Welcome stocks are surging dow is up nearly 500 points. S p 500 climbing back towards record territory were just about 3 below record highs and the nasdaq jumping almost 2 of the session check out the retail rally Department Stores like macys nordstroming and lulu lem hn that stock is higher well have more on those moves later on weve got the angles of the big rally covered. Seema at the new york stock exchange, eamon javers at the white house where optimism spurred this rally and Steve Liesman on the year of the right cut. We start with seema. A triple digit rally for the dow as u. S. And china trade officials confirm a meeting frg october. The s p 500 is back above with a 1 gain. For the week, the dow is up about 1. 4 being led by banks and industrials. And if we dig into the financials, youll see the big banks like citi and goldman are up about 1 to 2 2. 6 for goldman industrials that initially sold off this week on fears that a meeting would not take place between the u. S. And trade officials are now all higher and whats also helping is a weaker dollar. Its down about 1 in the past three days, which is good news for multinationals that do business overseas. Now both the dow and s p 500 are about 2 away from their respective all time highs hit back in july the nasdaq is about 3 away from high and as to whether we can get there, it comes down to the jobs report. Tomorrow, the fed meeting in mid september and the trade talks to see if we can get progress as we mentioned todays rally being fueled by hopes for more productive talks with china, lets get to eamon thats right. They are saying here that theyre taking a wait and see approach on those trade talks with a the chinese that mirrors what aides say the president s own personal approach is to this. Then with an eye toward perhaps a higher level meeting in october at the lower level meeting takes place this month so one of the areas where we can expect to see the china conversation happen is in the oval office today. The ceo of General Motors is here today shes expected to be in a meeting that is according to the schedule, going on right now here at the white house. Aides tell us that will be a wide ranging conversation. We expect that china will be among the topics there are a couple of other topics that we expect them to discuss including the trade agreement with the u. S. And mexico fuel economy regulations then of course the president is always focuseded ond jobs announcements. Anything that gm might have coming up that the president can point to politically to say his Economic Program the working of course all of this ahead of 200, a lot at stake for that meeting. Well bring you the details. Thank you very much all right in addition to trade, the markets digesting a new set of data putting recession fears on the back burner ahead of tomorrows jobs report here to break down the numbers and eck plain what it could mean for the fed, Steve Liesman most of the data today coming in on the upside and really worked against those fears of a recession that are out there adp up 195 more than expected and greater than the expectation for jobs. J jobless claims, 217, but still in a range that says the job market is is healthy productivity, second month in a row of above average productivity did slow from the first quarter. Contradicting the ism manufacturing. And theres the Services Number, which is a big chunk of the economy. 56. 4, better than expected lets talk about atale of two economies. I have here the ism manufacturing, whos dip below 50 caused a 400 point decline this week. Against the ism services let me tell you, this gap between the two is a 13th largest that i could find going back to 1997, which is 266 months please write that down in pencil at home. Manufacturing is going to be more affected by the strong dollar than services will be two other times weve had a wide gap like this. Another big gap came ahead of the recession 2000 in 2015, it was a growth slowdown the outlook for fed rate cuts did react to the better data by reducing probablyties not of the rate cut of september, but the chart fell melissa just got a chill i was still pondering the i thought you were scared well be done in a minute here 71 chance earlier this morning of a rate cut in october thats fallen to 57 and then right around the 50 end for a rate cut in december thats now just 37 . So baking out some of the cuts here and the outlook for the fed is going to react again tomorrow at 8 30. Expectations are for job growth of 150,000 a hotter number could dial back expectations and thats not it because markets get a chance to react again when jay powell speaks in switzerland at 12 30 p. M. Eastern time. So in terms of the gap between services an man f manufacturing, you said you found 13 times where the gap was larger, but only to of those times led to a recession one episode of the gap. And one growth. Right so two out of 13. No, no. The 13 the 13 is sort of bulked together. There were four, five big numbers together when the gap opened up essentially. You can see it opening up there. Like ten, 11, 12 a bunch together that came before 2000. It was a good recession indicator then not in 2015. Could have been an oil related ning 15 and 16 we have a piece of that in here. A lot going on for manufacturing. Not affecting the Services Sector that badly. Some of the stuff nsds the Services Number not that great today. But 56 is a good and solid number it is and steve stay right there with those markets on rally mode is wall street just falling for false hope once again . Lets bring in hugh johnson. And ceo with whittier trust. Hugh, who are you trusting manufacturing or the rest of the economy here im really trusting both. But i think steve really hit the nail on the head i still think were headed towards a recession or a bear market that will be accompanied by a recession this has been a long bull market the longest in history trees dont grow to the sky. So sooner or later, thats going to happen and i have that again sometime like in june, mid 2020. But between now and the end of the socalled bull market, we could have some fireworks on the upside i think part of the reason for that, you know steve hit the nail on the head is that we ask yoursethe questis there going to be a recession. There are other numbers that say no the real key is the Services Sector is the Manufacturing Sector of the economy which may be in a recession going to drag down the Services Sector and the answer to that question with those numbers we saw this morning as well as employment numbers, but the most importantly, that nonmanufacturing pmi is no not being crdragged down and thats 90 of the economy. So it looks as though the case for a recession got weaker the case, the need for many rate cuts by the Federal Reserve certainly got less but hugh, youre still im going to turn to sadeep here in a second, but youre still expecting a recession come 2020 and the main thing as i read it that you are concerned about is the socalled inversion of the yield curve. How worried are you about a, the inversion of the yield curve and whether or whether or not it predicts a recession well, this inversion of the yield curve is different of course it contains information about future growth and that is admittedly slowing down across the globe driven by weakness in manufacturing. But there are at least two or three other factors that are depressing longterm bond yields globally Central Banks outside the u. S. Are still engaged in qe. The outright pushes prices up. Yields lower people are fretting and theyre worried, so theyre fleeing and hiding in bonds and the cost of safety of this protection has also gone up a lot of risk has come out of this system. Inflation expectations are lower. This Economic Cycle has been so stable, elongateded and long, its not extremely volatile so risks premium have come out and these are factors that are contributing to the inverlgs version of the yield curve and they dont say much about growth theres a time of the year when the sun shines and the air is cool. Were kind of there now. L tell you why the market today, i dont know about tomorrow, is enjoying the best of both worlds. Strong economy and a belief that the fed is going to cut rates. And a belief there may be a trade deal great point, tyler. If you look at what the tenyear has done today, i wonder if the traders in the bond pit were not talking to the traders in the stock pits trade ers in the bond pits both rere deuce the chance of rate cuts in the outlying months because of the Strong Economy and they raised the, the chart is today you went up from a 150 area to 156 or so. Which is six basis points. Pretty decent move now Rick Santelli, my good colleague from chicago, paused the theory today that maybe next week, the market doesnt geg everything it wants from draghi in terms of whatever it takes. Maybe they get some of what it takes. Takes the pressure off the fed. Then maybe powell sticks to his mid cycle adjustment so i guess the question is is if youre going to price in better economic data, you also have to eventually price in a little bit less from the Federal Reserve. And that works, too hugh, well give you the last word translate this into how you think investors should be positioned now in a bull market, rates are going to go up some. The Federal Reserve will lean towards restraint, but the point is the message of the bond market today is that were not going to need three cuts in the federal funds rate the economy will be good enough particularly because of the Services Sector. Hugh, hugh, does the stock market hear that message yes it does. And what you also have is not only a stabilization, maybe even a rise in rates and we boenwon have the cuts we need from the Federal Reserve, but thats in response to an economy which turns out to be a little bit better than we expected, which means earnings will be better than expected. Ordinarily in a bull market, you have Interest Rates going up, earnings and stock prices going up in other words, what happened today is very symptommatic of a renewal of a bull market again, this is the late stages all right i think youre going to have to throw that out the window. That recession you know, you keep kicking that can. I know we have took into consideration but steve i want to ask you this because it seems like the market has believed what it wants to believe and has done that for a long time and the bond market then comes around to the stock markets thinking when it comes to rate cuts i dont think theres anybody out there that watches that relationship more closely than you do, melissa, and i agree the bond market can go further than the warranted but in general, it tends to be ahead of where which means the its the smartest kid in the room it likes to think of itself as the salier of the two i think were off sides at this point my outlook has been along not much different from the feds. For 2 growth. I think the recession fears have overblown. In which case, the bond market might have gone too far. And the idea weve had this furious rip this morning, a generationally historic bond rally. And the idea that somehow it wont back up and retest where it was before, well thats just not understanding the way markets work steve, thanks pleasure. Thank you both as well. Appreciate it very much. Pleasure. Lets go to Rick Santelli who is back at the cme i know you heard this. What do you think . It was a great conversation ill add a couple of things into it fed fund futures, which are a snapshot and then after that snapshot, they dont really mean as much. Its a moment glimpse of a reality. If i look up, it is selling off and it sells off deeper as you go further down the calendar what does that mean . When you sell fed fund futures, you lower the possibility of easing or how many or the intensity of the one thats built in thats important on a day when you have good data and a lot of stuff going on quickly, august 1st started two year note yields theyre starting the grab basically off of cycle lows. One week of tenyear also just two days ago, we hit the slyke l low and its up double digits. Finally, the two heroes. The long end intraday of u. S. 30year the highs, 209 four years since 201 that was the all time low. We violated it in august we come right up and retest it and finally the biggest 30year trade of the day is going on in europe theyre two day chart jumped 15 basis points overnight and i dont think it was for nonmanufacturing ism you have strange things going on with Central Banks especially ecb better data in the u. S. And the most important thing, the bond market used to be smart like your discussion, but the signals are broken hard to get your gps between stocks and the fixed income market back to you. Our producer paul wants us to do this quickly. How far could the tenyear back up whats the resistance level at the bottom there or at a higher yield . Ill tell you what. If we closed above 209 before a tenyear yield closes under 137, i think we could have 25 basis points additional upside in both maturities quarter point higher. Quarter point higher but you have to close above 209 in 30s before you close below 137 in tens. Thats the game of chicken on the long end rick, thank you very much steve, thank you as well coming up, the bears, well theyre getting trounced on wall street today the dow is up nearly, exactly 400 points what about that. Will the bears do any wetter against the packers tonight . The nfl season kicks off on nbc and mike is about to join us from chicago but first, lyft shares down 35 since the ipo. Up next, well talk to an analyst who thinks the bottom is in lbe with us wel right back. Do you have concerns about mild memory loss related to aging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back we were considering slashing its valuation target in half ahead of its highly anticipated ipo. Thats according to report iing from david faber who joins us from 30 rock with the details. Hi, david. Perhaps not that surprising given at least the initial reaction to the one when it came out in terms of concerns amongst investors about valuation, the Business Model and even about governance we work for the we company as its now known, is trying to address any number of things inclutding governance. Its added women to the board now. But it come down to the idea of wlingness of investors to take on this Business Model and believe in it. Thats proved to be more difficult. As ive been reporting today and others as well it doesnt appear theres demand at the 25 billi 25 billion leve this ipo more likely, you get closer to the 25 billion level. Overall, valuation before you start to see people who are willing to believe weve heard this, even in the last few days, from a number of real estate executives including sam who was on squawk box yesterday talking about this Business Model of leasing space and releasing it and wondering whether in fact during a downturn it would be able to with stand the pressures that would take place heres mr. Zell yesterday. Ive had the privilege of investing in this kind of company once before. As a matter of fact, this kind of Company Began in 1956 with a guy named fijan who went there then subdivided it every single xacompany in this space has gone broke still look for this guy fijan by the way it goes to a lot of concerns many people raise. Yesterday, isa had a conference. Similar sentiments from them that said, the most important investor so far in this company has been soft bank include uing this high of 6 billion this year thats been reported as 47 billion value. I spoke to the man who runs soft bank bank this spring and he did discuss while he feels its going to work as investment. Growing so quickly and theyre investing into the cap ex right . But its a recurring revenue ongoing, recurring like a subscription. You know the subscription of magazines or newspaper and now netflix. Netflix is still losing money but the value of the companys tremendous compared to other companies. And so there you at least have some sense. Now of course he does figure strongly into what is going on surntly. Others reporting that theres a consideration at least in terms of trying to get another corner stonement from soft bank to help under gird what it would be in terms of when they come to the Public Markets or whether theyd be willing to write another check to allow the company not to have to go public in the near term well see where it all plays out but from soft banks perspective, interesting as they try to enter the market for another vision fund. The fact that theyre under water so far on their uber investment and the we Company Given this valuation were talking about may make it more difficult for them to raise those funds. All right david, thank you very much sticking with struggling ipos, lyft is down more than 30 , but Deutsche Bank out with a new note saying to buy now because the worst could be over. With us now is the analyst behind that call lloyd, great to have you with us thanks for having me. The timing is interesting giving the 85 gig economy bill in california which is looking like it could pass just got the governors endorsement a day or so ago. Theres increasing concern about this become law and perhaps paving the way for other states to adopt the same legislation. Why is that not a big deal for lyft. Yeah, so we think its been a big concern among the Investment Community and its overblown for a number of reasons. For starters, even if the deal passes, already the existing law in california. So they are required to classify their drivers as employees. And if they go ahead and do this move, we think cost the pretty limited. They can pass along a lot of that to the end user they can reduce pay in other areas like paying drivers during surge pricing times. If theyre employees, they can have them where they need them without surge pricing and ultimately, if you l