john williams will be listening.t certainly will be reflected in terms of adjusting that autopilot. >> it's a good sign they say they're listening but i think what some investors are concerned about is that they're getting the wrong message. when they say the outlook is strong and the economy looks good, why aren't they referencing inflation expectations why aren't they referencing ceo confidence surveys which have rolled over along with soft data like the philly fed and new york fe fed. >> i think they're trying to carefully balance things your don't want the fed to be so dovish and cautious. it scares the markets more so i think they see the same data we see. the markets react into it. they had this rate hike they were going to do it was more semantics about being said that being said, i believe they're focused on quickly changing any base case scenario they have if the things in the economy change there's a lot that could happen. if you get a china deal, you could see global growth turn up again so i think they're

. >>> stocks were up briefly off the back of optimistic comments from new york fed president john williamst hour now mostly in the red. the dow about flat, barely hanging onto gains nasdaq briefly in the green, now back in red, out of bear market territory. down double digits in the last two months this against the backdrop of possible government shutdown and continued tensions between the u.s. and china joining us in a cnbc exclusive, cisco chairman emeritus, john chambers that runs his own firm, jc 2 ventures. happy holidays, good morning >> good morning, jon, carl, rest of the team. pleasure to be with you today. >> now john, a lot of big tech stocks suffered in the last quarter as the market has. how is it impacting the pace of investment in the valley, your outlook for 2019 is this something that companies are largely shrinking off as a wall street thing or is it hitting home in silicon valley as well? >> well, i think you can break that question into a couple of pieces, jon, and it is the right question to ask. many of us, myself included view the fed missed an opportunity the other

the big headlines worth noteding np new york federal reserve john williams took on a friendlier flexible tone than the markets heard from jay powell and stocked rally almo 40 oh points from the comments. but the rally fizzled out. all rallies have donehat recently because they've been more apt to sell on the rallies than buy on duchs. add that the resignation of jim mattis and contentious comments from peter navarro and the fed and china and all that didn't helpen stiment. and stocks took on a defensive tone. utilities led the charge while tech and communications services like facebook, netflix and twitter all led tohe downside. for nightly business report, bob pisani at the new york stock exchange. >> now the market declines in december led to concerns that wall street gloom could be main streetoom. falling stocks could create a economic slowdown. the reason, the wealth robert frank explains. >> the welt effect is a theory that when people's welt goes up they feel more confident andd sp more. economists figure that for every dollar a household adds in wealth from from stocks or home the

we saw john williams making these comments, and we have seen some dramatic drops. ?fed going to pause is the fed going to deliver something more market friendly in 2019? >> i don't think it will pause. i think the message from powell 's saying that nothing will stop us from doing what we have to do . it's important, does that mean raising rates three times? no. the inflationary pleasure -- pressures remain. but the fed does need to move into the next cycle and that's a than thertant factor moves and the volatilities and markets. before, aboutsaw what happened at previous and upns, these things being absorbed and adjusted by markets. and markets need to get used to the facts, interest rates are going up. that should not be a problem. that should be an opportunity. vonnie: and we have vince, some of the week for us? tradingnk the week's has a lot to do with year-end. we are seeing traders not really wanting to hold positions going into the final days. from an equity stan part -- standpoint, this market is starting to collapse and there's no incentive to hold on and be

more questions now about the fed, whether investors no longer trust the central bank end john williams. it's good to have you here clearly there was a thought in the market on wednesday that maybe the market didn't trust the fed anymore to get it right. that was a part of what he said. i asked a lot of different questions and came back to this notion the fed, indeed, does hear the message of the market let's listen to what he said about this specifically. >> we are listening very carefully to what's happening in markets for two reasons. financial conditions have an important influence on the economic outlook >> i think we are hear something and that is a concern around the potential slow down than we expect in our base case. >> he didn't seem to want to go there but did, the reduction of the balance sheet is something they're flexible sheet that they could get to a point where the reduction of the balance shoot planned would be changed. >> that's rebutting the whole autopilot conversation of the week the market really jumped >> during the -- >> yeah. >> when he said further hikes. it's

on friday, john williams of san francisco and also of the new york fed, with i thought a really sharph -- we have some john williams -- the problem we need to solve these days is the risk of inflation that is persistently too low rather than too high, price level targeting and its various offshoots, such as nominal gdp targeting promises to overshoot the target inflation rate in good times to make up for inflation under-shoot when policy is constrained. do we need a new regime at the fed that looks at the combination of real economic growth and price change? >> tom, i think the fed has a framework that has been in place since 2012 and i think it is serving the fed well. that said, a lot has changed since 2012. as my colleague and friend john williams emphasized, we are in a world of low equilibrium risk rates. in a future downturn, there is less room for conventional monetary policy. what that means is that central banks need to be just as worried as keeping inflation at target is going above the target. abigail: we've got more discussion of the fed straight ahead from nobel prize-win

once again, john williams tried to alleviate that nervousness a little bit too little too late.f the chairman would have talked more like john williams talked, the market probably would have been more positive as far as the fed goes. the balance sheet situation, we don't want to hear it is on autopilot. notably in reality, it is on autopilot. david: if we do say the fed will make a decision month by month on the balance sheet, doesn't it make it more of a political football? there was a lot of controversy especially for conservatives when they ran up that balance sheet because they said, you should not have that big effect in the marketplace -- big of an effect in the marketplace. it puts them right in the political spotlight. scott: that is what we do not want to happen. the fed has to remain independent. for us, clearly the chairman has mentioned on several occasions they are not influenced politically. we don't want them to be influenced politically. they need to do what they feel they need to do. they have a dual mandate. the fed has to try to maneuver it within a $20 trilli

well with joy of the office christmas card list john william logan a former republican member of the a missouri senate i think spoke a lot international and making the time this festive time thinking it's. ok no story watch we think over the next couple of days will be the syrian military says government forces have entered the northern city of mandate to the request of civilians and kurdish fighters in the area it comes as the kurds try to strengthen the city's defense amid a what could be upcoming turkish offensive and crick considers kurdish fighters to be terrorists full stop is our middle east correspondent paula sleep. what we see happening is that the conflict in the northern syrian city of monday's continues to escalate now we are receiving reports from the syrian military that they soldiers have entered the city at the request of the kurdish fighters and civilians who live there and the concern from locals is that they need assistance against a possible upcoming offensive from the turkish side we invited the syrian government which we belong to to send its armed forces to ta

. >> morgan: john williams, thank you, sorry.ple things going on from a political and economic perspective. we do have the slow down in china. march 1st is the deadline for trump and president xi do have some kind of deal on the table, or more tariffs. there are more things that can happen there. you also see a lot of turmoil in europe. we have seen what's gone on the past few weeks as it relates to brexit. we look at the major world economies, none of them are in fantastic shape. we will, despite some of the slow down and potentially in the u.s., as relates to the market -- people will still come back to the u.s. dollar. >> melissa: chris, that's a great point. she talking about the fact that the whole tariff battle has been a drag on china. that's one of the things that's hurting global growth. what if i get settled customer sooner or later it will get settled. that will turn the page on a whole lot of things. it would re-accelerate the market, the economy, and be a huge win for the present trade what you think are the odds tha

week as well markets earlier getting a boost on the day on remarks from new york fed president john williamsn sharply lower williams saying that the fed is listening to the market. here is the volatile and would recore plans for the balance sheet. it seems to be what investors wanted to hear it just didn't last. we'll talk about what the central bank has in store and what it means for your money let's get straight to the market action though. >> it is what it wished it heard from williams. it is not reacting to peter. the market is in the sway of this slow motion and relentless liquidation. it is feeding on itself. >> but why why are huge funds -- >> i think it's a combination of yes we are pricing in and props a slower environment we are pricing in a little bit of uncertainty i also think there's a sense that a lot of big money is caught ton wrong side. it is a derisking. i think a lot of that is what we are seeing in practice every day. the other piece of it is a sense that had everything going forus and so much good that went into the bank for 2018 which is the earnings growth which was t

we were talking about john williams. if his comment that the fled data the fed is flexible and that these are just a guidance, not commitment didn't give investors the massaging that they needed. what would? christopher: we believe in john williams. he is a sacramento guy. he is running the new york fed. people have to realize i don't know there is exactly a powell put. the federal reserve is looking into economic data. they are dependent and always have been what they are seeing is an economy that is doing ok and yes, it bothered me they said they would raise -- they put two. on the plot next year. i would rather have them be open-ended. the market is going to hit oversold, and people will be more rational and come back into this market. looking at the opportunities, the u.s. is one of the best to be in. they want the dollar. they will be buying on dips but not until the first week of january. there is not a lot of trading. caroline: what are your views on emerging markets? christopher: even a year ago i thought they mi

now, variety reports, the film's score, filled with familiar john williams themes, has been disqualifiedy award consideration... because it was submitted after the deadline."ho ho ho ho ho!"a holiday treat for "gold star" families, courtesy of actor and activist gary sinise. his foundation's "snowball express" flew more than 17- hundred children of fallen military heroes to disney-world in florida, for a "therapeutic retreat," disney fun, bonding... even a closing concert by sinise's "lieutenant dan band."(nat) "boy, do i hate being right all the time.""jurassic park" is now part of the national film registry of the u-s library of congress. this year's 25 additions, chosen for their cultural, historical, or aesthetic significance, also include the classic musical "my fair lady"... and the two- thousand-five cowboy romance "brokeback mountain," now the most recent film on the registry. in hollywood, i'm david daniel. (james) and here's a live look outside... at the bay bridge toll plaza. we'll be back with more we'll be back with more of your kron 4 morning ne (james) welcome back. checki

for john williams. >> no, joe my time with john is very limited. >> okay. you wouldn't notice.g coming in. >> i don't have a three-hour show where i can joke around like that. if i had a three-hour show -- >> but what's t going to be about? >> what message are you getting from the market and do you have this wrong >> and do you care what the market says. >> steve, stay where you are here to help break this down is scott anderson i want to hear your take on the data i also want to hear your take on the debate we've been having at this very table. you've been waiting patiently, scott. >> thank you well, the data, no real big surprises there. a little bit of disappointment in the gdp and the durable goods orders but we knew the economy is slowing down this really won't have a huge impact on our economic outlook i have heard what people have been talking about i think the u.s. economy is performing better than the stock market right now you don't go from 60 to zero overnight. and the data is softening but we're not falling off a cliff. and looking at around 2% for the first half of

connell: john williams president of the new york city fed did an interview on cnbc this morning.he market gained hundreds of points, up 300, up almost 400 on the dow. it comes all the way back down. what is going on here? >> anxiety here is high. i push back a little on lindsey's point which i rarely do, lindsey the fact matter this is different time of history. so many things weighing on investors concerns. connell: right. >> the fears democrats are controlling 113th congress january 3rd. they don't know what that two year period is like. they're looking shut down debate as indication -- connell: they're extrapolating out. >> what could policy perspective, tax reform, roll back on regulations things that helped economy get turned around knowing the global economy is slowing down. there is hyper-focus. that may have not been the case. connell: that is fair. a federal reserve, a lot of market participants at least, lindsey, don't see being helpful, whether william as comments clarify that, i don't know. you have that as the backdrop. to mitch's point, you do have all these policy

john williams.teve? >> yeah. the markets rallied strongly but briefly. at least a couple things they wanted to hear one that the fed hears the negative message and that it is not locked into a policy path of rates? we are listening very carefully to what's happening in markets one is financial conditions have importance on the economic outlook. we take into account and think seriously about that secondly, we are hearing about that the risks to the economy a potential slowdown >> and maybe more important than that, whims serves as the vice chairman said there's flexibility in the fed's plan to reduce the balance sheet currently reducing by $600 billion next year. >> we do view it is our primary instrument to address policy if there is a material deterioration in the outlook, obviously we would reconsider our path for the short term and would address it in our goals. we said we would reconsider the balance sheet normalization and may even end that process. >> just for the record, powell had said it pr

john williams emphasizes is we are in a world risklessuilibrium rates.conventional monetary policy and central banks need to be as worried about keeping inflation as target as going above the target. that said, next year, the federal reserve system will be doing an assessment and review of our existing framework, seeking input from a range of experts and stakeholders and we are going to get a sense of ways we can refine our framework. tom: so much of that comes from domestic analysis. every conversation i see is on the global economy. is there a disinflationary impulse out there separate from the fed, separate from america that you have to consider? richard clarida: those have been at work since i first started doing your's show, 20 years ago. globalization can have a .isinflationary impact we are in a world where central banks are focused on keeping inflation away from disinflation. tom: let us go to columbia. 101.re in econ ?hat is a powell put michael mckee says powell put is media language. what does it mean? richard clarida: mike got that right. i d

rich clarida and john williams have a better idea of how to do it.hy the chairman struggling to connect with this market? scott: i think they are going back to their comfort zone of understanding models and trying to figure out what is the neutral rate, and it will be really challenging for them. i think you got a little bit of it today with williams throwing a bone at the balance sheet. that is potentially in play, but i think there is no consensus and that is hard for the chair to deliver a strong message. jonathan: the premise of this conversation is assuming that they need to settle the market down. do they? brian: i do not think the fed is nearly as concerned about the markets as the market think they ought to be. i think that is exactly right. i think the fed is going to look at the data and it is slow to come in and relatively slow to change and there is a risk the fed is behind the curve in the markets are looking forward. i think that is a big risk given that the fed is focused on the data here. jonathan: what do you think the biggest issue

we heard from new york fed president john williams.ill get to that point on the bond market in a minute. the purpose of the meeting with the press just to update us on economic conditions in the region. he more or less mirrored from we heard from fed chairman jay powell, that the u.s. economy is strong. some specific things to new york. they did confirm they're seeing upward pressure on wages, more firms increasing wages. at this moment difficult to tell by how much. to your point, connell, there was a q&a session that followed. the main question was, are you concerned about what looks to be a flattening yield curve, perhaps even one that could become inverted? as we all know a lot of investors get nervous when they see that, it can sometimes imply there is recession not too far away? here is john williams, what he said in response to that question. >> employment and gdp growth, on, you know, from the other surveys and other indicators, consumer spend having all come in either had or strongest expectations or my strongest expectations

john william a loud and former republican member of the missouri senate told us the case reflects a deep cynicism in u.s. politics this is a cynical as it's politics could possibly get you have the democratic party that is say that is running all these voter registration drives and every vote counts and they want to get more and more people out to vote and then at the same time they're taking these new and low information voters and trying to trick them into voting against their own self interest this is a huge scandal democrats that are calling for mueller to continue to get to the bottom of this russian collusion and they were employing what appeared to be the exact same tactics in alabama so they've got egg on their faces and i don't see this fizzling out this looks like it's going to be way bigger and i suspect this is not the only place they've used this tactic it's just alabama is going after it. the syrian government says its forces have entered the northern city of money b.j. at the request of civilians and kurdish fighters in the area the kurds are trying to strengthen the city'

one thing as john williams emphasized, we are in the low r star.s in a future downturn, there is less room for conventional monetary policy. central banks need to be worried about keeping inflation at target. the current framework serves us well. the federalext year reserve system, including the banks, will be doing an assessment and review of our framework, seeking input from experts to get a sense about ways we can refine the framework. shery: that was richard clarida in an exclusive interview with bloomberg television. we are getting word there may be a funding bill to avoid a government shutdown. president trump saying he was considering pushing back that u.s. government funding deadline to avoid the shutdown. this because of george h.w. bush 's passing and how washington is getting ready for funeral proceedings. a national day of mourning on wednesday. interesting though be one way of mourning and they are considering getting this stopgap bill for another two weeks. this is kicking the can down the road. keep the government open and really pun

as john williams emphasizes, we are in a world of low equilibrium/risk rates.n a future downturn, there is less room for conventional monetary policy. central banks need to be just as worried about keeping inflation at target as going about target. i think the current framework serves us well. next year, the federal reserve system will be doing an assessment and review of our existing framework, seeking input from a wide range of experts and stakeholders. we are going to try to get ways we can refine our framework. vonnie: richard clarida on bloomberg this morning. this is bloomberg. ♪ vonnie: qualcomm has ruled out any chance it would return to its bid for semiconductors. this is after china opened the door following the g20 talks to looking at qualcomm and xp again. qualcomm revisit the $44 billion deal? >> i think this ship has sailed. qualcomm has commenced a buyback program using cash that had been earmarked for the deal. the dynamics of the semiconductor industry have changed. when qualcomm made the bid two years ago, the semiconductor cycle was on the up

an interesting press conference from john williams, some opening remarks.as a press conference to talk about the regional economy for the fed, the new york region broadly. part, ealthy for the most there is some disparities from one part of the area to another, versus new york city, et cetera, but he said report rkets, they exceptionally tight. he came up with an upbeat view he was conomy and then asked by a reporter about the invested yield curve that we have seen and what did he think it. he didn't seem too worried. let's listen to what john said. to lose don't want track of the hard data which i think has been very strong and showing continued momentum well into the fourth quarter. important that's an kind of starting point. shery: the hard data, ecodata of course, e fact, that he thinks tax cuts, more government spending are going to fuel the economy in 2019. again, i think this concern is the twos to the 10s, trade concerns are hitting stocks. they're also fueling the bond rally, but something negative, boy, you got to buy bonds. at the chart.ook some

then screwed up pretty badly in december i don't know how easy it will be to come back i thought john williams a great job with you guys the day after the fed meeting and i think john and rich clarida are probably going to be two guys to clean up the mess a little bit i don't know how long that will take and what we see from jay will matter in the coming months but this was not what the market was expecting, a kind of -- it reeked a little too much of politics and lines in the sand and then to have the president come on afterwards and fight it out, it has people people questioning the force of the d fed. >> because of internal dysfunction or external pressures or what? >> i think it's a mix of the fed taking its independence very serious seriously. and jay showed stubbornness. there was more hue tillty from john williams and that's what the market wants to see. i don't think the economy is hon a precipice like people do but you want to know that the fed is there if it is. >> evan, do you agree. you can talk about president trump and the tweets but you can talk about other things we've seen inc

would you have the state of the markets in the hands of jay powell and john williams and the rest of the governors there or in the hands of somebody that has a view of trade policy and how you sell the deficit problem? there's a lot of downside risk for trade. you hope to get a step in the right direction and have the market stay in the rally a little more. it's right to stay capital. the mantra for the fed is that they will do the right thing, but they will do it based on the economic outlook. caroline: you said you were taking -- talking about the government shutdown. what unifies -- what do you and -- advise? the --e are waiting overweight in the financial stocks. we still think it is premature to get defensive here. there is an opportunity being too defensive too early. we are not in the possession driven bear market. we have had a drawdown lingered longer than we would like. i would point out one thing, one of the places we have liked for a while has been a software. that is kind of market performed. that is not a great alpha but in this environment, you take what you can. scarl

but yesterday, john williams, speaks, and he is talking about a strong economy and perhaps the fed havingrate hikes to go. which one is it? >> well, with all due deference to president williams of the new york fed, i think if anything today's "beige book" validates some of the concerns that are out there. i can't remember, here i sit in dallas, i can't remember where weakness was cited out of dallas. this has been one of the biggest engines of growth in the nation and we saw a little bit more out of philadelphia. the beige book mentioned real estate, residential real estate coming down. this is the most leading indicator in the economy. so charles, i would, i would look to trading tomorrow morning to show concern about the price inflation that is very evident. i mean if people are walking off their jobs, that is pretty strong wage inflation. so i would look for potentially another rate hike in march after december. but the markets have begun to price that out, based on their leaning towards pockets of weakness that are now evident in the fed's own data and research. charles: because there

gave ant john williams interview and set of the market is listening, which is what the market wantedto hear. there was a word that jerome powell was tone death. john williams made those comments, the dow surged 400 points, it quickly gave back but that reaction shows just how addicted the market is to the fed. if i can come out and kind of calm -- is the fed can come out and kind of calm down be marketed it, that shows. arestors have not really dissipated in the bull market of the past decade, so if we do start to see folks kind of move money back into the market, especially after the declines we have seen, a buy low, sell high phenomenon, that can help as well. host: there is another publication talking about the a spat withving jerome powell, talking about possibly even changing him as the head of the fed. are you hearing similar things? guest: i saw the bloomberg report this morning, talking about how president trump has talked about the possibility of removing jerome powell as chair. whether or not he can do that remains to be seen. i mean, i think the lost days that the presiden

they're starting to see that, seeing that with john williams' speech and all of the other messages young from the federal reserve. less urgency to act. the economic fundamentals tell them one or two rate hikes are justified but they're looking at other things now. >> you think one or two next year >> i don't think more than one or two next year but if financial conditions continue to tighten, they may step back away from that >> john, your thoughts on this >> i think anthony has it right. one or two at most, more likely one. but when you look at the inflation numbers, i am sure steve can get a graph on this, there's huge disparity between cost of services and cost of goods. we have had deflation and goods for a number of years. i think that discrepancy will limit the fed actions, they'll look at this and i agree with anthony, one maybe two, more likely one move next year. >> steve, i will give you the last word. >> the trouble is the x factor again which ends up being how tariffs end up effecting inflation output, how the fed folds that into its forecast tariffs have stag-flation with

. >> and you will be speaking with new york fed president john williams in the morning. >> see if we can get more clarity on the outlook with one of the principal policymakers at the federal reserve, new york fed president john williams, that will be 10:00 a.m. tomorrow. >> where is he on the hawk/dove chart? >> he's sort ever in the middle, maybe leaning a little bit right or towards the hawkish side. the reason i say that is because amid all of this tumult in the markets he sort of stuck to his guns that the fed needs to raise and i guys that's where all the voters are right now remember yesterday's decision was unanimous. there was no dissent. >> we will see so if he softness his rhetoric tomorrow that could be key, or not. either way steve, thank you very much >> sure. >>> we're watching a major selloff again today. the worst year for the dow in a decade the nasdaq down 20% from its august 30 highs and it be could the first time in history that december is the worst month of the year for the s&p 500 on top of that a new survey of retail investors showing that bearish sentiment is

serious dilemma here we have banker after banker today say things are just fine not to worry we have john williams, the president of the federal reserve bank of new york, saying a strong economy furthers rate hikes. they are saying things are strong rosy even and you shouldn't be worrying about what interest rates are saying ignore them. they say the real fewer is higher wages and full employment to me they sound like they have lost their minds. >> they know nothing, nothing, nothing! >> the fed says things are gangbusters. the interest rate primer says be afraid, very rafraid i don't get it the banksters can't be relied on they are naturally positive. their long boat show, i don't blame them but their stocks are trading at or near historic lows versus the balance sheet and the earnings may be ready to fall apart they ne if the fed keeps tightening and it gets more and more tortured, some say it's axeio matic with recession. how about the companies? the manufacturers are adamant. the orders are slowing they are getting concerned no panic but they are concerned what would make them sound the alarm?

as john williams of the new york fed has said, it is front and center.he technology in senator lugar's time in indiana was a little different than the huge service sector success of indiana today. david: senator, one of the things in start contrast, we have to remember nafta was negotiated and signed by president george herbert walker bush. now we have a president who says it is the worst deal ever. there was a very different approach to trade. was president bush 41 right? or have times changed so much that he no longer is right? richard: no, he was on the right track. free trade for the united states has always been the strongest policy would have. , want to affirm that very much in absolute contrast to today. in the same way we discussed nato. he was strongly for nato. we should be strongly for nato. he was on the right track both times. david: but the population doesn't necessarily agree with that. there is a significant part of the american population who think, if it is not isolationism , america first is the way to go right now. one of the things t

potential for bust in housing prices and what it would mean for the to economists on my staff, john williams, who is now of the federal reserve ank of new york, and glen -- gave a presentation in which they talked the federal open what committee through would likely happen to the prices fell use nationally 20%. which was considered almost unimaginable. of course, they fell more than that. basically, the answer was, have a might well recession. it would certainly have a negative impact on the economy. the decline in housing wealth would have a negative impact on spending. the housing industry would be severely affected. ripple effects through the economy. this was ked like something the fed could probably contain. cut interest rates. this was probably manageable. decline in ke the stock prices in 2000, that a recession. it was a relatively mild recession. interest rates. it was not a pleasant thing but crisis.t a financial paul krugman: wow. so people did actually -- they will just say nothing ever happen, but, all right. boy. this is material in the public domain so the fed contemplating tha

i think what he said and what's been said -- although john williams said rates were going up one implies a slowdown and that's a lose-lose as far as equities are concerned >> as traders, we were watching and really thought it was just going to be this huge dislocation between powell and trump and they would take their sides and twoshl horrible for the markets. i think he just reiterated what the fed's posture has been the fact he came out and said something was enough to have everybody go, whoa, wait a second they are obviously in teen with the market we have to take a step back. >> doc, as closely as you watch the options market, it's not been, you know, shoveling calls on the s&p into their books. >> right >> it's not like sentiment had completely shifted, right? >> right i'm trying to wrap my head around this, judge we're looking at a vix of 19 19 on a 600-point sell-off that just doesn't jive at all. i mean, i can't remember something like that. >> you think it should be higher >> significantly >> you do have a day off tomorrow, jon. >> i know. >> the market is closed tomorrow the in

ten-year has done okay i'm not sure what to read into that i've talked to john williams and others about it at the fed they don't seem as worried about it >> it's not suggestive of more dramatic slowdown than the fed sees >> the san francisco fed is the champion of yield studies. john is the second most important person on the committee, very powerful, a great thinker. when it happens to go flattish or negative, six months to two years out. so we don't know where we are if, indeed, that's the case. remember, to get to one of the points earlier, we are dealing with what was radical, different policy what do we do now? how do we get out of this? >> a lot of what we talked about has been about the domestic economy. >> that seems to be what could be affecting the yield curve >> i think that is affecting yield curve. we're the best looking horse not in the glue factory. we are, as i like to say now secretariat in 1973. this is relative kate andy talking in the greenroom, my theory about systemic risk is europe. europe is in a tender position now. they stopped that policy with negative interes

>> if the federal reserve were to decide not to raise interest rates going into 2019, and john williams was interviewed by my colleague steve liesman this morning, he's the president of the federal reserve. he said interest rates next year are not set in stone. if financial conditions deteriorate, the stock market falls more deeply, credit markets get disrupted or we see signs of serious slowing in the economy, the fed may not raise rates again at all. that boosted the market early this morning by 400 points before we started to sell off in the middle of the day. part of it on the shutdown, part of it peter navarro, the president's top trade adviser said the negotiations with the chinese over trade that will begin in january will not be easy, and that sent us to the lows of the day. >> we have all kinds of folks watching tonight. we've got young folks and old folks and rich folks and not so rich folks. is there a bit of advice that is convertible no matter who you are in life? >> yeah, time is the element here that's most important if you're an investor. if you have down payment money i

two economists on my staff, john williams who's now president of the federal reserve bank of new york, and glen rudebush, gave a presentation in which they talked the federal open market committee through what would likely happen to the economy if house prices fell nationally 20%. which was considered almost unimaginable. of course, they fell more than that. but basically, the answer was, well, we might well have a recession, would certainly have negative impact on the economy. the decline in housing wealth would have a negative impact on consumer spending. the housing industry would be severely affected. there would be ripple leffects through the economy. but it looked like this was something the fed could probably contain. the fed would cut interest rates. this was probably manageable. something like the decline in stock prices in 2000 that caused a recession. it was relatively mild recession. the fed cut interest rates. it was not a pleasant thing, but it wasn't a financial crisis. >> wow. okay. so, wow. so this is a -- so people did actually -- they didn't just say nothing will ev

john williams emphasized we are in a world of low equilibrium riskless rate.m for conventional monetary policy. central banks need to be just as concerned about people in that keeping inflation at target as above target. we have announced that the federal reserve system will be -- an assessment seeking input from a wide range of stakeholders and experts. still with me on set is laura and michael mckee. i feel like this week is the fed deluge. everything out there so nothing gets caught in the foreground. we don't know what the economy is going to look like in 2019. michael: going into december, that rate hike is baked in. they are not going to disorient the markets. 2019 is going to be data dependent. said today that we don't know by 2019 whether the economy is going to be very different. the tailwinds we have gone from the tax cuts are going to start to fade. we've got 90 days to see what will happen with trade. we don't know what is got to happen with a government shutdown because that is going to be postponed for a couple weeks. a lot of risk factors, not t

even john williams, who is speaking this evening, said he is watching the data at of the december meetinghe employment report. it is really hard to see them not hiking the right now. maybe they are worried about the trade war impact. a lot of questions and we will get more answers. shery: let's go back to eli lee, who is still with us. given what is happening in the bond market and the yield curve, does all of this signal we are headed toward a peak in equities soon? >> know, i do not think so. i do not think so. we are seeing an inversion in part of the bond year market and it is a reaction to what has been perceived as a dovish tilt to the fed in the last month or so. believe there is still healthy growth in the u.s. economy and it will not be a strong euros it was this year, it will still drive some appreciation in the equities market. shery: which part of the curve are you watching? market has been disturbed by the five-year, two-year part of the curve inverting over the last few weeks. the largest signal is the 10 year to year. inversioneen driving is the perceived dovish tilt over t

we heard from john williams from the fed. anything new from him on the dollar?arket and interpreted jerome powell's comments as dovish. the range of neutral estimates. that means it could be close or far away, so the market interpreted it as dovish. fed chair williams did come out on the hawkish side, saying rate increases are going forward. he did not allude to the yield curve inverting. it has been flattening near-term. that is a hawkish thing. going forward, the employment data out friday is extremely important, particularly the wage side come to see if that supports further wage hikes or a pause. yvonne: thank you for staying late with us. take a look at equities here. the nikkei is turning around. rishaad: certainly after the lows of the day. just down .3%. topix likewise. -- dollar isking making a comeback against the yen, just shy of 1.113. some of those movers, mitsubishi gas on the way down as it is said to be reducing its stake in a saudi company, selling that stake. that is what we have. nissan, we have been reporting on that as well. the break is upo

coming up, we'll discuss president trump's nomination of william barr with john malcolm. en a look at potential changes to the h one d.c. program with william kerr. we will also discuss the opioid crisis with regina belle, former chief of staff at national drug control policy. be sure to watch washington journal live at 7:00 eastern. join the discussion. >> here is a look at our live coverage tuesday.