tv The Claman Countdown FOX Business September 18, 2019 3:00pm-4:00pm EDT
fed funds futures trading since the statement was released show that investors still think another rate cut is coming this year. on their behalf, let me ask what is going to guide fed policy to either pull them towards where the dot plot suggests no more moves this year, or keep them in plac are you reacting to data now? are you reacting to your gut feeling about what trade tweets might mean? should they just watch for jay powell's speeches to decide what's going to happen going forward? what's the fed's reaction function now? >> right. so what we are looking for through all of the data, all of the events that are going on around the world, we will be looking at the evolving geopolitical events, we will be looking at global growth, we'll be looking at trade policy uncertainty, most importantly we will be looking at the performance of the u.s. economy. we will be looking for things
that are affecting the outlook for the u.s. economy, particularly the outlook as it relates to maximum employment and stable prices. all of those things in principle can affect the achievement of our goals. it's an unusual situation, because you know, the u.s. economy itself, the largest part of it, the consumer part of it, is in strong shape. the manufacturing part, less so. but overall, you have seen an economy that i think generally forecasts show growth similar to our own forecast coming at about 2% which is a good solid year. so the difference here is we have significant, really, risks to that outlook from not just the geopolitical events but also from slowing global growth and trade policy uncertainty. we will be looking at all of that and also financial market conditions and how they are affecting the outlook. i can't -- it is -- it's a challenging time. i admit it. but we really have to be open to
all those things. we're not on a preset course. we are going to be making decisions meeting by meeting as we see this, and you know, we'll try to be as transparent as we can as we go. reporter: chairman powell, with the rate cut today and potentially another modest adjustment coming down the road, do you worry about lessening the fed's firepower should there be a recession and is there any scenario in which you would envision rates drifting lower into negative territory, and are there any other tools you could use before having to go there? thanks. >> you know, in terms of firepower, i think the general principle as i mentioned earlier is it can be a mistake to try to hold on to your firepower until a downturn gains momentum, and then there's a fair amount of
research that would show that that's the case. now, i think that principle needs to be applied carefully to the situation at hand. what we believe we're facing here, what we think we're facing here, is a situation which can be addressed and should be addressed with moderate adjustments to the federal funds rate. as i mentioned, we are watching carefully to see whether that is the case. if in fact the economy weakens more, then we are prepared to be aggressive and we will do so. if it turns out to be appropriate. you mentioned negative interest rates. so negative interest rates is something that we looked at during the financial crisis and chose not to do. we chose, after we got to the effective lower bound, we chose to do a lot of aggressive forward guidance and also large scale asset purchases. those were the two unconventional monetary policy tools we used extensively. we feel that they worked fairly well. we did not use negative rates. and i think if we were to find
ourselves at some future date again at the effective lower bound, not something we are expecting, then i think we would look at using large scale asset purchases and forward guidance. i do not think we would be looking at using negative rates. i just don't think those will be at the top of our list. by the way, we are in the middle of a monetary policy review where we are looking through all of these questions about the longer run framework, the strategy, tools and communications and we expect that to be completed sometime around the middle of next year. reporter: how much can you talk about the mechanism which the two rate cuts will affect the real economy and how much, to what extent will it offset the negative effects of the trade uncertainty and tensions? >> so in terms of how our rate
cuts will affect the real economy, first, we think monetary policy works with long and variable lags. the real effects will be felt over time. but you know, we think that lower interest rates will reduce interest burden for borrowers, so that interest-sensitive things like housing and durable goods and other things like that, cars, it supports purchases of those. just again, broadly, mor accommodative financial conditions, higher asset prices. that's the models and data show that that's another powerful channel. i also think there's a confidence channel. you see household and business confidence turn up when financial conditions become more accommodative. so i think through all of those channels, monetary policy works. it isn't precisely the right tool for every single possible negative thing that can happen
to the economy, but nonetheless, it broadly works. and you know, we are going to use the tool we have. if it comes to it, we will use all of our tools. so that's how we think it works. and how we think it's working. reporter: [ inaudible ]. >> it's very hard to say. it's tough to say. we'll use our tools to offset negative -- that's really the job of monetary policy, to the extent it can, to offset, you know, things that drive us away from maximum employment and stable prices. reporter: nancy marshall with marketplace. chair powell, you worry that the low interest rates are adding to or could create a bubble of consumer and corporate debt that could make it more difficult for especially consumers to recover from the next recession or survive the next recession? >> you know, so if you actually look at households, households
are in very strong shape. they are less levered, they have less debt, they have more income relative to their interest requirements and they are in very good shape, much better shape than they were in before the financial crisis. so the household sector as a sort of aggregate matter is in very good shape. that doesn't mean that every single person in the household sector is in good shape, but overall, it's really not a concern. the business sector is something that, you know, we have talked about a lot and studied a lot, and the situation there is that the level of debt relative to gdp in the business sector is at a high level. however, so is the size of the business sector. so actually, the business sector itself is not materially higher leveraged than it was. nonetheless, there are a lot of highly levered companies. that's the kind of thing that happens during a long cycle when there aren't downturns or now
into our 11th year, you get, you know, you do get that kind of phenomenon in a long cycle. so that's something we are monitoring. i think our view still is that that's a real issue but what it really represents is a potential amplifier of a macro economic downturn. it does not have the makings of anything that would undermine the working of the financial system, for example, or itself create a shock that would turn the economy down. it's more of an amplifier. we take it very seriously, though, and you know, we're monitoring carefully. we are actually looking, the financial stability board is actually conducting a project right now to identify where these loans are held all around the world. it's the subject of a lot of study and work. we are trying to keep on top of it. reporter: thank you, chairman powell. i'm kind of hearing two things from you.
you are saying that the economy is doing well, but there's this sense with people that the economy is actually starting to slow now, and people are more and more, there's talk about recession. and even the fed thinks the downside risks are rising. so is the economy over the next year, between now and the end of next year, you think gdp growth is going to hold steady and the unemployment rate, could you talk about just, how do you see the economy evolving over the next year? >> i think and my colleagues and i i think all think that the most likely case is for continued moderate growth, continued strong labor market and inflation moving back up to 2%. i think that's, by the way, widely shared among forecasters. you know, the issue is more the risks to that. you have downside risks here and we have talked about them. it's that global growth will have an effect on u.s. growth over time, less so than for many other economies but still, there's a sector of our economy
that's exposed to that. trade policy uncertainty also has -- apparently has an effect. and you can see some weakness in the u.s. economy because of all that. but nonetheless, so the job of monetary policy is to adjust both to ensure against those downside risks but also to support the economy in light of the existing weakness that we do see. so as i mentioned, we're not -- we don't see a recession, we're not forecasting a recession, but we are adjusting monetary policy in a more accommodative direction to try to support what is, in fact, a favorable outlook. reporter: and the inverted yield curve that we hear is the bond market signaling recession, is that -- so that signal is not pertinent to you? >> we do, we monitor the yield curve carefully along with a large, wide range of financial
conditions. we don't -- so it's not -- there's no one thing that is dispositive among all considerations. the yield curve is something that we follow carefully. and again, based on our assessment of all the data we still think it's a positive outlook. the thing -- so just to talk about the current situation, you saw the long-term rates move down a whole lot and then retrace two-thirds of that move in the space of a few days, so i think what really matters for all financial conditions generally is when there are changes, material changes that are sustained for a period of time. but why are long-term rates low? there can be a signal about expectations about growth there, for sure, but there can also just be low term premiums. for example, it can just be that there's this large quantity of negative yielding and very low yielding sovereign debt around the world and inevitably that's
exerting downward pressure on u.s. sovereign rates, without really necessarily having an independent signal. nonetheless, that is a signal about weak global growth, probably, and weak global growth would affect us. so global capital markets and the global economy are quite integrated. so this is something we pay careful attention to. we are not going to be dismissive about the yield curve. i think you can tell on the committee, there's a range of views. there are some who are very focused on the yield curve, others, not so much. from my perspective, you watch it carefully and you know, i think you need to be asking yourself a lot of questions if the yield curve is inverted as to why that is, and how long it's sustained. reporter: hi, chairman powell. paul keernan from dow jones news wires. you mentioned an ongoing complicated discussion.
what is your rule for stopping, as far as interest rate cuts go? you referred to this as a midcycle adjustment, the median dot suggests no more rate cuts but you know, if we get continued kind of -and-forth between the u.s. and china trade policy uncertainty is going to remain heightened so you know, under what circumstances would you say i think we've cut enough, we stop now? secondly, as leader of this institution, have you felt the need to take any steps to boost like employee morale at a time when the president is constantly criticizing the fed? thanks. >> you know, i would love to be able to articulate a simple straightforward stopping rule but it's really just going to be when we think we have done enough. our eyes are open, we are watching the situation. we have cut rates twice. we have moved really through the course of this year as i
discussed, and you know, we see ourselves as taking actions to sustain the expansion and thereby achieve our goals. if you look at sort of the things that are happening in the economy, i think i personally see a high value in sustaining the expansion because we really are reaching this positive economy is reaching communities that haven't been reached in a long time. there would be great benefit to having that last as long as possible, that's al so i don't have a specific stopping rule for you. i think we are watching carefully and there will come a time i suspect when we think we have done enough. there may also come a time when the economy worsens and we would then have to cut more aggressively. we don't know. we are going to be watching things carefully. the incoming data and the evolving situation and that's what's going to guide our guidance on that path. in terms of the morale of the institution, i would say it's very high. we are very unified. we feel like we are doing the best job we can serving the
american people. reporter: hi, chairman. it's been reported that the cfpb is investigating bank of america for opening unauthorized accounts. i'm wondering if the fed is also investigating this and given the pending order against wells fargo, if you are concerned that these banks are too big to manage? >> you know, i saw the headline like this morning during all of the preparation and everything in this morning's meeting. i really don't have anything for you on that. i will say about wells fargo that you know, there were quite wide breakdowns in risk management which resulted in mistreatment of consumers that we know was quite harmful to the consumers, and to the image of the institution. i have no idea whether that's what happened at bank of america. i really don't know standing here today.
reporter: steve beckner filing for npr, freelance. the fed and your fellow central banks have been sort of exploring the far reaches of what's possible for monetary policy, even going so far as to make rates negative in some cases, with mixed results. meanwhile, fiscal and regulatory, not to mention trade policy, are pursuing their own separate courses. as you and your colleagues do this monetary policy framework review, do you ever consider limitations of monetary policy, should you be more explicit about what monetary policy can and cannot do? in this environment? >> you know, we try to be clear about that, but really, i think
our job is to use our tools as best we can to achieve, you know, to do the jobs that congress has assigned us, which is achieve maximum employment and stable prices. that's our real job. in terms of giving fiscal authorities, who by the way, are the ones who created us, advice about how to do their job, you know, we keep that at a high level, i think, and at a high level, yes, i would say and i have said before that it's really fiscal policy that is more powerful and that has much more to do with -- fiscal policy can do those things that will increase the longer run growth rate of the united states by improving productivity and labor force participation and the skills and aptitudes of workers. all of that comes from the private sector but also from more the kinds of things that can be done with fiscal policy. over the long run, we can't
really affect the growth rate of the united states, the potential growth rate of the united states is not a function of monetary policy. it's a function of other things. so i try to be clear about that, and so -- but ultimately, fiscal authorities will do what they deem appropriate. reporter: mr. trump has been a very vocal critic of you and your colleagues, recently calling you boneheads and just now, has called you a terrible communicator. how do you respond to these criticisms and any regrets to have this many press conferences? >> i don't. i'm not going to change my practice here today of not responding to comments or addressing comments made by elected officials. i will just say that i continue to believe that the independence of the federal reserve from
direct political control has served the public well over time, and i assure you that my colleagues and i will continue to conduct monetary policy without regard to political considerations. we are going to use our best judgment, based on facts, evidence and objective analysis and pursuing our goals, and that's what i have to say on it. reporter: brian chung with yahoo! finance. thanks for taking my question. as we saw with falling yields, there's been a lot of demand for u.s. treasuries and even that was maybe partly to blame for the liquidity crunch in repo markets we saw this week. does the fed have concerns over the impacts of a global glut for u.s. debt? is that a conversation that you also have with treasury secretary mnuchin about what the proper way to maybe address some of the challenges down the road with that type of kind of heavy interest globally? >> not really.
no. that's really treasury's job and congress's job. in terms of how much to spend and how big the deficits are and how to finance it, none of that really calls for advice from the fed. we take fiscal policy pretty much as exogenous to our work. now, that doesn't stop us from time to time from saying that we think it's important that the u.s. fiscal picture return to a sustainable footing, and you know, right now it's not. that's been the case for a long time. and that's something we will have to address and a good time to do it is when the economy's strong. we limit ourselves to high level statements like that. reporter: heather long from "the washington post." mr. chairman, in your view, is there any risk to the united states having much higher interest rates than europe and japan and other parts of the world? is there any risk to the u.s.
economy to that divergence or any risk to the global economy? >> i guess i would say it this way. global capital markets are highly integrated and you know, our rates, our long rates are definitely being pulled down by the very very low rates that are abroad. the way i would characterize it is this. low rates abroad are a symbol or a sign, rather, of weak global growth. expectations of low inflation, low growth and you know, just kind of a lack of policy space to move against or ideas about how to break out of that low equilibrium. that has implications for us. in a world where economies and financial markets are tightly integrated, that matters for the u.s. economy. so that's going to pull down u.s. rates and u.s. financial conditions can tighten because of that, and so i think we put,
all of that goes into our thinking and into our models. we do understand how the international sector interfaces with the u.s. economy. we take that into account in setting our interest rate policy. thank you very much. liz: well, one market mystery solved but a bunch of others popping up in its place. markets are moving all over the map but persistently stuck on one side and that would be in the red. folks, let me make this very simple for you. here's what happened. the federal reserve just made borrowing money cheaper, less expensive. they cut the benchmark interest rate by a quarter of a point to 1.75% to 2% but there's some serious news that the federal reserve chief jay powell just made. he just said during the q & a that he and his committee voted 7-3 to cut rates by a quarter point because they want to quote, keep the economy strong.
note, he didn't say make the economy strong. he said keep it where it is. which is strong. he also said they wanted to do it to protect against risk which he very pointedly said was due to the trade war. we want you to look at the intraday picture of each of the major indices. you know, it was kind of fascinating. the runup was basic, it plateaued. then you start to see stocks acting like a pulse, quickening specifically around 1:58 p.m. eastern when jay powell showed the first sign of dovishness, meaning the indication that he might consider doing something more to prop up the economy. during the press conference, he said quote, we will revisit the question of when to grow the balance sheet, meaning the fed will start stimulating the economy by purchasing bonds and all kinds of things and that that could come sooner rather than later if the federal reserve starts to see more problematic risk. let's get to some of the most outsized reaction. treasury yields, they turned
highut what was interesting was that the ten-year yield which has been about 1.75% moved higher to about 1.80%. we will show you in a minute how the shorter end also started to go higher, almost catching up at one point to the ten-year. gold, complete opposite. it had been higher by a couple bucks, then spot gold dropped, plummeted, and is down by $19.50. why? because gold is usually a hedge against rising inflation. he made it very clear, we don't have inflation. and look at the u.s. dollar spiking. the u.s. dollar hit a seven-week high specifically against the yen which in a way has sort of been a flight to quality. the japanese yen. right now you can see all currencies lower against the u.s. dollar, the greenback strengthening. all right. let's bring in some smarter people than the rest of us here. former federal reserve insider, jeffreys chief financial economist ward mccarthy and chief economist steve richutto.
on the fed, you just last month sent an open letter to the fed that said, we can show it on the screen, dear chairman, start printing money and stop targeting interest rates as a policy tool. as we show that on the screen, you have to tell me, steve, did they or did they not listen to your advice? >> not fully. they are leaning towards it over time, i think, but at this particular juncture i would have to say categorically they have not gone far enough. liz: why not? >> because they don't really understand, they keep on talking about the growth story. the growth story is not the issue. the real story facing the u.s. economy is basically deflation risk scenario. that's the real critical issue. that's what's happening at the long end of the curve. not the growth story. the yield curve flattening has nothing to do with the growth story, more to do with global deflation and the concern that i have that we are going to import that which is what's happening with the rising dollar. liz: all right. we can show the dollar, we can show the markets. i just want to let our viewers
know that right now, dow jones industrials is down 65 points. it had been down 200 points. here's the yield curve. as i said, when we started off, the ten-year was 1.75%. now it's at 1.80%. the two-year started spiking, now it is above where the ten-year had been, at 1.77%. let me get to ward mccarthy. forget the numbers for a moment. what jumped out at you in anything that fed chair jerome powell just said? >> well, jerome powell was trying to tell us that yes indeed, these rates are a midcycle adjustment, the fed is not in a race to zero. that was the primary message. as a responsible fed chairman, he also pointed out that you know, this is not set in stone. should the economy deteriorate, then the fed would start lowering rates once again. but right now, the economy is in good shape. we have more people working than we ever had. the lowest unemployment rate in
50 years. we have seen very strong consumer spending and a rebound in housing activity as well. so right now, the u.s. does not need further rate cuts. so he wants to leave something in the arsenal in the event that rate cuts are needed in the future. liz: okay. what about that, steve? rate cuts. i'm looking at an economy, you have to tell me because on your screen, retail sales, look at the july number, we had july spiking considerably, .8%. we have got a very strong consumer who is basically like atlas, he or she has got the world on its shoulders for the u.s. economy. is atlas going to shrug? doesn't look like it. >> i like the quote there but no, i don't think that's going to happen. industrial production numbers the other day drive that point home. the housing starts numbers today. liz: a 12-year high. why then cut rates? >> again, that's the mistake. they are responding to the yield curve and not understanding what the yield curve is telling them. what the yield curve is themmel
them inflation expectations are declining because japan is stuck in deflation, europe is moving towards deflation. that's a substantial portion of global gdp, 30%. take food prices out of china which is another 16% of global gdp, you border on deflation in china as well. liz: ward, i'm looking at the markets. we want to let our viewers know because we know we have people sitting in the car listening on sirius xm channel 113, dow is down 57, the s&p down 9. it had be down 17. the nasdaq is down 40. it had been considerably lower as well. we are still stuck. what doesn't the market like about what happened right now? >> well, what the market was not happy with was that there was no promise there would be additional rate cuts. jerome powell has made it conditional on performance going ahead and again, on market expectations, the fed has been trying to manage them in recent weeks away from this idea that this was a race to zero.
i think they did it in a very compelling fashion, both with what jerome powell said and also what was in the dot plot which basically said one more might be on the table but that would be it. liz: okay. we have good economy, good consumer, good housing starts. let me just play what jerome powell said and we pick out this sentence, folks, because we were sitting here listening very closely, as the one thing that got the markets up off the floor. listen. >> it is certainly possible that we will need to resume the organic growth of the balance sheet earlier than we thought. that's always been a possibility and it certainly is now. liz: steve, put that in plain english for us. >> well, the concept of an organic growth in the balance sheet means over time as the economy grows, the balance sheet has to grow. one of the mistakes the fed made when they were trying their normalization, they forgot to let the balance sheet grow organically. that's why you have had the situation you've had in the
financial markets. they have taken too much liquiditut of the system and got caught with their in it. liz: we woulde ress if we didn't show t tweet president trump put out the second the announcement pretty much was out there. again, he has been very verbally harsh on jay powell, who was asked about this, and he specifically remained extremely calm but seconds after the announcement, president trump tweeted jay powell and the fed fail again, no guts, no sense, no vision, a terrible communicator. your gut reaction on that? >> well, i think the tweet is unfortunate because i think powell did a very good job communicating today. and the fed -- liz: can i interrupt you there? i'm not sure he had a good answer to the questio about the so-called repo rate gyrations over the past 48 hours. i have a good hold on what happened with this overnight rate that suddenly spiked in a crazy way and we watched it a year ago. were you not watching 48 hours
ago? >> i think it's a situation where you had a number of factors happen at the same time. corporate tax debt, the settlement of treasury auctions and probably also something related to saudi arabia pulling cash out of the market. but i would agree with you, he kind of soft-pedaled that situation. i think the fed should have been better prepared but the lesson from this is that they will be better prepared going forward for this and they will be adding reserves upon any kind of date, settlement date, month end, quarter end, when they t they could be upward pressure on the rep ochl rao rate. the thing about this, it makes -- liz: hold on. you have to say what it means to people. >> it's a rate the fed wants to replace libor, the london intrabank offer rate, as an index for the market. it's a substitute. in this latest case, libor with
very little change, actually went down a little bit. there were problems in the repo market so the fed has to fix that if indeed they are going to use it to replace libor. i'm not sure they can totally fix it. liz: guys, thank you. let's see if jay powell will listen to your next open letter. >> there's always hope. liz: we will see what steve has to say to the fed the next time around. of course, ward mccarthy, thank you. the dissenters, there were three of them. this is fascinating. we had the boston federal reserve chief and of course, the second one, esther george of kansas city. both did not want to see rates move at all. they felt the economy is decent enough. but this is what as we showed traders at the moment what's important to say is that the third dissenter, uh-huh, the third dissenter, james bullard of the st. louis federal reserve, he dissented because he
wanted to see a 50 basis point cut. much bigger, much more aggressive than what we got. it was a quarter point cut. to our floor show traders. teddy weisberg, to you first. what kind of flows are you seeing on the floor when this announcement was made and during the q & a? >> i think the q & a is always a little more interesting. i don't think what he said was unexpected. i guess there were some folks that were disappointed, they wanted to see a bigger cut. the market did sell off, we were down 200, as you pointed out earlier. but now, we have been climbing out of that hole. we are down 18 with about 20 minutes to go in the trading session. who knows, you probably have a decent shot at closing positive on the day. i don't think anybody heard anything that they found particularly disturbing. at the end of the day the fed is still the 800 pound gorilla in the room. personally i think they're right on target and doing a good job. liz: did you see jpmorgan, up more than a percent.
here's what's doing well. it's the financials that are leading the charge here. goldman's right there, up .6%. there are other big names. apple, very nice at the moment. the dow jones industrials, look to the right of the screen, now down just 17. we just blew out the earlier high which is still below, this is the high of the session, now down 14, 15, wavering around. keep your eye right with us, it may go posit scott, what would get us there? >> you know, i think like teddy said, we are going to see some buying into the close here because the market, the psychology of the market withstood just the quarter point. i'll be honest with you, i was hoping they weren't going to lower rates at all and we would have seen a nice 2% to 3% selloff on a big overreaction because that would have been such a massive buying opportunity. as jerome powell underscored -- liz: positive. >> -- he does not see a recession. there you go.
he does not see row sessiecessie horizon. yes, you had dissenters, but you had two of the ten saying no cut at all. if you just look at the data and see what's going on here, we don't need to catch up with the rest of the world. the rest of the world needs to catch up with us. liz: luke, there is another mystery that popped up. i said some mysteries are solved. we know the quarter point cut. the mystery that popped up is what happens in 2020. we know that most of these people felt that -- at the fed, this year, but they would rate not forecast for 2020. unless i missed something. >> the reason they can't forecast it is because they don't know what's going to happen with the trade war. look at what happened to fed ex this morning. that's a good leading indicator. business activity is down. and the ceos have an excuse to sit on their hands and say we don't know what tariffs we're going to have, i'm not going to put in an order i will get delivered on nine months from now and know whether i can bring it in, whether or not i can send
it out, how much extra i will have to pay or not pay. they are sitting on their hands. you see what happened to fed ex. liz: down 12% right now. >> yeah. i think last i saw, it was down $15 or something. it was taking quite a hit. it had been down lower. but this is my biggest pblem. the fed has made it more profitable for compani buy back stock and do financial engineering than do expansion. if apple wouldn't do its buy-backs it would probably be around 20% to 25% lower. liz: really. that was always the question. hold on. that was always the question, was the fed and these low rates almost covering up real mark to market value, were they really marked properly and would they all be, many of these high flyers, much lower. we've got to run. thank you. we are now up seven points. the s&p is down just two at the moment. if you follow me on twitter, hours ago i said doesn't matter
what the markets do, right at the announcement, it's what they will do after the q & a and sure enough, we have erased more than 200 points of losses. let's look at the markets, each moment. again, we should look at the transports. the dow transports, these are th railroads, airlines and fed exes of the world, they are not looking good at the moment because they are taking it on the chin just as luke pointed out, due to the fed ex and that is the biggest drag. he said he saw it down 15 bucks. it's now down $22. oil is also lower. the oil complex down about 2% or $1.20, $58.15. saudi arabia appears to have discovered something like 17 to 25 unmanned aerial vehicles that did not stay up in the air during that attack on saturday night, on its oil fields. what do you have? you have oil at the moment moving lower so they can figure out exactly who they believe did this and yes, they are pretty much pointing to iran. let me get back to fed ex.
fed ex is dropping after the company specifically slashed its 2020 profit outlook as the trade tensions and the end of its cargo delivery contract with amazon back in june is apparently taking a bigger toll than amazon anticipated. ups is getting tainted by amazon's problems so at the moment, ups is downercent because of fed ex's profit rning, unfortunately for ups. let us go to media and high tech. roku and netflix, look at these shares. roku is dropping 14% and netflix, down 2.5%. the companies face even more streaming video competition than just apple and disney over the past couple days. comcast announcing it is getting internet only customers a free device and they stole a page out of apple's book, a free device which will stream services on a television set. maybe like similar to a firestick. so we have comcast moving higher by just a half a percent.
let's look at facebook. it's flat to slightly lower after announcing its $149 portal tv devices which support video calls that get streamed to a tv set. then allows users to watch various programs. let us get to this breaking news. warren buffett protege and ceo of one of his companies, the pampered chef, is leaving. her name is tracy britkuhl. she will be leaving berkshire hataway. she went to harvard business school, was a superstar there. she's done. this is odd. most people don't leave. she says she's leaving at the end of march to start her own investment firm. she describes it as a berkshire but she wants to acquire companies she sees that are long-term plays but much smaller and too small for berkshire to buy. she joined about ten years ago
to berkshire and she basically was put in charge of some of the most difficult-to-run companies. benjamin moore paints. the pampered chef. she was on the board of kraft heinz. can we show khc? that company since she's been on the board has been a disaster. i am not blaming her. it is at $28.31 and just two days ago its second largest shareholder sold 75 million shares or something like that on the open market at a discount. real problem there. she says she will stay on the board of blue apron. as we look at all that's happening, we have you individual stock stories. let's get back to the big picture. fed chair jerome powell also said the economy is still growing at a healthy pace with a strong job market and rising consumer confidence, and no sign of recession. edward lawrence was in the room during that q & a, joining us
now from the federal reserve. gee, why did we have to -- aren't rate cuts supposed to be for difficult times and recessionary times? reporter: you know, these are fun times to be covering this federal reserve. you talked about 2020. quickly i want to go back to something you asked earlier about forecasting for the rate cuts in 2020. i have the famed dot plot with my notes on them right here. in this, it says they are basically one federal reserve vote away from a rate cut in 2020. so they are very close to that point where there could be one cut in 2020. at the moment the fed is not forecasting a rate cut in 2020. interesting, the federal reserve chairman basically said he didn't want to hold his firepower until an economic downturn pulls the economy down and then it's too late. very interesting. the fed is not forecasting another recession as you had said there. i talked about the uncertainty related to all of this. in fact, i was asking him about the trade uncertainty and that's one of the themes that went
through this. listen to what he said about looking through the volat of that trade uncertainty to forecast their path forward. listen to the fed chairman. >> trade policy's not the business of the fed. it's the business of congress and the administration. so why are we talking about it. we are talking about it because anything that affects the achievement of our goals can in principle be something that monetary policy should take into consideration and our discussions and the research we have suggests that trade policy is something that's weighing on the outlook. i point it out in recent remarks that the thing we can't address really is what businesses would like, which is a settled road map for international trade. we can't do that. we don't have that tool. reporter: but he says they are trying to work through that. he does also see that the economy is going to continue to grow, the fed forecasting 2.2% by the end of the year. he said already, they are growing gdp at 2.5% over the first half of this year. back to you. liz: good to see you.
thank you very much. okay. what we just showed you all was sort of immediate reaction with fox business's edward lawrence, who was in the room there at the fed. our next guest is the so-called smart money. he used to run cantor fitzgerald and he is ready to give you the trades. sean matthews joining us live from his trading floor area. okay, which asset class were you watching most closely at 2:00 p.m. eastern when the announcement that the fed had cut rates a quarter of a point, which one were you watching most closely? >> right away you look at copper because that's a barometer of what global growth expectations are and the yield curve, to see if, perception was they were either going to be behind the curve if it flattened or if it steepens, people thought that he was in front of the curve. the curve flattened four basis points or so so it's not a big deal. copper went down a little bit. i think the marke is gyrating
around trying to figure out where we sit as an economy. i think there's an underlying bias to being long equities at this point, so that continues to be the theme in place. but the real kind of, you know, activity that's going on is going on in the treasury market, in the metals markets, where people are really trying to figure out what's happening as well as the currency market. liz: tell me what you were buying ahead of this and whether it worked out for you. >> well, i think when you look at the curve, the curve is a place where you are always trying to participate in, you know, once the news came out we actually had a [ inaudible ] and took it off very quickly so we didn't get hurt which was good. but i think looking forward, it will be about trying to buy dips in copper, when you think it gets to a reasonable level. i think silver has some properties that are going to be attractive, especially if people think that you're perceiving to be behind the curve, if the fed
is. it really depends what happens in europe as well. because the bond markets in europe rally pretty aggressively today. liz: by the way -- can i just interrupt you -- the s&p has now just turned positive, folks. s&p had been down 17, around the low of the session. now we are across the board at session highs. the dow jones industrials, up 50 points and climbing. so you could almost say that the markets survived this. they survived the disappointment of the quarter point cut they had wanted, if you could say that, they wanted a 50 basis point cut but we don't need that, correct? >> are you talking about the equity market. again, there's a bias there. it's a discounting mechanism. if you believe inflation expectations are going to stay low, so they are going to not be as aggressive easing, then all of a sudden, you can discount at a lower interest rate for a
longer period of time so that gives equities kind of an underlying theme to it. i still think q3 and q4 earnings are going to be pretty poor and it's going to be something that has to be worked through. still, everyone's looking at it saying okay, if i can discount back at 2% or less on the ten-year that means i can have multiple expansion even if earnings are flat. liz: what's your favorite trade right now? that's what i want our viewers to hear from somebody like you, who has worked on trading floors his whole life and seen other things beyond equities. we just had tracy maitland on from advent capital talking about corporates, convertible corporate bonds, convertible bonds. he says it's sort of an unloved area that actually protects you, you win by not losing. where are you winning by not losing? >> i think there's a bias right now that everyone has piled into the u.s. dollar. i think the dollar is going to show some weakness because europe is now talking about
fiscal policy hasn't particularly, you know, been in play but it's going to be in play. all of a sudden, as they start to work through their governments as opposed to monetary policy, you will get some upside there. so i think the dollar is probably peaking oight here. liz: seven-week highs at the moment. >> i'm sorry? liz: you would short it? that's interesting. it's hitting seven-week highs against the yen. it's certainly higher against the euro. the uk pound is just slightly moved above the dollar. go ahead. >> i think you have to be somewhat, you know, understanding where your exit and entrance points are. as we look at the dollar, i think the dollar is going through a topping process and once it starts to put fiscal measures into place, europe, i think you will see there are some interesting opportunities there. so the world economy growth will not survive if the dollar gets really strong. all right? i think there's an understanding that the dollar can't continue to go up and everything's going to be fine. i would look to short the
dollar, certainly. i think long duration rates in sovereign entities are completely overpriced. i think there's a bubble in the fixed income market that will have to work its way out at some point. so you want to be short duration, especially long duration, and look for the dollar to come down. liz: thank you. the shorting the dollar maybe which is in direct conflict to your former boss, who on this show said he loves the dollar. sean matthews, thank you so much. charlie gasparino is up next. don't go away. the dow, up 20. the s&p just flat at the moment. this is a horse race 12 minutes left. imagine a world where
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business. but the newest kind of hot topic is about privately traded shares, as tech giants like slack and palantir stay private much longer. look how long it took uber. regulators are looking to give retail investors access to pre-ipo company shares. charlie gasparino is here with exclusive details about the measures. >> we got a good scoop here on creation of certain funds that maybe investors can get involved in to get these pre-ipo shares. one issue i want to bring up. talking about srting t dollar. very risky right now. he's a smart guy and i don't doubt his long-term prognosis. the dollar has got to come down. but if you know anything about financing markets across the globe, how companies finance their operations, how chinese companies finance their operations, a lot of it involves the repo market. it's a short-term borrowing market. liz: overnight repurchase agreement operation. >> in order to get money in, you give someone collateral.
that collateral that you give them is often treasuries. those treasuries are denominated in dollars. that's why there's a need for treasuries out there. that's why the yield curve is flattening, one reason. it's also one of the reasons why the dollar is up. that situation is not going to go away for awhile. just be real careful if you think of going out and shorting the dollar. liz: thank you, mr. gasparino. >> sorry for the little economics lesson. what we have here now is the s.e.c., jay powell and commissioners, are talking about some sort of an investment vehicle like a mutual fund or hedge fund, where small investors can get access to these private companies. right now the private companies, only accredited investors and institutions can buy. what's an accredited investor? someone with a million dollars or someone that makes over a certain amount of money, is pretty rich. average investors cannot get access to these pre-ipo shares.
what clayton is saying is listen, look how good uber did pre-ipo. right? look how bad they did post-ipo. small investors were left out of the pre-ipo runup of uber. that carl icahn made a ton of money on. let's figure out a way to open that up, do some sort of diversified portfolio that allows them to get in this that we sort of, we have to change some rules. there's a lot of work to be done on this. this is like getting into the guts of securities laws, allowing small investors access to something they haven't been allowed access to. but if they do this, it's a big thing. from what i understand, we spoke with john coffey. he said the s.e.c. is talking about this. they are thinking of various ways to create a sort of fund vehicle that youan get involved in these private shares and if that happens, pretty big story. liz: charlie, thank you very much. on a busy day. we've got the big story of the fed but more importantly, what's moving and how can you make
money in these last six minutes of trade? that's when the closing bell rings. as we look at the markets at the moment, we are joined by gibbs wealth management president erin gibbs, etf trends.com publisher global trends investment president, tom lydennis there, too. erin, give it to us straight. what do you think, knowing what the landscape sort of is at the moment, because they didn't give us much clarity on rate cuts next year, where are you putting your money? >> one of the things, even though we're not clear about when or how many rate cuts, i think we are still going to be in a period where we are going to see at least one more cut. in those periods, particularly ever since july, high dividend yielding stocks, large caps, have done well. i think if you invest in a diverse high dividend yield s&p 500 dividend etf, those are going to be good bets for over the next six months. they also provide a certain amount of safety while we have these trade war and tariffs
circulating in the backgrnd. liz: by the way, the instasmall midcaps have the least exposure to international clients, customers and gyrations, right? >> exactly. liz: you are looking at, for example, dividend winners, blackrock, broadcom. guys, we have it on your screen. what you get paid just to wait. lockheed martin. that brings me to tom. she mentioned the etf but which etfs look attractive to you right now as the etf guy? >> well, as we were just talking about the fed, when you look overseas, there are some great opportunities in foreign equities, for sure, especially if the dollar comes a little bit higher. we get a stronger dollar, it's forced the valuations down in a big way. however, here in the u.s., a lot of money has been going into longer duration bonds and actually less credit quality bonds, into corporates and into high yields, where we are probably going to have one or
two more rate cuts going forward. so last year it was a whole different story where rates were tightening, we were in a credit squeeze to a certain degree, then during that period of time, everyone shortened up duration. now it's safe to go longer in duration and lesser credit quality. we see billions that have been going into high yield and corporates right now. liz: look who we have in the chair to join the conversation. steve ott with 80 quadrillion in assets under management. anything that jerome powell said or did, did it surprise you as he cut just a quarter of a point? >> it didn't surprise me. i was hoping he would do 50 and he would start talking about expanding the balance sheet again, at least organically. i thought that would cause the market to go up. i know he's going to do both those things over the next couple of quarters. i think everyone else does, too. so the market has settled itself out here, realizing sooner or later we will go there. this is a good environment for
equities. you've got rates coming down, the long-term bond yield has come off in the last five years over a percent. there's been no move up in valuations on equities because people are worried about a recession that's not coming. so as we get through the end of the year we are thinking there's another leg up here in stocks. liz: really? because we have already gone to an >> we're in a a secular bull market. we're buyers on dips all the way through. that is our view. liz: erin is now the time for the dividend plays? i say that there are point where it is super popular trade. not everybody should follow the her, what makes them this moment in time the place to be? >> one of the reasons is even though we've seen this big runup, particularly since the july 31st cut, they're still not at peak valuations. there is still some room to grow
in general you're talking about more table, volatility stocks. these will pull you through the next six to nine months of uncertainty and higher volatility and be outperformers. we've seen that since july 31st. those are the stocks and big winners in the second half of the year. that is when leadership turned. it will continue. liz: tom. this is stunning move. the s&p is slightly positive, the dow definitely positive on a day where there was a mess of action below the flat line. we got 10 seconds left. what do you have to say about the market action and what happens in the future? >> the great thing is, it met everybody's expectations, liz. that is where we are today. when we end up flat after coming back 200, the fed did exactly what it expected to do. liz: steve, last word. >> i like market. don't fight the fed. i like the market. liz: have been around a long
time? >> a while. liz: you are really calm. thank you so much. [closing bell rings] this is stunning market action day that will be remembered with big moves to the downside. we end up for the s&p and the dow. let's hand it over to "after the bell." there is more. melissa: we are looking at a comeback on wall street following the fed decision to cut rates by a quarter percentage point and keep them at the current level through 2020. the dow closing up a whopping 36 points. we were down more than 200 points earlier in the day. s&p 500 and nasdaq, see how they're ending the day. positive territory for the s&p, barely. nasdaq, no such luck. i'm melissa francis. connell: i'm connell mcshane. that was a nice little chart at the end intraday for the dow. well-tom to "after the bell." we have fox team coverage i'm sure her counting on keep stories at the end of day