energy outlook is optimistic, dom, for the year and decades to come. >> and, by the way, the mystery chart that we showed was constellation energy so that's how far it's come. pippa stevens, great story right there. that does it for us here on "the exchange." right now stocks are sitting near session highs, the dow up 1610 points. that does it for "the exchange." "power lunch" starts right now ♪ dominic, we thank you. gefrp, welcome to "power lunch." along with morgan brennan i'm tyler mathisen, glad you could join us on this busy friday. stocks surging as dom just pointed out, but a lot of the action is in the bond market, too. bank of america's rates calls the treasury market vulnerable and subs susceptible to shock. what could be lurking in one of the deepest and most liquid markets in the world, and tapped out. housing affordable being crepe i'd by the 7% mortgages.

that's the call from a veteran analyst who is moving to the si sidelines and calling a building recession. >> stocks just mentioned their session highs as treasuries reverse course this afternoon. the dow was down 127 points at the low. as you can see right here, we're up 621 or just over 2% caterpillar, goldman, jpmorgan are leading the way higher the s&p is also up nearly 2%, 3736 is your level there, up 70 points, and the nasdaq is up 1.8% as well we're on pace for gains for all the major averages here's what's driving the surge, short-term treasury yields they are pulling back, the one and two-year yields had been at 2007 highs earlier in the session, short-term treasury yields more to the fed rate hikes. tyler. >> the short-term yields reacting to comment from the san

francisco president mary daly who said she would like the central bank to, quote, step down from the pace of rate increases what has been a series of 75 basis point hikes but added she isn't sure when that happens. this follows a "wall street journal" report that says some officials want to talk about slowing the pace of hikes, though they are expected to approve another large rate hike, three-quarters of a point in november here to discuss the future of rate hikes and the next move for them and yields in general is mark cabanna, head of u.s. rate strategy at bank of america. great to have you with us. what does your crystal ball tell you about the path of interest rates and bond yields? >> well, thank you very much for having myrick and as we have long argued we do think that the risks skew in the direction of the fed, hiking more aggressively and delivering more rate hikes, front loading, if you will as long as the data

remains strong now, we've heard the comments from san francisco fed president mary daly will potentially stepping down but we feel the fed needs justification in order to do that right now what we've seen is that the unemployment rate is at the lowest for this cycle, and core cpi is at the highest for this cycle so it's difficult to envision a fed that feels good about about reducing the pace of rate hikes when their policy mandate is still so out of balance and the labor market is still so strong. >> where do you see fed funds a year from now? >> our house view is that the fed's target range will be between 4.75 and 5% a year from now, but the risks, as i noted, are skewed to the high side on that, and the reason that they are skewed to the high side is because the economy has been so strong we thought we would see more signs of labor market softening.

we thought we would see the consumer begin to pull back as rate levels have increased, but what we've seen is that the labor market is strong and it's strengthening. it's not softening, and so to us that just suggests that the risks are for the further front loading of rate hikes and wanting to still remain the front bend of the treasury curve. >> does 4.75 to 5%, does that break the back of inflation? is that enough >> well, we previously thought that it would, but incoming data suggests that it hasn't had much of an impact so far, and the market is pricing about something in line with our expectation already so the market has priced this outcome and we're not seeing the softening in the labor market. >> let me just play devil's advocate here, mark. you can starting to see some weak anything and weakening quickly in certain sectors of the economy like, for example, housing, which we've been

talking about all week on this program. is it safe to say that you're not seeing signs that inflation in some aspects is starting to or has the potential to start to abate, and i think just as importantly the fact that that front end of the curve is still so much higher than the back end, we have this inversion paying out along different spreads along the curve, what is that signalling? >> some part of the economy are showing slowdown, but in aggregate the economy is still very strong, and while the housing market very well be in a recession and it's very difficult to want to buy a new home with 7% plus mortgage rates and some correction there streams what inevitable, but on balance in the economy today the consumer still spending in a quite healthy way. services inflation is still very high, even though goods inflation appears to be moderating to some extent, and

perhaps most important of all the labor market is so strong. now, what the fed would ideally like to do is get to a rate level where they are starting to see that the jobs market is softening and that inflation is coming down, and then they would like to hold there and let the economy sort of play itself out and let conditions slow and financial conditions bite a little bit more aggressively over time, but the challenge that the fed has today is they are not sure they far they need to go. >> mm-hmm. >> and the market is certainly pricing a rate level that the fed thought would be sufficient to slow things down. we're nottying that yet. do we think the fed will be reactive to the data they are very data dependant, but we don't know that it that will be enough

the market there and the give at large is strong. that appears to be more of had a slowdown across the economy to give the fed confidence that they really can slow things down, and we don't know if we're there yet. >> thanks for joining us. >> thanks for having me. our next guests doesn't expect rates to come down substantially any time soon. here to talk about what the double whammy to mean for stocks is carl farmer, vice president and portfolio manager altrockland trust. carl, talk to me about this one-two punch. what does it mean in terms of further pain from your perspective? >> certainly, thanks for having me on today. i agree with the previous guest that the fed certainly isn't done yet, the one-two punch seems like 2023 estimates for earnings may still be too high and interest rates are not just kind of encompassing what the previous guest had said. what many are missing is that even if inflation has peaked, that doesn't mean interest rates decline soon we think about the fed's

long-term inflation target even after inflation subsides of close to 2%, you add on the 1% to 2% real yield premium without fed intervention, that gets you closer to 3 or 4 anyway so the most important take away is that a pause in rate hikes does not mean a cut if we look back at how -- talked how the stronger dollar has been a headwind and falling profits can weigh on the labor market these layoffs and the labor market is strong does the equity market trade hand in hand with the bond market >> if you're looking to discount future cash flows, you need to look past the bumpiness of funding reports in order for the

index to move higher it's probably next year until confidence levels have peaked. that being said, it should be a good time for stock pickers to add relative value. >> it's been a hard year of the i've lost money in stocks, lost money in bonds, lost money everywhere, everywhere, everywhere how can i make a little money over the next year, carl, where? >> you're not alone. perfectively one thing that's good is if you look back a lot of the savers have previously been punished in terms of what they could earn from the fixed income markets which was below inflation. now that inflation has pushed up interest rates you can each get one to two-year short-term bond investors that are willing to learn in an absolute return that's better than 90% to 12% you received months ago. there are some stocks that you like out there however, some that i'm happy to discuss. >> name them quick and then we'll come back and pick up on them. >> absolutely. we went west pharmaceutical

services which is for injectable therapeutics we like an online vehicle auction platform and remarketing services that connects buyers and sellers, has a strong network effect and if you can stomach it we like meta, the artist former known as facebook. >> like kanye, it's now yes. meta. >> let's turn to market for an update on the markets. >> just take a moment here, we're at session highs with all the major averages on this friday afternoon which makes it notable given the fact that the last several fridays haven't been so strong all the major averages are up more than 2% right now the dow is up 66 points and the nasdaq up 2% as well every sector in the green in the s&p right now, options expiration today, too. carl, to go back to meta, as we do look at another week of

earnings, why, why do you like this name it's so beaten down? >> it's already drop is of 16% they still, however, possess the most widely used social application in the world and it's still expanding, though slower than it used to and then was the research from the snap relate the news, if you read through the press release the quarter was still track with 9% growth. the transition from traditional marketing to digital is not over, and you're right the valuations are simply too cheap to ignore if you're looking at 12 times earnings estimates for meta next year which is offer a below average multiple we like that combination. >> snap is having a very rough day on the marks, 52-week low, down 30%. >> whoa. >> carl farmer, thank you. >> all righty. coming up, housing affordability is in uncharted territory. why? because of 7% mortgages, that's,

why and that is prompting one analyst to downgrade the sector to new street lows he'll join us. plus, huntington bank shares up 8% today the ceo coming along shortly to discuss his better than expected results and what the rapid rising rates means for auto lending and mortgage demand. let's take a look at a handful of stocks hitting all-time highs, cigna, northrup drummond. more power to you. back in two.

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a big call on the builder, a parabolic spike in mortgage rates now above 7, putting homeownership further out of reach for many people. according to raymond james, at current prices a house would cost 42% of a medium family gross income that back above the naek '06 when housing was going down in value. lennar, hdc and pulte and buck horn is an analyst with raymond james. thanks for joining us. >> thanks for having me. >> what makes bucks so sad >> it's a bitter pill to swallow. we believe that housing is in a structural supply deficit situation. there's still tremendous pent-up demand among particularly young

millenials, starting families for single family homes and this affordability picture what, we've seen over the past two weeks and two and a half months in particular, driven mortgage rates north of 7% now. that's unprecedented in terms of the magnitude of that rise and like you just highlighted. 4 it% of gross income going, to you know, finance the median existing home payment is just too far too fast and what it means is home prices are going to have to adjust downward and downward significantly what we did with our piece having to step back from the sidelines is just the recognition that it's going to be hard for builders to outperform as home prices are adjusting downward and estimates need to come down dramatically what we tried to do was kind of kitchen sink these estimates, throwing out a 2011 type of scenario which was the worst year for housing in the past 60. still think the builders maintain profitability, but estimates could be down anywhere from 50 to 70% from last year's

run rate levels. >> so let's put some numbers on that house price decline that you are forecasting here, and is this a national event, or is it a more regionalized and more regionalized to areas where house prices are his ebb the most over the past decade? >> it's going to be a national event, but i think you're correct that the zoom towns, full, the zoom boom, will certainly see the effects probably more pronounced certainly we're seeing more dramatic price declines happening in the western region at the moment, particularly the southwest. puts of the southeast in florida are holding up better, but we do anticipate nationally home prize will be down substantially and to quantify that for you, if we're going to hold rates where they are today notwithstanding the comments of your prior two guests that fed funds could go higher still, but at today's rates and today's prices and

today's household income levels it implies that new home prize need to come down 20% to 25% to restore, just to get news that, you know, his storic bandwidth of normal afford ability. >> i do want to dig into that a little bit more. first looking at the home builders that you cover. all downgraded from strong buy or outperform to market perform. they are already down anywhere from 30% to 50% on the year. why are you just making this move now >> well, that's a great question, and i'll be remiss to say we didn't anticipate 7% mortgage rates this year we were probably too hopeful for a soft landing scenario. that soft landing scenario i think is off the table now i think it's -- we have to brace for impact it's going to be had a hard landing for housing. we think that the builders that can be most cost efficient will take market share. d.r. horton is the one name we

maintain an outperform rating. we think they are the more cost efficient producer they have a tremendous balance sheet. they are going to meet the market they have an advantage and head start in single family rentals the buildlers have to pivot hard into the single family rental product and we think they have a great opportunity there. >> if you've got interest rate that are essentially mortgage rates that with parabolic this year, and i realize some of the commodity prices have come off but you still have building materials and labor at elevated costs right now, what is that going to do to this inventory picture that we hear is still so small? >> i'm sorry i missed the last saturday >> what is this going to do to the inventory picture for housing here in this country when we know there's not enough homes or property out there in general looking at growth trends >> yeah. well, inventory is going to get tight and we think builders will rapidly try to burn through any

unsold inventory that's currently in production right now. fortunately we're not seeing a lot of pressure in the retail market the resale inventory, people are staying put. not adding a lot of inventory to the market so that does give us a little bit of a backstop in terms of home prices we don't see a lot of distressed selling taking place or shaping up any time soon, but it's going to exacerbate the inventory situation as we come out of a recision, but in the near term, in the near term, unless we get some rate relief, home prices are coming down, and got to tell you, i mean, across the economy, we're seeing a rapid, rapid deterioration already happening across the housing continuum in terms of not only house prices but rental rates we think the fed is in real serious danger of overshooting very quickly here by raising too far too fast. >> strong word from buck horn erk. thanks for being on with us today. >> thank you.

up next, breaking down the sectornomicced today we're diving into energy the group whose good fortune depend on the crude realities. names most related to oil prices plus, restaurant reservations, signs point to a resurgence in restaurant activity as inflationary and recessionary risks remain high. we'lspl eak with famed chef wolfgang puck. all the major hires are higher today. stay with us at humana we believe your healthcare should evolve with

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welcome back to "power lunch. energy is by far the best performing sector in the s&p 500 this year. it's up 56% while all the other sectors are negative these stocks are all tied to the price of oil, but some more than others dominic chu is looking at that in today's sectornomics. dom? >> all about relatively to your pain when if comes to oil and gas companies they are all pretty much tied to oil and gas some more than others. if you look at the energy sector overall versus crude versus the energy storks can you see here the orange and white lines, okay, the ones that track the energy stocks in oil kind of trade together up until a little bit of a discrepancy in divergence in the early part of the spring this year

if you take a look at some of the stocks at play, the data team at y charts took a look at correlations or trading relationships between stocks in the sector and oil prices, and what they found was pretty interesting. among the names that have the least amount of correlation or trading relationship over the past three years to oil prices are names like pipeline operators, kinder morgan, also look at kortea look at eqt on the natural gas of things, much more tied to natural gas prize. if you look at some of the highest correlation, we're talking about names and maybe the exploration and production side of things, look at eog resources, diamond back energy and then marathon petroleum as well and the kind of refinery side of things those tend to have a higher trading relationship up or down to the price of oil so when traders are looking at some of these names, yes, oil and gas prices factor into the stocks and some of them trade closer to the prices for the underlying

commodity and others and the charts team took a look at those names, those are some of the more correlated or closely tied names up or down to oil prices >> dominic, thank you very much. let's stick with the energy theme and look at how the etfs did in the past week they brought in $267 million in net inflows over the latest week this according to our friends at track insight. the big energy etfs posting nice gains and the sle sector spdr up more than 6%, take a look there, and if you look specifically at oil services and equipment, those names gaining double digits this week for more please visit the ft wilshire etf hub let's get to frank holland now for a cnbc news update. >> hey there, tyler. here's your cnbc news update at this hour. the january 6th house committee issuing a subpoena to former president trump demanding he appear for deposition testimony beginning on november the 14thch the panel also outlined a request for a series of

corresponding documents in addition to that testimony that's now unclear how trump and his legal team will respond to that subpoena. the fbi is warning that an iranian government tied hacker group is active in posing a threat to the u.s. mid-term elections. federal agencies believe the group is currently running operations to hack and leak classified materials of american organizations. and phizer is planning to charge between $110 and $130 for a doze of its covid vaccine once the u.s. government stops buying those shots. executives believe the commercial pricing for adult doses could begin early next year however, the drug-makers expect many people will continue receiving the vaccine for free that's the very latest tyler, back over to you. >> thanks very much, frank ahead on "power lunch," we're hitting main street. three important stories that investors need to know about first we'll speak to the ceo of huntington bank shares and how the rising rates are affecting lending and borrowing. >> plus, changes to the 2023 tax season could offer a big break

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90 minutes left in the trading day, and we want to get you caught up on the market. stocks, bonds, commodities, let's begin with bob pisani as stocks are closing out a strong week bob? >> reporter: very strong, 4% on the s&p. the important thing with what we're seeing today is the earnings are -- well, there are a few disappointments. there's not wholesale cutting going on so that's good news helping to support the market. we're really getting smacked around by the macro, the higher rates that are moving things aside from the earnings i want to point out that energy stocks are having a good week a bunch of new highs, exxon mobile is at a new high, schlumberger, conoco phillips all at new highs and we haven't gotten major earnings from the

oil companies. we have from some of the oil services companies, but not from some of the big names. we'll get that shortly here. meantime, earnings aren't hurting the bank a lot of earnings have come in from the super regional banks and yet a lot of them, they are up a little today. they open the day essentially at 52-week lows comerica, truist, zions, fifth third, a lot of variation between highs and lows of the company. were with we with the s&p? last month between 3600 and 3800 at the s&p this is really surprising because a month ago a lot of people were anticipating that earnings would be slashed and people had estimates on the s&p between 3,000 and 3600 this has not materialized because the earnings situation, while it's lower than it was a couple of months, the estimates for the third and fourth quarter, they are not being slashed, so, again, that's a key

point with the earnings holding up statement, if you look at the vix, we've been coming down for several weeks at a time here look at that that's the lowest close there since the start of october, and essentially it's been coming down since the cpi october 13th. that a big event to get out of the way. this vix measures expected volatility in the next 30 days an with the cpi out of the way the new numbers that we're going to cirque the big issues, will be november 2nd when the federal reserve meets and then the elections. we already believe the federal reserve is going to raise 75 basis points so the only wild card still left in the vix is that election. guys, back to you. >> bob pisani, thank you. oil is closing for the day slightly higher. let's get to pippa stevens at the commodity desk for more. >> oil prices finishing the week modestly higher with wti right around the $85 level but the sacks in natural gas prices tumbling below the $5 level and sinking to the lowest

level since march. it's now on pace for a ninth straight week of losses for the first time since 1991. now a combination of warmer fall temperatures in parts of the country, rising production and rapidly filling storage have all pressured prize, and we're still in shoulder season which is when demand for gas is at its lowest. turning to energy stocks which are the top performing group this week. a notable mover today is schlumberger surging after beating top and bottom line estimates. the companies also raised its full-year guidance with the ceos saying that while concerns remain over the broader economic climate, energy industry fundamentals are constructive. morgan. >> pippa stevens, thank you. it's now time to turn to the bond market where yields are pulling back a little bit giving some of the fed speak we've gotten san francisco president mary daly saying she's worried about the fed overtightening saying she wants to slow the pace of

hikes from three-quarter point inkmans. as you can see right now, we're at 4.215%. check out move in the japanese yen, a big turn lower on concerns that the bank of japan has or will intervene to support the yen as well. we've seen some pretty wild moves over in recent days and weeks. now we'll move on to a regional bank that's on the move and that's huntington bank shares trading sharply higher best performer on the s&p reporting a strong third quarter earnings the bank also seeing a 3% jump in average total loans from last quarter, here in a "power lunch" exclusive steven steinhauer, chairman, president and ceo of huntington bank shares great to have you on the show today, and i do want to start with net interest income you had a big beat on that, and then you raised the forecast for that for the year so walk me through how you're navigating this interest rate environment and what it means for the economy since you do sit at the intersection between wall street and main street. >> we do

we're very much a main street bank and very relationship oriented our net income is increasing we're managing very well, low growth, just about 10% for the year annualized, and it's all sort of coming together after a combination with a company called tcf a year ago. >> reporter: what would you beaute in in. >> we have a very strong financial group. that group in particular has gone from number seven nationally to number five. we do a lot of asset-based legged, so in this type of a moment where general unsecured lending can be a bit constrained as companies try to lever up and use their balance sheerkts we've got a great team that does, it one of the top ten asset-based lenders in the company so our 9/11 businesses are performing

very well and we have scale and certain other markets. we're new to minnesota and colorado we now have scale in chicago, a great market for us, and we're a factor in michigan in addition to the core franchise, especially ohio >> talk to us a little bit we were speaking earlier about housing and how interest rates in one analyst view is going to depress the house price gains or actually lower the transaction prices of houses you're big not only in mortgage lending but there is auto financing, and i'm wondering whether interest rates and the prices of new and used cars are so high that that market is going to begin to suffer a little bit are you seeing that. are you making plans for that, or am i off base here? >> no, you're exactly right, tyler, on the homicide, right, 7% plus mortgage rates today and it was 3% plus at the beginning of the year so there's a sticker shock phenomena that's

occurring, and -- and yet housing supply is very, very low. we've got a couple of weeks in many of our markets in new homes on the market, so a very strong housing market unlike either coast. we don't get a lot of inflation here in the midwest, and so we don't have the highs, but we also don't have the low lows, so there's a stability, in many of the markets especially here in columbus where we're headquartered. we've got population growth. got a lot of economic activity, the intel announcement just a couple of months ago a big deal here. last week we had a honda announcement of about 3.5 billion with retooling their plants and putting in battery plants with a partner, so there's a lot of growth, core growth and growth in population, and that's going to -- that's going to inevitably mean housing stock increases here and in other markets here in the midwest. >> okay. so we're seeing american express

trade lower in part because of the loan lost reserves and heard the big banks setting more reserves aside as well and talking about the big banks and ceos coming out in the last week or so and being a bit more cautious about the economy as we go into 2023 and the rising risk of recession based on what you're seeing from your vantage point, are you as caution? >> well, the sentiment is certainly changing the rate of increases in interest rates are causing businesses to revisit plans for '23. i think there's an inevitable impact in terms of when we're talking to many of our business customers. there are year-other-year pipelines, 20% lower so that's a slowdown so they are coming off a very strong run, and they are in great shape, and their margins may get crimped for a year or two but they have plenty of room for that, many of them do they are still after inflation the number one issue there's still a fundamental

labor shortage and most of these businesses that we have as customers are actually looking for employees now, and they have been for several years so we've constrained growth that should give us a nice long-term economic run. >> thanks for joining us today >> shares of huntington up 8.5%. a major change to the 2023 tax season could create an opportunity to pay zero in capital gains. what capital gains after this year, especially if you're a younger or first time trader 'ltee details are next wel ll you how to pay zero capital gains.

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your prescriptions, and to get our free decision guide. humana, a more human way to healthcare. ♪ ♪ no more waiting. no more running. [ screaming ] we finish this tonight. well, we've all been dealing one way or another with the pain and expense of inflation, but there may be one bright spot, a break on your taxes. sharon epperson has that little ray of sunshine for us sharon >> reporter: that's right, tyler. some investors could qualify for a zero percent tax rate on long-term capital gains next year that's thanks to the irs for making some changes due to inflation. most investors focus on the 15 or the 20% capital gains tax rates for assets held longer

than a year, if you there's the zero percent tax rate, too, and that couple pact more americans in the year ahead. rates are based on taxable income and the threshold to qualify for the zero percent long-term capital gains tax rate will be higher in 2023 you could qualify for that rate with taxable income up to 44,625 for single filers, and that's a nearly $3,000 increase from this year and the income limit for married couples filing jointly will go up to $89,250 and almost $6,000 increase. now the irs is also raising the standard deduction for next year to $13,850 for civicle filers, up $900 from this year and $27,700 for couples filing joi jointly an $1,800 jump once deductions are taken no account a retired couple with a sick-figure income could be in the lowest tax bracket meaning they pay no tax on profits from their investments. tyler.

>> let me make sure that i'm understanding, this and then i have another question for you. if i earn below that's -- my regular income is below those thresholds any capital gains income that i have is taxed at zero percent. >> zero percent. >> okay. let's talk about retime. the irs has also made some changes to contribution limits on 401(k)s and i.r.a.s what's the outlook for next year >> well, the irs just put this out that the 401(k) and i.r.a. changes for 2023 would increase limits to 401(k)s to $22,5 up from $20,500 this year, and the contribution limit for people over 50, 50 and over, will rise to $75 up. that's up from $6,500 this year. that makes it possible for older workers to contribute up to $30,000 into a 401(k) in 2023. the i.r.a. limit is going up $500 to $6,500 in 2023, and for

those ages 50 and over, they can contribute up to $1500 thanks to the catchup contribution tyler. >> thanks very much. sharon epperson. >> good news there. up next, famed chef wolfgang puck joins us live to talk the state of restaurants are consumers once again taking a seat at the table, or are prices keeping them home that's nex t. the new iphone 14 pro is amazing. the camera is incredible. and you'll get our best deal. nice, but i can't accept it. unless every business gets the best deal. on every iphone. uh, actually... we already do that. the plumber with the ascot! big bjorn, little bjorn, too! the caterer who really cares. every business should get the deal! we make a good team. every business gets at&t's best deals on every iphone. including up to $800 off iphone 14 pro. (♪ ♪)

welcome back to "power lunch," everybody. from inflation to labor to food costs and consumer spending, the restaurant industry can be considered a proxy in many ways for the economy, and our next guest operates restaurants around the globe let's bring back and welcome back wolfgang puck, chef and restauranteur, entrepreneur as well chef, welcome. good to have you with us, sir. >> good to be with you, thank you. >> before we get to the labor issue which i know is something we talked about the last time. are you seeing as you buy the food commodities that you have to buy for your restaurant, eggs, the butter, the cheese, the meet, the fish, the shellfish, the pilotry, the game, the pork, are you seeing any of the price inflation recede or come off the boil? >> you know, so far the

inflation is really hitting us really hard. food costs went up probably 15%, some things like restaurant equipment went up 20%. i bought the other day cutting boards, like 15 cutting boards they were $1,500 and then the next next day i bought some for another restaurant, the next week, it was $2,000. i said, what happened in this amount of time, you increased the price? they said, it's supply and demand we don't have enough so they just charge more. >> you're not seeing any restraint in those inflationary measures, whether it's equipment or food, still going up. >> no. the prices are still going up. it's still really difficult. you know, labor is going up because it's supply and demand we still have a labor shortage and so the prices of labor go up if you want to retain people, people are opening new restaurants after the pandemic, so the labor market is still very, very tight

so, we have to be really, really -- make it really a way that our employees feel great when they come and work. >> are you able to push those prices, those cost increases out to consumers are consumers feeling resilient despite that >> the customers still come to the restaurant they want to go out. they want to spend the money but we have to give people great service, great hospitality, great food we have to be extra careful and we have to be better than ever to make all our guests feel great when they leave the restaurant so they come back you know, for example, reservations are up in our restaurants. like at spago in beverly hills, reservations are up, but we always keep 15% of the table empty for last-minute callers because i think at the end of the day, we have so many regular

customers. if we all of a sudden tell them, okay, suddenly we are booked totally, they're going to say, what, i'm going to your restaurant for 25 years, now we can't go anymore so, we have to operate better. one thing which is really up this year, you know, spago is open 40 years, is private parties. we're going to have the best year this year in private parties, which is really an important part and revenue, it's a good profit center for restaurants. >> you know, i remember, chef, when you were starting out 40 years ago, and i would see you on -- on some of the tv shows. you have built your business the old-fashioned way, sort of one brick. you made money, you made money slowly it's really a testament and tribute to you and your work ethic. let's talk about your international business we just showed -- we're looking at a map of some of your u.s. locations, but i wonder if you're seeing the same

propensity to spend in all of the markets in which you operate around the globe there is that list from london, and we know what's going on in england right now, budapest, bahrain and singapore. is the propensity to spend over there still as robust as it is over here? >> well, in england, really with all the crazy things going on with the government, with, you know, inflation and everything, i wonder how the holiday seasons will turn out. i'm actually going next week to london to work a little bit there and see how it will happen so far, the fall is actually really good. i don't know if implementing brexit, the government not reallying being in control and people are uncertain about the future, what will happen i think that's really a difficult market and in budapest, for example, we do very well, but we are really the only really upscale restaurant there you know, they come to spago, if it's the prime minister or some

tycoon for anywhere, they go to spago. istanbul is always on fire you know, in istanbul we do better than anybody. why? because the labor cost there is really great so, we make actually more money in istanbul, except the exchange rate is terrible it used to be three and now it's eight. i might as well not change the money. >> very quickly, just to bring the labor conversation back here stateside, the tip credit is on the ballot in a number of states, a number of jurisdictions come midterm elections next month, including d.c., where i know you have some restaurants as well. >> yeah. >> where do you stand on this debate >> well, i really believe, you know, the salary distribution in between waiters and back of the house, chefs and dish washers, is not really equal. you know, so we need great cooks to serve great foods, yet the labor cost in the kitchen cannot be the same as in the dining

room so, i think tip credit for me is an important part, especially for upscale restaurants where the waiters can take home $500 a night. but i think coffee shops, if you work in any of the chain restaurants, that might be a different story where the hour is $6 or $10 you don't get a lot of tips. but in our restaurants, hopefully we can get tip credit everywhere so that way we cabal our labor and get people the amount of money what they should and we are doing some things in spago beverly hills, for example, the waiters contribute 5% of their tips to the kitchen because the kitchen is just as important as the front of the house. it's like a football team. with a great offense, you don't have defense, you're not going to win the super bowl. i think that's really important. what i also love, like in new york, for example, the bar business is up a lot

people come to the bar, even single diners. they know they can get a steak with french fries or tuna tartar or macaroni and cheese and spend $30. that's really a good way to defend against inflation. >> it's making me hungry, this conversation. >> it's making me hungry. >> wolfgang puck, thank you for being with us. up next, why the retail investors has gone missing "power lunch" back in tw power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market.

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. welcome back we're starting to see signs of market risks weighing on retail trading volumes and kate rooney has that story for us. hi, kate. >> hey, morgan, that's right individual investors are showing signs of fatigue lately. the latest signals are coming from the major brokerage firms charles schwab reported the lowest trading volume since buying td ameritrade in 2020 morgan stanley saw a slump as well and robinhood, especially indexed to retail traders, has warned against a similar trend some alternative data from schwab says retail investors are the most bearish research this week highlighting a slowdown in retail stock purchases.

individual investors have reduced net buying and were, quote, reluctant to raise their risk exposure after that cpi number this group had been strong buyers heading into the print. retail has not thrown in the towel completely they haven't seen what they call full capitulation. they expect some strong retail buying and bids in the next couple of weeks. this cohort moving into money market funds, still buying tesla, netflix and roblox this week back to you. >> kate, thank you very much. folks, they're playing our song morgan, you hear that. >> happy friday. >> happy friday. thanks for watching. "closing bell" right now stocks are jumping to end a solid week for the bulls as fed commentary stays firmly in focus. this is the make or break hour for your money welcome to "closing bell." i'm mike santoli in for sara eisen. here are where things stand in the market started out much more hesitantly but we have rallied throughout