Pressure on financially strapped companies. How much would that be offset by the benefits of Lower Energy Prices to consumers . The dollar was weighing on manufacturing, but how long will hat last . There was concern about the difficult to read outlook for the chinese economy and what that might mean down the road for the u. S. And Financial Markets were the biggest concern of all. Almost all participants saw financial conditions sought tighter financial conditions pushing up market volatility. Voting members expressed a range of views about what the impact of that might be. A number of participants noting that the large magnitude of changes in the Financial Market conditions were difficult to reconcile with the incoming information on u. S. Economic development. The economy was stronger than the markets were suggesting. As we know, they punted, holding rates as they were in declining to provide a balance of risks assessment. Members generally agreed, the minutes state, that it was not sufficiently clear. They did observe that if the recent signing of Global Financial conditions was sustained, it would amplify Downside Risks. There is also this note a couple of participants question whether Market Participants fully appreciate that Monetary Policy is datadependent. Vonnie were going to stick around and come back even a couple moments. A number of said officials saw inflation as more uncertain. It strikes me there might be a Market Reaction when we dont often get 20 minutes, julie hyman. Julie we are seeing much of a light downward in stocks. The rally is holding steady. Not extending games, perhaps on the view that if the fed was so pessimistic in the chamber meeting, we will see any likelihood of an Interest Rate increase pushed out even further. Lets see what this is showing. We are seeing a little bit of a letdown heading into the minutes im a little bit of bouncing around. It does take a little bit of time. As we have been talking about, the Third Straight day of gains for stocks. Stocks every day have been making new highs as they head towards the close. See theontinuing to yield rising although interestingly enough, it did take a light down, perhaps on the interpretation that there would be less likelihood of a rate rise this year. Up on the day as we are seeing buying of stocks and selling of treasuries. Lets take a look at the currency board, if we could come and not at my bloomberg terminal at the moment. Im looking at a headline that we got a few moments ago. To death reporting abe isreporting that ruling out more stimulus for now bit in the wake of the fed minutes as welcome we saw europe turnaround slightly higher. Not seeing Much Movement in the vonnie. Market today, vonnie for more reaction and analysis of the fed minutes from the january meeting, lets bring from janneyter montgomery scotland. Editorh us is economics Michael Mckee just outside the Federal Reserve lockup in washington. You have been moving around her target for the 10 year nfl had the benefit of reading the minutes closely but it strikes me that the Downside Risks are played up here and it may not have made it into the statement quite is obviously. Do you think you will change the outlook now . We have the 10year i have below 2 , not much higher than we are right now. At the end of the day the Federal Reserve is a symptom of the underlying condition, which is low Inflation Expectations and low absolute inflation for the foreseeable future. There was a light in the fomc minutes that noted the inflation outlook has grown more certain. I question whether it could be over certain. Nearly all the inflation readings between the end of the Global Financial crisis and today have been in an extra nearly now arrange, regardless of qe or whenever it is supposed to cause. We can no longer say what causes inflation. It is one of the changes that came into the january 27 statement. Measures of longerterm Inflation Expectations are little change. Michael, do you think markets will see anything interesting ut of these minutes . Its richie we are learning more than we typically do. Vonnie. T really, janet yellen spoke last week in between the time we had the meeting and she said many of the same things. They do expect inflation to be lower for longer because of the falling oil prices. They dont know what is going on in china. They expect inflation to rise once these things are out of the way but when will that be . We dont know. Do a word search for the words downside risk. They didnt know whether they would be realized or not because they could know how long many of these threats would continue. With Oil Prices Keep going down . With the Financial Markets continue to be volatile . Those are the questions we are waiting to see answers to. Markets didnt understand them or data dependent. That seems to be the message that most fed officials since the meeting have been trying to deliver. We will wait and see what the markets what the chinese, with the oil prices do before we actually decide in march what happens. Vonnie the fomc minutes show that officials believe markets are not listening, that they are not realizing how datadependent the fed is. The markets have started to price in a fed rate hike. Are the markets listening . Guy theyre listening. They are disagreeing, obviously. The last official munication priced in 4 rate hikes. The odds of that are extremely son extremely slim right now good the most viable predictions market to look at is the eurodollar futures market. Last time i logged into my terminal a couple hours ago, we were looking at a single rate hike between today and the end of 2017. That is nearly two years down the road. During which time the odds of a recession are actually quite substantial between now and the iod. Of that per it is hard for me to leave the fomc views the markets more accurately is pricing in that much the january 27 meeting it so like we had only just had the first rate hike. Guy six weeks. Vonnie the markets had just begun reacting, as had the economy, right . Two days later we get the japan announcement and there was a whole different ballgame. Beenously the fed had needing a number of months of data in order to make a decision. To . Is that now reduced guy i have no idea, to be blunt. The Federal Reserves decision i am paraphrasing their own wording is based on a strong jobs market, the expectation with the theory that inflation would rise. Now, inflation, as i noted at the beginning of the segment, since risen in any period the great recession. Although have going for them on the inflation argument is theory. Very easy to pop a particular argument with the data. Anotherone to show measure of Inflation Expectations. Really languishing. Isnt going anywhere. We got another the court was up but only up. 6 percent. There are aspects that make it less useful for predicting inflation than it used to be. It was a formulation change about three years ago. Good in food and energy and that was flat. Vonnie we will return to you in just a moment. Michael mckee, thank you so much for receiving those minutes and digesting them for us good in the next 20 minutes of Bloomberg Markets, we will look at retail giant walmart reporting tomorrow. Minimum wage increases reflected in the quarterly reports. An Shannon Pettypiece showing these increases may not be all bad news for investors. In the search for a grand bargain among Oil Producers shifted to iran today but that the output costs give u. S. Shale opportunity . Lets look at where we stand as investors digested the latest fed minutes. No major change. P 500 up 1. 7 you can see the nasdaq is the leader there at 2. 2 higher. Vonnie welcome back to Bloomberg Markets. I am a vonnie quinn. Time for the biggest business stories in the news right now. The white house says the Justice Department and fbi have the full support of the administration in the dispute with apple. The rejected a court order to help investigators unlock an iphone used by one of the shooters in last years california terror attack at press secretary josh earnest explain what the investigators are seeking. They are not asking apple to redesign its product or to create a new back door to one of their products. They are sadly asking for something that would have an impact on this one device. Reactionpples dramatically escalates the battle between the Tech Industry and the government on how much companies should cooperate in the fight against terrorism. American express is cutting costs. They will trim 1 billion worth of costs over the next two years. The plan includes streamlining divisions like marketing. The Company Announced that the chief marketing officer would the part after the transition to a new Marketing System is complete. Google is adding fresh fruits, toetables, meat, and milk its fruit express deliveries, seen as a response to the Amazon Grocery service. Google says it will at perishable groceries to select neighborhoods in San Francisco and los angeles. Memberships cost 95 a year. And that is your Bloomberg Business flash. Julie hyman has a check on coming movers. Julie we are seeking pretty broadbased rally today but there are stocks moving down. Groupon is taking a pause after an 82 session gain for groupon. The shares are falling back by 8. 5 percent today. There are companies with earnings that disappointed versus estimates. Again at out with numbers that missed and also forecasting slowing ad revenue this year. Losing after the company cut jobs and its dividend and capital expenditures, like so many Energy Companies have. Finally, a health care saidology company fourthquarter bookings missed its forecasts. Those shares trading lower as well. With the rise in yields today we have seen pressure on utility stocks. That has really been the one Lighting Group today. Con and an firstenergy all trading lower. We tend to see the inverse relationship between utility stocks and bonds yields rising today. Finally, housing. We have been getting choppy housing numbers as of late. Julie, thank you so much. We will check in with you in just a bit. Here with us is kind of boss lebas of Jenny Mccarthys got. I want to play a sound bite from the most dovish member of the fomc. Lets listen to what he has to say. If inflation slowed to return to target, Monetary Policy normalization should be unhurried. We dont have to be in a rush to change Monetary Policy that we should make sure we actually are going to get both expected natural inflation up to the 2 we want. Vonnie ok, so he is clearly saying Monetary Policy or any further move should be unhurried. What does this indicate to you in a project in Inflation Expectations . Even negative Interest Rates seem to be a possibility. The hurdle of reversing course after the first rate hike in 10 years is very, very high. More likely, for more likely than a true course reversal, is this constant waiting game for the Federal Reserve for the higher inflation reading. It is our own base Case Forecast that jobs growth, while it slows in 2016, remains decent. That part of the puzzle is taking care of. It is hard to have faith and that is what the Federal Reserve does, is faith come in higher Inflation Numbers right now. Vonnie particularly when other parts of the world guy mired in deflation, absolutely. Vonnie japan is instigating negative Interest Rates, which might portend something worse than the road. In europe, we dont know what will happen in march yet. How will that impact the u. S. In terms of gdp growth . Guy i will focus on your comment about negative. We have had discussions with clients over the past two weeks especially around yellens speech about the potential for negative Interest Rates in the u. S. In japan, the negative Interest Rate policy applies to a relatively small slice of the overall economy. If you really want to get things moving you got to cut rates deeper than that. Vonnie do you see happening in the United States . Guy extremely unlikely scenario could the cultural rebellion against deeply negative Interest Rates could be severe, such to put the longterm independence at risk. That is even worse than having slightly tight policy. The fed risk losing credibly if he doesnt move in some sense this year . Guy credibility is to find if the Federal Reserve says it is going to do something, whether or not they do a good while they said they were going to raise Interest Rates in december, and they did it, that is credible to me. They said that they are truly datadependent on the data is disappointing, at least on the inflation line item. If they dont act, that is not a credibility issue. That is, ok, forecast was wrong issue. Different than true Monetary Policy credibility. Vonnie do you see anything on the horizon that will boost inflation . Guy as i said, the fed is sort of the inflation faithful. There are inflation atheists who think it cannot happen. I am an inflation agnostic. I dont know if it is going to happen because the data of the last three years has been so unclear. Vonnie what reformations do you have even in terms of the wider world of credit result, corporate issuance back onto the world stage the last couple of days . On the margin, yes. That is an example of a highquality corporation at some use as a surrogate for treasury bonds. Now we are recommending our clients stay defensive in terms of credit quality. We are probably in a little bit of a countertrend rally in the shortterm. We are nowhere near the bottom of the credit cycle. Credit cycles dont just stop after three months in reverse. We have barely scratched the surface. I believe we will see cheaper prices and highyield credit before the year is out. Of course come that tends to swing around. Probably speaking, we recommend our clients say defensive. Vonnie do you see it continuing to flatten . Guy we have some planning in our forecast. If you are rate hikes that do occur, the less likely that is. We have been more optimistic on the yield curve. Even if we do get a little bit of the backup over the course of the next 10 months of the year, we still think it will be a decent year for the longterm. Vonnie thank you very much. Right after the reform see minutes, the twoyear yield and 75 basis points. We saw the 10year move a couple of basis points. Still ahead on Bloomberg Markets, shares of walmart have been soaring this year. We will look at why it is the secondbest performer on the dow. Vonnie welcome back to Bloomberg Markets. I am vonnie quinn. Discount retailers including walmart up significantly this year. They are beating the performance of many of the doubt and minimum wage was raised in 14 states. Shannon pettypiece joins us now. A lot of debate about what the minimum wage hike actually does, first of all, for investors, but also for the walmart worker. Talk to us about this. With way the opponents talked about the Employee Base as being biggest the Chinese State army. Walmart has 4. 4 million and plays in the u. S. The minimum wage at the company is now 10 an hour. That went into effect this year. 14 states have raised the minimum wage. 3 million workers affected by that. On the huge scale of the macroeconomy, that is not a big numbers. 300some Million People in the u. S. In the slice of the economy that caters to lowincome worker, the discount retailers, walmart, the dollar stores, Companies Like rentacenter, which rents furniture to people who cant get credit, he is the places where the minimum wage workers dollars are concentrated. In some cases the paychecks are going up quite significantly. They could be thousands of dollars a year that a consumer has to spend. Vonnie stossel left significantly lasted because walmart did increase last year as well. And they issued guidance saying that the profits would be between 6 and 12 because of this. A onetime transfer and we are seeing that again now. For itr from capital will go back to capital eventually, right . When walmart gives workers are raised they dont spend 100 of it in the store if they give a generous discount to employees on a lot of merchandise. Their own employees have extra income. You can expect them to be spending some of that back in the store. In states like california where you have the entire minimum wage going up, you could see that going into the store, too. Vonnie how do you quantify that . If you do the same store sales, does that mean anything . Manyon part of it is too factors and walmart is a difficult one because they are so big. 100 million shoppersplus go into walmart ever