>> no central bank wants to engineer a recession. >> countries are playing catch-up. >> i think the fed will have to be aggressive. >> i think that the chances going up every time the fed moves. >> i do not think it is yet inevitable. >> this is "bloomberg surveillance." tom: good morning. jonathan ferro, lisa abramowicz

and tom keene, we are back on track. lots of distractions in the last hour. it is about inflation, recession. william dudley says it is about a hard landing. lisa: specificity is what struck me about the column published this morning, talking about how it is inevitable that we will get a recession in such a short time frame, building on what others have said, that there is a growing chance of a downturn. now the question is how steep it will be. tom: this is the gaging of the many different types of recessions. we do not need a history lesson, but each one is different and lisa, you mentioned the distinction between two world-class phd's, the gentle recession, dudley with a hard landing. what about the hard landing? lisa: whether he will be the new volker of 2022 is the

distinction, how much has the fed committed to getting inflation back down to 2%, but eminently by the end of next year versus five or 10 years out? how much of the urgency is about getting inflation numbers and check shows and they are creeping higher over the next decade or so? tom: we see dollar resiliency, but in the bond market -- i do not have to do a data check because it has not moved. there is a three-day stasis here in fixed income. kailey: the 10 year down by about seven basis points as we speak, and it is that fleeing to safe havens because of the growth fears. while you see the dollar stain ying up, yen is getting a little bit of the haven bid back in. tom: kailey leinz is so far out in front of me, i do not even need to come in.

you mentioned safe haven and the first thing you look at is euros. i have the euro-swiss at 1.02. lisa: and this is also because the euro has been not supported by an ecb that has let inflation get far ahead of monetary policy. at what point do the central banks try for a stronger currency? we have talked about this for months, but i think this will be the theme. the race into a stronger currency. tom: we talk about a lot of fed speak. you had it in the brief this morning. what did jay powell not want to say today? lisa: he does not want to use the word recession, that we will cause recession. he does not want to say that they are willing to cause recession in order to get inflation under control. and what he does not want to say is he sees a larry summers outlook for 5% unemployment.

tom: i could see that. lisa: and that is what it will take to bring inflation back to that 2% low. tom: chairman powell will go, larry summers who? futures at -39. vix sticking. 31 points. briefly on bonds, to year yield with a panic of 3.12. now, i am only given a bond data check because john from capri, he says do more fixed income. the curve at 10 basis points. bill yelled at -4.5%. lisa: bonds have been fascinating because -- tom: the bond market was closed for five days and you would say it would be fascinating. lisa: there is a 20 year option.

you are lucky i did not talk about that. today, jerome powell will be testifying. that will continue throughout the day ahead of the thursday testimony to the house. how much will he talk about the dollar as a global destabilizing liability, the stronger it gets of the more other nations are importing -- reporting inflation. how much of that is problematic for a federal reserve, which is a central banker to the world. today, and of fed speak, including the chicago fed president, as well as philadelphia's fed president. we heard from tom bargain yesterday talking about what to expect when it comes to the rate hikes, particularly in july, and a 75 basis point rate hike and he gave strong words about why they are expecting to raise more than they had been a month ago. then we have president biden speaking about 2:00 p.m., on the

proposal to suspend the federal gas tax. it is a major issue going into the midterm elections, as gas is still around $5 a gallon. tom: we'll talk to annmarie about the president's eventful day. emily roland is the co-chief investment strategist at john hancock investments, and she knows the difference between new john hancock and old john hancock in boston. i love in your note where you go to the axis and a safe speed of cycle is everything. you note that cycle right now is fast, like the red sox recovery. tell me about speed of cycle. emily: we are seeing the largest amount of financial tightening that we have seen in decades, and that is causing the cycle to move incredibly rapidly. we just saw this swift pricing

in of a global recession in the equity market, down now by 20%, about two thirds of the way there in terms of the average bear market. on the fixed income side, bonds have not priced in this economic cycle, they are not even close to pricing in the potential for a global recession. which the odds have moved up. high yield bond spreads are at 490 basis points. they have widened, but they are not close to hitting their 20 year average. they are closer, but not there. so we have seen parts of the market that have not reflected the fact we are moving closer to a late cycle environment, even a recession, and we think the offers opportunity. kailey: let's go there on the heels of what paul krugman was writing about this week, the prize-winning economist talking about how we are not out of the free money era and we will go

back to it when we hit a recession. because yields will go back down. is that what you are betting on, investing in the longer term bonds? emily: it is. we see it like a teeter totter where this year the fed is resolute in their effort to fight elevated inflation. the gloves are off, but they teeter totter we think will switch to the other side as we go into 2023 and we expect, the fed will be cutting rates. and they will be laser focused on the others of their dual mandate, dealing with higher unemployment. we think the fed will probably need to bring the economy to the brink of recession, which clearly means rising unemployment, and that will be critical next year. normally, when you think about higher unemployment, a global slowdown or recession, bond yields fall. you have talked about the traditional cross asset relationships this morning, and

i think that that one is broken right now. so we see yields topping out.you are getting 4% on the aggregate bond index. we have not gotten that since 2010. so we see it as an attractive entry point. i tried to get a t-shirt made that said i love bonds. i love bonds. kailey: there are people who are good with photoshop, so i think they can put that on your outfit this morning. if you are buying bonds, how does that fit into your broader allocation of a portfolio? are you shifting away from equities, what else is in there? emily: we are. we are going to be reducing are overweight equities, bringing it down to neutral, into looking at higher parts of the market, adding to the defensive areas. those that are still on sale. defensive areas are trading at ridge market bulls -- multiples.

and we are looking for a return on equity, those companies with lay a lot of cash on their balance sheets. it's indiscriminate selling. so owning equities, being thoughtful about the ones that we own, and notching up on fixed incomed, while notching down her allocations to credit and bank loans. we are looking at core as the clear opportunity. we expect to see a bid as inflationary pressures come down and as investors looked towards safer parts of the market heading into a recession. tom: are you calling double-digit equities up one year? emily: i think that that is a tough one to call. i think there could be some further weakness. the key to me is earnings estimates still have not been revisedd own, so i think you could see more weakness. we are waiting for that to happen.it is about looking at those opportunities in equities for some relief. tom: emily roland from john

hancock this morning. it really underscores the uncertainty out there. it's a mystery with the uncertainty. lisa: josh at oppenheimer has around the highest targets for the s&p. yesterday, bloomberg spoke with him and he says that is still the case, i see a 40% rally heading into the year end. he still has conviction on this. we have not seen capitulation on the individual price targets. when the year end averages north of 4600 come way down in the face of all these discretionary calls. tom: did kellogg's capitulate yesterday? the answer is yes. kailey: you could say that, they are trying to break up into three companies, obviously for a tax benefit, but corporations have to make these decisions in this type of environment. you still have the likes of credit suisse, jp morgan,

calling for something like a 30% rally. it's a long way away from where we are this morning. tom: the three divisions of kellogg's -- snap, crackle, pop. lisa: he will never let you live that down. tom: it was brilliant. i should not even come in. let kailey leinz run the show. ♪ >> up-to-date with news from around the world. president biden wants to do something about gasoline prices. he is calling on lawmakers to enact a gasoline price tax holiday with average gas prices around five dollars a gallon in the u.s. federal taxes make up about $.18 of that. it is not clear how long the president wants to suspend the

tax. in the u.k., prices rose by 9.1% in made from a year ago. there's bit increases in the cost of everything. thre will be more inflationary pressure building at the wholesale level. integral materials have increased the most on record. the ukrainian president has resumed lobbying european union officials for support for the ukraine to join the eu. that will come up in a summit on thursday. and the senate has voted to advance a gun safety built into final passage is expected later this week. it's the latest breakthrough on the issue, designed to improve background checks, sicker schools and give states federal funds to combat gun violence. bitcoin has resumed its form. it's just above the key $20,000 threshold. for months, it was moving in the same direction as stocks.

investor appetite for risk assets has been falling in limits of a near recession. in the midst of a near recession. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg.

>> after 12 years in government, the tories have left the economy and -- tom: emotion in the house of commons. you wonder if we will see it in america as well. the gentleman from scotland speaking. they have really been going at it in a much greater level than i have seen in recent times. here is the prime minister. >> the government has the fiscal firepower to deal with it, mr.

speaker, and that is a benefit to the whole of the united kingdom, including scotland, as we have seen throughout the pandemic. it is a matter of fact that taxes are higher in scotland, as well. lisa, very quickly, the backdrop is a simple commit $8.66 u.s. a gallon in london. lisa: it is a lot more there and it is creating tension around the world as people bubble over and see their incomes going down on a very real basis. tom: we will move it from the emotion from the house of commons to the reality of careful academics and to study at the international energy agency. tim gould leads economics coverage at iea. an extraordinary time, tim -- to

cut to the chase, in your report, what is the distinction that the prime minister and leader of labour need to know right now? what do they need to know from iea? tim: we have not been putting enough capital into the energy sector in recent years, and that is true whether you look at it from the perspective of energy transitions, we have not been investing enough in clean. because we have not done that, that means the amount of money going into the traditional sectors, oil and gas, has also been not enough to avoid the volatility we have today. lisa: has russian oil actually been taken off the market or read diverted through china and india, then sold back to the west? tim: there is clearly some impact on russia already of the measures in place, but if you

look at the data for exports there has not been a huge amount of change since the invasion in february, so there is evidence of a reorientation rather than a reduction when it comes to russian flows. lisa: who was pocketing the difference? if you are dealing with gas and crude being sold at a discount, then being sold at anything but a discount everywhere else within the developed world, who is getting that delta? tim: it is a unusuallyn profitable moment to be in the refining business, margins are high. and particularly high if your input crude is heavily discounted russian crude. lisa: there is an allegation that some people have that actually india, in refineries, are benefiting on all sides compared to other nations.

what these nations are importing is russian crude, is that accurate? tim: it is difficult to tell. the providence of the molecules that come out of a refinery, there's no way to distinguish at the output of a refinery based on the origins of the crude. it's a difficult question to answer directly. kailey: you are an economist. the biden administration is pushing congress to put a pause on our gasoline tax to provide relief at the pump in the u.s., will it work as intended? tim: i think that we are very focused on other dynamics. the fact is oil and gas upstream investments have come down by half since 2014, and that has added to the pressures we see on the markets. so, how do we get out of today's

crisis? essentially there are two baskets of options. one is around doubling down on fossil fuels. the other is investing in new areas of the energy economy. certainly from our perspective, we are keen the upswing we have seen in clean energy investments in 2022, we are wanting to see that gain further momentum because we think it is the lasting way out of the crisis today. kailey: of course, by nature it is a transition -- we cannot just arrive at a moment where we are totally reliant on clean energy.many clean energy sources are intermittent by nature, the wind is not always blowing, the sun does not always shine. you cannot get the green energy at the same time you're weaning off of fossil fuels, does that make sense? tim: we try to avoid saying that there is a binary element, you just need to scale down one,

push of the other. it will be something for years to come. you need to make sure all parts of the system are functioning in a way that everyone has affordable energy. we need to focus also on all of the energy services, the reliability that you can still get from traditional forms of supply. tom: the effort here from iea, when i look at j.p. morgan, where in 100 pages they say the foundation of all of this is population growth in emerging markets. you own this, you have had the courage to go beyond the developed countries and a look at emerging markets as well. is the case for higher oil prices simply a burgeoning population in emerging markets? tim: i think it is more than that. it's about the economic growth, rising incomes, aspirations of

people in developing economies, what they have for the lifestyles we have in our advanced economies. that will drive development in the energy sector for many years to come, but what sort of model are these countries going to be pursuing? is in the same path we have been on these years or is there a new lower emissions path now available because of some of the increasingly accessible and affordable clean technologies on the market? tom: thank you for the report from the international energy association. lisa, this is in the jp morgan report as well, starving people are burgeoning middle class in em, they have aspirations. and the center around the use of energy. that is the heart and soul of the jp morgan call. lisa: which ends where we began,

that tension bubbling up as we go towards a jp morgan call of $150 a barrel. tom: are we going to get a two year yield under 2%? it's starting to get my attention. kailey: bonds are starting to get your attention, seriously? i actually find it interesting, even after have the hawks and fed talking up hawkish nests, you have a rally in bonds, especially as people look out to the recessionary call in the near term, more so than people previously thought. tom: stay with us. kailey leinz is here for jonathan ferro. we on radio and television -- we 're on the radio and television. this is bloomberg. ♪

tom: oil down 124. commodities generally giving it back. dollar resilient, 104.51 on the country dx.

persistently weak yen. sterling, 122.47. pound sterling cannot get out of its way. lisa has an individual stock story. lisa: they are all down. today is a gloomy wednesday. today is a new day when it comes to the relationship of oil to the deflationary backdrop. there has been a shift, the inflation that is going to potentially cause a recession, this will impede the demand for oil. you are seeing that with oil prices down, seeing declines across the board in some of the majors in the oil sphere. chevron, the tit-for-tat between president biden and -- president

biden came back with, i didn't know you guys were sensitive. chevron shares down 3%, exxon mobil shares down about the same. given the crude space and occidental down 3%. i want to take a look at the winners and losers after yesterday's rally. tesla up more than 9% after elon musk talked about job cuts and gave more clarity on twitter. those shares falling 1.5% as people reassess because of this broad-based, risk off field. yesterday, they did not participate in the rally. netflix is suspected to announce another round of job cuts after beefing up during the pandemic, those shares down 1%. meta -- meta has been left out. one of the big bets in what could potentially drive a rally, this is it. at what point is value in names after bid up on ultra low rates

for so many years? tom: we only show red on the screen. thanks you, lisa. romaine would have done it differently. kailey in for jon ferro. we go inside, talk about the dynamic, the flows in what i call the trust market, which, years ago, was indicative of the ted to spread, the dynamics against treasury bills, the measurement of the short term paper. suddenly, the ted spread jumps up. should i care? >> one of the things i have been impressed with is -- with

systemic risk, -- if you look at where banks print cp, it is subdued. it is up, but we are not anywhere near at panic levels, banks are holding up quite well. tom: are we not at panic levels because we have so much fiscal stimulus, there is so much money sloshing around in the system? just that simple? padhraic: it has been there since the pandemic, it remains -- missed commentary on this. you mentioned the ted spread, the dynamic on the front end is our risk-free rate in the u.s., which is 10 basis points below the feds reverse facility rate,

five basis points below the fed fund floor. it does reflect this act of stability, pushing down on repo rates. lisa: we spoke with the head of global debt at ing, i am curious for people trying to game out what a recession would look like. when you look at credit space, what are we pricing in in terms of the type of recession? padhraic: credit spends are wide, if you look at the spectrum of wideness, one of the real positives of the here and now is the falls are historically low. what i see with this elevation of credit spreads is a pickup and false as we go into 2023 and have a slow down. we are not there yet.

i hear a lot of talk about imminent session. we have a strong labor market in the u.s., that is the ultimate test of whether we are in a recession or not. lisa: this is interesting, bill dudley comes on next saying a recession is imminent in the next 12 to 18 months. you are saying, not so much. how much does that view hinge around the vulgar-esque policies ? padhraic: i think we would have to do mine -- define imminent. if we are talking to thousand 23, i am surely on board -- 2023 , i am surely on board. from a bond market perspective, there is a lot of talk of, should rates befalling? i do not see it yet. i see reasons for market rates

to rise further from here, which i could go into, but we are not there yet. lisa: speaking of, we are not there yet, we have barely talked about quantitative tightening. how far away are we from seeing the real impact of that, rate hikes aside? padhraic: i think we are 12 months away. this is one of the anomalous situations that the fed is doing 50 billion per month. before we get the traction there, you look at the cash going back to the fed. it is at two and a quarter trillion dollars, that tells me the fed needs to get that balance sheet down by 2 trillion four we have a real impact. we are talking about 12 months before there is an impact. kailey: everything operates with a lag.

as for how this translates into the treasury market, what are your expectations on the nominal yield, but where that is going to be driven -- driven from? is that real yields or breakeven? padhraic: real yields. back in march, we had a real yields in the u.s., -20 basis points. it is now 60. 60 is still low. this is why we think rates can rise. before the pandemic, the real year yield was up around 1% on the 10 year. that seems to be a sensible target, given the economy is hot on the labor market. secondly, i am looking at the five-year on the curve, it is not signaling the rise, a classic sign the fed has a big

job to do and the market rates has rising to do. having said that, i am expecting rates this quarter, we are just not there yet. tom: you said peak this quarter, what are your terminal years? what is your terminal rate for the fed that esther powell needs to describe later this morning -- mr. powell needs to describe later this morning? padhraic: the market should discount, leads to for next year . this has been the biggest bear market in modern times, plenty of room for positive times once we get yonder this -- get yonder this -- get beyond this. tom: the high-yield total return

index, i am still not there. it is something i have never seen. the idea of double-digit declines, high-yield prices, i believe was at -12%. lisa: doesn't the default get to a level that is getting priced in by spreads? the reason why some people are saying, including emily rowland, we love bonds. i want to highlight this, andrew at city publishing what to expect from chair powell today, this reiteration of a message that inflation is too high and the fed is determined to bring it down. i think this underlines the moment and feeling right now. while not new, the repetition of this message as markets increasingly price in the risk increases the hockessin us -- hawkish and us of the message. how much does this emphasize the

bearishness of the market today? tom: kailey, do you discern a difference or nuance recession to a recession? most of us older do. kailey: that is the conversation you are having now, it is not whether or not we get a recession or what time it arrives, it is how deep it will be. is it short-lived or one that is difficult to come out from? the nuances matter, because the fact of the matter is, this recession will be different than anyone we have had in the past. the question is going be, how short-lived will it be when it eventually arrives? tom: all of you on radio and television, stay with us. we look at the news and get to dr. dudley, futures -47. vix, -47 -- 31.07. bitcoin with a print under

20,000 -- over 20,000. it coin in the 10 year yield, 3.2% on the lower yield by eight basis points. bill dudley is next. this is bloomberg. ♪ ritika: boeing ceo sees supply chain issues lasting until the end of next year. david calhoun says that is not the industry's only problem. >> we have a very large, sophisticated and somewhat fragile supply chain behind the airplane manufacturers. just as fragile are the operators, the airlines. the ability to staff up with pilots, ground crews, maintenance crews, etc. ritika: bloomberg has learned president biden call on congress

to enact a castling tax holiday. he is expected to make a statement today as average gas prices are around five dollars a gallon in the u.s. federal taxes are $.18 a gallon. the ceo of deutsche bank sees a growing risk of a global recession as the global economy battles multiple strains of supply chain issues to rising food prices. >> put a percentage, but at least i would say we are 15% likelihood of a recession globally, but in europe. ritika: he said volatility will be the theme for the next 12 to 24 months. american automaker will -- parts in germany. ford says it will talk with

unions about significant job cuts because of electric vehicles request in workers. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ >> we are in a situation where inflation is high, persistent. rates are well below normal. i think the spirit is, you want to get back to where you want to go, as fast as you can, without writing anything. tom: an important conversation, mr. barker with important comments on the item of the moment, recessions in america. the chairman will speak today, it will be a sober conversation, a sober set of q and a.

part of it will be reading william dudley's essay for bloomberg opinion this morning, where bill dudley simply says, learn how to spell it. it is a hard landing. bill, how do you know or discern a recession coming, the distinction between a 1994 soft landing looking at a goldilocks recession, or a more different recession? how do you get out front of that intellectually? bill: it doesn't have to be a deep recession. the processions occur when something breaks, like a global financial crisis. the fed reserve has to generate enough slack and the economy, bring down inflation. the problem the fed has, it is hard to push the unemployment rate up a little bit. every time the unemployment rate has gone up more than half a percent, you get a long recession. there is no reason to think it

could be any different this time. tom: will the chairman say today what you say in your essay, suddenly, employment as a mandate is subservient. is that where we are heading? william: they took out the -- the labor market remains strong. they are focused on inflation, as opposed to employment. the labor market is too tight, as opposed to not tight enough. i think he will reiterate the message we have heard in his press conference last week. i think he will not talk about a hard landing. the fed is going for a soft landing, they should. the problem is, it is going to be difficult for them to pull this off. lisa: a lot of people are trying to draw a distinction between a soft recession and one more damaging. what is the characteristic of the hard landing you envision? william: it is going to be a mild recession at this point, because the fed looks like it is

solid. household and business balance look solid. you get a deep downturn when financials break, the ability to supply credit to people becomes impaired. i do not expect that to happen this time. i would expect a mild recession like 1990 or 2001, not the peak recession like 1973 or the great financial crisis. lisa: a lot of people would push back the fed has an appetite for causing a recession, they will pay that from raising rates as much as people expect. why do you think that is not the case, why do you think they are going to take a page? william: i do not think they want a recession. if you want inflation down, you need more slack in the economy. they are definitely going for a soft landing, it is almost impossible for them to pull it off. lisa: is the assumption you're

making, they are not going to blink when the data becomes more -- turns more dramatically? larry summers was talking about a 5% unemployment rate the next five years. where do you think their tolerance is? william: what larry is talking about is reasonable. the reason they are not going to blink at the end of the day, if they blink and do not get inflation down, they have to do even more later. postponing -- procrastination is not a great option. we saw what happened in the 1970's when the federal reserve was slow to tax inflation. inflation got out of hand, paul broker had to put the u.s. economy through the rinker -- ringer. >> it is in the longer term you see the full effects of monetary policy taking shape, and operates with a lag. we understand that. the question is, if they are frontloading and aggressive, are they going to see it reflected in the data we are getting, or do they risk -- or is the risk

of too aggressively, and the data turns all at once? william: that is what could happen. the economy has a certain momentum as the economy reopens, household balance sheets are very solid, boosted by the fiscal stimulus we got the last couple of years. things are in trouble. inflation is rising faster than wages, financial conditions have tightened a great deal. the economy will be fine the next few months, and then we are going to see a sharp slowdown, probably in the first half of 2023. lisa: i want to build on that 5% unemployment figure from larry summers over the next five years. what happens if you start to see the unemployment numbers climb, but the inflation figures do not come down because of those lag effects, like rent, that are continuing to climb? how does that -- the fed handle

that in the face of the central bank? william: you are right that inflation is probably not going to come down quickly. i think the ukraine-russian war complicates things, it looks like the energy price shock and food shop is going to last longer because of the war. i think the fed has gotten unlucky in terms of the kind of inflation shock we are seeing, likely to be persistent. i think that is going to make it difficult for the fed to reverse course. tom: john taylor school, stanford, i think it is called. i can see john taylor with a full balloon in his freshman economics class letting the air out of it slowly. we have a fiscal bloom, 30% of gdp. how long will it take to let the air out of that school loon -- fiscal balloon? do you see it out a decade?

william: fiscal policy is a factor behind why we are going to see a sharp slowdown at some point. fiscal policy, while it has been stimulative, it is over. we have seen households pull down their savings as the fiscal policy stimulus was put in place. the savings rate has fallen below average, which tells you consumers are stressed and starting to experience stress in terms of their balance sheets. tom: bill dudley, required reading before the testimony of chairman powell. we will get bill dudley out on social as quick as we can, you can see that bloomberg.com. he speaks of a hard landing. bill, i look at this and think of jerome powell -- if your own powell was to read your essay, you wonder how he would amend

his discussion today. he is not going to say hard landing, but how does he address the probabilities, the set of outcomes we may see? william: he has made it clear it is going to be more difficult, the longer inflation stays, the harder the fed's job. he admitted that in his press conference. i think today is going to make it clear, it is not going to be easy. he is going to talk about the path to the soft landing, i think it will be narrow. lisa: what kind of financial banking do you see being a trigger for the fed? as the yen weakens to the weakest level to the dollar since 1998, people are concerned about deteriorating liquidity in certain bond markets. william: the biggest area of stress is low and moderate income countries who are hurt by a stronger dollar and higher

energy prices. for poor countries, grain and energy are a key millet of portion of the household consumption basket. they will be hit severely over the next 12 to 18 months. i expect a lot of sovereign debt problems in the next year or two, that is going to be more problematic for the global economy. lisa: at what point does a strong dollar create an issue? a growing number of investors see the dollar as the main hedge against equity weakness. at what point is it a trigger for the fed? william: the fed is not unhappy with the dollar being stronger. it slows down the economy by reducing u.s. export competitors. when you think about the fed wanting tighter financial conditions, the dollar is attractive because a stronger dollar increases were purchasing power. the dollar strength is not something the federal -- they will use it in the future. lisa: we heard from tom barkan.

kailey: he says you want to get back to where you want to go as fast as you can without breaking anything, not causing undue harm to financial markets. what harm would that be? william: i think you would have to see some sort of calamity in financial markets, repeated ability of banks to lend money to households and businesses. i do not expect that. i think the reforms we make that we saw in terms of the banking system, more capital, more liquidity, better government. i think they will work this time. tom: i you not know which is more important, you quoted the great economist claudia, or quoted the other economist, wiley coyote. i will let you decide. that is great to see. bill dudley, thank you, former president of the new york fed. lisa, it is great to talk about the psalm rule, which speaks to

the dynamics of what the central bank has to deal with the unemployment. from mr. dudley, personal savings rate with all the challenges of an nation now for the country moving from 27% to 4%. that is jaw-dropping. lisa: that is something people are talking about as we get people eating into their savings to keep spending up at a time when inflation is running at the fastest pace in years. this idea of recession and contours of what kind of recession it will be is the debate at the moment. it is no longer how likely it is to avoid that downturn, but how painful it will be, and what the scars will be. that is interesting to note in rhetoric we are hearing out of wall street banks and investors. tom: wiley coyote, i think he is out of berkeley. wiley coyote making clear in recent research report, we are at the bramo cliff. lisa: wiley coyote likes tang

and velveeta. tom: i suggest a quick skim of that essay before we hear from chairman powell. kailey, what will you listen for? lisa: the words he chooses -- kailey: the words he chooses to say. will he utter the word, rec ession? tom: future steady, -50 on s&p. futures dow, futures negative 358. yields, seven basis points. recession in the air. this is bloomberg. good morning. ♪

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