>> well, the fmoc just needs to do what the market is expecting it to do , basically to hikein march,the time it hikes, inflation will be lower for the mere fact the u.s. economy is decelerating quite rapidly. we saw that quite clearly in the latest data. and we are going to see more because there is a lot of high oil prices and geopolitical risk to not go back up. so yes, the fed will do something in march and we will announce very clearly. but then for the rest of the year, we still have to see how growth basically behaves in the u.s. it might be worse and the forecast might be too optimistic, even having cutting it now. shery: so far, we haven't seen those dire inflationary pressures play out across asia. but then last night, we had the monetary authority of singapore coming out and having to tighten i nan out of cycle meeting, not to mention even the bank of japan's governor talking about commodities, pushing inflation higher. we're talking about japan here. will inflation become a problem even for asia this year? alicia: great point. and finally, we talked about inflation in asia

and i would say that most fmoc participants say that there's maximum employment in the sense of the highestployment with price stability. that is a personal view. very broad support on the committee on the judgment to raise the target range for the federal funds rate the other thing is maximum employment will evolve over time and through the course of a business cycle in the particular situation it may well increase that's consistent with stable prices increase and we hope it will as more people come back into the market as participation rises. and the policy path to contemplate would be supportive, as well. so the thing about the labor market right now is that there are many millions of more job openings than unemployed people. you ask whether we can raise rates and mover to less accommodative and tight finance shlt conditions. i think there's room to raise interest rates throughout threatening the labor market there is by so many measures a historically tight labor market. record level of job openings quits. wages are moving up. if you look at surveys of workers afind jobs plentiful all t

definitely going to have his hands full with a more dovish and more regulatory set of members joining the fmoct will be partially offset by some of the regional governors joining for the voting this year they will tend to be a little more hawkish that's why i think the chairman will get what he wants on inflation, but investors have to anticipate you probably will see more regulation on the banking sector going into 2023 >> any last word on maybe something i haven't mentioned? you think you have ten or a dozen of these surprises for the year a final word you would want to leave investors thinking about >> yes, i think this year geopolitics has more of an outsize effect we don't pay much attention to it but if you get something that goes wrong in russia or ukraine you could be looking at $100 a barrel for oil and inflation remains the issue going into the midterm election there's a possibility that the voters of the country will remove the party in power. in eight of the nine last elections since the financial crisis, the u.s. never had political volatility like this since the end of the civil

economy because now you have the fed and goldman is tripping over themselves to say how many times the fmochalf of what the market digested? we rally. >> right. >> so my point is, if they raise less then what happens to the dollar the dollar comes in so that decreases the pressure on the front end of the curve which will increase the steepening of the yield curve so value outperforming in that scenario. >> i so agree with you and if somebody asked i would give them basically the same explanation how this is likely to play out but what if this year is different because their to keep tightening >> why would they have to keep tightening if they have to keep tightening then they're rebottic. they have to react to the pressures on the economy if inflation -- they said transitory depends on what you call transitory you would agree and they would agree a tremendous amount of this pressure caused to the supply due to the pandemic in every metric to look at the pandemic is subsiding. everyone would agree on that inflation should be coming in. so if they want to get ro botdic and just raise rates in

talk about tomorrow the fmoc meeting because it is the big, big event.t there likely significantly out of the money. i think that the fed has religion right now and they understand they have more of a mandate than just protecting investors. right now they got to reload. to do that they're going to have to get off zero and they will have to start looking at the balance sheet. so i think they're going to do it. i don't think they will blink this time. charles: mark? >> i agree. historically speaking the fed only steps in with accommodation when the market corrects around 24%. that is 3700 on the s&p. that is a long ways away, a long way down. a lot of sleepless nights for anyone who thought valuations didn't matter. but they're not going to do it. they will not step in. they will not help. they do have a dual mandate. no matter what people think about the hypothetical third mandate of juicing the market. they got to take care of inflation. charles: it is just so interesting, because they have stuck with that hypothetical mandate more than anything else. go

reinforced the message of a flavor of from chair powell at the press conference from the december fmoceeting and then the minutes wents into detail just how much they're prepared to start unwinding the balance sheet this year and then looking at market pricing the market's basically fully pricing in a rate hike in march so if balance sheet run yauch happens thereafter you talk about both tools that the fed has to start to tighten financial conditions. >> are you expecting yields to continue their surge that we have seen already year to date or kind of moved enough in the short term >> that's different to say i think if i talk to our colleagues in strategy they don't expect to have continued movements as sharp as what we see now but over time, yeah, it would be natural for rates to back up a bit, both real and nominal. part is getting closer to the actual liftoff of short term interest rates and then the market has to sort through how much of a price reaction this unwind of the balance sheet is going to take. >> how much pain is the fed do you think willing to take on the equity market?

when the fed started talking about the unemployment rates for different minority groups inside the fmocutes, that was a big deal they started adding that and honing in on that you can see the ways the pressure has made the difference i think the point the democrats are making is you have to have a full picture of the economy not just what you're hearing on wall street, though, of course, the fed primarily works on monetary markets. >>> for more we're joined by jim grant. jim you have long been critical of this fed for not moving more quickly. we're now hearing from wall street firms and others that the fed is likely to make at least four moves, four hikes this year is that enough in your view? are they going to be able to catch up from being behind, at least in your opinion? >> i don't know. i think the fed's principle error in this cycle is to arrogate to itself the idea that it is in charge of events, not conceding that events actually have been largely in charge of the fed. and i think i can interpret senator brown's remarks. they are exactly 106 or 7 years old, around the time of th