what the federal reserve could learn from paul volcker. is a mythical personality, he had a few faults of his own. sheila bair is to break it down and all the challenges facing jay powell after this. ♪. moving forward with node- positive breast cancer is overwhelming. but i never just found my way; i made it. and did all i could to prevent recurrence. verzenio reduces the risk of recurrence of hr-positive, her2-negative, node-positive, early breast cancer with a high chance of returning,... as determined by your doctor when added to hormone therapy. hormone therapy works outside the cell... ...while verzenio works inside to help stop the growth of cancer cells. diarrhea is common, may be severe, or cause dehydration or infection. at the first sign, call your doctor, start an antidiarrheal, and drink fluids. before taking verzenio, tell your doctor about any fever, chills, or other signs of infection. verzenio may cause low white blood cell counts, which may cause serious infection that can lead to death. life-threatening lung inflammation

volcker dealt with that. he went through it. but can powell? charles: volcker had the cigar, a different kind of swaggerer. you're right he gave a press conference i'm not quitting and keeping the pedal to the metal. charles: i don't see jay powell messily doing that. >> we'll find out. charles: our note, our equity strategists disagree own the next direction of 10%. so the equity strategist sees low equity earns returns but the technical strategist sees trading opportunities on upside? >> this is investment bank, not within wealth management. charles: okay. >> i think that highlights how much uncertainty and how crazy and unique and historic this is, right? so there is volatility. there will be more volatility. a lot has to do, the strategists evidence that a tale of two time frames. i can tell you exactly what you need to do to get through the next six, nine, 12 months and i can tell you it will be better in one to three years but what you do in the next short term is very different than the next long term because as we just discussed, there

kathleen cullinan let's remember, when he talked about paul volcker and that period when paul volcker had to work so hard to get inflation down, he also had to realize that he stopped hiking rates to quickly. jay powell particularly mentioned not moving prematurely, so don't be looking for a pivot any time soon, investors. also important to look at the totality of data. charlie evans from the chicago fed, who is known as more of a dove, said that he can see his way clear to a 75-basis-point rate hike. he has not made up his mind yet, but one thing for certain, he said, i know rates have to go a lot higher from here. the question is -- what is a lot for europe? what is a lot for the u.s.? definitely the economies are in a much different situation, but the path policymakers is the same and they are making it clear that this is what they intend to do and probably will not stop any time soon. haslinda: don't look for a pivot any time soon. kathleen hays in new york, thank you. let's bring in the cio of maybank wealth group management. the big question is if the fed will keep hiking. >> i

>> don't forget volcker was in a much worse inflationary situation than we're in now. neil: absolutely. >> we were having eight to 10% inflation for almost a decade and interest rates were sky-high. inflationary expectations by both surveys and market based were much higher today. in fact market-based inflation and expectations going forward have come way down from where they were six, 12 months ago. so he doesn't have to -- pull a volcker, the interest rates, what is happening in the sensitive commodity markets and housing markets are showing how strong the effects already is. neil: you know the backdrop for this is still pretty steady job gains professor. that is one thing the administration points to, a number ever economists point to, we're in a lot better position economically than back in the carter years, some inflation rampant at the time. that is a positive sign but this fed seems to look at that as the problem, not the answer and that coupled with more government spending, trillions of dollars in various stimulus efforts or new climate change legislation and

it worked forepaul volcker even though you know, volcker was notoriously famous for not caring a hook about impact on stock market. good thing because the market was collapsing while he was doing it. it seems like jerome powell is ready to follow that do you agree with that? >> i don't agree with the fact he should do that. i think he is talking tough now because he was so say weak or meek for many, many years leading into this. i think he wants a stake in the ground saying i'm not doing that again, i'm not making that mistake again. as soon as the fed makes that mistake again i believe they will turn dovish. don't forget, neil, as we've seen in the past bear markets in very emotional trading scenarios, whether it was 16, whether 2009, certainly 2001 and 2002, the market will rally ahead of that slowing pace of the fed. the market will rally ahead of that next up swing in earnings or economic data. so to get out at this point if you have a long-term horizon as many of our investors do, we're adding to positions here because of the fact that i believe the market will rally ahead of wha

used the same language that paul volcker may have used and paul volcker was revere in the financialmunity and he killed inflation in the early back-to-back in 1980s. so the proof of the pudding is in the eating and the debate, of course, gdp and the economy's plat on its back and the first two quarters were dominated by omicron and china lockdowns complicating the further global supply chain that was the first installment we haven't seen what the fed has done that will show up at the end of this year into next year the first two quarters of this year and if you average gdi and gdp and we'll just say the economy is flat on its back. even if you don't think there's a recession it's stagnant, but the fed's actions haven't kicked in yet and that's going to be the story for the next 12 months and that's why the recession, if you don't believe it it's already started and staring us in the face. >> the fed has not kicked in yet. the quantitative easing of it is sort of this underreported part of it when they're pulling cash out of the system. i wonder why, though, if the economy is flat on

second, talking about volcker. data, while volcker was super-aggressive when debt-to- gdp was a lot lower he also cut rates way before inflation was anywhere near 2%. they started cutting rates when inflation was still higher at 10 -15%. why? because the economy was dramatically slowing down and that's what we're seeing now in a big way. the atlanta fed just had to cut its own gdp forecast from 2.5% to 0.5% on the heels of two negative gdp quarter growth so the danger is that the fed is again miss reading the actual impact of the policies. charles: the saying that's popular on the street the fed has to go hard until something breaks. could we consider the earnings warning from fedex something like that it feels like it's a proxy for the economy breaking, the housing market is already in a recession. what else has to break, do you think, before there's a different mindset out there? >> well, according to the fed, it's jobs and that's the worry that they are again looking at lagging indicators, and vis-a-vis what fed

paul volcker and the fed increased interest rate discount rate 200 basis points over one weekend andegraph it and explain it. now the world is different. they telegraph exactly what they are going to do and explain it afterwards. the fed has been telegraphing 75 basis points. if they were to go to 100 basis points, i think it be shocking to the market. i know some percentage of people of the market, 14% or so, think it might be 100 basis points, but i think they wouldn't want to shock the market that way so if they were going to do 100 basis points i think they would have telegraphed it by now. neil: they have expressed alarm about what's going on and that is what bummed so many out after jerome powell's remarks in wyoming a few weeks ago, but the market reaction, did paul volcker worry about how the markets would digest what he was doing? what is this obsession we have? >> well there weren't as many tv shows and as many people who knew what was going on in the market those days because we didn't have instant access to the markets for everybody. today everybody follows it all over th

we think we can avoid the kind of very high social costs that paul volcker and the fed had to bring into play in order to get inflation back down and set us up for a long period of price stability. kathleen: interesting that jay powell alludes to the instance, trying to get people we cannot stop, we cannot stop prematurely, and we might have to raise rates more like paul volcker had to do around 1980 to finally get inflation down. he said he will be watching the totality of the data. cpi is the next big part of that total. presumably -- i think it almost does not matter how high it is or is not. it will be so high it will still justify being aggressive and hard to believe it will not be enough for them to do another jumbo. yvonne: and they both spoke at the same time, lagarde and powell, which was interesting. kathleen there from new york. let's get to chief investment officer, managing over $300 billion in assets. thank you for joining us. great to get people based in europe to talk us through the ecb. after we heard from lagarde, how long do you think the cycle can last? do rates go ab

everybody is talking about jerome powell being paul volcker. paul volcker but he is also part arthur burns because he monetized the debt during the pandemic. the m2 measure of money grew 42% during the pandemic. that's why we have inflation today. and the reason all of this happened is because they accommodated the congress. congress was trying to give people money. some people call it buying votes. then the fed bought the bonds that the congress was forcing the treasury to sell and then what happened is the money supply exploded and inflation went up. paul volcker never monetized the debt. he reversed all of that. we'll see if jerome powell has the intestinal fortitude to do this and i think you're right, i think he tightens, unemployment goes up, recession happens, market goes down and then he eases. that is exactly what arthur burns did. charles: what's interesting today, we had a whole bunch of economic data out. >> right. charles: it was good enough for the atlanta gdp number to go higher but one thing interesting to me is prices paid in t

>> i mean powell is trying to be paul volcker although he is not really doing what paul volcker did.es the money supply and that is when interest rates, why interest rates went up. today the fed just sets interest rates where they want and they think that is going to lower inflation and the wheel idea here is that rate hikes will destroy demand, kind of what i was just talking about. here's the problem. rate hikes also destroy supply. so for example, people are having a tough time buying houses today with more rates at 6% but homebuilders are also backing off because they face higher construction costs as interest rates go up. so this idea that you can just raise rates and it is like a laser scalpel and it gets rid of demand, that is not true. it affects the entire economy, demand and supply. so they're going to keep it up and eventually throw the economy into recession. charles: am i overthinking though, or maybe wishful thinking when the fed put out their model last week, their economic projections they're modeling for a rebound in growth next year. >> right. charles: in order for

got inflation from the '70s. 1980 they create a recession, volcker, the volcker fed creates a recessiondemand destruction. charles: right. >> not unlike today. charles: right. >> and then they go oop, maybe we went too far. maybe we get a soft landing? then they let their foot off the brake. inflation pressures really started to ramp back up. so they stomped on it pretty hard and we got extended global recession. charles: to that point we keep hearing this powell fed say they're not going to make the mistakes that were made back then. does that suggest even, when we see signs that inflation is receding they still have to keep stomping on this thing because it may be smoldering enough that if they walk away it reignites? >> look, there are lessons learned which in and that are hard lessons learned and they're forgotten. that is the nature of human. the fed today, if you listen, take a look at them, people are starting to pay more attention what they're up to, they said in 2018, 2019 going into covid they were not going to be preemptive. they were only -- charles: let inflation run hot fo

and he focused on the failed efforts before volcker got the job.ery of our view, my view that we need to act now forthrightly, strongly as we have been doing and we need to keep at it until the job is done to avoid that. we think we can avoid the kind of very high social costs that paul volcker and the fed had to bring into play in order to get inflation back down. charles: very high social costs. that to me was the key phrase. i really, i know he wants to be hawkish but i believe when it comes to the very high social cost i think he is going to blink. what are your thoughts on that? >> i think he was talking about inflation being a very high social cost. inflation impacts 100% of the population. i don't want to be callous about this but a recession and unemployment does not impact 100% of the population. really what he is trying to get at is that, and he said this in previous meetings too, if you don't get inflation under control, pretty much can't do anything else with the economy. so that is what he is focused on. now maybe he is right after out

, the volcker shock, around '79 to '81 and in those seven recessions, the market fell about one month before the official recession began. it was declared after the fact after volcker, there were five recessions, the market fell right on the dot a lot of those were panics or crises so the market is not going to be six, nine, ten months ahead of a recession. if you look at yield curves, ten-year minus three-month or ten-year minus two-year, they indicate a recession by mid-'23, figure june, july, august. market's not looking that far ahead. they're just looking at what the fed's going to do in the next two meetings and what's going on with the economy in the fourth quarter. so we don't have a lot of reasons to worry about it. i guess, if you're just looking out three months, if you look out six months, nine months, yeah, i think there's real trouble. in fact, i think that the fed's rate hike that they did yesterday was the one that will be looked back on as the mistake. >> you know, the average market drawdown, i believe, in a recession, is the s&p 500 is down something like 31 or 32%.

to avoid that, we think we can avoid the high social costs that paul volcker and the fed had to bringplay in order to get inflation back down. janet yellen wants to see tax hikes on the rich. she used a speech to highlight what she sees as the biden administration's success story. the u.s. government is loosening restrictions that were put in place because of technology sharing. look commerce department says the rules will help the u.s. maintain its lead in setting standards. to australia it was passed its first major climate legislation and more than a decade. it set targets. the prime minister's climate change bill legislates a 43% cut in carbon dioxide emissions from 2005 level by 2030. the target brings us closer in line with allies including canada, south korea, and japan. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. paul: the big story around of the world, the passing of queen elizabeth ii. she was head of state in australia and had the distinction of meeting more than h

that is volcker-ish-like momentum. gary, thank you very much. have a safe weekend, my friend. >> you too, sir. thank you. neil: this shouldn't come as a surprise, it was bound to happen sooner or later, but in an android-dominated world, most devices are kind of an destroyed operating system, at least in this country that has now flipped. if it is now an apple-dominated world. we're just playing in it. ♪ finding my way forward with node-positive breast cancer felt overwhelming at times. but i never just found my way, i made it. so when i finished active therapy, i kept moving forward and did everything i could to protect myself from recurrence. verzenio is the first treatment in over 15 years to reduce the risk of recurrence for adults with hr-positive, her2-negative, node-positive, early breast cancer with a high chance of returning, as determined by your doctor when added to hormone therapy. hormone therapy works outside the cell while verzenio works inside to help stop the growth of cancer cells. diarrhea is common, may be severe, or cause de

in other words i'm paul volcker. i'm paul volcker. are you worried that he's going to push that too far? is that one of the great risks in this market? >> i think that's one of the risks. i'm also concerned about the amount of spending that we're coming out of the government making their job even harder. charles: oh, god it's ridiculous >> so you are, you know, obviously doing the best they can with the fomc but the government is just piling on extra cash into the system to exacerbate this inflation situation, and so i think between those two, it makes their job almost impossible. charles: you have a nibble a little bit. >> i have, i have. i think we are very close to a lot of bot ops. i actually bought united healthcare today, this morning, added it into the portfolio. healthcare is one of those areas holding up a lot better. i know we've juggled some other healthcare names, so i think that is one of the safer points, while we're in this risk-off period. charles: yeah, united health and sigma, i'm looking at those real close. i like

during the volcker era, debt to gdp was only 39%. now we are at 100%.you need to look at it differently. add to that the ceo estimates, just to service the budget deficit, it will be an issuance of $1 trillion in treasuries, and then qt will result in another 500 billion. we were at 500 billion before the pandemic. now we are closer to 1.5. so this has all sorts of implications for bond volatility and money supply, yet congress continues to spend with impunity. we have spent trillions since covid. at some point that'll come back to the economy and be an inflationary force. haidi: i am looking at the stocks you have the largest holdings of and there is tech, financials, defense, consumer telecoms. can you tie this together in terms of the narrative that you like about each of these companies? nancy: i sure can. the theme in our portfolio, one is that we want to own reliable growers, because as growth becomes more scarce in the economy, investors will turn their attention to companies that deliver reliable growth. one of those names is microsoft. this is

guest: i will remind your listeners, when paul volcker had to go after inflation, short term interest rates went up 20%. i don't think we are there yet because the underlying problem is the federal reserve has to print more money because we keep spending more money. things will continue to be worse. host: the congress shows reluctance to spend money as we continue to keep the government open? guest: i think everybody should be watching if there are new programs in there. we are talking about new programs, sending money to local police departments for training. it is something for the public to monitor, is the government showing restraint? the idea that we spend more money on anything right now is ridiculous. nevertheless, that is where congress is. i sure hope if the republicans take charge, the spending stops immediately. host: there is a public safety bill on the floor today. could you go more into that? guest: we just found out about it. i am very supportive the police. i am one of the most outspoken opponents of the anti-police bill floating around there. we do not want the police

when inflation was high 40 years ago, volcker raised fed funds and borrowing rates were upward of 20%ul time back then. and this is just the start of the tightening cycle and rising rates and there's more pain to come here. maria: i was looking at note and bank of england action intervening yesterday and the boe's action take financial stability seriously. just wondering, i know that's not the case here but does the fed see that and say, well, if markets crash maybe it's time for a pivot? >> well, markets are hoping that the fed will pivot they can my pivot if they want to fight inflation. they have been behind the curve and why we are going through the temper tantrum right now. we have a listening way to go to get inflation under control. what do central banks want to do. they want to protect the currency and rates and protect the economy. inflation is way out of control. if they don't stop it now, then things are going to get worse. maria: i agree. john, let's talk about what we saw yesterday and the impact on the fed and the macro story. i mean, layoffs are continuing. bp is laying

is one of the things i takeish timiraos has this column about jay powell inflation when is% paul volcker a straight reported piece from nick timiraos, i am not criticizing him but to say that jay powell is trying to follow this volcker attack on inflation, jay powell in have large part caused all of this. we never needed -- again, you don't have to take away punchbowl if you didn't serve up hooch to investors, and enrich leveraged rich two years for two years, by the way, the end of 2020, they still passed the trump administration and everybody still passed additional covid relief, before two trillion dollars from joe biden after he took office, they were still doling out money, right and left. we didn't need it we already had vaccine, all of the stimulus should have ended when we got a vaccine, period. >> did cancels, end of 2020 jay powell term coming unwanted to be reappointed, the progressives pushing lael brainard down his throat competing with her to get reappointed you can't convince me it was also not political what was going on with the stimulus as well watching that inflation t

before paul volcker was in that position, he ran the new york federal reserve so he didn't care about markets given what his background was, he just got the job done. neil: is that a mistake to ignore the market? >> you cannot be insensitive to what hard-working americans made and squirreled away in their 401(k)s and iras because they waited. neil: your actions artificially propped up the markets, doesn't do any good. >> you understand that. i understand that. the retirees understand that? their financial advisors told him to be in it for the long term, to buy and hold, stay there. what if you are 70 years old and don't have the option to reenter the workforce at that age. neil: that is a different definition. >> shorter for me every day. >> they held rates too loafer too long which is where we are. neil: it is mind-boggling. and we could end at 4% or more. >> we started this in march. neil: is transitory, and people questioning them. neil: it started, any effect it is working, still remains high. only thing i see signs where it is working is some other economic sign slowing. >> housi

paul volcker confronted the last inflation, two months after his confirmation, been burning key -- led the federal reserve during the financial crisis, chairman powell served through the covid 19 pandemic in which we have seen inflation reach its highest level in 30 years. as we sit in front of zoom screens the last 2 and a half years i will speak for myself, when you watched as her hair turns gray her, and in chairman powell, with key policy issues, chairman powell, good to see you today. >> it is not failure of my imagination on my part nor would anybody be surprised. as jim mentioned, including at the fed, a head fake on inflation, in the pandemic and related to disruptions, this contributed, seems a stronger consensus in larger part policy debate. can you give us some insight into how you are thinking on this topic over the last year and 1/2 and how those conclusions are involved as well? >> congratulations to both of you and cato on 40 years of monetary policy conferences. a good entry point for that question is to start by recalling before the pandemic unemployment was at a 50 ye

time when i think the fed went rogue under paul volcker in 1980 and 1981 9% to 20% in six months. what that led to is the bear market the entire bear market went down 27% by august of 1982 after the volcker moment we're already down 25% right now. unlike then, the stock market didn't falltightening. here it started falling before the fed was done tightening. i think we could have a lot of bad stuff happening in the stock market >> jim, the spart starting point matters. we are talking about the 10-year treasury i guess my question on your thesis for next year in terms of it being a good years. it is reliant on the fed stopping what happens if they don't >> there's no doubt, becky if the fed wants to destroy the economy, they can do that and destroy the market as well if they take -- i don't know how they figure out the magic rate if they are not using free market signals to figure that out. >> pce >> that's what i mean. it is 5% they could create a massive recession and that would be very bad. i think that seems unlikely and unsustainable and illogical to me i think the more likely

. >> andrew, is it fair to say that jay powell was trying to reprise a bit of what paul volcker did ints and yet without the impact that paul volcker had, maybe having a really negative impact on the economy? >> i think that's exactly right. what he's trying to do to some degree is sort of jawbone his way out of this, rather than actually raise interest rates to 10-plus percent. if he can say i'm on this path, can he slow things down literally almost verbally by using the bully pulpit and businesses start to say i'm not going to hire more people right now, i'm going to slow things down a little bit, and does that aleve year to date some of these pressures? the truth is that the federal reserve has a very blunt instrument, raising interest rates, lowering interest rates. that's the instrument. and we know that so many of these problems that are facing our economy are so nuanced, so much of them are supply-side issues. you still can't get enough chips manufactured, you know, we've seen the price of food go up. wages have gone up, which is great in so many ways, but when costs are up even

everyone wants to channel inner volcker. we're in a generational high at the gdp. the idea you could shut down a levered system with high inventories and slackening demand does not make any sense to me. it's amazing how the markets always force the fed to make a shift. and that's the -- that's the call that nobody's making. we see the inflation hell, i see the downside i came out with a 220 estimate for next year in the s&p 500 it's not about the inflation it's about the bad news becoming bad news so, if we're right on the fall fall, that's when you want to start thinking about what's next and whether it's at the very end of this year or into early next year, sara therein will be the opportunity. >> we'll hold you to it. no doubt we'll talk to you before then. tony dwyer, thank you. appreciate it. >>> check out the renaissance ipo etf, gettingcaught up in the selloff again. the tech ipo market is in the midst of an itselfic drought no listing worth more than $50 million in the last 230 plus day period. >>> up next, been lerer weighs in on the dry spell and why his

we think we can avoid the very high social cost that paul volcker and the fed had to bring into playder to get inflation down. -- long period of price stability. >> he's alluding to what people consider the misstep paul volcker made. they thought they were getting inflation under control, so they started slowing down rate hikes. guess what? they had to go back in the fray and raise even more, causing a deeper recession. jay powell also said they are going to put their decision on the back of the totality of the data. that puts a lot more emphasis on the cpi's, if there was not enough already. the august cpi is out next tuesday. charlie elephant -- charlie evans also on board with this aggressive hike, the doors open to 75 basis points. paul: the ecb moving 75 basis points as well. there was a sense maybe they wouldn't go that far. was this a surprise? >> it is hard to say it was a surprise because a number of people were saying it was expected. if you looked deeper, a lot of people thought it definitely could happen, but it might not. partly because the energy crisis is now full-blow

>> charles, basically the fed is trying to channel their inner volcker.essful flight inflation, let fed funds drop when inflation showed very hints of dropping. powell will not make the same mistake. the dot plot shows that the fed wants to keep policy very tight for a quite long period of time. the dots are december 2023. 12 toe nine members with rates four 1/2 to 5%. the fed wants fed funds above real inflation rate. real rates are not negative per se, if real rates are high and restrictive when economic growth is lowering all assets get hit. that is exactly what we're seeing right now. when it comes to us at the location, charles, u.s. dollar, cash and patience. those are the two assets investors should have right now. that is it really. charles: that is something we're not used to having a good time to get it down. alf, appreciate you walking us through all of this. thank you very much. >> thanks, charles. charles: coming up, folks, jpmorgan boss jamie dimon takes up the dream of ditching fossil fuels. wait until you see the video. he gave it to a mem

probably showing my age, steve here, i remember paul volcker never fussed with such concerns. the market didn't like what he was doing who cares? i know we live in a different age now, from alan greenspan the markets have been pivotal coaxing them, preparing them, but why do we obsess about that? >> i think the markets are too obsessed with fed interest rates and not obsessed enough about what impact inflation has not just on peoples incomes but on peoples investments. so the dow, the dow ask down 222 as i look at the screen right now today. it is actually down now for the year, you know. it's down since biden took office. so when you consider that over that period we've had, oh, somewhere near 13% inflation, that means investors have lost 13% on an index fund because you know, it is not just income. it is also investments that are affected by inflation. so my point i'm making, neil, is inflation is a killer of bull markets, kills them. look what happened in the '70s. i said this many times on your show. we were at dow 1000 in 1967. they were the dow hit 800 by 1982. inflation

how many times powell has come out, he talked about volcker what volcker has done, and they do not wante they're going to continue to hike rates, keep them at a higher level until they see inflation come down to a level that is acceptable for them. i'm not sure what that level is going to be. it is definitely not going to be 2% that they say is their target. charles: right. >> that i would look at next year, maybe around middle of the year, third, fourth quarter to start lowering rates. charles: still within that you see the possibility of a soft landing. that is the case by the way, what would that look for with the market if the fed pulled this off? >> i think it would be great for the market. i think the market would be really pleased with a soft landing. i think the fear of recession has come back a little bit from where we were earlier this year. it is obviously still a concern. my opinion it is going to be in europe. that is where we're going to see it first, depending what happens with the ukraine and russia depending if putin tries to freeze europe out this winter, that obviousl

when we think about the 1970s, we're not at a volcker moment now. volcker came after 15 years of inept fed policy where they repeatedly did too little to fix the inflation problem, something that powell has recognized. we're really in 1970 now when fed had to to decide are you going to nip intblaition in the bud and do the job right, or are you going to blow it and have to come back again later and hit the economy even a harder: so my hope is that the fed has figured it out finally. and i with was happy with the jackson hole speech. i felt like this was a much more realistic view. we got that get the job done -- gotta get the job done. we don't want the 1970s. we want to nip it in the bud and have only a couple years of the 1970s, not the whole -- >> hey, cheryl, can i jump in on the '70s debate? cheryl: sure, go ahead. >> i think there's a very, very important distinction between today and the 1970s, and that's that the fed has an inflation target. in fact, most central banks in the world have inflation targets. the fed was unmoored in the 1970s in

if that's his hero, didn't paul volcker cut spending at the same time? >> he did. spending cuts, domestic spending cuts, tax cuts, energy deregulation, and of course he then pulled the money supply out and raised nominal and real interest rates a lot. so yeah, it would be nice if we had -- you know, this is a strange story because the federal government, congress and the white house, increasing spending. recent bills are going to increase spending by, i don't know, $2 trillion or some such. so they are putting money in and the fed is trying to take money out. that's a very bizarre situation which is probably going to make things even harder to accomplish. >> ainsley: larry, on fox nation you have the unauthorized history of socialism, a live summit that will stream at 11:00 a.m. today. i understand brian will take part in this. tell us more about it. >> one of the big questions is which side brian will be on, socialism or freedom and democracy. [laughter] we will have to work that out later to attract the viewers. look, this is going to be a discussion essentially

now, martha, one stat interesting, paul volcker when he was fed chair in the late 70s, early 80s, theytes seven times in this period to quell inflation. the federal reserve under chairman jay powell has raised rates five times so far under president joe biden with two more rate hikes likely the next two meetings. that would be seven rate hikes. >> martha: it's going to take a couple years, he could surpass volcker's rate hikes of seven. he may need to go further than that. edward, thank you. let's bring in mark tepper, president and ceo. you're shaking your head as you look at the numbers over the next two years. >> yeah, yeah. i don't think the fed can take their foot off of the brake any time soon. inflation is red hot. jay powell mentioned, the sticky parts of inflation. when the cpi report came out, i scoured through the data. the only items that decelerated from july to august with highly discretion nary items like air fare, sporting tickets. all the essentials. food, shelter, all of those kind of things, utilities, they all accelerated. that's the real concern. the fed has a long

i'm not 100% convinced they will up to the talking hawkish or impactful as a paul volcker. >> it's ait troubling to me they do seem to be moving in a panicky way. your discussion before the fed really needing to get going sooner than they did, to be more aggressive early on rather than to start slow and then get pan mickey and aggressive at a time when they might be overdoing it. they are chasing lagging indicators here. we talked about the yield curve, housing, money supply. those are leading indicators. rental inflation is a deeply lagging indicator. wages yes they're critical and important but they're a lagging indicator. very sick at sticky tied to contracts. so they don't move right away. if the fed is running the vehicle looking through a rear view mirror don't be surprised if you end up in a ditch. charles: i have to be agree with you. very wise words. >> thank you. charles: former chair of white house coins skill of economic advisors tomas phillipson. just your thoughts on this number. why do you think so many people got it wrong? listen, anecdotally there were many signs thi

i mean really, stacking up some fear in the market here. 100 basis points is doing a volcker. >> well to a volcker , but you know the problem with this fed is that they were wrong from the beginning. they are still wrong now. i think they are miss reading the labor and rate situation just as badly as they misread the transitory thing. so they are sticking to their models which are flawed and broken and everybody knows it except evidently them, stuart so are they reckless? that's debatable? are they stupid? that's debatable. are they on track? boy i don't think so. stuart: costco earnings i believe are on thursday, key indicator to you? >> absolutely, because this particular company has really held the ball, held the wall, held the line against inflation and done great things for its consumers. if there is any hint, that they are having trouble managing supply chain or inflationary issues, i think that that is going to portray a broader sell-off. that's the thing that may tip the markets down. stuart: i just want to go back to this possibility that you're raising of 100 basis point hik

do you think the fed could possibly move up 100 basis points, do a paul volcker?i think they could. i think it be a big mistake in my opinion if they do. look the bond market has done enough tightening for them. in my opinion, if they just let things go the way they were, inflation is just going to slowly go down and we could have a softish landing, but they are hell bent on raising rates and that just makes the problem even worse. stuart: got it. eddie, thanks very much for being with us all this time. you will be back real soon that's a promise thanks very much indeed. >> thank you. stuart: change the subject. queen elizabeth's casket will leave buckingham palace in just a few moments and travel to westminster hall. what are we going to see lauren? lauren: she's carried by horse drawn carriage to westminster hall. it's a 38-minute procession, solemn without music, without fanfare. her coffin will be followed by king charles iii and members of the royal family as they transfer the queen's body to the british nation, to the people, wherein the westminster hall the

know, one thing in another i was able to publish a number of major major books by people like paul volcker the great fed chair earning jordan the great civil rights leader george soros who obviously doesn't do it for the money. i was able to find the wesley clarke when he came back after having won the war in kosovo was able to agree with me on a contract without having to pay ridiculous amounts of money. so there was a way to do it, but you had to have an approach that i was able to take because of my experience and most people choose or can't do that. and so what happens is they go into an auction. they meet with the public figure. sometimes that public figure doesn't even show up for the meeting. and there's an auction and then they write i have somebody write the book for me. it's just you know, it's not a good process in my view, but that's the process. so peter austenos, let's go back to your work with presidents. did you make money on the art of the deal? and what were you what were you dealing? what were you dealing with president trump? oh god the art of the deal. is a remote is t

powell when you're channeling your inner volcker shutting down economic activity with generational high in debt to gdp with rising inventories and slackening demand especially globally there's a lot of risk that comes with that that's beyond -- especially in the private credit market that's been the driver throughout this entire last ten years. >> tony, thank you for joining us good to have you on a day like today, of course. >> great to see you. >> tony dwyer from canaccord nike plugging more than 40% this year a bull/bear debate on whether investors should buy this beaten down stock before earnings are reported after the bell. >>> later we will discuss the outlook for the ipo market among other things with max levchin who knows a thing or two about taking companies public. we're down on the dow about 535. we are off the lows at this point but still a broad-based sell-offment only two dow stocks higher, traveler's and visa. we'll be right back. so... i know you and george were struggling with the possibility of having to move. how's that going? we found a way to make bathing safer with

they were totally at sea then paul volcker came in, hed chief, hit us, boom, with a series of ruthlessess than they'd needed to be if they acted aggressively a few years earlier. sound familiar today unlike back then the fed knows exactly how to beat inflation and jay powell has shown he's willing to bring the pain that means it should peak sooner next let's look at the same sticky price cpi number from today versus the early to mid a&e. '70s in red. williams points out it's very similar to what we had back then again, i'm talking about perfect correlation. it's almost eerie, isn't it? he says the current inflation action looks very similar to where we were in 1974. and 1974 was the peak. two peaks. after that we had a few years where inflation moderated substantially before again exploding in '79, which was on the large chart i showed once again williams notes that inflation only tends to persist for so long before it burns out. despite what you hear about in the media. although how we get there varies by time period finally, how about the last major bout of inflation we had in the u.

you have to go back to the paul volcker years. they have gone as much as 400 and one meeting during the volcker years. we are nowhere near that. if you got 100, it would shock people in the markets and there would be a knee-jerk reaction the fed does not want to risk. variable lags. they do not know when that is going to hit the economy. they would rather be more cautious than 100. not that 75 is mild by any means. lisa: how much discussion is there in your federal reserve circles about the disproportionate effect of rate hikes on lower income individuals? they used to be more concerned about the varying effects. now it seems that one mandate and that is to get inflation down at the expense of anything else. is that really what the discussions are like? mike: essentially. they have been concerned in recent years more publicly with people in the lower income strata, but they also feel inflation is a big tax on those people. more so than wealthy people with big bank accounts. getting inflation down is a good move for people in the l

and i don't think what chairman powell is doing is similar to what paul volcker did.est rates go wherever they want to the go in 1980 the fomc directive said that the federal funds target would be between 8% and 14%. the fed was selling off securities to move the interest rate this fed is doing something very different. they are paying a record high interest rate on a pile of cash kept at the fed and effectively bribing commercial banks and mono market funds to keep that money from doing anything productive keep it in cash in a risk-free, government-guaranteed account receiving over 3% now, maybe 4.5 pie the end of the year. as little sense as it made to pay people not to work, now we are -- our central bank is paying banks not to lend and paying money market funds not to allow their cash to finance productive investment in the real economy >> if you wanted to cause demand to be last to bring down inflation which is the tool that the fed uses, that's a viable way of doing it. the question is is whether you kill the patient in the process and whether inflation at this

you can see that from what lael just said, they don't want to reduce prematurely that's what volckerde a mistake, easing up too early, inflation came back and then he had to go to double digit levels last -- interest rates at double digit levels last time inflation was this high. >> randy, just to put some context around it, have we ever seen a fed hike this aggressively, this quickly and have it not end up becoming a recession? >> i think it's pretty rare to see something like this. and then the question will be, how mild or how severe will the recession be i think part of that will be due to the fed but part of that will also be due to choices that mr. putin makes. there's a lot of other geopolitical risks out there it's a fragile time in general and other shocks also we've seen the challenges that the uk had. there are a lot of things that could push us much further over the edge i think the fed needs to do what it's doing and it needs to take that risk, although i don't think the risk is excessive >> randy, i'm thinking about what morgan stanley said earlier in the week. they sai

huge tailwind it's been for all assets as we've had lower and lower interest rates really since the volckerra, but particularly, you know, since the early '90s. so as rates go higher, it's almost inevitable that we have more multiple complexion presentation -- compression. and the probability of a recession is so much higher now than we're more than likely going to have another leg down driven by cut equity earnings forecasts over the next several quarters, maria, unfortunately. maria: you're also looking at globalization which held down inflation, helped cause profit margins to go up. now we're talking about a profits recession. we'll hear from corporate america in the next two weeks as the third quarter earnings season will begin in a week and a half. what about what happened in britain this week with massive disruption in markets over debt worries and a new tax cut plan from new leadership in the u.k.? >> yeah, look, unfortunately, we've had to remind the crowd recently that when recessions happen, earnings don't go up, they go down. and we do think in this earnings season you're going t

describe what's going on right now, i was in my early days in my career, in the early '80s, when volckerking a sledgehammer to inflation because it was embedded in the system after 15 years of profligate spending; vietnam war, great society and then going off the gold exchange standard. a sledgehammer, that's what he needed. that is what i believe chairman powell thinks he needs. and we just don't think that's true, because we see so much deflation. and one more thing. we also see a massive inventory overhang around the world. you've got europe in recession, china in recession effectively, and here in the united states retailers are bulging with unvenn -- inventories which will have to be cleared with discounts. so we hi we're going to see some major downside surprises in inflation during the next 3-6 months. maria: so many important points there. want to get your take on what this means for the macro story. first off, on inflation will the fed be able to reach that target of 2%? and when do you expect the fed to see inflation at these targets? >> so the fed is looking at the pce deflate