mark: welcome to the bnn bloomberg audience. i am mark crumpton first word news. biden is calling on congress to enact a three-month federal gas tax holiday, blaming high prices and supply shortages and russia's war in ukraine after gas prices are around five dollars a gallon. federal taxes make up $.18 of that. european union leaders plan to give the ukraine the green light to become a member of the bloc after intense lobbying by

volodymyr zelenskyy. leaders have drafted a joint statement seen by bloomberg best as the eu is granting candidacy status to ukraine and moldova. this will come at the summit in brussels starting thursday, but the membership process is expected to take years. saudi crown prince met with turkish president erdogan today. the men turned the page on years of rancor over the killing of a high profile saudi journalist that had brought trade and diplomatic ties to a virtual standstill. turkey is seeking to secure currency swap deals with saudi arabia. at least 1000 people have been killed and hundreds injured after a powerful earthquake hit northeastern afghanistan overnight. the 6.1 earthquake has set off a new community area and crisis in a country -- humanitarian crisis

in a country already facing hunger. it is the worst crisis to hit afghanistan since the landslide in 2014 killed 2000 people. 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 am mark crumpton. this is bloomberg. kriti: i am jon erlichman. welcome to "bloomberg markets." and i am created group debt. -- kriti: and i am kriti gupta. we now have green on the screen up 5/10 of 1%. the question is, are the

fundamentals the ones driving the market? the 10 year yield is where you see recession fears a stronger. in the face of a slowing economy you dive into the u.s. bond market. yields are down 12% but a reversal of what we have seen the last few days. let's look at the dollar index. as the yields come down the greenback does as well. down 3/10 of 1% and we should mention the oil story. that is really a recession story. growth fears driving the commodity market lower. jon: that factors in to the stock at this hour. because there has not been willingness on the part of investors to move into any sector it is feeling company specific at this hour, whether you have a standout stock like moderna up 6.5%, or docusign

going through a management shakeup. coming back to what you are talking about, you are seeing noticeable weakness in those highflying energy stocks. whether it is marathon or conocophillips down 5.5%. kriti: you used the buzz word. that is the focus for investors. jay powell testified on the topic before the senate banking committee. [video clip] >> do you agree that if interest rates go too high, too fast it could drive into recession? >> it is a possibility. it is not our intended outcome, and frankly, the events of the last few months around the world have made it more difficult for us to achieve what we want, which is 2% inflation and a strong labor market. jon: joining us to discuss further, megan greene, senior

fellow at the harvard kennedy school and full institute global chief economist. thank you for being with us to. to hear fed chair powell talk about recessionary risk and talk about a soft landing becoming increasingly challenging, what is your reaction to that? megan: i do not think there was anything new in chair powell's testimony we did not learn at the last meeting. chair powell reiterated a number of times the fed is really serious about getting on top of inflation. there was an admission the fed had been surprised by how long inflation stayed higher than the targets, and i think that is fair, but the supply-side constraints continued to hit. there is not much new here other than chair powell said it will be really difficult to engineer a soft landing and that is what many economists have been saying throughout.

i think the fed knows this. with inflation this high and unemployment this low it is going to be difficult for the fed to hike rates aggressively, get rights above the neutral rate -- rates above the neutral rate, which is 2.5%, but if you have an uptick in unemployment, that means companies are constraining spending. that is what causes recession. kriti: the inflationary pressures are a far cry from what we saw in the 1970's. nevertheless, chairman powell said he did not want to compare himself to paul volcker but he is committed to price stability. could this be, for to what extent could this be, chairman powell's volker moment? megan: the difference between what we are facing now in the 1970's is this time we have the 1970's as historical comparison. that put the fear of god in

every central banker. i think the fed is really serious about getting on top of inflation. what worried the fed was inflation expectations jumping before the last fomc meeting. the fed wants to keep those anchored and will do whatever it needs to do in order to achieve that. i think that is the real prize the fed has its eyes on, maintaining anchored inflation expectations. in the 1970's they became deanchored. we are not there yet in the u.s. economy. jon: you talked about the potentially tough choices employers will increasingly have to make throughout this economic cycle. you have zeroed in on the health of the u.s. consumer, you have talked about the fact, in some cases, they had some financial firepower to deal with this. what is your current assessment of the u.s. consumer? megan: i think the u.s. consumer in aggregate is in good shape.

the u.s. consumer is sitting on a huge cash cushion. that is not true across income distribution. the bottom by income of households have already burned through the cash buffer. they can defend the paycheck unlike the top which saves a lot. the personal savings rate is way below historical average of 7%. it is around 4.5% now. that means consumers are not saving but we did push $2.5 trillion into household bank accounts. it will take time to burn that cushion down before households get into trouble. on the corporate side, i think it is similar. u.s. companies have built up a massive cash cushion and with rates going up and earnings going down, they could get into trouble except they have the cash cushion. i am not that worried about a recession over the next 12 months. it is the 12 months after that the risk increases. kriti: we have got 30 seconds.

i have to ask you about the housing market. to what extent could a pause in the housing market or speedy deceleration have ripple effects across the economy? megan: it could affect the economy. a greater percentage of residential purchases this time around have happened in cash which means rates do not matter as much. there might be financial's asian of that with -- financialization of that. but we are not looking at the housing crisis we saw during the global financial crisis this time around. it will be a drag on the economy and that is the point, to kill off demand. that is what the fed is trying to achieve to bring demand back into equilibrium. kriti: megan greene, we thank you as always. coming up, we stick to that subject and dig into the further unraveling of this massive

housing boom. that is the topic of the big take and we dive into it next. this is bloomberg. ♪

>> you see the housing market slowing down because higher rates are having an effect. that should have an effect on housing prices, perhaps even fairly quickly so that prices will not come down but price increases will flatten out.

we are seeing lower home sales, lower starts, so a slowing in housing. kriti: this is "bloomberg markets," i am kriti gupta with jon erlichman. jay powell testified earlier before the senate banking committee and the u.s. is not the only country seeing a housing slow down. that is the topic of today's big take. we have our senior you is economist -- senior u.s. economist. thank you for being with us. you had a bloomberg scoop that hundreds are being cut or reassigned in the jp morgan housing unit. you can really see the effects across all parts of the market and the economy, but i have to ask, the faster the deceleration, what are the ripple effects you are seeing across the u.s. economy? >> i think the u.s. economy is pretty much insulated from a

full-blown housing crisis. kind of like what we saw in 2007. the thing is that if you look at real estate, home equity in real estate is the highest since 1980's. you look at the debt ratios, they are at the lowest levels. households have delivered quite a lot. the risks to the financial system from the housing market are pretty low at this point. of course housing will slow down and it will have spillover effects on consumption, but that is the whole idea of slowing demand by rising interest rates. jon: interesting to hear you say that. we just heard from megan greene of harvard. as we look at these bubbles in the housing market around the world based on the economics work bloomberg has done, whether

it is new zealand or australia, or here in canada where, over the last couple of years, it has not been surprising to see prices increase by more than 50%. there was a trend that started going back to the financial crisis where more conservative canadians, who managed on the economic front and saw a record low interest rates for a decade, started to get in. could we be in a situation where the u.s. navigates relatively well but has to be keeping an eye on these global housing markets because of this uncertainty? >> you are right. canada is among those countries to potentially see the highest risks according to the analysis that was performed by my colleague at bloomberg economics. i think the u.s. is relatively safe in this environment and again, i think the u.s. consumer has delivered quite a bit

relative to what we saw in the early 2000's. that is really important distinction. also, the u.s. consumer has accumulated a lot of savings and those extra savings will provide some cushion despite the fact the savings rate has fallen quite a bit since the peak we saw during the crisis. kriti: about 30 seconds. i have to ask about whether or not we actually see a housing shortage continue. it is not just about cribbing demand, but how long is the shortage? yelena: i think this will support housing prices to a certain extent. there is a lot of housing in the pipeline but those houses cannot be finished simply because they are lacking doors, windows, whatever because of supply shortages.

we will not see significant improvement on the supply side which should prevent housing prices from going down this year at least. jon: yelena, thank you. coming up, pain at the pump causing president biden to re-think's energy policy. we discuss how his next move may not work. this is bloomberg. ♪

jon: this is "bloomberg markets ." i am jon erlichman with kriti gupta. president biden will speak shortly about a gas tax holiday. research says biden's move may not lower gas prices at the pump. everyday analysts from bnef

share their research. we have one research alongside bloomberg's joe mathieu to talk about the d.c. perspective. joe, why don't we start with that? we will get into the nitty-gritty on the economics but in terms of the democratic or republican support from a maneuver like this, what are you hearing right now? joe: not a lot of support to be honest. while americans might love the idea, may be taking a dollar off of a gallon of gas, it does not have the democratic and republican support on capitol hill to make it happen. the president is going to talk in the next hour and he was working on a decision about this. the fact is congress must approve of this idea. three-month suspension of the federal gas tax is $.18 a gallon. the white house says you combine that with states lowering their taxes or suspending them altogether, which are bigger than the federal ones, and

promptly oil companies to produce more and we will have a meeting tomorrow on that at the white house. it could lower prices by as much as a dollar. the other side of this is, advised the way we have been down this road before, it has been proposed over the years, number one, oil companies may not pass the savings along and two, if prices come down, do they not inspire people to drive more and create higher demand? jon: i am glad you mentioned energy companies. we just spoke to the heads of one of the largest in this country, canada synovus, which is in washington to talk about canada's energy opportunity this week. we listened about the potential impact of the gas tax. >> i certainly understand the desire to take whatever action possible to drive down the price to consumers. obviously, that is a positive

step, although a small step given the scale when compared to the price of a gallon of gas in the u.s. jon: alex calling it a small step if it comes to be. >> i definitely agree. it feels like a good approach to a bigger structural problem. we have elevated gasoline prices because of high crude prices trading at $105 per barrel, which is $35 higher than a year ago. the second is because we have a lot of refining capacity in the u.s. in the last year. i think we shut off around $1 one million barrels a day.

there is not much more we can get out of these refiners. kriti: i believe it was $.18 on the gallon was the actual gas tax. is that enough to really make any sort of difference? tai: i think it would do something at the margin but not a whole lot. a couple of months ago the american auto association did a survey for gasoline prices at the pump. consumers started to change their behavior. that is the price point for people to change their mindset. gasoline prices is around five dollars per gallon. we take $.20 off that and you are far away from the four dollar pivot point. that is not close enough to get us there. jon: joe, hearing all of this

from tai and synovus at the end of the day would you anticipate, at least for republicans, for them to move away from this argument there has been a challenge, to say the least, for the white house to get gas prices under control? joe: it is hard to say. i will remind you even speaker pelosi has not been a fan. she called it showbiz and it reminds me of 2008 when this was proposed by hillary clinton and senator mccain. barack obama called it a gimmick and over 230 economists expressed it would not work. one thing i will add to this, one of the concerns speaker pelosi had -- the democratic leader in the house -- typically on the same page as the white house she said this would take money away from the highway trust fund, that is where the federal gas tax goes. at a time we are prioritizing infrastructure, that would be

counterintuitive. kriti: joe, 30 seconds. the biden administration is dealing with a scathing letter coming from the chevron eeo to which he said, i cannot believe their feelings get hurt so quickly. can you speak about the relationship between joe biden and the shale industry? joe: not very good. the president is talking like that and being sarcastic referring to exxon making more money than god when he will be asking them for help tomorrow. there will be a meeting tomorrow with the heads of the oil companies which the white house will ask them to do their patriotic duty and refine more. without that component prices will not come down. jon: joe, thank you so much. and our thanks to tai lu from new energy finance. with joe you can hear every day, weekday his radio program "sound on," 5:00 p.m. new york time.

oil prices under pressure. one of the stories we have been watching on this wednesday. for kriti gupta, i am jon erlichman. this is bloomberg. ♪

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mark: i am mark crumpton. biden wants to do something about gasoline prices. he is, on congress to enact a three-month gas tax holiday blaming high prices and supply shortages. average gas prices in the u.s. are around five dollars a gallon. federal taxes make up a little more than $.18 of that. russian intelligence agencies have been backing into scores of organizations in the u.s. and other ukraine allied