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. Its 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 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 wouldnt characterize it as an incredibly strong market. I think its a market that finally has broken out of a consolidation range when youre talking about equity postPresident Trumps august first tweet, we basically stayed between 28. 25. Do you think its doable, youre approaching the Federal Reserve. Theyre 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 wouldnt 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 theyre all an important component down the stretch jon najarian, i got a note here their quandt team talking what about they do. They say the pessimistic trades in october, theyre 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. Thats what were seeing but it probably cant 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 theyre 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 said, 445,000 more folks in the labor force that had been on the sideline seeing that coming in, thats a big positive they would be coming in, of course, because they think that theres opportunity to make money, working rather than not being in the labor force megan, ive got to imagine your phones are blowing up in august, right . Chaotic time youre just trying to take a vacation, leave me alone but you cant do that for your clients. What are they saying now whats the main message, whats the thing theyre worried about when they call Wilmington Trust . I think its hard not to Pay Attention to the headlines but thats what were 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, were back where we started we have news in october which im sure its escalation that were seeing in the market today. But at the end of the day, were 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 theyre 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 its 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 onetime 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 everybodys working. Right . You cant grow jobs thats 7. 5 million open jobs in this country. How do we expect the number to grow you live in new jersey im sure you see like i do, help wanted signs everywhere. Im not looking like you. Well, you never know with this kind of talent. Ill probably be somewhere else soon yeah. Heres the thing, does it matter as much as it used to absolute lit not. And thats why i ask the question, i thought there were positive things to come out of the jobs report. But i dont think it changed your position if youre bearish or bullish it really didnt change your view on that look, we had wage growth we always have the adjustment, so we had the prior adjustment down but its a threemonth number youre looking at. In august, as larry said, its kind of funky. Summer months are difficult, particularly august. So, i dont think the fed should go i think its a mistake i think theyre letting the market dictate what they do. At the same time, theres a weakness in the economy. Its not the Global Growth, season, or the Global Growth below zero with the rates. Its not their mandate. Well, they cited it the mandate is employment and inflation. Gentlemen, thats for the next segment okay. This, were talking about the markets. Jim, save it the dows up 80 listen im not going to make a huge amount about an 80point jump to megans number, either the market doesnt care, or it believes in the fed. Lets talk about megan, she said the most important thing, were 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 didnt sell, by the same token, i didnt have any money, i havent sold anything. Im not a trader, im an investor if youre 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 theres definitely volatility. All weve got, meghan is a meeting. Were not close to a deal here youve got to buckle your seat belt how im 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 dividend and winorthrop grumman and airlines, Alaska Airlines has increased its dividends. Those are the sort of stocks that im looking for to get three move the stur mouturmoil. Lets get to dominic chu hes 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. That gap is growing just a bit now, when it comes to where were seeing the outperformance and underperformance 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 yeartodate basis american while, the American Outdoor brands, the Company Formerly known as switmith wesson, handguns, that sort of thing. Thats lost on a yeartodate basis. When it comes to those you know about its interesting with the etf hitting the record high. The topweighted most heavily weighted stocks, boeing, year to date up 13 . United technology up 26 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 ive traded it fairly well and i think it works we talked about it yesterday, onemonth delay is not going to define the companys future going forward. I know you agree with this absolutely. Its just a duoopoly. Its remained above the fray as far as china trade deals overall market, i think weve got a pass now the past five days i think the opportunity has been in the overall equity indices themselves picking a direction which has been a breakout direction. I think overall, when you kind of pull back the lens, its 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. Youre throwing out names, i love it, that we dont talk about a lot. Copart, does it say to you that stockpicking 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 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 investmentgrade issuance. Its 70 billion just is this week alone so that liquidity is back once again. And i dont understand why people are afraid of this increase that were seeing in issuance by corporations for corporations that have maturing debt, its 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 30year paper at 2. 9 . 30year paper. We were talking about this. And that 75 billion is the most in a week since what, 1992 . You know who is not coming to market, though oil and gas companies. They cant too bad for them. You know what this means, cash flow is being generated. Thats why you get these low rates. You cant be a single b company and get a 2. 9 rate. Its 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. Its never gone away. Frankly, the s p is up 18 and change how much stock do you need im sure every one of your clients would be happy with 18 , right . Or 11 and the market does tend to create opportunities for it. Weve talked about multiple times, fed chair jay powell, hes star number one, getting ready to take questions minutes from now star number 1a, Steve Liesman not a bad billing you heard me, i was using your name in vain over here. I did you didnt throw anything at me i appreciate that. I didnt have anything to throw. Here you go what can we expect from mr. Powell today i think hes going to look at the number the way everybody at the table looked at the number theres 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 dont like whats in the establishment, that follows but the last several months, the Household Survey has been moving further you just want to watch that. Theres strength in the household thats 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. Id say this keeps me along the line what it does raise questions about is how much i do it. I think what weve 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. Probably not i think it its 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. Its not going to be satisfied if were on this trajectory down where it goes and stays below 100. What if the unemployment doesnt 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 its going to sound insane, why not, its friday. Is there any case for rate hike . Ill tell you what, feds 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 positive, were they not . Year over year wage gains. Tariffs were supposed to be inflationary weve got both the mandates seemingly covered. I would push back on that, while we had inflation thats been stable, i think expectations have been pretty low and theyve continued to tick down you look at a tenyear treasury inflation breakeven rate, its about 1. 5 thats the lowest in 2016. If youre looking at expectations and tips break even, theres a signal there that the fed is watching, thats a reason not to get worried about the inflation. And then theres the inverted yield curve as well which i dont think theyre 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 thats correct. There is one reason to hike or at least not to cut. Thats Financial Stability joe and steven, were talking about the corporate. Theres an awful lot of it, and theres 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 its been a better environment yeah, thats right. Thats 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 theres a modicum of irrationality out there that perhaps suggests were forcing you into otherwise, were feeding a bubble thats a concern. So, i think thats an issue the fed is looking at here, that these low spreads suggest that theres 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 thats the reason. I dont think thats 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 didnt jump in for once im immune to your charms you really are. Back in a few minutes with a little bit of what powell says yes, powells going to speak. Heres whats coming up on the Halftime Report. Jons seeing unusual activity in the Options Market this latest trades straight ahead. Plus, come fly with me one firm says American Airlines and delta are buys right now our investment debate it in our call of the day. And next week, halftime hits the road were live from san francisco. Guests include dick costolo. And more you dont want to miss it starting monday. The Halftime Report is back in two minutes. 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 theres 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 such a small, small tag position there, thats really for tax purposes but its 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 dont know that much about alaska i havent 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 deltas 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. Theyre ultra cyclical you sort to think that maybe the chinese will begin to fall there should be investors. The way these have sold out i dont care which ones you pick of the three, theyre oversold, so theyre due for a bounce. For me, i actually like alaska because it is domestic, its expanded from regional to transcontinental and its worked through that integration and its 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, thats huge baggage fees, we know thats billiondollar business for each of these guys now. On a quarterly basis, but to have a credit card be this valuable to delta. Its amazing i look at the industry, i dont own it, and i look at it, in the last couple years, these Airline Stocks are basically in the same place, why is that . Its fears of a recession, jon. The consumer is strong. International is strong. I agree oil prices. Whats the catalyst . You need a rerating. Guys, weve got to go, coming up 0 an a commercial break options bulls making bets on home energy. Curious on this, jon plus, were still awaiting fed chair powell in zurich getting ready for headlines. Er Jerome Powell well be back. So. How are you feeling . On a scale of one to five . One to five . Its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im 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. Welcome back, everybody, im sue herera heres 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 were expecting but the center 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 president ial 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 twoparty 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 youre up to date thats 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 alltime high. Options traders are bullish. Betting on new highs ahead jon nn najarian. This has been a spectacular year for home depot. Whats a continued way for upside here . Buy some options thats 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, thats 10 for that investment now, they bought thousands of them so its a lot more than ten bucks, but 10, per option what a cheap shot. And it doesnt take a lot for those options to double. Thats why they did. I joined them ill 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 youre betting that the an adarko deal is going to do well. 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 cramers 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 ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. Doprevagen is the number oneild mempharmacistrecommendeding . Return home. Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back its 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 ill go mastercard. Mastercard basically is a little richer than visa but its performing better than listen, theyre both at alltime 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 youre paying for the growth im 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. Were 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 theyre part of a plantbased meat that theyre going to back. I think theres a lot of competition for this space and we all know about the valuation here why not sell it why hold it . I dont own it right now. But i would hold it if i did and id just write some big fat calls into this thing. There you go. Jim, youre 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 thats ridiculous. They have enough on their plate. Merge these companies, squeeze out the synergies. Theres 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. 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. Its 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. Cramers quarterback is, joe, you got cloud, target, running backs like apple and microsoft, what do you think . Im going right to the kicker like chicagos kicker the kicker is the one thats going to make the difference the one thats going to get us to the next playoff game weve got a canadian kicker. 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 thats a big space you can narrow is down for us. I think as were looking more broadly at where were positioned, we just dont think now is the time to be taking big bets sectorwise, weve tightened that way up again, thats very much related to the slowing in the economy that were 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, were looking for companies that display that higher quality, maybe have less of that volatility, more exposure to help ride through this as we get more clarity i like the portfolio a lot. I agree, target, i think thats stellar. I think thats 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, youve got to take out some of is that risk. Because theyre all, or most of them, are highquality stock theyre quality for the most part tmobile, its a beta driven portfol portfolio. I own microsoft. Amazon, i own apple. Twitter you own twitter . Ive added twitter. You want twitter there . I want twitter there. You have 11 players and you want twitter on the team, really id make a substitution meghan, lets switch gears to retail were going to look back at the last ten years and realize whats incredible, like this offprice retailers like a months or t. J. Maxx, the parent company. Theyve made people millionaires theyve outperformed almost every single stock and yet, were 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 its 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, theyve had way troop too much inventory for years exactly, so theyre feeding off the weakness of your big mall stores which partially an 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, youll probably have more of that inventory building up at your bigger Department Stores and mallbased 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 lowerpriced 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 again, its online or offapplies. Those are the two ways you want to go in retail. And if youre not in those two distinctive propositions for your customer, youve got a problem. Yes well, congratulations anybody out there that bought these names years ago because youve done very, very well all right. Gold rebounding today. And its higher on the week. Your trades next, ahead in the Halftime Report. Were back in two minutes. I like to make my life easy. romo mode. beep bang good luck with that one. Yes thats why i wear skechers slipons. Theyre effortless. Just slip them right on and off. Skechers slipons, with aircooled memory foam. 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. Heres what hes saying right now. By pointing out that the United States economy has continued to perform well and is in a good place. In fact, were well into the 11th year of this expansion, which began in the second half of 2009. Its 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 weve been monitoring those, including as you mentioned slowing Global Growth, uncertainty around trade policy and also persistently low inflation. Ill 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, well be somewhere between 2 and 2. 5 . Thats 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 its in fact sideways to slightly down. Its 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, weve been at half century lows in unemployment weve got higher wage force participation. And wages moving up i think the market is in a good place. I think todays labor Market Report is very much consistent with that story and weve got inflation moving up to 2 . Overall, were 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. Thats one of the reasons why the yut look favorable one despite these cross winds weve been facing. So you asked specifically about Global Growth. The Global Economy has been slowing since the middle of lets 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 its not the only one. Trade policy uncertainty will be weighing on Business Investment decisions and that sort of thing. So still, though, ill 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 were going to continue to watch all of these factors and all of the geopolitical things that are happening and were 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 didnt 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 dont do trade. Its not a responsibility of the 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 thats what well 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 were 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, ill 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 margin by so many measures, the labor market continues to strengthen the consumers are in good shape and really theres our main expectation is not at all that there will be a recession. I did mention, though, that there are these risks and were monitoring them very carefully and were conducting policy in a way that will address them, but no, i wouldnt 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 tightening because its like a tale of two markets. When that number came out you had all these courses of things are weakening. Powell doesnt seem to think so. When you have 3. 7 unemployment rate, everybody at the table ought to kind of pinch themselves and say were 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 theyd 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, thats the new reality, the new macroeconomic backdrop were living through. I think the fed, to be fair, theres 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 have theyre dealing with a president who is making nearly daily attacks on them. And c, theyre dealing with both brexit and everything going on with hong kong as well i do not envy Jerome Powells job. Its a difficult job. They have definitely been i think the fed its important to point out theyve 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 thats 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, its that they are being preemptive they are being kind of alert and not even reactive. Theyre 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 of cyclical companies, industrials, materials they dont 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 its not going to escalate further. The unfortunate thing is nobody is going to trust anything he says its 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 thats going to come up and take hold in about nine months . Youre right, jay powell has a very unenviable job right now. To megans point, hes 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. Steve and i talked about this. Many of us criticized us they are deflationary. When you look at them on a global perspective thats why the Federal Reserve because of currency moves . Guys, sit tight, weve got to go back to Jerome Powell hes making more news making headlines. Lets listen in to the fed chair. Its low growth its 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 weve cut more than five full Percentage Points or as we say 550 basis points weve cut in a typical downturn now our federal funds rate is about 2. 1 we wont have that ability here. 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. Were very committed to defending the 2 inflation target on a sim metric basis weve seen low inflation become the case moving down you seem to get on this road that its hard to get off of were 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 so lets bring it back here. I think theyre going to act as appropriate. Thats what they said. Rate cuts coming on september 18th, period, end of story. Im not so sure i think its 50 50 i know what the market is saying at some point the feds got to say were not going to let the market dictate what were doing by fed fund futures. You typically have 550 to cut the downturn they dont have near that. Why waste the 25 bips . You make a good point im not dissuading, that but the Banking Sector has no way to make money and the fed knows it needs a healthy banking section. That wouldnt change it. Youre right. Youd need more than 25 bips. Youve got 30 seconds left. Go around the horn fed cut rates yes or no . Yes. Yes. Yeppers. Thats not yes. It is yes 50 50. Youre like in the midwest, yeah, no thats in minneapolis. Not even a question its a 2 to 2 1 2 economy ill 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. Lets 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 didnt find what h