if are ninhtly bs report, i'm steve liesman. >> what it may mean, satyam is the senior u.s.conomist. lcome back. >> thank you for having me? i'll cut to the chase. do you think the f will cut rates maybe as early as july? >> well, was ther a report out today. it didn't really help establishing any confidence into raising rates so the odds of cutting rates have moved up, but i wouldn't go so far a calling it in july, though. maybe perhaps in september or for later date in september, but yes, the odds of a rate cut has moved up. >> the manufacturing number was especially weak and the fed has said in the past that they are watching manufacturing and the impact from all of these global trade tensions and weaker global growth. how closely are they going to be aiscrutinizing the d of that? >> i think this is the key point here. how much of a o spillr effect from the industrial sector is o going to seep into the service sector. we have seen manufacturing decelerating over the year and it seems like the labor report that came out today, w haven't really added as many jobs as we had

steve liesman is in chicago tonight. ♪ ♪ f >> two t officials speaking in chicago today ewsuggested thattariffs from the trump administration could change monetary policy. here's when the vice chair told cnbcien the inte >> today the tariffs put in place in the economy have haa small effect in the aggregate and the others would agree with that consensus as we move ahead and we consider potentially more tariffs and potentially retail wragz and that potentially has a oure noticeable effect on the economy and we have to take that into account. >> and they're not necessarily inflationace because the p only go up once and stay that way. so he said he's more inclined to ddress how tariffs can weaken growth. the fed chairman jerome powell also saidcthe fed would if it needs to. >> we do not know how or when thesessues will be resolved. we are closely monitoring the implicatio of these developments for the u.s. economic outlook and as always, we will act as appropriate to sustain the eansion with the strong labor market and the inflation near the symmetric 2% objective. >> this is all potentiall

>>> wrapping up with steve liesman and steve will join us after the break to tell us what mr. williams is saying about the potential for those rate cuts we were just talking about and bmw opens the new final assembly plant in mexico just as the president is set to, yes, slap tariffs on cars made in mexico tariffs must be slapped. we will take youhe tre as the plant opens. plant opens. stay with "power lunch." ♪ to fill your world with fun. ♪ to share my culture with my community. ♪ to make each journey more elegant. ♪ i'm working for all the adventure two wheels can bring. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. you guys be good i'llshe's gone.ter. it's a dangerous world. ah! [ grunt ] whoo-hoo! pops are your friends going to die? pickles don't be so dramatic. but yes probably. there they are. aww! whaa , whaa, ahh! >>> welcome back to "power lunch. i'm julia boorstin snap shares are up nearly 8% today on pivotal upgrading the stock to buy saying we don't want to miss the inflection point in the business despite our already st

for "nightly business report", i'm steve liesman.e have been following the housing market closely today and today an important gauge declined, housing starts fell 9% in may, a steeper down point expected. but there was a bright spot. residential building permits which are seen as a sign of future activity rose lastinonth. fact, it was the strongest monthly rate of growth since the end of last year. >>> time to take a look at some of today's upgrades and downgrades. oracle, we begin with tonight, was downgraded to neutral from out per at mcquarry research. she call comes ahead of the company's earnieport out tomorrow. the analyst says that the business software company is underinvesting in its future right now. price target, $55. that stock fell a fraction to $52.90. >>> kb homes was downgraded t underperform to market perform at raymond james. the analyst says the stock's valuation is too rich right now and margin concerns areun ng. shares fell more than 256today to $2 >>> and bank of america was upgraded to outperform from market pe

as you heard there from steve liesman, the fed has removed the word patient from their statement. they said now they're willing to act as appropriate to sustain the expansion. but it remains unclear when the rate cuts could come and how much we could see when they actually do start moving on the rate front in terms of equity reaction in europe, it's positive across the board. in terms of sectors, we are seeing trade sensitive sectors outperforming. the likes of basic resources, autos, tem cchemical, technology increasing tensions in the middle east providing a boost to oil and gas stocks let's look at yields treasuries led a global bond rally as you would expect in the wake of the fed statement. the ten-year treasury yield dipped below the 2% mark right now it's trading just there, about 2%. european yields, the italian german bond yield spread the tightest since september 2018. the spanish ten-year hit a new record low bonds across the board are seeing yields drop on the back of that fed news >>> president trump has preetedly hit out preeted repeatedly hit out at the fed policy e

steve liesman starts us off tonight i washington. >> reporter: the federal reserve left interest ratesnged at the june meeting but major change in its outlook that's just in. it could cut interest rates m i thths ahead, maybe even at th next meeting in july. the big changes the federal reserve effectively ended its policy of patience where saying it wouldn't do anything for many months. that word came out of the policy statement. instead itmpsized uncertainties in the economic outlook and said it would, quote, act as appropriate to sustain the economic expansion. as recently as march no fed official forecast a rate cut this year. now eight fed officials forecast at least one i2019 and seven of them forecast two. fed chair jay powell saidos eve who are not forecasting cuts in the survey are leaning that way. >> a number of those who wrote down a flat rate pass agree thae case for additional accommodation has strengthened since our may mting. this added on accommodation would support economic activity and inflation's retn to our objective. uncertainties surrounding the baseline outlook h

if you are fed president john williams, taking questions from steve liesman in new york right now. >> right now we're somewhat below that target. we've had softer targets in the last few months, i think with the strong economy we'll achieve this -- >> i'm going to ask this more directly is low inflation something that should be addressed? >> so do you think inflation is obviously -- we have dual mandate goals, maximum flexibility. we have set increase -- we need to achieve that on a sustained basis. i do think the fed policy is one of the aspects of -- one of the decisions we need to think about. and we've been doing it that way pretty cone sift endly right now, the inflation data it's coming softer, i think when i look at policy over the next few years, i'm going to say watching, how does it behave that will be one of the factors. do we have monetary policy in the right place? obviously on the other side of the mandate, watching as the economy evolved in the way consistent maximum employment. those are factors. on both sides of the coin trying to manage those two goals. >> there's a

. >> all right that decision is coming down the pike let's get to steve liesman in washington steve. >> no change in the federal funds rate the federal reserve retains the funds rate at 2.25 to 2.5% however, removed the word "patient" from the statement the fed said uncertainties have increased. the statement says the federal reserve will, quote, act as appropriate to sustain expansion. they will closely monitor implications on the outlook. the st. louis fed president wanted to cut rates. on rates, a major change in the dot plot or the outlook of the fed officials for their rates. a lot of disagreement. eight are now forecasting a rate cut. seven of them are forecasting two quarter-point cuts this year one is forecasting one cut eight are on hold. and one is forecasting a high cut. eight forecasting a cut. ser seven is two cuts. one is one cut, one on hold, one hike the result is actually unchanged. however, it's down by 50 basis points for 2020 to 2.1%, down by 1 for 2021 to one quarter point to 2.4%. the long run also down by a quarter. the long run fund rate to 2.5% from 2.8 all o

i'm going to hear from my english teacher. >> jim, matt, thank you very much, and steve liesman. thanks to you. >> to washington now, and a trade panel holding a hearing today into the plan to tariff $300 billion worth of chinese goods. kayla tausche is in d.c. >> hundreds of companies and more than 50 hours of testimony are taking place what's unique about this week's hearings are most witnesses plan to say the same thing. that tariffs are bad and shouldn't be applied to the remaining $300 billion in chinese imports, which sweep up most consumer goods. executives from best buy, hp, even irobot are set to make that case over the next week. and to argue that if tariffs do go forward, their companies or products should be exempt. president trump has been unphased by these arguments in the past and he says those businesses should just move else where, but mark carota, president of bra maker leading lady says it's not that easy >> very difficult garment to make, so many operations there's 25 or 30 operations on this garment sewing so many different places on here that it is just not

speaking with earlier and i guess there's a perception that maybe they were more dovish today liesman is in chicago. steve, you there with us >> yeah. i'm here >> so, what are we to make of all of this fed speak today? i think we just lost liesman's shot we'll get that back up in a second but you had bullard yesterday, okay saying, well, maybe a rate cut is warranted you had charlie evans today saying, well, the market may be seeing something that we're not seeing at the given time but we need to pay attention to that. and then powell himself, the chair, well, we'll act and we'll do what's necessary. >> and of course last evening, you had a cut from the reserve bank of australia. >> first time in three years >> it's very significant, scott, because outside the u.s., we are seeing economic contraction and that deflation is being exported to the united states so there has to be consideration given here on the part of policymakers about the economy, the concerns that they're seeing, and again, it goes down -- friday, the strength has been labor, what is the labor look like on friday? is that number weaker th

cnbc senior economics reporter steve liesman is here, as well we begin where else the markets rising, surging really ahead of tomorrow's decision on interest rates and stocks sitting less than 1% on new highs and investors expecting a friendly fed and then the president's tweet about that phone call with president xi getting another boost, pete, you are 27 points away from a new record >> amazing push, scott but the chips are starting to fall on the level that would push the market up higher. will there be the follow through. we heard the tweets with the president and what might be happening in terms of trade and this is something very positive. the idea the g20 and the opportunity to get together and make some of those calls today it is all about steve liesman and the fed. i am pointing to you this is their world. how much of a cut? people aren't talking about what kind of cut. is this going to be a quarter or 50 cents whether it is june or july yesterday i know steve was talking about 50 and that seemed like a big number to me but maybe it is. >> yet mike wilson who says in his most

steve liesman has some answers >>> three reasons behind the latest downdraft in bond yields.ation is consistently coming in below the fed's 2% target and it looks to be falling further. second, growth is expected to weaken, maybe a lot depending on how new tariffs on china and mexico play out in the broader economy. third, low inflation and weaker growth are forecast to combine to cost the federal reserve to cut interest rates how much have rates fallen from the presidential election to the peak of rates under president trump the benchmark ten year yield rose by 140 basis points call it 1.4 percentage points. since november 2018 yields have fallen 115 basis points. that just about wipes out all of the post election increase it's been a powerful bond rally. it will need to be confirmed by economic weakness, low inflation and fed rate cuts to be sustained. >>> and our thanks to steve liesman. so there is your macro setup the question is, where do rates go from here joining us now is sri kumar live from los angeles we know it's a big day to get you on live from la, sri i said al

patient isn't in there, it's good. >> all right that decision is coming down the pike let's get to steve liesmanshington steve. >> no change in the federal funds rate the federal reserve retains the funds rate at 2.25 to 2.5% however, removed the word "patient" from the statement the fed said uncertainties have increased. the statement says the federal reserve will, quote, act as appropriate to sustain expansion. they will closely monitor implications on the outlook. the st. louis fed president wanted to cut rates. on rates, a major change in the dot plot or the outlook of the fed officials for their rates. a lot of disagreement. eight are now forecasting a rate cu

steve liesman will join us shortly, as well as stephen moore. what's your takes in terms of the reaction >> i think the bond market has been pricing this action in all along, right as josh just mentioned, whether it's a 25-base cut, now we have effectively priced it in. >> 100% nearly, right? >> yeah. roughly. >> it's delivering expectations. whether you go and dissect the dot plots, saying that there were be a cut, most of them saying there should be at least one 50-basis point rate cut, it's delivering on market expectations that's why you're not seeing a lot of activities in terms of equities credit spreads are holding in there. that break-even spread actually went up today, so it seems to be bond market pricing a lower growth rate. >> michelle, i thought the most definitive point was when he answered a question on president trump. he said, i think the law is clear and i have a four-year term, and i fully intend to serve it does that clear anything up? >> you know, he's been making that comment, and every press conference he's asked that in a

chairman jerome powell sitting on the sidelines with no rate cut let's get to our economics reporter steve liesman who was at the news conference today steve. >> thanks very much, melissa the federal reserve left interest rates unchanged at the june meeting but made a major change in the outlook, suggesting maybe a cut ahead, maybe in the next month's meeting in july. effectively ended the policy of patience as it was born, actually signalled where it wouldn't do anything for several months, instead it is now emphasizing uncertainties in the economic outlook and, quote, it would act as appropriate in economic expansion. remember back in march no federal official forecast a rate cut in 2019. now eight are on board with rate cuts, at least one this year, and seven of those forecast two cuts, and the fed chair saying even though they aren't forecasting cuts, well, they're leaning that way. >> the number of those that wrote down a flat race pass agree that the case for additional accommodation has strengthened since our may meeting. uncertainty surrounding the baseline outlook have clearly risen since

the market is getting way ahead of itself on fed expectations and on that note, let's bring in steve liesman joining us today from d.c steve, so you had all this fed speak yesterday. chair powell says baseline outlook remains favorable. policy should not overreact to a single data point. bullard says 50 basis point cut would be overdone. this doesn't sound like these two very important people on the fed are necessarily in line with where the market expects things to go next month >> i wonder if i disagree with you on that, scott the market pricing does expect a 25 basis point cut that's a good odds-on bet and a possibility of a 50. when i look at the way the market is priced i see a 78% of a 25 basis point cut that seems about right i think the real issue, scott, there's, by the way, september 68% chance of a 25 and an 18% chance of a 50 i think the fed does not quite know what it's going to do and that's because of all the things you guys are talking about if you can tell me exactly how the meet with xi and trump is going to go and how weak or strong the july jobs report is going to be and

committee at the desk today, joe terranova, stephanie link, josh brown, jim lebenthal, jon najarian, steve liesman. let's begin with a rally even as the may employment report comes in well below expect take expectations investors banking on the fed cutting interest rates especially as though new tariffs could go into effect on mexico on monday 106 s&p 500 stocks at new 52 week highs and this is all about what the fed. this is all about the fed. >> yes yeah and you know, for weeks, we've been saying, and steve, i think, has been agreeing as more and more data comes this way and as the inversion stays in place that we're going to see at least two cuts and i think july and probably in the fall, i don't know about a third >> market wants 3% >> well, and the market doesn't always get what it wants, just like mick jagger and keith richards wrote can't always get what you want, sometimes you get what you need. this might be what you need, scott. you like that, steve >> love it >> you pulled that off well. >> thank you >> i love it awesome. joey, there's no denying i. tt. the best week of the year in the

for "nightly business report," i'm steve liesman. >> teresa mcdonogh joins us to rstalk about the fac from tariffs to inflation data that willo into any decision the interest rates and carissa, thanks for joining us tonight. >> thanks for having me. >> for the record you areca foing maybe a couple of rate cuts and maybe july and september. how much of that is con tifrtin on c tneseiffs remaining in place? >> i think a good portion t, that, in fe were really only looking for one hike before september, but the of tariffs make us think that we really need to think about the fed stepping ihere and forcing the hand of, you know, whether it's the market o just getting ahead of it, so agree, those two his for sure by september and aat's where we're standing today. how important is each individual data point to the fed at this point? and also the contions of the corporate credit market as well because the data's been somewhat mixed cl isomicating things for the fed. >> that's right. the fed needs to build its case in terms of making these cuts kind of the shadow third mandate behind inflation

. >> steve liesman and on that story tonight. >> amid stories of the weakening consumer -- and he just revised it by another half a point. consumers showed up for health and personal care items and sporting goods and general merchandise stores and of course on the internet. it was then kind of discussio that consumers feel very comfortable about the outlook and what's in their pockets. barclays wrote today's report paints a picture of strong momentum a consumer spending. this is consistent with an outlook for the second quarter when we expect consumer spending to hold thet. f there's still some slowing growth into the tax cut-induced spending spree. economists believe it will any down from 2%, down from last year, and it's a potential growth for the u.s. economy and better than the earlier estimates of just 1% or less. >> we still have slowing consumption compared to last year and the consumer has been theon bac of this recovery in this expansion and we expect that to be maintained. the strength in consumer spending actually complicates policy making for the federal reserve. concerns a

economist and cnbc's markets commentator mike santoli, also economics reporter steve liesman. exaggerated. this revision to april is very good news. the solid number in the control group, missing by 0.1% on the top end doesn't bug me at all. it is a little weird this data has been unusually choppy, and i don't know if it has to do with the weirdness of when easter fell or all this other stuff. been saying for a while, you have decent wage growth, widespread employment. there's no reason why the consumer shouldn't be doing well and this back revision kind of helps to square the circle on that, in that april is -- as rick said, 0.5% better than we originally thought, and may is pretty solid department stores, they were up, now they're down miscellaneous stores were up, now they're down but the strength was in health personal care, sporting goods, and hobbies. i think we're on a good track now. we may even get an upward revision to the second-quarter growth forecast as a result of this. >> so, constance, what does this do to all those who are concerned about an approaching recessi

steve liesman has that part of the story. >> weekend deal with mexico to avoid tariffs, markets are still betting on a series of interest rate cuts from the federal reserve this yeae the chaf a rate cut is priced in futures markets running around 80% so what would it take for the fed to lower rates? the fend meets next week they're expected to stay on hold but perhaps signal possible cuts coming in july. a cut might come if presidents trump and xi either don't meet in japan laterhi month at the g20 gathering or if they meet and can't strike a deal. the president sat id additional tariffs could be levied on chinese goods. a weak second quarter growth could all seal theoreal a fed rate cut. some fed watchers expect a mini-easing cycle consisting of two or three rate cuts. >>t supports asset prices and credit conditions, softens the dollar a little bit, it would help sectors like hsing that are beginning to benefit from lower ten-year yields. is it totally transformative? no. does it help lean against this extreme uncertainty frde tra yeah, it does. >> and there are those who say the fed may

for nrk "nightly business report", i'm steve liesman in washington. >>> low interest rates have beenood for dividend-paying stocks this year. they've been hot and could get hotter if the fed cuts rates further. joining us to talk about that, n pres chief investment strategist at point view well it management and a big fan dividend paying companies too, at the same time, right? >> yes. absolutely. >> i was going to say, are we taking more risk -- certainly you get a better yield from a lot of the stocks than you wou from treasuries for example right now, but are you taking more risks because of the prices right now? >> well, certainly -- i mean now that the interest rates have fallen so muchecause of anticipations of fed rate cuts, dividend stocksngre loo more and more attractive as people who are traditionally in fixed income are now lookir over th shoulders and looking at some of the better yielding stocks and saying, maybe this is where i can pick up some more yield. this is particularly true because credit bonds are ao very tightly trading relative to treasuries. >> right. >> what

steve liesman joins us with more from chicago with the highlights and hopefully more on a topic that i actually know something about. steve? >> yes, wilf two top fed officials suggesting here in chicago that coming new tariffs if they change the economic outlook could change monetary policy. >> to date the tariffs that have been put in place on the economy have had a small effect in the aggregate, and i think the others would agree with that consensus. as we move ahead and we consider potentially more tariffs and potentially retaliation, that potentially has a more noticeable effect on the economy and we would have to take that into account >> clarida said tariffs are not necessarily inflationary because price only go up and stay that way. fed chair jerome powell also said the fed would act if it needed to. >> we do not know how or when these issues will be resolved. we are closely monitoring the implications of these developments for the u.s. economic outlook and as always, we will act as appropriate to sustain the expansion with a strong labor market and inflation near our symmetri

senior economics reporter steve liesman is here with what's happening. >> not pretty.eacting and economists warning of possible recessions take a look at the rate cut probabilities. we now are putting in a 57% chance of a cut in july. that wasn't even on our board in the last several months. now we're good darn sure it's going to happen with 87% probability by november and not only are we counting on a single cut, there's a 64% probability of a cut by october of two cuts. >> is this happening because we're worried about what you see in treasury markets right now. >> yes hold on to that thought, becky brilliant as always. jumping the gun. the move in these markets is equal to the strong concerns expressed in the economic reports. pantheon said the chance of a self-inflicted unnecessary weakening in the economy this year, and perhaps even a recession. barclays says we expect global economic and financial conditions to worsen enough to warrant 75 basis points. >>> jpmorgan says making abysmal growth attainable. now becky was asking what's happening in treasury markets. th

steve liesman joins us now with more especially after that data at the top of the hour. >> that too.y about protectionism from worry to almost convinced about a recession. the national association of business economics out with its june outlook and they're forecasting a high chance of recession next year, largely due to growing trade protectionism the odds, below 15% for 2019 that's below average, but rising up, you can see there, according to the survey out last night, the 60% by the end of 2020 recession fears surged amid rising trade protectionism morgan stanley writing over the weekend, if trade tensions continue to escalate, we could end up in a recession in three quarters and the consensus, very quickly, has gone from no cuts planned this year to general for multiple cuts, evercore isi writes we see a base case in which the fed will reluctantly cut rates three times starting in september in a mainly easing cycle intended to ensure against downside risks associated with trade conflict the fed funds futures, you can see, i left friday afternoon, there was not a 50% probability of

joining us now is our senior economics reporter, steve liesman. e what they've done, steve, a big round of thanks to you you're out there covering the fed like nobody out there in the world. of course the markets are reacting to the fed. therefore the markets are reacting to you. thank you if we hit new record highs today. >> wow i did not expect that, brian thank you very much. i don't know if i take credit for any of this. i'm doing my job here, as you know let's talk about the fed it was an expected but still a sharp turnaround for the federal reserve. the federal reserve keeping rates unchanged but dropping its policy of patience it lost patience and adopted a clear, easing bias what does that mean? in the months ahead the economy is essentially guilty of weakness and needs at least one rate cut unless proven innocent butunexpected strength >> the baseline outlook remains favorable the question is whether these uncertainties will continue to weigh on the outlook and thus call for additional monetary policy accommodation. many fomc participants

steve liesman joins us with more on the reaction, not only the immediate reaction but a day later whate think about this >> jerome powell and the open market committee didn't give president trump the rate cut he was clamoring for but they gave him a solid suggestion that one is on the way. powell said growing uncertainty over trade and global growth prompted the fed to lose its policy of patience and adopt an easing bias. that is if the expected weakness occurs >> the baseline outlook remains favorable, the question is whether these uncertainties will continue to weigh on the outlook and thus call for additional monetary policy accommodation. many fomc participants now see that the case for somewhat more accommodative policy has strengthened >> eight policy officials forecast one rate cut, and seven forecast two what happened to the probabilities? we'll show you them in a different way right now. 100% baking in a july rate cut an 80% probability of two cuts or a second cut by september 61% chance of a third cut by december let's look at the calendar here's some key dates. that meeting

steve liesman is with us steve? president trump remains unhappy with the federal reserve for not cutting interest rates and continuing to run off the balance, destructive and hobbling his negotiations with china. >> we should be entitled to have a fair playing field, but even without a fair playing field, because our fed is very, very disruptive to us, even without a fair playing field, we're winning. because the tariffs are putting us at a tremendous competitive advantage. >> president trump also expresses displeasure with the personnel on the federal committee. >> no, they haven't listened to me and we have people, more than just jay powell. we have people on the fed that really weren't, you know, they're not my people. but they certainly didn't listen to me. they made a big mistake. they raised interest rates far too fast. >> despite the mexican and mexican immigration tariff, markets forecast multiple rate cuts from the federal reserve this year, june down 22%, was as high as 30%. july, 84%, that's up today from

steve liesman with more on that. steve? >> quite a word.resident trump in the cnbc interview was blunt about his continued unhappiness with the fed for not cutting rates. running off the balance sheet and as melissa said, called the fed, quote unquote, destructive. >> we should be entitled to have a fair playing field but even without a fair playing field because our fed is very, very destructive to us. even without a fair playing field, we're winning because the tariffs are putting us at a tremendous competitive advantage. >> so the context of that is obviously in the negotiations with china that he feels the fed puts him in a bad place. president trump also expressing his displeasure with personality over the committee saying they don't listen to him and end quote, they're not my people despite the mexican immigration and tariff deal, markets continue to forecast multiple rate cuts from the fed this year here's the probabilities down a little bit for june, but still strong 84% for july, going to 97% by october. inside that, a 51% chance o

steve liesman told us yesterday, there's a 100% chance of a cut in july. >> the 100% priced in as ofoday. that can change tomorrow, because if there is a deal the rate cut odds would get pulled back manufacturing has slowed the global economy in terms of manufacturing is in a minor contraction. if you look at pmi numbers, we'll get some more today. if there's no deal, that gets exaggerated, and you'll see further declines in manufacturing activity that could threaten and spill over into services >> outside of that, we had our number of the day yesterday. you know what that number was? >> i do not. >> 12.5 trillion >> do you know what that is? >> yes the negative yield in securities >> correct the amount of debt around the world that has a negative yield. japan, germany, switzerland, sweden, denmark, another one thrown in there. >> it's like 20 to 25% of the entire global bond market. >> correct >> how does that end not next month, maybe not next quarter, two to three years from now. how does that play out >> it's playing out in terms of the profitability of european and japanese bank

steve liesman sheer with some details and context. >> neel kashkariy staking on one of the most dovish positions, saying he abdicated for a 50 basis point rate cut at the meeting on wednesday kashkari who doesn't vote now, wants them to commit to not raisie ining interest rates untl inflation hits 2%. he said i advocated the rate cut. an aggressive policy action such as this is is required to reanchor our target. you will remember kashkari last voted in 27 and dissented against all three rate hikes now jerome powell expressed some sympathy this week he noted research that shows it's best for the fed to cut more deeply when it's close to zero rates he said an ounce of prevention is worth a pound of cure host the market? here we go 100 probability of a rate cut. here we go 78% probability. and a 22% chance of a 15 a basis point cut. the fed did do basis point cuts out of the box in 2001 and 2007. 1998 so 15 out of the box, not that unusual. real fed men and women >> but in terms of how this that i think chaing and how it presented this data, how was it before what did we show before? wha

numbers coming in much weaker than many had expected. 75,000 jobs were added in the month of may steve liesman is here to break down the numbers steve? >> missed the mark by a long way and raised concerns about the economic outlook and whether the trade war is already hurting the jobs market. add to evidence ahead of the meeting showing economic policy uncertainty may be increasing weighing on growth prospects here are the numbers which the bls report, 75,000 was what was reported from 180 what was expected and then the revisions of minus 75,000. maybe a tick lower than expected here's where the jobs kind of weren't. government minus 59. liked at the detail. that's educational services for the state and local levels that could have been a little bit of seasonal stuff. maybe a little bit earlier for those, whatever happened there plus, you have construction down a little bit and manufacturing is where people thought maybe the trade war was already showing up the report with the prospects be cutting rates and cutting them soon the probabilities we've been showing you all week and they're higher

back to steve liesman who teased us before, he's now got a preview, will tease us again, you did tease to that part i know you don't think it is a soap opera, but of the back and forth that we may be hearing >> yeah. add my praise for the interview becky just did pivot from patience to possible rate cuts today as the fed meets among unprecedented public pressure from the president for the fed to ease policy signals that willingness to cut rates in the future, removes patient from the statement, marks down possibly the economic outlook. major question, how many if any fed members forecast rate cuts this year. the so-called dots in these economic projections none did so in march when they last did this. let's look at the fed rate cut probabilities real quick 23 for june. 82 for july. 894 for september. 45% chance of three cuts by december the meeting takes place after these comments from president trump, who was asked by our own eamon javers if he would remove or demote jerome powell. >> let's see what he does. i wican tell you draghi and the eu, if you look at what's going on with the e

let's talk about new inflation data fueling more speculation that a rate cut may be coming soon steve liesman is here to break it down. steve, you ready >> i'm ready i thought it was my ear piece. >> we all thought that we're good to go >> what about low inflation which the fed said was transitory it failed to transit out of the economy. headline inflation rising 2 %. core inflation, take out food and energy rose a tenth for the fourth month in a row. leading the year over year rate to decline to just 2 % bmo says despite modest pressure from tariffs inflation is well in check due to the strong dollar falling labor costs and aggressive online kcompetition driven by digital technologies there's two economies in the data service inflation, we took out energy from both of the calculations 2 .7% year over year commodity and good prices appear to be back in the deflation mode leading to fed to miss the 2% target markets judge it good enough or bad enough to prompt the fed to cut rates because inflation is weak or because the low inflation numbers suggest a faltering economy. odds of a july rate cu

what was it, ten days ago steve liesman sat on this show and introduced the concept of a 50 basis pointsveryone on the show said, oh, 50 basis points, we only thought it was a quarter steve said, well, no, if we're going to do it, we're going to go big, go big or about it home i think was the expression so ten days ago the market wasn't even thinking about 50 basis points now we're selling off -- >> because we're demanding 50 basis points >> but, but, but, we're not even 2% off the recent high you're partially right, joe, the market is saying you darn well better give us our quarter point, as long as you don't talk about backing off a quarter point, we're okay. there's two things that matter, we were talking about, if awe don't get tariffs kicked back. but i don't think the market really cares about 50 right now. >> apparently it does, jim >> we're down a half a percent >> the high in the s&p 500, we're 36 points off. >> no, i actually agree with jim. >> i thought you said the market wants 50%. >> no, no, i said the market is pricing in those two cuts, those two 25-point basis cuts. the

until then, we check in with steve liesman with the results of the latest cnbc fed survey. steve, you know, trade is a big part of the survey, but what did respondents say about it >> when it comes to china, the only thing the markets care about is as howie mandel would say, deal or no deal, and the answer is for now, no deal look what's happened to the response to will there be a trade agreement with china 77% thought that back in april that is all the way down to 30% now. the no deal part of tariffs, only 13% say there will be new tariffs. the 50% number, continuation of talks. that's where the market is priced right now, at least what our respondents say. what will happen if there are new tariffs or the existing tariffs? 78% say they'll increase prices. 89% say a weaker economy and it's going to shave .2% off gdp in '19 and in 2020, and it ranks, not surprisingly, as the number one threat to the u.s. expansion. 37% peg it as the protectionist trade as the number one threat that's up about ten or more basis points global weakness and geopolitical risk now take a look at wh

under even more pressure to cut rates following talks of easy money emanating from europe, and steve liesman joins us with more on that a lot to talk about, steve >> yeah, there was an interesting chain of events this morning that unfolded today that could ultimately impact the federal reserve's rate decision. it began this morning when ecbd president mario draghi said more stimulus may be needed that weakened the euro sent the german bund yields deeper into territory, and dragged down the ten-year benchmark to 2%. it sparks a tweet also from the president of the united states, who said, and i quote, mario draghi just announced more stimulus could drop, making it unfairly easier for them to compete against the usa. they have been get away with this for years economic weakness just one reason why the respondents to the cnbc fed survey are now pricing in a rate cut. top reasons why, there we go we asked people to see, on a scale of zero to 100, a portion of why the fed is cutting. economic weakness number one, followed closely by not hitting the inflation target market pressure up there, and t

calls for a fed rate cut are growing louder and louder on wall street, so will they or won't they steve liesmans standing by with the man who has a big say in the matter, richard cclarida. steve, take it away. >> i am here with fed vice chair richard clarida. let's talk about the conference which is this fed listens thing. and i wonder if you can boil it down to what the market needs to know about where the process could go is it possible that it leads to a very different way of the fed figuring out how to make policy as in a higher inflation target, average inflation target, what are we really caring about why you are listening and thinking about this process >> well, as we've indicated, we think our current framework is serving us well. so why do this the economy is in a good place and we have the opportunity to see if we can do our job even better we have a job assigned to us by the congress which is maximum employment and price stability and this is all about having the best set of tools and strategy to achieve this. we're early on in the process. this is called fed listens for a reason we'

. >> let's bring steve liesman into the conversation. our senior economics reporter. what do you make of that >> i think it's possible for stuff to happen after a period of weakness that will make it so we would have been in recession. i think what liz ann is saying -- in fact, it happened in '01 if you read what they wrote about the '01 recession, it said if not for 9/11, there would perhaps not have been a recession. so, we have this initial weakness 9/11 comes along and creates additional weakness and that then gets predated to the beginning of the recession i think that's an interesting concept. >> are things worse than they seem >> i had a chance to sit here and listen and keep my mouth shut for a change, as you know it was the most depressing i've ever heard about a stock market at an all-time high. there was not a nice thing said about anything >> maybe the consumer. maybe the consumer >> we're in a post-'08 world. >> i want to bring up a chart. i'm psyched about theheadline of it. which is asking the question, is the first cut the deepest? we have, as we have

. >> steve liesman, thanks for being with us. >> have a great weekend, earn and "the exchange" starts now. >>> thank you, scott hi, everybody. here is what's ahead today overreaction are markets makingtoo much of today's disappointing jobs report are rate cuts this summer really on the table now we will debate and the clock is ticking. negotiators are racing against time to cut a deal before the president's tariffs on mexico go into effect on monday. we'll tell you why the auto unions are a key group to watch there. plus breaking up could be bullish for big tech broken miller saying the companies could be worth more on a breakup all except one of them and which one? that's coming up dom chu is here and this could be the best week of the year. >> it could be the best week of the year and it could be the best week of the year for key sectors, kelly, because as you can see, there are strong gains in the green across the board and the dow up just around session highs and a little bit below their 320 points up over a percent. and the s&p up a third of a percent and the nasdaq up by almost

and dive in senior portfolio of morgan stanley investment management and alliance bernstein and steve liesman. is the fed ringing the bell and is the market the last couple days salivating? >> i don't know the fed is ringing the bell as much as the market is salivating without hearing the bell and by that i mean -- >> maybe we're too conditioned >> i think that's exactly right. the fed is what it would call it reaction function is working reasonably well, except that it removes some optionality there's a weakening in the economy and a growing concern about a recession. growing concern about the weakness and the tariffs and the global economic weakness those set of factors, the market is conditioned at this point to say, you know what, if those things are going to be true, then the federal reserve will cut. and i think that the market gets ahead of where the fed wants it to be, which raises the issue and the bar for wednesday where the fed wants to give the market some of what it wants, but preserve some optionality. >> maybe, jim, say it a different way. i don't want to put words in steve's m

those who spoke elsewhere in speeches and otherwise that seemed to, and liesman even side it, steve liesman's here, by the way, senior economics reporter. you said the other day that the fed seemed to be coming to grips with what the market or accepting what the message that the market was sending or something like that. >> what i said was i had talked to three fed officials on the record and gave each one of them an opportunity to push back against where the market was priced >> they didn't >> none of them did. i went further with one. i said you're not pushing back means it's good? and of course he didn't quite answer that. but they didn't push back, especially richard, and now look, i mean, some of what they said was conditional on this idea that there were going to be mexican tariffs. i'm not sure it's off and scott, i'm deeply confused about what happens next week in case you were going to ask me >> the meeting is what a week from today >> it's a week from today. the announcement would be a week from today >> there's no -- the expectations is that they do nothing. maybe they set the tabl

steve liesman, cnbc. could you walk us through your thinking about trade?s really the threat of tariffs against mexico that caused at least the market to become definitely pricing in rate cuts. if, for example there is a deal with china, does that take the possibility of rate cuts off the table? >> yeah, so i would say that we're not looking at any, any one thing. i would start by agreeing with your premise that news about trade has been an important driver of sentiment in the intervening period but we're also looking at global growth. it is really trade developments and concerns about global growth that are on our minds. so we're not exclusively focused on one event or one piece of data. risks seemed to have grown. in the meantime we have incoming data in the united states that's been pretty good, particularly for the consumer. consumer spending is solid supported by, you know, a healthy job market, high levels of employment, wages going up. we do see some areas that we're looking at, such as i mentioned business fixed income. so, also prolonged short fall

our senior economics reporter steve liesman joining us with more others are sort of opining on what the fed may do. goldman has been way off sides on what the fed was going to do. now they say no cuts this year what do you think about what mr. trump had to say >> i think what he's talking about when he says the fed has been destructive i think he means in context of his attempts to grow the economy faster but also the trade negotiations with china. he contends the fed hobbles the administration because it doesn't cut interest rates which weakens the dollar and eliminates the ability of china to offset the effects of the tariffs through the weaker currency >> okay. so we get this deal with mexico. you can debate what actually changed or what didn't change or what was agreed to doesn't matter the market is up big sentiment is -- >> it actually does matter, scott. a lot of guys are trying to figure out what lesson the president learned from this deal with mexico because if -- >> that's not difficult to figure out if you ask him. he believes tariffs work they're a beautiful thing, i think i

>> i think steve liesman presented this last week he's right the federal reserve in june gives the market a rate cut and then president trump goes to g20. and everything is okay with china. that's not a scenario that i think chairman powell -- >> well, because maybe the economy is slowing regardless of the trade situation with china >> this is the hard part >> manufacturing data today was weaker so did we need the -- >> did we need the december hike are we paying for the december hike >> the fed made a mistake by -- >> in retrospect >> and what we're doing right now with the trade dispute, are we slowing the german economy into a recession right now that we'll know about six months later? probably >> probably. >> see, if the fed comes out and said, you know, we're aware of the trade dispute, geopolitical, that's not what i want them to say. i don't want them to say we're aware of the trade dispute i want them to focus on the economy and everything else. otherwise, they become traders >> we're at the lows of the day for the markets. let's take a quick break here's what else is coming up on

give us 25 basis point cut in july, probably, not even guaranteed >> probably because last week steve liesman survey showed 100%, that's all the percent, of people surveyed, said we're going to get a rate cut and whenever there is 100% certainty on something, maybe don't want to be certain, it sounds like you think there is a chance we won't get a cut. >> look, if you have -- we have a lot of data next week, next week will get interesting again. we'll have the g-20 outcome, whatever that is, but then a nonfarm payroll report on a friday, after the fourth of july. >> opec -- >> opec, we have got manufacturing confidence coming out next week. there is a lot to chew on and earnings season will come up again. >> on a short week with low volume. >> right. >> we'll be doing "fast money" that friday, july 5th, i bring that up, i will be here. just to be clear >> pretty exciting to be here. >> i'm very excited, pete. >> five guys that -- >> hi, how are you >> thanks for doing your job thanks for doing your job. >> great day to be here. without that liquidity, with the jobs number, with the fed in foc

wilmington trust with us from d.c., the ceo of farr, miller and washington, and our economics reporter, steve liesman. you can see the markets making another reversal, down now is up 151. the s&p, nasdaq briefly went negative, now they're positive too. investors simply trying to gauge what the weak enshrinemeest adps for the economy, what, if anything, the fed may be prepared to do about it. pete, you've got the best two-day gain in five months. >> yeah, pretty impressive >> is this all about expectations and hopes that the fed is going to cut rates? >> i don't know if it's all but i would say a great portion of it is about the fed and what they're going to do and jon's been talking about this rate cut for a while, we've been talking about the ten year getting closer and closer to 2% for a while as well, scott, so there's a lot of different aspects of what's going on that's very, very interesting right now i think the fact that there's also folks out there, there's been some murmuring at least about are we getting anywhere further with the trade deal. i mean, i think that's still a percentage of what

. >> before you guys answer that, steve liesman has a rapid update for us, literally right now. which plays right into this conversation steve, great timing on this. what do you have for us? >> yeah, scott, put all the data together, the strong retail number sales, decent industrial production, business inventories, we're now at 2% for the second quarter remember, this is a number that's had a one handle through most of the quarter and the data that's come in and it's up 0.3 from where we were before. here's some of the forecasts, bank of america agreeing with stephanie, they're up 0.4% atlanta fed comes up 0.7 to 2.1, action economics, 1.9, deutsche bank and joe at 1.5% and 1% respectively there you go there's the forecast out there and then the third quarter is running 2.1% so first quarter was 3.2% we put it all together, the fourth quarter at 2.2% and if w do this one and the next one it's a 2.4% economy and i think your question is a good one. if you have a federal reserve that believes the potential of the economy is 1.8% and we're running 2.4%, do the math, does that auge

steve liesman joins us now oh you made the -- you went across the river is that where you are?andma's house. >> did you pass go, did you collect $200 >> i did not, i paid the toll, as you know. so the starts -- headline is that they're down but that a's not really the real story here the real story is that upward revision to april helps out overall. so you're down a little bit from the up wardly revised number in may. bottom line, we might possibly get a reversal in the housing effect or the residential effect on gdp it can begin in this quarter -- you can see five straight quarters of -- what is that? eight out of nine there where housing has subtracted from growth the next two we could be getting possibly in this quarter here at least to zero which would help maybe even a positive addition, depending on what's happening with residential improvement a quick look, kind of echoing what rick was saying of the fed probabilities. 30% for june that's a pretty high number but pretty high percentage but 86 for july. pretty darn short so the fed steps up to the plate or the market gets

broteman, president and ceo of the mortgage bankers association, cnbc senior economics reporter steve liesmanat was enough to refi but this finally looks like, bob, like maybe we'll see some better activity overall in housing. it's been one of the laggards in what has been such a strong economy. >> yeah, i think that's right, joe, and we've seen 14 straight weeks now of purchase application volume up year over year, so it's been a strong spring season, but we think it could get even stronger as the summer proceeds, as inventory improves a little bit, and the job market continues to be so strong >> so, whenever we talk about this, it's not monolithic. so, there's places that skew our overall perception of what's really going on, because there's some inventory, but not where you really want the inventory, where the demand is really strong is that why we struggled to see sales go up? >> it's true that inthe entry-level part of the market, the inventory is the tightest, and we're seeing that builders aren't able to keep up with demand because of high land, labor, and lumber costs and restrictive