Interest rates. All markets closed in positive territory. The dow closing 2. 5 higher for the day. Why is this happening . What did investors take from his comment . The first one, the possibility that there will be a rate hike. More so going into 2019, youll see a slowing down of Interest Rate hikes. Thats because jay powell said theyre just below the neutral rate. When you look at the fed fund rate, which is between 2 and 2. 25 , this is the equilibriueq. The fed chair made a comment saying he sees no dangerous excesses in the stock market. Speaking of the market, lets take a look at the big movers on the dow. Home builder stocks higher. Caterpillar, boeing. The biggest movers as well as you nighted health. A lot of investors moving their money back into risk. Netflix, amazon, apple climbing higher for the day as they embrace risk. The fact that the possibility of Interest Rates may not be climbing, that played a role with the tenyear yield. You saw that fall for the day. Tenyear yield is sensitive to fed policy. So you can see the last little year or so, how its climbed. But today it closed in negative territory as investors are thinking that this could maybe be the end of the cycle when it comes to fed Interest Rate hikes or a slow down going into 2019. Last but not least, we should look at the price of oil for the day. Closing lower at 50. 29. Two reasons for that. The first is u. S. Supplies came in higher than expected. And then theres so much uncertainty around opec countries and whether they will cut supply next week when they meet. Back to you. Neil thanks. As you know, this is just exactly what this president wanted. So what is the reaction there . Kristen fisher at the white house with more. President trump has been relentless in his criticism of the feds rising Interest Rates. Today the fed chairman defended them. But he also opened the door to a potential pause in these rate hikes. Wouldnt said when but analysts predict that they could happen next year. That still will not be soon enough for President Trump who just yesterday told the Washington Post that so far im not even a little bit happy with my selection of jay, Jerome Powell. I think the fed is way off base with what theyre doing. Those kinds of comments have led to a lot of criticism that the president is not respecting the independence of the Federal Reserve. The chairman of the president s council of economic advisers, he said today that that is President Trump being President Trump. He looks at the path of Interest Rates, not just the short term rates and thinks about the economic effects of it. The president speaks his mind. Thats what he did. Hes not impinging on our respect of the independence of the fed. So looking forward, its looking increasingly likely that the fed will rise Interest Rates, raise rates again in december but after that, they could pause. As he noted, thats been great news for the markets. Good news for President Trump even though he wants that to happen right now. He doesnt want to wait, neil. Neil im waiting for that tweet. How did this play out . Especially the g. M. News and how they dealt with that at the l. A. Auto show. Jeff flock has the latest. Hi, jeff. It has overshadowed the cars sadly, neil. The president s tweet suggesting a 25 tariff on all cars that come from europe. Who is upset about that . The germans. Thats the new mercedes amg. That sells for 112,000. If they were to pass along a 25 tariff on this vehicle to the consumer, that would be an increase in price of 28,000. Some would argue if you got 112,000 to start, to buy a car, maybe you have another 28,000. So maybe it wouldnt hurt things. Maybe it would lead you to buy a chevy corvette instead if you wanted a sports car. This is a reasonable argument. But its certainly something that figures to raise prices across the board. Even the u. S. Automakers say, i dont know that raising tariffs is a good idea. This Auto Industry is so intertwined, i dont think thats good for anybody because if car prices go up in general, none of us are going to be happy. Neil . Neil and the worry with the Federal Reserve as well. Jeff flock. Ed lawrence on how this whole g. M. Drama is playing into this. He joins us in washington. All right. We should have him shortly. I want to get the fallout from this. This was unexpected, folks. We had a feeling that the Federal Reserve might be a tad more accommodating. Now the fed is saying were nearly neutral. We have dan here with us. We have charlie gasparino. Daniel looking at this, what changed in six weeks . Apparently weve gone from being worlds apart from neutral to just under. That is when markets really took off because they priced in exactly one more rate hike come december 19 and thats it. Theyre considering 2019 to be in complete pause mode and stocks took off. He mentioned that stocks themselves were not overvalued. He spoke about the obscure as most investors are concerned and the fact that theres this overevaluation. But markets looked passed that and focused on the fed is going to pause. Powell is kowtowing to the president. Neil and optics are one thing. Others saying the averages now are in positive territory for the year and december is a good month typically, right . Yeah. You know what i think happened here . I think the president got to him. Im going to use a baseball analogy. Its like when the manager goes out there and screaming at the umpire. The umpire doesnt change his view at the moment by hes in his head. The next time he makes a call, hes remembering that argument. Thats what the president has done to jay powell. Hes gotten in his head. Why else would he do what he did . I agree 100 . This is a very bad precedent that jay powell did. He did a 180 in 6 weeks. Not that much has changed. Same sort of trade war stuff, basically same economic indicators. And then he does a 180. Heres what im worried about. Overleveraging of corporate america. The reason why the fed needs to unwind its Balance Sheet and raise short term Interest Rates is because a, the economy is improving and number 2, you could have asset bubbles. We should not be incentivizing corporations and individuals, mainly corporations because they went on a debt binge to borrow more. Neil hes not worried about that. Are you . I think what has changed in the last six weeks is what happened at general electric. In the blink of an eye, nobody cared that it was trading south of 10. When their bonds went to 80 cents on the dollar and started trying like a junk bond from mike milkins day neil what shes saying, the Federal Reserve was guided by the markets and responding to the markets. I didnt think Federal Reserves did that. I think its a combination of things. Part of the danger of where we are is if jay powell will hold off on raising rates, if thats where were going to go, we we have room when a recession hits. One is coming. Neil so now not to get to wonkie about this, but something that the fed said is controlled about 2. 5 Jerome Powell is saying that is half the norm but a long way from zero and they have a lot of arrows in their quiver because they have raised it. Are there never arrows . No. Neil would you please try to avoid technical stuff. Youre doing it again. Cant blow up the balance they lower longterm rates. Neil so if youre right on that theyre idiots. Neil thats lovely. Why were stocks up so much . Someone would get pause here and say wait a minute. Theyre going to slow down on Interest Rate hikes because things are slowing down. Should i be worried . Look at new home sales. A threeyear low. Neil was this an overreaction . Stock traders trade off of headlines. Longterm, stock market reflects value longterm. Short term people betting against the market. What happened in june of 2007. Stocks were at historic highs. I think 14,000 on the dow. And then you know what happened next. Im saying that. Stocks are an imperfect measure. Im worried about too much leverage in the financial system. At some point, youll have to pay for that. If theres any neil lets talk about that. A good time. Dan, one of the things that powell said today is that now were going to be data dependent. Make moves based on the data and whether it necessitates having to move. But he doesnt see banks in nearly the duress that they were a decade ago. So hes saying that yeah, there might be some overvaluations here and there. Im paraphrasing. I dont see the asset bubbles that we once had. You agree with that . I dont. I think i theres more trouble around the corner that were not paying attention to. The reason neil so you do this because foreseeing that trouble . Well, i dont think that he is. I think thats part of it. I still think that the president is in his ear, neil. Thats what i believe. What bothers me about this, your fed chairman has to have a steady hand. I dont think he will be chasing the shiny object here. Thats what im concerned about 1 1 2 months ago, were one place and now were in another place. Neil its too obvious. I love you to death. But youre calling the president s tune that hes with song. When you could make a case, charles, argument not withstanding that all right, you know, there are signs that markets are hick cupping. G. M. , the housing industry. You could make a argument to slow down, right . You can. Look across energy states. Look across manufacturing states. Real Estate Construction and leisure and hospitality. We studied this a few days ago. Jobless claims across these sectors have turned up. Its still a solid economy to you. Its weakening to me. Neil weakening from the highs. Of course. Neil this market and what its doing now justified around these levels . After 9 1 2 years of expansion . Id say no. Neil dan . We pumped a 22 trillion any time a bubble bursts i know he said that. I dont see the banking its a false premise again. I use that word. In the banking system. The leverage is not in the banks, its in corporations. Exactly. Thats the problem he has. When does that pop and do you need to pop it . I think you do you need to let the air out of it. If you dont neil so you disagree with the pressure that the president was putting on the Federal Reserve no. I agree that he buckle and he shouldnt have. Neil no. Thats what im saying. That you dont think that was the right approach for the president to take . I dont care that the president did it so much. I expect president s to do it. I dont fault trump. President s and administrations have always complaint. Neil so youre saying caving when you could make a good argument to do what he did. To charlies point, an hour before he hits the podium today, a Financial Stability report hiss the news wires that calls into question everything the fed is saying. An hour before. It was too well orchestrated. He has to have written signed off on that report being released that stated this was brewing. Two weeks ago shepard the g. M. Troubles triggered this and changed the writing of his speech today . You think so . I think thats cover. Hes using that as cover. I still go back to its an italian thing. Its more than a third of their north American Work force. I know. This is more than s. U. V. S overtaking cars. Its a third. A big number. This corporate leverage is alarming. Im doing research on amazon, maybe buying the fox Regional Sports network. How are they going to buy them . With cash. Neil i thought you were shopping on amazon. I do that, too. Theyre a great company. Neil you think the leverage is anything like it was a year ago . In Certain Companies it is. Its substantially higher. Neil we have to breakaway here. But this response today is a short life event . Is that what youre saying . A lot of people were covering their bets today in the markets. I agree. Neil we have to quit hanging out together. You have too many italians here. A false premise. Neil all right. What we did mention is g. M. The role about whether the company is playing fast and loose with the white house and being too cute and too could i for words. The president responding to that. Ed lawrence in washington with more. Ed . The president responding to that and also alluded to the fact that the auto tariffs may be coming in. A twist here. The president tweeting out today saying that tariffs on trucks coming in to this country have worked and helped that industry adding that if we add cars on that list, g. M. Would not be closing their plant saying the president has great power on this issue. Hes referring to those auto tariffs of up to 25 of autos coming into this country. The president here at the white house, anger is an understatement when you talk about the reaction to job cuts and the plants closing here. Sources here at the white house, also a source at a department outside the white house within the administration tell me that this president has directed them, the appropriate agencies to go forward with this threat in looking at cutting subsidies to g. M. Were talking about the Energy Department specifically. They have given g. M. This year alone 76 million in grants. This is money that they dont have to pay back. The federal government has loaned g. M. 50 billion since 2000. All by 11 billion has been paid back. The white house economic adviser kevin hasert says that g. M. Should be in a better position. Its easier than it used to be for manufacturers to succeed in the u. S. Thats lower tax rates, lower regulation. We see the results. We have about 450,000 more manufacturing jobs. So when you see a specific company that is headed in a different direction, whats up with that company . Why can they not keep up with the trends. The political outbreak for the president , this could be bad politically for him. Talked about bringing jobs back to america. This obviously is the opposite of that. Economically, g. M. Says that they have to do this for the survival of the company. Neil . Shepard thanks very much. On to some other developments. There was other news today. About the my grants arriving in mexico. Now mexico is saying we need help from the United States. Essential for pine trees, but maybe not for people with rheumatoid arthritis. Because there are options. Like an unjection™. Xeljanz xr. A oncedaily pill for adults with moderate to severe ra for whom methotrexate did not work well enough. Xeljanz xr can reduce pain, swelling and further joint damage, even without methotrexate. Xeljanz xr can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma have happened. As have tears in the stomach or intestines, serious allergic reactions, low blood cell counts, higher liver tests and cholesterol levels. Dont start xeljanz xr if you have an infection. Your doctor should perform blood tests before and while taking xeljanz xr, and monitor certain liver tests. Tell your doctor if youve been somewhere fungal infections are common and if you have had tb, hepatitis b or c, or are prone to infections. Needles. Fine for some things. But for you, one pill a day may provide symptom relief. Ask your doctor about xeljanz xr. An unjection™. Neil all right. Forget the 5 billion for the border wall. Mexico says give them 20 billion and you dont need the wall. Jeff paul has more. Jeff, that i have big problems in mexico . Yeah, the new incoming foreign minister of the Mexican Government wants the money to help create jobs in Central America to stop that flow of migrants. When asked about an agreement, the white house says theyre not aware of anything. But theyre continuing talks looking forward to the new administration here in mexico that is taking power on saturday to continue talks with them. While that is going on, the flow of migrants continues. The shelters are at Maximum Capacity and Officials Say theres more than 6,000 people staying. Also growing concerns that resources will be thinning. Many migrants are lining up for food, relying on the goodwill of nongovernmental organizations to help. Have you thought about giving up and going back home in. No, i havent. I havent. Why not . Well, i would feel if we come like this long way. Were here just like just waiting and everything. We have to be patient. Its not like were going to come here and go over there. No, we have to be patient. Thats why i still have determination. Im going over there. Several others include manage families that were seeing here are giving up on the idea of entering the u. S. Theyre relying on organizations and going back home. Others are staying not knowing what their next move is. Neil . Neil looks like things have calmed down for what it was like 48 hours ago. Yeah, they have. Take a look. Most of the people are in line for some sort of service, whether its food, call a family or friend or get new shoes or pants. At the moment, things are fairly calm. Were not totally aware of any other demonstrations in the future. Everyone is standing by, waiting to hear what will happen next, neil. Neil thanks, jeff. Lets go to senator john thune on this and what washington can do to deal with this, help mexico, should they help. What do you think, senator . I think its a really important thing to remember, neil that a country without borders is not a country. We have to have secure borders. Thats what this is about. I think that in terms of the process that were working through up here, in terms of funding the government and the department of homeland security, the president has requested funding for the border wall. Thats a probability for him, priority for the american people, a priority for us, at least republicans here in the congress. We want the wall funded. Hopefully we can do that part of it. Border security starts there. If you dont do that, the rest is conversation. Neil im sure youre aware that Chuck Schumer said the president is demanding 5 billion to do that. Hes already got 1. 6 billion and enough is already. What do you say . Senator sch