how could he not >> unless, steve liesman, he can't -- >> why >> because inflation is ruling the day, not the market itself steve? >> yeah, i mean, i'm not sure why powell would back off here because of what the market is doing. i hear a little bit of conflating on this conversation, scott, and i don't think it's totally wrong, but i think it's overdone the conflating of the stock market with the economy. you have the stock market, in my opinion, going through a reevaluation because of a changed outlook for the fed, but i don't think that that creates a need to completely reevaluate what looks to be at least the forecast now for something around 4% growth this year, which would be about double the potential. i still think you're going to do well >> yeah, just real quick >> joe pointed out earlier, profit margins are at all-time highs. you could have some decline in that and still have a very profitable stock market,but not -- profitable companies, but not necessarily stocks at current levels you can adjust here without having a panic at the federal reserve or need to back off. i don't

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we'll see you soon our steve liesman. >> let's bring in our panel for analyzing. great to have you all here steve, let me start with you on a point steve made at the end. has the market already done the fed's tightening why does the fed need to still actually do the rate hikes that people have been talking about >> kelly, steven whiting >> yes, for you, sir >> look, i think the policy uncertainty by bringing in its balance sheet and its rate hike outlook immediately into the picture. so this is a policy that we have only one historic experience with it's something that we will -- we believe effectively tightens monetary policy by discontinuing it right? the effects of past bond purchases, again, when they roll off, has some substitution effect and so i think what's really important for powell today is to just clarify the fed's intentions we, again, have had a legacy of inflation behind us. the economy has been as disrupted as a wartime economy and it wouldn't have been possible -- what unemployment rate could we have had that would have stabilized prices in this en

economy as well. >> none of which sounds very good, steve liesman, so how do we get to the other sideiously china is going to do what china is going to do in terms of imposing restrictions b but how much of this could be positively impacted by the moves that the biden administration takes? >> i think there's limited possibilities for the biden administration to solve this problem. look, what determines prices are the goods on the shelf, the goods back in the warehouse and the goodsed on the way from the manufacturer. all three of those things are challenged right now. so until we build up inventories in the warehouse or from the manufacturer we are going to have some trouble with prices. it's the reason why the fed has pivoted, the federal reserve has pivoted and now sees omicron as virus outbreaks as inflationary. before they were worried about the idea that, hey, it would reduce demand. that's not the problem. the problem is it reduces workers, it keeps goods from getting to the stores and so right now what that means is the federal reserve is more concerned about inflation, likely

80-year record of nearly 6.5 million as the labor market continues to climb off pandemic lows steve liesman more. >> reporter: a confusing and mixed u.s. jobs report where questions were raised about weakness in the jobs market and others confirm it was one of the strongest and tightest in history. overall the markets traded on the strong data and believed it would keep the fed more on track to hike rates this year. the unemployment rate down 3.9% compared to a forecast of 4.1% labor force participation was unchanged but there have been about a million new entrants to the workforce in the last six months and wages rising by .6% on the month. and the average work week was unchanged at 34.7. the average work week remains elevated as employers deal with the market by asking for more hours from the employees upward revisions of 141,000 jobs to the prior two months. over the 11 months of 2021 payrolls were advised up in every one but march, the average revision 100,000 monthly as the government seems to have a problem under reporting job growth in the first half there are too many signs in the l

thank you. >>> steve liesman. cnbc's senior white house correspondent kayla tausche with the new survey numbers the president is getting tough marks on the economy. >> yeah, kelly the economy and the cost of living leapfrog covid as top concerns for voters we polled late last month even as omicron was starting to spread 72% say the economy is in bad shape. that's up 17 points from last year, andindependent voters wh secured the presidency for mr. biden in 2020 gave him a "d" on every economic issue across the board. democrats give him mostly bs and cs and republicans give him mostly "f" grades. the electorate was largely unmoved by the $1.9 trillion american rescue plan that the white house shepherded through being could. 58% of biden voters and 99% of trump voters saying it made no difference or it left them worse off. today nec director brian dees told cnbc that reiterating the administration's message that its build back better plan will lower costs for americans but there's not consensus on that. nearly all bi

. >> thank you very much steve liesman reporting. we'll be hearing from steve throughout the day and all day tomorrow meantime, let's bring in a fed watcher who steve knows well david, senior fellow in economic studies. long-term editor and reporter at "the wall street journal." >> my former boss, by the way. >> your former boss. >> i gave her her start. >> he did. i am here today because of that man right there. >> a wise man you are. >> best of the best. >> so i asked steve yesterday if everybody knows what the fed intends and the fed knows what the fed intends to do, why don't they do it at this meeting what is holding them back from just going ahead and ending the quantitative easing and raising by a quarter point why not? >> i think it's a great question they only have $30 billion more to buy in part of the quantitative easing thing and i suspect there's a good argument for why don't they just say at this meeting we're not going to buy anymore. but they've been so focused on not surprising the market. so worried about repeating t

. >> let's get to your fed panel steve liesman will bring us the key numbers and headlines as soon as he gets them diane swank a chief economist aboutw grand thornton. and bob pisani and -- >> diane, let's start with you what is it that we don't know about the most recent meeting that we could find out today with the result of these minutes? >> the biggest question is exactly how are they looking a the uncertainty wrarld ith rega omicron. jay powell mentioned it in his press conference and how much weight they are putting on warrants continuing to add to rather than subtract from inflation. this is the first variant wave we have had without fiscal stimulus that doesn't mean it won't still muck up supply chain and cause inflation problems but this is a very different kind of wave how much do they talk about that how much are they concerned about in a at this meeting going into the meeting, we saw a much more hawkish fed ready to lift off on rates sooner and much more rapidly. >> one of those issues is what happens here in the u.s., and also what happens in china that could affect the e

let's go to steve liesman. >> thank you, thank you mr. chairman mr.ne sort of technical question and one question or principle. the question is if you're going to discuss balance sheet at the next upcoming meetings and won't become balance sheet reduction until after you bick rate hikes, seems to me technically you can't begin balance sheet reduction until the summer is that correct? second of all, with balance sheet running in the background, that you would possibly be raising rates and running off the balance sheet at the same time that's sort of a technical question, part of it the principle question i have, you said running in the background but the statement on, on the balance sheet principle says, the committee's prepared to adjust any details of its approach based on financial developments, which suggests there's something of a reaction function associated to the balance sheet and it won't be running in the background. could you give us any sense of distributionary recommendations on what is the reaction function surrounding the balance sheet?

steve liesman. still ahead, russian stocks are falling over increased tensions with ukraine the rsx russia etf down 8% it's done 20% this year. we'll have the latest next >>> we're tracking the market selloff with a closer look at semis. we're trading in the 260s right now. keeping an eye on bitcoin which has gone green this may be the tell for how the rest of the afternoon goes for the markets. it's up 2% netflix still lower by 7%. big declines there and in tech across the board as we head to break, look at the biggest decliners in the nasnasq we're back in a moment ♪♪ care. it has the power to change the way we see things. ♪♪ it inspires us to go further. ♪♪ it has our back. and goes out of its way to help. ♪♪ when you start with care, you get a different kind of bank. truist. born to care. ♪ ♪ ♪ digital transformation has failed to take off. because it hasn't removed the endless mundane work we all hate. ♪ ♪ ♪ automation can solve that by taking on repetitive tasks for us. unleash your potential.

steve, thank you we appreciate our steve liesman reporting.nd a quick programming note treasury secretary and former fed chair janet yellen will join "closing bell" for an exclusive interview today at 4:00 p.m. eastern. >>> my next guest says if growth stocks could turn in good earnings, they could still barry, welcome your thoughts on the risks around this fed tightening >> well, i see two things. in chinese mythology there's a dragon called hung, the rainbow dragon it's got two heads one is covid for us. the other is the federal reserve. the covid head is going back to sleep even though our company had to cancel a 50-year anniversary trip because of covid. it is going to go back to sleep. it's the other one, it's the federal reserve. and we just look at that, you know, the trade reporting that you just had at the beginning of the year it went from an expectation of three hikes to four hikes. and what has the stock market done since it's gone down next week we get the information from the federal reserve of what they're really thinking. and f

steve liesman is here with more. eve. >> yeah, kelly, the bad news as you can see the interest rates are up and heading higher. the good news, economists think they may not do that much damage to the economy as a whole. that could be a problem for a fed that needs the economy to slow down in order to fight inflation. two sectors stand out to be hit by higher rates, equities obviously is going to suffer and valuation pressure from the rates. housing will be hurt by higher mortgage rates as the fed, likely to concentrate balance sheet reduction on shedding mortgage-backed securities first. that's the forecast from many out there. while the market may take a hit, many companies won't feel too much pain because they hold long-rate, long-term debt. capex plans shouldn't be too troubled by an extra half point or full point on ralts autos likely to rebound despite higher financial cost because production and sales are so far below normal and suffer from supply chain problems. consumer spending should continue to wenbenefit f

steve liesman is here with more. how much more hawkish can we get at this point?> you left something out, kelly. i will tell you what it was in a second you are right, stronger inflation and hawk yush comments from fed officials prompting a reset in expectation for tighter interest rate policy this year it is four hikes plus qt, quantitative tightening with upsides risk to that a march rate hike now a near certainty. a second hike in june carries an 85% probability according to refinitiv. the third hike is baked in for july or september with strong odds of a fourth hike now in december but that's just what's priced in to rates fed observers also expect qt or quantitative tightening with growing agreement the fed will reduce its balance sheet this year, maybe as soon as this summer that's the equivalent of another rate hike or two, and something the fed should do, goldman sachs writing four hikes plus qt may not be enough. they said in the kcommentary the may need to do enough to tighten financial materially to be sure, those who see the recent round of economic we

the unemployment rate does fall to 3.9 we're joined by steve liesman who helped us get through internals mix where they raise question about the strength of the market andt other parts confirm it's one of the tightest job markets in history overall, trading on the strong data and it keeps the fed [ inaudible ] half of what was expected at 442. 3.9% unemployment rate, down three-tenths 61.9%. unchanged. we've had a million people back in the work force. and the work week up -- unchanged to 34.7 but that's a strong number. remains elevated as they deal with the tightness in the job market how do they do that? by asking for more hours from the existing employees upward revisions of 141,000 to the prior two months over 2021, to which there is data, they res have up in every month but march. the average revision plus 100,000 every month is the government seems to have a little trouble unreporting job growth there are too many other signs of a tight labor market to change the view to the upside and that's what the, mat thinks. the probability at a contract high of 82%. a second hike in june, n

. >> we're going to interrupt right now and go to steve liesman with the fed's decision. >> the committee expects it will, quote, soon be appropriate to raise the target range. >> reporter: it's a central bank strategy to fight skyrocketing prices from grocery aisles to gas stations the federal reserve today suggesting it will soon start slowly raising interest rates. >> i think there's quite a bit of room to raise interest rates without threatening the labor market. >> reporter: analysts believe the fed will raise rates gradually in quarter-point steps beginning in march higher interest rates will likely lead to more expensive car and student loans, credit cards, and new home mortgages even as home prices nationally are up 14% in a year here in phoenix where new home prices have jumped 30%, jacob dennis and his wife nicole are struggling to find a new home and fear it could soon be out of reach >> it's turned into more of a business transaction rather than our first-time home-buying experience together that should be fun and enjoyable. >> reporter: the coming rate hikes follow an unprece

we will get to reporter steve liesman who looks at how the fed could pull it off. ke the optimism, steve >> you got to give the idea a chance let's walk through jay powell and his conference emphasized the inflation risk and uncertainty over how much the fed will have to address it. that freaked the market out. he laid a path for price increases could come down without drastic measures that is the fed not doing much more than what they would to normalize policies he could tighten the fed could tighten modestly at first the supply chain issues begin to resolve over time this year and later next year. virus impact eases and fiscal drag helps restrain the economy. >> i would say it isn't just monetary policy. it is supply side improvements and less fiscal impulse likelihood monetary policy will do. >> powell said the job market and economy are strong he believes it is possible to tighten policy without doing damage to either the key is the bounce back from the economic week for the next couple months with the winter brought on by the omicron variant. it is a best guess

>> thank you steve liesman.to break, catch my full conversation with now former disney chairman bob iger, the ceo for 15 years, 47 plus years with the company, both online, and on cnbc.com and it is also on the "squawk on the street" podcast. if you want to listen to it that way. i think it's a good way to spend an hour. you let me know. we'll be right back. everything you've seen me do was made possible by what you don't see. cause when you're not looking, i go to work. ♪♪ strength isn't a given. it's grown. it's earned and tested. ♪♪ we all have the strength to see what's possible. it's up to us to unlock it. tonal. be your strongest. >>> welcome back to "squawk on the street." just taking a look at the major averages on this first tragd day of 2022, mostly high r, dow up 85 points. the s&p is up 4781 and the nasdaq is .8%. let's get over to dom chu for a sector sort looking at the top leader on the s&p today. dom? >> maybe no surprise, morgan, stocks mostly higher to start the new year off the consumer discre

steve liesman is here with a preview. >> the fed meets next week amid higher expectations for rate hikess meeting and new expectations for balance sheet reduction this year markets will be looking for confirmation or pushback for the new hawkish consensus. among the questions looking to be answered, first will the first hike come in march as priced in. how many more and at what frequency, and will future hikes been aced will the fed reduce its balance, when and by how much and finally, fed fund futures. confidently forecasting the first week in march and a quarterly hike for a total of four next year including a 63% probability on the fourth hike coming at the december meeting of course a new set of presidents will have the vote beginning in this meeting including new people from st. louis and kansas city and they are among the more hawkish it may not be until the next meeting before president biden's nominees to the board join the committee and have their say it is interesting, as you know, sara >> anything could happen went now and then steve, the market, we're just coming off of our w

let's begin with steve liesman on the fed meeting and interest rates. steve? >> for right now the stock market sell y-off is having an impact but not that much look at the 2-year yield leading the outlook. fell sharply midday and down 10 basis points since reaching pandemic highs of 1.05 on thursday the effect is call it 5 to 10 percentage points this year. four hikes are still priced in marketplace a 92% chance of a second in march. 66 for a third hike in september and the real impact on less certainty for a fourth hike in december and trading at a 56% probability. fed watchers expect the central bo r bank to talk about balance sheet reduction this year. while the fed watching the stock market the fed has an inflation problem as you know and that will likely keep the fed on the tightening track with the sell-off not sufficient at this point i think to defer it. >> all right hang on. we'll bring in stephanie here. you said the fed does need to fight inflation but how much is too much and might chair powell have been more right than wrong a year ago using the w

on that note, let's bring in our senior economics reporter steve liesman with more. steve, as i said, it's good to have you back, as always, of course as i said at the outset, not only was the fed chair not dovish in any way, shape or form and you can make the case that he were more hawkish than some were anticipating? >> i think he did that by keeping things open ended. a bit of a nod and without total agreement with the lebenthal idea i look at it as we were entering a new regime here. we had a solid guidance for low interest rates and qe for the entire run of the pandemic year. i'm a bit wut a net here and maybe that gets the fed put idea and it is without a net in the sense that ultimately it will be meeting to meeting, data report to data report lebenthal could end up being right, but i want to recognize that the fed has an inflation problem and the big change today, scott is you're right the market was fairly hawkishly positioned and now it's more hawkish in the sense that we're now looking at consecutive meetings and what's priced in the three consecutive rate

senior economic reporter steve liesman with a preview did i see fed officials warning about it >> yesutely the consensus is for the january report 150,000 but that's a substantial number forecast for a decline in job growth average 150. that number was lowered moments ago by dow jones from last week's consensus of 178. you can see the range. minus 300 to positive 250. we have forecasters like bank of america, capital economics forecasting a negative print unemployment rate at 3.9%. the concern is sick leave of omicron with weather to result in poor numbers. there's a 5.1% decline of workforce activity come pyred to an earlier dave gilbertson said we saw a deeper decline of workforce activity in january across every industry and region and every company size since we've seen the job disappears but the worker is usually stil back. the street and the fed are looking through the negative number that could cut both ways no panic of a weakening job market or economy if it's lower. >> seems like we are laying the groundwork for this head line of maybe the negative payroll growth fed george w

we are pushing 174 a minute ago, let's bring in our senior economics reporter, steve liesman to join the conversation steve, there's so much to talk about, but these minutes from yesterday really give us a lot of insight into just how wrong the fed has been on inflation because it doesn't feel leak we like we're all that far away from thinking about talking at this point about raising rates and winding the balance sheet and having the fed in their minutes, steve, talk about the tax on inflation on consumers that can ill afford to pay higher prices for their cost of living >> yeah. you know, it's interesting, scott because you can read it the way i think you're suggesting is the fed's behind its own curve, right think about the idea that here's a meeting in the middle of december where the fed is talking about strategies for reducing the balance sheet while it plans for that month and this on month and the next month to continue adding assets to its balance sheet. so it's a little bit, i guess absurd is the way to think about it and the fed knows what it needs to do, i think, and there

seven rate hikes or something less or more that soft landing is the key question for investors steve liesmans here with that part of the story. >> no sweater for me jay powell emphasized the inflation risk and the uncertainty over how much the fed will have to do to address it the fed could engineer a sofrt landing. powell mentioned four factors to combine to ease inflation. of course the fed tightens moderately the supply chain issues begin to resolve themselves the virus eases and fiscal drag helps the economy. it could get help from the st stronger dollar. you can tightening without doing damage here's a best guess for now. the fed approach to tighten beginning with a ready rate hikes. not necessarily four, five, six. go on the balance sheet, the reduction would be running in the background fed will only escalate to the ethan harris fear if inflation does not decline powell made clear he would act if inflation didn't respond and didn't do so much as endorse the scenario but lay out how it could happen with help from several other factors. >> including what? an abatement of the supply chai

anyway, let's get straight to the market and the selloff steve liesman has a closer look at those fedinutes and what the market has been reacting to over the last hour mike santoli's tracking the broader action deirdre bosa has a look also >> minutes to the federal reserve's december meeting suggesting the central bank could be very aggressive, highing growing concern with inflation at the bank. it's not actually scheduled to stop buying assets, that is increasing the balance sheet until next month after that the first quarter point rate hike could come as soon as march, and markets are pricing in as many as three this year watch the x-axis here. it suggests the possibility of a faster rate hike than the minutes. a second hike in june, a third in november, and not putting, i guess, possibly a fourth hike in december there are some hints in the minutes on when the fed might reduce the balance sheet and how it might do it some officials even said they want to rely more on balance sheet reduction than rate hikes to remove a combination. that suggests a potentially faster pace than sheddi

get to seen jer economic reporter steve liesman part of that news conference, and asked a technical news worthy question, about the balance sheet? >> yeah. the way he laid it out, i was just checking to make sure it could happen by the summer get to that in a second. what fed powell did largely delivered on market expectations today. firmly signaling a rate hike is on the way used language we thought they'd use. soon appropriate the fed is preparing to reduce the balance sheet. if it was anything maybe a bit more hawkish not a lot, just a bit. surprise release of balance sheet principles suggesting processes may be further along than previously thought. here's what he said about balance sheet reduction. >> the balance sheet is substantially larger than it needs to be. we've identified the end state as, you know, amounts needed to implement monetary policy efficiently, effectively in the ample reserve regime there's a substantial amount of shrankage in the balance sheet to be done that's going to take some time we want that process to be orderly, and predictable. >> hey, sarah, just got t

here you can see the drop came just after 2:00 when the minutes were released we'll talk with steve liesman more in a couple seconds about this mike, you were watching this this as it was happening and seeing this realization that the fed is going to potentially move actively i don't know why that came as a surprise but you did see big act especially with the high market -- >> it was a little more hawkish than anticipated obviously the minutes are a summation of a debate. right. so you hear all sides of the debate but the market, in terms of the mega cap growth stocks that really were hurt, they were already on the down side i think you have to keep in mind you kind of pushed a market that was already a little bit off balance and that to me explains a lot of the action yesterday when you have, you know, again the big tech stocks for the last two days, people have been exiting them the markets are repricing for what it sees an economy that the fed is going to have to push a little bit to fight inflation. in a weird way it's what people have been anticipating and hoping for, which is we'd lik

steve liesman with the results of the latest survey showing market has shown aggressive for the fed here in expectations the expectations have turned aggressive compared to the last fed survey with looking next year and next were multiple rate hikes and significant balance sheet reduction. the first hike now firmly seen coming in march. 3.5 rate hikes forecast this year, showing three are agreed to and the debate now is over whether there's a fourth an additional three hikes expected next year, and the balance sheet runoffs beginning in july, much earlier than the last survey which pegged it at november we don't know much about how the fed will run off the balance sheet. here's the first look at a market expectation and how it could happen respondents look for 380 $380 billion to come off the $9 trillion balance sheet this year, and 8 60 billion drr in 2023 while most think it will be phased in, the average respondent looks for a monthly runoff of $73 billion. that's faster than the last time the fed did this over about three years, average respondent looking for 2 .8 trillion or a third

. >> steve, always good to see steve liesman.ve stocks we want to get to after hours, christina has the highlights. >> i have a few breaking news in after-hours trading. firstly, a new member of the s&p 500, constellation energy, is going to replace the gap they're shares are climbing higher almost 5%, unfortunately the gap is moving the opposite direction, down 4% gap will be moving to the s&p mid-cap 400. keep in mind two weeks ago constellation executives put out a press conference saying they will emphasize nuclear enterprise and -- next company popping 6% -- haven't heard back on this report that's why you are seeing movement in these company stocks >> christina, thanks pete najarian your pick on which stock you want to talk about. >> i'd probably lean towards centene we talk about this in health care and so forth, any time i hear someone interested in something like this, the possibility of it being there, it's something we all want to find out if there's any creditability to that. i think that stands out the best for me. >

steve liesman.>he paper on the central bank digital currency being issued by the federal reserve saying a cbdc could offer a range of benefits and risks don't come to any conclusion about it but they say it could offer the general public a risk free general money, free from liquidity risk, that would not replace traditional money. the fed will not proceed without support of congress and the executive branch ideally with an authorizing law. it would provide a form of central bank digital money, faster and cheaper payments and expanded access to the financial system many of course are underbanked in the country the risk, it could affect the market treasure. cost and ability of credit because it could disrupt the banks if they get it the wrong way. things they are calling for. privacy protected, intermediatiated, and identity verified to protect against criminal activity. paper is meant to begin a debate and they will get public comment and continue to explore a wide range of design options for it it i

steve liesman tweeting a moment ago, got about an hour's time before we get the fed minutes. ch rate hike has hit 71%, which is according to steve he believes the high for that contract, the two-year hitting its highest level of the pandemic, 80 basis points. keep your eyes there about an hour away from fed minutes. what do you have coming up tonight? >> one of my favorite stock historians is larry williams he has a website he had the best call i have seen he said it will be an amazing christmas rally and we will go back to him, go back to the well and see what he is thinking. he is legendary. he is a market historian i love. 60 years he has been in the business >> good stuff. it has been good having you with us super fun. so glad it was the stock summit and you were here. >> thank you >> our new nonexecutive member of the committee what is your final trade >> i had to go with nvidia i listened -- when i listened to talking about disease, i said, listen, nvidia made a presentation today it was amazing jpmorgan, i love her yesterday made a presentation on gaming, ces. look, if

our senior economics reporter steve liesman is joining us now.t's really what it comes down to, whether powell can pull this off and it ain't going to be easy and i'm curious as to what you think based on your reporting and those who you talk to as to whether you think that they can be successful in this >> you know, let me first before i answer this question i listened to the show the entire week and learned a lot, obviously, there are some bullish members of your commit, scott, rotating in and out, and i started to think about, well is there a bullish scenario here for the economy and the fed? and honestly i went to go look for it, and i re-read powell's transcript from the press conference the other day, and he does have -- there is a bullish scenario there say soft landing scenario here, and let me walk you through how that would happen. in the first instance, there is no scenario that i can imagine where the fed doesn't tighten. the fed almost certainly will do multiple rate hikes at the beginning here and then what powell is looking for her

because i want to point your attention to not only a tweet, but a chart that our economics reporter steve liesman put out in the last hour that tells the story. it's full steam ahead as far as the market is concerned relative to what the fed is going to do and when it's going do it in terms of raisinginterest rates liesman says fed funds futures trading like it was a strong inflationary jobs report that keeps the fed on track to hike all these probabilities are contract highs with the third hike now at 58% for september, the december contract, 50% probability for a fourth hike for the very first time, but you take a look at this chart now that i want to show you. 82% for march for the first hike and now you're creeping up to four hikes 50% think december will be the fourth hike. that's why rates are on the move, pete >> yeah. no doubt no doubt scott, i think it's really important and i love that you showed us what it looked like over the last week that's an unbelievable velocity move when we're looking at the ten-year and all of us are looking at that and there are two reactions and you're gettin

. >> reporter: now, that was steve liesman of cnbc. he'll be on the "today" show. he's worth listening to. he won a pulitzer prize for business writing and he plays in a grateful dead cover band. these are good qualifications in my mind. wall street, investors seem to have a rate hike already priced in. things look positive. this is pretty cool, walmart says it's going to work with the bay area's plenty farms to bring the farm's produce to walmart stores. plenty grows produce inside, using robots, which cuts down on pollution and chemicals and runoff into the water. walmart is investing in the company as well. their farms are really cool. they say they can increase yields enormously. of course they don't have to deal with bugs because it's inside and because they water verticily, a plant at the top drips down to the next one as well. and the secret is this low-cost led lighting. they can create sunlight for pennies on the dollar. sunlight might be free, but you can't protect from storms and bugs. >> how interesting, too, could it take away from california's economy

. >> now, that was steve liesman of cnbc. he's worth listening to, he won a pulitzer prize and he plays in a grateful dead cover band. those are good qualifications. wall street, investors seem to have a rate hike priced in this morning. walmart says it's going to work with the bay area's plenty farms to bring the produce to walmart's stores. they grow reduce inside, using robots, which cuts down on pollution and chemicals. walmart is investing in the company as well. their farms are really cool. they say they can increase output by about 250%, and they save water because they run the farm vertically. so any drips coming out of one plant are going to the next one. you think to yourself, oh, yeah, duh. >> it's fascinating. no pesticides. it's really interesting. >> salad for lunch. >> thanks, scott. >>> 5:16. san francisco leaders want those struggling in the bay facing eviction to receive nor leeway. supervisors are requiring a ten-day period before eviction. under current city laws, only a three-day eviction notice is requir

think that, but the market doesn't think that because probabilities for rate hikes, thanks what steve liesman just sent me, is a contract high all across the board march 100%. >> talk to me in two weeks >> june, 87% september 76, december 69. so you've got the probability of four rate hikes plus now the new added variable of quantitative tightening and you talk about doing stuff with a balance sheet which they are it sounds like the market has already made its bet, josh >> well, that's a bet that changes. if i showed you what fed expectations were every january at the start of each year and then showed you what ended up happening you would understand that that's really not something that you can hang your hat on the market will move based on new information coming in throughout the course of the year i think the fed has to tighten, should tighten most of the people on the show were talking about this this past summer. there's absolutely no benefit to continued stimulus, pushing home prices higher, pushing stocks up, pushing the wealth effect. we didn't need it anymore. so it's good that we're

. >> thank you >> that's dubrshg avko lekos he's the man of the hour steve liesman, senior economics reporter i hope powell of the practicing in the mirror last night because this is the most important communication that he's ever going to give. >> yeah. it's a pretty important communication in that he has to pivot and really come up with new language and new guidance, all kinds of things that have to be rejirged. he'll probably come out with the statement and rates have to go up before long they won't say specifically, but they won't say it may be appropriate to raise rates some time soon in the statement i don't think we'll get that in the balance sheet, but i think he has the market, you know, kind of where he wants it to be. i do it differently from how you do t scott i look at, for example, yield since the pivot. he's got 50 bases points on the two year he's got 30 or 40 on the five or the 10 i don't think he has a reason to back off where themarket is priced right now because he needs these higher yields in the system in order to help slow the economy somewhat, and i just want

cnbc's steve liesman, and the fed knows they've got to raise rates, why wait until march., stephanie, first of all, people think the fed should have done it already and it's behind the curve and late catching up. on the other hand, the fed doesn't really have to do anything to make markets react. the fed made a pivot and said it was going to be more tough in terms of removing stimulus from the economy, and markets have reacted. stocks are down on the nasdaq about 15 or 16% since then. but more importantly, interest rates have risen. for example, the 30-year mortgage is about 1/2 percentage point higher now. some autofinance rates are up. the fed has time to follow through on what it says, but the fed is powerful enough, all it has to do is talk and rates go up. it's going to be okay a little bit until it reacts in march and raises lates. >> mr. ratner, inflation is a problem not just here, but around the world. in our nbc poll, 61% of people say their income is falling behind their cost of living, cost of food, gas, going up big time. inflation is a huge issue for the amer

be sure to catch an exclusive interview with bridgewater's founder ray dalio this afternoon >>> steve liesman here with the story. >> thanks very much, kelly st. louis fed president telling a group in st. louis that this hour that the fed is in a good position to take additional steps to control inflation those steps include passive balance sheet runoff i'll come back to that word in just a second, as well as raising interest rates the fed, he says, could hike rates as soon as march, and it can adjust rates up and down, depending upon do rates faster or slower depending on the economic data. he does not see omicron as a big risk to the economy, believes that cases if it follows the south african model, will fall off in the coming weeks. separately, san francisco fed president saying that the fed needs to hike rates to keep the economy in balance she now supports rate hikes. but she says the fed should only reduce the balance sheet after raising rates, so a more dovish ideas. he was joined by governor chris waller who used to be his research director out in st. louis, now he's a fed governor s

i want to bring in cnbc's senior economics reporter steve liesman, mark zandy for moody's annual ethicsthony klotz and karen kimbra chief economist for linkedin. steve, walk me through this number. it's confusing. >> yeah, well, i can say, stephanie, if you are not confused you are not paying attention. there's two different reports that people need to know b there's one report that gets data from the employers, another report where the government calls up people and asks them their status. the number you are looking at right now that's from the payroll report, that's 199,000. that number has been running very low on the initial reporting, and what they're doing is they've been revising up continuously this initial report. i will give you an example. they added back 141,000 additional jobs to october/november. the number underneath that number, the unemployment rate, comes from the household survey. i think at the end of the day, stephanie, people should not be overly confused or overwhelmed by the data. the unemployment rate is what you need to know. it tells you the number of people w

let's go to steve liesman. reporter: thank you, mr. chairman. mr.hairman, one sort of technical question and one question on principle. technical question is if you're going to discuss balance sheet at next upcoming meetings, you won't begin balance sheet reduction until after you begin rate hikes it seems technically you won't or can't begin balance sheet reduction until the summer is that correct the first thing? second of all you suggested that with balance sheet running in the background that you would possibly be raising rates and running off the balance sheet at the same time. that is sort of a technical question, part of it. the prince pill question i have you said it would be running in the background but the statement on balance sheet principles says the committee is prepared to adjust any of the details of its approach based on economic and financial developments would suggest there is something of a reaction function associated to the balance sheet and it won't be running in the background. can you give us any sense of the discussion or -

start doing that i think they want to and we're still only talking about at most estimates -- steve liesmanyesterday the consensus is maybe they're looking at $3 m$3 trillion shruk off the $9 trillion balance sheet. $3 trillion looks like a lot until you say $9 trillion. what is that going to look like with the rate hikes? >> bearing in mind nobody really knows how strong the economy is going to be, there's a gazillion different forecasts. so all of these forecasts and balance sheet runoffs are contingent with what happens in the real economy i do sem pa thiz with the feds any banker who's happy with a balance sheet that's nearly 35% of gdp, they're in the wrong job. and the idea that they're printing money is a normal response to an economic slowdown is very dangerous, and i understand why they would want to be out of that expansion sheet business, but timing is everything with banking. i just think that the sudden rush of talk about doing it faster and doing it quicker and everything will be easier this time is very dangerous it's -- the consequences are clear to see in the markets. >> th

our senior economics reporter steve liesman is here. high light of the week, but i will be watching it very closely. >> what else do you have going on, becky? it's the jobs report oh, well, you actually have a life good for you here's the deal. the consensus, 78,000. that is over a debate whether there was a negative number. here's the average 178,000. i'm looking at forecast that goes from minus 200 thousand with positive of 280 folks we follow all the time are looking for a negative rate. the unplamt rate is 3.9% omicron and some others are behind this. we also look at other things every month. it showed a 5.1% decline in work force activity during a survey we compared from a month earlier. that's two percentage points worse than last time dave gilbertson of ukg said, quote, we saw a deeper decline in workforce activity in january in every industry, every region, and across every company size since the pandemic began national economics council director at close bell on friday afternoon basically talked about the idea that people who h

. >>> we also want to get to our own steve liesman with more reaction from the fed and what we saw inutes yesterday. hi steve >> hey, good morning morgan. market trying to gape ogain out to remove stimulus, suggesting rate hikes and balance sheet runoff the minutes said, current conditions could warrant a potentially faster pace of policy rate normalization. the hawkish tone led several forecasters to move up their timeline tore when the fed could start reducing the $9 trillion balance sheet and how many rate hikes next year and how soon they could come. bill nelson writing, participants can be divided into two, not three groups. those who want to tighten policy and those who want to tighten policy even faster, with the median being the first group such a distribution would result in upside, not downside risks to policy so a group on the fed from the midwest they're at the center of the new call it the hawkish core here chris waller with st. louis fed president jim bollard's former research director, the two were among the earliest last fall to talk publicly about balance sheet reduct

steve is standing by up early mr. liesman, what do you think of what joe had to say and what mr. powell had to say, more importantly? >> can i say what i think and what anybody thinks for a second here i want to show you what markets think which is a little bit more important and will change the conversation markets sped up and increasing the outlook for fed rate hikes in the wake of the meeting with the fed increase in march and balancing after that powell did not rule out consecutive hikes or limit the number of hikes. he had greater concern over inflation. he said there is scope to tighten policy without hurting the labor market powell said the fed needs to be nimble the market had been priced for quarterly hikes this year, that's four of them. futures now see a hike probability of the meeting in march and the fourth in september and now a fifth in december hold the chart up there for a second thanks for the graphics department we had to make the template this morning. thank you, graphics department the break in june through september could be because the fed could halt hiking

back to the broader markets rallying a day of a the fed signaled a rate hike is on the horizon, steve liesmand, movement this morning, futures markets are speeding up and also increasing their outlook for fed rate hikes in the wake of that meeting yesterday. the fed signaled a rate hike in march and likely balance sheet reductions sometime soon thereafter while the market had priced four quarterly hikes this year, fed funds futures see a high probability of three consecutive hikes beginning in march a fourth one comes in september and now the new one here, a fifth in december. so take a look here's what the funds rate would look like base odd on that pricing. it bring it from around zero to a range of 1.75 to 1.5 by year end. below the 150 to 175 range before the pandemic. step back a for a second the big change here. the virtual withdrawal of forward guidance which it offered the market assurances of low rates since the pandemic started. how much the fed does now will be tied to the incoming data and the outlook for inflation rather than the kind of long-term guidance that we had for such a

. >>> cnbc's out with a new fed survey steve liesman has the results for us steve. >> showing the stocks being marked down while the outlook for tightening has grown declining to 4650 from 4750 from the prior forecast and 4800 for next year. given the current levels, that still means returns of around 6% in 2022 and 10% next year if these forecasts end up being right. the cnbc risk reward ratio gauges the probability of a 10% increase in stocks over the next six months falling to negative 14 from minus 11 in the last survey so there's an average 52% probability placed on a 10% decline compared to just the 38% probability of a 10% increase in stocks the more bearish stocks come with an outlook for the ten-year yield to rise over 2% by year end hitting 26 in 2023 and you know that the current level of 174. so a bit to go for this year all right. despite unit four forecast for stocks and hirer bond yields, the outlook for growth improved with forecasters raising their gdp to 4.5% for 2022 also amid a more aggressive fed outlook. here are the expectations. first hike now firmly seen coming i

that's the question, and economics reporter steve liesman is joining us now. u, steve. >> hey, good morning, andrew the fed is expected to affirm its market expectations for master rate hikes and even balance sheet reductions this year, jay powell's counterparts in europe and japan are happy to o hold the door open there was a signal there's no intent to join the tightening party any time soon. >> we're not moving at the same speed, and we are unlikely to experience the same kind of inflation increases that the u.s. market does. >> carl weinberg of high frequency economics tells me the key word is divergence central bank moves are not going to be synchronized e we have divergence amongst economies. japan in blue, not expected to tighten any time soon. mexico, tightened to december. the bank of england looks like it will offer a hike in february meanwhile china cut recently and india is expected to cut jpmorgan's rep says they plan to follow it six to nine months and japan will have to follow labor tightening markets eventually. meanwhile most other developed na