Global business news twenty four hours a day at Bloomberg dot Com, the radio, plus Globo Land and on your radio. This is a Bloomberg Business Flash from Bloomberg World Headquarters. I'm Katherine Cowdery. The global rally continues on Wall Street, where the SMP five Foundered is posting its strongest two day climb in four months. Tension is easing over the impact of a UK exit from the European Union. Energy shares around pace for their best two days since January.
Is crude oil games with Chevron up two point eight percent at Goldman Sachs basket of the most shortage shares in the Russell three thousand is seeing its biggest surge since who jacon marks every fifteen minutes throughout the trading day on Bloomberg Radio. Dal Industrial leverage up two hundred fifty four points one and a half percent, trading at seventeen thousand, six hundred sixty three. SMP five foundered up thirty two points to one point six percent at two
thousand sixty seven. The NASDAC is hired by eighty five points one point eight percent, trading at forty seven seventy six. West Texas Center Media crude oil up at dollar seventy four a barrel three point six percent at sixty spot coled up nine dollars announced at ten year treasury unchanged with the yield of one point of forty six sixty three. And that's a Bloomberg Business flash show where you Kathleen
Bloomberg jaking stock to the Fed in the focus. Interest rates start to row for where the economy is going. The question is how much higher should it be FED to increase the fasset? Yes, and in doing so it has increased its liability. Keeping interest rates at zero for a long time is not going to cause emploation to go up. It's very controversial. I think what we need to do is find a way for the FED to integrate its policy and think more about its impact on
the world. The Fed in focus on Bloomberg Radio, forget December, forget next year. The Fed's done hiking until eighteen. So reads the headline on a terrific story on the bloom Bloomberg Today and on Bloomberg Dot Calm by Liz Copple McCormick. She specializes in the bond market. And Matt Bosler, who is part of our feder Reserve Reporting team here in New York is not hiking rates enough. Should the Fed
even be cutting them as well? Let's put this question to our next guest, now, Rihanna, Culture Lakota joins us now. He is the former head of the Minneapolis feder Reserve Bank. He's a bloomberg of you, calumnus, and he's going to explain his latest column to us. Now. Rihanna, welcome back. Yeah, thanks for Kathleen. It's my pleasure to be with you. So let's start with Brexit, because we've got the stock market up for three days in a row. People, the
markets need to be shaking this off. If Brexit is one of the reasons why the Fed should be more stimulative, not high grades, maybe cut them, maybe go to negative rates, as you argued in this in this great piece, is it really so necessary? Now? You know, I think that's a great question. But I saw Brexit as um merely just one example of a large more uncertainties that are facing the United States economy as we move forward the
next three or four years. Um. You know, I think that how the negotiations unfold, how um uh, Europe and Britain engaging each other, um over the next two three years as they as they talk about what brexits going to actually mean. I think there's gonna be a lot of uncertainties associated with that, both for the UK economy and perhaps even more meaningfully for the for the European economy. But there's other questions that are on the table as well,
questions about about China, about emerging markets. All those uncertainties UM mean that I think the FETCH should really be best served by UH. That combined with the fact I should say that the FET faces some constraints in terms of ability to react to those kinds of contingencies if they do emerge, UH means that the FETCH betaing at some insurance today by UM at their next meeting, by
cutting raids when what's the likelihood of that. We got the consumer spending numbers the strongest two months since two thousand nine. Now, granted that their key inflation games, that PC deflator year over a year went from one point oh to point nine, so it's even further away from the FEDS two percent target. I didn't the UH, So I've been discovering with what I would refer the FED to do UM that I I don't anticipate that is pretty to be too likely on the FENS agenda and
in July. That is, I don't anticipate that they would be thinking about cutting rates in July. I've been disappointed. I have to say, to what extent um the increase in December is treated as a given um in in feder Reserve communications. I I think that that makes it much harder to raise rates if you treat every move you've made as being something that's semi semi permanent nature um.
Because if you if you ever raise rates, that means that you're stuck with it, and then that means you're gonna have to be very deliberative about any process of raising rates. But I actually think they get there faster if they were more willing to cut and uh. But everything we've heard from them is that what they're thinking about is as the most stimulaive policy they can think of is not is uh. At least we've heard so
far is simply standing paths. I want you to elaborate on that point, because you state that in your latest piece, but it's something you have written and talked about more extensively, because I think maybe just people don't quite hear what you're saying, which is, if you really want to start hiking rates, FED get the economy going and get in a position where it needs to have rate hikes. And it's not a big question, but you you're saying, you
can't do that unless you ease and stimulate more first. Yeah, I think that if we ease further now, and we and the FED was actually clearer about the package of tools that has this available in in the case of of adverse shocks, I think that businesses and households we feel a for spending now, and that would get the economy going again. Um. But beyond that, I think I think right now that the FIT has been communicating that every interest rate hike that they're going to think about
is going to be semi permanent. Nature will take it a very extreme event to move away from that. Any If you think about any decision you want to make, if you're free to change it, you're going to be more likely to make it. If you're free to If it's stuck forever, you're not able to do it, then you're so. And I think it's been a problem for the FED that they've been communiating that that move we made in December. That's stuck. We're never gonna undo it.
Um bari cataph last. When I go shopping, I only buy from stores. Will let me return things, should be able to say myself. Great example, real quick though, Jeroan Paul fedboard governor is looking at financial conditions tightening, saying that's now a big, big part of how that FED makes a decision. Will that maybe help the move toward a rate cut? I was writing, what you say, financial condition and tightening bigger part of the equation for the FED.
I think that the financial conditions are certainly something their continued track by ster Dudley uh thinks about talks about that a fair amount. And again, what we've heard from them is that that's gonna make them less likely to raise rates. I haven't heard anything that indicates that they're gonna that's gonna make them like that. He cut as sooner July Now, Riana cultural Lakota, thank you so very much for joining me today. He's form ahead of the
Federal Reserve Bank of Minneapolis. He's a Lionel W. Mackenzie professor of economics at the University of Rochester and of Bloomberg gew columns. This is taking stock on Bloomberg Radio. The third year Treasury bond continues to rally. The yield is down to two point to six percent. How low can it go? Kevin get us from Raymond James up next to Bloomberg Radio.