john lonski moody's chief economist. john, i will start with you. you are the economist. what do you think of that? >> looking at beige book we have need for very low borrowing costs. we have modest growth despite federal funds -- melissa: we have need for lower borrowing cost? it is not working. >> imagine what if they were higher when what we would look at. things would be going downhill pretty quickly. look at housing. we had a stretch when we had 10-year treasury yield approaching 3%. home sales are down year-over-year because of higher mortgage sales. at least we're pet getting growth. some growth. melissa: john lonski, i love to you to death. the counter factual is bs i never let anyone say that. you can't say if we didn't have it would be worse. >> speaking of bs, departing with the winter weather john, maybe you can back me up on this, some sort of economic study about this last year, this year, oh, my gosh, the economy slowed down because of winter weather. it is winter. it snows. on the western half of the country it was pretty summery. i don't buy this winter w

melissa: john lonski. >> look at sales are not going my goodness. s&p 500 sales are growing less than 1%. even if you take out the energy companies less than 2%. profitability is under pressure. why should companies higher workers, pay higher wages, do capital spending? makes no sense. this is flat recovery. melissa: consumer spending is slowing. >> one thing the fed is concerned about is what we call misallocation of resources. junk bonds sold at 11 12, 13% are selling at 6 7 8. that is major concern. they're making 10-year fixed-rate loans. melissa: there much money. >> looking for yield. everybody is looking for yield. you might find businesses doing certain things. expanding business where maybe not most appropriate thing. low interest rates might be causing misallocation of resources in the economy. >> current junk bond yield spread is 100 basis points wider than the average during comparable previous recoveries let's move on. the american dream is slipping further out of reach. u.s. homeownership falling to 25-year low. tom, what do you think

ashley: john lonski we appreciate it with your expertise on the markets today.off unfortunately. >>> a reminder to listen to lou's financial reports three times a day on the salem radio network. >>> a bad day for investors but a great week for "star wars" junkies. a trailer for the seventh installment "the force awakens," was released yesterday. and the internet nearly exploded. the trailer accumulated over 20 million views youtube and millions of tweets containing "star wars" related hashtags since yesterday afternoon. here's a sneak peek. . >> we're home. ashley: we're home. i love it nippon airways a fan of the "star wars" franchise. the airline unveiling a boeing 787 dreamliner painted like the lovable robot r2-d2 that will fly international routes this fall. >>> fans of jay-z having a great week with having an opportunity to speak with the former def jam president himself. jay-z treated fans who subscribe to new music streaming service tidal to exclusive look to the brand-new song glory which he contributed to the birth of his and beyonce's daughter blue iv

joining us rudy's capital markets john lonski.very time i hear this about free trade or nafta but the results seem to be another year of trade deficits and mounting attacks journal that and a loss of jobs. was reminiscing? >> look at the data you don't really see this activity but despite it we have had a middle-class living standards decline since 2004 so the benefits are hard to notice if anybody is benefiting it is corporations and shareholders. lou: the market's move higher as wages for middle-class decline is shrinking? >> at least in terms of its purchasing power. they have declined by 13% and they're sure that is still going on today. >> the commerce department of labor department and of them keep track of the offshore of production overseas space keeps track of the impact or the consequence of the federal government. >> the primary reason why the economic growth that used to be between three and 3.5% is now about 2.5% -- 2.25%. lou: of the republican party continues to be a slave to the u.s. chamber of commerce but it's no

moody's chief economist john lonski. gree with what's becoming conventional wisdom that we'll wait until september? john: i very much do. it may not be until december if the fed moves. gerri: all right. how much will it be when they finally get around to it? a quarter point? john: my guess, by the end of this year the federal fund rate target will be no bigger than a percentage of a rate hike. that will be some relief for the small saver that has been punished so severely ever since zero interest rate policy first took affect. december 2008. gerri: well, you make a very good point on that. we've been talking about this on this show for some time. savers for six and a half years. there's nothing you can do. right? >> that's right. unfortunately, you know a lot of these small savers have perhaps felt compelled to move out of safe savings accounts insurance savings accounts, into equities that are not insured. of course they're taking on a good deal of price risk, that they don't fully appreciate. just to get that dividend y