Top the agenda. In newi am betty liu york. It is just after 7 00 p. M. Yvonne it is just after 7 00 a. M. In hong kong. It seems markets are taking it as steady as she goes. You can also argue she came up more hawkish the first day. It was still too early to conclude inflation was well short of that 2 target. We did see bond markets reverse. Betty one thing we did come away from these last two days, is that the fed is watching inflation. It is something they are on high alert about in terms of whether they are going to hike rates again or gradually delay that. I do not know if this was a jab or not, when she was asked a question about Donald Trumps growth target she said 3 growth would be great, but challenging. I want to pull up this chart for our viewers. Much making how America Great again is going to rely on americans. Meaning, them spending at home. Personal consumption, it has always been a big part of the economy. It has only gotten bigger and bigger and the gap has widened between other areas or parts of the economy that have traditionally propelled growth such as Government Spending or property investment. It is now consumption, personal consumption, that determines the future for the u. S. Yvonne we will see if that inflation data tomorrow coming out will be a game changer when it comes to where the fed goes. This will be crucial for the bond markets, as well. Asiapacific markets will be ending this trading week. We are at twoyear highs, kicking this off on the a positive market. Downe seeing the nasdaq 0. 1 . Down 0. 1 . 50 the kiwi. The aussie at march highs after the very good trading numbers we got out of china yesterday. Futures for equities market pointing lower. 46. Rude, the iea said Global Demand could pick up. Japan, looking tepid for futures, heading higher by 15 points. 113. 36 for the dollaryen. Seeing strength here to end the week. A strong week for asia. But we could be ending things on a limp note. Betty possibly. Even though the s p was within five points of the record, the dow on a high. Fed chair janet yellen giving a note of caution. Su keenan has more. Techhead a rebound. Yellen rally, day to coup. Day two. It was the fifth day of gains for the nasdaq. This one served the most in eight months. Target giving hope that they could have a come back. There is a lot of pressure on these retailers. Most. El up the that has a lot to do with trump saying he will stop the dumping of steel. What was the take away of the yellen talk . , andwindow of opportunity bankers ask on their act on their words. It means carry on. The cost of carry is interesting to note. This is the index, that white line. It has been coming back as we head to 2017. The emergingmarket carry trade index has been popular in this environment. Now is the time, is what strategists are saying. Betty what are they saying about the last two days of trade and the story in relation to the testimony . Su one thing that got attention, is yellens talk on a sitting on cash. We go into the bloomberg one chartime, and this is a about capex. We have seen bullish outlets for corporate spending. They have been reined in. The 12 month capex share in purple. Box tells us it is jumping the highest level in 18 months, following the election. We have seen analysts more circumspect. We are now trailing 12 month spending to 69 per share. That is the lowest since 2012. Note, to squeeze in a summing up what yellen has been signaling to people. She is withdrawing the punch bowl slowly. Mario draghi is doing the same thing at some point. You are doing the same thing in london, and in japan with kurod a. Su withdrawing the punch bowl slowly. Yvonne pulling punches, you could say there is a war of words heating up. The delta ceo weighing in on the qatar chief comments about their cabin crew. Su it overshadows earnings by delta. If we go into the chart you can see all the alliances under pressure. The ceo said he was appalled that qatars insult earlier in the week, saying u. S. Airlines , and that a lot of the crew members are grandmas. Y miss to their estimates missed their estimates. They still have a 10 stake in american. You have seen this price rise on the expectation. American also has been very critical of the remarks coming from the middle eastern airline. Yvonne getting pretty testy, some of these comments. Lets get the first word news with courtney collins. Courtney President Trump says jr. sn donald trump meeting was uneventful. Speaking in paris after meeting donaldmanuel macron, trump denies the lawyer in question was connected to the government. President trump i have a son who is a fine young man, a great young person, who took a meeting with a person in russia. Nothing came of the meeting. It is a meeting most people in politics probably would have taken. Courtney Republican Leaders have released a new Health Care Plan to provide another 70 billion dollars to stabilize Insurance Markets. In an effort to win over party critics, they say the cuts are too severe. The republicans hold a narrow 52 48 majority in the senate and face united opposition. Will step down, to be replaced. 2008, moreme ceo in than tripling vanguards assets. 48yearold buckley becomes president immediately and ceo on january 1. Has died after a long battle against cancer. Winning the peace prize in 2010, leaving chinas most prominent prisoner and infuriating beijing. Tiananment of the protests in 1989. He is the first Nobel Laureate since prison 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. Trumpswhile president 3 goal Growth Growth goal is wonderful, many questions over the second day of testimony on capitol hill. Lets get more from kathleen hays. She is in new york this morning. Inflation in the Balance Sheet was there anything new . Kathleen i think what happened is, it has sunk into the markets, what has been a square in front of them for some time. That is, janet yellen has repeated what people have been talking about, including other fed officials, that inflation is weak and the fed has to watch it closely. It was up 2 , back down to 1. 4 . The president of the dallas fed saying he wants to see greater evidence inflation is turning back toward targets for them to stay on the fed hiking path for him to be on board. We have the former head of city fx. He made the point that it is not so much what janet yellen fed said the last couple days, but the market is weak. Lets listen to exactly what he said. Thinkthe markets inflation will stay relatively low, the growth is going to be not as strong as the fed thinks, so that the pace of hikes is not anywhere near what the fed thinks yes, they are going to do the Balance Sheet withdrawal, lowthe commendation of inflation and slow growth will mean everything goes very slowly. They may never get to the terminal point. Cpi friday morning in the u. S. Is supposed to be reasonable, modest. A deviation on either side is something to be closely watched by the markets. Inflation. All about betty what did she say about the Balance Sheet . Unwind, it is going to she did not say when. She expectsnowledge to see Balance Sheet increase once the fed gets this underway. Lets go to what janet yellen said. We want to make sure we balance this in a way that is not disrupt if the financial markets, in part for that reason, we have tried to sit out increasingly clearly how we intend to proceed. Kathleen we will look at a bloomberg chart. I think it is a great chart, because it is explaining the relationship between the Balance Sheet and the treasury market, bond yields. Lets start at the top. The idea is to show you the correlation that the fed funds rate fell. The white line, the qe, got bigger. That jagged line is volatile, treasury futures. It rose, people like that. It dipped back again. There is a broad correlation. The fed realizes they have to go slowly. A couple other things it yellen said, the opioid abuse in the united states. Becauseis looking this they think it is affecting the labor market and participation rate. Gdp, i do notbout think it is a cliff. She said she would love to see it, but 3 could be tough with a low productivity and an aging population. Betty thank you, we will continue our conversation on the fed strategy. A former fed governor will be joining Bloomberg Markets asia at 10 10 p. M. In new york. Yvonne do not miss our interview with Robert Kaplan, joined by our daybreak america crew in new york. Betty we will speak to Cumberland Advisors vice chairman. This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Inty i am betty liu here new york. We dig deeper into Janet Yellens testimony with Cumberland Advisors bob eisenbeis. And, kathleen hays. Bob used to work at the atlanta fed and was director of research. Give me your quick take of janet yellen, two days in. Bob that was not much in the way of surprises, as far as i was concerned. He essentially said we will change the Balance Sheet, we will start letting it winds down. We do not know when. But i think most people think it will be september. And, we will go slow on rates. We will wait and see what happens. And, we are concerned about our inflation objective. Think most people think it will be september. And, we will go slow on rates. We will wait and see what those three things are what you can take away from this particular round of discussions. Kathleen lets put it all together. You mentioned three things that intertwined, especially in the markets mind. Big, the sheet that is fed has sworn to reduce. Lets look at this chart, it is a simple look at the Balance Sheet. 4. 5 trillion. You can see the white line is treasuries. That is the majority, 2. 3 trillion. The yellow bars are mortgagebacked securities. Almost an equal amount on a gradual basis. What is your big concern . What is the number one thing we should be focused on if the fed gets ready to do this . Whatthe real question is, the Interest Rate impacts are going to be. What i thought was interesting when you look at the minutes this last june meeting, there was a wide divergence of views among fmoc participants as to what this impact will be, even with the little baby steps that they have proposed in their plan that they publicized. What you see, there is a group of people who are concerned about the fact that there could be a significant impact. There are a number of people who do not think there will be much of an impact. Janet yellen indicated today she was not in that camp that thought there would be a big impact of movement. They can start and see. Yvonne she did mention about how she expects a rise in longterm rates with a Balance Sheet runoff. But we also heard mentioned from the dollar wasow more sensitive in the shortterm rate than the Balance Sheet. Is she a lone wolf in that view . Bob the minutes suggest people are all over the map. I think that is born out when there is ae wide divergence of views. That is not necessarily bad. It is an indication that when you are in uncharted waters, reasonable people can and probably should be expected to have different views. The fact that they are not articulating them essentially is airing all of the issues. Markets are taking what janet yellen said very positively. At city fx, they said it is not so much what she said, but the market wondered how they could move much. Lets look at this chart. Inflation expectations, they peak and come down. Thiso you think part of will play out . You deal with a lot of bonds. What will it be like for the bond market . Bob it will mean Interest Rates are probably going to be low for a wild. Movement,ee a lot of particularly because the Inflation Numbers are low in the fed will because us about moving until they start seeing that inflation number pickup. I do not see anything wrong with 1. 4 inflation. Pose anteresting to counterfactual as do, how would greenspan be talking about things now, if there was not that inflation target in place . You see a lot more emphasis on growth and focus on that side and those issues, rather than the inflation issues. Betty i want to pull up this chart. We have a lot of charts for you today. It is interesting to see the pink line, which shows consumption being a bigger and bigger part of the growth trajectory of the u. S. Economy. It is fascinating to see how other parts, whether commercial investment or Residential Property investment, or Government Spending they are all converging and not budging much. It is first of all, consumption. It is first of all, consumption. At a time when we are raising rates on the american consumer, how will that even go higher . Bob there was a lot of concern about debt convergence burdens. Bud what, if anything the fed is going to do about it. They are trying to balance. On the one hand, they do not want to see another explosion of Consumer Debt to the point where it causes another collapse. Yet, they are concerned about Inflation Numbers. On top of it, you do not get the same amount of job creation from Consumer Spending you do from investment. Because you have an accelerator affect associated with corporate investment. Corporate investment has not kept pace. We have seen it in low productivity and everything else. Were looking at 2 to 2. 25 of timeor some period until we get a pickup in productivity. Betty thank you, bob eisenbeis. And thank you to kathleen hays, who has been watching the testimony for us. This is bloomberg. Handing over the keys to another international market. Is Ride Hailing Company canceling a merger with russia year after pulling out of china. Eric newcomer has been tracking the story out of san francisco. Why did uber cut a deal with yandex, and what are the terms here . Last year pulled out of china and now is pulling out of russia. They were clearly behind. One leadd a two to over bookings. Uber gets 36 over the company. Took a lot and the rest is for employees. Uber have to kick in 225 million into the new company. But then he gets to cut off its losses. It spent 150 million over three years. This is an opportunity to take a big stake in the region without having to run the business. Betty is this the start of more to come . Will they start pulling out of more markets . Eric that is the question. The u. S. , north america, south america, really promising, major markets in europe, india, southeast asia. Uber and their competitors want to see consolidation. Whether uber tries to do a takeover or cut a deal, there are lots of questions. Betty thank you so much, Eric Newcomer on uber. Up next, rivals reporting misting missing estimates. Detail straight ahead. This is bloomberg. These days families want to be connected 24 7. Thats why at comcast were continuing to make our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Yvonne happy friday. It is beautiful outside hong kong. Morning, minutes away from asias first major market open. Betty 7 30 p. M. Thursday evening here in new york. Markets did close higher. Not as big as the rally we saw with Janet Yellens testimony. The fed is paying attention closely to inflation. I am betty liu in new york. Yvonne i am yvonne man in hong kong. First up, fed chair janet yellen said President Trumps goal of 3 growth is admirable but difficult to achieve. In the second day of testimony, she said productivity growth is hard to find. And a rise of just 0. 1 would be a good payoff. She said that the danger of another financial crisis remains. We increased our monitoring of the Financial System for a broader range of risks. We can never be confident there wont be another financial crisis. Steelmaking stocks headed for the best month after President Trump repeated his comments to crack down on dumping by foreign competitors. Speaking to reporters on air force one, trump says he may impose tariffs or quotas or both. Countries including canada and china have been bracing for a commerce report on whether steel imports threaten u. S. National security. U. K. Prime minister theresa may announced her Brexit Strategy, sparking fury from scotland and wales. Speculation that opposition could derail her plans. It will transfer e. U. Laws onto the british books. Scotland and wales say it does not give them proper powers and they are looking to block it. Speculation rising that Rex Tillersons diplomacy in the gulf may be bearing fruit. Kuwait,alks in qatar, and saudi arabia, that produced ideas that could be a resolution to the diplomatic crisis. Tillerson is heading back to washington, but there may be another round of talks next week involving the u. S. , the u. K. , and the saudiled lock. Bloc. 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. Betty we are counting down to some of the major market opened in the asiapacific. Here is adam haigh in sydney. That isis week not stopping some of the worry warts right now in these markets. Adam the story of the week has been a rosy picture for equities and the dovish tones we have been hearing from policymakers in the states, driving that emergingmarket driving that. Emerging markets having a good week, as well. Again thisrencing low volati