volcker was one of his mentors. if he is coming in late, finding his inner volcker he will have to put u.s. economy into recession. that will be the tough medicine that has to be taken. lauren: the consume certainly slowing. homebuilder sentiment read it is down six months in a row. hit a two-year low, danielle. at the same time 30-year fixed rate mortgage, 6.28%. last week it was 5.5%. that is an incredible move to the upside. put that in dollar terms for the average american with a 400,000-dollar home, 20% down at the beginning of the year you paid $1400 a month for your mortgage. now you're paying $1950 a month. that is a big deal. can the consumer handle higher interest rates? >> i don't think that the consumer can handle higher interest rates. cfo of ford corporation today, in his speech said ford is seeing automobile delinquencies begin to tick up. that is another interest rate sensitive sector. to your point, with the national association of homebuilders this morning, read into the read, traffic, traffic of p

and carter knew the consequences of appointing volcker but he did it anyway, because everything elsee had tried had failed. aand indeed, volcker did exactly what carter's political football advisers feared he would do, and he began to jack up interest rates to a really high level, just as carter was entering the general election campaign in 1980. and you know, that was another reason for why he lost the november election. and he doesn't get credit. ironically enough, most people seem to think that ronald reagan was the guy, the president, who with volcker's help, beat inflation. but it really started under carter. >> well, thank you for those thoughtful answers. and i would like to remind everyone that you can purchase kai bird's look at a capella books with a signed bookplate. and thank you again both to kai and to joe for this wonderful evening at this wonderful program. it will be available, i believe, on [inaudible] facebook page, and thank you so much. >> thank you, ceri, thank you, joe. with inequality, and history professor at the university of mary washington, talked about fr

>> guest: it's as 8 promom calcr but you forget that's what paul volcker ultimately had to do. we had double-digit interest rates in order to quell the carter inflation. again, thisle is just basic economics. but you're with absolutely right about the debt. >> caller: paul volcker did not have a $30 trillion national debt when he was in the federal reserve. it was a minuscule amount back then. he raised rate, he raised the national mint, quadrupled it, but, of course, it was still small. >> guest: yeah. >> caller: volcker could cothat and get away with it. powell, if he raises it to 8%, you wouldn't have enough money left to pay social security probably or anything. so it's not realistic. >> guest: yeah, your point's well taken. the size of the national debt today means that a small increase in interest rates, when it churns through that debt, creates a massive interest cost. i believe it was every basis -- every 1% increase in rates produces about $200 billion of additional interest payments. once we've churned through that debt. so your point's well taken, it's extremely dang

spirit of paul volcker.licy right but they made a terrible mistake, universally acknowledged, they didn't get the inflation story right, dismissed as transitory, they were wrong about that. if they started tightening a year ago we would not be in the situation, does he have the cojones, does he have a steel to push through these tough necessary measures to get on top of inflation. if the market is crashing, getting from a this pressure from the white house, congressional democrats, it is reasonable to raise that question at have doubts about it. neil: it might telegraph, this is more intriguing how he comments on the move. jerrod jared baker, wall street journal at large. top-notch gas and ruminate on the very things we are talking about, how far will the federal reserve go? you get similar hikes in july. in october and ultimately, you are still up markedly on rates near 0, a little more than a few months ago that are 5 times that. new projects means new project managers. you need to hire. i need indeed. ind

in your view, did jay powell unleash his inner volcker this week?'s got a ways to go if he's going to reach paul volcker's level of interest rates. and, yes, jason trennert was suggesting theoretically you've got to get interest rates above the rate of inflation to a squash it. undoubtedly, that would produce a recession. we have midterm elections in november, and it is very unlikely that this fed chairman is going to push interest rates in a way that puts the economy in a recession as democrats are trying to run for office. so you are left with joe biden struggling to try to ec main what happened -- explain what happened. and looking at that clip, i am left to wonder why every time biden get -- gives a speech, he is shouting like that. he always makes it seem as though anger is a substitute for real policy. it seems to suggest to people that if he shouts, he's doing something. but manifestly to this point, they are not doing anything. they didn't think inflation was going to happen, they don't think federal spending ca causes inflation. so he's lef

i think back to paul volcker and a situation similar to this. 50 now, 50 in june, 50 in july, more likely to say let's get back to 2% let's get back to neutral and then see how the markets react and since chairman powell and the fed have pretty much said it's going to be 50 now an 50 in july, i think it would be really a good idea to do the full 100 now, get us back close to 2% and see how the markets do then. and so i think the odds are it's going to be 50 i do think there's a chance of 75 or 100. >> because chair powell also said that we need to see evidence that inflation pressures are abating and coming down if we don't see that we'll have to consider moving more aggressively so maybe a surprise this week. maybe he'll signal that they're up for it maybe next meeting, bob. do you think the fed can get inflation levels back down it's a question given a lot of what's pushing prices up on energy and food are way out of the fed's control. >> sara, one thing is clear. inflation is not going to fix itself we have to take action and we know a couple

it's now being said that chairman powell is trying to pull a paul volcker, no? seth: well, i think it remains to be seen whether severe recession is what's critical, or if there's some slowdown in the economy that is shy of that kind of recession can do the trick in order to bring inflation down. and if anyone says they know for sure, they're either lying to themselves or they're lying to you. paul: there's also this to consider. had the fed done too much too soon, it could have choked the economy during a pandemic, killing jobs, freaking out markets, inducing a recession. longtime economics journalist david wessel of the brookings institution. david: chairman powell at his press conference today was emphatic.nt ilation from getting embedded in people's expectations. and he said it over and over and over again. and i think he means it. paul: could he really have moved much earlier, in the midst of a pandemic? david: it's just that we have 8.6% inflation, and it's hard to macape the fact that the fe''ey fo.retrgp it. it is a remarkably sharp shift in fed policy i

tom: i love that, paul volcker in the short term. taking what we heard about the assessment of the trajectory from the fed, and oil is under pressure again today, are we starting to see the saints -- see signs of demand destruction? eddie: the market is pricing the possibility. u.s. consumers are driving less. it is very hard to drive less when people need to go to work and someone. but in the work from home environment people have the option. i am not going to fill up the tank quite as often. that question about whether we see a volckeresque powell in the short-term, the bigger question is if the economy is ready to stomach a volcker in the short-term. and we are seeing it in the oil r market. commodities are starting to back off a little bit now. tom: before we let you go, your views on germany activating phase two of their emergency energy plan? we saw gaskets from russia, what does it signal about the strain on the euro zone economy and how germany is attempting to shift? eddie: germany has no choice. they need to fire up their c

was head of the fed, reagan never criticized volcker he understood.scal sideid something different than this administration, he slashed taxes across the board to try to ease the pain and keep the economy working. that is not something that democrats or biden would do. >> they are talking about, they want to spend more money over a trillion. trying to cobble pieces of build back better left over and forcece manchin to get onboard, and raise taxes by a trillion, if they are not hammering the corporate sector in word, they will hammer them indeed, that would assuming we're headed into a recession or in one, that would make it that much more that much deeper and prolong a recession that much more. by raising taxes in that kind of an environment. and another thing to point out about jimmy carter, he started using deregulation toward the end of his term, knowing what a hardship inflation was. like deregulating price of airline tickets. but, this administration is so entrenched and driven, strangled by their own left wing nut ideology, they can't let go of,

bank of america says look forward to the summer of vulgar -- volcker. lisa: is this the beginning? this is what people were talking about yesterday and a lack of understanding from the notes on wall street as to what was happening was it a lack of buyers were forced selling? when do we see something break? tom: the night uva beat duke, where did this language come from, it's on ladylike to call this cathartic. it's called a bear market. kailey: it is and that begs the question of now that we fallen into a bear market, have we not yet seen what you actually need? futures were higher but they are well off session highs. it was not much of a convincing rally this morning. tom: we will get to that in a moment but lisa, i want to frame out the tea leaves i see now. there was an ugly last 12 hours. moments ago, pound sterling broke down into a new weakness of 120 -- $1.21. i would also point out that maybe what matters is that two year yield. lisa: it's coming off the highs we saw yesterday since 2007, real yields is what i am watching on the 10 year versus the highest levels going back

. >> i don't see a paul volcker out there. he said, i have to bring inflation down. the only way that will happen if i let interest rates ago up to whatever level they need to go to to bring inflation down. u.s. history shows the most effective way to bring inflation down is to have a recession. tom: i have a conversation of the day on the economics you are living. and when you're dead he at yards any research. he was blistering on this compare and contrast foolishness to the era of paul volcker. some parts keeping as you look at markets. stephen gallo at bmo capital markets just reaffirmed weak euro to 102, which is remarkable when you combine begin, weak euro, i think that means strong dollar. lisa: how much conviction is there for the fed to keep on going? the long dollar call was their main hedge. does that keep working against the pressure that people feel it unemployment keep sticking up? tom: my tie is a mess. somebody help me. lisa: they are clamoring to help. tom: euro-yen is what the pros look at, 143.72 kansas near that 145 level. yen weakness. i would als

what happened in the 1970's, inflation got out of hand, and paul volcker had to put the u.s.my through the ringer. the fed wants to do what is necessary in the rear term, so they don't have to do a lot more in the long term. >> but it is in the longer term that you see the effects of monetary policy taking shape. it operates with a lag, we understand that. so if they are frontloading and aggressive, are they going to see it reflected in the actual data we are getting, or do they just risk moving too aggressively and then the data turns all at once? >> that is what could actually happen. right now the economy has forward momentum as the economy reopens. household balance sheets are still very solid, boosted by the fiscal stimulus that regard over the last couple of years. but beneath that, things are in trouble. haidi: bill dudley, senior advisor for bloomberg economics, and the former new york fed president, speaking with lisa abramowicz and kailey leinz. more predictions coming through on whether we will see a deep recession in the u.s.. annabelle joins us now for morning ca

demigod >> >> you're right about volcker. >> he said it.ned yesterday that he told senators that sticking a soft landing would be challenging and he see s interet rates continuing to go up. >> i think the market has been rea reading our reaction function reasonably well, and what you will see is continued progress toward, expeditious progress toward higher rates. the center of the committee wrote down that rates would be between 3% and 3.5% bit ey the of this year >> talks about interest rates and much more, greg fleming at rockefeller capital management a career in all kinds of conditions which will be helpful to us here i was getting ready to ask you, remember when you orchestrated the sale of merrill, because you saw how bad things were going to get. do you see anything that tells you systemically that there's minefields or something under the surface that could really be bad if times get tough >> it's good to see you. i was listening to the three of you while i was working out. maybe at some point i come into the metaverse and bring my

volcker did break inflation.he internet did >> was there an internet in 1978 >> i'm talking about the 30-year secular disinflation there is a lot to that volcker -- that's a blunt tool he used. i was there. no one likes to just pull the rug out from under the economy and just clamp down just to deal with inflation volcker at the time, as you remember, richard, americans have to accept a lower quality of life for a few years because of what he did then, we give him a lot of credit, but things did happen. exporting workers around the globe and lower labor costs also helped with disinflation >> you're right. >> the fed can't do everything for us, richard. you know that. you said that a lot. >> i believe that, joe let's keep things in perspective here what started then was the greatest bull market of all time fixed income interest rates got so low that two and a half years ago, the bank of england issued a report that it was the lowest -- they he go back to the first trading paper. they are still historically low. we

it's really interesting that, you know, jay powell has switched his religion to paul volckerism. that's an indication of how to solve the problem. how much was your mortgage, 13%? if i remember right. >> neil: did i ever mention that story to you? yeah, that was a bargain buy back then. >> the sad thing here and this is what will get people motivated politically, the people that have assets, their 401(k)s are suffering. people are buying food open credit cards and now we're rating rates, the interest on the credit cards will go up. they'll pay a 20 to 30% premiums on their everyday items. that's the saddest part. >> neil: andscott, your perspective, life experience, some people have never seen anything like, this how are they going to judge? >> they haven't. it's going to be rough. we're starting to see that. look at savings rates plummeted, credit card usage. that is increasing at a crazy rate. consumers are tapped. they're spending but on essentials. your comment about the 40 years, we're seeing prices as high as they have been since i was prom king if that tells you nothing. >

i was there on wall street in the reagan administration when volcker did that.you have to freeze domestic spending and then of course scratch your head, you've got to open the spigot, you've got to open the oil and gas, did you see these utility numbers in here, this is incredible, natural gas. blue one very sorry. i have a hard commercial break coming. 4:00 this afternoon you are on fox business, thanks for being with us, great stuff. still ahead, steve hilton, jonathan honed egg and much more on this big selloff. we will be back. i'm greg, i'm 68 years old. i do motivational speaking in addition to the substitute teaching. i honestly feel that that's my calling-- to give back to younger people. i think most adults will start realizing that they don't recall things as quickly as they used to or they don't remember things as vividly as they once did. i've been taking prevagen for about three years now. people say to me periodically, "man, you've got a memory like an elephant." it's really, really helped me tremendously. prevagen. healthier brain. better life. (v

takes aggressive action tomorrow until it is clear that inflation has been named 10 we get to the volckerof people are making he says hopefully 5 to 6% on a terminal rate gets it done to bring inflation down is that something you agree with >> 5 to 6% is actually really high but i think that logic that's coming out will make some sense. i think there's still a lot of credibility behind the fed if you think about what they tried to do last year, they had to keep it loose to get us out of the pandemic. they kept it loose a little bit too long they got inflation higher than where they wanted to be. they enter this year and it was a year they have had to clamp down and they have had to clamp down throughout this year. that's why i think this market and economy is now kind of in shock to some degree trying to figure out, wait a second, how did we go from a mid-cycle economic expansion to roughly what feels very late cycle and may actually be on the precipice of a recession with at least recessionary odds increasing because the fed may be in a corner where they have to take rates high enough th

are they committed to fighting inflation and become vulgar 2.0 or are they not -- volcker 2.0 or are they not? jonathan: do you think it is already in conflict or is that what is in store later in the summer? collin: later this summer they will be. i will agree with both jim and meghan that the markets need some clarity and we don't have that right now. we are more uncertain now than we were a week ago. what are the plans and unfortunately it will take a few more inflation reading and a few more university of michigan readings. this is something we paid attention to but not something we would watch every single friday and now we will be glued to it. it is going to take some time and hopefully some clarity that inflation is starting to roll over. until that, we are not going to get that and i would expect more volatility. jonathan: we are talking about credit in a moment. u.s. investment-grade debt sales going down. that conversation, up next. ♪ ♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this i

nevertheless, chairman powell said he did not want to compare himself to paul volcker but he is committed to price stability. could this be, for to what extent could this be, chairman powell's volker moment? megan: the difference between what we are facing now in the 1970's is this time we have the 1970's as historical comparison. that put the fear of god in every central banker. i think the fed is really serious about getting on top of inflation. what worried the fed was inflation expectations jumping before the last fomc meeting. the fed wants to keep those anchored and will do whatever it needs to do in order to achieve that. i think that is the real prize the fed has its eyes on, maintaining anchored inflation expectations. in the 1970's they became deanchored. we are not there yet in the u.s. economy. jon: you talked about the potentially tough choices employers will increasingly have to make throughout this economic cycle. you have zeroed in on the health of the u.s. consumer, you have talked about the fact, in some cases, they had some financial firepower to deal with this. what is

we have seen, are you willing to be like paul volcker?e has not pushed back that hard and i think that is right given how far with the fed is on its mandate. we would have to see it fall a few percentage points before the fed thinks about that trade-off. jon: helpful context. steven kelly from the yale school of management. we will watch that balance sheet story and watching many people making the return to work or, in the case of elon musk, return to work or work somewhere else. what tesla employees were told but how much is the return to office worth for employees? we talk about that next. this is bloomberg. ♪ it system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create jon: this is "bloomberg markets ." i am jon erlichma

. >> is this the federal reserve board of governors under your leadership committed as doctor volcker was some 40 years ago to bring in inflation under control, no matter what? >> i would never want to try to compare myself to paul volcker anyway but it will say that we are strongly, strongly committed to restoring price stability we do understand that it is the thing that we need so we can get back to the kind of labor market that we all want. >> reaching the standard that paul volcker left the fed would be a high reach but one that anybody there should try to get there, wouldn't it? >> yes. >> thank you, mr. chairman. >> thank you, senator shelby. i will exercise my time now. mr. chairman, you point out in your testimony that the core personal consumption expenditures minus gas foodim ad rent,rm 4.0%. even slightly decline from the previous report pics so ths the real culprits, gas food and rent. first, the issue of gas price inflation is a global phenomenon, is that correct? >> yes.nt gas prices are a function of oil prices to significant extent, and then the refining spread as wel

chair powell needs to channel his inner volcker?aghi if expectations get under way, we're in trouble >> what's expected out of the fed, they meet again in november and december is the last meeting. >> it is unlikely the inflation rate will die down very quickly especially the total number with the food and energy, but the fed should not be distracted by that and they should say we will continue to press until we start to see inflation ease off upon that's what chair powell has said all along and just stay with that program. >> but does he need to spell out explicitly what progress is and looks like he wants clear and convincing evidence that inflation is falling. an investor told us she believes that inflation gauge is rising only a tenth or two each month does he need to get exblessity of what progress looks like, even if it's market break evens that he's looking at how are we supposed to know otherwise if they think that this is working? >> powell will never give you the explicit guidance that the president mester did these are th

paul volcker got us out of inflation. out of inflation raising inrates above the inflation rate. that is tightening monetary policy, expanding supplied goods total production, this is exactly the opposite direction they're going. this is, this is catastrophic what they're doing and, jimmy carter all over again. they're even worse than jimmy carter. i thought i would never say that. they are literally worse than jimmy carter. neil: we'll have to see what happens. art, i was thinking you were mentioning paul volcker. i was watching a documentary on him. lo and behold talks about the whole reagan relationship. there it you were. you look the exact same. you're like dorian gray of economics. you haven't aged. what the heck. >> hobbits don't change. we just don't age. neil: not at all. not at all. >> thank you. thank you, neil. so much fun being with you. thanks for having me. neil: always good having you, art laffer. always interesting. weigh as key player in the whole '80s boom saw ronald reagan cutting taxes, paul volcker c

jimmy carter, i mean, you know, he had volcker, volcker tamed inflation. >> right. >> but there were so many global forces, external forces, you know, we like to think in america that presidents control the economy. there's so many external forces right now. >> especially now. >> especially now with two years of covid, the pent up demand. i understand biden striking out, biden attacking this group, attacking that group, that's what politicians want to seem like they're in control, but the fact is, this is all on powell, isn't it? >> i'm not blaming powell. i'm saying moving forward this is on what jerome powell and the fed does >> he's the only person with tools right now, unless biden wants to withhold some of the spending that's already been authorized, but that would be hard for him to do. as larry summers warned a year ago, and sometimes he turns out to be right, if you're going to have that massive spending it will add to inflation. but whether or not the president is totally to blame, when you go into the store and, you know, a loaf of bread is $1.50, $1.70 and gas is $5 people

back to paul volcker type rate hikes and that did eventually call me inflation beat but also drove ushis convenient path until now which is let the markets do the tightening so that ship has sailed several months ago and markets used to have better understanding of what the terminal rate was supposed to be but the fed has been so late, markets are pursuing the terminal rate is much higher, to whip inflation into place. that is why we have chaos in the market. the fed has to get ahead of markets in this scenario. they have to get ahead of market so at least a hundred basis points but the out the window for pursuing this option, the longer you wait and the more inflation in the economy, the more the s&p has to do to volcker style inflation taming, that is harder on markets. neil: it is not an absolute rule of thumb but you want the overnight bank lender and the federal funds rate to narrow what the inflation rate is but to do that, having a fed funds rate twee 8 times higher than it is right now and then some. how likely is there will the series of rate hikes bring down the inflation nu

, instead , he did cut taxes, so you had the two men working hand in hand, paul volcker to get rid of inflation, it worked, ronald regan to stimulate the economy, it worked. but that was then. what the heck happens now? stay with us. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out wha

where we have to make a distinction between non-monetary and monetary inflation what you as paul volcker who in the early 1980s headed up the federal reserve and to kill the terrible inflation at a very high cost that had been inflicting us in the seventies because in the 70s, they'd fight. it not fully kill it then would come back worse than before. so we went through a very grim period in the early 80s to finally stop it once and for all and he rolls we did an interview with him a couple of years ago and he four years ago and he would roll his eyes at the idea that 2% inflation is good in terms of the stability of the dollar you want you don't want inflation or deflation you want inflation. now, this is a very subtle point you may get prices going up because of supply and demand. for example a hotel room in cambodia a very poor country is going to be a lot cheaper than a hotel room stay in singapore very prosperous country when a country becomes more prosperous. and people's salaries are going up in real terms. they not only start to buy more things, but they're going to want more serv

the only, the only thing we could look back on the only history is volcker and look what volcker hadat because they're afraid if that's what it is going to take, we're in for a lot of pain. stuart: yes, we are. jeff sica, thank you very much, sir. i know we'll see you soon. thanks a lot. looking at movers, we have pro-logics moving down. duke realty is up. what is the story? lauren: show you a winner. it's a small gain. duke realty is a winner today. i say that with a smile. this is the news. prologis is warehouse company home to amazon and home depot and others. they're buying smaller rival of duke realty $26 billion. all stock deal. save money in synergies 400 million a year. that is what is expected. stuart: i'm looking at banks, a huge decline in signature bank. lauren: it is one of the biggest decliners. banks are down on recession fears. banks benefit from higher rates but not in a recession. that is one of the biggest losers today among the banks. stuart: are we back looking at cruise lines, yes we are. norwegian, 8% down, 12 bucks a share. they need to fill summer cruises, we

charles: paul volcker. stuart: we going to do that again?w that in this kind of climate you can do it. also things changed. look at our debt levels. stuart: huge. charles: if we did a paul volcker kind of move our country be paying over $1.5 trillion aishah hasnie year in interest. what can you do of $1.5 trillion paying the interest on your debt so we're in a different predicament than we were when paul volcker was then a bold move. i don't think there's a political will out there. i don't think this administration wants to see it. they want the fed to be there as a fall guy, but you know, that kind of action, president biden is talking a good game, but he doesn't want to see any kind of massive recession, which a lot of people are starting to come to say that's the only thing that would cure this. stuart: i want to hear more about this so i'll be watching you on "making money" with charles payne, 2:00 p.m. eastern here on fox business, charles thanks for being here. charles: thanks a lot. stuart: lauren come intel me about tesla. lauren: k

kurt volcker, i want to talk about ukraine, seems to me russia is winning by not losing.ple things. ukraine is winning by surviving. russia's effort was to overkill thorough the ukrainian government and 118 ukraine is a country at a people and they have failed to do that and they are fighting to take territory in the east. they are succeeding at taking some of that oratory. with the ukrainians need is better longer-range artillery systems, missile defense systems to protect cities like we saw that attack on the shopping center where the russians bombed the shopping center. and and the territory. russia is winning, ukraine is the victor, as a sovereign european democracy. stuart: what does the biden administration went? what do biden and the europeans ones? some kind of settlement with troops on the ground in place, peace talks fairly soon, is that what they are geared towards? >> there are some differences and we will hear about this in the coming weeks. ukrainians want russian forces out of their territory completely. the biden administration is giving support to the ukr

they call it the summer of volcker. tom: there are too many differences from 1979 step a bond bear market is price down and yields up and we see that with a vengeance. the vix is critical to me, breaching 30. futures are up 15 and dollar strength confirming the yen and sterling is stunning $1.20. lisa: 8:30 a.m., the latest in a series of data. food prices, energy prices are climbing. the companies cannot pass along the price increases as much as they did. this could turn into a weaker margins. how much can the fed pivot to the strong labor market. the fed is kicking off the to date meeting to discuss interest rates. how much are we looking at a baked in scenario of recession? at what point is there a faster tightening cycle giving the market supports? tom: we do economics and politics in the foundation of this in investing has been whether trading is for short-term or long-term. we will change the show now and we can do that with katie kaminski who is having a killer year shorting the space. i want to go back to what y

it's not a paul volcker cycle yet.isa: to your point, laura master said the fed is just beginning raising rates. if they go a little above 4% next year, has the market adequately priced that in? >> no, especially last week and we got to extreme went where the market was pricing significant cuts in 2023. essentially, the price would have a nine-month tightening cycle and then we will start cutting. obviously, the hikes are priced bigger than normal. nevertheless, we were pricing the hiking cycle that was going to be one year and then the cuts would start. that i think is questionable. i think we will have a situation where the services and prices will be sticking and it will be hard for the fed to switch to cutting mode. we might not talk about 75 basis points for ever so maybe a slower pace but this notion that the fed flip super hawkish to getting ready to cut within a year, that i think is too early. i think we will push that out. jonathan: thank you for your view on things. the playbook has not really changed for th

then in 10 years now, as we do with paul volcker now, did we really need to go that hard?athan: that is what the writer mr. is addressing today, she thinks the bigger mistake is not going are not. i want your view on the differences between europe, the ecb, u.k., bank of england effort, the u.s. and the federal reserve effort. we have put this up as a big conference. how big is the difference between the u.k., europe as they tackle this problem? kit: the biggest thing going on in europe is the war in ukraine, and they are dependent on natural gas supplies from russia. european natural gas consumers, which includes industry, are paying a far higher price than what has already been seen in the u.s. that is a particularly european peace. the biggest danger for europe is a recession that come from that reliance on russian natural gas. the u.k. has already got much tighter fiscal policy, and economy losing momentum, more labor market shortages and the rest of europe. i think the u.k. is done in the sense that we will see higher rates, but the economy is losing momentum here. wh

volcker let things go and create an opportunity for investment. >> we need to address inflation quickly. >> his point is make the private sector attractive for investment and things take care of themselves dollars get soaked up. >> a lot more dollars now. a lot of dollars out there right now. >>> new comments from president biden on the state of economy. telling the associated press that recession is not inevitable he pushed back on assertions from republicans that the covid aid package is to blame for the inflation hitting 40-year highs. the jobs market is very strong right now. we hope that continues. >> you keep hearing about layoffs. >> tech industries in particular despite the gains, the s&p is poised for the worst week since march of 2020. joining us now is lisa erikson and michelle girard. why don't we start, lisa, with your take on where the markets stand. you listened to what joe and i have been talking about. you are on ron baron's side. >> long-term we agree that stocks make sense for portfolios with that broader horizon. in the short-term, we are cautious we look at what is

>> look, having bought stocks in '82, i would say the difference is that that was volcker taking rates up so high the market started to rally before the volcker peak, 19% fed funds rate when i look at what would possibility cause a bottom here, believe it or not, i'm going to go back to what you said yesterday about the selloff at 4:00 a.m., because there were no buyers whatsoever. we're talking at every single level. let's go back to adobe adobe's very important because almost all the notes were negative about what chauncey said he was somewhat optimistic in his outlook. people said when he cut the outlook, which he didn't, he just said there were currency issues, issues involving seasonal weakness. but the scorn, the quiet scorn for one of the great executives of our time that people had, i think was very interesting it shows that people are fed up. when are they fed up when the stock goes down j gigantically that's how you get a bottom, you finally get these analysts -- you have adobe, it's where it was on november 21st, the top of the market, everybody loved it now they don't like

talk of that at the last meeting we might see a full percentage hike which was routine under paul volcker. that woe then, argument would be hard to pull something big like that. what do you make of the possibility they could be setting the stage for that. >> markets really don't like surprises. i would almost use the word they hate surprises. that is one of the reasons we've seen so much volatility. worst start to the year since 1970. last week was one of the worst things we've seen in year. all this is pricing the bar is coming way down in the economy. people are getting concern. recession word is everywhere. the fed has a credibility problem as kenny mentioned here. they're trying to restore credibility recognizing they hit the inflation issue hard, finally took them a long time. by doing so they may catch up on the problem. they're not ahead of it. they're still behind, they're not catching up. all the fed officials are out there laying the groundwork we don't have future surprises fed laying rates to address the issue. the real concern, as ken kenny mentioned slow down in housing mark

. >> stephen engle at standard charter bank said the fed might want to create this paul volcker moment. and michael at j.p. morgan, a longtime fed watcher, has joined the call for a 75 basis point hike. he said there is a nontrivial risk of the 100 basis point hike. the terminal rate is seeing 4% by the middle of next year in the swabs market. let's look at the other side of the coin. neil from resin on's said, remember, the fed is happy to see financial conditions tightening just with forward guidance. look at the move it has had in bond yields. and he said jay powell may not have the consensus for a series of 50 basis points hikes. that is why he thinks this is not going to happen. the final point is -- inflation got higher than expected then people thought but it is in the realm of what the fed has been looking at. is this enough to tell them, we need to speed up now? >> really interesting seeing how bond markets are pricing and pricing again. what are you seeing as we start talking about parts of the market wanting to be surprised? >> well, the one thing that did strike me is we ha

>> the fed's remaining resolutely hawkish and powell has found his inner paul volcker-ism.e is testifying before congress week i don't think there will be data to change much of what he said. however, we could see a little calm before the storm. i think the next catalyst is the second-quarter earnings coming out and what that may bring us. there may be a narrative that we have hit a bottom, we are oversold, the fed is taking inflation seriously and that might be slightly bullish in the interim. we have already tighten financial conditions considerably. it has not been recalibrated through the system so i think the competitive narratives kinda find a bottom or say the bottom could keep volatility elevated. >> when you say the fed pivots, what would that look like? frances: it is hard to speculate. if we look at the pivot around covid, back stopping corporate credit, things like that, i would hope we would not have to do what japan has done which would have the fed step in and buyback equities. it would depend on what happened with credit spreads. if there was a credit event,

at the end of the day it is not a 1980's paul volcker kind of situation that we had in the united states. jonathan: thank you. just to reset for people just tuning in. rates changed at the ecb but a ton of guidance. they had to cut their growth forecast. this market behaves like it was reading the statement. initially the bond market was pretty contained. the first line in the statement, asset purchase program's before detailed guidance. they have big and some flexibility, the idea that they can -- then you get down to the rates line and think it more interesting. looking to hike rates in july. september, open the door to a bigger move. then talking about sustained but gradually increases. what is interesting about this rate guidance, and everything could change in the news conference, you having ecb laying the groundwork for something we have not seen in these european central bank's, a tightening cycle. it is not to me to say whether they can achieve it or not, but not just july, ecb opening the door for september, leaving the door open for doing more than that. tom: the thing that is

neil: well, of course, he had the help of paul volcker, the federal are reserve chairman, at the timetes one full point ott -- at a time. gary, you've been warning about the inflation thing for quite some time. the federal remeets next week -- reserve meets this week. we're hearing more talk of why not three-quarters of a point to get really ahead of this thing. what do you see happening? >> look, i think it should be one point to get ahead of it, ask they'd still be behind. look, part of this is not just what you do, it's sending a message to the country, it's sending a message to business that you are dead serious about attacking this inflation. and, neil, a year ago we started noticing the shrinkflation in a few products. it's like everything now. and also just, it's that bad. and the fact that nobody's really doing anything about it, the fact that they're so behind curve, the fact that janet yellen this week said i'm not worried about recession when you have mortgage applications dropping through the floor, you have savings rates plunging, you have credit card usage skyrocketing,

calls it is the basic idea that the scale of move that will be needed by powell is like volker -- volcker. we have to think about a blue scale and then pushing against the animal spirits. matt: jonathan has been a very optimistic person as long as i have known him. i will say that one of the most interesting things that i learned today is talking to ed ludlow, those longshoremen are going to strike for higher wages. yesterday mohammed was saying if you think we are in a red-hot economy and i am paraphrasing, watch out for wage increases and if they get that it will keep driving up the inflation spiral. lisa: to end the -- tom: to end the doubt -- the hour equities deteriorating, i love doing the dow futures. s&p 500 -60 and the nasdaq, let me get the percentage move because ferro had to be medicated over the dow quote. -1.8%. the vic is at a 28 level. matt: this is after a 2% drop yesterday. we already had -- markets were anticipating that and i do not believe that the selloff yesterday was off of christine lagarde and the ecb in the united states of america, they were watching this repor

i wonder whether a 3/4 hike gets people thinking about the paul volcker years when he could do that routinely. that would scare them. you think that would scare them? if they keep going and going big, if key oh the phrase is kneecapping. if the notion is to make everybody feel better you have to kneecap them and put them on the ground so they can rest, that will scare them. people tonight like to get kneecaped. >> neil: i worry about that. all kidding aside, how do you look at the markets? they tell more after falling yesterday. you hear this talk of capitulation where investors say the hell with it. i'm out. are we at the hell with it i'm out stage? >> so clearly we are not. but clearly, you know, when i look at my 115,000 clients across the world, we're not. but sometimes we don't have capitulation with the bottom. i'm increasing almost coming to the view that this is a period that will not have capitulation. partly because everybody is looking for it. partly because this what i call a ghost busters market. you can't go anywhere. if you think about it, long bonds are negative in this period

it will usually bring on a worst recession and you only do that as a last resort volcker is the ultimatele. but i would bet, and again, not what i do, but that the fed feels like if inflation really gets out of hand, we have a playbook if we get into a really bad recession, rates are still pretty low we can cut them again. i think they're probably more nervous about that so they'll be raising rates for a while. this doesn't raise the general direction. if i were to bet which side they'd err on, no matter what they might say they always have to sound, i have spent my career avoiding being a fed parser i can't think of anything more ridiculous than hanging on every word i think powell is speaking right now or soon and trying to parse it and they're always trying to tell you something, but mislead you a little bit they probably a little bit more worried about a serious recession. >> therefore they won't go crazy -- >> they'll drop less than some down the middle would have gone. anything can happen. we live in a volatile time you could see inflation with growth, or the one everyone fears, a

aggressively raising interest rates, a lots of people think jerome powell wants to be the neck paul volckercarter into the reagan years was raising interest rates a full point at a time. but ronald reagan followed up with big tax cuts that took the stag out of the stagflation part. if republicans were to take control of congress, and i know you're retiring, but do you think that should be the republican approach to this? all right, we've whipped inflation. that's the hope. now come the stimulus part. >> yeah, i think that reagan recipe is exactly what we need right now to offset some of those higher borrowing costs to get the economy back on track. certainly ending the covid era spending to fuel inflation would be hugely helpful. abandoning the biden tax hikes. they ought to makes the tax cuts and jobs act permanent looking in the lower rates for families and small businesses and investment incentives so companies can invest in equipment. the solution would help a great deal. but the other thing about ronald reagan we need to emulate, we need to reconnect workers back to their jobs. the wor

we did experience 10% unemployment in 1982 following the volcker shock. in this market to get to 10% unemployment that would require about 10.5 million additional people out of work and historically we know black unemployment is usually double that of white unemployment, correct? >> yes, it tends to move at twice the speed both up and down certainly moving up. >> when the former treasury secretary says he wants 10% unemployment overall, he's also saying that we need black unemployment of nearly 20% -- or implies that but, chair powell, i do think despite the tools you don't have, congress does have tools as well. would you say the following actions, granted in the scope of congress, could be deployed to impact inflation using antitrust laws against companies that are raising prices, using their market power >> i didn't hear the last part >> would this action -- would using antitrust laws against companies that are raising their prices have an impact -- >> anti what laws? >> antitrust >> sorry the acoustics in here. >> would that make an inflationary impac