reporter: hi, chair powell. with the recent bank turmoil, we have seen multiple banks by other banks, and i was curious whether you think further consolidation in the banking sector would increase or decrease financial stability and whether you have any concerns about the biggest bank in the u.s. getting even larger -- biggest banks in the u.s. getting even larger. chair powell: i do not have an agenda to further consolidate banks. consolidation has been a factor in the u.s. banking industry since interstate banking and even before, more than 30 years. when i started, there were 13,000 banks and now there are 4000 and change. i personally have long felt that having small, medium and large sized banks is a great part of our making system. the community banks serve particular customers very well. regional banks serve very important purposes. and the various kinds of large banks do as well. so it is healthy to have a range of different kinds of banks doing different things. i think that's a positive thing. is it a

chair powell: good afternoon. before discussing today's meeting, let me comment briefly on recent development in the banking sector. conditions in that sector have broadly improved since early march and the u.s. banking system is sound and resilient. we will continue to monitor conditions in the sector. we are committed to learning the right lessons from this episode and will work to prevent events like these from happening again. the first step in that process, last week, we released vice chair for supervision barr's review of silicon valley bank. the findings underscore the need to address our rules and supervisory practices to make for a stronger and more resilient banking system and i'm confident we will do so. from the perspective of monetary policy, our focus remains on our dual mandate to promote maximum employment and stable prices for the american people. my colleagues and i understand the hardship that high inflation is causing and remain strongly committed to bringing inflation back down to our 2% goal.

we have heard that from chair powell's comments earlier.y are looking to watch and wait, and really see how the data unfolds. it is important over the past couple of weeks, we saw an inflation print which did show some cooling in these core services and shelter numbers that we have been anchoring the market on. but also, you have seen data that has been mixed. the lending standards probably didn't show incremental tightening that many were anticipating. payroll is continuing to be hot. so, this is a mixed bag, but i think really, the onus is on the hawks of the committee to convince the rest of the committee that the hike will need to occur, and the base case in our house few is a positive one. >> i want to bring up the two-year. you had the fed starting to speak, and you had a drop-off in yields, and then you had gridlock on the debt ceiling. in the levels of come up to yesterday. as we seen again. >> how much is this debate conflicting with what is happening with the fed and their belief on weather conditions are tight enough or too tight

>> i don't think you can blame chair powell. i don't think you can blame him for this. to know what are the concrete reforms? let's stop having bank executives on this boards and make sure you have better liquidity tests and stress tests and the regulations we repealed in 2018 back there and have some statement on guaranteeing bank deposits so i don't have to come here every few weeks. >> with another crisis. a looming one, what to do about the debt ceiling, the fed is predicting a mild recession is head of us. the president has overseen the highest inflation that we have seen in decades in this country, whether he calls it or not he's overseeing it. you have these looming issues and the standoff over the debt ceiling. it is not a sustainable position for the white house to say they're not going to negotiate with republicans. is it? >> here's what is sustainable, pay your bills. if you're a family, you have credit cards -- >> sounds like you're agreeing it's not a sustainable position. >> we should pay the bills and negotiate. negotiate on deficit reduction. the last pe

we just, as you know, heard that federal reserve chair jerome powell said that the u.s. banking system is, quote, sound and resilient. do major investors who have the power to make decisions about whether to pull their investments feel the same way about regional banks? charlie gasparino's been doing some work. >> i think he's talking about the entire system, including the big banks, the jpmorgans, the bank of americas, the citigroups, the banks that hold most of the assets and deposits. liz: he was specifically asked about regionals. >> and he said he thinks they're fine. liz: he said the whole banking system -- >> that's what i'm saying. you've got to look at exactly what he said. the banking system, if you take as a whole, we're not in 2008 territory. no one's betting against that. what they are getting against and they will continue to bet against because, you know, once you see the jpmorgan-first republic deal, you start pricing other assets, other banks of similar size, the regionals and the mid-sized banks. you start pricing that based on that deal. liz: jpmorgan'

chair powell seems very prepped. he's reading notes >> leaving nothing to chance. >> so far just around more big ideas in central banking like how to communicate correctly and how to think about the pandemic impact nothing -- certainly nothing around what's going to happen in june, which is where the market is focused and the policy path from here. >> right as for the debt ceiling dynamic, we had for a while seen this split where the white house would talk constructively about the pace of negotiations, the speaker would say otherwise. then the speaker appeared to come around in the last 48 hours and say maybe a deal will be possible in principle by the end of the week. the president talked about potentially maybe having a press conference on sunday, at least around the time of his return. now we're back to a period again where the white house sources told the wires that talks had been going well. now hearing otherwise from the side on the gop. >> time is running out june 1st is the so-called x date set by treasury se

statement, the language in the statement then the press conference with chair powell david, i guess there's questions about whether they'll use the word yet in their statement to indicate flexibility about rate hikes or not hear. and we'll come back to you in a moment >> because steve liesman has the fed decision here in just a couple of seconds time will it be the quarter point >> raising by one quarter point bringing the funds rate up to five and quarter percent the federal reserve offering i guess i would call it strange somewhat hawkish forward guidance less than the last time. the fed saying it is determining whether additional policy firming may be appropriate that's a change from the prior move it removed where it said it anticipated firmer policy. it's gone from pretty sure it's going to hike to maybe, but it's maybe looking for a reason to do so the fed saying it is determining whether additional policy firming may be appropriate taking out language saying that it anticipates the u.s. bank system statement says it's sound and resilient, but tighter credit conditions are likely to w

jay powell and company he has been aggressive, right? he hiked no other fed chair in history. this is jay powell. the rest of the history. like a bull in a china shop. things are breaking, people are screaming, alarms are going off. danielleing something in the statement feels like jay powell is not acknowledging that part. maybe why we're not taking off. >> no in fact they reiterated that the banking system is sound and labor market is robust. robust for them we have not caused enough pain for them yet. we'll see that reiterated by powell at the podium. charles: three months job, second biggest three month job in history. two month lagging indicator. we're seeing other things, today crude oil crashing, crashing down 5% yesterday. under 70 today. it wasn't long ago china was going to reopen. opec cut production. we thought at this point, thought maybe crude would be $90. in the 60s right now. doesn't that tell us something is wrong? >> indeed. demand in brent, west texas intermediate global demand coming much lower than anticipated. that is reflection of this chart right here,

powell, who is he? where did he come from? for people who only heard of him a few years ago when he became fed chair. tell us about his background. he ended up in the position he's in. yeah. so jerome powell is a local he's from this area. he grew up and grew up in georgetown or chevy chase, and he was the child of a fairly family in the area. they were catholic. he went to georgetown and he went to the same school that brett kavanaugh went to. actually, he went private here. he went to georgetown afterwards. he went to princeton. then he went to georgetown for law school lawyer, worked in sort of law for a little bit, but then kind of made the jump to finance. spent a lot of his career in finance worked in private equity for a while and of flit in between the private and public sector for much of its career. so we saw him working at treasury sort of in the domestic finance arms. we saw him working at the fed a governor before he became chair and tell real quickly the story of how he ended becoming a fed governor, because that really wasn't anybody's radar until it. no, it wasn't it wasn't actually. a

fed chair jerome powell signals a possible pause. >> plunging after hours since bloomberg learns it is weighing strategic options, including a sale. >> even in the excitement, there is a potential pause in fed timing but that was not enough in today's session. a gain of almost 1% for the s&p 500. u.s. futures trading under pressure at the moment. you have regional banks under pressure, falling to the low of november 2020. we reported on pac west, weighing strategic options. that is sending the stock plunging. in the regular session, it was about what the fed might or might not do from here. they raised rates by 25 basis points. they could pause the most aggressive hike since the 1980's. at the same time, it seems like this pause was already priced in. markets pricing in a fed pivot in the coming months. crude oil prices falling below the $69 per barrel level. recession fears are very high in investors' minds. more on our top stories. markets seem to be looking at a potential pause but that is not necessarily seem to be enough when we are not expecting a potential pivot coming up anytim

fed chair powell seemingly siding within those in the fomc for a pause. the two-year with a little money flowing into the front end. brent down again by 1%. let's get to the details around the u.s. debt ceiling and what to expect later today. president joe biden says his call with house speaker mccarthy on sunday vote, went well, as he flew back from the g7 summit in japan. it sets the stage for fresh talks read treasury secretary janet yellen warned the u.s. is fast running out of cash. >> there is always uncertainty about tax receipts and spending. so, it's hard to be absolutely certain about this. but my assessment is that the odds of reaching june 15 while being able to pay all of our bills is quite low. tom: for more let's bring in jill disis. when are biden and mccarthy said to meet? what's the timeframe and what we know about what transpired over the weekend? jill: ultimately, they are expected to me today as fighting returns to the white house -- biden returns the white house. as you mentioned, it seems there was some reason for positivity. over t

i think today chair powell indicated this may be the last hike in this tightening cycle but still leften to some monetary policy flexibility going forward and that speaks to the fact that inflation remains elevated. now, one way to deal with this high and sticky inflation may be to stay with interest rates where they are now, but for longer than we are used to during tightening cycles. another one may be that if inflation remains strong and accelerates in the coming months, they could be another one or two hikes coming down the line, but i think the working assumption for the fed right now is that the hard part of the claim is done. interest rates have increased by about five percentage points since last year, and so from here onwards, i think there is some flexibility, but not a lot more tightening to be done. we were looking at what is happening in the banking sector and certainly interest rates have played a role in all of that. this morning we see another regional bank that looks like it might be in trouble, pack west. so what do you see moving forward, is what the fed doing, are w

pnc bank. >>> fed chair jerome powell signaling today that stresses in the banking sector may mean interest won't have to go as high as expected to curb inflation. what does this mean for the fed's road ahead let's bring in richard clarida he's the former fed vice chair it's good to see you again welcome. >> thank you >> so powell today said we've come a long way, our stance is restrictive. might not have to take rates as high because of credit tightening from the banks. are they done for the time being? >> i think that they've certainly paused time being, yes. let's agree. i don't think they want to declare victory. it's not mission accomplished. inflation is too high, but this is a very similar message we got out of the press conference a couple of weeks ago. i think that's what the chair wanted to convey, that they're going to pause at the june meeting certainly, and probably in july. >> i chose my words carefully in the way i asked you that question, you know, for a reason for the time being, but what you just said is very interesting to me, and that, you know, june, okay, but you think

. >>> fed chair powell announced the tenth straight rate hike raising by .25 signals a possible pauset the next meeting in june for the review, let's bring in roger ferguson a former vice chairman and titiaa ceo. you are on quite a bit we never run out of new things to add to the discussion or add to our anxiety or take away from our anxiety. you have pacwest today and first republic everything the fed has been doing and it wasn't we were worried about presidenthe finan system steve liesman asked powell about that yesterday are they taking that into account enough the stability of the overall system and what could happen >> thanks for having me on i heard what chair powell said in response to steve and others yesterday. i think what we are trying to do is difficult and may not be working. they are trying to separate out the need to control inflation by raising rates, which is the only tool they have, from the correction of financial stability. the bank oversight tools are working well according to them a i'm not sure i agree with them that the banking system is stable the banks are we

chair barr's role really is, and he'll take the lead on though. >> thank you >>> that's fed chair jay powell, of course, after the decision to raise rates another 25 basis points, the tenth such move in a little more than a year, and maybe most importantly of all, the chair noncommittal whether it's ten and that's it he said a decision on a pause was not made today he did acknowledge the change in language, essentially substituting determining instead of anticipating. he called the system sound and resilient. he underscored -- as for stocks, there's your live picture there. we're at the lows of it is days. it's taken a bit of a moment for all of it to filter into the market stocks seemed to be moving lower on the comment that the fed chair made about ten minutes or so ago, where in their own forecast, it is not for inflation to come down all that quickly. quote, in that world, said fed chair jay powell, he doesn't see rate cuts coming the market is telling a bit of a different story. >>> we'll get into all of this with a panel, liszt sonders is here, and jeff gundlach is joins us liz ann son

not that i'm trying to defend chair powell, but can we blame all of this on higher interest rates, thomast it also down to the fact that regulation isn't as tight as it could be in the united states, and that has been an issue for the banking sector as well? i certainly wouldn't blame it on the loosening of policy that you saw in recent years. that was not impactful as it relates to these four. was the supervision a bit lax in san francisco? yes. in signature bank? yes. but there were warning signs. this is a symptom of the steepest hiking cycle in the last a0 years, and you just can't knock the problem, you have all these deposits from all the stimulus during the pandemic, you got them all at once, at the exact worst time to reinvest, when rates were effectively zero. and these banks did not do any cowboy type of investment. they weren't reaching for crazy things. if you look at silicon valley bank, it had 5.7 years duration in us treasuries. so they forced these deposits from the stimulus checks into the banks, which had to invest them. maybe they could have been slightly lower duration

still, if you look at inflation, the run rate is too high so chair powell likes to focus on the super services taken out, housing inflation, that's still running at 4% an you will rate. so above and beyond somewhat he thinks is reasonable is it enough to fget the fed to change course? we don't think so. >> 68% odds for a recession at this point that's uncomfortably high. >> is that recession a feature it needs inflation to come down. >> i thought, chris, i don't know what else you can say, but chair powell said in the press conference last time that his base case was not for a recession, which surprised me. >> sure. well, it didn't surprise me that he said that there wasn't a recession, because he really can't. but recession is a qualitative thing. if you slow too much, you ease into a recession that wouldn't be the worst thing in the world for equity investors, we can buy things at lower prices so i do think, kelly, we're still in an economy, in a stock market that is speeding down a cul-de-sac it seems happy, but there's really no place to go. there's no outlet here that ends happil

thank you all for being hear, hear it is a true honor today to have chair jay powell and former chair and nobel laureate ben bernanke with us today. thank you very much for being here. i very much been looking forward to this conversation or i'm sure our audience has come to, so let's just get to it. this conference as are the windows is to the memory of -- order this morning we heard some personal reflections on working with thomas from secretary janet yellen, also former chair on the fed, and from president john williams. and both of you worked closely with thomas as well. i would like to you both an opportunity to share your own thoughts about his contributions as an economist come as a central banker come as a colleague. then, they wouldn't show what you. >> sure, it's great to be here. i was his thesis advisor and he worked with me on a book on inflation targeting when he was still an undergraduate student at those long time ago and is not yet as exalted position at the fed when i was doing jay's job. i don't have any short little as to give but if you want to say that i think th

liz: i'll tell you that i want to read some of these headlines from chair powell. he said that specifically, inflation and i'm going to repeat this again. it's far above the fed objective it poses significant hardship. failure to get inflation down would prolong pain. we are right now with the ppi, the manufacturing index of inflation, at around 5% if i'm correct, and the fed funds rate at the moment is 5-5.25%, so we're kind of not anywhere near the 2% level that he said he would like to get down to. >> yes, and the fed funds rate is not above the inflation rate and that's what you've got to have in order to really step on the brakes. liz: and lack at wages. sorry we just showed wages. wages are not out pacing inflation. >> you just talked a minute ago about the writer strikes. there are quite a few school districts in the country that are on strike and wages keep going up. i agree with you, the wages are not going up much faster than inflation, but they are setting a floor to the inflation rate and therefore, the fed has to break that momentum and that means lowe

we believe they should pause i believe chair powell is going to keep his options open our biggest challenge is when you look at the leading indicators, they have declined by eight percentage point which is in any other cycle, would have been a signal to the fed to pause this is something that leading versus lagging indicators, what are their benchmarks, north stars? i think one thing he'll reference is tightening credit conditions we expect commentary about the reg regional banks >> david mentioned the labor market we got news earlier this week that job openings declined sharply. is that kind of to use the cliche, a canary in the coal mine that some of the effects of higher rate rs really beginning to dig into the economy? >> undoubtedly look, we're supposed to have a slowdown when the fed hikes rates. that's what we're seeing the thing that's been keeping the market somewhat afloat is that the labor market has been strong socompany earnings have been holding up okay it's only a matter of time before that starts to deteriorate. the question is how long and how deep that's going to gauge wha

it is something we have to keep an eye on, and something according to chair powell the fed is keeping an eye on as well , if you look to health and safety of the banking system overall, it is written -- it is in very strong state that shape. banks have proven to be resilient the past two weeks, they should feel confident if they had deposits in the bank they will be there if they need them. jon: obviously the regional bank wildcard for the economy is one talking point. the president today while addressing some questions around the jobs also reiterated his criticism of house republicans when it comes to the debt ceiling standoff. that you have talked about as well, warning about some of the potential job costs of that standoff. can you give us an updated view on where you stand on that front? >> our council of economic advisers put out a report earlier this week that detailed the potential economic implications of a default. no matter what scenario you are looking at it is extremely dire. talking about almost an immediate recession, potentially the cost of millions of jobs. credit pull

>> well, i think that it's interesting that chair powell met with congressional democrats in the house he did not talk about the debt ceiling negotiations and i think he missed the golden opportunity to explain to members of congress the damaging monetary consequences of running deficits far into the future and it really makes no sense that the fed is so bent on a restrictive monetary policy, they are trying to contract economic growth and they see that the best way to do that is increase unemployment rate. here they are doing classic monetary contractionary policy at a time when fiscal policy is total stimulus. maria: yeah. >> so i think that unlike voker who was a democrat and wasn't afraid, spoke before a senate banking committee about the importance of curving the surge in government expenditures as a way to fight inflation, it was voker who said money tear policy alone can't do the job. i think that powell could be much more useful instead of just saying price stability is the responsibility of the federal reserve which he says all of the time at each of the press conferences foll

powell's comments on inflation. our steve leaseman has a recap steve? >> fed chair powell with hawkish comments with remarks that were much more neutral about the possibility of a june rate hike, saying the tighter credit condition from banks could ease the pressure on the fed to raise rates that policy is restrictive now, and the fed faces uncertuncerta. >> we've come a long way in policy tightening, and we face uncertainty about the lagged effects of our tightening so far and the extent of credit tightening from recent banking stresses >> he said the risk of doing too much or doing too little are valid. it was not all dovish. he emphasized that inflation is too high, the data suggests it will take time to come back down the probability of a june rate hike, it's fallen do around 13 e13%. it had been elevated because there was a june rate hike on the table. powell didn't take it off, but he made clear it was not the first item perhaps on the menu sounds like he won't know what he's ordering in until june. >> we're waiting for that last-minute data on so many fronts

fed chair jerome powell reckons it can be voted but today's big take story looks at the odds stackedim. jill joins us now. you have taken a look at this and jay powell's assessment of the u.s. economy and pointed to three areas where it might be found wanting. what are the biggest warning signs that powell needs to look out for it? jill: as bruce explained, certainly these talks over what is happening with the debt ceiling is one of the big concerns going forward and we will have to see how it is resolved in the weeks and potentially months ahead. we were taking a look at our mental risks that are presented by conditions getting into the summer. we have some extreme climate issues as we head into the summer months and could be looking at potential commodity supplies and further price pressures that could make inflation which is already very stubborn continue to be a problem. then there is the ongoing banking crisis. how exactly that may continue to affect powell and the fed going forward. what we have seen is a cascading level of bank failures starting with svb and then continuing ri

fed chair powell. >> the question is is the reassurance enough? we will have more details ahead. kiwi stocks coming online and they are looking a little bit flat. we saw apple having stronger sales figures coming through in china. they are continuing to increase their market share their, another positive signal for the overall health of china's economy. we are still watching the move into the bond yields. investor still coming back into safe haven assets. the signal of uncertainty coming through in the vix age. compared to where we had been for much of april where he was really subdued. >> bloomberg has learned the ftse plans to exempt smaller lenders from paying extra to replenish the government's deposit insurance fund. instead, i will ask big banks to cover most of the fund. the big banks have really benefited with this turmoil in regional lenders. what does this plan look like? >> the fdic is really focused on trying to replenish this fund without charging the nations smallest banks. they hope to charge a larger fee to the nation's biggest banks. there had been a lot of lobby

you know, as chair powell has stated from the beginning, we must raise the debt ceiling.he fiscal decisions, of course, are between congress and the president and however they sort it out is good by us, but if you did not do that, the consequences for the financial system and for the broader economy would be extremely negative. >> how important is it that this vote succeeded on the first try? >> like i say, this is a fiscal decision left to congress and the president, so it wouldn't be the place for anybody from the fed to be saying what they should pass or how they should vote. >> yeah. >> but, you know, i liken it to there's legitimate argument if you're trying to lose weight, you know, what can you eat and how much exercise. everybody should be able to agree that first strategy should not be cutting off your toe. that doesn't save much weight and it's really painful and that's kind of where the debt ceiling is. >> well, treasury secretary yellen said it's already kind of painful because she's already seeing borrowing costs and that go up and that there is a cost to bei

chair powell is aware of that.roblematic levels, and he is a man on a mission to fight inflation so is he going to signal today a pause? that's what the market expects the june odds have gone down to zero they were at 20% before yesterday. so, there's a feeling that they're going to be spooked. last time, remember, they said look we have the macro prudential tools to deal with the banking problems, which they did and there was some relative stability. i don't know if they can say that again, right? i mean, they can but ultimately there's going to be an impact on the economy, you mentioned the credit tightening, they get a look at the senior loan officer's survey before the public does. we get that coming soon, early may, they see that so if they're spooked about what they see on lending pullback, then you could hear that in the tone from chair powell, and maybe he'll lean more toward a pause. >> yeah, all right, let's get a little bit more on all of this from steve liesman he is in d.c., of course, as he always is,

>> i think so, and to be frank i thought chair powell intimated that pretty clearly.e amount of uncertainty about how much more credit tightening is needed not just to higher rates to the banking turmoil, and if it is much worse, then it is not just a problem that can be fixed with lender's last resort, etc. it will affect the macroeconomy, so it will end up having to affect monetary policy. kathleen: on monetary policy, is the fed done hiking rates? do you think they will have to keep going? >> i think it is incredibly dependent on the credit market turmoil. if credit markets and liquid and financial markets really disappears, the outlook for the macroeconomy is completely different from what they have right now. inflation is different, and of course there monetary policy will have to be different. if they can get through this with tighter credit conditions so it slows down the economy, not that financing baking will not be messy, it will be messy, but that is a story of the 80's and 90's bluntly in terms of what happened when they raise rates. then if they are done,

federal reserve chair jerome powell handed the u.s.officials may pause their tightening in june but he pushed back against any expectation the fed will cut rates by the end of the year. can you pause is almost half of adults in the u.s. worry their bank deposits are not safe. that's a level of concern as high or higher than during the 2008 financial crisis. the gallup poll was conducted last month following the failures of silicon valley bank and signature bank. a judge has dismissed donald trump's $100 million lawsuit against the new york times over an award-winning report on his taxes. the judge also ordered the former president to pay the papers attorneys fees and costs. the times reports of the trump real estate business claimed suspiciously low valuations on properties to minimize tax liability. in atlanta, police have arrested the suspect in a fatal shooting at a medical building after a manhunt that lasted several hours. they say he stole a vehicle after the attack and later fled on foot. one person was killed and four others wo

inflationary worry, and in others, deflationary worries >> so, the question is, what does fed chair powell do and what does he signal? there's plenty of evidence in the banking system and these ripple effects and concerns there's reason to be cautious, right? everyone's expecting a credit squeeze from the banks pulling back on lending. it's not clear the contagion is over every day we see sharp drops in other regional banks on the other hand, to your point, inflation is sticky and they don't want to be the ones that let inflation get too high and not do enough about it so, i think that risk for the market, carl, is clearly they don't signal they're pausing as the market is expecting. here at milken i've been talking to a lot of big investors, nobody i've spoken to expects the federal reserve to be cutting interest rates this year as the bond market is priced for. they constantly i hear, inflation is set to remain higher for longer. i had a panel about it yesterday. rb schwartz, the ceo of carlisle was on it. he said that, a number of big asset managers on there. this disconnect between wha

unemployment would rise to at least 8% mortgage and car payments would go all go up. >> now, fed chair powellhat if the federal government does default, there may be little that the federal reserve can do to save the u.s. economy live in washington. alexandra limon. >> thank you, alex. 6.22. and coming up with the 4 morning news to have trouble remembering all your computer passwords. how google may be coming to the rescue with some things that could help you things that could help you out. this is a craft 170 years in the making. (sniffing) for bold, smooth flavor in every batch of black silk. it's something we pride ourselves on at folgers... yeah, i said folgers. i need to dig deep to do this, and this, and this. that's why every clif bar® is purposefully crafted with a blend of protein, fat and carbs. because the more good you put in, the more great you get out. because the more good you put in, ahhhh! we're no one hit wonder. ♪ i don't give a med bout' my reputation ♪ allow us to reintroduce ourselves... folgers”. not me! [ indistinct conversations ] ♪♪ hey, class. this is lily. ♪♪ when

plus, fed officials, including chair powell signal opossum hiking cycle might be appropriate next month christine lagarde says the ecb fight to tackle inflation is and over. when it comes to the china story, kit was walking us through how important the u.s. narrative is there. the end of the u.s. rate hiking cycle is driving the yuan, and chinese stocks and weaker data. the fuel for a rally has been biden saying relations between the countries are going to improve from here. china tech stocks up one another percent. s&p seeks -- sinks lower. michael hartnett says his clients are board of the bears. what you do when you're bored? perhaps you just by ai stocks, which they say is in a bubble. when it comes to other asset classes, a move in the belly, neel kashkari speaking to wall street journal saying perhaps a pause is correct as we assess the fallout in terms of the banking crisis. a tighter credit cycle. the euro is moving higher, we had christine lagarde saying they are not done yet and they will keep hiking. that varies widely with what we've heard from the u.s.. the renminbi up abov

chair powell says he needs that ratio at 1:1 and we are at 1:1. 6, so we have a ways to go. or is there anything in this data or the data you have seen so far since the last meeting that would suggest that maybe they need to do more? michael: they think they are restrictive enough and one reason is we will see some credit constraints from the banking sector because of the turmoil in the banking area. they think credit conditions will be tighter as banks pullback. one area you have to be concerned is the housing sector, the most interest rate sensitive sector of the economy, seems to be bottoming out. if monetary policy is tight and the housing market is starting to recover again, that raises a question of whether the fed is sufficiently tightening. tom: i want to go to your latest essay, which has a single sentence in it that is not inflammatory but shocking to a lot of people, and i will suggest that bill dudley, like stephen roach, you people are looking for a new fed mandate around fed stability. financial stability. are you advocating a three-part fed with a responsibili

given what we got from cher powell -- chair powell was sort of a conditional pause and know what the bank express, how should markets feel about this? >> they should be feeling uncertainty going forward because it is not about whether or not the fed really will pause, it's not about how the government will handle the regional bank situation, but also that debt ceiling problem. it is also looming. the next few months i think will be a. significant uncertainty and that almost always leads to volatility. >> more pressure on banks? >> more pressure on banks and stocks and bonds. keep in mind we have seen volatility in the bond market exceed volatility in the stock market recently. i think that will continue. >> when can we expect this to sort of come to fruition? when could we expect, to return to the markets -- calm to return to the markets? >> we will need to see the resolution of some of those areas of uncertainty. the fed is telling us that it is data dependent, and there is a different standard going forward. but it is all about the data so we will see a focus on that. i think what

financial services committee will have the ceos in, reg glatszers in including secretary yellen and chair powelle humry hawkins in to hear from the chair of the federal reserve jay powell. those are important dates given the state of banking in america today. >> all the pieces affecting the economy right now. i want to ask you about the stability of the banking sector because you had jaime dimon and jay powell, two important people saying banks are solid and then we saw all the volatility in the marketplace again this week, california,'s pac west, arizona's western alliance, those two regional banks under pressure. are we going to see more goernment rescues? >> unfortunately, we're not out of the bu whateps need to understand since 1933 when we enacted and created the federal deposit insurance commission insured deposits never had a loss. 99% of accounts in america are under the cap level and 99% of the deposits in america are safe and sound. what we have to do is address over a period of time the safety and stability of smaller banks, in a time where the market is judging their business model,

fed chair powell has personally affirmed that view on multiple occasions since the report was published. for example, last september he said during a panel discussion on digital finance that the fed would need approval from both the executive branch and congress to move ahead with the central bank digital currency. although the fed understands that it cannot issue a cbdc from congress, some commentators continue to suggest that legislation is not necessary. they are wrong. the framers of the constitution understood the importance of a strong and stable national currency which is why they granted congress the exclusive power to coin money and regulate its value. congress must not forfeit this power which is why i'm introducing the power to mint act. this bill clearly prohibits the federal reserve and treasury department from issuing a cbdc without authorization from congress. i thank my friend, representative french hill, who is the chairman of the subcommittee on digital assets, financial technology and inclusion on the financial services committee for his work with me on this bill and

in fact, i think the treasury secretary yellin and federal reserve chair powell would do everything theyould to prevent defaulting on the treasury debt. they'd do that as an absolute last resort. >> what about the comply right now? h economy right now? new trouble trying to save first republic bank. >> so the economy's looking generally pretty good. a little weaker than the end of last year. the economy is growing a little more slowly. we got the gdp data out last week. that's expected. the federal reserve is raising interest rates quite a lot. they are trying to reduce price pressures and inflation, but th there's not anything close to recessions after yet. the l largest thing was the bank failure last month. they seem to be working on that. there doesn't seem to be a systemic problem. so the economy seems to be doing generally okay. just growing a little more slowly. >> and of course the federal reserve is set to meet this week and is expected to raise interest rates by another quarter of a percent in an effort to bring down inflation. what impact will that have on the economy overall

consumers shift down to less expensive goods and that's just a fresh crack in the economy and i think chair powellis board have been very cohesive. i believe there's only one been descending vote in two years. we think they should raise. i'm just not certain that they will. maria: yeah, that's the question, tom. what about you, do you expect the fed reserve to raise rates or take a pause? >> we are surveying advisers all of the time, maria, they are saying most believe we will see the final 25 basis point hike in two weeks. maria: yeah, but i mean, go ahead. >> on top of that, talking about valuations, yes, if you look at the s&p, around 21 , e but if you look at broader markets outside of the top stocks they are fairly priced and most importantly small and mid-cap stocks pe of 11. 50% that you can buy the s&p for. there's great value out there and there are periods of time that during slight recessions, i have been times -- even times with interest rates markets do quite well. >> small caps, small caps do outperform large caps but that hasn't been the case in the last ten year. if you look at ove

clearly, the gap between when the fed raises rates and impact on the economy is pretty big and fed chair powellear that is the case. when are the effects, full effects of tighter lending conditions going to be seen in the economy? >> julianna, i think we have already seen a piece of that especially when it comes to the interest rates sensitive sector in the economy we have seen weakness in trade and manufacturing and housing and private investment there's going to be a second round effect on the rest of the economy, right when does all of this weakness spill into the consumer and employment and basically services sector. that, we expect, with more lag to be in full effect at the fourth quarter of this year. we would expect this recession driven by past tightening to happen in q4 2023. that is when we would expect the contraction materialize. >> samy, i appreciate the time this morning chief economist at lombard for that update. >>> the uk government selling 1.26 billion pounds of shares in nat west trimming the stake in the lender it brings the holding down to 38.6%. the government says it will

to raise the unemployment rate and cool wage growth, combat sticky services inflation which fed chair powellicitly earlier this week does this report this morning actually do that i think that's going to be one of the key questions for jan hatzius when he joins us later today. >> given where we are in unemployment and seeing in the job market, not to mention we were talking about housing, for example, as another barometer, which has been very strong, there are questions as to whether, in fact, that pause that people are looking for is going to happen, but then on the other side of it is this concern that you keep raising rates on the banking system in particular these regional banks that are already dealing with assets that are under water and started the concerns that we continue to have or those have people have in the markets, and it only makes things more difficult. >> yeah. monday i believe we get the fed senior loan officer opinion survey it's going to be a key one to watch, given the fact that we know credit standards are beginning to tighten and just how much that's happening and jus

i mean, chair powell said it best when he said there's no -- he's not going to get involved in the negotiationey have to raise the debt ceiling. we can't default on treasuries. that's the safest asset in the world. that would be a mess. >> neil: i can remember, austan, in 2011 when you were with barack obama. we had our debt down graded. we avoided a default. it was the craziness prior that prompted that, you know, slashing our triple a credit rating. some are saying the same thing could be poised to happen now. what do you think? >> well, i don't know if it was the crisis or if it was the fact that i left the government. two hours after i left the government is when we got down graded. as you look now, this -- to not be flip about it, this is a nightmare. this is -- do we really want to pay more in higher interest costs and have financial crises or big recessions or cast doubted on the full faith and credit of the u.s. government? i don't know how they're going to sort it out. that's to -- congress and the president and whatever, they just need to sort it out. this is not something that we ca

conferences, which i introduced four times after the summary of economic projections, and which chair powellas taken to an art form -- [laughter] -- also, the inflation target, the forecasts we released. there is a cultural change which some don't like but i think is good which is it used to be, if you looked at speeches in the greenspan era, the president of the fed bank of minneapolis would talk about harvests or something, not very much about the global, national economy. now you have a lot of people talking about different aspects of the fed's views. that contributes to both market transparency and accountability to the local and national constituencies. >> you have continued to push forward on the communications, transparency fronts. >> the broader setting is transparency is especially important today. polling data have struggled to retain the public's trust and support in recent years. now, we are an institution that serves a critical public mission. to be here and work here is to know the particulars of what we do and how we do it are not generally top of mind for most people. and, on

official today jefferson, who was confirmed 91-7 to his current role on the board would become chair powell's number two if confirmed to that role jefferson has signaled support for powell's strategy of successive rate hikes followed by that potential pause. kugler is a long-time labor economist. she would fill the vacancy left by lail brainard who joined the biden administration and she will be the fed's first latina policy mmaker if confirmd >> we're getting news. we're getting some news from the congressional budget office, analysis on the debt ceiling, just how much havoc this could reek ifwe go into technical default. >> the cbo is an important nonpartisan, essentially referee, number counter in the fight here for the debt ceiling. the cbo in new numbers out today suggests that the treasury is going to face a cash crunch in the first two weeks of june before tax receipts come in on june 15th. and the cbo says essentially that if treasury has government obligations of $300 billion or less, perhaps it can make it through the middle of the month when more of that revenue comes in and if it