>> the surprise of the first four tough months of the year are resilient of how big equities have been. >> it's a good time to own volatility. >> inflation is primarily a concern for the first quarter earnings reporting season. >> we are late cycle. how late are we in the cycle and how much pressure on corporate profits? >> the question remains, can the markets still go higher? >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. jonathan ferro, lisa abramowicz, tom keene, it is "bloomberg surveillance" but decidedly different today. from washington and the headquarters of the international monetary fund, thrilled to have you with us on radio and television and on a most historic time. jonathan ferro's off today. forget about him. what is so important here is not

a crisis or a war but a set of crises i've never seen. the number of them in the three-dimensional space is a certain area. lisa: you frame it perfectly. we are dealing with the pandemic and now war and then we are dealing with inflation and the trick a lot of facts of all of these escalating prices -- crises. how do you grapple with that as a monetary system is turned on its head with unprecedented actions by central banks, unprecedented inflation in many areas of your life. tom: without question, this is the most packed day. we have bank earnings out, we saw wells fargo, should ali bostick -- sonali bostick's work there. and yes we will do twitter and

elon musk but we are focused on the set of crises and we see it with the food inflation and numerous countries right now. i think what we want to do is get right to the morning brief. let's do that with kriti gupta. ritika: let's talk -- gerard: let's talk about what we are going to expect with some of these bank earnings. we already had wells fargo earnings but we need to talk about what else we will hear. we heard credit losses are likely to accelerate from historic lows. they bracing for the worse? that is the question we asked jp morgan yesterday and we will keep an eye on what do the buybacks look like as we start to see jp morgan authorizing a $30 billion repurchase plan. will we see that in the light of these rate increases? a lot of these banks sitting on a lot of cash. what will they be doing with it? we will also hear from the ecb, the rate decision at 7:45 a.m. . this is important as we talk about the euro-dollar, seeing a little bid this morning but hedging costs overnight, now the

third highest level since december 2020, so even though the consensus on the policy front is perhaps going to be mundane, at least that is the expectation, traders are bracing for volatility there and speaking of central banks, we should talk about an interview coming up, important, with the new york fed president john william. michael mckee will be spearheading that at 8:45 a.m. we of course will be listening in closely. tom: interesting to see john williams and his thoughts toward the fed meeting and of course later on we are absolutely thrilled, and original set of interviews with daniel juergen and putin's world is my book of the year, i've never had it sooner than this and the war in ukraine is a must-read. would love like to do is advance the conversation on the present economics of the world, that has been her tour de force at the international monetary fund for number of years but it is new duties for the first deputy

managing director at the international monetary fund, gita gopinath. there was a celebration across all of economics with this announcement. what is different from your economic duties versus being first deputy managing director? gita: as chief economist, i would see my role as an advisor, but as managing director, i am in management are taking a lot more difficult decisions. i think that would be an important difference. tom: you have been spearheading the pandemic and i must ask on an update on the way asia and china is prosecuting their pandemic. why does the imf need from china to help asia better in the pandemic? gita: the pandemic has evolved has you know compared to the last two years. we have much more be real and making it harder -- virilant strains making it harder. our advice to china would also be some recalibration would be

held for. tom: do they need american vaccines to fix this? do they need mrna to get china vaccinated? gita: firstly they need to get more coverage of their 70 plus population while they have high vaccination coverage. you look at the tail end in terms of age distribution and you certainly need greater coverage. you would need booster shots for the older population and effective booster shots would be important. lisa: you have an amazing birdseye view of how well prepared we are to combat an additional strain that possibly the vaccines do not cover or additional pandemic with the additional rollout of vaccines similar to what we saw. are we much better prepared to tackle it more quickly than we did this last time around? gita: we certainly have the signs and knowledge from having dealt and lived over two years of the pandemic. what i'm worried about is everybody is hoping for the best case scenario, which is this is

a mild, and demi-virus. what the experts tell us as we could have much worse downside scenarios. we need to prepare for that and that is the part where i think more needs to be done. we need another $15 billion in grants to get the right amount of preparation in place and then $10 billion every year for pandemic preparedness. lisa: what does preparation mean when we have seen a lot of the money and tools that have gone to certain countries have not really gotten out to the public and you deal with people that are so hesitant to get vaccinated in the first place? gita: so the huge discrepancy between the vaccination rate in high income countries, 70%, versus low income countries, 11%, that gap has to be close. it is true you see vaccine hesitancy in different parts of the world and are seeing absorption capacity constraints. still, we need to get at least the most vulnerable population in every part of the world vaccinated. tom: i want to turn to the tour

de force here. a breaking news today on the economic outlook coming out next week but if you want to slip any numbers out this morning, that is fine. the wto shocked the other day with a number that shocked me, to point a global growth -- 2.8% global growth. i don't want to -- the work you do but it appears we are under 3% in global growth. have we been here before? is the global slowdown original and tangible? gita: you will get the numbers and weekend i will not be leaking numbers are now. tom: elon musk will let you do it on twitter. [laughter] gita: what is true is we will have a significant downgrade to our growth projections. the last number we had for this year was four point 4%. we will have a significant downgrade closer to the number. what is true is we will remain in positive territory for global growth. that said, we are very -- in

very difficult times. the pandemic is not over. tom: that was stunning what you just said. you are framing the probability of distribution, a fan distribution we will see next week, and you have a lower bound telling me it will be positive. gita: no. i said there will be more, which is what we put out in terms of baseline, will be a positive number. if i look to the fed chart, many other things are possible. so we are still living in a time where there is high -- tom: do you rally from that? i heard what she said. we are talking here some 3% global economic growth. i have never done that. lisa: part of this is because where does the growth come from? we have always talked about china, about india driving growth, that is no longer the case. how we talk about united states driving growth. how much does the united states have to grow their gdp this year in order to prevent the world's

economies from slipping into recession? gita: firstly i would say that much of the world economy toward the end of last year had the momentum coming out of the pandemic, reopening, so there were drills coming back in and many economies tied. so there's an inverse momentum to sustained growth at this point. but you hit shock aftershock to so you had the pandemic that is not over, you had the war, seeing inflation, then just as a simple comparison, before the pandemic, global inflation was around 2%. today, global inflation is 8%. this is numbers that are a decade or higher. which makes it challenging, which is why i want you to be careful about projecting forward. i think there are big risks. tom: i agree and this is a magnitude issue. i'm far more interested in your work next week, particularly financial stability and world economic outlook, the x-axis.

do you have a framework of how long the duration of 4, 5, six standard deviation will be if any sense of the width of that, given the [indiscernible] gita: if you're thinking about a target of 2% and your question is how long will it take to come down to the 2% target number, that would looking -- be looking toward the end of next year. it will take many months before we see inflation coming down. if your question is has it peaks and it is likely to come down, unless we are hit by an escalation of the war or further major event, the expectation is the second half of the year we should see inflation. tom: do we need to adjust the adam pozen 3%? tune extent he is saying we have to forget about 2%, that we have to ratchet that upward around 3%. do we need to think about that? gita: i think with the fed will

realize is coming down, bringing down inflation to 4% is going to be somewhat easier than coming down the rest of the way, which is 4% to 2%. while it is important of course to communicate clearly and have a framework is important, it is important to decide on where you will land. tom: the imf tweeted me and said that is way too much talk with the doctor. [laughter] thank you for joining us. gita gopinath here at the international monetary fund. coming up, we will speak with the managing director. she will join us as well, the senior u.s. equities strategist at ubs. a stay with us. this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world

with the first word, i am ritika gupta. elon musk made what he made a best and final offer to buy the company. he says twitter has external area potential and you can unlock it. last week, he disclosed he had taken a roughly 9% stake in the company and has been outspoken about the company changes he would like to make on the platform. president biden is sending heavy weapons to ukraine and authorize $800 million in new firepower for the ukrainians including artillery, armored personnel carriers, and helicopters. the president announced the new aid package after a phone call with the ukrainian president. the suspect in the new york city subway shooting will also face a federal terrorism charge. frank james was arrested a day after the attack at a brooklyn subway station injuring more than two dozen people. police say he had an extensive arrest record. pfizer biontech say third those of their covid vaccine increases antibodies by 36 fold in kids

from five to 11. the companies plan to a file -- plan to file for emergency use authorization in the coming days saying no new issues arose in their trial. jp morgan has plans for its new global headquarters in manhattan, a 60 story skyscraper that the bank says demonstrates its commitment to revival. jp morgan is offering amenities to entice employees such as yoga and cycling rooms, levitation spaces, and a state-of-the-art hall. the building is said to be completed in 2025. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ i am ritika gupta. this is bloomberg. ♪

tom: bloomberg surveillance, a

very special bloomberg surveillance from the headquarters of the international monetary fund, an historic time for the institution and a true cookoff of news on this day. we will get to twitter in a moment, we have bank earnings, and we have the reality of the war in ukraine all in the last one he four hours. -- last 24 hours. lisa abramowicz with me and jonathan farrow on sabbatical. it seems every conversation we have his back to food and wheat. lisa: frankly that is a game changer. people go hungry and that changes the game when it comes to international economics and politics and you see that already in sri lanka, you see that in peru and you see that in other places around the world. as wheat prices spike and frankly as ukrainian fields continue to get bombarded. tom: it harkens back to the arab spring tensions starting in tunisia and eric martin our expert on imf has a maximum

focus on egypt. lisa: especially as ramadan kicks off and especially as 86% of their wheat comes from ukraine and russia, especially as this is an area a lot of people view as a sociological tender bockius -- tinderbox in some ways. tom: the tinderbox idea is tangible. we will speak with ann marie horton in a minute but first we have to do what we need to do on surveillance, we want to speak to an expert on twitter and matthew single understands the nuances between all of these companies. microsoft activision is somewhat of an equivalent. discuss that. >> we know microsoft announced this deal a couple years back and that was around eight times forward sales. this one, which buyout announcement came this morning, is around seven times of sales, and we are in that sort of environment where spending is decelerating and twitter has its

challenges, so it is a fair multiple on the deal. the question is, will the board take it? why stands as you have silverlake on the board and you know the others realize they may not get a competing offer above $50 billion is probably the cap if this deal were to go through the buyout. this is a fair deal. lisa: elon musk wants to fix twitter. what does it mean to fix twitter? >> so he is leaning towards monetizing twitter engagement using a subscription model. he has been vocal about using twitter blue as an option and charging three dollars a month for that subscription fee and it will certainly help. as the fed -- advertising is going through its slow down, there was a bow forward during the pandemic and subscription as maybe the answer. the problem for twitter is they

need advertising and subscriptions and advertising, twitter has a lot of challenges. their backend systems do not work well as facebook and snapchat do. there is a lot to be due in terms of fixing twitter. lisa: why would the board reject this offer? mandeep: you may argue that somebody like oracle, which has expressed interest in tiktok, buying tiktok u.s. assets, may be interested in buying twitter, and remember, elon musk is -- larry ellison is on tesla's board so there is that connection there but also somebody like google. there are other large platforms that you say ok this is a unique asset and they need to trust that as well. tom: mandeep singh, greatly

appreciated. we will have more on this story through the morning. there are 14 ways to go to ann marie horton -- annmarie hordern and i'm learning about the dominant shift of russia in the black sea. this is extraordinary once again and the russians say whatever they say -- annmarie: the russians are now towing it back into a port. tom: attached to us with your work of the pentagon how ukraine -- let's assume their side of the story is accurate, a cruise missile going back to the falkland islands, they seem to win big when they win but they struggle in so many other areas. how does our pentagon or western i lies for that matter adapt to these two extremes of success and desperation? annmarie: that is war, right? success and desperation. they have been on the back foot in the beginning of this. i think the fact russia was even

to make the inroads they have and ukraine was pushing them out shocked a lot of people. the fact they never captured ky iv shocked a lot of people. you have a brand-new general that obliterated syria and that is where it turned the tide for assad. so there are these concerns. you think what the pentagon is doing, yesterday meeting with lockheed martin, making sure they could keep the production and supply chain going into the weaponry because look at the stock that is going to ukraine. this is an incredible amount of military aid and support. lisa: meanwhile you have russia and bring up the threats when it comes to finland and sweden and their potential joining nato, saying they will create more nuclear threats in the balkan islands near them in order to prevent them, if they join nato. how realistic is this, the sort of signal, a lack of leverage -- does this signal i lack of

leverage? annmarie: they have always warned finland and sweden not to join nato and particularly finland. the soviet union, this is their imperial leader over union, this is almost personal to vladimir putin. they shared 850 mile border between the two. the idea finland joining nato scares him. so what we have today? the former president as well when putin was a prime minister basically signaling we will now put missiles there. that is what they are signaling now. incredible missiles that are russian. tom: how is finland different from sweden to bladder mayor pruden? annmarie: the border -- to vladimir putin? annmarie: the border. i think finland is more of a third rail than sweden. and you also have the president who everyone calls the putin whisperer. tom: mandeep singh -- annmarie

hordern, thank you very much. we are here at the international monetary fund meetings and the morning begins in washington, any number of things. i believe i had 10 mins with the managing director late this morning and i will tried to lobby for a one hour conversation. lisa: good luck with that. tom: i really cannot emphasize enough how american centric and maybe london, new york centric our coverage is and it is a breath of fresh air to come to the imf and see multiple sets of issues. lisa: and how the world that is doing better in this u.s.-centric world really deals with these other crises in a world that is global. we have to tackle them on a global lens. tom: delta airlines with a boom delta airlines economy. lisa: everyone wants to travel and get out there. when you look at what is out there, there is a lot of threats. chicago futures return to their

highest, talking about that. tom: been watching that, eight dollars per bushel would be something. lisa doesn't know i know what a bushel is. lisa: i see. tom: bank earnings this morning. from washington, this is bloomberg. ♪ loomberg. ♪

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tom: bloomberg surveillance. good morning. a very special morning from the headquarters of the international monetary fund, timely conversation with the managing director of the imf. it is a bank earnings time, also a time of ecb. we heard from wells fargo, goldman sachs in any moment. sonali, what do you see? >> wealth management revenue coming in a love light of expectations compensation expections coming in line, keeping control on costs. investment banking revenue coming in a little shy of expectations. they will be a question if some

of that will come back. elon musk didn't a morgan stanley as his as pfizer for his advisor for twitter. sales and trading came in above expectations. a light quarter for ipos but heavy quarter for volatility. morgan stanley winning on the business that it knows best, typically on top and wall street. tom: staying with us. the headlines come out and press releases come out as a blur. what do you see on the morgan stanley difference between goldman sachs? lisa: interesting the net income beat, compensation expenses in the first quarter were above expectations. a bank that is waiting on multiple fronts when we are talking about the goldman sachs,

morgan stanley duopoly shifting a little bit. tom: how is the melding together of e*trade and everything going for mr. gorman? sonali: a much broader base of clients and different demographics. transitioned them over too well clients. morgan stanley tends to serve a wealthier clientele, who tends to refinance, or to cut mortgages even in this era. to tell you how much investors were spooked about trading versus consumer in the wealth business, even wells fargo trading above book value compared to goldman sachs. morgan stanley trading in line with where jp morgan has been. lisa: morgan stanley first quarter trading equity came out, beating soundly,. . how much of this is a tale of

volatility driving trading versus morgan stanley winning a greater share of hedge fund and other business? sonali: interesting that you ask. we know there been a lot of questions about how we consolidate in the wake of archegos. jp morgan said prime palaces are still at record highs, which shows you jp morgan can take shares on the retail side but also take advantage of the volatility on the client-side. this is a mixed quarter for hedge funds. for morgan stanley to make so much money in equities is a big deal. the buy side story is still shaky. tom: thank you. we expect to have goldman sachs out in any moment. devin ryan joins us, the jmp securities senior research analyst. what is your distinction of the difference between morgan stanley and goldman sachs? devin: i think it's pretty simple.

morgan stanley over the last 10 plus years has been focused on building on wealth management, the study your fee-based business model. acquiring eaton vance, expanding into the retail with e*trade, it's been a huge focus for the company. goldman sachs is doing something similar on a digital backbone, but you are in the first or second inning of doing that on the consumer wealth side. that is the difference in the results we are seeing. i'm not sure that one is better than the other, but goldman sachs, in our opinion, has more growth because they are in the early days of expanding into consumer. that is the difference between the two. tom: across all of them, i'm fascinated by the addiction of senior management to cut cost to

2022 because that is the way we do it? devin: i actually think this is a different time and you have to lean in and invest through any environment because it is so competitive today. there is so much focus on technology and growth. these banks and investment banks are not only competing with each other but an emerging fintech group as well. you'll see continued investment. the first quarter was as tough as the first quarter of 2020 on the pandemic started, and look at the numbers morgan stanley put up. a very good quarter against what has been an incredibly choppy backdrop. we are talking about wide divergence between expectations, whether it is the economy or the outcome of the war.

there is uncertainty about the banks are performing quite well through that. that has been encouraging to us. lisa: shares of morgan stanley are up 1.8%. fixed income sales and trading revenue came into .9 billion dollars versus the estimate of $2.1 billion. beating across the board. tom: goldman sachs, so nice of them to delay. sonali basak now with what we see from goldman sachs. sonali: equities and trading also be expectations. interestingly, they bought in just about how much morgan stanley bought in, little bit more. these two banks have been at it for the last couple of years in terms of competition. fixed sales in trading also beat expectations. we saw a slight decline over a jp morgan.

we knew that the commodities business was a star when it comes to their trading business. they got into the nickel market in the first quarter. tom: let me interrupt you. wall street firms and commodities, is that all the rage now? you are so good at looking out a year. is that we will see in 2023, re dux of the commodity boom of 40 years ago? sonali: this could be a double-edged sword. people making money on the volatility but also seeing losses. jp morgan yesterday with that nickel exposure, credit cost of $120 million tied to the chaos here. banks are looking to make markets. if you trade the wrong way, you know you can lose a lot of money just as easily. not to mention these banks have been trying to stabilize their

revenue, goldman also adding to that consumer involved division, tacking on some acquisitions. lisa: shares up to percent after reporting earnings, even with some pitfalls in investment banking. overall, equity trading beating. i wonder if we have overpriced that the client and wall street activity on the heels of higher rates. if we are seeing revenge of the classic investment banking firms in response to what the other banks, the wells fargo's of the world are seeing, in other words, has the pendulum tipped too far for the growth story and not valuing the wall street dynamism that some of these morgan stanley's and goldman sachs rely on? sonali: it's an interesting question, wall street valuing

goldman sachs more. it shows traders were worried about volatile trading businesses. the consumer business, wells fargo warning that charge-offs could rise. jp morgan setting the provision for the possibility of consumers not borrowing more as rates rise for the outlook getting worse . you see deals like this morning. deals are starting to trickle in more. my sources say a lot of these deals are just prolonged. whatever goldman sachs has to say about the pipeline will be important. tom: thank you so much. now for the cynical portion of bloomberg surveillance. we can only do that with bank earnings. devin ryan of jmp securities. everybody exits asia, they wait a year, and that is what we saw with hsbc, what a surprise, they are going to rebuild wealth

management in asia. tell me about the international aspirations of goldman sachs, morgan stanley? are they going to do the same thing, pullback, there is money to be made, let's go international? devin: international businesses are still going to be incredibly important. investment banks, even with what is happening in the world today with the more, other dynamics, it is still incredibly interconnected. the leading banks will have presence in the capital markets where it can be helpful in developing and developed economies. i don't see that changing at all. the consumer side of the business is more complicated, getting in and getting out. we are seeing more folks that don't have either critical mass or some differentiating driver backing off of some of the

international parts of the business models. that could continue. it's i diverted between institutional and capital markets and other parts of banking. that is how i would frame that, tom. international markets remain incredibly important for goldman sachs and morgan stanley. i don't see that changing. tom: devin ryan, thank you so much, jmp securities. we have to reframe where we are. it is a show of international economics, but we have not talked about the ecb. this is a critical meeting this morning. lisa: he earns we are looking at reflect the potential for a slowdown. how do central banks deal with the fact that you have a slow economy and accelerate inflation and different inflation? tom: we will be here on an incredibly busy morning for bloomberg surveillance. stay with us.

futures slightly green. coming up, adam posen of the peterson institute. ritika: keeping you up to date with news from around the world, i'm ritika gupta. let's get to first word news. twitter plans to review elon musk's offer to buy the company. he began his takeover attempts a little more than a week ago. he says the company has extraordinary potential and he can unlock it. european union is warning its own members against vladimir putin's rubles forecast demand. it requires companies to open up two accounts, one in rubles. they say countries would be violating the sanctions imposed after they invaded ukraine. restaurants in hong kong are staying open later and can have up to four people per table.

gyms and movie theaters can be open. vw estimates that revising the value of its hedges will add $3.8 billion to earnings. they use hedging instruments to shield against volatile prices. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. >> they will try to maintain strong labor markets while

trying to bring in inflation. it has been done in the past. it is not an impossible condemnation but will require skill and good luck. tom: i will not mince words, it is the talk of this international monetary fund headquarters, the speech of the secretary of the treasury yesterday. janet yellen said, everyone, grow up. this crisis is about trillions, not billions. her issue is the scale and magnitude is different than we perceive. lisa: especially when people are still trying to grapple with whether they want to give more money. she also had some pretty harsh words to china. this was fascinating, basically coming out and saying national security is no longer considered a military thing, it is a financial implication. if they continue to back russia, they will be consequences. tom: we have to get to the ecb.

guy johnson is whether those in london. the ecb, i will say this is an original meeting for christine lagarde. >> so many she has to be thinking about paving what is happening with the global picture on inflation. the ecb not a new to that challenge. then you have to factor in what is going on with the war leaving the refinancing rate unchanged at zero. the deposit rate left at -50. how quickly does that close is the question people are asking themselves. how quickly do we get back to neutral, a lot of challenges. the data since the last meeting has led some credibility to the idea that we will be seeing a liftoff from here.

rates will rise "sometime after the next bond buying ends." any rate increase will be gradual. asset purchases should be concluded in the third quarter. rates at the present level until inflation meets its goal, underlying inflation. data reinforces expectations that the app should and in the third quarter. adp has to end and then we can get to rate hikes. the conclusion is we should get rate hikes before years end. the market is pricing and 71 basis points, which would take us into positive territory on the deposit rate. market reaction, that we will get your thoughts on this, the euro is down, italian bonds pairing their gains.

yields coming in sharply lower on the italian two-year. that is what we have from the ecb right now, reinvesting the app bond purchases for an extended period. we await the press conference. tom: stay with us. i think this is important, the sea change in the markets. jonathan ferro is always focused on italy, the yield indicator. this is a sea change announcement. would you suggest it was driven by the uproar of the bundesbank, a blistering essay in the financial times the other day? guy: the germans are nervous about what is happening with inflation. to be honest, they have not felt the full story yet because of

the unionization process, second-round effects will take longer to seep into the german economy. once they get there, they will be stickier. the ecb is saying take whatever action is required to fulfill its mandate. 2% inflation is the mandate. we are four times that level. the core rate is a full percentage point above that level. the ecb has work to do if it is going to get the rate to come down. the data since the last meeting as may be added some credibility to the argument that earlier policy action is required. lisa: to that point, they will take every action work hard to fulfill their mandate. the mandate is to percent inflation, but when and at what cost? how much are you looking at the potential for them to delay even though inflation remains above that? how much do you expect them to redefine their mandate? in the u.s., it toggles between

the importance of a full labor market as well as low inflation rate. guy: the ecb does not have that dual mandate it only has a single mandate. the ecb's job is inflation. it has financial stability around that, but the mandate is inflation. it needs to get to that 2% target. there is some suggestion the fed can live with 3%, maybe the ecb can, as well. certainly there is this idea that we will see rate hikes coming through maybe by year-end. what is interesting is italian yields have come down as sharply as they have, the euro is down as sharply as it is right now, i don't think this redefines anything in terms of the current timeline. basically in line with current thinking around what the ecb will have to do.

clearly, the ecb will have to take action. 71 basis points is currently priced. judging by what we learned today, we are likely to get rate hikes by year-end. tom: i am really watching the euro. i don't have the trading envelope in front of me but certainly a 107 handle on euro would be something. we have wonderful guests over the years that have provided us with decades of perspective on their changing views of what matters to you, on radio and television. one of those is adam posen of the peterson institute, one of the german authorities of american academics, looking at the things that matter, particularly this original inflation that we have. we spoke to his colleague, former chief economist of the imf the other day. we advance the conversation forward this morning.

i was talking about once again the certitude of elites saying we have to get inflation back to 2%. no one has led the charge in the world for a readjustment of that decades-old certitude. are we heading back to 3% inflation? adam: i hope so, tom. the ecb, which you were just talking about is important to set out a different path from the fed, notwithstanding others remarks. inflation is different in europe than it is in the u.s. tom: it is different in europe but you have made worldwide impact in economics, saying we need to reset. since the last time i talked to you, we are six standard deviations out on so many statistics. there is a glide path back, we

get that. how do we get back to 2% inflation, or are those days over? adam: we can get there but it is probably not worth the cost in my view. you can get well below 4% in the u.s., and the fed is on the way to do that. the question is how far and how fast it gets to get from 4 to 2, 2.5. between now and the first quarter of 2023, fed tightening is baked in. inflation is probably peeking in the u.s.. you will get it down below five by the end of the year, i recently confident. the question is how far you push it down from there. i'm hoping to except running something in the high 2's or 3's. lisa: how hot can inflation be without crippling consumer confidence, the ability to go

out and spend? adam: it's a good question but what we are seeing right now, for all the talk, consumer confidence is affected by other things. we are seeing continued spending. lisa: we are going to get retail sales coming out, and we have seen them coming down dramatically. they have been increasingly negative over the past few readings. people are buying come about at what point do you start to worry given the fact that this inflation rate is affecting sentiment? adam: no question. i was on record a year ago, april 1 of last year, saying that it would come in way below the fed's forecast and they would need to start moving. but the idea that they took a gamble, in my view, the gamble did not work out, and now they have to rectify it, is one thing. that is separate from what would happen if they do not grind the u.s. economy to get down from 3.3 to 2.5.

that is the question for 2023-2024. tom: a great conservative economist wrote a book and i see so much static analysis. all the noise going on. the optimists would say that we are a dynamic system, we will compensate and get beyond this. is the great compensator the currency market, and we could see substantial depreciation in valuation in some countries in crisis who don't get it right? adam: i think you'll see some of that even if they do get it right. we are coming into the spring meetings of the bank and the fund. as the deputy manager said this morning to you, secretary yellen said last night, there is real stuff going on in that world. there are food shortages, energy shortages, price spikes,

interest rates being passed on by the u.s., necessary actions. you get to a point where there will be debt problems and recessions and maybe unrest. it is not that they didn't get it right but the world is hard. we are not very fair about sharing the ability to keep the floor under things. tom: we have to move in an incredibly hectic day. thank you so much. adam posen with the peterson institute. this is a huge deal, this illusion that we will go back to normal. lisa: that is not going to happen very quickly. we heard that from gita. it will take time to get from 4% to 2%. tom: nadia lovell will join us.

we will also speak to daniel juergen, angela stent on putin's world, and to the managing director of the imf. stay with us. ♪

>> inflation is intolerably high. >> the fed is raising rates because the economy looks good and they have run way to do so. >> we will still be experiencing pressure to the downside. >> we have a higher chance of going into recession next year and stacked ration. >> i think really easily beat that. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. lisa: the sting of inflation amid a strong corporate america. this is a special edition