the broader question, as you say, if the fed and fed chair jay powell are comfortable with this dovish drift in the outlook envisioned in the rates, and that's loosened financial conditions since the last meeting. taking a look at how much they've loosened the ten-year treasury down 60 basis points since that november meeting. junk bonds and 30-year mortgages down 35. the dow down 7 a half of that percent just from today. average hourly earnings are up 0.6% if the fed didn't intend for financial conditions to loosen and has a problem with market levels, the fed chair today could attempt to lean against it with hawkish forward guidance. another problem for powell, the market sees the fed hike into 482, but easing by 50 basis points through the year next year that's at odds with a fed that's probably going to update its economic projections today to show the median funds rate at around 5% for 2023, plus or minus, creating a conflict between the fed and the markets rate outlook, kelly. >> there's a lot in there, steve, and i'm glad you pointed out about financial conditions easing, but wi

fed versus markets, 0-1. fed hawkish, jay powell sounds hawkish, but markets find it hard to. we try to make sense of it with greg jensen and dan tarullo. pcd sees court inflation as staying at 2% between 20 55. yields catapult higher. finding a 40% return, it is commodities. goldman sachs says underinvestment will lead to shortages and a big price moves. from new york, i am alix steel with guy johnson. markets in the u.s. may not seem to be paying attention to jay powell, but every market is paying attention to christine lagarde. guy: we just had a lot from christine lagarde on how to get markets to pay attention. jay powell felt that test. we saw financial conditions easing during his press conference. he fumbled a couple of lines but lagarde nailed every single one. the market is paying attention. that was a steep change from the ecb. alix: she crushed any conversation. the messaging was hawkish. she doubled down on the hawkish message. these moves are enormous. you are looking at almost 30 basis points on the 10 year yield in the. stocks here are falling in sympathy, but t

the fed needs to be data-dependent.ow that we have gone to this point were we are likely seeing more certainty around what the forward inflation trajectory will look like, we are seeing some signs of cooling in the labor market, not necessarily from today's print but headlines around job losses. we are now past this peak in fed hawkish this, we are past this peak uncertainty on how high terminal will go. now that we are moving past that point in into this regime around, ok, the market has more confidence on where terminal will be, looking at where some of these longer rate levels are at this point, they are attractive levels for investors and mark a great opportunity. katie: winnie, if we are past the peak of rate volatility, that would be good. i want to go back to i.g. versus junk bonds and where the better play is. winnie: this is a really tricky one. there will be so much idiosyncratic risk driving the next 12 months that it is almost hard to say i prefer i.g. over high-yield or high-yield over i.g. duration risk ha

the fed decides is next.s is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom.

but in some ways the fed is more hawkish than that. what they're saying is by the end of the year they'll still be at 5, 5.25, the end of '23 as of this morning futures markets were pricing in the idea the fed is already going too far and will have to cut rates twice at the end of this year. so i think there's going to be a major argument between the fed and the markets where the markets are saying you're overdoing it and you're going to put this economy into recession and that's why you'll endi up having to reverse course i think the fed is trying to be hawkish to show how resolute they are against inflation, but inflation is fading anyway and it's not worth putting the economy into recession to hit your inflation target a year earlier than you thought inflation is coming down anyway. i'm disappointed by this but i think this is more hawkish than markets expected. >> let's remember how dovish the dots turned out to be coming into this year and how wildly they underestimated the trajectory of rate hikes if anything, the dots are one of

the fed's rate decision.erome powell is scheduled to hold a news conference shortly after that announcement. will he tweak his language to be more dovish after that cpi print. frank alderson is going to be speaking on a finance and biodiversity event in montreal. fed doves got a boost as u.s. explosion -- as u.s. inflation slows more than expected. more on that ftx fallout. sam bankman-fried denied bail into the bahamas ahead of a likely extradition battle. this is bloomberg. ♪ >> no doubt, you look at the headline numbers, better discolorations in a number of items. >> everything the fed has been doing as difficult as that has been for the markets, the inflation data shows us it is going in the right direction. >> it's not just the magnitude of the moves, it's also the speed. >> investors didn't think inflation was going to come down and now it's coming down even faster. >> it is not the end. this is not the time to get complacent. there is a lot more to do. dani: some of the bloomberg tv guests reflecting a

it's fed gametime, markets away for the fed rate decision and jay powell's conference and stocks arelightly higher and ftx is being called one of the biggest frauds in u.s. financial history step sam bankman-fried could face as much is 100 years and risen and we will get the read off -- get the read out from bernie made off lawyer. the evercore chairman joins us for his take on inflation, recession and china. welcome to bloomberg markets. get ready for the next 48 hours. guy: it seems like the end of the year is rapidly approaching and the week is almost halfway ruined my inc. week are about to get to the main event. you've got the ecb tomorrow stop in the next hour, which of those central banks will be the most hawkish. alix: i'm wondering if t leaves will be more effective. there could be more pressure on the ecb for further hiking. i am kind of excited about it. guy: shouldn't it be the bank of england? alix: good one, i got nothing. you guys are in a tough spot. guy: there is some good news in the u.k.. our focus this hour is definitely what is happening with the dead. cpi did no

the 2% target didn't come from the fed. the fed adopted it. it worked well. from that, 3% or 4%, would make people worry. will they track back to what they do with monetary policy? there's always been this discussion, 2% is glued in. we should take very seriously the idea of raising it. it used to be too high. it's a mistake to raise that at this point. even though there is discussion about doing that. kathleen: once the fed gets to restrictive rate. if it is 5%, 6% or higher, how long will it have to keep it there? what does history tell us? what does your analysis tell us? >> i don't think he needs to be as long as history. because this is a relatively recent thing. say a year and a half, inflation was in high two years ago. that is unlike the 70's, we took almost 12 years before inflation picked up. this is different. this is a situation where if of fed signals doesn't want inflation to be this high, it wants inflation at 2% and will take the action necessary and wages and prices will adjust with relatively costless actions in the economy, that's the hope.

came out of the fed.discuss what they came out of the fed. it was a hawkish message that signaled higher rates next year. kathleen hays is here with the latest. will the fed be emulating mario draghi's spirit of doing whatever it takes now? >> the bazooka. or a better metaphor. paul volcker. do have what it takes? can you stay the course? nobody wants to see people lose their jobs. jay powell started his remarks today after they made this decision at 2:30 eastern time during a press conference, saying that the american people clearly want they will push hard. that is what they have to do to bring down inflation. yes, the 50 basis point hike instead of 75. dated four in a row. 425 rate hikes this year. that's a lot of tightening. it's another reason why people will think, gee, that will come down. it will not be a problem. look at the dots. this was another, not a surprise, a lot of people figured it was possible that the federal reserve would raise the terminal rate for 2023 to 5.1%. a lot were still thin

>> well the fed -- charles: how much should the fed pay attention? >> the fed says they do not pay attention to it and yet they have a weekly report that shows what liquidity is in the banking system for some reason even though they don't necessarily call it m2 anymore. we've seen a year-over-year negative print on biggest measure of money supply six weeks in a row, longest time in u.s. history. they will have to pay attention because of effect it will have on the financial markets in my view. charles: i think it is, powell said lag effect. he didn't want to say it. he is chairman. everyone's voice has to be heard to a degree e agree. ali, markets paying attention to it. >> we're just hitting 4,000 on the s&p. the question do we go below. looking for three ps, ppp, price of money, what is terminate rate, looking for when we pause and do we pivot? those are three things the market is consistently wanting more clarity in before they give some sort of a level for the market but, you you were talking about credit is constrained. credit is really constrai

york fed president john williams who said it's possible the fed will have to hike more than the 5.1%l funds rate forecast, adding going to 6 or 7%, is certainly not his baseline joining us exclusively is the former federal reserve vice chair pimco managing director richard clarida. welcome. >> as always, great to be on the show, sara. >> so look at the reaction post fed meeting. the s&p is down more than 5% since the statement came out on wednesday afternoon, and treasuries have rallied and yields are lower what is the fed going to make of that >> well, it is an interesting picture because really for the first time in this cycle, the market is not signing off on the path in the dots. the dots have the to5.25 as i look at my screen that's not priced in. we've gotten some good inflation data so part of this may be the markets are expecting the fed won't need to do what dots said. today we had mariey daily and williams pushing back. >> who prevails? >> i think the fed is going prevail. the chair said they will keep at it until the job is done i think that's what we will see. we will see

, shows up in the 2023 outlook medium fed forecast rising to 5.15 fed future prices year end at 4.41, that's cut after a few more hikes on the market sees the fed en route to making another policy error by tightening too much. >> i didn't think powell was as hawkish as he could have been yesterday. am i wrong he was way more hawkish at jackson hole talking about pain, last time they raised interest rates where he seemed to make the point that financial conditions weren't tight enough and they had a lot more work to do he was kind of hawkish but not down 1,000 points hawkish, was he >> reporter: i don't know how to put that in context like that. i think it's a good point that he was not dramatically more hawkish than he was previously first of all i want to make a couple points, i think what markets were listening for was some sense from powell that he got a little more comfort with inflation given the last two reports. you read morgan stanley today, he did not pick up on those two inflation reports or change their forecast the way the market did when they saw those two better inflatio

the fed is trying to signal 5% rate because the fed wants to keep financial conditions tight.this market struggle to believe they will keep it there through next year. lisa: and to your point, are they going to keep them there as they get to the next mile? right now, some people estimate we've only seen about one third of the cumulative effect of fed tightening play out in the economy. tom: i would have a higher frame rate. lisa abramowicz has really come on here with the knowledge. brief me and jon about the ability to miraculously shutdown those lanes, particularly on the left side. lisa: morocco has not allowed one goal to get through. their defense has been incredible. how much can they continue the defense, especially considering the fact that they are the first african nation to come out? honestly, i think this is testing. jonathan: they are serious about this. trying to walk on the right side of the fence. fantastic. so the big match this time is hakeem e against but they -- tom: i saw one story, the goalkeeper -- lisa: i love that they are all friends, that they give e

why is this a problem for the fed? >> i'll point something out here this cycle started ten months ago. we get to the end of the first quarter next year. we would go on a one-year trip when we started ten months ago you and i were sitting here talking about the price of lumber, the price of gasoline, talking about the price of oil we were talking about the price of shipping containers >> turns out that was all transitory >> that's what was driving inflation. all of that is gone. in fact, i think oil hit a 52-week low last week. the commodity markets or the input side of the equation is basically unchanged year over year now look, we're not feeling it yet in the stores and we're not feeling that as consumers yet because there's a lag that has to work its way through, but at the spot market today we're back to unchanged input prices. >> and there's an increase and evidence that rents are starting to roll over even though it wasn't cpi he mentioned as such but he's worried about the historical record suggesting premature l

the fed to keep raising higher for longer. >> you fight the fed on this at your peril. katie: joining us is tracy chen and we have cuts in the second half of next year. if you rewind and look at what the new dot plot says, it doesn't say anything about cuts, so who wins here? tracy: the market has been misinterpreting the fed speech. there hawkish on the terminal rate and dovish on the pace of hiking i don't think there will be rate cuts next year and the market has been pricing at least one cut. i think there will be adjustments in terms of price going forward, especially on the short end of the rate. i think there will be repricing of that in the market should try to price that out. matt, there is a good reason why don't fight the fed is one of the most overused. is there any chance this time is different? matthew: there is always a chance that this time is different there is always the chance. what we are seeing is an interesting paradox so if the fed ever says, we might cut at the back end of next year or that might be necessary, the more they talk about something l

you need the fed -- for the fed to back off you need the rest of the world to catch up.om: the ecb later today, arguably more about the discussion around qt. relative calm in the spreads between bunds and btp's, does that last? jeffrey: they are behind the curve on inflation. we like to look at me measures of inflation to give us a sense of how broad it is. it is brought in the u.s. but we are not seeing the breadth in europe. i don't see those in the trend mean measures. wage growth has picked up in europe and maybe more widespread. i think the ecb has really dragged their feet. can they hike without upsetting the bond market? that is a whole other question. probably not. we saw the fed hike 4.25 this year and they upset the bond market, we saw much wider mortgage spreads, for example. your spread between italy and germany is your version of that across the pond. it's not an easy situation but they are behind the curve and i think they need to go ahead and hike. tom: ecb needs to hike, do not fight the fed, two clear messages from jeffrey cleveland, chief economist at p

i think the fed comes -- the fed fed likes to not surprised the market so i think we are confident we will see 50 regardless of cpi prep. katie: careful, deliberate communication, that seems to be the jerome powell fed for the last two years. maybe 50 basis points in december is a lot but when we think about the past week and a half or so, has the fed's end destination changed at all? >> we don't think so. we think the pace of the hikes is poised to slow down. the final destination is the same. the question is really what does that mean for markets. to me, the fact we are starting this new phase with fewer of these double hikes and a slower pace of hikes, that probably cuts the tail of a scenario in which we have a fed-induced recession driven by over tightening. that is a positive thing. the other thing is rates volatility is poised to slow down here which is good news from fixed income because it allows outside capital to be deployed given the fact we have a much better value proposition from a yield standpoint today. the final destination in my view is the same. katie: so a five-in

what does it all mean for tomorrow's big fed decision? this is a make or break hour for your money welcome to "closing bell." i'm sara eisen look at where we stand now, s&p up .6%, well off the highs the nasdaq, still positive, up a percent. so you're seeing the most strength in technology if you break it down by sector, energy is in the lead today, communication services right behind real estate also doing well. what is negative consumer staples at the bottom of the pack and the only sector lower at the moment. the dow is barely up it is the high of the day up 707 points we're seeing big moves in the treasury market as well. wanted to point out, yields falling sharply earlier in the session. they had come off of those lows. you're still seeing a big rally in bonds and the u.s. dollar which is down 1% all in reaction to cpi or that falling rate of inflation. coming up on the show, much more today on the wild moves and we're joined by holly newman kroft, who has been bearish on this market. plus, we'll discuss the charges against ftx found

we priced in the fed the fed was 3,450 on the s&p two months ago we're waiting for earnings to be revised downward the thing we're most concerned about is a credit crisis powell doesn't have a crystal ball but he's sticking by, hey, i'm not sure we have to have a recession. that's an environment where stocks will be under control, people are underallocated, ways to invest through this, buying high quality stocks, free cash flow generators, companies paying down debt there is a playbook for that. >> majority say above 5% for 2023 while there may not be a credit crisis, could things get dicy. interest expense will expand at some point that's wanting to catch up. >> that's right. if you look at lending standards at the moment, they're the tightest they've been since the global financial crisis. what i think investors don't get is the move from 7.1% to 5% is going to be pretty easy. the move going from 5% to 2% is going to be very hard. in order to get that last leg of inflation lower, the fed is going to have to stay restrictive which they already are for much longer. i'm like tim i don't th

the fed higher.f they do not cut, they only pause, what are the implications for these other central banks around the world and what the markets are going to do next year reacting to what the fed does? laura: in terms of when we think about the ecb and the 50 basis point hike, i think optionality is pretty important for the bank of england. they are getting some strong data, it is going to be quite difficult to treat at this stage. it will not be cutting anytime soon, that is the case there, ecb is not a huge continuation from here towards terminal around 2:75 -- 2.75, people want to keep their options open. watching the moderation. certainly as we head into the northern hemisphere this weekend and -- hemisphere, in terms of australia, we are expecting the rba to pause in february. the most of which of the central banks taking his own path, downshifting and we think we will be pausing before that. i think the bank of new zealand started first in the hiking cycle and we expect them to continue. the ma

that is a pretty strong view on the fed.t of near-term certainty on monetary policy that wasn't there. if you ever wanted the connor factual, look at what equities did on wednesday when chairman powell spoke. jonathan: we like to throw around the word pivot. can you watch it -- walk it through what this means? ellen: the first pivot is when they step down the pace? they are communicating they will step down the pace so that communication has happened and we have seen the reaction in anticipation to that pivot. the next pivot is when do they stop hiking? we think they stop at 4.75 in january depending on the data. they could stretch out longer than that. you could even get 5.25. when do they stop hiking? the third pivot is when do they start cutting? we have not gotten communication on whether they stop hiking. they know the peak rate but that will be the next pivot. lisa: how have we moved so quickly from 5, 5 .25 to what you are looking for, a 4.6 rate? ellen: we have been resolute that they would get to january and a 4.75

going to get to all of it, the ramifications for the stocks and fed. but first we get to elan moi in washington just a stunning level as carl was laying out of stunning revelations at ftx >> the current ftx ceo characterizing what happened at the company as old-fashioned embezzlement, not sophisticated at all he's calling this a paperless bankruptcy because of the complete lack of documentation in fact, even in the cases where there was a paper trail, he said it raised more questions than answers. he pointed to the example of a loan that sam bankman-fried apparently took out in which he was both the issuer and the recipient. all of this is making it a painstaking process to try to secure customer assets ray said that process could take months if not longer that is leading to the big question in washington whether these events create urgency around this new round of legislation or stigmatizes the industry here's what sherman had to say clearly in that latter camp. >> my fear is that we'll view sam bankman-fried as just one big snake in a crypto garden o

fed is right my view from chicago, sometimes nashville, the fact the fed has never been right going back decades. i bet on the old bond trader in me, kelly. the treasury markets, specifically two and ten-year forecasting that we will get through this storm. >> all right leave it on that hopeful note. we need to today jeff, thank you again. appreciate t. great seeing you. >>> dow's down 931 crypto crushed and the fintech space. got big movers and whether more pain is ahead, next on t"the exch exchange". l? mm-hmm. for 1,100 bucks? ga-a-a-ap! looks like your wallet may need a sling too. tell me about it. did that goat say "gap"? he's talking about expenses that health insurance doesn't cover. eh-ehh-eh! well i'm talking about the money aflac pays to help close that gap. aflac, huh? aflac! ga-a-a-ap! aflac! gap... uh-oh! that duck can motor! get help with expenses health insurance doesn't cover at... aflac! ...dot com. 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 employee. all it takes is eigh

that seems to be the place where the market and the fed may be at odds the market thinks that the feds going to be cutting rates by the end of next year and the fed itself, at least thus far, has not signalled that i think that is a place where the disconnect with the market and fed might be most important and that might influence how equity markets perform once we understand how long the fed keeps rates at the relatively elevated level >> do you think we'll get a recession in the american economy next year, roger >> i do. i've said that for several months i think starting back in march or april i think recession is practically inev inevitable i think the issue is it will be relatively short or shallow. in a sense, that could be seen as a good outcome. for me, recession is far more likely than not. i'm thinking short and shallow >> you know, should that 2% inflation targeting re-thought, roger? wage inflation should be sticky. once you give people pay increase or hire at a certain wage, it is unlikely you will reduce that pay unless you want them to leave. that's got to be playing a h

s. feds latest interest rates rise is the lowest type in months . so is it winning its war on inflation? and also on the show, how you in tech workers are keeping their high t sec to running even from a far as a state of a business on robots in berlin. welcome to the program. another month. another rates rise from the u. s. federal reserve, but december hike signals. a change in gear rates are going up by half a percentage point somewhat less than a 3 quarters of a percent increases following the previous for fed meetings. it's just a cooling in the central banks, all our war on inflation and follows data suggesting price rises, slowed in november. however, the fed has indicated further hikes are still on the way well, let's cross over to new york and to our financial correspondent, yann's court and discuss this bit further. yes it, was there anything surprising really in what we heard from the fed up i, i would say there were a couple of things that were quite interesting. i mean, 1st of all, i mean, yes, we do see inflation cooling off a little bi

will it be a dovish reading going into the fed meeting? >> think it would take a significant amount of surprise from cpi to shake the fed off its course. they have signaled they would go 50 basis points this week. they want to slow down the pace. if inflation is pushing in the opposite direction, all bets are off or a bigger rate hike. all things being equal in terms of what we know right now, the fed is expected a signal that we have a new dot plot in terms of where they might see the fed rate peaking next year. we have the press conference from jerome powell which will be important in terms of where he things the inflation story is going and where rates will be peaking next year. in terms of what we know it is expected to be a smaller rate hike by the fed as they guide into a slower pace of rate hikes next year. it would take a big inflation story to change the story. dani: we have 11 central banks. we have ecb, boe and a host of others. what does the fed slowing down to 50 and potentially a peak in the dollar mean for other central bank

fed and that is front and center and the fed liquidity and what the fed does and the messaging sets the tone for anything and we won't know anything about earnings until mid to late january. that to me is a hundred years from now when i talk about positioning and the market, and i think people are all over map on this earnings recession that they may or may not have, and there there a got earn in technology and they're cutting and so many of the industries are still doing well and i still see the bifurcated environment where tech companies are in a, quote, resessions while other companies are naff gating and have more levers, and i also think talking about a recession, to me, what i can't get my arms around is we're still such short workers and wage growths will still be strong and how do you have a deep recession when we have the high wage fwrgrowth and we're sl short so many workers and ex technology the fed, inflation and oil traders that commodity markets do crude is at 73 bucks and it set it better than 2.5%. how do we see this playing out and for those that have a lot of energ

ira: the fed has to be less balanced.r the past couple of months the federal reserve has become more balanced in that it is talking hochul surely but they don't want to go too far, chairman powell said that a few days ago. with the report like this you have to be concerned that you are going to get jeff rosenberg's wage price spiral. maybe you only go 50 basis points in december, i think that's still the base case. the market is starting to price that may be the fed is going to have to go 50 again in february. because you wind up at a faster than expected rate of increase, you will get more flattening in the yield curve and price for a harder landing. tom: how can you have a wage price spiral if after adjustment for inflation, people's paychecks are getting smaller every month? lisa: everyone is saying we need to get paid more or we will have an early retirement. there are structural issues leading to participant rates going lower in wages higher. the market feels all over the place with one week lower, shifting every one

it is not a problem with the fed and market which is in agreement through the spring and the fed will slowd down to the right level hiking down to 25 points here is what evercore wrote, by targeting a higher for longer peak rate but slowing down, the fed prepares for the adverse case while allowing time for the data to falsify its inflation. 17 rate decisions over 5%. 7 over 5.4%. one official said 5.63% through 2025 a couple below 5%. powell welcomed the recent than better expected inflation report he pointed out that inflation is still running at 7.5% year over year not a reason to be crazy dovish. it would take more evidence to get confidence that inflation is moving toward the 2% target for the fed to ease back on rate hikes. becky, disagreement now with consequences down the road >> there is the old joke, where ships steaming ahead and another ship in the way radios out saying change your course. i'm headed your way. the other guy radios back says, no, change your course the first guy gets mad i'm officer of the aircraft carrier. the other guy says i'm a lighthouse you change you

and then the fed starts hiking interest rates, all of a sudden, to 4 1/2%.are skyrocketing, costing more to go go out apply a new vehicle or lease a new vehicle, and that burden is going up. and so they are the ones who pardon my language have completely gotten screwed in all this, the federal reserve's job has been made that much harder, because biden and company won't stop sending out stimulus. don't forget, that they have continued the moratorium making student loan payments through at least the middle next year, that is inflationary. it is a stimulus for rich people, and because interest is not accruing on that debate, the taxpayers are paying that that burden is being borne by people, again, who can't afford it. maria: what do we do now congressman smith we are looking at inflation having come off the highs, are we supposed to say oh, well nation has peaked, so let's get back to the spending and reckless -- uh approach to this economy? you know, joe biden just approved what 24% increase in wages for the rail workers, and he wants this moratorium to cont

that keeps the pressure on the fed. outside of the high strong inflation number, the thing that is missed by everybody is that the underlying internals of the payroll report were very weak. you have a dynamic that puts the fed into a pickle where growth is slowing faster than it has been and the wage growth continues to be strong. that's a tough situation for the fed. katie: i heard this a few different ways today which is how can we be it -- headed to a recession when we have these consistently strong prints coming out around the labor market? if you look under the hood, growth is slowing may be quicker than expected. do you see a recession next year? >> on your first point, the labor market is the strongest part of the economy. you have seen all of the stats that show the ratio of people looking for a job versus jobs available. that ratio is still very elevated. that dynamic tells you the labor market is going to stay tight for a while, but directionally it is slowing. the pace of slowing is probably picking up. do i

the fed is expected to raise its own forecast we get those projections today to near 5% fed chair powelln as focused the tight labor market as he has been on high inflation numbers, jpmorgan reporting this morning we believe that persistent labor market strength means a majority on the fomc is still likely to be more concerned about doing too little than too much. >> there's a limit to how dovish a fed or fed chair is going to be, becky, with those kinds of numbers. >> i'm trying to figure out what he could possibly say, steve, that would come as a shock or a surprise i moon i feel like i'm ready for anything. >> i think he's going to say they're good numbers, encouraging enough, two in a row. that's not enough. it's too early to pivot. i think he's going to do his best, becky, to maybe jump on those numbers a little higher, but he has to take into account the drift of the data. i think what's going to happen is he's going to lean on the jobs in the labor market as being the bump of his concern over inflation he's just not ready to give up the fed is always going to be late theirtown mar

is and i think we've had the worst of the fed and i think that's an environment going into the fed meeting that people have prepared for maybe we'll get surprised. i think powell has a lot of work to do because i think he can't be overly complacent, but i think people feel the fed is in the rear-view mirror. >> we get what is expected out of the fed, karen. we were talking about the pull forward of a rally, the pull forward that we saw in october maybe it's just compressed maybe this is the groundwork for the rally through year ending? >> i don't know. we could see a very different thing in ten minutes tomorrow if the cpi number is hot or very cool for that matter to me it was just front-ru runng of a cool number does that mean it's already priced in? i don't know i don't think we can look at what the fed is going to do until we see the hint from what the cpi is merger monday is generally a good thing because people see, oh, there's value in companies that didn't seem to be that valuable before the weekend. >> right and i do think this is a good time there's clearly optimism of what we're

the fed may have to keep the growth rate permanently lower. if you follow jay powell's thinking, which is what i've been doing, and i've been thinking a lot about it, the thing that was so hawkish to me and down batebeat about his spet brookings is he sees no help coming from the labor market y'all at home can play the how to measure growth game its productivity plus labor force growth if productivity stays the same and labor force growth is permanently lower, that's a permanently lower potential to the u.s. economy and if i didn't ask him the question yesterday about whether or not he's concerned about financial tensions, chi thought was the most important question, the next thing i was going to ask him was, hey, jay, are you thinking that the u.s. economy economic potential is perm permanently lower? what does that mean? it means, he has the stamp on the neck of this economy for a very long time to get it blow potential or the prior potential and get labor, get the demand for the economy in line with labor supply, which is permanently lower.

is the fed yesterday's news?oining us is julie beale with kayne anderson rudnick, what do you think? julie: the problem for the fed's they are using the news of last month to make their decision. it is tougher than to be ahead of the curve when they are completely data dependent, and they should be. they were not enough data-dependent in the past, that is why we got this transitory mess. what matters for the markets going forward more so than the fed, because it is well telegraphed they will stay higher for longer, is when we will get the cut in earnings estimates so we can reach full capitulation. if all of us know we need to be cutting earnings estimates, my preschool teacher has asked me when our analysts going to turn down estimates? [laughter] it is the most transcribed thing we can think of. i think that is more important, so i agree with this point of view. we can say the dot plot is relevant, but when has it been right? guy: you're basically saying it has its fingers in its ears and is going la la la. jul

steen: there is no risk that the fed is wrong. the fed is always wrong. they have not foreseen anything in their lifetime. i like to say when i do speeches that i have a golden retriever. she is nine years old and she is doing better than the 250 economist that work at the fed and she has done so throughout her life for the past nine years. so there is no protect ability in the fed. what they are is exactly what they should be, they are data-driven. and the morning news from australia is interesting. you have the rba to has been the first one to pivot. they must be spinning from all of the pivots. but what happened to the employment number, total employment significantly, wait and see if the employment debt impact is coming. i doubt it is coming trade we've lost a lot of jobs due to long covid. if i talked to businesses and talk to real people in the real economy, none of them are seeing the deflation going on. it is about the inflationary. that is artificially incited the cpi. remember, the cpi numbers is a consumer goods product. what you need to look a

fed pivot down 48. fed pivot down 27. fed pivot down 15. i mean, you kind of say golly, what are we really cheering for a fed pivot for , so should we be calling or hoping that the fed puts the brakes on? >> well, you know, ultimately the answer is yes, right? but here is the problem charles and this is the one thing i think the markets continue to get wrong this year, and you and i have been talking about these rallies that we're going to get , selling to the rallies, because all of this idea is that the feds going to cut rates or they are going to slowdown rate hikes. well that's what we rallied back last week, jerome powell says hey we're going to slowdown rate hikes markets up 3%. he didn't say he was going to cut rates or drop rates back to zero or restart qe. that's the pivot, and the only time they will do that is when and you just mentioned it at your opening talking about credit spreads, these private equity funds that are limiting redemptions. those are the first cracks of what we call financial in stability and that's when the fe

another 19% say the fed goes up 5. guys, that's the first chart the second chart, the far chart is the one i was after there, and that will show, i think, kelly, the dispersion in the market and probably the fed. note all those numbers are higher from where they are here, and the way i like to describe it very similar to the way described is if you're putting out a fire and you're by yourself you pour one bucket of water but if you're a fire ranger you pour more than one on it >> the market seems to be saying monetary policy is already restrictive. look at the yield curves if you take that message seriously they're telling us we're not going into a recession but going into a deep one. does the fed have a responsibility to keep that from happening? >> the curve was an excellent p predictor of recessions and market people talk about two-year, versus ten-year and power is pretty limited and that's largely -- right, the fed's balance sheet has been so big and i appreciate it's shrinking, but that's really distorted that si

and at least the fed could have the inflation story all wrong.t saying this is where the fed has told you where it's going to go. this is where the ecb has told you where it's going to dgo, i think and you make a bet against it with some sense of the risk involved there >> sure. >> i don't know what it's going tad. i certainly think if you're betting on 60 basis points of rate cuts next year, it's a tough bet to make. you have to have an awfully secure version of how inflation is going to come down and feel good about betting on it if the market was so sure about this, kelly, i think the market would be rallying based on rate cuts i think they're selling on two things rates that are too high -- growth that's too high or higher than the fed wants it, the belief the fed is going to come in and do what it says it's going to do, and then, three, the idea that that may be a mistake and cause a recession. i think that's the one, two, three of what's happening in markets these days. >> that's how you get the dow down 730 points. steve liesman, bob pisan

cpi will be tonight and the fed decision tomorrow.t dani, reiterating downside risk is there in the stock market between now and the end of the first quarter. economists, we love the economists. that is a drop from seven point 7% last month. the man with a mission to make the trades. it's mads peterson the investment officer for human edge investment technology you know you have the capacity to go full risk off. when you look at the repricing in the bond markets i 100 basis points in the implosion on inflation expectations, how does that set the stage for risk for you? mads: we move i and risk more than a month ago. we have been out of the market and of course nobody knows what is going to come out in the coming days we think that the worst of inflation is behind us paired with think it has a lot more to do with economics then so much with markets. we seek -- we think inflation is coming down. the world husba and through a tough year and things are healing. money is not being printed as quickly anymore. that's the overall picture. we

the fed remains hawkish. we would also believe we are going to see an equity market correction because equities are not pricing in the session. we expect that early next year, the dollar will stay again and we will not see a new beat for the dollar but we may go against the dollar even back to this. and to have a more sustained move for the dollar bond, we need to seek all inflation low enough and unemployment high enough for the fed to have the odor control. -- under control. and we can argue we go back to the moving dollar. we are not there yet and it seems the market has already priced much of what is expected in 2023. lisa: because we are coming up against the bank of england decision, what sort decision about how they're going to factor in the housing market but not destroyed the economic bastion? athanasios: this has been a challenge for the bank of england. that is why they are hiking and apologizing. we are expecting a slow pace, but they will continue pushing against aggressive market pricing looking

jeffrey gundlach once again on fed day.ews conference the best investments he sees given what happens today he'll let you know, of course. with us exclusively today once again. josh brown is going to be there, too. we're hoping you'll join us. he'll give us his outlook for stocks and everything else he sees let's do some final trades farmer jim >> alaska airlines scott, and i think everybody knows how i feel about the economy, that we're not headed for recession. even within the airlines, this is the best of the bunch i say that based on their release yesterday, that they'll start share repurchases in early 2023 they're amongst the first, may be the first to do that in the airline industry reflects their strong balance sheet and their projections for strong financial performance in 2023 >> okay. better than -- you go on delta, too, right >> a little bit of delta >> kirby was bullish from united no big shock it's a good time to be, you know, operating an airline, i guess. the question is, whether it's a good time to be an in

luke: the fed always overdoes it.very single tightening cycle leads to a recession, pretty much every single tightening cycle. 65% of your economic survey respondents on bloomberg are seeing a recession is coming. i am shocked that is not more. i see a recession baked on for next year. it will probably be q2, and it probably will not be a drawn out one, like b r p to see in the u.k., but it is coming. katie: michael, let's stick with the idea that recession is coming. you look across wall street and you can quibble over the magnitude, severity, but it seems like the consensus is for recession next year. is that your view as well? michael: the magnitude and the severity is really the important point, katie. i think it is kind of a foregone conclusion that you'll have some kind of soft landing or maybe mild recession next year. that is pretty much priced into risk assets. what is not priced and is something much worse, where the on employment rate doesn't just go from 3.7 to 5%, it goes up to 6%. to luke's point, the fe

the fed failed to act. in fact, the actions of the fed created the inflation, and it's going to get a lot worse. and powell is looking at wages rising and thinks that might push off inflation. no. rising wages don't cause inflation, inflation is what's causing wages to rise. wages are just the price of labor, and prices are going up. and eventually the fed is going to stop fighting inflation when the recession gets much worse and, in fact, when it becomes a financial crisis. liz: okay. but, peter, the fed if has been in a months-long fire fight against inflation. do you not see any if improvement -- any improvement in what we have seen when it comes to inflation if at least ticking downward a bit? >> no. i mean, you're always going to see an ebb and flow. but in order to really fight inflation, we would not only need much higher rates than the rates we have right now because rates need to be enough above inflation to encourage savings again, and our savings rate is basically at a record low and consumer bor

by that point i think the an along will break down. >> what i put in the fed survey is the fed would start hiking against slowly, and be liking at the end of the year. for me, the first half of the year when the inflation is falling 9-4, and we were not headed into recession. that could be good for risk assets, for cyclicals, for high-yield, any spread assets. mortgaging are really live, look attractive mortgage reits look like a good spot to be in. >> really? >> it's the second half of the year for me that's the biggerrer issue. as the author wrote in that fed paper referenced earlier, the costs of the fed trying to solve fiscal inflation is absolutely prohibitive. >> so you think they're not going to end up having quite the stomach for it all right. >> absolutelyconvinced 4% unemployment, and they will have very weak knees. >> barry, great to see you again. cot grass again, and thank you for joining. >> thank you, and congrats to you, too, kell >>> november saul the biggest bit counsel outflows, and sam b b bankman-fried will testify on capitol hill tomorrow. we're back in a moment

what is the fed to do with a hot jobs market?s is the question investors will try to figure out, after months of raising the interest rate benchmark in an attempt to curb inflation. the central banks job has now gotten harder. asian stocks are rising. tom brought us this wonderful insight. this all has to do with the china reopening and the fact that traders are now betting that the economy will reopen significantly from coed restrictions. in europe, the focus is a bit medicated because that -- a bit mitigated because the taxes under pressure. the other thing we are watching is commodities. the other thing we are watching out for is opec-plus. pretty much unchanged over the weekend. that was the story we were watching. francine: -that ties-- tom: that ties into the big energy producers. whether it is china, opec-plus, maintaining that output. the europeans agreeing on $60 a barrel as part of that russian price cap. c bearing oriole, that ban -- sea bearing oil, that ban begins today. the gains we are seeing an tencent as investor

link to the inflation report before the fed meeting, and is it delusional to think the fed can get outnd make a guesstimate, or are they simply waiting for the data. >> i think they are data dependent, continuing to look at data closely, but they can get out in front by looking forward. what i mean by that is we are starting to see signs of incipient labor market weakness in an array of overlooking indicators. for example, the average on force -- first time jobless claims is moving up again, and it is well off the lows of the year. if we hold at current levels by next spring, we have a recession signal out of that data. the conference board release some confidence numbers, and within that index, there is a measure of households that say jobs are plentiful, with leading indicators that are rolling over. the quit rate is coming down, i'll be had from high levels. we are getting more data that suggests the labor market is losing steam, but that is the intent of the bed. this is what they want, and this is what they will get. >> this is -- what is the history of seeing and predicting a rec

but even if the fed does go on pause next year, there is no hint the fed will start cutting rates. they continue to double down on that message. dani: they softened, but to your point still at a very high level. bloomberg's enda curran there. we will continue the powell conversation, shifting gears, and the bond market rally. tom: mystery continues to shroud the missing billions of now bankrupt ftx, after sam bankman-fried denied trying to perpetrate fraud. this is bloomberg. ♪ >> for starters, we need to raise interest rates to a level that is sufficiently restrictive to return inflation to 2%. we anticipate ongoing increases will be appropriate. it seems likely the ultimate level of rates will need to be higher than five at the september meeting. the time for moderating may come as soon as the december meeting. our progress, it is likely that restoring price stability will require holding policy at a restrictive level for some time. street cautions -- history cautions against loosening prematurely. we have a long way to go restoring price stability. tom: that was the fed chair sp

now, i do think the fed will start backing off. we know they way unemployment far more heavily than inflation when it comes to their decisions. they're very worried about overdoing it when it comes to the labor markets and probably will start to back off as a result of that with that in mind, the big question you're asking about is what about this recession we're supposedly about to have you know, it's intriguing. that's been a watch word for the entire year. my question has always been, why? why do you think we'll have a recession? inflation, to be clear, is not hurting consumers. it's being pushed by excessive consumer demand and consumer demand has been overheated by the massive amount of stimulus that the government unnecessarily put into the economy over the course of the pandemic households are still sitting on trillions of dollars in cash $5 trillion holdings this morning, five times what it was pre-pandemic that will be enough to push the economy through the troubles from interest rate sectors to sectors like housing so i j