President trump said he made his decision on iran but refuses to say what the decision is. Speak thison due to hour, hopefully to clarify. Betty welcome back, yvonne. We missed you, a lot has happened in the last several weeks. Today with the fed, that has been the big news. Now we know this qt we have been talking about will Begin Next Week next month. Lets look at how the markets traded in reaction to this. In thiss quite a dip announcement and after with a news conference. We saw markets climb back. The s p closing above the red that, butnasdaq below the dow adding 42 points. I want to bring up a quick , which shows you how uncharted the territory is from markets. Since 2009 we have seen the s p track qe so tightly. Yes, they spread apart in the last year. But it really has been qe that has driven prices. Now where do we go . Yvonne we have seen the success of qe when it comes to equity markets, especially the s p. The big question is, will qt have the opposite effect of qe . Asia, one of the first markets to react. Here is how we are trading in new zealand. Pretty flat on the nzx 50. Bang in line with estimates, not a huge reaction in the kiwi. Singapore back from its recent gains ahead of the weekend election. Goinglian futures nowhere, up three points for the asx 200, after it finished flat yesterday. In0, still sing resilience the aussie dollar in the face of the strengthening dollar we saw overnight. The most in about a month or so. The bank of japan after the fed, how will the feds Balance Sheet unwind shape the boj when it comes to yield curve control . The nikkei sitting well below 20,000, ahead of the meeting. Dollaryen hitting a fresh high at 112. Should be a good day with the equity bulls. A big thursday for banks. And taiwan, philippines indonesia to wrap up the week for us, as well. It lets get to first word news with courtney collins. President trump says he has made a decision on Iran Nuclear Deal, but will not reveal what it is. He refused to say whether he would pull the u. S. Out of the accord, which is called an embarrassment to america. His iranian counterpart told the assembly that iran would not be the first to the deal. President says his administration is ready to help order rico as it is battered by a second major storm in two weeks. Maria has weakened to a category 2 system, but still casting strong winds and torrential rain. The whole island is without power and the capital san juan is flooded. Storms are expected to leave a damage bill in the billions of dollars. The earthquake in mexico has claimed at least 225 lives, making it the countrys deadliest tremor since 1985. 25 the students and teachers are thought to be buried. On softtal is built soil, that was once a lake bed. Seismologists say it exaggerates earthquakes effects. New zealands dollar little changed as they show a grew. 8 . It is lasting news ahead of the election. The key we saw a boost on wednesday, suggesting a late surge for the government. It gave Prime Minister bill 46 support,ty against labor, 37 . Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Look lets take a closer at the key drivers of the u. S. Market close. Bonds tumbled come all the dollar surprisingly surging on this news about the fed being hawkish. Su keenan with more on the mood in the market. They put the dot on the plot. The s p 500 did recently dipped below the 2500 mark, then surge above it, setting a fresh record. The market is closed close to unchanged. But now it is treading water. Lets take a look at the index where you see the reaction. Indicating there might be a rate hike by the end of the year. That means fresh profits for the bank. If we go into some of the market snapshot you see the 10 year yield is nearing 230. The at the 1300 gold at 1300 level. Apple was in the spotlight. Analyst talking about weakness and iphone sales. We saw a lot of suppliers drop as much as 5 on the. Fedex had a disappointing First Quarter after the cyberattacks. You can see the market moving higher. Bed, bath and beyond, a story of retailers under pressure, down 15 , a disappointing earnings report. Oil closed above 50. We did have the supply data reports. If we going to the bloomberg you can see exports are back above prehurricane levels. G btv 5114 is real important. The oil the recovery in patch. What is also important, we saw gasoline supplies fall to the lowest in two years, it showed you the slowdown in refineries. Traders a they will have to jam and get back to running, that will increase demand. That pushed prices higher, as did the opec talk. Traders say that will give oil a lot of room to test the higher range. We talk about 50 being a psychological barrier. We closed above it on the latest session. It will be interesting to see if we can go higher. Betty how long we hold above that 50 level. The Federal Reserve official he on track for one more rate hike this year. It will start to reduce its Balance Sheet, a stance that seems hawkish when inflation remains far below the target. But they will do it next month. Kathleen hays has more. The dots tell the story. Ots are athleen the d big deal. Why is there doubt . Because there are doubts above inflation. It is well below target. Yell in a knowledge yellen acknowledged it is a bit of a mystery. The fed sees it stronger this year. The revised gdp to 2. 4 . Lets look at the dots. If you go to your terminal you can see at the far left hand corner in the bottom, this is 2017 and there is a long line showing suggesting one more rate hike. Three for 2017. There are still four not in favor of a rate hike in december. It is lined up solidly behind janet yellen. The fed also seeing three rate hikes. The rate hike on its for december have gone up to 63. 8 after the fed meeting from 50 yesterday, from 25 september 8. They are climbing steadily even though traders are remaining skeptical the fed can hike as much in two years. Was asked about what the fed is doing and why, and the conviction they have. She opened the door ever so slightly to maybe some shift, if the data justifies it. Lets see what you think. If there is nothing set in stone about the policy path is paths, there is a great deal of uncertainty around them. Not only is their disagreement, there is uncertainty. C participants have been revising their views over time and will continue to do so. Kathleen some economists have soued this consensus being strong has something to do with not wanting to rock the boat. They say the dovish signal could make the markets wonder what is going on. To be smooth, they are going to be doing 10 billion a month in terms of proceeds they are not reinvesting. It is interesting to think about what is going on. Inflation is so far below target, some people were surprised. There was a little more doubt on that september rate hike. Yvonne stay with us, we will bring in vince reinhardt. He joins us live from boston. Good to see you. As kathleen mentioned about the dots, they stay relatively on the hawkish side. But also all over the map. Numbers lowering their projections with inflation. Why are they still going ahead on this . Vince they are working on the theory. The theory is, when resources are so tight, when the unemployed and Unemployment Rate is this site, it puts pressure on costs and inflation and they want to get ahead of that. What you saw in the way janet yellen is leaning is, they have a forecast where it is only a temporary, transitory dip in inflation. Andation will be coming up, they are confident enough to display they will raise rates. They do not view this as a policy hike, but renormalizing policy. Kathleen you are the head of the division of Monetary Affairs dothe fed, a fed economist, you agree with this procedure, this way of doing things . They are supposed to be datadependent, but they are basing it on a forecast that everybody, including the fed, has a history of forecasting that are often wrong. The easiest way to see that is if you look at the very first dot chart in the longterm column, the lowest dot was higher than the highest dot today. That is how much it has shifted in the last five years. Underlying this is, guidance is hard. Telling people what you dont know for sure is guaranteed to be wrong on occasion. The fed has been wrong about that. The dot chart was a good idea when they were providing negative guidance were not going to raise rates soon. Positive guidance is hard if you do not know that point. Curious we know the fed will try to manage this smoothly. Economists and analysts are saying, there will inevitably be volatility. Do you think that will have a direct impact on the economy . Remember, we are talking about small net changes at most. At most, the fed is talking about raising rates one more time this year, three more times next year, from a very low level. Would not expect that to be a large source of volatility. It will matter for Financial Markets because that is what we care about, the path of the federal funds rate. When you think about all the volatility being injected by what is going on in washington, by the congress and the white house, what the what is coming out of the Federal Reserve building does not seem all that important. Let me take the other side. The equity markets have rallied, bond yields have been low, based on a very large Balance Sheet. The fed is kept rates low for a very long time. I think we all feel like everything is great. Removinge fed stops stimulus starts removing stimulus, it could start making more difference at a time when growth is still modest. The gdp might grow at 2. 2 . Inflation is not a problem. Do you see a risk the fed could upset that nice economic applecart . Vince the fed can always make a mistake. It has made mistakes historically. But if they get it right, they will be normalizing Monetary Policy at the point where the u. S. Economy can bear it. They are raising the funds rate because they want to keep Economic Activity in the neighborhood of 2 or so. By the way, that is faster than that rate of output. They want to land Monetary Policy gently on the deck of the Aircraft Carrier that is the u. S. Economy. They will probably get it right. Yvonne vince, stay with us. We have a quick commercial break. Coming up, we talked to a ceo about investing in startups. At that is in about 20 minutes time. Betty plus, we hear from a turkish president erdogan at the Global Business forum in new york. This is bloomberg. Onne this is daybreak asia i am yvonne man in hong kong. Betty i am betty liu in new york. Fedspeak,for more centralbankspeak with Kathleen Hays and vince reinhardt. Quickly wanted to say to our viewers, we were talking earlier about managing the markets and the different reactions we saw in different assets. I want to pull up on my bloomberg what we saw with the dollar index. This is the intraday chart. The spike up, which was quite interesting, the surge you could call it in the dollar, given what we saw with of the more hawkish tone of the fed, were you surprised by that, given it seems to be so widely telegraphed we did see a sharp reaction in the dollar . What did you read into that . Vince i was a little surprised by that market, participants were surprise. We were thinking the fomc was going to tighten in december and the odds of tightening last week should have been flipped. That is what happened today. Months, thet couple dollar had been depreciating because of the sense that other Central Banks were going to have to go a lot more than the Federal Reserve. At least the Federal Reserve has a to read normal lies Monetary Policy. Investors apparently came to the view the fed will do it quicker than they thought. That added upward pressure on the dollar. Do not think that will last, because the fed has less room to tighten van ecb and the bank of japan, eventually. Onhleen i want you to put your fixed income strategist hat while you watch the Federal Reserve. They are closely linked. 30 year bond ended higher today. One of the reasons was, janet yellen may be opening room to doubt about inflation. But the yield curve is flattening. There was a lot of skepticism still about the fed being able to make as many rate hikes over the next two years as they think. Short and that is steep close off, long end and it higher. How do you understand the fed, being right or wrong about the fed, and from an investment standpoint, how do you play it . Vince there are two features to the dot chart. Keep going down as they appreciate the equilibrium is lower. The second part is, markets were e they always, i track below the dots. The fed is pushing against disbelief. We believe the fed has a little more to go in terms of lowering the equilibrium funds rate. But they will get there on a path that janet yellen said out, i. E. , lower for longer. What it feels like is a lot like 2005, where the fed was tightening Monetary Policy and flattening the yield curve. If you remember, that was the time of Alan Greenspans conundrum, where financial conditions were easing, even if the fed was tightening. Sounds familiar. Yvonne it certainly does. A lot of time leading up to that, this next policy decision from the fed. In the midst of that we have drama in d. C. When it comes to the perceived or potential government shutdown, the debt ceiling debate. How does the Federal Reserve respond . Vince with great difficulty. We think of that fomc meeting on december 12 and 13. It will be around the Time Congress is fighting over the debt ceiling and the continuing resolution. There is a lot of time between now and then. Lots of geopolitical events could intrude. You got to take janet yellen at her word. When she said all decisions are datadependent, well, it is a slowmoving process. This is not a contract, this is their forecast. Things turn out differently than they forecast, then they will not deliver. Betty we are waiting for the boj as well later today. Do you think this makes anything more cloudy for the boj . They are looking at it from the flipside. Dollar appreciation means the yen depreciation. What governor kuroda has had a hard time doing is generating inflation. Anything that can help him is probably welcome news. Reinhardt, chief economist, joining us live from boston. I also want to thank Kathleen Hays. Plenty more to come. This is bloomberg. Betty this is daybreak asia. I am betty liu in new york. Yvonne and i am yvonne man in hong kong. The world bank is selling insurance operations. It makes it the biggest acquisition by the Hong Kongbased in sure. Cba disclosed in august they were in discussion with third parties about the unit. They were also Betty Bloomberg has been told google is close to buying assets of a taiwanese filmmaker. Is said to be planning us planning a townhall meeting today. There will be a pending announcement. They have been exploring virtualreality businesses. Bloomberg reports that google had been in touch. Yvonne facebook is stepping up enforcement and ad targeting, with human reviewers. They will clarify their advertising policy to disallow targeting using any criteria that directly attacks a group of people. Saidheryl Sandberg Facebook never anticipated the system being used in such a way. Betty we are down to the opens in japan and south korea, counting down as well to the bank of japan and their decision and comments on the outlook. You can see nikkei futures nikkei 225 futures unchanged as well as the chicago nikkei. Watch dollaryen. Despite the idea that even though the fed is now tightening, the boj continues firmly on its stimulus path. That still is going to create a cloudy outlook for the dollaryen, for where the japanese yen heads. Although you just heard from vince reinhardt, saying depreciating yen, always going to be good for the japanese economy. Yvonne always a good thing for the boj. With this allen sheet unwind, what does it mean for yields . Will it be the boj to control . We look ahead to that decision. Also, Sallie Krawcheck joins us. Yvonne 7 30 a. M. Thursday in hong kong. I came back from europe, came back to summer. 30 minutes away from asias first major market open. Betty looks gorgeous there. 7 30 p. M. Wednesday in new york, holding onto the remnants of our summer. Markets closed slightly higher. A mixed session. We saw the markets selloff after the fed announcement. I am betty lou in new york. Yvonne i am yvonne man in hong kong. Youre watching daybreak asia. Lets get the first word news. The fed has announced the beginning of the end of an era, saying it will start to shrink its a giant Balance Sheet next month. The fomc left rates unchanged, but said policy makers still expect another hike before the end of the year. Janet yellen continues to see the economy strengthening with a healthy labor market and rising inflation, but admitted that cpi undershoot is a mystery. For quite some time, inflation has been below the committees 2 longer run objective. Inbelieve that the shortfall inflation reflects developments that are largely unrelated to broader economic conditions. Legal experts say equifax could get away with a just paying one dollar for each of the 143 Million People whose data was compromised by hackers. That is based on the money anthem paid in june for claims it did not protect customers from a hack. Faces more than 100 consumer lawsuits, but they say neither side has a slamdunk case. A snap election in japan is expected to mean a substantial delay in new can see notes casinos. Expected toas provide a bill, but the election would put that off until next summer. To 25 billion dollars in potential revenue from japanese casinos, making them one of the most lucrative opportunities in the industry in years. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. On whatlets get more we should be watching is tradin