inflation core inflation in the coming year. and this is the kind of reading that it will take to support that so really, this gives us greater confidence in our forecast rather than at this point, changing our forecast. in terms of the pieces we have been expecting. goods inflation to come down as supply chain pressures eased. that's happening now. housing services . as i mentioned there is good news in the pipeline as long as housing new housing leases show declining inflation that will show up in the measure around the middle of next year, so that should help. and the big piece again is core services x housing. which is very important and we have we have a ways to go there. you do see some beginning signs there. but ultimately that's that's the big that more than half as i mentioned of pc core index and, uh, it's very, uh,

fundamentally about the labor market and wages. if you look at wages look at the average hourly earnings number we got with the last, uh, payrolls report. you don't really see much progress in terms of our average hourly earnings coming down. now there may be composition, effects and other effects in that so we don't put we don't put too much weight on anyone report. these things can be volatile month to month, but we will be looking for wages moving, you know, down to more normal levels where workers are doing well and ultimately, their gains are not being eaten up by inflation. there's a excuse me michael mckee from bloomberg radio and television. um there's a little bit of a disconnect between the optimistic view you just expressed about the economy and the changes that you've made in this step. uh and i'm wondering if you're reacting to the fact

that the markets have loosened financial conditions or if you feel the fed may be a little bit behind on inflation. whether in the recent disinflation we're seeing is transitory or not, and how this affects the idea of a soft landing. if you're projecting just half a percent growth for this year, so if i if i think i got your question. so you know, one thing is to say is, i think our policies and getting into a pretty good place now we're restrictive. and i think we're you know, we're getting close to that level of sufficient. we think sufficiently restrictive we laid out today what our best estimates are um, to get there. um. and uh, i mean, it boils down to how long do we think this process is going to take? and of course we're we welcome these these better inflation reports for the last two months . they're very welcome, but i

think we're realistic about the broader project so that that's all. that's the point. i would make its you know, we see goods prices coming down. we understand what will happen with housing services, but the big story will really be the rest of it, and there's not much progress there and that's going to take some time. i think my view and my colleagues view is that this will take some time. we'll have to hold policy at restrictive level for a sustained period. so that you know too good, you know, to good monthly reports are, you know very welcome. of course, they're very welcome. but we need to be honest with ourselves that there's you know , inflation 12 month. core inflation is 6% cp i. that's three times are 2. target now it's good to see progress, but let's just understand. we have a long ways to go. to get back to price stability. the soft landing is no longer at you. no, i wouldn't say that. no i don't say that. i mean, i would say this, um you know, to the

extent we need to keep rates higher and keep them there for longer. inflation moves up higher and higher. i think that that narrows the runway but lower inflation readings if they persist. in time. could could certainly make it more possible. so i just don't think anyone knows whether we're going to have a recession or not, and if we do whether it's going to be a deep one or not, it's just it's not knowable and certainly, you know lower inflation reports worthy to continue for a period of time would increase the likelihood of so i would put it this way of a return to price stability that involves significantly less less of an increase in unemployment than would be expected, given historical record. hi jimmy fallon. high term of al brian chung nbc news, um, you warned americans of pain earlier this year as the fed hikes rates. but with the fed now expected

to raise rates higher than you thought, when you first said that just wondering where we are in that pain. how would you describe that to americans if the projections on unemployment find themselves that would be 1.6 million americans out of jobs. so the largest amount of pain the worst pain would come from a failure to raise rates high enough and from us allowing inflation to become entrenched in the economy so that the ultimate cost of getting it out of the economy would be very high in terms of, uh, unemployment, meaning very high unemployment for extended periods of time, that kind of thing that had to happen. when inflation really got out of control, and the fed didn't respond aggressively enough for soon enough in a prior episode, you know, 50 years ago. so that's really the worst pain would be if we failed to act. what we're doing now is, you know it's raising interest rates for people, and so people are paying higher rates on mortgages and that kind of thing, um there will be some softening in labor market conditions, and i wish there

were completely painless way. to restore price stability. there isn't and this is the best we can do. i do. i do think, though, that um, and markets are pretty confident. it seems to me that we will get inflation under control. and i believe we will. we're certainly highly committed to do that. grady. thank you, mr chair. grady tremble with fox business you've reiterated today and the committee has reiterated its commitment to that 2% inflation target. i wonder. is there ever a point where you actually reevaluate that target and maybe increase your inflation target? if it is stickier than >> we have a 2% inflation goal, and we'll use our tools to get back to 2%. i think that isn't the time to be thinking about that.

there may be a longer run project at some point, but we're not considering that, we're not going to consider that under any circumstances. we're going to keep our inflation target at 2%, and we're going to use our tools to get back to 2%. >> reporter: thank you, chairman paul. nicole -- [inaudible] -- chairman powell. i wonder if you're paying close attention to a sector or even income level, have you factored inequality into your risk qualifications especially given -- [inaudible] of 2020? >> so the -- i would go back to the labor market that we had in 2018-'19, '20. what that looked like was wage increases for the people at lowest end of the income spectrum were the largest. the gaps between, between with

racial groups and gender groups were at their smallest in recorded history. that's -- and all of that because of a tight labor market. a tight labor market which had inflation running just a tick below 2% in the economy growing right at its potential. so that seems like something that would be really good for the economy and for the country if we could get back to that. and so that's what all of us want to do. we want to get back to a long expansion where the labor market can remain strong over an extended period of time. that's a really good thing for workers in the economy. and we'd love to get back to that. that's what our goal is. you know, in the near term we have to use our tools to restore price stability but, you know, what we have to think about is the medium and longer term. if you think about it, the country went through a difficult time the, i think much more difficult than we can think

would happen here. but it really set up our economy for several decades of prosperity. so price stability is something that really pays dividends for the benefit of the economy and the people in it over a very, very long period of time. and so when it is lost for whatever reason, it has to be restored and as quickly as possible, which is what we're doing. >> [inaudible] >> we do, yes. we absolutely do. we look at -- it's our regular practice to talk about unemployment rates by different groups including racial groups and that sort of thing. we do. we keep our eye on that. >> hi, nancy marshalling again, sir, with marketplace. what would you do if the economy slows so much that we enter recession before we see strong, consistent signs that inflation is slowing, in other words,

stagflation if? if -- >> so i don't want to get into too many hypotheticals, but, you know, we'll, we -- it's hard to deal with hypotheticals, so let me just say that we have to use our tools to support maximum employment and price stability. i've made it clear that right now the labor market's very, very strong. we are at near a 50-year low. you're at or above maximum employment, 50-year low in unemploymenti think mommal wage- nominal wages are very i high. where we're missing is on the inflation side, and we're missing by a lot on the end inflation side. so that means we need to really focus on getting inflation under control. and that's what we'll do. i think as the economy heals, the two goals come more into, into play. but right now.

>> thank you, chairman powell. craig roth from market watch. you spoke a9 little bit ago, you said the u.s., it looks like we have a structural labor shortage in the economy. could you expand on that, talk a little bit more about that. and really are you talking about getting congress action onen increasing, like, legal immigration, things like that? >> so what i meant by that, the structural labor shortage, is if you look at where we are now, as i mentioned you can just look at demand for labor, you can look at vacancies plus people who are actually working, and you can take supply of labor, are you looking for a job or have a job, and you're more than 4 million people short. we don't see, despite very high wages and an incredibly tight labor market, we don't see

participation moving up which is con area to what we thought. so the upshot of all of that is the labor market is, it's 3.5 million people at least smaller than it should have been based on pre-pandemic, just assume population and raging of the -- aging of the population, our labor force should be 3.5 million more than it is. and there are lots of easy ways to get to more of that that. so why is that? part of it is just accelerated are retirements. people dropped out and aren't coming back at a higher rate than expected. part of it is that we lost a half a million people, close to the half million who would have been working who died from covid. and and part of it is that the migration has been lower. we don't prescribe, you know, it's not to our job to prescribe things, but, you know, i think the if you ask businesses, pretty much everybody you talk to says there aren't enough people, we need more people. so i tried to identify that in

my, in the speech i gave a month ago, but i stoppedded short of telling congress what to do because, you know, they gave us a job, and we need to, you know, do that job. >> [inaudible] >> thank you, chair powell. jennifer with yahoo! finance. you say you expect growth of just half a percent next year given that you said the process of raising rates and getting inflation back under control will be painful. have you had discussions within the committee and addressed how long and/or how deep of a recession you would be willing to accept. >> no. i mean, what we do is we make our forecasts and we publish them quarterly, and, you know, if you look at those forecasts, those are forecasts for slow growth for a softening labor market by which i mean unemployment goes up but not a great deal, and you see

inflation coming down. you see rates going up, inflation coming down. those are those forecasts, and that's really what hay show. of course -- what they show. of course, we don't talk about, you know, this kind of a recession and that kind of a recession. we just, you know, we make those forecasts. the staff runs, and you will see in this if you look at the old teal books, runs alternative simulations of all different kinds at every meeting, and we look at those two. and those will explore different things. but that's just, you know, upside and downside scenarios. of course, that's responsible practice that we've carried on for many decades. but, no, we don't -- we haven't asked ourselves that question. >> [inaudible] >> hi, jean young with market news. i wanted to ask about the sep again.. if you're reaching peak rates

around 5% in the first half of next year and inflation starts to decline materially, that would seem to make the real rate gradually more restrict i. is that something -- restrictive. is that something that's built into projections and into models? is that something you would want to see? >> we do know that, that's something we woulden want to see. i wouldn't see the committee cutting rates until we're confident that inflation is moving down in a sustained way. that would be my test. i don't see us as having a really clear and precise understanding of what the neutral rate is and what real rates are so that would mechanically happen like that. really it'll be a test for cutting rates i think in the event it'll be a question of do we actually feel confident that inflation's coming down in a sustained way. thank you very much. finish. liz: well, like a nice but firm and stern high school principal.

federal reserve chair jerome powell saying the central bank is not ready to jump the tracks and stop tightening interest rates yet because inflation is still running hot. the the rate-setting federal open market committee voting to boost the overnight borrowing rate half a percentage point, ache thing it to a targeted range between 4.25% and 4.5%. the increase did break the string of the four straight jumbo hikes of 75 basis points, the most aggressive policy moves since you've got to go all the way back to the early 1990s. but he not gonna stop there. here's what happened, stocks erased their earlier gains, turned deep crimson, then scratched back into the green. just a minute ago they were all green and really as you see really straddling the flatline here. dow jones industrials up 2 points, the s&p flat, nasdaq down 4 points and the russell 2000 up 2.4 points. the announcement had the dow swinging nearly 700 points from

peak to trough. i'm calling it the jerome gyration. it's kind of a christmas tree of colors here, red, green, red, green on the intradays. and at the moment you see with the dow just trying very hard to go into the positive territory there, not gonna make it at the moment, down 41 points. and it's pretty much followed by the s&p. these are mirroring everything that you see. now, so much of this to do with what t jay powell said specifically. he gave a tiny little bit of inch when it came to inflation starting to moderate, but he was extraordinarily crystal clear that he still feels, along with the committee, that inflation's gotta come down a lot more, and that means the brake path is going to continue to the north. inverted yield curve, let's look at the bond market. it deepened following the fed's rate hike as the 2-year treasury, which is very policy sensitive, turned higher cutting earlier close -- losses. that's pretty extraordinary here. we have it at 3.49%.

i have my old school sheet of what i do before, during and after the news conference and the announcement. 2-year yesterday closed at 2.43% and we are just about there, as you see. the 10-year also spiking. look at this, 3.48%, yesterday it had closed at 3.50%. financials, these are very interest rate-sensitive, turning negative. jpmorgan, morgan stanley, goldman, everybody's lower -- well, you could call jpmorgan chase flat and mayor can -- morgan down 2%. the vix ticking higher at 2 p.m. eastern but now dipping back into the read -- the red. so the tension in that push me/pull you, yes, that's my reference are of the old animal that a had two heads -- [laughter] is happening right now. let's look at the u.s. dollar, the greenback. you've got the euro hitting a

6-month high versus the u.s. dollar. the higher rates go, that is usually dollar-positive, but right now most major currencies are stronger against the dollar. the dollar at its lowest level since june earlier. and let's check on gold. gold retreating from 6-month highs, holding though above 1800 per troy ounce, 1821 and change there there. you see a bit of a spike will in the wake of that the news conference. during the press conference, fed chair powell cited the real reason he said interest rates need to continue to rise. listen. >> we do see a very, very strong labor market, one where we haven't seen much softening, where job growth is very high, wages are very high, vacancies are quite elevated and really there's an imbalance in the labor market between supply and demand. so that part of it, which is the biggest part, is likely to take a substantial period to get down. the goods inflation has turned pretty quickly now after not

turning at all for a year and a half, now it seems to be turning. but there's an expectation really that the services inflation will not move down so quickly so that we'll have to stay at it, so we may have to raise rates higher to get to where we want to go. and that is why we're writing down those high rates and expecting they'll have to remain high for a time. liz: okay. so it's no longer about high prices of everything we buy in the grocery store, it's about a labor, wages, services still remaining sizzles hot. joining me now, chief economist and global strategist peter schiff and andy brenner who says today could be the last hike in this rate-tight the. ening cycle if one piece of economic data cooperate. let me start with you, andy. your gut reduction reaction here on what -- reaction here on what jay powell said and the tone he took, we're in it still. >> he came off very hawkish, very different from november 30th at the brookings.

as we look at the market, as you just pointed out, both equities as well as bonds, they're not believing him. i mean, the 10-year spiked from 3.48 to 3.55, now it's the at 3.47. the- year that you just mentioned moved from 4.18 to 4.30, and last i looked it was back to 4.21. the equity markets reversed. look, this is a fed that one year ago projected that the fed funds today, december 2 2nd, would only be 90 basis points. they're 4.25-4.5. this fed is awful in their projections. liz: oh, boy. yeah. >> do i think they're going to continue to raise rates? it does look lie they -- like they might try to raise again, but i really would like to see the cpi number, and i really think fed is over their skis at this point. liz: it's that cpi number that we are expecting to get in january for december that andy brenner says maybe we might see a pause. peter schiff, what jumped out at you the most as the most

important part of this news conference? >> well, you know, powell said that the consumer would be in for the most amount of pain if the fed if failed to act and let inflation run out of control. i've got news for the consumer. inflation is already out of control. the fed failed to act. in fact, the actions of the fed created the inflation, and it's going to get a lot worse. and powell is looking at wages rising and thinks that might push off inflation. no. rising wages don't cause inflation, inflation is what's causing wages to rise. wages are just the price of labor, and prices are going up. and eventually the fed is going to stop fighting inflation when the recession gets much worse and, in fact, when it becomes a financial crisis. liz: okay. but, peter, the fed if has been in a months-long fire fight against inflation. do you not see any if improvement -- any improvement in what we have seen when it comes to inflation if at least ticking downward a bit?

>> no. i mean, you're always going to see an ebb and flow. but in order to really fight inflation, we would not only need much higher rates than the rates we have right now because rates need to be enough above inflation to encourage savings again, and our savings rate is basically at a record low and consumer borrowing is at a record high. so that is not helping. but also government spending continues to increase, budget deficits continue to rise. you're not going to fight inflation unless you get cuts to government spending. right now we're getting stimulative the fiscal policy coming out of washington, so everything is screaming more inflation not less. liz: go for it, andy. what do you think? >> well, i think one of the things that peter's missing is the money supply, and than -- and that has been growing at exponential rates, but in the last few months it's starting to come down. liz: you're talking about the fed printing must be. >> well, basically, yes -- money. that is being reduced.

i do see the economy slowing down, and there are parts of inflation that are coming back. peter's got some good points. i mean, you know, inflation causes wage increases, it's not the other way around. we agree with him on that. but we do see inflation being reduced, and we do see the fed backing off from where their rate increases are projected to be. liz: okay. peter, goldman sachs, am-ex are the laggards here and those, of course, are the financials when you look at the nasdaq leaders. same one as yesterday, no moderna, atlas january, docusign. some of these, they're just moving totally separate of what the fed has said or done. we have an investor audience. they want to know what to do between now and the next fed meeting. >> well, i think you have to continue to recognize that the game has changed. we're going to be living in a high inflation environment for the foreseeable future. rates are not going back down to zero is, but they're still going to be negative in real terms. and you have to invest in real

businesses that actually have earnings and pay dividends. that's why if you look at our strategies year to date, our value strategy and dividend strategy have delivered positive returns so far this year because we own the type of stocks that do well in an inflationary environment, and their going to do even better as dollar really starts to fall because the stocks that i'm buying are not in the united states. and so their prices and revenues are not in u.s. dollar, so they will benefit from the decline of the dollar which is going to kick into a higher gear when i think the fed stops hiking rates because the economy is too weak and it's got a bigger problem to worry about than inflation. liz: he talked about how housing has certainly weakened, but we're still seeing rents and shelter costs extraordinarily high. one of the things that i found really interesting was at a certain point during the news conference, and maybe grow guys noticed this, the dow was up -- was down, rather, more than 300

points when powell mentioned wages and what specifically might be the reason that would trigger a slower pace of rate hikes. i want you to listen and then you guys get to respond. >> we think that the appropriate hinge to do now is to move to a slower pace, and, you know, that a will allow us to feel our way and, you know, and get to that level we hi and better balance the risks that we face. that's the idea. it makes a lot of sense, it seems to me, marley if you consider -- particularly if you consider how far we've come. but again, i can't tell you what the actual size of that a will be. it will depend on a variety of factors including the incoming data in particular. liz: so there you have it. immediately 100 points came off the losses there, andy. [laughter] not really helping that much at the moment. what do you interpret from that? >> what i interpret, liz, is

he's also very much concerned about the global economies, especially the u.s. economy. and i think he recognizes the fed has moved too far, foo tsa -- too fast. inflation's been off the a charts, but he has moved, as you just said, the quickest in 40 years. so i think he's starting to be concerned about the aftereffects, the black swan effects and some of the things that we've seen. both peter and i hate crypto, so that's really not a good example, but you look at what happened to the blackstone reit as well as private credit, and you see it in a lot of different things. there's a big mistake out there that's waiting to happen, and i think the fed's going to have to ease into it sometime in 2023. liz: peter, what are you most worried about? >> well, you know, i agree that the fed is going to ease, but that's going to be a mistake. it hasn't gone far enough. the problem was it let interest rates, left them too low for too long. it already expanded the money

supply so much that we haven't even had enough price increases to catch up with the previous expansion of the money supply. so even if it's growing more slowly, it doesn't matter. there is so much inflation already in the pipeline. and the only thing that was keeping our inflation rate lower was the fact that the dollar was rising when everybody thought the fed would keep hiking. but now that the dollar is falling, that is going to add fuel to the inflation fire. i think it's going to burn a lot hotter in 2023, but the economy is going to cool off even more as inflation heats up, and that is a no-win situation for the fed and for the country, you recall. lil' lil' -- unfortunately. liz: the value bank does not have a good record here, guys. the economy fell into recession 9 of the past 12 times that the fed tightened monetary policy. guys, we've got to run. it is about 32 minutes before the closing bell rings. check the dow, still down about 147 points. as powell spoke, one of the most pronouncedded moves in stock sectors were the transports. take a look at the dow

transports. now, before the decision the index touched a a session high of 251 points. it was the only i one mt. green. now, during powell's peach it hit a session low that you see right now, fighting back, it's now up 80 points. some of the top gainers include delta airlines, j.b. hunt, exe media. but if we go through once again the major days of the major indices, the dow soared 700 points yesterday after that softer cpi number but then fumbled a good chunk of the gains. it's having a lot of trouble getting back the gains that we already saw earlier today. high of the session for the dow, up the 287, we are down 203 right now. s&p, same hinge. nasdaq is also still at the moment struggling and down about 101 points. but beyond this moment in time, knowing post-fed meeting that the fed will continue to tighten rates and that valuations and multiples on some good quality names have still come way down this year, you know, we picked

three of them right out of the air to show you. call cl come. pe ratio qualcomm, 10. it's pretty cheap. down 32% year to date. medtronic down 23% year to date, that one's got a pe of 24, so a little richer. vodafone, it's still got a very low pe of 12. the stock graveyard is much more populated. has the fed just given us a signal to bring some of them back to life? let's get to the floor show, teddy weisberg and lpl financials' chief global strategist quincy cross -- crosby. you buying? you looking for some of the dead and bringing them back to life? >> absolutely. i mean, you know, some of these stocks have just been literally, they're been picked -- kicked and they're dormant. and if you're a long-term investor, and you have to be a long-term investor, you can start doing price, you know,

averaging in every month. but you also have to remember that one of the fears in the market is that come 2023 first quarter, second quarter we're going to see problems with. earnings, and that could push the market down to test previous lows or at least maybe 10%. and that's the worry about coming in now and not letting this process work its way through. but there are so many really good companies with excellent credit -- cash flow that you want to have in your portfolio if the economy continues to slow are next year. liz: well, what are they? let's not keep it a secret, quincy. are there sectors where you feel that is starting to really shine? >> well, i'd just look at the energy sector, you know? this is one where if the oil, actually with, which is the commodity underpinning and liquified natural gas starts to come down, everyone is worried. but with at same time, the expectations are that, you know, we're going to see oil prices

climb. these the companies in the complex, the energy complex, are returning shareholder value. and ones that have strong cash flow which are the smaller companies, the mid-sized companies, not necessarily the big integrate names, they're not just giving a dividend, they're also giving special dividends. and as long as they can focus on returning value to the shareholders, you're going to see more interest in the energy sector despite, what shall i say, the the obituaries that are being written for the energy sector right now. liz: let's keep with the death theme. i'm really liking this, teddy. this is all your fault. [laughter] you're the gravedigger. start telling me which names you feel are ripe to come alive once again. >> well, liz, a couple of points. number one, in terms of what we heard from the if fed today, i don't think we heard anything really new and the direction of interest rates is still going to be to up. it's all about how fast and how far, and that does not create a

positive backdrop for equities in general. so the best trade of all continues to be the 3-month treasury as far as i'm concerned. but we're also at the end of the year, the end ebb of the tax year. the weak stocks tend to get weaker as we start to see a lot of tax selling. perhaps the background is not conducive to even buying anything this year, but if you like to play the year-end game, there are some really interesting names, a couple of which you mentioned. vodafone, medtronics, tyson, verizon. now, you know, we happen to own some of these stocks and, unfortunately, we're suffering with them. but they're at price levels where they are very interesting. and for folks with a longer term horizon, it might be a good opportunity -- the. liz: well, let me jump in here because i was looking at medtronic, teddy can. it's not far from its annual low, obviously, a best in class company. pe of 24, that's a little richer. verizon is interesting. that one's got a pe of 8, down

27% year to date. tyson foods down 25% year to date, a pe of 7. really important, quincy, to do what teddy's doing, right? don't overpay certainly at this point. >> no, absolutely. i mean, because, look, just because they're attractive and the valuations are compelling, the backdrop to the market is difficult. and we probably are going to see another down draft. but let me also mention another group. these are the defense names. you know, every time you look at anything having to do with geopolitical whether it is the taiwan, whether it is ukraine, you start seeing the names of the companies that are producing the missile weapons systems being shipped over, bought or actually just sent over from the u.s., the patriot missile systems. these names are helping to bolster the industrial sector, and we don't think that that is going to kiss pate or wane -- dissipate or wane over the course of the year.

the geopolitical backdrop, the environment is intensifying even if there's a negotiated settlement between ukraine and russia early next year. we still have other issues that the world has to pace in 2023. liz: absolutely, can't forget that. they would by -- teddy, one last comment because things that jumped out at us when it came to what chair powell was saying, certainly that he got very focused when he was asked, i believe it was by mike mckind of bloomberg, about a recession, the possibility of that. it kind of came up within another question about what he needs to see after two good consumer price index can numbers. let's listen to that, and i'll let you comment. okay, we -- the sorry it's not loading. sorry about that. we'll try and get that to our viewers in just a minute. sorry, what? okay. let's listen. we have it.

>> -- monthly reports are, you know, very welcome. of course they're very welcome. but we need to be honest with ourselves that there's, you know, inflation, 12-month core inflation is 6% in cpi. that's three times our 2 target. now, it's good to see progress, but let's just understand we have a long ways to go to get back to price stability. >> do you think the soft landing is no longer achievable? >> no, i wouldn't say that. no, i don't say that. i mean, i would say this, you know, to the extent we need to keep rates higher and keep them there for longer and inflation move moves up higher and higher, i think that a narrows the runway. but lower inflation readings, if they persist in time, could certainly make it more possible. so i don't think anyone knows whether we're going to have a recession or not. and if we do, whether it's going to be a deep one or not. it's not knowable. liz: you know, teddy, when i quote asked a question i don't know the answer to, i'm going to

say it's not mow if bl. he does have a few -- knowable. he does have a few successes here. give me your final thought. >> the inverted yield curve is telling us exactly where we're going. i think we do know where we're going. the problem is just like markets that go up too high, they go down too low, and i suspect we're in an environment where the fed will continue to overreact and interest rates, when it's slow or fast, are going to get too high. but we'll get to a point for the markets where bad news is good news. bad economic news is going to be the good news for the markets. liz: okay. >> clearly, we're not there yet, but we will get there. liz: dow jones down 212, far from the highs. quincy, good to see you. teddy, thank you, as always. >> thank you. liz: the financial times is reporting goldman sachs may be looking at cutting bonuses by at least 40% for one division, uh-oh. the financial sector, is it starting to tighten its collect arive belt and play grinch?

charlie breaks it next. closing bell 22 minutes away. i don't know, is that right? 22 minutes? [laughter] yeah. finish we got a lot of numbers flying with the fed and, yes, the dow is continuing to fall about 239 points. we are coming right back on a very big move day. ♪ ♪

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and keep it off. who loses 138 pounds in nine months? i did! golo's a lifestyle change and you make the change and it stays off. (soft music) liz: we have this fox business alert. we want to explain this, part of the reason that you are seeing stocks in the red is because the federal reserve today raised its 2023 median forecast for its benchmark interest rate to 5.1% versus 4.6% which was just back in september. what are we talking about? some of you are saying, liz, what are you talking about? the fact is that the fed's fund rate, the overnight lending rate that the banks use, but it pretty much sets the rates whether it's your auto loan or mortgage, you had 17 of the 19 fed officials saying, you know what? for 2023 west got to be above

with 5% -- we think it's got to be above 5%. we are currently, as you know today, because of the 50 basis point hike, the rate is at 4.25 the-4.5%. this is called the fed dot plot. in's sense, fomc members interest rate forecast, and it showed this median fed funds rate of below 5% next year, now it's above which means more interest rate hikes which is quite clear. powell said that. but just wanted to make that very, very clear for you. the dow though are is off the lows, the still down about 174 points. the s&p losing 26 and the nasdaq down 95. can we look at tesla? it is following -- falling to a 2-year low. goldman sachs cutting the price target to 235 from 305. we're at 156 and change right now, citing softer global supply and demand for the ev merrick. the brokerage also slashed its

deliveries target for 2023 by about 100,000 units, interesting, goldman didn't mention elon musk, but tesla has been under serious pressure from a lot of investors as the ceo, elon musk, focuses way more, they believe, on managing twitter, his new, shiny toy. the stock of tesla down about 30.5% since he took over the social media company. its market cap has fallen $500 billion. does that still stand, folks? it was kind of toggling back and forth. let me just make sure, yep, that is very true. it is now at about 493 billion market cap. and musk's fortunes, so it gets personal, they're intertwined with tesla's stock, they have been dwindling. he has now lost his spot as the world's ridgest person -- richest person to the louis vuitton cofounder and ceo. [speaking french]

charter communications losing its signal after the cable company told analysts it plans to ramp up capital spending to sharply improve network speed. the the stock is down 16% right now. there's a new ceo, chris winfrey. he says the company will invest $5.5 billion over three years. that pressuring comcast and other rivals. sofi technologies, that one's getting a boost afcee oweny noto bought $5 million in common stock in the company. it's up about 5%. still, though, $4.65. filings show that the trades were executed over just last few days. he got the shares cheap, the stock is down 70% year to date. tell -- delta airlines on the move, citing strong demand for air travel to close out the year and saying that it expects its adjusted earnings to nearly double in 20 the 23 from this year's level. delta forecast a revenue jump of

between 15% and 20% in 2023 and expects 30 billion worth of travel spending next year. that's good for a 2.33% bump. credit suisse announcing job cuts. are more big banks to follow? charlie gasparino, i'm asking you this because credit suisse has specific problems. >> right. they're -- what was that word -- [speaking french] liz: you know, you asked me that that a long time ago. >> how do you say it? liz: i don't know. it's a latin word or french or something -- liz: it's a legal term. >> it means they're unique. take them out for a second and let's focus on wall street. essentially what powell said is the cost-cutting plans will continue through the end of this year, end of next year. what does that mean? you will not see wholesale layoffs on wall street, from what i understand, at the big banks, morgan stanley, bank of america, j jpmorgan, citigroup. not massive layoffs, but they will continue to cull the bottom

5% of performer, as they say, which they do that from time to time, but they're going to do it more now. bonuses will be slashed. i hear about 50%, because deal flow is down significantly. so that's what you're going to have, continued cost cutting, belt tightening, probably into next year until the interest rate cycle ends and deals come back, and that's what we're seeing on wall street right now. again, i don't think you'll see massive splashing. -- slashing. i just keep hearing culling of that 5%, and it may keep going on and on and on until, you know, jerome powell stops which a lot of people think he's going to stop in mid next year. remember, we're at 7% inflation right now, the target is 2. that's a lot of rate increases between the 7 and 2 the, i think. it's still pretty sticky at 7. it went down from 73 to 7.1. everybody was like, wow, that's great -- liz: it's great at 7.1%. i find it amazing, they think

it's going to go down to 3.1%? that's a 5% hole you could drive a truck through. >> it may, but it's going to to go down with fed rate increases because the biden administration's not going to do anything on the fiscal policy side to increase the supply side. so you've got to do something about demand. that's what's going to happen. that means wall street will cut and cut significantly. attrition, too, is another thing they're going to keep doing. you're going to hear that world a lot out of the big wall street firms. now, when you talk about credit suisse, that's kind of a unique situation because they had a massive funding problem. there was a rumor they were going out of business, they weren't. so they have -- they announced massive cost cuts, and on top of that, they're an invest investment bank in the u.s. is impacted by the same macro factors as everybody else. so that double whammy is leading to cost cuts. those cuts, from what i understand, as theyfect the labor -- effect the labor, their

employment, is hitting this week. massive cuts -- liz: oh, terrible timing. and then, of course, bonuses. >> bonuses, you know, if you get one. but if you get a job, you know, that's probably -- you're lucky at credit suisse. they are cutting pretty significantly. i heard junior staffers like certain parts of the banks, certain departments, like, they literally wiped out the entire freshman class. so this is pretty significant at credit suisse. we did talk to dick bove recently about it. he thinks it's a buy on the stock. liz: big banking analyst. >> yeah. bove thinks it's a buy. he told ellie, my producer, that he thinks they're going to get their house in order, they're going to slash wages and slash the work force, get their house in order, and the stock is cheap. liz: he may be -- it's a latin word. >> i said it's either french or latin. liz: it's not paren.

>> you know, i think it's fun fun that you are finding that out now because someone's in your ear telling charlie it's latin. five minutes ago you did not know. liz: you said sous -- >> how did i say it? liz: you said it's sous -- and you didn't know the difference? liz: sorry, i don't speak bronx? >> yes, originally. [laughter] liz: i don't speak bronx. >> i just think it's funny that you needed someone to tell you in your ear. liz: i don't know what you're talking about. who is august to me in my ear -- who is talking to me in my ear? nobody. thank you, charlie, very much. >> i'm only kidding. i figured you were the one person around here that would know that. liz: you finninged -- fingered or you figured? >> i figured. liz: okay. thanks, charlie. >> you want me to leave. liz: we're 8 minutes before the

closing bell -- [laughter] the federal reserve raised rates. this was widely expected, but when chairman powell spoke, investors have been left feeling bearish but nowhere near as bad as it was just around about 10 minutes into the news conference there. the major averages hit hair lows of the session after paul signaled more data needed before the central bank are meaningfully change its view of inflation. listen. >> we don't want with wage increases, we want strong wage increases. we just want them to be at a level that's consistent with 2% inflation. right now if you factor in productivity estimates, standard productivity estimates, wages are run running, you know, well above what would be consistent with 2% inflation. liz: see, now, i love high wages because it's been a long time since many workers had them. but usa chief economist is here, and prosper trading academy's scott bauer.

steven, i hear him, i understand, but if you translate it, you know what comes out? cost of wages is going to hurt certain sectors very badly. which ones? what do you seesome talk to our viewers. >> well, i think there are several things you have to understand about what they're going to be doing. what they're going to be doing is not going to affect individual sectors as much as it is going to affect the economy in general. every single industry is going to feel some of the pain. now clearly, tech is probably going to feel the pain more than anybody else because tech has been going on for 30 years without a correction, so it needs a bigger correction than everybody else. but everybody's going to feel the pain, and what's going to happen is smaller, less profitable companies in every single industry, in every single sector are going to feel the pain which is why we've been recommending to people a slight tilt towards value and up in quality in every single space. because those are the companies that are going to be able to

capitalize liz: scott, this sort of bell ringing over and over lately. looking for cash flow and profitability. what are you as a trader looking for at the moment that looks juicy to you? >> so a couple things, liz, as an investor longer term, you're right, i want the cash flow. i don't want, i don't want to see those high growth stocks. i definitely want that cash flow, especially in a high interest rate environment but as a trader, as a trader, two sectors i'm looking at right now, banking sector which is getting hit today. they typically benefit from rising rates, net interest margins rising of all the big banks i think bank of america has the best potential upside, if, if, inflation is in check. this is a big one, if inflation is in check i love the travel industry. i think expedia has a lot of upside room in the near term. regardless of rates moving forward, energy on this pullback

i think is a buy. devon energy is one i talked to you about before. 8% dividend, huge, huge, cash position. i think that is a great one. steve, you know, you just said it will be all sectors. i think about the lodging sector in particular. scott just touched upon expedia, some of the bookings. we know from delta air lines, they're going whole hog into 2023 people are dying to travel, i get it, i see it, flights are full but if wages as jay powell said are a little too sizzling hot, do you worry about some hotel names? you know, citi downgrading both marriott and hilton, for slightly different reasons than wages but you got to figure these people are paying, they have got to pay more to get bodies in to clean, to do food service and to greet people at the front desk? >> so really comes down to is, what happens with margrgins and does the federal reserve slow

the economy enough that you wind up in an environment where they can avoid a price wage link. it doesn't go from wages to prices. it goes from prices to the wages. so if there is a position where you begin to shift the balance of power in the labor market away from the employee to the employer then yes, you can have that kind of transition where you can have the margins still be strong and the costs to come down. this is what the fed's trying to create. they don't want to say it publicly but they really have to shift the balance of power in the labor market back to the employer away from the employee and that's really what avoids this price wage loop that they're trying to get out of. they're worried if they let things go on for too long, it will become established in the system and then you wind up having to do more rate hikes further down the calendar and create a much deeper recession. if their own numbers they're not

looking for recession. they're technically looking for 0.5% growth next year. we're in the camp minus 0.1, minus 0.5, a very shallow recession in 2023. liz: okay. >> that gives you the opportunity for the labor market balance to shift, companies to hold the line on profitability and through their margins. liz: scott, one of the things that jay powell referenced was rent and housing services. they are still pretty high, coming down just lightly but you know, he talked about that. and he said they need to see that kind of thing come down. is there any sector, whether housing or something else you would absolutely avoid? >> well housing is one of them right now, liz, at least in the next three to six months, couple quarters. liz: what, homebuilders? >> homebuilders are giving things away right now. they're trying to actually sell off a lot of their unbuilt property, a lot of their say can space. they're trying to sell that off

because of, just the demand all of sudden as we know, the demand has just been eviscerated. so homebuilders i would absolutely stay away from. some of the retailers going through the first and second quarter, i think we'll see some really light numbers for holiday spending. so some of the bigger retailers, i would avoid also, especially after some comebacks here. a target. even a walmart. you're talking about best in class there. liz: yeah. >> i don't see over the next three to six months i don't see much upside for stocks like those. liz: my people are kind of zipping up the wallet. last thought, steve, before we go, i do want to ask, we don't have that much time before christmas but how about a santa claus rally what we've seen over the couple of sprinkled days over the past two weeks? >> to that extent we think the trading range on stocks is probably 3hundred to 4100. it gives us a little more upside potential to hit the top end of that range.

i don't think we'll have any reason to really sell off going into the end of the year in equities. as we reset into 2023 people will look a little bit more quizzically at their earnings numbers and a reset back to the lower end of the range is possible. but reality of the situation is equities are expensive. could they get a little bit more expensive in this environment? the answer is yes. but i don't think there will be much sustainable upside potential as we go into 2023. liz: i wish both of you a great 2023. steve ricchiuto, scott bauer, always a pleasure. gang, we got much awaited 50 basis-point hike. [closing bell rings] you know what? a selloff. nothing too dramatic. a third of a percent for the dow, s&p half a percent. guess what we'll do it all over again tomorrow. so you got to be here. who knows what the markets -- ♪. larry: hello, folks, welcome to

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