steve liesman has got the numbers. outside of the parliament where teresa may is making her last minute pitch >> reporter: that's right, melissa. this is a final gasp by the prime minister not only to persuade her own party that the deal she has on the table, her government spent more than 18 months negotiating not only the best deal but the only deal available. there's a lot of critics in the house of commons behind me likely to vote this deal down. if that happens, a huge range of permutations to follow we could see the opposition party vote no confidence against the government and trigger a general election and if that's not something they pursue, there's the option of a second referendum on the table and a lot of hard line pro brexit members of teresa may's brexit party and like to see no deal with union whatsoever. spelling out what she thinks is important and what she wants to avoid, that is she does not want to see brexit reversed and a general election thinks that would create more division inside the united ki

i'm steve liesman in washington. >>> now t all those earnings started with boeing, which helped lead the dowerhi they reported record earnings for the fourth quarter and said it ef ects moree same this year. shareholders certainly enjoyed the flight today as the stock rose more than 6%. uphil lebea has more on boeing's big earnings beat. >> pardon the pun, boeing is aring right now, delivering record earnings, revenue and cash flow in the fourth quarter. boeing's ceo says it's proof the company is performing at a higher level. >> i think what you see reflected here is a strong growth in the aerospace industrd the marketplace. in a way we're leveraging that growth as we ramp up commercial airplane production. we're driving bottom line profitability nd cash flow while we're doing that. >> boeing's earnings are surging thanks in largeart to the company's most popular plane, the 737, where monthly production has steadily dliecli higher, pushing airplane deliveries to a record high. >> deliveries are in place and the fe cash flow is there so we view any pullback as an opportunity on the s

steve liesman . >> we began a big week for data with an ugly business outlook survey. it was taken during the shutdown and hopefully that i influencedt to the downside. maybe itk will snap b now. the current assessment of sales and profits t had some ofir biggest drops in the 38-year history of the survey. employnt held up and actually rose a bit, butapital spending plans fellsh ply, hitting their lowest level since the second quarter of 2017. the plans for capital spending the next three months fell beloh level where they were before the tacuts were enacted. 84% of firms say the tax cuts had no effect on spending plans although it is a bit higher for goods producers. 77% sayfs tar have not affected hiring or spending plans. businesses say it'sou still to find workers and few see a recession this year. the big fed decision and adp payroll data is wednesday, jobless claims on thursday and the january employmenteport on friday. they see 170,000 jobs being created. two questions, how much was the economy affected by the government shutdown? crunchers got into the office t

i'm steve liesman. >>> elsewhere a federal reserve official says now may be the time to pause when it comes to increang interest rate kansas city fed president esther george said today that the ntral bank should proceed with caution and be patient. she did acknowledg, thou that it's possible some additional rate increases might be appropriate and that the economy is overall doing well. inflation auge o that the federal reserve watches moderated in december. the producer price index, which is the measure of the prices esses receive for their goods and services fell 0.2%, mostly due to a steep drop in energy prices. one economist said that faltering demand for new orders and market volatility could prevent companies from passing along price increases. >>> but that is not stopping netflix, which today did hike prices for its streaming service by the most ever for millions of subscribers. investors cheered the move, though. they sent the stock up more than 6% today. julia boorstin has details. >> netflix is raising its prices by between 13% and 18% f its subscriberstreaming in the u.s. an

let's get to steve liesman in atlanta where he attended the fed panel earlier today. hi, steve. >> hey, melissa when you said the words patient and flexible i thought of a runningback and a gymnast. that's what they think powell is now i guess. let's get to key take aways that powell said today here in atlanta. one, flexible on rates two, inflation is muted which allows him to be flexible on rates. three, the balance sheet is up for discussion in a way he hasn't perhaps said before as melissa said, very correctly there, maybe the most important thing was he said the fed can be patient. >> with the muted inflation readings that we have seen coming in, we will be patient as we watch to see how the economy evolves. but we are always prepared to shift the stance of policy and shift significantly if necessary in order to promote the statutory goals of maximum employment and stable prices >> of course, interesting to hear a dovish fed chairman on a day when jobs were 312,000 -- almost double the expectation. let's take one more look at those jobs reports, because we can ands

i'm steve liesman. >>> time to take a look at some of today's a upgrad downgrades. there are a lot of them. bank of america was upgraded to buy from neutral at ubs. hee analyst cited attractive valuation and healthy operating leverage. the call comes one week before the bank reports its earnings. target e,pr $32. that stock rose about 1% today to $25.76. >>> morgan stanley was upgraded to buy from neutral at .ci the analyst says that the increase in market volatility can lead to higher trading revenue throughout the year. price target now $48 and shares rose a fraction to $41.74. >>> nike was dograded to neutral from outperform at baird. the analyst cites concern that th stock's valuation might not be sustainable. the price target is $i don82. shares were slightly lower at $76.59. >>> oracle was downgraded to equal weight from overweight. thenalyst cites competition in oracle's database business and also in its cloud offerings. the price target is $55. the stock was off just a fraction to $47.78. >>> barclays also cutting its ting on we's to equal weight from overwe

the fed is in a place where it can be patient, but are his comments enough to calm the markets steve liesman is here with all the highlights hi, steve. >> fed chair jerome powell stirring the market with comments on the fed. he said the fed is in no hurry to raise interest rates, they can be flexible and patient because of low inflation he expects momentum from 2018 to carry over to 2019 the biggest concern with global trade and extensions and extended government shutdown >> several factors were in play at the time including somewhat soft bond and the sweet from the president would not go going to the world economic forum saying the balance sheet would be substantially smaller than it is now >> we wanted to have the balance sheet returned to a more normal level, a level no larger than it needs to be to conduct monetary policy don't know the exact level that will depend on the public's appetite for our liabilities, specifically, currency to us, that's a liability and the public has a large appetite for currency and also, reserves and other liabilities. so it will be substantially smaller than

steve liesman takes iro here. >> one question dominates the economic outlook for 2009 who has is right? the market which seems to be forecasting a severe slowdown or the federal reserve which sees a modestone. there is data on both sides as theierrue to a close. many business and consumer confidence surveys turned down but the hard data on jobs, economic growth and consumer spending stayed strong. the best prediction takes a lile from both sides. first, look for gdp to slow from above '073% in 2018 closer to 2% or trend next year. 2019 will not bring the recession the markets fear. there is too much stis in the system for that. but it's likely to use to see a slowing of growth as the effects of stimulus wear off second the unemployment should tick down and job growt remain strong for the first half and stabilize as the year moves along. finally the fed finds reasons to hike rates one more time in 2019 and probably launch into an extended period of pause until it feelsde more con in the economic outlook. for nightly business report, steve liesman in washington. >>> certainly onege of th

steve liesman just made a great point.conomy is slowing more than people thought, even before the shutdown which means the fed in december was even more wrong than people thought they were and now that the fed has made a mea culpa, now the credit market is opening back up and this allows people who take on more risk than they otherwise would, so that intensifies the credit boom and leads to more buybacks and mergers while times are good and then in three to five years when the cycle ends, people will be lulling into a false sense of security and that will make the ensuing financial crisis worse. >> that's a fascinating point. brian, charlie, thank you both for joining me brian reynolds and charlie o'shea thank you for joining me "the exchange." i'll join tyler and melissa on "power lunch" which begins right now. >> see you shortly, kelly. i'm melissa lee on "power lunch. trouble at tesla a rough outlook. how investors navigate the road ahead and netflix says fortnite is a bigger threat than hbo and hulu will gain that out.

. >>> administration officials telling steve liesman they have doubled the estimate of the negative economict of the shutdown he joins us now with more. hey, steve >> morgan, good morning. the trump administration now estimates the shutdown will subtract 0.3 points from the economy every week that's every week the 800,000 workers are on furlough. the previous estimate was the same amount, but every two weeks. the increased estimate comes from incorporating more effects from private contractors who are also out of work and greater impact from loss of other government functions the administration now sees a half point coming off first quarter gdp if the shutdown lasts through january. contrast that with mark zandi, in a research report yesterday, he estimates a less severe impact half point if the shutdown lasts through march. and pantheon thinks it could go negative first quarter in part because the first quarter is seasonally weaker than the other three anyway some losses could be recovered next quarter when back pay is remitted to workers. ironically, economists lack some data that may tell

i know you're reacting to mester this morning with steve liesman. what about powell?> i think he'll say we need two rate hikes, but we need to be data dependent david, that is talking out of both sides of your mouth i think that the bears will beat the eagles, but the eagles are going to beat the bears. let's say i said that, okay? you know what you would say? jim, that's worthless. mester's comments were very similar to what i said about the bears and the eagles >> let's listen to mester's comments and have you react as well >> one or two rate hikes, right, is about where we're seeing the economy now. it depends on how the economy moves forward. frankly, i think that's a good forecast if we got an economy that performed that well, soft land nothing a slowdown towards trend growth, we should be happy with that >> okay. >> i like data i like phone calls i want beth moonie to come on and talk about loan deceleration largest banker in cleveland. where is mester from mester is an academic. she's an adjunct professor at wharton. you know what? i took galbraith, all these g

back to you. >> all right steve liesman, thanks. >>> joining steve and janet yellen on that panel was-founder kara swisher who is with us now at post 9. that's an interesting panel. >> i have nothing to say about interest rates. >> janet and steve okay tell me, omni channel has to be a big topic and it fits in, the idea of mixing physical and digital retail. >> all talking digital. >> everybody is doing it lots of pressures that janet was talking about. what stood out for you >> what's interesting, right after we went on, the ceo of target came on and he was talking a lot about this, the idea that target can meet anybody's needs anywhere i think that's the line from a lot of people, it is not a line, target has been making incredible technology investments. i think the issue is how you keep up with amazon and not just amazon but the global retail economy which is changing so quickly, especially in china so i think that was interesting to me. >> one of the things that jumped out to me in terms of the conversation on stage today is was the amazon effect on inflation. >> yes. >> that inf

phil swaigel from the university of maryland and rick santelli and steve liesman are with us. rises 312,000. well above what. expected at 176,000. also had average hourly earnings quite a bit hotter 0.4% versus the 0.3% the street was expecting. that's a big one too what's your takeaway, steve? >> i was hoping as a result of this number the fed and the markets might come closer together i'm afraid they're now going to be further apart though i like the way the stock market at the moment is digesting this it does seem to not be scared by this one other thing i want to remind you about, i told you yesterday adp may not get the number exactly right but directionally it's good. it gave 271 which was well above consens consensus. i think there is a lot of snapback and noise in the data so i wouldn't take 300 as the run rate of the economy. i do think 200 is not a bad number i don't think there's any sign in this number of weakening of job growth especially as was correctly emphasized when you get the revisions to the upside in the prior month, it tells you momentum is going in the r

opening exchange, latest nab survey showing pessimism joe lavornia is sheer, a cnbc contributor and steve liesman. welcome to you both. steve, start with this survey. how circular are we getting? the survey is asking corporate america about their spending plans and their attitudes about the economy? why are things slowing down. >> one is the outlook and the assessment of the current situation. there's emotion in both sides of it and feelings and sensibilities. when you ask somebody what's your current sales compared to how it was, that plunge, as well as -- >> who are these numbers, by the way? >> these are members of the national -- economics reporting how companies are doing. >> fortune 500 or small business. >> some of them are, some are medium size. a spectrum of companies. and the plans -- the current assessment of sales fell, current assessment of profits fell and these are not small declines i had to do a double take on these numbers. when you go back and look this survey's been around 38 years, the plunges are the first, second or third declines you've been seeing. >> we've seen in the pa

sarah bloom raskin we're going to bring in steve liesman now, as well, who's at the fed about the keyh, i think it's an issue of a lot of what sarah just said, the issue of patience, is something the market's going to hear the market's behaving a lot like it already knows it's going to hear what it wants to hear today. and it comes down to whether we hear that word, patience on rates, patience on the balance sheets and i think sarah's right about the fed really trying to thread a needle here. on the one hand, on rates, it wants to tell the market it's not happening soon, but doesn't want to sort of foreclose the possibility of it. markets right now are priced for no rate hike this year, but our fed survey suggests that it could be as much as -- it could happen soon june also, on the balance sheet, the fed -- i don't think it's quite ready to say, we're getting off of our plan, but i think what powell is going to indicate today, guys, is that they're willing to think about changing the plan, as such as it is, the sort of auto pilot idea of reducing the balance sheet by up to $600 billi

breaking news right now on the banks and the impact of the shutdown steve liesman has all the details. steve? >> melissa, thank you very much. the federal reserve and several bank agencies out now with guidance to the financial firms to work with those affected by the government shutdown. regulators urging for them to consider things like loan modifications orextending credit to those affected by the shutdown and then saying such arrangements should not be subject to examination or criticism of the examiners what's interesting about this kind of guidance they give typically with natural disasters such as hurricanes or in november, the california fires separately, cnbc asked with moody's rep on the shutdown effect of growth we're tracking pretty strong for the fourth quarter 2.9% but the median estimate is a 0.1% from gdp effect in this quarter and the next quarter, 2.4% of first quarter of 2019 and 0.1% hit to gdp from the shutdown melissa? >> presumably, loans, mortgages, things like that but if you're a landlord, for instance, and pay a mortgage and tenant happens to be a government

our own steve liesman was here as well.ng around >> if you'll have me >> good. i can relax a little >>> coming up when we return, this morning's market movers we'll also hear what tim cook is saying about the economy we'll also talk trade talks. and marco rubio is going to talk with us small business, the government shutdown whab he thought of president obama and the democrats' reaction to his oval office announcement last ayght. st tuned you're watching "squawk" here on cnbc i'm ken jacobus and i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet? ? i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. >>> welcome back to "squawk

steve liesman has more. >> the central bank con throw versely raised rates they were already thinkingout bringing a halt to their hikes in fact, the minutes show some members at the meeting even opposed the hike at the time in the end the fed decided to raise rates based on strong economic and jobs data despite the selloff in the market and rise in volatility, the minutes show officials still expected growth to remain above trend this year and that more rate hikes could be coming. but officials tried to tweak their language to indicate that future rate hikes were far more dependent on economic data than they had been in the past. didn't really work at the time in the wake of the meeting the dow jones would decline 2300 points or nearly 10% before calling back most of the post fed meeting cost it took some soothing comments suggesting the fed is more flexible on the rates than markets thought. >>> several fed speakers on wednesday emphasized this new patience they said they're likely to hike but we'll wait to see whether the pessimism in the market or the optimism from the data wins ou

steve liesman is back at our headquarters he's got a look at more of those factors that are going to uence the federal reserve as we kick off the new year steve. >> david, happy new year let's take a look at two scenarios for 2019, the optimistic one and one that's not quite so optimistic here i'm focusing on two forecasters out there, morgan stanley and action economics here's where we think we'll ending 2018 at 3.2%. big slowdown here forecast by morgan stanley down to 1.7, shave 1.5 points off gdp action is 2.6% what happens to the consumer and what happens to business spending take a look at the consumer. a much bigger slowdown for the consumer they don't see a lot of extra help to the economy coming via the tax cuts or the better jobs and wages we've had so they have the consumer going down to 2%. action economics 2.6 look at this big difference right here in the outlook for business investment, which again linked very closely to the tax cuts we think we're going to the 7 this year more or less, give or take 1.8, all the way down for morgan stanley, whereas action sees the tax cu

faster than we expect. >> something to think about. >> thank you, bill bill nelson and our own steve liesman thanks for having me on. >>> the dow briefly down more than 400 points today and off the lows but health care remains one of the worst performers, only real estate and consumer staples in the green key stock reporting on earnings tomorrow that's pfizer. worst dow performer so far this year is a turnaround coming i've had y i've had y prestigious jobs over the years. news producer, executive transport manager, and a beverage distribution supervisor. now i'm a director at a security software firm. wow, you've been at it a long time. thing is, i like working. what if my retirement plan is i don't want to retire? then let's not create a retirement plan. let's create a plan for what's next. i like that. get a plan that's right for you. td ameritrade. ♪ gimme two minutes. and i'll tell you some important things to know about medicare. first, it doesn't pay for everything. say this pizza... is your part b medical expenses. this much - about 80 percent... medicare will pay for. what's left...

it was those comments on the balance sheet you just heard that had some on wall street on edge steve liesmans back at headquarters with more dovish or hawkish, steve >> so, can i pick a third choice, melissa? >> okay. >> and not dovish, not hawkish, but maybe careless >> careless. >> wow. >> wow, okay. >> i think this is a lot like the october 3rd comment that upset the markets when he said that we were a long way from neutral. i don't know exactly what chairman powell thinks, but there are estimates out there, which the new york federal reserve gathers, which shows that on the street they expect a balance sheet of 3.5, 3.6 trillion, from the current 4 trillion is that substantially smaller than it is now is he disagreeing with the market estimates right now i don't -- what he said back then that we're a long way from neutral, i didn't think he meant they would go more than 100 basis points, but i think the market saw that as potentially more than that i think this is a case where the fed chairman might have been more precise i think the first part of his thing was correctly telling what fed

second longest shut downin history and the fallout could be about to wreak havoc on the markets steve liesmans back at headquarters with the lowdown. hey, steve. >> trying to figure out what it means for the u.s. economy the 800,000 workers are unlikely to get a paycheck this week. let's scale up from small to large here it's potentially devastating for individuals and their families who can't afford sometimes basic stuff. troubling for the businesses and communities that rely on the spending of the furloughed workers. but small at at least for a time manageable for the u.s. economy. it's as if the entire city of milwaukee didn't get a paycheck for at least two weeks but the effects of that,unlike say the effects of a natural disaster there, spread out they hit d.c. area the hardest and other places less so more so there's no actual disaster and people might eventually get paid. economists estimate the shutdown costs the u.s. economy around 0.1% percentage points of gdp each week it goes on in the current quarter. some of the spending is lost forever. but the income comes back and so will som

steve liesman joins us now live from the federal reserve in washington, d.c., with more on that steve, it was like a bull's dream here what the fed said. >> christmas. >> yeah, or a dovish dream after they just hiked six weeks ago, this is a sweeping policy reversal, giving the doves everything they were looking for and maybe some things they weren't looking for they got in this thing the fed kept rates unchanged and it would be, quote unquote, patient in considering other hikes and removed the language that telegraphed further rate increases ahead. >> growth has slowed in some major foreign economies, particularly china and europe. there is elevated uncertainty around several unresolved government policy issues, including brexit, ongoing trade negotiations, and the effects from the partial government shutdown in the united states. financial conditions tightened considerably late in 2018 and remain less supportive of growth. >> analysts took the new policy pronouncement to mean it is on hold at least six months pending more clarity in the economic outlook. the fed said its plans to re

and greg from "the wall street journal" and steve liesman, our senior economics reporter. great to have you all on board here jason, i'll begin with you a lot of bs talk, balance sheet talk that is today that's the focus, how much they're going to pare that back. >> certainly the fed since the mistake in communications, maybe hamhanded communications in the fourth quarter of last year, the fed has largely been kind of reading an article, a face of what equity investors have wanted to hear kind of sweet nothings now it's largely about the balance sheet and the pace and i think the main thing investors want to hear is that it's not on auto pilot that they're going to remain flexible i think that's -- >> independent >> that was the thing that really scared people most. certainly we've walked pretty far back from that since christmas eve day, which was pretty frightening but now it's all about the balance sheet. >> and we haven't had the usual economic data for the past six weeks. that typically guides them they don't have any more information than we do does that make the ane

steve liesman, appreciate it >> to the market's response, bob pisani, they like what they hear so far, yes? >> yes because they got the two thipgs they want number one, they wanted to have jay powell's comment in december b about being patient inserted that's what happened and they wanted to see comments they would make changes in their bans balance sheet it's like the markets wrote this, 26.60 we started out on the s&p 500 we're at 26.79 now let me tell you, what's the good news the bad news, the market's getting pricey now we are above the e recent trading range we've seen bulls might say that's a good thi thing, but we're not pricing in a dovish thread now. we're pricing in positive trade talk outlook we're price iing in a bumpy, bu okay earnings. i think that's the right way to describe the earnings season so far. it's expensive the market's now trading, s&p, 16 times forward earnings for 2019 that doesn't sound like a lot, but we're expecting zero to 5% earnings growth in 2019. that's what the range is right now. it's where the debate is small. 0 to 5%. 16 times forward earnings.

steve liesman has more for us tonight. >> fed chairman jerome powell ii effort to nudge stock marks back on track looks to have nearly lost control of the train. powell last week tried to m convinkets that the fed is aware of the weakness in the economy and sensitive to the downturn in stocks and not hellbent on raising interest rates. >> we're listening carefully to that. we're listening sensitively to the message that markets are sending, and we're going to be taking those downside risks into account as w make policy going forward. >> the result, markets may have gone too far the other eyway. now expect the fed's next move will be to cut intert rates. futures market pricing no action thisear and in 2020d pri in a rate cut. it's the opposite direction for a fed that is still forecasting rate hikes next year. >> i think people have gone too far in thinking that the fed will stay put and then cut rates. let me explain why.fi t, it's hard to find any systemic weakness in the u.s. economy. yes, the may be small pockets, but overall the economy is doing ll. you saw this on the employment rep

steve liesman has more on that tonight from atlanta. >> reporter: a superstrong jobs report would norlly raise fears of more interest rate hikes from the federal reserve but n with today's report of 312,000 jobs created in decemberas the , a dovish sounding fed chairman jerome powell m tellinkets what they wanted to hear. he is flexible and not he-bent on raising interest rates. >> we will be prepared to adjust policy quicklyxi and fy and to use all of our tools to support the economy should that be appropriate to keep the expansion on track, to keep the labor marke t strong and keep inflation near 2%. ak >> reporter: sg at the american economic asmoerks in atlanta flanked by former fed leaders powell tried to counter critics who said that the fed is not attentive to market and fierce of slower growth. >> markets were expressing concerns again about global growth in particular. i think that's bnoming the m focus. and trade negotiations which are related to that. and i'll just say that we're thaening carefully to listening sensitively to the message that markets are sending. and we're tak

steve liesman rounds up the >> the chance of r the next 12 months forecast by respondents to the cnbc fed survey spiked tots highest level in three years amid growing worries about global economic weakness, fed rate hikes, the market sell-off, trade tensions and t government shutdown effects. the recession probability rose to 26%, the third straight increase. it's above the22% average for the past eight years, and it was last this hanh inuary 2016. that followed another bout of market volatility. then uncertainty t prompted the fed to hold off on rate hikes and that's the expectation now. the 46 respondents to the january survey believe the fed will now hike just once in 2019, down fm the forecast of two in the december survey. and just 48% of resndents believe the fed will hike in 2020. 37% believe the fed actually cut rates. 100% actually expect no rateke hi from the january meeting. respondents forecast modest stock gains of just 4% in each of the next two years, bringing the s&p 500 up to 2846 by 2020. the survey showed two schools of thought on the outlook. one sees ano weaker u.

for "nightly business i'm steve liesman in washington. >>> a mega deal in the fast-growing financial tech industry. that's where we begin tonight's market focus. fiserv is buying first data in a takeover valued at $22 billion making it one of the largest in the sector. they sellte s to financial firms, including those related to electronic payment transactions. first data offers point o sale products for retailers. first data soared 21% to 21.24. fiserv fell 3% to 72.57. >>> blackrock reported quarterly earnings that missedanalysts' expectations. the world's largest asset manager saw its assets underin de but tt was due to the drop of the in market late last year. they did report record etf inflows of more than $80 billion and the shares rose 3% to 413.. >>> a ford says fourth quarter profit won't be as strong as wall street had hope. the automaker cited lingering uncertainty, including trade and britain's exit from the eu, but ford added that it has the otential to grow earnings this year. nonetheless, shares fell 6% to >>> snap's chief financial officer unexpectedly resigned less t

here's steve liesman. >> in his third public appearance in the past month, fed chairman p jeromell sat down for a chat with private equity mowing al david ease tein and tried t market concern over the outlook. powell suggested the fed is in no hurry to raise interest rates. >> i think we're in a good place. i think where that leaves us, particully with inflation low and under control, is we have the ability to be patient and watc patiently and carefully as we see the economy evolve. >> thereed chairmaated that he sees the u.s. economy as strong and expects momentumrom 2018 to carry over into 2019. his biggest concerns, weaker global growth, trade tensions and an extended government shutdown. but markets sold out of and several ftors were in play including a soft 30-year bond auction and a tweet from president trump announcing he would not be going to davos world economic forum because of the shutdown. some say the balance sheet will be substantially smaller than it is now. >> we wanted to have the balance normal turn to a mor level, which is no larger than it needs to be to conduct mon

. >> global slowdown seems to be what everybody agrees with steve liesman is here as well. by the way, steve, last year davos was --let's not bury the lead on the good news. as you know, it's not the biggest part of the gdp, but they are the biggest part in the growth that decline is meaningful for global growth. >> let's talk to mr. rutledge about that. sometimes i think people complain that they -- and then they use it. the fact is service it is are still doing okay, but a lot of that debt is dollar denominated. when you u.s. dollar goes up and when the interest rates go up, the burden of that debt goes up on them, and there's no reason to go. >> i was just going to say, to that point, even saying we would let hem weaken the currency, no, they can't that creates an internal problem for them absolutely if the you had a rows of bankruptcies or failures or the like, that would be a system freezer. and it's now down 10% this year, so is peer lending >> some of these companies have dollar denominated sources so it's not like it's all debt -- dollar debt being paid. >> not all,

2019 remains on the fed and what's to come for the rates there let's get back to headquarters and steve liesmane, gaming out what you expect to see in 2019 steve? >> the market begins the year thinking the fed is done none and done is the mantra. no hikes it's worth looking at this two ways what is the fed expecting and then gaming out what has to happen in the economy for the market to be right what is the zero-hike scenario pantheon said markets think the fed is done. this time last year markets thought the fed would hike twice in 2018. the fed's no hike scenario, it came up right away 2 .3% gdp growth 3.5% unemployment. under that economic scenario with that outcome, the consensus fed forecast is for two hikes so what is the zero-hike scenario here's my guess for the economy with the numbers you might see for the market to be right you don't want these numbers if you did zero hikes you would be below potential growth. a half point to 1.9% growth, rising unemployment, 2% inflation or falling spchlt i would say between 2 and 2.75%, stable or rising inflation from the 2% target then you have to

breaking news right now on the banks and the impact of the shutdown steve liesman has all the detailse? >> melissa, thank you very much. the federal reserve and several bank agencies out now with guidance to the financial firms to work with those affected by the government shutdown. regulators urging for

let's begin this final hour of trade with the top story steve liesman with more details on the beige book headlines. willem marx has the latest on brexit and leslie picker has more on black rock's earnings. steve, we'll start with you and what we got out of the fed this afternoon. >> as you said, sara, eight of the 12 districts saw increased growth at a moderate amount but four districts, including kansas city, new york, st. louis and cleveland saw somewhat less robust growth. it was flat in kansas city, it leveled off in new york. outlook was pretty positive, but many districts said their business contacts were less optimistic because of four reasons. financial market volatility, rising interest rates, falling energy prices and elevated trade and political uncertainty. shutdown mentioned only once this report goes through january 7th, so didn't pick up a lot of it mentioned only by chicago related to farmers not receiving government payments. tariffs, 20 mentions, down from 39 in the last report but it was linked to rising uncertainty and higher prices. now, one piece of good news, s

steve liesman is here.e'll be in davos to interview the ceos of jpmorgan, goldman sachs, uber, and many more companies our coverage starts tuesday at 6:00 a.m. eastern time stay tuned you are watching "squawk box" on cnbc this is huntsville, alabama. aka, rocket city, usa. this is a very difficult job. failure is not an option. more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges. >>> good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center on this friday morning, we are watching shares of state street. the financial services firm announcing a workfo

wilf, back to you. >> steve liesman is also here on set.ine in gas prices that's going to go away. that's what's depressing the headline number. the quarter in line. there's really no increase in the rate of inflation, right commodities down two months in a row. pretty big 1.5 this month these are month on month might reflect the earnings out there. that there's some softness there. there was a lot going on there and transportation costs looking again for the trade showing up with the tariffs. hard to find more into the details to find that overall kind of muted inflation. we're not seeing a partive to change rates >> joining us to talk more is chief global strategist at morgan stanley investment. rather than just talk about this number, i want to talk about some big calls you're making for 2019 you say that america has peaked and will begin to decline in 2019 >> you know, my basic point has been this would be in america's decade it is the only equity market in the world which has really done well so the market has tripled in value like ame

. >> let's bring in the chief economist for the americas our senior economics reporter steve liesman who is in atlanta today. this seemed to be a big change not only in tone but policy. perhaps he got the message >> reporter: or perhaps the market is hearing the message he was already given. two aspects have changed, one is his characterization of inflation as muted he doesn't feel any pressure to hike right now but his characterization of there being no preset policy on rates is something he's been saying for quite a long time where there is a change, a meaningful change, is a new policy when it comes to the balance sheet. before the fed said it would not go along with its plan or follow its plan to reduce the balance sheet until it meaningfully reduced interest rates powell said if we find out or figure out that balance sheet is a big part of the problem, and i guess he meant stocks or the economy, then they would not hesitate to change that's where the big change is, not rates necessarily. and i would point out this jobs report today in fact does keep them on track to doing maybe

is weighing -- lifting tariffs on china in order to hasten a bigger deal on trade steve liesman is hereat the fallout of this headline, steve. >> i think it is worth talking about the internal politics in this story, right? you have mnuchin who, how do i say this, maybe he heads the free trade wing inside the white house, which would include our friend larry kudlow. and maybe kevin haset in there against the peter navarro and lighthizer and you have to say that the instincts of the president have leaned that way, right so you have these two camps and now you have a story which is not exactly a story, but says mnuchin has brought this up in the white house and does not appear to be policy at this point. but the idea that you can just see how sensitive the market is, the one thing that might make this more of a true story is all the things weighing on the market and the renewed concern about the economic effects of the shutdown you have to think that's arm tria arbitrage against let's lighten up on the trade side if i lop a quarter or half off global economic weakness, lop another quarter

when he sits down with steve liesman on "power lunch." >>> coming back to one story we've been followinglosely over the last 24 hours, apple. the tech giant shares had their worst day in over five years on thursday they plunged more than 9%. the decline saw the company's market cap fall below 700 billion. today the company's frankfurt listed shares are trading higher yesterday one of the key focus points for european investors were the chipmaker stocks, with some of those suffering steep losses this morning we're seeing a rebound across that supply chain, and our technology reporter, elizabeth, joins us around the desk with more. can you give us a sense of the scale of the share price decline we saw yesterday in monetary terms? >> right so apple dropping 10% yesterday. that is the equivalent of 4$452 billion in market value lost that's bigger than the size of facebook we have to remember when we talk about apple, when it cuts revenue guidance by 5 billion to $9 billion, that's a huge amount of money this is coming from a huge company. apple's market cap stands at less than 7$700 billion

. >> trinidad, ugh >> shout out to steve liesman. he had one constructive comment.d be later in the show >> we only have 15 minutes left. >> i'm telling you what he says. >> how about liesman gets up earlier. liesman. stella blues band. thank you very much, frank love you, steve. >>> coming up, is 2019 the year of the so-called activists why we could see board room battles. leslie picker joining you with a story on that coming up. with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪ (danny) after a long day of hard work... ...you have to do more work? (vo) automatically sort your expenses and save over 40 hours a month. (danny) every day you're nearly fried to a crisp, professionally! (vo) you earned it, we're here to make sure you get it. quickbooks. backing you. >>> good morning thanks for being with us 5:46 stocks indicating this little market rally pretty good start to the year will not continue

he wants to hike i think he's going to wake until the market is with him >> thank you very much steve liesman, good to have you u on the desk. >> to bob on the floor of the new york stock exchange. there has been a reaction down there. bob. talk us through it >> it's more dovish commentary and i think rosengren was the key today and steve did great job there. market sentiment may be pessimistic. rosengren laid out a good case there for why the economy is doing very well. here's what i would point out. december 18th or 19th, we're about where the markets were, but the world changed dramatically we dropped 2,000 points in the week or so after the fed meeting and partly on the fact they appeared to be fair ly aggressive so the world changed dramatically after the meet og cured and they were a part of that whole volatility. remember we had issues on trade and tariffs. since then, we've had the clarification from powell. we had tariff talks that are incuring this week china and the markets turned around since the bottom, the s&p 500 is up about 10%, so we drop 200 points on the s&p. then all of a

. >>> and steve liesman tells us what jay powell is likely to say and what it means to your money, allup at noon on the we'll see you then >>> sounds good. as we head to break look at the nasdaq which is down about 1%. amd, nvidia, electric art, microsoft and amazon leading that indexow ler we have more squawk alley after this break a luxury car more teched out than silicon valley? with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪ 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. fidelity. amazon prime video so when you say words like... show me best of prime video into this... you'll see awesome stuff like this. discover prime originals like the emmy-winning the marvelous mrs. maisel... tom clancy's jack ryan... and the man in the high castle. all in the same place as y

steve liesman takes us through the u.s.rowth forecast for 2019 >> let's look at two scenarios for 2019 the optimistic one and one not so quite optimistic. i'm focusing on two forecasters out there. morgan stanley and action economics. here's where we think we'll end 2018, 3.2% big slowdown here forecast by morgan stanley down to 1.7 the big differences are what happens to the consumer and what happens business spending. look at the consumer, a much bigger slowdown for the consumer they don't see a lot of extra help to the economy coming from either the tax cuts or from the better jobs and wages we've had. they have the consumer going down to 2% action economics at 2.6. look at this big difference, in the outlook for business investment, which again linked very closely to the tax cuts we think we'll do 7 this year, 1.8, all the way down for morgan stanley, action sees more tax cuts or the tax cuts continuing to give off. here's a quote from morgan stanley, though a growth correction does not mean recession for the economy, f

the dollar index which was higher this morning coming off just a bit let's bring in steve liesman live in atlanta. steve, a lot of focus, particularly from wall street now on comments around perceived flexibility in the balance sheet. >> reporter: you're exactly right, morgan. there was in my opinion a change in policy from the federal reserve when it came to the balance sheet. what i've done is i pulled what was from the fed's own strategy document in june, twef2017, whet said under what conditions it would change the balance sheet i'll read that to you and then get to powell's remarks that i think represent a change the committee said in 2017 they would change the balance sheet if there was material deterioration in the economic outlook were it a sizable reduction in the committee's target for federal funds rate. let me come back and explain that in other words, they would first reduce the funds rate before, and some people thought that meant to zero, before they changed the balance sheet. here's the verbatim of what chairman jay powell said he said if we came to the view that the ba

shutdown the trade war is beginning to bite china's economy the latest numbers there and who else but steve liesman on the fed and new global growth forecast let's begin with bob at the nyse hi, bob. >> important thing, tyler, reporting fourth quarter earnings but that's not what the street is concentrating on so look here, october 1st, we were expecting 10% earnings for all of 2019 for the s&p 500. today, that's down to 6.3% down steadily in the last three months and people at 5 and a small group of people at zero and that's the question. is it going to be zero or is it going to be 5% that determines your outlook for the year it's going to come down more than i think than the 6% and had 20 companies reporting fourth quarter earnings so far and 75% of them have seen their estimates for the first quarter cut. not the fourth quarter but the first quarter cut 6% average reduction. that's a lot more than normal and guys, that tells me there's more cuts to come, certainly for the first quarter. back to you. >> thank you, bob. bob o'bri bob pisani at the nyse >>> the longest government shutdown in u.s. h

the fed is in a place where it can be patient, but are his comments enough to calm the markets steve liesman is here with all the highlights hi, steve. >> fed chair jerome powell stirring the market with comments on the fed. he said the fed is in no

and the truth about the economy with reporting from steve liesman.d out of a big biotech stock. that and more at noon. about ten away >> thanks, scott. >>> the government reopening after a 35 day shutdown, thousands of irs employees are headed back to work. is the shutdown going to slow down your tax refund anyway? ylan mui is in washington with more on this season's tax uncertainty. >> reporter: tax filing season starts today, and the irs is open for business. but it could take some time before the agency is fully operational. the white house tried to make getting out refunds timely one of the priorities, so even during the shutdown they recalled tens of thousands of workers to get ready for the season the only problem is roughly half the workers didn't show up either they couldn't be reached or said they couldn't afford to come to work because they weren't getting a check to pay for child care or transportation even now that the shutdown is over, one worker said the irs suspect going to be ready to be sending out refunds immediately. >> we don't go

. >> can i ask you what the period of the beige book covers >> steve liesman >> can you hear me >> yes got you. >> it roughly goes from the last fed meeting until just about week or so ago so it's, it overlaps a bit on the over the shutdown, but not totally. >> i'm reminded of the ads maying in heavy rotation these days where they, the punch line i think it's at&t ads, okay is not okay they ask about your doctor is your doctor okay? how good he's okay. but that's not good enough but michael farr seems to be saying an economy is okay is okay do you gragree? >> i think michael is correct in this we've had such high expectations through 2018 the tax reform, really high earnin earnings as we came into 2019, we saw will ta lot of that get lowered. have they come so far down that now okay news is okay. i think we're see thag with some earnings, too. we saw samsung come out with not great earnings, guidance and the stock was only down like 1.5%. we saw some bank earnings. their not great, but they're solid. look at the movement we're seeing in their stock prices i think expectations have come

comes to the fed and rate hikes, the market seems to have gone from one and done to none and cut steve liesman is here to explain. >> an astonishing government when y - government development they see the fed doing nothing over the next year in the face of the fed's own forecast for two rate hikes and in 2020 if you look at the graph, they see a rate cut you can see that right there now, this is far out, i don't mean far out as in groovy, i mean far out as in far away. but still it is astonishing that for a fed that essentially has been forecasting rate hikes and wants to get to normal, wants to normalize its balance sheet, that the market sees it going the other way. and there are three parts. how do we solve it first thing is i think what they call open mouth operations did powell go too far, does he need to rein the market expe expectation back in. does the market need to prirefrs price to the fed and does the fed need to rese e reserve. >> and we'll be talking to one of the experts saying beware because the bottom may not be yet. let's start with what steve mentioned, the market sees a rat

slightly different tones our senior economics correspondent steve liesman is back at hq with what ityou're like a linguistics professor. >> a deluge of fed speak, sara, as you know, but let me focus on the vice chairman richard clarita. we went closer than any other top possibilities and it's a possibility under the right conditions of a rate cut if the economy weakens. he said if the crosswinds are sustained, appropriate forward-looking monetary policy should seek to offset them to keep the economy as close as possible to our dual mandate objections well, what would that be, that would be some kind of easing clarida said the fed will not hesitate to make changes on the balance sheet if they are found to conflict with the dual mandate. his speech came after fed chairman jerome powell said the fed can afford to be patient and flexible sara pointed out that's the new med mantra but powell took some heat when he said the balance sheet will end up substantially smaller. markets expect the balance sheet to fall from $3.5 trillion to the current level of 4 trillion and the fed would finish