Transcripts For CNBC Closing Bell 20240712

Stimulus and higher bonld yields as well which reversed and went the other way. Dows down almost 300 points is this art of the deal or do traders really need to pare back their bets over stimulus lets get right to maike santol for the market reaction. What stands out to you right now . First of all, its an incredibly clean test of where the market was and what it was trying to bake in over the course of this rally which as will fred said was whats really fascinating too is the news came as the s p 500 was just hitting these levels that everyone has been saying oh were going to give room to this rally to get to 3425 and then well see what happens we were just above that in the afternoon and then we had this little reflex. I would caution everybody to keep in mind that we dropped to where we were trading yesterday morning right after the close. So there has been a little bit of a head of steam and builtup gains in this market this doesnt necessarily completely alter the premise of what was happening in the markets although i do think a very good test of this very cyclical rotation that was under way and whether in fact there was more to it than just a nearterm expectation of a stimulus bill. Its a very interesting way of getting a lot of testing lets watch it through the close because i dont know how its going to react after the Immediate Response to that headline you mentioned the cyclical groups the only group up right now are utilities. Very much not a cyclical Group Materials are right behind it. And it looks like the hardest hit are the outperformers, Communication Services, consumer discretionries like amazon leading the leg lower. That was the case before we got the news the big six stocks in the nasdaq were actually down all day and it was almost as if it was money coming out of them into other areas like the financials, industrials. The auto stocks were up. Semis were lups even though tech broadly wasnt that strong so i do think that most of what were seeing here is just a quick hit to the indexes in general. And lets pull our chips off the table because we dont really know if this scrambles the entire game and all the assumptions the rally was based on but more than anything, again, i think you have to see how we respond to the close because its going to tell you if it was more than just because honestly, i dont think we had been pricing in a super high probability of a 2. 4 trillion bill coming in the next couple of weeks i think there were more kind of pricing in momentum toward some kind of further fiscal support down the road if not immediately. Dow is currently down 280 it had been up 144 at the high of the session lets bring in ilan moi for the latest on this breaking news ilan, clearly the tweet is pretty clear but what are the implications of it i think what were seeing now also is some rancor between the president and House Speaker nancy pelosi in the president s tweet storm he said that the white houses offer of 1. 6 trillion was very generous and he said that pelosi was not negotiating in good faith and thats one of the reason why he is calling off these talks. Now, i had just gotten confirmation in the past few minutes that during the democratic Conference Call that was going on in the 2 00 hour democrats were talking about voting perhaps next week if they could reach a deal this week we know that the treasury secretary and the speaker of the house, they had a good working relationship that they had negotiated several complex and contentious bills before, including most recently the bill to keep the government funded through december 11th. So when they were left to their own devices they were able to come up and cobble something together however, the president now putting his stamp on these discussions and saying that 2. 4 trillion is too much, especially if its going to as he put it poorly run high crime democrat states i had also confirmed that state and local funding remained one of the key sticking points and it appears they are just not able to get past that roadblock. Guys ilan, if he sticks to what he said in the tweet, that nothings going to happen now before the election, how realistic is it that something could happen quite quickly after the election wilf, i think that depends on what happens after the election. Which party wins, which party feels like they have the mandate from voters to carry out their platform it does seem now like there is a promise of some stipe of fiscal stimulus in the offing, whichever party wins and how much and how big that fiscal stimulus is, thats all a question for another day but right now all of the focus of republicans is going to be on confirming the Supreme Court nominee. Its crazy to me that its a focus for another day with the jobs momentum already losing steam. We saw fewer job openings in the month of august. We saw a lower rate of employment growth in the month of september i just want to point out whats happening, ilan, with the airlines you saw a sharp intraday slide on the news. Names like delta, united, american airlines. Obviously, theyre first in line for aid. Is there any discussion of doing piecemeal kind of deals for the airlines which appears to have bipartisan support. At least to help them out. Yeah, the airlines have now suffered two strikes pelosi had promised to bring up either a standalone bill to help the airlines. That was quickly defeated and sort of rejected in the house last week. And she said if that didnt work she was going to do it as part of a comprehensive package well, now a comprehensive package isnt coming anytime soon so does this put pressure on the speaker to bring up perhaps standalone legislation in the face of quite literally a stalemate and an end of the talks with the administration . Perhaps that is a path forward but all of this is developing. And quite frankly democrats are going to be very surprised by this news. Ilan, thanks so much for that market continues to sell off down 1. 25 on the s p 500. Mike santoli, just want to focus on the russell, which is fractionally holding on to some gains still. It had been the big leader of the pack earlier today somewhat surprising perhaps it just dipped into the red. But it hadnt dipped into the red sooner given it is one of the more cyclical time ype of indices there was one trade that was in train before we got this news, which was benefiting everything cyclical and everything slightly higher risk such as the russell 2000 small caps they were just nudged above these levels, 1600ish that had kind of held the index back for the better part two of years with the exception of early this year so it clearly was just when people hot they were getting clear of that old trading range. Similar with financials and the bond market being linked together so i think it was all, you know, essentially one big tactical move leading into the news that basically said we got, this were getting traction on the economic recovery story, either organically or through the help of further support from fiscal push and then we have to kind of unwind that a little bit i really do think the question is how far it has to unwind before it kind of comes back into balance with just what the underlying sense of corporate Profit Improvement and the economic pace is you would think that they would mark down Fourth Quarter gdp and earnings estimates, First Quarter next year, if theyre not getting stimulus anytime soon, right . No, but i dont think nobody had been necessarily penciling in 2 trillion in new money coming from the government for the Fourth Quarter gdp estimate so i think all else being equal absolutely, things are going to be weaker versus stronger if we were going to be getting this bill but its not clear to me that its going to just flow right down to the bottom line of the Corporate Income statements so to speak right away. Lets talk more about it. Lets get to Steve Liesman for how this plays into earlier comments from fed chair Jerome Powell steve, nobodys listening to jay powell, it appears yeah, and hes trying to talk as loud as he possiblyk sarah, because just hours before the president called off talks on new stimulus fed chair jay powell warned of the potential for a deeper recession without it he told the National Association for business economics today that the economic recovery is progressing more quickly than expected but the economy is not yet out of the woods powell said there was a risk that the pace of recovery could slow and made clear that more support needs to come from the fiscal side. We can help but you know, clearly this is not something that Monetary Policy and supervision of banks and Financial Stability and payments can do all by itself. Those are the jobs clearly weve said this from the beginning. This will be a work of all of government in the first instance from the Health Authorities but then from fiscal authorities. Powell said the recovery would be stronger if the monetary and fiscal sides Work Together and that the risk was doing too lshlths not doing too much his biggest concern, a slowing pace of recovery could trigger typical recessionary dynamics where weakness creates more weakness the problem is not only is aid not coming but if it does come the timing could be too late maybe too late for some businesses and industries. Sarah, in answer to earlier question you asked there was one committee, jefferies, earlier this week, that printed a piece that said with stimulus they were looking for 2 1 2 gdp growth sorry, 10 gdp growth in the Fourth Quarter. Without it just 2 1 2 so a very big swing. Because you know everything is brought to the fourth power when you look at the quarterly change so yeah, theres a potentially big impact on Fourth Quarter gdp without this expected stimulus not to mention jobs steve, you and i dont analyze the politics and maybe this is art of the deal stuff but for a president thats trying to get reelected with millions of americans out of work and with that job growth momentum slowing as the previous trillions of dollars of stimulus which so desperately helped this economy wears off, why not spend trills more to juice it back up and get people over the line until we can really fight this virus . Yes and i think that sort of echoes what powell was saying about the risk being of doing too little he said you cant really do too much if you do too much, it will create either jobs or investment for other times, and others have said now is not the time to be thinking or worrying about the deficit right now. So the idea of putting money in peoples pockets the weird thing is, sarah, is it worked so well the first time. You follow these things i know. And the fiscal side never comes in on time and with enough money to help blunt the recession. You have this stronger than expected recovery for one reason you had a stronger than expected fiscal package that came more quickly than anybody estimated and an unbelievably strong Monetary Policy package as well, i guess, steve anyway, thank you so much. Steve liesman joining us were down 1. 2 on the s p 500 Airline Stocks getting hit as well following the president s tweet. Lets get to phil lebeau with the details. Hi, phil wilf, take a look at the airlines theyre all down between 2 and 4 , and th as soon as the headline crossed regarding the stimulus talks being over, at least for now, then you saw the big selloff begin for all of the Major Airlines one stock in particular i want to take a look at, Southwest Airlines why southwest . You heard gary kelly on squawk box this morning. Southwest yesterday and again this morning reiterated they plan to pursue 10 pay cuts in order to deal with what theyre facing, which are these larger losses they want to avoid furloughs and theyre going to start beginning negotiations with their unions, the Flight Attendants Union came out and said no, sir, were not taking a 10 pay cut. This is the kind of public jockeying youre going to get back and forth the bottom line is this. Southwest, like all of the airlines, they cannot continue without a payroll package in place as they are currently constructed. Given the fact that you have lower demand, theyre going to have to cut their costs further. And while southwest is proud of the fact that it has never furloughed any employees in its history, gary kelly was very blunt in saying look, we have to take actions in order to conserve cash. So southwest is one that people will be watching closely and you already know the actions that have been put in place by american, by united. They have begun furloughs, have actually furloughed more than 32,000 employees so this is not good news for the airlines you heard ilan basically outline the fact that these guys are waiting. And if they dont get a stimulus package they dont get the 25 million in order to cover payroll through march of next year and phil, furloughs are the first step or are we worried about how much cash theyve got left even if they enact were not to that point about worrying about how much cash theyve got left look, these guys have borrowed billions of dollars. I think the total is Something Like 51 billion in the last six months i mean, its an amazing amount of money that they have borrowed primarily from the private market but theyve also borrowed from the federal government as well furloughs have already happened for a number of Major Airlines, wilf and now you have southwest saying look, we dont want to pursue furloughs but we need a 10 pay cut if we do not have government aid through march so youre in this period here over the next six months, this is going to be the roughest period for the airlines because youre not seeing an increase in travel and youve got basically september and october, theyre not really going to be big travel months. If you dont get a bounce for the holiday watch out because that First Quarter, that is the slowest time of year for the airlines phil lebeau, thanks so much for that the likes of american down 3 . The broader s p 500 down 1 . Nasdaq com subpoena down 1p is after the break how the news could impact the market and your money. Youre watching closing bell on cnbc. Breaking stimulus news in washington President Trump says hes calling off stimulus negotiations until after the election stocks falling across the board as a result and tech getting hit hard as well lets bring in glenn caicha, founder and ceo of light street public his investments focus on the tech and media sectors thanks so much for joining us, glenn. Good to see you. Are you surprised to see tech at the bottom of the pile today in light of some bad news for the broader economy given that techs done so well today in light of economic difficulties yeah. Like you said, its been one of the strongest performing groups. We think theres good reason for that over time but its not immune from Economic News and macroeconomics in terms of the valuations that the broader tech sector had got to, do you think that that is a problem for why were seeing it pull back at the moment i dont think valuations are a problem. You have to weigh evaluation with the fundamentals. And we see incredibly strong fundamentals, particularly in the ecommerce and payments universe as well as in Cloud Computing. The way we think about it is for businesses to get through this difficult time in navigating this period before we have a vaccine and maybe even after we have a vaccine, were waiting for that vaccine to be distributed and take effect. Businesses need to take advantage of the ecommerce infrastructure that weve built around the world and they need to take advantage of the Cloud Computing infrastructure in order to engage their employees at home, stay efficient, and also engage their customers and sell product to them online, maybe in a different way than they have in the past. Lets talk through some names, glenn i see that peloton is in your Top Five Holdings in terms of long holdings. Is that still the case even though weve seen such a tremendous runup and you get worried about levels being too expensive . Or is that just a work from home sort of virus hedge . Because it seems to go up every time we have a negative headline around covid we model peloton out five years really and look at what the you know, what the potential is for that company. Theyre very clear that theyre bringing out a lower cost bike, lower cost treadmill, that election panned the market they talk about expanding to all aspects of fitness so other modalities of exercise probably, if you look at some of the competitive products like a mirror or a tonal and strength id expect over time peloton to compete in these categories as well when you look at the peloton business, its seven or eight times forward revenue. And thats something that to us does not look dramatically expensive. Even if we back out the hardware business and give that a onetime multiple, we see a fastgrowing and recurring membership stream of 40 a month with the consumers paying. Thats just an incredible business we think that in a lot of ways that peloton is the next wave of exercise and fitness and we see great growth in front of them. We continue to be strong shareholders in peloton. You mentioned you like the payment space. Is that some names we talk about often here like paypal and square or names abroad thats a good question. Its a little of both. Paypals definitely one of our Big Investments there. Afterpay, which has traded in australia, has been a big winner for light street this year so the ability for the consumer to get financing of an individual purchase in their right in the shopping cart from the ecommerce vendor. Thats a huge Growth Business and were big fans of that company. Shopify of course is exposed to payments so we see that as another way to play i wanted to ask you about the feeling from washington on big tech overall as we watch the election and try to figure out what it means for all the different sectors. We finally got some leaked details of that much highly anticipated and delayed house antitrust report and looks like theyre going to go after these guys for anticompetitive behavior, whether that means a breakup or not. I think theres some split there among lawmakers. Do you feel that this election will be consequential when it comes to regulating big tech and potentially breakup risks around some of these companies sure. Regulatory risk is something we are always taking into account in the history of technology its been a not an important force frankly. Back its very, very rare that the government gets involved and breaks up a company even in our sector you know, there are just a few examples ibm historically was under a Consent Decree back, you know, decades and decades ago. Clearly the government went after microsoft. At t was broken up but the effects on particularly microsoft, you look at the amount of value that that company has been able to build following that very careful look by the u. S. Government and the eu as well we just, you know, think the franchises are so strong and so dominant globally that i think its really difficult for even regulatory, you know, rulings to slow these companies down in the long term. Weve got to leave it there, glenn. Thank you for joining us especially hitting on that breaking news. Got a busy closing hour. Weve got 35 minutes left of trade. Take a look at where we stand. We took a sharp turn south in the markets after President Trump tweeted that hes walking away from negotiations with the democrats over stimulus until after the election dows now down at session lows 370 points or so s p 500 down 45 or 1. 3 . Every sefrkts lower except for utilities. Consumer discretionary and Communication Services are the worst performing thats why the nasdaqs down 1 1 2 1 1 2 the russl caps hanging i change in plans. At fidelity, a change in plans is always part of the plan. Welly [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Keeping your oysters growing while keeping your business growing has you swamped. you need to hire i need indeed indeed you do. The moment you sponsor a job on indeed you get a shortlist of quality candidates from a resume data base so you can start hiring right away. Claim your seventyfivedollar credit when you post your first job at indeed. Com promo economy. Can when closing bell comes right back. Down 300 points. Yeah, and wilf, stimulus is very important to a lot of industries important to travel and leisure, industrials, oil stocks. Even the Retail Industry look for example at airlines delta. A lot of the airlines immediately dropped about 4 so deltas a good example of that there you see the decline here jewelry business, retail business, cigna. You pick any of these, it doesnt matter cigna, that also immediately dropped about 4 just immediate reactions here. Even industrial stocks General Electric had a notable drop they were probably down almost 6 at least 5 . Through see right there still sitting at the bottom. All the oil stocks, oil dropped about a dollar, almost to 40. Hess, for example, dropped about 4 why is this important . Why does the street care stimulus is a bridge to the vaccine. It gives people money along the path to normalcy somewhere down the road if the reopening story was going smoothly this stimulus effort would not be so important. But the reopening story is not going so smoothly. We see everyone from Christine Lagarde over in europe to mr. Powell here in the United States essentially pleading for more fiscal stimulus because they know it is the bridge to normalcy thats why the markets dropping so much right now. And earnings are going to start coming down if we dont get some kind of stimulus because Fourth Quarter numbers have been going up on hopes stimulus would be there gradually a little more normalcy that could all be interrupted. Thats why most traders, guys, still feel this is a negotiating ploy, theres simply too much pressure to get the stimulus as the bridge to normalcy out there postelection and postcovid guys, back to you. Not to mention help the economy preelection if he wants to get reelected. Bob, thank you bob pisani earlier today i spoke with imf managing director Crystallina Georgieva who echoed fed officials calling for continuing stimulus measures in order to bridge the gap between the market and the real economy. Heres what she says on the markets. The combination of decisive monetary accommodation and fiscal action combined with the strength of the sectors that are benefiting tremendously from this crisis is what has driven this situation on the markets. But lets be clear, there is some between what is happening in the real economy and what is happening in the markets for this disconnect to be closed down we ought to move toward recovery in the economy very important to sustain support measures so companies and workers can continue to contribute the head of the imf, wilfred, the imf, and shes been really out front, warning about some of the ineke waults that have been building in the system, the fact that lower earning income workers are being hit especially hard by this and her message was the markets have teed off the stimulus both fiscal and nontry and that there is a disconnect she also in the big news of the day actually gave a preview of next week where the imf puts out its official growth outlook, said that its actually not as bad as originally feared hinted they were going to rise up their Global Economic foreca forecast why . In part because theres been such heavy stimulus measures to help fight the economic pain that we had as a result of more than 80 being in lockdown as a result of the pandemic so ill play for you the entire interview in the next hour but clearly topical as we are learning now that that continued stimulus which would continue to help the u. S. And the global economy, important to put it in a global farther away definitely looking forward to the rest of the interview. And i do think that International Perspective on the scale of stimulus both monetary and fiscal that weve seen is important thaws we might lament the breakdown of the latest stage of talks in washington for more fiscal stimulus but there are few other developed world economies that have seen as significant monetary stimulus and pretty significant fiscal stimulus even though that was now a few months ago and in that sense we might lament the breakdown of the latest round of talks but i think the u. S. Economy on both the nontry and fiscal side has seen more support than other developed world economies so far and thats played out certainly in the stock market as the imf chief there was pointing out. But as we stand today we are sinking down 277 points. Just off the lows. We were down 1. 3 at the lows. Now down 1 . Coming up, we will discuss further how the president has instructed his white house negotiators to cease talks on further stimulus and what that could mean for markets when were joined by fed voting memory Loretta Mester. Heres a check on bond yields heres a check on bond yields which had been movin as business moves forward, were all changing the way things get done. G high and deliver our products. But no matter how things change, one thing never will. Thtwork of at t. To help keep your business connected. Well be right back. Y prtg n yr stocks are taking a sharp turn lower after the president tweeted that hes calling off stimulus negotiations until after the election there is the look. We were up more than 100 points on the dow dropped sharply lower. Were now down 236 as we approach the close 23 minutes left of trading seema mody here with a look at whats happening specifically with energy stocks, seema. Yeah. Interesting development with energy stocks, sara. Energy had been a leader this morning. Now a big laggard with the xle etf turning sharply negative down a percent and a half. Now, take a look at oil, pulling back from a strong twoday rally that weve seen Still Holding on to gains but well off the highs that we saw right around the oil close at 2 30 p. M. Eastern still supporting oil prices in Oil Workers Strike in norway and a category 4 hurricane delta in the gulf of mexico which has shut almost 30 of u. S. Production there but the stimulus news still hitting oil and energy stocked a lot right now. Oil and gas majors, diamondback, apache, marathon oil, all with losses right now wilfred. Soil still up 8. 6 over the course of the last couple of trading sessions worth pointing that out for the s p 500 as well. Down a percent now today but still up 0. 8 so far for this last two days of the week. Time for a cnbc update now with sue herera hi, sue. Hello, wilf, hello, everybody. Heres whats happening at this hour wisconsins Governor Tony Evers retightening coronavirus restrictions this as that state now ranks third in the nation for the highest per capita rate of new infections starting friday, bars, restaurants and other indoor spaces will be limited to 25 of capacity fresh debate over the setup of tomorrow nights Vice President ial debate. Vice president pence now requesting no plexiglas dividers on his side of the stage this after the Debate Commission said both candidates had agreed to add the dividers to limit the potential spread of the virus. And in london gunnar soras, the mascot of the arsenal soccer team, has been laid off. But midfielder mezut ozil is offering to pay his wages. He himself has not played since march as the team has so the to trade him. Im a brig arsenal fan but everyone is disappointed in the club it comes a day after we just signed a new player for 60 million. And we lay off someone whos been a team mascot for 30 years. 30 years. Exactly. The guy inside the suit he basically said weve got to keep him, we can all pitch in, but hes taking the lead in paying for his wages look at him walking away with his head down. Thats a very apt photograph its sad. Its ridiculous its sad for the team. Did you produce this update, sue . Surely there are more important stories. And i saut story this morning. Actually late yesterday. And i thought this is for wilf i have to do this. Because i know what a fan they are. And also who lays off your mascot i have a photo with my brothers and gunnarsauerus when we were very small i guess its the same guy. For 30 years hes been there after the news update hell be just fine well, exactly he deserves to be. He deserves to get back his position sue, thank you very much you got it. Thanks, sue still to come on the show, much more on todays Late Afternoon selloff were going to take a look at the economic and political impact of the president s decision to call off stimulus decision to call off stimulus negotiations until after the 6 do i hear 7 . 7 in the front 7 going once. Going twice. Sold to the onion lover in the front row elections. Certainly the elections. Of sourdough bread. Dont get mad get e trade and get more than just trading investing. Banking. Guidance. Were down 1. 2 with 17 minutes left of the session. And more breaking news from washington ilan mui has it for us House Speaker nancy pelosi is now responding to the president s decision to stop talks on another covid relief package. She said the president is putting himself first at the expense of the country she went on to say in a statement that walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus as is required by the heroes act, which democrats have passed. He shows his contempt for science, his disdain for our heroes, and Health Care First responders, sanitation, transportation, food workers, teachers, teachers, teachers, and others, and he refuses to put money in workers pockets unless his name is printed on the check. Now, that phrase, contempt for science, is one that pelosi used with her members when they learned about the president s decision through his tweets while democratic lawmakers were on a Conference Call i am told that democrats are now regrouping there could be a push to pass individual line items through the house. For example, things like aid for airlines or perhaps even an extension of Unemployment Benefits but all of that is still being sort of processed and discussed and thought about as democrats decide where to go next after the president has now halted talks over another relief package. Guys ilan mui. Ilan, thank you. As the democrats release their version of this story. For now on economics and the policy pact lets bring in ed mills, from raymond james. And mike far oeli, chief u. S. Economist at jpmorgan. Mike, straight up, the decision to postpone, if this does if this is indeed true, the decision to postpone any new stimulus bill until after the election, what will be the impact of that on the economy . So i think it removes what would have been a pretty significant upside risk to growth if were talking about Something Like 2 trillion of stimulus, which would be in between the republican and democratic proposals thats 10 of gdp. So even if you want to haircut that down by saying multipliers below one and its going to take time to spend, were still talking about a pretty significant fill up to growth. We had expected this wouldnt pass as talks deteriorated two weeks ago, you know, but we always thought this could have been az said a pretty significant upside risk which now seems to be really off the table. Ed, what do we know about what went wrong here it looks like according to the president s tweet there are about 800 billion apart 1. 4 versus or 1. 6 versus 2. 4 trillion dollars of stimulus why all of the sudden did it break down the market was getting optimistic that things were going to work out. Yeah, politics got in the way. It is too late to be negotiating a package this close to the election and i think that the real miss was not getting this done closer to the july 31st deadline for when unemployment expired at the federal level or trying to get it done early on when congress came back in september quite frankly, both sides kind of made their position too hard and the president really never came toward democrats. Democrats kind i have think have made the decision that their vote last week in the house at 2. 2 trillion is enough to get them through the election and theyre going to see what happened after the lame duck mike, weve still been adding jobs each other, at least until recently are we saying without stimulus that will change direction, that q4 gdp will be negative . I dont think necessarily this means well have a double dip recession. I think a few months ago it may have felt that way and it may be one of the reasons why there was less urgency in washington to get something done we did start to see much better job numbers over the summer and job growth looks like its continuing i do think the economy can stand on its own two feet. I think the stimulus, however, would have been would have done two things. It would have taken out or at least removed some of the down side risk in case we do have a double dip recession as i said, i dont think its likely but its certainly a possibility. More stimulus would have been insurance against that and secondly, even without a double dip recession we remain about 11 million jobs below where we were in february and while were closing that gap were closing it at a slower and slower rate each month so stimulus would have helped us get back to full employment. Even without a double dip recession sooner than we would otherwise. So ed, i just keep coming back to this point i dont understand the political calculus here. Unless this is a negotiating stance, why wouldnt the president want to spend trillions hes never been concerned about the deficit. He said before that hes a debt guy. Why wouldnt he want to add more stimulus to take the possibility of a double dip recession off the table, to get more people in job weve already seen a slowing of momentum in terms of the strength in recovery weve been seeing. Why back out of that sara, you make a lot of great points and i think one thing that is really uncertain today is kind of why would he be the one that comes out and says he rejects the deal in that it is squarely on him as to why things have ended . Politics 101 is usually trying to blame the other side. He certainly does try to blame nancy pelosi here. But i think it goes back to what he has been trying to run on for his reelection, was that covid was over and that the health and economic consequences, we dealt with those earlier in the year and things have turned the corner, to negotiate a multitrilliondollar covid deal is to admit that the Economic Impact is greater than what the campaign has been willing to say. And ultimately he, when there was any further stimulus it was through executive action so from a political perspective he had the ability to say the only person who has delivered since the cures act is himself ultimately think what we see from powell is more is needed. It could have been a big boost to his election to have another round of checks going out before kind of the final votes are counted. But ultimately he decided he didnt want it mike, can powell and co make up the difference . I dont think so. And i think thats one raines why youve heard powell and everyone else on the fed on the fomc saying we need more fiscal stimulus. I think if the fed felt they could do enough to stimulate the economy to get back to full employment in a reasonably short period of time they wouldnt get involved in discussing they dont like to talk about fiscal policy they try to stay in their lane to use powells favorite term. And i think the only reason theyve kind of swerved out of their lane is because they know its going to be very difficult with monetary alone to get the Monetary Policy alone to get the economy back to full employment in an acceptable time frame. Ed, the republicans will say that the democrats were trying to throw too many goodies in there, too many of their own policy priorities in there extra in terms of the bill and thats why potentially the president tweeted that pelosi was not negotiating in good faith. What were the democrats trying to throw in extra on top of what the republicans were willing to give in terms of relief . Yes, erin what ive heard from many of my republican contacts is they ultimately didnt believe that these democrats were negotiating in good faith that n. That they were going to consistently move the goalpost so as we got closer to a kind of an acceptable top line number last week, a lot of the conversation had moved to policy who exactly gets the next round of fiscal stimulus checks . Is it only u. S. Citizens or is it anyone with a tax Identification Number . So a couple weeks before an election throwing immigration politics in the middle of a Fiscal Relief package threatened to blow it up. And its just kind of honest disagreements between whether or not its the fundamental responsibility of the federal government to provide state and local aid at times of economic crisis or it is fundamentally the responsibility of that state and local government to provide the shortfalls that were seeing across the economy you just mentioned that we are at session lows as we approach the close with eight minutes left in the session. Down 1 1 2 now on the s p 500 ed, just quickly do you think theres still a chance of individual line items like for the airlines i think the airlines are probably the most likely i think its a little bit of a hurdle remember the senate does not come back into session until the 19th, to give enough time for individual senators to quarantine we have three republican senators who have tested positive for covid so its going to take some time to flesh that out. Its possible but only if it is through unanimous consent. Neither side is going to spend much time working on it. So any disagreement could spike any of those deals mike, finally on state and local governments since ed brought it up as a point of contention and this one really gets to be a political football, i get the point that republicans dont want to socalled bail out some of these democratic states that they say have been mismanaged but what are we look at here, mike, in terms of an economic hit on jobs and growth from the pain that the states are feeling right now . If we dont get more relief. Right so i dont think when it comes to state and local government i dont think the pain is going to be in the short run but rather it could be spread out over many years state and local governments, over 10 of the economy. And i think what we saw after the last recession is that when they face revenue shortfalls what you see is actually contraction and activity over a number of years. And state and local activity after the last recession didnt get back to positive growth until 2014 so i think that pain will linger if you dont see relief coming to that part of the economy. Session lows down more than 400 on the dow ed mills, mike feroli, thank you both for jumping on the phone to talk us through this breaking news thank you weve got seven minutes to go in the trading day we are going straight into the closing bell market zone commercialfree coverage of all the action going into the close. Cnbc markets commentator mike santoli here as always to break down the crucial moments of the trading day along with ariels Charlie Bobrinskoy we were just down 420 on the dow. Were down 1 1 2 on the s p clearly a big reaction and a negative one at that to President Trumps tweeted that came just before the top of the hour that edition calling off stimulus negotiations with thedemocrats accuses nancy pelosi of negotiating in bad faith trying to push forward a 2. 4 billion stimulus when he is offering 1. 6. Charlie bobrinskoy, does this make or break the case for stocks in the short term if we take stimulus oft table till after the election well, its a big if i do still think theres a chance this is a negotiating ploy but these are very big numbers think about the size of the deficits were talking about 2. 2 trillion package is one of the biggest packages in the history of the country so look, the market right now likes economic activity. Thinks the stimulus package would help industrials and other industries but were spending money at incredible rates, running incredible deficits. At some point thats going to matter its going to cause inflation. But i will say in the short run the market was hoping for this package. Charlie, do your value stocks need stimulus to be higher than they are now by the end of the year yeah. This morning i was coming, in wilf, all ready to brag about how well my value stocks were doing and this sort of took some air out of my tires. Look, the gap between how value stocks are being valued and how Growth Stocks are being valued is massive right now and if we get higher Interest Rates thats going to be good for my value stocks. When we get a vaccine and get a recovery of the economy thats going to be good for my value stocks fundamentally this gap cannot last the way it is but i admit im not pounding the table quite as hard today as id expected to. Airlines falling sharply on the news out of washington phil lebeaus got the details for us hi, phil all down between 2 sxers and 4 what does this mean . Without a stimulus bill that means another 25 billion for the airlines will not be approved that means that the furloughs that were announced last week, that went into effect last week for american, united, alaska had some furloughs as well, all of those will be continued. They will not be bringing people laid off back onto the payroll and Southwest Airlines this morning Ceo Gary Kelly was on squawk box. He said look were going to have to pursue 10 pay cuts unless we get payroll aid. They will now move forward with that and guys, the significance of this is that the airlines now enter these next six months where theyre going to have slow demand and no payroll aid. So theyre locked in what they have in terms of their employment and dont be surprised if things get weaker you could see further layoffs or furloughs over the next several months phil lebeau, thanks so much for that mike santoli just discussed with ed mills the chance of still an individual sort of line item deal for the likes of the airlines i mean, would that, if it happened, help only that sector or the broader markets too most likely that sector for the most part. I dont think that were right now hinging on that industry as a bellwether of anything unless it signaled a greater willingness to do a bigger deal, which probably it would be the opposite i dont think its necessarily the kind of big swing factor for the overall market and i think whats happening right now, obviously, is traders were caught pretty much offsides in over two days rebuilding or building up the probabilities of some kind of broad stimulus bill got knocked back and i think its going to have to regroup here. But i think it is telling were down a little more than 1 , above fridays lows. I think its a regroup thing and maybe the upper end of the trading range was sort of slid hyde here because thats exactly where we were when this news broke that the talks broke down. Important levels there. Charlie, any deep value here in the airlines and i would just throw the cruises into that conversation because i know you like some of the cruise lines and theyre actually trading higher today for some reason. Dont compare my beloved cruise lines to the Airline Industry the Airline Industry has never been profitable since the Wright Brothers the cruise industry is a very Good Business thats going to be fine once we get to the other side of the vaccine and the covid process. The cruise lines, particularly royal xwhaen, has done wonderfully since march. The stock is up more than threefold. Bookings for next season are strong im fundamentally worried about the ashl industry. Business travels going to be down permanently i dont think cruising is down permanently. Strong case for the cruises you dont hear it that often here theyre all trading higher today. Charlie, hang on just a second twoef minutes to go before the close. Mike, what are you seeing in the market internals with the dow down 350 pretty sharp to the negative side broad rally just about an hour ago before it was sort of upended but if you look at the up and down volume its not that dramatic breadth doesnt often really completely turn around but you do see about a 1 to 3 ratio, not quite that, of up to down stocks. And then the new highs versus new lows on the New York Stock Exchange actually was telling an encouraging story. It still is. Most of those new highs were made before 3 00 p. M. Eastern time but 150 new highs in new york compared to 24 new lows the average stock is outperforming the market right now. Then the volatility index also was starting to nudge lower and now we popped above 29 again with this new news it seems were just in this range right now. High 20s, mid 20s, probably into the election about 40 seconds left until the close. Down 1. 25 on the s p 500. About the same on the dow. 330 points the low of the session was about 10 minutes ago, down 415 points. We were up 150 points at one point. Big intraday selloff as we were saying the nasdaq down 1. 5 the russell the outperformer all of those indices, though, are higher over two days which is worth pointing out. Utilities the only sector higher on the s p 500 today all 10 of the other sectors are lower. Worth pointing out oil did remain higher today up 2. 3 somehow 8 over the last two daes but the s p 500 down 1. 4 at the close lower close, a lot lower than we were looking earlier in the session 37 welcome back, everyone, to closing bell. Im sara eisen here with wilfred frost and mike santoli cnbc senior markets commentator take a look at how we finished up the day on wall street stocks tumbled and bonds soared after news broke on twitter that President Trump said he is ending stimulus negotiations with the democrats until after the election fading hope that the bulls on wall street were just starting to really have that we would get some type of stimulus. You saw the sharp turn in the markets. The dow is up more than 140. Boom then it fell closed down 377 points ultimately, a loss of 1. 3 boeing, apple and microsoft were the big losers Procter Gamble the only stock on the dow to close higher theres the s p 500 down 1. 4 . As wilfred said it was swift and it was broad Consumer Discretionary that was the group that lost the most, down 2 . A lot of retail names, everyone that depends on people on consumers having money in their pockets. They got hit gap, under armour, those types of names that had been coming back the nasdaq down 1. 6 and the russell 2000 index of small caps faring better than the rest down only. 3 importantly, though, we are still higher on the week, even though its only tuesday thanks to yesterdays big rally. But today was a big fall coming up this hour cleveland Federal Reserve president Loretta Mester, her take on President Trumps call to stop stimulus negotiations which came by the way just hours after fed chair jay powell said that the u. S. Economy needs more stimulus to prevent a long and tough stumble ahead. First though lets talk about the market Charlie Bobrinskoy from Ariel Investments is still with us Jeremy Siegel joins the Conversation University of pennsylvania wharton professor of finance first, though, mike santoli on what happened and just how much damage was done as the stimulus the stimulus relief sort of got wasnt a foregone conclusion although the market was starting to treat it as it was. It was starting to treat it as if it was a growing possibility or probability not necessarily that it was a foregone conclusion, but it was interesting that this breakdown of talks as reported about an hour ago came just as the market was acting as if it was starting to get traction on the idea there was a cyclical recovery in financials and auto stocks and other things that were not big tech working really well and thats the environment in which we got this headline that okay, were not going to get another 12 trillion thrown into the economy in the near term apparently so i dont think we had fully been rallying based on the premise that was going to happen, but it was definitely an offsides moment once we got hit with that news at the exact day people were saying look at the Small Cap Index its breaking out to the up side look at banks starting to outperform tech and everything was starting to click in and then we had to unwind a little bit but as you say, up for the week, down a little more than 1 on the day. It doesnt seem like it changed the overall story but its definitesly a time to regroup after the market was sort of swatted down from the upper end of its range professor siegel, are you surprised by the scale of the intraday selloff on this news no. Because i think that i have been saying most of the rallies that we have seen was optimism on the stimulus package clearly this is a big disappointment why couldnt they just say lets cut it down the middle at 2 and do this . But its a political calculation now. Exactly four weeks before the election theres no doubt about that. Lets dive in a little bit more into the Airline Stocks which of course fell significantly on the news of a delayed stimulus bill. More than most sectors they were relying on it. Hunter kay, Airline Analyst at wolf recess joins us now how much were they relying on it, hunter well, they werent relying on it they were begging for it but he this furloughed everybody on october 1st the horse is out of the barn in terms of furloughs they could have rescinded those furloughs and brought them back, but these airlines have already made plans to go forward and theyre not banking on getting furlough money or more bailout money. Even if they did get stimulus, hunter, would that change the view of the airlines . I mean, can you really have a view on these businesses until you know when were going to get a vaccine or a really effective treatment to keep people out of the hospital thats exactly right. I mean, this is delaying the inevitable its still a dateday stock. This is what traders get when they try to make shortterm decisions based on political winds. Its just not going to work. It still may happen. One of your earlier guests talked about the senate. I dont see that happening i think thats off the table i think rand paul alone is going to derail the prospects of that. But at some point youve got to move on. These airlines have started to plan their businesses in a covid world, in a post federal support program world. Sxumtly this is pain that needs to be taken. If theres any prospects of them doing anything over the next couple years whats your top top pick, hunter about a 12 billion market cap in the United States, focus on a Regional Travel company hunter thanks so much for joining us, weighing in quickly there on the airlines. Back to the broader markets. Michael yashakami, does this give you the opportunity to buy into some of michael yashakami, sorry, not with us. Charlie bobrinskoy which of the cyclical value stocks that have suffered today and of late on these types of headlines would you be topping up on . Not the airlines. But the Auto Industry in particular is showing some really good signs. If you go to an auto dealer right now, the lots have nowhere near enough cars to keep up with demand so the auto suppliers, our favorite being borg warner which is still trading at a very low price, is something were very excited about. Snapon tools, which sells tools to the Auto Industry to do repair work. The Auto Industry is in very solid footing. Its coming back and again, we think youve got to think about businesses that are going to be fine when we get to the other side of this covid problem or business thats are permanently impacted and i think Business Travel is going to be down for the foreseeable future and so airlines and hotels are not going to be the place to put your money professor siegel, banking so much on increasing prospects of stimulus, does it tell you something about the stimulusfueled markets . The dependence on stimulus, whether its from fiscal or monetary authorities and is that necessarily a healthy thing for investors in the long run well, i mean, in the long run this will resolve. Theres going to be an election. Theres going to be a new congress and whatever were going to get, if we can get it delayed, its unfortunate it will lower growth in the short run but we also have to remember that weve had some big savings in the last two or three months. Personal savings has been nearly at record highs. So there is reserves that a lot of americans have. A lot of the people that have been kept on will now go on Unemployment Insurance not as high as it was before but still on Unemployment Insurance. And get support. So it will be a slowdown i dont think its a disaster certainly. Its a disappointment that they cant get together charlie, i know you like Goldman Sachs and some of the private Equity Companies what about the commercial banks . Yeah, obviously, the Interest Rate environment is very important for that the 10year has been ticking up nicely it got up to about 77 basis points we still think has a long way to go so the regional banks arent quite as cheap as the Goldman Sachs of the world are so i would put my money in the names that are trading below book, which is goldman and we still like kkr a lot so regional banks still very dependent on the shape of the yield curve, which is not great. Mike santoli, we saw a lost retail names get hit today i guess anything discretionary perhaps is sensitive to the idea that people who are unemployed would have more money than they otherwise would. What other sectors would you look to be hardest hit if these lack of stimulus negotiations now become the central theme well, a related group is the Consumer Finance companies things like discover financial, capital one. They actually had just started to get a little bit of momentum as well, and thats a very direct play on Household Finances and having extra cash to lie around and service debt and all the rest of it you see the intraday moves there. Pretty direct tell on both sentiment toward reopening as well of course as maybe Unemployment Insurance coming in, enhanced Unemployment Insurance. Those would be the two main areas. But whats interesting is that things like housing and other manufacturing parts of the market have had their own kind of dynamics, their own kind of global snapbacks that have worked for them, and it has been a somewhat more independent of the stimulus conversation. Well, theyve been dependent on fed stimulus, which dependent on the fact that chinas back in business and throwing money around and the rest of the world seems to be kind of reviving to one degree or another but also inventory rebuild is just kind of mathematical at certain points it is just at this point snapback from how bad things , levi strauss earnings are out. Seema mody has those numbers seema. A big surprising profit, sara, from qulifs the denim maker 8 cents adjusted the street was expecting a 22cent loss revenue 1. 06 billion versus 822 million estimate. Margins improved Digital Sales are up by 52 . Due in part to its womens business in fact, ceo telling cnbc. Com that the womens categories in 2015 was just 20 of the total business thats now 37 and the company is aiming to get it to 50 . He also says that china and europe in particular where a lot of Women Apparel brands have been hit harder by the pandemic, thats where theyre actually starting to see market share gains. Take a look at the stock up 8 after market here. The stocks certainly moving on these results here, wilfred and sara, back to you. Seema mody, thank you very much more than 9 now mike santoli, last quarter levi announced a very sharp decline in revenues and actually announced it was laying off a good chunk of its workforce. So clearly the worst is behind them in terms of the lockdowns and the impact its had on the business how did the stock look its having a big bounce here. It seemed also to reset expectations lower and the stock has been really bumping alongs at a relatively low. Seems like the up side surprise here is genuine mostly because people werent expecting much. And again the global favor of the upside surprise is interesting as well. Well leave it there. Thank you very much. Mike, Charlie Bobrinskoy, professor Jeremy Siegel, thank you for joining the conversation as well. Up next on the show, stopping stimulus talks thats what President Trump called for late in todays trading session, turning the whole market around, sending stocks sharply lower were going to discuss what it could mean for your portfolio with Morgan Stanley chief u. S. Equity strategist mike wilson whos been pretty bullish on the markets lately plus voting Federal Reserve plus voting Federal Reserve member Loretta Mester will be even if their shares cost more. At 5 a slice, you could own Ten Companies for 50 instead of paying thousands. Here all Commission Free online. Schwab stock slices an easy way to start investing or to give the gift of stock ownership. Schwab. Own your tomorrow. Well, audreys expecting. Twins grandparents we want to put money aside for them, so. Change in plans. Alright, lets see what we can adjust. Wed be closer to the twins. Change in plans. Okay. Mom, are you painting again . You could sell these. Lemme guess, change in plans . At fidelity, a change in plans is always part of the plan. Lemme guess, change in plans . Our Retirement Plan with voya gives us confidence. They help us with achievable steps along the way. O. So we can spend a bit today, knowing were prepared for tomorrow. Wow dad, do you think you overdid it maybe . I dont think so. What do you think, peanut . Nope honey, do you think we overdid it . Overdid whatny see . We dont think so, son. Technically, grandparents cant overdo it. Its impossible. Well planned, well invested, well protected. Well be right back here on closing bell. Joining nous is chief u. S. Equity strategist and chief Investment Officer mike, as always great to see you. Same question i posed to professor siegel are you surprised at the extent 1. 4 of the selloff in light of this tweet . Wilf, thanks for having me on no, im not surprised at all i think the market has been anticipating that this bill had a better chance of getting done at the end of last week and into the early part of this week. Obviously theres a lot going on theres just a lot of uncertainty. You try to make a bet on whether this is going to get done before the election weve got about a 1 3 chance we think of this happening before the election i think the more important message, though, is we do think there will be some fiscal stimulus at some point either before or after the election and its just a matter of timing but as i said before, the market was up a bunch yesterday kind of on the hope they were making progress so of course its going to trade off on that this is kind of what we expect for the next couple of weeks this is the problem. Its going to remain volatile probably for the next three, four, five weeks until either the election comes and goes or we get fiscal and a couple other things are still bothering the market its going to remain choppy. It doesnt surprise me at all we sold off on this news. Whats the shortterm down side if we dont get anything before the election given the risks the election itself brings as well . Well, then we go back to our Technical Analysis which weve been writing about lately which is the correction that happened in september was kind of quloenk due. We thought it would happen in august it happened in september then when that happens youve got to look at your kind of longterm support areas. Worst case you go to the 200day moving average which is around 3100 on the s p 500. It wont be a Straight Line because theres always going to be hope that something gets done in the 11th hour but that is realistic down side support and realistic down side case if nothing gets done before the election so just to harp on the issue a little bit more, you have been leading, mike, on this idea of a vshaped recovery, at least in the markets but i think youve also tried to sniff it out in the economy. Does the postponement of stimulus until after the election do anything to disrupt that does it make that harder to achieve a v . Well, it definitely takes a little edge off the v. The v becomes flattened out. Weve seen that in the data lately Economic Data starting to flatten out a bit. Still very supportive of the recovery story its just a delay. I think we all have to be honest built fact market we were bullish on the market this year but i didnt think wed get to 8600 by labor day but there we were tlp taking a little wind oust sails isnt such a bad thing assume we go do eventually get that stimulus. I dont think we need stimulus in the next 30 days for the economy to kind of stay afloat, meaning theres no risk of a double dip recession in the next 30 days if we dont get the stimulus done. The main message i want to leave with your listeners is we still think stimulus is coming its just now a timing question whether its before or after the election our best guess is its probably after the election p. What did you make, mike, of the way bongd yields were rising over the prior five or ten days, they pulled back a little bit today but still of course el ce elevated from the 0. 6 handle wed held on to for quite a while . I think thats the more interesting story quite frankly from here weve kind of gone out on a limb lately talking about how thats the one market thats not priced in the vshaped recovery that we see and we see a lot of other evidence that its there, whether youre looking at the Economic Data the Earnings Data the markets itself the back end of the treasury market remains very depressed and we think thats mispricing ultimately when we get the stimulus and we get through this period and we think thats probably the Biggest Surprise thats still to come that back end rates could move up meaningfully higher than what people are projecting right now. And that quite frankly will have a bigger determination on kind of what you want to own as opposed to how much you want to own. In other words, i think the market can handle rates higher but there will be a rotation and weve seen it a little bit as well underneath the surface the markets were starting to to rotate to some of the other areas possibly levered to higher rates. We think thats going to end up how its going to be resolved overt next three months but its going to be choppy and volatile between here and now mike, hang on for just a mome moment, if you could stay with us we do have some breaking news we need to get to from the us what. Kayla tausche has the details. Reporter this news, sara, is actually from capitol hill the house judiciary subcommittee on antitrust has released a long awaited report on what theyre calling the monopoly power of four Large Companies in the Tech Industry facebook, apple, amazon, and goog google pape 16month report with more than 1. 3 million documents at its center. The subcommittee concludes that basically awful these companies enjoy this monopoly power because of practices of their own making and they issued some recommendations. Notably structural separation of these businesses and prohibiting them from being in adjacent lines of business. This has been equated to a sort of glasssteagall for big tech though we should note its something republicans on this subcommittee do not support. There are also recommendations to prohibit big mergers in this space and to prohibit these companies from putting their own products preferentially in front of those of other third parties and also have recommendations about how they are able to use customers data. This is a longawaited report. Many of these recommendations have been discussed at the many hearings that have led up to this but certainly quite staggering to see them in writing and to see the subcommittee say these are things they will pursue at the end of this legislative session or the next. Sara kayla tausche, thank you very much with us still is mike willis fron Morgan Stanley. Not breaking news on the white house but the house antitrust report, mike, that we were expecting. And clearly theres going to be more pressure here obviously. And more calls about anticompetitive behavior. The stocks are not moving a whole lot after hours if you look at some of the big names like a facebook or Google Alphabet or an apple down slightly. How big of a risk do you think this is for these stocks not the first time but clearly ramping up ahead of the election thats right. This is not a new issue. The fact were Getting Movement in this process, though, is maybe earlier than some people thought. I do think its interesting, though, today before the close the Big Tech Companies did not trade well even though you would think theyd do better in kind of a risk off environment where rates are coming down. So maybe this got into the market before the close and that could explain why theyre not reacting as much after hours this is going to be a long drawn out process, sara, whether the government decides to go down this path. How far they go down this path and the reality is some of these companies will do just fine in the postregulatory world because their businesses are very strong. But it is another headwind and i would argue that higher Interest Rates, which is our view over the course of the next three to six months, may provide a bigger challenge, quite frankly, for the valuation of some of these companies than even the regulatory risks. So were centered on that more its easy for us to forecast rates than it is for us to forecast regulatory change but no doubt this is not a positive and its just another headwind for why that rotation could Gain Momentum into the end of the year and into early next year. Mike wilson, thanks so much for joining us thank you didier bosa tweeting out who had the most mentions in that report number one was google 1,966 mentions followed closely by amazon, apple at 1,200 facebook coming in fourth 9at44 mentions still to come, Federal Reserve Voting Member Loretta Mestery po dont go anywhere. Y prtg n y p President Trump tweeting he instructed representatives to stop stimulus negotiations until after the election joining us by phone is White House Deputy press secretary brian morgenstern. Brian, thank you so much for jumping on the phone why would the president call off these negotiations with millions of americans out of work and suffering from this pandemic well, the of course he has supported funding for jobs and for schools, for people keeping people connected to Small Businesses, for airlines, all of the things that everyone agrees with. In fact we came up from a trillion to 1. 6 trillion. Unfortunately, the speaker decided she would rather have zero than 1. 6 trillion but the democrats have not been negotiating in a serious way for a long time. The president announced it but theyve had this posture for a while. The things everyone still agrees on, we were still supporting and it was just the speaker was holding it up, holding it up the president decided its time to move on to things we can accomplish like a Supreme Court nominee, an excellent nominee. But the fact is our position has always been clear, that we support funding for jobs and for schools and for things connected to covid, people whove been harmed through no fault of their own, but at some point if theyre not going to negotiate in a serious way its time to proceed on to other matters that we can accomplish. Are you not worried about the economic fallout from this weve alreadyseen the momentum on jobs wane a little bit. We saw fewer job openings in the month of august and the september jobs report, 661,000 jobs sounds great but we were above a million in the prior months and we have seen other Economic Indicators starting to slow. Suggesting that initial boost, which was really helped by the enormous stimulus you guys have already passed, is starting to really wear off here well, were seeing reason for optimism of course were expecting very, very strong growth in the Third Quarter. We are seeing people start to be able to reopen in a safe way around the country we want that to continue weve seen great momentum of course in some sectors, the auto sector, the housing sector, and others we want the entire economy to be doing better, though we want everybody who has been harmed through no fault of their own to get back to normal. Unfortunately our negotiating partners were not willing to come to the table in a serious way even though we had numerous proposals. Even oneoff funding for airlines we came to the table with numerous proposals for jobs and for schools. Things that literally everyone would agree on but as i said, its 1. 6 trillion is a tremendously large package and unfortunately the speaker decided shed rather zero than come a little bit closer to the administration brian, do you think the president s decision here was influenced by his ongoing recovery from coronavirus, that he feels its not as big a threat to Peoples Health and the economy more broadly as perhaps he used to think i dont think i would leap to that conclusion. Though i would say that the president is certainly projecting confidence and strength and showing people the example that this virus is not somethingthat should have us cowering in fear it is a serious problem. We of course grieve with the many families who have been so negatively impacted by it, but we must reopen our country in a safe way because the effects of more lockdowns are even more dire we have unreported Mental Health issues we have child abuse issues we have foregone cancer screenings there are untold Health Effects that could realize in the years to come if we dont safely reopen so the president certainly is encouraging everyone to do that while still taking it seriously. Is he encouraging everyone to wear a mask, brian because one thing that a lot of research has shown that prevents the need for a lockdown and in fact therefore helps the economy is everyone wearing a mask is that the message from President Trump . Certainly wear a mask when you cannot socially distance and one of the things that folks were critiquing of course was last night his return to the white house when he wanted to show his strength and resilience he was standing outside on a balcony and took his mask off at that point thats a safe way to do it i mean, we dont have to wear masks in the shower. Okay we have to wear masks when we cannot socially distance from people definitely when were not outside and we cant socially distance from people but there is common sense has to come into this as well. And we know that we can open churches, we can open schools, we can open businesses we just have to do it in a safe way. Were doing that here at the white house in fact. We have cleaning crews making sure that the place is clean we have ppe where people may need it, if they need masks. We have Hand Sanitizer we distance from one another and so we are going about our business, carrying on the work of the American People were just doing it in a safe way. And thats how many businesses all across the country have been operating and thats what we want them to be able to do but you have been able to do it in a safe way, brian. Theres a major outbreak are you in the white house are you working in the west wing right now . Whats it like there how many people are actually there . There are so many covid cases. So i am working in the white house. Weve had similar situations where if there is a positive case that individual quarantines. We do a contact trace. We determine if anyone is a close contact. And just like right now, kayleigh mcenany, our press secretary, is home quarantining. She has covid, but she is a symptomfree patient so shes feeling fine. Shes continuing to work she is on the phone with us numerous times a day shes still able to do interviews and do her job, just do it remotely thats what a number of us are doing. We have maximum telework capabilities for anyone who would prefer to do, that maybe they dont feel safe or they have Health Reasons for doing that we encourage that, absolutely. But if there are reasons to be here and someone remains negative then we can come into the office, do our jobs, just wear a mask, socially distance and use Hand Sanitizer brian morgenstern, we appreciate you jumping on the phone to help explain the tweet and whats going on there. Absolutely. Great to be with you thank you. Good you have to here fed chair jay powell says more fiscal and monetary stimulus is necessary for an economic recovery just hours before President Trump called for a halt to the stimulus negotiations. Stimulus negotiations. At wellyy prtgwa baba3 2 45pn 9 be right back. P. M. Welcome back 2 45 p. M. Eastern time, just around there, President Trump tweeted that he instructed representatives to stop stimulus negotiations until after the election this comes just hours after fed chair jay powell reiterated the need for aggressive stimulus and policy support this morning. Joining us now is cleveland fed president and Voting Member Loretta Mester president mester, great to have you back on the show especially on a day like today when we saw stocks take a fall on that news you like many of your fed colleagues have said we need fiscal stimulus. If we dont get it before the election, whats the Economic Impact well, the timing is whats important in actually having a package. Ive built a package into my forecast of continued recovery and certainly the recovery will continue without it i think. But its going to be a much slower recovery. And its disappointing that we didnt get a package done. There are still a lot of house olds, a lot of Small Businesses that really need that kind of help and even though the recovery has come in somewhat stronger than many of us thought it would, you still have to look at were still in a pretty big hole theres 11 Million People still out of work from where we were in february. And thats a large number of people so weve only made back half of the jobs so people are going to be on unemployment it will be less than they got in the first package. And i think its disappointing in the sense that both Monetary Policy and fiscal policy came in quickly and strongly at the beginning of the pandemic and those two policies working together i think were an important aspect of why the recovery is we see the pickup in activity. I think the next part of this recovery is going to be even harder in the sense that we saw the pickup from a very closed down economy, we saw a strong pickup, but its the people who are out of work, who need to retrain maybe to go into different industries, thats going to take time sectors like commercial real estate are still under a lot of pressure as companies rethink their office plans, given remote work those kind of structural changes are going to take time and having support from both Monetary Policy and fiscal policy i think would make the recovery broaden it out and also make it more sustainable. Not to mention were not past the virus and were still dealing with an uptick in cases in many parts of this country and in many parts hospitalizations as well so were facing a potential second wave. And if we dont get the fiscal stimulus you know what im going to ask what more can the fed do can the fed pull out any more barriers to make up for it sara, you point out a very important aspect of this kind of recession and the recovery is that it really is the virus that is the main factor here. This is not like any other kind of recession weve had and investments in, you know, testing, contact tracing, behavior, if we all do the right behaviors and Wearing Masks and social distancing, investing in vaccine, those are the things that will make the huge difference in what the recoverys going to look like. Youre right fiscal policy and Monetary Policy are not in the drivers seat there but investment in those kind of things that will speed up the ability to get a good vaccine to be able to distribute it and to make sure people are confident enough to take it, those are the kinds of things that could make a huge difference in this. And youre right to point out that in fact both the monetary policies, were applying all we can do, and weve gone in strong and as weve said in our september meeting statement we intend to be there with very accommodating Monetary Policy because we think thats whats needed to get us back to full employment or maximum employment and price stability. But its going to take fiscal policy in my opinion has got to be there and its going to be advances in medical treatments and vaccines that really get us to the other side so president mester, you said the feds already doing all we can do theres nothing extra . Well, were going to look at what we can do in addition but right now im very comfortable with where we are both on our Forward Guidance and our asset purchases. Were always looking to see if we can doing different in our programs. 33 emergency lending facilities. And as you know, over time we have changed some of the terms of them to make them more effective. Were always constantly looking at things to see if theres more we can do but i think our policy came in very aggressively. Its very accommodative. But its going to take fiscal authorities who can do direct you know, direct payments to households who are really hurting from this. To Small Businesses who are still very hurting from this to really make a difference i think the two in tandem could be hugely impactful. But when were doing our part, i think the fiscal authorities, who were very good in the beginning coming in with a lot of aid, i think they need to do more now for all the disappointment at the lack so far of another stimulus bill, president mester, i mean, as youve been pointing out yourself perhaps the more important focus is whether we get effective treatments or a vaccine. And even if we dont in the short term i think i understand you rightly from your earlier comment you that do think the recovery will continue regardless to improve albeit maybe at a slower rate yeah. I mean, right now one of the things that weve seen is the recovery is coming a little bit stronger than most of us had thought it would and you go out and talk to Business People and theyve all been kind of surprised as well but they do say the two things that are their biggest concerns are what happens with the virus and broadly defined meaning what happens in terms of caseloads but also how quickly we can get a vaccine and the vaccine thats distributed and two, what if we dont get another fiscal package so the two things theyre concerned about are i think the key risks here and we can all come out with down side scenarios that are, you know, bad scenarios. But we also have to cake on board that the economy has recovered and now its a question of can we make it a faster recovery or will it be just a slow slog and the longer it goes on slowly with people being detached from the workforce, that creates, you know, more thats a headwind for any kind of recovery to make whole. So again, by getting people back to work, by having them reattach the labor market, that can make the recovery go better and thats one of the reasons that having aid could be impactful in terms of what the trajectory of that recovery looks like so i can come up with down side scenarios where we go back down like if the virus takes off and its, you know, another wave but thats not in my baseline. But i still think that we could do actions now thatll make the recovery broaden out and be more sustainable than it is right now. I personally think theres some fragility out there in the recovery what about one potential up side scenario, president mester, ws a vaccine hopefully we get it sooner than later. Is that in your base Case Economic forecast . How do you view that as an economic stimulant here some. Well, so thats so interesting, right is how you do forecasting when its really about something that has nothing to do with economics really so what i do in my forecast is i do sort of like lets think about whats going to happen in the Public Health care aspect and conditional on that what does the Economic Outlook like like so i have built in that well get some kind of vaccine and have it distributed, broadly distributed, next year, perhaps in the Third Quarter and im basing my forecast on that but that certainly is hugely uncertain at this point. And if we dont get that then it just means things linger on longer and it takes a longer time to get back and that also is a headwind for the recovery because that means more people are out of work for longer, more firms end up running into trouble, and so it is really conditional on what happens in the health care sphere so investments in those kind of things that can actually improve our ability to test, trace, and get a vaccine would be huge qully impactful. My followup really has to do with the vaccine if we do get it and that does change the trajectory of this country and our economy, why then does the fed feel the need to say rates are going to be zero until at least 2023, without knowing that kind of critical information that really could change the whole direction of all this . Right well, whatever youre doing forecasting you have to come up with what you think is the most plausible scenario and thats also why many of us including chair powell keep reminding people that theres a lot of uncertainty out there about the trajectory but you also have to think about the risk and the risks to the forecast i think are on the down side because this is a very fragile recovery right now weve seen we had the reopening. But as you know, when virus cases go up we see in the data people even if the governments dont state governments or municipalities dont shut down activity, people themselves xw themselves behave differently n they want to protect themselves, for good reason. They disengage so at this point you have to condition on that kind of outcome. But youre right, there is you can write down some up side and that would be some upside risk to the forecast and then as we say whenever were doing Monetary Policy, we focus on outcome so in our Forward Guidance, right . Its based on whats happening in the economy so our forecast or our Forward Guidance on the funds rate is what happens in the economy. If we get there faster, that means well react differently in our policy path. But right now in the summary of Economic Projections most everyone seeing that given our forecast were going to need a flat path for quite a long time. Yeah. You guys have been playing it cautious well, we certainly appreciate you taking the time and for your thoughts Loretta Mester, president of the cleveland fed. Thank you. Thank you up next, our exclusive interview with the imf managing director kristalina georgieva. What she sees for the Global Economic recovery and what she says about stimulus and now necessary it is here in the u. S. Well be right back. Before we talk about taxsmart investing, whats new . Audreys expecting. Twins is always part of the plan. Heres a quick look at how we finished up the day on wall street stocks sold off sharply on the news the president had called off stimulus negotiations until after the election as you can see, down 1. 4 at the close of the session down 375 points on the dow and the house antitrust subcommittee releasing its report on big tech after the close, recommending prohibiting platforms from entering adjacent lines of business and recommending preventing big tech from giving preference to their own products among other things. A bit of a selloff after hours. Facebook in particular down 1 wilfred, weve been talking a lot about the u. S. Economic trajectory one question is how bad of a hit the World Economy is going to take this year after lockdowns and recessions in most corners of the globe in june the imf was saying were looking at a 4. 9 plunge in global gdp but today its head says that may have been too dire ahead of next weeks release of its official Economic Outlook, i spoke exclusively to kristalina georgieva, the head of the imf listen it is less dire, but dire nonetheless. The reasons are two. One, very Effective Central Bank action massive liquidity injection. Positive spillover for some emerging markets that were able to return to borrow. And two, adjusting to the pandemic still around us what we see is the eurozone, the u. S. Doing better than we feared china surprising on the up side. What about this concern about a second wave . Its happening in europe its happening to some extent in the United States. If we do get a full blown second wave of the virus, what does that do to the economic recovery we are projecting the recovery to be partial and even uncertain exactly because we do not yet have a definitive exit from the Health Crisis that is slowing down the recovery plus, governments have learned how tozero on areas where ther are spikes many are doing better now than in the beginning of the crisis and there is more in terms of medical capacity than we had a couple of months ago that all helps to not get to a complete lockdown which we dont anticipate happening, although, of course, we have to see how the winter adjusts to the pandemic is a vshape still possible what we are facing is multiple letters in multiple places for a very small number of countries that have been successful to contain the pandemic and are doing effectively better in restarting or sustaining their economies, vshape is possible, but these are very few cases most countries are going to be faced with uneven recovery and we see many cases a k with parts of the economying really well and other parts contracting dramatically how badly do you think the u. S. Economy needs more stimulus right now . The u. S. Economy has done really well by injecting 2 trillion in physical stimulus and also by incredibly Decisive Action from the fed. Given that we are not out of the woods yet, continued support is necessary and the good news is that the u. S. Can afford it. The sooner the better so we dont risk bankruptcy in unemployment because of the premature withdrawal of support. That is the core of our message. Do not cut lifelines prematurely. What was your reaction upon hearing that President Trump was diagnosed and hospitalized with covid19 does it impact the outcome for the u. S. It is very hard for any family that gets impacted by coronavirus. Like everybody else, i wish the president and the first lady speedy recovery. It seems like they are on better paths. The strength of the u. S. Economy that has helped not just u. S. , but the rest of the world in this crisis. What we have seen is quite remarkable in terms of what Decisive Action in the u. S. Meant for preventing a dramatic collapse of companies and increase of unemployment but also, how the u. S. Has been affected in supporting the rest of the world we have seen this by the extension of small by the feds to other countries helping to sustain Financial Stability globally we benefited at the imf because included in the first 2 trillion stimulus supported the capacity. It is a very important country and can solve the world by doing better to come out of this crisis our thanks to kristalina georgieva. That was key to me she is forecasting higher next week because the u. S. Took decisive and strong action to fight this crisis she plainly put out there that the u. S. Needs more, and she said sooner rather than later to prevent bankruptcies and unemployment it is important for the world. The u. S. Is the most impactful economy in the world it is not just that china has come back strongly but the u. S. Needs this, too she is adding to her voice calling on congress and the administration to do more. But the overall tone is we need to see more fiscal stimulus but doesnt tie with a screaming need to add more stimulus immediately. Immediately. Earth way, fascinating as business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. Stuf and deliver our products. But no matter how things change, one thing never will. You can rely on the people and the network of at t. And very clear message session. Y prtg n th we look into the next 24 hours. We saw the gut reaction was to sell we will find out how much the market was depending on that stimulus coming before the election, particularly in some of the cyclical groups which had been working well lately thats the test the pattern has been when we have doubts about the strength of the recovery and whether we get stimulus, generally it is the Growth Stocks, but that wasnt the case today. They were on sale all day. Thanks for watching this is fast money. We begin with two major market moving stories out of washington stocks plungwh