The ftse 100 is dipping into negative territory. Switch up the board. Here is the yellen scorecard ahead of that speech. What a run it, has been on over the last few days. It keeps climbing. Yields for a look bit lower by two basis points at 1. 86 . Is fascinating. We have a little history of what we might hear. Is speaking in singapore and talking about the dow plot. He said today that he thinks it is still a good idea to have the dot plot. He wants to wait and see if it wasnt a mirage. Jonathan i find it fascinating that Monetary Policy has been reduced to some dots on a piece of paper. Anchor i understand what you are saying. You caught up on the latest headlines with your numbered first world ms. Bloomberg first world news. The government has and access to data on an iphone used by terrorist. The government compelled apple to help. Police say a man was shot after pulling out a gun outside the u. S. Capital. Good in pretty condition. They believe the man acted alone. The suspect has been arrested. The brusselsceo of airport says operations will not be back to normal for a month. The bombing last week severely damaged the airport. Setceo says the airport is to reopen tomorrow, but it will only be able to handle 20 of the normal number of flights. Global news, 24 hours a day, powered by 3400 journalist in 150 new sparrows around the world. Jonathan turning now to the middle east. The domestic egypt air flight was hijacked on its way to cyprus. We are still waiting for a lot of these details to be confirmed. Where are we as this story develops . They were 55 passengers on this flight. It was due to go from alexander to cairo. All but three of those passengers have been released. On top of that, you have crew members and the hijacker. Those are the last remaining people on the plane. It is still only tarmac in larnaca. They are still negotiating to get the release of these final passengers. It is unclear what exactly the demands are of the hijacker. There have been reports of the cypriot press saying it was a personal matter and perhaps, it was related to his exwife, who resides in cyprus. The cypriot president has said it is not related to terrorism. One more thing i should tell you though, the egyptian aviation minister said it is unclear whether he does indeed have an explosive belt, as wheas claimed. Jonathan we will keep you up to speed on that story as a continues to develop. Turn back to markets now ahead of the big speech from chair yellen. Pimco in has joined a warning that costs are due to pick up. February,rose 1 in half of the 2 target. Where does janet yellen said on this debate about upside risk to inflation in your mind . I think they desire upside risk to inflation. That is what all of these policies are designed to create. I think to get a little bit excited because tip break events have risen a little bit is a little much. They are still trying to generate inflation. The fed and most other Central Banks think the risks are on the downside. How can John Williams talked data mighthis cpi be a mirage . Were not seeing much energy to the inflation pressures that are there. They look a lot at the core pce. That is kind of in the ballpark of 2 . I think they are looking for cover to begin to raise the fed funds target rates again once or twice more this year. They are out of sync with the other Central Banks. Those other banks are cutting rates into negative territory and providing liquidity in the system. Jonathan what i found fascinating was the argument that the Federal Reserve was going to run Monetary Policy hot. The last couple years they kept promising they would be gradual with rate hikes. Now we are in a position where they are saying, sit tight. And if that happens, they can hike and push inflation back down. What does that mean for Financial Stability . That means it is possible for Financial Stability jonathan they have to hike aggressively. They know that can work. If things overheat on the economic front, they can raise 50, 75, 100 basis points if they need to. That happened back in 1994. What no one has shown yet is, what do you do with this inflation if it becomes entrenched deflation . That is something we have learned from the japanese. Hor it is very depressing if this becomes the case. What is your best Case Scenario . The fed is expecting 2. 2 over the coming year. I think that is a bit optimistic. Were thinking sub 2 . I dont know but is on. 6 or 1. 8 . That is not enough though. Definitely not good enough. I am in just to see what she says that the Economics Club today. I think she will review the summary of economic projections. They have 3 sitting out there in 2018 and i think that is fantasy. Jonathan i think 2014 to take the helm. Entions it 24eech m times. In the data you see in the labor market, has slack diminished enough that she no longer has to work about Spare Capacity in the labor market . They talk about the labor market all the time. I think it is the underemployed that worries them. If you look at which game, yes, they have drifted up a little, but they are nowhere wher theye they should be. There is still a lot of work to be done on the employment side. Jonathan there is a question i was asking a couple minutes ago. Is the fed leading the markets anymore . Fouor are the markets raising te fed . They can talk about raising rates. The markets have certainly been leading the fed, havent they . If you go back one year ago when it looked like there are going to begin the normalization process, they didnt. They did not do it in june because the dollar had appreciated and that was a big head went to corporate earnings. They did not do it in september because of the august volatility. They backed away from raising rates this march because of the volatility we saw in the Capital Markets. They talk about foreign financial conditions a lot. I think they are responding to what is going on in the markets. It makes sense to me. What head of the fed once a crisis on their watch . They cant ignore it because of the impact it can have domestically. ,t cant be this old reason moving or not moving. What about the stronger dollar and trade . How much will the fed be taking that into account in march . Be taking they will into consideration a considerable amount because they are looking at corporate earnings. You need corporate in the corporate earnings to be strong. When we look at the volume of borrowing, like corporations did last year, and the u. S. They did well over 1 trillion. Most of that went into financial engineering, buying back shares, raising dividends, and the may activity. And mma activity. Bob michaels is staying with us. He is the j. P. Morgan Asset Management mobile cio. Later in thecause day we have full coverage of the Federal Reserve chair janet yellen and her speech at the Economic Club of new york. Jonathan we dig into japans retail sales and a spending data. That is next. Nejra vonnie you are watching bloomberg. A local executive has been arrested. The Parkhill Group raises money for private equity and hedge funds. Authorities say he duped a Hedge Fund Manager into wiring him 25 million last fall and then lost it all betting on stock options. Yahoo has told potential investors they have until april 11 to submit bids for its Internet Business and asian assets. This includes a stake in chinas alibaba. 40 companies signed nondisclosure agreements, indicating the are interested in making a offer. The bank of england says companies should tighten standards. The move is part of a wider compound. Rental concerned that owners are pushing up house prices in the u. K. Jonathan over to japan now, to the world of politics and Economic Data. The country is releasing retail sales and spending data today. The numbers for february are somewhat of a mixed bag. Tobreak this down to go erik in tokyo. Is Prime Minister abe frontloading some spending and will that help . We will have to see, but you are right the Economic Data at today was retail sales on how spending adjusted for the extra day in february this year, for leap year. They both fell. It shows the economy is really struggling to rebound after contracting last quarter. This kind of gets back to one of the criticisms of abenomics. Even though we have seen the yen weakened and exports increase, we have not seen a lot of that trickledown a lot of those benefits trickle down into the economy. Wages have not increased that much. We just finished the springtime annual negotiations with the unions. There was a slight increase, but it was minimal. You are not seeing the Consumer Spending increase that many people think would trigger the changes abe is hoping for. Jonathan looking at the strategy for the government, Prime Minister abe came out saying they would frontload budget spending. Is not enough from the boj, how does this help . That is one question a lot of people are asking. He hit on a lot of the main talking points of abenomics. To front of the budget and basically, spend a lot of the money up front to try to stimulate the economy. Other things he reiterated. They want to increase the sales tax next year. Theyre going to do that borrowing a lehman type event. They also want to increase salaries for childcare workers. That may sound like a small thing, but a big issue here with getting women in the workforce. There are simply not enough childcare facilities. He has reiterated a lot of the things about abenomics they have been speaking about for the last few years. We will have to see if these last few policies, whether they allocate enough money and the policies are effective. Vonnie you mentioned a couple of those policies the same work policiesame and the help for couples trying to conceive. He is obviously, tried to think very longterm here. He says he wants to go ahead with another sales tax increase next year. But i am not sure they can shoulder this burden. You know, population decline is a huge issue in japan. The population is declining and you know, they need people paying into the tax system. So abe has talked about that. It is unclear how much money they will commit to that or if it will be affected, but that is clearly an area they want to target to boost the economy. Jonathan thank you very much for breaking that down for us this morning. Bob is still with us for bloomberg. The limitations for Monetary Policy now, we appear to have reached them in japan. I dont know what the efficacy of doing more in japan is. What is the marginal improvement if boj goes up there and buys more small bonds . Does improve anything . Telling usk they are they are frustrated with investing in the Capital Markets. They have cut rates to negative and they may do more, but what we are seeing happening is the big holders are selling them to banks and then taking that money and exporting it overseas into foreign bond markets. If we know this, they know that. That is why they are trying to tackle the real economy. Raise the sales tax, get them to spend, and if the if they can jumpstart the real economy. E was working, i would expect the long came to be selling off, not rallying. Investors would be saying, what is going on . What is happening . Bob miller actually sent us this chart and this is the u. S. , u. K. , and german 10 year yields. All of those equally weighted to get there are yielding 1. 3 . Japanese 10 year yields are down about 0. 1 . This is from a survey we had yesterday. It shows the japanese economists expecting the 10 year yield to stay. 70 of all japanese data, i think vonnie said, is yielding negatively. And the boj is actually going out now and buying even on the longest end, even in 40 years right now. But is this working, bob . Bob well, i dont think it is. Weakenede seen the yen against the u. S. Dollar for eight Straight Days now. Finally, it turns around, right . Bob that is obviously, one of the things you get when you cut rates into negative territory. You enter the currency war. This chart tells us many things. It tells us japan was the first to qe zero industry policy. The other markets are now on the same path. Maybe there is more downside yield. It also tells you that the japanese are struggling to get it right. They are still struggling to stimulate the real economy. A could be demographics. It could be just the lack of investment Going Forward. Exhibit a preference for savings, but i struggle to see how anything is working. As far as weakening the yen, kuroda has had a tough time of it. For eight days. They still have a long way to go to get back to the level where they were one year ago. Bob that is true. They are going up against a lot of other countries that are weakening their currency. Youve got certainly, europe cutting rates. You also have the u. S. Backing away from the Interest Rate rise, as had been discussed. You have other emergingmarket Central Banks cutting rates, like hungary. You have the peoples bank of China Banking away and easing Monetary Policy. Everyone is trying to get their share of gdp wherever it exists in the world. What is really missing is strong aggregate demand. Vonnie thanks so much. The bank of england issues a warning for banks over a possible brexit. Details, next. Jonathan welcome to bloomberg. The bank of england stated the should date for brexit encourage banks to buil dd of lending. Francine joins us. Francine, first question. Over brexit, risks can we draw a line with what they are doing with the countercyclical capital buffer this morning . Francine we dont really know, but the bank of england today got paid the same. They basically raised their warning of a possible credit crunch. They are asking banks to put more money to one side. You are absolutely right. This is about the countercyclical capital buffer. We dont really know what a brexit vote would mean for the banks. We dont really know the repercussions. There are two to the argument. People are saying, the u. K. Banks are fine and the bank of england is doing what they can to ensure Financial Stability. And because we know there is a vote on june 23, there will not be a shock like with the lehman brothers. The other argument is, we dont know what we are facing because we dont know what Financial Markets will interpret this possible leave. We spoke to the ocd secretarygeneral and he was very clear. We dont know what will happen, but there will be risks if this country decides to leave the eu. Have a listen. There is a fundamental assumption, which is wrong i those who think that nothing would happen. That is that all of the institutional arrangements that are in place today would continue to work in the family. In the same way. That would not be the case. We cannot assure that. That is a very great source of uncertainty. Francine a lot of people of course, are saying the banks are Strong Enough to withstand the possible shock. But we dont know what that shock would look like or how big it would be. Vonnie is the bank of england using the potential for a brexit as an opportunity to raise the buffer . Francine that is an interesting point. The bank of england is seeming not to be too political. I think they are covering their bases. They are in charge of Financial Stability. Polls, theyk at the are so close. They are just trying to ensure that nothing bad happens. Of course, in the Financial System in the u. K. It is interesting that the buffer applies to the u. K. Banks. It applies to building societies, but it does also apply to other branches of European Union banks. Problem with the brexit is we have a lot of people who are undecided. Many people are reluctant to believe the polls. They are very close. And we have a majority of the u. K. Voters who are undecided and we dont even know if they actually will show up come june 23. Vonnie i cant imagine banks are too thrilled. Any other big headlines from this mornings data . Francine lets look at the polls. I think they really say it all. Undecided, anything between 12 and 19 . The campaigning over the next four months will be crucial. Jonathan Francine Lacqua in london, thanks for joining the program. Coming up, we take you from the politics in the u. K. To the politics in the Business World to silicon valley. The government has gained access to a terrorists iphone without apples help. What does this mean for the case against the tech giant and apples reputation . Show me movies with explosions. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go onliand switch to x1. Only with xfinity. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. The market open here in new york. Futures here in the u. S. , a little bit softer. Negative six points on the s p 500. Rolling over in europe. Miners are leading the losses. Here is your cross asset yellen scorecard. The eurodollar at 1. 12. Today winning, a streak. The dollar is stronger and the yen is weaker. It is down by two basis points this morning. Twocrude is lower, down by Percentage Points this morning. Vonnie lets get to your first word news now. We begin with that egyptian crisis. Authorities in cyprus say a hijacking has some