About 5 from their all time highs. Where is it safe to hide in this stock market we have details as power lunch starts right now and here is where we stand right now. The dow was down nearly 600 points at the lows of the day right off the open, weve come a long way back. Now down just about a hundred points with the nasdaq actually in the green, ever, ever, ever so slightly. The two big laggards are energy and financials well explain why, both down about 2 oil sinking to 50 a barrel. Well have more on that later. That would explain why Energy Stocks are down 1 3 4 . The focus is yields banks around the world are cutting rates. This is sending u. S. Investors into a selling frenzy. U. S. Stocks have bounced back, fears remain about what it means for the market we have full Team Coverage to lay it out Steve Liesman is here to talk about the rate cuts, and lets start with you hello, everybody. The important thing is were moving lock step with tenyear yields lets just take a look as yields move down, we had problems here, and yields move up off of the lows, the markets have rallied, particularly in the Late Afternoon the yields have come off their lows thats the key port of whats going on today we have had a nice rally most of this has not been cyclical, most individual stocks associated with Consumer Staples names, krogers for example, food stocks have been rallying a bit. Kroger was down as much single. Cocacola has 3 range and same with procter gamble, herb essentially a 3 range for the highs and lows you see the same pattern lows at the open, and now were sitting at the highs for the day. Not much with the Global Industrial really not helping a lot caterpillar, very good example, 3 m. Almost essentially sitting off their lows for the day here. Bank, same situation, no big rally in jp morgan in citigroup of bank of america, particularly still a negative territory theres a couple of stocks that are really helping today that are in the cyclical camp i think the biggest one is apple, down on the day, and look at that, now in positive territory, apple is 220 at the start of the month were talking about a 10 move in apple in five or six trading days perhaps a bounce back is to be expected tyler, back to you. Thank you very much, bob. President trump not backing down one iota on china today saying that someone needs to stand up to them eamon javers live at the white house. Reporter thats right, i asked the president about this today. I asked him if hes watching the stock Market Reaction to the china trade news today he said he is watching it, and not only that, he thought had might have been a little bit worse. Heres what he said. The narcotMarket Reaction ise expected i kind of expected even more at some point we have to take on china china is losing thousands and thousands of companies, leaving china now because of the tariffs and were in a very good position as to whether or not a deal will be made, i will tell you this, china would like to make a deal very badly. The president signaling there hes prepared to absorb stock market pain in order to absorb the deal, and china is about to come to the table to give him the deal that he wants earlier today on twitter, the president said really the problem isnt china, take a look at the tweets, he said the problem actually is the Federal Reserve. The president suggesting that ultimately, the currency is under siege in china but in the United States, he said the problem is the Federal Reserve, and he wants the Federal Reserve to cut rates even further than they have and he feels they havent gone far enough, and quick enough, so this is a president whos feeling his political power here in terms of his relationship with china, and in terms of his relationship with the Federal Reserve thats for sure thanks three more Central Banks around the world cutting Interest Rates overnight. Steve liesman has that story. Normally the Central Banks in thailand, india, are not the big three. That wasnt the case when those three Central Banks heard around the world as they cut Interest Rates either unexpectedly in the case of thailand or more than expected in the cases of india and new zealand. Thats part of what sent bond yields careening downward taking stocks with them the message to markets, the possibility that were in the middle of a race to the bottom on rates in fact, President Trump as eamon encouraged it today. He said our problem is a Federal Reserve is too proud to admit their mistake of acting too fast and tightening too much. They must cut rates bigger and faster it would be easier if the fed understood that were competing against other countries, all of whom want to do well at our expense. Whatever their motivation, Central Banks around the world take a look at this wall from russia to australia to brazil have been cutting rates since april. Thats the general direction of Interest Rates around the world, definitely downward as they are in the expectations for our u. S. Federal reserve. Take a look at the probabilities at this hour 54 chance of a quarter point cut. Its down a little bit as those rates came back in september 65 chance in december, and 42 in january the fed knows it cant maintain rates so far from other countries. The problem may be if it cuts, other banks will simply cut more and nmore and more and more has the fed lost control of the situation. The problem is that it assumes it had control i think right now, the main drivers of global rates and probably economics are tariffs thats over on the fiscal and political side i think the fed is in a position of looking, hey, thats not our circus we may have to clean up after some of the things that circuses leave behind. The reason i ask, is you just concluded by saying that the fed can cut rates but then the response may be that other Central Banks will cut rates more and we cant have a rate that is so much higher than theirs, so then weve lost the ability, havent we, to manage you think thats relative race we could cut the rates here objectively, what they are in the United States, so the rates can be lower here, not clear that without specific policy coordination that we can set the rates that the market sets between countries. Youre going to stick around, arent you that sounds good. Is the bond market signaling to investors that we could be on the precipice of a global recession sooner than we expected lets talk about this, falling yields michael faroli, chief u. S. Economist and rick santelli. Are the yields and the inversion of theyearold curve, two month to ten year or the flattening of it, with respect to the twoyear to ten year, is it telling you were on the brink of a recession. It sends a worrying signal. It has for a while its been sending a signal were late cycle at the least. I would seemphasize a lot of the move, lately, even if you have a relatively sa relatively s relatively, Global Developments have been weaker and the decline in global rates is dragging down u. S. Interest rates and its also putting outward pressure on the dollar which may force the fed to respond i dont see signs that the u. S. Is slipping into a recession right now. I do agree with what the market is saying, not only is Growth Prospects here diminishing by around the world falling faster. Peter you cite a bond bubble thats scary to watch. We havent seen this kind f of slide kind of slide in tenyear yields since the peak of the debt crisis in the United States, the idea that we were going to default on our debts back in august, i point out, of 2011 well, when we first went to negative Interest Rates in europe back in 2014, 2013, with the swiss and the danish central bank, you scratch your head, and youre like this is creating a bubble, and its obviously gone on much longer and deeper than anybody imagined but i think its clear that, yes, the disappearance of Interest Rates over seas is certainly led to this inversion here. Theres no question that the u. S. Economy trajectory, economic trajectory is slowing dramatically, and the slow down in trade and manufacturing is spilling over into services, and services obviously making up the largest portion of the u. S. Economy. That, then, starts to ask the question of hiring could get impacted next, Consumer Spending could follow and get impacted on the downside, and what this all means but this is completely lala land. The world is upside down with negative Interest Rates and it is scary to see a german ten year at minus 60 basis points. Its alarming. Rick santelli, jump in. You know, obviously i agree with both, especially with peter, but heres the issue, do we use traditional Monetary Policy tools to address this do we use negative Interest Rate tools . Weve had some smart guests on today. I have Great Respect for saying that, get ready, you know, zero rates and negative rates are coming listen, i just think its an intolerable function for the u. S. And its citizens to go there. What do we need to do, we need to think outside the box theres definitely a slow down peter described it a lot of that is a feedback loop from trade theres more going on. You add in all the negative rates, the bank of japan, bank of england would have been doing and their condition worsens so much faster than ours, that our multinationals get dragged in. I get it, but the inverted yield curve may be a sign of a recession that starts in europe, and might have an effect on us but our central bank needs to communicate a whole new message. An inverted curve with a catalyst that is beyond their control should be ignored as a signal they should fight the fight of trying to hold rates up, even if market rates are negative. They need to be more of a backstop we need somebody to shock the system back into normal thinking, and i dont know that our central bank is up for the task, and i dont mean any ill will against them. If i had to put a banner as to who caused this, im sorry, but Ben Bernankes name will be first on my list. Im not sure i agree with that i think the proximate cause looks to be tariffs. If you look at the way the market has reacted, Federal Reserve cut Interest Rates last week and things seemed like they were okay for something less than 12 hours. Then a tweet came out and theres a lot of folks who want to deflect from that proximate cause. A tweet came out announcing did. That there would be new tariffs. The only thing i say about that and youre absolutely right about the cause and effect over the past week, is when you already have europe telling us its going to be the bond buyers of last resort, when you already have japan playing that role, the yields were negative on german boons before the trump tariff tweet. I think thats right but if you look at what happened to bond yields since then, you look at whats happened to stock markets since then, its all downward. What about the fed, how does the fed fit into that . I will tell you, im not sure the fed knows how it fits into this im not arguing with that, but i think tariffs is a really bogus answer for whats going on here whats a bogus answer thats like saying, you know tariffs tariffs added to situation that was already a mess. Have you seen a chart, the tariffs come out, the tweet comes out, the market goes down. Exactly but it would have been were a tinderbox of negative rates with a fed backstop that disappeared. Certainly the tweet was a trigger, but believe me, the outcome was coming no matter what. And china responded and what happened on monday. Trade is definitely an issue. I get that the problem is how the world deals with these adversities by a dumb policy, theyre tripling and kquadrupling down on. Youre not sure how the fed itself knows look what he said to me, what are you doing, we dont really know, were learning while we do. Do you think theyre a little bit lost and surprised by the market response here over the past week. Heres what i think the fed wants, it wants two things it wants to change its policy rate in response to changes in Economic Data. I think bullard was very clear yesterday when he said really taking a page from the santelli play book, we cant be involved in a tit for tat in relation to tariffs. At the same time, i think it knows that it cannot be an island unto itself and acknowledges to the president that yields around the world are much lower in the u. S. , and one effectiveness, it was happened so far, the u. S. Tenure has come a lot closer to the german bund. Now youre more together. I would like to offer a drink to our outside guests, michael piroli, and peter you go next, what is your reaction to what you just heard. I think i definitely agree more with steves take, every time we have had an increase in tariffs, forecasters across the spectrum have been lowering their outlook for growth in the u. S. , and you have seen prospects for the fed rate stick on down. If youre bothered by, you know, negative rates, in the u. S. We may be once again moving toward negative real Interest Rates thats largely a function of the trade war which is denning Growth Prospects here and around the world, and you see that in a lot of asian countries, not just china but countries like taiwan, korea, that are in that supply chain. Their Growth Prospects have been coming down, and the fed has to respond. You cant increase Interest Rates just for the sake of it when Growth Prospects and inflation are running on the light side here. I definitely agree that the fed is in a bind they dont want to cut Interest Rates. They would like to have higher Interest Rates when policy is pushing the Growth Outlook in a more adverse direction, the fed has to do their job. You dont think the u. S. Fundamentals are as bad as some others thats whats interesting. If the u. S. Isnt that bad, is the fed in that much of a bind. We think growth is going to be slowing into the second half of the year. We do obviously see inflation remaining weak, and i think the Downside Risks are building, and have built over the past week. You have seen not only the increase in tariffs but that in turn has caused the dollar to rise, which is a head wind for growth and inflation im not doom and gloom, but i do think, and part of the reason im not doom and gloom is i do think the fed will do their best to offset head winds here. Peter, you get the last word. Im on board that growth is slowing. But to what end do we get with lower Interest Rates has anybody looked at the European Bank stock index lately its down 80 from where it was in 2007. The japanese Bank Stock Index is down 90 because the Central Banks killed their yield curve and jammed it into the ground through negative Interest Rates. Do we want lower Interest Rates and encourage corporations to go out and lever up more with business debt relative to gdp at a record high, should we then encourage households to lever up through lower Interest Rates look what happened last time. Youre a fascinating voice here, you think were slowing but the fed shouldnt respond. Because the medicine they have is not going to be effective in addressing the illness. I think theres unanimity on this panel i think even piroli would agree that nobody is quite sure that Interest Rates are the right response here, and i also think everybody agrees the fed will probably respond by lowering rates anyway because theres not much else it can do but it has a mandate to do so, i dont know that theres 100 , im pretty sure theres 100 agreement that everybody thinks the rate cuts will not be 50 effective. Not only are they not effective, its turning into quick sand if youre the ecb and boj, virtually impossible to get out of this policy the fed has a choice, do they want to go down that path which has clearly failed and those banks are now trapped or do they say theres only so much we can cut rates. Cutting rates further than that is not going to help and we dont want to get trapped like the others. Ill tell you theres a new factor we need, and im coining it right now its called p star p star is for politics okay we have r start for the neutral rate, and one reason wi had the fed is going reason why the fed is going to have to do this, i do not think it can stand by and do nothing if the economy is falling. That is the worst reason on the planet you do something because you dont know what else to do if thats where were at, im liquidating all of my stocks. I think we may be there, rick, because all they know, i know we got to go. Like mike respond because hes the smartest of all of this stuff. Would you rather us raise Interest Rates right now so certainly there are several channels lower Interest Rates can help the economy its not just currency this isnt just a matter of competitive devaluation. There are other ch