so i'm much more speaking about the greenspan feds than the bernanke fed. mr. michel: ok. mr. wallison: questions from the audience. >> i'd like to go back to greenspan keeping the interest rates too low. you have talked in terms of economic data. i want to talk a little bit about the collapse of enron and worldcom. the sarbanes-oxley bill. because it seems to me that the real worry was the loss of trust in all the accounts that the companies were producing. i happened to be on the board of scandia insurance international based in stockholm. we were watching the stock markets between the collapse of these companies until about 2003 off c.e.o.'s had to sign for their accounts. what was one of our concerns, the impact of the loss of confidence on the equity markets. and it occurred to me that that might have been one of the reasons that greenspan kept the interest rates low during that period. mr. michel: it could be. when we went through looking through all the transcripts and meetings, i wasn't looking for that. i copt say for sure -- i couldn't say for sure, but it makes sense

the fed is coming up widely anticipated to hike. markets are mixed going into that we saw the third negative session in the row for the s&p, even though for the quarter it's on track for the best quarter since 2013 the last couple of days, price action has not been that positive generally speaking it's been a strong quarter the mood overnight was better. we saw relief in chinese equities there there was a report from the msci saying they are considering increasing the weight of equities in their indices next year we saw a bounce in the nikkei, up 0.3%, touching its highest level since january. that was the picture overnight in europe we have a dented mood. we're down about 0.10%, slightly weaker heading into the trading session today. let's get into the individual markets. the mood is a bit sour in europe the ftse 100 around the 7,500 mark watch out for jeremy corbyn's spe speech later today the xetra dax, focus is back on the political back drop. this as the cdu's party whip was pushed out one of merkel's loyal colleagues is out of

it is finally showing up in the fed data. i would put caveat out there as of october the 1st, european central bank cutting its taper. the united states federal reserve will increase quantitative tighting to max run rate of $150 billion. there is tightening going in the back round and going up to the highest level of tightening globally. trish: good. i would like to be back to normal. >> yeah. trish: the fed saying today they're trying to get back to normal. this is good. 3% is nice. >> let's put this in perspective. when the fed finished its hiking campaign before this one the fed funds rate ended at 5.25%. we're just at 2 right now, to your point. trish: okay. i kind of like it. >> i love it. trish: it feels like the right thing to be doing. >> yes, it is right thing to be doing. trish: given our economy and it bothered me we were so low for so long and printing away, adam. >> you know, just ask danielle at that and her former mentor at the dallas fed, mr. fisher, who was adamant the fed overstayed welcome. kept rates far lo

the fed is conducting monetary policy very gradual. they are not going to get in front of anything, and yes, there are concerns around inflation, but there is nothing that says the concerns are manifesting and that is what the data says. the issue will be the longest variable lags and if that is a misreading of the structural issues, misread. this is the eighth consecutive quarter where the federal reserve is upgrading it's level of growth. the federal reserve has consistently gotten the forecast wrong. they get it wrong when the high, so i would should we expect the forecast of the forecast to be right and not a problem down the road? tom: the market moved when he talked about the dream of getting out front which is a fiction as diane said. want to mention quickly that president trump is currently meeting with theresa may, this is that the un's general assembly meetings. you can watch their meeting on the bloomberg at live go. we want to go back to our panel. scott, you mentioned something that nobody asked any questions about the fed

lacker things we are underestimating the fed. he thinks we could have six more now, he was hawkish, but he thinks the risk is to being behind the curve a lot of economists, and i would ask krishna too, think that the fed is indeed late on this, that they should have begun raising rates years ago and they're still now playing catchup. i think that they're looking to have that dry powder that they don't have now and i hope they don't overreach is my sense. >> final thought, quick. >> so i'm not sure they are behind i do think they need to keep going. remember, inflation and inflation expectations are still fairly subdued and they do need to finish the job of getting those reanchored long before we go into the next downturn. >> gentlemen, thank you. we've got to leave it there. nice plug for the farrcast, by the way. i'm sure it's on itunes. >> download it all day now. >> we'll see you a little bit later. melissa. >> that's a catchy name too. >>> coming up, new bombshell accusations against supreme court nominee brett kavanaugh. kava

or the fed its own chapter. i specifically had it as the main character in all of the chapters and all of the region which comprise the book which i call pivot countries or regions. and i analyzed them since the financial crisis to see how they behaved relative to fed policy, whether they supported it or tried to go against it. what happened, therefore, to them politically and economically and how the world sort of changed around these pivot countries over these past ten years with some major ramifications that aren't even related to monetary policy but because of monetary policy or the level of interest rate that the fed sets, the level of interest rates that other central banks set and the amount of money that they have conjured or produced to subsidize their markets. and the countries, regions of pivot areas were mexico, brazil, china, japan and then different part of europe including the u.k. doesn't want to be a part of europe right now, and that was actually also part of a ramification of what's happened si

we saw some divergent reaction to the fed. mething for everybody, something for the hawks and doves and we saw that reflected in what markets are doing. equities showing the performance yesterday, gaining momentum after the decision and dropping as we had the press conference from jerome powell. let's look at the gmm function. negativeed up on the -- negativity. performing and gaining some speaking broadly things have been negative in asia. in terms of forex markets, this is where we get the virgin market reaction to the fed, e.m. policies coming down and the euro is down. the australia unit is down. the dollar is strong. have held onto their decline. they are declining more. we will talk about that with our mliv colleague in a moment. let's show you where we are on commodities. talk about $100 oil. we are trading up by 1.1%. some upward momentum talking about $100 oil and we will bring you that interview. the u.s. energy secretary saying the strategic national oil reserves will not be tapped. asian stocks have been falling as

we just heard the reaction to the fed. the was president accused beijing of interfering with 2018 midterm elections in retaliation for the bilateral trade war. >> earlier today and just now you made allegations against the chinese government. you suggest the chinese are meddling in -- pres. trump: that's what i hear. >> what evidence do you have? pres. trump: i cannot tell you now, but it did not come out of nowhere. they have actually admitted they are going after farmers. nejra: bloomberg's senior international editor jodi schneider joins us from hong kong. good to see you. president trump had a lot to say in his news conference. how did china respond? doesn't have implications for the trade war? saidesident trump president xi in china is no longer his friend after president trump made the comment about china meddling in the 2018 election. three days earlier there had been an advertising supplement in the largest newspaper in iowa basically criticizing the trade war's. iowa is the place where they grow soybeans. those hav

guy: yes, we are counting you down to the fed decides. is is a big meeting, a meeting we will want to pay attention to, 2:00 p.m. new york time. things will be shifting to press conferences at every meeting. the next one is the last one without a press conference but i am fascinated to

there is no sign that the fed plans to pause. are on this margin and they will keep raising rates. for thesetting us up therewhere at of the blue is news that causes them to have to stop. >> what kind of news are you referring to? the emerging markets have been on the radar screen. things are looking better with a weaker dollar. suddenly the world might wake up and realize all of the tariff threats are starting to affect the real economy. if that a moment arrives, >> are we at the point of a or will we be there in december when things start to matter? ago theom two years yield percentage change in the two-year up 270% from hyperloop to where we are now. are we now in a critical mass where it matters? >> the most important thing out of the statement is a removed the characterization as accommodative. it is the only thing that changed. while that is expected, if you take a step back and look at the long trajectory of monetary policy post crisis, the financial markets have been backstopped. they had been supported by highly accommod

the fed is supposed to be independent. after the president commented about the federal reserve, people are questioning that independence, in some corners of wall street. here's what the president said recently. he told reuters i'm not thrilled with his raising of interest rates. no, i'm not thrilled, referring to jay powell, your thoughts on the president's response to the fed's work. >> so i won't comment directly on that, because i don't think it would be appropriate, but i will say this, part of this job, and one of the reasons i joined the fed, i've only been at the fed for three years, and one of the reasons i went from the private sector to take this job is i knew it would be challenging to quote unquote normalize monetary policy. and the key part of this job is the fed needs to do its work without political considerations or political influence. and so my challenge and i think our challenge is to analyze the economy, weigh this balance that i just talked about, and make good monetary policy decisions, and i think we

i think it's just a blip on the radar screen for the fed. ng,d the economy is labor market is strong, and inflation is near targets. let's look at the dots. , and in thisgnal 16 plot, it is up to 12 of looking for rate hikes this year. they did drop the word accommodative from their policy statement and say they are describing the stance of policy. here's what jay powell said about why they did it. of the fomc statement likely noted the committee dropped a sentence that indicated the stance of monetary policy remains upon -- accommodative. this does not signal any change in the likely path of policy. instead, it is a sign that policy is proceeding in line with our expectations. reporter: and bonds did rally because they assumed if the fed drops the stands, they might be more aggressive with rate hikes, but jay powell says we don't need any longer, it doesn't make sense, the fed can raise rates are lower than more quickly or slowly. it will depend on the economy. of course, he did say there's a rising chorus of complaints about trade and tarif

across the world all those shorts because the fed -- the hawkish borrower was high, and the fed at thef the day wasn't as hawkish as the market expectations came in so everybody covered their shorts and bonds went up, yields went down. so every fed meeting you are seeing a tremendous amount of people, because of what you're talking about, the investment community globally a lot of investors have been betting on higher yields. it's a crowded trade so the bar is high if the fed is not hawkish enough, people buy bonds >> yesterday we saw the ten-year yield at 3%. we saw yields come back just a bit. the markets did fall off a bit on concerns for financials but were you surprised that kind of the lack of overall move to the federal reserve yesterday? >> yeah. i was, but when you talk -- over the years when you learn about rates. my younger years i spent a lot of time on equities, the last 20 years more time on rates, some of the smartest people on planet earth trade dollar futures something important happened in the last 10, 15 days you can make a bet in the euro/dollar futures, so a bet on

the next fed actions are still in doubt. this dynamic between the hawkish and dovish camps play two more close decisions later in december and next year? bob: i personally do not think there is as much difference right now among all the people that some of this hawk and dove kind of talk may suggest. wholeof all, there is a new group of people now coming on the board of governors as more and more people are being confirmed. and most of those people are pretty centerist. i think the really dynamic here that is going to play out is, first of all, we're going to get a rate hike tomorrow. i think that is baked in the cake. and probably december as well. and two or three next year. but this group i think has been so cautious, particularly given the newness of so many of the people, that they are not just going to rush on and be data dependent. that is the word we are going to hear tomorrow and the press conference, and that will be the mantra through next year as well. i don't think there is any question about that. shery: what a

gold is near session lows ahead of the fed decision. more let's bring in jackie deangelis and the "futures now" traders. >> reporter: gold is under pressure just under 1,200 as the u.s. dollar is gaining ground. trading 12% off its 2018 highs scott nations, how are you trading gold ahead of the rate hike >> i don't like gold in general. you talk about the dollar, i think it's just interest rates in general look at interest rates around the world. as interest rates go higher, the opportunity cost to hold gold also increases that's why we've seen it come back a bit the ten-year yield in the united states has increased just over 20%. in the uk it's up 29%. and in germany up over 18% so that's another reason to not be owning gold right now >> all right, jim, to you. you're highlighting gold's narrow range we've been watching what are the levels you're watching now >> the month long consolidation has been awfully tight to me that suggests when it moves out of it. the move could be relatively strong i think if it trades below 1190 on the down

look at the fed's statement. ese response to the terror of situation seems to have some sort of calling feelingg. calmin i think there are really some interesting opportunities in the higher yield. do mentionhen you the hedges, the yield pickup is not there for treasury, put in europe or japan. how important is that aspect for the treasury market at the market to attract foreign buyers? colin: i don't think it is overly critical. there has definitely been a shift in the valuations that make it more expensive. evidence by the fed where long-term treasuries are at now, i think there are pivotal buyers that are happy buying treasuries and longer-term debt at these levels. it is important to have the buyers that could come in from overseas, but i don't think that is the driver and i think as the , it will down the qe most likely be domestic buyers that are more critical to the treasury market in the u.s. versus outside. jonathan: really thought. . we will in this -- really thoughtful stuff, guys. you have to answer as

the fed, as well, digesting the statement seen as a modern day exit. let's look at what is going on. tencent, a big decline or so far in the session for the hang seng. looking at positivity from japan, positivity for hong kong, as well. .1%. the nikkei gaining ground. china under a bit of pressure. let's look at what companies are doing on here. it is a situation where we have banks in the crosshairs as to what they do next with the base rate going up in line with the fed by the hong kong monetary authority, and do they move their primary? hsbc has a news conference coming up in an hour and they could be announcing a change. has certainly not gone out that well carried 15% down on the back of the retail side of this, which was under subscribed. that is on the way down. we are talking to the ceo in under half an hour. stephen engle's down at the exchange. it does put pressure on mortgage holders and so far, a little , butmmittal for shire moving in other directions seek assets and henderson lined. giving you a taste of what is going on in hong kong. >>

a choppy fx story after the fed meeting. is stronger dollar today about italy and worries about their deficit. spread, morgan stanley says they were short the long the short in. crude up by 1%. that is a thank you very much, rick perry. they said they will not release extra oil from the spr/ david it i interesting they will not do that despite the midterms.. this morning, a lot of economic data, including third quarter reading for u.s. gdp, durable events, weekly jobless claims. then, the big hearing for judge brett kavanaugh. that is expected to go on into the evening. selling.s., treasury $31 billion of seven-year notes. alix: we have that hearing at 10:00 a.m. and will be taking that life. stay with us for that coverage. time now for bloomberg first take. the top stories is the fed. is a basic look. we saw that longer median run nowhere in goes 2020, and higher than the market was expecting. what did you make of yesterday? >> the market is nervous for a lot of reasons. over the last month, we started to price in a slightly

now let's turn to the fed's policy meeting. ral bank is expected to raise rates by 25 basis points, the third hike this year. according to economists, the fed will continue its quarterly rate hikes straight through to june 2019. it is a more aggressive pace than fed watchers anticipated in june 2018. joining us now is the global equity fund manager at aviva investors. great to have you with us. what has changed in the u.s. economy to make economists forecast a faster pace of hikes? >> it is inflation. the inflation backdrop has been strengthening. wage growth is one of the conundrums people are waiting to see. we have seen the impact of heil -- higher oil are prices. now you're seeing ways growth as well. that has moved the dow now. >> should they be more cognizant of emerging market risk? hardr the fed it is quite to price that in. certainly people have been looking at emerging markets more. there is risk. from the fed's perspective, all you can do is look at the u.s. economy, which is going very robustly. i think that is all y

so where is the trauma in this fed meeting? : the consensus seems to be that there is a little bit of question about how many more rate hikes this year. i want to show you this chart because it shows a couple of interesting things. the yellow line along the bottom is expectations for two more rate hikes this year. when you look at the top one, the white line, this is showing you the expectations that we will get two more. that's what the market is looking for next are. one thing i want to point out, look back at the middle of last year and see have both these lines rose. a trade war, we have a tax cut, consumer confidence at an 18 your high, and unemployment is low. for all these reasons, investors say we get two more this year, two more next are, but the big question is, the fed is looking for three, at least that was there last consensus forecast. who will win the battle? let's look at another chart. this gives us a sense of the dove versus the hall. these are the voting members -- .he dove versus the hawk there is a loan dove

nejra: in what sense is the fed being aggressive? they say they are going to do with they said they will do. perhaps we should not read too much into that, but why too aggressive? peter: aggressive in the sense there was a danger, because we do not know where the usual rate is. they go significantly above 3%, we could end up in contractionary territory. it will be a classic example of the fed killing the dynamic. there is a risk there. probably not for next year, but in 2020, that is something to think about. the fed is running down its balance sheet as well. that is a form of monetary tightening. not only are in just rates going up, but the balance sheet is going down question mark nejra: we saw u.s. equities close lower yesterday. peter: it is early to make those calls. i believe the market believes all is fair under the circumstances. markets do not have an awful lot to worry about from the fed. impulsegoes on, as the from the tax cuts begins to fade, and growth is not what it once was, costs are a little more expensive, that is wh

you said there's always a delayed reaction to the fed. about the fed or something else? >> often a head fake got a little bit of a pop on the statement and the market goes to sleep during the chairman's press conference, and then you have a little bit of a heavy reaction it's certainly about the fed in the sense that this is very much in character with how this market has dealt with fed rate hikes this cycle this is the eighth one six of the previous seven, the markets either stalled or slipped a little bit yields came down after the rate hike, so this is not unusual to see a little bit of hesitation i don't mean on the day off. i mean weeks afterwards. that being said. i think the idea that the committee did not signal aleness or is looking for an opportunity to pause next year in their plan it shows that growth will slow but you won't get a lot of help on the rate side. >> let's get a look at all things related in the room steve liesman joins us with the summary. >> reporter: yeah, the fed raising rates. the new range if you aren't payin

the fed is reacting to that. >> assuming that the fed moves very gradually. >> there is no sign the fedns to pause. >> it is really a recipe to move quietly and judiciously and don't do anything radical in one way or the other. >> we actually expect we will see four rate hikes next year after another one at the end of this year, which is above what is being priced in. >> the federal open market committee will simply set policy in the best long-term interest of the country and of the economy. i think they will do their very best to ignore outside pressures. >> the economy has been doing quite well. i think that is because of the tax reform, the regulatory reform. the fed's policy about normalizing, to get back to normal is a part of that, and the markets will be working better as that continues and i hope it does. jonathan: still with me, diana amoa of jpmorgan, scott thiel of blackrock, and colin robertson, from northern trust asset management. colin, i want to begin with you. the reserve moving that word "accommodative." as the federal reserve still an accommodative federal reserve? co

how big of a factor is that with the fed? rving how moving their balance sheet will be part of their process. the first time they have had two separate tool to use. they have been trying to manage both of them. they want to avoid surprises. so far, so good. they will keep working both of them with one eye on how the market is responding, the other on how inflation and labor markets are working. where are we in the business cycle? are relativelywe far along in the business cycle. use sportss to analogies, i don't think we're in the ninth inning, maybe seventh, eighth. there is more to run, assuming the fed moves very gradually. optimism is relatively high among consumers. a consumer sentiment index yesterday that was pretty high. same with business leaders. wages are gradually starting to pick up. there are many forces that will provide momentum. i don't think the fed has a this financialh market condition whatsoever. i think they want to let it run as far as they can, assuming no big pickup in inflation. david: what does that

rishaad: traders await the fed. the topix retreating. yvonne: treasuries are steady with yields near seven-year highs. rishaad: oil on the slide on reports of an increase in u.s. stockpiles. yvonne: president trump sparks derision and denunciation at the united nations. iran says he is committing economic terrorism. ♪ rishaad: after that speech, donald trump, some editorials saying was it madness in his methods? yvonne: getting laughter from the crowd. rishaad: he shrugged it off. yvonne: he handled it well. questions about iran in particular now countries fearful about sanctions. india considering cutting their imports of oil. have all the chinese markets open. we are here is how faring in the asia-pacific so far. singapore bucking the trend, mostly lower today. the malaysia stocks also down .3%. japanese stocks retreating from eight-month highs, perhaps losing steam. the nikkei 225 down .3% right now. let's go to the boards. hong kong coming back after returning from that mid-autumn festival holiday. a 1.6% retreat on monday. flat when

look at the fed's statement. the economy is chugging along. chinese response to the tariff situation seems to have some kind of calming feeling. and so i do think it is an attractive market, but there are really some interesting opportunities in the higher yielders. jonathan: colin, i want to talk to you about whether the treasury market is attractive to the foreign buyer. when you mention the fx hedges, the yield pickup is not there for treasuries, whether in europe or japan for that matter. how critical do you think that aspect is for the treasury market at the market to attract foreign buyers? colin: sure. i don't think it is overly critical. i agree with you, jonathan. there has definitely been a shift in the valuations that make it more expensive. but evidenced by the fact where long-term treasuries are right now, i think there are pivotal -- incremental buyers that are happy buying treasuries and longer-term debt at these levels. it's important to have the buyers that could come in from overseas, but i don't think that is the driver and

when you were at the atlanta fed, part of the policymaking by the fed, very different issues now. thing that hasn't changed. we talk about checking history. many times, the markets are concerned about the fed's mistake if it does too much. the fed's mistake is not able to know when it hits neutral and keep going on rate hikes. is there a risk happening this time? >> policy is always set in a context of really a lot of uncertainty. some of the tools are less than precise, so they are trying to navigate, which i think is what jay powell is using in the jackson hole speech. they are navigating in a situation of uncertainty between bad outcomes on both sides, and it is never a sure thing. so, yes, something could happen, but i think the current approach of gradual increase in rates that are calibrated to the strength of the economy and to the inflation and employment , veryion is a very solid predictable for the markets, and therefore i think it is a very good path that they have carved out. the u.s. may be able to rein in effects of a trade war because it is not trade dependent anymor

memani: janet yellen said the fed should prepare themselves for a rerun of zero rate. l thels you policymakers are thinking. today, because of fiscal stimulus, everything looks hunky-dory in the u.s. and will probably grow at a rapid clip. a year from today, two years from today, if that scenario plays out in the fed tightens six-time in 2019 expecting u.s. growth to continue at this level is preposterous coming cannot sustain itself on the curve would be totally inverted and the dollar would be meaningfully stronger and you have a correction everywhere. in that environment where treasury rallies and rally in a meaningful way. two more times this year. i don't agree with that. policymakers also say the long-term average rate should be about 3%. another six times will take us to a little bit above that is not necessarily unsustainable. it might be a problem for the rest of the world of the u.s. could continue to grow even if that kind of level. that's the fed raises want to twice this year and we go into recession 19, 20, got a framework very we are calling for mental sl

we think the fed will tighten twice this year. i don't think december is a pause. e is a risk of a pause next year. we think the macro and monetary policy factors all point to still higher rates from here. watching the show, it is interesting to see how many of my colleagues and other firms are getting more bullish on rates. i think they might be a little early. that said, i am not expecting the 10 year to hit four or five anytime soon. it is a question of how high do you go in the threes and when does the rate cycle peak out? jonathan: what is interesting is how comfortable the fed appears to be to invert the yield curve. the new york fed president came out this week and essentially suggest it is not something that would stop him from rising interest rates in inverted the yield curve. if you have a fed that is saying guess what we are comfortable interest rates in inverted the doing this, don't you have to stay with the trade? >> yes, you do. we are also short duration and we are looking for a flattening yield curve. apparently perhaps, an inverted yield curve. whe

that the fed plans to pause. really a recipe to quietly and judiciously and don't do anything radical in one way or the other. we actually expect we are going to see full rate hikes next year after another one at the end of this year, which is the problem with being priced in. >> the federal open market committee will simply set policy and the best long-term interest of the country and of the economy. and i think they will do their very best to ignore outside pressures. >> the economy have been doing quite well. i think that because of the tax reform. i think the fed policy is about normalizing, to get back to normal. i think the markets will be working better is that continues. i hope it does. jonathan: still with me, jpmorgan management and blackrock and northern trust accept management. the federal reserve removing that word, accommodative. is the federal reserve still in accommodative federal reserve? >> yes, it's still an accommodative federal reserve. but i do think there's a number of important things goin

i think the fed is whistling past the graveyard. flatter inverted yield curve is a big deal. iain: i think the curve continues to flatten off. but i think this time is a bit different compared to everything else going on around the rest of the world. lisa: my thanks to priya misra, michael collins, and iain stealey. from new york, that does it for us. we will see you next friday at 1:00 p.m. new york time. 6:00 p.m. in london. this is "bloomberg real yield." ♪ ♪ alix: aluminum and steel relief. president trump lowers tariffs from south korea, brazil, and argentina to protect u.s. producers. farmers helped by new nafta, still hurt by china. a new potential trade deal with mexico and canada gives farmers a sigh of relief, but the china battle still looms. we speak to the ceo of adco on his outlook. help, i am melting. the arctic melting faster, opening up new shipping routes. how climate change can help global trade. i'm alix steel, and welcome to

while at a time when leverage lending is gaining steam. >> okay, so in terms of the nominations for the fed, those are entirely completely under the control of the white house and ultimately the president and traditionally, the fed chair has been consulted on those and i'm happy to say that that has continued but these are really decisions for the white house and we think of us as just being consulted. i will say that i'm very happy and excited about the team that we're putting together and i'm very much looking forward to having those offices up and down our hall filled. its been pretty quiet. more quieter than usual which is saying something on the board hall so we're looking forward to getting some people confirmed. in terms of corporate debt, so this is a, i was an investor for a long time in areas that were very close to the leverage lending market, so i haven't had a lot of experience and that market has evolved really significantly since before the crisis and the banks take much less risk than they used to. they are essentially in the business of distributing these loans and bonds ra

and we do expect the fed to hike in september and december. ou buy the combination of an auction, and should make the trade work, as well as lower rates, i think the risk around em, risk around tariffs, all of that can potentially make rates drop as well as vol pickup. it is a combination. lisa: when you say rates, are you talking 30-year, 10-year treasury yields? priya: i would say 10-year. lisa: mike? michael: i will go with the theme of two ideas. one is lower rates. i believe we have been in that tight range. if you have a breakout in one direction, feels like the higher probability is on the downside. but emerging markets, which we have talked about today, could be a star performer. lisa: including turkey and argentina? michael: possibly. lisa: iain, what is your highest conviction contrarian bet? iain: everyone else has had two. i will take two as well. i will agree on the emerging markets high. i am looking at these returns down 5% on the hard currency, down 10% on local bonds. i would not be surprised if we are close to flat on the end

we will try to read the fed tea leaves. mberg will become during the announcement with special coverage starting at 2 p.m. eastern time. this is bloomberg. ♪ caroline: live from bloomberg's world headquarters, i am caroline hyde. u.s. stocksf how closed today. a third loss on the s&p 500. underneath it all, utilities are feeling the pain. joe: "what'd you miss?" caroline: you can't keep cannabis down. not stocks are up after a three-day losing streak. we speak to one of the market's biggest players. u.s. treasury yields are pushing higher ahead of the fed decision tomorrow. an exit from argentina's central bank. a resignation three months into his post. we have to talk pot stocks. a three-day losing streak and tilray is leaving the pack again. all eyes are on canada whose recreational market opens in october. our next guest wants to stand out with branding. we welcome michael from toronto. with wonderful to have you us. it is not just about canada, it is about a global hope we see mobile markets -- more markets open up. how

the fed's fault. te in the cycle when the economy overheats, usually the fed has to chase the inflation rate higher because that's part of its mandate then it hikes too many times and you get an inverted yield curve at the same time you have the fed's policy rate well above the so-called neutral rate we should compare it not to zero but what would be a neutral rate >> we may be looking at that now. if inflation is 2%, you're getting to 2% -- >> well, so that is my point so the neutral rate, the goal post seems to be moving. the estimate was revised higher by almost 85 basis points over the summer if it is 3, and the fed needs to get moderately restrictive, we are looking at a fed funds rate of 2.5, where 2.75 was priced in so it's a moving target, but as the natural rate goes up, it allows the fed to raise rates further without damaging the economy. therefore if the curve were to invert next year, it may not be as damaging as it might have been in other cycles >> hank, what are you telling investors to