the fed as we saw in those book covers the only game in town. in fed we trust. the alaba so has the fed come far? the answer is yes. but is it too far? and as i write the fed's history i'm struck by how little of the framers vision has held sway but not just today but in each generational intervention. it isn't a frame or focused vision at all but one that i think is more realistic and that is that the fed is constantly being reinvented. sometimes that comes through formal legislation but these happen through the insiders and outciders that influence the policies. this is why elections matter and appointments matter and governance matters. we want to know more about the values that fill the gaps after the technical apparatus is exhausted given how much power resides in those hands we need to know more about the people whose hands they are. >> this is on the stickiness of law where law can rear it's head generations later. the place i'm talking about is why i would be opposed to writing a monetary policy rule into the federal reserve act. if we want to taylor a ru

the fed as we saw in the book covers, only game in town, in fed we trust, the al chemist. their boyar is extraordinary indeed. the question has the fed come far? the answer is resounding yes. is it too far? as i write the fed's history i am struck how little the framer's vision held sway, not just today but in each generational intervention that remakes the fed in its own image. institutional change that guides my story telling in this new book isn't framer focused vision at all but one i think is more realistic. that the fed is constantly being reinvented. sometimes the reinvention comes through formal legislation, federal reserve act, dodd-frank act more recently but much more often these changes happen through every day decisions of insiders and outsiders who seek to influence its policies and this is why elections matter. this is why appointments matter and this is why governance matters. we want to know more about the values that fill the gaps after the technical apparatus is exhausted, given how much power resides in those hands, we need to know more about the people

i really do love the fed. i think it has had a positive impact on my professional life and it is an important place in washington filled with people who want to do the right thing. they sometimes fail, but i love the spirit of the fed. the second thing is i noticed not many people have been writing books on the fed. wrote two parts of a three-volume history of the federal reserve. hisof the reasons is history is such that comes in the journal. i likened his work to give in, and it is true. alanou go outside the realm existed in in federal reserve history, there is a lot of weird conspiracy history going on. if you're going to start to think critically about the fed and even say hey, this isn't what they were designed to do, you will have a lot of people walking down that path with you that you wish were not there with you. so, i think a must because thinking about is what the fed doing constitutional, is it the case that the founders thought this might -- what they might be doing -- as soon as you start talking

one, rill do love the fed. i think it had a big positive impact on my professional life and it's a very important place here in washington filled with people who want to do the right thing. they sometimes fail but i love the spirit of the fed. second, i notice many people have not been writing about the fed ever since allen wrote his three volumes -- it's part one and part two but it's a three-volume thing. three types of economists, those who count and those who can't so he has two parts to a three-volume history of the federal reserve. but not many people have written and one of the reasons is his history is such an extraordinary accomplishment in the journal is true. but the second thing is if you go outside the sort of realm that allen existed in federal reserve history then there is a heck of a lot of weird conspiracy stuff going on and peter writes about that in his book a little bit. if you start thinking critically about the federal and say this is not what they were designed to do, then you have people

uberet: the fed turned dovish. eeds on a more hawkish course, will it make the tightening that follows even more painful for everyone else. alix: it is once they tighten, everything gets tighter. the dollar rises, and that tightens financial conditions. scarlet: on what did you miss today, we will be talking about australia because one of our commonwealthes a thinker. he will talk about the inflation target. a lot of economic data coming up in australia in the coming days, next week. of course, that will be a full report with gdp estimates estimated to raise. alix: it will be great to get his perspective on what is weighing the country down. scarlet: why are they the exception? alix: be sure to tune into bloomberg radio today. janet yellen will be speaking at harvard in about one hour. it on theso watch bloomberg. this is bloomberg markets. ♪ scarlet: you are watching bloomberg. i'm scarlet fu. alix: i am alix steel. this is your global business report. scarlet: low morality in italy -- why are they so gloom? alix:

the great divide over what the fed will do. erik nielsen and unicredit on janet yellen, central-banker to the world. china talk the talk of a weaker yen and yuan. and a generational change in riyadh. the mystery that is saudi arabia's new oil policy. good morning. "his is bloomberg "surveillance from new york. i'm tom keene. with me, vonnie quinn. francine on assignment. vonnie: news out of saudi arabia, japan coming back online, lots to talk about today. tom: the quiet after a big jobs day, huge in decision on what the fed will do. vonnie: listening to some more fed speak this week. we will be getting bank of england inflation expectations. tom: i didn't know that. michael mckee and will join us in this hour to pick up the pieces. monday, to our bloomberg first word news. here's vonnie quinn. tonie: in his latest attempt prevent a u.k. exit from the european union, david cameron said that the u.k. has a national interest in preventing future conflicts in europe and that requires staying in the eu. >> i understand why many peopl

when the fed minutes came out. banks rallying that offset declines in consumer shares, particularly retailers because of disappointing results. underneath,violent but looks placid on the surface. increasing long-term rates -- you saw utilities getting slammed. that sector down 2%. of course, rates in general and the dollar after those feds minutes that perceived to put june on the table. alix: janet yellen will be speaking in late may and early june. we are also taking a look at factors in after-hours trading. tesla motors falling in extended trading. it's going to sell $1.4 billion in shares to fund its expansion of its production of the model 3. it will boost annual production to 500,000 vehicles in 2017. there was a lot of speculation. tesla says it will spend $1.4 billion. alix: cisco and salesforce. salesforce estimate, their large corporate customers are spending a lot of money. announcing $2 billion in sales for this quarter. in terms of cisco, obsessed -- -- also forecasting avenue to july.% ending in they a

but the fed is going to sacrifice the dollar.donald trump spoke the truth about the fact that we need to renegotiate our treasury debt, we have to restructure it because we can't possibly pay it back, then he backtracked and said, no, we'll just print money. that's what we do. we print money. because we can't repay our debt. >> what about the monetary policy -- >> let me finish. it's all about perception. puerto rico was broke. it was broke two years ago, three years ago. why didn't anybody care. the creditors kept lending them money. eventually people wake up and realize a debtor is broke. america is more bankrupt than puerto rico. our creditors have figured it out yet. we might not default, but we will print. when the fed has to relaunch qe, when they maybe have to go negative and people realize that none of this worked, that ben bernanke's book, the courage to act, needs to go into the fiction section, because none of it is true, that -- >> actually, i would argue with so much of that -- but we don't have enough time for the s

we are parsing what the feds ought to be doing. the last one is they operate with discretionary rules and what action is necessary. this is a technical and political debate and congress is trying to rein in the feds and audit the fed which has everything to do with the fed explaining decisions on monetary policy. some say the feds must declare rules and good it deviates it has to report to congress on why they did that. i will stop there on this very important topic. >> that was a great talk. can you say a little bit about the impact of the feds creation of several trade dollars and what that has done to the stock market and other asset prices and as they unwind it what it might mean. >> this is really the trillion dollar question pun intended. critics warned of hyperinflation and we have not seen that before. by that metric, it hasn't bip been pernaceous activity. as you alluded to we had this bizarre period of negative interest rates around parts of the world and that has all of these other consequences. other asset prices go up s

if the fed worried over the week that the fed might scare everyone back to o brichb it's been very farest that. >> oil and the u.s. dollar. oil prices are rising again this morning. back above $48 a barrel. so multi month highs here. there is still a lot of talk about supply disruptions coming out of nigeria, canada and lower output out of the u.s. >> the euro today is a tad stronger. the yen is a tad weaker. the pound a bit flat, a bit below flat today. close to 146. the pound had has had a decent week. retail factors also growing confidence. the betting market saying just a 1 in 5 chance of an exit vote so the confidence is growing the remain camp will win the vote. >> with a lot of angst over the fed and currency market this seems to be whether the stock market globally likes the best right now and that is a weaker dollar versus the euro and a stronger dollar versus the japanese yen. that is sort of the calm force when it comes to the currency market. once the dollar strengthance against the euro. there are concerns about currencies and all that. we might see markets fall out but at

let's get more in the fed minutes. most said the june rate hikes would be appropriate if the economy continues to improve. joining me now for more is a global quantitative strategist at the investment institute. were you surprised by the nature of these minutes? found really, they another way to use a lot of words to say they are data dependent. andgs happen between now june. we might raise rates. the numbers do not really agree on what that means. just covering our options. >> way to see what the data says p are you make it sound simple. why are the markets reacting so strongly? >> i think it is a struggle of whether the news is good or not. good news has led to central banks becoming a little more tight around the edges. ae paradigm has shifted little bit where the fed come the european central bank, bank of japan, i think they still want to air on the side of letting growth do what it has got to do. higher rate coming with real economic data, it will lead to economic earnings. >> would you say that the data from now

the being weak started with dana, with the fed minutes -- of the big week started with data, with theinutes. jeffrey lacher saying the case behind them would likely be strong as the dollar rises. this is the msci emerging markets index, heading for its longest run of weekly declines since august, on a five-week losing run. developing nation currencies falling for a third week as well. investors detouring from risk-taking as the possibilities of a fed rate hike coming to the fray. that is the msci emerging market index. really quickly, term premium. not since 1962 have treasury dealers demanded less compensation to own a long u.s. government bond rather than a shorter government bond. right now they are not demanding anything at all. a federal reserve bank of new measure falling to a negative 0.38% on tuesday. many bond professionals view a level below 0% as a signaling that debt is theoretically overvalued. this is a result of all these central banks pushing interest toes negative and a flight assets in the united states. both short-term treasuries and long-term treasuries. that is wh

at 8%, the fed won't move. implied probability an actual probability goes back to the ex post anti-analysis. everyone agrees that there is over communication. there is maybe now communication, but the foundational point away from the media power game is john williams of san francisco last week to kathleen hays. we are going to wait and see what the data is talk to me june 13. jonathan: we have the dog of the fed and the tail is the market . right now, the tail is wagging the dog. tom: i don't agree with that. i think the idea that the fed will wait and see what the data is with some economists adjusting mabel go i -- suggestg they will go in june. i love the idea that we need higher interest rates to boost savings. the single most interesting thing this morning was and nielsen of denmark talking about his denmark. he had an authority about it. this is not normal, totally confused. i go back to the idea of a fed in all due spirit desperately trying to get to normal. they will determine that the second week of ju

will the fed listen? king news from target. $1.29 a share, the estimate was one dollar 19 a share. a adjustedow seeing -- the estimate was 1.36. we bring in shannon pettypiece to make sense of the numbers. shannon: you see that they beat on earnings-per-share. they will say that they are controlling their margins but what analysts compare about is same-store sales. sales increase? it was not as good as expected. analysts were expecting 1.6%. in the world of retail analysts, they really needed to meet the same-store sales numbers. david: cost control? shannon: cost cutting. it is good, it shows the ceo is going in the right direction but it didn't look good with same-store sales and second quarter is not looking good. so a lot of questions about what the consumer is doing. lisa: is this another says -- another symptom of the amazon effect? what can target due to generate interest in sales? we side with macy's. in march and april, consumers seem to pull back on everything except cars and travel. we are seein

the fed think raising rates. : it's an interesting week we just had, the idea that the fed may start to tighten again in june has come back in play. what did you think about the feds raising rates in december and do you think they should continue on this path. >> i'm personally in a big believer we are in a very low inflation environment for a long time. i think the global economy suffers from a lack of demand. i think they will be with us for five, six, seven years. governments have to start spending. the private sector isn't picking it up. corporates always buy back their stock. ebb says they are getting their epfs up so they can get the bonuses. they don't see the demand. gary: if the fed moves it sounds like you continue to believe they are making a mistake, given where interest rates are and what the economics look like outside the united states. >> if i a voting member i would say you are better off waiting until you seat ghost of inflation materialize. there is the ghost deflation out there and that's a lot

good lifejuly, are options for the fed. the fed is never really told us the opposite.ket earlier this year, until recently, just thought that the fed would not follow up on it earlier communications to raise rates. is what probably will happen june is very close. you may not get enough evidence that the economy is really rebounding pay enough from a week of first quarter. so july think is the better bet, but one of these meetings is probably a rate hike. anna: they could do it in july, and color press conference afterwards. that would allow the market to perhaps move in on july a little bit more. holger: you don't need that, necessarily, to hike rates. you could just suggest in june in july.kely to hike the markets would probably be forewarned, and a well worded statement in july would do the us conferences and explaining what the fed is doing. anna: there was no shortage of voices lining up the bond market saying you need to wake up to in thee had to voices last 24 hours hang bond markets need to be aware. back on the chart, this is term premium in the u.s. bond marke

and the shift, the perceived shift in fed policy. st year were predicated on maybe two rate rises last year. for this year, we got one last year, and we need to get two this year. having clawed back from 225 basis point rate rises this year. one we think will happen in september. that means the gold market will have to recalibrate because it has already declined on a series of rate rises that do not look as if they will materialize. so a combination of perceived shift in fed policy, a recently weaker dollar this year, and some weakness in emerging markets. james, isn't this going to be the over -- the most ?vercrowded asset class everyone says buy gold and everyone will pile in. james: i would not personally complain about that, but it is something like 6% or thereabouts of the total financial markets, so it is relatively small. it can be historically volatile, but it is a barometer of not only the economic and financial markets but also the wider political and geopolitical financial markets. tom: let's bring in jeffrey rosenberg. jef

the fed job is to set monetary policy. that is what they will do. ina is in the boat of all the others trying to figure out when the fed is going to move. globalfed has alluded to developments however they couched in previous statements. clearly they are mindful of the ramifications of what they do. >> that is the way to think of the international implications. is there some feedback loop that would come back into the night it states? that is a pretty indirect mechanism. for a central bank to be able to divide that with any confidence and make that the basis of moving the policy decisions, that is a big move. alix: they have to be concerned with not repeating what happened at the beginning of the year. take a look. this is the dollar versus the yuan. you had a lot of money coming in. you had a big evaluation. a similar story happened in august. we saw china start to take some steps today to lower their ban. what steps can china take to smooth whatever transition comes their way? isthe irony is that china moving towards a more flexible mechanism. the

the fed steps in, begins to tighten. is more comparable to the period we are you now, because we're just about at the anniversary, seven years since the economic expansion. what you find is when the fed begins to tighten in these historical scenarios, markets are lower over several months, over one- and three-month period s. also, volatility is higher. the point we are making out of this analysis is that no matter how well telegraphed is the beginning of said tightening, it does tend to induce volatility in u.s. equity markets. julie: which is interesting. we saw stocks perform well after the fed meeting -- minutes and fed speakers, and stocks are performing well today on the perception the fed is going to be more aggressive. mr. strugger: right, for sure. if you look at the fed fund future, it is 65 basis points, less than a full rate hike price in at this point. our view is the jawboning from policymakers will he continues to have to upward momentum narrowing their perception of the world and the market perception of t

the feds not knowing. >> that's the other thing. i don't think the feds pay any attention to it. economy and where we are in the tradeoff between wage growth and inflation. recently it has come down reasonably hard much i said urprise as earlier on the side of getting wages to go up. on i think it's focused normalizati normalization. s&p is very much a data point. did the first months prove that you? >> absolutely. we came into december with three rate hikes for 2016. > is it an investor the fed is worried about or corporate profits? >> the s&p is in many ways a to look at tatistic the conditions the fed is looking at. equity ormation in the prices is very important to the fed in their decision making. there's a subtle difference here between i think what steve and i are saying. i think that the international financial conditions, this tightening that can come from a the dollar that happened last year, that happened at the beginning of this year, that happened with merging markets is something of. the fed is very fearful stagnation where it unnaturally low interest a low growth ai

it hasn't changed the fed view. if the data provides reassurance to a data-dependent view, then the fed is on the table for june. david: i was looking at the minutes from the previous meeting, the march meeting. view.a robust if you are took in trust -- contrast the view, is there still conversation about that in these minutes? mike: there was still concernmike: about business spending and there was still some concern about overseas developers. but those concerns have diminished significantly because, in part, federal financial conditions have improved. --ng with the rising rages raising wages and some decline in energy prices. the minutes say they explicitly took out that reference in march the global developments in order to send a message to the public, a message that apparently a lot of investors didn't get. there was also one reference to brags it -- to brexit. there is no mention of it being any kind of disqualification or a factor that could derail a move. david: stay with us. we will go back to michael hansen

i don't think the fed will really get aggressive on anybody. they are testing the waters. their looks optically really silly. inflation,ment, 2% and a 37 basis fed funds rate. the old world of a 4% fed funds rate, let's not get down to 2% and they it's significantly below the long run. we are still at 37 basis points on that looks pretty good. we made a lot of joys just jobs and we have good interest rates. worlde seem to be in a , after aof america report, bank of america throws the tell him on a june fed funds rate. >> it was not just in response to the jobs number. it was a combination of events that made it harder for the fed to hike in june. after we pulled the june hi, would they go in july or wait until september and that's a close call. that theyne is still will hike in september but after the recent conversation from fed officials, i think july is a real possibility. it's a data dependent and dependent on the markets and the headwinds that could potentially develop between now and the summer. when you take a step back and look at the economic indicators, yes, the

a plus for the fed. s movement, i think dig tadz that investors actually by putting on their flat eners are happy. >> here the thing. if the markets and the stock markets start moving lower and start acting like they're having trouble and we have another tantrum, they're going to pull back, right? this say big test for them. let's see if ultimately how it plays out. >> i don't think, so michelle. i don't think. so i don't think so. listen, there is no way to normalize without a stronger dollar and a negative reaction to stocks. just no way. it is absolutely impossible. >> misch snell. >> either do it or you don't. >> you're right, michelle, to worry about the market reaction here. this raises a really interesting question f there was all this talk in the april meeting about june, why does the april statement not convey any of that? i'm not -- i'm thinking the -- a little bit of the other side of rick here. rick, i'm going to think on the other side. i don't think they get an a plus on. this if they were t

once again from the fed. ets reacting. i have a chart here of the two year yield, climbed to the highest since april, overnight. market reacting a bit to what we heard overnight from fed officials, was still a 64.6% chance of a rate hike at the end of this year. john: this is why i think the, with the markets. the market is not commenced the more rate hikes are coming. what the fed has neither the intention or the desire to stop on the backend of the asked year. need to keep the room for maneuvering, and to do so, there to talk up the possibility of raising rates. don't want to catch the market cold, if they decide to act. and the best chance of getting rates higher is by continuing to remind markets that is where they intend to take them. anna: is june still alive? joan: it is. it certainly is still live. fromhe data has been far entirely comfortable. but there has certainly been some bright spots. and as i say, the fed would like to take rights higher. and as we flexible so it is in a position to take advant

the fed's mission is to protect the persons. many critics warn of hyperinflation which we have not seen. we haven't even seen vacating its inflation target. so by that metric it has not been a pernicious activity. it's also true, we've got this bizarre and perhaps unprecedented period between zero interest rates, negative now interest rates in parts of the world and that is all these other consequences. some intended subcontinent into. ben bernanke would say that the fact that will interest rates make asset prices go up is exactly what is supposed to be. there are three channels to which low interest rates statement economy. one is whatever things that which is it's cheaper to borrow and buy things. the second as it tends to cause her currency to depreciate so your exports get cheaper and that put people back to work. and the third is that other asset prices go up. for buying a house become cheaper because you can borrow less, stock prices go up and so on. i don't know, i'm not sure anybody does, what the effect of all these ass

does the fed have a communication problem? ey can say june is live, june the market isen surprised as if they had not been saying that? >> we have a failure of communication. what makes it even more of an obvious failure is when they try to convince the markets they were successful, that was in march. ity said members agreed would be appropriate to move at the next meeting. the voting members. participants, it is clear it wasn't in the statement when the meeting was finished. they didn't have enough of the consensus to put it there. it would have the same effect as in october. they would have repriced. it's hard to believe suddenly we hawks.is hurdle of scarlet: it does feel like the fed is trying to say listen to us, we have seen relatively -- volatility pick up. as the fed shakes the market up, does it wind up being self-defeating? >> very much so. is of the many key features it is highly sensitive to the markets. probably the most sensitive in the history of the fomc. if they start reacting badly, i bet they will pause. espe

will it impact the fed debate? investment equity investment officer. play the drama for us. : it is a great number, but not so great if you take three factors into consideration. spending was flat and prior months, so there was a catapult effect. prices increased significantly. part of the spending increase was households paying more for gasoline. 3, the savings rate coming down. which is good news as consumers became more optimistic so they loosen the purse strings. those three factors are unlikely .o be repeated going forward income looks decent, households are spending at a decent clip, meaning current quarter growth will bounce back from the lousy but let's not get to out over our skis, too excited, based on the number. the fed likes the number, but yellen and company will go into the june 15 meeting say one month is not necessarily establish a trend. news. but, it is good for the bad news, the rest of the week? carl: we got through the good news with income spending and whatnot. the question of the second half

between theorce market and the fed. chart, a two-year and this is as flat as it has been since 2007. that inversion intentionally could be very caveaty. for you, do you like the dollar story from deutsche bank? tracy: we see all the analyst talking about how the dollar rebound is only just getting started. it is crazy when you look back in march, how the dollar make everyone nervous, made the fed turned dovish. now it seems fun. manus: tracy, great to have you with us. you will see much more from tracy alloway. bloomberg . >> okay, leeza. we're ready for you on set. leeza: thanks, guys. >> i'm walking to set with our ladies. >> we're gonna do a last, final mic check. leeza: of course. all right. have a good show, everybody. female announcer: the following is a paid presentation for dr. denese skinscience.

the fed think raising rates. : it's an interesting week we just had, the idea that the fed may start to tighten again in june has come back in play. what did you think about the feds raising rates in december and do you think they should continue on this path. >> i'm personally in a big believer we are in a very low inflation environment for a long time. i think the global economy suffers from a lack of demand. i think they will be with us for five, six, seven years. governments have to start spending. the private sector isn't picking it up. corporates always buy back their stock. ebb says they are getting their epfs up so they can get the bonuses. they don't see the demand. gary: if the fed moves it sounds like you continue to believe they are making a mistake, given where interest rates are and what the economics look like outside the united states. >> if i was a voting member i would say you are better off waiting until you seat ghost of inflation materialize. there is the ghost deflation out there and that's a

jeffrey lacher of the richmond fed. is bloomberg surveillance from london and new york. ♪ francine: that is the french foreign minister speaking at an impromptu news conference after meeting with the families of people on board. saying 56 people were on board. it is a fluid operation. we know there is a search and rescue operation under way. 16 of those on board were french citizens. it was 20 minutes before landing that we lost contact with the airplane. too early to speculate on the causes of what happened. at the moment, all we know is there is a huge rescue operation by air and navy. the egypt air airplane vanished at 2:30 a.m. local time. tom: the search for knowledge and details. tell us what he is saying with your wonderful french. moment, he isthe saying, i'm trying to listen and , we need to verify. we are for extra information. we need to make sure the information is correct. i think, tom, where we have had high checks that did not turn out to be hijacks. -- wee had explosions need to remember the am-370 airpl

the fed raising rates would slow the economy down.t that policy does and i think that we need to proceed only when we have enough growth and inflation in the u.s. economy to warrant still needing the feds longer-term goals with that pricing. vonnie: this morning, stephen majors was on and he was saying that the front end of the curve is probably mispriced because we are looking at no hikes this year that should be around 50 basis points. we are up in the 80's now. where do you see the curve going? are you afraid it might flatten? laura: we think the probabilities attached to june are too low right now. we think the market is waiting for the data and that is exactly what the fed wants -- eyes on the data. we could see more action in rates after we get payrolls and other key data next week. david: we have not talked about productivity. how important our productivity growth numbers on how the economy is doing and what the fed does? laura: productivity growth has disappointed. we have been in this low regime for quite a while now. we do n

the fed hiked rates in december. ate hike after a long pause, the market runs into turmoil. if you told most people let six months later the market would be flat versus when the fed hiked rates, i think most would sign up for that. something really weird is happening in the one point $3 trillion junk on market. biggest junk-bond market has experienced broader elite flows as the broader market has seen relatively little turbulence. scarlet: joining us on this is lisa abramowicz. what is behind all of this? lisa: first, disclaimer -- people don't know who is putting what into what. looking at the fact that you have seen such incredible inflows and outflows and looking at the activity in the underlying market gives some clues of what might actually be going on. one major theory is dealers are increasingly using ats, their erstwhile inventories of corporate debt. they can say to their clients a lot of people want to buy bonds. we will take your money and i will buy etf shares and i will redeem the shares for the underlyin

neither does the fed. you think about the things that drives stock and drives the economy in the long run, it is economic performance. and it is earnings. we see the runway to both of those improving. that is what the fed sees as well. this is the point where rate hikes will reinforce positive messages. mark: why is it when investors are less bullish on stocks that we see a big pickup in the stock market, which leads me to my favorite chart -- in the aaii investor sentiment bullish readings, which you have referred to. at its lowest level in 10 years. why does this precipitate a rebound? julian: it does not always work that way, but the point is when you have this extreme level of caution, but it tells you is everyone who has wanted to sell and reduce their risk has already done so. image of whator we saw january and february. data was coming in worse than expected. there was a panic reaction. we are seeing data starting to be better than expected. and because people are not sufficiently exposed to the pot

giving some relief to the fed. >> those are all fair points. the reality is, growth for the fed. raising rates will not damage growth that much. it will be a half day. trish: let's talk about some of the economic data. you heard janet yellen saying we will look at the data. we will see if the data supports an environment where we can raise. i will tell you one thing, they are data dependent. situation could actually be a possibility. >> it is, yes. thanks to our president. that is an issue. one of the factors that will give the fed reason to raise rates. i do agree. i think that it is time to rip off the band-aid. once we get over the initial shock, we will be fine. >> i think about all of these retirees being at home. you cannot get anything in the bank right now. i heard someone just a couple years ago saying you should look at columbia. a 6% yield on republican bonds. has it come to that where we need to be looking at columbia and bonds? conservative in their investments. >> trish, how do you think they solved all those puerto rican laws? trish: i know. i know. i know. they hav

the market is disbelieving the fed. they raise rates too quickly the economy will not stand it. >> which it of the curve are you worried about? the 10 year is an anomaly. look at the term premium. >> the term premium is negative. is a matter of how you read the messages there. if you look at break even inflation rates, it's trying to the market is still not convinced. but it does not believe the fed fund rate can get to the 3% that the fed would like you to believe in the next two years. that is the message coming through. >> let me ask, we have some amazing headlines. armani says he is not interested in the unicredit ceo job. he also says that the ecb -- the low rates have become an excuse , thatid government reform is pretty obvious and that is a case across the globe. what i find most interesting, you mentioned brexit, he says that brexit would be a big trauma for europe which most educated commenters have agreed on over the last couple of months but most interesting, he says that brexit might bring about a more unif

as tyler pointed out in that piece, the fed matters. what did you glean from the minutes this week about what we should expect from the fed. >> i gleaned two things. the first one is they are acknowledging, which i think is fair, that the u.s.'s economy continues to chug a log and create jobs. the second thing they're acknowledging is if they're going to do anything this year, it need s to be in june. september is way too close to the elections. and i think the third thing is, and this is where the market's got it wrong, the fed itself doesn't know itself what it's going to do in june. the fed is due ta-dependent, but not just u.s. data-dependent but globally data-dependent, and i think they've come to an important understanding with china, which, after currency pegged to the dollar. while you might get one rate hike, which i think is unlikely, you're not going to get significant rate hikes. >> can i make money in the stockmarket this summer, and if so how and where. >> yes, you can, tyler. not only you but all of your viewers, i believe

the fed think raising rates. gary: it's an interesting week we just had, the idea that the fed may start to tighten again in june has come back in play. what did you think about the feds raising rates in december and do you think they should continue on this path. >> i'm personally in a big believer we are in a very low inflation environment for a long time. i think the global economy suffers from a lack of demand. i think they will be with us for five, six, seven years. governments have to start spending. the private sector isn't picking it up. corporates always buy back their stock. ebb says they are getting their epfs up so they can get the bonuses. they don't see the demand. gary: if the fed moves it sounds like you continue to believe they are making a mistake, given where interest rates are and what the economics look like outside the united states. >> if i was a voting member i would say you are better off waiting until you seat ghost of inflation materialize. there is the ghost deflation out there and that

the fed in focus. markets try to make sense of june rate hike speculation. >>> new this morning, snapchat is raising more money. and this financing round valued the company at $22 billion. >>> facebook, new policies on trending politics. following advice from conservatives. it's tuesday, may 24th, 2016, and "worldwide exchange" begins right now. ♪ >>> good morning, welcome to "worldwide exchange." on cnbc.

a different story on wall street where they price in the fed-rate high risk. number is still in focus because energy, wti, seeing a 3% gain on last week. that was good news for some of the stocks here in europe as well. we'll also give you a view how the horses are faring one by one. a lot of individual stocks here, particularly when we look at the german market, we're looking at bio. we'll get into more details on that megamerger proposal coming up in a minute. we'll get to the big news of a morning, it's a $62 billion mega deal. bayer is offering $122 a share for monsanto and a tie-up and the german chemicals firm said it would create synergies over a billion dollars in year three. the company has been quick to say it was confident in its ability top fund that transaction through both equity and debt. well, let's get a look at how bio shares are faring in the announcement here. the stock up 2.8%. that underperforming the broader market losses we're seeing in germany. some investors cite concerns over the financing picture but also the price when you look at i

and the fed caught the down dravt from the fed news, and europe was not open, and it uniformly moved downside. and then you have extended the losses in the course of the session, and despite the fact that the egypt plane was traveling like this through europe, it is not the reason that the stock market is down, and i will show you that in a moment. the example, the oil majors, the hea heavyweights in the indices are lower, because oil is lower, and partly, because it is priced in dollars, and if the fed increases rates, then it will move down over a period otime, or at least that is the theory. and what the banks are anticipating the fed to do you can see jpmorgan and others falling off of the highs earlier. travel stocks are down in negative territory in europe, and the most notable is the uk tour operator thomas cook. he came into the session to today explicitly warning and giving a profit warning because of what has already happened in europe, and the fact that notably, the holidays to turkey for example are being affected by the brussels attacks. and so he sepss a historical move

that's why we think that we should buy that correction ahead of the fed meeting. what really matters most is when data continues to get better. and that is the case. earnings are to the upside and we think that will actually continue in the second half of the year. >> how long are you holding that position? for the long haul or through the end of the year. >> i would say even through the long haul em should be outperform ing outperforming. >> when it comes to selection, what are your preferences? it is not just the macro effects we talk about with the fed and global from china. when you look at a place like brazil, still you could say a political mess there. what is the case for brazil? and the other side which markets do you like. >> first we are not saying rosie picture for the market you want to normalize the positioning. and risk is still reasonably elevate elevated on the whole you want to be in markets like brazil. like russia. >> we all have inflation fever it seems. looking t inflation so closely. and you talk about how we should be long the inflation winne

up next, don't count out the fed. --nings from the world's world's most influential bond traders fall on deaf ears as u.s. rate hike expectations remain muted. should investors listen? ♪ >> i'm not so sure that june is out. , weeard from stan fisher heard from williams in san francisco and they all seem to get it. they also to know that at some point they should be raising interest rates in order to preserve a semblance of profitability for savers and the like. the most influential bond investors as well as the head of the new york fed are signaling the u.s. central bank in on calls to raise rates but markets are not listening. despite those warnings from bill gross, mohamed el-erian and mark easel and william dudley. markets are pricing in a single fed rate hike this year and not until december. with me is the international chief investment officer at j.p. morgan asset management. 8% is june. 22% is july them a 35% in september. 37% november. 52% is when we go above 50%. are you more on the fed side or the market side

it is closely related to the fed. people start to expect yields to move up. those value names don't look quite as appealing. they also happen to be those dividend names. if you have the expectation of a hike in yield going higher they will selloff. energy is big here. scarlet: we have breaking news. matt marantz oil and natural gas ipo has been suspended or withdrawn. this is the headline. they are withdrawing their ipo. they were planning to share sale for $9 billion to finance extension plans. you have the falling commodity prices getting in the way. maybe it is once again full of uncertainty and prompting the company to withdraw. ipo.nd gas withdrawing its scarlet: market not looking for those. scarlet: not looking for those assets. we were talking about the different industry groups. you are looking at volatility. what did you learn when you look approachingr-term this one year anniversary? >> we touched on the fact that in a bulliciently market without hitting a new high. if you look at the past seven years we have always been able to hit a new high. it i