it is michael mckee -- we have an exciting one to kick off. michael mckee. -- hel: jay powell said hearken back to the 1990's in the fed rate cuts. let's set this up. the white line is the fed funds rate, the yellow line is gdp. the blue line is the bce price index that the fed follows. gdp was falling, not much happening with inflation but it was still low like it is today. the fed cut three times and then read it -- and then let it ride for a while. in 1998, the situation different. gdp was down, but we had the russian default that year. the vet reacted by cutting rates two -- the fed reacted by cutting rates another two times. .hose were the cuts the biggest difference between now and then is look the rate. 6%were at 6%, the fed was at when they began the 1995 cutting. today we started at 2.5%. the fed does not have as much room for insurance as it did then. vonnie: that is a very illustrative chart coming from this star of yesterday's federal reserve news conference. guy: absolutely. certainly worth watching. michael mckee playing the star

michael mckee joining me is michael mckee, and sarah hunt of alpine woods is still with me. bondis as simple as global yields at record lows, their fight don't -- record lows, therefore don't buy em? michael: basically, can these countries repay their debts? it is something like 69 trillion dollars worth of debt in emerging market countries, and there is concern about what happens if we continue to see the same dynamics play out. we are not at a crisis yet. other central banks around asia this week cutting rates to try to prop things up, but the reason for why people are concerned is pretty obvious at this point. alix: it feels like it is caught between a rock and a hard place. if you want yield, don't you still have to go to emerging markets? sarah: i think that is the reason the lire is up, because turkish yields are still very high even though erdogan is trying to get rates down by changing out the entire central bank. i think it is very tough when you are in a situation when a lot of emerging markets also depend on commodities for cash flow. a lot of those prices have co

vonnie: joining us is bloomberg's michael mckee. datae start with this new we have out from the kansas city fed? we just got it a few moments ago. it will obviously play into the collection of data that the fed considers. michael: it is interesting you mentioned that because esther george was looking for some signs the economy is weakening. the kansas city fed manufacturing index just out shows it fell by the most in three years. new orders fell and also production lower. i asked esther george during our interview about that and about ceos werehat what telling her in her district and here's what she had to say. business leaders express a fair amount of uncertainty and concern about knowing where export markets are going and what their opportunities are going to be. on the whole, they continue to be optimistic about the outlook for the economy. michael: general outlook but some signs of deterioration. esther george does not think we need more accommodation but she wants to see the data by the time we vote on september 19. vonnie ment

michael mckee, argued th-- are you there in jackson hole? michael: yes, we are in jackson hole. romaine: great interview there. towards the end of the clip we just played, she talked about the idea equilibrium. how alone is she with regards to fomc members from esther george, in that thinking right now? michael: in that thinking she is probably with the majority, given that we don't really know neutral is. it is more of a feeling that an actual number you can pick out of the air. there are a lot of people on the fed who think we are at or close to neutral. one of her adjustment they might make to take out so-called insurance for the economy would not be that large. that is why you see even doves like jim bullard, one of the first people to call for a rate cut, saying he is not ready to do 50 basis points. we are still set up for a rate cut, perhaps, but not as much as one as wall street might have hoped. caroline: we have also just got international geopolitics, something to the federal reserve is having to digest. i want to ring viewers breaking news out of rome. the italian pr

let's get to michael mckee. the fed chair does not go beyond his oft repeated promise to act as appropriate to sustain the expansion, even though he said trade policy is worrisome for the u.s. economy. remarks,prepared because the most important effects of monetary alcee are f a year or lags o more, the committee must focus on things that propose and material risk of doing so. we will act as appropriate to sustain the expansion. powell runs through a history of policymaking from the 1950's to the early 1980's when it was not clear the fed could control inflation and the 1990's when the fed controlled inflation. inflation today is under control, but there are new challenges from trade. inhave much experience addressing typical macroeconomic developments, but fitting trade policy uncertainty into this framework is a new challenge. unemployment is near a 50 year low. inflation is not rising as the old model suggested it would. with inflation expectations so w, the neutral of rate --neutral rate has fallen. incorpor

michael mckee is with us in jackson hole. it's a random selection of those who i was able to do interviews with ahead of time. we will hear more from the devilish side this morning -- the dovish side this morning. we will hear from jim bullard at the top of the hour. it's a situation where probably not a lot has changed in terms of who will go which direction. it's also important to remember who is voting. pat harker not voting this time. is.er i feel like we want to walk this question forward. how many ounces of prevention are necessary to sufficiently give an accommodative boost to the economy? what is that conversation now? michael: you hit the nail on the head there, alix. if the fed is going to be cutting rates, jay powell in july characterized it as a midcourse correction. wall street sees a recession ahead. how much accommodation to the various fed officials think we even even if we think -- if they think we do need a rate cut? is this a correction, or the beginning of a rate cut cycle? this is an important conversatio

we are joined by luke kawa and michael mckee taylor: -- and michael mckee. let's start with that china data. as you know, exports actually went up. theiris another line on on the imports which shows they are negative, but better off than it had been. michael: the numbers are a bit of an anomaly because we did see in june president put additional tariffs on. economists are expecting this to turn around because of the threat of new terror -- of new tariffs. bloomberg had a very interesting story yesterday that said warehouses in the u.s. would fall. not chart where you put anything. alix's closet, maybe. [laughter] michael: there's a more interesting statistic i saw any chinese data, and that is their foreign reserves. a decline significantly, just above $3 trillion now. that suggests they have been losing reserves to capital flight. going down,n that is one reason possibly why the bank is setting fixing at a very slow move because they don't want to encourage more capital flight. luke: a silver lining to the trade data, too, but chinese imports of commodities

that is michael mckee, bloomberg's correspondent at jackson hole. for more on the fomc and what we can expect from the symposium and the economy, we are joined by simeon hyman, proshares global investment strategist. how do you see the strength of the economy right now? it is clearly at the core of the monetary policymaking body, so obviously there will be a sense in the broader economic community. simeon: there's conflicting data all around the world. we had terrible german manufacturing data this week, and yet also this week in the u.s., we had across-the-board great retail earnings results. there's the question of can the u.s. consumers save the world, but in europe, the consumer is much better than manufacturing, so there's conflicting data, so there's no surprise there's dissent. vonnie: was it a surprise for the fed to make a so-called insurance cut? i know you are looking for 50 to 75 more bases cuts for the rest of the year. that seems quite drastic. simeon: the question of what is a neutral fed funds rate is a much different one than in a n

let's go back to michael mckee. u.s. to question in the news conference with jay powell and we will play the response because it was a very important question about what the 25 basis point cut will get done. supportslicy confidence and economic activity. household and business confidence, through channels we understand. it will lower borrowing costs. it will work, and i think you see it since we noted our vigilance in june, you saw financial conditions move up. i will not take credit for the recovery, but you saw financial conditions move up, you saw confidence move back up. you see economic activity on a healthy basis. david: it was a great question and got an interesting answer. this is about quantitative easing. you talk about business confidence. a lot of people say part of the problem with business confidence is trade dispute. that man cannot fix the problem, no matter how low the interest rates are. michael: which is why proceeded my question by saying the fed is the hammer in search of a male. they are the only de

thank you, michael mckee. for more insight into the fed's thinking, we will speak to the former fed president eric rosengren later in the hour. hong kong protesters heading to the streets for the 11th straight weekend. months of demonstrations have led to violent confrontation between protesters and police, including a demonstration at the airport. our guest from stratfor. is in your sense that things are calmng, or is this the before the storm? >> we will have to wait a few weeks. certain groups try to keep their protest more controlled, we didn't see the disruptions we saw in previous weeks. we areis not clear that out of the woods yet for hong kong or beijing. vonnie: what is the strategy on the part of the protesters? it looks like things were kicking up to a new level last week with the airport shutdowns, there.rmish here or now we are calm again. is this delivered on the part of the protesters? rodger: you have to be careful, there is no single protester group. is organizing these more peaceful protests

alix: michael mckee, stick with you. still with me is so broad showroom shopper -- subadra rajappa and megan greene. your initial reaction? megan: this was straight down the middle of what people expected and every month i feel it we are trying to figure out what the implications of trade are and it is not coming through as strongly as we expected. that train continues. what is interesting to me is the senses was supposed to kick in in april and may and june and we were supposed to see this huge jump. we still have not seen it. is that because we are automating these jobs? it is weird that has not come through. subadra: this is as middle-of-the-road as it possibly can get. i do not see anywhere where things stand out. we did see revisions for last 123, then to participation rate went up a little bit. betweenings are still 3.1% and 3.2%. the trend is clear. you had 225,000 jobs on average last year and this year you start to see that trend toward 175,000. that has not changed. the trajectory seems to be toward a modest sl

michael mckee is on the ground with what to expect. michael: we've already seen a moose, soweto copley star main goal this week. moose,all members -- a so we've accomplished our main goal this week. almost all members of the fed will be here, so the challenge is how do you manage an economy and use the tools to get through a downturn if interest rates are so low that they can't really cut them? how much will chairman jay powell and the rest of the fed cut interest rates next month here in the u.s.? everybody is looking to the chairman's keynote speech tomorrow morning. we will be getting a preview of that, as you mentioned, from kansas city fed bank president esther george, coming up in half an hour. luke: you mentioned all the fed officials are gathered there. that's pretty much the only sign of unity that appears to be on the committee now. yesterday, if you look at the per disciplines section -- if you look at the participants section, many not really there at all. how hard is it for jay powell to give a speech when there's not a lo

and michael mckee here in our new york city studio. let's check in now on the first word news with kailey leinz. iran, president hu son rouhani -- president hassan rouhani said that all president trump is looking for is a photo with him, and made it clear there is one precondition to any negotiation. without america withdrawing from sanctions and abandoning the path it has chosen, there will be no positive development. the key to the did relationship is in washington's hands. kailey: president trump said he is willing to meet to discuss the standoff over the nuclear agreement. japan wants to end the auto tariffs threat as part of a deal with the u.s. president trump and prime minister shinzo abe announced a tentative agreement over the weekend. president trump left the door open to imposing them later. in germany come of the economy is now on the brink of recession. the second quarter exports fell by the most in six years. that led german gdp to shrink by 1/10 of 1%, the second contraction in the past year. in italy, talks between long

our thanks to bloomberg's michael mckee. guy: staying with the fed theme, and ahead of our special coverage from jackson hole, later today we will bring you and axles of interview with eric rosengren from the boston fed. dissenter in june. looking forward to it. this is bloomberg. ♪ ♪ live from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets."time now for our stock of the hour. we are looking at estee lauder. shares are the best performer in 500, doing the best since february. emma chandra will take us through the numbers. emma: estee lauder shares hit a record high, with double-digit gains at the highs of the session. this builds on a big year for the $65 billion cosmetics giant. stock is up 40% year-to-date come outperforming their global peers. we seem to have the wrong graphic there, but hopefully we will be a be to bring you the right one. they've been putting in -- we will be able to bring you the right one. they've been putting in healthy returns, but still doing better

kevin: thanks to bloombergs michael mckee for breaking that down. now for the latest on where trade talks stand. let'we miss you in washington, . what is the latest on the trade front? sarah: the latest we are reporting is a question left unanswered over the weekend at the g7. how is china reacting to trump's back-and-forth on whether he is taking a softer tone to a trade deal or he is intent on hitting china harder? what we are hearing from our sources in beijing is china does not trust anymore, so it will be hard for them to cut a deal, both politically and as they prepare for their economy to go it alone a bit more. there is an idea sitting in that it will be hard for china to get a deal with trump before the 2020 election. the economy is slowing and so they need to start coming up plans to make sure they are bolstering their economy and preparing for a protracted trade war. shery: very difficult for officials around xi jinping to plans to makeconvince him to sf trump could break it. we are still expecting the talks to occur in september. we have

michael mckee was there and he joins us in new york. one of the tweets we paid close attention to was the confusing one where he blamed the fed for doing nothing. michael: it was confusing because it almost sounded like he thought they were having a meeting to change interest rates. he seems to have been upset jay out to not promise rate cuts even though the markets were pricing in a rate cut based on what jay powell said. everyone in the room watching their twitter speed while jay powell was speaking because they wanted to see what president's reaction might be. kevin: when you look at it in the broader context of the president's remarks in the past hour at the g7 and then you couple it with his public comments last week, what becomes the consensus viewpoint of where the president is in terms of negotiating on trade and his pressure on the fed chair? shery: you know is -- michael: you know as well as i do that no one can answer that question. donald trump is all over the lot. all we know is he has threatened to raise tariffs on china a

alix: bloomberg's michael mckee, thank you very much. here's something else we are going to be keeping our ion, hong kong. tensions escalating at the 12th straight weekend of protests. force used water cannons the first time, saying it was the best way to disperse protesters. president trump says that he expects president xi to do something about the protests. we will have more on the analysis of the markets next. this is bloomberg. ♪ alix: time now for first ta ke. first, president trump says china wants to get back to the negotiating table as world leaders wrap up the g7 summit in france. here discuss, vince cignarella, damian sassower, and candice --gsund, fiera vice capital fiera capital vice president and portfolio manager of asset allocation. first of all, friday was a mess, and it was really hard to deal with. the s&p had a chance to respond last night. huge gap down, and now trump is making whipsaws. what is this telling you? vincent: the idea that premier trump and saying he wanted to get trade talks restarted, i have a better

thank you so much, bloomberg's michael mckee. coming up, more on your market analysis and more in today's first take. this is bloomberg. ♪ alix: time now to give you all the news and get you some trades and analysis for the markets. gdp number showing the economy in germany on the brink of recession. here to discuss that in what it means, vince cignarella, damian dessner, jpd maddi morgan asset management multi-asset strategist. i feel like this does put pressure on stimulus from the ecb, as well as the government for germany. vincent: the interesting thing is from the government, we are getting pushback. we are getting pushback from the wonders bank is -- from the bundesbank as well. no, isn't that how he's labeled now? what is he not seeing that everyone else seems to be seeing? maddi: one of the things we are expecting is that the ecb and germany in particular is going to jump in with fiscal policy at this point -- at some point. we do think there is some upside to the extent that we start to see that fiscal stimulus come th

there with a look is michael mckee, bloomberg's international policy correspondent. michael: it is all about currencies, a catholic and scrambled by china's reaction to president trump's threats. we start with australia and new zealand, australia out tomorrow, new zealand on wednesday. look at the currencies. the australian dollar in white, the new zealand kiwi in blue. they have been going down. the fed rate cut caused reaction. people thought new zealand would probably cut rates again to keep its currency from rising. australia has been it a couple of times, so they were going to wait. you can see the difference in the dotted lines, the benchmark rate cuts. with china cutting, that gives australia more room, and possibly new zealand. new zealand expected to go ahead because they have additional space compared to australia. with china cutting, their currencies have been going down today. it makes it a little easier over there. for india, it is a bit of a different story because a couple of things are happening at the same time. you can see the indian rupee, and i in

michael mckee has his speech. chair is not go beyond his promise to act as appropriate, even though he says trade policy is a worrisome thing. remarks, the most important effects are felt with uncertain lags, the committee must look through what must be passing developments and deal with things that -- we will act sustain thete to expansion. does this meet the test of being dovish enough? >> two major stories hitting the economy and markets. jackson hole and trade. president trump saying he will respond to china slapping tariffs on u.s. goods. threatening the stability of markets. >> the only incumbent presidents not getting reelected presided over reelections. he knows he has to rectify the situation. things are weakening. he needs to do whatever he can to stimulate the economy. >> the president saying, my only biggern is who is the threat? he has made a calculation he is going to double down on attacks on attacks in central banks. >> i think the reaction has been instructive. you saw stocks fall after headlines

caroline: let's get even more up-to-date reaction from michael mckee. mike, how has the response been to china acting on new tariffs and the reaction and the response we await from president trump? mike: everybody is waiting to see what the president wants to do next, but his tweets did not go over well here. many people thought he crossed the line by comparing jay powell to xi jinping. there's also a feeling that this is donald trump, it is what he does, and maybe it is best to ignore the whole thing. specific comments came from stanley fischer, who said the trouble is not in the international monetary financial system. it is in the president of the united states. things are getting worse day-to-day and it is the behavior of the united states that is causing problems around the world, which is kind of the general view of many participants around here. caroline: mike, i don't know if you can see this chart, but basically what we are looking at is what i would call extreme correlation between the manufacturing index and the five-year breakevens, both of

michael mckee has a copy of remarks. go beyondir does not his promise to act as appropriate to sustain the expansion. even though he says that trade forcy is a worry something the u.s. economy. "because the most important monetary policy are felt with uncertain lags of a year or more, committee must attempt to look through what maybe passing developments and tous on things that seem affect the outlook overtime. as appropriate to sustain the expansion." act asomise to appropriate meet wall street's of being devilish enough. >> two major stories. jackson holes and trade. trade.o president trump tweeting he will respond this afternoon to china slapping another $75 million of tariffs on u.s. goods. the stabilitying of financial markets. .> the past 100 years only incumbent president didn't reelected -- you have consumer confidence down. things are weakening here. he needs to do whatever he can the economy. >> the president tweeting out earlier, my only question is, the bigger enemy, jay xi.ll or chairman the president made a

kevin: thanks to michael mckee. vonnie: let's get a check on those yields. there is abigail doolittle. >> it was a risk off friday. they are all down about 0.8%. the week, we are looking at the worst week of the year. we will look of data in a moment. the emerging market index has been down eight days in a row. it's a sign of risk off, investors are going away from that. right now, they are selling that index, the worst of the year, down 2.1%. this has to do with the trade between the u.s. and china. there is uncertainty around the fed. the 10 year look at in -- days six its in a row. this suggests that investors were buying bonds ahead of the fed and ahead of the announcement around the trade war. drop.s clearly a huge at some point, it's the biggest rally for bonds since 2016. that's the degree of selling we've been seen. that's the degree of buying i should say. paris was different. 500, the big tech giants have exposure to china. apple is 20% of their revenue plus the supply chain. it's a disappointing forecast. they are down 6.4%. --ally, i was missing

mckee. we understand where the former fed president is coming from, because the fed is facing a dilemma. one at this put the fed close to the realm of politics? michael:

tom: michael mckee would not come out today unless we got a deutsche bank opinion. if you adjusted your view? ago, we a few months expected them to cut rates by 25 basis points in july and september. there has been fluctuation in between. we are sticking with that view. you have a committee split in terms of what to do. there is a decent contingent that does not want to cut at all. the center of the committee is looking at slowing global growth, trade uncertainty, muted pressures as powell highlighted. tom: which goes right against the dudley essay. thank you. reading thee, dudley essay and digesting it for us. exceptionally important essay by the former president of the new york fed. coming up at 10:00, a timely conversation, i doubt i will talk china trade war with mario but there is a lot of talk about on value, investing. we will touch on media and just possibly, we will look at the fall season of cbs. this is bloomberg. ♪ viviana: you are watching "bloomberg surveillance," with the bloomberg business flash/ max customer has sued boeing. order forto cancel an

michael mckee mckee was absolutely right yesterday, according to chairman powell. this is bloomberg. ♪ ♪ this is bloomberg "surveillance." all eyes on the bank of england. we are expecting a rate decision shortly and the inflation forecast and gross forecast -- growth forecast and a news conference where governor carney will probably address the pound. we have seen a shift and probably the last 15 and its or -- 15 minutes or so, the pound at 1.21. how will governor carney navigate these questions and what will that mean? nejra: it is a difficult navigating situation that mark carney will have to do. what the boe has been forecasting, slightly rising rates, and the markets showing a probability of cuts. what the bank of england forecast is not factoring in is no deal brexit. that is something mark carney will have to address. tom: what is the backdrop of united kingdom economics and the consumption vector of the united kingdom? is it like america where it is pretty good? nejra: yes, it is. consumption has been folding -- holding up. growthe seen real wage and th

michael mckee has a copy of his remarks. chair does notd go beyond his often repeated promise to act as appropriate to sustain the expansion even , though he says trade policy is a worrisome thing for the u.s. economy. from his remarks, the most important effects are felt with uncertain lags of a year or more the committee must look through , what must be passing developments and focus on things that seem to affect the outlook over time or pose a risk of doing so. we will act as appropriate to sustain the expansion. does this meet the test of being dovish enough? vonnie two major stories hitting : the economy and markets. jackson hole and trade. first two trade president trump , saying he will respond to china slapping another 75 billion in tariffs on u.s. goods. this is threatening the stability of financial markets in the u.s. >> the only incumbent presidents not getting reelected presided over recession. i think trump knows he has to rectify the situation. things are weakening. he needs to do whatever he can to stimulate

sherry: let's bring in bloombergs international and economic policy correspondent michael mckee live from jackson hole. you have a very busy schedule ahead. we heard from esther george, but she is not the only one having reservations. no wonder we are seeing this market reaction. michael: the data seems to suggest that the fed would have an excuse for doing it when we saw the ism numbers for market today go below 50. that is a disappointing figure suggesting a contraction in manufacturing, suggesting the fed could make a case. still a long time between now and then. you have to remember we are talking about where politics meets business, but nowhere is it more evident than in the president's tweet this morning criticizing the fed. does the fed want to be seen as giving into donald trump even if they are doing it for the best of reasons? kevin: that would be my follow-up question. in terms of as the president continues his attacks, what has the response been in jackson hole? michael: they are practicing the turn the other cheek school, trying to keep a profile -- keep a low profile, t

michael mckee has a copy of his remarks. let's get to our economic and foreign-policy correspondent. michael: the fed chair does not go beyond his oft-repeated promise to "act as appropriate" to sustain the expansion, even though he says trade policy is a worrisome thing for the u.s. economy right now. from his remarks, "the most important effects are felt with uncertain lags of a year or more, the committee must look through what may be passing developments and focus on things that seem to affect the outlook over time or pose a risk of material risk of doing so. we will act as appropriate to sustain the expansion." does the promise to act as appropriate me walet wall street's test of being dovish enough? vonnie: two major stories hitting the economy and markets. jackson hole and trade. first two trade, president trump saying he will respond to china slapping another $75 billion in tariffs on u.s. goods. this is threatening the stability of financial markets in the u.s. >> the only incumbent presidents not getting reelected

michael mckee joins us. let's talk the papers. -- what stuck out to you beneath the headlines of jackson hole? michael: the central banker for cypress presented a paper suggesting ways that the central banks can better communicate. a lot of it technical. what stood out was the next day, philip lowe, the reserve bank of australia, criticized the paper and said this is no good to me in my life because most people do not understand economics, don't understand economic formulas. we have to tell stories about how policies are tom: affecting our people. -- how policies are affecting our people. tom: was this sobering? michael: it was. one person said, "i left here more depressed then when i arrived." tom: stunning. maybe 08 was more like it or 09. michael mckee, thank you. nejra, what do you see? nejra: one strategist said the markets are weirder than 2008, in terms of what president trump is able to because with his unpredictability. he has been able to have high-level talks with china and other voices. tom: than

to explain what it means to be a currency manipulator, we welcome now bloomberg's michael mckee. michael: people have been making a lot out of these three criteria in the 2015 law, but the treasury department is using 1988 version of the law that basically says if a country is manipulating its currency for trade advantage. is china doing that? it did, but it is not doing it anymore. take a look at the turnover in the chinese foreign exchange reserves that they would buy or sell to manipulative currency. for years and years, you can see that they were accumulating foreign reserves because they were buying u.s. treasuries, and that was pushing down on the yuan. but in 2014, they shifted gears and now has been a net negative. they have been selling, and the yuan has been falling -- getting stronger, rather. i just want to address one thing quickly, and that is why china didn't go farther today in its yuan fixing. look at what happened in 2015, when there was massive capital flight. they may not want to go too far, too fast. is china manipulating now? was this a response to the presi

the value of having experienced reporters like kathleen hays and michael mckee out there at jackson hole. interviews including a host of fed presidents you see here. will bring the dovish case to the argument. robert kaplan has been pushing back as well as patrick harkin. we will hear from loretta mester on bloomberg television. let's get the bloomberg business flash. >> deutsche bank is paying over $16 million to settle ftc allegations it hired relatives of overseas government officials to win business. 2006iring lasted from until 2014 and focused on the asia-pacific region and russia. the lender agreed to settle the case without admitting or denying wrongdoing. societe generale is considering options for its asset management business. these include a sale or a merger of the unit that oversees about 150 billion euros. it may kick off in the fourth quarter. to shore up its finances. goldman sachs is getting the cold shoulder in i would be. -- abu dhabi. and has not been invited back. goldmanhe 1mdb scandal, has struggled to win business since the emirates wealth fund suspended activities

we welcome michael mckee, bloomberg international economics and policy correspondent. michael: what everybody was worried about is what is starting to happen. surprising, given what people thought. the bank of thailand was not supposed to move at all, they go 25. the bank of india surprises everyone with a 35 basis point cut in the bank of new zealand sends its edge mark rate down 50 basis points. quite a surprise. let me show you one thing quickly. this is where we were when we went out of the recession. we are way down now. a lot less room for these banks to cut. they may have to do more. if currency wars are heating up, they may have to do more. the kiwi and the australian dollar, the australian dollar on hold. they are at their lowest in years as the currency plunge because banks are coming rates. japan is the only safe haven. what are they going to do about the yen? it will hurt their economy of something doesn't change. they do not have a lot of scope for movement, nor do other central banks because we are way down below where we were. this is where we were going

bloomberg'sow is michael mckee, and still with us is marvin loh of state street. is anyone with him? michael: a number of fed officials have concerns about where we are going, but jay powell's view is it is better to get out in front. that seems to be the consensus of the members of the open market committee now. that's why they are at this point trying to move. the question is how much trouble are we in? can this be easily reversed? president trump saying you've got to go to almost zero, which they don't want to do because there would be nothing left. what thee statute says fed is supposed to pay attention to. i will put up a chart right now. i don't understand how we are in so much trouble if you look at the dual mandate. --marvin:nemployment on unemployment, the market is doing fabulous. the consumer has been holding everything up. but two years into this expansion, the fed preferred measure of inflation, we are not even close to that number. if we are looking at a long and the tooth part of the expansion, it is going to be really hard to see how you get that n

my favorite there, different from jerome powell, inflation rate, michael mckee talks up the trimmed rate, and all you know is back to the crash of 1987, we have never seen a lower real yield than we have right now. i rarely use the word "never." it is a fictional financial system, for our viewers and listeners, francine. francine: i actually changed my chart last minute, and this is what i am looking at. negative debt. tom: great chart, yeah. francine: you can see it closer to $16 trillion. now $16 trillion. unreal is the best way to describe it. output july industrial posted the weakest growth in 10 years due to trade tensions. donald trump delaying tariffs has cheered markets. mike gallagher is the director of macro and strategy. -- macro end strategy. when you look at concerns in china, first of all, let's leave trade to one side. thedoes the china -- how is china economy actually doing? it is slowing down. turnnk leadership wants to china plus economy from export driven to import driven. francine: with donald trump postponed tariffs until december, does it give china a window for tra