i want to come back to the issue with stanley fischer, though.ischer before this meeting was banging the drum about inflation. where did that go? richard: what the fed it did last night is say the u.s. economy is doing fine, but we will mop be completely insulated. -- we will not be completely insulated. this is probably not the right time to raise rates as aggressively as they suggested they would in december. guy: we are not going to shut down the only engine that is firing right now, is the message. >> notwithstanding the decent numbers we have seen out of the u.s., it is not strong enough to drag the global economy higher. the fed it knowledged that. that is why we looked at the international headlines last night. my words are coming up of my mouth. you look at how the dynamics of this are going to work. front end implied volatility gets suppressed. is this a couple of years out? is inflation going to come back? it's all of that story going to be there for us? inflationoing to let get to hear before they start hiking and as a result, the curv

if that is the case, i can't exhaust stanley fischer. can exhaust stanley fischer .epends what the data does, guy. that is what is driving things. the dovish wing of the fed now, including chair yellen, is waiting for the day, in terms of the internal debate. i think the fact that the dovish wing has started to dominate since the turn of the year is something the data will have to dissuade them from taking that pact. already some hawkish members of the fomc who say we need rate hikes inn april. i think the dovish side of the fed will overrule them. guy: the yen has been on a losing streak lately. walk me through the yen trade. richard: it is one of those things where central bankers around the world -- and in japan as well -- are lamenting the fact that they are not getting help on the fiscal side. if we do get something that is fiscal stimulus, i think it probably suits the japanese authorities. i think the yen will weaken from their. -- from there. guy: stay with bloomberg television. we continue to monitor events as they happen in lamaca, cyprus. i am talking abou

vonnie: we heard stanley fischer moments ofere were inflation in the u.s. economy and on the phillips curve is not broken down by any means, and it is actually the employment figures that is leading to this inflation. so would you say wall street is in for a surprise, as goldman said, that we could see an increase in march? thisdoubt we get one month. they are usually very good at telegraphing those things in advance. even though they started hinting go from for this year, now to one and done. think -- our economist looked at it -- and we are thinking maybe two more for the year. i don't think the strength has been enough for them to pull the trigger. vonnie: talk about resistance levels. you have been looking at certain gauges in particular to look at sentiment. the snp is at a key resistance level. 2000. we can get into the minutia of it, but this is a fibonacci retracement that is providing some key resistance. but aa big round number, lot of times those numbers are not important here this time, it is. above that, 2050 will be the next number to keep an

are just hearing what mike mckee was telling us about stanley fischer's comments.xt for us, what did stan fisher say to give us any indication what the central bank will do? >> his view is consistent that the fed has more hikes coming in. the data will allow the fed to be opportunistic here. things have stabilized a little bit. comment say inflation is generally around the corner and starting to pick up. certainly consistent with at least two hikes this year and not three in terms of what stan will do what you will see is an upgrade to the language in the statement in march. they may even choose to classify the balance of risk. that would open the door for a move in either april or june. >> we also have some headlines. what did we learn? >> she has been active in saying the fed should not move quickly. the fed should work to protect the game it hasn't made. shouldn't take the strength in the labor markets that san fisher is talking about. .hey may not continue slowing growth in china is having an effect on markets everywhere, particularly to commodities. even thoug

even in places where the rates are still positive, stanley fischer shared his views on the policy toolesterday in washington. >> the negative rates of been used in five countries by five worked banks, they have somewhat better than many expected. he went on to say the fed would prefer not to go there on negative rates. belowy lower its rate zero on thursday. a former member of the ecb who is the chairman joins us today. thank you for joining us today. ecb need to announce more stimulus thursday? lorenzo: they will have a new forecast. at 2% target of inflation is getting further away, they need to do more. i think the market expects them to do more. mark: what would you suggest the eb -- ecb do? lorenzo: they have levers to use. upfront theto amount of government bonds they are purchasing and try to have an impact. probably there is the issue of negative interest rates. there is a conflict of interest here because i am a banker. that is not something that is helping banks. i think they can compensate the negative effect of excluding certain amounts of the deposits that the banks have w

francine: that was stanley fischer striking an optimistic tone on inflation in the u.s..omments from fed officials coming as the ecb president mario draghi is expected to unveil further stimulus measures on thursday. let's bring in carsten brzeski. at the j.p.hughes morgan asset. he is here from the u.s. thank you so much. does it feel different being here in europe? we are still talking about normalizing the fed. we are still talking about one possible hike this year. in europe, where talking negative rates. carsten: it feels very different. it doesn't everyone is talking about policy focused on stimulating. the ecb opened the door to fiscal stimulus coming from those countries that have balance sheet capacities to do so here to germany, for example. francine: you may look at the mystic policy -- look at domestic policy. carsten: i think there is a growing feeling in the u.s. that the world is in a growth slowdown. whether that leads to recession, we will see. it looks like the federal reserve is out to sync with the rest of the world central banks. francine: does that m

this is what stanley fischer said at a separate event in washington. >> it is sometimes argued that the link between inflation must have been broken. i don't believe that. rather, the link has never been very precise, but it exists, and we may well at present be seen the first stories in the increase of the inflation rate, something which the fed would like to have happen. carol: recent reports suggest shaken up thes affects of financial volatility from earlier in the year, but the question now is, is the worst behind us? alan gayle is with us right now. great to have you here with us. you see the environment we are in. where are we in this market cycle, in this economic cycle? alan: first of all, thanks for having me. i still think we have a way to go to the upside in this cycle, in this economic expansion. but i would say in managing the we areion strategies, cautiously optimistic in positioning portfolios. -- wee have seen here look at valuations, we want to see something attractive. we are also looking for macro tailwinds. we have gotten a little bit of that, but the jury is still o

stanley fischer says he sees the first stirrings of higher prices in the u.s., but in an exclusive interview with cnbc's steve liesman, they'll be watching the data closely and still wants to see signs of persistence before raising rates again. >> of course, if the dollar strengthens, that means manufacturers' exports are weakened, profits come down, core import prices come down. so there's an interaction between the strength of demand abroad. there's been very deficient global demand for some time. what we all need to be doing at central banks and we're generally including fiscal authorities around the world is working to raise global demand. not shift it across borders. >> eu leaders appear to have reached a break-through agreement with turkey on the migrant crisis, this following late-night talks and a deal brokered by angela merkel that still needs to be signed off on later this month. >> translator: this proposal that was brought forward by the turkish side is a breakthrough if it is to be realized because it would break this vicious cycle of entering illegally on a boat and as a result

vice chair stanley fischer says u.s. inflation may be starting to tick up from too-low levels. interview with steve liesman yesterday, the fed governor said the evidence is not so clear. >> there are a variety of reasons to think that inflation could stabilize, could move up over time if oil prices stop falling, if the dollar doesn't rise further, if what we're seeing in the labor market starts to translate through into higher inflation than one would expect to see it moving up. on the other hand, though, is some troubling signs that inflation expectations have slipped downwards. so that is a risk to the outlook that i'm looking very carefully at as well. >> a two-day fed meeting scheduled to begin two weeks from today. >> really centering on inflation. they can't argue with the improvement in jobs with the 4.9% unemployment rate. some slack still in the labor market, but it is that inflation debate that's going to be so crucial. as far as the hierarchy, stand fischer, if you had to go with one over the other. >> inflation still a serious issue in europe as well. that's why so

guy: stanley fischer speaks a little later on.k he will -- you look at what is happening with oil, how does these guys communicate where the fed goes next? what you think the signals going to be? richard: there's been a lot of talk where they are concerned with meeting their lower inflation goals. they see concerns about market volatility. they see specific concerns about china. i don't think any of those concerns about a way. sense, qe istion what the fed look set. if it means climbing a little bit higher, but nowhere near levels where you think the inflation is getting out of control. hans: the first question to mario draghi should be was this decision unanimous? or why do not you go further -- why didn't you go further? risk of the question will be was this further?unanimous -- richard: the question will be was this decision unanimous? i think that has to be the first question. guy: we will see what it is. richard jones from bloomberg first word. the pulse is up next. we are going to monitor events in brussels as we watch this

she warned of the discriminating meanwhile,ting -- the vice chair stanley fischer struck an optimistice on the inflation in the u.s. and weighed in on a negative rate policy across the world. >> critics have argued that qe with negative interest rates is no longer effective in either japan or parts -- or possibly in the eurozone. that case has not been empirically estimated, established. i think central banks still have the capacity to qe two run expense or he monetary policies even at the zero. usedthe rate that is been by five central banks have worked somewhat better than many expected. guest,t's bring in our jpmorgan european rate strategist, john lucas salford. -- john lucas alford. it the most hawkish you have heard the fed chair? gianluca: it is reflecting the data. we have concerns about the u.s. going into recession. most recent activity data is not confirming that. when you look at the inflation numbers, they are telling you that something is working. at the same time, you have that areent rates stable at low levels. the fed has to continue the message of being cautiously opt

janet yellen, stanley fischer, and new york fed president dudl dudley. that's the core of the fed. ultimately, that's who's making policy. >> more comments from bullard today as well. >> now to the latest from brussels following this week's deadly terrorist attacks. our very own michelle caruso-cabrera joins us from the belgian capital. good morning, michelle. >> reporter: good morning, sara. the key development overnight is that the authorities believe there is a definitive connection between the attacks here in brussels and the attacks in paris back in november. the two brothers who died as suicide bombers here, one in the subway, one at the airport, are believed to have been accomplices, facilitators of the paris attacks, providing safe houses and/or transportation. this is raising the level of criticism of the security officials here. the argument is you have this belgian terrorist cell. you have terrorists working across borders, but intelligence services not necessarily cooperating or working across borders. so this is already becoming a political discussion here. does this s

fed vice chair stanley fischer struck an optimistic phone on inflation in the u.s.nd weighed in on the negative rate policy across the world. >> critics have argued that qe along with negative interest rates is no longer effective in japan or in the eurozone. that case has not yet been thatlished and i believe central banks still have the capacity through qe and other expansionaryun policies even at the zero bound. the negative rates that have countries --five or five central banks have worked somewhat better than many expected. toa: let us bring back in the conversation allen higgins. let us talk about this negative rates phenomena. i have a chart that shows this strange world in which we live where you can lend money to the japanese government over 40 years and get a lower return than if you lend money to the u.s. government over to go. -- over two years. fischer says he can see areas where it is more effect of than people thought it would be. allen: he is probably talking about denmark. where it seems to be working quite well. we do not know the -- we don't know

stanley fischer had a whole list of references in january on the history of negative rates.should we treat them? them about her at citigroup says that unless we see financial instability there is no cause for concern. do you agree? : if the prices are falling, if nominal -- if nominal growth is constrained, the economy will be negative. maybe from a policy perspective you need to have them linked. francine: the financial system was different then. now they permeate into everything we do. they have a direct impact on liquidity. are you concerned that we are punishing the banks too much? if you are, then mario draghi should not go into further negative territory tuesday. is, do youe first want to have a very healthy banking system in the private sector? think everyone would say absolutely yes, in which case you definitely go to the second issue, which is you need to make sure that banks earn less bread. if the equilibrium interest rate is negative, they should be largerd to charge a negative number. and giving back that money, if you like, in terms of negative rates, paying mo

we are expecting from washington, fed vice chairman stanley fischer, who will speak at the national associationomics. that is at 12:30 p.m. in washington. the ecb governing council will meet to review interest rates. the council is widely expected to cut the deposit rates further below zero. tune into bloombergtv for coverage of the rate decision and mario draghi's news conference at 1:40 p.m. in 7:45 a.m. in new york. mccarthy weward were talking about the impact on janet yellen's thinking after we had the good u.s. jobs report friday. are you uneasy about negative rates? if we are looking at negative rates across the world, except for the u.s. that is ready to hike, what does it mean for the dollar? pressure isns the going to continue to be stronger. that is one of the obstacles that the fed faces during this cycle. the fed was more aggressive than the central banks early in the cycle. that is one of the reasons the u.s. economy is doing so much better than the other major economies, and that is what the fed needs to raise rates. what it means is they will do it cautiously and opportunistical

tom: the uncertainty -- it is a different uncertainty than what we heard from stanley fischer a numbereks ago. describe the greenspan uncertainty. michael: there are a lot of moving pieces to the economy, he said. china, oil, politics. he was particularly worried about politics although he wouldn't go into detail. tom: he said, no, we're not going there! michael: and he doesn't know how any of these things will play out, and that makes it hard for somebody who made his living forecasting to forecast. tom: those were wonderful conversations, and we begin with the two topics of the moment. here is alan greenspan on negative interest rate and productivity. >> up to a point, negative interest rates have no effect. why? he goes people are willing to accept, essentially, a negative interest rate to hold the claims of these particular countries. thisis going to change if goes on indefinitely, but things will start to move. we don't know what happens when that happens. michael: is a dangerous, do you think? a dangerous experiment for some reason for banks to be doing this? does it called to mi

because stanley fischer, the vice chair, had been talking about core cp doesn't have to get back to 2%ve to have confidence it will get there. maybe that's why the markets think like this and it's more of a judgment call. >> i think you're right. the consumer confidence numbers you came out with will contribute to that. we'll have another job growth number between now and the next meeting. that will make a difference. and i think if oil stabilizes, and then you can see the opportunity for inflationary pressure to build, all of those will make a difference. remember, the next meeting is four weeks out. >> let's pin you down, mark. are you saying that the data and mainly the inflation data will pressure janet yellen and the fed to move faster than they would want to when it comes to raising interest rates? >> i don't think it will pressure them to move faster, i think it's the inverse. if they see the pressure, if they see inflation coming back to where they see a more normalized rate that will be a go signal. >> we'll see what she says today. mark olsen, thanks for joining us. >> >> tha

you had stanley fischer about a month ago saying, i'm actually surprised that negative interest ratesou are in a deflationary environment, why not set your inflation target at higher than what is historically -- what it historically has been? what is so magic about 2% in japan? why not 3%? there are any number of tools you can use. david w.: there are unintended consequences from these actions. we are very dependent on money markets in this country for funding, much more than other economies. how would that work with negative interest rates with money markets? tom h.: in negative interest rates, what are you doing? you are looking at a diversifying asset. what is cash? it is a diversifying asset. you don't earn any money. at some point, you could argue that there is a limit to what you can have in terms of negative interest rates. 1% or -2%, but we are far from taking a from that level. do we write the rules? you assume risk, you are paid to assume risk. you will not get paid if you hold to maturity this time around. you are not worried about that? it is a question of other asset clas

there's a big difference between stanley fischer and the governor -- it's unusual for board members tosuch differing views. -- how do those issues get resolved inside the fomc? gary: the federal reserve spends analyzingot of time the current state of the economy and its prospects and they have a variety of models that help them forecast the future. including the future of inflation and whether the risks are biased towards the upside or downside. unanimity.need it is a contradictory situation because the u.s. economy, putting aside the inflation, the u.s. economy is performing reasonably well, especially compared to much of the rest of the world. employment gains have been substantial, consumer spending has held up and has been relatively healthy. etc.ng seems fine, etc., we are in a world of excess capacity globally and that seems likely to put a lid on inflation for the foreseeable future. that gives the fed a lot of because come if you take their dual mandate to heart, price stability and high employment and reasonable economic growth, they are achieving it. is toick to policy now ad