35 Burst results for "Fomc"
"fomc" Discussed on The Breakdown
"Start with the biggest theme this week, which is about what the week told us about where we are psychologically. Obviously, there was an FOMC meeting where somehow investors were taken by surprise that the fed believed that at the end of next year, the federal funds rate was going to be somewhere between 4.25 and 5%. So when all was said and done, the 75 basis point rate hike didn't really matter to investors, but the fed's acknowledgment for how long these market conditions were likely to remain did. We also learned as I went
"fomc" Discussed on Bloomberg Radio New York
"Balance of power and Bloomberg television radio. I'm David Weston just over 24 hours to go now until we get that FOMC decision and the markets are anticipating it. I'm sure critic Gupta will tell us how. Yeah, well, I mean, this is pretty a normal stock market reaction ahead of the FOMC. You always see a little bit of a decline going into the fed meeting. The problem here is that you always see kind of a massive rise on the day of the fed. It kind of seems like the market is angling for that. You're looking at the S&P 500 down about 8 tenths of 1% of NASDAQ down four tenths of 1%. So tech, outperforming just a little bit, but really still some pain in the markets where you're seeing a lot of pain, though, is the bond market. A lot of the money coming out of the treasury market here, sending that ten year yield up 7 basis points to three 56. And that's going to be a crucial part of the conversation in terms of what's next for the dollar because that dollar strength story continues to be quite prominent. And at the same time, the two year yield, which really kind of shadows the fed and is on the front end of the curve. Three 96, David. Yeah, it's 306 at the same time, too, is not going up quite as fast as the tenure right now. And it was a reverse for a lot of lessons. Exactly. But it's interesting because it's really just kind of flattening in a few different ways, which is challenging, especially when we're talking about those recessionary outlooks. And it's not just the bond market, the thing so. At the same time, Ford got hit today. Four got hit in a very big way, down about 10%. What's interesting is kind of a positive and a negative story. We'll start with the negatives here as we always do in journalism. I have to say, before coming out and warning about a $1 billion cost, we're increasing costs when it comes to commodity pressures. Think about it. They're trying to mobilize their fleet, do more electric vehicles, those costs, pressures you're seeing in the chip space, which you need more of to make those electric vehicles think palladium think metals think cobalt, lithium, all of these things that you need to go into cars. And on top of that, they're saying 45,000 cars might just be partially built. They're not even going to be fully built and ready, ready for sales. The process of side of that is even with all of those issues, they're still keeping their full year forecasting. They can make it up in the fourth quarter. Well, that's interesting
"fomc" Discussed on Bloomberg Radio New York
"Get them to dial back the hawkish rhetoric when we're tomorrow morning. We're going to get another hot core PCE and another hot PC inflation number overall. And that's unacceptable. And I think what's happening outside overseas is kind of very secondary. Michael, the dispersion here of outlooks is extraordinary. How do you define neutrality right now? Are we there to o'clock today? Are we there in September? So according to the median estimate of the FOMC participants, a 75 basis point hike today would get us to a neutral nominal funds rate. I think neutral is probably a little lower than that. I think the tightening we've seen in financial conditions when terminal is being priced at three three and a half suggests that neutral certainly is low. How much lower than three and a half it is. It's hard to say, but I think it's probably below the F one C two and a half that they currently have penciled in. Certainly, everything we have seen since the end of the pandemic suggests that trend growth, both here and abroad remains as weak as it was before the pandemic. Mike was skipping to September 21, before we get there, we've got two more CPI prints, two more job reports. Is it too early to expect some weakness to show up in those payrolls reports before we get to September? I think weakening is certainly possible. But when the three month average of payroll growth 375,000, you know, to expect a negative number before the September print, I think, is would be kind of an unprecedented slowdown. So I do think we should see things slowing, certainly the jobless claim numbers would suggest that surveys would suggest that. But I don't think we'll be convinced of a recession by the time we get to the September FOMC meeting. At the same time, there are signs of pretty severe slowdowns, particularly in the housing market. We got an additional data today How does the fed view this? This is what they want to do, right? They want to tighten financial conditions, but it seems like it's a really bifurcated tightening with a lot of conditions. The stock market doing okay, whereas other areas like the housing market where the rank and file individual is trying to buy is a little bit more tenuous. Is this a good thing for the fed? Well, it's a normal thing. I mean, when you tighten policy interest sensitive sectors get hit the hardest, the one that gets hit the hardest and the most reliably is the housing market. So that's doing what it should be doing. There's a lot of other parts of the economy that are much more unusual in their behavior right now. Some of that due to the lingering effects of the pandemic, the recovery of the service sector. But I think the housing market is I think the fed is probably happy with the slowing that they're seeing there. And I suspect we'll start to see some slowing and manufacturing just given the strength of the dollar. And again, that's another normal effect that's another interest sensitive sector. But a lot of other things aren't behaving as normal. Yes, it would in a business. That's the objective you said it. My
"fomc" Discussed on CoinDesk Podcast Network
"And 40% respectively in four days leaving many traumatized. This likely makes today's CPI the most watched inflation number in history. Such a crash is very unlikely to repeat itself for 5 reasons. Number one, the crash was driven not only by a high print but more importantly by a large beat of consensus. Number two, the market is already expecting a very high print higher than in June and has already sold off considerably since Sunday in anticipation. Number three inflation is expected to fall considerably from here, mainly due to falling gas prices, number four today's CPI is unlikely to change the fed's reaction curve, which is what truly matters. The fed is seemingly set on a 75 basis point hike in July, which is fully priced in. July's FOMC should be a minor event with all eyes on September's FOMC. No FOMC in August has boomers take a month off. Number 5, when it comes to crypto, much of the industry has already capitulated. I expect CPI higher than consensus and thus the ensuing dip to be faded rather than start a new downtrend. So let's talk then about what actually happened. The banner headline is that the consumer price index rose 9.1% year over year in June. It's the largest gain in 41 years since the end of 1981. The month over month gain was a 1.3% jump, which is the highest since 2005. The key aspects of this inflation print were higher gasoline costs, the higher shelter costs and higher food costs. You know, three fairly non-essential categories. As we know, however, what matters in many ways more than the numbers themselves, at least in terms of short term market reaction, is how they came in relative to expectations. Economists had projected the month over month would be 1.1% and the headline would be 8.8%. That's versus the 1.3% and 9.1% they were respectively. So we came in with a hotter inflation print than expectations. Now the other number that people watch is the core CPI, which strips out food and energy, which are more volatile. Those are up 0.7% month over month and 5.9% year over year. A few of the key areas gas prices rose 11.2% in June from a month earlier. Energy services including electricity and natural gas increased 3.5%, which
"fomc" Discussed on Bloomberg Radio New York
"And financial advice to lottery jackpot winners who's now accused of fraud. First up this hour though, in addition to Friday's job print, new FOMC minutes came out this week, officials see a 50 or 75 basis point hike coming later this month. To help break down the latest missive from the U.S. Central Bank, Bloomberg news senior markets reporter Katie greifeld and senior markets editor Mike Regan spoke with Don mccree had a commercial banking at Citizens Financial Group. I think it was pretty much as expected. I think share Powell and his testimony a few weeks ago was certainly pretty hawkish and we're leaning towards probably a 75 basis point move Again, reinforced that there's a likelihood that the economy could slip into some kind of recession, whether it's deeper, shallow is to be seen. Don, it strikes me as a pretty difficult environment to be in commercial banking. One day we have interest rates rising really fastly, the next day they're coming back down. The focus seems to shift from concerns about inflation to concerns about the economy, possibly falling into a recession. What is sort of the atmosphere among your clients right now? Are they sort of pulling back on demand for loans at a time like this? Or is there even more demand? It's actually pretty good. I mean, if anything, there's more demand at the margin. That's largely a function of a lot of the other markets being so disrupted. So the equity markets are clearly selling off. There's not a lot of new capital being raised there. The high yield market has been essentially close. I think there was 25 billion of issuance in the last quarter, which has got to be a record low. And very like calendars going forward and the institutional loan markets are kind of backed up right now. And really kind of hanging from the sidelines. Do I see what the economic picture? So we've had a pretty heavy client flow. And remember in a bank like ours, our loan book is floating rates. So as rates go up, the short term index and floating rates those rates go up that's generally a good thing for our P and L and bank earnings. And then on the risk side, I would say that we're seeing very little stress in the portfolio. I think that CEOs got very serious during the pandemic. They adjusted their businesses, trim their workforce, adjusted their working capital. And that's continuing as they stare into a potential recession. So people are very focused on taking actions on their business to try to make sure they can survive whatever the economy throws on them. And Don, what kind of conversations are you having with clients right now? Because if I look across Wall Street commentary that I get in the morning, if I look at consumer sentiment surveys, it seems like there's a lot of angst out there. Would you say that that's showing up in some of the conversations that you've been having as well? It is. I'd say concern. I think angst is a little bit strong. I think they're trying to figure out ways to automate and become less dependent upon labor because that continues to be a real constraint being able to hire people. That's constraining the sales line in a lot of our clients. One piece of good news is that they're not worried about is interest rates because a lot of companies refinanced over the last two or three years taking advantage of the really low rates that were available in the marketplace and termed out their debt. So we're not facing a wall of maturities that we might otherwise be facing right now. And if they're not if they're not termed out, there's been enormous amounts of hedging activity both in the currency markets and in the commodities markets and in the interest rate market. So people are people are somewhat protective in a rising rate environment, which is the other thing you always worry about. So Don, how does someone in your position sort of think about and prepare for a recession? Time to start tightening up your underwriting standards on the loans you are ishing or the too early for that. How do you sort of navigate such? We're definitely tightening a little bit at the margin and being more selective, particularly if it's not an existing client. Number one is we bank a large number of our clients for many, many years. We've seen them go through cycles. We've seen how the management's behaved. Literally in touch with them weekly or monthly, really understanding what's happening in their business and how they're preparing. On the new business side, if something is a little more marginal or a little more leveraged, we may take a pass at the split second, but I wouldn't say it's significant in terms of our origination volumes. Interesting to hear you say that it does matter whether or not this person has been a client in the past in terms of evaluating. But I am curious, I want to hear your broad thoughts on what this sort of whiplash that we've seen across financial assets, not just in stocks, but in bonds and all corners of fixed income. What that has meant for M and a and for deals because anecdotally, I don't have the numbers in front of me. It feels like there's been quite a slowdown. Yes, there has. And we have we continue to have a very, very large, maybe record M and a pipeline. It's just not going to be executable right now. If it requires financing of any kind of scale with any kind of leverage, so think about the private equity arena, there's been a real slowdown in terms of P and E or P E oriented M and a. And then I think if you've got size, if you have to go out and raise 7, 8, $9 billion is part of an M and a transaction. The markets are just not that deep right now. And that's a way from buyers and sellers trying to figure out whether value still works at whatever in whatever conversations that they've been having. So I think you need a valuation adjustment in certain areas of the economy. And then there's going to be a wait and see in terms of what can be financed. In particular, it's got some size to it. That was Don mccree head of commercial banking at Citizens Financial Group, along with Bloomberg's Katie greifeld and Mike Regan. You're listening to Bloomberg businessweek, coming out the story of the so called lottery lawyer who stands accused of a massive fraud
"fomc" Discussed on Bloomberg Radio New York
"This is a Bloomberg business flash. From Bloomberg world, headquarters, I'm Charlie pellett, an FOMC meeting a minute meeting today and we did have the Dow the S&P and nez stack rallying stocks to close off session highs, but still an advance with the S&P up for a third straight day, investors were sifting through the economic data that hinted at slightly slower growth, prompting some to brush off the hawkish stance at the fed reiterated in its June meeting minutes as outdated. S&P was up 13 up by about four tenths of 1% that out today up 69 gained near of two tenths NASDAQ up 39 higher by about four tenths of 1%. Ten year yield 2.92% spot gold at 1738 the ounce down $26 ounce, a drop today for gold, of one and a half percent, West Texas intermediate crude oil, 98, 18 a barrel, WTI down 1.1%. Briefly, GameStop has announced a four for one stock split in the form of a dividend and we've got shares of GameStop up now by roughly 3%, and apple is planning its largest smartwatch display to date a bigger battery and a rugged metal casing as part of the upcoming Apple watch geared toward extreme sports athletes thus according to people with knowledge of the plans. Recapping a move higher for stocks, S&P up to date by four tenths of 1%. I'm Charlie paddleton net. There's a Bloomberg business flash. All
"fomc" Discussed on Bloomberg Radio New York
"Right, thank you so much, Charlie pellet. I'm Katie greifeld here with Mike Regan. This is Bloomberg businessweek. I'm doing my best Carol master. Mike, I think you do a pretty mean tip. I mean, mean is the right word for that. Mean in a good way. Let's go to our next guest. We have Don mccree on the phone from Boston. He is head of commercial banking at Citizens Financial Group and done, let's talk about the news that dropped a 2 p.m., those FOMC minutes. It feels like there wasn't a ton of new information officials see a 50 basis point or a 75 basis point as likely in July. Did this move the needle for you at all? No, I think it was I think it was pretty much. I was expected. I think share Powell in his testimony a few weeks ago was certainly pretty hawkish and we're leaning towards probably a 75 basis point move, but I didn't, as I looked at the information that came out a few minutes ago, I didn't say anything new. And again, reinforce that there's a likelihood that the economy could slip into some kind of recession, whether it's deeper, shallow is to be seen. Don, it strikes me as a pretty difficult environment to be in commercial banking. One day we have interest rates rising really fastly. The next day they're coming back down. The focus seems to shift from concerns about inflation, so it concerns about the economy, possibly falling into a recession. What is sort of the atmosphere among your clients right now? Are they sort of pulling back on demand for loans at a time like this? Or is there even more demand? It's actually pretty good. I mean, if anything, there's more demand at the margin. That's largely a function of a lot of the other markets being so disrupted. So the equity markets are clearly selling off. There's not a lot of new capital being raised there. The high yield market has been essentially closed. I think there was 25 billion of issuance in the last quarter, which has got to be a record low. And very like calendars going forward and the institutional loan markets are kind of backed up right now. And really kind of hanging to the sidelines. Still I see what the economic picture. So we've had a pretty heavy client flow. And remember in a bank like ours, our loan book is floating rates. So as rates go up short term index and floating rates those rates go up, that's generally a good thing. For our P and L and bank earnings. And then on the risk side, I would say that we're seeing very little stress in the portfolio. I think that CEOs got very serious during the pandemic. They adjusted their businesses, trimmed their workforce, adjusted their working capital. And that's continuing as they stare into a potential recession. So people are very focused on taking actions on their business to try to make sure they can survive whatever the economy throws on. And Don, what kind of conversations are you having with clients right now? Because if I look across Wall Street commentary, then I get in the morning. If I look at consumer sentiment surveys, seems like there's a lot of angst out there. Would you say that that's showing up in some of the conversations that you've been having as well? It is. I'd say concern. I think axed is a little bit strong. I think they're trying to figure out ways to automate and become less dependent upon a labor because that continues to be a real constraint being able to hire people. That's constraining the sales line in a lot of our clients. One piece of good news is that they're not worried about is interest rates because a lot of companies refinanced over the last two or three years taking advantage of the really low rates that were available in the marketplace and turned out their debt. So we're not facing a wall of maturities that we might otherwise be facing right now. And if they're not if they're not termed out, there's been enormous amounts of hedging activity both in the currency markets and in the commodities markets and in the interest rate market. So people are people are somewhat protective in a rising rate environment, which is the other thing you always worry about. So Don, how does someone in your position sort of think about and prepare for a recession? Time to start tightening up your underwriting standards on the loans you are issuing or is it too early for that? How do you sort of navigate such? We're definitely tightening a little bit at the margin and being more selective, particularly if it's not an existing client. Number one is we bank a large number of our clients for many, many years. We've seen them go through cycles. We've seen how the management's behave. We're literally in touch with them weekly or monthly, really understanding what's happening in their business and how they're preparing. On the new business side, if something is a little more marginal or a little more leveraged, we may take a pass at the split second, but I wouldn't say it's a significant in terms of our origination volumes. Interesting to hear you say that it does matter whether or not this person has been a client in the past in terms of evaluating. But I am curious, I want to hear your broad thoughts on what this sort of whiplash that we've seen across financial assets, not just in stocks, but in bonds and all corners of fixed income. What that has meant for M and a and for deals because anecdotally, I don't have the numbers in front of me. It feels like there's been quite a slowdown. Yes, there has. And we continue to have a very, very large, maybe record M and a pipeline. It's just not going to be executable right now. If it requires financing of any kind of scale with any kind of leverage, so think about the private equity arena. There's been a real slowdown in terms of P and E or P E oriented M and a. And then I think if you've got size, if you have to go out and raise 7, 8, $9 billion is part of an M and a transaction. The markets are just not that deep
"fomc" Discussed on Bloomberg Radio New York
"Seen in recent months should continue to temper growth and help bring demand into better balance with supply As shown in our summary of economic projections FOMC participants have marked down their projections for economic activity with the median projection for real GDP growth running below 2% through 2024 The labor market has remained extremely tight with the unemployment rate near our 50 year low Job vacancies at historical highs and wage growth elevated Over the past three months employment rose by an average of 408,000 jobs per month Down from the average pace seen earlier in the year but still robust Improvements in labor market conditions have been widespread including for workers at the lower end of the wage distribution as well as for African Americans and Hispanics Labor demand is very strong While labor supply remains subdued with the labor force participation rate little changed since January FOMC participants expect supply and demand conditions in the labor market to come into better balance Easing the upward pressures on wages and prices The median projection in the SEP for the unemployment rate rises somewhat over the next few years moving from 3.7% at the end of this year to 4.1% in 2024 levels that are noticeably above the march projections Inflation remains well above our longer run goal of 2% over the 12 months ending in April total PCE prices rose 6.3% excluding the volatile food and energy categories core prices rose 4.9% In May the 12 month change in the consumer price index came in above expectations at 8.6% And the change in the core CPI was 6% Aggregate demand is strong Supply constraints have been larger and long-lasting than anticipated and price pressures have spread to a broad range of goods and services The surge in prices of crude oil and elder commodities that resulted from Russia's invasion of Ukraine is boosting prices for gasoline and food and is creating additional upward pressure on inflation And COVID COVID related lockdowns in China are likely to exacerbate supply chain disruptions FOMC participants have revised up their projections for inflation this year particularly for total PCE inflation given developments in food and energy prices The median projection is 5.2% this year and falls to 2.6% next year and 2.2% in 2024 Participants continue to see risks to inflation as weighted to the upside The fed's monetary policy actions are guided by our mandate to promote maximum employment and price and stable prices for the American people My colleagues and I are acutely aware that high inflation imposes significant hardship especially on those least able to meet the higher costs of essentials like food housing and transportation We are highly attentive to the risks high inflation poses to both sides of our mandate and we're strongly committed to returning inflation to our 2% objective Against the backdrop of the rapidly evolving economic environment our policy has been adapting and it will continue to do so At today's meeting the committee raised the target range for the federal funds rate by three quarters of a percentage point Resulting in a one and a half percentage point increase in the target range so far this year The committee reiterated that it anticipates that ongoing increases in the target range will be appropriate And we are continuing the process of significantly reducing the size of our balance sheet which plays an important role in firming the stance of monetary policy Coming out of our last meeting in May There was a broad sense on the committee that a half percentage point increase in the target range should be considered at this meeting If economic and financial conditions evolved in line with expectations We also stated that we were highly attentive to inflation risks and that we would be nimble in responding to incoming data in the evolving outlook Since then inflation has again surprised to the upside Some indicators of inflation expectations have risen And projections for inflation this year have been revised up notably In response to these developments the committee decided that a larger increase in the target range was warranted at today's meeting This continues our approach of expeditiously moving our policy rate up to more normal levels And it will help ensure that longer term inflation expectations remain well anchored at 2% As shown in the SEP the median projection for the appropriate level of the federal funds rate is 3.4% at the end of this year A percentage point and a half higher than projected in March And .9 percentage point above the median estimate of its longer run value The median projection rises further to 3.8% at the end of next year and declines to 3.4% in 2024 Still above the median longer run value Of course these projections do not represent a committee plan or decision and no one knows with any certainty where the economy will be a year or more from now Overcoming months we will be looking for compelling evidence that inflation is moving down Consistent with inflation returning to 2% We anticipate that ongoing rate increases will be appropriate The pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy Clearly today's 75 basis point increase is an unusually large one And I do not expect moves of this size to be common From the perspective of today either a 50 basis point or a 75 basis point increase seems most likely at our next meeting We will however make our decisions meeting by meeting and we'll continue to communicate our thinking as clearly as we can Our overarching focus is.
"fomc" Discussed on Bloomberg Radio New York
"The data it's going to be PPI The FOMC is undoubtedly the most important dominant alpha as it were in terms of the hunting pack of rate setters followed by Christine Lagarde at the ECB and the BOJ This is bingo If you're like me whenever you listen to the news you feel forced to choose between two toxic sides But people are more complicated They don't fit neatly into just two groups and media should reflect that That's where the loss debate steps in What's up guys I'm Corey Bradford and I'm Robbie Gupta and we're the hosts of the lost debate This country is more politically divided now than ever before But we're not as different as the mainstream media makes us out to be That's why we launched the loss debate It's a podcast and YouTube show for the politically eclectic who've lost trust in our polarizing partisan world And we'll bring you news ideas and trends that are overlooked also bring people together at the conversations the media isn't having to empathize with each other and challenge each other in good faith And the political satire and skits because why the hell not New episodes drop Tuesdays and Thursdays lost debate on YouTube or wherever you get your podcasts This has been McDonald's Middle East your top stories this morning 20 central banks meet this week inflation rages to the fastest pace in four decades in the United States The fed headlines the packed agenda as a big policy decisions and splits emerge Researchers say the UK faces up to 75,000 COVID deaths this winter as the point heads for its first year loss since 2018 President Biden warns Russia of devastating economic consequences if the attacks Ukraine so to say he has the G seven's support And Dubai's IPO frenzy continues the emerald plans its second listing in a week with a cooling firm and power Mona.
"fomc" Discussed on The Peter Schiff Show Podcast
"Today we had the conclusion of another two day. Federal open market committee meeting following the conclusion of the second day. We get the fed's decision on interest rates and as expected. The fed decided once again to leave interest rates at zero. Nobody expected the fed to raise interest rates. The question was would. The fed finally announced the beginning of the highly anticipated tapering process. And if you look at the odds of the announcement of the taper prior to the meeting i think it was about an eighty percent probability that the fed would announce the taper there is only a small probability that it would hold off and announce it maybe at the next meeting so i think the fed pretty much had a clear signal that the mark has had blessed a decision to begin to taper because after all the s&p the dow were sitting at all time record highs even though it was pretty much a sure thing that the fed was going announce the taper. And i think that's what gave the fed courage to meet those expectations and announced the taper. Now had the markets van crashing in anticipation of a taper. Then i don't think we would have had one. And in fact had the markets reacted negatively to the news that the fed was going to start to taper. maybe powell would have immediately backtracked and done some kind of damage control. Either at the press conference that immediately follows the decision or maybe tomorrow or the next day to the extent that there is an adverse reaction. Because i think the fed always takes the temperature of the markets to determine whether or not it's policy decisions were correct if the market goes down then. It's an indication that the policy was mistake because after all the fed is really gearing is policies to the markets at it is completely beholden to the financial markets. Do and so it's not going to pursue any course of action that may be detrimental to the market. Of course it also cares about the bubble economy and making sure that that doesn't deflate but the more immediate litmus test is always the market because you can have an immediate adverse reaction to affect policy decision and if you go back and look at what. The fed typically does if there is an adverse reaction. They quickly tried to repair the damage by basically saying. Oh we didn't really mean what we said or they try to clarify what they claim to have meant. Once they realized that the markets took it in a way that they didn't anticipate but the markets were fully prepared for the fed's announcement and the fed did come out and say that it would begin to taper process. Now the one thing that may have been a little bit less dovish was that the taper is going to begin this month in november. So they could have said we're gonna start it. In december were announcing it in november and the first taper is going to be december. But no they're going to start tapering in november and it's going to be exactly as they described before fifteen billion per month split between mortgage backed securities and treasuries five billion per month coming out of the mortgages and ten billion from treasuries and the markets basically took the announcement in stride. There was very little reaction in the markets. I mean they kicked around a little bit. I mean there was some noise but the moves. The magnitude of the movement was not that great. I mean you could see right at two o'clock when the announcement comes out the markets are gyrating around so there are little bit more volatile than they were just before the announcement but if you actually look at the magnitude of the moves they were actually very small especially in relation to some of the volatility that we've seen following prior fomc decisions and in fact the stock markets..
"fomc" Discussed on Adventures in Finance: A Real Vision Podcast
"There is enough risk out there that don't think vix is going to collapse significantly below fifteen and you jackson hole coming up. Now you've got this september. Fomc coming out which arguably maybe not so much now but they were considered market risk events right so that would mean that implied vote in the form of the vix should hold up. It shouldn't absolutely collapse and fall out of bed. Basically right on the other hand realized volatility was falling out of bed right so going to the lost. Expiry realized bowl was sub five. Something ridiculous like that with the snp really where we go so pinned to the strike in the week before expiry. It just couldn't move right. And then we had a little bit of turbulence around expiring and we've we've done again and realizes about ten so realize tracking about single digits. Basically whereas employed informed vic seem to be florida about fifteen so the trade. The i already had some vix futures going into jackson hole but always a little bit nervous that the market was just going to take wherever power said relatively well and it price some risk out of the market so the way i basically hedged was i said well i just think realized is the thing that's going to remain low especially before september fomc. Whereas i think employed might find a bit ba- floor wherever happens. So i ended up selling september so that expires the friday before. Fomc right third. Friday of september. I still the forty three hundred puts on snp..
"fomc" Discussed on Adventures in Finance: A Real Vision Podcast
"Well the snp. We barely grazed The fifty day moving average once again you know it's like literally it is like i'm trying to think it's probably the fourth or fifth episode in as many months ash where we the market backs off the highs and the snp test fifty days fifty day moving average support level whether it was on The bitcoin de risking whether it was on the first headline inflation number. We got whether it was on the fomc meeting whether it was on this crisis in confidence we had last week. It's been the same formula and the s&p which is a bounce off the fifty day moving average. So that's your number one level right now until that pattern changes. And that's what i've been riding the try to ride the bull market up and i'm not really. I don't have all the technical levels for all the indices. I really don't talking about broad based and talking about these indexes just looking at it from a fifty thousand foot level. Looks like it's official high on the snp as well hiring espn five hundred Close at record highs S and p five hundred and nasdaq just looking at Across the tape here on nbc. Yes you know we. We spoke last week a little bit about how bitcoin and i. I don't wanna just switch the combo street to crypto or anything but obviously bitcoin any theory have been waking up in performing. And the one thing i just wanna point out that i think is relatively important. Is that the last time technology sectors and bitcoin were rallying together they both went on a tremendous run and it feels like we could be in a similar situation. You know when we came at a locked down in march of two thousand twenty through call it the summer of twenty twenty one. The nasdaq went from seven k. At the load of fifteen k. So a doubled and bitcoin went from six k. At the low sixty k. At the highs you know and that was all to me. It was every day. Bitcoin higher theory higher nasdaq higher q. Triple cues higher software higher cybersecurity higher right and so now i look at it and with in my opinion. Bitcoin is done a lot of work. Technically but now all of a sudden we're in this position where the technology side of the stock market looks really good again and only really good in a sense. I don't know what's going to derail it from here. Other than unless yields start moving up really rapidly and we have a dislocation lower in the bond market. And i'm not seeing any of that happened just yet either. So if we have a powerful tech lead rally where industrials also performed because of that reopening rotation idea. Man that's gonna be a powerful snp to try to hold back for the next couple weeks. Don't you think yeah absolutely very well said as you were talking. I was looking at crypto prices. Men talking about critical levels with.
"fomc" Discussed on Adventures in Finance: A Real Vision Podcast
"These are the federal vet. Presidents are making external. I think it's ridiculous of i think. The markets are telling us values being one twenty seven on the ten year. On every time we have a discussion about tapering market. Has a you know three to five percent correction. I think the market is telling us that this is a very very uneasy time to have withdrawal the quantity. We don't have the dealt of beriot of these sort of locked down. We don't we don't have to figure it out by the way when it's not delta. Could be fatos. Zeta lambda greeks. This is happening viruses mutate. Were in the middle of a pandemic and maybe we had in misguided expectations as investors in people as humans on that this was going to be all over once we get those needles stuck in our and the reality is competence of a political resistance but also the confidence of the virus mutating itself. It's it's actually not going to be over as quickly as we thought it would be. And so ultimately you feel like the fed is on this tapering timeline. That's associated with yesterday's view of the world in terms of getting the economy fully recovered..
"fomc" Discussed on Adventures in Finance: A Real Vision Podcast
"Welcome to the daily riffing. It's great to have you back on. It's an honor to be here with. The honor is all mine Not only because of that. Trade which we'll get to in a moment but first western. Let's start out with Fed chair powell's speech at the conclusion of the fomc meeting there was a lot to analyze federal reserve announced to standing repurpose repurchase facilities which many were anticipating and they also Omitted some taper. Talk which we get into. What were your thoughts on on the events today Yeah the so the the facility is. That's that's just making something permanent that everyone had been utilizing anyway and so it's kind of just you know solidifying something as official where i thought in terms of language and literally language. That was interesting. Is that so in the post. Call it. I don't wanna call it post pandemic because we're obviously still post like mediate. Emergency arrow pandemic and this sort of inflationary era that we're in. The fed has been using to specific very purposeful. Phrases was transitory. The other one being substantial further progress now those two phrases in combination. They give the fed a ton of flexibility. Which is why constantly use them. Transitory essentially means that you know it's something that is is temporary in the near term and therefore gives them maybe one or two meetings of will room in terms of timeframe to specify something the substantial for the progress is the actual progress itself. It's very subjective term. It could be measured in any way they choose to measure. So today powell actually kind of defined more or less s. about the at least what transitory was and what substantial for the progresses and again changes this up as much as you want to but apparently it's a chance stories like temporary but doesn't mean that price increases will be taken back so he's looking for raider change basically and he doesn't leave that rate of changing in. Cpi is gonna persist substantial for the progress as far as right now is concerned labor market. So that's what he's he's kinda focused on and so i thought that was interesting that they finally defined what these two very key as me..
"fomc" Discussed on Adventures in Finance: A Real Vision Podcast
"We just saw. Cpi at five and a half percent year over year and pbis seven percent year-over-year and the markets still rallying into that so to me that is an example of sort of think how offsides the bond market has been an in reality. You know there was probably a much bigger bond short out there expecting this inflation because think about what we've been conditioned for for the last three to six months you know we. It was only june first when we had the barons cover. That was the everything shortage if you remember right. And if we were trading bonds off the inflation trade and we saw that barons cover we realize that that was probably the high that we saw yields and yields never took higher from there right so it was really interesting to know that i mean that was just a great lesson in psychology commodity markets. Were inflating. we were getting headline data. We gotta barons cover. that said. there's an everything shortage yet. Nobody could sell anything because markets were still going up into that phenomenon. Even though it was so baked into everybody's calculation right. So what happened. Is you know the bull market continues as a little bit of a facade for a coupla days and then you find one data point and it gives up the ghost and breaks back down. Its support so. I think the fact that this trade is becoming much more telegraph than it was say. Six months ago you know that people are getting more involved in the oil trade and more involved in the industry of metals trade. We clearly just dismantled everybody in the gold trade after the last. Fomc meeting so there are some dangerous dangerous cracks in the inflation trade. And you know now we're at a point where positioning has become positioning at sentiment. Have become sort of the number one and number two priorities on the radar right. If we're all going to be trading this market that we think is probably inflationary due to our pivot to the green economy due to our cyclical recovery. Out of the cold locked down you know. Everybody anticipating inflation. The commodity markets are still saying inflation is coming. You know. it's just going to be a little bit of a non linear paths to get there and so i think that this shakes out a law. A lot of longs out of the way. I've heard some reports on sell side shops pivoting and calling for a lot of deflation ahead this year. And so i think that they're getting way ahead of the game. I think the bonds yield bond yields at one fifteen even though i'm not the bond vigilante that sounds like that's getting way ahead of the deflationary game and we'll see how this pans out. We'll see if this is a bottoming process in both the bonds Bond yields entity sap. So that's what it looks like to me. And that's how. I'm kind of kind of treat it. As i still think that we are in a navigable bull market in the smp support for this podcast comes from invent together. According to studies less than thirteen percent of all inventors who hold a us patent are women black and hispanic college graduates patent at half the rate of their white counterparts but we can fix that by.
"fomc" Discussed on The Peter Schiff Show Podcast
"It's more of a lasting enduring increase. That is going to require fed action and that the fed is going to have to be raising interest rates a lot sooner than the markets have been expecting and in fact. We've already been seeing that narrative play out even before yesterday with strength in the dollar with a contraction in the yield curve tightening where the short rates were rising and the long rates were falling the rotation out of a lot of the cyclical inflation sensitive stocks that people were buying back into the nasdaq type stocks. In fact even yesterday the nasdaq. I think made a new all time record. High as investors started to buy the high priced momentum stocks that thrive in the environment where interest rates stay low inflation stays low but economic growth is also so the cost of forgoing current income by gambling on future. Income is much lower. And therefore the impetus to invest. In these speculative growth stocks is greater. So all that had been unwound or was in the process of being on wound. But i think that process is now being accelerated. Couple of things that happened yesterday. Did i think are getting investors to be particularly cautious about the future number. One was statements earlier in the morning or of statement that came out and this was from the chief economist at the i. m. f. and what she came out and warned about was that she thought that continued fiscal policy in the us and obviously the monetary policy that goes along with it that it threatened to cause the pickup in inflation to be sustained. And this is really the first time now that i've heard the. Im of publicly expressed. Some concerns that the uptick in inflation is going to be sustained because up until yesterday they were still talking about inflation being transitory they were very much on the same page as the federal reserve in reassuring the markets not to worry about what we were seeing with prizes because all of these price gains were transitory that they were simply the function of the economy reopening which was a one off event and once it reopened things. We're going to go back to normal now recently. They've began slightly tweaking that by admitting that well yes inflation as transitory but this transition may take longer than we thought meaning that these higher prices will be here a little longer before they go away. But it's still going to be transitory. Even if the transitory period is somewhat longer than what we originally expected and even if the increase in prices maybe a little higher than we expected. It's all okay. It's all good because everything is going to go away transitory. Don't worry about it now. They are talking about a sustained increase in inflation. And there's a big difference because if inflation is not transitory if it sustain well. Everybody expects the fed to do something about it. If it's transitory defend doesn't have to do anything because it takes care of itself but if it's not transitory now the fed has to take action to reduce the rate of inflation. And that is what is spooking. The markets the markets are worried about the fed taking action. And in fact. They're even more worried. After the release of the fomc minutes and one of the things that is worrying the markets is that diminished do reveal that members are actually talking about tapering not necessarily raising rates..
Bear Market? Not According to These Monster Funding Rounds
"So yesterday folks were starting to get dreary. Obviously the crypto markets haven't been great for a while now but there were some big psychological milestones that were crossed yesterday and crossed in the wrong direction. The too big of course. We're bitcoin dipping down under thirty thousand dollars. Effectively retracing the entirety of twenty twenty one and the theory of going below two thousand and meaningfully below for awhile. I spent a fair bit of time on this show talking about why the market has been turning. But i think it's worth reviewing here briefly as we set up the rest of today's show. I i believe that there is macro structural weakness. We are now in the post vaccine pre tapering phase of covid era macroeconomic policy that means that normal economic activity is resuming indeed. Some of the economic activity is even abnormal as people catch up on things like trying to build houses and move. That's putting inflationary pressure on the system which we see even in the traditional measures like e or personal consumption expenditures or cpi consumer price index holding aside any critique of those measures as tending to underestimate true inflation. The fed for their part has been that those pressures are transitory for months. Inflation being transitory of course means that it is insufficient to get the fed to consider a change in policy withdrawing support in the form of either bond buying or near zero interest rates however the market and the popular financial media. Haven't really bought this transitory and of course inflation can become self fulfilling prophecy pretty easily. If one thing's prices are likely to go up in the future and has the means to buy now. They tend to buy now putting pressure on the price to go up at the latest. Fomc meeting last week. The feds started to admit that they weren't totally positive that all inflation was in fact transitory. And they said they might need to at least start thinking about thinking about tapering policies. That showed up specifically an expectations of move away from zero interest rates in twenty twenty three about a year earlier than they had previously estimated. The market is completely addicted to cheat money and so hated this
E3 2021 Is Around The Corner And Here’s Everything You Need to Know
"Annual electronic entertainment. Expo is taking place in a virtual format this year. Nintendo microsoft's xbox ubisoft entertainment and capcom are all at this year's e three while sony and activision blizzard are skipping it xbox game studios halo infinite bethesda software star field ubisoft rainbow six quarantine as well as new games for the nintendo switch. We'll be some of the more closely watched. Titles a wild card to watch is whether ubisoft will tease out. Information about its open world star wars game
Should The US Expect an Interest Rate Hike in 2022?
"Do you think it's too premature to have that cycle conversation? A conversation about the cycler? Maybe this fed just never raising interest rates. It is a little premature. There is a huge debate raising about you know what kind of inflation we're going to get. We know we'll get some temporarily Defends acknowledged as much But will it be sustained? That's a big question. I do think, though at the end of this year if we have unemployment and 4.5% is the Fed expects on his secretary, Yellin says, we should get the full employment next year. And if we have inflation it 2.5% at the end of this year, which isn't impossible. It is going to become increasingly untenable for the Fed to argue that the appropriate policy rate in those conditions is zero. So I actually think that the federal we pushed in the hiking sooner rather than later. So I think the scenario where the Fed just never heights through the cycle. Is it pretty unlikely one. We put a number on sooner you a camp on 2022 type of call If you're on the FOMC right now, Megan. Um, you know, some force meteo the Fed has said that they're going to go ahead and take her purchases first, and that they'll provide a long runway for investors to do. That s O. You know if we ended up Having the Fed hiking in 2022. It would probably happen in the latter part of that year, but I think that's certainly possible and certainly I think it's Zlenko before the Feds own forecast, according to the DOC plots, which isn't until Only 24th the earliest. That implies also that they will start to taper there
Fed sees stronger economy and higher inflation, but no rate hikes
"Federal reserve bolstered markets yesterday ramping up expectations for economic growth and indicating no interest rate hikes. Likely through twenty twenty three. Here's chairman jay powell in wednesday's virtual press conference today. The fomc kept interest rates near zero and maintained are sizable asset purchases. These measures along with our strong guidance on interest rates and on our balance sheet will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete. The dow closed above thirty three thousand for the first time on this good news. The fed is projecting six and a half percent. Gdp growth in this year as well as an unemployment rate closer to four point five percent investors. Were watching this forecast really closely anticipating how the fed would balance expected growth as the economy reopened more broadly with fears of inflation. It's a bit of a tightrope walk.
September FOMC Meeting Preview: The Fed Waits for Congress to Act
"Focus will be shifting to the Federal Reserve and next week's Fed meeting, of course, complete coverage here on Bloomberg Radio. Andrew Sheets is chief cross assets strategist at Morgan Stanley in London. We can't simply coast on an expectation of The central banks will solve all problems and I think this is what makes the debate around US fiscal policy. So important is that I think we're facing a really key decision point. Or how the economic growth in the U S, like going forward, And we think that would matter for markets even if the head keeps policies, and he was interviewed this morning on Bloomberg Surveillance, the 10 year Yield 100.66% Gold down 3/10 of 1% 1940 ounce crude West Texas Intermediate Up 2/10 of 1% 37 39 a barrel
The alpha generating opportunity for the second half of 2020
"Of K P W as we enter the second half over this year, I think we have very little clarity, Visibility whatsoever. Government e Year and well this economy and the pandemic situation will look like from New York City this morning. Good morning to world alongside Tom Kay. Together with Lisa, Grab it some Jonathan Farrow, one hour, 12 minutes away from your opening about We roll over just a little bit. A mild move lover, down six points. The S and P 500 off by 2/10 of 1%. That's the equity market is the bond market for your Treasury yields have been lower. The curve has been flattered through much to the morning so far, your 10 year yield comes down to basics points. You're 30 year down almost three and a foreign exchange muted price. Actually, G 10 through much of this morning euro dollar Going absolutely nowhere. Poundsterling just a little bit weak. It's on the pound. Just a little bit lower. Well, interesting in the pound. Maybe Francine Lacqua, driving the pound weaker with her conversation with the chancellor of the exchequer earlier today, right now to have you reset for the second half of 2020 a guy who writes an incredibly interesting short research note. Michael Purvis is great because it six or seven or eight pages instead of the 30 pages a boilerplate that your eyes glaze over on. And in that he always tries to get out front of the trend. He did that to a tea with the Asia currency dynamics about 23 years ago. He is tall back and we're thrilled. Michael could join us this morning. Michael Purvis real simply. Where's the opportunity? Right now? What do you writing about is the truth. Alfa generating opportunity for the second half. You know, it's it's a tough question. Tough. I think for any of us, we were shifting. I would start by answering that question. If we were the first half was very fine area, you know, almost sort of wrist on wrist Call Allah 2010. The second half is going to be a much more nuanced sort of less binary set of analyses. And there's a lot of things that are just to come into the foreground. Just after we clear the Fourth of July holiday, which is all of that right around the corner. They're so I think the framework shift there, you know, in terms of how one position For the second half. I am looking, you know, opportunistically to sell volatility. I did that a couple of weeks ago when we had that big spike after the FOMC. There. You know, I'm looking at, you know, on my long equity portfolio toe have sort of a core ballast of what other people have. Which is you know the big cap tax, which is sort of an all weather type of Equity investment. It's almost a separate after classes to itself. There. I think the areas that are very interesting into the second half is looking at this potential sort of pivot where Europe, the European condition. Maybe moving into a into a more interesting place with stimulus slowly coming together and at the same time writing political risk in the United States. With a whole bunch of uncertainties. But what kind of policies were going to get out of D? C in 2021? There's no like I expect. I expect for the f B X, you know, to be most likely rangebound. I think it's gonna be hard to be a committed bear in the second half, but the same time it's gonna be hard to be That they committed bowl and then I think not too much that answer, But I would also suggest that look, you know it's it's arguably a consensus trade right now, but I've been Very constructive and precious metals for some time, and I continued to be so I think we're going to see a lot of pick up their particularly in the minors and silver. Well, Michael, that's basically a whole book. So let's pick out part of the story gets a Europe Do you think we could see re allowed performance on the continent? Well, I you know, Look, European equities have been the mother of all value traps for some time. We've all been there revolved and you know, sort of excited. You had a glimmer of hope in 2017 that lasts about 6 to 9 months. There. But I do think that there's something that investors have to keep their eye on here. Which is that there is, um you know, perhaps a bit as the catalyst has brought together. The new sense of European cohesion, and you're saying that with this with this very large 750 billion grow stimulus plan France, Germany over Anchoring there, and it seems like there's slowly getting old 26 countries on on board with it, but it's very important because it underscores declining. If it happens, it'll level harmonized. Interest rates across the eurozone. Um you know the spread of TB. The bones will come down and arguably, O'Neil should come higher as well. But at the same time, the political risk premium that's always exist in the euro should come down. I think I look, there's a lot Can happen between now and that you know whenever that might become a reality, but it represents a very, very important chefs in terms of training it, you know, it may be The long euro trait is the easier crazy and say my along the equities right now or or or the widow maker of sorting fun, but I think it's very, very important because over the long term mechanic tracked Very substantial capital flows that have been very US focus. Back into the eurozone, and that has implications that will ripple across. I think the whole the whole investment landscape. Again with the caveat gifted when it comes to happen, But there is a moment of building there that We had not seen before. Michael purpose
Unemployment Claims: 1.5 Million New State Filings in a Week
"You there was a decline as I mentioned but there's a box isn't there there is and I would say the decline here which left to go pick up on what we've seen before down by sixty eight thousand from the previous week and the total number of claims might throw in the pandemic program which is expanded Karen's act related benefits goes to two point two million blisters use that headline number one point five million that's still five times higher than we would have seen a book for the crisis and aware at forty six million total new claims so believe the unemployment rate is still in the mid teens here and it's important to remember that with each of these claims were talking about a person some of whom are wage earners or previous wage earners that we're looking at food on the table for their families I've heard instances and maybe you have to have people who have been offered the chance to go back to work because of the re opening of part of the economy but it declined because they are getting more through this unemployment there on a when the benefits we'll talk more this has been reported I think it is as you indicated primarily anecdotal and the anecdotes are coming from employers many of whom are let's say bar restaurant readers and I would say this is part of the inefficiency of acting quickly to try to attack this crisis it's quite clear that as the program expires at the end of July that will not be a part of what eventually I think Democrats and Republicans are going to reach it now how would you gauge the joblessness levels over what has reached now about three months since this pandemic really made itself felt in the economy still historic and we think about the fact that we believe the unemployment rate now at roughly fourteen percent is four percent higher than the worst financial crisis and Great Recession by the end of the year the federal reserve has projected a collectively with the members of the FOMC that we might get below ten percent bought you know a lot is riding on that not the least of which is the way the virus behaves and as we know we don't have a great deal of experience with that and treatments remain
Global markets seen taking economic hit as coronavirus spreads
"One story that dominated both global and regional markets this week the deadly coronavirus on choosing the head of the World Health Organization visited Beijing to assess China's response to the crisis that came as the country reported more than four and a half thousand cases and more than hundred the Ptolemies we are more with the Merck's Chris at sea in Tokyo and Simon Ballard as well he's the chief economist at first up and down the back South Korea and rubber was off yesterday so they're essentially catching up not only to the declines in Asia yesterday but even the the Friday's selloff on Wall Street so the Korean markets had a lot of catching up to do which explains why there are particularly hard hit today Australia also under performing but if you look just in the afternoon session here we're seeing some signs of easing in the selling pressure so the the Nikkei is off of its lows it's only down about point six percent that's about half its it's declined from earlier today we're seeing Chinese stock futures also coming back just a little bit some interesting headlines just scrolling saying that China is telling brokerages to be rational in what they're telling investors they're telling people don't you know stored pricing and you know do stay here China's foreign minister saying that China has the tools to win this war against the virus so there's a little bit of a sense of you know you you can see governments taking action here you can see here they understand the scale of the problem so that's providing some reassurance I was going to follow up on that actually the efforts are definitely picking up the scale of the undertaking significant but as you look to the comfort of global coordination there is the reality of global economic disruption is that what the market really needs to start factoring in yeah well you got the situation where you know that there's going to be a significant you know near term had to Chinese grows to gross really across the globe if you think about the impact that Chinese consumers have through tourism or you think about the disruption to the global supply chain so you've got this short term impact but then you've got the assumption that once the disease passes they'll be rebound so number of economists are saying you know what I'm not going to change my full year twenty twenty projection for global growth for even Chinese growth at this point I'm just gonna assume that we're going to see see some growth shift from the first half into the second half nobody really rushing to mark down their full year forecasts just yet but the you know the bottom line is we don't know really how big of an impact this is going to have you know we're still a ways away from the peak of the number of infections from a peak in the number of deaths unfortunately so until we get a clearer picture in the next week and a half or two it's going to be you know guess work on the part of economists and investors alike Chris thank you very much Chris and see that in Tokyo running up the latest market action our guest host this morning a sign of ballot chief economist at first the Debbie bank something good to see this morning so we read are trying to pull with the contagion and the impact all of this active gold ring story I've seen the first number sent to me this morning from mentor partners that Chinese growth could be started by a hundred to two hundred basis points took me through the global impact of a contraction in China grows by night two percent in the first two quarters of this year if that's the scenario yeah and that's exactly that's exactly the wrist that with with with with facing today in terms of you know listen to the director general of the of the W. H. O. now add in China so the pining again I think we just looking for further clarity from them as to whether they still see it as a as a domestic relatively contained issue or whether there's a reserve a space into a more global pathogen I suppose of the sauce two point zero if we go back to two thousand to two thousand three at the sauce event you know that triggers your view previous because said a serious downturn in economic activity in the region especially in China where it shaved about one percent just over one percent of Chinese GDP triggered a recession in Hong Kong that was the time when GDP in China still managed to increase between two thousand two to the end of two thousand three from seven percent to eight percent when now talking if you recall about the risk the last month of of of moving to sub six percent GDP territory with China we didn't get that we held a six percent as you know as per consensus as per Beijing's expectations but usually one percent off that now when you go into the five percent you could possibly to high four percent level on Chinese GDP if this Haroon of ours continues to mutate and and and and and spread something that because we've seen in the commodities space where is that going to hand because the phone so the market's life team put exactly that question to our audience question of the day coming through then how far will the corona virus related to climb the commodities extends this something that is going to be as severe as we've seen in the past with some of these events or are people going to focus on the global growth forecast for twenty twenty staying intact I think people still gonna focus on that twenty twenty growth full cost overruled the news flow the headlines and the the volatility that we see in the market over the next couple of weeks if if not being honest about us a couple of days is going to be key in terms of one what happens in the bond market in the what happens in the commodity market is probably a reflection of the overrule sort of risk of this nature of investor sentiment at the service station you know it's raining it's pouring but this study no room for you know the old man to be snowing in the back and you could be what you all the elements that we see this you say no the ten year round it down to one sixty that hit one forty five back in September is mass was talking about earlier on so you know if we do see sort of negative connotations coming from the WHL if we continue to see you know this mutation I'm a and an expanse of cases and remember we were two thousand to two thousand seven hundred cases on Monday work for the whole thousand today I'm hearing them doubling serving twenty four appeared we could soon be about a thousand that we had in the sauce in our back in two thousand and three and that's with then good sort of Dr you know Dr risk aversion hiring drive that taking a yield back through the one fifty back down towards the one fifty if not one forty five no and certainly dampened expectations for commodity prices in terms of your expectations for slower global growth environment in outlook Simon can we just take this a little bit further with central bank reaction we see the market we price from the fat mother was when I pricing twenty five basis points back to back that was originally in a in the front of twenty twenty one to the market is already beginning to price central bank action it does that come across your timeline intends the fat in terms the PTO see if I emphasize the what if there is Dayton the mutation as you say in numbers activists scale of a real global pandemic and that's that's a huge plus a huge different of course all the time the time is made a little different this week by the fact we've got the FOMC on Wednesday with bank of England which is more of a coin toss with the bank of England on Thursday and as you say in the futures market was looking for that first all that additional twenty five basis point cut to come in in two thousand twenty one because of the risk of ocean nature of market sentiment at eleven that's brought forward into so the queue for October you know depending on the news flow over the next twenty four hours I really don't think the fed's going to cut you know this month they suggested they stated previously that I'm very comfortable with the level of accommodation and it would need a meaningful event to trigger a sort of a moving rates from from where they are today you know for the time being you know the the crown of ours doesn't seem to be that meaningful event in order to to trigger the fed but certainly it's it's it's bringing a more dovish rhetoric into the market place now then we had done it earlier this month
"fomc" Discussed on Bloomberg Radio New York
"The FOMC that's the question that you need to ask yourself as PA reading warns about being unimpressed by the continual delivery on the inflation numbers what does that really mean the marketplace to in November ray **** rather than Q. one twenty twenty one to the market is shifted to the equity market as we see policy says that asset valuations are somewhat elevated the not extreme we don't think there's an imminent risk from Chinese to act again this all goes back to what do you think the corona virus and it spreads can be contained it is not two thousand and three China impacts seventeen percent of the world economy no four percent of the world economy as it did in two thousand three to be wary of the bench marks you use as scheduled to speak not me first what headlines this morning well health organization has called on emergency meeting later Thursday to discuss a formal global alarm over the corona virus I break governments on tightening travel restrictions and several airlines are cutting services to John as the death toll minds the you and says the whole world must be on alert unable to co founder Jack ma is the latest high profile figure offering to help fight the virus outbreak tennis was his mental doted on fifteen million dollars through its terrible foundation joining bill and Melinda gates in placing systems that's on top of Ali Baba's offering to establish a hundred forty five minute on the funds to share its expertise in artificial intelligence with research in union has thought of Britain and stopped short of banning walk away from five G. the decision risks barking eighteen you with with the U. S. which had lobbied hard for the walkway to be blocked from next generation networks China is the E. U. second largest trading partner in Beijing has tended to act repercussions if while it was capped of the five G. road I'd better investor Warren Buffett is pulling out of the newspaper business Berkshire Hathaway's something it's the H. media unit thirty daily papers to Lee enterprises that's for the son of a hundred and forty million dollars in cash but the delivered papers as a teenager but said last year that most surviving titles are quote tells those are your headlines chicken on some of the other market action it is quite a gloomy picture that is materializing too it's selling it in Singapore and has it all to it yeah yes if I send stocks lower for a sixth session in a row as of course if he is about the corona virus spreading really sick continue to impact market sentiment in particularly in Taiwan because stocks in Taipei have resume tried for the first time since lunar new year so you are saying that catch up selling in that market now down by five point eight percent its biggest one day drop since October twenty eighteen big holes in the likes of folks cons Han hi also the airway a lines like a the a and a T. S. M. C. under pressure to you also of course the got money flowing into the safe havens and it's a the yen is stronger than a K. they're down by one point nine percent and Hong Kong's market he's get continuing to be sold off in light trade down by two percent now we had of course dismal numbers coming through in terms of China visit is an overall visit is to Macau for lunar new year and you've seen a property stocks actually test levels that we haven't seen since August last year when they were really hit hard by the protests at the height of those protests sounds of course weighing on the coast we'll get to that in a moment and when it comes to some of the currency market using a big selloff coming through in the end as you would expect that the title of that down seven tenths of one percent and Thailand's Bosch is now at levels that we haven't seen since June as the corona virus fees spread menace just give me just second back to the Sam song I I know the fact that the numbers I mean we have a T. live on the go dig into the numbers for manning the most disconcerting part for me was when they say that the adoption of five G. isn't expected to contribute much to the demand for memory this year yeah and some side has got such a nice variety of really keeping the market outdated so the fact that the fourth quarter numbers means have taken a lot by surprise because we had early estimates earlier this month actually base out what the market was looking for so a thirty eight percent decline coming through in those fourth quarter numbers due to falling memory chip prices we were speaking I to an analyst at C. LSA research earlier on Bloomberg television that was Senshi Rana and he believes that there will be a rebound for Sam sung Isaacs it actually expecting profit to rise by more than forty percent in twenty twenty saying that memory market to conditions will likely improve gradually thanks to increasing demand from diocesan two companies and as we say smartphone adoption of from five G. even though of course you mentioned on the lines from Sam sung itself when it comes to the consensus writings you can say on the Bloomberg though is still a lot of analysts really positive on the start fourty buys five holes zero sales for Samsung Yousef thank you very much for that to truly Sally there let's get back to this part of the world because bond investors in the Middle East will have to consider several factors going into trade later from the corona virus to the latest fed decision good morning this within a raise he's the executive director of fixed income and are calm capital I look at the spreads and I have to make a call as to whether you sell for you had switched side are you on we're more on the hedging side so for I understand that the uncertainties are increasing we've had very good drawing this here and markets are at the thought that if you look at the JP Morgan and be at this point we're off the fights because of the coronavirus but and we're still at one hundred thirty basis points the for far from the two thousand seven tights so this point three would hedge and not said because you don't want to leave to word it and just three credit and not be able to come back where do we stand in English talked about the fad and the fed in many ways is the box stock to every global decision whether I'm in the G. C. C. or the app is the fad box stopping in the psychology of market so the people that you talk to it is it is what I mean from the beginning of this year the fed could wind back to the back of the people's mind because the fear of hiking rates and the fear of a global economic slowdown are no longer there so this is for granted that the fed is is easing is supporting the market so the fear of increasing it is no longer there duration is now or friend the focus shifted onto the hunt for years hence why we've seen such significant tried it in the emerging markets starting Q. three last year and going into Q. one this year what about the issuance is I mean it's going to be critical and the last couple of months ago quite strong for the Gulf is that going to continue given the uncertainty that is out there given where we are with rates we think that the primary market has been strong in did and I think it's going to continue because markets are said favorable rates are still low minus the relative risk aversion to someone following the corona virus we markets are still vote we still have got for the to put the market we have inflows coming to the market and we think that both in the Islamic and the convention is the so yeah and convention of markets both in the sovereigns and corporate space would be coming back to market and that which is showing what what came out of this office so far this year of the study with five billion when you look at those kinda names where we're gonna see the flow of of patients come from again back this often and inside the in those those by names I think it's going to be in both so so it came out of the five billion which is relatively smaller than the size comes with we think they're going to come back before Q. one potentially with the euro issue we think our mantra come to the markets beheading came through one thought I got to think this over the street com and the of of course the banks and the corporates would be coming we think we can also be seen newcomers to the market I just read about some breaking news any the Bloomberg from mentor remarketing one of the key names on the Saudi compatible so they're coming through here with a fiscal year sales number of eight point four two billion Saudi riyals the market penciled in eight point three billion so it is a clear beat on the fiscal year sales front they're probably coming on a nine hundred and eighty four point seven million riyals the market was looking for a billion so just a little bit short there on the on the key profit number the last twelve months have been interesting for the stock but as we got into twenty twenty we saw a bit of downside their overall analysts are a little bit positive on it seven by seven olds zero cells owns a rear idea of course so do wholesale and retail stationary school supplies and many other things as well let's get back to Xena risk now she's of course with our com capital as we dig deeper into some of the challenges perhaps that the Gulf is facing we have the story out of Lebanon that's just the mean day after day after day appears to be getting worse almost like a vicious cycle I mean at what point does it become attractive to actually step in and just pick up what is left there basically the Lebanon store is very political more than this on economic and did the question is a bit more of like a chicken or do they played the March twenty with auto pay on but if the March one is not paid then you have a message before I think it should all come with a plan once we start having visibility on the fiscal on the fiscal front and therefore the minute thirty from that would be a point where we should step in and buy the phones died Ukraine Mozambique and Angola these these are what will we was a lie what what what what what do you want to go and this year in part in part be top goals but this is about a comfort with high yield or what is it that drives you festival to this solver and high use here and then you have to mark on the board as well so just give it gives you thinking I love the idea of Mozambique so the rationale is as mentioned the hunt for years is there the hunt for years is still there we've seen a bit of risk aversion but we haven't seen the market tree Dr could choose to to me was like before we used to have the Senate now and ask questions later on two June what we haven't seen that we haven't seen the give this is apparent in the relative mild reaction following the following the said I might know doc and now with the outbreak so we have seen the Eunice tightening twenty the use the U. S. C..
A glance at global bond yields
"Let's check in on the markets now that we've been talking about this all week the backup in global bond yields take a look at the benchmark yield on the ten year China government bond that is currently trading around three point three percent still lots of people have speculated that the PPO C. would step in to suit the market with some additional liquidity that did not happen this morning so lots of people scratching their heads around that one I should just add it's a slightly different story in U. S. treasuries ahead of the FOMC meeting today the basis points there in down about a one bit as we await the FOMC a similar story also for the Ozzy ten year bond yield that is sliding after inflation data at the lower end of the RBC target all right now speaking of the markets let's get more with so he can read and in Hong Kong and not neat solution to Susan in Mumbai Sophie let's start with you what's the latest in Asia Tracy this Wednesday Asian stocks under pressure set snap a four day advance with the heavy earnings lined up across the region but we were right on the eco a date a friend a Japanese retail sales out this morning for September showed a jump ahead of the sales tax hike now in Tokyo the Nikkei two two five set to snap a seven day game with earnings coming in heavy there Namora searching on its best quarterly performance in seventeen years now here in Hong Kong the hang sang losing ground as investors have to consider a bleak economic picture chief executive Terry land today saying for your growth and not likely to be better than the first half of this ahead of third quarter GDP data which is likely to confirm that Hong Kong has fallen into a recession so overall stocks are meandering lower and as you said treasury's guiding higher and at two ten spreads narrowing ahead of the FOMC decision Ozzie binds Tracy as you pointed out climbing with the curve ball flattening after their corn inflation came in line with estimates so we're seeing pricing for an RB a rate cut for number November easy even as a CPA data did remain slug yeah a story of global easing in the near term but out lots of speculation about what comes after that what comes after the FOMC it rate cut today in particular Navneet let's check in on the Indian markets now looks like it's a positive start yep it is on the internet cookies rather have been bucking the trend within the Asian facts of we've had a positive sign though we may have come off from the opening levels that are hopes that to government could look at rationalizing taxes which the equity investors and that includes the long term capital gains tax which was introduced last year as for some reports of these two reading back for any sort of announcement but in back of that be able to witness a stellar rally yesterday buying interest continues but as we speak I guess the bank fifty has slipped into the red it's don about fifty points member nifty is I'll be three percent from its all time high levels by the bank fifties of a about six percent to as we speak the intern rupees assisting somebody because of engine ready closer to the mark of seventy one to the dollar in terms of individual stocks so the large cap telecom player party at that has seen somebody recovery after falling yesterday they gave us September quarter of data with regard to the performance and the average revenue per user came as a big surprise on back of French Mauldin Stanley has maintained their reading of equal weight and HDFC life because sitting with games after to UK and Chardon sped up a standard life which has about twenty percent stake up in September fighting sold about five percent stake in the opening session today mistake scene was at a discount of about eight percent to yesterday's closing but looks like the markets and absorb all the setting that is coming into the stock and distracted positively up about three and a half percent all right so we can read in there and not need Seleucia disease a thank you
Fed to buy Treasury bills starting next week to ease money-market pressure
"East fed judge our own Paul this week said that the central bank will resume buying treasury securities to avoid a repeat of the recent turmoil in money markets while leaving his options open on interest rates he indicated that the purchases would be made up of treasury bills and he stressed that it should not be seen as a return of crisis area Cutie I want to emphasize that the growth of our balance sheet for reserve management purposes should in no way be confused with a large scale asset purchase programs that we deployed after the financial crisis neither the recent technical issues nor the purchases of treasury bills we are contemplating to resolve them should materially alter the stance of monetary policy use of got more with Steven and is had a pack of market strategist to add ACSI trade you know let's face the facts I think the you know looking back here back twenty seventeen twenty sixteen we knew the feds they're going to have this on enviable task when it came to unwinding this massive balance sheet now you know it came to logger heads as September when there's a delusion paper hitting the markets with tax receipts going out yeah this really put a lot of pressure on overnight finding markets just couldn't find an offer the repo market so these things just reeks of trouble but you know starting on that side of the street a couple decades ago tell you funding is always tight around quarter and and especially here and so for a lot of the you know or report guys this wasn't really that much of a catastrophe but fortunately the fed to come to the rescue the provided there one week to week repose they offered overnight repose unnecessary to suit the market's concern and I really think this reserve management policy aspect of Q. we is right on I think this is enough to help out the primary dealers deal with the delusion paper that's on the street right now Stephen how much more are you expecting the fed to deliver on in terms of rate cuts as we end up twenty nineteen going to twenty twenty I think the market Smith's pricing expectations of the states markets always want more that's for sure I think what we're looking at here is the fed's pretty March a highlighter overnight lows J. power highlighted overnight is the payroll data he seems to be happy with the number coming in around the three month average coming around around a hundred fifty seven thousand that suggests that city's gonna benchmark somewhere lower we think that benchmark somewhere around a hundred thirty five thousand we think it moves below there I think the sh the feds then do share from the sort of and easing cycle to the fullest easing cycle I think is really predicated on the data the feds have definitely shifted back into data dependency counseling and one work one rate cut I would be surprised if two hits if we see a deterioration which I think is unlikely mind you the generation on the payroll data but you know we'll have to just play it by ear and see how the data plays a I mean you look at break even Steven I mean this is a measure of expected inflation and we are at the lowest level in three years how does that play into how strategy should be done in US assets at the moment with everything we've talked about historically that suggests you know there's lots of wiggle room here policy wiggle room for the fence these but you know the inflation metrics of below for so long it doesn't even appear globally the delusions central bank gazing across the board is affecting inflation in any part of the world so I'm not sure how much a deeper move lower and overnight funding is gonna have stoked inflationary first that's a concern the feds have they got to deal with this I think more so they're really concerned about the effects of this global growth the X. if weeding everywhere impacting the US economy were starting to see that the manufacturing sector we all know the big talk here everybody's worried about it moving into the consumption sector I think this is what what they're most concerned about what they really want to defend possibly by taking more aggressive preemptive action that I even think they're they're going to come come forward with later in the week the FOMC minutes show policy makers are getting down to serious business that particularly focused on inflation J. Paul is promising to offset persistent on the shooting of the fed's two percent target by line prices to run above that for a period of time the problem is that how may no longer had the central bank when it comes to the time to follow through on the advice we got more with making a moccasin global chief economist at society general if we look ahead I would expect to see further rate cuts from the fed at this stage I think the triggers for the rate cut is basically the economic data that'll be coming in slowing pace of job creation leading indicators on the PMI I think all of that will feed into the fed's decision process but I think importantly if we look at just how low the fed will go we expect that coming into twenty twenty one we will see the range on the fed funds rate at back to zero zero point twenty five and one of the reasons for that is because we're building in this idea of a new under under shoot overshoot wrote world if we can call it that on the inflation side from the fed which means that it's it's a it's not an exact science but it probably means we get about fifty basis points lower than we may have been otherwise if we were just mechanically applying the old rule from the the the the rule that's currently being communicated by the fed so I do think even in the short term it gives us more monetary easing from the US side now coming back to to my previous point I think monetary policy help stabilize the situation what I really question is whether it can give us that that lift off that we previously been thinking about you know previously when you come into a downturn the central bank eases policy trade policy help stabilize the situation what I really question is whether it can give us that that lift off that we previously been thinking about you know previously when you come into a downturn the central bank eases policy this helps credit constraints on various balance sheets and it also increases demand for credit but also importantly at bye bye getting that strong lift down on the interest rate you get that accelerating effect and I did struggle to see how that's coming through at this point in time I I belong to the group of economists that think that there is such a thing as a reversal rate where if you get interest rates very deeply into negative for very long period of time it starts actually to hurt the economy rather than help the economy now if you ask me where exactly that reversal rate is the answer is I'll tell you what we've seen it because it's not something that any of us with any accuracy can pre defined but I do think we're getting lower levels I still think monetary policy is positive at this stage but just not that strong acceleration okay which was talk about the fact that straight to your because you take me very naturally that have we hate is a reverse the race with a negative rates in Europe at the moment but I think what we're seeing is a it's a very fragmented picture across Europe because there is the German rates yeah as for example the Italian right so it's a very different picture but what we have seen and I think this is an indication that we are getting closer to that reversal rate we have seen a lot of noise out of the German financial industry some of the the larger managers there warning us about the potential damages of those very low interest rates and very negative interest rates as a process over the longer term keep in mind that the German banks will find it very difficult to pass on the negative rates to their retail consumers keep in mind that the pension and insurance companies will also be struggling the lower the longer rate environment stays with us for and then there's a final point to the lower for longer is that it has been encouraging that hunt for yield so at some point in time we can be concerned how much longer can you continue to sustain asset valuations that a mismatch with fundamentals but being supported by liquidity okay I'm gonna should be a Greek government bond jeans at you and I I'm Tracy myself with old live three thirty five forty percent years that have like a ten year government bond paper what I need to know from you is what back one point forty one attends yesterday grease joined the negative bone to cloud the issue thirteen week bills negative point zero two is this is this Paul McGann madness or is it perfectly acceptable logic I think it's perfectly acceptable logic and for two reasons for this so first of all if we think about what's going on today are we worried that there's going to be a new debt restructuring increase and to my mind the answer is no are we worried that we're going to see and in the foreseeable future any kind of except by Greece from the euro again my answer is no and as an investor looking at grace looking at a hunt for you to Asian it makes perfect sense to go into Greece at this point in time just from the from the belief of those two questions now of course if things start to deteriorate again we could be in a very different a position but in the short time I think it's very consistent what we're seeing
World Economy: Get Ready for Biggest Week of 2019
"Well investors are bracing for what what might be the busiest week of the year for the world economy we get rate decisions from the bank of Japan and bank of England and Brazil there's also China PMI data and U. S. non farm payrolls on Friday as well of course the prospect of the FOMC lowering rates for the first time since two thousand eight is the big one J. pal is expected to keep the world's largest economy running hot as he tries to keep the expansion going on that note let's bring in LGT capital partners executive director and global strategist Mikio quemada Mikhail it's nice to have you with use of a myself today let's start with the obvious question looking at the U. S. economic data and we did get the GDP figure on Friday showing two point one percent annualized growth on the other hand we did have PC inflation coming in worse than expected but you know two point one percent U. S. economic growth that's not too bad is a rate cut justified by the economic data in the US personally I think it is absolutely justified and I would actually vouch for zero by four fifty basis points the reason is because why growth is okay each eve even if you look at the nominal number it's around four percent on an annual basis that's above the ten year average so the growth is okay but inflation is below target and below expectations and as always inflation expectations are below target there's always a case for central banks to surprise on the easing side whether they will actually do it that's a different question I don't I don't think they will go for fifty we kill we put together a chart to show the strong consensus that is building behind a twenty five bit rate cut from the fed our clients to get the extra perspective this is a story a fed funds futures probability but also story of the spread between implied August rates in current levels that is closer to twenty five bits what happens after this make you what happens in the second half of the year as we get closer to September and October well I I don't want to exclude the unlikely possibility that they will do fifty basis points which would be very good I leased in my view but assuming as you suggest that they do twenty five and as is the consensus I think we will need some time for market said they the markets will probably reacted by the room or sell the fact kind of situation so that means they'll probably sell off for a while and then the markets will adopt a wait and see I can check to see if that's enough of the economy does what the companies said Billy what kind of outlooks they deliver for the rest of the year you know the earning season is still ongoing so there will be a period of questioning and you know wait and seeing for the second half if they do fifty basis points I think we'll it'll be a more bullish outlook overall still you know the album is not negative but twenty basis points is kind of like room not really convincing in my view so do you chase risk assets at this point and the reason I ask is because if you take a look at this chart for instance pull it off on the G. TV function on your Bloomberg you can see that when the fed started hiking rates that actually pushed one month treasury yields above the dividend yield on the S. and P. five hundred four eight you know a reasonable amount of time and we saw a flood of money go back into cash like assets money market funds now with the fed poised to cut you would expect that to reverse and you would expect a lot of people to go back into things like equities hi respawns things like that is that something that you would do it this juncture well you know at the end of the day such just about the contents also but what this card will do to the economy and I think you both twenty five to fifty will have a positive effect it's just that fifty basis points will give us more confidence that indeed we will have foster GDP growth going forward so I would see it in degrees happening but the simple answer is yes I think a rate cut is a good thing for for his castle scored Mikhail we come on in the area no role to an editorial for Bloomberg and it's trending with clients say here's what he had to say this is a an important bit of what he really whatever unfolds this busy week to call press are likely to persist first you've got the key data releases and policy meetings that are going to fail to lift the extra ordinary uncertainty in the global economy and then second markets will ignore the competing signals confident that central banks will continue to insulate them from the economic reality are we out of touch with economic reality make here no not at all I would say I would also not agree that the outlook is extraordinary and certain I mean it is uncertain but there's always uncertainty that the the way I look at it is if you look at the entire ten year cycle and you look at either nominal growth if you want to keep it simple in the U. S. or you look at the broader global you know purchasing manager type servi indices which quite well I show you this sort the cycles within the larger bull market that we had over the past ten years we had three slow downs this one is the third one the current one all of these slow downs were combined with extra ordinary fears that turned out to be nothing the first one was a double date in the early two thousand tends the fear that you know we would relapse into a recession very quickly after the great financial crisis never happened the second one was the China hard landing it did lead to a commodity bear market that led to a crashing many emerging markets in the mid two thousand tens but that's hard landing in China never happened either and now we have the third slow down this time this story is the Cold War I their story the trade war with some connotations of a Cold War and the question is will it ever happen in as bad as away as some imagined and I don't think so I think the economy is the answer to everything the economy is weakening but it's not disasters you have chip makers a dominant chip maker in Taiwan I'm sorry I'm in Asia just a few days ago actually giving a pretty bullish outlook in my view about their what they think is going to happen to cap ex despite the trade war and everything and of course they have exposure to all the board markets so I don't think we have extra ordinary the uncertain outlook sometimes we have some uncertainty but we also have central banks are doing the right thing make sure the economy supplied with money
Markets React to the US Federal Reserve's Potential Rate Cuts
"Let's talk about the markets this morning a reaction to the fed was a driver Powell's comments yesterday cementing market bets for a rate cut at the end of July leaving the door wide open now VT motors pricing it at twenty five basis point cuts with some allies even looking at a half basis point cut the pricing is for almost three quarters of a percentage point of easing by the end of twenty nineteen so that's the crucial bit to suppose there a fool on the ten year U. S. yields I was sitting next to touch of obviously for German bund yield so we get the E. C. B. accounts for my veggie meeting later today so that will be watched closely by markets the S. and P. top three thousand yesterday before pulling back just slightly in Asia this morning the embassy on a specific gaining eight tenths of one percent the Sean how come there pulling back into negative territory along with the CSI three hundred at the yen is strong before tens of one percent the Donna they pulling back down two tenths of one percent we actually have the toll of four of the POWs testimony yesterday and then vice in reaction to the FOMC minutes themselves emerging Asian currencies gaining essentially boldly on this dollar weakness the south Korean one if the ticket for example oil this is a seven week high that we saw yesterday as seems to be holding this morning with sixty dollars fifty for the bow on W. T. I. two tenths of one percent we got this Gulf of Mexico storm brewing a third of Gulf output is currently sure a close so that's one thing driving the markets and gold gets the fed boost to offer one thousand four hundred and twenty two the Troy ounce I'll give you a note to a bit coin down three percent it's been an interesting move a bit coin three days of gains than yesterday afternoon a tumble and again will love it this morning for
The Fed's Messaging Dilemma
"Hey, everyone Cardiff N Stacey here. And we know we just know that you cannot wait to discuss interest rates, and what Federal Reserve chaired your own Powell said today at the end of the two day meeting of the Federal Open Market committee or just the FOMC which is kind of like F O M O, except nobody really out on it. The ABC's the committee within the fed that meets every six weeks to vote on how to manage the economy. Oh, the anticipation we reviewed economic and financial developments in the United States and around the world and decided to leave our policy interest rate on changed. Okay. Look the tone in the language used by chair Powell are not super excited I designed yes. On purpose because the language does matter to the fed is in kind of a tricky situation not because of what's happening right now. But because of what might happen for the rest of this year today on the indicator from planet money, we speak to someone who used to be. A member of the fed. And she explains why if the fed wants to navigate its way out of this tricky situation, it will have to choose its words, so very carefully. Support for this NPR podcast and the following message. Come from Exxon Mobil, the company working to make carbon capture technology more efficient and affordable. So it can be deployed at industrial sites worldwide. Find out more at energy factor dot com. Support also comes from WordPress dot com with powerful site building tools and thousands of things that she was from users can launch his site. That's free to start with a room to grow. Get fifteen percent off any new plan. Purchase at WordPress dot com slash indicator. The Federal Reserve manages the economy by adjusting interest rates. So for example, if the fed wants to boost the economy, it will lower interest rates, so people will take out more loans because interest rates are cheaper. And then they'll use that money from those loans to buy things like houses or cars and that boost the economy, and here is what the fed is dealing with right now on the one hand unemployment is relatively low at the moment and the economy is growing at a healthy pace. So you would not think. That the fed would be planning to boost the economy any more than it already is. And in fact, the fed chose today not to further boost economy it kept interest rates right where they are on the other hand, the fed is also responsible for keeping inflation going up by two percent. A year not much lower than two percent and not much higher. It's like they're Goldilocks swit- spot. And normally when the economy is growing fast enough and unemployment is low enough, you would expect inflation to also be rising. Because when the economy is growing, it means the people have jobs and more money to buy things. And so they start spending more money, and then prices of those things go up a little that's inflation. But since the middle of last year, even though the economy has been growing inflation has been falling. And it is now well below the feds two percent target. In fact, let's make that the planet money indicator. Inflation right now is rising at one and a half percent. Maybe that falling inflation is just a blip and it'll start going back up later in the year. But if it does not start going back up towards two percent. And remember, it is the feds job to make sure it does get back up to two percent, then the fed would have to consider boosting the economy even more to bring inflation backup. And so now, we can discuss the feds dilemma, if the fed is not careful in explaining why it is boosting in a Konami that already seems to be healthy. It could send a confusing message to the public it might even backfire. So we called up someone who understands how this all works first-hand. I am Sarah bloom Raskin, I was a governor on the Federal Reserve Board and the Federal Open Market committee. I am currently a Rubinstein fellow at Duke University Sarah was on the Federal Reserve from two thousand ten to two thousand fourteen and the governor she was one of the people at the fed who always voted on monetary policy. And she said there are a bunch of different ways that the public might interpret fed decision to boost the economy later this year. So the communication becomes critical. How does the fed talk about a rate cut? Why? Exactly is the fed doing it. How were they going to communicate the reason for that move? And the words they choose are going to be really important in determining what path the economy actually takes. This communication happens in press conferences, like the one today with chair Powell and also in speeches that members of the fed give to the public that communication influences. How the public interprets any decision made by the fed and in our conversation with Sarah, she identified four different ways, the public might interpret decision to further boost the economy, I the public might think that the fed is panicking that it is boosting the economy because it thinks the economy is about to collapse. And I think if the fed were to take such an action that could itself unsettle markets and potentially tip the economy into a place that the fed didn't intend it to go. And what you mean does it if people start believing that the economy is in trouble it? Could become almost like a self fulfilling prophecy people stop spending money because they wanna make sure they have enough money to hold them over during the upcoming hard times. But if everyone stop spending money all at once that will itself bring on the hard times because he Konomi needs people to spend their money in order to keep going, obviously, the fed would like to avoid this particular interpretation of its decision. The economy's a flat circle. Which brings us to the second. Possible interpretation that the fed is boosting healthy economy. Just in case things get bad later, especially since any decision by the fed normally takes a little while to affect the economy monetary policy acts with a lab it it doesn't act immediately. So these people are going to say, let's lower rates now because we're going to be getting into choppy waters later. So that is the second interpretation if the fed decides to boost the economy later this year, it's not because the fed is panicking. But because it wants to preempt a recession before it can start the third possible interpretation, basically is why not why not the economy? What? Yeah. Let's see what this baby can do. Who cares? If it's already growing fast. Let it keep growing even faster. That would be great. It means more jobs. It means more people getting raises. Remember, it's been a long slog since the recession ended in two thousand and nine and since inflation is too low anyways booth. Getting the economy would be perfectly consistent with the feds job. It's not like boosting the economy a little more. We'll send inflation skyrocketing way above the fence target and Sarah. At least thinks that is a plausible case. I think that is a completely appropriate argument one that is absolutely possible. And that there is space actually for more stimulation to occur and that that stimulation can happen without doing anything super dangerous to the inflation rate. And finally, there is a Fourth Way that the public might interpret decision by the fed to stimulate the economy, and that is that the fed caved to political pressure and specifically political pressure from President Donald Trump. See the president has aggressively called for the fed to cut interest rates and stimulate the economy. Because of course, he wants his presidency associated with a super strong economy. But the fed is supposed to make decisions based only on. What is good for the economy not on? What is good for a politician or political party? And so traditionally the president does not comment that much on monetary policy. President Trump has broken with that tradition. And it means that the fed will have to convince the public that it is not being influenced by the president's words that it is still acting independently. How do you think you would have responded to it? If some kind of pressured like this had been coming from the White House while you're on the FOMC. Well, we would try very hard to to not respond to it. So basically the fed will try to tune out the president. But more importantly, it will need to convince the public that it has tuned out the president. So look, this is all still hypothetical, but if inflation remains low or even goes lower the fed eventually will have to decide whether or not it wants to stimulate the economy by lowering interest rates. The message coming from the fed if it does make that choice will have to be crystal clear because Sarah points out just lowering rates might. Not be enough. How the fed explains its decision will matter too because rates are not the only tool that the fed has for managing the economy. It's other tool is the language it uses and like any tool it can be used and it can be misused.
Pressure On China To Agree To Trade Deal
"Radio. Even though we have a lot of liquidity offline from may happy made if you are taking today off there still some selected assets that are trading and some important events to look ahead to US equity futures advancing then he had apples upbeat forecasts. Traders expecting lower volumes throughout the day. Then bit of movement coming through in terms of US equity futures higher. You've got a bit of movement on the ASX two hundred straight up about eight tenths of one percent. Other than that. It's pretty quiet on the equity side in terms of the handover overnight. We did have course, they Tekere innings more generally with apple but also a little bit of a well, it was a weight on the shoulders from Google corporate earnings and develop the trade conflict between the US and China remain front and center, that's for sure I mean, running through some of the currency pairs here. You're looking here the Bloomberg dollar index. That's just barely about the flat line here quiet on the Major's front. So I mean, pretty much all of these pairs unchanged. Eurodollar one twelve twenty Donnie in one hundred and eleven fifty and cable is up less than a tenth of one percent. Short of one thirty fifty five commodities are on the pressure a little bit. Brent crude Coney down six tenths of one percent. We have higher inventories out of the US and the initial data overnight. Gold is lower by three tenths of one percent. So the metals on the pressure let me run through some of the news as well. In terms of the corporate earnings because we are getting of course, quite a few fast and furious start off with Sainsbury's fiscal year revenue at twenty nine point zero one billion pounds. You're looking here at fiscal year sales of thirty two point four one billion pounds to final dividend. Shares going to be seven point nine Pence. Few notes on guidance year Sainsbury saying the consumer outlook continues to be uncertain and that they are well-placed to navigate the external environment. So that's on the Sainsbury's front more retail input from next currently first quarter retail sales coming through a negative three point six percent. The market was looking for actually more of a contraction here down six point two one percents of slightly better than some of the analysts had pencilled in. I go to online sales eleven point eight percents the estimate heroes for twelve point eight percent. And so a little bit of a little bit better on the retail sales. But a little bit short of estimates on the online sales on guidance. They're still seeing fiscal year pre-tax at seven hundred and fifty million pounds and still see full price sales at up one point seven percent. And then also on the economic front. We've got some UK April house prices. They're up zero point four percent on the month. That's the nationwide. Up zero point nine percent on the years that is some economic input as well. So that's a bit of a flavor then on what's happening with these corporate earnings. Let's get now to some of the stories we're watching very carefully starting off with what's happening with the United States and China. The White House is ramping up pressure on China to reach a trade deal in the next two weeks. Bloomberg daybreak Asia anchor Bryan Curtis has more from Hong Kong, the US said once again, he would walk away from the talks if no deal, Mick Mulvaney, President Trump's acting chief of staff said negotiations would not go on forever. So the administration is making its impatience known a slight shift from the earlier more optimistic messaging still going into talks today. Treasury Secretary Steven Mnuchin said the US side had a nice working dinner last night with vice-president Leo hub, two of the quick notes. The F T says the US is likely to accept a watered-down commitment from China on security that to speed up a deal and. And Chinese regulators said today, both Chinese and foreign banks will no longer be subject to ownership caps on local banks Kong, Bryan Curtis. Bloomberg daybreak Europe. That means on world financial markets away. Today's Federal Reserve announcement on the US interest rates. Bloomberg's Michael Mckee has a preview. This fed meeting is widely expected to be a nun event except for that little possibility of a rate cut. No, not a policy cut to the fence target. But an adjustment to the rate of interest. The central Bank pays banks on excess reserves the effective federal funds rate traded a record five basis points above the excess reserves rate Tuesday most traders blamed technical rather than policy issues such as a rise in repo rates on other securities that suggests the fed doesn't need to do anything others note, though, it's been an ongoing problem and forecast a slight cut in the rake in Washington, Michael Mckee, Bloomberg daybreak Europe. And as the central Bank meant to weigh monetary policy. Donald Trump sought to pressure the fed to make drastic moves to boost and already healthy US economy in a pair of tweets Tuesday. Trump criticized the fed for having incessantly lifted interest rates and wonderfully low inflation Colfer steep interest rate cut and the resumption of bond purchases as well. The thing with the theme. The president's comments came as another political drama swirled around the central Bank on Capitol Hill Trump's plan nomination. He recalls Stephen Moore to the fed sports looks increasingly uncertain as a third Republican Senator voices downs. The story from Bloomberg's Charlie Pellett. Senator Lindsey Graham of South Carolina. A key ally of the president told reporters that Moore would be quote, a very problematic nomination, though, he has not made up his mind. Senator Joni Ernst of Iowa and Senator Richard Shelby of Alabama on Monday voice. Their own concerns about more a Heritage Foundation fellow and a former Trump campaign adviser Ernst the senate's fourth ranking Republican told reporters, quote, I am not enthused about what he has said in various articles later, Monday Shelby. The former chairman of the banking committee said he thought the proposed nomination, quote has some problems Charlie Pellett. Bloomberg daybreak Europe. That's something singing. Singapore where Mark Cranfield and markets live team joins us, Mark. Let's start off with the mlive question of the day. The fed odds in terms of the likelihood of a move very contradictory and not really in line with what we're seeing the job market. Yes. Good morning, certainly the market by some as strong as it's been since the nineteen sixties in the United States pretty healthy condition. We've also saying some pretty good wage growth as well. Even though it hasn't really fit injuring flation too much. So Fava certainly in the GDP data from Las week, as well already know the picture is pretty healthy economy. We go to started go to the payrolls not becoming up on Friday, and the fed will certainly be thinking about this as well because it probably reinforce this very strong picture of job market. So when you have that in the background certainly makes a bit curious as to why the mock is getting so excited about the polls. Not of the fed may take the opportunity to to try and rain the market back in a little bit and try and get them back more to a neutral territory because of that. Let's talk about the greenback. It's climbed against all but three of its group ten currency peers and twenty nineteen to folks at TD North America point out that any further strengthening any wheat test of some of those twenty eighteen is could mean trouble for stocks can be trouble for high your credit and currencies as well. More. Generally. You're seeing that dollar bears can return to hibernation after the FOMC run me through your thinking. Yeah. So we had a little bit of softness in the dollar towards the individual pro, and that's not unusual this month and maneuvering which goes on. And it's quite often the case where people are just have to tidy things up in the came off a little, but the fundamental case for is is pretty hard to ignore right now, particularly against the emerging market currencies. You've got short term rates in America, which are very high in comparison to other g ten currencies relatively high compared to the emerging market world. Plus as we were saying this pretty strong background of data from the United States. And they made it very. Clear it's on a long-term polls here. So he's not really going to be going anywhere. We've monetary policy at the same time. There's other countries that want to lower interest rates in in Asia. We've had India of moved already we've got to Malaysia looking at it, South Korea looking at it Philippines, Indonesia, they're all heading towards lower rates environment. So that certainly from an investor's point to you. They're probably thinking that the fed is beginning to look like a high yield currency here. So we could save it. If a rebound once the fed is out the way people start looking ahead to Friday's jobs report. It's always a pleasure catching up. Thank you for stopping buying. It's Mark Cranfield. Remember the for real time market commentary and analysis to markets. Lifelock. That's the only Bloomberg terminal. Let's get into some of the corporate news because apple their their numbers of projected quarterly sales top analysts estimates more from Bloomberg's Charlie Pellett. The reports suggest demand for iphones stabilized after a disappointing holiday period. The company also reported solid revenue. Growth from its services business as consumer sign up for a growing Schwartz board of digital subscriptions. Apple shares have surged more than forty percent from twenty one month low in early January after lacklustre iphone sales prompted the company to cut its holiday revenue forecast. So far this year. Apple is up twenty seven point two percent in New York. Charlie Pellett, Bloomberg daybreak Europe and do better as demand for all. The shares offered in its IPO just one day after kicked off throat show in London. That's according to people familiar with the matter, the ride hailing company will continue meeting potential buyers in New York and San Francisco as it seeks to raise as much as nine billion dollars right time now for the latest elsewhere in the world with Bloomberg's leeann guarantee, man. Good morning Yussef Kwun guidos gamble to take control. Venezuela appears to have flops the position need publicly called on the armed forces toback his attempts to oust nNcholas Maduro, but the military command. And state loyal to the president the US reiterated its support for quite, but it seems to have little effect. Japan has seen the first voluntary handy of the chrysanthemum throne in more than two hundred gays. Bloomberg's Crisan STI has this report from Tokyo Japan. Welcome to new emperor on Wednesday with hito acceding to the throne in a ceremony attended only by males symbolic, Hugh leader ushers in a new era Ray, or beautiful harmony, one of the emperor's first major tasks will be to entertain US President Donald Trump who arrives later this month for state visit interfere Chris Asti, Bloomberg daybreak. You're in the UK. There's around with a neighbor vets policy on another e referendum some of the party's MP's won't want an Olsen Kim stances, while others would prefer a better Brexit deal general election yesterday, the ponies governing buddy agreed to stick to its policy of simply keeping the option of another poll on the table it disappointed labor backbencher Mary Cray danger. We're trying to ride. To wholesalers on nicest. Theresa May has demonstrated over the last two years is that you end up leasing date. The country is looking to the labor party for leadership. They're looking to labour leader for leadership, and this may French police carrying out full, potentially violent protests across the country. Bloomberg's Caroline Conan reports for the first time the universe will join climate activists any traditional union marches, but as many as fifteen hundred black blocks anarchists are also expected in Paris. French president mccone came up with a new wave of reforms last tweak. The two-thirds of the French said they were not convinced in Paris, counting Kernen, Bloomberg daybreak Europe. Cable news twenty four hours a day on air take takes on Twitter,.
ECB's Draghi worried about Fed's independence
"Top story. President Trump has renewed his attack on the Federal Reserve. He tweeted that the stock market could be as much as ten thousand points higher the word for the FOMC derided quantitative tightening. As for the killer comes after ECB president. Mario Draghi said he's concerned about the relationship between the president and the fed speaking of the IMF spring meetings in Washington, you said he's quote, certainly worried about central Bank independence. Let's get out to Eric Robertson. He's the global head of FX global macro strategy at Standard Chartered Bank. Eric every central Bank has a finite amount of credibility capital recently. We saw in Turkey how quickly that can get a VAT berated and how difficult it is to build again. And we store that confidence. How far are we from a scenario like that? How quickly it's credibility getting burned up here. If you're talking specifically about the US, I look I think we're still a long ways away, the fed has an almost religious adherence to its institutional independence. And we've said a number of times that you know, Trump and his administration can can comment or tweet all they want. But I'm not really worried about the Fed's independence, and I don't think we're very worried about some of the potential fed governors that Trump has nominated. I think the fed will be fairly resilient here.
Stocks buoyed after Fed confirms dovish turn
"Stories, and we're starting in the United States where the fed says that interest rates could be on hold for quite some time as rising global risks way on the outlook for the US economy. And domestic inflation remains meets it chairman. Jerome Powell says that there's no data to suggest a move either up or down, adding the policy makers should remain. Patient and let the situation play out. We don't see data coming in that suggests that we should move in either direction they suggest that we should remain patient and let the situation clarify itself. Over time. When the time comes will act appropriately the FOMC's, slashed the number of projected rate hikes this year from two to
What to expect from the upcoming FOMC meeting
"The Federal Reserve will be holding a two day meeting. USA radio's Chris Barnes with a preview now from Washington DC fed policymakers to meet Tuesday and Wednesday, and they'll issue a statement at the end of the meeting on Wednesday, that's likely to note that while the economy is on firm footing. It does face risks from slowing growth in some trade conflicts against that backdrop to thinking goes it would be unwise to keep raising interest rates as the fed did for. Times last year. Instead, the fed is expected to keep its key short-term rate in a range of two point two five percent to two point five percent and many analysts believe the policy makers will scale back their projection of rate hikes this year from a cube to one or perhaps even none
Fixed Income: Definition, Types, How It Affects Economy
"Let's talk fixed income Alex Harris bond reporter for Bloomberg news is in our Bloomberg interactive brokers studio, Alex so nice to see you. What are some talk about a crazy busy week free? But what are you looking at the markets today today, thankfully was a little bit calmer. You said it was boring. We're a little more come on. Let's just be relative to what was happening yesterday with the FOMC minutes. And there was a lot packed today. A little bit calmer was seen a backup and yields however, still range-bound because again, there's all this uncertainty floating around. So I think really today's move was driven more by the investment grade corporate bond calendar. You know yesterday you had alive lily come in with a with a big bond issue. Tens and out the curve and their funding an deal Tae, Boston scientific four point three billion. They were across the curves. Five cross the curve excuse me, five years to thirty years or bond market alive and kicking alive and kicking as long as there's day where you're not getting a whole lot of fedspeak and things are relatively calm. And there's not a lot of volatility. I think they can come in. And that's what's pushing the market a little bit. You have the five thirty s curve is steeper today. It's round fifty three basis points. So in on the new issue market what's the reception in there? And what's liquidity in the marketplace? Mean you're still getting people taking down these deals in clearly they're coming and they can come with four point five billion yesterday from Lilian then Boston scientific and follow up with another four point three reception is still good and as long as follow Tila ty- remains somewhat subdued and now the feds on hold. I think it just gives you a bit of an opening and the long end is an attractive place. For issue. Just because investors want that yields. So they're gonna pick up what they can get. So, but again, you know, ten year thirty year treasury yields still rangebound, we have trade uncertainty. We have Brexit uncertainty. We have all these issues on the table that have yet to be resolved. And until we get a resolution. A can't see the treasury yields breaking out one way or