Skip to main content

tv   Closing Bell  CNBC  June 15, 2016 3:00pm-5:01pm EDT

3:00 pm
this time, and those are numbers about which there is great uncertainty. we have good reason to believe that the so called neutral rate, or rate compatible with the economy operating at full employment is low at the present time. and many of us believe, as a base case it is reason to assume those rates will move up over time. but we're not certain of that. it is one of the uncertainties. and there could be revisions in either direction. but thus far, in recent seps, i'd say the revisions have mainly been in the downward direction. the idea that a low neutral rate may be more closer to the new normal but you still do see some
3:01 pm
reversion. so we are really quite uncertain about that. >> in your speech in philadelphia you called the slowdown in job growth last month concerning and you mentioned you want to verify the underlying momentum in the economy and labor market is still continuing. what do you need to see to convince you that the labor market is still moving towards full employment? and for how long would you need to see snit. >> i can't give you formula? i know you would probably like a number for a cutoff that is what we we would like to see in a particular report. there are a lot of different indicators of the labor market for example. the labor market conditions index. it has 19 different indicators. clearly we will be looking at the next job report. and if we were to see a healthy
3:02 pm
pace of job growth, you know, above that needed to may not the status quo and the labor market. so, you know, i should say over time we should expect to see as the economy comes closer to maximum employment the likely pace of job gains is probably going to slow down somewhat. and we have seen some slowing but the recent couple of months was very low. and arguably not even at the pace we need to see to may not stable labor market conditions. so we want to see an adequate pace of job creation. there might be revisions to previous months that would change your views. but there will be other surveys of employment intentions. and other indicators of the labor market that will focus -- will be focusing on. so there is no formula for what
3:03 pm
it takes, but we will be looking at the labor market. >> also in philadelphia you did not say that you felt it was probably appropriate for a rate hike to occur in the coming months. do you intentionally leave that out? >> you know, we do need to make sure there is sufficient momentum. i don't know what the timetable is going to be to gain that assurance. every meeting is live. there is no meeting that is off the table. no meeting is out in terms of a possible rate increase. but we really need to look at the data, and i can't pre specify a timetable. so i'm, you know, not comfortable to say it is in the next meeting or to. but it could be.
3:04 pm
it could be. it is not impossible if my july for example we would see data that led us to believe that we're in a perfectly fine course. and that data was no aberration and other concerns would have passed. >> we are in election season and in the past the fed has been sensitive to making policy changes in an election year. you have three more meetings before the november presidential election. could you comment on whether or not the election will come into play? and any concern that if you change policy ahead of the election and based on your forecast today, you obviously could, are you concerned that that could then lead to charges that the fed is trying to change policy to influence the outcome of the election? because if it has been sensitive
3:05 pm
to that in the past. thank you. >> so we are very focused obsessing the economic outlook and making changes that are appropriate. without taking politics into account. look, if the incoming data were in the coming months to justify the kind of gradual increases that we have long discussed that we see is appropriate in light of the outlook, i think markets should not be surprised by such a decision if we make it and it is obviously consistent with the data that we have seen. and the committee will feel free to move in the coming months if we think it is appropriate. >> you mentioned in your remarks at the beginning that we are getting a slightly different
3:06 pm
signal when you look at inflation versus inflation expectations. could you detail a little bit which you look at and sort of weight more? are you more concerned with inflation expectations are or focusing more on the slight pick up in actual inflation? >> well we are looking at both. i would say with respect to the behavior of inflation, inflation is behaving roughly in the manner i would have expected. i've really not seen significant surprises there. we have long said that important reason that inflation is as low as it has been is because of past declines in energy prices and increases in the value of the dollar. and as those factors began to dissipate, we could see inflation moving up. now that is exactly what we are seeing. and that is in line with our thinking and with the data. so those things have stabilizes.
3:07 pm
their influence is dissipating. and with respect to core inflation, which now that is partly influenced also by the dollar. but trying to pull out the dollar and import price influence, core inflation seems to be behaving roughly as one would expect with well anchored inflation expectations and improving labor market. so i'm not seeing anything inflation, even core inflation is running under 2%. i continue to think the evidence supports a projection that it will move up over the next couple of years back towards our 2% objective. but we've seen in the past, and economic theory suggests that inflation expectations are relevant to price and wage setting decisions. so we do monitor indicators of inflation expectations
3:08 pm
carefully. now, it is very hard to know exactly what inflation expectations are relevant to actual price and wage decisions. and so for example we have seen the michigan survey, a measure of how expectations move down, it is a preliminary number. it is hard to know what to make of it. we've certainly taken note of it. but survey based measures where forecasters have queried are really all been quite stable and measures of inflation compensation, i'm always try to be careful to call it inflation compensation rather than inflation expectations. because they are not inflation expectations. inflation expectations influence those market measures, but there is also an inflation risk premium. and there are actually good reasons to think that the
3:09 pm
inflation risk premium could have declined significantly and may be depressing those measures. so we watch them. we have taken note in the statement that moved down. but actual inflation is behaving more or less as would be expected. >> marty with the associated press. when the april minutes were released they caught markets by surprise and they showed -- seemed to show there was an active discussion of a possible june rate increase. something that we hadn't gotten from the policy statement that was i should right after the meeting. was that a conscious decision to hold back and tell us when the minutes came out about the june discussion? and if so, could you tell us what surprises we could see in the june minutes. >> so the minutes are always --
3:10 pm
have to be an accurate discussion of what happened at the meeting. so they are not changed after the fact in order to correct possible misconceptions. there was a good deal of discussion at that meeting of the possibility of moving in june and that appeared in the minutes. i suppose in the april statement we gave no obvious hint or calendar-based signal that june was a possibility. but i think if you look at the statement, we pointed to slower growth but pointed out that the fundamentals -- there was no obvious fundamental reason for growth to have shrolowed. and we pointed to fundamentals underlying household spending decisions that remained on solid
3:11 pm
ground, suggesting that maybe this was something transitory that would disappear. we noted that labor market conditions continued to improve in line of our expectations. and we did downgrade somewhat our expressions of concern about the global risk environment. so i do think that there were hints in the april statement that the committee was changing its views of what it was seeing in a direction. we continue to say that we think if economic developments evolve in line with kmpexpectations, t gradual increases we expect to be appropriate. and i suppose i was somewhat surprised with the market interpretation of it. but the june -- the minutes of
3:12 pm
the april meeting were an accurate summary of what had happened. >> jeremy. the fed has repeatedly voiced its on concern over slow pace of wage growth. do you think increasing the federal minimum wage could be any help? could it boost higher wages and eventually drive up inflation? >> so i they the minimum wage increases that have gone into effe effect, estimates that i've seen suggest it is a relatively minor fluence on the aggregate level of wage inflation. i would take somewhat faster wage increases to be a sign that labor markets slack is diminishing. and that the labor market is
3:13 pm
approaching conditions that are con constituent maximum employment. so i think, you know -- i think we have seen some hints, perhaps preliminary indications that wage growth is picking up. and as much as anything i think it is a sign of generally healthy labor market, which is our mandated objective to achieve maximum employment. and so it would be a symptom of it. >> greg rock from market watch. there's been a lot of discussion last couple of months about the slow pace of demand in the global economy. and some economists think central banks should think about using helicopter money. maybe in japan first or europe first.
3:14 pm
but ben ben bernanke weighed in. saying he thought it would be a good thing to put helicopter money in the tool kit in case for the united states. i'd like your comments on that. >> in normal times i think it is very important that there be a separation between monetary and fiscal policy. and it is a primary reason for independence of the central bank. we've seen all too many examples of countries that end one high or even hyperinflation because of those in charge of fiscal policy direct their central bank to help them finance it by printing money and maintaining price stability and low and stable inflation is very much aided by having central bank independence.
3:15 pm
now that said, in unusual times where the concern is with very weak growth or possibly deflation, rather rare circumstances -- first of all, fiscal policy can be a very important tool. and it is natural that it can be employed that just as monetary policy is doing a lot to try to stimulate growth that fiscal policy should play a role. and normally you would hope in an economy with those severe downside risks, monetary and fiscal policy would not be working at cross-purposes to get -- together. now whether or not whether in such extreme circumstances there might be a case for close coordination where the central bank playing a role in financing fiscal policy. this is something that academics are debating.
3:16 pm
and it is something that one might legitimatery considely co. i would see this as very abnormal extreme situation. where one needs an all out attempt. and even then it is a matter that academics are debating. but only in an unusual situation. >> yahoo finance, justine. knew the fed started the process of raising rates various fed officials have said that the fed could go cash flow negative in this scenario as capital losses are taken on the portfolio bonds. do you still see this happening? and when might this happen? >> so you're talking a ourt income going negative? >> yes. >> well, it is conceivable in a scenario where growth and
3:17 pm
inflation really surprise us to the upside. that we would have top raise short-term interest rates so rapidly that the rates we would be paying on reserves would exceed what we are earning on our portfolio. now even then we have about $2 trillion of liabilities, namely currency, on which we pay no interest. so this does require an extreme scenario with very rapid increases in short-term interest rates. so it is conceivable but quite unlikely that it could happen. if it were to happen, we would have an economy that would be doing very well. this is probably an economy that everybody would feel very pleased, was performing well and
3:18 pm
better than expected. and where monetary policy, you know, our goal is price stability and maximum employment and we would probably feel that we had done very well in achieving that. so we usually make money. we have been making a lot of money in recent years. but the goal of monetary policy is not to maximize our income. in a very strong economy like that. the treasury would be seeing a lot of inflows in the form of tax revenues too. >> madam chair. steve --. market news international. to what extent do you feel con strabd in raising interest rates by the low or even negative ratesconstrained in raising int rates by the low or even negative rates that foreign central banks are pursuing possibly out of concern for what
3:19 pm
it might mean for the dollar exchange rate. and if that is a constraint, to what extent are you also concerned about the impact long range of low domestic rates on possibly distorting domestic markets? >> so the state of foreign economies, both their growth outlooks and the stance of monetary policy, those are factors that influence the u.s. outlook and influence the appropriate stance of monetary policy. so of course we do look at foreign rates. the prospects and the prospects for growth in those economies in considering the stance of policy. differentials between countries in likely policy paths do tend to spill over into exchange
3:20 pm
rates. that is a standard part of how monetary policy works. and a stronger dollar does have both a depressing effect. it creates channels through which domestic demand is depressed. at the moment net exports -- well for quite some time, and probably going forward. there will be somewhat of a drag on u.s. growth. so that is a factor that we take into account. >> increases in the dollar that we've seen since mid 2014 have served to push inflation down as well. can also have impacts on commodity prices that are relevant. so it is certainly relevant to the stance of u.s. monetary policy in a factor.
3:21 pm
but when as a constraint, i would really not go so far as to say it is constraint on monetary policy. when we have an outlook for continuing o both trend growth that if he held reach absolutely flat, we have reason to believe inflation our overshoot our target we could see a case to gradually raise rates over time. at the moment i think markets do expect and this is factored into market prices, a gradual path for rates to increase over time. but for example, if we were to see upside surprises to growth and to inflation and had to raise short-term rates faster, thought we should, one of the channels by which that would work would be the associated impact on the dollar. that is a standard channel through which the monetary policy transmission mechanism works and we could take it into account and would not fill
3:22 pm
constrained. but that would be part of how it would work. >> nancy marshall. marketplace. how how much are you watching oil prices and their impact on inflation and how that could effect the timing of future rate increases? >> well oil prices have had many different effects on the kmo economy. and so we have been watching oil prices closely. as you said, falling oil prices pull down inflation. now, it takes falling oil prices to lower inflation on a sustained basis. once they stabilize, at whatever level, their impact on inflation dissipates over time. so we are beginning to see that happening. not only have they stabilized.
3:23 pm
they have moved up some. and their inflation -- their impact on inflation is waning over time. >> but oil prices have also had a very substantial negative effect on drilling and mining activity that's led to weakness in investment spending and job loss and energy sector. it has different effects. for american households it's been a boon. since mid 2014 we've estimated the decline in energy prices, in oil prices has probably resulted in gains of about $1400 per u.s. household. and that's had an offsetting positive impact on spending. but in many countries around the world that are important commodity exporters, the decline
3:24 pm
we've seen in oil prices has had a depressing effect on their growth are their trade with us and other trade partners and caused problems that have had spillovers to the global economy as well. so it is a complicated picture. fed chair janet yellen completing their two day news dmompbs which they announced no change in the interest rate policy right now. if you are wondering why no change this time around. look no further than the first sentence in today's statement. this is today's statement which at the end of the first statement says "the labor market has slowed while growth and economic activity has appears to have picked up." this is the last statement from the previous meeting on april
3:25 pm
27th. "the labor market conditions have improved, even as growth and economic activity appears to have slowed." so just the opposite of what we got last time around. >> and you have zeroed in on pretty much the only significant changes we've even seen to the statement. aster george by the way did not dissent. >> very unusual. >> and the let's bring in some guests. here on the floor of the new york stock exchange. significant here is not only their downgrading of the labor market but also the own sense of where interest rates are going, right? >> absolutely. i think what was certain in in plot was a lot of uncertainty about the outlook. the fed's -- they are less sure what where the economy is going and that is why where he saw the
3:26 pm
dots address down. >> and i guess we could stay markets had already priced all of this in. we haven't seen much change in anything since the statement came out. >> exactly. and you know from doing this for a while that you know wherever you are in the market pretty much you slide off or you rally back. and then you wiernd up right back where you were when the initial event starteevent start. it's a little od janet yellen has been talking the economy up for months and now one point where she talks the economy down. sound like about eight different mandates when they are only supposed to have a couple of them. so for now i think it is more koefzing for the market. she's trying to clear. she's unclear. to me it just sounds like a lot of blah blah blah whenever i hear her speak. no disrespect but it just seems like it is confusing the markets even more.
3:27 pm
>> i'll quote sax sew. theo. the a dovish trade. just a couple of weeks ago pretty much everyone had us positioned for a rate hike and that didn't happen. >> yeah. now listen, kelly. i interview lot of exfed official, fed governors. and it is not a science but there is probably somewhere between 200 and 250 pages generated at every meeting if you were taking notes if are the minutes but yet the minutes are usually 7 to 10 piejs. i like the one question regarding the statement didn't give us any clues about the big hawkish vent that came out in the previous meeting. because there is no doubt that picking those 8-10 pages that then become the release minutes, there is a lot of weeding out
3:28 pm
that has to go on. so they had to pick a topic they thought was relevant is the sense. i think that speaks volumes. it just seems to me that this committee will go out of their way to talk about the strength in the dollar should they tighten. all of the things that are up in the air. but let's frame it. 25-50 basis points. a 4.7 unemployment rate at the last meeting. a 20 year chart of stocks it is pretty much right on the highs o. a 20 year chart of 10 years notes it is right on the lows. and none of this makes any sense. and i think this meeting would have had to have been upgraded for me to hear the blah blah blahs that steve heard. >> -- never even trance pierd.
3:29 pm
i. >> we can focus on the particulars of this meeting. but what is almost more significant. when is the last time we saw a rate cycle where they raised interest rates once? and are are they done? >> good question. let me look. i think the first rate hike cycle is over, kelly. i think what janet yellen said in response to my question and if you look at what's happened to the rate hike to the forecasted rate hike it is pretty profound. as close to the fed getting to exchangelati capitulation about the efficacy for fed policy, the outlook for the economy. i think all of us are in a process of continuously reevaluating the neutral rate. you see that -- part of the new
3:30 pm
normal. 5/8 decline to the funds rate outlook for two thousand --. is very profound. and gdp remain the same. that is very important. i don't know what rick's upset about. rick represents the markets. the rick, the markets won. the fed has completely capitulated to the market's point of view. the fed is not leading the markets here. the markets are leading the fed. >> there is no market. there is no market. there is the fed -- >> you are wrong about that. >> there is janet. there is mario draghi. there is really no market left. only securities for that quarantined all the central banks around the world and maybe we could talk about resuscitating mr. market. >> mr. market is pessimistic and the fed has now gotten to be as pessimistic as mr. market. >> -- threw him a bone and he threw it back at me.
3:31 pm
>> we're waiting for former dallas fed head richard fisher. i'm dying to ask this question. the dot plots came out. as we anticipated and they show a concerted opinion that the rate increase velocity is going to go down and we're not going to see as many rate increase this is year and over the next two years. is there still a value in the dot plot, these forecasts when she continues to repeat the mantra that each meeting is data dependent. what is the point of the forecast and future trajectory of future rate increases is each meeting is data dependent? >> so i would not be investing on the dot plots here. i will say -- you can't. you're right. they change. and i don't know if they have in any of my longer term charts that show this coming down but they shaved off a whole percentage point to a year ago
3:32 pm
in some respects here. so that is a really big deal. right about that. and other thing is it shows the fed is getting less hawkish, more dovish. and lower rates for longer they are projecting and really that is a step towards what larry sumner said today which is you have to stop forecasting the rate hikes that never appear. >> the the issue -- >> i'd say the majority of -- >> maybe you were b about to respond to this. was it is not as if the people are listening to the fed's projections. they were almost widely optimistic to people were ignoring them in the first place. >> i don't know. i don't think they -- i do think they provide some value. they tell us how the fed responds to nfgts. in this case the market may have been more pessimistic than the fed earlier on but the fed was responding to a very weak p payrolls report and the economy
3:33 pm
is weakening and the fed is responding to that. it is not really their fault the labor market came in that much weaker and they seam rattled by the recent data. >> when you suggest one rate change takes months to take effect in the economy, why in the world do they respond so much to these -- >> that is the argument, bill. >> -- what's that steve? >> that is the right argument. that is the argument of those who say that the fed should be hiking now and also the argument of those saying look, compared to where we were, we should not have these low rates. that is the argument. that it is in the future that rate hikes will take effect and you need to get in front of those effects. >> look, i think it is also important to remember that this has been a long process. the fed started tightening policy in 2014 with its language on winding its qe program. it's come a very long way. it hasn't raised rates that much
3:34 pm
but it has normalized and now the economy is pretty much slowing and doing what's appropriate. in our forecast we don't have anymore fed hikes in the next two years. and today's comments definitely make me more confident in that. >> pantheon's view that the next move is going to be more stimulus of some form in 2017. certainly on side of consensus now. but how would you say the market is now view bhag the fed's next move is going to be is this. >> i think it gives lack of confidence when you don't see the fed. we've reached that critical mass where it was good for the market. elevated and lifted and created this bloated equity market. now they are still worried about what is janet yellen worried about. ultimately i think it is a negative. we're going to have a new president 2017 so i think there will be a lot of money thrown back at the market kelly. >> and amend that, precision,
3:35 pm
not pantheon. any case, thinks stimulus is going to be the next move out of the fed. >> are we going to be a quiet market now until the 23rd with the brexit vote? what is the next market you are watching here? >> it's got to be brexit for the market right now bill and obviously we're going into the summer season with a lot less speed bumps but i would think it is brexit. and if you look at the way the market has been selling off, i think that it airs on the side of lightening up oppositions and make taking a break from equities because the market is worried now that the fed has lost all credibility if they had an ounce left. >> let me show gold for a second too. i think touched 1300 an ounce mark. gold had its best rally in decade farce stat of the year. and as you can see they were sitting at just under 1300
3:36 pm
dollars an ounce for gold. and it is also interesting t dollar weakened but it is hanging in there. should we expect more weakening? and what does that do to global markets? zblz. >> reporter: it is hard to peg where the dollars going to go because all foreign exchange is based on the central bank who's issue has with foreign exchange so like chasing your shadow. with regard to gold it is the only thing i think makes sense. the it is only thing that makes sense. push comes to shove nothing is going to make gold glitter more than central bankers. joining us now. richard fisher. >> thank you. >> how are you? >> i guess you have heard all o that's happened. >> i have. >> i didn't raise rates. simply by reversing one
3:37 pm
sentence. yep, the whole thing. and now we wait to see what happens next. and they have lowered expects for future rate hikes for the next couple of years ear. >> but i listened to janet's press conference. and i would summarize with, like the music of vog ner, it is not as bad as it sounds. one things she made clear which i think people needed to hear was embedded in the question was are you likely to move towards negative interest rates. and what she said was we have the rollovers in the portfolio. we have a substantial portfolio. she talked about the new york economics club speech. so that question achieve accommodation if necessary without -- and she said in this press conference, going back to zero. to me that was the most important statement made in her entire press conference. >> still talking about that scenario of easing, stimulating, supporting the economy. are we having that conversation
3:38 pm
and not the tightening one anymore? >> let's start with what you need as the first step. which i thought that was a little more optimistic than some people in the marked are talking about. we have negative interest rates everywhere else. it is assisting us. and she made reference to that in terms of cross-quarter flows and so on. but the door was left on. we'll see o how the numbers evolve. they keep constantly saying that. the other thing i thought was effective to my trained ears was don't get caught up too much with the dot plot. >> is there even value in the dot plots anymore? >> in my opinion? >> yeah. >> i gave a speech in new orleans they parodied dr. seuss where it was called out out dot dot. so i think the answer in short-term is no. and she said as based on assumption of what proper monetary policy might be. without saying the name it is largely guess work.
3:39 pm
it is an opinion and they are going to constantly change. >> the by the the same token is it counterproductive to be so data dependent? when you consider the long-term impact that the fed policy is supposed to have on the economy? in other words, it takes so long for one move to creep into the economy and have an impact of some kind. when one jobs reports can change the whole picture. >> this is what worries me. sounds like they are almost day trading the data. and i think they have to be e extremely careful about that. they are look at the long-term and the impact of the monetary policy on the real economy. as it effects price, inflation, deflation and job creation. so that is really what this is all about. and we have to keep that in constant memory. i'll tell you what i didn't hear and i want to hear more of is the damage that is being done by the slow interest rate environment to the basic institutions that the middle income groups rely on.
3:40 pm
insurance. community banks. regional banks. interest rate spreads. money market funds. and we're undermining through monetary policy, not as badly as others -- >> the they're controlling the short end of things. the 10 year, the 30 years. the moves are responding they are moving lower even as the fed is rating rates. how is that the fault of the monetary institution? >> that is being driven also by relative rates in other countries and negative rates all the way out --. >> what were you going say steve? rick? >> richard has it. the interest rates on the long end. steve said what about the market? the market is relegated to look for the biggest fattest santa clauss it can find. and on the long end right now that is mario draghi and i think the short end has no clue. and i agree with richard. dplots just take up some time. this is about talk. this is about keeping it hot for
3:41 pm
every meeting. but it is really not hot. and with regard to mr. market. you know, i think equity markets have some semblance of reality to them. except we see that earnings aren't really doing much anymore. so we're running out of gas there. and that is the issue. when we've run out of gas in midair most likely we are going to see quantitative easing or negative rates. richard i like what you point out because i was looking for more meat on the bone on negative rates. my problem is that if you have another 75 or a hundred basis points of lower negative yieldes on the european/german curve i don't see how janet yellen is going to be able to play with the balance sheet enough. i think the possibility of negative rates in the u.s. is as high as it's ever been in history. yet i don't hear one presidential candidate talk about it. or i don't see anybody in congress talking about it. i think it is the biggest issue
3:42 pm
facing us on many levels. >> i don't think it is going happen here. >> okay. >> this is one of the rarest -- might disagree because we support each other constantly on the show. >> as the policy or economically it won't happen. >> well i thisty insurance lobby, money market fund, region community banks and also the big bank, they cannot suffer an interest rate regime here. we are vitiating the insurance industry. life insurance in particular is the way middle income savers protect themselves long-term. >> what kid you hear her say about mega rates? she was -- negative rates? >> i think richard is wrong to dismiss the dots. and i don't even use the term dots. t dots are the fed's long-term forecast or near to medium term forecast for interest rates. i can't think of anything more valuable to understand the direction of what the fed believes is going to happen and
3:43 pm
the way it thinks economy interest rates work. true it hasn't come out the way they forecast it. but in terms of policy direction, their direction has been that they are going to be raising rate. and that is still the direction that they are forecasting, richmond. and i think it is a very important part of the arsenal that is out there. it is not the be all and end all. i don't call it dots. it is a forecast and it is a valuable tool in that regard and and i think this is a very important point. it is a moving target. it is how they feel at the time using appropriate monetary policy. here is my point. don't get fixated on one dot plot. look at how it progresses over time. i think that is the key. >> we have go but laura. >> that is what i want to get to. when yellen said why are they lower for longer and the answer is because we think some of the head winds we have now is more permanent. it is one of the singsal most
3:44 pm
pessimistic things i've ever heard a fed chair say. and when i asked her why did policy change are from just this past quarter? they think some of this stuff cragging down the economy is not going away and now the forecast reflects that and i think that is important. >> i believe the word last hour was lieu gub rows. lew gub rows. lug brows. our thanks to everybody. richard fish iris going to stay with us. as we continue to try and make our way through the fed policy as it stands right now. we just have 15 minutes left in the session. the dow is now negative. down nearly 3 poichblt we were in the green all day. before the statement, after the statement, frankly until this moment. the nasdaq is trying to hold a
3:45 pm
small gain. >> the feesd decision to leave rates unchanged as we continue to look ahead to the july meetings a as well. >> and gym grant yada yada. and richard kovacevich weighing in on something.
3:46 pm
♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. digital works for banking and financial services. lets talk about how digital works for your business. ♪
3:47 pm
3:48 pm
welcome back. a little more than 10 minutes left in the session. markets have gone negative. the dow is down 17 points as art cashin just walking by here why that might be the case. he pointed out a couple of things. one the fact that question janet yellen was asked why didn't the last statement reflect their
3:49 pm
discussion more appropriately once the minutes were revealed and there wasn't muffin of an answer leaves people wondering there wasn't much of an statement put out today. and dow is down 15. >> waiting for an official -- well there was never an official market on closed order report but we'll wait for that more definitive report in the closing minutes. and seema mody. >> a couple standouts. caesars gaining 10% after getting more time to negotiate a settlement with its bondholders. currently battling with credit ares over restructuring. in the past parent company have say unfavorable settlements will lead to stuff on both sides. and merrill lynch raised from
3:50 pm
neutral to underperformed and upped price target based on higher forecasts. and fire eyes saying the company has refused several recent acquisition proposals from multiple party this is year. one was semantic. and fire eye has been subject of speculation for quite some time now. >> let's look take another look at gold. it popped higher today after the fed announced it will leave rates unchanged. tested the $1300 mark there. currently up about 7 bucks to that level. >> and luka paolini. he joins us with richard fisher.
3:51 pm
overall. big pitcher what you heard and what it meents for the markets here. >> i think the fed will be tremendously cautious but i think a couple of hikes are still probably here to happen. the key question is growth. >> is it because the fed's hands are tied right now and they can't raise rites? >> i think the fact that -- i think the gold price will continue to go higher. >> this has not been a good day for fed credibility nor a good day for those who would like to view the fomc credibly. combination of the statement, the dots, provide as confusing and conflicting mental that raised more questions than were answered today.
3:52 pm
>> i always say i'd wait to the minutes come out to get the full picture. comes out three weeks after the statement. when i joined eleven years ago the fed we went from 250 words to 950 and the words have more syllables. and then we went to the press conference. which i think is very important. but then you have to wait three weeks to actually get a sense of what was discussed in full and all that. i want to come back to the question of gold here because we're going to have jim grant on the show and he's a real gold fanatic. and always had been. the carrying costs are nil presently. but i think the other thing that might be impacting gold isn't so much what happened in this meeting today or the fact that the fed has not moved. there is uncertainty out there and that uncertainty has picked up a little bit with the fwrex brexit vote. and remember again with the nil interest rate, non interest
3:53 pm
rates as it were, it doesn't cost a whole lot to carry position. >> you are practice clally paid carry gold. brexit. there is a feel if they do vote to believe the european union the markets will go down and just the opposite if they vote to stay. do you wi that. >> >> we have seen already a lot of weakness. even with brexit probably downside is not massive but yes there will be a big reaction. especially for european and others. and i think this is the biggest risk if there is a brexit in the referendum. >> explain why anybody in their right mind would pay the german government to hold their debt. >> for ten years. >> and how long is that going to persist? >> we've seen that in countries already. i think a looft o investors are forced to buy bonds. but it is not long-term. >> i know they are data
3:54 pm
dependent. if you were still sitting on the fed i'm curious what your dot plots would like look here? >> i never was that extreme and out of the norm. but i still would be looking forward to try to get some upward movement in the fed funds rate and get a couple of movements in this year. >> you still want too see a couple of movements this year because i want to have something to give back in case we slide backwards. we're seven plus years in into the cycle and i'm deeply worried about the damage being done to insurance companies and banks and the money market funds. >> -- >> -- needs to be taken into consideration. >> bearing in mind the mensch marks they set for themselves. are they every going to get 2% inflation and the job growth at the same time? >> i think we are close. the way the math works you have to keep having prices go down to have the inflation numbers go down. and we'll see what comes out.
3:55 pm
we've seen the cpi and the ppi. we're just going to have to watch the dynamics of the market. you can overshoot it for a while before you actually take action. >> trying to figure out what's really going on with this economy. thank you guys so much for joining us. luca paolini and richard fisher. >> when we come back it is time for the closing countdown with the dow down 40. >> and jim grant will be joining us. so will dick controversy vich. -- you are you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent
3:56 pm
of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later. that's what it means to go long™. call now and request this free decision guide. it's full of information on medicare and the range of aarp medicare supplement plans to choose from based on your needs and budget. all plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. unitedhealthcare insurance company has over thirty years experience and the commitment to roll along with you, keeping you on course.
3:57 pm
so call now and discover how an aarp medicare supplement plan could go long™ for you. these are the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. remember, medicare doesn't cover everything. the rest is up to you. call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile.
3:58 pm
it's on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile... even when i'm on the move. sign up at and get up to six hundred dollars. just inside the two minute mark. the statement comes out 2:00 eastern. the dow did a stutter step up and sideways and not until the close that we got the sell off. the 10 year. we kind of went sideways. the dollar lower but back.
3:59 pm
gold at 1298 right now. >> a lot of people wondering why the dip. we were fine until 3:30. long after janet yellen stopped her press conference. and i don't think anything she said influenced the market. we have a quadruple -- separation this week. a lot of contracts are rolling over right now. this is the point at which they make decisions rolling over ahead of that expiration. and i think the brexit a lot of uncertainty is causing gyrations. but a billion in options are going to roll over in the next couple of days and i think that may be contributing to some of the selloff today. very hard to put it on it but i can assure you the markets were fine until 3:30, long after janet yellen finished her press conference. volatility picked up. the vix is back up at 20 and i think it is going to stay there
4:00 pm
until this brexit thing. >> yeah. i would think. thanks bob. see you later. going out minus. down 33 on the dow, down to 2071 an the s&p. cascadian is ringing the bell and cgi here at the new york stock exchange. stay tuned for hour number two of the "closing bell." see you tomorrow kelly. thank you bill. and welcome to the "closing bell." i'm kelly evans. stocks going out with a decline on wall street after the federal reserve leaves its interest rates unchanged. the dow declines 29. the s&p down 3 to 20071 and the nasdaq down points. this all in the last half hour. the initial reaction was much more positive from the stock market. we'll get into the factors behind this move lower and what it means. gold also moving higher. we'll have lots of reaction to
4:01 pm
the fed's decision when we speak to jim grant who says the next move listen to ease instead of tighten. and also joined by former wells fargo ceo dick kovacevich. >>&mike santoli is here, along with cnbc contributor carol roth. and for more, guy adami and steve leisman stays with us. steve, the rate hike cycle has left the building. what is the jeff gundlach is saying. that is what you yourself told us a short while ago. >> yeah big changes here. worth note dprg all investors out there. first of all they didn't hike. they left rates unchanged. siting uncertainty out there in the economic outlook. down grate grade the labor market. also saying brexit played a
4:02 pm
factor. but the big story coming in the longer term outlook for rates. you can see interest this chart that they downgraded the outlook for 2017, 2018 and the longer run. first of all an 16 they didn't downgrade but six fed members now see just one hike this year. that is up from just one before. and look how fed rates were slashed in 2018. and i asked why this happened? what happened in just the past three months from the last time the fed put out its projections and she talked about the idea that the head winds we're facing in the economy are creating a sense that longer term rates need to be low. here is what she said. >> i think what you see is a downward shift in assessment over time the sense that may be more of what's kaud causing this to be low are factors that are
4:03 pm
not going to be rapidly disappearing but will be part of the new normal. >> the market was already down there. the fed was here when it came to the outlook for rates. the fed meeting the market yet again. yellen said rate -- it could be the data turn around and the fed could hike in july but right now given what i've heard that seems unlikely. i'm not saying go away for the whole summer. go away to the beach but keep your phone next to you i think. >> well for you anyway, steve. mike, there is a big difference between people feeling like the fed is going to just go slow this cycle and realizing if it's over does that mean the expansion is over too. >> and at least the fed bending its trajectory for what the economy is capable of much lower. it was deafen a resigned tone. a bit more i wouldn't callive dovish because that implies they
4:04 pm
are making a choice to do less. and i think investors are also trying to digest this idea that the fed seemed to go out of its way to drag the markets expectation towards the prospect of a summertime rate hike just a few weeks ago and now essentially entirely unwound. >> from many i perspective this is not surprising. i've been in the camp that this is a fed that is not going to do anything. but i think it is disappointing. i do not think the fed's monetary policy has been helpful. i think it's been a hindrance. and i would like to see them get out of way. and if we haven't seen the changes that the fed keeps projecting. they keep putting up projections that by the their own admission are wrong, maybe they should try and do something the different. and i think it is time for them to do that. >> what is that?
4:05 pm
do you want them to raise rates are or stop projecting raising rates? anything doesn't work. they are central bank. they have to do something. >> i would like to see them raise at least a little bit to get towards something that is more normalized, something that doesn't have this intervention from, you know, this fed and central banks around the world. somebody has got to break the cycle here skprenl if nobody is willing to break the cycle we're going end up in this situation forever, my perspective. >> i was just going say aim all in favor of that if someone can explain why higher interest rates would cause businesses to invest more than they did before rather than less. and i can't get that. i know a lot oaf people think that just because rates are low that that may be the problem we're having. and i can accept that idea even though it is buyerly economically out of the box. but what i can't understand is
4:06 pm
why doing the opposite would be something not an episode of seinfeld here, where doing the opposite gets you the girl. >> i kind of feel like we've been living in an episode of seinfeld. and i think it is all about psychology, steve. if fact of the matter if you did a small number of rate hikes it fundamentally doesn't change the proposition. it is still incredibly low interest rate environment but it takes the psychology of the market away from letting the tail wag the dog and letting things get back to normal so companies feel like they can make decisions that are based on what's best for the company instead of this market cycle we're in. >> can i take a shot at that answer? and by no means do i think i'm right or even know what i'm talking about. but i think what's happened in this low rate environment over the last 6 or 7 years many my opinion, companies are gotten lazy. that means they can borrow real cheap and with that money they can buy their stock back. they are taking the lazy way of
4:07 pm
without out of running and growing businesses. they are not making the hard decisions. again my opinion because this zero rate policy effectively has allowed them to be lazy. and giving them a runway to do things they might not do if rates start going higher. they might start taking more critical looks at their business and doing things differently if the rate environment starts to move the other way. that is my view. the same thing ulgd say about the housing market. why don't people run in and buy houses as rates going down? because they think rates are going to continue to go down. maybe if rates go the other way that will force people's hands. >> the fed is not in the business of trying to tweak the incentive structure of corporate executives. they are trying to gauge more directly what the employment level is and whether inflation is giving them the green light to do more. >> i'm not suggesting that. i was just trying to answer the question as what would different if rates started to go higher.
4:08 pm
>> i get that. the fed is trying to do two things. one hand trying to lead the mart. the other hand trying to take its cue from the market. and when i look around the world at what people are lending money are demanding as a cost for that loan it is administde minimis. they are willing to give the german government money and get --. the really incredibly out of line with where the market would put it by itself. >> now that conversation is to why is that the case? why german 10 years at 0%? i think we're in this global deflationary cycle. we have deflation in the wrong places. we have deflation every place else. >> and i just want to point out janet yellen took that step towards that in the quote i ran
4:09 pm
earlier. janet yellen took an b important step towards that point of view -- >> just to go over the impact that this discussion is having here, dow looks like now on o five day losing streak. we mentioned earlier what's happened with dwoeld. i guess the larger question then is, is the biggest change relative to what we knew heading into the fed meeting that the u.s. can't avoid being dragged down by the negative worsening environment. >> or that it can't create much more dance distance between its own zbrout the rest of the world. you want to dial it back. 2ish% real growth. kind of a message of more of the same, not necessarily something that spurs a reaction. and i think that is what the commentary said. we're seeing what we've seen. softening up around the edges. let's just wait. >> and like it or not, one of the other things that's happened
4:10 pm
is there seems to be much more focus all of a sudden on how the fed could support the economy were it to weaken further here. so again like it or not. as richard fisher pointed out. he was parsing janet yellen's language to see whether she was going to take negative rate office the table. and as the very different environment. >> the conversation is all related. because that is the putting out of fear, the fact that there aren't great growth prospects, that we are not doing the types of things to encourage business to make the capital investments to pursue that growth. so i do think that that discussion. and i'll fall into the camp of not liking it, again all related. this is one big non virtuous cycle i guess i would say. >> and by the way we have a news alert here. steve we'll let you go. >> thanks kelly. see you tomorrow. >> after that fed decision because we want to get over to q
4:11 pm
logic, seema mody has more. >> semi conductor company cavium announcing acquisition of q logic. it is a cash and stock deal that values q logic about $1.4 billion in equity value. in the press release it says the deal boosting 2017 adjusted earnings by 60 to 70 cents. another stock is jabel circuit. a beat on the bottom and top line. revenue of 4.31 billion versus the estimate of 4.18. and also announced a $400 million stock buy back program. the strong is down seems to be on guidance. sees q 4 revenue down around 9%. in the press release the ceo
4:12 pm
says as expected our third quarter results also reflected a soft environment within our mobility business. take a look at shares down more than 6% after hours kelly. >> thank you so much. guy a final comment before we let you go? >> kwk logic is not ab expensive stock. i think it trades 13 inform times forward earnings. probably one and a half times price to bourque. book. if memory serves it's been sideways the last decade. and again the whole fed conversation, with companies awash in cash they are looking to do things. and acquisitions are out there. buying back stock. so this is all part of the -- in my opinion, the unintended consequences of the fed. deals get made. you can say they are good deal, bad deals but that is what's going on now. companies don't know what to do
4:13 pm
with their money, they make a deal like this. which actually probably makes a little sense. >> the slight recognition there. >> i'm not always dire. but it is what it is at this point. >> guy, thank you so much. >> thank you. >> great to see you as always. more coming up next hour on fast money. they will be talking to the former ceo of via com in a rare and exclusive interview. and he'll reveal who he thinks is to blame for the company's troubles. and if he'll return to ceo. and the reaction to the fed's decision and what it means for the economy and more. plus yesterday on "closing bell," signet jeweler ceo's fired back. >> jim's wrong on a lot of fronts. first of all a lot of inaccuracies in the report and the one i can't help but take personally is the questioning of our integrity.
4:14 pm
>> jim grant will join us, talk about the fed and more in the little bit ♪ before a movie star unwittingly gave you a global product endorsement. and millions of women everywhere decided, "i love that shoe." and the company's data center handled the spike in traffic without any drama. before all of this. cdw orchestrated a scalable software defined data center solution using vmware nsx technology. scalability by vmware. orchestration by cdw.
4:15 pm
4:16 pm
bank of america reportedly
4:17 pm
set to eliminate up to 8,000 jobs because of the rise of digital banking. >> hardly a new phenomenon, the rise of mobile banking but has taken these companies a while to adjust to what consumers need and want. bank of america's head of retail banking still said there is some sizing for the bank to do. 11% fewer people going to the branches. 12% fewer dialing into the contact centers. exactly the same rate for the last three or four years. to reflect that up to 68,000 retail employees to the low 6 0s, not replacing people who leave by attrition. we are continually looking for ways to cut head count. a multi year phenomenon. the bank said for its part no new cuts are planned. these are all existing plans for bank of america and it is not just bank of america.
4:18 pm
j.p. morgan has cut 43,000 jobs in the last finour year to reflt the new reality. it will be interesting so see a turn in credit and a change in the economy and people want to get on the phone and talk to people about their credit cards or mortgage, will is there there still be enough people to field those calls. >> and in fact let's ask dick kovacevich about the impact. former ceo of wells fargo. and is this being overplayed? is reshaping the need for human services that quick? >> i think it's overplayed. certainly a factor in reduction of employment. but what is really happening is there are so many more compliance people in the banks today than there ever was and it
4:19 pm
is increasing. and they don't add anything to revenue. so they have to cut posts or profits go down. when you have over 50,000 people in compliance related activity, that is a big factor as well. >> you also have to increase revenue and to some tengts there is an opportunity every time you interact with a human for them to keep you in certain service, sell you more of those service, figure out what else your needs might be and match them. how do you increase the top line if you keep cutting from the bottom? >> you are exactly right and we don't do that at wells fargo but think other people don't have those opportunities. >> i guess how does a bank increase its revenue in this environment is this. >> i don't think you are going to see the industry increase its revenue in this environment. i think there can be bank whose gain market share because other banks are doing things that don't make sense.
4:20 pm
but the overall industry is not going increase revenue and it hasn't and it will not in the future until things change. >> banks are between a rock and a hard place. they have the feds that basically just said that they are not going to raise interest rates. at the same time they are contending with regulation. what are the m&a prospects given the desire to grow revenue but still having this heavy regulatory environment. is there opportunity for banks to acquire in fin tech and maybe go in a different direction as way to increase revenue without running into the regulatory issues they might otherwise? >> well i don't think you are going to increase a lot of revenue by being in fin tech. i think what should happen is the industry will need to consolidate. and the only reason it isn't consolidating is the regulators probably don't want that to happen. but if it was a normal situation
4:21 pm
you would find banks being acquired because the high fixed cost of regulation. they need to amortize that over a bigger customer base. it's started but it would much great for the regulators would allow it. >> in this industry has been kind of in shrink mode since the financial crisis and now there are concerns. you see how investors are treating the bank stocks that the cycle has basically turned on them when they never got to reap many of the rewards. the corporate credit cycle turned year ago. and indications that maybe the consumer credit side of things might be fraying a little bit. is that something manifested in the bank's financials now? or a false con snern zwli think it is in it. but really happened in the past is the credit reserves were actually reduced because credit fell so much. so they gained a lot of so called profits simply by reducing reserves f.
4:22 pm
and still very low levels relative to history. and the combination has reduced the profits from the past because it was really artificial in some ways in the past. >> how many more jobs do you think the industry is going shed as it right sizes for today's environment is this. >> i don't think it is going a lot. it really depends on have we reached the top of the compliance cycle? and then they can start adding people to serve customers instead of just replacing them with compliance. but i think we're pretty close to -- i don't think there will be a lot more reductions in people. and again that assumes that the economy continues to grow at 2% or more. and that we don't go into recession. >> that is another story. while we have you. we've got to talk about theranos as well. you served on the board. recently they had a big set back
4:23 pm
when walgreens said it will discontinue its partnership. long term viability still up in the air i guess as they wait for final word on sanctions from the feds. what can you tell us about the regrouping of this company and what your representations a -- recommendations are for its future profitability. >> they said they were disappointed in the action taken by walgreens. particularly because the lab that supplied the walgreens store was -- has been approved by the regulator. so it's been working just fine. so it was a surprise to them. and they will take -- the reason i can't speak about it i think there are legal and other reasons that i just can't speak about what the future will be. but as they said in their release, they are focused on fixifix ing all of the regulatory issues and they believe their
4:24 pm
technology is still unique and proprietary and will result in good -- will serve customers well into the future. >> you think the company has a future? is it going to be around in five years? >> i believe they will, yes. >> theranos. okay. do you think it is going to still center on the finger prick idea? or is it going to look very different is this. >> i really can't speak to all of the issues here. but i believe in the vision of elizabeth and what she has done. and it's proven to be working. and i think that it will work. >> couple of difficult industries, here to wrap our heads around today. dick kovacevich thank you for joining us. >> you are welcome. >> a former wells fargo ceo. is boeing reported deal with iran air the first of many coming up? and
4:25 pm
♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ looktry align probiotic.our digestive system? for a non-stop, sweet treat goodness, hold on to your tiara kind of day. live 24/7. with 24/7 digestive support. try align, the #1 ge recommended probiotic. the first stock index was created over 100 years ago as a benchmark for average.
4:26 pm
yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. a good car has to maneuver quickly. that's also true of a good car company. people have always bought cars. but we saw an opportunity in sharing cars. so we moved fast and launched car2go in 29 cities, all around the world. doing that required dozens of data centers, designed for speed and performance. we built our business on the ibm cloud. because that's what the ibm cloud is built for.
4:27 pm
we built our business on the ibm cloud. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t. whole foods shares after the fda found serious health violations at one of the storage facilities. what it means for the stock is coming up. and first jim grant reacts to janet yellen and responds to the ceo of signet who says grant is
4:28 pm
wrong to question the jeweler's accounting practices
4:29 pm
4:30 pm
welcome back. breaking news on the disney alligator search. sue herrera has more.
4:31 pm
>> a news conference going on. and the florida sheriff is confirming that the remains of that 2-year-old little boy who was grabbed by the alligator at the beach of the grand floridian last night about 9:30 p.m. they have found the remains. he's confirmed it was the remains of the 2-year-old boy. the remains were in tact. his remains were found by divers. and that is what we know right now. that news conference is going on right now. the post it sign said no swimming. however that little boy who was right next to his father was just wading not in very deep water at all. it is the first such incident at disney in some 45 years. they have never had an incident like that since they have been in existence in that particular part of orlando. some sad news. we can confirm the remains of that 2-year-old little boy have been found by divers at lake bun
4:32 pm
vis in floribuena vista in flor >> sure the signs said no swimming but was it clear there was a real gator threat. >> the boats on some parts of lake buena vista it does say beware of wildlife, including alligators. and actually saw al an alligator in the lake. and said do you know? and he said yes. there are alligators. they get in from the everglades. but they are still looking for that particular alligator. obviously he's lethal and they have euthanized a total of five alligators but divers found the boy instead. >> such horrible story. thank you sue. we have a news alert on hillary clinton now.
4:33 pm
>> interesting development in the economic debit on the campaign trail. hillary clinton has just given an interview this afternoon to usa today in which she said she would ask her treasury department if she were elected president to eliminate the carried interest loophole by executive action if congress would not do so. the obama administration has taken the point of view that it lacks the authority to take that step. but there are some legal and tax experts who think the administration does have that authority. hillary clinton is siding with them and saying she would get that done even if congress doesn't pass it, which of course congress threw out the obama administration has refused to pass that. >> what do you make of this. >> clearly there was a meeting with bernie sanders. that is the kind of thing maybe he hinted that is the kind of gesture you want to make. and i don't think it would have much political cost. if there was a core of trump supporters they are certainly not really the hedge fund types.
4:34 pm
>> and friend of wall street, and foe of wall street as we've been talking about. for the time being she's positioning herself as foe of wall street. seal see how that progresses as time goes on. >> thank you john. the latest on the hillary clinton campaign there. the fed leaving rates unchanged today. the next guest thinks the fed is moving in a direction towards further easing and not tightening. jeff gundlach also says he thinks the rate hike cycle has left the building. >> brilliant man is jeffrey gundlach. i think the fed missed its market and the next move will be in the direction of ease. i think the industrial manufacturing economy is visibly entering or flirting with recession. yield curve is flat and flattening. inventories are building. notably in autos.
4:35 pm
i think what is most notable for investors is the notable -- maybe the singular juxtaposition of sky high asset markets on the one hand. with softening activity on the other. and on the third hand, the existence of this persistent radical monetary experimentation. so to a degree we all live in this central bank constructed hall of mirrors. it is not clear where evaluations given that interest rates are none. >> so if you take all of those three hantds together and we do see further easing in terms of policy, do you think that will be helpful? because i just made an argument -- >> to whom carol? great for the gold guys. >> let's talk about the broader economy. from my perspective the stock market at some point hopefully comes back to mirror what is going on in the broader economy
4:36 pm
and obviously if we see the economy continuing to slow here and abroad that is not going to be good over the long term for the stock market either. so in terms of actually being effective policy, do we think that that helps? >> no i think it does not help. and i think with respect to the asset markets we can imagine a little kitten up at the top of a tree. and that kitten we might label as cartoonist and grant might have done in the --. i can't does close these things. might label this kitten stocks bonds or real estate. and one might imagine a fire lady say janet at the top of a ladder saying hey little fur ball, how did owe get up that high? so central banks have manipulated and coaxed --. the horse of -- the horse of speculation is ahead of the cart of enterprise. >> so you chop the tree down, right kelly?
4:37 pm
you don't wait and climb up the tree. you got to chop it down. >> what happens to the kitten? >> if in fact activity is softening in the industrial sector, all these things, maybe we are at that section of the cycle, jim have we not fully though made gains on o net basis pretty much on any number? if we talk about how much the economy is by it's measures and all the rest. so these are the starting points. >> to be sure things are better than in 2008. but this has been, you know, the slowest motion recovery in living memory or perhaps in dead memory. and i don't have to tell people of your age how difficult it has been to break into the world of work. by the way you three have done a great job. keep at it. >> i love that you think that i'm in the same age bracket as her. great. keep talking. >> jim, let's talk micro while
4:38 pm
we have you if we can't talk macro. >> we can talk macro. >> make it maybe it all comes together. we spoke with ceo of signet and diamond swapping and credit concerns and this was his response. >> there was a lot of inaccuracies in the report. and one i can't help but take personally is the questioning of our integrity. it is absurd to think that we would have any systematic. we are the largest diamond retailer in the world. we got there by understanding that trust is the most important characteristic from someone who's buying jewelry. >> well, i take this rather personally. with whom i have no personal quarrel was on brand x television today saying that there's ban orchestrated campaign of the bears against him. now that is a charge of collusion and manipulation. and it seems to me the federal
4:39 pm
reserve is in charge of market manipulation. grant's nothing do with that. >> very elegantly wiggled out of there. >> i thought he gave heartfelt denial of not exactly what we asserted. we said there is a great deal of smoke in many parts of the country about -- but our principle line of argument was had to be with credit and accounting. and he didn't touch those things as all. except very glancingly. >> and we asked about the credit and he basically said it wasn't any worse than u.s. conditions broadly. >> yeah. well that is not good. i say we are entering a down portion of the criteredit cycle. we'll know more in two years. >> and the point is we saw the softening up of some consumer credit measures, synchrony financial. private label credit cards, store branded largely.
4:40 pm
it does seem to me as if that is what investors are fixating on it. >> that's been turned into something more sensational than certainly we presented. >> do you think the bigger deal is the customer perception with the brandi issue? or do you think the credit issue is a bigger issue. >> the franchise value was a very precarious thing. you could spent your entire life building it up and see it whisked way. like .000 something was involved in alleged misdeeded. well what percentage of was involved in chipotle's health issues. --. al i'm take -- >> thank you for joining us.
4:41 pm
jim grant there. again, really good to see you. appreciate it. boeing reportedly reaching historic deal to set jets to iran air. coming up. how much could it be worth and will it kick off more deals between the u.s. and iran? we'll discuss h a nice long lif. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it helps pick up some of what medicare doesn't pay. and could save you in out-of-pocket medical costs.
4:42 pm
to me, relationships matter. i've been with my doctor for 12 years. now i know i'll be able to stick with him. [ male announcer ] with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and virtually no referrals needed. so don't wait. call now and request this free decision guide to help you better understand medicare... and which aarp medicare supplement plan might be best for you. there's a wide range to choose from. we love to travel - and there's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. remember, all medicare supplement insurance plans help cover what medicare doesn't pay.
4:43 pm
and could save you in out-of-pocket medical costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. a 24 hours. zero heartburn.
4:44 pm
. whole foods is under fire from the fda for unsanitary conditions. >> we're talking about ceiling drip on pesto pastas and egg salads, ammonium sprayed on salads and employees failing to wash their hands, just some of the serious violations cited after inspecting a whole foods prep facility in massachusetts. and sent a list to the company in march this year. whole foods responded by saying they were retraining their employees. however the fda not satisfied with this response so they fired off a warning letter this week stating we do not consider your response acceptable. because whole foods has not shown any proof they have made these changes and things have improved. in a statement whole foods says we were honestly surprised by. this we've opened our doors to
4:45 pm
inspectors regularly and work to address every issue. whole foods does have 15 days to respond to the fda. and today if you throw in a downgrade t stock was sold down. >> down nearly 5%. thank you. i think it was a massachusetts facility that served 8 states. but it is okay because whole foods shoppers aren't that finicky. >> the fact they haven't learned from what happened with chipotle, a similar thing, organic product, high end. and just jumped all over this. is very surprising from a brand reaction and if i were them i would be all over this. because they are already having enough challenges. >> and they usually all over this stuff. we saw what happened. i can't remember exactly. it was the overpricing. >> a measurement thing. state regulated. >> they came out quite voe sifrsly in that mike. >> i agree. i'm cynical enough though if you
4:46 pm
look closely enough at the supply chain of food everywhere along the way you can write anybody up. not good for the brand but i'm -- >> so you're not playing extra for it then. >> we have a news alert on a deal in the healthcare sector. >> it is official. envision and am ds amsurg merging. amsurg's ceo will be the ceo of the combined mccompany. keep an eye on amsurg. it is currently halted and will resume at 5:00 p.m. eastern. >> it's been decades since new u.s. planes have been sent to iran. but that is about too change? and several names bandied about
4:47 pm
for both donald trump and hillary clinton. and up next we'll talk to colorado governor john hickenlooper who's been mentioned as a choice for the democratic ticket
4:48 pm
4:49 pm
welcome back. the latest poll following the orlando shootings shows hillary clinton pulling ahead of drumpd by double digits.onald trump by double digits. joining frustrate the iconic conference in denver is governor john hickenlooper, governor of colorado and author of a new book. welcome governor. >> gad to be on. thanks for manager having me. >> you are also a super
4:50 pm
delegate. do your travel booked already. >> yes i do. reservations made and looking forward to being in the middle of it all in philadelphia. >> definitely bring the cool i. but what do you do to kind of keep, not only the cool factor, but sort of have this state respond to the growth that you've seen, particularly in the denver area where so many people have moved there? it's tough to find affordab aba rent, affordable housing. you're growing like a weed. >> it's a good problem to have, but it's still a problem. we're very focused on -- traditionally affordable housing is the housing you built 30 years ago. but when you're growing as rapidly as we have over the last decade, you aren't able to keep up. we're trying to figure out ways to cut red tape, and allow developers and builders to build more efficiently and effectively. and basically faster. >> yeah.
4:51 pm
cut down on the regulation. that's what donald trump wants to do if he's president. >> yeah, that's not all he wants to do. >> what do you think -- we're pivoting here to the general, and your name has come up on the vice presidential ticket. have you heard from hillary clinton? have you spoken with her recently directly about the campaign and your potential involvement in it? >> no. i think they are still very focused on making sure they get everything in the general election in place. clean up all the -- whatever, you know, feelings, and reconnect with all the senator sanders supporters going into the convention. no, i have not had a direct conversation with secretary clinton. or her staff. they're busy. >> oh, they're real busy. do you think fracking is going to be an issue? it's one area that goes back to the enormous potential your state has for growth. you have huge natural gas reserves, but there's a lot of
4:52 pm
pressure especially on the left not to frac. you say the science is sound. are you guys going to move forward with this? >> well, i think, you know, i look at this from a couple of points of view. one is natural gas is i think a very good transition fuel. not just in this country, but especially in china, to go to -- to shut down coal plants. i certainly agree with both people that we've got to get to cleaner energy, and a cleaner energy economy in the future. at least in this country, you know, those mineral leases are somebody's private property. and maybe in russia or china, the government will take away private property. but we have a process of doing that. eminent domain where we compensate someone. we've looked at that and are working towards that. the key is, we've increased fines for spilling frac fluid, or crude oil into water, or on the ground for 500 bucks a day to $15,000 a day. the first state to have methane regulations to make sure that every single well gets shut,
4:53 pm
there are no leaks. we shouldn't be taking people's private property, we should be doing everything we can to make sure that what is admittedly an industrial process is done safely and securely. >> right. no, i hear you. it's a lot of opposition, but also a lot of potential there. what about marijuana, and -- you've sort of been a little bit wary, actually, about what is probably going to be the signature achievement here of, you know, you can't go a page in the newspaper, a mention of colorado, without this coming up. actually, jane wells did some reporting recently about the negative effects, the smells from the acreage now devoted to growing pot and that sort of thing. how is this working for colorado at this point? >> well, i will say, and i said this before, probably the only good thing from my point of view about donald trump exploding onto the scene is marijuana is
4:54 pm
no longer the first question i get asked. which is a blessing of a sort. you know, i was against it in the beginning. we continue to work very hard to make sure that we regulate marijuana very rigorously. a real focus on making sure it doesn't get into the hands of kids. we're beginning to see -- and again, i keep telling other governors, i'd wait a couple years and make sure there. more unintended consequences. we're hearing anecdotal stories where we used to have drug dealers and now we're seeing a lot less drug dealers. drug dealers don't care who they sell pot to. that's a good thing to have less dealers. >> we've got to go, but what are some of the other unintended consequences. >> we're worried about, again, people driving more, under the influence of pot, which we haven't seen. we've been worried about it getting into the hands of kids, all that kind of stuff. but so far, those unintended consequences have been as large as we feared. >> i'm sure you have more up your sleeve so the question of four or five going forward. thank you for joining us,
4:55 pm
governor, making the time. appreciate it. >> you bet. my pleasure. >> governor john hickenlooper. the first to land a major contract with iran since lifting of sanctions earlier this year. phil lebeau next. ♪ using 60,000 points from my chase ink card i bought all the fruit... veggies...
4:56 pm
and herbs needed to create a pop-up pick-your-own juice bar in the middle of the city, so now everyone knows... we have some of the freshest juice in town. see what the power of points can do for your business. learn more at
4:57 pm
4:58 pm
welcome back. iran is finalizing a historic deal from boeing to buy more airplanes. >> we should probably get an announcement in the next couple of days. there was a preliminary announcement out of iran today. not an official one from the government, but preliminary announcement saying, we have an understanding to buy x number of aircraft from boeing. but the details aren't there yet. we should get that in the next couple of days. here's when it's finalized. approximately 120 planes, maybe as few as 100. that number still needs to be finalized. the most important point here, the treasury department will need to approve the deal. it's not just a rubber stamp of everything. there are parts of the deal with part of the treasury department, because the sanctions may say no, we don't agree with that. this deal is significant, because iran needs newer airplanes as quickly as possible. they're flying boeing aircraft that were sold in the mid-'70s.
4:59 pm
so they need this because it will help spur the economy there. and their travel within the middle east, and around the world. as you take a look at shares of boeing, keep in mind, any announcement that comes out, it's going to come from iran. boeing will probably say, it's got to be approved by the government. but they would love to have a chunk of the future sales there. >> i guess it could still take years for the results. >> there are a lot of people who are opposed to the iran deal. >> correct. not only here in the united states, but in iran as well. so this is not like iran saying, yeah, yeah, we want to buy -- >> do they have to pretend it's not from boeing? >> depends how they structure the deal. do they buy them from boeing, leasing companies? >> private label. private label an aircraft. >> to what extent will the treasury decide if they will go or not? >> a lot of those sanctions are still in place. that's a good question. >> you can still do the banks,
5:00 pm
just not in u.s. dollars. >> right. >> this could end up being an election cycle question. >> for now, and for after november. >> absolutely. >> phil, thank you so much. phil lebeau. thank you, carol and mike, for joining us today. that does it for "closing bell." "fast money" begins now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square. my name is melissa lee. tonight on fast, an exclusive interview with a former ceo of viacom. tom freston will be here on set. what went wrong, who's to blame and would he return as ceo. he joins us for a very rare interview this hour. plus, worried about a brexit. we may have found four stocks that could be the most vulnerable if england opts out of the european union. one mega tech stock is about to reclaim its dotcom bubble highs. why traders are so bullish right


info Stream Only

Uploaded by TV Archive on