Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington,
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Speaker 1: Bloomberg to the country, sees Exam General one and around
Speaker 1: the globe the Bloomberg Radio plus appen Bloomberg got gone.
Speaker 1: This is taking stock. I'm Kathleen Hayes. Along with pim Fox.
Speaker 1: We see a sell off in the US Treasury market
Speaker 1: after the Feder Reserve makes it pretty clear that they
Speaker 1: are watching the data and looking to see if they
Speaker 1: will warrant the next interest rate increase that they're meeting
Speaker 1: in June PM. I think that significant. Is not like
Speaker 1: the Fed is looking for reasons to slow down. It
Speaker 1: looks like a number of members are ready to make
Speaker 1: the move if the data supported and Lindsay pexa chief
Speaker 1: Economists to stifle fixed income from Chicago, Will Pete joining
Speaker 1: us coming up right now, Let's go to Charlie Pellett
Speaker 1: and the Bloomberg news room for a Bloomberg business flag
Speaker 1: and I thank you him, I thank you Kathleen. Since
Speaker 1: our last duct optate, we now have Neztack turning Laura
Speaker 1: so Badal the SMP nastac all trading down. This update
Speaker 1: brought to you by Sector Spider et f S. Why
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Speaker 1: entire sector of visits sector s p d r S
Speaker 1: dot com or call one six sector e t F
Speaker 1: if you're just joining us. We got minutes from the
Speaker 1: Federal Reserve today, just about thirty one minutes ago, policy
Speaker 1: makers signaling a willingness to raise borrowing costs in June.
Speaker 1: The SMP five hundred index now lower after advancing seven
Speaker 1: tenths of one percent. Stocks favored for high dividend payouts
Speaker 1: fell as treasury yields spiked, banks rallying on the potential
Speaker 1: for higher rates to boost profits. The tenure down twenty
Speaker 1: six thirty seconds. Zeal one point eight six percent, most
Speaker 1: Federal Reserve policy makers set in April, and interest rate
Speaker 1: increase would be appropriate in June if the economy continued
Speaker 1: to improve. Matt Bosler covers the Federal Reserve for Bloomberg
Speaker 1: News sentence that ms out at me here is Several
Speaker 1: participants were concerned that the incoming information might not provide
Speaker 1: sufficiently clear signals to determine by mid June whether an
Speaker 1: increase in the target range for the federal funds rate
Speaker 1: would be warranted. So yes, they did say it was
Speaker 1: likely if the economy did what they wanted, but it
Speaker 1: sounds like several were concerned that they might not get
Speaker 1: the info they needed. He was interviewed right here on
Speaker 1: taking stock Gold downtounce now a drop there of one
Speaker 1: point one percent to twelve sixty three. Crude oil giving
Speaker 1: up earlier gains, down twenty cents the barrel now for
Speaker 1: ten on West Texas Intermediate, a drop there of point
Speaker 1: four percent. SMP again down eleven, a drop of six
Speaker 1: tenths of one percent to thirty two on Wall Street.
Speaker 1: Now a look at other news. Charlie, thank you from
Speaker 1: the Bloomberg news room. I'm Mark Crumpton. This news update
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Speaker 1: dot DU. It was a split decision Tuesday night for
Speaker 1: Hillary Clinton and Bernie Sanders. The Vermont senator won the
Speaker 1: Democratic presidential primary and Oregon, while Mrs Clinton claimed victory
Speaker 1: in Kentucky. Sanders supporters like this woman in California, say
Speaker 1: they'll continue to back him even when the delegate maths
Speaker 1: suggests otherwise. I'm worried that a vote for her is
Speaker 1: a vote for Trump, because in all the polls he's
Speaker 1: been there. The next big tests are June seventh. There
Speaker 1: will be primaries in California, New Jersey, and four other states.
Speaker 1: Cybersecurity officials are sounding the alarm, warning lawmakers today that
Speaker 1: hackers are becoming increasingly sophisticated. National Intelligence Director James Clapper
Speaker 1: said one group in particular poses the biggest threat. EIS
Speaker 1: is by far the most capable, most sophisticated user of
Speaker 1: the cyber domain for lots of purposes, for command and control,
Speaker 1: and of course our challenge there is the increasing trend
Speaker 1: towards encryption, which is make it much more difficult from
Speaker 1: a content standpoint to understand and have insight into their plotting.
Speaker 1: It could be another tough commute this afternoon for Metro
Speaker 1: North customers. The railroad says writers traveling into and out
Speaker 1: of Grand Central could experience delays of up to eighty
Speaker 1: minutes following yesterday's fire underneath the elevated tracks near One
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Speaker 1: our two hundred journalists in more than one hundred fifty
Speaker 1: news bureaus around the world. From the Bloomberg News Room
Speaker 1: by Mark Crumpton. Charlie, and we thank you. The losses
Speaker 1: on Wall Street intensifying now the Dow down one hundred
Speaker 1: one points, to drop there of six tenths of one percent.
Speaker 1: The SMP five hundred indecks also declining six tenths of
Speaker 1: one percent. Law now by eleven points, Tenure down thirty seconds,
Speaker 1: l there one eight six percent. I'm Charlie Pellett, and
Speaker 1: that's a Bloomberg Business flash. You're listening to Taking Stock
Speaker 1: with Kathleen Hayes and Pim Fox on Bloomberg Radio. A
Speaker 1: majority of Federal Reserve officials are they prepared to raise
Speaker 1: the Central Banks benchmark interest rate in June as long
Speaker 1: as the recovery remains on track. Let's find out more
Speaker 1: from Lindsay Pieza, Chief Economists Defill Fixed Income, joining us
Speaker 1: from Chicago. You can follow Lindsay at Lindsay PEXA on Twitter. Lindsay,
Speaker 1: all right, so give us your thoughts on these uh
Speaker 1: these results. These the release of the minutes and the
Speaker 1: takeaway about June and potential rate increase, Yeah, they were
Speaker 1: pretty exciting f o MC minutes. Now we know the
Speaker 1: market has continuously discounted the possibility of an additional rate
Speaker 1: increase until the end of the year. But as we
Speaker 1: see in these April minutes, SET officials are increasingly optimistic
Speaker 1: regarding not only the state of the U S economy
Speaker 1: but their ability to continue to remove accommodation under these conditions.
Speaker 1: So really a hawk ish stilt in the April minute
Speaker 1: uh hawfice silt that has been affirmed by more decent
Speaker 1: comments from individual BEETE officials talking about not only a
Speaker 1: near term rate increase, but the possibility of many rate increases,
Speaker 1: maybe two, maybe three, still within the bounds of twenties sixteen.
Speaker 1: So certainly SET officials are well positioned at this point
Speaker 1: to vote in favor of a near term rate increase,
Speaker 1: potentially at the June meeting. But it all depends on
Speaker 1: the underlying data. Now the set is set. We don't
Speaker 1: need the economy to get back to strong. We don't
Speaker 1: need solid or robust. We need modest or moderate growth.
Speaker 1: But even getting back to a more moderate pace of
Speaker 1: expansion from the current slow activity level will be a
Speaker 1: sizeable challenge. Well, lindsay, Uh, you are in the camp
Speaker 1: that has been more cautious on the economy, more concerned
Speaker 1: about the economy. Are you concerned then that there's a body,
Speaker 1: perhaps a majority on the f m C now that
Speaker 1: see enough strength and um and not inflation, maybe far
Speaker 1: from targ target, but moving in the right direction. And
Speaker 1: the other thing they like to talk about. I think
Speaker 1: John Williams of the San Francisco Fed stress this when
Speaker 1: we spoke to him just a couple of weeks ago
Speaker 1: in an interview. It's normalization, it's not tightening. You know.
Speaker 1: Ester Georgia said that, does that concern you? It really
Speaker 1: does concern me because typically when we talk about the
Speaker 1: FED removing accommodation, So you're right, not yet tightening, but
Speaker 1: but normalization, removing accommodative policy. The Fed weights until the
Speaker 1: economy is on solid footing, strong footing. This time around,
Speaker 1: they're raising rates in anticipation of improvement rather than realized improvement. So, yes,
Speaker 1: we have seen continued hiring games near seventy consecutive months,
Speaker 1: but the pace of hiring remains very modest without upward momentum.
Speaker 1: In wages, business investment remains negative, the consumer remains under pressure,
Speaker 1: so the state of the US economy is still very fragile. Now,
Speaker 1: certainly we can sit down and argue with Set officials
Speaker 1: regarding the consistent inaccuracy of their forecast, but I think
Speaker 1: it raises a big red flag when we are basing
Speaker 1: monetary policy on expectations alone, rather than waiting to see
Speaker 1: that improvement filter through into the data. Lindsay. The President
Speaker 1: of the Federal Reserve Bank of Minneapolis, Neil kush Kari,
Speaker 1: previously has said that investors obsession with interest rates is
Speaker 1: misguided and that they should be focused on more important
Speaker 1: economic issues. What's your react? I think I think that's
Speaker 1: exactly right. But I think the FED has no one
Speaker 1: to blame but themselves. Uh. The constant will they won't
Speaker 1: pay saga has been drawn out for years with the
Speaker 1: market sitting on the edge of their seat, and had
Speaker 1: the FED actually begun this normalization process back in two
Speaker 1: thousand and eleven when they had a wide open window,
Speaker 1: we certainly would be in a very different place this
Speaker 1: time around. So I think the feed in good part
Speaker 1: can be blamed for all of the hype surrounding even
Speaker 1: basis point and great. Of course, as you pointed out,
Speaker 1: what's significant here also, it's just not that it's one more.
Speaker 1: It's a fact that Dennis Lockhart again told told us
Speaker 1: that in an interview about three or four weeks ago
Speaker 1: then and John Williams as well from the San Francisco
Speaker 1: fat there's not just two interest rate increases. Maybe it's three. Right,
Speaker 1: So this is I think what maybe the market starts
Speaker 1: getting concerned about the FED is going to start normalizing,
Speaker 1: raising rates, whatever you want to talk call it that
Speaker 1: they are now on a path. And once the FED
Speaker 1: gets on a path, I think there's still that that
Speaker 1: idea looking at the past FED moves that the path continues. Now,
Speaker 1: I think you're exactly right there walking a very fine line.
Speaker 1: They're trying to convince the market that they will continue
Speaker 1: along a very slow, tepid or quote gradual removal of accommodation,
Speaker 1: but at the same time, by raising rates, each additional
Speaker 1: hike makes the market more nervous that we will get
Speaker 1: back to a two thousand and four style tightening cycle.
Speaker 1: For the FED raised rates basis boids at every meeting.
Speaker 1: So on the one hand, the FED is trying to communicate.
Speaker 1: It's very a slow, tepid, still very accommodated level of policy,
Speaker 1: but also moving closer and closer to a more normal level.
Speaker 1: So it is a very delicate line, and the FED
Speaker 1: is desperately trying to communicate to the market. And whether
Speaker 1: we put the blame on the FED for the lack
Speaker 1: of communication or simply on the market for the lack
Speaker 1: of listening, I think there's a blame to go around
Speaker 1: for both sides. Ten seconds, are you gonna? Are you do?
Speaker 1: What is your view today? Hike in June? I think
Speaker 1: they certainly are well positioned to go if the data
Speaker 1: continues to improve, I think they're going to be hard
Speaker 1: pressed to bypass June. However, the data disappoints and the
Speaker 1: ongoing volatility surrounding the Brexit begins to wratch it up.
Speaker 1: I think they have more than enough excuses to wait
Speaker 1: until September. Lync PSA, thanks so much for joining us,
Speaker 1: giving us you had another view on the FEDS Minutes
Speaker 1: from their April twenty seven meeting. She's chief economist is
Speaker 1: Stephen Nicholas and Company. Kathleen Hayes pim Fox taking Stock,
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