let us bring in mike mckee for more analysis. mike, the comments you made as the news was breaking this morning was the idea of cementing the rate expectations going into next week. i suppose we had a little wiggle room in the markets heading into the report this morning before we got to reality. mike: that's all that was necessary. we went into this morning with the markets at about 60 basis 66 basis points in terms of a fed move. they really priced in more than the fed doing 75. but there was little chance that wouldn't do a 75, given the situation. given the fact they want to get interest rates up higher to be somewhat restrictive on the economy before we get things out of control. it was the core rate rise, double what was anticipated. 6/10 instead of 3/10 that sold the idea. that is why people have been talking about, may be the fed is not making enough progress. david kelly disagreeing, but a lot of people thinking with the core rate rising, the fed still has problems. kriti: mike, since we got the report, we had a couple of

is mike mckee.er in line with what wall street expected, 315,000 jobs created during the month of august with 308,000 of those coming in private payrolls. we will have to look and a moment, there could be a seasonal factor with teachers going back to work. this could be a larger number in non-seasonally adjusted since. manufacturing payrolls up 22,000, we did see strength in that ism report yesterday. average hourly earnings coming weaker than anticipated. .3% up, which means the average year-over-year is 5.2% unchanged from last month, lower than the 5.3% that had been expected. here is an optimistic number from the federal serve, the labor force participation rate rises to 62.4% from 62 point 1%, a significant number of people going back into the labor force looking for jobs. that is something the fed wants to see. the music's underemployment rate rises to 7%, from 6.7%. i do not know if i mentioned this, the overall unemployment rate rises to 3.7%, a function of people going back into the labor f

i love mike mckee. i actually think the federal reserve is at stake right now.his is part of powell's legacy in terms of being tough on inflation now. romaine: that is what i am curious about when you talk about going from 4% to 2%. there are a lot of days the fed could have settled for a 4% and hoped maybe normal economic cycles takes care of the risk. do you think the fed has that luxury? do you think they would be willing to maybe pause and wait and see or continue to push this? diana: i think they will go to 4% and hold, and then they will see if they need to do more and watch how it comes. no, they will not settle for a higher rate of inflation now. that came up at the jackson hole training. jason thurman had a qualified answer about how maybe we could start with a higher rate of inflation. not now. this could unanchor inflation expectations. now is not the time for the fed to say we will settle and stop short. that is not good enough for a for combating inflation and their credibility. caroline: talk about the data they are depending on until the run-up fo

jonathan: mike mckee joins us in new york. let's start with the fed. 75 or 100? how unusual would it be to follow up with 100 given they have not signaled that? mike: it would be virtually unprecedented. you have to go back to the paul volcker years. they have gone as much as 400 and one meeting during the volcker years. we are nowhere near that. if you got 100, it would shock people in the markets and there would be a knee-jerk reaction the fed does not want to risk. variable lags. they do not know when that is going to hit the economy. they would rather be more cautious than 100. not that 75 is mild by any means. lisa: how much discussion is there in your federal reserve circles about the disproportionate effect of rate hikes on lower income individuals? they used to be more concerned about the varying effects. now it seems that one mandate and that is to get inflation down at the expense of anything else. is that really what the discussions are like? mike: essentially. they have been concerned in recent years more publicly with people in the lower income strata

the market reacts a lot to that data we just saw mike mckee breaking down. news is bad news and bad news is good news -- [laughter] jonathan: i think at the end of the day, good news is bad news because good news apparently means that has to do more. that news is bad news, this is the outcome the fed desires. tom: if afterthought completes your summer reading on time, is that good news is good news or bad news is good news? jonathan: good news is good news, the policy year is going to get hammered. good news, bad news, tom. tom: -- would tell you this game theory is baloney. jonathan: we have both said it. where is yellem? next thursday in detroit, the secretary of the treasury will deliver a major address to discuss the biden administration's economic agenda. that is very good news on that front, good news. we need to hear from the treasury secretary, don't we? tom: two standard deviations technically on sterling, 1.518. we are not there yet. jonathan: a year -- on the tenure, a breach. coming up, morgan stanley wealth management. they will run you into the

mike mckee. let's bring him in now. mike: the totality of this data is very good. we saw business activity rise, production rise, new orders rise. employment rose, but we are also seeing prices dropped just a little bit. that is still elevated and it is not as nearly as much of a drop we saw in the ism tax rate. this fix the goldilocks scenario we saw in the jobs rate on friday. the simply -- the s&p global -- there composite 44 .6 from 44.5. two different measures of two kinds of u.s. companies going in opposite directions. alix: higher yields and lower stocks. this is good news were the economy and bad news for the stock market scenario. mike: even though this is normally good news, it is the cpi report that is going to drive up what the fed does and what the fed does is going to drive up what the markets do. cpi numbers before anybody can definitively you start to put a bed on the 21st. guy: does that put pressure on the feds to do the same? mike: it takes some pressure off the feds because you get a global tightening that pushes the credit and helps the global

mike mckee breaking down the data. we are looking at 75 next week.sensus. lisa a.: that is a game changer from where we were months ago. the question is, are they going to hold their? fed officials said we are not going to cut rates next year. if they hold rates at 4%, can the economy withstand that given the amount of debt and how much people have gotten used to zero rates? tom: i would suggest you would clear out zombie companies. we had zombieization. is that a word, jon? jonathan: it is today. [laughter] it raises the question on why credit has been so resilient. tom: i am going to look it up. jonathan: zach, can i begin with high-yield? why are you seeing signs of resilience in that part of credit? zach: it is surprising when you think about the move in risk markets. the odds we think there is bad news priced in, and you can look at the wall of maturities coming up, and you're not seeing a lot of maturities that will need to be refinanced. from a fundamental perspective, we think there is more flexibility for some of these high-yield issuers van

right now, michael mckee with us here as we go forward into the fed meeting again. wonderful. mikeh a respect for your ability to throw down. i just am unable to do it. which of the forecast, which of the dots with the item you would look for first when they released that stuff this afternoon? >> well i think we are going to be looking at the median got which does come out as well as on the dot plot because what people want to know on wall street is how fast are they going to get to terminal and what do they think terminal is? the third question, how long is it going to stay there? all three questions will be sort of answered in one ride on the economic projections. we will also look at unemployment because there hasn't been a forecast under that dot plot, and that sort of tells you what they think is acceptable in terms of unemployment. if it follows the book and unemployment goes up. so far, they haven't had a whole lot of luck pushing that. tom: we just showed the dot plot, it looks like a winnie. mike mckee, beyond that, they will be the questions today, what does he not want t

michael mckee, what are you seeing this morning? mikese the labor market is tight, and the labor market is still tight. 213,000, that is the same as last month, unrevised. it does tell you that we are seeing a very strong labor market still, and a chance for people to get jobs, even if they have lost their job, because continuing claims continue to fall. these are two weeks behind, so the week before last, it doesn't show you that this is an incredibly strong labor market. at least, it is showing no signs of cracking on the letting people go front. there was obviously a big exchange between the chairman and me yesterday, and the chairman and others, about unemployment and how high they are willing to let it go. right now it does not seem to be a problem. tom: is the phillips curve in order right now? that did not come up yesterday, but i thought there was a nuance of questions, starting with nonlinear items early in the conversations, and over to your rudeness later made for an interesting press conference. is the theory we grew up with,

jonathan: mike mckee will join us now. this is not the number many people were looking for. thinking that way on wall street but let's go through the numbers making you three so gloomy. the month over month cpi comes in .1%. the core is the one you're are talking about, up .6%. the forecast was .3%. we see the corbett rise to 5.9%. i assume president biden will not talk about the core rate. cap his part of the bargain, it fell. food has not reversed. people were thinking when commodity started to fall in july we would see a drop in food prices, we don't. we don't see a fall in shelter prices. rent is up. used cars were down but on a wholesale basis the expectation was that might be down as much as 1.5%. no selloff of inventory, they are still rising .2% on the month. a month ago you had someone on who said the fed is going to be determined to get up to restrictive territory. as we watch what is happening in futures markets, people pricing in 75 for the september meeting and a possibility of 75 for the november meeting, you can see the fed in the past has always raised intere

mckee. you want drama! mike: it depends on where you are.ll the traders probably love this, because there is nothing to trade on. we are back to the beach for our last long weekend! 315,000 jobs created. what the story really was with the rise in the participation rate is it went up 62%. that is -- it does show that people are coming back into the labor force, and the gains were broad-based in terms of the 315,000. 16,000 in construction, services are always stronger but 263,000 are a good number. only people losing jobs are in mortgage services. it shows that women are coming back into the labor force. midway through the recovery from the pandemic, there was a big drop. women were supposed to come back. they were not staying home taking care of the kids. they were supposed to come back a year ago in september, but now they are finally getting back into the labor force and making a big difference. tom: michael mckee breaking down the jobs numbers for us, wages coming up a little bit. reaction for the -- for reaction to the jobs data, we are

here is michael mckee. mike: our cup runneth over with numbers.er is up .3% and that is much better than the .1% decline expected. better than the flat reading from last month. the x autos numbers down .3. the control group which is what everyone follows in the economic data is flat at zero. last month, is to reside down 2.4 from .8. this isn't a particularly great report, but it's not a bad report on the face of it. it is not telling you that the economy is super. a lot of this may be dependent on the amount of service station work or spending that was done. service stations were down 4.2 percent and gasoline prices fell. jobless claims, look at the skies, 213,000. the number last week was revised to 200 18,000. jobless claims are going in the other direction. the job market is staying very strong. one million 403,000 continuing claims which is down from 1,000,473. the empire manufacturing number rises to -1.5 but it was -31.3. a correction there. business is better. new orders are up and shipments are up in the new york's fed measuring of manufa