Transcripts For BLOOMBERG In The Loop With Betty Liu 2015022

Creditors are favorable for the governments package of new. The debt crisis has raised worries that greece might leave the eurozone but the president says that is not the cards. It is not discussed. It shows we have a Strong Political commitment to keep the eurozone intact to keep its integrity intact, and to Work Together strongly. I think that is key. If politicians dont have that determination, a gives a very strange and negative signal to the trust we have any monetary unit we have built. Betty the current bailout expires on saturday. Greece isnt the only country facing a cash crunch. Wartorn ukraine signaling it will need more money sooner. The International Monetary fund has promised and officials of indicated that might not be enough. Several countries are meeting and europe today to try to make both sides except a ceasefire deal as fragile as it is. Prosecutors want to know if the worlds biggest bank minute belated gold and silver prices. People familiar with the matter says 10 banks are being investigated, among them jp morgan, goldman sachs. Agencies say they are cooperating with the probe. Jp morgan institutional clients will not have to pay fees on certain deposits. Company blaming new regulations for the move. It says it has to come up with more capital to back the funds and that makes holding the money for clients too expensive. It aims to reduce the deposit by billions of dollars. A new merger will combine two of the biggest u. S. Brokerages outside of new york. The deal cash and stock deal is with 150 million. We will find out more about this merger in our next hour. We will be joined by run cushion skied. Apple has found a smarter way to run its genius bar. You know you have to walk in and a problem before you are given an appointment time that is usually five hours ahead. Apple is starting a new Concierge Service that we use an algorithm to prioritize customers. The worship problem is, the sooner you will be seen. Customers will leave the numbers so they can get text updates on their wayit time so you have to wait in the store until they call your name. That is genius from the genius bar. Janet yellen heading to capitol hill this morning for two days of testimony on the economy. She could offer new clues for the feds plan for Interest Rates and she faces a growing backlash in congress. Peter cook has more on this. Issue heading into hostile territory today is she heading into hostile territory today . I was adjust it is challenging territory for her today. First time she has been on the hill since republicans took over congress. You will see a change in tone because of that. A couple of things to watch for today read we are looking for any clues from janet yellen on when they might start raising Interest Rates. Issue less or more patient that she was a few weeks ago when she spoke in front of cameras . You have the big push on capitol hill to augment the Federal Reserve. The reality is it may not go anywhere given where the votes stand right now. Questions about the feds role as a regulator will also be a dominant theme today. Betty who will give her a harder time this time around . Will it be republicans or democrats . There are more republicans on the panel so the odds are with them. You will hear more from the republicans on the oversight question and whether or not the fed has exceeded its authority. I will listen for democrats to push her to not push Interest Rates too soon. Perhaps not everyone has felt a turn in the economy yet and maybe there should be more patients there. I would expect democrats to give her a harder time about the regulatory capture questions. As the fed got into close to the banks . Betty thank you so much. He will be covering that testimony. Be sure to catch his interview with Richard Shelby after the hearing. You get his reaction at 2 00 p. M. Eastern time. Staying with todays testimony i want to bring in my guest host for this hour. Jim reynolds from chicago where it is even colder than it is here. Much colder than it is here. And ellen greenies. We spoke with many investors over the last several weeks. They have been anticipating today. What are we going to hear . I think we will hear more of staying the course. I dont think we will hear any market moving recommendations today. The market is rounding nicely coming into this testimony. About 10 or 11 Straight Days in a row. That seem of patients will resonate through her comments. We will get a sense of the improvement in the economy. I think we will have some dialogue about the dollar and overseas and the labor force strengthening. Betty even though we have been anticipating this for the last several weeks, it will be much of what we expect, right . That is my view. I dont think we will get any surprises today. I wouldnt disagree with any of that. The way i look at this thing today is that the real context here is how the market interpreted and those had a cautious tone. I would emphasize that it is a punch of risk management. The fed is getting closer to raising rates. It will be very scary because it is uneven. When i go into this at 10 00 a. M. This morning, i look at this as what is her incentive . That she want to be a little more hawkish . She needs to breed a little more flexibly for herself in the fed and the fed. What they do need is more flexibility. With the market priced at the end of this year and some cases in early of january next year whether or not she raises rates again betty but its in the market interpreting the fed right now as to thedubbish at this point . I dont think so. Give clear signals to the market place. Unlike greenspan where you had to figure out what he was figuring out what he was saying. Betty you had to look at has tie and every tick. She has allowed more discourse within the members. We hear more about it although they do come out with unanimous decisions most of the time. What i think is going to be irrespective of whether it is june or september or december, we need to continue to look at what the signals and factors are. Oil prices are coming into the discussion now. They werent a year or so ago. Those are some of the things that the market is going to be looking for. Betty i just want to read from you one part of the text minutes that were released. Many participants regarded dropping the patient language in the statement whenever that might occur as risking a shift in market expectations. Spot on. You wont hear her deviate from that one bit. Know you wont. No you wont. What this effectively does is boxes them in because now they are in a situation that one eye drop patient not everyone is interpreting a pledge of two meetings. Maybe the fed doesnt go to meetings. Go two meetings. I think it was a poor choice of words. What they do is adapt the same exact wording that greenspan adopted in early 2004 to demonstrate where he was at that point in that cycle. That was a tactical mistake. Betty would you agree with that . I think the market is looking for various signals. If she dropped it and that might happen, i think immediately the market says it is not there. Maybe we should begin to anticipate a move. I am not sure if that should be it. She should stay with the theme of we are going to look at the data which we have not gotten. We will begin to see if in fact the factors prevalent in the economy dictate we should move. Betty as we noted, there would be a risk in market expectations. Maybe it would be a soon on the shift a tsunami shift. Eric, hang on. A gym as well. We will have much more on the markets. Bloomberg television will be during her testimony live and throughout from 10 a clock a. M. Macys coming out with fourthquarter results. Fourthquarter profit and sales of the outlook was a little bit light. The consensus was 4. 84. Revenue for the full year will about 1 and comparable sales will rise about 2 . In the release, it says macys is shifting for focus on faster sales growth while maintaining its profit rate. Currently it is down 1. 8 on this lighter than anticipated forecast for the full year. Betty thank you. Much more on spending and doing. Home depot releasing their earnings as well and announcing a multibilliondollar Share Buyback. Greece is closer to a bailout deal. We will get opinion from the countrys new Democracy Party live from athens. That is next. Betty here is a look at our top stories this morning. The Eu Commission says a package of new economic measures was comprehensive but we are still waiting to hear from the finance minister. Greeces commitment would include revamping tax collections. Ukraine says a peace accord is not working. Ukraine contends prorussian separatists are not pulling back. Foreign ministers from ukraine russia, germany, and france are meeting today. Now i look at other stories we are watching. Americans flock to home depot. It posted earnings this morning that be estimates that beat estimates. And 18 billion Share Buyback was also approved. A rough commute for two people in south korea. A man and a woman consumed by a sinkhole seconds after stepping off a bus. The plunge was captured by surveillance cameras. They were pulled out and received minor injuries only. They are trying to find out what caused the sidewalk to collapse. Best treatment for childhood peanut allergies may be exposing them to peanuts. The children who avoided peanuts were seven times more likely to be allergic to them than those who ate them three times a week. Sometimes it turns the allergy on its head. Greece has moved one step closer to winning the four month bailout extension. I want to go to Erik Schatzker where he is joined by a member of the new greek democratic party. Thank you very much. I am here with the member of the new Democracy Party who has been in Parliament Since 2004. Thanks for having me. The eu has pronounced the package reforms submitted to the eurogroup sufficiently competence of. What about sufficiently competence rehensive. This is a very spectacular uturn. A lot of the commitments were assumed by the previous government. They are not consistent with what was said before the election. What is the risk then that he fails . He will have a tough time convincing is leftist faction that he should abandon some of the more excess of campaign excessive campaign efforts. You have to manage your domestic constituency after election. The good point is that a lot of this reform is moving in the right direction and we now have the time as a country to articulate a convincing reform package. The bad thing is there is no money on the table yet. We seem to have gotten the memorandum without the money. At the end of the fourmonth. , there will be at the end of the fourmonth time, there will be money on the table. There are still questions unanswered. It sounds to me as though you as a member of the opposition broadly speaking support what he has proposed. We support and i said a very clearly in parliament that we are supporting this adjustment to realism that is in the process of executing. We will support any reform that is good for the country. We will support reasonable fiscal circumstances. We will never support the government and doing all of the good reforms which took place over the two and a half years we were in power. We didnt see any of this in a letter. Rest assured, a lot will push the party to them, alex World Campaign promises. How difficult will it be to execute . It will be difficult for several reasons. This party does not have any real experience in governing. It is one thing voting it and another thing implement it. What are the chances in your mind at four months from now greece finds itself in the same position it was in on friday on the verge of sovereign insolvency and an exit from the euro . I hope it doesnt happen but it depends on the government making good use of this for months on this four month period. Our plan from the beginning was to exit the memorandum phase and allow greece to tap the International Markets as a normal country. Whether this can take place after four months, i dont know. Are those chances less than 50 . I am not willing to put a number. We will support any reform that moves in the right direction. Thank you very much. That is the view on the ground from athens. Betty thank you so much. Erik schatzker there from Market Makers. Much more ahead including banks, bonds, and a big number. We are talking trillions of dollars. Jp morgan just outlining they are expecting a lower return on equity. They have their investors date starting in moments. We will talk big banks with jim reynolds. Betty you are watching in the loop live. Good morning, im betty liu. 2. 1 trillion. That is how much commercial banks in the u. S. Currently hold in the treasuries and that from several agencies. It is the largest amount since 1973 in spy of a growing economy and strong hiring data. Part of that buildup has to do with the rules of holding high quality assets in the wake of the financial crisis. Happening right now, jp morgan is holding its investors conference. It will be starting in a few moments. The bank is saying they presented in advance that there is no value in breaking up but that the bank will continue to cut cost to the tune of nearly three million dollars. That division has to hold more capital. Still with me is my guest host this hour, jim reynolds and also evergreen stays with me as well eric green stays with me as well. When you hear jp morgan and by the way jamie dimon has been at it with regulators saying you have to lower your expectations because of regulation. You say what . This was a topic we talked about the last time i was here. This theme of breaking of jp morgan. I said then that it was not a good idea. And a lot of the profitability of the bank occurs because of the synergy within that bank. There was a conversation about breaking up the Corporate Bank and the commercial break. When you look at those entities they are as strong as they are because they Work Together under a very strong leader with a very strong vision. That is the proper course and i think that is the message i certainly agree with. Betty when you hear about how much capital they have to hold 2. 1 trillion on the books of banks not being put to work. How is that helping the economy . It is in helping the economy but it is a mimetic of everything that has been going on over the past three or four years. Corporations own a boatload of cash. When you have is a lot of financing going on in the Debt Capital Markets as opposed to normal bank lending. We are at the point now where it is a reflection of the deleveraging cycle and lower interest markets. We are starting to get this organic job growth that will take care of the lending equation overtime. It is sort of like an europe. The amount of cash on the Balance Sheets of banks in general regulatory has to do a lot with it. As we began to walk back to what happened in the mid1980s with the leveraging of banks also we are not seeing demand on the demand side of the equation for laws. It is not happening in the Housing Market, Business Market or with the consumer. Debt frightened the consumer in 2008 and 2006 and 2007. They have not come back to have a hearty feast on that again. Betty i hear both sides. I hear there is a demand but things have also tightened. It is a lot harder to get the loan. We saw the write offs. You talked about it through the crisis. You can get a home loan with no job, no income and no visible means of support with no assets. You can get a mortgage and buy a house. For that to tighten up is reasonable. Betty dealing with regulators, the jamie dimon way is to say last month that you dealt with one regular and now it is five or six. You should all ask a question of how american that is and how fair that is. The other way is that it is not a shock that the pendulum would go very far. Which is the best way . I would say they both have their points because jamie dimon has to deal with more regulators because he is truly a big banker. Goldman sachs is a big bank because it was convenient to be a bank at the time they became a bank. He has to deal with it and accosted him billions and hundreds of thousands of employees to deal with that. It is very cumbersome. Blankfein deals with that also but it is much less restrictive. They have to deal with things overtime to have become pretty good for those guys. Betty hang on one second. Eric, thanks for joining us. We will be back with jim reynolds. I have to get you caught up on the top stories. Greece closer to getting a four month bailout. Greece is promising to fight corruption and tax evasion. The head of Blackrock Financial Services larry fink talked about the crisis with charlie rose. He says the countrys troubles are far from over. Greece in my mind as part of the international grid. If you want to remain in the grid, you will have to ultimately conform. If they dont conform they will become argentina. Betty the current bailout expires on saturday. A new merger will combine two of the biggest u. S. Brokerages outside of new york. People financial agreed to by the eastern aging group of alabama. The stock and cash deal is worth 150 million. We will find out more about the merger in our next hour when we will be joined by ron. The Homeland Security department runs out of money in just four days. Mitch mcconnell is looking for a way to end the standoff. The Senate Majority leader says he is removing controversial a momentum the Agency Funding bill. They have secure and congress not to pass just the temporary spending measure. To those in congress who may be contemplating funding are kicking the can punting or kicking the can down the road the consequences are also severe. Betty if the spending plan does not go through, Homeland Security will be forced into a partial shutdown. Prices are near a two week low traders are waiting on food inventories. New information is due out tomorrow. Stockpiles probably increase last week by nearly 4 million barrels. Facing sluggish Global Growth and Strong Political<\/a> commitment to keep the eurozone intact to keep its integrity intact, and to Work Together<\/a> strongly. I think that is key. If politicians dont have that determination, a gives a very strange and negative signal to the trust we have any monetary unit we have built. Betty the current bailout expires on saturday. Greece isnt the only country facing a cash crunch. Wartorn ukraine signaling it will need more money sooner. The International Monetary<\/a> fund has promised and officials of indicated that might not be enough. Several countries are meeting and europe today to try to make both sides except a ceasefire deal as fragile as it is. Prosecutors want to know if the worlds biggest bank minute belated gold and silver prices. People familiar with the matter says 10 banks are being investigated, among them jp morgan, goldman sachs. Agencies say they are cooperating with the probe. Jp morgan institutional clients will not have to pay fees on certain deposits. Company blaming new regulations for the move. It says it has to come up with more capital to back the funds and that makes holding the money for clients too expensive. It aims to reduce the deposit by billions of dollars. A new merger will combine two of the biggest u. S. Brokerages outside of new york. The deal cash and stock deal is with 150 million. We will find out more about this merger in our next hour. We will be joined by run cushion skied. Apple has found a smarter way to run its genius bar. You know you have to walk in and a problem before you are given an appointment time that is usually five hours ahead. Apple is starting a new Concierge Service<\/a> that we use an algorithm to prioritize customers. The worship problem is, the sooner you will be seen. Customers will leave the numbers so they can get text updates on their wayit time so you have to wait in the store until they call your name. That is genius from the genius bar. Janet yellen heading to capitol hill this morning for two days of testimony on the economy. She could offer new clues for the feds plan for Interest Rates<\/a> and she faces a growing backlash in congress. Peter cook has more on this. Issue heading into hostile territory today is she heading into hostile territory today . I was adjust it is challenging territory for her today. First time she has been on the hill since republicans took over congress. You will see a change in tone because of that. A couple of things to watch for today read we are looking for any clues from janet yellen on when they might start raising Interest Rates<\/a>. Issue less or more patient that she was a few weeks ago when she spoke in front of cameras . You have the big push on capitol hill to augment the Federal Reserve<\/a>. The reality is it may not go anywhere given where the votes stand right now. Questions about the feds role as a regulator will also be a dominant theme today. Betty who will give her a harder time this time around . Will it be republicans or democrats . There are more republicans on the panel so the odds are with them. You will hear more from the republicans on the oversight question and whether or not the fed has exceeded its authority. I will listen for democrats to push her to not push Interest Rates<\/a> too soon. Perhaps not everyone has felt a turn in the economy yet and maybe there should be more patients there. I would expect democrats to give her a harder time about the regulatory capture questions. As the fed got into close to the banks . Betty thank you so much. He will be covering that testimony. Be sure to catch his interview with Richard Shelby<\/a> after the hearing. You get his reaction at 2 00 p. M. Eastern time. Staying with todays testimony i want to bring in my guest host for this hour. Jim reynolds from chicago where it is even colder than it is here. Much colder than it is here. And ellen greenies. We spoke with many investors over the last several weeks. They have been anticipating today. What are we going to hear . I think we will hear more of staying the course. I dont think we will hear any market moving recommendations today. The market is rounding nicely coming into this testimony. About 10 or 11 Straight Days<\/a> in a row. That seem of patients will resonate through her comments. We will get a sense of the improvement in the economy. I think we will have some dialogue about the dollar and overseas and the labor force strengthening. Betty even though we have been anticipating this for the last several weeks, it will be much of what we expect, right . That is my view. I dont think we will get any surprises today. I wouldnt disagree with any of that. The way i look at this thing today is that the real context here is how the market interpreted and those had a cautious tone. I would emphasize that it is a punch of risk management. The fed is getting closer to raising rates. It will be very scary because it is uneven. When i go into this at 10 00 a. M. This morning, i look at this as what is her incentive . That she want to be a little more hawkish . She needs to breed a little more flexibly for herself in the fed and the fed. What they do need is more flexibility. With the market priced at the end of this year and some cases in early of january next year whether or not she raises rates again betty but its in the market interpreting the fed right now as to thedubbish at this point . I dont think so. Give clear signals to the market place. Unlike greenspan where you had to figure out what he was figuring out what he was saying. Betty you had to look at has tie and every tick. She has allowed more discourse within the members. We hear more about it although they do come out with unanimous decisions most of the time. What i think is going to be irrespective of whether it is june or september or december, we need to continue to look at what the signals and factors are. Oil prices are coming into the discussion now. They werent a year or so ago. Those are some of the things that the market is going to be looking for. Betty i just want to read from you one part of the text minutes that were released. Many participants regarded dropping the patient language in the statement whenever that might occur as risking a shift in market expectations. Spot on. You wont hear her deviate from that one bit. Know you wont. No you wont. What this effectively does is boxes them in because now they are in a situation that one eye drop patient not everyone is interpreting a pledge of two meetings. Maybe the fed doesnt go to meetings. Go two meetings. I think it was a poor choice of words. What they do is adapt the same exact wording that greenspan adopted in early 2004 to demonstrate where he was at that point in that cycle. That was a tactical mistake. Betty would you agree with that . I think the market is looking for various signals. If she dropped it and that might happen, i think immediately the market says it is not there. Maybe we should begin to anticipate a move. I am not sure if that should be it. She should stay with the theme of we are going to look at the data which we have not gotten. We will begin to see if in fact the factors prevalent in the economy dictate we should move. Betty as we noted, there would be a risk in market expectations. Maybe it would be a soon on the shift a tsunami shift. Eric, hang on. A gym as well. We will have much more on the markets. Bloomberg television will be during her testimony live and throughout from 10 a clock a. M. Macys coming out with fourthquarter results. Fourthquarter profit and sales of the outlook was a little bit light. The consensus was 4. 84. Revenue for the full year will about 1 and comparable sales will rise about 2 . In the release, it says macys is shifting for focus on faster sales growth while maintaining its profit rate. Currently it is down 1. 8 on this lighter than anticipated forecast for the full year. Betty thank you. Much more on spending and doing. Home depot releasing their earnings as well and announcing a multibilliondollar Share Buyback<\/a>. Greece is closer to a bailout deal. We will get opinion from the countrys new Democracy Party<\/a> live from athens. That is next. Betty here is a look at our top stories this morning. The Eu Commission<\/a> says a package of new economic measures was comprehensive but we are still waiting to hear from the finance minister. Greeces commitment would include revamping tax collections. Ukraine says a peace accord is not working. Ukraine contends prorussian separatists are not pulling back. Foreign ministers from ukraine russia, germany, and france are meeting today. Now i look at other stories we are watching. Americans flock to home depot. It posted earnings this morning that be estimates that beat estimates. And 18 billion Share Buyback<\/a> was also approved. A rough commute for two people in south korea. A man and a woman consumed by a sinkhole seconds after stepping off a bus. The plunge was captured by surveillance cameras. They were pulled out and received minor injuries only. They are trying to find out what caused the sidewalk to collapse. Best treatment for childhood peanut allergies may be exposing them to peanuts. The children who avoided peanuts were seven times more likely to be allergic to them than those who ate them three times a week. Sometimes it turns the allergy on its head. Greece has moved one step closer to winning the four month bailout extension. I want to go to Erik Schatzker<\/a> where he is joined by a member of the new greek democratic party. Thank you very much. I am here with the member of the new Democracy Party<\/a> who has been in Parliament Since<\/a> 2004. Thanks for having me. The eu has pronounced the package reforms submitted to the eurogroup sufficiently competence of. What about sufficiently competence rehensive. This is a very spectacular uturn. A lot of the commitments were assumed by the previous government. They are not consistent with what was said before the election. What is the risk then that he fails . He will have a tough time convincing is leftist faction that he should abandon some of the more excess of campaign excessive campaign efforts. You have to manage your domestic constituency after election. The good point is that a lot of this reform is moving in the right direction and we now have the time as a country to articulate a convincing reform package. The bad thing is there is no money on the table yet. We seem to have gotten the memorandum without the money. At the end of the fourmonth. , there will be at the end of the fourmonth time, there will be money on the table. There are still questions unanswered. It sounds to me as though you as a member of the opposition broadly speaking support what he has proposed. We support and i said a very clearly in parliament that we are supporting this adjustment to realism that is in the process of executing. We will support any reform that is good for the country. We will support reasonable fiscal circumstances. We will never support the government and doing all of the good reforms which took place over the two and a half years we were in power. We didnt see any of this in a letter. Rest assured, a lot will push the party to them, alex World Campaign<\/a> promises. How difficult will it be to execute . It will be difficult for several reasons. This party does not have any real experience in governing. It is one thing voting it and another thing implement it. What are the chances in your mind at four months from now greece finds itself in the same position it was in on friday on the verge of sovereign insolvency and an exit from the euro . I hope it doesnt happen but it depends on the government making good use of this for months on this four month period. Our plan from the beginning was to exit the memorandum phase and allow greece to tap the International Markets<\/a> as a normal country. Whether this can take place after four months, i dont know. Are those chances less than 50 . I am not willing to put a number. We will support any reform that moves in the right direction. Thank you very much. That is the view on the ground from athens. Betty thank you so much. Erik schatzker there from Market Makers<\/a>. Much more ahead including banks, bonds, and a big number. We are talking trillions of dollars. Jp morgan just outlining they are expecting a lower return on equity. They have their investors date starting in moments. We will talk big banks with jim reynolds. Betty you are watching in the loop live. Good morning, im betty liu. 2. 1 trillion. That is how much commercial banks in the u. S. Currently hold in the treasuries and that from several agencies. It is the largest amount since 1973 in spy of a growing economy and strong hiring data. Part of that buildup has to do with the rules of holding high quality assets in the wake of the financial crisis. Happening right now, jp morgan is holding its investors conference. It will be starting in a few moments. The bank is saying they presented in advance that there is no value in breaking up but that the bank will continue to cut cost to the tune of nearly three million dollars. That division has to hold more capital. Still with me is my guest host this hour, jim reynolds and also evergreen stays with me as well eric green stays with me as well. When you hear jp morgan and by the way jamie dimon has been at it with regulators saying you have to lower your expectations because of regulation. You say what . This was a topic we talked about the last time i was here. This theme of breaking of jp morgan. I said then that it was not a good idea. And a lot of the profitability of the bank occurs because of the synergy within that bank. There was a conversation about breaking up the Corporate Bank<\/a> and the commercial break. When you look at those entities they are as strong as they are because they Work Together<\/a> under a very strong leader with a very strong vision. That is the proper course and i think that is the message i certainly agree with. Betty when you hear about how much capital they have to hold 2. 1 trillion on the books of banks not being put to work. How is that helping the economy . It is in helping the economy but it is a mimetic of everything that has been going on over the past three or four years. Corporations own a boatload of cash. When you have is a lot of financing going on in the Debt Capital Markets<\/a> as opposed to normal bank lending. We are at the point now where it is a reflection of the deleveraging cycle and lower interest markets. We are starting to get this organic job growth that will take care of the lending equation overtime. It is sort of like an europe. The amount of cash on the Balance Sheets<\/a> of banks in general regulatory has to do a lot with it. As we began to walk back to what happened in the mid1980s with the leveraging of banks also we are not seeing demand on the demand side of the equation for laws. It is not happening in the Housing Market<\/a>, Business Market<\/a> or with the consumer. Debt frightened the consumer in 2008 and 2006 and 2007. They have not come back to have a hearty feast on that again. Betty i hear both sides. I hear there is a demand but things have also tightened. It is a lot harder to get the loan. We saw the write offs. You talked about it through the crisis. You can get a home loan with no job, no income and no visible means of support with no assets. You can get a mortgage and buy a house. For that to tighten up is reasonable. Betty dealing with regulators, the jamie dimon way is to say last month that you dealt with one regular and now it is five or six. You should all ask a question of how american that is and how fair that is. The other way is that it is not a shock that the pendulum would go very far. Which is the best way . I would say they both have their points because jamie dimon has to deal with more regulators because he is truly a big banker. Goldman sachs is a big bank because it was convenient to be a bank at the time they became a bank. He has to deal with it and accosted him billions and hundreds of thousands of employees to deal with that. It is very cumbersome. Blankfein deals with that also but it is much less restrictive. They have to deal with things overtime to have become pretty good for those guys. Betty hang on one second. Eric, thanks for joining us. We will be back with jim reynolds. I have to get you caught up on the top stories. Greece closer to getting a four month bailout. Greece is promising to fight corruption and tax evasion. The head of Blackrock Financial Services<\/a> larry fink talked about the crisis with charlie rose. He says the countrys troubles are far from over. Greece in my mind as part of the international grid. If you want to remain in the grid, you will have to ultimately conform. If they dont conform they will become argentina. Betty the current bailout expires on saturday. A new merger will combine two of the biggest u. S. Brokerages outside of new york. People financial agreed to by the eastern aging group of alabama. The stock and cash deal is worth 150 million. We will find out more about the merger in our next hour when we will be joined by ron. The Homeland Security<\/a> department runs out of money in just four days. Mitch mcconnell is looking for a way to end the standoff. The Senate Majority<\/a> leader says he is removing controversial a momentum the Agency Funding<\/a> bill. They have secure and congress not to pass just the temporary spending measure. To those in congress who may be contemplating funding are kicking the can punting or kicking the can down the road the consequences are also severe. Betty if the spending plan does not go through, Homeland Security<\/a> will be forced into a partial shutdown. Prices are near a two week low traders are waiting on food inventories. New information is due out tomorrow. Stockpiles probably increase last week by nearly 4 million barrels. Facing sluggish Global Growth<\/a> and Rising Capital<\/a> demand, shares fell 5 monday for hsbc. It is europes largest bank. During the summer and cutsin qatar, it is too hot for soccer. The Committee Says<\/a> the games should be played in the cooler months between thanksgiving and christmas. Those are our top stories that you need to know right now. Much more ahead. It is decision day in chicago. Will a second term be won to lead america city . We will talk about that in a moment. Betty we have less than an hour until the start of trading. We are listening for janet yellen and her testimony at 10 00 a. M. Scarlet fu with some movers. Everyone is waiting for her to speak. Macys higher in the premarket. It has moved around a little bit and now down. The outlook was a little light here. Home depot already at a record high and set to gain even further after boost the dividends. Reported fourthquarter profits beat analyst expectations. Look for plenty of costcutting the division. We are also looking at a solar venture. After the close today, we dont have many details on this aside from the fact that two companies are planning a joint adventure. They will ipo this. No word on timing or value. For scooter revenue coach at a nine month high getting an upgrade to outperform at oppenheimer. American airlines downgraded. Sprint off by 3. 6 right now. Betty thank you so much. Now moving and shaking this hour. It is chicago mayor rahm emanuel. President obamas First White House<\/a> chief of staff faces reelection in the windy city today. He may come up just shy of an outright majority. In his to get over 50 of the vote to avoid an april runoff. The democratic mayor run an expensive ran an expensive reelection campaign. Even the president got out and stumped for him last week. He closed under 50 underperforming schools. He passed an austerity budget for the city to help bring down a significant murder rate. He has consulted with a wide range of people including my guest host this morning jim reynolds. We did a roundtable with rahm emanuel. He has big plans for chicago. It has been tough. I say it is americas city because it reflects a lot of what is right and wrong in this country with its problems. What has been the Biggest Issue<\/a> for him . The Biggest Issue<\/a> that livery manual faced were issues not of his making. He inherited a tough situation in chicago and he has to make quick decisions. He wasnt in a position to kick the can down the road. We had one of the biggest and most controversial moves that he did was closing 50 schools at one time. It was unpopular among some. The Chicago Teachers Union<\/a> definitely didnt like it. Since he has closed them, reading scores have gone up Graduation Rates<\/a> have gone up, proficiency has gone up. The schools that state open have students doing better. The have been a significant amount of positives. Betty it has been tough. There has been a fair amount of criticism lobbied at him for not dealing with the income and equality issue as much as they would have liked. It is 33 black with the city and we continue to see the Gang Violence<\/a> headlines out on the newspaper. Has he done enough to help the citys poor . We dont really have republicans in chicago. [laughter] betty have you scare them all out . I think the income inequality is a theme nationwide. It is very pronounced in chicago and it continues to get that way because one thing the mayor has that a tremendous job of his attract businesses to chicago. It is one of the fastestgrowing Business Districts<\/a> in the country right now. The tech firms from Silicon Valley<\/a> are coming out there, and they cant move there fast enough and develop fast enough. We have some incredible educational facilities. Downtown and the north side are blooming. At the same time, the south side where i am from was struggling to figure out how to get that demographic involved. That is the pull on the mayor because chicago is about 33 black and about one third hispanic and one third other. Betty the other part that is weighing on him also is dealing with the budget and dealing with the debt which is as bad as it has ever been in chicago. He was at our conference a year ago in chicago. You were there also. He was talking about the pension problem in chicago. What i want to make sure is when we are solving this, it is not just to solve for retirees and the taxpayers. I want dont want to costs to grout crowd out our children. You cant tell me we are facing that. Chicago has it in spades. It is a national problem, not a chicago problem. Betty is that solvable in the next four years . It is and i think there are proposals on the table to start solving it now. The city and the state has the exact same issue. He touched on it, but the mayor is very cautious to assign blame. He is a guy that accepts it. At the end of the day in years past, both the union bosses and Political Leadership<\/a> agreed that certain pension payments would not be made to the system. We have the shortfall. He is not doing that. In making those, you need some sort of agreement because the required amount of pension payments would virtually crowd out everything else. It would be devastating to the city at large. They are having discussions on it. Hopefully they will agree on it. Betty jim, great to see you. Coming up, another effort being made to help america. Will talk to the ceo of one Company Targeting<\/a> Small Businesses<\/a> really Small Businesses<\/a> throughout the country through technology. Betty time for our top stories is morning the Eu Commission<\/a> says a package from greece is sufficiently compensable. The flow of bailout dollars hangs in the balance. Graces commitment would include revamping tax collection. In ukraine, a Government Military<\/a> spokesperson said his support is not working. The rebels are not going back pulling back. Foreign ministers from europe are meeting in paris. Robert mcdonald is apologizing for falsely stating that he served in the u. S. Special forces. He made the assertion last month and a conversation with a homeless vet that was caught on camera. He issued a statement calling the claim in accurate. The white house says it except the explanation. The u. S. And iran edged to a historic compromise. The deal would clamp down on Irans Nuclear<\/a> plan for years it would slowly ease on other programs. There are still obstacles before the march 31 obstacles. Birdman might have soared at the oscars, but the shows ratings did not. They were the lowest since 2009. It is another sign that hollywood is out of touch with moviegoers. Birdman won the oscar for best picture. The new commissioner of Major League Baseball<\/a> says he is open to the idea of a shorter season. Purists shouldnt get too worked up. The al moved to a 162 game season years ago in the nl made a move the following year. They are try to figure out how to speed up the game and attract the younger fans. What janet yellen says about the u. S. Economy in the next hour markets in the markets and two Small Business<\/a>. If the economic landscape improves, so does Small Business<\/a> growth. A number of companies are looking to benefit from the growth. Upon it is one example. C with the ceo c with the ceo had to say to me. We have in\\ revenue basis growing at about a 40 rate. We have the best brand and the industry with a lowcost. We are stepping on the gas as hard as we can. Betty one other company doing the same is Endurance National<\/a> group. They are helping Small Businesses<\/a> build and grow an Online Presence<\/a> over the cloud. Ceo Hari Ravichandran<\/a> joins me now. Great to see you now. When we say Small Business<\/a> with you, we are talking about the momandpop shops like the dry cleaner down the street, the restaurant on main street and elsewhere. What are you finding . What services do they need . From our perspective, we are thinking about really Small Businesses<\/a> with no real i. T. Staff or Technology Function<\/a> within the company. A lot of them want to use the web to start a business and bring their business online. I started this business 18 years ago. We have used the web almost entirely to go to the scale we have been at. We released our earnings yesterday. All of that just by using the web. We think we can take these tools and apply them to smaller businesses and giving them a web presence solution. We can use online marketing. We both up a platform for these very Small Businesses<\/a> where they have less than 10 employees for 10 to 15 a month im a variety of products a month, they can get a variety of products. Betty do they feel like they can hire and grow sufficiently . Over the last five or seven years, there has been a big change in this market. People that are Small Businesses<\/a> before use to think of the web as a tool. Now a lot of their customers him to them and ask about a website or facebook present. You have coupons available or emotions or are you on yelp . The impetus is now on the Small Business<\/a> to get online. Betty he did an interesting survey about a month ago on these Small Businesses<\/a>. The big take away from me for me was that a big percentage of this business says taxes are the biggest concern. If you think about a Small Business<\/a> making 200,000 in average revenue, they think about two or three items. How do i grow that and do i have enough time to do that and where are the park pockets i can save in . A lot of them are proprietors or people that do pass through. It is a lot for these guys. Betty thank you so much for joining us. We will be back in two minutes on in the loop. Betty janet yellen speaks to congress at 10 00 a. M. And bloomberg tv will be airing at live. Betty welcome back to in the loop. We are 30 minutes away from the opening bell. The case schiller home index is out and 0. 87 gain. Before we get to get that, the European Finance<\/a> ministers have approved the extension of the Greek Bailout Program<\/a> in their Conference Call<\/a> today according to an official involved in the discussions. When it comes to effect or impact on financial markets, this was widely expected. We are not seeing Much Movement<\/a> here. Janet yellen will begin speaking later this morning. Onto the Economic Data<\/a> released. Home pricing for the month of december showed prices in 20 u. S. Cities moved for. 5 moved 4. 5 . This was a slight increase of the 4. 3 increase in movement in november. Miami with a. 4 increase. With an 8. 4 increase. On a month over month basis prices in the 20 u. S. Cities increased 9 10 of 1 . And pick up that we saw in the previous month which was a tense of 1 . This is slightly better than what economists had anticipated. Betty scarlet fu there, thank you. The euro area finance ministers have approved the greek extension. Futures indicate stock will be mixed at the open. One factor is oil prices timing for a second straight day. We just got that news out on greece, so we will see what more Market Reaction<\/a> will come from that. The Justice Department<\/a> investigating at least 10 banks including j. P. Morgan and goldman sachs. Hsbc says it is cooperating with the probe. The companys landing new regulations and says it has to come up with more capital to back the funds which means withholding money from clients to costly. A new merger will combine two of the biggest u. S. Brokerages outside of new york. The deal cash and stock is worth 150 million. We will find out more about the merger leader this hour when we will be joined by ron. We are under 30 minutes away from the start of traits or want to count you down to the open with the top tech headlines before the bell. Number 8 86 years old is the age of retirement now. Much of the Elderly Population<\/a> are forced to sweep streets in hong kong to stave off poverty. Hong kong will have the highest share of population age six to five years or older in asia. 42 of the population will be 65 or older. A third of those people will be in poverty. 86 years old is the age of the retirement. We interviewed someone because three of her children will not support her so she is handing out pamphlets. Traditionally, one of the reasons that were not huge pensions and hong kong is because traditionally the families supported the older people. Now they dont have the financial wherewithal to do that. Betty this was a great swan in the making. We have known of this demographic shift for a generation. The problem is if they decide to raise entitlement spending and do Social Security<\/a> for example, it is a slippery slope. You can never sure get back down again. Our benefits just grow and grow and can never be turned around. Betty number 7 a turnaround in housing. Home depot improved approved in a 18 billion Share Buyback<\/a>s. The other fascinating thing is these are home depots numbers for last quarter. That tends to be the strongest quarter in retail but not for home depot traditionally. Spring is better for home depot when people are fixing up their homes. The fact it was such a Strong Quarter<\/a> at a cold time of year made all the more extra ordinary. Im doing a lot of work on my house because home values are finally rising a little bit. I feel like they are rising enough that i will take a bet that may be the home will be worth more so why not put a little bit more into it. Betty all property is local so any government around my neighborhood i am seeing more forsale signs that master. Maybe that is a new sign that the Housing Market<\/a> continues to grow. Maybe i can buy a house near you and we can be neighbors. Know there is something for sale in her neighborhood. Betty target has big plans as it expands into more cities. The retail giant will open and 15 Stores Including<\/a> a city target near small quick trip shops in urban areas. I went to target expressed in minneapolis near the university of minnesota. This is the only one right now. They will open eight more this your. I welcome one in my neighborhood. It is like a target in many ways. It was the size of a walgreens or cvs. You go in and it when you walk in, you expect to see beauty and pharmaceuticals. The first thing you see is a bunch of university of minnesota merchandise and things like basic tshirts or aim mobile phone and Tablet Technology<\/a> area. They are geared locally. Betty i think what will be key is the inventory. Didnt target canada have the worst time there because people expected the same inventory in the u. S. As they got canada. They got different inventory there. Will they get the same products at a target express . It look like it. Betty we will sit down with ron to discuss the biggest merger of the two u. S. Stay in the loop. Betty we continue to count down. Number 5 the acquisition would be ef up they acquired businesses will generate 325 million in revenue a year. For more on the intricacies of this deal Thomas Stephanie<\/a> ruhle is standing by with the ceo. Welcome and congratulations. You will beef up. Is that why you did this deal . We have been looking to help Wealth Management<\/a> for some time. This was a firm that started up in 1901 and they have other great businesses, fixed income in particular. There are a lot of good parts of this firm that fit nicely with our firm. I am really happy this morning. Congratulations. The equity business and Investment Banking<\/a> business you are looking to sell those correct . They have a great equity business. They have built a very nicely. There is to menace overlap with our business. We think the right thing for the people is to allow them to keep their band together. We will help them do that. I feel that is the right thing to do versus just saying go do whatever you want to do and you dont figure. And you dont fit here. I want to help facilitate them in whatever manner we can. What happens if you cant sell those two units, will you fire those people . We dont fire people. These are good people. They can go anywhere. Together, they built a nice business with a nice brand. I think that is the right thing to do. People make their own decisions. I cant tell people what to do. I certainly hope they consider staying together. Stifel started by doing almost the exact same thing back in 2005. That catapulted our growth so he went from a 200 million firm to today we are looking at over two and a half billion. Have been looking at acquisitions and organic growth. Do you need to acquire more firms to justify getting bigger and bigger . I hear that all the time. Not including this deal, but when i looked back since the beginning of the financial crisis, almost 40 of our growth has been organic. We grow both organic and acquisitions. This isnt a rollup strategy. We have been growing. There is a void in the marketplace created by the financial crisis. Our firm is taking advantage of this and adding great other firms to us. We grow organically everyday. Your pricetobook value trades higher than compared to other Financial Firms<\/a> out there. Do you need to make an acquisition like this to justify it all . Absolutely not. We trade at a higher multiple because our evaluation supports it and our business supports it and the way we run our business supports it. We trade higher than maybe what they do today, but not higher than what the Brokerage Firms<\/a> traded precrisis. Why are you so bold up on your fixed income business . A lot of other businesses specifically have been shrinking over the last two years. Why do you think this is a time to lean in . That is exactly why it is time to lean in. I have always been a contrarian. One the largest firms are shrinking, we are growing. That has been true over the last 15 years. We announced yesterday our 19th Consecutive Year<\/a> of record revenue. Grew through the financial crisis and the tech crisis and we are growing today. When other firms are shanking and cutting back, i view is the market will be better five years from now and we will grow. It is contrarian but it has worked. For us we are not looking to get bigger just to get bigger. We want to get more relevant in the marketplace and to be more relevant i think when its at capabilities. As we add capabilities, we are adding people and we are growing. If you want to be with an organization where you are growing and being aggressive youll come work with stielfel or join our team because we are building what i believe can be a preeminent Investment Banking<\/a> and was management firm. How will the effect of electronic trading effect that . That will not help firms that have individuals. That have been talking about electronic. Technology is going to always be there. You need Market Makers<\/a> liquidity, people that provide advice and ideas and so i dont see machines replacing humans to the extent that that question would imply. Of course markets will become more computerdriven but there is a place for the firms like stifel. I have to congratulate you because it looks like when you paid, it was a great price. We try to do deals that are creative for our shareholders with a negotiated transaction. This is a merger, not an acquisition. You dont require people. People join you because you provide a culture and place where they can do better. That is what this is about. The price was negotiated. I think it is a good deal for our shareholders and i think it was fair. I think so also. Congratulations. Good for you. Thank you. Betty thank you so much. Stephanie ruhle there. Much more as we count down to the opening bell. Jp morgan says it is not their fault. We will be back. Betty let us get back to bringing you the most important stories you need to know before the bell. Julie hyman and matt miller joining me today. Number 4 jp morgan announcing it has lowered and also plans cuts because of higher capital requirements. Clients will also have to pay new fees, clients like hedge funds for instance. Of course they are in need of a more capital cushion. These big institutions are giving them huge deposit and saying hold on to this. They cant count that as part of their cap will cushion. They have to count as temporary funds as the law told them to. The have to hold even more of a capital cushion to back that up. And becomes too extensive. They are saying we will charge you more because it cost us more to hold this for you or take it somewhere else please. Betty it makes sense. They are passing on the costs. Jamie dimon has all but basically said more regulation against the banks is unamerican. It is unamerican to do this to our nations banks. Number 3 the u. S. Justice department investigate the worlds biggest banks from integrating prices of gold and silver. The Justice Department<\/a> is probing 10 banks including j. P. Morgan barclays and deutsche bank. Finally. The gold bugs are ecstatic about this because they have been contending for years that there is a manipulation in the metals market. We dont know which way the manipulation was supposed to be happening. It might not be in the goldbug favor. It is a compensated story for a precious metal. The big is zero has construed to three of all time. It is like digital google how did jp morgan manipulate the market . 50 lawsuits in u. S. Courts. Betty amid dropping oil prices opec says there is no plan to hold an emergency meeting. Crude prices have dropped from a june peak after opec refuses one with a hold an emergency meeting after a collapse largely due to their own doing . If you were going to hold a meeting if you are not going to hold a meeting 10 ago, why would you hold it now . Some people are saying that. Some people have targets as low as 10 a barrel. Saudi arabia will do what it wants and so will the other opec countries. That group has kind of fallen apart as far as power. Why would you hold a meeting . Who cares . Betty their next meeting is in may. As we go to the opening bell after the news out after greece and euro financing accepting the agreement hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity<\/a> series. Welcome back to in the loop. The dollar rallying ahead of janet yellen testimony. In athens, greek stocks rising on the news, european stocks rising on the news the euro region finance ministers have approved greeces package of economic measures, paving the way for the extension of the countrys bailout agreement, a fourmonth extension. We are sort of pulled by two factors today, but really, in the u. S. , just focused on what janet yellen is going to say. And the dollar. We couldve mentioned the dollar in a most ever singlestory we have touched on so far. It has everything to do with home depot forecast and the oil market and the metals market. Every single thing we have talked about the strong dollar touches on and it will be really important what janet yellen decides as far as voluntary policy Going Forward<\/a> Monetary Policy<\/a> going ford as an effects currency. On the other hand, talking more about her today because of the possibility of more oversight right . Speaking of what is an american. Likely on the agenda for the lawmakers, the fed. It will be interesting today to see if we do get any substantive news on where rates are going to go or if most of it is just holidays. Most of it will be politics. Having watched this is congress. Will we get anything on rates that we can sink our teeth into . We will find out. I think fed officials are like athletes, theyre good at speaking a lot of words, but not saying very much. There you go. They are like politicians. And politicians. I want to bring in our guest who thinks janet yellen may put more pressure on longterm industries in the u. S. I think one thing that will come out of the testimony, i think janet yellen will reestablish the consensus the fed is going to move this summer. I think people have overreacted to the statement i think was balanced, to the minutes but if you think about what is going on with the labor market and some of these worries we have had about greece and ukraine diminishing, all that says to me, the fed should still be on target to raise rates this summer. I dont think she will try to deviate from that. I think that is what shes going to say. I think the markets will react. The most important thing they talk to her about or do you think it is the auditing that is first and foremost . For the markets, i think this will be the most important. I dont really believe i dont believe the market expects the cars will only be setting poetry policy. I certainly hope it doesnt. That is a bunch of politics isnt it . My great concern is i have a lot of problems of how the Federal Reserve<\/a> operates Monetary Policy<\/a>, but listening to most politicians about Monetary Policy<\/a>, clearly, it is even worse right . The wing of the republican party, right, that is really going to lay into her on this is gained a lot of power. We have a severely divided government in this country, and i dont expect any major policy moves on any issue to come out of this congress and this white house whitlock gridlock may save us. Minutes from last month, some market for to spend said it muddied the picture little bit. You could tell some of the bankers, central bankers, were a bit more nervous about raising Interest Rates<\/a>, about shifting but the way they say, some participants said this and that nobody really cares what some say. I think the consensus is reflected that is balanced, but the statement came out before we had a blockbuster january employment report and before the worries about fiscal cliff greece, diminished. But she should make sure this testimony today she uses the word patients a few times. Yes, the language is important. I think she should keep the word patient in until the committee decides either in their march meeting or in their april meeting. We talk about the market resetting its expectation, do you think we see a negative reaction in stocks, for example . Lately when the fed has said these things, the reaction in stocks has been more muted than in the past. It is hard to say because there are areas of stock arquette cyclical, financials, which can in a fit from higher Interest Rates<\/a> and ultimately if she says their raising rates in june or in the middle of this year not necessarily june, but june or july, that is a positive for the economy. Longterm Interest Rates<\/a> need to go up him up but how the stock market reacts is really hard to say. I think she will be delivering some vote of confidence to the u. S. Economy. Some are saying the laura oil prices is throwing a wrench into Lower Oil Prices<\/a> is throwing a wrench on the fed in which a raise rates. Wilbur ross was on last week. Heres his interpretation of what Oil Prices Mean<\/a> for the economy. The decline in the price of oil for the developed countries is good deflation. So i would not worry about that part. And that translates into downward pressure and lots of other things because of transportation costs and all that. I think until we get to more steady period on oil, which i think will probably have that later this year, into we get to that, it is hard to measure how much is noise and how much is true deflation. What about you . What is your take on the Lower Oil Prices<\/a> . The first thing is, lower oil is the stimulus but that we need to recognize, it will help consumers been in growth. Oil is at bottom and is moving up. Right now, looking at low later on, we will get cpi number, negative for the First Time Since<\/a> 2008. But that is really short term. I think from here, oil prices will creep up over the next year or two. We should see a substantial increase in oil prices in the next two years. The most important thing is, if we create more than 100,000 jobs per month in this country, the Unemployment Rate<\/a> goes down. That is the single most important equation and the whole thing. The fed knows this. The every month that goes by with a healthy economy is one month closer. , i believe, to fed tightening. David, stay with me. Thank you to matt miller and julie hyman this morning staying with me through the belt. We are staying on the markets. We will keep you updated on what stocks are moving right at the opening bell. Recent bailout extension gets the greenlight, it appears. We will give you the latest up next. Stay in the loop. Back to the big news that broke a few moments ago, youre a finance ministers have approved the greek bailout extension, according to an official involved in the talks. Use our european markets react pretty strongly. It schatzker is live in athens and will be throughout his program. What is the latest you are hearing . Well, this is the news athens was waiting for, without question. Euro zone finance ministers met on a Conference Call<\/a> starting at 2 00 gmt. According to the dutch finance minister who spoke just a few moments ago on television, the meeting went well. Well enough to approve a four month bailout extension for greece. It is not over, of course. This approval is subject to subsequent approval by the member parliaments. Not every single one of the 19 eurozone parliaments needs to approve this, but several do including finland and germany. After that comes the hard part. Greece needs to negotiate a new Bailout Program<\/a> over the course of that for months. Imf managing director Christine Lagarde<\/a> wrote the euro, the dutch finance minister was saying she has seen the list of Economic Reforms<\/a> that greece proposed and she says it is a valid starting point. Those are her words. And it is not very specific. She is being critical, betty that a lacked clear assurances and tax reform will stop im telling you, if you have seen that list as i have, youd have to agree with Christine Lagarde<\/a>. Nevertheless, this is a major step for the greece. Back to you. Thank you so much, Erik Schatzker<\/a>, live in athens. As you can see from this chart am a greek stocks have been surging on the prospect for this deal that is now come through apparently. David kelley back with me from j. P. Morgan funds. Just when we are relieved, there is going to be another obstacle down the road. At least we have bought some time. Greece can never pay this money back. Lets be honest. Even the state of the greece economy and the size of the debt, they will never pay back. The logical strategy in the last two years has been string greece along long enough for the rest of european economy to get healthy and the european banks to get healthy. We are actually moving a good deal along that road right now. I think are up is picking up countries that are doing better. If europe can continue to improve, even if the greek situation remains critical, the longer we go, the less dangerous it is going to be. It has been a fiveyear greek drama already. How much longer . Common more years before europe really gets back on footing and says, ok, we can finally get this done . It is tragic and i feel sorry for the greek people because honestly europe should have been more generous austerity in the middle of her recession, not ever a good idea. It was a bad policy from the start. But they want to enforce some discipline. Yes, but what they ended up with was the election of an extreme Leftwing Party<\/a> in greece because of it. The great worry now in europe is that extremist left parties will win elsewhere in europe because the public just doesnt trust european institutions at all. I think it is important that we dont have a fullblown crisis in greece. Should they hold back Going Forward<\/a> on enforcing the stringent austerity measures holding the greeks to those . A little bit. But i think they can negotiate with greece. The one thing we are learned in the last few weeks is, even if the newsyriza government realizes they dont have any cards in their hands. It is hard to go all in when you have nothing in your hand. The greek negotiating position is getting weaker and weaker. Strong on the day of the election. And much stronger back in 2012 when european banks were in much worse trouble than they are right now. But now that is not so much of a problem, greece doesnt isnt that much of a threat. Larry fink a blackrock outlined a very well. I want to play for you what he said about what leverage greece has. In 2010, if greece failed then, the private sector owned most of the greek debt. Today 70 of the greek debt is held by the ecb greek banks are all part of that and you have the imf who has a huge loan outstanding to greece. So it is not a private sector problem. There is more skin in the game. It is not a private sector problem, and that is the point. Ultimately, some of this debt is bad. I think European Central<\/a> bank and the imap will take a hit from it imf will take a hit from it eventually. That is when unemployment is come down in europe. The greek that is a lot for the greeks, still not norris in terms of Global Economy<\/a> or even the european economy. It is a hit, but it will be much more palatable for europe if he can be delayed by a few more years rather than having it right now. In the u. S. , have we of what it the catastrophe . Are we free and clear . I think a lot of our worries are going away. We still have a fiscal cliff over the Homeland Security<\/a>, but i think the old the forced into an agreement. I think they will be forced into an agreement. I think they can get past this freeze, consumers are very well positioned with lower gas prices helping, housing will improve the u. S. Is getting better. I think it will ultimately support the stock market and higher Interest Rates<\/a> this year. And you want the super bowl. Not personally. David kelly, much more ahead. Including moments away from Janet Yellens<\/a> testimony on a hill. We will be talking about that with a former fed governor when we come back. We are Just Moments Away<\/a> from Janet Yellens<\/a> testimony on capitol hill in front of the senate and king committee. That is a live shot of the room where lawmakers will be grilling her about the state of the economy and where Interest Rates<\/a> will go. She will do her best to deflect and make sure she doesnt surprise market participants. Josh wright joins me with his analysis and the former Federal Reserve<\/a> governor and professor of the blue school at the university of chicago. Randy, why dont i kick it off with you and what you think Janet Yellens<\/a> job is going to be this morning. To show a lot of patience and try to convey what patience means that which is something that is flexible. I think there are different views around the federal Market Committee<\/a> table on when rates should be rising. You can either point to the robustness of the labor market or to very low and declining inflation and Inflation Expectations<\/a> and challenges around the world to say should either be more patient or less patient. My guess is, she will go through the different arguments but probably not make a case or one side of the other. It will depend on the data. Josh, from what we have heard other observers of the fed say over the last several weeks is especially after the minutes, they field this fed is maybe perhaps more dovish. Issue going to have to correct that course this morning or does she have to at all . I dont think she has to. I think they set themselves up to get closer to the data dependency mention in the last year or so theres been so much emphasis on for guidance. What we are going to see is the beginning of janet yellen walking is away from the world weaning us off yes already mentioned data dependence. Trying to undermine the concept of patient because they want to get away from this guidance and get back to what the world looked like before. They want to normalize not only the level of policy rates, but the process. That means everyone should take out their pencils, sharpen them look at the data just like the fed policymakers. Arent they at fault for that as well . They gave the Forward Guidance<\/a> and had to step back, given it step back, right . True they have painted themselves in the corner, but it has been a success. Slowly, very slowly, toward raising rates yet we havent seen a big reaction in markets. Some of that has to do with capital flows along abroad, but also being without a goal and not upsetting the market. Randy, did the fed and janet yellen herself box them into box themselves into a corner by using the word patient that she will have to repeat it again because if she doesnt say it again, the markets are going to react . The link which had to change from before because it was a considerable period. I thought they did something elegant to avoid disrupting the markets. At the end of last year or they going to introduce patients . The answer was, were going to have both. The elegantly said, this means this, so we dropped considerable period no tumult in the market. Theyre going to try to do Something Like<\/a> that Going Forward<\/a>. I think the challenge is not just win, but what does it mean for Interest Rates<\/a> Going Forward<\/a> . Once they start, does it mean theyre zooming to 2 quickly or are they going to take steps here and there . That is going to be very difficult to communicate. But i think this is a fed that is been good at trying to communicate carefully and that is what janet will set the foundation for. That is a great point. Josh there is this white space, considerable time to patients after patients, what does that mean . What does that mean . Probably not another word. It looks like from the january minutes, the fed policymakers havent decided for themselves what the next step is going to be. That puts janet yellen in a precarious position. I dont think she wants to tip her hand one way or the other. The committee itself doesnt know. I think the message she will reinforces that is actually where the fed wants to be, wants to be looking at the data and doesnt want to be broadcasting this so far in advance. Thank you so much for joining us josh, heading back to your desk, right wright, watching these headlines . I am sharpening my pencil. Randy stays with me as we await the testimony from janet yellen. She will be speaking at 10 00 a. M. Welcome back. We continue our coverage of Janet Yellens<\/a> testimony. You can see the room or she will be speaking a front of lawmakers , the Senate Banking<\/a> committee. Back with me as the former Federal Reserve<\/a> governor and professor at the booth school of business at the university of chicago. Randy, i want to say, a lot of people talk about what is going to happen when Interest Rates<\/a> rise. I want to play for you what Philadelphia Fed<\/a> president Charles Plosser<\/a> said about a month ago where you really do not know what the results are going to be. Here is what he said. A number of things could go wrong. The fed has opted to deep large Balance Sheet<\/a> and begin raising rates. We dont know in some form or fashion how fast we will have to raise rates or how the economy will respond to that in some ways. And how it will respond to the Balance Sheet<\/a>. Everyone thought when we quit buying assets after qe3 that rates were going to skyrocket. Well theyve done nothing but go down since then. I think theres a lot of unknowns. We are in uncharted territory. There are a lot of unknowns. Randy he makes a great point. What will likely happen if and when the fed raises rates . I very much agree with charlie that this is unchartered territory. We have never had Interest Rates<\/a> at these low levels for so long. And we dont know exactly how the markets will react when they move off of them. I think it is going to be a little bit like in q, there were probablye be some to multiple market as the fed changes some of its language in anticipation of the moves but my guess is, things will be reasonably smooth when the fed does me because they will telegraph it so clearly. I think the key uncertainty is this bead with which they raise the rates. They certainly dont know that, and i think it is very hard to tell how the markets will react depending on different speeds. Should they be paid more attention to oil and the dollar . The fed pays attention to a lot of different things, certainly, they are aware of those issues. As the dollar strengthens and oil prices come down, of course, that reduces inflation pressures in the u. S. And the fed is aware of that, but that is one of the many variables there looking at. There looking at the implement situation carefully, too. That seems to trump above all. Data, dependent on when the next move is right . Theyre going to be looking at they have a dual mandate. Keep maximum implement growth consistent with low, stable inflation. The inflation goal is around 2 . It seems inflation it is slipping, even core inflation, stripping the changes in Energy Prices<\/a> is moving downward. Inflation expectations are moving downward. Theres a bit of a tension that even though theres more strength in the labor markets, inflation goal is not being met. Randy, thank you so much former Federal Reserve<\/a> governor. We will continue our coverage of Janet Yellens<\/a> testimony and just a few moments. Stay tuned. Live, from bloomberg headquarters in new york, this is Market Makers<\/a>, with Erik Schatzker<\/a> and stephanie ruhle. Stephanie welcome to Market Makers<\/a>. We are moments away from the release of Janet Yellens<\/a> Opening Statement<\/a> to congress. She is set to testify about the Monetary Policy<\/a> before the Senate Banking<\/a> committee you can see her getting her papers ready. I am getting my papers ready. Im going to take you to washington, d. C. Where here cook is on capitol hill. Peter he will say the fed is not planning to raise Interest Rates<\/a> for at least the next couple of meetings. It will be determined on a meeting by meeting basis. She is trying to get more flexibility going toward while acknowledging Interest Rate<\/a> increases on the way. The Committee Considers<\/a> that im likely to be Economic Conditions<\/a> will be in a target range for the next couple of fomc meetings. She says","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia600200.us.archive.org\/30\/items\/BLOOMBERG_20150224_130000_In_the_Loop_With_Betty_Liu\/BLOOMBERG_20150224_130000_In_the_Loop_With_Betty_Liu.thumbs\/BLOOMBERG_20150224_130000_In_the_Loop_With_Betty_Liu_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240621T12:35:10+00:00"}