one thing that caught people's argument particularly if you are is the facthe fed, the fed it knowledged that inflation expectation has not risen. they are steady. another gtv the chart and the get an interesting comparison we put together, the connect inflation expectations to break even and had they are tracking crude oil. the five-year breakevens are in step with crude oil. if the fed sees that, it has number off lately, and two, any kind of change in inflation that is past memory by oil prices may discount, because all prices have moved up. we know the oil prices can move done quickly as well and that is one thing that may look past. one of the bond teams of the world was on bloomberg television earlier and said this focus on inflation is not new. period.llen talk about exceeding. inflation over a certain he said he doesn't expect one more rate hike, let's is in to what bill said earlier on bloomberg tv. if the fed moves significantly higher, i expect a john wright type, i don't expect to or three or four or six power forward. i don't think they could do that. a note was written afte

the fed did nothing, as expected. they gave no indication that it will hold live meetings for every meeting, so what does this do for your projection on what it does next? ira: it does not change much. we knew they had to say something on inflation because we are very close to the inflation target, where they want to be commanded they may have let it slip a little bit, but as the chair said in a speech not long ago, he said we will not make this or let inflation run away from us, and stay way above our target just because it has been running below for a long time. tom: what is your experience of the fiscal impulse monetary theorists will have to look at? your world is one chapter, chapter 23, and nobody ever reads it. they cross it out on the exam. tell us about your world linked into fed phd's. ira: the fiscal stood less has not hit yet. we certainly had people with more money in their pockets, but disposable income is rising and we will have more of a fiscal impulse going forward. one of the interesting things about

but the fed is a shining island. jay powell was an excellent appointment, rich clarida is an excellent appointment. the president has shown no overnation to send incompetent people with wild ideas to the federal reserve, although he has done that with many, many agencies of government. indeed, in many agencies of government, he has sent people that seem to have a mission to destroy the agency. when he has done with fed nominations is completely different from that. it has led people like me to applaud the decisions that we just hope it will keep up. there are more vacancies to be filled. caroline: would you applaud the views we have heard already in the statement was released ahead of time by richard clarida saying that you would see a balanced approach in terms of the dual focus of the fed but also in terms of banking reform? he seems to be a supporter of the reforms put in place since the financial crisis. in your book to you mentioned how those reforms help the banks but not the homeowners. do you think there shou

>> if determined by the fed, yes. i do think that that could be appropriate in some circumstances. >> so in essence we can say the fed really can step in at any point and say we don't like board members. we can supercede chair shoulders and put pressure to have them fired is what you're saying today? >> the -- the law, for example, would not allow the shareholders to, you know, elect people who have committed crimes from being board directors, and if they did, it would be appropriate for the federal reserve to say that that's not an appropriate director. i think -- i really am on your side on this. i think that that should be something that's extremely rare. >> i think this is something you need to take it a look at, concerning, the fed's role here, and i think if you take some time we'll be on the same page on this issue. >> exactly. i want to look to examiners in their exams asking questions of financial institutions about their lobbying efforts. would that concern you? is that a proper role of the fed to ask questi

jobs, jobs, jobs, fed, fed, fed. we go, yeah, retail sales, so what? that's wrong. it's important. we'll have it for you tomorrow morning as well. bloomberg technology, in boston, go, red sox. ♪ tom: good monday morning. "bloomberg surveillance" worldwide. let's get right to it. here is your bloomberg first word news with taylor riggs. usa embassyvirtual in jerusalem opens today. president trump had vowed to move it. palestinians say the u.s. can no longer be a mediator in the region. u.s. is ready to let american businesses invest in north korea, but there is a catch. north korea must groove it has given out -- given up its nuclear weapons arsenal. mike pompeo says the u.s. can create conditions for real economic loss parity in north korea. the leader of the two countries -- the leaders of the two countries hold a historic summit next month. the country possible electoral commission says he was the front runner in national elections. the officials results are in for just over half of the country's provinces. the record low turnout was the first since iraq declared victory over t

the fed does have other tools. they can use for guidance, it can make promises that will keep rates low for a long time. it used asset purchases properly known as quantitative using, pretty successfully in the last few years. seems to be unwinding without too much difficulty. there are additional tools. the fed can look at other strategies like changing the way targets inflation for example, that could have impact on the ability to respond to a slowdown. i think it's an issue. it is not clear that if we had a deep recession, that monetary and fiscal policy would be as effective in responding as might have been the case in the past. terrence: that brings me to another question. as a guy who runs a public company, one thing investors can't stand is when you give guidance and you miss it. they will punish you. very badly. it appears the fed gave a lot of guidance throughout the years and maybe didn't follow through. one thing the market hates is uncertainty. it hates uncertainty when the government gives guidance on t

its systems were compromised and the money was stolen you know i'm not blaming swift i'm not blaming fed i'm not blaming bangladesh bank but and this was not strong enough to really we stand by. and that. all institutions touched by the heist have denied they were told for the losses they have however taken steps to improve security. police headquarters in downtown dhaka detectives here are working with all sorts easy in other countries in what has become an international investigation they've yet to confirm how the hackers got into the system or we will fit all the data and helping us into helping us and we are trying to find out. about cancun theme. maybe some investigators are sifting through ten terabytes of data in the hunt for a smoking gun that might identify the culprits though no bank insiders have been charged over the heist police say they must fully investigate the possibility. that maybe a bank employee. yes. thank you dish bank denies that anyone on the inside was involved and also denies negligence the police have not charged anyone from bangladesh bank in relation to the

fall coverage of the fed decision coming up next. this is bloomberg. ♪ that he: this is a's bestial report on the fed decision. tom, let's get started. we will not get a rate hike. tom: june 13 and august 1. that is what everybody is doing. i don't like it. i get it. it is a debt meeting, but we will not do that today. wethat will frame us out to get the june 13. scarlet: we are joined by jeffrey rosenberg. what are you focused on? >> the curve reaction. there is not a lot of surprises here. how the market interprets the upgrading is it more on changing the near-term path, or expectations. tom: what is so deportment is the data dependency -- so important is the data dependency. following every trend. are they -- >> they are following. they are clearly following. jeffrey they want to embrace inflation. tom: they have got to see it. jeffrey that is how the fed is acting. it is very hard to get in front of it. scarlet: we are already at 2% inflation, once we are there, can we stay there or move faster to 2.5%? jeffrey: if you look at

jonathan: let's talk about the fed, george. has the fed put changed? i don't mean just where the s&p 500 trades i mean global , financial conditions, em, china. we saw the fed back off and em route in 2015. is the federal reserve more or less sensitive to that than they were a year ago? george: i think you're seeing them exit, sort of quantitative easing and rising interest rate environment we haven't seen before. they are setting the precedence for one other central banks are going to follow. there is a good deal of sensitivity. keep in mind, they're reducing their balance sheet at the same time. that's obviously something they're weighing into. lisa,an: the other thing i had a conversation with week with an investor who said that typically real rates of the fed get to about 1.5% that would suggest the rate needs to get to the threes, 3.5%. are we going to get normal rates to 3.5% in the federal reserve? lisa: my guess is probably not. it will probably do 2% or 3% next year, but i think we're facing a significant slowdown in both fiscal stimulus and m

about doing too much, too fast if you think about where -- >> this is a new fed, not the yellen fed >> true. i think the fed is probably focused on a couple things we don't talk about they need to focus on credit spreads which haven't really given a lot of ground. that sounds like it should be -- that's a good thing, but i think the fed wants to see commensurate move also not just what we are seeing in rates but in credit spreads to feel like something's happening here >> john, jump in >> one thing i would say is the fed's interested in keeping the cycle going. the fed has no interest in ending the business cycle prematurely. this idea they want to put arrows in the quiver may be there but that's a second order of consideration the first order of consideration is not to make a policy mistake. don't do anything overaggressive or rash. and as long as inflation is below 2% there's no reason for them to be more aggressive here. we think the market's pricing a lot of fed for this year, it's pricing more for next year and given the backdrop, we think that's about enough. >> pricing in a l

what is the risk in fed move? rateshink global interest are still low and i think we have to keep that in mind and so what's normal today is lower than what it has been in the past and people have been talking about this for quite a while. we can't lose sight of that. it seems to me of all the cautions the most urgent one is yield curve flattening. you said that it is getting close to crunch time on the yield curve. it could actually invert relatively soon. what is driving it and why is it happening? >> if the effect goes up three times threat the rest of this year you have to ask yourself is the 10-year really going to go up that much in that timeframe. if it doesn't we are going to have an inverted yield curve later this year or early in 2019. timedo think it is crunch for this. those that are more sanguine on this issue feel like the 10-year seen yieldnd we have going up in the last day or two. the question is how is that going to proceed over the remainder of this year and into 2019i don't think we are in any

in otherin other words, 2% is ne ceiling for the fund, the fed ling for the- cei fed, the fed could let it drift above 2%. it noted consumer spending was moderate. it was a somewhat weaker than the first quarter, but they also ling for thsee stronger business investment. they also see stronger job growth. a lot of people sees on the fact seesthe fed says it inflation expectations unchanged. you can see it tracking crude oil. at the top of the chart, you can see they have leveled out. what is compelling about that chart is inflation expectations moving up just because of oil prices, maybe the fed looks past that. maybe that is something they are not too concerned about. think bottom line. everyone thinks they will hike the key rate in june. they think inflation will stay around 2%. 4% another hike on, do instead of 3% this year --that is what they are continuing to debate. let's hear senior fellow at the institution at stanford university. you have been watching this for a long time. what do you make of -- what is the fed trying to tell us by "symmetric?"rd >> they are trying to say they

. > coming up, the fed opts to ho rates in may and signals a jump in june more analysis on the fed decision after this break. ♪ with expedia you could book a flight, hotel, car and activity all in one place. ♪ hey, want thedone.est internet? and now, xfinity mobile is included. you can get up to five lines. you can save 400 bucks or more a year, which you can spend on a funk-tastic music video. ♪ dance party boom. ♪ simple. easy. awesome. come see how you can save $400 or more a year with xfinity mobile. plus, ask how to keep your current phone. visit your local xfinity store today. . >>> welcome back let's check in on markets. asian equities have not had a good session ahead of the upcoming china/u.s. trade talks. some of that was dampened by reports that the trump administration is considering executive action to restrict chinese companies abilities to sell telecoms equipment in the u.s. that's dampened the mood in asia that dampening of mood is continuing to the european session. stoxx 600 is trading down 0.3% let's get into individual european markets here. you can see that agai

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

joins.r fed governor a former fomc member and one fed short-lister for the chairman position. warren buffett says he is buying more apple. we will be in omaha for what to expect from the animal shareholder meeting this weekend. more to come, but we are 30 minutes into the trading day, and julie hyman is here. we typically might see some selling. julie: we are seeing an indecisive day. there's is no room for stocks with the volatility we have seen. we are seeing not much change overall in the wake of the jobs were are dust jobs report this morning that was mixed when it -- in the wake of the jobs report this morning that was mixed when it comes to overall estimates. a lot to way here. if you look at the s&p 500 the past five days, we have seen four of the past five days be negative. this is as investors are trying this as good as it gets. that sentiment encapsulated in the caterpillar conference call earlier in the week. if you look at the economic data, there is the question that remains as well. we have the economics of price index for the united states. that is in blue. that

jonathan: let us talk about the fed put george. has it changed? has the fed put changed? and i don't just mean that domestic story with where the s&p 500 trades. i mean global conditions. e.m., china, we saw the fed back in china in happen the e.m. rout in is the federal 2015. reserve more or less sensitive to that than they were a year ago? >> i think there are more sensitive to it right now. you are seeing them exit from the quantitative easing and the rising interest rate environment that we haven't seen before, and they are sensitive to that. they are setting the precedence for one other central banks are going to follow. there is a good deal of keep in mind sensitivity. they are also reducing their balance sheet at the same time, obviously something that they are weighing into. jonathan: and it is still obviously a very accommodative federal reserve. i had a conversation with week with an investor who said that typically real rates of the fed get to about 1.5% that would suggest the rate nominal rate right now needs to get somewhere in the threes, 3.5%. are we going

we are sticking with the fed for our battle of the charts. that is where we take a look at the most telling charts of the day and what we mean for investors. you can always get there at gtv. kicking things off is michael mckee. michael: this chart plots where the fed sees the funds rate versus where the market sees it. something has happened of this chart that has never happened. i picked a random date. this is two years ago in march of 2016. the white is where the fed projects interest rates are going to be. the red line is where the market projects interest rates will be. let me make a change on the date. you can see for the first time ever, the market thinks we are going to have more interest rate hikes than the fed. it is a little bit unfair because the fed does not change its forecast as often. they will not change again until june but we will see if they go to four. it is a different kind of dot plot than we have ever seen. vonnie: and the more loretta mester speaks, the more that will change. i think that was a very instructive chart.

here is what the fed had to say. overall inflation and inflation for items other than food and energy continue to run below 2%. they cannot say that again. stephanie: they are going to be trying hard not to change the statement much, because if you are the fed, you are looking at a situation where the market is expecting that rate rise in june and maybe a couple more for the rest of the year. they are in quite a nice spot in terms of managing expectations and they do not want people to run away with the idea that they will go much faster. there is nothing in the numbers where they -- there is a sign of a real upward push, particularly wage pressures. that might concern them over the long-term. they might have quite a debate internally that we hear about with the minutes. in terms of the statement, we are not expecting much change. david: what sort of risks could they talk about? they cannot blame it on inflation. marty: there are some hiccups in the economy i think the fed may want to be looking at, shortages of labo

the fed has been very gentle. at the same time, the world economy is faster than peoplea anticipated at the start of the year. as a result, you will see financial conditions be relatively loose. wille same time, there not be a hike as quickly as some thought. that story is one of the most interesting there at the moment. the bank of england seems to be backing off. the ecb is not going anywhere in a hurry. how wide can this divergence get? >> it will be transmitted through the markets, the dollar through currencies. that the central bankers are willing to outgrow. that therethoughts might be hikes this week, now no one think so -- think so. the bank of japan is still pumping away. there is a case to be met the fed is going to go out on a limb. much, simonou very kennedy, bloomberg's editor for economics. jay powell is starting to deliver his comments in zurich. we are the have an indication of what he is going to say. already have an indication of what he is going to say. london, trading a bit higher. markets else

despite these dovish signals, the fed made clear the next fed hike is coming soon and suggested maybe as soon as june. the d biggerate now, how many more come after that. for "nightly business report," s i'mve liesman in washington. >>> there were new developments on the trade front late today. according totr "the wallt journal", the white house is considering the imposition of new tariffs on imported vehicles, on national security grounds. those tariffs could be as high 25%. the report says the plan is in the earlytages though the idea has been discussed with industry officials. > to the economy now where a new report shows manufacturing activity is at its strongest level since september of 2014. the so-called flash survey out today pnts to stron gains in both production and new business. it also showed that inflation is rising with input costs increasing at the fastest rate in nearly five years. >>> saleses of new h fell at the beginning of the critical spring selling season. according to the commerce department, purchases were down 1.5% in april and last three months was revised lo

and its customers included bangladesh's central bank and it was to the new york fed that the hackers sent thirty five messages requesting payments from the bangladesh bank account. things could have been a lot worse but for an extraordinary coincidence millions of dollars hundreds of millions were never transferred because the name jupiter in the address for the bank happens to match that of an oil tanker nothing to do with the heist but on the list of u.s. sanctions against iran as a result most of the transfer orders were flagged as suspicious and blocked by the feds. and there were other reasons to transfer requests could have arouse suspicion they were different to most payments made by bangladesh bank they would formatted properly and these were large payments to individuals rather than organizations. but largely because the requests appeared to be authentic aided by swift eighty one million dollars was sent. when i use my card in a foreign country for example or for a sudden large purchase it can trigger a simple fraud inquiry from my bank real time monitoring the technology is

fed does respond. either way it is not great. 3%, anytion is near sort of rule thereabouts would suggest that fed funds should be close to 5%. that is a long way from what markets are expecting coming case you noticed. tom: alan ruskin doing the math. just fell off the couch in the green room. we will get him on. coming up, this is great. i am thrilled to have with us later,skin, mark mobius and up next, dennis gartman on the taylor rule. good morning, winnipeg. ♪ ♪ tom: good morning everyone. "bloomberg surveillance." mark mobius to join us. right now, alan ruskin of deutsche bank and dennis gartman. how has trading been? >> i've aged. i'm aging very quickly nowadays, but doing ok, and then left the past month or so. tom: it is a volatile environment. we were talking about the taylor rule and other theories of the central bank. bring up the screen. i want everyone to see this incredible bloomberg function. on television it is a little noisy, to say the least, but these are the fill-in factors of t

we saw the fed backup an e.m. route. we saw the fed backup off the back of what happened in china. is the federal reserve more or less sensitive to that than they were a year ago. >> i think you're seeing them exit, quan tave rising sthrirmente we haven't seen before. they're setting the precedence. so i think there is a very -- very good deal of sensitivity. keep in mind they're reducing their balance sheet at the same time. that's obviously something they're weighing into. >> i had a conversation with week with an investor who said that typically real rates of the fed get to about 1.5. that would suggest the rate needs to get to 3, 3.5%. are we going to get normal rates at 3.5 of the consideration r concern. they'll probably do two or three next year. but i think we're facing a significant slowdown in both fiscal stimulus and by the end of 2019 or 2020. >> i can the federal reserve on a real race basis gets rates to where they once were? >> it defends where they once were. the trend higher for rates is going to be methodically slow. i don't think -- you're going to see rates anyw

the fed will only do two. >> the fed comes to the market. we're calling for three this year. >> the fed comes to the market. jonathan: b theund -- the b und spread? >> flatter. governor,who is the erdogan? >> are to want. >> erdogan. >> a joint effort. jonathan: thank you. me, from us,for from new york. this was bloomberg real yield. you are watching bloomberg tv. ♪ >> you are watching the best of bloomberg daybreak. the major stories driving headlines from the region this week. diplomatic pressure on israel after the bloodiest violence since 2014. the eu expresses deep concern and urges maximum restraint. opec says the cartel has enough capacity to cushion oil market as the u.s. three imposes sanctions on iran. >> and property crisis in dubai. despite earnings missing even the lowest of analyst estimates. >>

first, will the market come down to the fed, or will the fed to move up to the market? there is that much in it. what will happen? luke? luke: i think the market will come down to the fed because it will only do two. jonathan: joe? joe: i think the fed comes to the market. we are calling for three this year. jonathan: diana? diana: i think the fed comes to the market. jonathan: btp bund spread, why -- wider or narrower by year-end? luke: wider. joe: flat. diana: flat. jonathan: and the final one, who runs the central bank of turkey, who is the governor? the governor or the president? luke: erdogan. joe: erdogan. diana: a joint effort. jonathan: there we go, very diplomatic. great to catch up with you diana amoa, joe higgins, and luke hickmore. that does it for me, from us from new york. we will see you next friday. 1:00 p.m. new york time and 6:00 p.m. in london. this was "bloomberg real yield." you are watching bloomberg tv. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory.

and its customers included bangladeshis central bank and it was to the new york fed that the hackers sent thirty five messages requesting payments from the bangladesh bank account. things could have been a lot worse but for an extraordinary coincidence millions of dollars hundreds of millions were never transferred because the name jupiter in the address for the bank happened to match that of an oil tanker nothing to do with the heist but on the list of u.s. sanctions against iran as a result most of the transfer orders were flagged as suspicious and blocked by the fed. and there were other reasons to transfer requests could have a suspicion they were different to most payments made by bangladesh bank they would formatted properly and these were large payments to individuals rather than organizations. but largely because the requests a p. it to be authentic aided by swift eighty one million dollars was sent. when i use my card in a foreign country for example or for a sudden large purchase it can trigger a simple fraud inquiry from my bank real time monitoring the technology is quite

what does the fed need to do at this point >> the fed right now is a little bit like that -- the rat in a maze and the cheese is gone and the chose eese is inflation. it does not know what to do with growth without inflation or inflation accelerated. i think the inflation rate will pick up as the year goes on just from the lag, the slowdown the u.s. had in 2015, 2016 so what it needs right now, it moved to this sort of a wide path for inflation what it knows it doesn't have is an increase in wages and that's really what it's looking for now for wages to accelerate. it's really just another excuse. even if wages don't accelerate, does that mean it keeps rates where they are so the real answer is that the equity market's really telling them and powell being a preacher of the capital markets, and i mean that affectionately he's really going to let rates -- let the markets dictate where rates should go. if the markets start getting out of control, that means their growth story is right and money is too cheap and he should raise rates. if we get a bull market coming back, it will make it

the fed has a duty to remain apolitical. would expectg you from any fed nominee. one of the more in sync questions was did you feel any political pressure from donald when he interviewed you for the job. because kevin worsham, who was interviewed for the job of chair recently said he did feel political pressure, that the president might in the future ask the fed to be more accommodative than it wants to says he has not felt anything like that. michele bowman said the same thing,. vonnie: what are these models he is talking about? all of this academic and pimco career with models he developed, what did he mean? michael: he is an expert on what the fed does. they have a model, he has a similar model of if you do this, and this happens in the economy. that's what they based their policy decisions off of. not one model, but a lot of different ones. he has done a lot of that. jay powell has not done that. it would be a good, woman to the -- it would be a good complement to the chair. nejra: a lot of these models are coming under question. he said a very complex picture

it is the fed's determination. for example, if jon corzine came back and reinvented mf global which he helped blow up a couple years ago and was taking tremendous risk the fed could theoretically, not theoretically, according to this rule, even though it's a small entity, regulate it. trish: would that have prevented something like long-term capital? you look even today, right? >> long-term capital could come under the volcker rule and be restricted and come under fed guidance based on this law. trish: okay. >> so could blackstone. so could carlisle. it gives the fed tremendous leeway to do it. it is not really changing the rule. it is doing some small things which are really good. why should a small community bank have to face all this fed compliance when it is really not systemic. trish: right. >> if it blows up, the worst thing happens it blows up it will not doom the economy. basically the, it should not face the same compliance as bank of america, if it blows up can doom the american economy. that is what they

unrelated to the fed minutes -- >> you saw tesla spike on the fed minutes? >> kpa accountly you have to watch these technology companies ran off of that they reversed and gave a little bit back i'm giving wilf a heads up on this one i'm going to look like a hero or get decimated tomorrow >> i know. >> it's going to be up 25 or down 25. >> mark, quickly talk us through your view on amazon. it's one of the major tech companies that you like. >> yeah. i mean, obviously we saw a blowout quarter when they recently reported. i think most important is the leverage they have they can pretty manufacture the kind of earnings we had in the first quarter going forward and decide what kind of expense growth they want to have i think the kind of leverage they have now with the cloud and some of their faster growing markets, they're getting into the wallet like we saw recently. had some news on their swipe what they're doing to companies like paypal and visa i think the leverage these big companies have is extraordinary. and what we obviously know now and have been saying

to the feds turning meeting. investors will watch for any signal that policymakers will raise interest rates. another three times this year. joining us, mark cudmore. let me first ask you about what you expect here as far as the fed is concerned considering the fact we saw inflation come up to their target? little inre expecting terms of surprises. we are not expecting a rate hike. two in 90 people are calling for a hike. statementking for a to see whether there is change in hawkishness, but i don't think there will be major shift in the statement. when you talk about the fed, for the longest time, there has been little attention on the fed in asia. there have been market issues dominating more than what is coming from the fed. guy: let's talk about what happened in asia. what happened with the china fixing? are the chinese trying to communicate? i think it is interesting timing. it is also important to put in context that the chinese yuan is near a two-year high in the official basket. it has room to weaken agai

a fine line for the fed. if it needs to raise rates to keep check of inflation and get us back where we should be given the economy. at the same time they don't want to stamp out that growth. >> i would agree with gary. the fed is too slow. qe3 should have never happened. >> bless you. ashley: or qe2. >> i'm going for the lay-up first. the fed is a little behind, no question about it. i think with respect to what kristina was talking about, wages are still slow. that being said average hourly work week looks good. >> yes. >> there are things that should push it up that haven't pushed it up. >> you're moving toward the four hikes for the year? >> before the last quarter gdp i would have said the bid offer is 4.5. now after gdp i'm -- now i'm like 3.4. but i think -- ashley: really? >> i'm three to four hikes. i think if we go to four hikes, we'll certainly see, back up much north of 3%. i think it will have impact to the market. >> the ten year to your point is floating around 2.97. what is what what is so mys

joe: i think the fed comes to the market. diana: i think the fed comes to the market. jonathan: btb bond spread, why narrower by year-end? luke: wider. joe: flat. luke: flat. jonathan: who runs the central bank of turkey? luke: irna one. -- erdogan. joe: erdogan. jonathan: great to catch up with you diana amoa, joe higgins, and luke hickmore . from new york, we will see you next friday. this is "bloomberg real yield." you are watching bloomberg tv. ♪ >> i'm mark crumpton. authorities say as many as 10 people, most of them students, schoolin a texas shooting. that happened at santa fe high school located about 30 miles from houston. the local sheriff says one person is in custody, and a second has been detained. the school district adds possible explosive found after the shooting. officers working to render them safe. >> at one point, they were students coming out from different hiding places. our search is continuing to make sure none are still hiding. we do not know if anyone is in there and we don't know of any additional for talladega. it is secure now. we have a

felt like a different fed to me. number two, love the glasses on you i agree with tim, except in my world dual mandate is s&p and nasdaq goes higher and that's what you saw today. >> that was their mandate. to be very clear, after the crisis targeting 10% on unemployment, get below charging 10,000 on the dow, get above that we know that the fed arguably have market forces they won't admit to you can't tell me they care about market valuations here if anything we created an asset bubble they wanted asset inflation, they have gotten it. if anything they are talking about trying to control something that looks at least you're starting to get and be careful what you wish for. >> let me be clear i don't think the feds have done hiking, they backed off their language. they saw the dollar rising, yield curve flattening. >> dollar back to december levels. >> we talk about it every single day. we talk about it every day. >> when it was at 90 in december just five months ago, were people freaked out bottom line is the dollar p

environment is this where the market is paying more heat to the fed is -- paying more heed to the fed. another factor is the slower growth in europe as well. francine: thank you for staying with us. watson,ey and marilyn both stay with us. if you are a bloomberg customer, you can watch the show using tv . you can follow all of our charts and functions by using the id function. tesla shares sink after the analysts call veers off course. elon musk says some of the questions were boring. we will bring you the details. ♪ francine: economics, finance and politics, this is "bloomberg surveillance." let's focus on the fed and officials have left interest rates unchanged. without indicating any intention to veer from the heightening of monetary policy. here is how that went down with some of the key market watchers. >> the statement is loud and clear, mission accomplished. we have reached full employment, inflation has hit 2%, we are safe to connue moving with our rate increases. let me set you up a little bit. inflation is going to run hot. >> if the fed moves higher, i expect june rat

did the fed's actions dampen volatility that? perhaps. but i think it was the fact that the economy cooperated. we had an economy that was not much different from what we were anticipating. you could say, as late as 2012, you had no less a light than jamie dimon querying ben bernanke about, hey, that you may be gone too far, you folks. mr. dudley: it goes back to the japanese experience. i think ben bernanke very much understood that, he understood the lessons of the great depression. i had done a lot of reading about the japanese experience as well. i was completely in line with his view that we have two err on the side of doing enough. red doing enough inflation expectations well belowuced 2%. then we end up in a japanese situation where it is hard to make monetary policy stimulative because inflation is so low. >> the aftermath of the financial crisis you were the most vocal new york fed president in memory to speak behaviorting out that in the financial markets and creating incentives for integrity in this greater content this greater

julia: big decisions await the fed as the e.c.b. officials discuss the path forward. >> i would take that as a bearish signal to the u.s. economy. >> we are going to look through these transitory movements and look at where inflation is going. >> we will give additional guidance. julia: plus, another week of corporate news and earnings season. >> what we said was we would pay out 50% of our profits in dividends. >> it looks like tencent is not going to let go. they are going to spend more. >> is anyone surprised by these results? they have not been reading the news or paying attention. julia: it is all straight ahead on "bloomberg best." ♪ ♪ julia: hello and welcome. i am julia chatterley, and this is "bloomberg best," your weekly review of this week's important business analysis and interviews from bloomberg television. trade was on the agenda this week with talks between the united states and china scheduled in washington. but before face-to-face meetings began, a tweet provided an unexpected twist. >> donald trump has ordered

many emphasize that the fed's target is symmetric. inflation is seen remaining near there because of a tight labor market they worry about the inflationary effects of the oil. it may no longer be giving us the signal it once did, because of hiking the funds rate on the important issue of wages, many on the fed are saying, overall wage pressure remains moderate they see little evidence of general overheating in the labor market and they still see some scope for the labor market to improve. a couple quick words on what the fed sees as the risks and uncertainties. supply constraints could affect the balance. the issue you guys were talking about when it comes do trade a lot of warnings in there about trade. there's a wide range of possible outcomes from some of the trade discussions going on some are worried that trade uncertainty could dampen business sentiment and even dampen business spending melissa? >> steve, thanks so much stick around, steve. >> we're going to do market reaction now >> jordan posner joins us. brent schudy also wit

oftenll the fed back 2015, 2016 off of what happened in china. moree federal reserve sensitive or less sensitive to that than they were a year ago? mr. rusnak: you are seeing them exit quantitative easing and arriving in an environment that we have never seen before and they are very sensitive to that, kind of setting the president for what other central banks are eventually going to follow. there is a good deal of sensitivity and keep in mind, they are also reducing the balance sheet at the same time. it's obviously something they are weighing. it is still very accommodative federal reserve. i had a conversation with an investor who said that typically real rate of the fed gets to about 1.5% and that would suggest the normal rate right now needs to get up to somewhere in the threes, 3.5%. are we going to get nominal rates at 3.5% of the federal reserve? ms. hornby: monday's cases probably not. you probably do another two or three this year, another three next year but we are facing a significant slowdown in both fiscal stimulus and monetary comm

we felt the fed minutes this past week were telling you that the fed is for free for all of 2018 and that is why the , two-year has held where it is. jonathan: how important is that? henry: the fed is pretty important. the policy will base -- be something to pay close attention to over the next 18 months. matt's point is a good one. that delta between the fed hikes priced into the front-end of the curve is gargantuan. that front end, the delta are -- that ties in with dollar strength, is not necessarily going to be so big. i personally thought the fed minutes were interesting in that the feds seem to build in a lot of flexibility. they said we will take inflation higher, a steeper curve, there are conversations around the dot plot going away, so the fed is introducing ambiguity into the market, which is healthy. lisa: people are finding cash attractive. we are hearing a growing number of investors saying they are increasing the allocation to cash. how are they getting the allocation? in two-year treasuries. there is a balance going on. jonathan: has 250 become an entry point for a lo

joe: the dollar is doing some of the military tightening for the fed. the matter what index you look at they are tying up in the u.s. , if you get to next year, the markets are starting to take pricing out. it will remain 2.5 and 2.0. the fed is at real risk of going too far, too soon. jonathan: you really think so? looks any powell uberhawk. jonathan: what gives you that indication? luke: he wants to get up the hill. he wants to go marching up the hill with rates. he has room to get down the other side. i just think he is going to continue down that path, and the risk is just too much. that be the way we get 2020 as our problem -- would be the way beget 2020 as our problem area. jonathan: that is really interesting. diana, this is still in accommodative federal reserve, isn't it? diana: it is, but that is the point. that raises the likelihood that you get more hikes. the federal reserve is concerned that we have had unprecedented stimulus when the labor market is tight. we do not want to be caught behind the curve, but we want to see other language. th

he says the biggest risk is fed thpolicy. market accident tend to do well when the fed is tightening. let's take it t another level here, somewhat interrelated. also the risingnterest rate environment. which is matt mailie over at miller tayback, says every time we see a meaningful rise of rates represents some sort of malinv ctment. it coue the scary environment or downdraft we saw in february. rising rates also play in his discussion as well. this is from bla good win. he says it's dollar strength anm emergiket weakness, because it's the top of the list because it's probably the most immediate and current stress in a few countries like say turkey, argentino or venezuela, could easily spill over and eventually start to impact developing markets. the next one hnge flo into the same dollar theme. this is lori over at rbc capital markets, who says we've seen historically whenhe dollar strengthens too much, kind of like it is right now, earnings revisions take a hit. the expectations for a weaker dollar has been consensus so if