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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot com, the radio, plus Globle lact and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pellett. Stocks little change right now, the down,

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Speaker 1: SMP are higher, Nestack is Laura. This update is brought

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Speaker 1: to you by s E. I have evolving investor and

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Speaker 1: dot com. Slash. Imagine stocks fluctuating after briefly erasing losses.

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Speaker 1: Right now, we've got the SMP five hundred index up

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Speaker 1: one point to seventy nine, a gain there of one

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Speaker 1: tenth of one percent. Down Industrials up eleven again, also

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Speaker 1: of one tenth of one percent. The Nastack Composite index

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Speaker 1: down three points, a drop there of one tenth of

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Speaker 1: one percent. Minutes from the latest Federal Reserve meeting show

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Speaker 1: officials were split on weather and in trust rate increase

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Speaker 1: is warranted soon. The tenure up six thirty seconds, Zeal

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Speaker 1: one point five, Gold down three tents of one percent.

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Speaker 1: Thirty nine ounce crude oil West Texas Intermediate now unchanged.

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Speaker 1: I'm Charlie Pala. Fat's a Bloomberg Business Flash. You're listening

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Speaker 1: to taking Stock with pim Box and Kathleen Hayes on

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Speaker 1: Bloomberg Radio and Divine. I've had a reserve over how

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Speaker 1: soon to raise its key rate again. That is one

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Speaker 1: of the elements it seems to emerge from the minutes

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Speaker 1: of the July seven policy meeting, released just about eighteen

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Speaker 1: minutes ago here on taking Stock on Bloomberg Radio. Let's

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Speaker 1: bring back to the table now. Chris Lowe is chief

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Speaker 1: economist at f t N Financial. So, Chris, if what

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Speaker 1: do you what would you say about the odds of

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Speaker 1: the FED moving in September moving in December? Based on

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Speaker 1: number one, these minutes? Right, so, even after a week

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Speaker 1: employment report which they had seen, they were still thinking

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Speaker 1: about the need to raise the key rate, right uh?

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Speaker 1: And then also based on what you've heard from BEETE

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Speaker 1: officials the last couple of days. Well, okay, we can

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Speaker 1: start with they think the odds are higher than the

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Speaker 1: market does. But the market is pretty much dismissed the

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Speaker 1: rate hike this year, especially right away, so it is

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Speaker 1: interesting to see those odds readjusting after Dudley yesterday. Uh,

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Speaker 1: my sense is that the odds are probably close to

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Speaker 1: about in September, which might sound high, but my my

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Speaker 1: thinking is that they really would like to get this

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Speaker 1: done before the election, so they're feeling a little bit

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Speaker 1: of pressure that sooner is probably better than later if

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Speaker 1: they can get away with it. But at the same time,

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Speaker 1: it still doesn't quite get you over because they are

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Speaker 1: still worried about things. Uh. Two things that jumped out

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Speaker 1: at me in the minutes. First, Uh, they had they

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Speaker 1: spent quite a bit of time talking about inflation, and

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Speaker 1: they're just not convinced it's going to accelerate to two

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Speaker 1: I think that's really important because after all, what's the

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Speaker 1: point of raising rates if you never get to two

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Speaker 1: percent inflation. The the other one is the discussion of

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Speaker 1: risks overseas. Yes, Brexit is on the radar, but there

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Speaker 1: were two other things they're watching as well. They're watching

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Speaker 1: bad loans at European banks. They're worried about the possibility

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Speaker 1: that that could uh weigh on economic growth in the region,

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Speaker 1: and of course that's something equity investors have been on

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Speaker 1: too as well. And then they're watching China. They are

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Speaker 1: still worried about China's far an exchange policy and the

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Speaker 1: implications of Chinese debt, which has run up now to

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Speaker 1: a very significant portion of GDP. Chow, Is it possible

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Speaker 1: that we're going to get uncertain events between now in

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Speaker 1: September or even now in the end of the year

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Speaker 1: that will preclude any action on the part of the

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Speaker 1: Federal Reserve? I think it's likely. Uh. You know, when

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Speaker 1: when you look back, the FED had every intention of

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Speaker 1: tightening once a quarter when they made the decision to

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Speaker 1: raise rates last year, which by the way, they made

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Speaker 1: at the April meeting, and then they didn't get that

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Speaker 1: first rate out hike out until December. And of course

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Speaker 1: now we've already moved out to September, so it's nine

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Speaker 1: months later. So the reason is that at every meeting

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Speaker 1: since December, there has been something going on overseas. Uh.

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Speaker 1: And what's noteworthy about that is it FED officials Bob Kaplan,

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Speaker 1: for example, in Dallas, are starting to connect the dots.

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Speaker 1: Maybe we shouldn't worry about each one of these crises.

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Speaker 1: Maybe it's time to recognize that they're all connected, uh,

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Speaker 1: that they're connected by virtue of the fact that global

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Speaker 1: growth is absolutely disappointing. That means that there's too much

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Speaker 1: global wage slack. That means that global inflation is low,

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Speaker 1: global interest rates are low, and you know, if you

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Speaker 1: follow that to the obvious conclusion, it means the need

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Speaker 1: to raise rates just isn't what you would normally expect.

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Speaker 1: And at the end of a business, you know, Chris,

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Speaker 1: uh and of course all our taking stock listeners will

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Speaker 1: be speaking to Rob Kaplan, President Dallas FED a week

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Speaker 1: from tomorrow at the Jackson holl Symposium. He'll be joining

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Speaker 1: us live to certainly to talk about these very very issues.

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Speaker 1: It's it's an interesting connection he's making in that way, Chris,

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Speaker 1: in terms of in terms of the bond market, you know,

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Speaker 1: and you look where things are. The work as a

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Speaker 1: matter of fact that I just mentioned being above has

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Speaker 1: dropped to forty five point three. Clearly there's a little bit,

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Speaker 1: at least from the FED funds futures traders standpoint, a

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Speaker 1: little bit of a sense of huh. Maybe it's just

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Speaker 1: disappointment that there wasn't more of a sign of the

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Speaker 1: Fed reared up to raise rates or even considering September.

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Speaker 1: As Bill Dudley from the New York FED was possible yesterday. Yeah,

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Speaker 1: I think that's exactly right. You know, I read these

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Speaker 1: minutes and that they still tilt towards caution as much

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Speaker 1: as they do. You know, there's there's never anything definite,

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Speaker 1: but uh, you know the fact that they are still

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Speaker 1: looking at problems that we know are have not gone away,

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Speaker 1: particularly problems on bank balance sheets in Europe. I think

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Speaker 1: that is a major issue, uh, which I can't remember

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Speaker 1: the FED focusing on since the European banking crisis way

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Speaker 1: back in and eleven, So it's it's noteworthy they're looking

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Speaker 1: at that. Uh. And by the way, remember too that

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Speaker 1: there were two big European banks that they're subsidiaries failed

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Speaker 1: the FED stress test, so that might be another reason

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Speaker 1: they're on the fed's radar. Thanks very much for spending

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Speaker 1: time with us. Chris Lowe is the chief economist for

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Speaker 1: f t N Financial, giving us his perspective on the

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Speaker 1: release of today's f o MC meeting minutes from the

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Speaker 1: July six and twenty seven meeting, in which it seems

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Speaker 1: as though the participants were split about increasing interest rates

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Speaker 1: sooner rather than later. You're listening to taking stock. I'm

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Speaker 1: Pim Fox, my co host Kathleen Hayes and this is

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