it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> welcome to bloomberg markets. i am matt miller. we are one let's start with a quick check of what is happening in the markets. the s&p is continuing to rise higher. now at or thousand 382. we are now higher than the day the fed started raising rates.

the 10-year yield coming off a little bit. 3.7842. showing the coffins the markets has in a hold, pause, -- the confidence the markets has in hold, pause or skip. new york crude at 69.29. katie greifeld is with us. katie: you are going with a hawkish hold as the expectation today. everyone expects the central bank will stay put at this afternoon's meeting. this is where pricing gets interesting. so far, markets are pricing in 17 basis points of a quarter-point hike. then you look at what is priced and on the others in terms of cuts. you are around 20 basis points. seems like a bit of a wash when you add it together. if this actually happens, we have one more hike and cut and

you will end up in the same place. we will hear from jerome powell in a moment. the market can be different but he will ask about the rate cut pricing. matt: a 5.1 percent implied rate today and a five point 1% implied rate for december 13, the last meeting of the year. it is expected to be a wash. the fed has been topic number one across the bloomberg platforms today. earlier, victoria fernandez said the markets might be missed pricing the fed. >> i am not sure the fed is dead. i know futures are pricing in 25 basis point hike at the july meeting but i think they will go further. i think the dot plot will look further into that. if they raise their expectations to where the imf came out earlier this week and put growth

expectations, this means two more rate hikes at least. this afternoon could be interesting. matt: let's bring in henrietta, trade director of economic policy research. great to have you on the program. looking back at the 525 basis points of height -- 520 five basis point hikes we have had, i wonder if this is due to all the fiscal spending that came out of the united states federal government during covid? is jerome powell trying to undo with presidents trump biden day? henrietta: you are on the right track and have had incredible programming today. there is one part that used to be operated which is only to be have record spending during covid in response to the pandemic during the last two administrations but the debt ceiling deal a couple weeks ago

gives investors this false expectation that there will be federal spending reductions going into 2024. i do not think that will be the case. i think that will probably, ray combination of the appropriations bills and the supplemental appropriations for the are in ukraine, border spending, defense spending, disaster relief that will be necessary from the canadian wildfires, onto a potential tornado or hurricane, there is likely to be more spending in the 2024 fiscal appropriations bill that there was in 2023. if the fed posits now, they will have to read -- to reserve the right to hike again later. that is something i think you should encourage reviewers to know. matt: that is exactly why we have you on the program. i want to bring in this important aspect. let's get to bloomberg economics

-- bloomberg economist anna wong. she joins us in washington dc what is your view on the fed from here? for the most part, we expect a pause at this meeting but will they have to continue to hike as the federal government money continues to be spent in municipalities across the country? anna: as you said, everybody expects the fed to skip today but the question is, will they be pausing indefinitely? our view is i think the economic data between now and july will push towards a direction where they will have to pause in july and wait until september to make a decision on whether to hike. the reason is because there are a couple risks on horizon. one is that refilling the treasury general account held at the fed. in the process where the

treasure is issuing our responsible drain some reserves out of the banking system in a way that has a bigger magnitude than the monthly $95 billion in qe. that is a risk on horizon and could tighten liquidity conditions in the next couple months. other than that, you see softness and economic data demand. we are paying attention to thursday retail sales. the fed is likely as well. we expect a pause until july. -- even in july. katie: those are the two factors i have been trying to make heads or tails of. we have inflation coming down but then you have a and evidence the fed means to keep optionality. at the same time, you have evidence that things are starting to cool down. good things potentially cool down where you actually need to

see a cut? should we be talking about a cuts and not a hike? anna: i think the fed strategy is to hold higher for longer. they are less inclined to push interest rates really high and then have to because aggressively later on. their strategy is to let the real rates do the work. as inflation falls, even if this'll -- even if the pace slows, the real rate will climb and stay high for a a while. i think that is the strategy. matt: henrietta, let's bring you back in. as we get into next year -- a lot of forecasters have pushed their recession expectations back to 2024. i saw citadel now expects a recession next year. what are the risks you start getting more spending from congress -- we start getting more spending from congress as we head to an election and this

undoes a lot of the fed's work? henrietta: there is a really small, one line item, in the debt ceiling bill that allows appropriators to delay any decision about federal spending for next year from september 20 20 three until january 1, 2024. what is realistically going to happen is you are not going to get comprehensive. bills. we will probably get them in the second or third week of december. you are going to be in position for all senators and house members to add money for pothole feeling or bridge consumption or things that do resolve federal spending that would undo anything the fed is trying to do by continuing to hike into the fourth quarter. it is something that is underappreciated, just how valuable the debt ceiling headline numbers are and how

likely you are to have to buy votes later on this year. and specifically heading into the first quarter of 2024. that is exactly the timing. i imagine something will go up. at the worst, it will go for that book quickly go up. katie: i want to see you might see from the fed members because this has been a fairly united fed. throughout the whole pandemic but there has been calls that could end at this meeting. anna: you are watching for two dissents, one by governor moechella bowman and the second minneapolis neel kashkari. his bowman dissents, it will be the first ascent of a governor sense 2005. usually when you have a mixed picture in the economy is where you have dissent.

it signifies the economy is at a turning point. matt: anna wong, bloomberg economist partner and henrietta treyz veda partners from veda partners. this adds to the picture immensely. it is not just about jobs and wages. we are going to talk about higher rates from the fed and what kind of told they are taking on the economy. or than half of young workers in the u.s. to not expect to do as well financially as their parents. that and more after the break. this is bloomberg. ♪ [office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪

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matt: this is bloomberg markets. i am matt miller. let's get to something that caught my eye as we discussed the effect of higher rates from the fed. more than half of young workers in the u.s. to not to do as well financially as their parents. it also highlights the amount of people who say they are living paycheck-to-paycheck. about evenly split between young adult men and women. 41% and 43%. meaning they are saving no money and only have enough to pay for, food and fuel.

he are insiders trying to help cash-strapped consumers. rodney williams joins us, head of one of the few minority finance funds. he is out with his own cash report. thank you for joining us. i imagine that financial education is probably the key. my parents did fairly well but never sat me down and talked money. i guess that is the case with a lot of people out there. >> i would say partly. we are finding the number one concern or issue is there are not options for cash for americans to gain access to capital so they can make their way out of this particular problem. the lack of solutioning is the number one factor. in our survey, there were interesting findings. 50% are college educated.

one in 10 make income of over $100,000 a year. how we are defining this group is different. matt: when you look at that group living paycheck-to-paycheck, is the problem that they actually do not have enough money to put anything aside or are they just enjoying themselves and have not thought about saving for their retirements? rodney: unfortunately, most americans, especially middle-class americans, live paycheck-to-paycheck. it is a combination of our entire financial system. our financial system is predicated on the utilization of credit. it is built on overextending one's expenses for wants and needs. this sense of a scenario where there is limited savings -- sets up a scenario where there is limited savings. i don't necessarily believe it

is a financial literacy problem. it is down to how our financial system is set up and how our system is exposed to middle-class america and young americans who want and need names. that is where the root of the problem lies. matt: what do you think is the answer? now, especially that we are focused post-pandemic on more of a work life balance, hustle culture is not something everybody wants to be involved in anymore. what should they do? >> we need better solutions. number one and two solutions for this type of credit tend to be subprime credit cards and payday loans. both tend to hurt our communities and middle-class america. our report shows the average american will spend night he hundred -- will spend 1900

dollars on fees trying to handle this expense. it will have a financial moment 2.5 times a year where they will need help and assistance. the only thing they can go to is a subprime credit card and payday loan. we need innovation. that is why we started solo funds and why solo funds and the black economic forum decided to produce this report. our agenda is to call on congress to think about things differently but we also think there is a big problem with apr. we do not believe it is accurate and we are recommending a new approach called the total cost rate. matt: explained that to us and tell us, do you want a legislative solution? you think these lenders are predatory and need to be taking care of legally? rodney: there is a hearing in d.c. talking about this matter.

there is more depth to the answer. this concept of junk fees is a problem. i would give a simple scenario. a subprime credit card or payday loan, most people do not pay this on time and incur a late fee that compounds over time. if you are trying to assess the true cost of what a solution like a credit card with, you have to assume the late fee. in the way of which the apr is calculated, it does not assume the scenario where this happens a majority of a time. the total cost rate takes into the account all the total cost a consumer pays in addition to the apr to attain that loan, service the loan, and pay it back. this is a much more accurate measure for a consumer to assess this option but also to assess how to avoid this problem. we have hyper targeted this apr,

alongside many other legislators that agree junk fees need to be looked at differently. our answer is a total cost rate. matt: what do you think happens when you have student loans coming back? he mentioned a lot of people in your survey are college graduates. is this going to make your situation worse? rodney: unfortunately, it will. when you think about higher inflation, a lot of young people live in cities that have a higher cost of living. what this means, if i am a new college graduate and rapid designer, my income is really -- and a graphic designer, my income is not enough to make ends meet in big cities. they need solutions to kind of create -- make their cash flow more consistent. matt: if you were at the federal

reserve press conference today and had a chance to ask jay powell a question or make a comment, what would you say? rodney: my comments would be specifically around innovative solutions. we need more solutions than credit cards or payday loans. we need solutions that look at things differently. more importantly than solo funds is the apr. it is not an accurate measure of the cost of reddit anymore. you need something that include scenarios like a consumer being late. these are real examples of how consumers are paying off these debts. if you start to measure it that way, you can really start to understand the debt of what it means to be predatory and what it means to create better solutions for consumers today. matt: excellent point. i will be fascinated to see if we can move closer toward that

model. rodney williams, cofounder of solo funds. still ahead, stock of the hour. ensures falling after warnings of rising medical costs. this is bloomberg. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose.

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matt: this is bloomberg markets. time for our stock of the hour. u.s. health insurers plunging after warnings of rising costs end boost of procedures -- elective procedures like joint replacements. katie greifeld has been following this all morning. this is fascinating because he would have thought a pandemic is bad for health insurers in the end of a pandemic is good but it seems to be the other way around. katie: it is the other way around when you are talking about procedures like joint replacements. these were the type of procedures people deferred over the past years. rbc wrote that during the pandemic, it was medicare advantage patients that referred these procedures so it created pent-up demand that is being

led. this change things for consumers like unitedhealth because their second-quarter premium revenues spent on cost is going to be at the upper end of what they had been previously projecting. it could be moderately above expectations. the reality in the stocks is brutal. united is down over 7%, the worst drop since 2020. matt: they are expecting an 82% to 88% payout of premiums for these elective procedures. that is still a pretty decent margin. he heard a warning today about bank failures. it comes from someone prevalent during the last rate financial -- last great financial recession of bank failures, peer or zach. katie: he said we are not out of the woods when it comes to regional banks.

then you look at the news flow. matt: now he is at lazard. katie: it is interesting when you think of what we have heard from regional banks. 53rd has reduced its outlook for net income. yesterday, we heard something similar from zion, saying its next was going to fall. we also heard from keycorp saying it is cutting its net outlook. some of the forecasts -- of the focus has not been on regional banks the same way it has been passed months but there are still issues there. matt: katie greifeld talking to us about insurers and adding on a kicker. coming up, "bloomberg surveillance" has special coverage. the fed to size with tom keene and lisa abramowicz is next -- the fed decides with tom keene and lisa abramowicz is next. this is bloomberg. ♪

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