Well. An interesting reaction to what we got out of the fed today. For more analysis, lindstedt deeper with abigail. Everyone is paying attention to the possible liquidity crunch. Going skyhigh. Not so much over the last today. Lets look at this rate coming back down as the fed did one yesterday then again today injecting liquidity into the system. Yesterday and analysts said there was not a liquidity crunch or anything to be worried about. These are the puts on the s p 500. You can to the bearish interest spiking skyhigh in october then again in december. This year pretty low as we have had stocks going higher. In august you see that it was high but more recently, look at this actually coming down as the overnight lending rates were going higher telling you that the bearish options investors are not that bearish. I wanted to take a look at dollars dynamics and the strengthening in the dollar that we saw in that announcement particularly because the fed might be more hawkish than originally appeared. Five other officials, wanted cuts today but no more through the end of the year. You are getting some Dollar Strength here and potentially no more rate cuts through 2019. I wanted to full that into the equity Market Dynamic here. The smallcap stocks do better when there is Dollar Strength. They were lower by 1. 2 relative to the s p. The smallcap stocks are trading more on the terrace the may are on dollar dynamics. Dont have the size and scope to pass on to the consumers. In my mind smallcap stocks underperforming caught my attention. I couldnt let the day go by without checking in on crude oil. There was such a ride this week so far. Crude oil is extending the decline from tuesday. This time around, it is on a quick return of saudi arabias crude production. Thats where the attention has shifted. The kingdoms damaged facilities operating at 40 of the preattack levels. The attack happened over the weekend. The facilities should retain or return the 4. 9 Million Barrels by the end of the month. Earlier i eased some after their the Defense Ministry said the attacks were unquestionably sponsored by iran and did not originate from yemen. Meanwhile, an Industry Report says the oil market remains well supplied with ample stockpiles. Thank you to everyone. It still with us is our Wells Fargo Asset Management president and our very own sarah. That came up during the fed press conference. Chairman powell was asked about the u. S. Economy and whether or not the data were getting would be enough to push the fed to cut rates or to pause. He also have a question about the differential between what is going on in the u. S. And overseas. We got good housing data out of the u. S. This morning. Had he reconcile that . You have to look at the global economy. Sector is being hurt by the strike. Housing starts are extremely strong. You have the dichotomy where on the one hand, the consumer seems to be doing well but to my earlier, you see some cracks. Powellht chairman ballasted that very well. Also indicated it has to look at the global economy. Clearly, that is slowing down. There is no question that will have an impact on the u. S. Chair powell was speaking, you are pointing to the reports and comments from analysts and economists. Was there any consensus or was it very . It was a different tone before and after the press conference. There didnt seem to be a sense of unity. Before the press conference, everyone was talking about the hawkish rate cut. As you just mentioned, jay powell was able to balance it during the press conference. He said if the economy weakens more than we are prepared to agree be aggressive. At one point you look at it of 17 are seven out saying no more cuts this year. However, jay powell is saying at the same time as we said in the past they will act appropriate to sustain the expansion if we can further they will step in. I am interested in the Corporate News we have coming out. A 40oft announced billion share buyback. Some companies are able to repatriate the cash to their investor base. From . 51their shares to . 46. Percent up on tencent after hours. I am interested from your perspective Big International companies such as microsoft, how winds arehe of the coming from the u. S. Dollar . It is spiking high today. Do you expect the dollar to remain in favor as the rest of the world starts to slow down . I have said all year its hard for me to come up with an argument that the dollar will weaken. It continues to be strong. If you look at the interestrate differentials is when the u. S. And the rest of the world, it is hard to argue that the dollar will slow down. Whats interesting is that the trade wars in my mind are contribute into the stronger ironically. The administration would like the dollar to weaken. The problem is, the more the rhetoric and the worry about trade wars the stronger the dollar. We will see what gets there. The dollar is up one quarter of a percent. Looking at other assets, particularly gold and of the a down we saw gold had day today. How did that factor into the trading mindset . We have been seeing safe haven assets pull back a little bit. You have seen that in the treasury sending years yields higher and also in the commodity market. When you think about safe haven assets like old and silver, there was felt to be a little bit more risk feeling in the market. I was listening into a webcast yesterday and he was saying he thinks that yields will be moving higher from here is because we saw the copper to gold ratio turn as well. To some i would say if you are trading, people are taking this as a signal to say maybe it looks as though the new york that are reserved will conduct an operation again tomorrow for a Third Straight day. It has done well in terms of common the stresses within the money markets. Relieving the funding pressures there but it is notable thats one of the Key Takeaways from the fed the is that they will also step in and look to cut a key rate. Why didnt we hear more from jay powell about this . It seemed odd that they had this meeting. This was all going on and the way jay powell characterized it is that they barely talked about it. He did not offer a permanent solution yet they are doing this for a third day . They are watching and learning more. Click he said they will discuss it in the intermeeting. You really have to look into the what toolsfigure out you have it your disposal and whats the right way to go about this. They say they are going to be talking about this within the next few days. They dont want to come out with a permanent Solution Market canvassing the and checking to see if other proposals might be out there. Uproar with the overnight with the overnight with market, have you seen any spillover into equities into what you do . Not so far. What is interesting is money market yields were up substantially. Shortterm Government Funds were Something Like 3. 5 overnight. Regular money markets were at 3 . It is interesting to see if people will continue to want to stay in the short end of hold cash at higher yields. So far, the equity markets seem to be complacent and remember we are not that far away. The s p is close to 3000. The high was 3027 in the summer. Steady as she goes. Thank you to our guests. Some headlines hear from apple. The vp of communications will leave the company. This is something that had been flagged as possible. He was the head of apples communications for the last five years. X yes this is a changing of the guard. Coming under stress when after 16to trade but years of the business he is going to be stepping in. He says he is taking time away from apple to spend some time with his family. Up next we will have analysis of the divisions inside the federal reserve. This is bloomberg. We are live from new york. Im caroline hyde. It is a snapshot on how u. S. Stocks close today. Staging quite a comeback. The question is would you miss . The fed cuts again. President trump ways in saying the central bank has no guts no sense no vision. Focus, ney market saudi arabia blames the wrong again saying attacks on the oilfield were unquestionably sponsored by tehran. Breaking news here on at the, their shares are moving around after hours. It is said they would do a private placement of convertible notes due in 20 36. You can see the shares down 1. 6 . They were down as much as 4 . Lets talk about the fed hawkish view. Lowering the benchmark rate for a second time this year. Policymakers remain split over the need for more easing. We are not on a preset course. We will make decisions meeting by meeting and we will try to be as transparent as we can. If the economy economy does turn down, a more extensive sequence of rate cuts could be appropriate. Its not will we expect but we would certainly follow that path if it became appropriate. I dont think we would look at using negative rates. I dont think that will be at the top of our list. If we experience another set of pressures, we have the tools to address those. To use not hesitate them. It is certainly possible we will need to resume the organic growth of the Balance Sheet earlier than we thought. Always been a possibility and it certainly is now. There will come a time when we have done enough but there may also, time when the economy worsens and we would have to cut more aggressively. If we dont know we will watch things carefully. For more lets bring in our guest. We saw today, we had two cents in both directions the first time we have seen the since 2013. From a signaling perspective, how important is it that we dont have consensus right now in terms of the direction of rates at the fed . It is important for a couple of reasons. The fed it likes to be driven by consensus and we dont have that. If you look at the dots, there is a huge number of people on that committee who didnt want to cut today and dont want to cut. They misinform as well as they inform. I think it does show the wide range of views about how much is needed. You have the people think the economy is just fine i know there are risks that spending is strong. Its 70 of the u. S. Economy lets wait to cut rates until something goes wrong. Then theres the other part which is there are lots of risks everywhere trade uncertainty is weighing on the manufacturing investments negative. Lets be preemptive and that really does seem like a pretty strong ideological break. There do seem to be fundamentally different views at the fed. Have theman powell unified view of the fed behind him . That he should take a more dovish tilde his press conference while they take a more hawkish tell tilt . Do understand the rationale of taking it meeting by meeting. When there is so much headline driven risk out there between canit and trade and change very quickly as we just saw even just a couple of weeks ago when there were room rumors about an interim deal with china, i do think you have to take it meeting by meeting and figure out where the risk is because everything changes so fast. You just dont know. Ahead, risksr catching them off guard. That is almost what happened to them last december. They locked in so early to a rate hike when they probably should not have. Then we found ourselves on doing it six or seven months later. Do you view the fed or does the market view them as being in control of rates . With what happened on monday and tuesday in the repo market and what we are seeing in the shortterm rates, the flattening of the yield curve today, what is going on . That is a very loaded question. Thats why i ask it. [laughter] i could speak to this as well quite expertly. I think the market is preceding them do they have tools maybe to bring it back in . I think thats what they tried to show today by lowering the interest on excess reserve rates by 30 basis points instead of the standard 25. I think thats why jay powell expressed he has more flexibility on the Balance Sheet and they can look to start regrowing that. I think thats where they talked about reserves and how that has impacted it here. I think they are showing more flexibility. Maybe it is about a scarcity of reserves. Lets get your expertise. Clearly a are told to keep things under control. Powell was trying to explain the difference of setting the target rate target rate. Then what they see as a very tohnical dialing of knobs try to have shortterm market rates right where they set the target. They conceptually put them apart. I dont think markets are quite so precise and separating them in their minds. By adjustment on the rate five basis points relative to the target range, thats moving in the direction but its very technical. We had repo rates trading at 10 at a time. The idea that five basis points is meaningful misses the point. This is why theyre doing these operations offering the market 75 billion. Those are being oversubscribed today. Quickly on the Balance Sheet, are we ever going back to a point of retraction of the Balance Sheet . There seems to be a sense that the contraction was almost a mistake. We are not going back to a contraction. Point where they were shrinking total assets and its been stable for a little while and a plan was to let within the Liabilities Bank reserves continue to contract until you get to the right level. Whats the right level . No one knows. The contraction again i think is clearly off the table. Initial contraction a mistake . Maybe maybe not. My thesis is held that its necessary. The reason to do it is to demonstrate to people but it was never necessary. Thank you, seth. , alix. He you guys took some pretty loaded questions. Coming up, President Trump calling for tougher sanctions as mike pompeo builds a case against tehran. Ongoingdiscuss the tensions in the middle east. This is bloomberg. Lets turn to saudi arabia. We spoke with the saudi finance minister and asked to the recent attacks have an impact on aramco numbers . We are back online. In terms of the economy and we use our reserves only for a couple of days before we are back online last night and today. Meanwhile President Trump says he wants tougher u. S. Sanctions on iran. Sanctions can we have . Be much will it runs economy brought to its knees . It is hard to have a greater impact than what we have seen. The u. S. Sanctions have severely limited irans ability to sell oil on a legal market. On there companies Tehran Stock Exchange can target. There are sections of the construction sector. There are additional sanctions you can put on Irans Central Bank that would make it very hard for them to even get humanitarian aid. This is an oil economy. I think about 80 of the economy depends on some level on oil. Those sanctions are already there. Certainly you can tighten the screws but this is going to be more of an impact on the margins at this point. X are you hearing any sort of talk about potential military action now that you have saudi arabia coming out and blaming the attacks on iran . And you have mike pompeo in the middle east now making the case for why iran is responsible for this . Secretary pompeo arrived a few hours ago. He made an interesting comment on the tarmac. He basically said that he is there to help Start Building a coalition that would begin planning a response to iran. I read that as a very cautious approach. I dont think that signals any kind of imminent military strike. President trump earlier said there was 20 of time to have some sort of a stronger response but he also raised the specter of the u. S. War in iraq. He said we went into iraq and how to that would work out for us . He was long and opponent of that conflict. Some of his thinking, this is a Campaign Based on getting the u. S. Out of the least complex conflicts. One of the things he wants to avoid is sending more troops off to a war. What are we expecting in terms of response from iran . We will see what comes out of mike pompeo stocks in saudi arabia. He goes to the uae tomorrow. Iran has the issue here has been if you publicly declare that the strikes came from iran, you have to be prepared to do something to follow up on it. That they can respond to any attack with additional attacks. Quickly the new National Security advisor, is he going to provide any sort of difference with regard to a u. S. Policy toward the middle east . He is seen as close to mike pompeo. Mike pompeo basically stands alone as the dominant figure on trumps policy. I think pompeo and trump will be determining the response. Always good to get your insight. More of our exclusive interview with the ceo of ibm. Why she thinks watching is all about trust. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. With custom gear. S us motivate our students we love how custom ink takes care of everything we need so we can focus on the kids. [spokeswoman] custom ink has hundreds of products to make you look and feel like a team. Upload your logo or start your design today at customink. Com on Mark Crumpton the first word news. Mike pompeo is in saudi arabia where he is scheduled to meet with the ground rights. His visit comes as the United States blames iran for a weekend drone attack on the heart of the saudi oil industry. Saudi arabia said the attack was unquestionably sponsored by iran. Iran denies being involved and has threatened that it will retaliate immediately if tehran is targeted in response. The House OversightCommittee Chairman and civil rights and Civil Liberties chairman have written a letter to mark esper wanting answers about 184,000 in military spending that lawmakers estimate was used at president xpense at trumps resort in scotland. The lawmakers are demanding that all invoices, contracts agreements and internal and external communications be produced by september 27. The