inflation could be sticky. as we go into the next meetings, i'm wondering how wall street or others should look at your reaction function? will you be reacting to time or data if we're looking is he same sort of labor market and inflation levels in july or september or november, will you move? you said you feel you need to. is it time that will require additional movement or reversal infl in inflation >> our main focus has to be on getting the policy right that's what we'll do the july meeting will be live. we'll just have to see you'll see the data and hear fed people talking about it and markets will have to make a

judgment >> reporter: do you think inflation is likely to continue coming down based on the lags and based on the threat of additional movement or are we going to be in a period where we're not going to know what's happening? >> if you look at -- if you -- i'll point you to the forecast inflation is running core pcu at about 4.5 little higher than 4.5% we think it will go down to 3.9 by the end of the year that's expecting substantial progress that's a pretty significant decline for half a year. that's the forecast. you know, we try to be transparent in our reaction function we're committed to getting inflation down that's the number one thing. that's how i think of it

>> reporter: "politico." could you talk about the balance sheet and how you're thinking about it what are you looking for to judge whether we're approaching reserve scarcity and the treasury issue, if it's going to affect that, also are you considering lowering the rrp rate to take pressure off banks? >> on the treasury part of it -- i can talk about that and go to the balance sheet. we've been focussed on that for a couple months. treasury has laid out its borrowing plans. i saw the secretary's comments to the fact that treasury has consulted with market participants and they'll watch carefully for that that's from the treasury which sets the borrowings. at the fed, we'll be monitoring market conditions carefully. the adjustment process is very likely to involve both the

reduction in the rp facility and also in reserves it's hard to say at the beginning of this which will be greater. we are starting at a very high level of reserves and still elevated rp for that matter. we don't think reserves will become scarce in the near term or in the course of the year that's the treasury part of the answer we will, of course, continue to monitor conditions and money markets and we're prepared to make adjustments to make sure that monetary policy transmission works was there another part of your question >> reporter: are you considering lowering the rrp rate to help take pressure off banks? >> we have a number of -- i would say the rrp doesn't look like it's pulling money out of the banking system latelyctually been shrinking

that's not something we've thought about a lot over time. doesn't really look like that's something we would do. i think it's a tool that we have, if we want to use it, we can. there are other tools we can use to address money market issues i wouldn't say it's likely that we would do that in the near term >> reporter: bloomberg have you seen sufficient cooling in the housing market to bring inflation down how does the rebound affect your forecast how does it factor into monetary policy >> certainly housing very sensitive and it's the first place -- one of the first places that's either helped by low rates or held back by higher rates. we saw that over the course of the last year. we now housing putting in the bottom or maybe moving up a

bit. we're watching that situation carefully. i think we will see rents and house prices filtering into housing services, inflation. i don't see them coming up quickly. i see them kind of wandering around at a low level now. that's appropriate >> reporter: do you think you'll have to target that with further rate increases >> well, i think we look at everything we don't just look at housing. the way it works is individual participants sit in their offices all over the country and write down their forecasts, including the rate forecasts and then they send it in on friday afternoon and we copublish it fr you. i don't know that housing itself is going to be driving the rate picture, but it's part of it

>> reporter: thank you for taking the question. edward law edward lawrence with fox business the cpo projects the federal deficit to be 10.8 trillion in two years. at what point do you talk more firmly with lawmakers about fiscal responsibility because i'm assuming monetary policy can't handle alone the inflation with the high level spending >> i don't do that that's not my job. we hope and expect other policy makers respect our independence on monetary policy and we don't see ourselves as, you know, the judges of appropriate fiscal policy i will say and many of my pred

s predecessors have said -- i think trying to get into that with lawmakers would be inappropriate given our independence. >> reporter: was there any conversation about the federal reserve financing some of that debt we see coming down the pike >> no, under no circumstances. >> reporter: thanks for taking our questions, chair powell. looking at the sep, gdp forecast was raised significantly the unemployment rate was pulled downward should we take that as a sign that that committee is more confident in a soft landing, at least as to what you were expecting in march >> you know, i would just say it this way, i continue to think -- this really hasn't changed -- that there is a path to getting inflation back down to 2%

without having to see the sharp downturn and large losses of employment we've seen in so many past instances it's possible. in a way, the strong labor market that gradually cools could aid that along i want to come back to the main thing which is simply this, we see -- the committee -- as you can see from the sep, the committee is completely unified in the need to get inflation down to 2% and will do whatever it takes to get it down to 2% over time. that's our plan. you know, we understand that allowing inflation to get entrenched in the u.s. economy is the thing we cannot allow to happen for the benefit of today's workers and families and businesses, but also for the future getting price stability back and restored will benefit

generations of people as long as it's sustained and it's the bedrock of the economy you should understand that is our top priority >> reporter: quick follow up you said the committee will do whatever it takes to get inflation down when i look at the sep, inflation is still looking to be elevated can you help me understand that? >> if you look two and three years out with the forecast -- first of all, i wouldn't put too much weight on forecasts even one year out they're so highly uncertain. what they're showing is as inflation comes down in the forecast, if you don't lower interest rates, then real rates are going up just to maintain a real rate the nominal rate should come down to maintain real rates. since we're probably going to -- we're having real rates that are

going to have to be meaningly positive and significantly so for us to get inflation down, that means that it will be appropriate to cut rates at such time as inflation is coming down significantly. again, we're talking about a couple years out as anyone can see, not a single person on the committee wrote down a rate cut this year, nor do i think it's at all likely to be appropriate if you think about it, inflation has not really moved down. it's not reacted much to our existing rate hikes. we're going to have to keep at it >> reporter: hi, chair powell. there's a rebound in may in unemployment is it consistent with the fed's

maximum employment mandate are you worried about that >> we are, of course, worried about -- there are long-standing differences in racial and ethnic groups across the labor market that's a factor we can't address, but we consider that when we think about maximum unemployment it's a broad and inclusive goal. so we do watch that. remember, all unemployment, including black unemployment, has been bouncing around right near historic lows we're talking about -- i mean, it's as strong a labor market as we've seen in a half century overall unemployment of 3.7% is .03 higher than it was measured a month ago, but still

extraordinarily low. it's a very, very tight labor market >> reporter: thank you i want to follow up on the rent question and housing we heard governor wallard -- we haven't seen the slow down in rents show up yet. we heard the governor talk about there's not going to be much relief coming. how are you thinking about that and how did that play into today's outcome? >> you know, as a factual matter, that's correct we need to see rent bottom out or stay low in terms of increases because we want inflation to come down and rental is a very large part of the cpi, about half of that for the pce. so it's important. it's something we're watching very carefully it's part of the overall

picture. i wouldn't say it's the decisive part take a step back look at core inflation over the past six months. you're just not seeing a lot of progress, not the kind of progress we want to see. it's hard to avoid that. committee people-- people on the committee, the median went up significantly the median participant now thinks that core pe inflation will be 3.9% this year once again, every year for the past three years it's gone up and it's doing that again. we see that and we see that inflation forecasts are coming in low again we see that this tells us we need to do more. that's why you see the sep where it is. >> reporter: could you talk about your outlook for wages and given the recent slow down in core services how far you think

we need to fall? >> wages will continue to increase we're talking about having wage increases at a strong level, but consistent with 2% inflation over time. i think we've seen some progress, all of the major measures of wages have moved down from highly elevated levels a year or so ago and they're moving back down, but quite gradually. we want to see that process continue gradually it's great to see wage increases, particularly for people at the lower end of the income spectrum. we want that as part of getting inflation down to 2% inflation hurts those people more than anyone else. people on a fixed income are hurt the most by inflation. >> reporter: thank you, chair powell greg robb from market watch.

i wonder if the committee talked about the labor market and there's strikes now in hollywood and the united auto workers are talking about a possible strike. aren't workers -- workers have power now and are going to be seeking higher wages does that come up in your discussions? thanks. >> the topic of wages in the labor market and dynamics in the labor market is about as central a topic as anything. labor economics and the labor market are utterly central it's half of our mandate we spend a lot of time talking about that i think, you know, we -- there are structural issues that are really not for the fed we don't spend a lot of time -- although we take note of what's going on we're not involved in discussions or debates over strikes and things like that

you know, we look and see what's going on we're making judgments about what it will take to get inflation down to 2% in the aggregate. most folks would say it wasn't about wages at the beginning, and it's becoming more about that as we get into service sector inflation which is the part of the economy where we've seen the least progress. >> reporter: thank you, mr. chairman wondering what your thoughts are about systemic risks now that we're three months past the failure of silicon valley bank, and also specifically what are the risks associated with commercial real estate and nonbank financials and could you further elevate those risks with higher rates possibly for longer >> so, i'm trying to think where to start i'll start with commercial real

estate we're watching that situation very carefully there's a substantial amount of commercial real estate in the banking system it's well distributed. to the extent it's well distributed, then the system could take losses. we expect there will be losses there will be banks that have concentrations and they'll experience larger losses we're monitoring that carefully. it feels like something that will be around for sometime as opposed to, you know, something that will suddenly hit and, you know, work its way into systemic risk in terms of nonbank financials, the financial sector, there's been a ton of work and, you know, clearly in the pandemic it really was -- it was the nonbank financial sector where issues arose. there's a lot of work going on with the administration in

particular leading that to try to address issues in the treasury market and in all kinds of nonfinancial markets. our jurisdiction at the fed is over banks, bank holding companies and some banks that's our main focus. in terms of the events of march, as i mentioned earlier, we will be carefully monitoring that situation. you know, our job generally involves worrying about a lot of things that may go wrong that would include the banks might be hard for me to identify something that we don't worry about rather than what we do worry about. we're watching those things. as we see things unfold, as we see what's happening with credit conditions and also all the individual banks that are out there, you know, we'll be able to take -- to the extent it's appropriate we can take if they're macroeconomic issues, we can take that into account that's what i would say.

>> reporter: do you risk further exacerbating those issues if you get up to another 50 basis points >> so that's -- i meant to address that by saying as we watch we'll see what's happening. if we're seeing the kind of tightening of conditions that you could be referring to, then we can factor that in. really, we use our rate tool as -- it really has macroeconomic purposes we'll take that into account we have responsibility for financial stability as well. that also is a factor we're always considering thank you very much. >> that was fed chair jake powell as you heard there after what our own steve liesman described as a very hawkish pause, the fed projecting two more rate hikes before it's all done chair powell saying all policy makers see more hikes necessary.

calling july, a live meeting the stock market selling off almost immediately it's somewhat skewed at least as the dow is concerned by what's been happening with united health it was down by more than 400 points s&p was in positive territory. the market still trying to pars out what the fed chair said. good afternoon i'm scott wapner you're watching "closing bell" at the new york stock exchange jeffrey gundlach will be joining me cameron dawson is here what's the story >> the statement was hawkish the s&p was hawkish. then there was that little window in the press conference where powell wasn't necessarily the most hawkish he's ever been. he talked about how, yes, july

is a live meeting, but certainly wasn't committing to it. you saw the market sort of take that with the interest rates coming off their highs for the day. stocks rebounding. the reality here is that the fed still sees a lot more work to be done and that their job fighting inflation is not done. >> you're keying off what some have been talking about that he went out of his way some are suggesting to say july isn't predetermined. at that moment maybe the stock market took some comfort in that it may be short lived. >> it seems that way it's interesting to have so much y unamity. they're still guiding for two more hikes to get to the 2%

rate >> let's bring in jeffrey gundlach jeffrey, good to see you steve liesman described this as very hawkish rick santelli said hawkish times ten. what was your take >> it was definitely hawkish in the rhetoric, but not hawkish in the action i feel like the fed is getting mr. magoo like at the last meeting it was a hike, but called a dovish hike now we have a hawkish pause. wonder what it will be in the july meeting seems like the opinion that we need more rate hikes has been made clear the path of rate hikes is all over the place i would like to remind people that the fed has had a bad record of forecasts where the fund rate is going to be jay powell, to his credit, pointed that out it's interesting to notice that

two years ago the forecast for the fed funds rate at the end of 2023 was 50 to 75 basis points that was the median dot. they missed by 450 basis points and even more if they continue to hike, which i don't think they'll do we seem to have some fed people think rates are going to stay above 5 for two years and others thinking it's going down to 2.5. as of a couple meetings ago, jay seemed to have his ducks in a row. now it's like he's trying to herd cats. i don't understand the talk about this strong economy. people talk about the strength of the labor market and there's been many months of beats on that the most recent labor market report, which was touted as being very strong, was not strong there was growth in jobs, but there was a significant decrease in average hours worked.

if you take the product of those two, number of jobs times average hours worked, you get economic aggregate outlook yes, jobs went up, but the hours work fell enough if the hours worked stayed the same, the product of jobs times hours worked, you would have had a loss of jobs if hours worked stayed stable, to get this output, you would have had more than 100,000 jobs lost that's not that strong i don't understand why the fed is making the same mistake they made a year and a half ago, but in reverse they're not looking at the high frequency data there was a lot of commentary after the statement. i think steve liesman did a nice graphic where he acted like he was driving a car but going backwards.

i agree that's what's going on here if you look at real economic indicators, they're really bad m-2 is negative at a level that hasn't been seen in decades. leading indicators are negative 8% over the last year. the yield curve has been inverted by 100 basis points ism, new records, are in deep recession territory. manufacturing pmi is massively recessionary and even services has given up the ghost going down to 50.3 i'm hard pressed to find an indicator that's strong. you can tell me it's employment, but the thing i referenced about the product -- also, the unemployment rate has peaked its head above its 12-month moving average. now, it's not anywhere close to its 36-month moving average which is an absolute lead pipe

that's still up at about 5%. when you think of the 36-month moving average, that's three years. three years ago we're talking about the depths of the pandemic and unemployment spiked tremendously now it's come back down. that's going to be falling i don't think the fed is going to hike again. we have a trend in place here, scott. it went 25, then 50, then 75 for a while, then 50, then 25, then 0. i don't know maybe i'm just a mathematician, but i see a trend here i don't think the fed is going to be raising interest rates again. i tweeted that out after the last meeting one thing about this and i'll stop and you can probe further this is one of the most easy to predict fed meetings of all time i feel like we're back to four years ago. i think it was universally believed this would be a pause and that this would be a hawkish

statement to try to offset, you know, the complication of having -- of financial stress with, you know, conditions tightening and three bank failures while inflation is still somewhat sticky. >> that may be fair, but i don't know if many were expecting the idea of two more rate hikes before they're all said and down steve liesman has made his way out of the room. let me bring him in. steve, you seemed genuinely surprised when this statement came out and they laid their case out as to why they see two more rate hikes. you said, quote, the fed isn't going to stop until they break something. >> reporter: i guess i have a difference with jeffrey on this score. i went in there with one question in mind will they or won't they? do they mean this or not mean this i came out of the room thinking they mean it they're probably going to do one, maybe two more.

what i think happened in the intervening period, the reason i asked the question i asked, i wanted to know did powell change from the way he sounded in a more dovish way at the end of may. i think he did i think he went in there to herd cats and became one of the hawks if i can mix a couple metaphors. he maybe wanted to bring them over to the dovish side. i think they brought him to the hawkish side let's listen to what he said about inflation. >> i still think, and my colleagues agree, that the risks to inflation are to the upside still. don't think we're there with inflation yet. we're just looking at the data if you look at the full range of inflation data, particularly the core data, you just aren't seeing a lot of progress headline, of course, inflation has come down materially, but we look at core as a better indicator. >> reporter: just getting on

that theme that jeff was talking about with the old meetings, the old way we used to go was follow the balance of risk. maybe the data comes out weak the way jeff is expecting it, but i kind of had the feeling they mean it i may be proved wrong. >> jeffrey, i would love your reaction >> let's go through it >> maybe it's time to believe the hype so to speak. >> again, i think they're making the reverse mistake they made about a year and a half ago where they were too slow to raise rates because they're looking at lagging data. employment is lagging data we already see some signs of weakness developing in thee fed

and 375 on the inflation rate. i don't believe the fed will raise rates ahead. i think chair powell has a difficult job right now. i think he realizes we're at a turning point on the inflation situation and on the economy and yet there are people that are dedicated to these lagging indicators like employment, labor market and looking at core cpi, well, it lags it just does i think the used car thing which is part of the cpi problem stickiness we have, i think that will ease and shelter is there

that's going to be the last man standing on inflation. i think the fed is overstating the inflation risk at this time when you look at all the high frequency indicators i'm sorry to go on so long i think it's an important point. >> it is a good one.s kind of wk santelli suggested this is more bluster than substance i don't think he believes that they'll do what they'll suggest they might either. how would you respond to that? t have a big argument with what jeff is saying because i think fundamentally you count on the federal reserve to follow the data in front of them. by the time july rolls around, we talked about this this morning, this idea that the big june number, 1.2% inflation from june 2022 rolls off and plunges the rate down to 3.5%.

that could hold them in july yes, if the data turns, maybe they'll pause again. i just need to -- i don't know enough right now to gauge the strength of the commitment of members of the committee if you look at it, there were nine members at two hikes or more and i believe the total is 12 at two hikes or more. that's two thirds of the committee and that's where they are right now. maybe they'r inclination is to take them at their word that they mean to hike and watch the data if jeffrey is right and the data erodes in front of them, it takes their case away. >> steve, great stuff. as i move back to you jeffrey, the scenario you paint is not one where the fed hikes one or two more times, but one where they cut because you think the

economy is much weaker and inflation is coming down faster than they're willing to admit? >> well, i think that -- i think the fed will cut rates if the unemployment rate goes up to what they forecast it's really fascinating that the fed is forecasting a recession in their dot plot. people are acting like they upgraded things. they're still talking about an unemployment rate that's basically about 75 to 100 basis points higher than what the trough was historically when you get an unemployment rate that goes up about 50 basis points, you've never failed to have a recession. usually it ends up going up by 200 basis points or more i think that's what in prospect here they're clinging on to the core inflation data which i think is misleading it's pretty random when you think about it, all the slicing and dicing of inflation data where you take the -- you know,

the headline number and strip out food and energy and shelter. i mean, you end up talking about a really contrived aspect of prices i'll say it one more time because it's important look at commodity prices they're just dead in the water we keep getting opec cuts, or at least stated who knows if they're cutting maybe they're like the fed they say they're going to cut production, but don't cut production oil prices just don't really go up we see persistent weakness that's a tell tale of coming lower inflation. i really believe, as we talked about nine months ago, that i think treasury yields peaked last year, not on the short end, but even they're down substantially. two-year treasury was above 5.

it's 4.75, but it's lower than it was before and the ten-year treasury hasn't seen 4 in a long time it's range bound, but it's not going anywhere i think that if the fed follows the path they're talking about, i think steve liesman is right, maybe their intention is to break something. if they do that, they are going to break something we already see lending conditions getting much tighter in these surveys of lending officers they've been tightening credit conditions for a long time that leads to a credit starvation for the engine of this keconomy, particularly for small businesses just to repeat the fed was way too slow in raising interest rates back when they started i said they should raise rates 200 basis points right now they didn't. because of that long rates went

up because they were anticipating the inflation and that led to this banking crisis at the regional bank level they were kind of responsible for that now, if they overtighten which i think they've already done, what about the regional banking system who is going to keep deposit rates at banks who are paying no interest rates when you can get 5.75 in rolling t bills? >> what do you say to the pushback that they've overtightened? we're talking about a stock market in the midst of a pretty strong rally some suggest it's a new bull market yields have not -- you know, yields have not exploded higher either couldn't you see how they can look at that and say we haven't done nearly enough i know that labor is a lagging indicator.

nonetheless it's still strong enough at this point and certainly stronger than they expected it to be. they say there's the evidence, all you need, that we haven't done enough. >> if you want to talk about the stock market, you have to divide it into sectors. you have the s&p 7 if you say ai, your stock goes up 20% then you have the s&p 400 which has a little tailwind. the stock market frankly is exhibiting signs of mania where you have ace of the market driving the entire train. it leads to a valuation which is pretty scary with an inverted yield curve and the fed raising interest rates the s&p 500 has a pe of 19 on a forward earnings basis if the economy weakens, those

forward earnings are greatly exaggerated. the s&p 500 is really overvalued you have nvidia up over 400% year to date i'm going to say that's a lot. there are stocks like that leading the train. this is feeling like the lead-up into january 4, 2022 in terms of the action of the s&p 500. there's been a lot of -- you know, there were a lot of shorts there was a lot of pessimism we've had the type of retracement you would expect to call this a new bull market is pushing it with the s&p 500 at 19 times forward earnings. >> i'm just going off what technically they suggest we've been having debates every day as to -- >> you're telling me pacwest stock is in a bull market? >> your point is well made

in this environment -- you don't like risk assets if you think the stock market is in -- what you're describing to be -- you didn't use the word bubble sounds like you're describing something like that. what do you like here and now? >> again, i haven't really changed my game plan for about a year and a half, maybe a year and three quarters that is systemic upgrading in fixed income portfolios. this is the perfect time to do that we've had with the stock market going up a nice rebound and a bid that was absent a few months ago even in ccc assets this is the time you want to have a barbell portfolio with some risk assets, primarily in bonds. in the past we talked about a

30/60/10 portfolio take a pick on your real asset of choice. now i think you should be 20% stocks, 60% bonds and 20% in the real assets. the fixed income market is really cheap 5% in a very high-grade bond portfolio with no default risk you can get 8, 9, 10% in an actively managed fixed income portfolio. ccc i don't like at all. even single b is something you want to upgrade away from. you can get all these yields and have all this upside what people don't understand is thanks to the fact that risks went up a lot and bonds are somewhat elevated, about 450 basis points, you're talking about prices that went from 100

on these credit bonds down to 80, 70, 60, 50 because of those rate increases and some of the fears. when you buy risky credit or moderately risky credit at a price of 100, you have a bad proposition because they can't go up very much. if the prices go up, they just refinance them prices going up means they can do new issue bonds at lower yields they're refinance them and take your coupon away and you have all that downside if you started at 100, you can go to 80, 60, 50 that's what happened if you start out at 60 or 65 cents on the dollar, you have 50% upside you have stock market like upside i would argue even greater upside than the stock market from these valuvaluations. stocks can easily drop 50% we've seen it so many times in my career and the bonds aren't

going down to 32.5 unless there's a massive default problem. if there's a massive default problem, stocks are going down more than 50%. fixed income right now has four times the payout of the stock market if you do this barbell i'm talking about and you can hedge it with treasuries long bordunds are not at 1% or % treasuries are up to 4%. they could turn into 2%. that's a 20% gain plus coupon. the long bond could give you a 40% gain plus coupon this is an exciting time for the fixed income risk parody because we're back where we were in 2012 or so. you can get yields and you can risk manage very precisely. >> you still like the longer end of the treasury curve rather than the shorter ends where you have yields at 5% in some cases?

>> you do a mix there. i don't think you want nothing but long bonds you can take short term, medium grade credit and asset-back securities that amortize very quickly. they're paying you back quickly. the job is to keep invested because you're getting so much payback. those are up around 6, 6.5%. you can marry them up. we're talking about short-term assets getting the benefit of the base pricing off the inverted yield curve the long-term bonds can go up in price. t you're not talking about yield here you're talking about the risk-management vehicle. you have a portfolio that can yields in a low risk sense, a yield around 6% in a high risk sense. it can be double digits, but you have to deal with volatility there. that's where i am, scott

i've been here for a while. >> what about emerging markets, are you still there too? >> emerging markets have been very volatile. em emerging market currencies haven't gotten the upside. the emerging market stocks are up about 3%. that's more than the s&p 500 they've been challenged more recently with the dollar having rebounded. as a long-term play, you should own emerging markets on a dollar cost average basis not china, but southeast asia and then india of course india has a very, very bright future over the next two decades call it. that's a core holding. >> you're obviously quite critical today of the fed in

some respects. before i let you go, i want to look at all this in total. we've done ten straight rate hikes before today we've done 500 basis points in a little more than a year. we have a stock market that as of today has hung in there pretty well. an economy, yes, it might be weakening and the leis are weaker nonetheless we've not had the recession that so many have called for or thought would be here by this time at minimum can you assess jay powell's job and the fed of saying they've done a good job to this point? to be where we are with what they've done and have those things i just told you we do >> i think they started out a year and a quarter ago doing a terrible job we talked about that all through 2022, until about -- i don't know -- maybe it was the november meeting or december meeting where i said i really

feel like he's found his footing. jay powell has himself in the right place. i think they're still okay i think where they are rightno is okay, but if he follows that rhetoric, that hawkish rhetoric, i think he's going to make a mistake. i think he's walking on eggshells here he's got a lot of cats to herd he's done a good job if he doesn't hike rates and starts looking at high frequency data, he can go back to that spot where he was where i was complimentary of him, scott. i'm not always critical of the fed. i'm not a big fan of the fed as a mechanism. i think jay powell's got himself to a good place. the hardest thing to do in the investment business, after you get yourself to a good place, if you see storm clouds coming, you got to make changes. one of the hardest things to do

in the investment business is to make changes after you've done well because it's such a good friend of yours. it's gone well i've got this in the portfolio economically i've benefitting. the hardest thing to do is change when i bought european stocks about a year and a half ago, it felt really, really weird. i was losing my old friend of being out of the european stock market, but it's been a good place to be over that time period it's hard to do, but i hope jay has the courage to do it. >> jeffrey, i appreciate it as always thank you so much. >> tell your viewers to look up buffalo akg art museum and go to the images and try not to say wow. we just opened this week >> i don't have to tell them you just did jeffrey, thank you >> thanks, scott we're now in the "closing

bell" market zone. cameron dawson back with us again. she joins us to break down the crucial moments of the trading day. bob, you first, it's been an interesting market reaction. what's your takeaway >> it's been one

data is coming in better than expected, and i think jeffery's comments about data being weak or signs of weaknds, a lot of

that is either market-based data or soft data if you look at the hard data, things like instead of looking at pmi, looking at industrial production, they remain resilient, you haven't seen enough weakness in the data to suggest the fed needs no make an about-face >> we've wrestled with this idea of who's really in charge. have the bulls gotten it back? jeff makes the case. obviously, he's the bond king. he's a bond guy. he's going to make the case in some respects for bonds, as he did. but it is a hurdle to get over, that there is -- there are other attractive securities to be investing in besides equities, still, whether it's cash or fixed income >> i think the real question, and the issue for the market, if you want to try to get if market higher, if that's what your goal is, it's all those people who are buying 4.5% one-year treasurys in the middle of march that were flooding the market and pulling money away from the stock market, we are up 500

points on the s&p since the middle of march. that's 13% are those people sitting there saying, i got 4%, one-year cd, and we're up 13% since i pulled all that money out are they going to be dragged into the market right now? >> unless they think it's too late they missed it, so they're going to stay safe >> the fomo never dies let me go one point about powell what's really motivating powell for being so aggressive? he hinted at what they were really afraid about. he says, forecasters, including the fed forecasters, have consistently thought inflation was turning down and have been wrong. he says, we have been wrong. it's better to overtighten than lose credibility that seems to be what his message is today >> look, he said, cameron, the risks to inflation are still to the upside i think it's pretty obvious, too, at this point, that when they thought was going to be restrictive wasn't restrictive enough if you look at the fact that the labor market -- i get the idea

that it's a lagging indicator. still hung in there pretty well. stock market is up 20% since the lows >> they seem not to believe their own forecasts. they talked about how pce would go down to 3.9%, and he goes, that's a pretty aggressive forecast i think what's interesting is we're at the same real interest rate that we were prior to the issues,and yet valuations for tech stocks are up 30% that just means that this rally has had nothing to do with the fed. the fed's not been the key source or driver of the upside it's all been positioning, fomo, a.i. optimism. >> gundlach says, no more hikes. what does dawson say >> i think it's still very potential that we could see more hikes. i think that the fed still has a credibility problem. it's widely thought they would get to 5.25%, that they wanted to make sure they delivered on what they said they were going to do, so i think if data continues to be resilient, the big question i have is that if we have a strong jobs data but

softer inflation, just because of those tough comps, year over year, what does the fed do in july with that comp, that combination? >> i mean, are they going to go overboard, bob, trying to save their own credibility as cameron kind of suggests >> yes yes, that's what he seemed to imply. >> their credibility is more important at this point than doing what's right >> yes yes. and remember, square the circle. they raised their estimates for gdp. they lowered their estimates for unemployment, and they act like something imminent dangerous is coming that they want to slow down the economy, trying to raise 50 basis points. it seems a little -- >> doesn't square necessarily. >> the market probably doesn't believe it, which is why the s&p was positive momentarily and is only down not even 3.5 points. >> yeah. >> because the market still doesn't believe what powell says >> or they can withstand the 50 basis points if it does actually happen i happen to think jeff is right.

i think they're not going to do it i think they just need to keep that credibility, and if they overtighten, so be it. better than lose credibility powell said we've been wrong on our inflation forecast they can't have that happen. their credibility is on the line >> maybe one part of the economy is bottom. that would be housing. housing stocks have been one of the bright spots of the year out of the discretionary space diana, leads me to you >> this is going to be interesting given the dynamics in housing during the spring quarter, builders said they were benefitting from the lack of existing home supply, but mortgage rates all nuts this quarter with the 30-year fixed starting march above 7%, then falling really sharply in april, close to 6%, then back up over 7% so, we'll look for common builders' costs, materials, and wages and of course gross margins, which fell in the previous quarter and then home prices as a result lennar stock has been on a tear, nearly hitting an all-time high

yesterday, but it's really going to be about the demand going forward. we'll be listening for that, scott. >> all right diana, i know you will we'll be watching for certain. let's go back to our panel as we watch the market here. dow is down 275, but again, price weighted, united health has been a massive drag all day. at one point today, it was accounting for all of the losses of the dow, right, bob so, it's skewed in the way you look at it today suggests that is not all fed >> no. this is why the dow is a flawed index, in my opinion it's a $500 stock. when your average stock in the dow is closer to $125. you move 40 points in that stock, in a day, that's 280 now points on the day when the market's moving in a completely different direction, and yes, of course, medical ratio, loss ratio they were talking about was an issue, obviously, but 400 points -- excuse me, almost 300

points in the dow? there were four stocks down today in the dow, 26 up at 10:30 when i made a comment about this, and we were down almost 200 points in the dow. i mean, that's a -- that's a problem. there's a reason market cap weighted indexes like the s&p 500 have won the day, because it's the community voting on real shares and real involvement in the market. >> i want to see, too, in the days ahead, if today ends up being, for lack of a better description, a whole lot of nothing. you would pay too much attention to what the chair said the bottom line they did ten rate hikes in a row, and now they've paused and maybe once they've paused, it's harder to start again regardless of what they suggest. cpi was good the ppi was good the economy's still hanging in there. and the stock market is too. >> yeah. well, canada and australia restarted their hikes, so there is precedent by other major central banks that they could do

that, but looking at the market action today, under the surface, there is some defensiveness. the only ones that are up are staples and tech it will be interesting to see if that continues in the coming days, if we see a risk-off tone under the surface. >> what do you make of gundlach's suggestion of -- he didn't use the word "bubble" in tech, but some others have in str suggesting there's been some mania around the magnificent seven or seven to ten names instead of everything else until recently was ho-hum. >> there has been a mania, but is the mania insane? i don't think so i think the a.i. potentials are enormous segal has been arguing for a while that using old-school valuations from 20 years ago, like the s&p at 20 would be unusual, should be revised and i think he has a point maybe 16 or 17 times forward or 25 times forward to tech is not

an old -- it should be looked at a little bit differently >> well, we're going to hear the bell in a moment the dow is going to be negative. but again, it's the united health story nasdaq near 50 points to the upside s&p trying to turn green into the close. maybe a bit of a surprise today from the fed, but we shall see i'll see you tomorrow. o.t. with morgan and john is now. hawkish pause by the fed sending the s&p on a roller coaster, round-trip ride back to the flatline looks like we're closing just above the flat line. that's the scorecard on wall street, but the action is just getting started. welcome to closing time overtime, i'm morgan brennan >> i'm john fortney in san francisco. >> we're going to hear from frederick mishkin and jason furman on their reads on chair powell's comments and if they