supply chain and modernization runs its course. the labor market is rebalancing , as i mentioned. job creation has slowed. the base of job growth has narrowed, and of course, twelve- month inflation is above target and getting down closer to target. it is not guaranteed, but we do seem to be getting on track for that. those are the risks. questions we have to go answer. overall, a pretty good picture. it is a good picture. your second question was-- sorry ? >> could you get inflation below target, end up with inflation below target and you have to do something about that? >> the thing is, we are not looking for inflation to tap the 2% base once. we are looking for it to settle out over time at 2%. the truth if we have a month or two lower and we have that now of inflation that is annualized at a lower level. we are not looking to have

inflation anchor below 2%. if we do face those circumstances, then we will have to deal with it. i think, as of now, the question, we want to take advantage of this situation and finish the job on inflation while keeping the labor market strong. >> foxbusiness, thank you, mr. chairman for taking this. as i have heard from some district fed presidents, is it in your view a little premature to think that rate cuts are around the corner? when we do see that first rate cut, should we interpret that as the beginning of a rate cut cycle or a one off? >> i will point to the language on your first question. we include in that language in a statement to signal clearly that with strong growth, strong labor market inflation coming down, the committee intends to move carefully as we consider

when to begin to dial back the restrictive stance we have in place. if you take that to the current context, we will be data dependent. we will be looking at this meeting by meeting. based on the meeting today, i would tell you that, i don't think it is likely that the committee will reach a level of confidence by the time of the march meeting to identify march as the time to do that. that is to be seen. i would not call it-- when you asked me about, in the near term, i am hearing that as march. probably not the most likely case of what we will call today's case. your second question is? when we see a cut, is it the start of a cutting cycle or just a one off? >> that will depend on the data. the whole thing will depend on the data. we will be looking at the economic data as it affects the output and balance of risks and we will make our decision based

on that. it could wind up, we will have another s&p at the march meeting , and people will write down what they think. in the end, it will depend on how the economy evolves. we talked about risks that causes it to go slower, for example, stronger inflation, more persistent inflation. risks that if they would happen would cause us to go faster and sooner. that would be a weakening labor market, or for that matter, very persuasive, lower inflation. we are just going to be reacting to the data. that is really the only way we can do this. >> could you talk a little more about activity growth? you have mentioned multiple times about the level of wage growth consistent with superset inflation. we have obviously seen you were talking about eci this morning, which it has cooled a little, but still

above what we wanted to see. growth has been very strong. how much of those numbers do you attribute to productivity and do productivity is temporary, of the labor and supply-chain factors you were talking about, or do you think that productivity growth will fade over time? >> this is a really interesting question. i think, my own view is, if you look back to the pandemic, you saw a spike in productivity as workers were laid off and activity did not decline as fast , and then you saw a deep trough of productivity. over the last-- use a high productivity last year, 2023. i think we are basically in the throes of getting through the pandemic economy. the question will be, what is it that has changed? productivity tends to be based on fundamental aspects of our economy. will it be the case that we come out of this more productive, more on a sustained basis?

i don't know. what would it take you market it would take people talking about ai, but my guess is, we may shake out and be back where we were. i am not sure i see-- work from home does nothing like a big productivity increase, ai, artificial intelligence, generative mate be, but not in the short run, maybe in the long run. i am not seeing why it would. right now, i would say, productivity is kind of what falls out of the broader forces driving people in and out of the labor force and activity returning supply chains getting fixed. >> right, so would that be behind why we have seen such strong growth, but also seem inflation fall, that made there is a higher level of productivity? >> that is one way to look at it. >> hi, chair powell. i want to ask a little bit more about how the. i am wondering,

how closely are you watching rents and housing prices as you evaluate whether and when to cut rates? it seems like, housing prices are not coming down as quickly as you expect it? >> so, when we think about our statutory goals, maximum employment, price stability me that is what we are targeting. we are not targeting the cost of housing, any of those things, those are very important for people's lives. those are not the things we are targeting. we are also well aware that when we cut rates at the beginning of the pandemic, for example, the housing industry was helped more than any other industry. when we raised rates, the housing industry can be hurt, because it is a very interesting set for. on top of that, we have longer run problems with the availability of housing. we have a built up set of cities, people moving further and further out. there has not been enough housing built.

these are not things we have any tools to address. word comes into play very specifically in our work, inflation, a combination. it is really rental inflation. you are taking owners equivalent rent and actual rent paid by tenants, running that through the cpi cancellation or pce calculation, which we look at. market rates are flat, that will show up in inflation over time, it has to, as long as that remains the case. >> real quick, what is your response to the letter sent to you by members of congress, asking the fed to lower interest rates to make housing more affordable? >> my response is what i started with, which is, the job congress has given us is price stability and maximum employment. price stability is absolutely essential for people's lives, not most importantly, but mostly

for people at the lower end of the income spectrum, who are living at the edges, at the margins. for someone like that, high inflation, the necessities of life, right away, you are in trouble. whereas, even middle- class people have some scope to absorb higher costs. it is our job. it is what society has asked to do is to get inflation down and the tools we use our interest rates. >> can you give us some insight into whether the committee discussed the possibility of slowing balance sheet runoff in the months ahead? >> yes, so i would start by saying that, balance sheet runoff so far has gone really well. as the process has continued, we are getting to

that time where questions are beginning to come into greater focus about the runoff, all of that. at this meeting, we did have some discussions about balance sheets and we are planning to begin in-depth discussions of balance sheet issues at our next meeting in march. those are coming into scope now and we are focusing on them. we are at the beginning of that process, i would say. >> a follow-up, would the fed decide to lower rates and make adjustments to the balance sheet runoff in tandem? >> yes, we see those as independent tools. for example, if you are normalizing policy, you might be reducing rates, but continuing to run off the balance sheet. in both cases, that is normalization. from a strict, monetary standpoint, you could say we are loosening. that could happen. it is not something we are planning or thinking about, right now, we are thinking of getting to a

place where we will see the balance sheet runoff. we are monitoring it carefully and we will be looking at that as a committee, starting in march. >> thank you, chair powell. you have mentioned that six good month of inflation data, that not being enough to build confidence. based on your previous response that your base case, you probably would not start using in march, eight good months might not be enough either. roughly, how many months do you think you might need of good inflation data to be confident? >> i am not in a position to put a number on it. i will just say-- and it is not that we don't have any confidence. we have growing confidence. not to the point where we feel like-- it is a highly consequential decision to start the process of dialing back on restriction. we might get that right. we feel like a strong economy, strong labor market gives us the ability to do that. we think it is the best way we can serve the public. ultimately, we have made a lot

of progress on inflation. we just want to make sure we get the job done in a sustainable way. in terms of when that will be, that will come out of our communications. we won't keep that a secret. >> hi, chair powell. can you explain a little more on what you are considering when tapering qt. do you need to see the overnight facility all the way down to zero, or something you can start with a couple of hundred million dollars? >> not a decision we have made. we would not take that position, it has got to go to zero, if it were to stabilize. that is what we will be talking about at the march meeting. a whole range of issues will be briefed in the committee. we will get into all the issues that will be rising over the course of the next let's say a

year or so. >> chair powell, i want to change gears a little bit. in the presidential primary campaign that has been going on for the last nine months or so, your name has come up often and any republican candidates have said, they probably would not want to give you a third term. i wanted to give you a chance to talk about that. do you want another term on the fed? what is your stance on that? >> i don't have a stance on that. it is not something i am focused on. i am focused on doing our jobs. this year will be a highly consequential year for the fed and monetary policy all of us are very buckled down, focused on doing our job. too as you mentioned, core pce has been running at over 9%

the past few months. you guys are actually expecting core inflation higher this year, 2.4% compared to that this month measure. given that forecast and that the media is for rate cuts this year, hat happens if inflation stays where it has been the last six months for the next six months? >> we will update our inflation forecast at the next meeting. he referred to the december meeting. that is not three months, it might be lower now, given the data we have gotten. as i mentioned, we will be racking in the data. if we get very strong inflation data and it kicks back up, we will go slower, or later, or both. if we got really good inflation data soon, that would matter-- that would tell us that we could go sooner, perhaps faster . of course, we will weigh that with all the other factors. we are setting policy based on the totality of the data.

>> just to follow, if inflation stays where it is currently, that would probably mean the real interest rate comes becomes more restrictive, with that mean you would have to go trim more? i think if we came to the view that six-month inflation numbers, which are very close to two in the pce world , if we thought that was really where we would be, yes, our policy would be in a different place. that is the whole point. we are trying to get comfortable and gain confidence that inflation is on a sustainable path, down to 2%, or toward 2%. >> i was just wondering if i could get your comments on the recent consumer confidence data ? it seems to be moving toward a more optimistic economy.

i'm just wondering, is it fair to say everything toward where the fed appears to have been in recent months, and do you think that following inflation perhaps has played a role in that and what challenges do you see going forward? thank you. >> it has been interesting that confidence surveys have been week at a time when unemployment has been low, very low, historically low for a couple of years. nonetheless, that has been the case and we ask ourselves why that is? one obvious answer, we don't pretend to have perfect wisdom on this, one obvious answer is the price levels are high. prices lineup much more than 2% per year for a couple of years and people are going to the store, and they are paying much more for the basics of life than they were two years ago, three years ago, and they are not happy about it. it is fine that inflation is coming down, but the price is they are paying are still high. there has to be some part of why people are unhappy. they are right to be unhappy.

this is why we need to keep price stability, why we need to do our jobs, so people don't have to deal with things like this. you are right. in recent surveys, you have seen a couple of significant increases in consumer confidence , or happiness with the economy . i guess that is a good thing. that can support spending, can support economic activity. there is some evidence of that. it is a fact that we have seen a meaningful increase, i think levels of confidence are still maybe not as high as they have been at times, but certainly have come up. >> thank you for taking our questions. committee members have said, they like to meet with usiness leaders and stakeholders in- person to learn more about the economy in real time, the issues of seasonal adjustments, throwing off balance, the economy meeting quarterly, have

you yourself learned anything or is there any evidence not captured in data yet? >> yes. i'm a big believer. yes. we do meet with outside groups who come from all different parts of the economy. i always feel like you. i spent most of my life in the private sector looking at companies, individual companies, individual management teams, good enough from that. starting with gdp data, working into what is actually affecting people's lives is challenging. it is very hard. i really like anecdotal data. in addition, as you know, 12 reserve banks have really the best network of anyone. in all of their districts, they are talking to, not just the business community, but educational, medical, nonprofit community. they have arms in all of that. when they come into that, that

is what goes into the beige book. what each reserve president does during the outlook go around, they will say, in my district, and they will talk about 100 conversations. they will give you input based on 100 patients that they have had with people of all different walks of life. i personally find it very helpful in understanding what is going on. also, i think you will hear things before they show up in the data sometimes. >> did any notice the slowing economy, based on what they've heard from the district? >> if you look back on, not this beige book, but the one before, there was a lot of slower activity. i think what you are hearing now is, things are picking up a bit. not in every district and every person we talked to, but overall, it feels like you are hearing things picking up at the margin. that is what comes through.

>> just kind of looking to put it all together, you talked about basically the economy looking strong with 3.3% annualized growth in the fourth quarter. does the strength of the economy speak more loudly to you now than any inflation threat might now that you are in a position, in other words, to keep rates elevated as long as the economy stays strong and you are more tilted towards that , and perhaps, are you worried that the economy may be a little too strong now and inflation could come back at some point? >> i am not so worried about that. again, we have had inflation come down without a slower economy, and without important increases in unemployment. there is no reason we should want to get in the way of that process if it is going to continue. i think declining inflation, continuing declines in inflation are really the main thing we are looking at. of course, we

want the labor market to remain strong too. we don't want the growth mandate, we have got a maximum employment mandate and price stability mandate. those are the two things we are looking at. growth only matters in the extent of achievement of those two indexes. thank you, very much. welcome to "closing bell." i am scott wapner. first fed meeting officially in the books, along with the news conference with chairman powell. the question on everybody's mind, when will the first rate cut come? clearly, the chair was not implementing that. he did say it would likely be inappropriate to begin reducing rates sometime this year, the hiking cycle most likely done. the money line of the whole day seems to be the question he got about a march cut, in which chair powell said, quote, probably not the most likely case. stocks did not like that at all . they sold out pretty quickly.

we have 1% plus declines for the s&p, nasdaq, and russell dowell has gone negative by about 2/3%. cut in play, who knows when, who knows how many? that is probably just the way chair powell was it to. let's bring in jeffrey good luck, ceo, cio, and cofounder of double-blind capital, joins us for our first fed meeting of the year. what is your assessment of what you just heard? >> you are right. the money line, we are not cutting march as a base case. i think that is going to be the case. we have an inflation model, i talked about this every fed meeting. we knew that inflation was going to come down. for now, we think there will be a stall in the inflation rate coming down. that will probably mean that the market is not going to get the goldilocks picture that it was euphoric about a couple of weeks ago.

that is that the fed cut in, it will be soon, it will be quickly, that is not going to happen. i think risk assets got to a very high level of enthusiasm, not just stocks, but things like junk bonds, bank loans, very high prices relative to where we have been on average over the past couple of three years. in fact, a lot of these markets are kind of back to where we were at the beginning part of 2022. i think that jake powell did a very good job of being candid, i would say. there was a lot more left-- less handwaving, i guess. the one in march, tanked the stock market, got the bond market low, less enthusiastic, although the short end is still down significantly. when we go to the next meeting and we will see what happens. the baseline here is, the

market can expect a rate cut in the next two or three months. >> does march really matter when it comes down to it? as long as the fed chair admits, they are likely to cut at some point this year. it is the trend that matters more than the dates, isn't that correct? >> that is correct. but the market, really not very long ago was pricing in march pretty heavily. that led to very high evaluations on a lot of risk markets. the longer the fed stays at what is going to be about a 200 or 300 basis points real interest rate on fed funds, there is risk to economic growth that is going to build as we move into this year. everybody knows that the employment market, the headline establishment survey looks really good. there were a lot of downward revisions in the last employment report. households surveyed have been strong and also data that never

gets reported to the extent it should be, which is unemployment data recorded on a state level. states do this too. they have 51 states, d.c., its own estate. something like 85 or more percent of 51 state reports have rising unemployment over the last six months. there is a strange mathematical inconsistency that the unemployment rate states at 3.7 on the national house establishment survey, but over 85% of states report that unemployment is rising over the past six months. it almost does not seem possible. now, the states that are not reporting rising unemployment are wyoming, north dakota, yes, texas, i think transylvania, but not california, not illinois, not florida, not new york. i don't know, is unemployment really as low as we think? with continuing claims rising, that

is a lead indicator, temporary employment is falling, that is a leading indicator. the rate is not in every sector about the same as it was pre- pandemic. this narrative of there is nobody quitting is just false. it is all the way back to where we were pre-pandemic. >> i just thing higher for longer will weaken the economy. that is what we hear when march- - we have to see a big date of change, which one should not expect. there is two reports before march. our inflation is not looking for the relaxation. i just want to say one more thing about inflation, that is, one reason to be optimistic past the next few months on on inflation, is that the ppr remains negative year-over-year. that is a leading indicator. import and export rises, my favorite inflation measures, because they are not adjusted in any way, those have been negative for a while now and remain negative year-over-year.

i think cuts are coming, but we are on a delay now. that puts the market in a less euphoric position. >> if you look at the most important metrics on inflation, certainly to what we believe the fed thinks is most important, access falling, expectations falling, pce going well in the right direction, so why not cut as soon as march? the worst thing they can do is take too long to cut, like they took too long to hike, isn't it? >> i completely agree with you, judge. i think that is the issue the market is having in the last half hour or so. there is risk in certain-- inserted into the marketplace. we were looking for 6 rate cuts based upon pricing and treasury market using the work function. six rate cuts here in 2024. you better had started pretty soon if you are going to have six. now, we are talking probably, i

don't know, i will take a guess that the baseline is june. if you really want to get aggressively cutting in the five months, four months leading to the presidential election, i don't know. i am skeptical that the fed is political as many people assume that they are. a lot of people have been talking about that. the fed is always political. i think it is somewhere in the mix. i believe that jake powell is not terribly political. he has been doing a very good job over the past, i don't know, a year now, of communicating. it is a dual mandate. now, he is saying it is in balance and so forth. he was crystal clear that inflation has to stay at a level that resembles 2%, or get near 2% and not go higher. if that happens, there could be real disappointments. the good news is, i don't think it will go terribly much higher. another reason i feel that way is the bloomberg commodity

index just remains in a protracted downtrend, 200 moving average just keeps dropping and it is below its 200 day moving average. that would not be a catalyst for inflation. the last thing i want to say about commodity prices, with all of these tensions, iran, retaliation, already wars in ukraine and israel, it is interesting that the price of oil does not really go up. that would be indicative of a weakest global economy. we know that europe is acting like it is in recession, we know that china has not been doing well lately. it looks like the demand for commodities and oil is waning, and it is overwhelming even some very significant geopolitical tensions. >> are you still calling for a recession? i thought it was noticeable-- notable where powell a few

moments ago, rather matter-of- factly said, this is a good economy. yesterday, we had ken griffin on this network as well. he talked about goldilocks, the potential of a softer no landing and said, the economy is quote, pretty good right now. are you alling for a recession still, like you have been? >> yes i am. i want to talk about experience in markets. i've got a lot of it, being at this over 40 years. when i hear the word, goldilocks, i get nervous. when you hear people saying, goldilocks, and everybody in the room not there head in a north-south direction and says, yeah, it is goldilocks, that means, everything is priced to something resembling perfection . when you are in goldilocks, the problem is, i remember once in the year 1999, there was somebody i worked with that was very aggressive in nasdaq type of stocks. he called the turn of 1999 and into 2000, nirvana,

investment nirvana. a chill went down my spine and i said to myself, if this is nirvana, it means he could only get worse . like a aaa bond, he could only go in one direction. you have nothing but aaa rated bonds they are not guaranteed in any way, they can only get downgraded, they cannot get upgraded. i feel like we are priced at perfection to me goldilocks language. today, jake powell took goldilocks away, i think. >> you said a little ago, risk assets are extended and you did not limit that to equity. you mentioned parts of credit. what would you do? i should preference that by saying, i got a text a few moments ago from someone on my investment committee saying, by bonds, by simple. what is your reading or what the portfolio needs to look like, given what powell has just done, seemingly taking march off the table? no one knows truly, it is two meetings two months from now. >> i think if you want to buy

bonds, you should buy treasury bonds and you should buy treasury bonds two years, three years, five years, maybe out to 10 years. i think bonds remain very attractive with the inflation rate may be stalling out in terms of its improvement, but likely to stay lower tiered we have a high, real interest rate. during the months of november and december, the first part of january, we had one of the best credit bond markets ever in terms of prices going up, even the downtrodden start to rally in december. i am talking about commercial mortgage-backed securities, which people would break out in hives if you talked about buying commercial back securities backed last summer. even those start to rally a lot. really, i think in many parts of the credit market, things are overvalued. we have had his goldilocks mentality, spreads on investment corporate bonds in the top percentile of where they had been, which means, they are the least attractive.

junk bonds on average are in the 12 percentile peer cheaper than this 88% of the time. the fed is not really going to bail out risk assets in the near time for jake powell's own words. the risks appear attractive to me, particularly if the fit is staying higher for longer, and made by that process engineer a lower inflation rate than 2% by the end of this year, which would make treasury bonds very attractive, and lead to the fed cutting interest rates. unfortunately, that may be in the context of weak economic growth and rising unemployment. i like cash a lot now. i like defensive bonds. i feel like just as investment corporate funds are bottom docile of spread, i feel like risk is really in the top decile now in terms of evaluation and

problems. i like cash because i think you will get better buying opportunities. i've been talking about emerging market securities stocks and bonds, but we remain underweight -- under wait. we want to wait for the recession to come. those areas have not been doing very well of late, thanks to china and thanks to slowing global economy. i think you want cash to be able to get into that emerging market trade once the economy slows, and perhaps goes into recession. i think globally, there are certainly many pockets of recession at present. if we go into the united states recession, i think we will see a buying opportunity and you want cash for that. you can buy the two year treasury. you will have to roll it every three months. on the shorter end, still getting 5 1/4 on the six month bill. that is probably fairly attractive. i would want to have a little longer maturity, just in case the race start to fall and you have to reinvest

at a lower level. for me, i am in defensive mode. we talked in the november fed meeting, i think november 1st, i talked about how i was pretty enthusiastic about things. that has totally repriced since then . the pendulum is on the other side for me at this moment. >> it has been a different markets. bear with me if you would, jeffrey, for a moment. let me just update our viewers. we are almost at the lowe's, dow is off about 280. the s&p 500 is trading 4853, remember, it was a day ago where we got he first ever close above 4900, as we head into those mega cap earnings. we have given that up, obviously. s&p down about 72 points. steve policeman has come out of the room where the chair was giving his news conference. steve, this is so interesting. the march commentary from the feds share clearly upset the market. it almost feels like a

fed share who is 9/10 of the way there who wants to cut rates, he just needs one more jolt of inflation confidence to truly get there. maybe march is simply too soon. >> scott, very dramatic moves around stocks, bonds, fed fund futures. i will show you an example of how things have been moving. you have been ollowing the stock market, look at the probability for a march rate cut. it has come down 36%. we had been between the minis as high as 80%. hopes dashed around the world for that early fed breakup. scott, i have to tell you, i was somewhat amused. i did not think powell would answer that question as detailed or specifically as he did. he did not say this, but i thought he could have said, if you haven't listened to everything we have said between the meetings, if you did not

listen to what we said in the statement, and if you did not listen to what else is going on, we are not putting in march. let's hear the sound from what powell said dashing hopes from that rate cut. >> based on the meeting today, i would tell you that i don't think it is likely that the committee will reach a level of confidence by the time of the march meeting to identify march as the time to do that. that is to be seen. i would not call it-- when you asked me about in the near term, i am hearing that as march. probably not the most likely case, or what we would call a base case. >> scott, i will leave it there. i am sorry, that is consistent with things the fed share has been saying at the market has been listening to some extent, but not nearly as much as perhaps it should have been. >> he was, as you said, more explicit. let's say that, more

explicit than perhaps some expected him to be today. that is one of the reasons why you have got the dow down more than 300. >> let me just add, one of the things he said in response to the neutral rate question, is the idea that he does expect weakening in the economy. he says, the strength we have had so far is supply and demand coming back in a better balance . he expects weakening, and that is the weakening i think that will facilitate the rate cuts. >> that is a good point, as many you have made. i will go back to jeffrey. you know, i thought it was somewhat profound today and kind of underscored the shift in psyche , if you will of where powell and the fed things to be. it appeared to i think everybody throughout the beginning to middle stages of this hike regime they have been on, that they needed to crack the market to get demand on and bring inflation down to where

now, powell underscored a number of times today, we want to keep the labor market strong . that is a change of focus clearly for the fed. now, they don't think they need to rally the labor market to get inflation to target. i read where the eci is going, the price of the training 31-- pce might be headed. >> he also said, the labor market is largely healed back to where it was prepared to make, not all the way there, but largely there. i think he is right about that one a lot of the data. so, it would be nice if the labor market did not weaken and inflation would stay down to 2%. like i said, 85 plus percent of states say, unemployment is up the past few months. i wonder about all of this. are these numbers real? i don't know. the jolts numbers used to get a lot of attention in. the job numbers.

people are starting to realize that does not mean anything anymore. the response to the jolt survey used to be 75%, now it is something like 35 percent. is it really comparable to where it was a while ago. our people dropping out of the survey for, i don't know, reasons. what reasons would it be? i don't know, but it is not comparable. today, we got the adp number. i think this is what hurt the stock number initially. the adp data was not great. adp data is notoriously not correlated with the establishment survey that is coming out later this week. it did seem to move the market, because it was a noticeably weaker number. we will have to watch what happens there. i expect the unemployment rate will go up and i think it will end this year higher than the fed's stop clock this december. that is what will happen and it will necessitate lower interest rates. since we don't have

those lower interest rates, even though the two year treasury was down 4% with the fed funds rate at 538, that is a pretty negative yield curve from the fed funds two year. it is not meaningless. this will have an impact and the fred -- fed staying higher for longer, i have talked about this for months now, is going to be bad for the banking system. i noticed, we had a little baking problem today, although i take it is isolated. >> i want to talk about that and i am glad you brought it up. the level of concern you would have today around the regional banking system, relative to commercial real estate, a couple of bad loans at new york community bank, that stock is having one of its worst days, if not the worst day it has ever had, down more than 37%, this could obviously put pressure on the fed potentially to move sooner, rather than later how do you see that? >> it might. there is plenty of

anecdotal evidence that particularly the urban office market and commercial real estate is a real debacle. there was loans underwritten post pandemic assumptions to evaluation on one building of $330 million, and it went into foreclosure and got sold out at $130 million. that is a big haircut. these things take time in investing in the economy, everything-- that is why i try to mentor the young people, everything takes longer than you expect. you can see there are problems in commercial real estate that will take time for those things to from a theoretical loss, to a realized loss, and those things are going to be happening. there is consequences to money printing, consequences to higher interest rates. it just happens in slow motion, relative to what people have patience for. that, i think will be the story

of 2024. >> speaking of money printing, i have noticed many posts lately on social media about the deficit. do you think markets are too complacent about that today? there was a moment a handful of months ago with concerns about funding the deficit, whether all of the supply would be able to be absorbed. we sort of moved past that. we have hit new highs on the snp today. what about that issue? should it be of greater concern today than perhaps it is? >> yes, it should be. like everything, it will take forever. i don't think that the 2024 election will be about the deficit. i do think the 2028 presidential election will be about nothing but the deficit. the interest expense is going straight up. we have added about 400, 500 billions of dollars of interest expense per year already. and we have tons of bonds, like 17 trillion of treasury bonds

rolling out the next six months. if we are higher for longer, every day we roll these things over, the interest expense is going up and we are getting to the point where we can't deny it any longer. medicare admits it will be broke in 2030, using cbo assumptions, social security admits it will be broke in 2032. those assumptions are overly optimistic. they assume no recession ever, real gdp growth that resembles where we are now, interest rates lower than what treasury rates are today, and assumes the deficit that is smaller than it is already today, even though we are in-- aren't in a reception-- recession officially. if you tweak those assumptions, more likely that medicare will go bankrupt in the 2020s that the 2030s. last time i checked, we are midway through 2020s. this will be a really big issue. higher for longer just brings it forward more quickly. i

think this will be the defining issue of the next six years. >> powell has had the benefit of having unanimous votes inside that room. there have not been food fights, so to speak, about where policy is going to be. do you think we start to get to since, and does it matter at all,-- >> it does not matter. he does not look good for the chairman, but ultimately, it is jake powell's decision, i am certain. i think you will get to since certainly by the main meeting if rates are where they are by that time and at that change. i noticed, there was letters sent by a bunch of congresspeople to the federal reserve people saying, you need to cut rates now. i am not sure what that is all about. maybe they want to get reelected . i am not sure. i am not sure what all of that

is about if everyone is crowing over this goldilocks economy. >> before i let you go, let me ask about the dollar. it is another asset class you have spoken with me on numerous occasions. you had a weak dollar and you were expecting to ultimately strengthen, which he did quite substantially. how does that play work now relative to what your view is versus what the fed has said today and what you think they may do? >> it should sustain a relatively stable or stronger dollar. the market is looking for rate cuts. they are not coming, at least not in a couple of months. i do think, when the recession comes, the dollar will be very different than it has been past recessions. past recessions, it will always get stronger. this time, i think it will get weaker because the policy response to the recession. one thing i have said for a long time, recommended, india as an equity asset, the economy

is the strongest in the world. there service pmi is over 60. their manufacturing pmi is basically the most robust in the world. i think investors should be using weakness. if recession materializes and starts to double up on the ind, the indian equity etf. i don't have a stake in it. i don't like to recommend things that would be in my funds. i think i nda is a good investment for people looking to get every exposure. it is my number one recommendation for 2024. that is a good way and a good place to leave this. your insights are valuable. we count on them every fed day. i appreciate your time and we look forward to the next one, jeffrey, thank you. jeffrey gun lock joining us exclusively as he does every fed meeting. you will continue to see him here joining me now, wealth management josh brown, we will

get a quick comment for-- from you after we break. >> i think jeff came on in november and was enthusiastic. the only thing that has really changed from then until now is we had one of the best three month periods in the history of the stock market. we did plus 19%. quite frankly, we have done that less than 20 times the last hundred years. the problem with the recession case is that on 16 of those 17 occasions, not only did you not have stocks lowered, but you had no recession. in fact, the market was up an average of 30% one year later. i would have to hear the case for why this time will be different. if you think we have this $5 trillion rally in the stock market over the course of 90 days, over absolutely nothing, that is a really interesting story. that says to me, everyone is wrong and the last

people still calling for a recession are right. they might be. there is very little evidence. everyone is working, people's bills are being paid, the market seems fine, the economy seems fine. i think if we were going to interest rates of 6% to fight inflation, everyone would be singing a different tune. that is not what we are talking about. we are talking the first cut moving from march to may. to me, a very big no big deal. >> kind of a knee-jerk reaction in the market. stay with me on live. we will not take a break. joining us, liv young and commentator mike santelli. liz, i will turn to you and asked the same question i asked jeffrey, does march really matter as long as we know cuts are coming? >> it matters today to the market, because everybody seemed pretty sure that is what was coming. i think the other thing about it is, the idea of a cut in march was pretty

quick. it gave people the sense that we were sort of invisible-- invincible. cuts were on the table, they were going to back start it. we would not be able to go down because they are going to start cutting. now, e are coming to reality of, all right, i think but he told us today, you have not been listening. you have not been listening to what i have been saying, reading the statements. i think he has been pretty clear from the jump, from the beginning of this hiking cycle that they would rather stay too high to long then cut too early. he has not changed his tune on that. the market has tried to bully him into a different position. today, he said, i would not be bullied. we call the shots. >> we will still have this debate and i think jeffrey alluded to this as well. whenever that cut does come, which the chair himself called, a highly consequential decision, will it come for the wrong reasons? >> inflation continues to come down, what forces their hand,

so to speak? >> nothing. i think the bold case, they can be bringing rates down based on their stated framework. their outlook from the last time they delivered it was, they thought inflation was not going to be as low as now and they thought growth would be weakened. that leaves them room. there is a lot of room here. what i heard from him sounded like a guide that id not have the votes in the room. felt like we've got to wait a little longer, let's prolong this, that is fine. i was saying last week, march to me is not make or break for the stock market, but lot of people feel like march is make or break. clean out the market. we are well higher than we were when march was projected as an 80% possibility of a federal rate cut. we are down below 40. to me, one less thing i think that gives you a little cushion psychologically. the longer you wait, the more

likely perhaps you will make a mistake and end up kind of twiddling your thumbs while the economy does buckle a bit. i don't think he was going to front run six or seven weeks of growth and inflation numbers and say, one way or the other whether it was happening. it was a surprise he seemed to close the door on it more. that was the tone of the committee of the meeting he just got out of peers >> with the loss of the mega cap cushion today by virtue of this selloff we have seen already throughout the day, nothing was all that substantial, except alphabet, down about 6% or so. we just did not have that going into the meeting anyway. an already fragile market takes a tumble on the idea we will have to wait a little longer than march. >> i also think that plug into the servers in this room we are in, or other servers, they are programmed to make sales of high

data technology stocks if and when jerome powell says certain buzzwords. i know it sounds hilarious, but that is actually true. we all have seen this now meaning, many times where tomorrow could be an absolute reversal of today. i can't promise that it will be. envision, if you will, a scenario where we get the january jobs number, and we will, and that number underperforms expectations, which will be the first time we have seen that in a while. all of a sudden it is like, maybe powell was sandbagging a little bit and wanted to look at january, february before committing. we are of 200 points on the dow and nasdaq has 21 points up for the day. you are telling me that would be completely out of the realm of possibility? i which i would say, don't make today the last and final word on anything and do not make too much of a reaction like what we saw in the last 90 minutes, as that will set the course. >> big picture too. let's not

lose sight on the fact that as kitty griffin said yesterday, the economy pretty good right now. this is a good economy, he said, just plain and frank here at the employment cost index is coming down. pce, the fed's favorite measure going in the right direction. inflation expectations, gets you a ham sandwich and bag of chips, still going in the right direction. big picture, this is working toward where you want it to work. >> that is absolutely true. i just think that powell's bar for satisfaction is higher than most. i heard the words, sustainable path toward 2% over, and over, and over again today. their own projections for pce ready for the end of this year is still 2.4%. i also think his threshold for pain is higher. if the economy starts to show weakness, i think the economy will react and say, that is it,

we will get more cuts and reacts initially on that. i think they are quite comfortable with seeing some weakness, almost welcome it to get everything back into balance. >> you want to take a shot at what was said about risk assets, even credit, high- yield, things like that that looked pretty extended coming into today to get picked off? >> absolutely. i thought, coming into the year, the happiness threshold is higher. you need more good news to feedstocks at 20 times earnings . after this run, there has not been a 50% pullback in three months. one of those could happen for no reason whatsoever. it is not take the fed saying one thing or another. this could be a process you have to go through that does not change the stories. if earnings aggregate moving in the right direction and the next head is a cut in the 10 year treasury yield is back to 4%, you will get a little relief on market rates like mortgages, i don't know, it does not seem like the wolf is at the door necessarily, based

on all of those things. you can shop around. 20%, three months. >> here we are, about to hit 378 . the initial spike me if we can take that back to the spike we were just looking at, there it is, right as the statement comes out, 2:00 in the afternoon, just shortly after that, and then you have that drop-down and the rise back up. about as explicit as he has been today. >> isn't it bullish that the fed does not feel that they have to fly to the rescue with 25 basis points? isn't that another way that stocks got ahead of themselves, hoping for several cuts? i don't see it that way. >> i don't, either. the way i would characterize it, they are saying, the risks are balanced between further, high inflation and weak growth. the risks are low on both of

those scores, balanced, but not high. i do think the longer you wait, if you think private sector job growth is teetering toward zero , and some people will actually show you the chart to say it might be the case, then, they might end up being a little late, kind of oblivious. maybe that is the case. i don't think it is wild that type it has to be that precise and they better get there by march and 25 basis points will make a difference one way or the other. that is the market psychology at this point. >> a little less than four minutes to go as we head toward the close. i want to set the table for tomorrow. we will digest the fed throughout the evening and obviously tomorrow. then, we will get amazon, apple, and these money stocks that still need to perform, especially on the back of what we have got from microsoft announcements. what should we think of all of this in the next 25, 26 hours?

that is when it will all go down. >> i was looking at some activity today. what is working? i happened to have noticed healthcare a bit. i thought that was interesting. they have secular growth, but are still considered somewhat defensive. i was looking at other areas. i think what will happen here with amazon and the rest of these names, if you are bullish , you say, no matter what the report, if they sell off, the money will come out and go to other places in the stock market, that is a thing that has actually happened before. it happened at the end of 2022, actually, during that october 2020.. if you get great reports from the rest of the seven names, but more importantly, you get the right guidance, i think that is enough to keep this in active play. i don't think we have to have the q 1 correction everyone is canceled in as sort of a lock.

these names are important and we should not minimize that appears >> maybe the order will come back and haunt us too in the way these companies are reporting. the biggest? i would say is apple, given what the revenue growth trajectory has been and the stock was flat coming in to today. lots of questions about iphone shipments, casting doubt in the last 24 hours. two minutes to go, by the way. we need these stocks now to do well, don't we? >> we need their earnings to do well. so much of the market is looking at their earnings to carry the rest of earnings growth. we all know these numbers. you take the meg 7, and their earnings contributions versus the other 93, 94 stocks. we need their earnings in order to stay afloat. but, there would have to be some kind of negative catalyst to really take them down.

i think money rotates within sectors for a while, until, or unless, there is a negative sector for the outcome. >> the moment you made a moment ago, so perfectly done, we have this upsetting of a day. the snp is down 1 1/2%. >> of the worst day for snp since late september. >> it has been a minute. which means, you probably do, if not today or tomorrow, look, it has my attention that the russell 2000 is down with the yields down a lot and nasdaq down a lot. we are not getting that rotation in the market. to josh's point, you have to get a rethink. we will see how it goes. you were kind of due for some pruning and a little reality check on everybody's perfect macro scenario. i don't think again it has to be that consequential. we talked february 7th last year

me it was a nasty correction. in retrospect, looks like a lot. until we see you again tomorrow, see what this trade does. we will go read-- red. i will send it into overtime now. claimant stocks pulling back after jake powell says, he does not think a cut in march is likely. a 10 year yield too. the action is just getting started. welcome to "closing bell overtime." the biggest loser today as communication services and tech weigh in on the index. healthcare, one of the bad spots. coming up, isi chair