think about where the economy is going from here, rather than looking backwards, and does that match up with what your forecasts have been and what you think the appropriate policy path should be? >> so, it's hard to characterize a really interesting set of discussions we had, and you'll see them in the minutes in three weeks, but i would say this. i think the comments from our reserve bank colleagues and from the ceos that they talked to are pretty constructive on the economy right now. pretty constructive feeling that the labor market is, you know, back to normal to the point where it's no longer that much a discussion topic in their world, whereas two years ago, it was all they were talking about. so, they feel like the labor market's in balance. people feel good about where the economy is. demand is obviously pretty strong, and you know, you're seeing, what, 2.8% growth in the third quarter estimated, maybe the year is 2.5%.

this is, you know, this is a strong economy. it's actually remarkable how well the u.s. economy has been performing with strong growth, a strong labor market, inflation coming down. we're, you know, really performing better than any of our global peers, and i think that is reflected in what you hear from -- what i hear people hear from ceos. i don't get to talk to a lot of ceos in my job, but i hear what others summarize from those, and of course, i hear the reserve bank presidents do a lot of that, and it's pretty constructive overall. that's not to say there are areas of caution and things like that, but ultimately, overall, pretty positive. >> the follow-up, the areas of caution, if there were black clouds on the horizon that you identified as something you're watching, what would they be? >> i think it's, you know, it's things like -- clearly, geopolitical risks around the world are elevated, and just as clearly, they've had relatively

little effect on the u.s. economy. now, that can change through the price of oil or otherwise, but people talk about those as something that's on the horizon all the time. but you know, ultimately, if you look at the u.s. economy, it's -- its performance has been very good, and that's what we hear from business people, and expectation that will continue. if anything, people feel next year -- i've heard this from several people that next year could even be stronger than this year. >> andrew. >> hi. it's andrew ackerman with "the washington post." i just wanted to follow up on the discussion earlier on fiscal policy. your predecessors, greenspan and v volker, spoke up loudly. will you do that too? right now, we're in a period of full employment. we have large budget deficits

and debt at historic highs that are -- and rising. is that something you'd speak out against? >> so, you know, i have said many times, no more, no less than what the predecessors you mentioned have said, and what that is, is that the u.s. fiscal -- federal government's fiscal path, fiscal policy is on an unsustainable path. the level of our debt relative to the economy is not unsustainable. the path is unsustainable. and we see that in, you know, you've got a very large deficit. you're at full employment, and that's expected to continue, so it's important that we, you know, that to be dealt with. it is ultimately a threat to the economy. now, i can say that. i don't have oversight. we don't have oversight over fiscal policy. i've said it on many occasions. just said it again. >> okay, thank you. i guess the other question is, to follow up on victoria's question, do you believe the president has the power to fire

or demote you, and has the fed determined the legality of a president demoting at-will any of the other governors with leadership positions? >> not permitted under the law. >> not what? >> not permitted under the law. >> thank you. >> courtney. >> courtney brown from axios. in response to howard's question, you said it wasn't an ideal time to give forward guidance because of the economic uncertainties. can you lay out what some of those uncertainties are and whether or not it includes some of the proposals that the president-elect has put out on the campaign trail? tariffs, for instance? >> no, i was not referring to the new administration's policies at all, nor will i today. so, what i'm just saying is, as we look ahead, we know, and i mention this in my statement that the risks are two side -- i

guess i should start by saying that we think that the economy and we think our policy are in a very good place, very good place, and -- but as you look forward, you say, what are the risks? and one risk is that we would move too quickly and find ourselves having moved too quickly and inflation comes back and we -- and we lost our chance to get inflation back to 2%. so, we have to avoid that risk, and that -- to avoid that risk, that means you want to move carefully. the other risk is that we move too slowly, and that we allow the labor market to weaken too much and do unnecessary damage to the labor market and the people's working lives. that says, don't get behind the curve. so, these are two -- these two things are the two risks that we have to manage, and so we're in the middle there. we try to be in the middle and deal with both -- manage both of those. again, the idea is to maintain support, the strength we have in the labor market and the economy, but also with somewhat less restrictive but still restrictive policy, enable

further progress toward our 2% inflation goal. so, there's, you know, this is a thing we're, meeting by meeting, we're going to be making our assessment of what the right path is, you know, it's not as important -- the precise timing of these things is not as important as the overall arc of them, and the arc of them is to move from where we are now to a sense of neutral, a more neutral policy. we don't know exactly where that is. we only know it by its works. we're pretty sure it's below where we are now, but as we move further, there will be more uncertainty about where that is, and we're going to move carefully as this goes on so that, you know, we can increase the chances that we will get it right. >> i know you don't want to share your decomposition of bond yields, but it is clear that longer-term inflation expectations do seem to have

risen, up at about 2.5% on the five-year. that's up half a point from when you cut in september. do you have any concern at all that longer term inflation expectations are deanchoring or, put another way, are anchoring at a slightly higher level? thanks. >> so, we would be concerned if we saw -- if we thought we saw longer term inflation expectations anchoring at a higher level. that's not what we're seeing. we're still seeing between surveys and market readings, broadly consistent with -- i look at the five-year five-year earlier today and it's probably moved, but it's just not -- it's kind of right where it's been, and also, it's pretty close to consistent with 2% pce inflation. so, that's one. that's been a traditional one that we look at a lot. but overall, expectations seem to be -- and really have throughout this -- in a place that's consistent with 2% inflation but you're right to say we watch that very carefully

and we will not allow inflation expectations to drift upward, but that's really why we reacted so sharply back in 2022 was to avoid that. >> kelly? >> hi, chair powell, kelly o'grady, cbs news. we talked about what you heard from business leaders, but many average americans are still not feeling the strength of the economy in their wallets, so what's your message to them on when they might expect relief? >> so, you're right that -- we say the economy's performing well, and it is, but we also know that people are still feeling the effects of high prices, for example. and we went through the world, went through a global inflation shock, and inflation went up everywhere, and you know, it stays with you because the price level doesn't come back down. so, what that takes is it takes some years of real wage gains for people to feel better, and

that's what we're trying to create, and i think we're well on the road to creating that. inflation has come way down. the economy is still strong here. wages are moving up but at a sustainable level, so it's just, i think -- i think what needs to happen is happening, and for the most part, has happened, but it will be sometime before people, you know, regain their confidence and feel that. we don't tell people how to feel about the economy. we respect -- completely respect what they're feeling. those feelings are true. they're accurate. we don't question them. we respect them. >> and just a quick follow-up. president-elect trump has been critical of your performance. any concern about his influence on the fed's independence? >> i'm not going to get into -- any of the political things here today. but thank you. >> nancy? >> hi, chair powell, nancy marshall gensler with marketplace. what is your plan if we start to see stagflation? >> so, that's a, you know -- the

whole plan is not to have stagflation so we don't have to deal with it. that is actually our plan. you know, it's, of course, a very difficult thing because you're -- you know, you're -- anything you do with interest rates will hurt one side or the other, either the inflation mandate or the employment mandate. i would just say that, you know, we've been able to see inflation come down a whole lot, much closer to our goal without the kind of sharp increase in unemployment that has often accompanied programs of disinflation. so, knock on wood, we've gotten this far without seeing a real weakening in the labor market, and we believe we can complete the inflation task while also keeping the labor market strong, and that, of course, is exactly what we're trying to do. >> can you rule out an interest rate hike next year? >> no, i wouldn't rule anything

out that far away. that's certainly not our plan. i mean, our baseline expectation is that we'll continue to move gradually down towards neutral, that the economy will continue to grow at a healthy clip and that the labor market will remain strong. if you look at our -- that will not change from the september sep. that is our baseline forecast, and short of some exogenous event, that will continue to be our forecast for the foreseeable future, but ultimately, it's -- we're not in the -- we're not in a world where we can afford to rule things out a full year in advance. it's just -- there's just too much uncertainty in what we do. >> let's go to the last question. >> hi, chair powell, jean young with m&i market news. i wanted to go back to a comment that you had made about americans being quite unhappy about the cumulative price level rises over the past few years, even though now inflation is back on a path to 2%.

would it be appropriate for the fed to undershoot for a while on its inflation goal under the average inflation targeting regime so people have a chance to catch up? >> no, that's not the way our framework works. we're aiming for inflation at 2%. we do not have -- we did not think it would be appropriate to deliberately undershoot, and you know, part of the problem there is that low inflation can be a problem too. in a way -- but that's not part of our framework, and it's not something we're going to be looking at in our framework review. thank you very much. >> well, that was fed chair powell following the decision to cut interest rates by 25 basis points. the chair saying the economy continues to expand at a solid pace, that labor market conditions have eased. he was noncommittal on another

rate cut in december. i want to show you what the major averages are doing, pretty much hanging on to those gains. it does follow that massive day yesterday. nasdaq has been the outlier all day, but the s&p and the dow are also winners. welcome to "closing bell." i'm scott wapner, live from the new york stock exchange. let's bring in doubleline capital ceo jeffrey gundlach. welcome back for our traditional visit. >> hey, judge, good to be here again. >> good to have you. what is your reaction to what the fed chair had to say today? he used a couple "r" words, recalibration and remarkable, he said, when describing the resiliency of this economy. >> yeah, recalibration showed up again, and that's a repeat of the last meeting's sort of word of the meeting, and i think powell feels very much that he's in a good place now because since the july 31st meeting, we have the two-year treasury rate

is up by almost 60 basis points, and the fed funds rate is now down by 75 basis points, so he's gotten much more in sync with the bond market by a movement of fed funds relative to two-years of 135 basis points of convergence in just, basically, two meetings. so, i really think that we've probably have one more rate cut coming in december, because that would -- that would true up the fed funds rate with exactly where the two-year treasury rate is right now. so, it is interesting that we have had such a strong performance of the stock market since the last fed meeting while we've had interest rates rising, so you've had a tremendous outperformance of stocks versus, at least, treasury bonds since attribute that, basically, to the election result. so, we had an incredibly consequential election result, very different than a lot of people probably were forecasting as a base case a few months back, and we have had one of the least consequential fed meetings

today with basically a repetition of this idea that the goals are normalizing, the labor market's normalizing, the quits rate and the job openings rate are where they were pre-pandemic. i think the fed is feeling very much that they are plodding along towards their goals, and he said so in fairly direct language today. so, yeah, the thing that's sort of surprising me a little bit is that people are so willing to dismiss the softening jobs market. i mean, the 12,000 jobs -- i know people want to attribute that to one-off, the hurricanes and strikes and stuff like that, but i keep looking at the household survey, and the household survey over the last 11 months has been a loss of jobs of over 300,000 jobs, cumulatively, over the last 11 months, and so that typically is a little bit more realtime at economic turning points. it's still not terrible, the

household survey. it's very volatile, so we have to watch out for that, but it's not showing tremendous signs of strength and the real problem that the bond market seems to be having, from my perspective, and it's being talked about much more in the open. it came up several times at the press conference today, is that the supply of treasury bonds is getting to be rather astonishing. we have a $2 trillion deficit. it's about 6% of gdp over the last 12 months, and we still have a growing economy, and the interest expense on the debt, which i always talk about, three years ago, was $300 billion per year. it's now $1.3 trillion per year, and we have a great volume of bonds that are rolling off with very low interest rates from five years ago or even three years ago that are being refinanced at substantially higher rate levels and this is going to continue to be a supply problem for the bond market, and for this reason, we are not

positive on long-term treasury bonds, in spite of the fact that the economy is sort of gradually slowing down, it's just the supply of bonds is very troubling. and so, we want -- we recommend investors stay at the intermediate heart of the treasury bond market and not out in the 20 and 30-year bond sector. in fact, when we're at the low-end rates, basically, several weeks ago, we made another duration cut or maturity cut in many of our bond funds because we do not want to be exposed to this fiscal financing problem, which i think could very well lead to rising interest rates in spite of the fact that we might have a slowing economy. so, interest rates are rising. we have an -- the curve is not inverted anymore, twos to tens. it's not very positively sloped. it's a very flat yield curve and we're anticipating that the fed will cut rates again in december, so not a lot to take away from today's meeting.

it was pretty much a repeat of the comments that were made by jay powell at the last meeting, but i do think that he is much more in line with the bond market, and he is correct in exuding the idea that he's, you know, in a normalized sort of a place and that he's making progress towards the mandate. the inflation numbers are lower, of course. the pce core is at 2.7%. there are some inflation numbers in the low 2s. we believe that if we keep the price of oil around the low 70s, which has been a lot of resis tans tans down around $70, we think we're going to see a headline cpi where jay powell can declare a victory. i commend jay powell for bringing up lags on the rent rolls. part of the inflation rate that

remains elevated is rent rolls. the new rents have almost no inflation, but the old ones come down with a lag, and so that part of the inflation picture is probably still going to provide something of a ceiling on where the inflation rate is going to be for 2025. i don't think, under the base case, we'll see a three handle cpi inflation rate during the next 12 months. >> bear with me for a moment if you would. steve liesman has come out of the room where he did ask a question to fed chair powell. steve, going in, you called the statement splashless. that's the words you used. were there any waves, if you will, in the comments that he just made? >> no. i think what there was was a guy that was on the beach trying to avoid getting wet from any of the waves that might be lapping on the shore, scott, is how i would describe it, and those waves include a new election, potentially huge new fiscal policies coming down the road.

you and jeff were just talking about the spike in interest rates that are out there, and what's happening with the deficit. i think he didn't want to get involved in much of that today. he seemed to say, hey, all of that's down the road. but i'll just play for you the one thing that says, hey, where are we going with this? he says, we're still going to neutral. here's what he said. >> we're going to wait and see how things come in in december. i mean, it's just -- i would put it this way. we're on a path to a more neutral stance, and that's very much what we're on. that has not changed at all since september, and you know, we're just going to have to see where the data lead us. >> so, scott, that's where we're going. he still sounded to me like maybe there's another cut, as jeff suggested, coming in december. i do think it's interesting what's happened, which is now the market seems a little bit more aligned with where the fed is and where, by the way, our

fed survey is, as opposed to the fed getting more aligned with the market. the market went way haywire in terms of expecting lots of rate cuts. it came back up, and now it's, i don't know, actually a little bit more restricted, but i think what we need to do, scott, here, and i'm fascinated by jeff's comments. you got to be on your toes. things can change, and they may take time and that's going to have an effect on the fed, but we don't know how or when. >> the chair -- i mean, jeffrey did mention the movement in the two-year maybe coming more in line, is the point you make, with the fed. i want to ask you to react to one thing that we did hear a short time ago by chair powell. it's when he was asked by a reporter the political backdrop, certainly some concern of, you know, what the trump presidency would mean for the rest of the chair's term, which goes until mid-'26, so he's got 18 months or so. let's listen to how powell

answered this, and we can react quickly on the other side. >> some of the president-elect's advisors have suggested that you should resign. if he asked you to leave, would you go? >> no. can you follow up on -- do you think that legally you're not required to leave? >> no. >> emphatic, defiant. what do you make of the way he answered that? >> i think that he feels that the law does not give the president the authority to dismiss the fed chair. most of the legal scholars i've talked to about this issue suggest that he does not have that authority without cause or -- and whatever cause means, it would be like serious malfeasance in the job, and he's pretty adamant about that. he serves at the pleasure of congress, nominated by the president. if the congress wants to change the federal reserve act to give the president the authority to dismiss the fed chair, look,

the -- the tale of the tape, scott, we did something, you know, remember he said the fed has no guts, no vision back in 2019 when he wanted the fed to cut? and then he said he might demote the fed chair, and that's when in 2019, he also said that he would -- powell said he would not go, and then this year, the president-elect said he might get rid of him. then he said he's going to keep him. for my taste, scott, the more important issue is that this is going to be a lot more fun to cover the federal reserve right now in terms of, you know -- but i do think the thing to do with all this stuff is probably to ignore it. i don't know that it's going to have any big effect on policy. fed chair's just going to do his thing, act according to the law, and the president's going to make a lot of comments about policy, and it's just going to be more interesting than it has been under president biden. >> i did think it was an interesting exchange there. steve, thank you. senior economics reporter, steve liesman. back with jeffrey gundlach. jeffrey, we talked about the

backup in yields. you certainly did. what role do you think that might play, if any, in where policy does go from here? powell said, "we're watching that. we'll see where they'll settle. right now, it's not a major factor in how we're thinking about things." do you think it needs to be a bigger factor? >> well, i think that one thing with the trump election and the senate going to the republicans and perhaps the house, if the house goes to the republicans, there's going to be a lot of debt. there's going to be higher interest rates at the long end, and it will be interesting to see how the fed reacts to that, because trump says he's going to cut taxes -- at least he said so in the campaign -- and he's very, you know, pro-cyclical stimulus as basically it'sin his dna. so, it looks to me that there will be some pressure on interest rates, and particularly

at the long end. so, i think that this election result is very, very consequential, and i think most people were surprised at how widespread the strength was for the republicans and maybe it was just a denunciation of all the law -- all these crazy lawsuits being filed, almost on the same day back a year ago, and people just don't like that. people don't want this kind of strange manipulation, and i think that trump's authenticity is something that attracts people. unfortunately, he's very outspoken about the types of policies that are very stimulus-heavy that he wants to put in, and he's always been a debt guy. so, i'm really worried about that. i'm glad that elon is somewhat associated with this administration.

they're talking about looking for some spending cuts. that will be really interesting. elon, if you're listening, give me a call. i can help you try to find a trillion or two out of spending cuts, because we certainly need that. but i think that we have a risk here of there being a backlash from the bond market, and the stock market has done so well since -- over the past couple of months, and the bond market has not done very well at all. it's starting to be an interesting valuation issue. i think goldman-sachs was put out a paper talking about forward returns and how bonds are very, very competitive given the yields where they are today, where you can get 7% yields out of not terribly risky, say, double-d type of a corporate portfolio. i think it's quite likely that bonds will be much more competitive going forward than they were, but in particular, what's interesting is that the spreads on corporate bonds are very, very small in terms of the

incremental yield versus treasurys relative to history. they're almost where they were really at the lowest. for junk bonds, it's only about 270 basis points. certain side of 80 basis points over treasurys, but i don't think that there's -- that means you should be avoiding corporate bonds. i never liked the really low-rated stuff, the cccs and all that, but in single-b, double-b, weak triple-bs, i think there's a reason why spreads are so tight, and it's because i think the corporate bond market is less risky on a relative basis than the treasury market. it almost reminds me of where it was back at the beginning of my career when the reagan came in, people were worried about the deficit, and you had the higher quality bonds like ibm, for example, i remember, at the time, actually yielded less than treasurys, because people thought ibm was safer as a borrower than the treasury market. and i think that's one of the things that's propelling this corporate bond performance that's been very, very strong.

the reward isn't very high, but the risk isn't very high. these corporate treasurers are smart, and when rates were so low, i mean, three years ago, the high-yield bond market, believe it or not, yielded 3.5%, and so these treasurers locked in these very low rates, and there isn't a maturity law coming for the next few years, so it will be interesting to see how the spread markets change, and we've already seen pretty much spreads tightening across the board on non-treasurys. it's the treasury market that's been the underperformer in recent months, and i have a feeling that could continue. >> so, you told me prior, you alluded to it here, when talking about the tax cuts, you told me you were not in favor of re-upping the trump tax cuts, so he obviously thinks he has a mandate. he may, in fact, have a wide enough margin in the house by the time this is all said and done to do that. do you stand by that view that

they shouldn't do that? and i also want to know what you think about that larry fink op-ed in the "journal" the other day regarding the deficit, which you are obviously concerned about, that essentially you can grow your way out of this deficit problem. you just have to have a higher nominal gdp growth, in fact, to do it. >> yeah, i actually -- i agree with that point, except there's a caveat. and that is, we have to stop this deficit spending. jay powell said this in the press conference, to his credit. he said, we can't keep spending $2 trillion more than we're taking in. the math just doesn't work. it's the, you know, ben franklin said one of the great natural wonders of the world is compound interest. but when you're compounding your debts, you're running into a real parabolic compound interest curve that's working against you, so we really need to have

less of a deficit, and i don't think that's going to happen in the quarters ahead based upon the strength of trump in this pretty resounding victory. you know, i think harris actually underperformed biden in just about every county in america. that's kind of hard to believe it could be that widespread, but the lack of authenticity from harris was really kind of fatal, and of course, she had an albatross around her neck with an approval rating of her boss that was just mired at 40 or lower for the last few years. so, she really had an uphill battle that she was forced to climb. but i think that we're not going to get better news on the deficit in the first couple of quarters, maybe first year of the trump presidency. i don't think we can continue on this path, and if we -- it just

means we're extending the timeline on this deficit problem. i'm actually writing -- it will be out in the public in about a week or two, i'm writing my own white paper about the debt crisis is starting to come much more in focus, and i run through some basic rayarithmetic on tha and it's rather sobering. i do not like long-term treasury bonds. the last thing i did relative to long-term treasury bonds was to sell them. >> you had been calling for a recession at some point. do you still thing one is possible, likely, or do you think that the election of donald trump changes the calculus because he's going to, theoretically, have a more pro-growth agenda, if you will, certainly would have -- you have a lot of pent-up demand as it relates to m&a and other things. how do you view that now? >> yeah, i think that's right. i think trump -- it's clear by the action of the stock market, not just yesterday and today,

but really over the past couple of months, as the support for trump was on the rise, kind of steadily for the six to eight weeks prior to the election, we see tremendous outperformance of stocks versus bonds. it's getting rather stretched, but i do think that it's right to see the trump victory as being -- as reducing the odds for near-term recession fairly substantially, and so, i don't really like the way it's going to be accomplished, because i think that's going to lead to the problem on long-term bonds, but we'll see what happens. certainly, the odds of recession drop when you have this type of an agenda being promoted in plain english for the past three months by mr. trump. >> does it change the trajectory of the dollar, which is obviously one of those trades that had been a so-called trump trade? we saw the dollar index rising, and it seems to be on a higher trajectory from here. is that what you see? >> the dollar seems to be

extremely correlated to interest rates. if you take a look at the chart of the dxy index and overlay it on the chart of, say, the ten-year treasury, it's the same chart. so, what happens is our interest rates, you know, have been going up, and that's supportive of the dollar. if i'm right, and there's still some potential for long-term rates to be suffering under deficit fears, then the dollar would probably still go higher, and so for the time being, we've been neutral on the dollar for much of this year and it's been trading in a range between about 108 on the dxy index and 100, and lo and behold, right at the dead center of that range, very nearly the dead center, and that's the same on the ten-year treasury yield. you know, it got down to 3.60%. it's been up around 5% and we're in the middle of that. the dollar is moved by treasury rates and i believe that is going to continue to be the case because it's been an extremely strong correlation over the past

several quarters and there's no reason to believe that's going to change. >> it seems as though you think that chair powell, at this point in the cycle, from, you know, when we started doing these interviews a couple of years ago, it feels like, at this point, should he -- can he, at this point, declare victory? he obviously said today, explicitly, that he wasn't. and some likestan druckenmiller this week suggested that they might try and do that a little too early, but does he have a right at this point to declare victory, given the trajectory of inflation where the economy is, again, using the word, remarkable to describe it. should whe? >> i think it's a little early on that. but i think he'll be able to do that come, say, march or april of next year unless we get some sort of a shock to commodity prices, particularly the price of oil, because we're going to get, on the headline cpi, we're quite confident, given the

current structure of the commodity complex and where rents are going and the like, we think that the cpi is going to have a one handle on the 12-month headline number come march or april of next year, and if that happens, well, then, i think you can start talking about declaring victory at that point in time. i think it's too early now. he's too prudent. he's too careful of a fed chairman to make that assumption. he says, we don't predict, we don't assume. he said those words in the press conference. i applaud him for that, but the trajectory he's on, he's getting to -- he's getting closer. you know, we started these conversations, the fed was so far behind the curve. they were so loose compared to the trajectory -- the obvious trajectory of inflation, and then he was too tight, and now, he has gotten himself, begrudgingly, perhaps, but he's got himself almost in line with -- i've said this almost every conversation, scott. the fed follows the two-year. people push back against me, but i can prove it mathematically,

and it absolutely follows the two-year, and he's almost exactly in line with it. so, powell is in the right spot where he is. he says the labor market's normalized. i agree with that. inflation rate has been coming down. i think he deserves credit for what he's done once he finally started cutting, and now he's cut 75 with the two-year going up, i'm -- he's right to be in a relaxed frame of mind and his mood and demeanor in the press conference were very good. i thought his answer to, are you going to be demoted or would you step down if trump asked you to, i thought that was a great answer. no hand-waving. just, "no." he's not stepping down. >> i think that's why we played it. it had a bit of -- i don't know, drama to it, but the way that the chair answered that -- i mean, how do you view that -- i

don't know if it's a wild card or not. you know, powell obviously thinks he has some room ahead there to continue to cut rates. he made that clear. he thinks they're too restrictive. to the degree of which they are, that's still unknown, but he also is potentially going to be dealing with reflationary policies from a new president. at a time where the economic -- >> that's a risk. >> -- backdrop, jeffrey, is pretty good. it just creates tension, i think, in the -- in the relationship, if you will, moving forward. >> yeah. i think that's right. i mean, i think -- i think there is a risk of a reflationary policy. we don't know what the tariffs are going to look like. they could be surgically applied, which would be great, because that's kind of where it was the last time, or they could be, you know, just very heavy-handed. that would obviously be potentially inflationary depending on what method is used on these tariffs, and of course, tax cuts that he's talking about are horrible for the deficit.

so, we're -- we've seen that -- and i'll just repeat it one more time. as trump became more likely to win, we've seen rates go up, and we've seen, in spite of those rising rates, we've seen stocks going up. so, it's been a very obvious sort of trump trade. i don't know why that -- one should expect that to change in the near term. i mean, we have to see what happens come january, third week of january, but i'll be monitoring the rhetoric that comes out of trump very carefully, and he will be probably trying to browbeat powell into being less restrictive, if possible. so, it's going to be an interesting time period here. we have had quite the week. i think powell looked a little tired. i think a lot of people had a late night on tuesday. and so, this meeting is really very inconsequential. i think what we see december and then the first meeting of 2025 is really going to be very important.

>> and in terms of the, you know, the -- i guess the drama between president trump and chair powell, we've seen this movie before. we'll see if the sequel is nearly as dramatic. it will be fun to watch. let me ask you this. of the trump trades, if you will, the one that we saw to the downside was china. you've told me for many months that you liked india. do you like it more? >> yeah. >> today because you anticipate higher tariffs on china? how do you view that whole paradigm? >> well, i still -- i like india a lot for the long-term. i mean, it's obvious that they're on the ascent. not just demographically, which is extremely strong demographics, but they're clearly a beneficiary of, you know, production shifting away from china, as is mexico, probably. so, i think that that's not something that i even think about as, like, as a three-month or one-month.

i'm talking about a multiple-year horizon, and i just think india is a great place to be for the long-term. the dollar is very stable. oil has been very stable. it's really remarkable how we've seen such volatility in gold and silver being up so much. now bitcoin is on a moon shot. >> i was going to ask you that. >> this is all -- yeah. >> i was going to ask you that. did you go and buy some bitcoin on tuesday night? >> no, no. i have no interest in cryptocurrencies, but i do think that there -- it's interesting that gold has been rising, and silver has been rising relentlessly, pretty much all year, and i think that's an anti-deficit, anti-central bank type of a mood that's going on. central banks are buying gold like crazy. retail buying, even costco is selling gold, and they can't keep it in stock. i think people are viewing bitcoin and gold as not

speculations as much as they were five years ago, but more as permanent portfolio allocations. and i do have gold in my portfolio, so i continue to hold gold. bitcoin is for -- i'm a coward. i can't stomach that type of volatility. so, that's why i do bonds, primarily, you know? let the momentum guys have their fun, but i'm a value guy, primarily, and so, i don't -- i don't have a mechanism for valuing fair value on bitcoin, so i stay away. >> all right. we will leave it there, i think. we covered so much. i so much appreciate your time as always, jeffrey, thank you. >> all right. we'll see you in -- i guess the next one is december now? >> december. we'll see you in about a month. >> yep. >> see what happens. >> all right. good luck, everybody. good luck out there. >> you as well. that's jeffrey gundlach joining us from doubleline. up next, much more on today's reaction and chair powell's news conference.

plus, airbnb reporting top of the hour. we have all the key themes and metrics to wchat for when that report crosses the tape.

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stop waiting. start investing. e*trade ® from morgan stanley. ♪ we're now in the "closing bell" market zone. cnbc senior markets commentator mike santoli here to break down crucial moments of the trading day. plus deirdre bosa has the set-up ahead of airbnb earnings in overtime. joe, i'll turn to you first, some of the things that jeffrey gundlach said. >> i think jeffrey is spot on in identifying that the potential for the long end to back up is a significant possibility. i think jeffrey's right to identify we're seeing a rally in some of the precious maeetals, t i also think that jeffrey's tone is one that i share where i

think you have to be optimistic about where we are in the investment environment, and i think we're making a tremendous mistake here. we listened to chairman powell's press conference. we listen to it, and i think a lot of skeptics about where we are in the marketplace were attempting to hear something that would disrupt this rally. you're not going to hear that. you're not going to hear that from chairman powell, and let's remember that the scoreboard for president trump is the stock market. when president trump was elected in november of 2016, the first thing that happened in december, while his transition team was working, was the fed raised rates 25 basis points, and in 2017, they raised them 75 basis points on three meetings, and then in 2018, they raised them 100 basis points on four meetings. we're in a completely different situation right now, scott. the fed is actually cutting rates. we're looking for contention between the fed chair and the president that i don't think is real based on where we are today. >> yeah. it's like candy for somebody who

has made a career of hoping for low interest rates. i mean, it's just what you do and how you do it. that's what you want. what'd you make of what he said? >> maybe it's the slow pace and the wait-and-see posture that might at some point create a little more static, but right now, i think the market wasn't really expecting much beyond confirmation that the plan is in place. they think that rates are too high for where inflation is. they've thought that for a while. they're normalizing it, hoping the treasury yield curve normalizes. powell could not be pulled into making grand declarations about the message of long-term yields going up because honestly, i don't know why there's this much fixation on a 4.2 or 4.3% ten-year treasury yield. we were here july 31st, above there in april. it went up quickly but that's because we entered and then immediately reversed out of a growth scare. it's not about some critical tipping point level. i think all that is to the good and in terms of the stock

market, i mean, look, the overheated stuff yesterday is backing off, bank stocks giving up 2% after a massive move, transports down. otherwise, it's definitely people want to remain involved and you have a final hour lift here basically driven by procrastinators who don't have enough exposure >> there is a question as to what role the backup in yields may play in the trajectory of fed policy. >> sure. >> at a time where you have, as the chair himself called the resilience of the economy remarkable, we do have the possibility of the backup in yields going even further. >> sure. >> they're not exactly sure where neutral is. >> that's right. >> they know they're too restrictive, so there's still a lot of wild cards. >> there's plenty of play in all of these questions, and i do think that's why it's probably into next year that it becomes a little more touch and go, because another quarter point from here, they're still not going to be at neutral. they're still not going to be at what they believe is neutral. if yields start to really blow out because inflation data or inflation expectations are

really gathering steam, that's going to be an issue with the economy, for equity multiples, for what the fed thinks it needs to do, but until and unless that happens, i don't think that's the thing specifically to worry most about. >> i focus on positioning, and let's remember, we're still not certain that it was fundamental forces that we got that backup in yields from the last fed meeting until the current fed meeting. i think a lot of it was technical in its nature. i think you had a market as it relates to the treasury market where speculators had gotten very long because they thought the economy was cooling. they thought they were going to get 50 basis point consecutive cuts beyond september and i think now you've got a treasury market where speculators are short the market. i like that chairman powell gave the example, and he dismissed and said, it went back up to 5% and came right back off. >> that's why he said, "right now, it's not a major factor in how we're thinking about things.

we'll watch it." was not fully dismissive of it but certainly didn't sound concerned. let me ask you this. as an investor, yesterday was such an enormous move in so many things within the market. does that color your opinion on where and how you would put money to work from here forward because so much happened yesterday in so many different parts of the market? it's like, well, i liked bitcoin before, but wait a minute, that was like above 75,000. you know, i kind of like growth stocks like tesla, but that was up, like, 20% this week. how do you play it now? >> i think where momentum was working, that intensified, and momentum by itself is a very powerful force. i think you stay with that but i think we were reminded of the opportunity regarding just investing in the u.s. itself because you looked at yesterday's tape, and what did you see? you saw large strength here in

the u.s. but not so much beyond the u.s. that doesn't mean that you don't want exposure outside the u.s., but i'm not sure that you need to. i think a lot of what we saw yesterday was the expectation that finally the russell 2000 comes out of its earnings recession, that you could see -- >> it was up 6% yesterday. >> and today, it's pulling back slightly. i still think you stay mid cap and large cap. you play the broadening out in mid cap and large cap, and let the russell really prove itself that it's going to come out of that earnings recession. >> all right, we'll come back to you guys in a second. deirdre bosa on what to expect with airbnb in o.t. dee? >> hey, scott, it's all about bookings and demand expectations. last quarter, you might remember the company warned of slowing u.s. demand. the paris olympics likely provided a boost for its latest quarter, but most importantly, how is the upcoming holiday season looking? when i chatted with ceo brian chesky, he said he was confident over the long-term that demand is going to remain strong.

he's encouraged by the trends that he was seeing. i'm curious to learn how he plans to capitalize on those trends as well as how he will continue to build now that the company is in growth mode. another area to watch is marketing spend as airbnb increasingly shells out to compete with the other ota home sharing units and how that could impact margins, scott. >> dee, thank you. we'll see what happens. deirdre bosa. mike, i'll turn back to you. i'm curious as to what you think about the -- you know, the fed chair is pretty confident that inflation is going back towards sustainable, i think, is the word that he used. gundlach thinks it may go lower than target, and he's been pretty consistent on that. "if we keep the price of oil around low 70s, we're going to see headline inflation below 2% in four to five months." >> i do think that's kind of where the math gets you. maybe at least on cpi. and sure, i think it was interesting in the press conference when powell was asked

about the removal of that phrase in the statement where they had previously said they're confident that inflation is heading toward target, and he wafl basically said, no, that wasn't a coded signal to suggest we're losing confidence or that the trajectory has changed. i think the market took some heart in that. interestingly, too, he was also asked if they would like to see inflation go well below target for a while, send some time there because they had this idea a while back when inflation was too low that you had to let it sit higher than 2% to even out the long-term. he basically threw cold water on that, like, no, we're not playing that game. 2% is the target, so we're not going to fight for super low inflation. i think right now, those are all questions for once we get closer to target and closer to neutral in terms of the rate. >> i thought jeffrey gundlach highlighted something that was important related to the difference between how the treasury market might be trading but how the corporate bond market is trading. the corporate bond market is trading incredibly well.

issuance -- >> spreads are tight. >> spreads are tight. any new issuance is very strong, demand for that new issuance. we're going to see a lot of new issuance coming out on the other side. i also think we're going to go through this period here as we move into the new year where the animal spirits return, where you see m&a return, and you have people that say, okay, well, potentially, we're going to have a lower corporate tax rate. possibly, right? but we're not going to feel the effect of it. yes, you are, because cfos are going to see that. they're going to know it's coming, and that's going to increase capex. >> in terms of high-yield trade, the animal spirits idea, you know, introduces the idea of more risk-taking. he was pretty clear that he wouldn't go too far out in the high yield curve here of thinking about where you want to take that risk. >> if it's ccc right now, something went wrong. in other words, it's not like you're going to go out and issue a lot of paper as ccc as a fresh deal. he's saying, don't look at the

broken merchandise. you got a decent risk-reward. >> you don't have to reach. >> that being said, this idea that animal spirits have been dormant is a joke, okay? the market's been ripping for a long time. credit spreads have been down for a long -- have been tight for a long time. flows have been pretty healthy. >> only in m&a, it's not a joke. >> of course. >> corporate activity, the animal spirits are up there. not in the -- >> m&a, and that's probably good for small caps because a lot of those companies, the way they leave the index is they get bought. but by the way, goldman-sachs stock has been going almost vertical, and yesterday, it went literally vertical. so, this is not underexplored territory here. >> for sure. >> we're here, guys. it's not the beginning of a cycle. it might be the acceleration of a cycle. >> well, it could be the beginning of a -- >> of another phase. >> m&a cycle. >> ipos and all the rest of it. absolutely. no doubt about it. >> i'm glad you keep us honest on that, but that's what we're

targeting here. financials, by the way, the worst-performing sector today after ripping yesterday. mike, thank you. joe t., thanks to you as well. that does it for us. we have earnings coming up. green across the board, not that far from 6,000 on the s&p either. we'll see if we get there tomorrow. ♪ >> that's the end of regulation. caci international ringing the closing bell at the new york stock exchange, and embecta corp. doing the honors at the nasdaq. record closes for the s&p and the nasdaq as the fed cuts rates by a quarter point. the post-election rally continues to gain steam. we're watching the dow and where that settles right now because it is on the cusp of a close, maybe not, we'll see, as well. that is th