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Speaker 1: Broadcasting live to New York Bloomberg eleventh, Rio to Washington,

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Speaker 1: d C. Bloomberg to Boston, Bloomberg, Well Under to San Francisco,

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Speaker 1: Bloomberg nine to the Country, Joey's Exam General one nine

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Speaker 1: and around the globe the Bloomberg Radio plus Dappen Bloomberg

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Speaker 1: got Gone. This is taking stock. I'm Kathleen Hayes along

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Speaker 1: with Pim Fox. Janet Yellen, the Fed Chair, wraps up

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Speaker 1: two days of testimony. It is clear that the Fed

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Speaker 1: Chair is no longer certain that rate hike rate hikes

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Speaker 1: are inevitable this year. Uh And having said that, she

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Speaker 1: also suggests that maybe we'll get lucky in the economy

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Speaker 1: and the labor market will show a little rebound. Pim,

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Speaker 1: We're going to talk to a guy who says he

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Speaker 1: thinks maybe there's a little too much hope in Janet

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Speaker 1: Ellen's outlook. Yes, that's John Herman, director of an interest

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Speaker 1: rate strategy at Mitsubishi e u f J Securities. He

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Speaker 1: says that the hope is not a strategy. I'm gonna

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Speaker 1: find out what he means by that. I remember that

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Speaker 1: as being a book by Rick pay Salesmanship. We'll find

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Speaker 1: out more right now, let's find out all about news

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Speaker 1: with Charlie Pellett of the Bloomberg News, and I thank

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Speaker 1: you him Fox sant Kikathleen Hayes that Dow is lower

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Speaker 1: SMP NEZZAC advancing the ten ure of five thirty seconds

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Speaker 1: looking at the yield of one point six eight percent.

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Speaker 1: The pound fluctuating amid speculation over whether the UK will

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Speaker 1: vote to leave the European Union. Oil slipping below forty

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Speaker 1: nine dollars of barrel right now though w T I

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Speaker 1: is at forty nine eleven, it is down one and

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Speaker 1: a half percent, dropping seventy three cents. Brent by comparison,

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Speaker 1: down two point three percent forty four right now on

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Speaker 1: Brent and again w e t I at forty nine twelve.

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Speaker 1: Tobias Lefkovitch, chief US equity strategist at City Group Global Markets,

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Speaker 1: was interviewed this morning on Bloomberg Television. Here's what he

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Speaker 1: had to say about uncertainty in the market. One of

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Speaker 1: the things that I've been fascinated by is this uh

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Speaker 1: constant reference to uncertainty. Um, they'll we have very high

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Speaker 1: degrees of uncertainty today. We've always had high degrees of

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Speaker 1: insert and date we probably get it a little bit

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Speaker 1: more in terms of the instantaneous technology feeds of that

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Speaker 1: news flow. But I can't remember a time in my

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Speaker 1: career that there wasn't uncertainty. And you know, if you

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Speaker 1: talk to people who grew up in the sixties and

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Speaker 1: the fifties who were told to hide under their desks

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Speaker 1: in case the Russians attacked UM with a nuclear barrage,

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Speaker 1: there's always uncertainty. And again recapping, we do have a

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Speaker 1: mixed picture for stocks. The SMP up two points now

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Speaker 1: at two thousand ninety one on the SMP five hundred.

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Speaker 1: In next sense, the game of point one percent, the

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Speaker 1: Dow down ten, a drop there of one tenth of

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Speaker 1: one percent to thirty two on Wall Street. Now, let's

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Speaker 1: take a look at other news from around the world

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Speaker 1: on Bloomberg Radio. Thank you, Charlie from the Bloomberg News Room.

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Speaker 1: I'm Rainey in a cen co. This news update is

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Speaker 1: brought to you by land Rover Manhattan, where New York

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Speaker 1: Goes for luxury, conveniently located at and eleventh Avenue and

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Speaker 1: online at land Rover Manhattan dot com. Land Rover Manhattan

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Speaker 1: is at your service house Democrats, stage of protests on

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Speaker 1: the House floor over gun control, forcing the House into recess.

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Speaker 1: About thirty Democrats, led by George's John Lewis, are demanding

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Speaker 1: a vote on measures to expand background checks and block

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Speaker 1: gun purchases by some suspected terrorists. They want House Speaker

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Speaker 1: Paul Ryan to keep the House in session through its

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Speaker 1: planned weeklong recess next week to debate and vote on

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Speaker 1: gun legislation. Which presidential candidate would be better for your portfolio?

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Speaker 1: That is the basis of a new national poll Bloomberg

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Speaker 1: S Michael Barr has more when it comes to investor cabinets,

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Speaker 1: and new Bloomberg poll shows more voters with money in

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Speaker 1: the stock market say Donald Trump would be better as

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Speaker 1: president for their portfolios than Hillary Clinton. Bloomberg Morning Consult

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Speaker 1: National polls shows voters with money in the market picked

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Speaker 1: Trump over Clinton tote. The poll also shows nearly eight

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Speaker 1: out of ten Republicans say Trump would be better for

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Speaker 1: their holdings, while about six out of ten Democrats say

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Speaker 1: Clinton would. As for independent voters, the polls shows they

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Speaker 1: are twice as likely to big Trump as better for

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Speaker 1: the report folios. Michael Barr Bloomberg Radio, New York's Attorney

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Speaker 1: General says that Jimmy John Sandwich Chain has agreed to

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Speaker 1: stop including non compete agreements in hiring packets used for

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Speaker 1: low wage workers. Eric Schneiderman says such agreements quote bully

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Speaker 1: workers into staying under threat of being sued, and companies

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Speaker 1: should stop using them for minimum wage employees. Global News

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Speaker 1: twenty four hours a day, powered by more than journalists

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Speaker 1: and analysts in more than one under twenty countries. From

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Speaker 1: the Bloomberg News Room. I'm Rainy in Essensio. This is Bloomberg, Charlie,

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Speaker 1: and we thank you, and again recapping S and P

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Speaker 1: five index higher a little change right now, up one

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Speaker 1: point at two thousand ninety eight. That is a gain

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Speaker 1: of less than point one percent. I'm Charlie Pollock, and

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Speaker 1: that's a Bloomberg business flash. Is taking stock The FED

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Speaker 1: in Focus on Bloomberg Radio, The Fed in Focus. Our

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Speaker 1: next guest says that Chair Janet Yellen's current outlook is

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Speaker 1: entirely based upon hope, and he goes on to add

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Speaker 1: that it is never ever a strategy. Here to tell

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Speaker 1: us more about this is John Herman. He's the director

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Speaker 1: of rate Strategy at Mitsubishi u f J Securities. John

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Speaker 1: always a pleasure. So go ahead, explain what you mean

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Speaker 1: by this. Gave him So you and you and Kathleen

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Speaker 1: and I go way way back a couple of decades

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Speaker 1: at this point. So let's just you know, we have

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Speaker 1: to really fess up on a couple of things. One um,

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Speaker 1: you know, she all the issues, just just you know,

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Speaker 1: a few weeks ago, four weeks ago, she was telling everyone,

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Speaker 1: get prepared for rate high, get prepared for rate high.

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Speaker 1: But basically, the john market has lost a lot of

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Speaker 1: momentum very rapidly over the last five or six months,

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Speaker 1: and that totally caught them off guard. And up until

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Speaker 1: this point, she's been saying things that, you know, there's

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Speaker 1: a couple of head winds that the economy faces, and

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Speaker 1: she expects them to fade over time and for rates

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Speaker 1: to go back up and you know, growth to go

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Speaker 1: back up and flash. And now she's basically thing, you know,

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Speaker 1: maybe those head winds are really only going to slowly

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Speaker 1: fade over time, and we're really uncertain over it. So

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Speaker 1: she's had a major about faith and she's listed and

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Speaker 1: now an enormous list of headwinds. It used to be

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Speaker 1: just a couple of headwinds. It used to be just

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Speaker 1: oh there's some weak productivity goes, household formation rates amongst millennials,

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Speaker 1: not where we wanted to be. We've got some overseas

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Speaker 1: economic and financial developments were concerned about. Now we've got

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Speaker 1: a whole laundry list of stuff. And she said today

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Speaker 1: at the beginning with the House testiment, she said, you know,

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Speaker 1: I don't want to send a message of pessimism on economy.

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Speaker 1: That's the exact quote from her. I don't want to

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Speaker 1: say so. She doesn't want to delivers. But the thing

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Speaker 1: is she has to. She has to tell people what

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Speaker 1: is really going on so that maybe policy makers can

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Speaker 1: do something about it. And that's my issue. But go ahead, okay,

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Speaker 1: which I think we gotta put a couple of things

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Speaker 1: on the table. Yeah. Number one, Uh, there is no

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Speaker 1: conclusive evidence that we're heading into her session. You see

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Speaker 1: recession signs, people are looking for them, because once the

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Speaker 1: economy peaks and you know, yields bottom and job has

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Speaker 1: claims bottom, the next move is frequently towards recession. There's

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Speaker 1: no definitive sign of that right now. And there are

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Speaker 1: even people people number one and number two, people uh

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Speaker 1: would criticize her like crazy you want the FED chair

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Speaker 1: to come out and go, yeah, I think maybe recession.

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Speaker 1: Oh probably not. There'd be one headline, I think we

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Speaker 1: might have a recession and you see stocks creater O.

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Speaker 1: Let's go through, Kathany, and let's go through it. So

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Speaker 1: if you're right for this year, we don't see a

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Speaker 1: recession this year. She doesn't see it. We don't see it,

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Speaker 1: and most other people in the business don't see it.

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Speaker 1: But when you look out past this year, uh, you know,

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Speaker 1: and you look in twenty you know, towards the twenty

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Speaker 1: end of the labor fourth has a very strong bias

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Speaker 1: to contract after the year eighteen. It's it's even assuming

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Speaker 1: a hundred percent participation rate amongst millennials, were biased to

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Speaker 1: contract every month, every quarter every year from twenty end through.

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Speaker 1: So this is is you know, the likelihood of a

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Speaker 1: of a major slowdown at that point is going to

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Speaker 1: be you know, very high. So that's as as a

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Speaker 1: very basic but the other things, you know, even in

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Speaker 1: the nearer turn, there's there's some things to concern people,

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Speaker 1: which is that you know, business profits and basically started

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Speaker 1: to roll over for the last three quarters. So that

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Speaker 1: is a leading indicator of slowing activity, and and more

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Speaker 1: cautious business investment, more cautious hiring and so on, and

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Speaker 1: potentially some layoffs. And as this stuff starts to work,

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Speaker 1: potentially work at Swains and Country, then you would see

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Speaker 1: the spill over to consumer spending and the like and

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Speaker 1: risk taking and so on. So you know, we're not

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Speaker 1: out of the clear by any stretching imagination. She's now

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Speaker 1: seems to be more open and receptive to these risks,

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Speaker 1: and now she's guiding us that she's gonna really really

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Speaker 1: raising rates very gradually, very slowly. And the next rate

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Speaker 1: hike isn't really even on the table just right now

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Speaker 1: because you can't she can't even convincingly argue right now

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Speaker 1: when the next hike is coming. So that's so she's

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Speaker 1: done a big about face. But there's a ton, uh,

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Speaker 1: you know, a ton of issues here, and and what's

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Speaker 1: amazing to me is that, you know, she has to

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Speaker 1: really be pushed. You know, the the Senate Q and

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Speaker 1: A was fairly collegial and polite and a lot of

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Speaker 1: niceties and so on. But the House, both sides were

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Speaker 1: you know, you know, much more harsh in their criticism

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Speaker 1: of the policy and the questioning and so on and

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Speaker 1: so there was she was more disclosing of what some

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Speaker 1: of her concerns really are. And and suddenly there's like

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Speaker 1: this long list of things everything from again like the

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Speaker 1: millennials in their situation, the formation rates, their their indebtedness, etcetera.

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Speaker 1: These big strains in the income and wealth gaps in

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Speaker 1: the US, especially between you know, educated whites versus you know,

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Speaker 1: less educated uh, you know, minorities. I mean, there is

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Speaker 1: huge things. And and then the questions about what that

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Speaker 1: does to the local communities where people reside and so on.

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Speaker 1: I mean, these are very big issues. The things about uh,

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Speaker 1: you know, productivity being weak and protest it has been

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Speaker 1: weak for seven years now, business capex has been weak

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Speaker 1: for eight years now. I mean, it's a whole bunching,

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Speaker 1: the hollowing out the middle class. She said, you know,

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Speaker 1: this has been going on, you know for years and

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Speaker 1: decades and decades, and you know, and now she's more

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Speaker 1: disclosing on that. And and and you know, the regulation,

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Speaker 1: the excessive regulation that's being burdened on community banks and

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Speaker 1: on businesses more generally, the high corporate tax rates more generally,

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Speaker 1: all these things are just starting to you know, to

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Speaker 1: come out in her testimony, but she has to really

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Speaker 1: be pushed by, you know, a fairly contentious group of

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Speaker 1: representatives to get it out, all right, John German, thank

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Speaker 1: you so very much. Director of Interest Rate Strategy Mitsubishi

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Speaker 1: U s J Securities UH saying Jenna Ellen is not

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Speaker 1: being negative enough on the economy. He sees the session

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Speaker 1: signs and at least he says she has backed off

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Speaker 1: on her course of interest rates. Kathleen Hayes, pim Fox

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Speaker 1: Tavy stuff we've been radio. The FED in Focus is

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Speaker 1: brought to you by Willoughby since eighteen ninety eight, New

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