bill dudley says a recession is inevitable given powell's hesitancy to act. for more we are joined by our chief issue correspondent enda curran. what are the broader implications from here? >> the takeaway is that this inversion usually predates recession. it is a warning signal that we are moving from an inflation scared to a growth scare. this is all not just about tightening, but central bank tightening all around the world. several emerging economies are tightening monetary policy to offset inflation. now that is only going to lead to slower growth and economic spillover from the russian invasion of ukraine. central banks are on a tricky path trying to navigate raising interest rates. for those who say the signal is not what it has been in the past, among them pimco, saying just because it is signaling recession does not mean one is likely. dani: now, also bill dudley wrote an opinion piece yesterday that caught quite a splash. harsh warning of a fed policy error. what was his argument? >> he disagrees with fed chair jerome powell take on -- the fed was r

that's the line from bill dudley.: short and brief and as a former public official, it's quite something. i don't recall decades ago where you would see this angst from a former president of the fed. what's important is this is not an academic exercise. dudley has been dead on taking a new stance. jonathan: former fed officials have been very outspoken this time around about what they think the fed should do and very clear about criticizing of what it hasn't done. lisa: the situation looks bleaker and bleaker. the fed has been able to avoid a recession but this time, we are coming from such a low base from the unemployment rate. it will be more difficult because it is a sub supply-side issue, how much will we have to dampen the demand side in order to do anything about inflation? jonathan: fascinating quotation this morning. the equity market is up 4/10 on the s&p 500 stuff apple has 10 straight days of gains and it could become a 11 and if it does, is the longest winning streak since 2003. apparently apple is cutting

jonathan: a hard landing is virtually inevitable says bill dudley. lisa: an increasing number of tinkers are saying you're seeing a different sentiment in the market which is what is the fed's instrument to transmit their policy to slow demand. has that weakness been priced into a market that is continuing to be dependent on the strong consumer? jonathan: we are still talking about talks but this time in turkey between ukraine and russia. with -- what does the market gain from those talks? lisa: people are looking at the changed rhetoric on both sides and are getting optimistic about give and take. how much are we going to see some demilitarized zone as the solution in the eastern region of ukraine? jonathan: let's whip through the broader price actions. looking at yields, just about a low 250. the 10 year yield is up there by two basis points and looking at crude, up 9/10 lisa: how do we get a sense of whether these talks will yield anything? it's simply stock markets going up in the fact that people are realizing that folks would like to see his ce

i am in the bill dudley camp yes, the fed is in the curve they are acknowledging in all different voices there is rising inflation they can't control. slowing growth what are the right earnings on the back of this over the next couple months. the rally has been epic. >> the rally has been extraordinary. i did very little buying in the last whoosh down which seems so long ago, but it was short i think it is possible that we are seeing peak inflation numbers. i think that even though the fed is going to tighten pretty aggressively in almost any scenario, but i think the inflation numbers, if they do get a little bit cooler, i think that gives us a shot of a softer landing. i am not as bearish as dudley. i haven't bought a lot here. the one thing i was thinking of buying more of was banks you would think why would you do that i think it's overly priced in. and bar for earnings for banks this season will be low. >> has the call for recession become consensus you hear more and more of people saying recession is a possibility. you hear more and more people and think that's in the markets alrea

shery: i was bill dudley speaking with david westin.t is time for morning calls good the recent rebound in u.s. stocks is a bear market trapped at the call from bank of america. strategists say that warning signs are flashing for the market, given the weaker u.s. fundamentals. the january selloff is not over, start rallies are common in volatile bear markets and the tightening dead is not likely to -- fed is not likely to rescued stocks. china's equity is overweight from underweight. it has drawn a line in the sand for me meant equities. this is to boost sentiment in the next three months. haidi: coming up next, the bank of china has reported the biggest profit increase in over a decade. he tells coming up, this is bloomberg -- details coming up, this is bloomberg. . ♪ >> russia says it will cut back military operations the ukrainian city of kyiv. this comes after negotiations in turkey. it could pave the way for a meeting between vladimir putin and the printing president. moscow's announcement is being met with hesitation. patrick hark

jonathan: zach, the former new york fed president bill dudley caught up with us and went through theorecast and said they are in fantasyland. do you think they are in fantasyland? i know that you do with the dot plots. zach: a lot has happened since their last summary of economic projections, so we look for a pretty materially increase in their inflation expectations for q4 this year, bring down the gdp forecast maybe half a percentage point. it is a difficult situation for them to be in. inflation is here to stay for at least the foreseeable future, so they will need to adjust policy soon. jonathan: the 22 forecast for core pce is 2.2 percent. will they be lucky if it has a three handle? zach: we are at 4.4% at wells, maybe they will not take it that high, but there are pressures everywhere, even just looking at the cpi figures which are not exactly the same as pce, but every other major subcategory contributes to growth in february and january. you have the stickier inflation components like shelter rising, something that we think will be here to stay. we see inflation forecast com

tom: bill dudley they are saying a recession is all but inevitable as the fed raises interest rates.omething he has been critical the fed's policy response over the last six to 12 months. ringing back marcus morris-eyton from allianz global investors. how do you position then. how to position for lower growth and higher inflation? marcus: as you said, inflation continues to surprise to the upside. i expect it probably will do in the coming months. companies that are able to pass on those higher raw material prices. other factors you need to look for our companies that have flexible business models so they themselves are able to manage sanctions and access different markets. and quality management becomes important. we are looking for good companies with good pricing power and flexible business models. francine: what does a flexible business model actually look like? is it work from home or work from the office, or is it something deeper? marcus: the definition changed during covid. depending on the nature of the business, it could be working from home as you say. embracing digital ca

remember that line from bill dudley? he said the fed projections are in fantasyland.jp morgan with a good team of people this weekend when out to 5.4%. jonathan: and we look at the dot for next year. lisa: do we think -- people care but they care for different reasons than using that as gospel. they are using that as a guide for what they seem to be targeting is manageable. you can come out and say it's not going according to your plan. maybe you've got to adjust your plan. jonathan: did anyone take the fed plan as gospel? it's about reaction functions and all of the above and we are about to see a federal reserve that needs to lift that dot plot. jonathan: lisa: did you see janet yellen say that she said inflation will be uncomfortably high for 12 months at least? what happened to transitory? the politicians are rebranding the whole story. isn't that the story out of washington, d.c.? tom: that's one story and a lot of people i would consider pros aggressively push against that. there is some of that at the margin. it's hugely fragile right now. i'm looking for the d

juliette: that was the former new york fed president bill dudley speaking to bloomberg.d markets agree that a recession is coming, with key portions of the curb inverted. but stocks are still holding firm. bank of america still says the rebound is the hallmark of a bear market rally might give way to deeper losses. let's get more now with our next guest, she is taking the opposite view. she is not concerned. janet tsang from jp morgan. great to have you with us. why not concerned? janet: certainly there are a lot of uncertainties in the market. but at the end of the day everything comes of the price. if you look at the fundamentals of the market, we are talking about a very low pe level. just 11 times. our own proprietary framework is also at a very high level at like 17 or 18%. so that tells us that the risk reward from here is actually very attractive. juliette: a lot of people are saying potentially look to the bond market for what happens next. we are looking very much at the rotation as well which leads us to the question of the day we are asking, and that is how fa

i have heard larry summers talk about this, and bill dudley has talked about this, that the level of neutral fed funds rate that they will need to get to is much higher than right now the market is priced out. tom: are you suggesting to sell apple, amazon, sell this, sell that? jonathan g.: i am neutral on the tech sector is. i think that the key is 20% of the s&p is a really great inflation hedge. that includes the cyclical sectors like industrials. the rest of the market does not do particularly poorly in this inflation environment, they just do not benefit as much. tech is one of those areas that is kind of neutral in this environment. tech does well -- if you think that we will slow down and the recessionary risk is higher, those people are more bearish in they probably want to roll into tech because it does better when the economy decelerates. tom: i have been crushed and destroyed because i have been triple leveraged in cash when you have been going up with a bull market call against all of us. congratulations on a really wonderful 24 months. we need to bring you forward in rep

jonathan: bill dudley came on this program a few months ago and said the fed forecasts were in fantasylandis is the forecast for growth in 2022, 4%. for core pce, 2.7%. is that fantasyland? michael: the fed forecasts always assume policy support works. the growth forecasts have been too optimistic. when they were at 4%, we were at 2.9%, and now we are at 2.6%. you were on was my good friend seth carpenter. they have been revising their growth down four basis points. so that for percent number has to come down a lot, for a variety of reasons. they got to bring that inflation number higher just because of where spot inflation is. i still think the outlook will be a goldilocks soft landing forecast. the fed kind of has to forecast that. i think some reckoning here in the data will mean big changes in their outlook. lisa: this assumes that their policy recalibration's will work. do you think that is in question? michael: yes, i do. it is not necessarily a direct criticism of the fed. i would just say that the fed, as you will know, focuses on things like core, and it is a recognition that ther

tom: is it close to bill dudley, mohamed el-erian's world? jonathan: maybe.things it is a binary choice between risking recession or prolonging inflation. he thinks the least bad choice to block inflation is to not go too hard. tom: the least bad choice is l arian -- is el-erian game theory. we will go to ian shepherdson, who is fortunate enough to be in the studio. you have to frame glide paths or reaction functions. do you see glide paths that get us to that stunning kind of move that mr. hollen horst speaks of? ian: not in the timeframe they are looking at. tom: the x axis is the point of discussion here. ian: indeed. i am very much of the view that the terminal rate will be way higher than markets think, but i am also of the view that it will take longer to get there than citi are now suggesting. i don't have a problem with the idea that we will end up well into the threes, and we may even hit 4% by the end of the cycle, but i don't think we will get there at that sort of speed. tom: this is about the elasticity or responsiveness of the economy? if you ge

sort of something that bill dudley always liked to invoke. too late the question is our fate sealed a downturn lurking sometime middle of next year? joining me, chief economist with jpmorgan you pointed thissous yesterday.s >> summed it up. unemployment very low and evidence building of a wage price spiral, keeping upward pressure on inflation for some time the fed with their policy should want to relieve some of that pressure slow growth and demand, and for better or worse actually get the unemployment rate up just a little bit you mentioned that tends to be hard when the fed exerts, puts the brakes on the economy, i should say. unemployment rate tends to go up a lot. so that i think is really the concern. not necessarily a concern for this year, i would say fed is just getting started. obviously -- seems they'll pick up the pace. i think given the lags in monetary policy and how that acts on the real economy next year prospects are looking a little more dicey, if the fed really needs to slam on the brakes to slow the price wage spiral that

home prices and rent inflation now have former new york fed president bill dudley calling out fed chairerome powell and a bloomberg op-ed skyrocketing prices in all realms, not just home prices, shows feds framework is behind eight ball in controlling inflation and has the u.s. economy barreling toward a recession. so, let's just say he's right. with the red hot housing market showing no signs of cooling off, will the real estate market still be attractive if there were to be a recession? joining me now, the ceo of real estate investment company which has a portfolio of more than 20,000 apartment units and 2 million square feet of office space. you know what dudley is talking and we can see it in the case- schiller number home prices are rising at a faster pace than inflation which is at four decade highs, that number though, is from january so it's lagging. today, give us today. do you see any sign of prices cooling even just a bit? >> you know, liz, first of all thank you and pleasure being on the show. look, the home prices rising, it's not something that we did not expect, right? we

that is why people are concerned, especially after bill dudley wrote another opinion piece for bill burck opinion saying that recession is in evitable. the fed has to move quickly. the consumer demand is strong but the people who are worried about this figure that if that is the case, if the fed is going to have to move that quickly it is creating a strong risk of recession. the yield curve is reflecting it. haidi: we are talking about what the government in japan could do , they are battling to get the yen and cap the 10 year yield. >> they have signed up for at least three days in a row of bond purchases and what we are seeing so far is that it seems like they presented -- prevented a yield from topping 2.25%. we are hearing now that officials like the finance minister saying that they need to check. i think it was a 10:00 hour hong kong time, talking to reporters sitting -- saying that the government has to see if the weaker yen is affecting the economy. the vice minister for international affairs, this is his job now and what he says is the boj and the government are communicating on

tom: bill dudley they are saying a recession is all but inevitable as the fed raises interest rates.omething he has been critical of the fed's policy response over the last six to 12 months. ringing back marcus morris-eyton from allianz global investors. how do you position then. how to position for lower growth and higher inflation? marcus: as you said, inflation continues to surprise to the upside. i expect it probably will do in the coming months. companies that are able to pass on those higher raw material prices. other factors you need to look for our companies that have flexible business models so they themselves are able to manage sanctions and access different markets. and quality management becomes important. we are looking for good companies with good pricing power and flexible business models. francine: what does a flexible business model actually look like? is it work from home or work from the office, or is it something deeper? marcus: the definition changed during covid. depending on the nature of the business, it could be working from home as you say. embracing digital