>> he is acting like paul volcker. much but others like bullard and others have been talking paul volckerish and again they have to be careful when paul volcker did his thing, we didn't have $32.000000000000 in debt and $1.5 trillion yearly deficits. that means the economy. i am a big believer the people are the economy. with government so big they matter much more now than ever. again you got to be very, very careful here. we'll run nearly a trillion dollars this year in just interest. so again, he has got to be real careful. i think he needs to talk tough though because those last two inflation numbers, not good. if inflation stays up here, reaccelerates we'll see five 1/2, 6% on yields, again markets will not be happen on that. charles: before i let you go then, got on one side the economic data and tradition and what yield curves usually point to and then you have got the market itself showing extraordinarily resolve. who do you bow to this in position? which one do you base your investing on in this particular mome

>> paul volcker would have -- look what paul volcker did when he took over he went to reagan.ant me to fix this thing? yes. well you will have pain here. damn if we didn't but he fixed it. paul volcker knew his stuff, he knew his stuff, neil. mcchesney martin, he knew his stuff. arthur burns, there is issues there but you could argue he knew his stuff. what the hell is his name? alan greenspan. these guys were pros. bernanke, they were pros. now, i will tell you there is degrees. i would say at the top of the list would be volcker and mcchesney martin but right now i think the talent is there. the will to fix it is not. i'm sorry to be so brutal on the fed but i think they all ought to resign. i don't know how anybody can have confidence in the federal reserve board right now based on what is going on in america. i don't know how. i don't. but, neil -- neil: you're pretty big, got pretty big influence to look at that, but finish that thought, ken, i apologize. >> neil, don't forget the underlying theme of my belief, don't sell america short. yes, we have serious problems. yes,

but climate change a i other dimensions, but you knew the late paul volcker? well, i happen to know paul volcker well, and in some senses he was the hero of a moment of coming out of an era of stagflation. and you write that we may be entering in another area when we already be in an era of stagflation. what's wrong with, or why shouldn't we hope for another paul volcker to come raise interest rates to a, to a crippling level to, to kill the fatness in the lethargy in the economy and the bad stuff? the why do you not think that there aren't heroes that come do the right things to get us out of this? you know, threat driven future. we have i think is unlikely for the following reasons. not in the 197 days we had the negative supply shocks. they all the shock of 973 with the yom kippur war between he's and i'm out of state. the 2nd all shock in 1979 falling de islamic evolution in iran, elect inflation and recession. by that time u. s. in advance economies collaborative public that there's a shortage in the was only a 100 percent. so we got inflation, we got the

that is when paul volcker got there, we're '79, 80ish when that is happening.nflation runs out of control. 13 1/2%. unemployment 10%. paul volcker said enough is enough. he jammed rates higher in 1981, '82 they were up to 22%. money in the banks. it wasn't in the market. in that sense anyone who had any money put it in the bank. it guaranteed, earning 22%. why would you put it in the market? until only after paul volcker crushed inflation, sent the economy in a two-year recession, which was ugly, started to cut rates on that day in august of 1982. charles: kenny, 30 seconds, that scenario, say powell sticks to it, he doesn't want to be arthur burns, he wants to be volcker, he has to crush inflation where do you go cash? do you load up on cash at this point? >> no listen, here again, depends who you are, right? if you're younger i wouldn't load up on cash at all. i would be cautious i wouldn't load up on cash. for me new money putting in, leaving in cash, putting in treasurys at the moment. i do think there will be some continued short-term disruptions next two,

the business, only really senior partners, some managing directors were actually around to see paul volckerreagan's theme of morning in america also helped to offset that, remember, the market had a remarkable performance as paul volcker was crushing inflation. so keep that in mind. when i started in the business in 1986, the early year or two kind of foggy, although i do remember when alan greenspan came to rescue after black monday. i thought it was all over for my young career, turned out to be a remarkable day not just for me, but for the market because paul volcker came in. these days everyone's kind of wondering, will the fed just kind of stop, will they go to the different playbook, not be accommodative long term. you know, i don't think so. i really believe that when the coast is clear, the fed is going to come back to being a more accommodative fed. i know a lot of brilliant people don't believe me, but here's the thing, the bet is just -- debt is just too high. $800 billion a year for the government to spend on interest, i just don't think we can do it. i think we've gone too far

we had another day of bond yields plunging, the biggest since the paul volcker era.t u.s. banking, continuing to spike, despite the concerted efforts to stem those losses. taking a look at what we are seeing, i'll say futures are setting up for some steep losses going into the open. the aussie dollar also sitting a little bit risk off at the moment, going into the start of trading in tokyo. chicago naked futures, up about .3% -- nikkei futures come up about .3%. get refunds.com powered by innovation refunds can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars and we can help your business too. qualify your business for a big refund in eight minutes. go to getrefunds.com to get started. powered by innovation refunds. shery:

the only president really is roughly in 1980 when paul volcker raised short-term rates to 14%. fail for this reason. jon: helpful context, chris, thank you for your time of oppenheimer, and david, joining us web bush. we will take a break, the other big stories is on the jobs front. market reacting to the latest deployment picture of the united states. we have jobs number in canada, earlier today we spoke with u.s. labor secretary marty washer talked about silicon valley bank, as well as labor data. >> a lot of concerned if in areas. hopefully we can can can you to move forward, secretary yellen is up at capitol hill testifying, there is lots of concerns about what the future of the stock market is. i know that, when it comes to jobs we have a good jobs report. good signs all around. ♪ go. go brain. no, not that one. go this one. go optimizing data. go efficiency. go results. emerson's plantweb digital ecosystem is the brain for smarter, safer and more sustainable performance. go plant go. go boldly. emerson. kriti: this is "bloomberg markets," i am kriti gupta alongside jon. o

you're not paul volcker but he has come out the gate that way. >> yeah.es: is he focused on legacy, does that add element of risk he is myopically where he stands in history than getting the job done? >> i think there is focus insuring the legacy is not one where they allowed inflation to run out of control or not come back down to 2%. charles: crushing the economy even more than it needs to be crushed is more appealing to a jay powell 15 years from now sitting in a rocking chair than to paws too early? >> i think the risks are asymmetric, i think they lean towards overtightening to insure inflation eventually comes down even if that brings about pain. fed, fed chair powell have been adamant about that. there is slow realization right now today that the private sector will have to deal with a higher cost of capital, a higher interest rate environment for the foreseeable future. that was not the case a week ago. that is gradually starting to fall in place. charles: certainly is. thanks a lot. >> thank you. charles: your work, your firm's work is phenomenal

busy paul volcker. so this is being very, very unusually tight monetary policy. it's almost in narry in the coal mine or in this case that's a rooster screaming pro, trouble. there's something wrong and the banking system is responding. okay, well the statement from the us treasury federal reserve, a said quote, deposit is, will have access to all of them. money from monday does not come things or or panic, people more. no, i think that is absolutely the correct step to pay in this situation. the has an obligation treasury and they have d, i see actually in this case when the ones are maybe announced that they have an obligation to protect deposit owners and the banking system. but the banks, a larger question, is the fed going to get the message and slowed down this program of tightening of the interest rates in the economy as this continues? and is there any particular sector of society who may suffer the most because of this? well, the concern is that the state is going to pick the economy into a recession that will cause billions of job losses and that will g

the last time we saw that was when paul volcker was rapidly raising rates. does the white house see a recession around the corner? is that why it's all this spending? >> the tax increases he wants will not pass because the republicans control the house. so -- but, he wants to act like that wouldn't come to anybody if it did. it's a political document to appease the left. the challenge is he will get some of it because the democrats run the senate and he has the ability to veto anything. and he wants to take us back to the future to jimmy carter's level capital gains taxes which bipartisan voters had to cut in half. and the bipartisan congress also rezeused. the position he's moving to are too far to the left of the modern democratic party just two years ago. liz: let's welcome back to the show, l liz peek. the inspector general found 42,000 federal government workers repeatedly failed to file their own taxes by the irs. they are paid by taxpayers so they don't file? that's what's going on inside this government. what do you think, liz? >> it's worse than tha

down that is a short period of time inflation is still understated if we use the 1980 time when paul volcker took rates to 18% and we use that to define the cpi number, inflation is 17% today. >> wow >> the airlines, which i love, and now listed on the london stock exchange, and itis amazing with the biggest inflation were airline tickets guess what airlines are turning cash flow to positive. a shortage of pilots and everyone wants to travel there are industries where you get imbalance with supply and demand and turn around and look for the opportunities. airlines took it on the chin with the contagion >> absolutely. you opened by saying you think this year is coming in like a lion and go out like a lamb. what does it mean for the u.s. indices? where will they end the year >> mathematically going back to 1955, it is double digits like 11% positive they can sell off and easily have the turn. there will be stress in the economic engine and congress will resolve things and the federal reserve will make a pivot point. bankers like this are good for bottoms. >> it is a tough market. >> hold on fo

faster than paul volcker, more significant on an early basis then paul volcker. i have known -- i am known as a permeable, when money is available. it is the opposite when money is not available. we have this idea that we are going to have a soft landing in a place where you've got a generationally leveraged system. we are finding out what that means. not necessarily in where people look. it is not ever where people look, it is where people cannot see. where they cannot see is the biggest growth area of finance in the last 15 years is private equity, private credit and venture. when we look at these factors, the idea we are going to have a no landing or a soft landing in agent -- in a generationally leveraged system with the fastest rate hike will in history does not make sense. it is not the banks that are blowing up. the problem we have is employment. employment goes down on an escalator and up on an elevator. there is always a catalyst that makes it spike like that. the catalyst is typically when you have a money shutdown and companies have to lay people off.

i already conjured up the image of paul volcker. it's not cash.ously, but still no volatility, 4.5% that's a nice comparison to bonds right now. any time people go to cash, the dollar gets stronger so i think you'll continue to see the dollar get stronger. those are some areas i'd want to hide in until we find out what the fallout will be with higher interest rates because i'm concerned about the high interest rates. >> i want to clarify you're say 40g% equity, 50% mutual funds or cash >> cash and other alternative assets like cash if you're going to do bonds, i would consider doing bond ladders. >> jeff, what about you? i'm sure your phones were ringing off the hook after that selloff. are there any big changes that you see that are needed right now? >> i'm more cautiously optimistic, but i think ivory brings up a great point. the cost of capital with a 2-year, now at 5%. that's fascinating to me the cost of capital takes time it doesn't take a month or two it takes quarters upon quarters. it takes decades to have this rate normalization process

so forget about whether you're arthur burns or paul volcker, right?iving in the here and now, and you're hurting real, live people. you're crushing their dreams. stuart: yes. what's the alternative though? if you don't do that, maybe you just let inflation run, and that hurts -- >> when inflation started, he was the one who said it was transitory. every economist said what's the cure for inflation? high prices. naturally, they'll go down. here's the big asterisk, and there's never been one like this before, trillions of dollars have come into this economy. stuart,s going to the take years, years for that money to the dissipate. stuart: yeah. we're living with the outcome o- >> free money. free money. free money, yeah. we went from a chicken in every pot to the everybody could be a millionaire. stuart: all good stuff. very good story -- >> it wasn't as good as jim though. [laughter] oh, he left. he hit me in in the head with a club, and then he left. [laughter] stuart: we will be watching -- >> thank you very much. it's improved since he's seen it last

but for the market because paul volcker came in. these days everyone's kind of wondering, will the fed just kind of stop, will they go to the different playbook, not be accommodative long term. you know, i don't think so. i really believe that when the coast is clear, the fed is going to come back to being a more accommodative fed. i know a lot of brilliant people don't believe me, but here's the thing, the bet is just -- debt is just too high. $800 billion a year for the government to spend on interest, i just don't think we can do it. i think we've gone too far in this sort of new paradigm, and i don't think the federal reserve can do it. it's tough right now, you're not alone. in the has happened before, but very few people have seen it. stick to the fundamentals and ride it out. right, liz? liz: oh, yes. and by the i way, liz ann saunders is about to weigh in -- charles: she's one of the best. liz: by far, one of the best over at charles schwab, chief investment strategist. we wouldn't quite say march is coming in like a lie --

abandoned that, we're powell 3.0 focused being reincarnation of paul volcker.f itself is kind of worrisome at least to a lot of people out there there is no, it hasn't been smooth. we have gotten different versions of the fed chair. >> yeah i think that is because we've got some different economic surprises over this period. i think what you described as powell 2.0 was a real reaction to the fact inflation had been surprisingly low. seemed like we could push unemployment a lot lower than previously expected without causing a lot of inflation. seemed like we had very good news, almost goldilocks moment. we got walloped with this inflation in the wake of the pandemic. people didn't expect it. most mainstream economists did not expect it i think pretty much everyone i talked toes have surprised by how sticky it proved and lasting it has been. i think he is pragmatic, sort of this man's middle name. i think he adjusted the script pretty dramatically twice now as you noted to accommodate what is really rapidly changing economic backdrop. charles: admit a lot of rapi

. >> neil: what is so weird about it, we think about the days and you worked with paul volcker and this next that, you know, banks can watch themselves and we can avoid the excesses of the past. what is odd about this latest eruption, it has nothing to do with selling questionable instruments like mortgage backed derivatives, stuff forced on investors that knowingly bought in. there was the grenade among many others. in this case it started with making bad bets on treasury notes and bonds that wendt the wrong way. oversimplifying it. many banks could have done that. i'm wondering now with this flight away from regional banks on the part of depositors that have sought out safer, bigger havens, bank of america has $15 billion in deposits the last few days, i hasten other banks like wells fargo and j.p. morgan chase got a lot of customers. could that lead to a route in the banks, maybe not to the degree you dealt with in the 80s but what do you see happening? >> neil, it's interesting when you talk about that period back then. there's a really quite a similarity. i was appointed to the fdi

i suspect even though powell wants to impress the folks at social club that he can be paul volcker andout instead for the adulation of the masses and start to prime the pump yet again. we'll see what happens, you know? a lot of people, almost everyone on the show odd the said the fed's going to to stay the course. i believe though the way things are happening beneath the surface in this country, at some point this summer or earlier you're going to see the fed not only pause, but they'll start to to hint. liz claman, heir going to warm up the helicopter, so be ready. liz: yeah. and we still don't know, as i said yesterday, what's really going on underneath the skin of these banks. charles: right. liz: oh, boy. well, we're going to see, because here is the big question as we kick off the final hour of trade, will traders and investors turn tail or turn even more bullish than they are at the moment while barreling toward the closing bell? judging from the dow's behavior this session in which it's crossed the unchanged line 41 times today, i'm going to say it's too risky a call

it's clear that fiscal impact is very powerful and the other thing is, paul volcker, his predecessor,icy alone n can't do this. we can't fight inflation unless you balance the budget and make serious efforts to have a growing economy but restricted spending. maria: and you now we're now wg about worries over the safety of the banks. i want to get your take on that. deutsche bank this morning is plummeting, leading a slide in european bank stocks this morning after a spike in the cost of insuring against potential default. judy, the stock down 10%. are you expecting more bank failures? >> i think there's a crisis of confidence and so the risk of contagion is definitely there. what concerns me is the level of derivatives is just almost mind boggling. there's 600 trillion in the nominal value of derivatives out there and when you see these changes in interest rates that are so rapid, all of those derivatives are set up to hedge various institutions from interest rate risk and from currency risk. and you're stretching them to the limits of the algorithms that they are based on and so peop

i mean, this is what paul volcker and al ann green. c-span: did.ime they went to capitol hill and made statements, it's the we've got to get the budget in order, we've got to pay our bills. i'm sorry, but this is not something that jerome powell does. in fact, he basically said the fiscal situation is not a problem. that's crazy. elizabeth: yeah. >> we've got a $31 trillion department, and he's saying we don't have a fiscal problem? that's exactly the wrong message to be serving. elizabeth: to what steve was just saying, all of that government money, congresswoman, has to be parked somewhere. and president biden basically did a bailout of silicon valley tech start-ups and venture capital firms after hundreds of tech ceos said we want it, it won't cost a penny. we're finding lots of insider loans, insider loans to silicon valley officers, directors and shareholders. those loans more than tripled to $219 million, the chief risk officer with left concern left with more than $7 million, the ceo with more than $13 million, and now we're supposed to bail

i think he wants it to read he came, he saw, crushed it like paul volcker.e have mvp chief economist joe lavorgna. joe, i have to give you props, up calling you were calling for the fed so slow down a long time ago. >> i did but there were reasons for that. charles: reasons for that. most guests were saying hey, the fed wants to break things, they want to break things and things to fall apart. we have couple bank failures. call it a qe, don't call it qe. balance sheet is going back up, people are own pins and needles. what do you make now of the notion that jay powell will still probably stay the course and go at least 25 basis points wednesday? >> on the balance sheet, the balance sheet is going up, massive discount window borrowing increases reserves like qe but they have the qt going at the same time. money is going in one area coming out of other. they have to stop the qt, that is number one. number two, i don't think they should be hiking an don't think they will. as short-term bank rates go up, leaving the banking sector going into the treasury market

neil: that seems even with paul volcker when raising rates, the idea was stamp out inflation , a lot of people will lose their jobs in that fight, but you'll get the inflationary beast under control. but only for a while, right? because then things pick-up again. if the economy gets active again , rates go up again. >> well what happened after volcker wasn't so much the crushing of recession that conquered the inflation is what he and the fed did afterwards. unlike the 1970s they brought about especially greenspan took over for a while, relative stability in the dollar. they started to do things right. the great moderation. greenspan said in the 90s, he's got a sloppy and he didn't use those words but a sloppy gold standard look at commodities prices and gold price to see if things were getting out of line and then lost sight of it but there was a thing they did after volcker that mattered. cutting taxes, cutting regulations, so you get the economy -- neil: we forgot about the reg on one-two punch. >> yeah, they did things right, so they stay relatively stabilized the dollar, put inc

rates go up this fast and this short amount of time really , since the early 19 eighties under paul volcker. so what does all this mean for everyday americans? well higher borrowing costs. we've already seen mortgage rates go up to nearly the highest level in 20 years. the fed moves today they could go higher credit cards. it's never been more expense. pensive to have a balance. on your credit card, auto loans, student loans, all of them getting more expensive, and powell is also going to face questions today on this banking crisis. how much does he think that the stress in the banking industry is slowing the economy and also, how did regulators including the fed missed the red flags before these banks included. so a lot of tough questions today for fed chair jerome powell will be watching in parsing every syllable that comes out of his mouth today. thanks so much for being there for us. thank you. still to come here. explosive arguments in the courtroom blowers for fox news and dominion voting systems facing off in that defamation lawsuit, as they both are hoping for a summary judgment and

under paul volcker, you can see rates are going almost straight up. so what does this mean for everyone at home? well if the fed raises rates again, it means higher borrowing costs mortgage rates they've already spiked near 20 year highs. it's never been more expensive to carry a credit card balance. it's gotten more expensive to finance the purchase of a loan or take out student debt. the other real impact here, of course, is that the fed is trying to cool this economy off, ideally without breaking something, of course, kate. the bank failures in the last 10 days suggest that fed already has broken something. matt it's good to see you. we'll see what comes in the next few hours joining me now for more on this as we wait for the fed's decision is diane swank, she's the chief economist for the global financial services firm kpmg. it's good to see you again, diane, what do you think the fed is going to do today? well, i'm actually on the side of a pause, even though that's a minority view at this point in time because of the tightening. we see that cons

we did not see that biggest repricing yesterday, the biggest drop in treasuries since the paul volckerera. the september 11 moves, black monday, a huge recalibration of expectations where the fed ends up. that inversion is continuing to narrow only last week. we are around that 107 mark of that inversion. some strategists saying this is an unwinding in a move that is typically marking the end of the post hiking fed pause. that is one to be washing there. in terms of the expectations, we are continuing to notice that essentially when you have this -- the fed on pause, it takes the pressure off the doj and the need to pivot there. still a little bit stronger in the early trading hours. that is sometimes positive for japanese stocks. very much worth focusing on those japanese banks because the troubles are drawing a lot of attention to the heavy investment in u.s. bonds by japanese banks. you can see the topics bank index is basing the broader losses. let's change on because in korea, lenders are there. it has been something of a bloomberg intelligence team is concentrating on, they are s

we are back at the times of paul volcker.ls us is the big differences is that this is an area where we are coming out of low interest rates and the extreme amount of uncertainty that's coming through in the market even though we saw the two year yield looking flat today. yesterday, rising more than 20 basis points. it's that question of, what will the fed do as their meeting wraps later wednesday? in the broader markets, yields climbing, led by that front end of the curve there in asia. in terms of the fx base, we've seen the dollar fluctuating somewhat. some currencies and focus. the kiwi dollar is declining. some analysts including j.p. morgan saying this currency could drop as much as 7% on the haven demand which we could say for the greenback if conditions in the economy continue to deteriorate. we are continuing to watch the korean won. that currency is leading asians ones to the upside. it does come down to that sense of relief that's coming back into equity markets. we did see more support coming through for the financ

in the early 1980s when similar situation we had high inflation and the federal reserve under paul volckeranks that were badly run. they got caught out and what the feds did then was pretty much what they just did. now which stepped in the now which is they stepped in the federal insurance federal deposit insurance corporation, over the corporation, took over the bad institutions and most cases institutions, and in most cases , not only did they safeguard the deposits of insured federally insured depositors, they also protected by various mechanism items the uninsured depositors as well. and i think this is what we've seen with signature bank and silicon valley bank. what everybody watching it wants know is, is watching it wants to know is, is donald going to be next donald going to be the next president united states? president of the united states? well, i probably i mean , well, i would probably i mean, if you look at the prediction markets, you at the markets, you look at the polling, i he's the polling, i think he's the frontrunner the republican frontrunner for the republican nominat

we are back to volker , this is not an analog to paul volcker. jonathon: they think we have burns.s a problem. step down to 25, risk reintroducing 50 and all of a sudden, and then backing away introducing 50. tom: a couple of years ago i looked at the arthur burns shift and that is what greenspan saw. greenspan invented measured 25, 25 and 20 five. and now we risk what john says lisa: he now expects a 50 point basis point hike because of what they said and what we heard yesterday. he sees a terminal rate of 575 from the previous expectation of five 50. on one level this is deliverable what happens if the fed does not deliver that. haven't they already flipped and flopped in the eyes of the market that has taken there that is from tom: the rhetoric we have heard? tom:report what you saw in the high-yield market? lisa: the same thing we saw in equity markets. tom: why did that happen? jonathon: i have no idea. thus a story so far. why is tech leading? you think stocks would be cratering. you would think that would hurt. tom: i just got elbowed by alicia levine, let us do the data che

lisa: do you think jay powell is arthur burns or paul forkner -- paul volcker?: let's hope neither for our six. -- neither for our sakes. jonathan: that is bruce kasman with us. i asked this question, never mind burns and volker, hiking rates into a crisis, is that the risk they run here? lisa: they run every risk. what we heard is a complete lack of certainty with everything. that is what we hear from everyone with humility and honesty that this is so greatly uncertain with incredible binary potential duality of outcomes. you have the potential for a sooner recession and on the other hand recession gets pushed off because the fed doesn't do much and then they ease and then they perhaps have to re-tighten, perhaps around the burns where we saw in the 1960's and 1970's. jonathan: the conflict between all of these different things, financial stability, price stability, making sure they don't bludgeon the labor market. that is coming together at a difficult time for chairman powell. lisa: gerard cassidy that he is not seeing the withdraws from the mid-sized banks.