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

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Speaker 1: dot Com, the radio plus mobile act 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 Howlett. Stocks are extending gains on a report

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Speaker 1: of an opeque output deal. We are seeing crude oil

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Speaker 1: surging now by three point nine percent. West Texas Intermediate

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Speaker 1: up a dollar seventy three of barrel forty thirty nine

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Speaker 1: right now on w t I. Brent is up three

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Speaker 1: point two percent, advancing a dollar forty nine fortyty six

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Speaker 1: on Brent. Natural gas is down one point four percent.

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Speaker 1: US equities higher. Now we do have the S and

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Speaker 1: P up four to sixty four. That's a gain of

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Speaker 1: two tenths of one percent. Down. Industrial is up sixty one,

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Speaker 1: a gain of three tenths of one percent. As stack

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Speaker 1: up two points a little change. They're up by less

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Speaker 1: than one tenth of one percent. Gold down three seventy

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Speaker 1: the ounce the thirty two drop there of three tenths

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Speaker 1: of one percent. And the programming note for those of

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Speaker 1: you listening across our terrestrial radio stations in New York, Boston, Washington,

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Speaker 1: d C, in San Francisco, the Federal Communications Commission will

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Speaker 1: be conducting a coordinated nationwide test of the emergency alert

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Speaker 1: system at two twenty pm Eastern Time, just about ninety

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Speaker 1: seconds from now. That is a test conducted across all

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Speaker 1: radio stations in the country, including bro Bloomberg programming will

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Speaker 1: resume at the conclusion of the test. SMP UP five

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Speaker 1: a gain of three tents of one percent. I'm Charlie Paddock.

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Speaker 1: That's a Bloomberg business flash, Charlie Pellot, thank you so

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Speaker 1: very much. The FED Hour on Taking Stock is brought

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Speaker 1: to you by Commonwealth Financial Network. When it's time to

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Speaker 1: change the conversation, talk with a broker dealer r I

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Speaker 1: A that's ready to listen called eight six six four

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Speaker 1: six two three six three eight or visit Commonwealth dot

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Speaker 1: com to learn more. Bloomberg Stock FED in Focus. There's

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Speaker 1: certainly a large discussion about whether or not the FED

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Speaker 1: is going to try to hike rate again. To she

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Speaker 1: we think the FED by December will be ready to

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Speaker 1: do another hike. That sounds like a big difference from

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Speaker 1: the markets, but it's not that big a difference. I

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Speaker 1: think at this point the FED is going to remain

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Speaker 1: on the sideline through and most likely the better part

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Speaker 1: of because they have a huge communication problem with the

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Speaker 1: public about what's driving their polity decisions. They basically have

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Speaker 1: no strategies the FED in Focus on Bloomberg Radio. I'm

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Speaker 1: Kathleen Hayes along with pim Fox, and we're very happy

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Speaker 1: now to welcome to the show. One of the participants

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Speaker 1: today at our Bloomberg Markets Most Influential Summit here at

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Speaker 1: our World headquarters, Richard Clarida, Global strategic advisor at Pimco,

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Speaker 1: Professor at Columbia University. Rich welcomed back to the show.

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Speaker 1: I'm happy to do it. Well, it's a really exciting

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Speaker 1: day here at Bloomberg and a kind of exciting day

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Speaker 1: on Capitol Hill. I guess if you're Janet yell And

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Speaker 1: testifying before the House Financial Services Committee. She's there to

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Speaker 1: talk about bank regulation, the health of US banks. But

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Speaker 1: she defended, of course, she took quite a being. I

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Speaker 1: would say it was a lot of tough questioning on

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Speaker 1: what's going on with Wells Fargo and how that FED

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Speaker 1: intends to respond. Yes, she did, and I think that

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Speaker 1: was the focus. Although during the you know, the back

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Speaker 1: and forth with the members of Congress, she did get

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Speaker 1: into some comments on monetary policy. For the most part,

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Speaker 1: she stuck very closely to the script from the recent

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Speaker 1: FED meetings, So no real news there, but yes, understandably

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Speaker 1: you know that. Uh, I'm sure there wasn't a lot

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Speaker 1: of of concern criticism, and I think in the headlines

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Speaker 1: that I read, she also spread concern about these revelations.

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Speaker 1: Rich Clarena, what did you take away from Janet Yellin's

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Speaker 1: uh comments and also get your view basis points in December.

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Speaker 1: I think that's why it's it's it's not a done deal.

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Speaker 1: This is the FED that's data dependent. But I think kid,

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Speaker 1: it's important that at the last meeting, fourteen of the

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Speaker 1: sixteen or I guess actually seventeen fourteen of this havant

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Speaker 1: team participants through the blue dots, indicated that they thought

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Speaker 1: it would be appropriate to hiking December. So that means

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Speaker 1: that I think the FED things that it's going to

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Speaker 1: be hiking. But obviously it will depend to some extent

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Speaker 1: on the data. And I should note that the recent

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Speaker 1: data for the US has been coming in on the

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Speaker 1: soft side. Most folks a week or two ago thought

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Speaker 1: the US GDP and the third quarter would be north

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Speaker 1: of three, and we're we and others are marking down

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Speaker 1: our view of third quarter GDP probably to around two

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Speaker 1: and a half or so. So obviously you know the

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Speaker 1: data will be relevant, but the expectation is that they

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Speaker 1: will be hiking in December. Well, Rich cleared, If you

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Speaker 1: were a voter, what would you do? Because you're absolutely right,

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Speaker 1: the GDP does not look as good as people thought

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Speaker 1: it would, and me there's some time left before we

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Speaker 1: see what happens with it. And Jenny Ellen herself, even

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Speaker 1: though she said she expects the unemplumber rate to fall farther,

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Speaker 1: she said, yes, growth has been disappointing, productivity is slow,

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Speaker 1: and she doesn't see inflation rising. Why would it vet

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Speaker 1: your vote to raise rates? Now? Well, you know, but

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Speaker 1: but I think I have Norm's respect for Cherry Yellin,

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Speaker 1: but I think she's a little bit selective. So for example,

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Speaker 1: if you look at CPI inflation, course, CPI is about

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Speaker 1: two percent. If you look at that regirely earnings, they're

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Speaker 1: running at about two point eight per cent um. And

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Speaker 1: and in particular, I think John Williams, of all the

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Speaker 1: Fed officials, is the one that I follow closely. I

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Speaker 1: think Williams just in the last day or two of

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Speaker 1: new quotas, saying that he would be supportive of a hip.

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Speaker 1: We had three descents um at the September meeting. Certainly,

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Speaker 1: I think you know right now policy is very very accommodative.

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Speaker 1: I think the economic concerning withstand a number another visas

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Speaker 1: point move uh, and so I just think they should

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Speaker 1: they should get on with it. You know, Rich Clarado,

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Speaker 1: one of the things I do to prepare to speak

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Speaker 1: with you is I look at some of your previous

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Speaker 1: work and you published a piece back in September of

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Speaker 1: twenty fifteen, and I have to say, not that you

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Speaker 1: would reuse it, but you probably could because not much

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Speaker 1: has changed. And even your description about the debate over

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Speaker 1: whether to raise twenty five basis points this is as

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Speaker 1: Yogi Barris says dejav all over again. Well, thank you.

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Speaker 1: You know, I I knew when I was going on

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Speaker 1: your show. I wanted to make sure that I hadn't

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Speaker 1: said something totally silly, and and you're right, it is.

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Speaker 1: It is eerie the parallels between you know, a year

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Speaker 1: ago and today, And in fact, I think you can

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Speaker 1: actually make a case today that the FEDS um poor

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Speaker 1: communication is even more hard to understand. You know, last

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Speaker 1: summer you had the China devaluation and the repercussions from that,

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Speaker 1: so at least you could maybe say, well, international developments

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Speaker 1: are unfamiliar. But um but I'm not quite sure. And

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Speaker 1: I don't know if you noticed this today, but Charles Platser,

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Speaker 1: who until not so long ago was the president of

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Speaker 1: the Philadelphia FED, was also quoted as being critical of

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Speaker 1: the communication. I would also know Tim that in the

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Speaker 1: minutes of the July meeting, as well as in the

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Speaker 1: minutes of the June and April meetings, the minute to

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Speaker 1: reveal that FED officials expressed concern that they were not

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Speaker 1: communicating very well in the markets didn't understand them. And

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Speaker 1: with all due respect, I think that it's the problem

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Speaker 1: not the markets. I think that there is not a

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Speaker 1: particularly crisp understanding of their reaction function. And it may

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Speaker 1: simply be that the FED itself is not an agreement.

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Speaker 1: Um And until I think the chair becomes more proactive

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Speaker 1: in that, well, we're gonna have this pretty divergent range

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Speaker 1: of views, all right, We're gonna have more With Rich Clarida.

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Speaker 1: He is Global strategic Advisor at PIMCO. We're broadcasting from

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Speaker 1: Bloomberg Markets Most Influential Summit at our world headquarters. This

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Speaker 1: is Bloomberg. Continue our live broadcast Bloomberg Markets Most Influential

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Speaker 1: Summit with one of the key participants, Rich Clarida, Global

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Speaker 1: Strategic advisor at HIMCO. It's not just about the Fed

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Speaker 1: these days, it's about the Bank of Japan and their

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Speaker 1: year old curve. That's coming up to broadcasting live to

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Speaker 1: New York Bloomberg, to Washington, d C Bloomberg to Boston, Bloomberg,

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Speaker 1: Well under It to San Francisco Bloomberg nine, to the

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Speaker 1: country Channel one, and around the globe the Bloomberg Radio

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Speaker 1: plus Dad Bloomberg Got Gone. This is taking Stock coming

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Speaker 1: up on taking Stock more with Rich Clarata, Global Strategic

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Speaker 1: advisor to PIMCO. Want to find out with negative interest

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Speaker 1: rates in Japan and in Europe, will they cause a

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Speaker 1: variety of unintended consequences and the regulators holding the bad

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Speaker 1: very important question. Let's get to Charlie Pellet here at

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Speaker 1: Bloomberg World Headquarters in the newsroom with the Bloomberg Business Flash.

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Speaker 1: And I thank you very much, Kathleen Hayes, thank you

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Speaker 1: pim Fox. We have seen quite a turnaround for US

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Speaker 1: equities in the past couple of minutes. Here FIDAL, the SMP,

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Speaker 1: NEZDAC all advancing stocks rising as energy shares rally along

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Speaker 1: with crude prices after reports that OPEC reached an agreement

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Speaker 1: to limit oil production. This update is brought to you

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Speaker 1: by Sector Spider et F s Y by a single stock.

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Speaker 1: When you can invest in the entire sector, visits sector

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Speaker 1: s p t rs dot com or call one eight

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Speaker 1: six six Sector e t F Crude Oil West Texas

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Speaker 1: Intermediate now rallying five and a half percent. It is

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Speaker 1: up to forty five a barrel thirteen right now on

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Speaker 1: w t I brant of four and a half percent,

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Speaker 1: gaining two oh eight of arrol forty eight oh seven

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Speaker 1: on grant s and P five hundred index climbing eight

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Speaker 1: best level of the day. Now again there of four

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Speaker 1: tenths of one percent down. Industrial is up eighty seven points,

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Speaker 1: a gain of five tenths of one percent, and NASDAC

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Speaker 1: is up four points, a gain of one tenth of

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Speaker 1: one percent. FED Chair Janet Yellen was back on Capitol

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Speaker 1: Hill this morning. She reiterated her view the the US

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Speaker 1: Central Bank plans to remove accommodation gradually on current course,

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Speaker 1: whilst saying she sees no fixed timetable for raising rates

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Speaker 1: as the jobless rate should fall further. And here's what

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Speaker 1: you have to say, and remarks carried right here on Bloomberg.

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Speaker 1: We're really not seeing meaningful upward pressure on inflation, and

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Speaker 1: we haven't seen the unemployment rate fall, but monetary policy

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Speaker 1: is accommodative. Eventually, continued job creation at that pace would

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Speaker 1: cause the economy to overheat and would push the unemployment

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Speaker 1: rate um down to lower levels than now. And right

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Speaker 1: now we've got gold down three tenths of one percent

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Speaker 1: to thirty two on Wall Street. Now, let's take a

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Speaker 1: look at other news from around the world. Thank you,

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Speaker 1: Charlie from the Bloomberg news room. I Ramie in essent cio.

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Speaker 1: Former Republican Senator John Warner is panning Donald Trump as

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Speaker 1: disrespectful of the military and woefully unprepared to be commander

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Speaker 1: in chief. Warner appeared with Hillary Clinton's running mate Tim

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Speaker 1: k in Alexandria, Virginia to offer his endorsement to Clinton.

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Speaker 1: That candidate is one that is fit and ready to

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Speaker 1: lead our great free country and to lead the world.

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Speaker 1: In the cause of Freedom. The eighty nine year old

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Speaker 1: Warner says he's quote distressed by Trump's comments that the

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Speaker 1: US military is in bad shape. Republican House speaker Paul

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Speaker 1: Ryan spoke at the Economic Club of Washington this morning

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Speaker 1: and was asked if he is eyeing a run for

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Speaker 1: the White House down the road. You never say never

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Speaker 1: to these things, but I've never really had this ambition.

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Speaker 1: I have presidential size policy ambition. I've really never had

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Speaker 1: presidents of size personal ambition. It's just it just was

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Speaker 1: never really in my DNA. A Dutch lead investigation has

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Speaker 1: implicated Russia in the shooting down of a Malaysian jet

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Speaker 1: liner over Ukraine two years ago. According to the probe,

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Speaker 1: the missile system that was used to shoot down the

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Speaker 1: plane was brought in from Russia at the request of

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Speaker 1: Russian backed rebels. Russia's Foreign minister calls the probe politically motivated.

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Speaker 1: All two hundred and eight people on board that plane died,

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Speaker 1: and the NYPD is questioning a man in connection with

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Speaker 1: that home explosion in the Bronx that killed a fire

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Speaker 1: battalion chief yesterday. Michael Faye, a seventeen year veteran and

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Speaker 1: father of three, was killed by falling debris while directing

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Speaker 1: operations from the street. Authorities are looking into whether that

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Speaker 1: building was being used to grow marijuana. Global News twenty

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

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Speaker 1: analysts in more than one hundred twenty countries. I'm Ramy

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Speaker 1: in Essencio. This is Bloomberg, Charlie, and we thank you.

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Speaker 1: And again recapping, we are seeing stock surge SMP five

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Speaker 1: hundred index up eight Now that's a gain of four

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Speaker 1: tenths of one percent, overcoming earlier losses. UH the now

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Speaker 1: up eighty four points. Again there a five tenths of

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Speaker 1: one percent. And again have to mention now that crude

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Speaker 1: oil closing in on six percent for barrel of West

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Speaker 1: Texas Intermediate a five point eight percent now gaining two

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Speaker 1: fifty seven to twenty three. I'm Charlie Pellett and that's

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Speaker 1: a Bloomberg business flash. This is aging Stock in Focus

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Speaker 1: on Bloomberg Radio, the Fed in Focus broadcasting live from

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Speaker 1: Bloomberg Market's most Influential summit at our global headquarters here

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Speaker 1: in New York. Were speaking with Richard and Claren up

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Speaker 1: is the global Strategic Advisor at Pimco. Rich Claren Up

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Speaker 1: do you believe that the world is experiencing about a deflation, Well,

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Speaker 1: the world's not in deflation obviously, Japan until recently has

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Speaker 1: been in deflation. And I think that certainly seven or

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Speaker 1: eight years ago, in the depths of the crisis, that

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Speaker 1: was a legitimate and real concern. And I think for

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Speaker 1: all the criticism that some have offered, we can't lose

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Speaker 1: sight of the fact that through through bold and unconventional policy,

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Speaker 1: we did avoid deflation in the worst recession in seventy

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Speaker 1: five years. So I think, I think outside of Japan,

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Speaker 1: and even there in Japan has emerged at least using

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Speaker 1: some measures from deflation, I think, uh, I think that

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Speaker 1: we've avoided that knock on wood. Well, no deflaced, but

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Speaker 1: negative interest rates. And of course, to a certain extent,

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Speaker 1: central banks like the Bank of Japan and the European

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Speaker 1: Central Bank have been chasing their tails because the more

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Speaker 1: they pushed towards negative rates and the more bonds they buy,

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Speaker 1: the more they push bond yields down. And even in

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Speaker 1: the negative territory, BUJ is trying to reverse that. Now,

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Speaker 1: does this is this policy gonna work? What's important about

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Speaker 1: it to you? Well, that's an excellent point, because you know,

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Speaker 1: we're we're conditioned to think of the FED meeting as

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Speaker 1: being the most important, but actually I'd argue that the

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Speaker 1: Bank of Japan meeting last week was it was more

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Speaker 1: important at least in terms of what they're trying to do. Essentially,

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Speaker 1: Kathleen and pim what they said is that there existing

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Speaker 1: framework they're basically their negative rateing QWI framework UM is

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Speaker 1: reaching some limits UM and so they've pimoted to a

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Speaker 1: framework where they're going to essentially say they want to

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Speaker 1: put a cap on bond yields on the at the

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Speaker 1: ten year point, they're gonna be buying less securities and

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Speaker 1: longer drison. They're gonna try to steepen uh the yield

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Speaker 1: curve and potentially, and I think this is important, poten

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Speaker 1: leap down the road. That could be relevant if the

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Speaker 1: administration designs to put in place a big fiscal expansion,

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Speaker 1: because as long as they are tagging the putting a

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Speaker 1: ceiling on the yield on tenure bonds, you're an effect

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Speaker 1: going to be getting money financing of those debts. And

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Speaker 1: then finally, the last thing they said they would do

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Speaker 1: is they want to anchor inflation expectations. They want to

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Speaker 1: increase inflation expectations, and to do that, they're actually aiming

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Speaker 1: to overshoot their two percent inflation target. Now, I know

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Speaker 1: the skeptic will say, well, they haven't even hit two

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Speaker 1: two percent inflation yet, and I do take the point.

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Speaker 1: But I think that down the road we may see

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Speaker 1: other central banks tivot away from an inflation target towards

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Speaker 1: more of a price level objective. So this could be

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Speaker 1: a sort of a dry run on that, Rich Claid,

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Speaker 1: I don't know whether you've just heard, but oil prices

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Speaker 1: are up by a little bit more than six percent today.

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Speaker 1: The report from a delicate briefed on the matter says

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Speaker 1: that Saudi Arabia and Iran UH they have reached an

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Speaker 1: agreement to cut oil production down to thirty two and

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Speaker 1: a half million barrels a day. That's nearly seven hundred

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Speaker 1: and fifty thousand barrels a day lower from what it

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Speaker 1: pumped in August. Do you think, first of all, that

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Speaker 1: this kind of agreement will remain in place, given that

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Speaker 1: I think the Saudi has just cut their many government

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Speaker 1: positions salary by will it stay in place? And what

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Speaker 1: are the implications then for dollar and and interest rates

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Speaker 1: when you start looking at great, great point. You know,

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Speaker 1: this has been, this has been people have been speculating

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Speaker 1: on this for a while. Um. And this was this

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Speaker 1: was not the typically regularly scheduled OPEC meeting. This is

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Speaker 1: a special meeting. You know. I've been looking at the

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Speaker 1: internal email traffic on this and I think it's I

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Speaker 1: think it's too soon uh to tell, but but potentially uh.

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Speaker 1: You know, we've been calling for some time for oil

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Speaker 1: prices to firm and and this would be contributing to

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Speaker 1: that would move prices, you know, back up around fifty

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Speaker 1: uh dollars um and uh. So I think that the

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Speaker 1: short answer is right now based upon the report, is

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Speaker 1: too soon to tell. But but there does seem to

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Speaker 1: be a sentiment uh, and that that OPEC is recognizing

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Speaker 1: to try to achieve some stability in oil prices. Uh.

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Speaker 1: And they may feel now that they can actually enforce this.

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Speaker 1: Of course, as you both know that in the past,

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Speaker 1: the trouble with OPEC is that there are huge incentives

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Speaker 1: to cheat uh in oil cartels that in life. So

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Speaker 1: whether or not at holds there's another issue. But I

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Speaker 1: knew think that there does seem to be some movement

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Speaker 1: to trying to put in place some production interesting to

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Speaker 1: Rich that wouldn't hire oil prices to be viewed favorably.

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Speaker 1: Tricoles the bank in Japan at the FED they're trying

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Speaker 1: to boost inflation. He was following all prices last You're

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Speaker 1: totally made hard for the BOJ to do that. I

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Speaker 1: completely agree, and I think Kathleen, a lot of folks

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Speaker 1: forget that, and it's easy to criticize the Bank of Japan,

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Speaker 1: but the fact is is that they got hit with

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Speaker 1: two UH shocks that had nothing to do with Japan.

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Speaker 1: One to collapse in oil prices and too obviously the

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Speaker 1: sort of flight the safety bid for the yen and

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Speaker 1: the dollar after the China devaluation last year UH. And

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Speaker 1: it's tougher for them to keep inflation expectations anchored when

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Speaker 1: there are these big moves and headline inflation that are

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Speaker 1: out of their UH control. So so so yes, I

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Speaker 1: I do see the point. And also we know, Kathleen

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Speaker 1: in the US that inflation expectations are historically quite sensitive

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Speaker 1: to gasoline and oil firms as well. Rich Claire, that

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Speaker 1: thank you so very much for joining us here at

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Speaker 1: Bloomberg Markets. Most influential as someone in our world headquarters today,

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Speaker 1: which is Global Strate Teaching Advisor at PIMCO and the

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Speaker 1: professor at Columbia University. Some big news on the Bloomberg

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Speaker 1: The California State Treasure is sanctioning Wells Fargo. We'll have

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Speaker 1: more details on that coming up in our next Bloomberg

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Speaker 1: Business Report. I'm Kathleen Hayes along with pim Fox, and

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Speaker 1: this is Bloomberg. The FED in Focus is brought to

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