Briefly into positive territory: welcome back to another! Absolutely today we're talking about how the federal reserve uh yeah, now essentially statement down the table. We're down! Oh, like seven, eight nine points there december a while ago and moving back down a little bit. Sorry there we go double volume on there. Okay, sorry about that.

Uh welcome! Welcome back uh, so the federal reserve uh just announced that uh they have begun the taper. We expected this 15 billion dollar taper. Let's go ahead and look specifically through their statement here. Jerome powell does speak in about 27 minutes, so we'll cover jerome powell talking as well and then we'll react.

But let's take a look at what we've got here, so federal reserve uh, specifically we're going to jump right over here. The federal reserve is keeping interest rates. The same we expected this, we don't expect that they're going to raise the rate at any point until we actually see uh the taper fully complete because they don't see a point in ta like providing stimulus to the market and raising rates. At the same time, they think that doesn't make sense so they're going to complete the taper fully.

First, they are going to keep interest rates at that 0 to 0.5, 0.25 percent level expect it will be appropriate to maintain this until labor market conditions have reached levels. Consistent with the committee's assessment of maximum employment and inflation has risen to two percent and is on track to moderately exceed two percent for some time. This, by the way, is the same line that they've had over and over again in here. So it's it's.

We we know we're over two percent right now, but they're mentioning that they their whole thesis has always been. Let's keep uh inflation running hot for a little bit because we've had such low inflation for a while. So it's all part of apparently their master plan, but we are seeing inflation last longer and be larger than expected in light of substantial further progress. The economy has made since last december, the committee decided to begin reducing the monthly pace of its net purchases by 10 billion dollars for treasuries and 5 billion for agency-backed securities.

This is mortgages, so a lot of folks have said that the federal reserve should really just keep money in treasuries. Uh keep basically buying treasuries, but that they should not uh or rather that they should fully cut the real estate bond purchases. Mortgage-Backed securities purchases rather - and they say that because the real estate market has just been so incredibly hot. However jerome powell and uh most of the members of the fed are so uh are much more interested in seeing an even taper, where you taper, since we're right.

Now we're buying 80 billion dollars a month of treasury bonds and 40 billion dollars a month of mortgage uh bonds, uh they uh they're, keeping basically that taper in line uh with the ratios, since you've got twice as many bonds being bought in treasuries every single month And they are tapering 10 billion there and half from the mortgages, so they're basically doing an even taper, which is kind of interesting, because the real estate market is pretty hot and folks say: hey the last thing that needs more liquidity. Is the mortgage-backed securities market this by the way? Just so you know kind of like how you can picture what it is is. Imagine you had uh you had like a book or something here's just the old broken notepad. I have let's say every single one of these pieces of paper was one person's mortgage, and so this whole thing had like 200 people's mortgages on it, uh say each is uh 500 000.

Then this would be a 100 million dollar bundle here right. Well, you could slice this up and then each little sliver of of you know the pie so to speak, kind of like a slice of uh of a piece of art like an nft, each little slice uh. It can be bought as bonds mortgage-backed securities. So it just kind of gives you a little bit of an idea on how to maybe visualize what those even are so uh and then, as you make your payment, those are people who receive those interest payments which is interesting because folks always complain about i'm tired Of paying the bank interest, i don't like paying the bank interest.

It's not really the bank you're paying interest. The bank might collect your money, but it's the people who hold those mortgage-backed securities they're, making money on the fact that you had a mortgage so anyway, beginning later this month, the committee will increase its holdings of treasury securities by 70 billion per month. Right: that's down from 80 and uh. They will increase their mortgage back securities by 35 bill a month down from 40 beginning in december.

Oh look at this they're, even giving us the path beginning in december. The committee will increase its holdings of treasury securities by at least 60 billion. That's another 10 billion paper and agency by 30. there's another five, so so they're going to go.

Do a a 15 billion dollar taper, followed by another 15 billion paper in december. This makes sense committee judges that similar reductions will likely be appropriate each month so uh, in other words, we'd, have a december and then another five months. So this could take us through june of 2022 and then we can be completely done tapering by about the summer, which is right along expectations that we finished tapering in the summer. And when we finish tapering in the summer, we'll uh we'll be at a position where perhaps uh interest rates could go start getting raised, we'll see all right uh.

So what else do we have here and then we'll then we'll look at the uh there we go complete. The look then we'll look at uh the market, because the market's reacting pretty positively assessing the appropriate stance of monetary policy. The fed will continue to monitor the committee will continue to monitor okay and remember drone pile's talking about 22 minutes. The federal reserve is ongoing purchases and holdings of securities, we'll continue to foster okay uh, thereby supporting the flow of credit, so they're kind of giving their rationale as to why they're still stimulating, because remember, they're, still stimulating when they're still when they haven't completely tapered.

They're. Still introducing printed money to the market by the tune of 105 billion dollars a month right and then next month, it'll be 90 billion dollars and then thereafter it'll be expected. 75 billion dollars right, but anyway this is the s p. 500.

You can see the s p. 500 moved nicely. I mean this was a move from about four. What do we have here about 461 uh, a point and a half fluctuating here all right? Let's, let's see how some individual stocks are doing, let's see here, tesla's flat did have a little bump on that news.

Oh look at that silana up seven percent. Let's take a look and see so bed bath and beyond. Remember yesterday they announced that they were going to um move forward their stock buyback. They had a stock buyback plan over three years and they said oh we're gon na.

Do that all right now within uh within the next year? Well, i'm sorry not within the next year uh, oh yeah! This is a good one within the next uh two months. Actually so they're they're moving all their bond buying up to that which are not both mine, they're stock buybacks up to this year. So, let's see here look at bonds for a moment here. 10-Year treasury did pop up a little bit after this we were, i wanted to say a 1.55 right before this.

Let's look at the day, chart yeah look at that. So here's your day chart and you have uh less um - let's see here yeah, so we were somewhere around 1.56 here at the start, and uh did pop up to about 1.59. So not a dramatic pop-up. But you would expect this when you see, what's it called uh, when you see the fed buying less bonds, you have less buying pressure on bonds, which means the price goes down of the bond, as the price of the bond goes down, yields go up.

So if the fed is going to be less of a buyer - and it makes sense that yields would naturally go up so anytime, we hear the federal reserve uh reduce their bond purchases, you're, removing a buyer, a large, a heavy hitter you're, removing a whale from the Market right, when you remove a whale from the market, you have a lot less buying pressure, uh and that that will force yields up. Okay, yeah no kidding. The chat here has been so spammy because it's not on members mode. This is why we have members mode.

So anybody who's confused as to why we have members only mode the spam bots don't want to pay 4.99 a month, they're too cheap good i'll, buy the dipped coffee. Although there's not really a dip, let's see uh indices here, oh the s, p just went negative. So a little bit of a mixed market again the dow's down almost a quarter: nasdaq tech, though up 0.5 and the russell's up 0.77 again we're also really playing catch up here. Uh you've got uber up 5.8 percent uh cardano up five percent beyond meat.

Five percent uh lemonade lemonade. Look at that four point: six percent again, that's on top of like a six percent run yesterday, so congratulations, uh they're! Finally, on uh the ensure tech space see - and this is the other thing to know about market rallies is at some point - a rising tide lifts all boats, right or ships or whatever we call it uh. The that's. A beautiful thing about a market rally is market.

Rallies can be a great way for you to lighten your bags. If you have bags on certain stocks like for me, pinterest is, is uh one where it's like. Okay, maybe one of these days pinterest will go up. Well, we'll see i don't so far, it hasn't been, but again eventually, as markets go up.

Uh yeah, i mean it's up 0.4, but as markets go up, you see stocks that have been left behind, look like opportunities, so something like lemonade. I've regularly been talking about how lemonade is pretty cheap, uh and the volatility is low and that it's been somewhat juicy for potential call options. If you zoom out to the uh to the day chart you could see leading up to uh today, it was pretty much here on this. This feather out.

This bleed out as low as may levels here and uh as low as some of the lows we saw during the ipo or maybe not completely as low, but we were bouncing around some of those ipo prices uh. All of this being basically gone uh. It's so uh now we're seeing a little bit of a look at that volume that has moved into lemonade here. So i would expect to see trends like this continue again.

As prices go up, people take money from things like tesla and they're like okay. What else is cheap? Oh lemonade's, cheap, okay. What else is cheap? Oh, this is cheap. So that's pretty common! Oh look at that.

Redfin down. 5.46 percent after zillow falls 24. Oh my gosh whoa whoa whoa, that's a big old! That's a big loss! There uh and look at expi dropping 8.64. You know i actually think that's a little bogus on on behalf of expi because see expi does not do home buying and flipping, oh and by the way.

I thought about this a little bit more, because people were trying to educate me on accounting yesterday uh, but they weren't also listening and that's a problem uh. So i'm gon na show something here really quick, so give me one sec. I want to get into bloomberg. So i can see if there's anything going on with exp, because i don't think there is and then what we'll do is we'll listen to jerome powell when he comes to speak, but so far the market's being pretty excited here.

Okay, so jerome powell comes in about 15 minutes, let's say overall, the stock market is cheering uh. This uh, this taper news, okay, so in the jobs report on friday, it's gon na be another catalyst for us all right. So take a look at this uh when zillow look. Let's put it this way.

If uh, let's say your costco really quick, and i want to see what you all think about this. Okay, let's say your costco uh, you sell. Oh, i don't know um boxes of uh gosh. Let's go, you sell boxes of pasta.

Okay, you sell 100 of boxes of pasta. The way thing the way accounting usually works. Is you have revenue which makes sense? You have the pasta uh. Then you had uh the cost of the pasta, pasta, and this is exactly what they're doing with real estate, so it kind of it makes sense, but i'm gon na show you what i mean so anyway, you have revenue coming in at costco, 100 bucks, the cost Of the goods were - maybe i don't know 30 bucks is what you paid for the car, the pasta and uh.

Then you're going to have your op x. Let's say it's 15 bucks, it's probably uh. This is probably honestly more like 50 bucks. Let's go with that.

There you go and uh now that leaves you with about a 35 dollar profit, and this is not net income, because then you still have interest and uh taxes and all that so just a quick example. This is usually how things work, and this makes sense that you've got 10 of pasta coming in uh or i'm sorry hundred dollars of pasta coming in. You spent fifty dollars to buy the pasta, and then you had your operating costs uh. For that, the fun thing it was sort of the funny thing about real estate, though, is if they now got into the real estate business.

Personally, i feel like it makes more sense and they don't because it's just then it would be non-standard, but to me it makes sense if you had uh. Let's say you bought a 100 000 house now and sold it for 105 000. Then then, this all of a sudden makes it look like your revenue is like this and then your your cost of goods sold. Is, i don't know, uh well.

Well, you sold it for 105 000. Let's say: go with that quickly and then we'll get back to the fed here, one sec 500. There we go your cost of goods sold in this case would be 100. And what do we say? 50, there we go yeah 150, something like this, and so it makes it look like your.

Your numbers explode this much, which is so weird because it really skews how much money zillow and these other companies can make from from other aspects of their business like redfin. Doesn't only do flipping, so i was saying it feels like it would make more sense if this top line number here was actually just something like this uh, the the revenue being the difference between what you sold the property for and this. So now you have, let's say five thousand dollars of revenue right, but then it still cost you money to do to do the work there uh at the property or whatever. So i i don't know personally to me that seems like it'd, be a little bit more intuitive that uh.

Now we have costs that went into this uh and then you're marketing to let's say acquire the property, and things like this right uh this to me just feels more intuitive, like okay, what it! What did it cost me to to deal with this? My uh, my staff and so on and so forth, related to that property, the contractors or whatever. Ah, but maybe maybe their version is, is more intuitive. I don't know it's just for comparison sakes. It uh seems a little odd, uh, okay.

So, let's now wait for jerome powell and take a look uh go to top news here and also, let's get ready here for jerome powell, all right, uh yeah. So, anyway, okay, i was going to talk about expi, expi, okay, so expi news, because expi is dipping a lot on this zillow news um. What okay well expi, actually has a different set of news. That's odd! So expi reported this morning.

Expi maintains dividend of 4 cents, revenue of 1.11 billion eps came in at 15 cents. That beats the 11th cent estimate, so expa b, that's so weird, okay exp i beat oh here we go. Uh expi stock falls, sec sec sends expi subpoena on commission practices. Wow interesting, so i mean that could be why expi is down a little bit.

The xbi gets subpoenaed on commission practices, let's look at it together and let's see what it is, because that's their whole business. Let's see here so no, i i don't think it's just the sector here, let's go. Let's look at this here because they got press releases. We had to see sec filings there.

We go current report statement of beneficial interests, probably in this current report. 8K. What is this uh announcing financial results? No, where is the sec thing? Expi sec, commission? This news just came out and i'd love to know what it is news. It's not even up.

Yeah, did this literally just come out? I guess within the last 30 20 minutes here no impact expected from the sec inquiry. Well, i wonder what what the complaint was, but that could explain why exp is down a little bit the xpi disclosed on regulatory in a regulatory filing that the company received a subpoena issued by the sec um during for its commission practices during 2018 and 19, the Company is fully cooperating with the sec company does not believe the impact will have uh the impact or the inquiry will have a material impact on the company's financial condition. Well, i would love to know what it was. Okay, so is it with they buried it within their quarterly filing is what they did.

That's so weird inquiry here. Look at that on june 1st the company received june 1st that's a while ago, the company received uh a subpoena by the sec, requesting certain documents between 2018 and 19. company does not believe yeah. They don't really explain it.

Oh well! That's interesting! Huh, yeah! Okay. So, let's at least while we're here, let's look at the revs, so revenue here in thousands, so they had two uh 2.694 uh billion in revenue. They gave their agents 92 of that general and admin 171 million sales and marketing look how little their sales and marketing is relative to their business. It's because this see with expi the cool thing.

Is you don't really have to market that much like the agents? Are your marketers for you, it's kind of brilliant all right, drone powell in seven minutes so uh this is, they did bump their marketing, though it's not that much wow look at the difference here i mean they have exploded compared to the nine months, ended in september 30Th, 2020. geez, but yeah i mean i would want to compare, though let's compare to uh last year. That would be cool here, i'll i'll pull it up really quick on this and then jerome powell comes in six minutes. So we'll see what we'll see what mr j pal says to crash the market yeah get your popcorn ready, okay, so their revenue right now is current revenue.

Why do they list it like that? That's funny hold on a second here, income statement. These are the estimates all right. Okay, oh there, we go: okay, okay, that's last 12 months! That makes sense. Okay, so 42 in 2019, expi did 979 million on the top line and they were not profitable.

They became profitable in 2020. So this number here is just the first nine months of 2021 and the first or the full 12 months of 2019. They did. What did they do? Let's see here, nine 979 divided by 2694.

They did a third wow. That's actually really good. 9. 7.

9 divided. This way they did 2.75 x in just they did 2.75 times as much revenue in 2021 as they did in the full uh 12 months of 2019 - and this is just the first nine months and their sales and marketing is nothing. I wonder: has their spread gone up a little bit. Yeah well see their general administration is only one.

Seven is only six percent now, so this has gone down. So that's good, which makes sense as revenue goes up, they should be more efficient and uh there yeah. I mean the commissions are always going to say that, somewhere between that uh, nine and eight percent, so they lost a percent here, though um earnings per share 45. What were they expecting see here? Earnings estimates because they're down, i can't believe they'd, be down so much on just this sec thing uh hold on what's up well, i haven't even been sharing the screen with y'all.

Sorry there you go so uh jerome powell talks in four minutes. So i'll hang out for jerome powell here but uh. Just for anybody wondering i was just looking up the oh yeah, they be wow, they beat really well. So i was just looking at the earnings reports here for expi expi disclosed that the sec sent them an inquiry in june for some commission practices back in 2018 and 19, but not about their commission practices in 2021 or or 2020, which is interesting because it implies That those issues are, you know, were basically just an issue back then and aren't anymore, which is good, because the last thing you want is is the way they do their commission model to be an issue broadly.

That would be very, very bad, but anyway they beat. On eps, eps came in at 15 cents versus 12.7 expected gap. Eps came in at 15 cents versus 11.3 expected revenue came in at 1.1 billion versus 999 million expected. So that's a really nice beat there's like a 10 beat here, a little more than that net income came in substantially more than expected: 23.8 million versus uh 14.6 million.

I mean, i think they they killed it here, uh in the quarter, so i think they did really well so uh, i'm a little surprised, they're falling. So much. Let's look at the chart here. I wonder if it's just because people are selling off the real estate sector, but this is expi on sort of your broader chart here you can see it had this euphoria this by the way was after the stock split see the stock split was right here and It basically started selling off right after the stock split, so you kind of have some euphoria here that probably doesn't belong because of the stock split see if this was uh.

If you didn't do the stock split, this would probably look a whole lot more like uh, something like this, but you know you could be trading along uh there we go just start there. We go stay trading along this sort of trend here, a little bit more or or you know, maybe even a little bit, something like you'd say something like this or you're trading above it or below it a little bit. But all this over here is mostly excess because of that stock split hype. So if you're ever wondering, if stocks run when there's a stock split and fall after the answer is usually yes, this is a good example on that uh, but yeah.

I think i wonder if expi is just down eight percent really because of the zillow drama, which seems like nonsense to me, uh that expi would be down because they're in totally different worlds, but whatever all right, uh, let's go ahead and uh prep for jay pal J pal j powell actually we're pretty much ready for g-pal j-pal comes out and one minute. So, let's see here, yeah zillow people zillow's getting so low. It also does make you scratch your head like wow. What are they worth uh with without the flipping business and losses right? So i don't know in february of 2020, they were selling for about 66 bucks and they were selling in the 50s in 2019, pretty big faux pas there, and the next earnings are going to suck because they're going to show some massive losses, but anyway, all right.

Let's get ready for the fed, he will be talking momentarily kind of exciting when jay pal talks. You know he just had a fun halloween all right. Okay, 11 30 should be out all right here we go. We are strongly committed to achieving the monetary policy goals that congress has given us maximum employment and price stability.

Today, the fomc kept interest rates near zero and, in light of the progress the economy has made toward our goals decided to begin reducing the pace of asset purchases. With these actions, monetary policy will continue to provide strong support to the economic recovery. Given the unprecedented nature of the disruptions related to the pandemic and the reopening of the economy, we remain attentive to risks and will ensure that our policy is well positioned to address the full range of plausible economic outcomes. I will say more about our monetary policy decisions.

After reviewing recent economic developments, economic activity expanded at a 6.5 pace in the first half of the year, reflecting progress on vaccinations, the reopening of the economy and strong policy support in the third quarter. Real gdp growth slowed notably from this rapid pace. The summer's surge in covid cases from the delta variant has held back the recovery in the sector's most adversely affected by the pandemic, including travel and leisure activity has also been restrained by supply constraints in bottlenecks, notably in the motor vehicle industry. As a result, both household spending and business investment flattened out last quarter.

Nonetheless, aggregate demand has been very strong this year, buoyed by fiscal and monetary policy. Support and the healthy financial positions of households and businesses with covid case counts, receding further and progress on vaccinations. Economic growth should pick up this quarter, resulting in strong growth for the year as a whole. Conditions in the labor market have continued to improve and demand for workers remains very strong.

As with overall economic activity, the pace of improvement slowed with the rise in covid cases. In august and september, job gains averaged 280, 000 per month down from an average of about 1 million jobs per month. In june and july, the slowdown has been concentrated in sectors most sensitive to the pandemic, including leisure and hospitality and education. The unemployment rate was 4.8 percent in september, this figure understates the shortfall in employment, particularly as participation in the labor market, remains subdued.

Some of the softness and participation likely reflects the aging of the population and retirements, but participation for prime aged individuals also remains well below pre-pandemic levels in part, reflecting factors related to the pandemic, such as caregiving needs and ongoing concerns about the virus. As a result, employers are having difficulties filling job openings. These impediments to labor supply should diminish with further progress on containing the virus, supporting gains in employment and economic activity. The economic downturn has not fallen equally on all americans and those least able to shoulder the burden.

Have been hardest hit despite progress, joblessness continues to fall disproportionately on african-americans and hispanics. The supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors, in particular, bottlenecks and supply chain disruptions are limiting. How quickly production can respond to the rebound in demand in the near term as a result, overall, inflation is running well above our two percent longer run goal. Supply constraints have been larger and longer lasting than anticipated.

Nonetheless, it remains the case that the drivers of higher inflation have been predominantly connected to the dislocations caused by the pandemic, specifically the effects on supply and demand from the shutdown, the uneven reopening and the ongoing effects of the virus itself. We understand the difficulties that high inflation poses for individuals and families, particularly those with limited means to absorb higher prices for essentials such as food and transportation. Our tools cannot ease supply constraints like most forecasters. We continue to believe that our dynamic economy will adjust to the supply and demand imbalances and that as it does, inflation will decline to levels much closer to our two percent longer run goal.

Of course, it is very difficult to predict the persistence of supply constraints or their effects on inflation. Global supply chains are complex, they will return to normal function, but the timing of that is highly uncertain. We are committed to our longer run goal of 2 inflation and to having longer-term inflation expectations well anchored at this goal. If we were to see signs that the path of inflation or longer-term inflation expectations was moving materially and persistently beyond levels, consistent with our goal, we would use our tools to preserve price stability.

We will be watching carefully to see whether the economy is evolving in line with expectations. The fed's policy actions have been guided by our mandate to promote maximum employment and stable prices for the american people, along with our responsibilities to promote the stability of the financial system. Our asset purchases have been a critical tool. They helped preserve financial stability early in the pandemic and since then have helped foster smooth market functioning and accommodative financial conditions to support the economy.

Last september sorry december, the committee stated its intention to continue asset purchases at a pace of at least 120 billion dollars per month until substantial substantial further progress has been made toward our maximum employment and price stability goals. At today's meeting, the committee judged that the economy has met this test and decided to begin reducing the pace of its asset purchases. Beginning later this month, we will reduce the monthly pay pace of our net asset purchases by 10 billion dollars for treasury securities and 5 billion dollars for agency mortgage-backed securities. We also announced another reduction of this size in the monthly purchase pace starting in mid-december, since that month's purchase schedule will be released by the federal reserve bank of new york prior to our december fomc meeting.

If the economy evolves broadly. As expected, we judge that similar reductions in the pace of net asset purchases will likely be appropriate each month, implying that increases in our securities holdings would cease by the middle of next year. That said, we are prepared to adjust the pace of purchases if warranted by changes in the economic outlook and even after our balance sheet stops. Expanding our holdings of security securities will continue to support accommodative financial conditions.

Our decision today to begin our tapering, our asset purchases, does not imply any direct signal regarding our interest rate policy, we continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate. To conclude, we understand that our actions affect communities, families and businesses across the country. Everything we do is in service to our public mission. We at the fed will do everything we can to complete the recovery and employment and achieve our price stability goal.

Thank you. I look forward to your questions, all right cool, it's good news. Thank you, we'll go to nick at the wall street journal this. This is all good.

This is good he's, not very hawkish wall street journal chair powell, the markets anticipate you will raise rates once or twice next year. Are they wrong? I love it. It's so blunt um, so i would say it this way. Um we try to focus on what we can control and that is uh how to communicate as clearly as possible in this highly uncertain world.

How we're thinking about the economic outlook and the balance of risks and how policy will uh evolve. Uh in that case, and also in the cases which are frequent where the economy evolves in unexpected ways, so the focus at this meeting is on tapering asset purchases, not on raising rates uh. It is time to taper. We think because the economy has achieved substantial, further progress toward our goals.

Measured from last december. We don't think it's time yet to raise interest rates. There is still ground to cover to reach uh maximum employment, both in terms of employment and in terms of participation. Getting to your question, our baseline expectation is that supply bottlenecks and shortages will persist well into next year and elevated inflation as well, and that, as the pandemic subsides supply chain, bottlenecks will abate and job growth will move back up and, as that happens, inflation will decline From today's elevated levels, of course, the timing of that is highly uncertain, but certainly we should see inflation moving down by the second or third quarter.

The time for lifting rates and beginning to remove accommodation will depend on the path of the economy. We think we can be patient uh if, if a response is called for, we will we will not be, we will not hesitate. So what i will tell you is we're watching carefully to see whether the economy evolves in line with our expectations and policy will adapt appropriately um, and that's what i would say based on if i could follow up based on your current outlook, for the labor markets. Do you think it's possible, or likely even the maximum employment could be achieved by the second half of next year? So if you look at the progress that we've made over the course of the last year, if that pace were to continue, then the answer would be.

Yes, i do think that that is possible. Of course, we measure maximum employment based on a wide range of figures, but it's certainly within the realm of possibility. Thank you. Thank you.

Next, we'll go to gina at the new york times hi chair powell um. I was wondering if you could detail a little bit how you're thinking about wages at this moment, obviously we're seeing strong wage growth, particularly for people in sort of lower income fields. I wonder if you see that as a positive thing or as a potential start to a wage price spiral and sort of how you sort of delineate those two things so wages have been moving up strongly very strongly and in particular i would point to the employment Compensation index reading that we got last friday now in real terms, they've been they had been running a little bit below inflation, so real real wages were not really increasing. I think, with the eci reading, it becomes close to uh - not maybe not increasing, but close to back to back to zero in terms of the real increase, so wages moving up, of course, is how standard of living increases over the years for a generation upon generation.

It's very important and it's generally a good thing. You know the concern is uh somewhat unusual case where, if radius wages were to be rising, persistently and materially above inflation and and productivity gains, that could put upward pressure on uh on or downward pressure on margins and cause companies to their employers really to to raise Prices as a result - and you can see yourself find yourself in in what we used to call a wage price spiral - we don't have evidence of that. Yet um productivity has been very high uh. The eci reading is just one reading again.

If you look back uh, we so we'll be watching this carefully, but i would say that that at this point we don't see, we don't see troubling increases in wages and and we don't expect those to emerge but we'll be watching carefully. Next, what is steve leesman from cnbc uh? Thank you, mr chairman. I wonder if you could uh, perhaps uh give us your thinking about the trade-offs between inflation and unemployment. You've talked about the shortfall of unemployment or employment policies before the pandemic, and yet you have inflation, which is affecting everybody.

Are we at or close to a point where the risk of uh inflation is greater than the benefit that you'd uh for recovering these lost jobs? So that, now from a risk management standpoint, it makes sense to move more aggressively on rate hikes kind of a related question. The statement today says you'll keep policy uh accommodate until you hit that two percent inflation target. Our survey show looking for five percent inflation this year, three and a half percent next year. It sure seems like you're on track to modestly or moderately exceed that two percent target thanks yeah.

So i'm not sure i totally got your first question, but but i would say in fact, could you just quickly succinctly say your first question again sure the idea that that the trade-off between inflation unemployment that you're, that you would keep policy accommodative? To put this five million folks and find these five million jobs again, at the same time, all americans will be suffering from higher inflation. Is that trade-off worth it or is it better or smarter to raise rates right now to combat inflation, uh and perhaps not lean? So heavily on the employment side of the mandate yeah. So you know this: isn't this isn't the traditional phillips curve situation where there's a direct trade where that's really what we're talking about the inflation that we're seeing is really not due to a tight labor market. It's due to bottlenecks and it's due to shortages and it's due to very strong demand, meeting those so um uh.

I think it's not the classical situation where you have that that precise trade-off, but i you know in this situation, um we we do, have a provision in our uh in our statement on longer-run goals. As you know, that says when, when those two things are in tension, what we do is we take into account the employment shortfalls and inflation deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with the mandate. So it's a we used to call that the balanced approach paragraph we have to think about the amount of the deviation we have to think about the time it will take and we have to make we have to make policy in a world where the two goals Are in tension, it's very difficult what it, but what it really boils down to is something that's common sense, and that is risk management we have to. We have to be aware of the risks that were particularly now the risk the market really likes this so far by the way.

Here's your first push on the spy. Here's your next uh bottlenecks persisting into next year, we see well into next year. We see higher inflation persisting and we have to be in position to address that risk. Should it become uh, should it become really a threat to to should create a threat of more persistent, longer-term inflation and that's what we think our policy is doing now.

It's putting us in a position to be able to address the range of plausible outcomes. Thank you. Next, we'll go to colby smith at the financial times. Thank you, um, chair powell.

What are the economic conditions, um that would perhaps warrant a faster uh pace of tapering, and i'm wondering how you would also characterize the risks that the fed may actually need to accelerate that process eventually. Thank you. So i guess, as i said in my uh opening remarks, assuming the economy performs broadly as expected, the committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month and we're prepared to deviate from that path. Uh, if warranted by changes in the economic outlook, so i'm not going to give you a lot more uh detail on what that might be.

Of course, if we do see something like that happening, if it becomes a question, then we'll communicate very transparently and openly about that, but i'm just going to leave it with the words that are in the statement. So was there a second part, um yeah, it's just on characterizing the risks that you you might actually have to uh to do so later on. You know i would just leave you with with the words we have here: um we, we are prepared to speed up or slow down the the pace of reductions in asset purchases if it's warranted by changes in the economic outlook and again, if we, if we feel Like something like that's happening, then we'll be will be very transparent. We wouldn't want to surprise markets, we'll we'll say in light of of of this factor or these factors uh.

We are considering doing this and then we would either do it or not do it, but so uh, but i'm not gon na. You know start making up examples of what that might be today, thanks. Thank you. Next, with a rachel siegel at the washington post, all right, jer powell, thank you so much for taking our questions.

Um you mentioned at the beginning that the fed understands the difficulties that high inflation poses for individuals and families, especially those with limited means. What was your message to those families or consumers that are struggling with higher prices right now, and do you feel that your expectations around transitory inflation is that message is reaching them? Thank you yeah, so um. First of all, we it is our job to, and we accept responsibility and accountability for inflation in the medium term. Our is it you know we're accountable to congress and to the american people for maximum employment and price stability.

The level of inflation we have right now is not at all consistent with price stability by the way we're also not at maximum employment, as i mentioned, so i i would want to assure people that that we will use our tools as appropriate to get inflation under Control, we don't think it's a good time to raise interest rates, though, because we want to see the labor market heal further, and we have very good reason to think that that will happen as the as the delta uh variant, uh um declines, so which it's doing Now you know do, as i mentioned so transitory is um is a word that uh people have has have had different understandings of for some, it carries a sense of of uh short lived, and that's that's. You know there's a real time component measured in months or, let's say really for us. What transitory has meant is that if something is transitory, you will not leave a behind it permanently or or very persistently higher inflation. So, that's why we, you know we took a step back from transitory.

We said expected to be transitory. First of all, to show uh uncertainty around that. We've always said that by the way in other contexts, we just hadn't done it in the statement, but also to acknowledge really that that um. That means different things to different people, and then we added some language uh to to to really explain more what we're talking about.

In paragraph two in paragraph three um, we said that uh supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizeable price increases, and we said progress on vaccinations and an easing of supply constraints are expected to support continued gains. In economic activity and employment, as well as a reduction in inflation, so we're we're trying to explain what we mean and and also acknowledging more uncertainty about transitory, so it it's um. I mean it's become a word. That's attracted a lot of attention that maybe is distracting from our message, which we want to be as clear as possible.

Ultimately, the only other thing i would say is look we we understand completely that it's particularly people who who are living paycheck to paycheck are seeing higher grocery costs higher gasoline costs when the winter comes higher heating costs for their homes. We understand completely what they're going through and you know we. We will use our tools over time to make sure that that doesn't become a permanent uh feature of life. Really that that's that's our one of our principal jobs, along with achieving maximum employment, and that's our commitment really interesting by the way that he just said quote, we will use our tools to get inflation under control and acknowledging that it's not right.

Now that we don't have price stability um, well, i wonder if you could update us, you talked about getting back to full employment um, and so could you update how you how you define that i mean you've. You know a few months ago yourself and other fed officials talked about getting back to the pre back to the pre-covered labor market. Uh markets are liking this by the way so far uh. Now we hear talk of, as you mentioned, people retiring and there's talk of not being, and it's probably going up, because the market's realizing jerome powell is not going to u-turn.

He's still sticking with this idea of being slow uh to taper. Give us some examples of things you're, looking at specifically to measure full employment. Will you be looking at prime age, employment, population ratio, for example? It's not going to happen. He never gives a solid blueprint on exactly what they're looking for he's going to dodge this, achieve maximum employment or is.

Is there something short of that that would work? Thank you. So thanks. So maximum employment is um. It's a broad, we say broad-based and inclusive goal.

That's not directly measurable and changes over time due to various factors. You can't specify a specific goal, so it's it's taking into account quite a broad range of things and, of course, uh employment levels of employment participation, uh are are part of that. But in addition, there are, there are other measures of of what's going on in the labor market, like wages is a key. A key measure of how tight the labor market is the level of the level of quits um the amount of job openings, uh, the flows in and out of various states.

So we look at so many different things and you make an overall judgment now. The temptation at the beginning of of the recovery was to look at the the data in february of 2020 and say well, that's the goal, because we didn't know any that. That's what we knew that we knew that was achievable in a context of low inflation. I think we're in a you know we're we're learning that we have to be humble about what we know about this economy, which is still very, very uh.

You know covet affected by the way you know a lot of what we're seeing in the last 90 days is because of delta. We were on a path to a very different place, delta, put us on a different path, and - and we we see these things, but so i think we're going to have to. Ideally we would have. We would see further development of the labor market in a context where there isn't another another coveted spike, and then we would be able to see, i think, a lot.

We would see whether how does participation react in that world in that sort of post-covered world right now, people are staying out of the labor market to do because of caretaking and because of fear of cohort in significant to significant extent. You know we. We thought that the uh that schools reopening and the and elapsing unemployment benefits would would produce some sort of a of additional labor supply. That doesn't seem to have been the case.

Interestingly, so i think there's there's room for a whole lot of humility here, as we try to think about what maximum employment would be. We're going to have to see sometime, post covid so that we know or post delta anyway to see what is possible, and i think the learning from for those of us who live through the last cycle is that over time you can get to places that didn't Look possible now uh. What we also have now, though, is we have high inflation, so we have a completely different situation now, where we have high inflation and we have to balance that with what's going on in in the employment market. So it's a complicated situation but - and i would say we will we hope to achieve significantly greater clarity about where this economy is going and what's what the characteristics of the post-pandemic economy are over the first half of next year.

Okay, big non-answer thanks, we'll go to howard schneider at reuters. Ah thanks and thanks for doing this, so so, given that answer about uh employment, i would like to get back to steve's question a little bit on a headline basis, just as it's evolved this year. Do you feel that the two tests on inflation have been met? Sorry, the two tests, the two tests in the in the state of the guidance and it has to hit two percent and be on track to moderately above it for two percent? Has the economy cleared that that's a decision for the committee, i i would say i would put it to you this way by when we reach maximum employment when we reach a statement, a state where labor market conditions are maximum are at maximum employment. In the committee's judgment, it's very possible that that the inflation tests will already be met.

We're aware that that language sounds it sounds a little out of touch with what's going on, but uh. You know we're not at maximum employment when, when the, when that, when that is the case, we'll look to see whether the inflation test is met and there's a good chance that it will be. If you look at how inflation has evolved in the last year and a half so to follow up here, so you're not really to commit that the current levels of inflation and their persistence have met moderately and for some time so uh. Given that i mean how we should run, how should we render what moderately and uh moderately overhead? What i'm really saying is that question is not before us right now we're we're.

You know we were. We had the question on when to taper. We've now answered that question and the speed of it and all that we're not. We have not focused on whether we meet the liftoff test because we don't meet the liftoff test now because we're not at maximum employment.

What i'm saying is when given where inflation is and where it's projected to be, let's say we do meet the maximum employment test. Then the committees, the question for the committee at that time will be. Has the inflation test be been met and you know i? I don't i don't want to get ahead of the committee on that, but the answer may very well be yes, it's been met, but we're not asking that question today because we're not we're not running the liftoff test, we're not evaluating the liftoff test. Today we didn't have that discussion at today's meeting.

We did talk about the economy and the development of the economy, but we didn't ask ourselves whether the liftoff test is met, because you know it's clearly not met on the maximum employment side. Thank you. Thank you. Let's go to matthew bosler at bloomberg: hi chair powell, matthew boswell with bloomberg um.

So when you're, looking at this question of assessing whether or not the us economy is at maximum employment, do you have a framework for making that judgment that is independent of what inflation is doing? This is literally the same question of as the last person who asked how do you define full employment now this person's asking for a framework on how you define full employment inclination to believe that you know the high inflation we're seeing is not related to um capacity Utilization in the labor market, thank you. So we don't actually define maximum employment as we don't. We define it in in terms of inflation, but of course there is a connection there. Maximum employment has to be a level that is consistent with with stable prices but uh, but that's not really how we think about it.

We think about uh in maximum employment as looking at a broad range of things. You can't just look at unlike inflation, where you can have a number uh, but with tesla just popped nicely in a situation hypothetically where uh, where the unemployment rate is low. But there are many people who are out of the labor force and will come back in, and so you wouldn't really be at maximum employment because there's this group that isn't counted as unemployed uh. So so we look at a range of things, and i you know so by the thing is by many uh measures.

We are at a very tight labor market. I meant i mentioned quits and job openings and wages, and things like many of them are signaling a tight labor market. But the issue is: how persistent is that? Because you have people who are held out of the labor market, you know of their own they're, holding themselves out of the labor market because of caretaking needs or because of fear of covet or for whatever reason, they're staying out. And it's it's clear that there are, you know with tremendous demand for workers and wages.

Moving up, it does seem like we're, set up to go back to a higher job creation, so that would suggest that you're not at maximum employment. So, at the end of the day, it is a judgment thing, but of course it at the end. It also has to be a level of employment. That's consistent with uh with price stability.

He should say i'm reclaiming my time a little bit about this possibility that the two goals might be intention and how you would have to balance those two things. Could you talk a little bit about what the fed's process uh for balancing those two goals would be in the event that say come next year you decide there's a serious risk of persistent inflationary pressures. Despite ongoing employment shortfalls. Yeah, i mean again it's a it's a risk management thing.

It's not i. I can't reduce it to a to an equation, but also, ultimately, it's it's about risk management. So you you want to uh, be in a position to uh to act it to cover the full range of plausible outcomes, not just the base case, and in this case the risk is skewed. For now, it appears to be skewed toward higher inflation, so we need to be in a position to act in in case it in case it becomes necessary to do so appropriate to do so, and we think we will be so that's how we're thinking about it And uh um.

I i think, though, that judgmentally too it's appropriate to be patient, it's appropriate for us to to see what the labor market and what the economy look like when they heal further. We know that we were on a path to a different place. As i mentioned, when delta arrived and delta stopped, it stopped job creation. It stopped that transition away from a goods-focused economy where there's excess demand for goods, because their their services are not available.

People are not traveling that transition itself could help bring inflation down, because presumably people would spend a little less on on goods while they start spending more on travel and and all sorts of travel services. And things like that, so that we want to see that healthy process unfold as we as we decide what the true state of the economy is, and we think it will evolve in a way that will mean lower inflation bottlenecks should be abating. We start to see that now with some of them, but but overall they haven't gotten better overall and we're. You know we're very aware of that.

So that's that's really how we're how we're thinking about it, we're thinking that time will tell us more. In the meantime, we don't think it's time to raise rates now. You know if we do conclude that that that it's necessary to do so, then um we'll be patient, but we we won't hesitate. Thank you.

Let's go to edward lawrence at fox business. Thank you, mr chairman, for taking the call uh so the federal reserve. I want to talk about climate change. The federal reserve released a statement today.

Um says the federal reserve supports the efforts to identify key issues and potential solutions for the climate-related challenges most relevant to central banks and supervisory outcomes. Is this putting us on the path to regulate what banks can offer loans on or invest in like coal plants or fossil fuels? So that's that's! Not a decision for bank regulators or for any uh agency. That's that's a decision for elected representatives, so we we feel that uh any any role that we have and we do think we have a role in climate change. It relates to our existing mandates and our existing mandates are really prudential regulation of financial institutions.

We expect them and the public will expect us to expect them to understand and be in a position to manage their risks. So that's physical risk and its transition risk for climate and by the way the large financial institutions are doing this already and - and you know, we're that's - we think that's right within our mandate.