>> greg robb from market watch just following up on paul's question, president trump said recently that you should feel the markets, so when you see the markets, what are you markets telling you? >> you know, financial conditions, broadly speaking, we don't look at any one market we look at a really big range of financial conditions and what matters for the broader economy is material changes in a broad range of financial conditions that are sustained for a period of time. a little bit of volatility speaking in the abstract some volatility doesn't -- doesn't probably leave a mark on the economy, so we look for that, and -- and, you know, what we've seen here is -- is a tightening there's been a tightening since right around after, a week or so at the september meeting, and we tried to factor that are into our models of the economy and to the results that come out of

those models that's how we think about it so we do, you know -- we follow markets really carefully, but, remember, from a macroeconomic standpoint, none of it matters if changes are sustained over time. >> nancy and then donald. >> nancy marshall genzer with marketplace. do you still think that core pce is still a good measure of whether the economy is overheating? what do you think of other measures like setting a target for economic growth and relying more on that >> well, i think we look at both, but core pce is a good indicator. it has -- what's happened over really 50 years is that inflation has become much less reactive to changes in growth. there was a time when inflation reacted really quickly to changes in growth and changes in

unemployment and that time is behind us and that is -- that is often attributed to the success of central banks in anchoring inflation expectations so that people believe inflation will come back to the target or around the target so it doesn't go down as much. inflation doesn't go down as much and a downturn doesn't go up as much when the -- you know, when the economy is strong it's -- it's really true though that inflation has not reacted a lot on a road from 10% unemployment to now 3.7% unemployment now, it did move up last year, but -- but in terms of just targeting growth, you know, i think -- i actually think our dual map date works very well wits maximum employment and stable prices most of the time those two things work together when they work temporarily in different ways, we take a balanced april proven, but i think that approach has served us well, and i think we can work well with it. >> donna

>> chairman pole, donna borak with cnn next year every meet be will be a live meeting so presumably there will be some adjustment that anticipates when a rate hike is coming how has the committee thought through of communicating the policy moves especially given the tremendous amount of uncertainty going into next year >> having regular press conferences will be a big gain for communication. that's the plan, and being able to come out after each meeting and explain the committee's thinking and relate that to the state of the economy and expectations for policy and global developments, i think it will be -- the idea is that it will be helpful in explaining how we're thinking and, you know, explaining what we're thinking about policy going forward. that's the plan. i do believe it will be a positive development i think will also become the case over time that there will

be no prior as to whether we would move at a quarterly meeting or one of the meetings at which we do not file an se pvmt as you know, we only update our projections upped the current approach quarterly whereas we have eight meetings, so i think we'll move to a more -- we'll have the ability to move at eight different meetings, not eight times, but at eight different meetings on the year >> i guess that is sort of the question that i'm trying to drive at is in terms of communicating to the market, because we've been -- because the market has been so adjusted to the fact that these are quarter end rate hikes and now you have the potential to move eight times a year, is the fed thinking through how it's going to communicate when it plans, given the amount of uncertainty? >> i think it's pretty straightforward. if we want to communicate

something about something that's going to happen at a future meeting i think we know how to do that in speeches and press conferences and such pump >> don lee with the "l.a. times. you mentioned broad-based wage ghosn this year and i'm wondering if you see further acceleration in wage growth and just how much slack there is in the labor market. >> so what we've sheen s a very gradual and ongoing inyoos in wages? if we go back a couple of years, there's many reasons and we were all clustered arranged 2%, 2% increase per year and now they have all gone up to 3 and then

gradually. up so in economic sense i do expect and many forecasters expect that wedge increases. there's plenty of examples where we had wage increases above productivity and high inhalation and we don't have high inflation. it would be welcome. we hear a great dole of a exdotal information about laborer shortages along with other, you know, bottle next and things, so i would expect that wages will keep moving up, and it doesn't -- it doesn't necessarily mean inflation we don't think of it that way. so -- did that answer your question >> labor stock. >> yeah, so, you know, my most indicators we look at a very

wide range of indicators on the labor market, and by most indicators we're at or even above longer run normal levels, but i would -- i would point to one particular pocket, and that is labor force the participation by prime age workers, particularly prime age males is still meaningful below the normal level there's a question can we go above the cyclical peak, or are the problems more structural than physical? i think we'll find that out. given the strong economy we've had the luxury that labor force participation can be higher than we thought, and that's nothing but a good thing. >> john. >> hi, john helpman with american banker.

a regulatory question, if i may. so many of the fed's regulatory proposals so far, especially this year, have been pry marivel focused on banks in the medium to small inning. i'm thinking of the stress capital buffer as well as the most banks making more than $2r 50 billion gsibs are left out and i'm wondering if that is meant to send a message that the fed does not really intend to change its regulatory structure for the largest banks going forward or if you'll get to that maybe later, and i'm thinking specifically the gsib capital surcharge which several members of congress have sent letters to asking you to revisit and you to reconsider. >> you're right that a big

focus. at the large regionals and then on down to the community banks and various steps and ask whether we have appropriately tailored regulation and supervision to account for the fact that smaller and less complex organizations presented much less significant threat to the economy and to the community should they fail, should they experience material difficult. so in the nature of that you're focused more on the smaller institutions think with the larger institutions we want regulation and supervision to be effective and efficient. i know that the larger institutions tend to be the ones who care about the volcker rule. that's something that we're working on you know, we -- we -- we think things need to be looked at carefully, and i -- again, i wouldn't want to materially change capital levels because i

think, you know, it's important that the largest financial institutions, the systemically important ones be held to the highest standards and higher expectations, and while we may tailor some regulations, the fundamentally hoy expectations are not going to change. >> okay. steve and then courtney. >> steve beckner, freelance financial journalist reporting for npr, chairman powell i know you look at many financial indicators, but let me focus your attention to the bond yeemptd the ten-year note yield has gone down pretty steeply, roughly 50 basis points i think in recent weeks. i wonder what you make of it is it a worrisome sign for you in terms of the outlook for growth, for inflation? on the other hand, could it be a positive in terms of presumably bringing down mortgage rates and helping the housing sector >> again, we -- we do focus on a

broad range of financial indicators, and really we don't obsess about any particular one. you know, we look at a range of them and we ask ourselves what's really going on in the broad picture out there. when you ask what's going on certainly with the longer maturity treasury market hats come in some that's consistent, you know, with a risk off feeling, you know, in the stock market as well, and we don't know whether that will persist. really the longer treasury has moved in a range around 3% and down 3% as a risk sentiment has changed. you know, i think -- if rates were to stay low for a longer period of time, that could be thought of as a signal of expectations of lower growth, but, you know, we don't know that that will happen. as i mentioned, our forecast for next year, in keeping with other

forecasts, that we'll still have solid growth next year, declining unemployment and a healthy economy. >> courtney? >> hi, chairman. courtney brown from axios. i'm wondering if you can clear up what's become a little bit of a debate in the financial community. you said in october in an interview with pbs that interest rates were a long way from neutral. a month later you said interest rates were just below neutral, and i think a lot of people interterm ted that as a shift in tone from you. were they right to interpret it that way >> monetary policy is a forward looking exercise, and i'm just going to stick with that where we are right now is we're at the lower end of the range of neutral. we've arrived effectively at the bottom end of that range, and, you know, there are implications of that. for that, as i mentioned, going forward, there's real uncertainty about the -- about the path -- the pace and the destination for further rail increases, and we're going to be

letting incoming data inform our thinking about the appropriate path. >> okay. michelle with the last question. >> chairman powell, talked about monitoring global developments you touched on the trade dispute with china, but could you elaborate on what economic developments you're referring to, whether brexit is one of those and what else? >> more broadly i'm referring to global growth, so if you go back a year, 2017 was a year of kind of ongoing upside surprises in global growth. it was a year of synchronized global growth, and people raised their forecasts for growth around the world, kind of throughout 2017, and in some sense expect that to continue into 2018. what has happened instead has been a modest retracing of that, so you have still healthy levels of growth in the aggregate around the world, but close to

the potential growth rate of, you know, the global economy, but you no longer have the really strong levels of growth that you had in 2017, so that is one -- that's i think the key effect we also monitor, you know, event risks like brexit, like, you know, like the negotiations between italy and the eu over their budget, and, you know, as far as those are concerned, we monitor them very carefully and, i mean, i'll mention brexit. our financial institutions have had a long time now to get red for the full range of possible exits from the eu by the uk, and they have had supervisory involvement from the u.s supervisors from the uk and supervisors from the eu. we think they are fully presumed for the full range of outcomes that may come out of that. i was very happy to see the developments around central counterparties today that was a big issue that -- that seems to have been

satisfactory for the time being resolved, so it's something that we're watching carefully honestly it shouldn't have major implications for the united states, but, you know, there's a lot of uncertainty because it's not something that's happened before, so we'll be watching it carefully. >> thank you >> thanks very much. >> that was fed chair jerome powell, of course, wrapping up his press conference welcome to the "closing bell." wilfred frost alongside sara eisen. straight to the markets, the s&p 500 intraday chart, right before the fed decision it was up 1.1% at 2:00 p.m. we were expecting a dovish hike, bullet market did not think it was dovish enough in tone. we sold off twice in the last couple of hours, firstly on the decision itself. we then recovered a little bit as the start of chair powell's comments were fairly dovish, but towards the back end we did hit

session lows we were down over 500 points at one point on the dow we're down 1.25% on the s&p, over 2% swing in the last hour or so. >> big move across assets. you're seeing buying of bonds and pushing treasury yields lower opposite whatever you saw initially. the dollar pretty much flat, climbed um the basic takeaway, yes, rate hike that was expected by the markets. they moderated the fed outlook in terms of growth for 201 cut the number of hikes expected or interest rate increases expected in 2019 from 3 to 2, but, again, didn't give investors enough to cheer about, and in jay powell's comments right now didn't sound flexible. he said we're paying attention to the markets and we have no plans to change the balance sheet outlook and the growth outlook merits more interest rate increases in 2019 the market is not pricing it that way here to react to the fed news,

we've got phil camparelli and our own rick santelli. your thoughts on the powell press conference >> you know, i really thought he would thread the needle a little bit better you can say dovish and hawkish and people are going to use those terms. to me when i watched the response in the marketplace and then i watched it as it moved with every question and answer on the press conference, my feeling was is that there's still this notion of a fed stencil, a fed path, a fed plan, and i really think that type of guidance is not good now, granted he would say very often that he's data dependant, but i don't think he really sold it, and with respect to the marketplace, today's a huge day for the treasury market in particular nobody should be shocked that there's volatility in the equity markets. i've been watching 75-point swings in the dow that happened like that, but right now as it

sits, two-year note yields haven't closed at these levels since august, but ten-year note yields haven't closed at this level since april of this year, and the reason that's so important, 2.81, 2.82 a huge area should we close under 2.81, let's round it out if we lose the 2.80 handle, i think that sends a really nervous message to the marketplace which will create another feedback look into a negative some move. >> jim grant and steven grasso have joined us as well let's get to steve liesman who, of course, was in the room during the press conference. steve, what was your take? >> you know, i'll pick up on what rick was saying he was trying to thread the needle between the outlook for a slower economy, his knowledge that the market indeed was forecasting worse outcomes than the fed and telling us that he did in -- he has in fact incorporated that idea that there is a lower market outlook

for the economy, but sticking with his committee, you know, i don't know -- it's interesting i wonder what rick would think about this if chairman powell could have put the news in any better way the news is not what the market wanted to hear i think the market wanted to hear the fed completely exit late i think there was very little chance that that was going to happen but the fed did not exit late so powell has a committee that sees two hikes and he did suggest if the economy doesn't perform as they expect and they won't be hiking had, by think, rick, am i wrong that the market want the growth and no hikes that's the way the market wants it there >> yeah, i think that there's some gray in there between total capitulation by the fed and what we saw today, and i really think that it's possible and that's where jay powell wants to go, but i don't think he communicated that there's a lot of ways he could have been more dovish about a

pause without giving up the hawkishness without normalization and maybe stressing after the 2015 hike. we waited a whole year. >> can i just respond on that a little bit >> yeah, go ahead. >> he's the guy who has to stand at the podium next month after the market goes up 2,000 points and say, well, you know, we made a mistake by change our forecast, and -- >> and that's the problem! that's the problem, steve! that isn't a problem but they think it is. >> it is a problem. >> that's the guidance trap that he's in. if he misjudged then he states it and eases back a bit. >> that's where we disagree. it was october 3rd when the market was at an all-time high and that's when they were saying the economy was so great and people were on -- on our air saying buy stocks, buy stocks, buy stocks and all of a sudden now we're 10% or whatever it is off of the all-time high. >> what else happened in early october, steve what else happened in early october?

that's the point of gravity where all the central banks inputs of are liquidity started to turn, early october i don't know why that fact isn't mentioned more. >> and that's where, if i can jump in there, that's where chairman powell actually stepped it up and talked about almost a robotic raising of rates, and he had to back off of that. so it's your exact date, rick and steve, october 3rd is where powell came out ultra hawkish, and that's why the markets tipped off today it's his inability to explain why inflation hasn't been there and the robotic unwind, and now we went from a robotic rise to robotic qt. >> steve, i have two examples. powell said i don't see us changing balance sheet policy, so indicating not much flexibility there on the financial tightening and the market reaction to that if we're seeing that. he said some volatility in financial conditions doesn't probably leave a mark on the economy. it just seemed like he was

seeing a better outlook on the economy than the financial markets are actually telling them. >> i don't want to be the guy who only supports his policy, but the objective of policy-makers is to be as steady as they can in the face of the volatility of both the economy and the markets and not to try to react, and that has some longer term returns if even on a day like this. sara, i would point out for the better part of a year i came on air and reported the fed's precise plans to reduce the balance sheet, and i can tell you -- i can count on one hand the number of basis point moves in the term structure of the bond market relative to that i understand people are saying the fed should react now, but over the course of the time the fed announced and began executing this plan. the market did not care one wit. >> well, yeah. it's a big experiment. i think it was a big unknown. >> statement, in steve's defense, we got comments from the fed chair the fact that

changing financial conditions are not necessarily affecting the economy. he also said that tariffs -- >> that's the key. >> and that's what they are managing, the economy, not the financial markets. let's bring in jim grant what's your take on this in terms of whether he's failed to thread the needle will successfully >> i don't think it's a matter of communications policy i think it's a matter of substance. to me the clear and present risk is the consequences, unintended though they be of ten years of suppressed and distorted interest rates with the attendant distortions in both the so-called real economy and especially in the financial economy where leverage has been piled upon leverage. >> so this is inevitable, this kind of rehacks? >> certainly after ten years of the lowest interest rates literally in the 3,000 years of recorded history. >> you didn't agree with the policy before. >> sara, it's not a question of agreeing with it the consequences of ten years of distorted interest rates are things that we can't always see but which are nonetheless.

for example, the distortions of the leverage loan market with the fine print that's meant to protect investors has been eviscerated or hats been written down in are no interest rates interest rates are meant to measure risk and discount future cash flows and set investment hurdle rates when those things are absent or distorts, decision-ins realtime or real things are not as they might be, and exactly what is wrong will be revealed in time now, the stock market is a forward-looking indicator. the economy is not a forward-look indicator. >> you know. i would sake the other side. i think he did thread the needle today. i mean, whenever you go into a fed meet and the market is weak, everybody is looking for the fed to come in and stop and make an about-face and this december has been historically weak as we know what did he say today? he said. okay, we'll adjust to different market conditions. the first market condition is if

the tariff negotiations don't go well by march 1st, we're probably not going to go again however, if we're at the bottom end of our neutral rate and want to go one or two more times, they are going to go again, but direction of travel is the same, and what i've been telling people all along this is the ninth hike, hard to believe. they have raised rates nine times now. what i've been telling you all along if they stop before they get to neutral that's a bad sign. >> phil, you can think they threaded the needle but the market collapsed off of that interview so the market didn't think that they threaded the needle so there's definitely some type of misconception between the market and what participants think and the fed. >> well, that's what i'm saying. the market goes into these meetings if there's weakness thinking that the fed is going to make an about-face. they are not traders. >> often the market reaction to a fed doesn't always necessarily stick. >> right. >> there's a lot of knee-jerk reactions here phil, are you saying these an overreaction >> we started -- >> hold on, steven. >> phil, continue. >> we would think that this is a

perfect reaction to what was -- what was being said, but i have to stress that -- >> the guys on the floor behind us were yelling make this guy stop talking >> like the will ferrell skit on "snl." >> since the last meeting, since the last meeting in november, the s&p is down 9% the nasdaq is down 9%. the russell is down 12.5%. they didn't thread the needle. this has become maybe what we all feared maybe it's become a political thing. no reason why he had to raise rates today. >> it's not the stock market, steve. >> if they didn't move rates today, steve, that would have been a big credibility. >> he repeatedly said there was no sign of inflation or the fact that reflation is tame and they had wiggle room. that doesn't mean to me that he had to raise rates. >> they are still accommodative. >> let's go to steve liesman and then rick. >> jim grant talked about there being ten years of distortion in

the rate structure, and i just want to know is it the considered upon of the panel that the fed ought to or ought not move towards normalization and what you had if you had a massive fiscal stimulus come along, it allowed the feds to raise rates and create a more normal structure with a modicum of pain that's going to be out there in the economy because of higher rates but not rates that are high in any historical measure either on a nominal basis or a real basis. we're still looking at a zero real cost of money it was jim grant on our air last year who said that gold continues to outyield some $7 trillion of paper around the world, so we're either in favor of normalization or we're in favor of continuing the skew that the policy has given to us. >> jim, and then rick. let's go with jim first. >> i'm certainly in favor of normalization as of like five years ago. >> jim, that ship has sailed.

>> whether or not one favors normalization, one must consider what is baked into the cake, and what is baked into the cake or what the austrian economist termed mal investment otherwise known in brooklyn as white elephants and the white elephants will reveal themselves in the fullness of time and we'll have a realtime time of the economic theory of austrian economics. can you sit on interest rates, the most sensitive prices in capital for ken years without adverse consequences that's the test >> you don't care what the fed did or said today. >> i'm in the news business. i care very much it's good cop en i'm trying to parse your words and understand you're saying it's distorted no matter which direction. >> i'm saying it's too late for normalization with this structure of investments and incentives that have been in place for so long. i think we must and will eventually revert to normalized and a market discovered interest

rates. just because it happened doesn't mean they won't be painful to adjust to. >> rick, what's your view on this point in the discussion >> first of all, we don't know the counterfactual if he wouldn't have tight yenld it possibly we would be down 600 and another asterix. we're not closed yet it's not out of the realm of possibility that after the close or tomorrow morning equities will be higher that means the discussion that we're having is a moot point, no i think we can sum it up in the following. they got the markets and the global economies addicted to liquidity. now it's their job to get it unaddicted to create the 12-step process for normalization. i think they purchased enough insurance with low-hanging fruit with the nine tight things i think at this point i still would like more normalization, but i think the path needs to be more real with regard to data dependant. he can say it until he's plus in the face i guess me and the market don't believe. if i just don't believe it i don't see how he can take a data dependant argument and sell it to me given the kind of data

point deterioration, and the u.s. hasn't been big, but it's deteriorated a bit nonetheless. >> i don't think he stressed the data dependant point enough, fishlgs and i feel in a it felt like he was trying to justify rate increases and further rate increases. >> exactly. >> more than he was trying to convince the market that they were trying to be flexible and data dependant and would hold off on quantitative tightening and interest rate hikes. he stood his ground on the tightening thing, and that's why the market is disappointed, but i want to move it forward and ask you about president trump. >> yeah. >> we're monitoring the twitter feed as always eamon javers has asked for reaction, of course. this is not what president trump wanted to see. is there a risk now that the president could do something more drastic >> get mat. >> he can get mad. >> get mad can he do something else he theoretically could -- >> chairman powell -- >> he could remove him as chairman. >> chairman powell addressed it. he shade they have a job to do they are meeting a dual mandate

and might want to squeeze in one or two hikes they are almost done we're arguing about the last one or two they are almost done. >> then he should have stress it had more. >> sara. >> he should have stress it had more >> that's something that the market has missed. the fed brought down the neutral eight of 2.8. >> exactly. >> there's a caveat to this, but the fed does the two hikes next year it's at its median neutral rate. >> what is neutral >> it's 2.8% is what they consider long run. >> they follow the market. they follow the market. >> let me just finish this. >> let's answer sara's question? what does that mean? >> i can do that in a second there's nine members of the fed who think the fed ought to go above neutral and neutral would be the rate that neither stimulates or restrict economic growth. >> steven grasso, clearly your view is he hasn't managed this well as relates to the market, whether or not that should be his primary aim but talk us through the key levels

we were at the session high close to the decision. >> when you look back at the macro, long-term retracement levels, 2508 is the level that we want to pop above before the close of day today if we do not not do that, we fall below 2,40400, and i don't mean today or tomorrow what do i mean is your next long-term support level to rick's point, when you have a calendar where we have one leak left, there's going to be a pension fund rebalance because equities were so beaten up that it infers there's going to be 45 billion notional having to come back into equities before year end. now, there is some flexibility when the pension funds can do that, but with illiquid markets it can get extremely volatile, both up and down, but i would err on the side of pension funds

need to be boy, so this dip could be bought back in the next couple of days. >> jim grant, you'll hear a lot of talk of is the fed making a mistake in are the markets saying the fed is micking a mistake? if the fed is really making a mistake what are the market implications of that >> they were set out by sunday's "wall street journal" piece. they contended that the fed is about to make a major policy error, and as evidence they cited the chaps in oil prize, for example, and other indications of weakening growth, not just here but especially abroad, and to tighten in the face of this they contend was a big -- if they are right. >> is that already in the market because the expectation was that they were going to tighten today, and we've already seen that sharp slide in oil and stocks and everything else in. >> i think what kevin and stan were saying is that the worst of it is still to come. after all, the market is down 5%

this year, so really nothing so i think the add verse consequences of this action -- >> nobody answer what had neutral is, by the way, and nobody answered my trump can i. >> i did, sara. >> they are normalizing and they are meeting their dual mandate and i don't know why we're talking about policy error the neutral rate, if they go past it at 2.8 they are restricted. >> the neutral rate is in fact a construct. it's a theoretical construct. >> ambiguous. >> nobody knows what it is it's apparent in retrospect as will be the wisdom or not of this particular move today >> they are meeting their dual mandate. >> i people -- they made it up themselves but they decided that themselves so that's the choice. >> almost out of time. i want to quickly get to the

question about president trump and you asked that question. what did you make that have response >> fairly unowe give call. i feel like the president ramped up the rhetoric it needed to be asked again. i think it personally plays in the room there i think it plays in a way that the fed feels its independence is threatened when it's a close call and has to go the other way and the other thing is the fed -- i don't think the fed wants to be in this position of fighting the market and president often this but it must find the case relatively compelling, this knowing of getting up towards this, this nebulous notion of neutral not being in place where they are continuing to stimulate the economy and the other thing is

taking away the economic weight details. >> i think it's a tough situation, phil, because the president can say the market agrees with me i was right about the federal and he's got a scapegoat. >> if there's no negotiated solution to u.s. hand china, the fed is not going again, so they are basically going to base clear they are almost hat agreement. >> we could go on for hours. >> and the very. >> thank you all norwaying in. it's intense and steve grasso, rick santelli, jim liesman, all over with the stocks sinking with a federal increase and not satisfied with the comments of

chairman powell. the naz down is down 2.5%, off the hose of theization and at one point and we're dhoes to 9% so we've convenient 2% intraday swing. up next, much more reaction to the fed's decision to hike rates and the biggest stock movers and how you should be trading. we're back in a couple of minutes. don't go anywhere.

welcome back to "closing bell." let's look at some of the biggest movers on the back of the decision and the news conference, both causing stocks to fall. bob pisani, seema mode and dom chu at headquarters looking at moves in treasuries and financials bob, let's start with you and what's happening with stocks. >> better than 2% move i think it's important just to review what chairman powell said this was a dovish statement by any stretch of the imagination he lowered the growth and inflation expectations, the 2019

hikes came down from three to two. the neutral rate came from 2.8% from 3%. put up that full screen, so those are dovish statements, and then i think he went further in the press conference he came out and said there is significant uncertainty about the path of any further rate increase that says we're not sure what's going to happen, and then he said our forecast is going to change if the data changes that's as data dependant as it gets there are concerns about quantitative tightening and i think a lot of problems that we have now are technical problems. you see the dow jones industrial average, this would be a new low for the year if we close 23,533. that was the old closing low that was back in march at the same time, let's take a look at the dow transports we also have a new low here for the dow transports this gets those people who still follow dow theory all up in a bit of a lather. dow theory, of course, looks for the dow transports and the dow

stri industrials broadly to confirm trends in each other when you have both of them hitting new lows on the same day, that gets those people who believe in dow theory all concerned that we have a new primary downtrend in another signal, essentially a sell signal that exists in the market so there's a lot of this new lows on the s&p on an intraday basis as well we broke bloat 200 day moving average. bottom line is watch the technicals here and a lot of that is why the markets are down >> thanks very much. we're down three points on the do you as we speak and what's happening at the nasdaq, seema is uptown with us for the biggest movers. >> we started the session higher by 1% and following the fed decision, the nasdaq dipped into lower territory. the mentionch cross-currents in the economy, financial volatility heightening, factors

that the market already knew about, but when it comes to the fed chair the investors take it to heart the question is what it pretends for stocks going forward on the losing side, the nasdaq and micron shares are down after posting disappointing guidance technology names like ibm and oracle trying to hold on to gains and jabol has been able to buck the downward trend in the market today guys, back to you. >> seema, thank you. let's send it over to headquarters where dom chu is looking a the move in treasuries and the drop in financials, dom. >> overall bob mentioned a lot of different things and if you take a look at what happened with the treasury side of the equation it's been playing out fairly markedly. the difference between yields on ten-year u.s. government debt and u.s. government debt are now moving lower they have now hit around 12 basis points you can see on that stage right there, 12 basis points

they have been moving sharply lower. what does that moan? it means that there's buying of longer term treasury debt forcing down yields on the long end and then a slight maybe holding steld to of that particular two-year yield. that flattening of the yield curve does affect banks. let's show you what's happening right now over the course of the past year-to-date period that downtrend in particular yield spreads is now playing out very markedly. let's check out the intramarket day trade. if you look at that particular etf, we did see again a sharp move lower on the heels of the powell press conference. down now by almost 3%. on a longer term base, that etf as we'll still tracking that falling yield curve. that flattening, if you will, so with all of this happening, wilfred, the bank stocks key to watch as the treasury dynamic plays out, and as bob pointed

out, some of the treasuries might be the short result of technical issues so certainly a trade to watch wilfred, sara, back over to you guys. >> dom, thanks very much for that in terms broader markets, we've got 15 minutes left of trade. we're down 388 points on the dow, 1.6%, a little bit more than that on the nasdaq, 2.4%. >> all sectors led lower by energy. >> jeffrey sherman will be here to weigh in on the fed's rate desanksd we'd decision and his boss told him before the move that it would not be dow down 355 [leaf blower]

you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

welcome back to "closing bell." 12 minutes left in the trade we have sort of stabilized in the last 20 minutes, down 1.6% for both the dow and the s&p, more on that and the lovitz session were worse, but we have just come off those, but nonetheless markets meaningfully lower since the fed raised rates a few hours ago. >> that's the big headline of the hour the fed raising interest rates today but signalling a more cautious approach for 2019 not cautious enough for the market apparently. mike santoli has been looking at

how markets have historically reacted when and if the fed decides to take a pause. >> yeah. that's exactly right the market didn't hear clearly enough that there would be a pause, although if you look at the fed's on-paper outlook, two hikes out of eight live meetings, in theory there could be many months, even if they do two, is before they move again what the market had in mind a blueprint in the past where the fed did stop raising rates in response to a slowing economy. if you look at a 94-'95, the only engineered soft landing and very similar market action and this year is a bit worse at this point, and did you have the fed pause late that year and the market took the signal bond yields went down but stocks went up. 20 is 2015-2016 looked similar and janet yellen conveyed the fact that they were done, done for a full year. i'll point out in 2006, ben

bernanke's final cut before the financial crisis happened in mid-2006 the markets did celebrate for a while. it was another year of a bull market when we still thought it was a pause as opposed to the highest level for fed funds we may ever see again. >> markets have already started to fall apart somewhat particularly in december mike, thanks very much for that. we'll see you again in ten minutes and for the whole of next hour. joining us is jeffrey sherman. your boss mr. gundlach has told our scott wapner that the federal made a mistake, sounded like they were on outpilot on qt and talked about the economic modeling what's your take >> i think that's exactly right. the love affair of the market with chairman powell, he was professed to be a pragmatist and he sounds more like an academic which he started at the last quarterly meeting back in september talking about r-star

and neutrality and that was the focus of the press conference and everybody is talking about this being a dovish hike, but quantitative tightening being on autopilot i think that's the scary part if you look at when the market really fell apart during his words, it was all this talk about autopilot. this is not a tested program of quantitative tightening. to put it on autopilot i don't think it's like an airplane where question fly on autopilot and all feel comfortable. it's like tesla trying to solidify the autopilot and the market started to ask is this actually dovish by continuing a tightening program and really sluffing it off >> he didn't say the word autopilot, but he did say i don't see us changing balance sheet policy david, are you going to defend the fed chair or not >> i mean, i think he came in the right direction. the market wanted more, and i do think jeff is right that the -- that the qt fallout was really the big fallout from the speech.

it would have been easy to say everything is on the table and we're look at everything and we could change the balance she had if need be he didn't do that, and i think the market would have taken the nod. >> i think that's the frustration. >> in a would have been so supportive. >> would have been so easy to not being more aggressive when it comes to talking about more hikes and more tightening. >> i agree agree with both jeffs, jeff sherman and jeff gundlach, that there has been a switch and he's gone towards the modeling side. he spent a lot of time weaning us off the models at jackson hole and now has brought us back to the models. the mods else are just failures and there's very little sign that inflation is accelerating even at a 3.7% unemployment rate and that's an easy thing to push away like greenspan did in the '90s, you know what, we don't trust these med else anymore we're flying had a little bit by our seat of the pants. do what we did in the late '90s, see a lot of similarities to the

late '90s. let's let it goed a we're sort of hoping to hike twice next year if anything goings well and if everything falls apart, it may be like '95 and '98 we may need to bring some eases back to the table. that would have been the easy way. >> we're all reacting like this because we've seen the s&p move 2.5% inthat day but it's not like gdp growth has moved 2.5% down hits job is not to manage the equity markets. >> i agree, we would rather him focus on the economy which is showing signs of desell rage, but it comes back to these models and the market losing faith that the ned is going to pay attention contemp rapiously. knife basis points from the high of the day, that's a slap in the face to the fed where they say we don't trust this idea, so i

don't want to bring it back to qt it's a tightening of liquidity in the marketplace and to say that they can just pause or a hike is needed on the monetary policy i think that's where the markets got nervous. >> what are you doing in response >> we're looking through the cycle here we've been forecasting that economic growth would parker in the middle of the year exactly as it has. the cap "x" would not flow through from the tax cuts, you'll have dividends and by the end of the year we'll be reassessing with what do we do with all the tax cut and the amount of deficit spending the deficit is the key here on the backdrop of qt coupled with the amount of spending that we're doing at treasury with the fiscal deficit looks ugly for the bond market

look, the fed is probably losing control, powell needs to be pragmatist, come back and actually talk like someone who has been a practitioner in the market. >> david, the s&p 500 down 9% in the month of december. is that overdone >> well, i would say it's down 7 for the year and adjusted for dividends, total down 5 on the year i'm not going to get too upset in the grand scheme of what we've done over the whole cycle. it's a down year and a year when we dent get a lot of rate support in terms of if you were edged. i think the equity market is a bit reacting to this i do believe there's a lot of disinoperation coming into the system and i think next year we'll see more surprises, the oil prices going down and the bond yields

reacting in a way that not most people forecast it would react over the last two or three months, and, remember, most guys that came on your show that talked about a big bear market in equities were also talking about 4% ten yirz, a big federal mistakes and lots of end-of-cycle inflation that's just not happening. this is not going according to the models uncertain different type of cycle than what what is forecast very similar to what we saw in the late 1990s, and i'm still talk fog my jeffrey's client with that '90s blueprint in mind, and i think we actually mind, andthe future of tually technology investing having the hike. >> thank you both for joining us we'll back in a moment for the close. our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail.

finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. the global investment management where in all of this is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you partner with a firm that combines trusted, personal advice with the cutting edge tools and insights to help you not only see your potential, but live it too. morgan stanley.

(sounds of race cars) the same iot technology on the ibm cloud that helps race teams improve performance and safety. bye. girls, don't wave at strangers. can now be built into everything we drive. when you apply expertise across an industry, bye! you can put smart to work. bye!

don't get mad. get e*trade, dawg. >> welcome back to "closing bell." there's the s&p intraday chart, down 1.3%. the fed hike, it was a dovish hike but not dovish enough got that twice in the statement at 2:00 p.m. and rp jerome powell's comments at 3:00 p.m. when we sold off the lows. down 17.3% on the s&p. quick look at the bond market. yield curve has flattened. ten and two-year spread not looking good and the dollar has rallied off its lows pause we didn't get enough of the dovish sentiment, all be it the dollar

still down sector performance, every single sector is low. that's the main takeaway rather than breaking down what this really means for individual sectors. they are all low, and there we have the dow down 1.4 and s&p down 1.4 and nasdaq down close to 2%. there's the closing bell down in points terms 352 on the dow. sar,a, back to you welcome to "closing bell." i'm sara eisen wilfred frost rejoining me in a moment along with mike santoli, cnbc senior markets commentator. a big thumbs down from the stock market for jay powell, the fed chairman the dow closing lower 1.5%, down more than 350 points s&p 500 down 1.5%. check out the nasdaq, losing more than 2% russell 2000, index of small

captains, also giving up 2%. this was all a reaction to the federal reserve's news conference, really the tone that came out of jay powell the fed did raise interest rates as expected,moderated the outlook and a number of forecasts for fed interest rate hikes this year but not enough to apiece this market. all 11 sectors closing low, energy and consumer staples hardest hit. team coverage around this fed decision and market action from all angles steve liesman is at the federal reserve fresh out of that news conference with the fed chair. bob pisani here on the floor of the new york stock exchange watching the fallout and seema moldy uptown at the naz tack with the big movers there. steve, let's start with you and just what the fed chairman said and how the market reacted >> yeah, i think that's the best way to think about it, sara, is that the market appeared to want total capitulation from the federal reserve on the issue of rate hikes next year instead it got partial capitulation at best one example the market wanted one or no hikes forecast for

next year and the fed continues to forecast two hikes. further gradual increases. the fed says there will be some further gradual increases. i'll goat that detail in just a second but first hear jay powell talk about the change in the rates outlook. >> many fomc participants expect that had economic conditions would likely call for about three more rate increases in 2019 we have brought that down a bit and now think it's more likely that the economy will grow in a way that calls for two interest rate increases over the course of next year we always emphasize that our policy decisions are not on a pre-set course and will change if incoming data materially change the outlook >> now, what the market wanted was just the one rate high, now instead there's going to be two. the market wanted flexibility on the issue of the balance sheet and the instead powell said, no, we'll pretty much be full steam

ahead and reduce the balance sheet by $600 billion and wanted more overall concern about the economy. instead it got that line that we're monitoring financial and global developments. but powell may have been a bit more dovish than the market may have given him credit for. listen to this one thing that he said about the outlook for data. >> i think from this point forward we're going to be letting the data speak to us and inform the outlook and inform our understanding of what will be appropriate policy so there's a fairly high degree of up certainty about the path and ultimate destination of any further increases. >> so really what that amounts to is that if the data don't prove the fed right on the 2%, 2.5% growth, on unemployment remaining low and inflation remaining near the target, the fed is not going to hike so the market can be concerned if it wants with a forecast, but i think powell just laid out a somewhat different reality for what he expects to actually

happen. >> steve, you've obviously heard all of the debate here on "closing bell" the last hour about the market reaction and whether that's an overreaction to the downside to what the fed chair said do you think jerome powell underestimates what is bearish about the market or he doesn't care about the market but he just cares about the economy >> he cares about the market to the point where it start to influence the economy. he sees some impact on the economy from the recent selloff. that may have been behind why the fed did bring down its outlook for rates, but he's not going to be guided by a market that was at an all-time high on october 3rd and has now come off of that pretty good. if you look at a two-year chart of the dow, it still looks pretty healthy, and you tell me where the right point is of the right valuation for stocks i think powell is going to monitor the market, but he's not going to be necessarily guided by it, and i think it's the imperative the fed seems to have

getting up towards the neutral rate and removing the number from the financial crisis. >> i think they will be asked how much of a fit the market needs to have before he changes his attitude. >> perhaps. >> let's get back to the market reaction that we've already pointed to bob pinsy will have a look at how markets reacted from the nyc floor. >> take a look at the s&p 500, we had the fed drip, the tendency to rise before the meeting and shortly after the markets started to drift south as you can see here. what is indicated is a sharp dechampion, industrials like caterpillar, jpmorgan, the banks were deeper into oversold bear market territory exxon down even though oil was up, that's how tough it was overall. some defensive names like verizon on the upside. steve is right the market was really looking

for total capitulation and even though the chairman and the rate hikes came down from 3 to 2 and all of this is quite dovish and i would reiterate that the chairman said that there is significant security we held their hand and said we're not sure what we're going to do and that's data dependency more flexibility on the balance sheet that the market was look for and that's a bit of a disappointment you see the dow drills, a loy for the year that was the new march low and look at the dow transports, you saw, of course, the fed red sox, at a new low in the. -- dow theories are people who believe when these two people

move in the second and hitting new lows and new highs hitting lows will confirm the downtrend that we've seen in the recent market. a lot of stuff that's going on is technical here. back to you. >> bob, thank you. the nasdaq very volatile following the fed interest rate hike decision closing down to more than 2% let's send it over to seema mody. >> reporter: the nasdaq faring the worst. to parse the fed chair's words, no easy task for the markets and that was evident in today's market reaction. we were up 1% pre fed decision and down 2% after getting the announcement, off the lows but a sharp reverse sal. motorcycle ron sta micron stock is now down 46% while trailed wasn't a big factor in today's market discussion, a number of chinese-focusing stocks did

trade to the downside, and names hike dollar tree and are with today's losses, nasdaq falling deeper into territory and i looked for for guidance, if you will one month against the consensus for earnings now we down to 16% guys, back for you. >> let's dive in and talk about this more with our guests. mike, do you think the market is overreacting a little bit to what was still a dovish hike, and that's ultimately what the market wanted to see it? >> you know, i would say it's overreacting except for the fact, and as i've said for two days, the market was so primed to princevalle because it was so oversold and in theory it could

have taken almost any excuse to do that rally and it didn't. what that tells you is the market is that much more fragile and the downtrend is that much more stronger and felt that much more in need of rescue by an overwhelming dovish message rather than a moderately incremental move to the dovish side to the fed. to me the takeaway is this is a market that yet again has declined to take a very perfectly plausible connection dues for a rebound >> you used the word the numbers now look negative and scary and it's causing this kind of reaction the fact that the federal chairman didn't process that or see that. >> he didn't nod in that direction, clearly enough, and there's a bit of a mismatch between the fed's mandate and the things it focuses on and employment and domestic

inflation and the sources of s&p 500 earnings and the liquidity conditions in equity and corporate bond markets i mean, all those things are little bit accept rat spheres. >> they usually right. >> well, i think they can both be right can you have a decent domestic economic situation and not have are the market positioned to capitalize on that. >> paul, is one of the factors here that the market is looking, whether it's a year or a matter of months further ahead than the fed is, and is that a mistake that the chair is potentially making, that he's not looking further enough ahead >> what was that to me >> it was, paul, please, go on. >> actually, i think mr. powell did a really fine job of threading the needle the fact that the stock market sold off tells us about the move of the stock market but as an economic matter i think mr. powell did a really fine

job. he said that we've arrived hat the bottom of the range for neutral which has been a long-term objective of the fed for the last three years and that they have achieved it it's the bottom of the range to be sure and they brought down the median range from 2.8 to 3 so they are almost finished, and i think, you know, what steve liesman was saying was right is that the market wanted to hear we're finished and he didn't say that because he doesn't know that they are finished so overall i think that mr. powell is taking a very sensible position and i don't think there was any incongruency between where my outlook is and his outlook is from the standpoint of the longer term they are basically finished the normalization process, and now they are getting back to old-fashioned monetary policy. >> except, paul, i wonder if the market reaction would have been less severe if we heard things like all options are on the table, including, you know,

quantitative tightening and locking at the speed and at the size of how we're doing that that may be more accurate than what the data is showing us now. giving more and sounding a little less aggress whiff it comes to raising interest rates and sticking with the tightening. >> i think he probably could have come up with friendlier rhetoric if he wanted to, but i don't point a inning f'er at him for not doing so i thought it was very friendly rhetoric, and i don't think he should be in the business of quote, unquote, of rescuing the market unless the market gives you a sense that something negative is going to be happening on the economy, and he's watchful about that, but there's no smoking gun that the economy is getting ready to go off a cliff or anything, and i think also in the back of his mind he wants wall street to grow up after ten years of super

accommodation and recognize that the fed is not bank of dad and stop asking for money. >> victoria fernandez, your thoughts >> we've been talking to our clients since the last meeting and we thought that the risk was going to be that this was a more hawkish market than what was anticipated and that's exactly what we've seen. looking longer term, i mean, we see the fed is still expecting a couple more rate hikes next year and that follows along with our anticipation as well they see that the economy is going to be strong growth greater than 2% until 2021 and the unemployment rate continuing to come down and taking a more longer term perspective. we remain had a little bit short duration on our investments and fixed income side and fully invested and looking more long

term on where we saw the opportunity. >> neil hennessey, your own take on the size of this pullback and whether it's a buying opportunity for u.s. exsis. >> i think the buying opportunities ahead, and i had to chuckle when the news came out at 11:00 pacific time and the market had gone from up 260 points down to over 400 or down to even and then went back up 100 and closed down 350. it's just crazy. the reality of this situation is everybody knew we were going to get a rate hike. did it matter if it was today or the first quarter or second quarter? we all knew it was coming so what is happening is you get people that start to sell and that's what happens when you get all the money in the passive sides because once the selling starts, you can't stop it. everyone knew what powell was

going to do and the committee was going to do so it wasn't a shocker. the market at 15 times earnings and 2.5% dividend yield, 50 basis points away from a 30-year t-bill, you'd be crazy not to buy into this marketplace, because the economy as powell was trying to say is in very good shape. >> i mean, the surprise i think, mike, came in the fact that he downplayed the market turmoil and the question is this going to be a lasting move beyond today, the funk that we're in, given the size and magnitude of the drop. >> 9% in december alone. >> today wasn't the bloodbath but the extension of the trend we're down 15% from the ultimate highs and whether it continues from here, as i said, we were oversold and stremptd the sentiment was really negative 12 hours ago, so we're only that much more so now and in terms of a regular bounce it's got to happen relatively soon, but the

first move, and the first rally is not telling us anything about where we ultimately go from here the bearish trend is there the fed won't be talking much any time soon so i think the market has to make its peace with where we are. >> three sessions in a row this week we've started positively and hit session highs, you know, up a percent or so earlier today before this, and we've sold off. whether it was the fed today or anything else, that's pretty bearish signals, isn't it? >> we were up 381 on the dow persistent distribution trend. people own enough shocks and shoulder enough risk and at some point we get sold out on some level, but it seems like it needs a more extreme extreme this time before there's a snapback. >> valuations? >> valuations look fine. next year's earnings estimates look in jeopardy fedex today only exacerbated that fear, and the process of downgrading earnings forecast is messy, even if stock prices already reflect some that have. >> victoria, what does it mean

for the interest rate sensitive sectors like housing we've seen the housing stocks get hit by the higher interest rates because while the fed chair talked about higher interest rates next year and raised rates, treasury yields actually came down. >> you know, they did, and it's interesting if you look back at 19949 and you were talking earlier about the rate hike cycle that we saw then we saw rates move down as well but the fed was doing the opposite they were saying they would pull back and stop raising rates. today we saw them pull back as well for not really the same reason, so if you look at the interest rate sensitive sectors like housing they really have had a rough time as of late. housing and looking at autos as well and i think some that have has already fed through the mark the fact that rates are now toeing a little bit at these levels will be a boost for consumers in that areas and energy has come back down putting $40 billion more in the

consumers' pockets women allows them to be more bearish when it comes to housing and autos with ereceive seen a hit with rates come back below the 2.80 level, we have to start watching and see where the next bottom is going to be on the ten-year rate. >> paul, we saw very clearly from the fedex earnings last night that there is a global slowdown happening do you think the fed chair failed to acknowledge enough of the extent of the global slowdown >> i think he did acknowledge it he also acknowledged that financial conditions have tightened and that combination is why they have a more dovish outlook in tandem with the fact that they are in the neutral neighborhood, so i thought he did a really good job of threading the needle, so i guess i'll put myself in the camp of, you know, giving a salute to chair powell, notwithstanding the fact that the equity market

got beat above the head and shoulders after he spoke. >> yeah. he acknowledged, it paul, but he -- he downplayed it i mean, he -- he didn't emphasize an urgency or a kind of fear factor around it and what it would mean for the economy and his policy. >> i don't think he wanted to emphasize it there's the risk of it being a self-fulfilling prophecy if he were to emphasize it the big thing he wanted to emphasize, they are at an infliction point the long journal from zero up to 2.5, was more or less on automatic pilot. he would reject that proposition because he would have, to but essentially once they started off of zero, it was a destination of 2, 2.5 unless sub-stops me now they are in that zone, and he -- of neutrality, and he wanted to really stress that this

actually if the nears of global growth, he'll react to it. his bigger mission is to say that we're in the neutral neighborhood, the lower end of it, but we near that neighborhood that's a big deal. >> neil hennessey, just quickly, top sector pick for 2019 given this pullback? >> i think there's a lot of sectors can you go into. the high growth area of tech is pretty much overbought and though it's come back down, but there's plenty of consumer staples, consumer durable goods out there, and industrials there's a lot, a lot of companies out there that are selling it on a price-to-sales ratio and half to one-third of what the overall market it, so there's plenty of buying opportunities out there. >> okay. thank you all very much. neil hennessey, paul mckill and victoria fernandez last hour our own steve liesman asked about political influence and president trump's tweets

here's what he said. >> political considerations have played no role whatsoever in our discussions or decisions about monetary policy. we're always going to be focused on the mission that congress has given us we have the tools to carry it about. we have the independence which which think is essential to be able to do our jobs in a non-political way, and, you know, were -- we at the fed are absolutely committed to that mission and nothing will deter us from doing what we think is the right thing to do. >> joining us to dive into that angle of the fed story, cnbc contributors jimmy pethokoukis and jared bernstein from the center on policy and budget priorities gentlemen, good to sigh both. >> jimmy, we don't know how the president is the going do react. clearly he made his position clear ahead of this saying the fed should not raise interest rates. does raise a risk now that the fed did raise interest rates for the president to do something more drastic than just complain on twitter >> well, listen, i think there

will be a lot of complaining on twitter. i would expect -- listen, we had the hike today may get a couple more. we have a slowing economy. i would expect that 2019 is going to be a year where the president will open up with both barrels or both esphonsmartphon, you're right that's just tweets it matters if it begins to change how congress treats the fed. back around 2010 there was the whole sort of audit the fed movement haven't heard a lot about that that can change. republicans could key off what the president says and begin to talk about bringing a fed chairman up for more hearings. maybe they are need to be audited by the gao there's even more sort of extreme ideas out there about what to do about the fed the fed can still be al terld by congress, a congress as the republicans shift on trade if you see them talk more about fed independence and where the fed is too independent and ignoring other things like

economic growth. >> jarred, is there any aspect of the president's criticism over the last year or two of the fed that you can understand, that you think is fair >> yeah. i think so first of all, let me acknowledge jimmy's bold forecast that there's going to be a lot of complaining on twitter i think that's -- >> take it to the bank. >> that is wholly accurate, and, in fact, i'm surprised the president's thumbs have been inactive this afternoon. it's almost like he had something else to do yeah, i -- i think that -- you know, interestingly i yield to no one in terms of my valuing of the fed independence i agree exactly with what major only powell just said, but i don't really think it makes sense for politicians who represent constituents, whose economic lives are affected by federal reserve actions in a big and important way, to have the fed be, you know, off base, off limits, so i don't mind that kind of jawboning. i don't agree with it. i think donald trump gets a lot more wrong than he gets right,

but that tweet that he put up where he complained about the strong dollar hurting the trade balance where he mentioned inflation has been tame and quiet, you know, interestingly, as somebody wrote, john cassidy wrote the other day, donald trump and paul krugman agreeing on what the fed ought to do on rates so that's kind of unusual. >> jarred, you are underestimating the potential for crazy ideas to emerge, not just like, well, yes, we should be able to question the fed chair but maybe we should put limits on the fed, congress can determine the feds can raise rates in rates are under 4%. that's a bernie sanders idea and i worry about the momentum if we started to ge the fed for political purposes. >> you're not saying the federal reserve should have paused on interest rates and then there

would be questions about credibility as well. so it's damned if you do, damn it if you don't. >> i agree with a if sentiment that we haven't heard. i consider this a pretty dovish hike, and the fed is not going to go from throw baked-in hikes from one to go from three to two was a fairly big deal f.look at the forecast on unemployment there's no way they will tell you that the fed won't hike >> fed chair bernstein, come on. fed chair bernstein would be cutting. >> what likelihood do you put on the republicans actually moving towards trying to fundamentally alter the independence of the fed? >> i think there will be serious discussions and i think you'll hear a lot of conversation i don't know if democrats are going to go along with that. i don't think there's anything

done in congress but the mere fact that if we start seeing that again as we did with the audit the fed movement, i think if i'm an investor i think very hard about current fed independence and where the fed might be five years down the road we've seen all these other institutions in the united states under attack in recent years and why would the fed -- >> i think it's a scary prospect, and i think we need to hear from mike santoli on how the markets would interm result that. >> can i make a quick point. >> we'll come back because it's important to say that the fed is one of the most independent, credible institutions in washington. >> and let's not screw it up. >> what would happen if that were compromised >> negative for the market and i don't know how the market would trade off of that. i do think there's a way we can look back on today and say he got the one hike in from all the

criticism. >> if they are still calling him in for hearings. >> recall here's where i think jimmy is probably overstating the case the republican house and senate and white house were actually gunning for the fed's independence last year, and they were unable to do much now we have a difference structure up there with a democratic house with a lot more progressive liberals, and i don't think if a jeb hensarling-led financial services committee -- >> progress i was would love to alter the fed, jarred. bernie sanders, elizabeth warren. >> i really think -- >> guys, we have to -- >> if the republicans couldn't do it, you're not going get it in this session. >> jarred and jimmy, thank you both very much great discussion. >> thank you. >> it was a good discussion. >> political influence on the fed. >> you always get heated on a fed day like this. up next, mike santoli goes to the telestrator to see how

today's comments from the fed chair could impact emerging markets. >> plus, facebook tumbling following yet another revelation about questionable practices on data sharing and privacy a former ftc official and facebook sharehold werill join us to debate that coming up.

let's take a look at how we finished the day on wall street. lower across the board and reaction to the federal reserve

raising interest rates, moderating its outlook for less rate hikes but not enough. the dow closed lower 1.5 points, more than 350 points s&p lower by 1.5% as well. the nasdaq and russell both losing more than 2% apiece just add together losses we've seen for the quarter. >> we have a news alert. hi,ishing. >> how you doing, wilf, tilray announced a partnership to research non-alcoholic beverages containing thc and cbd the partnership is limited to canada and the company says any decisions regarding the commercialization of those beverages, that will be made in the future each condition intends to invest up to $50 million in total of $100 million stock up more than 11% after hours. the stock was down 7% during the day so that kind of washes that out. the stock was over $200 in september, but it's in the 70s

right now so it's come down a long way back to you guys. >> eric, thank you very much time now for a broader cnbc news update sue herera has it for us hi, sue. >> i do, indeed. here's what's happening at this hour, everyone fellow republicans are slamming president trump's decision to declare victory in syria and begin withdrawing the remaining u.s. troops from that country. florida senator marco rubio calling it a colossal mistake. >> the decision to an american presence in syria is a colossal in my mind mistake, a grave error that's going to have significant repercussions in the years and months to come. >> delivery company ups expects its busiest returns day to fall before christmas for the first time it expects to handle 1.5 million returns today and predicts another spike on january 3rd when it anticipates it will handle 1.3 million packages.

>> big news out of chapel hill, the university of north carolina agreeing to an eight-year contract extension with head basketball coach roy williams through the '27-'28 season he's won three ncaa championships and been to five final fours. congratulations to him >> eight years. >> it's a long time, right >> you're up to date, guys. >> jose mourinho can only dream of sue, thank you very much. >> very true. >> don't think we were talking about soccer very much. >> just briefly. >> now back to the fed raising interest rates today what's the impact on the emerging markets you going to do a dollar chart >> it's related to the dollar. it's all put together. here's the setup leading into today's federal decision bank of america, merrill lynch risk/love meter. sentiment in emerging markets in

particular you can see right here it's plunged. it's around the lows of a few years ago of early 2016 and also not too far from 2011. during the financial crisis it was all the way down here. we don't even show that, and what it suggests, and there's another part of this analysis that shows that the six-month forward returns when the indicator is all the way down here are consistently positive it will just suggest the pendulum swings and we saw the emerging markets sell off and it's largely because the dollar did bounce a little bit and you had a sense that maybe easy monetary conditions were not going to help out emerging markets though i think we have another chart that shows just recently emerging markets have gotten some tracks crop relative to u.s. stocks this is not a reversal in the trend of weakness and it is interesting that you have a bottom forming there, and it may be a little bit of a mean reversion move but obviously the outlook for global growth is going to determine a lot more than what the fed said today and

it's all interesting that it seems there's dry powder in the end. >> that kind of correlation does still hold pretty well, particularly when you look at individual currency markets and they are related along the whole em bracket and i guess as we look ahead, going to put it in a different situation and we don't have that same structural tailwinds than we did after the financial crisis which helped global growth pick up again. >> and spring loaded growth that you might look for that. obviously china is going to determine this as well as everything else in terms of the aggregate performance. obviously if we're talking about mavis slowdown or risk of recession in many regions next year this, isn't going to work just baugts sentiment is where it is. >> good stuff. thank you very much. >> risk/love. >> i love that name. markets going on a roller coaster ride after the fed hiked rates by a quarter point and heard what jay powell had to say. find out where buying opportunities now lie. that's coming up.

>> first, shares of facebook plunging on a "new york times" report saying the social media giant shared more user data anth previously disclosed we'll discuss that coming up we'll discuss that coming up why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

a is a . facebook getting hit hard again crushed and done more than 7% after a "new york times" report saying the social media giant gave big-tech companies like microsoft, amazon, spotify and others more access to user data than previously disclosed >> in a post facebook offered this defense none of these partnerships or features give companies access to features without permission nor did they violate the 2017 settlement with the fcc >> the dc attorney general filing a lawsuit against facebook over the cambridge analytica privacy violations a lot to talk about when it comes to these sorts of issues julie goodrich joins us from northstar asset management and the former chief technology officer at the ftc quoted here in the story ashtan, as far as facebook violating are the agreement with the ftc that it made several years ago to avoid the privacy

concerns, do you see this as a violation? >> i do. thanks for having me i do the order required that the company not be deceptive with regard to its statements around its privacy as well as have a comprehensive privacy program, and i think the reporting highlights that neither of these actually were followed through. >> julie, the facebook defense today says none of these partnerships or features gave companies access to information without people's permission. is that sufficient defense does it cover them of all potential wrongdoing, or is it not -- is it fair for the individuals to say, well, we didn't know we were signing up for that >> well, i think it's -- it's facebook's fault i think they have got lousy corporate governance i've talked about this numerous times on this program. what scares me is, you know, as we know, zuckerberg has the majority vote, and he really is

in control of the entire company, and he really doesn't have a clue about what it means to protect people's privacy. >> ashkan, sorry for mispronouncing your name here earlier. what's new here? streams like some investigative team at a newspaper digs something up it's even more damning and alarm and how they handle users' information. what else have we learned here >> i can anything is new but the scale and scope is magnified for sure and to your earlier question of whether consent is enough, i think companies like facebook consider just by signing up to the service consent which i think most users would not consider just a term of service what this really highlights is the statement that the company does not sell people's information, and in fact when they don't sell it for dollars, they do sell it for exchange of

integration on new platforms or partnerships where developers build apps for them. >> that's their entire business models. >> in the statement from the company today, they -- they asked themselves a question, do partners get access to messages? the answer is yes. we're not talking about people changing their status or updates. this is personal messages between individuals as if you're posting someone a letter the postman would never be allowed to open that letter to read it to make money off of it whether or not somewhere someone signed up to allow that or not without knowing. individual users didn't know that their private messages were being read. >> this is exactly what the problem is, right, because we have different ideas of what's privacy and what isn't this is a brave new world. you know, we just created a new sector for these companies there really isn't -- there are no rules for these guys, and if we're letting them establish the rules, we've got a problem, and that is what is going on now

you know, this is like zuckerberg, you know, trying to dig himself out of a big deep sand p. it's not going to get any better, and i think that as shareholders, you know, we have to decide are we willing to live with this stock as it drops another 50 points or whatever? do we want to own shares of a company where the ceo who has complete control over all, you know, every single decision that's made at that company, clearly doesn't understand what the problem is i mean, when people go on facebook, they want to -- you know, they want to post pictures of their grandchildren and, you know, talk to their friends, you know they are not expecting that in two seconds all this information is going to be shared. i mean, i think they probably should expect that, but they don't. >> right, i just -- ashkan, on some left ubiquity of facebook will always make it a target fortuneists from the advertising

side, from poem who want to spread and malign viral messages and everything else, so it seems to be the impression is that it's going to be an ongoing process. it has to be part of the -- the assumes of how this company is run, and it's not clear to me. is it clear to you, that if there was a different management structure that that approach would change >> i do think the management structure has a lot to do with it i think up to the "c" suite level there's a lot of focus on growth at any cost and we've seen folks resign, and we've seen whatsapp, the founders leave with a great deal of money on the table to separate themselves from the company. i think there's a great deal of concern from the philosophy and ethos of the company bolt sheryl, bos, mark himself have a lot of influence about these practices. >> julie, we're out of time. are i want to get to the heart of this.

you made a good investment thesis against owning the shares and i introduce you as a share herald >> i bought 58,000 shares and by the end of 2014 we had 58,000 shares and now we've got about 16,000 shares. the reason i'm hanging on to some of the shares, and it's actually in our retirement accounts at work is because we're filing shareholder resolutions asking mark zuckerberg to give up his majority voting structure so he gets ten times the votes of every other shareholder who owns the company. he's not a majority shareholder, he controls whether or not he steps down, controls everything. we think there's a conversation that needs to happen and needs to continue to happen. you know, to try to get this guy to understand that he doesn't have the skill set anymore to run this company because he's not taking care of shareholders and their customers quite

truthfully you know, he's become kind of the robber baron of the communications sector. >> got it. guys, thank you for joining us with your -- each with your perspectives on the facebook issue and another big slide for the stock. julie and ashkan. >> now all 11 s&p 500 sectors finished the day lower on the fed rate hike decision whether there are any buying opportunities out there, we'll discuss that coming up

welcome back let's head over to the nasdaq to check in with "fast money" trader guy adami what's your reaction on the fed decision and the reaction? >> love you and sara, like the peaches and herbs song "reunited. >> i get the gist, don't know the song. >> it's great, number up number two. >> agreed. >> i'm -- i'm more afed jerome powell fan today than i was yesterday. good for him i think he's doing everything right, and as they say, the twitter people, don't at me but if you want you can at me, but why shouldn't he move? i thought, you know, a few months ago this was the greatest economy in the history of our republic if that can't withstand us going from negative real rates to now 25 basis points or so, what are we really talking about here >> but would you be a buyer? i mean, look what the market did? >> the market should be going down i mean, you know, it's funny when the fed leaves rates at zero for seven years, nobody

talks about the fed being data dependant, right everybody is thrilled, but now when the fed is actually trying to rectify the errors of the greenspan era, exacerbated by ben bernanke an -- >> is it time to rectify the errors and raise rates at berna >> it time to rectify erris and the global economy is slowing? >> when will it be the right time. >> when things are looking up. >> it will never be the right time we've zone been so ee mulls fieed in the zero interest rates that there will never be a good time to move he is being systematic maybe the data does suggest. but if we can't handle from negative rates to 25 basis points then we are worse off than we were he is taking the pain in my opinion to save us from an inevitable situation year and a half two years from now. good for him for having the kahones to toing

>> it's peechaches and herb. >> i know you know that. >> sorry this is about two people. >> two people it's a duo. >> i thought it was the fruit and seasoning. >> but guy, i could call him on it. >> that's peaches and cream. >> at some point the guy -- what the market needs take the medicine approach there is a pain point out there what's interesting is this is mostly equity move right now corporate credit softened but it's not necessarily signaled the things that the fed would say, okay that's a true tightening of credit conditions. >> listen, i understand. and i'm sure i'm not making a lot of friends i understand we want the stock market to go up in perpetuity. i get that but back to sarah's question at what point are we ready for rate hikes? at some point tough take the medicine what are we 13 percent or so off the all-time high in the s&p, 14%. >> just about 15.

>> that's not all that -- i don't know, that's not a big deal given the run it's had the last eight or nine years if this is the medicine we have to take we have to take it in my opinion the unintended consequences of federal reserve being accommodative for eight, nine years is widespread if you want to look at it, look at companies that borrowed money cheap, bought back stock, paid divides and didn't focus on the business that's where it made corporate usa lazy >> guy, adami. in the jim grant camp thank you for joining us catch you at the top of the hour. >> yeah. >> we got a bonus round of guy. >> guys who grew up in commodities think 15% moves are nothing. which is some sense true 15% giveback of a bull market run. >> and they've been consistent on talking about criticizing quantitative easing. more of that with guy and the team on "fast money" at 5:00 p.m. >> let's continue the discussion in terms of overreaction to the

downside from the fed decision joining us now jim paulson and jack aburn founding partner and at wealth advisers jim, start with you, chairman powell made a mistake. >> i don't know it was a mistake. i think the market looks at it that way but i'm not sure he had a lot of choice this month we saw the rate of core consumer price inflation and the rate of core producer price inflation both accelerate from the month before and both near highest levels of the entire recovery. wage inflation for the second year in a row year on year is above 3% and two weeks from now it could go up again. i get where the fed is coming from i really do. i think the central problem is not that we have had overheat issues we have had those all year it's just we ha good economy to offset them. this is the first time in the

recovery we have had worries in my view about stag and flags simultaneously when you have the stag flags mindset in the market is a tough path for the bull. we have escalating fierce of the recession and but still dealing with overheat pressures legitimately so. i think to we have to kill off concerns about inflation that means a deeper correction and even weaker economic growth before this bull can continue. >> not very optimistic jack, bottom line does the decision today change the outlook for stocks into the end of the year and 2019 >> no i think it's part of the longer term path what guy was saying is right i think the investors in this market nowadays are on pennsylvania -- have champagne tastes and unfortunately the central banks are on a beer budget one of the things i worry about is that while certainly you have

a federal reserve that tightened the last few years we still have roughly a $14.5 trillion quantitative easing stockpile built up yet we still have $7.5 trillion of bonds worldwide with negative yields if we do start to slip i'm afraid that, you know, a lot of the investors are looking for another bailout. and the central banks just don't have the where with alto do that i believe just like powell i think deroggi and others need to really ramp up their stockpile that -- to be able to address the next downturn if we have one. >> jim, quickly, we are talking about the attractiveness of emerging markets before the break. in light of a perhaps slightly less dovish fed than expected and the dollar recovering intraday, what's your take on that >> you know, i like the emerging markets right now.

i think it's amazing and somewhat surprising that they have outperformed here in a -- in a more than 10% correction in the u.s. stock market. they have gone down only half as much and actually been a market performer now three years. and i kind of think that they might continue there is other favorable things surrounding them including valuations and a completely washed out marketplace where there are only hardy souls that own them i kind of think they lead the rest of the way in on the balance of the bull. if we have a bear market i don't want to be hanging out but otherwise a good bet right now. >> gentlemen have to leave you there. >> can i weigh in. >> i'm afraid we are out of time jack and paul. >> final thoughts on the market. after this wild fed day when we come right back.

(toni vo) 'twas the night before christmas, and all thro' the house. not a creature was stirring, but everywhere else... there are chkers and food orde. doctors and surgeons and all the life savers. the world is alive as you can see, this time of the year is so much more than a bow and a tree. (morgan vo) those who give their best, deserve the best. get up to a $1,250 credit on select models now during the season of audi sales event. ♪ you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

don't get mad. hey kurt, are you watching the best of geico ? i sure am, linda. they've been saving folks money for years. and now they're re-airing some of their all-time greatest hits. with classics like... hump day. caveman airport. and even... celebrating squirrels. this crudité is great, but those geico ads are even better. but that's not all. vote today and you can enter for a chance to appear in an upcoming geico commercial. just visit geico.com/bestof.

oh, geico. it has been a wild day on wall street. very macrodriven afternoon, sarah. but tomorrow you focus down on one company in particular. >> nike earnings after the bell a good global snap shot especially of what's happening in china how do we tell if it's a one-day move or if the market is okay with the fed posture. >> i honestly have to see the

market react to itself right now. we are below the intralay low from february and april. this is the moment when you look to see buying come in. often the day after a fed day as you said earlier is when you get the full reaction. >> down 9% on the s&p for dies are december that does it for "closing bell" today. thanks for watching. >> "fast money" begins right now. >> "fast money" starts right now. live from the nasdaq market site overlooking new york city sometimes times square traders are pete najarian. steve grasso guy dmay and the words ma made the doves cry. despite what many considered a dovish hike as federal reserve chair jerome powell started speaking stocks started sinking, getting crushed, wiping out a big rally with the dow ending down about 350 points closing at the dead lows of the year. let's get straight to our own steve liesman in washington, d.c. at e