give the fed a little credit. you are right in response to, you say that banks didn't take the money to lend it out, the fed's economic series but my understanding is the fed never expected that, they would be -- and? was in fact pushing on a string in that sense but the express purpose of q e was to lower long-term rates and get people, with longer-term assets and the sense in which my criticism was not consistent, inequality aware wherever they were, less unintentional use, was an explicit attempt to work on long-term rates which of course pushes security prices and asset prices up. do you see what i am saying? that's consistent with the effects of this policy. is that right? >> the fed was expecting the banks -- failed to take account of data, some talk at the fed particularly in the fomc minutes about how surprised they were that the banks wouldn't lend and turns out they were more risk-averse than we thought which involve rules that were not a great surprise but that is why the lack of lending as a result of

to know about the fed? >> first, the fed is a non political, non partisan organization that tries to serve all americans in a way that's really important, to achieve maximum employment and price stability. a great jobs market and low inflation, to really important things, and that's what we do is try very hard to succeed. the other thing i would love people to know though ace you hear about the fed a lot, we get a lot of notice and people write about us all the time, the truth is, the really important things about our economy are not things that we can affect. we have a relatively short term perspective, a business cycle perspective on the economy and the things that we can do. really wet matters for the country's economy are the longer term are things like investment and education, which is investing in people. and having a more inclusive economy. so those are the things that matter for the long run, much more than the fed, so we get all this intention but in reality, it's the things that congress can do a

the fed and working from there ? >> we had a pretty significant meeting on march 15 which i think was a sunday and that was the last meeting that i did from this building . i went home after that and since march 15, 2020 mostly works from home. although lately i'm coming in, i find myself coming in two, three , four days a week more than i used to. i'm not sure why that's the case. i would say it was surprising how well our business and our business model was able to adapt to doing work remotely. any organizations and experience and we certainly did. >> most of the fed staff people who work at the main building, are they coming in now more frequently or are they working from home . >>.he works, everyone from home exclusively . exclusively, some people live elsewhere now. for their calling in from phone someplace that isn'tone they have in washington area . >> are coming in more frequently because your wife is finally decided to get out of the house. visit some of that weston mark. >> there may be some of that involve

is it because of the fed's heavy involvement? >> we have seen overthe last few weeks has been the 10-year treasury for example from 175 down back to 155 we're starting to see that grind back higher and i think that trend could continue especially as we get the announcement of stimulus, the reopening of the economy and really true form this summer months and then the fed if it does commit to the sidelines for the quarters or the foreseeable future in one to two quarters that really is a good backdrop for inflationary expectations to rise and rates to rise again. to your point on the biden administration, yes, we are seeing tremendous amount of proposals come through and not seen congress' reaction and keep in mind there has to be an approval process and make take sometime and i think he'll talk about 1.8 trillion tonight and probably a starting point for the negotiation so i think the markets are still also in wait and see mode to see what actually goes through for the bill tonight and the infrastructure front so there's still som

i think the fed is kind of stuck here.y the time they want to raise rates, i think the economy potentially will be in such a weakening path that will be difficult for them to do so. i see things quite differently here. you cannot argue on one end that consensus forecasts are right in on the other say that rates will go much higher. that's a big disconnect. jonathan: this is let's about rates needing to go higher and maybe adjusting the asset purchase program. they need to stop talking about talking about it. >> there is such a clear runway because there is such a sequencing. they have been clear around the timing that they have to announce and then they taper and in 12 months goes by and then they raise rates. i think the sequencing is right in front of you. you cannot just jump the queue and get right to rate hikes, i agree. i also think it's entirely too early to talk about tapering, notwithstanding katherine's comments. i think that speaks to the bigger point which is the fed, powell in particular, will have his hands f

it underscores the power that the fed has here to shift the focus.hen you have so much money riding on every interest rate decision that the fed makes on wall street, it really kind of brings into focus the things that people need to be working on in order to follow along with the fed. that is what we see going on here. romaine: it is interesting because we are kind of at the stage now where it does seem like the market is starting to get the message on this issue here. do they have any real defined parameters with regards to what the fed is going to use. or completely creating their own model? matt: so far, we have not heard much from the fed, incorporating these variables into their interest rate decisions. it is kind of an open question. the goldman sachs report that we highlighted in our story today, kind of the first example we have seen. the interesting thing about it is the sort of method that goldman used to calculate this forecast for black unemployment, it is not very hard to do. they were just looking at the historical relationships betwee

the fed could be late and if the fed is late they left a slam on the brakes and that could have consequencesfor the economy but financial markets. jonathan: looking forward to catching up with both of you later this week. bill dudley, former federal reserve bank of new york president. so many issues. this federal reserve is unwilling to risk being early so they are committing to being late former president dudley raises the important question, it is a matter of how late they will be and how much damage that will do. tom: to me it is just a game. they are always after-the-fact. now they are going more after after-the-fact. there will be a point where they are after after after-the-fact. we have seen this before. jonathan: we have seen this before. we will continue discuss this with kathy jones a little bit later on bloomberg tv. i will do that next hour. i will run away. as we get set up for the rest of the week, i will get set up for the show. tom: jon ferro, thank you for joining us. joining us and i from bloomberg intelligence as we look at microsoft going after one of the software provide

>> the fed is saying it is going to be transitory. >> it is going to take the fed a while to figure out whether transitory is indeed transitory. this is a high risk policy scenario. >> the fed will find itself in a difficult position. it is becoming a real issue. >> the fed will remain less concerned about inflation than the markets. >> the markets tend to have a short fuse. jonathan: let's break in today's panel. -- bring in today's panel. let's talk about the difference between something that is transitory and something that is a little more sinister. what is the distinction? >> i think what is interesting is everyone says transitory, what is transitory? is it two months? two quarters? two years? that is the problem. transitory has not been defined and i think there is a real risk that it is not two months, but potentially even more than two years. that is an issue. jonathan: what is your take on that? mike: to use a literary analogy, we are waiting for ghetto -- gad do, and he is not showing up. everyone is freaked out about short-term data. if you look at the equity markets, they ar

fed and working from there?e had a significant fomc meeting and that was the last meeting i had in this building. i have mostly worked from home. lately i am coming in. i find myself coming in 3, 4 days a week now, more than i used to. it was surprising how well our business model was able to adapt to doing work remotely. david: you are coming and more frequently because your wife is saying 'finally it is time to get out of the house!' jerome: there maybe be some of that involved! david: what have you learned as a member of the fed board member that you did not really know before that surprised you perhaps and what have you learned about the pandemic and the ways it has affected the economy that may be a lesson learned that the economy has learned about the way the economy operates in a pandemic? jerome: i am just about to have my birthday here at the fed and i have learned a lot in nine years. you have to master payments, regulations -- there is a lot to learn. in terms of the pandemic, i would say this, the mo

the fed did its job. we are here. people are not crazy about the fact that it had to be done in the first place. how should the administration, when thinking about regulation going forward -- crises are going to happen again in the future that are totally unexpected. think about addressing some of the frailties that may have been exposed a year ago? >> i think the nice thing about a year ago is because both fed and congress stepped in very quickly and managed to contain a lot of the damage that otherwise the events would have inflicted. most of the financial markets did not spill over into the real economy. that said, we cannot take for granted that type of aggressive intervention. i really think we need to go back to the events of last march -- really february and march and look at what was wrong, consider how much worse things might have been without the fed intervention, and use that as a starting point for creating a laundry list of some areas that require greater attention. romaine: sometimes failure is necessary

i know you are in the fed building now.e you been from the last year working from home or coming in? chair powell: we had a significant f1 see meeting march -- significant f1c meeting march 15, sunday, and that was the last meeting i did from this building. i went home after that and since march 15, 2020, have mostly worked from home. lately i am coming in 2, 3, four days a week, as a matter of fact , more than i used to. i am not sure why that is. but that is the case. i will say it was surprising how well our business and our business model were able to adapt to doing work remotely. i think many organizations had that experience. we certainly did. david: you are coming in more frequently because your wife is saying finally it is time to get out of the house and go to the office more. chair powell: there may be some of that involved. absolutely. [laughter] david: what have you learned as a member of the fed, board member, that you did not really know before that surprised you, perhaps, and what have you learned about the p

we are talking about the fed.verything so closely, what will these tech earnings mean for the rally that we've seen in stocks and stalled out for a couple days? is this a big plus? >> it's interesting. you are seeing massive drums. the bloomberg intelligence missive was something like 33% yesterday. that has only risen with massive drums intact. you are seeing cyclical exposure here. that's what these earnings are showing. with that reopening economy, you are not seeing the end of growth stocks. a lot of it has to do with digital ad revenue, business investment, and a lot of that spending coming out of the american consumer savings rate. those will all go in favor of those tech companies. it's not just value. some of those benefits will be reaped by those growth companies. haidi: r bloomberg markets reporter there. besides the fed, asian markets will be divesting a host of earnings. china construction bank reporting a 3% gain and offers. the chinese economy powering out of the pandemic at a record pace . tom macke

is that a concern for the fed? in terms of impacting inflation?hair powell: yes over time and , in the long run the budget is on an unsustainable path. meaning that the debt is growing meaningfully faster than the economy and that is unsustainable over time. it is a different thing to say the current level of debt is unsustainable. it is not. the current level of the debt is very sustainable and there is no , question to service and issue that debt for the foreseeable future. i would also say that as a nation we will have to eventually get back to a sustainable path. that is best done in very good times when the economy is at full employment and taxes are rolling in. this is not the time to prioritize that concern but is important that i believe we will ultimately have to return to again when the economy is strong. david: you have previously said and i want to ask if you feel the same way now. currently you do not expect the thatcurrently you do not expect the federal reserve to increase interest rates before the end of 2022. is that correct? chai

this fed is in a box.old world you would allow rates to rise to accommodate rapid increase in aggregate demand, economy, v-shaped boom in the white house continues. instead the fed is kind of stuck and tapering is likely to be a lot further out into the future than the markets and investors are hoping for. they're just in a weird spot because they should be doing it now. by waiting, you're just going to make financial assets more expensive, more bubblicious if you will. that will basically preclude them from really raising rates, let alone taper. charles: danielle, you have been really warning folks about this for a long time. now it feels like more and more folks wall street jumped on board. powell is in a box, so is wall street. if he is not going to remove the pickup bowl, what do you do as an investor -- punchbowl. is there any possibility that he will drop any hints saying i have to start doing something at some point. >> i seriously doubt it, mainly because the market is on tenterhooks expecting this

in the past, one might say by the fed -- by following the fed, you would say the fed is keeping the funds rate low, so should in all euros below? the answer is right now is no, because the fact the fed is keeping the short rate low means the two other components are free to go. in other words, inflation expectations might rise faster, and so might the temperament. tom: i'm sorry. i think this is so important. the heart of the matter is for listeners and ears is out somewhere in 2023 or 2022, a fed waiting and waiting and waiting in the market is going to react to it. would do you anticipate -- what do you anticipate? anthony: there will be numerous tests of the fed that the fed will have to reply to overtime. you have to ask richard clarida do if he still believes in this idea of a new neutral, the new neutral thesis. it means the fed thinks the neutral policy rate is slower today than it used to be. in the past, it might have been call it 3% or so or even 4%. today, it's probably in the low 2's. we want to know if the fed still believes that. the test will come frequently. when the infla

did the fed give another all clear to the market. said to ellen degeneres that sent dogecoin to the moon. we have the two biggest companie

fed's perspective at this time? >> right. so we look at football stability for us -- financial stability for us we have a broad framework. i know many people just look at asset prices, and they looked at a some of the things that are going on in the equity market which i think do reflect froth in the equity markets. but really we try to stick to a framework for financial stability so we can talk about it the same way each time and so we can be held accountable for it. one of the areas is asset prices, and i would say some of the asset prices are high. you are seeing things in capital markets that are a bit frothy. that's a fact. i won't say it has nothing to do with monetary policy, but it also, it has a tremendous amount to do with vaccination and reopening of the economy. that's really what has been moving markets a lot in the last few months, is this turn away from what was a pretty dark winter to now a much faster vaccination process and a faster reopening. that's part of what's going on. the other things though

repeatedly one at another, fed speakers, the fed chair himself has said we are not doing anything anytime soon. if we let up flation run hot, so be t that's why you are jeremy siegel it is wharton school saying we're only in the third inning of the boom, and you have nothing to wet weather about under the fed does make that signal this becomes a bet is the fed doing it earlier than expected or not. >> there's a lot to unpack there. first, i would say you're right on the 65% allocation, it is the best assets we have from an allocation point of view however there's a way to -- where you build a lot of convexity into the system. while you can run -- you can put on a whole lot more protection in terms of convexity. by the way, i think the market is still going higher. however, you know, changing the mix of it and creating more convexity in the portfolio i think is important i would looks to see the fed change the communication you can -- i actually think the fed should still by accommodative. however, you look at the front end of the yield curve and where so much liquidity is put in the syste

will now be approaching the fed's blackout period on friday night so we will have a few more fed speakerscolor the guidance with. probably the last we've heard from powell for the -- for a couple of weeks now. manus: in terms of the bond market, there has been a stoicism in the bond market this week. no blowout, no radical reaction to the cpi jobs number. we are doing quite well with the headline numbers. the bond market, and i've said it again, steven major said it, has already priced in a taper. michelle: part of that might be that there's a widespread view that investors on both side are feeling the inflation were seen in the second quarter, a lot of it is noise right now. will have to be patient to see how much of the surge in inflation we were seeing a few weeks back is sustainable and something to be feared rather than something to be patient about. for now, powell has a bit of room to make his case. the layout that they're not going to be raising interest rates anytime soon and the tapering of asset purchases is some ways off. there is some calm in that view, but if things start to

the fed is not doing anything any time soon, and you agree with that? k >> nothing soon. honestly, powell is playing the game with biden now, because he wants to be renominated february of next year. i think there is a game here, and that is why he is being so compliant, and i think that the fed is recognizing the danger and biden is going to reappointment, and i think that he wants that job, and once he gets that job for another four years, he could be much tougher on inflation. >> come on, professor, you are insinuating that jay powell, the fed chair is, he wouldn't do something simply because he wants to be renominated by the president of the united states, and he won't raise rates, even if the economy says that he has to, because he wants to be renominated. come on. >> he is going to go slower. i didn't say that he would do nothing, and that is why i believe that the taper will end before the year-end. now, whether they are going to actually start raising the rates depends on the unemployment and all of the rest and the pressure that comes from it. but he is going to

with that view on the fed, if this hole in the labor market starts filling up, does the fed positione to adjust a bit to that? robert: subject to me being convinced we have broken the back of the virus, which again, i keep emphasizing we are not there yet, once i feel that way, me personally, i would rather be on our front foot because i think excessive accommodation for longer than we need to has side effects, and you don't feel them while they are going on. they are easier to see in hindsight. but i would rather move sooner rather than later, and i think it will be far healthier. again, subject to me being clear that we have weathered the virus, that is the thing that is giving the pause right here and having me hold my fire. kathleen: what is the biggest risk of not being on your front foot? robert: the issue is we are watching inflation, for example, and we know there's going to be a price surge this year. we are seeing it already. the year over year numbers are going to be attention-getting because they are going to be elevated. i think some of that is going to be transitory. su

nod your heads if you agree the fed isn't going to do anything today.re, can't we i guess -- i guess, david, the real question obviously is, what is the text that accompanies this you suspect that the fed is going to have to take into account some of the more positive economic numbers that have hit the tape since the last meeting. >> yes it's going to be hard to stay quite so gloomy here the first thing is literal to have to do something about the statement about inflation. because twice in the statement they say it's running below the objective of 2%. so i think they'll change that i'm going to be playing transitory bingo in the press conference to see how many times jay powell says transitory to describe inflation inflation is clearly picking up but the fed wants to give the impression this is because of a strong economy and the covid comeback and inflation will fade down the road but that's the question here. >> jim, is the fed paying too much attention to inflation and too little to unemployment or employment >> i think that's a good way to frame it

edward lawrence. >> thank you fed chairman for the question. there's so much fiscal health and accommodation from the federal reserve. you said today the vaccinations will follow the normal economic conditions or lead to more normal economic conditions this year. when do you see the economy being able to stand on the same feet so to speak? and with the fiscal spending and accommodation you talked about with transitory inflation does more spending need to be injected into the system. >> when will the economy be able to stand on its own feet? i'm not sure exactly what the nature of that question is. >> what i'm saying is when will you need to lower the amount of treasuries you're buying or taper off a bit? when it can it stand without having the support from the monetary side and then further transitory? >> we've articulated our task for that. and that is we'll continue asset purchases at this pace until we see financial further progress and we'll communicate well in advance of any decision. we're going to let the public know that's what we're th

the regional surveys from the richmond fed, from the dallas fed, and the kansas city fed, they have shownnificant pressure, in particular the manufacturing sector. as you just spoke about copper prices, that makes it more expensive to produce. margins could get squeezed or inflation can go up we are seeing more signs of this not just being base effects. there strong demand in the economy pushing prices higher. jonathan: how is your outlook different from the federal reserve? torsten: in the near term, if i go to my bloomberg screen and do the profile of hal i expect core pce over the next couple quarters, the expectation is inflation will go up and then it will come down at the end of the year and into next year. i think the risks are beginning to rise. this is not just overheating. this is like starting a fire. there's a chance inflation could be overheating and the fed might say it we have flexible average inflation targeting, we are allowing inflation to overshoot. the big question is rates will take a relaxed approach to inflation overshooting. i would say the key issue is inflation d

how can the fed deal with this?e fed is trying to acknowledge the recent improvement we have seen. many of the data points you pointed out, particularly the hedge lined payroll number. they also want to analyze risks and improvements that need to be made. while the fed is complementary of moves put in place to get the economy at this point, these big steps we have taken in the right direction, you also make sure we don't say all right, grow recovery is complete we need to move accommodation. he has been vocal that we continue to need support to keep the economy on this track. he also recognizes there is a lot of uneven pressure across different sectors of the economy. as we look into the labor market, we can see some individuals across racial, gender, regional and income levels that were disproportionately impacted. not everyone is benefiting as much now as recovery begins to take hold. he says this is something we need to keep an eye on. amanda: jay powell has been clear that he wants to see inflation -- he does no

but, up next, fed chair jay powell said the u.s. economy appears to be at inflection point and poise for stronger growth. hear more from his interview with david rubenstein next. this is bloomberg. ♪ shery: fed chair jay powell believes the u.s. economy is at a turning point. it is place for stronger growth and more jobs as the country emerges from the covid-19 pandemic. speaking to david rubenstein, he said debt levels were sustainable for now but the coronavirus is still a major risk. >> the economy, at this point, seems to be at a bit of an inflection point. that makes sense with more widespread of vaccinations. strong fiscal policy, more support for monetary policy. you can see ridership on airplanes going up and people going back to restaurants. i think the march jobs report we recently got shows with that can look like. close to a million jobs in a month. we are going into a. of -- a period of faster growth. there was a spike in cases, perhaps, it may be more difficult. we do see cases having been moved up a bit. i think we wo

this takes us back to the fed. the lesson of the last cycle is being applied to this cycle, we have discussed this so let's explore it further. whether the lessons learned from the last cycle are pertinent to what we are about to experience right now for the next several years. priya: i think you can question whether we should extrapolate from the last cycle. the last cycle had initially significant accommodation and the fiscal accommodation went away. right now, we think a lot of the stimulus we got is going to fail, but if this infrastructure plan will fast -- will pass, it will help us. it is one big difference, assuming it passes, we will not have that fiscal drag that we had to contend with in the last cycle. the other big question is inflation. i actually think that it is still valid that those structure forces are still in place. there is a question whether this time the fed is for more dovish. could inflation actually had higher? does the fed lose inflation fighting credibility because they let it go too fa

very dovish from the fed.esting to see where inflation expectations in treasuries continue to rise while nominal rates are flat. real u.s. interest rates in the 10 year sector continue to fall, and that is creating an excellent environment for the dollar. mark: you say a negative environment for the dollar, the bloomberg dollar index is 1% from multi-year lows. when will it break those new lows and make new multiyear lows? chris: that could be soon, really. we have a window before the june fmoc. at some point people think the u.s. rates will rise later this year. this is a brief window of a disorderly rise. maybe there could be a period, but it might not be much closer than june 15. you could say in may we could go to a new low in that index. you are referencing the 2011 pe riod. you can make the case we are moving back into a period like 2005-2007 where you had broader synchronized growth. in 2011 we were unraveling the balances within europe. the fact we could get more coordinated growth around the world, th

the fed raised rates to quickly.has said yes, we made a mistake, so now in 2021, we have to see the data and have these average inflation rates of 2% and staying above. they want to full employment. that is why they are optimistic, but that is not enough. it's also a matter of not letting the markets think they can be pushed in to tapering down the bonds or doing something like that. it's also based on what the sea in the economy and what they don't see yet. haidi: we are getting the inflation numbers. what are you looking for? >> it is a tale of commodity and energy prices. the march producer index, the factory engagement age is actually supposed to have accelerated. what you can see here is we will start getting a surprise in global cpi. if you focus on the global cpi, domestic prices have surged year on year and that is generally the global rise in oil prices. you're comparing it to much lower prices earlier, so you have that year-over-year comparison. domestic steel prices rose over 20% from a year earlier. bloom

the fed is watching the recovery . information like mobility data and restaurant reservations. they also rely on things like opentable. debbie soo is the ceo of opentable. do you see parts of america reopen? -- as you see parts of america reopen, how do you see that in your data? >> we publish the state of the industry dashboard which showed daily dining activity compared to pre-pandemic times. what we are seeing is dining in the u.s. is at about 90% of what it was in 2019. 80% of the restaurants and -- restaurants and opentable are open and taking restaurants. matt: the narrative in terms of new york is that the restaurant industry was dead to the world and was never coming back. i can't understand why any logical person would assume that. what kind of bounce back do you see in the big apple? >> the big apple has been one of the slower recovery markets. what we have seen in the data is when local restrictions list the people feel safe dining out again, the dining demand come -- comes roaring back. cities like new york

well, maybe not the fed.hat are all-time highs in price or at least multi-year high in price. are you ready? i'm going to blast through it. here's your prices at record or near record high menu, new cars, used cars, old homes, semiconductor, lumber, steel, iron, ore, copper, corn, wheat, sugar, platinum, palladium, shipping containers and more we just didn't have any room on the wall we could probably throw up supply chain, but we ran out of space. this is short term it's a real pain in the wallet for companies and a pain in the wallet for you, the consumer, who doesn't need corn, copper, car, homes, lumber you name it, up at record or near-record highs in price random but interesting, and random but expensive let's get more on this and what it means for the markets along with new tax policies, we're learned by the chief strategist at truist advisory services. keith, what did you think of that list? i could keep going but we literally, for the first time ever, ran out of space on our giant graphics wall. >> f

louis fed president.bout how long it would take to get there. 3.2 million per day is your latest. if you extrapolate that out, and i think there are nuances around doing that, but if you extrapolate that over the next three months, it would get there, three months to get to 75%. tom: what i really like is to think about the day after day grind. we are talking about may or late may like we used to talk about july or august. we set up -- i don't know if that is the right english, we sped up our anticipation of where we are, and that is that joy. jon: you reminded me of something a few months ago, i used to have conversations with people. i think things change in may, i think things change in june. here we are talking about the same month in a different year. lisa: we are all like scarred -- we are all scarred from this. they're throwing out a new vaccination rate on how -- when they taper. what other criteria -- what are the criteria to start tapering? this is important. tom: there is one benchmark in fed h

we talked about the fed just now. may be the fed hikes rates in 2023.hey hike four times in 2023 in the most aggressive scenario and four times in 2024, which i don't think is the base case by any means, then may that causes a recession sometime in 2025. but on the view that you don't want to sell equities until at least a year before that, it suggests we have some way of rising markets ahead of us. matt: on the other hand,. the west -- here in the west, there are number of industries where getting back to pre- pandemic levels is still going to take years. and if you look globally, bloomberg had a great story about the shrinking middle class for the first time in basically three decades, the global middle class dropped 150 million members. this is going to have, this pandemic, long-lasting implications for sub-saharan africa, for large swaths of asia. and we were counting on those people to buy stuff. isn't that a concern? mike: it is obviously being caused by covid. if you look at the projections for the middle class over the next decade, in asia, we f

central bank view the risk of inflation according to the minutes from the meeting several fed officials believe supply disruptions and strong demand could push prices push up price inflation more than anticipated while several others believe the factors that contributed to low inflation during the previous expansion could again exert more downward pressure on inflation than expected so joining me now to go for the topic is former fed insider daniel de martino booth now daniel when looking at where the fed stands right now their overall conclusion is that the risk for inflation is broadly balanced even though we saw the consumer price index increase point 4 percent in february does the fed see this. the pressure on inflation is only temporary with more businesses open and supply chains getting back on track. so. actually gave a speech today for the i.m.f. meeting and he reiterated that the fed is going to stand pat on its position that it believes that this inflation is going to be transitory in nature of course we've seen episodes of even more dramatic increases in inflation in recent y

indeed it is the fed's job to make sure that does not happen. if contrary to expectation, inflation would move above 2 percent in a manner that threatened to move longer-term inflation expectations, we would use the tools to bring it down to consistent levels. that is a principal difference. we aree all familiar of the sixties and seventies. we know our job is to achieve 2 percent inflation over time. we are committed to that. we'll use the tools to do that. that's a very different situationn from 1960. let me talk quickly about the two reasons why we think inflation will move up in the near-term. twelve-month mage measures of inflation will go well above 2 percent the next few months as a m very low inflation readings march and april dropped out of the calculation the process has started in the it later reading this week with the pce price data. this will contribute oneer percentage point to headline inflation and seven tenths of a percentage point in april and may. significant increases and will disappear over the following months and transito

the big story is how fed chair jay powell and the fed have convinced markets how patient it will be in raising rates the 2-year note barely changed after $1.9 trillion of stimulus passed by the biden administration a jobs report in march that was a million jobs if you include the revisions from february. this is the big story. this is a big part in my opinion of what underpins the stock market right now this belief in patience. it is like powell has convinced everybody to take the blue pill and nobody knows that, a reference from matrix if you haven't seen the movie. >> i have. that was a something burrito. >> he had something there. >> the life work take it easy jamie dimon bullish about the economy and saying that those stimulus payments are a big reason why do you agree with him on the bullish stance do you feel like this deficit spending is okay if it leads us to a recovery? >> i think what we have seen is forecast and expectations have been revised significantly higher as the virus has been controlled vaccinations picked up speed and because of the trillions of dollars in spending

rishaad: former new york fed president bill dudley says the fed needs to see more progress on inflations well motivated but was running the risk of being behind the curve as policymakers monitor fallout from the archegos debacle. with more concern about the nonfinancial -- non-bank financial sector. >> reserves at the federal reserve are not risky assets so we are not talking about an exemption that increases bank risk. if we are really concerned about the idea of exempting reserves and giving banks more room we can just raise the leverage ratio requirement from 5% to 5.5%. >> what is left? >> reserves are not risky and banks cannot control have any reserves they hold, that is determined by the fed. >> moving beyond this point of regulation and talking about the leverage ratio, you have talked before about concern about leverage building up in the shadow banking industry, about a lack of regulation and that area of financial markets. do you still see this as a concern and you see it as oppressing one, or civilly something to deal with perhaps later on? >> i think it is pressing. when yo

balanced even though we saw the consumer price index increase point 4 percent in february does the fed see this pressure on inflation is only temporary with more businesses open and supply chains getting back on track. so. actually gave a speech today for the i.m.f. meeting and he reiterated that the fed is going to stand pat on its position that it believes that this inflation is going to be transitory in nature of course we've seen episodes of even more dramatic increases in inflation in recent years 20112010 being the most recent so they do have history to look back on and and compare and say is this going to be an inflation scare you have to bear in mind $6000000.00 americans have dropped out of the labor force $6000000.00 americans if they could get a full time position they would they're working part time and then there's still 8400000 who have not gotten their jobs back sense the pandemic 1st struck so that is a lot of what is driving the fed's narrative they see this as slack in the labor market and your largest form of inflation the thing that really drives the c.p.i. up is wh

you heard from the fed that he will be paying attention to the forecast, the idea that a fed will not preempt any rise in inflation by hiking prematurely. they will wait for the data to show that. you also show the median. show the fed will be on hold or projected to be on hold through 2023, but he saw two more officials pencil in hike earlier than that as opposed to the last summary of economic projections we got in december. markets will be looking for any color around that discussion as well as any commentary on tapering. the fed is going to stay full throttle on their asset purchases, but we know the bond market is pricing in more aggressive path of tightening than the fed itself. that will be an interesting discussion to watch. matt: what are we going to see in terms of inflation? i guess the word transitory or transient or some variation of those words is going to be used a number of different times. katie: absolutely. jerome powell made clear any earth of inflation that we could see out of lockdowns as the economy starts to reopen, he is not expecting it to stick around for tha

same tone from the fed.e will get more insight as to what jay powell has to say when he speaks later today. manus: yes. we would expect he is likely to reinforce this view that we have miles to go before we taper and miles to go before we taper. that is in some ways what has caused a dislocation in the short end of the rates market. we will get to steven major and ask him whether there is a regime change. i don't think he is convinced there is a regime change in the risk market. it is not a taper tantrum. annmarie: let's take a look at what is going on in the markets. pretty much steady as we go. the s&p 500 notching up another record high. u.s. futures up 0.4%. asian equities are flat. i put the pound in there today. it is now on the favor of your side, that euphoria on sterling and a vaccine rollout, that hot trade we saw last june and the beginning of this year is starting to fade. better for you, not so much for me. this is something we are going to want steven major's take on. manus: well, let's get to

fed policymakers wrap up a two day meeting today.y are all but certain to hold interest rates near zero. they are also expected to repeat a pledge to keep buying bonds at the current rate of $120 billion a month. four years of political brinkmanship has come to an end. european union lawmakers gave their approval to the post-brexit trade agreement with the u.k. that ensures that commerce will continue without the chaotic disruption to business a no deal brexit once threatened. still, it doesn't mean an end to hostilities between the two sides. deutsche bank has posted its strongest quarter in seven years and has raised its outlook. fixed income traders outperformed most of their peers on wall street. income from buying and selling debt securities rose 34%, and deutsche bank avoided losses from the collapse of archegos capital management. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ ♪ >> we are talkin

i will also point to the fed. every thursday 4:30 p.m., i look at the fed's balance sheet and it grew to a record. is this really what is underpinning the move? jonathan: if tom keene were here, he would tell me to get a life. [laughter] mickey levy joining us now, berenberg's chief economist. inflation coming in hot, retail sales coming in better, bonds rallied. do you think this inflation story could be more persistent? mickey: i do believe it will be more persistent. the cbi, we have a base effect and higher oil prices going through retail. we all know the economy is reopening. if, following the reopening, there is continued strength in aggregate demand, which i expect based on all the stimulus, we have never seen anything like it. businesses will have the flexibility to raise product prices which we are beginning to see. inflation is going to rise modestly. i think there is no question at all. i listened to your opening remarks. i think too many people, including the fed, are looking back to post-financial cri

the fed believes it is transitory.o try to answer because if inflation becomes sticky the world we've been living in terms of investing in a 60/40 kind of world the past couple decades that world could change if inflation starts to creep higher. >> and you already hear that story a lot. a lot of people saying it is time to system the 60/40. worked a long time, for decades. we'll have you back when we plug in more of those numbers. we appreciate it. thank you very much. >> thank you. charles: stocks are i here as investors await clarity from the fed. also biden's american family plan. we'll get more of that. don't forget the flury of earnings all week long. tesla in in kicks it off off the bell. we have a whole lot of trillion dollar companies that are reporting. the question is, should you be long before they announce? the question stay tuned to find out. ♪. ets? yeah, actually i'm taking one last look at my dashboard before we board. excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on th