and then changes to the rates would be to reduce the supergreen rate premium. i'm going to give you a little bit of context for these actions. our objectives with these rate changes are to streamline and simplify the net energy metring programme. we want to -- we want to make sure that the programme's user friendly and administratively efficient. especially in advance of enrolling the rest of san francisco's net energy metring customers city-wide. and then we want to ensure that our supergreen programme rates recover costs and remain competitive with the solar choice programme that pg&e runs, that's their 100% renewable product offering. pg&e is expected to update their generation rates on march 1 of this year. they're proposing to increase their spending on the rate class, to increase the power charge and indifference adjustment, that exit fee we talk about by about 12 or 14%. again, depending on the rate class and significantly reduce their premium for their solar choice programme. we don't know yet what the final rates will be but we have been planning and u

with the lower trawl rate. but the nominal gdp target but the smaller more practical step. to with that objective of inflation. based on the confidence of that recession and then you could preserve that to and one -- 2% inflation target i don't think it is possible to reconcile the forecast of the inflation and then to be symmetric. >> i should have noted you are welcome to stand if you would like but across the hall way we do have a big screen where you can sit down if you would like. we will take a couple of questions and then let larry respond. b9 so to be implemented. >> do you expect any physical response to the next recession? i know the horse has left the bar this particular year but with that capacity right now. and not put all of that on the monetary side? >> please tell us who you are. i am patrick. with that conflation three or 4% range is consistent with the target nominal rates. it doesn't show any ability at that point. you would all concerned what kinds of things. >> am i at all concerned? i did n

so the question on the neutral real rate, look, my view is that the neutral real rate is being shaped by some very profound structural things that i would call the demassification of the economy. law firms used to need 1,200 square feet of space per lawyer, now they need 600 square feet per lawyer. nobody wants malls anymore because there's e-shopping. startups used to require $5 million of capital, now they require $500,000 of capital. our canonical technology companies, apple and google, have as their central business problem what to do with all of their cash. and how to disburse all their cash. an environment of that kind it seems to me is an environment that's going to have structurally low real interest rates. 321? another is that you extrapolate at one or two and then another answer is three and it is hard to know the answer is but i look at the downward trend of almost any proxy and i am at least as worried the rate will fall as i am of the belief that it is going to rise you have to take the fact of the indexed bond market and it's telling you neither in the united states nor

today the bureau of labor statistics released their new jobs report predicts december and the unemployment rate remains at four point one percent for the third straight month we'll dig deeper into the details then take a little trip around the world and look at unemployment around the planet and what's in store for energy sector in twenty eight there's a heck of a lot going on as well as tyson slocum for his take now let's get to the top stories in business and finance. u.s. tech stop started in twenty eighteen on a highway tech stocks outperformed health care energy and real estate with the tech sector averaging thirty four percent gains across the pond also the results are the same there despite brics it concerns investors broke all records for the u.k.'s technology sector with u.k. based firms attracting more than two billion dollars in new funding financial tech or fin tech was the u.k.'s leading investment sector like in the us for last year firms like trans wire funding circle and non-zero lead the pack raising hundreds of millions of dollars in capital u.k. artificial intelligence compan

to cut the short rate will have know effect on the long rate. the additional commitment to do it for another five years doesn't buy you much more. >> thanks. let me keep on with the question of this promise to raise inflation. is this something that is a change? so people sometimes describe this as a rule which framework by the document which we review every january is a statement that states very explicitly our goal is to balance dual mandate objectives but bring inflation overtime back to its target. what we're carrying out in my view is a policy that the goal of which is to get inflation back to 2% over the next couple years while managing the dual mandate objectives. i think this is actually a critical issue in terms of thinking about the current situation versus maybe more like what's the long term framework. let me give you an example. i'll be happy to hear ben add his views on this example. but one of the challenges the fomc faced in 2009, '10, and the first half of '11 is that market participants were basically at sea about how the feds r

natural rate with stock markets stretch far beyond normal expectations and so i believe that the unemployment rate is going to go below four percent in two thousand and eighteen but ultimately by the end of the year the unemployment rate should be rising at that point you know there were some experts that i heard talking in recent days they said that they thought that the rate could get as low as three point five percent are you are you that dr. dived i've seen that figure and i'm not quite that optimistic and you know as i said it when the federal reserve stretches the unemployment rate below the natural rate that to me is a sign of trouble times ahead and so i would like to see normal unemployment rates were that don't change very much instead of ones that go below four percent go above eight percent that's the fault of the federal reserve and its monetary policy well we'll see a lot of that coming up i know and we have jay powell the new chair of the federal reserve who will be presiding over his first meeting of the federal open markets committee on january thirtieth and thir

at the end of the day, customers pay bills, not rates. so, what is going to matter is the bottom line on that bill. and we're very conscience of that. as we procure more energy to grow our programme, we're paying very close attention to the cost profile and running the proforma to make sure that all costs are covered by the rates we are charging. so that we are meeting ours revenue requirement from this customer base with no subsidies from our other electric rate payers. >> so, is there any other other downside, besides this potential future guessing game at this point, i guess. or like from an optics perspective that -- is there a downsides in setting these rates, reducing these rates? >> we don't see a down psi. you know, we are staying competitive, which i think is important for continuing to market the supergreen component of this programme. the object civ to grow that component of our programme. i think staying competitive is attractive and that's part of what is accomplished with the reductions that were just described. but, again, w

today the bureau of labor statistics released their new jobs report predicts december and the unemployment rate remains it four point one percent for the third straight month we'll dig deeper into the details then take a little trip around the world and look at unemployment around the planet and what's in store for energy sector in twenty eight there's a heck of a lot going on as well as tyson slocum for his take now let's get to the top stories in business in finance. u.s. tech stop started in twenty eighteen on a highway tech stocks outperformed health care energy and real estate with the tech sector averaging thirty four percent gains across the pond also the results are the same there despite brics it concerns investors broke all records for the u.k.'s technology sector with u.k. based firms attracting more than two billion dollars in new funding financial tech or fin tech was the u.k.'s leading investment sector like in the us for last year firms like trans wire funding circle and non-zero lead the pack raising hundreds of millions of dollars in capital u.k. artificial intelligence compani

real interest rate and 2 on the inflation rate gave the nominal interest rate of 4% i thought was great and larry summers described that useful for many purposes. that's where it came from. the second part of your question is what would i do now? i don't think there's much difference what we think the measurement bias is or zero bound because it's always been there. the main difference is equestc briium. i question that, not so much about the research but uncertainty. wheelland showing how difficult it is to determine this, unusual monetary policy, very unusual and still unorthodox in other parts of the world and makes it hard to estimate. they think it's about 1 now. that suggests if you have a rule useful in current policy, i suggest to 1 or so, i think they should be doing if they think ours is 1. i have my doubts about it and we should be careful about it and it most likely will go up and should stick with that 2% inflation target. if i could say one other thing. there are many good things about the inflation target choosing it numerically. sometimes, it's taken too much a

find a much cheaper rate around the corner. similar question. a way for mta to make more money. not raising rates. this is revenue neutral. this is going to be a revenue neutral program. it is using data, not using parking prices to make more money. the new smta.com has an interactive web map and you can find the rate at any time. you can open it on your smartphone to see where the rates are. again, this is something we are providing free to any developer, technologist who wants to use it. some are taken us up on that. there are apps to find the price at any given time on any block in san francisco. outreach is very important. i won't read off the bullets. i think the point is we have been reaching out to as many merchant and business and advocacy groups anybody that has wanted a presentation i went to make the presentation to them. overwhelmingly the reaction is thanks so much. when is this going to start? i think you have gotten e-mails and letters from interested parties, professor donald from ucla whose ideas this is based o

rates to go up. the england will likely raise rates if not once this year, twice. we are entering a phase where the fixed income market will probably see yields going up in general. within the eurozone, the spreads may well come in further from here. you talk about the differential between the u.s. in the eurozone and how the european quantitative easing has funneled directly into the u.s. you can see that if you look at the bloomberg. the gap between two-year yields in the u.s. and germany has reached the highest level since the late 1990's. points or more than 2.5 percentage points more that you are earning in yield to own two-year u.s. treasuries versus two year german bund and this is a phenomenal indication of how global the bond market has become. michael: it has an impact for the dollar because one way to hedge against that is with the dollar. the initial jobless claims are out. they were sent out by email. michael: apparently they had technical problems. expected5 thousand was and i came out as 2

of growth in the city's general fund and say if we grow no faster than that rate of growth so we just keep to our share what would our level of support would be to accomplish that and so at the top of the page for '17 and '18 those were our targets we calculate inside that way and $711 million and $740 million for '19 and '18 and below that is the adopted budget for the '17 and '18 you can see that there's the level of general fund support and it's 715 and 770 so it's over the target but that difference was funded because as you saw at the presentation three or four months ago we ended fiscal year '16 and '17 with a large surplus due to revenue growth and those dollars were programmed in the mayor's budget to fund our d.h. r. contributions some of the items in the mayor's budget such as the humming bird, the saint mary's some of those other prioritys so our net general fund when you factor in the surplus is $682 million and $704 million over the two years so we're doing better than that target that was adopted by the health commission last year. that's a recap before we ended up compa

the average rate on the 30-year fixed is up nearly a quart to 4 sell of in the bond market. rates loosely follow the yields on the ten-year treasury. >> three bedrooms, right. >> yes. >>> >> report: higher rates could keep potential move up sellers were listing their homes because they dent want to lose the rock bottom rate they locked in a couple of years ago. that reduces the rate further. it could cause buyers especially those on the margins to jump in faster now before rates rise even further and price them out. >> one of the things i think is going to happen, and my realitior friends tell me too, they are concern people won't sell their home and just stay in it. if there are fewer sellers there is going to be fewer home on the market and home prices go up. >> reporte they ha already been going up accelerating their gains as demand rises and supply false. higher interest rates usually cause home prices to cool off giving purchasing power. but given how tight the market is nationwide that is unlikely to happen. >>> switching gears to a story that is also everywhere, the fl

it's got to do the first rate hike then the second rate hike. en it's going to do the third and maybe it will do a fourth. there is no indication of any particular hurry in here >> okay. >> it's a little bit more confident on the inflation outlook, i will say. >> let's get the panel in here, steve. danielle, more hawkish, more do dovish or right? >> they saw the consumption picked up, capital investment picked up and the only thing to drag the number down was inventories. it's feasible that the atlanta fed 4%, 4.2% figure in q-1 gets -- comes to pass. you've got this massive inventory rebuild going on in q-1 and the fed knows well that's going to generate -- look, you had $306 billion in insurance losses tied to all the natural disasters. that's $306 billion that was not planned to pump right back into the economy. >> scott, i was going to refer to the bond vigilantes and i remembered you are one you're part of the group moving the market the fed statement pretty much the same here's a weird question on fed day. do we care that much about the fed

and the interest rates that we pay for just about everything are impacted by those rates that the fed had kept to around zero following the financial collapse however all that started change at the end of twenty fifteen with the fed's first interest rate increase in the fed funds rate so what do you think's going to happen going forward regarding these rates down you know. well you know it's interesting the minutes were were fairly hawkish and we've certainly seen interest rates react to that hawkishness i was really surprised to see how much back and forth debate there was revealed in the minutes about inflation and that tells me that even though the market would like to price in two rate hikes in two thousand and eighteen chances are we get to three and possibly four based on what federal reserve policymakers are thinking today. so explain that a little bit for our viewers again you're the expert here but explain for our viewers how the inflation rates actually impact what the fed governors at the f.o. and see do with regard to rates i know they have this two percent target rate for

been modest and rates still seem to be available around the 4% rate for would be probl for the market, some investors think a yield of around 2.6% is a better bet than buying stocks, meaning they pull money out of the equities. this does solve a problem for the federal reserve. some officials were starting to be concerned that rates in the y were failing to re it was hiking the short term funds rate and reducing its balance sheet. for "nightly business r >>> the great bond bull market that began 25 years ago may, may, be coming to an end, so says janice henderson's bill gross, often referred to as the bond king. >> it's not a strong colombian bear market. it's a decaffeinated bear market where yields rise 25 to 30 basis points for the year. >> but rising rates don't necessarily mean falling stocks, at least not according to bill miller who is known for beating the market 15 years in a row when he worked at legg mason. >> those ten-year yields head towards 3, we could have the meltup we had in 2013. >> rising interest rates are sure to be a theme this year. what impact might they have

the u.s. and u.s. interest ratesey stood out a little bit because it was turning around and saying the days of very accommodative monetary policy coming to an end and being priced on the back of that. and when you look up at the interest rates, it is more reflective of stronger demand conditions and emerging markets tend to do quite well. we shouldn't get over concerned about interest rates. if the pickup of interest rate is a reflection of stronger conditions, ath few minutes ago regarding the pickup in global growth. in that is the driver of higher inflation, the market can still those conditions. rishaad: i'm not sure if you're in that camp or not, but how does that play out for monetary policy for emerging markets in this part of the world? >> is the dollar going higher or lower? >> you've got to make the call. again, coming back to the inflation indicators, when you strip out the effects of fuel prices, inflation has picked up in the last few months. there is some semblance of truth. in 2018, it was a bit of a g

we will deliver on the rate hikes this year. rea is showing some correction. anding transaction volumes the housing construction orders already started to decline. they'll will be a drag on the economy growth of this year -- that's will be a drag on the economic growth of this year. the strongelieve export in south korea will more than offset the domestic housing market. yvonne: how graduate will the rate hikes be? the minutes show there were a lot of concerns about inflation, we have a strengthening yua an as well. young: we believe and gradual monetary policy. in the past, we used a hike every two months but now we think they will hike the interest rate every six or eight months. we believe the rate othis time will be 2.25%. that means we expect another rate hike through 2019, compared to the historical perspective that was quite gradual. yvonne: given that t was at , whether the right decision to hike rates last year? could they have waited until 2018? young: they believe this is not tightening but more like reducing accommoda

to the extent nominal interest rates and g.d.p. growth have a way to offset the low nominal rates. the one problem is you could get in a situation of very low growth and then the fed would be targeting high inflation and may not be possible or sustainable. my bottom line is of the various things suggested, i think that variance of price level targeting is the most appealing to me. i recognize and would recommend to the fed to look at nominal g.d.p. figures because they're letted to the price level targeting. in what i consider to be minimum requirement at this point, you could make the case, making this hypothetical case, not saying it's correct but make the case with the cost of changing -- and i think larry may have overstated a bit the severity, the cost of the zero low bound where it is and make a couple points on that. one is it's been pointed out in the paper by people here at brookings the unemployment rate came down as quickly as porme. so if that's your case of slack, they did get it down given how deep the recession was. you know, moreover, despite the fact that, you know,

we have lowered the rating on china. the back of for financial stability down the boom, which credit if you look at it, it is the largest and financial history in absolute terms -- it is slowing down. they have been trying to slow it down. my hope and expectation has been after president xi jinping gets his new mandate as enthroned to a more powerful position that they would step up the measures. this balancing act between growth on the one side and stability on the other, so i think we have not seen that clear sign they want to ring growth done more quickly to a sustainable levels, so what is true is that credit growth has been declining, but still growing. people still convolute that and say credit is going down, no, it is the rate of growth going down. the overall ratio of indebtedness continues to inch upwards. conclusion from your report, if you had to pin it down to a few sentences, would be emerging-market resilience for the most part in a wave of normalizing rates for now? >> mostly, mostly, there are lots of sha

the magnitude of each rate hike when it comes. s where we are now. we are left with passing the the kremlin. like everyone is hanging on every euro so it will be the zone in equivalent of considerable period on the forward guidance. at the pattern around the asset versus -- purchases and of the first move. you can plot the path of the forward weights. i am not calling for a rate hike anytime soon. i am talking about the market's implied level for rates in the eurozone. that is going up. in answer to the question that came in. guy: i've got the german curve here. steven: in answer to the question about the flattening we have called for. this is not a new idea. view isfication to our the bearishness at the front end of the curve. it is the upward move in the short yields that would drive the flattening. the long and will stay put. the yields will fall in the tenure plus, maybe the 30 year is the best place to focus on. our recommendation is to sell 30's.and buy it is about the implied path of the rates and that is different than sayi

so the spread between 10-year german rates and 10-year rates in the u.s. is about 200 basis points. etty wide level, a multi-decade wide level. we expect that spread to converge over time as those long end rates normalize. and in our minds, it is really mispriced or the front end of the german bund curve. you have two-year rates of 70 basis points. that is a bit of a difficult market to trade because that mechanically controlled by the ecb. if we have to be short somewhere, we would choose further up the curve at the 10-year point or 30 year point. we don't think fundamentals, in terms of improving growth and inflation justify rates at such , low levels. julie: we will button up this part of the conversation. but there is much more. everyone is sticking around with us. kathleen gaffne, julien scholnick, and ira jersey. and coming up the auction block. , all the talk this year about brexit did not seem to sway investors. we will tell you why, next. this is "bloomberg real yield." ♪ ♪ julie: i'm julie hyman. this is "bloomberg real yield." i want to head to the auction block now. and i

if it has got anything to do with the south korean exchange rate, the currency rates are at the highestince october 2014 at we are questioning now we will see the 2008 hi. -- high. the nation's first interest rate increase boosted this. that is want to watch. an interesting chart i wanted to show you. this is looking at the hedging costs in some of the asian currencies. that premium dropping to the lowest level you have seen in almost five years. you have investors bullish on the long-term outlook for asian currencies. i thought those also worth noting. joe: finally, on the commodities, oil and gold, not a lot of action but oil creeping up above or near the $62 level. still a lot of buoyancy in the oil market. gold basically doing nothing on the day. those are today's market minutes. scarlet: those are vast parking minutes. -- market minutes. the white house the center will out rich clarinet for the vice chair position, and advisor to pimco at the moment. other names floating are mohamed el-erian. both market experts and commentators have been floated, but for now rich clarinet has been

the critical function is where our short-term rates? ing prerecession and over the past 20 or 30 years, it was really the function of short-term rates as opposed to long-term rates flattening out that curve. if short-term rates do not move up about a certain real interest rate level, we do not have much to fear. want to translate what i just heard -- our camera guy looked at my belly as you're talking about the belly of the curve. that is the five to seven year period. bill gross, let's make this clear. i believe that means yield up is what you just said, and price down. bond need to prepare for a bear market, where we see price loss i made this yield increase? bill: i think so. and a mild one. i have talked in the past about a 2.40, 2.45 low. we are about that now. in any case, the long-term secular trend -- these levels are about to be broken. what does that mean? it means the economy can support 2.75 10 year 2.50, treasury, as opposed to what it required the last couple years. should a bear market breakout, if it goes from 2.50 to 2.7

it's all related to the extent you have higher interest rates across the board, the discount rates apply to cash flow streams would go up, you would have lower asset prices. typically the stock market would have a longer duration associated with that long rates would be important. but short rates matter, too. if the fed were to get aggressive, and we started to see that if you look at the forwards markets, they're starting to be more concerned about the pace of rate hikes that's not really yet become an issue. but if that trend that we've seen over the last month or two were to extrapolate the next year or so and you saw aggressive hiking in a short end of the curve getting nervous about it, then the whole curve would be something that you would have to watch. >> has the softness in the dollar provided an opportunity for you to allocate more money into sectors that benefit from a weaker dollar? whether it's technology, financials, industrials that benefit from not just a weaker dollar but benefits from overseas >> technology is a place we like longer term very well, but more for the secu

instead it said to the rating agencies, you get your money from the issuers whose products you're rating and this led to those issuesers being able to game the system and to essentially have the regulatory agencies be captured, the ratings agencies captures and it led to incremental boiling of the frog and next thing you knew they had been talked into giving aaa ratings for products that were progressively less reliable. the federal government in the student len area is in a similar principal/agent problem. it's not reasonable to expect that anyone will protect the federal fics when they do not have an obligation to do so and if the institutions, including mine, that are receiving large amounts of student loans are not on the hook in any way for the outcomes that we care about as a society we shouldn't be surprised that only organizations such as those represented here today who are clear out liars and are acting for reasons of their own that are laudable, we should not expect those to be replicated in a broadway around the country and this is an inherently political issue which i don't

recession ended in the city started a recovering and we're really seeing astronomical rates of growth by historical standards in the city economy and jobs started coming back and property values escalated business taxes, hotel taxes were all coming in at highlights of growth and salary and benefits of course are continued cost growth but projection assumes we have inflationary increases in those rates and some other calculated rates for benefits and pensions and then other city wide costs. so here is the high level picture from the financial projection, these are millions of dollars by the fiscal years of the projection so you can see at the top total sources that's the growth in the revenues for the city and then below is the growth in the uses if you look at fiscal year '21, '22 you have revenue growth but then compare that to what you see in the uses which is $1.1 billion of expenditure growth and you can see how that imbalances growing overtime to the point where the four-year outlook shows $709 million deficit which is a very sizable deficit now that of course is projec

the unemployment rate is 4.1%. s below the consensus forecast for 180,000 jobs the net revisions for october and november, a net revision of 9,000 fewer jobs created over the last two months and previously reported. december private sector jobs up 146,000. 30,000 manufacturing, and 25,000 new workers as well. the same for food services and drinking places. the real story here, job losses in the retail sector the labor force participation rate, 62.7%. basically unchanged. the u6, the so-called real unemployment rate. 8.1% even with this headline number of just 148,000 jobs, the average for the last three months is 204,000 jobs per month. one other interesting demographic story in this particular report, the unemployment rate for african-americans has dropped to 6.8% that's down more than a full percentage point year-over-year. that 6.8% is the lowest since the bls started keeping records back in 1972 from inside the labor department, i'm hampton pearson. back to you, guys. >> okay. thank you for that, hampton. want t

and further increase in the refi rates that the ecb has.irst the curve steepens and then will eventually flatten. it is already flattening, that's the interesting point here. jonathan: what is your view? priya: i would agree to the extent that the ecb will raise rates rather than reduce purchases too much, because how much does it affect the periphery? if they actually taper quickly, they stop buying. if they stop reinvesting, then it could have a pretty big impact on the periphery. the view from the market is they keep the buying program, they start normalization from negative rates, perhaps to zero. therefore, the curve should flatten. i would say the spread in the front end is all about ecb action. in the long end, that spread is too wide. treasury bonds around 2.5 basis points is arguing if prices are continuing to rise as if treasury prices can rise while bund rates stay the same. that does not seem to make sense. jonathan: let's have some thing that does not make sense to people, the amount of debt outstanding that trade for negative

first, the change in rate. middle market and lower end of the private company would like to say there are great companies in that neighborhood that terrible tax departments. so make them more attractive -- lack of opened the door to m&a activity and significant amounts yet to be have realized in this part of the cycle. the second part is immediate depreciation. that part of the tax bill expires in five years. a bit of a lighter fluid on the fire to get back kind of investment happening. the third part is repatriation, which helps reignite this repatriation. an investment in capital has been largely lacking in this post financial crisis recovery period. investorsovides for who own family businesses and things of that nature to get reinvested in these companies or look for other kinds of exit strategies that have been elusive in this stage of the cycle. alix: for the family office, what kind of returns do you target? have seen one family office, you have seen one family office. alix: the reason i am asking is whe

>> there is a very powerful anchoring affect from the -40 rates. n see the front move dramatically higher. manus: i think she is thinking about -- she found a great article on the bloomberg. the emerging european economies are not afraid of the qe. economies areour in much better shape than when investors fled our economy in 2008. talk me through the market .6.equences of a break at higher fors yields the right reason. when you look at what happened before, yields went higher because they received poor credit. higher for the right reason. that is not the issue now. anna: it is a reflection of higher inflation expectations. thank you very much. manus: up next, china's appetite has led to aer surprise increase in the demand for global clean energy investment. where are the dollar is being thested -- where are dollars being invested? we will talk about that coming up. clean energy is where it is at! ♪ ♪ anna: this is "bloomberg daybreak: europe." it is 6:30 in london. the dollar is a little resurgent this morning, selling earlier this week. the power a

single provision of the law which allows it to be turned earnings held overseas at less than halfn the rate it woul that would havd him old system and two days before wal-mart snagged the headlines for the $400 million of bonuses lifting its minimum wage at a cost of 300 million of the nation's largest retailer unveiled a plan to buy back issue debt, $4 billion. minimum wage, they pay a 300 million dollars stock buyback 4 billion. i am glad these workers are getting bonuses. they deserve them but it seems recently they are token efforts. the cnbc survey found the texas haven't yet had a meaningful impact on american companies plans to boost investments or raise the workers rate. they closed loopholes while lowering the rate and lower corporate taxes but actually stipulated that the money be put into the wage increases instead of what many are doing now. one time bonuses and massive stock repurchasing programs. many me middle-class families ad the tax bill properl constructer that to them. they squandered the one once ina generation opportunity on a tax break for the big f corporations in th

you can see that in the outlook for rates. the 2018 average, 2.2% or a fule entage point and then some when it comes to the federate hikes.20 , 2.8, not much more in 2020. but long run, 3.2%, that's also higher. overall looking for more in thet way of inter rates. you can see that also in the ten-year yield where the current rate is around 2.7. going to 3.0 at the end of this year and 3.4 in 2019. that's not bad. if you leak a ago that was the expectation for this year at the beginning of 17. higher rates may weigh on the market. 2854 at close of business yeed. only 3 or4% up from where we are right now by the end of this year. and 3005 for the s&p by the end of2019. even if we get higher rates we may get more growth. look at the gdpforecast. up be up, up, up in each successive suey, adding half a percent. it is almost 3%, 2.7% for next year. better numbers that we have seen in because of the tax cuts. that's the expectation this year, thats the tax crive better growth, at least this year and into next year. for "nightly busine

are much lower than the potential growth rates of today. guy: where do you think the potential growth rates -- james: between 1% and 2%. depending on which country you look at. for the advanced economies, it is in that range. some recovery there, we are starting to see that in the data. below 2% is in the norm. we are not going to see that this year. euro growth this year is around 3%. a lot of countries will actually see falling government debt levels this year versus last year. the question is 2019. guy: from a ratings point of view, this is as good as it gets? james: absolutely and we are kind of balance. i think this year will be a good year. more countries have falling debt. we expect to see higher ratings moving higher. guy: italy elections, are you worried? how are you preparing for it? james: we downgraded italy last year, actually. if we were to have this discussion one year ago we would be worried about italy leaving the eurozone. that seems to be off the table. nobody is talking about taking italy out of the eurozone. that seems t

tantrum on the exchange rate side. ing points are difficult to control for central banks. the ecb will think go out of its way to try to pin down the expectations of interest rates to prevent the sharp rise in interest rates, including but not limited, the .und yield tom: a lot of our viewers in the united states aren't aware of is the improvement in unemployment rate. the on up limit rate of poland from 20% down to 14% and now down to a stunning 6.6%. europe, can you is over?euro-sclerosis it is dead? ebrahim: i wouldn't go that far. what a lot of our conversations boom exceeding the crisis. it is a significant progress taking place over the last few years, including that is down one percentage point a year and i think it will go lower than some other cycles. it is going down alongside structural improvements in labor markets in various countries. let's be fair though, there is a long way to go in countries like spain, greece, unemployment is still too high. italy, too high. it isn't enough to change the social issues

as the top rated global power the united states rating drop is dramatic hovering between china and russia tonight understanding a major rethink is america first translating it to america last i'm broke off in berlin this is the day. from this day forward it's going to be only america first so we decided we're going to walk away from paris according to her walk away from the transfer to the pacific partnership we're going to walk away from the iran deal where are the means to pollsters that should be upheld she writes the united states is largely disappeared rocket man is on a suicide mission for himself there is a lot of cringing here and elsewhere over the president's tweets against north korea is just not a credible threat from it if you think so there's really a sense not it's not a matter of is america first or not is this america alone or not is an article working with others. also coming up tonight our hidden cameras inside a turkish court journalists on trial as enemies of the people. in turkey there is no system of law that protects the rights of individuals entire groups in socie

better effect if it lowered the rates form. a -- as just kind of long diatribe to paceically say isn't going to matter that much. the tax bill is not going to change the fact of the economy that much. even if it did, it wouldn't have a huge effect. because higher growth results in lieu.ev it also results in more interest spending and more social security spending, et cetera. especially at these numbers. we don't see a big dynamic effect. what we see. we see a fiscal situation that's way harder to get out of. know many folks have talked about balancing the budget. that was technically the goal of president. it had been the goal of the house and senate republicans. a much more modest goal, the goal that president trump had put forward. i think is long term.for the it is going to stablize the debt to gdp. manes we can run deficits as long as the economy grows at the same time. that's insufficient. we want to keep debt at the current record-high level. anotherwe have recession or war? debt nowtabilize the would require 5.4 trillion

it was not all that different to the inflation rate today. different if you had a much stronger global economy at that point in time. the u.s. was growing at 3.5% to 4%. and you had high real interest rates, whereas in this environment today, we have got low real interest rates. volatility, i think, comes when people have felt comfortable about a spoon view of the world -- certain view of the world and you get a correlated shift in belief that really everyone has to shift, shifted the goal post in what they are comfortable with. , you know, a move from the ecb over the next 12 months or so, japan, some noises that maybe they will follow, if you see the global trend towards interest rates on the up as opposed to just the u.s., maybe that will be what shifts it. manus: the one thing i was chatting about with david earlier -- i am finding the chart, the amount of negative yield in bonds. 6460 is the chart you want to have a look at. this is the amount of negative bonds in the world, with the best eight trading sessions of 2017. i am a bit like a

rates haven't gone up. i also think separate from the debt situation global interest rates, the global average interest rates are just declining. they've been declining for 30 years with bounces and booms. i do expect interest rates are going to rise, but i don't know when or how. as to your first question, yes, a lot of leakage in this tax bill. sometimes it's accounted for specifically. in the pass-through, they try to do some estimates. sometimes they do it generically. they use their microeconomic elasticities are proxies for people getting around the tax. with that said, we're trying to find states to find ways against the state and local tax deduction. if i was betting i would bet that jct underestimated the revenue loss on the conventional side. i'd also bet they underestimated the revenue gain on dynamic to some extent because their model doesn't really have the ability to account for gains from allocated gains other than between real capital and other capital. but overall i imagine there's going to be more leakage than jct expects, which also means more offsets of course in the future to pay for mor