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In an interview this weekend also from Singapore where it was the Shangri -La dialogue Bloomberg Television ran with Bloomberg Television Australia's Defense Minister Richard Marles says it's possible to be an ally with the US while also having a productive relationship with China Marles though did express concern with China's military buildup in the region especially without any reassurances as to why they're doing it Australia finds itself in a situation many nations do which is have a military alliance with US the while having to maintain ties with China's economic engine global news 24 hours a day powered by more than 2 hundred journalists and analysts in over 120 countries I'm Dan Schwartzman and this is Bloomberg back to you Brian all right thanks very much Dan well Bloomberg opinion columnist Mohamed El -Erian thinks that there's an elevated risk of the Fed making a policy error his remarks follow the latest US jobs data and some of the recent suggesting communications that the Fed would pause or skip a rate hike at the June meeting here's El -Erian speaking with Bloomberg's Jonathan Farrow the US economy remains a major engine of job creation and that is good news we also know that the US economy is increasingly realistic between what's happening in manufacturing in general and what's happening in services and and all this including today's job reports complicates the Fed's policy challenge whether you call it a skip a pause or hike it's certainly complicated and I must tell you it's going to amplify already lot the high criticism about communication people are not going to be scratching their head why did they guide the market so strongly towards a skip ahead of this report and ahead of the next CPI. Governor Jefferson earlier this week skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming. Mohammed have we got Governor Jefferson back on the phone do you think the message would change? age I don't know I don't know I mean you know I smile a little bit because thinking that one month of data is going to make a huge difference is I think fooling yourself they have framed it that way and it's a shame because I think it's such a narrow framing John we all are now discussing is it a skip is it a pause when there are such bigger issues involved and that's the risk of being excessively risk excessively data dependent is that you get stuck in a in a sort of smaller and smaller corner and the data will pin you there and as the data becomes fluid it pins you there even more you've heard me say over and over again we need a strategic view of this economy from the Fed and they need to to to to know where they want to end up because right now they excessive independent you've complained about the Fed not taking a strategic view as a market participant can you take a strategic view on the direction of things so I worry that this Fed will end up pushing the economy into recession I worry that this will happen for the three reasons you know one is the lack not just of a strategic view but of a valid monetary framework two is I think they have the wrong inflation target and three they're trying to restore their credibility so that's the concern otherwise I think it will be easier to navigate but the risk of yet another policy error I fear is quite high before we had this data your expectation was rate hike in what is it now so if they are serious about that 2 % target given the data they should hike okay if they are true to their word they should hike because they are data dependent and the data has been hotter than expected the surprise index drawn is at levels seen for a very long time pointing consistently to stronger than expected data so if they are true to their word and true to their target they should hike I would not hike but then I have sort of broader issues as you know in terms of how I would be thinking of monetary policy here as Mohammed El -Erian the Bloomberg opinion columnist and the former CEO of PIMCO and looking at the bond market here at the moment the yield on the 10 -year US treasury is at 3 .72 % so up three basis points on a Monday morning the two -year at 454 this is Bloomberg. broadcasting live from the Bloomberg Interactive Brokers studio in New York Bloomberg 1130 to Washington DC Bloomberg 99 .1 to Boston

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