fed pricing and u.s. futures jump on the stock action. two year yields plunge as traders scale back rate bets. fomc will hold fire at this month's meeting. thus, u.k. prime minister rishi sunak says a plan to contain the svb fallout is in the works, getting support for the u.k. tech industry. another u.s. bank fails over the weekend and the government steps in to backstop depositors and allow easier access to capital for banks. peter contee from worth didn't says that the fed's lending program is an admission of not only systemic risk but that the risks are so unusual and exited that failure to invoke this liquidity could create a financial crisis. with the government stepping in, the stock trading is underway. you have to remember that silvergate was highly crypto exposed. that relief is being felt through the crypto sector, bitcoin at 4.6%. there did seem to be the expectation there would be a government that comes to the rescue, perhaps another buyer. s&p and nasdaq futures jumping on the announcement from the treasury, from the fed, f

if you look at fed pricing, it's all over the place.you ever seen such confusion about what the path forward might look like? megan: i have not seen so much confusion in terms of market pricing for the fed path but i haven't seen such contradictory data coming out of the economy either. there's data to tell whatever story you want to tell in terms of the u.s. economy. monetary policy is not feeding through as we expect it to. it's working through financial channels just fine. it's working through the banking sector but not through the real economy and the labor market as we are use to it. the labor market has held up freakishly well given the aggressive rate hikes we have seen. part of that might be because of the pandemic, part of it might be labor hoarding that we are not used to. we don't know how to measure any of those things, so it is difficult to anticipate how the economy will respond and how the fed is going to move. i think the fed is going to continue to use rate moves to lean against inflation even if we have further bank in

does that sound about right to you and how does the market price that longer cycle from the fed with smaller increments? ira: we were pricing that even before we got the bank runs the last week or so. the market is trying to figure out what are the risks to the economy because of what is happening in the financial sector? it's not so much that the market is not pricing out hikes, once the fed calibrates where the peak terminal rate should be, when do the cut start? we were pricing in cuts by the end of the year and that is not being priced accurately. whether the fed goes another 25, 50 or 75, but it is how early and aggressively do they cut and it will not be early. it may be aggressive but it won't be early and that is what the markets are getting wrong. alix: to that point, it feels that it depends on how quickly inflation comes down. when are we going to see the disinflationary shelter impact and how fast will it be? mike: it takes about a year for that to start hitting so that would put us in may, june. there was some hope we would see it earlier in the year but most people think

kailey: on that point, couldn't the market force the fed's hand? if they price and 50 basis points, does that not mean they have to move 50 basis which? yelena: there is something to it and it almost sounded like chairman powell had regrets about downshifting to 25 at the last meeting yesterday. he sounded like, had we known what we already know now and had we seen all the inflation data and payrolls data and all that at the last meeting, we would not have downshifted to 25. guy: why was the january data such a head fake? yelena: i would not call it a head fake. there are some elements that suggest that some of it was temporary. we estimate almost 30% of the january increase was due to weather related issues and seasonal adjustment issues, but a lot of it was actually driven by genuine strength and economic momentum. you see the rotation from goods into services. you see a lot of hiring or the lack of layoffs in the leisure and hospitality sector. some of it will continue into february and not all of it will reverse in the reading that we will receive friday. we

another sector -- haslinda: how much of the fed has been priced into current prices?ly we are in a one-one correlation -- a 1-1 correlation. there is a huge amount of selling follows it, so there is a correlation, but the domestic environment, as far it is concern, maybe we are at the end of the cycle. so, other markets will have to disconnect from the global turmoil, whether the next six months, three months, it is difficult to say. when challenges the valuations of our market is reasonable, not cheap, so there will has to be that. haslinda: thank you. indian markets. nifty leading gains by more than 1%. the rupee at that level. a leg up for the indian rupee on a day when the dollar is under pressure. keep it here ahead. plenty more with us. this is bloomberg. ♪ haslinda: welcome back. the ceo of credit suisse says business momentum improve this quarter, including in the markets unit. he told us exclusively that shareholders need to be patient for the benefits of the radical turnaround strategy, still years away. >> i am fully convinced that the strategy. we are exec

inflation gets under control, which it will, i hope not because banks collapsing, but because the fed's pricees are going to play a role. chipotle is going to go much, much higher. it is the best of the best. portiiil's come on and we will embrace you the way i embrace those hot dogs, which are darn good. kind of chicago hot dog. it's not like a traditional hot dog. certainly not like a cheesesteak. the charge interpreted by larry williams the market has already bottomed for real, and even better, it could be due for a long lasting move higher. quite the time for today. given the fact we've seen the market fall apart. much more "mad money," include ing holding, running up nearly 30% after holdings. could the swiss sportswear giant continue? let's discuss. >>> and regular viewers know my thing towards nvidia. the powerhouse you do not want to miss. and all your calls on tonight's edition of a very scratchy throat "lightning round." stay with cramer. if your business kept on employees through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per em

katie: then you look at what is going on in the two-year treasury yield where you see these fed expectations price. a few weeks ago, we were about 5% and i we are below 4%. you look at thank read it will rally that we've seen particularly in the short end. is it safe to say maybe we have gone too far? zach: we think it has gone way too far and 400 basis points of race cut -- rate cuts to be price in seems insane. we think the economy is resilient, which is part of the issue from the inflation front but you can see a severe recession for the fed to be going 100 basis points between now and the end of the year. that is not our base case call. we outlined a potential hardening scenario where the fed is cutting rapidly by the end of this year but we do not think the banking issues we have seen have been the start of that hard landing at this stage. katie: i want to spend time on the volatility we are seeing in the treasury market. what is supposed to be one of the most liquid bond markets out there, you think would these extreme moves we see -- even though we live in extreme times are now -- it seems

guy: fed swaps now pricing at 5.5%.im, if we see rates continuing to rise, how is the manufacturing sector going to react? tim: i don't know that i can fully predict that. right now we would manage our way through it, and i've been feeling that. i don't really feel a strong effort will occur at the federal reserve, but i'm no expert at this. with this kind of number, i don't think they are seeing what they like to see. alix: yields jumping higher, equities rolling over a little. i'm just trying to check in on the dollar, sort of giving back some of the earlier losses. going forward, what is going to be the biggest thing you are looking at with the march data? tim: i'm still watching the chemicals product sector. improved in the month of february, but it is not above 50 yet. transportation was the best performer. machinery grew in the month, but not strongly. it is feeling like we are in a pretty good place. not seeing any major fallout. europe and china noted as improving beyond expectations. i like the fact that custom

fed fight -- hike. the first time this cycle we haven't priced in a full hike. policymakers, what's at stake is they are balancing the inflation fight with the turmoil in the banking sector. the are counting down to the policy decision later today. let's bring in valerie tytel and paul. let's set things off. set the scene. what's expected? valerie: the fed is likely to meet market expectations for a 25 basis point hike, but it will be about the dots and what they signal on the path. he mention uncertainty around the feds path forward has been extremely notable. if you look at front end interest rate voles, they are at record levels. in the last few session, the markets are acting like the banking wobbles might be done. the fed acted swiftly and preemptive measures. there was not a lot of pull from the dollar swamp lines -- swap lines. the new lending facility take up was not that large. perhaps we go quickly to pricing that everything is sound and we go back to worrying about inflation. if you look at funding metrics, that's a very important funding metric. it ha

core consumer prices accelerating faster than expected. the fed will have to weigh that against the risks around financial stability for the banking system. there is relief for now across the asian space in terms of equity markets. across the benchmark, up 0.7%. particular upside for the banking stocks in tokyo and hong kong. some investors bet that the turbulence emanating from the financial world in the u.s. is starting to ebb. the futures in europe range bound after the rally we saw yesterday. futures in the u.s. also flat. a strong session yesterday, brushing off concerns about the cpi print. it was the regional lenders in the you -- in the u.s. pairing gains. the two year yield at 4.31. we saw that move higher of about 27 basis points yesterday in terms of the yield at the front end, and that move continues today. six basis points moving at the front end of the u.s. yield curve as investors adjust to the probability of a rate hike again from the fed on march 22. we will check how markets are reacting to the latest cpi print with mark cranfiel

yields remain low and push higher as fed pricing is repriced?appens, the dollar goes higher, so you see this reversal of fortunes. flows will have gone back to the dollar bonds, but at the moment there is certainty and they look a better haven than other assets. haslinda: volatility is what has been defining markets. brent's fx -- bloomberg's fx and rates strategist, david finnerty with us. let's get the first word news. >> let's start with the london metal exchange. nickel contracts have resumed in late hours of trading. this comes after last year's unprecedented turmoil when training -- trading was halted, affecting billions of dollars worth of deals, and these were canceled in response to a runaway short squeeze. meanwhile, china's vice premier reassured the blue executives the country will continue to open up to international businesses. he said at the annual china develop and forum that opening to the outside world is a national policy. we also got a message from president xi pledges to pursue a mutually beneficial deal. taiwan and honduras

we did not know if it was a real price discovery. the fedeal price should be. we just said, we will build cash and we know that cost our shareholders money, but also provided option analogy to our shareholders that really is paying off today. again, we've got only 37% of our deposit base went out today, but really importantly, 20% of our deposit base is in a checking account at the federal reserve. >> were you surprised about what happened last week with these other banks? >> i was, very much surprised. i think, based on the reaction, everyone has been. >> you obviously, because of your very long history, clearly understand these things, i was surprised the banking did not fly, some of these banks that put so much money out on the yield curve and at such a high concentration, just a few customers. >> i think these cases will be studied a long time, and i can't say i know the details around all of them, but i think the industry as a good history of learning from mistakes and i think they will learn from this one. >> i am very grateful you cam

fed has forecast it will go yeaq end. ea=%9qm■i] lower than that righw in the pricing. ot, because the market is almost totallyxdok ignoredñr it. >> look at that chart. we now have a chart of the fed/market gap.xd 1 point, two points. gillian, will you respond to that? >> yeah, i would say that i agree with steve in the sense that at the beginning of qe, i wasÑi supportive. what hase1 really concerned me thexd degree to which complacen about the outlook has become baked in. i think the fed could have and should have spoken up much more about telling the market theyxd need to prepare for -!k$ higher rates. yes,q i do think it's time for the 5a■investors, foru■i]ht■ pr equity, venture capitalists, the entire systemÑii] to wake up th this is not normal and adjust to something that is moreÑiÑi sustainable. >> if i may -- >> just quickly.q very short, barry. nobody ever promised you the postxd doddçóçó frank world was to be a rose garden, that banks weren't going to fail. the wake of the pandemic. you could make an argumenti] thá supervision, except i the case of a couple of

it could help the fed with prices faster than expected. collins said it may be too soon to weigh the impact of the policy measures. >> the recent data shows signs of more underlining strength in the economy certainly than i anticipated and unemployment rate is at historic lows and spending indicators through september that were stronger than expected. this strength might reflect the fact the policy did not enter restrictive territory until the second half in 2022. it may simply be too soon to see the full effects of real activity >> i'm taking you to overtight data >>> chinese factory data growth above expectations the manufacturing significant focuses on construction hit a 12-year high >>> coming up on "street signs," we will speak to the former prime minister live on the shores of lake como. we'll be right back. there's always a fresh deal on the subway app. like this one! 50% off?! that deal's so good we don't even need an eight-time all-star to tell you about it. wait what? get it before it's gone on the subway app! next on behind the

yvonne: are people pricing in for a hard landing, a recession? the fed seems to be reversing what they were saying about this whole downshift. now they are thinking may be 50 basis points is back on the table. in march of the u.s. jobs report on friday, a cpi print next week. it raises confusion among the markets of how hawkish this fed will be. goldman sachs being the latest, bringing up the fed pricing for their peak rates of 5.5, to 5.25%. rishaad: there is a terminal rate in yellow. where looking at the markets pricing in 100 basis points of more. we have the likes of goldman sachs raising their forecast on peak fred -- fed rate hikes. others getting involved too. there are people like mohammed taking a look and a swipe at the fence policy. yvonne: he was saying, look, the communication has been interesting. they were talking about disinflation and now they are talking about higher and faster heart -- hikes. there something more sinister in play. the more this volatility occurs, the greater risk of economic and market accidents. that is a recession,

now, let's switchgears let's keep fed fund futures as a price and overlay that with one-month t-bills, down about the same amount in yield and you can see how they're ly . tomorrow, it will be one interesting morning. i know you will be discussing that, kelly. i don't think they are going to raise rates at all, in my opinion. but we will have to wait and see, but there's some very telling markets. so the two-year in europe versus the ten-year, it closed at the least inverted of the year now, if you go back just a couple of trading sessions, it was at the most inverted since the early '90s to me, that may be better off listening to the markets tomorrow kelly, back to you >> rick, thank you very much >>> joining me now onset to make sense of this market action, i'm pleased to have such a big group. andy, nancy, peter, welcome to all of you and our own steve liesman is here, as well. steve, if i may, let's kick it off with you and bring us up to speed on what the market is now pricing in for the fed, which decision is due out a week from today. >> yeah. i think i'm overusing the word "dr

fed. >> a big conundrum. they will likely meet market expectations going for a 25 basis point hike but boy have things change quickly. four sessions ago we were leaning into pricing a pause. the fed likely to meet those expectations. the biggest things for markets is what they decide to signal in the dot plot. perhaps showing confidence the banking issues are contained. the flipside of the argument is maybe they will keep the dots where they are. a signal in some way the lag effects of monetary policy are upon us, lending conditions are likely to tighten and possibly doing the work for inflation on them. francine: the concern for today specifically is a hike of 50 basis points. the market will panic if they don't hike at all. the fact they don't have faith in their financial institutions. going forward, of the press conference is extremely important because it needs to acknowledge some of the financial breakdown we saw in the last three months whilst reassuring. valerie: he will be asked on his thoughts on the recent banking turmoil. the fed will have more intelligence on this. they probably spent the last seven days on the phone to his many regional banks as the

the fed is trying to curb inflation with rapid rate hikes, yet recent economic indicators are showing the moves are failing to keep a lid on rising pricesjerome powell vows to continue the tightening, but policymakers have to maintain a balance between cooling the economy and preventing a recession. >>> now, improving labor efficiency is critical for japan's economy as the country tries to deal with depopulation. its hourly productivity is the lowest among g7 nations. one of the reasons is its inflexible labor market. now, long held concepts regarding employment are changing. tomura keiko has more. >> reporter: this student changed professions at the age of 28. before that, he worked at a tokyo travel agency. during the time, he taught himself computer programming. that work inspired him to seek a career as an engineer. he had told the recruiters about his computer skills and enthusiasm for the new position. yoshia thinks changing jobs is now more commonly accepted among young workers. >> reporter: aft >> translator: after graduation, most people imagined working for one company until retirement at age 60 or 70. now, if you feel you don

signal. >> if the fed does not take next week, there will be questions about whether the fed is also committed to priceing to tighten things up and realizing it is not that easy. >> the stress on the system heightens financial conditions. there is a warning about the lag effects of monetary policy. >> this is bloomberg surveillance. tom: good morning. another day, another financial crisis, this time worldwide. it is about zurich and credit suisse, it is about cabinet square in london. there i say credit suisse, first boston attempting to be built in new york. it is global. jonathan: it is and it starts with credit suisse, stop down by almost 23%, just off session lows and record lows. the record low is 1.68 earlier this morning. top shareholder, and saudi national chairman saying will you provide more assistance? absolutely not. we understand that the regulatory issues across that 10% threshold, that i have sent it repeatedly, to say that out loud when the stuck his them as much as it is and now it is down even more. tom: technical analysis, the stock is well contained and trending down, a straight lin

the fed futures are pricing in some of that what does it mean for the broader economy? ge that goes counter to the fed saying they will be steadfast to reduce inflation? >> i think it depends on what we see beyond march it is possible we see the fed pause for march and let things calm down. if you continue to see hot inflation and the measure is put in place by the fed facility and working to calm fears, then you could see another hike come may. i don't think this spells the end of the tightening cycle. i think even if it does suggest the fed needs to be a little more cautious with their stance, i think it could end up with the fed potentially just sitting where they are in terms of the fed funds rate for a while it doesn't necessarily mean cuts i think there's still a lot of different scenarios that we could see that could suggest that could lead to pressure and slowdown >> sarah, is this what the fed is trying to do it slow down the market and test the market is this an unintended consequence here for something in the market in the economy to break down >> i don't thin

the fed has to balance the financial stability and the price stability. king next week would send a signal that perhaps the fed is not that committed to price stability. jonathan: zero consensus right now, thank you for joining us. goldman sachs, wells fargo and barclays are looking for a cut and they're looking for the end of qt as well. citigroup and bank of america are still looking for a move next week. a week is such a long time in this market. tom: we are all data-dependent been around that is to maintain greenspan's measure. the person who had the best four days alan greenspan. he used to pound the table and andrew stood his ground that he wanted rates higher faster. greenspan would have said measure it out, take your time, observe the data nationally. jonathan: we will observe the data at 8:30 a.m. with cpi just around the owner. just just around the corner. futures right now on the s&p 500 are positive zero point percent. from new york, this is bloomberg. ♪ advancing flight for future generations. ♪ welcome to a new era of flight. ♪♪ what will you

one more thing that i've been tracking, the gap between what the fed has priced -- has forecast for the year-end funds rate, and where the market is right now. and that's the fed balance sheet. if you look at the market gap, that is now 114, where is it now? it's a tremendous -- that's the january '24 contract. and there it is. thank you very much, guys. 1.13 percentage points, guys. and you see it was negative before, that meant back in the beginning of march, the market thought the fed would do more than the fed itself forecast, and now that's come dramatically back the other way, where now the market is baking until that the fed will be 1.13 percentage points below where the fed thinks it's going to be at the end of this year. there's a reckoning to come, guys. it's going to be interesting. >> which way will it break, though? fed, going back to the fed balance sheet, the traditional window went down, but we saw the huge pop last week, right, because that was before the special window had opened. we flush it out, but still, even if it remains the same week on week, isn't it still a re

if the fed does not hike next week, there will be real questions about whether the fed is also committed to price stability. jon: let's get more on all of this. wells fargo's managing director joining us as well as mike mckee. based on those comments, the balancing act is where the fed has to consider. mike: there are two things you have to keep in mind. what is it the fed is completely focused on inflation and they really believe invasion is a danger to everybody's candor of living and we need to get inflation back down. the other is they have always felt that there should be a dichotomy between financial stability and monetary policy, that they have tools that work on both. they can do monetary policy with interest rates and they can do financial stability with rules, regulations, supervision. they think they can essentially walk and chew gum at the same time. when you have the inversion numbers that we have, it tells you the fed has more work to do, a 25 basis point hike at least would be warranted normally. a lot of it will depend in what happens with the banks between now and next wednesday

there are more people saying, no, there are calls all over but some are saying the fed cannot do it, the market pricingthan a coin flip that they go 25 basis point hike next week. fed has a tough job. not that they did not always, but it got a lot tougher. kriti: linda, final word on simply what that kind of hard landing scenario might be like, if, hypothetically, we are looking at a pause going into next week or even a cut as 1 wall st bank is forecasting? do we then have more emphasis that the fed is going to be even more hawkish later in the year? is the 100 basis point cuts that is priced into the market right now over nothing? linda: yes. we think it is over not. i should say we think it is overdone for the 100 basis point cut. we think they will not hike rates next week. they don't have a need because mainly financial stability risk trumps the inflation risk. i am see comparisons to 1987, when they were assurances the economy was fine, as now, and rates got cut because of concerns. once settled down, rates had to go back up. we continue to have an inflation that is persistent, and we look at the

consumer prices rose in february. that is left the fedials facing a tough choice as they waive the inflation fight against financial stability following the svb collapse. cpi, excluding food and energy, increased .5%. 5.5% from last year. bond markets are pricing better than the odds of the fed hike next week. moody investors have cut the outlook for the u.s. banking system from negative to stable. it cites a substantial decline in depositor confidence after signature bank and silicon valley bank collapse last week. it cites concerns over unrealized losses in the risk profitability. this comes as u.s. authorities are set to be examining the collapse of svb by misconduct of officers including stock sales and whether they violated trading rules. the probe is being handled by prosecutors of the justice department's fraud a section. the u.s. attorney's office for the northern district of california and the sec. inflation in argentina accelerated in february due to soaring food prices. its cpi spiked over 6% and registered a 102% increase annu

prices paid of the ism looks to the surprise on the upside what is the fed calculus at this stage andre you more worried of the fed tightening or under tightening >> i think the prices paid data and not informative series they tend to reflect movement in commodities prices what the fed is focusing on more is firstly the actual incoming data given the degree of uncertainty and secondly the developments in the labor market and what it implies to inflation 12 to 18 months forward. i wouldn't worry about the survey i think tension is elsewhere of the -- elsewhere as is the case right now, the uncertainty is where the peak or terminal rate in the u.s. will be we moved from plateauing for most of the latter part of last year to now pricing in successively higher levels for the terminal rate in the u.s it needs, i think, a turn in the data, labor market or inflation data to stop >> let's move then to something or somewhere where it sounds like you do have conviction. that is your tactical stance on gdp. what makes you say that sterling isn't an attractive play at this point? >> very short-te

fed. there is clearly still concern here, but perhaps the fact that as you can see, we are pricing in cutse fed, equities are happy to keep rallying. investors are happy to keep buying risk. citibank says watch out, we are not so sure when it comes to things like stocks and credit. two year yields in the u.s., lowered by three basis points. in australia, it goes down by six. in japan, inflation still remaining sticky, there is that pressure. that is causing folks to snap up the yen versus the dollar by about half a percent. we were just talking to esther about the future of the end. it is not quite clear at this moment. we are also seeing some haven buying amid the banking crisis. central banks are in focus, it has been a busy week and will continue to be busy. hawkish ecb officials are getting bolder about the need for more tightening with last week's rather half-point landing without an incident and a quarter-point fed increase some policymakers are making the case for higher borrowing costs to tame inflation. it comes as other central banks push ahead with their own tightening campaigns

how much of this easing fed is priced into valuations at this level? >> yeah. i was just looking last week, the nasdaq 100's premium over the s&p 500 is back to where it was at the peak in late 2021 you could say that seems like it has done as much as it might be able to do today, that's not the dynamic. you have microsoft down 3% basically a reversion of what was happening last week. we're holding together so far. >> yeah. you are seeing a little bit of this give back the reason microsoft rallied is not necessarily because of microsoft-related things they are aaa rated, so that helps in the flight to safety. there's another tone in the market where we are seeing the cyclicals fade that was a big thing at the beginning of this year where industrials were leading, materials were leading, now you're seeing that cyclical trade lose a lot of steam. one of our favorite indicators to watch is equal weight discretionary. i think that's important to watch going into the next couple of weeks >> the economic message from all that would suggest more uncertainty, more down

would be pressure so isn't it paradoxical then in some ways those regions of the kansas city fed land prices nine or 10 percent between 18 and 20 percent in the region by then minneapolis fed. >> and the primary reason for that was b described well a minute ago showing that the cashh receipts were tied in those areas of the country were predominantlyor concentrated in that was substantial not just the size of the farm operations. and then the region that they are located in. >> and maintenance and investors. and his arkansas back to the day from back in liechtenstein with too much farmland so bill gates why do by farmland it's a good hedge against inflation but how much of that savvy investors know that the government has a role and will stepep up to keep land values from crashing? the issue is who benefits from values?and people with a lot of land. but the non- farmers owning land goes away from the goals ofn foreign-policy i spent seven years and it finally had an impacter on me. who gets it and why cracks. >> . >> so if financial stress and in particular has a negative impact and then wil

the job market is loosening up one more thing i want to show you, joe, which is how there are fed hikes pricedou have 90 basis points of hikes priced in through october and then through the end of next year, 2024, 130, what do you want to call it basis points of cuts built in and that's really the question about is the fed too tight, is the market in line with the fed, is the market not in line with the fed that's the tngsension and the debate right in those three bars that you got >> slowly getting more in line i guess, steve slowly but surely. >> but not on the back end >> right but maybe it gets in line because the back end is headed even higher that we don't even know and we're still x amount away and now even the terminal thing is even higher and we're still below that i don't know thank you, steve >> i want to shift gears right now to talk a little bit about tesla. elon musk announcing his master plan three at investment day, close to seven years after that part two of that plan. they want to produce 20 million cars by the end of the decade. h here's elon musk >> the desire for people to

or not, 50 basis points would be on the table for that march meeting when i look at fed funds futures, i see them pricing in right now four 25 base points, or four fed hikes. with a strong front that we have seen, the picture has changed. >> well, at the same time the interest rate goes up, which is not good for stocks, the economy looks so much stronger the number of ceos that see a recession coming have been more than cut in half remember, at the end of last year, we had a record number of forecasters forecasting a recession. never before a recession had we had so many. that is because of the strength of the job market, strength of the first quarter. i'm not saying the second half of the year wouldn't be weaker, but a lot of people are saying, you know what? that 220 earnings, that actually might come in. i actually think we're going to see a big slowdown of the rate of reduction, and i think a lot of corporations, by the way, are positioning their guidance very cautiously, because they are still worried there might be a big downturn i think we may get a lot of beats in the second half of the year rath

kriti: michael mckee covering things all for the fed, as the pricing changes minute by minute. let's turn to a senior fellow at the american enterprise institute, where he specializes in systemic risk. experience at the imf, jp morgan. he is a part of the research team involved with policies like basil -- basel iii. the idea that there were so involved in that fdic backstop, if it is seen as stimulative, there has to be a pain point. what is that pain point in your opinion? >> the fed's action this week could have an impact on the banking system, for sure. raising the rates would then raise the rates on money market mutual funds, the rates they pay, which would then pull deposits out of the banking system. if the weaker banks sustain some sort of run behavior, they basically fund the deposits that leave with loans from the federal reserve under the special lending program, or from the home loan banks. deposits at banks, generally banks pay little interest on them if anything. 0, 25 basis points on transaction balances. if they have to replace those with borrowing from the fed,

now, on the markets, as you note today, dom, have been pricing in very low -- seriously reduced outlook for the fedts are pricing in a lot of bad things for the second half and if those things don't come to pass, it's going to have to change that pricing if financial stress does, indeed, does away. sara? >> he was one of the high dots, right, on '23 rate predictions, higher -- >> he's a high dot. he's not giving anything, sara, on the idea that he really -- he doesn't want to be cutting rates. he wants the financial system to be dealt with through the fed's what they call macro prudential policy. i don't want to use that word but i think viewers have to get used to the word macro prudential. >> fat balance sheet, tools, that sort of thing. steve, thank you. given a few more days like this and i wonder if he'll change his tune. by the way, bullard not a fed voter. dick kovacevich still with us. do you think the fed will ultimately be cutting rates this year because of all this? >> i doubt it. it depends upon -- how bad the recession is that's going to happen. i would like to comment. bullard is exac

fed. they are still pricing in cuts after the fomc decision. does that how fit -- have to be priced out? eople continue to add bets? how high of a bar is there for some sort of easing from the fed? mark: in terms of what the swaps market is pricing, they go too far on the upside and downside. it's nothing unusual in that respect. if you look at the volatility you have seen in the u.s. rates curve over the past couple of weeks, that helps to explain the positioning it was skewed for higher rates. it may be too skewed in terms of rate cuts. we don't need to read too much into that. but, what you may well see is that the u.s. yield curve, which has been inverted for so long between the two year and tenure, if people get the sense -- and 10 year, if people get the sense that the fed is close to taking a pause but the inflation numbers are going to stay relatively high, then you need to see this curve in version come out. the 10 year yield is way too low, if the fed are going to be looking past inflation, a bit more and more worried about the banking sector in the short-term. the curve can fla

a bank rebound led stocks higher yesterday on inflation watch a gas prices held steady at 3 44 gallon. everybody is waiting on the fed markets pricing in 87% chance the fed will raise the main interest rate by a quarter point with more on the upcoming fed decision. let's bring in rachel siegel, economics reporter at the washington post big day here. the economy has performed strongly since the last fed meeting. you know if you just look at the economy and isolation, it would seem logical the fed would keep raising interest rates, but we have banking turmoil. where do you think the fed comes out here? the markets expecting 25 basis points. there's plenty of people who think the fed should take a time out. it's really just remarkable how much has changed in such a short period of time. the last time that the fed chair spoke publicly, he was talking about those very economic science that you just mentioned. sign that these signs of the economy was heating back up, then maybe they would need more aggressive rate hikes in order to try and tame things down. but then you had this entire baking crisis squeezed in the middle,

everything across the board is becoming more expensive. >> gas prices going up, food prices going up. >> jacoby: but the fedng, and food costs. >> jacoby: it didn't raise interest rates or pull back on quantitative easing. >> the question now haunting economists is whether these price hikes are a pandemic blip or a sign of a long-term threat to the economy. >> jacoby: and they had a word for the highest inflation in more than a decade. >> transitory... >> transitory... >> transitory... >> transitory... >> i know you believe this is transitory, but everything is transitory, life is transitory. >> this inflation round is not transitory. this is very hot inflation environment and the longer the central banks wait, the greater the risk i reacted quite strongly to the assertion that inflation was gonna be transitory. i remember warning at that time that we simply don't have enough evidence that it's gonna be transitory. transitory is a ry reassuring term, because i tell you, "don't worry about it, it is tempary, "it is reversible, therefore you don't need to change behavior. so, yes, we have inflation, but don't

standard deviations overbought on fair value give or take is 3800 on that model by the way how the fed is priced right now. >> yeah. interesting. jason, i appreciate so very much your time. jason hunt be ter, he is, as we say, the head of technical strategy at jpmorgan now let's welcome in to have more discussion where this is heading. stephanie link and dan greenhouse of solas asset management stef, i said coming in today, critical levels. 200 day moving average got a little bit of a move higher as we begin the final stretch. the 10-year above 4% you have the overlay of the technicians and what they're watching and the critical levels to suggest whether we really are going to have more down side or not. >> today we have a little dan loeb effect and for him to get aggressive on a name that he sees there's a lot of opportunity especially in the second half, especially in nvidia and semis that's a vote of confidence that there are places in the market that you can invest in it's not overall the broader market that you want to be invested in this year. you want to be a stock picker. you mention tha

i would say, clearly, the consumer price data due out on march 14 is the most conclusive reading for inflation. that is going to give us a good guide of what the fed'sreferred reading, the pce price indices. the things i am watching. let's look at the ism report, both services and manufacturing. services has eased, but that price index level is still high. look at the comments, yes inflation pressures are easing. but, it is still very elevated. i think that is what we are seeing on the service side of the economy, which is overall running strong. that is a problem for the fed, it keeps service inflation hi. i worry a bit, we've got news to this rather steep disinflation on the good side as bottlenecks have become unwound. as supply chain bottlenecks. with china reopening and coming online with oil prices potentially going higher, that feed into other commodity prices and lyft goods prices and headlight. it is a lot of crosscurrents to consider. kriti: what is striking to me about this particular report, it proves perhaps the january reid was not a fluke, it wasn't a seasonable our ration. which brings me to, how high can the services growth go? is t

they are doing is right, to take seriously the need to come back to price stability, to the target that was defined. i like what the feding here because i do think -- but the beginning of the ecb and i believe in the medium to long-term, having price stability to the level around 2% which is the official target for the ecb and for the fed and all major central banks, of the developed world, is the condition to have maximum growth and wealth for the people, maximum employment, even in the short term, and may create some difficulties -- and what they are doing is to ensure that we will return to the target of inflation is the right thing to do. the way to do it, it is not impairing growth. we are growing despite the war in ukraine and increasing inflation. we continue to see positive growth and we could -- continue to see an increase in employment and that is true or france. if i look at the unemployment rate, it is the lowest for a long. -- for a long period of time. lisa: some people will point to the images of protest and garbage collection issues and be pushback -- you have seen -- -- the pushback you have seen in pa

fed. i'm not sure i agree with the pricing but this is a pause, the end of the tightening cycle and historically the markets are choppy as the fed tightens. but then after that tightening is done, there's this stage of euphoria, maybe we got the worst behind us and soap the markets can still perform during that time. that's what we might be experiening this market in release mode and that can last for some time. to your question, melissa, which one is the fed -- who will be right, the banking sector or the fed or the market pricing, i think at the end of the day the fed will pay attention to the banking sector. as fed chair powell said, the fact that banks are in turmoil means they're going to tighten credit conditions and that, in and of itself, takes care of the rate hikes they might have had to do otherwise. we're likely at the end of the rate hiking cycle and that can support the growth. >> the credit we're not thinking of as a de facto rate hike. what has gone on so far is causing the equivalent of two to three rate hikes, joe. that's sort of interesting to think about, that we might be fac

if you go back to the fed easing chart right now what is being priced in is the fed is essentially donecharles: right. >> the economy will come down on its own. when i look at this, what i see is bunch of levered players being squeezed. they had short positions in two year bonds, expecting rates to go up. they got squeezed through this crisis period. we get a pricing that is pretty improbable right now. charles: christine lagarde today, she didn't use the term lag, she intimated same thing, they're starting to see their work. say we got the lag. one more hike. they stay there. to me though, doesn't this say they have broken the economy? we start to see, this many rate cuts, you know does it mean they have broken the economy? so far argue, housing, seen pretty good housing numbers lately, banking, even those are special circumstances? has the fed really broken the things that they wanted to break? >> look what is priced in here. you see 150 basis point of cuts in the span of just essentially a year. that is a pretty aggressive easing cycle. would align with a pretty challenging economy.

fed were not too hike at all or go 50 basis points? subadra: definitely 50 basis in this market because the market pricing suggests the fed will maybe cut rates once -- hike rates once but then they will have to cut in june or july meeting so in that context i think the fed probably does not really want to go against the investor sentiment broadly speaking and swim against the tide if you will. for the most part, larry summers has been spot on through the cycle and i don't know if the fed has been listening to larry summers during the course of the cycle and it is not clear they will at this particular meeting. probably speaking, i agree with what tony and mike were saying, the economy is relatively strong, we do not really see any signs of a slowdown or imminent recession. the real risk is if they do not address national stability issues, this look -- this could lead to a sooner, faster recession. katie: you bring up the idea of rate cuts and pricing we have seen in the market has been pretty shocking when you think about we were about 5% on the two year yield last week. that feels like a long time ago and had one point this week there

and also by the minneapolis fed, land prices have jumped nine to 10% in the region that your banks are, and 18-20% apparently in the regions by the minneapolis fed. so eventually the great planes. >> i think a primary reason for that was described well by pat a minute ago in showing much of the cash receipts were tied to corn and soybeans. those areas of the country that were predominantly concentrated in corn and soybeans because of the profit increases in those industries really were quite substantial. and as was alluded to earlier there are distribution differences when it comes in, not just on a basis of the size of farm operations but regions as well. when we look at disparities regionally across the country you are going to see some of that that is tied to the kind of industry, the region there located in. >> let's go to another question for i'm sorry, susan. >> question of land values, nate minchin investors. -- mentioned. there was information who is buying farmland? we were worried about the liechtenstein by too much harlan. but who is it these days? people

jackie: the fed is going to look at the preferred gauge, pce, prices for producers they were up pointfor the month was slightly less than expected but there still higher, that says to me the producers are still paying more. >> that's correct, the same report that we had on february's personal spending and income this shows me that wage and salary income is still growing rapidly up seven-point to percent, this is the average wage but i think wages can multiply that by the number of people working. we still have the ability on the part of consumers overall to pay for higher prices and also tells me there's a lot of wage cost pressure after that will help to sustain inflation at a rate well above 2%. when i look back historically if you would be confident about and into rapid price inflation the aggregate number that measures all wage and salary income taken together should grow no rapidly than 5%. unfortunately were at seven-point to percent february. jackie: there's a little bit of a disconnect stocks move higher in their thinking the fed is going to pause on rate hikes nobody will bec

when you look at the fed funds future contract out at the end of the year and the beginning of next year, what the market pricing is, is totally out of line with what the fed is saying with their dot plot. i know that chair powell has told us to take the dot plot with a grain of salt, but i think that's where the rubber meets the road tomorrow, is where are they going to put the dot plot? are they going to reduce the marketplace for the pricing that is out nine months and say we're doing to do the dot plot or not or have some kind of rhetoric associated with uncertainty? >> if they don't lower the dots, in other words, if they don't blink and meet the market where the market is, what's going to happen, paul? >> i don't know is the honest answer. but what i do know is that if you have more conflict between the fed's messaging and where the marketplace is pricing, that leads to an increase in uncertainty and volatility. and that's not particularly good for these particular times. particularly given the fact that the big part of the debate right now is not jamie dimon and what the fed is going to do. it's what cong

to do let's bring in steve what are you seeing here >> well, what i see is the traders in the feds are pricing tighter. in fact, it is a total re-think. the question is have the fed funds trader gone too far or have the equities not gone far enough here is the concern. shows up in a massive fall on the outlook for rate hikes it was a percentage point higher last week, and then the year end fund rate, i can't believe i pulled this up, 375. that means if they are betting on a percentage point of cuts from the current level by the year end, all of that expressing skepticism and what's been done is not enough to keep from dragging down the economy. and also, by the way, inflation. let's look at what's been done in light of what steve grasso was talking about. that creates a guarantee that other uninsured deposits will be guaranteed they created a few fund and eased lending rules at the emergency discount window at the fed. so officials telling me they ended to signal an implicit guarantee for those uninsured deposits and there may have been some progress today. but a finding of som systemic rk is

and only priority of the fed is price stability because it's thee branch and executive branch that are responsible for, quote, full employment and having that policy environment and makeing sure that's right. so your commitment to price stability is welcome by this committee. yesterday in the senate you suggested that you supported a regulatory framework abroadly regulatory framework for digital assets, is that right? >> yes >> is it your view that if we had a regulatory framework here in the united states for digital assets there be more transparency and rules of the road for consumers, investors and developers >> absolutely. >> if we had those rules of the road for business seeking to use and develop block chain as a potential new technology in their business and tokenized payments that that would be beneficial to business to know how to go about that. >> yes, and to ensure it's done in a safe and sound manner talking about banks. >> and my next point would be that, to help banks, investment brokers, custodians understood how they could participa

here is what is ahead on the show a key fed gauge of inflation shows prices are cooling off, but are cooling off enough for the fed to hit the brakes on interest rake hikes? our guests say no, they are still on track to hike in may. he tells us what makes him say that and why he's not worried about the bank trade >>> plus, citi not too worried either, giving the usa double upgrade today and downgrading european stocks. so are u.s. equities the place to be? our market guest says proceed with caution she tells us what she's worried about, and why she's positioning as a result in the way that she is >>> and it's a box office going the way of the blockbuster we look at the changes in the movie landscape and who is best positioned to benefit from it. >>> let's start with today's market they are picking up steam. as you look at what's happening, right now, we are about near session highs. the dow and s&p up nearly 1% at the highs, we were up 290 for the dow industrials. solidly above the 4,000 mark for the s&p 500. 1% gain there is on the nasdaq 146 points to the upside for the composite.

fed has a job to do. it means financial stability but also price stability. we're going to find out at the end of this week how much of a job because the fed's favorite preferred inflation report will come out. the personal personal consumpte index. expectations are that is going to be higher than consistent sense you sus estimates. -- consiste consensus estimates. we're at a crossroads. it's important. this week is also the beginning of fed speak where they're all coming out with their opinions. that also confuses the market but nonetheless, at least we open up today with n an actual bank coming in and buying part of what started this whole thing, silicon valley bank and that's good news. maria: yeah. all right. i'll take it. i'll the take some good news here. it's good to see you. thanks very much. >> thank you. maria: the market is up 156 on the dow. let's slip they a short break. when we come back, congress is ready to consider legislation on tiktok after the ceo's concerning testimony on capitol hill last week. we'll talk about the plans for the chinese o