Speaker 1: Broadcasting live to New York Bloomberg eleven, Brio to Washington,
Speaker 1: d C. Bloomberg to Boston, Bloomberg Well Under, to San
Speaker 1: Francisco Bloomberg nine, to the country, US Exam General one
Speaker 1: nineteen and around the globe the Bloomberg Radio plus Zappen
Speaker 1: Bloomberg dot Com. This is taking stock. I'm Kathleen Hayes,
Speaker 1: along with pim Fox. US treasury thirty year bonds sell
Speaker 1: at a record low two point one seven percent. Germany's
Speaker 1: benchmark tenure bund selling at a negative yield for the
Speaker 1: first time ever. This as the Federal Reserve signals that
Speaker 1: the US is growing modestly and traders scratch their heads
Speaker 1: over where central banks around the world are going. Next,
Speaker 1: we'll be speaking with Lindsay Piegza, chief economist at Stifle Nicholas,
Speaker 1: about the Beige Book and about the Federal Reserve in
Speaker 1: the US economy. But right now, let's go to Charlie
Speaker 1: pelevin the Bloomberg Boose Room for Bloomberg Business Flag and
Speaker 1: I think of pim Fox. Thank you, Kathleen Hayes. That
Speaker 1: on smp R higher Naz tak Laura, and this update
Speaker 1: is brought to you this Wednesday by sector spider e
Speaker 1: T S. Why by a single stock when you can
Speaker 1: invest in the entire sector of visits sector s P,
Speaker 1: d R S dot Com or call one sector e
Speaker 1: T F. Philip Hammond has been appointed the UK's Chancellor
Speaker 1: of the Exchequer, tasked with the job of protecting the
Speaker 1: economy from the fall out of Brexit. A meeting you
Speaker 1: Prime Minister Theresa May's pledge to tackle quote burning injustice
Speaker 1: in society. He must now decide how best to stimulate
Speaker 1: the UK economy, which is already at risk of sliding
Speaker 1: into recession, while quelling voters frustration following six years of
Speaker 1: George Osborne's austarity driven policies. Federal Reserve out with its
Speaker 1: paige Book report and it says the U s economy
Speaker 1: expanded at a modest pay since mid May, amid slight
Speaker 1: price pressures and some softening in consumer spending. The rally
Speaker 1: and US shares faltering today, equities fluctuating at all time
Speaker 1: highs as crew plunges amid an unexpected rise in fuel stockpiles.
Speaker 1: Treasuries have halted a two day slide. Laura Rosener is
Speaker 1: Senior economists of b MP poda ba. We're getting more
Speaker 1: easing and more concern externally. It's just increasing demand for
Speaker 1: assets that actually are yielding something positive and so that's
Speaker 1: fueling demand for US Treasury securities and and driving them
Speaker 1: much lower. So no, it's not really fundamentals which are
Speaker 1: are driving US treasury yields. And right now with you
Speaker 1: have gold up seven tenths of one percent, SMP five
Speaker 1: hundred index unchanged, and now we'll look at the other
Speaker 1: stories making news. Thank you, Charlie from the Bloomberg Newsroom.
Speaker 1: I'm Eric Shatzker. Hillary Clinton is talking unity today while
Speaker 1: on the road in Illinois, one day after Bernie Sanders
Speaker 1: officially endorsed her. Clinton spoke at the Old State House
Speaker 1: in Springfield. There is too much and hate in our country,
Speaker 1: too little trust and common ground. An analysis by the
Speaker 1: New York City Council finds that Donald Trump's proposals to
Speaker 1: deport illegal immigrants and temporarily banned Muslims could hurt the
Speaker 1: local economy. The council finds the plans could cost the
Speaker 1: state more than eight hundred million dollars in the city
Speaker 1: more than three forty thousand jobs. British Prime Minister David
Speaker 1: Cameron has left Downing Street for the last time as leader.
Speaker 1: Mr Cameron thanked his political supporters, his children, and offered
Speaker 1: a special thank you to his wife, Samantha, you have
Speaker 1: kept me vaguely saying and as well as being an
Speaker 1: amazing wife, mother and businesswoman, you have done something every
Speaker 1: week in that building behind me to celebrate the best
Speaker 1: voluntary service in our country. You came home. Secretary Theresa
Speaker 1: May has taken over from Cameron as the new Prime Minister.
Speaker 1: Cameron Sterling is calling on protesters to protest the right way,
Speaker 1: protest in peace. He's the fifteen year old son of
Speaker 1: Alton Sterling, a black man who was shot and killed
Speaker 1: by white police officers outside of convenience store in Baton Rouge,
Speaker 1: Louisiana last week. There are extensive subway delays across the city.
Speaker 1: Officials say of power outage at a rail control center
Speaker 1: has caused major backups on the one, two, three, four, five,
Speaker 1: and six lines. Global News twenty four hours a day,
Speaker 1: powered by more than journalists and analysts in more than
Speaker 1: one twenty countries. I'm Eric Shasker, this is Bloomberg, Charlie,
Speaker 1: and we thank you and again recapping a move higher
Speaker 1: for the down Jones industrial average up by two tenths
Speaker 1: of one percent, s and P up by less than
Speaker 1: half a point. Little change there. Nazdek is down two
Speaker 1: tenths of one percent. I'm Charlie Pelican. That's a Bloomberg
Speaker 1: business flash. He's taking stock the FED in Focus on
Speaker 1: Bloomberg Radio. The FED in Focus reports from the twelve
Speaker 1: Federal Reserve districts indicate that economic activity continued to expand
Speaker 1: at a modest pace across MO regions from mid May
Speaker 1: through the end of June. Here to tell us more,
Speaker 1: Lindsay Pieza, chief economist at a Stifle Nicholas, joining us
Speaker 1: from Chicago, and she can be followed on Twitter at
Speaker 1: Lindsay PA. All Right, Lindsay, so, tell us a little
Speaker 1: bit about your reaction to the Beige Book. Well, it's
Speaker 1: pretty much in line with expectations. The Beige Book has
Speaker 1: consistently painted a much rosier picture of the US economy
Speaker 1: than the data would otherwise suggest. Remember, at the start
Speaker 1: of the year, with a very flow start out of
Speaker 1: the Gage, the Beige Book continued to emphasize that economic
Speaker 1: activity expanded at a moderate pace, a very similar tone
Speaker 1: that we continue to hear in this morning's report. Well, actually,
Speaker 1: what I really see in this Beige Book is the
Speaker 1: word modest amid slight price pressures. To me, this is
Speaker 1: a very very cautious view of how the economy is growing.
Speaker 1: That doesn't seem to me there's anything that suggests, oh
Speaker 1: my gosh, we're seeing a big spurt of growth here. Well,
Speaker 1: I think the idea is more stability, the economy continue
Speaker 1: to grow to modest or moderate pace. What I'm really
Speaker 1: looking for is an acknowledgement that the U S economy
Speaker 1: is still on very fragile footing. Now, of course they
Speaker 1: did mention that manufacturing activity was mixed, consumer spending showing
Speaker 1: some signs of softening. But what's so interesting is that
Speaker 1: they talked about the labor market remaining stable, and of course,
Speaker 1: as we know, May employment virtually non existent, followed by
Speaker 1: a very large uptick in June, the exact opposite of
Speaker 1: what I would describe as stable. Lindsey, take away all
Speaker 1: the politics, takeaway Brexit, all of the extraneous events. If
Speaker 1: you were just to read this Beige Book and then
Speaker 1: add into that the release of the previous f O
Speaker 1: m C minutes, can you tell me what your position
Speaker 1: would be about raising interest rates, Well, I think right
Speaker 1: now it's a matter of so so economic growth, and
Speaker 1: it really depends where your bar of expectation falls. For me,
Speaker 1: I'm looking for strong, solid, robust growth in order for
Speaker 1: the Fed to feel comfortable to give us that second
Speaker 1: rate increase. But for many sitting at these low low
Speaker 1: levels for years now, so so we're modest is good enough,
Speaker 1: and some of the Fed will certainly push for a
Speaker 1: second rate increase within the confines of It's hard to uh,
Speaker 1: you know, sort of all out at times, isn't it.
Speaker 1: But I think we had a trivick story on the
Speaker 1: Bloomberg today pointing out that, uh, in terms of the
Speaker 1: odds of the December interest rate increase, they're back up
Speaker 1: to which is almost where they were before the Briggsit vote.
Speaker 1: It still doesn't indicate that people are betting on a
Speaker 1: rate hike this year, at least not traders, because our
Speaker 1: economists more and more, I think, once again, who are
Speaker 1: seeing the December hike? Uh? Your your your view? Will
Speaker 1: they hick at all this year? Lindsay? And is it
Speaker 1: better if they do or they don't? I think at
Speaker 1: this point the Fed is going to remain on the
Speaker 1: sidelines through and most likely the better part of I
Speaker 1: think right now it's very fragile out in the economy,
Speaker 1: and I think the Fed really learned their lesson from
Speaker 1: lifting off in December based on expectations of further improvement,
Speaker 1: which we're still waiting for now six months later, and
Speaker 1: so I think a good portion of the committee is
Speaker 1: going to err on the side of caution, waiting for
Speaker 1: realized improvement rather than expecting improvement down the line. It's
Speaker 1: all us about your thoughts having to do with the
Speaker 1: Bank of England. Will they cut rates? I think there's
Speaker 1: a need for additional stimulus. There's a significant amount of uncertainty,
Speaker 1: there's a significant amount of volatility out in the marketplace,
Speaker 1: and I think additional support from the Bank of England
Speaker 1: will at the very least begin to calm some of those, uh,
Speaker 1: those uncertainties in the marketplace. So I do expect another
Speaker 1: rate cut, additional stimulus out in the marketplace. Okay, of course,
Speaker 1: that's were almost evenly divided among economists between tomorrow, July fourteen,
Speaker 1: Thursday or three weeks from now, and as you and
Speaker 1: you point out, they probably will move pretty quickly. But
Speaker 1: you also to comment on the negative bond heals the
Speaker 1: thirty year bonds selling at a record low two point
Speaker 1: one seven percent Germany's tenure bune now with a negative yield. Uh,
Speaker 1: if you're a central banker, do you just say, well,
Speaker 1: we've bought up so much sovereign debt that there's nothing
Speaker 1: left to buy and they'll take any kind of yield
Speaker 1: they can get, or would you be concerned? I think
Speaker 1: it's a little from column Ay and a little from
Speaker 1: column by. Certainly central banks have gone around buying up
Speaker 1: all substantial amount, I should say, of debt, but at
Speaker 1: this point it's also a concern. It's a flight to
Speaker 1: quality trade as investors are looking out in the marketplace
Speaker 1: and we're experiencing three four five standard deviation events, particularly
Speaker 1: surrounding the Brexit, and there's a rush to be safe haven,
Speaker 1: be that German bonds, be that the yend, be that
Speaker 1: the dollar or gold. And I suspect that we will
Speaker 1: continue to see these capital flows into these safe havens
Speaker 1: during this time of uncertainty. If these capital flows into
Speaker 1: these safe havens continue on the institutional and corporate level,
Speaker 1: then what is an individual supposed to make of all this? Well,
Speaker 1: I think individuals are very concerned at this point, and
Speaker 1: I do suspect that we're going to see a lot
Speaker 1: of individuals hoarding cash, pulling their money out of the marketplace,
Speaker 1: with a big question mark of where we headed from here.
Speaker 1: Now again, the big books got officials. They're telling us
Speaker 1: the economy is on relatively moderate footing, but there is
Speaker 1: a big concern that we could be discussing the R
Speaker 1: word recession sometime in the near future. And of course,
Speaker 1: the fact that the yield curve gets ever flatter as
Speaker 1: the yields continue to drop on long term treasuries and
Speaker 1: long term deating around the world. Typically that is has
Speaker 1: been in the past a signal that that our word
Speaker 1: recession could be coming. It's a little bit more complicated
Speaker 1: these days, though, Lindsay p St thank you so very
Speaker 1: much for joining us chief economist as Stiffil Nicholas and co.
Speaker 1: We're gonna be continuing our look at the markets later
Speaker 1: in the show, will be be speaking with Jack Ablin
Speaker 1: from BMO Private Bank in Chicago. This is Bloomberg Fed
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