Pot belly cfo why the klain lost 6 today we will get to it all let us begin with the Federal Reserve as expected no change in rates in the time meeting of both the year and final meeting of the decade. Come on. Thats all in the past, guy what should we expect in the future the new year, a rate cut, a rate hike, Steve Liesman was there. Asking questions at the press conference and he joins us now with more good evening, steve. Sully, thanks the Federal Reserve ended a momentous year for Monetary Policy by lawmakering what it indicated was a new regime where policy is likely to remain on hold for what could be at least several months the move to neutral follows three successive rate cuts beginning in august and reversal of plans to hike earlier this year now the policy statement the fed called the current stance of policy appropriate feds overnight lending rate standing at a range of 1. 5 to is 1. 75 . Jerome powell saying that could be the case for a while to come. We believe that the current stance of Monetary Policy will support sustained growth, a strong labor market and inflation narrow symmetric 2 objective. As long as incoming information about the economy remains brewedly consistent with in outlook, the current stance every monday tear policy likely remains appropriate. The statement said the fed is monitoring Global Developments that means it is watching trade war appear foreign economic weakness in china and europe while the chairman didnt rule out future rate cuts he suggested the bar for hike something high as in high inflation. Powell said policy is not on a preset course. But 13 of the 17 members of the fed forecast no change in rates for the next year. You tell me. Is that risk on or off. I cant but the trader can. What do they think. I want to ask you one more question, steve. Because we get a change next year you have voting members out. You got new voting members in. Because they rotate every year you know all the personalities how much changes or dissent or debate do you think thats bringing in the new year whats interesting this year we found, brian is that doves became hocks and hawks stayed where they were and some people moved Center People arent necessarily ingrained where they are i think only one he isser to moved messter moved to center she was hawkish. I have to wait to see the policy to know where people stand but one development worth talking about, i think powell has control of the committee this is policy he supports and the committee is not in a place he doesnt support and b he didnt lead it to. He says lets talk about what happened we went from planned rate hikes to now we are going to cut to three cuts to now on hold, all in a 12month period its well to remember this time last year we in a 3 10year and a forecast from the fed itself that the funds rate would be 3 at the end of the year instead cut it in half 1. 5 . Steve liesman in d. C. Its been a republican day we appreciate it sfl. Thank. With the fed seemingly out of the way for a while what toes it mean for stocks . We head to next year guy adami and how much of the year is spectacular gains have been fed induced . This year. This year. How about the last eight nine years induced this year i would say most if not all. But clearly not on Earnings Growth because you dont have Earnings Growth you dont have revenue growth. Its on stock buybacks and the market beliefs that somehow the magically the fed has their back i find it interesting paul volker passed away at the same time the fed lost remaining semblance of credibility they had. I dont want to get on the soapbox. But the fed talks about inflation. They measure everything x inflation if they factored it in it was surpass any benchmark they had but the market wants to go higher i think President Trump is pulling the rip cord on the tariffs on saturday night. Because in in his mine the chinese are weak, vulnerable the stock market at an all time hi i can step on their neck cost me a nont in the market but february, march turns it around et cetera up well for the election if im not convinced they wont happen this weekend. Go ahead. Thats the risk to the market i was surprised the market wasnt higher today. Because you ask the impact on this, the Federal Reserve has had a tough time almost impossible time creating the type of inflation that they want but theyre excellent as creating asset inflation that should be great for the stock market after todays reaction and theyre telling you hey we are running the economy hotter we want more inflation, you would think equities would be higher but i think there is the trade war trade tariff risk hanging over the market. Why why would anybody buy stocks this week, karen when youve got not only the sunday potential tariffs which were getting more with kayla, because peter navarro, the trade guy in the administration wants the tariffs. You have this election in the uk tomorrow as well which could determine again the fate of brexit there is so much risk out there. Why put more risk on if you think feel like there is a bit of risk priced in for tariffs . I dont think people think there is zero risk of tariffs being in place on sunday, so i think there is that. And also we have sort of managed to earn through tariffs. The market is higher even we know we had tariffs this summer. We had tariffs in may. So ultimately the market has been higher. Im nervous. I think the vix is up. I think thats telling you that people are nervous 15 it hasnt been hovering around 15 for a while. Im long and nervous and have protection yes, i think there is a lot more Downside Risk right now than upside potential. Im nervous as well. I think there is nothing wrong withholding cash i see no reason to put cash to work prior to next monday. We need to to see whapz. In my opinion tariffs get delayed or come into effect on december 15th. There is not going to be a deal, right . And when we talk about the fed, the fed did a great job this year 25 , the stock market up, the s p 500. But my concern is how much of 2020s performance did we pull forward into 2019 . So now. Answer your own question, mark. Five, six percent maybe midsingle digits. The upside of next year has been pulled forward the fed is off the table now focus on volatility surrounding the election you need to focus on a trade deal when is it actually going into effect if we get one and you need to focus on the consumer because the consumer has been the work horizon of this economy. Lets bring in somebody answering all the questions. Who is that. There we go. We added a gentleman on the set. Marko klonovich. First to markeace question, marko, thank you, which is have we stolen next years gains this year. No, i dont think so. Actually if you look the Market Performance last two years i think market is up maybe 5 since january of 2018. So if it was not for the rally last month we would have been basically down two years russell down so i dont think we stole anything i think people say that we had a record rally this year they dont say that in the last quarter we had the worst quarter since 1929 which bounced back in the First Quarter and basically market was exactly flat for 18 months before that i dont think we stole anything. Certainly last month we had the a bit of melt up you said that sort of why with would you deploy cash now . That means many people think that way i think there is upside. I dont think we stole anything. Some of it is priced in. We had a good fed and a little bit of brexit. You remain farrell optimistic not wildly bullish not pounding the table. But you think the equity markets as a whole will go up again next year a bit. Yes we think it goes up a bit when you talk about s p. And s p is basically has stuff which is expensive and stuff which is cheap we think its a bit of rotation. But globally sort of equities outside of u. S. We think they can go higher. If you look at emerging market, japan, europe, and then specifically the cyclical sectors we have a bit of space. So the fed since i think it was september 17th or 11th or something when overnight rates spiked to 10 . There they increased the Balance Sheet faster the last couple months than over the last ten years. Whats going on . I mean what to they see the rest of us dont see . Because there is nothing normal about what theyre calling normal. So certainly we have a slowdown globally in manufacturing as determined by the trade war. Still there is a lot of Political Uncertainty and not just coming from u. S. But other parts of the u. S they see that. I think they probably also recognize they did overtighten in the second half of last year. Specifically december. I know powell said they were doing the same thing but december was the worst month since 1907 for Asset Classes they did overtightened so they are adjusting back because of the trade war. The uncertainty is prompting Central Banks around the world to cut actually if you look at them right now, the number of Central Banks cutting versus hiking is it near record so we do have something which looks a little bit like a synchronized monetary easing globally. Marko, i read your notes. You had a 3450 target next year. Do you get there on Earnings Growth, multiple. Its 34 and basically we do have a bit positive on earnings on 180 and eps and s p. That does assume that some of thes tariffs will be rolled back december the deal has been chinese wants a rollback off tariffs u. S. Wants concessions on purchases and other stuff. We think some progress will be made including some partial roleback of the tariffs. Thats why we are optimistic on the e process s. As you said thats why were not pounding the table for 3400. We think cyclicals catch up to defense he was, value catches up to momentum and growth and high beta stocks can catch up to quality stocks thats the view. Mark p. O. Im curious is this a first half view and things change as we approach the election its certainly a first half view because seasonally you do have these type of moves happening typically early in the year. And if we do get the space one i think that will be the catalyst for this he could second half of the year could be more rick tricky but we nonetheless think the u. S. Elections will not be the massive risk we dont see the big probability of Progressive Left or extreme left candidate we see it more as a match of trump versus maybe somebody stsh the risk might be doing nothing. I wish i asked for a chart of this process if you lack at the markets for about a year and a half before the 2016 election the markets did nothing. Yeah. Did not nothing for 15 months people sat there and watched the election and wondered what happened because there was such a gross disparity between the two candidates we have huge disparity now between some of the positions. And i do wonder, marko, if you are an investor you made a good amount of money last decade, fed induced or not guy. Yeah. Why not sit out and wait . I can i can see your point. I would just say that we do have a sort of trump who wants to get reelected and he knows that reelection chances are somewhat related to the fate of the market and he has some lets bullets to spend specifically on trudy. He can pull some breaks out of the market to help the reelection prospect that could be one element again going back and say if you made a lot of money in the last two years. Im not sure everybody did we had a big swing from december. Ten years for sure. The last ten years. Since sort of the last two years a lot of people are buying high selling low. Just timed it, yeah. Look, we will certainly monitor election probabilities how they evolve. Right now we are not concerned about a far left candidate if that comes back in a game, we will turn a bit more cautious. If and when you do let us know and we will get you back on one of the shows, right bk. I think so. Marko thank you very much. Thank you. Good stuff. Mark tepper. Yeah. Youre out there what they call them swing states. Exactly. I dont want you to get political. But ohio where you are from, a very important state and any way to sort of read it visavis the markets . To read it visavis the markets, as far as the state of ohio goes, you know, you have a bunch much blue collar people working butts off trying to save as much as they can. And whats happening there is they are happy the portfolios have gone up but at the same time they are very skeptical of what next year brings ahead for us, right i mean they are concerned about the election i mean thats first and foremost the election and trade are the number one and number two concerns that i hear from clients in ohio. And you wonder, guy adami if we get close and it looks like its trump versus a centrist or maybe a mayor pete or michael bloomberg. Although bloomberg chances are minuscule. We get that. If it looks like the momentum is more progressive side, the taxing side, do you think we get a move. Well, if its more centrist and if obviously President Trump is the republican candidate i think thats market positive on the margin for sure. But these are stories that play out in the spring of next year its hard to game it now and listen, i understand what everybody is saying. Sometimes you have to make it easy and the easy thing is just ride the wave of the mechanic i get it but the warning signs are there. Newmont mining, the gold market is telling you something yield curve flattening all those things are out there the repo market stuff which everybody says is is not a big deal. Doesnt say everybody, my friend ive talked about it. Fair enough. To a point where people say why do you bring it up up . Because there is nothing wrong did owe with it. Its happened before it has happened before but it is unusual. Its more than unusual. This year is different too because of the basl three rules you havent seen the bank Balance Sheets be constrained like this. There is a tirchs year end. Its the blood stream of the market, fair to say. And whats the medicine you need to keep the blood flowing i dont want great detail. But thats whats going on. Whats that sned. I have no idea. Whats the medicine, guy. I dont know. We are following developing story on the trade talks this one is one of the more unusual we have had on the last couple days or weeks Kayla Tausche in d. C. With the latest on, yeah, i dont want to call it kayla. Brian, the last few days various members of the Trump Administration have been sounding off on trade ahead of the december 15th deadline but the resident white house Hawk Peter Navarro is leaning on fictional alter ego which he calls ron ver aire to disseminate a case that tariffs are good and phase 1 deal bad. In a email memo circulated december 9th obtained by cnbc and reported by the New York Times ron vera makes this contrarian argument that quote tariffs are working to defend the economy and have had had no negative impact on growth or stock market rise thp thp. They spur growth by improving net export and he also urge the white house uncertainty out of the market until announcing no deal until after the election and ride the tariffs to victory. Its unclear whie navarro wanted the talking points out there especially under the stage name of ron vera appear how widely he circuited this we reached to nafr memo and the white house for comment. Navarro himself has been arguing up stream against in phase 1 deal since announced brian but certainly now he is taking his case over email and sending out the arguments as his alter ego ron vera zblientsds a jumbled up annagram of the last name is there aed rrd one you know of kayla. As far as we know ron vera is the one he leans on the most an australian scholar realize the that ron vero was appearing in many books and he couldnt find the expert cited elsewhere. Navarro said it was an open secret that essentially an inside joke that it spilled out into the open but even after coming under fire for that and criticizing journalists for using their own aanonymous sources, why navarro chose to lean on this identity again to disseminate the case is really perplexing. A lot of perplexing turns kayla, thank you very much for the interesting story. You could do the annagram and call it tepper i dont understand why he he didnt use his name, right. He has a powerful position. You are one of the most powerful people in government and advocating a strong position on something you said publicly many times. Exactly. Its like guy adami writing about the repo market programs under adamis. Ill spare you the Google Search remember hannibal electricer was a fan louis friend. So maybe pete navarro is watching too many jodi foster movies and i know he watches the show lame. There you go. Male ana gram. And earlier we heard from jeff gunned latch here is what he had to say about a trade deal. Ive been consistently stating that there will be no trade deal until the 2020 election there is no reason for china to do a trade deal on the terms the United States wants when there is an election coming up in less than a year and potentially they could have somebody else that is more old school and wants the genie back in the bolling and would take away tariffs. Bk, nodding. You know what ive been nodding somebody on the desk said this about a year and a half guy adami he said consistently that you will not have any trade deal until after the election and i think you have to at least as an investor plan for that now. I mean we came with the phase one which came out of no where i dont see a lot of incentive except perhaps a weakening chinese economy. That might be the kolgtsist to get them closer to the line. Were a year away from him from the president saying were getting close. Guy is getting a lot of love well deserved tonight. True. And number two what gundlach he called it phase 0. 1 because it wasnt like a deal to make buy soybeans we are making a deal for you to buy soybeans somewhere in the next few years even if there was a deal its nothing. I think there is an argument to be made for some certainty, though right. A step in the right direction. I think there is going to be a deal if you think it President Trumps Approval Ratin