your take on the lael brainard about lack of liquidity. seems like a big deal.hear the context of what she said and the context of the question and was it asking about a particular asset class because there is plenty of liquidity in the s&p 500 names but mortgage backed securities or corporates that are not triple a or double a i know there are liquidity problems there. >> right. >> if that's the context of the question, i'm good. >> thanks for take three stock lunch and then some dessert. >> like fast food. >> thank you for watching "power lunch. see you tonight at 5:00 on "fast". >> and "closing bell" begins right now. see you tomorrow >>> stocks are starting the week on a shaky footing, though making a decent comeback we took a hit when jamie dimon told cnbc how much more downside there could be for the market. >> there could be another 20% and, you know, i think like the next 20% will be more painful than the first. >> then stocks gained ground back after comments from fed vice chair lael brainard. >> moving forward deliberately and in a data dependent manne

the federal reserve, caution from one fed member, vice chair lael brainard advising for data dependency. others perhaps not reading from that sheet. she seems to be a bit of an outlier. >> frontloading was a good thing given how far below normal neutral rates were. but overshooting is costly too, and there is great uncertainty about how restrictive policy must become. >> in light of elevated global economic and financial uncertainty moving forward and in a data-dependent manner will enable us to learn how economic activity, employment, and inflation are adjusting to the cumulative tightening to inform our assessment of the path of the policy rates. rishaad: a bit of a shock to see charles evans up there first of all. looking at these remarks and going through every little nuance as ever, fed speak is always something which is like criminology. yvonne: it's interesting when you mention it the fact that they are talking about overshooting is important as well. furious headwinds are emerging and likely to push the u.s. into some kind of recession six to nine months from now. in terms of st

. >> then stocks gained ground back after comments from fed vice chair lael brainard. >> moving forward deliberately and in a data dependent manner will enable us to learn how economic activity, employment and inflation are adjusting to the cumulative tightening in order to inform our assessment of the path of the policy rate. >> we're going to have annual sus of all of those headliner comments throughout the show the make or break hour for your money. welcome to "closing bell." i'm sara eisen coming up we will speak with the president of dow component honeywell about how slowdowns are impacting his business and sustainable fuel efforts, big announcement today the market dashboard, commentator mike santoli, where after the brutal sell-off on friday, pockets of strength today, mostly in the defensive areas but materials are higher and industries >> yes it's not an across-the-board new down lag in the market it's semiconductors and some of the cyclical areas that are pressure points. the market is yap hennive -- apprehensive and how aggressive the fed has to be and what economy is going t

down to this more optimistic town or more positive tone by lael brainard. sort of running counterintuitive to what we have heard from other fed officials pick keeping an eye on on what we are seeing the bond space. treasuries closed monday. we did see an aggressive selloff against the guilt curve. driven by what we had from the boe concerning it will end it's long-duration buybacks from friday. if you change on now, interesting moves in the currency space. the aussie dollar extending losses being driven by what we are seeing in china. the aussie dollar the weaker on monday. a weak spending during the holiday period. the service sector deteriorating. all of those conspiring to seeing traders looking at $.60 to the dollar. the yen, watching that as we are good close to the level in september. japanese futures also looking a little bit higher ahead of the open in one hour. shery: no wonder we have seen that haven trade with the u.s. dollar at the one-month high. we continue to see a rebound in the u.s. futures training session after the s&p 500 lost ground for

haidi: lael brainard lays out the case for fighting inflation, the world bank and imf warned of a $4 trillion global recession. shery: president biden condemns latest missile barraged on ukraine as vladimir putin threatens further attacks. annabelle: u.s. futures seeing a little bit of an asian session -- sing a little bit of a pick up on the asian session. when it came to the semi conductors, the pressure was felt across the board. november 2020 lows down 40%. not to mention it was not just washington's actions but it was also the fact we got a peek into earnings season that did not look great last week with samsung. crude prices falling for the first time in six sessions. we continue to see the downside pressure. mobile demand concerns coming to the forefront despite the fact we have opec plus announcing production cuts. not to mention geopolitical tensions around ukraine. we were and it came to the $24 n treasury market, you can actually see how central banks and foreign governments have been offloading treasuries. we are talking about this record laws of $29 billion last week. we

so this whole idea that maybe lael brainard came on and said they're attentive. i mean, i used to work in a big japanese bank where we hired people to follow green span. these people are using words that aren't really that big of a deal but at the same time you have to realize we still have inflation above 7%. now, the market got really disappointed when we had 8.3 versus 8.1 cpi read last time around and we only got two tenths of the cpi knocked off and shoving rates up everybody's you know what. we'll continue down that path and they're not going to stop. if we don't get something significant, there's not going to be no pivot. they're going to continue to go town this path, and that's why i think if you're an investor, you're going to get better prices. i'm not here to pick a bottom but i'm telling you right now, we have inflation at above 7%. remember u in 1971, nixon had his hair on fire with 6.6% inflation. we're nowhere near where we need to be. those rates are going to go to 4.5% by the end of the year, maybe 5. where does that put that 30-year mortgage? w

on the other hand we have lael brainard, we know she is quite unowned of, but she is acknowledging the impact of the fed's tightening cycle in the world economy and how that will feed through to the u.s. and a negative way. francine: how much more brutal where the markets be? you have changed your position into value defensive stocks. does that still the strategy? >> there was no panic in the markets. the panic was in fx and equity markets. over the last couple of weeks, we are seeing more de-risking by investors waiting to see evidence of duration. always coming to the rescue for the last 10 or 15 years. we need to learn to invest without the support from central banks. something has to give. either central banks come to the rescue or the market has to be more nervous about the selloff from here. tom: there is a backstop, that is how the boe is describing, describing what they see a significant repricing of u.k. debt. the prospect of self reinforcing firesale is what they want to avoid. remarkable language from the bank of england. >> absolutely. in and of itself, that is quite worryi

tom: lael brainard and evans saying they are starting to see the effects of tightening in the u.s.conomy. manus: the global perspective is interesting. fresh from his nobel economics prize, this is what ben bernanke had to say, "what should be kept in mind is that an inflation target is a medium-term target, it doesn't have to be met in six months or anything like that," should it be listened to? kit juckes's with tom and i this morning, we will come back to reynard and evans in just a moment, i think this is a saly tory warning of you are about to break something from a man who knows a thing or two about crises. you don't need to get there immediately. kit: it's interesting coming from him. i don't know how the fed in practice when they meet in november are going to react. having missed the start of the inflation spike, they feel under a great deal of pressure not to be too casual, and that's why they have laid out this policy of 75 basis points in november, another 50 in december. we will know if they have went too far when we get the history books, but let's say core cpi inflati

. >> the idea that came to me on friday when lael brainard gave a speech in which she indicated that the fed is between a rock and a hard place. it is actually between volker 2.0 and bernanke 2.0. it is bearish. it ain't over until the fifth lady sings the more optimistic too. she was concerned about financial stability for this was the first time ain't fed officials talking about financial stability. you said on the show that financial stability is one of the mandates, but how important is it? i think it is number one. jon: as the fed continues to digest all the data come at the economic road ahead will be watched closely kathy jones, chief income strategist at charles what -- charles schwab, let's talk more about the market reaction today about the latest piece of data, you could look at that as a possible sign lying. what was your reaction -- sign of cooling. what was your reaction? >> it is one of many indicators that rings are slowing down and inflation pressures are easing. we have new orders below the 59 and the price index below the 50 line. that means the manufacturing is a

maria: did you see the lael brainard comments yesterday?ould read into those comments as far as her suggesting that at some point the fed backs away but so far we haven't seen the same situation here that we saw in england where the bank of england really saw financial stability as an important indicator to back off, change policy, dagen. dagen: right. and also i'll point out it was lael brainard and also chicago fed president charles evans said his current economic outlook for the economy, i guess it's redundant, it would be appropriate for the central bank to pause rate increases, so they're trying to calm the markets -- maria: with those comments. dagen: with talk, not walk. maria: i thought it was important to point it out. i was reading it thinking what is she trying to suggest here, is she trying to put the pivot idea back in the market. cliff, thank you very much. good to see you this morning. we'll be right back. stay with us. meet a mining company that doesn't mine. advance united's au marketplace platform is ready to disrupt the p

lael brainard says liquidity is fragile in core markets. the fed is monitoring the markets. the question is whether the boe did now is enough. it has been criticized for limiting the bond purchase through october 14th and resume asset sales on october 31st. i read something from pension fund lobby group in england saying they continue those purchases through october 31st you guys were talking about why it will work past central banks intervention works best when it is unlimited and traders cannot profit from opposing that policy that is why you get to a place where the policy eventually works. the bank does it this much and that much. we will take all paper here and that is when it has a better impact. >> whethen it can wash you out instead of betting and betting by doing it this way, the bank of england loses more credibility. they go back on the usuaissues the political party has to change plans or in a situation where thing go haywire there is not a good answer to any of these >> i think the boe credibility bus may have left the station already. i'm not sure they are gett

guy: how seriously should we take lael brainard when she said we are going to be careful not to easeolicy to early, we will not make that same mistake again? i keep coming back to the bank of england, having to 180 on its qt policy. i wonder if we should take the fed at face value when it says it will keep going and will tighten to the point where it is absolutely certain it will not have to do a do over on raising rates. ira: i will prop our monthly piece that we put out this morning and note in february we will get to a real funds rate of zero. the federal reserve has always hiked until the real rate was zero. assuming the personal consumption deflator comes down as economists forecast, we will reach there in february. at that point the fed will be on hold. the challenge is how long do they wait, what is the economic environment in which they will keep interest rates at that 4.5%, 5% level, and for how long? i think they will do that assuming core inflation does not roll over. as soon as you see unemployment rise, some of the things that mike mckee will talk about, as soon as the e

we're going to come back with another stock pick right now fed vice chair lael brainard making documentseve leashman, what is she staying? >> she's saying that monetary policy will need toe restrictive for some kip but see how employment and the economy and inflation are adjusting. it will take some time for the cumulative timing to -- and moderation, she says for monetary policy is only partly realized one of the things he points to, is that inflation, what we call core services, ex-food and energy are expected to ease slowly, so she's paying close attention to the outlook as well as global risks as well. rebalancing in the labor market, and the second half, will be limited, and she's expecting flat gdp growth this yeeismt it's having some effect, not sure, brian, if any or all the this amounts to the sense that main brainard wants to go -- but the touch of being restrictive for some time. brian? >> we look at her as more of the less hawkish, but now you have these comments it's kind of hard to read exactly. we almost need a deet-plot for the fed members, and where they are individually

aoifinn: if you look at the numbers from lael brainard, they're looking under the hood come out the transitionf their tightening is having an effect on the different sectors. they're looking at the retail sector come out housing sector, maybe an area that is looking at the mortgage rates that have doubled over the course of the year. they want to see inflation coming down across the board. they want to see it happening first and it is starting to happen. architect to understand that. -- markets have to understand that. guy: i appreciate that we are seeing it moderating in important areas. the problem is we are now seeing it pick up in other areas, mainly the service sector where it is more sticky, problematic and more difficult to get rid of. isn't that the mission we are looking at -- sorry, the transition we are looking at now into services inflation and that could be longer-lasting? aoifinn: we do have to break open the service inflation and see what is in that. health care, airline tickets, the cost of a restaurant. it is goods and services, goods and labor. labor takes up an increasingly

lael brainard, the vice chair of the federal reserve made comments on v friday acknowledgg the spillovernd another fed official said the same thing yesterday in so many words acknowledging that we're getting to the point where stresses are starting to men fest and you can see it in -- manifest and see in the goldman sachs condition and above 100, indicative of tight financial conditions in the economy and market is looking for signs while it seems to be, again, there seems to be some dissidence with regard to what the fed has said, which has repeatedly been one of a message of tightening. john williams from the new york fed yesterday reiterated the same that he thinks perhaps even though chair powell has said we think we're at the low end of what is the neutral range, john williams said he's not even sure we're there yet so that leave as lot of upside to rates that i think investors have to acknowledge. maria: yeah, i wasn't sure if he was trying to be ambiguous or what. it's had an impact but we're not done yet. i guess you read it as, yeah, we're not done yet. dagen, jump in. >> mark,

lael brainard, vice chair of the fed, said recently that the fed needs to start looking at more data dependent moves. as they look at the tightness being talked about in markets. neel kashkari, he said there is a very high bar for a pivot, for me, he said. the bar is very high because we have not yet seen much evidence that the underlying inflation, services inflation, wage inflation, labor market, that that is yet softening. that is the message from the last jobs report. neel kashkari, who used to be a major dove, is now a major hawk. he is showing why they are looking at what they have to do, when they are going to calibrate, maybe thinking they should do it soon. but you still have to get inflation coming down and you have to have it coming down sustainably. conclusion, maybe they will move gradually towards smaller rate hikes but the end in sight isn't from here. haidi: it feels like the markets overnight are less focusing -- focusing on the calibrate statement and more looking through the cpi print. even though it has to show something really dramatic to move the needle. emily:

be a very difficult period for the next year, year plus for sure, probably -- >> that is what lael brainardy i brought that up, because she was trying to signature, that day yeah there is an end to this i think james. she is not focused on the problem which is inflation she is -- suggesting there is a pivot coming. >> wall street -- some of the reasons you hear so much people so many people claiming the fed has been hiking too much too fast they believe we are headed into a recession there is a convention that recession automatically will cure the inflation problem tom, you could have a recession still inflation problem. the. >> well, i think -- yeah, i think probable that we will have a recession and inflation will continue for some time. that is why the -- recession that becomes deeper that is -- that is why you finally break the inflation, i mean, if you begin if you, get supply-side productivity up all things accomplished, you don't see pause, to take care of the supply-side, in a strong positive way that means the demand side means recession yes you will have inflation in early parts o

. >> we were talking the last hour about jay powell i made an offhand comment and lael brainard.owell has a contract. people say they can't force him out. you can't force him out. he's got a deal. however, as we have seen in the past, in the 1970s, powell is not immune to political or human pressure you can make life uncomfortable enough for him that he may choose to move on on his own it's not impossible he will leave early, is it >> it's certainly not impossible, but i would not want to imply that that is the environment that democrats are trying to create at this point i think they're trying to high late that there are two sides of the dual mandate and the cooling of the job market comes with pain and that powell has been very clear that the economy will have to take harsh medicine in order to bring inflation down, and right now we're in a very sensitive political moment of course, the fed meeting deciding on interest rates just before the election. that's what's top of mind for washington right now we'll see how this all shakes out and whether powell will continue through his

maria: i feel like lael brainard's comments were sort of suggesting -- i know she wants the stimulus is a dove on this but did you read anything out of the comments she made yesterday about that? >> what's going on in the united kingdom with the pension fund, you can start to see certain systemic assets. so the guilt going from 3.8% to 5% in a day, you're starting to see things break. and so i believe jeff gunlak has the right idea and the rate hikes we're almost at the end and the focus should be the balance sheet. maria: wow, we'll see. >> i would make -- maria: do you agree with that? >> you mentioned unemployment. it's been freaking -- they can't get the unemployment number up. if they do, if you look at markets historically the market recovers way before unemployment starts to go up. so i think the big mistake investors are going to make is let's wait for good news, let's wait on sidelines because you know the market will rally ahead of any good economic data. i think that's what you have to focus on right now, like the s&p trades at 15 times forward earnings which means histori

a very important moment for lael brainard, the vice chair, she gave a speech two days ago, talking moreed needing to be cautious, watching the data, certainly we are going to get to restrictive policy, but there's a little note of -- we are getting closer to the point after doing 300 basis points of rate hikes since march, that is a big move, that there's going to be a point where they are already -- where they are ready to pause. they made it clear, they are not quite ready to look at that because he says there's a very high bar to pivoting. he says because underlying inflation, services inflation, wage inflation, the labor market, that is not yet softening. the latest job report was certainly proof of that. it is very interesting michelle bowman, speaking in new york today, said that sizable hikes should be on the table, unless inflation is falling. that still seems to be sort of the core, the consensus. there is and probably some participants. some members are talking more and more. we are going to have to be cautious. the cpi report, coming up. we will certainly -- it will certainly

edward: the idea of the opera came to me on friday when fed chair lael brainard gave a speech where sheis sort of in between a rock and a hard place. i think it is actually between voelker 2.0 and bernanke 2.0. it is kind of a bearish opera. the opera is not over until the fed lady sings a more optimistic tune. she was concerned about fed stability -- financial stability. you said on a show that financial stability is one of the mandates. the question is how important is it? i think it is number one. tom: great. the fact of the matter is, when something changes, any central bank changes. how close are we to the facts changing where we observe it in the fed dialogue? edward: i am totally mystified, surprised that fed officials do not seem to acknowledge, just focusing on the fed funds rate is a part of the monetary tightening cycle is a mistake when you also have qt and a soaring dollar. these are very restrictive monetary developments. i believe they will not get up to 5% on the fed funds rate. i think they have one more rate hike coming in november, and that will be it, because the fin