mcdonald's announcing a $5 meal deal. so people may still be unhappy about prices at the grocery store, but it doesn't seem like there's a lot of inflationary pressure left in this economy. wonder if you could tell us more. >> it's true that inflationary pressures have come down, but we still have, we're still getting high inflation readings. i think you can see it in various places in you know, in some parts of non-housing services. you see elevated inflation still and that's probably to do with, could be to do with wages. goods prices have kind of fluctuated. there's been a surprising increase in import prices on goods, which is kind of hard to understand and may, we've taken some signal from that. but you know, and of course housing services, you're seeing, you're continuing to see high readings there. to some extent. that's catch up inflation from earlier pressures. overall, you're right.

inflationary pressures have come down. as i mentioned, the labor market has come into better balance. wages are still running i would say above a sustainable path, which would be that of trend inflation and productivity. you're still seeing wage increases moving above that. we haven't thought of wages being the principle cause of inflation, but at the same time, getting back to 2% inflation is likely to require a return to a more sustainable level, which is somewhat below the current level of increases in the aggregate. >> hi. rachel from "the washington post." thanks for taking our questions. there's obviously a lot of focus on how many cuts could be expected the year, but could you give us a sense of what one cut by the end of the year could do to the economy? what would be a meaningful difference if there was a cut or even two? >> if you look back in five or ten years and try to pull out the significance to the u.s.

economy of one 25 basis point rate cut, you'd have quite a job on your hands. that's not how we look at it. really, the whole rate path matters and i do continue to think that when you know, when we do start to loosen policy, that will show up in a significant loosening in financial market conditions and the market will price in what it prices in. i have no way of, we're not at that stage so i don't know we'll be thinking about at that time. it's a consequential decision for the economy. you want to get it right and fortunately, we have a strong economy and we have the ability to you know, approach this question carefully. we will approach it carefully. while we're very much keeping an eye on you know, downside economic risks, should they emerge. >> you've been talking about this clear sense that's going to take longer to have the confidence that's needed for rate cuts. is there something about what happened in the first couple of

months in the year that you're seeing differently now with more time or hindsight? do you still characterize it as expected bumpiness or something affecting your policy for the rest of the year? >> always want to avoid the tendency to dismiss the parts of inflation we don't like and just make it go away. we had a quarter where inflation was running higher. yes, i could stand here and say it's stuff we shouldn't have taken signal from, but it is what it is. low inflation is low inflation. you have a quarter where it's higher, we tried not to take signal from the first couple of months but we got a third month and said, okay, the signal we're taking is that you know, we think it's going to take longer to get confidence that inflation is moving sustain to 2%. i still think that's the right thing to do. now we have today's inflation reading, which is much more positive. we're going to have to see what the trend is. what's going to be the data going forward. we're looking for something that gives us confidence that

inflation is moving sustainably down to 2%. one reading isn't, it's just, it's only one reading. you don't want to be too motivated by any single one data point. >> hi, chair powell. thank you for taking our questions. i'm jo ling kent with cbs news. what's your message to americans who are seeing encouraging economic data but don't feel good about this economy? >> you know, i don't think anyone knows, has a definitive answer why people are not as happy about the economy as they might be and we don't tell people how they should think or feel about the economy. that's not ourjob. people experience what they experience. all i can tell you is what the data show. which is we've got an economy growing at a solid pace. a very strong labor market with unemployment at 4%. it's been a long time since

we've had a long stretch of time with unemployment at or below 4%. very long time. we had a period of high inflation. inflation has come down really significantly and we're doing everything we can to you know, to bring that inflationary episode fully to a halt and fully restore price stability. we're confident we'll get there. and in the meantime, you know, it's going to be painful for people, but the ultimate pain would be a period of long, a long period of high inflation. it is people who lower income people, people at the margins of the economy, who have the worst experience. who experience the worst pain of inflation. particularly for those people we're doing everything we can to bring inflation back down under control. >> you've indicated one interest rate cut sometime this year. i know you don't have a crystal ball up there, but a lot of people are watching and see you know, borrowing money remains very expensive.

for everybody who's out there waiting on a rate cut, about when can consumers expect some relief? >> well, you know, i don't have a precise date for you, but what we said is we want to make sure that we're confident that inflation is actually moving back down to 2%. and when we are, then we can look at loosening policy. so, having that kind of confidence that inflation will be at 2%, it just pays benefits to the whole economy to all americans for a long period of time. we had that period for a very long time. we very much want to get back to a place where people cannot think about inflation. it's just not a concern in the every day economic decisions we make. we were there for a long time and our goal is to get back to that place. we've made good progress. we're in the phase now of just, you know, sticking with it until we get it done.

>> financial times. just on the change on the statement of there being modest further progress on inflation. you know, halfway through the year and after today's cpi release, what have you and other committee members found that has been particularly encouraging to you? and just in terms of the conservatism, how much of that is about stickiness and shelter inflation in particular? thank you. >> encouraging has been that growth, that growth clearly that we had last year. particularly the second half of last year and we continue to see still strong growth. solid growth this year. that's been very encouraging. if you go back a year, there was a real concern about you know, very much slowing growth and recession. many forecasters had that and that's not what happened. instead, the u.s., and it's in sharp distinction with many other advanced economies around the world.

that's been encouraging. i would say that today's inflation report is encouraging but it comes after several reports that were not so encouraging. you asked about, your second question was really about shelter inflation. so, i think if you go back a couple of years, we know that there are renters and then there are people who own their houses. we have oer, owners equivalent rent. so when market based rents go up sharply as they did at the beginning of the, when the economy reopened, they really went up sharply. those play into rollover rents much more slowly for existing tenants than for new tenants. so we found now that there are big lags so there's sort of, there's a bulge of high past

increases in market rents that has to get worked off. and that may take several years. n nonetheless, as long as market rents are going up at relatively low levels, and they still are, it's going to happen. just more slowly than we thought. we also do sort of this thing where we impute rental value to owned homes. many countries around the world do that. some do it differently than us. it's something that the price experts have regularly looked at. it's not something that we're the only country that does and it's not something we're looking at changing or would look at changing. anytime soon. but it's true. it's one of the very hardest things in inflation and in prices is how to think about you know, the services that someone is getting in a home that they could rent that they're living in. come countries ignore that. that's not how we do inflation

here. it's true that we're seeing delays in realizing what's happening economically, but we understand that. we understand that very well. >> thank you for taking the question, chair powell. i want to go back to jobs and the consumer. the last jobs report showed that over the past year, 634,000 more people took multiple jobs. that's up 8.2%. since january of 2021, we've seen prices rise 19% so people are using their credit cards to pay for their lifestyle. what pressure points will signal to you that the slowing economy could break companies in terms of hiring or the consumer in terms of spending? >> we monitor all the things you mentioned and more. we're what we're seeing is basically spending is going up faster than disposable income

during big parts of last year. and so what that, you would expect to see is people spending more on their credit cards. credit card balances have been going up. defaults have been going up. they're not at high levels. remember after the pandemic, people were cooped up. they couldn't spend money. they couldn't go out to spend money. they could spend money from home. households were in very, very strong, historically strong financial shape. they've now worked off a lot of that. so we're watching that carefully. and you know, what do we see? that's what we see. the same data everybody else sees but you've still got household sector that's in pretty good shape. but nonetheless, not in the shape it was in a year or two ago. we're carefully watching that. >> how close are we to the point where the consumer can't respspend? >> consumer spending is still growing. not at the pace it was a year or so ago, but it's still growing solidly. by the way, other parts of the

economy are picking up spending on equipment and intangibles has picked up quite a bit in the wake of all the construction we saw of new tech plants. so overall, the economy is exhibiting solid growth and you know, something around 2%, which is a good pace of growth for the u.s. economy. but you're right though. we do see the same thing other people see, which is you know, increasing financial pressures on more lower income people. and you know, the best thing we can do is to foster a very strong jobs economy, which we think we have done. ultimately to get inflation under control because those people experience inflation very dire directly, very painfully. once we get inflation under control, rates can come down, which will also improve things. >> victoria.

you've mentioned the unexpected weakening in the labor market would bring rate cuts sooner. could you talk about what that would look like? is it more of like a quicker pace of people losing jobs? is it more the level of the unemployment rate if it were to start to go above 4.2 or something like that? how are you thinking about what you're looking for to see the job market unexpectedly weaken? >> you know, when i say unexpectedly, first thing is more than is kind of in our forecast or in common forecast. so something more than that. but we'll be looking at everything. we'll, the labor market, you know, has the ability, has the tendency sometimes to move, to weaken quickly. waiting for that to happen is not what we're doing. we're watching very carefully. we're looking at the balance of risks. i always point out the balance of risks. and also the fact that we look at all of the whole situation.

a decision to begin to loosen policy could have several reasons associated with it at a given time. we monitor all the labor market data and if we saw troubling weakening more than expected, then that would be something we'd consider responding to. but we look at the broader context of what's going on, too. >> so something like negative payroll numbers would be -- >> i'm not going to, i can think of things, many things would make it on that list but i don't think i'll utter them here. >> thank you, chair powell. may i ask, you mentioned with the slightly higher pce this year, that wasn't one or two months, but three months that tipped you to be a bit more cautious in the rate outlook. should we take from that that you know, it looks like may will be quite good for pce as it was

for cpi. does that imply that two more good months would reinstill the confidence that rate cuts could be coming sooner than you currently project? >> i don't have that kind of mechanical thing in my thinking. i get that. as many good ones as we had bad ones, but it's not like that. it's going to be the totality of the data. labor market data, growth data. in terms of inflation, you know, you would want to see real progress that builds your confidence that we are on a path tow down to 2%. i don't want to try to give you specific numbers of things because that points to dates and we're not at a point of being able to do that. >> i would like to know about impact of stronger data on u.s. economy growth and prices.

i have no doubt that markets should determine the rate but emerging market are suffering from strong data. so i want to know if it is having positive impact on u.s. economy in total. thank you. >> we don't actually, it's our finance ministry, the treasury department, that has a responsibility for thinking about and if it sees fit, doing things about the level of the dollar. so for us, it's just another financial variable and you're right. the dollar has been, has exhibited some strength over the course of the last year or so because the u.s. economy's very strong. we don't think of it as benefitting or hurting the u.s. we don't, again, we don't manage the level of the dollar. that's not our job. it's not, you know, for our economy, what we're trying to foster is maximum employment and price stability and we feel like we've made good progress on both of those goals over the course

of the past year. >> thank you, chair powell. jennifer schaumburger with yahoo finance. you said you would cut rates before inflation falls to 2%. t you're forecasting the year to end at 2%. we're at 2.8% on core pce right now. you said the inflation forecast is conservative and that if you got 2.6 to 2.7 on pce, that would be a good place to be and that the job market has normalized. why not cut rates this summer just once. you're well above neutral. to try to preserve the soft landing rather than risking waiting too long and the quest for confidence for inflation. >> so we are, we're well aware of the two-sided risks here, let me just say. we understand that if we wait too long, that could come at the cost of economic activity. you have employment of the expansion. we understand if we move to

quickly, we could end up undoing a lot of the good we've done and have to then start over and it could be very disruptive. we're extremely aware of both of those risks and just basically trying to manage them. what we said is that we're, we don't think it will be appropriate to begin to loosen policy until we're more confident that inflation is moving down to 2%. over time. on a sustainable basis. that's kind of been our test. our there's another test which is you know, unexpected deterioration in labor market conditions. i think that's the right way for us to think about it. that's our dual mandate there. you know, we have a strong economy. we've got growth forecasts are very commonly around 2%. that's a strong growth rate for our economy. the labor market continues to print jobs at a pretty high rate. unemployment's still low. so we have the ability now to

approach this question carefully and that's what we're doing. >> just to follow, chair powell. do you need to be ahead of a weakening in the labor market? otherwise, is it too late given the labbe eshor market is a lag indicator. >> we completely understand that's the risk and that's not our plan. is to wait for things to break then try to fix them. we're trying to balance these two goals in a way that is consistent with our framework and we think we're doing that. >> thank you, chair powell. evan riser with market news international. you mentioned the before the framework of the process will start in the latter half of the year. at this point, do you have any specific time frame for the start of that? who will lead it? will it be you or a member, a committee group of your peers? what will be the parameters? do you anticipate the review

will consider changes communications going forward? >> so, we, what we've been thinking is that we would announce and commence the review later or late in the year. in the meantime as that time approaches, we will be devoting a lot of careful thought and planning to the contours of it. within scope would certainly be communications generally. i'm not going to say that we'll look at this or that particular thing. and all the other details. we're just, we don't want to get prematurely into a conversation until it's really time to have it. and so you know, i'm going to leave pretty much everything else to later in the year. >> hi, chair powell. just one more question on housing. can you still cut rates with shelter prices high or will you

wait until they start to moderate a bit? >> i wouldn't, there isn't any one thing, one variable like housing prices moderating that would really decide or decide against what we're doing. we've got an overall test, which is greater confidence that inflation is moving down to 2% on a sustainable basis. that's our overall test. our alternatively, we see unexpected weakening in the labor market. so, those are two different tests. i would say you know, we're not looking at any one price in any one sector saying that's the one. we don't target housing prices for example. and we don't target wages. we target aggregate prices. >> but if housing prices remain sticky, could that slow down the pace of rate cuts? >> i think we'd be looking at the aggregate numbers and asking

ourselves what's going on here with inflation at the aggregate level. of course, if any price that contributed to ongoing inflation would matter. any price that contributed to ongoing disinflation would matter, too, but i wouldn't say allowing housing in having a special role there. thank you very much. >> that was fed chair powell following the decision on interest rates. let's show you the markets. they have been extending their record highs today. the s&p and nasdaq on track for new closing highs. the dow is at the highs of the session now even as the federal reserve has taken its own forecast, four rate cuts, down to one this year from three back in march. as is customary, we're joined by jeffrey gundlach, only today, we are live in los angeles with the founder and ceo of double line capital. good to see you.

what do you make of what you saw and more importantly, what you just heard? the big news obviously is the forecast down to one cut from the fthree we had in march. >> i think that's what will be remembered in this meeting. in the history books. in past meetings, there was new ideas that were brought out. remember, we had super core inflation brought up at one meeting. three month and six month annualized. that one, they had to do the sep. so they had to adjust things a little bit. but he was remarkably vague in the q&a session. basically saying i don't know what's going to happen. he did mention he can't wait for the labor market to really show signs of weakening to you know, he doesn't want to break things just to fix them. let them break then fix them. i think that's pretty contradictory. if you, if the labor market is

strong and stable and you're not going to wait until it starts weakening, i don't see that, i don't see that to be consistent with dropping from three cuts to one cut. but the market seems to be completely focusing on his tremendous balancing act. he used the word balance a couple of times. between the labor market and the inflation numbers which have kind of stalled out, well, depends on what you're looking at. there's so many different inflation numbers. i think that the idea of getting to 2% is really interesting. he actually brought this up late in the press conference. the core cpi was at 2%. for a very long period of time. almost in a perfectly linear fashion. and that happened all the way until of course the pandemic. and then we had this spike. so now the inflation rate is

more like 2.5% for the past 20 years and almost 3% on the core pce for the last ten years. so, you can't pick and choose what inflation data he looked at. if you're really serious about this 2% idea over the long-term, he did bring it up. you would actually need inflation for the next ten years on the core cpi to be 1% per annum to get us to a 20-year run, back to the 2% trend in place before the pandemic. i actually think implicitly what we have here is a growing acceptance of a higher baseline inflation rate. it seems that we're, he said 2.7 is not that bad. i think was quoting the pce. i just feel like the market is very fond of the fact that hikes still sound rhetorically like

they're completely not being considered. >> you've said most recently you're still looking for one cut this year. does that hold today given what you saw in the data and heard from the chair? >> i actually think i'm less confident there will be one cut this year. i almost feel like the fed is going into a reactionary mode. react much more volatile and quickly if the data starts to get bumpier. i just feel like he wants, he's almost a trigger finger it seems on deciding whether inflation is going to be acceptable, they can cut rates, but what if there's some other problem. i feel like he would possibly go to in the future, possibly go to fed hike rhetoric. i think that's a potential. >> even with what he said today about the report, the cpi today being better than almost anyone expected. >> much better.

>> said they made good progress. we're getting good results here. feels like he's building the case for cuts. >> certainly, they've been tilted towards cuts ever since i would say november 1st, which started everything off. in the rally. it was reenforced i would say at the last meeting where it was quite a surprise to the market. there was a fear that there would be more talk about potential hikes. that it wasn't all skewed toward rate cuts. i feel like that was walked back a little bit today, but you have to get out a magnifying glass and look at the rhetoric. i don't know. i think that the labor market is weakening. it's not weakening in a way that's alarming, but the unemployment rate has been going up. the household survey looks pretty bad. part-time jobs is negative. full-time jobs rather is negative year the date on household survey. and he tipped his hat to the fact that we have highly

contradictory data. that's because we have a highly inconsistent economy. that's because we have a theme that's been developing in commentary across the board. that some levels of the economy, those that are needs based consumers, are getting crushed because the things you need are still very high in price and they're not going down. it's the same thing with the money supply. we talked about this before where the m2 was spiked dramatically in the pandemic response then went negative year-over-year. recession's imminent because it's negative. but the amount of money is still a lot. m2's still way above the prepandemic trend. although people focus on this excess savings theme, the fact is that the m2 money supply is growing again and it is still way above the pre pandemic trend. it's just not even ly spread in the economy. i've been using this analogy. it's from not this cpi report, but the one from last month.

didn't have time to do the slicing and dicing because we were doing the show today. but the inflation rate is very different depending upon what your lifestyle is. one thing, used cars was the big drag on the cpi a month ago, but used cars don't affect anybody. they probably affect hertz and avis. whereas auto insurance, that affects every single person that drives. because you are forced by law to have it. and it's not a one-time buy like used cars. it's every day in essence you're buying your own car insurance. same thing with health insurance. what's happening is we're getting greater dispersion of outcomes. if you put four kids through college over the last ten years, you've had a massive inflation rate if you were paying for your kids' college. in my situation, i'm doing assisted living for my parents

over the last 11 years. the price has gone massively higher. the inflation rate people are experiencing is very different than the indices. the on average stuff. i think that's true across the economy. i commend jay powell for talking about that. the fact that the lower 50% of our economy is very, very stressed out and the higher end of the economy is obviously doing better with financials. >> do you not believe that the committee is as good then as chair powell would suggest today? he used the word solid on numerous occasions. he talked about parts of spending are picking up. the consumer is still strong and the labor market is by all metrics, still healthy. >> yes. i don't know about all metrics. one thing that's happened is we're talking about economic data reports and they're always backward looking. then we get monthly data that's

filtering into the quarterly gdp reports and the data is observely weaker over the past six to eight weeks. the economic surprise index has gone way down. economic momentum is way down. unemployment rate is up to 4%. almost, it's 3.96. but this has been a very long time period of the unemployment rate being stable. it's 28 months now that the unemployment rate has been at or below 4%. this hasn't happened since 1967 or 1968. >> there are many people who thought we'd be in a recession by now and that the unemployment rate would have spiked a lot further than it has to date. >> the labor force is shrinking. the legal laborforce is shrinking. so the labor participation rate going down. when you have the labor force participation rate going down, it causes stresses to the economy because you're having more and more people that are takers rather than payers. and i think that that's very

slow to evolve but i think that's underway and i do think we're going to see, if i did my own sep, i would not have the unemployment rate where it is now at year end. i think i would have it more like at 4.4. i think that's enough to cause a little bit of consternation about the lack of this. it's almost like we had this sort of goldilocks stability in gdp and inflation rate after the big scare, but inflation will come down, i think, further, as long as the quick rates continues to fall, which has been falling rapidly. it's not at alarm level yet. i think if shelter prices come down, which they should because the inflationary rate was in 2022, was way higher than what was reported. the shelter and housing was grossly understated because of the way it's constructed. but it's going to come down

because the national rent rule is now .6 year-over-year. it's nowhere close to what they show as the shelter. if you actually want to be sort of optimistic about the 2% goal, i can do a magic trick for you. there's actually not a complex way of look at the inflation rate that gets you to 2% right now. it's just core cpi, less shelter. that's it. and shelter is coming down. the other thing is if oil prices go down, we would see further relaxation on inflation. right now, the correlation that's the strongest for the ten-year treasury yield is wti. it's been extraordinarily strong. if it goes down, if for some reason, it goes lower, not sure it's supposed to, but i just have the sneaking suspicion there's going to be organized pressure to get oil prices down for the election. >> the chart is interesting of the ten-year yield moving higher

following the statement and chair powell. we were 4.25 earlier today. so we're moving up a little bit. steve liesman has come out of the room now. he did get the first question to the chair. i feel like once again, steve, we had a more hawkish statement, maybe a more dovish fed chair. you asked the question, too, that the statement and even the forecast for pce by the fed in your words seems to ignore the better data that we've gotten recently, including today. were you surprised by that? >> i was, scott. it feels like the fed came out of its hole in march, saw its shadow and kind of went back in and said six more months of inflation. i think they sort of ignored the progress we've had in april and may. now, i get they were somewhat spooked by what we saw in january through march. but it seems increasingly clear to me that what we saw in those

three months was very much residual seasonality. jeff was talking earlier about the change in motor vehicle insurance. it now has come off it did seem like adjustment to price or catch up from the increase in auto prices in the past. and jeff brought up something really interesting i'm wondering about right now. i'm wondering if indeed the fed has a bias to cut anymore. i don't know that. it feels like there was something of a coup of the hawks inside the committee when it came to the statements. forget may and april. all that matters is january, february, and march. also, forget what we're seeing. this cross. inflation's been coming down. unemployment has been ticking up. 0.6. i get the payroll number was high. when you look at the unemployment rate to see the ratio of those who want jobs. jeff's forecast for the unemployment rate is exactly the

forecast from the fed survey we had. so, yeah, there is this tendency now. i think you're right to pick up. if things did change, if the data showed this weakness, powell would change, but right now, the forecast of the fed and the statement seems to be really seriously leaning on the hawkish side. >> yeah. really good insight, steve liesman, thank you. you want to opine on that? >> i think he's spot on just about everything he said. i also want to point out, and i think he alluded to, there's a seasonality to the inflation data. and it's strange because it's supposed to be seasonally adjusted and yet over the last 14 years on average, and it happens most years so it's not it's just the average. it's quite consistent over time. the first quarter is by far the first inflation quarter followed by the second and weaker in the second half. and that was, that fact was

ignored november 1st when it did the rhetorical pivot by doing the three month annualized that we're taking second half numbers and analyzing them. but it's quite likely that seasonality will continue. steve's right on when he says the auto insurance thing is very important. because some things are adjusted at year end. that happens with rents a lot. auto insurance and things. i believe we're going to see the inflation rate settle in on the headline cpi. we have a model that's quite simplistic that's been very helpful over the years. we think it's going to settle in at about two and a half to two and three quarter percent on cpi for most of this year. chair powell said hey, 2.7 on pce. just called it inflation. he seemed content with that. if this headline cpi settles in on that, you would think that they would be maybe would have gone to two cuts instead of one.

so the one does have a little bit of a hawkish tilt to it, but the contextualization with the rhetoric, i'm not sure they're biased to do anything anymore. i think they're waiting and seeing. it was abundantly clear by the repetition during the press conference of the dual mandate. he's been on this thing for the whole hiking cycle. but he repeated himself kind of many times today. >> if you don't know truly then what the bias is anymore from the fed, then what investment decisions would you make as a result and would any of your prior change as a result of the ambiguity here seemingly suggest exist today? >> we have been for a while now, operating under the investment theme of higher for longer from the fed.

and higher for longer means that you can expect very good returns out of certain parts of say the fixed income market. like today, double v bank loans. i've talked about this. they're very low risk and they have a spread that is about 290 basis points over. so you're talking about yields with an eight handle. so even if the fed cuts once, twice, you're still talking about something that is very attractive. and the risk is very, very low. and i think that what i take away from powell's q&a today is that you're probably going to be earning that eight handle yield for a while now. and the default risk is very, very low. so the bond market has been incredibly stable. we've seen the yield curve at negative 45 basis points or so.

it's still there. with all the gyrations that we've had. we had ten-year treasury go from 3.9 up to 4.8. yield curve didn't move. some days. but on trend basis. and now we've had the rate come down to 4.25 and it's still at that level. so the market seems to be saying i don't know what's going to happen either but we're biased to think the economy's going to weaken and the fed, you know, on the margin, is more likely to cut. i think the odds of cuts obviously went down today. because when you go from three to one, that's news worthy. >> and why is the equity market do you think reacting the way that it is? we're likely going to put in new closing highs for both the s&p and nasdaq once again. >> well, yields are down a lot this week on the ten-year. that's spurred things. the inflation data today doesn't hurt at all. the stock market really needs

rate cuts, i think, to sustain or they need the earnings projections for the coming 12 months, which have been upgraded. i think that's helped a lot. they're up about 14% now for the s&p 500. that's a big number. and i worry about that. but that's in the psych e of th market right now. >> does it need the rate cuts or the belief that there are going to be eventual rate cuts? and frankly nothing the fed chair said today leads you to believe that the next move is not a cut, does it? >> no. the overall takeaway from today's meeting and press conference has to be, odds are the next move is a cut. but those odds have gone down and i also think that, i'm just going to repeat this. i think they're going to, i think the rhetoric from the fed is going to change fairly dramatically between now and year end because i don't think

this data is going to be sideways to the extent that it has been. i think the economy's going to be weakening. i think employment's going to go up to 4.4 and that's going to be enough to change the way they're looking at things. when we started this year, i remember the pricing in the bond market was seven cuts this year. can you believe it? seven. seemed crazy. >> feels like an eternity ago. >> seems impossible. and yet, the bond market hasn't really changed very much this year. >> but are rates then done going up if you think things economically are going to weaken from here? >> my game plan remains the same. rates peaked for this cycle back in october of 2022 i guess it was. 2023. but 2023, they peaked and i thought they would start falling as the inflationary came down.

that happened. and i think we've seen the peak for this cycle in the longer term bond yields and probably in the fed funds rate, but i do believe when the next recession comes, the fed will act much more aggressively than they think they will. and i think that it will be problematic and that we will see significant reactions to the long end to inflationary fears and excessive treasury supply. the one thing that's helping the bond market and that hurt the bond market last october was there was tremendous net supply. auction after auction. bond market couldn't digest it. that's down now. the supply problem in the near term isn't that bad, but i think in the economic weakness that will come one day, it's like waiting for the economic weakness, when it comes, i think we're going to have a scare on the government reaction being inflationary again.

>> you still sound skeptical that powell is going to be able to mpull this off. that they're going to get the soft landing the market seems to be placing its hopes on. you still looking for a recession? >> yes. th it's a question of when. it's been a long time coming. many of the recession indicators, flags, a year, two years ago, but this was a crazy cycle with all that government spending then the retraction of liquidity. i felt like powell himself was less confident today. than i've heard him. i'd say in about a year. >> interesting. >> because he seems, he seemed to have some mojo back in november and he seems to be pretty confident in the early meetings this year. this was like an economist talking. not a private equity guy, which is more of his background. he's sort of like on the one hand, this, on the other hand,

that. it's not one thing. i just felt like he said almost nothing today. >> doesn't he have to balance, he has to balance the risk. he said that specifically about cutting too late. or too early. >> but clearly in past meetings, there's been meetings where he's shown up more hawkish than people thought. more dovish than people thought. this one, he wanted to keep all of his options opened. that's why i think steve was on to something. i'm not sure they're truly biased to cut. they're sort of biased to biased to be biased to cut. >> let's run through a few investment ideas. gold, we talked about it before. >> i've been bullish on gold all year. >> coming off it worst day in some three years. >> that was the employment report. it's back up to 2300. still quite strong. 15, 17% year-to-date. i just think it needs to take a

break. it went up over 20% in about four months. to take a break. but i believe gold is a worldwide economic thing. central bank thing. i think it has to do with worldwide indebtedness and i think gold should be accumulated on weakness for sure and even at the level today, i think it's worth dollar cost averaging. i own gold. i've been positive. that was my real asset pick. i had no idea it was going to go up so much, but that's the way markets work. >> india seems to be a hot pick lately though you've been talking about it for quite some time. >> love it for the long-term. i would buy it and don't open your statement because when it goes down 20%, and it will from time to time, don't sell yourself out. i think india will be the

strongest -- biden administration makes the comment is u.s. is the strongest economy in the world. that's obviously not true. india is probably the strongest economy in the world. at least on a present basis and going forward. their manufacturing economy has a lot of tail winds. that's my number one long-term. inda. it's an etf. you can buy that. >> speaking of president biden, you've been critical of him. you posted on x recently about what you called chaos at universities. the wars in ukraine. gaza. the interest expense on the debt. does that mean you're supporting former president trump in the upcoming election? >> i've never supported a presidential candidate personally. i've never endorsed one and don't give any money to them because i've got other things to

do, but i think the problem the biden administration has is they've glued together a group of constituencies and a lot of them are ethnic groups. socioeconomic groups. a lot of them are immigrant versus rural, city versus rule. what's been revealed with the israeli hamas situation is when you glue constituents together, they're not monolithic and don't always agree with each other. even within the sub sectors, they're somewhat homogeneous. we've gotten to a point where some of these constituencies are exactly on the opposite side of this issue. hamas and israel. and it's sort of starting to fall apart. it's sort of metaphoric for the tensions that are clearly building within the country. how many times do you read our institutions are falling apart?

i used to talk about how that would become a number one news item. i talked about it 15 years ago but now people are saying it out in the open. people don't believe in churches anymore. people don't believe in the justice department to the extent they used to. people refused to think the fbi was absolutely unquestionably excellent. >> but the former president in some ways some would suggest is the one attacking the institutions and criticizing. >> i don't think there's any one source of this. i think it's just a fact that we have so much wealth and equality and we have so much power that's concentrated in ever smaller group. people are starting to realize that they're being ignored by what they used to think was the establishment. this is a lot like 1968. i did a webcast yesterday and i entitled it 1968 because i was talking about how the lack of cooperation that led to a lot of

difficulties around that time period are in evidence today. and i think it's sort of, the volatility of our perceived reality. when you're a kid, at least when i was a kid, you think that everything's going to be the same forever. nothing will ever change, but things always change. then you get to my age now, be 65 this year, you realize nothing's off the table. everything can change. and i think everything will change in the next four to six years. >> given your concerns about the deficit, the former president wants to double down on the tax cuts. they're going to expire. he wants to renew them. would that be a good or bad idea? >> i think it's, i think it's a bad idea. i think to expand the deficit even a higher rate than right now is suicide. >> perhaps $4.5 trillion. >> in a fiscal year. right now, we're running at 2

trillion. >> that would add renewing the tax cuts would add 4.5 trillion to the deficit according to the senate committee on the budget. >> over what time period? usually is ten years. >> it expands the deficit. >> absolutely. >> you think it would be a mistake. >> absolutely. i think the interest expense is under appreciated. it's getting more attention but it's underappreciated. it's going up a lot. higher for longer and one cut instead of three if we're going to use that as a base case. just means it's going to go much higher. we're going to be over a trillion dollars in interest expense on the deficit. when a recession comes historically, in the old days, the deficit will go up by 4% gdp. in the last three recessions, they were worse and weird situations with the pandemic. went up by 9% of gdp on average. let's just take the middle of

that and say it goes up by six percentage points. we'd be looking at a deficit of 3, $3.5 trillion per year. and that is not serviceable. so we're going to have to work on solutions and that's going to involve restructuring liabilities and it's going to be interesting to see how they manage the treasury debt. they made a big mistake when rates were at zero forever. they should have borrowed at those levels but they didn't because 25 basis points was cheaper than one and three quarter percent. it's always short-termism. we should have planned on that. we'll see what happens as this stuff comes rolling off. i'll remind everybody. we have between this calendar year and the next two, $17 trillion of treasuries that are being refinanced and many are going to be 400 basis points higher. so this is going to be a really big issue. i doubt it will affect this

presidential election, but it's going to be front and center in 2028. >> we will see you next fed meeting. appreciate you having us here at your headquarters in los angeles. jeffrey gundlach of double line capital. thank you. >> thank you, scott. up next, another big pop in apple shares. the stock is rallying once again followg s nocentinitanunme at wwdc. we break it down, next.

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plus, steve kovach, and kristina partsinevelos looking ahead to broadcom earnings. steve, it's you i'm going to begin with because these have been two remarkable days for apple shares. >> i remember you and i were in cupertino just 48 hours ago watching the stock go down on those artificial intelligence announcements then all of a sudden just overnight, the next day, we saw the street just really accept it and say you know, these artificial intelligence features are going to drive more iphone sales. they're going to, they are new, they are novel. they are exciting. keep in mind, scott, the big story here beyond what the ai features can actually do, it's the hardware that they could run on. right now, unless you have an iphone 15 pro, you're not going to be able to use it plus newer ipad and mac models. it's the phone that matters the most. we'll find out for sure in the fall if people are going to upgrade for those ai features.

just more reporting on those features, not everything is going to launch on day one on iso 18. that's especially true for the chatgpt partnership. they say that's going to come later in 2024. same for other feature, scott. >> good stuff. thank you very much. i know nvidia, it sucks all the oxygen out of the room, but broadcom, they are going to report earnings in overtime. >> and they're also considered an ai darling because they're the go to. many aren't expecting the full year guide of $50 billion to change with this earnings report. there is hope that $10 billion revenue number will go up driven by billions of dollars in spending promises from hyper scalers like google and meta. two of those are broadcom customers. 40% of their income stems from stable software revenue streams. we know software has been weaker as of late but broadcom's

recently acquired vmware could off set any cyclical trends. soaring ai demand should help both its custom chip and networking business. yes, it competes with nvidia. lastly, a recovery possibly in enterprise chip business making broadcom a popular ai play year-to-date. the stock is up about 34%. options market is pricing in a 6% swing post earnings. could see movement there. >> all right, thank you. to mike now. and michael, here we are. we had another fed meeting, we had a statement then a news conference from the chair. stocks are still hanging on to these closing highs for the s&p and nasdaq. what's your takeaway? >> we are. i think we had a very broad rally. a lot of the pressure capame of

the average stock. didn't really get that in the press conference. i always caution sometimes it's the next day after a fed presser when you get the cleaner response, but i think the fed's operating from a strong position of flexibility. powell had the opportunity to take september off the table. he did not. even though he took june off the table in march. so i think you can sort of say they can do what they want. we're one year on hold. the economy's doing fine and rates are coming down and they have optionalities to do what is necessary in the coming months. >> all right. good stuff. closing highs for the s&p, 500 and the nasdaq as well. to overtime now with morgan and jon. >> it is another day of records as a cooler inflation print sent the s&p 500 and nasdaq to new highs. closing off the best levels as the fed signals just one cut this