i'm going to call you professor stephen stanley.m an economist standpoint, there is a reason why the fed and chair jay powell said what they did during the jackson hole symposium. there is a legitimate concern about the labor market and the possibility of the u.s. entering a deeper economic downturn. is that the right way to approach it? because it sure looks like a lot of the other data points speak to no imminent recession at all. >> yeah, i think the economy's in okay shape. i don't think we're headed into a recession, but if you're the fed, your job is to manage your risks. for the last couple of years, the risk has been on the inflation side. now inflation has come down, the labor market has cooled enough that i think the fed has to at least think to start to consider that risk, and as steve laid out, the fed is quite restrictive now. so they're signaling they're in the beginning of moving back towards neutral. >> all right. guys, i want you to each hang on. we have a critical two-year note auction up for grabs right now. rick

stephen stanley taken the other side.obody seems to be taking a breath. this selloff continues. a snapshot of where equity futures are. down 4.5% on the s&p. down almost 6% on the nasdaq. on the russell down 5.5%. a number of hours ago people in europe were thinking about the u.s. coming in and buying this. it is not happening. dani: it is certainly getting sold. the volatility story is getting worse. the vix and 15 minutes went from 50 to 60. this is the kind of trade when you picked up pennies in front of the steamroller. jonathan: they vicious unwind of big trades, including in japan. i want to look at the two-year and the 10 year. the difference between the two was -50 basis points at the end of june. now a single basis point. down 10 basis points on 10 year, down 18 basis point on the two-year. we wake up monday morning buying even more of it. down aggressively. dani: we are and it is kind of the only thing this morning that works come the only thing you can find safety in common that is when you get to this thing is

stephen stanley with this to say. i am especially anxious to see the august employment report.ust jobs report is likely even more pivotal than the august cpi meeting. things have changed a lot in the last 12 months. good morning to you. stephen: good morning. jonathan: you do not love that powell gave up optionality. was that a mistake? what do you love about it? stephen: yeah. i think my view is the fed will go 25 in september. it seems like it is where most of the officials were leading up to jackson hole. you heard words like gradual and methodical. there seem to be a lot of tea leaves pointing in that direction. the markets were only discussing whether the fed would go 25 or 50, not whether they would go at all, so he pretty much locked in a september move, ok, fine. i guess people wait and let the data dictate what the market will pass in, which can be dangerous if the markets go a different direction than the fed was intending. jonathan: let's explore that danger. i assume you mean a big surprise in the unemployed report. you are saying that is why it is dangerous? stephe