get to >> well, just talking about demand for a second, as i mentioned in my remarks, i think you pretty clearly have a slowing now in demand in the second quarter consumer spending, business fix investment, housing, places like that i think, you know, people widely looked at the first quarter numbers and thought they didn't make sense and might have been misleading in terms of the overall direction of the economy. not true of the second quarter but at the same time you have this labor market so there are plenty of experiences where gdp has been reported as weak and the labor market is strong and the economy has gone right through that and been fine so that's happened many times and it used to happen, if you remember, in the first quarter of every year for several years in a row gdp was negative and the labor market was moving along just find and turned out to be measurement error. it was called residual fees. we don't know the situation.

we think that demand is moderated. we're not sure there is a great deal of money the market is very hot there are many, many job openings you think if the economy should be doing well in the second half of the year. you do see a marked slowing that is fairly broad. we'll be watching that we want to see demand for a sustained period to create slack and give inflation a chance to come down. >> nicole? >> hi, chairman. nicole, cnn business when does the committee expect to see a meaningful slowdown in the labor market and how much

weakness with regard to slower job growth and hiring employment before it pauses or thinks about cutting rates. >> i think you've seen in the labor market what you've seen as a decline from very high levels of job creation last year and earlier. job creation quite robust. you're seeing some increase -- i would say -- also, anecdotally

you hear the sort of level of concern on the part of businesses they simply can't find workers is probably down a little bit from what it was, for example, late in the latter parts of last year there's a feeling the labor market is moving back into balance. if you look at job openings or quits you see them moving sideways or perhaps down it's only the beginning of an adjustment i think, also, once you start citing these things you can't stop if you look at the household survey, you see much lower job creation and also the survey can be quite volatile but has no jobs created in the last three months that might be a signal it is slower than we're seeing in the establishment survey executive survey there's some evidence that labor demand may be slowing a bit

labor supply not so much we have been disappointed that labor force participation hasn't moved up since january that may be related to yet another big wave of covid and there's evidence that's the case nonetheless, i would say some progress on demand and supply getting back [ inaudible ] so we're going to be looking at inflation as well. as i mentioned we need to see inflation coming down. we need to be confident that inflation is going to get back down to mandate consistent levels that's not something we can avoid doing. that really needs to happen. we do think the labor market can adjust because of the huge overhang of job openings of excess demand really there should be an adjustment

that would have lower than expected in the ordinary course of events. the rashopen of vacancies to unemployed is just out of keeping with historical experience and that suggests this time could be different >> thanks, mr. chairman. >> how close are we to a recession and how to forecast from economists, how does that make a soft landing you've talked about more difficult? >> as i mentioned, it doesn't seem the u.s. economy is in recession right now. you do see weakening, some slowdown, let's put it that way, in growth. you see it across some of the categories i mentioned

in all probability demand is still strong and on track to grow this year the slowdown is notable and we're going to be watching that carefully. [ inaudible question ] >> what we're able for that has to be our goal that is our goal we'll keep trying to achieve it. i do think events at the beginning we said it was not going to be easy, it is quite challenging to do that it's unusual, an unusual event, not a typical event given where we are if there is a path to it, and we think there is, it is the one i

mentioned that the labor market actually has such a large amount of surplus demand that you could see the demand coming down in a way that didn't translate into a big increase in unemployment as you would expect in the ordinary course because, frankly, the imbalance is so much greater but we don't know that this is a case of first impression so anyone who was really sure it's impossible or sure that it will happen is probably underestimating the level of uncertainty. i would say it's an uncertain thing. it's our goal to achieve it, and we'll keep trying to do that >> thank you, mr. chairman i wanted to ask about the balance sheet reduction program. it's been working for a couple months now and in a different environment than the last time the fed did it what are you learning about how it's working and how markets are

reacting and is reaching the minimum level of reserves needed in the system still several years away at the current pace? >> so we think it's working fine as you know we tapered up into it and in september will go to full strength. the markets seem to have accepted it. by all assessments the market should be able to absorb this and we expect that will be the case i would say the plan is broadly on track it's a little bit slow to get going because some of the trades don't settle for a bit of time but it will be picking up steam. so i guess the second question was -- the process of getting back down to the new equilibrium will take a while. it's hard to be precise but the model will suggest between two, two and a half years this is a much faster pace than the last time.

the balance sheet is much bigger than it was. we looked at this carefully and thought this was the sensible pace and we have no reason to think it's not >> chairman powell, brian chung, yahoo finance. looking at financial conditions, it seems like the tightening has slowed as of late with the ten year coming down, 30-year fixed mortgage rate going a bit sideways when we talk about a hot housing market still wondering if you find conditions tight enough as you raise rates. >> break even is coming down, which is a good thing. it's a good thing that markets do seem to have confidence in the committee's commitment to getting inflation back down to 2% so we would like to see market base readings of inflation expectations come down conditions have tightened a good

bit. we set our policy and financial conditions react and that's what affects the economy. we're just going to do what we think needs to be done we're going to get our policy rate to a level we are confidence will be moving back down to 2% we'll be watching to see they are appropriately tight and they're having the effect that we would hope they're having which is to see demand moderate and inflationary pressures recede and inflation come down >> thank you, chair powell i wonder if you can go back in time to a little bit before there was this outbreak of inflation when the committee put in place forward guidance on tapering asset purchases in december of 2020

saying maybe that was too tight, that kind of condition and it put you a little bit behind. maybe we were late to react to that inflation talk about that decision and have you looked at it in hindsight at all thank you. >> we said that we wouldn't lift off until we had achieved our mandate goals. the reason was the first look at the new framework we had rolled out plenty of people were saying it's not credible. you'll not get inflation to 2% some of our critics say inflation is too high are the same ones who said you'll never get to 2%. that's what happened we thought we needed to really make a strong statement with that it wasn't part of the framework. the guidance that we put in place.

so i would say two things. one, i don't think that has materially changed the situation. i have to admit i don't think i would do that again. ultimately the situation evolved in a highly unexpected way for all of us. maybe the learning is leave a little bit more flexibility than that but did it matter in the end i really don't think it did. does anybody think that would have made a difference if we had raised rates three months earlier? it didn't matter this is a global phenomenon happening now. different in the united states anyway >> a lot of people talk about that time and they talk about a taper tantrum. you talked you were worried at

the time about repeating that taper tantrum you had experienced as a governor. was that part of it? where did that fit thank you. >> i think we learned there have been multiple taper tantrums famous one in 2013 what happened at the december 18 meeting where markets can ignore developments around a balance sheet for years on end and then suddenly react very sharply. we move predictably and doing it in steps we did it that way this time we were careful to take steps. they can be destructive and tighten financial conditions and knock the economy off kilter in '13 and '18 had consequences to the economy

we were trying to avoid that it was part of it. the real issue of 2020 and '21 was trying to understand what was happening with the reopening economy. that was where the big uncertainty was and our view was that the supply side issues would get better labor force participation would come back. schools would open kids would be in school and labor force participation would jump back up that's what we were very broadly thought to be the case they still haven't that's the learning around how complicated the supply side issues can be. we haven't seen this before in a long, long time. that's what accounts for the pace we moved in when inflation changed direction in october, we pofd quickly

since then, people would agree it was coming down month by month. we thought we had the story right. but i think in october you started to see a range of data that said, no, this is a much stronger economy and much higher inflation than we've been thinking we pivoted and here we are >> nancy marshall with marketplace. chair powell, i want to pin you down a little bit more on the issue of recession if we get a negative gdp number tomorrow for the second quarter, would the fed consider the u.s. in a recession and just remind us what is your definition for the start of a recession? >> the fed doesn't make a decision on that we use our tools to achieve price stability and maximum employment we don't say there is now a recession. that wouldn't be something we do we would look at the data

tomorrow we will draw whatever implications we can. i mentioned if you think about what inflation -- what a recession really is, it's a broad based decline across industries that sustain for more than a couple of months. it doesn't seem like that now. what we have now doesn't seem like that. the real reason is the labor market is just sending such a strong signal of economic strength that it makes you question the gdp data. we won't reach a conclusion on that >> thank you very much, simon with the economist you said some softening in the labor market is needed within the fed there are staff economists who argued that the noninflationary rate of unemployment might be as high as 5% to 6%

what is your opinion of niru and did that come up in discussion with the committee >> i think broadly a lot of econ economists think the national rate of unemployment will have moved up to some significant extent above where we think it was before the reason is the usual matching issue or matching has become less effective and that kind of thing and the big switches in demand from services to goods and all of that. it could be higher the natural rate is higher we can never know where the star variables are in real time with any confidence but i would say it must have moved up materially second to that as all these jobs get created and people go back

to work and unemployment is so low, i think you could see it coming back down pretty significantly and that would take pressure off inflation. that gap in unemployment and the natural rate that really is relevant for the negative slack in the economy you wouldn't observe this. it's an unobservable but you could be seeing inflationary pressures come down. we don't control that but if the labor market is a natural rate to move up, you should see it move back down >> thank you, chair paul from cnbc.com, just a question,

hate to beat the drum about recession but what we're seeing from the public, people believe we're already in a recession or heading for one. economists pretty much the same thing. they're told by folks like you and the administration that we're not in a recession we're not heading for a recession. frankly saying we're not heading to a recession what would you tell the public to reassure them you feel confident and the fed is ready to respond to a potential downturn in the economy? >> what i said i don't think it's likely the u.s. economy is in recession now and i've explained why that is the case i think the public will see that as well. we've seen a slowing in spending, as i mentioned we've seen the beginnings of,

perhaps, a slight lessening in the tightness of the labor market it would only be the beginnings. and i mentioned that i also said that our goal is to bring inflation down and have a so-called soft landing by which i mean a landing that doesn't require a significant increase, a really significant increase in unemployment we're trying to achieve that i have said we understand that will be quite challenging and has gotten more challenging over recent months. >> thanks, chair powell. kyle campbell. the fomc has historically tried to avoid the kind of rapid monetary policy that has happened this year how concerned are you that the rate hikes that we've seen thus far might increase risk be to financial stability, not just

domestically -- >> there are precedents for the fomc moving very quickly, for example, 1994 and 1980 even more so we've been known to do that and i would say that begin how quickly we've moved i am gratified that while basically there's volatility but -- for financial stability,asset values are down, which in some sense lowers vulnerability it's when they're really high that you would worry they're vulnerable to a fall actually. many asset values have come down i think you capitalize banking systems, you have households are generally in about as strong financial shape as they've been. in a very long time if ever given the money on people's

balance sheets you have a pretty, from a financial stability standpoint, you have a pretty decent picture. now macroeconomics, there are plenty of macroeconomics that don't rise to financial stability concerns financial stability, we think of that as things that might undermine the working of the financial system so big serious things not to say people aren't suffering. they are they're suffering from high inflation. they're going to the grocery store and finding that in many cases we're seeing -- it's why we're really committed to brings down inflation >> thank you

mark with bank rate. remember when you held your first conference, a very plain spoken chairman, and we're thinking today about the impact of fed policy on individuals as well what would you say to individuals who may yet lose their jobs in this tightening cycle in the fight against inflation, try to translate what fed policy means to them in this complicated landscape. thank you. >> i guess the first thing i would say to every household is that we know that inflation is too high we understand how painful it is particularly for people who are living paycheck to paycheck and spend most of that paycheck on necessities such as food and gas and heating their homes and clothing and things like that. we understand those people suffer the most, middle class and better off people have some resources where they can absorb these things

many people don't. it is our job, our institutional role we are assigned uniquely and unconditionally the obligat obln of price stability and we will use our tools to do that there will be softening in labor market conditions. we need growth to slow to allow potential growth we don't want -- if you think of the medium and longer term price stability makes the whole economy work, can give us a strong labor market and wages people making relatively low wages, they're the ones suffering the most from inflation. it's all the more reason why we need to move on this thank you very much.

>> fed chair jay powell wrapping up his news conference after hiking interest rates three-quarters of a percentage point. 75 basis points. we are at the highs of the day on stocks. dow up almost 500 points the s&p 500 surging about 2.5% the nasdaq higher by more than 4% right now why? fed chair powell acknowledged the softness in the economy. we got that first in his statement. he really did drive home what he's seeing in terms of consumer spending, business investment, housing weakness, even acknowledged some of the weakness right now in the labor market and importantly he did not precommit to what the fed would do on rate hikes for september. i thought one of the key moments when he said it will depend on the data the next meeting is in september and there will be more data between now and then joining us now on fed days,

former national economic director gary cohn welcome. >> thanks, sara. glad to be here. >> it's the gary cohn rally, the market rallies was it just a lot of the hiking news is baked in and now it goes the other way? >> i think the news was baked in, the market anticipated pretty poor earnings out of the tech sector this week. weep got through crucial earnings yesterday and more this evening. we will have to get through those as well. the chairman himself came out with a dovish statement, talked about being in the neutral range. he talked about the last dot plus being still relevant. so if you take the range and the three remaining meetings it doesn't sound like 75 is still on the table he emphasized everything is still on the table so he in many respects said

monetary policy is working and in many respects it is they said that out of the box, that we're starting to see a slowdown in the economy. we see it in the market, in corporate earnings i think the chair was trying to say, look, we're seeing the data what we're doing in monetary policy is starting to have an effect we happen to have the luxury of not having a meeting two two months right now and we'll see what happens >> data dependence is bullish for the market because the market assumes the data will turn weaker between now and then the new funds rate is right in the range of neutral i don't know if he meant to say that or not or if it's going to come back to haunt him what does that signal? >> he said right in the range of neutral. then he literally went on to say that the 3 to 3.5 range is still forward guidance for year end.

>> which gives us smaller rate hikes, to your point >> so i think he was telling us that his forward guidance they gave us is still where they see it he did say we'll see where the dots come out next week. that was a reassuring statement when he said we're in the range of neutral >> reassuring if you are rooting for fewer hikes and the economy. what if you are worried about inflation? well, interestingly there was something in here for everyone, of course. the initial statement in the prepared remarks right out of the box, inflation, the resolve to fight inflation and they have the tools to fight inflation and he reaffirmed the 2% target. so he came out initially

>> a hawkish statement -- >> we're going to get to 2%. and we have the tools. he sort of backed off the aggressiveness of rate hikes being needed he acknowledged that the rate action they've taken right now is having an effect, which they also acknowledged in their prepared statement one place they're not seeing it is the job market. fairly significant gains in labor. we still continue to see gains in wages so the one place in the economy we're not seeing the rate increases really have an effect is in the labor market >> although he acknowledged it we're seeing modest slower job creation, still robust it's why we're not in recession. >> and we've seen many companies talk about the fact that they're curtailing hiring or laying pem

off or they're stopping to grow in terms of head count i do think the market and the corporations and the big hirers are starting to slow down hiring i think he sees that the way a lot of us see that, the hiring is lagging through the system. >> i don't think he gave a specific on the jobs and the economy, acknowledged the softness that is starting to happen he didn't really say what would change their tune on rate hikes, did he >> he did not. he did not >> it's going to be slower, that we're now another 100 points since we started talking you started talking. >> in an interesting turnabout when he got pushed on the recessionary question are we in a recession or not, the chairman defended we are not in a recession and used the strong labor mark as a foundational

block of why we're not in a recession. you can't be in a recession or tried to argue you can'tbe in recession when you have 11.4 million job openings and we still see robust jobs and robust job growth >> do you agree with that? >> i do agree with that. >> gary, stay with us. we want to bring in our senior economics reporter, steve liesman, who was part of that news conference with chair powell, asked a recession question as well what were your takeaways >> reporter: i think i was one of several reporters the chairman just shut down in talking about how policy -- i thought my nose almost got hit by the slamming door when powell just basically avoided my question and that of others which was about how policy may or may not change. what he said in response which i thought was interesting, he talked about what he expects to happen with growth down the road >> we actually think a period of

growth in order to create slack so the supply side can catch up. we also think there will be in all likelihood some softening in labor market conditions and those are things that we expect and we think they are probably necessary if we are to have to get inflation, be able to get inflation back down on the path to 2% and ultimately get there >> so rather than be angry about not being answered, the question is why why is the chairman not add addressing this issue? he may have some concern about the state of financial conditions right now which if you look at the fed rate, the market has these cuts built in down the road. the chairman has this inflation fight on his hand. he does not want inflation -- i'm sorry, financial conditions to ease and so he wants to avoid any talk at all about what might happen to policy in the event that there is a recession or a more severe slowdown

he is staying on point, i think, is the way to put it when it comes to this idea that right now inflation is the problem in front of us. inflation is the problem we're addressing and other problems to address we'll deal with those later. >> that's not what the market reaction is telling us right now. the dollar is weakening. financial conditions are easing. the stock market is rallying because they're reading his words about data dependency, about the fact that we're at the neutral rate the fact he said there's still a lot of tightening in the system yet to hit the economy, all of that taken together maybe we've seen the biggest rate hikes that we're going to see this cycle. >> yes, i think that's right, sara, about the biggest rate hikes. i think there's still a substantial thing, he talked about getting to that 3.25 range, i think that's where the fed is headed.

the market may be making a mistake. >> we have three more meetings >> the question and the debate right now as you know is about what happens afterwards. is it 3.5 to 4 or 3.5 as the market is priced back down to 3? i know you talked to the same people i do, there are some people the fed has to go much further than that and chair powell is not talking about the situation right now. >> no, he's not. >> steve liesman, do you think we go higher than that do you think it will take more to tame inflation? >> i don't know. we are in this situation where we know that the rate hikes do take time to filter through the system the places where they hit immediately which is consumer credit and long dated mortgages, we are seeing the impact very

quickly. so other parts of the economy we know for the rates to affect the economy they do take time to get through the system we've had fairly large, consecutive 75 basis point increases. the chair has the luxury right now of literally eight weeks so they meet again. >> cpi reports, jobs report. >> two of everything he has the luxury right now of waiting to see another eight weeks to see how these -- this increase as well as the prior increase filter through the system we'll get through this quarterly earnings cycle we'll see what the markets do. we'll see what financial conditions do and we'll come back he left himself an enormous amount of wiggle room. he did say 3.25, 3.50. then on the question of how did you decide on 75 basis points he clearly left himself open for any rate increase he wants he said i could go to 100, to any number i want. he didn't take anything off the

table. he left 100 basis points on the table and he left 25 basis points on the table. >> the economy has now started to soften and i do wonder if he's going to get more blow back from the public, from politicians. i interviewed senator warren, had the op-ed this weekend her point is the ted reserve should not increase joblessness if they don't have the full tools. listen to what she said. >> increases in the interest rate won't fix any of it jerome powell has actually admitted that in testimony before congress. and yet he continues to drive forward with what so far has been historically fast, aggressive high interest rate increases. so if it's not going to help bring down a lot of the prices in our economy, what it can do is actually pitch this economy

into a recession >> a lot of people do agree with her that he should not be going so hard at a time where the economy is weakening i took the other side, obviously, because the fed can affect demand and it's working inflation is a problem there is a thought why would we want to wreck this great jobs market >> there's a lot to unpack there. >> go for it >> i'll go a little bit on it. first of all, this is a question that we've talked about is this a demand issue if we're just raising rates to kill off demand but we really have a supply issue it's not going to have an effect. >> a little bit of both. >> we know there's a supply issue. on the commodity side there's a supply issue we're talking about the great thing that's happening in the oil market and the gas market but in the natural gas market as supply tightens up there we're seeing record high natural gas

prices there is a debate on supply versus demand. there's another debate on the mandate. it's not made up by the fed. if senator warren wants to change the fed's mandate, chairman powell is executing on instructions he has been given to go after and try and have normalized employment growth and normalized prices at 2%. he's not making up the rules by which we play. >> i asked you the last time you were here whether you are a buyer on the powell presser. the last time you said yes higher thanks to this month's rally since the last meeting >> based on what you heard today, it's clearly on the more bullish tone i think companies that have been punished by the market, there's

still value in the markets the answer isthe answer i gave you a month ago. i'm more of a buyer today than seller >> because there are cheap prices and you like the way the fed is going >> the fed seems to be forecasting there's 100 basis points as we have stayed we don't know what's coming next year but it feels like the impact of higher rates are in the system. they're slowing down we know they're slowing down in certain markets. slowing down in the housing market we see the consumer move out of goods, move more into services which is the natural economy some of that service is pent-up demand some of that pent-up demand will go away. i think we'll go intoa more normalized environment so i'm more optimistic than negative. >> you almost sound like you expect a soft landing. >> i've been in the soft landing camp the runway has gotten significantly shorter. it's gotten significantly more narrower and as the chair said himself the path is narrower, the path

has gotten considerably narrower the longer we sit with higher and higher inflation >> gary cohn, good to have you on a fed day up next, much more reaction to the fed and how it will impact the market when we are joined by david zerbos highs of the day up more than five points. we'll take you inside the market zone

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bell market zone money strategist here to break down the crucial moments of the trading day plus jefferies david zervos on the fed. kate rogers joins us on chipotle straight to the jump for stocks. major averages moving sharply higher it's broad it happened during fed chair jay powell's news conference about half an hour ago or so the nasdaq is the biggest winner up 4%. every sector in the s&p right now is higher led by communications services and consumer discretionary group, utilities. up a third of a percent. lindsay, did the fed chair and earnings, is everything going on this week changed anything for you in that this rally which we've seen a nice move in july could be sustainable >> i think as far as the market goes, we're probably going to trade a little bit sideways going forward. of course the news we're getting this week is good news but yesterday was a different story. so i think what the fed is

saying especially in powell's conference he sounded more dovish than the actual release sounded. that was good. we could be coming closer to the end of the fed rate hike tightening than we are closer to the beginning, too until investors see that as a positive although they are saying that because there's an increased likelihood of going into a recession even if he doesn't believe we're in a recession now. i think we're still on watch, we will still be reactive to any data point that we get especially with regards to jobs and inflation and i think it's going to be in this wait-and-see mode, we'll see what the fed says in august at jackson hole yes, thank you and then we'll get to september. we have a little bit more time between fed meetings here than we have the last three months. we have a little breathing room. i think the market appreciates that >> so we have every sector

higher right now lindsey, you are the earnings queen. you go through all the estimates and what we've been getting. so far a signal for the economy and which groups would you stick with >> it's been a great earnings season so far, a lot better than what most people expected. i expected the second quarter to be good and that's exactly what it is. we're only about 35% of the way through but we're going to get more this week and next week top line and bottom line beat rates are still very good but guidance is coming down just as everybody has anticipated but guess what, a lot of that has been priced into the market. you are seeing positive reaction to lower guidance from a lot of companies across sectors we are seeing tech, right. we got some numbers last night from microsoft and alphabet. they were disappointing. but investors found solace in the fact microsoft could reaffirm guidance and sounded more positive on the earnings

call i think corporations are being cautious and taking the path from the market that has already prepared for lower guidance so they're doing what they've been asked to do, lowering their numbers. we might see a benefit on this in the second half of the year with the lower numbers and the opportunity to beat them at a faster rate. looking at consumer discretionary looking at tech and health care, those are three sectors that i thought the numbers had come down going into earnings season, for the second half overall and we're seeing the outlook even in places where there are down grades, the stocks react very well and the consumer remains strong thus far, too i think you heard that in a lot of consumer companies recently, visa, chipotle to name a few >> chipotle is at the top of the market

also meta which comes after the bell for more on the fed and the market, let's bring in jefferies chief market strategist david ze zervos >> i wouldn't go so far down the dovish path, sara. there's a strong commitment to fighting inflation after the june meeting really pushed credibility to, i think, cyclical highs, they're warming the market up to the eye deep of what they have to do which is bring demand down to meet the limited supplies hopefully those go away soon the most important thing for the market to take away from this we're moving kind of baby steps away from forward guidance

like the ecb did, we don't know. we're going to surprise you and give you more and then we're going to kind of go meeting by meeting. he did say meeting by meeting but then he waffled, hey, we have this from the last time that's good guidance he kind of moved it off to the side and i think they're getting very close to moving forward guidance completely away and having an open path forward as opposed to where we are now which is still trying to tell the market we have a 25 and a 50 and another 25 and 50 before the end of the year. we're just not sure. the market likes to see that end game >> he did say it would not be as

clear now that they're at the neutral point. to your point he did mention that maybe we'll get rid of that all together what does that mean for stocks and bonds and increasingly pricing in cuts next year. >> the cuts are a little perplexes. as soon as inflation starts to come down they will be able to go back to their own ways as things turn down those are a little bit premature in there 25 or 50 cuts in the next few quarters in 2023 i think the story is being able to do that if they need to and the market is giving them that whether they take it or not is a debatable point. they probably won't this is all kind of consistent with where you want it to go which is what

does it mean for stocks? what it means for stock the fed has this credible attack on inflation under control and jay is doing an incredibly good job keeping the yield curve inverted which i think is a sign of credibility, even on the down trajectory, and getting the market comfortable with a modest slowdown and not an aggressive slowdown and we're going to come out of this with a couple of scratches and bruises but at the end of the day the stocks are priced in more so a little too much pain we talked about that bounce the last time after the june meeting. you had me on and i think you had the guy from credit suisse

on >> morgan stanley, mike wilson he wasn't buying it. >> he's switching from selling to buying and that's the usual bearer i think we made a bit of a turn here i'm excited about it and it all hinges on the fed credibly going after inflation. and the market feeling comfortable with that move that it will not generate an extraordinarily deep cut but just a few nicks and bruises >> david zervos good to hear from you the nasdaq is up investors eating up shares of chipotle after the restaurant chain beat wall street earnings estimates. higher prices able to offset the increase in cost earlier our kate rogers asked the ceo whether more price hikes are planned. listen >> our value proposition is tremendously strong. we talked about this before.

we want to take price at the last lever it is something given the environment we are dealing with. one more price increase in august and going forward we won't have to continue to do that >> any indication that consumers will start to push back against those higher prices? he talked about what was happening at the low end >> exactly and that's something we heard from mcdonald's they're starting to see some pullback but mentioned that's also not really the core demographic for chipotle they did have pricing power to continue to raise in august another 4% as you heard. commodity inflation for avocados and beef have been very stubborn so they are transparent about the hikes to come. as he mentioned in thaerms of value they are still lower priced and that's one of the reasons the consumer has been so

loyal and one other thing, they've been able to hang on to their margins even in the face of these rising costs and investors like to see that today. >> lindsey bell, chipotle, an example -- how do you find companies that have the pricing power and that also have greater exposure to a hyper income consumer if you add that up, the stock is up almost 15% right now. >> yeah, i mean, that's exactly right. the more affluent consumer, they are able to take on higher prices and so you see companies like chipotle be able to pass the higher prices on to offset their higher costs that's what you want to look for in an environment like this. you will hear more and more of that as we go through earnings season they've been able to push prices on to their consumer it's all about the product, the end consumer, and being in that position you can take advantage of that. and maintain your margins.

historically high devils over the last couple of years >> it's all about what the priorities are now paypal off this "wall street journal" report, elliott management has taken a stake in the company. kate rooney joins us we mentioned before it could be an activist target i know we don't know exactly what elliott is up to here, but what could be the playbook in what is the upside >> one upside pay pal is sitting on about $8 billion worth of cash so being more efficient with that cash potentially cost cutting would be another big area that could come in the form of layoffs they also spend a lot on r&d and sales and marketing. so they estimate they could go from 25% margins to a 40% margin

business, the classic activist play here in the playbook to really pull back on spending, improve margins and then there's also now more speculation about a pinterest deal we talked about that back in october sources told us paypal had been looking elliott also owns a stake in pinterest. renewed speculation over those two companies and then the last thing would be management changes. the ceo dan shulman does not really have an heir apparent the cfo likes to go to walmart, an interim cfo they don't have anybody waiting in the wings chatter from the management side and dan shulman at this point. >> either way it's getting investors excited. kate rooney, thank you alphabet and microsoft just a few minutes we will get results from meta. julia boorstin with the key number investors will be watching for so interesting to see alphabet

not really falling hard. >> alphabet trading higher for meta the thing to watch is revenue. is expected to be the first quarter ever a 0.4% revenue decline in the quarter from a year ago quarter. now we're all watching revenue guidance and how they expect a couple key factors to depress growth including macroeconomic uncertainty, the operating system that will increase competition with tiktok. color on new businesses such as reels and messenger and when those could start to generate meaningful revenue for the company. sara >> julia boorstin, thank you lindsey, would you buy meta in this report?

>> i don't know. it's tough to buy into the report the numbers that we got from alphabet are a good sign that spending at companies like an alphabet with the youtube platform and meta could do well and they're saying they could be from others in the space so that's an encouraging sign the stock is down, the valuation is down significantly and there may be opportunity they have a long slog ahead as they transform from a social media company to one focused on being the center of the metaverse. >> the other big event is we're going to get gdp on the second quarter. if negative that will be two in a row and some will say that is recession so not the white house and not the fed chair. 10% off the lows for the s&p

500. how much pain do you think for this economy is factored in already? we're about 16.5% off the highs. >> yeah, you know, i think the market is pricing in a moderate recession and so i think that investors are comfortable with that if we do get the gdp tomorrow, could get a slightly positive number. economic growth is slowing but it's a bit of a snap back to more normal. last year economic growth grew gangbusters gdp growth so we're in a period of a bit of a giveback i don't know that a negative report will be that much of a surprise in the markets tomorrow >> from allied financial, as we head into the close, a nice rally. 2.6% higher.

the dow and the nasdaq is surging. up 4.3% up 4% or so. the fed chair acknowledging the softness in the economy did not recommit on september and won't have 75 basis points inthe nex meeting. that's it for me now to "overtime" with scott sara, thank you. welcome to "overtime." i'm scott wapner we're just getting started at post 9 at the new york stock exchange it is another big hour for your money. i'll speak exclusively to doubleline's jeffrey gundlach on what the fed just did and jay powell just said we begin with our talk of the tape imminent earnings from meta and qualcomm and ford motor. so far a sigh of relief from big tech

will