fed officials at .4%.which interesting, in terms of the longer-term rate, the expectation is .9. is it the guide and in no way it locks these fed officials in. let's look at the market pricing, there is a disconnect in terms of the dot plots in the forecast of what the markets are pricing. markets are pricing and more. it's not the first time that happen. markets are pricing in about 70 basis points of cuts, by the way, by the end of this year. around 66 basis points the last time i checked, including 150 basis point cuts. this is the projection in terms of where you get the dot plot projection in terms of where you get to 4.4% in terms of the september move. the markets are disconnected from the dot plots. does that matter? to what extent will that close at all. does the fed need to address that in its communications going forward? this is the pricing coming through in terms of the market expectations on this, let's have a look at how the markets move. it was a choppy session, risk on right now across asi

they are trying to digest what the fed is trying to say. the fed is trying to say, of course we are going to remain data dependent, but we might not be as aggressive as you might think. that will give some repricing of expectation. that gives a bid for the dollar, especially if rates are not going to decline as fast as the markets have expected. so, of course, in the meantime, what's been one of the biggest outperformer's has been the yen. and that, of course, is suffering the most on the back of what we have seen from the fed. paul: bloomberg mliv strategist mary nicola there. interest rates exert a substantial influence on mende dynamics, so let's get a view -- m&a dynamics so let's get a view of how investors should navigate dealmaking. amit dixit is here, he is ahead of asia at blackstone private equity. the fed easing cycle kicking off. do you expect that put a bit of life under m&a and fundraising? amit: absolutely. you know, at blackstone, we are in our prime, the activity has been very strong. and this interest-rate easing cycle hel

first is the next fed meeting. the expectation is for at least a 75 basis point cut through the end of the year. whether that is 50 at the next meeting, the market gives a nice edge and expectations are split. let's flip up the board. you have to remember the 75 basis point expectation was 100 basis points worth of cuts to begin the month. the changing set of expectations and the narrowing of the spread has lead to less market volatility. take a look at the index. the white has come down to a two month low. that is after we got more data from the federal reserve. there could be some more as it goes. columbia university professor has spoken at the bloomberg new economy forum in new york about the fed's big rate cut. >> i have been a critic of the fed for raising interest rates too far and too fast so i welcomed cutting it back. we should have a market interest rate over 3.5%. i would like you to come down more. sonali: joining us to discuss is mark cabana from bank of america securities and meghan robson from bnp. t

the biggest thing is what the fed should do versus what the fed will do. i think we all know that they tend to be a little late to the party when it comes to raising or lowering rates. it's not that i don't think they should go, i just don't think they're going to. jay powell tends to communicate and be a more conservative person, so i think when it comes down to it, when the decision is made, 25 basis points is here. i think what they'll do for ward guidance is communicate what they think. i agree with claudia that the labor market is the most important part. if it comes to fruition that the labor market is, indeed weak and weakening quicker than anticipating, they can always go faster and stronger in the future. also, they have other tools that they can do to lower interest rates. so i don't believe that this is a debate on whether the labor market is weaker or stronger, it's more about what the fed is going to do to be safe. they're going to take the safe play today, 25 basis points and let the economy -- given a little more data, and i think by the tim

the fed has two mandates.he first is to keep inflation low, right, and the second is to keep unemployment rates low. they're accomplishing both of those things and the market's at all-time highs, and so that in my definition is a soft landing. they have accomplished what many have thought was something impossible, something that's only happened twice in the last 70 years, and so that's what they've been able to do. you look at the numbers. 7% of inflation is down from what it was. >> you're keeping us in suspension. what's the word of the day? you didn't tell us. >> stagflation, you do not want to have it. it means your pricings aren't going anywhering either up or down, and that's a killer to the economy and the markets. you don't want it. stagflation is the word of the day. >> it sounds like you're concerned about something that jeff gundlach is also concerned about. he was speaking to scott wapner yesterday. i want to blake the sound bike and let me see if you agree or disagree with jeff gund lam's stake. >

why would the fed? if the fed is not certain of the size of the first cut, it is unlikely to have confidence in the magnitude of the full campaign. are we expecting too much from the federal reserve? lisa: clarity? yes. i don't think we will get the same kind of clarity that people have been dreaming of. you do get a better sense over the balance of risks, they need to get a descent, maybe even from a potential governor. for the first time in 20 years we are looking at a fed that is has consensus for so many years that now suddenly that can be used as a tool to give more uncertainty around the edges that we can dissect for the next couple of months. jonathan: at 2:00 p.m. eastern time we have the fed decision. 20 minutes that after we have gone through the statement, we have a news conference with chairman powell. after this one, you have to wait until november 7. two days after the general election in this country and dance could be different by the time we get to november. on the campaign trail it has

former fed president of st. louis james bullard told cnbc the odds of a 50 basis point cut overblown so some informal fed talk seeming to affect plus going into the actual meeting. attempt to sectors, september is bad for the s&p 500. what we are seeing this september is rotation. you can see on bottom consumer staples, they have been slightly higher but these are among the best sectors on the month. utilities, real estate and discretionary. what do utilities, staples and health care have in common? high dividends. when yields go lower, these look more attractive. what is interesting is tech has not gone along. the nasdaq 100, the magnificent seven peaked in early july. the nasdaq 100 down 6.4% over that time period. in times past, lower yields, cheaper money would have good for big tech. some of the value oriented sectors hitting a boost as the money comes out of big tech. sonali: the question on wall street's mind is how big will the fed go. 25 or 50 basis points. here with some prominent voices told us this w

charles: so my next guest says it is a close call of the fed but it's likely the fed policy will be amal, front-loading want to bring in chief economist gregory daco. so it's interesting because you do layout three reasons. this is not what you necessarily want them to do. it's what you think the fed will do and you said they are going to go gradual, in part because most fed officials favor gradualism. >> yeah, i think in general fed policy makers have been talking about a methodical approach to easing monetary policy. go slow if you don't know, excuse me, the impact of monetary policy. what we're seeing in terms of fed chair powell is openness to more rapid rate cuts. front-loading rate cuts and that's what governor waller has also said. charles: we saw that going into jackson hole because everyone who spoke before said gradual, gradual. get to jackson hole and the word doesn't come out of powell's mouth. what do you think is driving jay powell. i go back to 2018 hike four time, markets falling apart. something happened, the ghost of christmas past over the holidays because he came b

at some point, you fully priced in the fed.e to narrow and the ecb has more to gain and catch up and increase that pace either going every meeting or going with 50s here and there, that gives you the risk-reward before the equity performance where there is probably a greater ability of the u.s. equity performance next year regardless of who wins the election. if the fed is easing more, all these things start to say euro is probably looking a bit dovish. especially between now with the risk premium with the u.s. election, you move away from the euro. >> the euro-dollar at this stage is 1.11. what is the rfk heisk here acro europe? when you think about the protectionist tones we are getting from europe which is different from all these years, potential tariffs on chinese evs and other sectors, too, what is the outlook for the euro-u.s. dollar? >> it is all about prote protectionism. if you look at the plans in the u.s., they are more aggressive. most of what you are getting at in europe, look at the evs. a lot of the other areas

butbut truman badgered the fed. nixon badgered the fed. this is a long-standing tradition.adgering the fed. at least he's out there and says it, right? maria: and we have confidence that knows what he's talking about at least. >> no, we do not have that. some of us have that confidence. maria: some of us have that confidence. >> here's what he said that's interesting. he said i'm a businessman. you know, what he might have said, i lost enough money to make the average american man go you out and shoot himself, i understand risk. i have money risk. i having to say about interest rates and credit. good. that's true. right. maria: fine. >> and governor waller with all respect and he's a yale university man, with all due respect, he has not that that experience. trump has a tactical financial and business experience and insight and so he wants to have a say. yeah. it's a free country, right? maria: everybody wants to have a say. everybody has opinions. but look, i want to get your take on debt. you've talked about this, written about this. we don't talk about it enough. but $35

our road map begins with the fed

the fed is working for us.he fed isn't trying to work for us, but the fed is working for us. >> do you agree with this line that small caps tend to outperform in the first six months after a cut? >> they do. but i find the small cap way that hedge funds get involved, which is by an index, it is foolish. got to pick some small caps that are actually good. and those are hard to find, carl. so, yes, these are supposed to be working. what they'll do is buy a basket of them, big institutions, because you can't pick and choose the small cap. they're just too tiny. they would overwhelm every small cap. they would own every small cap. >> meantime, you got b of a today, subramanian comes out talking about old-school economies, utilities, industrials. she points to the biggest boom in u.s. manufacturing in over a decade, the two million jobs that alone brought in. >> we know this is true. i still think the strongest part of the economy is construction. some of that is the doubling of the datacenters. we think that datace

the fed would have to cut.o not trust the data they don't have a good sense of confidence around the soft landing not to mention that the fed does not have a good track record of achieving soft landings, but there is a feeling of a lack of confidence. what is the next shoe to drop? jonathan: let's get you an update on stories elsewhere this morning with your bloomberg brief with dani burger. dani: do says it intends to pursue a $4 billion damages claim in london against the state of the late british tycoon mike lynch. it is now waiting for a ruling on just how much is owed. lynch and his daughter were among those killed late last month and a severe storm. almost all of this goodwill flights canceled from hong kong to singapore and inspecting the engines on the planes. engineers are ticking for deformed or degraded fuel lines on the rolls-royce made engines. the failure forced the return of a fight from hong kong to zurich monday night. the airline as it already found some component failures across a number of e

this fed decision, i think the market has been so excited about a fed rate decision because it will end the longest stretch. we're of the camp of the 25- 25-basis-point rate cut. it could be quite difficult for the fed to justify a 50-basis-point rate cut. >> is it really that difficult because the economic data has clearly suggested we've seen softening of the u.s. economy. there were a lot of concerns they should have cut at the prior meeting, and think didn't do so. ultimately is it that difficult for the fed to announce a 50-basis-point cut today? >> it's not difficult if they put the focus on inflation. of course, it made tough progress on inflation, perhaps faster than expected. yesterday sales were quite good. if you check, for example, the gdp now casts it still at 3%. in a cnbc survey yesterday, we saw that economists are waiting for the 2% rate cut and then 3. i think it's not the case for today. >> well, then, what does that mean for the fixed income world? i was just highlighting how we had the yield on the 2-year treasury at 3.6%. if we get a deeper cut and the fed goes bey

jonathan: fed speak starts a bit later. how many of those people were on board with conviction to go 50 at the meeting this week? lisa: that's one of the key questions people have been asking given that it looked like there was more support before the articles came out in the journal, indicating that maybe it wasn't the case. [laughter] nonetheless, one of the key questions, if this fed doesn't want to be on the wrong side of the market, does that mean they are going to front load rate cuts and leads significant cuts this weekend to add to what they have done? that's the tone supportive of risk assets. jonathan: we have heard from the federal reserve and the bank of england yesterday. overnight we heard from the boj. dollar-yen breaking out. on the screen right now you can see a weaker japanese yen. no indication from the governor that they will be hiking interest rates anytime soon. lisa: this is what i found fascinating about the parallels and the differences, there is an almost outward discussion of the politics of this

if the fed goes by 50 i can see the market pushing the fed to continue 50 and it doesn't need to.es it result in another rally, maybe not at this stage. there are many other things going on. there are a lot of uncertainties. lisa: higher inflation? >> i don't think monetary policy in and of itself will trip us into higher inflation at this stage. unless they do something crazy. i do think the combination of monetary policy and whatever happens in the first three to six months by fiscal policy, that could annmarie: you think given the fiscal policy we don't know if the fed will be on a rate cutting cycle or hiking? sonal: we are at a decent level, that's a very outside scenario. i definitely think that the market pricing of rate cuts all the way down to something like 280 i the end of next year is wildly overblown unless we seriously believe they are at risk of recession and at least fixed income markets are not pricing in a recession right now. annmarie: when you say you don't think the fed will have to hike, the peterson institute things they potentially would because o trump ter

matt: everyone placing fed bets.

the fed is independent _ were out cuts. the fed is independent of _ were out cuts.d is - independent of country politics but it is hard to think about what you have a joke without a sense of who might occupy the oval office. does this across the mind of policymakers and how much is the upcoming election matter? it how much is the upcoming election matter? it matters a lot but more _ election matter? it matters a lot but more for— election matter? it matters a lot but more for its _ election matter? it matters a lot but more for its direct - lot but more for its direct effects on the economy. that said, present trump, he said were busy on the campaign trail and press it if he said he would like to have some say over fed policy, which is an attack on independence. vice president the campaign trail and president biden, his economic speech yesterday has said that this respect fed independence and it is part of the reason that innovation came down with that unemployment going up. i think that's fact, they are right. so, there is a threat if trump gets in to the fed but t

that is not the message from the fed.hen you look at european markets today, we are seeing green across the board. the stoxx 600 trading higher at this stage. yesterday, ended the session down .50%. the investors are digesting the commentary from the fed. worth keeping in mind, it is time to hear from the bank of england with the interest rate decision and the cpi for the month of august came in at 2.2%. at this stage, some positive momentum on the ftse, but we'll keep a close eye in uk equities today. let's look at the different sectors to understand what is the corporate story this morning. at the top, we have basic resources. the best performing sector at this stage up 3%. significant moves when it comes to basic resources. i also want to dive in detail when it comes to autos. at this stage, up almost 2%. new car sales for the european union disappointed this morning. we got the lowest reading in three years for the month of august. some concerns here when it comes to the joutlook for the auto sector. we will be discus

did we look at fed funds.etail sales. >> i would guess. >> we were above 50% for 50 basis point cut, we'll have more on the fed in a few minutes. the uaw plans to hold a vote in the coming days to authorize a strike at local chapters of stellantis. that's a parent company of chrysler, dodge and jeep. uaw president shawn feign called out stellantis for failing to keep the promises it agreed to after the six-week strike last fall. >>> and jpmorgan is in talks with apple about taking over that company's credit card program. "the wall street journal" report said discussions started earlier this year and have advanced in recent weeks, but the price still hasn't been negotiated. >> i think jpmorgan was looking for below par. at least that is according to "the wall street journal" on what they would do to take that over. take a look at the futures this morning. not a whole lot of movement ahead of what we are waiting on, for that big fed decision. we want to get over to frank holland with a look at some of the mornin

this is not something that the fed can really fix. but i think as we normalize rates, you'll see the housing market normalize. and ultimately by getting inflation broadly down and getting those rates normalized and getting the housing cycle normalized, that's the best thing we can do for householders. and then the supply question will have to be dealt with by the market and also by government. >> just following up on some of the labor market talk earlier, you know, monetary policy operates with long and variable lags, and i'm wondering how much you see being able to keep the unemployment rate from raising too much comes from the fact that you're starting to act now, and that's going to give people more run to run, versus just the labor market is strong. and then, also, if i could, following up on nick's question, do you see today's 50 basis point move as partially a response to the fact that you didn't cut in july and that sort of gets you to the same place? >> you're right about lags. but i would just point to the overall economy. yo

so did jay powell's fed just go political? we'll ask john carney and wall street star scott besson, but first up our own edward lawrence is live at the federal reserve. edward explain this one to me. reporter: you know, larry, yeah, this is the first time the federal reserve made a move in eight consecutive meetings and this 50 basis point will shock some in the markets but this was not a unanimous vote. in fact board of governor michelle bowman voted against this saying there should have been a 25, smaller 25 basis point cut. now, here is why the federal reserve chairman says they needed to make the deeper cut. >> it's a process of recalibrating our policy stance, away from where we had a year ago when inflation was high and unemployment low and that process will take place over time. there's nothing in the sep that suggests the committee is in a rush. reporter: so the dot plot of that hadssep talks about shows a forecast of two more rate cuts this year if they were to move 25 basis points, then four rate cuts next year and t

we are in the media blackout ahead of the fed meeting. formation vacuums greed uncertainty and the market is questioning whether the wall street journal know something the rest of us don't. just what happened ahead of the june 2022 meeting when the fed let the journal in on april bit of information ahead of the meeting. the problem is i don't think there is anything new in that story. nothing has changed. sonali: how do you see this going? what would it say if the fed were to cut you basis points? >> we don't think the fed is going to cut 50 basis points. we think if they were to do so, that is like shouting fire in a crowded movie theater. the data supports 25 basis points in going slow and steady we think makes sense to sonali: sonali: if they will -- make sense. sonali: if they went 50, the markets in the odds seem to be rising not only ring that direction but closer than they were be or. could they go 50 and then go 25 after that? gennadiy: that is the difficult thing to communicate. you tell the market we are starting late so we are

fed's next move.wman was the only dissenting vote at the meeting last week. we heard mixed messages. austan goolsbee said policymakers can't be behind the curve for the u.s. to achieve the soft landing. raphael bostic said the fed doesn't need to go on a mad dash to lower rates. we have roger ferguson with us. roger, good morning. as always, great to see you. >> good morning, frank. nice to see you. >> roger, what do you make of us hearing from so many fed officials? obviously, they are speak bing about the economy and moving markets. what's your general take on it? >> first, it is not a departure what from what we have seen in recent years. after the blackout period, the fed opfficials are speaking. it is a lot to have on one day, but that's the trend. i think what's going to happen is a consistent message which is we don't want to fall behind the curve. some with risks more balanced. there will be some on 25 versus 50 points. you see someone going on 50 and others say no need for a mad dash. i think

gets killed by the fed. so we have a history where the fed is late. late in this cycle raising rates. to me the risk is the economy is slowing right now. not stalling. we still had wage growth in the last report of 4% year over year. that's not a recessionary environment. so i think it's a tricky environment for the fed. not today, but i think that their keddens going forward, not this cut, but the next few, to consistently get, i would say 100 basis points of tightening, of cutting. it's really important. i think we're at minimum, could do 100 basis points. 25, 25 four times. still have a very tight, tight fed market. ultimately, my guess, relating to the stock market. to me, like today, when i look what's works, what's going okay, i still equal wait s&p is a really strong performer up three quarters percent. as we go through a slowing not stalling economy i think things will broaden out. the question as an investors how broad will it get? stay large cap, i still think. large midcap, large cap and more quality versus going down in the market cap. i t

the fed has a deficit in self awareness.hey so-called dot plot was projecting 0% rates after three years. the future is given to none of us just so we can guess. this our star is at the pretext? at the tinkerbell of interest rates. it is a conception. it is an economist conception. i hear donald trump say yes i want to say how to run the fed and i'm thinking that's a bad idea. except there is a guy in hong kong a financial secretary in hong kong sir john held forth during the 10 years a great hong kong prosperity. he said he did not trust anyone to make a financial decision unless that person had money up unless they had money at risk. what trump could say i have been successful in life. however i have at times lost enough money to make the average american men go out and shoot himself. i know risk and who do you want? there are economist on the one hand there are tenured professors. click to your point i feel like a lot of these folks are looking at ivory towers too. did they even go to a supermarket? 113 economist does see

sending bonds with sewing as traders debate the fed next moves. we begin with big issue, a cooling labor market. >>>> what we are seeing is a slowing in the labor market. >> there is a slackening in the labor market >> report is better than in july. >> the headline reaction is to the slightly weaker payroll headline. >> this is telling you there is a softer landing. >> things are not falling apart out there. >> john market is loosening but not aggressively so. >> the fed has not had to worry about the labor market are quite some time but we heard from chair powell at jack hold that is starting to change. the fed has aided that it is concerned about the market. >> i don't think this report is definitive on the 25 versus 50. >> i don't think we are going to get a 50 basis point cut. >> 50 could be a negative signal than a reassuring signaled the fed is on the case. >>>> there is little that can move them to 50 in september despite the fact we that is warranted. >> you are kind of on a knife edge and you don't want to deteriorate or the here. >> it i

fed policy. fed has to keep interest rates high enough to satisfy the creditors so they can get a real return. this would be the right thing if you look at the whole picture. if you look at the market situation which is worse and that affects more people, it is probably 50 basis points. >> what is the state of the u.s. economy? you're talking about 25 or 50 based on how the economy is doing. from the data we have gotten so far, does it justify 50? >> we have a model for estimating what it should be. the economy right now is very close to an equilibrium level. it would look like there should be a modest easing of interest rates. to or more positively sloped yield curve, what we would call normal is fairly normal. except it is not normal in the way it is so skewed. if we look at the markets where the way the populations income levels are from the very sectors, if you look at the bottom 60%, the politics, the left and the right and the nature of what is going on in the two roles we live in in terms

here is your "five@5" fed edition. >>> global markets rally after the fed's first interest rate cut since 2020 a 50-basis point move. also sending a signal another 50-basis points of cuts before the end of the year. >> you have a cooler labor market with the activity what that tells you it's time to change our chance. >>> ahead of the curve, defending the fmoc policy path powell says the cut was not a reactionary measure. >> i would say we don't think we're behind we think this is timely. i think you can take this as a sign of our commitment not to get behind. >>> as we said, global markets in the green we will check in with london and singapore in a moment with stock futures surging. >>> breaking out the playbook for re-calibration and looking at strategies to boost your return. >>> in the face of falling rates, jeffery gundlach looking for more. >> it might be time to start upping markets and if you are really intrepid in local currencies. >>> it is thursday, september 19th, 2024 and you are watching "worldwide exchange" right here on cnbc. ♪ >>> good morning thanks so much for being wi

steve, what do you think the fed would say in response?t are the plans now as it relates to the balance sheet? why has it gone down this path? >> so i need to read barry's writing a little more carefully. i've been reporting this morning this issue of the balance sheet. i keep coming up with balance sheet doesn't matter, bsdm. i've talked to do -- two federal officials and one market analyst who follows the plumbing of the system very carefully, and he just says there susisn't an imp right now. he doesn't think it'sed very much in the beginning, doesn't think it had much impact right now. the story i was trying to report this morning, maybe barry can help me out, was there a knock on the fed, such that lower rates might make quantitative tightening more impactful, but so far it doesn't seem to be having much impact the qt side of things. i was wondering if it was time to pay attention to the balance sheet while the rates were coming down. i don't know that's the case, but right now, kelly, my reporting, and i need to understand like i said

that's not the fed's job.you recall, that's what powell thinks is his job, and the -- he thinks you support inflation. now inflation is the problem, and now he's trying to solve that problem with more inflation. and, you know, powell indicated that for a while he could keep doing quantitative tightening while they're cutting interest rate. well, i think by q1 of next year the fed going to be back to quantitative easing because the rate cuts are not going to stop the recession x they're going to result in higher long-term interest rates, and the fed is going to try in a panic to reduce long-term interest rates by going back to quantitative easing, and that's ooh just going to increase the pain because it's going to send the dollar through the floor, gold and other commodity prices through the roof and consumers are not only going to be dealing with a loss of jobs, but much higher prices when they go to the supermarket or any place else that they try to spend their rapidly depreciating dollars. liz: peter, andy,

the projections show that the if fed, fed officials expect the fed funds rate to the still be above their estimate of long-run neutral by the end of next year, so does, does that suggest to do you see rates as restrictive for that entire period? does that threaten the weakennenning of the job market that you'd like to the avoid, or does it suggest that people see the short-run neutral as a little bit higher? thank you. >> i think the way i would really characterize it is i think people write down their estimate, individuals do. i think every single person on the committee, if you ask them what's your level of certainty around that, they would say there's a wide range where that could fall. so i think we don't know. there are model-based approaches and imbyically-based -- empirically-based approaches, but realistically we know it by its works. is that leaves us in a place where we expect in the base case to be continuing the remove restriction, and we'll be looking at a the way the economy reacts to that. and that'll be guiding us in our thinking about the question that a we're asking at e

the projections show that the fed officials expect the fed funds rate to be long run neutral by the endoes that suggest you see rates as restrictive for that entire period? does that threaten the weakening of the job market you that said you'd like to avoid? or does it suggest that maybe people see the short run neutral as a little bit higher -- thank you. >> i think the way i would really characterize it is this. people write down their estimate, individuals do. i think every single person on the committee if you ask them what's your level of certainty around that they would say there's a wide range where that could fall. i think we don't know. there are model-based approaches and empirically based approaches that estimate what the neutral rate will be at any given time. but realistically we know it by its works. so that leaves us in a place where we expect in the base case to be continuing to remove restriction and we'll be looking at the way the economy reacts to that and that will be guiding us in our thinking about the question that we're asking at every meeting, which is is our po

fed is more confident we're heading there. and the labor market is still solid, though we based the move today on recent labor market data that suggested some weakening. the doves getting most of what they wanted today. coming a long way, melissa. >> you mentioned you're trying to understand what comes after, steve, and did you think you got a clear picture? what struck me was the fed's confidence that unemployment would actually, you know, stabilize and not get much much worse. and the confidence behind that, the confidence in the ability to step in, should it tick higher than they expect by year end. >> welling, they do have a lot of ammunition. they feel pretty good about that, melissa. i think that's part of the confidence right there. they've had pretty good luck with -- with the numbers so far. he took a lot of signal, apparently, from that revision of the job market, says, hey, maybe jobs are much weaker than we previously thought. so, that was a reason for them to move, and so, now what they're saying, remember, for mo

>> it is market tends to do better when the fed moves slower when the fed movers quickly, they have made a mistake and chasing their tail thinking about 2007, 2008, 2001, versus say, 1998, 1985, because the economy held in there. so, if the fed does go 50 here, they're gonna have to be very careful with how they communicate to the markets if the decision is we're going to cut quickly to get to a still positive real fed funds rate, but lower than we are now and then pause, that's a very different message. that could still fit into the slow easing ping cycle. >> steph, how does this build into your thinking here? there's been anxiety about the consumers. visa said things had perked up recently so how are you putting it together >> i think you have to put all of it together it's a pretty good picture we're growing at about 2%, 2.5%. commodity costs are down gasoline prices are down 15% year over year that's favorable for corporations, for people, individuals, and at the end of the day, it's what about the companies are saying a a realtime basis it's pretty good, mike goldman sachs had their

earlier this morning, the former fed president bill dudley making the opinion that the fed should go, steve englander, good reasons not to cut by 50 basis points. it is so finely balanced going into wednesday. lisa: real question of whether it matters going into the destination, whether they can telegraph that. they will have a statement of economic projections. jonathan: up next, a split decision. >> we are looking for a 25 basis point cut but for them to signal that they are doing cuts here. 50 basis points suggest they are more worried about downside risks to the economy. jonathan: that conversation around the corner. you are watching bloomberg tv. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tool

coming up, the full week of investors for post-fed data and a number of fed speeches. >>> and intel gets a multibillion dollar offer. >>> oil is higher following the escalating tensions in the middle east. israel and hezbollah vowing more violence after the weekend strikes. helima croft is here with insight. >>> and leaders are rolling out a new plan to fund the federal government and avoid a shutdown. we are live in washington. >>> another potential shutdown. this time at the ports across the united states. we look at the billions at stake and the industries that could be impacted. it's september 2rd, 2024 and you are watching "worldwide exchange" here on cnbc. >>> good morning. thanks for being here on this monday morning. i'm hollafrank holland. we begin with the stock futures. you see a mixed look in the pre-market. the s&p fractionally lower down a point. flat lining. the dow looks like it would open almost 40 points lower. the nasdaq up just about 12 points. we want to look at the biggest laggards on the dow right now. you see chevron at the top of the list down almost 2%. tr trave

so, when we have the fed meeting, which is in a couple weeks time, i think the message from the fed ifhey deliver 25, the message is we don't want to be there restrictive anymore. we are at 5.5. what kneutral is? we have about 3.5%. it is about the pace of eight cuts. that prediction is clear. the pace of cuts matters. >> that communication is very important as well. if they make -- if fed chair jay powell speaks out and says, you know what, what we're looking to do here is we're going to start this and not look to be restrictive as you pointed forward, but we're trying to make a consistent effort now at ensuring the restrictiveness in our policy aids the economy a lot more than the economy. has that actually been a message they have been able to deliver yet or is this the pivotal moment in two weeks' time? >> i think it will be pivotal in two weeks time. the fed has two mandates. they have employment and they have inflation. we have been fighting inflation. now we focus to employment. it's not very easy. the fed has been struggling with it. the street has been struggling with it. if t

the market is the fed.on't think that's a good way to proceed, but that's the way it is. >> the one area where i think lowering the rate 25 or 50 could have a big impact in the margin is hiring. if job hiring is slowing and layoffs are starting, they're not terrible, but -- >> do you really think a quarter or 50 is going to make a big deal in hiring? i don't think so. >> it's going to help on the margin and that could be enough to just keep the labor market chugging along. >> yeah, the only thing i see at the margin is that we have marginally more spending every quarter, and sooner or later, that is going to be the only thing that matters to the market. and the fed easing isn't going to make the deficits go down. >> no, it's not. we'll leave it at that area of agreement. rick, thank you. rick sansantelli. >>> my next guest says the market has backed the fed into a corner. let's bring in michael landsberg. michael, welcome? which corner, michael? >> i agree with what mike said. i think we're positioning for

to the fed. but it is interesting that there was enough of a kind of a rethink of that noisy response yesterday whereas people almost came in today and said let's not overthink p. >> well, we shut the machines off yesterday at 4:00 and everything that happened as far as the 2:00 to 4:00 p.m. price action that's algorithms in the market taking advantage of volatility. it's not financial advisers saying oh gosh the federal reserve went r50 baesis points not 25 we've got to make portfolio reallocations. i don't put much credibility into the price action from 2:00 to 4:00 p.m. what happened overnight was you had a significant amount of overseas buying from europe, from the middle east, from asia, a lot of sovereign wealth funds getting into the marketplace again, and the trend is a very powerful force. the trend itself might be the most powerful force in the marketplace and we've seen so many times over and over again this secular bull market that's well entrenched which has these catalysts of a fede

lisa: isn't there a fed put? isn't the fed going to cut rates dramatically? michael: there is a fed put but the question is is the fed put out of money. yes, the fed will be cutting but if they are cutting and they are behind the curve, you can still have a business cycle downturn, you can have profits that disappoint. jon mentioned the belly of the yield curve just inverting just prior to the last four recessions. a lot of financial market upheaval going into those downturns. here we are again. maybe it will be different this time. the risk is the fed cuts rates but they are behind the curve so they end up having to do more than is anticipated. the consensus view is we have already priced in a lot. a lot would be a word you would use if you think the business cycle stays pretty steady. in an actual downturn, the fed will be behind the curve and will have to cut more. one statistic, bond market inflation expectations have collapsed by 70 basis points since the spring. that means real policy rate, it would be like the fed doing almost three 25 basis point hike

final thought, fed speak in the pipeline.n just after today hearing remarks from waller about inflation is the key decision, remember, we also have folks like austan goolsbee speaking, the chicago fed president, where the story about employment will be an even bigger question at the end of the day. fed supervision chair also speaking next week and of course, bank capital rules are front and center. from new york, that does it for me. same time, same place next week. this was "bloomberg real yield," and this is bloomberg. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all.

the reality is, again, the fed is now cutting, the fed is more dovish. that is a tailwind.t comment, the fed is cutting for a couple of reasons. we think it's because inflation is last year's problem. we've been saying that for a while now. on friday they said inflation is not really a problem, that's why rates are coming. >> what about the broadening? this quarter is going to be remembered as finally when you had the equal weight outpace the market cap weight. is that something that continues or no? >> we think it does. we're more neutral technology. three months ago people thought we were crazy to say that. it's going to happen when the fed starts to cut. small caps are a dirty word a lot of times. but mid caps have been our largest overweight all year. mid caps have done really well. with the cutting in play, we think the broadening out theme is alive and well. we think this is going to last more than a quarter or two. small caps are historically cheap since 1999. and they've outperformed large caps. we're saying the parts of the market that are cheap, you probably want

the yield on the short end which is ultrasensitive to fed policy or what the fed might you falling as much as 15 basis points. the 10 year yield down about one basis point. the 210 cried -- let's get back to the equities side and bring in abigail doolittle who has been looking at big movers. maybe you go: we have this decline for the s&p 500 but on the week we are down 4%. going back to march of 2023. the nasdaq 100 down more than that. it has everything to do with the selloff and tech but chips in particular. nvidia is the biggest drag, down 5% on the day. down 30% from its recent peak so in a bear market. the stock went too far too fast. the recent quarter guide not quite enough. broadcom the same deal. not up as much as nvidia but the guidance and you can see that the results in particular of broadcom last night or today taking down super micro computer and intel's plan to divest some portion of mobile not helping their shares. it is not just technology. all 11 sectors of the s&p 500 are in the red. apple, tesla, google. we have the banks down the most. wells fargo down the better

mike -- what the fed likes to look at the most. mike: good news for the fed if they want to keep cutting interest rates. we are almost back to the fed's target, 2.2% for headline. the fed's target is based on the headline. 2.2% is within touching distance. you could reach out and touch that level. scarlet: within spitting distance. mike: personal spending was slower. people had been worried we would see a drop off in the economy. the personal income numbers also slower. wages and salaries up by .5%, a strong number. bigger than july. it was dividends and interest that cost people money. focus on wall street not doing as good but they will keep spending, anyway. here is the really interesting thing -- the savings rate. yesterday we had the big gdp revision. savings rate almost doubled because of that for the year to date. month after month is basically what we saw was two percentage points higher. consumers have money in the bank and their wages are going up so the odds are we still see continued expansion giving the fed the opportu

it's where the fed is going anyway, not just 50, but beyond that and the fed may be beyond the curvee and no harm since the fed is thought to be restrictive even after a 50 and it's insurance against economic weakness and that weakness is seen as the biggest risk right now. j.p. morgan writing over the weekend that a closely followed monetary policy rule, the taylor rule, is currently a full percentage point or more too restrictive and that is the fed policy and jim bullard telling me over the weekend he's looking for 25 and for the fed to lay out a dovish outlook of as much as 125 and 150. here's the trouble, markets are pricing in 250. so if you do a 50 this week and maybe you encourage not just this, but you encourage more than the 250 already priced in the fed may want to avoid that, kelly. >> steve, you talked to bullard over the weekend. is he a voting member? >> no bullard has left, as you know, he was the former st. louis fed president. >> once i'm used to them being on the committee because i was going to say i didn't get a phone call. >> well -- [ laughter ] >> you promised

the fed is out of control.jay powell's credit and the entire federal reserve, they have built credibility with the market. who would have thought that they could get inflation to pullback. and one of the other thing is really want to talk about is we are so focussed on what is inflation today. that's what everybody is focussed on. but you talk to consumers and with the election, you talk to the elect rat, what are they worried about, the economy, inflation. why? because over the last four years prices are up and they have not come down. >> they want deflation. >> that's exactly right. and we are still getting adjusted it to when we go to the grocery store, go to the gas station. it is still shock and awe. i can't believe how much i'm having to pay for this. >> yeah. >> that is what everyone discounts. hey, inflation is in check now. but really look at the last four years in my life time, i've never seen it like this. >> absolutely. it's a perfect place to bring in our next guest. the consensus is a rate cut is

so, right now i think we shifted from a fed looking exclusively at the inflation data to a fed that's looking a lot at the employment data. >> but what do you say to those who look at the data today, for example, and say, you see, i mean, they didn't have to do 50 and they shouldn't be doing much cutting at all because this is not an economy that needs any sort of help from the fed at this point. the obvious other side of that is, well, they're just too restrictive anyway, so the current rates make no sense relative to where their inflation projections are. >> i think, scott, you phrased this in the connect way. you know, the real question is how restrictive is current policy? certainly the federal funds rate is well north of inflation and north of their estimate of, you know, the neutral rate. you know, on the other hand, financial conditions by the fed's own index are rather easy. if anything, have eased even more since the rate cut. and ultimately this is about demand and supply. so, i do think they'll be open-minded as we go into next y year. i don't think they're on a preset path

the market leads, the fed follows.rles, with that the question, central banks and what's happening in japan are our biggest risks and does have us concerned. charles: right. i want to ask you i know you're really big on the leveraged etfs, and their popularity has soared bigtime here recently, and some are actually saying this op popularity of leveraged or inverse exchange-traded funds may be a sign of excess speculation. i also saw a chart last week and i thought about you, a very hot stock the up more than 1000%, but the leveraged etf -- 100, in this case, microstrategies was down almost 100%. people who are watching who want that leverage, is there a way to do this? do you use stops? how do you make sure that a year from now you may be right on the stock but wrong because you picked the wrong vehicle? >> yeah. listen, we've used leveraged etfs along with regular etfs for the better part of a decade, and we've had success because we have a market-timing model that we use. but the key is there's only a handful that th