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tv   Fast Money Halftime Report  CNBC  September 6, 2019 12:00pm-1:00pm EDT

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like a strong week up 1.8% for the s&p so far this week we're there to react to jay powell who is speaking at the snb in switzerland we'll see what he has to say >> his friends call him jerome now? >> jerome, that was the subject of the trump tweet, right? >> yes let's send it to brian sullivan >> jon, sarah modi, thank you very much. welcome to a "the halftime report," i'm brian in for scott once again job growth it does fall once again, stocks they don't care. shaking it off markets coming off a big week. get ready, fed chair jay powell set to talk again. jay powell getting ready to speak this hour about the economy and fed policy his last speech before the next fed meetinging what happens if investors don't like what they hear?
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the big week for the bulls technique up 2%. transports up more than that the semis, soaring the stocks to snap up right now. time to take on. why investors are checking into delta and american airlines. it's our "call of the day. the investment committee is ready to go, "the halftime report" starts right now and it certainly is good to have you with us on this friday. our investment comphoot is steven rice, jon neg jarron, jim lebenthal and megan. >> thank you >> we begin with the markets, all 11 sectors, 100% there in the green for the week four of them including technology up about 2% transports and some of the chip names, guys, soaring and doing very, very well. joe terranova, we talked about
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it yesterday are you surprised by how strong the market has been this week? where did this market scum after an august to forget? >> i wouldn't characterize it as an incredibly strong market. i think it's a market that finally has broken out of a consolidation range when you're talking about equity post-president trump's august first tweet, we basically stayed between 28.25. do you think it's doable, you're approaching the federal reserve. they're going to give you your 25 basis points. what does the market do with that so, i would argue the path of least resistance at this point, believe it or not is probably higher but i wouldn't lose the other components of your portfolio that have allowed you to endure the volatility, like reits, and high yield and precious metals i think they're all an important component down the stretch >> jon najarian, i got a note
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here their quandt team talking what about they do. they say the pessimistic trades in october, they're reversing course in other words, what they seem to think, so many on the elbow or trading side, actual investor, not traders, had just barreled into pessimistic trades in august. >> true. >> but they have to reverse it now. that's what we're seeing but it probably can't last for long >> i would disagree. i think we last up until at least when the fed makes its next report. >> they agree with that, they see it through september 16th through the 23rd they're oddly specific >> i wonder what happens during that time frame. >> the fed, by the way, is the 18th >> you there go, right smack in the middle i thought what we heard from the bls, the bureau of labor statistics was all good news, brian, for the way i view how this news should affect the markets. they brought in as larry kudlow
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said, 445,000 more folks in the labor force that had been on the sideline seeing that coming in, that's a big positive they would be coming in, of course, because they think that there's opportunity to make money, working rather than not being in the labor force >> megan, i've got to imagine your phones are blowing up in august, right? chaotic time you're just trying to take a vacation, leave me alone but you can't do that for your clients. what are they saying now what's the main message, what's the thing they're worried about when they call wilmington trust? >> i think it's hard not to pay attention to the headlines but that's what we're advising our clients do take a step back and not get swung around by every single headline through august, a lot happened, but at the same time, we're back where we started we have news in october which i'm sure it's escalation that
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we're seeing in the market today. but at the end of the day, we're still in our view, miles apart on a deal between the u.s. and china. and we still have this bifurcated economy where manufacturing continues its downward trajectory. and services is holding up and the consumer as well but not totally immune to it and they're starting to see some cracks, i would say the labor market report today was a disappointment, in our view. maybe good for the market, because it gives -- >> it gives powell cover >> exactly exactly. right in between there so you get the cut. >> what was the biggest disappointment in your view? >> payroll growth. if you look at year over year payroll growth it's very disappointing. >> in terms of number of people going back to work or -- >> in terms of jobs created. part of that missed expectations today. and part of that is the one-time
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boost from the census which is about 25,000 so, not a bad thing, by any means, but soft, differently >> steven weis, you kind of dug in a little bit, i think steve liesman is here around me. is the jobs number really that relevant only in the sense that everybody's working. right? you can't grow jobs -- that's 7.5 million open jobs in this country. how do we expect the number to grow -- you live in new jersey i'm sure you see like i do, help wanted signs everywhere. >> i'm not looking like you. >> well, you never know with this kind of talent. i'll probably be somewhere else soon >> yeah. >> here's the thing, does it matter as much as it used to >> absolute lit not. and that's why i ask the question, i thought there were positive things to come out of the jobs report. but i don't think it changed your position if you're bearish or bullish
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it really didn't change your view on that look, we had wage growth we always have the adjustment, so we had the prior adjustment down but it's a three-month number you're looking at. in august, as larry said, it's kind of funky. summer months are difficult, particularly august. so, i don't think the fed should go i think it's a mistake i think they're letting the market dictate what they do. at the same time, there's a weakness in the economy. >> it's not the global growth, season, or the global growth below zero with the rates. >> it's not their mandate. >> well, they cited it >> the mandate is employment and inflation. >> gentlemen, that's for the next segment >> okay. >> this, we're talking about the markets. jim, save it the dow's up 80 -- listen i'm not going to make a huge amount about an 80-point jump to megan's number, either the market doesn't care, or it believes in the fed. >> let's talk about megan, she
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said the most important thing, we're right back where we started. july 31st, we got the rate cut august 1st we got that tweet from president trump in the month of august i didn't sell, by the same token, i didn't have any money, i haven't sold anything. i'm not a trader, i'm an investor if you're an investor like me, you look at companies and you say where is the cash flow generated. brian to this point of september 16th to 23rd, who nose but there's definitely volatility. all we've got, meghan is a meeting. we're not close to a deal here you've got to buckle your seat belt >> how >> i'm glad you asked. >> amazing how that works in television >> take a look at companies buying back shares hand over fist like cisco systems. they increased it and pay a nice
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dividend and winorthrop grumman and airlines, alaska airlines has increased its dividends. those are the sort of stocks that i'm looking for to get three move the stur mouturmoil. let's get to dominic chu he's got a look at some of the under the radar names rallying in the market. >> brian, this might up the alley for meghan and jim lebenthal and those others on the desk right now aerospace defense stocks have been usually up. one of the main attracts at the ishares usair r.s. aero& defens.
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that gap is growing just a bit now, when it comes to where we're seeing the out-performance and under-performance here, it is the names that you mail not always hear about. check this out, triumph group makes aerospace components, aircraft components and systems. that stock is up 91%, so far, just on a year-to-date basis american while, the american outdoor brands, the company formerly known as switmith & wesson, handguns, that sort of thing. that's lost on a year-to-date basis. when it comes to those you know about it's interesting with the etf hitting the record high. the top-weighted most heavily weighted stocks, boeing, year to date up 13%. united technology up 26%
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lockheed martin up the record highs, guys, with boeing right here, 22% weighting, underperforming the overall index. yet, this particular etf makes a new record high. something to watch, guys, aerospace. back to you, guys. >> i know, look at you, you love that boeing. >> i do like boeing here i've traded it fairly well and i think it works we talked about it yesterday, one-month delay is not going to define the company's future going forward. i know you agree with this >> absolutely. >> it's just a duoopoly. it's remained above the fray as far as china trade deals overall market, i think we've got a pass now >> the past five days i think the opportunity has been in the overall equity indices
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themselves picking a direction which has been a breakout direction. i think overall, when you kind of pull back the lens, it's about companies outperforming within their sectors think of financials. think of underperformers of financials kkr, in the last month, incredibly strong, intut, intut the technology space and the stock in copart well above $50. in select environments, you can find opportunities look at lam research. >> you're throwing out names, i love it, that we don't talk about a lot. copart, does it say to you that stock-picking -- a hate to say -- is back you know what i mean the market seems to be recovering these really interesting names. >> well, the word i would use is
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dispersion and dispersion tends to correlate highly with liquidity. december 2018. what was the complaint the complaint was that globally, the sea of liquidity had basically grown -- contracted into a puddle. it was a puddle of liquidity we had $8.5 billion 6 investment-grade issuance. it's $70 billion just is this week alone so that liquidity is back once again. and i don't understand why people are afraid of this increase that we're seeing in issuance by corporations for corporations that have maturing debt, it's a fantastic environment. if your debt is maturing, your debt servicing cost is going to be much lower than the environment you were facing in the fall >> hey, joe -- >> i think that john deere 30-year paper at 2.9%. 30-year paper. >> we were talking about this. >> and that $75 billion is the most in a week since what, 1992?
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you know who is not coming to market, though oil and gas companies. they can't >> too bad for them. you know what this means, cash flow is being generated. that's why you get these low rates. you can't be a single "b" company and get a 2.9% rate. it's not buying back debt. remember we had this conversation tuesday the question was, would they buy back debt? who would buy back debt with a cost to capital 2.9% >> let me ask you a questionsto. >> it's never gone away. frankly, the s&p is up 18 and change how much stock do you need i'm sure every one of your clients would be happy with 18%, right? or 11% >> and the market does tend to create opportunities for it. we've talked about multiple times, fed chair jay powell,
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he's star number one, getting ready to take questions minutes from now star number 1-a, steve liesman >> not a bad billing >> you heard me, i was using your name in vain over here. >> i did >> you didn't throw anything at me i appreciate that. >> i didn't have anything to throw. >> here you go >> what can we expect from mr. powell today >> i think he's going to look at the number the way everybody at the table looked at the number there's some good stuff and bad stuff, right rising wages larry was right. i checked the numbers, 4.2% annualized on wage rates, not too shabby and temporary help on the way up and household survey which is usually the refuge of politicians when they don't like what's in the establishment, that follows but the last several months, the household
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survey has been moving further you just want to watch that. there's strength in the household that's worth watching and not entirely a political gambit right there on the other side, payrolls, we missed, coming down. they are weaker. and a downward revisions and modest private sector. i'd say this keeps me along the line what it does raise questions about is how much i do it. i think what we've seen, some backing off of the outlook of rate cuts in october and september and the rest of the year -- >> let me ask you a question -- >> you got to be quicker around here, sully. >> this used to be called "fast money halftime report. now, i know why. >> if there were tangible progress being made, do you think the fed would cut? >> probably not.
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probably not i think it -- it's a close call there, because of the inflation numbers. but the fed is going to be satisfied with stable job growth in the 130 to 150 range. it's not going to be satisfied if we're on this trajectory down where it goes and stays below 100. >> what if the unemployment doesn't change >> that would tell the fed the amount of job growth is commensurate with the supply of labor. the entrants to the workforce. >> is anybody here, i know it's going to sound insane, why not, it's friday. is there any case for rate hike? i'll tell you what, fed's mandate is what? >> stable employment and prices. >> correct >> wages, we know employment has been relatively stable, still at your point, happy at 130 to 160. wage gains i think were a
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positive, were they not? year over year wage gains. tariffs were supposed to be inflationary we've got both the mandates seemingly covered. i would push back on that, while we had inflation that's been stable, i think expectations have been pretty low and they've continued to tick down you look at a ten-year treasury inflation break-even rate, it's about 1.5% that's the lowest in 2016. if you're looking at expectations and tips break even, there's a signal there that the fed is watching, that's a reason not to get worried about the inflation. and then there's the inverted yield curve as well which i don't think they're going to cut by 50. you could make a case for needing something dramatic in order to catch up to where the market is. >> i think that's correct. there is one reason to hike or at least not to cut. that's financial stability joe and steven, we're talking about the corporate.
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there's an awful lot of it, and there's a concern among some on the federal reserve that we keep these rates low. we create the bubbles that pop that create the crises so there is a small wing of members of the fed that are concerned about the impact of low rates. >> why would they be concerned now, when in december, they were concerned about corporate credit conditions, investment grade at that point was 4%. investment grade is less than 2.8% it's been a better environment >> yeah, that's right. that's right but one of the things they look at are spreads and they like to see if investors are being rational, of course to sort of rational theory and when they put triple "b" and high yield right on top of investment grade, then they start to worry that there's a modicum of irrationality out there that perhaps suggests
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we're forcing you into otherwise, we're feeding a bubble that's a concern. so, i think that's an issue the fed is looking at here, that these low spreads suggest that there's either a reach for yield or a certain irrationality that speaks to the bubble look, this is not a predominant opinion. brian asked me is there reason to hike. i think that's the reason. i don't think that's where the fed is i think the issues that gretchen talked about are predominant >> i was going to talk about it and i thought it would draw you out, but he didn't jump in for once >> i'm immune to your charms >> you really are. >> back in a few minutes with a little bit of what powell says >> yes, powell's going to speak. here's what's coming up on "the halftime report. jon's seeing unusual activity in the options market this latest trades straight ahead. plus, come fly with me one firm says american airlines
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and delta are buys right now our investment debate it in our "call of the day." and next week, halftime hits the road we're live from san francisco. guests include dick costolo. and more you don't want to miss it starting monday. "the halftime report" is back in two minutes.
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♪ all right. it is time now for your "call of the day" berenberg sees investors soar with airlines stocks, specifically delta and american airlines, with buys today. calling for 20% upside into each american airlines is their topic. anybody around the table pick this up that thinks that the company or calculations are multiyear lows they love the fact that there's more fliers coming out of dallas and charlotte. higher than average. anybody disagree >> i do. >> but you love boeing. >> but i also own american airlines look, i used to own american
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such a small, small tag position there, that's really for tax purposes but it's been a serial performer with mismanagement so why make that bet there in the hope that things are going to change. own a delta, own a united. i don't know that much about alaska i haven't really looked at it. jim seems to like it >> delta, they got a buy rating on the stock on gains. this is what stuck to me on delta. roughly 30% of delta's domestic capacity faces no competition at airports they fly from >> that changes monthly. >> 30% with no competition >> yet, the other 70%. >> you got to understand, these stocks have been trading for the last couple of months on the basis of a recession on the basis of demand plummeting airplaning being parked in the mojave desert. they're ultra cyclical
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you sort to think that maybe the chinese will begin to fall there should be investors. the way these have sold out i don't care which ones you pick of the three, they're oversold, so they're due for a bounce. for me, i actually like alaska because it is domestic, it's expanded from regional to transcontinental and it's worked through that integration and it's now ready to really show the cash flow >> delta call that they make here, they say 3 or $400 million from credit cards. that would be an impact on the positive way for delta on the credit card side brian, that's huge baggage fees, we know that's billion-dollar business for each of these guys now. on a quarterly basis, but to have a credit card be this valuable to delta. it's amazing >> i look at the industry, i don't own it, and i look at it, in the last couple years, these airline stocks are basically in
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the same place, why is that? >> it's fears of a recession, jon. >> the consumer is strong. international is strong. >> i agree >> oil prices. what's the catalyst? >> you need a re-rating. >> guys, we've got to go, coming up 0 an a commercial break options bulls making bets on home energy. curious on this, jon plus, we're still awaiting fed chair powell in zurich getting ready for headlines. er jerome powell we'll be back. so are you feeling? on a scale of one to five? one to five? it's more like five million. there's everything from happy to extremely happy.
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there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this.
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welcome back, everybody, i'm sue herera here's your cnbc update at this hour hurricane dorian making landfall in cape hatteras earlier this morning as a category 1 storm. these pictures are from moorehead city david to you >> this is what it currently looks like right now this is the most recent update from the national hurricane center the track is going to stay off the coastline which is what we're expecting but the center
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of the storm is now off the coast. this yellow ring, this is how far off the tropical storm force winds extend through portions of north carolina as the storm continues off the coastline and weakens, it will be expanding the next couple of hours so those winds can brush cape cod as it works its way past massachusetts sue. howard schultz says he will not run for president. his presidential ambitions were widely criticized by democrats who were concerned an independent run would help president trump win a second term however, schultz said his belief that the two-party system needs reformed has not wavered >> suicide rates in the u.s. are raising especially in rural areas. a new study from ohio state area looked at data from 1999 to 2016 it shows that suicide rates jumped 45% >> you're up to date
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that's the news update at this hour brian, back to you >> tough story to hear there, sue. thank you very much. back to business home depot shares hitting at an all-time high. options traders are bullish. betting on new highs ahead jon nn najarian. >> this has been a spectacular year for home depot. what's a continued way for upside here? buy some options that's exactly what somebody did in a big way today they came in and bought about 6,000 of these calls the september 245 calls. so $15 out of the money, brian, they paid a dime for them. 10 cents that means since every option controls 100 shares of stock, that's $10 for that investment now, they bought thousands of them so it's a lot more than ten bucks, but $10, per option
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what a cheap shot. and it doesn't take a lot for those options to double. that's why they did. i joined them i'll probably be in these another two weeks second trade, take a look at ox de occidental, just fractionally high per kai anymore in a much bigger way and more expensive option. take a look at these, the calls, they came in and bought 20,000 of those these options are trading over a dollar not a 10 cent option, a bigger option and they bought many more of these options so, i bought these as well, as you can see. perhaps this was the trough for occidental petroleum >> you're betting that the an adarko deal is going to do well.
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>> jon najarian, thank you have. >> wait, two days ago i talked about yeti, the options have moved up by better than 50%. not taking off any options, but i did trim my stock today. you there go >> there you go. jon, thank you football season has kicked off and so has jim cramer's fantasy stock portfolio. stay tune for his top picks. plus, the desk is awaiting your questions you can acreh as yo you @cnbc/halftime we have your questions and answers coming up. stick around ♪ ♪ i've been a caregiver for 20 years. no two patients are the same.
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welcome back it's 12:37 here on the coast coast. time to take your questions and get some answers first up, danny in new jersey asked visa or mastercard even steven and/or joe which one has more room to run >> i'll go mastercard. mastercard basically is a little richer than visa but it's performing better than -- listen, they're both at
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all-time highs i look at the last two quarters. i look at revenue growth the average of mastercard, 7.5%. and visa, 12%. yes, mastercard is more expensive, but you're paying for the growth i'm going to say there >> have you a blind chart, say, pepsi/coke test. company "a" and company "b" -- >> is that your recommendation for danny, do a basket of each one equally weighted >> both, danny live it up >> jon, are you ready? >> i am. >> we're going to talk about a stock nobody has ever talked be about. beyond meat. buy sell or hold >> hold it right now kroger just announced they're part of a plant-based meat that they're going to back. i think there's a lot of competition for this space
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and we all know about the valuation here >> why not sell it why hold it? >> i don't own it right now. but i would hold it if i did and i'd just write some big fat calls into this thing. >> there you go. jim, you're up edward in alabama. alabama wants to know about cbs more profits on upside in cbs, not cvs. >> i own them both hold off on stocks okay that makes no sense, what the markets are saying, they fear the companies are going to acquire something else like an amc network or discovery that's ridiculous. they have enough on their plate. merge these companies, squeeze out the synergies. there's a long time before we have to worry about another merger in the meantime, combining these two companies makes it stronger. hold on to them.
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all right. as the nfl season kicked off last night, our very own jim cramer kicked off a season of his own. his annual fantasy portfolio stock. the basket of stocks make up a portfolio. it's a balance of consistent winners like an apple and microsoft. those are his running backs, if you will as well as a more speculative name like okta. cramer's quarterback is, joe, you got cloud, target, running backs like apple and microsoft, what do you think? >> i'm going right to the kicker >> like chicago's kicker >> the kicker is the one that's going to make the difference the one that's going to get us to the next playoff game we've got a canadian kicker.
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sh shopify, come on >> i want starbucks, i want chipotle i want them to be my kicker. but the rest of the portfolio, i like the portfolio >> meghan, on a macro basis. you like cloud service but that's a big space you can narrow is down for us. >> i think as we're looking more broadly at where we're positioned, we just don't think now is the time to be taking big bets sectorwise, we've tightened that way up again, that's very much related to the slowing in the economy that we're seeing. not quite recessionary some of the trade risks and all of that. within the technology, we are looking for things like software and cloud computing. again, those are more structural growth stories not as tied to more of these shorter term economic cycle. and again, within that, we're looking for companies that display that higher quality, maybe have less of that
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volatility, more exposure to help ride through this as we get more clarity >> i like the portfolio a lot. i agree, target, i think that's stellar. i think that's being reiterated in terms of the multiple but this is a portfolio because of the outside beg in this portfolio, that begs for downside protection. so, you've got to take out some of is that risk. because they're all, or most of them, are high-quality stock they're quality for the most part t-mobile, it's a beta driven portfol portfolio. i own microsoft. amazon, i own apple. >> twitter you own twitter? >> i've added twitter. >> you want twitter there? >> i want twitter there. >> you have 11 players and you want twitter on the team, really >> i'd make a substitution >> meghan, let's switch gears to
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retail we're going to look back at the last ten years and realize what's incredible, like this off-price retailers like a months or t.j. maxx, the parent company. they've made people millionaires they've outperformed almost every single stock and yet, we're talking about getting discount clothes >> right >> why have they been so incredible and why do you still like them >> well, the reason we like them, i think it's a very interesting business model and it does give optionality to that middle price consumer again, the way it works, they take inventory from your big department stores that are unsold >> by the way, they've had way troop too much inventory for years >> exactly, so they're feeding off the weakness of your big mall stores which partially an
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amazon story going forward, with the trade risks still where they are, we are going to see the next rounds of tariffs impacting the consumer more of those will impact your clothing, your apparel, footwear what that means, you'll probably have more of that inventory building up at your bigger department stores and mall-based stores all of that can be acquired at a cheaper price for your retailer. at the same time, i think if we do have more of a headwind for consumers, the consumers might be looking to downshift to lower-priced goods so that could be a very good place to ride out. stay in your consumer directi discretionary. >> they got sideways glances around the table but the run in these names has been spectacular. >> it has been spectacular
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again, it's online or off-applies. those are the two ways you want to go in retail. and if you're not in those two distinctive propositions for your customer, you've got a problem. >> yes >> well, congratulations anybody out there that bought these names years ago because you've done very, very well all right. gold rebounding today. and it's higher on the week. your trades next, ahead in "the halftime report. we're back in two minutes. i like to make my life easy. ( ♪ ) romo mode. (beep) (bang) good luck with that one. yes!
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welcome back to "the halftime report" we have been listening and monitoring jay powell, fed chair jay powell in switzerland. and he was asked about the global economy and the global outlook. here's what he's saying right now. >> by pointing out that the united states' economy has continued to perform well and is in a good place. in fact, we're well into the 11th year of this expansion, which began in the second half of 2009. it's now the longest such expansion since we began keeping reliable records and the outlook, the most likely outlook for our economy remains a favorable one. with moderate growth, a strong labor market and inflation moving back up closing to our 2% goal all that said, there are significant risks. and we've been monitoring those, including as you mentioned slowing global growth, uncertainty around trade policy and also persistently low
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inflation. i'll just make a couple of quick comments on that i think we grew about 2.5% in the first of the year. for the year, we'll be somewhere between 2% and 2.5%. that's very much driven by consumer spending which represents 70% of our economy. consumer has been strong conservative has been strong the trade has been weaker and it's in fact sideways to slightly down. it's a smaller part of the economy. by the way, that pattern of a strong consumer economy and a weaker manufacturing and trade economy is fairly common now around the world meanwhi meanwhile, our labor market is in quite a strong position for a year and a half, we've been at half century lows in unemployment we've got higher wage force participation. and wages moving up i think the market is in a good place. i think today's labor market report is very much consistent with that story and we've got
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inflation moving up to 2%. overall, we're in a good place and the outlook is good as well. part of the reason the outlook is good, is that the fed has, through the course of the year, seen fit to lower the path of interest rate that has supported the economy. that's one of the reasons why the yut look favorable one despite these cross winds we've been facing. so you asked specifically about global growth. the global economy has been slowing since the middle of let's say 2018 we see that continuing with china and germany and the eu there are many factors that are driving that trade policy. uncertainty is one of them, but it's not the only one. trade policy uncertainty will be weighing on business investment decisions and that sort of thing. so still, though, i'll wrap up by saying we see the most likely case for the u.s. and for the world, too, as continued moderate growth and at the fomc as we move forward we're going to continue to watch all of
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these factors and all of the geopolitical things that are happening and we're going to continue to act as appropriate to sustain this expansion. >> do you share this perception? >> very much, but let me say a few words about switzerland. >> by the way, that is you looking at the swiss national banker as well standing next to fed chair jay powell very quickly, he was also asked -- do you guys want to go to the next bite here? i didn't understand the instruction. he was next asked about the impact of trade on the economy and also spoke about the probability of recession in the united states. >> just by pointing out that the united states economy has continued investments in plant or equipment or software they want some certainty that the demand will be there they want certainty that there will be growth and that their supply chain is secure i think we would never comment on trade policy. we don't do trade. it's not a responsibility of the
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fed. but i think it is the case that uncertainty around trade policy is causing some companies to hold back now on investment. our obligation is to use our tools to support the economy and that's what we'll continue to do >> the recession fears, how worried should we be about a coming u.s. recession given all the talk in the media? >> so we're not forecasting or expecting a recession. as i mentioned, incoming data for the united states suggests that the most likely outcome -- outlook for the united states economy is still moderate growth, a strong labor market and inflation continuing to move back up. i went through the numbers, i'll say a little more about the labor market, payroll jobs are coming in at well above the level that new people are entering the labor market and that means that the labor market is still tightening at the
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margin by so many measures, the labor market continues to strengthen the consumers are in good shape and really there's -- our main expectation is not at all that there will be a recession. i did mention, though, that there are these risks and we're monitoring them very carefully and we're conducting policy in a way that will address them, but no, i wouldn't see the recession as the most likely outcome for the united states or for the world economy. >> thomas? >> our main scenarioor base scenario is not one of a recession either for the global economy or the swiss economy we have in 10 days our monetary policy meeting again and then we will have a new base scenario. >> that was jerome powell, fed chair speaking in switzerland as well you had a swiss central banker as well. jay powell in the middle steve is still with us i thought what the fed chair just said, the last bit of that last sound that we heard was so interesting. the labor market is still
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tightening because it's like a tale of two markets. when that number came out you had all these courses of things are weakening. powell doesn't seem to think so. >> when you have 3.7% unemployment rate, everybody at the table ought to kind of pinch themselves and say we're still talking about a rate cut in fact, 100% chance of a rate cut when the fed meets in a week i think if you said that to somebody a couple years ago they'd take you by the lapel and shake you and say snap out of it he did say the fed would use the tools necessary for the economy. you know, you could read what powell is saying either way you like hawkish or dovish. he still cease a good underlying economy. he sees good underlying growth and he also talks about the idea that slower growth, lower inflation, lower interest rates, that's the new reality, the new macroeconomic backdrop we're living through. >> i think the fed, to be fair, there's a lot of criticism of the fed, but i think the fed has an impossible job. not only are they trying to deal with the data which they always
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have they're dealing with a president who is making nearly daily attacks on them. and c, they're dealing with both brexit and everything going on with hong kong as well i do not envy jerome powell's job. >> it's a difficult job. they have definitely been i think the fed it's important to point out they've been more preemptive than in the past. they have cut rates. the first rate cut of this year was before the inversion of the yield curve between the 10 year and the 2 year that's the first time they have cut rates before that inversion. and so if there is any hope of them stemming some of this slow down, it's that they are being preemptive they are being kind of alert and not even reactive. they're being preemptive i think that one other thing i thought was really interesting was the point about cap x. what he said was that companies need clarity they just need to know the rules of the road. this is something that we found in our conversations with ceos
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of cyclical companies, industrials, materials they don't even necessarily need the tariffs to come off. they have projects ready to go, spending that they want to do. they just need to know the rules of the road. they just need the goalpost to stop moving. >> would they rather make it almost have the president say the tariffs are here for another year, period, no matter what happens? >> just to know that it's not going to escalate further. >> the unfortunate thing is nobody is going to trust anything he says it's an incomplete list. what about japan fighting south korea over world war ii reparations? what about the simmering possibility of auto tariffs on europe which would kill germany and the european economy how about political infighting here in the u.s. how about a brutal election that's going to come up and take hold in about nine months? you're right, jay powell has a very unenviable job right now. to megan's point, he's getting ahead of it. >> the federal reserve have to cut rates. >> why do they have to >> because the premise was that the tariffs were inflationary.
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steve and i talked about this. many of us criticized us they are deflationary. when you look at them on a global perspective that's why the federal reserve -- because of currency moves? >> guys, sit tight, we've got to go back to jerome powell he's making more news making headlines. let's listen in to the fed chair. >> it's low growth it's all of those things so you get in a world where the neutral real rate is low but inflation is also low. what that means if you add those two together you get the interest rate. so the implications are as i mentioned earlier that central banks will have less ability to counter act the downturn by cutting rates. typically in the united states since world war ii we've cut more than five full percentage points or as we say 550 basis points we've cut in a typical downturn now our federal funds rate is about 2.1% we won't have that ability here.
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so the implication, one implication is that we need other tools and so when we got to the zero lower bound during the financial crisis, we used quantitative easing and we used forward guidance about the interest rate and we feel that they worked although are not perfect substitutes for, you know, for the interest rate. i think one essential feature of this from our standpoint is not to allow inflation to move materially below target, because if that happens, then that will work its way into interest rates. we're very committed to defending the 2% inflation target on a sim metric basis we've seen low inflation become the case moving down you seem to get on this road that it's hard to get off of we're trying not to get on that road and actually defend our 2% inflation target where it is now. >> i think this is one of the absolutely key questions at this moment having this lower mutual rate -- >> all right
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so let's bring it back here. i think they're going to act as appropriate. that's what they said. rate cuts coming on september 18th, period, end of story. >> i'm not so sure i think it's 50/50 i know what the market is saying at some point the fed's got to say we're not going to let the market dictate what we're doing by fed fund futures. you typically have 550 to cut the downturn they don't have near that. why waste the 25 bips? >> you make a good point i'm not dissuading, that but the banking sector has no way to make money and the fed knows it needs a healthy banking section. >> that wouldn't change it. >> you're right. you'd need more than 25 bips. >> you've got 30 seconds left. go around the horn fed cut rates yes or no? >> yes. >> yes. >> yeppers. >> that's not yes. >> it is yes >> 50/50. >> you're like in the midwest,
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yeah, no that's in minneapolis. >> not even a question it's a 2 to 2 1/2% economy i'll take that given we lost manufacturing and energy. >> thank you very much we got three yeses, a maybe and a yeppers. whatever that is thanks for watching "the halftime report" have a great weekend hi, everybody. thanks, brian. welcome to "the exchange". this is the last time we will hear from the fed chief before the next meeting in two weeks. let's go down to steve who has been monitoring the headlines and bringing us the very, very late zble latest. >> jerome powell speaking in switzerland talking about the economy being in good shape. he sees the labor market as tight. he does say the federal reserve will use the tools it has to help the economy i didn't find what h


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