>> my gut is the fed is not going to be hawkish enough, and the market will go higher. >> we will see because we're an hour away from the decision itself, and then the fed chair meets the news media there. i'll see you then. "the exchange" begins now. ♪ ♪ thank you, scott hi, everybody. i'm kelly evans. ahead on "the exchange," about an hour to go until the fed's latest decision. this time it will only be a quarter point hike is what is expected but it will have big implications for your money.gine or a pivot this divide between the markets and the wide would get wider, and all of these hikes have pushed credit card rates to record highs one industry watcher expects

them to top 20% after today. now the white house is trying to cut consumers a break. will it work we'll have the latest. the housing slowdown continues. mortgage demand plunging what will happen after today's expected rate hike that's not all we have big earnings meta reporting after the bell. is it facing the same ad challenges we'll dig into all of that we begin with today's market action and dom chu has a look at the selloff. >> it is a selloff kind of on a fed day, typically what we have noticed is there is this more wait and see mentality, almost like a holding pattern for stocks right now, the real underperformer is the dow jones, down 365 points. we were down 380 something at the lows, so over a percent down, led by am gen and travel shares

the s&p is down 23 points now. at the highs of the decision, we were flat from yesterday at the lows, down 26 points. that is your trading range so far today. and the nasdaq is the outperformer, that tech heavy trade, down 35 points or about 1/3 of 1%. it is a fed day, so let's focus on what's happening with rates across the yield curve rates are lower going into this right now. the two-year benchmark, 4.2% the ten-year, 3.46%. as we often do on fed days, let's look at some of the bank stocks, because the banks are heavily focused on what happens with the fed and the interest rates. it's a mixed picture, but jpmorgan chase down, goldman sachs down morgan stanley, just

fractionally to the green side of things. back over to you >> dom, thank you very much. let's get right to the big story of the day now what are investors watching for in the fed's statement, in the press conference, what is the language, what is the code steve leaseman has more on what to expect. steve? >> reporter: yeah, fed chair jay powell expected to hole the line on suggesting any easing to come, he's going to hold the line on plans to hike and stay above 5% for a time, despite market pricing for rate cuts later this year. 66 points, that's what separates the market's year-end view, and the feds are pricing one more quarter point hike after today and cuts beginning in the late fall that's the market, not the fed one question is whether jay powell feels the need to push back against that or if he's content to let that play out over time. fed officials do not want the market to think that the down shift to 25 base point meeting

pace signifies the end of the tightening cycle a series of new voters comes in. we have kansas city, cleveland, and boston they're on the way out we also have a contingent of mid western hawks there. chicago, philly, dallas and miles per hour one thing to listen to, the three or six-month an you willized inflation -- annualized inflation rate is running at 2.1% on a three-month basis. we don't close to the fed's 2% target one of the questions is, why doesn't powell just declare victory and go home, or defend the 5% line because of the tight job market kelly? >> steve, quick question for you. what did you make of the job openings report this morning it was a jaw dropper

>> yeah. the job openings keep being wide open it's quite surprising now. of course, you didn't have that lower than expected adp. so there is that one cross current there. but in general, it looks like the job market remains strong. the question is, not only is the job market strong, but the question is how much it adds to inflation. this notion of the phillips curve, or the tradeoff between unemployment and inflation, it's not working very well. we've had a high gdp and low unemployment rate and inflation has been coming down in all of that but it's really the mechanism that powell sees as the one driving inflation, and who raised a question about it the vice chair earlier this month did. she said maybe it doesn't mean that you're going to have to have the job market soften to bring inflation down >> we're not going to get any job predictions this month, are we >> no, that's not until march.

that's been the convenient excuse for feds not to answer my question whether or not they're rethinking the 5% threshold. they say talk to me in march >> steve, thank you. another quarter point may be priced in, but it's what the fed signals or does not that is giving the market anxiety, especially with this data sending mixed messages today in particular. steven whiting is here, chief investment strategist at city global wealth investments. cathy is with us, chief economist at nationwide mutual great to have you guys on board. steve, i want to start with you reacting to what he just said. jump in on this idea of what is going on with the jobs data being so strong, the same day the manufacturing indicator was horrible >> exactly let's look at the data in the fourth quarter, on an unadjusted basis, we had about 750,000 job openings fall in the

fourth quarter it's erratic month to month. friday, we would expect another strong employment report unfortunately, i think it's the last of the year >> so let me back up are you saying that the job market is as strong as the report suggests or you think it's losing momentum >> labor demand in the year ahead is going to be a lot worse. you can say well, mortgage application volumes are steadying. they're down 38% from january a year ago we have nothing but construction employment gains behind us when we get into the spring, we'll have very severe job losses in home construction. we had home inventories contribute the most to gdp last year since 2010. marketing and sales positions are going to be lost if the saying is, too little too late in the case of the fed, it's too much too late they will be tightening in a period where right now we are facing near-term contraction pressures in the economy >> it sounds like what i think

you're warning about, as well. you're seeing signs of a slowing consumer, the manufacturing is more pronounced. >> that's right. real estate is obviously deep in recession, but you're seeing that now play out in manufacturing. and maybe the service side, we'll get the report later this week but that indecision hit below 50 that was a real shocker. we felt the service side was holding up much better than that and consumers the last three or four months adjusted for inflation has contracted so i guess it's negative consumer spending going into q-1. doesn't mean we get an outright decline in spending, but we could. and the last kind of bastion of strength is the labor market i w what was interesting is hiring continues to trend lower so even with the job openings

numbers increased, hiring, which you have to think about, maybe that's what happening, they are pulling back on hiring, and that could depress the net job creation, especially -- maybe not so much this friday, i agree with steve, but going forward, it should be much weaker >> i think we have the same kind of thing show up in zip recruiter and indeed so kathy, are you just saying it's a matter of time until the labor market slows more? and if so, the fed has all of this data, too so is this the kind of environment they want to continue to hike rates into? >> that's a good question. first off, i do think it's just a matter of time you can't have the labor market remaining so strong when you have all these other sectors and weakening in the head winds affecting it and companies are preparing for recession. so that means they're going to pull back the hiring

they're going to have to lay off workers. so the fed, i think generally this is what they're aiming for. not necessarily a recession or slowdown, but they want to bring down inflation, and that means slowing down the labor market. >> do you think the message from markets here is basically that -- say ten-year, the peak is in, it's only down from here. do you think there's any kind of rational case to be made for 350 being the lows of the year, and somehow we go higher, or could rates continue to keep falling, even as the fed, if you think they're going to do three more, raising things on the very short end of things? >> yeah. i think the rates have already peaked for the cycle last year was the peak of the cycle, and our expectation is that yields will gradually decline during the course of this year. that said, i was quite surprised

how quickly we moved from 420 to around 350, and we have stayed at that level for the last -- for over the last month or so. i think the trajectory for the remainder of the year is to head lower, and a lot of the fed hikes and the pressure is going to be felt by the front end of the yield curve. that's really where i feel like the market is underpricing the risk i see steve and kathy's point of view, but i think the fed will stay hawkish at this meeting and the market is not fully appreciating the fact that the fed is determined to get it to the 5.25 range by the end of this year. i think there's a potential for more repricing of hikes over the near term, at least in the first half of the year >> one of the reasons, each as

everyone talks about a soft landing, the yield curves are pretty worrisome and then when you see things doing what it's doing, you wonder if they're ahead of the curve. the fed would have to cut by at least a point here can you just from memory talk about whether -- and what their reaction is usually like normally, these inversions happen a year, year and a half, maybe more before the real pain of any kind of downturn hits and i'm sure by that time, at least the recent past, the fed has been cutting so i can understand why people are extrapolating from these inversions, because they're going to be cutting by the end of the year. it's only nine months after the last rate hike any reason to think this time won't be the same? >> i think there is, because of the fact that we have a very different environment with inflation leading the way higher to higher policy dates the period now is very similar to what we saw back in the 1960s

or '70s or '80s, where the curve was extraordinarily inverted, it stayed inverted for a much longer period of time. so in our forecast for this year, we think that the curve continues to disinvert, but for the remainder of the year, it stays in negative territory. the spread between the two-year and the ten-year remains inverted, even as we approach a recession perhaps in early 2024. so the dynamics are a little bit different, given the fact that the repricing hire has been led by the front end, and the fed pricing in starting to deliver a bunch of hikes so in this sort of context, it makes sense that the yield curve remains inverted so i'm less inclined to read too much into the inversion of the yield curve, into an imminent recession. we still have recession for early 2024 we see that trajectory for a

recession is not imminent. >> i disagree. we're seeing two months of declining in industrial production and consumer spending and two months of decline in real income. we are more and more signs that we are seeing an earlier reaction again, this is going to be a period, if we look back, paul volcker was cutting rates after employment was rising. the year through december, since 1948 -- >> do you think the fed is in the position like volcker was in the '80s after he succeeded in beating the inflation. >> the yield curve is telling us the right message. ultimately the fed will follow it it will be the second half of this year. unless we get all of these declines in sale and jobs, the fed will cut later in the year >> quick response to that? >> it's possible it really depends on the

trajectory for the job market. that's why the job market has been extraordinarily resilient i think as long as people remain employed, they're going to spend. so i think that you really need to see the unemployment rate rise from 3.6% to around 4.5% by the end of the year. we just don't see that, you know, the unemployment rate rising as rapidly in the next several months >> kathy, quick final word from you, what are you going to be watching for at 2:00 or 2:30 today? >> we're expecting a hawkish 25 basis point increase first thing is let's look at the policy statement, do they make any changes there, is it still ongoing increases or did they change that adjecadjective. and i don't think jay powell will up the ante, but hold the line i don't think the market also

necessarily listen, but i do agree that eventually the markets will have to catch up with that hawkishness. and i also would add even though we see a recession unfolding, the fed keeps raising rates to a bit above 5% because of inflation. >> do you agree, steve >> i think they'll go a couple more we don't think this is going to be a real hard landing employment g mment growth has b since covid started. i think we will be surprised, the fed will be surprised that unemployment is closer to 5% at the end of the year. without a change in policy, it won't stop there >> thank you all for your time today. don't miss jeff gundlach he'll reveal the moves he's making at 4:00 p.m. eastern time still ahead, these rate hikes couldn't be at a worst time for many consumers. what the white house is trying

to do about it and whether they will have any impact first, the busiest week of earnings season continues with big tech, big oil and big pharma on deck. and here is a look at the markets. the low for the do you was 384 the nasdaq remains the outperformer with a quarter percent decline. 346 for the ten-year back after this. [office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪

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welcome back, everybody. earnings movers this week, as the busiest season rolls on. let's get the story on three more key names set to report meta, they're after the bell today. shares are down slightly after that snap report it even turned positive, and we're talking about a year where digital ad spend willing hit a wall they're cutting 11,000 workers, shares have dropped. and julia has the story today with courtney garcia is here with our trades. welcome, guys. julia, what are you watching >> well, there are a couple of key things, especially on the heels of snap warning about revenue declines in the first quarter. the key thing is revenue growth.

what are we going to see here and in terms of brand advertising versus direct response advertising one oh of the reasons why snap did have the stock struggles so much today is because they are very exposed to brand advertising. meta is better positioned, about 75% of the revenue comes from direct response advertising. so they may have a more optimistic outlook about what's going on the overall question is, have these macro economic pressures started to relax a little bit in terms of overall ad spending the other thing we're listening for is this question of whether or not they're really starting to make money from some of their features, such as messaging, which is an opportunity to generate more revenue and profits from those areas and cost cutting, they did do layoffs, but will we hear more about where they're pulling back are they going to pull back further in this metaverse space?

>> and courtney, the stock is up off the lows what would you do with it here >> i did a hold on meta. you brought up a point i was going to bring up, some of the biggest things they're facing are competition on ad revenue. i do think that will weigh on meta they're still facing regulatory scrutiny in the u.s. and europe. their biggest thing is they're spending a lot more on the metaverse than investors want to see that could be a long-term play for them. shorter term, we need to see they're focusing on some of the issues at hand but we do want to see how they're doing in reels, but one thing is just the fact that the dollar has come down to put this in perspective, the dollar has come down since november that cut out about $1 billion in their top line just this quarter alone. so i have a hold on them i'm not actively buying it right

now. we do want it for the long-term. >> looking forward to that later on julia, thanks. now to conoco phillips, shares down 4% today and flat over the past month after a monster run last year, up 63%. conoco has fallen on three of the last four earnings reports pippa stevens has the report >> there are a couple of key things to watch. first is the capital spending plans and the shareholder returns. now, on the capital return front, last year conoco targeted about 50% of cash from operations going back to investors. of course, the danger is investors can start to see that as the base dividend so that can be a little dangerous there. so we will be listening for commentary around how they see

this with oil and gas prices coming down. then updates around key projects they do have an interest in lng facilities, as well as some partnership with qatar energy. and maybe most importantly, their alaska project, that is an $8 billion stake and the environment analysis was made public. they gave them the go ahead. it should be scaled down a little bit, but did give the green light, so that will go to the administration for final approval and then final thing here, i think any commentary around m&a activity could be interesting. they were active, they bought contra resources, as well as shelves in the permian basis so could they lookto make a strategic acquisition? >> courtney, do you like the energy names here? do you like conoco >> i do. energy in general continues to look very attractive here. significantly outperformed the s&p 500 last year. i don't think you'll have that

same this year, but the overall supply and demand constraints of energy have not been resolved. now you add china reopening, which exacerbates it conocophillips is a strong name in this space. they are focusing on growth and brought down their balance sheet. just looking at some of their numbers is very attractive they were able to cut their net get to capital, and their operating margins are over 30% right now, well above the roughly 20% range that was in 2019 i just think you're going to see this look attractive 4.3% dividend right now, which makes that look attractive this is a play here. >> still down 3%, i'm a little sobered up about some of these energy stocks. but we'll see. let's turn -- thank you, pippa -- to merck now. it's lower today but it's about

to snap a three-week losing streak what is the story here >> well, kelly, the story with merck is massive cancer drug, both because of the growth it brings and the fears of what happens when it starts to lose patent protection in about five years. in the near term, it is expected to be a big growth driver for the company. so that will be closely watched. along with the vaccine gardisil is another big driver. within that cancer category, of course, combinations with the personalized cancer vaccine. and how are they going to fill that revenue gap in five years through business development and m&a. so what will they say around that part of their business, as well >> all right courtney, what do you do with

merck here, do you like snit >> i do like this. this is one of the only ones that is down so far this year. it is underperforming the markets that leads to some opportunities. just to echo your point here, this is like their big driver right now, which we are still five years away from them losing exclusivity. it will continue to be a profit driver for them. what i really like is they have spun off their lower growth initiatives and are focused on higher profit margining. they're expecting that can increase operational facility. so we just need to see more things like that to help the fact that they are going to lose exclusivity of these drugs but in the near term, it will continue to be a good play >> guys, thank you still ahead, a number of home builders hitting new 52-week highs but demand is still high we'll look at some of the head winds for the housing market

speaking of which, it's clear skies for business travelers across most of the country today. but winter weather in texas continues to wreak havoc at airports, with carriers canceling 2500 flights in dallas this monday. more than half of the cancellations across the country are in texas as we head to break, let's look at this. only four names are in the green right now, led by boeing salesforce up, as well intel and j&j. the rest of us are red see you after this

welcome back to "the exchange." here's your prefed setup we see the dow pdown 319

but the nasdaq, this has been the best performer in january and since basically rates peaked a couple months back let's get over to tyler now for a news update. >> thank you very much here's what's happening now this hour the fbi's search of joe biden's delaware beach house has concluded, and no classified documents were found this according to a lawyer for joe biden. agents did take some hand written notes and other materials for review the search, which was planned, done with the president's cooperation, took about 3 1/2 hours. it's in rahobeth, delaware more massstrikes in europe this time in the uk. civiler i erservants and teache up to 500,000 to take part that would make it britain's largest strike in more than a

decade, as months of strikes over wages and working conditions intensify and attorneys general from 20 consecutive states are warning cvs and walgreen's about selling abortion pills by mail they say they will take legal action against sales they say would violate both federal and state laws, and that an fda rule allowing abortion pills to be delivered by mail is illegal kelly, back to you >> tyler, thank you very much. still ahead, credit card rates are at record highs. we'll dig into the state of consumer balance sheets. and joe biden is set to address credit card fees the headlines and what it could mean for your wallet, next

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welcome back the white house could soon reshape its economic team which has implications for the fed they are looking to strengthen the consumer in the second half of joe biden's term. here is all the latest

>> reporter: we learned the white house will tap the fed vice chair to run the economic council and jared burnstein to lead the council of economic advisers according to sources familiar with the matter two critical roles shaping economic policy, the latter of which will require senate confirmation the decision, which sources caution are not yet final, could be announced as soon as next w week politico first reported the news of the two appointments being near the finish line sources say the departure of brian deese is imminent. officials thanked him for his service. today, the consumer financial protection bureau is moving to cap credit card late fees at $8 from as high as $41 previously they are requesting comments from the industry, but it's hitting back, the consumer banking association saying these

fees by highly regulated banks are disclosed and the policy is deeply unfortunate and puzzling. >> that's a big deal it sounds like the president didn't budge >> it's moving in that direction. i asked roger ferguson what he thought of the move, whether there were any conflicts associated with today's vote on monetary policy. he said that he hopes that she'll stay at the fed, because she is a superior leader there let's turn to our next guest now. he says they will push credit card rates at 20% as americans are adding on debt how much trouble could that be joining us is greg mcbride it's no coincidence we're seeing the white house get involved here, but what does this boil down to in terms of the load consumers are facing >> credit card balances are

rising at exactly the wrong time we're seeing credit card balances rise at a time when credit card rates are at a record high, and rates continue to move in lock step with the fed. so quarter point rate today means your rate will go up a quarter percentage point, probably one or two statements >> if we look at your mortgage is usually fixed, your car payment is fixed this is the area where rate hikes hit immediately. >> it does, and credit cards, home equity lines of credit, they are the achilles heel right now in terms of exposure to these rising rates the rates will go up 4.5% in less than a year, and the fed suspect done yet so that is having an impact on consumer spending. >> at the same time, right as people can get a return on their

savings, by many accounts, it sounds like the savings are running out. what are the options here? buy now, pay later i'm sure it will be under regulatory scrutiny, as well if the white house is trying to cap fees, that's fine, but where do you think the consumer is likely to turn >> that's a real question. a lot of times what we have seen in the past is credit tightens, so it ends up leading particularly lower and moderate income households in the position where they're going to things like payday lendors or the rise of buy now, pay later that's certainly been popular. but you're going to have people looking for alternatives and you can't get credit in a traditional way. >> the fact that we have had four points worth of hikes in a very short period of time, i imagine that things like home and auto are areas where people

will continue to see and feel the hit. >> exactly a lot of those are fixed rate loans, but the effect of these rate hikes brings the economy into a downturn or a recession and unemployment goes up, then you'll see delinquencies and defaults start to increase maybe not a direct correlation there, but there is a knock on that >> where does this tell you where we are in the quote unquote cycle? >> we have seen households build up savings and pay down credit card debt. and we have seen a reverse now households are running the credit card debt back up and depleting savings. savings are declining, credit card balances on the rise. >> so above 20%, we could be headed for some of these rates on average today on credit card debt thanks for your time, greg

>> thank you coming up, kathy woods' vote of confidence not enough to see things going today we'll reveal the stock and why she's staying bullish, next. al . at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

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welcome back to "the exchange." we're talking about shares of tesla, up 41% so far this year, to finish out its best month in more than a year closing out its best month ever. grant it, they're down from the highs. the largest position is where it's kept is tesla so this has been a long standing of strength, relative weakness and in a position of strength again today. kathy saying she still leaves in tesla's future as a tech company. listen >> its gross margins are going up, and it's a technology company from the point of view from battery technology. it is at the leading edge there. artificial intelligence, as you said, and i think one of the

most important things, you asked who the winner are going to be they are going to be those companies with proprietary data. >> and there you have it meanwhile, home builder stocks touching new 52-week highs today. but falling mortgage rates aren't doing much to help the housing market we'll have the latest numbers and a look at y ye an'whbursret biting that's next. system with billions of passengers taking millions of trips every year? you aren't about to let any cyberattacks slow you down. so you partner with ibm to build a security architecture to keep your data, network, and applications protected. now you can tackle threats so they don't bring you to a grinding halt. and everyone's going places, including you. let's create cybersecurity that keeps your business on track. ibm. let's create

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welcome back mortgage rates have been dropping over the past month, but it hasn't yet translated into an uptick in home buying. diane is here to break it all down >> mortgage rates continued to fall last week, but after several weeks of big gains, mortgage demand dropped off sharply. so the average rate on the 30-year fixed dropped to 6.19%, just a little bit from 6.20. it started this year at 6.58%, about a year ago, it was half that even with rates well off their recent highs, applications to refinance a home loan fell 7% for the week, we're 80% lower than a year ago. mortgage applications fell a wider 10% for the week and were down 41% year over year.

while mortgage rates and home prices are coming down, housing is still pricey, and the supply is still quite low, and that may be keeping mortgage demand under pressure the mba wasn't surprised by the drop, citing volatility in the market as well as strong demand coming off the holidays. they said this drop this week could be a "blip." >> we'll see let's bring in andy to discuss the potential impact of today's fed decision on the housing market andy, welcome to you it's ironic, if they keep hiking and the market thinks that will send us into a slowdown, the ten-year will keep dropping, stimulating the home buying portion of the market. what do you think? >> that's typically what you have seen in past cycles we have seen that happen throughout 2022. you would expect that with the fedex expected to plateau rate this year, the 30-year rate

would remain relatively high not necessarily what we have seen over the last four fed tightening cycles. so there is expectation that rates could ease here, despite the fed to raise rates throughout 2023. >> how much so far contributing to any increase in buying demand are people that rate sensitive, or is affordability so stretched this doesn't yet make a dent >> i think it is helping a little bit look, we saw pending home sales last week for the december report, that sign contracts, they went up unexpectedly and also the last two builder reports we got this week from pulte and last week from dr horton showed unexpected new demand coming in december, and that's when rates fell back the most from their highs. i do think there are some people who are on the fence saw rates come down a bit and said, okay, let me get in when the market is not that competitive again, we're seeing prices come down sharply i'm wondering from andy if he

expects to see prices fall much further. we're down 60% from june according to case-shiller. >> andy? >> i think you will. if you look at we just released our latest home price index last week that showed the sixth consecutive month over month decline. if you look at home affordability, it's improved from where it was in october and november you're still looking at home affordability worse than it was at the peak of the market in 2006 and that will continue to put downward pressure on prices. if you look at that annual home price rate it's down to 5% as of december if you look at the trajectory, it's set to cross over the 0% from march and april they are telling us negative 5% is where the annual rate would be if we see the behavior we have been. i would expect the market to continue to correct. from a transactional perspective, we are seeing buyers start to come out from their winter hibernation all in despite the jumps and drops. transactions reaching their

floor but prices still softening as we move -- >> riddle me why we're seeing the home building stocks at multiyear highs at a time when you're talking about prices going back to zero in terms of increases. it's bizarre >> it almost feels like you're seeing the upslowed, right if you look at demand or purchase locks or sale volumes according to our data in december, they were roughly 30% below prepandemic levels maybe trying to call the dip on the stocks in the market, call the floor on that volume activity when you look at the purchase market, it is expected to gradually rise as we move throughout 2023 despite the challenging q-1 that we're looking at here. >> look, more people are taking out a.r.m.s because of high rates, ironically, these are usually seven-year resets. it wouldn't affect that many people now >> we're still below 10% which

is nothing compared to what we saw in the last housing boom people are still being very conservative and going for the 30-year fixed. they are taking out home equity signs, the economy is pushing them to get money where they can and that's in the house. >> all right, we'll leave it there. diana olick and andy walden. less than ten minutes out. the dow is down 324. i'll join tyler mathisen who is getting ready for isth big show right after this quick break

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experts, a quick check on the markets. we're looking at the dow down 307, so a little off session lows, almost a 1% decline. the s&p is only down 0.4 as we await this big decision. david kelly of jpmorgan asset management, a morgan stanley investment, and new edge wealth's karen david, we'll start with you. we have the move itself. we have the press conference, what in the statement will you be watching? >> they're going to have to acknowledge there has been a slowdown in consumption because industrial production fell and real consumer spending fell. i have to acknowledge that right off the bat. are they going to change the language of future increases there may be some further tightening in the federal funds range. i think they need to back out of

the idea they're locking in two more rate cases. 25 basis points today. that's unwise. i think even more unwise to do another two rate hikes in march and may. >> you agree a quarter point is baked into the cake here but i want to pick up on something david just said. when is this all going to end, cameron? when are they going to stop this rate increases is it this meeting is it next is it may? when >> if we believe what the fed says it wouldlook like may because the fed has given guidance they want to see rates above 5% which would imply another height in may. the question how much they want to push back in the back half of this year. we still have 50 basis points baked in for the back half that's the real question mark for markets is that pushback against cuts

>> jim >> the fed has a very difficult job today. in one sense they have to decide they're slowing the pace of rate hikes to 25 basis points they don't want to let people know the terminal rate is already baked into the cake and keep that a hotly debated question they're thinking about. look, i think they go 25 today they probably do another 25 in march. in my view that's probably where they end the cycle but overall the key message for them that they're going to have to communicate is how wage inflation and the tightness in the labor market are key factors they're keeping an eye on. the worst thing is to have inflation not come down enough, unanchored and start to rise and restart their hiking cycle so they have to skirt that line >> you said something very interesting. the fed would be wise to call a halt to rate increases right now.

why? >> the economy is like a big cruiseship you're supposed to cut the engines and drift in it makes no sense to overtighten and then project they will cut rates. there's nothing that says the right way to stabilize is to overshoot interest rate and then cut. >> do you agree with that, cameron? >> not necessarily we think we're seeing signs the deceleration in inflation in the back half of 2022 could start to abate meaning inflation could react sell re-accelerate and because we've seen resilience, look at that j.o.l.t.s. number today, we don't think it gives the fed much wiggle room to become

accommodative. the fed is inflation of inflation coming back which means they've continued to say they're at greater risk of undertightening as opposed to overtightening >> jim, the first word after the decision about you we have about nine seconds left before we go to steve liesman. the dow right now down 300 points let's go to steve with the fed's decision >> reporter: the federal reserve raising by 25 basis points to a new range of 4. to 4.75, the eighth straight hike since march up by a quarter to 4.50 to 4.75. the federal reserve sees ongoing increases as appropriate the fed is still en route to a level it calls efficiently restrictive level of the funds rate one dovish commentary here, inflation has eased somewhat, it still remains elevated the fed is signaling a new focus of the extent of rate inea