the fed went on a bing again. he other thing that's not fully recognized that since the crisis of 2008-2009 the fed is the principal reason why we have problem today and big governments and big corporations, pricing of credit, but starving credit for small and new businesses, the so-called interest rate, that sounds great, but as they used to say in the soviet union, the health care is free but you can't get any. >> i'm confused. low interest rates and feds are doing what it can to bolster the economy. can you explain that? >> when you had an anemic patient, you blood the patient, that does more harm than good. right when you have before it deteriorates but you don't get housing function anymore. what they've done by messing them up, they made the short-term credit unavailable to small and new businesses by mispricing credit, banks are under -- if you don't know what the price of something is you're going to get less out in the marketplace and in terms of what the federal reserve has done is bank regulators and the

the fed, and this is one of the benefits of having an independent central bank, the fed makes those decisions based best that it can do for the u.s. economy. gary: it is important that we get that out there. unfortunatel this has become such a crazy political season, people can say anything and it just gets out there. anthony: there is some discussion about the fed politics -- policies and exacerbating the income divide. really true. first of all, the fed is using the tools it has. the people who do not like the implications, the side effects of low interest rates, they say, do not do anything, the economy would stay in recession. the amazing thing that supportive monetary policy does is help create jobs. i do not know who benefits more from more job opportunities than the middle class, the working-class people. i do not get this inequality. gary: a lot of people feel that they follow the rules. they save money, pay for the kids to go to college, put enough money away. they are people that did not go out and speculate and as a result of low interest rates, they have had to shift their retirem

one, the fed. everyone is looking at the bank of england as the fed plus six months. also fears about what's happening in china and the emerging markets, the fallout of the u.k. and the u.s. there's a sense of that failing over the past few weeks and a sense that the bank of england is going to say, hold on. we are not going to wait until 2017. the inflation forecast that we see today. i think there's also a realization that they are likely to be on the hawkish side. manus: -- francine: what are you expecting? q2? a bigger split in the vote? robert: i think historically when the bank of england has shifted from being on hold to a rate hike cycle, the voters tend to move en masse. what i'm looking for are the inflation forecasts. my forecast is that three years ahead, they will be at 2.2%. the bank of england is conditioning these forecasts on the market curve of last wednesday. saying that's too far away, i think in that case, why not? wages. this is where it ties back. we've had fairly benign inflation, negative inflation t wages areut rat rising. is this part of what

why does the fed cough kabucke drama where banks punish? with its all encompassing new regulatory authority under dodd/frank is a dangerous mix. it is a threat to economic growth not to mention the principles of due process, checks and balances and the rule of law. if we're not careful, our central bankers will soon become our central planners. fortunately, the house will soon have the opportunity to reform the fed and make it more transparent with the federal oversight reform and modernization act offered by our colleague mr. hai zinga and approved by this committee. i now yield five minutes to the ranking member for an opening statement. >> thank you, mr. chairman, for holding this hearing and thanks to federal reserve chair yellen for making herself available to testify. the 2008 financial crisis inflicted staggering damage to our economy. within the months before president obama took office, shedding more than 800,000 jobs a month, home foreclosures displacing millions of families, and entire industries on the brink of collapse. congress

about who willly get ahead and not get ahead with the fed. re the big picture of what the economy is doing. is the m&a cycle going to continue to be hot, which i think it will be. and then as the situation develops an economy improves and the job market improves, you will start seeing a high-yield market, the primary site, begin to pick up. joe: the federally controls the short end of the and they could increase the short end without seeing much of an increase at the longer and or the range where people really borrow. how much to the fed policy rates and the short-term rates really affected the corporate picture? adrian: it affects it so much that depending on what it is talking about, it will direct expectations of growth, and that is what lives the backing of the curve. depending on how well the policy , and a lot of people don't think it is going to do much -- for the most part you will see it continue to go on. more so in the five-to-30 have in your band -- 30-year band. scarlet: good stuff. adrian miller, thank you so much for joining us.

help me reconcile your practice and the formal fed policy. >> the formal fed policy says that in these of purported information, security breach, there should be a review by the fomc secretary. >> right. >> and general counsel to determine what the next step should be including whether it should be referred to the inspector general. my understanding of that policy the way i understand that, is there is a material breach, it is appropriate to refer it to the inspector general, and i've done so. if these rules need clarification, that's how the fomc chair is tasked with han e handling these investigations and that is my understanding of the rules and how i intend to proceed. >> let me see if i can cut to the chase on this. i think what you are saying you believe your practice is enti entirely consistent with the policy and what your letter really said was after -- without saying this, after the general counsel did their investigation, i would immediately refer it to the inspector general? >> i've taken the view of as soon as we determined there is a material breach i asked the inspecto

hasn't the fed crossed the line from being regulator to manager? we have had a number of individuals come to our committee to tell us that fed officials have regularly attended corporate board systemicallyhe important financial institutions under the fed's purview. is that true? chair yellen: i am not sure if that is true. >> you were unaware of any fed officials attending board meetings? chair yellen: it is conceivable that that might have occurred. i am not saying that it did not occur. >> is it did occur, what legal authority would you site for having employees of the fed invite themselves into corporate boardrooms? chair yellen: i don't know what the circumstances are in question, but i can for example tell give that when i was president of the san francisco fed that i occasionally would attend a portion of a board meeting of one of the firms we supervised to make a presentation to the board about our supervisory findings and the emphasis -- >> but you were unaware of any fed employees attending these board meetings? chair yellen: i really don't

i think the fed had that. and unless something completely unforeseen happens, i think they will do something in december. i think that is what the market thinks. but pushing back, they might say here is a quarter point, come back to us in december, 2016 which is what the market wants to hear. >> back up. december 2016? >> yes. >> give us a quarter and we'll see you in a year. nine months to a year. >> that doesn't sound data dependent and that is what they want us to believe they are. >> they have painted themselves into such a tight corner unless something completely unforeseen happens, they have to do it. >> they have to do it. because if they don't. >> they lose all credibility and the market gets squishy here. >> so in this goldilocks environment that you put forth. >> yes. >> what do you buy and what do you sell? how do you position yourself? >> here is how i position myself. you still stay long dollar. >> that will work over the long run. the financials, i would be worried. i know you love them pete, but

so help me reconcile your practice and the formal fed policy. >> the formal fed policy says that in the case of purported information, security breach, there should be a review by the fomc secretary. >> correct. >> and general counsel to determine what the next step should be including whether it should be referred to the inspector general. of that policy, the way i understand that, is that if there is a material breach, it is appropriate to refer it to the inspector general, and i've done so. if these rules need clarification, that's how the fomc chair is tasked with handling these investigations and that is my understanding of the rules and how i intend to proceed. >> so let me see if i can cut to the chase on this. i think what you're saying is that you believe that your practice is entirely consistent with the policy and that what your letter really said was, without saying this after the general counsel did their investigation, i would immediately refer it to the inspector general? >> i've taken the view of as as soon as we have determined that there is a material breach, i have as

steven: i think the fed will be the balances about sheet. it comes to the short end versus the long end -- the short end gives them a margin in case the economy does begin to slip, to use conventional monetary policy. that is important to them. you one thing -- obviously are focused on the currency area, and you talk about the , u.s. between government and eurozone yield. talk about the sensitivity of the euro versus the dollar to that spread. what is going on here? everyone was wrong about the degree of convergence during the year. we accepted there was divergence between the u.s. and eurozone that would cause the dollar to strengthen. instead we got much less divergence than we expected. statistical with analysis and say, what is the responsiveness of the basis pointso a 10 move on the 10-year yield, it is lower than it has ever been. i think the market may have lowered the bar. it used to be they would not get out of bed for a 200-basis point differential. alix: ok, great stuff. stephen engle under -- steven englander is staying with us.

it is not really fair to blame the fed. the dodd frank act set up the post of vice-chairman of the fed for regulatory affairs. the obama administration has refused to appoint anybody to that post. jeff hester link has called her now to testify in place of this person who was never nominated. not her fault, but certainly never's of the committee are unhappy that this aspect of dodd-frank has not been carried out. it is also a possibility that defenders of the banking system will attack the fed for what they see as overly burdensome regulation. that they're carrying out dodd-frank to the best of our ability, but the banks have criticized the regulations, saying they cost too much money and they can point to all the reductions in headcount that they are undertaking these days as evidence of how it is hurting the system. there are a couple ways that she could be criticized. to be aboutpposed monetary policy, but it is possible that somebody will ask her about that and that opens up another avenue for discussion. betty: what is t

on what we are expecting, 185,000, will that do it for the fed? ichael: it would give the more confidence. i don't think that would be the final answer or word. payroll of rebound in growth, up from the 140,000 we have had in the past two months should be a signal to them that the uncertainties from abroad, the emerging markets weakness, the volatility following the evaluation, that has subsided. firms are in cautionary mode, but now they're back into hiring mode. that is in line with the consensus 185 should edge them closer to moving in december. i would not say it is a done deal. betty: rich, dig into the details for the report tomorrow. ath: the fed will be looking what happens to the on employment rate. if that falls, it will give them i'd -- get them worried we are in full implement territory. janet yellen has paid attention to appointment. probably maybe most importantly average hourly earnings. finally this tightening of the jobs market if that is leading to any wage increase for americans. , aren'tn many respects wage is important, or as i

chair yellen, the first couple of questions i have deals with the concern, has the fed crossed the lineing regulator to manager? we had a number of individuals come to our committee to tell us that fed officials have regularly attended corporate board meetings, t under the fed purview. is that true? >> i'm not sure if that's true. it is not -- >> you are unaware of any fed officials attending board meetings? >> it's conceivable that that might have occurred. i -- i'm not saying that it did not occur. i don't -- >> if it did occur, what legal authority would you cite for having employees of the fed invite themselves into corporate boardrooms? >> i don't know what the circumstances are in question. i can, for example, tell you that when i was president of the san francisco fed, that i occasionally would attend a portion of a board meeting of one of the firms that we supervised to make a presentation to the board about our supervisory findings and the emphases -- >> but you're unaware of any fed officials attending these board meetings? you have no personal knowledge of this? this is not a

>> guest: i started right away cry left the fad -- the fed and saturday and monday and was working on the book i had a lot of materials for emails because i managed by e-mail i had dozens every day it was very useful because you could see in realtime we were thinking what was happening so i had a wealth of material and i also had some help as a public affairs person who held made to the started on the process. >> host: eight decade that the fed early in our lifetimes you didn't have time to reflect on economic policy so what did you learn about yourself? >> the big purpose was to have the whole process. en to go through the experience there is a lot of hindsight bias as we create a story that this had happened and that had happened that in the fog of war as things are happening one risk against the other i see myself as a risk manager to find the right way for word but it was very difficult to know with any given time. >> host: i remember many years ago reader's digest to say to be proud of the man i have become. and for narcissistic man or the egocentric person generally as you recon

why did the fed sort of missed this in some sense? hy -- why was the government overall not cognizant that there were places, ohio, had about the middle of the poir had more foreclosures all over the state? why did we not see how serious that was in. >> i don't quite accept your characterization. i spoke about foreclosures a number of times before the crisis. some foreclosures are unavoidable, but in some cases it seemed like that there just wasn't enough effort being made to modify mortgages and to find a solution whereby people could stay in their homes. so we thought about it, of course, partly from a economic perspective. empty houses, affecting local tax revenues and the like, and the fed did pay attention to that issue. >> i would argue and i heard the statements but i would also say that consumer protections that -- to stop lending in some -- and some of the responsibility and authority that the fed had particularly prior to you, and i'm not casting dispersions on any fed, but i think that you were more in tune than predecessors

neither does the fed. they can only weaken the economy by trying to manipulate it. so the fed, being active, is weakening the obama economy, not helping it. >> keeping rates at zero is hurting the people who have savings out there. they are not making money. >> then they go out on the yield curve and rip the investments. getting back to the issue of janet yellen being political, if she raises rates she can say, no, i'm not political. they may raise rates in december a quart point, not much. she has given speeches about income inequalle ti right before the midterm aleks of 2014. janet yellen was a chairperson of clinton's council of economic advisers from 1977 to 1999. >> it's clear she's on the democrats' side. >> it's true. on the interquality issue she politicizes things. i disagree with trump on the issue of zero interest rates. they were in place in the bush administration. this has to do with a soft economy. you put it out yourself, mike. this is a weak recovery. we have an enormous job relative to other recoveries. >> i think we all agree on that. the fact is

a 70% chance is being priced into the fed fund future. art that we have been watching closely. the huge uptick we have had ever since the fed statement last week that indicated that the december meeting was a possibility. janet yellen reiterating that this week, calling it a live possibility. areou look at rates, we seeing that expectation priced in. we are looking at the highest yield in about five years. on the 10-year, we are seeing an uptick. we have been seeing the dollar strengthened against other currencies as with the rates go higher, as well. gold prices also caught up in the ripple effect. --d sharply lower asked her after we got those jobs. in jobs report delivered terms of surprise value, mark. mark: julie, thank you. just been informed that the president, vice president, and secretary of state kerry will be headed to the roosevelt room at the white house momentarily. the obama administration rejecting the application for construction of the keystone xl pipeline. remarks, ao to their final comment from phil mattingly at the whi

the fed is about the hike.d well be in this world that we've got that the payroll is something we are concerned about. that is based on a lack of profitability in the u.s.. you've got all of these things converging over the next three or four. with crude in particular, you've got this other factor, this sunni shia factor. that something we could spend days discussing. tom: very interesting. thank you so much. we're not there yet. stuart wallace, i'm sure will put out a headline when we get a 199 handle. coming up, we will speak with an important author of a really important book area he does all sorts of cool things. his new book on america's bank's must-read. stay with ♪ tom: good morning, everyone. it's a jump condition in china. waking up to a jump move in many commodities. we welcome all of you to bloomberg "surveillance." now to our business flash. allergan arer and on the verge of the biggest deal in pharmaceuticals. it's valued at $150 billion. the deal is structured so that allergan is technically lying

december, the in feds meet the cymer 16th.he reason it is not 100%, people wonder if the fed is going to do the right thing. now they are talking about how a rate hike would still be a mistake. they also look back a few months blink backaw the fed in september. the fed doesn't really want to go until it does. thingsu look at the fed, -- 2016 rate increases will be very gradual. simon: it is about the pace of the subsequent move. they now need to backup in december if they do hike. how slowly are they going to raise that rate. themberg news reporting jobs are ending minority -- are in the minority. francine: it seems a lot of investors were saying we have not gotten their communication. do you feel you're in good hands, that janet yellen is clear in the message? on our side, the as an end strategy -- market to our companies. what happened in the last two or three weeks is everybody was unemploymentcause going at 5%. ago,e same time, two weeks one of the best retailers in the u.s. comes alex -- comes out cutting expectation. i t

the inflation. betty: unlike larry summers. right.: fedhas a lagging effects of a want to get ahead of it even if they are not quite at that 2%. that was kind of striking and really hammers home the notion that december is likely now. he did talk a bit about how financial market volatility like we see today could be one of the things we are watching. it could be one of the things that delays. looking at the markets today, the stock market is down significantly. treasure yields coming down a little bit but not a ton. the fed fund futures trading is pretty much where it was. if anything, it was just reinforcing the fed is going to raise rates in december. michael: absolutely. people are getting pretty convinced it's the most likely scenario. obviously a terrible jobs report for this month could change things. panicky moves in the market. that sort of thing could delay them. at this point, it doesn't look like this amount of volatility is enough. --ty: did you get a sense the fed shouldn't be watching markets but did you get a sense he was ve

is a lot lower than the fed realizes. the consequences of low interest rates is the enormous buildup of debt in the economy. even a small rise in interest debt that isu have 300% of gdp, interest rates are 1%, you use 100% of gdp to service it. the economy cannot cope with it. it will have a bigger effect on the economy than the fed thinks. angie: what happens to the credibility when they take it back? they say they have to do it in december, but pretty much, you do not you to federal reserve if you take it back at some point. you have lost 100% credibility. peter: the fed has lost its credibility anyway. the point in the summer where it was about to raise rates and suddenly, markets started to tank, it raised international concerns. i think people were stunning to put question -- are starting to put question marks over the fed at this point. i think the bond markets are saying the same thing, actually. if you look at the yield curve, it is flattening out quite quickly. the bond markets do not believe the fed will be able

next, does the fed actually care about the economic data?reak, listen to democratic congressman brad cheekn give his tongue in reason for why janet yellen should wait until the spring to raise rates. >> god's plan is that things rise in the spring. if you want to be good with the almighty, you might want to delay until may. ♪ alix: i am alix steel. "what'd you miss?" we're back with bill lee. janet yellen says that the door is open for a december rate hike . volatility matter more than the data? volatility is a proxy. janet yellen and the fed seem to be reacting to market conditions than data. joe: how do you quantify that? >> the fed should be following , and here is the bond market volatility index. this is a rolling regression of their coefficient, how they react overtime. it is more and more negative. they ease in the face of on market volatility. push you the market around. thatosses violating cardinal rule that every young economist has learned. that makes it more disturbing that the boss, ultimate insider, is violating these rules. ba

market expectations have shifted a lot around the fed. we are looking ahead to this jobs report today. >> i think it's really important. market expectations are 50-50 on whether december is in play. anna: i think 56% is the chance. >> oversight, but yes. anna: we will call that 50. >> what happened over the past few months is that analysts have over expected on the nfb, and i think most economists have reined in expectations a little bit. our u.s. economist tells me he thinks it will come in below. anna: it would be too simplistic to say if this number disappoints, we won't get a rate rise in december. the fed doesn't necessarily have the same expectations around this number. the fed is looking back over the years. >> it's a really volatile number. it would be on to make your policy decisions just on that. the fact that the u.s. had a bit of a soft patch, i think that is going to fade when things pick up in q4. it is just whether it happens in time for december or not. anna: jamie murray, chief european economist for bloomberg intelligence

why did the fed miss this in some sense? why was the government overall, not cognizant that there were places all over the country. in fact, ohio ohio was in the middle of this. had more foreclosures every year than the year before, all over the state. why did we not see that as a country, how serious that was question. >> i spoke about foreclosures a number of times before the crisis. my concern was that some foreclosures are unavoidable and in some cases it seemed like there just wasn't enough effort being made to modify mortgages and find a solution where people could stay in their home. i did speak about that. we were very concerned about the housing market which was getting slow as early as 2006. we talked about foreclosures and the general problems and we thought about it from our economic perspective. what was the risk to the economy overall. we did worry about effects on communities and empty houses affecting local tax issues and the fed did pay attention to that. i also would say that consumer protections to stop pre

below the fed so it's the market versus the fed. what i just described in terms of the graduated increase is what is going to happen. the curve is pretty accurately reflected on what the fed will do. tom: we will come back with bill gross and continue our discussion particularly on investment for yield. stephanie: there you have it, thank you to our own boat surveillance" team talking to bill gross. we need matt miller to take a look at the markets. across the board are saying this is a strong number, much stronger than they had anticipated. it seems now that uncertainty is out of the market, the fed will likely raise rates in december. uncertainty will be gone in a quiz can rally? matt: the market reaction nu wasts. the markets went on chris. take a look at currencies. i have a live trade of the euro-u.s. dollar. , if you want to look at alive trade, it just dropped off a cliff. it's down to 107 .35. we were floating above 108 earlier so big drops in the euro, big drops in the yen. if you look at the yields, they were unbelievable.

julie: the fed is part of the reason. you have to consider the context, the idea that valuations for the s&p 500 has been higher. trading at more than 18 times earnings, around the highest in five years. are considering the evaluation. then there is the question of where we are on technical levels. this is the 200 day moving average and were falling back toward that level. 2100 andtten towards it's been a difficult area to breakthrough for stocks. i know you will talk to mike reagan shortly and he talked about that being a little bit of a cap, putting a lid on things that 2100. betty: thank you so much. mark crumpton has more from our news desk. obama andident israeli prime minister benjamin netanyahu, it was a chance to mend fix it -- mend fences. relations between the two leaders and the two nations have been tense over several issues, deal withthe u.s. iran. today the president decided to focus on areas they agree. obama: is no secret we have had disagreement on this , but we don't have a disagreement on making sure th

>> everybody is weighing in on the fed, i might as well. what he told us, it looks like the bank of england is leaning toward a second-quarter liftoff to rates. they're not the first out of the gate. i think the fed will be first and i think bank of england is cognizant of this. we're in a very unique environment with this broad decoupling of central bank interest rates and this is something that is highly unusual, especially among the g-10 economies. we have a situation where the fed is possibly going as early as december, probably going in the first quarter of next year, i would estimate. at the same time the european central bank is easing policy and expectations are for them to expand the q.e. program and bankle england is caught somewhere in the middle here. they have a lot of similarities in terms of labor market performance and the recovery from the great recession and financial crisis. a lot of parallels with the u.s. economy, so i think that they'll largely be doing what the fed is, but they're much more sensitive to what happens in

inside the fed's head. counting down to the minutes of the next, the last fed meeting. minutes go backwards, folks. it could be a real market mover. we'll get the minutes in a moment. stocks rallying ahead of that release. we'll have the latest from paris when "power lunch" continues in two minutes' time. an up day for the industrials. up 150 points. this bale of hay cannot be controlled. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. thankfully, mary miller banks with chase for business. and with greater financial clarity and a relationship built for the unexpected, she could control her cash flow, and keep the ranch running. chase for business. so you can own it. chase for business. bob dylan. to improve my language skills, i've read all of your lyrics. you've read all of my lyrics? i can read 800 million pages per second. that's fast. my analysis shows your major themes are that tim

the fed considers raising interest rates. g into the conversation richard jones from bloomberg's "first word." what are we expecting from draghi? >> i think it's interesting. the timing is very important. ever since draghi testified to the european parliament, the market has been expecting a 10-basis point cut next week. over the past 24 hours or so, odds of a bigger deposit rate cut have jumped. we are looking at a 90% chance of 15 basis points next week. i think by the time they meet next month -- sorry, in january, there will be 20 basis points of cumulative easing priced in. i think the market is looking towards a deposit rate cut. extension, perhaps expansion of qe. perhaps both. i'm of the opinion that they might keep a little bit of powder dry for january. let's see what the fed does. let's see what the reaction is to that. what would constitute a surprise from the ecb? there's a lot of expectation that they will do something significant in december. beto me, the surprise would possibly a negative surprise, which is to

joe: how fractured repossession rates could affect the fed exit. een,alked to jeff whose ideas of bridging the income gap are getting attention. >> we begin with the markets, another down day. the dow off by triple digits. notable selloff by commodities. oil below $42 a barrel. looks pretty ugly. with the commodities, it started in ugly. commodities, copper, gold got slammed, a really ugly day. no one is spared. ugly consumer credit creation number out of china last night. it really had to do with oil. it is close to $40 a barrel. s&p, the s&p could not shake off oil. the energy stocks erased 17 points, not as much as health care or financial, but a substantial amount. it was the big names. there was an inventory build. the selling also happen earlier this week. it feels like a lot of momentum to the downside with no real catalyst. we knew we were oversupplied. they are still short when it comes to energy. joe: at least the energy shorts are making some money. alix: another area is in the currency market. i want to take a deep dive, u.s. dollar vers

what could cause the fed to pause? rkets, the fed seems to be more focused on the markets than ever and if the market continues to show upset over the possibility of the fed raising rates this seems to be the only thing that could stop them. interestingly enough, fed fund futures did not move today on the volatility, still pricing in the 70% chance for a december rate hike. >> that's true. are there any -- is there any talk about this around the corridors of the fed about, oh, we better be careful not to upset the apple cart this time of year? >> no. i agree with jeff on principle here that it's not december in itself that might keep the fed or moving or a presidential election cycle. this idea has been around for a long time. the point that it misses is that the fed does not create monetary policy in a vacuum. they create policy that responds to the economy and washington has an impact on the economy. what's embedded in this question of whether or not the fed will move in election years or not is looking at what type o

he thinks lower will be part of the fed's verbiage going forward. they will leave open the possibility after moving rates up they go back down again. i wonder how much this number in today's job report changes that and everybody's stance from being cautious to wondering how quickly and how steep might the fed move next year. >> i think you have to watch the data, kelly and i think the key is going to be if we start getting reports like these 250, 270, a lot of people said today was a snap back from two weak months the more likely trend is in that 180 to 190 range. that should bring down the unemployment rate but at some point the fed is going to get cold feet if it sees the unemployment rate go down to 4, 4.5%. >> one last thing. the first thing i thought this morning is what if we get a revision lower on this number like we did for august after that bad september number. i mean, we still do have one more unemployment report to go before they meet in december. >> we do, but, bill, this was a pretty solid report throughout. when you have different sid

healthier because the fed did not raise interest rates. i think you tap the break, or his brakes, when one of a couple of things is happening. when there are signs that inflation is really rising and getting out of control, i cannot see any of that in the data. when there is a sense of financial euphoria breaking out, perhaps you could make that argument last spring, but you can' a sense that the economy is overheating, and businesses can fall -- fill all their order books. that is not the sense we have about the economy right now. so, absent any evidence that you want to the brakes, i don' t know why -- what the strong case would be for raising rates. i will tell you this, and this is something i don' t think is getting the degree of concern that it should. on average, about every seven years, we have had to cut interest rates by about 300 basis points to keep the economy stable. it has been seven years, that is sense this recovery began, we are entering the seventh year of recovery, so sooner or later that need will co me, and i' m gary:

the fed, probably in december. d, i still think february as possible if the u.k. data holds up nicely. we may get a slightly stronger report on fourth-quarter gdp in the u.k. ,f the market takes a fed hike a february rate hike of the bank of england, i would not rule that out. francine: we talk about policy mistakes. is it more of a concern that if we wait too long to normalize, to start normalizing, that the hike, the interest rate hike, will have to be much more rapid than gradual? if we delay and then we realize the economy is much stronger than we thought, we are going to go to 0.5% to 2% very quickly and that may stifle the recovery? thatr: yes, there is risk we may have to do more in a rush . i don't think inflation would be such a problem that the central bank would be forced to do as much, but actually, after such a low rates, you want to start gradual. tom: are there bubbles out there? within all of this mumbo-jumbo we are talking about, this economics back-and-forth, what the audience wants to know is how

that being said, you know, the fed has to make sure that the u.s. house is in order and i think the labor market is giving the fed a green light and think that will be the case for the foreseeable future. my expectation is that they go in december and go again in march. francine: tell me about the pace of the interest rate rises. i also want to bring in -- we spoke about the cargo ship saying global growth is slowing down and trade is weaker than it significantly would being under the growth forecast we see. is there a danger the fed has to reverse course? neil: it's more of a structural issue. there's no law that says trade has to grow faster than g.d.p. francine: the global economy, right? neil: it is but trade elacticity has been slowing for quite some time. in the 1990's, trade would grow two times faster than global production and now growing one for one. again, i just come back to the u.s., it all comes back to the u.s. labor market and the big debate really for the fed was whether the phillip curve was still useful or not. i think the governo

these are your headlines from around the world. >>> more fed talk and a hike makes sense. john williams after the solid pay rolls reading prompting goldman sachs, citi, and barclays to bring forward their rate rise expectations to december. >>> putting pen to paper. they will buy plumb creek for $8.5 billion. a timber giant will own more than 13 million acres of u.s. forestry. >>> a bonus battle heats up as they suggest that a compensation could fall this year for the first time since 2011. >>> the best night for "saturday night live." critics slam donald trump's appearance and calls by opposers to dump the trump. >>> good monday morning. thank you so much for joining us. if you're just tuning in, thanks so much for finally sharing your time with us. let's quickly check in on the futures board and what it's telling us ahead of the wall street open today. and it looks like we are below fair value. we're coming off the sixth consecutive fasa week for all big three industries. that's the longest winning streak since late 2014. the implied open is telling us we're going to be d

what does that mean for the fed? tightening at times where we are already seen deterioration and risk appetite and what does that mean? are they throwing fuel on the fire and making things more dangerous? betty: a lot to chew over. thank you so much, joe weisenthal. they will be chatting with the global head of fixed income and economics research at credit suisse. much more ahead on bloomberg markets. we are nearing the close of trade as we head to trade. here is a look at sector winners and losers today. ♪ betty: welcome back to bloomberg markets to i am betty liu. 10 minutes away from the close of trade. us have been kind of not doing that much today. julie hyman has a look at where the major averages are. we have got individual movers. julie: this is after the biggest gain in stocks in a month yesterday. now a sort of stalling out of that activity today. we approache it as the closing bell. very little changed for the three major averages. today after the fed minutes were released, investors still trying to suss o

cheryl: yesterday's selloff sparked in part by fears of a december rate hike by the fed. we'll see how policymakers are responding to some of the concerns expressed by the gop dan dates during the debate. nicole: the film "goodfellas" was about the notorious lufthansa heist. but the man they thought behind it is free. cheryl: rex ryan returns to the meadowlands and gets payback, with his buffalo bills. we'll have highlights on "fbn:am," the latest in breaking news and markets and what to expect in days ahead. nicole: breaking news this morning, a us air strike targeting the notorious isis member "jihadi john." he was involved in the deaths of american journalist steven sotloff. an official said "jihadi john" was evaporated. the strike hit a vehicle carrying him in northern syria. the battle against isis was one of the main tommics during the tuesday night's fox business gop presidential debate. >> they are coming for us. they recruit americans using social media. they don't haste us simply because we support israel. they hate us because of our values. they hate us because

how much tighter really get before the fed moves in december? then the big picture, dollar will be appreciating and we are still in the early stages of what i call the obama dollar rally. the million-dollar rally is about 55%. the obama dollar rate is only about 20%. when is it going to peak? meets,ks before the fed they may extend the duration of qe to maybe march 2017. is going to be measured in quarters. i imagine it will last all of next year and into 2017. joe: when we see the euro against the dollar, we clearly see that policy divergence trade, so to speak, we can clearly see the gap. the yellow line is the yellow lineand that is the spread. it's true that there will be a long time when the fed thets tightening following ecb doing more qe. >> i think that's the wrong way to approach this. ,hat might be priced in today think about this. you will be starting next year, you are putting money in your 401(k). how is that money being discounted? i say it is not. he is being adjusted -- new money is being adjusted. current --map cap map out curren

i think the fed story is getting more interesting. think will feedback into what is happening with the bank. janet yellen really making it clear that that december hike is still very much on the card. -- cards. the markets are alive to that risk. this is how they said that have shifted over the last few months. currently we are at 56%. six months ago we were at 70%. the data got worse. sign was strong on the pmi rating. that seems to be pushing people toward set debt story. fisher is almost on message talking about how inflation is not too far below the central bank. thathe was making it clear we should go back to using the set policy -- taylor rule set policy. we would have rates at 2.8% in the u.s. of the moment. that would be a big change. anna: let's talk about china. shop isnd the china the phrase we used. after the summer we had that in or miss route in china stocks. after we saw that, we have since seen a staggering recovery. guy: this is the last few months. this is a 21% move off of the lows that we hit in august to where we a

in the fed share takes that equally seriously. with a cast of 10 others to have a serious san sobering conversation with the calls you needed to make that day in the town east of columbus and i got a call from the majority leader to say we leave you on the phone at 2:00 with chairman bernanke. this is september before that 2008 election of obama and bear stearns had already been saved at that point. fannie and freddie and aig those were about to happen. to allied the problems to say we need legislation but maya regulate election said libya for page ability to pass immediately one of the vagueness i do on hard votes to make for and against it and felt without i wrote best but i will ever cast and worst political votes i will ever cast knowing that it was painful i am not exactly a wall street guy but i also knew what was best for my country. the stock market dropped 700 points. you remember that very well. but what you did with t.a.r.p. in the auto rescue was immense importance per cry want to go to the next up to talk about the nin

he basically says the fed should do the switch. so they should stop buying long-term notes and be selling long-term treasuries and buying short-term treasuries to get the yield curve to not flatten. is that a good idea? >> one of the key leading indicators of the economy is the yield curve. when they look at recessionary traits in the marketplace that cause a recession, they generally cause recessions. get a more positive shape than the yield curve, that means you have inflation expectations growing down the road and in the near term, you have probably got a more stable to growing economy. i am concerned because we are starting from low rates and i told be a little hesitant see the fed push us into negative short-term interest rates, which they could do based on the buying power. betty: thank you so much, the chief investment officer. much more is ahead in the next 20 minutes of bloomberg markets. the media is making headlines today. cbs reporting after the bell and networkng a brand-new called vice land. tag is almost $6 billion.

guy: the faintest fed -- the latest fed minutes suggested december is going to see liftoff for u.s. k of japan keeps monetary stimulus unchanged despite the recession, it said its record easing measures are working. french police say they do not know if the ringleader behind wasatrocities seen friday killed in yesterday morning's rate. where live in the french capital with the latest. ♪ good morning. welcome to count down. the me tell you how european markets are going to open up. .8%euro stocks is up by continental markets are rallying. but he looks like a bit of a lag off. -- footsie looks like a little bit of a lag off. it looks like we're going to get a nearly 1% move higher. how does that compare to what we saw in asia? let's find out. juliette: we have had a good thursday here in asia. we are seeing the shanghai market just closed up by 1.5%. we are seeing hong kong still trading up by .5% in the last hour. it was a great day. korea closing higher. with a two to five having a positive session, up right over 1%. export companies are likely to shop. of course as you have mentione