>> brian, thanks very much fed governor chris waller will say that monetary policy should continue to tighten. however, he currently favors right now a 25 basis point increase at the fed's next meeting, which as you know, happened at the end of this month and the noums comes on the first of february. he says the fed still has a considerable way to go to get to its 2% inflation goal. he expects to support continued tightening of monetary policy, even after, is the implication, this upcoming meeting. economic activity says it's holding up well with the fourth quarter gdp, around 2%, but notes that it's slowing and he expects that economic slowing to continue that's part of his forecast. he says there's ample evidence that the fed's rate increases have dampened demand and economic activity. you've got the slowing of business activity. he says that is consistent with the fed's goal, but he does point out the goal is not to halt economic activity, just to slow it and moderate it. he says consumer spending has begun to slow, as well, and he expects it to moderate further this year. he expec

>> brian, thanks very much fed governor chris waller will say that monetary policy should continue tot increase at the fed's next meeting, which as you know, happened at the end of this month and the noums comes on the first ofeb

we heard from the fred's desk the feds chris waller favoring 25 basis points at the next meeting. is it too early to downshift once again or do you think that is opiate given what we've learned? >> i think the fed is comfortable going down to 25 at this point. the question is less about the path and more about the destination but how we stay at the destination. our view is that the market is a little bit premature in pricing in those cuts in the second half of this year. we acknowledge that 6-9 months from now, they should be rolling over in a more consistent basis and the fed will probably cut but we think there is still more runway left in the u.s. economy so we are not ready to lean into the cut in the cycle. katie: i want to talk about what that means for the bond market. in december, you made a bold call that 10-year treasury yield should be closer to 475. we are a bit closer to 350 right now. are you sticking by that call? >> it's always fun to watch the price action move against a bold call. it's been a tough chart to watching the first two weeks of the year. it's easy to g

>> we heard chris waller the board of governors who has been one of the early ardent voices for hiking rates aggressively but in some recent speeches he has opened the door saying we have done enough that we could slow down. the thing that will be in focus now besides downshifting is what they see next. markets are already pricing in a series of rate cuts in the second half of the year. will powell come out saying -- we have to stay tight? or will he open the door wider to sooner rate cuts depending on what the economy looks like over the coming months? haidi: kathleen hays ahead of a big week for central banks. adani has published a lengthy rebuttal to allegations of fraud by hindenburg research. we have the details on the latest we are hearing in this saga. >> the context -- we had adani meeting with investors on thursday. the follow-up, sunday in india -- a long report setting out to respond to the ada questions raised in the hindenburg research report. that report alleging market manipulation and accounting fraud. the overall response is 413 pages. impossible to get all of the deta

michael: chris waller's statement was he said he needs to see six months worth of data. the eci is three months worth of data and we've seen inflation falling for the last two months. it's significantly lower on a month over month basis than it was earlier in 2022. they are starting to see what they want to see and they are seeing evidence the economy is slowing down. there is a reason for them at this point to dial back to 25 and not feel the need to go to 50, buzz that count as a turning point? that's the hard part. alix: it is a change. for the market, at a turning point in the market or did we already do that? >> that's the million-dollar question and if you look at the big name from this earnings season, big misses are escaping big penalties. if you pull data and you look at what's happening when it comes to those misses, the least negative they been in eight quarters so companies beating on sales and bps actually outperforming the s&p 500 by close to 1.5% which is beating a six year average. it's just a signal that those expectations into the earnings season were s

chris waller's cliques later tonight. existing home sales data at 3:00 p.m. u.k. time. coming up, we hear some more of what fed's head of had to say. that's next. this is bloomberg. ♪ introducing the new sleep number climate360 smart bed. the only smart bed in the world that actively cools, warms and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number. >> inflation has declined in recent months. it's going to take time and resolve to get it back to 2%. financial conditions have proven considerably over the past year as the federal or -- reserve and banks around the world have tighten policy considerably. dani: u.s. fed reserve chair lael brainard on the central bank's next move. let's bring in our next guest, sieben harvey. thank you so much for joining this morning. i guess you could have said that brain already was a mixed bag. she talked about some of the economic weakness that has shown through but basically saying, we need time and resolve to get inflation back down to 2%

i thought of chris waller's comment. he is a governor at the fed.s previously said that the fed should keep pushing higher in rates but his latest is that, you know, we're in a 15-year high. we shouldn't be absolutely certain that it is going to have the same effect it has in the past. maybe it is appropriate to move more slowly anyway so we have a better sense of the effect on the economy. >> chris, let's talk about the money supply. a lot of folks keep pointing to m-2, that precipitous fall we've seen that hasn't happened in the modern era. go back to the 1920s, you can see the data there the notion that it does have a lag effect. i was reading research over the weekend that suggests maybe, maybe people misjudged when the lag effect kicks in. when do you think, how would the get model the sort of lag effect of all the work that they're doing, coupled with the fact that money supply has gone into free fall and recession is glowing? like the red flags are out there. >> you know one of the most amazing things about the fed when you think about it is

. >> yeah, thanks, mike, an important one, fed governor chris waller pushing back against the market's optimistic and dovish view on the outlook for inflation ans the fed needso hike as much as 75 basis points to ensure inflation is brought back to the fed's 2% goal and the market may have it wrong here >> the market has a very optimistic view that inflation is just going to melt away we have a different view inflation is not going to just miraculously melt away it's going to be a slower, harder slog to get inflation down, and therefore we have to keep rates higher for longer and not start cutting rates by the end of the year. >> the fed and the market are about 72 basis points apart. average fed forecast 5.13. the market has the fed raising to 490 and undecutting down to . waller says he needs six months of improving inflation data bv he's going to pause. he said rates are pretty close to sufficiently restrictive, but he has a way to go on that it's easy for the fed -- or easier for the fed to cut if it's wrong on the inflation outlook. waller joined in his speech over fed officials i

the reason why it is not all quiet right now is i'll speak to chris waller i'll have that interview live on cnbc in the 1:00 hour. guys, not quite all quiet on the fed front. >> western front you mentioned this gap, steve, between the market and the fed i guess the biggest question in the market at this point is when does the gap get filled? at some point these two sides are going to have to come together at some point it is a matter of who blinks >> i think the how is also really important here. let me say one thing and take a step back, scott the market marks to market every day. every piece of data comes in and the market processes it. what does it mean for the economic outlook and earnings j outlook and fed outlook. i asked williams if he changed his 5% he did not acknowledge 5%. we know he is. everybody on the fed is above 4.900. he said i'll do it if i need to in march the fed is on the different clock from the market. to some extent, scott, you want it that way. you don't want the fed to market every piece of data that comes out out. on the other hand, it creates the lag where the

. >> they signaled many of them like chris waller in washington, the vice chair and others have said we are making progress on inflation it's ok to slow down and may be look ahead to a pause. it will be jay powell's job at the press conference to fine-tune that however he asked to do it. yes we are getting closer to the point or no we have further to go. we know that consumer prices are coming down. what feeds into the major measures? wages are a big one. the cost indicator benefits came in at 1% in the latest quarter had been as high as 1.4%. on the other hand, you have recession risks rising and that's another thing that would argue for the fed to pause at least slow down to see what happens next. if you look at something like jay powell's favorite inflation gauge, it is still high. that's the core services minus housing costs. jobless claims continue to fall, they are not rising. that argues for a market that is still tight. it is not looking like it's broken. our team says jay powell is going to signal the fed is on track to getting to 5.25% not stopping below 5% as a lot of mark

expectations have both fallen below the pre-pandemic levels and approaching recessionary levels fed chair chris wallerssion, but he acknowledged some data has turned down recently he said future rate hibkes will depend on data like others on the fed, guys, he said he did not foresee rate cuts this year carl >> steve, we'lltake all that into advisement and talk more about the impact on the market let's bring in megan schu. megan, let's just talk about the data that we have seen as steve mentioned some of the naib stuff, ceo confidence, backlogs, inventories. the market is beginning to sniff out why that would be happening, and that's negative for stocks. >> exactly, carl thank you for having me. i think i would add to that list the conference board leading economic indicator that we got just a few minutes ago, which was negative 1% on the month negative 7.5% on a year-over-year basis that's one of the indicators we are watching that would be the biggest head fake if we don't have a recession we haven't seen that decline at this pace without a recession. i would say odds have improved over recent months

i'm going to keep asking this question i'll be speaking later today to fed governor chris waller at councilsome of that interview live to you on cnbc around 1:00. >> we're looking forward to it, steve. that's what i was going to ask you. when you have someone like vice chair brainard who tends to be more dovish with her tone in general speak, it seems like the market expects that or it's baked in when someone like waller speaks and seems a little more hawkish than a brainard, is the expectation that what he could say could have an even bigger impact today >> you know, that's a great question, morgan i'll answer it two ways. first of all, brainard is the vice chair what we don't know, because she's sort of just recently become the vice chair, is she sort of a policy pulling guard, to use a football metaphor, for powell or speaking her own book? there was a little disagreement between brainard and powell on how service price inflation can come down. she thinks the decline in oil prices and commodity prices and other input costs could bring down inflation without loosening up the job market mu

vice chair lail brainard, john williams at 6:30 and tomorrow i'm going to speak with fed governor chris wallermy looks to be turning south, inflation is easing is it time for the fed to change its rate outlook carl, i'm watching this ten-year, which is 3.32 now. 3.03, that's where the ten-year was when powell stepped to the podium in jackson hole and shocked everybody and put rates up to 4.22 on the ten-year just 29 basis points of that tightening left from powell's speech in jackson hole. >> 100 basis points off the high that will be great tomorrow. talk to you in a bit. >>> our next guest says the bull market may be back calling for an uppier for the s&p and saying the global economy will not fall into recession this year ed, great to have you back appreciate the time. >> thank you, carl >> you were pretty early in saying inflation peaked. now you raised the prospect of a new bull market. has the data this week shaken your faith at all in that? >> a little bit. certainly looked more supportive of the recession or hard landing view than my view, which is a soft landing view. we did have retai

they all agree they've gotten into restrictive territory which is very important and you had from chris wallern them and the market. and that's not a bad place to be i think the biggest disagreement between the fed and the market is a consensus view about the fact that they expect to not cut it all in '23 and the market expects to cut i think there's a little bit of risk that, in fact, you know, there's a group think at the fed that says no way are we cutting and as the data shows, it may be appropriate to at least have that on the table. i don't think that's likely to be on the table and i think that's where some of the risk might start to emerge. >> having been in the room, roger, does it matter for the fed to sort of say, you know what, we have this wrong we're going to do -- it wouldn't be quite an about-face but say, hey, the market is right we need to cut again is that a big deal for the federal reserve. does that undermine the institutional creditability? >> i think what's more important is being right if at the end of the day they say, well, our plans back at the beginning of '23 to no

chris waller addressed it when i spoke to him saying it wasn't as much about the market not believingce over opinion of the outlook for inflation. >> the market has a very optimistic view that inflation is just going to melt away we have a different view inflation is not going to just miraculously melt away a slower, harder slog to get inflation down and, therefore, we have to keep rates higher for longer and not start cutting them by the end of the year. >> he used the phrase, immaculate disinflation but will be happy if he is wrong and would take them downward because inflation was less than expected 71 basis points separate the market on the year end fed funds outrate look believing they will hike to 490 and cut almost immediately, fed officials insisting they'll hike and hold for at a high rate for all of 2023 above 5%. a lot depends on how businesses react. news from the national association of business economics suggest they're preparing for a downturn take a look at the next three months outlook net percent hiring plans, minus 7, first negative since the pandemic, capebut good

chris, you know new york. i'm in upstate new york, i'm not responsible for anything south of yonkers. but the reality is, that lola, esposito, marina, nicole, they all share -- even michael wallereorge santos on and this story really drowns out their ability to convey what's actually happening in congress. i look at it through that lands, you're -- i'm not. i think that's really a lot of what's driving this is that sucking all the air out of the room, the major media markets does not help frankly the new york delegation that won the majority for the republicans. >> it's interesting. the new york delegation is laser focus message, at the top of the ticket helps you quite a bit. -- >> absolutely. >> it's messaging on crime helped quite a bit. i'm curious as someone that's in a district that's a close district, you won now really i think barry -- it's very close. if it helps you to have votes on things like abolishing the irs and slapping everyone with a 25% sales tax. which would amount to an enormous tax cut for millionaires, an increase taxes for most middle class folks. is that the kind of thing you want to congress to do, it is voting yes on that help you at home? >> listen,