mr. kaplan: i think it is early to make a judgment on that.g to be very vigilant about understanding these heightened trade tensions, see if they feed through to the economy, most important they, -- most importantly, see if they persist. and so i think it is too soon, though, to make a judgment as to whether we might or might not take an action. i would rather be patient here and let events unfold a little more. michael: investors have priced in three rate cuts. and wall street economists over the weekend basically joined the consensus that you are going to cut rates. you have been in the watch-and-wait camp. what would tip the balance for you? when would you think that you need to make a decision? mr. kaplan: i would need to see some evidence that there is a further deceleration of the economy. we expected that growth would slow from 2018-2019, but we are still growing above trend. we still see a tightening in the labor market. and our dallas term mean, which is our measure of core inflation, is now at 2%. we think we will end the year around

mr. kaplan: i think it is early to make a judgment on that.be very vigilant about understanding these heightened trade tensions, see if they feed through to the economy, most important they, see if they persist. and so i think it is too soon, though, to make a judgment as to whether we might or might not take an action. i would rather be patient and here and let events unfold a little more. michael: investors have priced in three rate cuts. and wall street economists over the weekend basically joined the consensus that you are going to cut rates. you have been in the watch-and-wait camp. what would tip the balance for you? when would you think that you need to make a decision? mr. kaplan: i would need to see some evidence that there is a further deceleration of the economy. we expected that growth would slow from 2018-2019, what we are are still growing above trend. we still see a tightening in the labor market. and our dallas term mean, which is our measure of core inflation, is now at 2%. we think we will end the year around 2%, so i would n

mr. kaplan seeds to be throwing cold water over some of the markets hopes of an imminent fed cut at the july meeting is it your expectation that the fed may well go ahead and get this cut out of the way at the next meeting >> if you look at the futures, there's 100% certainty that they'll cut. i think they're just playing for time through the g20 talks if a deal gets done, which we think is unlikely, you might have to put those interest rates on hold. because the domestic economy in the u.s. is doing perfectly well, thank you. you have nearly full employment. you have low inflation you have retail spending, which is quite high. consumer confidence continues to rise the back drop is reasonable. if you have a deal, maybe it's on hold for the moment but unlikely we get a deal >> simple question how do you play a rate cutting cycle? where do you put your money? >> so far the stocks that have done well this year are the staples. defensive stocks what is underperforming is things like industrial stocks, material stocks. things that do well on a dollar weakness and emerging market stocks if you do

about the economy, and what is ahead, the president of the federal reserve bank of dallas, robert kaplan. mr. president, it is always a pleasure to see you. thank you for being here.>> thank you, maria. maria: had you characterize things right now? we are seeing pmi 's slowdown that is global not just the us. is that with the real weak spots are? and are you expecting a slowdown? >> yeah, so -- we have been expecting that growth would slow from 2018 until 2019. and we thought that last year and you have heard me, i talked to about it. the reason we thought that is aging populations, slowing workforce growth and waning of the sizable fiscal stimulus. particularly, the spending aspect of the fiscal stimulus was going to wane. if you had been the show april 30, i would've said you know, our forecast would have been 2 1/4 or two and half percent gdp growth for 2019. i might have said that if i was wrong, we might be wrong too low. in other words it might be better than that. then the china talks hit a snag, the threat of tariffs on mexico were very significant for u.s. businesses because so many

mr. kaplan said the fomc is looking more at credit dynamics than equity per se.ility model that builds on the fed methodology. tom: pushing to 2020, are you there? cameron: we are not there but getting there. tom: are we there? tom: the odds have lifted a bit, but we are not at a point where the recession will happen in 2020. it depends on your perspective. we have a robust recession model as everyone on wall street does, and i would say over the course of the prior year, recession odds were sitting around 10% for the coming year and they have drifted closer to 12%, 13%. claims play prominently. while they have stabilized over the last week or two, they are coming off big numbers because of the chainstore strike in new england and problems with seasonably adjusting the spring break holiday. i would say generally speaking, they have drifted but it is still marginal. francine: pain some of your latest pieces, -- in some of your latest pieces, you say the fed is not right -- the fed is right and not panicking and expanding the credit market. cameron: my model is bas

joining me right now in exclusive interview with federal reserve bank of dallas president robert kaplan mrst expect economy to slow according apparently to federal reserve how could you characterize things right now what are you expecting for 2019 sir. >> if i appeared on this show at april 30th i would have said i was expecting growth u.s. economy for this year 2 and quarter, 2 1/2 piers if wrong probably be on the low side. i expected growth from 19 -- from 2018 to 2019 to slow because of fiscal stimulus but pretty good momentum heading through the month of april. then may 1 through may and june, heightened trade tensions with china then the issues with mexico and threatened tariffs there, what i noticed from my contacts and all our surveys at dallas fed it is companies started pulling backs a bit on capex to degree uncertainty was enough to cause them to take a wait-and-see attitude so as i sit here today our estimates dallas fed for gdp growth this year is now 2%, the big change is really in the last 8 weeks, has been due thientd trade sanctions feeding into that, decelerating rates gl