treasury stops buying the u.s. fed stops buying their own bonds well then the e.c.b. steps in so how is this possible according to wall street is says as the possible because the e.c.b. run by an italian has been buying a talon government and corporate bonds hand over fist along with bonds from other countries in the euro zone as part of its q e an order to do whatever it takes and what it took was to stop any and all. price discovery and to force investors such as life insurers and retirement schemes that have to buy euro bonds to buy italian bonds even when the yields were negative these outfits actually their beneficiaries whose money this is are now pocketing guaranteed losses so it's not hilarious to them as i said the pension accounts and the retirement accounts are programmed robotically algorithmically to buy these bonds even though makes no rational sense they're locking in losses now that makes no sense so i get on the titanic and you hear the warnings there's an iceberg ahead iceberg ahead but you say you know i'm going to ignore the warnings i'm still goin

treasury stops buying the u.s. fed stops buying their own bonds well then the e.c.b. steps in so how is this possible according to wall street is says as the possible because the e.c.b. run by an italian has been buying a talon government and corporate bonds hand over fist along with bonds from other countries in the euro zone as part of its q e in order to do whatever it takes and what it took was to stop any and all. to scupper e into force investors such as life insurance and retirement schemes that have to buy euro bonds to buy italian bonds even when the yields were negative these outfits actually their beneficiaries whose money this is are now pocketing guaranteed losses so it's not hilarious to them as i said the pension accounts and the m a retirement account are programmed robotically likely to buy these bonds even though makes no rational sense or locking in losses in other makes no sense and so i get on the titanic and you hear the warnings there's an iceberg ahead iceberg ahead but you say you know i'm going to ignore the warnings i'm still going to sail i

treasury stops buying the u.s. fed stops buying their own bonds well then the e.c.b. steps in so how is this possible according to wall street is says as the possible because the e.c.b. run by an italian has been buying a talon government and corporate bonds hand over fist along with bonds from other countries in the euro zone as part of its q e in order to do whatever it takes and what it took was to stop any and all price discovery and to force investors such as life insurance and retirement schemes that have to buy euro bonds to buy italian bonds even when the yields were negative these outfits actually their beneficiaries whose money this is are now pocketing guaranteed losses so it's not hilarious to them as i said the pension accounts and the retirement accounts are programmed robotically algorithmically to buy these bonds even though makes no rational sense they're locking in losses now that makes no sense it's like you're on the titanic and you hear the warnings there's an iceberg ahead iceberg. but you say you know i'm going to ignore the warnings i'm still g

treasury stops buying the u.s. fed stops buying their own bonds well then the e.c.b. steps in so how is this possible according to wall street is says as the possible because the e.c.b. run by an italian has been buying a talon government and corporate bonds hand over fist along with bonds from other countries in the euro zone as part of its q e in order to do whatever it takes and what it took was to stop any and all price discovery and to force investors such as life insurance and retirement schemes that have to buy euro bonds to buy italian bonds even when the yields were negative these outfits actually their beneficiaries whose money this is are now pocketing guaranteed losses so it's not hilarious to them as i said the pension accounts and the retirement accounts are programmed robotically algorithmically to buy these bonds even though makes no rational sense they're locking in losses now that makes no sense it's like you're on the titanic and you hear the warnings there's an iceberg ahead iceberg. but you say you know i'm going to ignore the warnings i'm still g

traders in the interest rate market because it raises questions about whether our own u.s. fedill slow down. let's go right to the markets snapshot. you have a play for state haven. the dow down 1.5%. let's go to the active. goldman sachs drops. more on the banking battering ram. general electric also taking a hit on concerns they will have to cut their dividends. hewlett-packard taking a hit. let's go into the bloomberg. here is the story. the s&p being pushed outside its range by the european risk. there is a concern that this is bleeding into the eurozone. and rekindling fears from about one year ago.one strategist said the fact this could cause her own fed to slow down -- our fed to slow down really hits the banks hard because that has been a financial pillar. that will create profits for the banks. yvonne: talk more about the banks here. take a look at not just goldman sachs. morgan stanley following 6%. they are calling it the italian bond quake, wreaking havoc on the fact we have seen treasury year plunging. su: let's go back into the bloomberg on this italian bond point

now on the markets investors focus turns to the u.s. fed meeting today. and we expect that. well another rate hike the people who observe the fed are pretty agreed on that i would say almost one hundred percent saying today's not the day one reason being that today there won't be a press conference that is the new chair jerome powell isn't scheduled to talk to the press and the public basically to explain policy after the meeting and it's almost ruled out that there would be a move of this magnitude a rate hike in the united states for the dollar for all those trillions out there in treasuries without the fed chair there to explain it and the moment has derived either the economy yes it's humming along there's great improvements in the labor market and indeed inflation has reached the two percent target that the fed sets for itself but it's accepted lower that the fed will still want to observe the economy further and one piece of data that's coming in is the labor market data it will be some information on that today and on friday and the fed is expected to move those two o

zero percent and the tide of asset purchases rising here is the chart of course the red line is the u.s. fed the blue line is the e.c.b. and the green line is the bank of japan max you had said this you suggested this long ago that whenever the fed stops or slows down with q.e. the e.c.b. picks up and vice versa and this data that nomi prins linked to suggests this is true and a lot of people to point this out peter schiff. richard jim rickards you know people that we've got on the show not only proves that the global increase in money printing as never decreased because you can't taper a ponzi scheme so people say to me oh you know the fed is raising rates i thought you said you can taper a ponzi scheme you can that's why globally the money is being printed most people who write those comments in the you tube section most people live in a small little local area so they can only go access their local banks they don't understand that you know the warren buffets of the world and their friends can access free cash anywhere in the world and they get to game the system because they're part of th

asset looking shaky now that the dollar is rising and we could see more rate hikes from the u.s. fedmium has jumped to the highest level in 16 months. look at what happened in 2015 when china devalue the yuan. that is one percentage point more. we could reach those levels. investors have raised short positions to a 14 month high. in bond has lost $1 billion market capitalization so far this year. a wonderful story from a bloomberg reporter, she says ratesion from higher u.s. is entering emerging markets via least and you and spots them talking about turkey and spots,na -- immune talking about turkey and argentina. is worth find this wonderful chart. vonnie: wonderful. presentation. i am a sucker for going beneath data, and i think matthew has come up with something interesting as we hit rate. the matt gets the job. -- crown. >> thank you. this is bloomberg. ♪ ♪ mark: live from london, i am mark barton. vonnie: and i am vonnie. this is the european close on bloomberg markets. advisorerkel's security 2005 to 2017, christoph heusgen, currently the german ambassador to the united na

fed. this is the spread between the two-year and the 10-year u.s. treasury as massive supply floods the market, $70 billion in new treasuries. a historic flattening in this as the fed may try to move at the front end of that. it is the nearest spread in a long time. shery: right. let's get to apple. tim cook saying he has a plan to withstand the slowdown in mobile phone sales. apple rising today to the highest level since after posting iphone sales in line with analyst estimates. our guest joining us now from san francisco. tom, give us the t -- that key takeaways. we see apple not so susceptible to industry trends when it comes to the smartphone sphere. tom: they have found a way to withstand it. overall, i'm talking about across the market, smartphone-to smartphone-to -- -smartphone boom is lagging. it contracted in the first quarter. some manufacturers faring better than others. apple being one of them. they met expectations for iphone sales. admittedly, those. were scaled back. they were lowered expectations, but they meant to them. they made bul

if the bok holds rates on thursday and the u.s. fed it is expected to do next month, it will widen the gap between the two countries benchmark rate to about 50 basis points. betty: u.s. minor freeport surged on a bloomberg news reports that rio tinto is ready to accept the $3.5 billion to exit the coppermine in indonesia. what reaction could we have to that news in asia? david: long-running, lots of people have been waiting to see a resolution here. it involved rio tinto exiting from grasberg and would see a local companiesdavid indonesiane the majority. inended about 3% higher trading in the u.s.. in trading in the u.s.. rio tinto in london. what they have been doing recently is extending a program. they have been handing some of that cash back to shareholders. the prospect for another big development, $3.5 million, some of that will be returned to shareholders should see rio perform well. i'm sure people will be looking at trading once rio opens in australia. betty: david, thank you. david stringer in melbourne. don't forget to check

u.s. retail data and a warning from the fed against a shrinking yield curve.k exclusively to the st. louis fed president. anna: good morning, this is "bloomberg daybreak: europe." 7:00 in london, 8:00 in germany. we get the data from germany right now. consumer prices rising 1.6% year on year, unchanged month on month. that is the latest in the german data story. ais comes in the context of stumble from the german economy. that is what we heard early on this week on .3% increase in the size of the german economy, softer than forecast and the weakest in more than a year. dutch-portuguese growth cooling. of weather fx,e the flu, idiosyncratic factors? or is it something more sinister around trade? we are seeing the cpi number coming through in terms of the euro. pretty flat on the euro-dollar at the moment. we will get more details on that. you have breaking corporate news. burberryver far from a brand check. this is the state of play, up 16%. they are doing another share buyback, a new share buyback. is million pounds, this making progress, raising consumer dem

. >> so european stocks moving lower in that first trading session since yesterday's u.s. fedndicating plans for gradual rate hikes and you can see the market narrative not too different in an what we're seeing here with our own major indices. and a surprise drop in eurozone inflation below the target of just under 2%. that core rate which excludes food and energy, tobacco, alcohol, also below the consensus as well. the inflation number does provide a challenge for the e krmpt b b and you take a look at the euro, the pound in negative territory on weaker more than expected data in the uk this time around for the services pmi and earnings, smith and nephew down sharply after the device maker missed on results. and adidas falling despite strong quarterly sales in north america. and today's gainers include you loge tch ec logitech and also hermes back over to you >>> all right. thank you. and when we come back, free trade is under assault that's what stanley drunk mien miller has to say just as the team arrives in china for talks. we'll talk to gary locke coming up >>> big story,

u.s. dollar ahead of the minutes from the fed's last meeting as investors wait for clues on what the u.s. central bank is likely do next month. dollar surging against the japanese yen this is where we are standing now, 109.91. i do want to highlight the euro. the common currency is under fed pressure against the u.s. dollar, 1.1717 so off about 50 basis points for the single european currency that's after those pmis pretty much underwhelmed market expectations, both germany, france and the composite number from the eurozone as a whole so there are questions there as we were discussing on whether this is really just coming off a high base, some moderation from last year, whether it is seasonal noise or whether this really is uncertainty related to trade tensions, et cetera, and this being as good as we get in terms of growth. >> as if investors need additional uncertainty, there's that big wildcard coming out of italy. president sergio mattarella still has not approved the five-star movement and lega's choice for prime minister, giuseppe conte the coalition's pick for economy minister is al

u.s. is growing well above potential now. the fed thinks the u.s. potential growth rate is 1.8%. is very little slack in the u.s. economy. you don't need much more growth before you get inflation. wages, thees to headline wage numbers that you would looked at 10 years ago, they're much lower now. the fed will be looking at 3.5% as the risk level or wage growth before inflation pressure could become a concern. u.s. wages are growing below 3%. >> does the fed know what for employment is now? >> no. it is tough across all advanced economies. after the crisis we were expecting his racist where you storisis.i the national rate is higher than before. unemployment is well below what central banks have anticipated. u.s. unemployment could be 3%. we simply don't know. if the fed goes three more times this year and next year, that is a very gradual pace given the fiscal stimulus and the economic backdrop and the global economy. i'm not worried about putting the brakes on growth with that sort of taste timing. >> that is for this year in total. is that symmetric? is that allowing the inflat

if i look at argentina or china, the reality is, with the u.s. fed bank, we will have a higher u.s.kets. what will be the ramifications of that? alberto: the first shoe to drop is the emerging markets to have the highest dependency on foreign funding. argentina has been issuing a lot of dollar debt. a bond that went over 100, now back to $.87. some investors bought the 100 year in dollars. turkey, similarly, has a lot of hard debt. most vulnerable emerging markets. emerging markets as a whole remains positive. you can not make a bad bunch at of the whole group, but i would say definitely there are some weaknesses. some companies issuing for the first time. these are vulnerable. tom: when we look at this arising real rates, the reality of what mr. powell or mr. draghi the battleey may do, in your world of economics, what will be the knock on effects of the largest developed nations to less developed nations? there has to be the effect of higher real rates, right? holger: this affect will actually be pretty small. tom: why? holger: because we have strong growth in u.s. domestic demand

u.s. brings the fed to three more rate hikes this year and if investors keep an appetite for treasuries amid the massive delusion of supply -- deluge of supply from the u.s.. guy: btp's, certainly a story. the market is pricing in the possibility the populist government gets formed. they may have found a temporary solution to deal with the situation regarding prime minister. of 2% on the north 10 year yields basis, the spreads are widening out over bunds. we will watch what happens here. a lot of people like it, but maybe that starts to turn the other way as we start to look to the formation of the government and its spending plans. i want to show you what is happening with the gmm this morning, give you a heads up on the currency market. we will talk to mark cudmore in a moment. are we going to see the story out of argentina, stir -- turkey, go into other markets. the brazilian real is under pressure. let's get a first word update with juliette saly. north korea has threatened to walk away from its meeting with president donald trump next month if the u.s. made a one-sided demand for the re

u.s. influence monetary policy on global financial conditions, the fed is not the only central bank whose bal financial markets. is the recipient of monetary policy spillovers. afters in german yields you see be policy decisions passed through u.s. yields. raised thele we have target interest rates six times since december 2015 and have begun to shrink our balance sheet while overall financial conditions have gotten looser in the united states, in part to improving global conditions and bank policy abroad. much of the discussion of spillovers of u.s. monetary policy focuses on their effects in emerging market economies. some have attributed the movements of international capitals flowing to emerging market economies to monetary stimulus by the fed and other advanced economies central banks. the data does not seem to fit this narrative well. as illustrated by the blue -- line in the left panel, figure four, capital flows to emerging market economies were already strong before the global financial crisis. the subsequent surging capital price was009, as the abating, largely reflects the rebou

fed. markets are keeping an eye on u.s. central banks. e.m. ors are worried about a repeat of something similar to 2013 when we curbed that tantrum. an interview with bloomberg's presidentdent -- fed in monetary policy. see do think that we might some variation of numbers over time. if they go above 2% for a time. that does not mean we are in a shooting off period where inflation will take off. i don't see that happening. i think it will be a gradual process. onrefore, the fed can stay our gradual upper press -- upper path of interest rates. rishaad: thank you for sticking around. let's get your opinion as to what the fed does, what the dollar does. how do you think emerging perhaps,ill react -- more dollar strength which is possible. you can't treat them all equally. different countries will be heard differently or benefit differently. nader: absolutely. while the issues we had at the is a of the year, but significant amount of money that flew into emerging markets as the u.s. dollar weakened. money ist of that trying to get out in a rush. and

u.s. outlook and the fed's outlook. if that drops out, if the outlook for europe is measurably weaker, that could potentially change the outlook of the fed. >> i'm bringing up the policy error question again, are they going to know it in time, are they going to be raising rates into a slowing european economy and you're going to get further away, the fed is going to get further away from the other central banks. >> i think that's possible you can't rule it out. they're sleeping with one eye open i think that's the way they're thinking about it. they're going to watch it carefully. if there's a big change in yourm, it will change the outlook for the u.s. and the fed. >> let's wrap this conversation up with one more conversation about a sector of the market, that being the banks you like the banks >> i do. >> even with rates where they are now, we're worried about all this exposure to italy and elsewhere in europe? >> our base case is rates are going to creep up and we focus more on the direction as opposed to whether or

u.s. lower after the fed struck a less hawkish tone and many expected.ig takeaway was the word symmetric. ready tognaling their tolerate inflation at or below the 2% target. we also have those trade talks today that could possibly be weighing on the markets. michael jones telling bloomberg tv earlier the potential for trade war still weighs heavily on the market. following the fed meeting, the 10-year note was that unchanged, about 2.97%. bill gross saying this excitement of the treasury market having at or above yields at 3% level is behind us. of course we thought that piercing to that level last week. us andng that's behind this is a great quote, he said it is hibernating bear market, which means the bear is awake, but it's not really growling. we had stockpile data out of the u.s. yesterday. at the start, u.s. stockpiles of the west coast are surging, the biggest jump since 1999, but don't expect this to weigh on the market. the west coast accounted for 80% of its increase and a report yesterday, so you expect to see some moves on the prices but wher

we had that resurgence session in the u.s., clawing back losses, investors more comfortable with that dovish set of fedes. u.s. dollar gaining against all g10 peers except for the yen. sydney futures showing some weakness at the open. let's take a look more broadly. we saw that 10 year yield in the u.s. below 3% reflate. it is still just sitting shy of 3% as investors digest this idea that the fed is comfortable with a modest overshoot of the inflation target. when it comes to the oil patch, $72,ork crude just shy of brent just shy of $80. we are looking at the turkish lira the central bank moved to raise rates high 300 basis points. that seems to have stemmed a the bleeding when it comes to the currency, but watching emerging markets over the next few days with paul krugman come the latest voice to add to concerns that the emerging-market meltdown has just begun. he is comparing it to the asian financial crisis. we saw a spike early on and that coin, but falling by .25%. all of this volatility stemming from geopolitics uncertainty over trade. the trump's easing his demand that north korea abandon its

for example, even with the fed's thatabor market dashboard they look at, it suggests there are some areas of slack in the labor market in the u.s.. the fed cares about core inflation, so when we look at pce, the biggest is what is going on in the health care markets and prices, and those have been very well behaved for the last several quarters, and we expect that to continue. inflationyou are get skeptic, at least at this point, sing and have to think sort of longer-term or at least medium-term, that all sorts of risk events coming up at the back end of the year, political events, like the midterms come as well, which could have an impact, so what are you telling investors right now -- like the midterms, as well, which could have an impact, so what are you telling investors right now? jason blood there are a few our main risks, how you feel -- group ofere are a four, including credit markets, so we are still pretty bullish on equities and commodities and still a little bit cautious or underweight credit risk, and we do not think this way, but that turns out to be pretty classical late cycle we think thatnd regardless of what h

u.s. jobs report on friday. what kind of action you are pricing in from the fed. are actually quite optimistic about the u.s. market in particular. earnings growth is expected to be in the 20's. we see unemployment around for or so. -- around 4% it is still within target. we think global growth is maintaining and it will help asia. in the long-term, we think it will help a lot of industries, such as technology, industrials, exporters. those other markets that we think are attractive at the moment. does it concern you that there was some volatility in the bond market? all the focus on the 10 year yield and whether that will accelerate to 3% level or not. >> hasn't mentioned, that is one of the two reasons why there was a selloff in february and march. when you look at the interest about 275 arted at couple months ago. now it is about 3%. curve, bythe yield the end of 2018, another in 2019. 4% or touching around 4.5%. it could adversely affect the equity market in the long-term. until we get that, until the piece gets faster, we think that is the much embedded into t

we should be seeing the 10 year part of the curve go higher in yields in the u.s., if the fed raisesates. yet, you will say it will take a while before rates come up in europe. moment, thet the market is pricing in perhaps another two or three interest rate hikes in the u.s. and several more next year. that seems right. unless we get deviation from that, no reason to think it should shift. there are some risks. not least is the tension between china and the united states on trade. we could see some substantial deviation in the past. -- path. mark: the bank of england next week is the big one, expectations that disappeared of a rate hike. would you be brave to forecast a rate hike next week? >> no, not least because the market does not believe it will happen on a do not think the bank of england would want to surprise. given we have had weaker inflation data and very low growth in the quarter, the bank of england would have a conviction to put a hike and right now but we will need to wait and see how much that is because of temporary factors, the weather, and perhaps if we do see a re

u.s.? >> naturally, we are fed up of hearing on these sanctions continually. the u.s.iran are not new, of course. iran are not new , of course. we do not find this to be right for peace in the region. as the international atomic energy agency says, iran is a country which fulfill their obligations. in that case, on what basis do you punish iran now? these are not right. there was a procedure that was in place under mr. obama's term, and under that process everything was normal. office,ma leaves the iran is punished through a new practice. these are not right. all of these result in tensions in the region, not contribute the regon's peace. we do not want this region to go into tension. this region is now tired, so in thestablish peace region and contribute to a peaceful world altogether. of declaringtep jerusalem as israel's capital is a very serious step two tensions in the region. we are looking at the number of people killed in the gaza strip. it is a disaster, 37 people. in fact, i believe more died, and hundreds were wounded. these people were wounded by real bulle

u.s. competitiveness. fed officials set the stage for a june rate hike should the economy evolve as expected. bottom line here, trish, fed officials on course for at least two more rate hikes this year, with the next rate hike in june. back to you. trish: thank you very much, jennifer. we're watching a market seeming to improve. we were down more than 100. down 83 points. investors still digesting the minutes right now. we're still seeing a little bit of downside. again an improvement here to work through all of it, we have our own nicole petallides, danielle dimartino booth, kaltbaum capital management president gary caught bum and "wall street journal" economics commentator, greg ip who had a very good piece about what we need to do with trade with china. i will start at the nyse. what are traders telling you about this particular report, nicole. how this they thinking about it right now? >> the big picture they would get much of the same. that is what we're hearing. economic outlook remains unchanged. same

u.s. of historic regret if it pulls out of the deal. haidi: i had scratcher for the fed as u.s.age growth slows despite unemployment falling to 50 year lows. betty: warren buffett taking questions about policy at the first -- after the first lost since 2009. haidi: it is past 8:00 in sydney. we are two hours away from the open of asia's first major markets. betty: it is after 6:00 p.m. sunday evening in new york. i will look at how the action on wall street will play into the asia-pacific trading day. we saw socks -- stocks surge on friday after that jobs report showing an 18 year low on the jobless rate now below 4%. who would have thought this after the financial crisis? the dow surging 340 points, the s&p higher. look at the nasdaq cowering -- towering ahead. you know, overall throughout last week, it was a doldrums in the market. we ended on a really high note, but that left the markets flat for the week. saw dust haidi: apple was a real standout. here we are getting back to trading from the last week. it was really disrupted by a number of public holidays around the region.

u.s. and the fed holds, as expected, and we have the s&p and dow both off 7/10 of 1% and the nasdaq -- 4/10ens of 1% of 1%, and tesla reported in will have that story in a little while. and we have asx futures pointing a lower, andke japan closed today with the aussie dollar hovering above $.75 u.s. below $68l slipping as u.s. crude inventories buildup. elsewhere we look at the australian trade that is expected to widen, and steven mnuchin is in china to talk trade. i am paul allen in sydney. more from "bloomberg technology" is next. ♪ emily: this is a technology and back to our top story. tesla out with first-quarter revenues and elon musk saying he is targeting 5000 model threes in two months, but it is difficult to predict production. if the company cap up its production the company will be profitable in the third and fourth quarter, and aside from s anddel three, the model model x are hot, and joined us now from detroit is david welch. we are waiting for elon musk to a few minutes from now, what is your overall take given the promises and the fact that they have been broken a few times

u.s. economy and the fed's perspective. michael. thank you, vonnie, and nowre with kevin warsh, assisting with fellow in economics at hoover. i got to ask you, 3.9% unemployment, but on a year-over-year basis, wages go down. what does that tell you as a former policymaker about inflation dynamics? kevin: welcome to hoover, mike, great to have you here. the economy is strong, that is what it tells me. the economy continues to have some acceleration, have some positive momentum. 3.9% unemployment rate is strong. on the wage front, we are not capturing the underlying trends in wages. wages are moving up in the u.s. some of the reason why the data doesn't suggest it, there are huge changes in that. we see people with less than high-school educations coming into the labor force. but they have opportunities now. my guess is in a 2018 when all is said and done, you will have the biggest increase in real wages we have had in a dozen years or so. michael: given the statistics, with unemployment at 3.9%, pce inflation at 2% from the fed could

what does it mean for cte, the fed, and the chinese? the u.s. dollar index is pretty flat.te? itsdollar taking some of clues from the treasury market. we are a little low on some of those yields. oil,rice of a barrel of 72.52 of 5.4%. -- 72.52, up for -- 0.4%. we will talk extensively about treasuries and btp's. those prices will come up on the bottom of your screen. a slight turnaround. is submerging. it's borrowing costs are rising. the credit default swaps are at 135. when they were really in the eye of the storm, 600 basis points. this is what you have to ask yourself, do you want to be long or short btp's? would you be brave enough to buy? steven major will have that answer for us. the italian government warning government warning in terms of the policy risks. to that extent, we will keep an eye on the two spreads. french bonds -- bonds are up. khashkari is the second man in a week saying that we need to be careful. he's a dove. an arch dove. needs -- warning that the fed needs to be slightly temperate. let's get your first word news with juliette. president isly's set

u.s. economist for bloomberg economics. friday, the fedsk carney are among the speakers at the 350th anniversary conference. we will have live coverage starting at 9:00 a.m. new york time. amanda: you can catch all of our interviews on the bloomberg with the function tv . there is one now. this is bloomberg. ♪ >> this is the "bloomberg markets." in a minute the fed will be releasing minutes from the policy meetings. as we wait on that, looking at in equity market that is mixed. lower to mixed, s&p 500 off by 3/10 of a percent. 2.57% on the two-year. julia: did we do have the fed minutes. scarlet: the bright red headlines that we publish say modest inflation overshoot could be helpful, most officials saw the next rate hike appropriate soon. inflation, on overshoot could be helpful. could behold full. -- be helpful. so presumably soon would be at the next fed meeting. julia: some officials saying for guidance provision appropriate soon, so at what point will we see recognition of monetary tightening. going

u.s. and in the near term, the fed is likely to keep going and will focus on what is right for the u.s..the cost of capital is high enough for long enough, aims start to go wrong and they tend to in the most levered parts in the world economy. entire world is dollars, give or take. that is where emerging markets standout. matt: which is a popular trade right now. bob: some people say it has cleared out. idiosyncratic risk your or their. if rates go high enough, that is possible. we would see a lot more than markets. risk in the the other area to focus on is corporate debt market globally, including in the u.s.. toh-yield has been on fire the extent that goldman sachs put out a note warning investors to stay away. recession,se of no afraid it still won't make money. bob: i tend to agree. there may be individual stories are the cases to be made, but generally -- how high is the cost of capital going to get and how quickly? if it is a lot higher and quickly, which i think will be the case because of data in the u.s. will be pretty good -- we could end up straining the global economy. i agre

u.s. growth, the fed is probably going to look through that. think that there is an interesting dynamic where the european central bank will be moved slower. there are already reducing the amount of quantitative easing they are doing. the question is how far back does this push potential interest-rate increases in the eurozone? i think that is something that everyone is still looking at, and something that mario draghi is going to have to continue to probably be a little bit more cautious here with the amount of stimulus, because of these unclear data at this point. caroline: and what about what is also being left unsaid come in because there was a lot of handwringing in europe -- finance ministers are worried about trade issues brewing between the u.s. in particular and tariffs in front and focus, and we had an open letter being written into donald trump from economists in the u.s. saying we're worried about the potential single tariff focus. does the vet look at that and the domestic economy? ira: insomuch as this impacts the overall economy.

the fed focuses on the u.s.'s central banker and i am sure they will be paying attention to international spillovers. francine: we had two guests yesterday really fighting and disagreeing over what an inverted yield curve means. you can see every time we have had a recession in the past, there was an inverted yield curve that showed up before that happened. is this time different? should it be a dilemma for the fed? stephen: the actual slope of the yield curve, although he has been getting -- it has been getting more shallow, seems completely uncorrelated with u.s. growth. the idea the yield curve may invert, it will be interesting to see what the long end of the u.s. market would be to further fed tightening. the fed is in a cycle of tightening but the real rate is still negative in the states so you have not had a real monetary tightening. if we think about monetary conditions are generally using the chicago fed, there was a modest tightening last year although nothing that would register on the historic scale

yesterday stocks fell, a fourth straight session by the fed kept interest rates unchanged. higher inflation for the u.s. economy. that can be a real motivator for the feds to stick to the course of raising rates gradually. what we're watching economic data on unemployment and productivity. elon musk shedding light on tesla's ambitions to launch self-driving ride sharing network. on the company's earnings call last night musk described a world where people share this cars offering them as uber or lyft or hybrid version you can specify nip can use it when you're not. musk says that network could be ready by the end of next year but it's unclear when tesla could launch it because of regulatory issues. amazon trying to get more retailers to use online payment service, passing along the discount on credit card fees. banks, visa, mastercard all charge a fee when buyers swipe their card. that generates about $90 billion a year. big stores like amazon negotiate lower fees because of volume of sales they do. so rather than adding a savings to profit on the poem line, amazon is willing to pass that onto retailer

we are seeing concerns about coming out of fed and u.s.ut also the key talks between the trump administration and china. what are you expecting as we touchdown with economist rising today? to be thexpect ramifications for the global economy and not just the market? >> we are cautious and skeptical that the magic of diplomacy's will involve the current u.s. and china escalation. it'll take a few months for this to play out. see what happens. it is nice that there is an exchange of views and it is nice that we have the u.s. delegation -- we willely, probably see a further tit-for-tat and further negotiation before we see how this is resolved. we also have a think about what up -- on otherhe emerging markets are up -- on or emerging markets are and perhaps it plays unfavorably where --iously the u.s. has in there is a negotiation around the future of nafta being held right now. does the current focus of the which iuse on china think his priority number one, does that potentially allow negotiations to be -- the can to be kicked down the negote

u.s. will the fed now slow down its rate hikes? it is already causing a scramble. let's go on to the chart on the market snapshot. it was a move to this -- safe havens. the dow down 1.5%. it accelerated once we saw europe's uglylose. goldman sachs when it gets to , ge is adeclines function of the company. they have to/-- they have to slash their dividends. let's go into the bloomberg with the theme of the day, the european risk pushing the s&p 500 out of its range. gtv is where you can find these charts in our library of charts. had been moving higher out of its range and coming down in a 1.5% decline. there is real concern as this thing feeds on itself how we are setting up or the wednesday trade here in the u.s.. yvonne: they are calling it the italian bond quake. it is wreaking havoc in the united states. if we go right back into the bloomberg one more time to look at the bond quake, i will fix my chart here. this chart is called the italian two-year surging. you talked about how this is almost unprecedented. you see it graphically represented, a huge jump. it i

it is fed decision day as the u.s. treasury and announces its quarterly -- refunding plans.uld america boost borrowing? 's inner circle meets today to discuss the customs union. the irish border looms large as talks continue in brussels. good morning, this is bloomberg daybreak: europe carried welcome to the program this wednesday. let's look at how the futures suggest we open. an hour to go till the start of cash trading, but things look flat to positive. the ftse 100 looks to add another .4% at the start of trade. there could be a currency impact there. we have seen the pound under pressure because of a reassessment of where the bank of england heads and the customs union. dax and cac futures up, but not by much. .2% at this hour. we look flat to negative on most of the u.s. futures because of concerns around president trump and whether he would be inpoenaed to testify connection with the special investigation by robert mueller. refuses to be voluntarily interviewed. the nasdaq futures point higher as a result of the apple numbers. let's put up the risk radar and show wher

u.s. goods into beijing. $200nfirmation of that billion number reported earlier on friday. take a look at the fed. seeing downside in new zealand, kiwi stocks off .2%. the dollar at 59.27. one of the outperformance with the session of u.s. dollar strength, the bloomberg index reporting those with a fifth week of gains. sydney futures looking weaker into the monday morning open, the aussie dollar 75.24, the aussie kiwi 26. gold stemming declines. an ounce,he $1300 crude 71.72, brent crude below $80 a barrel after so much transaction with oil commodities , largely unchanged despite what should be an optimistic tone when it comes to trade. let's get first word news. paul allen in sydney. paul: venezuela is voting in an election largely ignored at home and rejected by foreign critics, including the united states. the main opposition is boycotting what is seen by many as a sham that will have president nicolas maduro in a second term. united nations has refused to certify the vote while washington said it will not recognize the result and warns oil sanctions are under active review. middle east populist

u.s. economy because it means the market has a different view of the future than what the fed has. your big concern, that the yield curve inverts and we get a recession? >> the yield curve would invert. that would send a signal. you can argue about how good it is. san francisco fed that he on said ite out recently has been a pretty good signal of ofblems ahead problems ahead for the u.s. economy. i don't think you want to get into that situation without thinking it through. >> a lot of people starting in the great recession. have complained. particularly in the bond market. >> a lot of people starting in you don't read the kind of message that you used to. >> people say this time is different. this has sent a good signal ever since the 1950's about what's going on. it's a good signal for the u.s. economy ever since the 1950's. i would be very hesitant on arguments that this time is different. the fedr feature is marches ahead and inverts the yield curve. to me that's an unnecessary thing to do at this juncture. we don't have the kind of inflation problems that we had. so you don't

fed minutes. on the dovish end of the spectrum, we could argue this morning. we saw a move in the u.s. where the fed minutes came out to where we are now, there has been a drop in yields on the u.s. two-year, more significant getting a gauge for u.s. rates going. there we are. italian yields, that i feel you should be doing. francine: you are so much better at it. the u.s. has started an investigation into whether car imports threaten national security. stocks have been hit across asia and european trade as a result. washington,rom kevin cirilli. first of all, national security -- what is the argument? reconnect excuse to with the base ahead of midterms? can we expect more hip shooting? kevin: i think you can. every source i've spoken with has suggested president trump is going to continue to use national security arguments as their secret weapon they can play during the trade war, especially with china. i predict we will see it again. i think it is something that allows president trump to get around congress. i have been talking to sources week as well as allies on capitol hill. they

u.s. debt overload and forcing the government to drive a bond issuance is the fed shrinks its balance sheet. the u.s. treasury is boosting the amount of long-term debt it sells to $73 billion. it is investigating adding another five-year sale with regular calendar. and planning to issue a new two-month build -- bill in 2018. the political consulting firm at the heart of the facebook data manipulation scandal is shutting down to cambridge analytic up is filed to begin proceedings in the u.k., what it calls numerous unfounded accusations in the major reason for seizing operations. it says it is being vilified for activities that are not only legal, but widely accepted in online advertising. global news, 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm yvonne man. this is bloomberg. david: thank you. our top story today, chinese iphone makers filing in hong kong for the world's largest ipo. since alibaba in 2014. haidi: they used hong kong's new rules for going public. two days after the rules came into effect. let'

u.s. subsidiary, under fed just dix. >> so it is kind of compare this to lehman is almost, is almost to denigrate how important lehman and aig and all the stuff that happened in 2008 was. this is, this is nothing compared to that. okay? neil: what do you think of blagojevich, martha stewart potential pardons? >> i don't know much about the blagojevich scandal. you know, i have read some stuff on it. it seemed like he did stuff that looked problematic that everybody does, right? exchange a favor for campaign contribution or something along those lines. neil: difference we had tapes. that always makes things -- >> i do know a lot about martha stewart. give you a little history, my partner at time, jerry at "wall street journal." jerry is at "washington post." we broke 99% of the stories leading up to martha stewart's indictment and what feds were looking under james comey, then the u.s. attorney general, u.s. attorney for the southern district of new york. here is the problem that i think trump has marred donning her. she

all eyes going into the fed will be on the u.s.r, which is at its four-month high that's having an impact on various pairs. euro/dollar is close to breaking through 1.20 looks as though the dollar strength is continuing into today's session with the exception of dollar/yen, then cable is one to watch. it has bounced a bit, but we've broken through key levels, through 137 and is now around that 136.40 mark some technical indicators are pointing to further downward moves from here. now that most of those key levels, resistance levels have been broken through. just one last bit of information before we move on. let's talk about italy, because italy was the soft spot in a general slowing of final pmi data france saw the readings revised upwards, while final german manufacturing pmi came in line at 58.58.1 >>> let's look at u.s. equities now. and looks as though the day will be slightly firmer dow was seen opening up about 18 points higher. s&p opening up about 3 points. a lot of the emphases has been on the tech stocks, which is one re

u.s. will be running significantly above the fed's targets in the next few months. u.s. in the less than expected in april. up .2% after falling in march. used car prices drop the most since 2009. the american labor market is still ties to fewer people than expected. jobless claims remain unchanged at 200 11,000. that is near a low that has not been seen since 1973. stunning election result has -- back in power. , a shockingon defeat. froms the prime minister 1981-2003. he defected from the party years ago. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. vonnie: thank you. the goldman sachs finance conference is underway. the deals reporter is on the west coast now. we can see the ocean in the background. >> that is right. thank you. i'm here with the cohead of the investment bank. thank you for having us out here. it is stunning. you set in almost at this exact same spot last year and said it was a great market to sell to it is that the sam

moving around in the wake of the fed decision the kiwi settling below $.70 u.s., and australia it isooking quite with futures pointing higher only at four points, and the aussie dollar also settling below $.75 u.s.. but it a quick check on commodities, gold clinging on by its fingernails to the 1300 level" slipping below $68 a barrel as u.s. inventories rise. we have breaking news for you bank,ational australia give me a moment for like it the right buttons here. out national australia bank with a earnings cash profits of $3.29 billion at the interest income of $6.75 billion, these lines crossing the bloomberg terminal right now. this is one to watch at the moment command you can catch hours exclusive interview with ceo andrew thorburn on the bloomberg markets: asia at 1:30 p.m. sydney time and 11: 30 hong kong. and the fed has rocked the meeting living interest rates on hold, and left work economics policy editor kathleen hays with us. no change in policy or surprises, but significant changes to the wording. is amazing how much power one of the work could have come at it is one litt

u.s. is something along now, 1.7%, given what is implied in the market in terms of fed hikes over the nextould be coming very close to that. and very soon. that tells me that the economy can choke. the u.s. fixed income markets are incredible predictors of a slowing economy. they do not give you the date or month or quarter, but a perception of how bad things can get at how the economy will respond down the road. that is a very clear message. i believe that, if you believe the fed is an clockwork mode, my assumption, you think they would deviate from what the dots suggest. it can be trouble down the road. they do not now or next week but can be trouble down the road, especially for growth assets. francine: do you agree? >> people believe in clockwork in terms of they continuing to-the same people they tell you that they believe there is a high chance for recession in 2020. if that is so obvious, do we believe the policymakers at the fed will walk into this. they could say, we do not believe in the inversion of the yield curve and create recessionary risks. our feeling is that they are abou