i want to be clear about the words of bill dudley.e has been calling for this for the last six months plus. i remember talking to him going into the summer, and he raised this is a key risk. when the fed has to move, they will have to move sooner and quicker and take it to a place that people aren't thinking about, and they are still not thinking about it. that is an outlier call that the fed funds rate gets anywhere near 3%, 4%. most people somewhere between 2% and 2.5%. tom: vix 19 level, just breaches 21, showing some of that morning tension. jonathan: the nasdaq 100 down more than 1%, -1.25%. in the bond market, yields did breach on tens 1.80% briefly. came back down to 1.7674%. but we have taken out last year's highs. we have done it really quickly. started the year at 1.50%. had a 25 basis point move last week alone. tom: it will be interesting to see. we start strong this hour. francisco blanch scheduled to be with us. rj gallo joins us right now with federated hermes. you are in the fixed income space. are you steeled for a be

can i add that i heard bill dudley will be on later? i think the question you have to ask is he brought financial conditions indices to the fed, which is really a private market concept. thus in the market love them, but is that something that belongs at the fed? is that how they missed inflation? they were too concerned about people like me throwing our toys out of the baby carriage? tom, i know that you were around when volker raised rates from 5% to 20%. i was there also. can you imagine if you looked at financial conditions indicators? what do you think that he would have said and done? tom: this goes back to the landmark work of michael rosenberg, this wonderful indices. i agree, bob. it has been a new certitude with these indices that doesn't work in crisis or pivot points. >> and i love bill dudley, i have known him for years. jonathan: i am glad that you slipped that one in. if you want a final comment on your beloved liverpool? >> they are coming on strong and i would be proud for them to have the david ortiz number applied to

that is essentially what i heard from bill dudley. idea is that the fed does not want to stop a tantrum and the market has not had a tantrum yet. two of the market has not had a tantrum, do they need to spur it by getting a little more concerned in order to actually tight monetary conditions? to me, this is really the wildcard. jonathan: do want to engineer that to be the objective. that was the message we just got from the former new york fed president. tom: i think they are making it up as a co-author also historic fiscal expansion, original expansion off of a natural disaster. i'm going to cut them some slack, but with that said, bill dudley brings up some important points. i just took the taylor rule as seen on the bloomberg and plugged in adam posen and olivier blanchard's inflation at the peterson institute. i will be honest, the taylor rule a proximate and barely moves. it is stunning, how far extended it is. lisa: i am still trying to get my head around what a 3% to 4% fed rate would mean. we heard from bill dudley that he thi

bill dudley making the case beyond goldman sachs, that may be the fed has to go even further than thatjust four but five. he took issue with how the fed had characterized what was happening in the job market. did they misjudge what was happening there that got us to this point where they have to act faster and the market is jittery? matt: interesting when you grow that in. a weaker than expected jobs report last week, and yet, we added 6.4 million jobs in 2021. i think that may be the most on record. let's get some insight on the fed with kathy bostjancic, chief u.s. financial economist at oxford economics. let me first get your take on, i guess it is a parlor game of sorts, but how many rate hikes do you think the fed will have to do, will be able to pull up this year? kathy: it's a great question, something we are all grappling with. we officially have lift off in may, three rate hikes for this year. after seeing the really hawkish minutes last week from the federal reserve from this prior policy meeting, it started to make us think that the balance sheet runoff, the shrinkage of the

but bill dudley says they are not hawkish enough. what is pricing in the bond markets? that is the question. we turn to our guest. rates is your game, credit is your interest. we are teetering on the edge and this is what he has to say, you're on the edge and he goes on to quote winston churchill, teetering on the edge, this is not the end, it is not even the beginning of the end, but perhaps the end of the beginning. how would you describe seven days of trading in the evolution of the narrative? is it the end of a beginning of a much bigger bond vigilante move? good morning. >> good morning. what i want to point out is the pace of change of thinking. if you remember, it was only the end of last year, almost yesterday, the new year, the idea of transitory was strong, we are going from needing to look at this as an inflation threat. and sort of pace really i think is what is so stunning in my mind. we are going from the tapering will end early this year and maybe we have a rate hike mid-to-late this year, and now we are already going to the rate hike being as early as ma

a federal reserve that wants to take rates higher, and in bill dudley's words, maybe perhaps much highertom: the fed will be fascinating today. loretta mester will be riveting as well. i want to dovetail all of these pieces in. james dimon moved to -- moved the market yesterday. how does mr. dimon and his team react to what we see from citadel? that is where you get to the growth message we heard from mr. dimon yesterday. jonathan: to jamie dimon's point yesterday on cnbc, the interview you are referring to come of major point is the economy is not the market. the economy, consumer balance sheets, fantastic. we need to distinguish between the two in the hours and weeks and months ahead. tom: it is going to be fascinating to see how he threads the needle around the politics of left and right. lisa: how do we determine how much weakness we can see in the market to allow the economy to continue to grind in a controllable way without some sort of wage price spiral, without some sort of disruptive bout of in-place and that could crimp growth going forward? tom: we've got to get to the data ch

tom: bill dudley saying this is a serious issue. they've got to get out front.ust getting going is not enough. he's looking at 45, dare i say seven increases down the road -- four or five, dare i say seven increases down at the road. jonathan: he is saying they need to push four. it is just not part of the conversation right now. tom: i don't know what david bianco will say. there's a lot of different opinions here. jonathan: your equity market up 16 on the s&p, advancing 0.3%. yields unchanged at 1.755 1%. the made event yesterday was the turnaround and the nasdaq, down around 3%, then back into positive territory. up again this morning 0.5%. lisa: we were talking about that earlier this week, when do the pockets of pain turn into or broad-based risk aversion? at about nine: 12:00 a.m., jonathan ferro will be -- at about nine: 12:00 a.m., jonathan ferro will be interviewing -- at about 9:12 a.m., jonathan ferro will be interviewing loretta mester. today, fed chair jay powell is center stage for the senate confirmation hearings. how much does he reiterated infla

there are some on the other side of that trade like larry summers , even bill dudley saying they willave to go 3%, 4%, 5% before they get to neutral. we don't know what the demand side of this is going to turn out to be, and that is the problem for the fed. so i think they are going to be very cautious. bill dudley make a good point in a bloomberg opinion article this morning that may push back at what you were saying about when they start the balance sheet runoff. he thinks if they want to get the fed funds rate up to at least above 1%, if things go pear-shaped, they can start cutting again and not have to immediately start qe again. so it could get a little bit faster than the two years before they start tapering, but letting the runoff go. then when they get above 2%, they start to look around, they start to see what is happening with the economy and what is happening with inflation. alix: thanks a lot. really appreciate it. thank you very much. really good round table conversation. we will continue the conversation with our next guest, saying u.s. monetary policy would need to be

i think i use the name bill dudley earlier for the st.t former federal reserve governor today was quoted as saying that the fed is guilty of what he calls alice in wonderland thinking, arguing it needs to be much or hawkish in its outlook. >> i will be honest, we get criticism on both sides. some say we are being alice in wonderland because were not reacting to inflation, others say we are taking the punch bowl away was that economy is strong enough to bring workers who have not worked since the pandemic into the labor market. what is important as you are always in this balancing act. we have price stability and full employment, and i think policy is in a good place. we are tapering asset purchases and are in a position to raise interest rates, withdrawal the support from the economy as it gets its feet under it, and in position to respond if we need to, unless if we need to, and that is where we should be, so i feel very good about where we are, and not like we are behind or ahead of the curve. judy: ordinary americans listening to this

bill dudley, former fed official, says, i have news for those who think the fed has only turned morekish on inflation. it has only just begun we know from watching markets right at the time when people are freaking out is when the countertrend stards. it would seem today would be the epitome of that. how much more can you get after four hikes from goldman and dudley saying they're going to have to raise rate -- i don't know what the neutral rate is, 2%, 2.5% in 18 months. where do we go from here >> i will not make an interest rate prediction, but i will point out the following. the economy as we suspicious it on a day-to-day basis, as we understand it on an abstract overall basis the economy is in turmoil. if you look at the absences across the logistic space, the stoppages across transportation, those are conditions that i do think make it harder at least in the immediate course to raise rates. the economy is kind of a mess right now, just simply getting people to work healthy in a way that's necessary for productivity so at least as it relates in the near term, i think that's one

i think i used the name bill dudley earlier for the name of the st.rmer federal reserve governor today was quoted as saying that the fed is guilty of what he called alice in wonderland thinking, arguing it needs to be much more hawksh in its outlook. >> well, i'll be honest with you, we get criticisms on both sides. some people say we're being alice in wonderland because we're not reacting to inflation. others will say we're taking the punch bole away right when the economy is strong enough to bring 4 million workers who have not worked since the pandemic back into the labor market. it's never popular to be a central banker but what's important is you're always in the balancing act, we have price stability anfull employment, and i think policy is in a good place -- we are tapering asset purchases so we can complete it by march, we are in a positi to raise interest rates, to withdraw the support from the economy as it gets its own feet under it, and in a position to respond more and less if we need to, and that's exactly where we should be. so i feel v

earlier we spoke with bill dudley about how the fed will achieve that goal. take a listen. >> other they are successful from keeping inflation becoming a long-term problem and they can allow the labor participation rate to come up and keep these workers employed. so i think getting inflation under control will best achieve their objectives in terms of having more inclusive employment. caroline: let's dig into that and get the take from a chief economist. diane, i am interested in your perspective. you are so fine tuned to the inequality in the labor markets. you have been so supportive of that focus coming from the federal reserve that this needs to be a more inclusive recovery. but it feels as though the federal reserve has almost tamp down on that focus despite inflation. is it right we have a more inclusive recovery if we focus on inflation like dill dudley seems to be insinuating? diane: i think he is right. the bottom line is the inflation hits the lowest end of the income strata and their already having -- they are already having a hard time inflation a

the former president of the new york fed, bill dudley, in his latest opinion column says the fed hase rate hikes than they think. they can't make inflation magically disappear. >> i think they should go faster than what's priced into the market. it is going to depend on how the economy evolves, but my best guess is they need to do 4, 5 rate hikes. . this year it would not surprise me if we get into an every meeting cycle. kathleen: the fed is already saying the consensus from december, they are looking for three rate hikes this year. the other question on the table is will they be doing balance sheet reduction to also tighten policy? this is a big question. republicans and democrats are on board. you can see this dot second in from the left, the vast majority seeing three rate hikes, a couple looking for four, which is what bill dudley is saying. what may be contentious is asking about climate change. big banks account risk when they make loans for companies in that field or financing energy, that sort of thing, and also bank regulation, another big question. these things could be co

or will bill dudley say, you could see five or possibly six rate hikes this year.that cpi data on wednesday, it will enforce that view. the markets will have to play catch-up. we saw the nasdaq fall almost 3% before recovering, ending the day in the green. across the benchmark, gains of 0.7%. dex is up 125 points. and the cac is up 52 points. let us have a look at how things are playing out sector by sector. the handoff from the united states. technology gaining 2%. the real impacts across the markets and what it means to be in a higher rate environment. the u.s. 10 year and the five year, there is some differentiation today and the flattening of the yield curve. at the bottom are two sectors in the red. we focus on what is happening across these markets. we will get another update for you. that is the broader picture. francine: a warning from a high risk of market valuation. this is ahmed and uncertain time for the european this is -- this is amid a certain -- and uncertain time for the european economy. joining us now is sylvie goulard . thank you so much for joi

we are so lucky to have bill dudley joining us to discuss the recalibration in markets. sort of waking up to the reality of the fed, or is the dead going to get concerned about what they are seeing in markets? hitting the highest level earlier this morning, getting back to january of 2020, a complete seismic shift in expectations over one week. i keep saying this. at what point are stockmarkets going to wake up to this, or have they already done so question interesting to see how this goes. it is like a tea leaf into consumer sentiment from the university of michigan. the hvac tatian's for it to deteriorate further. people take a look at this and prices are just so much higher that people are starting to refrain a little bit on the edges. today, and host of pharmaceutical ceos joining us here as well as merck ceo robert davis. jonathan: really timely conversation coming up at pfizer a little bit later. pfizer paying up to $1.45 million. the mrna effort will catch up with pfizer a little bit later. we kick things off with the head of u.s. equity strategy. you came into 22

lisa: we have heard bill dudley said the balance sheet roloff will be less dramatic than what people expect. at a certain point it starts to make a huge marginal difference. as you get some normalization of the labor market, however that looks, some people are trying to map that out, there is a question mark. jonathan: speaking of uncertainty, it is all about when they start. march, let's get ready. we heard from a dovish member, ready to go. it is how high they take it from there. that is where the debate is. lisa: when you look at the data, that is just as uncertain as the trajectory of the yield. when do they make that decision? jonathan: tom keene, lisa abramowicz, jonathan ferro. yields up almost one basis point at 1.75. from new york city, this is bloomberg. ritika: with first word news, i am ritika gupta. curbing inflation said to be the central bank's most important task. working people around the world are concerned about how far their paychecks will go. president biden is deploying the military to help those in new york, new jersey and other states facing coronavirus surges

lisa: then you have bill dudley saying 3% to 4% fed funds rate includes a base rate of 3%.is not very far away from the consensus right now. tom: it is important how you calibrate fed action with the terminal rate of inflation higher than the adam posen benchmark of 3% or 4%. this is fascinating. i think i will come back tomorrow. lisa: we will give you an extra glass of tang. tom: on radio and television, futures up 24 points. stay with us. this is bloomberg. ♪ jonathan: good morning, good morning. your equity market looks like this on the s&p, .5%. "the countdown to the open" starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: from new york we begin with the big issue. the nasdaq enters correction. >> we are seeing a big selloff. >> a long way to go. >> a selloff in nasdaq is underway. >> some parts of the market will not do so well. >> significant pullbacks in a short amount of time. >> the current correction can go longer. >> rotation has happened. >> there are dips worth buying.

we were talking to bill dudley on bloomberg television earlier, formerly of the new york fed.e says for five hikes this year, than much more after that. veteran investor mark mobius telling bloomberg television earlier that the recent spike in treasury yields has room to run. he said market participants are currently under the inflation risks. >> i think they could go much higher. people are not going to be buying treasuries if they see they are only getting 2% or 3% when inflation is 7%, 8%, 9%, 10%. so at the end of the day, those numbers have to go up. guy: that goes to our question of the day. does the fed hike water times this year? could it be more? what are the petitions for your polio -- for your portfolio? joining us for those questions is freddie lait, latitude investment ceo. do using the fed is going to have to go more than people are anticipating echo what does that mean for your portfolio? freddie: good afternoon. i think the price action so far has been very rational. it is clear that quantitative easing is slowing. i think it is highly likely we see four in the

coming up, new york fed president and bloomberg opinion columnist bill dudley joining bloomberg tv 3: new york this is bloomberg. ♪ let's check in on the bloomberg first word news. i'm ritika gupta. it was the weakest u.s. jobs report of the year. employers added just under less than half of what the median estimate was in a bloomberg survey, but the employment rate fell more than expected to 3.9%, and average hourly earnings surprised economists, rising 4.7% for the year. that suggests the shortage of workers may be holding back the hiring. in kazakhstan, the president has ordered security forces to shoot protesters south warning. he's declaring victory and putting down demonstrations with the help of russian troops. dozens have already been killed and hundreds wounded. it is the most serious challenge to kazakhstan's leadership since independence in 1991. city group is telling office workers that those who do not comply will face termination. a message to staff said their last day of employment would be the end of the month. more than 90% of the team have complied with the taxing ru

what did bill dudley call it early this week, the long dot? i think he called it fantasyland at the federal reserve. lisa: however, on the others, you have stephen major going back to that note this morning, where you talked about perhaps going along on the short end and seeing some value there, seeing a further selloff at the long end. that is a tactical trade. he still has the same view that we just heard from sebastien page, that long-term rates cannot go up that high simply because of the amount of debt and how difficult it is to get to that higher terminal rate on a long-term basis. jonathan: this is the self-limiting selloff that a lot of people have been discussing in the bond market for a while. tom: other things come in. the biggest problem here is the static analysis of many people that are in the game, but also the static analysis of the financial media. we at "surveillance" refused to do that. we have alisa levine coming up. these people think dynamically. there's moving parts here that don't get you to the certitude of a given vie

bill dudley as well earlier on talking about the fact that we have a long way to go in terms of whathe fed has got to do, and for a monday morning, that is spooking things. alix: we were below the 100 day on friday. we have gone below that for the nasdaq 100, but we are not seeing that this time. i wonder how much technical selling pressure we are seeing as we had to the next moving average. guy: absolutely. the bmo ceo talking about the fact -- alix: are you a little ok -- are you ok? you are a little for clamped. guy: not covid. let's be clear about that. there's lots to talk about, so i need to maintain the voice. alix: let's have guy take a swallow and we will go to one of the top stories, and that is goldman's call, saying they see four hikes this year. they rode in a nude over the weekend that we are pulling forward our runoff forecasts -- they wrote in a note over the weekend that we are pulling forward our runoff forecasts. we no longer think the start of runoff will substitute for quarterly rate hikes. we continue to see hikes in march, june, and september, and we have now a

jon: bill dudley there, the former fed president and bloomberg opinion, one -- bloomberg opinion columnistyesterday's conversation. with tom keene and lisa abramowicz, i am jonathan ferro. your equity market advancing .3%. the nasdaq up .5%. bond market, 1.7 550 one, chairman pals reconfirmation hearings coming up later this morning. here's one for you, from punch bowl news, house minority leader kevin mccarthy is considering instituting new limits for an outright ban on lawmakers holding and trading inequities if the republic takes the majority in november. that was for moments ago. jon: the key word here, -- tom: the key word here, and we won't spend too much time on this, the keyword is trade. his trade moving mutual funds around, let's say a 401(k) broader portfolio, or is trading going outside the hall? jon ferro, people are outraged that they are daytrading. do you want to get rid of that? they can do it in a heartbeat. have they? no. you buy and hold. to me, this is all incredibly solvable yet it never is. joe mathieu knows that and he came to me for stock tips when he first joined

rishaad: bill dudley, a columnist and senior advisor to bloomberg economics, saying the fed needs to be more hawkish and hike four or even five times this year to stem perhaps rampant price rises. >> i think they should go faster than what is priced into the market. it will depend on how the economy evolves but my best guess is, they need to do it at least four or five rate hikes this year. it wouldn't strike me, if we get into an every meeting cycle at some point. haslinda: let's take a look at what the markets are doing ahead of the u.s. inflation numbers with our cross asset asia editor. good to have you with us. when you look at the markets, you think it is repricing. >> i think that is right. remember, we had such an amazing run from the bottom in march last year, and of course towards the end of last year, as 2022 started, we have concerns about rising interest rates. interest rates are going to rise , inflation remains sticky and you are seeing these adjustments on the part of investors. you have seen the rotation out of high-growth tech stocks into value stocks that were lagg

bill dudley speaking in a chapter on the bloomberg terminal with that bloomberg opinion columnist sayingas already signaled they will start hiking rates in march. he says he does not think it will happen and does not make sense to him. another issue is omicron, covid-19 hitting the economy, how much? we have markets are volatile. lots of questions for jerome powell these fronts. the policy statement will not talk about a 50 basis point rate hike. it will not spell out the march lift off, but the press conference tomorrow, what he says when he hears all these questions is what the markets will be listening for. haslinda: that's right. the prospects for economic recovery, the imf cutting its growth forecast for 2022. >> this is a story that will not surprise you. china is dealing with the property market meltdown. the u.s. has less fiscal stimulus. i love this chart here. at the far right, 4.4 is the forecast for global ruth. it was 4.9%. the one thing i want to point out, this global slowdown is still strong. look to the middle of the chart. 12.4% will be well above something we saw in th

bill dudley says you need to do four or five this year. how far do you think you need to go?ll you that in december, i had three penciled in for this year and a few more over the trajectory. i also want to point out that we are going to have to see how the economy does overtime before we can say for sure how many rate increases are needed. there still a lot of uncertainty around the outlook. there is uncertainty around how the pandemic plays out. as we have seen each new variant, the economy has navigated it in terms of economic outlook. right now, we have to say that we probably need to recalibrate our policy stance because inflation is well above where we need it to be. labor markets are tight from the standpoint of a policy relevant framework. do i think we will see labor force participation move up after we get beyond the pandemic? of course. i do not think we can ignore the short or medium run type this in the labor market. we are in a good place in terms of policy and we will have to see how that affects the economy going forward. and the other factors affecting growth

kathleen: there was a request to end the rate hike immediately, and bill dudley said we don't need too that, they have signaled the march rate lift off, ending the bond purchases right now would not accomplish much. he is not looking for it. one thing people have to be looking for is, the fed is going to be asked about the surge in the covid-19 omicron variant. i am sure somebody's going to ask, are you worried about the markets, look out markets are reacting, and i think people are going to look for my dovishness in their, but the majority -- dovishness in there, but the majority is, we are going with more rate hikes comments just a question of how many, and the answer i think lies within nation. shery: take a look at u.s. futures. we are seeing downside pressure, down .6% for s&p 500 futures, nasdaq futures also down almost 1%. this, as we saw stocks in the new york session ending lower, little rebound of the afternoon, but not enough to see a dramatic comeback that we saw, for example, on monday. the russell 2000 and the brink of a bear market down 18% from its november high, drawd

i mean, you have -- bill dudley, he doesn't see three or four rate hikes, he sees four or five if not be live. and you were just talking about inflation. so with inflation, goldman sachs is saying it's all about profit margins this year. companies immediate to prove they can stay profitable. stuart: and earnings season believe -- begins this thursday, i believe. we'll find out soon. lauren: yeah. stuart: you've got some movers to look at including ill lumina. why are they up 7%? >> medical devices, testing, genetic sequencing. that's in big demand right now, so that's why these shares are up in a big way. also take a look at another winner, juniper, they're a net working company, communication services. double upgrade all the way to buy at bank of america. bofa says, look, networking is back, and 2022 is the year companies invest in their network capacity as well as 5g. and i want to show you united. shares have been up and down kind of, you know, now they're up about a third of 1%. here's the news. 3,000 of their workers have covid, okay? 4% of their work force is out sick. so we hav