it is not just with the fed does , it is what people think the fed is going to do. for example, mortgage rates have grown up two percentage points in the start of the year. the fed has only raise interest rates by three quarters of a percentage rate and until yesterday, they only raged -- they only raise percentage points a quarter of a percentage point. one of the main ways you would get that move is that if investors thought the fed was going to raise rates a lot more than the percentage point this year. that is exactly what they have been saying they were going to do. markets have been listening. heading on a three quarters -- jay powell took that on the table. he said we are not doing that right now. it looks like we are going to do half increases over the next two years. you saw equity markets, stock market took off. host: a change -- still a lot of change in the market in a short. of time. what are the risks of all this happen? guest: the risk is you get some sort of very sharp market correction. the fed right now wants to see -- go down. they want to see the

we'll hopefully hear a two whether fed chair agree with such a fast and furious flight of the fed fund rate >> perfect incapsilation it's almost breath taking over the past week. it really has. thank you and we'll see you soon >>> now, the countdown is on let's bring in our fed panel for more analysis. and head of u.s. rate strategy at society general and chief investment strategy at city global wealth investments and global chief economist and strategist steve, i'm going to start with you. let's respond to what liesman just said. these markets have got a lot more hawkish >> you know, if you think the fed was wrong and they went off course last year, why are you so sure this is the right course now? for one thing, we have to account are for the loss of stimulus spending is down 33% this year spending levels are down that much again, the fed would be shrinking its balance sheet at the same time it would be giving us rate hikes comparable to 1994 when we thought the rate hikes were large we're not arguing that policy ends at zero, nothing needs to be done to recalibrate towards the highe

next week gets busy with a ton of fed speak.inal spread look something like this, plenty of fed speak with mr. bostic, all on the docket. we get cpi data out of china and germany. germany getting even more interesting with ecb official after ecb official talking up high interest rates. then watch as u.s. cpi comes on wednesday. i have the estimates in front of me. the median is 8.1. bfa at 7.9. marquis at 8.1. hsbc also at 8.1. let's get to the rapid power -- rapidfire round. really quickly, have we seen the two year high for the -- have we seen the high for the two year yield? subadra: no. tony: no. george: no. jonathan: this is one i ask after week, will the fed speak with a 1, 2, 3 handle or higher? george: two handle. tony: three. subadra: three. jonathan: cpi next week where will we be your end? pick any number. george: 12.4. >> tony. tony: core cpi, 4.25. jonathan: subadra. subadra: about 4%. jonathan: if three of you, thank you so much. enjoy your weekend from mcgurk city. that is it for us. we will see you sometime next

we forget the fed is not hiking into strength. the fed is hiking into weakness. for that reason i think 50 is enough. i'm in the camp the fed will not go as nearly far as everyone expects. this statement is more than enough to get the job done. wages are tilted a little bit. houses coming off the bloom a little bit. already have an effect. there is tightening throughout the economy already. this exacerbates it. this is the right move. they're spot on. charles: we know the fed will do what it can with respect inflation. it has been brought up there are certain areas outside of their influence so what would that mean for the market, phil? >> inevitably we'll sell off a bit more here if we get another 50 basis points. i think we do down three to 5% on s&p. to your point the fed cannot control inflation, from oil inflation. it cannot control supply chain inflation. what you don't want to create disinflationary environment by hiking too far too fast. that is where the market will sell off. it will accept another 50 basis points. give up 3 to 5%. we capitulate in july,

if that is not the province of the fed, why do we even have a fed?is the fed's responsibility, not the supply shocks. they are real but this inflationary overshoot in large measure is due to aggregate demand. tom: if they politically embedded 50 basis point rate hikes and they sort of say and i am being very sophisticated here, let's see what happens, how far out a trajectory do you see? if they go 50-50, etc., do they really analyze two meetings out in july or do they go out further before there is a lot of navelgazing over what to do next? michael: i think they just need to try to extricate themselves from the last business cycle. we still have fed officials out there saying we want to get to neutral and neutral is around 2.5. that might have applied to the last business cycle but the cycle looks different, whether it is nominal gdp inflation, the rapidity of the fall in the under putman rate, and so the fed has basically made two mistakes here. one is assuming a flat curve until 3.5% on appointment because that is where we were at the end of the l

francine: do you fear the fed or policy to the fed? jamie: i am not afraid of the fed.rica needs very good domestic policy to improve the growth economy, which makes the fed job easier. that is about regulation, rules, policy, improving projects and things like that. you have two increase the supply side opposed to the demand side. the fed job will be easier if we had economic policy. francine: what could go wrong? we talked about strong economic growth, we talked about storm clouds. what is the worst case scenario? jamie: this fiscal and monetary induced unbelievable growth in the u.s., which is true around the world, it is going down in europe, that is abnormal. we have never had that before. we have never had qt before. when you look at qe, that is one of the greatest experiments ever done was 50 years on it. we have to reverse it. that is a huge change of flow of funds over the year. then you have got ukraine. when you look at ukraine, wishful thinking, you have a fed that works, the world is fine, ukraine resolves. there's a chances goes on for years and you comple

respect the fed. respect the fed's independence, which i have done and will continue to do.is not to nominate -- not only to nominate highly qualified individuals, but to give them the space that they need to do their job. i will not interfere with their critically important work or responsibilities. chair powell and other leaders of the fed have a laser focus. there was a larger complement among board members. i look forward to chairman powell's continued leadership with the fed. thank you for coming in. [indiscernible] romaine: the president of the u.s. preparing to meet with the fed chair, jerome powell and joe biden's secretary. there are some other economic measures. we will bring that to you, but we want to move from that to a milestone here at the end of may. a lot of focus on equality and how we can strive for a more equal society. a professor of economics over at the university. it benefits us all. thank you for being here. to some of the best research i have seen is amongst various professors, striving to make the case for equality. one makes the case for the econo

for the fed, they are a single mandate fed right now.hey are only focused on inflation. >> i believe the market is going to go at least 50% below the peak. >> we believe things are overdone. you have gotten rid of the excesses and the underlying fundamentals are still relatively good. >> some of that earlier on the market volatility. our next guest says the markets are having a tough time pricing and economic regime change. great to have you. to get your views on such a hectic market date. i want to put up this chart lends itself to the idea that markets are facing unprecedented level of risk into volatility. it's a rare year that you would see both bonds and stocks falling by this magnitude. when you have rising rates automatically putting so much pressure on returns, valuations, multiples, how do you change the way you look at how you invest in this market? >> a piece of it is to understand whether you are on -- whether you own individual bonds, you can hold them to maturity even when the yield might be the lowest in the market. you wi

clear fed.t's communicative. it's sensitive and it's not afraid to pivot. the word pivot is operational here. it's the key word. and it means -- the most important thing is to respond but when you see your respond, opt to pivot. alix: john, based on that. how do you know if yields have peaked? as of last week it felt like maybe yes and then we get this really chunky move in the bond market. we have the potential for more 50 basis hikes to am co. i understand your pivot point but how do you know how to invest if you don't know where yields are supposed to go? john: i think you have to figure here, we had a world of abundance, in effect fact, we had -- in fact, we had overcapacity. shuttering large segments of the economy threw everything out of tilter. the whole work from home business. the idea that the resignation, a lot of people resigned and retired early. a lot of turbulence here. but things are likely to go back where we came from because last we looked, there's still every bit as much as n

die, it is a tuesday before the fed wednesday. what was on the bond market this morning is quickly reversing. guy: absolutely. the data may be about to reverse that. it is a forward-looking indicator is what's happening in the labor market. the data we are seeing at the moment looks a little stronger, but maybe we all anticipated in fact, the prior number has been revised higher. this number comes through massively higher than anticipated. 11 million, 549,000. the market was looking for 11,200,000. as i said, that prior number has been revised higher. that does not speak to a softening labor market. is that the green light for the fed to be more aggressive? i know we are only talking about 50% -- 50 tomorrow, but maybe 75 the next time around. kailey: you have the st. louis fed floating the idea of a 50 point basis hike. i spoke to an economist who said when you are skewed to the upside or downside, it is more likely that the fed would move 75 basis points than only 25. yes, their price for 50, but that doesn't mean there isn't st

is this a hawkish fed? is it a fed that is on the right track?> is not a hawkish fed. -- it is not a hawkish fed. this is a problem of their own making. i thought powell spoke very eloquently about the situation about the dangers of inflation and why the fed needed to act. i do not know where that powell was 12 or 18 months ago when he said they did not need to worry about inflation from -- for at least 2-3 years. keep inflation at zero and not worry about inflation. i hope he is more accurate now than he was then. i think they didn't what everyone expected them to do. -- they did what everyone expected them to do. the question is is it enough? >> we just ran the soundbite from him saying that they are willing to move rates higher than needed. willing to go above the neutral rate, it is an estimate, 2%-3%. is that high enough even if they do go above neutral? >> people mean different things by neutral. the 2% and the press and do not think is high enough -- and 3% i do not think is high enough. it is not going to be a 2% by the end of the year. y

investors on edge as the fed kicks off the two-day policy meeting today. looking to assess irisk with inflation. >>> and another central bank hiking the key rate for the first time in more than a decade. >>> back to wall street. tech under pressure after the relief rally the nasdaq posted a 1% gain. the 10-year yield now above 3% >>> and elon musk looking for help to take twitter private hopefully the world's richest man can find another one with deep pockets >>> it is tuesday, may 3rd, 2022 you are watching "worldwide exchange" here on cnbc >>> good morning i'm frank holland in for brian sullivan who is reporting from the milken conference in california we will hear from him in a few minutes. let's kickoff the hour with the check on the markets and your money. right now, stock futures are in the green. fractionally up. dow poised to pop as i said. this comes after a late day rally that saw the averages end the day in the green after hitting fresh lows for the year earlier in the same session. nasdaq actually ending the day with a 1.6% gain we are showing

they have already seen conditions for the fed to back away. but the fed has not seen the data yet. for others, they believe that if you want to get inflation down, you need to get inflation rates much higher. vice chair clara, the former vice chair basically said it, the expeditious moves back to neutral will not get it done. he things we need to get to at least 3.75. tom: many of the fed hocks gather at the hoover institution. our michael mckee is there, with us later with randy quarles. we could take the next 20 minutes and do a data check but the guests are two important. we have to start with an update on pound sterling. jonathan: pretty difficult, had a look at 1.22 earlier, back to 1.23. on the nasdaq, we recover just a bit. down half of 1%. we were down one full percentage .30 minutes ago. yields are higher by five basis points. euro-dollar. dollar showing some strength. a couple of ecb officials talking about higher interest rates. this is where it gets tough. tell me what the central bank will do and then tell me what the market will do in response to that. and the bank of

jason: just to be clear, the fed should not be waiting and the fed is not rate -- the fed is not waiting but what the fed is -- has currently got priced, the market, what is currently expected is clearly not going to be enough. if it is going to remain behind the curve doing the period you were talking about, that six month. i appreciate what you are saying, we are going to take action, but is there data we are still going to be behind the curve and have to do even more further down the road? what is -- what does even more further down the road look like? jason: i have a-inflation forecast, but i would not put everything on my forecast being right. at this point the thing you should do is say there is so much uncertainty you are not going to change course until you see actual inflation come down. you are not going to act on the basis of forecasts, you are going to act on data. the fed is raising rates 50 basis points. he put 75 basis points back on the table. if they tell us rates may go above for -- four, a lot of that gets priced in. financial conditions are doing a lot of work right n

>> 50 basis points appears to be locked in by the fed. that would be the biggest hike since the year 2000. we have details on how they plan to run off the balance sheet, $9 trillion. that is the other part of the story in the u.s., what will they do with the securities and how quickly will they shrink the balance sheet? we would also have chairman pebbles first in person press conference in two years since the pandemic began. he will come on and he will be peppered with questions on the outlook. that will be a critical take away, not just the rate hike but how many are in the system, how fast and how hard will the fed go from here. much expectation in terms of signals. dani: any opportunity for voluntarily. -- for volatility. to ukraine. there are reports the kremlin will be holding referendums in russian occupied areas to open the way for full annexation. we are joined by roz matheson. it is almost 10 weeks into the war. what do we know about president putin's aims to achieve in terms of the outcome? roz: he expected it to be over a lot

we have the fed deciding tomorrow. but we saw gains wiped out through the afternoon session just to end up in the green. we did see the nasdaq 100 underperforming a little bit. a broader benchmark with the s&p 500 benchmark gaining .5%. wti under a little bit of pressure given the china lockdowns and concern over the amount of russian fuel. india is getting a little bit of ground. but the key focus is in the after hours trading session as we had those earnings results. starbucks missed expectations and sales results in the u.s. outperformed. dale's across china did not. it plunged when it came to comparable numbers, more than 20% given the lockdown across china. we are seeing a little bit of a rebound in share prices after hours. we are seeing amd up more than 7%. they came in with very strong sales forecast. they are showing that they are doing pretty well, beating rival intel at one point as well. and we see young china, watching the company very closely. they met expectations with growth of 4%. they are saying that

if you believe the fed and if you believe that the fed can engineer some soft landing and tame inflation, should commodities also rally, bk >> should commodities rally? >> yeah, absolutely. you have two things going on today. you had a weaker dollar, right but the commodity story isn't necessarily a demand story it's the supply story. >> so the fed can't control. >> the fed can't control it. also, remember, china is closed right now. so all that commodity demand is not even out there in commodity prices are at this level i think we've got an issue coming into the summer >>> all right, coming up, we've got some earnings coming your way. shares of bookings holding, tripadvisor and etsy on the move we'll bring you the numbers yet. more, what is next for the markets as the central bank battles inflation? the details ahead. do not go anywhere "fast money" is back in two. i'm only 21 but i've never been afraid of hard work. i waited tables to help my family make ends meet. i dreamed of going to college and the kpmg future leaders program helped me get there. with a scholarship, mentorship and

karen lynch and david on the fed. markets near session highs the fed just raised rates by 50 basis points it was a double. they announced plans to start trimming their balance sheet but, mike, i guess it could have been worse and more hawkish because the market was very relieved to hear that the fed is not considering 75 basis points, which would be a triple hike and fed chair powell really laid out a pretty clear road map that was already there. what do you make of the reaction >> exactly we were somewhat spring loaded the market we've been talking about was beared up and investors going around collecting new things to worry about and that included the possibility the fed was going to be even more full steam ahead, wanting to keep that 75 basis point potential for a hike out there. and essentially being interested in breaking things as opposed to just trying to get back to normal given the position we started in, it seems as if we triggered that same reaction we had the past two fed meetings, went into all of them at

from other fed brinks -- other fed banks around the country.e get the national ism, and it is going to be a question of whether this is a supply problem , whether it is china and the problems we have with getting stuff out of there in covid zero, or whether it is demand, all of a sudden people have decided they don't want to buy stuff anymore. jonathan: mike, thank you, as always. just ahead of this print, we got this note from andrew hall and horse and veronica clark -- from andrew hollenhorst and veronica clark over at citi. "data on wage and price inflation remains most important for asset prices. this is particularly the case given chair powell's strong indication last week that price stability is his key concern." so even if we get these downside surprises on economic activity, there's this belief in some parts of wall street that the fed keeps going because the focus is on something else. tom: and then the message from goldman sachs, they did frame out unemployment rates that are elevated, but not anything that we would call a crisis. rig

is a credible fed i want more. i want them to do it now i want them to fight inflation in the moment. china will reopen. when china reopens, we'll see an acceleration in global growth. why is it when we introduce emergency measures we can cut interest rates 100 basis points on a monday morning like we did in 2020 when we cut them 50 basis two weeks ago, but yet we take away the interest rate cuts, we do it slowly. in 2008 we lowered interest rates 400 basis points we did three 75 basis point cuts i think what the market would rally on is if we had a very aggressive fed that lowers the expectation on market participants as to what the federal reserve is going to have to do. do too much right now. i think markets would be fine with that. >> i just don't know steve, do you think they would be fine with that? i don't know what the likelihood of that happening is, seems slim and none cramer made that argument, they're going too slow just do a lot like joe says now. we'll figure it out. you guys are so far late and behin

whatever the fed is doing, it's going in the opposite direction in the fed wants to see a tighteningnancial conditions and they don't want to see too much of a rally because that moves in the opposite direction for what they are trying to achieve. do you agree with that? >> the fed is very much focused on financial market stability and not targeting yields but yes, they would like to see the market respond to what the fed has already done. they have other tools in their toolbelt to continue to push longer rates higher and draw down the balance sheet. they will ramp that up and if they are not comfortable accelerating the pace of breaking reese's, the -- it may not be doable moving into the fourth quarter. they can resort to balance sheet reduction at a faster pace which will provide nice upward rush her to the longer and/or at least provide a floor to longer rates. jonathan: who do i listen to in this market? >> i think at this point, we need to listen to the fed presidents. the policy makers tell us that policymakers are uncertain about the direction of rates. there is a very fruitf

so i think that the fed not going sooner is one of the biggest mistakes the fed has made since i've been covering them they all sort of felt like they should have stopped buying assets they were doing so, tyler, incredibly through march. >> yeah. a time which was the same month that they reversed course. they had a plan to do something and they wanted to be, i guess, the only excuse you could give was they wanted to follow through with their plan, to do something through march and they did so and they reversed course almost automatically it's part of the reason they have to be a little more firm now in terms of raising rates and probably why they're doing 50s now. they probably should have stopped. powell made a pivot and you could say he still had a covid crisis to deal with. if you remember there was another outbreak he was late in the rhetorical pivot and he was much too late in terms of the pivot when it came to buying or stopping the purchase of assets in qe let me just say really quickly, tyler. when all is said and done, i hate to do something too quickly, and we are now 11 minute

nathan: the fed is moving, and as the fed moves in the u.s.nomy is under pressure, still it is better than the rest of the world. you are seeing the dollar strengthened. there's been a debate about how much traction the fed is getting in financial protection, but make no mistake it is getting traction on the dollar, and that has echoes throughout the rest of the world. u.s. stronger currency is helpful for us in fighting inflation, but the weaker currencies who are on the other shy to that are inflationary in those countries and making the challenge for those central banks even more acute. in addition, for many emerging market economies, it creates tensions in their balance sheets given their exposures to dollars. so it does create, as you suggest, some dilemmas for these central banks and may force them into further rate hikes at times when they don't want to hike rates. lisa: here in the united states in about 24 hours, we are going to get that cpi print, expected to come in at 8.1%, down from 8.5% in the prior read. how important is it to l

i wanted to talk about john's writing in the atlanta fed. fine, but i want to talk about the fed.e, let me take a quick move over there and then you guys can talk about football and i will let you go to the pub together. i'm curious though, especially after being in the atlanta fed concept recently there is a believe in markets of the fed will recognize the slowdown we are seeing in some of the data and respond by pausing and not raising rates as much. this seems to be opposite the rhetoric from fed officials. what was the scuttlebutt when people were talking to you, when they were not on camera and on the podium? what did they say when it came to their frustration with markets and belief in a fed push? >> what is remarkable is they do not pay -- fed officials do not pay anywhere near as much attention to the markets as we do on a day-to-day, sadly minute to minute, basis. you have to think, where were the markets in the fourth quarter of last year. before the fed had made its pivot, they were seeing little interest rate action from the fed this year and they overshot fed guidance

at least a plateau as we wait to hear from the fed.he treasury market is sitting where it was yesterday at uft

how far does the fed have to go? this data point may give some indication or fuel to that sentiment. today we have to keep a focus on what is going on in europe. this has to do with gas prices. this has to do with some sort of cohesion in the european union. the nesters are meeting in brussels to discuss additional responses to russia, and putin's insistence on paying in rubles. this comes as bp reported earnings, and they reported a doubling of the profits even though they reported a $25 billion right off for their share in rosneft. this shows how much oil companies have gotten above this simply because the prices have gone up as much as they have over the past six months. jonathan: let's talk about this equity market more broadly. jp morgan and the investment bank think we are being too negative. "we feel that a per risk stance is reinforced by more infrastructure stimulus and regulatory easing in china, and the positive news from the q1 reporting season." join us now is run temple -- is ron temple, cohead of multi

the fed hike was largely priced in. telegraphing it may be won't be as some people thought. >> that is the way the market is reacting. i believe it is normal to review. we're coming out of 10 years of accommodating policy. that is creating spillover. about time we get there. as an investor, i welcome that. we can approach the marsh are bash the markets with the cost of capital. romaine: how much does this affect it? mathieu: for us, it doesn't. we always captured the liquidity premium. we tend to do exclusively rates on the private traded side. i would not say this is no news. it is just part of what we have to manage. it is about macro, micro, working on companies. it is business as usual for us. romaine: you are a bottom up investor. you have to pay attention to broader economic conditions. when you look at economic conditions globally, are you anticipating we could be in for a significant slowdown in growth? mathieu: it is likely. we have a little bit of a perfect storm, the mother of all happy hours. you could not b

the fed is ante.atin for getting out in front of the trend, which is codified within fed history. ex post is after the fact. surveillance latin is important. for example, we do latin and we like hypothesis. jonathan: can you translate that? tom: i need a glass of tang. we look to the weekend and are wrapped up in tottenham versus liverpool. i do not know the latin pronunciation. van dyck is the key for liverpool? jonathan: he is a fantastic defender. tom: they have to get by the guy. jonathan: you have a decent line, too. can we please get the camera up? lisa: i am good. jonathan: lisa is not happy. this ex post, it is not necessarily my view, the fact that we have a former fed official saying they disregarded the data because of uncertainty about leadership, i am surprised a bigger deal has not made. that is hugely problematic for the leadership. tom: you are correct. it is out there. no question about that. as yet an opinion with david page, is not prepared for this conversation. ante x post, is thi

fed for guidance on how healthy the u.s. consumer is, because we have been knee-deep in earnings season, we had an opportunity to hear from a lot of companies on what trends they are seeing with their consumers. have you been able to have some significant takeaways listening to some of the earnings calls so far? katie: i think it has been really interesting. more to come on the earnings season, we will hear more and more about the consumer. a couple of trends and themes i take away, one is we are seeing the shift away from goods and services, we saw that from amazon. people want to get out of their houses, they want to travel, go on vacation, go to restaurants. the shift from goods to services is happening. interestingly enough, in terms of strength of the consumer, that strength may be waiting at the lower end consumer. we heard that from mcdonald's last week, they received some signs the lower consumer was not able to handle higher prices. trading down in ticket price. it will be interesting to see going forward how the st

respect the fed. which i have done and will continue to do my job as president is not to nominate -- i would nominate highly qualified individuals but to give them the space they need to do their job. i'm not going to interfere with their critically important work. the fed has dual responsibilities one employment and two, stable prices jay powell and other leaders at the fed have a laser focus on addressing inflation, just like i am and with a larger number of board members confirmed, i know we'll use those tools to address rising prices for the american people i look forward to powell's continued leadership with the fed and the senate confirming my final nomination in the near future and thank you for coming in >> thank you let's go thank you. let's go thank you a. let's go thank you, thank you let's go come on, you guys. >>> president biden meeting with fed chair jay powell moments ago at the white house let's bring in kayla for more reaction no major headlines yet >> reporter: a brief set of commen

i would run the fed -- i would remind the fed that the price of anything is the interaction of supply and demand. if the fed has the ability to influence demand through monetary policy, but does not have the ability to influence supply, to a degree that lingering inflation is a result of lingering supply chain disruptions. the fed should not get overeager and raise interest rates too much to try to choke off inflation that ends up not being demand driven to begin with. i think that is the story for inflation and the balance of this year. jonathan: let's talk about the story for this market. the jp morgan investment bank saying we are pricing in too much investment risk. do you agree, and how do you measure that? scott: i think that is right. i think the market is too pessimistic about the risk of inflation. in an environment where we are adding jobs, roughly 500,000 a month and wages are rising, combine this together, consumption is 8% of personal gdp. going into 2024, there's a recession out there. but i don't see that in the near term. where i think the anxiety arises is we are stil

would we be better without the fed? >> get rid of the fed. it is not authorized.u have to do is get special interests to influence the federal reserve. they are, big players in the whole system. but everybody likes them. because if you're on the dole here in this country, you need debt, because we can't afford it. we can't work our way through all of this and provide all of the needs and demands of the people. we couldn't be fighting wars with the military industrial complex, they love it. you couldn't do any of it without rigging monetary system. i think things are much more serious than people want to believe and i think the real problem started in '08, that qe stuff. right now, they're tinkering, maybe we can be tighter for june and july. that will work. i don't think so. it is price fixing on the most important price you can have, that is interest rates.. charles: i don't think anyone believes this will be aggressive fed. wall street plays the game, feigns concern, this fed will not hike 11, 12 times. i do real quick, get your thoughts at the world economic fo

that is one reason why they are not exactly front running the fed, but the fed is basically front runningtself. telling everybody what they intend on doing. with so many speakers out there, there is some confusion, but when you look at the core members of the fed, you basically get a pretty good idea of what they are going to do. it will be very important. all the speakers over the next couple of weeks will be driving where we are going to go. >> this is a genuine question. you think participants have a clear understanding of what the rate will have to be? >> no. i do not think precisely. the market is pricing around .5% terminal rate right now. that being said, if inflation comes in higher than expecting over the next six or seven months, that rate could go higher. that is the real risk for the markets right now. you will have a higher terminal rate and maybe a higher landing at some point. for the said, i think they have decided that they are going to fight inflation. until you start to see some of those employment measures start to turn, the fed will marie -- will very less. >> thank y

that to me is the big call at this point so either the fed is tradpped o the fed is not trapped and does not have to really get the economy into a bad place before we can say inflation is moving to the right spot. >> it's hard to know with the war still raging in ukraine, oil prices still rising. nat gas up 21% this week i want to hit the e-commerce names. amazon sinking to its lowest level since 2020 there's wayfair, ebay, etsy, shopify. ebay and etsy among the worst performers on the s&p after both companies gave weaker-than-expected guidance. again, these stocks have been weak all year long shopify is now down 70%, mike, taking away a lot of the pandemic gains i guess the question from here is what settles these stocks if the fundamentals are turning weaker than expected >> well, i think in every case the question is -- and it's going to be different. what is built into shopify's valuation near the highs about the perpetual, very fast growth that was going to be there at these levels, i say who owns them, who needs to get liquidity. when are they going to be so low they are kind of ig

where nothing's going on other than the fed >> with the fed hiking -- >> that's kind of my point here. so we're a little oversold we're at a level almost got to a new 52-week low. that would have been a bell ring back towards 4400 in s&p >> 4050 had been a level that a lot of technicians pointed to in terms of being a support i'll flip what dan had to say on its head in that we had all this bad news we know the fed's going to do 50 we had bond yields popping yet we still managed to stage this bounce that's actually good news for the markets, no? >> well, i don't know, i'd like to see more follow through to put a pin as the bottom. i think there's plenty to point to i keep pointing to credit. let's look at what it did today. hyg was basically flat jnk was down i would say you saw further deterioration of credit even as the equity markets are able to rally. so i keep saying beware of equity rallies i think more or less, that's what we saw today. apple didn't make me feel great. amazon didn't make me feel great. we did this analysis with microsoft maybe a week ago, be u a stock likes app

given the fed's track record, is it safe to trust the fed? how do we know this project wouldn't face the same decade-long delays. >> i think fed now is going to be really important in terms of offering real-time payments. i agree with you, from the perspective of those small businesses and families that need access to their funds the most quickly, real-time payments can have the largest effect. fed now did not get started for a long time, because of public debate of the nature that we're having here today. we are a public institution, so unlike a private institution, there needs to be support from congress and broader support among a variety of stakeholders. that is why fed now took some time to get that kind of support and get off the ground. but we are on track to deliver it this time next year. the private sector is quite excited. there was a lot of ambivalence in the lead up to that announcement. and i think it is a really important -- today there financial system is moving very rapidly. it is very hard for us to see five years out. if we

fed chair powell: thank you. you're right, 3.6 percent unemployment is just about as low as it has been in 50 years. i would say that i expect and committee embers generally expect it will get some additional participation. people will be coming back into the labor force. that will tend to hold the unemployment rate up a little. i would also expect that job creation will slow. job creation has been at more than a half million per month in recent months, very strong, particularly for this stage of the economy. so we think with fiscal policy less supportive, monetary policy less supportive, we think that job creation will slow as well. it is certainly possible that employment would go down further, but i would expect those to be relatively limited because of the additional supply. implications for inflation, really wages matter of fair amount for companies particularly in the service sector. wages are running the highest they have run in quite some time. they are one good example or good illustration of how tight t

people can attribute it to the fed but it is not the fed. this is the realization they are tied between a rock in a hard place. increasingly concerned about recession and tied to what is going on geopolitically, whether having to do with ukraine or china lockdown. jonathan: looking ahead to cpi on wednesday and hoping we see more deceleration. lisa: but does it matter if we just saw peak inflation? if we end the year at 4% inflation will we feel good? will the fed say we are done? i don't think so. jonathan: i am with lisa. the mechanical peak is not the story. how much longer does this persist, that is the secret sauce for the future. tom: what is the fed going to do? we just got over the last fed meeting. june 15. along the way we will have inflation. the inflation battle over the weekend was extraordinary. mr. silver at jp morgan looking more short-term. it is a services sector inflation catching up with goods inflation? you featured the jan hatzius piece where he says it is over and done. jonathan: and for the first time in last couple o

we got fed minutes we know the fed is probably looking to potentially move faster than slower, but you have a dynamic here where i think when you add in the inflation data, a widely followed indicator for the fed. 4.9% is some easing. we got more data from retail companies and consumer companies in realtime. so we got the q1 numbers, but we heard a little about april and may that said things were strong the dollar gens when we thought, okay, higher end luxury continues to be in a pretty good sweet spot what about the lower economy no, dollar gen gave numbers into may that said we're ahead of expectations and then the inventory dynamics, how they handled that a lot of other people were quite better than walmart and target to handle that stuff >> i think the scary part is that we can rally around 200, 300 handles in the s&p and still be in a bear market. i think we'll make a lower high, slip back down, suck everyone back in again. so i don't think we're out of the woods. quantitative tightening starts next month what's going to happen at that point if we start next month and we start tig

fed really wasvigilant we thought some market traders liked the fed to be more hawkish than what we thought maybe bond traders do press the buy signal when the fed goes further. i don't think it -- it is the punch bowl always works. that should be the default position if it looks dovish -- they will never want to take their medicine right now stock traders. no >> i think that's right, joe this has been an historic time and massive readjustment to what's happening it has been difficult to move from the fed being wide open to the fed taking away, as you say, the punch bowl i think powell is right to one extent matters how you take the punch bowl away. i think what he did yesterday was put a kibosh on the randomish and outside talk going on he said we will do this, but do it in a deliberate way i want to make a quick point, joe, if you don't mind it is about the cnbc fed survey. it came in earlier this week more dovish than the market. it was more closely aligned with what powell said than where the market was priced. i think that is an interesting tell which is the people who answer o

rates are going up and the fed is chasing. there rates went down, the fed chased. rates will go wherever the market thinks they will go. if the fed overreacts, all they do is make the situation worse. kriti: mike, a key part of that press conference with chair powell, he said monetary policy to a large extent is working through expectations. would you agree with vincent's take? mike: not quite, and here is the reason why. you have an awful lot of fed speakers who have raised possibilities. and i'm looking at you, jim bullard. evermore hawkish actions that then the market adjust to. ira jersey, our bloomberg intelligence fixed income guy, said yesterday, he thinks the fed is frontrunning itself. to an extent, i think that's true. they are putting out there the possibility of doing all of these extra hawkish things that they may not follow through on but the markets are repricing to them, especially the 75 basis point idea. nobody really endorsed, not even bullard, brought it up as a possibility, yet we saw the reaction in the market yesterday. the biggest increase i

reports before the nest fed meeting. i just don't think it's a couple of months. maybe you grind it out for another week or two, but you've got to acknowledge we've been grinding it out for four months already. >> i give it back to you, i didn't mean to interrupt you i just want to make the distinction here between saying something is too early and he's eventually going to be right if you say it's going to rain outside and it's sunny every day and it rains finally i told you. >> it's the same thing for mike wilson mike wilson's been calling a bear market for a year and a half and you applaud him give me a break. >> abrpplaud him i've told him i'm wrong, what do you mean that's my exact criticism. if you tell me it's going to rain every day and then it's sunny, and then six months later it finally rains, you can't claim you're right. >> good, i'm not telling you to wait a year and a half right now is a good time to buy, you've got to have a little guts for crying out loud. let's not cry over two months. >> okay, you have

the fed is expected to raise rates this week.his is bloomberg. ♪ >> there will be an interesting grade and central banks have an interesting path to gay dish to go to deal with inflation. net rates will go up. jonathan: from new york city, this is bloomberg surveillance in your equity market is slightly lower. yields are coming in at 296 after having a little look at 2%. the currency pair on the day is unchanged. tom: stay with us through friday because it will be really event will. we continue our discussion on what politico brought last night which has riveted america. job matthew provides leadership on this and that will drive forward the conversation. let's go back to fester know what feldman. it lays out the modern supreme court back 200 years. this drives for the left and right and center in a wonderful moment in charlottesville, virginia. this is the times were order who is now teaching at yale and uva. linda greenhouse. there is no suite justice and a lot of people are not used to they're not being swing justice so they a

jobs report mean for fed policy? i ask that question also because we've got inflation rising, and unemployment -- the rba coming out saying they see unemployment at lows not seen since 1974. strong jobs report and employment picture in the u.s. does it mean the phillips curve becomes alive once more? kathleen: very interesting question. let me start here. i think you are hitting on very important things. a strong labor market, normally it is not that great. but if it is too strong, like the u.s. where you have labor shortages, the jobs are going unfilled. what good does it do the economy broadly if it remains that way. . in terms of what is being expected on payrolls. jay powell said yesterday the labor market is extremely tight, what he thinks job creation will slow. if jobs -- jobs isn't just about strength of the economy it is also about inflation. in terms of the specific forecast, payrolls are supposed to slow to 380,000. that is healthy. unemployment is set to go lower, 3.5%. this is what people are looking at.

the fed is worried about a moderation in growth.s were far too optimistic, at the same time, we have europe playing catch-up, up nearly 2.5%. they did not get the same boost the u.s. had gotten. this is msci asia-pacific without japan. a gain of someone percent despite a possible u.s. crackdown in china listings in america. and yesterday's rally in tech in general after that fed decision. manus: socgen got their boost from higher rates and volatility in q1. helps to offset rising costs as the lender prepares to exit russia. revenues rose 17%, beating estimates. let's get to paris, caroline, is on the ground with frederic oudea. caroline: i'm happy to be joined by the ceo of societe generale, good morning. frederic: good morning. caroline: the equities were slightly missing on the cost of risk and operating expenses read can you tell us exactly what has been the impact of the war in you rein on your activities? frederic: strong performances across the board. and strong management of the costs related. the cost of risk, 60% comes from

the former new york fed president bill dudley in his latest opinion column says he thinks the fed has to get real about the fact they will have to be a lot more aggressive than what they are saying. >> the problem is the federal reserve has not been forceful enough in stating not just what their goal is, 2% inflation, but the means to achieve that goal. chair powell not want to talk about why monetary policy might not just have to go to neutral, but to tight. a tight monetary policy is what will be required to get inflation under control. kathleen: i am also thinking it will be easier to make those statements when you are not actually at the fed anymore. jim bullard is more aggressive saying get to neutral rate to 2.5%. some day 2.5%. and see where you are. they want to take this step-by-step. do they have that luxury? is it going to be so persistent a godless of whether it piques or not? they will have to speeded up, maybe even by the summer. haidi: all of this uncertainty will weigh on markets, which we saw asian stocks briefly snapping that seven-day losing streak. but it looks cha

fed talks about neutral.tral changes and almost every fed meeting they don't really have a notion of where neutral is and look how much has changed from the minutes and we're down 7.5% in productivity and we had 428,000 in jobs and continuing claims continue to drop and we had a consumer credit jump month over month of over 52 billion and the highest ever since 1905. the dow is at, what? 33,128 before the last meeting where they tightened and ten-year rates were 297 and the two-year closed at 278 i guess what i'm saying is that ultimately they are already taking some away in the futures markets, and i think the reason the fed is going slow is because it talks tough and the market ramps up expectation and expectations are going down and that all gets encompassed in the slow-moving fed because they'll meet what the market truly expects what was overreaction and that's their interpretation. >> let's get what you think of what steve reported from the minutes today. any surprising revelations there or pretty much

the fed meeting. andrew >>> thanks, becks. energy giant bp reporting a big jump in first quarter profits. climbing to the highest level now in more than a decade despite the decision in february to divest the 20% stake in the russian oil. the charge of $24 billion led to the paper loss of $24 billion that the company stopped after the profits in the account additional $2.5 billion share buyback. we will have the ceo with us on the program in the 7:00 hour. a lot to chew on all of the geopolitical issues and price of gas. >> oil is higher this morning. i saw it at $104 big moves you are watching with commodities and yields it will be interesting times >> will be >> maybe it will do work for jay powell. >> jay grant will be on. he has interesting things to say about the quandary that the fed finds itself in. >>> let's talk chegg slashing the sales forecast. the company ceo says students are taking fewer classes and the ones they are taking are less rigorous with fewer assignments. that sounds good >> wi