Rates are the second time this year, but Jerome Powell says only moderate policy moves are needed from here. Down, a more turn extensive sequence of rate cuts could be appropriate. We do not see that, it is not what we expect, but we would follow that path if it became appropriate. Anna the fed also plans a cash injection to tame the repo markets. Sticking to its guns, the boj calls for an october review after leaving policy unchanged. Investors look to the bank of england for their Interest Rate decisions later this morning. A halfhour from the european open. Treasuries, let me trim this chart down. We have come back down from the fridayike we shot up to my currently trading at 1. 70 after Jerome Powells press conference. We see futures pointing to a negative open in europe. On the s p more tellingly. French futures flashing a little green. Off almostures are 0. 25 . What do you also see . Anna u. S. Futures do not will bethe late rally sustained into todays session. We see negative reaction in some markets in asia, but overall in limbo in the asian session. The narrative of of where banks go from here, and how much support to expect. It looks like a split on the Federal Reserve committee. In asia, down 1. 2 in hong kong. People are asking if the chinese will follow the fed. Pushing of australia the aussie dollar down. Language,view of prices and growth in the economy, but in doing nothing they might have disappointed some who expected something more dovish. That did not weigh on japanese stocks. Some of the sizable moves, the aussie dollar move having an impact on the two years. A big move in italian debt, the fiveyear, we will keep an eye on that. The downward trajectory for metals, iron ore in singapore down and continuing the drop we have seen. Lets talk about the aftermath of the Federal Reserve. Mark, your thoughts here on how hawkish a cut this was from the fed. The headline soundbite we played gives two sides on the argument of what the fed can do. What was your assessment . Mark the expression going around today is confusion breeds contempt. Investors do not know what to make of it, they are not being constructive on assets today in asia. We are seeing in tokyo where there were gains in japan, some of that is coming back. The rest of asia looks subdued. The s p futures are down as well. Treasury futures setting off hard in the morning but rebounding a bit. The dollar retaining its games against the yen, a mixed day were investors are having trouble getting the story. They want more information. We need more clarity because the futures markets are surprising. Quite a bit of head scratching going on, and reflected in the fact that nobody has a strong conviction of what to do with assets after the fed meeting yesterday. Matt they have known what to do with assets over the last year. If i look at the s p 500 which dropped 1 before the end of the press conference then rally back , even with a year to date gain of 20 , that is pretty incredible performance for the u. S. Stock market. Have we reached a peak . Of people are thinking we would see a new record high yesterday if the fed cut rates. Below they about 1 current record. That did not happen. It was choppy during the day and back to where it started. Itple will start questioning if we do not see a new record high on the s p 500, people will be disappointed. They will wonder where the momentum has gone. What you are seeing in equity trading in the states is a momentum driven market. If you do not get a continuation of good news, it can reverse course quickly. We have seen that several times this year where the market looked hot and reversed in a couple of days. Year to date the game is good, but there has been big trading ranges and it feels like we are getting close to the top of another trading range. Thank you very much. On can join the debate todays question of the day, which asks which assets are most attractive following the fed rate cut . Lets continue the conversation with ewald nowotny, former governor, oesterreichische natl bank. He is here with us in berlin. It is an honor to have you with us. Let me ask you about the ecb meeting last week. It seemed Mario Draghis message much more wet have can do in the central bank and need governments to step in with fiscal support. Ewald i am retired so i was not at this meeting, but i can read the messages. Be the banks should not only game in town. There is a need for additional policy. Week the dutch government has some answer to this, so the clear increase expansion, and i hope others follow. Matt we have seen a number of oftic clearly here in europe more rate cuts. Your successor, for example, the french ecb governor, the members, german ecb from finland and holland, with so many people on the governing council against a rate cut, why do you think mario draghi said he consensus was so clear he did not need a vote . Draghi didink mario a good job as president of the ecb. I think it is shocking that we see now a number of personal insults against him in the german press. Case, i wouldic be critical because i think with regard to lowering the deposit rate, nobody expects this will have a positive effect on inflation rates. It is combined with a tiering program. Matt do you think mario draghi himself does not expect that . I think what he in the majority wanted to do was give a signal, and this makes sense, but the signal should be answered by fiscal policy. This is something that is needed. Kind of restarting the program of buying bonds, that might have an effect, but it might be better to keep your powder dry because you are running out of options. Anna good morning to you. There were interesting comments coming from your successor at the austrian central bank. Such as more transparency about who argues with whom at the governing council meetings. And the possibility of lowering of the inflation target down to 1. 5 where it seems to want to sit. What is your response to these ideas . Nowd i think what we see is the ecb is developing a policy of inflation target with the rate of 1. 9. On the other hand, we see we have structural changes in the economy, and if you look at the fiveyear market perspective, it is 1. 2 . It makes sense to think about, 1 and a range between 3 , and some Central Banks have adapted this. I would hope this will be a discussion that many Central Banks have started, some policy, and i would hope such a discussion will be started within the ecb. Set out a little more detail if you could about what difference that would make, giving a range the ecb to generate more inflation. Ewald the difference would be, if you have an inflation rate of 1. 5 or 1. 6, you would not see the necessity to be expansionary. If we have 1. 9, it would mean Central Bank Policy has to be expansionary for a very long time. A lot of problems, technical problems and maybe legal problems. It is worth discussing this. Matt you have heard americans talking about negative rates. The fed is far away from that. Powell yesterday said he does not think they need to go there. Resized rzman has criticized and said they were poisoning the financial system. What do you think about this kind of criticism . Ewald it is clearly an abnormal situation to have negative rates , and such a huge amount. It is not so easy to get away from this, but i would have preferred a policy that does not increase the problem. To someying to get normalization. I cannot imagine this is a permanent feature of Monetary Policy. Matt do you expect governments to step in . You talk about the german press being negative about mario draghi. Expect about the German Government spending more money . Ewald i am talking as an outsider. Matt we still value your opinion. I think there is a lot of pressure now. There are different ways to be expansionary, it can be by reducing taxes. There is room to reduce taxes. There is room to maneuver. Anna on the subject of negative rates, do you think they pose an existential threat to Capital Markets as we know it . , the for the time being horizon of one year or so, i would see this might be a feature, but i will take seriously is the danger of an inverse structure of interest curve. There is a lot of discussion about it, but we have some empirical evidence that means negative elements for the banks and the economy. This should be a priority to avoid such a structure. Matt i recognize you are an outsider, but you did laud the performance of mario draghi, and i would love to hear your opinion as a former business leader, what do you think of Christine Lagarde coming into the ecb . She is clearly more of a politician than economist. Do you expect her to shake things up at the ecb . Ewald i have the honor to know christine for quite some time, she is very talented on economic policy. Choice,she is a good but of course Central Banks time objective of stability. These are not institutions for abrupt changes. I would like to see a certain element of continuity, but reacting to different needs as they come up. Matt will she be able to convince governments to spend . It is something mario draghi has been pushing for years but not able to achieve. Ewald this is something where external needs will be the convincing argument. In some cases, rational arguments take a long time to be effective. Sometimes you have to wait until it is obvious you have to do something. We might get into this situation. Matt thank you for your time. Ewald nowotny, former governor, oesterreichische natl bank. Up, we will get a Rate Decision from nordisk bank. It is an interview you do not want to mess. The fed has cut rates for the second time. Chairman powell says the u. S. Outlook is solid saying moderate moves should be enough to sustain the expansion. Joining a now is James Mccormack , director global head of sovereign supranational ratings, fitch ratings. What do you think of the cut yesterday . We think the fed is done thenow and agree with assessment that the u. S. Economy is fundamentally strong. The only thing that has really changed is the global outlook, and that is driven by trade and the trade conflict. Hawkish cut, i guess you could say that because there is not an obvious path for another rate reduction which is the way we are looking at it. We think the fed stays on hold until the end of next year as well. Is that because you think the data is better than the market is factoring in . Even when the fed looks divided. James we are talking about two things, the market and the real economy in the u. S. If you read the statement the fed put out, it sees economic strength as we do, labor market strong, household sector strong, consumption growth, good. A little weakness in investment and exports, but it does not look like we are on the verge of a downturn or recession. We do not buy into those stories. The economy is fundamentally strong. Anna do you think the trade war will catch up with the u. S. Economy the way it has caught up to the German Economy and others . Because the u. S. Economy is not as open, not as concentrated in manufacturing. Is at thee u. S. Center of the uncertainty, the Economic Impacts china china and u. S. Are bigger in the eurozone. U. S. Is at the center of the dispute. Matt what do you think about the possibility the tail wags the dog . A lot of people would say the fed was pushed to a rate cut by the market because you are in a situation where 2 growth, 2 inflation, 3. 7 unemployment. The president may have pushed them there as well. I want you to listen to this where a journalist asked the governor about trumps attacks. Mr. Trump has been a vocal critic of you, and your colleagues you boneheads and a terrible communicator to read how do you respond to these criticisms . I do not. I am not going to change my practice here of not responding to comments or adjusting comments by elected officials. I will just say i continue to believe in the independence of the Federal Reserve from direct political control has served the public well over time. My colleagues and i will conduct Monetary Policy without regard to political considerations. Matt do you think political or market considerations play into what the fed does . On thei would say yes market side, not so much on the political side. As long as mr. Trump is in the white house we will have these outbursts from him with respect to policies he is not happy with. Our stance is that does not move the needle for the Federal Reserve. It makes the job more difficult and opens questions about independence, but more broadly there is a question of Central Bank Independence not just in the u. S. But globally. At fitch we do not think it makes much difference. For the markets, the pressure on the fed is something that is something they take into consideration. We are a little worried about that capture of Central Banks paying less attention to the economy and more to the markets. Anna thank you for your thoughts, James Mccormack, director global head of sovereign supranational ratings, fitch ratings. Minutes away from the open, we will look at your stocks to watch. German engineering giant named a new ceo. This is bloomberg. Anna welcome back, you are watching the boj governor giving a News Conference in tokyo following the decision. No change in policy. They are reviewing their progress today. No sign of recovering in the Global Economy today. A steeper yield curve is desirable, the boj has referred easing. Matt really . Can you believe that . They want steeper curves and have been pursuit of that for some time. Lets talk about the stock market. They have been announcing reshuffles for a couple of days. Yesterday was the chief technology officer, who is designated deputy chief executive officer. , but het a done deal has been in charge of the restructuring and is emphasizing ownerships with german manufacturers. Story withis the next . Innumbers came practically and they maintained their guidance. For september the numbers are looking softer. Lower, and the shares have been up 55 this year. They need a push to get a boost at the open. Anna another red headline from. He boj, more easing now we have seen the yen gaining. We will see how that moves. More on the markets opening up here, and. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Anna a minute to go to cash equities trading. Lets look at how the markets are positioned. The european session a minute away, asiapacific looking flat. All the talk of the Federal Reserve conference, the threeway split on the fmoc leaves the market confused about that, and narrative to adopt. The rally at the end of the session yesterday not necessarily going to carry through into today. We see strength in the yen, maybe disappointment about what the boj delivered from a dovish perspective. Englandd, the bank of meets later today. The brexit story very much at the fore. There does not seem expectation the bank of england will do anything today. Futures in europe suggesting a mixed to flat start to the trading day with a bit to the downside as we see u. S. Futures looking in the red. Investors are trying to figure out what the fed is communicating, and what it means for policy going forward. 0. 2 . Se 100 down by the spanish ibex up by 0. 1 . Euro stocks as a whole pretty flat. We see a Little Movement in the agayen. In the nordisk we have a lot of rad on the board. D on the board. Materials and Energy Companies look in the red. I am not getting a lot of direction from this break down what do you see in the individual movers . Matt i see some interesting movers. 290t off, and even split, winners, 290 losers. I was checking to see if any banks were on the upside. Yesterday we saw financials lead stocks back to games after the cut. Socalled hawkish we see pmb paribas adding points to the stoxx 600 as well as lloyds and ing. These are not huge gains or outsized moves in terms of the gainers. Switzerlands watch exports, 1. 5 year over year. Taking the most points off the stoxx 600 as the oil price continues to feel pressure, both down 1 . Shell is off as well. Iageo is off. The Worlds Largest distiller. You would think more people depressed they would reach for the model, but that is another story. European markets opening mixed in the wake of the fed cut. Holding off on signaling what comes next. The fed is a said paired be aggressive if growth falters. We will be making decisions meeting by meeting, and we will try to be as transparent as we can. If the economy turns down, a more extensive sequence of rate cut could be appropriate. We would certainly follow that path if it became appropriate. I do not think we would look at negative rates. If we experience another episode , we have the tools to address that and will not hesitate to use them. We are watching carefully, and there will come a time when we have done enough. Theyre made come a time when the economy worsens and we may have to cut aggressively. We will watch things carefully. Matt benjamin jones, senior multiasset strategist, state street bank. It seems like all good news from powell. He is ready to cut aggressively if needed. He does not see it as needed. The economy is strong. He does not see negative rates, termed as financial poison by big names in the u. S. And Market Operations are back, shouldnt the market like this . Benjamin i think powell delivered with the market was expecting. Powell was keeping his options open. Like investors, powell can see the policies i can see the economy and market. Adjust we stand ready to policy if needed, but perhaps we do not need to. There was not an awful lot of news. It was at the margin a little more hawkish than expected based on the fact that the dots are showing we will not get further rate cuts this yea