tv The Claman Countdown FOX Business June 16, 2021 3:00pm-4:00pm EDT
charles: right. you know, by the way to your point, i think he kind of just kind of said just now, remember, those are just projections, right? in other words don't do anything with your portfolio based on that damn dot plot. well, i don't know what you ladies said but the market improved really strongly since you kind of illuminated what's been going on. danielle and nancy i couldn't ask for two better people thank you both very much. liz claman, over to you. liz: oh, boy, charles, breaking news, the markets have just now found the floor as jay powell strenuously pushes out the message that the focus is not rate increases but rather, asset purchases, which will remain in place and that there will be a highly accommodative stance for the federal reserve. this is an extraordinarily important meeting. we're going to go right back to washington d.c. to listen to what will be key comments from the federal reserve chair. let's go back to the presser. >> asset purchases are taking too many safe assets out of the
market right now, and creating maybe some dislocations in the money-markets. >> so on the facility, we think it's doing its job. we think it's doing the reverse facility is doing what it's supposed to do, which is to provide a floor under money-market rates, and keep the federal funds rate well within its range, so we're not concerned with it. you have an unusual situation where the treasury general account is shrinking and bill supply is shrinking and so there's downward pressure. we're buying assets there's downward pressure on short-term rates and that facility is doing what we think it's supposed to do. sorry your second question was again? >> yeah, i mean, the change in the rate control toolkit. will that have any impact on do you think that will reduce the amount of money coming into reverse repos, will that have any impact on money-market conditions that beyond the fed funds rate setting? >> it could have some impact. i think we'll have to see
empirically but it's designed to keep the federal funds rate in, you know, within the range and i do think it could have some effect on broader money-market conditions below as it relates to, you know , the very low rates and the downward pressures. >> and do you think it will lower up take in the reverse rep o facility or that's not the focus of what the change was? >> the funny thing is you would think that it would but we'll have to see. it's possible that that would not be the case. that's going to be an empirical question. >> cool, thank you. >> we'll go to gina smelick, the new york times. >> thank you for taking our questions. i was wondering if you could follow-up, a little bit on your response to the very beginning, and talk a little bit about how we should understand what full employment means in a world that , as you mentioned, all of
the data has been by the pandemic and we're not sure where epop is going to settle in or participation is going to settle in and wages are already looking decent so i guess i wonder what full employment means in this context and sort of how you're thinking about those data. >> yeah, as you well know, there isn't one indicator we can look to and there's no one number that we can therefore point to. we look at a range of skate or s and it's a very broad range, you can count to a high number, just quickly, but certainly it will include things like unemployment and participation and wages and many different flavors of that, so how do we think about it? a couple things. we're all going to be informed by what we saw in the last cycle , which was labor supply outperforming expectations over a long period of time. now, that hadn't happened in many other cycles but this was a
very long cycle so we're going to have to be alert to see whether that can happen again. it is a different, it's a different economy. we have had a slew of retirement s, and that may weigh on participation. that effect though should wear off in a few years, and as you move through that window, because people would have retired anyway, and you'll be back where you would have been, so i think the lesson number one is just to be careful about assessing maximum employment, and i think if you, during the last cycle, there were waves of concern that we were reaching full employment as early, you know, as 2012 when i arrived at the fed, and you know, nine years later, eight years later, we were still creating jobs and it was quite remarkable, so we're all going to be informed by that. at the same time, we understand
this is a different economy. the demographics are people are getting older, and that should have a secular affect to reduce participation over time, so we have to be sensible about what can be done, but i think we're going to lean into that and be optimistic. you asked about wages. we're seeing wage increases. that's sort of a natural thing to be seeing in a strong economy , and what we're seeing is that we don't see anything that's troubling in the sense of what be troubling be , you know, very wide across the economy, wages at unsustainable levels without high inflation. in other words, wages in excess of productivity and inflation by a meaningful amount, broadly across the economy sort of forcing companies to keep raising prices and getting into a wage price cycle. that's the old formula for one of the old formulas for having high inflation. we don't see anything like that now. we do see high wages. we see them for people who are
mostly new, you know, entering into new jobs. many of them in low skilled jobs , and but we do think that you've got to think in the labor market right now where supply and demand are just not matched up well and we think it's a flexible economy and it will clear. there will be a level at which supply and demand meet and we think that'll be happening in coming months, so but the last thing i'll say is again , if you look at the forecast, we're going to be in a very strong labor market, pretty quickly. there's still a big group of unemployed people and we're not going to forget about them. we're going to do everything we can to get people back into work and give them the chance to work , but there's every reason to think that we'll be in a labor market with very attractive numbers, with low unemployment, high participation , and rising wages across the spectrum, so that's a
little bit how we're looking at the labor market. >> thank you, now we'll go to hannah lang, at the american banker. >> hi, i wanted to ask about the status of your thinking around the supplementary leverage ratio right now. is the fed still thinking about ways to permanently adjust this to account for the high growth in deposits and do you ultimately leave a permanent fix is needed, and any information on the timing around that be helpful. >> all i can say is we're working on it. don't have anything to share with you in terms of the particulars or the timing right now, unfortunately, but we've always, our position has been for a long time, and it is now, that we like the leverage ratio to be a back stop to risk- based capital requirements, when leverage requirements are binding, it does skew incentives for firms to substitute low risk assets for high risk ones. it's a straightforward thing, and because of the substantial increase in reserves, treasuries
and other safe assets in the banking system, the slr is rapidly ceasing to be the intended backstop for our big firms that we want it to be so we do think it's appropriate to consider ways to adapt it to this new high reserves environment and we're looking hard at the issue. we would also, just to be really clear, we will take whatever actions are necessary to assure that any changes we do make or recommend do not erode the overall strength of bank capital requirements. sorry i can't give you anymore. that's just something we're working on. >> thank you. now we'll go to anaka tapa at cnn business. >> hi, there, thanks for taking my question. chairman powell, the price jumps we've seen it some raw material, lumber for example, you mentioned that earlier, seem to be easing and it looks like we're in the beginning of suppliers catching up with demand, but i wonder if you
worried at all if we end up with excess supply immediately after those shortages and if we just continue this mismatch as we're recovering and getting out of the pandemic economy and i wonder how that would affect the fed's outlook at all. >> well that is really not the problem we're having right now, but and actually people who work in commodity industries are very focused on that because they know that they don't want to build capacity and then find out that it's not necessary, so really, the problem now is that demand is very very strong. incomes are high, people have money in their bank thes accounts. demand for goods is extremely high and it hasn't come down. we're seeing service sector reopening and so you're seeing prices are moving back up off their lows there, but in terms of over correcting, i think there is a possibility on the
other side of this that inflation could actually be quite low going forward but that's not really where our focus is right now. where our focus right now is we need to, our expectation is that these high inflation readings that we're seeing now will start to abate, and that's what we think and it'll be like the lumber experience, and like we expect the used car experience to be, with things like airplane tickets and hotels , which are the other two factors in the most recent cpi report that went up a lot. we expect that those prices will get backup to where they were but there's no reason to think they are going to keep going up a lot, because if they are, people will build new hotels. there's no reason for supply and demand to be out of whack in the hotel business over any period of time so we think that'll happen. i think in terms of the timing and the effects on inflation in the mid-term, there's a lot of uncertainty. the overall story is one that we think is right and we think the
incoming data support it, and but you know, so do many many forecasters, and if you look at the forecast on the fom c, you'll see that as well, but we don't in any way dismiss the chance that it can work out that this goes on longer than expected and the risk be that overtime it does begin to affect inflation expectations and if we see inflation expectations and inflation or inflation moving up in a way that is really materially above what we would see as consistent with our goals and persistentsly so, we wouldn't hesitate to use our tools to address that. price stability is half our mandate and we would certainly do that. we do not expect that though. that is not our base case, and in that, we're joined by many other forecasters, but there's a lot to be humble about among forecasters. forecasters have a lot to be humble about.
it's a highly uncertain business , and we're very much a tune to the risks and watching the data carefully. in the meantime, i would say, you know, we should, as i mentioned earlier, there's so much uncertainty around this. it's just a unique situation that we need to see how things evolve in coming months and see how that story holds up, and act accordingly. >> thank you. we'll go to howard schneider at reuters. >> howard schneider reuters, thanks, chair powell for taking this. i don't want to miss a moment and i noticed in a statement you dropped the language saying that the pandemic is weighing on the economy, so is this the effective end in your view of the pandemic as a constraint on economic activity, even though it is still cited as a risk? >> you know, it's a continum, right? what you've seen with the pandemic is sharply
declining cases, hospitalization s and deaths, and that's great, and that should continue, but you also saw in the united kingdom, which as i think at least as high if not higher vaccination rates they've had an outbreak of the delta variety and it's causing them to have to react to that. so you're not out of the woods at this point, and it be premature to in my thinking it be premature to declare victory. vaccination still has a ways to go to get to levels it be good to see it get to a substantially higher level and, you know, that can only help, so look, but you're right. the statement language is evolving. i would expect it to continue to evolve. there's a lot of judgment in that but you can expect us to drag our feet a little bit on that, because that's what you do with statement language. it's great to see the progress, but again, i would not declare victory yet.
i would say it is so great to see the reopening of the economy though, and to see people out living their lives again, you know, who doesn't want to see that? it appears to be safe and i just would encourage people to continue to get vaccinated. >> if i could follow-up on that if you view the statement, do you think that this is more of a mark-to-market exercise around the improvement in health or around the inflation risks you see developing out there? >> i think it's both. i think clearly, since march, what's happened is people have grown more confident in these very strong outcomes that they'll be achieving, very strong outcomes in the economy will be achieved. there's more grounds, we've seen growth come in higher than we expected. we've seen very strong labor demand. we've also seen, we have seen inflation above target though, and i think even though in our
forecasters case, they do see inflation coming back down over 22 and 23 into areas that are very consistent with our mandate. nonetheless, the risk is something that can factor into people's thinking about appropriate monetary policy. the thing is, you know, these are 18 different forecasts and i can't stand here and say exactly what was in all 18 people's minds but that is something that i think can factor into things as well, factor into our forecast as well. >> thank you. >> thank you. we'll go to victoria guida with politico. >> hi, chair powell. i wanted to ask a little bit more about inflation to make sure i understand how you're thinking about this. so in the projections, inflation is expected to be high this year and then come back down next year, and then maybe start to rise a little bit again, enough for a lift off in 2023. i know that's obviously take
that with a grain of salt but that would suggest that you all could theoretically see inflation sustainably staying above 2%, and so i guess my question is what be causing that inflation? what be , because it seems like you all now see a situation in which inflation be rising in a way that isn't caused by transitory factors in the next couple of years, so would that be the result of a tight labor market? would that be because this whole situation has raised people's inflation expectations? how are you thinking about that? >> so what we're seeing in the near term, again our base case is what we're seeing in the near term is principally associated with the reopening of the economy, and not with a tight labor market or a tight resource constraints, really so but you're right. when you get to, in the forecast , all of that, the supply and demand side of the economy adapt, we have a very highly adaptive, flexible
economy moreso than most, and by 2023, those increases are really about rising resource utilization or to put it a different way, low unemployment or high employment is a way to think about it so that's what that's about. that's about the kind of broad inflationary pressure that results from a really strong expansion, tightening up resource utility station around the whole economy and lifting up inflation. that's why, and that's why you would see it then because by then, in the forecast, and it's just a forecast, they are just individual forecasts in people's forecasts, that's what's happening. >> so the change of the projections reflect the fact that you all are more optimistic about the economic outlook and not necessarily that you think that this will change the way people think about inflation? >> yeah, i think there may be an element of the latter as well because inflation expectations have continued to
move up. it's all in people's individual thinking, and you can't, it's hard to say it's not something that a committee debates in terms of, you know, what the outlook is for 2023, so i'm a little bit speculating which i shouldn't do but i wouldn't surprise me if there's an element for some people in seeing inflation performance that we've had and thinking that i have more confidence that we could see inflation above 2%, that it may not be as hard to do that as we thought, and that inflation expectations may move up to a level they were really at a level that was kind of a little below 2%. they might move up as a consequence of this , or as a consequence of the new framework you know, we did see inflation expectations moving up in the wake of the announcement of the framework, but you know, we don't really know that, so ultimately i think that it's consistent with both those things. >> thank you. now we'll go to greg rob at
market watch. >> hi, thank you for taking my question. chair powell, i'm just looking at the forecast and one thing that i just don't think that's been talked about all that much is how much the fed thinks that the economy is going to slow next year. i mean, are we looking at a scenario of a slowing economy next year as with higher inflation and what do you think about that? >> we're looking at an economy that will not have the degree of fiscal support. the fiscal support in the forecast is much less than it was this year, so but you still got a very strong growth well above the longer run potential output of the economy. you've got growth meaningfully above that and inflation is lower next year in all of our forecasts. i think the range of core pce forecasts for next year is 1.7-2.5 in 2022 and 2-2.3 in
2023, so you're right. you're seeing, i can't remember the number but it might be in the threes, 3-3.5% growth for next year. that's a really good year. coming on the back of 7% growth year, that's a really good year. that's a year with a lot of momentum. that'll cause significant job creation and it will, i mean, we would take 3.5%, we didn't have a 3.5% growth year. we didn't have a 3% growth year between the global financial crisis, and the end of the expansion, so that be a good year. >> doesn't it seem like there's a risk of like stagflation where you're going to go from 7% and down, that means the economy is really dropping and we haven't seen that, right? >> well the economy is not, the economy is still growing and growing at a very healthy rate.
our estimate, i mean, different people have different estimates, but broadly speaking, economists think the economy has the potential to grow at around 2% per year. if you're growing above that, then the unemployment rate should be declining, people should be pulled into the labor force, wages should be going up lots of things should be happening, businesses should be investing, so you know, i guess to answer your question a different way, is there a risk that inflation will be higher than we think? yes, as i said earlier. you know, we don't have any certainty about the timing or the extent of these effects from reopening, and therefore, we don't think that, we think it's unlikely that they would materially affect the underlying inflation dynamics that the economy has had for a quarter of a century. the underlying forces around the globe that have created those dynamics are intact and those are aging populations, low productivity, globalization, all of those things that we think
have really held down inflation. all that's out there still. when we get through this , we will be facing the same thing but nonetheless is there a risk that inflation will remain higher than we thought? yes and if we see inflation moving above our goals in a time , sorry, to a level or persistently enough, we be prepared to use our tools to address that. >> thank you, going to brian ch ung with yahoo. >> chair powell, brian chung, yahoo finance. on that point you talked about the structural changes in that last answer with regards to productivity. i noted that the medium projection for the longer term interest rate is still the same at 2.5%, but there is since new literature out there that maybe the covid crisis could have actually changed some of the underlying fundamentals of the economy and maybe changed productivity in addition to combined with demographic changes that have already been
in effect to suggest that that longer term neutral rate might be higher. what would the implications of that be for monetary policy? do you think that maybe the fed could have the possibility of underestimating the long run neutral rate and what might be the impact of that? >> a higher neutral rate would mean interest rates would run higher by that amount and that be a good thing from the standpoint of the economy, because it would give the fed more room to cut rates. the problem with interest rates being close to the lower bound, of course, is that it really cuts into our ability to react to a downturn. for example, a pandemic, and if you look, for example, at the european central bank, their policy rate was well-below zero when the pandemic hit, so we don't want to be in a place where we can't react. the higher neutral rate be from that narrow standpoint, be a good thing for us. it would give us more room and therefore, then that would tend to result in better outcomes for
the economy over time. you know, you can't estimate it with great precision. i think we be alert to studying our star is a whole industry unto itself and i think we be alert to factors that might raise our star, the neutral rate of interest, and we'd try to keep up with that and i think we're all thinking about that and the possibility of that. you know, there are many, there are a lot of stories right now that could essentially could lead to higher productivity growth and we don't know which of those stories will come true, but i'll give you an example. there are a lot of start ups, a lot of early stage companies, and is that going to have that effect? we don't know but we'll be watching those things carefully. >> great. thank you for the last question, we'll go to michael mckey at
bloomberg tv. >> mr. chairman, of course you'll be shocked to learn that you have some critics on wall street and i would like to paraphrase a couple of their criticisms and get your reaction to them. one is that the new policy framework is that you react to actual data and do not react to forecasts, yet the actual inflation data is coming in hot and you're relying on the forecast that it will cool down in order to make policy. i wanted to get your view on how you square that. another is that you have a long runway, you've said, for tapering with announcements but if the data keep coming in faster than expected are you trapped by a fear of a taper tantrum from advancing the time period at which you announce at a taper, and finally, you've said the fed knows how to combat inflation but raising rates also slows the economy and there's a concern that you might be sacrificing the economy if you
wait too long and have to raise rates too quickly. >> so that's a few questions there, [laughter] but let me say first, i think people misinterpret the framework. i think there's nothing wrong with the framework and there's nothing in the framework that would in anyway interfere with our ability to pursue our goals. that's for starters. all of our discussions and all of our thinking and planning are taking place in the context of our new framework, we're certainly committed to it. we think it's well suited to our goals, including in this unique time, and i think if you look at the forecasts that we have written down, our committee is behind and the forecasts are all consistent with that. you know, your specific question , i guess, was will we be behind the curve, and that's
not the situation we're facing at all. the situation that we addressed in our statement of longer run goals and monetary policy strategy was a situation in which employment was at very high levels but inflation was low and what we said was we wouldn't raise interest rates just because unemployment was low and employment was high, if there was no evidence of inflation or other troubling imbalances, so that's what we said. that is not at all the current situation. the current situation, we have many millions of people who are unemployed and we have inflation running well-above our target. the question we face with this inflation has nothing to do with our framework. it's a very different, a very difficult version of a standard investment, sorry, a central banking question and that is how do you separate inflation, how do you separate things that follow from broad upward price pressures from things that
really are a function of sort of idiosyncratic factors in a particular, due to particular things. a class being example was to pick a narrow example was the cell phone price war back in 2017 if you remember it prices were incredibly low and it held down core pce by .3 for a year and that fell out and this is much bigger than that and it's not easy to tell in realtime which is which but that's the question you'd face under really any framework, and you know, we're trying to sort that out. i've tried to explain that today how we think about that, and, you know, we do think that these are temporary factors and that they will wane. we can't be absolutely certain about the timing of that and we're prepared to use our tools as appropriate. your second one was oh, you know , we will taper when we feel that the economy has achieved substantial further progress,
and we will communicate very carefully in advance on that and that's what we're doing. that's what we're going t do and we'll follow through on that. there's no, i mean, we'll do what we can to avoid a market reaction but ultimately when we achieve our macroeconomic goal we will taper, as appropriate. the third thing was, what was the third thing? >> if you raise rates to control inflation, you also slow the economy and the history of the fed is that sometimes you go too far. >> that's right, and look, we have to balance the two goals, maximum employment and price stability, often they do pull in the same direction, of course but when we raise interest rates to control inflation, there's no question that has an affect on activity and that's one of the channels through which we get to inflation. we don't think that we're in a situation like that right now. we think that the economies recovering from a deep hole, an
unusual hole actually because it's to do with shutting down the economy. it turns out it's a heck of a lot easier to create demand than it is to bring supply back up to snuff. that's happening all over the world. there's no reason to think that that process will last indefinitely, but we're going to watch carefully to make sure that evolving inflation and our understanding of what's happening is right, and in the meantime, we'll conduct policy appropriately. >> thank you, mr. chair. >> thank you very much. liz: well, federal reserve chair jay powell says don't worry, he will put out the headlines before they even begin to start tapering, the very accommodative asset purchases that have put a floor, put a pillow out, underneath the markets during what has been a very very volatile year.
markets wildly spasming as federal reserve chair jay powell admitted that yes, at least seven of the fed committee members now believe rate hikes will be necessary in 2022 versus the previously-stated 2023 and by the way, seven members is up from four members at the most recent meeting, but when powell stressed that fed policy interest rates will remain highly accommodative for now stocks found their footing coming up off lows. i want to show you the dow, nasdaq and the s&p intradays here. we'll start with the dow, 2:00 p.m. eastern when even just as the fed announced rates be left untouched at near zero you can see that very moment. again, 2:00 p.m. eastern where the dow immediately doubled it losses. the fomc statement released said simply that yes, there are concerns, but indeed, there will be a moment at some point where things start to look a lot better. now, look at the dow intra-day, the instant drop, we can go through the s&p pretty much reflecting same thing and again, there you can see just 2:00 p.m.
eastern, the big drop but then to the right on all of these charts, you will see that there was a bigger drop at around 2:37 -2:45. we'll get to that in a second but let's cycle through some of the reaction here. 10 year treasury yield which this morning stood at 1.49%, is now at around 1.52, i believe, and as we look at the 10 year yield, there it goes 1.55 now, okay so we have been up more than about six basis points now we're up 5.2 basis points at 1.55%. you have less of a fear trade. less of a rush into some type of sort of reactionary safe haven which is usually what treasury bonds do. now financials which tend to be rate sensitive have been in the red at the market open this morning. now you look at what they're doing most are moving higher we've got morgan, bank of america, these are not big jumps under 1% here, jpmorgan up about 1%, the closest there, goldman sachs let's call that flat, citi
down 3.3% but that has more to do with what they said yesterday which i believe was pretty much that the ceo said investment banking revenues be much lower than they were a year ago. it's always important, i think, looking at gold. you know, moving slightly lower after the decision we can check the metal down just under 1% or $17 and then going into the day , let's get to that fear gauge, the wall street fear gauge otherwise known as the volatility index, this one was already under historical average, meaning very complacent, showing very little fear here, just up 1% at the moment to 17.19, but it was a hold the phone moment for the markets when powell admitted, and as i said it's around 2:37-2:40 he admitted some of his fomc cohorts are morphing from doves to hawks when it comes to raising rates sooner rather than later but the fed chair stuck to a doveish tone saying the focus right now is on asset purchases versus
lift off. >> rate increases are really not at all the focus of the committee. the focus of the committee is the current state of the economy , but in terms of our tools, it's about asset purchases. that's what we're thinking about lift-off is well into the future the conditions for lift-off were very far from maximum employment , for example. it's a consideration for the future, so the near term thing is really we'll learn from a discussion that will begin is really about the path of asset purchases. liz: the markets, the dow have been down 382 points, it found a floor just at that moment let's bring in two guys, expert at reading and translating fed speak, global fixed income head andy brenner, with 3.7 trillion, chief investment strategist michael eroni. andy i'll start with you. investors chose and got scared even as powell said that talking about lift-off is premature. what was your gut reaction at
that point? >> liz, inflation, inflation, inflation, plus the fact powell is losing control of his soldiers. the 10 year went from 149 as you said all the way up to 159. the five five year went from 77 all the way up to 91, and has backed off. there's definitely inflation, powell admitted it. it's called wages, wage inflation isn't going away any time soon. it's not so much commodities and he might be right about the transitory nature of commodities but wage inflation is there and rates are going higher. liz: okay, i want to show our viewers what he said about inflation, and i think what's important here, folks, is he tries very hard to maintain a very calm note saying the price hikes that we have seen lately, you look at the ppi, which is the producer price index, an indication of, you know, manufacturing prices jumping 6.6 % year-over-year, that's
worrisome to people, because that eventually translates to the consumer. here is what he said about inflation and then andy, i do want to know what you mean when you say powell is losing control of the troops. >> if we see inflation moving above our goals in a time, sorry , to a level or persistent ly enough, you know, we be prepared to use our tools to address that. liz: okay, and so now, you think that the fomc team, more of them , andy, are basically saying we think it's here, and we think that this maybe a problem for rates. >> absolutely, liz. you already pointed out how more people are looking for rate increases next year. you know, you've been having kaplan leading the pack about tapering and he's been pounding the table. now the fed is starting to talk about tapering or starting to start to talk about tapering whatever the case maybe. no, they're not going to raise
rates this year. no they're not going to start tapering anytime soon at least i font think so even though they should, but there's no question that powell is losing the troops behind him. he is by far and away more dove ish than the average fed governor right now, and i think that's going to be the cause of his demise in february of next year. liz: huh, that's a strong statement. michael to the investment piece of this. everything that you have heard today has done what for your risk assessment and when it comes to investing, are you riskier now or are you saying wait a minute this is a time to back off a bit? >> well i don't think it's a time to back off. i think the risks are fairly stable. i think what was happening today , particularly with the reaction in the beginning, is investors are looking for clarity on the path for interest rates, if inflation is indeed transitory, and what is the fed going to do with the tapering and they didn't get that clarity, so liz, from
an investment standpoint, i think you need to stay balanced, cyclical stocks that benefit from a rebound in the economy and building inflationary pressures, energy, materials, financials, industrials, and you balance that with the secular growth trends in technology, i think that's what investors need to do. liz: you know there was one point where he was very positive on looking because what we do here, folks is we frantically take notes we've got a whole team in our control room. i'm here, we're also looking at all of the things but one to two years out we'll be looking at a very strong labor market. he also said that, you know, what happened with the vaccinations has really help ed speed up the recovery, so michael, you just gave a whole bunch of sectors. any sub-sectors that you can pinpoint that be great for investors knowing what we know? >> well i think in the mid-term , both banks and the metals and mining industry should do well. banks you're seeing respond favorably to the pick-up in rates that andy was mentioning
around 149-159 as we know, higher rates flatter bank profitability. on the metals and mining front i think it's an acknowledgment that we continue to struggle with supply chain challenges, as demand continues to increase, and inflation is building, so that's really well with those metals and mining companies. liz: well, you know, andy before we go, you look at copper up more than 67% year-over-year. lumber, which interestingly has started to come down and we can show some of these prices here, that does play into powell's bet that this will be all of these price hikes transitory, or temporary. do you believe that inflation is where the fed believes and if not, where is real inflation right now? >> liz, i absolutely do not believe that the fed knows where inflation is, as i've seen in the last week, you've seen cp i at 5% and as you
mentioned before, ppi at 6.6%. i think inflation is a lot higher and liz let me tell you something from my freshman year at watteron, had a great economist, labor economist and he said son, you know, inflation is made from wage inflation. ignore commodities, ignore everything else, and powell just told you wage inflation is here, and it's coming, and it's going to get worse. be aware of inflation. liz: huh, all right, okay andy b renner, michael arone, lots of good focuses dow jones industrial down 193 the low of the session as down 392 and folks let me just give you the s&p too. its low of the session was a loss of 44 points, you can see we have cut those more than in half. we're now just down 11 points, nasdaq is now positive by that much. let's bring in our floor show traders teddy weisberg and scot bauer. we saw the markets tumble, as
soon as that fed statement was released but as you were watching your screens what specific market sectors or stocks sold off or popped at that time, where you saw flows in and out? >> absolutely, so the first one was the semis especially if you look at an etf like the smh, that sold off right away, made a little bit of a rebound and then when he came out, powell came out and was really talking about this wage inflation, that's when the semis sold off to their low point. now they have rallied back somewhat, along with the nasdaq, but that was one specifically i was looking at. the other one, and you touched on it was gold, but to me, gold came down to a level and just for full disclosure here that was an area i bought it around 18.35 that's the area i'm looking at. it came right down to that big support level here, and so i think that we saw not necessarily some knee jerk reactions, because you know, these trends have been going for an hour or so since the
announcement came off but when powell started talking, it was really, those two things i was keyed on, the semis and then gold also, and you know, we got -- liz: is gold -- >> yes, yes it is. liz: would you buy it again right here? >> absolutely. 18.35 was my number. liz: teddy let's get right to you. we're at 18.36 right now folks, teddy anything move during chairman powell's presser that you were particularly watching there? >> obviously listening to the message very carefully, i think clearly it was a shift in the message, inflation is a problem, in spite of what he says, and the overall market reacted negatively and the financial sector reacted positively, which is really connecting the dots to the prospect of higher interest rates and a steepening yield curve so you saw, you know, stocks like jpmorgan, bank of america, immediately go positive and the insurance stocks which benefit from higher rates went positive, even some of the
brokers like schwab which have a lot of assets under management which would benefit from higher interest rates and the money-market area, so the immediate reaction was just as i would have expected. liz: just as you would have expected okay, i don't know if we can pull up some of the meme stocks, but as you look at that, what message, teddy, do you think those reddit traders who have been very risky are interpreting from what's going on in the last hour and a half? >> [laughter] i'm not sure what they're thinking. >> [laughter] liz: [laughter] >> they sort of live in an entirely different world than i live in. clearly they're too young and i'm too old so i don't know how they think. liz: [laughter] >> but i sure would like to own some of the stocks they like and i just can't figure out how to get ahead of that. liz: we got them on the screen, scot. you're looking at gamestop and amc, well, amc is down about 6% but it's up more than 2000%
year-to-date so give me a sense of what you really feel will be let me call it the risk curve. how has it changed over the last hour and a half going forward? >> yeah, i think as teddy talked about, it's the steepening of the yield curve. it's here, it's now. we've known that the fed was going to do this for a while. powell admitted it today so it's all pushed up here, and i agree with him, we're going to see those rates start popping up the financials are absolutely a place that you need to be in over the next six to 12 months. that, to me, today was let's call it the nail in the coffin in terms of we're not thinking about raising rates. they just took a flip turn on that and we all saw it. we probably should have seen it coming, so financials got to be there. liz: charles schwab, teddy, to your point up 2.25% and morgan stanley of course interactive brokers these are the ones that clearly have a lot of individual retail investors both in the green. gentlemen, thank you. it is extraordinarily busy with
just about 16 minutes left of trade, fox business alert, it's electric in today's pop stocks general motors raising the stakes in the ev race. the auto maker is now investing $35 billion in its shift to ev, that figure, a massive $20 billion more than forecast back in march of 2020, 8 billion of those funds will be going to two new electric battery plants, up nearly 4% of session highs, the hummer and bolt maker right now up about 1.7% but solidly above $61 a share. can we turn it over to british- based ev startup rivl. shares getting charged up after the company tweeted its delivery vans are now ready for trial, look at that pop here, up 10.6%, that's an extension of a 6% rally yesterday, fueled by meme stock mania, because a rival is a heavily shorted stock and that
attracts the attention of the wall street bets crowd because they enjoy squeezing the big wall street names whose short in large form some of these stocks. all right, which publicly debuted in march in the uk's biggest tech ipo ever via $13 billion spac deal stands at $22.03. taking a look at fellow short targets, lordstown, which we have talked all week long about the difficulties lordsdown has been facing right now we do have ticker symbol ride up 3.7%, nickel up 1%, tesla up 1.25%, of course tesla was the original ev that the shorts loved to short, and it has defied them nearly every step of the way. let's look at oracle. oracle taking heat after issuing a very disa in politicoing vision for the future. the tech titan had softer than expected quarterly revenue guidance a planned doubling of its cloud capital expenditures to $4 billion for fiscal 2022 is
getting the blame for the 5% chop to shares which stand at $ 77.38. just been a horrible tasting recipe for blue apron today. it is getting pounded, down 22% in this final 14 minutes of trade on a disappointing $20 million equity offering, shares priced at 4.25, they are at $4.29 right now, so 4.25 was more than 23% discount to yesterday's close, so the meal kit makers trials and tribulations continue. all right, did you miss the international press for position to get a shot of the world's two most strategically-important leaders just before they headed behind closed doors? well the three-hour meeting between president joe biden and russian president vladimir putin ended with president biden sound ing a firm positive but cautionary note about what was achieved.
listen. >> let's get something straight we know each other well, we're not old friends. it's just pure business. liz: to connell mcshane, live in geneva, switzerland on what that pure business entailed and how it all went down. connell? connell: you saw the president with his jacket off in that clip you just played, liz it was 87 degrees and sunny in geneva and he was getting a little bit warm so he took it off during the news conference. there were claims broadly speaking from both sides the day went well here. first we actually heard from president putin who had the first news conference after the summit wrapped up, characterizing the talks between he and president biden as constructive, and then biden said the tone was good, and that kind of things but it was clear from hearing both men speak and we were in attendance for that, biden news conference, there are still deep tensions between these two countries on issues like cybersecurity and certainly human rights. on cyber, putin talked broadly about further negotiations between the two sides, where biden says he was more specific in warning the russians what they need to stay away from.
here is the president. >> 16 specific entities, 16 defined as critical infrastructure under u.s. policy , from the energy sector to our water systems. of course the principle is one thing. it has to be backed up by practice. responsible countries need to take action against criminals who conduct ransomware activities on their territory. connell: but what will the consequences be if russia doesn't behave going forward from here? biden didn't really layout any specific penalties that might be put in place, instead, suggesting that putin's credibility is on the line. that might be enough. here he is. >> how would it be if the united states were viewed by the rest of the world as interfering with the elections directly of other countries and everybody knew it? what would it be like if we engaged in activities that he's
engaged in? it diminishes the standing of a country that is desperately trying to make sure it maintains its standing, as a major world power. connell: now when the discussion did turn to human rights including the story surrounding the jailed russian opposition leader navalny, biden said he made it clear to putin that when they met today that he will continue to raise issues of fundamental human rights, says he feels obligated as the president of the united states to do so, and then he wrapped things up. as i wrap things up and go back to you, liz since you mentioned coming in i'll briefly explain what did happen before we heard from the two men at the very beginning of the summit. the pool of reporters was being rushed into the room in the small clip you showed in the video you showed and there was a lot of pushing and shoving you don't often see things like this. a lot of screaming and yelling and russian security even getting physical to some extent with some american journalists so that was quite a scene, but they got through it, and now the president is on his way back after a busy week here in europe
on board air force one to washington d.c. liz: yeah i noticed that and there it is, okay so we've cut that piece right there and you can see it and there was a lot of jossling i think, because let me tell you, this was a big moment, connell, and you all were there, and then there's some guy, i don't know if we can show that video where they were really kind of fighting, but there was some guy who just wouldn't move, right? can you give us some of that color? connell: right. yeah, i mean, there's a small pool. there's a small number of reporters anywhere that were at the site where we were located. we were right near biden's news conference it was a few hundred yachters from where the summit was taking place but a very small pool allowed into the room for the pool sprays as we call them so the media around the world can see what's happening inside the room or at least get some sort of flavor and when that pool was being ushered in that's apparently, from what we were told, when the screaming and yelling started on both sides, but to the point, it did get physical,
especially i think you're talking about one of those russian security officials who was saying, you know, to backup, and then to stand up, and then one point reached out with his hand and appeared to grab i believe it was one of the still photographers from the united states. so that was, boy, we might say, but two leaders were sitting there, biden and putin looking at this and looking at each other made a few comments we couldn't really make out what they were saying but then the meetings began and lasted three-plus hours, and got into the issues that we talked about a moment ago. it is what it is. liz: very interesting meeting there. connell, thank you. connell mcshane live in geneva, we're going to show you what roadblock stock, you may not be happy if you own it. we're coming right back. get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen...
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higher interest rates may be on the way next year versus 2023. so what does this mean for the wall street bets crowd? we were talking to our floor show guys about that but let's get to charlie gasparino because he was watching like a hawk when it came to what jay powell did and didn't say, charlie. >> welcome back, liz, by the way. i missed you. liz: thank you. >> he didn't address it. a lot of people, a lot of my sources, investors, traders thought he would address it. face it, the reason you have meme stock mania because the fed is printing money. maybe at some point he would own up to the fact that he is inflating assets by keeping interest rates this low and printing money for this much, this long. by the way, i read a little thing on twitter from the sarge, mr. guilfoyle, who said right now the money supply is actually even bigger than the debt. we have $20 trillion in debt.
we have $19 trillion in m1. there is some crazy stuff going on here. but he didn't address it. even so, these two stocks took a little breather from their frenzy. i will say this, liz, if interest rates go up that is probably, if you have any indication that inflation is coming, that interest rates are rising, remember powell left that open. that he could raise rates, that's where i think a clear sell signal for these crazy meme stocks who are -- liz: gamestop turned positive, charlie. >> i think it is great. liz: these guys have shown, that the herd is powerful with the wall street bets crowd. >> right. when you start having higher rates you will see some other money come out. you know a lot of this is being propelled by professional traders right now. they're riding on the backs of amc apes, meme stock apes, that
is why gary gensler the se chair is looking at all of this stuff. he is worried about wall street playing games here. liz: yeah. >> 2022, he said i might -- liz: no, he didn't. seven fed members say 2022. not him. >> should be tomorrow. liz: that is why andy brenner we lost control of the soldiers if you're talking about the jay powell. >> that is crazy. liz: good stuff, charlie. >> all right. that is just so nuts. the whole thing is just so nuts. they will never raise rates. what is this, zero rates forever? liz: everybody is scared. >> it is nuts. it is so psycho! psycho! liz: like you. not really like you. >> psycho! liz: thanks, charlie. fed chair jerome powell talked inflation after the fomc meeting that the central bank is ready to address it when it gets out of control if it gets out of control. our "countdown" closer says
pinocchio. alex manages $1.4 billion. what do you mean by that, alex. >> i think that is referring to the index that we have with wisdom tree. wisdom tree's growth index. liz: okay. but you're talking about how inflation is going higher and that yellen and of course powell are acting like pinocchio, correct? , if you feel that they don't see it or not be honest about it? >> yeah. i mean your previous guest was talking about asset price inflation. you see it in the equities. you see it in tech company, private tech company valuations. you see it all over the place when you look at asset price inflation. recently you have reports that the cpi, the consumer price index might be around 5% in the past month but you have to understand that those numbers, what's happening in the supply
chain is happening three, six months, or longer in advance, right? liz: got it. >> what i'm seeing, what my company does, supply chain is not easing up any bit when it comes to inflation pressures. [closing bell rings] >> if anything what you're seeing in the cpi -- liz: alex, there we go request inflation. dow down 266. big day in the market. ♪. larry: hello, everyone, welcome to "kudlow." i'm larry kudlow. great to be with you. kind after bad day for stocks. the dow had fallen over 300 points by mid-afternoon though it did close on somewhat better note later. i don't know whether stocks fell because of putin's news conference, biden's news conference, or jay powell's fed news conference. i don't know which was worse for the market. i don't know which was worse for american security and