Former dallas fed president Richard Fisher is with us live and we are hours from a key report from netflix. Which way is this stock going to move the Investment Committee is ready to go. The Halftime Report starts right now. A lot of good questions there. Of course, its good to have you with us on this wednesday. We have a very good Investment Committee as usual for you jim leventhal, steve weis, jonny in najarian. Not for investors, not for today. Csx shares derailed. Investors suffering their worst day in more than a decade. A lot to unpack here lets get to frank who has been following the story since last night. You were just talking about economic indicators. The economy is strong. Retail sales strong. Unemployment at record lows. Inflation not a worry. But their new fears of a freight recession. Now csx, lowering guidance from 1 to 2 growth to a 1 to 2 decline, largely due to weaker demand for domestic and export coal and the everpresent trade tensions first half volumes fell 4 ceo james foote saying the present economic backdrop is one of the most puzzling ive experienced in my career many of our industrial customers volumes continuing to show weakness with no concrete signs of these trends changing foote also telling cnbc today, this is one of the most unpredictable freight skrir environments hes seen expecting to see 1 of volume negatively impacted by the closing of a refinery in philly last month due to a fire jb hunt said its container transport business fell more than 7 in the first half of the year and its nonpay loads, empty trucks, that increased 60 for the quarter. Also a. C. T. Research forecasting rates will foul 4 and 6 which could be an additional signal of lower demand and could solidify those freight recession fears. Were going to get a better sense of the freight market and how widespread the slowdown is when we hear from Union Pacific thursday and Kansas City Southern on friday keep in mind next month is the beginning of the Holiday Shipping season when retailers start bringing in the loads of consumer goods, the oys, everything else. Thats traditionally when we expect to see freight demand increase but well have to see. And i think, obviously, the refinery fire. Were starting to realize, they got other oil from north dakota. They didnt get it from around here Union Pacific and the other names you cover, when they come out with their numbers, theyll really tell the story. Is this a csx problem, or is this a sign of a u. S. Economy thats beginning to slow down . Thats a great question jb hunt a lot more optimistic. They think the second half of the year is going to improve for them lets go around the horn. Frank, obviously, stick around brenda, you have a take on the transports do you believe csxs worst day in a decade, is that a macro worry or a csx thing and everything is okay were in an environment of a lot of uncertainty, particularly within the Manufacturing Sector and anything related to global trade. I would say if you can look outside of that and into some of the other transports that are more leveraged, the consumer, we own u. P. S. , for example. There is still a story there and its more certain at the current moment, although i would say, you know, theres a lot of uncertainty. This is a part of the economy being the most impacted. Its so bizarre you dont hear a ceo, a longtime ceo say im puzzled. I dont understand the economy yeah, so, look, lets broaden the picture here good reporting, frank. For classic theorists of the market, the dow theory applies you are setting new highs on the s p 500, new highs on the Dow Jones Industrial but the dow jones transports are about 7 below that high and that does not confirm the breakout in the overall indices. Why are the transports lagging were talking about csx down 10 . Its still up 15 on the year. The railroads are not the problem as far as transport goes the problem is localized, brenda, im sorry, on u. P. S. And fedex. Fed checks is taking it on the snout when amazon will do more of its own shipping and both Companies Facing pressure from the u. S. Postal service where President Trump wants to renegotiate their contract rights so that seems to me to be what the problem is with the transports i take some comfort from that. Yes, theres a slowdown from what its localized in u. P. S. And fedex. I dont think thats true let me just finish let me just finish the thought here, okay the u. S. Economy has clearly slowed down. No question about that thats a factual statement the question is where do we go from here . And if you get an easing of trade tensions with china, then that trade and the container volumes and trucks and shipping will pick back up. So i bought Xpo Logistics which is exactly what it says. Its got the trucks and everybody uses them from amazon to everybody and i sold it. The reason i sold it is because looking at spot freight prices i sold it a few weeks ago and they continue to come down too much capacity. Its due to a slowing and due to an increase in capacity, which is the worst of all worlds for a company that depends on rates. We saw fedex had some weakness not just from cutting out amazon, because they proactively said were not doing business with you anymore the tnt division isnt doing as well. Right so youve season weakness. Jb hunt is a good one. Theyre optimistic about the next half because why not be it costs them nothing. So i think that its an issue. Coal we understand coal shipments are way down. Utility plants in a big green move to go more toward gas so, look, its so i think youll see some of the same unless its all about expectations, dont forget if unp said were going to do this and they beat it but its not a great growth story, the stock will do fine everybody will come out and say you have to also watch oil and gas because, as we said, csx, shipping a bunch of oil from north dakota to philadelphia, Canadian Pacific is the number one shipper of oil. And if we see Oil Prices Drop and we see freight and volumes drop, Canadian Pacific which is up 38 this year, the market has been optimistic on this name if we see oil volumes fall, these names are going to be at risk up 10 over the last few weeks as the market moved up so its thats my point every transport is up. Where the market has driven it and not the fundamentals. Jon, can we make a blanket statement about the economy slowing down until we see more numbers . No. What if Union Pacific comes out tomorrow and is like, everything is great. Rates are up volumes are up then well have a totally different discussion tomorrow. How about this one . Jb hunt, jbht was up 17 over the past five days today it fell and fell by about 4 pretty big drop. Its recovered all of those 4 right now at midsession. So is that telling you, brian, that instead of being a oneoff, that this is broad i mean, landstar is still down and trading near its lows of the day. Citing another trucking company. I know. And logistics, to steves point, xpo right up there with jb hunt. Both of them up strong and after this morning, both are all the way back up. The viewers are going to who cares about personal anecdotes but one of my best friends is a landstar broker in wisconsin. Former trucker hes growing hes hiring people hes never been busier as well you wonder in the industrial midwest is that telling you, brian listen, its one guy. Maybe hes just doing a good job. I came back from the midwest in wisconsin, and things are humming. I dont agree with your statement the economy is slowing down i think its factual. If you look at things like the atlanta fed gdp for the thats fact for me facts are trucks on the road what i see not what a couple of economists project. Were talking about gdp, the atlanta fed and were in the third quarter. Wronging over f on everythine last not everybody at once, okay its below 2 , all right . I dont think theres anyone out there projecting that the Second Quarter gdp is going to be above 2 that is a slowdown the question isnt what happened in the Second Quarter. If were going to make an argument that things like the regional fed surveys and ism are not telling the truth, im going to back away from that whats important is Going Forward where are you going to be i state again the economy clearly has slowed the question is, where does it go from here now, by the way, were painting a muddled picture because were talking about csx. The flip side of this on the transport, the airlines, so far, have reported very good numbers and very good projected numbers. Its a muddle. Youre talking about your landstar broker. I like that. I want the economy to do well. But you look at truck orders class a truck orders they stink you know why . Because the trucks are lasting long because of new Engine Technology lets bring in i know for a fact lets bring in a guy that knows what were talking about a former fed president , Voting Member of the federal open market committee, a guy that negotiated trade for the u. S. Government Richard Fisher joining us live from dallas. Great to see you you are the perfect guy to have on right now were talking youre in texas. Maybe youre not because your economy has done well. Do you believe that the u. S. Economy is in a slowdown mode . If so, by how much, or if not, why not . Well, lets put things in perspective. This is the at the end of this month, it will be the longest economic expansion since 1854 according to the National Economic bureau of research this is the most anticipated slowdown ive ever heard of because we keep talking about it, talking about it, talking about it, and yet we continue to proceed, consumption is strong retail sales are surprisingly good the last june employment figures, more jobs twice as many jobs created as we need to continue job expansion so on the consumption side, excellent. Monetary conditions are super accommodative. Stock market at an alltime high Interest Rates very low. The prospect of perhaps another rate cut, even though i disagree with that if i were at the table. Things are very, very good and yet youre talking about freight and all of that. The cas transportation index which everybody starts quoting now, is weak and has been weakening and weakening and weakening. So were going to have to see. The one thing i felt when i was at the fed an overempscihasis on two thing. All the manufacturing indices manufacturing data, its important. Its 11 of our economy. The consumer and Services Drive the u. S. Economy and were still continuing to grow and with all due respect to my former colleagues at the atlanta fed, as you know, thats a very volatile number and hasnt been at all accurate in forecasting whats actually going to be reported on gdp. So i think were probably slower one would expect it to slow down at the same time, i dont see us turning into negative territory. And again, financial conditions are hyperrobust right now. So things are pretty good, i would say. Maybe from 80 miles an hour to 70 miles an hour. Nobody is picking on the atlanta fed. Theres good people down there the number has been a little wild ill probably get a phone call after the show no, its not supposed to it changes every day, by the way. The gdp now number it is youre not picking on the atlanta fed. Thats fair i remember in december you were saying that the rate hike may be the right thing to do and that we should have a couple more rate hikes that obviously may have been a policy mistake but do you believe that now we need a rate cut at the july 30th meeting no, i dont all the conditions they were worried about have not materiali materialized the market has raced upward in equities Interest Rates are low Mortgage Rates are low even though theyve come up a few bips in the last few days. Consumptsion is strong job creation is strong what i worry about here, they only have so many coins in their purse. There are eight coins they want to go back to the zero bound i wouldnt be pulling those monies out and spending what is in my meager purse until its uber clear that things are looking bad. Its not clear right now so again, they may end up cutting. That seems to be the rhetoric, but if i had those coins in my purse if i were still sitting at the table, i would not be in favor of cutting rates here. The market has been determining the shape of the yield curve the market has determined how low rates are. I dont think the fed controls the yield curve more than a year out right now, the way they constructed their portfolio and the way theyre deal with the base rate. So things are good so richard, let me ask you this question. If you are sitting at the table when they are talking about the rate cut and its clear its going to happen because powell cant afford another communication gap like he had in december what and you say, why are we doing it now what do you think his response would be, and do you think its just inflation or what wouldnt be said is its the political pressure what do you think is behind this rate cut i agree with you i dont think it does anything for the economy anyway when they do it. I think, again, theres an academic construct here that has been adopted by every central bank in the world that the desired end point here, at least in terms of the intermediate term is 2 inflation you could debate that. But thats what everybody is hung up on i do think, and i love jay powell like a brother. I consider them a brother. Were very close personal friends. He has to be careful noft to be captured by academic constructs but remember his instincts on credit markets and the markets effect on the economy and how you price money. He knows that very well instinctively. Thats his background. So i think that would be the issue that people would be pushing on here. Or taking out what they call an insurance rate cut, although i dont want to take out insurance rate cut if i were at the table until its clear that we need to its not clear that it is. Weve had this nice comeback of all these factors they were worried about in the last meeting. I do not think its a response to political pressure. You do not . If anything, that would be it would be perceived as that. Ithink i know this culture very well in the central bank. I understand all the Federal Reserve colleagues of mine, former colleagues of mine. I know jay powell like a brother. He is not going to give in to political pressure and if it were perceived as his doing so i want to switch gears. We always call you the former fed guy. And you are the former fed guy also the former trade guy. You were a trade representative, especially between mexico, latin america and canada for a number of years and china and vietnam and china as well and korea the perfect guy again to have on to discuss this trade fight or trade war, whatever you want to call it and tariffs are you surprised that and maybe we are slowing a bit to jims point, but that the tariffs have not had, or at least yet, more of a negative impact on the consumer, on consumer spending, or do you believe the american engine, the American Economy and American Companies are smart enough to figure it out and to deal with it first of all, American Companies have been moving around their production around the world well before this all occurred vietnam has been a very attractive place to produce. Mexico has been attractive place to produce other countries have been an attractive place to produce product. Theyve been moving out of china for some time. Not so much because of this. Because the cost of operating there and the intrusive nature of having a Party Official sit in on the factory floor, sit in on your local Board Meeting and every management meeting, thats not the way we do business in the United States or in democratic capitalist countries. People moving their production for quite some time. Im not a big fan of tariffs i do think the real issue with china has to do with intellectual property, who wins the tricerace to 5g i think theyve gotten it right, but the tariffs themselves eventually lead to price increases for the consumer we are very lucky in the United States to have less exposure to trade than anyone else and it just hasnt worked its way through the system however, as the point that was made earlier, the most important thing in business is confidence. Uncertainty makes Decision Making difficult thats the first thing you learn in any Business School or mba program. Mr. Fish eer this leads to uncertainty and thats where the issue is for manufacturers. I want to key in on confidence, sentiment and im not calling for negative growth. I think theres clearly if were talking about sub 2 , i compare that to 3 plus a year ago which nobody expected all the economists said you cant grow above 3 , and we did. Thats fine im just stating for the fact that its slowing. But my question, is sentiment the reason for the cut low unemployment, no inflation, a stock market at alltime highs. It begs the question, why we are making the cut i desperately hope youre right its not political why are we making the cut . Is it because of sentiment is it because of the need . The market is telling us that you have to give us this cut for the market to stay happy well, first of all, i dont think the central bank should be geared to the equity markets which is a hypervolatile i operated in those marketed for decades running hedge funds. I dont think thats the way you should operate Monetary Policy its more delicate than that they are looking at sentiment surveys Going Forward. They are trying to make absolutely sure that the real economy is pu