Decision. Bullard should have called for 75 basis points and he could have the job when powell steps down to spend more time with his calculations. I agree completely with bullard, his dissent on 50. Whats he thinking . Then i read his comments and said thats pretty smart it made total sense to me. On the bullard side, this gives you a sense of why its so reasonable i would be watching very carefully for any signs of a downturn. Of course, there are views on the other side as well, from the other dissenters i think the center of gravity, clearly the center of gravity on the committee is the second adjustment was appropriate. Thats right. Fed president jim bullard joins us here in just a moment josh got a cameo in that little mashup. Lucky you didnt wear the same tie. Some of my best work. Yeah, you have to give me the heads up on that. Building throughout the day, hopes of the trade deal, really good housing data. Yeah. What are you chalking it up to lets do housing first. Xhp, itb, housing related etfs, the names big in these indices period, full stop. Thats a trade weve been highlighting here on the show the days im on, talking about lenar, etfs themselves which one is your favorite . So i dont want toruin it, but my last chance trade dont ruin it. Is yet another belated name to this trade. So well put a pin in that youve seen the russell strong youve seen transport strong they had been weak last week its nice to see them bouncing back in addition to the strength in homebuilders, of course thats a story that continuously pops up and disappoints everyone some positive news in facebook, amazon these stocks have been under pressure both of them look terrible however, todays action looks like theyre trying to hammer out a bottom lastly, let me bring this up a lot of the biggest winners of the year are getting hit the hardest. Im talking about software as a service stock, cloud stocks, whole software space, workday, slack. I think that unwind is a function of whats happened with we work. People are rethinking these 30 times revenue stories and that makes sense. These are crowded trades and hedge funds trapped in some venture deals, also the Public Market when you need liquidity, you get it where you can, not where you want it. I think that explains the action there. I would not make more of that than what i just said. At least not yet. Josh is with us for the full first hour of the show lets drill down some of the big stories were watching today eamon javers has latest. Analyst nick mody from rbc, juul and sarah is having a look at nike trading at new highs today. Eamon, lets start with you. A source familiar with the matter, Washington Post reporting, breaking within the past couple of minutes, Washington Post reporting acting director Joseph Maguire threatened to resign if the white house didnt allow him to testify freely before congress about this ukraine situation the Washington Post reporting in the past couple of minutes here that he feared the white house might attempt to force him to stonewall when he provides testimony on thursday. That sets up a dramatic confrontation between democrats on capitol hill, republicans on capitol hill and the white house with the director, acting director of National Intelligence right in the center of that on thursday. So what weve seen throughout the day today is a president very much denying these allegations, saying its inappropriate for democrats to criticize him for this we just saw President Trump side by side with president zelensky of ukraine, president zelensky saying there that the call he had with President Trump is normal and said that nobody pushed me. A bit of a lifeline for the president of the United States sittohave the president of ukraine sitting side by side and saying there was nothing inappropriate about the phone call were going to see the president of the United States in this room taking questions from the press corps thats already assembled here about this matter and anything else. Its a free wheeling day for the president. Were expecting a free wheeling press conference in new york city back to you. Well take it when it happens. Eamon javers. Mike santoli has market dashboard. Sara, thanks. Market sniffing out volatility around election day next year. The real world, heavily hyped ipos maybe they didnt have the easiest time transitioning in the real world then by total request, a few stocks one big name youre very familiar with, sara, that by acclimatation, and corporate insiders cashing in and out relatively high numbers. Several dates down the road expected volatility, wells fargo derivative strategy group. The orange line here, if you wanted to buy, speculate on the level of volatility for the s p around the election, this is when you would do it thats your window, september to december of 2020 and you see it bid much higher than the period immediately before and immediately after that so, clearly, the market is saying theres going to be these predictable bumps out there with these identifiable catalysts, one of them being october 31st we have the brexit deadline as well as the fed. A little bit of a sign that in recent weeks people have decided everything being equal, its good to be a tight election in 2020 no matter what and maybe start to posture for that at this point, guys. Okay, mike. Thank you very much. Its been a wild week in the c suite as chief executives step down from their post, we works and juul ceo kevin burns is out, being replaced by casey crosswaithe and Philip Morris also announcing their ending their merger talks thanks very much, nick, for joining us the headline of kevin burns stepping down, you actually think its a positive for altria absolutely. Former chief growth officer of altria going over to work with juul or run juul al altria has a corps competence of regulations, through the Tobacco Industry juul Management Team are startup guys that came up with technology, great Product Design and didnt have the core competence required in a sector thats complicated like tobacco where youre dealing with Public Health its a good move, great move i would expect this to help the youth epidemic weve been seeing with ecigarettes the past few years. And yet altria shares are lower today, nick. Theyve been slammed in the last few months and theres some concerns about capital, especially when theyre holding so much of juul when this deal is, if it is permitted to go through. How do you balance that negative with all of the regulatory hurdles with your view on altria its a bit puzzling remember altria had a passive stake in juul, cant record Equity Income from juul even if theyre making money right now people have understand theres a separation here. Whatever happens to juul from a financial standpoint doesnt impact altria in any way, shape or form. Cash, earnings, revenue. Theres going to be no impact from juul on altria this year, next year or the year after. I hope the stock goes to zero i would tell anyone watching this, they should pay zero attention to anything to deal with earnings, revenue, chief growth manager, whatever they give the person that runs the company that sells poison to children this is stock that should be divested twothirds of the money is an esg standard, coming to the United States in a very big way. These stocks are getting kicked out of portfolios, millions of peoples portfolios at a time. I dont care if it trades at a 1 yield direct index and subtract copies like these. So we Sell Oil Stocks its not the same thing at all. Were talking about the executives core competency is getting raed right to the edge of the law. Thats juul what about Philip Morris it was 702 1 2 years ago its 40 theres no Investment Case to be made for companies that will not be part of the portfolio of the future people are not investing money into Companies Like this. You keep saying you hope it goes bust and to zero. I hope it does, truthfully. Moral position. Im not predicting it does. In fact, over the last 100 years, the best performing sector for both britain and the United States are to be alcoholo stocks im suggesting that investors en masse remove these from their portfolio. Its so unpopular it makes it a great Investment Opportunity because one day people will come around im not so sure. Esg and people investing in a socially responsible way is the mega trend of our generation and younger and people will not hold these stocks in their portfolios its not about the business, the execution. None of that is the point of what im saying. What im suggesting is you can own the index and you can x out stocks like this Telecom Companies pay high dividends, utilities you can own preferred stocks you can own anything other than this and thats what i would do. Nick mody, thank you. Thank you. After the break, our exclusive interview with James Bullard. Well ask about his dissent and the feds path going fwaorrd stay with us 49 minutes left till the close we trust usaa more than any other company out there. They give us excellent customer service, every time. Our 18 year old was in an accident. Usaa took care of her car rental, and getting her car towed. All i had to take care of was making sure that my daughter was ok. If i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. Were the gomez family. Were the rivera family. Were the kirby family, and we are usaa members for life. Get your Auto Insurance quote today. Classical Music playing throughout caught the markets attention as one of the fed officials who voted against a quarter rate cut last week but it was because he wanted a bigger cut jim bullard joins us now for an interview. Thank you for joining us. Thanks for having me. Why do you think this economy needs more accommodation at this moment and why do you think it needs more than all the other voting members on the fed . I think its prudent Risk Management at this juncture. I think it would have been better to go farther at this last meeting than the mantle of the committee wanted to go but still i would say the Committee Overall has made major changes during 2019 coming into 2019, we were expected to raise rates in the january, february, march timeframe. We went to a flat path and then in the july, august timeframe. Policy rate is still above the tenyear we probably have a little more to go here. The pushback i would give president bullard is that weve had a good economy here as well. Even housing has started to wake up as a result of those low Mortgage Rates some signs of stabilization in manufacturing, some firming in inflation. Those are some of the weak spots in a market thats less than 2 from record highs. So, why double down on the accommodation . Yeah. I think some of those effects are exactly what you would expect from the turnaround of Monetary Policy during 2019, housing in particular with lower Mortgage Rates thats just the kind of thing that you would expect Monetary Policy acts with long and variable lags. I would expect the effects to show up now in the second half of 2019 and in the first half of 2020. Does the fact that the word insurance cuts has been used by you in recent speeches and by the fed chair suggest that the data isnt that bad yet but you think it will get worse in the short term this is all about Risk Management and the Downside Risks of the economy. If the economy powers through, as it did in the late 90s, we can raise the rate back up the prudent thing to do, especially since inflation is below target, Inflation Expectations below target, i think the prudent thing to do is lower the policy rate right now. And we can come back. If we are going into a recession, why not save it till you need it . The keep your powder dry argument isnt as powerful as you might think. Most of the Research Says you should use the tools while you have them to try to manage the risk that you have like i say, if we play our cards right, as we did in 1998 when there was an agent currency crisis going on, we lowered the policy right at that time, then we raised the policy rate back up i think that was a prudent move at that time thats the kind of thing we would like to see here, keep this expansion going, keep the labor market performing well and keep the consumer on track. Where do you stand on the argument that trade is the biggest potential drawback to the Growth Outlook and Interest Rates arent the most effective tool to deal with that issue i think trade is the biggest issue. I think the global trade war has expanded quite a bit, compared to what people might have expected i think its going to take quite a while to get to agreements i think the chinese might have incentive to wait out this administration, see what happens at the election. I expect titfortat types of moves. So that trade uncertainty is having a lot of effect inside the u. S. , but its having even larger effect outside the u. S. , chilling Global Investment i think those ceos who come on your show and are thinking about a billion dollar investment somewhere around the world, theyre thinking twice theyre being very cautious because theyre not sure what the rules are going to be Going Forward and theyre not sure where they want to make the investment thats slowing the u. S. Economy. It could come back to bite the u. S. Economy. What about the u. S. Consumer, how confident are you that the u. S. Consumer can stay strong in the environment that you just laid out really has been a great spot in this overall economy yeah. I think if you just look at labor markets and consumption, youre going to come to the conclusionthat this is a great economy, but thats a backwardlooking way to think about things that the juncture i think its not surprising with unemployment near 50year low that you would have great Household Spending but when that breaks down, it will probably be too late. You dont want to wait until you see those kinds of indicators turning around theyre kind of lagging indicators you want to be more forward looking and take on board that this trade war has become more pernicious than we originally thought. You mentioned the yield curve earlier. Does the shape of the yield curve in itself worry you . To what extent do you think that shape is more influence, like in places of germany and japan than the likelihood of recession in the United States . I think our yields are, of course, influenced by global yields we have negative yields elsewhere in the g7. I think the shape of the yield curve in the u. S. , though, is sending a signal that markets are less, saying about future growth, future inflation than the fed s i dont see why our policy rate has to be above the general level of rates in the u. S. In this situation if were fighting a war against inflation, then that would be a concern, but thats not where were at here. Inflation is actually below target by a preferred measure and Inflation Expectations certainly seem well contained at this point so i think we have room to maneuver here. I think we can take out the insurance. Like i say, if we dont need it, thats okay. Well just take it back in 2020. So, what should the fed do in october . Would you advocate for a 50 basis point cut again . Wait a minute the committee went 25 last time. Just sitting here today, i would say another 25 basis points. Right but you wanted the 50 basis points. Right i would go another 25 before the end of the year. I would like to reserve judgment i dont like to prejudge meetings well see how the data come in if you guys are right and i should be more optimistic ill certainly take that on board. As for the dissent itself last time round, how did that go down internally . Was the chair disappointed in you . It was a beautiful thing. No i think were used to arguing things out at the open market committee. We have lots of different views. I think thats important we dont want to get trapped in group think. Certainly had people on the other side of this argument and theyre making their case as strongly as they can i think that shows that theres vigorous debate going on. One person on the opposite side of you is Eric Rosengren of the boston fed doesnt want to be cutting he talks about the costs of cutting and one of the more powerful charts was the one where it showed low Interest Rates are encouraging more leverage and riskier debt transactions just this idea that the more the fed cuts, the more it encourages risky behavior, more leverage in the system and more potential dangerous bubbles that could end up hurting in the long term. How do you respond to that yeah. I think coming into the 2007, 2009 crisis, we have better radar on this. My sense is that there may be a few areas of excessive risk taking but nothing on the order of magnitude of what we saw in the mid 2000s or for ma matter the late 1990s i dont think thats where the balance of risks are we would be better off protecting ourselves against the possibility of global slowdown feeding back into the u. S. Do you expect those people who say if we step back and go into a further loosening cycle we just delay the problems for much bigger fallout years down the line yeah, im not sure. One of the biggest risks we face is falling into the kind of negative