in fact only one person they are dead and that was paul volcker but let me take one step back. what was remarkable about the people around him was that most people had never heard of them. and if they had heard of them they heard of them in a much different contexts. as richard said john commonly was the secretary of the treasury and in many ways he would have been very much at home in the trump administration. he was a fierce nationalist and basically his motto was let's screw the foreigners before they screw us. he had no interest at all and global financial assistance and he arrived in washington thinking the europeans and the japanese had taken advantage of us over the last two decades and they owe us big. in contrast there was paul volcker who was the undersecretary of treasury but he was the only one there who really understood. but he too realized the dollar had to be devalued and the only way to do that was to use gold but he really felt okay the value of the dollar and he wanted exchanges. connolly couldn't care less. he just wanted to be sure that we could take advant

they are keep bringing up paul volcker. do we need a john wayne type figure to turn this economy around? president biden will make it official, during this show delivering a handout to student loan borers. it is scheduled for 2:15. not only will this add to inflation i warn is new caste system is taking root here in america. new poll with americans categorize themselves as suffering reaching a all-time high. huge earning after the bell that will move the market tomorrow. we'll get you information you need to know before the close. all that and so much more on "making money." ♪. charles: so the stock market continues to meander. all eyes are on jackson hole and the next move from the federal reserve or maybe a blueprint from the federal reserve. while jay powell will be the center of attention but shadow cast by former fed chairman that will really set the tone for all of this. these days paul volcker is being talked about with extreme reference, right? for doing what was necessary to whip inflation. miss persona taking on i

we are in the midst of discussing whether we need a paul volcker style response. going to see if we can reconnect with christopher pissarides in just a moment. of course he is the professor of economics at the london school of economics. ♪ we are back with christopher pissarides, professor of economics. we were just talking about whether we need a paul volcker style response, which was a huge ramping on rates. what unemployment rate might it take to break the back of inflation? that is the question. >> i don't think we need a volker type response. because of unemployment and the economy it would be too severe. it will cause so much more pain. there would be more waste, more strikes. we might see deflation after three or four years. it would create so many other problems in the economy which is not worth having. . to put up with. a more gradual approach with the fed and the central banks in europe trying out the market to see what kind of rate rises they would tolerate without a response from the labor markets like we had in the 1980's would be much better now. man

i like the fact that he mentioned volcker twice, that's telling me he's got that play book.ok it's not just that he's hiking, he'll probably do 75 and another 50 and get us to 4%, but it's more about the length of time you have to stay there, and that's what the markets are not anticipating. we think a lot of this rally is going to come unglued unfortunately. charles: so ben bernanke and janet yellen i think they were more to your point, concerned about the mistakes of the 1930s and how they may have exacerbat ed a recession into a great depression, but at some point, powell's going to have to face that same sort of test as well. i spoke earlier in the show about to me it feels like i don't know if he's being as much paul volcker as trying not to be arthur burns. when the push comes to shove, when the pain is out there, do you think he'll stay this course >> yeah, the positive way is to be paul volcker but he doesn't want to be arthur burns, but you know, charles, the economy is in really much better shape. he's made that point a number of times. the financial system is much

neil: for those not knee-deep in this, picking paul volcker did a lot of good, he lost the election, that was then. where are we now on this thing? where do you think the fed goes? the percentage of people thinking we will see a hike in september, the next meeting is overwhelmingly of that mindset? do you agree? >> for him to be talking this tough to larry's point we are in front of the midterm election, he will plow right through, despite the fact that it is november. the one that follows is six days before election day. stuart: will he continue this? >> that is what he is saying and he is saying he's going to plow through into 2023, and this is astounding jay powell, he was a political potato for a while. biden was or was not going to reappoint him. now that he has reappointed, he's exercising full veto power the way paul volcker did in the same spirit. we forget paul volcker suffered mutiny on his own federal reserve board and got death threats and yet held steady. that is who powell hopes he can make his legacy be. neil: markets and stocks down across the board, utilities were es

that's where paul volcker gets invoked here. this is not jay powell saying, you know, we're not going to kick the can down the rode. jerome powell wants to talk tough. the pace will subside and our terminal rate stays between 3/4 percentage points. it's tough talk. we don't have a lot of players on the field, either. the volume was anemic for a 3% move. >> neil: the next meeting in september, do you still look at a 3/4 point hike that seems to be the market consensus? all dangerous. what are you seeing? >> a lot of incoming data between now and then. jay powell leaned in to that. it's probably a 60% chance right now in terms of the consensus that it's 75 basis points. i want to take a step back. doesn't matter if we add 125 basis points this year, if we do that with the 75 or two 225s. it's focusing on where we end the year on september 22, the day after that next fed meeting. >> neil: all right, art. speak for yourself, young man. i read in the history books about the 80s. anyway, good seeing you. >> good to see you. >> neil: a

we are here because of paul volcker.981, the kansas city fed wanted a new name for their conference. they came to jackson hole because volcker left the place. the irony is this year, the financial world is wondering whether jay powell will be like volcker in committing the central bank to fight inflation above all else, even if it leads to recession. you do not feed the bears. tom: the one and only michael mckee. now, we are joined by kit juckes , head of ethics strategy at socgen -- fx strategy at socgen. let's start with the u.s. dollar as we lead up to this each from jay powell. how much should we read into the price action today? kit: it is still affecting risk sentiment on a day-to-day basis. the story from yesterday, maybe someone was saying that the easiest trade on the market is ahead of what is left. people saying that nothing is supposed to be easy, so it is a rallies and equity markets, but of a selloff in the dollar. tom: still the best game in town? kit: i think it is going to stay strong for a long time, no

it's no surprise that mr powell referenced paul volcker, a fed chairman in the 19805 volcker, a fed chairmanrates to 20% and put the us economy into recession. that is the point he is trying to make to ordinary americans, there will be paying along the way but it's worth it to avoid that. —— there will be pain along the way. women in iran have attended a domestic league football match for the first time since the 1979 islamic revolution. about 500 are thought to have been at the game at azadi stadium in tehran on thursday night. diana nammi, founder of the iranian and kurdish women's rights 0rganisation here in the uk. it's a great achievement for women in iran, because since the islamic republic took power in iran, women have been segregated and it has been a systematic discrimination and inequality. it was, and still it is, an agenda of apartheid. so this has been under the pressure of lots of women demonstrating in iran, and they try to achieve to go to the stadiums several times, many times actually, i have to say that. and even their husbands, some women used to wear men's clothes and p

he wanted to get away from the concept -- he had said the soft ish then he invoked saint paul volcker and those were the things he wanted to accomplish and then took on more and some hope when he did say at some point we might reach a level where we slow down, or whatever his phrase was i think that was the case. very briefly, i think he accomplished exactly what he wouldn'ted and poured some cold water on some of the stock market bulls. >> without a doubt, injecting more reason for pause, for people to assume this tightening phase is almost done and it's going to reverse on the other hand, i wonder where it they have stock markets in terms of positioning. there's still been a pretty lively back-and-forth of whether we interpret this as the end of the bear market in june, or just another temporary relief rally did we get any fresh information on that? i think we'll find, as we progress, we're approaching the month of september, and we've been doing this 60-odd years seasonality is a fact, so i think the bulls are going down with a bit tougher time, particularly if they're able to push

when you see a volcker-style inversion, it is a pretty hard landing in my book. create is down a third of a percent. you are seeing the escalation of risk in energy flows from russia into the heart of europe to the czech republic, hungary, etc. a weaponization of gas flows. bitcoin down by .8%, a pretty tough day on bitcoin and ethereum yesterday as we saw the nervousness ahead of this cpi. it is all about elon musk equating his tesla stock holdings, for me that is the ultimate story. dani: there is this question of what is driving it and what happens to twitter. i want to linger on the yield curve because our markets editor points out that the volcker era was down 200 basis points, so 85 basis points from bank of america is not that wild. let's get to our reporters around the world. one of the big ones is tesla, mi will have that one. manus: enda curran--elon musk selling nearly $7 billion of tesla shares saying he may need the cash because he is possibly forced to buy twitter. he said he had no plans to sell additional stock. emme leads our business coverage in

why don't we ask ourselves what did paul volcker know, what did he think? he was an economist.s that inflation comes when you expand the money supply too much the, too fast. we expanded the money supply by $6 trillion in a year with all the pandemic spending. it should be no surprise that we have inflation, and the fed doesn't need to do anything about it because there hasn't been a covid stimulus bill or any other kind of stimulus bill now for 18 months. this is a solved problem, and yet they're going to meet at jackson hole, and they're going to just natter about, about, oh, we need to destroy the village in order to save the village because we need to be strong and forceful, bill dudley said so. good lord. they're going to throw us into a recession for no reason, man. charles: i tell you what, and even adding to that more recently, the citi economic surprise index has turned markedly higher since mid june. in fact, it's ironic concern or maybe not -- that it's also moved in tandem with the stock market. and both of those are supposedly things that the fed doesn't want. they

>> paul volcker. [laughter] so what's going on with the whole zuckerberg saga and the fbi responding to what he was saying? >> well, he was on joe rogan -- neil: right. very popular podcast. >> i'm a huge fan. i was actually listening to it -- neil: he's a great interviewer. he really is. he does -- >> -- a little bit, but -- neil: so do you. >> yeah. but he's mostly a friendly, it's a friendly give and take. neil: very smart guy. >> really smart and very accomplished. he does a million things. he's an actor, comedian, mma, and he does great podcast -- neil: and if you don't like him, he could beat you up. >> he could crush you. not an unformidable young man. neil: as are you. >> i can handle myself. i don't know if i could handle joe rogan, but in any event, he basically said, listen -- neil: that is, zuckerberg, right? >> -- 2016 and said there's going to be a ton of russian disinformation -- excuse me, 2020, the 2020 election that was then trump versus biden. just alerting you. now, that's what he

one was to go back and fix the exchange rates, just allow more flexibility. >> that is what volcker hethat. >> a second was to go to floating exchange rates. that is what charles said. and that is where we ended up. i think a third was to try to replace gold with a creation of international money from the imf. which they called special drawing rights. people thought, you know wet let's create something else and have a fixed system that was backed by something solid.,. we went to floating rates. i would like to come to your point about the future of the dollar. let me just put it this way, anybody who thinks they really now knows nothing. if you had sad to any of those guys around the table, we can remove gold entirely and the dollar will get even stronger, and it will stay that way for decade after decade, i do not think they would have believed it. the question is, why did that happen? to me, looking back it is not such a mystery. no other country ager so big and so powerful that you would want to use their currency. and, no other country wanted their currency to be so ubiquitous. so

that would provide a positive real interest rate so the lesson of history from the volcker period, not talking about the same yields and levels of rates, but in terms of the thematic, which is to move the policy rate up enough and then as the inflation rate comes down, let the real interest rate, which is the difference between the policy rate and inflation, let that move up and hold it there for a while to ensure that inflation expectations are tamped down and one quarter won't do it, it will take several quarters or more. the idea of faster inflation is embedded in many generations now, it's knottnot just the boos and would want to be convinced in a few months absolutely from a human behavioral standpoint won't do it. >> fascinating, tony stay with us for a moment. we're going to check in with steve liesman. he's in jackson hole, talked to bullard a few moments ago. steve? >> reporter: hey, carl, yes. jim bullard striking a pretty hawkish tone saying he thinks inflation could prove to be more consistent and that the fed needs to bring rates up now quickly to combat the current inflat

i'm not going to be arthur burns, i will be paul volcker. we'll keep rates higher for longer until we know for certain that inflation won't rear its head again which is a tall order. so we're in this position right now where the market is recalibrating what multiple it wants to pay for stocks. so i think what josh hit on with housing is so interesting. what he said is spot on, but the conundrum we're in, so all the stats he gave you about new home sales, it's all about new home sales are racking up, but we are still structurally very undersupplied in overall housing. so we'll be in the situation where rents stay higher, energy stays higher so i just think that the market has not priced in that we actually have longer inflation that is stickier that's where i don't think we'll have this v-shaped rally over the next couple of months in the market because we're in this time period. i will say, it's okay if stocks are down this year i've said it all year long the stocks go down we've had an amazing ten-year run. if we're going to have a negative

the kicker was quoting paul volcker. it is clear where chair powell is moving here. think he is being cautious and trying to have a continuous movement towards a more hawkish tone and a more hawkish policy orientation. that is there, but he did clarify this idea that at some point they will slow down. some analysts took that to mean they would slow down in september. here he clarified that there is a choice between 50 and 75. it is going to come down to the data. consensus expectations are around 300,000. i'm not sure the number will slow enough to say we have this under control. lisa: we are looking now at the nasdaq. the initial reaction was tepid, and now it has accelerated in terms of decline. have we fully assess what chair powell was saying in the bond markets with the front end going to 3.42%, even your view we could get higher than that in the next year or so? andrew: i think it does come back to the data, and markets need to be convinced by the data. we have fed rhetoric more clearly pointing in the position of a further tightening of financial conditions. i

to the extent he can he wants to be as tough as paul volcker was on inflation. actually think unlike prior midterm cycles or any political cycle i think he will press forward into the midterms not appear if he is trying to curry favor with one party or another. which is not how the federal reserve usually operates. charles: right. phil, you've been writing, jim, you think he has no choice but to go strong, go hard on this? >> i agree with danielle. he has got a credibility problem. they used the word transitory last year. that turned out to be terribly wrong. they have to rein in inflation. the only tool they have is to raise interest rates. i agree with you we could see 3%, high threes in six months, but on longer term interest rates they may be closer to peaking out. we may get the situation with lower higher rates which is inverted yield curve. charles: that changes the conversation from inflation to recession? >> right. >> inverted yield curve has a good track of predicting recession. charles: five and 30, some odd combination? >> three month. charles: okay.

paul volcker raised interest rates to get the country out of inflation during reagan's first term. which was not going well, it took a few years for interest rates that come down in the economy took off. i am working on a podcast coming out in the next couple of weeks on the carter years. i think a lot of people can relate to the carter years. there are a lot of differences between carter and biden. there has already been talked about biden being a one term president, stagflation, the sense that policy is adrift. we had the withdraw from afghanistan in 20 years of war after afghanistan. i think there are some important parallels there. i always make sure to talk about the differences. history does not repeat itself but it does rhyme. host: martin di caro you talked about sean valenz and how history needs to be reported now and not waited on. is it too early to look back at the trump years? guest: i think so yeah. it takes time for documents to become available to scholars. certainly we can analyze the trump years. we are not blind. we saw what happened on january 6. i don't think i

but volcker is credited. there was a painful recession, and he's also jawboning.e doesn't want the stock market and the housing market to get carried away, because inflation is usually partly a symptom of overheating. and he wants things to cool down and, if necessary, he probably is willing to get very, very tough now by pulling after a band-aid all at once. get it over with. half measures, if they pail, could be much costlier later, and that's why we heard tough talk. he wants to warn, and he's also trying to shake up the stock market, the housing market because, unfortunately, now is not the time to overheat. he wants to cool down the economy a little bit. neil: real quickly then, scott, as the stock watcher here, on the next meeting are you expecting a three-quarter point hike? because that was what he did and the fed did in the last two. >> you know it, and i think he's got to do it. but what he's got to realize too, neil, is the market is really frisky right here. to your point earlier, the economic pain is already here. the word pain didn't really surprise

i think that's what jay was pushing today, even invoked some old volcker quotes in his speech today. that's something we've pushed really hard on at jeffries, that was was jay's volcker moment he's staying with that and is going to make sure that we don't get an unhinging of the inflation anchor that peter was just talking about the most important thing for long run growth is having anchored inflation expectations. jay knows it peter was just talking about it. i think this speech was all about making sure we think about the long run and not get too caught up in a little short-term pain it's just not that important in the big picture. >> peter, i guess that brings up the other analysis, which is how much can the economy withstand what kind of a cushion has been built up, whether it's in consumer and corporate balance sheets which don't seem particularly strained, whether it is in just the labor market that's been as powell said unbalanced in the direction of being perhaps too tight. so can we have an economy that deals with the most hawkish fed in a couple of generations and doesn't n

it is no surprise that mr powell referenced paul volcker, a fed chairman during the �*80s, who, as ato 20% and tipped the us economy into recession. i think that's the point powell is trying to make to ordinary americans — that there is going to be pain along the way, but it is worth it to avoid that. you are watching bbc news. our main headline: the usjustice department has released a heavily redacted version of the document it used to obtain a search warrant for donald trump's florida home. experts investigating the deaths of thousands of fish in a river between poland and germany say the cause remains a mystery. scientists are trying to identify what they say was probably a pollutant added to the water, triggering what they describe as a catastrophic chemical chain. meanwhile, people living upstream have told the bbc they first reported fish dying as early as march. jenny hill sent this report from szczecin in poland. a river that should team with life, instead gives up its dead. fish are dying in the 0der in the thousands. in a single day, they told us here, they pulled 16 times

it is no surprise that mr powell referenced paul volcker, a fed chairman during the �*80s, who, as ase interest rates to 20% and tipped the us economy into recession. i think that's the point powell is trying to make to ordinary americans — that there is going to be pain along the way, but it is worth it to avoid that. here in the uk, households have been warned that energy bills will soar by 80% in october for tens of millions of people, causing real hardship for many who are already struggling with a steep rise in the cost of living. the bbc�*s business editor simonjack reports. abby dezso is a single mum living in ipswich. the energy price rise will hit her hard. she has a part—timejob which earns her £1000 a month, but her energy bill is going up from £80 to £250 in october, which she will struggle to find. is there anything you can cut? honestly. . . no. as she looks at her stretched budget, her primary concern is for her children. you don't want them to go without. so, as long as they're fed, that's my main priority. so, as long as — i mean, as long as they're fed, i don't real

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 fed chairman seems to be channeling his inner volcker right now and seeking to communicate to the market his determination and aggression in driving down inflation. that is why markets are so aggressively repriced and resold, as they disabuse themselves of this conflict with the pivot. at that is a fantasy. inflation is the single most important policy target for the fed. there will be followed in the economic level and markets as well. rishaad: you look at energy prices, the u.k. and europe, having a look at those, these are huge increases. and then you have governments, would you believe in giving money back to the people in order to pay their bills at the same time and at the same time you have ecb tightening. energy prices are going up by the magnitude. it is an interest rate hike. a sizable one. >> it is absolutely a form of monetary tightening. let's not forget qualitative tightening as well in the u.s.. that will reverberate across the global economy. the price hikes are more of a supply shock, i don't see that changing anytime soon. so yes, we've got ourselves a challengin

maybe he will talk historically, mention paul volcker, what he had to do to get things done. it will be interesting to see, and no doubt the fed, everyone knows this is a speech, it's not like they're trying to please the markets, they want to make the message clear, and that will help the transmission of monetary policy and that is what they have to do. rishaad: just now, the bank of korea, .25% hike, which is odd when they raise their inflation rate outlook. i guess we will have a chance to speak to the bank governor as well? >> that was a hefty increase. 5.25%, but they're already above that now. they're suggesting inflation will not come down as much as they thought it would, so it seems like a rational thing to do. i wonder if they have not seen just a couple of days ago an export number for korea that came enough on the strong side. it was on the softer side. and on top of that, china's slowdown. when china slows down, then it is not good for anybody in the region. korea is such an export-dependent country. that has to be one of the reasons they decided to slow it down.

do you agree with that and do we need a paul volcker style hike from the bank of england to re-graspnflation narrative and break this spiral? >> there are some signals materializing in the u.k., meaning that the labor market is very tight and recent data shows that the growth rate is quite strong. at the same time, inflation is running at a 40 year high. so the risk of inflation is elevated. if we look at inflation expectations, long-term expectations, they are still in the range of the last couple of decades. so i think that according to that measure, if you start too early to say we are seeing a price wage spiral, however, if we had to see signs of that, it would be too late for the bank of england something about it. being hawkish, however there opportunity windows to hike monetary policy that are limited. dani: sylvia, if i can pick up on the thread that manus mentioned, one of the bearish stories in the u.k., that of energy. this week, shutting down an aluminum smelter in slovakia at the end of next month. you also have halting is in factory in the netherlands. this is finally d

look to ronald reagan, when he raised taxes -- interest rates with paul volcker, they were doing it toositive things for the economy. joe biden has done the exact opposite. he's taken over a gang buster economy and has done everything he can to crush it. things are getting worse, not better. that's why i think you see every democrat politician trying to step away from him, saying they don't want him to run for re-election. this is only going to get worse for joe biden, not better. the economy is not going to get better, americans' lives will not get better which means poll numbers and democrats won't feel better about joe biden dis what paul volcker did was bring about inflation insidious inflation for generations of americans. in terms of joe biden and joe manchin going i -- what do you say? >> i said it before, i'll say it again. i think joe manchin signing onto this big bill is a sign he's not going to run for re-election. the green energy nonsense in the state of west virginia is political suicide. i think not enough is being made of the broader implications of biden's horrific pol

but, he is ready to push hard and keep pushing like paul volcker did in 1979, 81, 82. shery: going in the other direction is the pboc in china, not surprising seeing the economic challenges. the power crunch continues. stay send: absolutely. that adds to headwinds on the chinese economy. july data last week came in well below expectation. we are awaiting the prime rate later today for bank lending. that has trailed off considerably in july. the power crunch seen in sichua n, one of the most heavily populated provinces in china and heavily industrial. power cuts has been extended to factories that were exposed -- supposed to expire saturday. because of problems with power levels and hydroelectric dams, they extended the power cuts to industrial areas through this thursday. chengdu has not seen a smidgen of rain for more than two weeks. other cities have been in drought for 18 days. other cities have not had any rain this month. that is really taxing the power grid now. that will be taxing the globo -- global efforts to try to some -- stimulate some growth in the overall

there is a very academic presentation about the fed having more credibility than they did when paul volckertepped in and having to pull off that red hot inflation and because they have adequate ability. he still thinks that they can pull off a soft landing without the recession. >> kathleen hays with us in new york there. let's get more on market action with the director of asian equity research joining me now here. great to have you with us. we want to get your thoughts on what kathy mentioned. let's start with what we are seeing in market action. things are more sanguine even though we have nancy pelosi in taiwan. she has made it clear that the u.s. is trying to stand with taiwan. >> yes. i think the markets are a lot more relaxed because we did not see an explosion or whatever. i think in reality, so far we mainly just speak. >> we are watching very closely. does this change the outlook or what kind of reliance you could see from china on some of these chipmakers? >>, think that has changed. china has mentioned it would like to develop its own industry and reduce reliance on wherever the

>> yes, carl what you mentioned is a non-monetary influence paul volcker knew in 1979, when he joinedere affectening inflation expectations that matters a lot as he said at that time, in a there's an entire generation of young adults that grew up in the 1960s and '70s, knowing nothing but inflation. no wonder, then, they're dematcheding meyer wages and setting higher prices. so taking a page out of the voelker book, chair powell is acting tough rather than the stop/go policies of the '70s this time it will be stop and hold boomers like me, we're probably the only generation that thought the inflation rate could pick up now you have millennial and x and z thinking it could all rise how could that solve the problem? it took a generation to get rid of the last one, because it was so large, but a couple quarters of tight policy will not be enough and the fed floe it it's beneficial for the markets in general. >> tony, marco from jpmorgan has been defending his buy the dip mantra, say the fed won't want to go too hawkish before the midterm elections, because it could cause market turmoil a

there was reference to volcker and we are nowhere near there.hink the market took this quite badly. i think the hope was there would be more focus on inflation. july looks good. just softer in tone. in my mind it's short-term noise. the outlook for this, there is a risk of recession. i don't think it will be that bad. the job numbers are still too strong. consumers are still spending. earnings have not been slashed. there are no major banking crisis issues out there. it will be a murky microenvironment. lauren: do traders need to relax this weekend and monday a different beautiful day? >> i think when we get past this market hangover, there will be some buying of the debt and less selling than there has been in the past. you will see some risk money come off the sideline. lauren: we thank you so many for that perspective. big tech, even though they are impacted by higher rates, they might be the safest play. the dow is down over 10,000 points. markets down 3 plus percent. kudlow is next. brian: welcome to a special edition of "kudlow." i'm brian

we need a dose of simplistic but tough and disciplined approach by paul volcker. powell said he's very much committed to doing this. the fed is taking big steps but it's small compared to what they have to do. the federal funds rate is still sharply negative. you will not control inflation -- tom: help me here with the real economy unemployment rate. if we pop it up to 4% or 5%, what does that mean to america's unemployment rate? stephen: it will go up, tom. tom: give me a magnitude. no one is watching. stephen: somewhere in the 4% to 5% zone, a small price to pay. not for those affected by it of course but a small price to pay to get inflation back under a more stable path consistent with sustainable growth in the u.s. the path now does not cut it. kailey: obviously there is a trade-off between keeping inflation in check and supporting growth. to tie it back to china, the pfc was saying we are going to go with massive stimulus despite the turmoil in the property sector and the covid zero policy causing issues because we are worried about inflation. you expect eve

paul volcker did too. jonathan: that was vincent reinhart. he is not alone.his from bill dudley earlier this morning. he said this wishful thinking is unfounded and counterproductive. live from new york city with tom keene and lisa abramowicz i am jonathan ferro. picking up a brand-new trading month with futures down on the s&p. the nasdaq a little softer, down .2%. tom: surveillance correction. bob emailing in from the hamilton college near lake moraine and he says moody's has apple as aaa. you are correct, and i was also correct. s&p has it at aa+. jonathan: who were the other disco companies? i believe it was microsoft and johnson & johnson. i can see lisa typing away. lisa: it is taking a minute to load. j&j and microsoft. good job. jonathan: i can take the week off. i am so done. tom: you have any more data? it is a no news monday. we are kidding. 10:00 the ism. and then a lot of data christian doing to august 10. win thin joins us. finally, a dollar breather. is that it for strong dollar? win: no. the simple answer is no. i know the dollar bears will co

let interest rates seek their own level like paul volcker did. we had interest rates, it is 20%.ld control. it had that effect. he didn't come in and stand back and watch it. >> he let interest rates go up and reduced monetary base simultaneously and made tight money which is what you need to stop inflation and reagan increased supply of goods and the two together brought inflation down like a stone. if you remember the time we had mortgage rates 16, 17%, you are just a baby. neil: did i tell you when my wife and i paid for our first mortgage? 50 times i told you that. now we have new spending going on. the administration, it will not be inflationary, the college loan relief, i am wondering how likely that is because it will complicate the federal reserve. what do you think? >> don't care what type of economist you are, keynesian or supply-side, but if you look at it scientifically and most agree the giveaway on the loans will increase inflation. that will increase inflation. spending bills will increase inflation. they add to the monetary base and reduce the supply of goods and

actually conclude the federal reserve isccommodatin here in the 1970s and '80s with double digit, paul volcker had to raise above to get tight and accommodating. with inflation at 9%, do the math we have to have interest rates at close to 10 p% and we are nowhere near that. we hope to get a bend in the inflation curve on the forward basis. that takes the tail risk out of the market that the fed has to get excessively tight here we need to be cautious in allocation and focus on things to survive if things get more difficult. >> when you say difficult? >> the market that is valued in the united states that is $46 trillion if you consider a bad case and this is not the base case, but consider a bad case. the economy is currently $23 trillion if you are at $46 trillion, you are roughly two times the overall gdp. you still have a market that is expensive. now the good news and so there could be relatively significant down side if the fed had to get real tight and the value of the stock market came back into line with the size of the underlying economy. you need to see profits break down and the goo

month or 3 quarter trend they will -- charles: as much as powell says he wants to be reincarnation of volckerhim or what he saw, apparently the myth was he saw a homeless person on his way to work. i think that powell might reemerge as soon as he can. talk about making money in this environment. what do you like? >> i like managed health care. centene is one of the stocks i recently got into. the downturn is a good opportunity. not too value. charles: cnc the symbol. >> cnc. charles: mark? >> perrigo, when i go got a headache i can buy tile roll or walgreens brand that. is perry go you want to stretch the budget, buy discounted over-the-counter medication. charles: that's it? >> you want another one? axon. that is non lethal force for law enforcement. that is tasers that is bodycams, that is software. they're shifting more of their revenue towards software. 80% of revenue is recurring. that is more of a secular play. the first one i gave you was more cyclical. charles: i was in the air force with a bad hangover. jar of generic aspirin, took a bunch of them i never had a headache after that bu

the audience on the day when he gave that speech was paul volcker.entral banks could control inflation. we are living in that legacy today. it is not going to be easy going forward, but much easier than it would have been had it not been for paul volcker. tom: does jerome powell and his team, do they understand that part of inflation matter? >> absolutely. they are looking at the full package. the fed has to take responsibility for delivering overall and lucian that matches the 2% objectives over the medium term. they are well aware that there are going to be some stubborn components like to rent pieces that you .2, tom. lisa: at what point do they say we understand that this is a little bit sticky in certain areas, so we are not going to target 2% over the next three years, we are going to target 3%? >> i don't think they are going there. powell is bound and determined to deliver 2%. he means what he says, he says what he means. 2% is the objective, that is what i expected to deliver. jonathan: you've done this great piece, future recessions, this b

we received an email last week offering the stipend, we know that that's going to continue to the volcker say that cps is rooting them and they are making their roots more efficient. the bus company itself says that they have enough driver's. >> carley: i can imagine that between the pandemic and this, the learning class is huge, and that must be a huge concern for you as well. >> it is, especially with these students were not able to get to school. either the families were struggling to be able to get them to the school building themselves or students are arriving to school late, and were talking about children who are missing their required special education minutes because they're missing school. we've even had many students were asked to leave school early so they can accommodate their bus routes because that's not how this is supposed to work. >> carley: that's not how school is supposed to work you're absolutely right thank you so much for joining us this morning best of luck for you and your school as well. >> thank you. >> carley: you're very welcome. federal judge in california r

fed has that we instigate the very corrosive behavior that we saw in the '70s and '80s and it took volckercrush expectations and right now we're not there, but the fear is that every time we have a blip in inflation expectation the fed will have to step on it even harder >> steve, vobviously gas prices have fallen dramatically and helped calm things down for the consumer, they're firming up lately and who knows where they go from here >> yeah. i mean, that's right those are commodity prices and they'll go up and down and there are a couple of concepts in economics that they call the rocket and feather phenomenon. prices go up like a rocket and fall like a feather. put yourself in the position of a gas station that has their 3 in the ground -- in the tanks, but let's say oil fell or gasoline prices fell to $2 it wants to sell that gasoline to the extent it can for $3 before it offers that $2 price that's available out there so that's part of the phenomenon another interesting factoid i've come across in the research and this is an xafrexample and thats coca-cola. it charged it for about a h

that led to a resurgence of inflation that caused volcker to have to tank the economy into a double-digit recession. i think that is the playbook they are playing. i am totally not expecting anything dovish out of jackson hole on friday. i think the rally has gotten a little bit ahead of itself. jonathan: awesome to catch up. stephen auth of federated hermes. with a different perspective relative to what we have heard for the past decade or so. tom: we talk to these guests time and time again, and that is a new stephen auth. jonathan: we will catch up with jan hatzius. we will do that in about 15 minutes time as we count you down to the annual fed get together, where we were -- where we will hear from chairman powell on friday. a small balance relative to the move down we have seen over the previous two days. it is a cloudy new york city this morning. brammo, what did you do? lisa: thank you. jonathan: this is bloomberg. ritika: keeping up-to-date with news from around the world, i'm ritika gupta. there are signs that a recession and europe may be coming to pass. economic activity in the

them but many say that the so-called age of credibility, when it comes to the fed began under paul volcker this powell fed. your thoughts? >> yeah, this is serious business now moving away from the statement of mary's comments here. the fact of the matter here is that the cornerstone of the prosperity of the united states has enjoyed over the last 3 1/2 decades is built around the fed ruthlessly, impartially pursuing its two mandates, price stability, and full employment, regardless of politics and the party in power. marketing believed them, not just american markets but worldwide markets. that is eroding right now. that belief the fed will do that. consider back in 2018, there were four consecutive rate hikes under president trump. inflation was around 2% and never crossed 3%. now we have had, then the first quarter of this year the fed funds rate was near zero around the fed is buying bonds at tens of billions of dollars at a clip. now you have only, called it inflation was transitory and now they're reacting only now for the first six months. it looks to many like they're put, the fed

that's true, it sets us up like august, '82 the stock market bottomed almost ten weeks before paul volcker abandoned the anti-inflation fight and that rally erased a three-year bear market i think the key here is investors are bearish on all sides and skeptical and think that the hard data is driving this '82 tells us that we could have a very steep stock market move, similar to what joe was talking about, 4350 might be a magnet. but i think the all-time highs of this year will be realized before year ending. >> tom, by the way, the highest rated ever where you break down your thesis for the second half rally. speaking of it, you believe the rally is strengthening with a focus on lower quality exactly what do you mean by that >> well, it's something we highlighted to our clients today that mark newton, head of technical strategy, says one of the nice things developing is there's a breadth expansion. more stocks are participating and advancing. when you have a breadth expansion, investors are going to shift away from quality and the big cap leaders and move towards low quality. we were high

i mean we've never seen, not even volcker raised rates with this kind of magnitude.nd, because i'm running out of time and i got to ask you about a comment made by san francisco fed president mary daily. quote, i don't feel the page of inflation anymore. i see prices rising but i have enough. i sometimes balk at the price of things but i don't find myself in a space where i have to make tradeoffs because i have enough and many americans have enough. golly, i think that is sort of presummous, isn't it? >> it is absolutely galling. it underscores the degree which washington elite has serrie understanding what the average american is going through right now. the fact is, if they really believe what they're saying, they're going to continue moving rate higher, which is going to lead eventually to a real recession and layoffs and that is going to compound the consumers already significant problems. >> you know what? you already have enough stuff so stop complaining. we always appreciate your sage wisdom, thank you so much. >> thanks, charles. >> bring in mcclellan market

downgrades to earnings is showing people don't really respond so again in '82 the bear market, the entire volcker bear market was erased in four months i think that's what could happen in 2022. >> well, let's talk about some of those warnings from the semi conductors some individual stock stories here micron, take a look, it is falling more than 5% after issuing a revenue warning for its current quarter due to weakening demand it came just a day after nvidia's warning micron's ceo telling "squawk on the street" this morning about the impact the company is seeing in inventory. >> in the near term, certainly we are seeing due to macroeconomic headwinds as well as, you know, in certain market segments customers not being able to secure components, nonmemory components, that's impacting adjustments which have broadened since we last spoke. instead of just being adjustments on the consumer side, we are seeing inventory adjustments on the data center side and also some adjustments in automotive and industrial >> the company also announced it will invest $40 billion through the end of the decade to manu

tightening and it just kept leading to higher and higher problems with tightening ultimately culminating volcker'79 they definitely don't want to repeat that experiment so we'll, like everybody else i guess just have to see. >> i guess we will i appreciate the time as always. thanks so much. >> great to talk to you guys. >> you as well that is jim chanos joining us today exclusively. we have more trades ahead. back in two minutes. 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 >>> welcome back palo alto is the best performer in the nasdaq 100 today on pace for its best day since february. the company beating earnings estimates and announcing a three for one stock split. jenny harrington joins us on the phone. their guidance was good too. there is nothing to hate on with this report? >> it was terrific a strong quarter 27% revenue growth, billings up 44%, three for one stock split, billion dollar buyback it was terrific. >