if we end up with the fed cutting rates on july 31, to me, that would be a signal that the fed is market dependent, not willing to push back on market expectations for a rate cut. i don't see the case in the data. in your history of covering economics and the fed, have you seen this amount of bifurcation between what the fed ought to do, and what they might and will do? >> it seems extreme to me now, and i would add to that, what i feel the fed is not discussing enough is the risks run cutting rates when a rate cut is not necessary. if they potentially push the labor market to an even more overheated state, they are not worried about that from the inflation side, probably not should be. they are not worried about wages picking up from here. they have picked up but not an extremely high growth rates. but there are problems that have happened when the unemployment rate has come down the slope, something they recognized last time. in part, it can relate to some of the financial stability , probably not as prudent as in the past because the labor market is so strong. a lot of the risks come

what markets are waiting for with more dovish signals from the fed chair and the fed policy statement, that this was the beginning of something bigger. jay powell at the press --ference characterize the it as insurance against downside risk materializing. on the other hand, he did not say it is one and done. let's listen. is not theaid was it beginning of a long series of rate cuts. i did not say it is just one or anything like that. what you think about rate cutting cycles, they go on for a long time, and the committee is not seeing that. kathleen: another thing people was the emphasis has clearly turned to global risk, not so much to domestic economy, the growth, which is still there, the inflation miss, still below target. let's listen and read together one of the key statements. in light of the implication of global developments for the economic outlook as well as muted inflation pressures, the committee decided to lower the target range for the federal .unds rate also noteworthy, two fed rank presidents were voters this year who have questioned the need for insurance rate cuts in

those two dissenters, esther george from the kansas city fed and eric rosengrig of the boston fed, they are, i guess, they have dissented, esther george has dissented seven times, back in 2013. she's very fastidious. back then she was worried aggressive bond buying or stimulus might cause unwanted inflation. we are seeing no inflation. fed chair powell was very clear about that. where is the inflation when we have a fully employed world right now here in the united states and the consumer seems pretty confident and is spending. >> we're not seeing the inflation but let me build upon andy's comment, which -- with respect to the ecb, and why the fed will probably move one more time. simply because the dollar being stronger presents two problems. one, stronger dollar's going to hurt our exports and be a negative for overall economic growth. second, a stronger dollar means that our import prices will be lower and that will make it more difficult for the fed to get to its 2% target. so from my point of view, and again, maybe reemphasizing what andy had to say, i think there is a case for the

will do. >> the fed is in preemptive mode. >> does the fed to get in front of the eightball or behind eight ball? >> it comes down to the discussion, do they want to make insurance cuts? what are we ensuring ourselves against? jonathan: to discuss, we have peter tchir, iain stealey, and noelle corum of invesco. i want to begin with you. it is the number one question following the payrolls report. what does the jobs number on july 5 mean for the fed meeting on july 31? noelle: no doubt, the payrolls number was strong across the board but we don't think it means much. we think it definitely reduces the likelihood of 50 bps cut, which is priced in going into payrolls. in terms of the fed, communication will be key. they will either have to deliver a cut with markets that are doing well, but powell seemed to write that off in the q&a section at the june meeting -- or they will have to say they are not cutting but they are credible. also at the beginning of the year if you recall they were , pointing to inflation, lackluster inflation, and we think this is a regime shift for the fed and th

housing starts and the fed's beige book thursday. new york fed president john williams speaking.day, fed presidents jim bullard and eric rosengren taking center stage alongside the bank of japan. still with me for final thoughts, mike schumacher, kathy jones, and matt hornbach. looking ahead to next week, what are you looking for? matthew: clearly, we will be looking at the data, but it is not clear to me that really matters a whole lot to the fed at this point. i think they have made up their mind, or at least the consensus on the committee has. but i would say one of the things that is worthwhile keeping your eyes peeled for are trade headlines. we are starting to see these headlines pop up late this week, with the president of the united states suggesting he was not quite happy with the fact that china has not continued to buy agricultural products as he thought they may have suggested during the g20. so you just have to be attuned to this. the trade conflict is not over. it is ongoing. that is one of the things that is leading the fed down this path. jonathan: kathy, looking

he wants the fed to go 50. the president also complained that the -- dollars hitting fresh two-year highs, it's done nothing but strengthen, so kelly, to those people who think they know how to manipulate a currency, i would say guess again. >> i would echo that steve, no dot plots, no projections today, right we only get the statement? >> you only get the statement. you get the dot plots four times a year if you'd like it more often, kelly -- >> no. >> perhaps i can ask the chairman. >> feel free, but my guess is you have more important things to say i'll say kelly to we-- wants me dots, and he'll say wear polka dots >>> judy coronado is here and andre is head of -- ceo of zoey financial. julia, you're expect a quarter-point cut? >> yes, i am i'm also expecting them to end balance sheet reduction at the end of july and then as steve subjected, leave the door wide open i believe the base case is two rate cuts for the fomc, now and again in september, to address persistently low inflation and downdied risks but

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the fed characterized u.s.as solid and said that the labor market continues to strengthen but the fed pointed out that wage growth has remained moderate and that inflation has been below the fed's 2% goal this year. in the report, the fed said that it remains firmly committed to its inflation objective. here at home, the fed is still forecasting more moderate growth during the second quarter and that the slowdown in business fixed in-depth could be persistent internationally, the fed said that growth has stabilized during the first half of the year, albeit at a restrained pace it also said that international financial conditions were supported by accommodative communications by major central banks. now, as you said, this all comes from the fed's semi-annual report to congress fed chair jay powell will be testifying on the hill next week there was a special section in this report on trade the fed found that tariffs lowered u.s. imports by about $70 billion. it also said that higher tariffs are having a material

in the fed?> don't you think he made that point. >> i think it is clear to everything how he feels about the fed. >> does he have a nickname for jay powell >> no, hasn't developed one for jay powell. >> and nancy pelosi. where are his nicknames. >> sleepy -- joe. >> what would you do with powell >> powell? carry grant. he doesn't usually do that some of his nicknames are the kinds of things where if you went home your mother would take the hair brush and smack you and say wait until your father gets home. you are lucky you are only getting the hair brush my father would do the five fingers. >> d ram channel checks looking better. >> using a $31 target. boy, did he have to eat crow, with must starred, using french's i think that micron is going to be up. that is a bold call. the pe is five he is saying it is a short-term thing. he has been flummoxed. he had to make a move. his price target was too low he had to make a move. it is a good day to make a of mo mxp making a comeback. industrial, indust

what you want at the fed is stable prices. somehow the fed stabilizes the economy is nonsense. fed is the one that caused the great recession in 2008 and 2009 by building up these huge bubbles in the housing market. so, the fed hasn't been the anecdote to recessions the fed has been the cause of recessions >> steve, what takes you to the white house today and to contessa's point, were you correct that today europe hasn't done any currency manipulation they simply made some new appointments in the way that he has. >> i don't think we should worry about what these other countries are doing with their currency. we should worry about what we're doing with ours. the dollar has been slow in my opinion and i think that is hurting growth a bit if you have the rate cuts that i want, i want to see a 50% rate cut reaction i think you'll see the dollar normalize and that's the best way to get back at the chinese, if, indeed, they are man manipulating their currency. >> sarah, i have one other quick question going back to judy shelton and some of the comments she made about monetary policy

will be closely watched. >> that's all fed, fed, fed related.r key things are you focused on >> traders are also very closely watching negotiations with china going on today we saw a headline again that china is now insisting that if the negotiations are going to come to a conclusion that tariffs will have to be stripped away that's a major obstacle going forward. however, i think traders as long as the u.s. and china are speaking, perhaps tweeting, and there's open lines of communication going between them that's all they need for now as far as s&p 500 earnings are going on, earlier this week we had a dismal picture painted for s&p 500 earnings going forward so one thing i think trader will be looking at is forward looking guidance and what the rest of the end of the year looks like >> mark, thank you very much let's sends it over to mike santoli. >> the summer within internals of the market getting blown around i highlight this because it's still slightly to the negative, slightly more stocks down on the new york stock exchange today than up.

coming up, it is fed decision time. we count you down the fed's announcement.estors expect the first rate cut in a decade. this is bloomberg. ♪ jon: this is bloomberg markets. shery: we are counting down to the fed rate decision, what is minutes away. it will be followed by chairman conference.ss istty much 25 basis points the moment. the key question is, what happens next and whether or not it will be sequential rate cuts. is it a one and done? carl: former fed president dudley was saying one and done. the old pringles potato chip slogan, once you pop, you cannot stop is going to be the more pressing issue for the fed. i do not think of one cut will accomplish what they are trying to achieve in terms of on andrting the yield curve weakening the dollar marginally as the rest of global central banks are moving on in easing course. i think we will be seeing another rate cut. the fed is going to try to talk a tough line to manage expectations so the market does not run further in the direction of 3, 4, or more rates in reductions. jon: he started doing some great

the fed is only the third worst.other boj and -- >> the bank of england, we passed that era in history >> what do you mean, jim >> bank of japan and ecb have killed their,ive bond markets. they would be under indictment if the market was a human being. i'm talking about aty tiff death, sarah the central banks have killed the risk sensors of these markets. if that weren't enough, we have the two leading lights of wall street, layry fink and rick reider saying the ecb really ought to buy equities. how about price discovery for a program? how about price discovery? implts appointing a -- >> you're not a fan of the central bank buying stock. >> i'm not fan of that point of view >> so it sounds like you don't agree with the rate cut -- >> i don't agree with the regime i have no opinion on 25 basis or points what i emphatically have an position on, is the this improvisation of conducted by people who -- for example, if chairman powell had only said this is our policy, now let's look at some of the perhaps unintended possib

the fed starts cutting rates in the u.s. curve stevens, why wouldn't you prefer owning a 30 year treasury when you can buy it with the currency versusnd pick yields europe? you're going to do that. beene european rally has unbelievable at this stage. i would not be jumping in there in the least. we are seeing better data. there is nothing to be had. aboutnot what is amazing this week, the data has gotten better. frenchld think that a ipc would move the market. the data in the u.s. is more resilient. this is what strikes me as odd. the slowdown has been going on for 12, 18 months and the ecb capitulates and the federal reserve turns around and says, maybe not transient. aoc, jay powell all agree that they should throw the phillips curve under the bus or in there are some people thinking that that is to consensus. maybe i need an upside call, a call option on the inflation story. are we getting too complacent? >> i think so. advocatingn long-duration since late last year and we are back to more neutral stance and one thing abo

so i think it is pretty good data and, looking at the fed next week, it will be hard to see how the fed will cut by 50 next week. jonathan: we have to work at it means anything to the fed. bob: if i want to nitpick, i could say the revisions brought gdp in 2018 sub 3%, 2.5 at the end of the fourth quarter. there is some slowdown there from what was expected. but marilyn is right, a solid number. the fed could not care less. that is not their issue. they are concerned about inflation expectations. george: if you look for the inflation expectations, they look like they have bottomed and picking up. we take away from it that it was relatively healthy numbers, the consumer looking pretty good. many of the fed's targets are trending in the right direction. as my colleagues have said, it is difficult to justify an aggressive move, but we will see how they comment around it. jonathan: gdp today comes in at 2.1%, on the money in terms of the forecast from the federal reserve itself for 2019. you said inflation looks like it might start to pick up. how so? george: core cpi looks like it will bot

it is all about the fed. interesting how the market moves with how the fed is the economy and what they might do. the movie theaters are full of films about superheroes now. i think the market ceased the fed as guardians of the economy, and they will use their superpowers to avert this global economic slowdown, but i don't think a few rate cuts will make a difference, 25 or 50 basis points, at the end of this month. this is probably a mild economic downturn and global scope, and there is little ammunition by other central banks to add to the u.s. while the bond market is pricing in a realistic probability of a slow down, stocks have gone the may b inection and and shery ahn: getting -- may be in for a surprise. shery ahn: jp morgan asset management in april told people to load on risk assets. take a listen to what he had to say. >> all the way down to zero. i think that is where we are headed over the next couple of years. we have had the recovery. it is coming to an end. now the central banks are falling int

the fed bringing rates down mitigates that once the fed opens the door to lower rates, stle to hathey hav reason to stop cutting those rates. >> peter navarro talked about capital controls, even if that's one extreme version of this, are there better tools to target the dollar other than cutting interest rates which has all of these side effects >> the tools most immediately at the disposal of the fed is the monetary policy tool the other side is on the fiscal side, stimulus or balance sheet. >> do you remember, there used to be a time when we had coordinated central bank action to deal with exchange rate abnormalities. where is the coordination? this is the problem of intense nationalism all over the world we work better as a global economy as opposed to fighting each other over currencies >> sounds like terrific potential solutions, but here we are in this situation. when you say it's time to buy equities, are you worried about that bubble and asset prices and how do you see the bubble ending >> i don't see a bubble right now. that's part of the issue given where rates are, inflatio

in terms of the fed, communication will be key.hey will either have to deliver a cut with markets that are doing well, but powell seemed to write that off in the q&a section of the june meeting. or they will have to say they are not cutting but they are credible. also at the beginning of the year, they were pointing to inflation, lackluster inflation, and we think this is a regime shift for the fed and they will continue to focus on inflation. the market has been challenging them on that. they started pricing in cuts way before trade tensions were even a discussion, pricing them in in march. that is because inflation has been falling year to date. jonathan: iain stealey, three -- rate cut expectations are coming back a little bit after the payrolls report. to what degree do you think it should shape the fed's next move? iain: a don't think it will change july. 50 bps is off the table. i think it was off the table earlier this week post the g20. the fed is being clear, they think the economy is slowing. q2 data looks like that is th

fed should remain independent?o knows, maybe he would cut interest rates by a full point is that really necessary >> i don't know if it's necessary or not but you don't want a fed that's just baiting the president all the time i mean, that's not the purpose of an independent group. but what you find happening with the fed is they have followed interest rates pretty much you know, when interest rates started going way down they lowered the discount rate and followed the markets and they have not done that recently. we have the ten-year bond now at below 2% i don't know what it is this morning. >> it's 2.02 but your point is taken. >> yeah. in that range. and you know, it was 3, that's when they had the discount rate. we had a large fall in interest rates and the fed hasn't followed the market which it almost always does and i believe should do. it should follow the market and it's not done that and i think they're just baiting the president to be honest with you. and he's taking the bait and biting back. >> art, tha

the fed worried. charles: they said as much, they said as much recently. >> i understand but i am absolutely certain of the fact as long as there is not inflation those rates are really, it is inexcusable not to compete against the europeans, the chinese and move those rates accordingly to a competitive basis. neil: lou, that is assuming then that the federal reserve changed its directive or goal to say we want inflation. our goal is to get a little inflation. i understand when it comes to inflation and all that, that is a good goal. i get it. if that is now its new directive to beg, hunt, claw your way to get a hill inflation by hiking or cutting rate to sort of force the issue, be careful what you wish for? >> let's not forget the jobs number is out couple days. we have the pmis, they are watched so closely. that is where the weakness in the economy has been, manufacturing and housing. you could argue businesses have stopped putting too much money out there in terms of cap-ex since cap-ex declined i

the fed is divided. got a camp that thinks that in this global slowdown are enough to warrant may be a 50 basis point rate cut, but the other half of the fed sees 2% core inflation in the u.s. and says, what are we worried about? let's say that ammunition for later. i think that puts powell in the box today of saying nothing more than really was in the statement. david: have they put themselves in a corner given where the markets are? now one defending right data out of the markets rather than the economy. data not so much what is going on in the economy as the markets telling that they have to cut? jeff: that's right. have nothing to dissuade the market from the idea there will be a rate cut this month, and perhaps some additional rate cuts will follow. the challenge with that is that it really doesn't give .hem a lot of flexibility we could see some potential resolution on trade that would change things. think the market here has put far too much confidence that the fed can alleviate all of the pressur

he was an economist at the richmond fed, a season fed watcher.ked the fed is taking an action that is not defensible, and that jay had a tough time giving a defense of it at the fomc. the fomc is clearly suffering from anxiety, but neither the policy statement are the powell press conference provided a compelling case the rate price stability rest these issues. when michael mckee estimate -- asked him about this, jay was may be struggling a bit to answer. let me share you with something jim bullard told me last month when i asked him how about what a rate cut would do for inflation. he said at least it will show with the fed is serious about moving inflation higher. he was in the camp that wanted to cut. in terms of future rate cuts, september rate hike not ruled -- not ruled in, not ruled out. intrade talks will resume september after meetings and shanghai ended with no progress. forced sides discussed technology transfer, ip rights, and nontariff carriers. the white house issued a statement saying the talks were constructive, and that washingto

kevin corke at the white house on a fed chief move. >> no matter what the president said, the fed chair made it clear today he's not going to step boy from this job. he says i'm going to serve each and every year of the four-year term on the side to side otherwise. that's his word that despite the criticism from president trump, the man who appointed him, and you may have seen this. they fed chief was asked by maxine waters of california if he would heed a theoretical call by the president to step down. >> mr. chairman, if you got a call from the president today or tomorrow and he said i'm firing you, pack up, it's time to go, what would you do? >> of course i would not do that. >> i would not do that. powell stating he has no intention of leaving, no intention of being forced out or leaving other than on his own accord. white house officials say that powell's job is safe for now. >> there's no effort to remove him. i will say that unequivocally at the present time. >> did you notice what larry said, "at the present time." got to love larry kudlow. last month the president said he didn'

obviously, the president putting pressure on the fed as to complications, but the fed needs to stick to its guns as an independent bank. vonnie: what is your read on what happened with williams and clarida? was there some mischief happening? lack of genuine understanding of how the markets would take these statements? ethan: i think the problem with theyed is that right now don't understand when somebody asks you a question about this idea of aggressive policy, they are asking you should you go 50? that is the way the market interprets all these aggressive actions, even though going 25 by historic standards would be aggressive. they are answering the question in a way that is confusing to markets. is aber, john williams leading academic expert on monetary policy. he has written a lot of interesting stuff. when he was at the san francisco fed, he tended to talk a lot about his research. sometimes it was not clear if he was talking about it as an academic or policymaker good that is what just happened again -- policymaker. that is what just happened again. you want tosaying be more agg

fed chairman jerome powell suggest the fed cut is certain this month. traders ask, can he stretched to a half point move. deutsche bank in the crosshairs, u.s. investigators with the malaysia scandal investment fund. the tale of two listings. budweiser asia offering is set to price later today. less than half an hour until the start of european equity trading. ftse futures look like this, positive, as if we will get more out of the minutes or powell comments we heard yesterday. storyle catch-up, the before that session is a positive one. let's see where we are on the asian session. a strong session, fully pricing in everything we heard from paolo overnight. the expectations for july have an cemented. the jobs report on friday did not change the fed thinking on what should be done with insurance cuts against the slowdown globally. higher.arkets going this is the fx picture. the japanese yen on the rise. the dollar retreating. let's put up the other side and show the fixed income side. there are bigger questions about what happens to sovereign trade if we

if the fed starts cutting rates in the u.s. curve start steepening up, why wouldn't you prefer owning a 30 year treasury when you can buy it with a currency hedge and pick yield versus europe? of course you are going to do that. kathy: the european rally has been unbelievable at this stage of the game. i certainly would not be jumping in there. seeact, you are starting to a lot of it better data there and there is nothing to be had. isn't that what is amazing this week? the data getting better in europe. eurozone data is also better. the data in the u.s. is a little more resilient. this is what strikes me as odd. this slowdown has been going for 18 months, and finally the ecb capitulates? all larry kudlow, agree they should throw the phillips curve under the bus. surely there are some people thinking that is a little of it to consensus now. maybe i need an upside call, a call option on the inflation story. are we getting too complacent? kathy: i think so. we have been advocating long-duration since last year. back to a much mor

go, what thatb looks for the fed.e are looking at what is priced into the market in terms of rate cuts for 2019. as you can see in june, we're looking at three cuts for the year. that has been way pulled back. the markets now looking at two 2019. cuts price and for i want to look at individual movers we are at. we had samsung earnings worse than expected. they saw earnings cut in half entree tensions and oversupply with the market. all the kingmakers fall today. analysts over bank of america had products for intel. they are facing a crucial second half of the year. china is a headwind but you need to take a look at the pipeline for these companies as they enter h2. taylor, great job. thank you very much. is our guest joining us from los angeles. post the payroll number, do you think you are changing any of your views on allocation ? while get through where you are as anything has changed. komal: we are coming to the private stages of the bull market and today's job market does not change. clearly, if you are a traitor

if the fed is not your friend in the next couple of weeks where we get all of the feds, investors are wondering whether there's a major draw down. the market in front of us has earnings that will be weaker, the market knows it, and it knows in the context of bond yields 70 basis points lower that has a lot to do with equities are that's the big question. >> yeah. >> you know who would be a great guest at this point? >> jay-z, not the one married to beyo beyoncÉ. >> it would be great if he were here. >> as investors eagerly await jerome powell's testimony tomorrow, another guest says don't get excited. the market usually gets it wrong. let's bring in jay z. >> he likes the nickname, you can tell. >> general jay z.. jay z. owes you. you say a 10 or 15% correction from here is realistic >> i think so. >> what is going to precipitate that in your view? >> it is that markets are more dovish on central make policy than the fed is. the markets went from five months ago pricing in two hikes as of last week pricing in three cuts you know that the market is always bad when it comes to predictin

performance as fed chair, but how did chair powell do in the cnbc fed survey? mr. liesman knows. steve. >> yeah, i'm not doing the grading. our panelists. about 40 or so economists and fund mangers in the survey, giving powell a b-minus. you can see how this compares with the final grade of yellen, a b-plus, and bernanke at a straight b and you know what, powell had to navigate hikingerates and then going to hold and then going to what looks like a cutting modality here, mode for the federal reserve. let's look at where they think he's good and bad. here are the best grades that he got. regulatory expertise, market knowledge, and transparency, of course, powell gave us the press conference at every meeting. but here are places where he's not seen as quite as good. economic expertise communication, and economic forecasting are the worst ones he has the fed's communication overall, not getting the best marks take a look here 46%, the biggest one so much confusing. 13% say very confusing put it all together, do the math, 59% say somewhat or very confusing, just 41

cuts a few times why do a deal before the fed cuts >> that's true >> now manipulate the fed?ousing and then get a trade deal why did a fed deal before -- >> you think the fed is supposed to be reacting to the trade deal >> they told us. believe it or not, powell told us that last month, yes. >> isn't that terrible >> it is what it is. i don't want to judge whether it is good or bad. >> the fed is supposed to wait for the trade deal, the trade deal is waiting for the fed to move. >> there is other reasons to cut. inflation has been undershooting. a variety of reasons why you could cut. not just one factor. >> because of the productivity mystery that still no one has solved, right? the global growth is slowing altogether why? trade. trade. it is undercutting that on top of everything. >> inflation is undershot for 20 years. basically. the average is below 2% over 20 years. that's kind of been the long run. i will say on the fed, i don't really like the idea of the fed validating what i would view as a questionable policy, which is the tariff situation they should have their eye

i encourage the fed to be independent. applaud chairman powell for that but i am also seeing a fed that has begun the deregulation of the financial sector as it they have had a collective amnesia about what happened 10 years ago. i have a mixed view of what the fed has done but i am hopeful that with interest rates, we can grow wages with moderate and low income people. issomething we have wondered there is a lot of talk about problems but not much that the fed can do to address them. inequality for the middle and lower income worker. is a lower rate going to fix that problem? sen. brown: i think it will create more economic activity. generally over history, it has a mandate of fighting inflation and lowering unemployment. toward lowering inflation for much of its existence. powell'sful from jay comments today that they understand how important it is that it's about employment as sincer more particularly we have seen a subdued inflation rate over the last several years area that makes me optimistic. that doesn't mean congr

look at philly fed manufacturing report.anufacturing getting a bump after seeing a static hold for the remainder of the year. we don't know exactly what the economic picture is right now. nela is right we need to look where the economy is going. where the economy is going might be very different where the stock market is going. the fed needs to be sensitive to that. charles: stand by for a moment. we have big news. shares of boeing are up huge after the airline builder reportedly will take $4.9 billion charge. boeing saying the calculations are based on an assumption the plane would be up in the air sometime during the fourth quarter. kristina partsinevelos is live in the newsroom with more details. kristina. >> charles that is an after the-tax cost. that will be one thing in the second quarter. the reason we're seeing share price rise. seems like boeing is relatively confident. they must know something the fact these planes, these 737 max jets will be up in the air by the fourth quarter. boeing alluded to the fact there wou

those are the kind of communications the fed can do.t the same time, the president and the white house can really focus on getting policy more clear in the minds of business leaders and less uncertain >> finally, glen, you know, since the blackout window began, this conference board number was pretty incredible, adp solid today, core pce. i just wonder when peopleargue that they've locked themselves into this cut and that they need to ask themselves how that happened, what do you say? >> well, i think if the fed were to make an argument for a cut, it would be less about current u.s. economic conditions for the reasons you just said, but more in terms of global weakness in terms of central bank trends outside the united states and their effect on the dollar, foreign exchange value of the dollar, and on the fed's lack of hitting its inflation target i think that's a better argument than evolving data dependence on the u.s. economy >> lastly, glen, and i ask this because of your position within the financial sector as well and some of the

i think that is just what the fed needs.onathan: it all hinges on where you think we are in the cycle. frances donald weighing in on all of this -- as of july 1, we are in the longest economic cycle in modern history, which means you have to pick either we are headed toward near-term recession, or we are in a super cycle. gershon, which one? gershon: some of those people calling for lower rates are those that called for 3% 10 year a few years ago. this is the only industry where you can be wrong again and again and people still want to know your view. i think the reality is, what europe has taught us is there is no lower bound. if equities are weak, if the economy is weak, we can go a lot lower, even negative. on the other hand, i'm not sure we should believe this will be the equilibrium rate of inflation. 1.5% over the next 10 years. rates probably should be higher in the longer run. lisa: it depends on how you interpret bob michele's call. he said rates would go to zero over some period of time, which is probably true. in

shares of fed ex up half a percent.moving. >>> it's time for the top trending stories rahel solomon is here. get us up to date. >> goodnews for consumers. big win for consumers, in fact, for all of the robo calls, at&t is the first wireless service to automatically block the annoying calls without requiring customers to block in. all new at&t customers will be enrolled in the service and existing customers who want it can. i'm not an at&t customer but my contract is up this might be enough. >> i was just going to say -- >> this might be enough. >> i feel like these things are so annoying. especially in the last week or so i have had so many more robo calls by my area code, by the first six digits you know that's a robo call but it annoys the heck out of you. >> so irritating. >> at&t is going to help >> maybe that will get some subscribers switching. >> maybe it will get friends when they said i'll be there for you, they weren't talking about netflix. they will lose it. they're moving to the hbo max. this is the set blo

lauren: happy fed day.hat is important for the fed to get across today is they are closely monitoring the situation, that they are ready to move if the economic data continues to deteriorate. alix: it feels like we are set up for a disappointment. do you buy the rumor, sell the news? what is the strategy over the next when he for hours? -- the next 24 hours? kathryn: it should be interesting because what isn't priced in is if the fed gives some surprise and talks about balance sheets, if they are going to stop the roelofs six sixs early -- the rolloffs weeks early. i think the fed is going to have to rein in expectations. the markets are overpricing the cutsof dramatic fed from the current levels. david: is there any way for them to do that as a practical matter off?ut sending the markets the markets are so invested now in at least three, maybe five rate cuts in the coming months. lauren: i think what the fed needs to communicate is that they are monitoring the data, that they are willing to act. it is a di

from the new york fed, the new york fed also has a recession probability infection. several people have pointed out for the first time in a long, long time that has popped above 30% likelihood of a recession in 2020. now, whenever it gets up to 30%, it's had a pretty good history of calling it. we have had recessions without it getting there, but whenever it's gotten there, we've come pretty close to a recession. now, part of that indicator has to do with the yield curve so powell could take care of that if he cut rates the right way. i would suggest to you that powell is not only under the influence of the market, which he clearly was i mean, he backed up immediately. and the other thing to note is how fearful the fed is usually that statement would come out at 10:00 when he began testifying they put it out at 8:30 in the morning, an hour before the market opened. they wanted to be sure that everybody read it, everybody discussed it, and everybody discounted it. >> art, one of the things that i think is interesting here, and i know the indicator you are talking abou

on days where the fed has spoken the fed has been driving the multiples.f we see the fed meeting market expectations, we should expect risk assets to rally strongly for the remainder of the year. if you have got weak earnings you only have a 25 basis point cut by the fed, we'll see a much weaker move ahead for the second half of the year we're at a crucial time right now which will guide us where assets are going for the rest of the year >> we were showing some big companies to report earnings next week. we'll see a heavy focus with companies on international exposure whirlpool, amazon, alphabet. talk about how the perspective resolution on trade tensions plays into this or whether we'll see a continuation of this standoff with china. >> it's interesting you say this with those larger companies, the focus will be on guidance. one of the reasons is for economists it's difficult to measure what the impact of this trade war has been and will be so there's a continued second round effect on sentiment which will impact business and investment that's why there w

it will be hard to selloff if the fed goes 50. jonathan: given what has happened in europe, i find it fascinating the rally we have seen, the demand you see for longer dated are peripheral debt. surely we have already had this move. what are your thoughts on the matter? matthew: if you are willing to go to spain and italy given the problems those countries have the party, or has adding to it, -- added to it, and a bit of realized inflation, seems pretty good. jonathan: maybe the party is just getting started again, not ending. the party ended for emerging markets and china 18 months ago. that is what is stunning about all of this, the timing of the easing we are set to get after a significant downturn in economic data. how late are they? matthew: central banks are very rarely early. they tried to be, unsuccessfully usually. that is why we recommend investors positioned their portfolios with the steepening rise of the yield curve. if they are too late and they actually have not done enough to easing, this yield curve will steepen m

how divided is the fed? kathleen: it is not that they are not with powell entirely, a lot are not sure yet how they are going to vote. look at the president of the richmond said. he was at a conference in idaho said herepared remarks does not see inflation expectations as a trigger for a rate cut. that is not ruling out. he says the fed does not need to "step on the gas." does that mean a 50 basis point cut or at all? on rateshe message from powell hasn't changed since the june meeting. >> he said the same thing yesterday we said in our last memo, wages we don't have forward guidance -- which is we don't have forward guidance anywhere in the memo. we are watching the data and we are looking at upside and downside risks. at this point, they are more tilted to the downside. kathleen: sounds pretty middle-of-the-road to me. the memo he is referring to is the policy fed statement at the end of each meeting. another official is not sure there is a need for a july rate cut, because employment looks pretty good. in

clearly there is a slowdown underway, and with inflation so much below the fed target, i think the fed feels like it has the room here. basically,ee option, to take a few rate hikes back and see what happens. vonnie: after this one, how much do we need to know about trade before the fed can tell what is going to happen to the economy after that? jurrien: clearly you are starting to see trade seep into the earnings numbers, or at least the earnings guidance. that seems to be every company's favorite thing to blame if they are missing earnings. it could be a different story every quarter. but you are seeing the guidance, and it makes sense. if you look at the whole brexit debacle over the past three years, we saw something similar. the u.k. stock market in those years did ok. earnings were actually up a reasonable amount, but the market valuation went from 60 pe to 12 pe as investors got tired of waiting and started sitting on their hands. companies will take a wait and see attitude. they don't want to take any risk in front of this uncertainty, and eventually the market gets because get

nejra: the round off the fed speakers, the minneapolis fed said he saw a cut in june to remake inflation. >> let's look at the data, let's look at the wage data and until we see wages pick up, we know we are not really at full capacity of the u.s. economy. nejra: joining us now is the global economist at capital. how convinced are you buy the data yesterday on the cpi? i know it is only one data point but we could see an increase in inflation in the second half of the year? >> the view of the second half of the year, we do think the u.s. inflation will trend higher because of the higher energy prices that technically push the year on year cpi up but also in terms of core inflation because of the tariffs and the stronger we doy from powell -- expect inflation to trend higher but it wouldn't be a threat because it is just core inflation to three percent to 4%. beon't think it will worrying, the level of inflation despite being higher in the second half. >> it seems this week from the comments from jay powell that he seems determined to message to the market to send the dovish message that

the market is paying a great deal of attention to the fed but it has its arms around the fed in understanding right now. we are pricing 25 basis points in terms of the cuts we will see this month. where is the biggest uncertainty? the fed policy uncertainty is elevated but the real policy uncertainty, and this is what the market is struggling to get its arms around, is what is happening with trade. you can see that has spiked rapidly over the last month. we have seen a huge pick up since the beginning of the year and that is continued in the last month and we are pushing up to levels we have not seen since 1995. why we will spend a lot of time talking about the fed, the market to a certain extent has a handle on that. it is figuring out how to understand the pricing around the fed. it is probably related to the trade narrative but the biggest imponderable for the market is trade and that is where i suspect a lot of people will be focusing on once we get through the jay powell testimony. vonnie: that is also a fascinating chart. you both have given me a difficult decision. that i cannot sit do