what i find most interesting is that question that steve liesman just brought up. how is that goes to affect the markets? actually, bill, i think i have an easy way to attack that look at it this way. the last time we were at 2.63 on a closing basis was the 13th of march of 2017. so, where were the dow, the s&p and the nasdaq on that particular day everybody's worried. what's going to happen to the stock market the last time we were there in

but first, steve liesman, on where the economy may go next. a look ahead is this week's >> reporter: 2018 could be a year of big change for monetary and fiscal polha first, growth in the u.s. could average 2.5% to maybe as much as 3% as the u.s. gets a lift from overseas growth, better domestic demand and stimulus from a tax improvement from the past several years. the question is whether those gains can last or if they're second, the u.s. budget deficit is likely to rise next year and will need better growth to bring in more revenue to pay the tax and finally the fed is likely to hike interest rates three times, as new chairman jerome powell takes the helm. and here's a course for the fed along the lines of his predecessor janet yellen. if growth really takes off the fed coul >>> 2017 saw a big slowdown in the housing market. not in prices but in home sales because there was nothing to buy. sales slow more. sales could become even more sluggish as the supply situation warsens. yes, home builders will continue to increase production. but slowl

steve liesman, the headline number seemingly disappointing but it was a solid report this morning, wasn't it >> yeah. i disagree that even the headline number was disappointing in the sense there was this whole political hubbub about 3% economically, no one really cares if it's 3 or 2.9 the idea is that we're running above trend. the trend growth we think is between 1.8 and 2% we did a third quarter that was solidly above trend. and you're right, even though the headline was lower than expectations, the internals were pretty good. consumers did well, business investment did well. there's a chart that shows you where the fed and the cbo think trend is and how we've done the last three quarters which is running above it what i like is you had those two quarters above three and you didn't give it all back or revert to the mean in the fourth quarter. and it looks pretty good, bill, because we think there's some stimulus coming from the tax cuts as well as the greater

steve liesman takes a look. s to have gotten his 3% growth number during his first three quar is how much he is responsible for and it whether the growth can continue. gdp afternooned exactly 3% since the second quarter of 2017. that's assumes the fourth quarr comes in at the projected 3%. that's an extra 1% of growth compared to the prior four d mos of that extra growth has come from investment, including less growth in structures and housing but more growth in business equipment. one force that could be behind it is increased business confiden from the president's policies, including expected tax cuts and actual deregulation. higher stock prices could also be generating a wealth effect. >> you have gone from an administra that said you didn't build it to an administra that says how can i help you build it. >> repor part of the equipment spending increase looks to be tied to energy. the growth has also been helped by more federal spending from the feds. there is also a big boost in inventories and in trade in p

but we begin with steve liesman. >> reporter: here's what could happen. first, growth in the u.s. could average 2 1/2 to maybe as much as 3% as the u.s. gets a lift from overseas gross, better domestic demand, and stimulus bill. the question is whether those gains can last or if they're just one-time events. second, the u.s. budget deficit is likely to r and we'll need better growth to pay the tax cut bill. the ten-year yield nears 3%. finally, the fed is likely to hike interest rates three times as new chairman jerome powell takes the he steers a course along the lines of predecessor janet yellen. of the fed could consider a fourth hike if the economy really takes off. i'm steve liesman for "nightly busi" > ipos and women in leadership. three predictions for 2018. first, get ready for a much stronger ipo market. 2016 was a terrible year. 2017 was better. 2018 will be much better. big names will likely go public including sandwich shop pret a manger. finally there's a shot that saudi oil gian aramco may list in the u.s. as well. 2018 will see one or more major banks create a platf

for "nightly business report" i'm steve liesman. >>> now to the earnings we mentioned earlier. caterpillar had a quarter few investors saw coming. the largest heavy-duty equipment maker reported profits that trounced expectations and gave upbeat guidance for the full year. that lifted shares. morgan brennan has more on the big cat's blowout quarter. >> reporter: at four years of sales declines the world's biggest maker of heavy machining snapping its losing streak reporting revenue in 2017 as mining and construction rebounded around the globe. jim you thinkelby saying economic indicators are positive and he expects a strong start to the new year. >> we are expecting to capitalize on sales momentum or quickly adjust should conditions change. we also plan to grow the company by offering expanded services. >> reporter: after years long slumps tied to the collapse of commodity prices sales are picking up across all of caterpillar's major segments. construction, mining are expected to grow this year. just as a restructuring within the company has taken root. analysts say caterpillar

as steve liesman tells us, that could mean an even more aggressive fed. >> reporter: for retailers, it was a very, very merry christmas. based on government data report friday, the national retail federation estimates that holiday spending surged 5.5% for the best season since 2010. >> we saw from the thanksgiving we could, it was clear the consumer was back and retailers were in a good place to responsibili to consumer demand. >> reporte onlin sales showed the strongest growth with combined november and december revenue in the category that includes e-retailers hiding $110 billion, up almost $13 billion from last year. with consumers leading the charge, economi now believe the u.s. registered another 3% quarter growth in the fourth quarter. that's the third three in a row. the u.s. is not only benefiting from domestic growth but overseas economies are helping as well. >> we are seeing synchronized global growth period which is really quite rare. i think that's one of the key offsets of why both the market in the u.s. and markets globally are doing so well. >> reporter: the one downsid

weiss, jon and pete najarian, kevin o'leary, and with us on set, our senior economics reporter steve liesman. we begin with the markets today, what's already been a wild week. the dow traveling an astounding 1,500 points in the last four sessions, hitting a new high earlier today before turning negative we're just off the lows of the day. rates are in focus the ten-year is pushing past two six. pete, what's happening we erase a 280-point gain the other day. then we go up more than 300. then today we find ourselves falling as we speak. >> a little slipping >> welcome to the new world of the market >> welcome to the new world, and you talk about 1,500 points, that's why we're seeing the volatility rise the way we're seeing it. this is significant. these moves are huge they have volume behind them i was talking about the volumes the other day in the options world. 24 million, 37 million contracts over the last three sessions so volatility is here, scott i wouldn't be surprised if we start to see a new range for volatility everybody has been expecting it. but we get these kind of moves, and we s

let's get to steve liesman who has a very special guest steve, good morning. >> becky, good morning i'mith dallas fed president robert kaplan thanks for joining us, rob. >> good to be here. >> president cap lap, excuse me. >> thank you. >> let's get right to it last time we talked you had not raised or altered your economic forecast because of the tax cuts. >> right. >> i think it was early days you haven't quite passed yet have you done so now >> yeah. >> so how much >> for 2018 we've marked up our gdp forecast by a few tenths of a percentage points so we're expecting 2.5%, 2.25 gdp growth for 2018 a little less of a positive effect for '19 and even a little less for '20 so we think the effect of the tax law will be front-end loaded and will tail off. >> why does it tail off? >> well, the first -- there's a corporate tax reform element we hope that part will be sustainable. >> right. >> which encourages people to domicile invest and all that have and there's part that's a tax cut financed by the increase in the tax debt. that's the part i was more concerned about which gives you a shor

the new tax law either has everything or nothing at all to do with the decision let's bring in steve liesmanook at the real economic impact. >> brian, thanks despite businesses and investments plans from the tax cuts, these are certainly early days for assessing the potential economic effects of the tax cut. the early returns are good but it's like calling it an election with only 10% of the ballots counted. too early to call. a large part is from the tax cut. senior economist at the budget model, told me nothing he heard from apple or any other companies has altered his forecast "the apple announcement is certainly part of the justification for the tax cut and evidence that it's doing the things we thought it would do. but the magnitude doesn't suggest huge labor income. there's a positive market effect from the market but another thing to go forward and say that the bulk of the extra money ends up as capital spending, new jobs or higher wages, which will have a very positive economic effect rather than share buybacks or dividends where the economic impact is less >> i love steve liesman. i

steve liesman explains. >> reporter: u.s. economic growth in the fourth quarter registered a bit below economists expectations but the details of the report were stronger than the headline. gross domestic product rose 2.6% as an annual rate for the three months ending 2017 down from 3.2% in the prior quarter. but it was the third quarter in a he ro of above trend growth. that could mean more jobs but also higher interest rates ahead. >> the jobless rates is likely to move down yard because growth is moving above potential. the reserve will continue to raise rates just like it did three times in 2017. it's likely to raise it three times in 2018. >> higher oil prices propelled investment in the energy sector. higher stock prices motivated consumers to spend more of thb their income than they had been in the past. taking away from growth was a sharp decline in inventories and a surge of imports. they are likely to continue to drag as heavily on the economy this year. president trump didn't get the 3% figure he made so important

and as steve liesman tells us, it's the economy that's playing an important role in the stock >> reporter: some stock market surges take flight on the hot air of just hopes and dreams. but this one seems to have some solid economic data keeping it afloat. we got more proof of that today with an adp report suggesting 250,000 jobs created in the private sector in december. that was far more than the consensus, and far more than economists expect for tomorrow's jobs report from the government. adp adds to a running series of economic surprises that's seen goldman sachs' economic surprise index surge to new levels. the street keeps underestimating the strength of this economy. all that adds up to overall economic growth that for three straight quarters looks to be running well ahead of potential of just around 2%. the second and third quarters in fact offered the first consecutive quarters of growth since 2014. estimates are still healthy for a 2.7% growth rate. there are definitely reaso for caution. the stock market has high hopes for the effect of tax cuts. those tax cuts better deliver to

the fed beginning a two-day meeting in washington and steve liesman joins us with the findings of thevey steve? >> thanks very much. we asked our 40 respondents who gets what from the tax cut in other words, what's the cut from the tax cut let's take a look at the expectations for growth from the tax cut. the first thing you'll see here is they have increased their expectations for this year looking for about 60 extra basis points of gdp. that's up from call it 45 in the prior survey and in the december survey 19 another half of a point and then average over the next ten years is 44, 45 basis points that's unchanged seeing it diminishing over time. pretty good pop. they've pulled forward some of the benefits who gets what? what's the cut from the tax cut? 8% say it primarily benefits workers. 54% say shareholders and executives 39% say both we went deeper if you have a dollar of tax cut, how do you think companies on average will apportion it? here's the data. 36% or 36 cents on the dollar goes to share buy backs and dividends. 22 percent to capex. 32% to debt reduction. just 12% goes

eric rosengren and dallas fed president robert kaplan will sit down with steve lease mran y liesman onhe earnings front, jpmorgan, wells fargo, blackrock are all reporting results today. don't miss blackrock chairman larry fink, he will be on "squawk box" in the next hour. >> those blackrock numbers will kick off the earnings this morning. those come out at 5:45 a.m. during this show that interview on "squawk box," and then the banks will continue hitting their numbers throughout "squawk box. jpmorgan at 6:45, wells fargo at 8:00 a.m >>> facebook unveiling its biggest changes to the news feed in years landon dowdy has the details on that for us. >> facebook is getting friendly. you could be seeing more friends photos and updates facebook is changing your news feed preferring posts from friends and family over business posts. mark zuckerberg announcing he is changing the goal i give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions this could have a negative impact in the near-term, not just to the publishers who

steve liesman joins us with more on the numbers. >> the details are stronger than the headline and that's the u.s. economy. trading inventory ended up taking off nearly two full points of gdp while the parts that matter were up. here's some of the details 2.6, we were looking for 2.9, so not a big miss consumer up a strong 3.8, the best since the second quarter of 2016 business investment was strong at 6.8, best since the third quarter of 2014. housing was strong as well as government, federal and state both up as well. bmo says the u.s. economy had a solid end to 2017 and early indications point to a firm handoff to 2018. let's get the political nonsense out of the way the president didn't get his third straight quarter 3% growth but that's irrelevant from an economic point of view >> i think we're going to see short-term aberrations in any quarter. we're comfortable in saying that our objective is a sustained 3% gdp over the long term so we're not concerned about any one quarter which can be revised up or down relative to where everybody else was talking at the beginning of the year, i

steve liesman back at hq. >>> coming up, we'll have much more on the health care initiative that's a for it. we'll discuss it with bill george sometimes, they just drop in. cme group can help you navigate risks "squawk on the street" is back in a few minutes advances. ♪ like you do sometimes, grandpa? and puffed... well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort co

sector jobs surged in the month of december, and that's ahead of the jobs number tomorrow our own steve liesmanns us steve, thoughts on adp today and what it says about labor tightness and potential inflation? >> really strong number, carl, and if you looked across, you know, if you look into the details, strong job gains from small, medium, and large-sized business and strong jobgains across sectors we did well in manufacturing, well in construction, and, of course, the service sector plowed ahead there is some tendency to overstate december relative to other months, but one thing we did see, carl, is a jump up of fed probability. more inflation, more certainty the fed is going to deliver the rate hikes we're at 37% now for the third rate hike to happen in december, and we kind of pushed ahead that expectation for the second hike now. it had been september, now there's a greater than 50% chance it happens in august. so seems like we keep finding the workers. wages don't seem to be going up too much i think there's great jobs boom we've been having can continue into part of this year >> anthony

steve liesman has more on what this is all saying about the market steve? >> thanks. ten-year 262 takes out the march 2017 high. the next milestone, 3%, the high of 2014. the question is if we're going there. fixed income traders say it's within range of possible if the economy grows 3% and if the fed pushes short rates to the 2% level as expected. you might need a little inflation to get to such a lofty level. the bigger question is, why hasn't this happened already the markets pricing in three rate hikes which will bring the fed fund rates to 2% by the year end and two-year is already there. 2.6 on the ten-year is light compared to the to the bigger story has been the fail you're of the ten-year yield to rise. it's fallen by 75 basis points, down to as low as 50, now back to 58. the reason, lack of inflation, lack of strong demand at home and abroad and maybe belief in markets that economic growth won't continue quite as strong as it's been if it does, higher rates shouldn't keep -- you know what we'll look at is not just the ten-year but the real rates in the real

steve liesman here on set on the rapidly rising interest rates, but we begin this hour with bob pisani where stocks are rebounding bob, what's going on >> slowly but surely, about you it started out rather rocky. preopen, the futures contract, where about 35k trrp some reports that china officials may consider slowing or halting their purchase we dropped seven or eight points and slowly clawing our way back, and none of that is confirmed, throw in gundlach's comments yesterday, gross's comments, take a look at bond proxies. utilities are at ten-month lows, reits at six-month lows, so that whole complex is under pressure. higher rates, of course, yields up that's helping the banks ten-year yields close to ten-month highs, so most of these banks are at the highest levels since 2008. transports, you heard earlier from tyler, united and american raised guidance helping the airlines remember, railroads have been the real performers this month talk about sectoro tags, tech has been under pressure, and remains under pressure so over in taiwan and over in korea, we saw some of the big names, t

unemployment holds steady at the 17-year low of 4.1 now we have a four-month low in ism services steve liesmanigging through all that >> this weaker than expected jobs report, economists say doesn't change their view that the jobs market is pretty strong, actually here are the numbers carl was telling you. 148 versus a survey or consensus of 180 just a little below. october/november revisions add up to minus nine average hourly wages, reasonably strong gives us a 2.5% year over year rate unemployment rate unchanged. 4.1%, and labor force participation at 62.7% ian shepherdson says the rise in payrolls is much smaller than implied by the array of private sector surveys we're inclined to see this as noise rather than a shift in the trend. john herman suggests some drag from statistical issues like strong seasonal adjustments depressing the number and a low response rate. he says that could mean upward revisions in the future to these numbers. here's where the jobs were 30,000 on construction that's a big number. leisure hospitality, up 29,000, also strong. education and health services, that's a

. >> we are going now to steve liesman with the fed decision. >> no change in the fed fruunds rate it's.25 to 1.5%. unanimous decision by the nine current voting members of the federal market committee powell was unanimously elected as the chair of the federal market committee beginning on february 3 powell will be sworn in as chair of the board of governors or chairman of the board of governors on february 5. the federal reserve repeated that it expects the economy to evolve in a way that will warrant further raises in the federal funds rate or gradual rate hikes it upgraded the economy a bit. more confident in the inflation outlook as well. it said gains in employment, household spending, and business investment have been solid that's an upgrade for two of those measures labor market continues to strengthen economic activity is rising at a solid rate unemployment stayed low. on the issue of inflation a little bit more confident in the outlook. saying that it expects inflation to evolve in a way that it begins to rise in the next 12 months expected to move up this year and stabilize ar

. >> brilliant thank you very much for that >> don't miss steve liesman's exclusive interview with dallased president robert kaplan at 13:10 cet. >>> details on that fiat chrysler headline, they are expecting to pay bonuses after u.s. tax cuts or reforms the company will give 60,000 employees bonuses of $2,000 each that's quite a significant total. the carmaker also announced it will boost its investment in the u.s. by putting more than $1 billion into a plant in michigan i want to bring you more news coming out of germany. we had this five-day media blackout over the spd, cdu talks, we're getting a number of headlines coming out of the end of those talks the german conservatives and the spd saying they do not want to close chapters in turkey's eu access the spd aim to get 65% of energy from renewables by 2030. that's another spd agenda top item they plan to invest 6 billion euros in digitalization and education and planning 4 billion euros to promote social housing and homeownership it seems that the spd are getting a lot of their wish list fulfilled by the cdu and the csu. we'll get you

as steve liesman and the beige book may have under stated how well the economy is doing.have been reversals in races for the gop in various states most recently wisconsin in a state senate race there. with the economy doing well, with a company like apple coming in saying we are going to create 20,000 new jobs in the united states, build a new major campus in this country, isn't that going to -- isn't the state of the economy going to be the thing that voters turn to this fall >> it tends to be a more significant factor in an electi election the distinction is the damage i would say trump has done to hilhil himself. the apple press release speaks to that. don't reference the tax cut, the trump administration i don't think that's by accident when you write those press releases you know what you are and are not putting in there if you were looking at it subjectively, the president should be probably higher considering where the economy is now. when you run what is essentially a divisive presidency, your rhetoric, the words he uses, how he talks to opponents, about the media

it is the two jasons and our own steve liesman.ou for joining us jason furman, jason johnson. you can catch joe kernen's entire interview with president trump at 6:00 a.m. on "squawk box. >>> semiconductor firm maxim reported after the bell. the increase individend by 17% on top of strong guidance. you're seeing the stock pop about 5% after hours back to you, kelly. >> thank you, eric maxim up 5%. >>> airlines going the other way. not exactly taking flight again today. jetblue, american, southwest, all seeing their stocks hit after earnings we'll look at what's behind that turbulence >>> government officials have been jockeying favor to land amazon's second headquarters we'll talk to a mayor of a city and saying amazon y mabe using up in what's goodwill in a pr-driven search roperty, like their car or home computer, to help them do their work. but they might not know that those items may need special insurance to protect against costly damage, theft, or liability on the job. trusted choice independent insurance agents represent mul

. >> they have been transparent but we had steve liesman on the half time today and he was talking about three, maybe four hikes. now that's interesting to me because that makes me feel like then the fed is being a little bit less transparent than they have been in the past. they were talking about three. we sudden ekick in a fourth is that something that starts to tip? >> my point is it's also asset prices too, right? if you had a risque set melt up, then you have have to do something. >> i'm worried about the commodity melt up. inflation that isn't asset prices but labor pete mentioned velocity money. we are seeing bonuses. some of that money, apple is not going to be spent. these deferred tax money so many of these bonuses coming up combination of labor look at oil. we see another oil spike, that's the cause of it not rising asset prices >> what do we do with our portfolios if we believe there is a risk from higher interest rates and or inflation, guy. >> you stay with material stocks they have been the big beneficiary over the last six to nine months. tim see more has been on this. f

if people can remember steve liesman's report, but talk about -- interesting, the fed members of themost of them boosted their gdp expectations, danielle, and yet they were fighting about whether or not inflation would stay flat or lower. that was a lot of back and forth. a lot of back and forth and you heard about the financial conditions and i'm starting to hear jay powell and jay powell exerted himself in these minutes and i think we heard from william and from the new guy in atlanta who is coming in as a voter, and i think we heard from him from the doves that would be going on, but on the other hand there were a lot of hawks making their presence known 69 -- excuse me, 17 out of 18 industries described pressures were increasing and it was a six-year high. >> how much will this matter since there's so much change all of these people who are in this room, and i don't want to call it fighting, but having intense debates about whether inflation will be up or down a lot of them will be gone >> are we starting to hear voices that we haven't heard before >> are we starting to hear quar

. >>> next, steve liesman's exclusive interview with the president and ceo of the federal reserve bank of cleveland. e-mail us, find us on twitter and facebook the "csilong bell" is back in two minutes. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. >>> welcome back another day of records dow jones industrial average higher by another 156 points today. 25,231 the s&p 500 higher by 13 and the nasdaq higher by 43 points 2/3 of 1%. 7,121. putting 7,000 comfortably behind us. >> and those mid and small capst kevin o'leary. they're seeing a resurgence. record territory for the russell. >> cboe, bitcoin futures on pace for their best week ever that's since they started trading last month last week was previously the best week ever when they each saw gains of around 4%. >> the long history of bitcoin trading. >>> the american economic association is kicking off its annual conference this weekend

weiss, jon and pete najarian, kevin o'leary, and with us on set, our senior economics reporter steve liesmanh the markets today, what's already been a wild week. the dow traveling an astounding 1,500 points in the last four sessions, hitting a ne

still with us, jared bernstein, alex bril, steve liesman, and rick santelli.aying "price is right" who is our winner >> jared is. >> nobody. >> nobody. >> no one. >> everybody is over >> i guess jared would win >> jared, the first word >>. >> i did get the walk growth year-over-year corrects, and that's like jason said, that's super important, and it suggests a nonacceleration in the pace of wage growth, which is, of course, relevant to the federal reserve. >> you're right here is there like a bad news-good news situation there could be a good news-bad news situation if things were running hot, that might be a problem >> the good news-good news is that we're a long way from good news being bad news. if that makes sense. 2.5% average hourly earnings, you normally don't get yourself into trouble after average hourly earnings are at 4%. that's when the fed tends to get aggressive, and the yield curve -- right now you're in a sweet spot for financial assets. our washington team has counted 85 expects that have announced either bonuses or extra benefits since the t

steve liesman is here with more in terms of reaction to the data not just this morning, steve, but wert. >> big week. big week i am just looking up a number here and i can do that maybe during the discussion, but the savings rate has plunged to 2.4%, and be that's going to be the lowest i was trying to figure out in how long what's happening here is the wealth effect is coming forward in a big way people are feeling flush in their accounts and i think the best argument here is that we're spending morethan our income coming in because we're doing well in the market and other places it's an interesting idea because obviously it affects a portion of the population more than others, but the effect of this appears to drive down the savings rate for years it was personal savings rate, solo now it's negative. then the revisions the consumer stretch, it's not sustainable, no, it is it's the exact same phenomenon. >> i'm worried about publicly answering the question i'm having flashbacks. i won't do that. i will say there are some likenesses to 2006 and like i went to the boat show this weeken

steve liesman is in d.c. ed ex pekted to leave interest rates unchanged for the last meeting but they'll likely upgrade their assessment of the economy and continue to signal graduate rate hikes coming as jerome powell takes office in the next several days. yellen leaves his successor a pretty solid economic record to start on there were 9.7 million jobs created. unemployment falling by 1.4 percentage points. gdp averaging 2.5% inflation 1.17 on headline year over year. how to get inflation back up to the fed's 2% goal. how much rates should rise if inflation remains low. another challenge, how powell should think about the lofty market levels and process all of the stimulus coming from the tax stimulus the markets went up five times to 1.25 to 1.5%. ten year yield didn't move much. started off high and went low but came back to being 2.70. there it is, 70% on the dow up to 26.076. you can debate at home on who is responsible for that here's yellen when she became the first chair in nine years to engineer a ra

. >>> president trump has pushing for a 3% economy he didn't quite get there in 2017 steve liesman thatre our -- >> he's going to be close enough to rock and roll, as we say. now looking at a year-over-year date but the survey shows 40 respondens, that the and you can see that the chance of recession next year, or in the next 12 months is now the second lowest we have ever recorded. the lowest was 13% in january 2015, now it's 13.7% that's very low for the average of this survey the shies, our respondents don't like them at all >> 90 per says the first hike is coming in march, the average is three, but 0.21, that 0.21 there is an expect ace of more growth. >> we're just 20 minutes at. there's a normalization of rates. there is been a very long time about to think about a 2.5 or 3% fed funds rate. >> that has to come into the calculation. >> it's a big, big change. thanks. >> a pleasure. >>> rick santelli, how is the market doing year to day of at the yield curve, we are steepening a bit we're about seven, eight basis points higher. we have to go to breaking news all right. we're not goi

steve liesman, even more positive signs out today. >> you know, tyler, you know this weren't around atime some stock market are built on the hot air of hopes and dreams. this one, though, has solid economic data underneath it and more prove this morning with an adp report showing 250,000 jobs created in the private sector in december more than the consensus and more than economists expect from tomorrow's job report from the government adp adds to a running series of economic surprises seeing goldman sachs economic surprise, index surge to new levels. bottom line, the street keeps underestimating the strength of the economic data and the market rides those surprises higher all of that adds up to overall economic growth that for three straight quarters looks to be running well ahead of potential. second and third quarters of the year offering the first consecutive quarters of 3% plus growth since 2013 and the cnbc wrap it up for the fourth quarter, still healthy at 2.7% growth those kinds of numbers come along with good corporate profit growth, ultimately the fuel of stock market gains

wages rising not blowout pace, but nice steve liesman in philadelphia breaking down the numbers and looking at what it all means for rate hikes this year steve >> reporter: hey, tyler, thanks. yeah, it was a weaker than expected jobs report, but economists said it didn't really change their view that the jobs market is really pretty strong take a rook at tlook at the nume up 148 looking for 180. a touch underneath the revisions add up to not very much more in november, fewer jobs in october. average hourly rages, tyler, 0.3%, 2 1/2 year over year unemployment rate, 4.1%. unchanged. participation rate, 62.7%. here's the commentary we got "rise in payrolls is much smaller than impleaded by the array of private sector surveys so we're inclined to see this as noise rather than a shift in the trend. abnp they're noting "2017 was the year of softening and hiring and wage growth paired with a steady fall in the unemployment rate, way below the fed's estimate of the longer run equilibrium rate." let's take a look, as melissa advertised, where the jobs are, construction up 30,000 leisure, hospitalit

steve liesman looking at the trump economy one years in. >> thank you president trump has hit his 3% growth target during the first three quarters the question is how much is he responsible for? and most importantly can it continue we assume the fourth quarter comes in at the projected 3% growth under president trump is an extra 1% higher compared to the prior four quarters, mostly coming from trade, niche torrie and investment, mostly, folks, in equipment there increased business confidence from the president's expected policies could be the reason, and you have the expected tax cuts coming and actual deregulation, but the president has also benefited from higher oil prices, and part of 9 spending looks to be tied to energy it's also been help by higher defend spending and a boost from trade. job growth strong under president trump. so the trump economy looks to have benefited from positive reactions to the expected and actual policies. true test comes down can continue with some of the policies actually coming into place. >> don't move, steve, we have larry kudlow on set. it's hard

dark clouds on the horizon strong economic numbers forced fed to raise rates faster than expected steve liesman joins us now wow, that good. >> it could, but markets not seeing it much as a dark cloud, more of a whisp of cumulus all of that has dallas fed president robert kaplan thinking about ratethree rate hikes this year, maybe more. >> my base case is still that we should increase rates three times this year. i probably have a little more stronger conviction the three times, not less than three times is appropriate it's possible it could be more than three times, but that's still the base case. >> for mark chance of more rate hikes looks to be eclipsed by strong retail spending in fact, the national retail federation says this was the best holiday spending season since 2010 with a 5.5% gain. economists think the u.s. economy now grew 3% in the fourth quarter for the third three-handle in a row. here's the cnbc rapid update after the inflation and retail numbers this morning 3% dead even up by 0.4% because of the numbers this morning with a range of 2.8 which you can see bank of tokyo and th

. >> let's get to steve liesman with breaking news from the fed. >> randy grossen, one ever his biggest most specific speeches since becoming -- taking that position, saying the feds should step back and assess financial regulations. he said the fed can, quote, improve the efficiency of regulations out there. he said core parts of financial reform has brought gains to the financial system and he wants to preserve the core reforms, capital liquidity and stress testing and resolution doesn't want to change them but has an idea at the margin. he supports the effort in congress to raise the dodd/frank threshhold to really free up some of the small and medium sized banks. he said the fed itself can and should do more to tailer regulations to the size of firms and fed should disclose more stress test detail totz bank that is an area of controversy and he said the financial system is stronger due to the reforms and doesn't want to ease for the biggest banks. so this is one of the things we are not talking about, because we're talking about the shutdown but there is an effort to ease the dodd/f

higher and holding above 2.7% just as the fed meeting gets under way in chicago let's bring in steve liesman with more. >> thanks very much. it is chair yellin's last meeting and it's time to grade the chair and grade the incoming chairman, jerome powell. we asked an extensive set to 40 spopd ents yellen a b-plus in leadership, c-plus for powell. a-minus for economic expertise just a "c" for powell when it comes to that category c-plus and "c" for economic forecasting. nobody thinks the fed does a good job on monetary policy a "b" versus b-minus. two areas our group thinks powell is better, regulatory expertise, b-plus for powell and economic expertise communication, yellen does better and transparency yellen does better. powell has four years to work at this he's not been at the helm. the overall grade here, take a look -- the next -- yeah, overall grade for yellen is a "b," i believe yes, that's correct. for powell, a b-minus. not bad for an incoming chair. take a look at the outlook for fed's fund rate. 2.2. that's a bit higher than we previously forecast. the markets starting to build in

market is focusing on the ten-year ahead to the federal reserve meeting tomorrow let's get to steve liesman>> markets are struggling with a tug of war here when it comes to the outlook. higher interest rates on one side but also higher economic growth the ten-year yield taking out highs not seen since 2014, passed through the 270 level, came down a little bit since then markets wondering if a three-handle is the next stop. forecasters are nudging up their forecast to put a three-handle on gdp growth this quarter and maybe this year after friday's gdp of 2.6%. several economists upgraded their forecast for the first quarter to 3%, noting that inventories and trade, they took away almost two full percentage points of growth jpmorgan writes, a shortfall in accumulation actually bodes well for the current quarter, we thus raise our forecast from 2.5% to 3% more growth could mean more fed rate hikes this year take a look at the probabilities. a virtual lock on a march hike june is more than 50%. december, 53%. so, those three rate hikes now a new addition, this possibility of a fourth hike rate,

quarters despite the miss, there were a number of positive growth signals within the report, and steve liesmanhere to break it apart >> this number had the details were stronger than the headline. good news for the comoous economy in the month ahead trade and inventories took nearly two full points from gdp, not going to keep going on, and there were other parts that were up, important parts. 2.6% is the number the consumer, 3.8%, best numbers we have seen since second quarter of 2016. business investment doing well housing in double digits even government, state and local spending along with the federal government doing better. they're up 3%. bmo says the u.s. economy had a solid end to 2017, and early indications point to a firm hand-off to 2018 the president, though, he didn't get his third straight quarter of 3% growth, but his treasury secretary telling cnbc in davos that it may be too soon to look for it the effects of tax cuts and the higher deficit spending from the bill have yet to hit the economy, he said and so it's probably coming and they're not really worried about one single qua

steve liesman is in d.c. this morning. beautiful introduction, joe, thanks very much. >> you're welcome. >> appreciate it. >> really appreciate it. >> well deserved. >> i'm happy to see you. >> thanks, becky, appreciate that >>> on the ppi numbers, down 0.7% a lot of negatives looking down the column of wholesale prices, kind of easing off some of the higher numbers from the prior month and again raising questions about whether inflation in america -- you know, fed officials don't like what they see when they look to how they'll be able to respond to the next recession. smart low inflation. they're likely going to hit that with the rate at 2% or 3% so the fed won't have the five percentage points it has to cut in the face of a recession larry summers speaking at a recent conference said the overwhelming likelihood is that when recession comes policy won't have sufficient room to cut rates as much as it would like to within the current frame work some fed officials and economists are thinking about how to get inflation and i

the $1,000 bonuses >> you said i want wage increases, not bonuses >> you were sitting next to steve liesmanthat's who said it >> you, too. >> i nodded. this is at a level -- >> it's like me and obama. >> we are talking about possible nuclear war, and this guy is basically saying mine is bigger than yours that's what this is about. you think that's a defensible position >> we have a lot more capability in terms of nuclear weaponry and the -- and knowing that ours will work. i'm not convinced -- >> i don't think it's a debatable point. you have another side of it. >> there's nothing defensible that trump has done in 13 months in your view >> i'm concerned when you start joking around about nuclear war. >> it's not joking around. saying you have a button you don't think the united states -- >> it's brinksmanship. >> it's not brinksmanship either >> what do you think it does to the position of this country on the world stage? >> what did -- how was our position -- >> you think other people look at this and say, my goodness, this is the guy running the country? i'm sorry. what about the appeasem

steve liesman has the numbers and he joins us right now with those. >> good timing, becky. december payroll private sector rose by 250,000 that's better than expected. and they revised down november by 5,000 to 185,000. that 250 is the biggest number for adp back to march of 2017 and it's the third one this year above or at 250,000 or higher. here are the numbers, the good sector, that's a strong number, 28,000, the service sector an even stronger number up 222,000. there's your estimate for non-farm payrolls of 180 this is the difference that makes me think some economists are going to revise up their expectations for tomorrow's report from the government here's how we did it small business up almost 100,000. medium business up 100,000 and large business up 56,000 so that is broad based by business. >> also broad base by specific sector here. you can see education and health up 50. trade and transport, some will be holiday spending hiring up 45,000, leisure hospitality up 28%. construction a strong 16 and manufacturing is strong as well, up by 9,000. let's bring in mark za

steve liesman has more on bah we should watch we have a lot of things coming, including the big jobsff tomorrow. folks, today is tuesday. it's not monday, in case you made that mistake when you woke up we have wednesday ism manufacturing. auto sales a look at that, that could be up 17.5 million that's a good number fed minutes on wednesday as well thursday we have the adp employment report and jobless claims i'll come back in a second with what numbers we're expecting there. friday, a lot of data is what pay roles, unemployment, international trade and ism services should set the tone for. the other 70% of the economy here let's take a look at the jobs outlook. looking for 189 on adp 180 on knob farm payroll that's a big comedown from where we were, but it's still a very strong number. 4.1% unemployment rate is expected and a reasonably good gain on average hourly earnings on 0.3%. let's take a look at where we are where we ended the year for q4 expectations for growth 2.6% that's a very nice number. parted me. that's the victory because if you see there q3 actual was 3.2%, and not g