And andrew ross sorkin. Well talk about the fed and the Market Reaction in a moment. But first, check this out everybody. Close friend of the show. Jordan spieth hitting a hole in one. Yes it happened on par 3. The par 3 2nd at conway farms golf club. Thats in lake forest illinois. One bounce off the run on to the green and right into the bottom of the cup. Wow. Okay. Lets get you caught up on the market news in the morning. Got to love that. U. S. Equity futures at this hour after the feds decision not to move. Janet yellen and the feds. It is a group. And hes not even complaining. Hes not complaining. Dow looks like it would open down about 55 points right now. Just broke up to 57 points. S p 500 down 7. 5 points as well and the nasdaq open off about 17 points. The fed of course, were doing it again. Were doing it every day. What if they had raised what would the markets have done. No idea. 110 points to 7yearold 0 Interest Rate policy. Market odds for december hike still above 60 . But rbs suggesting that markets are currently pricing the first full rate rise for march and the expert of the morning was here. So a cheer went up among fed reporters when they didnt hike because we have a job for another 30 days as well. Markets forced themselves to put the decision in the rearview mirror. If not now then when . The fed focussing on the risk of market volatility and Global Economic weakness on the u. S. Economy outlook. Trouble that could take months to work through the u. S. Economic data. So many months that four of the 17 members dont see a rate hike until next year or later. Thats double the prior number. But fed chair janet yellen said, you know what, it wont be that long. Were getting closer and the labor market has improved and as i said in the past we dont want to wait until we fully met both of our objectives to begin the process of tightening policy given the lags in the operation of Monetary Policy. More or less markets are still betting on a hike this year. We did a flash cnbc fed survey. We got 40 responses in the time after the decision came out. 64 still believe theres a hike this year. Have the monthly break down. Ill get that to you in the next hour. 80 before the meeting. But what she just set is a much higher bar than people realize. You can be at the right unemployment levels but if your other objective is watching inflation. Were far from near the inflationary targets, if we have to actually hit those targets before they raise thats a bigger issue. You put your finger on the issue which is theres this downdraft, we know this, Everybody Knows this, of a deflati deflationary coming from abroad. Weakness overseas. And the stronger dollar is a big part of that thats going to reduce the headline Inflation Numbers over the next several months. That was the question i asked her and she said well were going to wait a little bit and i dont know what a little bit is. Heres some of the commentary we got. The fed was true to the requirements of its policy statements because of what becky was just saying. They are not going to hit that 2 inflation target for awhile. So much for preemptive as opposed to reactive Monetary Policy. Im hanging up my fed watching spurs. This yellen fed just wont hike rates ever. That exasperation widespread yesterday with the main criticism that theyre concentrating too much on overseas but yellen and all Voting Members except jeff clearly prefer to see if thats true in reality rather than just in the forecast. Didnt one person want more accommodation . We dont know for sure but some person actually put in negative rates. Wonder why we have a problem. But were going to have a chance to ask this stuff on monday. We want to do a tease, we have jim on set here. That will be good. He hopefully, people say, theres a disagreement as to whether some of what the fed is doing is actually selffulfilling in terms of slow growth and putting a damper on Business Investment. David makes this point again in the journal today that if youre going to decide who gets credit and who doesnt, everybody else stays at zero and buys back stock and doesnt do Business Investment youre cultivating a slow growth environment and reacting to the slow growth environment by staying at zero. It cultivates a slow growth environment and then you stay at zero even longer. Theres been articles that its like a little strange there that there might be some bells and n inscents and cutlike meditation and yoga. Cameras is what they do have. He said the next move would be qe. So im trying to think of who might end up being right. It could be santelli that said they wont raise until 17. They said it again yesterday that this fed wont i was hoping that they would be i was hoping wow, theyre good. Theyre going to do what needs to be done. They surprised me though. I thought if they didnt raise yesterday they would come out and say its going to happen very soon but all the commentary i heard from yellen is wow this is more dovish than i expected. Some people said a dovish hold. I thought a hawkish hold. But things arent so bad they couldnt have done it. October, remember when things happen in october in the past. Things happen in october. If theres another theyre going to look ridiculous if they raised and gave it back in october. Yeah but it didnt go up yesterday. It was down 60. What if theres a tremor. What if that was a preshock. What if what we saw with china was the beginning of in october we do have a market break. Then theyre smart not to do it. Not if its the reason that its happening. But thats where the debate is. I dont see how higher Interest Rates are something that would something might always be happening down the road. Lets get peter in here. What i understand the most is the inflation and not being near the inflationary target. But if you grew up you never thought the inflation target was put in to get to it from below the target. You always thought price stability you thought the feds role was to keep the dollar from devaluing. But you have the opposite concern. Its a very different world. I want to know what everybody thinks about the political implications though . Thats going to play. I read yesterday that it would hurt the democrat ifs they stay at zero. Theres two ways to look at it. Its either going to hurt the democrats and if you think theyre now going to raise in 16 and you actually believe that janet yellen was some kind of plant for the democrats you would think she would really have to hang until 17. He said now it wont be until 17. But the market may end uptightening different places. Joining us now chief u. S. Economist. Did we intro you yet. Quickly, yes, im here. They moved the prompter. At the top i did. Hes our guest host today. Im beside myself. Is that a good name . Its perfect. The monetary policies on this circular feedback loop. So after qe1 ended stocks fell. After qe2 ended stocks fell. When they hinted at the end that they were going to taper stocks fell. When qe3 actually ended stocks fell. A month before the feds may raise Interest Rates stocks fall and then janet yellen says the tightening of financial conditions are not going to get us to tighten when theyre the center of the tightening of financial conditions. Theres a pattern they dont see. Its always Something Else thats causing the issues and not them themselves and i think thats a treadmill they dont seem willing to get off and the dollar strengthens so they may raise Interest Rates and that causes problems in emerging markets and the whole argument, cpi, core cpi is running. 6 . They say we dont Pay Attention to core cpi anymore. Its pce. They would have raised rates a year ago. So its driving Monetary Policy. I wonder if the line following of the 2 inflation target is good for us in the long run because you know you may be able to eventually hit it but its going to be difficult in the world of global disinflation and the price you end up paying is maybe that you create another set of imbalances in a real economy or Financial Market somewhere and we go through another boom bust cycle and asset prices that ends up in deflation. So to me i think its better outcome and closer to price stability that the alternative scenario is we end up with another asset bubble. 30 or 40 years the u. S. Always grew about 50 faster than europe because of their structural imbalances and their embrace of an entitlement state or welfare state and now they continue to reap what they have sewn with Slower Growth and we say the world isnt growing and here were probably okay but were going to base our Monetary Policy on the disinflation that they have created over there and the slow growth theyve created over there. The alternative is basing your Monetary Policy on forecasts of bad things that could not have happened over the course of 7 or 8 years. Think about when they launch those rockets after cape canaveral. If you have a little tiny thing that goes wrong or a glitch, you scrub the whole lift off and the metaphor works in that this is really lift off were talking about in that youre extra, extra careful because the down side is the rocket blows up and they went forward and they were on their way toward hiking rates and its this blow up in china. Remember what we have been talking about. The impact of market volatility and the impact of the slow down in china, thats all we have been talking about. The market was down by a thousand points. It scared everybody. It was this crazy overinflated stock market were talking about. The chinese economy is probably still growing at 60 or whatever. Lets find out if thats true. Lets just make sure that thats right. Before we go up a quarter point. No, you misread that a little bit. The impact on china in the u. S. Economy is as limited as it used to be. Hoping for a different result, this is where we are after this accommodation. All of this accommodation is not the right medicine. What if its counter productive. Its not only that its a hindrance but i have a long list of why zero Interest Rate policy is a hindrance to growth and bad policy. If Interest Rates went up whats going to happen to the Housing Market . Well one of the problems with the Housing Market is the first time household who has a choice of renting or buying. Home prices have been rising well above the rate of income growth. If Interest Rates went up a little bit maybe the cost of financing it go down. Make it more affordable to buy a home. Right now theyre priced out. Theyre paying 4 or 5 on rent because home prices are rising 6 to 7. If Interest Rates went up maybe the home price would go down and they could better afford to buy that home. Was there actually a quote yesterday . Did yellen really say hopefully we wont get trapped here forever . Something like that. Really . I think the quote was its my belief we wont be at zero forever. I could actually find it. Its my belief that maybe we wont have to go to negative Interest Rates. Maybe. Were not talking about that today is what i think she said. My concern is if this was really a delay from six weeks, three months, i would have no problem. My concern is that Something Else will deter them in december and then you get into seasonal, you know, weakness in q1 and we could very well find ourselves at the june meeting still at zero, Unemployment Rate, 4. 8 or possibly lower and at that point, the tightening cycle is not going to be gradual and my concern, again is you are probably going to get another leg up in asset prices and then you risk potentially a more disorderly correction. I would also follow up on what steve said because the sell off in equities really spread from the u. S. The day after the fomc minutes come out and they were all over the place so i would argue a lot of this volatility in the markets is not just about china. Its about policy uncertainty and the fed is contributing to that to some extent. It could give them, this latest move, down 60 yesterday. October is coming. Who knows what happens and theres going to be positive things on terngs front to help stocks. October has been a scary month in the past. We could have a break that disallows any move in december and pushes it out. But theyre sort of adding to it. Some of those concerns wouldnt be quite as strong. I felt like there was a real chance they were going to do this in october but they were pushing that quite a bit further back. They may be part of the problem. Thats where we disagree. Im ready for that understanding and i get what peter is saying because clearly Interest Rates arbitrage the cost of the underlying asset. We see that in the student loan world as a person sending a kid to college not too long from now and all the financing thats available is clearly having an ill pact on that. I agree with you on that peter but if the issue is savers versus investors or savers versus borrowers i fail to see how raising rates helps in that regard, but its just an honest difference of opinion i guess. Raising rates is a stimulus package to the 10 trillion sitting there in savings accounts yielding 0. If people got 1 on that money thats 100 billion of extra income into peoples pockets. Particularly retireees that arent getting that much. 1 . God forbid. Its never a good stay to stop. Its was luke 23 34, father forgive them for they do not know what theyre doing. Thats how i feel this morning. Right here. Quoting verse, man, im out of that. Im not in that game. Coming up, youll be here peter. Thank you. Coming up i really dont think they know. You wont believe what former president was caught on the kiss cam at a baseball game last night. What . W . I guess, right . And could a trip from la to vegas soon be as fast as a high speed train . That story and how the chinese are part of that next. Who was he kissing though . That was the question . You werent going to say it. Thats good. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Welcome back. It may soon be easier to get from los angeles to las vegas. Theyre going to help build a high speed railing between these two cities. Estimates suggest the project could be worth 5 billion. The deal comes days before chinese president makes his first visit to the United States next week. Quite the buzz story this morning. Ron perlman now quitting the board of carnigie hall. He wrote a letter to trustees accusing the artistic director of a lack of transparency and criticizing the board for failing oversight. He was the chosen successor. There seems to have been some very strange things, a prize that was going to be given supposedly and ron claiming theres a conflict of interest and that the board was allowing this and either shouldnt have allowed it or should have hired a board to do it but the worst part for the institution if youre a new yorker or somebody that cares about the arts is ron perelman has been a great benefactor to this institution. Now that hes leaving it, might not be such a beneficiary. Might be a key point about whether this is the buzz story of the morning. If you are a new york, right . If you are a 1 er in new york and you care about stuff like this. Im telling you, people are going what the and who is you just went through a im only in new jersey. Im only 15 miles from here. You dont even know what im talking about . I didnt know it was a big buzz story of the morning. You werent buzzing about it . Within the sort of we know exactly what within youre talking about. Its you. Anyway. And then this to you will be what that was to me. Is this Jordan Spieth maybe not. The second highest ranking official at fifa is being placed on immediate leave. Hes under investigation involving the black market sale of tickets. Den very broncos beating poor kansas city in a way they havent done before. I dont know how many in a row this is in kansas city. Its horrific in youre a chiefs fan. 3124. Peyton manning throwing a 19 yard touchdown pass to tie the game with 36 seconds left and then on the next play, he scooped up a fumble and ran 21 yards for the winning touchdown and scored just nine seconds later after the last one and there was no overtime and anyway thats what happened. And now, to baseball, former president jimmy carter is the one kissing his wife rosalynn at the braves game. The moment was caught on kiss cam. How many have we got . 41 . We got w. We got jimmy carter. And we got bill clinton. And we said which one was caught on a kiss cam. Is obama a baseball fan . I dont think so. But we said former president. Youre rushing things. I know with you thats not Wishful Thinking in this case. Lets get back to the markets. The dollar falling on the feds decision to keep rates unchanged. Hes the managing director at bk asset management. This tells us the fed is paying even more attention to the dollar than we suspected. If theyre using the inflation argument and the lack of inflation as the reason theyre not doing that the dollar plays a role in that. She said the dollar is a concern. It does have an impact. I was thinking about this whole thing on the way here and something struck me that is interesting. If you buy their economic argument that everybody at this table agrees there is no hike in the foreseeable future, i wonder if a lot of this was simply because they were afraid of the budget battle coming up. I think, you know, one of the things that she talked about in the press conference that went completely unnoticed was she said it would be much i forget, less than unhelpful or incredibly unfortunate