economy? >> the answer to that is there isn't any one perfect summary statistic. so the way i think about it and the way we generally think about it is we make our policy changes and they affect financial conditions actually, it works the other way around financial conditions tighten in a different way now. so we monitor the tightening of financial conditions we look at the history of these financial conditions and we ask how tight are financial conditions we also look at the effect they're having on the economy. sensitive spending but other things as conditions tighten we also look, one of the financial conditions we look at. we'll look at the whole, the entire rate curve. the treasury rate curve. we'll look to see positive, significantly positive, real rates across the curve and you have that, you can hear about the short end, but you've got to pick some sort of a forward

leaning, looking reading for inflation. it reflects confidence in us bringing down inflation. so you've got real rates you also look at credit spreads and what are private companies borrowing at because most doesn't happen at the federal funds rate it happens in many other prices. asset prices, we look at exchange rates which are just another asset price. we try to make a judgment about whether looking, put some weight on you know, on the real interest rate curve. some weight on the other aspects i talked about i think you have to make a judgment that you're restrictive. >> so estimate of neutral rate of interest didn't seem to be one of the big factors >> it's in there in looking at the real rate curve. you look at it, you'd want policy, real rates to be above what we estimate as the longer run neutral rate the issue is the longer run

neutral rate is a rate at a time of full employment and 2% inflation and the economy in perfect equilibrium. that isn't where we are. >> yeah, i noticed i turn to the balance sheet. i'm going to turn to questions from the audience in a minute. what criteria are you going to use to decide when the end the shrinking of the balance sheet the economy? when money market accounts are functioning well the treasury's having trouble raising money? how do you decide when you end the shrinking? >> i should refer you to a document that lays all this out in detail. i really should be reading to you, but i'll prayeraraphrase. >> thank you no one will be paying attention if you don't get it exactly right. relax. >> so we're in an ample reserve regime changes in the reserve level

will not affect the rate so there's more than enough reserves in the system we're not close to reserve scarcity what we said is that we would allow reserve to decline until we're somewhat above the level that we think is consistent with an ample, with scarcity. and then for a while, what you do is hold a balance sheet constant and non-reserve liabilities grow while reserve shinks so we short of shrink gradually down to that then at some point, we're just going to call it we're not looking to go back into proving they're scarce because what happens is and you saw this back a few years, the demand for reserves is not stable they move up and down substantially. so we want to stop at a place that's safe. having a lot of reserves in the system is really a good thing. it's really a public benefit to have plenty of reserves, plenty of liquidity in the markets. that's how we would do it. >> in a minute, the last fomc

meeting, it said the staff had a forecast that does not, forecast below potential growth but not a recession. but then there was this interesting sentence where the staff said the possibility that the economy would enter a recession sometime over the next year is almost as likely as their baseline forecast. is that how you look at it >> i have resisted the temptation to handicap it. >> oh, go on >> i think i'll continue to do that but the way i think about it is i do continue to believe that there's a path to a soft or softish landing. i do believe that. >> and the definition is what? unemployment goes up a little but we don't have a recession? >> yeah. unemployment goes up, but it's not a hard landing it's not a severe recession. you can think of unemployment going up, but not, you know, really spiking as it does in some recessions. so that's how i think about it

and i think the path is clear. that labor market conditions soften we see inflation and the goods inflation gets better. housing services inflation gets better and the labor market softens, but doesn't go into recession and you see inflation start to come down i think that's very plausible. i don't, i don't want to be the handic handicapper on it. our job is to try to achieve that if you look at the history, it's not a likely outcome, but this is different >> you said at the last press conference, you thought the pa to that soft landing had narrowed has it continued to narrow or widened? i don't know if you can have a wider soft landing >> i don't know if it's changed since five or six weeks ago. i said it's definitely still possible and it has narrowed because if you look over the course of this year, nobody expected us to raise rates this much no one expected inflation to be

this strong and persistent and this, to have spread so broadly through the economy. so the extent we need to get, keep rates higher or keep them higher longer, that's going to narrow the path to a soft landing. on the other hand, if we get good inflation data and all those things start to swing the other way, then we could very much achieve this. >>. >> august 2020, you announced a new framework and i wonder whether there's anything in that that you think we should be rethinking now in light of the recent experience? >> so we said we would review, do another framework review in five years so that would be to bear fruit in '25 or '26 so we're going to stick to that. we need the see this through a full cycle we need to see the other side of inflation and what the economy looks like after this historic episode to really make good

judgments about that aside from the framework itself, we implemented through guidance of various kinds and we put in really strong guidance because there were a lot of doubters that we would ever achieve 2% inflation if you remember that that was the main criticism. little did we know but one piece of guidance we gave was and i don't think this had anything to do with or much to do with, say it that way, with all this inflation we're experiencing but the one piece of guidance we gave that i wouldn't do again is we simply wouldn't lift off unless, until we saw both maximum employment price stability. i don't think i would do that again. because it's, the tail risk, you know, we tend as human beings to underestimate tail risks and we didn't think, it seemed so unlikely if you remember 25 years of low inflation and many years after the pandemic, the financial crisis everywhere in the world,

it's all this inflation. just didn't seem likely. yet here we are. >> so it turns out when you invite chairman of the federal reserve to speak at brookings, a lot of people e-mail you questions. most are questions that were so poorly framed that i couldn't ooe understand the question, but somebody asked me this one so i want to give them an opportunity to get an answer what do you like to do in the morning before you start work? >> work. i'm a super early person and i read a bunch of newspapers and drink my coffee in peace and that's what i do >> now that you're chair, do you still ride your bike >> some, yeah. i won't tell you where i ride, but i ride >> the security guys thank you for that >> yeah. >> okay. so, here's the deal. we're going to take questions

from the audience. you need to wait for a m microphone to get to you because we have a lot of people online you need to say who you are and you need to remember that this is not an opportunity for you to make a speech or tell the fed what it should do. it should be a question. it should be short and questions end with a question mark. so come down here. joe? then jonathan. >> thank you so you've spoken both about risk management considerations and inherent danger of inflation becoming entrenched. so i was wondering what, how much do risk management considerations suggest a terminal rate higher than would normally be expected to achieve your policy goals? >> so i think there are a number of dimensions and one of them would be potentially higher rate, but more i would think one risk management technique is to

go slower and feel your way a little bit to what we think is the right level. another is to hold on longer at a high level and not you know, loosen policy too early. i am, i don't want to overtighten. certainly, my colleagues and i do not want to overtighten because you know, we, i think cutting rates is not something we want to do soon so that's why we're slowing down and going to try to find our way to what that right level is. but theoretically, it's another dimension, but wouldn't be my first choice >> jonathan? >> thanks. so i had a question about the balance between labor supply and labor demand you know, one of the things that's a little secured is there's a pronounced downward trend due to population aging. so when you think about

realigning labor supply and demand, a, are fomc officials hoping or expecting that participation really move back up to a pre covid peak and related to that is you know, the follow on question how much of the realignment do you think needs to be done through restricting labor demand as opposed to the ability of supply to catch up >> so, on labor force po participation. i think it's useful to go back ten years and the forecast that mainstream labor economists had was that, you're right aging the population leads to declining labor force participation. not with standing that, it was in effect fralat and up from 203 to 2020 roughly and that was because you had a strong, tight labor market people were staying in the labor market longer than expected. that was really what it was.

so our ability to predict is not perfect in this. except over long period s of time i don't think it's reasonable to expect we get all the way back to where we were with labor force participation in 2020. at 63.7 population i don't see that, but i wouldn't rule it out. we're nowhere near that now. we're a point and a half below that now the real question is do we expect to see big chunks of labor force participation. this year, we've seen in the aggregate, not much. it's been a little disappointing and surprising that's part of the story the other part is population the work the labor force, a big part of the shortfalling labor force is actually population >> given population trends, given some workers are clearly

anxious about going to work during covid and given that immigration is well below the levels that were projected before the pandemic, does most of the balancing have to come on the demand side? >> i think for now, we have to assume that. we have to assume that that's why i talked about you know, supply side policies on labor. they're not for us to recommend or to answer questions about >> noted please >> so the answer's yeah. i kind of said that in my speech we have to do what it takes to restore balance in the labbe esh market to get back to 2% inflation and that's what we're doing. really just by slowing growth, job growth rather than putting people out of work >> danielle. >> thank you chair powell, back in 2018, you gave a speech questioning the role of the so-called star

variables the fed uses to navigate and there was a possibility raised that maybe unemployment could fall well below what the staff thought the natural rate you star was then without causing inflation, but then covid came and turned everything around and as you just said, one interpretation is that you star went way up and we were on the wrong side of it, which is inflationary. my question is, going forward, do you think it's likely that things could reverse as the dust settles from covid and we could end up back in that world where maybe we're on the other side of you star, we don't know it, it's hard to tell what lessons did you learn from that period that got forgotten because of covid >> well, unemployment went below the, so what we write down and the staff writes down is a longer run you star. a longer run estimate of the natural rate of unemployment i guess one thing i would say is that during the course of a long

relatively gradual, so we only have one experience to generalize from, but what i learned from that experience was long, relatively slow, not super fast expansion, you really saw the natural rate of unemployment, shorter term natural rate, come way down. we had 3.5% unemployment with really little sign wages were just getting up to that level of productivity and 2% inflation so we could be back in that place. i think we could certainly be back in that place what we've seen, it's another and equals one situation with the pandemic it's so unique i would also point out we did see the inflation we saw at the beginning, we did have unemployment, natural rate of unemployment go up probably significantly. but again, the original inflation we saw was not to do with the phillips curve. with the labor phillips curve. it was not to do with that >> so another way to frame the question is i think a lot of us

thought the lesson we learned when unemployment fell very far and we didn't get inflation, that maybe over time, before you were in charged the fed erred on the side of being too tight. i think the concern is that will we fight the last war and because of this experience, the fed will be reluctant to experiment with a low rate of unemployment in the future >> i'd love to have that problem again. if we can get back to it >> so you've got like three years left in your term. you think you can pull this off so we can run the n equals two experiment >> absolutely. >> claudia song, song consulting so, the question i had is we've had unexpectedly fast and large rate increases this year and that has pushed up the dollar relative to basically any currency in the world. we've seen likely more financial market instabilities so the

federal reserve's dual mandate is for the united states and yet are you worried that a global recession would come back to make it harder for us to achieve the u.s. global mandate? >> we do look at global developments we have a domestic mandate, as every central bank does. but in this world, global financial markets and the global economy really matter for us we monitor all that very carefully. we really think that the best thing we can do for ourselves and the global economy is to get inflation under control as quickly as possible. we don't think the world's going to be a better place if we take our time and inflation becomes entrenched then we'd have to go in later the evidence is that employment costs only rise with delay

at the time same time, we don't want to do any more than we have to but as a risk management matter, we needed to do what we did and feel like we're now in a place, again as i said, where we can slow down and try to reach that ultimate level >> but how much do you worry, what claudia's question implies. we do something with rates, other people are forced to do something with rates and that spills back to us and makes it harder for us to do it you have to take that possibility into consideration >> we absolutely believe we take that into consideration. the models explicitly take it into consideration of course, they're not perfect no one can say we do it perfectly. we have a very large global model we use for the global economy and it absolutely takes into account what's happening with the real economy and monetary tightening and currency and all those things won't be perfect, but we do that and we also sort of understand

generally that the, you can, there's a lot of research and things, people are talking about this a lot right now that maybe the hole is bigger than the sum of the parts when it comes to tightening but we're aware of the risk of that but gagain, i come back to, loo at where we are. we've raised 375 basis points. markets are working. i think we're now in a position where we're in a place where we really can get inflation under control and we haven't, unemployment's at 3.7% so we haven't done, i don't regret getting to where we are and i think broadly the world will be better off if we can get this over quickly. >> okay. julia. stand up so the mike can find you. >> can i ask two questions >> if they're short. >> yeah, very short. so one question on the labor market is how do you reconcile you know, the characterization of the labor market as very

tight with the fact that wage growth isn't keeping up with inflation and the labor share of gdp really hasn't risen since 2020 second question is what kind of research do you rely on to think about the notion that a very tight labor market will lead firms to invest in and innovate and become more productive over time could that be a tail wind to productivity growth? >> okay. i wrote those down really fast now is the problem with reading my handwriting so you asked about -- >> the labor market is tight wages is not rising anheusand the labor share of gdp hasn't really started to rise so how do you put that into your thinking? >> so, naturally, we understand that real wages are not going up for most people, but to me, that

is, that's true, but it's not really dispositive the issue really is that it's one of salience, really. so at what point do people start saying i need higher wages because you know, my real wages are going down you're giving me these 6% wage increases but inflation is 6.7%. we don't really know when that point is, but when you get to that point, we're in serious trouble. we don't think we're at that point, but it can't be that we can go on for five years at very high levels of inflation and that it doesn't work its way into the wage and price setting process pretty kquickly. that's a serious concern on the second question, yes, no, i think we're seeing that, you're seeing the service industries you're going to see. this labbeor shortage we have, doesn't look like it's going away anytime soon. that's absolutely i think certain to lead to a lot of investment in technology and

labor replacement technology where there isn't labor and i think you'll see quite a bit of that it could be a dividend down the road i would think it will have to be to provide the services the public wants to buy. >> thanks. mike from jpmorgan you spoke about going somewhat restrictive then staying there for a long time. why would you prefer that over a shock and awe approach that goes very restrictive but for a shorter period of time i ask that because of some evidence of ratios lower in a more aggressive regime like that >> i think we've been pretty aggressive i would say. now i don't, i don't agree we wouldn't you know, to just raise rates and trash the economy and clean up afterward, i wouldn't take that approach. i think we're in a polsition to

move really quickly and slow down with high-end uncertainty around that, we have a broad set of thoughts about where that might be, but we could be wrong. it could be higher than that even lower we'll have to see. but i think that's the right approach and it's also the approach that it would allow us not to throw away the option value of you know, upending a lot of lives, which we would do if we crashed the economy. might get rid of inflation, but at high human costs. >> the commquestion in the back do you want to stand up? thanks z >> thank you so much for seeing me in the back here. is the fed in danger of neglecting its maximum employment mandate is the maximum employment mandate taking a backseat to the stable prices or inflation mandate? >> no. absolutely not

absolutely not we, the thing is this. without stable prices, we can't have maximum employment. that's how i think about it and i think my colleagues as well. in the sense that if you're constantly fighting off inflation and having these battles and having to raise rates and it goes on for five or ten years as it can, you're not going to have maximum employment the kind of, the situation we would love is to have another one of these very long expansions and we've had four now in the last several decades. really when inflation was low after the '70s, we got out of the habit of these short, you know, these short inflation-driven business cycles we were 3. 5% unemployment those are really good for very beneficial to our society to have these long expansions and benefits start to go to people at the lower end of the spectrum in the seventh or eighth year in the last cycle the two things go together right now, the labbeor market is

incredibly strong. again, before this thing, we had never had 1.7 job openings so this is a great labor market in that sense it's too great in a way because it's going to be heading to inflation. >> one more in the back. a gentlemen in the aisle two questions. two gentlemen in the aisle keep them short. >> thank you i would just like to ask a question related to chinese economy. so right now, a lot of analysts are arguing or believe that china's zero covid policy is continuing to take a toll on the chinese economy, but also likely to weigh on the global economy due to the size of china's market and its position in the global supply chain. so we're just wondering about what impact or how much impact do accept that continuously slowing chinese economy would

have on the u.s. economy or the next interest rate moves and is china's current economic situation this inflationary factor or inflationary factor to the u.s. thanks >> i'll just say to the extent china's having shutdowns in the parts of the country and economy that are deeply connected to global supply chains, that's going to make those supply chains less efficient. less effective and so that will have an effect on you know, on the prices of some of these goods that are manufactured or assembled in china so it does have an implication for the u.s. it's hard to say how big that will be without knowing how persistent, how long these lockdowns take place for >> the gentleman behind you. >> thank you i was wondering how you think about the tradeoff of restrictive policy and the

supply constraints you mentioned. so in particular when it has negative effect say on housing production that makes it harder to meet housing demand or on the congressional investment through the inflation reduction act, climate mitigation and the policy to make energy cheaper long-term. what do you think about that tradeoff >> i don't think our restrictive policy would have much of an effect on the climate investments you're talking about. in terms of housing, there are two things one, sort of a longer run housing shortage that we have. but in the meantime, we had coming out of the pandemic, rates were very low. people wanted to buy houses and get out of the cities and buy houses in the suburbs because of covid and so you really had a housing bubble you had housing prices going up at very unstaeinable levels. now the housing market's going to go through the other side of

that and hopefully come out in a better place none of this really affects the longer run issue which is that we, we've got a built up country and it's hard to get zoning. it's hard to get housing built in sufficient quantities to meet the public's demand. >> so i want to thank you, chair powell, for being good with your time and thank you all for coming and want to appreciate everybody asked a short question that's the first time in my experience that's happened i'd like for you all to stay in your seats for a minute until the chairman can leave safely and if you have paper, coffee cups or something, take them to the back of the room and dispose of them. so thank you very much >> that was fed chair jerome powell at brookings institution. welcome to "power lunch. powell saying there smaller interest rate hikes could start in december, but cautioned that monetary policy will still stay restrictive for some time, but markets are responding >> around session highs.

we were lower today. there are are your numbers dow's up 366 s&p 500 up 2%. but look at the nasdaq, it is taking off like a dove i think or some faster, stronger bird perhaps the nasdaq is up 3%. what was amazing to watch though was that we'll get to the yields in a second. right when steve liesman came on with the headlines, the market kind of took off then steve said it best. they kind of closed the door, but back hawkish, the dove just slammed into a window, but clearly something the fed chair said is making markets take off. >> moderate pace of rate increases. that seems to be the headline and what markets are listening to >> moderation. >> they like that. >> everything's good in moderation there's the ten-year yield we just mentioned steve liesman. because the power of video technology, we can actually bring steve in steve, welcome i loved your sort of metaphor at the very beginning before we heard from powell that he

slammed the window and had this picture of a dove hitting a closed window and i felt bad for the dove what do you think is what he said that's making the markets react like this? this moderation idea >> i'll admit having a hard time with it. >> me, too >> if the market's hearing for the first time that the fed is going to slow rate increases in december, then i'm sorry, but i guess i didn't pay attention to the fact the market was not paying attention to the fact that's been out there for a long time there's one area where he was a bit dovish this idea that two of the three components he talks about are causing inflation are coming down and he expects them to come down housing and goods prices he did stick to this idea of service inflation coming down. let me tell you what's happened. this is not unusual if the sense of forget what the stock market is saying. let's look at what rates are saying and what's happened is the market still has 50 baked in

for december still, i just want to make sure that's still the case while i'm talking. still essentially has 50 or 25 baked in for february then it goes on. we're still near that 5% mark, guys, i think that's the key here powell being clear we're going up to a level which we feel will be restrictive and stay there for a while. i don't walk away from this with any change in my key outlook for the fed and that's up around that 5% metric and they stay there for a while. if anything dovish in this, i would say you know what, maybe it's more of a 450 call. if it was hawkish, i'd say it's a 550 call i'm still at that 5% range i don't see anything in here that should cause the market to think it's substantially less than 5% and substantially less for a while. >> let's bring in randy, former federal reserve governor he's currently a professor of economics at the university of

chicago's booth of school business randy, welcome in addition to pouillwell indicn the fed may be slowing down, he says there's a chance the decline in job openings may not lead to a steep rise in the unemployment rate. >> he's hopeful he can have the immaculate disinflation. >> good one. >> inflationary down without having the unemployment rate go up very much we've never done that before i don't want to say it's impossible but i wouldn't say it's very likely i do think the labor market at some point can crack and basically powell kind of said that said we really need to see some of the heat come out of the labor market i think they've been very optimistic to say rates no longer than 4.4% i think much like i very much agree with steve that i think the fed is going to end at with

a five handle on interest rates and i think the unemployment rate is going to be above 5% >> randy, 5% and then i guess the next question is for how long because 5% itself is one thing 5% for five years is a totally different animal >> i don't think it's going to be five years, but i think it's going to take a while for inflation to come down really for the reasons jay powell was talking about. we're starting to see a step down in rents, but the way we calculate the housing services part of the inflation indices, it has a lag in it so it's looking at not only rents today, but also rents that have been nego negotiated over the last few months so that's going to take a while to come down we've seen a lot of pressure in the services sector because it's such a hot labor market and it'

going to be a while before the trades start to come down. that's why i think it's going to be most of 2023 before we see inflation start to come down, but for something that mr. putin might do or a geopolitical shock. i'm putting those aside for a moment, but there's a risk something could go wrong in the world. >> barring those shock, powell seemed to suggest that a soft landing is still achievable. >> yeah, and first of all, i would like to give randy publicly points for the concept of an immaculate disinflation. i don't know if you take points over zell or paypal, but i'd like to send you a few and the idea that powell thinks he can achieve it. but here's the key thing which is an answer to steven's question powell would love for that to happen he's been talking about this for a long time. they can bring down job openings without increasing unemployment. that's possible. but the thing that i think you need to hear powell saying as well is he's willing to do it in

an unimmaculate way. he's willing to allow the unemployment rate to drift higher expect it to drift higher and indeed, if you read the speech with the hawkish squint in your eye, you would understand that powell doesn't really see a way of bringing down inflation without serious slack being created in the labor market. he said that the labor supply problem is not going away. it's not going to fix itself retirees continue to leave the l labor force at a fast rate they ain't coming back we have an immigration problem by the way, there's a long footnote in his speech about the immigration problem and congress is not about to solve that as far as i know, so therefore, the only way to solve that problem is for the fed to create the slack in the labor market because it's not coming from the government it's not coming from supply. >> let's bring in another voice here rick santelli. hold on, randy, we're going to expand this until we hit the

octobox. that's tv inflation. somebody got in my ear and said you don't believe the market is reacting necessarily to what he said as much maybe what they don't believe. >> yeah, no, not necessarily i 100% think the market is not listening or on the same track with what many fed officials think inflation's going to do or rates are going to peak and 20 minutes before the speech began at 1:30 eastern, i know row read the blast i sent out every trader i talked to pretty much uniformly agreed they were going to wait right until his text was released and then they were most likely going to reverse the trends of the day. they just don't see the future in the same way and they look at much of what the chairman is saying as kind of covering his butt in the future that inflation ends up moving lower, he thinks it looks fine

higher, it looks fine, but that's not the way traders think. trades are in it for the money and the money is if you wait until that chairman says it's all clear, we've beaten inflation, there's going to be no money left to get >> randy, back to you. is the market getting this wrong? is there a perception of what powell said wrong? >> i think they don't want to believe. jay has been clear since the end of july and the markets say no, no, no you can't really mean that finally like in jackson hole, regular speech, said, okay, i'm just going to say one thing eight times in eight minutes and that's we're going to keep at this thing. the markets are still not really fully willing to accept that so i think they're getting closer and i think the markets now think that the fed will get to around 5% and i do think the fed's likely to end between 5 and 5.50 but hold there for a

while. i don't think they understand that the fed really does have to see the labor market crack, the unemployment rate go up to feel comfortable that the key, underlying source -- >> what if inflation goes down come on. what about the obvious answer here well, then the fed does less >> they could bring rates down >> steve >> i was going to say, then the fed does less. if it goes down. but remember what powell said. i want to get the language exactly right. >> they're centered around the flows of capital and the flows of capital certainly didn't correlate with the flows of words >> agreed. what i was going to say, rick, is that powell puts out a pretty strong litmus test here for being convinced about doing less he says he needs to see

substantially more evidence to give comfort that inflation is declining. i'm not sure what that means i've kind of had in my head the fed needs at least three months in a row of serious declines in the inflation rate i don't know if maybe he upped that or made it tougher this time around. rick, i think you're right seems to suggest that what the market is doing is not necessarily a reaction to the words, but they were just kind of waiting to clear a hurdle of potential risk out there before they made a trade and they wanted to trade higher i don't know and i'll ask you this question, rick. are you hearing anybody saying something different from what randy and i are saying, that we're not changing our view of how high the fed is going here >> yeah, they are. they're changing their view dramatically most traders i talk to think the high yields on every maturity maybe outside of two-year notes are already in and they're trading it that way. they're waiting for yields to pop then they challenge them >> oh, okay.

>> they like when fed speakers grab a microphone. yes. >> but rick, i still see the peak rate in the futures contract for the funds rate trading at 4.96. that's still darn here 5%. i mean, it was over 5 this morning. under 5 yesterday. it's still centered around that 5% rate. >> where the market is right now is all that really matters because the markets we're looking at that paint that picture down the road, they're like my watch. my watch says 20 to 2 chicago time in an hour, it's not going the say that anymore but it didn't mean it's wrong. >> it's wrong in new york, too >> i've got to go do a 3:00 p.m. eastern time cnbc pro with leon cooperman. vanish seema randy, could we get back to the other part of this which is

jobs for me, the most interesting thing was near the top and they went into this idea about covid or people early retirement 4 million people gone. obviously alluded to long covid implications, people retiring early. let's hope that everybody out there that is suffering gets be better and that covid slowly becomes less a part of our life, but as it becomes less a part of the economic story, too, the job market is spectacularly tight. jay powell's kind of rolling the dice thinking this is going to remain this tight for a while. i mean, what if people just start roaring back to work because they're savings have run out and now they've got to get back to work >> he's hoping at some point we'll see that there will be more labor supply and that will help to bring some of the wage pressures off of where they are right now.

i don't think think we're going to see this dramatic shift older workers have decided it's too risky. they've seen too many people be ill and pass away and not spend time with kids, grand kids so i don't think they're coming back so i think we're going to have these relatively tight conditions and that's why the unemployment rate is going to have to move up and i think the fed's going to keep on until they see a soft labor market they can hope the softening will come from more supply, but i don't see that happening and i don't think he does either >> i think the countdown to the november jobs report on friday, we'll hopefully get answers there. randy, steve, rick, thank you. great discussion >> okay. not all that's going on today. a busy today you've got "the new york times" deal book summit reid hastings is speaking. >> you guys have the sequel of glass onion out in theatres and it apparently made a bunch of money. >> we did. >> but there's a question should you have gone wider with that?

was there money left on the table? lots of money left on the table. >> because we were interested in customer satisfaction on our service. so with film, we released it typically in film festivals early to stimulate conversation and demand, but not to fulfill that except when it launches on netflix and everybody watches. so our week in the theatres has done exactly that. everyone's talking about it. and december 23rd, the whole world's going to get to see it and i think it will be one of our biggest films. it's a proemotional tactic by film festivals >> this went to 638 theatres across to county tr i. >> big release in the u.s. is 34,000 >> could you see a day where you would do a week at 3,000 or two weeks? >> two religions member satisfaction and operating income that's what we're focused on

we use this as a proemotional technique so then more people watch on netflix because that's member satisfaction. we're not trying to build a theatrical business. we're trying to get people so excited and breakthrough the noise. i didn't see glass onion that week it was on and everyone's talking about it when is it going to come then everyone's going to watch it tighdecember 23rd. >> live. that's new >> that's new. >> that's new. that's more like tv. i remember when ted said the goal is become hbo and they can become us. that was back in 2013. you finished that one. >> we're moving on from there. live's going to be great for us for doing contestant shows comedy specials. we'll experiment with it but you know, there's a lot of speculation we're doing that because of sports. we're really focused on series, films, and games, which all have

creative risks we have to spend 20 to 200 million developing a property then sometimes it works great and sometimes it doesn't >> the reason i mentioned the quote is remember hbo's slogan is it's not tv it's hbo are you trying to become not just hbo, but to become tv and what does that mean? the reason i say that is you're going to have this live programings. more broader sitcoms what i describe as network sitcoms. procedures and the like. it's a shift and i wonder what that brand means to you today as it may have related to what you thought it meant three, kwour, five years ago >> we want the brand to be the most exciting on earth the place where you go when you want emotional stimulation for us, that's around films, series, and games. and the fact that people, if you look at the nielsen data, youtube on tv is equal to us in

viewing. that doesn't mean we're going to get into the user generated business then there's sports, there's news so there's a lot of things on the big screen, but again, what we want to do is embody the most exciting entertainment on earth. be the best creative company that's why disney is so inspiring to be in the same league as them because they're such an amazing creative company. >> where are you on sports andy jassy is doing sports no sports yet. at least classically >> talk to us after we're a big leader in games. we've got a lot of investment to do in games. >> what does that mean there's the mobile gaming piece of this. you're not partnered with microsoft. microsoft now is selling x box streaming where you can play straight up from a television. >> from the outside, it's odd because we build on amazon web services and we compete with them that's been true from the beginning that we compete with them and rely on them.

then at microsoft, we rely on them on the ad sales, compete with them in gaming. that's normal. but we are focused partially in mobile games and we've done acquisitions there, which is a new thing for us and we want to have incredibly compelling mobile games that are really most mobile games have a lot of upsell montization strategy is to get you to spend money to get clothing or weapons or these things and that distracts from the engagement and our theory is we can build games just around engagement that are like really awesome. >> but you anticipate being in the gaming business on tv eventually >> sure, on tv and we'll have you know, lots of games that are mobile-based. some that are tv-based in a modern world like fortnite. it's a smaller distinction

we would have loved our m&a team that we didn't by wordle it would be a perfect mobile game for us. obviously you guys have strength in that. we'll compete in lots of places. >> how do you feel about microsoft buying activision? >> no particular opinion i'm not involved in it >> but you don't worry about, i mean, this is a big sort of regulatory question about companies, the idea of companies that may not be in a business. they actually are in a business already, but may not have a overwhelming stake in a business yet, but are able to use the profits of a one side of their business to effectively get into another business good, bad thing. >> for society, it's great because then you get companies that attack each other and that creates lower prices think about all the companies that are attacking us. that's lower prices for consumers. that's a big positive. that's what you want you want them to be aggressive and think about tesla getting into trucking.

they don't have to do that, but then you know, it's like new entrants so think of it as when companies get outside, think about mark zuckerberg i got to see some of your -- i think the world should be saying, thank you, mark, for advancing this technology. i don't know if it's great for facebook shareholders. that's debatable he thinks it is. >> what do you think >> i wouldn't bet against him. it's been an amazing track record he's had. i think there's good odds for it, but whether it works out for not commercially, it's incredible advance the technology and they're really moving it ahead so that's going to benefit all of us. >> what do you think, the other part of that conversation was about platforming. not just platforming people, which is an issue, but platforms like apple and we keep talking about it all day. elon musk has gone to battle what do you think of that battle >> my answer will make you think i'm obsessed with "the new york times," but you and us share the same reader exemption that apple

has where we can sign up people anywhere and they can consume on that apple platform without getting taxed. so our businesses have a benefit that others, for example, twitter, don't it's not a big deal with us. we've got great relations with apple and google, but it's part li because of the business model. >> but you want people to go to the website to try. >> and it works well. >> but not through apple pay. >> it works through mobile web, which is what we do, it works fine we have no battle, others have big battles with apple, we don't. >> since you are a twitter user, what do you think is going on? >> i'm excited elon musk is the bravest, most creative person on the planet. what he's done in multiple areas is phenomenal. you know, his style is

different. like i'm trying to be a steady, respectable leader, but he doesn't care he's just out there. but he spent $44 billion he could have build a mile-long yacht for $44 billion, but he's not interested. >> you they what he's doing is good for the planet? >> i'm 100% convinced he's trying to help the world in all his endeavors, and in that one, he believes in free speech and power for democracy and that's an option. how he goes about it, again, is not how i would do it, but deeply respectful. i'm amazed people are so nitpicky, yeah, the blue checkmark is making some mess of things but he spent this money to try to make it much better, to have a more open platform, and i am sim theic to that agenda

dave chappelle creates some -- we've been talking about hate people and other kinds of speech, how do you think about that >> our brand is trying to get the most entertainment in the world, shah of dave chappelle is one of the best. that's one of the most entertaining special we've had we're about entertainment and he's very entertaining, provocative. again, that's the core of what we're doing. >> i want to go back to costs, and maybe ben affleck, talking about how much people will spend. i wonder whether you'll spend the same amount of money or even before, on the same volume to volume business, on you you think it shifts to higher cost

i'm curious how you think of sh shona rhymes, or megan and harry, michelle and obama, throws are very expensive deals. >> we have some other deals that are more speculative we have a wide range, the show we brought is with mgm, now owned by amazon, is ortega, and adams family rerun it's going to be in the top three. >> you think the big mega overall deals remain >> as part of the portfolio. >> as many >> i don't know. we've got lots that's just like a deal structure thing. are we going to continue to invest in stories we think can be breakout entertaining yes. >> what about the idea of the

idea of being an arm dealer from a content -- would you sell your stuff off-platform >> i think sony is doing that. that's a great business. we're not in that business we're in the business of building amazing shows, and films, and eventually games, and having it for our members. >> i want to open it up to questions. we have some hands around. i see one right here in the front. i'm going to go here, if we can get that microphone to him we were just listen to go reed hastings. julia boorstin, a wide-ranging conversation there with our colleague andrew ross sorkin he talked about his support for elon musk, the idea that he thins to be m&a activity, and the ad-supported model should have been rolled out sooner rather than later? >> yes it's fascinating to watch his total reversal to ads on

netflix. for so many years, he said he didn't think that ads had any place on netflix here today, we continued this reversal he's had over the past six months or so, how he sees such an opportunity to not only serve this unmet need, but to help the advertisers who haven't had access to consumers, but do so in a way that he thinking will be effective. he also had nice thing to say about microsoft, as they decided to partner with which surprised many people. he was complimentary about bob iger he said he was ready to be a fund-raiser for him, saying there was speculation that iger could run for president, but he thinking duties any will be a big success, and he foreceases this where they're duking it out. >> and netflix up.

i want to get your thoughts on meta mark zuckerberg also -- >> yes, he started off the conversation with our colleague andrew saying he thinking about it as along-term play. he also said that meta is in a zone where they're operating with more discipline they've had to pull back and their operational focus will be on efficiency, discipline and rigor. he says that, in addition to the economic downturn, apple's impact on meta's able to target ad -- remember, of course, they made that change -- has been a real limiting factor he spoke about apple, again this time in the context of questions of elon musk's criticism of apple and the 30% fees it takes. zimmer berg said that apple controlling the app ecosystem is

what he calls problematic. he also fielded questions about competition with tiktok. he said reels is making progress against tiktok and that engagement is going well he said, my guess is a bit better than what people perceive externally he also weighed in on the chinese ownership and security concerns, saying there's real questions that need to be grappled with. >> julia, thank you. back to the broader market which is near session highs, following comments from jerome powell you'll see the dow is up over 1%, 366 points, really the nasdaq leading the show here, up nearly 3%. bill snead, chief investment officer, good afternoon, bill. the message from fed chair powell seems to be that they're ready to slow down pace of rate hikes, but some would say that may not be the case. what was your read >> i think he's going by the

seat of his hands. he goes along and they're trying to read tea leaves, and what he's saying is that, if inflation turns down, they'll stake their foot off the neck of inflation. if you go back and look, in the 1970s, that's exactly what the federal reserve board did in the 1970s. they would fight inflation by tightening credit, inflation would get better, they could take their foot off, and it would pick right back up again so, his problem is he needs the economy to be lousy, and it's hard for an economy dominated by 92 million people between 26 appan 42 to stop doing what they're doing. >> it's a tough balancing act. he said the housing inflation bill will continue into next year what's your thoughts on this specific sector going into 2023?

>> you heard him say, we have a shortage of houses right? so what we love about common stock investing is, we want to own a business that meets an economic need. there's a huge need, and he talked about how much prices went up last year. that was a temporary price bubble, but it was not a building bubble. people are still in a coma about '06, '07, '08, '09 and the circumstances caused by that you look at a ten-year treasury, the mortgage rates should be substantially lower, even with what's happened, and there's a bright future for these companies. it's just we don't know what's going to happen the next six months, and that's not our job. >> quickly, can the market go higher from here >> well, there are lots of bear market rallies in bear markets

by looking at the bankrupt rally in the most decimated tech stocks, that looks like like a bear market rally. >> bill, we appreciate your time looking at the nasdaq, back above 11,000 thank you for watching "power lunch." "closing bell" starts right now. stocks reversing earlier losses this afternoon, getting a big boost during fed chair powell's speech, where he signaled smaller rate hikes ahead. this is a make or break hour for your money coming from the cfo council summit in washington, d.c. quite a rally, up more than 400 points, the s&p 500 up 2%. the nasdaq is zooming, up 3%, some of the hardest-hit parts of the market all year long, like technology, are leading.