does the fed need to be more aggressive here? i think the fed was behind the curve at least a year ago. it was clear we were not going to have the meltdown they. feared, so it would have made sense to move back to position like normal. the most vocal critics said the fed should raise 10 times from here and be hyper aggressive. it makes a big difference how much of the inflation is coming from supply shock and how much is coming from demand. the only tool the fed has is to raise interest rates and reduced demand for interest sensitive things, that is the only toll they employ. if you think this is predominantly inflation coming from too much demand, then that could work. if you think it is coming from supply, all you do by raising the interest rate and raising unemployment is you generate stagflation. you cannot really get rid of the inflation by having high unemployment. so the fed has got the balance that out and keep an eye on the next three months of numbers, to get a sense of is this supply, is it demand, is it starting to fa

we should thank the fed.us, most likely, you're going to need at least a, you know, you're going to need to hurt demand a lot, whether it gets to the level of recession is one thing or not. but we're probably going to have a recession, self-induced. >> well, listen, joe, i think recessions are a natural part of the business cycle they hurt people people lose their jobs but i also think that one of the compensating factors that you are allowed to essentially grow wealth much more quickly than in any other system but you can't outlaw recessions. i think the roots of a lot of this date back to the financial crisis, when we started qe we started qe, the fed largely tried to outlaw a business cycle so that the fed's balance sheet were $800 billion. now they're 9 trillion now i think the fed really got into the business of trying to be hard scientists like physics or chemistry instead of understanding this is a social science. and so while it hurts people, no one wants to see a recession again, it is part and parce

is this a more aggressive fed, a more realistic fed? the market almost interprets it as a more dovish fed. kathleen: if it is dovish because they said we could do 50 at the next meeting and he said, don't expect to 75 to become common, if i were one of them, i might question that. i guess they could have been more hawkish. the median dot is up to 3.4% for this year, 3.8% in 2023. at the beginning of the year, the dots were forecasting 1.9%, even though the markets got more aggressive. in terms of what this means and what the fed is hoping it will do is slow down inflation and not cause a recession. maybe people are believing that jay powell wants to make sure he can achieve a soft landing, he will, although jay powell said inflation was transitory and some investors said that it not directly there. interesting what he expects for figuring out the size of the hike, what they are hoping to do. let's listen to more of what he said after the meeting. >> 75 basis points today. the next meeting could be about a decision between 50 and 75. tha

fed? way you spoke about the fed the last 15 years, you expect me to believe you've got empathy for the fed? lisa: for how challenging this picture is. jonathan: no one believes you. you do not believe it. lisa: come on. jonathan: this is bloomberg. ♪ ritika: a new governor to lead the sixth central bank at the end of the year, marks 17 years of steering monetary policy. he will be succeeded by -- who heads the swedish financial supervisory authority. the news comes as he has made a momentous policy shift, the central bank is addressing a surge in inflation. -- expressed interest in acquisition of abn amro bank. bloomberg learned -- biggest bank has reached out for a meeting with the dutch governor to discuss. 18% on the news, negative interest rates way on results and executives waited for programs on a banking union in the block. airlines working hard to convince passengers it is safe to fly, but having a tough time to convince staffers to do the same. officials facing an unprecedented n

the fed has gotten aggressive. they're likely to get a lot more aggressive the idea the market goes straight up, the idea they'll be as aggressive as they are now, 75 today is likely 75 in july, a real possibility more hikes after that. no recession will be the result. do you agree with any of that? >> the chairman has in the past pivoted. he did it january of 2019, basically told us -- said buy stocks there was a dramatic pivot i think the chairman will pivot. one of the things important to pivot on is from the july meeting, july 27th, there's not another meeting until september 20th you have two cpi reports in between. we need to hear from the chairman that the fed is willing to do an inter meeting rate hike >> they're not going to tell you that >> they have to. they have to they have to address the issue that there's nothing between july 27th and september 20th, and two inflation readings they have to tell markets they're willing to respond to that >> they're not going to tell you that today if there was no meet

. >>> the fed drops the big one. hikes rate 75 basis point pps the biggest increase in nearly 30 years powell says another three quarter point hike isn't off the table for july what did the market do it rallied we'll break it down with former dallas fed president rnicole richie a-- richard fisher and ou traders. >>> biden's big oil battle the president calls on the nation's refiners and energy companies to pump and pr deuce more saying their profits are coming at the expense of consumers. what impact will have fight have on the crude complex that's the most aggressive increase in 28 years major aver averaging but fin shing off session highs. the dow added over 300 points. both snapping five day losing streaks. the bond market taking a breather despite the rate hike yields on ten year treasury. was the fed able to get it right? guy. >> in terms of communication, they got it right. we had a robust conversation on monday steve cams in suggesting they would do exactly this. i think across the desk we said this is what's

>> a big change from the fed. >> i think the fed's forecasts are optimistic. >> fed rate hikes take a long time to impact the economy. >> the unemployment rate fantasy plan -- fantasyland. tom: good morning. a moment in history for economics, finance and investment. we see it on the bloomberg screen. so many central banks acting in what i see massively on this screen as certainty -- uncertainty. jonathan: yields are heading up. bond yields higher, 10 year treasury pushing a350. the hike at 75 basis points, 25 and the bank of england. more to come. tom: we are not discussing stories of import that are pushed off the radar by the central bank derby. that ecb story from jenna rando out an hour ago from the single, oddest, desperate bond story i have ever seen. ecb, lagarde in search of an anti-crisis tool. jonathan: they want to somehow contain italian bond yields and increase interest rates, tightening financial conditions. it is going to be really tough. tom: you mentioned the shocks, the gas, the food, tanisha with elements of a revolution. tunisia shut down this morning. lisa: you ha

a lot of questions about what the fed is going to do. are they really getting ready to jump onto a more aggressive rate hike at this week's meeting? the traders feel that way. let's get our bloomberg policy and economic editor kathleen hays. 50, 70 five or even dare i say 100 basis points, what will determine what the fed will do? kathleen: a few things on the table, the market selloff. the markets are so concerned the fed will get aggressive or are they just excepting the fact that we need to get inflation down? in order to do that you have to slow demand, you have to slow the economy and they have to adjust. that's one of the big questions. it's far too early for the fed to say you're worried about growth. that won't happen for a long time. employment is still low, consumers have a lot of money to spend. they are a big risk to the economy. but so far that is still steady in the fed is going to have technology even more and we will hear what jay powell says if the risk of recession grows. will they be willing to let unemployment rise? c

the fed has to keep raising interest rates to curb inflation and he dismisses speculation the fed couldold its fire in september. he spoke with bloomberg earlier. bill: labor market's the tightest it has ever been. you can see that from the unfilled jobs related to those unemployed. in february 2020, it was 1.2 to 1. the fed needs to loosen it up or inflation will be above 2%. the problem is that in the past it has been difficult to push the unemployment rate up meaningfully without precipitating a hard landing. that is what the fed is going to try to do, but extremely difficult. they have not been as forthcoming in their forecast as they need to be. if you look at their last summary of projections, the inflation occurred almost immaculately. inflation was the 2% target and it begs the question of what caused inflation to come down? the way you get it down is more slack in the labor market. that is not the friendly message from the fed, but that is what is necessary. >> 4.1% and unemployment 3.5% and 3.5% again. many have been asking the question, this conversation about the pause in se

let's look back to march when the fed said 1.9% fed funds rate at the end of this year. now they are saying 3.4%, and as you pointed out not five minutes ago when you broke the news, 2023, 3.8% on the fed funds rate up from 2.8% those are significant changes in terms of the predictions >> yeah. i think we started printing these seps back in 2011. i think you would be hard pressed to find a percentage point change. >> right. >> in the outlook for the funds rate from one to the other, but tyler, maybe there's some good news in this and i don't want rick to have a coronary on this, but the market has been higher than the fed for several weeks now. maybe we're finally getting to some place where we can agree on what the next several months of fed approximately see looks like i will just say the market has pushed ahead the futures curve for the funds rate a little today and the market was at four now the fed is at 33.8 and the fed is at four it is much lower the only thing that matters from an investment standpoint is do you feel that four is enough to get the job done to tak

for now there is a lot of work for fed -- for the fed to get to 3%. the markets can stay there. we are already seeing money returned to risk assets. it has gone under the radar, but may was the first month this year that high-yield or investment-grade had a positive return. both of them had a positive return. things are starting to stabilize. there will be more mining coming -- more money coming into credit. jonathan: with the conversations you are having with clients, are they looking to allocate every time yields kick higher? bob: they are. they are sitting on a lot of cash. they are looking at the repricing. they are worried about inflation, they are worried about recession, but they also have money to put to work and they want to take advantage of the higher yields, lighter credit spreads. we have already seen a big move in the muni market. one of the things we are keeping an eye on is the quarter and. this quarter we should see some of the biggest rebalancing ever, and that money should come out of cash and go into bonds and equities. jonathan: gargi, do you sense the same

the post fed rally falling in asia.ention now turns to the bank of england, expected to the anti-in the fight against inflation -- expected to up the ante in the fight against inflation. the s&p snapping five days of losses, relative relief in the u.s. that the fed is getting a grip on inflation. also relief for the fact that jay powell did not commit to significantly higher increases over a prolonged period of time. he did leave the door open for july but said the 75 basis point move would be rare going forward. the msci asia pacific up 0.2%. the u.s. to year yield is preparing some of the gains -- gains are up in session today. you saw a move of money into treasuries yesterday. some suggesting now is a time to get further exposure to u.s. bonds. the 10-year at 332. move up in yields of a little over four basis points. it is expected 25 basis point hike which will be the fifth in a row from the bank of england. concerns about growth coupled with inflation, stagflationary environment. the bound is at 121, lower by 0.6%.

guy: yeah, in advance of the fed meeting. always a pleasure, great to see you. ♪ alix: a look at some of the biggest stories in the news right now. according to this latest tweet, elon musk says he is thinking of creating a super pac. he says the political action committee would support candidates from more parties. he said it is apropos that he voted republican for the first time. americans are cutting their spending. 0.3%, down half a percent last month, which should reflect the impact of impact of inflation. that is your latest business flash. alix: thanks so much. coming up, u.s. equities up this morning by about 1.2% while bond yields continue to tumble. a high manager risk here of next. this is >> the consumer is the heart of the economy and the consumer is still strong. the consumer is still out spending the consumer is still strong, we just got the latest results from the federal reserve, and household assets dictated in the first quarter, very modestly. >> we are now on the u.s. trading session, stocks of solidly. st

so i think that the fed, i would say the fed will continue to be judicious. the fed will continue to raise rates until something breaks in the bond market. i think when you see already with mortgages that they own 30%. i would call them the unnatural buyer. remember in 2020 when softbank did an experiment, they were doing all these options, and options market was going crazy, no one knew what was happening that happened in the mortgage market, now the fed stepped back i think equities will be priced off the bond market. you don't want the bond market to have 4 and 5 standard deviation events as an investor, please watch that closely. >> jim lebenthal brings me to you >> i got your back >> i guess i would say to you in light of everything we see with our own eyes, i don't understand how you can have a die metrically different view how the world looks. >> i think you made the point. >> what's your answer? >> wait and make sure you're done >> go ahead. >> made him wait 15, 16 minutes. still happens. >> we are dealing with the math of the pandemic. and there's a

and welcome to the fed-day edition of "the exchange."'m kelly evans and we're waiting on a crucial decision by the central bank three quarters or even a full-point rate hike and what will fed chair jay powell say and we're minutes away from all of these questions and let's go to dom chu with the latest numbers >> it's a very much wait and see pattern but doesn't take away from the fact that we're green across the screen and the berd the dow is up a third of 1%. s&p 500 two-thirds of 1% gains and the composite index, aka nasdaq, up about 1.5%. 10,000, 977. interest rates are a key part of the overall market narrative every day. but special on a fed day the two-year note yield is tilking slightly lower and the 10-point note yield -- again, the inversion is not there yet but kind of close. well keep an eye on the 10-year treasury note yield. we're going back to the highest levels since 2011 at this point hear this is going to be a huge thing to watch the 10-year treasury note yield and tech and financials. a key focus for many am vesters to

everyone is talking about the fed or how far equities are cried fall before the fed panics. >> we are in for a roller coaster rate profile. jonathan: joining us to discuss is meghan graper from barclays and jim bianco . what are the lessons from the week? meghan: we are seeing risk amplified as we round out the week. it has been a bearish backdrop. market reactions, the velocity of market reactions have proven to be far less predictable. jonathan: i know you have a lot of things to say about the fed. start now. jim: the fed has gotten is completely wrong and because they have gotten this completely wrong, we are seeing the consequences of it this week. it is apparent from what chairman powell said today they are committed to 2% inflation. in other was saying they are omitted to inflation. that is why stocks are down 6% and the extraordinary rise in yields. they have to pound the economy to try to get inflation down. jonathan: something that speaks to that was a line from tiaa. are they chasing something they are not going to be able to catch? do you think they are? jim: to some extent

from the fed chair. extremely difficult, the tone to be struck in these, given how much is at stake. the fed admitted the reference to the return to the 2% objective because that suggests that the fomc sees these price pressers as -- price pressures as persisting. 3.4% is where futures are projecting at the moment. the question is what that looks like, another 75? a 50 through the end of the year? shery: we have four more meetings where we spilt -- where we will see way decisions and we will be watching. right now, the chair saying that that soft landing might be possible but it will not be easy , and interesting when it comes to the forward guidance, they chose to omit expectations of a strong labor market, focusing on inflations. we will welcome our global economics and policy editor. what did you take away from the federal reserve? leading up to this, you and i have been talking about 50 basis points and sunday five basis and even 100. what you make of what happened? kathleen: within the last four wee

in kansas city fed. we still have few if any answers. just this month, the kansas city fed refused to provide any information about its recent decision to revoke the master account for reserve trust. a non bank fed tech. this is significant given the controversy that arose in former governor raskin's nomination process when it was revealed that the kansas city federal first it's the now over reserve trust application for a fed master account following a call from miss raskin. now months after defending the decision, to grant reserve trust master account, the kansas city fed abruptly revoked the account without explanation. the kansas city fed won't give banking republicans information or even a briefing about this curious reversal. and it's important to point out that republicans aren't the only ones who have found it difficult to conduct fed oversight. several of my democratic colleagues including senators warren and menendez have been vocal when they also found their oversight efforts met with resistan

you listen to the fed. best i think it is overly cynical not to i think it is unintelligent not to say this is an agency that is trying its best. the truth is they have done a good job here we are -- go ahead. >> no, no. i was going to say and i'll go to dana because we're running out of time. i'll agree with what jenny had to say because there is no history book for what happened the last pandemic in 1968 and 1918 we didn't have a global economy. we didn't rely on shipping from around the world and covid lockdowns and the export terminal in china. there was no playbook for this do you trust the fed going forward? >> actually i do i think markets also trust the fed. in fact, after yesterday's actions, stock market rallied. that is because people believe the fed is credible. that is one of the three things the fed is trying to address of the make sure to bring down inflation and make sure that inflation expectations remain anchored and markets and businesses see them as credible. i think the fed is winning a

fed fund rate 1.6%. according to the semi annual report the rates should be over 6% under the taylor rule. this disparity indicates not only the length that the fed has to go to normalize policy, but the fed has boxed itself into a menu of purely reactive policy measures. unless the fed works quickly to move way way from their discretion based monetary approach, that has remained consistently well behind the curve, i'm concerned the fed will lose its credibility to effectively manage the national economic situation. regarding congressional oversight of the fed, our concern that the fed and regional banks will continue stonewalling reasonable request for information, the latest example with the fairness, transparency and consistency of fed decisions, granting highly valuable fed master accounts and this is a significant public policy issue. ranking member toomey, myself, senator loomis and others have repeatedly requested information about this from the fed and the kansas city fed, yet we've still have fe

the dollar and the fed became all-encompassing and what the fed has done is created an equity recessionro covid, russia-ukraine, but we are back to that trade. we are not thinking in terms of trade. you are not buying commodity exporters. you are selling commodity importers, but what is happening is the strength of the dollar is a single meta-theme that is deteriorating risk sentiment. we are bringing short-term cash back into the u.s. dollar. it is like a one trick move where stronger fed policy, tighter financial conditions just as a single strong dollar with no other effects. lisa: you mentioned the headwinds facing euro. how important is parity? mark: i think it is a likely discussion. if you look at option pricing, which is an interesting look, it is only a 15% chance. we have a trade on we are looking to revisit the lows under 104. we have already seen the fed at a 4% terminal rate. tom: i have to leave it there because of time. mark mccormick, thank you, really appreciate it. lisa, i have been waiting for somebody to publish. the wall street journal over at the death star talked

how does the fed arrange on this. it's whatever way they decide to shift that determines the path of the market where everyone sees a whole flow of mush. jonathan: corporations and leaders are struggling to recalibrate their company to have the appropriate level of capacity to meet that demand and we have seen that repeatedly over the last few weeks, mistake after mistake coming to the surface. lisa: i think this is important and that's the reason, how many job openings are there and when do companies pull back on their employment because they don't want to be overly employed at a time when there is such fluctuation. jonathan: elon musk has a plan. anyone wishes to do remote work has to do a minimum 40 hours a week according to elon musk. tom: this is a tinderbox. i don't know which way it cuts. senior officers will run it -- will be running out of patience. jonathan: this time last year, get back to the office by labor day. in september, it's back to work stuff what happened? tom: it didn't happen. it -- i don't know

just for the second quarter we were at 2.5 from the fed, atlanta fed. now we're at zero in couple weeks. all this data. one thing we can agree on, right, the fed never had to hike into free-falling economy. that is where we're at now. what is the road map to deal with something like this, nancy? >> i think you hunker down, charles. hopefully made adjustments to portfolio. you want to be in defensive names, what we talked about dividend growers. you want allocation to other asset classes like alternative and we have convertible strategy so our clients are in there. we left the bond market in august of 2020. it has been one of the worst bond bear markets that i have ever seen. charles: yeah. >> i think now, might be time to start sniffing around going back in but with high quality focus, short duration, and ladders. that is what we're doing for some of our clients. charles: to your point, though, this bond market, the devastation there, i talked about it, we talked about it a lot last year when no one else was paying attention, that 60/40 portfolio, 40% b

their headline, fed lift rates by the most since 94. their chart of the rate hikes over the years, actually going back to about 1990, when the rate was some 8%. wednesday, they raised the rate, the fed raise the rate, by 0.7 5%, bringing it to a range of 1.5 to 1.7 5%. central bank raises its benchmark 0.7 5% points -- >> will leave this recorded program here, you can finish watching it if you go online to c-span.org. we'll take you live now to the cannon house office building on capitol hill for today's january six committee hearing. members today, expected to focus on how former president trump may have tried to pressure vice president pence to not certifying the 2020 election we results. congressman pete allah akbar of california will lead the session, he is serving his fourth term, representing a state's 31st district. as we head into the briefing room, into the hearing room. again, congressman aguilar serving his fourth term, representing estates 31st district. he serves on the appropriations and house committees in addition to his

hand and the fed becomes political, because the fed has to give the fiscal spending, has to give ittself they're like co-conspirators >> but i think that president trump was hectoring the fed to not raise rates. >> even worse, yeah. >> and that was follow ed by biden doing exactly the same thing and the fed acquiesced. >> i was reading the letter, the letter from the biden administration or signed by the president points out that refinery capacity dropped in this country and it dropped in 2020 because of the pandemic he's asking them to ramp that back up. i don't know how quickly that happens. this is not like you flip a switch and things come back on i'm just saying those higher costs for gasoline, the bigger difference, the bigger spread that you see, even though oil prices have been at this level before we're seeing much higher gasoline prices. than is because of the capacity issue. i don't know how can you expect these companies to turn things around and say okay, we're going to produce tomorrow. it doesn't happen that way >> no, it doesn't happen that way. and almost every step

they have a tough job in following the fed. fast can they raise rates given what's been happening with peripheral spend? the president of the ecb, christine lagarde, was asked about the fragmentation problem. she got the question -- duct the question -- ducked the question. at least it's an answer any gives people a little while. they have to come up with something. it's important to note 200 basis points, we are nowhere near the highs of the spreads during the crisis in 2011. kriti: some of those concerns are do we had another sovereign debt crisis at a time when i think christine lagarde set her job is not to close the spreads and here we are perhaps doing just that. michael mckee joining us from washington, d.c. sticking with us and covering it live from washington. we will continue our countdown to the fed decision with ajay rajadhyaksha, berkeley's -- the first to call for a 75 basis point hike today. this is bloomberg. ♪ >> if we move 75 basis points tomorrow, that means the fed is moving forward. they are acknowledging i

fed's portfolio. the real story but a nominal growth story but you have a market that might not be able to withstand some of the runoff we will have your you are going to see significantly higher volatility in rate markets. thick about how many 10 basis point moves we have seen this year -- think about how many 10 basis point moves we have seen this year. tom: lisa, may we remind the animal spirit as published is 6% up q1. lisa: this is a strong economy. i am sitting here wracking my brain trying to dovetail the idea of the depression people feel in the sense there will be a downturn with the incredible momentum and that is the incredible argument i see on twitter and elsewhere among economists. how can you beat talking about recession and a fed torpedoing given the fact that this is an incredibly strong economy. do you get the sense this is still likely that there will have to be a measure taken by the fed to create more weakness that people are expecting, or do you think perhaps the pessimism has go

it is a big move from the fed. dani: happy fed day everybody.ore aggressive hikes -- calls for more aggressive hikes are growing. phil ackman says 100 basis points would be better. jeffrey gundlach is calling for the fed to raise to 3% today. markets are expecting the central bank to abandon gradualism and hike by 75 basis points. joining us now is enda curran. 75 basis points, are we expecting powell to signal that it is going to be 75 from here on out? >> we need to make sure 75 happens. that in and of itself is a new development. remember at the last meeting the fed said 50 was the way forward. inflation data on friday changed all of that. if 75 does happen, then we get new forecasts from the fed. those are going to be really important in terms of what kind of a trajectory the fed sees for inflation. what will that say about where interest rates are going? of course we have the press conference with chair powell and that is going to be critical. that is where he will give the signaling, will he say they could go 75 again or say they could go

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

in the fed.e restored if the fet takes aggressive action tomorrow until it is clear that inflation has been named 10 we get to the volcker comparison which a lot of people are making he says hopefully 5 to 6% on a terminal rate gets it done to bring inflation down is that something you agree with >> 5 to 6% is actually really high but i think that logic that's coming out will make some sense. i think there's still a lot of credibility behind the fed if you think about what they tried to do last year, they had to keep it loose to get us out of the pandemic. they kept it loose a little bit too long they got inflation higher than where they wanted to be. they enter this year and it was a year they have had to clamp down and they have had to clamp down throughout this year. that's why i think this market and economy is now kind of in shock to some degree trying to figure out, wait a second, how did we go from a mid-cycle economic expansion to roughly what feels very late cycle and may actually be on

where the fed is going to hike. will say, what was interesting about that wednesday meeting, it was almost as though chair jay powell was trying to have it both ways. yes, we have hiked most in two decades, but not expect that too often. at the end of the day, we know liquidity is raining out. they have to deal with this inflationary situation. in addition to the s&p 500 and moving they average, apple, if they can get above that 100 week moving average, this bounce could have something to it. as long as apple is below that critical support, that is one that typical -- typically holds. that is the big one to watch. the vicks has not been participating in the way it could. the s&p 500 selling off any big way. yesterday, the s&p 500 carving out its lowest low since december 2020. the vix at a 33 handle, the s&p 500 was closer to 4300. some investors are not worried, there is disconnect work through -- to work through. a long, slow rolling bear market. kriti: romaine, i have to ask about the playbook. we had abigail tal

let's get back the fed, wall street raising the possibility that the fed could consider the biggest raten 1994. something he could be potentially a 100 basis point hike. >> even though there might be an initial selloff on 100 basis points, i think there would be a subsequent rally because the fed is finally getting hold of the narrative which it certainly has lost over the last year. >> bank of america global research rates analyst joining us on set. thanks for coming in. a week ago, 35 is 50. where are you guys at for tomorrow? >> our call is for a 50 basis point. we are of course seeing the potential for a 75 basis point hike and really that comes on the backdrop of a very, very strong cpi last friday and longer inflation expectations. guy: what are the chances that tomorrow the fed also signals the chances of a soft landing have completely disappeared? >> i think that the fed is likely not going to signal that, but what they will need to be getting a very strong message on is that their priority has to be getting inflation under control. i think the fact that you have seen these longe

right now, the fed is solely focused on inflation.tinue to see elevated prices coming down, particularly from the supply-side, the fed is going to tighten, now into recession, but potentially into a deep and dark recession. >> as we talk about the r word and this idea that jay powell put out there that this might be something that is unavoidable, how much are we looking at a much deeper recession versus a shallower one, especially if it's happening sooner? >> it's going to depend on whether or not we see price growth slowed with domestic growth. the fed will continue to raise the cost of capital, which will tamp down consumption and investment and result in that slower growth profile. if supply-side prices slow with the demand, the fed is likely to back off sooner than later. this is where we get a more shallow recessionary scenario, a more run-of-the-mill recession, if you will. if growth slows and prices remain elevated, the federal continue to tighten, forcing us further into a deep and prolonged recessionary period, potentially le

given the fed's track record, is it safe to trust the fed? how do we know this project wouldn't face the same decade-long delays. >> i think fed now is going to be really important in terms of offering real-time payments. i agree with you, from the perspective of those small businesses and families that need access to their funds the most quickly, real-time payments can have the largest effect. fed now did not get started for a long time, because of public debate of the nature that we're having here today. we are a public institution, so unlike a private institution, there needs to be support from congress and broader support among a variety of stakeholders. that is why fed now took some time to get that kind of support and get off the ground. but we are on track to deliver it this time next year. the private sector is quite excited. there was a lot of ambivalence in the lead up to that announcement. and i think it is a really important -- today there financial system is moving very rapidly. it is very hard for us to see five years out. if we

steve, what about the projections we got from the fed? they changed, too, on their expectations for the economy and unemployment and inflation does it jive with what they are doing and what wall street is expecting? >> reporter: well, it certainly makes more sense now, right? they have the unemployment rate ticking up they have the gdp rate coming down and they have inflation coming down over time. before it didn't make any sense. they had inflation they had not really taken into account what would happen with inflation. they had unemployment coming down and inflation coming down that doesn't make much sense they may not have the magnitude yet but they're in the right direction and of course, sara, we will write down in history the change for the estimate, a 1% increase. you don't see that in a while. the question is -- i forget who asked that -- are we there yet maybe we are >> yeah, i don't remember either steve, thank you very much steve liesman. >> reporter: sure. >> there is a question now what happens to the economy what does a 75-b

investors will scrutinize the fed chair language and his tone and any indication about the fed future moves. can guyed the promised soft landing without pushing the economy into recession. lots to discuss. edward lawrence is live at the federal reserve for the decision. reporter: the federal reserve has gone 75 basis points first time since 1994 if you may remember nancy kerrigan got hit with a lead pipe. esther george dissented from the position. only wanted 50 points. inflation remains elevated because of supply chain issues they said related to the pandemic high energy prices as well as the broader price pressures we're seeing. in the statement they mention the russian invasion in ukraine is creating tremendous hardship and continuing that upward pressure on inflation. the federal reserve also blames the china lockdowns for creating supply chain and continuing the supply chain issues. the fed balance sheet will continue as scheduled with the runoff of the balance sheet. the federal reserve revised inflation forecast for this year. went up to 5.2%, almost a full percentage point. th

now expecting a 75 basis point hike at next week's fed meeting.ning us is the economist behind that call, jonathan miller i guess it surprised everyone and will surprise the fed to get such a hot number, but as roger ferguson told us earlier, market expectations, they don't necessarily want a shock that's not where the market is and not what they have been laying the groundwork for. >> right i think this is one of those circumstances that actually may require the fed to surprise the markets. what we saw in the data today was just a very broad-based increase in cpi. wasn't pmuch in the way of silve linings. there's not much sign that we hit a peak in terms of inflation. perhaps more concerning today, the michigan survey data showing an increase in longer term inflation expectations which has to have the fed worry about their own credibility. so it does seem to us that they're going to prioritize having to get in front of this and to try and reinforce their credibility with an aggressive move up here. >> so you've laid out the case of why they shoul

the fed dithered last year.ow it is all excited that it needs to hike rates aggressively the question is not if they will raise rates enough but, will they have the resolve to really lower inflation? that depends critically the economy and particularly labor markets. if, as the fed hikes rates, labor markets remain ok, the auto limit rate increases a touch but not much, that the fed will continue to hike. but i would not be surprised if not this september but later in the year, next year when the unemployment rate starts moving up, the fed comes out with a statement that says we have to be balanced on our dual mandate, backs off of things. we are in a difficult situation. tom: chair yellen came out yesterday and said she was wrong on inflation. what that the people get right to pushed against transitory? let them take a victory lap now. dudley, leavy, summers, the rest, what did they get right? mickey: all you needed to do was look at broad measures of aggregate demand, like final sales to domestic purchasers, n

possibly forcing the fed's hand. new calls for a 75-point basis hike >>> as stocks fall, so does crypto details ahead. >>> and oracle out performing with that stock sharply higher we are telling you what that is. >>> and elon musk getting ready to address his soon to be staffers at twitter. it's tuesday, june 14th, 2022. you are watching "worldwide exchange" here on cnbc >>> good morning welcome to the show. i'm dominic chu in for brian sullivan on this tuesday morning. let's kick off the morning with the stocks set to rebound after a rough start to the week. you can se implying 180 point gain at opening bell 27 point gain for s&p and nasdaq up 113 points. that's modest. the bulls might take it as a victory with the sharp selling we have seen all of this after the losses yesterday with the dow falling nearly 900 points or 2.8%. the lowest close since february of 2021. the s&p falling nearly 3.9%. it is now more than 20% from the record highs what some traders call bear market territory that pull back of 20%. closing

look for our special tomorrow on the fed. deutsche bank will join us for ever fed special tomorrow and deutsche bank out with a recession call. is your team under the desk? are people hiding under the desk this morning? >> i have to give my team credit because when we started this year, we said we would see a lot of volatility and cash might be king. it was the first time in my career that neither the bond representatives or stop representatives were excited about their areas. i think we are going through what we thought we would do in our conversations at the office. it's going a lot quicker than what we saw. lisa: is this the cathartic puke? you don't want to buy when people are scared but here we are and that's typically the best time to buy? >> we see what's happening with crypto which is having their peak errant tease but there are too many ideas. we gained about 20% on the s&p 500. it was pretty poor volume. i don't see why we shouldn't do more damage than that with all the money that was pushed into this and so many pe

the fed's proposed building block approach. the eu u.k., through their covered agreements with the u.s., recognize these approaches to group capital. nevertheless, insurance europe, the federation of european insurers takes the view there cannot be two versions of the national capital standard. will you continue to advocate and support the aggregation method as an alternative to international capital standard? chair powell: i am rusty on that. i know we are strongly committed to capital standards that work for u.s. insurance companies. >> what i am getting at is, we had a different way of regulating insurance in the u.s. it works for us, we do not need to let these international bodies change our way of doing things. we need you to stand up for the american way of doing things and american businesses. can you commit to doing that? chair powell: yes. >> i yield back. >> thank you. the gentleman from massachusetts is recognized for five minutes. >> thank you. welcome. i want to ask you about inflation expectations, which as you k

fed. people are speculating that there equity could go to zero. how much has the scene changed overnight, how anymore carnivals are there? tom: we are going to head to new orleans for carnival. jon, this reminds me of what we need to consider from a central-bank standpoint, the bramoput. it is more nuanced. you fold in a little spread market jargon and debt, the bramoput is important. we appreciate the males, the twitter feed. jon, we are taking in the strategic end of quarter lunch. team surveillance at mcdonald's on 3rd avenue. alpha new jersey emails in, he is looking for an all clichÉ surveillance to move into q3. [laughter] jonathan: dictionary corner with tom keene. lisa: i am not going on a cruise. probably going to end up in the detroit airport. jonathan: what is wrong with the detroit? lisa: nothing is wrong with detroit. i think it is fabulous. really. tom: she is doing a home alone invitation. lisa: we are out of time. jonathan: down 4% on the s 70 -- s&p. this is bloomberg. rit

let me start with you on the fed.here do you see rates going, more importantly what the market reaction might be? >> so as we just heard, the fed is behind the curve. it would not surprise me at this point after friday's cpi number that we do go 75 basis points but i think that they also, if they don't go 75 they need to bring that really back on the table. maybe even talk about in between meetings rate hikes. i think they probably should have raised rates on last friday with that number. charles: right. >> rates are not going to take care of it all. there needs to be policy out of the white house. charles: real quick then, what's the reaction, say 75, they even hint, don't be surprised if we do intrameeting hikes as well? >> look, the markets already taken the hit since friday. stocks are down substantially. so i think again, the surprise would be more if it was just 50 tomorrow. charles: okay. >> but they need to get more serious about inflation. it is hurting companies. their margins will be under pressure. the com

the new york fed release projection for the fed balance sheet of an overall 2021 open market activity. they announce to the public that the fed portfolio could run a projected loss of about 300 billion dollars through 2024, as interest rates continue to rise. since you have an enormous, biggest in the world i guess, fixed income portfolio. the fed most recent financial statement over the first quarter says an unreal of capital awesome foreigner 50 billion dollars. my first question is, does the fed need a positive capital cushion in order to carry out its mission as our central bank? >> no, we do not. >> can you explain to the people why not. >> sure. so, what we do is, our liability, currency for example is a liability to us. we don't pay any interest on. it but the treasury, we have six financial earnings. we give that to the treasury department, by law. we have given one trillion dollars worth in those earnings to the treasury department over the years. we did not retain as capital, we do not need it. it is literally not required. for us to conduct operations and monetary policy. w

what is your take from the fed. >> i think the fed is acting on the fly a bit in the sense that they -- the incoming data, signified a 50 basis point hike, and suddenly we have the cpi report, now we have 75 basis points. potentially 75 basis points for the next meeting. it just means that the fed is looking at every piece of data that is coming in. inflation is crucial. but we think, chair powell -- we think it will be 75. we think there will be two more 50 basis point hikes and monitoring doing down -- moderating down, we may reach a point of 3.5%. market reaction was not a released rally but it has not seem to last a long, probably because a lot was price in. powell did not commit to more 75 basis point moves. the reality is the fed has to put its foot on the pedal and go more aggressively. they have a rates much further. it's not going to be much of a market for the year. rishaad: at the start of tightening, that is going to have a mark -- an effect on the bond market with more supply coming on, which is bound to lower prices. how does that play out for the dollar too? >> i think

that's because the fed has found itself after friday's data in a real pickle in my opinion. the bedrock of their whole inflation targeting scheme, their whole policy framework is steady expectations. what we saw in the consumer sentiment survey last friday is those are starting to become unhinged as much as 50 basis points is baked in the cake from prior guidance they have given us, it doesn't seem like it's a good move to me to just go with what's safe and have to defend a relatively soft move in the press conference afterwards. >> i just think it's unlikely because you have a fed that has worked so diligently on its communication strategy and worked so hard to telegraph moves to the markets and be transparent. i think it would be a real shock -- maybe they need to do it to restore inflation credibility, but what would that do to its communication credibility when last meeting the fed chair said 75 basis points is not under consideration right now. >> he said it's not under consideration for that meeting he also said the fed needs to look at the incoming data and react to i