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THERE MAY BE SOME UPSIDE IN EUROPE. EUROPE IS THE BIGGEST BENEFICIARY OF THE FOLLOWING ENERGY PRICES. THE U.S. IS NOT A BENEFICIARY ANYMORE. I THINK THE INFLATION STORY IS VERY SUBDUED LOVELY. WE HAVE DISINFLATION EVERYWHERE WE MAY BE LOOKING FOR THE FED TO HIKE RATES. EVERY TIME THE DOLLAR GOES UP, THAT'S DEFLATION HITTING THE U.S.. THE BIG CONCERN I THINK OVER THE NEXT TWO OR THREE MONTHS WILL BE IF WE SEE A CONTINUATION OF THE EARNINGS TREND. NET INCOME. THE U.S. CORPORATE SECTOR WILL STOP HIRING AND START FIRING. I'M NOT SURE HOW MARKETS WILL LIKE THAT OR NOT. FRANCINE: YOU'RE NOT ARGUING WE WILL SEE A CORRECTION IN A EDDIE'S BECAUSE OF ALL THE CHEAP MONEY BEING PULLED AWAY? BOB: I THINK THE FUNDAMENTAL STORY IS WEEK. THE BALANCE SHEETS ARE IN THE MIX. WE'VE GOT A SITUATION WHERE I THINK THE MARKET GENUINELY EXPECTS GROGGY TO BE THERE FOREVER. I THINK WE'VE PRICED HIM OUT EFFECTIVELY. I THINK WITH JAPAN, THEY ARE AT RISK OF DISAPPOINTING MARKET. I THINK THE BANK OF JAPAN WILL DO MORE. THAT IS MY VIEW. I THINK THE FED WILL BE ON HOLD AT PERHAPS LOOKING TO CUT RATES THIS TIME NEXT YEAR. I THINK ALL OF THAT IS IN THE MIX. I EXPECT TO SEE A 25% CORRECTION. MAYBE FROM A LITTLE BIT HIGHER. PEOPLE WILL BE ASKING WHERE IS THE FED? I THINK THEY START TO TALK ABOUT CUTTING RATES OR ADDING BALANCE SHEET AGAIN WHEN THE S&P DROPS. TOM: TELL ME ABOUT THE WHEN ELUSIVE CONSENSUS. -- AND PILLARS OF CONSENSUS. BOB: I MUST HAVE MISSED THE STORY. TOM: YOU WROTE IT A FEW DAYS AGO YOU WERE TALKING ABOUT THE TWIN PILLARS OF CONSENSUS. PICK IT UP. BOB: I DIDN'T WRITE ANYTHING RECENTLY. THIS IS ONE WE WILL THE A NORMALIZATION IN THE OUTLOOK FOR GROWTH. I THINK THE OTHER THAT EXIST OUT THERE NOW IS CENTRAL BANKS WILL BE YOUR FRIEND FOREVER. FRANCINE: WHEN YOU LOOK AT SOME OF THE GREAT MINDS TALKING ABOUT MARKETS. IT'S INCREDIBLE THAT HE CALLED FOR A 25% CORRECTION IN STOCK PRICES. THAT MEANS THE FED WILL HAVE TO REVERSE THE HEIGHT IT SEES IN DECEMBER. BOB: THE FED IS CAUGHT BETWEEN A ROCK AND A HARD PLACE. EVERY INCREMENTAL QE WAS CREATING A MASSIVE AND BIGGER EXIT PROBLEM FOR THE FED. THE STORY FIVE YEARS AGO WAS THAT EXIT. THERE IS NO EASY WAY OUT. FRANCINE: THE BIGGEST RISK FOR THAT YEAR'S MONETARY ACTION. WE GO BACK TO MARKETS. BOB: I THINK YOU ARE ABSOLUTELY RIGHT. THE OUTLOOK OF THE GLOBAL ECONOMY IS DISASTROUS. IT'S WONDERFUL AGAIN. THE TRUTH IS SOMEWHERE IN THE MIDDLE. I THINK GRADUALLY WE WILL SEE AN INCREASE IN OUTLOOK FOR VOLATILITY IN MARKETS. I THINK A ROUNDING PATTERN IN EQUITIES. I THINK THAT WILL RESULT ONE WAY OR THE OTHER. IT WILL BE THAT WAY NEXT YEAR. FRANCINE: WHAT AN HONOR IT IS TO HAVE YOU IN THE STUDIO. WE WILL CONTINUE ON BLOOMBERG TV. WE SPEAK TO MICHAEL AS WE CONTINUE THE CONVERSATION. ♪