From new york, i am alix steel with guy johnson. I should point out that bank of america ceo says it is hard to see a recession because of stronger Consumer Spending. I wonder if we will see any of that from the fed today. It will probably have to change something about next year. I do not think alix steel is all in on the fed today. I do not think she is excited. I think she is struggling with finding her mojo. If you wrap the back end of the week together, it looks like a coin toss. The boj may not be an event. There are things to be excited about, alix steel. I was literally digging. What can i start with the show with because i really want to get through today. He called me out and it is a true fact. We will find a way to make it exciting. I think there will be some nuggets to be discovered. Is powell going to deliver the smooth performance that he has up until now . They would try to find that last little gem that will set us up for something interesting, come tomorrow morning. We have all heard this before. Are we there yet . Where is there . Mike . Are we there yet . I like your second better your second question better. If the said new that it was restrictive enough and inflation would continue to come down, then they could say, we are there. And the question is, how long do you stay there before moving on . There are a lot of things coming up that could change the outlook. We talked about oil prices and the war, possible government shutdown, that kind of stuff. The fed is going to be i do not think they will come out of this knowing more than the markets are. He is actually really pumped. He was all revved up. Even if they are not going to move anything, there is a lot of information that we will get. Think about how big the dispersion is between the high die and the lodi. Some may hike year. Yes some people who think that they are going to cut hundreds of basis points. The dispersion and where some of the dots and up will be telling. We do not have James Bullard anymore. We have a couple of new governors. There are new people that will be participating. It will be interesting to see what the dispersion of views is. Is the fed the biggest swing factor when it comes to rates right now . Where are other things moving the fed more . The fed is definitely the biggest. My answer is maybe not. You mentioned there is a lot of centralbank news that we will be getting. We do have the bank of japan meeting. We saw what happened when they eased yield curve control. Not on fears of changing demand. The fed is still the most important factor in where they are going. I think the 10year is independent of any news that we will get today. Certainly the money market rates that we are focused on wind up being keyed in on what the fed is going to say. Were you trying to get to the bank of england were trying to get to fiscal . Both those thoughts were going through my head as i asked it. What will be happening is fascinating. The bank of england is a case in point. There is evidence now that they are starting to come under control. Maybe this is not the end of it. But the Biggest Surprise is that gasoline prices did not lift that inflation number. There are other factors and we ended up with a falling number. I think this is the question everyone is trying to figure out. How big of an impact is it going to be . Is it something the fed is going to take into account . Is it an inflationary story they need to worry about . This is the unknown over the last few days. The fed is going to look at oil prices and gasoline prices as a component of the indicators and say, we cannot affect the level of prices but we can have an impact on consumer expectations. They will see and watch the markets to see if they become more, but i think it will take time for any kind of reaction to get into the markets other than, we do not like higher gasoline prices. They have not gotten to the previous really high levels and we are getting into a nondriving season in the winter. That may keep down some of the pressure. Is it going to crack a certain part of the consumer . Everyone else seems to manage and be ok . If you are taking out a loan for anything, you are going to have to pay. Some businesses will have to refinance loans. There is not much the fed can do about that. They were keeping rates at zero forever. A lot of people questioned about how that was affecting senior citizens. The basic answer is, we have to do it with the greatest number. Some will have problems and some will not. A final question. Where is neutral and how much information are we going to get today . I think we are a little bit above neutral. He will continue to say what he has. Neutral is probably there with a three handle. Neutral is probably where you think inflation might be in the longer term of growth. It does not seem like an elite and unreasonable level. The twoyear at 5 . That is at value. I think the market narrative is changing quite significantly. We put eight we put out a note about that. He really did that . It is said day. The only better place to be would be with mike mckee in washington. Were you going to Say Something . The only cut we care about is alexs haircut. We can talk about it. Im very pleased. Excellent. These are the cuts that are important. We got to the punch, eventually. Thank you very much, indeed. The fed decides new york time. You are looking forward to that a little later. More on our question of the day, are we there yet . We have climbed the matterhorn and we are back again or are we going to be there for a while . We will speak to the cio, joining us next. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh the fed will do what we all expect it to do. A hawkish pause. A pause button indication that they are willing to do more. They will keep open the possibility of another hike. They are going to remain vigilant. They will make it clear. The big question is, are they going to do something in november . I think that the fed is done hiking rates. They are going to raise rates in november. It is a tricky needle to thread. November, we will see what happens. What we are expecting from the fate from the decision today. I we there yet . Are we there yet . And where we there as well . We are not there yet. We are at a rest stop. We may decide that the journey is long enough. I do not think, based on the previous conversation, that there will be too much focus on fuel prices. There is a reason is volatile. Not so much that Monetary Policy can do to affect that. It is probably sporadic but i do think a pause is likely. We get to the peak, maybe it is a little further away. But we get there. The question then becomes, what kind of a peak is it . Is it the matterhorn up at the top . We go up and down quickly. We do need to temper what has happened. It really hasnt filtered through yet. Remember, there are many other ways to get access to credit. Not everybody has a mortgage. Some are on fixed rates. Earlier there was a reference to the lowend consumer. It may not even have borrowing in effect. Lets see how they transmit and like any time coming down the mountain, it is always precarious. We are going to have ammunition in the tank now, to stimulate, should it be necessary. It will be flat, there is that power to stimulate, if needed. What is the biggest missed price in the market for that . It looks like we are in the soft landing scenario. What we need to factor in, there could be negative surprise. They have not even seen this transmission effect. It was a discussion around some of the numbers coming out of europe. The u. S. So far has skirted that, so that perhaps has not been taken fully into effect. How to the stocks holed up in this kind of environment . We talked about this on the show yesterday. If the economy ends up slowing rapidly, how do stocks deal with that . Are you actually being paid to take a little bit and see where the chips fall . . Being paid to hold cash. It is looking reasonably good on a net inflation basis. As we know from that large, unprecedented amount, there is a desire to get into risk asset whenever the time is right. We saw that through the major chasing of returns and tech. It has been about three sectors. It has been about Technology Communications and can were discretionary. They have treaded water gear today. That does not make sense to me. That financials should tread water. It suggests that there will be opportunity in the stocks to pick up. Getting bit of equity is at this juncture is not wise. Flip it. Bank of america said, we are going to see 4600. What happens when you get in . I do not think you pile into the sectors that appreciate it the most. You do not neglect growth, but you start you definitely feel that value. There are Many Companies that are trading at low valuation. That is how you avoid getting caught at the wrong time. I guess the bigger question is, is this a time where you want to take more or less risk . You need to continue to take risk because many investors know where inflation is heading. Nobody can hide out at this time. We can take time out, but you cannot be there forever. For that reason, i suggest that the right thing to do now is to steadily build out your risk, monitor it, do not be too tactical or swing for the fences. To stay close to your core allocation. Realize that some of your assets, you will not be able to liquidate it for some time. Sit on the income and continued to look for new and emerging areas that are always interesting, whether that be in regenerative agriculture or any of these things that are taking place. We always appreciate it. Still ahead, new york city versus doordash, versus grubhub and hoover. Well talk about what a court ruling could mean for how much you are paying for your food delivery. Here is cathie wood joining Bloomberg Television earlier, talking about how the cycle is affecting investments. We have always invested for the longterm. What interrupted, what was a nice move in innovation stocks was a massive increase in Interest Rates. I think we are on the other side of that rate increase that destroyed a lot of performance. And we are ready for prime time. [announcer] if youre thinking about earning your degree online, snhu can help you get there. I felt supported throughout the whole process, even from the first call. [graduate] my advisors consistently reached out and guided me along the way. It was like i was talking to a friend, like someone that i had known for years. The instructors were very helpful with everything that i was going through. [announcer] well be with you from day one to graduation to your dream job. It all starts the moment you find your program. [announcer] go to snhu. Edu to get started. It is 22 past 7 00 on the west coast. Silicon valley science its morning. It is here in new york city, but the story is here. This has to do with the lawsuit doordash and grubhub against owners. Grubhub is this is a california versus new york story because the philosophical argument from the companies is that the law put in place and then made permanent is unconstitutional and stops trade between states. They are doing business here, but it is about this 15 fee. If you get food delivered to your house, that is the most restaurants can charge. They are saying you are discriminating against californiabased companies in order to protect momandpop shops. If they are successful and this is removed, what can they charge . This is a slowing economy and i just wonder at the ark of where we are. It probably says that in reality, even if they when, maybe they do not get much out of it. I first covered restaurants. It is a low margin business. But how it is determined, the argument is, let the market decide. The structure is always the restaurant charges what it charges. What we are arguing about is how much each business can take home. You have a Delivery Service fee and a cost inflation for food anyways. Ordering chinese takeout is like 60. That is new york chinese food is insane. But no more. Im going to walk over and pick up the food myself. This is like the last pandemic area artificial market function that might be undone. What happens to the growth of these companies will be interesting to watch. It is moving some of the shares that are relevant in this case. Responding very positively. I will bring you those numbers later on. Amazon is getting ready for christmas and a big way. Question amazon is adding workers. I think they did 150,000 years before, so they have not been consistent. And talking about higher wages and have regionalized distribution. It is supposed to have come from closer then further away. But go with the bigger figure. It looks like they are expecting traffic. If you are talking about shortage of labor, this is one of the areas you have to watch. It is not just chinese food that is expensive. But chinese food is the cheap food that you get. Clearly, alix steel has an issue. Looking forward to the show later on. aidyl hi, im aidyl, and i lost 90 pounds on golo. I struggled with weight loss and weight gain my entire life. With all the yoyo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. In one year, ive lost five sizes, and im on my way to lose another three. With golo, i can do it. announcer change your life at golo. Com. Thats golo. Com. Alix we are about one hour into the u. S. Trading session. Volume light, stocks go nowhere. Abigail is tracking the moves. Abigail futures overnight down a little bit, up a little bit. Right now down literally a fraction as investors wait to see what is the fed going to say today. The expectation is they wont be briefed but will they give color on the november meeting or the dot plot. Lets look at the sectors. This is what we have since the last fed meeting, nine of the 11 s p 500 sectors are lower. Energy up with lower. Take a look at tech. This as the dollar and yield have absolutely shot higher. The financials which benefit from yields going higher down 1. 4 . Real estate and utilities both down. These are the worst two sectors. So stocks have not really performed all that well since the last fed meeting. I think folks were surprised the fed did not officially announce a pause based on my hearing i still think thats where they are at. If you look at the federal funds rate, of the world Interest Rate probability, it suggests next year we will see anywhere between 75 to 1 of cuts. Jay powell said they dont see themselves cutting for a number of years so heres the pain taking some of the money out of the market. Tightening conditions here and it does suggest that we could have a little bit more pain ahead for stocks if the fed does not ease off which i dont think there is any indication we will see the s p 500 here since that fed meeting stuck in this range. It looks like a last touch at the top which may suggest we could see some of the near term buyers step away, the near term sellers step up and take that closer to 4300 or so. It will be interesting to see what happens. Guy when we get to the top what will we see . Abigail whats happening in the markets. Investors watching the fed carefully later on. What will it say about the u. S. Labor market. What will it tell us ultimately about where it sees inflation going and how is it going to respond. The number one factor that drives Consumer Spending and will drive this Holiday Season is the labor market. It has been a story of strength with continued job creation, continued turnover of the labor market and wage growth above normal. Guy Michelle Joining us yesterday from purchase. That takes us back to our question of the day, are we there yet . I think you can apply this to a number of different central banks. Chief u. S. Economist joining us. A little quote from you earlier on. This is rubeela farooqi, of the quote. Within the fed is delivered enough and the fed is sufficiently restrictive. If the labor market does not soften in their upsizing theres a risk the fed will have to push even higher. Great to see you. How great is that risk . Rubeela we think the u. S. Economy is going to moderate Going Forward. We dont think the risk is high but we think the fed is in no position to say they are at the peak rate. We think theyve done enough, but the problem is the economy is still not responding in a way that people expect did to do over 500 basis points of tightening. Thats really problematic and what happens in the Fourth Quarter i know theres a lot of headwinds but we have consistently underestimated the strength of the economy and the household sector in particular. Thats something we are watching carefully. We dont think theres huge risk but we cant discount it completely. Alix if the fed may be there yet but with the lag time still the thing, what would the dots have to tell you to convince you that the fed also thinks they are there. The fed is not in a position to say they are there. I dont expect any change in terms of what they expect for 2023. If they see unemployment go up by 1 . Are the projections where you need to be looking . Rubeela i think we need to be looking at the dots. One more rate hike has to remain on the table. I think unemployment, i dont expect any big changes to that forecast. Also on inflation i think there projections for 2023 are probably too high. We might see some downshift in that forecast. I think the whole point is there so much uncertainty around 2024. We underestimated performance of the economy but we still think the underlying effects of tightening will filter through. We still think consumers agree are facing headwinds but the thing as michelle said, of the labor market is still strong. Job growth is positive and households are making, still wages are rising at a pace thats elevated. Those are positive and inflation is easing. It is an uncertain sort of time in terms of what can happen Going Forward but we still think the u. S. Economy will avoid recession. Growth will remain positive and inflation will continue to be towards that 2 target. Guy the problem with all of that is we are not going to know until we look at the data. This is all rearview mirror. We wont know if the fed has made a policy mistake until we are well into next year and at that point it could be too late. How big a risk is there at this point that the fed does too much and too little. This is why we are concerned. This is why we think they are at the peak. I think the further they push this. I dont think any five basis points will make or break this economy, but if they do continue to push against this positive growth theyve consistently said they want to see growth slow to a below trend rate. Thats just not happening but we are seeing some softening in the labor market. A moment of inflation in the right direction. We dont