Coming up to 2 the way that the fed target for inflation has it. The other thing theyre worried about, expectations. Some members said that expectations are lower than they were for inflation. Meaning that perhaps, perhaps expectations have been anchored at a lower rate and it will be more difficult to get them back up. There was a discussion of how dallas measures inflation, how cleveland measures inflation. They have to do is keep that target credible. If they use the word credibility, it means they are concerned about it. The other thing they are concerned about, lingering concerns. There are two things they are worried about. One, china. The fact that it may not make this structural transition in a clean way. Lo and behold, here we are on january 7, that is exactly what going on. Lingering concerns have been borne out. The other thing they are worried about is what we have been watching all year. Commodities, emerging markets and the effect of the strong dollar on them. One note to congress is hidden at the bottom of these minutes. A lot of talk about appreciation for the bipartisan budget act that was passed, saying that for improved expectations future fiscal moves. Ben bernanke before, now janet yellen, have said several times to congress that what they really need is some kind of fiscal action. That was the stick, this was the carrot. Gradual, gradual, gradual david. I know that you live in brooklyn, you have a little bit more time to get the brownstone. Brendan, stay with us. Julie hyman has the latest and i want to get some reaction to that. Julie it seems to be that they are emphasizing what brendan talked about and concerns of dissent, that some fed officials were concerned, sort of they were on the fence about this rate increase and some of the concerns they talked about in terms of inflation not meeting the fed target as well as Commodity Prices in Global Growth. Something that Market Participants have been concerned about the new as they have come back here in the new year. Thats one of the things they have been filling up. Working towards the lows of the session, were not quite there but in addition to that we are looking at if you look at the s p 500 over the course of the day you can see whats happened here towards the lows of the session. Not a dramatic reaction but it does usually take some time for people to go through the minutes. Year there. E 10 it is dovish. , thewoyear, taking a look yield is moving lower, its a bit more of a dramatic move in the twoyear. Gold prices, lets take a look at whats going on with gold. Here we go, is that thats not percentage, up 16 points, excuse me with those gold futures. Crude oil has been moving lower all day. More in reaction to inventories lake blower and finally the dx why, the dollar index, you can see it taping taking a dip as well. Looks like the market read on these new on these minutes is relatively dovish. Getting back to the fed minutes, Brendan Greeley is still with us from washington. Mike, you have been looking through these as well. I wonder if we are able to divine anything about the federal open market and how the rate rise might take place. We heard stan fischer today in an interview saying four height is what he is thinking about. Anything here give us an indication of what the committee is thinking . Mike if you want to trade on what the fed might do, go with fisher. They will always vote to drive the decision. What this tells us today is something we already knew. Some officials were concerned that it was too low and that might mean two or three and fed speak. They will watch inflation closely and have forced the committee to put that into the statement. But we knew that already. Theres no numerical guidance or a trigger for an additional fed rate move. Concern, aress number of the members, that oil prices might not stabilize and it would delay their ability to see inflation rise and therefore act, but we are a long way away from the next time they might act, so it doesnt give as much guidance at this point. Talkingrendan, you were about the hawks and the doves. We were impressed by the unanimity of the decision last month. Any indication here as you read the minutes about how difficult it was for them to bring the doves on board . I think that what jumped out at everyone in the lockup were the words close call. Something we havent anticipated. We saw it compressed when we look at the expectations for inflation and gdp growth. What we thought we saw was a more unanimous fed but what we are getting from these minutes is that this is a more cautious fed. This is something you and i have been talking about for the last year. From the minutes, because Labor Compensation was increasing at a subdued rate and remained below 2 , some participants judged that a moderate decline in unemployment would be unlikely to lead to would build up of unduly strong inflation pressures. What it says to me is a confirmation for what janet yellen has been saying over the last year, the committee is willing to run the economy a little bit hot. You can see the economy running down lower. It sounds to me that they dont believe in the phillips curve, the idea that if unemployment goes down, wages will rise. Thats an undecided issue at this point, but in the nonmanufacturing survey today we got an interesting note, the commodities reported to be going up in price were brockley, eggs, and labor. The one commodity reported in labor. Upply was so, we are seeing in the Service Industries in the u. S. Pressure that could lead to higher wages, the question is how much does it take . Brendan highlighting how asortant the decision is, she looks ahead to raising rates, is that going to be enough . Its one of those weasel phrases they love to use in washington, like strong dollar. They never tell you what a strong dollar is. We dont know what actual progress is. Mathematically we will see the cpi in the tcu rise a little bit. The big drop in Oil Prices Last year will fall out of the indicator over the next couple of months than the drop that we just saw moves in. Around march we get back to where we were, which outweighs the other . Hard to say, but its hard to say if there will be actual progress. Expected progress is what they think will happen based on the indicators 6, 12, 18 months from now. We havent had those indicators and it gives them flexibility going forward, satisfying some of the doves that they are perhaps on top of this. But it does not tell you anything about what they are going to do. Brendan those lingering concerns are giving them room. Jumping back to something that might just said, are you looking at the inflation that they are measuring or expecting . What i pulled out of this wasnt fomc looking at different ways to measure inflation. There was an active conversation about whether or not they use the dallas way or the cleveland way of measuring inflation and even in these myths there is an understanding that those tend to be higher and there has been some political discussion, right . That we should be using different measures of inflation . Some analysts will point to cleveland and say well, its a little higher, so we are closer to the goal. Is it measured inflation or is it expected inflation . They are worried about the models my word, not theirs. But they also are discussing how we measure, which to me answers the question that they are looking at what they are measuring, seeing, and expecting. They mentioned that last month, didnt they. Thank you brendan, michael. Just a reminder that the next open Market Committee meeting is expected to take place june general are 26 and ginny were 27th. Looking at the probability of a rate hike at the meeting, 0 , the next meeting is march 16. We will continue to watch all of this, of course. Speak to next i will ambassador chris hill, former u. S. Ambassador to iraq, once a they are testing a Hydrogen Bomb. David david lets head back to our markets desk in julie hyman to get on the heels of these fed minutes. The fed said it was a close call, whether or not to raise this seems to be reinforcing the concerns over Global Growth with china than had been anticipated by Market Participants and of these fed minutes showing that there is some concern about the fomc Global Growth. Stocks are at the lows of the session, but they did not take a significant leg down on an intraday basis. We see a little bit of activity here, but really its in line with what weve seen today. It seems as though the read is that this is more of a reaffirming or reinforcing of the sentiment already out there today rather than something radically new in terms of market information. If you look at the other Asset Classes to see reaction as well, again just a continuing of the trend we have seen for oil prices. Not only do you have ample supply out there as shown by the indexes lastoma week you have demanded terms of Global Growth. Similar situations there, gold futures are up and an extension of some of the declines in advances we had earlier. People looking at what we perceived as safety, similar when you look at rates as well and that currencies in this market when they look at treasuries and currencies. For example, we have seen buying in the treasury market pushing the yield down to. 9 . Similar trajectory to what we saw earlier with the dollar index. Lets get a check on that as well. The dollar has been bumping around, unchanged for much of the day. Now, its only lower by one quarter of 1 , but this is consistent with the view that there is concern about Global Growth and in terms of the fed concern that inflation is not rising as much as they would like. Appreciate it, julie. The fed has a lingering concern when it comes to geopolitics but north korea claims they have joined an elite were both countries capable of detonating a Hydrogen Bomb. Kim jongun, reportedly calling the claim into question. The initial analysis its been conducted of the events overnight are not consistent with north korean claims of a successful Hydrogen Bomb test. Theres nothing that has occurred in the last 24 hours that has caused the government to change our assessment of north koreas technical abilities. David members resolved to pursue significant measures. Joining me now is the former ambassador to south korea and in the university of denver. First of all, let me ask you about the strategic importance of this distinction between fusion and fission. Why is it strategically important . Alternately whats important is how quickly they will get to marrying a weapon with a missile. You can have a lot more bang for the same size, suggesting that they are getting close to a deliverable weapon. Thats the main issue. Had slowed a hydrogen device, that would mean that they are getting pretty close and the whole of obama administrations idea of strategic nations is being somewhat called into question. All of that said, i think its pretty clear is that the North Koreans dont care what the rest of us think, dont care what china thinks, they seem to want to continue to develop the Nuclear Weapons and sooner or later they will have a hydrogen weapon and the question is what will we do about all of this . David china has been making far as togoing so deliver a handwritten letter to pyongyang asking them to cease their weapons testing program. Is this an outright act of defiance against china by north korea . I think its fair to say the chinese have been saying for months that they have a kind of unspoken deal with the North Koreans that they will treat them a little bit better in return for which the North Koreans wont test, but the North Koreans just summed their noses at them today and i think its humiliating for the chinese. The chinese have a way of turning these humiliations into some kind of a good thing where they say well, we just need more patients, etc. , but i think the chinese have to be pretty upset about what the North Koreans have done and what will be interesting in the days coming up will be waiting to see what happens in terms of sanctions because i think the feeling is that the chinese really ratcheted down on them and that really could hurt as opposed to the sorts of things that the u. S. Can do david . Can do. David when the Security Council says that they condemn this act, what is left at the disposal of that body . The level of sanctions, so severe, what more can the International Community do . Like there is not a lot that they can do, but there are steps that china could take to implement some of these sanctions and be tougher on them in terms of financial and other areas where the North Koreans clearly use china as an outlet. I think that it could be significant if the chinese say look, weve had enough and we will throw the book at them. Overall this is one of the most sanctioned countries on earth. Doesnt mean that there arent additional steps but it also means being one of the most sanctioned countries on earth has not changed their behavior to date and probably wont in the future. About one year left, the president doesnt have a lot of time, are you optimistic that he will be able to get anything done with regards to the north Korean Nuclear issue for several years . Are you at all optimistic that things could change . Im really not. Usually diplomats are optimistic about talks, but i think its going to be tough. Chinaof all, the u. S. Relationship is and what it used to be. We used to be able to work more closely with them and now theres a lot of distance between the u. S. And china. Thats one thing that needs to get fixed, the u. S. And china need to better get into those patterns of cooperation from the past. The second thing is the North Koreans have got to give us a signal that they are interested in g nuclear is a has been no signal from this thirdgeneration that they are at all interested in this. Back when kim jongil was in charge it was pretty bad, but it appeared they had some interest and were able to shut down the program. Didnt mean that they were going to be stopped forever, but it certainly did slow them down and for several years they did not produce any fissile material. That seems to not be the case these days. Theres got to be some rethinking on the part of the North Koreans. Finally, while we are doing better with the South Koreans we need to continue to get south korea, japan, and the u. S. Together, the three democracies of the Six Party Talks to see what we can do to get the russians involved. Our relations with russia are about as bad as they have been for a long time. There are big ifs if they are going to do anything in the remaining months. That is the ambassador from the university of denver and a former diplomat. We will have more information at 3 00 and William Cowan will be our guest then. Still ahead on Bloomberg Markets, more trouble for chipotle, and e. Coli outbreak, a plunge in sales, and a federal subpoena. David welcome back to Bloomberg Markets. Chipotle, a worse than expected plunge, they are struggling to rebound from multiple outbreaks of foodborne illness and now they have been subpoenaed in a federal criminal investigation. For a look at the troubles, lets bring in cragg. First of all, what did we learn from the sales figures . We suspected that sales would be bad, but this is worse than expected . Anand 8 decline for the 8 decline for the first quarter, now they are saying 14. 6 percent. David how has the company reacted to all of this . To help along this outbreak has been . It certainly has hurt them in the way that this has come out. The cdc has put out reports as they get information from the states. That really isnt under their control, but every time they come out with a new update, the stock goes down and there are more negative headlines. Today show tohe apologize. I think they thought they had their arms around it, but there has just been a negative headline after another a negative headline. That they indication are getting closer to what caused all of this . Not yet. Were waiting for the cdc to say that they figured it out and that every thing is fine. 50 of thet only time they figure out the cause and at the way they keep records the Business Model made it difficult, so does a decent chance that we will not ever know what the ingredient was, but still they say that they consider this outbreak close and until it happens, it still hanging out there. With response to one specific case its not an overall reaction . The fda is not commenting, los angeles is not saying much. An interesting question, i spoke to a lawyer who dealt with food safety and he said that if this is just one restaurant in california, wire the feds even involved . Typically its a product that crosses state lines. There is some speculation that maybe this has to do with communication between the Corporate Headquarters in denver and this restaurant, an issue with how they informed the public. We dont know a ton at this point about what they are looking for, but that headline raises the specter of a criminal investigation and more bad news for chipotle. David thank you very much. Craig covers restaurants for us here. Still ahead, Car Companies making a big push at the International ConsumerElectronics Show. Mark fields will join us live to talk about whats in store for 2016. David from bloombergs World Headquarters in new york, this is Bloomberg Markets. Lets start with the news with mark crumpton. Mark the white house is casting doubt on north koreas claims of having conducted a Hydrogen Bomb test. In the initial analysis that has been conducted of the events that were reported overnight is not consistent with north korean claims of a successful Hydrogen Bomb test. There is nothing that has occurred in the last way for hours that has caused the United States government to change our assessment you guys were early making the show a priority. Guest we were the first car show or and now it has were warped into every Automotive Company that was here. We have used this as the venue to show how we are making a lot of progress in technology, but we are using it this year to talk about how we are transitioning from an auto company to an auto company and building company. Its a natural extension of our business. We love our core business of designing great cars and trucks. Time, we have all of these emerging services out there that have enabled technology. It is a natural extension for us. How do we make sure we grow in that area while maintaining our core business. Cory give me an example. Guest we are doing a number of pilots on ride sharing. Because of population growth and other reasons, people want access versus ownership. Either they cant find parking or it is too expensive to own a vehicle. Expensive to been have a vehicle in an urban area but more congestion and higher wet for parking a vehicle are looking at that and doing pilots on car sharing. We are doing experimentation around micro buses and transit vans in terms of allowing that to get around and using mart phone apps to do it. Apps to doartphone it. Always and about making peoples lives that are. We are looking at that and saying how do we help people be mobile . Mobility is allowing people to live, play, and work where they want. I was shocked when i saw that toyota will be using your technology. Talk about how that came to be. Guest we have developed the ability to take your favorite app on your phone and use it in your car and access it through your touchscreen. Open sourceade that because we think standardization is a good thing. Toyota has taken a look at that and they have adopted it. The benefit to the consumer is they get more ability to use apps in the vehicle. Is benefit to developers they only have two develop at once and they can go across multiple forms. Guess im surprised because the company has been so difficult to give up that dashboard space. Guest we are thinking very much like a technology company, where open source is a good thing. If it can facilitate standardization, thats good for our development costs. That is the transformation we are going through. Thinking different and questioning traditions. What do you make of the g. M. Andlyft investment . Guest if you think about it, our traditional business of selling cars and trucks globally is about 2. 3 trillion a year. Mobility services, think about how people get around besides just buying a car trains and planes aside, its about 5. 4 trillion. And cory what is in that . Guest taxis, buses, things of that nature. We in our industry get none of that. So if you get a small pieces if you get a small piece of that, that could be substantial. Cory talk about the pace of the self driving front. Where do you see that developing . Pardon the pun, but what are the speed bumps along the way . Ford that is part of the development plan, seeing how people live their lives. They want to stay connected and be mobile. Autonomous of vehicles, we announced we are tripling our Autonomous Vehicle fleet. We are tripling of from about 10 cars to about 30 cars. What you are seeing is the sensor and Camera Technology and the Software Algorithms that controlled the brain of the car. The thing thats going to be an inhibitor is the regulatory and legal claim legal framework. We are reaching out in having the sectors come together before the vehicles that here. Cory great stuff. Really a lot of change happening here. Bloomberg news editor at consumerre at the Electronics Show in las vegas. Coming up, Bloomberg Politics za of the wutang clan. John heilemann will join us with more. Starboard slamming yahoo s decision to split off its company. Cohen weighs in on the north korean bomb test. David welcome back to Bloomberg Markets. In the battle for the white house, donald trump is senator ted cruzs canadian roots might be a problem if he won the election. Now the white house is weighing in. It would be quite ironic if after seven or eight years of drama around the president s birth certificate that republican primary voters were cruz as theirtor nominee, someone who was not born in the United States and only 18 months ago renounced his canadian citizenship. David trump is making a big deal about this and you have ted twitter,ng to describing this as jumping the shark. I suppose this is something to do with the polls in iowa. John there has been a truce for a long time between crews and trump. Between cruz as trump. Trump has been trying to figure out how to take on ted cruz even though he has tried to not take on trump. Trump is starting to feel the pressure to go after ted cruz and has not found a good line of attack. This is his latest attack, basically going birther on ted cruz. Ted cruz is still trying to laugh at off. David any indication that this is something that would dog him going into the primaries . John im not a constitutional lawyer, even though i play one on tv. It seems on the basis of the mass of legal opinion that ted cruz does not have a problem here. There are some legals dollars on the margin who thinks he might have a problem but by and large, they think you do not they think he does not. But trump, because of the volume he speaks at and the way he speaks can throw a lot of doubt and uncertainty into the world. Do i think this is the thing that will stop ted cruz ultimately . I do not. Its irresistible for the media to cover it. If i was ted cruz, i would be a little uncomfortable. David senator sanders gave a speech yesterday taking on wall street directly. You are trying to hammer him down on some specifics on what he finds wrong with wall street. What did we learn about his land . John one of the things we raised is that he is clearly more antiwall street than Hillary Clinton who has some serious proposals to do further wall street firm wall street reform. The details are not that resize to reinstate glasssteagall. We know what that would look like. Putting it back in place would have obvious implications. The notion that he would start to break up the biggest banks is very hard to pass that law. It was considered act in 2009 and there were some senators who put that up as a solution to the financial crisis. It didnt happen then and its hard to see it happening now. He talked about having a user law in the United States. That is a biblical term. A law andagine such what it might look like but sanders has not put forward what that legislation might look like. I was surprised in the interview would we asked him about who he consulted with on economics, he mentioned bob reisch but he did not have an economic adviser. Hillary has a list of 100 economic advisers. Manyrs did not really have go to economists. Maybe because many of the economists he respects are so far to the left, hes not going to say carl marx on the show. Hes very principled but in terms of specifics, not so much. We have reported a lot about Martin Shkreli thought when i came to bloomberg i would find a place of his more obsessed with wutang clan than i am. Mr. Shkreli, he has the power to do something really cool. That was something that does if he wants to be philanthropic, he could do something that would allow more people to hear the record. David you did give him a chance to respond to things Martin Shkreli said. Is he doesnttude mind. Hes as bad people, good people, you cant choose your friends. He paid for the record, he can do what he wants with it. But it is clear he would like to figure out some way he has talked to people about how do we get the album to be in the Public Domain . I think what he would like is the light ofo see day. As a Public Relations move, it would make sense to release it to the world. The contract doesnt say what you can or cant do with it. You could put it up on a streaming service and make it free to the world. Shkreli doesnt seem like the kind of guy that would want to do that but he might see the wisdom in doing that given how bad his Public Images right now. David john heilemann, managing editor of Bloomberg Politics. You can see that interview in its entirety tonight beginning at 5 00. Lets go to the markets desk where julie hyman has a check on some of the movers. Is a time to give a shout out to wutang financial. John one of my favorites. That is where i get all my financial advice. Lets take a look at what is going on with markets right now. We have seen the s p 500 take and other leg lower. Dipave seen a little further, 1. 7 and now the decline is setting up to be one of the worst starts to a year that we have seen in the last couple of decades. We will bring you those stats coming up at 3 00. There is one single mover among the 10 worst that is not commodity related and that is autonation. Autonation coming out and saying it will report significant margin declines for the fourth quarter. Down 300 yearoveryear. The ceo said it was more push than pull in the quarter and is trying to take steps to fix it. Consol energy was one of the worst performers last year and the company is cutting spending on natural Gas Exploration by 41 and cutting coal sales forecasts. A lot of companies have been cutting production. Many of the Oil Producers have done it, and now console is doing the same. Much is one stock doing better today netflix. That was the bestperforming stock on the netflix last year, on an as it embarks aggressive Expansion Plan adding 130 countries. Remainstion for netflix how any subscribers versus how much do you have to pay for new content . Thank you very much. Applyst investors pressure on yahoo s board. We will look at that after the break. David welcome back to Bloomberg Markets. Starwood values has its eye on yahoo management again. They say dramatically different thinking is required together with the ethic and changes across all aspects of the business, starting at the board level and including the executive leadership. Yahoo did respond to that moments ago, saying our lord and regular team engage in open dialogue and strive to maximize shareholder value. And Management Team engage in regular and open dialogue and strive to maximize shareholder value. Investors seem to be getting frustrated with the pace of things. Emily investors have been frustrated for a while, but must firsttar board Public Statement since november. This is the activist investor encouraging yahoo to spin off the alibaba steak and then said dont spin it off. Instead, lets consider a spin off of the core business which is, according to starboard, less than zero. You see starboard laying the groundwork for a proxy fight. Theyd do not want the alibaba steak spun off. They think a spinoff of the core business or sale of the core business could work but they are not confident in the current executive and current board to execute on this. Changes andnagement they want Management Changes now. Yahoo has said they are going to explore a spin off of the core business. That could involve a sale but starboard saying that will take a year and shareholders cannot wait. 1 id starboard owns about of the companys stock, so not huge relatively speaking, yet very percent for us, writing the letters and voicing this. How much sway do they have with the yahoo board . Part of this is a Public Relations war and you have shareholders who want answers more quickly any year. A year is too long to wait. Who has said they are looking at restructuring and are going to announce some sort of plan around their Earnings Call which is coming up. So, we are waiting to hear. Marissa mayer coming back from maternity leave, shes not back already. She is definitely working and should be coming back soon, but the reason yahoo hasnt explored a spin off yet is because they dont think they can get fair value for it. An investor like starboard says its worth less than zero, they dont think they are going to get a fair price right now. This goes to show starboard is laying the ground to turn up the heat more considerably which could result in a proxy fight. David emily chang will be focusing on food on yahoo tonight. And a board number four yahoo will be joining her tonight. Coming up, we will sit down with hps chief Technology Officer who will join us from the consumer electronic show. The dow down jones down 1. 9 . This is Bloomberg Markets on bloomberg tv. X it is 3 p. M. In new york and 8 p. M. In hong kong. Welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, good afternoon. Im betty liu. Breaking news here on stocks extending their losses in late trade. The dow is now down over 300 points following the lead of global markets. Crude oil dropping below 34 barrel. The apparent Hydrogen Bomb test by north korea is just one of the geo political factors riling investors. The un Security Council vows significant action but how will it impact the world . And turning up the heat on yahoo Ceo Marissa Mayer starboard letter sending a letter to landing change saying management is destroying value. Will it lead to a proxy fight . As i mentioned, stocks