let's start with the fed balance sheet. federal reserve has made making policy mistake after policy mistake for decades. this cycle, we seem to have extreme faith that everything is going to be ok. that they can unwind a $4.5 trillion balance sheet and everything will be ok. is it going to be ok? priya: if we look at every rate hike in this entire cycle, it was 90% priced in two weeks before. the market didn't react this week, i think it was because it was the most widely telegraphed move. i am not convinced the market is entirely priced in. they are starting very gradually. i think it is hard to price out a year out when there is 30 billion more in treasuries per month that will be issued. the second is, we don't really know a crucial point that the market cannot price in, which is which is how will the treasury fund paying the fed? will it be built issuance, in which case i can tell you there is no impact. if the market does not have that information we cannot price it in. to start out with 6 billion per month, that is som

khans going to be the chairman of the fed i said no this is the next chairman the fed is going to kevin warship that's a separate story but all this cone stuff you know the president as gary cohen is gary coleman is the former president chief operating officer goldman sachs now head of the national economic council in the west wing since very close to the president you know as if goldman sachs didn't have enough power let's put them next to the oval office and so gary constantly says he decides that the best selection from their share of the fed would be himself gary come so the delegates are spun up in leaks and all this stuff. so. this one episode of the sopranos or the godfather you know is a gary you know gary you don't see him no more you know he got whacked a couple days ago because he disagreed with the president you know the the one of my favorite f.b.i. tapes of the mafia was they had been a social club in little italy in the york they they were to have john gotti he was used to be the godfather back in the eighty's and he was talking about how he whacked this guy and he said y

do the fed actually lowered interest rates to my point that the fed is an open source of funds for scoundrels so jim rickards a long term capital management made a huge error and instead of paying for that error they went on again and again are you gal this nobel prize winning economist martin. you know option pricing volatility ok they have an open cash spigot at the fed at zero percent interest to fund their mistake yeah they're all working again creating massive hedge fund frauds again and that story had repercussions in two thousand and eight of course because all the other banks on wall street are one united to bail out long-term capital management i think it was jimmy cayne bear stearns who didn't participate no let them go bankrupt and of course they weren't there for him when he went bust or maybe it was one of the other big fault lehman was the hold out he was there and then they took lehman out back in two taps to the back of the head on water street and it was done lehman so here's the guy did not get bailed out but he and he paid for his mistake and it's a good lesson b

it is all about the feds let's begin there. the countdown is on less than an hour no rate hike is expected but this is still an incredibly important meeting and announcement because everybody wants to hear how the fed is going to start to unwind its multitrillion dollar balance sheet. our economists reporter, steve liesman, from the federal reserve in washington. is this all about size and pace? >> yes you could say that, brian. with no double onton i'm sure. the fed announcing plans to reduce a key financial crisis and begin to reduce its $4.5 trillion balance sheet there is more with the 2:00 p.m. statement which comes with a new round of economic forecast the fed is expected to announce that balance sheet reduction beginning in october second, do fed members continue to forecast a third rate hike this year with some in the market have dialed out the expectations are that they produced their forecast for the long run fed funds race down from 3%. in addition to these policy questions, the issue of how the fed incorporates the e

it takes mystique what the fed is going to do. when you telegraph the heck out of it, investors know what they are going to do. the risk management, yin yang, push, pull that should go along with a decision to buy or sell, that gets removed and you have the cradle of the federal reserve. >> i would go further than that i think the federal reserve needs a communications together. it is abhorrent. trish: just stop talking. >> regardless what comes out in the press conference today, i an assure you next one or two weeks, several fed governors come out and walk back what is put on the table today. they test market it, like a little focus group. they say something to get the markets reaction. trish: the market is off 27. there is not tremendous amount of reaction yet. a lot of people are sitting and waiting for ms. yellen to speak, heather, to see how she will define this process. we have some details. so far, i guess we're all optimists here. we want to believe it is going to work. i would just say it's a little tricky. i don't know if

mike mckee at the fed. >> the balance sheets start shrinking next month. fed officials lowering the inflation forecast but they still see one remove this year and three next year. those are the headlines. are seeing higher rates going forward and at least one policymaker joining jim predicting no rate move. two moves forecast. the rate moves down over the long run to 2.8% from 3%. core inflation is expected to 1.5 percent this year and next year, 1.9%. from a 2%e decline forecast in june. unemployment falls 4.1% in the next two years. inflationerm level of and full employment remains. in the statement, fed officials suggest hurricanes will not have a long-term impact on the overall economy. hurricanes harvey, irma, andrea has devastated communities conflicting severe hardship and rebuilding will affect economic activity in the near term. passive -- experience suggest storm is unlikely to alter the course of the national economy over the medium term. they will affect prices. higher prices for gasoline will likely boost inflation temporarily. remain 2%xpected

european trade getting a bounce after the fed meeting yesterday. pean markets enjoying the softness in the euro they saw yesterday. moving on to broader markets -- >> an update on the price of oil. yesterday we actually saw wpi tick down slightly, still holding that $50 per barrel range, which is where we're holding now. we should note we moved over into the november contract for wti, but paying attention to the stronger dollar when it comes to the price of oil, as well as those inventories which are higher for the third straight week we can see brent is down slightly here, 0.4%. look at what's going on with the dollar we saw the tlar fidollar firm ah fed's decision yesterday marginal moves here the morning after the fed's decision let's round things out with the price of gold. a slight move higher yesterday, but this morning we are under a bit of pressure, down 1.3% or so right about bang-on 1300 check that out >> there we go >> love when that happens. >> just changed. moving on to corporate news. google is betting big on smartphone hardware. the c

let's start with the fed balance sheet. federal reserve has made making policy mistake after policy mistake for decades. this cycle we seem to have extreme optimism in them. is everything going to be ok? priya: if we look at every rate hike in this entire cycle, it was 90% priced in two weeks before. not werket did draft this week because it was the most widely telegraphed move. they are starting very gradually. i think it is hard to price out a year out when there is 30 billion in balance sheet that is still going to be issued. we are at a crucial point where the market cannot pricing, how are they going to fund the fed? is it all bill issuance? if the market does not have that information, we cannot president. to start out with 6 billion per month, that is something the market can handle. jonathan: what are your thoughts, greg? greg: it has to have some effect. if you believe qe, the sole purpose was to tighten risk premium, divorce people at the risk -- to force people at the risk curve, then the reverse has to have some

the fed cannot raise rates. the market -- has the market got his head around yet this idea that the fed does not care anymore? bhanu: when the fed said they are going to move, they have not been able to move because inflation is surprising the downside. in the last nine months, we have seen a very different fed. there has been a subtle shift in them carrying a little bit less about inflation and caring a little bit more about financial conditions and the unemployment rate, both of which are telling you you should be moving right now. there has been a shift. last year, when the fed changed -- remember, brainard and yellen completely changed -- that was the time when china was completely stressed. growth was plummeting in the rest of the world and the fed said "we are international." this is not that fed. now therechanged, and is stability. the question is whether the renminbi will strengthen or stabilize. markets.loves emerging there is no international problem. that can come back to haunt us. the fed is really f

quantitative surge from the fed. big the balance sheet is now, how do you think janet yellen and company should detail the reduction in the balance sheet without railing markets? what did they need to say to make sure they don't cause another taper tantrum in the treasury markets? they needed to be very clear about their strategy, less clear about the specific dates, but about the strategy. saying that the time for normalization starts when they believe the economy is sufficiently robust, and frankly, they have delayed it for so long that nobody will suspect that they are imprudent. if the fed decides that it is time to raise interest rates, to start dealing with the balance sheet, it will be good news rather than bad news. it will be good news if the fed assesses the economy is strong. and frankly, the rest of the -- the taper tantrum that happened in the past is not because the economy was not ready, but because the communication was clumsy, and i believe those lessons have been learned, so i think it is a speech n

the fed has been wrong about that. t chart was a good idea when they were providing negative guidance -- we're not going to raise rates soon. positive guidance is hard if you do not know that point. curious -- we know the fed will try to manage this smoothly. economists and analysts are saying, there will inevitably be volatility. do you think that will have a direct impact on the economy? remember, we are talking about small net changes at most. at most, the fed is talking about raising rates one more time this year, three more times next year, from a very low level. would not expect that to be a large source of volatility. it will matter for financial markets because that is what we care about, the path of the federal funds rate. when you think about all the volatility being injected by what is going on in washington, by the congress and the white house, what the -- what is coming out of the federal reserve building does not seem all that important. let me take the other side. the equity markets have rallied, bond yie

we expect the fed to come around by the end of the year.onathan: in terms of communication, the fed spent so much time trying to talk to the market, the boe spends years talking, the bank of canada just doesn't. why doesn't anyone else just do it? kathy: this is part of their strategy to not shake things up. the problem now is we have them and somethingng else. it is hard to interpret when they are all saying different things. jonathan: we will get the summer of economic projections in the federal reserve, what is it worth for next year and the year after one hardly any of us have a clue who is going to be at the fed? george: there are some changes coming on board with chair yellen. expectations have not been as good of a predictor of what is going to happen. they have been coming down dramatically. we expect to see them forecast three interest hikes next year and that could come down to two next week when they release that number. jonathan: we have the bank of england talking up a rate hike. inflation in the u.k. is at or .3%. a lot of peo

i think this is one possible reason why the fed is precommitting to the balance sheet. it's an insurance against an attack on fed independence by putting in place a multiple quarter strategy of tightening, of getting that agreed possibly unanimously today, of getting markets to price that in, though a new fed chair could come in and change that. it's less likely they would if it is something the markets expect >> let's talk about the picture around the rest of the world and what it means for various dollar pairings we've seen a weak dollar all year, but they are likely to confirm today they are the first central bank to begin meaningfully on that tightening path does that mean we need to see a bit of dollar strength on the other side of this whether it's against the euro, the yen or sterling? slightly different case for sterling >> i'm not sure it means we see a reversal of the dollar's weakness >> there's lots of factors going into the currency. one is that the u.s. dollar is not driven by the states, but international willingness to buy and hold u.s. assets the u.s. ne

the fed holds. andave the s&p 500 in white that securities owned by the .ederal reserve since 2015 we have seen them go sideways -- slight gains in some performance, certainly outpaced by those of stocks, and we have had a lot of commentary around what the unwind is going to do since the conventional wisdom at least is that quantitative easing helped the growth of the growth of the fed balance sheet has helped the stock market, so we might see this hurt the stock market. and speaking of shrinking, we are watching the food industry run into some struggles here. general mills out with its numbers, three years sales slump is what has been experienced here. earnings missing estimates, sales missing eczema, europe -- estimates, yogurt sales down in the double digits. some of this is because of inflation and price wars against the companies that sell their products, that is grocery stores in the united states. them of it has to do with upstarts like kobani as well -- some of it has to do with i as well.ike

the fed holds rates. d fanfare. >> they really need to put the hammer down on the augmented reality theme, something that is that x factor. scarlet: goldman sachs set a strategy to fix troubles. >> we have identified $5 has marginalizes of 30%. >> europe's banks are preparing

how would you explain what the fed is doing, why the fed is doing it to the american people? >> first of all, let me say that the decisions that we've made this year about rates and today about our balance sheet are ones we've taken because we feel the u.s. economy is performing well. we're working down our balance sheet because we feel that's stimulus that in some sense is no longer needed. so the basic message here is u.s. economic performance has been good. the labor market has strengthened substantially. every measure of the labor market, whether it's the narrow unemployment rate, the broader unemployment rate, the number of people working in part-time jobs who want full-time work. the level of job openings. the quick rate, the difficulty that firms are facing in hiring workers, the level of confidence we see in surveys about the labor market, all of that is pointing to vast and continuing improvement in the labor market, and we see sufficient strength in the economy in term of spending that growth with, its ups and downs, but never theless is strong enough, looks to be s

david: how does this play into the fed? discounting the possible disruption that could come a few months down the road and how that could the back to your point, the inflow straight into india. how much money? >> we are talking about domestic inflows into the equity market. for india specifically. if we were at tenure lows in asia and we started to see the fed normalize, there would be less risk of a correction. we are at multiyear highs, so there is some risk. aen tapering comes, that has take profit impact. what we have seen his, so let's say we look at fed rate and how that impacts. ignoring the level, the volatility has had almost no impact on the recovery story in asia so far. we take comfort in that. there has been at the coupling ,etween asia, asian markets asia economic activity, and what's happening in the u.s. david: taiwan, korea, some other , alsos, very tech heavy formidable to stronger currencies. back to your point of where we have seen a decoupling. at what point to these currencies become too strong? are we

in the news conference with fed chair janet yellen. nk they will continue to be transparent, walk you through every step of the way what they are trying to do. they do not want any surprises. it got them in trouble in the past. we saw the temper tantrum. they don't want that. we are listening to what they have to say and they will try to end things. jonathan: here's the thing i don't get, kathy. will we get the summary of economic projections? we have laughed about it before. what is it worth, given we don't know who is going to be at the fed. if you look at the dots at the moment -- on the base case for year end 2018, they are seeing rates pretty much where the 10-year is right now for the fed funds rate, just north of 2.10. we are at 2.20 on the 10-year. so i keep coming back to this question. either someone is really wrong, the treasury market or the fed, or the yield curve is just going to look like this. dead flat. which one is it going to be? kathy: well, somebody is wrong. i think the fed will probably bring down some of their do

scarlet: and the fed chair. joe: he was talking about how his administration saves money and that is what he does not like the cosmetics of the price story. >> let's get back to the fed, the most relevant of that wide ranging conversation. that decision coming into or inee weeks so let's bring our guest. i was about to ask about a chart and want to look at that looks at the dollar in the spread between the two-year and 10 year yield. a bottoming. it is not that we have seen that much of a rebound from that bottom but we have seen a little one. do you plot out different scenarios based on if it is yellen or powell, or if tax reform happens, if it does not happen, or do you figure out first which is the most likely of the scenarios and it on that? guest: if you have to make a bet you have to do it on a pillow -- on a probability weighted runion or you will get over. you have to look at it with all the different scenarios in mind. what is interesting about these comments now is we have a timetable. if this is about

you think the fed is looking at nominal? inflation and the breakdown of the phillips curve relationship so clearly inflation is moved up. that's relative to real economic indicators and their reaction function, at least in the near-term. francine: are they trying to fix it or say were not doing anything until we figured out? theoretically there's a good sort of foundation for why the phillips curve would work. you have pressure on capacity which in time would put pressure on prices. there is no alternative. pooh-poohingple the fed for missing inflation, they have not come up with an alternative model of them. overtime compensation should equal productivity and inflation. you look at what happens with wage growth and what goes on in the labor market. if the labor market continues to do what it's doing this year, i think the fed will get down. we doing economics out of the textbooks you studied in school or are we making it up as we go? adam: we are doing and out of the textbooks. taking up something we'll set is the phillips c

wall street remaining calm ahead of the fed. tty: at least 90 people have died in a powerful earthquake in mexico. it came on the anniversary of a shock that killed 5000. >> tony blair talks brexit with bloomberg. he says there is a 30% chance the divorce will not happen. ado about be much nothing. welcome to "daybreak asia," i am haidi lun. betty: and i am betty lou. i love how people have game to that out. people putting bets on as to whether brexit could reverse. in the meantime, a lot of bets on what we will hear tomorrow from the fed. that is the market staying relatively calm or at least not moving much before the fed news conference. the dow up 40 points. still has the slight bullish tent. level, above that 2500 1/10 of 1%. the same for the nasdaq. a slightly higher open in asia. haidi: mostly calm, volatility slumping. we keep talking about these indices pushing into the record highs. we saw that again with the s&p. bound,s of being range this is the tightest range for the s&p we have seen in decades. not a lot of motivat

mark: -- on the fed. de on the dove and hwawk comments in the fed, what were see? michael: he could be seen as more of a centrist. he has recognized the fact that we do not have a lot of inflation and has said we should or cutsly going forward them. a bit of a clash with janet but they had talked about how they have worked together. they argue about the economics and that was event to listen to, and they come to consent us on what should be done -- come to a consensus on what should be done. i would throw the set marty, the fed only has four members are now. if we did not get any of the nominees can do by the time he leaves, and there is a possibility that might not happen, the fed falls the three members, below the forum. there is a provision that says you can have a quorum without the remaining members, but how policy would a have with having three people on the board? marty: that would be very did goats. -- very difficult. i think the markets may be somewhat unsettled by that prospect if they do not mov

the fed is following the market.t may be that the market is a little overconfident in that, but it remains to be seen. david: as you suggested, there is a debate going on between the market and the fed. you used to work at the fed. pay attention to what the market is doing? does it influence you at all? julia: of course it does. different people to different degrees, the new york fed is very focused on that since they are managing the balance sheet, they have to make sure that as well communicated. but they do want their policies to be priced in and good communicators. they do not want to shop and surprise the market because that means they are not doing their job communicating. yes, they will watch the market, and yes, it matters to them. but yellen's mantra, because twistsave been so many and turns in the recovery that are unexpected, and the drop inflation is another unexpected developments, so she is different from the greenspan stands let me micromanage the market and make sure it is in line with my guidance. sh

let's start with the fed balance sheet. federal reserve has made making policy mistake after policy mistake for decades. this cycle we seem to have extreme faith that evening is going to be ok. is everything going to be ok? priya: if we look at every rate hike in this entire cycle, it was 90% priced in two weeks before. the market didn't react this week because it was the most widely telegraphed move. convinced the market is entirely priced in. they are starting very gradually. i think it is hard to price out a year out when there is 30 billion more in treasuries per month that will be issued. the second is, we don't really know a crucial point that the market cannot pricing, how will the treasury price in the fed? bullet be built issuance, in which case i can tell you there is no impact. if the market does not have that information, we cannot president. to start out with 6 billion per month, that is something the market can handle. it is the path forward, i think the effect might build more cumulatively over time. jonathan:

kathy: the fed. matt: bank of england. y and hold to to year-end, tajikistan 10-year or austrian bond? kathy: tajikistan. matt: none of the above. jonathan: you've got to pick one. matt: i am selling january 1. jonathan: is shorting the german two-year the new widow maker, yes or no? george: yes. matt: yes. kathy: yes. jonathan: thank you for joining us, george rusnak, kathy jones, and matt brill. we count down to that reserve decision with janet yellen next week, full coverage and special programming right here on bloomberg tv and bloomberg radio. from new york for our viewers worldwide, that does it for us. we will see you next week. at 12 new york time, 5:00 p.m. in london and if you're in hong kong, watch the replays over the weekend. do something else. this is "bloomberg real yield." ♪ ♪ announcer: the thrill of living well is in the pursuit. the pursuit of the rarest experiences. the pursuit of the finest products. the pursuit of quality in everything you do. and in all of these pursuits, you need the best intelligenc

the fed is not only central bank meeting this week. the bank of japan began its two-day monetary policy meeting today. makiko utsuda has more >> reporter: yes, it's widely expected the board will keep its easing policy unchanged. board members are seen to be in broad agreement that the economy is picking up. for the three months through june, the japanese economy marked igts sixth consecutive quarter of growth. on the other hand, consumer prices climbed half a percentage point in july which is far from reaching the bank's goal of 2 %. interest rates are likely to be kept unchanged at zero one issue that i be north korea and how it's provocative actions could affect the economy, though there was limited market action when a north korea missile flew over japan on friday tomorrow is the yun-year aone-yr anniversary of the yield curve control, a measure aimed at bending long-term interest rates at zero and keep monetary policy loser for longer that led to a 60% increase in japanese government bonds in the past year. jgbs offer a minimum ann

the blue line is the fed. -- the boe and the fed. drew matus: i think there are two things. one is people get excited when it there is a change. the second thing is no one is expecting the bank of england to reduce the size of their balance sheet. they are pricing and the tightening on the right side of the equation where with the said, what are charter showing is with spec some rate hikes and balance sheets reduction -- what we are seeing is we are expecting some rate hikes and balance sheet reduction. i know there been a love article suggesting that, oh, no, the market will look a yields will come down. jonathan: is the bloomberg is it that. what you expect is used to follow based on demand of supply. reverseion increase the not about what is about to happen? drew matus: i do not believe so. my view is one of the things holding the economy that is the yields are too low and below a certain point yields work against year. -- against the you. if you chart the 10 year first the saving rates, you find a relationship is nonlinear. people

it really pushes against the fed certitude. the market is greatly overestimating the votes and the commitment to hiking at the fomc, and then he turns within his research note and says the next inflation print has to deliver the bounceback to normal inflation. how urgent is it within the fed linkage into the real yield market to finally see actual inflation data, as mark mentions? jim: i think there is a lot of long-term secular headwinds to sustainable inflation. i do think inflation is definitely picking up and i agree with mark's point. you're at a point in time where it makes a lot of sense and gives the fed confidence with regards to where we are, the underlying economy, the labor markets, that they can reduce their balance sheet. that being said, there is a lot of aggregate debt in the system that is still going to put long-term headwind on to inflation. i think it will still be an outline by the fed, they will reduce their balance sheet and hike, but at a moderate pace relative to the underlying economy. tom: this is an i

the fed, no big surprises, but the dot plot lesson dovish and the fed reducing its outlook for rates long-term. those are today's market minutes. julia: let's move on and turned to politics. mitch mcconnell saying he intends to take of the health care bill on the senate floor next week. the repeal could have a significant financial impact on states, cutting federal funding for health insurance. joining us now is john kasich from columbus, ohio. great to have you on. you said you see this as another flawed plan. let's be specific. what does it mean in terms of cuts? ohio, but a just 17% cut off the top from the base level. that will impact those folks who receive coverage through medicaid expansion, or it will affect those people who need subsidies to buy health insurance. what thelly get to real problem is. it is like a ping-pong match. the democrats did it without republicans. republicans hit the ball back over the net, back-and-forth, back-and-forth. thee was a proposal that governor of colorado and i put forward that would give states flexibility and allow states to keep what they

it is not just about the fed. lt of trade focusing on the boj's policies against all of the other g10 currencies. we have what the boe did last week. hawkish terms. the sterling is now the strongest and traders are saying a similar unwinding in the euro, aussie, canadian dollar against the yen. it is the first anniversary as so it is notolicy going to be a terribly exciting policy meeting but it is a chance for traders to refocus on the fact that the policy is diverging from the rest of the g10 currencies. this morning we have reports abe could call for a snap election this month or october. that is another reason to fight the dollar against the yen. not usually seen as massive risk events. you are not think that the new zealand general election is something that generates that much excitement among traders. it has been a pretty wild ride. >> yes it has. poll, ame there was a know it is a net connect race between the national party and every time the polls show that the ruling party is in the lead, we see the qb up

effect, feeling the love from the fed. on the over hand it's all this talk about a potential tie up between some mega banks in europe we'll get to that in a second. before that, i do want to show you what the fx markets are doing. we are seeing the dollar has risen to a two-month high versus the yen. the dollar is weaker against the euro 119.08 is the handle >>> now, back to our top story italy's largest bank, unicredit could be exploring a merger with commerzbank. that's according to a report by reuters. the combination would create one of europe's largest banks and could come after unicredit's two-year turnaround plan is complete unicredit expressed interest in the deal to the government let's explore these options with marco elser joining us on the line thank you very much for taking the time do you think a tie-up between unicredit and commerzbank would make strategic sense >> the situation is that this is still rumored, it's unconfirmed. unicredit has implemented a plan which could keep the bank afloat and growing by 20

the fed, what is the reaction to the fed? is a ratio probability hike in december, but are they prepared to go somewhere in terms of quantitative tightening? what are the? ramifications stocks can carry higher. by --er civil down this is about volatility. this is comparing volatility on the ftse 100 to the european counterparts, so it is volatility at a four-year high, relative to the euro stoxx 50. you are paying up for volatility. you have the pound higher. you have jordan rochester sitting by you. consensus's still view. the risk is rising for the ftse 100 stocks relative to the euro stoxx 50. that takes you want to the gilt icksing, down by 20 t is morning. gilts down. yields are rising ever so slightly. more than just potentially one and done from the bank of england. rate hike in november. they must start a new trajectory of rates. carney himself said in washington is about the global paradigm of rate shifts that could dictate that you have to stand still. that is driving sterling and the gilt market. i am off to digital

. >>> trade has hit the pause button as the fed kicks off two-day meeting and president trump heads to the united nations. >>> a big sign of the times in retail as toys "r" us files for bankruptcy protection. full details coming up it's tuesday, december 19, 2017. "worldwide exchange" begins right now. >>> good morning warm welcome to "worldwide exchange." i'm wilfred frost. sara eisen is off today. here are the latest developments on maria the hurricane making landfall overnight on the caribbean island of dominica as a category five storm. it weakened slightly within the past few hours to a category 4 storm. but forecasters warn maria could strengthen as it approaches the virgin islands puerto rico is also in the crosshairs we'll bring you the latest updates on hurricane maria as we get them >>> we're following a developing story out of southern california a magnitude 3.6 earthquake shook parts of los angeles it happened around 11:20 p.m. local time residents as far away as costa mesa felt the rumble there have been no reports of injury or damage due to the quake. >>> america's larges

the japanese market going it's on way in response to the fed. 's get the bloomberg business flash with juliette saly. juliette: the indian mining billionaire plans to spend as much as $2 billion on anglo-american shares. he says it is a family investment and he does not intend to launch a takeover. anglo-american declined to comment. google has agreed to buy part of the engineering and design team for $1.1 billion. taking on 2000 employees with experience working on it devices intended to showcase the best features of the android software that now power the vast majority of the world smartphones. the deal comes with a nonexclusive licensing agreement for intellectual property. crh has agreed to buy the cement company in a deal that values target at 3.5 billion dollars on enterprise value basis. the transaction has been unanimously approved and is currently expected to close by early next year. the company said escrow stockholders will be entitled to receive a cash merger consideration. that's the bloomberg business flash. bank of japan has kept i

lots to talk about with the fed. and verycks diverting explicable when you look at what is going on with japan. the close catching up today, hong kong and south korea a little bit weaker. the overall picture is up be. it not tell us all that much about where we go next. in terms of where we are on the , he was holding its gains slipping a little bit. the fed is meeting, balance sheet the focus, shrinking the foreign to have to in dollar giant. houston lee, how deliberately or cautiously will that be done? treasury yields pretty steady. that is what has been going on. mass: we hit a 15 month high and gain some of it back. the question for the market is this. be slow andl gradual. , the analystshind are left behind. i am grateful to the analysts. this seems to make my life easier. we are playing catch-up. a number of others raising the forecast. and 140 is where he calls the position but there is a little bit of risk in that call. about mna inalk the market. just pressing the number. for 1.6 billion dollars. this transa

any comments we get from the fed in the press c0 nfe re nce comments we get from the fed in the pressyellen meets the press, or anything from a statement that hints at that, it will probably almost be more important as to where the market goes from here. we should watch and see what they say. lots of change in the team, stanley fischer, the chair of the central bank, he is leaving next month. janet yellen‘s term is up for renewal. what do you make of all the change? it is a lot of change. we could see a very different composition of the fed, particularly the washington central part. we will see some dramatic changes. it is up to donald trump to try and shape the committee in a way he would want it to be. there is a lot of speculation about who would be in the next chair. i suspect there is probably, it won't be as traumatic as people think and will be much the same. you are a very calm man, no drama there. in other news: european budget airline ryanair has resorted to offering pilots bonuses in an attempt to avoid more cancellations. senior pilots who agree to forego their annual leav

mike mckee at the fed. >> the balance sheets start shrinking next month. ring the inflation forecast but they still see one remove this year and three next year. those are the headlines. are seeing higher rates going forward and at least one policymaker joining jim predicting no rate move. two moves forecast. the rate moves down over the long run to 2.8% from 3%. core inflation is expected to 1.5 percent this year and next year, 1.9%.

hampton pearson has more on the new era the fed will begin ushering in. >> reporter: as expected, janet yellen and her fellow monetary policymakers left interest rates unchanged and announced the beginning of a plan to start trimming the more than $4 trillion worth of bonds and mortgage-backed securities purchased by the feds to combat the financial crisis and the recession. >> our balance sheet will decline gradually and predictab for october through december, the decline in our securities holdings will be capped at $6 billion per month for treasuries and $4 billion per month for agencies. >> reporter: the fed chair said there is a strong consensus among monetary policymakers for another interest rate hike this year, even though inflation is below the fed's 2% target and hurricane damage in texas and florida will have short term negative impacts on the economy. >> so if there are small changes in the outlook that require re-c re-c re in monetary policy, we'll set the federal funds rate. >> reporter: marketwatchers are concerned about the impact of trimming the balance sheet and the lik

that leading to speculation will the fed do anything, december? see we are seeing a little bit of momentum in the s&p 500, but not so much are the dow. a lot of lows related to that. >> it definitely was in yields with the tenure. tuned, we have a lot more coming. >> we have an exclusive half-hour interview with former u.s. treasury secretary jack lew. this on tvsee all of . this is bloomberg. ♪ >> it's 1:00 in washington, 6:00 in london, one :00 a.m. in hong kong. i shery ahn with david gura. welcome to "bloomberg markets: balance of power," with a focus economy.cs and the president is touting the gop's tax reform plan, but is he moving the needle with corporate leaders and capitol hill? the formeroment, u.s. treasury secretary joins us for an interview on a wide range of issues from tax reform to trade, and much more. and weiss in your -- why senior lawmakers are expressing growing frustration with companies like facebook and twitter as investigators look at social media's role in russia's attempts to interfere with the presidential election.

i fundamentally think the fed is important. d emphasize is it's inflation driving rates. not the other way around and what people shouldn't think that the federal reserve banks around the world are helpless in determining what's going to happen to inflation. when federal reserve banks, central banks want more inflation, they can make it happen eventually >> you sound like bern i can this is like bern i can in 2003 all over again saying there's never a problem, we can always make it happen charlie, i'm not sure we're really seeing the fruits of that the market certainly doesn't believe it or they think the fed isn't serious about actually going after that goal. >> we got a tick up last numbers that came out were a little bit stronger you're absolutely right. it's taken longer for this to happen than anybody thought. when you have central banks around the world who want to make something happen. more inflation, they can do it because fundamentally, inflation is about money it's about the value of money. and if you print more of th

>> it is clear the fed is starting a two day meeting. loff in treasury the last week or so. more focused and there was. ,o fed rate hike expected however the odds of a hike in december have been creeping higher, now just over 50%. the odds rising there. what theonsistent with fed has been saying, one more rate hike in 2017. all the more reason for focus on the dot plot of where rates are heading. the fed updates this projections every quarter. that will happen this meeting as well. below target, but three force of the economists we theeyed said no change in inflation forecast and leaves open the question will the dot plots change. that one moresee rate hike view out there. the fed is announcing that date of the balance sheet unwind. they had said for the longest time it should start in the tober. we will get that tomorrow as well. the fed is saying this will be like watching paint dry. that is how boring this process will be. that remains to be seen. , and0 year yield was down now up, so quite a move in bonds. >> asian central banks also

same thing, by the way, with the fed today. anyone ask janet yellen if they should replace the people who runs wells fargo but, you know what, equifax, i don't think it's a left wing or a right wing thing equifax gotcha 100 million people, they got you. i am going to be ready to get a new social one of my friends is applying to get a new social got hacked real bad last week. don't know if it's equifax done everything right in her life and someone's her. >> most people are not going to do that. you realize that, right? >> i have a nice -- i'm doing well in life, i'm very lucky but i check my bank balance once a week improving that to checking more than once a week too many people who know too much next thing we know, we have to change our passwords david, you and i will switch passwords. >>en wi no one will know. >> you mentioned wells and what the fed should do with that board. this is what warren told jim about that last night. >> this is the fed's chance to step up and say when you cheat consumers. when you open fake accounts.

the fed has room to hike. isabelle: there is also's of uncertainty since the hurricane and the impact it is good to have. there is the return of the uncertainties around the debt ceiling, also in december. as simon was saying, they are awaiting confirmation. their stories of growth and inflation was temporary. our analysis suggests they'll get the confirmation, but it will be -- they don't need to rush whether data is heading. it makes sense for them to wait. however, we will get a new set of data. if there is a new -- a move downward, the market could react. mark: how would you expect on the dot side? it gets pushed back a bit. simon: i think you'll get a gentle approach path in 2018 and 2019. first of all, we may get some price inflation return. wage inflation in which the medium-term trajectory on use inflation will be materials. tight.dline measures are secondly, the rest of the world central banks which the fed cannot decouple from remain and hyper stimulative mode. -- remain in hyper stimulative mode. the

currencies are flatlining ahead of the fed. toxx 50 indicated down 1/8 of 1% and dubai down 1/8 of 1%. it is waiting to see what happens. anna: little movement on donald trump's speech. let's get a business flash update. here's juliette saly. thyssenkruppa and have signed a joint memo of understanding. have 48,000 employees and 34 sides and headquartered in the netherlands. toshiba's board has agreed to sell its flash memory chip unit to a group led i bain capital. it includes backing from apple and dell. the iphone maker played a crucial role in swinging momentum in the options and plans to contribute capital. the deal would and a contentious bidding process that stopped -- stretched over eight months. 1.2ating profit rose 9% to -- 1.7 billion euros. that is the strong euro eroded the value of clothing sales. that is your bloomberg business flash. smiles is with us from ubs wealth management. you have a report, business with impact. what you said during the break was playing it. this is about investing, impact investing and ann

even with a comfort as dan maes mentioned, the good phd's atthe fed. : mark carney said it was an extraordinary privilege to work with mr. stanley fischer crossing of the bloomberg terminal. as we were saying, he may be move from bank of israel governor to vice chair of the fed. you know him. how is it that a move? how easy was it from him to go to the head of one central bank to him as the head of one central bank, the biggest in the world? wasn't that a move he always relished and look ahead to? tom: i think he enjoyed it immensely and he went from the hugest success at the bank of israel over to a fed where he was certainly is the advisor to the chairs bernanke and yellen. what i would suggest with governor carney's comment, it is a guy we forget who he is. this was a phd advisor for a guy named bernanke and a phd advisor for a guy named draghi and a young kid out of harvard. within 20ths place century economics, julie, going back to the classic textbook. it is considered a benchmark of reading within economics. toie: is there anybody else ask this q