Experts react to the latest federal interest rate hike
Experts react to the latest federal interest rate hike
CNBC’s Bob Pisani, Rick Santelli, Steve Liesman, David Kelly, JPMorgan Asset Management chief global strategist, Katie Nixon, executive vice president and chief investment officer for the wealth management business at Northern Trust, John Bellows, Western Asset portfolio manager, join ‘Power Lunch’ to discuss the Fed announcement of a 25 basis point hike. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
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0 -> uh let's bring back our panel Bob basani
2.28 -> Rick Santelli watching the market action
4.02 -> for us uh Rick let's start with you uh
6.6 -> what do you see in the tens twos and
8.16 -> everywhere else
10.019 -> ah twos and tens uh dropped rather
12.36 -> dramatically twos especially
14.28 -> dramatically we dropped to 393 and then
18 -> it popped up to over four percent on the
20.82 -> 10-year note I saw the market get very
23.52 -> close to kind of 340 uh a 349 area
27.84 -> before it popped just a bit the dollar
30.3 -> Index did the same thing it dropped a
33 -> bit so what are we looking at in macro
35.28 -> simple terms we're looking at interest
37.2 -> rates moving lower across the curve
39.48 -> we're looking at equities and I'm sure
41.46 -> Bob will get to that in a minute not
43.079 -> looking too badly everybody of course is
45.6 -> monitoring what's going to happen with
47.64 -> the next set of fed meetings that
50.28 -> happens in May are they going to do a
52.26 -> quarter point or not that's how it's
54.36 -> turned so quickly but there's nothing
56.52 -> surprising here every Trader I talked to
59.399 -> was looking for 25 of few were actually
61.26 -> looking for 50. every Trader I talked to
63.96 -> thought stocks would be the better of it
66.119 -> and that all markets that they monitored
68.88 -> from interest rates to the uh
71.58 -> currency markets with respect to outside
74.46 -> the dollar all these markets were going
76.26 -> to rally and they have been correct and
78 -> I will go on record thinking that the
79.92 -> press conference is not going to take
81.84 -> this away I think the press conference
83.82 -> if anything is going to accelerate these
86.4 -> moves Bob what do you make of it with
88.619 -> we've seen a seesaw where stocks dipped
91.2 -> lower now they're kind of trying to claw
92.759 -> into these gains where where's your
94.439 -> attention focused well there's there
96.24 -> were two options here assuming that a 25
99 -> basis point hike was what happened and
101.1 -> that is what happened so the FED could
102.96 -> either pause and specifically explicitly
106.32 -> signal that they are pausing or they
108.479 -> could hike and simply say the economic
110.759 -> conditions are a little uncertain and it
112.619 -> seems to be the later or the latter one
115.259 -> and I don't think that's necessarily a
117 -> bad thing so uh this phrase additional
119.82 -> policy firming may be appropriate well
123.06 -> okay they're saying maybe we'll hike in
125.219 -> the future but that's a much much weaker
127.259 -> version of their prior statements a much
129.959 -> weaker way of saying that we might rise
132.12 -> so that's certainly a bit bullish and
134.22 -> then the failure to really acknowledge
136.08 -> the bank banking crisis is kind of
137.76 -> striking they said recent developments
139.56 -> are likely to result in tighter credit
142.56 -> conditions but the effects are uncertain
144.72 -> that's a nod but it's a a pretty weak
148.02 -> nod so the the implications here is that
150.66 -> they are dealing with the crisis they're
152.34 -> still not entirely sure what the outcome
154.8 -> is here so I would say that this is a
157.8 -> pause but a very very weak form of the
161.519 -> pause just enough to make the markets
164.28 -> satisfied the real worry for the market
166.2 -> was what happens if they explicitly said
168.42 -> we're sorry the banking crisis we have
170.64 -> the tools to deal with this and we are
172.319 -> not done fighting inflation and we are
174.12 -> not necessarily going to uh to to uh to
177.54 -> stop our interest rate hikes that would
179.7 -> have been a major problem that's not
181.44 -> what happened here and that's why I
182.64 -> think we're getting this modest rally
183.959 -> right now David what do you hear what do
186.06 -> you hear in the statement as we look at
188.519 -> the famous octa-box that's my favorite
190.739 -> thing eight
192.14 -> it's a thing of beauty uh what do you
194.94 -> what do you make of the statement as we
196.739 -> covet the OCTA box uh and and the fact
200.34 -> that their prediction of core pce or
202.98 -> inflation is up from what it was not
206.159 -> down
207.12 -> well on the inflation number I'm not
209.519 -> surprised by that because our own models
211.44 -> were saying that you know inflation's
212.819 -> coming down it just has to come down
214.68 -> steadily and in fact they were quite
216.36 -> optimistic in December on the pace of
218.099 -> the kind of inflation
219.599 -> um so I'm not surprised I had to mark
220.799 -> that up a bit but it's still coming down
222.18 -> it's coming down very steadily and I
224.159 -> just think that I think they're having a
225.84 -> problem pivoting here they really should
227.34 -> have pivoted to a much more neutral
229.019 -> stance I think this is you know clinging
231.239 -> on to some hawkishness which they're not
232.62 -> going to be able to clean onto for very
233.7 -> long but it is a little bit more hawkish
236.099 -> than I thought but talking about you
238.14 -> know further firming rather than further
240 -> changes in rates
241.56 -> um and also they didn't acknowledge any
243.12 -> further progress on inflation even
244.5 -> though the year-over-year inflation rate
245.94 -> has now fallen for age consecutive
247.44 -> months and wage growth is running well
249.48 -> below inflation they could have
250.98 -> acknowledged that but unless they say
252.78 -> they're making progress against
253.62 -> inflation then it's getting getting
254.879 -> harder and harder for them to to you
256.979 -> know pivot without sounding like they're
258.6 -> scared of the banking system so I think
259.859 -> I think they missed an opportunity to go
261.54 -> to a more neutral stance here Katie do
263.58 -> you agree
265.56 -> well I I our view was that they were
267.9 -> going to raise 25 with another 25 to
270.06 -> come and that they would strike this
271.979 -> balanced statement which I think they
273.419 -> didn't I think it's really interesting
274.56 -> the focus on credit and not Financial
277.32 -> stability as being sort of the
279.06 -> transmission mechanism of what's gone on
280.74 -> in the last few weeks and as we all know
282.419 -> credit was getting tighter before we had
285.36 -> this recent bout of volatility so I
287.52 -> think the FED is is clearly focused on
289.68 -> the direct transmission mechanism of
292.02 -> this uh period of instability on growth
294.24 -> and inflation and again keeping their
295.8 -> options open I don't think they have the
297.54 -> the ability really to uh to raise a red
301.44 -> flag on financial instability without
303.78 -> undermining the confidence that has sort
306 -> of slowly started to come back into into
308.28 -> the market so they had to strike the
310.199 -> balance and I think they did
Source: https://www.youtube.com/watch?v=4mPzGOWk45g