into some kind of unentrenched upward spiral? thank you. >> the data we've received so far for october and november we don't have some of the -- we have some to get in november they clearly do show a welcome reduction in the monthly price of pay increases as i mentioned it will take substantially more evidence to give confidence that inflation is on a sustained downward path. so the way we think about this is this, this report is very much in line with what we've been expecting and hoping for and it provide greater confidence in declining inflation. we've been forecasting significant declines in overall inflation in the coming year and this is the kind of reading it will take to support that. this gives us greater confidence in our forecast rather than at this point changing our forecast in terms of the pieces we have

been expecting goods inflation to come down as supply chain pressures ease that's happening now housing services, as i mentioned, there is good news in the pipeline as long as new housing leases show declining inflation that will show up in the measure around the middle of next year so that should help. the big piece core services and housing is very important. we have a ways to go there you do see beginning signs but ultimately that's the big -- more than half, as i mentioned, of the core index and it's very fundamentally about the labor market and wages look at the average hourly earnings number we got with the payrolls report. you don't see much progress in terms of our average hourly earnings coming down there may be other effects in

that these things can be volatile month to month we'll be looking for wages moving down to more normal levels where workers are doing well and their gains are not eaten up by inflation. >> michael >> michael mckey from bloomberg radio and television there's a little bit of a disconnect between the opt optimistic view and the changes you've made in the sep, and i'm wondering if you're reacting to the fact that the markets have loosened financial conditions or if you feel the fed may be a little bit behind inflation whether the recent disinflation is transitory or not and how this affects the idea of a soft landing if you're projecting just half a percent growth for this year.

>> if i -- i think i got you question one thing to say is i think our policies getting into a good place. we're restrictive and getting close to that level of sufficient, we think, sufficiently restrictive we laid out what our best estimates are to get there it boils down to how long we think the process will take. they're very welcome but i think we're realistic about the broader project. that's the point i would make. we see goods prices coming down. we understand what will happen with housing services, but the big story will be the rest of it and there's not much progress. that will take some time my view and my colleagues' view is this will take some time. we'll have to hold at a

sustained period so that two good monthly reports are very welcome. of course they're very welcome but we need to be honest with ourselves there's inflation, 12-month core inflation is 6% cpi. that's three times our 2% target now it's good to see progress. we have a long ways to go to get back to price stability. >> the soft landing is no longer achievable >> no, i wouldn't say that no i don't say that i would say this to the extent we need to keep rates higher and inflation moves up higher and higher, that narrows the runway in time it could make it more possible i don't think anyone knows if we're going to have a recession and if we do if it will be a deep one or not.

it's not knowable. certainly lower inflation reports, were they to continue for a period of time would increase the likelihood of -- put it this way, a return to price stability that involves significantly less of an increase in unemployment than would be expected given the historical record. >> brian >> hi, chairman powell you warned americans of pain earlier this year at the fed hike rates but with the fed expected to raise rates higher than you thought when you first said that, wondering where we are in that pain, how would you describe that to americans if the projections on unemployment find themselves 1.6 million americans out of jobs. >> the largest amount of pain, the worst pain would come from a failure to raise rates high enough and from us allowing inflation to be entrenched in

the economy so that the ultimate cost of getting it out of the economy would be very high in terms of employment, meaning very high unemployment for extended periods of time, the kind of thing that had to happen when inflation really got out of control and the fed didn't respond aggressively enough or soon enough in a prior episode, 50 years ago that's really the worst pain would be if we failed to act what we're doing now is raising interest rates for people. people are paying higher rates on mortgages and that kind of thing. there will be some softening in labor market conditions and i wish there were a completely painless way to restore price stability. there isn't. this is the best we can do i do think, though, and markets are pretty confident, it seems to me, that we will get inflation under control, and i believe we will. we're highly committed to do that

>> grady >> thank you, grady tremble. you have reiterated the commitment to that 2% inflation target i wonder is there ever a point where you actually re-evaluate that target and maybe increase your inflation target if it is stickier than even you think it is >> that's just -- changing our inflation goal is something we're not thinking about it's not something we're going to think about we have a 2% inflation goal, and we'll use our tools to get inflation back to 2% this isn't the time to be thinking about that. there may be a longer run project at some point, but that is not where we are at all we're not considering that, we're not going to consider that under any circumstances. we're going to keep our inflation target at 2% and will use our tools to get inflation back to 2% >> nicole? >> thank you, chairman powell.

as you monitor wage growth and unemployment data i wonder if you're paying close attention to a sector and income levels how do you factor into your risk calculations especially given the recovery of 2020 >> so the -- i would go back to the labor market that we have in 2018, '19, and '20 wage increases at the lowest end were the largest the gaps betweenl grou and gender groups were at their smallest in recorded history and all of that because of a tight labor market which had inflation running a tick below 2% and the economy growing right at its potential

so that seems something good for the economy and the country if we can get back to that. we want to get back to a long expansion where the labor market can remain strong over an extended period of time. that's a really good thing for workers in the economy that's what our goal is. in the near term, we have to use our tools to restore price stability. what we have to think about is the medium and longer term the country went through a difficult time, i think much more difficult than we can think would happen here, but it really set up our economy for several decades of prosperity. price stability is something that really pays dividends for the benefit of the economy and the people in it over a very long period of time. when it is lost for whatever reason, it has to be restored and as quickly as possible

[ inaudible question ] >> we do, yes. we absolutely do it's our regular practice to talk about unemployment rates by different groups including racial groups. we do. we keep our eye on that. >> nancy marshall genzer with marketplace. what do you do if the economy slows so much we enter recession before we see strong, consistent signs inflation is growing, in other words, stagflation >> i don't want to get into too many hypotheticals, but it's hard to deal with hypotheticals so let me just say that we have to use our tools to support maximum employment and price stability. i've made it clear right now the labor market is very strong.

near a 50-year low 50-year low in unemployment. vacancies are high nominal wages are very high. the labor market is very strong. where we're missing is on the inflation side and we're missing by a lot on the inflation side that means we need to really focus on getting inflation under control and that's what we'll do i think as the economy heals, the two goals come more into play but the focus has to be on getting inflation down >> greg? >> thank you, chairman powell. you spoke a little bit ago and said the u.s. -- it looks like we have a structural labor shortage in the economy. could you expand on that are you talking about getting

congress action increasing legal immigration, things like that? thank you. >> what i meant by that, the structural labor shortage, if you look at where we are now, as i mentioned if you just look at demand for labor you can look at vacancies plus people who are actually working and then you can take supply of labor by are you in the labor market, are you looking for a job or have a job, and more than 4 million people short, we don't see, despite very high wages and incredibly tight labor market we don't see participation moving up which is contrary to what we thought. the upshot of all of that the labor market is actually -- it's 3.5 million people at least smaller than it should have been based on prepandemic, population, reasonable growth and our labor force should be 3.5 million more than it is and

there are lots of easy ways to get to bigger numbers if you go back a few more years. so why is that part of it is just accelerated retirements, people dropped out and aren't coming back at a higher rate than expected. part we lost half a million people who would have been -- close to half a million who would have been working who died from covid and part of it is migration has been lower we don't prescribe -- it's not our job to prescribe things. i think if you ask businesses, pretty much everybody you talk to says there aren't enough people we need more people. i try to identify that in a speech i gave a month ago but i stopped short of telling congress what to do because, you know, they gave us a job and we need to do that job. >> jennifer? >> thank you, chair powell you say you expect growth of

half a percent next year given you've said the process of raising rates and getting inflation back under control will be painful, have you had discussions within the committee and addressed how long and/or how deep after recession you would be willing to accept >> no. we make our forecasts and we publish them quarterly if you look at those forecasts, those are forecasts for slow growth for a softening labor market, unemployment goes up but not a great deal that's really what they show we, of course, we don't talk about this kind of a recession and that kind of a recession we make those forecasts.

the staff runs alternative simulations of all different kind at every meeting and we look at those, too that'sup side and down side and responsible practice we've carried on for many decades. we haven't asked ourselves that question >> last question >> jean young with market news i wanted to ask about the sep again. if you are reaching peak rates around 5% in the first half of next year and inflation starts to decline materially, that would seem to make the real rate gradually more restrictive is that something that's built into the projections and into models is that something you would want to see >> we do know that that's something we would see. we wouldn't -- i wouldn't see

the committee cutting rates until we're confident that inflation is moving down in a sustained way. i don't see us as having a really clear and precise understanding of what the neutral rate is and what real rates are so that would mechanically happen like that. it would be a test for cutting rates, i think, in the event it will be a question of do we actually feel confident that inflation is coming down in a sustained way? thank you very much. that is the fed chair, jay powell, wrapping up his news conference after hiking interest rates by half a percentage point, 50 basis points that's what the market expected. and signaling there's still a ways to go when it comes to interest rate hikes and he wants to see more evidence that inflation is coming down in a sustainable way. look at the market reaction.

we took a dip right around 2:30 and the projections, the sep, came out showing they expect higher inflation, showing that 17 out of 19 of those expect the peak fund rate to get 5% or higher that's higher than the market expectation, the higher for longer side of the story the market dropped on that news. we're positive now three points. i want to show you what's happened interday with the u.s. dollar the litmus test for the fed and the market reaction. the dollar initially rose. that was the hawkish view we got on the higher for longer projection but then it fell as powell continued to talk falling dollar perhaps took stocks up with us. joining us is gary coen, vice chairman of ibm and former president of goldman sachs

back with us for his fed tradition, it's good to have you. >> great to be here, sara. >> what did the fed chair just say to you >> i think we got a little bit of everything from the fed chair. he came out and he talked about the full effect of not yet being felt that was a little bit of what we heard last >> the lag >> the cumulative effect we got the cumulative effect stare and the dot plot was the one surprising factor we got here where you mentioned 17 out of 19 over 5%, but i remind you that's 60 basis points away from the 4.5% which is the top of the range where we're at now that's one increase at 75 basis points so we're not that far away we're at 60 over the top end of the range right now. we're in striking distance he was asked a couple questions about the restrictive rate he said we are getting into

restrictive territory. >> yep >> and that allows me to slow down, potentially. powell talked about potentially 25 basis points in february being on the table, which would make sense if you're 60 basis points away from your terminal rate and your terminal rate is some time in the middle of next year, 25 basis points would clearly be on the table. >> is that your expectation for february which is the next meeting? >> i think today, as i said here that would be my expectation you would have february or march. >> a step down from the 50 today. then you're at 5%. you are at your dot plot by the end of q1 of next year >> but he talked a lot about how while it was welcome -- he used the word welcome -- >>to see it come down. he mentioned wages which also remain high and he said the labor market continues to be extremely tight.

why is this a problem for the fed? >> i'll point something out here this cycle started ten months ago. we get to the end of the first quarter next year. we would go on a one-year trip when we started ten months ago you and i were sitting here talking about the price of lumber, the price of gasoline, talking about the price of oil we were talking about the price of shipping containers >> turns out that was all transitory >> that's what was driving inflation. all of that is gone. in fact, i think oil hit a 52-week low last week. the commodity markets or the input side of the equation is basically unchanged year over year now look, we're not feeling it yet in the stores and we're not feeling that as consumers yet because there's a lag that has to work its way through, but at the spot market today we're back to unchanged input prices. >> and there's an increase and evidence that rents are starting to roll over even though it

wasn't cpi he mentioned as such but he's worried about the historical record suggesting premature loosening of policy while inflation is still high. >> so that leaves you with wage inflation. so everything we're seeing is wage driven. i think that's what you see in the grocery store. if the commodity prices are unchanged but higher priced groceries, it's because of all of the wages that are involved in getting those groceries to the store, all of the warehousing, all of the truck drivers, they're all getting paid more money. we have to look at the wage component of the situation, and so we're in this sort of vicious circle, and i think we're at the end of the cycle we're in this cycle, in the pandemic, the government initially paid people not to work the government gave you money to stay home. >> that was under the trump administration >> and also the biden administration it was under both administrations. i think you have to be honest and say it was under both

administrations. there was a large stimulus package under both whether it was student loan relief or child care credits, the government has continued to give people stimulus a lot was pent-up demand it was pent-up demand for goods. then it became wildly pent-up demand for services. people wanted to travel, to see their family, go on vacation, to go out for dinner, to have a good time. we are starting to see some of that disposable income coming out of the system. we're now starting to see credit build in people's accounts, default rates build. we're seeing a much more normalization. i think we're in this three-year normalization cycle. if people are getting back to normal, it means they're going to have to go back to work they can't just go spend money and have a good time they have to go back to work if they come back to work and we renormalize this cycle, that will help us with the wage side

of inflation i do think we're at this interesting part of inflection so the fed slowing down and lookingality 25 basis point increase will make some sense to me >> we have to see that labor force participation. stay with us we want to bring in reporter steve liesman. he was in the room for chair powell's news conference and gary and i were talking, we thought you asked a really interesting question about basically whether the fed chair minded that the stock market is up a lot since the last meeting as he's trying to tighten policy i'm not sure if you were satisfied with the answer. >> reporter: never satisfied with the answer, but very satisfied you and gary thought it was a good question look, here is the thing. the stock market, i think, is the least of powell's problems i think the bigger problem are the interest rates i enumerated not to mention i'm looking right now, sara, that the january 24 -- in other words, the end of the year for next year is now trading in that 4.36 area.

the fed is at 5.15 year end. there's a big gap there. there's going to be some kind of conflict let's hear how powell answered the question whether or not this loosening presents a problem >> i would say it's our judgment today we're not at a sufficiently restrictive policy yet and ongoing hikes would be appropriate. i would point you to the sep again for our current estimates of what that peak level will be. as you will have seen, 19 people filled out the sep this time and 17 of those 19 wrote down a peak rate of 5% or more, in the 5s. >> reporter: so he pointed us to the sep. let's look that 2023 outlook and you can see right there 17 folks are above 5%

by the way, that goes along there, one of them is 5.63 for a very long time maybe that is inaccurate 2 and not 12 the issue the fed is at least in their thinking much more hawkish than the market and maybe gary or maybe you, sara, can explain how they meet. >> doesn't usually the market tell the fed where to go on that front, gary? >> i don't know. look, it's an interesting debate but the market has been more right over the recent years or so i could point out the obvious. we could look at where the dot plot was a year ago as we sat here and look at where the market was it wasn't anywhere close to right a year ago as we sat here. i think the market looks much more accurate as i think we will get people back into the labor

force, will be forced back into the labor force and we're going to get wages to settle down to some degree. >> so, gary -- gary, you see rate cuts next year? >> i'm not sure i see rate cuts -- >> that's what has to happen for the market to be right that's what has to happen. >> it's possible that we could get rate cuts at the end of the year if we get workforce participation back to where i think we may see it, we'll get participation back and, unfortunately, we'll get participation back at a time when we would get jobs slowing down as well which means we would get higher and higher unemployment which would then lead steve liesman, steve, thank you very much. we appreciate it it sounds like, gary, you are leaning more into the pause camp >> i guess you would call it a pause. i've always been in the soft landing camp soft landing --

>> do you still see a soft landing and not recession? >> i think it's soft landing there could be a negative -- >> there's a difference, isn't there? >> i think we're now in the world of technicalities. yes, there's a big difference between a soft landing and a recession. absolutely i do not think we're going into recession. i think what we thought would happen as we renormalize over the three-year cycle feels to me like it's more and more practically happening. the one piece is people coming back to the labor force. will we get people back to the labor force? and, look, there's always a risk there's a risk in the new government omnibus, more government stimulus, we do student loans and people take the newfound income and say, look, i can stay out of the labor force longer and longer. i would like to renormalize as much as we can and the more that we renormalize and the less we create stimulus,

the more we'll get people back into a normal employment cycle >> so the reaction here bonds are catching a bid now, so we're reversing the early reaction and the ten year is down below 3.5 stocks, the dow is back lower by 140 points or so and the dollar is weaker is it ultimately bad for risk, bad for stocks if the fed and the market are on different pages about how high rates are going to get >> i think ultimately the fed is going to get to where the market is they can only diverge so long, and at the end of the day the fed controls the front end, as you and i have talked about. they have some immediate reaction into some financial impact into the consumer, but at the end of the day, the market will control what's going on because corporate debt and other borrowing will be driven by where markets price securities

>> another very interesting part i thought that i wrote down was when he got asked by one of the reporters if they would consider revising their inflation target, their goal higher, and he said five different ways, nope, not even thinking about it it's not something we would consider under no circumstance. and then he said there might be a longer run project about looking at the 2% inflation target what do we make of that? because it is going to be hard to get back to 2%, isn't it? they don't expect it until, i don't know, 2025 or whatever the plot says. >> yeah, look, i agree it's a long-run project to get back to 2% i think it will be very difficult to get back to 2%. i also agree with the way the chairman answered it i don't think in the powell fed we will see any deviation off the 2% target rate >> for credibility's sake he has to stay there. >> for credibility's sake. and for the fed to move their target, that's something they have to take very seriously. they would have to talk about it

for a long period of time. they would have to study it, and it's not something they could do very often if they started moving their targets for inflation around they would lose credibility based on what we see going on in the economy. that would inhibit the credibility of what the fed does the fed needs to have a side of objectives and live with them through thick and thin >> what it sounds like to me, your reaction, and this is what i think i heard today, too, he was hawkish than last time, right? >> definitely less hawkish >> they're nearing the end of the hiking and you think there's a soft landing, do you buy stocks >> again, overall i think i do, but i think, as i say many times, i think you have to look at companies and companies

specific i do agree that this sort of spending spree that has been going on for the last couple of years when people have stimulus money and able to spend, that will come out of the economy so some companies that have been affected by that are clearly going to have different earnings potential going forward. so i think you have to analyze the companies, analyze their competitive situation and how they're going to be affected by what i would call a more normalized economic picture in the united states. >> an increasing number of folks in our world, economists, financial market participateants that think the fed is oversteering here. jeremy siegel hasn't been shy on this network about that. the fact there's so much tightening done in such a little period of time and there is a lag effect, what does that ultimately mean for next year? why don't they just pause now and see how it shakes out? >> i do believe there's a little bit of truth in that i've said numerous times the fed

was late to this game. if you're late to the game, staying longer doesn't necessarily fix the problem. i think they need to take a real objective view of where we are even in the statement i pointed out it talks about higher food and energy prices. we do not have higher food and energy prices on the spot market we do at the retail level. i will clearly say -- >> retail went up half a percent last month >> we know that housing -- we know that rent in big cities are coming down. you have plenty of the big real estate companies owners on we know it's a lag in the calculation. we know these effects are coming through the economy so, look, i do think in some respects in the couple of questions where the chairman chls asked today, he

gave a mild hint that we are slowing down and we are 60 basis points away from our terminal rate and we won't meet until february again and in february it could be 25 and if we've gone from 75, 50, 25, that, to me, is a pretty dramatic slowdown >> and then after that done >> maybe another 25. maybe not. by then you will have almost another quarter of that. >> right and a lot can change gary, don't go anywhere. we'll take another leg lower in the market, 200 points on the dow. the s&p 500 is down about 0.75%. the worst group right now are the financials, the banks are getting hit. materials, real estate again, technology is lower with the nasdaq down a percent. it's still up 1.3% for the week.

up next we will get the white house's take on the fed's decision in a first on cnbc interview with national economic council director brian deese remember that job? also, doubleline's jeffrey gundlach and the impact on the market at the top of the market on "overtime." 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. did you know your health has more to do with your zip code than your genetic code? that doesn't seem fair. we agree. but where you live determines access to doctors, green spaces and fresh food. that's why we grow our own. smart. we don't think it's right that some people are healthier than others just because of where they live. that's why we're delivering food to areas with less access to it,

and helping schools teach kids about gardens. wish they'd taught gardening at my school. you would have aced it. introducing elevance health. where health can go. young lady who was, you know, mid 30s, couple of kids, recently went through a divorce. she had a lot of questions when she came in. i watched my mother go through being a single mom. at the end of the day, my mom raised three children, including myself. and so once the client knew that she was heard. we were able to help her move forward. your client won't care how much you know until they know how much you care. lily! welcome to our third bark-ery.

oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

welcome back on a fed day afternoon. here is what the market reaction is the s&p 500 down three-quarters of a percent we're starting to move south again. we've been all over the map. the low of the day down 400 on the dow right after that statement was released by the federal reserve. they raised interest rates 50 points as expected but the signal was higher for longer there's more work to do when it comes to fighting inflation and more evidence the fed needs to see that inflation is really coming down meaningfully chair powell didn't rule out 25 basis points, another stepdown in the increase in rates at the next february meeting. there's a lot there. we're seeing lower treasury yield. the dollar is weaker and stocks are again turning lower. the nasdaq down more than a percent. joining us now is director brian

deese from the white house it's good to have you, director deese. welcome. >> good to see you >> i know we're going to talk about inflation clearly and i know you want to keep the fed a little bit separate, but do you sort of wish that the fed, i don't know, might take a pause as we see inflation numbers coming down and the impact starting to damage the economy >> well, you're right. i'm going to leave the fed's decision making and the communications they made today alone for the reason we don't comment directly on their policy if you look at the macroeconomic context over the course of the last couple of months, i think what we're seeing is continued progress and continued resilience toward what the president has been talking about now for months of this transition towards more stable and steady growth and i think that's what we all want to see and we are seeing some meaningful progress on that front. resilient consumer, resilient labor market and now a couple months in a row of inflation

showing positive developments in terms of cooling there's more to do but certainly we're seeing progress. >> right and so the fed chair himself said there's a lag to monetary policy, as we all know what are your expectations as a white house economist about what the lag's impacts will be on the economy of the interest rates? >> the monetary tightening cycle operates differently across different sectors of the economy. certainly housing is one place we have seen a pronounced impact and one of the things that's interesting about the inflation data we saw come out yesterday is that we're seeing sort of a peaking of the printed inflation of the data on housing at very high levels but what we know in terms of real time data in the market is market rents and housing prices have started to turn over.

and so what you need to do is balance what the data is showing, but what we try to focus on mostly is what's happening out there in the economy. what are people experiencing, businesses experiencing, what are households experiencing? certainly you have to navigate the lags they operate differently in different contexts one thing i will say practically speaking is that households and businesses over the course of the last eight, ten weeks, have been experiencing significant declines in energy costs that's true at the pump for households down about $1.70. declines in the cost of diesel, for example. those are, again, some promising signs but also things we know are happening real time in the economy right now. >> where does inflation go next year >> well, look, we are going to be careful about and cautious about trying to predict the future there's a lot of uncertainty out

there. uncertainty globally and we need to factor that in, and, as the president said yesterday, we have more work to do to see inflation come down. what i would say the signs we are seeing now are promising, promising across goods, promising across services outside of the housing sector and, as i said on housing, there's reason to believe in the actual market environment we're seeing progress as well. i think the outlook right now, i think, is progress and more optimism that we are seeing movement in the right direction than we would have seen a couple months ago we have a ways to go here. we have to keep our head down and on the policy side we need to continue to focus on things that can help to lower costs for american families, lower costs for american businesses. the good news on that front is a number of the provisions we enacted this summer are slated to start on january 1st. a couple weeks from now weapon see more progress on the policy front in areas like health care and energy

>> you can't deny the fact the 2023 outlooks are coming out all over wall street for the economy and the market and it's marked by declining profit growth, deteriorating profit growth and economic activity with many more forecasting recession. >> well, look, if we were having this conversation early in 2022 there were a lot of people forecasting the second half of next year, we were going to see a stepback and now we're operating with 2.9% gdp growth last month and we'll see at the end of this year we are in a transition, and this transition is operating over the course of the next couple of quarters i think if you step back the biggest economic question for the united states is a longer-term question which is can we come out of this pandemic cycle breaking out of the equilibrium of low growth, low interest rates, increasing in

equal. they recognize the short-term challenges but almost all of them to a t say they are more optimistic and more interested in investing in the united states over the medium term than in some time because of the policy changes we've seen, long-term innocentives to invest in semiconductors, to have more stable supply chains, building clean energy over the long term with incentives to do so those are the things that are going to drive the longer term productivity benefits. i think there's reason for real confidence in that perspective >> brian, my guest host here for fed day is your predecessor, gary cohn is with me, who you know pretty well i think he wanted to ask you a question >> brian, great to see you let me change the topic for a minute i know you must be working

around the clock on the omnibus bill can you give us some insight how that's going and where it will end up >> the leaders have anouned there is agreement around a framework. gary, you've been through many of these cycles. the place to start when you talk about a funding bill is the top line, how much are you going to invest in the areas of defense and nondefense spending, and there is alignment growing, alignment around that. you work down into details. there are a lot of details that need to get worked out and then other provisions that may be accommodated in that process. but the good news is we have an agreement around a framework, and i think a real durable commitment to try to work to get this done. we have many miles to go over the course of the next several days but, gary, as you know and you've lived through, the significance of having a secure, long-term funding of the government so you're not having to come back in six weeks, two months or three-month

increments, create uncertainty across the federal government and everything that it touches is important economically. we're committed to doing what we can as an administration to help facilitate that kind of outcome. i think there's some reason for optimism here that we can get that done. >> gary will be very nice because he was in that position. i'll ask the tough question, brian, how much stimulus will be in there are you going to push for the he can tension of the child tax credit, the student loan forgiveness? these are factors that matter as we talk about trying to control the inflation problem in this country. >> i don't think it's a stimulus conversation i think it's a certainty for government operations and a certainty for businesses and investors that rely on certain elements of a functional government we're talking about can we continue to operate our defense and homeland security functions without having to go in very short increments, the care we provide for veterans, for education, so people can plan

out. important as we deal with the ongoing health challenges. i think there is a focus on providing that certainty and stability. that's what folks are talking about, what folks are trying to agree on i think ultimately that's the package that we'll end up with i'm confident we can get there >> i don't think that was a no brian deese, appreciate your time on the topic du jour, inflation and the economy on this fed day from the white house. didn't rule out the extra spending you were worried about. >> no. >> when it comes to sparking more inflation >> i don't think this will roll it out i would be surprised if it's not in the package it's actually one of my concerns the extension of the child tax credits. it's a great program but, unfortunately, in this period of time, we need to normalize the economy. we need to normalize people back to work. we need to get rid of the excessive stimulus programs. i'm worried about student loans. we need to get people back into the labor force.

it's the one piece of inflation we have not been able to tackle and is really where we are right now and hopefully we will normalize this >> and the fed can't control the labor force participation ultimately >> we cannot >> gary cohn, good to have you here as always >> sara, always a pleasure >> up next on the show jefferies chief market strategist david zervos following the lesatt rate hikes when we take you inside the market zone. we're off the lows on the dow. esg is responsible investing. who's responsible for building esg into your investments?

at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.

(vo) hi, we're visible. a different kind of wireless company. in sports, catches are a good thing. wireless? not so much. so we don't do catches. with visible you get unlimited data for just $30/mo. switch now to get a five-year rate lock. not a catch in sight.

power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity

we are now in the "closing bell market zone." mike santoli is here to break down the crucial moments of the trading day as always. mike, the fed market reaction feels very indecisive to me. we're down, we're up, we're actually climbing, down 113 on the dow and three sectors have gone positive. they're the defensive, recessionary type stocks which jives with the fact you're seeing bonds catch a bid, jeldz below 3.5% and the dollar is weak what's your take >> i will say today's s&p moves have been entirely within the range the last two days. not a big change in overall outlook. for growth, for inflation, for

mroim, it all seems like a lower chance of a soft landing greater inflation even with that they'll have to have rates higher the market is not just taking that on face value the market seems to have greater faith there was down side momentum and the fed will go slowly toward its target of 5% on the fed funds rate or maybe it won't get there and maybe will cut thereafter. in the comments powell really did make it clear it wouldn't be weird to step down 25 basis points in february and maybe that's all they do for a while >> one part of the market is certainly very senssensitive home build ers expect rates to increase and believes lennar and pulte are well positioned. lennar is set to report earnings

the commentary will be key, diana. >> reporter: that's all we're looking at lennar is expected to show an increase despite a slowdown in home sales buying down the mortgage rate we heard from toll brothers interest rates did make a big move hitting a high of 7.3% but then dropping nearly a full percentage point by the end of november and that could have helped pull some in the door >> diana, thank you very much. more market reaction david zervos joins us, chief market strategist at jefferies it wasn't the beatdown that the market got, say, in jackson hole or even the last fed meeting but there was a message from powell there's more work to do on inflation.

what's your take >> sara, i think the take is we're coming down in these rate moves. we're gone from 75 to 50 it's very hard for jay to remain at peak hawkishness, where he's been most of the year when you're taking your foot off that brake a little bit it was very hard for me to see why people would think you could get more hawkish messaging than usual from jay into a meeting like this. that's the story it's a message that is still very consistent with everything he said all year, they're vigilant, will not make the mistake in the 70s you talked about it earlier on your program so he's not giving you anything dovish to bite on but we were already, i think, very close to peak hawkishness

i think the market is telling you that >> the market is telling you that, bonds are getting bought right now. yields are lower we are well off the highs that we were seeing a few months ago. do you think that's it have we seen the highs >> the market is pricing in a lot of credibility for the fed a lot of people like to talk about this inversion as the recession indicator, and it is there's an indicator we have a risk of recession and it's a material risk. it's not guaranteed by any means. some people think we had one last year with two consecutive quarters and didn't feel that bad. i think the yield curve and the ten year in particular is telling you, sara, the market has an incredible amount of faith in the credibility of the fed right now and its desired anchor which they've done pretty well in the back-to-back years on inflation >> so what do you do as an

investor now we've been waiting for progress. we got that two months in a row. yesterday it looked like a giant rally and it basically evaporated which suggests there's hope and optimism built in around moderating inflation numbers. are we targeting jobs reports? what sort of signals to know whether it's a good time to buy? >> honestly, sara, i think next year there's a lot more interesting opportunities, at least from my perspective and the credit markets than the equity markets the big difference between this year and last year is not the inflation rate the inflation rate is the same as it was and the unemployment rate is only 0.2 away from the beginning of the year at 3.9 the big difference is yields are higher particularly in the belly of the curve and spreads are wider. so, to me, you have an opportunity in some of the more beaten up areas of the credit market or leveraging in the higher end of the credit markets that can give you equity like

returns, even double digit yield returns without having to take equity risk. i think that will be the interesting trade next year. i'm not sure that the fed is going to want to see big rallies in the equity market and they're going to jackson home you every time we rally up because they can and they want to get that number down. the report card has a couple fs. >> and there's a little bit of a gap where the fed thinks it will be in the market david zervos, thank you for your take we have two minutes to go, mike. tesla, as you go to the internals, a new 52-week low, the lowest level since, what, early 2020 >> yes >> and continuing to lag the broader market >> the unwind of the favored

growth stocks but idiosyncratic with twitter and the loss of faith in shareholders there's leadership at tesla trying to short things out as demand weakens in china back to the heralded stock split in terms of going through those levels from the upside >> what else do you see in the internals? >> nothing too dramatic. the market has been twitching. a two-year note yield. this did pop higher. this is bottom at 4.2. short-term rates even if we get to 5%. the volatility index has come in it remains in their range for the week >> what a choppy reaction.

>> interpreted as higher rates for longer even though half a percentage point there's the s&p down half a percent into the close health care the only sector going to go out positive banks are the hardest hit perhaps on the lower yields you are seeing weaker dollar. the nasdaq down off the lows about 0.75%. to "overtime" with scott sara, thank you very much. welcome, everybody, to overtime. the bells. we're just getting started with a busy hour ahead. cnbc contributor josh brown along in just a bit. let's ask doubleline founder ceo and chief investment officer jeffrey gundlach with us