Transcripts For BLOOMBERG Bloomberg 20131219 : vimarsana.com

Su keenan with the equity markets in record territory as the fed moves to taper qe. Yang yang with a comb i got as thein the Senate Budget compromise passes. Those stories in a moment. First, the Federal Reserve take the first step in unwinding its unprecedented economic stimulus. At one of the final meanings of chairman ben bernanke is tenure, the fed announced it will trim its monthly bond buying starting in january. Peter cook has more on the decision and mr. Bernankes last News Conference as chairman. Let the taper begin. At their final meeting, the Federal Reserve decided to scale ,ack the Bond Buying Program convinced that the economys cumulative progress allows the central bank to ease up on its record stimulus. Chairman ben bernanke who has chosen successor janet yellen also carefully matched to that move with new language reinforcing the commitment to keep Interest Rates low for the foreseeable future. The bond buying which has swelled the Balance Sheet will be reduced to 75 billion a month starting in january from the current 85 billion. Defended the decision in what was likely to be his final News Conference as chairman. Our modest reduction reflects the committees believes that progress towards this economic objective will be sustained. With the incoming data broadly supporting the committees outlook for employment and inflation, we will like to reduce the pace of purchases in further measured steps at future meetings. The chairman said bond buying could also increase if the economy falters. The fed went further to make clear that tapering is not the start of tightening. The fed funds rate will likely stay low well past the time that the on implement rate declines below 6. 5 . We are certainly not giving up. We intend to maintain a highly accommodative policy. Nothing that we did today was intended to reduce accommodation. We are still buying assets at a high rate and increasing our Balance Sheet and holding onto those assets. Our guide us today, we strengthen our guidance to make here that we expect to keep rates low. President fed dissented saying it was premature to scale back stimulus but bernanke says yellen still awaiting confirmation as his successor fully supports the policy changes sending a further message to markets that there will be no surprises when she takes over in february. Back to you. Stay with us for comprehensive analysis of the fed move. Bank of tokyo mitsubishi chief financial economist chris repke will be here and later at 7 40, we bring in the former chairman of the fdic. He is currently chairman of fifth word bancorp. Let us show you have a equity markets finished this session. Rose dramatically, sending benchmark indexes to alltime highs. This after the fed said it will reduce the pace of its monthly bond purchases. Governors also expressed confidence of the labor market recovery. Lets look at the numbers. The s p 500 was up 29 points. The Dow Jones Industrial average up 292 points. Up 46sdaq composite was points, 1. 1 . Story behind the the numbers. Su keenan is standing by in the newsroom with those details. Good evening, mark. Stocks surged to a record as the fed starts to taper and one strategist likes this small test of a paper which suggests the fed will be cautious Going Forward. Among the stocks in the spotlight, the theater chains first day of training trading. For the plunged. Fedex which missed abstinence that gave a bullish fullyear outlook. As shares of the u. S. Movie theater chain controlled by chinas second richest man rose five percent. The ceo was on hand at the New York Stock Exchange to tout the importance of movie theaters. Day, the end of the inflation in ticket prices is less than the rate of inflation over any period of time you want to look at. We continue to be pretty good Value Proposition for couples and families to come out. The idea is delivering value. Some of the experiences are more expensive to deliver so they will be higherpriced. Some are not. We will moderate according to the experience and the supply and demand in every one of the markets. Such as citigroup and bank of america and Dunkin Brands whose ceo sees big expansion ahead. I used to work at blockbuster and papa johns. We knew everything about every customer it goes because you had to either rent a video or deliver a pizza. You had their name and address and all that. This industry has never had to do that. Every consumer was just another person. We have got to get beyond that. We are the leaders in that field. The company says it sees 15,000 u. S. Stores over the next two decades. Su keenan, thank you. In an effort to show more transparency, the white house released the full report scrutinizing National Security agencies spying programs. This comes after president obama met with top tech executives. They are pushing for limits to surveillance programs. Phil mattingly is following the story. Two days after the obama administrations intelligence collection programs were deemed likely unconstitutional by a federal judge, president obama decided to release a critical outside review of u. S. Intelligence policy. The five members in a more than 300 page report recommended the administration and Congress Place new limits on the surveillance of u. S. Citizens including ending the government storage of metadata like the millions of u. S. Phone numbers collected each year. The panel also proposed new limits on surveillance of foreign leaders requiring the white house to weigh the cost of those operations before giving them the green light. Note, thertant to president will not necessarily implement each of the 46 recommendations from the task force. Over the next avril weeks, we will be revealing the report and its 46 recommendations as we consider the path forward including sorting through which recommendations we will implement, which might require further study and which we will choose not to pursue. The reports release comes a day after the president held a threehour meeting with technology and telecom executives. It was described as contentious i people familiar. The report recommends the book bulkction both collection should continue but it be stored in private hands instead of government databases. For technology firms, the disclosures have unified and industry that is facing angry shareholders and foreign governments. Potential billions in losses because of their compelled involvement in these programs. The report was supposed to be released in january along with the president s decisions. White house officials who met with the review panel this morning put it out early after what they said was inaccurate reporting on its contents. White House Press Secretary jay carney said it was reasonable to assume that president obama would take a report on his two week holiday vacation in hawaii. Those decisions are expected to be finalized and announced sometime next month. Back to you, mark. Coming up, the federal toerve says it is time taper, taking the first step toward unwinding the stimulus that chairman ben bernanke he put in place. Our next guest says this small step for the fed is a giant leap for the economy. The bank of tokyo mitsubishis joins me when bottom line continues in a moment. The Federal Reserve is repairing its exit strategy. In the final of his eightyear tenure, and then bernanke ben is tapering. Chiefrupkey is the financial economist at bank of tokyo mitsubishi. Good to see you again. You were not surprised by todays fed action. In a note this afternoon, you wrote the following, their policy was supposed to be contingent on the economy after all. It is a small step. Should the fed have done more . That is debatable. Some of the consensus numbers that were coming up from the dealers were that they would cut 15 the first time. 85 down to 70. It is within that. The way they talk about it, they are going to do additional cut back in the future. What, sounds like 10 billion every meeting . That would mean seven or eight meetings to completely unwind the amount. A dissenter said curtailing bond purchases was premature until incoming data more clearly indicated that Economic Growth is likely to be sustained of of its potential rate. The growth has been going on for a few months now. That has been going on since the end of summer and through the fall. We are halfway through the winter. Or halfway through the beginning of what is hopefully not going to be a bad winter. Is the data enough . Are you receiving enough think this that you is sustainable . Wax that is the difference between us and the markets and the fed researchers. We look for trends. The Unemployment Rate has been falling 0. 7 or 0. 8 every year for three years. That is a trend. It is not going to stop. They pull out the reason to save maybe it is going to stop here. We have had ready slow growth, 2 . Yet the Unemployment Rate continues to fall. That tells you that growth is above trend right now. Is enough. We are putting people back to work. I dont understand the problem. Chairman bernanke said, nothing that we did today was intended to reduce accommodation. We are committed to doing what is necessary to getting inflation back on target. That target, 2 . What did you make of his comments . Specter of inflation looming on the horizon . I am not a big buyer of that idea. The output gap, the fact that gdp is not made up for lost lost during the recession, that is supposed to be putting downward pressure on prices. I do not view the 1. 1 core inflation rate for their pc indicator as a sign of economic weakness. I think they are concerned about some sort of japan deflation scenario. I think they are way off base. Cpi is running 1. 7. It is much faster. So much for the market having a negative reaction. All of the major indexes were up. Dow jones was up over 290 points today. Why did the market embraced the feds action. I am going to tell you no, i am not really sure. It was quite interesting. Without the minute they do qe the stark market was going to tank. I think one of the things they thought about was, it is only 10 billion. They are still doing 75 billion per month. The fed said, we may not raise Interest Rates when the on implement rate gets to 6. 5 . It could be a much longer period before we raise rates. Maybe that was comforting. Treasury markets took notice. Onyear influences rates everything from mortgages to corporate debt. What is your take on the treasury market off reaction . What does this move mean for Interest Rates Going Forward . World, myself included seems to have the 10 year treasury yield it didnt do much after the fed announcement. It went up a little in advance of it. It is much closed five basis points higher. From 2. 80, the whole world sees it going to 3. 5 . I am in that camp at the moment. The feds Balance Sheet, almost 4 trillion. It swelled as the chairman tried to put americans back to work. They Unemployment Rate still isnt below 7 . That loweringned the Balance Sheet could have some sort of volatile effect for the markets . The only danger is if there is the exit strategy they exit too quickly. If they take that Balance Sheet and instead of buying 75 billion per month, they start selling 75 billion per month into the market to wind down there Balance Sheet. That could make yields overshoot. I dont think they are going to do that. We are getting headlines from moodys saying that the feds easing could lead to higher Interest Rates globally. Higher Interest Rate globally interesting is an one. The whole world seems to move together. I would go back again and say 10 year treasuries going up maybe 6070 basis points next year, that is going to push out yields around the world. We have about a minute left. Even with todays decision, the ats qe purchases are still 75 billion per month. Does that concern you . There is nothing really worrisome there. A lot of people we talked to, they want to know, when is my savings rate going to go up . They put out some forecasts on that today. The fed said that the end of 2015, 0. 75 on the shortterm Interest Rate. It is 0. 25 now. 2016, it will be at 1. 75 . If youre a saver, look out. It is coming. Her rates at the con yes end of 2016. Chris rupkey joining us here in the studio. Always good to see you. Ining up, a threeyear boom corn and cropland prices has left American Farmers prospering. Could that boom turn into a bus . That story when bottom line continues in a moment. Record high corn prices in recent years led farmers to buy up more land to produce a record corn crop. Almost 14 billion bushels of corn in 2013. Is this prosperity changing for American Farmers . Alan baerga joins us now for more. Have we seenrends in crop prices and how does that affect land values . What you have seen is that continual decline in corn prices, they are about half what they were at the record and of the drought of 2012. With that, you see some of this boom in land prices. We have been seeing it for decades now, starting to come off a little bit now. Youre seeing commodities driving what the land value is worth. As crops are getting bigger and demand isnt keeping pace, you are starting to see a little bit of an easing of what has been a crop boom for several years. How have high land values benefited farmers . How would a decline affect them . Anything that helped your paper value is good for a farmer. A good return on your crop allows you to get your john deere tractor, your monsanto seeds, your dupont chemicals. It helps you invest in your operation. That is very good for the companies and very good for the farmers. Now that you are seeing the prices come off, it is a pullback from that. Eased away a little bit this year. Farmers, are they overleveraged at these high values . Could we see returns of the foreclosures that happened in the 1980s . You hear discussion of that sort of thing. What you saw in the 1980s, you saw several years of booming Commodity Prices and then you had a bust. You had several years of land prices going down. Then there was a rally. This time around, debt asset ratios are much better than they were in the 1980s. You dont have as much over leveraging. You have farmers who are a bit older and have more equity into their land. People are not expecting that sort of crash. Hasntare a farmer who had as much profitability, maybe are a little bit more in the margins, you have got to be worrying as these Commodity Prices come down. How likely is it decline . You would say that these foreclosures, these failures that you saw 30 years ago might not be happening. The prices though are going to be coming down. Especially if you have another good crop next year. You look at global commodities, brazil is having very good crops. The u. S. Is having very good crops as well. That leads to lower the prices, lower demand. You aresomething watching closely. What about china . What about their role on this . Where there was word last week that china might reject some shipments of u. S. Corn that contain a genetically modified variety. That is in the news again. The u. S. Does a lot to reassure its trading partners like china that there isnt a problem with their crops. China in general has not been the big buyer that is driving demand the way it has the last few years. The u. S. And Chinese Markets are very connected. Anything that happened in china is of concern. Something you and i have talked about a lot, the farm bill, where do we stand on that on capitol hill eston mark capitol hill . They say they are very close to a deal. They are just getting some scores back from the congressional budget office. It is looking like an announcement may be at the beginning of january. Hopefully getting this three year process to fruition. What are your people on the hill telling you . What are you hearing . Is there any chance of a deal . The chances do seem high that there will be a deal within the conference committee. The question is what happens and when it goes to the floor of the house and senate. The house rejected a version of the farm bill last july. The food stamp cuts, there is going to be some sort of rejection reduction. That could lead to resistance in the house of representatives. There is question about the shape of farm subsidies that could be threading the eye of the needle. It looks like leadership will be behind it. Maybe there is some hope for some bipartisan agreement in 2014. Thank you. At the top look stories in asia including the latest on a potential deal between apple and chinas largest mobile phone company. Bottom line continues in a moment. Back to the second halfhour of bottom line. I am Mark Crumpton. Thanks for staying with us. The Federal Reserve decided to reduce its monthly stimulus for the u. S. Economy because the job market has shown steady improvement. The fed will trim its 85 billion in monthly bond purchases by 10 billion starting in january. The fed said it could further reduce the purchases next year if improvement continues. The shift could lead to higher longterm borrowing rates for individuals and businesses. Lets check where the markets finished today as we hit the bottom of the hour. Record day on wall street. Snp up 1. 6 at 1810. Dow jones industrial average falls 1. 8 . The nasdaq composite index of over 1 at 4070. Lets check the top stories we are following for you. Delta Airlines Says it will not allow inflight voice calls throwing the weight of one of the industrys biggest against lifting a ban on in air phone conversations. The federal Communications Commission voted 32 on december 12 to seek Senate Budget<\/a> compromise passes. Those stories in a moment. First, the Federal Reserve<\/a> take the first step in unwinding its unprecedented economic stimulus. At one of the final meanings of chairman ben bernanke is tenure, the fed announced it will trim its monthly bond buying starting in january. Peter cook has more on the decision and mr. Bernankes last News Conference<\/a> as chairman. Let the taper begin. At their final meeting, the Federal Reserve<\/a> decided to scale ,ack the Bond Buying Program<\/a> convinced that the economys cumulative progress allows the central bank to ease up on its record stimulus. Chairman ben bernanke who has chosen successor janet yellen also carefully matched to that move with new language reinforcing the commitment to keep Interest Rates<\/a> low for the foreseeable future. The bond buying which has swelled the Balance Sheet<\/a> will be reduced to 75 billion a month starting in january from the current 85 billion. Defended the decision in what was likely to be his final News Conference<\/a> as chairman. Our modest reduction reflects the committees believes that progress towards this economic objective will be sustained. With the incoming data broadly supporting the committees outlook for employment and inflation, we will like to reduce the pace of purchases in further measured steps at future meetings. The chairman said bond buying could also increase if the economy falters. The fed went further to make clear that tapering is not the start of tightening. The fed funds rate will likely stay low well past the time that the on implement rate declines below 6. 5 . We are certainly not giving up. We intend to maintain a highly accommodative policy. Nothing that we did today was intended to reduce accommodation. We are still buying assets at a high rate and increasing our Balance Sheet<\/a> and holding onto those assets. Our guide us today, we strengthen our guidance to make here that we expect to keep rates low. President fed dissented saying it was premature to scale back stimulus but bernanke says yellen still awaiting confirmation as his successor fully supports the policy changes sending a further message to markets that there will be no surprises when she takes over in february. Back to you. Stay with us for comprehensive analysis of the fed move. Bank of tokyo mitsubishi chief financial economist chris repke will be here and later at 7 40, we bring in the former chairman of the fdic. He is currently chairman of fifth word bancorp. Let us show you have a equity markets finished this session. Rose dramatically, sending benchmark indexes to alltime highs. This after the fed said it will reduce the pace of its monthly bond purchases. Governors also expressed confidence of the labor market recovery. Lets look at the numbers. The s p 500 was up 29 points. The Dow Jones Industrial<\/a> average up 292 points. Up 46sdaq composite was points, 1. 1 . Story behind the the numbers. Su keenan is standing by in the newsroom with those details. Good evening, mark. Stocks surged to a record as the fed starts to taper and one strategist likes this small test of a paper which suggests the fed will be cautious Going Forward<\/a>. Among the stocks in the spotlight, the theater chains first day of training trading. For the plunged. Fedex which missed abstinence that gave a bullish fullyear outlook. As shares of the u. S. Movie theater chain controlled by chinas second richest man rose five percent. The ceo was on hand at the New York Stock Exchange<\/a> to tout the importance of movie theaters. Day, the end of the inflation in ticket prices is less than the rate of inflation over any period of time you want to look at. We continue to be pretty good Value Proposition<\/a> for couples and families to come out. The idea is delivering value. Some of the experiences are more expensive to deliver so they will be higherpriced. Some are not. We will moderate according to the experience and the supply and demand in every one of the markets. Such as citigroup and bank of america and Dunkin Brands<\/a> whose ceo sees big expansion ahead. I used to work at blockbuster and papa johns. We knew everything about every customer it goes because you had to either rent a video or deliver a pizza. You had their name and address and all that. This industry has never had to do that. Every consumer was just another person. We have got to get beyond that. We are the leaders in that field. The company says it sees 15,000 u. S. Stores over the next two decades. Su keenan, thank you. In an effort to show more transparency, the white house released the full report scrutinizing National Security<\/a> agencies spying programs. This comes after president obama met with top tech executives. They are pushing for limits to surveillance programs. Phil mattingly is following the story. Two days after the obama administrations intelligence collection programs were deemed likely unconstitutional by a federal judge, president obama decided to release a critical outside review of u. S. Intelligence policy. The five members in a more than 300 page report recommended the administration and Congress Place<\/a> new limits on the surveillance of u. S. Citizens including ending the government storage of metadata like the millions of u. S. Phone numbers collected each year. The panel also proposed new limits on surveillance of foreign leaders requiring the white house to weigh the cost of those operations before giving them the green light. Note, thertant to president will not necessarily implement each of the 46 recommendations from the task force. Over the next avril weeks, we will be revealing the report and its 46 recommendations as we consider the path forward including sorting through which recommendations we will implement, which might require further study and which we will choose not to pursue. The reports release comes a day after the president held a threehour meeting with technology and telecom executives. It was described as contentious i people familiar. The report recommends the book bulkction both collection should continue but it be stored in private hands instead of government databases. For technology firms, the disclosures have unified and industry that is facing angry shareholders and foreign governments. Potential billions in losses because of their compelled involvement in these programs. The report was supposed to be released in january along with the president s decisions. White house officials who met with the review panel this morning put it out early after what they said was inaccurate reporting on its contents. White House Press Secretary<\/a> jay carney said it was reasonable to assume that president obama would take a report on his two week holiday vacation in hawaii. Those decisions are expected to be finalized and announced sometime next month. Back to you, mark. Coming up, the federal toerve says it is time taper, taking the first step toward unwinding the stimulus that chairman ben bernanke he put in place. Our next guest says this small step for the fed is a giant leap for the economy. The bank of tokyo mitsubishis joins me when bottom line continues in a moment. The Federal Reserve<\/a> is repairing its exit strategy. In the final of his eightyear tenure, and then bernanke ben is tapering. Chiefrupkey is the financial economist at bank of tokyo mitsubishi. Good to see you again. You were not surprised by todays fed action. In a note this afternoon, you wrote the following, their policy was supposed to be contingent on the economy after all. It is a small step. Should the fed have done more . That is debatable. Some of the consensus numbers that were coming up from the dealers were that they would cut 15 the first time. 85 down to 70. It is within that. The way they talk about it, they are going to do additional cut back in the future. What, sounds like 10 billion every meeting . That would mean seven or eight meetings to completely unwind the amount. A dissenter said curtailing bond purchases was premature until incoming data more clearly indicated that Economic Growth<\/a> is likely to be sustained of of its potential rate. The growth has been going on for a few months now. That has been going on since the end of summer and through the fall. We are halfway through the winter. Or halfway through the beginning of what is hopefully not going to be a bad winter. Is the data enough . Are you receiving enough think this that you is sustainable . Wax that is the difference between us and the markets and the fed researchers. We look for trends. The Unemployment Rate<\/a> has been falling 0. 7 or 0. 8 every year for three years. That is a trend. It is not going to stop. They pull out the reason to save maybe it is going to stop here. We have had ready slow growth, 2 . Yet the Unemployment Rate<\/a> continues to fall. That tells you that growth is above trend right now. Is enough. We are putting people back to work. I dont understand the problem. Chairman bernanke said, nothing that we did today was intended to reduce accommodation. We are committed to doing what is necessary to getting inflation back on target. That target, 2 . What did you make of his comments . Specter of inflation looming on the horizon . I am not a big buyer of that idea. The output gap, the fact that gdp is not made up for lost lost during the recession, that is supposed to be putting downward pressure on prices. I do not view the 1. 1 core inflation rate for their pc indicator as a sign of economic weakness. I think they are concerned about some sort of japan deflation scenario. I think they are way off base. Cpi is running 1. 7. It is much faster. So much for the market having a negative reaction. All of the major indexes were up. Dow jones was up over 290 points today. Why did the market embraced the feds action. I am going to tell you no, i am not really sure. It was quite interesting. Without the minute they do qe the stark market was going to tank. I think one of the things they thought about was, it is only 10 billion. They are still doing 75 billion per month. The fed said, we may not raise Interest Rates<\/a> when the on implement rate gets to 6. 5 . It could be a much longer period before we raise rates. Maybe that was comforting. Treasury markets took notice. Onyear influences rates everything from mortgages to corporate debt. What is your take on the treasury market off reaction . What does this move mean for Interest Rates<\/a> Going Forward<\/a> . World, myself included seems to have the 10 year treasury yield it didnt do much after the fed announcement. It went up a little in advance of it. It is much closed five basis points higher. From 2. 80, the whole world sees it going to 3. 5 . I am in that camp at the moment. The feds Balance Sheet<\/a>, almost 4 trillion. It swelled as the chairman tried to put americans back to work. They Unemployment Rate<\/a> still isnt below 7 . That loweringned the Balance Sheet<\/a> could have some sort of volatile effect for the markets . The only danger is if there is the exit strategy they exit too quickly. If they take that Balance Sheet<\/a> and instead of buying 75 billion per month, they start selling 75 billion per month into the market to wind down there Balance Sheet<\/a>. That could make yields overshoot. I dont think they are going to do that. We are getting headlines from moodys saying that the feds easing could lead to higher Interest Rates<\/a> globally. Higher Interest Rate<\/a> globally interesting is an one. The whole world seems to move together. I would go back again and say 10 year treasuries going up maybe 6070 basis points next year, that is going to push out yields around the world. We have about a minute left. Even with todays decision, the ats qe purchases are still 75 billion per month. Does that concern you . There is nothing really worrisome there. A lot of people we talked to, they want to know, when is my savings rate going to go up . They put out some forecasts on that today. The fed said that the end of 2015, 0. 75 on the shortterm Interest Rate<\/a>. It is 0. 25 now. 2016, it will be at 1. 75 . If youre a saver, look out. It is coming. Her rates at the con yes end of 2016. Chris rupkey joining us here in the studio. Always good to see you. Ining up, a threeyear boom corn and cropland prices has left American Farmers<\/a> prospering. Could that boom turn into a bus . That story when bottom line continues in a moment. Record high corn prices in recent years led farmers to buy up more land to produce a record corn crop. Almost 14 billion bushels of corn in 2013. Is this prosperity changing for American Farmers<\/a> . Alan baerga joins us now for more. Have we seenrends in crop prices and how does that affect land values . What you have seen is that continual decline in corn prices, they are about half what they were at the record and of the drought of 2012. With that, you see some of this boom in land prices. We have been seeing it for decades now, starting to come off a little bit now. Youre seeing commodities driving what the land value is worth. As crops are getting bigger and demand isnt keeping pace, you are starting to see a little bit of an easing of what has been a crop boom for several years. How have high land values benefited farmers . How would a decline affect them . Anything that helped your paper value is good for a farmer. A good return on your crop allows you to get your john deere tractor, your monsanto seeds, your dupont chemicals. It helps you invest in your operation. That is very good for the companies and very good for the farmers. Now that you are seeing the prices come off, it is a pullback from that. Eased away a little bit this year. Farmers, are they overleveraged at these high values . Could we see returns of the foreclosures that happened in the 1980s . You hear discussion of that sort of thing. What you saw in the 1980s, you saw several years of booming Commodity Prices<\/a> and then you had a bust. You had several years of land prices going down. Then there was a rally. This time around, debt asset ratios are much better than they were in the 1980s. You dont have as much over leveraging. You have farmers who are a bit older and have more equity into their land. People are not expecting that sort of crash. Hasntare a farmer who had as much profitability, maybe are a little bit more in the margins, you have got to be worrying as these Commodity Prices<\/a> come down. How likely is it decline . You would say that these foreclosures, these failures that you saw 30 years ago might not be happening. The prices though are going to be coming down. Especially if you have another good crop next year. You look at global commodities, brazil is having very good crops. The u. S. Is having very good crops as well. That leads to lower the prices, lower demand. You aresomething watching closely. What about china . What about their role on this . Where there was word last week that china might reject some shipments of u. S. Corn that contain a genetically modified variety. That is in the news again. The u. S. Does a lot to reassure its trading partners like china that there isnt a problem with their crops. China in general has not been the big buyer that is driving demand the way it has the last few years. The u. S. And Chinese Markets<\/a> are very connected. Anything that happened in china is of concern. Something you and i have talked about a lot, the farm bill, where do we stand on that on capitol hill eston mark capitol hill . They say they are very close to a deal. They are just getting some scores back from the congressional budget office. It is looking like an announcement may be at the beginning of january. Hopefully getting this three year process to fruition. What are your people on the hill telling you . What are you hearing . Is there any chance of a deal . The chances do seem high that there will be a deal within the conference committee. The question is what happens and when it goes to the floor of the house and senate. The house rejected a version of the farm bill last july. The food stamp cuts, there is going to be some sort of rejection reduction. That could lead to resistance in the house of representatives. There is question about the shape of farm subsidies that could be threading the eye of the needle. It looks like leadership will be behind it. Maybe there is some hope for some bipartisan agreement in 2014. Thank you. At the top look stories in asia including the latest on a potential deal between apple and chinas largest mobile phone company. Bottom line continues in a moment. Back to the second halfhour of bottom line. I am Mark Crumpton<\/a>. Thanks for staying with us. The Federal Reserve<\/a> decided to reduce its monthly stimulus for the u. S. Economy because the job market has shown steady improvement. The fed will trim its 85 billion in monthly bond purchases by 10 billion starting in january. The fed said it could further reduce the purchases next year if improvement continues. The shift could lead to higher longterm borrowing rates for individuals and businesses. Lets check where the markets finished today as we hit the bottom of the hour. Record day on wall street. Snp up 1. 6 at 1810. Dow jones industrial average falls 1. 8 . The nasdaq composite index of over 1 at 4070. Lets check the top stories we are following for you. Delta Airlines Says<\/a> it will not allow inflight voice calls throwing the weight of one of the industrys biggest against lifting a ban on in air phone conversations. The federal Communications Commission<\/a> voted 32 on december 12 to seek Public Comment<\/a> on ending the restriction that has been in place since the 1990s. Another vote would be needed to end the band. President obama has chosen openly gay athlete Billie Jean King<\/a> as one of the u. S. Representatives at the olympic ceremonies in sochi, russia. Russia has come under International Pressure<\/a> for its antigay laws. For the first time in more than a decade, neither the president , Vice President<\/a> nor first lady of the United States<\/a> will attend the ceremony. Lottery Officials Say<\/a> a georgia woman has won the two winning the 636 million Mega Millions<\/a> jackpot. The second largest in u. S. History. She is identified as iraq very rry. Ra ke she chose the numbers herself using birthdays and her lucky number. She opted to take the cash payout of 123 million. A gift shop in san jose, california sold the other winning ticket. Not estimate. That is a look not to me. That is a look at some of the top stories in this hour. We are getting word the president obama will name max baucus the democrat from montana at the next u. S. Ambassador to china. That is according to a person with knowledge of the matter. He is 72 years old. He announced in april that he would not seek reelection to the senate in 2014. The nomination is subject to senate confirmation. Replace gary locke as ambassador. Lets look at the top stories in asia. For anrs are waiting official announcement of a deal between apple and china mobile. They are still waiting. Mia saini joins me from hong kong with details. That is right, they are still waiting. Recall that back in 2011, china mobile told reporters that once it embarked on setting up its own four g infrastructure, they would be able to sign a deal with apple. Currently, apple doesnt make a handset that is compatible with china mobiles three g debt arc. Three g network. We do have reports from wall street reporting that the deal ,ould be announced last night but bloomberg reporters are saying that no deal was going to be into their. They dont expect a deal anytime in the next few weeks. What they do agree upon is that it is widely agreed that a deal is imminent. The format of the announcement, that is what is really unclear. As of the most recent conference, the china mobile ceo says they plan to sell as many as 220 million smartphones next year. That is compared to 155 million this year. You can imagine that that could be good for both sides. China mobile is the worlds biggest phone company. It could make both of them very successful because, just to give you a sense, china mobile has 700 80 million subscribers. 760 million subscribers. Bitcoin, the digital currency, it took a big hit today partially on news out of china. What happened . Question used to be, how high can they go . Now, bitcoin watchers are wondering how low it can go. Prices plunged against the u. S. Dollar and yuan. You have scandinavian authorities saying they are going to impose regulations as well. Really it is the china news, bitcoin falling as much as 49 . They say that they are no longer going to offer deposit services. What we will see is how low it can really go. Mia saini joining us from hong kong, thank you. Coming up, the fed has kick started the stimulus taper. How will the move impact Financial Institutions<\/a> . Former fdicto chairman bill isaac when we return. In our nation capital, a rare sign of bipartisanship. The Senate Approved<\/a> of first u. S. Budget in four years. Yang yang is in washington tonight with more on that story. Good evening, mark. The first budget in four years and the first budget from a divided congress in 27 years. The senate needed only a simple majority of 51 votes. 6436 and it is on its way to president obamas desk where he says he will sign it into law. The budget sets annual federal spending at 1 trillion for two 63 billion in sequester relief and reduces the deficit by some 20 billion all without touching the bigticket items of taxes and entitlement reform. Negotiated by paul ryan and ay, itmerry patty murr effectively takes the threat of another Government Shutdown<\/a> off the table. Reminded hery colleagues it is better than the status quo. This bill isnt exactly what i would have written on my own. I am pretty sure it is not what chairman ryan would have written on his own. It is what the American People<\/a> have called for. A compromise. That means neither side got everything they wanted. Both sides had to give a bit. Having passed both houses of congress, the bill now heads to the president s desk. Even after signed into law, we wont be totally clear of a Government Shutdown<\/a> just yet. This only sets the budget. Lawmakers still need to spell out exactly how that money will be spent. The deadline for that is january 15. No fireworks expected there. Republicans are setting up a fight over the debt ceiling. What is the gop pining to ask for an exchange for an increase . Good question. They havent decided yet. Republicans know they will be demanding something in exchange for raising the debt ceiling but some of the options they are considering are a delay or repeal of the individual mandate in the healthcare law. Maybe energy or tax code changes. The game plan is still a work in progress at this point. They will set their plans at the annual republican policy retreat in late january which means they wont be leaving much time for negotiating the debt ceiling suspension expires on february 7. Yang yang joining us from washington, thanks. As the fed decides to do her, we still await a finished basel plan for banks. According to two people briefed on discussions, the Federal Reserve<\/a> has decided to delay imposing limits on leverage at eight of the biggest u. S. Financial institutions until a global agreement is completed. Bill isaac is the former chairman of the fdic, currently bancorp. Of fifth third before we get to the banks, your reaction to the feds decision to taper. Is the improvement we have seen in the job market enough to justify the feds actions . Are the gains consistent enough . I have been opposed to qe3. I think the fed did the right thing in its easing of the crisis. Qe has really hurt growth andse weaken the job recovery. I am glad they are beating in beginning to taper. The fed also trying to and strengthened its commitment to Interest Rate<\/a>. That is the feds threshold. What is going to mean for americans on main street . I think it hurts. It makes it difficult for banks to lend and for markets to operate as they should. It is really hurting older people. They are near or in retirement. They are being denied a lot of income. It is really unfair for people who have worked all their lives to save and now they cant get a return on their money. I think it is frightening for the fed to say the economy is so weak we are going to keep Interest Rates<\/a> at zero. It scares people about making investments and says, i dont need to go out and borrow now to make investments. The rates are going to be low for another two or three years. It is really disrupting the markets and forcing people to go out and take risks they shouldnt be taking. Lets talk about the banks. We are hearing that the fed will delay that i leverage rule until the Basel Committee<\/a> finishes its own requirements. Shouldnt the fed take the lead here . I think the three agencies that control the currency have an agreement on what the leverage ratio should be. They all adopted it. There is no excuse. There is no excuse for delaying the increased leverage ratio. We shouldnt be waiting for the rest of the world to act. We should be leading on this. We are the largest economy in the world. We have the strongest banks and we really ought to act and let europe and other nations follow our lead on this. I dont think we ought to be waiting for them. They are not going to do a 6 leverage ratio in the rest of the world. Theyre going to do a 3 . We are still going to have to act without them. Lets get it done. Industries not in favor of this . Big banks are not. All the other banks are there. The regional banks are already where they need to be. There is no excuse whatsoever to delay implementing this rule. Lets talk about some of those ratios. They issued a preliminary rule for eighthigher caps of the largest american banks as you just mentioned. The asset ratio for Living Companies<\/a> that would be at 5 . For banking company, the ratio would be at 6 . Basels overall averages 3 . Our the u. S. Guidelines too high . No. The rest of the world needs to get up where we are. We have been playing this game for the last 20 years. The u. S. Banks need to be brought down to the level on capital that the rest of the world operates at i have been saying for 20 years, that is the wrong way. The u. S. Needs to stay where it is entering bring the rest of the world up. What do these regulations mean for the banks ability to take risks . There are two measures that are relevant here. One is the riskbased capital measure were you measure the risk and the assets and assigned capital ratings to them. In addition, you need a leverage ratio. A minimum level of capital, 5 for the Holding Company<\/a> and 6 for the banks. You need a minimum level of capital irrespective of risk ratings. That is what we have needed. U. S. Has also had a rebel always have a leverage ratio. We are bringing the world toward us. We cant get distracted at this point. We have about 30 seconds left. How do these rules affect the competition between u. S. Banks and International Banks<\/a> . Does it affect the Playing Field<\/a> at all . The big banks would tell you it does. I dont believe it seriously does. The banks that are ultimately going to prevail or the strongest banks, the ones of have the best Balance Sheet<\/a>. Those banks need to be in the u. S. Bill isaac is the former chairman of the fdic. Joining us in the studio. Always good to see you. Happy holidays. Still ahead, how safe is your car . The Insurance Institute<\/a> for Highway Safety<\/a> has been butting models to the test. Those details when bottom line continues in just a moment. Welcome back. Ons is bottom line bloomberg television, streaming on your tablet, phone and bloomberg. Com. The Auto Insurance<\/a> companies released their list of the safest cars on thursday. This year, they are including a new test, how well cars due at avoiding crashes in the first place. Megan hughes went to the industrys testing facility at rutgers bill virginia to find out. At the Insurance Institute<\/a> for Highway Safety<\/a> in virginia, engineers ready a mazda. Thanks to this anxious mazda execs wait. Ready, set, crash. The dummy today did well. All of the injury measures were good. The mazda and all of the cars in the intro to institutes graveyard are competing to be one of this years top safety picks. Can i look at a car like this and say, that is probably not a sop top safety pick . You can tell if you know what youre looking for. You can see where the driver would be sitting is intact. If we look at that one across the way, see how the wheel is back where your legs would normally be this is not good. Hashis year, the institute added a new test. It trades in dummies for people. At a track where they are road testing crash avoidance features. Sensors that can gather information from the environment were the driver of impending collision. Should i apply the brakes because i am about to crash . We put subarus automatic breaks to the test. Engineers record speed and input to the pedals. Were approaching the balloon car. The warning. Brake . You then it is my turn. Has that little car ever been dinged . All the time. 25 miles per hour. Straight into the back of the car. This is very counterintuitive. The brakes kick in just in time. Ok, didnt hit it. The subaru past. Engineers are also testing subaru and volvo detection and avoiding of a moving pedestrian. This robot will soon carry a balloon car to mimic traffic. We have robots in our blind spots. Right now only limited models are equipped for the technology. It doesnt come standard. The institute estimates the technology could prevent or lessen the impact of a third of deadly crashes. That is bang for your buck. Megan hughes, bloomberg. In a related development, megan will be going to fix the International Space<\/a> station. Just kidding. Still ahead, enjoy chocolate without eating it. How you ask . Hotshots next. That is a look at the futures markets. Bloomberg brings you a market check at 26 and 56 after each hour of the trading day. Lets get you the bottom line on what is happening thursday. We have yang yang and su keenan with it review. Lets start with tomorrows weekly jobless claims report. ,t 8 30 a. M. Washington time the Labor Department<\/a> will release a new tally of newly unemployed. Surveys by bloomberg expect that number to be 335,000. At 10 00 a. M. , former Federal Reserve<\/a> chairman paul volcker will be speaking at the world bank. With the budget bill out of the way, the senate is planning a vote on the 625 billion Defense Authorization<\/a> bill. The measure is expected to pass that would require the pentagon to take steps to address actual assault template limits and place limits on the transfer of guantanamo detainees. Welse can we expect . Have a lot of earnings out tomorrow. Among them, nike, the unattributed undisputed leader in the athletic footwear market. The earnings will be out after the bell. Ahead of that is, we take a look at whether the company can continue its impressive run, if youll pardon the pun. It is poised to end the year as one of the top performers. Can ups save christmas . Day is the biggest time at the Worlds Largest<\/a> shipping company. We take you inside the package shipper to look at their biggest plans for peak day to ensure that your Holiday Gifts<\/a> get where they are going on time. Su keenan and yang yang, thank you both. It is now time for hotshots. A look at some of the most compelling images of the day. In afghanistan, a Circus School<\/a> and joyht back laughter to children in the wartorn country. Tens of thousands of kids have attended the school which was set up by a traveling Educational Group<\/a> called mobile mini circus for children. The school was established in 2002. It has grown into a countrywide program focusing on teaching children to become leaders. In mexico city, hundreds of clowns sang, juggled and joked their way to the basilica of our lady of what a lupe in annual pilgrimage. They asked her for blessings and protection for the upcoming year. Holidays canw, the be stressful. One spot has developed a new way to treat yourself. Instead of reaching for the lavender oil, how about dark chocolate . Allows you toa enjoy all the benefits of chocolate without the calories. The owner says that simply inhaling the chocolate makes you happy and relaxed. [laughter] ok. Get the latest headlines at the top of the hour on Bloomberg Radio<\/a> and streaming on your tablet and on bloomberg. Com. That does it for this edition of bottom line. I am Mark Crumpton<\/a> reporting from new york. Thanks so much for joining us. 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