dani: welcome to "bloomberg

daybreak: europe". i'm dani burger in london. it is great is in dubai with the stories that set your agenda. manus: u.s. futures tick higher and chinese stock fluctuate as lowe -- as slowing cpi. but the bank of england is seeing hiking rates for the 12th straight meeting, as ecb officials say tightening may need to continue past july. jamie dimon exclusive. we will speak to the chairman and ceo of jpmorgan chase at the bank's annual global markets conference in paris. dani, very good morning. it was almost a pavlovian response to software cpi, they are pursing a pause. good morning, the pavlov dogs

are salivating. dani: bond yields come in. looking at the market odds on the terminal, they went from 20% odds of a hike to 0%, to now 5%. it is hard to see what would change that before the next decision. manus: there is a pack of a lot -- heck of a lot that could happen. i love what ben emmons had to say. we are on the ski slopes, it is like the 1970's, they are skiing down the sunny downward slope of cpi coming out of the major price shocks just like the 1970's. the question is, how much will the journey be from 5%, to 2%? dani: i wish i was skiing on a sunny downward slope right now. but it is completely right that

you mentioned risk of default. while you are off interviewing everyone in the world yesterday, i had sushil on the program yesterday who said if we get close to possible default, that could mean even sooner cuts from the fed. manus: and she rode up the story. she embarrasses me. she was everyone to know she is setting a bar that will be hard to climb. take it away. dani: it is not just u.s. cpi coming in softer, china did, too. that is reflected in the futures and china trade this morning. china leading the market down, but the overall msci asia-pacific index is down. european stocks and u.s. futures moving higher .2%. manus: two's tanked, it was a pavlovian response, it ticked

back ever so slightly this morning. but it was the broad-based assumption that we move to pause load on the two-year paper cable. 12th hike, is it in the back? - in the bag? oil vacillates. it is grappling with the number of narratives. adnoc made it clear yesterday, they are happy with what they see in the china energy market, it is rebounding strongly. demand for jet fuel especially strong. but yellen is getting ready to press down on more russian sanctions if asians. keep an eye on the oil price as we go to vienna. 73.13. dani: we have the dutch lender ing reporting first quarter net income, it is a beach, just under 1.6 billion euros, the

estimate was just under 1.2 billion. the other big line to mention, they will have a share buyback program of up to 1.5 billion euros. that interest income is a slight beat, 4 billion euros, the estimate was just under 4 billion. manus: let's take that view on the buyback. it will be nice for the market to get there draws into. the cfo joins us both now. 1.5 billion, is this a one into done, or the beginning of a series of buybacks? you have the ecb backing for this? good morning, tanate. tanate: nice to be on the show. we had a solid start of the year with strong first-quarter results. you mentioned the high interest rate environment has driven strong revenue growth. that is matched by relatively

low [indiscernible] showing resilience of our customer base. that has driven strong first-quarter profitability, and exceptional capital generation. on the back of strong capital, we have announced the share buyback of 1.5 billion. dani: you mentioned your customers, the strength, how have you seen the deposit picture evolve throughout the american and swiss banking crisis? tanate: it's been really solid. our franchise is stable. deposit growth has actually grown during the quarter. we are sitting on strong liquidity. our customers have remained resilient, and nonperforming loan levels have remained

modest. almost the same as in q4. manus: to square away the names question, we will catch up with the head of the ecb in just a while. your model will give you the nims outlook for the bank. ceos are saying we are at the top this year then we will roll over. is that your version, how many more rate hikes do we get from the ecb? what will be the top? tanate: our house view is for interest rates to be hike a couple more times this year. the terminal rate we think will be 3.75% to 4%. with those levels, we expect to continue to see strong net interest margin and income for the rest of the year. dani: are you having to pass

more of that benefit onto clients? banks will globally have an issue with profitability because clients know they can go to other vehicles and get more yield. tanate: what we have seen historically, is that the level of deposit tracking has been at a historic low. we expect that to pick up at some point. at the same time, we offer a competitive price in all the markets we have. the current rates we offer, we continue to see inflows of deposits into the bank. we will watch carefully the competitive situation in each of the markets. manus: tanate, you have managed a whole variety of cycles. so far, nothing has broken in the global system.

500 basis points of hikes from the fed, 350 from the ecb and growing. what is the risk that something breaks? you fear a policy error, or are you relaxed? we can wash through 500 bibs in the states. tanate: i sleep well at night. i'm not that worried, but of course, i watch all the things that have happened. this industry has gone through many ups and downs the last few years. given ing's diversified business model in terms of segments, geographies, we are confident about our prospects despite what is to come. that's why we are confident enough that we are doing a share buyback this quarter, 1.5 billion. dani: you will have to share

your routine with manus, both of us need help getting better sleep. just to press you a bit, you are confident about ing, fair enough. when you look out, where do you see potential stress? there has been flags raised about commercial real estate, especially places in europe. red flags about that buildup with nonfinancial institutions. where do you see the biggest potential pockets of stress in the system? tanate: you named them. what is commercial real estate -- one is commercial real estate. correction needs to happen. if there is unexpected moves in terms of debt ceiling in the u.s., that could affect confidence in the financial market. that would be a second point. the third unexpected situation that may occur with the war in ukraine. those are the three top risks i

see. dani: we have to leave it there on a hour note unfortunately. tanate phutrakul, ing cfo. coming up, relay for the fed, u.s. inflation shows signs of cooling. opening the door to a rate hike pause. manus: don't miss our exclusive interview with the jp morgan chairman and ceo, jamie dimon live from the bank's annual global markets conference in paris today with francine lacqua. on bloomberg. ♪

>> cpi is cooling. >> it's a sign up a little bit of disinflation. >> the fed is making progress. >> inflation still running close

to 5%. >> the fed is still focused on what they need to do. >> the fed will take this as encouragement. >> the balance of risk is towards hiking further. >> i don't know how much of a difference 25 basis points makes at this point. >> keep rates at this level or higher. >> throughout the course of the year. >> until they are confident inflation is back to 2%. >> it is hard to look at this number. >> this is just another drop in the ocean. manus: bloomberg television guests weighing in on the latest u.s. inflation print. my guest this morning is sunaina sinha haldea, global head of private capital advisory at raymond james. good to have you with us. i said to dani, it was a pavlovian response from the bond market to a sub-five read for

the first time in two years. is it over-up there is -- overoptimistic that rate hikes stop? sunaina: nice to see about again. yes, it is optimistic to think about a rate cut. not so much to think about a rate pause. i think the print gives the fed what it needs to make the pause which they have signaled already. the market is signaling a rate cut as early as late summer. if you look at that coming out of the market is a quasi-tightening effect that will have to flow through. that is way too optimistic. which central banker wants to be the one that cut rates too early? dani: they arguably waited too long to start the hiking cycle. one thing that has been argued is china would reopen, that would help global growth.

but looking at the data this morning, inflation is soft in china. what does it mean if we don't have that contributor to global growth? sunaina: this was a big theory, remember all the oil bulls who said think about the energy play with the china reopening. we haven't seen that, we have seen a lot more softness than any of us would have predicted. that means the engines to grow, if it is not the u.s. and china, one has to ask where that is coming from? especially when you pick about where equities are priced, they are still not cheap. and you don't think about drivers to think about rereading in stocks, as early as we are in the potential recessionary cycle. dani: what guest will be so humble and safe i have had different -- say i have had different data and have changed my mind. manus: this brings in the whole argument about being dexterous

in terms of changing when the narrative changes. i was in abu dhabi yesterday with the global head of adnoc, he sees the energy market rebounding strongly. jet fuel demand in china is exceptionally strong. do we have dani there? demand for jet fuel exceptionally strong, acceptable level of recovery. when you speak to some end producers, it is slightly different. what makes you a bit more doom and gloom on china? to be fair, he sells oil and gas. sunaina: i would not be surprised if he said anything other than what he said to you. we are not seeing the growth tailwinds you are used too seeing out of china in a full-blown recovery scenario. there is a lot of weakness in the consumer story and chinese real estate markets. you have yet to see that settle in for the demand story to come back. he may have more data, for

example, on the jet fuel and travel side. that has yet to play through when it comes to gdp numbers. more importantly, when it comes to thinking about how that has fueled global oil demand. that hasn't come through in the last quarter and a half. that may change through the year, we know the west took a good three quarters to come back to sustainable growth after the pandemic. manus: you and i -- dani: you and i are headed to berlin next month for the biggest private capital conference. every time i go, i asked executives, the macro environment is difficult, how are you dealing with it? i get the answer frequently, we are investing in good company, they will grow. but why should we care when it comes to private capital what this inflationary environment looks like? why does it matter that we are having such a difficult time grasping the macro narrative? sunaina: we all should be cross

asset class investors. in a market where we have to say to each other, equities are expensive. bond market is likely are having a banner season in 2023. with the debt ceiling coming up, etc. where else is there a wall of capital looking to be put to work? that is in private capital, especially private equity, $3.7 trillion in dry powder in private markets that has to be deployed. remember these are funds with four-year investment periods in which they essentially have been quieter than they have ever been before. so the clock is ticking and this capital needs to be put into the asset markets to buy companies. these committees eventually need to be sold, they either need to be made public, or sold to other purchasers. with all that context, we need to think about how private markets behave. a number of participants believe

the public debt market -- need the public debt market to function, so they can do their job, leveraged buyouts. that is where the macro cycle and fed hikes matters. where the whole debt negotiations matters, because they need a functioning loan and debt market to do leveraged buyout that scale. manus: biden is warning the world is in trouble about the debt ceiling. yellen is leading us to prepare for a no deal scenario. that fear that that deal does not get done is way too high, your base case is that we don't get over the bridge. if it is less bad than a people, -- default, what risk are you attributing it to? technical default.

is that a real risk? sunaina: however real that risk is, it is not nearly priced in enough. that is the big point i want to make. markets are sort of ignoring the debt ceiling. you are seeing some dislocation at the short end of the bond occur, the one-month and three-month inversion has it occurred -- has occurred. but the rest of the market has continued business as usual. that is not nearly pricing in enough of the risk of something going bad. i think the downgrade will certainly get investors to wake up. the real risk is will be u.s. government buy ex-date stop making payments. yellen is doing a bunch of planning. what are the different options? there are various levels of nuclear options. the worst is for a complete default and no fallback. i think biden's less bad option

is to invoke that 14th amendment, at least that gets him to continue to make payments. dani: always such a joy to have you on, sunaina sinha haldea, global head of private capital advisory at raymond james.it is decision day for the bank of england. could this be the final hike of the cycle? ♪

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manus: this is "bloomberg daybreak: europe". i'm manus cranny in dubai. dani burger alongside me in london. we have stubborn double-digit inflation. you are living it. outside the bank of england, will they go for the 12th interest rate hike today, even though the end of its lightning quick hiking cycle could be coming into view. she's there, it is lizzy burden, it is not raining at the bank of england. tell me, what is going to happen

today? lizzy: we are expecting a quarter-point hike to 4.5%, the highest since 2008. you have markets and economists agreeing on that. i don't agree on where the future path for rates should be. when is the pause coming? that's what we're really looking out for today. we will look in the press conference, the forecast. in terms of the actual decision today, the vote split is expected to be 7-2, the same as last time because you have doves saying previous jumbo hikes have yet to take full hold. she says to be a hawk right now is like being a fool in the shower, turning on the hot tob, being too impatient for the water and getting scolded. but then you have talks like catherine mann saying you need to get control of the second round effects.

the doves will say wait, because it takes 18 months to two years to get in control of inflation for the monetary transmission mechanism to work. we expect that blood to play out -- that split to play out today. dani: i keep hearing that shower metaphor everywhere. there is a lot of uncertainty about long into variable lag's. how much forward guidance are we expecting? lizzy: we have had surprise after surprise when it comes to the u.k. data, inflation-wise, labor market data-wise. you have to wonder whether the bank will be credible, if it says the future path is anything ba dependent? we will look to the forecast. interestingly, i wonder whether the bank of england sees inflation ending in the year? rishi sunak said his number one target is hlaving inflation by

year end. but yesterday it was said that it was irresponsible of the prime minister to set that target because it interferes with the inflation fighting mission. we will find out at 12:00 whether the bank sees inflation ending in 2023. dani: looking forward to your coverage. lizzy burden outside of threadneedle street. we will bring you that boe decision at 12:00 p.m. today, follow by special coverage of the news conference. manus: it's a big day, we will have guy johnson sitting down with the bank of england governor as we get more nuance in terms of where he sees the road to inflation. that's at 4:00 london time. coming up, g7 finance chiefs gather in japan. we will hear from treasury secretary janet yellen, she will have a news conference. it is all years on yellen -- ears on yellen.

the world is in trouble if we default. dani: it's a difficult time for yellen to come into a g7 meeting, when it is so overshadowed by the debt ceiling. you have to wonder if there is some sense that america isn't coming into these conversations with strength, if this type of political thing is what is on the agenda? manus: the least worst option. glasses on, glasses off. i need to buy contact lenses. the least bad choice could be secti

manus: this is "bloomberg

daybreak: europe". i'm manus cranny in dubai, with dani burger in london, on the stories that set your agenda. dani: u.s. futures higher, chinese stocks fluctuate as slowing cpi spurs hopes of looser policy. but that is not the case everywhere, the bank of england is seen hiking rates for the 12th straight meeting. as ecb officials have said tightening may need to continue past july. we will speak with the chairman and ceo of jpmorgan chase at the bank's annual global markets conference in paris. a conversation you don't want to miss. we are waiting on some bayer earnings this morning. i'm trying to see if we got anything on that. manus: you just caught me short. it doesn't happen often.

i know you are excited, but i didn't have it in front of me. let's do a cross-market check. look at bayer, and tell me the average price of the chemical components. there you go, short end of the curve dropped like a stone yesterday. a pavlovian response to the inflation rating. the bond market at the short end compressed, yields dropped. cable is the best-performing currency in the g10. we expect another 25 basis points, but what caveat will bailey give us that could suggest that the bank of england might go into pause mode? unlikely, some would say. oil is eking out a bounce back. the chinese energy market is rebounding strongly. jet fuel demand is especially strong. it is an acceptable recovery.

we are getting ready to head to japan. dani: let's over there. janet, u.s. treasury secretary, is speaking around u.s. default questions. let's listen in. sec. yellen: earlier this month, i told u.s. congress our best estimate is the united states will be unable to satisfy all of its obligations by early june. potentially, as early as june 1, if congress does not address the debt limit before that time. that projection underscores the urgent need for congress to act as soon as possible. in my assessment of economists across the board, a default on u.s. obligations would produce economic and financial catastrophe. millions of americans could lose their jobs. household incomes would be reduced. american businesses would seek

credit markets deteriorate. and millions of american families that receive government payments would likely be left without the resources they were promised. this would make it dramatically harder for households to spend. and businesses to invest. a default would threaten the gains we have worked hard to make over the past few years in our pandemic coverage. and it would spark a global downturn that would set us back much further. it would also risk undermining u.s. global economic leadership. and raise questions about our ability to defend our national security interests. short of a default, brinksmanship over the debt limit can also impose serious economic costs. we know this from recent history. as we learned in 2011, just the

serious threat of default can lead to a downgrade of our credit rating, and the weakening of consumer confidence. we could see rising interest rates on mortgages, auto loans and credit cards. we're already seeing spikes in interest rates for debt due around the date that the debt limit may bind. there is no good reason to generate a crisis of our own making. the u.s. congress has raised or spend the debt limit almost 80 times since 1960. i urge you to act quickly to do so once again. let me now turn to our work at the g7. i'd like to thank you, first, finance ministers suzuki and his team for hosting the g7 ministerial. and thank you to japan, for its leadership of our group this year. there are many issues we will

work on this week. but today, i'd like to highlight three of my core priorities. the first is the global macro economy. we're taking a broad range of individual and joint actions to bring down inflation. sustained growth. and help mitigate the impact of external shocks, including to developed countries. the second is to redouble our commitment to support ukraine as it defends itself against russia. the third is our longer-term work to bolster economic resilience and security. as we advance these priorities, i look forward to working not only with my colleagues from the g7, but those from several non-g7 partners that are here this week. including developing countries in emerging markets. we all have shared goals.

i look forward to productive discussions about how we can better deliver for all. first, even as we face downside risks, i believe the global economy remains in a better place than many predicted six months ago. in most g7 countries, including the united states, annual headline inflation has fallen in recent months. and the growth outlook for the global economy is better than it was in the fall. in the united states, we have taken decisive action to tackle elevated inflation. and strength and confidence in the banking system. while also enacting a trifecta of historic legislation to raise our long-term growth potential. other countries have taken actions to address their near-term challenges as well. we encourage our partners to

make long-term investments in their productivity and in combating climate change. when we strengthen our own economies, we strengthen the global economy as well. but we need to do more. it is important that we take concerted actions to improve the economic outlook for the entire world. particularly in developing countries. that's why we will coordinate on our efforts to push hard for timely and comprehensive debt treatments for countries in debt distress. it is why we have worked hard to take joint actions to lower food and energy costs during a volatile period. many of these actions have had the largest impact on the poorest countries. of course, we remain attuned to economic headwinds and downside risks. the world is still recovering from the pandemic, when russia

began its illegal full-scale war against ukraine. these shocks continue to impose significant costs on the global economy. further markets are seeing the possibility of a u.s. debt limit breach as a growing downside risk. i will continue to work with my counterparts on ways to strengthen the global economy over the next few days and beyond. second, i look forward to coordinating with other g7 members to support ukraine and to degrade russia's ability to wage war. when the g7 finance ministers gathered last spring, russia's war against ukraine was less than three months old. now the war is approaching its 450th day. since day one, our countries have united to support the ukrainian people as they mounted

a fierce resistance. the united states is proud to have provided significant economic security and humanitarian assistance to ukraine. we are just as proud to be part of a coalition that has stepped up to assist ukraine in its moment of need. we're pleased that the imf's program for ukraine will provide critical financing for the country. while putting it on the path of macro economic stabilization and future recovery. the program will bolster president zelenskyy's commitment to accountability and good governance. and it will help ukraine's economic officials provide a steady hand for its economy and reform agenda item the coming months and years. we are also continuing to lead a multilateral coalition of over 30 countries to impose heavy

economic costs on russia for its war. over the past year, our campaign has systematically degraded russia's military-industrial complex. and helped reduce the revenues russia can use to fund its war. because these sanctions are having an impact, russia is trying to get around them. this year, a central piece of our strategy is to take further actions to disrupt russia's attempt to evade our sanctions. our three-pronged approach involves improving information sharing and coordination among allies and partners. putting pressure on companies and jurisdictions that we know are allowing or facilitating if asian. and identifying and shutting down specific channels used by russia to equip and fund its military. we have taken a wave of actions

in the past few months to crackdown on evasion. my team has traveled around the world to intensify this work. our innovative policies to support ukraine extend to our joint efforts to restrict russian oil export revenues. last may, the g7 finance ministers discussed the price cap policy for the first time. our goals were twofold, to reduce revenues for the kremlin, while stabilizing global energy markets. a few months into its implementation, we see clear signs that the price gap is working. the russian government's oil revenues from january through march of this year were over 40% lower than a year prior. importantly global oil markets have remained relatively stable since the imposition of the crude oil cap last december.

in short, the price cap has stabilized the global economy, just as it has hurt russia's ability to wage its war. members of the price cap coalition are committed to prohibiting or facing out imports of russian oil. but we continue to urge developing countries to save on their oil costs by taking advantage of the price cap to negotiate steep bargains on russian oil. as i've said before, we will stand with ukraine for as long as it takes. now third, i will work with my counterpart on our longer-term initiative to build greater economic resilience. and bolster economic security. our goal is not only to enhance resilience for ourselves. it's also to build resilience for our allies and partners, including developing countries

around the world. we're advancing important work to build reliable and secure critical supply chains. this is part of an effort i've called friendshoring. we believe that our supply-chain diversification efforts can open up more trade investment opportunities for developing countries that have traditionally only had limited footprints in global supply chains. during the upcoming g7 meetings, i'm looking forward to discuss ways we can partner with developing countries to help them better integrate into global trade. in a way that moves countries away from solely extractive industries into activities that provide greater support for the domestic economy and employment. this work will build on investments already underway through the g7's partnership for

global infrastructure and investment. our partnership is already helping bolster global supply chains by mobilizing private capital toward infrastructure projects in developing countries. we also look forward to building on our work with about a dozen countries in the indo-pacific economic framework that was launched this time last year in japan. the g7 will also advance our work to mitigate geostrategic risks in our economies. as i said in a speech last month, the united states have such a broad sweep of tools to mitigate mystics -- risks to our national security. we will take narrowly targeted actions when necessary. we're looking forward to working with the g7 to effectively counter economic coercion, which is a key feature of japan's presidency. we also know that many of the

threats to economic resilience are coming from the global challenges that we all face. since last fall, the united states has worked with shareholders to evolve the multilateral development banks to better combat 21st century global challenges. trans-boundary challenges like climate change, pandemics, and fragility in conflict are disproportionately impacting the most vulnerable among us. we're accelerating the momentum for our evolution initiative. and aim to adopt a rolling set of world bank reforms over the coming months. these g7 meetings present us with an opportunity to coordinate our collaboration with and support for lower income countries. let me stop there. with that, i will be glad to take your questions. >> andrea, reuters.

>> they so much, madam secretary. the u.s. debt ceiling debate that you addressed is overshadowing a lot of these multilateral efforts. the president yesterday said the u.s. could go into recession if this happens. you have talked about global slowdown. have you modeled exactly what kind of downturn it could involve? also yesterday, the president said he was considering invoking the 14th amendment. can you speak to that and what you think the effect of that would be? sec. yellen: with respect to modeling of the potential cost of the debt ceiling breach, u.s. treasury hasn't undertaken its own models.

put the council of economic advisors published something in which they provided estimates. and moody's and others testified and provided estimates of what the impact would be. there is a lot of uncertainty attached to this. for example, if you only take account of the fact that if we had to lower spending to match incoming tax revenue. and could no longer issue debt. you would be looking at a substantial cut in government spending, which forgetting about other impacts on financial markets, financial institutions, on consumer confidence and so

forth. that in and of itself would be substantial. all of these analyses show that we would fall into, if this lasted for any meaningful period of time, a very substantial downturn. >> chris condon from bloomberg. >> provided administration is preparing an executive order that would add new restrictions to outbound u.s. investments to china. two questions related to that. there are critics already predicting that this executive order would be more of a symbolic action designed to make the biden administration look tough on china without making it meaningful. the first question, how would you respond to such criticism? second, in regard to these meetings and this executive

order, are you looking to g7 counterparts for feedback? or even an endorsement of this planned executive order? sec. yellen: restrictions on outbound investment is something that could be the subject of an executive order. it is something we have been discussing internally in the administration for some time. we're committed to discussing this with our partners. obviously, it would be most effective if there is coordinated action by a group of like-minded countries. and agreement that this is a useful approach. we haven't finalized the approach that we're likely to take in the united states. and we have been engaging in discussions with our g7 colleagues.

i would expect that would continue with these meetings, at least in some informal way. most of what we have discussed internally, although nothing has been finalized, you mentioned would it be symbolic? and not very meaningful, i guess i don't see it that way. i believe it would be narrowly scoped. and targeted at technologies where there are clear national security implications. i gave a speech on china a couple of weeks ago, and discussed the concerns we have around national security, and indicated that the united states has very strong commitment to

protect our national security. that occurs partly through reviewing inbound investment through our process, through export controls. and some restrictions on outbound investment would be a complement to that. my own view is that this should be national security focused. it's not focused at undermining say, china's economic competitiveness, or ability to advance economically come up but there would be a heavy national security focus. that said, that's not symbolic. but we would like to work jointly with our partners and are continuing conversations on that. >> aaron from wall street journal. >> you mentioned this idea of countering economic coercion.

i know you are working on the resiliency. beyond that, what are ways that economic coercion can be countered? related to that, china has been and thing up pressure on western companies that are searching for offices and things like that. is that an example of economic coercion or that could merit a response from the united states with the g7? sec. yellen: there have been examples of china using economic coercion on countries that take actions that china is not happy with from a geopolitical perspective. australia suffered that along with other countries. that is a matter that should concern all of us. i'm certainly aware of the

examinations they have conducted of american firms recently. consultancies operating in china. i don't know if i would include that in the same bucket. i don't have anything concrete to say by way of plans, but many g7 members share a common concern with this kind of activity. and are looking to see what we could jointly do to counter this kind of behavior. >> katie forrester, afp. >> hours ago, former president donald trump and republicans buttoned a default if no spending cuts are made. what is your reaction to that? also, our g7 finance ministers discussing concrete new actions

regarding sanctions evasions as you mentioned in your speech? sec. yellen: i am aware of former president trump's comments about default. as i have emphasized, and the president has emphasized, and actually, all of the congressional leaders who met on tuesday recognize, default is frankly unthinkable. america should never default. it would be tremendously economically and financially damaging. i think it would rank as a catastrophe. in the numbers we were discussing previously make that more concrete in terms of what the likely consequences are. the notion that under any circumstances we should default

and that's a reasonable strategy, america simply, as a global leader, and as the leader in having the reserve currency most used around the world, and the broadest and deepest capital markets. the notion of defaulting on our debt is something that would so badly undermine the u.s. and global economy, that i think it should be regarded by everyone as unthinkable. we may differ in terms of our views as to how to structure spending, what the appropriate level and composition of spending and taxation is. president biden laid out his views on what is appropriate in his budget. he proposed plans that would

involve $3 trillion in deficit reduction over the next decade, while continuing to invest in the long-term growth and productivity of the u.s. economy. and asked corporations and wealthy individuals to pay their fair share on the tax side. the republicans have laid down very different ideas. once that president biden and i considered to involve draconian cuts that would harm our long-term economic well-being. repealing our clean energy climate change programs. cutting to the bone discretionary programs that fund futures, school -- teachers, school, veterans' medical care and other priorities.

a process has been set up to negotiate fiscal policy, which is of course, appropriate. another meeting is scheduled for next friday. and staff are working to see if they can resolve this. i'm very hopeful that the differences can be bridged. and if the debt ceiling will be raised. and i realize, andrea, i didn't answer your question about the 14th amendment since we are on this topic. the 14th amendment, the idea that was discussed is that possibly, the amendment would justify issuing debt sufficient to pay all the government's bills and ignore the debt ceiling. what president biden said in his remarks is, it is really not.

there were clearly be litigation about that. -- would clearly be litigation about that. it is legally questionable whether or not that is a viable strategy. as i've said previously, i'm often asked, if the debt ceiling is not raised, what would you do? would you ignore the debt ceiling and pay all the bills, what exactly would you do? i don't want to go there and discuss alternatives. there are choices to be made if we got into that situation. but as you think about each possible thing we could do, the answer is there is no good alternative that will save us from catastrophe. so i don't want to get into ranking which bad alternative is better than others.

the only reasonable thing is to raise the debt ceiling, and to avoid the dreadful consequences that will come if we have to make those choices. >> elaine, ap. >> i'm wondering you see any way to end the some 80 rounds of brinksmanship.is there a way in the long term to find a better way to do with this problem? >> my personal opinion on this and i'm not speaking for president biden, but i have weighed in on this topic previously and personally i think we should find a different system for deciding on fiscal policy. congress could