fed decision. alix: u.s. stocks closing mixed after the federal reserve leaves interest rates unchanged. treasuries rallying while the dollar tumbles to a three-week low. joe: but the question is, what'd you miss? doves prevail with interest rates unchanged. all eyes on october. will the fed even make a move this year? alix: we size of the fed's 2% target. joe: and how is turmoil on the global market influencing the fed's decision? if the factor driving volatility. alix: of course, we begin with the markets because a whole lot of nothing happening in the markets. the s&p spiked higher as the decision came out. pressowly as the

conference went to, it gave back all the gains and it is ending in the red. nasdaq barely up. joe: you say a whole lot of nothing. if you're watching all day it was quite a roller coaster. markets were rallying, then it went negative, then it was a big surge after the dovish result and gave it all up. quite a day from a stock perspective but are quite interesting day and a lot of moving parts we will dive into. alix: we want to get to julie hyman who is in the newsroom with more highlights from today's action. highlight what was most interesting to you. julie: i want to go over the asset classes. the mixed market you referred to at the top of the show, here it is in black and white or green and red, we should say. nasdaq of .1%. take a look at my bloomberg terminal. i want to look in more detail at the intraday action in the s&p 500 in particular. we are all day sort of bumping along, rising a little bit going

into the decision. now i will zoom in to the postdecision period to see exactly what kind of action we saw. right after we got the no decision, there were typical gyrations. that is what we tend to see because there is this digestion period on the part of investors. what is it me now that there is no move? that continues as the press conference begins. during stocks rising, that is when janet yellen was giving her statement. she wasn't taking questions yet. around the peak is when she began taking questions. at 2:47 is when the headline cross, then october remains a possibility. she says we can't expect the uncertainty to be fully resolved. all of that commentary happening right around here. then stock speaking and coming down after that. we are not getting any resolution here. we don't know what is going to happen next. in other words, more of the same

of what we have heard from the fed in past meetings. stocks falling to the lows of 3:25ay after 3:20 -- dollars when we saw the lows today. that is when it struck, the gyration here. expect the digestion to continue overnight in global markets and back in u.s. stocks tomorrow morning as you have strategists writing their thinkpieces, trying to figure out what to make of this. just want to get a quick check of the treasury market as well and what we saw there. generally we saw yields coming down in the wake of this. of course, there was volatility with treasuries, too, as there was with currencies and the various asset classes in the wake of this. but generally that idea of stocks trading mostly lower, the trajectory lower, and the yields trending lower as well. alix: awesome stuff. julie, we will check back in with you later in the hour. when i said nothing really happened, that was in stocks. in the treasury market we saw

extreme gyrations. i want to take a deep dive in the bloomberg terminal to break down what we saw in the two-year yield. it started right before the announcement even came out. --rted right before 2:00 let's see if i consume in and show you. it started to decline right there and continued the slide. camewas so steep when he to the yield. the biggest decline since march. the ecb started the bond buying program. that is a significant decline that we saw. to put it in more perspective, too, take a look at the three-day chart. that is pretty ugly. you saw the rally within the yield about two days ago as we get better data, it held its own yesterday and then fell right off a cliff. joe: absolutely. the two-year yield has been rising a lot and people took it as a sign the market was ready for a rate hike so when it didn't come, you got that tumble. my chart is basically the mirror, looks exactly like your chart except this is the dollar.

2:00, or just before, it started to weaken, and then we got that no hike, the dollar fell out of bed. it broke the whole picture of move, dollar rates from anything like that. alix: it was a dovish press conference. joe: right, you see the dollar lows of the day. alix: i want to bring in our guest to get the fed decision covered from all angles. we have austan goolsbee, professor at the university of chicago booth school of business. he joins us from chicago. he is the former chair of the council of economic advisers. andrew levin is former special adviser to fed chair janet yellen and ben bernanke, and steven englander is citigroup's global head of strategy to break down the markets. i think this is our first triple box. joe: this is very exciting. alix: very exciting. of the three, you are the ones

saying the economy was good enough for a rate hike today. what did you think of janet yellen's justifications? steven: notwithstanding whether it was good enough, the fête was sending signals it wanted to hike. it didn't surprise me that they did tonight. what is interesting is that didn't hike. what is interesting is that the markets, a bunch of other things got brought into the picture, namely, china, asset market uncertainty. and they took a whiff. she didn't emphasize october, she didn't really emphasize , andber, notwithstanding the markets were saying we weren't expecting a height but we weren't expecting this devil of division us, either -- this level of dovish in this, either. joe: andrew, you wrote a paper saying that not only should the fed not hike, it is not even close to being justified. we are happy with what you heard today from the statement and the

press conference? andrew: yeah. i was very impressed with chair yellen's press conference. she is very sensible and reasonable, and i think she deserves a huge amount of credit . this is a large committee with a wide range of views and it is important that president lacker dissented, it is important to have a diverse committee were some people dissent sometimes. ben bernanke said this once -- if everyone agrees, what is the point of having a committee? in the end, more hawkish comments and an earlier stage from president lockhart, governor powell, president williams, and to some extent from vice chair fisher, i think people were quite unsure weeks ago about which way this would go, and as recently as the last few days, maybe people refer to this as a coin toss.

the probability was a bit below 50 but no one was willing and out. -- no one was ruling it out. alix: probably liddy was going even lower when it comes to october. austan, you were also against a rate hike. we are happy with what you heard and do you think it is more a 26 teen scenario -- 2016 scenario? austan: i was happy and this is that i think it was a self-inflicted wound if they tried to raise rates now. the most surprising thing about the announcement is that it almost came with the soundtrack "meep meep meep" because they have been backing up from what they've been saying the last week or so. the conditions don't warrant it. personally, i still think that expected,rse than we europe is not getting better the way the optimists want, and the u.s. is only ok.

when it comes to december, they will again be forced into this, well, there is no inflation, it is not as good as we think, unemployment is coming down but not doing that much, maybe we should wait until 2016. joe: stephen, given what you heard today, didn't look like they signaled october into december. do you have a guess or forecast? do you think it will be 2016? steven: i'm still hoping to things calm down in china it will be december. it doesn't look likely it will be october. potential growth looks to be 1.5. u.s. looks fine. alix: well, good stuff. a lot more to come with all you gentlemen. we will be talking about with a negative rate could possibly meet and who the dissenter might have been right after the break. and we want to discuss how did it chair yellen do in her press conference.

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alix: i am alix steel. joe: i'm joe weisenthal. "what'd you miss?" we are back with austan goolsbee, andrew levin, and steven englander of citigroup. the ratesople think will go and one of the things that really stood out was that in 2015 and 2016, one member for the first time called for

negative dots, that rates should be negative given the environment. nobody knows who it is because some arenymous speculating it is someone from .he minnesota federal reserve he has unconventional views. should it be a tool that the fed considers at some point in the future as a stimulus measure? to see aes and no p negative number like that suggests it was somebody who was an academic economist, because the puzzle of zero lower bound of the way that academics raise it is the real interest rate ought to be negative but they cannot get the nominal rate down past zero. been kocherlakota. i'm not sure. alix: the idea is there needs to

be more stimulating the economy. would you agree with that, austan? austan: absolutely. that is what the person is saying. not only should we be raising rates, but if we could figure out how to cut rates when they are as low as they can possibly go, we should do that. advisedrew levin, you yellen and bernanke particularly on communications strategy. was or anything that stood out to you and something that yellen said that you are taking away from it? andrew: yes. someone asked her about the communication's of the last week and she was absolutely right in saying that it is very challenging to communicate in probablyronment with -- complicated crosscurrents, writing was the phrase, and with a wide range of views of how to interpret the developments. she gets a lot of credit as a consensus builder to reach a decision at this point in time.

wasll say that the dot plot introduced and adopted by the fomc is a way to be transparent about the diversity views. it was not intended to convey the rationale for the committee's decisions or the strategy of the committee. it is a bunch of dots, like a survey. and i think that what the committee needs to do, and she said it is an unfortunate state of affairs and i agree with that . they committee needs to improve its communications companies to have a more systematic, transparent policy strategy, to lay forth not just a bunch of .ots, but a coherent strategy there are different ways to do that and we can talk about that if you want, but the press conference today was a little different then in june because in june, someone asked her what does she think about the different proposals in congress to improve the transparency, and at that point she said we don't really see a problem.

i think from a market's viewpoint in trying to be fully transparent and as open as they are, they are confusing the market. words comet that the in retrospect, this was a no-brainer, weren't even close, based on her comments, based on her statement, they weren't even close to hiking and there was so much debate about whether they would move or not. in the discussion, something that was meant to be communicated was lost. alix: because otherwise the markets would have known that? steven: wouldn't have been so much debate. the way she from presented that from the fed point of view, september was open and shut. joe: what ucf the cost to this mystery in cash -- what do you see as the cost to this mystification? -- miscommunication? steven: i think the fact that there was so much volatility

around the decision, even though they clearly have the opportunity to convey what they wanted to do and have the opportunity to convey concerns and yet it was priced into the market, that tells you something, that they are not succeeding. austan: if you think of the cost -- mostly conveying more information is good, but now it creates the insatiable demand, we want more information, the fact that they are not saying something, what is that telling us? that they can only raise rates on the days when they have a press conference, then they have to decide, are we going to call another press conference for future meetings? but if we call a press conference, does that convey the message that we are going to raise the rates because we call a press conference on the wrong day? all of that kind of confusion leads to volatility and that is the downside of this. alix: we have much more to talk about, austan goolsbee, andrew levin, and steven englander are

staying with us. joe: what is today's fed decision mean for emerging markets? the outlook abroad seems to be more uncertain of late and i can concerns about emerging-market economies -- heightened concerns about emerging-market economies have led to volatility in financial markets.

alix: i'm alix steel. joe: and i'm joe weisenthal. what'd you miss? alix: we have austan goolsbee, andrew levin, and steven englander still with us. steve, this is kind of a real house. -- your wheelhouse. what does this mean for emerging markets? steven: it is all most as if

there was a deal done between the fed and the chinese were the chinese said they would stabilize their asset markets and keep equity markets in line in the fed, and told the fed, look, you guys raise rates and with the dollar appreciating we can't go with you so we will be back where we were in the middle of august with us depreciating and everyone taking the risk that em falls apart again and i don't think either side wanted to take that risk. the stability of cnh over the last week has been remarkable and it is possible that they were trying to send a signal that we will stabilize our times and but you have to do your job in your time zone. the things, one of that yellen talked about specifically is what is going on in the global economy and market volatility. do you think this decision, excluding all the employment and inflation stuff and those targets, was a smart move on the global perspective? andrew: i think that the single most important thing for the fed to do is risk management.

by far more important than the fine-tuning of the quarter-point or not. and so i think that the downside scenario that everyone is worried about an chairman yellen mentioned it today is a very hard landing. isn't just china, but it is east asia and other emerging markets and it would have major consequences for global financial markets in the u.s. economy and for global commodity prices that would affect u.s. inflation. that is the scenario that -- it goes beyond what happens in the chinese stock market or the chinese exchange rate. it is really about the whole composition of the chinese thatmy and the imbalances everyone has recognized have built up over many years. how can those be resolved quickly enough to avoid that kind of hard landing? alix: austan, to that point, chair yellen talked about canada and how the oil prices affected that economy. emergingour take about

markets and what the fed needs to see over the next six weeks to gain more security to hike? well, look for my think the comment about hard landing in china is perfectly appropriate, and i think we are there. i think they are in the middle of the hard landing and are trying to destroy the information content of prices so people can't really tell it is as hard as it is. whenever we get into a rising rate environment, the emerging markets are big losers in that environment. you have got a lot of dollar-denominated debt that is held by companies in a number of the emerging markets. every day the dollar does not appreciate his -- if you are living on death row come every day that you have breakfast is a win for you. the risingare not in interest rate environment yet so that was a big win for emerging markets, but i think that is a big-time risk. i want to get us some thing else wrote quickly because what matters to a lot of people in the world is jobs and wages.

from your perspective, things are going well in the labor market. why should they feel comfortable at least on that side that they are doing well? steven: look, the recovery at this stage, the number of jobs we are creating, is the strong as of any recovery in the last 45, 50 years. although there is a lot of talk about part-time jobs, and chairperson yellen mentioned that. if you take a look at the actual chart of jobs, all the jobs. since 2010 has been full-time jobs -- all the jobs created since 2010 has been full-time jobs. part-time because of economic reasons have been falling. the labor market suggests it has a lot of momentum and historically from the beginning of the fed hike cycle, it takes one and a half, sometimes even three years until the unemployment rate drops out. with this momentum, we're taking the risk that when they begin to hike it will be too late. alix: it's a great point that

you made, that the hike only affects it four to 10 years later depending on the rate hike cycle. it was an interesting chart you sent over for us. however, we did hear from janet yellen saying that if a growth does continue as it is right now, if the job growth does continue, the risk is they will have to make it so much faster down the road. on steven's point, why don't you favor a rate hike now, just a tiny one? thing iwell, the first would say is the gdp is growing modestly. it is going ok but not very well. 2.75%. the only reason we had an unbelievably strong job market performance in 2014 even of the overall economy wasn't doing that well is we had the bizarre fact of negative productivity for the united states. i think that is extremely unlikely to continue. if productivity goes back to anything like normal, you are

going to see the job market improve much slower than it has, and there is no evidence of inflation. if you believe that the natural rate of unemployment is somewhere around where we are now, then you have got to explain why is there no inflation? i think it is because the real national rate of unemployment is well below where we are now. joe: andrew, what do you make of steven's argument that the job market is blistering hot right now? a paperi want to cite that any branch five-hour -- danny blanchflower, one of my colleagues at dartmouth, wrote recently. we are short of full employment and it is consistent with what i heard from chair yellen in terms of the kind of analysis she is looking at. the congressional budget office just updated their economic outlook. they have very similar conclusions to what danny blanchflower reached.

if you think it is around 3 million full-time jobs, then 200,000 payroll per month, it will take us another year and a half or two years to get to full employment. and to actually get closer, we will see some pickup in nominal wage growth, compensation, that will be very positive. she also mentioned that in the press conference. and that will in turn create upward movement and inflation towards the 2% target. i guess in the end i agree with austan that there is no need yet to start the hiking cycle. steven: that is what they were saying in the u.k. three months ago, four months ago, and then wages began to pick up. they respond with the lag. even chairman yellen mentions that. once you see wages begin to pick up and you are too late, that is what is happening right now. austan: but then that is also what they said in sweden when they race the race but then they

had to cut the rates again because it went too far. alix: right, and actually that is one of the biggest risks some say. they will have to backtrack like we saw in sweden. steven: what if they backtrack, it is not because of the decision. it is hard to believe that going to 37 basis points is going to be the end of the war for the u.s. economy. i think that right now the question is do they have more stimulus then they need? i think the pace of the unemployment rate is dropping is telling you that the risk that they will have the full employment target a lot quicker. it was dropping half a percent year, i would say yes, they have some margin, they don't have to worry, but one percentage point here, that is a lot. alix: awesome stuff. thanks for joining us on this very big saturday. austan goolsbee, steven englander, and andrew levin. joe: we will be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. welcome to a special one-hour edition of "what'd you miss?" on today's the decision. alix: we want to get to julie hyman on the market action. it ended flat on the day but it was a very intense afternoon. julie: yes, it was. a lot of volatility through the afternoon in all asset classes, really. we talked about stocks and treasuries in some detail so i want to talk the other asset classes. currencies, which you talked about a little bit, but i want to redirect what we said -- reiterate what we saw could account rising versus the dollar. i