you bring a lot back communities. but we also have these great to civilian life. leadership skills. technical ability. regionals. and a drive to serve in new ways. a great business with many companies. syracuse university's d'aniello institute i do think their business model for veterans and military families is under pressure. has empowered more than 200,000 veterans i would not like to see us add to that by treating them like to serve their communities and their careers. that. from professional certifications, to job training, to help navigating programs and services, we give veterans access to support i would say i personally think, from anywhere in the world. and i think the fed strongly thinks that the smaller regionals an enormously part of our banking system. >> i have one last question. are you having a good time? [laughter] chair powell: now? david: i assume this was not that pleasant. in general, are you enjoying your job? chair powell: it's an incredible honor to do this job. everyday i do what i feel so fortunate and so lucky and blessed to be entrusted with

this. all i want to do is do the best i can for the public. we all serve. yes, there is a lot that is enjoyable. mostly it is so important to get it right and that is what we are trying to do. david: thank you so much. [applause] >> absolutely fantastic interview at the economic club in new york. that was david westin. he anchors wall street week, sitting down with jay powell for 35, 36 minutes. he got a lot out of him. one of the main headlines was that he says rates are doing some other job. he said the margin yields could mean less need to hike. that is something we heard from other federal reserve governors. it's important to hear it from

jerome powell, especially so close to the blackout period. we will only hear from fed speakers tomorrow and saturday before they are done talking until the next meeting in november. he said the evidence is the policy is not too tight right now. he made remarks earlier indicating they could still raise rates again. we have seen markets with saw in this environment -- whipsawed in this environment. gains to losses to gains again. the same is true when you look at the bond markets. look at the numbers. s&p 500 up a third of 1%. jon: welcome to bloomberg markets. matt: let's get a quick check. this is not on low volume. we were 20% above the kind of it is high-volume day after our volume we have typically seen on david westin sat down with the average last 30 days on the jerome powell for an hour. s&p. he gave the impression at first usually when you have a fed meeting you will see very light that maybe rates are not volume. restrictive enough and then the it has been pretty heavy today in stocks, certainly on the s&p treasury market means they will not have to raise rates again. 500. the 10-yields coming to 495.13. now stocks are happy.

it's been right up under 5%. the s&p 500 after some big swings is up a quarter of 1%. has not hit the 5% level since 2007. we are at the highest level we we do see the five-year yield have been since july of that moving down but still well over year on the 10-year yield. pretty much the same across 5%. 5.1735%. the curve. the 10-year yield moving higher. the 30-year. this is what jerome powell means when he says you have got to let 4.95 is the highest we have seen since july of 2007. was going on in the rates market play out. the 30-year is over 5%. yields are doing a little bit of their job in terms of holding you saw some real steepening after that jerome powell back the economy to some extent. interview. nymex crude up $.81. let's get over to policy editor we are seeing brent firmly over mike mckee from washington, d.c. you watched this speech. $90 amid the continued unrest in the middle east. jon: we have had to digest all what are you take from jerome powell comments? mike: he aligned himself with these different earnings the open market committee and stories. you have these micro-portions of leaves the impression the fed is the market story today. going to be on hold on november let's go through a few of them. 1. i don't know how far you can you have netflix, as we have take that out from there. been saying all day, the

it did not sound like he's in a hurry to raise interest rates. crackdown on passwords really boosting the subscriber story. he did move the markets a lot, netflix holding much of the gain particularly at the long end. at 16.5% right now. watching the yield curve during his speech and it significantly at&t with a casual outlook pleasing the street. widened out and then came back those shares are getting a percent pop right now. in a little bit. he originally said he did not elon musk tempering some growth think rates were too tight. expectations as he looks ahead the market took that as we might for his electric vehicle business. see him raise rates more. then he came back and said later that took a bite out of tesla shares, post earnings. the yield rise could mean the those shares are down about 9%. we will talk more coming up fed has to do less, which is about the blackstone picture. the combination of a weaker what we have heard from a lot of other fed officials. dealmaking environment and this in terms of monetary policy it looks like the fed is where the interest rate reality did play into the profit story in the market thinks they would be. latest quarterly results. matt: that and the war in the we see that reflected in futures. the futures guess for november eastern mediterranean seems to be spooking elon musk. hi rates and geopolitical unrest 1 is down to 3% chance of the -- high rates and geopolitical fed raising rates. it was not significantly higher but it has dropped since powell unrest not good for tesla. the market today really reacting began speaking. to fed chair jay powell's not a lot of change in the remarks. december fed funds futures. here is some of what he had to

say about the economy speaking we will watch the data for that with wall street week anchor as the fed will. david westin in the last hour. matt: when we look at the rise in yields, obviously the fed chair powell: we have a certainly resilient economy. plays a huge part. you wonder how much a part in it the economy growing strongly. the fiscal spending plays and if you think back to year, many debts and deficits. called for the u.s. economy to steve major said he was wrong in be in recession this year. thinking that does not mean anything. not only has a not happened, now powell told david westin it growth is not running for this is important and he realizes we year above its longer run trend. that has been a surprise. are not on a sustainable path. jon: let's bring in matt maley the focus on deficits and at militate back to get his assessment here. quantitative tightening can be part of the yield rise. mr. miller was saying we saw are the bond vigilantes coming back, mike? mike: well, to the extent there this wall street whipsaw today. let's start with the state of were such things that you could the economy. is this a resilient economy in make the argument that they are. your estimation? there is a question, not about matt: it is resilient, no question. the long-term sustainability but we see all these different signs about the fact that government has to sell a lot of paper it may not be as good as we within the next six months or would like it to be or that so. the fed is no longer buying. going forward it will be. look what's going on with these as a matter of fact, the fed is financial stocks.

letting some of its holdings we have seen a lot of people rolloff and therefore that talking about bank of america creates more demand for other and their portfolio and such. buyers. do they step up and by and at blackrock is down to its low of the year. what price -- buy and at what blackstone had a pullback here. price? even berkshire hathaway, the the fed never takes a position insurance part of the more thant on the fiscal policy of the u.s. other than to say we are on an unsustainable path. insurance but the financial he does not offer solutions. stocks have come down quite a bit. it is true with all this well -- i'm sorry, only additional debt that the u.s. has to sell it will be doing ok. it is hard for them to really interesting to see what happens grow a lot more if the banks to rates, particularly longer will have a tough time. i'm not as convinced as some rates in the next refunding at the end of the month. that the economy is in fabulous the treasury announces how much shape. it has to borrow in december. it's in good shape, but how much rates much higher. better is it going to be going forward? does that creates distortions in i'm not sure. matt: don't forget about see's the treasury market that the fed may or may not have to address? candies and justin boots. how does it affect monetary why are you not convinced? policy of rates go up even more? does that slow the economy too i'm so nervous about this economy and so are many much? americans. does it give the fed less to do? we are looking at 5% gdp growth. we are looking at unemployment on the fiscal side it's an still well under 4%. jobless came out this morning unsettled situation for the fed. matt: thank so much for joining

the lowest since january and we us. are in october. everything seems to be firing on bloomberg economics and policy all cylinders. editor michael mckee talking to what is the problem, matt? us about jerome powell's interview there with david matt: this whole thing with westin. interest rates. let's get over to kathy jones, at charles schwab. it has not had an impact yet so therefore it is not going to have an impact? most cycles we have had in the during that speech we saw real last 40 to 50 years you did not moves in rates, especially at the long end. have this pent up demand that what do you make of the climbing curve? came from the revenge spending chair powell: i thought it was people took after the pandemic. interesting the initial reaction that played a bigger role in was the short -- the yields came delaying this impact. now we have seen a huge, huge down and then we kind of rise in long-term bond yields in reversed that and we started to see the curve re-steepen. the last six months. i don't know there was anything the stock market has not really responded at all. particularly fresh in what that divergence is a big concern powell had to say. for me. in the last 50 years, unless the that may be what is reflected in stock market was really cheap, the continued steepening of the which it is not now, every curve. single time we've had a big divergence develop because of a what you are seeing is a focus big increase in long-term yields on how long the fed has to stay on hold to slow the economy and the stock market has always come down at some point eventually to cool off the labor market even more. resolve the diversions. jon: you are saying too much

those are the two big criteria for the fed. complacency that there is risk we want to see the economy to the downside from the equity slowed to a more sustainable market? matt: i definitely think so. level, 2% or less. and to see the unappointed rate pushed to the side the go up and the wage growth slow situation in the middle east. that divergence is very large. down. betsy do talked about how he it leaves the door open to another rate hike. normalized interest rates. that is true, but like i said that has the market concern. matt: as mike mckee just said, the stock market has not been normalized. it really seemed like jerome it has not moved in response to powell was getting on the same what's going on with interest page as the rest of the fed rates in the last six months. speakers we've had of late. you look at the high pd ratios, we have had a ton. they can be played with a little bit. i think we had seven including there can be write-offs and things. powell. priced to sales, the ratio is there are more to come tomorrow and saturday. are they telegraphing exactly almost 2.4 times sales. that is higher than at the top what they are going to do before? do we know they will not raise of the internet bubble. rates now in november and they the market is expensive. think the rising rates and that has not been normalized. you throw and geopolitical treasuries are doing the job for issues that could cause bigger them? kathy: i would say it is problems -- hopefully won't, but apparent the fed does like to if it does -- i don't think signal ahead of time if they are

going to make a change in people should be quite as complacent as they seem to be policy. we would have heard that from when it comes to the stock market. matt: you bring of the internet the variety of fed speakers we have heard. bubble. actually we have heard just the one really interesting dichotomy opposite. they are content with the way is that you've had the top seven things are playing out. they are content to wait and be stocks rise in terms of a pe patient and see if there is a need for another tightening move or not. from 25 to 45 while the bottom at this stage of the game i put 493 stocks have just been a low probability on a rate hike holding steady under 20. in november. matt: the interesting thing is how does that play out? it looks like the economy is speeding along here. i thought these were interest it is running hot. rate sensitive stocks and now if you look at the atlanta gdp they are trading at 45, 50 times forecast, 5.4% in q3. earnings and that continues to i'm hearing people talk about rise. almost 5% growth in this current matt: it is funny. some may have to do with people quarter on wall street. you have got retail spending -- it is coming to the end of a goodyear. that is strong. a lot of institution sellers do you have claims that are low. not want to peel back on the stocks. there is a flight to safety the lowest since january today trade. at some point that will change. and we are in october. how did they see what they are as you said, the other 493 doing -- working of the economy is running so hot and we are stocks the pde ratio -- p/e still seeing headline inflation

way too high? kathy: i think as paul net -- ratio -- the magnificent seven powell noted the economy has have to come down. they are so highly weighted in been more resilient than most those indices that they will models would have expected it to be. come down and that will scare including the fed's models. people. keep in mind before the last they will start pulling money out of their mutual funds and the whole thing kind of couple of quarters, the last snowballs. the fact that the s&p 493 are quarter and half, growth was sub 2% for quite some time. still relatively fairly valued i think what we are looking at is not as bullish as i think some people would see. is this uncertainty around long and variable lags. if the other stocks come down, the rest will come with it. we don't really know how much matt: great point, matt. the recent tightening is going really appreciate it. matt maley of militate back in to affect growth in the next couple of quarters. company talking to us about -- i think that is what the fed is focused on. miller tabac and company. they know there is tightening in the pipeline. they know credit lending john gray shares his estimates standards have tightened quite a bit. that is affecting how housing and auto sales. it's affecting parts of the market for consumers who are falling the lackluster earnings. that stock dragging down the very reliant on financing and index today. this is bloomberg. for smaller businesses really ♪ reliant on the near-term

finance. big companies may have turned out their debt but small companies tend to finance and refinance on a regular basis. you see those companies start to struggle a bit. i think it is a question of, do we have a couple of quarters of above trend growth and revert back to that lower trend we saw late last year and the beginning of this year? matt: watching how small and medium companies respond to higher yields, how consumers react to these higher rates, powell said something about that in this interview with david westin. let's listen to what he had to say. chair powell: markets have been volatile. you have seen the rates moving up and down a lot. i think we have to let this play out and watch it. for now it is clearly a tightening of financial conditions. we will be watching it carefully. matt: do you see it actually fresh, warm hot dogs! working in terms of tightening financial conditions? when i'm not selling hot dogs, i invest in a fund clearly it is definitely working that advances innovations like robotics.

in the housing market. we still see prices on fresh, warm hot dogs, straight out of my torso! automobile storing. -- automobiles soaring. one for you, one for you. kathy: there is a supply demand oh, you're a messy one. cool, right? so cool. anyone can become an agent of innovation with invesco qqq, dynamic that is keeping those prices high. we are seeing delinquency on auto loans go sky high and a fund that gives you access to nasdaq-100 innovations. repossessions start to go up. hot dogs! fresh, warm hot dogs! before investing carefully read and consider charge-offs on credit cards are going up. fund investment objectives, risks, charges, expenses personal bankruptcy filings are and more in prospectus at invesco.com. going up. you kind of have this dynamic where there is some spending going on. you can see where there is stress where the spending has been. i think it is very unsettled but it does look like the tightening we have seen so far is having an impact. it tends to start at the bottom, the least credit worthy borrowers. small businesses are individuals -- or individuals at the lower well spectrum. then it works its way through where you get that more cautious approach even amongst folks who have had -- you have good jobs

and a certain amount of wealth. they start to get more cautious as things slow down. it's a waiting game, a time gain. that is why the -- time game. that is why the fed is leaving the door open. if you read the commons from the districts, you see a lot of commentary from small businesses that inflation is another big concern anymore. it is new orders, commercial real estate, the unsettled conditions out there. i think they are willing to give it time but not too much time, because of things we accelerate they will have to tighten again. matt: an important juncture for sure. kathy, thanks for joining us. kathy jones over at charles schwab. coming up, former fed governor enter wells fargo betsy duke joins us to talk about powell, the economy and rates. this is bloomberg. ♪

jon: this is bloomberg markets. time now for the stock of the hour segment. we have been watching shares a blackstone under pressure today. they reported a drop in quarterly profit of around 12%. the executives blaming would-be buyers being hesitant to do deals as we watch debt costs rise. here is an interview with john gray earlier today. >> i would say on inflation the fed is really having some real success today. we see it in input costs in our companies that are pretty flat. we see the labor market is cooling. we are seeing wages now below

5%, meaningfully down from a year ago. to your question on shelter costs, those have come down quite a bit. it is really in the data the fed uses, the bureau of labor statistics which tend to lag. that will be a force of gravitational pull downward. i think that will come into the numbers over the next six to nine months, put additional pressure downward on those headlining core cpi numbers. that's a positive when we think about inflation and will make it easier for the fed to really pause. >> you seem more optimistic about the direction of inflation then many out there. what this is mean for the direction of interest rates? we were talking about the idea of a cause for instability in rates -- stability and rates. how soon could that happen? jon: i have more optimistic

about the -- optimism about the path to inflation but the fed will stick at this. they will hold rates higher for longer. the long end has now accepted that. i think that is going to have the effect of slowing the economy. slowing growth. >> we have models for we look at our companies. they have been very resilient. everything, formulas are everything. revenue growth in the quarter as a practitioner we have to be and our private equity portfolio focused on what the economy is companies was up high single telling us. even taking lags into account. what is it telling us? digits. they are much more muted than they were a year ago. does it feel like policy is to tie right now? i would have to say no. i think where this leads to is inflation comes down but also growth comes down. the cost of 8% mortgages, 8% 5.25% to 5.5%. auto loans. matt: that was fed chair jay that can weigh on the economy. i think that's the environment powell speaking with our own david westin. we have to invest through. betsy duke is a former federal we have endured in inflation shock. we have now endured an interest reserve governor and former rate surge. chair of wells fargo. i think the next step of this is she joins us now to help us to endure a slower economic assess what we heard from picture. we don't see it like 2008-2009

governor powell and what we are watching in the markets these days. betsy, it's incredibly in terms of imbalances. fascinating to see this economy getting ready for that is continue to power along for the important and taking a view over past couple of days. the environment is, that is what atlanta gdp forecast pointing to we do as a firm. 5.4% of growth in q3. it's one of the reasons we have been able to generate outsized we are hearing from some banks returns for a long period of on wall street they expect to time. sonali: have you ruled that a keep the level of growth in the current quarter, almost 5%. hard landing? jon: i don't think -- that is what do you make of this power in the economy in the face of not our central case given the 5.5% fed funds rates? momentum from the savings betsy: i think it is easy to get consumers have built up. given the strength and energy transition. a huge focus for our firm. distracted by the nominal fed funds rate. where fed funds are today and to given what's happening in ai and digital infrastructure, there are some big part of the economy look at how far rates have gone, how quickly they have gone up. where there is a lot of if you look at real rates, the investment and growth. in some ways almost regardless real interest rates, you take of the level of interest rates. the nominal fed funds rate and i think that will provide some subtract inflation, actually more ballast. nevertheless, we anticipate a policy has been restrictive up slow down here. until this summer. matt: jon gray over at it was not until sometime in july or august that the fed

funds rate actually got higher blackstone. than inflation rates. pretty bullish on the economy. it seems optimistic about the if you look historically, the path of inflation coming back down. sonali basak conducted that real fed funds rate has been quite a bit higher. for most of my banking career interview for us and joins us now live on set in new york. fed funds rate of 5% would have been considered neutral or good to hear that he is so off normal. i think the committee is really mystic about the economy. the problem for them is their feeling its way to what is the right level of real interest counterparties are not closing deals. sonali: it is really hard to do rates. not so much nominal interest a deal right now. rates. for him to say yes they are that has to do with both where coming back but no sense of when the rates are as well as what exactly. he said things have to stabilize the underlying inflation is. matt: what is your take? in treasury markets. we are looking at these volatile what is our star? interest rates and it's not helping deals. privately as well, even those what is the natural rate above which policy is restrictive and massive private credit funds across the industry, they are below which it is stimulative? telling me we are also seeing a some people are willing to say i real dearth of supply out there think it has moved higher than for new deals. it has been in the past. i don't think a lot of people they are also hoping it comes back. it is interesting because this are willing to go out and say where they really think that is. is it 2.5%? all means the assets under management at blackstone are below expectations for the

3%? current quarter. so are inflows. we are quite far off when you look at real rates. betsy: if you go back to when they are coming in but below what analysts expected. the first model came out and when it was calculated, the performance is contingent on those deals, those exits and the neutral fed funds rate was around 4%. ability to profitably exit existing investments. 4.5%. by the way, they are sitting on it was certainly higher than it is believed to be today. when i was at the fed the $200 billion more than that of record dry powder as well. general belief was our neutral getting that to work is of key rate was about half a percent. interest for blackstone. if you looked at 2% inflation jon: building on that, jon and half a percent for a neutral rate, 2.5% would be what is gray was into canadian market considered neutral. looking for opportunity. i think when the first dot plots came out, that is where everybody was. that was right before we started 2.5%. talking about geopolitical now i see them going up a bit. uncertainty. i wonder how the street will ec five or six of the dots up a continue to watch that as one of little higher than the 2.5%. the wildcards for dealmaking. sonali: especially abroad. some up into 4%. we spent time talking about the middle east. this is not just about deploying i think it is higher. money abroad. the reason i think so probably this is also about international has to do with a change in investors and what it means. globalization. it seemed to come down when you we are sitting in a year for had a more global economy. fundraising has been very

challenging for most major when you had more global funds. financial markets. do you really need more money now with political isolationism, when you are sitting on $200 as well as the breakages and billion of dry powder? for the industry it is a big question mark. supply chains, international he pointed to oil prices and the supply chains experienced in the volatility around oil prices being a big unknown as well. pandemic you will have less globalization and in my mind existing investments outplay new that is going to push the neutral level of fed funds rate investments. the question is where they get up a bit. matt: this would imply the fed money from and the 12 months moving forward. needs to raise rates even more to slow the economy and get that's a big question as we look at the zeal of political inflation down to 2%. they used to want to average 2%. --geopolitical concerns. jon: when we come back, turning in order to do that they would need to bring in below that level and then hold it for like to the hospitality sector. 40 years. we will talk to a restaurant i don't know what the ultimate tour caoline styne who has been goal is now but it does not seem outspoken about the fed's path like they want to raise rates forward. here is some of what she told us with mortgages at 8%. do they? last time we spoke to her in betsy: they don't necessarily july. have to raise rates to tighten caroline: my message is please policy. stop every time the fed meets. remember, it is the difference we start sweating because they between the inflation rate and the policy rate. if inflation continues to tick are trying to tamp down wage increases.

down, that is actually raising we are stuck in the middle. ♪ the real rate, tightening policy. you begin at that point to be able to see where restrictive ends of being. if inflation takes backup and experienced inflation from those ♪ with the consumer's and core is it possible to fall in love with your home... inflation, it's headline. ...before you even step inside? with what is going on in terms ♪ of the middle east, if gas discover the magnolia home james hardie collection. available now in siding colors, prices start to rise than that styles and textures. curated by joanna gaines. will impact the consumer and that changes the level of real rates. matt: how hard is it going to be for the fed to bring inflation down to its target when we have an inflation reduction act that spends an additional $1 trillion when we are running annual deficits of $1.5 trillion plus and it doesn't look like that is going to slow? they are operating at cross purposes with the federal

government. betsy: definitely the debt level is unsustainable. at some point that will be affecting longer-term rates even more than what the fed is doing. that is an entirely separate issue. with respect to the fed's policy rate and short-term rates, what was also the first time i think is going to happen is if you heard of a town named dinosaur, colorado. you see inflation stagnate, stay we just got an order from dinosaur, colorado. start an easy to build, powerful website for free at current levels, the committee with a partner that always puts you first. will conclude they have to raise rates a bit. start for free at godaddy.com if you see inflation continued to drift down a bit, they will feel more comfortable. if inflation starts to really drop, they may follow that with drops in the nominal rate or the policy rate. i think that is the key piece to keep an eye on right now. matt: i would be remiss if i did not ask about the banking landscape. in your position previously at wells fargo, what you think about this time right now for the big banks or the regional

banks in terms of net income and beefing up their balance sheets? betsy: on a steady state basis, a 5% fed funds rate gives banks >> we have models for a lot more room to maneuver on everything. formulas for everything. the net interest margin. more room for differences in as a practitioner we have to be different business models. focused on what the economy is i don't think that is a bad rate telling us. for the banking business. even taking lags into account. having gotten there as quickly does it feel like policy is too as we did and some banks tight right now? definitely have -- investment i would have to say no. i think the evidence is not portfolios that are underwater. policy is too tight right now. as far as an interest rate we are at 5.25 percent to 5.5%. environment to operate i don't think it's bad for the banks. jon: this is bloomberg markets. matt: great to get some time with you. appreciate your insight. let's bring in someone who may betsy duke, former chair of disagree about the impact of wells fargo talking to us about rates on the real economy. caroline styne joining us. the fed rates and the economy. let's turn now to a big part of also a founding member of the that economy, the housing independent restaurant coalition. sector. great to have you back with us. sales of u.s. homes fell in normally we get reactions from september to the lowest level strategists or economists on fed since 2010. policy. we bring in augusta. you had a lot to say when we last spoke to you.

thank you for joining us. you are right in the thick of it running your restaurant business. what is your message to the federal reserve at this this is a fascinating area of interesting juncture? caroline: i keep -- i sound the discussion because of the rise in rates. we have seen the housing market broken record. i keep saying the same thing grind to a halt. that the rate hikes scare off this morning on surveillance they were saying it was tougher clientele. people now but keep in mind how we have a hard time keeping easy it was over the last decade. everyone refinanced down to 2% restaurants full when the market is so up and down and when or 3%. what is it going to take to people are feeling that pinch break this new logjam when and making decisions about their mortgage rates at 8%? personal expenditures. nobody wants to sell their rates go up. house. augusta: exactly. mortgages go up. investments go down. it's been a tough year for the they suddenly have less money to housing market but especially spend in a restaurant. for the resale market. what we are seeing with mortgage rates rising, they rose for we are already under a terminus about of pressure and terms of costs on our side. pretty much every single week that is making our lives that for almost two months now. much harder. matt: i look at consumer data what that does to the resale market is that it has the a all the time. they are putting a lot more double edged impact. purchases on credit cards. they are starting to -- they are at the same time they take a toll on affordability, players laid on those payments. they are starting to default on are thinking twice about taking auto loans. on a mortgage rate at almost a percent, you have's -- 8%, you student loan repayments are

coming back this month. is that really challenging to have sellers thinking twice about selling their house. that is taking a toll on inventory levels. going out to dinner at a nice matt: what does this mean for restaurant? caroline: no doubt. the housing market? we have seen a decline in guests does it just mean builders are out there in full force putting up as much inventory as visits the restaurants. there was a statistic that we they can? augusta: builders are trying. are down 6% in terms of gas flow we saw they were having a very and expenditures and restaurants -- guest flow and extenders in good year so far. they were seeing sales go up as restaurants. people were fleeing the resale everyone has less money to market. spend. they were seeing supply chain in some markets the restaurants might be full but costs are up so much that there is no money issues that took a toll on construction for the past two to even break even. years pretty much gone by the start of the year. now what they are seeing is between people having a harder mortgage rates are too high even time affording just living, for the new construction market. paying back those student loans, they are out there offering paying their rent which is incentives. they are offering financial constantly going up, and the incentives, mortgage points, but price of dining out going up, it it's not enough. that is what we saw a is kinda catastrophic. homebuilder sentiment fall to a matt: darden put out data nine-month low this month. matt: rates are tough for saying consumers are reaching

for cheaper bottles of wine. everybody in terms of sales of previously owned homes and home you represent restaurants that builders as well. does this mean a whole have slightly higher quality levels. are you seeing the same thing? generation of new families i went to rosie's and ordered forming cannot buy into the real estate market? augusta: possibly. two appetizers because the one thing we saw in the report entrees looked pricey. caroline: i hear it day and this morning was exactly that. night. the share of first-time it is so extensive to dine out. homebuyers was actually at just buying a burrito at a local historically low. it has been following -- falling taqueria has gone up from initially. month after month roel. everything is more extensive. i see a lot of people doing if this is your first chance to go out and you are seeing that. mortgage rates at almost 8% and people are just might be -- they still going up, you might think twice about that. might be going out but when they do they are not splurging. we saw that for first-time they say i will treat mys homebuyers. at the same time another share we saw hit a 10-year high was elf to a meal but just one glass of wine. cash sales. those who get to avoid mortgage let's share an appetizer and an entree. it is hard to survive on that. rates, which right now are jon: i was talking to a mostly either people who are buying a second house, who already have been in this market restaurant operator about how in before or investors are the ones this kind of environment there having the most luck right now. is a focus on trying to make matt: thank you so much.

some menu changes. i know behind the scenes i can be very complicated. bloomberg's augusta talking you want to make sure you can work with what you are serving about the housing market. market coverage continues as powell's remarks move rates. so you don't make it even more complicated to have to go out and look for other items that this is bloomberg. ♪ maybe feed into that. can you take us behind the scenes and how you navigate what is on the menu and how you are pricing items? caroline: that is a really tough one. we have seen inflation on our side go up so dramatically. some items are up to 20% more expensive than the used to be. we have to be strategic about what we are doing. yet we all need to stay true to what our restaurant culture is. i can say personally all of our produce is organic. we get it from farmers. we can't suddenly start buying conventionally grown, cheaper, pesticide-filled produce and still try to charge the prices we do. it is not fair to the consumer.

it is not what we believe in doing. we have to be strategic about how large the portion size is. how much arugula we will put on a plate. you have to be really crafty about it, because restaurant margins are already so thin as it was pre-pandemic, pre all of this. it takes being creative and also not losing sight on what your goal is, what your point of view is and what you are providing to your guests. we are trying to provide an experience and trying to provide value without raising our prices tremendously. it is a real balancing act. it is very difficult. matt: great to get the reality check from you and the industry as we see wall street data points continuing to indicate the economy is so strong. we know on the ground inflation has made it very difficult. caroline styne, cofounder of

-- talking about restaurants in america. we are watching the market rebound a little bit. up -- actually it has turned lower after jerome powell sat down with david westin. the s&p, 4309. this is bloomberg. ♪

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