i use the example of the federal reserve versus fed funds future. the fed funds futures as your northstar. dots are irrelevant as to what the fed will do. a better take on the outcome is the futures market. carol: that market can move so quickly. we look at the wrp function but it can train -- changed dramatically. >> when things get close to 50% is when that market is saying that there is a shot here. below 50% like it is now for the rest of the year in some cases below 30% and 40%, it's saying that much of a chance. so it's the wisdom of the crowds and not the lunacy of the crowds. >> the crowds can be fickle. fed funds futures trade to the way stocks trade. you have seen a bit off the bottom today. people have been coming in to the rate cycle is off the table and don't have to worry about that. this is an indicator of market expect haitians that builders into equities -- expectations that filters into equities and every thing else. carol: it's a where to environment no matter which way you cut it. >> it is in its compressed into the last two weeks

the fed continues to resist calls by congress to disclose monetary rules even though it rules it uses such regularly. the fed has beard from data-driven analysis toward the exercise of even more discretion. for example, rather than adhering precisely to stated goals of inflation and employment, the federal open market committee appears to base certain decision on factors such as "financial and international developments that cannot be derived through quantitative analysis." the fed's regulatory conduct has become increasingly opaque and complicated. this is demonstrated by the inherent complexity and overlap in capital and liquidity rules, stressd testing -- testing and revolution -- resolution and recovery planning. a panel experts testified before this committee that conflicts -- complex regulations might increase, rather than decrease, risk in the banking system. criticized transparency in the rulemaking process. this is true of the rules established by the international committee and him posed by domestic regulators on our two shins without -- our institutions without adequate tai

the fed's leadership. i appreciate the response you sent us last week in which you acknowledge that greater diversity can help improve the fed's decision-making and that there still work to be done to improve diversity among the leadership. let me start by asking, does the lack of diversity among the regional fed presidents concern you? >> yes. i believe it is important to have a diverse group of policymakers who can bring different perspectives to bear. i think as you know is the responsibility of the regional banks class. see directors to conduct a search and to identify candidates. the board reviews those candidates and we insist that the search be national and that every attempt be made to identify a diverse pool of candidates. we monitor those searchers while they are ongoing to make sure it's been done. >> but then let me just ask you about the outcome. because just as you said under the law when a new regional fed is selected by the regional board, that person must be approved by you and the others on the board of governors before taking office the fed were recently reappointed each and every one of th

not secret, i've been of this view that the fed has established its reaction function in a way that was credibly non-credible in the sense that they would tell usk we are about to grow rapidly and it doesn't come to pass and they say we will still raise rates, but not do it now. we will wait for six months. the same dynamic plays out. next 12-24 months, we will continue in that same dynamic. growth will be around 2%, not much faster and we are not in danger of overshooting -- the normalization of the growth of the economy does proceed the normalization of rates. doesn't matter when the fed gives knowledge 25 basis point increase? does it help? austan: i'm not sure if it helps, it does matter. if they move too quickly, they might find themselves in the position the central bank of sweden found itself. convinced they were eminently about to start growing, they raise their rates and soon after that, they had to cut the rates. you have the uncertainties of the brexit vote putting pressure on the dollar. you know the u.s. economy needs to shift to more sustainable base growth and it is hard to get your exports up when you are currency -- your curren

an interview earlier this month, governor tarullo stated that the fed is reviewing the application of stress tests to regional banks. he uses the word probably will exempt regional banks from the qualitative portion of c car. last december, the fed announced it was tailoring see car, but the tailoring turned out just to be a restatement of existing policy. what assurances can you give that this current review is a meaningful effort to tailor ccar in a way that recognizes different risk profiles of banks? if so, when do you expect such changes? janet yellen: we are engaging in a five-year, very serious review that has been informed by consultation with both financial and outsidecipants economists. i do think that you will see meaningful changes. the suggestion that governor tarullo made that banks between 50 and $250 billion that are subject to the stress tests might be left out of the .ualitative portion of ccar still the stress tests would be applied, but the full qualitative part of ccar that relates to capital planning, they might be exempted from that. i think that is very likely could we will look at other changes as w

the same old story, you know. give us a report on the economy, but the economy is not really as bright as the fed chairman would tell us. you know, the real unemployment rate is still too high. the e kconomy is not growing li we would like for it to do in a robust way. it is growing, but it is slowly. and i think that the fed has missed the boat two or three times on they act like they are going to raise the interest rate on the fed fund, and then something happens and they don't. i am not sure that the day they that they are operating are from is that reliable. >> i am glad you wentd there, because i thought it was interesting and telling that you asked the very first question about the fed's credibility. it is speaking to the issue which you are talking about here. do you think that the fed has a credibility issue? >> i do. i think that they have a credibility issue in a lot of ways, but the one that i was referring to was that i am not sure that the data that they collect everywhere, and they claim to be such experts at is working for them. because, several, beginning of the first of the year, they sent the signa

said that the models you use, the fed model, do not do well in incorporating financial markets into theirn: that is correct. rbus modelords, the f works exceptionally well, i have many inputs myself, i worked closely with them. people onth the everything else like that. the financial model was awful. it captured nothing and did not grasp what the issue is. what i to reproduce would do. that what wed have, implications. topic. per se are not two thousand bubble collapsed, we could barely see a change in economic and committee . on october 19, 1987, the dow jones went down 23 percent in one day. he will not find a slightest indication that that collapse and that level in the gdp numbers or in the industrial reduction or anything else. i think you have to basically decide what is causing it. -- causing what. i think the models have got to be capturing the bubbles. bubbles are essentially part of the fact that human nature is not wholly rational. you can see it in the data clearly. >> that was alan greenspan speaking with tom keene and mike mckee. we will be right back. ♪ scarlet: welcome bac

the regional fed banks. yes, the economy is still growing but at only a modest pace. that is the word the fed chose to use. fed use that same word modest to describe wage increases and job growth since the last beige book. in other words, this is not the kind of assessment that turns hawks into doves. there is little that suggest an urgent need to raise rates at the next fed meeting on june 15. the one area that stands out is labor markets, which the fed described as "tight." difficulty hiring should translate into inflation pressures in the months ahead. as of now, the fed reported only slight growth in price pressures. anna: next, we will take a step beyond the numbers. to the week's most compelling conversations. topics ranging from apple's efforts in india -- to the case in supporting donald trump. our best interviews are coming up on "bloomberg best." ♪ anna: this is "bloomberg best." it is time to replace some of the week's most interesting interviews. we will start with erik schatzker, the exclusive sitdown with mark -- who reflected on crucial changes in the banking system. >> the good old days, the

us. james corden hosts the shareholder meetings.w we will look at a strategy for pumping up sales. traders are rethinking their predictions on the fed's next move. muhammad ali arian believes a rate hike this summer remains on the table. he will tell us what else may convince the fed to make a move. ♪ betty: walmart held its annual meeting. the ceo wrapped up a press conference just a few minutes ago. the outlookat is based on what you just heard? reporter: no one here is claiming victory but they're pleased with the progress they have made. they have been refocusing the company. we spoke to the ceo and you can hear what he had to say. >> we believe in supercenters, neighborhood markets, sam -- and .am's club and we need to focus we cannot do everything. in the case of delivering value we believe that the neighborhood markets and e-commerce can help us do that. reporter: there was a big emphasis on technology. ship announced a partner with uber and lyft. dronesowed off some they are using in their warehouses to make things more efficient. kind of returning to the fundamentals. turnis how they hope to things around. they are getting to

been a drag on economic growth, leading the federal reserve to stand on its own on monetary policy. but manyeal situation of us appreciate the situation the fed put into and many of us will go to the mat to defend the fed against the ideas that would damage the monetary policy independence of the fed. my question pertains to something you just closed on. there is a narrative developing that while credit markets are as a whole robust, and the facts show that, credit markets are strong for corporate america, but that's not true for strong and medium-sized enterprises. and the narrative as it has developed is that that is true. and that's a question to you. you seem to believe that it's not. number two, the second part of the narrative is the reason for that is bank regulation. this report says new banking regulations have made bank credit more expensive and less available. this affect small firms disproportionately. so my question is, are we in seeing a supply problem in terms of credit to smaller businesses and is there any evidence that that is attributable to new bank regulations? small businesses often find it more difficult to get access t

that's the word the fed chose to use. that same word, modest, to describe job growth and wage increases since the last book in mid april. in other words, this isn't the kind of assessment that turns hawks into doves. there is little if anything in today's beige book that suggests an urgent need to raise rates at the next fed meeting on june 15. the one area i will say that stands out is labor markets, which the fed described as tight. difficulty hiring, of course, should translate into wage and inflation pressures in the months ahead, but as of now, the fed reported only slight growth in price pressures. shery: next, we'll take a step beyond the numbers. to the week's most compelling conversations. topics ranging from apple's efforts to branch into india, to one c.e.o.'s case for supporting dommed trump. our best -- donald trump. our best interviews are coming up. ♪ shery: this is "bloomberg best." anna: it's time to replay some of the week's most interesting interviews on bloomberg television. we'll start with the exclus

the fed has shown us in the past when markets are volatile, they don't like to move. so i think the clock is running out and the calendar is working against them. >> what i found interesting, i this. it is the projections for rates. they basically saw a downward projection for rates. all the way to 2018. that does be sound like it both well for the economy. >> i don't think so, sue. i think the fed has been very watchful of the employment market. they've been keeping an eye on innation. and even with the unemployment rate at 4.7%, we're not really seeing sharp uptick in inflation. perhaps the fed is worried that unemployment has to be much lower than it was today at 4.7%. so i think the chair woman was very cheer that she wants to keep an eye on the data. i think it will take more than one or two strong months. ? have the jobs numbers are complicated. you have an enormous number of people who are the quote/unquote diskornlgd workers. those who have dropped out of the work force for various reasons. does that skew the number the fed has to deal with? >> it certainly do

as close to the fed getting to exchangelati capitulation about the efficacy for fed policy, the outlook for the economy. i think all of us are in a process of continuously reevaluating the neutral rate. you see that -- part of the new normal. 5/8 decline to the funds rate outlook for two thousand --. is very profound. and gdp remain the same. that is very important. i don't know what rick's upset about. rick represents the markets. the rick, the markets won. the fed has completely capitulated to the market's point of view. the fed is not leading the markets here. the markets are leading the fed. >> there is no market. there is no market. there is the fed -- >> you are wrong about that. >> there is janet. there is mario draghi. there is really no market left. only securities for that quarantined all the central banks around the world and maybe we could talk about resuscitating mr. market. >> mr. market is pessimistic and the fed has now gotten to be as pessimistic as mr. market. >> -- threw him a bone and he threw it back at me. >> we're waiting for former dallas fed head richard fisher. i'm dying to ask this question. th

running 345eu9 and icky rubio came in second. >> the fed keeps things unchanged but doesn't rule tout hype. up next the morgan stanley portfolio manager joins us to talk about the fed hike. we will debate it next. ♪ >> i'm jonathon pharaoh. for bloomberg "go." 50e8ds having its best start since any year since 1985. and record low after record low. joining us is jim caron. senior fixed portfolio manager. number one, 30-year yield in switzerland at subzero? when you started your career did you ever think you would see a market like this? jay: never. we can't escape the low on bonds either. i think treasuries are returning somewhere around 57-6%. even if you look at emerging markets, emerging local markets and investment corporate for 5.6%. as yields go negative it becomes more difficult to achieve those returns. >> in the last minute or so the euro dollar went down .6% and i just wonder approaching this that we have next week, everyone downsizing it do i want to think about playing the short squeeze and see where the money is going and thinking about how i can play that thing? jim: yes. one is going into the event. and clearly we don't know a lo

scarlet: the fed and market watchers are out of sync and to that end, the fed uses job owning as a toolhe operations of the federal reserve before the fomc meeting. telling us that janet yellen's speech was scheduled pre-late to give her maximum option alley to signal whether there is a rate increase coming or not weeks before the actual meeting. how critical is the payrolls report? >> it is right that the fed will use open mouth observations. be rightes, they will before a meeting or after an economic indicator. after the last jobs report, they came out and spoke and delivered . we will hear after that. the jobs report matters. that will give us an indication about the trend. and number of things will be a little difficult to determine. one factor is how do they play a role in the fed number? factors theyecial might have to account for. you always want to calibrate for these factors. mykola -- cohost is joining us now. it went to the upside. really surging 20 the highest levels in years. there is the chart surging over 60, the highest level since 2011 we continue with more inflation. i

the fed do? do they go to negative interest rates or what? >> i'm glad you brought that up. there is not much else they can do. we have to have fiscal policy save us. the fed should have raised rates in 2014 when we hit peak earnings. we haven't seen that we're at end of this business cycle. it has been over six years. 68 straight months of job creation and fed, they're going to have to raise rates one time and be one and done. fed funds futures market is showing one more rate hike but that is going to be it. melissa: let me ask you guys about a story that caught my attention today. walmart turning to drone to replace workers in an attempt to speed up distribution. the world's largest retailer is testing drone technology to check warehouse inventories in the united states so a task that take as human worker one month to complete, would just take one day. david: wow. melissa: based on these droneses, rise of the robots, my friend. jack hough, what do you think of this? >> walmart certainly starting to look like amazon almost, i guess not. >> yeah. >> with these jobs, i had dinner this week with big semiconductor chief, he says factory automation. e

an interview earlier this month governor turulo stated that the fed is reviewing the application of stress tests to regional banks. and he usedd probably will exempt regional banks from the qualitative portion of ccar. last december the fed announced it was tailoring ccar, but the tailoring turned out to be just a restatement of existing policy. what assurances can you give that this current review is a meaningful effort to tailor ckrccar in a way that recognizes the different risk profiles of banks? and if so, when do you expect it published such changes for comment? >> so we are engaging in a five-year very serious review that's been informed by consultation with both financial sector participants and outside economists. and i do think that you'll see meaningful changes, the suggestion that governor turulo made that banks between 50 and 250 billion dollars that are subject to the stress test ccar might be left out of the qualifications, still the stress test would be applied but the whole qualitative part of ccar that relates to capital planning that they might be exempted from th that. i think it's likely that we will look

the fed continues to resist calls from congress even though it claims to use such rules regularly. it is public communication the fed has veered further away from data-driven analysis toward the exercise of even more discretion. for example, rather than a hearing precisely to its stated goals for inflation and employment, the fed will open a market committee appears to have a certain decision on factors such as quote financial and international developers that cannot be derived from quantitative analysis. similarly, the fed's feds were dilatory conduct is becoming increasingly opaque and complicated. this is demonstrated by the inherent complexity and overlap in capital and liquidity rules, stress testing and resolution and recovery planning. two weeks ago a ago a panel of experts testified before this committee that complex regulations might actually increase rather than decrease in the banking system. they also criticize the lack of analysis and transparency in the rulemaking process. this is especially true of the rules established by the international committee and imposed by do

yes, the economy is still growing, but at only a modest pace. to fed used the same word describe wage increases since the last beige book in april. this is not the kind of assessment that turns hawks into dubs. s. dove the one area i will say that stands out is labor markets, which the fed describes as tight. difficulty hiring should translate into wage and inflation pressures in the months ahead, but for now, only slight growth and price pressures. moderately.was up better than modestly in the 11 of 12 fed districts. confidence to the borrow more. the beige book can be a bit of a sleeper, but two weeks away from the june fed decision, it takes on greater importance. strong casemake a for a rate hike but does not take the fed off course, either. david: i wanted to ask you what commentary there is on signs of inflation in the beige book today. erik: not much. that is the slight growth and price pressures. on the push aside, yet the tightening labor market conditions -- you have the tightening labor market conditions. anecdotally, the fed does not report a lo

the fed doesn't do that anymore. mike: they give us reasonably explicit guidance. this --sk you both, does forward guidance work at this point? cannotseful if the fed know what happens, and we do not know what is going to happen with all these global developments that keep popping up? alan: i think it is very useful. meanhat does not controlling. the market has look at past history, correctly seen that the fed has overestimated the strength of the economy, conclusively overestimating and expressing this belief in that forecast. that is fine. what you like the markets to do is processing a lot of information, including what comes out of the federal reserve , and make its own judgments. that is what people get paid to do, and that is fine. i think it is good. it is certainly useful in terms of setting a framework for the market to look at events. having said that, it is interesting me to talk about issues like china, like brexit, issues that clearly nobody has a handle on in terms of what kind of reaction they will elicit an the market or the economy. but still have f

the fed's leadership. i appreciate the response that you sent us last week in which he acknowledged that great diversity can help improve the fed decision-making and that it is to work to be done to improve diversity among the fed leadership. let me start by asking does the lack of diversity among the regional fed presidents concern you've? >> yes. i believe it's important to have a diverse group of policymakers who can bring different perspectives to bear. as you know it's the responsibility of the regional banks class b. and c. directors to conduct a search, and to identify candidates. the board reviews of those candidates and we insist that the search the national and that every attempt be made to identify a diverse pool of candidates. we monitor those searches while there are ongoing to make sure that's been done. >> but then let me just ask you can about the outcome. because just as you say, under the law with any regional that president is elected by the regional fed board, that person must be approved by you and others on the board of governors before taking office. the fed board recently reappointed

the fed's leadership. and i appreciate the response that you sent us last week in which you would knowledge that greater diversity can help improve the fed's decision-making and that there is still work to bediversity a's done to improve diversity among the fed's leadership. so let me just start by asking, does the lack of diversity among the regional fed presidents concern you? >> yes. i believe it's important to have a diverse group of policymakers who can bring different perspectives to bear. i think as you know it's the responsibility of the regional banks class b and c directors to conduct a search and to identify candidates. the board reviews those candidates and we insist that and thath be national every attempt be made to identify a diverse pool of candidates. and we monitor those searches ongoing to make sure that's been done. >> but then -- let me just ask you then about the outcome here. because just as you say, under the law, when a new regional fed president is selected by the regional fed board, that person must be approved by you and the others on the board of governors before taking office. the fe

the interest paid by government bonds has almond to record lows. it has never been cheaper for developed nations to borrow money, which takes us back to the fed, whichosite direction. clearly, central bankers communicate to some extent, but it will be important for investors, bankers, and economists to have some sense of how these meetings take place. the u.s. cannot go it alone. the fed needs some coordination and support from fellow central bankers. it should not be afraid to just say that. shery: you can find plenty of fast commentary on timely topics in the gadfly section of bloomberg.com along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching bloomberg television. ♪ ♪ announcer: from our studios in new york city, this is "charlie rose." charlie: welcome to the program. we begin this evening with the president of the united states in orlando. president obama: i am pleased to hear the senate will hold both on preventingotes individuals with possible terrorist ties from dying guns, including assault weapons. i truly hope that senators rise to the moment, and do the r

the fed's so-called forward guidance continues to provide little or no guidance to the rest of us. the form act, endorsed by nationally renowned economists, including three nobel laureates, would help re-establish the fed's independence and promote economic growth by ensuring a systemic monetary policy framework that is truly data-dependent, consistent and predictable. another drag on our economy is the fiscal and monetary policy by the fed. paying interest on excess reserves at above-market rates, the fed has swollen its balance sheet by which it now directs credit to favored markets. stanford economics professor john taylor rightfully calls this "mundustrial policy" for the combination of monetary and industrial policy it represents. by inviting distributional interests to cred out of market discipline of credit, it favors some for the expense of many and weakens economic growth for americans. left unabated, the central bank will soon become our central planner. this cannot be allowed to happen. it is way past time for the fed to commit to a credible, verifiable monetary policy ru

the interest paid by government bonds has almond to record lows. it has never been cheaper for developed nations to borrow money, which takes us back to the fed, which the opposite direction. clearly, central bankers communicate to some extent, but it will be important for economist to have some sense of how these meetings take place. the u.s. cannot go it alone. the fed needs some coordination and support from fellow central bankers. it should not be afraid to just say that. you can find plenty of fast commentary on timely topics in the gadfly section of bloomberg.com along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching bloomberg television. ♪ >> general motors, navigating change. healed carmaker is trying to become the new technology company. >> this is a transformational time in the transportation industry. david: gm leadership wants to change the company from the bottom up and from the top down. >> resistance will pull down pretty quickly. >> they want to be held accountable. mary: if you see me something that is doing a consistent focus talked about,. call me o

the economy. how much are investors weighing that guidance? michael aurora from jones trading joins us. floor perhaps the 2% is a and the fed may not be willing to go beneath it. -- michael o'rourke joins us. michael: going forward, they are converged on 2% now, something relatively new. basically, the fed wants to see the gdp continue to grow in this country, but i think they are hesitant to actually post a gdp forecast a low 2%. it will show that the monetary policy for the past seven or eight years has not worked. so we see these estimates converge on 2% on the longer run , and the only time we will see the fed predict gdp lower than that number is when they are already tracking there. to thing is, it is important recognize because when we look at these fed forecast, and they are not really real forecasts. they are biased to the upside. vonnie: do you think certain members might see lower michael: thehat? language they use when discussing forecast and willies, they believe it change policy to get us back to 2%. same thing with the inflation rate. it will say the longer run forecast is this level because we believe we can

as sure you have some ideas to what could be added, financial conditions, etc., what in the fed add to give usetter clue of what might get them to lift rates? ini am a strong believer scenario analysis and contingency planning. the fed should do it for its own monetary policy. joe: thank you so much. fantastic discussion. down, three to go, the bank of japan and bank of england our next with their policy decisions. ♪ scarlet: "what'd you miss?" the boj is next with its policy meeting. japan faces a stronger yen. let's get the perspective from the chief global economist at s&p global ratings. great to see you again. the fed lowered its forecast for .ow many increases it sees what does that do to the boj's calculus? from fed monetary policy to what japan will be thinking will come through the exchange rate. this will be something that could lead the bank of japan to ease more. there is all this discussion about whether the fed is being clear enough. when it comes to the boj, there is a lot of criticism that governor kuroda likes to surprise. is that a fair reputation and hurting the boj? >> i th

the fed will raise rates. if that comes out with a hawkish statement, we can see that change. scarlet: exactly. ellen zentner stays with usecial report "the fed decides." ♪ get ready for the rio olympic games by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. >> this is a special report. i am scarlet fu along with tom keene and michael mckee. let's get you started with a check of what is going on the markets right now. we have the dow and s&p slightly higher. oftec up by about one third 1%. tom, you're looking at the two-year. tom: what is interesting is i know we are doing a foreign section here and that is appropriate. know, maybe it has to do with two chancellors on the stage today, but the fact the data screen this time around is typical of most fed meetings. >> the prime minister did not consult the central bank calendar around the world. help if we

the fed doesn't see itself having a foot on the accelerator pedal. >> the other part of that op-ed you are pointing out, companies are using low interest rates to do buybacks and dividends as opposed to investing capital investments. that's where the fed is getting it wrong or the policy hasn't been as effective as otherwise you might think. >> that is a theory that's been around a while. i've done a bit of research on this. i can find no connection between the fed doing quantitative easing and companies doing buybacks. if you look at the history of things, when stocks go up in value, company investment and equipment goes along with it almost always. there is no other way to incentivize -- you can from the fiscal side. from the monetary side, there is no other way to incentivize capital investment but to push up overall asset prices. >> steve, thanks so much. >>> let's get market reaction to yellen's comments. >> bond yields did move down. the dwroorl did weaken. s&p moved a little to the down side, but largely gained it back. we were up about ten points before ms. yellen began speaking. look at the s&p futures. i don't think she tipped her hand wh

now with the capitulation, we are left with the bad and we have no real strategy, the fed is basically telling ustheir tool box doesn't have a tool. you know, it's a philips screw and they don't have a philips screwdriver. in the end this isn't going away. what it really does is the brexit vote instructs us, it puts pressure on many parts of society. and they are going to turn to the political class because they are the only people who could find the right tools, who can get the right tools, who can use the right tools, because the fed can't change tax policy, the fed can't change the notion that everything isn't humming right. you know what it's like? if you spend a boat load of money trying to get your car to go faster and you don't fix the part that's wrong you're missing two spark plug, you've wasted a lot of money. so this just makes voting in november and the elections we've had in spain and all around the world, not only that much more important but probably that much more intense and i don't know that there's any quick solutions. one thing i know, somehow these central bankers should stop

the interest paid by government bonds has almond to record lows. it has never been cheaper for developed nations to borrow money, which takes us back to the fed, which the opposite direction. clearly, central bankers communicate to some extent, but it will be important for economist to have some sense of how these meetings take place. the u.s. cannot go it alone. the fed needs some coordination and support from fellow central bankers. it should not be afraid to just say that. shery: you can find plenty of fast commentary on timely topics in the gadfly section of bloomberg.com along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching bloomberg television. ♪ ♪ emily: i am emily chang and this is the "best of bloomberg west." microsoft adds linkedin to the professional network and we speak with the ceo about one of the largest acquisitions in tech history. apple's blueprint for the next generation. the tech giant renews its commitment to the tech giant at the conference and ask developers to get in on siri. and the must watched moments from the bloomberg tech conference.

the u.s. economy. concerned about productivity. david: joining us shortly to talk about the fedli the chief u.s. economist. jonathan: and it is referendum day in the united kingdom, region is voting on whether to stay in the european union. u.k. law prevents us from reporting on voting while the polls are open. what we will be following the action as results come in with special coverage beginning at 5:00 p.m. eastern. 90 minutes away from the market open. dow futures are positive. s&p 500 futures positive almost 18 points. day gain inght london with the ftse 100. , the poundhe board is at a 2016 high. we trade at 1.48. the yields are trading higher. at yield of the tenure is 1.73%. david: let's go around the world for coverage with our top stories. we are in paris with disappointing economic data. michael moore is in london. important conversations are to be had. we begin in europe with disappointing economic data coming in from france. the french pmi dropping below the 50 mark across the board. tell me what that means? >> if you look at the french economy in the past few month

the debt. and steve liesman listening of course. >> what we are hearing is a fed chair who is no hurry to raise the rates. she is using the term headwinds and suffering she said of the repercussions of brexit, and the long-term optimistic view, carl, but it is a fed not in any particular hurry to raise the rates, and wait for things to clarify the economic situation and the foreign situation before moving forward here, carl. >> thank you, steve. we will listen in, as the fed chair's testimony continues. >> the impact of the state of demand, and it is not only a t matter of shifting purposes early by having more accommodative financial condition conditions. there are repercussions that are longer lasting than that. >> and my consensus of the academic consens is -- conksenss of the economic activity that is taking place at that time. >> you are acknowledging, there is some of that phenomenon? >> well, it is not the only thing. >> so to what extent is this unprecedented accommodative monetary policy for these many years part of the reason that we have had relatively anemic growth today? isn't it likely that the case is t

us. the feds, while they continue to favor no rate hike, if they stay with it, i think the fed likely raises rates based on fundamentals in their july meeting. so i don't think the fed's going to go away, but the brexit issue will go away one way or the other creating good near-term buying opportunities based on fear. >> jacking we should mention what's happening in china and japan. certainly overnight it seemed like the chinese currency was weakening, a lot of the data and the bank of japan with all the rate headaches has a meeting coming up. so what's the bigger risk, do you think, or opportunity? >> right now, negative rates are a cancer. we have to understand that. it's not only asia. it's happening in europe. i've dealt with them for years. i can tell you first hand, several bankers and bankers alike are staying up with this negative interest rate and wondering how long it's going to take because quite frankly people are hoarding cash. they're looking for ways to be able to preserve capital. none of this is workingful we're not seeing any of it come out. we're not seeing any inflation s

the rally from february. low msci, all country world index, as you can see. let us see the fedncreasing rate manus, asian stocks up a bit. adding to that push a little bit higher. we see increased appetite for some of the emerging markets assets, as well as the feature in overnight trading. manus: i mean there is a lot to digest. yen is on the move. emerging markets shifting as well. this is what you need to keep an eye on. i love the story we have on government bond in the united states 50. term premium, anna. we will talk about this later with james foley. the market is prepared to accept bonds below fair value. a dollar korean yaun, this is down. the longest run of games for the yuan since the emerging markets are definitely getting reprieved. dollar-yen, where can i go to next? is mad dog to be believed? you have to stay tuned for the rest of countdown to find out exactly who mad dog is. anna? anna: i am intrigued. the fed and boj firmly on the agenda. let us get the bloomberg first word news. here is yvonne man. yvonne: barack obama has congratulated hillary clinton for he

the 18% chance of a fed rate hike in july. we had this on bloomberg under the work function. tell us about the fed's choices, then. we keep hearing they are data dependent. but in your view, do they have some kind of agenda where they do see the dangers posed by a low interest rate environment, and they just want to get things moving? >> well, i think the last payroll report has reduced treasure on the fed -- has reduced pressure on the fed to do something now. but they have a choice of raising rates over the summer to a level that is still highly cyclical in real rate terms. anna: and that would be short-term pain, you think? >> yes, because it is a controlled one. the fed can easily communicate and implement without causing any shock to the real economy. or having uncontrolled pain in the future whereby a lot of the control over the financial kin , and with respect to the unemployment rate, or their create in rate, would the worst-case scenario, dependency on a high debt growth environment, where even the smallest rate rise can cause distress. arguably, we are already there. anna: so, we could get some better jo

the next fed meeting for june 14th and 15th. a small chance of a rate hike at that gathering, but the cme group's fed watch program tells us the markets are now pricing in a roughly 59% probability of a move at the july fomc meeting. speaking of the central bank, the fed says chair janet yellen will attend this year's jackson hole conference in late august. the annual gathering is hosted by the kansas city fed. you might remember yellen skipped the event last summer. >> it was much talked about. >> it was indeed. >> chicago fed president charles evans says there could be two rate hikes this year if u.s. economic data continues to be favorable. but in an interview with cnbc in london, he says the timing of those moves isn't that critical. >> two rate hikes in 2016, that's my own call for that, if the data continues to be in line with my outlook. that's a slow and gradual increase this year. >> slow and gradual. but asked whether the uk's brexit vote would have any bearing on a fed hike this month, evans says he's not sure it plays an important role in policymaking beyond monitoring overall global financial conditions. >> it is a couple

and the new details are not without controversy over what the feds didn't want us to see before making a reversal late today. nbc's gabe gutierrez has those details. >> reporter: at 2:35 a.m., more than a half hour after the first gunshots, omar mateen calls 911 and speaks to a dispatcher for 50 seconds. in arabic he says, p praise be to god, and prayers as well as peace be upon the prophet of god. he admits, i'm in orlando, and i did the shootings. >> he did so in a chilling, calm and deliberate manner. >> reporter: mateen then said, i pledge allegiance to abu al baghdadi of the islamic state. the redacted transcript omitted any reference to isis. but critics like paul ryan said the administration was minimizing the threat. the fbi released an unredacted version calling the controversy an unnecessary distraction. >> we're not going to propagate violent rhetoric. >> reporter: with hostage negotiators, mateen identifies himself as an islamic soldier and demands america stops bombing syria and iraq. he falsely said he has explosives in a vehicle outside. by 4:21, police pull an air condi

former reagan budget director david stockman, former dallas fed vp and jon hilsenrath, and anthony scaramucci, join us for the fed rate decision and reaction to janet yellen's news conference. the closing bell, we're now seven and a half minutes away, if not tomorrow, then when? the federal reserve window of opportunity to raise rates in 2016 is narrowing. the man who closely tracks the u.s. economy for citigroup with me exclusively has a prediction, you need to hear it. the countdown coming back with bill lee from citigroup when we come back. when they actually did start saving. this gap between when we should start saving and when we actually do is one of the reasons why too many of us aren't prepared for retirement. just start as early as you can. it's going to pay off in the future. if we all start saving a little more today, we'll all be better prepared tomorrow. prudential. bring your challenges. : . liz: we're about 4 1/2 minutes away from the closing bell. i want you to look on the screen here, looking at the volatility. the fear index has reversed. it has punched to the upside. a second ago there, we

the fed and the eu referendum. you can take the fed out of it, take the live wire out of it. some people are usings a hedge and think about the issues. sterling his actually appreciated against the euro but against the dollar has done nothing. tom: help me with steve major's housecall on a low rate. what is that going to do to german yields? i have noticed german yields have not gone lower but they certainly cannot find a higher yield, lower bund price. you just assume german yields grind down with u.s. yields? david: it has been a brilliant call. we are looking for yields to stay low and keep low, and that is part of the german problem. they have a massive savings ratio in savings rate, and they put money in and there are no returns. some of the smaller banks are closing and that is causing issues in germany, social and political issues. it is trying to put pressure on the ecb, so an interesting dynamic, but the low yields are here to stay. they are going to sock emerging markets yields lower as well. us, withd bloom with age sbc -- with hsbc. 0.136%,an 10 year, grinding lower this morning. we ne

china does not like those external shocks that got us to the financial prices and has got us on the feda tighten bias. they've been investing heavily over the last year or so. they had the high profile by the president in october where the two leaders david cameron called it a golden era of relations and ping said the two countries are becoming increasingly i and there was $30 billion of deals announced. china's been investing heavily into the u.k. turning london into a remdi act n shore center as kind of a konadu wit as a continue of europe but that's been thrown a bit into question and that's what's been on the mind of government leaders here at what they call the summer davos here at the world economic forum. and i've heard him speak so many times. he always does the same pattern. there are challenges which you said. there are more uncertainties with the brexi texas but he reassured that china has the tools to weather the storm and their fiscal policy tools are still in play as to whether any external shocks and that's baseedly high message. medium to high growth rate are expected. >

david: a janet yellen signals the fed may hold back while others question the credibility of the fed. senator richard shelby joins us. as we doixed sessions with brexit. david: will it have an impact on the travel industry? ar guest is the founder of travel website. ramy inocencio has the latest. y: term right now is range bound. janet yellen speaking on capitol hill with her testimony but also her influence as we head toward that brexit both. we are in mix territory right now. the nasdaq looking into negative territory in the last hour or so. the dow and the s&p paring earlier gains. the dow have been as high as 60 point tower, now up by 19 points. this is a range bound trading kind of day. s&p's 10look at the sectors, even though it is range bound, seven out of 10 are in the green, telecommunications of the most by 1%. health care consumer discretionary, and materials are the laggards. withials seeing a selloff global commodity prices for the most part sliding. take a look at what is happening with telecommunications being the biggest leader. it is happening because of sprint, up 7.5% right now. this is a three an

the us us fire services the flames are being fed by strong winds, high temperatures and low humidity. >> we had all the wind pushing the fire so even though it's flat topography it moves quite a bit because of the wind and the grass. >> more than 2000 firefighters are making progress battling a wildfire in central california the blame -- claim two lines -- lives. >> it got hot enough it eventually hit my house. >> i lost everything you know they don't have a homes. >> thousands of people have already been forced to evacuate since the erskine fire on wednesday. >> we want to make sure that when our citizens come home that they are safe. all of these items need to be mitigated by our firefighters. >> the challenge for service crews is they're dealing with the entire neighborhoods that have been destroyed. so they are having to go are pretty by property with cadaver dogs looking >>> tracking the weather we have temperatures to talk about. these are the official highs recorded this afternoon within the last half-hour from the national weather service. it's clustered out in the livermore v

the fed continues to resist calls from congress even though it claims to use such rules regularly. it is public communication the fed has veered further away from data-driven analysis toward the exercise of even more discretion. for example, rather than a hearing precisely to its stated goals for inflation and employment, the fed will open a market committee appears to have a certain decision on factors such as quote financial and international developers that cannot be derived from quantitative analysis. similarly, the fed's feds were dilatory conduct is becoming increasingly opaque and complicated. this is demonstrated by the inherent complexity and overlap in capital and liquidity rules, stress testing and resolution and recovery planning. two weeks ago a ago a panel of experts testified before this committee that complex regulations might actually increase rather than decrease in the banking system. they also criticize the lack of analysis and transparency in the rulemaking process. this is especially true of the rules established by the international committee and imposed by do

what that number could tell us about the fed. will they be likely to raise interest rates more quickly? we will see. >> i can hardly wait. i'll hold my breath. >>> we now know what killed music icon prince. the investigation into his death isn't over yet. details coming right up. >>> now we now know that prince died of an accidental drug overdoes. the medical examiner reporting that fentanyl was found in his system. officials say the drug is 50 times more powerful than heroin. 50. 5-0. the question this morning, how did prince get it? here's sara sidner. >> reporter: christine, miguel, what killed prince is no longer a mystery. it is spelled out in black and white in the medical examiner's report. it is a page long and gives sparse details. it tells us the cause and manor of death. he self administered fentanyl. he died from fentanyl. it is the strongest killer. it is 50 to 100 times stronger than morphine. 50 times stronger than heroin. it is an extremely potent drug. now the question is how he got it. did he have a valid prescr

the world. we are now used to the fed watching markets.t is interesting to throw europe into this, the center of europe which is berlin at the moment because the euro thing really affected by the volatility we've seen with the brexit debate. how much a expecting volatility to calm? it seemed to be an initial knee-jerk reaction. policing sentiment change for the euro? kit: yeah, i think there is no doubt that if someone wants to argue if you listen to mr. cameron and say leaving the eu would be better for the u.k. economy, the u.k. leaving the eu would be bad for the european economy. is whyural conclusion europeans feel the need to be involved in the debate of a point. debate is the uncertainty in the economy is slowing. that is done now i don't agree get that back. caroline: do you agree with our that hasguest saying been slowing for 18 months? kit: peak growth is sometime behind us. you can see that feeding through in terms of the currency. that is important. in that sense, that vote isn't important. when i wake up in three weeks time an