market conditions. and that's what we're seeing. so wages have actually been gradually moving down. they're still at levels what would, that would be consistent over a long period of time with 2% inflation. nonetheless, we're making progress there. and by so many indicators, labor market demand is cooling. you can look at a surveys by workers and businesses who see that, you can look at the quits rate normalizing, you can look at job openings coming down, you can look at just job creation in the establishment survey has, you know, it's still at a high level, but it was really at an extraordinarily high level for most of the last two years. so you see cooling particularly in private sector in the last, you know, in the last report. so i think we see that, and it's happening at a gradual pace. so that's actually not a bad thing, in a sense, because if what we see is a labor market -- very strong demand for labor. liz: you're watching "the claman countdown" on fox business in

the wake of the fed's 1 11th rate hike this cycle. the markets right now are solidly in the green as federal reserve chair jerome powell fields a barrage of reporter questions. let's go back to the live news conference. >> reporter: we're seeing a lot of unions go on strike or threaten strike, and the common thing is they come out with increases, like big pay increases, like ups and the autoworkers coming up. are you concerned about a series of trends of big unions, these contracts pushing wage inflation? >> not for us to comment on contract negotiations. not our job, not our role. you know, we monitor these things, and we'll keep an eye on them, but really that's something that's handled at that level. >> [inaudible] >> victoria. >> reporter: hi, victoria geed doe with politico. i wanted to ask about the sep which suggests that you would cut rates as overall and core pce get to around or under 3%. so i'm wondering, is the level

of inflation what's sort of important there as you think about getting to 2 2 and when you might start cutting rates, or is the speed at which inflation is falling also important? >> i think you take both into account. i think you take everything into account when you start cutting rates. ed the depend on a whole, on a wide range of things. and when people are writing down rate cuts next year, you know, it just is a sense that inflation is coming down and we're comfortable that it's coming down and it's time to start cutting rates. i think, but, i mean, there's a lot of uncertainty between what happens, you know, in the next meeting cycle let alone the next year, let alone the year after that. so it's hard to say exactly what happens there. but what what's motivating people. >> reporter: sort of stubbornly in maybe the high 2s, you wouldn't necessarily cut rates? >> i'm not saying that at all. [laughter] i'm not giving you any numerical guidance around that. i'm saying we'd be comfortable cutting rates when we're comfortable cutting rates, and that won't be this year, i don't

think. many people wrote down rate cuts for next year, i think the immediate e january was several for next year, and that's just going to be a judgment that we have to make then, a full year from now, and it'll be about how confident we are that inflation is, in fact, coming down to our 2% >> reporter: a good part of wall street has become more confident that the fed is going to be able to engineer a soft landing, and they've reduced their forecasts for recession. and i'm wondering if the staff has changed its view on the likelihood of recession being likely and if you personally have changed your view in terms of becoming more confident that you can achieve a soft landing. >> so it's, it has been my view consistently that we do have a a shot, and my base case is that we will be able to achieve inflation moving back down to our target without the kind of

really significant downturn that results in high levels of job losses that we've seen in some past, many some past instances, many past instances of tightening that look like ours. that's been my view, that's still my view. and i think, you know, that's sort of consistent with what i see today. so, but it's a long way from assured, and, you know, we have a lot left to go to see that happen. so the staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession. it's, i just want to note that it's, that our staff produces its own forecast which is independent of the forecast that we as fomc participants produce. having an independent staff forecast as well as the individual participant forecast is really a strength of our process. there's just a lot of, i think, constructive diversity of opinion that helps us make,

helps -- informs our deliberations, helps us make, i hope, better decisions. >> reporter: and is the reason for optimism that inflation has come down and you still have a strong labor market? i mean, does that add to the optimism? >> i wouldn't use the term optimism about this yet. i would say though that there's a pathway. and and, yes, that's a good way to to think think of that. we've seen so far -- to think of that. we've seen so far the beginnings of disinflation without any real costs in the labor market, and that's a really good thing. i would just also say the historical record suggests that there's very likely to be some softening of labor market conditions. and -- consistent with having a soft landing, you would have some softening in labor market conditions. and that's still likely as we go forward with this process. but it's a good thing to date that we haven't really seen that. we've seen softening through -- not through employment employment, not through --

unemployment, not through higher unemployment, we've seen softening through job openings coming down participant of the way back to more normal levels, the quit rates so people are not quitting as much. we've seen participation, people coming in, and and so labor supply has improved which has lowered the temperature in the labor market which was quite overheated, you know, going back a year or so. so we're seeing that kind of cooling, and that's very healthy. and, you know, we hope it continues. >> [inaudible] >> reporter: thank you, mr. chairman. jeff cox from cnbc.com. you and other fed officials in the past have suggested that you don't need to keep hiking until inflation hits 2%, that as long as you see continued progress. so i'm wondering how close do you immediate to get with the inflation numbers -- need to get with the inflation numbers coming down, how many months of data do you need to see that will give you sufficient confidence and, you know, how

far does this fight need to go before you're willing to kind of declare victory on it? >> so the idea that we would keep hiking until inflation gets to 2%, it would be a prescription of going way past the target. that's clearly not the appropriate way toking think about the it. in effect, if you look at our forecasts, the median participant -- and, again, these are forecasting out years, so taken with a grain of salt, but people are cutting rates next year because, you know, the federal funds rate is at a restrictive level now. so if we see inflation coming down credibly, sustainably, that we don't need to be at a restrictive level anymore, you know, we can move back to a neutral level and then below a neutral level at a certain point. i think we would, you know, we of course would be very careful about that. we'd really want to be sure inflation was coming down at a sustainable -- i'm not going to try to make a numerical

assessment of where and when that would be, but that's the way i would think about it. you'd stop raising long before you got to 2 inflation, and you'd start -- 2% inflation, and you'd start cutting too because we don't see ourselves getting to 2 inflation, all the way back to 2, until 2025 the or so. -- or so. >> jennifer. >> reporter: thank you, chair powell, jen jennifer with yahoo! finance. pes been over four months since a hand of toful regional -- handful of regional banks failed. given bank of california's acquisition of pacwest, does this acquisition suggest the full impact has not been felt, or are you comfortable saying that we've seen most of the ripple effects that may have occurred at this point, and how does this play into your outlook for policy? >> so i don't want to comment on any particular merger proposal, but i will say things have

settled down, for sure, out there. deposit flows have stabilized, capital and liquidity remains strong, aggregate bank hedged aring was stable quarter over quarter and is up significantly year-over-year. banking sector profits generally are coming in strong this quarter, and overall the banking system remains strong and resilient. of course we're still watching, you know, the situation carefully. and monitoring, you know, monitoring conditions in the banking sector. in terms of the, actualfect -- effect, you think of a particular set of banks that were affected because of their size and business model and things like that, they were more affect ifed by the turmoil in march than others, it's very hard, as i mentioned, it's very hard to sort of tease out the effects on this very large economy of ours from them tightening. they may be tightening a little bit more, probably are, than other banks. the sluice has been sell --

telling us for more than a year that banking conditions are tightening. that process is ongoing, and that will restrain economic growth. so i think we have to take a step back from -- i can't separate those anymore. i think basically we're just looking at the overall picture which is one of tightening credit conditions. and that's going to restrain economic activity, it is restraining economic activity. so that's how we'd look at it. >> reporter: and how is that informing your outlook for setting policy? >> so i think we -- that goes, that is an expected result of tightening interest rate policy, is that bank credit conditions, bank lending conditions would tonight as well. and and so the question is, is it more effective this time because of what happened in may? i just don't think we know that. i think we're looking at the current data in gdp and seeing strong spending, we're seeing a strong economy, and it's made us confident that we can go ahead and raise interest rates now for the third time since the march events. and i, it seems like the economy is weathering this well.

but, of course, we're watching it carefully and expect to continue to do that. >> [inaudible] >> reporter: hi, chair powell. thanks for taking our questions. i wondered on wages if the you were at all concerned about any inflationary impact of wages now outpacing inflation which is likely contributing to the boost in consumer sentiment and the continued strength of the consumer that we've been seeing. >> well, wages in excess of inflation means real wages are positive. again, that's a great thing. of course, we want that. we want people to have real wages, but we want wages to be going up at a level that's consistent with 2 inflation over time -- 2% inflation over time. nominal wages have been coming down gradually, and that's what we want to see. we expect to see more of that. that's just more of what's consistent over a longer period of time. we don't really think that wages were an important cause of inflation in the first year or so of the outbreak, but ill say

that wages are -- i would say that wages probably are an important issue going forward. labor market conditions, broadly, are going to be an important part of getting inflation back down, and that's why we think we need some further softening in labor market conditions. >> reporter: this goes sort of to the balance of risks question, but you mentioned at the start how you're keeping an eye on can consumer activity and whether there might be some sort of a are rebound there. and i'm curious what the fed's explanation would be to families if further interest rate hikes start to hit the labor market, tart to -- start to, you know, drive that sentiment back with down, what's the message there of why you continue to keep rates elevated or to raise them? >> well, you know, we have a job with assigned to us by congress to get inflation under control, and we think the single most important thing we can do to benefit those very families, especially families at are the lower edge of the income spectrum, is to get inflation under control and are restore

price stability. we think that is the most important thing we can do now, and is we're determined to do that. and i would just point out that the people who are the most hurt by inflation if right away are people who are on a low, fixed income who, you know, when you're talking about travel, you know, transportation costs, heating costs, clothing, food, things like that, those -- if you're just making it through each month on your paycheck and prices go up, you're in trouble right away. even middle class people have some resources and can absorb inflation. people -- the people in the lower end of the income spectrum have a harder time doing that. so we need to get this done and, you know, the record is clear that if we take too long or if we don't succeed, that the pain will only be greater. so that's how i would explain what we're doing. >> thank you, chair powell, simon with the economist. you had said last month in

this -- that this meeting this week was going to be a live one. in the event the market has assigned a roughly 99% probability to the event you announced today, the decision, of course, was unanimous and the statement was basically unchanged from last month. may i can ask, to what extent was the meeting actually a live one? was there ever any doubt over the past two days about what the decision was actually going to be? >> i mean, you could -- was there doubt. look, i would say there's a range of views on the committee, and when you see the minutes in three weeks, you'll see that. there's a range of views about what we should do at this meeting and the next meeting, and it's a process that we go through. many times when we go into a meeting, the decision is not, you know, fundamental arely in doubt. nonetheless, we have the meeting, and some, some meetings are, you know, less uncertain than others, and i'll just leave it at that. >> [inaudible]

>> evanizeer, market news or international. thank you, chair powell. financial conditions have been loosening at a fairly steady clip in recent weeks. the dollar, the stock market, etc. what does that mean for the fed and being sure that inflation will come down to target? >> so we minnesota torquer -- monitor, of course, broad financial conditions. you're right, it's the dollar and equities, but -- and we're, of course, very focused on rates and our own policy. you know, we will, we're going to use our policy tools to working through financial conditions to get inflation under control. the implication is, you know, we will do what it takes to get inflation down. and in principle, that could mean that if financial conditions get looser, we have to do more. but what tends to the to happen though is financial conditions get in and out of alignment with what we're doing and, ultimately over time, we get where we need to go. >> reporter: if i could also ask about the fcp from june that showed rate cuts. do you expect the fed to cut

nominal rates next year while also continuing qt? >> so that could happen. the question is, you know, is that consistent with -- so if you think about both of them as normalization, imagine it's a world where things are okay and it's time to bring rates down from what are restrictive levels to more normal levels. normalization in the case of the balance sheet would be to reduce qt. so -- or to continue it. depending on where you are in the cycle. so they're two independent things and, you know, really the active tool of monetary policy rates, but you can imagine circumstances in which it would be appropriate to have them working in what might be seen to be different ways, but that wouldn't be the case. >> kyle? >> reporter: thanks, chair powell. kyle campbell with american banker. i have a question about the discount window. i'm wondering since the bank failures of the spring if you've

seen signs banks have taken more steps to be proactive in assuring they use that facility if they need to and whether you have any thoughts on whether policies might be appropriate for making sure banks sort of test regularly to show that they are prepared to use it. thanks. >> that's a very important thing, yes. yes to both sides of that, you know? yes, banks are now working to see that they are ready to use the discount window, and we are strongly encouraging them to do that. banks broadly. we did find, as you know, during the events of march and that, you know, it's a little clunkier, it can be a little clunkier and not as quick as it needs to be sometimes, so why not be in a situation where you're just much more ready in case you need to access the discount window. >> mark? >> reporter: mr. chairman, mark hamrick with bankrate. you've talked in the past about

getting the housing market back into better balance, excuse me, and also that the market might have bottomed. where do you see that situation and balance or lack thereof right now particularly with the constrained inventory of existing homes that might otherwise be coming on to market at a time when existing homeowners are reluctant to move? and, of course, all that happening with the 30-year fixed rate mortgage still around 7% on the heels of fed tightening and what you're talking about tightening industry lending standards. are we getting closer to balance or farther away? is what's your sensesome. >> i think we've got a ways to go to get back to balance really for the reasons that you talked about. with existing homes, you know, there are many people who have low rate mortgages and whereas they might want to sell in a normal situation, they're not going to because they have such, so much value in their mortgage which means that supply of existing homes is really, really tight which is keeping prices up. on the other hand, there's, you know, there's a lot of supply coming online now, and there are

people coming in, a lot of the buyers are, you know, first-time buyers coming in buying at, you know, with these, you know, with these relatively elevated mortgage rates. i think this will take some time to work through. hopefully more supply comes online and, you know, we work through it. we're still living through the, you know, the aftera math of the pandemic -- the aftermath of the pandemic. >> [inaudible] the last one. >> reporter: hi, chair powell. nancy marshall again, sir, with marketplace. russia has pulled out of an agreement allowing shipments of grain safe passage through the black sea and alternative routes at this point could be closed off. just wondering, how could that contribute to higher food prices and inflation generally and is how closely are you watching that? >> we are watching e it, of course, very closely. and you're right, the withdrawal from the black sea grain initiative does raise concerns about global food security particularly for poorer countries that import a large

share of their food. grain prices did go up on news, but they remain well below their peaks of last spring, and the moves we've seen so far, i would say, are not expected to make a significant contribution to u.s. inflation. of course, we will be watching that situation carefully. >> reporter: so you don't think it would have a big effect on fed policy at this point? >> doesn't -- you wouldn't say so looking at what we know now. thanks very much. liz: multiple headlines coming off the federal reserve's news conference after the central bank's unanimous decision to raise interest rates by a quarter of a point. that was widely expected. now the federal funds rate is at its highest level in 22 years, so we want to show you the markets. look at the intradays. markets either reversed or entirely raced gains as the fed chair revealed he does not think the fed will cut rates at all this year. so we've got the dow jones industrials, which had been up by as much as 199 5 points --

195 points, now down at the moment by 7 points. it's been all over the map. we're not going to, we're not going to close it up right here because, of course, we're waiting to see if the dow makes it 12 wins in a row. that would ooh tie it with the longest winning streak since 1987 on record. dow is at 35,437. so chair powell said he and the committee will continue to be vigilant about attacking inflation, and here's another one, he does not see the fed reaching its 2% inflation target until 2025. and you can see that the s&p really started to go south at that point as he made that comment. the index had been up 15, now as you sees the down about 10 points. the nasdaq, let's look at that, it fumbled all of its 42 points of gains perhaps because the market interprets that to mean that we've got maybe a whole new year of sporadic interest rate hikes. now, before the news conference

the yield on the 10-year treasury stood at 3.89. right now dropping just a bit. we've got it at 3.85%. to the 2-year yield. by the way, the 2-year is most sensitive to fed policy. right now it is at 4.84%. it, too, has come down just a bit from before the news conference. gold, if you're looking for maybe one of the bigger moves, and it's not really that huge, but gold, what you've seen as a hedge against inflation, now unabout $12, had been up $10 and change. 2,014 a toi ounce, that is -- troy ounce, that is a positive response for gold holders. the dollar weakened for a whole bunch of reasons. let's kick off with peter schiff and global fixed income head andy brenner. andy, your first gut feeling about some pretty significant headlines, among them he said that the fomc no longer is forecasting a recession. >> absolutely, liz. we didn't think there was going to be a recession at any time

over it's last 18 months, and we've said that. but let me just focus. powell started the meeting out hawkish, you know in they're not going to -- every meeting is a live meeting, and he could raise rates at any time during one of those meetings. but through the middle of the meeting, he got very dovish. he told you that next week's sluice report is going to be very weak, so credit is weakening. he's basically telling you what next week's report's going to be. ask we saw the 5-year go all the way from, i don't know, maybe move about 7 or 8 basis points, you know, lower in yield. and then towards the end he tried to bring it back a little bit. ultimately, i think it was a tad dovish, but then again that's kind of the way i see things as well. i'm sure peter disagrees. [laughter] >> well, i think the most significant admission that powell made was that the fed's going to start cutting rates long before inflation gets back down to 2%. and, in fact, i think the fed might start cutting rates even

as the cpi is trending back higher. because remember, the main -- liz: he said no cuts this year, i think. that's what he said. >> right. but he said fed 's going to start cutting before inflation gets down to 2%. and the thing that's significant is the main reason we got the drop in headline cpi from 9% to 3% was that we got a near 50% drop in oil prices from the summer of 2022 until about a couple of months ago. but in the last three months, oil prices are up 25%. i think we're just starting a new move that's going to take oil prices to new highs. and that's going to put a lot of upward pressure on headline cpi before the end of the year, and that's also going to push a downward pressure on the economy. so i think the fed is wrong on its recession outlook. we're going to have a recession. in fact, it's going to be a severe one. but with inflation is going to get worse, not better. liz: okay. he twice expressed what looked to me like extreme fear/paranoia

about quitting too early, so i don't know why, andy, you see it as dovish. let our viewers decide. >> sure. liz: here's how he put it. >> the worst outcop come for everyone, of course -- outcome for everyone, of course, would be not to deal with inflation now, not get it done. whatever the short-term social costs of getting inflation under control, the longer term social costs of failing to do so are greater. and the historical record is very, very clear on that. if you go through a period where inflation expectations are are not anchored, inflation's volatile, it interferes with people's lives and with economic activity and, you know, that's the thing we really need to avoid and will avoid. liz: he does not want to see a repeat of 1981 when the fed kept raising rates and caused a recession, but he also doesn't want to quit too too early. >> liz, 1981 was so far away from here. rates were 12, 14, 15%. that's not a good analogy. look, he's making the same mistake that the fed made in '21

as far as transitory goes. they are paranoid, absolutely correct. they are absolutely paranoid. but the reality is i believe they're going to be lowering rates sometime next year. as to how much, no, they're not going to lower rates between now and the if end of the year. i believe the economy is slowing down but will not go into recession. and, obviously, not peter's view, but i do think that rates are going to be heading lower. look, a year ago, one year ago, the fed funds rate was 2.5%. today it's 5.5 president. one year ago, as peter just said, cpi was 9.1%, today it's 3%. yeah, there's going to be mack nation, whatever, what's going to happen over the next few months, but i do think the fed is way over their skis. rates are too high for where the economy's going, and i think the federal reserve -- i think the treasury's going to have trouble paying over a trillion dollars of interest rates in the future. >> the problem is rates are only too high because we have too

much debt thanks to the fed. we can't afford these rates. to put this in perspective, 22 years ago which was the last time we had 5.5% fed funds, the national debt was $5.6 trillion. liz: can we show the debt clock? hold on. it was 5.6 trillion for the national debt last time around. right now, $31 -- let's call it 32 trillion -- >> it's actually 32.6; you've got the wrong clock up there. liz: that's the live clock. >> i just looked at it this morning, so i don't know what you're looking at. if you take the 5.5% rate back then, it would have been 3000 billion a year. -- 3000 billion a year. -- 300 billion a year. interest on the national debt was about three-quarters of defense spending. today, if we have to a pay 55% on the national debt -- 5.5% -- liz: that's interest rate. >> that's $is 1.8 trillion on the debt -- liz: per year.

>> now interest on the debt is more than twice what we're spending on national defense. but the problem is the debt's going to keep on rising, so the interest costs is going to keep getting higher. what's going to cause the fed to start the cutting is a solvency crisis at the government level and also on the corporate and personal level. it's not going to be inflation coming down. and, in fact, or when the fed has to start easing in the face of high inflation, it's going to be throwing gasoline on an inflation fire, and inflation is going to be making new highs. and so all the problems that powell is talking about are going to get much worse for the middle class and the working poor who are going to be decimated by higher inflation. liz: okay. and, by the way, that gasoline will probably also cost more to throw on the fire. [laughter] >> yes. liz: i jest but not really. the pause or the whatever you want to call it, the standdown from last month where the fed did not move rates at all, in the relate are prospect, was that a mistake or -- relate are prospect, was that a mistake or the right thing today?

>> there were a lot of economic numbers that were to the strong side. however, the unemployment number and the inflation number were not two of those. so in retrospect, i'd say it was a jump ball or a close call. powell is fighting a bunch of doves on the committee and now be bullard gone, it's going to be less hawk. so he's got to kind of squeeze a line in there. one thing i do want to say, peter, i agree with everything -- welshing i don't agree with everything -- [laughter] well, nonetheless, it's not the fed, it's the u.s. government that is, has come to market with too many stimulus programs that are, that have really increased the debt. >> of course. the fed enabled that. if the fed had not monetized all that debt, if the fed had not suppressed interest rates, the government couldn't have gotten away with all that deficit spending. they would have been forced to be fiscally responsible years ago, but because of the fed they remain reckless and irresponsible, and now we're sitting on a powder keg of debt that's going to exploit load at any -- explode at any moment.

liz: is the treasury market, maybe the t-bills, the shorter term treasuries, are those still as attractive with a 5% coupon or whatever, you know, as you look at some of these? >> andy and then peterrer. >> i love t-bills at 5.5%. you know, rick reider's talking about buying commercial paper at 6.5%. look, you can't get a better deal than t-bills right now. yes, there are plenty of floaters, whatever, 9, what have you, but i'm not one of these people who believe that you should go out to 10 years right now at 3.85. i just like, you know, accruing 5.5% for t-bills, so i'm going to stay safe. i made some good money in equities this year, i'm going to kind of put that a little bit aside, and i'm going to kind of coordinate into t-bills. >> well, there's no safety in t-bills. i'd say there's less risk in a t-bill than in a 30-year or 10-year treasury, but the real rate of inflation regardless of how the government wants to misreport it with the cpi is

higher than 5%. liz: okay, so what do how you go into? >> you've got to get out of the dollar, because that's what's losing purchasing power. you don't want to own any treasuries even short term. you want to own real money which would be gold, but with you want to own dividend-paying stocks that are outside the united states -- liz: what about materials? agriculture. >> yes. anything that's inflation-sensitive. that is basic materialses, that is energy, that is agriculture. but you want to be in investments that are going to benefit from the market being surprised by inflation being much higher than they expect and long-term interest rates being much higher hand they expect. so all this stuff that worked during the bubble days, high multiple tech stocks, that kind of stuff, the financials, that's not going to work. you've got to be invested for inflationary type stocks. so look at the 1970s. that's your blueprint for what's going to work. see the investments that worked in the '70s and get into those. liz: guys, thank you very much. we're looking at the dow jones

industrials which for a minute started to really pop its head back up above the flatline, it just turned negative again, so this is a moving target at the moment. sorry, andy, just hold that thought, if you could, because we're watching a whole bunch of movement here. s&p is negative, we've got the nasdaq negative. we've got9 to show you the intraday on the dow jones industrials. 13 gains in a row would match the dow's, as we said, longest winning streak on record set in january of 1987. not there at the moment, could happen in the next 29 minutes. but in the wake of powell's continued inflation-fighting efforts, how do you, the investor, really play this sticky inflation? to the floor show, we bring in hen onand walsh's kevin mann and jon najarian. jon, give it to me, baby. you look at exactly what he laid out. no cuts this year, he said. no recession this year. what are you buying today, now? >> well, liz, we've had, just as andy and peter were saying,

we've got a very uncertain fed right now. this is not a certain fed. they're going to talk tough all the way through jackson hole, all the athrough august until we get to september. so i'm looking at the vix, the volatility index for the s&p 500. it is down on the day. so don't pay attention to the match nations of the dow -- machinations of the dow, the s&p, the nasdaq. pay attention to the vix because that's where really big money is messaging -- hedging. and right now they're not feeling the need to hedge. they think that powell is still talking the tough talk, liz, but not going to walk the tough walk. so in other words, even though he said time and time again during the presser that he is not seeing the possibility of cuts this year, the street doesn't believe him. so the fact that the street doesn't believe him, liz, that's what with i pay attention to

rather than what the fed and the fomc are saying right now, trying to talk tough. liz: trying to talk through both sides of their mouth maybe, i understand how tough a position we've got jay powell in at the moment or at least the markets and the in the situation. but if you really want to see is it articulated, look at what he said right here. >> -- moderate growth, right? if we're looking for spry and demand -- supply and demand through the economy coming into better balance including, in particular, in the labor market. we'll be looking at inflation. we'll be asking ourselves, does this whole collection of data, do we assess it as suggesting that we need to raise rates further. and if we make that conclusion, then we will go ahead and raise rates. liz: there was a lot of maybe yes, maybe no, yes or no, kevin. but that said, what do you pile into at least from what what you interpret here? [laughter] >> yeah, i still contend, liz, that the fed should have hiked in may and gone away.

my number one question right now is what's really changed since the june meeting when they decided to pause. we had two conflicting jobs reports, 12 consecutive months of inflation coming down. by the fed's own projections, they believe unemployment's going to rise to 4.1% by the end of the year, the economy's going to slow to just 1% quarterly earnings are down projected on a yearly basis 9% year-over-year with. it's slowing. liz: what do i buy? >> look into those sectors that have historically done well during periods of economic slowdown, health care, information technology. we believe that the fed is going to start cutting rates by roughly 100 basis points next year, perhaps another 100 next year. will. liz: give me names where valuations are not outrageously high, they've got pes triple digits? >> first in technology, cisco. pe of just 19, giving a yield of around 2.9%. the leading netware solutions provider in the world.

and on the health care side, we like merck. they've got a dividend yield of around 2.7%, both trading well below what the pe of the market is right now. liz: and you talk about sort of sectors that have historically done well. jon najarian, there's a very short history for something like a.i. [laughter] not that i'm pushing anybody, i'm just saying that those have been some real winners. >> absolutely, they have. and there's a company out of norway, opra, that i am long -- liz: oh, my gosh, so is kevin. put a double box on the screen. [laughter] >> oh, yeah, you know? and it's not wagner, but it is opra. [laughter] liz, i would say right now that also there's going to be a lot of folks or that are going to focus in on do it yourself. in other words, if indeed inflation's picking up, and and i think it might be from the crude oil prices and others, i think things like keurig,

dr. pepper. because why? well, coffee prices are through the roof, and people aren't going to be able to afford those cup of joes that they like to buy at starbucks, at dunkin' donuts, but they can buy the pods. so that's one of the reasons we've seen big demand for upside calls in kdp. liz: yeah. here's your opra limited, can i just say look at this move of year to date about 122, 277% jump year-over-year. but, kevin, you look at pe ratios, actually pe -- they're profitable. >> yes. liz: how about that? they've got a pe of 38. that looks still a little bit rich to me. >> it's a little bit rich are, but if you look at where a.i. is going, this is a smaller cap a.i. name. about 1.6 billion market cap, they're using a.i. to enhance their search engine process, and they pay a dividend yield. the larger cap name i like is

microsoft. there's going to be multiple winners in the a.i. race, and i think microsoft and opra are two of them. liz: jon, powell did talk about what he saw as the tightening credit atmosphere. of course, that happened starting in march when you had a couple of regionings go belly up. how do you look at the banks? we've got the pacwest acquisition where pacwest is going to be most likely acquired by bank of california. if you look at the 2-day of pacwest, what a difference. i mean, yesterday it was plummeting. as you see that big divot there. and then today you can see it's now up 26 the %. -- 26%. why? looks a little nerve-wracking, doesn't it? >> i think a lot of these regionals are vulnerable still, liz. for the same reasons as before. no, it's not the mismatch in duration necessarily, but they haven't had runs. if you have any runs here on banks, that will be something that, you know, obviously a

combination like this can head that off. so i think we're going to see more of these combinations to try to head it off before it happens. in other words, putting one and one together might actually equal three, and i think that's what they're trying to do, put together a stronger balance sheet between several banks rather than just trying to survive on their own. they'd love to survive, but they're worried with higher and and higher fed push that their portfolios are going to look uglier and uglier. liz: that's what duke's campbell harvey said right here on this show yesterday, and he is the father of the yield curve inversion. i a hate to force you to put your fixed income cat on -- hat on here, kevin, but if you look at the spread between the 2 and the 10, starting to narrow a little bit. what is your thought here about -- it was never right on the signal this time around. >> yes. liz: that a recession was coming. we haven't seen that yet. >> it's hard to feel confident in chair powell suggesting that the committee is no longer

forecasting recession when you have the yield curve inverted as much as it still is and by their own projections when, in fact, economic growth's going to slow to 1% by the end of the year. with that in mind, are we going to have a recession? if they continue to raise interest rates in the face of this, we're likely to go into a or short and shallow recessionary period, and that's why i think investors would be wise to position themselves into quality companies with strong balance sheets that can withstand an economic slowdown and benefit from the next two years when rates are coming back down. liz: jon, i know you're anxious to start buying or selling. give me with one name, what you're doing with it. >> if i had to give you one right now, it would be google. i think it's a combination, liz, of both their a.i. which was a failure at first because of their bard mishap, but ultimately the numbers they put up yesterday were extremely strong. i would be long that stock for the rest of this year. in other words, for the next five months i think you've got a

winner in google. liz: well, it's up 6% right now. jon, kevin, great to have you both. let's get you some individual stock stories at the moment. we begin with union pacific. it is barreling to the top of s&p at this hour even after the railroad operator posted can disappointing second quarter results. the bulls celebrating the appointment of industry veteran and former unp coo jim van that. hedge fund sor bin capital partners have been agitating for ceo lance fritz's removal saying unc's stock could double if the other guy was appointed. well, look at the stock, it is popping 10% right now. analysts calling the move a significant positive. shares are on a pace for their largest percentage increase since march of 2020. we also have another executive shake-up we need to show you, it's being viewed favorably as well. gap shares trending higher by 7.8 percent after the apparel maker named mattel's president

coo richard dixon as its new chief executive. so dixon is the guy who who's been largely credited with reinvigorating the barbie brand which has been a huge win since the movie was released last week. mattel still up about half a percent. and look at boeing, claiming the top spot on the dow jones industrial average at this hour. shares are climbing 8.5%, that's a big move for boeing, after the air a craft company posted a narrower than expected loss paired with stronger than expected sales which were, by the way, boosted by a recovery in commercial aircraft deliver ilys. boeing's ceo also says there are a lot of, quote, good signs that delivery will resume in china, and we point out that our trader scott redler, just two days ago on this show, said he was buying boeing. we should take a look at an intraday chart of the 2-year yield. right now it's at 4.83 3% after

earlier topping 4.9%. and as you continue to look at the treasuries because they send a very important message here, we bring in with two experts on fixed income, portfolio manager jack mcentire and tcw group laird landman. laird, great to have you on the show. jack's been a real regular here, but give me your get reaction and what should viewers who maybe don't even own the 2-year interpret from this drop that you can see on the intraday picture of the yield? >> well, i think they're interpreting that the fed is reaching their terminal point, right now the 2-year range is near its high over the last 4 or 5 months. we like it. we think that, you know, we were just talking about t-billings. we think it's probably to actually be looking, you know, 5 years, get a little duration in the portfolios. that's what tcw is doing. thed fed is not done, and you

herald powell repeatedly go back to the notion of the number one thing they're watching is their battle with inflation, and pce is yet to come out, and it's clearly going to be biased higher. so, you know, we have another rate hike or two in front of us. but i think you want to own some duration here, you want to own the opportunity to make a profit when we do fall into a recessionary period and you can earn some price appreciation. liz: dow jones industrials, folks, is back up a little more comfortably from the flatline. it's now up 36 points. s&p down 3, the nasdaq down 12. jack mcintyre, when you look at what has just occurred and what fed chair jay powell says, your first gut reaction for if -- for your clients' money is to do what? >> so i'm not doing anything in reaction to what he said. liz: okay. >> i think in some ways this was sort of a nothing burger in the sense that, hey, we know that the fed is hawkish. i like the fact he talked about

real fed if funds rate, because you don't just look at the nominal fed funds, you have to look at them the elative to inflation. -- relative to inflation. as inflation comes down, it's going to be more restrictive. i like treasuries. i like going out to the 10 10-year part of the curve as well. i think the odds are that we're going to have to go through a recession to get inflation down towards that 2% level. so i think being in treasuries is a good way to be positioned for that. liz: laird, you just brought up a great point about how concerned powell is about slaying inflation. for people who maybe just tuned in at the moment, i want to play one sound bite that really jumped out to "the claman countdown" team about that. >> we would want core inflation to be coming down because core is signaling where headline's going to go in the future. core inflation is still pretty elevated, you know? there's reason to think it can come down now, but it's still quite elevated, and so we think we need to stay on task, and and we think we're going to need to

hold, certainly hold policy at restrictive levels for some time. and we need to be prepared to raise further if we think that's appropriate. liz: okay. so, laird, clearly -- [laughter] once again he's saying they are waiting at that gate, you know? when the gates open9 and the horses jump out during the horse race. and i get it, i do understand it. the 10-year at 3.860, we talked about the shorter end of the curve, but are treasuries something that you are sollly holding on to? -- solidly holding on to? >> yeah, we are at tcw. we definitel fed is about as good at economic forecasting as any of us which is to say pretty poor. so we won't know when we're in a recession. historically, recessions and the rise in unemployment that is negotiated with them, you're right there. it doesn't happen in advance. it's not like it creeps up, you know, a point or two and then suddenly you're in recession. we could be in recession -- i'm

not saying we are, we could be in recession right now, and we wouldn't know it. and when that recession occurs, the fed will have to turn around, they will have to steepen the curve. you want to own things that are sensitive to the can curve steepening, and that is they go up when the curve steepens. you want to own duration. i'm perfectly happy with the 10-year also. and i do believe the fed will keep tightening until they feel like we are, you know, seeing a real slowdown in the economy or a recession. they are, you know, you look at that gap between core flakes and regular inflation -- core inflation and regular inflation, and now the fact that headline cpi is going to be hampered and going down more by higher energy prices that have occurred in the recent period, it seems to me like the news on inflation is not going to be a one-way street. liz: yeah, yeah. but guess what, jack? we have a multitude of data now

between today's meeting and the september meeting. there is no august meeting. so we've got two full months, two cpi reports, two job reports. we can put up some of these to show how much data the fed will get to help them make their decision. you can barely see that. okay, yeah. we get second quarter gdp tomorrow, by the way. the pce, that is the fed's favorite inflation report. that comes out friday, not to mention the eci we're waiting on, you know? which one's going to be the most important here? >> so i'm glad you mentioned e e ci, because i always listen to what powell says, and when he references a certain economic data point, all of a sudden all eyes are on that. and he mentioned eci specifically. he's mentioning jolts in the past, etc., all those sorts of things. so that's the first hurdle, you know? but you're right, so that's why i kind of discounted a little bit of the meeting, the

information coming from it, because we're back to all being data-dependent. as laird said, i mean, we're all kind of looking at the same data now, you know? we're ultimately trying to figure out how the fed's going to interpret it in terms of setting monetary policy. but if the data comes in anywhere close to what we've seen with the last employment report, the last cpi, i think the fed's done tightening this cycle and let that real fed funds rate do some tightening for them and leapt the tightening of the credit conditions have an impact on the economy. liz: speaking of which, that's what i want to see, september fed funds futures right now. it appears that there is a 24% chance of an increase of 25 basis points. where's my, where's my very high-tech, handwritten list here? before the meeting that level for september was at 22%. so it has now ticked up just a couple of percentage points here for the fed funds futures. you know, i consider this as you

look at it, laird, an opportunity where people must believe or at least are starting to hear what jay powell says. >> i think you would have been, you would have done pretty well if you were on a high frequency basis listening to what the fed was saying and looking at the dot plot. they're kind of determined to follow through with this dot plot. so i think that that 24% is way too low as a percentage for another hike. and i do think that, you know, the pce data's going to be stronger than the cpi core data was. there's a big distorsion in the medical insurance -- distortion in the medical insurance that flows through that which is a pretty interesting phenomenon. and and is with commodity prices bounding a lit -- bouncing a little bit here, we could see headline inflation be a little bit disappointing. it's hard to envision unless we hit a recession that we're going to see the fed not follow through in september.

liz: lady, jack, great to have you back. the dow holding on to 15 points of gains. folks, we've got 10 minutes left to see if the dow can hold on to any shred of green which would, of course, mean the longest winning streak, tying with it, since 1987. twelve in a row. we hall see. stay tuned, you've got to stay with us. we're coming right back. ♪ ♪ if (vo) while you may not be a pediatric surgeon volunteering your topiary talents at a children's hospital — your life is just as unique. your raymond james financial advisor gets to know you, your passions, and the way you give back. so you can live your life. that's life well planned. new projects means new project managers. . .

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♪. liz: closing bell five minutes, five minutes away. the dow right now looks to do it. it's up 36 points. we'll see if it can hold. when i say do it, 12 gains in a row that would be the longest winning streak since 1987. 12 in a row as we said. it would tie it with that we shall see. we'll keep up the bug the whole time. our reporter edward lawrence asked federal reserve chairman jerome powell about wages, and this is morn wages jumped 5% year-over-year. some would say it's been too long since the average worker has seen a december bump and of course they're facing inflation and they need higher wages as well. the question as rates go higher

to quell inflation is the fed tamping down on those wages? here is what he said? >> i don't think we're targeting wage inflation. we're looking for a broad cooling in labor market conditions. that's what we're seeing. wages have actually been moving down but still at levels what would be consistent over long period of time with 2% inflation. nonetheless we're making some progress there but many indicators labor market demand is cooling. liz: let me be clear, he specifically said we're not targeting inflation. joining us 1.18 trillion in assets under strategist, lpl quincy krosby and mizuho chief economist steve ricchiuto. when you hearing is like that what does your mind triangulate toward? >> the fed is focused on wages. they don't want wages to go up

anymore. what happens most companies raise their prices. it is an input cost. the fed is going to, if wages continue to climb higher that is going to lead them to raise rates again. they need to see wages down. with 3.6% unemployment however, they have the quote, unquote, luxury. one of the things we wouldn't see, he wouldn't talk about it, the strikes going on, the deals that the unions have. paul volcker must be shaking in his grave now because he fought this over and over again to break the back of those higher union deals. this is an issue for the economy. it is an issue for the market. and it is a social issue as well because what is happening, they're pointing a finger at powell saying don't you care about folks who never had higher wages suddenly they do? his countyter point to that, well, wait a minute they're paying more on their credit cards, they're paying more for their services. no, they need to have their wages come in line. we need to have a balance. liz: steve, your gut, quincy saw

right through it, did you? >> clearly they have to be targeting inflation and they have to target wages to target inflation. the reality of the situation, the bigger problem real household income has been squeezed. it is running well below stripped. there is greater impetus to put on wages going up. that is where the fed will make the mistake. they're not focusing enough on that issue to the point they will run the risk of letting it get higher than it should and they will have to do more in terms of interest rates and more for much longer than people anticipate. that will be the pain train going forward. >> two minutes left to trade. the dow is up 70 points. quincy, give me your favorite investments now as we move forward with two months without a fed meeting? >> we like the industrials sector. it is a large sector. it is made up of defense spending which is on the way up again. it is made up of the

infrastructure names, household stock names. it is made up of a broad part of the economy and by the way, we're seeing building sectors, subsectors, moving higher because our companies are working overseas. they're working in the middle east. they're building cities. the industrial sector is moving higher and higher. it pulls back digests the gains. we also actually like and we're paying attention to the move in energy. we're paying attention to a sector which right now is the enemy of the market because the earnings are down. [closing bell rings] >> it is climbing higher. and services names are -- liz: wall street climbs the wall of worry and the dow looks to do it as we wrap up our fed day coverage. the dow makes it 12 in a row ♪ larry: hello, folks, welcome to "kudlow," i'm larry kudl.