The yield curve inverts again, the fifth time in the last week but stocks are shrugging it off. Weaker than expected manufacturing data and this season of retail volatility continues sharp moves in the stocks with more earnings movers coming in the next hour. Watching signals of the Federal Reserve. Philadelphia fed president harker throwing some cold water on any imminent rate cuts. In december i was not supportive of the increase i was supportive of the decrease somewhat reluctantly this time around to get us back to where policy should be were roughly where neutral is i think we are roughly where neutral is right now and i think we should stay here for a while and see how things play out. Well get another view from the Federal Reserve in the next few minutes here on closing bell. Coming up, an interview with dallas fed president Robert Kaplan with steve live from jackson hole joining us for the entire final hour, is mark leeman mark, it does feel like theres a little more optimism out there around the u. S. Consumer and the overall economy even with the yield curve inverted again how do you see it . I think theres plenty of negativity we have moved from neutral to negative over the last month ago. Some signs are more positive and the conversations having with managers more and more are like we dont see the kind of negativity we are fearful of that gives me hope and optimism for the Fourth Quarter for a better end of the year. All right lets drill down on the stories we are watching today. Of course, bob pisani tracking the market action. Phil la biowith the latest on boeing i was just talking about that stock. Courtney reagan focusing on the retail earnings. Bob, first you on the market. Hello, david. The markets are still moving roughly in relation to bond yields and of course, we saw the yield curve briefly inverted the market also weakened shortly after the opening. Another reason we saw Different Things going on here we saw the august pmi report showing Manufacturing Activity was weak in august, it was below 50 indicating contraction. The lowest read in ten years and the Services Sector notably weaker tim moore at ihs market who did the survey released a statement saying the most concerning aspect of the data is sharp loss of momentum across the Services Sector you have got gyrating rates and a flattish market right now. Back to you. All right bob, thank you very much well send it to mike santoli for the market dashboards. Heres whats coming up start off with less than zero. You can imagine that has to do with yields. How green my valley, the valley reflects Investor Sentiment. We have pit and the pendulum swin swings back and forth in a big sector the stock market play it as it lei. A pun, not a tie to. Less than zero attention on the trillions of dollars of debt with negative yields this chart of Ned Davis Research shows negative real government yield. Well before we have negative nominal yields in a recent cycle we had periods of negative real yields after inflation this is the percentage of countries where Government Bond yields were negative the shaded areas are global slowdowns. So here you have in obviously 2008 and 09 2012 you can go on from here. Her point is that these this tends to peak somewhat later in a global slowdown. This was the exception coincides with when the stock market started to do better on a forward going basis. We dont know if this is a peak or not but at least it shows you we have been roughly in these waters before even if on a nominal basis negative yields is a pretty new thing, guys. Thank you what does that chart tell you, mark we have maximum fear in the marketplace and more fear running through the market i think it does precipitate potentially an oversold situation in the marketplace i think people being negative permeated the market and i think the global slowdown is real. Negative sentiment that people are willing to lepd countries money. I do. Listen we have a growth versus value gulf in the marketplace seeing inexpensive stocks. Like what i think the dividend yielding stocks are inexpensive the small caps stocks in a tough trading ra trading range for a time the Growth Stocks are really doing very well in the tech market because theyre growing faster than the overall market and will continue but the perception that things are slowing down globally is overdone and will have a few things to help the market. I think you will have a trade war end some point trump doesnt want to lose this one. Secondly, the boeing thing will be solved. The max problem will be solved and the ripple effects are genuine. Speaking of boeing, of course, the leader on the dow today and the Company Reportedly looking to increase production of the 737 max jets. Phil la bioalways on those stories. They did not push us away from the story circulating late morning that suppliers are starting to expect boeing to ramp up 737 production this is what its all about. When they bring back max production, currently at 42 planes per month, remember, they brought it down to 42 planes back in april. It was at 52 the expectation is that they are targeting 52 by month by february and then 57 per month by june. But there is a huge and when i say huge, a major caveat here. It all hinges on whether or not regulators including the faa sign off on the fixes, software fixes, and a return to service happens in the Fourth Quarter. If that doesnt happen you wont see 52 per month by february or 57 by june still shares moved higher as they did for some of the major suppliers. Spirit aero systems. They have kept the production at 52 per month the entire time guys, though, it would rise up to 57. You will see as we get closer to potentially seeing a fix for the 737 max. It is all contingent whether it happens in the Fourth Quarter. Adding 100 points right now to the dow boeing is. Thank you, phil. Retail names moving on earnings courtney has more. Dicks Sporting Goods with a Strong Quarter beating across the board best comps since 2016 and upping the fullyear forecast l brands missed on revenues. Bath and body works up 8 . Nordstrom shares up. 27 of the shares are short and Short Covering is likely playing a role in the stock move here up 16 . Earnings did beat and expense management there revenue missed and it also lowered the annual salings and Earnings Guidance and none think that list for tariffs a material issue not at this point anyway sara thank you. Stocks are moving higher at this hour. Up 91 points on the dow with 52 minutes until the close. Lets bring in john miller jack nanly is here from jpmorgan and mark lehman still with us. Jack, sounds like youre not as convinced as mark that its green light in terms of optimism on the markets i think things look pretty good right now i think we have seen that markets are extremely emotionally at the moment and that a little bit of news good or bad can really sway things quite a bit. Ten years into the cycle, a whole lot of anxiety i think that the data coming in are mixed at best. Theres concern for slowdown in the short term and for me no real risk of a recession. What does that mean for the market multiple . We are only off what 3 , 3. 5 from record highs how do you look at a fair value right now . I think theres room for multiple expansion right now Earnings Growth is looking okay. We have started to see some positive momentum even in the Second Quarter season. I think the fed keeps rates low and looks like they cut further, that allows for more multiple expansion in the market, as well. A lot of companies did meet or beat expectations and a lot were lowered. Absolutely. I think there was a huge quite a bit of pessimism baked into the season, especially because the comps were so hard, because we thought the economy was going to slow down faster than it has. John, talk about a hot market, mui mispalties, i dont know why every municipality in the country isnt taking this opportunity. Is it a good time to be a buyer . Yeah. Municipalities earned back the softness they expoorpsed in 2018 when the fed increased shortterm Interest Rates four times and in terms of the Interest Rate environment and the ratios relative to treasuries have kind of earned that back but just in terms of current tax exempt cash flow theres tremendous demand and still pretty reasonable valuations on a relative bases so supply is disappointing so i would anticipate to get a little bit of a bumpup in new issue supply as you suggest in terms of municipalities with more debt because the demand is there. The appetite increases of high tax states of not being able to deduct the tax, right . Thats definitely part of it. I think the Tax Advantages maybe overlooked even though the top bracket was cut from 39. 6 to 37, munis is xec exempt from the medicare tax and sort of the only game in town in terms of mitigating the effective tax rate so if you dont have as many Interest Rate concerns, investors arent necessarily beating that rates drop but not see the rates rise sharply for an nav deterioration. If rates stay in the Current Trading range then the tax benefits and the credit quality combined are actually fairly good for demand in this marketplace. So what are you telling people about stocks versus bonds right now . How much exposure to each . Low rates are i think here for the foreseeable future probably through the decade. I think you will have like i said, you have a dividend yield higher than the yields on the paper for the government. We are in a funk where the low yields are actually scary or i think for some it is scary. Youre also seeing it flow through the consumer a little bit and since the rates dropped sick to eight weeks, i havent seen news that the consumer is dead and the Wage Inflation helped, as well. I would be worrisome if the consumer felt tapped out and im not getting that sense from what i see. You look at target and others doing extremely well john miller, what are you latest expectations for the fed and what is the bopd marknd mar telling you right now . It is Pretty Amazing environment in that the i think u. S. Yields are really being dragged down by the Global Environment but looking at unemployment claims today or retail sales outperforming expectations last week, the Unemployment Rate still at 3. 7 , we are not really seeing a deterioration in municipal credit or the Revenue Streams that the states are collecting and still fairly good so the u. S. Economy remains very stable and thats been good for credit qualities but now having said that, with germany probably tipping in to a mild recession perhaps, Manufacturing Sector is weak, obviously the head winds of the trade war creating a Global Environment where the ecb will embark on more bond buying and the negative rates in europe and japan pulling down treasury rates. Two year to ten year is virtually flat, even in yield. So i dont think thats a really potent recession their signal. So i think that the u. S. Is still growing but those rates are dragged down by overseas bond purchase programs. Add him to the list saying dont worry about the spread inversion. I think 3 for 3 here. I think we are. Thank you so much. John and jack. John and jack. Coming up, we are just one sfx record scratch music plays throughout [ watch me walk by Spencer Ludwig ] yo dj, can i put in a request . 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You ask me in april, i would have said 2. 5 and right now id say the risk to our 2 forecast to the downside and the reason for that is even though the consumers very strong and is a key underlining of the economy, Manufacturing Sector is weak and probably weakening and Global Growth decelerating going to seep into the u. S. Economy so i would say were expecting 2 growth for the year and the risks are a little bit more to the downside. Can you put numbers on the Downside Risk . Recession possible as long as the consumer stays strong, we will have solid growth the thing im watching for is does this manufacturing weakness and Global Growth weakness seep into other sectors where eventually you start getting one or two negative job reports and then consumers start to be less robust i think we can avoid that but i think itll help if we have some policy stability it will help i think the fed may well have a role to play in helping to engineer that. What kind of role would that be to play further rate cuts ahead . I was in favor of the rate cut in july. I felt it was appropriate to make an adjustment part of this job is to be forward looking and theres a Risk Management part of the job and i want to take all the time between now and september to assess how the economys acting and id like to avoid having to take further action but i think im going to have an open mind about taking action over the at least number of months for me, the global the global yields but particularly the u. S. Global yield could have been and less obsessed to the 2 and the 10 and the whole curve moved down and the fed funds rate at 2 to 2. 25 is along the curve and a reality check saying its possible our Monetary Policy is tighter than i thought three or four months ago. When you look at global rates do you see that maybe you have to bring the fed rate more in line with global rates i dont think we need to do that i think the reason that global rates rates outside the us are low, you have the trade uncertainty has a much bigger effect of countries outside the u. S. With a much bigger percentage of gdp. Quantitative easing and the number of activities by the ecb and other Central Banks far more aggressive so i want to be careful not to follow other Central Banks in a race lower but i do watch what it says about prospects for future growth. Robert, the odds that you come on cnbc to talk on a day when the president hasnt tweeted about the Federal Reserve is very low. Here you are on another day where the president said that german Interest Rates are negative and that the fed is behind the curve and do you see that american Interest Rates ought to be competitive with foreign Interest Rates the answer is no. There should be some divergence and it makes sense based on underlying fundamentals that there is. Let me push back. The divergence right now is more than 200 basis points. Thats a lot. I understand. And so, what im focused on is in particular is whats the Growth Potential of the u. S. Economy . When i look outside the u. S. , im trying to look at whats going on in terms of Global Growth that might affect our Growth Potential and i think we need to adapt rates that fit the u. S. Economy and also other countries have lowered their rates, their Central Bank Rates to much lower levels, done more quantitative easing. Didnt help to stimulate more growth policies that grow the workforce, trade policy, infrastructure spending, policies to improve skills are probably more the center of gravity which are going to affect u. S. Economic performance and i think it pays to keep to broaden the discussion to other policies away from Monetary Policy. Those are not fed policies, fiscal policies. Its our job to call it out. Sara eisen has a question for you. Hi, president kaplan. Not just a divergence but inside your central bank. Why do you think theres such a wide opinion about where the economy is headed, how many rate cuts are needed, how much sti stimulus is needed its confusing. So lets try to put it in context. I mentioned earlier one of the challenges of this job is you got to be forward looking. Whats happened up to now is not as important ads what we think will happen over the horizon and the other thing is this is a Risk Management job so i think some of the disagreement you may hear will be about how you weight Risk Management what im saying is i think that when the fed funds rate is well above rates along the Treasury Curve and we are seeing some weakness in manufacturing and Global Growth i th