Day. Did chairman jay powell thread the needle. Thread the needle lets put it this way. When he opened the door to another round of quantitative dsh another round of getting the Balance Sheet back up to where it was, to me that was the reason why the market, the dow went down 170 to base cheh unchanged on the day in that regard maybe he said what the market needed to hear in terms of myself, you know, sometimes you have to be you have to be confident in views. But there is a fine line between confident and dog mattic ive been bearish month and a half two months. But when you see price action like monday where i thought the market would be down at least 300 dow 35, 40 s p handles down 10 you have to sat some point say the market seems to want to go higher grasso. The only concerning issue is what guy said, the Balance Sheet. Thats concerning. And the but if you were in the camp where you wanted lower rates. You got it if you were in the camp you didnt want extended lower rates you got that too it was a little bit of everything for somebody. And i think the mechanic does move higher from here. Yeah, rates even moved higher today, which is extraordinary. Yeah, i mean from the perspective of the equity market i think the fed nailed it. He did he did everything he needed to do and you know as cautious as you want to be to guys point, if the market wants to move higher in light of all the things you create as a bear case then the market moves higher. You look at stuff like the banks going higher you look the cyclical going higher all very positive signs for the market and i think its really important the fed did say, listen if the data turns down we are going to be there with very strong response. And not only that, we understand the repo market was a mess we will increase the Balance Sheet if we need to. From the perspective of equities you got everything you wanted. Isnt that exactly basicallically what he said at various other points, well be data dependent and do whatever it takes its not any different what is the lens threw which we view the chair today. Relative to Market Expectations good question. If you think in august s p, sfiftly lower and a hawkish caught what did the market do in to do is a victory for a market getting another fed meeting out of the way i know it sounds insignificant aggregate is the 19. 5 standard deechgss below where it should be when you have all kinds of measures of at least positioning that say we are overth bonds, the market was interesting for the houks its tough because he didnt talk about the need to justify another cut. There wasnt a lot in here for people thats why i lean towards more hawkish even though the dahms with the money markets and what people can interpret you have a case where i actually think the fed is probably more divided than people also think i know that wasnt meaningful today. But i think getting into the december meetings, et cetera, i think thats important but make no mistake, and its interesting because i hear on this desk people willing to throw applause towards the fed and thats not something weve been getting yeah, i think you have to with the reaction today. Who knows what happens tomorrow. Made maybe the trade war increasing but if you look at the market today, the markets prices in movement on trade war a Federal Reserve accommodating. I always ask this question, how do you short a market where you have trade war in the back pocket we talk about this a lot with dont fight the fed then you have the trade war and then you have a dull market so you dont want to short a dull market. You dont want to fight the fed. And you also have a trump card in trade war so its almost impossible to the. Havent we rallied on trade show i got the sense i get the sense that actually the trade in your back pocket is something that probably three weeks ago we got a lot of that when they said we are get back to the table and not as divisive and ultimately none of us expect a formative material trade deal anyway. You just said it. You just said many of us dont expect anything formative or substantive. So. And i still. Zproo cant be in the market yet. If we all are not expect sfwloog you have to be long no matter what. You have to be long until you get the trade deal then i think thats the top in the market because china will never be as good after the tradedeal because they are giving up something by the nature of a trade deal and the u. S. Doesnt have it anymore as a variable or a tailwind so i think you have to short the market once that trade deal comes out. I have to argue with that its hard to argue with it i know you talked about it last night im certain on but oh. Where were you last night. I was stuck actually on the helix of the new jersey turn pick i put it on video with you which youre more than happy to view. I was concerned. Friday night. I didnt know what was going on. Ufrpt series of events. Anyway. By the way, the roadway shakes when you stand on it its quite actually its sort of alarming. Disturbing. I would think hear that. Its hard to argue with being long the market. Listen u. S. Steel down 8 Federal Express down to the side theyve done it to themselves you can say. But thats squha of a barometer how its doing and does the fed have our backs . Maybe its that simple i find it hard to believe that it works out well. Tloeft for today it did. Do you feel like were getting the glimmers of how we set up for the Fourth Quarter of last year in terms of the earning warnings coming out so far. Nothing changed i mean, in terms of warnings they are all again, earnings have been going in my opinion the wrong way. But you get the multiple expansion which maybe makes sense in the light of rates lower and the fed having our back. But there is the rotation that has gone on with the acquaint quake last we can from momentum into value, rotation into cyclicals acquaint quake. Its like similar in 2007 we had a acquaint quake. This is different though. This is kind of more of a rotation ou out of the moment name, the recession names. What im concerned about with utilities and into cyclicals lets think about what does that market say the market says even if we have a recession it will likely be shallow and the fed will be there. And thats what this rotation is telling you. Whether you agree with it or not thats what the market is doing. Thats whats difference about a year ago setting up into the Fourth Quarter. I dont think the market a year ago starting to get concerned on credit concerns had any idea the fed would pivot this low talking with the implied pe on market preponderates lower mean the pe multiple goes higherer the expectations for Fourth Quarter earnings are awful right now. We went from looking at 15 to 20 eps growth a year ago to 2. 5 where everybody knowing most is supported by buybacks and other things akreeft kreetive to eps. Its all about positions i would go to where Equity Investors were a year ago is a confident place. Lower rates and lower expectations this time around prevent thatkind of selloff even if we hear the avalanche. I agree a fed that will be there and talked about risk in the context of the market, thats the thing that they talked with being there for. Isnt that a good arent those huge differences between last year . Isnt that why we shouldnt be worried about fedex and u. S. Steel. Yes, thats why you shouldnt be worried but you should be worried. But at a certain point it should matter it shouldnt be as easy the market goes higher because the Federal Reserve has our back but maybe it is that simple. But at what point does that end . And at what sequence do does that come with i cant believe it cant be that easy. Maybe the market didnt get exactly what wanted but yields if banks shot higher after the decision to cut rates by 25 basis points and thats exactly what our next guest said would happen when the biggest bubble ever finally bursts in the bond market. Now what bta managing kwrt. Julian emmanuel great to have you. Great to be here. Is this it . Bonds its over, the trade oh is over. Reversed. We burst. We burst if you look back at august going from 20 li 2. 0 a in the 10year and 1. 45 come in the day after labor day get the appropriate supply response with literally record corporate issuance, dwoft issuing debt to finance the ballooning deficit, and you know, essentially the realization if you look at these economic surprise indices they are sky rocketing in the u. S the data is better than everyone thinks it is from that perspective yes we think the bubble has burst and we think if you look at today thats probably one of the single biggest factors that essentially, a day which we didnt think the fed did as well as others might have today that stocks held their own and bonds held their own people own too many bonds. Why do you think the fed didnt do as well as other people have said because, i mean, last fed meeting was a disaster i mean often times when he opens his mouth and goes off script. Off script. Umhum. Its a recipe for a selloff weve seen that many times. Well he held the script that was good. He actually was reading off paper for a lot of it. And that was good but the point is, you know, the dots have taken out any even sort of like Risk Management sort of onecut expectation. You know, the market Still Believes there are going to be cuts you know, and you raised your Economic Forecast for 2019 and 2020 when everyone else is taking their numbers down, which is surprising. And then on this whole issue of the repo and the funding and the liquidity of the last few days it seemed a little too sort of trite to us to say, yeah, we recognize its an issue but well be able to take care of it and oh, by the way, it doesnt really matter to Monetary Policy and to the economy and we would say, you know, tell that to friends of mine who know nothing about the Financial Markets and have gotten, you know, in their inboxes this thing about the repo the last couple days and calling me asking what the heck is this this matters with regards to confidence and confidence turns market down when it turns down. Part of this money market problem that we had was because there was too much supply of debt out there, right . And so if the bond bubble has burst and the corporations are still issuing and the u. S. Government is still issuing when does that become a problem for stocks right now it seems okay. But i imagine at some point you cant absorb all in debt and it becomes a problem for stocks. Well, again if you go back to the last couple years it doesnt necessarily become a problem for stocks until you get substantially higher in terms of yields the stresses that we have seen were sort of really much closer to 3 than, you know, 1. 75 on the 10year yield where we are now. I think its much more of a function of you know the market is expecting a deal of some sort the market is expecting some sort of reasonably neat resolution to brexit iran, we have already sort of shrugged it off the last couple days looking at the Energy Market sometimes those things dont turn out perfectly we would say locking into the Election Year, politicians, incumbent weather whether the house or anywhere else are ensuring there isnt a recession. A bursting of the bond bubble is not a problem for stocks. Its not a problem in terms of yields going higher until were more like 3 which we are far off from right now. Right. What does it mean for the view on equities. Our view is if you look at 2019 its been very interesting in that the underperformance of small caps relative to large caps have literally followed 10year yields tick for tick essentially small caps being sort of less liquid on on balance and the place people fear recession, small caps lead the equity market higher in the Fourth Quarter any also tend to seasonally as well look, our price target is where it is basically 3,000. So from our point of view the trading range hasnt broken either way we dont necessarily think its going to in the immediate term but small caps have been underowned, underloved just like financials, just like energy and any will eventually lead the broader indices high sfwleer so julian you touched on it in the beginnind snuck up on everybody when we had quantitative tight inning and they didnt realize it was raising at every meeting now another qe round or using that Balance Sheet, and see just throwing in the white flag, that its all over and we are 17 of gdp on that Balance Sheet . Well, look, the rules have been rewritten over the last several years. And you know, like it or not, Central Banks are, you know, perhaps an kmurchl player in the Financial Markets. But we havent had an accident yet. And the assumption is is that we will continue to potentially not have an accident thats certainly what the market is saying. And the way we look at it if anything the last several weeks have been good because the ecb and now the fed are telling you that there need to be other ways of keeping the economy moving forward, whether fiscal stimulus from germany ors rchlg the trade war. The message today was fix the trade war in our view. Julian thank you so much. Julian emmanuel of btig. Quickly on small caps . Iwm we talked about the line in the sand being 145. It held spot on and rallied now i think its 156 closed lower today not a big deal pl. I think small caps have led. The fact they havent made ha new high, despite the s p is effectively there is can concerning but again ive tried to bring up the bear case on dozens of different ways and none of them seem to hold water. If you look at what rallied above where it was before the fed i think the most impressive are semis. And banks. Banks responded as we talked about that, the cyclicality in here i think is very important semis which people have been trying to push down and say they cant make new highs i think thats probably the most extraordinary move today. I love the call on the small caps for two reasons one because they have regional banks which do better when you get a steeper yield curve which looks like maybe we get Something Like that and secondarily theyre undercovered and underloved because of a lot of things that have been going on with research on wall street you get in kind of whip saw effect and so i like that a lot. Coming up, Home Builders looking sturdy over the last month with the rate cut what does the outlook look like plus jp morgan ptac strategist says brace yourselves because more rates cuts coming were live from times square in new york city. Much more z ghafr isfmrit teth when i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. Announcer listen to cnbc live on your daily commute on a alexa device go googl hey. You must be stevens phone. Now you can know whos on your network and control who shouldnt be, only with xfinity xfi. Simple. Easy. Awesome. Welcome back to fast money. At t shares rising in the after hours session. Julia boorstin has the latest on the develop story. Julia. Dow jones reporting that at t is exploring parting with the direct tv unit, considering options including a potential spinoff or combination with dish now you see at t shares up about 1. 3 after hours we reached out to at t gichg us the no comment but its worth note nag Elliott Management demand nad at t sell direct tv. At t Ceo Randall Stephenson speaking at the council on Foreign Relations saying the letter from Elliott Management lighthouse and recommendation that seemed supportive of the current strategy and they made good points and that at t plans to engage with elliott on their recommendations. So this would fit into the sense of a dialogue with elliott on what theyre interested in them pursuing one note also that dish shares are up on the report melissa back to you. Julia thank you very much julia boorts bartzin in los angeles. At t shares up 1. 3 youre a holder right. Long at t im excited to have elliott around i think the issue was yes some of the parts is clearly one way to value the company its also the fact that its been boys town on the inside the acknowledgement alone of elliott paid dividends i think there is more to come. Is this acknowledgement that that squings was a failed i dont think sorry, i dont think there is any question about that. I dont think that was a good move. Bit off more than they can chew thats okay. You make mistakes. And i think the market gives them a pass. I also think and Randall Stephenson great ceo. But i think his time within the last six months of the ten your as ceo which could be. Which could be a catalyst. That could be a positive. Tim has been on in since the 29 and a half, 30, the concern with at t was the Balance Sheet are problem, debt problems those concerns seem to be going away looking at face value its a cheap stock. Plus 5 yield in a world with rates going lower that is attractive obviously the activist is there. But think about tmobile and sprimt of a duff theyll attractive you dont get the yield thats why people run here. Elliotts point was that if you compare to verizon, for instance, it has been underperform versen in the field focused world we live in would you rather. Oh. Love how she did that. Snuck that in. Verizon which would be more of a pure play telecom or at t which is now a hybrid . I mean, i dont know how you compare that. Thats a great question its not apples to apples in in case ill tell you, this is what i would say, is i would actually sell at t on this news. Oh. Up 29 for the year. This is probably the move that you were looking for elliott is in there agitating. Something is getting done. You probably sell this. You didnt say buy verizon. He didnt play the game. What do you mean i didnt play i gave an answer. I gave an answer. Im in. How did i not play the game. Im going to let that go. I will let that go. Were doing graphics if there