Consumer sentiment levels rising slightly there are some signs momentum is faltering. Corporate america making big layoffs. Underlying the wall street main street divide. 59 minutes left in the trading week s p 500 set for its sixth Straight Record closing high 7th day in a row of gains and 5th week in a row of gains coming up in a few minutes. Were going to speak with James Bullard about this weeks major fed policy shift the strength of this recovery, washington stimulus stalemate and much more. A bold call on energy, we will speak with a strategist who says now is the time to buy the sector continues to lag far behind the Broader Market, despite todays pop. Lets get straight to this resilient market, the s p 500 looking to close out its 7th straight day of gains, the dow turning positive for the year. Mike san tolly tracking all that action resilient, relentless, persistent, this uptrend, the s p 500 clicks the 3500. So essentially bumping up against that thats your High Water Mark into today for this move. Pretty hard to asail the trend itself the fact that youve had this persistence and through a lot of potential hurdles through the course of july and august, its continued higher one thing people are looking at is, if you wanted to draw a trend line for this rally that weve had, its pretty much running up against the upper rail, and were getting stretched to the point where just a routine type pull back, one that would come along as a matter of course at some point is going to seem like something jarring. If you went down 10 as a correction from here, youre not as low as we were july 1st july and august racked up the games. I wanted to take a look at some of the areas of most highest energy within the growth areas of the market. Theres clearly a bid for anything that seems new, disruptive, the next thing this is the s p 500 against the ipo etf which has been a big winner all year. This is the dow jones internet, kind of a fang type etf, and the crown software, theyre up, it looks like the same chart, more or less, you see this massive gap to the overall market. Thats where a lot of the pizzazz has been in this rally unclear if were going to start to have those cool off in favor of Something Else, look at apple and tesla, this is back tote date when apple announced its 4 for 1 stock split. 32 . Tesla, 38 they both go into effect on monday, to whatever degree its been about the split i understand theres a new Retail Energy in this market a lot of excitement around these areas, but this sort of shows you, its a different character of a market right now, where we have this emotional attachment to certain stocks and this selffulfilling prophecy on the upside historically, stock splits have been good for 5, 8, 10 if you look at the whole class of stocks that are split. Theyre ahead of the game, lets say that, guys im not going to be glass half empty im going to try to find something. If you look at volume, volatility, you look at narrow participation. Is there anything that raises flags about this market . You can definitely poke some holes in the breadth of the market, at least you have been able to. You have to make a distinction, though most of the gains mathematically, theyre already so big the majority of stocks are already going in the right direction. Volume, im not that concerned with mostly. On rallies, there have been less volume than on declines for years know i think its much more about whether we have win streaks and just because the luck runs out sometimes. And i do wonder if in fact you front loaded a lot of decent news, with the july august rallies and sentiment getting a little bit ahead of itself those are the things im watching right now its difficult to say today is the day when theyre going to matter. Mike, thank you see you in a bit stocks continue to climb here, we have seen major red flags for workers, in the form of a number of significant layoff announcements mgm and cocacola announcing thousands of employees will be laid off, brought out or separated from the company we saw Major Airlines warn of layoffs coming, even Digital Economy winners that have performed very well, like salesforce they will be laying off 1,000 people im going to dive deeper into coke, this announcement, this reorganization is not driven by the pandemic it sped up these changes that were in the works of cocacola to on leaner and to be more efficient. What is coke announcing . 17 Business Units will go down to 9 under four geographies. 4,000 people will be eligible for layoffs and packages if may not be that much, thats a significant chunk. It represents about 35 of the north american workforce, and does not include international staff, which will be affected likely as well remember, coke did see its biggest sales decline in decades last quarter alaska half the business comes away from home. Restaurants, bars, stadiums. Quincy told me this morning, i think covid will pass, this is about setting ourselves up for a long term future he maintains something hes been talking about throughout the quarter, april was the trough, and volumes do continue to steadily improve the intersection between the degree of lockdowns and the degree of stimulus will be the short term macro drivers for the company. The Company Overall he says is in great shape, and this announcement today is an effort to focus on the winning brands expect more innovation around the winners. Like atopochico for instance, and other brands to go away, like adwalla juice using covid and the pandemic as a chance to reset, it has a harsh way of showing these companies what really works and which one of their brands really resonate and which do not. Thats why its speeding up a lot of these structural changes at companies, its not a cyclical job cut, but something thats been in the works that happened quickly its got to be maddening for people who arent in the markets. Stocks moving higher, despite a pandemic, and companies laying off, despite their stocks doing really well, sara, youre alice watching coal gate today yeah, another stock thats been doing very well lately. Theres been a lot of interesting buzz and chatter around colgate in particular, speculation about around activist entering this space colgate has been a relative winner here of covid19, the 13 f filings came out last week and necessary ing peltz came out with three new positions that were unnamed he has an expertise in consumer packaged goods, especially household items. Remember, peltz is on the board of Procter Gamble, and the new proxy renominates him to the board, it would be unethical for him to take a position in colgate, a direct competitor, its not the way that nelson peltz or tryon operates. While the company isnt giving me any comment, hes not giving me any comment very unlikely that nelson peltz has built a position in a direct competitor to Procter Gamble colgate. Im going to do a deep dive into colgate and why its lagged some of its pigger competitors. At 6 00 p. M. Tonight, were going to dig into the high flying stocks of 2020 and figure out some of the bull bear case after the break, on closing bell, st. Louis fed president James Bullard telling us that unemployment could be as low as 7 by year end well see if hes going to stick by that call and get his thoughts on jobs and recovery youre watching closing bell here on cnbc right now, the worst place to be is stuck inbetween. Accelerate your investments or pull back . Change the plan or stay the course . Thats why Northern Trust is here. With specialized expertise. A history of success through every economic climate. And proven strategies rooted in data and analytics. Giving you more control. Clarity. And confidence. For now and whatevers next Northern Trust wealth management. Coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions. Touchdown only mahomes. Expect anything different . The big events are back and xfinity is your home for the return of live sports. Welcome back the major average is moving higher today, dow and s p 500 at session highs, following yesterdays fed announcement that it would shift average inning nation targeting in an effort to support the labor market and broader economy lets send it over to Steve Liesman who joins us with st. Louis fed president James Bullard. Steve . John, thank you and welcome, jim, to the virtual jackson hole summit which is how were doing everything these days thanks for joining us. Happy to be here. Let me start off with the thing that john was talking about, you released the average inflation targeting change yesterday. Which we all expected in september. So im wondering, is that it for september . Or should we be sitting here bracing for Something Else an actual policy move for the fed come next month . Ill have to wait for the september meeting, and were in the middle of a crisis here, lots of data can come in and well play our cards at that point and make a decision there. I think the chair did a good thing here by using the jackson hole summit to announce the closing of the framework review. This has been going on for 18 months, we did intend to close it earlier this year, con the do it because of the pandemic makes a lot of sense, he was able toe give a fairly long speech explaining the complainings that had been made, i thought it came off pretty well let me get your sense of how that might work in practice. When we talk about letting inflation run above 2 , or averages out to 2 over time, whats your tolerance for inflation to run, 2, 2 1 2, 3 yeah, inflation is right below target, by a half a for quite a while, so it seems like you could run above a half a percent for quite a while. The idea is to cement Inflation Expectations at the 2 target. You really want that credibility all the time, thats a key aspect of central banking. I think that this lower bound or this zero lower bound is kind of dragging average inflation down over time. That certainly happened in japan, its happened in europe we dont want that to happen here, we want to be sure that we cement Inflation Expectations at 2 by actually hitting 2 on average over time. I want to return to the current state of the economy, lets talk about what youre seeing right now we had the resurgence of the virus. Are you seeing a knock on effect in terms of the effective return of the economy i think were continuing to expand here. This will be one of the best quarters ever for Economic Growth in the u. S. Makes perfect sense, youre coming off the very negative Second Quarter i think youre getting the disease under better and better control every day. Businesses are learning how to adapt and how to get their Revenue Streams back up to where they were. Some businesses are actually doing better obviously, some are hit very hard youd expect that kind of un even reaction to the crisis across the industrial sector soy think well grow rapidly here in the Third Quarter. Some tracking forecasts are 25 in an annual rate or higher. I think youll continue to grow in the Fourth Quarter and First Quarter, i think were in the recovery phase here. The recession was only two months, even though it was very sharp. How critical to your outlook and that very optimistic view, i dont know if its optimistic, but its a good one, a good view, how critical to the outlook is an additional fiscal package . Do you think thats needed and if if you dont get it, is that something the fed has to offset yeah, i dont know whats going to happen on that, but i will say this. Macro forecasts right now, a lot of wall street are projecting National Income will be down about 5 in 2020 compared to what it was in 2019. And if you look at the c. A. R. E. S. Act and the other bills that were passed earlier this year, they amount to at least 10 of gdp some people would say 14 of gdp. It depends a little bit on how you count these things there are quite a bit of resources in the pipeline already. A lot of that has been saved by households, because i think some households cant spend on the same kinds of things they would have spent on previously and then you have the executive order, whatever you think about the executive orders helping out on the Unemployment Insurance and elsewhere. Its not clear to me that the incentives are quite as strong as they appeared to be a couple weeks ago, for both sides to come to a deal may not see that, but on the other hand there are plenty of resources out there. Good to have you back on the show hi, sara. At what point do you need to slow down qe, including the purchases of Corporate Bonds how are you thinking about that . Yeah, i think you know, im with the chair here, were not even thinking about raising rates and i think weve got a good policy in place right now, i just continue this policy. I dont really think this is about Monetary Policy, this is about the virus and the economy adapting to the virus, the Risk Management around the virus. And the contagion that would otherwise occur. I think our Monetary Policy is just right for this situation. And were going to have a low policy rate, were going to stay low for a long time. Markets expect us to stay low for a long time. Were encouraging market functioning through the purchases through the 133 programs that we have, our liquidity measures are looking very good. Were staying out of financial crisis you dont want to be in a financial crisis on top of the pandemic so far, weve avoided is that. All of that is looking very good its steady as she goes. Quite the opposite. Record highs every day here. What about the permanent damage . We just reported on some of the layoff announcements, even from Strong Companies that are doing well, like a salesforce, nike, cocacola. Taking this opportunity to reset their businesses and announce more structural layoffs. How are you thinking about how much damage is going to be done permanently that will not come back when we have a vaccine and when the economy snaps back . Well, im worried about it like everyone else but i also think that, you know, you have a big disruption like this, you should expect businesses to be reexamining their models, positioning themselves for the future. And im not surprised that you get a big rethink in some of these industries, even Successful Companies want to rethink where they are and how theyre going to position themselves goingforward i wouldnt say all of that is bad news, necessarily, obviously, youre the person thats laid off, thats bad news if youre thinking about, how can you keep the firm competitive goingforward. That part could be good. Its john fort im thinking a lot about Small Business these days we talked about Small Business as the engine of the economy and as i look at the markets as i look at this recovery, it sure seems like large businesses, especially the larger Public Companies are performing better. Are you satisfied with the way Small Business has been participate i participating or left out of the recovery thus far. I think this is very hard on Small Businesses many of them are innovative, bigger companies, if they have hard driving sorts of managements, they can adopt simple measures, i think thats whats so impressive about the Second Quarter, you look at someone like walmart, able to adopt really simple personal protective equipment, mask wearing, other kinds of safety features and run their business and have a great quarter, if youre a very Small Business, you may not be able to adapt fast enough, your customers may be afraid of coming into your store. I think theyve born the brunt here they also have fiscal package through ppp and other programs that are trying to reach out and help them. And so hopefully they can copy the things that the essential industries did during the Second Quarter, and adopt those approaches to their business, and get their revenue straight to the point where they get past this crisis. Jim, just a final question here, if i know you, youre sitting there thinking, where is the bubble question . Well, look out, because here it comes. Youve said youre going to be easier on inflation or more tolerant of higher inflation youre not thinking about thinking about it, the chairman is not thinking about thinking about thinking about raising Interest Rates why is that not a massive green light for people to go out and not just buy good stocks, but buy any stocks and you create asset bubbles through this fed policy, that create danger and Systemic Risk to the economy well, one of the things we did in the framework review, if you read through the new document, it has more reference to Financial Stability and i think all members to some degree are concerned about this issue and want to be vigilant on this issue some more than others. But i think i was pretty happy with the way this came out, we were able to get a little stronger statement on the idea that we do worry about asset price bubbles. We are aware that the 2001 recession, and the 2007 to 2009 Global Financial crisis bursting asset bubbles, and we do want to guard against that goingforward. I would also say that, you know, look at somewhere like japan, which has had low Interest Rates for a long time, the