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00:00HUME FROM OUR BUREAU IN LONDON. YOU HAVE HSBC SAYING WE ARE BUYING THE DIP. WHAT IS YOUR CALL? >> KEVIN MADE A GOOD POINT THAT NOT ONLY DO CENTRAL BANKS AND EMERGING-MARKET ECONOMIES MAKE DECISIONS, THERE ARE LARGE FLOWS THAT COME IN AND OUT OF THE INVESTMENT COMMUNITY IN THE DEVELOPED WORLD. THEY CAN MOVE THE NEEDLE ON THESE MARKETS WITHOUT ANY DISCRIMINATION BEAT THE CREDIT. WHETHER ITS EQUITY OR FIXED INCOME, YOU GET INTO A SITUATION WHERE THESE CELL MOVES -- THE STUFF THEY CAN'T BUY GETS LEFT BEHIND. THE REAL TAKEAWAY IS THESE MOVES ASIDE COME YOU HAVE TO LOOK AT THE STORIES UNDERNEATH. YOU CANNOT CATER OFF OF THE BIG MARKETS TO TELL YOU WHAT YOU SHOULD DO CREDIT BY CREDIT. THE INVESTMENTS, IF YOU DO YOUR HOMEWORK, CAN HAVE QUITE WELL REGARDLESS OF WHAT'S GOING ON ON A TREASURY BASIS. ALIX: WHEN YOU SEE A LOT OF MONEY THAT CAN BUY EMERGING MARKETS AND THEY MOVE INTO BONDS, IT'S BEEN A HUGE RUN-UP OVER THE LAST YEAR. TO YOUR WORLD, IF WE SEE A FED THAT STARTS TO COMMUNICATE IN A MORE HAWKISH WAY AND WE SEE A DECEMBER SCENARIO, OR WHAT IS THE WASHOUT POTENTIAL FOR EMERGING MARKETS? >> THE QUESTION IS WHETHER MARKETS WILL BELIEVE THIS. THERE HAS BEEN A CONSTANT MOVE THAT AT THE NEXT MEETING, THE FED WILL BE AGGRESSIVE. IF THE FED WANTS TO GO IN DECEMBER, THEY WILL HAVE TO TALK EVEN MORE. WE WILL NOT HAVE 19 SPEECHES , WE WILL HAVE 40 AND THEY WILL HAVE TO TAKE THE CACOPHONY AND MAKE IT MORE CRYSTAL-CLEAR. THEY HAVE A LOT OF WORK TO DO IF THEY WANT TO CONVINCE MARKETS THEY ARE GOING TO GO AND THEY MIGHT END UP IN DECEMBER WHERE THEY ENDED UP NOW WHERE THEY WERE POISED TO GO UNTIL HE GOT ONE PAYROLL PIECE OF INFORMATION THAT WAS 25,000 JOBS BELOW CONSENSUS. THE DATA IS NOT THAT GOOD. IMAGINE OF THE PAYROLL NUMBER BEFORE THIS WAS 175,000. WE WOULD HAVE A DRAMATICALLY DIFFERENT CONVERSATION AND THE UNDERLYING ECONOMY WOULD BE VIRTUALLY UNCHANGED. JONATHAN: THE ONE DATA POINT THAT CONTINUES UP IS THE IMPLIED MATURITYVIA FED FUNDS FUTURES. IF IT SHOWS 22%, WOULD YOU CARE? WOULD THAT MAKE A DIFFERENCE FOR A RATE HIKE? >> THE CURRENT FED SEEMS TO BE OF THE VIEW THAT THEY OUGHT NOT TO SURPRISE MARKETS, THAT MARKETS SHOULD BE SPOON FED AND LED TO THEIR DECISION. THAT'S NOT MY VIEW. MY VIEW IS THE MARKETS AND THE FED ME TO TAKE IN THE RANGE OF INFORMATION. THE FED NEEDS TO GO INTO THEIR MEETING AND CALL IT THE WAY THEY SEE IT. IF YOU ARE TO SURPRISE MARKETS FROM TIME TO TIME BUT BY CHANCE, MARKETS WILL BEHAVE MUCH MORE DISCIPLINED AND WOULD PAY MORE INTENTION TO THE UNDERLYING DATA AND THAT IT DYNAMIC THE FED IN THE MARKET WILL IMPROVE. THE PROBABILITIES HAVE PUT THE

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Warsh: Fed Has Become Prisoner to Market Expectations

Hans Humes, chairman and chief executive officer at Greylock Capital, and Kevin Warsh, distinguished visiting fellow at Hoover Institution and former Federal Reserve Board Governor, examine emerging markets and the Fed as a prisoner of market expectations. They speak on "Bloomberg ‹GO›." (Source: Bloomberg)

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