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tv   Worldwide Exchange  CNBC  October 12, 2017 5:00am-6:00am EDT

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. giving the green light stocks soar to report highs as the fed signals a december rate hike is all but certain. you better get it passed, that's president trump's warning over tax reform. and crisis in california the death toll continues to rise as fast-moving wildfires sweep through the heart of wine country. we're live on the scene. it's thursday, october 12, 2017, "worldwide exchange" begins right now. ♪ good morning
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warm welcome to "worldwide exchange." i'm wilfred frost at cnbc hq >> i'm safer sar a eisen in washington today we're always here when finance ministers from around the globe descend on washington. this time it's unusual 2017 for the first year since before the economic crisis and financial crisis is a year of synchronized global growth european debt crisis, fiscal cliffs, all sorts of uncertainties in the u.s forget it. this year the global economy is in expansion mode together, it's not just certain economies we're relying on the question is how fragile is that how sustainable is that? how can policymakers take the opportunity to put in place policies that will sustain it. policies like tax reform front and center in washington for the u.s. >> one other common theme, apart from the uk, is the lack of inflation.
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i'm sure that's a topic that will come up i thought we would get a catch-up first i only see you by video link these days >> it's a busy week for me the p&g proxy vote in since nat tichlt i'll cincinnati i'll be back with you next week. >> okay. great. the dow jones up yesterday this morning we expect a slight decline, 21 for the dow. the nasdaq down 5 points, the s&p down 4 ten-year treasury note slipped a fraction yesterday this morning 2.33 the yield on the ten-year >> as for the overnight action in asia, let's look at where we stand following on those record high closes for the nasdaq the nooe kikkei continues to pu higher, a third of a percent
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shanghai closed flat hong kong up a quarter of a percent. south korea doing strong that's part of the theme here, emerging markets growth. emerging market stocks at a six-year high. as for the early action in europe, let's show you the trade there. there's been focus on spain lately as the talks hopefully continue between the catalonian leaders and the spanish government spain is flat now. german dax down about 0.2% ftse 100 up 0.1. broader markets, oil prices fwaned yesterd gained yesterday 0.3%. they are at 50.09, despite a slide today. let's look at the dollar board, which slipped about 0.4% yesterday. now half of that came before the fed minutes, half came afterwards it wasn't like the fed minutes were particularly dovish, ongoing discussion of the lack of inflation which we'll get a
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pointer on with ppi today and cpi tomorrow but today we're seeing a fraction of weakness of the dollar against the yen no move for the euro and the pound. gold prices for you, down 0.4% yesterday. they're up to 1,298. bitcoin crossed above the 5,000 level, up 6%, 5,111, we will hear today from the man today who thinks it's a fraud, jamie dimon. >> ken rogoff just wrote on project syndicate, crypt to foofoo crypto fools gold, the price of bitcoin. it's a topic among the finance ministers. >> a wide topic. >> after christine lagarde said
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last week it's too expensive but there's some legitimacy there, shemerging markets where it could be a technology >> it's the technology that put support behind the bitcoin, but it's the legal or sovereign backing that people take issue with we will discuss that later on today's wall street agenda weekly jobless claims and the september producer price indecember at 8:00 a.m., we'll hear from a bunch of fed officials, rafael bostic, jay powell and lael brainard giving speeches don't miss an exclusive interview with boston fed president eric rosengren, he's sitting down with steve liesman at 4:00 p.m. earnings season kicks off this morning results from jpmorgan and citigroup. you will be covering these what are the broad themes you
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expect the classic thing again that the banks have done well and lowered guidance during the quarter. mid quarter we heard from some big investment banks that trading would be down. we knew it would be, because q3 was very strong. they guided down on that already. hopefully for them that's priced in the issue on the retail side of the bank will be interesting to watch. loan growth is expected to have slowed slightly. we will look for commentary on that the margin should improve. we have the june rate hike fully coming into play, though yields were low throughout the quarter, they have spiked a bit since the quarter. watching for guidance there. commentary on two key things, tax reform, but also deregulation that's started to happen a bit more by stealth since randy quarrels has been confirmed, and what can happen there even if you get gridlock on things like tax reform here in washington president trump is expected to sign an
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executive order on healthcare. the president is not revealing the full details of this one, it will relax rules on small businesses that band together to buy health insurance earlier this week the president said he plans to let people buy health insurance across state lines. president trump expected to sign that executive order around 11:15 a.m. eastern time. president trump hitting the road last night to sell his tax reform plan. he spoke to a group of truckers in pennsylvania. the president said the new plan will get rid of a repatriation tax. he also said it will give the average american household a big tax break. >> we will totally eliminate the penalty on returning future earnings back to the united states we will impose a one-time low tax on money currently parked overseas so it can be brought back home to america where it belongs. and where it can do its job. my council of economic advisers
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estimates that this change along with a lower tax rate would likely give the typical american household a $4,000 pay raise could be a lot more than that, too. >> the president also had a big warning for congress over tax reform saying they "better get it passed. >> we'll have to do some more work on that math about the $4,000 raise a lot of questions about how a corporate rate cut along with repatriation trickles down is there through wages this is a kevin hassett question, now the chief economist for the president. that will be a question. >> these forward looking promises on household income are hard to sort of stick to much like george osbourne's promise that brexit would lead to a 4,300 pound hit to every household, which has not materialized yet >> neither has brexit. president trump expected to make a major announcement on the iran
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nuclear deal tomorrow. sources tell nbc news that the president will refuse to certify that iran is complying with the deal but the u.s. is not expected to completely back out of it president trump long criticized the iran deal and made a campaign promise to scrap it iran's president says if the u.s. backs out of the deal, no one will trust america again. president trump making headlines on another deal saying he's open to bilateral deals with mexico and canada if nafta talks fail trade representatives from the canada and mexico negotiation tables are in washington for a fourth round of nafta renegotiations u.s. commerce secretary wilbur ross saying late yesterday that the trump administration does not want to walk away from the deal the race appears to be tightening for the next fed chair. jerome powell is the front-runner according to predict it
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the betting website putting his odds at becoming the next fed chair at 48%, followed by kevin warsh at 29%, janet yellen's chances now at 13% steven mnuchin is pushing for powell to take the job we'll hear more from secretary mnuchin at 7:45 a.m. eastern on "squawk box. sheryl sandburg is in washington today she will sit down with mike allen of axios later this morning in her first interviewan groups buying ads to affect the election the house intelligence committee says it will release some of the thousands of adds that the company turned over to congress. we are continuing to follow the developing story out of northern california. deadly wildfires are burning unchecked. officials say more than 23 people have died from the fires. more than 3500 structures have been destroyed leveling hundreds
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missing in chaotic evacuations firefighters are battling high winds as they try to contain two dozen blazes spanning eight counties a live report coming up alphabet's waymo demanding a billion dollars in damaging and a public apology from uber those two fighting in a high profile trade secret lawsuit reuters saying uber rejected the terms as nonstarters still ahead on "worldwide exchange," bitcoin surni insurgv $5,000 for the first time ever ken rogoff says cryptocurrencies are fools gold he joins us live straight ahead. first here's the national weather forecast from bill karins good thursday morning to you. the story in california is the winds and what they'll do with the fires still burning and any new fires that form. red flag warnings from redding
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to sacramento, also santa barbara and mountains outside of l.a. these are all areas where if fires do form, they could spread rapidly. the worst of the winds are early today, they'll die off during the daylight hours the poor air quality, a lot of the fires burning around of the wine country is blowing southward. all that smoke and toxic air towards san francisco. that will continue today not many highlights out there in the weather forecast showers and storms in south ora d showers exiting the mid-atlantic more "worldwide exchange" when we come back i love you, droolius caesar, but sometimes you stink. febreze car vent clip cleans away odors for up to 30 days. because the things you love can stink.
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welcome back to "worldwide exchange." bitcoin today surging above 5,000 for the first time ever. our next guest calls it the biggest bubble in the world. ken rogoff is former chief economist at the imf always a regular here at the world bank meetings. you just wrote this work crypto fools gold the price surges to 5,000. you say it will crash? >> i don't know when, but the history of currency tells us the private sector innovates, but the government regulates, then appropriates that's the long run here it happened with coins, happened with paper currency, it will happen here. >> though we have seen some moves on that front. china's cracked down a lot korea started cracking down. yet the price continues to bounce back.
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there's enough support and interest, it seems like, from not just the private sector but governments like japan friendly towards bitcoin. >> i can't explain what japan is doing, except maybe trying to become the switzerland of the fintech industry, and get money laundering from all over the world going through japan. at the end of the day they can't allow anonymous transactions to dominate the global economy. they can't collect taxes, they can't enforce regulations. it will remain at periphery. you won't easily be able to use it broadly in the economy. that limits it i think early on they have been allowing it to foster. they want to get the innovation, but now they're pulling back >> so you wrote a book about the death of cash. how does this fit in with your forward looking view are you talking about the price of bitcoin while there's some promise in the underlying technology?
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christine lagarde was saying for some developing countries this could be a cashless solution >> the last third of my book is about bitcoin, the blockchain and what it offers for security is important the problem is that there's regulation, there's potential competition. it's a difference between the blockchain a good idea or is bitcoin going to own the field >> so you're more with jamie dimon that this is a fraud >> no, it's not a fraud, it's a genuine technology just as when the coin and paper technology was invented, it's a good idea, but eventually regulation will come in. every central bank is looking at doing digital currency, making use of this. i don't know which technology will win out and how it plays a role the question is does bitcoin have a unique place?
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will it merit this kind of price? the japan move is very important. they made it a legal tender, but it's a little nuts, too. i don't think it's sustainable >> i have a feeling people will be talking bitcoin today the other big overarching story we've been talking about is the global economic recovery, the fact we have it firing on all cylinders from different parts of the world, developing, china, japan, europe, and the u.s we talked about it last week with christine lagarde who gave us a good forward looking clue that she would upgrade the economy. listen to what madam lagarde said >> we're certain that it's taking roots, and it's not just a little short-lived cyclical moment we are seeing it coming from about 75% of the gdp in other words, it's not one country leading the charge, it's not only the emerging market
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economies that used to be the case, it's europe, it's the united states, it's japan, and it's china, of course, and india. plus a few other countries >> do you agree it's not short-liv short-lived, and that it is sustainable? there's always a chance there could be a recession in any given year there's a 15, 20% chance there could be recession. we had a global financial crisis, the normal recovery period as i found in my work with carl rheinhartz >> what about getting the u.s. to 3% economic growth? is that feasible that's what this administration wants. >> it is feasible. but the baselines lower. if they don't do tax reform, if they don't put in stimulus, it's hard to see how that will happen i do think the global economy doing well is helpful.
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the fundamentals in the u.s. economy are good labor force, growth is down. there's aging of the economy i think productivity growth will pick up over the next few years. i think trend growth will pick up but getting the 3% would require them to get off their hands. >> they are talking tax reform near daily as far as what you hear so far, is it pro growth, the tich ype f reform that can get us to the 3% threshold? >> the corporate tax reform is good for the long run. making the rate lower, taking away exceptions to it's much simpler, that would be good. i don't think that will get you to 3% growth this year, but might pick up investment the tax cuts on the wealthy are probably not going to have a lot of stimulus effects. so i -- we don't hear about infrastructure spending yet. they were talking about that early on so it's limited.
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let's face it, the capacity to deliver is questionable. they have not gotten much done >> who would you rather see in the fed chair? kevin warsh or powell? >> i think they're both excellent. the question is will we see the new fed chair being dressed down on twitter the way rex tillerson is that would be problematic. >> so far we have not seen it even though he campaigned against yellen >> maybe when he puts his person in, maybe that will change the dynamic like i own you, i gave you this job >> loyalty >> absolutely. >> ken rogoff, thank you for being here this morning. wilfred, back over to you. >> thank you very much still to come on "worldwide exchange," we're live on the front lines of the deadly wildfires tearing through the heart of california's wine
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welcome back to "worldwide exchange." let's get you up to speed on the market picture record highs again yesterday but only slight gains, up 0.2% today pointing lower oil prices, which gained about
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0.75% yesterday are giving up about that amount today. 50.09. we also had eurozone industrial production earlier coming in 3.5% in august, it was above the 3.6% in july another strong print there highlighting europe's strong performance in terms of the fundamentals inflation still struggles, but the growth rate, industrial production, services pmi has been good. continuing to follow a developing story out of california the death toll rising in a string of wildfires tearing across the northern part of that state. nbc's jay gray joins us live from napa with the latest. >> reporter: good morning. the latest news is not good here the wind picking up overnight and pushing these flames the fires are expanding now, close to two dozen burning across california. we're in front of one of the shelters, one of dozens that have been set up across the strike zone providing a safe
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place for families to rush to as the flames rush in thousands are taking advantage of these shelters, also donation spots, where people can bring food, water, clothing, things these families need. many of them have lost everything to the fires here right now the forecast does not look real good winds are expected to continue over the next several days, fanning these flames, and again just making these fires grow and move into areas they have not been yet there's still thousands of families on edge now go bags packed and ready to move to shelters like this at a moment's notice. we also know more firefighters, more teams are pouring into the area to help the national guard has been called in as well. this is a fight that's going to intensify over the next several days it's going to be a tough go for a long time for a lot of people here >> jay, thank you very much for that update. when we come back, today's
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top stories and a round up of global markets later, we're talking taxes president trump hitting the road to sell his tax reform plan. en'll have the latest for you wh "worldwide exchange" returns.
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the big kickoff. earnings season gets underway as banks report results talking taxes, president trump hits the road to sell his massive tax reform plan. the latest from washington
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straight ahead. and bitcoin surging above 5,000 for the first time ever. more on the cryptocurrency's big move it's thursday, october 12, 2017, you're watching "worldwide exchange" on cnbc. ♪ good morning welcome back to "worldwide exchange" on cnbc, i'm sara eisen in washington as always for the fall meetings of the imf and world bank wilfred, absence makes the heart grow fonder. >> absolutely, sara. i'm wilfred frost, good morning from me as well. >> let's check in on the global markets this morning after small moves led us to more record highs for u.s. stocks. the nasdaq yesterday was stronger of the group. dow futures under pressure, following europe, trending a bit lower here dow down 17. s&p futures down about 4 nasdaq down about 4 1/2. as for the ten-year treasury
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note yield following the minuting from the last month's fed meeting, december looks to be on for a rate hike but there's an interesting discussion around the lack of inflation and what's causing that, and will it change the course of fed policy add it up, ten-year note yield, 2.33 we've been in this range here. higher yields, but nothing super high to talk about here. >> asian equities are mostly higher by about 0.3, 0.2%. japan and hong kong, shanghai flat south korea up 0.7%. european trade, we saw a nice jump for the spanish index as tensions in barcelona eased. they have not gone away completely, but the market not giving up yesterday's gains. it is still sort of cementin that gain and sentiment that we saw yesterday. elsewhere we're flat, a bit of declines for france, gains for
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germany and the uk oil prices have been firmer. they were up yesterday they've been up for the last few sessions weaker this morning, down 0.8% wti trading below $51 a barrel brent, 56.75 nat gas gets a nice pop this morning. as for the currency board, let's show you the trade there the dollar pulling back yesterday. continuing that theme, a tenth of a percent so fractional moves against the yen. 112.37 the euro is weaker pound bounces back, 1.3240 gold prices on the flip side, they're a bit firmer, up 0.6%. the action this morning is in bitco bitcoin, topped $5,000 for the first time ever. hard to know what drives the day-to-day price movements here, but it's been a straight line up there's been some bumps along
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the way. a lot of doubters as well, including jamie dimon, who you mentioned. we'll hear from him later. amazing. $5,000 some people were saying if they wanted to put in money, people were asking 1,000 s that crazy it's hard to know what the answer is. how do you analyze this currency no government, no central bank hard to know the supply and demand picture, and which government will come next and crack down >> absolutely. interesting to hear ken rogoff who is a naysayer towards it, to at least take his has the off and say the japanese endorsing it is a big move whether or not it can last is a positive step for the cryptocurrency, though his net position is one criticizing it, not believing the rally can continue forever >> at least on the price he says it will run into regulation as all -- he's looking at history of currency and coins. let's look at the wall street agenda today. full of economic data. earnings and fed speak, weekless
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jobless claims and september producer price index at 8:30 a.m. eastern the federal budget at 2:00 we'll hear from a bunch of fed officials, rafael bostic, jay powell and lael brainard giving speeches earnings season kicks off this morning results from jpmorgan and citigroup. in washington trade talk and taxes are front and center ylan mui joins us. you are focused on tacks after president trump's speech last night. >> he was in harrisburg, pennsylvania talking to truckers, the message he was saying was quite clear, win again. >> when companies leave our shores it's the american workers who get hurt when companies stay in america and move to america, it's our wonderful workers who reap the
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rewards, including our great truckers, who will have more products to deliver and more contracts to fill. >> trump talked about repatriating foreign earnings and says he expects close to 100% of the profits to come back to america this was a wide-ranging and raucous speech in front of about 1,000 workers. many of them truckers. he pushed for the trillion dollar infrastructure package that has yet to materialize from his administration he talked about rolling back regulation he said a decision on the iran fuguelar deal nuclear deal is coming soon. the challenge for republicans is convincing the public that cutting corporate taxes will benefit the middle class paul ryan will be talking at the heritage foundation this morning. the house weighs and means committee is holding a working session today on the corporate and international tax code,
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that's the committee where any tax reform bill will have to start. >> anything new in terms of policy in the president's speech any new details? >> he talked about a new stat they're touting, the idea that changing to a territorial tax system and repatriating foreign earnings will increase the average pay for a typical american >> $4,000. does that map out? >> it remains to be seen the white house says they will be releasing a detailed analysis of how they got there. the basic idea is if corporate profits go up, worker wages will go up. back in the old days, that was a one to one relationship. now what kevin hassett is saying, when corporate profits go up 1 percentage point, worker wages go up 0.4 points that's because so much of corporate profits, he says, are overseas if you change that maybe you see that return. >> we talked about this
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yesterday, how much would go into buybacks, dividend hikes. >> that's what we've soon previously with repatriation the big difference they're saying, is this time there would be a broader shift in the system it's not just allowing companies to bring earnings back to america, but that we're moving to a new system and lowering the corporate rate along with it >> are we still looking at 20% as a working corporate rate? >> that's the president's red line he has laid that out, made that very clear i think lawmakers on capitol hill will bend over backwards to make sure they get that 20% number >> as for the individual rate, we haven't learned anything new. 3 or 4, do we know how many brackets >> we anticipate it's highly likely there will be a fourth rate added for upper income households right now there are three rates in the plan, 12, 25, 35. likely there will have to be another one.
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which would be the same rate the highest taxpayer pays now? >> we don't know it could be 37, 38, but not above 39.6 >> i will listen to a lot of the economists today, wilfred, adding up this plan and seeing if it makes sense. christine lagarde giving a warning last week, this must be defic deficit neutral. busy morning elsewhere in washington don't miss steven mnuchin later. he will join "squawk box" live at 7:45 a.m. eastern in corporate news, waymo demand $1 billion in damages an a public apology from uber in settlement talks the two are fighting in a high profile trade secret lawsuit reuters reports uber rejected the terms as nonstarters southwest airlines is saying hello to hawaii. they have plans to add service there as soon as next year
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the long anticipated move will see southwest bring its no-fee model to one of the most competitive vacation destinations in the united states. at&t says third quarter results took a hit from the string of hurricanes that hit the u.s. and the earthquake in mexico the company says it lost about 90,000 video subscribers in the quarter. xl group says the damage caused by hurricanes harvey, irma and maria was in line xl is up 3%. shares of herbalife are higher carl icahn has increased his stake in the company to about 26% up from 24.5% in february. juniper networks is cutting third quarter profit and revenue outlook. the networking company citing lore than expected revenue from the cloud business. and shares of j. jill look
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at this one. down nearly 40% this morning the women's clothing retailer recent ipo cutting third quarter outlook, seeing same-store sales falling p% 3% to 5% previous estimates had sales rising in the single digits. the company blaming product and marketing calendar issues for the guidance j. jill's market cap below 500 million. still to come, the must-reads first let's check in on where europe is trading coming off the back of strong industrial production data. up nearly 4% expectation was 2.6, and we got 3.8. we're seeing slight gains for germany, uk, but frae ncis down.
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intelligent technology can help protect it. the 2018 audi q5 is here. welcome back to "worldwide exchange." time for our must reads. my pick is in "the financial times" titled u.s. stocks trump and grind. in response to the president's ongoing tweets and comments that no one is kcovering the stock market highs the ft article reads measured from inauguration day rather than election night the bump of 12% already compares poorly with mr. obama who saw a 29% increase in the s&p 500 during his first year in office since mr. trump has not made
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real legislative progress, it's harder than ever to understand a trump rally based on his election the most plausible link is investors still believe there will be big tax cuts but these could be delayed, diluted or derailed this is an aging market with companies trading at a high average forward price to earnings ratio of 18, a level never reached during mr. obama's tenure >> the other big question out there that we can dig deeper into is how much credit doctor president trump get. mike santoli pointed out in a tweet that it's not that unusual when we're in the middle of bull market to have a run like this in the beginning of an administration yes, you can't deny business and investor confidence is up, but how much is this global growth, which i'm hearing washington talk about today and how much is
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expectations for tax reform, the trump trade. my article is in project syndicate, the demise of dollar diplomacy. pundits have been saying the last rites for the dollar's global dominance since the 1960s, but the pundits may be right because the greenback's dominance has been sustained by geopolitical alliances that are fraying badly. it's a good look at who holds the most dollar reserves, allies like japan, south korea, how that changes their alliance with the u.s. in terms of go yo poeo politics and what will happen
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around north korea he centers it around that challenge and the underlying financial flows that back those military alliances it's interesting it's not something you typically hear about it is, you know, an appropriate one for the conversations of economists finance ministers behind me. we are approaching the top of the hour, let's see what "squawk box" has on tap. let's see what becky has coming up good morning quick question for sara, what does he suggest would be the alternative? if not the dollar what do we go to instead as a vef currereserv currency is it bitcoin? >> no this multi polar world, more of an equal share of dollars, euros, chinese yuan, commodity backed currencies like australia and canada that's a more confusing picture
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of the world >> perhaps a more accurate reflection of what we're seeing in geopolitics now >> true. >> we're talking with guests yesterday, i am trying to remember who it was, talking about how fresh rytreasuries -- larry fink one of his concerns is that you'll see a misstep from the fed in one direction or the other that leads to an inverted yield curve and you have concerns because you have china, japan as major holds over all of these securities that have been propping us up, how does that change over time very confusing, but interesting to follow how the nuances of this will play out any way, let me tell you about what's coming up we'll focus on earnings and taxes today. those are the two big issues more of the financials reporting this morning including jpmorgan and citi group wilf, you will be joining us go through those numbers and talking about what happened with them it will give us a better picture of what to expect from the banks and markets. then we'll be talking taxes.
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we have diane black from tennessee joining us to go through what she sees happening in the tax debate. she already has some fiery words. she says the gop senators are incompetent. she will talk about how you can get a package together, how she can see that happening between the house and senate the newsmaker of the morning today, treasury secretary steven mnuchin. he will be with us to talk taxes. lots to dig through about how he sees all of this coming together we've been short on details to this point maybe the treasury secretary can shed light on how he sees this playing out. big conversations coming up. >> i love that at the top there, an accidental name drop of the highest order from cnbc. i was trying to remember who i was talking to yesterday, oh, it was larry fink that's how i roll. >> you know how it goes. you cram everything froo yoin y
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head >> oh, it was the treasury secretary. >> one time when mark haines was here, you cram so many people in your head and forget about it, joe put a newspaper in front of mark and said tell me who is the guest host today, wouldn't let him see who it was mark was like -- oh. >> called out. >> you remembered it more importantly you remembered the key point, the fed misstep risk thank you. when we come back, the federal reserve is in focus, tons of central bank speak on the docket today we'll tell you what to watch as we go to break, let's check in on treasuries 2.33 i'll talk to larry summers later in the day about all of these topicss ll awe don't go away. you're watching "worldwide exchange" on cnbc.
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your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. welcome back to "worldwide exchange." if you're just getting up, let's get up to speed on market
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action yesterday record closes again, albeit gains slight on the in a intraday move. real estate the best sector, telcos the most disappointing. we had some big individual movers, ge hit a four-year low, down over a percent. walmart with another positive day. we're down about 8 points or 9 points for the dow the nasdaq hit flat. the s&p down a couple points oil prices for you, which gained about three quarters of a percent yesterday are giving up about that amount today for wti. 50.9, but for the week as a whole it's been a decent recovery sara, we'll be looking today at both ppi that's coming out and cpi tomorrow inflation a key thing to watch based on the fed minutes yesterday and the imf meeting you're at. >> this is the big debate. we're seeing this global coordinated expansion. and it's happening in the u.s.
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as well. the missing ingredient you usually see in a healthier economy is rising prices and inflation. not that we want to see too much of it. it is puzzling for central bankers that was front and center in the fed minutes. the question is what does the fed and other central bankers do about it they're trying to tighten policy, take away the punch bowl, but will they move too soon because of lack of inflation? that gets back to the potential for a fed misstep. it's not the best case but always a possibility we don't know who the next fed chairman will be and what they will do. >> i wonder whether mr. carney will arrive at imf and say be careful what you wish for given that he's got inflation to deal with, but it's from a position of weakness, not strength. let's bring in tony cracenzi
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from pimco thanks for joining us. what we were just discussing, the fed minutes yesterday seem set for a december hike but pointing to that lack of inflation. >> right there were two arguments or discussions within the minutes one was over inflation clearly the moderate hawks within the fed are winning out pimco was discussing this notion with ben bernanke yesterday, he's one of our advisers he seemed to think that the moderate hawks, those who think this is a relationship between economic growth, the unemployment rate and inflation. though there's no inflation now, the advocates of the phillip curve, they are winning. it looks like the fed is on target to raise interest rates, highly likely will in december it still thinks it will raise rates three times, pimco thinks two to three is a fair bet for next year.
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what does that meecan for te dollar what is priced in? the december hike but only one or two next year >> one intriguing thing that's happened in the past weeks is the market decided a hike in december is likely, but 2018, not so much. so one hike or so. so there's more to price in. though that might be good for the u.s. dollar, in this case because of the strength of the global economy, as seen in the imf's world economic outlook, it raised its global economic forecast to 3.6% this year up from 3.2 last year, looks for 3.7 next year, that strength in the global economy prevents the dollar from moving meaningfully higher because other central banks are looking to rein in extreme monetary accommodation >> key question what is the pimco forecast on bitcoin? >> on which? >> bitcoin >> oh, this cryptocurrency is speculative in nature. it's correct that the s.e.c.,
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the securities and exchange commission views bitcoin more as equity than currency, in the sense it has to have value of its own. there is no cash flow that comes from it. it's based on the past production, not based on future production, resources. one has to be careful when betting on that. the word bet is probably the right one. not invest >> tony, thank you very much for joining us >> thank you >> sara, the other central bank, which will continue to be in focus is the ecb, who have even less inflation and only a single mandate of inflation, but they did get better industrial production very good industrial production, 3.8% year-on-year. expected to be 2.6%. their fundamental data good, but still no inflation >> very strong that is a talking point here in the global expansion story the upgrade in the forecast for
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europe's economy we'll talk about it all. we have world bank president comi ungp on "squawk on the street," larry summers also coming up. "squawk box" is next
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good morning earnings alert jpmorgan set to report this hour we'll bring you numbers and reaction on wall street. president trump issuing a warning to congress on tax reform saying in his words you better get it passed. we have the highlights from his speech and crisis in california the death toll continues to rise as fast-moving wildfires sweep through the heart of wine country. it's thursday october 12, 2017, "squawk box" begins right now. ♪ live from new york where
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business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. stocks closed higher yesterday after we got those minutes from the nafederal reserve suggesting they think everything will withstand another rate hike coming in december stocks closing up. s&p closing at a record close. the dow up about 40 points yesterday. this morning a bit of giveback with the dow futures down about 8 points in europe, the nikkei up to another record high, 20,954. hang seng ended higher, up about a quarte


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