Revised down its 2017 core inflation projections from 1. 7 in june to 1. 5 . Unemployment will hold steady they expect by the end of the year, 4. 3 but gdp has been revised up from 2. 2 in june to 2. 4 what they expect by the end of the year. The fed is going to maintain its projections for a thirdrate hike in 2017 according to the fed dot plot and it is also projecting three potential rate hikes in 2018 but again members of the fomc are bit more dovish on the rate hike projections. Thee members dropped projections this year. From Federal Reserve statement, storm related reductions will affect Economic Activity in the near term but past experience that the storms are unlikely materially to alter the course of the National Economy over the medium term. The inflation problem the fed is facing, inflation on a 12 month basis expected to remain somewhat below 2 . This was unanimous decision to hold Interest Rates where they are in december and initiate beginning of unwinding in october. Trish thats a big deal. Thank you very much. Adam, this is a big deal, the fed has never had to do this before. This is historic. They built up all of this on their Balance Sheet. Four 1 2 trillion dollars worth of assets. Qe, sounded like a cruise ship, quantitative easing, they kept buying all the assets. Now there could be a hangover effect. What happens if they begin to unwind . You heard adam say 50 billion a month they will unwind. At that rate, adam johnson, publisher and founder of bullseye brief, points out it would take 10 years to unwind all of this stuff so we are going to be paying the price for 2008 for a long time. David nelson also here. Heather zumarriaga and action American ActionForum President douglas holtzeakin. All right. I think it is, sound a little wonky here right, douglas . The reality here youre talking about something that has never happened before. We never had to do before. Weve never been in this situation where the fed has taken on so much, 4. 5 trillion. I once again remind everybody were talking about basically a quarter of the size of annual gdp for the United States of america. If you try and do that, while simultaneously heading into a raterising environment what are the consequences for this market . Well i think it is pretty clear if things go really, really well, the fed announce as plan, it is done, it executes the plan perfectly, they do something that has never been done before in a way that doesnt surprise anyone, the market will only have to deal with higher Interest Rates which are inevitable its fine. The trouble there can only be bad news. Everything the fed doesnt get right is going to surprise the markets, will provide volatility, will harm equity valuations and spill over into the main economy. All risks are one side. Fed can not do a perfect job. Why i think janet yellen inherit ad incredibly tough hand from ben bernanke. Buying this stuff was easy. Selling it is incredible hard. Trish adam johnson as she washed into the job, ben bernanke was in the position of qe1, and qe2. Put it analogy, we have 20 trillion worth of debt as a nation. At some point we have to pay that back. If you keep borrowing you at some point deal with the consequences. Guess what, the fed said, adam johnson, theyre ready to deal with the consequences. Thank goodness. Were finally getting back to normal what were talking about. Excuse me i get choked up talking about it. Think what is actually happening here. Were taking a massive, massive stash of bond sitting in the Federal Reserve, were letting them actually wind down. The key, trish, were doing incredibly gradually. 10 billion a first month for first quarter, and go up to 20 billion for the Second Quarter and all the way up to 50 billion which will be ultimately run rate. They will very quietly let these bond expire. They will not reinvest proceeds. Trish they are not they are not reinvest them this is very good thing, trish. Were getting back to normal. Granted in 2008 the fed was only game in town. No one else would buy them. The fed did a wonderful thing but probably stayed on too long. Trish heather, what is your reaction to this. Stayed on a little too long, nine years after quantitative easing. Were finally ending the program. It is time. It is past due. If the markets were hooked on the monetary morphine we will soon find out what happens, not only as we raise rates but as we unwind the 4 1 2 trillion dollar Balance Sheet. To recap two important things, no rate rise and 10 billion a month, 6 billion in treasurys, 4 billion in mortgagebacked securities was expected. That was no surprise to the markets. That was telegraphed and anticipated. That is why were not seeing a big reaction in the markets right now. Trish let me go over to hang on. Well go back to adam for a second. Do you think the market can handled that, right . Yes. Trish they thought it would be one thing. Sound like from, if we still have adam shapiro with us it sound like it is actually going to be more up to 50 billion. No, no. This is in line what they initially told us back in july when the fed was remember, janet yellen is gradualist. She has been telegraphing what she would be doing come today for many months and theyre starting off at a rate of 10 billion per month. After three months, in other words, a quarter of buying that will go up to 20 billion for another three months. Then it will be 50. Trish theoretically, david nelson, the markets should be able to handle this, because it is gradual enough. It shouldnt shock anyone. The markets are handling it obviously. Right now the markets hovering near the flat line. Actually up a little didnt at news. It was welltelegraphed. Well have to go down this road again. You can bet Central Banks around the world are watching how this pans out. They have to make the same decision in the years ahead. Right now the markets are pretty sanguine by this it will feel like, even though theyre not doing it, letting it run off, it will feel like were selling 10 billion a month. That will ratchet up to 50. You can bet they give themselves a lot of wiggle room. They are asked a lot of questions, will they stop if they see the economy turned down. Trish, if i could . Trish yes, go ahead. I think i understand why they stopped at 50. If you think about it, that is 600 billiondollars a year for the need of private sector to absorb more debt that is about the federal deficit. Do anything more aggressively, youre doubling the ask of the private sector to absorb treasury debt. More than that might scare them too much. That is the problem though, do we have enough private investors on the other side to mop up all of these bond, unwinding of their Balance Sheets . If you dont, you see the short end of the curve blow through the long end of the curve. Trish before we wonk out, i want to talk about the consequences of that, heather. If you actually start to see Interest Rates spike, if rates, what are we at 2. 25 on treasury yields . 2. 23 on the 10year. Trish if that starts to move significantly higher pretty soon you get yourself at a point, heather, it becomes very suffocating to pay interest on our debt, why we worked up about the 20 trillion number to begin with. Yes, youre right, hello. 20 trillion in debt. We cant even pay interest cost on that debt if Interest Rates do rise. Not ownly, i know its a wonky term but inverted yield curve, when credits dry up, banks wont lend any money because theyre not making any money, that is the biggest risk if we see Interest Rates rise, but not only on rising debt. Trish i have to say to everyone, this is absolutely fascinating stuff, it really is. This is economics at work. It is fascinating because this is also such unchartered territory. The Federal Reserve never went out and made all those asset purchases until ben bernanke. No one ever had to unwind a 4 1 2 trillion dollar Balance Sheet. No central bank in the world. Youre hitting on the point, trish, youre saying what everybody should be talking about, we havent been here before. We have to believe we understand what the endgame is here but this is the first time it happened. Well have to go through this time and time again as Central Banks around the world go through the same game. Why were going gradually. It is scary when you Start Talking about it. Well keep the number we are retiring very low every month. Also why chairman yellen effectively said there will be only one more hike at most this year, if get that next year we get three. Trish dealing with unwinding at exact same time. You cant choke them. David, heather, doug, everybody stick around. We have a lot to talk about. I quickly want to go to the floor. Nicole petallides standing by at new york stock exchange. Weve been pointing out the markets taking this relatively in stride, nicole. We have go nowhere fast up until 2 00 p. M. The dow end up over the unchanged line over 140 types. What is interesting the 10year bond, yield up seven days in a row, it actually moved higher, right before the announcement at 2. 23 . Right now, is moving as well as 2. 2 . Youre seeing bond yields moving higher. Gold moved into the negative territory which would make it the fourth day in a road. Unwinding of Balance Sheet they expect that they heard janet yellen say it will be like watching paint dry. They expect that to happen. What they were listening for is the rate hikes. One trader came up to me, theyre still on track for the thirdrate hike in december. There were hopes they would throw that one off the table. Three in 2018. Two more in 2019 and one more in 2020. Janet yellen and i will conclude with this, trish, policy is not something set in stone. If their evaluation changes with respect to inflation in particular that would make a difference. Well see also what she has to say in the press conference. Right now the dow after a record, intraday record down one point. Trish . Trish good stuff. Thank you so much, nicole. Im back with the panel. I point out cliff our friend, chief Investment Officer at Mass Mutual Financial Group emails, this began in march of 2009. Weve been dealing with this asset purchasing by the fed for quite some time now and this is indeed an economic experiment. It really is and its historic because now for the first time, the First Time Ever a central bank is now committed to winding down that portfolio. They built it up. They have to wind it down. What is that going to mean for Interest Rates . He says the hope is they can do this effectively. That means good stuff for the future. That tells you the feds tinkering might actually work, but adam, you know me well, sometimes i get a little nervous we Start Talking about fed and their confidence, shall we say in their ability to tinker. What youre getting at where is the free in free markets, right . If you had the fed come in buy all this stuff. Now you have the fed not only unwinding it, but telling us exactly what it will do this year, next year, 2019, and even into 2020, are you kidding me . There is nothing free in free markets with the fed giving that much guidance. What youre getting at, we want them to get it right but maybe trish i never liked the fact they had to be so involved. I mean i get it back in 80, right . Those 80, those were scary times. You do at the moment. At one point forever you get stuck with a real problem. That problem, that day is here. There is confidence that janet yellen can figure this one out. Douglas holtzeakin, i never like trusting the academic. I think your sentiment is exactly right. You can look back and ask why did we do this because we never got improved growth out of it . That was fundamental purpose of program and didnt seem to work to me. There are two important things going on today, number one the fed statement as a whole is pretty optimistic statement. It says were unwinding and go to the hawkish end of the rate increases for 2018. Trish three of them. That sends a message that things are fine. And number two, this sets the baseline for whoever is the next fed chair. They will be measured relative to this. If they do more than this it will be moderately hawkish but if they do less, they are viewed as a big dove. This will frame the debate next year and set in motion unwinding and expectation. Those are important things for the fed to do. Trish let me ask you, david nelson, now that the fed is out on record, right, they made this commitment to 10, to 20, to 50 billion, they will raise rates in 2017 once and raise rates three times in 2018 if they dont follow through with any of this, they will back off and things are shifting, does the market freak out, say you twice promised one thing youre not following you through and that perhaps suggest you cant unwind a Balance Sheet of this size . If they back off theyre likely seeing something down the road for the economy. That will speak the markets for sure. That is really the risk. That would be from my perspective, only thing that gets them to slow down here. Theyre focusing on right areas, certainly Balance Sheet. Onehalf of the dual mandate, inflation, we spent four 1 2 trillion dollars trying to get some form of inflation. Obviously didnt work. So lets walk away from that at this point. Trish i am glad you brought that up. Heather, elaborate on that. 4. 5 trillion is a lot of money. A quarter of the size of our annual economic output. That is a lot of money. It didnt really get us anything. If anything, heather it, contributed to the hourglass economy we find ourselves in, where those on top they benefited because if you have capital, you can make that go to work for you in and markets have been on fire. And those on the bottom, increasingly have seen government handouts. Those in the middle, heather, they have been squeezed and i dont think the fed program has done one darn thing to help them. I agree with you. The other side of that those long the market would say it pushed people into riskier Asset Classes like stocks because youre not getting anything out of your boned portfolios if youre in retirement. How do you get anything from savings, cds, 2 , 1 on 10year . You cant. Youre forced to buy stocks. It propped up the stock market higher than some argue it should be trish. This is unprecedented time. Uncharted territories. Globally remember, Central Banks around the world are still printing money. Even though in the u. S. , it looks like were ending that program, we are going against the grain here. There is still 12 trillion around the world on global scale that need to be trish thats a good point as well. One thing i would say during the whole process is, i was bothered when you had retirees suddenly looking at puerto rican debt, saying hey, maybe i can get a 10 yield on puerto rican debt only to find out puerto rico was going to default on its debt. That is what it did. Took our momandpop investor, forced them to increasingly look at riskier and riskier vehicles. How else will you get any kind of yield . There are consequences of that. Speaking of puerto rico, guys, i point out, were getting word, entire island of puerto rico, 3 1 2 Million People dealing with no power. They had that very powerful storm, hurricane maria. The good news it weaken ad bit to a cat cat3. But it slammed into puerto rico. Look at unbelievable pictures. This is one of the strongest hurricanes weve seen. The entire island of puerto rico, 3 1 2 Million People right now with no power. And that means problems. We saw it certainly in florida. We saw it in texas. When you dont have power, you cant do much. You cant go to the atm. You cant get money out. You cant complete credit card transaction to buy food. You cant keep food you want to cook. A lot of serious consequences. Youre looking at this picture just come into us. We have homes destroyed. You see serious winds gusting across the island. Maria killed at least nine people in the caribbean. These poor people, they have been dealing with one after another this season. I want to go to Rick Reichmuth live in the weather center. Well go back to janet yellen. Were waiting on her. Rick, fill us in. They cant keep food cool in the refrigerator or freezer. A really horrible situation. You get a sense by the direction, it didnt just kind of clip one side of it but the center of the storm tracked across the entire kind of island diagonally. Also the eyewall moving right over st. Croix which had been spared from irma because it was so far south, that assever begin island. Not the case this time. Win recorded 137 mileanhour. That doesnt mean highest wind. That was spot that recorded wind. Other areas not able to record all of it. Taking a big trek acrossland. Highest mountains over towards the west, had it moved over there would have disrupt ad little more. Now moving offshore again, just off the north course there. Made landfall. Cat4 storm, probably strongest they have had in over 80 years. Now the center of this moves back over water. The good news in the short term there isnt any other big land mass in the path of this storm. Dominican republic, you will have impacts of this, i think probably worse, Hurricane Force wind likely to stay just offshore. Turks and caicos, going just towards east of it. The track pulls back up in and around mid atlantic and the northeast. Well watch a number of days, trish. Wednesday, thursday, maybe some sort of a storm in the northeast. At least indirect impacts, too early to say. Trish all right. Were keeping eye on that. Thank you very much, rick. Another Natural Disaster weve been following, 220 people, including schoolkids after mexico was devastated by an earthquake second time in two weeks. This is video people posted to social media, showing damage. This is 7. 1 magnitude damage quake. You had buildings reduced to rubble. Hundreds of people, soldiers, police, all scrambling to rescue anybody trap