free. >> thank you. steve weiss? >> i'm riding momentum in humana. it should recover everything it lost. >> i think you're going to see much more spending from millennials. >> eli lily continues to push higher. >> so we've got the s&p, the dow, nasdaq higher. yields fell today, leading up to what happens in a little bit. "the exchange" is right now. >> thank you, scott. welcome to "the exchange." i'm kelly evans. here'swhat's ahead this hour. an hour from now, we get the latest fed decision oninterest rates. stocks are in a holding pattern as you can see ahead of that announcement. dow is up 15 points. bond yields are down, though, especially after that cooler than expected producer price data this morning. the market is pricing in a full point of cuts next year as inflation has receded rapidly. will chair powell push back on that today or not? let's start there with full team coverage on the economy, the

consumer, and the trades connected to the fed's actions today. there is our whole roster guests. let's start with steve liesman in washington. steve, what's the scuttlebutt? >> i think the fed meeting today pits the market's desire to confirm its outlook for rate cuts against the fed's desire to hold the line as long as it can and not confirm those cuts. so they'll probably leave in the language saying it's still determining the extent of additional policy firming that may be appropriate. it will keep that even while it's been on hold for four months through today's meeting and six months until that meeting happens in january. it signals to its bias of hiking but also the bias to hike in the pause it has. some of that may go away. 13 forecast cuts from that level

in 2024. average cut of half a point, some of that may go away, as well. the trouble for the fed is, inflation is falling everywhere but in that core cpi we got yesterday. it's falling globally, in today's ppi and prompting forecasters to predict that next week. the market expectation for cuts is also data dependant. 46% of a probability of a cut in march, and darn certainty in june with 95% probability. t there is time for the markets to come together on all this, and even acknowledgement if everything goes right for several months, the fed will cut. we'll see, kelly. >> i'm looking for the date when we will get pce? could this be right, december 22 >> part of that data dump we get before the holidays every year. you know that.

so the economics reporter cannot take the friday off before christmas. >> never. and the significance of that, a couple of things. ppi this morning has everyone revising down what they think that all-important reading will be for the fed. and core pce, the fed's target, is 1.9% over the past six months already. so you can argue they're below target. >> it could be. next week could come in right at that 2% target. we'll see, even for the year over year. the other thing i've been looking at, kelly, look at cpi down below 2% for several months now. >> wow. interesting. as you said, stay with us, steve. the market is hoping for a soft landing and rate cuts next year on falling inflation. how likely is that to happen? sarah eisen asked janet yellen about that earlier on "squawk on the street." >> my baseline is that we'll achieve a soft landing.

are there risks? of course there are risks. we could experience another global shock that could be unsettling to that path. it could jolt inflation upwards or have diverse effects on the economy. >> one of my next guests still sees some bigger risks than that and is calling for a recession in 2024, maybe a mild one. let's bring in the head of u.s. rates strategy. we also have steven whiting, chief investment strategist. welcome to both of you. so you guys have the recession call? >> we do. we have a recession for the middle of 2024, and i think that we think it's going to be a mild recession, and the fed is probably going to have to act aggressively, starting as early as the may meeting. we have about 150 basis points of cuts penciled in for 2024,

and more in 2025. so we do think that this ultimately might end up being a very normal usual type of rate cut cycle. you know, in this sort of context, i think that the fed probably sounds a little bit more hawkish. there's no rush for the fed to suggest that they're going to cut rates. so we're pushing back on the market pricing of cuts for the march meeting. but a may rate cut seems very possible. >> steve, i missed the cpi data, but i heard people say it was on the hot end. talk me through it. is that report carrying more weight? do you think it could be a dovish pce report that could be to come? let me just point out, this is going to break our new graphics back there, but the five-year break even inflation rate, 2.08% right now, steve whiting. that means the market almost has them missing their target to the downside right now before we

each price in any real economic slowdown. >> you know, other than the recession call, we're all talking about highly tactical, tiny little insignificant shifts. in the history of the story that we're going to tell, central banks generally cared about inflation targets and whether they hit them over the course of a decade. let's look after the financial global crisis. we were below target. now they're talking about adjusting monetary policy based on a cp ireport. i don't think that's really what's going on. so we've been -- we've managed now to take inflation from 9% down to 3% at a headline level. and there have been no jobs lost. and the labor market has shown signs of easing on the margins. lost 3.3 million job openings, but by and large, again, this has shown that supply shocks, upheaval in supply and demand

mismatches generated the inflation. you talk about the economy, but does the fed need to punish the economy? does it need to force up the unemployment rate to get the inflation rate down to something that will look like target in the next few years? we don't think that's the case. the case is very clear here, that a slowing in the labor market will be enough for them to move off of a restricted monetary policy and towards neutral. bear in mind, ten of the last easing cycles, the federal reserve cut rates while employmentros still positive. the six-month average was 146,000 jobs in that whole period. we're including the vorker fed. >> what do you think powell is going to say today? >> the fed is still uncertain whether they've tightened sufficiently to guarantee that they will meet their inflation target. of course, as steve liesman just said, reinforcing their recent message. all of that is fine, because

they can never be absolutely certain that they're going to hit their inflation target. but what he also, in questioning, can entertain what does it take? why would we be easing monetary policy without a collapse in the economy? what will it take to protect the economy if >> i think though, steve liesman, the market is off to the races. that's kind of why i was say thing with that five-year break even, which is extraordinary. the pricing at a point of cuts, and they're not even pricing in an economic slowdown. this seems to be a disinflationary loosening. >> yeah, i mean, didn't taylor sing "dove's going to dove" or something like that? i think those are the exact words she used. the market is going to price in what the market is going to price in. as i tried to indicate in my report, i think they have basis for it. when you look into the data, that there is reason for them to believe the federal reserve will cut rates. in a sense, it's kind of funny to say this. it's almost academic if powell

acknowledges it today or not. if you put up that graphic you just had on the wall, showing the rate hike, the pause, the rate hike, and then the pause, pause, and then what will amount to another pause today, and the next time you're going to have an input is the end of january, it's going to be at that level where you would think for six months or so, if you're at a level you should be at least close to being competent. so let's call it what it is, call it neutral. that's where the fed is right now. i don't think there's any reason to be hiking any time soon, not if the data breaks the way it looks like it will. now, the question becomes, i would note that you used the verb "penciled in" recession, she didn't use penned in recession. the question is why does the fed cut rates next year? that will be critical to the magnitude of the cuts that come. if the fed is cutting rates

because of the penciled in recession, that's another amount. i think she already said, 150 basis points. if it does so, because it needs to get less restrictive relative to the economy and not do what steve whiting said which is to punish the economy, we'll have a modest set of rate cuts. >> that's the easy call. the downturn, that's an easy script for the fed to kind of use. the much more tricky one is the rate cuts without the downturn. look, we all here have been talking endlessly how inflation rates fall, they can bring down the fed funds rate. is that hard to explain to the broad public? why shouldn't they go ahead and do that? >> they could. they did it back in the '90s, and they were able to orchestrate a soft landing. but it's very unusual, and you just don't know how things are going to play out. if you look at -- as you were mentioned, inflation break evens have come down.

core pce is trending down meaningfully. let's see next year if we are at 2.5% core pce and the fed's fund rate is 5.5%, at that point it gets very obviously in restrictive territory. there could be a case made for the fed to adjust policy, even if employment doesn't crack meaningfully. we do expect employment to slow down in the first quarter meaningfully. >> let's put it slightly differently. this is a fed that has almost a perfect situation right now. if they don't act, they're going to ruin it, because they're going to move us into like a three-point restrictive policy. if they do nothing, we're heading in that direction. >> yeah, and they want to mostly see inflation head towards that 2% inflation target. core pce is still between 3% and 3.5%. yes, it's trending lower, but

they want to see that get towards maybe 2.5% or anywhere between 2.5% and 3% before they cut rates. the last thing they want to do is to cut rates prematurely, and then find out that inflation is starting to rise again. i mean, shelter inflation is still relatively sticky, although the -- the basket is coming down nicely. i think they really want to see inflation towards -- heading towards at least 2.5% before they cut rates. >> i'll give you the last word, steve liesman. maybe it won't be a while, maybe the data will move in that direction, but it could be a while before we get the kind of prints that would give them the confidence they're looking for around 2.5% or in that range. >> i'll give steve whiting the last word. i want to say quickly, i don't think the market and the fed are that far off. there's time for them to come together, and i don't think they're on different pages when it comes to reaction function. if inflation slows, the fed

could be talking about springtime or early summer rates. >> steve whiting, give us the wrap on that. >> so, look, i hope steve liesman is right that the federal reserve is on board for some easing of monetary policy, not forcing monetary policy to tighten and to interact and cause a deeper downturn in employment. what we keep talking about is recession is this fixed thing that always behaves exactly the same way. the economy is behaving unusually right now. we're seeing a strong labor market and a lot of industries contract. well, there is a difference coming ahead. even if it doesn't fit this perfect recession scenario that everybody can trade in and out of the market, the federal reserve should still react and do what they suggest, and that's protect the labor market and slow inflation. >> we will leave it there, everybody. thank you. it will be an exciting hour. we'll see you all shortly. coming up, mortgage rates

have dropped nearly a full point, enough that some homeowners are able to refinance, the unlucky ones that bought at the highs. does it tip the scales for the broader housing market? as home builder stocks continue to hit new all-time highs. as we head to break, here is a look at the markets. we'll call it a holding pattern. dow is unchanged. s&p up less than a point. nasdaq down ten. ten-year yield, right around 4.16, about 46 minutes to go until we hear from the fed. "the exchange" is back after this. when it comes to ai, there's something big happening. the smallest things are creating giant revolutions... at world wide technology, we're at the forefront of ai. with our one of a kind ai proving ground, cyber range, and full stack approach, you can build, test, protect and implement ai solutions

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welcome back, everybody. the rate on the 30-year exed mortgage almost dipping below 7%, with you're still slightly above that. borrowers taking advantage of that with refie applications jumping 19% last week. new mortgages still down about 19% from a year ago. my next guest doesn't seem a meaningful turn in mou housing l rates are at 6% and doesn't see that until 2025. mark, when do you think that is going to happen? >> did i say -- was that a typo, 2025? i think 2024. this time next year, i pexexpec

fixed rates to be around 6%. >> that's not much. i guess around 6% is different being 6.99%. >> indeed. if you kind of have a pulse on the market, every time mortgage rates rise north of 7%, the market goes ice cold. it's completely unaffordable. people stop transacting, home sales just fall. get around 6%, it feels like life comes back into the market. kelly, longer run, i think people should get used to fixed rates somewhere 5.5%, 6%. so that's kind of where i think we should expect them long run. >> the new normal? >> i guess going back to the future, maybe. that's sort of where we were. what was abnormal was the long period after the financial crisis when rates were just depressed. now we're getting back to something more consistent with a

healthy economy. ten-year treasury yield around 4%. >> let me ask you something that's turning into my chart obsession of the day. i'm looking back at the history throughout the 2010s when rates were incredibly low. 2.08 is where we were for that period of time. so why shouldn't we expect rates to go back at that level instead of staying at high levels? >> you know, i do think we're in a very different world. you know, lots of ways of thinking about it, but think about it in the context of inflation, in the period after the financial crisis, the fed was working really hard to get inflation up. inflation was suboptimal. they got their foot on the accelerator, and that kept rates low. on the other side of the pandemic, it feels like we're in a different role in regard to inflation. we have transition costs around

green energy. so it feels like inflation will be more of a headwind than a tailwind, with the foot more on the brake than the accelerator, so we get more normalized interest rates. >> is the biggest rate -- it's incredible to see how the home builders have been going to new highs as the housing market is frozen. if we get a normalization in housing, is that the biggest headwind for the home builders? anything that releases inventory back on the market, gets things back to normal, does that ironically hurt the hottest segment of that market right now? >> not for a while. i think they have a nice demographic tailwind. one, there is a very severe shortage of homes, particularly lower, affordable housing. we're short by about 1.7 million housing units. that's more than one year's worth of production in a typical year. and they've got to make that up.

and then i do think there's underlying demographics. here's the other thing, kelly. immigration is strong. i think we're getting this -- the data coming in suggests there's a lot more immigrants coming into the country than has been the case historically. more people, more households, more housing. so i think for the next three, four, five, six years, the home builders have some really significant tailwinds that could support them. >> yeah, i don't always think immigration is driving household formation as being part of the renting population or something like that. >> well, yes, yes, that's true. but it's adding to the demand for the housing stock, and therefore, it lifts all boats, i think. but you're right. >> obviously, anyone who displaces as a renters, maybe they move into the housing pool. >> exactly. >> what do you expect to hear from chair powell today? >> not much. i think the fed has the economy right where they want it. it feels like this job market is

cooling in a very graceful way. wage growth is moderating, close to being consistent with their long-run inflation target. inflation is coming in too high, but all the trend lines look really good there and the forecast seems pretty clear that we're going to get back to target sometime this time next year. financial conditions, we can debate that a little bit. but stock prices, bond yields, credit spreads, juunderwriting standards feel like they're in a good spot. chair powell must feel good about this. his goal is not to rock any boats and just to say we're on track and everything is moving in the right direction. >> i guess the million dollar question for you, do you think that they should avoid further tightening? do they have to cut rates pretty soon here the way inflation is going? >> i don't think so. certainly not raise rates. i don't see any reason why you would do that in the context of

everything i just said. but the question is, at what point do you lower rates? i think they're going to wait until they see that the forecast about inflation coming to target is right. that probably won't be until next late spring, summer, and once they come to that conclusion, they'll start to lower rates. and it's an election year. i suspect they would rather prefer not to move rates in any direction. once they do that, they risk getting politicized and wrapped up in what's going to be a pretty i think uncomfortable election process. so i think they would air on the side of doing nothing, all else being nothing. >> it is an election year on top of everything else. mark, thank you. that drop in mortgage rates is boosting home builders. the etf touching another all-time high today, up 54% since january 1st.

those names are still trading at just about nine and ten times forward earnings. we'll be listening to the updates. coming up, the top internet trades for 2024. jpmorgan's list is out. am amazon is number one. we will reveal this next. we'll ask the analyst why he sees 20% more upside this year. dow is up 7. back after this. (sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy?

♪

welcome back to "the exchange." jpmorgan's top internet analyst naming his top picks for 2024. stores, subs, and search are all part of those picks. doug, it's good to see you. welcome. >> thanks for having me, kelly. >> amazon's number one. how much upside, and why do they in particular come out on top here? >> yeah, absolutely. look, amazon's been our favorite name in the group for a long time now. certainly in 2023, we saw very good improvement on the retail business, really in terms of execution. really digging out of the challenges that they had during the covid pandemic and saw some real progress with re regionalization in the u.s. and significant margin expansion. so we think that's a big part of the story that that continues in 2024. the other key component is aws, which has clearly been a little challenging over the last

several quarters with optimizations, and corporates looking to find ways to save costs. we think that's kind of easing now, and we'll start to see new workload deployment in a bigger way in '24. that drives reacceleration in the cloud next year, in our view. the combination of all those things really means significant free cash flow generation, and comes up in a bigger way in '24. >> you think they're broadly going to experience reaccelerating revenue growth, is that right? >> i think they will in the cloud business. we have a bit of acceleration in retail, as well. more so in the early part of the year. but look, we think the consumer is holding up well. you know, more broadly speaking. but e-commerce in particular, we could just point to really e-commerce and cloud as two of the areas where we think there is room for a very strong secular growth for many years to come.

we think about e-com is just over 20% of total retail spending in our view, over many years. that could go to 35% to 40%. that can just grind higher, and cloud, the other big business for them, also certainly a sub-20%, you know, percent of workloads we think is online. so two big areas that have a lot of head room for amazon. >> and amazon's your top large-cap pick. google is also up there. and uber, which was the mystery chart we teased, i don't think of this as an internet name. i think of it as a taxi company. >> yes. understood. look, we continue to like uber. it was a top pick for us in '23. that continues in '24. the business has proven extremely resilient across both mobility, the rides business, and also in food delivery. we think that that continues. we're reallyseeing much stronger executional focus over

the last several quarters. that continues in '24, where incremental margins can continue to be very healthy. and that really drives strong free cash flow generation. what we think could be an early buyback, potentially. and the recent -- recently announced s&p inclusion as well, we think creates a healthier shareholder base overtime, and a broader set of investors looking at uber. >> fair enough. let's turn to your smaller picks, which matches your top pick there, vizio and ticker evr. what does everquote do? >> to be totally fair, my colleague covers our mid-cap names, so he covers all those names. but certainly i know his thesis is paced on tinder payers, returning to growth, buyback

support, and also valuation that's not demanding. so that would be his favorite name. >> quick final question, i just wanted to ask about online advertising before we let you go. a lot of weird cross currents there lately. what kind of year do you see for 2024? >> i agree, a lot of weird cross currents. you saw kind of a softer first half of '23, and firming up more in the middle and back half. i think that's going to carry through into '24. it's just a year from a stock perspective where we think it's more about company specific dynamics and ad tech improvements, you know, ways that those companies can continue to drive efficiencies, but with the biggest impacts of privacy and some of the apple changes from a couple years ago, those should be behind. so still optimistic overall on growth in online ads. >> 2023 is going to be a tough act to follow. so we appreciate you joining us,

trying to figure it out. doug, thanks for your time. >> thanks for having me. coming up, pfizer is the worst name in the s&p today, hitting a ten-year low after their 2024 guidance for revenue and profit was below estimates. drugmakers continue to see down turns in covid products. the shares are down 8% today. we'll look more at the biggest movers, next on "the exchange." 27 minutes to go until the fed speaks. stay with us.

welcome back to "the exchange." just about 25 minutes to go before that big fed rate decision meeting and subsequent press conference later on this afternoon. markets are in a very, very at least calm state right now. you can see just about flat across the entire market for the major indices. the dow flat. the s&p 500, 4644, the last trade there, and marginal declines for the nasdaq, 14,523. one place we are seeing more activity is in the macro side of

things. check out what's happening with oil prices, trying to find a little bit of a rebound after this very near-to-medium, short term down trend. texas intermediate crude prices, $69, ice brent crude muchers, $73.85. natural gas prices, very much under pressure, are catching a bid. so watch that. and then, check out what's happening also with shares of at least tesla, after the recall. 2 million plus vehicles, every car it sold in america since 2012. those shares down about 3% right now. it's going to roll out an update to help fix some of those software issues. another stock is take-two interactive, getting a bid because it will be included in the nasdaq 100 large-cap index later this month. take-two interactive shares up 55% so farrior-to-date. kelly, i'll send it back to you. >> dom, thank you very much.

dom chu. coming up, higher rates have been a negative for tech stocks. but there is a silver lining. we'll explain next on "the exchange." that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy.

welcome back to "the exchange," everybody. i'm tyler mathisen. we have a news update. the house of representatives debating right now the impeachment inquiry resolution into joe biden. house speaker mike johnson expects the inquiry to pass with republicans likely to support it. a vote is expected to take place later this evening. donald trump's civil fraud trial wrapped today, ending two months of testimony. he was scheduled to take the stand earlier this week in his own defense, but decided not to. both sides will present their closing arguments on january 11th. the judge will issue his verdict sometime in the next month. oprah winfrey shared with "people" magazine for this week's cover story she's been

taking a weight loss medication. she said she uses it as a tool to manage her weight and she had to overcome shame about using it. the media mogul did not disclose which medication she is using. kelly, back to you. >> tyler, thank you very much. tyler mathisen. just a couple minutes away from the latest rate decision. the fed's rapid pace of hikes over the past couple of years has had a surprising effect on rate sensitive spokes. diedra bosa has more. >> you could call it junkier tech. it's been making its comeback. if we get a dovish fed this afternoon, it could underpin this rally and give them more room to run. part of the reason for that comeback isn't just interest rates, it's that the interest rate environment has led to better fundamentals. take these for example. they have gone through years of efficiency and come out with workforces, cost cuts, and

commitments to be more disciplined. as a result, they have seen step-ups in free cash flow margins. this is a chart from bank of america. it looks at wall street expectations for free cash flow as a percentage of revenue margins. it tells us that analysts are expecting major expansion of these companies of the next few years. unity from about 10% this year to double that next year. wix, similar story. expansion nonetheless for still low, palantir and pinterest. a note of caution, these are just estimates and it allows for these hockey stick like inflections in tech. they can be misleading. they are difficult to sustain, plus smaller cap tech stocks tend to underperform in a downturn. again, the potential of a soft landing if you think that what will happen and a market that might value growth again next year, they could be well positioned. guys? >> i guess, you know, there are also those that want to argue

maybe some of these moves don't have anything to do with the fed, you know, that -- not about interest rates, not about -- but at some point, you know, at least if you're a startup, the cost of capital is probably the biggest thing. >> right. even if you're unprofitable, as well. the fundamentals are getting slightly better. maybe in a different interest rate environment that could make them more compelling buys. >> more compelling equals, you know, less exorbitant, outrageous. >> things are coming from a high level. very good point. >> thank you very much. coming up, mortgage rates are still above 7%. credit card aprs are at a record high and car loans are near 8%. could the fed decision bring any relief? that's next on "the exchange."

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welcome back. the economy has held up better than expected this year. the unemployment rate is near

50-year low. wage growth outpacing inflation once again. gdp rose more than 5% last quarter. so why don't people feel better? could be a few reasons. like this, both carry balances and interest rates on credit cards are near record highs after all the fed hikes. delinquencies are jumping to nearly 3%. just how big of a red flag is that for the economy? let's ask ted rossman. you know, so far people have said okay, it's moving in -- i would assume we would have had more concern from the earnings season. >> i think it depends on where you are on the spectrum. american express is doing really well, because they have a more affluent customer base, they're spending a lot of travel and gifts. you have some of the store card issuers, some of the subprime issuers, they are not doing as

well. that's indicative of the customer environment right now. in general, credit is still flowing freely. originations are within 2% of all-time highs set last year. but we are seeing some tightening on the margins. people with lower credit scores. >> should the fed cut rates, would that help? >> i don't think it makes that much of a difference for credit cards, because the rates are high, period. the record is 20.72%. honestly, even if that well three, four, five points, it would still be high. that's where the advice is, pay it off if you can. zero percent balance transfer offers are still widely available. that speaks to the strong job market and the fact that dlin again sis, while they're up -- delinquencies are up, they're still relatively low. people are carrying debt, but paying it back. >> on the macro level, it seems the balance sheets are nowhere near as stretched as they were

before the great financial crisis. >> the household-to-debt ratio is very low, historically speaking. so that flies in the face of other trends, which are highest credit card rates ever, highest balances than ever. you don't have to look too far to find negatively, the fact that the delinquency rate has doubled. it gets back to sentiment, though. none of this feels good because of inflation. most people are doing okay, but, again, it depends on where you are. >> lower gas prices have to be delivering some conceptual and actual relief. >> psychologically, yes. also in terms of expenditures. i think psychologically more than anything. that's one that we just see every day driving around. the fact that wage growth is outpacing inflation now, we want to see more of that. it's really a mixed bag. it really speaks to that k-shaped economy where some people are doing quite well, others are struggling. i do worry that cracks are

starting to emerge in terms of delinquencies, but also where do we go from here? do we level off or if the job market gets worse, do we see more of a substantial rise in delinquencies. >> what usually happens? >> traditionally, the credit card rate matches the >> thanks don't seem too concerned. it seems they're talking about normalization. we've gone a little past normal in terms of surpassing 2019 levels of delinquency and back to more like 2012, which was the great recession recovery period. it remains to be seen. banks are expecting their way to level up. not expecting it to jump but t bears watching in the job market will be part of it. >> what about the auto piece of

this. those borrowing rates are high and went up a lot during the pandemic. how does that impact people? >> subprime auto delinquencies are worse now than during the financial crisis. that's more of a worry then credit cards right now. a lot of it speaks to how much car prices are up. that's been a bigger factor than rates. it doesn't seem like a lot of relief coming. in many cases the option is to stick with what you've got for longer or bite the bullet and pay higher prices. that is getting some people into trouble from a financial standpoint. >> and what happens next if they run into trouble? does the car go away? walk us through the chain of events on the consumer side in the financial side. >> it doesn't take long to see a repossession. miss a payment or two. they are more stricter than credit cards. another aspect of this consumer lending thing is this buy now pay later craze. that was up 1% year-over-year on black friday and cyber monday. . i see that as a warning sign if we talk about consumer

willingness to spend but how will they pay for it. that's one to watch? payment great debate and weave speaking with providers who say it's a sign the times and it's a better product than credit cards and all that and then others are itching to hear your skepticism. >> i think it can encourage overspending. it's not $200, it's four payments of $50. that adds up more than people realize and lenders realize. most of these are not reported on credit report. there needs to be more visibility. the industry is working on it but it's been slow going. >> maybe this will encourage them to move in this direction. what are you listening foremost with the fed move today? >> the market seems to be pricing in something like a full point or a point and a quarter of cuts next year. i think powell may throw cold water on that and that seems like a big jump. >> aggressive and if he does we know how the will likely go

over. ted rossman would be great. still time to register for tomorrow's cnbc small business playbook strategies and opportunities in 2024. scan the qr code on your screen or head over to cmc events. that does it for us we are seven minutes from the rate decision. we would hear from the chair himself around to: 30 eastern. tyler is getting ready. power lunch ckupovag the other side of this break. fresh, warm hot dogs! when i'm not selling hot dogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso! one for you, one for you. oh, you're a messy one.

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the best advice i ever got was to invest with vanguard rifor my retirement.nses the second best? stay healthy enough to enjoy it. so i started preparing physically and financially. then you came along and made every mile worth it. hi mom. at vanguard you're more than just an investor, you're an owner. helping you prepare for today's longer retirement. that's the value of ownership. welcome to a special fed edition of "power lunch" alongside kelly evans i'm tyler mathisen and we are five minutes from the fed decision on interest rates . no change expected but we are looking for hints on when the fed may start

cutting interest rates in its text. >> and let's get a check of the markets. tiny increases of less than a 10th of a percent across-the- board on the dow, s&p and nasdaq. bond yields are creeping lower after that cooler than expected producer price index. >> let's get to the panel as we are minutes from the fed decision. david kelly from j.p. morgan, kristin from city global wealth and john from western lit. thank you for joining us and welcome. what do you expect the fed to do and what do you expect them to say? >> i don't expect them to change rates. i think we are done with tightening. and i don't think the statement will change that much. i think in the press conference powell will celebrate better- than-expected numbers for 2023

but be cautious on 2024. the important thing is the dot plot. i suspect they will actually move the end of year 2024 number which would mean we don't look at hikes but the only talk once in 2024 and that's a caution and an expression they intend to keep rates higher for longer. i don't think that's how it will turn out but that will be the messaging today. >> kristin, how about you? what do think they will do or say and pick up on david's point about the so-called dot plots and how much the fed may be inclined to cut in 2024. >> i think that's the major question. this will be the third time the fed will pause. effectively everyone knows at this point they are done in terms of the hiking cycle and everything is about when they will cut in this disconnect and what the markets are telling us where we have north of 100 basis points of cuts priced in at this moment in 2024 versus what the fed is anticipating. one or two cuts. i think it's a

game of connecting the dots in terms of michigan and looking over all of the market get ahead of themselves in terms of the number of cuts and the timing. we still have close to 40% of ability we could see the first rate cut within q1. anticipate chair powell will point to the data we see in terms of inflation and employment in terms of maybe walking back some of those expectations. >> and do you think he will walk those back or not? >> i'd like to focus on the core pc forecast we get today based on the ppi numbers you just mentioned. that court pc forecast will come down for this year and potentially next year. core pc of the last six months is running at 2% or a little below this is a big deal. we've seen very good inflation numbers and that will be the conversation today. there's a lot of focus and the

timing of first cuts pick the bigger question is if inflation is a 2%, why do we need these elevated interest rates at all? it will be here -- interesting to hear him address that and in some sense that's more important than the timing. why do we need these high interest rates if inflation is a 2% already. >> how much do you think the economy will slow in 2024 and how will that affect what the fed does? >> i think we had an exceptional summer in the united states with that 5% in the third quarter. that was the anomaly. i don't think it's ready to extrapolate that going forward. the moderation in november and into december is more likely going forward. i think the economy will moderate. interest rates are high and that will be a drag so some moderation and not what we saw over the summer. that means definitely moderation relative to where we've been? payment how about

you, david, on the economy strength? >> i think the economy will settle down to a 2% pace but the interesting thing is headline pce deflator could come close to 2% in the second quarter and that will put pressure on the fed to begin cutting that the june meeting. >> that's interesting. let's take a final look before we get the word at the markets. basically flat must of the day. no surprises expected as we get ready for the fed decision, the release of its statement and the decision and for that we go to steve liesman. >> the federal reserve leaving interest rates unchanged in a unanimous decision and the december meeting. the fed said growth has slowed from a strong third quarter pace saying inflation has eased over the past year but remains elevated and is the first time they said anything positive about inflation for a very long time in the statement and they backed off somewhat saying it's now determining the extent of any additional policy firming assertin