Statement the fed held back from changing its line on the balance of risks. A number of Committee Meetings were edging in that direction. What did they do . It seems a compromise here. They do not change the balance of the risk statement but they add that word further a couple of times in the statement. That change was explicitly in the context of the brightening outlook that fomc officials have for growth in 2018. Said they agreed to update the characterization of the expectation for the evolution of the federal funds rate in the postmeeting statement to point to further gradual increases. It appears this was a half step by the committee in january. Ok. Towards signaling a quicker pace of increases but a half step. Lisa thank you so much for that. U. S. Markets close in two hours. We are getting so much reaction and bond markets to the fed meeting minutes. Lets get a check on where stocks are trading. Taylor we are seeing highs of the day. Gains accelerate going into the meeting. We were up anywhere from. 6 to 1 . Over 1 a bit of an acceleration. Lets look at the 10 year index to see where we stand. 2. 90, Holding Steady now. Not a huge reaction. The same in the bloomberg dollar index. Looks fairly stable. I want to look at some of the build we are seeing and dig into the macro level. Celgene just received antitrust clearance to buy youy juneau. Both companies and investors happy that the antitrust hurdle was cleared. Baker hughes and ge shares moving. Ge confirmed today at a conference that it has no plan to divest its majority stake in baker hughes. It owns 52. 5 of the chairs. Clearly happy they wont divest the majority just yet. A lot going on in chipmakers. Nxp. Dcom, qualcomm and an for nmm raised its offer xp. Broadcom said that offer was too high. In response, they lowered their bid for qualcomm. Lets get some more perspective here. We are joined by jeremy siegel, university of Pennsylvania Wharton School professor. Got one surprise increasingly comfortable that inflation will pick up, albeit gradually. Jeremy yes. One has to remember that meeting was three weeks ago. It was before the stock market selloff. They were seeing much stronger gdp growth than some of the later data. Retail sales were very disappointing. The people i follow say that the first for gdp is now looking just a bit over 2 when they were looking at 3 or more. Away, theres dated month from today, march 21 is going to be an extraordinarily important meeting. The first meeting that jay powell will preside over. Also a new look at the dot plot and their expectation of future fed funds rates. The markets should shrug off a lot of what theyve seen because theres been so much that has happened subsequently and that will happen in the next three weeks. Lisa can you talk to us about what is more important right now for the Federal Reserve . Inflation, which is something they talked a lot about, or the fact that at some point, they may have to drop rates down again if the economy does stop. They want ammunition to do so. Can you way these two issues . Sure. Lets raise them now so we can lower than later always seems strange. Theres been talk about that for a long time. Low inflation low Interest Rate world, that socalled zero lower bound which we saw europe violating being a constraint on the market. Overwhelmingly, i think its the inflation data. Even though the real Economic Data hasnt been there in the last three weeks, inflation data has been higher than what the fed and the market expected. I expect the dot plot to be stronger for and of year end of year. We saw in december the median estimate was three increases. I wouldnt be surprised to see four increases. However, again, we have three weeks of data until this very important meeting. Julia lets type as to what they are saying. Fed officials cautioning about Financial Market imbalances. The gyrations weve seen in the markets, three weeks has been a long time as well. Can you put the movements weve seen in the stock market into perspective . Overall, the returns are pretty consistent on an annual basis. Right. December, i said we would get a correction this year. We did get that 10 drop. Yes, the fed does look at those financial conditions. I think we got through this correction very well. Brief,ere was that sudden downward movement that we had two weeks ago. Trades were going on, the market certainly has recovered, selling at a much more reasonable p e ratio. We have shaken off a lot of those momentum players. We do look at the Financial Markets. That does summarize everything that is going on. In marchgest concern is going to be how the inflation data plays out. And what kind of inflation data we will be getting in these next three weeks. Julia for investors, too. Lisa weve been getting a bunch of treasury auctions this week. We had a weaker than expected threemonth and sixmonth auction yesterday. Today, you saw weaker demand. How much does this way into the feds decision . Clearly, we do see a lot of bonds hitting the market. This week, over 100 billion of bonds. We see rates pushing towards 3 . That means to me that the fed could be more aggressive. One of the items the fed has talked about in previous meetings is the fear of flattening the term structure. Flat an inverted term structures are very bad signals for the economy. With that 10year now moving up almost a 3 , the fed has a lot more breathing room to bring that short right off without fearing that in version. They will look at the market signal of those long bonds. Certainly if they rise above 3 , it means the market is concerned about it and the fed has to take cognizance of that in its decision this march. Im sure its going to be a one 25 basis point increase. Plot could push towards four increases this year instead of the three we saw in december. Jay powell will be leading the meeting and q a. I will be front and center for that performance. Wont weat we all all. Thank you, jeremy siegel, professor. Ool we have seen a brief spike higher, trading at 1 for the dow, outperforming the financials, industrials supporting leading the gains that we are seeing here. We have seen some flattening of the rate curve. We have had more supply in the session today. Lets get a look at whats going on as far as the first word news is concerned. Mark President Trump will hold a listening session about School Shootings today. He will meet with parents, teachers and Students Affected by last weeks shooting and the shootings in columbine and newtown, connecticut. The white house says hes willing to listen to gun control proposals. Thousands of students who converged on floridas capital to urge legislators to pass covered gun laws tougher gun laws 17 people were killed a week ago today. Their friends were among those present. Son needs to know how to protect himself from being murdered. Afraid to send my 10yearold brother to school. The day after the shooting, he said im going to school, im not afraid, i wont die, i promise. Mark the students also met with state lawmakers. Newlyis, liberias elected president met with Emmanuel Macron on his first state visit outside of africa. The two announced the creation of a fund to support sports related projects and never got. He hopes the deal can advance the interests of liberian youth. The government said the people use the resources to benefit the people. This is where we are. Of dollars billions to liberia you cannot blame anyone but us for not investing them into our own country. Liberia is one of the poorest countries in africa and relies on funding from the united states. France is planning to provide Additional Development aid to the country. Antonio guterres is calling for an immediate end to the violence in a rebel held suburb of damascus where 400,000 people are living in what he calls how on earth hell on earth. Syriaghting in must allow humanitarian aid to reach all in need, including Urgent Medical treatment. This is a human tragedy that is unfolding in front of our eyes. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Julia lets move on that coming kashkari helps decode the feds language. From new york, this is bloomberg. Lisa this is bloomberg markets. Julia lets get a view from minnesota now. Michael mckee sat down with Neel Kashkari. He weighed in on the wording from the fomc january statement. We debate each word change in the statement. A lot of debate goes into those. Yurther is intended to sav furthering the path we are on. Julia mike mckee joins us from annapolis with more highlights from his exclusive interview. The decoding of the word further here the tax overhaul. Get a specifict number on how much theyve marked up there forecast forecast. The fed will continue on the right path theyve already announced but they arent ready to raise the number of rates this year. Heard from the Philadelphia Fed president who suggested he is still in favor of two rate hikes rather than the three that is the consensus forecast. The fed not changing it statement. Go, more months of data to thats where we are at the moment. Fed president lis Neel Kashkari isnt exactly a consensus member of the fed. Is that right . Michael he certainly wasnt last year. He voted against all of the rate increases. He suggested today hes more willing to consider the idea buildingation may be in the economy and the fed might have to do something about it. He wants to see the data. I did ask him whether or not a breakout of inflation in the fed response would bother wall street enough that the fed would have to step in with the socalled fed put. He was pretty adamant they wouldnt. Wall street overreacts to everything. We overreact to the upside and the downside. We cannot make policy based on market blips up and down. We have to focus on the longterm Economic Outlook and the mandates congress has given us. Michael kashkari is with the middle of the pack, i would say, looking for data of whats going to happen and open to the idea that the fed has to move if we start to see an outbreak of inflation. Lisa did you talk about this idea that because you are seeing higher 10 year yields that gives the fed more room to be more aggressive on the short end . Michael he didnt talk about that. He did talk about the idea that maybe at this point the markets are beginning to catch up to the fed. Beginning to see what the fed has been concerned about. The idea that down the road, we will get something if you are regular ande predictable and slow, gradual moves are the best thing for the economy while we wait to see what happens with the stimulus, whether more people come off the sidelines. Neel kashkari is of the view that there is still slack in the economy that could be taken up by some of the stimulus we will get. Julia the comments they made about the market gyrations we had a market blip from kashkari, small potatoes from dudley and the most predictive selloff from james bullard. Do you think theres a reaction function that makes them think we have to be more cautious now . Just in light of what we saw with the volatility. Do you think the commentaries interesting . Michael they dont want a fed in, but there has been one. They held off on a rate move in 2013. We saw it after the Chinese Markets melted down in january of 2016. There are times when the fed fears what the Market Reaction is going to be or may be to a fed move because they dont want to destroy business or consumer confidence. It has more to do with volatility than actual levels. Today, they cannot make policy based on that kind of fear. They have to make policy based on whether they see the economy what the circumstances are. Julia now, its more potatoes. Michael mckee, thank you so much for that. Still ahead, the etfs report. Etfy, we look at the inspired by the investing strategy of warren buffett. More on that to come. From new york, this is bloomberg. Lisa this is bloomberg markets. Julia time for our smart beta etfs report. Volatility can be coupled investors but helpful for smaller etfs for increasing liquidity. Discuss, eric. Talk us through it. We had a list of upandcoming rising stars from the smart beta. New ag is smart beta on the bond side. The big complaint with the ag, it doesnt give anything. You can get more with a 10 year treasury. Tos reorganizes the ag squeeze out more yield at 3. 4 . People like it for that reason. Im not surprised it saw a lot of va volume. Why money isn being pumped into these smaller etfs. People haveselloff, an excuse to sell their mutual funds so they can realize some gains. They are looking for etf to buy. This more liquidity and volume this took a lot more money. Its only 20 basis points. Its possible to fire a bond manager and highere this etf. Lisa another rising star, x pyg. In the past year, it has returned 25 . They are buying it because spidr cut their fees on 14 etfs. Its the cheapest on the market. If you cut your feet and you are the cheapest by a basis point, billions will pour in. Its barely growth. It takes the 250 side of the growth s p and market cap w eights it. Julia talk about u. S. Infrastructure. How it pays. A good figure for the u. S. Oneastructure this solves the problem with other infrastructure etfs. A lot of them have international exposure. This one is only u. S. It does this thing where it doesnt have any utilities. Thats the problem with other infrastructure. This tries to correct the problem of other infrastructure etfs and people are responding. Etf every wednesday, catch iq. From new york, this is bloomberg. American olympians will be saving some green in their pursuit for the goal during the 2018 Winter Olympics and pyeongchang, south korea. This is thanks to a president obama era law that prevents prize money from tax. This amounts to potentially tens of thousands of dollars in savings for victorious olympians. Julia that was one of the highlights from tictoc, streaming live on twitter. This is bloomberg markets. Im julia chatterley. Lisa im lisa abramowicz, in for scarlet fu. Lets get a check on the headlines. Mark survivors of the Florida School shooting met with state lawmakers and held a rally at the Capitol Building in tallahassee. They demanded legislative action at the state and federal level to deal with gun violence. One speaker at the rally said the 17 students and adults killed a week ago today in parkland are not statistics. They were family members and friends and loved ones who died because a former student was able to purchase an assault weapon. People who witnessed a collision between an amtrak train carrying republican congressman and a garbage truck in role in virginia last month told investigators the truck entered the Railroad Crossing after safety gates came down. A preliminary report was issued today by the National Transportation safety board. The probable cause of the accident hasnt been determined. One Trust Company employee was killed. Several people were injured. President trump is attacking his predecessor, suggesting he should have done more to prevent Russian Election meddling. On twitter today, the president said why didnt obama do something about the meddling . President trump also took a swipe at his own attorney general. During the 2016 campaign, president obama called on russia for political interference thats called out president obama called out russia for political interference. Between the two koreas must be kept alive that she hopes continued talks lead to reconciliation, piece, and the denuclearization of north korea. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Lisa Commodity Markets closing in new york. Heres todays biggest movers. Net gas having another big day on forecasts of Colder Weather in europe and the midwest and east coast. Take a look over at lumber, its up almost 18 on the year on a positive outlook for the u. S. Home market. A quick note on grains, they are approaching strong gains year to date. Corn and wheat have plenty of room to run. Lets end on metal. Silver rising today is the dollar slips. Cobalt gaining 70 since last year. It is used in lithiumion batteries. Thegrowth in electric vehicle space has sent cobalt soaring. Julia apple is in talks to buy the metal directly from minors for the first time. The company is worried demand for cobalt could threaten its own supply which it needs for iphones and ipads. For more, lets bring in mark gurman. Great to have you with us. Set the scene for us. To what extent does apple require cobalt for its iphones and ipads . By the amountrfed needed in electric vehicle batteries . Mark great questions, as usual. Its the most important component in any mobile product. It is the batteries. Theou look at the industry, rampup of technology over the past 10 years, Battery Technology is so far behind the technology that makes things work wirelessly, augmented reality, Artificial Intelligence there seems to be a breaking point when theres not going to carmakers,ecause the dozens of companies eating up the cobalt technology, which is easier and more lucrative to produce for cars than for smartphones and whatnot. A creative predicament for the smartphone companies. How can you explain to me this is a different arrangement thean what apple currently has . How are they locking in the agreement with their cobalt miners . What are the miners getting out of the agreement . Mark when apple builds a new device, they go to their suppliers and say we need this many battery packs, we need them shaped this way. They buy a bunch of these battery packs. Samsung and the other battery component makers are sourcing the cobalt. And are marking them up selling them to Companies Like apple and google. Apple wants to go deeper in the supply chain. Versus just buying the battery packs from whoever and installing them in the iphones, they are going