steve liesman joining us from jackson hole, wyoming. it does look like at this point -- it almost looks like the fed is a derivative of trade because trade has a direct impact on the economy, the global growth outlook, and that will determine what the fed does. >> and you saw it manifest itself in the stock market today. jay powell said, listen, there's no set way, set rules on how to handle a trade dispute, and they're going to be by the data dependent, which they always say. if you look and say, okay, a trade dispute is going to make the data deteriorate, of course you will have a fed that cuts rates. it is not going to help, but they'll continue to cut rates because that's all they can do. >> so are we at a point where the fed cuts rates and the market doesn't look at that positively >> yes i think you are at a point where it is 50 basis points is going to reenter the conversation. i don't think 50 is going to happen, but i think there was a shot that 25 didn't happen before i think there was a shot that they were going to do nothing

oh, steve liesman is gone. let me bring up janet yellen saying the u.s. economy has enough strength to avoid a recession. bullard says u.s. not in recession. good time for a framework review by the fed the fed is going to try its d damndest they're not ready for this thing to end quite yet >> no, by the way, it's part of their job to jawbone it higher that's what they're trying to do they paused in january because they're trying to stimulate the economy. >> jawboning is not going to be enough >> don't expect them to tell you that we're going into a recession. even if it was obvious, they are not going to tell you that i wouldn't look to the fed to be the guide on whether or not we're going into recession or not, scott the data is clear. we are slowing at a rapid rate whether we tip over into recession, it hinges on one thing and one thing only the labor market docompanies decide to start laying people off en masse in a way where the unemployment rate starts going up? we're seeing some signs that's happening with hours worked going down and wages coming do

you know, i thought steve liesman brought up an interesting point that i hadn't thought about that there might be some confusion on the part of the president that the meeting in jackson hole was a policy meeting, which of course it is not. maybe he was expecting a rate cut today and didn't get it. and that would add to his furry when you get these new tariffs from china and expect the fed to respond in some kind and he didn't get that. >> so he criticized powell six or seven minutes before announcing these actions or these orders against china it clearly seems like a cause and effect >> absolutely. and to use the word "enemy," not only against our own fed chair but now against the man that you're negotiating with on the trade war, that's -- i know sometimes talk can be cheap, and, you know, in the heat of the moment you say something you might not intend we all know here words matter. >> when you're talking at this level, you have to be careful what you say >> i will just note on that though that we have already essentially labeled china an enemy. all you have to do is look at the defens

wall street hanging on every word at the summit in jackson hole steve liesman's annual favorite trip we'll talk b about rates we'll bring you the latest details and more plus the great retail divide a clear landscape of winners versus losers in the consumer space, but which names have more room to run and work hard, play hard one analyst says black is about the soar he'll be here to tell us why he thinks the stock could jump another 30%. "power lunch" begins now >> the market dealing with a fed induced whiplash today we are well off the session highs but in the green for the s&p 500 swelz the nasdaq, the dow. the nasdaq though in negative territory down by .2 check out the etf that tracks the home builders down today, but it is up 5% in just the past week we'll tell you which names are driving that move. well the hawks are out in jackson hole, wyoming. fed officials not saying what the market wants to hear today steve liesman is there talking to all the xwbig names. it was really harp rer that sort of sparked that turn around in the market >> he wants to stay neutral. more on that in

and the s&p >>> steve liesman reports tonight from the federal reserve. ♪ >>> overnight lending among down by one quarter percentage point to a new range between two and at2.25%. s largely what the market expected but in a press conference after the statement came out, the fed chairman appeared to dial backns expectator future cuts. >> the committee is really thinking of this as -- as a way of adjusting policy to aor somewhat accommodative stance. we think of it as i essentially the nature of a mid cycle adjustment toli . >> stocks sold off immediately as the market began to question whether the fed will deliver the two cadditional rates priced in. powell went on to clarify saying he did not mea to imply the fed was done after this single cut. importantly, the fed providefu rther easing by ending the redutsion of balance sheet two months earlier than planned. the fed in its stement said that it comes amid a u.s. economy that is still growing, but with growing concerns about overseas weakness. >> to insure against down side risks from theo outlo of weak global tensions. we feel w likek

steve liesman is there. ♪ >> reporter: as the fed gathers in the shaw of the teton mountains for theual jackson holeeeting, the first officials to speak didn't tell the markets what they wanted to hear about the need for deep interest rates cs in the months ahead. >> i didn't think the cut was propriate necessarily but i went along with it to get back to neutral, but my forecast i ju to hold. >> my sense was we've added accommodation. >> right. >> and it wasn't req in my view. i think we're g in aood place relative to the manda we're asked to achieve. >> reporter: the fed president from dallas kaplan said he wants to avoid cutting rates if he can. but he isrn con that the deep decline is sending the fed a meshoge itd not ignore. >> the curve has moved down oves the 3.5 months and the fund ratet 2 to 2 1/4 is above every rate along thecurve. it is possible our monetary setting is tighter than i would have thought three or four months agnt > the com from the fed presidents highlight where to put interest rates right now. eight to ten r supported ae cut in july but two dissents in the m

further raising tariffs on chinese goods in rapid response just this morning boosting their tariffs steve liesman is live at the fed summit with immediately reaction from one of the central bankers of the world mark carney steve, take it away. >> thanks very much, melissa here at jackson hole with mark carney president trump escalated, talk about the global effects of the trade war between the u.s. and china? >> well, obviously, can't comment on just today's effects, but if we take a step back, what has been happeningthe direct effects between the u.s. and the uk or the u.s. and china of the actual tariffs and, you know, they're starting to get up towards potentially over the course of the two, three-year period about one percentage point lower for u.s. gdp if they all remain in place. there is the direct effects. what is happening globally is a confidence effect on business. business confidence, not just in the u.s. and china, but all across those supply chains more broadly because it's not, as you know, just a series of measures between those jurisdictions. we had issues around auto and still h

steve, thank you steve liesman with the bank of england governor, mark carney. mike khouw, what do you make of this in the price many of the most recent ramp up of trade tensions with china? >> one of the things i found interesting myself was he was talking about how central banks and maybe the fed have less wiggle room or ability now than they had perhaps before the credit crisis. i'm not entirely sure that that's true. we have to first think about how much of an impact we think fed can have and what are we actually talking about and trying to mitigate it. is it an issue of trying to support gdp in the united states are we trying to focus on employment are we trying to focus on inflation. it is what we are talking about on this show, right? i think it is interesting because, of course, we have seen unconventional p unconventional policy. when you have unconventional policy like questioe, i don't tk they have that -- i don't want to see us go back to that. i don't think we need to there is almost unlimited room i would suggest. >> thinking about the amount you c

. >> steve liesman, jackson hole, headlines from chair powell. > reporter: federal reserve jerome powell will say in a speech at jackson hole the fed will act as appropriate to sustain the expansion. he says risk management is part of fed's decision-making process. since the last meeting there has been further evidence of a global slowdown. he cites germany and china, the possibility of a hard brexit, turmoil in hong kong and the fall of the government in italy as developments he is watching t he says the federal reserve is carefully watching these developments a lot of talk about trade. he says trade policy plays a role in the global slowdown weakening manufacturing, lowering capital spending here in the united states he does note monetary policy, quote, cannot provide a settled rule book for for international trade. fed policy can adjust policy for trade policy developments. overall in the u.s. economy, however, he says the outlook continues to be favorable. he cites several strong aspects like the strong jobs market, strong consumer spending jo

steve liesman takes a look. >> several global and u.s.nsport indicats flashin yellow and raising concerns about a deeper slowdown in the u.s. in particular, three indices that deal with shipping. the cash freight index turned negative in december and has been negative every month since including a 5.3% decline in june. the shipment's index has gone om warning of a potential t slowdown signaling an economic contraction. the u.s. rail freight index is sending warning signals, down and awa similar to the 2015 and 2016 slowdown that did not lead to recession and not nearly as d as it was back in the '08 recession. the port of long beach container through put falling 10% in june compared to a year ago. >> the global economy is slowing. i think the u.s economy is slowing. i do expect to see slower growth. whether we have a recession in the next 12 to 18 months, i'm betting against it. i think we will still see growth in the next 12 to 18 months, but there's no doubt we are slowing. >> the source of thes slowdown largely from overseas. the effec

. >>> let's get into the fed's annual meeting in jackson hole steve liesman is there live and has been talking to several fed presidents today it seems what we heard this morning, not quite as dovish as the market wanted. why? >> well, i think it's because of the economy, kelly and you're right fed officials gathering here now at the annual summit they have every year in jackson with, you know, a normal set of very interesting issues all eyes are focused on jay powell and his speech tomorrow and, really, he faces a set of challenges that are pretty unique to the time we have right now. let's tick them off one by one the u.s. growing a trend 2%. that's why we don't have everybody on board with the rate cut. global economies are weak. the consumer is relatively strong bob pisani telling you about that manufacturing data which is slowing. the fomc not united on the need for a cut. we talked earlier with patrick harker, the federal reserve president and he explained why he thinks the fed ought to stay right where it is now. >> i didn't think the cut was appropriate necessarily, but i went

steve liesman. >> a pleasure. >>> we have been talking about negative rates, negative bund rates for instance how exactly do negative rate, negative yields work our chairwoman did some homework for us. >> right. >> let's go to trade school. >> let's go to school. >> karen finerman. >> we're in this very unusual position of trying to understand what do negative rates actually mean, right? so let's look at the german ten-year bund. we can see in july things were a little better than where they are now, and it was down like maybe 28 basis points, negative 28 basis points yield. okay but what does that really mean people are really confused does that mean you actually pay interest to germany, to the german government for these bonds? not exactly. so let's look what happens -- let's look at the price of these bonds. in july germany issued new ten-year bonds, around july 10th, and rates were still negative then. the way the mechanism actually works is you paid something north of 100 euros for these bonds, right let's say it was 103ish at the time you pay 103 and these are zero percent coup

we want to bring steve liesman in to talk bigger picture. why when people start saying karnsy war in response to china's latest moves, when the president is putting pressure on the fed, maybe that's the wrong channel. if he really wants to do something to weaken the dollar, what are we talking about? >> first i want to comment on the character we're talking about. bob asked the question are we one tweet away from a rally? our fed survey shows the market has twice been burned by this. they had a 70 plus chance they would have an agreement with china. i wonder now if the leak against the presidential adviser, even the comment from the president that trades are going well, i think at some point you lose the ability to turn this around. maybe i will be proven wrong where the tweet launches a rally, but -- >> you're saying we just in a good chat, we're constructive, everything is fine what happens then? >> you get to a point where you some you sell the rally and you really sell the rally as opposed to you sell it and wait and put it back in when

jay powell's speech in jackson hole steve liesman has the details.ot completely unrelated to the trade story, is it >> reporter: no. i think that's right let me start with the tweets from the president the president saying, quote, as usual, the fed did nothing it is an incredible that they can speak without knowing or asking what i'm doing which will be announced shortly we have a strong dollar and a weak fed i'll work with both and the u.s. will do great. my only question is, who is our bigger enemy -- jay powell or chairman xi? we tried to follow up with the white house and ask whether the president mistook the jackson hole summit happening every year a policy meeting also, no comment from the federal reserve on trump labeling the federal reserve chairman a quote enemy here's what powell did say the main story covering out here in the speech today. perhaps causing the president's reaction he said the fed will act as appropriate to maintain the expansion. on the trade irks and the sloupd, he said there's been further evidence of a global slowdown ci

trade tensions in washington, eamon javers has the latest from the white house on trade and steve liesman is here to explain what is a yield curve inversion and why it has so many people so worried. let's begin with mr. pisani at the nyse >> it is weak global economic data remember, yield curve inversion is in effect, not a cause. the global economic data that is issue we're seeing those sectors that would respond to that are the weakest, including retailers, energy, semiconductors, and industrials. everything is down rather uniformly, anywhere between 2.5 to 4%. a lot of emphasis on sectors that are already deep into correction territory, we're talking more than 20% down from their recent highs and almost all of these are due to trade tensions, global growth and tariffs being the two big aspects of that. pharmaceuticals is the one exception off the highs, a lot of separate issues dealing with medicare for all you see metals, retail, banks, troubles because of the global economic situation and they're the ones down the most people asking me what levels are important? traders don't know wh

here with a mid show adjustment is steve liesman in washington with a recap of yesterday. you like what i did there? you li mid show >> mid cycle adjustment is what you're referring to. the market expecting fewer rate cuts from the federal reserve. the chance of a rate cut in september has fallen to 39% from 70% before yesterday's meeting a third cut, which would be two more from here, now priced out just a 32% chance in the futures market, down from 57% yesterday it comes from this comment from powell during the press conference >> the committee is really thinking of this as a way of adjusting policy to a somewhat more accommodative stance. we're thinking of it in the nature of a midcycle adjustment to policy. >> boy, markets fell off on that the chairman's communications skills sharply criticized. here is the former philadelphia fed president writing the explanation and justification left a lot to be desired now, what was unclear is whether powell intended or not to talk down the market or market expectations for rate cuts he later came back and clarified that he did not

getting ready for jay powell's speech later today in jackson hole before we hear from the fed chair, steve liesmancial guest. good morning, steve. is he big and hairy? >> yeah. [ laughter ] yes. no no, he's not >> kind of we don't really know. >> yes, as of in good morning, i meant to say, no, he's not big and hairy and those not watching in the last half hour and yesterday, understand we are on big foot watch here at jackson hole among the wildlife. we've seen elk and moose, no big foot yet bought crew is out there looking. not wasting more time joined by president james bullard, a tradition to get up early. you sort of ask -- we say 5:30, you say, yes. >> i love t. i know you do it's great let's turn up the heat on this cold morning here. two forevederal reserve colleag of yours yesterday concerned about excess leverage in the economy. where do you stand relative to those arguments and what is yours about where rates ought to go >> look at these tips yields, break evens, tips breaks even. >> tips inflation adjusted bond -- >> what the market thinks inflation will be over the next five years, let

prevent the economy from going into something deeper someone else who has an answer to that question steve liesman. steve, what does the fed do? >> talk about overbilling. having an answer, i don't know but there is a powerful and global downdrafted bond yields this morning as you were saying, the ten-year note down to its lowest yield in roughly three years. german bund lowest level ever, now more deeply negative and increased speculation u.s. yields could go subzero. look at the three big bond markets we are following there it's now 161 on the ten-year yield? i just looked, it's 165. the bund minus 60 basis points for the yield. japanese ten-year is holding in there. it's unclear what sparked this reallily as sar was talking about, it started with unexpectedly deep rate cuts overseas add to that a really good german industrial production report, both raising new fears for the outlook of the global economy. several central banks cutting more than expected, new zealand, thailand and india dropping more than expected pressuring the u.s. federal reserve to act as fed u.s.er officials see u.s. rates

, it's briefly inverted >> all of this is going to get kicked around in jackson hole where our steve liesmanial guest good morning, steve. >> reporter: good morning, carl. thanks very much here in jackson hole with philadelphia federal reserve president patrick harker thanks for joining us, president harker. >> thanks for having me. >> reporter: you must understand risk management. there is a risk that you may come on shortly after the president tweets about federal reserve policy. >> yes. >> reporter: as david just said, 22 days in august, 19 tweets by the president. tell me how you look at this differential between german yields and u.s. yields is it a competition? >> no. it's a different economy the u.s. exports/imports are important to us, but germany much more so i don't think they are apples to apples comparisons. >> reporter: do we need to set our interest rates relative to european or japanese or anybody else's rates >> no. we need to do what's appropriate for the u.s. economy taking into account that there are effects, global effects on the u.s. economy. ultimately, the decision is

if the trade war reignites, what will it mean we've got steve liesman looking at the potential ripple effect steve grasso delivering a trader's take and rick santelliy watching bond land steve, start with you. >> yeah as the fedor worries about global economic weakness, it's finding out just how connected this world is weakness overseas having important effects in the united states take a look at these key gauges of manufacturing in china. they've fallen together. the u.s. pmi is from around 60 to around 52 growing though, but china's manufacturing index has dropped from just below 52 now in contraction territory around 49. what's happened to china that also effects what's happening in germany china's imports are down year over year. that's starting december a few mobts before that, exports from germany wednesday nelg. some strong trade and economic connections. let's move on. that could hurt germany. yeah, in turn, part of europe's concerns all this washes up where in on u.s. shares. yesterday's gdp data showed that data on the president obaositivy subtracted .7. the past four quarte

joining me cnbc economics reporter steve liesman. eve, thanks for being with us. >> sure. >> i saw you at that news conference with fed chairman jerome powell. >> i was there. >> i heard you grilling him there. it seems like investors are concerned the fed was cap itulating to president trump with this rate cut. how does that play out. >> that's not the preeminent concern from invest issues. the concern is they are not capitulating enough to president trump. by that i mean the president right after the meeting said jay powell let us down again. remember, jay powell was president trump's nominee on this job. >> he's really soured on him. >> dramatically soured on him. criticized the federal reserve and fed chair in a way no president i think ever but certainly in the last 30 years has criticized the federal reserve. the president wanted a series of rate cuts. the fed delivered one 25 basis point rate cut and sort of said we're going to see about the other two here. so that was the reason why the market sold off, because it didn't get e

steve, thank you so much >> pleasure. >> steve liesman let's trade this tim, what do you think >> wellsteve is pointing out that you have a dynamic where the fed certainly has a tool box it can go to, but the question is if we look at central banks has any of it actually worked. the good news is europe has a bigger spiral, showing people are looking at the relative trade which favors owning u.s. ten-years over german. one part we haven't spoken about the risk dynamics tonight is we haven't talked about the dollar, which to me is reasserting strength and is a bigger concern, because the next leg to fall is that emerging market currencies come under attack that is something we have seen multiple times throughout crises that have not necessarily by the way ended in emerging markets but ended up there. >> makes sense pete talks about being disciplined in the gold market i get it and he's right. this has been going on for longer than he each mentioned. the gold markets had the stealth rally he is talking about. with that said, it goes right back to the gold market. i will say this and i'm n

i take what steve liesman just said seriously global economy is slowing.'s happening in the u.s. outside a narrow part of the manufacturing sector however, if you're in risk management mode has fed is now by which i mean you're setting policy not for what you think's going to happen but what might happen you want to ease, because risks are definitely to the down side problem for powell is he has a committee that does not see those risks as strongly as he does a committee that does not see the data falling apart and not as worried about low inflation bottom line now is still cautious, quarter point moves and very much a data-dependent fed. >> jay, you heard greg and steve. what struck you? or what do you agree, disagree with >> i generally agree with both of them. i agree with what greg just said there. the fed is a, fomc is a consensus-driven sort of place got have a super majority to move we know there was two desense badesense -- descents back in july. shouldn't ease dramatically here unless you go forward the data falls apart and hasn't at this point. u

let's head straight to steve liesman.ith highlights of his interview with esther john we have missed you we know there is a lot of big news coming out of there. >> reporter: we got a lot of news we got to sit down with kansas city fed president esther george she's the host at this meeting and every year we talked about whether she regretted. she said at the last meeting, i asked her whether or not she regretted disaccide regretted dissenting and not doing the cut. >> my sense was we added the xendation it wasn't required in my view. so i'm observing the downside risk so right now i'm really focused on what the federal reserve has to do to achieve its mandates. my view with this very low unemployment rate, with wages rising, with the inflation rate staying close to the fed's target, i think we're in a good place relative to the mandates we are asked to achieve. >> how is the economy relative to your forecast last year >> last year was a strong performance. i thought 20 fine would not be as strong. still coming in around 2%

let's bring in kate and our own steve liesman with mr. liesman a walkthrough with some of these crosscurrents, if you will >> let's go through the first one here weak global growth we just looked at a bunch of countries, and most of them are either down in terms of their growth rate or some are even negative like the uk and germany. u.s. we just did our rapid update yesterday, 2.1% right about what most economists consider to be a trend let's go on to another crosscurrent here. kelly just talked about that recession signal from bonds. but the u.s. data, strong consumers. that's kind of unlikely at least at this point. then we get to the other split in the u.s. economy and essentially the global economy walmart earnings yesterday, manufacturing though contracting globally the growth rate down month to month over several months in the united states. kelly, even when we talk about a single piece of data, there is conflict we had the housing starts today. housing starts were terrible, permits up 8%. consumer confidence the expectations down b

policy makers are gathering as we speak if jacksonville steve liesman is there, speaking with philly fed harker his comments really impacted the markets here. >> reporter: yeah. i think maybe the key is this. >> that harker is not a hawk but his talk or his answers to my questions were somewhat hawkish. here's what he said when i asked him, you know, where should rates be where should they go >> ididn't think the cut was appropriate, necessarily, but i went along to it to get back to neutral. but i'm on hold right now. my forecast is hold where we are for exact one of the reasons is that that i think we run the risk of creating too much leverage in the economy. >> reporter: that comes against the backdrop of course harker did not want to raise rates in december now he's okay with where rates are right now. and, of course, the mark, the backdrop is the market expecting several hikes from the federal reserve this year. now, i did talk to an actual hawk, esther george, the kansas city fed host. again she does not want to see a rate cut in the months ahead. >> my sense was we've added ac

let's drill down steve liesman has details. rick santelli is tracking the plunge in bond yeels bob pisani is here at the exchange but steve, let's begin with you. >> thanks, wilf. a signal heard around the world as they cut interest rates, that was part of what send bond yields careening downward, eventually taking stocks with them possibly a race to the bottom on rates leer in fact, president trump encouraged the fed to match rate cuts today they've been cutting rates and doing so since at least april and some even earlier than that. the fed knows it can't maintain a rate so far apart, but the problem is if it cuts other central banks could cut even more >> steve liesman, thank you. >>> ten-year bond yields falling to the lowest levels since 2016. 30-year yields closing in on record lows. rick santelli has more. >> if there's any sector or specific part of the markets that should get a fist bump today is this next chart ready to challenge the 210 all time, low close that was established in july of 2016, same month the ten-year

steve liesman joins us from there. is here on set as we try to put into context everything we've learned, steve, in really, what, just the past four hours or so >> yeah, well, i mean, if you try to divine a little bit message of him walking with outgoing governor of england, mark carney. i suppose the u.s. and the uk on the monetary policy front are as good as friends as exist in the world today. i wouldn't say mario draghi is any less of a friend, but certainly, carney he was instrumental in working with foreign central banks and the united states when it came to the financial crisis he heads the financial stability board. and always, you know, a good friend of america, i guess, is a good way to say it and over in england, steering england through difficult times of brexit, hard brexit, and we are, of course, going to be talking to him later today at 5:30 p.m an exclusive interview with mark carney as for powell, i thought he hit a note of good enough in terms of how dovish he was, but all of those remarks were eclips

najarian is here, megan chu with wilmington trust and also with us our senior economics reporter steve liesman. we begin, where else, where the story is stocks following the worst day of the year. big concerns that the trade war is threatening to push the u.s. economy over the edge so we've got 60% of the s&p, a little more than that in correction territory. that's 306 out of 505. what should you do in the market today? >> today you should do nothing. >> what are you doing? >> i'm looking to sell further on strength, and here's why. i think the situation continues to worsen and the goal line continues to be pushed out a lot of people took comfort in monday when the president tweeted about delaying some of the traffics -- some of the tear i was until december i actually thought that that was more destabilizing we knew december was coming up well before he put the tariffs on so the fact that christmas is coming shouldn't be had news or a shock to him what was a shock was a knee-jerk reaction in putting tariffs on without any thought, and then when he took part of them off or delayed them until d

hole the big focus turning to the fed champ powell, to his speech tomorrow morning let's go to steve liesmanive in jackson hole for us we got a dose of fed speak today at least. >> we did. we had the first official to speak at the annual gathering in jackson hole beneath the tee time but they didn't tell the markets what they wanted to hear about the need for deep interest rate cuts in the months ahead. >> i didn't think the cut was appropriate necessarily, but i went along with it to get back to neutral i am on hold right now my forecast is just to hold. >> my sense was we've added accommodation. >> right. >> and it wasn't -- it wasn't required in my view. >> i think we're in a good place relative to the mandates that we're asked to achieve >> now, dallas fed president robert kaplan said he wants to avoid cutting rates if he can, but he says he is open minded about rate cuts. he also is concerned that the big decline we had in bond yields is sending a fed a message it should not ignore the comments from the three fed presidents highlight the divisions in the overall rate setting on the comm

further raising tariffs on chinese goods in rapid response just this morning boosting their tariffs steve liesmans live at the fed summit with immediately reaction from one of the central bankers of the world mark carney steve, take it away. >> thanks very much, melissa here at jackson hole with mark carney president trump escalated, talk about the global effects of the trade war between the u.s. and china? >> well,

steve liesman is here, our senior economics reporter. you thought based on your reporting and the conversations that you're having, that the market was probably still ahead of where the fed likely is now we have what is essentially a race to the bottom, if you want to call it. with three more banks today. >> that's a big factor in fed thinking based on the economic data alone. i was thinking a lot about tom's bullish case here and i think you have to ask yourself a question if you said to yourself, we're going to have what looks to be an intractable trade war between the u.s. and china, and the result is most likely to be that everything is going to be okay, or you said to yourself, global bond yields are falling and there's really no negative signal in that the signal is that everything is going to be okay both of those assumptions defy a little bit of logic. bond yields are falling globally i think because of global concerns about the fallout from the trade war. and about generally weakening economies. i don't think that there's any --

steve liesman has that story. >> normally the central banks in thailand, india, are not the big three. that wasn't the case when those three central banks heard around the world as they cut interest rates either unexpectedly in the case of thailand or more than expected in the cases of india and new zealand. that's part of what sent bond yields careening downward taking stocks with them the message to markets, the possibility that we're in the middle of a race to the bottom on rates in fact, president trump as eamon encouraged it today. he said our problem is a federal reserve is too proud to admit their mistake of acting too fast and tightening too much. they must cut rates bigger and faster it would be easier if the fed understood that we're competing against other countries, all of whom want to do well at our expense. whatever their motivation, central banks around the world take a look at this wall from russia to australia to brazil have been cutting rates since april. that's the general direction of interest rates around the world, definitely downward as they are in the expectati

steve liesman is at the annual symposium in jackson hole, wyoming. >> reporter: fed reserve chairman. powell with his keynote speech at the annual summit here in jackson hole, guardedly suggesting that the federal reserve could ces interest r in the months ahead. even though he said the u.s. economic situation is favorable, he noted that trade policy is playing a role in a global slowdown and that manufacturing and business has weakened both. there's only so much the federal reserve can do to address trade policy but could address some of the fall-out fromt. in a cnbc exclusive interview, e chairman's outlook was backed up. >> it is favorable, the economy is in a good place but there are significant risks. the global economy is slowing. there are uncerinties about trade policy and those are factoring in. we run monetary policy for the u.s. but we have to take into account globalop devnts. they impact exports and inflation and we will factor it in as we need to. >> other fed members here in jackson hole supported lowererg the it rate but for other reasons. >> what the market is saying

for "nightly business report," i'm steve liesman. >> art hogan joins us to talk about the selloff on wall street. he is the chief market strategist at national securities. welcome back, art. nice to see you. >> thanks, sue. thanks so much for having me. >> your reaction with today's selloff with thepat being played out publicly. was this a prep rate orn over reaction? >> i think it was very appropriate only in so much as we were caught off guard by what i would characterize as escalations inrade tensions. last week with tri week characd by the fed, the earnings, the company's reported earnings and be then we got a jobs report and none of us expected h toe a drive-by tariff announced and have this trade with china t escalatethe point that we don't know how bad it gets now. that's the problem. we saw t exact thing happen in may. over a weekend we found out that trade talks had fallen apart and then we escalated in tariffs on the first io$250 bi remember back in may we sold off about 8%. we feel like we' in is that same position where we need to recalibrate valuations and markets to adj

steve liesman takes a look. >> reporter: in the wake of the tariff t president and renewed worries about currency war between the u.s. and china, markets are now more aggressive in pricing in the idea that the fed comes to the rescue anduts interest rates this year. the fed funds future market trading with a 74% probability that the fed cuts its overnight lending rat b 25 basis points in september. there's a 73% it does another 25 in december, and it is toying with the idea of january with a thd cut with a 48% probability. but is all of that too aggressive? st. louis fed president james hell la bullard makingirst comments from the fed since the trade war blew up again. he's not as sure about the direction of policy as the market is. he said, quote, rates are in the right neighborhood. he doesn't see a need for half a percentage point. he expects anoer cut bu said, quote, it is a losing game for the fed to respond t all stock market movements. he also said fed policy can't react to the day-to-day give and take oa tried waade war. this suggests the fed is not going to react tovery tariff m

steve liesman takes a look at whether the fed is under even more pressure now to cut rates.ter: normally the central banks in thailand, new zealand andndia would not be seen as big global movers and shakers, not like the fed, the ecb and bank of japan. twhaent the case today when the tree central banks sentl a sig heard around the world as they cut interest rates, unexpectedly in the case of thailand and more expect in india and new zealand. at sent global bond yields downward, eventually taking stocks with them most of the day. the message to markets, the possibility we are in a race tob thetom on interest rates around the world. in fact, president trump he tweeted out today, our problem is the federal reserve too proud to admit their mistake of acting too fast and tightening too much and i was right. they must cut rates bigger and faster. it would be easier if the fed understood, which they don't, that we are competing against other countries, all of whom want to do well at our expense. whatever the motivation, central banks from around the world from russia to australiao

as steve liesman reports, there nve a number of economic conundrumstors are trying to navigate. >> if are not confused you gy not be pay attention. fed investors are trying to define the u.s. economy battling through numerous cross currents. there is weak global growth but u.s. ec growth around 2%. rapidly falling bonds suggest a recession may be coming in the years ahead. finally, robust consumer standing but a manufacturing sector that may be in recession. even the titans of wall street disagree. here is what fund manager rli said about the outlook. >> recessions are inevitable, the only question is when. do you see one coming? >> yes, i think that in the next two years, let's say prior to the next ection, there's probably a 40% chance of a recessio i think that you're seeing this around the world. >> not so, say david rubenstein, founder of the private equity tgiant, carlyle group. >> the u.s. economy is in pretty good state. we're notn highland, but there's no doubt as economies in europe and asia glow down and into recession we can't completely avoid that. at the moment i don't s

the treasury market sending a possible recession warning steve liesman with more. e, it doesn't always mean a recession is coming, but you don't get a recession without an inverted yield curve, and therein lies the worry. >> that's pretty much right. we are back on the positive side we will be talking about -- let's explain what it is short-term bonds yield more than long-term bonds. why is that bad and weird? investors want higher interest rates to lend for longer periods of time. makes sense. the two-year and ten-year bonds flipped this morning for the first time since 2007. it's a tried and true recession warning. take a look here three inversions 1985 it's curtain raised recession from 13 to 17 months the sample is small. every time it happened, we haven't circled this yet let's look at the history of inversions when it goes negative, it tends to stay negative for a while 1978-1980 was off the charts the curve was diverted by 2.4 percentage points. 2000 minus 52 basis points you can see the length that we were inverted. we go negative, we tend to stay negative l

former cea chair and from strategyist and steve liesman here what do you think?,000. >> 162 >> yeah. >> 162.5 or exactly 162? >> 162. >> santelli is here, too you don't give predictions right? liesman, you don't want to do the it >> our chief economist says 160. so -- >> 174 now. >> oh, you do? private sector >> rick, where are you >> 196 >> 196. >> do that >> all right you might -- still do that "price is right" stuff taken! sorry. he's going to get mad. i don't wait for the -- for the obama officials last let me gelt you first -- doug will be -- hear about it on twitter if i do, if i do you before him jason? >> i'll go with 180,000, 170,000 average this year, add 10 for the census. >> now oug >> i'm at 120. the geographic center of gravity is 90,000. 120 is a good number where we're headed. >> jason, did you see that, the journal piece the other day? are you feeling better about what the bureau of economic analysis said about wage gain ace cross the board? did it make you happy? i want so much to make you happy but better than previous years right? >> i'm alway

steve liesman joins us now with the details.hat fed chairman jay powell meant when he said the phrase mid-cycle adjustment those words sparked ai]arket sell-off >> the committee/9% really thinking of this as a way of. more accommodative s'mce. we are thinking of it essentially in the nature ofn (t&háp &hc% this tweet from the president of the united states. quote, what the market wanted to hear fromxdj. powell and the federal reserve is that this wouldxdkeep pace with china and other countries around the world. as usual, powell let us down the most important effect some in the market beganxdwonderingf the market ma i do this as one and done is that the right way to think about it let's look at what fed watchers call other mid-cycle adjustments. 1995, they get three cuts over seven month, 1998, three cuts over these three months. '01 and e'03 or the nine in 20 and 2008.ó[ powell have you as to remembere stuck to the basic economy is in good shape it doesn't need helps, just tweets, it's not a major adjustment he hono

you. >> all right, rick that's a lot to digest stay right there we will bring in diana olick and steve liesmanw. steve, why don't you tell us what you think quickly >> you know, i'm going to defer to diana nobody is better on the details of support than diana. i have a macro to point but i will let her give details. >> i'm going micro here. you have to separate single family versus multifamily. you see starts down 4%, but single family, which is most important to the housing market, up 1.3% month to month and up nearly 2% year over year we have seen single family starts down for the first six months of the year annually and it was a problem builders were saying they were trying to deal with backlogs from last year because sales were so weak at the beginning of the year sales started to pick up this spring and you are starting to see the starts picking up, and again in the building permits. that's a good sign because it is future starts and future sales we will see, and a lot a reaction to the rock bottom mortgage rates we are seeing right now, still falling i spoke to the ceo of kb home last w

let us bring in matt maley, chief market strategist at miller taback and our own steve liesman. we're going to start with steve and new economic data that you believe may foipoint to some troubling signs in the economy >> we don't know how definitive. hats off to john kemp from reuters who did a whole chart on this picked out a couple of things he was talking about. first, what's happening to u.s. rail year over year you're a big transport guy if you look at the first chart, we're negative now on the year-over-year basis it's not as bad as it was in the recession of 2008. it's about as bad or getting as bad as it was in the slowdown of 2015 i added to that chart the port of long beach freight loadings there, down 10% year over year move on real quick what is this a symptom of? look at jpmorgan global pmi. new export orders. now negative about actually than it was in the slowdown. this is global, not the u.s. john kemp from reuters says almost all the main economic indicate aors confirm the global economy has already slowed severely now how does this knock on to the u.s. take a lo

joining us is the founder of xante data and steve liesman is also with us this morning. >> reading aboutention and how do it to i here >> that's the question >> so many questions. >> steve was talking about this before it appears that the chinese government is letting this happen as opposed to pushing them in this direction and the question i guess thi morning is does it matter whether -- which they're doing >> yeah, good question i think it has an internal inconsistency. it's a big curve that moves above 7. on the other hand we say, okay, but we're not doing it deliberately, right? it's a very fine balancing act basically what i do for a living is to track these capital foes we track what the pboc did in the market overnight i believe they actually sold some dollars to slow the move, right? so they ignited the move but at the same time trying to moderate the pace of it it's a fine balancing act. the key thing is we've broken a level we have not seen in five years. over those five years as they tried to keep the -- remember really quite stable and now they're breaking it. it's a very imp

recession will the fed look to act even more aggressively this is the question we keep asking steve liesman been digging through all of this. >> i wish i had a more definitive answer. the fed processing a series of cross currents in the u.s. and global economies that lead to different conclusions about where to set interest rates. look at some of these cross currents u.s. forecasts remain for 2% growth bond yields they suggest a recession in coming months u.s. economic data says otherwise. the consumer thriving while the manufacturing both globally and in the u.s. may already be in recession. >> the u.s. economy is in pretty good shape there is no doubt that as economies in europe and asia low down and go into recession, we can't completely avoid that. but at the moment i don't see a recession in the imminent future. >> all right here's how the market is pricing the outlook for the funds rate up clear if this is more aggressive than the fed itself thinks it's going to be. september 100% chance of a rate cut. we will talk about that in a second 82% chance of another quarter point in october

major economies across the globe now seeing bonds with negative yields steve liesman has more we hadurprise rate cuts. >> that's right, melissa powerful global downdraft sending it to the lowest yield in three years and the german bund hitting the lowest level which is deeply negative now there's increased speculation u.s. yields themselves could go sub-zero more on that in a second let's look around the world here the ten year, well, that was like 177 some time yesterday the bund now down by five or six basis points that's increasingly negative the uk along with for with the lead with the japanese ten year. the declines come as several banks cut interest rates and some surprisingly so, new zealand cutting by 50 basis points central banks are easing all of this putting pressure on the fed to act i don't think thereb will any intervening thing. let's look at the probabilities for what the fed is going to do. we have a 66% chance of a rate cut in september 73% chance of another one coming in december. and 49% chance in january. so not quite at the 50% rate for that third hike, but it's

. >>> investors are waking up to the recession warning from the bond markets steve liesman has more wealk about the deficit, but obviously the conversation today has changed. >> yeah. up to less expensive deficit, at least in part. let me do -- everybody is up on the conversation an inverted yield curve where short term bonds yield more than long term bonds, supposed to be the other way around because the investors want higher interest rates if they're going to lend you money for a long period of time and it inverted for the first time since 2007 and tried and true recession warning. each one curtain raised a recession from 13 to 17 months notice i did not circumstance it will recent one because we don't know if that leads to the recession. how did we get here? well, the fed cut rates and the markets thought that was not enough that was a big ten basis point decline in the yield curve and then a trade war escalation and a deescalation and a stronger than expected cpi inflation that pushed up the two year bond yield. which is why we inverted this morning. here's what the market expects

. >>> steve liesman filed this report on the selloff state side and the possibility of an impending u.srecession >>> after two white-knuckle nosedives in the dow this week and a bond market signal flashing a tried and true reserbary sign, the "r" word is being thrown around a lot. global growth has been weakening. the trade policy uncertainty affecting many economies and are the central banks out of bullets? that's the concern of mohamed el-erian >> it's actually a very rational reaction a rational reaction to concerns about global growth after the numbers we've gotten this week about policy ineffectiveness by central banks, about liquidity being not as deep as people have, and a sense we entered a deglobalization phase. put all these things together, what you're seeing is a very normal market reaction >> we learned today that german growth contracted in the second quarter. joining three other european countries including the uk, sweden and norway that have shrunk their economies this year china's growth is slowing, hit by tariffs and other issues. the fear is that tariffs and weak glob

out of china and back to the u.s all of this with the eyes of the world on jay powell in wyoming steve liesman has been talking with the most powerful central bankers and will join us in a minute but to e lolon where the president lunaunched a tweet storm. >> on september 1st, the chinese imports supposed to be taxed at 10% will be hit with a 15% tariff on october 1st, the tariffs on $250 billion in chinese goods that were already in place will go from 25 to 30%. and then on december 15th, all of the products that we import from china will start being tariffed the rate will be 15% instead of 10%. in the tweet storm, trump said that china should not have issued retaliation tariffs $75 billion of goods and called the move politically motivated we know trump was huddling earlier today with the top trade and economic advisors how to respond to beijing's move. they were all there and just before or just as that meeting was happening, the president went on a separate tweet storm ordering our great american companies to immediately start looking for an alternative to china including bringing companie