i have kathleen hays here.onder, we talk a lot about the lag in some of these data points, is there an argument that they should be more patient and waiting, or do they need to move forward with more aggressive moves? kathleen: the arguments of them not waiting is that the longer you wait in the higher inflation gets, the more inflation expectation, expectation of rising inflation and prices and a willingness to save more because you think they will be higher in a month, it's going to get that. you talk about monetary policy and rates, so when it comes to price moving that's a concern for the fed. it happened in the report in august, people thought, the headline will fall and maybe the court will be steady, but it will show progress. the problem is the cpi on a monthly basis was up 1.1. but it was still down .1. on a year-over-year basis it's down 8.3 instead of a .1. that's what we are supposed to fall to. the gouge and gas prices is moving economics. that's kind of the only good news, energy prices. and that

they will keep it there for a while. >> kathleen hays there, given what kathleen was telling us, ouruest says the coming months will be -- it is time to take advantage of volatility. good to have you back. they are asking all of our investors but the best rate is. is there any preferred trade for you? >> we could have a bit of growth stocks mopping up. we are likely to have some positive meetings from there. this is the trade that we should start looking at in the u.s. treasury rates. the tenure might still be a little bit too low. if you are looking at this specifically, let's look at interest rates. >> what are you expecting there? >> that is likely to continue a little bit but overall, it will remain. global investors are very worried about the question coming. they are worried about earnings coming down. given all of the other ones coming out, these unemployment numbers are turning low. it is a long way from here to be flat and positive. that is not going to happen anytime soon. >> how do you best protect yourself against some of the short-term positivity? you might retest some o

yvonne: let's bring in our global policy editor kathleen hays. kathleen, the rhetoric is clear. are they going to be following through is the key question? kathleen: i have no doubt myself that they will follow through and keep raising rates. i think that would be just -- no way that is not going to happen. the second question would be how long are they going to hold ray time? jay powell says they will hold them up high for -- signaling next year. mary telling us a few weeks ago, i don't see why people think that there are going to see this big hump and rates are going to come down again. they are not. and i think they are expected to keep them there till the end of the year. and i don't know that the markets got that quite in its head yet. all the markets, i should say. but let's look at the 2-year note again because the .5%, the highest since the end of 2007. every time the yield goes up, the price goes down. the hyatt is up over 2007. -- the high is over 2007. we'll get into genuine next year. anyway, this is something that they have made very clear, you know, they have to do

yvonne: let's talk with kathleen hays. what are we expecting today? >> we are expecting a hike. how much? 50 or 75? they haven't done 75 point since 1999. what got everybody riled up, jackson hole, the example, members on the board at the european central bank gave us a strong presentation talking about how central banks have to tighten even into a recession to get inflation down. you can't let inflation expectations get entrenched. that is when we saw the bets on the 75 basis point high could go up to 80%. it is back down to 60%. traders are looking for this move. the head of the central bank of latvia says yes, and entrenched recession, cause the ecb to slow down, but noted if they need to fight inflation and have to keep going, they will push the key rate above neutral, if necessary. the question now is we were just talking about the odds of a recession. according to bloomberg europe, it is about 55%. probably depending on the energy crisis. maybe it is not a cold winter. that is a question hanging over the economy and the central-bank. that is the key one for them to go out

the former atlanta fed president joining us with kathleen hays. next, the ceo of the biggest consumer bank sounds a warning on red-hot inflation. we will have the latest. this is bloomberg. ♪ shery: the ceos of the biggest u.s. consumer banks are heading to washington to warn lawmakers that americans are struggling amidst inflation. committees will grow them about how they are helping. this get more from sonali basak. how do the concerns swear up? sonali: two different sets of concerns. one thing is the economic environment might get more challenging. the challenges are no less daunting even though the worst of covid is behind us, jamie dimon said it's a tale of two cities and highlighted inflation is a big issue. if you look at lawmakers, what happens to the consumer ability to borrow as it gets more expensive to do so. haidi: are there specific issues that have been addressed by the ceos in terms of the regularities? sonali: you have seen them address some of this and prepared testimonies. addressing the issues of fees and overdraft fees that ha

let's get more from kathleen hays.obless claims, empire manufacturing, retail sales, -- >> i'm going to take two of the main questions for the federal reserve. they started raising rates aggressively and they're going to do more. the big concerns are will because a recession because they want to cut demand and what does that mean for the labor market because they want to push unemployment up not too much. let's start with retail sales. august retail sales were up 0.3%. there was a modest increase. july retail sales this happens a lot, it was revised. that was pretty much flat. gasoline sales if you take them out of retail sales, then they are up 0.8%. that's in nominal terms. that is one thing that pulled the sales down. on the other hand, furniture sales fell. one of the bright notes was auto sales. they were peppy because prices went up. people site demand is holding up , but it's not as strong as it was and it's not getting stronger. let's look at the labor market. jobless claims look for the good. they felt well be

for more let's bring in our global economics and policy editor kathleen hays and andreea papuc. , whatas your take away? kathleen: they are staying on message. they will keep hiking rates. lael brainard, the fed vice chair does not speak as much as other officials so when she expressed views today everyone listened. >> we will responded to get inflation down. we have expeditiously raised the policy rate to the peak of the previous cycle and the policy rate will need to rise further. shery: there will be a fed -- a point where the risk will become more too cited. but for now, she says policy needs to get more restrictive. she sees more rate hikes needed. as for the beige book, it is regional districts. 12 districts that gather anecdotal evidence to say, where is the economy going? crosscurrents, strong retail sales, strong labor markets, elevated inflation. down the road, looking for a slowdown. as for now, that is putting out the message that the economy is strong enough to keep hiking. michael bar says the fed is focused on inflation fatigue. susan collins, the president of the boston

global economics and policy editor kathleen hays is here. ack-to-back 75 basis point hikes. as the door open for another? kathleen: i was a three is the charm. but we know for sure vice chair lael brainard is also speaking today along with half a dozen total fed officials as she is clear she is ready to keep writing inflation, ready to push rates higher, and they are not coming down until they have reached that goal. listen. >> we are in this as long as it takes to get inflation down. so far, we have expeditiously raised the policy rate from the peak of the peas is that the peak of the previous cycle in the policy rate will need to rise further. kathleen: in other words, the risk of recession is too much, and in terms of letting inflation state to high, she says rates have to get more restrictive, no doubt. the chair of the cleveland fed says she sees if i coming down until the fed gets the key rate to at least 4% and keeps it there for a while and also said more rate are needed. we just heard michael barr saying he wants this to keep going u

let's bring in kathleen hays. how badly do you think the energy crisis will impact europe which was already fighting inflation and recession risks? kathleen: they rise greatly. it's going to ripple through the entire economy. would you like to be the prime minister, they were already facing surging inflation. they will debate the emergency steps this friday. energy ministers. germany announced a cost-of-living crisis. it's going to hit households so hard. that's a key step to try and cushion this, the euro, down to 99.04. this is something that will make that worse. that can feed into the inflation and make it worse. this was a topic of conversation at jackson hole. we heard hawkish comments from the ecb governing board. the bank of france. have to be more aggressive. how do you make that decision when you are staring down the barrel of what could be contractionary forces? that's the question now. it's too early to tell. would russia, gazprom shut down the pipeline to open it back up again? suddenly, that possibili

let's get more when it comes to the broader outlook, let's bring in kathleen hays and garfield rental -- reynolds. markets seem to think 75 is not too hot and not too cold goldilocks point. kathleen: it is a large rate hike. it will be the third one in a row if they do it, but 50 basis points seems like something that is in the rearview mirror at least for now. inflation is high, it has not broken. the fed has made it very clear they are concerned about the inflation rate, so the debate is 75 and 50. the totality of the data, that is powell's words. labor market, still has it. on the hotness of inflation that would argue for at least 75. the reason why this 75 cap things is the reason -- one reason to do it is why they should do it if you do anything bigger you will get people worried about recession, they will start talking about rate cuts next year, financial conditions will ease, bond yields will rise again. it is going against the grain of what you need to do. if you look at the arguments people are making for 100, i would say at the top of the list is you have got to restore your

kathleen hays. kathleen: you said that it was pretty much expected. 24 hours ago we said it was not expected. as you're looking down the barrel of a recession, as you are looking down the barrel of an energy crisis that is going to smack consumer servers -- consumers and businesses with much higher cost, you need to wonder, do you really need to do 75 basis point? undoubtedly there was a debate. compared to how christine lagarde has talked about the economy and how they are going to move forward in the past, listen to how definite she was today. >> the governing council today decided to raise the three key ecb interest rates by 75 basis points. this major step front loads the transition from the prevailing highly accommodative level of aussie rates towards levels that will ensure the timely return of inflation to our 2% medium-term target. kathleen: front load from that highly accommodative policy. very definite. she is acknowledging that we have to speeded up. you mentioned the slowdown in the europ

haidi: kathleen hays. the dollar's rise is leaving some emerging markets exposed to capital wealth let's bring in mliv contributor garfield reynolds. we continue to talk about how this is different. it is not the taper tantrum. the vulnerabilities of emerging asia are different this time around but there are vulnerabilities there. garfield: definitely, haidi. when it comes to a capital outflows, most markets are seeing capital outflows right now. the question is how well can you cope with that and if you are a developed market by definition, you can cope better with capital outflows because you have your own currency and you don't borrow too much on u.s. dollars, for example but for emerging markets, that is always the concern. what is your -- what does your current account look like? what do your foreign exchange reserves look like? how well can you cope with those outflows? emerging asia has a lot of potentially surprising resilient economies on that basis because they are terrified by what happened back

. >> global economics and policy editor kathleen hays. let's bring in our next guest. just explaining jay powell doubling down on the hawkish rhetoric. the markets are rising. our the markets second-guessing the commitment of central banks again? >> i don't think they are. i think the markets finally have adjusted to the fact that rates will go up by 75 basis points when the fed moves next and i think what we are seeing is some recognition that a selloff that we saw the second half of august was a bit overdone. generally, markets pullback for the bad news is in. then they start to recover in anticipation. they recognize that some of the stocks have a lot of value in the. we have some investors doing a bit of bargain-hunting trying to recognize the need to be positioned in equities for the recovery. that recovery may take some time to develop. you still want to be there before it starts to happen. >> would you put yourself among the category of bargain hunters? are you adding to positions particularly in quality names? >> we think it's a good time to get long. one thing

rishaad: kathleen hays there, let's get more on how things are trading with mliv strategist mark cranfield. ruby dee saying this is likely to be an ugly and long recession. and we have elections in some of the areas in ukraine. on top of that, a crucial fed policy decision, your question is, is the market pricing an unknown tail risk? mark: i do think the energy situation is one that could come back to bite us in the fourth quarter. we've had a bit of a cooling down from the initial shock of russia invading ukraine, causing turmoil and energy particularly in europe as people scramble to readjust supplies. those prices have calmed down as people have gotten supplies and oil prices have cooled down. we haven't gotten into the teeth of the northern hemisphere winter. with russia making moves in terms of referendum, there is still a chance for the whole situation you play out more in financial markets. it may be a few weeks before we realize what that means. that is a tail risk. if the fed were to go with 100 basis points and give a hawkish message, that is something not priced into markets ye

kathleen hays in new york, thank you. let's bring in the cio of maybank wealth group management. the big question is if the fed will keep hiking. >> i think when the markets rally in july and the early part of august, we thought that investors were premature, and i think powell's jackson hole speech has reinforced that view, right? i think the fed is likely to go with a 75-basis-point rate hike. i think expectations are now more reasonably priced in. what is not is growth expectations, and that could be another trigger for the market. haslinda: suggesting the selloff in august takes us closer to the bottom, you are suggesting perhaps that is not the case? >> know, we don't think so. the s&p has actually pulled back about 10%. that is an adjustment of rate hike expectations, but you look at the consensus for s&p 500 earnings, we are looking at 9% for this year, 8% for next year, and we are talking about increasing probability for recession. the kind of high single digit earnings growth seems to be a bit optimistic. haslinda: how are you positioning your portfolio? >> we are still

kathleen hays, we are looking for a softening of prices in august. why? kathleen: you said it perfectly, it is all about gasoline prices. look at this chart, past 90 days, 13% drop in the month of august on top of 7% of the month before. you can see they have come down a lot. in fact, bloomberg economics expect them to take six percentage points off of the inflation number. for the month of august, the monthly number is expected to be down 0.1 kid was flat in july, so that would mean two months in arrow of zero monthly inflation. the headline number is expected to ease from 8.5% in august to 8.1% this month. of of course, it was 9.1% in june. that does seem to look like progress. now, even within that, let's not even get to the core cpi number. . used-car prices. everyone in the u.s. who is looking to buy a car, the prices are over the moon and they continue to move higher and are expected to move higher. construction materials are still expensive so there are a lot of prices that are not expected to follow, in fact, they continue to raise. . so maybe we'l

our global economic and polity -- policy editor kathleen hays is here. rome powell and christine lagarde. kathleen: inflation is high, it's way too high. they know it will be aggressive and be willing to do whatever it takes. but definitely that's the mantra for central banks, do whatever it takes to bring inflation down. chair powell says they will do this until they win. let's listen to what he said. >> we need to act now and we need to keep at it until the job is done to avoid that. we think we can avoid the kind of very high social costs that the fed had to bring into play in order to get inflation back down, and set us up for a long time of price stability. kathleen: jay powell is alluding to former fed chair paul volcker, the man who displayed the roaring inflation of the late 1970's and early 1980's, and started backing off too quickly. he had to go back into the fray and raise rates more, creating an even deeper recession. that's what jay powell says they want to avoid by moving now and moving hard. they will move on the totality of data, talking

. >> let's bring our economic and policy editor kathleen hays who is standing by with our next guest. >> this is somebody we know very well. a former governor at the federal reserve. he has been there done that. when you listened to jay powell today, when you saw the dots, is it clear than ever that jay powell has finally embraced the idea that without slowing the economy to the point of recession, giving up all hope of a soft landing is necessary that's what he has to do that's what they have to do now to finally down inflation. >> that's the core of it. i don't think you would say he has completely given up the idea that it would be something that is soft issue. the rate is only going to be 4.4%, that is still much to sanguine. fig is going to go beyond 5%. -- i think is going to go beyond 5%. there is going to be more pain. is it necessary? >> the interesting thing is not that they moved 38 that they expect to get to to 4.6 from 3.8 , look at the dots. you have six along the top almost at five then six along the bottom who are closer to 4.4. then you have the median in the middle.

let's bring in kathleen hays and garfield reynolds. we were talking about a potentially smaller than 70 point -- 75 point basic -- basis rate hike and what would a 100 point hike mean? kathleen: they thought they could do a 50 point basic that -- basis hike. 75 seems like the safest bet, but before i tell you why the reasons on both sides, i will tell you at the end so we can run through the reasons. there's an idea if we do a hundred basis points, they will start talking about rate cuts next year and this could mean financial conditions and that's what they -- not what they want to do. etsy opposite of what they are signaling. if you want to keep things tight, you have to keep bond yields high. all of these things could work against that. on the other hand, one of the number one reasons i'm hearing why they could and should do something more aggressive is either that or restore their credibility. now it is terrible, so that's the number one thing on the list. consumers are still spending, so you've got to move because good times at the

rishaad: let's get to kathleen hays. a third straight 75 basis point rate hike, raising their forecast of the funds rate this year. the message is pretty clear. >> in the markets are hearing it, finally. -- and the markets are hearing it, finally. jerome powell seems like he himself has finally embraced the fact that it is not in history in the united states usually to get inflation like this down unless you do something like what we are seeing come of this new dot plot. it is amazing. in june, on the far side, it was around the median was 3.4%, now 4.4%, how that view has changed. next year at 4.6% when it had been 3.8%, the view that the fed has changed as they have realized the problem is severe enough going down and they have to get more aggressive. the whole point is that they have to get, jerome powell talked about restrictive, how can you say you're getting tighter policy when you don't have a funds rate above inflation? it is still negative. on our next chart, you can see by next year, when the fed finally gets t

kathleen hays has the latest on the cpi numbers. the headline numbers were not as good as expected. it was the composition that took many by surprise. >> bloomberg economics said that gas price drop was the only good news in this report. that kept the headline cpi from getting worse but this did not follow as much as it was supposed to. what the fed has feared is that they do not get inflation under control as fast and they cannot, that is what is going to lead it to be more and more of a problem. look at the tour on cpi and core cpi, -- chart on cpi and core cpi, the core cpi was up zero point -- 0.6 percent in the month of august. the headline cpi was up 0.1. year-over-year you have the headline cpi of 8.3% year-over-year while the core cpi is up to 6.3%. it was supposed to be 6.1 but not much higher. we go back to the point about wages. wages are moving higher and that is a concern about the core cpi looking not so hot. we are moving up but inflation is moving more. people go to their boss and ask for a raise. apparently because of the labor shortages people are getting them. you

. >> kathleen: welcome back, i am kathleen hays.uld like to welcome our bloomberg radio listeners. the world bank is warning the global economy says a recession next year caused by policy tightening that could prove inadequate to temper inflation. we are joined by david malpass, president of the world bank. we are happy you could join us in studio. it is always a treat to have someone here. you seem to be arguing a recession may be in the cards given there is this broad central bank consensus that they have to keep hiking rates because inflation is so high. do you think, and with the fed considering maybe set -- maybe 75 basis points, can central banks take the needed steps without disrupting not just the global economy but particularly the developing economies? david: it is hard to do. inflation is a real problem. i'm not saying it is easy. but i think the central banks have more tools than just the interest rate hikes. one way for the government and the central banks to go is to focus more on production. how do you get more things

let's bring in kathleen hays, who is standing by with our next guest. hleen: professor of economics from the university of maryland joins us now. great to see you again. you were in jackson hole a few weeks ago. we are happy you're with us now to talk about this fed decision. let's talk about the message. jay powell said over and over and over they are going to do in -- they are going to keep moving until they get the job done, which presumably means until inflation is down to levels we can live with again. >> exactly. that was the case jay powell gave very strongly, as was the case in jackson hole. the hikes will continue into the future until they get down to 2%. kathleen: jay powell said they are just barely getting to the point where they are starting to get restrictive. next year, the funds rate at the lowest level is expected to go about four point percent. the highest level nearly to five percent. when and where do they get truly restrictive enough to fight inflation and bring it down? >> yes, this is the part where they keep emphasizing policy is

we will get more from kathleen hays. there were 20 of data points today. t's important to the fed? kathleen: to see how much the economy is slowing down and how resilient it is. they would like to stop inflation without having to slow the economy, but they know they have to do that. they are very wary of causing recession. they want to avoid that if they can. retail sales. let's start there. that's the consumer. the money number was up .3% in august, july down .4%. you get a flat rate for the past two months if you average them. inside the report you see eight of 13 categories were actually stronger. new cars is a big example of that. on the other, weakness in the control group that feeds into how the government calculates gdp. food services, gasoline, building materials. those were all week and bringing down the number. you step back and say, well, with consumers resilient, other people say it's not as strong as it was and is definitely getting weaker. in terms of the labor market, jobless claims were an outstanding number down to 200 13,000, below the pre

shery: kathleen hays with the latest.hing some of the energy related stocks in australia, given we had the bump in oil prices on monday with russia announcing with opec-plus they are -- 100 barrels a day, but that did not last. oil prices under pressure with brent headed toward $92 a barrel. and we are following the energy companies across the region. take a look at softbank. we weren't watching any news related to the sale to buy investments from softbank. that could value the u.s. asset manager at more than $2 billion, according to people speaking with bloomberg. the abu dhabi sovereign fund can announce that agreement in the coming weeks. we see softbank under a little bit of pressure. but it is downsized across japanese markets. across the broader space right now. paul: still to come. we explore the challenging macroenvironment of cryptocurrencies with kevin lou, who is seeing more money coming into blockchain startups. up next, joyce chang joins us from the apex cfo and treasurer's forum. this is bloomberg. ♪ shery: