Could that happen again? Sure, because it will take the clear signal of a rate cut before the two-year note yield will start moving down.

In 2000 we inverted as much as 47 basis points. Could that happen again? Sure, as it'll take the clear signal of a rate cut before the two-year yield starts moving down.

The yield curve is flat and typically when that happens, banks are reluctant to lend money and the economy becomes vulnerable.

The Fed, like all good central banks, has to work on a real-time basis, ... This is serious enough to cause a lot of pain.

If the yield curve inverts, that is bad because banks will not lend money at rates lower than their borrowing costs. It's as simple as that and the economy will slow down naturally.

A lot of people are afraid that increases in the PPI will eventually spill over to the CPI but it's important to put things into perspective. The majority of the average cost of goods is from labor and wages are still under pressure.

A slowdown is baked in the cake, ... A big part of economic growth has been driven by consumer home-equity loans and if home prices are subdued, you won't have more loans driving spending.

For us to give up some of the gain for consolidation, for correction, is very, very healthy.