that's still basically the way that you know that you're there is inflation so, is that understanding correct? and are those signals likely to be clear right now given that you have inflation that's caused by, you know, these supply chain disruptions that might also lead to, you know, inflation and wages and those sorts of things? so how do you sort of, like, tease out the signal of maximum employment >> so let me start by saying that the inflation that we got was not at all the inflation we were looking for or talking about in the framework this really was a completely different thing. it was to do with strong monetary policy and fiscal stimulus into an economy that was recovering rapidly and in which there were these supply-side barriers which effectively led to in certain parts of the economy what you might call a vertical supply curve. automobile purchases are very

interest-rate sensitive. and you would think demand would drive up the quantity of cars. but it can't because they don't have semiconductors. it was a very different kind of inflation. this is not the inflation we were looking for under our framework at all it's nothing to do with our framework. and the way we've approached it is really nothing to do with our framework. but come maximum employment, so i think you look at price and quantities if you want to look at maximum employment you look at prices and economies. and the main price you look at is wages so i mentioned a number of things you can get to 20 if you wanted to easily. but labor force participation, the unemployment rate, different age groups the jolts data gets a lot of focus. and wages. that's really one of the great signals. the quits rate is another one. the quits rate is really one of

the very best indicators according to a lot of labor economists because people quit because they feel like they can get a better job, and there's record amounts historically high levels of that going on suggesting, again, that you've got a very tight labor market. so on wages that's the price indicator we look at to tell us along with all the other data whether we have labor market conditions that are consistent with maximum mployment so that's how we think about it. but one of the complications is that, again, we've got to make policy in realtime so how do we think about that? if we think we can make labor, participation might move up if it would move up in two years, would we wait two years when inflation is running way above target probably not we have yet to make an assessment, what is the level of maximum employment that is consistent with price stability in realtime, is one way to think about it >> just to kind of follow up on

that for a second. if you do raise interest rates next year, and you're not certain whether you're at maximum employment, are you all going to point to ways in which the labor market could still improve? >> yes, absolutely whether or not we say we're at conditions, labor market conditions consistent with maximum employment next year, we would all be open and i think expect over time that the level of maximum employment that's consistent with price stability would increase further over time for example, through increasing participation. so, we would certainly -- we would not, in any way, want to foreclose the idea that the labor market can get even better but, again, with inflation as high as it is, we have to make policy in realtime we've got that make that assessment in realtime

>> thank you we'll go to olivia from "bloomberg." >> thank you good afternoon, chair powell thank you for taking our questions. i wanted to follow up on some of your earlier comments about labor force participation. i wonder what you think needs to change in the economy to kind of get a meaningful recovery in labor force participation, and also whether running the economy hot like in the last expansion is one way of doing that >> well, the labor market is hotter than it ever ran in the last expansion, if you think about it the ratio of job openings, for example, to vacancies is at all-time highs quits, the wages, all those things are even hotter but what would it take for labor force participation to move up more you know, why is it low is the question there are a bunch of answers and all of them probably have some, you know, some validity. part of it will be that for

certain people they don't want to go back into the labor force because either they're medically vulnerable or they're not comfortable going back while covid is still -- that's one thing. the lack of availability of childcare is part of it, not just for children but for older people it has been pointed out by many that the stock market is high, people's portfolios are stronger they may go back to a one-income rather than a two-income family. the same thing with houses people have a mortgage with leverage, and the house price increases, the equity they have in their home might've doubled and they might reach the same conclusion and people have savings on their balance sheet because of forced savings because they couldn't spend on travel and things like that and also because of government transfers so for all of those reasons, and it's hard to know exactly the part each of them plays, we have a situation where we've a shock

to labor force participation that is not unwinding as quickly as many has expected and a good part of it is voluntary. this is how they want to maximize their welfare, that's certainly their choice in other cases it's something that will abate very quickly if and when the pandemic gets under control. and the longer the pandemic goes on, you know, maybe the less likely that people will come back because they get used to their new life and they lose contact with their old jobs. that's what the evidence would say. so, it's a range of things it isn't that the economy lacks stimulus usually in every other expansion, it's that there aren't enough jobs and people can't find jobs, and we're stimulating demand and trying to get demand to come up. that's not the problem here. the problem is a supply side problem, what it would take to work it out i think it's going to be time and the number one thing would

really be to have the pandemic get under control. that's what everyone would really like to see what does the labor market look like in a world without covid? that would be the thing that we would really like to see but it doesn't look like that's coming any time soon >> and just to quickly follow up on that, if some of the reason that labor force participation isn't back to february 2020 levels because people are voluntarily making life decisions that are different, does that make you think we're going to end up at a lower rate overall? >> well, there's a demographic trend underlying all of this and we actually got above the demographic trend at the end of the last expansion so, one would expect over time that the labor force participation would move down because an aging population, the older people, the lower their participation rate is. so you would expect that the trend would be lower and that

over time participation would move down. the question of how much we can get back up closer to where we were in february of 2020 and indeed for the year or so before that is a good one what we can do is try to create the conditions there's a lot of good for society when you have a tight but stable labor market where people are coming in, they're getting into the labor force, they're getting paid well. in the labor market we had before we had the biggest wage increases were going to people at the bottom end of the wage spectrum for the last couple of years. there were just a lot of really desirable aspects for the labor market higher participation is one of them, and we'd love to get back there. but, again, ultimately, we have the tools that we have, which are essentially to stimulate demand, and also to control inflation. i mean, really, it might be one of the two big threats to getting back to maximum employment is actually high

inflation. because to get back to where we were, the evidence grows that it's going to take some time and what we need is another long expansion like the ones we've been having over the last 40 years. we've had i think three of the four longest in our recorded history, including the last one, which was the longest in our recorded history that's what it would really take to get back to the kind of labor market we'd like to see. and to have that happen we need to make sure that we maintain price stability. >> okay. let's go to edward lawrence at fox. >> thanks, michelle, and thanks for taking the question, chair powell so i was looking at census data for estimate monthly changes on sales. and what you're seeing is fewer people spending at restaurants and drinking places, more people spending at grocery stores you see electronic sales down 4.6% month over month. also department store sales 5% down month over month. what is your level of concern

the consumer may be turning away from this economy or pulling back because of inflation, the virus or something else? thank you. >> we see consumer expenses very strong in this quarter i don't know whether you're talking about more shopping online versus shopping in the store. but consumer demand is very strong incomes are very strong because people are going back to work and they're getting wage increases admittedly some of the wage increases are being eaten away by inflation. but nonetheless incomes overall are going up because of increased employment and spending has been strong there may be something in the seasonality that this year's holiday spending may have been pulled forward, and of course there may be effects from delta, and there might be going forward from omicron but fundamentally the consumer is really healthy. and we expect personal consumption expenditures to be pretty strong in the fourth quarter. >> let's go to mike at

"bloomberg." >> mr. chairman, the median forecast for inflation in this month's or this meeting's economic projections has been revised up significantly for 2021, but barely moved for 2022 and 2023 you've said you expect inflation to fall significantly. is that because you're going to raise interest rates or because the virus is going to fade and the effects are going to fade? in other words, is it a question of when, not if you raise interest rates and does it suggest that maybe your critics are correct and you might be afraid you're behind the curve? >> actually, i'm looking at the sep here, and the median forecast for core and headline inflation did move up by 0.4 each that's a significant, in an sep that's a pretty significant move

up it's based on both of those things, i suppose. i do think there's a broad expectation among forecasters including our own that the bottlenecks will alleviate some time over the course of next year if you look at where blue chip forecasts are, which is the group of well-resourced large forecasting operations with a long track record, they'll show inflation coming back down significantly toward the back end of next year i would say, though, as well that, our policy should begin to have an effect, there will be a lag, but it should begin to have an effect on that as well. that's the most likely case. i guess the thing i would want to say, though, is we can't act as though that's a certainty, and we're not going to act as though there's a certainty there's a real risk now, we believe, i believe, that inflation may be more persistent and that may be putting

inflation expectations under pressure and that the risk of higher inflation becoming entrenched has increased it's certainly increased i don't think it's high at this moment, but i think it's increased. and i think that's part of the reason behind our move today is to put ourselves in a position to be able to deal with that risk and i think we are in a position to deal with that risk we need to see more data, we need to see how the inflation data and all the data evolve in coming months. but we are prepared to use our tools to make sure that higher inflation doesn't get entrenched for one reason, as i just mentioned, it's one of the two big threats, the other being the pandemic itself to getting back to maximum employment. >> let's go to michael derby at the "wall street journal." >> thank you for taking my question so, as the fed shifts towards an accelerated taper, i wonder what your read is on financial stability risks right now. these periods can be -- seems

like the taper process has gone fairly smooth so far what do you see in terms of stability risks? are there any parts of the financial sector that concern you right now? and are there any significant systemic issues that are on your radar maybe from the cryptocurrency sector or something like that? >> you know, we have had now for a decade and more a four-part financial stability framework that we use so that we can hold ourself to the same kind of framework and, you know, not just treat each event individually and there are four key areas, asset valuations, debt owed by households and businesses, funding risk, and leverage among financial institutions so i would say asset valuations i'm going to go really superficially. they are somewhat elevated debt owed by businesses and households households are in very strong financial shape. businesses actually have a lot of debt, but their default rates are very, very low

but nonetheless it's something we're watching funding risk is by and large low among financial institutions, but we do see money market funds as a vulnerability and would applaud the sec's action this week leverage among financial institutions is low in the sense that capital is high so, overall, financial stability, that's how we break it down into those pieces. in terms of the things that we're looking at, it's the things we've already talked about, to some extent. it's the emergence of a new variant that could, you know, that could lead to significant economic -- if there were to be a variant, for example, that were quite resistant to vaccines, it could have another significant effect on the economy. we don't see that. we don't have any basis for thinking that the new variant we

have is that one, but it's certainly one we're looking at i would say cyber risk, the risk of a successful cyberattack is, for me, always the most -- one that would be very difficult to deal with. we had to deal with bad loans and things like that, i think a cyberattack that were to take down a financial institution or financial market utility would be a financial stability risk that we haven't yet faced. i could go on with a list of horribles. but i think that's a decent picture of where i would start >> how about the cryptocurrency issues anything that worries you there that's going on in terms of -- a lot's happened in that sector. does that concern you at all >> i think the concerns there are not so much current financial stability concerns i of course would support the views expressed in the

president's working group report on stable coins. stable coins can certainly be a useful, efficient consumer-serving part of the financial system if they're properly regulated and right now they aren't. and they have the potential to scale, particularly if they were to be associated with one of the very large tech networks that exist. and you could have a payment network that was immediately systemically important that didn't have appropriate regulation and protections the public relies on the government and the fed in particular to make sure that the payment system is safe and reliable, as well as the dollar to provide a safe and reliable trusted currency but i do think those are longer-term. in terms of, you know, the cryptocurrencies that are really speculative assets, i don't see them as a financial stability

concern at the moment. i do think they are risky, they're not backed by anything and i think they're a big consumer issue for consumers who may or may not understand what they're getting. and there are certainly developments in the markets that are worth following, which are really not in our jurisdiction but things like the kind of leverage that's built into it and those sorts of things is certainly worth watching >> let's go to nancy marshall guenser at "marketplace. >> hi, chair powell. thanks for the question. going back to inflation, is the fed behind the curve on getting inflation under control? >> so, i would say this. i actually think we are well positioned to deal with what's coming, with the range of

plausible outcomes that can come i do and i think if you look at how we got here, i do think we've been adapting to the incoming data really all the way along. and noticing and calling out that both the effects and the persistence of inflation of bottlenecks and labor shortages and things like that so we've been calling out the fact that those were becoming longer and more persistent and larger and now we're in a position where we're ending our taper within the next -- well, by march in two meetings. and we're be in a position to raise interest rates when we think it's appropriate, and we will to the extent that's appropriate. at the same time we're going to be seeing a few more months of data i don't actually think we're at a position now i think this was an important move for us to make. i think that the data that we

got toward the end of the fall was a really strong signal that inflation is more persistent and higher and that the risk of it remaining higher for longer has grown. and i think we're reacting to that now, and we'll continue to adapt our policy so, i wouldn't look at it that we're behind the curve i would look at it that we're actually in position now to take the take the steps that we'll need to take in a thoughtful manner to address all of the issues, including that of too high inflation >> let's go to evan at "market news." >> thank you, chair powell i was wondering if we should still be seeing the taper and interest rate hikes as separate. and, secondly, in the last cycle, the fed started shrinking the balance sheet when short form interest rates were about 1 to 1.25% range

do you think the fomc might be able to potentially start running off assets before that this time? >> are they separate -- i mean, they are separate tools. the asset purchases are a separate tool from interest rates. stopping asset purchases does not remove accommodation it just stops adding further accommodation. whereas raising interest rates starts to remove accommodation from what is a highly accommodative stance you know, the extent to which they will be separated in time is something we haven't really discussed at the committee yet we will be discussing that obviously in coming meetings i don't think that the last cycle that was quite a long separation before interest rates, i don't think that's at all likely in this cycle we're in a very different place with this, a really strong economy. as i mentioned, the sep medians are for 4% growth next year,

3.5% unemployment at the end of the year and the headline inflation of 2.6% next year or 2.7. so this is a strong economy, one in which it's appropriate for interest rate hikes. so they're separate, i would say. sorry, your second question was? >> the second question was about runoff in the last cycle >> with the balance sheet, we did have a balance sheet discussion it's our sort of first discussion of balance sheet issues today, sheet issues at our meeting this week. we'll have another at the next meeting and another at the meeting after that i suspect these are interesting issues to discuss. didn't make any decisions today. we looked back at what happened in the last cycle. and people thought that was interesting and informative. but, to one degree or another, people noted that this is just a different situation. and those differences should inform the decisions we make

about the balance sheet this time so haven't made any decisions at all about one runoff would start. but we'll be continuing to, in relation to when either liftoff happens or the end of the taper. but those are exactly the decisions we'll be turning to in coming meetings. >> thank you we'll go to scott horsley at "mpr." >> thanks, mr. chairman. i think you said a few minutes ago that the inflation that we got during the pandemic was not the inflation that you anticipated when you crafted the framework, and you described it as a collision of a lot of monetary and fiscal stimulus with these supply-side hiccups does that mean the stimulus was mistaken or is the inflation just a consequence that we have to put up with because of that? >> no. i'm not expressing any judgment about the stimulus in that

comment. what i'm saying is there's a sense among some that you wanted inflation, this is what you wanted, how do you like it and the truth is this is not the inflation that what we were talking about in the framework was inflation that comes from a tight labor market we had 3.5% unemployment for a period, and we had inflation that was just barely getting to 2% i think in that setting, our thinking was we can afford to wait to raise rates until we see actual inflation rather than preempted. no one had seen what 3.5% unemployment would look like with high labor force participation by the way no one had seen what it would look like for an extended period for decades. and we didn't know what the inflationary implications were turned out there was barely 2% inflation. and no sense that it was gaining momentum and that kind of thing. so we incorporated that into our

framework. this is something completely different. that's a situation where you had a very, very high level of employment and low inflation this is literally the opposite it has been the opposite where we have very high inflation and we've had it since the labor market was in terrible shape so far this inflation has really nothing to do with tightness in the labor market it does have to do with strong demand and strong demand was supported by the fed it was supported by congress i'm not making any judgments on congress it's not my job. but i will just say we're coming out of what we certainly hope will be a once-in-a-lifetime, certainly the first global modern pandemic, which looked at the beginning like it might cause a global depression. so we threw a lot of support at it and what's coming out now is really strong growth, really strong demand, high incomes and all that kind of thing people will judge in 25 years

whether we overdid it or not but the reality is we are where we are, and we think our policy is the right one for the situation that we're in. >> thank you let's go to brian chung. >> hi, chairman powell wanted to ask about the bond markets. when you see the 10-year at 146 basis points, do you have any sort of concerns about an environment by which you might be hiking interest rates into? would you prefer the curve be a little bit steeper what are you gleaning from the bond market actions over the last six weeks >> i think the short-end actions are easy to understand, which is they're basically very policy sensitive rates at the short end. and it makes sense that it's reacting to changes in expectations for policy. i think a lot of things go into the long rates and the place i would start is just look at global sovereign yields around the world. look at jgbs, look at bunds, and they're so much lower.

you can get a much higher yield on u.s. treasuries by buying usts rather than bunds and you can hedge the currency risk back into euros and still be way ahead so, in a way it's not surprising that there's a lot of demand for u.s. sovereigns in a risk-free world where they're yielding so much more than bunds or than jgbs that's a big part of it. i also think, you know, there may be some assessment in there of what the neutral rate is or what the terminal rate is. i don't know about that. and i would just say that we write down our own estimates of the terminal rate or the neutral rate of interest those are highly uncertain and we'll make policy based on what we're seeing in the economy rather than based on what a model might say the neutral rate is and we all had the experience

over the last cycle where we all through that cycle were trying to estimate what the neutral rate was i think we learned a lot from seeing what happens, cutting rates three times after raising them to 2.25, 2.5% i'm not troubled by where the long bond is i see that it's low. we're really focused on broader financial conditions we're focused on maximum employment and price stability >> thank you for the last question we'll go to greg rob. >> thank you very much >> chair powell, i was wondering -- i wanted to give you the opportunity to talk about something i've heard that's been discussed that your pivot towards a tighter policy, hawkish policy stance had something to do with the timing of your renomination by the president. thank you. >> sure. i'd be happy to talk about that.

so, as i mentioned, we got the eci reading just before the november meeting we got the labor market report two days after the meeting, and then one week after that i think on the 12th of november we got the cpi reading. it was really the cpi reading in concert with those two and i just came to the view over that weekend that we needed to speed up the taper and we started working on that that's a full ten days or so before the president med a decision of renominating me. honestly, it had nothing to do with that at all and i just thought this is what we got to do my colleagues were out talking about a faster taper that doesn't happen by accident. they were talking about that before the president made his decision it was a decision that effectively was more than in train and to the point where

people were talking about it publicly so that's what happened. and it had absolutely nothing to do with it whatsoever. we're always just going to do what we think is the right thing. and i certainly will always do what i think the right thing is for the economy and for the people that we serve >> just a quick follow-up. i guess some people are saying that it was the stimulus in march that we didn't really need all that stimulus and that there was talk even then that that would be a mistake and it would lead to higher inflation, and perhaps that you didn't push back as much as you might have otherwise. >> i didn't push back at all and the reason i didn't -- there was lots of talk about that but not from the fed because that is not our job. we are not the cbo, and we're not elected by anybody so, we take fiscal policy as it arrives at our front door, and we don't comment -- you know, we make our own assessments inside the fed. but it's really not our role

and i think it's very important that we stay out of that business no matter who's in the white house, who's in congress it's just not our job, and it's something we avoid pretty assiduously. >> thank you >> thank you, mr. chair. thank you, everyone. >> chair powell wrapping up his press conference welcome to the "closing bell," everyone i'm wilfred frost along with kayla tausche who is in for sara eisen today and joining us from d.c. stocks at session highs, rallying sharply both on the original release of the statement, but during that press conference, the nasdaq's down 1.7% a big swing during the session it's a by the rumor -- sorry, sell the rumor, by the fact type moment it was hawkish, it was a change of direction doubling the pace of the taper ten members saying three likes next year. five others saying two hikes next year.

>> despite how much of that has been telegraphed beforehand, the market likes what it is seeing and hearing from fed chair powell just now. our panel of experts are standing by to break down those comments from jay powell with the federal reserve wiping transitory from the statement, doubling down on taper and committing to possibly three rate hikes next year and coming up later on in "closing bell," the ceo of eli lilly will join us to talk about his company's boosted outlook for 2022 that stock leading the s&p 500 today, adding to the big gains on the year. plus, the ceo of ebay will be us to discuss today's somewhat soft retail number. >> let's get straight to our panel to discuss all of that fed action former pimco chief economist joins us

morgan stanley global chief economist to discuss what we just heard from the fed chair. i have to come to you first. david, this market reaction, pretty strong. wheres it coming from? >> i think -- there were fears, there were fears out there, wolf, that he was going to be much stronger in the pivot and he just wasn't, he was very balanced, he was very careful, very, i think, calculated. and i think he presented a very good case for why they moved from transitory, why the inflation risks, there might be some risks that it's now more persistent but he also said the risk isn't that high. it's there and it really wasn't there in his eyes maybe two or three months ago but it's there when it's not that high. i think that gave the market kind of a nice little boost. that is sort of what happened two-thirds of the way through the press conference i also just think he just didn't seem flummoxed, he didn't seem out of his element he sort of played all the questions right. i think jay did a great job.

i know paul always loves to sort of look on the good stuff, i'm always trying to find something where he messed it up. he just didn't mess this one up. this was an a-plus >> we're going to get thoughts from paul and seth but first we want to bring in our senior economics correspondent steve liesman. he was on the zoom where it happened and you tried to pin chair powell down on that exact timing of when the first rate hike would happen, how soon it would come after the taper what did you make of how he responded? >> i just want to applaud your hamilton quote right there, kayla. i don't want it to go unnoticed. look, i think that the reason -- one of the reasons the market may have rallied is, in part, because powell told the market he has their back on this taper thing. i asked him why don't you get rid of the taper now if inflation's the problem. and here's what he said. have a listen. >> we've learned that in dealing

with balance sheet issues, it's best to take a careful methodical approach to make adjustments. markets can be sensitive to it, and we thought that this was a doubling of the speed. we're basically two meetings away now from finishing the taper. and we thought that was the appropriate way to go. so we announced it, and that's what will happen >> so, think about what he just said he just said that, hey, we know inflation's a problem, it's hurting families now why don't we do anything stronger now to address with there's some uncertainty about inflation for sure, but also because we don't want to roil markets. i'd probably hit the buy button when the fed chair says that >> steve, thank you very much. and stick around as well paul, i want to bring you in because rates have really reacted much to this, even though as we just heard from chair powell we're only a couple of meetings away from qe being over, from the tapering being

complete what are the chances that yields react quite aggressively just when we've reached the end of that process >> i think the front end of the yield curve could react in a more pronounced fashion. but i think the long end of the curve will remain pretty well contained for the reasons that chair powell articulated i think chair powell's done a really great job of transitioning through this pivot. and i think the market is having a sense of relief today because, effectively, he's making it very methodical, very scripted, and is trying to minimize surprises while stressing that he really needs to do something. >> seth, perhaps the most fiery response that we saw from the fed chair this afternoon was when he was asked about a question about whether the fed essentially missed the warning signs of inflation and didn't push back on the introduction of trillions of dollars in government stimulus this spring. he said we are not the cbo, we

take fiscal policy as it arrives at our doorstep. do you think that was a mistake? do you think the fed should've waited on that, and now they're dealing with the consequences? >> i mean, i think realistically the fed doesn't have any choice there, the fed is a creature of congress there is a very clear sense of a separation of church and state, if you will, in washington, d.c. between the fiscal authority and the monetary authority so i think what we're seeing is chair powell saying we do monetary policy, we take what's given what's happening with fiscal policy. fiscal policy was large, it supported the economy. the economy is strong so they pivoted towards reaction with monetary policy. i think he maybe was feeling a little bit of pressure there from the question just because it was so pointed. but i think that's very consistent >> prerhaps but they said you need to shore up the economy it is the fed's mandate to monitor and keep inflation in check. do you think the fed should have weighed in there

do you think it was incumbent on the if ed to weigh in on essentially the economic conditions that were perhaps about to arise at the time >> so, forecasting is hard, the economy was quite weak, it was not at all clear where things were going and i think the point was a year ago, a year and a half ago trying to be stimulative was the right thing to do. what chair powell has just said is we were stimulative when the economy needed stimulus, now that the economy is strong and inflation's running high, it's time to start to reverse course. >> paul macaulay, he also said, quote, this inflation has nothing to do with the tightness in the labor market so far, end quote. is that accurate >> i think it may be a little bit of a stretch but not a whole lot. and he said that in the context of explaining the new framework where they were going to let the labor market run hot to let inflation get a little bit above 2% and he was stressing that's not

really what we're dealing with here the demands out of the economy is incredibly strong we have the supply side constraints. that's really where the story is on inflation as opposed to a tight labor market, per se though i would certainly argue that a tight labor market is contributing particularly going forward. so i think he was trying to draw a nuanced picture that the world is different than when they adopted the new framework a couple years ago he may have stretched it a little bit but i think the core of his point is accurate, which also means that we can have inflation come down next year even with the tighter labor market because inflation will come down with the abatement of the post-pandemic effects. >> david, he also expressed no qualms with changing course if the data warranted that. we should note that no committee member in september saw a rate hike on the table in 2022.

now all of them do and the average is three rate hikes next year. he said that the situation could be exacerbated by waves of the virus and acknowledged that they don't quite know exactly what the newvariant, the omicron variant will do. so, what is the situation that we're in right now, is this the status quo, and how long do you see it lasting >> i think he just did a good job of highlighting flexibility. and, in fact, what they've done with this pivot kind of gives the market confidence that there is flexibility so, if steve's right and the kind of, the backstopping is what the market went up on or the idea that they could backstop if the virus picks up or other conditions start to weaken on the growth side or the inflation dissipates faster, i think the market's going to take a lot of comfort from that flexibility that they're not boxing themselves in, they're not making statements like remember last time with the balance sheet they used the word autopilot. we don't hear autopilot anymore. these guys are happy to be

highlighting without autopilot, and i think the market's happier that they're not highlighting with autopilot it's a good thing. and i think also the market took a pretty good liking to his statements about long-end yields, that he's not troubled by them, he's not looking at them as a problem, he's not looking at them as a statement of concern, of frothiness. and i think the tech market in particular, the nasdaq and other things that are keying off long-term -- are going to like that a lot >> steve, everyone seems to have liked his performance today. the market certainly did do you think he's got a new lease of confidence since being re-appointed >> i do. but i have to ask a question, wolf, if you don't mind. i know you guys are the anchors and everything but i'm not sure the market is hearing what fed chair powell is saying i see no movement in the two-year i saw the two-year rachet up, and then it came back down i'm looking at the may

probability which i think is kind of a lock now i think he said, hey, as soon as we get done tapering, we're going to start to hike rates i don't think any change at a 56% probability. i'm just not sure the market has internalized the idea that, hey, the fed's moving fast here and it's going to move as fast as it can to try to keep the market at bay. but the door -- what powell could be saying is the door is open, it might be time to use that opportunity to exit here. i'm just a little worried that maybe they're not quite hearing that he said he's well positioned well, what does that mean? i think that means well positioned to finish the taper as quickly as they can by march and then get going on the business of hiking rates as soon as may >> hey, steve, if i could jump in there i think one of the other things that i may have heard is that chair powell said it's about optionality and by the time we get to march, they're going to

have a few more months worth of data i think there's considerable uncertainty about what omicron's going to do. but at least judging from the forecast that morgan stanley has -- >> but, seth, you are -- >> you're brilliant where you are now. you were brilliant at the treasury but what i would say is this i think chair powell and the fed are raising rates no matter what happens to inflation i think that's the flaw in the policy right now is that even if you didn't have high inflation, the fed ought to be taking the combination away i think it's not responding to inflation. i think it's just going by a 2% inflation rate >> they're definitely responding chair powell sort of switched a little bit the ordering to hierarchy. he said that they could start raising rates because of inflation before they get to full employment. he said before the blackout period and just now that stable prices are the path to full employment

i mean, i agree with you that they're on the path to raising rates. i think the question really does come down to the timing and the speed with which they do that. >> gentlemen, we will have to wrap it up there much appreciated steve, paul, david, seth, great to see you all, as always. >> as we keep digesting the market moves, let's go over to bob pisani with a deeper look at the market and what else is moving, and perhaps, bob, this rotation that has continued as the market grapples with what chair powell has just said >> yes, kayla. stocks are up, and we're at the highs of the day because powell is not acting in a manner that is surprising to the markets in fact, he is not actin relentlessly aggressive as they had feared and as the market had been starting to position itself let's take a look at the dow movers a couple things have happened since powell's pivot that was november 30th one is that several tech sectors like semiconductors have lagged. but apple is much stronger so apple's a big mover today

we see names like united health care and merck, healthcare stocks up. we see consumer staple stocks that are doing well like coca-cola, for example we've got bifurcated market. big cap tech up and defensive names that are on the upside that's happening today the same time we've seen cyclicals sort of flat to lagging. so industrial stocks, dow, 3m, industrial space have been kind of on the flat side in the last couple of weeks. that's happening today along with the financial names what's really starting to move again is these tech names, the mid-cap tech stocks. so software stocks like pager duty, for example, z-scale or adobe, they've really been killed as the market have adjusted down was road on fears that powell would be really aggressive today he's come off as less aggressive so these mid-cap tech names are all rallying

there's two conditions you have to have to kill bull markets the fed has to get really aggressive raising rates and that is not the body language the market's seeing and you have to have a weaker economy. kayla, he's referenced the fact that the economy is strong, the conditions are not there for the market to fall apart that's why we're rallying right now. kayla, back to you >> consumer is strong, income is strong, a lot to like about this economy, he said bob, thank you, with the dow now up 290 after the break we break down this market rally, and we neke you inside the "market zo." about those changes to your financial plan. bill, mary? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab.

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"closing bell" today what the fed's plan means for the bond market. we'll talk to the ceo about eli lilly about today's big pop and the company giving that strong outlook, which helped drive those shares higher. ebay's ceo will help us bring the november's sales report. and we will talk about vaccines in the restaurant space. we are now in the "closing bell" "market zone." we have josh brown as well as charles schwab chief investment strategist good afternoon to you both let's kick off with this broader market, stocks at session highs still up nearly 300 points on the dow. josh brown, is this the market saying that rate hikes actually won't matter to market levels as long as it's well telegraphed? >> i think maybe there's some element of that.

i think a lot of people put on some hedges that maybe are going to get unwound maybe there was like a minority view at the margin that there was going to be some sort of a shock or some sort of uber hawkish tone which, i mean, for me that would have been a very easy bet to fade i've been saying since the summer that the taper when it comes will be seen as a relief we deal with over a thousand high net worth households at our wealth management firm, many of whom are small business owners or executives at mid-sized companies. not one person i've spoken to this year feels like we should still be doing emergency stimulus in fact if you look at areas like the housing market, it's been counterproductive sticker shock on homes actually slowing the number of transactions so nobody wants to see more of this it's good that it's coming to an end. i would point out that on a net basis we are still adding liquidity to the system.

we're just doing so more slowly than we were so, to me, that's still outrageous but i understand this has to take place in a progression. big picture, it's a very weird bounce today it's respectable, but it seems to be very defensive you look at staples ripping to all-time highs mcdonald's, pepsi, coke, you look at costco which i would consider to be defensive xlu, which is the utilities making a 52-week high. healthcare making an all-time high also defensive so that's not a bad thing. i'm just pointing it out it doesn't look like people are, like, getting all balulled up o the economy. apple is adding a lot of strength, up another 2%, getting back to that record high that's where we are. it's a good thing it's not a bad thing. but overall i think most of what we're seeing here is not a renewed exuberance i think it's just people saying,

okay, the comet missed earth again, great news. >> liz anne do you share that view that this signals that perhaps some parts of the economy will keep growing but there is some pause being taken with the outlook on inflation specifically and what's around the corner from here >> to some degree, yes but you have to remember, and i remember with josh that that positioning sometimes can skew what happens in the very short term and i think there probably was a lot of defensive positioning coming into that, pre-fed meeting at least on the day utilities were leading and then you saw tech jump in front if you also look at some of the speck areas in the market, heavily shorted, nonprofitable tech, those popped too there is i think some shorter-term money going back into these speck trades. however, these sector shifts that we are seeing and have really been seeing all year have been unbelievably rapid fire

i think that that's likely to be a pattern that will continue and it's not always the same theme of defensive sectors versus growthier sectors it's not really growth versus value. it's not really re-opening versus shutdown. each leadership shift i think has different drivers. sometimes it's an inflation driver sometimes it's a yield driver. sometimes it's a variant driver. and i think that that is likely to persist i think trying to sort of game it ahead of time i think is a bit of a fool's errand i think probably the best strategy in an environment like this is maybe up the pace of rebalancing to take advantage of sometimes the huge gifts of profits that are handed to you in a very short period of time i think that kind of rotation is likely to continue as we head at least into the beginning of next year >> liz ann with, that in mind, as you are doing that rebalancing, overall, do you want your clients to remain pretty much fully invested >> well, we are what we would

call neutral to u.s. equities right now, which effectively means, yes, stay at your normal allocation, and that's gone to vary depending on the risk spectrum we're not making either an outperformer or an overweight caller, an underweight caller in the context of hugging to neutral. i think the rebalancing strategy having it about more portfolio-based versus, say, calendar based gives you a little bit of edge and allows you to stay in gear without having to try to time some of these short-term shifts. so for now, anyway, that's been the strategy we are recommending to our clients >> short-term shifts weeks in the making we'll see what happens from here liz ann, we always appreciate your perspective thank you so much for joining us josh brown's going to stick around meanwhile we have a slough of new numbers from the housing market, some of them pointing to potential new headwinds in the new year diana olick has those details. >> reporter: a bit of a housing

data dump today with the overriding theme of rising mortgage rates we saw a big dropoff in refinance applications, down 6% for the weekend, down 41% from a year ago this as interest rates rise and the national association of home builders chief economist warned that could put a damper on affordability next year. it did not, however, put a damper on home builder confidence, which ended the year on a high tieing with last february home builders are among the best performers this quarter with the itb up just over 20% year-to-date it's up over 43% year-to-date. in about an hour we'll get earnings from one of the nation's largest home builders lennar and we'll be looking for on supply chain and inflation especially back to you guys >> thank you so much for that. we're going to keep rushing through some stories here. november retail sales today coming in weaker than expected sales growing by 0.3% last month compared to estimates of 0.8%.

categories seeing big declines include electronics and appliances down 4.6%, and department stores down 5.4% among the retail names moving low today are macy's, kohl's, and nike josh, omicron seemingly has not hurt retail spending over the last couple weeks. but clearly there was some softer than expected data. does that change your perspective on how strong this economy is and whether it might get hurt in the early part of next year? >> not really. only because a lot of this data month over month is like very noisy. and if we're looking at this on something like a 90-day, you know, average time frame, maybe there's something there. but i really wouldn't try to look at this kind of thing week to week, month to month and perceive a shift in the confidence or the behavior of the consumer i think what will be more interesting is as we get into january and february when the

consumer just seasonally cools off, what that looks like relative to inventories. because it might turn out that this rampant inflation that we're all worried about actually flips, and we see a situation where demand slackens just as supply is starting to come back online and then, of course, we'll be saying the fed is tapering too quickly. so, i think it's too early to say that anything's really changing there the consumer is absolutely strong and probably will be through the holiday. i don't know why we would say anything other than that >> 30-second answer on what diana said earlier is housing overheating is fed chair powell a little too reticent to the risk there >> well, re-fi rates are notoriously sensitive. you could have interest rates go up by 25 basis points and the whole re-fi market shut down

but i wouldn't really go by that i think housing is okay, i think it'll be okay next year. and i think those confidence numbers from the builders actually make sense in the context of demographics. we are underhoused still in this country. >> one minute, ten seconds left to go. we're back at session highs on this fed decision day. quite extraordinary rally that we got over the last two hours since that press conference wrapped up we're at over 2% now on the nasdaq the dow is up 367 points, having been down 154 points at the low of the session the s&p 500 is up 1.7% tech is the best performing sector, up almost 3% healthcare up over 2%. utilities, real estate also performing very well today in fact, ten of the 11 sectors are higher that was not the case for most of the morning oil is high today. so a little bit of a surprise there. energy's not joining the rest of the party in the green the dollar is join 0.2%.

the big reaction from that fed meeting has been in stocks and we are at session highs as the bell rings no one cares about the mls, but. s&p 500 up 1.7% at the close the dow up 1.1%. and the nasdaq up just over 2% ♪ and welcome to "closing bell." that other sound you hear is wolf's phone ringing from all the mls fans watching today. i'm kayla tausche in for sara eisen. eli lilly the biggest winner in the s&p 500 today after announcing very strong guidance. we'll discuss that outlook in an interview with the company's ceo. you will not want to miss that plus, we'll get a read on the consumer, we are joined by the ceo of ebay. all of that coming up.

but we have to talk about what just happened in the markets with the dow losing and then regaining about 100 points just in the last ten minutes of the session. josh brown still with us and mark lehman is the ceo a citizens company also joining the conversation, and earlier today during the fed's news conference chair powell was asked if he thought the fed was behind the curve on getting inflation under control. here's how he responded to that question >> i think that the data that we got toward the end of the fall was a really strong signal that inflation is more persistent and higher and that the risk of it remaining higher for longer has grown. and i think we're reacting to that now and we'll continue to adapt our policy so, i wouldn't look at it that we're behind the curve i would look at it that we're actually in position now to take the steps that we'll need to take, you know, in a thoughtful manner, to address quality

issues, including that of too high inflation >> mark, your read on what the fed chair said this afternoon. is he playing offense or defense right now? >> i think he's playing both i think he has the inclination to act as accordingly and all the nay sayers from weeks past i think are somewhat quieted after today. because i think the answers to those questions show that he has the tools at his disposal and he will act accordingly and i think we're going to learn a lot over the next coming quarters about how fast the consumer is spending and how quick employment continues to rise i think it was a great statement by him and we're very supportive of what he said today, as was the market >> josh, it's been a fabulous year for equities. maybe it'll get even better now into the end of the year with a bit of a christmas rally what are your expectations though for next year are we hopeful of a 5% year or a 20% year >> so we don't do that we have allocations based on

each individual client's personal goals and objectives. we have some sense of what the volatility is versus potential upside and we have to allocate according to what we think will work long term quite frankly, last year was an amazing year given what we went through. to have the follow-through that we had this year seems almost like a gift. if next year is flat or even down, it really wouldn't be the end of the world so, no price targets, no real sense of what might happen next year nobody really knew what would happen this year or the year before this year of course so i think it's more important to just say am i taking the right amount of risk given my own situation, not what does my crystal ball tell me about my interest rates in june >> although, josh, it's interesting to think about some of the forecasts because there is essentially a consensus that growth will be good next year. we've heard everyone in washington essentially that saying that and a lot of

participants in the market as well you have to wonder if the fed starts raising interest rates in may and then we see a significant slowdown in economic growth the following year, i mean, how long would that rate hiking cycle actually last could it be pretty short or do you think they're committed to this path from here >> that's such a great point, kayla. you know, people want to get on the fed for in september not being hawkish enough he keeps saying the same thing that they're going to be data dependent. obviously the data has changed so you can, like, find fault with, like, oh, look at inflation now, it's speeding up, why are you behind the curve let's say they got hawkish this past fall and tried to get ahead of that. we don't know what their reaction in markets would've been the other thing is that inflation is about expectations. and when you look at five-year expectations, forget about next year high school expectations, look at five-year. the market sees 2.6% as being

the five-year expectation, which is back toward trend very close toward trend of what we've experienced over the last five years. so, i think -- it's not that the fed will always be right or will always save the market or whatever i just think, like, this bet that all of a sudden they're going to do the absolute wrong thing or pull hard on the lever and completely destroy economic growth, it's not been a good bet, like, for a very long time. so you can make that bet, and you might get lucky. but i think most investors are trying to be rational right now. they're trying to maintain their allocations. i really don't see the percentage in making this bet that they're going to completely blow the recovery after how far we've come it's really not that long ago that we were talking about depression look how far we've come. why all of a sudden would the fed start doing things that are extremely risky?

it just doesn't make sense to me that people are betting that way. so i think today's reaction makes sense. and i think we have to wait and see what next year brings. >> mark, what did you make of the way in which the nasdaq and the tech sector within the s&p rallied so significantly even though we started to get suggestions that we might get three rate hikes next year >> i'm frankly not surprised i have been expecting some sort of a christmas rally we've had such a violent move on some of the nasdaq names over the last couple months, particularly the winners of 2020, that i expect some sort of christmas rally. maybe this was the excuse the market needed. again, i thought the commentary was just spot on i agree with josh that this is definitely the kind of tone that needed to be said. and i think that's a terrific backdrop for the equity market through the rest of the year and i think investors are going to piece through this. we too are bottoms-up investors, and you've got some extraordinary opportunities to

buy stocks that are down 40, 50% from its, albeit, lofty levels they will be winners as the economy continues to expand. and i think you've got to be present in the market and pay amention facebook traded in at a 20-point range today. and we can go across any name obviously with this huge rally but over the course of the last few weeks you've gotten ample opportunities, if you wanted to buy some of the better names over the course of the last year that are down 30 or 40%. you just got to be ready to do that because this market, the vix went from 15 to 30 and crawled back to 20 that's a hell of a move in two or three weeks and you got to be ready to do that >> so when the fed is taking all of this liquidity out of the system, do you think that this is just a warning to investors you've got to buckle up, the vix is going to go up, volatility is going to take off again? >> i think volatility's going to continue because we've had such astounding moves we've had rotations.

we haven't even talked about the meme stocks or spacs we had a huge correction in some of those names over the course of the last three to four months and i do think that's the case the curious thing for me despite all this talk about rates going up is what did the 10-year do today. it's tucked in right around 150 and has been basically for the last few months. and then the correction when the market kind of came down and the nasdaq took kind of the 135, 140, it's just tucked in here at 150, which i think is astounding an example of why i don't think there's going to be ramping inflation coming up. >> we want you to zone in on your best trade idea josh, let's start with you what are you going for >> i wanted to spotlight the xhb. this thing has been a horse of a year we've talked about the housing market a second ago. this is like one of the most pristine trends in the entirety of the s&p as like an industry group. so the xhp is not only home

builders but companies that sell things for renovation, and it looks fantastic. i had this chart made up take a look at 200-day moving average. look at that flawless bounce off of that level, textbook. the buyers came in right where in evidence to it strikes me that so long as this trend can hold and remain in that nice channel headed higher, you can be long these names individually there are a lot of names that people don't think about very often. for example, builder source is the biggest holding there which is not itself a home builder but supplies home builders and there's a lot of great stocks in that group >> well, with existing homes on the market, supply is still so stretched. people are in the market, they need perhaps new homes i'm long on your holiday foliage. i have to say that gold leafery, what would you call, flanking you? >> listen, i came to play this winter remember that. [ laughter ]

>> mark, your best idea? we'll leave it there after that. >> i'm going to stick with the housing theme that just started. we like doma and all the move to the online versus the paper products we've used forever it. >> despacced this summer it's down a great deal but that trend is going to continue and gain great market share. i think they're going to be a winner over the next two years it's not a matter of if but when this happens >> thanks to both of you wolf >> kayla, i also want to comment on your backdrop because not only have you got the "closing bell" logo, but you also are showing us it's not politics today, it's markets because you have one single stock chart behind you >> and a picture of the federal reserve, too we've got it all covered today >> look at that. all backdrops are looking good today. we are just getting started

here on the second hour of "closing bell. up next chief investment officer on plus, a new study finds eli lilly's monoclonal antibodies loses some of its effectiveness against omicron. we're back here on "closing be" jt colellinusa up come on! question, is that an “s” or a “5”? think it's a 5... i thought so. argh! frustration...loading. [sfx: laser sounds] nobody wants more robot tests. but we could all use more ways to save. chai latte, for “rob ott.” for “rob ott.” error human. [sfx: laser sounds] switch to geico for more ways to save. [uplifting music playing]

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or unusual bruising. don't take xarelto® if you have an artificial heart valve or abnormal bleeding. tell your doctor about all planned medical or dental procedures and any kidney or liver problems. help protect yourself from another dvt or pe. ask your doctor about xarelto®. to learn more about cost, visit xarelto.com or call 1-888-xarelto treasury yields jumping before closing off their highs following fed chair jay powell's news conference last hour. the central bank saying it will accelerate the reduction of its monthly bond purchases and cease up to three rate hikes next year for what all of this means for the fixed income market, let's bring in deputy chief investment officer at doubleline capital. jeff, it's good to see you i'm not sure if you were listening to the prior conversation but we talked a lot about housing and the impact that some of these rates and moves could have on the housing market and could also have on

inflation. i'd love to get your response to that as we jump off here >> well, i think the first thing about the housing market and something that a lot of economists have been talking about is the lack of the housing market showing up in cpi data thus far and that's the shelter component of cpi is running in, like, mid-3% range today and if you talk about housing, we've seen all the indices come out, 19 to 20% type of gains year over year we know it's a slower-moving series when you look inside of the inflation data or the shelter data that drives inflation. what that mean that's some of these transitory effects we've been talking about in the supply chains, hotel prices, airline prices, things that have caused these temporary spikes when they recede, you're also going to get this kick from the other side from the shelter component. so, i know a lot of people have been talking about goods, they see more in-service pending. we don't think that the inflation data goes away or the

inflation goes back to this 2 to low 2% range that a lot of people are talking about although the fed is talking about their hiking forecast, they haven't really changed their inflation outlook for 2022 we think inflation's going to run a little bit hotter than those numbers. in fact, we're starting to think that potentially we're going to see a four-handle inflation for the bulk of 2022 >> jeff, first of all, you said transitory so you've got to put a dollar in the swear jar, as atlanta fed president raphael bostic would say. but, in all seriousness, now we are on watch for three rate hikes next year. the fed is calling for inflation in the fives this year in the mid-twos next year but what happens if inflation is lower on the opposite end of the argument that you're making? and what happens if growth starts to slow down in 2023? is it three and done >> okay. so, i'll take the latter first

if you get a slower growth environment and also a slower inflation market, i think the bond market is close to fairly price. when i say bonds i'm talking about treasuries here. the treasury market looks grossly overvalued yields are way too low for the type of growth we've seen as well as the inflationary environment that we are in the middle of contemporaneously. we also think that potentially next month when you get the next inflation print, it'll end up being 7% because you have a number rolling off in the december of 2020 that rolls off. it was about a 24-basis-point increase in inflation. so that rolls off. so if you get something in the 40 or 50%, i'm sorry, 40 or 50 basis points, half a percent of inflation next month, that means we'll end the month with a 7% rate thinking about the way that the growth could disappoint, obviously it's omicron, obviously it's the fed hiking. however, if you go to the price of the bond market, you look at what the interest rate probabilities look like, the

market has and has since jay powell turned his tune on inflation, stopped using the t-word, started using the swear jar, the bond market priced in somewhere between two to three hikes next year. the market is on top of this, it sees that the fed is on the hiking path. it's thus far digested a taper but i think the elephant in the room is how the markets really respond to the taper and this dependency we've had on fed buying the good new that's treasury supply should be diminishing somewhat commensurate with the bond purchases from the fed. we'll see what congress delivers on the fiscal front, and if that continues throughout the rest of the year but the supply/demand balance is pretty close, at least as is expected for the first quarter of next year what i heard from jay powell today is that he's saying that they're going to be flexible he himself is concerned about inflation. he got concerned over the weekend that after that eci

print, the employee clause index and what he's decided is that they can take their foot off the gas a little bit but they want to get to the hiking regime. i think he's done a decent job of prepping the bond market. it's way better than where he was three years ago when he had that disastrous press conference he doesn't want anyone to think that there's some formula or model they're following. he's talking about trying to do things in realtime, be contemporaneous and react to the out there. i thought was very interesting that he said eci concerned him, and i know one of the reporters called him out on that but he's not seeing wages drive inflation. and i agree with that thus far but there is the potential for that spiral to take hold >> do you think we get the first hike as early as march, jeff, and how many in total next year, if you're put on the spot, to call it now? >> well, you just put me on the spot, wilfred. i think we're going to settle between 2 and 3. that's what happens when i come to talk to you i expect that. i don't think it's as early as

march, though. i think they continue on this path with taper. they get out of the bond buying by march i think it's june. i think they still want to be measured at the pace that they're going to move the hikes up we all know the terminal rate is lower than forecasted from post gfc, where the fed ultimately ends up. when you start to pull all this together it's not that they can put their foot on their accelerator and do five or six hikes next year because they will end up damaging the overall economy real quickly as people start to extrapolate that. so i think what they've done is set expectations for a lower terminal rate. i think we're on a quarterly hiking regime what we saw under the realm of janet yellen. and i think it's going to be well telegraphed and well measured powell has done a good job of talking about forward guidance i don't think he wants to spook the market i also want to see how the market responds by reducing an incremental 30 billion a month i think you're going to see some

volatility in the first quarter when it comes to rates as omicron goes behind us and hopefully shortly, i think it's the catalyst to set the next direction in rates >> jeff sherman, thanks for joining us great to see you >> thanks, wilfred eli lilly, the best performing stock in the s&p 500 today after issuing very strong revenue guidance up next, the drugmaker's ceo on what will drive sales growth in an exclusive interview plus, retail sales cooling off last month coming up, the ceo of ebay on whether spending will slow down maintain. we're back in a couple minutes

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shares of eli lilly jumping today by more than 10% the biggest winner in the s&p 500 after the drugmaker raised revenue guidance for this year and released its initial 2022 outlook. management also discussed lily's pipeline and its investor presentation which was held today at the new york stock exchange ceo david ricks joining us now in an exclusive interview.

great to have you with us here at the stock exchange, albeit distant because of omicron first and foremost, congrats on a great day and an update. what in particular do you think analysts welcomed in terms of were you able to surprise. >> thank you, wilfred. it was a positive day here we were primarily giving an r&d update today we updated our '21 and '22 guidance, which actually has flat revenue because we have much lower expectations for our covid antibody sales next year, and we have a patent on another drug i think the strength of the company's underlying growth based on our newer medicines and then we updated on really the pipeline at lilly which is stronger than ever before. in our industry that's the key to continuous growth is we have to keep reinventing our company over and over again because we do patents it's an exciting time at lilly

and we shared that with the street today >> let's touch on your alzheimer's treatment. when can you expect significant revenues from that >> well, we have a rolling submission in at the fda, and we're replicating the first-ever positive study in alzheimer's. and that's the gold standard we need to replicate that finding in a very large study. this one's more than five times the size of the prior one. we are under review for what's called an accelerated approval, which is a contingent approval based on preliminary data. we hope that gain that by the end of the year. and then our final data will be available shortly after in the spring of '23. so really what i think for investors and families and caregivers who are focused on alzheimer's treatments and this kind of breakthrough, looking toward that ultimate data in '23 is key between an accelerate ad approval and that date, i think we expect modest revenues for a variety of reasons but then if the study's positive, i think that really should change the standard of care in alzheimer's. >> looking broadly at the drugs

that lilly expects to be underpinning this better-than-expected revenue growth next year, these are drugs that treat diabetes, cancers, arthritis, migraines. i'm wondering if you attribute the uptick in potential revenue to just simply the pipeline timing or to potentially delays in diagnosing some of these issues because of the pandemic or if it's simply a matter of pricing and the ability to keep pricing high with limited competition. >> i mean, it's really based on volume growth on a global basis. we have several new medicines, really 16 we've launched in the last seven years we expect to launch five new ones we highlighted today. we talked about alzheimer's already. but a key one in lymphomas is under review now another one in diabetes, and later in obesity and then some autoimmune drugs really adding to that really fresh lineup from lilly of new medicines that are changing the way we can care for these

serious conditions and the global rollout of those is kicking in a significant way this year and next it's interesting you mentioned covid. we still do face some headwinds in some of these therapy areas where patients through time are reluctant to go see their doctor for updates in their therapy or for tests that often trigger new drug initiation. i think that's kind of secular across the industry right now. and we have that as well that may be a tailwind if omicron becomes the last wave we face i wouldn't hesitate to guess that or i would hesitate to guess that right now it's really the breadth of our volume reaching patients with new medicines that are changing these diseases >> on the question of drug pricing, that is a huge debate here in washington where i sit and looking at some of the prices of your drugs, lilly's branded insulin drug costs $275 per vial lawmakers here are trying to cap the out of pocket cost of insulin per month at $35

democrats want that to be for a bucket of insured people republicans are trying to press for it to apply for folks on medicaid and medicare. if a policy like that were to go through, what type of effect would it have on your bottom line >> really none because our policy already is to cap insulin price at $35 you mentioned the list price i'm sure you know that price which is really the price by which products move through the distribution system is quite different from our net pricing for insulin is about $50 for the company. we automatically cap all out-of-pocket costs for commercial patients, people with employer insurance at $35 right now. so that's universal for lilly insulin. we piloted with the last government program in medicare part d, the senior program, to do exactly the same thing. about half the seniors who use insulin in are that. so we welcome that policy if they want to put it in, that's great, but it doesn't really

move our needle too much for insulin. i think this case study highlights, you know, kind of the misses in the rhetoric here at fixing the real underlying problems of affordability of medication which we see first and foremost as an insurance problem. what is the coverage and there's too many americans with really poor drug coverage, too much out-of-pocket costs versus other health services and then transparency, really showing what is the manufacturer making, what are the other actors taking as a percent of that to get the drug from the manufacturer of the patient. insulin is about $50 a vial for us that's quite a bit different from the list price. but i think that helps explain sort of what's happening behind the scenes we're for both of those. better coverage, better transparency >> dave, some reports following medicine german data, german study suggests your covid treatment isn't that effective against omicron. do you agree with that >> so, let me unpack that a

little bit we have two monoclonal antibodies that are approved in europe and u.s. and other jurisdictions for use against covid. they're both quite active -- or the combination's quite active against delta. that's primarily what we're seeing in the u.s. of course, europe is flipping to omicron. because we knew this virus was going to mutate and also the desire to create more potent antibodies where you need to use less of this kind of hard-to-make, expensive medicine, and you can make it more affordable and more widespread we developed a third one, 1404 is the number we use for it. and actually today we announced to the investment community that we have data in hand that its effect will not be limited by omicron, that it neutralizes both delta and omicron we had the foresight to begin that development last january and we have clinical data. we're in the process of talking to regulators in places like germany and the u.s. to see how we can make that available pretty quickly under emergency

use authorization. and here for lilly this has been a point of really pride in our scientists who developed these things so rapidly. we've distributed over a million doses globally and probably saved tens of thousands of lives. here we are with a new solution to this new-emerging variant and hopefully we can get it approved and in the hands of doctors quickly. >> given the extraordinary work that scientists and pharma companies have done in the last couple years to develop vaccines as well that have really changed the course of this pandemic, would you have liked to have see seen a bigger positive shift in public opinion and politicians' opinion towards pharma companies in general >> you know, we have seen a pretty big shift on a global basis. the starting point for that discussion was pretty low. if we look at the u.s., it is a little bit distinct because it stands out uniquely back to the prior point kayla was raising in that patients themselves are asked to pay such a high burden

of the cost of this part of healthcare whereas they're not asked to pay as much for hospitalization or doctors. that is unique to the united states no other country does business that way and actually our reputation internationally has risen because of the great work of our scientists and the rapid response of the industry, which now if you think about it, wolf, we have all the technology we need to arrest this virus, including omicron. i just told you about our antibody, the pfizer oral, we'll probably work against that we know the third dose of these vaccines is highly effective what we need is to deliver those technologies but the industry's done our part we feel good about that. we hope to get more credit in washington that's always a battle but we try to make that case in explaining to policymakers how that industry works and what we can do to lower cost for patients but also let innovation keep flowing we'll need it for other conditions, alzheimer's, cancer, et cetera. eli lilly's ceo there. lennar earnings are out.

and diana olick has those for us >> it was a bit of a mixed bag for lennar eps came in at $3.91 a share versus estimates of $4.15 a share. so that's a miss but revenue was a beat came in at $8.4 billion versus estimates of 8.279 billion revenue was up 24% year over year new orders up just 2% year over year but this was referred to as controlled new orders. we know that the builders like lennar as well as dh horton mentioned last week that they're controlling their new sales because they're concerned about supply chain issues and labor shortages and not being able to deliver the homes fast enough. so, again, this is a controlled new order. so, he also noted though that there are continued supply chain challenges, but also very strong demand outweighing supply. the one thing i'm looking at here is average price. $448,000 in q4 that's up from 393,000 a year ago. and guidance for q1 of next year

average home price 460,000 so prices continuing to rise very strongly. no mention in this report of course of rising mortgage rates, which could cut into that pricing. also on misses on guidance were of new orders and guidance on deliveries both lower than expected again, wolf, some mixed bag on lennar earnings. back to you. >> and the stock down more than 2% in after hours. still ahead on "closing bell," famed restauranteur danny meyer on how rising food prices are impacting his business and consumer spending. plus, shares of rivian soaring nearly 50% since going public last month. coming up, the key number to watch tomorrow when the company reports its first quarterly results since that ipo we'll be right back.

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tornados' aftermath some of the worst damage he's ever seen. and vowing federal aid will continue to flow into damaged cities and towns >> the government's going to cover 100% of the cost for the first 30 days for all the emergency work from clearing everything, every single cost, the federal government's going to take care of>> 90 people confirmed dead from last friday's storms, 80 of them in kentucky alone it's deadline day for the united states army personnel to be fully vaccinated against covid defense officials telling nbc news, active duty army is about 9 97% vaccinated so far only three medical exemptions granted final numbers expected tomorrow. and jurors in the kim potter trial, hearing from experts on whether the former police officer was justified when she shot and killed daunte wright during a traffic stop. potter said she meant to fire

her taser but used her gun by mistake. a law professor testifying today that no reasonable officer could've believed that shooting right was necessary and that even the use of her taser violated department policy tonight, tornado threats in minnesota, snow, wind, and fire danger in colorado millions of americans under severe weather warnings. full coverage on "the news" right after jim cramer 7:00 eastern cnbc kayla tausche, back to you >> all right, shep, we will see you there at 7:00. on "closing bell," up next here, ebay's ceo on how consumer spending is shaping up as the holiday season winds down. and, later, famed restauranteur danny meyer on whether consumers are dining out less amid covid coer a hher odncnsndigfo prices.

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>> you know, it's been a little bit different pattern this holiday year because of scarcity, people have been turning to ebay for areas like luxury think handbags, things that we're now authenticating we're actually seeing people buy refurbished products thus far, there's a lot of items on the site. they all say arrive by christmas. so people are still shopping >> have you felt like you've been better protected from the recent supply chain issues over the last few months because you're a marketplace or are those easing now as we get through to the end of the year >> while we've seen some impact to our cross-border trade business, when things are hard to find, people turn to ebay and our millions of sellers give us a great network to be able to get products to buyers so they're able to come onto ebay, find these unique hard-to-find items and then shop from our millions of sellers to

get those items. whether it's a dior tote bag or a berken bag, people are coming on having a great experience, and really getting the products that they want >> jamie, consumers aren't coming to ebay for groceries and for things that they need immediately. i think that's no surprise but i'm wondering how inflation is impacting the company because for the last couple of years, as consumers were not spending on travel and services, they were spending on goods instead. but now that the price of some of these necessities are going up, i'm wondering if you're seeing consumers pulling back. >> we're seeing a strength in areas like our ebay refurbish program because there they can get a like-new product for 40 to 50% off. and now on ebay we have a two-year money-back guarantee, 30-day hassle-free returns, a warranty with the program. so, yes, we do see people finding great values on the site because of where prices is that's one of the great things

about ebay is you can buy new products, but we've really leaned into pre-owned and nonnew in season and programs like ebay refurbish. we were talking about those things >> in terms of some of the recent strategy changes you've enacted, i know you've been focusing on the sort of top 20% of sellers who in fact generate the top 75% of gmv and i can understand why you would given those statistics but, at the same time, has that had an effect of driving some smaller sellers to other rival platforms like etsy? >> no. one of the beauties of ebay is a brand-new seller could sell alongside a larger seller. you can get up on the platform really easily and start selling. in fact, we recently put out a report that 84% of people started selling on ebay because they needed extra income during the pandemic and another 14% did so because they lost their job. and, you know, ebay's had a big

impact on individuals during this pandemic, and especially women who 80% of them turned to ebay during some financial or other hardship so, no, it's been a great opportunity for people to bring products that they have onto the platform, get started, and, in fact, most of our small businesses started as what i call an accidental entrepreneur. they sold a couple things because they needed some help financially or wanted to get rid of items in the house, and then they turned that into a small business on the platform >> and you can search for local pick-up too and help your community. so, there is certainly a lot going on in the platform and, jamie, we appreciate you coming on to talk about your business jamie iannone from ebay, thank you. up next, danny meyer joins us with his take on how inflation has impacted his businesses and what could be at stake with omicron cases on the rise we'll be right back. huh. is that true? geico's been saving folks money for 85 years? yeah, that's right.

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y of yale ceo summit this morning i would like to hear your firsthand perspective on trying to enforce some of these regulations in a marketplace where they keep changing how hard is it to communicate this to your customers and staff when every day it seems like we're getting different guidance >> first of all, thanks all, thc for having me. it's not that challenging. we were one of the first out to require both our staff members and our guests to be vaccinated. we announced that back at the end of august. it became city law afterwards. people in new york city, and i am not speaking for the entire country, but our full service restaurant industry get it 50% of people are wearing masks anyway well over 80% of the population is vaccinated anyway we have seen no pushback in fact, the only time i have heard from anybody is if, on a

very busy night, if somebody did not get asked to show their proof of vaccination, they will let me know about it because we want to keep our staff as accurate as possible >> when you first enacted the vaccine mandate for your restaurants, children were not eligible for vaccines. if a child comes over 5 who is not vaccinated, what happens >> we will do what we did with an adult sadly we won't be able to seat them indoors if we have seating joutdoors, we will be able to do that. and we have heaters for our outdoor dining as well >> i wanted to talk to you about the target is it taking on the beast of chipotle >> that's like asking if you

throw a pillow in the ocean, is it like taking on the rock of gibraltar. >> it is the kind of business we love to continue vest in it's run by someone we would have loved to hire ourselves and call our own, about hospitality towards their guests and staff and communities. we wish we had come up with on our own. it's a fascinating business. it's between fine cash, and full service. it's quick, easy and full scale. >> what about broader scale. you made quite a big splash in d.c. when you announced you were going to open restaurants here any new plans to open new restaurants in d.c. or elsewhere around the country >> we have no plans for full service restaurants around the

country. shake shack is continuing to grow especially with the drive-through models we have invested in a couple of brands of ice cream, which we love, based in portland, oregon. they just launched in florida and doing fantastic there as well >> what provides the most inflation pressure to you in your business. on the labor side or material side of things >> i would say right now it's mostly on the cost of gods i think any business, including the restaurant business where people have not had a choice but to go to work in person. so anything that involves trucking and delivery. obviously, when you go to a restaurant, you can't serve a table remotely or wash the tables remotely. where there wasn't a choice, the price has gone up.

restaurants find themselves at an intersection where all of these pressures are coming to bear to this day there is so much pent up demand for people to be together in raeft rants that people are willing to show up and pay what restaurants have to charge to be sustainable >> that's if you can find the line cook and server a few years ago you made the decision to raise prices on the menu to take tips out of the equation how about now that you have to handle that. >> when we did that it attracted more people to work for us more than 95% of our company lost their jobs when we went to zero revenue in march of 2020.

people who had a larger hourly rate did better when it came to unemployment insurance that said, now our dining room members do accept tips so our menu prices don't have to include the tip included model which we had done six years ago. we wanted to compensate the kitchen members fairly because in new york state tips cannot be shared between waiters and cooks which we think is unfair what we did was we instituted a revenue share so that on any night a portion of our revenue gets shared with our cooks and dishwashers. that's been a positive help. we have hired since this morning 1600 people. when people say no one is out working, i don't buy that.

is it tougher to find great people absolutely if you want them, you can find people with a heart for hospitality as well as skills to thrive, the people are still there. >> thank you for joining us. up next ev maker is gearing at for its earnings. wehe

the wall street look ahead tomorrow we will hear from adobe, fedex and rivian. phil lee phil lebeau with what to expect. >> the real focus is what ceo is going to say during the conference call after the numbers come out they will be focused on deliveries and orders, where are they

is the r1s on schedule and then there is the amazon electric delivery van rollout. those will be the topics guys >> thanks for that fedex is another big name on deck after the bell. the company's president and ceo will join us straight after the numbers come out on closing bell we are out of time th thanks for joining us. >> thanks for having me. live from the nasdaq market overlooking times square, this is "fast money." i'm melissa lee. our lineup -- and the fed saying too little, too late and biotech analyst has three stocks on his radar that could be taken out and pete's bes