Transcripts For FBC The 20240703

Jay powell in washington d. C. Sustained. We have to take those that macroeconomic effects into account as well. Those are some of my im not sure if i hit them all, but i ultimately, you know, youre coming into this with an economy that appears to have significant momentum,thats what we start with. But we do have this collection of risks that you mentioned. [inaudible] reporter craig torres from bloomberg news. I was a little surprised, chair powell, to hear you say that a soft landing is not a primary objective. This economy seeing added supply in a weight that could create longterm inflation stability. We have people adding skills, workers want to work, we have a boom in manufacturing construction. Weve had a decent spate of home building, and since inflations coming down with strong gdp growth, we may have higher productivity. All are good for the feds longerrun target of low inflation. And if we lose that in a recession, arent we opting for the awful history that we had in 2010 . So are you taking this into account as you pursue policy . Thank you. To begin, a soft landing is a primary objective, and i did not say otherwise. I mean, thats what weve been trying to achieve for all this time. The real point though is the worst thing we can do is to fail to restore price stability, because the record is clear on that. If you dont restore price stability, inflation comes back, and you go through you can is have a long period where the economys just very uncertain, and itll affect growth, itll affect all kinds of things. It can be a miserable period to have inflation constantly coming back and the fed coming in and having to tighten again and again. So the best thing we can do for everyone, we believe, is to restore price stability. I think now, today, we actually, you know, we have the ability to be careful at this point and move carefully, and thats what were planning to do. So we fully e appreciate that, you know, the benefits of being able to continue what we see already which is rebalancing in the labor market and inflation coming down without seeing, you know, an important, large increase in unemployment which has been typical of other tightening cycles. Is so the. Chris. Reporter hi. Thank you. Chris associated press. When you look at the disinflation that has taken place so far, do you see it mostly as a result of what some economists are calling the low hanging fruit such as the unwinding of supply chain snarls and other pandemic disruptions, or is it more a broad disinflationary trend that involves most goods and services across the economy . If thank you. So if i understood your question, its i would say it this way, i think we knew from the time from before when we lifted off, we knew that bringing inflation back down was going to take, as i call it, the unwinding of these distortions to both supply and demand that happened because of the pandemic and the response. So that unwinding was going to be important. In addition, Monetary Policy was going to help. It was going to help supply side heal by cooling demand off. And just in general, a better aligning supply with demand. So those two forces were always going to be important. Its the very hard to pull them apart. They work together. I do think both of them are at work now, and i think theyre at work in a way that shows you the progress that were seeing. Mike . Reporter Michael Mckee from bloom with Berg Television and radio. In june you forecast a 5. 6 yearenmedian fed funds rate, and since then youve more than doubled your growth forecast, you lower ed your unemployment forecast significantly, so what would justify that last move . Because the the median forecast is for lower inflation. And given all the known unknowns that you face, how much confidence do you have, can investors have or the American People is have in your forecasts . Well, foe casts are highly un forecasts are highly uncertain. Forecasting is very difficult. Forecasters are a humble lot with much to be humble about. But to get to your question though, whats happened is growth has come many stronger, right . Stronger than expected. And thats required higher rates. Unemployment, you know, you also see that the ultimate Unemployment Rate is not as high, but thats really because of what weve been seeing in the labor market. Weve seen more and more progress in the labor market without seeing significantly higher unemployment. So were continuing that trend. In terms of inflation, you are seeing the last three readings are very good readings. Its only three readings, you know . Were well aware of that, we need to see more than three readings. But if you look at june, july and august, youre looking at really significant declines in core inflation largely in the goods sector to have, also to some extent in housing is services and just a little in nonHousing Services, those are the three buckets. Had had headline inflation has come way down largely due to lower Energy Prices, some of which is now reversing. So i think people should know that Economic Forecasting is very difficult, and these are highly unis certain forecasts. But these are our forecasts, you know . Theyre we have very high quality people working on these forecasts, and i think they stand up well against other forecasters. But just the nature of the businesses, the economy is very difficult to forecast. Given the forecast that you have, what justified not moving today, and what could justify moving in the future if you think inflation is coming down . In other words, why did you leave that extra dot in . Well, i think we have come very far very fast in the rate increases that weve made. And i think it was important at the beginning that we move quickly, and we did. And i think as we get closer to the rate that we think the stance of Monetary Policy that that we think is appropriate to bring inflation down to 2 over time 2 over time, the risks become more twosided. The risk of overtightening and the risk of undertightenning becomes more equal. And i think the natural, common sense thing to do is as you approach that, you move a little more slowly, as you get closer to it. Thats what were doing. So were taking advantage of the fact that we have moved quickly to move a little more carefully now as we, as we sort of find our way to the right level of restriction that we need to get inflation back town to 2 . Back down to 2 . [inaudible] reporter thank you, chair paul. Jennifer schaumberger is yahoo finance. With your focus on yearoveryear pce, isnt it true that base effects are huge and that by the time you meet in november, that its more likely that youll have is a low pce number that would make you feel more comfortable . And secondly, how would the lack of key indicators like cpi, the jobs report impact your approach in upcoming meetings if we were to have a Government Shutdown . Thank you. So i missed the first question. What was what factors . Reporter the base factors. Base factors, ah. Okay. So on that, you know, were looking at just you can look at just monthly readings and see what the increase was from the prior month. So youre right, when you go back 3, 6 and 12 months, you get base factors. But we can adjust for that. In terms of not getting data, you know, again, we dont comment on Government Shutdowns. Its possible if there is a Government Shutdown and it lasts through the next meeting, then its possible we wouldnt be getting some of the data that we would ordinarily get, and we would just have to deal with that. I dont know, its hard for me to say in advance how that would affect that meeting. It would depend on all kind of factors, but its certainly a reality. Thats a possibility. [inaudible] you know, yes. I mean, if youre looking, if we can tell how much inflation has gone up in a given month, right . And, you know, thats what were looking at, month by month whats the reading. And, you know, i think what were really looking at is, theres a tendency to look at, you know, shorter and shorter maturities, but theyre incredibly volatile, and they can be misleading. Thats why we look at 12month. In this situation where it looks like weve had a bit of a turn in inflation starting in june, were also looking at 6 months and even 3 months. Really 6 months inflation. Youre looking at it in that period and longer periods. Thats e the right way to go. We dont need to be in a hurry, we can let the data evolve. So edward. Reporter thanks for the question, chair powell. Edward lawrence with fox business. So i want to focus back in on oil prices. Were seeing oil prices, as you mentioned, move up, and thats pushing the price of gas. How does that factor into your decision to raise rates or not . Because the the last two inflation reports, pce and cpi, weve seen overall inflation the has actually risen. Right. So, you know, Energy Prices are very important for the consumer. This can affect Consumer Spending. It certainly can affect consumer sentiment. I mean, gas prices are one of the the big things that affects consumer sentiment. It really comes down to how persistent and how sustained these Energy Prices are. The reason why we look at core inflation which excludes food and energy is that energy goes up and down like that, and it doesnt Energy Prices mostly, mostly dont contain much of a signal about how tight the economy is and, hence, dont tell you much about where inflations really going. However, were well aware though that if Energy Prices increase and stay high, thatll have an effect on spending. And it may have an effect on Consumer Expectations of inflation, things like that. Thats just things we have to monitor. So reporter on the consumer, theyre putting more and more of this on their credit card. The consumers seeing, you know, record credit spending. How long do you think the consumer can manage that debt at higher Interest Rates now, and are you concerned about a debt bubble related to that . So to finish my prior thought, i was saying thats why we tend to look through energy moves that we can see as shortterm volatility. You know, turning to consumer credit, you know, of course we watch that carefully. Consumer distress, measures of distress among consumers were at historic lows quite recently, you know, after during and after the pandemic. Theyre now moving back up to normal. Were watching that carefully. But at this point, these readings are not, theyre not at troublingly high levels, theyre moving back up to what was tip a call in the prepandemic era. [inaudible] reporter hi. Jean young with m and i market news. Yields along the Treasury Curve have risen to their highest in years. What is the feds view about whats been driving that increase in recent weeks, and how much of it can be aticketted to to mack attributed to macro explanations and how much to technical factors . Yeah. So youre right, you know, rates have moved up significantly. I think its always hard to say precisely, but its most people do do a common decomposition of the increase, and theyll, the view will be its not mostly about inflation expectations, its mostly about other things, you know . Either term premium or or real yields, and its hard to be precise about this. Of course, everyones got models that will give you a precise answer, but they give you different answers. So essentially theyre moving up because its not because of inflation, its because probably, you know, itll probably have something to do with stronger growth, i would say more supply of treasuries, you know . The common explanations that you hear in the markets kind of make sense. [inaudible] reporter harold campbell, american banker. Thank you for taking the questions. Just two on housing. You said slower shelter cost growth is in the pipeline and will reflect in inflation readings as new leases are sign, but theres also some questions out there the about the way housing costs are measured, particularly the use of rental equivalents which are estimates from homeowners about what their homes would rent for if they were in the rental market. So my question is, how much of the effort to tame inflation both as its the measured and felt by the broader public hinges on housing supply . And then as far as a constrained housing supply being sort of exacerbated by the sort of lockin effect of mortgages being higher now than they were at their recent historic lows, how is that going to impact future thinking about taking Interest Rates to that lower bound in the future . So on the supply point, of course supply is very important over time in setting house prices and, for that matter, remembers. And so supply is rents. So supply is kind of structurally constrained. But in terms of where inflations going in the near term though, as you obviously know, a lot of it is leases that are running off and being resigned or released at a level thats not it wont be that much higher. It would, a year ago it would have been much higher than it was a year before. Now it may be below or at the same level. So as those leases are rolling over, were seeing what we expect which is measured Housing Services inflation coming down. Your second question was the lockins, how much is that affecting things really . Reporter [inaudible] potentially bring rates down to their lower bound in the future sort of creating that sort of bubble of buying and then a lockin that sort of stagnates the housing market. I think we look at the i would look at the lockin, the idea being that people are in very low mortgage, very lowrate mortgages, and if they even if they want to move now, they it would be hard because the new mortgage would be so expensive, and thats explaining, thats one of the explanations for whats happening broadly in the labor market. Would that play a role in our future decisions in a future loosening cycle about whether we would cut rates . No, i dont think it would. I mean, i dont think thats i think wed be looking at what the, you know, fundamentally what rates can does the economy need. And, again, you know, in an emergency like the pandemic or during the Global Financial crisis you, you know, you have to cut rates to the point that you do what you can to support the economy. So i wouldnt think that that would be a reason for us not to do that. Its not something were thinking about at all right now, but down the road i wouldnt with think so. [inaudible] reporter hi, nancy marshall, sir, with marketplace. Chair powell, youve mention several things that would possibly weigh on consumer confidence, maybe cut back Consumer Spending, possible Government Shutdown, high gas prices. At this point would the fed welcome a decrease in Consumer Spending . Would that help you get inflation closer to your 2 target . I wouldnt say it that way. Were not looking for a decrease in Consumer Spending. Its a good thing that the economy is strong. Its the a good thing that the economy has been able to hold up under the tightening that weve done. Its a good thing that the labor markets strong. The only concern, and it just means this if the economy comes in stronger than expected, that just means well have to do more in terms of Monetary Policy to get back to 2 , because we will get back to 2. Does that answer your question . Reporter yeah. And i guess, on the other hand, would you worry that that could contribute to an economic slowdown or even a recession . Well, thats always a concern. I mean, concern number one is restoring price stability because in the long run thats something we have to do so that we can have the kind of economy we really want which is one with sustain period of tight labor Market Conditions that benefit all, as ive said a couple times. So that said, of course, you know, we also now given how far weve come with our rate hikes and how quickly weve come here, we do have the ability to be careful as we move forward because of that consideration. Reporter [inaudible] reporter hi, thank you, chair powell. Simon with economist. One of the factors in the Economic Resilience to date appears to be a lesser degree of rate seasonstivity than in the past. Obviously, youve talked about households with long fixedrate mortgages, also companies that refinanced before last year. What is your thinking about the efficacy of rates and how thats changed . And then related to that, how do you think about the distributional consequences in the sense that if youre a relatively wealthy household with a long fixrate mortgage, the past year has not been all that tough whereas if youre relying on your credit card for supporting your consumption, in fact, times are getting a lot tougher at rot more a lot more quickly . Thanks. So i guess its fair to say that the economys been stronger than many expected given whats been happening with Interest Rates. Why is that . Many candidate explanations, possibly a number of them make sense. One is just that household Balance Sheets and business Balance Sheets have been stronger than we had understood. And so that spending has held up is and that kind of thing. Were not sure about that. The savings rate for consumers has come down a lot. Question is whether thats sustainable. Could just mean that the data effect is later. It could also be that for other reasons the neutral rate of interest is higher for various reasons. We tonight know that. It could also we dont know that. It could also just be fed policy hasnt been restrictive for long enough. And there are many candidate explanations. We have to in all this uncertainty make policy, and, you know, i feel like what we have right now is whats still a very strong labor market but thats coming back into balance. Were making progress on inflation. Growth is strong. But i think by many forecasts, many, many forecasts call for growth to moderate over the course of the next year. So thats where we are, and, you know, we have to deal with what comes. On your second question which was, sorry, your second question was distributional, but can you be a little clearer about that . Reporter yeah. My point there was that if youre somebody who has a long fixedrate mortgage, youve been able to endure the higher rates relatively easily. If youre living month to month off of your credit card, current financing rates are punitive. Yes. And so the point i would make there is that were trying to get inflation back down. The people who are most hurt by inflation are the people who are on a fixed income. If youre a person who spends all of your income, you dont really have any meaningful savings, you spend all your income on the basics of life; clothing, food, transportation, heating, the basics. And is prices go up by 5, 6, 7 , youre in trouble right away whereas even middle class people have some savings and some ability to absorb that. So it is for those people as much as for anybody that we need to restore price stability. And we, we want to do it as quickly as possible. Obviously, we would like to do that, wed like the current trend to continue which is that were making progress without seeing the kind of increase in unemployment that weve seen in past things. But youre right, when we raise rates, people who aring you know, living on credit cards and borrowing are going to feel that more. They are. And, of course, people with lots of savings also have a much lower marinnal to propensity marginal propensity to consume, and so its not going to affect them as much. [inaudible] reporter thank [no audio] nonprofits and Community Groups about the Economic Health of low income americans, moderate americans. I have two questions about this. Are you going to use that data to maybe come up with sort of, like, a Quarterly Survey of those groups like the Senior Loan Officers survey . And from your and also the second question is from your recent look, readings of these surveys, how are low and moderate americans doing . Is there this thing where, like, the gdp is strong because of wealthy americans kind of driving things . Just want to get your sense of the health of that sector. Thank you. So i dont know about the Quarterly Survey, thats an idea welcome take away and think about. We can take away and think about. In terms of how hoe and moderate americans, you know, clearly theyre suffering from high inflation. I think during the pandemic the government transfers that happened were very meaningful and, you know, if you know the surveys that we take showed that, said that low and moderate income people were actually in very, very Strong Financial condition. I think now its a very hot labor market, and youre seeing high nominal wages, and youre starting to see real wages are now positive by most measures. So i think overall households are in good shape. Surveys are a different thing. Is so surveys are showing dissatisfaction, and i think a lot of that is just people hate inflation. Hate it. And that causes people the say the economys terrible. But at the same time, theyre spending money. Their behavior is not exactly what you would expect from the surveys. Thats kind of a guess at what the answer might be, but i think theres a lot of good things happening on household Balance Sheets and certainly in the labor market and with wages. The biggest wage increases having gone to relatively lowwage jobs. And now inflation coming down, youre seeing real wages, which is a good thing. Thanks very much. Liz not done yet. Federal reserve chair Jerome Powell finishing a pretty long news conference. He usually dumps out at about 17 minutes past the hour. Right now it is 3 23 p. M. He says question he and the policy committee are not totally convinced inflation has been subdued and, therefore the, theyre signaling one more rate tightening before 2024. Markets kind of wiggling around after the fed announced it was standing pat, leaving Interest Rates unchanged this time around. Weve got the dow still in the green, up 61 points. S p down 20, the nasdaq down 117. The russell 2000 down 55. This is the second 5. This is the second pause since the tightening cycle began in march of 20322. Some people are calling it a skip. If you look at the dow, the nasdaq, the s p, you can see just around 2 p. M. Eastern the dow erased 100 points of its gains right then and there. Youll see the same action in the s p, the nasdaq, the russell. That was about the moment when the fed released the fomc dot plot, basically thats sort of a survey. And it indicates a majority of voting members predict one more rate hike in 2023, reinforcing that higher for longer thesis. If powell attributing the need to do more with rates, thats his quote, to the Stronger Economic activity we have seen as of late. And, you know, we knew that would probably trigger higher bond yields, but look at the 2year. Earlier it was around 5. 1 . Thats a 16year high. But look at it right now, climbing to 5. 15 , up 5. 6 basis points. The 0year 10year yield, that was at its highest level since 2007 yesterday, its right now at 4. 346. So kind of hugging right where it was. Its the or shorter end of the yield curve that seems to be popping. Now, powell conceded that High Oil Prices which have risen about 8 month to date could trigger consumer caution and, hence, spending. As you know, threequarters of gdp is Consumer Spending, but dressed that its volatility stress thed that its volatility is the very reason the fed looks at the core inflation rate which scrapes out energy and, of course, food. One more hike this year, is it the right path, or mike might it make the difference between a hard and soft landing . Wharton finance professor Jeremy Siegel. Professor, for months now many economists have had fever dreams that the9 fed, for sure, will shut the door on future hikes. What did you hear from jay powell about whats coming by the end of this year . Well, certainly more people seem to think one hike is necessary, but i think theyre waiting for the data. I think what is a little surprising to the market was that the expectation for the fed funds at the end of next year is now 50 basis points higher than it was at the last meeting. In other words, were staying higher for longer, much long longer, and in a way that i think is hitting the bonds. As you properly said, the 2year, 10year jump, those high duration stocks, weve seen in the nasdaq theyre being hit more at this time. Another very big surprise is many june they predicted gdp this year would grow 1 , now were in september and theyve more than doubled it to 2. 1. And it also shows you how difficult it is for them to predict what is actually happening. More than doubled to 2. 1. Its that stronger economy, stronger for longer means higher for longer. Liz okay. But doesnt that also mean that we might be on the track for a soft landing meaning a pretty good Economy Holding up while inflation comes down . I mean, where do you stand on this decision if it because become one to raise one more time and that would be the 12th Interest Rate hike of this cycle . Well, my preference would be not. However, theres no doubt that everyones been surprised, including the fed itself, about how resilient this economy has been, and there has been disinflation. So we have brought that inflation down. The core is going to be stubborn, and, you know, the question is, is chairman powell going to step on the brakes risking a much more severe downturn just to get that core down a little faster . As you can see, the glide path is pretty slow to getting it down to 2 . He insists is and maintains that he will get it down to 2 , but, you know, basically its not going to happen tomorrow, and its not even going to happen next year. Liz professor siegel, should they hike that base rate of 2 . Should it be higher . It was 2 back in the 80s. I mean, perhaps or the 90, certainly. To leave it here when so much has changed between then and now, in fact, im glad you brought up that core target, that target rate for inflation. Hear what we he said about whether he would eventually consider raising it to maybe 3 or 4 , and then we can talk about it. It may, of course, be that the neutral rate has risen. You do see people you dont see the median moving, but you do see people raising their estimates of the neutral rate, and its certainly plausible that the neutral rate is higher or than the longerrun rate. Liz i dont know, it sounds like he opened the door to that, professor. [laughter] well, the neutral rate is a little different than the inflation target. Theyre related. What hes saying is that the rate that is consistent with 2 inflation has seemed to have gone up. They thought that, you know, that 2. 55 fed funds rate at the ending of the cycle would be enough. Now people are are talking about 3, 3. 5 is maybe going to be that level. On that inflation target, he really didnt talk about inflation targeting, but i agree 100 with you, my feeling is it should be higher because we are still in a world of much lower Interest Rates. And if we have a recession, you know, if we had a higher target, we would do more at lowering rates to bring us back to a full economy than we would before. But hes not going to bring up raising the target rate of inflation until he achieves what he thinks is near that 2 inflation. Liz before we go, professor siegel, and its got to be quick, youve been very critical of the Federal Reserve chair. Are you still . I was critical because they caused this inflation to begin with. I think theyve luck ared out lucked out. Im on getting it down as much as they have without the rise of unemployment. Im keeping my fingers crossed that that luck will sustain. But we shouldnt have been in this position to begin with. Liz professor Jeremy Siegel of wharton, we thank you very much for giving our viewers your first reaction to this. Let us turn now to trader Kenny Polcari. What do you make of the Market Reaction . Right now, the dow is the only one in the green. Right. I think the markets confused with everything that they heard, right . Are rates going up . Are they going to stay higher for longer . How much higher . He pushed out the 100 basis points cuts has now been pushed out to only two cut cuts next year and further into the year. So im not surprised. Its not crashing or, but im not surprised that the markets are confused concern. Liz it is not crashing, but the vix is now up above 14 well, its about time, dont you think . [laughter] liz yeah, but it should be higher, in my opinion, based on with we are. Liz it was 13 and change before 2 p. M. Right, right. So it spiked a little bit which tells you i think people are confused. They want to believe him, but theyre not sure that they can. The cd that hes discounting Rise Oil Prices i think is insane. Liz even when you strip the it out, other things are still going up. Agreed. Thats right, theyre going up, which is why i think youre getting the reaction in the market that youre getting, right . Liz kenny is going to stay right here because hes going to parse through everything thats moving and then see what looks better as an investment. In the meantime, the Federal Reserves inflation fight weighing on the housing market. According to bankrate, Mortgage Rates remain near 2 2year highs as the average 30year fixed has climbed, you ready . Cover the childrens eyes, 7. 599 this week compared to 5. 89 this time last year. How does this impact a company like airbnb whose hosts own homes that they are renting out to guests hooking for less expensive and better stay prices. Airbnb had a 1 drop year e over year. Compare that to hotel prices which have risen 10 to 163 over the same period. The rental platform has also Just Announced new initiatives to ditch and this is really interesting to ditch fake listings. They also want to lower cleaning fees and include all services in the total price market. And as you look at airbnb, is so today intraday it was higher, and now it has reversed. It has gone negative, down about 2. But this has been quite a winner over the past year. In fact, year to date airbnb looks to be, i just want to check to make sure i get you the most updated price, up 62 year to date for a company that has really been one of these sort of startups that has grown and matured into quite the opportunity. And so lets look at the year pick 1year picture. Airbnb is up 16 , big picture here. And as we look at exactly what a this companys been doing, they are the ultimate disrupter. Ultimate disrupt are orer. Disrupter. And and this makes me wonder about the inflation prices and levels that we are seeing in, of course, the ism services index, okay in that means that we are looking at a services situation, and that includes all kinds of, you know, hotel and leisure. And thats where brian chesky, the ceo of air bnb, comes in. He is joining us live right now. Okay. Brian, were talking about the prices, right in thats what the fed is looking at. They are not content prices are coming down enough, but youre already starting to the the see just an incremental drop in prices. Yes. Liz speak to people who just watched everybody talking about inflation still too hot, we may see another Interest Rate hike this year. There still is inflation. I mean, hotel prices in july according to costar, a company that services data, said that hotel fares are up 10 from this time last year. Now, were down 1 as of july, but the reason is the efforts that weve been doing. Weve been working and Building Tools for hosts. We built a tool for them to compare listings with other listings in the neighborhood, and hosts are able to say, hey, if i charge less money, i may make more money. So weve done a lot of work to getting affordability back to being a core value, and i think weve made a lot of progress against hotels. Liz well, sure. When you see that kind of move, i look at the services i, sm which is, of course, inflation x all of the other stuff. That includes what you guys do. Yes. Liz that unexpectedly jumped to 6 month highs in august. Yes. Liz how does that affect your business . Well, i think that, like, travel, our business is, like, incredibly resilient. I think that a lot of people we like to say that when an economys good, a lot of people want to travel. When the economys not as great, a lot of people want to save money, and they turn to airbnb. We have a lot of resilience in the model, and the evidence of this was in 20 20, the pandemic. It was incredibly resilient. No matter whether the economys good ored bad, people want to travel. They want to spend Discretionary Income on. I think even more postpandemic people really want to travel and be together. And staying in airbnb bs is a way a lot of people spend time with their friends and family. Liz its clear that youre in the Service Services industry both for your hosts and the clients who come to stay. Yes. Liz you are very focused on constantly sifting through the complaints and the data that come through, and youve made a big bunch of changes this time around. Yes. Liz and the announcement is that survey porrizing a lot of the fake vaporizing a lot of the fake listings, and youre using a. I. To do that. Yes. Liz how many of those fake listings, and how many did you vaporize . We have stopped 150,000 from coming on the platform. Liz how many of those were created through a. I. , in your opinion . You have a way of looking at that, dont you . Yeah, i dont know the number, but i think thats going to be a new issue going forward. So youre going to need a. I. To combat a. I. , in a sense. I think the key is we always want to be one step ahead. I really feel like, ultimately, were in the Customer Service business. We need to provide great experiences, and i think we use technology to do that. But one of the things, i never wanted to be is such a big company ceo im detach from the customer. Ultimately, the best trips win, if we provide the best vacations, were going to be a great company. I listen to thousands of pieces of feedback on social media, weve downtown halls, looked at millions of Customer Service calls, and weve systematically tried to address every single issue people have. And ive told our team weve got to make our service so beloved that people want new things from us. A. I. Will help us get there. Liz well, i know people coming to new york want airbnb b withs. However, theres a new law that basically institutes, a drastic new law, that effectively bans most shortterm rentals, and its resulted in the disappearance of, i dont even know if this is 15,000 listingsesome maybe more at this point . The new york office of enforcement rejected a bunch of applications here. Do you have a lawyer team working on this to fight back . We did take this to court, and the court did not side in our favor. It was very disappointing, because lets just give you an example. One of the enforcement rules said if you rent a bedroom in your house, you cant have a lock on the bedroom door. Doesnt that seem intuitive . Liz not at all. Is so i think we feel like its so unfortunate that airbnbs in 1000,000 cities, and thousands of err cities have figured this out. New york should be years ahead of everyone else. Paris figured this out, berlin are, san francisco. Theyve all found different seems. Schemes. Some work better than others, but new york should be the leader and, unfortunately, i think theyre a bit more of a cautionary tale at this point. Liz well, yeah. Because there are a lot of people that absolutely love and im one of them. And we were willing to find a way to make i work. We could generate hundreds of millions of dollars of tourism tax, and and we comply with local laws, registration systems, so theres a lot of models to make airbnb work. Theres thousands of case studies around the world with. Liz brian, thank you very much. All right, chair powelling weighed in on the feds efforts to rebalance the labor market. Heres what he said. But i think people, they want to be convinced, you know . They want to be careful not to jump to a conclusion really one way or the other. But just be convinced that the data, you know, support that conclusion. And thats why, given how far weve come and how quickly weve come, were actually in a position to be able to proceed carefully. Liz well, a different battle on labor and wages has now at this hour idled a Gm Assembly Plant in fairfax, kansas. United autoworkers have been striking at three plants, demanding higher wages due to the pressure on the cost of living. Joining me now is kyle bass to talk about the wage sticky stickiness, kyle, that you are seeing that, i dont know, how will it all play into stock market behavior and investor behavior . Well, liz, i think, first of all, glad to be here. I think its important to think about, you know, real wages and how far down they are meaning the inflation the fed reports, you know, the way that they calculate rent, they call a thousand homeowners and ask them if they were to rent their houses, how much could they rent them for . You know, you and i cant rent at owners equivalent rent, and thats almost 40 of the cpi. So the feds reported about 16. 517 inflation in the last 2 years, and the real numbers been 40. So the reason wages are sticky because they havent been honest about what real inflation has been. They chain weight automobiles and all of the other things in there meaning they replace things back to where they were 30 years ago and try to come up with a price from back then. And you and i cant spend 10 weighted, and we cant rent at owners equivalent rents, and thats why youre seeing these wage demands move when its the uaw or the autoworkers or the flight attendants. Anyone in the service is sec editor, theyre not worried about future inflation, theyre just trying to break even. Theyre taking on two and three jobs to pay their rent, to pay their car payment, to pay food and energy and live. And thats why the wages are sticky, and theyre going to go higher. Liz lets talk about whats going on in detroit and now, obviously, other states as gm has idled this new plant in kansas. That just happened in the past couple of hours. If you look at the average hourly earnings, you go back, i dont know, a year . To march of 2022 when this rate hike cycle began, wages have been trying to catch up to inflation. And when you see this bar chart kyle, that to me is an indicator that you gotta pay people enough so that they can buy food, just as you said, and pay their rent to break even. How does this end . Badly or in a soft landing . Yeah. Again, when you look at this bar chart, and this is only moving from 32 to 34 on the average number, right . Thats eau not even 10 . The point im trying to make is not messily so the necessarily, so the villains here arent the ceos and corporate leadership. The villain here actually is powell, the fed and yellen at the treasury. Finish this is the fiscal impulse of the administration, right . Were talking about this year, liz, running a 2 trillion deficit. 7 of gdp, when were at full employment, we never, we have never come close to that number except going into a war, spending into world war ii will do that. But going into a world war, you run deficits at full employment like that, but you dont do it in times that are good. Liz right. So the legislature and the treasury have kind of, theyre off their rocker with spending. And someones got to step in and stop it. Liz kyle, we dont get e a choice of what atmosphere we invest in. This is it. You invest with what youve got. Are you long . Are you short . What are you doing to get some deals and make some money here . Well, you know, look, the u. S. Has the high yields in the world, and we have the deepest, most liquid Capital Markets in the world. Liz yes, yes. So at some point in time, you know, lending for, lets say, commercial real estate has been off since march of 2023, and now you have consumer issues and lending to the economy more writ large has topped in the last few months has stopped. So what youve got is maybe a 6month lag, maybe a 4month lag. As we get true year end and into the first quarter, youre going to see the economy slow down. And, or you know, whether were going to have a shallow recession or deep recession, whatever you want to call it, it is going to slow down. And so somewhere in the next couple of months i think, i think the 10year rates peak, and you should look, you should own, i think a 5 riskfree rates a pretty good one if the fed is dead set on getting inflation down to 2 in the mean term. So, you know, i dont think you should plow into stocks at the moment, but if things start rolling and they start indicating theyre out cutting, stocks are going to go higher the. Liz well, im looking at the shutter end of the short end of the yield curve. The 12month, 5. 48 . The 3month, 5. 48 , and thats little to no risk. Is that the best idea that you have at the moment . I mean, its fine if it is, i just want to make sure our viewers get whats in your mind. Look, my perspective is you need to have some cash balances now. I think youre going to see some distress in the economy. I think these rate hikes take 9 months to a year to really factor into the economy, and if you remember what drove inflation was the expansion of the feds Balance Sheet and then the fiscal spending and the fiscal impulse. Thats just starting to roll off. And so the fed s raising rates doesnt have an Immediate Impact on what actually drove can inflation. It takes time. Liz yeah. And what im saying is that times in the next 6 months. Liz a ive got to ask you about china. Obviously, there are conversations between the administration and china. However, there is still an unbelievable lowboil tension there. How do we handle this . Yeah. You know, im not a fan of the administrations approach. I think that when youve got putin, the war criminal, having a Limitless Partnership with xi jinping in china and what weve learn throughout history is peace through weakness with madmen or dictators or authoritarians never works. And we just sent five cabinetlevel officials begging and pleading for meetings in china, and what did they come back with as a deliverable . That were going to have more conversations . I think that the administrations Foreign Policy path should be peace through strength. Were the strongest country in the world liz and how do you do that . How do you do that, kyle . Look, i think you, you have to be much more firm and stop i drawing lines in the sand if youre not willing to step up to them and enforce them, you know . When we have sanctions, the risk of someone evading or just, say, going against u. S. Sanctions should be that you should be secondarily sanctioned if you dont comply with primary sanctions. How many secondary sanctions has our feckless treasury engaged in . The answer is zero. And so our sanctions are meaningless, in my opinion. Liz well well, let me just point out we are at session lows. Dow jones industrials down about 50 points. We have the s p, the nasdaq and the russell in the red are. I do just want to point out too, kyle, that the transports are the one area were seeing a a teeny, tiny bit of green, up about 8 points, but that doesnt do much for just about everybody. Big losers on nasdaq, intel, pin duo duo which is a chinese amendment company. Thank you, kyle, for joining us. Great to be here, liz. Liz lets get you piecemeal some of these market indicators at the moment. And the volatility index is now up 4. 6 , the vix at about 14. 76. And as you see, the Dow Jones Industrials down about 47 points. Klavyo is the third high profile ipo today, debuted today. Debuted on the nyse, it opened at 36. 75. Thats actually more than 20 higher than its 30ish s po price. Kind of sounds like a broken record, because thats kind of what cart did. Cart closed up about 20 . Backers include shopify and Investment Firm summit partners. Shares right now up just 2 to 30. 67. So a bit of a pullback here. The the uaw has said stellantis did make a new offer today. If a deal is not reached by noon on friday, the strike could widen further. Workers in tuscaloosa, the alabama plant, joining the strike today. Zf chassis is a supplier for a nearby mercedes factory. Stellantis the says it will temporarily lay off 68 employees in ohio and expects to furlough 300 other employees in indiana because of the impacts of the uaw strike. Stellantis is in the green, up 1. 7 . Fords down 1. 33 , gm down nearly 2. As uaw members fight for higher compensation, bank of america announcing today its raising its minimum hourly wage from 22 to 23. That that happens next month. And and to 25 by 205. 2025. This makes the banks minimum yearly pay rate for fulltime employees at about 48,000. Bank of america down about a third of a percent. It was higher intraday, for most of the session it was definitely higher. As World Leaders, as if we dont have enough traffic in new york city, World Leaders are adding to it here. This week is the United Nations general assembly. The russiaukraine war high up on the agenda. In a speech on tuesday in front of the assembly, ukraines president Volodymyr Zelenskyy implored leaders for continued financing, set to attend a private party here in the city tonight hosted by jpmorgan with a guest list comprised of the nays top financial nations top financial names, business leaders, and well sprinkle some diplomats in there. Our own resident diplomat, charlie gasparino, is here. What are you hearing . Big story. We should point out when these things happen, sometimes they get canceled at the the last minute. Zelenskyy has to be in washington later tonight to meet with President Biden concern. Liz well, he could get there late tonight. He could, and thats the plan here. From what i understand, jpmorgans head of wealth management, her number two put together a meeting with zelenskyy. Now, remember, theyve been zelenskyys financial add a slidesser now for months, trying to raise private capital or at least talk about a 20 the30 billion private capital fund to rebuild the country. He went to the u. N. Basically to ask for more military aid. This is the second par, or getting private capital in there. Liz wow. For rebuilding. Right, for the rebuilding. So jp morgan has been their financial advise iser. From what we understand, they put together a meeting, should be held together at 4 to. Again, if it doesnt get rescheduled. That does happen. Some of these people may not show up. But heres the list of people on that, that are at least scheduled to go, and it is a whos who. Bill ackman, jose andres is going to be there liz hes making the food . We should point out hes been helping with food aid. Henry kissinger. Jonathan graves liz blackstone. Under steve schwarzman, might be the number one guy at some point. Liz very smart guy. Youve got bill bill ackman, youve got ken griffin, who else . Eric schmidt. Liz okay. Henry kissinger. Robert kraft, which is kind of interesting. Liz daniel he bet sky. Eric. Mitt. Now, how many billionaires are on that list . Are pretty amazing. I mean, ken griffins worth 35 billion, pretty sure robert kraft is worth several or billion. Again request, this is designed to get private capital frauing to the flowing to the ukraine at some point, hopefully when the war is over. Thats one of the big sticking points, the war needs to be over first, but theyre trying to get it sooner. And theyre going to sit down and brainstorm. From what i understand, theyre meeting at 4 30, 4 45. Its at the Ukrainian Mission to the u. N. So its in midtown. From what i understand, just to give you an indication of whether the meetings happening or not, theyve wall off the block. Liz oh, im sure. So this is going down. We may have footage of this. Liz i would love that. Another billionaire who actually ukraines has depended on, the ceo and cofounder of palantir, that is alex karp. He comes on the show tomorrow. I would ask him about this, and heres what i would ask him specifically, liz what is the hook, what is why does private capital likes certainty. Isnt this a big, uncertain thing here . Liz well, for now the war never ending. Liz ukraine would credit palantir with much of its success on the battlefield because of its a. I. Is it going to be a problem raising money . People want to raise money. Money doesnt go to wartorn naicses that could be taken over. Liz you have to see the outcome with afghanistan a lot of investment in afghanistan and iraq. Thank you very much, charlie fast. As the Federal Reserve continues to fighting Consumer Spending theyre not fighting Consumer Spending theyre basically trying to dwell it just a bit. Were moments away from one of the best reflections of Consumer Spending fedex. The shipping company will report 3. 73 in earnings per share and 21. 81 billion in revenue. Investors have high hopes for the company particularly since many consumers use fedex when ups workers were threatening to strike. On top of that the Holiday Shopping season is fast approaching. Even though it is september, here is an indicator, target, macys amazon are planning to hire ones of thousands of Seasonal Workers to meet the demand. Will seasonal demand translate for a strong year for fedex, maybe some other Retail Stocks . Bob doll, cio of crossmark global. He manages 3. 5 billion in assets. He is joining us right now. How much do you scrutinize fedex for the health of consumer and how do you triangulate what investments to make . As you point out, liz, this is an important point. It is an important one, so lets hope they have good numbers. Liz what do you think of the Federal Reserve today . Jay powell said in effect, one more, that is the a vote of the majority of the fomc committee here . One more this year. You know well see what happens after that. I have wrote these two lines down. Quote, full effects of our tighten having yet to be felt. Getting inflation to 2 has a long way to go. This was a hawkish hold, liz, there is no question about it. The fed realizes the economy is a little stronger than expected. Inflation has moved down. It is stubborn and nowhere close to two. They have more work to do. More work to do with you how do you think that will play out with the markets . At the moment everything is negative. We know the day after the fed, hours after the fed you kind of toss that out because it is so volatile, right . Where do you expect well see the investor psyche knowing there is probably one more quarterpoint hike by the end of the year . My guess is, liz, we have more weakness in our economy to see the effects of what the fed has already done. Whats more important, are they going to raise rates one more time or not is, what about the effects of what they have already done . We dont know fully what they are. I think it will show some more weakness and that will cause questions about earnings estimates for the balance of the year. Liz lets talk about a soft landing. Here is what jay powell just said and then i want you to comment. Because he was asked by reporters two different times and there was a little bit after miscommunication. And afterward the second reporter said, jeez, i didnt get the sense is a soft landing was your number one priority. Here is your reaction. To begin, a soft landing is a primary objective. I did not say otherwise that is it what were trying to achieve for all of this time. The real point though is the worst thing we can do to fail to restore price stability because the record is clear on that. If you dont restore price stability inflation comes back and you can have a long period about the economy is just very uncertain and it will affect growth, it will affect all kinds of things. It can be a miserable period to have inflation constantly coming back and fed coming in to tighten again and again. So the best thing we can do for everyone, we believe is restore price stability. Liz you dont want to see a stop start, stop start, do you, bob . For sure not. I think, liz, what he is saying is a soft landing wed love to see it but man, thats tough to achieve. That is like threading the needle. Liz bob, thank you very much for the Quick Reaction here, we appreciate it, bob doll. Now as we look at the markets again the reaction today at least at the moment we are at session lows with two minutes to go before the closing bell rings. You have the Dow Jones Industrials down 66, the s p down 40, the nasdaq down 198. Russell 2000 down 15. Standing by, he was in the green room, parsing all of his stocks, all his charts, Kenny Polcari is back. What did you see and what is the most important reaction. I think the reaction we see trading going into the end. Quarter. Some of money come out of highflyers were seeing. Look at nasdaq down 200 points. Money is becoming more defense defensive going into the end of this year beginning of next year. Utilities rallied six after really underperforming. Money coming out of hightech, boring, yes, but stable dividendpayers going into the new year. Liz treasurys and two year. The two year is at 5. 5 or something, isnt it. Liz you just heard kyle bass say why wouldnt you . He is not usually a treasury guy. Why wouldnt you if you are nervous about where the market is going, that is an easy do. Liz oh, kenny, these fed days are dramatic, arent they. They are dramatic. That is what makes it interesting. That is what makes it fun. Liz we let our viewers know opening your mind, Jeremy Siegels mine, kyle bass, bob doll, to let you know what is exactly happening. Were ending at session lows. Tomorrow this could all change. Also tomorrow i need you to tune in as we said palantir ceo alex carp joins me live from washington, d. C. To discuss the impact of a. I. On the military and how it is helping ukraine win the war. [closing bell rings] that will do it for us. Kudlow is next. Larry hello, folks, welcome to kudlow, im larry kudlow. Oil prices are heading to 100 a barrel, gasoline moving back to 4 a gallon, top line inflation has been going