With the moderation, of the levels thats needed to provide for new interest in the labor market, we do have a strengthening economy with policy accommodative, all that we are doing in raising rates is removing a bit of accommodation heading toward a neutral pace. I see that as appropriate. Were not moving so aggressively as to put a break on continued improvement in the labor market, but i think that is a prudent move to move in a gradual way with unemployment now and, any indicator of labor Market Performance and tightness that you could look at, whether its household perceptions of the availability of jobs, difficulty that firms report in hiring workers, the rate at which workers are quitting their jobs, the rate of job openings, all of these indicators do signal a tight labor market. With inflation below 2 , i think its appropriate that the labor market be that tight, but on the other hand, i think we want to avoid the risk, we want to keepe path and avoid the risk that at some point we find ourselves in the situation where weve done nothing and need to raise the funds rate so rapidly that we risk a recession. Moving to some extent in a timely way to remove accommodation with a Strong Economy and continued labor market strength, the committee believes is an appropriate management of risks. We are attentive to the fact that inflation is running below the 2 objective and we faced that situation for a long time. It is quite essential that we put in place policies that will succeed in moving inflation back to our 2 objective. That is a risk that we face as well. The committee believes we have conditions in place for inflation to move up, but thats also more risk and those things point to a gradual case of reducing accommodation. Hi, im from marketplace. Recently a group of economists sent a letter earlier this month disagreeing with your 2 inflation target saying they would like the economy to run a bit hotter. They dont think a labor market is so tight. You said you are committed to the 2 target, but what do you say to them . So its the time we adopted the 2 target back in 2012, we had a very thorough discussion of the factors that should determine what our inflation objective should be, and i believe that was a well thought out decision. Now, at the moment we are highly focused on trying to achieve our 2 objectives and we recognize the fact that inflation has been running below, and its essential for us to move inflation back to that objective we have learned a lot in the meantime and assessments of the level of the neutral likely level, currently in Going Forward of the neutral federal funds rate have changed and are quite a bit lower than in 2012 or earlier. That means the economy has the potential where policy could be the zero lower bound, more frequently than the time we adopted our 2 objective. It is that recognition that causes people to think we might be better off with a higher inflation objective. That an important, this is one of our most critical decisions and one we are attentive to evidence an outside thinking. It is one that we would be reconsidering some future time. Its important for our decisions to be informed by a wide range of views and research which is will ongoing inside and outside the fed. A reconsideration of that objective needs to take count, not only benefits of a higher inflation but also the potential cost that could be associated with it. It needs to be a balanced assessment. I would say this is one of the most important questions facing Monetary Policy around the world in the future, and we very much look forward to seeing research by economists that will help inform our future decisions on this. Thank you. Im with the l. A. Times. The feds projections continue to show the longer run rate at 3 . Markets are expecting 2 . How big what are the reasons for the disconnect and what are the input implications and real risk for the economy. When we say is not straightforward to determine whats embodied in market prices because there are a term premium that affect these rates and to be as low as one from a street read. In part, expectations reflect estimates of what the neutral federal funds rate is and how it is likely to evolve over time and views have changed over time and there is a good deal of uncertainty about it so we have recently put out charts that try to show what the uncertainty is, especially as one goes further out. There is a good deal of uncertainty and that reflects the evolution of the economy and what the likely evolution will be. We do try to write that down and provide the public with information about our current expectations and the media now stands at around 3 . We have uncertainty about that. The current level is lower than that. As i said in my Opening Statement it reflects an that the rate will be moving up and they are trying to assess that and we will be as well. [inaudible] our expectations are a little changed. The projections we released today are essentially identical to those and i think the market is aware of abusive participants and assessing evidence to form their own views. Its important that the market take an independent look and that we get to understand and see how Market Participants are interpreting evidence on the evolution of the economy. Its not an unhealthy thing to have such a gap and as i just said, our own views are not set in stone but likely to evolve as well over time. Back in 2013, when you, when the fed raised the possibility of trimming its bond purchases, it created some turbulence in Financial Markets. It caused you to reassess your communication of that process. This trimming of the bond holding, although Financial Markets seem to be taking that in a better way, if, down the road you say there is more of an adverse reaction, are you planning to make any changes . Perhaps changed the caps . How do you assess that you will handle that Going Forward . We have indicated for quite some time, i guess since our 2014 normalization principles that we wanted to reduce our Balance Sheet in a gradual and predictable way, and we have tried systematically to communicate more about how we would do that as our plans have evolved. In todays announcement, it is another step in providing further details about how we plan to proceed so when this plan does go into effect, no one is taken by surprise and Market Participants understand how this will work. I think the plan is one that is consciously intended to avoid creating market strains and to allow the market to adjust to a very gradual and projectable plan. My hope and expectation is that when we decide to go forward with this plan that there will be very little reaction to it, that its clear how we intend to proceed and that this is something that will just run quietly in the background over a number of years leading to a reduction in the size of our Balance Sheet and the outstanding stock of reserves. It is something that the committee will not be reconsidering. We think this is a workable plan and as one of my colleagues described it, it will be like watching paint dry, this will just be something that runs quietly in the background. That is my expectation and our intention, but of course, if it turns out there is a surprise and a substantial reaction, that is something we would have to take into account in deciding the appropriate policy. A couple comments from Administration Officials that i want to get your reaction too. The treasury secretary and others have suggested dodd frank regulation has roots restricted credit growth and banks are not making loans they otherwise would and that has slowed growth do you agree with that, and if you get a new vice chair of supervision who wanted to ease up on regulation, would you go along with that . Also, its been reported that the president has congratulated you on being a low interest person. Would you agree with that characterization of your philosophy. With respect to the impact of Credit Conditions and bank regulations, i have previously testified and indicated that i dont think our regulations have played an important role, at least broadly speaking in impeding credit growth and the growth of the economy. Ive pointed to a number of statistics suggesting that credit Growth Continues to be healthy, including among Smaller Community banks that are most concerned with Regulatory Burden i think, when banks are under capital laws that impedes credit growth and when banks are strong they are in a much better position to lend. That has been a view ive stated previously. In terms of regulation, the treasury recently issued on monday a detailed report and its a complicated document with lots of recommendations and it. I havent had a chance to review it thoroughly so i dont want to comment on too many details, but i would say it underscores the importance of capital liquidity, stress testing and resolution planning and having a safe and sound Banking System which are views that i and my colleagues have long espoused. Regulatory burden, when its possible to ease it, and a good deal of the treasury report is focused on Regulatory Burden, that is something all regulators should be looking to do. We strongly believe in the importance of tailoring our regulation to the size and complexity of institutions, finding ways to relieve burden for Community Banks. We have been focused and had a number of initiatives already in that direction, looking for ways to simplify Capital Requirements for Community Banks and we will continue in that direction and in those areas, certainly share the views expressed in the treasury report. There are a number of areas and suggestions where there are probably some areas we are likely to have differences. There are a number of areas where we are likely to take action that are consistent with those recommendations. I have felt it has been appropriate for Interest Rates to remain low for a very long time. We are in the process as the economy strengthens, normalizing Interest Rates, but certainly weve had a lot of years in which Interest Rates have been low. I thought it was necessary to support the economy at that time and was strongly in favor of those policies. I am karen karen with market news international. Today you outline the details of the plants plans of when youll implemented and it depended on when the economy would evolve. Why did you decide not to go ahead with it today . Are there certain conditions are looking for . And, do you think you could raise rates and begin implementation of the plan at the same time . We have tried meticulously as we can to provide advanced warning to markets on how we would go about doing this so Market Participants can prepare. Todays announcement is another step in that process. We certainly wanted to get this information out before we actually undertake the beginning of this plan. As the statement says, weve made no definite decision on the timing of the plan, but at the time of initiating the plan, but if the economy of all is in line with our expectations, we could put this into effect relatively soon. You asked about whether or not we would do that and raise rates at the same meeting and i would say weve made no decision about that it hinges on the outlook and assessment of conditions. You mentioned the treasury report and i just wanted to ask, how much weight you give those recommendations in considering regulatory changes moving forward . Also, more specifically, one of the recommendations relates to the rule, i know youve said it might be a good idea to exempt banks with Trading Assets and liabilities above a certain level. Do you think that is an idea thats worth exploring . We have previously suggested exempting Community Banks, Smaller Banks entirely from the role. A number of my colleagues have spoken about the role. Implementation of it is complex and im certainly open to looking at ways to reduce Regulatory Burden in that area. The report endorses a restriction on proprietary trading so, in that sense it endorses the Main Objective of the rule which i was pleased to see, but on implementation its true that the rules were reflecting the way the legislation is written and it was necessarily complex, but we do have some ideas for how we might simplify the role and certainly its something we are open to looking at. Treasury has set out a list of objectives for regulation that im sympathetic to and indoors. I think looking for ways to reduce Regulatory Burden, when it can be done without sacrificing safety and soundness , or creating systemic risk, that is something that all regulators should want to do. Weve done an awful lot of rule writing over the past five or six years, and coming back and looking at where weve created burdens and ways in which we can simplify, that is an objective that is core to the treasury review and that we are very sympathetic with. While we may not agree on every detail, certainly the suggestions made are ones we will Pay Attention too. In many cases we are already on our own list of things we should review. Mike derby. In light of the plans to trim the Balance Sheet later this year, what have you learned about bond buying policies as a tool for auditory policy. There were a lot of fears that it would create hyperinflation, that hasnt come to pass. In light of it as a tool for the future, what have you learned about how it works in the economy . Where do you see it affect things . What are the Lessons Learned . That is a great question. Staff in the Federal Reserve and outside economists have done a great deal of work trying to evaluate it. I think the general conclusion is, it has worked in that it has put some downward pressure on longerterm Interest Rates, socalled term premiums embedded in longerterm Interest Rates. There is disagreement among economists about exactly how large those effects are, and its something thats difficult to pin down, but obviously it has not caused runaway inflation quite the contrary. That was never my expectation, but i do remember when people were afraid that would happen. We do have the tools. Even with a large Balance Sheet we retained the ability to move the rate and set it as appropriate to the needs of the economy so, i think we have learned that it works, its a valuable part of the toolkit, it is something that if we were to encounter an episode in the future of extreme weakness right said we want the Feds Fund Rate and movement, thats our goal to number one main policy tool, but , if we were to hit the zero lower bound and constrained in our use of that tool, certainly Balance Sheet policy and Forward Guidance of the type that was provided, i believe based on the evidence of how they worked it could remain part of our toolkit , and we have said in the bullets we released today on our Balance Sheet that in such an episode of such extreme weakness , in the future, those are things we would consider Going Forward. Is their natural limit to how high you might want to push it. Weve had no discussion of that issue. Our focus now is on getting it back to a more normal size. I would say the use of it in the united states, relative to the size of our economy is not as high as its been in other countries that have employed it. That is something we havent seriously discussed. Its Workforce Development week at the white house and youve highlighted several successful jobTraining Programs in your speech in march. The president s budget has a 40 cut to job Training Programs. What is your response to the budget cut Training Programs even though they expect to expand apprenticeship programs and you believe they are both needed to help fix the job skills gap in the economy . Im not going to comment on the president s budget, and to these programs can be undertaken at many different levels. Ive seen many nonprofits and state and local authorities put in place programs that look to me to be successful. I do think we have a tight labor market and one where employers have jobs where they are finding difficulty identifying workers with the appropriate skills. In my own discussions with businesses, what i hear more of, and this is something that i think is a great aspect of a tight labor market, larger firms are spending more on training and trying to, given that they cant hire workers with the ideal skills, they are training people to fill jobs they have available. What i hear from ceos of smaller firms is that they dont have the ability to launch such programs. They would very much like to participate along with Community Colleges or nonprofits to see such programs launched and have jobs that people could fill if they received the appropriate training. I do think this is an important area, especially given the pressures that have existed for a long time, pressure on wages and job opportunities, especially those less guilt. I think this is something that deserves priority. After announcing an Interest Rate hike of a quarter percent, janet yellen finishes her News Conference after making it Crystal Clear that rates will be on track to move one more notch this year bringing shortterm Interest Rates to just under one and half by the end of the year she just predicted three more next year, but there is this gray cloud over the economy that continues to be somewhat of a sudden retreat in the inflation rate. That could signal the economy might be slowing and that could derail any Interest Rate path. She also said easing Regulatory Burdens and specifically relieving Community Banks and businesses of red tape will be a good economic stimulant. That is right up President Trumps alley, something he has pushed for during the campaign and of course since his first in the white house. The market is all over the map. The dow, any gain will be an alltime new record we see a gain of 14 points right now but we started to meander and then jump all over the place. After she began her q a, it turned significantly red, hit a session low. Same with the s p 500. The russell is down 12 points. That is put in much the biggest percentage loss of nearly 1 . We have to show this. You can see it fall off a cliff. It had been up 9 well before the noun announcement. When rate hikes continue, that becomes negative for golden positive for the dollar. We have fallen down 8. 30. That is about a 17dollar swing at the moment for gold. If you remain on track for Interest Rate hikes, thats an indication that for now, the economy looks solid. There is a key point of decision disagreement janet yellen has with president john. Our allstars are lined up and ready to roll. Dennis lockhart is with us spread we have former senior economist, bill lee. Wells fargo chief economist and chief investment strategist looking at equities and the colas on the floor of the end new york stock exchange. What we really need to work out is the future pick. We have a moving target that predicts the right heights. Hikes. We had been at 97 or 96 before this meeting. I had understood we were at about 90 or slightly below it. It appears we are now at just 18 . Is that correct . Somebody needs to check that for me. That is a precipitous drop. In 18 chance when just this morning we had a 19 chance that we would see a september world rate hike. What does this mean for you and your money . Lets begin with Dennis Lockhart who wrapped up his term in february. We hope you can freely speak and say all sorts of controversy controversial things. Dennis, ill begin with you. Thats a pretty stunning reversal. What does that mean that they dont believe janet yellen one more rate hike this year . Im very surprised myself at that reversal in the markets. Perhaps the market is inferring that the september move could maybe spill over to december, Something Like that. The markets, the broader markets may also be reflecting that the fed is getting on with the removal of accommodation by at least explaining very thoroughly how the normalization of the Balance Sheet is going to work, and that this normalization process is moving on. The accommodation is being removed to some extent on a gradual basis. You know what, i just dont believe that number. We are definitely checking, but the last week seen was 98 chance. That would make more sense. All right. I want to bring in bill lee. What worries you about the economy. It almost seems like inflation was the key word, inflation is the power of prices to rise, and that 1. 7 that is significantly lower than the two plus weve seen for inflation back in january. You hit it right on the money the uncertainty by the data is also compounded by the uncertainty that chair yelled yellen is discussing. Theres no need you need to address the Balance Sheet. It causes people to say how are they going to normalize it. Is it rates or the Balance Sheet and whats the combination. One thing most concerning is that the verbiage says we are going to fit focus on rates, but at same time will drop the Balance Sheet. Theres nothing in theory that said the Balance Sheet should stay where it is. Reducing uncertainty is something that they should be doing and yet you see from the Market Reaction she is actually introduced more uncertainty. We agree. I completely agree, especially in the point where she disagrees with the president. The president says we will have 3 growth in a couple years. She is saying no, by the end of 2019, we will be at 1. 9 which is actually lower than 2018 which is at 2 gdp. The consensus of the committee, the median projection showed a series of 2 by the end of the projection horizon. I think that is a way of saying the fiscal stimulus that had been expected several months ago has been very slow to develop and forecasters within the fed and the governors and president s who contribute to the sep, the Economic Projections are simply not making an assumption on fiscal stimulus. What they are reflecting is the economy as they see it today and the outlook for the economy based on its functioning independent of any financial stimulus. Those are a lot of fancy words that i just want to make sure our bureaus understand. There is no guarantee we will see 3 gdp rate. My own view is that we have some longterm headwinds in the form of demographics and the weak productivity growth. I think overcoming some of those headwinds is a heavy left. I think its difficult to assume we are going to get to a sustained level of 3 easily. I really believe you have to build that economy and it takes time. Liz, theres no doubt we are going to see a stronger rebound in secondquarter gdp. One of the things were not sure is whether or not we will see inflation go up. I think we will see lower inflation ahead of us before we see higher inflation. Everyone is freaking out that theres no slack in the economy. The on economy hiring is at the slowest pace relative to job openings in the history of the job data. The fact that you dont hire means theres no wage increase and no inflation productive the market is starting to sense and thats what they need to address what do you do if inflation sags behind. Are you gonna ease up on normalization or on the Balance Sheet. German stay with us. I want to dip into the market. What you are seeing right now, at least for the Dow Jones Industrial, but thats only 30 stocks, but it is at a record high. Any gain whatsoever and we have a gain of 28 points. That will spike back up. This is a picture, it had dipped right around 2 00 oclock and then went further down. It crossed the unchanged line 98 times. I would say that significant. A lot of traders are saying theyre not sure what shes going to say. We know that a rate hike indicates the economy look Strong Enough to absorb another hike but we are seeing markets pretty well priced in and that levels that might get a little rich and a little inflated. Right now the s p is down about six points and faltering after janet yellen came out and said i do not see the same 3 growth but she is on track for one more hike this year. As the dow wobbles, we can see the markets are on edge. The future Going Forward was part of the area they were contemplating, and when you have janet yelling, and out and saying we are. [inaudible] whats interesting is we move to record highs during the time of the announcement and everything seems to be right on track. The numbers we got this morning, they were weaker and people started to think we wont get the rate hike later in the year. Now that seems to be sort of a . For the back half of the year. Everybody loves records. Oil sold off and we got our latest inventory report. It wasnt as good as people hoped and that caused oil and Energy Stocks to sell off. We saw the steel stock selling off on an analyst downgrade and weakness on their earnings Going Forward. Those two areas, whats interesting, the leading group is utility. Thats the dividend paying stock people will look for Interest Rates and some way to gain some money because we saw gold moving lower and oil moved to lower levels. Fresh lows for both of those. It is fascinating to see. As we look at the markets im looking at my screen and seeing people are making money, certainly if they are a big american multinational. We are have about 20 minutes to go. Dow jones industrial up 31 points. Where we going . We want to get you an update right now on that horrific shooting. We are waiting for a News Conference right now. We do not want to lose track of the other big story of the day. We do have this breaking at the moment. The two men managers of the Congressional Baseball Team are expected to hold a press conference on the status of tomorrow nights charity game. We had heard the show would go on, the game would go on. Joe barton and mike doyle say the game will happen. This was the team that was targeted at todays shooting in alexandria virginia where the congressman and three others were wounded. We can give you this update. The congressman is out of surgery. He is listed in Critical Condition but he is recovering and we have the two police officers, the congressional officers who were special agents i want to give you their names. David bailey and crystal greiner , both heroically came out with their guns and took on a rifle man. The suspect, 66yearold James Hodgkinson is dead thanks to the heroics of Agence Bailey and greiner. As soon as that News Conference happened on capitol hill, we will take it. I promise. The dow increases its up 34 points as janet yellen takes the stage. The fed rate rate hikes and economics aside, she was also asked about her uncertain future as fed chair under trumps administration. She is supposed to go until february but she gave a clue or two, would you say. We are in washington d. C. So no matter what there is a matter of politics that hovers over everything. Just a couple blocks away from the white house and one of the big . That will follow janet yellen over the next six or seven months or so is does she end up staying on as the fed chair. As you know her term comes up early next year, President Trump has a decision to make. The wall street journal is reporting that gary cohen is in the initial phases of leading the search for the next fed chair. You heard what President Trump said multiple times suggesting janet was a political arm of Hillary Clinton and barack obama and in the recent months, it appears that kind of made nice. The question was posed, what about your future, and do you expect to stay on. Here was her response. What ive said about my own situation is that i fully intend to serve out my term as chair which ends in early february. I have not had conversations with the president about future plans. Do you have a desire to stand i really dont have anything for you at this point. A bit of a path there. There was a little bit of a dig as it related to the Trump Administration and the fiscal policy that they are trying to achieve. She was asked about it and mentioned how forecasters are saying that tax reform might get pushed to the side. She talked about spending behavior and said i havent seen much evidence thus far that the expectation of policy changes has driven substantial changes in Consumer Spending per she talked about the stock market being a runup over the past year. When i leave here in head down, but folks would say tax reform is getting john done and jobs are coming back and the stock market runup happened since the president took office. She is not eliminating what her future may hold. She was very quiet about that blake, thank you so much. If janet were to go, who gets the chance to get up at bat. Could it be the man in charge of the search party for the next fed chief . That would be gary cohen. Whats going on charlie. Ive done some reporting on this. Gary cohen has kind of made it known inside washington circles for a long time that he would like that job. The problem is gary cohen was a commodities trader. He has as much experience to be fed chairman as our own eric bowen. Seriously, the same resume, the same college experience. Im not criticizing eric. Look at his academic background. He is not a phd in economics, hes never studied economics. He is a guy that was a commodities trader. So is eric. That is what were dealing with here. He is probably not going to be fed chairman. The closest thing hes got is leading a search to find one. Heres one thing i would say about this, donald trump is playing with fire with this in this sense. I keep hearing Administration Officials say were gonna get tax cuts done this year and its coming, but they havent materialized and are not even close. If you put in somebody in there that is not a dove, someone who believes in a strong dollar, someone who does not believe in constant easing every time theres an economic downturn and that inflation needs to be the first thing the fed addresses, not the other part of their mandate which is employment, then that could really hurt the economy and maybe even cause a recession because what you have is delayed fiscal policy and then you would have Monetary Policy where you have tightening thats the problem. Janet yellen is a dove. She is doing what donald trump wants to do which is marginally raise rates now and essentially say im not going to do it unless i have to. Dont you find it interesting that donald trump said we should be raising rate and as a real estate guy i love low rates because people sign on to margin mortgages but now he said he likes the low rate environment. Donald trump set all sorts of stuff during the campaign. One time he said ted cruz is old man might have killed jfk. The prerogatives of the job are different once i get into office he needs lower Interest Rates until he gets his fiscal policy through. If he doesnt get this fiscal policy through, then he better hope someone he puts in a fed chair is a dove and wants to accommodate because hes not going to have a lot of tools at his disposal. The thing is, the market is really interesting because you had bond prices spiking again. That really was the action. The bottom market said, were probably not going to get tax cuts this year. We will probably have a slow growth economy, 2 because were probably not going to get that. Im not saying agree i agree with that, but stock, the stock market is being pushed marginally higher. A lot of stocks are treading water. If youre the average investor, what does it mean . It means smart money is casting doubt on whether the fiscal policy gets through and whether this level of a stock market can actually hold. Im not saying thats whats going to happen, i dont know what will happen, im just interpreting whats going on in the market. The reason you can ascertain that by the relatively flat Market Action today, and the movement. The tenure, the 2. 14, but by the way, yesterday at the close it was at 2. 4 . We have seen it fall. I believe it was 2. 11 earlier in the day. Heres the thing you have to worry about. If youre looking at the market somewhere to put your money, when the yield on the tenure goes below to, thats when there are program trades where there will be even more buying and that will signal the sale of the dow. This is something as an average investor, you just have to watch and Pay Attention. Im not giving you how to trade, im telling you what to watch if youre worried about your portfolio. We are not taking any commercial breaks. We still have billy who is now an important economist that we are talking to, along with john who is the chief economist for wells fargo and chief investment strategist sam and we also have teddy. Okay, let me first get to sam. You just heard charlie say that if that tenure yield falls below 10 , equity start to maybe sell off. Our equities in a danger zone right now or at least investors who are heavily invested thinking this is the best place to be . I think i will take your second part of the question first, and when we are eight years into an economic expansion , eight years into a bull market thats the second most expensive since world war ii, you definitely should not be chasing equities and going too far out on the risk curve. That said, since 1953 whenever the dividend yield on s p 500 exceeded the yield on the ten year note, the market was up 80 of the time 12 months later and was higher by 18 . It was even in doubledigit territory when the tenure note was higher but by less than one percentage point. With low Interest Rates and the lowinflation environment that were seen today, history actually says the opposite that stocks tend to do well. I can interpret that you say pretty much stay well invested, but has anything changed in the wake of what happened two hours ago that the fed has hiked rates a quarter of percent. When it comes to your guidance where you say go into this and get a out of this, has any of that changed . No, it has not. I would like to say a boxer is rarely felt by the punch he expects and may have been telling us to expect higher rates for the past two years and are trying to do the same thing now, unwinding their Balance Sheet. They are letting us know well in advance what they will do at what pace and for how long. John, you are over at wells fargo. Youre sitting on the trading for floor. Is that were economist get to sit . You see that janet yellen says i dont see growth by the end of 2019 any better than under 2 . You say yes shes right or the president s right . Will we be at 3 . Our estimate is more like two or two and half growth. Going back to your earlier conversation with dennis, clearly you need better productivity and better Labor Force Growth to get the economy moving Going Forward. Sitting with the traders today, below cpi number that came in this morning, i think it reinforces the point, at least on the domestic side, the Inflation Numbers stay pretty low for a long time. Dennis is still with us. What say you about that. Exactly. I think john and i are on the same page with this. He mentioned population growth and Labor Force Growth. That is also part of the equation, that we have declining participation, the decline actually resumed in the last report. Before i left the fed, my staff to the survey of different possible scenarios for Labor Force Participation and in almost every scenario they came up with, they saw the Labor Force Growth rate continuing to decline. Therefore, we just have a lot of what you might call secular or even structural elements that are weighing on the ability of the economy to grow at 3 or greater on a sustained basis. Look, teddy, i know youre on the floor of the new york stock exchange. The odds for september hike were at 17 and now theyre at 18 . You run out and start signing up for mortgage . Of someone sitting there thinking i want to buy a home or an apartment, is now the time . I think everybody has been concerned that with the fed threatening to raise rates, which theyve done that we would see a bounce in mortgage rates, but the fact is the rates have remained relatively flat and perhaps trended down a little bit. Money is so cheap, the Housing Market is doing pretty good, and i think a lot of that has to do with money and as long as it stays cheap, i think now is the time. We cant pick the bottom inflation. Bottoms and tops, picking those is a huge mistake mistake. I think it will take longer than folks think but if i was locking in mortgage money, id be doing it now. The dow is up 52. We are blowing out ceiling after ceiling. The fed could either be cheered for improving portfolios or they will be eviscerated later for having created some type of bubble with such low rates. Charlie got busy. Ill go back to john sylvia. Im so sorry. I meant sam stonewall. Okay liz, i think that will be the 64000dollar question. The fed i think is really trying to do what it needs to do and that is recalibrate. Historically, the difference between the fed funds rate and inflation has been about one and a half percentage points. We really should be about 3. 3 on the Feds Fund Rate, not 1 as the average is today. They need to be able to fight the next recession. Ive asked everybody, how more many rate hikes do you see this year. The fed says one. You must tell me, do you see one or zero or two. It will be a tough hall to get one unless they leave the Balance Sheet alone. If they do have one more they will have to leave the Balance Sheet alone and thats not in the picture. The margin is going up. The disconnect is that its showing up on hope and a prayer. The hope of deregulation and the prayer of tax cuts spread those are less likely Going Forward. About that. She made it very clear deregulation, or at least trending off the red tape that comes from the government and chokes Small Business and small banks is something she fully supports bringing that down. Is that somehow give a meaningful push to the economy . It helps, perhaps on the margin, but i dont think it overcomes some of the major forces at work, and as regard to rate hikes, im going to believe what the committee has signaled today, and that is the expectation of one more this year, whether that is september or december or even possibly at to enter a meeting, i dont know , but i think one is to be expected, and they will then decide when to begin to implement the Balance Sheet, normalization and not due to much at one time. We just hit a new high and it was like touching a hot stove. We did see a new high of 63 points to the upside. I remind our viewers, any gain and you will witness at the close, another alltime record high. What flows do you see . Where are the strongest sectors. I think the people that have been right are the people that have stayed long. We havent had too many opportunities to buy. We had one with the tech stocks a couple days ago. The selloff was hard and steep and painful but it lasted a couple days and they are back on track. They are painful but they are over quickly and i think their buying opportunities. In spite of all the natural concerns with lines of least resistance for the market are higher and not lower. Three minutes before the closing bell. Sylvia, what are you itching to say to people who have investments in stocks and bonds this right now. Again, the expectation with respect to doing a Balance Sheet adjustment that seems very modest, 10 billion to start would not generate, it would not generate a lot of Interest Rate. The return on equity is still very attractive. The one thing that makes people nervous is the somewhat lower inflation rate than what we saw back in january which was above 2 an hour at 1. 7 . We have two pieces of economic data. The banks have reversed, they were higher, technology seems to be reversing just a bit, and some made retail sales, we saw the biggest drop in 16 months. You stay out of retail . Do you let that continue . I think what we are seeing is the concern that we are going through another soft patch. Looking at economic indicators, implying that maybe we wont get a very strong secondquarter growth as had been anticipated on the heels of an anemic First Quarter growth in gdp. Our expectation is that we will probably end up seeing around 2. 8 by the end of 2017. It still is a sub 3 area, but it ends up being closer to President Trumps forecast than it does fed chair yelena. Nicole, we are off all earlier loads but the nasdaq nasdaq and s p cannot get a deposit of territory where the dow has been able too. Why do you think that is. Technology. Just like we saw the nasdaq surging with tech stocks this year, as they are now participating, they are dragging down. The dow will close with a record but the stock has been under pressure and in fact apple which i just took a close look at, i know we were gaining, but we did not recover from losses of the today tech sellout. To our panel, we do press the confetti button, this is a record. A gain of any point this year but we are up 47 points with the Dow Jones Industrial and as the closing bell ring, its important to know that gold which had been up 9 appears to be closing down about 7. We have about a 17 16. Swing. Over to you melissa. Stocks indeed are making a big comeback in the final moments. There closing at a record high. Take a look at this high. We saw a big dip after 2 00 p. M. Eastern. They announced they were raising rates and janet yellen took to the mic. This is after the bell. Republican lawmakers under attack. 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