Fed Day | Bloomberg Surveillance 03/22/2023

WE BELIEVE THAT THE U.S. ECONOMY IS GOING TO STAGNET EVEN BEFORE THESE BANKING EVENTS HAPPEN. WE HAVE NOT FINISHED THE HIKING CYCLES YET. THE FED WILL BE THINKING ABOUT HOW MUCH CREDIT OUTPUT WILL OCCUR AS A RESULT WITHIN THE BANKS. WE NEED TO PAY ATTENTION TO THE FED ON THE THIRD RAIL WHICH IS THE SUPERVISION OF THE FED. WE DO NOT BELIEVE THAT THE SUGGESTION IS BEING GENERATED THAT THERE IS A RECENT CRISIS. THIS IS THE BLOOMBERG WATCH WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. JONATHAN: DECISION TIME FOR PRESIDENT POWELL. GOOD MORNING FROM OUR WORLDWIDE AUDIENCE THIS IS BLOOMBERG WATCH ON TV AND RADIO.

STOCK FUTURES NOW ON THE S&P ARE DOWN ABOUT 18 OF 1%. WE HAVE MADE A COMPLETE TRIP. IN OTHER WORDS, SOMETHING HAPPENED. YESTERDAY WAS THE FIRST TIME WE HAD TWO CONSECUTIVE DAYS OF DECENT TRADING SINCE THE FIRST COLLAPSE OF SILICON VALLEY BANK. THERE IS A SENSE OF STABILITY, does that mean everything is going in the Fed's favor and they can ignore the back and forth we have in the meantime? JONATHAN: DECISION, DECLARATION, FORECAST, OPPRESSOR. WHAT ARE YOU FOCUSING ON NOW? LISA: IT'S GOOD TO BE THE PRESS CONFERENCE EVEN THOUGH I HAD A REAL HISTORY OF NOT NECESSARILY FOLLOWING A SCRIPT THAT HAS SOME RELEVANCE FIVE DAYS LATER.

THE THEME HERE WHAT POINTS FORWARD. JONATHAN: TELL US WHAT YOU REALLY THINK. LISA: DO YOU NOT AGREE? JONATHAN: LET'S GET TO JULIE IN A MINUTE. DO I DISAGREE WITH PRESIDENT POWELL? IF SHE GOES OFF SCRIPT, SHE FIGHTS. I DON'T THINK TODAY IS A DAY TO GO OFF SCRIPT. LISA: ARE YOU GOING TO JUST READ A STATEMENT? JONATHAN: WE'LL SEE. There have been time and time again where he struggles at the press conference when he goes off script. LISA: DO YOU THINK IT WILL GIVE PEOPLE COMFORT IF THEY JUST TAKE A SHEET OF PAPER? JONATHAN: IT DEPENDS ON THE MESSAGE ON THE SHEET OF PAPER.

PRETTY POINTED THINGS FROM LAGARDE TODAY. WE WILL NOT MAKE OFFSETS IN OUR PRIMARY PURPOSE. TOM: WHAT IS INFLATION. LISA: WHAT IS INFLATION AND SAYING WE HAVE THE TOOLS, SO WE WILL FOCUS ON INFLATION. INFLATION CONTINUES TO SURPRISE UPWARDS. WE LOOK AT THE UK THIS MORNING. THIS IS THE ENIGMA AND IT'S NOT THAT DIFFERENT FOR JAY POWELL. JONATHAN: LOOK AT THEM NOW. TALKING ABOUT ANOTHER RISE TOMORROW THROUGH HIGH INFLATION. IT'S A BRUTAL THING. A TASTE TEST OF PRICE ACTION. THERE IS NO REAL DRAMA HERE. BOND MARKET YIELDS ARE LOWER. 4.1% IN TWO YEARS. IT'S WORTH SAID AGAIN. THE TWO-YEAR YIELD IS WHERE IT WAS AT THE CLOSE ON THE DAY THE FED LAST MET.

SURELY YOU HAVEN'T FOUND IT. WE HAVE BEEN EVERYWHERE. YOUR 10 YEARS, 3.5733. LISA: I REALLY ENJOY WATCHING THIS. THIS IS WHAT MANY PEOPLE ARE WATCHING WITH TODAY'S DECISION ON THE FED'S GPM RATE. THAT'S THE MAIN THING -- YOU ASK ME WHAT I WAS LOOKING FOR IN THIS AFTERNOON'S SEGMENTS. JONATHAN: PROJECTIONS ARE NOT ABOUT WHETHER THERE ARE FORECASTS THEY WRITE ABOUT WHAT THEY CHOOSE TO SIGNAL. I WOULD BE INTERESTED TO SEE WITH THEM THEY CHOOSE SIGNAL. IF A CONCLUSION IS DRAWN ABOUT THE LAST TWO WEEKS IT MEAN FOR THE OUTLOOK. THE MEDIAN. BY THE 23RD IT WAS 5.1%. IT'S AN OPTION BUT CAN YOU IMAGINE IF THEY JUST CAME OUT AND SAID WE HAVE NO IDEA WE'LL GET RID OF THEM?

IT WAS OBVIOUS IN THE PANDEMIC OR WHAT WAS PAID TO THE POLITICAL LEADERSHIP IS VERY OBVIOUS TO ALL OF US. LISA: IT'S A LITTLE FALSE TO GIVE A PROJECTION THAT YOU KNOW IS WRONG. BECAUSE NO ONE CAN PREDICT ANYTHING. 2:30 PM WE GOT THE TREASURY TO TESTIFY BEFORE THE SENATE FINANCIAL SERVICES PANEL. IT SEEMS TO HAVE GAINED STABILITY IN THE REGIONAL BANKS. WE ARE SEEING A CONTINUOUS DEMONSTRATION AT THE BANK OF THE FIRST REPUBLIC. EVEN THOUGH IT IS SHARED. WE ARE TALKING ABOUT THIS RALLY WHEN YOU LOOK AT THE STOCKS SO FAR FROM THE MAXIMUMS, WE HAVE A LONG WAY TO RECOVER THE SENSE OF STABILITY WE HAD PREVIOUSLY.

CITIGROUP CEO TO APPEAR - SPEAKING AT THE WASHINGTON DC ECONOMIC CLUB, FOLLOWED BY A PAIR TO PEER EVENT WITH DAVID RUBENSTEIN. I WANT TO HEAR WHAT THEY HAVE TO SAY ABOUT THEIR ROLE IN SUPPORTING THE REGIONAL BANKS, THEIR ROLE IN TERMS OF WHAT THEY ARE DOING WITH THE DEPOSITS. HOW DOES THAT CREATE THE ENIGMA FOR THEM? JONATHAN: DO YOU THINK THAT'S LANGUAGE HE'LL USE LATER? JULIE JOINS US NOW. -- JULIAN JOINS US NOW. IT IS A PLEASURE TO HAVE YOU WITH US AROUND THE TABLE. A MAN YOU KNOW WENT OUT THIS MORNING AND TOLD OUR COLLEAGUES IN LONDON THAT WE HAVE NOT SEEN THE LOW IN STOCKS THIS CYCLE.

BECAUSE. HISTORY TELLS YOU AGAIN AND AGAIN THIS DEPENDS ON YOUR OPINION ON WHETHER THERE IS A RECESSION. I THINK IT'S EASY TO ARGUE THAT THE INVENTIONS OF RECENT WEEKS HAVE INCREASED THE PROBABILITY OF A RECESSION. At the very least, thankfully, this idea of ​​the no-landing scenario has been removed. I was tired of that talk anyway, but there has never been a bear market that bottomed before the recession began. THERE ARE RECESSIONS WITHOUT MARKETS. JONATHAN: THIS ASSUMES WE'RE ALREADY PAST THE POINT OF NO RETURN. IS THERE A SOLUTION TO THE BANKING PROBLEMS THAT COULD MEAN THAT IN ANOTHER TWO WEEKS WE WILL BE TALKING ABOUT THE SAME THINGS WE HAVE BEEN TALKING ABOUT?

A CYCLE THAT CONTINUES. THE FED HAS TO DO MORE. IS THERE ANY SOLUTION? I THINK ABOUT THE CHANGE IN PSYCHOLOGY, THE FACT THAT TWO WEEKS AGO WE DOUBTED WHETHER THE FINANCE LAWS HAD BEEN REVEALED, REPEALED. AND NOW HERE WE ARE. THAT'S A KIND OF RUBICON THAT CAN'T BE UNDOING WITHOUT AN ADDITIONAL DEGREE OF DEVELOPMENT OF THE ISSUES. As forceful as the political response has been and we applaud it, there is likely more to reveal. LISA: WHAT IS WORSE FOR RISK ASSETS, BETWEEN FIVE RAISES IN BASIC POINTS OR NO RAISE IN RATE? WE DO NOT BELIEVE THAT THE SCENARIO OF NOT RAISING RATES IMPLIES THAT THE FED KNOWS SOMETHING THAT WE DO NOT KNOW.

I think thinking that's probably a mistake given the fact that Chairman Powell teased the potential for basis point gains two days before one of the biggest runs on the bank of all time. I THINK THAT'S RISK MANAGEMENT. IT IS A RECOGNITION OF THE DEPENDENCE ON DATA. FRANKLY 25 OR A PAUSE DOESN'T MEAN MUCH EITHER. IT IS WHAT IT SAYS. LISA: I WANT TO CONTINUE THE IDEA OF RISK MANAGEMENT. THERE IS THE QUESTION OF WHETHER IT IS RISK MANAGEMENT FOR THE BANKS OR FOR INFLATION. THIS IS SOMETHING ANDREW AT CITI CONTINUES TO PLAN FOR THE ISSUE. SAYING INFLATION IS THE BIG BOOGIE MAN.

IT IS NOT A CRISIS OF FINANCIAL STABILITY. DO YOU AGREE? WE ARE MUCH MORE OPTIMISTIC IN THE PATH OF INFLATION. TO BE FAIR, THE FORECAST IS THAT YOU WILL HAVE A RECESSION AND THE SECOND HALF OF THIS YEAR COMING EARLY NEXT IS PART OF THE REASON WHY WE ARE GOOD TO BE MORE OPTIMISTIC ABOUT INFLATION, BUT MANY OWNER SURVEYS, RENTS ARE STARTING TO DOWN WHERE THE EQUIVALENT RENT OF ITS OWNERS IS STILL ON THE MAST. WE THINK IT IS A DATA MISCONORDANCE. WAGES ARE STARTING TO DRAW. WE BELIEVE YOU CAN GET SOMEWHERE IN TWO HANDS NEXT YEAR.

JONATHAN: THEY INCLUDE THE STANDARDS EXPECTED FOR THESE TOPICS. YOU ABSOLUTELY HAVE TO DO IT. FROM THAT PERSPECTIVE ONCE WE WOULD LIKE TO SEE THE FED TAKE A STEP BACK AND RECOGNIZE that there has been an extraordinary tightening in the system and, by the way, if you think about it, if their charity in postulating that policy works with a six to nine months like us. I HAVE SEEN SEVERAL FED GOVERNORS SUGGESTIONS IN RECENT WEEKS. YOU STILL HAVE A LOT OF TIGHTENING YOU ARE ABOUT TO GET OVER THE NEXT SIX MONTHS. THE PROBLEM I'VE HAD IN THE PAST WEEKS IN TERMS OF THE WAY THIS IS DISCUSSED IS THAT IT WAS FRAMED AS A BOUNDARY CHOICE.

FOCUS ON PRICE STABILITY. MANY COMPARISONS WERE ABLE TO HANDLE ALL AT THE SAME TIME. KIND OF IGNORANCE WHERE THE UNDERLYING POLITICS RISK IS. NOT ALL FINANCIAL STABILITY PROBLEMS ARE CREATED EQUAL. THE UNDERLYING POLITICS RISK COMES FROM TAX AUTHORITIES. IT WAS INFLATIONARY. IT ALMOST COMPLEMENTED THE POLICY ON THE MONETARY POLICY SIDE. THE PROBLEMS WE NOW HAVE IN THE AMERICA AND THE BANKING SYSTEM ARE POSSIBLY DISINFLATIONARY because they will lead to tighter financial conditions. DO WE REALLY SEE A POLITICAL CONFLICT FOR CHAIRMAN POWELL ON THIS COMMITTEE? THAT IS THE INTELLECTUAL PROBLEM. TAKING INTO ACCOUNT THIS EVERYTHING IN OUR HANDS, YOU REALLY SHOULD NOT SEPARATE THE TWO.

AND FRANKLY PART OF THE CHALLENGE COMES BACK TO THE IDEA OF THE SECOND PART OF THE DUAL MANDATE THAT WE HAVE ALL CONVENIENTLY LEFT FULL EMPLOYMENT AND RECOGNIZING THE FACT THAT INSTABILITY IN TERMS OF FINANCIAL CONDITIONS DUE TO THAT UNEMPLOYMENT WILL CAUSE THAT UNEMPLOYMENT RATE TO RISE. JONATHAN: HOW FAST THIS HAS GONE TO WEEKS! TWO WEEKS AGO PRESIDENT POWELL ENDED THE DAY OF TESTIMONY. WE HAVE A CONVERSATION TODAY 25 OR 50. NOW IT IS 25 OR ZERO AND UP TO ZERO CAN BE DONE, CYCLE OVER. LISA: SOMETHING WE HEARD FROM TIFFANY AT PIMCO. THE QUESTION IS THE END OF THE RATE INCREASE CYCLE AND WHEN THEY TALK ABOUT CUTS.

I THINK YOU RAISE AN IMPORTANT POINT: FINANCIAL STABILITY ISSUES HERE, UNLIKE WHAT WAS IN THE UK. HOW THEY SIGN OUT THEIR MATERIAL ADDITION TO WHAT THEY HAVE MADE. ACCELERATION IN A WAY THEY DON'T NEED TO DO MUCH ELSE. HOW DO THEY DO THAT RIGHT? TO JULIAN'S POINT I UNDERSTAND IT. IF YOU KNEW SOMETHING I WAS DOING TWO DAYS BEFORE TEE UP 50. IT DOESN'T MATTER WHAT YOU THINK. AND THERE IS A BELIEF THAT THE MORE DOVISH THEY ARE TODAY, THE WORSE THEY THINK THE SITUATION IS. THERE'S A MULTITUDE BELIEF THAT OUR COLLECTIVE WISDOM AND COLLECTIVE WISDOM HAS BEEN A LITTLE PROBLEMS.

IT HAS CHANGED ABOUT FIVE TIMES. WE HAVE NOT YET PASSED THROUGH 1Q. DOWN A 10TH OF 1%. JULIAN WILL STAY WITH US. CATCHING UP WITH STUART KAISER THIS MORNING. STAY UP TO DATE ON THE WORLD NEWS WITH THE FIRST WORD ON LISA MATEO. THE FEDERAL RESERVE TRAPPED BETWEEN INFLATION AND A SUDDEN BANKING CRISIS. WE LEARN HOW THE FED CHAIR AND HIS COLLEAGUES RESPOND LATER TODAY. Most economists expect the Federal Reserve to raise interest rates by a quarter point, but some say policymakers should wait. THE DECISION IS RELEASED AT 2:00 PM. NEW YORK TIME. INFLATION IN THE UK INCREASED UNEXPECTEDLY FOR THE FIRST TIME IN FOUR MONTHS.

THE CONSUMER PRICE INDEX INCREASED BY 10.4% COMPARED TO THE PREVIOUS YEAR. THAT FOLLOWS A 10.1% JUMP IN JANUARY. FOOD AND DRINK PRICES WERE AMONG THOSE TO BLAME FOR THE INCREASE AT THE FASTEST RATE IN 45 YEARS. ALL OF THAT MAY INCREASE THE ARGUMENT THAT THE BANK OF ENGLAND SHOULD RAISE INTEREST RATES AND SOON TOMORROW. XI JINPING TOOK ADVANTAGE OF HIS VISIT TO MOSCOW TO FIRMLY ALIGN HIMSELF WITH RUSSIA AGAINST THE UNITED STATES. THE CHINESE PRESIDENT DIDN'T GIVE VLADIMIR PUTIN SOMETHING ELSE HE WANTED, A COMMITMENT TO BUY MORE NATURAL GAS. IT SHOWED THAT CHINA MAY HESITATE TO APPEAR TOO CLOSE TO RUSSIA.

IT WAS THE FIRST TRIP TO RUSSIA SINCE PUTIN INVADED UKRAINE. A MOVEMENT THAT WILL SURELY GO TO NORTH KOREA. THE UNITED STATES AND SOUTH KOREA PLAN TO HOLD THEIR LARGEST LIFE FIRE DRILLS IN JUNE. THE EXERCISE WILL INVOLVE THE MOBILIZATION OF HIGH-TECH MILITARY EQUIPMENT. THE TWO ALLIES ARE FINISHING TRAINING EXERCISES THIS WEEK. NORTH KOREA HAS RESPONDED BY THREATENING TO TURN THE PACIFIC OCEAN INTO A FIRING RANGE. GLOBAL NEWS POWERED BY 2,700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. THIS IS BLOOMBERG. I HAVE MADE CLEAR THAT THERE IS NO TRADE-OFF BETWEEN PRICE STABILITY AND FINANCIAL STABILITY. WE HAVE MANY TOOLS TO PROVIDE LIQUIDITY SUPPORT TO FINANCIAL SUPPORT IF NECESSARY.

AND PRESERVE THE TRANSMISSION LINE OF OUR MONETARY POLICY. HAWK THINGS FROM PRESIDENT LAGARDE OF THE ECB. THE EURODOLAR VERY CLOSE TO 108 THIS MORNING. WELCOME TO THE PROGRAM. THE EURODOLAR LOOKS LIKE THIS. POSITIVE 2/10 OF 1%. STOCK FUTURES DOWN HEADING TO CHAIRMAN POWELL'S PRESS CONFERENCE LATER AND FED DECISION. IN THIS STATEMENT, IN THE FIRST PART OF THE STATEMENT, THERE IS THIS PHRASE CONTINUOUS INCREASES. I WONDER IF THAT FALLS DOWN TODAY. THERE IS NO GUIDANCE IF THEY SAY IT AND THIS TIME IT MEANS IT. EVERYTHING WILL BE ANALYZED AND INTERPRETED THROUGH A LENS THAT PEOPLE WANT TO INTERPRET IT. WHO WANTS TO SEE THE MARKET AND THIS IS WHAT WE WILL DISCOVER LATER.

I WONDER IF WE ARE MEMBERS OF WHAT THEY DID IN THIS STATEMENT. I DON'T KNOW HOW RELEVANT THE 25 BASE POINT RATE INCREASE REALLY IS OR NOT AT THIS POINT. IT IS THE CONTINUOUS GUIDE. ARE WE SEEING THE END OF THE RATE INCREASE CYCLE? THAT COULD POTENTIALLY BE MORE SUPPORTIVE OR MORE DOVISH THAN EVEN NOT GOING UP 25 BASE POINTS. THIS IS IN THE PREMARKET. LET'S CALL IT 2.7%. I PREFER TO SAY $0.40 AT THIS POINT BECAUSE ONCE YOU REACH THESE LEVELS IT'S REALLY NOT WORTH READING THE PERCENTAGE POINT CHANGE DAY TO DAY. THEY ARE JUST MONSTER MOVEMENTS. LISA: EVERYTHING IS A MONSTER THAT MOVES FROM A LOW BASE.

THE FALL IS THE WAY TO FOLLOW. DOW JONES REPORTS THE FIRST REPUBLIC IS - HAS HIRED TO POTENTIALLY REVIEW OPTIONS USING A CAP WELL INFUSION, A SELL, THIS ACCORDING TO PEOPLE WHO SPOKE TO DOW JONES. HOW MUCH DO WE THINK THIS SUPPORTS SOME KIND OF FUTURE RECOVERY? HOW LONG WILL YOU SEE A COMPANY SAY WE ARE EXAMINING OUR STRATEGIC OPTIONS AND SAY WE ARE GOOD? IT'S BECAUSE YOU DON'T HAVE MANY OPTIONS AND IT'S A PROBLEM. THAT IS OFTEN THE CASE. UBS IS EXAMINING ITS STRATEGIC OPTIONS WITH CREDIT SUISSE FOR MOST OF THE WEEKEND. UBS FALLS BY TENTHS OF 1%.

ON TUESDAY IT WAS UP 12%. LET'S GO TO ZURICH AND UPDATE MARIAN, WHO JOINS US NOW. WHAT'S THE LATEST ONTHIS INTEGRATION BETWEEN UBS AND CREDIT SUISSE? PIECES STILL COME OUT OF THIS. THE LAST THING WE SEE THIS MORNING IS THAT YOU HAD AN ANNOUNCEMENT WITH UBS BUYING BACK YOUR BONDS REALLY IN THE SENSE WE ARE GETTING IS IN THE SENSE OF WIDENING CREDIT SPREADS AFTER YOUR PURCHASE OF CREDIT SUISSE, SO WE SEE A LITTLE BIT ASSOCIATED RISK BEFORE THE MERGER IS PLANNED AND INFILTRATES THE UBS. IT MAKES SENSE TO GIVE THE HOLDERS OF THAT DEBT AN OPPORTUNITY TO RE-EVALUATE WHETHER OR NOT THEY WANT TO KEEP THAT DEBT AFTER THIS MERGER.

LISA: ONE OF THE IMPLICATIONS HAS BEEN FOR CONTINGENT CAPITAL BONDS. THEY SUPPORT A CERTAIN SENSE OF STABILITY. HAVE WE REACHED STABILITY IN TERMS OF EUROPEAN REGULATORS REJECTING SWISS REGULATORS AND SAYING EQUITY HAS TO BE REMOVED FIRST? THAT HAS BEEN A HUGE SOURCE OF QUESTIONS THIS WEEKEND. THERE'S A LITTLE DEBATE OVER WHETHER OR NOT THIS WAS HOW THINGS WERE SUPPOSED TO BE. BUT FROM THEIR POINT OF VIEW AND THE REGULATORS IN SWITZERLAND THEY ALWAYS HAVE THIS OPTION AND THEREFORE IT IS UP TO THEM TO ACTIVATE THIS IN THE WAY THEY WANT TO ACTIVATE IT. THERE ARE SOME PARTIES IN THAT WHO ARE BOND HOLDERS WHO ARE ASKING MORE IMPORTANT QUESTIONS AND WONDERING IF THERE IS A LEGAL CASE.

JONATHAN: WE ARE... WHAT ARE WE ON DAY THREE? LISA: EVERYTHING WILL CHANGE TOMORROW. THERE HAS TO BE A RISK PREMIUM WITH THESE BONDS GIVEN THE UNCERTAINTY AND THE FACT THAT THEY COULD BE ELIMINATED IN THE FACE OF SOME SHAREHOLDERS. GREAT FOR CATCHING UP, FANTASTIC JOB LAST WEEKEND TOO. EMMANUEL WITH US TODAY, PLEASURE TO HAVE YOU WITH US. THIS COMES FROM GOLDMAN SACHS. THEY SAID EVALUATION FOR BANKS IN ABSOLUTE TERMS IN EUROPE, SOME MIGHT SAY WITH GOOD REASON. OTHER PEOPLE COULD SAY IT IS A BUYING OPPORTUNITY. WE JOIN BECAUSE IT IS A PURCHASE OPPORTUNITY. GOING BACK TO A GLOBAL TIGHTENING CYCLE WITH DEFICIENCIES THAT WE HAVE NOT SEEN IN MORE THAN 40 YEARS TO THINK THAT THERE WERE THINGS THAT WOULD NOT BREAK WAS NAIVE.

THE BIGGER PICTURE AND THIS WAS ONE OF THE TIMES IT WAS ANALYZED BETWEEN THE LONG TERM AND THE VOLATILE SHORT TERM, AS IT OFTEN HAS BEEN NOT ONLY THE LAST YEAR BUT THE PAST THREE-plus YEARS. HAVING ELIMINATED THE CONCEPT OF NEGATIVE INTEREST RATES FROM THE PSYCHOLOGY OF EUROPEAN INVESTORS, I BELIEVE THAT THE FOUNDATION FOR A BETTER FUTURE FOR FINANCE IS ACTUALLY ESTABLISHED. AT A WIDER LEVEL, THERE IS AN ISSUE THAT IT IS NOT A RESCUE TYPE OF BEHAVIOR, IT IS LONG-TERM FOR THE PROFITABILITY OF THESE BANKS. WHAT IS THE USEFULNESS OF THEM AND WHETHER THEY ARE TREATMENT AS SUCH UNLESS THEIR PROFIT DRIVERS.

HOW IS THAT INCORPORATED INTO THE ASSUMPTIONS GIVEN THE LIKELIHOOD OF INCREASED REGULATION? AGAIN THAT'S A DIFFICULT CONCEPT AND IT'S SOMETHING THAT IT TOOK A NUMBER OF YEARS FOR MANY PEOPLE COMING OUT OF THE FINANCIAL CRISIS TO REALLY GET THEIR ARMS WORLDWIDE AND, FRANKLY, WHEN YOU THINK ABOUT THE CONCEPT OF DEPOSIT INSURANCE FOR EVERYONE, THE IDEA OF MORE USEFUL PERFORMANCE FOR THE GROUP IS REALLY EXCITING, AND I REALLY FRANKLY DON'T THINK THIS HAS BEEN DISCUSSED. THE CONCEPT OF DEPOSIT INSURANCE FOR EVERYONE IS REALLY A REASONABLY INFLATIONARY CONCEPT IN THE FINAL ANALYSIS. YOU WILL HAVE TO CREATE MONEY IF YOU ARE GOING TO COVER HOLES WHERE THERE IS MONEY IN QUESTIONS OF LIQUIDITY.

REGULATORS HAVE ARGUED THAT BANKS WILL LATELY LEAVE THE COST OF THIS, NOT THE TAXPAYER. THERE IS THE QUESTION OF WHETHER THIS PREVENTS PROFITABILITY AT A WIDER LEVEL BECAUSE IF THERE IS ANY PROBLEM THE BANKS COULD DEAL WITH IT. THIS... Does that basically mean that US banks are less valuable in the long run to you and even European banks? I THINK IT'S A CHANGE BETWEEN THE TWO. VALUATIONS IN THE UNITED STATES FINANCIAL COMPANIES WERE SEEN ONLY ORDERS OF HIGHER MAGNITUDE THAN THOSE OF THEIR EUROPEAN COUNTRIES. THAT'S CONVERGENT. IT IS NOT COMPLETELY IN A CONVERSION. THERE ARE MANY SYSTEMIC PROBLEMS.

ONE OF WHICH IS THE FACT THAT INFLATION IN EUROPE IS A MUCH MORE INTRACTABLE PROBLEM, NOT PERMANENTLY, BUT CERTAINLY IT IS NOW IN THE US BECAUSE OF THE STRUCTURAL RIGIDITIES AND ALL OF THAT LEADS. Going back to this idea of ​​negative interest rates, that's one reason to think that valuations will probably level out a little bit more in favor of the European ones. YOU HAVE ANOTHER CYCLE CALL. THANKS AGAINST THE CYCLE. WE HAVE THE SAME WEIGHT IN THE BANKS RIGHT NOW AND, FRANKLY, IT'S ONE OF THOSE TIMES WHEN WE'VE BEEN PROPOSERS OF VALUE TRADING FOR A LONG TIME.

When we started getting condemnation for Ed's call for a recession late last year, we stopped being overweight. IT'S PROBABLY A LITTLE EARLY BUT I WOULD SUGGEST THAT YOU'VE SEEN SEVERAL SHOES FALLING, SEVERAL MORE SHOES PROBABLY FALL OFF AND THE NEXT SHOE WILL PROBABLY FALL OFF. THIS WAS GREAT. A CONCLUSION FOR THE PEOPLE OF SONY. IF WE GET MORE INSURED DEPOSITS IT IS YOU PAYING THE INSURANCE PREMIUM AT HOME. YOU WILL PAY A MONTHLY FEE. THE BANKS SAY THAT IT'S ACTUALLY US AND WE SAY THEY END UP PAYING FOR IT. HE STARTED LAUGHING. I AGREE BECAUSE HONESTLY IF IT IS NOT PROFITABLE FOR THE BANKS THEY WANT TO STORE YOUR MONEY.

PAYING $15 A MONTH. CHOOSE YOUR OPTION. TO THE EXTENT THAT BANKING IS FREE. AFTER THAT IT WILL BE NO MORE. LISA: IS IT REALLY FREE? JONATHAN: HAVE YOU HEARD HOW THE BANK WORKS? THE DURATION DOES NOT MATCH. JONATHAN: TWO DAYS OF PROFITS ON YOUR 500. IF WE HAD TWO OTHER DAYS, WE WOULD BE TALKING ABOUT 50 RAISES IN BASE POINTS. S&P FUTURES, -.1%. CHAIRMAN POWELL DOESN'T HAVE TWO MORE DAYS, HE'S GOING TO MAKE THAT CALL LATER TODAY WITH HIS COMMITTEE AT 2:00 P.M. I THE BOND MARKET, PER YEAR, 4.1552. THIS HAS BEEN A GREAT JOURNEY SINCE THE LAST FED MEETING.

BELOW IS 3.62 A FIGHT IN TWO YEARS AGO IN THE US. THE HIGH WAS 5.08% A FEW WEEKS AGO IN A TWO YEAR AGO IN THE US. THE SUB TWO YEARS HAS BEEN TRADING LIKE A STOCK FROM MEME. IT HAS BEEN REMARKABLE WHAT THIS HAS DONE. LISA: I WONDER WHAT THE IMPLICATIONS ARE. WE ARE TALKING ABOUT REFERENCE RATES. AND IT STARTS TO GO THROUGH, WHAT ARE THE WIDER CONSEQUENCES? HOW DO YOU LEND WITH CERTAINTY IF YOU CAN'T MAKE PRODUCTION WITHIN TWO DAYS OF BANK RETURN? JONATHAN: LAST YEAR, IF YOU COULD NOT PRICE THE RISK-FREE RATE, HOW COULD YOU PRICE THE RISK?

WITHOUT THINKING THIS STORY WOULD RESOLVE ITSELF AND WE ARE FIGHTING TO CONTINUE WITH THIS. LISA: PEOPLE SAY IT'S SHORT-TERM NOISE. IN THE LONG TERM, THERE IS MUCH MORE STABILITY. IF YOU LOOK AT THE CREDIT MARKETS, THEY ARE BEGINNING TO TURN ALONG WITH THE VOLATILITY. LONG-TERM DELAYS, IS THAT THE CREDIT ADJUSTMENT WE ARE TALKING ABOUT? JONATHAN: THIS MARKET WAS SCREAMING THAT THE FED IS OVER. THIS MARKET SCREAMED THAT THE BOE WAS NOT TIMES YOU WANT. EURODOLAR AND LEY, POUND 1.2286. UK INFLATION IS IN DOUBLE DIGIT, 10.4%. WE WERE LOOKING FOR A 9.9% MANGO, SOMETHING LIKE THAT. BIG UPWARD SURPRISE WHEN ENTERING THE BOE.

EURODOLAR, 1.0783. NOTRE DAME BETWEEN PRICE AND FINANCIAL STABILITY. WE WILL NOT MAKE ANY COMPENSATION IN OUR PRIMARY PURPOSE. SHE COULD NOT HAVE BEEN CLEARER. LISA: SAID THE ECB HAS MANY TOOLS TO ADDRESS STABILITY. THERE IS EVIDENCE OF UNDERLYING INFLATION THAT IS HAVING A PROBLEM. SHE'S TALKING ABOUT THAT. THIS IS A PROBLEM FOR THEM, THIS IS THE MAIN PROBLEM. IS IT TAKEN ADVANTAGE OF BY THE FED? JONATHAN: THE ECB IS FARTHER BEHIND. THEY TOLD ME THAT THE STORY OF INFLATION WAS DIFFERENT IN THE US AND THAT MEANT THE FEDERAL RESERVE HAD TO STAY IN IT BECAUSE THINGS WERE MORE STRESS IN THE LABOR MARKET, THERE WAS WAGE PRESSURE.

LISA: -- WHAT DO YOU DO WHEN THE COLLECTIVE WISDOM OF THE CROWDS IS NOT SO WISE? JONATHAN: THIS IS THE SECOND TIME YOU'VE SENT THIS. LISA: YOU HAVE FISH YOU CAN'T GET, YOU CAN'T GET A SIGNAL. JONATHAN: YOU ARE SAYING THAT THE PEOPLE WHO SET THE PRICES ON THE MARKET ARE NOT WISE. LISA: NO, I'M JUST SAYING THEY HAVE NO ADDITIONAL WISDOM IN A SYSTEM THAT IS NOT OPANE. JONATHAN: YOU'RE OFFENDING A LOT OF PEOPLE. THEY ARE WAKEING UP AND YOU HIT THEM IN THE FACE. LISA: I AM OFFENDING A LOT OF ALGORITHMS AND SHOWS. JONATHAN: GOOD RETURN.

THE FED'S DECISION LATER. SOME PEOPLE SAY WALK, OTHERS SAY PAUSE. SARAH HOUSES IS THIS, IN THE PAUSE CAMP. WE LOOK FOR THE COMMITTEE TO RAISE RATES 25 POINTS AT ITS MEETING ON MAY 3. ANOTHER 25 BASE POINTS ON JUNE 14. A PAUSE TODAY, BUT MAYBE WE WILL RESUME THE WALK IN FUTURE MEETINGS. THAT'S NOT SO CRAZY. IF WE HAVE TWO MORE DAYS THAT IS NOT THE PEAK, WE WOULD BE TALKING ABOUT 50 AGAIN. LISA: I WANT TO MODIFY WHAT I SAID PREVIOUSLY. I DON'T WANT TO INSULT TRADERS, WHAT I MEAN IS HOW YOU HAVE WISDOM WHEN THE EFFECT CHANGES DAY TO DAY.

THAT'S WHAT SARAH'S COMMENTS TALK ABOUT. THE EFFECTS ARE CHANGING. WHAT MATTERS IS CHANGING. JONATHAN: SUMMERHOUSE JOINS US NOW - SARAH HOUSE JOINS US NOW. IF THE MARKET Stabilizes, EVEN AFTER A PAUSE TODAY, YOU THINK THEY COULD RESUME THE TIGHTENING. IF YOU TAKE A PAUSE TODAY, HOW DO YOU PREVENT THEM FROM PRESSING EVEN MORE CUTS ON US? Let alone more walking. SARAH: THEY CAN DO THAT IN A COUPLE OF WAYS. ONE IS IN THE STATE. IF FINANCIAL SITUATIONS RELIEF AFTER VOLATILITY, EXPECT CONTINUOUS INCREASES ON THE TABLE, MAINTAINING THAT CONTINUOUS INCREASE IN LANGUAGE EVEN WITH A PAUSE TODAY.

LOVE THEM OR HATE THEM, POINTS ARE AN IMPORTANT TOOL. THE POINTS SIGN THE MOST LIKELY OUTCOME OF THE POLITICS. WE CAN SEE WHAT THEY SHOULD HIRE. I THINK THAT WOULD INDICATE THAT EVEN WITH A PAUSE TODAY, THE FED IS IN THE TIGHT. THERE IS MORE - THERE IS NO TIGHTENING. THERE IS MORE TO DO ABOUT INFLATION AND THE FED IS COMMITTED TO IT. LISA: THERE ARE PEOPLE WHO LOOK AT WHAT THE FED IS DECIDING TODAY AND SAY THEY DON'T CARE. INFLATION WILL GUIDE THE COURSE, AS WELL AS BANKING DOUBTS. I WAS INTERESTED IN WHAT ANDREW SAID.

HE SAID THAT RELATIVE TO 2008 OR ANYTIME IN THE PAST 40 YEARS OF HISTORY, INFLATION IS MORE OF A CONSTRAINT FOR FRED IN THAT POLICY, IN THE FED POLICY. DO YOU AGREE? SARAH: I THINK IT'S BEEN A GARDENING, A GUIDING PRINCIPLE FOR HIM. I DON'T THINK YOU CAN HAVE PRICE CAPABILITY, PRICE SUSTAINABILITY WITHOUT THAT THAT'S WHAT WARREN IS TAKING A BREATH TODAY, BUT THEN TAKING A CAPTIONAL LOOK AT THE POLICIES AS THE DUST SETTLES AND STAYING FOCUSED ON THE CURRENT STABILITY SIDE OF THE MANDATE. THERE ARE BIG INFLATIONARY CHALLENGES WE ARE SEEING IN THE UNITED STATES. LISA: LEAVING THE FINANCIAL DOUBTS Aside FOR A MINUTE, I AM CURIOUS TO CONTINUE WITH THE INFLATION ASH IF THE INFLATION OUTLOOK IN THE UNITED STATES IS DIFFERENT THAN THE EUROPEAN SECTOR, IF THE INFLATION OUTLOOK IN THE US IS DIFFERENT THAN THE EUROPEAN SECTOR?

SARAH: THE FED IS MORE ADVANCED IN THE TIGHTENING CYCLE. THERE IS STILL A DELAY EFFECT OF MONETARY POLICY ADJUSTMENT. THE LABOR MARKET CONTINUES TO BE THE BIGGEST CHALLENGE TO REDUCE THE PATIENT TO 2%. IN THE LATEST EMPLOYMENT REPORT WE HAVE A HINT FOR IMPROVEMENT ON THE FRONT. IT IS A FAIRLY VOLATILE SERIES, SO YOU ARE LOOKING AT COSTS THAT EXCEED 4% ANNUALIZED. THE NON-SUPERVISORY SIZE - SIDE OF THOSE NUMBERS SHOWED CLOSER TO THE ANNUALIZED 5% ON THE SALARY FRONT. THERE IS STILL ADVICE TO BE DONE ON THAT ASPECT. YOU ARE STILL FACING A VERY TIGHT job market. THAT CONTINUES TO BE A HUGE CHALLENGE FOR THE INFLATION OUTLOOK AS YOU LOOK OVER THIS YEAR AND INTO 2024.

JONATHAN: PRESIDENT POWELL HAS THIS SENTENCE, THE ENTIRETY OF THE DATA. WHEN YOU TALK ABOUT THE TOTALITY OF THE DATA, DOES THAT TAKE ON A NEW MEANING IN THE LAST WEEKS? DOES THAT INCLUDE BANK STOCKS? SARAH: I DON'T THINK IT INCLUDES BANK STOCKS PER SE, BUT I THINK IT INCLUDES THE GENERAL ADJUSTMENT OF FINANCIAL CONDITIONS AND IT HAS BEEN RAPID IN THE PAST TWO WEEKS. CONSIDERING THAT THAT IS THE CHANNEL THROUGH THE FED POLICY, THEY HAVE TO TAKE IT INTO CONSIDERATION. INFLATION IS TOO HIGH, BUT THEY ARE AWARE THAT IT TENDS TO DELAY ECONOMIC ACTIVITY. UNDER THOSE CONDITIONS, AND IN ADDITION TO THE SOLID LABOR MARKET DATA, THE STILL HIGH LEVEL OF INFLATION THAT WE ARE SEEING, AS WELL AS WHAT THE RESIDENT CONSUMER SPENDING HAS BEEN, IS BEING TAKEN.

JONATHAN: THE OTHER PHRASE THEY HAVE USED IS RESTRICTIVE ENOUGH. RE: APPROACHING THAT POINT? DEUTSCHE BANK'S MATT SUGGESTS THAT DIFFICULTIES PROVIDE THEM TO BE SUFFICIENTLY RESTRICTIVE. DO YOU AGREE WITH THAT? Sara: I think so. WE ARE APPROACHING THE WHERE WHERE POLICY WILL BE ESTABLISHED IN PURPOSE. WE ARE LOOKING FOR A HIGHER TERMINAL RATE RELATIVE TO WHAT WE WERE GUIDING AT THE FEBRUARY 1 MEETING, GIVING CONTINUED BOOST TO THE DATA. THE RECENT ADJUSTMENT OF FINANCIAL CONDITIONS AND THE DIRT THAT WE ARE SEEING IN ANY FINANCIAL SYSTEM HAS NOT GOT DOWN A LITTLE, IT HAS NOT BEEN THAT MUCH, IT THROWN IT DOWN A LITTLE.

THE TERMINAL FEE IS NOT AS HIGH AS A FEW WEEKS AGO. EVENTS BRING US CLOSER TO WHAT SUCH SUFFICIENTLY RESTRICTIVE POLITICAL POSTURE WILL BE. LISA: IT SEEMS LIKE YOU'RE NOT ALONE WITH THAT. THE EVENTS OF THE PAST WEEKS MEAN THAT PERHAPS THIS ECONOMY IS NOT AS RESILIENT AS PEOPLE THOUGHT AND THE TENSIONS ARE MORE SIGNIFICANT. THEREFORE THE FINAL INFLATION RATE WILL BE LOWER AND SO WILL THE TERMINAL RATE. DO YOU AGREE THAT INFLATION WILL GO DOWN TO A LOWER POINT THAN PEOPLE IMAGINED A COUPLE OF WEEKS AGO? SARAH: I DON'T THINK IT WILL GO DOWN TO WHERE WE LAST LANDED.

I think we are seeing the channels through which inflation will come down and through that title, through tighter financial conditions. MAYBE IT IS HAPPING FASTER THAN WE WERE THOUGHT THREE WEEKS AGO AS IT SEEMED LIKE THE ECONOMY COULD NOT SLOW DOWN. WE ARE NOW SEEING MORE MATERIAL STRETCHING IN THEFINANCIAL CONDITIONS, WHICH WILL BE TRANSMITTED THROUGH CREDIT GROWTH IN THE ECONOMY AND CONTRIBUTE TO THAT SLOWDOWN. JONATHAN: IT'S WONDERFUL TO HEAR FROM YOU. LOOKING FOR A PAUSE FROM THE FEDERAL RESERVE LATER. LOOKING FOR A PAUSE, BUT IN THE END THE GOLDMAN TEAM SAYS IF THEY COME POSITIVELY WHO SAYS THEY ARE COMMITTED TO THE END OF THE CYCLE.

WHY IS THE END OF THE HIKING CYCLE YES POSITIVELY? LISA: IT MATTERS LESS WHETHER THEY COMMIT TO IT OR IF THE MARKET INVOLVES THAT. WE SAW THE ACTIVITY OF THE HOUSE BUILDERS AND THE NUMBER OF HOMES SOLD YESTERDAY IN THOSE DATA ARE HIGHER THAN EXPECTED. THE RESTORATION OF THE HOUSING MARKET IS ASSUMED DEAD BECAUSE MORTGAGE RATES ARE LOWER. THE UNINTENDED CONSEQUENCE OF AN EASY FINANCIAL CONDITION BEFORE THE JOB IS TAKEN. I AM NOT REFERRING TO A RELIEF OF ALL FINANCIAL CONDITIONS. REGARDING THE LENDING RATE, IS THE SECTOR MOST AFFECTED BY POLITICS RELATING? JONATHAN: FROM THE TOTALITY OF THE DATA, WE MUST TALK ABOUT THE TOTALITY OF THE DECISION.

WALKING WITHOUT WALKING IS NOT THE STORY. YOU HAVE THE DECISION, THE DECLARATION, THE PROJECTIONS, THE PRESS CONFERENCE. THERE ARE MANY DIFFERENT MEANS TO APPROACH THIS DECISION TODAY. LISA: WHAT'S WORSE, A HAWKISH PAUSE OR A DOVISH WALK? MY HEAD SPINS. JONATHAN: JULIAN SAID SOMETHING AT THE LAST MINUTE AND JULIAN IS RIGHT. THERE ARE PEOPLE WHO GET UP THIS MORNING AND AGREE. THE FED DOESN'T KNOW THINGS WE DON'T KNOW. THAT IS THE APPLICATION TO THE ECONOMY. WHEN IT COMES TO FINANCIAL STABILITY, YOU THINK THERE IS SOME... THERE IS SOME INFORMATION. WHAT IS PRESIDENT POWELL DOING WITH 50 BASE POINTS?

WALK BEFORE THE BANKS FAIL? NO MATTER WHAT YOU THINK ABOUT THIS, THERE ARE ENOUGH PEOPLE WHO BELIEVE THE FED THINGS - THEY BELIEVE THE FED KNOWS IT THANKS WE DON'T KNOW AND WE BELIEVE THE MORE DEVILLY THE FED IS TODAY, THE MORE WORRIED THEY ARE ABOUT THE FINANCIAL SYSTEM AND IF THEY THEY ARE WORRIED, YOU SHOULD BE WORRIED TOO. LISA: IF YOUR HEAD IS SPINNING WITH THE GAME OF BEING ON TOP OF THE THREE GAME, YOU ARE NOT ALONE. THESE ARE PEOPLE TRYING TO HANDLE THINGS THAT ARE DIFFICULT. JONATHAN: THE ECB, BASED ON OUR REPORTS, THIS IS THE WAY THEY THOUGHT THAT DECISION MUST WEEK.

THEY WERE WORRIED ABOUT THE SIGNAL IT WOULD SEND IF THEY DID NOT RAISE AFTER PREVIOUSLY COMMITTING TO REACHING 50. LISA: IF THE FED IS FALLING - FOLLOWING THE ECB AS YOU LISTEN TO RICH CLARIDA, THAT'S WHY THEY WOULD NOT RAISE 50 BASE POINTS? JONATHAN: THE FED DECIDES WITH A BRILLIANT LINEUP THAT INCLUDES FORMER FED VICE CHAIR PRIYA MISRA, DIANE SWONK AND BILL DUDLEY, FORMER NEW YORK FED CHAIR. ♪ LISA M: KEEP YOU UPDATED WITH NEWS FROM AROUND THE WORLD. THE BANK OF THE FIRST REPUBLIC CAN RELY ON THE SUPPORT OF THE UNITED STATES TO ENCOURAGE AN AGREEMENT THAT IS SHORT TO THE LENDER.

Bloomberg has learned that Wall Street leaders and US officials have proposed a variety of measures to make the First Republic more attractive to buyers or investors. IT HAS LOST 89% OF ITS MARKET VALUE THIS YEAR. IT'S DECISION DAY FOR THE FEDERAL RESERVE. POLITICAL MAKERS ANNOUNCE: THE POSITIVE AND LIKE A .25 HIKE OR A'S? OR A PAUSE? THE DECISION CAN BE PUBLISHED AT 2:00 PM. GAMESTOP STOCKS ARE SOARING. THE VIDEO GAME RETAILER REPORTED A SURPRISE PROFIT IN THE FOURTH QUARTER, ITS FIRST IN TWO YEARS. GAMESTOP HAS STRUGGLED FOR PROFITABILITY AS THE INDUSTRY HAS MOVED AWAY FROM DISCS TO ONLINE DOWNLOADS.

A BRIGHT PLACE HAS BEEN THEIR SALES OF COLLECTIBLES. JAPAN BEAT THE USA 3-2 TO WIN THE WORLD BASEBALL CLASSIC IN MIAMI. EVERYTHING WAS SURRENDERED TO TRUJILLO, WHEN HE STRIKED OUT MIKE TROUT, HIS TEAMMATE IN LOS ANGELES. SHAPIRO, WAS VOTED M.V.P. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE, DRIVEN BY OVER 2,700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. WE WILL HAVE A SIGNIFICANT NUMBER OF BANKS THAT WOULD NOT EXIST 12 TO 24 MONTHS AGO, MONTHS FROM NOW THAT EXIST TODAY. WHICH WILL BE APPROPRIATE AND WHICH WILL HAVE A STAR MARRIAGE? CENTRAL BANKS AND REGULATORS ARE TRYING TO STOP THE DISAPPEARANCE BY THEIR OWN AGREEMENT.

THE SHOTGUN WEDDING IS NOW WITH US. JONATHAN: LUKE SPEAKING AT THE BLOOMBERG INVESTORS CONFERENCE TODAY. IT IS A GREAT STATEMENT. I THINK WE WILL HAVE A SIGNIFICANT NUMBER OF BANKS THAT WANT TO EXIST AFTER 24 MONTHS. LISA: THERE ARE MANY PEOPLE WHO AGREE WITH THAT, THAT THERE WILL BE A ROLL UP IN THE SMALL AND MEDIUM-SIZED BANK DUE TO THE DEPOSITS THAT CAN GO AT ANY TIME WITH LONG-TERM LIABILITIES. I wonder if the larger banks get along because this is simply isolated from the smaller banks. JONATHAN: THE CONVERSATION IS THAT THE BIG BANKS GET TOGETHER TO DO SOMETHING ABOUT THE FIRST REPUBLIC.

FIRST REPUBLIC IS SUPERIOR IN THE PREMARKET. THERE WAS A STORY ABOUT A DEAL. WHAT WOULD THAT LOOK LIKE? LISA: WE ARE TRYING TO FIND OUT THE DETAILS AND WE HAVE EARLY REPORTS. THE FINAL PROBLEM IS THAT MANY OF THESE BANKS HAVE MORTGAGE DEBT AND OTHER LIQUID ASSETS. IF THEY SELL IT, IT'S ACTUALLY DEVALUATED IN RELATION TO WHERE THEY WOULD HAVE IT. HOW DO YOU GRANT ADDITIONAL LOANS AND AT THE SAME TIME GET OUTLET OF DEPOSITS WITHOUT CAPITALIZING AND CRYSTALIZING THESE LOSSES? MAYBE THEY COULD HAVE SOME IN-KIND DEAL WHERE THEY PARK IT THERE TO GET THE MONEY AND NOT HAVE TO SELL THE FISH THEY DON'T HAVE TO SELL. -- I DON'T HAVE TO SELL.

JONATHAN: LET'S GO TO TERRY HEINZ. A POLITICIAN ONCE WAS ASKED WHAT WAS GOING WRONG AND PRESENTED IT AT EVENTS. EVENTS ARE HITTING THIS WHITE HOUSE HARD. DO YOU WANT TO THINK THEY ARE THE NEXT STEPS? TERRY: POLITICALLY OR FOR THE BANKS? JONATHAN: IN TERMS OF POLICY FOR THE BANKS. WHAT CAN THEY DO? TERRY: I THINK IT'S THE FARTHEST THING FROM INEVITABLE. THE LENS YOU WILL SEE POLITICIANS LOOK AND ACT WITH IS THIS SYSTEMIC OR NOT? TODAY THE INDICATIONS HAVE BEEN THAT THIS IS NOT SYSTEMIC. WHAT YOU WILL END UP SEE IS SOME INCREASE FOR THE FEDERAL RESERVE.

YOU'LL SEE PEOPLE LIKE JANET YELLEN CONTINUE TO SAY, CONTINUE TO SAY WE WILL INTERVIEW, WE WILL INTERVENE WHEN NECESSARY. YOU WILL SEE POLITICIANS TALKING ABOUT THINGS THAT WERE NOT LIKELY TO HAPPEN, LIKE UNIVERSAL DEPOSIT INSURANCE. MEANWHILE, WHAT WILL END UP HAPPING IS THE FUNDAMENTAL PROBLEM YOU WANT TO ADDRESS. THE FUNDAMENTAL PROBLEM IS THAT WE HAVE A BANKING REGULATION CRISIS THAT CAUSES A BANKING SECTOR CRISIS WHICH IS THE IDEA THAT THERE IS SUPERVISION AND EXAMINATION THAT SHAKES THE CONFIDENCE OF THE MARKETS AT THE CENTER. LISA: CAN YOU EXPLAIN THAT AND WHERE THE BALANCE IS IN DECISION MAKING?

ARE THERE MORE POLITICIANS, REGARDLESS OF INCREASING REGULATION ON BANKS OR NOT, WHO DO NOT WANT TO PREVENT THE PROFITABILITY OF BANKS? A COUPLE OF YEARS AGO, THEY LIFT UP SOME OF THE DODD-FRANK WATER. TERRY: THE ANSWER TO YOUR QUESTION IS YES. POLITICIANS ON BOTH SIDES. TO ME THAT IS NOISE. THE SIGN IS WHAT YOU SEE IN THAT IS THAT THERE IS SOME UNDERSTANDING THAT THERE IS NOT A SYSTEMIC PROBLEM. THEY RETREAT TO THEIR CORNERS. BOTH PARTIES POLITIZE THE ISSUE. WHEN TALKING ABOUT BANKS, THE REPUBLICANS TOOK THEIR EYES OFF THE BALL BECAUSE THEY ARE CONCERNED ABOUT BSG.

DEMOCRATS ARE TALKING ABOUT WHAT NEEDS TO HAPPEN IS MORE SUPPORT. IN THE MIDDLE YOU HAVE REACH AND SOMETHING JUSTIFIED WHICH RESULTED IN LEGISLATION ON CLAWBACKS AND FOR LIKE. --AND SIMILAR. WHAT IT POINTS OUT IS THAT ENOUGH ATTENTION IS NOT PAID TO THE SIMPLE FACT THAT BANKING REGULATORS IN BOTH THE STATE GOVERNMENT AND THE FEDERAL GOVERNMENT (AND REMEMBER THAT SVB AND IMPLANT WERE WORSELY INTERRELATED) AND WERE REGULATED BY THE STATE. THEY HAVE FALLEN AT THEIR JOBS AND NEED TO CORRECT THAT TO HELP PROMOTE STABILITY. LISA: YOU HAVE MENTIONED THAT THIS IS NOT AN ISSUE OF SYSTEMIC IMPORTANCE NOR A SYSTEMIC BANKING PROBLEM.

SOME OF THE PROVISIONS THAT CAUSED THEM TO INTERVENE ARE FOUND UNDER THE MARKER OF SYSTEMIC IMPORTANCE. THERE IS A PROBLEM THAT SMALLER REGIONAL BANKS HAVE DOMINANCE IN SPECIFIC SECTORS AND HAVE WIDER RELEVANCE, AND HAVE WIDER RELEVANCE. HOW DO YOU COMPARE WHEN YOU TALK ABOUT POLITICS? TERRY: MY OPINION HAS BEEN AND REMAINS BASED ON THE FACTS THAT THE BODY LANGUAGE AND VERBAL DESCRIPTIONS OF ALL POLITICAL MAKERS HAVE BEEN THAT THIS IS NOT SYSTEMIC. THEY USED SOME SYSTEMIC TOOLS, YES. WHEN I SAW A COUPLE OF DESCRIPTIONS IN SYSTEMIC'S PRESS RELEASES THIS IS IN THE SECTION THAT, I grimaced because I thought, YOU'RE GIVING A BAD IMPRESSION.

THEY USED A COUPLE OF EMERGENCY TOOLS THAT ARE WITHIN THEIR ABILITY TO USE. AT THE SAME TIME, RESERVED AND WIDELY, WIDELY LOOKED. CLEARLY WHAT THEY THINK IS THAT IT IS NOT SYSTEMIC. I'LL TAKE THAT TO WHAT SECRETARY ELLEN SAID YESTERDAY, SECRETARY JANET YELLEN SAID YESTERDAY. JONATHAN: WHEN THERE IS A CRISIS OF ANY KIND, WE TAKE OUR ATTENTION AWAY FROM EVERYTHING ELSE. THAT'S WHAT HAS HAPPENED THE LAST WEEKS. WE HAVE NOT TALKED ABOUT XI JINPING AND TIKTOK. WE HAVE SEEN THE CONVERSATIONS OF CHINESE THEATER BROKERS BETWEEN SAUDI ARABIA AND IRAN. THEN GO TO RUSSIA. WHAT HAVE YOU TAKEN AWAY FROM THE CHINESE LEADER'S ACTIONS DURING THE PAST TWO WEEKS?

TERRY: MY OPINION FOR THE PAST TWO YEARS IS THAT RUSSIA EXISTS AS A CLIENT STATE OF CHINA. YOU SEE THE FORMALIZATION OF THAT. I think American foreign policy has made many serious mistakes over the last decade. THE LESSON playing. WITH IMPUNITY THERE. WHAT YOU HAVE IS MANY STATES NOT ONLY IN THE MIDDLE EAST BUT WHAT IS NOW CALLED THE GLOBAL ME THAT ARE PLACING THEIR BETS AND TRYING TO FIND OUT WHERE THE WIND BLOWS. THIS IS A DIFFICULT TIME FOR AMERICAN FOREIGN POLICY. THEY NEED TO BE MORE ENERGETIC AND MUCH FASTER IF THEY WANT TO CHANGE THE TIDE.

JONATHAN: I HAVE NO DOUBT WE WILL TALK MORE ABOUT THIS IN THE COMING WEEKS AND MONTHS, MAYBE EVEN YEARS AND DECADES. THANK YOU USE O... THANK YOU, SIR. TIKTOK IS ONE WAY THIS IS HAPPNING. TIKTOK CEO WITNESS BEFORE HOUSE COMMITTEE TOMORROW. LISA: THEY WILL FOCUS ON THE PROVISIONS THEY HAVE MADE TO ISOLATE THE DATA, TO PROTECT CHILDREN FROM A LOT OF PROBLEMS. THIS IS JOB PROTECTION, HOW DO WE KEEP THE BUSINESS UNDER OUR OWN HEADING AND NOT OFFLOADED TO META OR SNAP? JONATHAN: WE HAVE THESE HEARINGS AND YOU GET THE FEELING THAT THE PEOPLE ON THE OTHER SIDE OF THE CEO HAVE ALREADY MADE A DECISION.

IS THIS AN AUTHENTIC HEARING WHERE IT'S A FACT-FINDING MISSION AND YOU DETERMINE WHAT YOU'RE GOING TO DO NEXT? IS THERE ANYTHING THIS GUY COULD SAY THAT WOULD CHANGE THE MIND OF LEGISLATORS? LISA: YOU SAID THAT SO DIPLOMATICLY AND YOU EXPECT ME TO TELL YOU OF COURSE NO. THE QUESTION IS GOING TO BE HOW MUCH MEAT IS BEHIND THE QUESTIONNAIRE TO SAY THAT WE ARE GOING TO TOBA -- TWO SO WE ARE GOING TO PROHIBIT SOME TYPE OF SALES FOR ONE MINUTE. HOW FAR ARE YOU WILLING TO GO, GIVEN THE USER BASE WHICH IS THREE-QUARTERS OF TEENS ON TIKTOK?

JONATHAN: DON'T YOU GET THE FEELING THAT A SALE IS MORE LIKELY? LISA: 100%. BUT WHAT KIND OF RETALIATION DO THEY RECEIVE FROM CHINA? JONATHAN: THEY WILL RETALIATE AGAINST TECHNOLOGY COMPANIES THAT ARE NOT IN CHINA. THEY CAN'T, CAN THEY? THAT'S ANOTHER TOPIC WE HAVE NOT DISCUSSED, RECIPROCITY. LISA: WHERE ARE YOU GOING? WE BELIEVE THE AMERICAN ECONOMY WOULD STAGON EVEN BEFORE THESE BANKING EVENTS. IN BOTH EUROPE AND THE USA THERE IS NO HIKING. THEY WILL BE THINKING ABOUT HOW MUCH CREDIT RESULT WILL OCCUR AS A RESULT OF THE PROBLEMS AT THE BANKS. YOU NEED TO PAY ATTENTION TO THE FED ON THE THIRD RAIL.

WE DO NOT BELIEVE THE SUGGESTION THERE IS A CRISIS WE - CRISIS ABOUT. JON: FROM A BEAUTIFUL NEW YORK CITY, GOOD MORNING. I THOUGHT HE WAS A SERIOUS PERSON. LISA: WE LAUGH. JON: I AM. POSITIVE EQUITY FUTURES ON THE S&P. THE FED DECIDES IN ABOUT SEVEN HOURS. LISA: YOU'RE LOOKING AT THE CLOCK. TODAY WILL BE AN INTERESTING DECISION. HOW MUCH WILL IT MATTER? DO WE HAVE A FEEL OF HOW THE MARKET WILL RESPOND? JON: IT'S DIFFICULT TO CALL. IT'S NOT JUST ABOUT 25 OR PAUSE. IT'S WHAT YOU PUT IN THE STATEMENT. DO YOU REMOVE THE PHRASE ABOUT CONTINUOUS INCREASES?

WHAT THE PRESIDENT WANTS TO SIGN AND THE LANGUAGE USED AT THE PRESS CONFERENCE. WHERE DO YOU WANT TO SUPPORT? LISA: HOW MUCH CREDIBILITY DOES THE FED HAVE RIGHT NOW GIVEN THE CHANGE IN APPROACH AND IMPORTANT MANDATES DURING THE PAST MONTHS? TOM: HE GOT HIT. GO TO THE COMMITTEE, THE HOUSE AND THE SENATE, AND TALK ABOUT INCREASING THE PACE, POTENTIALLY OPEN THE DOOR TO WHAT'S BEHIND THE DATA WE'VE HAD, THEN SEE BANKING FAILURES, THE BIGGEST SINCE 2008, THAT'S A CREDIBILITY HIT FOR PRESIDENT. LISA: PREVIOUSLY YOU RAISED A POINT THAT I THOUGHT WAS IMPORTANT, WHICH WAS THAT THE ADJUSTMENT WE ARE SEEING IN THE FINANCIAL SYSTEM, THE STRESS IN THE US, IS DIFFERENT FROM THE THOSE IN THE UK.

IT IS COMPLEMENTARY TO WHAT THE FED IS TRYING TO DO. HOW MUCH ARE THEY RELYING ON THAT AND TRYING TO QUANTIFY HOW MUCH OF AN EQUIVALENT RATE INCREASE? LISA: I DON'T THINK THEY KNOW. CAN YOU DRAW THE CONCLUSION ABOUT THE DIRECTION? I THINK YOU COULD BUT IT'S TOO DIFFICULT AND TOO SOON TO START TALKING ABOUT THIS EQUAL TO 25 BASE POINTS, 50 BASE POINTS. I DON'T THINK YOU CAN GO THERE. THIS IS A VALID POINT ESPECIALLY SINCE YOU HAD TWO DAYS OF STABILITY. NOW IT'S A RISK. MAYBE IN ANOTHER 2, 50 BASE POINTS WILL BE BACK ON THE TABLE. WE GO THROUGH PRICE ACTION.

LOOKING FOR A RAISE OF 25 BASE POINTS BUT SOME ARE LOOKING FOR A PAUSE, WELLS FARGO, GOLDMAN. I DON'T KNOW WHAT HAS TO HAPPEN TO GET THAT CUT, BUT WHOHE KNOWS? EURO-DOLLAR 1.0789. I WILL CONTINUE TO MENTION THE COMMENTS WE RECEIVED FROM PRESIDENT LAGARDE. PRESIDENT LAGARDE WAS INTENSE. THERE IS NO TRADE-OFF BETWEEN PRICE AND FINANCIAL STABILITY. SHE SAID WE WILL NOT MAKE ANY COMPENSATION FROM OUR MAIN GOAL. WE HAVE TO ASK THE QUESTION: IS THE INFLATION PICTURE SO DIFFERENT, REALLY HOTTER IN EUROPE? WE TALKED ABOUT THE OPPOSITE SIX MONTHS AGO. ARE THEY GOING TO SEND A SIGNAL TO THE FED OR NOT?

TODAY AT 2 P.M. WE HAVE THE DECISION ON THE FED RATE. THIS IS THE FIRST TIME IN THE LAST YEAR THAT WE HAVE NOT HAD AT LEAST A FULL RATE INCREASE IN PRICES IN THE MARKETS PRIOR TO THE MEETING. TO ME, THIS IS AN INTERESTING ENIGMA. 14:30, THAT PRESS CONFERENCE WILL BE INTERESTING. DOES IT COMPLY WITH THE SCRIPT? If it does, does that mean there is some kind of consensus at the FOMC? AT 2:30 PM, JANET YELLEN SHOULD WITNESS BEFORE THE SENATE. HOW MANY QUESTIONS WILL WE HAVE ABOUT BANCO PRIMERA REPÚBLICA? WHAT IS THE TYPE OF INSURANCE FOR ALL DEPOSITS?

WHAT IS THE WILLINGNESS OF POLITICIANS TO SUPPORT THAT? WE'VE HEARD SOME RESIGNATIONS FROM BOTH SIDES, AND EVEN THE DEMOCRATS ARE FEELING A LITTLE NERVOUS ABOUT FILLING SOME OF THESE BENCHES MORE RIGHT NOW. YOU HAVE THE FEELING THAT THEY HAVE TALKED OVER. YES. Do you think this is counterprogramming? THAT'S NOT WHAT I'M SUGGESTING. I JUST WOULD HAVE THOUGHT THEY HAD TO BE TALKING FROM THE SAME SHEET. THEY HAVE TO BE BASICALLY COMPLEMENTARITY. 5:45 P.M., WE LISTEN TO ONE OF THE CEOS OF BIG BANKS, FROM CITIGROUP, SPEAKING AT THE ECONOMIC CLUB IN WASHINGTON, D.C., THEN IN A CONVERSATION BY DAVID - CONVERSATION WITH DAVID RUBENSTEIN.

THERE IS SOME CONVERSATION ABOUT HOW MUCH THEY WILL SUPPORT THE MIDDLE-SIZED BANKS, TAKING INTO ACCOUNT THAT THIS COULD BE SYSTEMIC, BUT ALSO A BIG PR MOVE. WE ARE PART OF THE SOLUTION. THAT'S THE POINT OF TALKING. IS THAT REALLY WHAT YOU THINK IT IS, A PR MOVEMENT? I DON'T KNOW WHY THEY SUPPORT ALL THE SMALLER REGIONAL BANKS. OUR NEXT GUEST IS FROM CITI. I'M TRYING TO KEEP YOU OUT OF TROUBLE. WE ISOLATE THAT CONCERN AND TALK ABOUT SOMETHING ELSE. WHAT TOOLS ARE YOU GOING TO USE TO ISOLATE THAT? HEAD OF COMMERCIAL STRATEGY AT CITI. IT IS A DIFFERENT NETWORK.

LET'S START HERE. WE REMAIN TACTICALLY POSITIVE. WHAT'S THAT? ABOUT 48 HOURS. SERIOUSLY, FROM OUR PERSPECTIVE, UNTIL YOU GET SOME REAL PRIVATE CAPITAL IN THE US REGIONAL BANKS, IT'S DIFFICULT TO FEEL MORE STRUCTURALLY POSITIVE ABOUT THE MARKET, BUT IF YOU TAKE THE ECB LAST WEEK AS A SCRIPT, THEY TRIED TO DISCUSS THE BANKING SUPPORT THAT THE MEETING BE BEAUTIFUL AND FOCUS ON POLITICS. IF THE FED CAN ACHIEVE THAT, THEY CAN GET STOCKS MODESTLY HIGHER. WILL THERE BE A LOT OF FOLLOWING IN THE NEXT WEEK? HARD TO SAY. VERY TACTICALLY, IN THE NEXT FEW DAYS, WE BELIEVE THE MARKET WILL CONTINUE TO MOVE UP.

DO YOU THINK PRESIDENT POWELL HAS THE SAME CLUE SHEET AS PRESIDENT LAGARDE? I DON'T KNOW IF YOU'LL SAY THE SAME THINGS, BUT THE CONSTRUCTION OF TRYING TO DISCUSS BANKING SUPPORT THE DAY BEFORE THE MEETING WILL ALLOW THE CENTRAL BANK TO FOCUS ON POLICY SO THAT THEIR PRESS CONFERENCE IS NOT DOMINATED BY FINANCIAL STABILITY CONCERNS. IF THEY CAN DESIGN IT, IT WILL PROBABLY BE A NET POSITIVE FOR THE MARKETS. IT'S HARD TO SEE EXACTLY HOW MUCH FOLLOWING WE WOULD GET, BUT THAT'S THE TACTICAL SCRIPT. ONE THING THAT HAS BEEN NOTABLE IS THE INTERPRETATION OF THE FED'S COMMENTS AND ITS ACTIONS HAS BEEN, AT LEAST WHERE PEOPLE WANT TO SEE IT AND WHAT THEY WANT TO UNDERSTAND, AND IT SEEMS LIKE THIS MARKET WANTS TO GET TOGETHER.

DO YOU THINK THERE'S A SIGN IN THAT, THAT PEOPLE WANT TO LOOK BEYOND THIS AND STILL GET INTO THE TRADE? THIS HAS BEEN LIKE THIS ALL YEAR. THE MARKET HAS BEEN VERY RESILIENT. I'M NOT OF THE MINDSET TO BUY THE DIPS, BUT THE DIVES WE HAVE GOT HAVE BEEN PRETTY SHAKFUL. THERE IS ALSO A FUNDAMENTAL ASPECT. THERE IS RISK IN THE SYSTEM BUT IT MUST BE ARGUED THAT THE RISK THIS YEAR, BEFORE THE BANKING ISSUE, WAS BETTER UNDERSTOOD AND LESS EXTREME THAN LAST YEAR. OUR VIEW WAS THAT THE MARKET RISK-REWARD WAS BETTER THIS YEAR. PEOPLE WANT THE MARKET TO GO HIGHER.

WHEN YOU START THINKING ABOUT 2008, THE FEELING HURTS. WELL SAID. AND IF WE GET THE STABILITY THAT WE'VE SEEN, I WONDER IF SOME TYPE OF DOVISH WALK OR A WALK WITH SOME INDICATION THAT THEY ARE NOT HORIZING AND OTHER RACES IN THE NEAR FUTURE WOULD BE CONSTRUCTIVE FOR THE STOCKS, TAKING INTO ACCOUNT THE TIMING AND THEY HAVE SEEN IN THE DATA, POTENTIALLY SOFTER RATE RAISES, INCREASED RISK. OUR OPINION ON THE FED IS THAT THEY WANT TO RAISE 25 BASE POINTS FOR THE NEXT MEETINGS. EVERYTHING THAT TAKES THEM OFF THAT PATH IS NEGATIVE. IF THEY ARE FORCED TO PAUSE DUE TO FINANCIAL STABILITY CONCERNS, THAT'S BAD FOR THE MARKETS.

IF INFLATION IS ACCELERATING, IT IS BAD FOR THE MARKETS. SO THEY ARE IN A SITUATION WHERE, IF THEY CAN GUIDE THEMSELVES TO STAY AT 25 BASE POINTS, IT IS ALMOST IMPOSSIBLE TO DO, BUT IF THEY CAN WALK, BY NOT BEING KEPT OUT OF THE WAY BY THE EXHAUSTMENT PROBLEMS, THE MARKETS RECOVER. THE MARKETS DO NOT LIKE THAT IT STARTED GOING BACK AT 50. WE ARE IN A SITUATION WHERE THE MARKET FEELS LIKE WE ARE REACHING A LEVEL WHERE CONCERNS ABOUT FINANCIAL STABILITY ARE STARTING TO ENTER THE EQUATION. IF THE FED CAN BE AT 25, THAT'S GOOD. IF THEY ARE REMOVED, THAT IS A NEGATIVE RISK.

LET'S TALK ABOUT SUPERIOR TECHNICAL PERFORMANCE. JUST TWO WEEKS AGO, PEOPLE ENTERING THE PROGRAM SAID THAT THERE IS A CYCLIC COMPONENT IN HISTORY, IT IS THE END OF TECHNOLOGICAL HEGEMONY, TWO WEEKS LATER, THE TECHNICAL REPRESENTATIVES AGAIN, RIPS AGAIN. IF THERE IS A SECULAR COMPONENT IT CAN'T BE CHANGED IN TWO WEEKS, RIGHT? OUR VIEW ON THE TECHNOLOGY IS THAT I UNDERSTAND THE LOGIC, BUT THIS: I FEEL LIKE THIS IS A DISCUSSION FROM 2022 WHEN THE VALUATION WAS EXTREMELY HIGH. WHEN VALUATION IS AGGRESSIVELY ATTACKED THROUGH THE RATES CHANNEL, OUR VIEW IS THAT THE RISK-REWARD CHANGES CONSIDERABLY AND MAY CONTINUE TO OPERATE.

IF I TOLD YOU THAT WE WERE IN A PERIOD OF INSTABILITY FROM BOTH A POLITICAL AND ECONOMIC PERSPECTIVE, BEING A LARGE CAPITAL TECHNOLOGY OWNER WITH LARGE BALANCE SHEET, HIGH CASH FLOW GENERATION, STRONG BUYBACKS, WITH A VALUATION THAT WAS NOT A BIG OBSTACLE, THAT ESTABLISHES ABOVE GOOD RISK-REWARD FOR TECHNOLOGY. WHEN YOU SAY POSITIVE, DO YOU REFER TO SHORT-TERM OVERWEIGHT TECHNOLOGY? WE ARE OVERWEIGHT IN TECHNOLOGIES IN THE MEDIUM TERM. OUR VIEW IS THAT IF THE MARKETS ARE Rising, TECHNOLOGY WOULD BE THE ONE THAT WOULD OUTPERFORM. THAT'S WHAT WE SAW IN JANUARY. Surprisingly, that's what we saw in February.

WE FEEL THAT MONEY WILL CONTINUE FLOWING INTO TECHNOLOGY AND THAT WILL TAKE IT UP. DOES THAT MEAN OVER THE NEXT WEEK I NEED TO FADE OUT THESE REALLY SHARP MOVEMENTS, BUT IF YOU TELL ME, WITHIN TWO TO FOUR WEEKS, I THINK TECHNOLOGY IS LEADING THAT? HOW MUCH DOES MONEY MATTER IN INDEX FUNDS? THEY HAVE A GREAT WEIGHTING. STRUCTURALLY SPEAKING, I THINK TECH BECOMES A SMALLER OVERALL WEIGHT IN THE STOCK MARKET OVER THE NEXT YEARS, BUT FROM MY PERSPECTIVE, I'M MUCH MORE TACTICAL, FORTUNELY OR UNFORTUNATELY, AND I THINK IN THE NEXT ONE TO SIX MONTHS, TECHNOLOGY CAN CONTINUE TO LEAD.

A BANK SOLD A LOT OF TECHNOLOGY. WE HAVE RECEIVED SOME REJECTION, WELL, THEY HAVE STARTED BUYING TECHNOLOGY. THEY ONLY BACK HALF OF WHAT THEY SOLD LAST YEAR. OUR JUDGMENT IS THAT THERE IS STILL ROOM TO ADD TO THE TECHNOLOGY AND THAT SHOULD BE POSITIVE FOR THE SECTOR. GREAT JOB. STUART KAISER OF CITI. POSITIVE BY 0.1% ON THE S&P. COMING SOON, A FORMER FED GOVERNOR. FROM NEW YORK, THIS IS BLOOMBERG. ♪ I AM LISA MATEO. THE FEDERAL RESERVE IS TRAPPED BETWEEN INFLATION AND A SUDDEN BANKING CRISIS. WE LEARN HOW FED CHAIR JEROME POWELL AND HIS COLLEAGUES RESPOND LATER TODAY.

MOST EXPECT THE FED TO RAISE INTEREST RATES BY 0.25%, BUT SOME SAY POLICIES SHOULD WAIT. THE DECISION IS KNOWN AT 2:00 p.m. NEW YORK TIME. INFLATION IN THE UK INCREASED UNEXPECTEDLY FOR THE FIRST TIME IN FOUR MONTHS. THE CONSUMER PRICE INDEX INCREASED BY 10.4% COMPARED TO PREVIOUSLY. THAT FOLLOWS A 10.1% JUMP IN JANUARY. FOOD AND DRINK PRICES WERE AMONG THE GUILTY, INCREASING AT THE FASTEST RATE IN 45 YEARS. ALL OF THAT MAY INCREASE ARGUMENTS THAT THE BANK OF ENGLAND SHOULD RAISE INTEREST RATES AS SOON TOMORROW. JEAN JINPING TOOK ADVANTAGE OF HIS VISIT TO MOSCOW TO FIRMLY ALIGN HIMSELF WITH RUSSIA AGAINST THE UNITED STATES.

THE CHINESE PRESIDENT DIDN'T GIVE VLADIMIR PUTIN SOMETHING ELSE HE WANTED: A COMMITMENT TO BUY MORE NATURAL GAS. THAT SHOWED THAT CHINA MAY HESITATE TO APPEAR TOO CLOSE TO RUSSIA. IT WAS HIS FIRST TRIP TO RUSSIA SINCE PUTIN INVADED UKRAINE. IT IS A MEASURE THAT WILL SURELY COOL NORTH KOREA. THE UNITED STATES AND SOUTH KOREA PLAN TO HOLD THEIR LARGEST LIFE FIRE DRILLS IN JUNE. THE EXERCISE WILL INVOLVE THE MOBILIZATION OF HIGH-TECH MILITARY EQUIPMENT. THE ALLIES ARE FINISHING TRAINING DRILLS. UNIONIZED STARBUCKS WORKERS WILL LOOK AT THEIR NEW CEO TODAY WITH STRIKES AT ABOUT 100 STORES ACROSS THE UNITED STATES.

THE BREESE TOES ARE DEMANDING THE COMPANY STOP ITS ALLEGED COERTION - THE COFFEE GROWERS ARE DEMANDING THE COMPANY STOP ITS ALLEGED ANTI-UNION COERTION. GLOBAL NEWS POWERED BY OVER 2,700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I AM LISA MATEO. THIS IS BLOOMBERG. I HAVE MADE CLEAR THAT THERE IS NO TRADE-OFF BETWEEN PRICE AND FINANCIAL STABILITY. WE HAVE MANY RESOURCES TO PROVIDE LIQUIDITY SUPPORT. THE ANSWER WOULD BE IF YOU GO TO A FINISHED INDIGOS ARCADE GAME - ARCADE AND THE GAME IS OVER. HE TURNED AROUND AND SAID THERE IS NO TRADE-OFF BETWEEN PRICE AND FINANCIAL STABILITY. WE MAKE NO COMMITMENTS.

THAT'S CRISPY THINGS FROM PRESIDENT LAGARDE... THAT'S CRISPY THINGS FROM PRESIDENT LAGARDE. I DON'T WANT TO PLAY WITH THE MARKET BECAUSE THAT IS ALWAYS A UNMATCHED GAME, A DANGEROUS GAME BUT THAT WOULD LEAD TO DRAMATICLY REVIEW THE TWO-YEAR PERFORMANCE AND THE FEDERAL FUNDS. THERE ARE FOUR DIFFERENT WAYS TO LOOK AT THIS, THE DECISION, THE DECLARATION, THE PROJECTIONS AND THE PRESS CONFERENCE. IN THE PROJECTIONS, IS IT STILL 5.1%? SOMEONE AT DEUTSCHE BANK SAYS YOU MAY BE GETTING THE .25 TODAY BUT IN THE END WE ARE CLOSER TO THAT MOMENT OF BEING RESTRICTIVE ENOUGH AND MAYBE IT WILL STAY THE SAME.

I SAID I DON'T THINK THAT TODAY. IT IS TREMENDOUSLY DIFFICULT TO PROVIDE A FORECAST THAT IS ACCURATE AT THE BEST TIME. IT'S ABOUT SIGNALING TODAY, SIGNALING YOUR INTENTIONS AROUND WHAT YOU UNDERSTAND TO BE THE COMPENSATION BETWEEN TWO DIFFERENT THINGS IF ANYONE BELIEVES THAT THERE IS A COMPENSATION BETWEEN WHAT HAS HAPPENED IN THE LAST TWO WEEKS AND YOUR MONETARY POLICY OBJECTIVES. SEVERAL ECONOMISTS HAVE TALKED ABOUT THE FED AS A RISK MITIGADOR OR, IN FINALITY, A MITIGATION, IN FINALITY AN AGENCY THAT WANTS TO MAKE THE OPTION LESS RISKY. IN THIS CASE, RAISE THE RATES, KEEP THINGS STABLE, SAY WE'RE ON THE WAY WITHOUT ACKNOWLEDGING THE WHIPSAW ACTION WE'VE SEEN THE LAST COUPLE OF MONTHS.

LET'S START WITH THE S&P STOCK FUTURES, WHICH ARE UP 0.1%. STOCK FUTURES RISE THIS MORNING BY 0.1%. IF WE CAN GO TO THE BOND MARKET AND GET TWO, 10 AND 30 UP. 4.2% IN THE TWO YEARS, UP TO 5.08% IN THE LAST WEEK. TWO YEARS THEY HAVE BEEN EVERYWHERE. THE CURVE HAS BEEN EVERYWHERE. 2-10 WAS AT A NEGATIVE POINT 1.1%. GETTING A LITTLE TILT FROM THE FRONT END. I will turn to currencies, the eurodollar and the pound sterling. HIGHER THAN OUTSIDE THE UK. BACK WITH A HANDLE OF 10. WE CAN GO TO FRANKFURT. THERE IS AN ECB CONFERENCE. WHAT DID YOU DO WITH THAT?

YOU HAD A NICE NAME FOR HIM. WHAT WAS IT? NO. I FORGET. THAT'S WHAT YOU CALLED HIM. THAT'S NOT NICE. MARÍA, WE HAVE LISTENING TO PRESIDENT LAGARDE. WHAT DID SHE SAY? I'M PRETTY SURE HE CAN'T HEAR US BASED ON THAT FACE, THOUGH SOMETIMES HE MAKES THAT FACE TO TOM, EVEN IF HE CAN'T HEAR HIM. CAN YOU HEAR ME NOW? LET'S TALK ABOUT PRESIDENT LAGARDE. I CAN HEAR YOU. FIRST, THIS IS THE THIRD TIME, WHICH IS VERY UNUSUAL, WE HAVE HEARD FROM THE ECB DIRECTOR IN ONE WEEK. WE HAVE DECISION DAY ON THURSDAY, THEN MADAME LAGARDE IN BRUSSELS ON MONDAY AND TODAY AT THIS WATER CONFERENCE IN FRANKFURT, THIS WATCH CONFERENCE IN FRANKFURT, THE MESSAGE: THERE IS NO TRADE-OFF BETWEEN PRICE AND FINANCIAL STABILITY.

THAT MEANS THAT THE MISSION OF REDUCE INFLATION, HE SAID, IS NOT NEGOTIABLE. THIS IS A SINGLE MANDATE, CENTRAL BANK - SINGLE MANDATE CENTRAL BANK. THERE HAS BEEN turbulence in the banking sector, but that will not be compensation. NOW THE OTHER IMPORTANT THING IS THAT WHEN IT COMES TO FUTURE ORIENTATION, WE HAD GOT ​​USED TO THIS IDEA THAT IN EVERY MEETING WE ALREADY KNEW WHAT WOULD HAPPEN. THE QUESTION WAS WHAT COMES NEXT? CAN YOU CALIBRATE TWO BASE POINTS? SHE HAS GIVEN SOME FLEXIBILITY TO THE EXTENT THAT THERE IS STILL GUIDANCE AND WE KNOW THEY WILL CONTINUE TO WALK.

CAN YOU SPECIFICALLY GAUGE HOW BIG MAY WILL GET RIGHT NOW? NOT PRECISELY. WE LISTEN TO THE HEAD OF THE GERMAN CENTRAL BANK A BEAUTIFUL AND HAWKish LANGUAGE. HOW MUCH DOES CHRISTINE LAGARDE REPRESENT THE COLLECTIVE WISDOM OF THE ECB? HOW MANY DISSONANCES ARE THERE AT A TIME WHEN THERE ARE DIVERGING DESTINIES WITHIN THE SEPARATE COUNTRIES AND YET INFLATION IS AT THE FIRST TIME FOR EVERYONE? THIS HAS ALWAYS BEEN THE PERENNIAL THEME OF THE EUROPEAN CENTRAL BANK. BY THE WAY, VERY DIFFERENT MONETARY POLICIES MUST BE ESTABLISHED. WE TALK ABOUT 19COUNTRIES, NOW 20. CROATIA JUST JOINS. WHAT I ALWAYS HEAR FROM CHRISTINE LAGARDE, WHICH MAY BE WORTH MENTIONING, IS THAT OBVIOUSLY SHE IS NOT MARIO DRAGHI TO THE EXTENT THAT SHE IS A PERSON WITH A GREAT REPUTATION AS AN ECONOMIST, BUT WHAT SHE SAYS BEHIND THE SCENES WHILE SHE IS NOT ONE AS GOOD ON THE TECHNICAL SIDE, SHE IS GOOD AT CREATING CONSENSUS AND GETTING EVERYONE TOGETHER, MAKING...

AND GETTING EVERYONE TOGETHER, ENSURING EVERYONE FEELS HEARD. WHEN TALKING ABOUT THE HAWKNESS OF THIS GERMAN CENTRAL BANK, CHRISTINE LAGARDE'S LANGUAGE ALSO REFLECTS IT. HE REPEATED THAT THE MANDATE TO LOWER INFLATION TO 2% HAS NOT ENDED. SHE REPEATED THAT THEY DON'T SEE THIS AS COMPENSATION. IT IS NOT ONE OR THE OTHER. THEY CAN HANDLE BOTH. AFTER HER LAST PRESS CONFERENCE, PEOPLE SAID THAT CHRISTINE LAGARDE DID A TREMENDOUS JOB IN ANALYZING BOTH ISSUES AND DELIVERING A MESSAGE THAT WAS CLEAR WITH APPLAUSE FROM MÁRQUEZ. NOW THAT THE WHOLE CREDIT SUISSE PROBLEM HAS HAPPENED, DO PEOPLE STILL FEEL THE SAME?

THAT'S A GOOD POINT. ON THURSDAY, MANY OF MY CONTACTS ACTUALLY TOLD ME THAT THIS WAS ONE OF THEIR BEST PRESS CONFERENCES TO DATE, IN CLEAR AND SIMPLE LANGUAGE. THE MARKET WAS ABLE TO DIGEST THIS AND WAS ABLE TO DO IT AT A TIME WHEN THERE WAS TURBULENCE, I MEAN NOT AS BIG AS THE WEEKEND, BUT A DIFFICULT WEEK TO MAKE THAT KIND OF DECISION. THE MARKET COULD TAKE IT. BEYOND THAT, WHAT THEY ARE NOW TRYING TO DO IS REPEAT THAT EUROPEAN BANKS ARE WELL CAPITALIZED AND WELL REGULATED, THAT SOME OF THE PROBLEMS THAT HAPPENED ARE SPECIFIC TO SWITZERLAND, AND ANOTHER MESSAGE THAT IS REPEATED MANY TIMES THIS WEEK IS THAT, WHEN LOOK AT THE Annihilation, which reflects a decision made by Swiss regulators, so it does not set a precedent for European banks and this is a different situation.

ANOTHER POINT, JUST BRIEFLY, JUST TO SHOW THE DIFFERENCE, WE ALSO HAD COMMENTS YESTERDAY FROM THE LEADER OF THE ECB SUPERVISORY BOARD AND HE SAID, GIVEN THE SITUATION, THE ECB IS CONFIDENT THAT THE BUYUPS AND DIVIDENDS CAN BE DONE AS PLANNED. GREAT JOB. MARÍA TADEO. THE ECB CONFERENCE AND ITS WATERS. I HAVE BEEN. IT'S GOOD. LISTEN TO THE PRESIDENT OF THE ECB. IT WAS MARIO DRAGHI AT THAT MOMENT. YOU CAN CATCH UP WITH ECONOMISTS AND OFFICIALS. IT'S PRODUCTIVE. I WOULD LOVE TO BE THERE. I'M NOT ONLY ASKING FOR A ROAD TRIP BUT IT WOULD BE FASCINATING TO SEE WHAT THEY SAY ON THE GROUND.

S&P STOCK FUTURES POSITIVE BY 0.1%. SEVEN HOURS AWAY FROM A FED DECISION, LOOKING FOR AN INCREASE OF 25 BASE POINTS. THERE ARE SOME BANKS LOOKING FOR A PAUSE, INCLUDING GOLDMAN SACHS AND WELLS FARGO. We met Sarah House earlier, who suggested that they can restart the walk even if they pause today. IN THE BOND MARKET, A ROUND TRIP after two years. NOW, 4.2%, AN INCREASE AGAIN OF THREE OR FOUR BASIS POINTS. WE HAVE BEEN NORTH OF CINCO, SOUTH OF FOUR, NOW 4.2%. AT 10 YEAR, 3.6132. IN THE FOREIGN EXCHANGE MARKET, LET'S CONCLUDE. EURODOLAR 1.0795, POSITIVE 0.25%. THE STRONGEST POUND, UP 0.5%, FINALLY AFTER THIS UK INFLATION STORY, SURPRISE UPWARDS.

WHICH IS NOT EXACTLY WHAT THEY WANT. WE'VE BEEN TALKING ABOUT BANKS FOR THE PAST WEEKS AND THAT HAS BEEN THE WHOLE OF THE MOVES AND THERE HAVE BEEN EVEN OTHER STORIES THAT ARE RELEVANT BECAUSE THEY TALK TO THE QUESTION OF HOW LONG CAN WE STAY IN THIS INFLATIONARY ENVIRONMENT BEFORE PROFIT MARGINS ARE STRENGTHENED. I WANT TO BRING IT TO OTHER COMPANIES WITHIN THE BANKING SECTOR. NIKE CAME OUT AND MADE SOLID QUARTER PROFITS. They have done well, getting rid of some of their inventory, but profitability is the problem. FREIGHT AND MATERIAL COSTS ARE HIGH AND EXPECTED TO WEIGH ON PROFITABILITY.

IT'S INTERESTING THAT EVEN AFTER THAT BIG HIT THOSE STOCKS ARE LOWER THAN 1% BECAUSE OF THE LONG TERM OUTLOOK. SHARES OF GAMESTOP, ONE OF THE MEME STOCKS, RAISED NEARLY 50% AFTER EXCEEDING EXPECTATIONS, A SURPRISE FOURTH QUARTER ADJUSTED EARNING. BASICALLY TALKING ABOUT SOME PROGRESS, MAYBE BECAUSE OF ALL THE MONEY THEY HAVE BEEN RECEIVING. AM. -- AMC SHARES UP MORE THAN 10%. MAYBE DUMB MONEY IS NOT MADE. NOT TO SAY IT'S NONSENSE. I WON'T TALK ABOUT ANYBODY'S TRADE LIKE THIS, BUT THIS QUESTION ABOUT THE STOCKS THAT MOVE THE MOST IN A RISK ON FEEL HAVE NOT CHANGED THAT MUCH AND I THINK IT'S RELEVANT BECAUSE IT SPEAKS ABOUT THE MOMENT WE ARE AND WHERE SOME OF THE MOVEMENT WANTS TO GO.

FIRST REPUBLIC ABOUT NO CHANGES. IN THAT NOTE SPECIFICALLY, BECAUSE I WANT TO AVOID MEME STOCKS, WE TALKED ABOUT BANKS. THAT HAS BEEN EVERYWHERE. COLLECTION BANKS, $30 BILLION IN DEPOSIT DO NOT DO IT. NOW THEY TALK ABOUT DOING MORE. THIS IS A CONVERSATION ABOUT GOVERNMENT SUPPORT, GOVERNMENT SUPPORT. WHAT IS THE ROLE OF THE GOVERNMENT? THAT'S A GREAT QUESTION, ESPECIALLY BECAUSE YOU ALSO HAVE BANKS INVOLVED. WHAT DO YOU SEEK FROM THE GOVERNMENT? HOW MUCH DOES IT COST TO STOP PART OF THE POTENTIAL ILLIQUIDITY IN YOUR ASSET POOLS THAT WERE SUBSCRIBED DURING A TIME OF LOWER INTEREST RATES? THERE IS ALSO A MORE IMPORTANT POINT, WHICH IS THAT THE BANKING INDUSTRY IS BUILT ON TRUST.

IF YOU HAVE A BANK THAT IS TALKING ABOUT STRATEGIC OPTIONS FOR THE FUTURE, THAT, IN ITSELF, WAS NOT THE GREATEST THING TO SUPPORT TRUST. HOW IS SOME TYPE OF STABILITY ACHIEVED WITH THIS STRATEGIC OPTION? IF IT CONTINUES, WHAT DOES IT MEAN FOR MONETARY POLICY? I LOVE THAT. RIDICULOUS. IF WE FIND A BANKING SOLUTION, Are we back to where we were two weeks ago or have things really changed? I would say NO. THIS HAS MATERIALLY CHANGED THE OUTLOOK NOT BECAUSE THERE IS ANY SYSTEMIC CRISIS BUT BECAUSE THE COST OF CAPITAL HAS INCREASED FOR SOME OF THESE BANKS.

OUTFLOWS OF DEPOSITS ARE COMING TO THE FOREIGN AND THERE IS A RESTRICTION ON THE AMOUNT OF CAPITAL THAT SOME OF THESE SMALLER REGIONAL BANKS THAT REPRESENT A LARGE PART OF CREDIT CREATION HAVE TO LEND AND GENERATE GROWTH. MOST PEOPLE: WE CAN CATCH UP WITH PAUL MICHELE TWICE THIS WEEK. GOOD DAY. MIKE MCKEE MESSAGED ME EARLIER AND I WANTED TO KNOW WHY YOU'RE HERE TODAY AND WHAT YOU WANT ME TO ASK HIM AT THE PRESS CONFERENCE. WHAT IS TODAY? I THINK YOU HAVE TO ASK. THE FED WAS CREATED TO PREVENT A BANK RUPT, SO YOU SHOULD HAVE SEEN THIS.

THEY SHOULD HAVE SEEN THE EXITS OF THE DEPOSITORS. ARE YOU SEEING SOMETHING ELSE THAT CONCERNS YOU AND WHAT IS THAT? AND I THINK THERE ARE THINGS IN THE COMMERCIAL PROPERTY MARKET, THINGS IN THE BANK LOAN MARKET, WHERE REBOOTERS HAVE DOUBLED AND TRIPLIFIED WHAT BORROWERS PAY, SO THERE'S STILL A LOT OUT THERE. HOW DO YOU ANALYZE A MESSAGE THAT GOES FROM WE WANT CREDIT CONDITIONS TO ADJUST TO, MY GOD, IT'S NOT A FINANCIAL CRISIS BUT THINGS ARE ADJUSTING TOO FAST. HOW DO YOU BRING THAT LINE TO A MARKET THAT DOES NOT LIKE NUANCES? THEY DON'T NEED IT.

THEY HAVE TOLD US THEY DEPEND ON THE DATA. LOOK AT THE DATA. THEY'VE WON. THEY DO NOT NEED TO STACK. LOOK AT THE INFLATION. IF YOU LOOK AT TIPS FOR 10 YEARS FROM MONTH TO DATE, IT HAS DROPPED TO 2.1%. INFLATION EXPECTATIONS ARE FALLING. LOOK AT THE UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT. THEY ARE THE THOSE THAT FALL THE MOST IN TWO YEARS. THAT'S BEFORE THEY STARTED RAISING RATES. AND IF IT GOES BACK TO THE STATUTES, THEY WERE CREATED TO AVOID A BANKING CURRENT. THEY BROUGHT IT TO THE POINT WHERE THEY HAD TO INTERVENE AND STOP A BANK RUNS, SO THEY HAVE ACHIEVED THE MAXIMUM PRESSURE THEY NEEDED TO REDUCE INFLATION.

IT'S HAPPENING, IT'S IN THE DATA, PAUSES AND WAITS. YOU PROBABLY SEEN THE DEPARTURES OF DEPOSITORS FROM SOME OF THESE BANKS BEFORE THAT SPEECH, THAT TESTIMONY FROM JAY POWELL, WHERE HE OPENED THE DOOR TO A RAISE OF 50 BASE POINTS. HOW DO YOU POINT OUT THAT THIS SCENARIO HAS CHANGED SO DRAMATICLY, TAKING INTO ACCOUNT THAT MUCH OF WHAT YOU ARE TALKING ABOUT, THE WIN OF YOUR WAR, WOULD HAVE BEEN WON EARLIER THAN WHAT WE SAW WITH SILICON VALLEY BANK? HONESTLY, IT REALLY DOESN'T MATTER. THESE ARE THE INVARIABLE IMPACTS OVER LONG TIME. THEY ARE ALREADY UPDATING THE ECONOMY. THEY ARE STARTING TO BITE HARD.

WHAT WILL HAPPEN IN THE NEXT THREE TO SIX MONTHS? LET'S WAIT AND SEE. WE HAVE OBSERVED EVERY TIME THAT THE FED STOP RAISING RATES. ON AVERAGE, IT HAS BEEN ABOUT 13 MONTHS UNTIL THE RECESSION. So you could stop here and then see what happens. WE THINK THAT WITH A TIGHTENING WE WILL PROGRESS UNTIL THE END OF THIS YEAR. AT THE EARLY OF THE YEAR, WHEN CREDIT WAS DECREASING, HIGH YIELD IS DOING WELL, YOU RESISTED THE URGENCY TO APPLY. I'M INTERESTED TO KNOW WHAT YOU'VE BEEN DOING FOR THE PAST WEEKS, SINCE THINGS HAVE STARTED GOING THE OTHER WAY AND YOU'RE NOT ON THE WRONG SIDE OF THE TRADE, SAY.

WHAT DID YOU DO? I MAINTAIN OUR CONSERVATIVE POSITION WHERE WE HAVE HEDGED IN THE CDX MARKET. YOU'LL HAVE TO TAKE THEM OUT FOR MY DYING HANDS. THIS IS JUST THE BEGINNING. THIS IS NOT THE END. THE SPREADS RIGHT NOW ARE AT 4.8% AND IT WAS AS TIGHT AS 3.9 PERCENT. THE BASIC ARGUMENT IS LIKE THIS. IT IS A HIGH QUALITY INDEX AND IT WILL NOT EXPAND LIKE IT PREVIOUSLY DOES IN RECESSIONS AND YOU HAVE REJECTED THAT NOTION. BECAUSE? I HAVE LIVED EVERY OTHER HIGH PERFORMANCE MARKET CYCLE. THIS MARKET IS A LITTLE OVER 30 YEARS OLD. YOU HEAR THAT SAME STORY ALL THE TIME.

THIS TIME IT'S DIFFERENT, BUT THE PROBLEM IS THAT FEAR ALWAYS REPLACES GREED. PEOPLE ARE FIGHTING TO IMPROVE QUALITY. WE HAVE SEEN THAT YOU DON'T KNOW WHERE THE PROBLEMS ARE GOING TO OCCUR, SO YOU TRIED TO ELIMINATE THE RISK. EVERY TIME, HIGH PERFORMER REACHES A MINIMUM CREDIT SPREAD OF 800 BASIC POINTS, AND WE ARE ON TRACK FOR THAT. YOU TALKED ABOUT NON-BANK LENDERS, WHICH ARE US. WE HEAR FROM OUR CUSTOMERS WHO WANT TO KNOW WHAT WE HAVE. THEY ARE ASKING ALL THEIR ADMINISTRATORS. WE ARE GOING TO START STRENGTHEN CREDIT CONDITIONS OURSELVES JUST BECAUSE OUR CUSTOMERS DON'T WANT US TO TAKE ON THE KIND OF RISK THEY WERE COMFORTABLE WITH A YEAR OR TWO AGO.

IT'S NOT JUST US. IT'S EVERY MANAGER. IT IS IN THE PUBLIC MARKETS AND IN THE PRIVATE MARKETS. LISA: HOW MUCH HAS IT ACCELERATED IN THE PAST TWO WEEKS? EVEN IF THIS PROBLEM WITH SOME OF THE MEDIUM-SIZED COMPANIES IS RESOLVED AND WE GET SOME TYPE OF SUPPORT THAT AVOIDS SOME RISKS OF CONTAGION OR OTHER CONCERNS, HOW MUCH HAVE THE CONDITIONS BEEN REINFORCED THAT WILL BE PERSISTENT? THEY HAVE BEEN SQUEEZED EVERYWHERE. WE'VE TALKED ABOUT CENTRAL BANKS EXPECTING THOSE ACCUMULATED, LONG, VARIABLE DELAYS TO CATCH UP, SO THEY'RE GOING TO CATCH UP. So unless they start reducing rates or ending QT, that will be progressive.

CENTRAL BANKS ARE STILL TIGHTENING CREDIT CONDITIONS. WHEN YOU LOOK AT THE SURVEYS OF TOP LOAN OFFICERS, BANKS HAVE BEEN TIGHTENING CREDIT CONDITIONS, AND I THINK WITH WHAT'S HAPPENED IN THE PAST WEEKS, THERE'S NO GOING BACK. THEN I TALK ABOUT NON-BANK LENDERS. WE ARE ALL DOING THE WORK FOR THE FED ANYWAY. YOU CAN PRESS THE PAUSE BUTTON. BANKS ARE STILL TIGHTENING CREDIT CONDITIONS AND NON-BANK LENDERS ARE TOO. LISA: I HATE THESE ANALOGIES BUT YOU ALSO MENTIONED COMMERCIAL REAL ESTATE. ARE WE AT THE BEGINNING, IN THE MIDDLE OF THE DEVALUATION? HOW MUCH MORE SHOULD IT GO? IT DEPENDS WHERE YOU ARE ON THE SNAKE.

I'M SURE REAL ESTATE COMPANIES ARE ALREADY HAVING PROBLEMS WITH OFFICES IN THE CENTRAL BUSINESS DISTRICTS AND THEY ARE STARTING TO SEE THAT IN SOME COMMERCIAL MORTGAGE BACKED SECURITIZATIONS, BUT THERE'S THE REIT MARKET, THE ENTIRE REGIONAL BANK MARKET, WHERE THEY ARE LOCATED MANY OF THEIR LOANS ARE IN THE COMMERCIAL PROPERTY MARKET, SO THESE THINGS DO NOT TEND TO HAPPEN AND GO. THEY TEND TO BUILD AND THEY ARE WITH US FOR A TIME. JON: JUST ONE FINAL QUESTION. YOU TOLD ME, THE WHOLE CURVE, WE HAVE SEEN THAT. ARE YOU SAYING GO DOWN TO 3%? YES. 3%. JON: HERE WE GO. 3.00% MINIMUM.

JON: WOW! THANK YOU FOR THAT AND FOR THE CORRECTION, BECAUSE IT IS IMPORTANT. THERE IS A DIFFERENCE BETWEEN A THREE MANGO AND 3.00. LISA: YOUR POINT IS PROVOCATIVE, ESPECIALLY SINCE PEOPLE USED TO THINK WE WOULD BE IN A HIGHER INFLATIONARY ENVIRONMENT AND WOULD SEE HIGHER REAL RETURNS FOR LONGER. THAT LEAVES A LOT OF PEOPLE TO GET IN DURATION AND YOU WONDER IF THIS IS CREATING SOME INSTABILITY AT THE LONG END, SOME STABILITY IN THE LONG END. JON: IT'S BACK TO THREE, NOT BACK TO ZERO. BOB'S POINT IS THAT IN EACH CYCLE, THE LOW IS INCREASE AND THE HIGH IS INCREASE.

HIGHER MINIMUM AND HIGHEST HIGH. THAT MAKES SENSE, I HOPE. 3.61% ON TENURE, TWO YEARS 4.22%. BESSIE DUKE JOINS US NEXT. ♪ TO KEEP YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, I AM LISA MATEO. A BAILOUT OF THE BANK OF THE FIRST REPUBLIC CAN HAVE THE SUPPORT OF THE UNITED STATES TO FOSTER AN AGREEMENT THAT SUPPORTS THE LENDER. BLOOMBERG HAS LEARNED THAT WALL STREET LEADERS AND AMERICAN OFFICIALS HAVE PROPOSED A VARIETY OF MEASURES TO MAKE THE EARLY REPUBLIC MORE ATTRACTIVE TO BUYERS OR INVESTORS. THE BANK HAS LOST 89% OF ITS MARKET VALUE THIS YEAR. IT'S DECISION DAY FOR THE FEDERAL RESERVE.

WILL POLICIES ANNOUNCE A QUARTER POINT INCREASE OR A PAUSE TO SUPPORT FINANCIAL STABILITY? IT'S A DIFFICULT BALANCE FOR FED CHAIR JEROME POWELL. THE DECISION CAN BE PUBLISHED AT 2:00 PM. IN WASHINGTON. AND GERMANY, CHANCELLOR OLAF SCHOLZ AND HIS ADVISORS PREDICT THAT THIS YEAR THERE WILL BE A CONTRACTION. THEY ESTIMATE THAT GDP WILL INCREASE .2% BUT THE SITUATION REMAINS TENSE AND INFLATION WILL CONTINUE. ORBIT VERSION WILL RESUME SOMEOPERATIONS ON THURSDAY. THE SATELLITE COMPANY TEMPORARILY STOPPED ITS ACTIVITIES LAST WEEK. A FAILED LAUNCH SOME WANT TO CARRY OUT THE PROGRAM OUT OF COURSE. JAPAN BEAT THE USA 3-2 TO WIN THE WORLD BASEBALL CLASSIC IN MIAMI.

IT CAME TO THE FINAL MOMENT, WHEN HEY NATOI STRIKED MIKE TROUT, HIS YEARLY DAMAGED TEAMMATE IN LOS ANGELES. GLOBAL NEWS POWERED BY OVER 2,700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M LISA MATEO AND THIS IS BLOOMBERG. ♪ IF IT'S A DOVISH WALK AS IT APPEARS TO BE, I THINK THE MARKET TAKES IT AS A RISK TO SOME DEGREE. IF THEY DO A DOVISH HIKE, IF YOU GET COMFORTABLE THEY WILL DO THE HIKE IN THE NEXT SIX TO 12 WEEKS AT MAX. STATE STREET'S MARVIN LOH WILL BE MAKING THIS FED DECISION LATER THIS AFTERNOON. FUTURES OF ACTION. THE S&P 500 ALMOST UNCHANGED.

THE RETURNS ARE GOING NOWHERE. THIS IS WHAT TO EXPECT WHEN THE FED MAKES A FUNDAMENTAL MOVE. 25 OR PAUSE IS NOW THE CONVERSATION, CONSENSUS LENDS TOWARDS 25. LISA: YOU EXPECT STASIS WHILE PEOPLE TRY TO WAIT AND SEE WHAT THEY DO. YOUR REACTION WILL BE INTERESTING. HOW MUCH WILL PEOPLE REACT TO ACTUAL MOVEMENT VS. STATEMENT AND PROJECTION OF ESTIMATES? JON: THE PRESS CONFERENCE. LISA: HOW WILL YOU HANDLE THAT? JON: THIS IS EASILY THE MOST DIFFICULT FED DECISION OF THE LAST YEAR. ONLY THE MOST DIFFICULT THING. I'M NOT SURE ANYTHING COMES CLOSE TO THIS. LISA: ESPECIALLY BECAUSE THERE WILL BE QUESTIONS NOT ONLY ABOUT MONETARY POLICY BUT ALSO SUPERVISION AND HOW MUCH THEY HAVE A HANDLE ON THE POTENTIAL RISKS OF BUILDING REGIONAL BANKS.

JON: Imagine going to the Federal Reserve in August 2008? THAT WAS BETSY DUKE. CAN YOU DESCRIBE WHAT IT WAS LIKE FROM THE FED IN AUGUST 2008? IT WAS AUGUST 2008. I WAS SWORN ABOUT 30 MINUTES BEFORE MY FIRST FOMC MEETING, WHICH WAS THE LAST NORMAL FOMC MEETING THERE WAS. AFTER MY SECOND FOMC MEETING, WE WALKED INTO THE PRESIDENT'S OFFICE AND VOTED TO LOAN $85 BILLION TO AIG. THIS IS HOW I STARTED MY CAREER. JON: CAN YOU TELL ME HOW DIFFERENT THIS MOMENT IS THAN WHAT YOU WENT THROUGH THOSE YEARS AGO? YOU KNOW, IT'S DIFFERENT BUT IT'S THE SAME. You know, the Fed's job is still the Fed's job regardless of what the current events are, the crisis of the day.

THE FED HAS TO KEEP IT ON WHAT ITS JOB REALLY IS. LISA: LET'S TALK ABOUT WHAT THE WORK IS LIKE. THERE ARE DOUBLE COMMANDS. ONE IS INFLATION. THAT'S FIRST AND MAIN BUT THERE IS SUPERVISION TOO. SUPERVISION HAS BEEN A COMPLICATING FACTOR AND I THINK IT IS SUPERVISION, NOT REGULATION. THOSE TERMS ARE OFTEN USED INTERCHANGEABLY, BUT THE REGULATION APPLIES TO DRIVING RULES. SUPERVISION IS BEING IN THE BANKS, PAYING ATTENTION TO WHAT HAPPENS IN EACH BANK. THAT'S WHERE I THINK THE PROBLEM IS. LISA: THIS RAISES A QUESTION ABOUT HOW MUCH SIGN THERE IS FROM A FED WHERE THE PRESIDENT APPEARED BEFORE CONGRESS AND OPENED THE DOOR TO A 50 BASIC POINT RATE INCREASE A FEW DAYS BEFORE THE COLLAPSE OF ONE OF THE LARGEST BANKS COMING BACK THE FINANCIAL CRISIS.

I'm curious what you think of that and how much signal there will be in terms of visibility and other issues in the banking sector today. THE ROLE OF MONETARY POLICY IS NOT TO PROTECT THE BALANCE SHEET OF BANKS. THE TOOLS THAT THE FED HAS TO DEAL WITH THE FINANCIAL SYSTEM ARE VERY DIFFERENT THAN THOSE IT USES IN MONETARY POLICY, SO THE MAIN TOOL OF THE FINANCIAL SYSTEM IS THE FED'S ABILITY TO LEND. THAT IS WHY THE FED WAS ESTABLISHED, TO LEND IN LIQUIDITY CRISIS, WHICH IS THIS. SO THE FACILITY THEY ESTABLISHED THE WEEKEND AFTER THE S VB FAILED IS ON THEIR WHEEL.

THAT IS YOUR MAIN TOOL. THEY WILL SEPARATE IT FROM THE MONETARY POLICY DECISION. LISA: MANY PEOPLE CLAIM THAT THIS IS NOT A QUANTITATIVE FACILITY. THIS IS NOT A TIGHTENING REVERSAL. IT IS A DIFFERENT MECHANISM, DO NOT BUY. IT'S LOAN. IT IS A DIFFERENT STABILITY EFFECT. DO YOU MAKE THE SAME DISTINCTION OR DO YOU THINK THIS IS THE END OF THE TIGHTENING? REALLY, THEY WOULD HAVE TO COMPENSATE THE INCREASE FROM THE LOANS WITH AN ADDITIONAL SALE OF SECURITIES ON THE BALANCE SHEET TO COMPENSATE FOR THE QUANTITATIVE FACILITY, PLEASE, THAT WILL RESULT FROM THE GROWTH OF THE BALANCE SHEET DUE TO THE LOANS THEY ARE GRANTING.

IF YOU GO BACK TO 2008, THE WHOLE QE1 DIDN'T CHANGE THE SIZE OF THE FED'S BALANCE SHEET AT ALL. IT SIMPLY REPLACED THE LOANS THE BANK HAD MADE DURING THE CRISIS WITH SECURITIES. IT PREVENTED THE FED'S BALANCE SHEET FROM CONTRACTING BUT IT DID NOT EXPAND IT. IT WAS NOT UNTIL THE 2nd QE THAT IT STARTED TO EXPAND. JON: MUCH OF THE POST-CRISIS APPARATUS THAT THE FED CREATED WAS DESIGNED TO COMMUNICATE LOWER FOR LONGER. THE PLOT PLOT SHOWED, FOR YEARS, THAT THEY WERE NOT LOOKING TO RAISE RATES FOR A LONG TIME. HOW DO YOU THINK THEY WILL BE USED TODAY FOR SIGNALING?

AT THE LAST PRESS CONFERENCE, PRESIDENT PAL WAS CLEAR THAT HE EXPECTED THAT THE PROJECTIONS THAT WOULD COME OUT IN SEPTEMBER WILL BE HIGHER AND I SEE NO WAY THAT WOULD NOT HAPPEN. THE DECISION IN THE ROOM MUST MATCH YOUR PROJECTIONS, SO I WOULD FOCUS NOT ONLY ON WHAT TODAY'S DECISION IS, BUT WHAT THOSE ARE, BUT ON WHAT THOSE PROJECTIONS SAY ABOUT THE TERMINAL RATE. LISA: YOU BELIEVE THEY'RE GOING TO INCREASE THOSE POINTS, INCREASE THE PROJECTION OF WHERE FED FUNDS RATES END UP DESPITE SOME recent turbulence. WHAT WILL BE THE JUSTIFICATION FOR THAT? WILL THEY DOUBLE THIS IDEA OF INFLATION AND WE STILL HAVE NOT BEEN RESTRICTIVE ENOUGH DESPITE THE SIGNS OF CREDIT RESTRICTION THAT HAVE ACCELERATED IN RECENT WEEKS?

THE WAY I INTERPRETED THE COMMENTS WAS THE EXPECTATION WAS THAT INFLATION WOULD FALL SLOWER THAN THEY EXPECTED. AND THE POINTS COME FROM INFLATION EXPECTATIONS. IF YOU REMEMBER, THERE WAS A LOT OF DISCUSSED IN THAT PRESS CONFERENCE. AT ONE POINT, PRESIDENT POWELL SAID MY FORECAST IS DIFFERENT THAN HIS. IF YOUR FORECAST IS CORRECT, YOUR RATE PROJECTION WILL BE CORRECT, BUT IF MINE IS CORRECT, YOUR FORECAST WILL BE WRONG... IT WOULD BE A MISTAKE NOT TO PAY ATTENTION TO THAT. JON: ONE THING WE'VE BEEN TALKING ABOUT DURING THE PAST WEEKS IS WHETHER THE FED KNOWS THINGS WE DON'T KNOW WHEN IT COMES TO FINANCIAL STABILITY.

WHEN YOU WATCH THE PRESS CONFERENCE LATER, ARE WE WATCHING A PRESIDENT WHO KNOWS THINGS WE DON'T KNOW ABOUT THE FINANCIAL SYSTEM? I THINK YOU'LL FIND - HE SURELY KNOWS THINGS THAT WE DON'T KNOW, BUT IF THEY ARE THINGS HE'S TRYING TO HIDE, I DON'T THINK THEY'RE NECESSARILY TRUE. AGAIN YOUR CREDIBILITY IS YOUR MOST IMPORTANT ASSET, SO YOU WON'T TRY TO HIDE ANYTHING, BUT WHEN THEY TALK ABOUT THE STRENGTH OF THE BANKING INDUSTRY, RIGHT NOW, THE BANKS ARE STRONG. THE CAPITAL IS SOLID, THE QUALITY OF THE ASSETS IS EXTREMELY GOOD. THIS IS AN INTEREST RATE RISK PROBLEM, A LIQUIDITY PROBLEM, AND IT COMES BACK TO THE BASICS OF BANKING.

THIS LOOKS MORE LIKE THE SAVINGS AND LOAN CRISIS OF 2008. JON: ONE OF THE INFORMATION FLOWS WE DON'T HAVE. WHAT ARE THE INFORMATION FLOWS TO WHICH WE DO NOT HAVE ACCESS IN REAL TIME? BETSY? I DON'T KNOW WHAT'S SO DIFFERENT. YOU RECEIVE A LOT OF INFORMATION AND THEY HAVE STAFF WHO COLLECT IT AND REPORT IT ON A REGULAR BASIS. BANKING INFORMATION WILL BE ARRIVING THROUGH SUPERVISION ACTIVITIES IN THE RESERVE BANKS. I guess right now supervisors, and all banks, are looking at what liquidity risk management looks like, what interest rate management looks like, and what capital looks like.

YOU CAN COVER A TEMPORARY LIQUIDITY HOLE WITH LOANS, WHICH THE FED IS DOING, AND IT WILL PREVENT BANKS FROM HAVING TO SELL THE SECURITIES THEY HOLD, BUT IF THOSE DEPOSITS ARE GONE FOREVER, IF THERE IS A CHANGE IN THE BANKING INDUSTRY MORE SMALLER TO THE LARGER BANKS AND IT REMAINS PERMANENTLY, THAT'S A PROBLEM FOR THE SMALLER BANK PORTION OF THE INDUSTRY. JON: THIS WAS WONDERFUL. I WOULD LOVE TO DO THIS AGAIN BEFORE THE NEXT DECISION. BETSY DUKE, FORMER FED GOVERNOR, WHO JOINS US THIS MORNING, LOOKING INTO 2008, THERE MAY BE SOME DIFFERENCES AND SIMILARITIES. LISA: I THOUGHT IT WAS BRILLIANT AND IT WAS INTERESTING TO HEAR HER OPINION.

WHAT SHE SAID, THAT THE BIGGEST SURPRISE MAY BE IN THE PROJECTIONS OF WHERE THE TERMINAL FEE ENDS, AND THEY MAY STAY BY HER PREVIOUS COMMENTS, TO ME THAT'S SIGNIFICANT. JON: We'll catch up with the former vice chairman of the Federal Reserve a little later. WAITING TO BE RICH OF COURSE: RICHARD CALRIDA'S VIEW. WE ARE NOT GOING TO BE AT A 2% INFLATION READING BY THE END OF THE YEAR. THE MARKETS GUARANTEE THAT WE HAVE REACHED A POINT WHICH BANKS ARE FORCED TO RAISE. WE ARE GOING TO 252 BUT ESSENTIALLY NOTHING, A CUT IS BASED ON SYSTEMIC RISKS. THIS IS THE BLOOMBERG WATCH WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ.

JONATHAN: GOOD MORNING TO OUR WORLDWIDE AUDIENCE, THIS IS BLOOMBERG SURVEILLANCE WITH LISA. STOCK FUTURES WITHOUT CHANGE ON THE S&P 500. IT SOUNDS LIKE A SIMPLE DECISION, IT'S MUCH MORE COMPLICATED. LISA: WE JUST HEARD THAT IT'S NOT GOING TO HAPPEN 25 OR PAUSE. IT'S GOING TO MATTER IS WHERE YOU SEE THE RANGE OF THE TERMINAL. IF THEY INCREASE THAT, WHAT KIND OF MESSAGE WILL GET TO THE MARKET IF THEY'VE ALREADY BEEN IN turbulence? JONATHAN: LET'S GET THE PRESS CONFERENCE. THE TONE OF IT. I THINK A LOT OF PEOPLE RIGHT NOW, EVEN IF THEY ARE ON A WALK OR A BREAK, THINK IT WON'T CHANGE.

LISA: THAT WILL BE A CHANGE WITHIN HERSELF. We were dealing with inflation that was harsher than people thought. IF THEY RECOVER, THEY WILL HAVE TO EXPLAIN IT. JONATHAN: ALICIA LEVINE IS WITH US TODAY. POWELL HAS NO GOOD OPTIONS TODAY. I will be for price action and we will get your box. STOCK FUTURES WITHOUT CHANGE. WE TALK ABOUT THE TWO-YEAR JOURNEY SINCE THE LAST FED MEETING. LISA: I FEEL BAD ABOUT TWO YEARS. THE JOURNEY HAS BEEN LONG AND TUMULTUOUS. JONATHAN: YOU FEEL BAD ABOUT THE EIGHTH CURVE AT THE END OF THE YEAR. LISA: WE'RE ALL WAKE UP SINCE LAST WEEK AND EXAMINING THIS.

WE ARE DEALING WITH HEAD-TURNING REALITIES. THEN TRY TO GIVE A MARKET RESPONSE TO THAT, WHICH IS ALWAYS WRONG AT THE BEGINNING. WHAT IS THE POINT? WE'RE GOING BACK TO BED. JONATHAN: DIRECTOR OF EQUITY AND CAPITAL MARKETS AT BMR WEALTH MANAGEMENT. GREAT TO CATCH UP WITH YOU. ARE THERE NO GOOD OPTIONS TODAY? ALICIA: THERE ARE NO GOOD DECISIONS TODAY. WE MAKE 25 BECAUSE THE MARKET GIVES 25 IN THE PRICE. IN THE SENSE, IT IS THE EASIEST DECISION. I'M NOT SURE THEY SHOULD MAKE 25 BECAUSE WHAT HAPPENED IN THE LAST WEEKS WAS POSSIBLY THE START OF A CREDIT ISSUANCE THAT REQUESTED SMALL AND MEDIUM-SIZED BANKS TO BEGIN WITHDRAWING CREDIT PROVISIONS.

EVERYTHING IS IN THE MESSAGING. SOMETIMES MESSAGES CAN BE LOCATED. I LOOK AT THE -- COMPLICATED. I looked at the UK and asked for signs as to why we are going to do 25 today. CHRISTINE LAGARDE MANAGED TO SEND THEM VERY WELL THAT THEY KEEP THE TWO SEPARATE AND THEY CAN KEEP THEM SEPARATE. I THINK THE FED WILL DO IT TODAY. JONATHAN: THERE IS NO COMPENSATION BETWEEN PRICE INSTABILITY. WHAT WOULD IT LOOK LIKE IF PRESIDENT POWELL REPEATED THOSE SAME WORDS? ALICIA: IF YOU CONTINUE WITH THAT - WE'RE GOING TO KEEP THE TWO SEPARATE, IN YOUR MIND WE NEED TO KEEP THE THING SEPARATE, I DON'T THINK DOGS CHANGE, BUT - THE POINTS CHANGE, BUT IF YOU KEEP THE INCREASES OPEN.

THOSE TWO THINGS WILL BE SEPARATE. FALLING INFLATION HAS NOT BEEN LINEAR. OPEN THE DOVISHNESS THE MARKET MAY WANT TO SEE RISKS THAN ANOTHER PIECE. LAGARDE SHOWED THE WAY TO HAVE CAPTURED THIS HERE. I WOULD SUSPECT THAT HE IS ALSO GOING TO SEPARATE. DID SOMETHING HAPPEN IN THE REAL WORLD TWO WEEKS AGO WITH THE BANKS? THE ANSWER IS YES. IN THE REAL WORLD, THE CREDIT CONCRIPTION HAS PROBABLY ACCELERATED. LISA: LET'S TALK ABOUT GAME THEORY. WE'RE TRYING TO GET OUT WITH A THEY'RE POINTING VERSUS WHAT THEY'RE GOING TO DO, VERSUS WHAT THEY KNOW, VERSUS WHAT YOU BELIEVE. DO YOU THINK JAY POWELL HAS LESS CREDIBILITY IN NOT ONLY HAVING AUTHORITY OVER WHERE THEY ARE GOING TO DO, BUT HAVING VISIBILITY OF THE PATH OF A MARKET THAT HAS BEEN HIGHLY AND DETERMINED?

ALICIA: JAY POWELL'S CREDIBILITY IS INTACT. IT HAS BEEN UNIQUE - IT HAS BEEN UNIQUE ON THE ISSUE OF INFLATION. IT WAS TALKED SOMETHING BEFORE, IN THE END THE PIVOT WAS REAL. PRIVET IS STILL THERE - PRIVET IS STILL THERE SEEMS TO BE FEED IT HAS THE TOOLS TO UNDERSTAND FINANCIAL ISSUES AND WHAT IS HAPPENING WITH THE BANKS IS SOMETHING REAL AND TRUE. IF THEY WALK TODAY IT IS A SIGN. LISA: IF YOU SAY SOMETHING MATERIAL HAS HAPPENED IN THE ECONOMY, WHAT IS THE CHANGE IN INVESTMENT AS A RESULT? ALICIA: WE TALK ABOUT ECONOMY BUT WE HAVE TO USE OUR CLIENTS' MONEY.

OUR THINKING ON THIS, THE RECESSION SEEMED TO LEAVE AT THE END OF

2023

AND 22 AND 4, 2 WEEKS AGO WHEN ALL THE INFLATION READINGS CAME REALLY HOT. THE ECONOMY SEEMED TO BE ON FIRE. THIS EVENT REALLY CHANGES THAT. RECESSION COMES BACK IN

2023

, PROFITS LIKELY DOWN. WE ARE PRETTY LOW ANYWAY. WE ARE NEUTRALLY WAITING FOR THE ACTIONS. WE REALLY NEVER WENT TO THE COMPLETE DISINFLATION IS HERE, WE'RE GOING UP AGAIN, WE'RE GOING BACK. WE DON'T THINK IT WOULD BE SO EASY TO GET OUT OF IT. THIS IS GOING TO BE THE FASTEST HIKING CYCLE IN 40 YEARS. TODAY, 475 BASE POINTS IN 12 MONTHS.

HOW TO GET OUT OF THIS WITHOUT A RECESSION? SOMETHING BROKE. THAT TENDS TO BE ONE THING. IF THERE ARE PROBLEMS IN THE REGIONAL BANKS, THEY WITHDRAW THE LOANS. MORE THAN 50% OF THE LIFT TO THE ECONOMY COMES FROM THESE; LOANS TO THE ECONOMY COME FROM THESE BANKS. JONATHAN: THANKS TO LIQUIDITY PROBLEMS, CREDIT PROBLEMS, THE RECESSION ADVANCES. WE CAN REMEMBER, WEDNESDAY NIGHT UNTIL THURSDAY, WEDNESDAY, MARCH 8 ALICIA: NOW WE ARE ABOVE THAT.BECAUSE? ALICIA: REGULATORY AUTHORITIES HAVE PREVENTED FURTHER DETERIORATION OF THE BANKING SYSTEM. IF THERE WAS A DOUBT, YOU WOULD HAVE SEEN THE DETERIORATION. THE STOCK MARKET IS SAYING, THE FED AND THE FDIC, THE REGULATORY AUTHORITIES HAVE DONE THE RIGHT THING AND DONE IT WELL.

THE REMAINING LAGGERS WILL BE DEALING WITH. LISA: IS A SLOWER PACE OF RATE RAISES, LESS OF THEM, WHICH IS WHAT PEOPLE HAVE BEEN PREACHING, IS A STIMULANT FOR RISK ASSETS? ALICIA: IT WILL BE TAKEN AS SUCH. IT CAN NOT BE. BUT IT WILL BE TAKEN AS SUCH. IF YOU THINK ABOUT STARTING LAST JULY, IT WAS THE PR IVOT AND WE RETURNED TO THE PIVOT. THEY WILL KEEP WALKING. JONATHAN: WE MISSED THE POINT. ALICIA: WE WANT TRADE AFTER TRADE. THERE HAS BEEN A DIFFERENT TRADE IN THE PAST WEEKS. THE MARKET WANTS A TRADE AFTER THE TRADE BECAUSE IT IS HAPPENING VERY FAST.

THINK ABOUT HOW FAST THE DEPOSITS LEFT THE BANK. PEOPLE IN APPS. THE SYSTEM HAS MOVED FASTER, TRADE HAS MOVED FASTER, THE MARKET WANTS TO PRICE IT BEFORE REACHING THE RECESSION. JONATHAN: I THINK WE HAVE THREE DIFFERENT REGIMES IN THE FIRST QUARTER. WE COME THIS YEAR WAS ALL RATE CUTS AND RECESSIONS. NOW IT IS FINANCIAL INSTABILITY. ALICE: IT'S MARCH 22. THE MARKET FOLLOWS PRIVATE PRICES. WE KEEP GOING BACK TO THAT, WE MAINTAIN 3800, WE MAINTAIN THAT LEVEL AND IT REBOUNDS IN THE RANGE BETWEEN 3800 AND 4200. WE'RE GOING TO BE AN UNSATISFACTORY YEAR AGAIN BECAUSE THERE WILL BE A SIGN THAT THERE WILL BE A CREDIT SHRINK.

OUR PORTFOLIOS ARE PREPARED FOR THAT. WE NEVER BELIEVED THERE WAS NO LANDING. LISA: WHAT DO YOU TELL CUSTOMERS? ALICIA: LAST YEAR WE WERE UNDERWEIGHT IN BONDS. WE WERE NEUTRAL IN BONDS. WE ARE CONSERVATIVES. WE ARE TELLING CUSTOMERS IT'S GOING TO BE VOLATILE. WE BELIEVE IT ENDS THE YEAR HIGHER THAN IT ENDED 2022. IT'S JUST NOT FAST TO FILL WELL. WITH OUR HIGHEST RATINGS FOR BOMBS AND NEUTRAL FOR STOCKS, WE CAN SPIN BONDS AND NEUTRAL FOR STOCKS, WE CAN PIVOT ON THAT. IT'S WHAT THE MARKET DOES WITH IT, WHICH IS ALWAYS THE DIFFICULT PART. Hitting the table on bonuses is the right decision.

BETTER BE LUCKY. JONATHAN: ALICIA LEVINE. NOTHING ABOUT THE LAST TWO WEEKS HAS FELT GOOD. THE MARKET IS HIGHER ACCORDING TO WHERE WE CLOSE ON MARCH 8TH. THE EURODOLAR RECOVERS 108. IS PRESIDENT POWELL DOING THE SAME? LISA: THE FEDERAL RESERVE IS TRAPPED BETWEEN INFLATION AND A BANKING CRISIS. WE LEARN HOW JEROME POWELL AND HIS COLLEAGUES RESPONDED TODAY. ECONOMISTS EXPECT THE FED TO RAISE INTEREST RATES BY A QUARTER POINT. SOME SAY THEY SHOULD STOP TWO THAT ENSURE FINANCIAL STABILITY. THE DECISION IS KNOWN AT 2:00 p.m. NEW YORK TIME. MORTGAGE RATES HAVE FALLEN TO A LOW OF FIVE POINTS. A 30-YEAR MORTGAGE FALLS 30 BASE POINTS TO 6.4 PERCENT.

MEANWHILE, APPLICATIONS TO BUY A HOUSE RISE. INFLATION IN THE UK INCREASED. FOOD AND DRINK PRICES WERE AMONG THOSE TO BLAME FOR THE INCREASE AT THE FASTEST RATE IN 45 YEARS. THE BANK OF ENGLAND SHOULD RAISE INTEREST RATES TOMORROW. THE FIRST VISIT TO MOSCOW TO ALIGN WITH RUSSIA AGAINST THE US THE CHINESE PRESIDENT DIDN'T GIVE VLADIMIR PUTIN SOMETHING ELSE HE WANTED, A COMMITMENT FOR NATURAL GAS. AND IT MOVES TO ANGRY NORTH KOREA, USM SOUTH KOREA PLANNED TO HOLD THEIR LARGEST DRILLS IN DOOM, IT LOOKS LIKE THEY ARE EXPANDING TRAINING THIS WEEK. NORTH KOREA HAS RESPONDED TO THREATS TO TURN THE PACIFIC OCEAN INTO A FIRING RANGE.

GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, DRIVEN BY OVER 2,700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. WE DO NOT BELIEVE THAT THE SCENARIO OF NOT RAISING RATES IMPLIES THAT THE FED KNOWS SOMETHING THAT WE DO NOT KNOW. I THINK THINKING THAT IS PROBABLY WRONG. 25 OR PAUSE DOESN'T MEAN THAT MUCH ANYWAY, THAT'S WHAT IT SAYS. JONATHAN: THE FED IS PETRIFIED. I CAN SEE A PROMOTION ALL DAY. WE ARE LOOKING FOR A 25 BASE POINT WALK. THAT IS THE CONSENSUS OPINION. SOME PEOPLE LOOKING FOR A BREAK. OTHER PEOPLE SAY A CUT TO 450. LISA: THAT'S A CALL.

BASICALLY, HOW MANY OTHERS ARE dealing with the same type of liquidity mismatch since then, it doesn't matter? -- DOES IT MATTER? JONATHAN: THERE WAS SOME LANGUAGE JP MORGAN USED THIS WEEK. PASTOR THE POINT OF NO RETURN, HAVE WE DONE THAT NOW? -- PAST THE POINT OF NO RETURN. HAVE WE DONE THAT NOW? -- RETURN, HAVE WE DONE THAT NOW? WE KNOW WHAT THE CONSENSUS IS. THIS IS BASICALLY WHAT SHE SAID. IF YOU HAVE LIQUIDITY ISSUES, THEY MAKE Stricter LENDING AND CREDIT STANDARDS. BENNY LISA: THE SAME FEELING AS BOB MICHELE IN JP MORGAN. THEY ARE EVEN TIGHTENING CREDIT CONDITIONS AND INCREASING RISK AVERSION.

WITH HEADLINES LIKE THIS MORNING, MORTGAGE RATES FALL TO THEIR LOWEST LEVEL IN FIVE WEEKS. WHEN PEOPLE START PREPARING FOR RATE RAISES AND PRICE CUTS, HOW MUCH DOES IT GET EASY ON THE MARGINS AND AREAS THAT WERE MOST AFFECTED BY THE RATE RAISES? THESE ARE THE NARRATIVES OF GRIEF AND THE CROSSWINDS. EVERYONE HAS A DIFFERENT OPINION ABOUT EMPHASIS. JONATHAN: I THINK THIS WILL BE THE INTERESTING PART. I AM ANOTHER ASSOCIATION BETWEEN PRICES AND SUPPLY. LISA: A GREAT POINT, ESPECIALLY BECAUSE THERE RECENTLY THERE WAS A FEDERAL RESERVE SURVEY THAT SHOWED THAT THE NUMBER OF AUTO LOAN APPLICATIONS WERE DENIED INCREASED TO THE HIGHEST LEVELS GOING BACK TO 2016.

OVER 9%. EVEN IF RATES GO DOWN, PEOPLE ARE STILL GOING TO TAKE THEM BECAUSE WHAT BANK IS GOING TO WANT TO EXTEND THAT LONGWOOD HAS MORE LIMITED CAPITAL? -- EXPAND THAT CAPITAL WHEN IT HAS MORE LIMITATION. JONATHAN: Let's see how it plays out. THERE IS NO DRAMA IN THE STOCK MARKET. S&P FUTURES VIRTUALLY UNCHANGED NOW. ON THE NASDAQ, WE DOWN 2/10 OF 1%. THE NASDAQ IS ABSOLUTELY WORN OUT. IN THE BOND MARKET WE HAVE COVERED THIS EXTENSIVELY. THE TWO YEARS HAVE BEEN EVERYWHERE. THIS MORNING RAISES SEVEN BASE POINTS. IF WE CAN'T END FOREIGN CHANGE, THIS MORNING'S LESSON FROM EUROPE IN THE UK, ECB PRESIDENT CHRISTINE LAGARDE.

I CAN'T IMAGINE WHAT THE MARKET WOULD LIKE IF PRESIDENT POWELL ADOPTS THAT LANGUAGE AT THE LATEST PRESS CONFERENCE. THE EURODOLAR ONLY 108 - BESÓ 108. INFLATION IS DOUBLE DIGIT. 10.4% WOULD USE THIS POINT TO MARK THE DIFFERENCE BETWEEN WHAT THE UK AND EUROPE HAVE PASSED. THERE'S PROBABLY SOMETHING LIKE SIX MONTHS AGO. THE FEDERAL RESERVE AND ITS EFFORTS TO ATTACK INFLATION AND THE HISTORY OF INFLATION IN EUROPE IS DIFFERENT. LISA: THAT'S WHY PEOPLE ARE DISCUSSIONING WHAT CHRISTINE LAGARDE CAN DO. I SAY THAT MANY PEOPLE ARE WATCHING THE FINAL TANDEM. ONLY SIX MONTHS AGO INFLATION IN THE US WAS STIGHER THAN IN EUROPE.

THINK ABOUT WHAT HAS HAPPENED. JONATHAN: CREDIT WRITING, LET'S CALL IT WHAT IT IS, ESSENTIALLY FAILED DURING THE WEEKEND. CREDIT SUISSE, LET'S CALL IT WHAT IT IS, ESSENTIALLY FAILED DURING THE WEEKEND. WE WERE 50. THE BANK WAS FULL LATER. THE FACT THAT WE ARE SITTING HERE A WEEK LATER TO SAY IT WAS A GREAT DECISION WITH 50 BASE POINTS. LISA: DIDLISA: YESTERDAY YOU SEE THE PERFORMANCE PER YEAR IN GERMAN, THEY PERFORMED THE PRICE IN EUROPE. A LOT OF VOLATILITY IN THIS BIG DECISION. NOT THAT IT'S A CLEAR MESSAGE IN EUROPE EITHER. JONATHAN: WE'LL SPEND TIME WITH MICHAEL MCKEE. WHAT IS THE APPROACH FOR YOU?

THERE ARE A LOT OF DIFFERENT THINGS TO FOCUS ON. IT'S NOT JUST ABOUT THE TIME IF IT WAS NOTHING, IT'S ABOUT THE STATEMENT, PRESS CONFERENCE, PROJECTIONS. WHAT ARE YOU FOCUSING ON WHEN THIS COMES OUT? MICHAEL: WHAT ARE THEY GOING TO DO IF PAU SE REQUEST BASE POINTS. WHAT JAY POWELL HAS TO SAY WILL MATTER MORE. IT WILL BE IN COMBINATION WITH THE ECONOMIC PROJECTIONS SURVEY WHEN WE SEE WHAT IS INTENDED TO HAPPEN TO INTEREST RATES BY THE END OF THE YEAR. THEY HAVE TO INCORPORATE THE IDEA OF THE BANKING ISSUES THAT WE HAVE INTO THEIR THINKING.

DO WE REALLY KNOW WHAT THE BIG PROBLEMS ARE GOING TO BE? THERE IS THE THEORY THAT WE WILL SEE A CREDIT ADJUSTMENT. THIS IS NOT A BAD LOAN SITUATION, IF YOU ARE RUNNING THE FIRST NATIONAL BANK OF PHARAOH AND YOU THINK YOU ARE DOING A GOOD JOB, DO YOU HAVE TO REDUCE YOUR LOANS? DO YOU HAVE A BAD OR UNCOMPARENT LOAN PORTFOLIO? IT IS STILL UNCLEAR EXACTLY HOW THIS WILL TURN OUT. IT WILL BE INTERESTING TO SEE HOW WALL STREET REACTS TO THE DIFFERENT THREADS. IT'S NOT ONLY THAT WE DON'T KNOW WHERE THEY ARE GOING TO DO, BUT WE DON'T KNOW WHAT PEOPLE CARE ABOUT TODAY.

LISA: WHEN FACTS CHANGE FAST, THEY'RE POINTING IN PLACES LIKE PUBLICATIONS THROUGH CERTAIN REPORTERS THAT CAN GIVE YOU A SENSE OF WHERE THEY COULD GO IF THEY WERE GOING TO CHANGE WHAT THEY'RE GOING TO DO. DO YOU GIVE ANY CREDENCY TO THAT? MICHAEL: THAT SHOULD BE A FEDERAL RESERVE PRACTICE. THEY DID IT ONCE BEFORE ON THIS HIKING CYCLE, THE FIRST TIME IN MANY YEARS. THIS MORNING WE ARE LAUGHING AT THAT GOVERNOR FROM THE WALL STREET JOURNAL ABOUT WHAT HIS VIEWS ARE GOING TO BE, WHICH COULD MEAN THE FED DOESN'T THINK IT'S IMPORTANT TO LET WALL STREET KNOW SOMEONE OR THE FED DOESN'T HAVE ENOUGH, TO LET WALL STREET STILL YOU KNOW SOMETHING.

I DON'T THINK YOU'RE GOING TO DO THAT ON A REGULAR BASIS. JONATHAN: OR HE HAS A PHENOMENAL JOB OF COVERING THE FEDERAL RESERVE. I DID THAT I THINK HE HAS DONE A PHENOMENAL JOB COVERING THE FEDERAL RESERVE. THERE IS SOME SIGN OF A PUBLICATION ABOUT RATES IN THE QUIET PERIOD. I DON'T THINK THIS IS A GOOD DEVELOPMENT AT ALL. LISA: PEOPLE TAKE ADVANTAGE OF EVERYTHING YOU WRITE. MAYBE IT'S THE WHITE SMOKE COMING OUT OF THE CHIMNEY. LISA: IS THERE A SIGN THAT IS NOT A SIGN? THIS IS WHAT PEOPLE ARE TRYING TO TURN THEIR HEADS. JONATHAN: LIQUIDITY IS FINE.

LISA: IS THAT RIGHT? THANK YOU. JONATHAN: I LEARNED FROM THE BEST. IT'S MY BEING SOON AFTER THIS. -- IT COULD BE SOON AFTER THIS. LISA: JONATHAN FERRO TOWARDS HIS NEXT PROPERTY. WE SEE A FADE AFTER TWO CONSTRUCTIVE DAYS ON THE MARKET, TODAY'S BIGGEST POP SINCE WE SAW SILICON VALLEY BANK'S PROBLEMS EMERGING. PEOPLE ARE TRYING TO UNDERSTAND WHAT THE FED CAN DO, AND MORE THAN, WHAT THE MARKETS WILL REACT TO WHAT THE FED HAS TO DO. THEY ARE SEEING THE S&P HIGHER THAN IT WAS BEFORE THE SILICON VALLEY BANK COLLAPSE. YOU ARE WATCHING THE EURO GAIN AFTER SOME HARSH COMMENTS.

THE EY ARE FULLY AHEAD. THE TOURS we've seen time and time again really throw people in circles trying to understand where we are in terms of a disinflationary course or not. UBS HEAD OF US ECONOMICS JOINS NOW. CAN YOU GIVE US A FEEL OF HOW MUCH HAS CHANGED FOR YOU IN THE PAST TWO WEEKS? JONATHAN: GETTING THE MAGNITUDE RIGHT NOW IS GOING TO BE IMPOSSIBLE. JONATHAN: THIS IS ONE OF THOSE THINGS WE CAN SIGN THE EFFECT. IF YOU THOUGHT ABOUT PHARAOH'S FIRST NATIONAL BANK, THEY MAY BE DOUBLE CHECKING THEIR LIQUIDITY, CAPITAL LEVELS. YOU MAY WONDER WHAT BANK EXAMINERS ARE LOOKING FOR NEXT.

AT THE MARGIN, THIS IS LIKELY THAT Stricter CREDIT WILL BE APPLIED IN THE FUTURE, WHEN CREDIT WILL ALREADY BE HUGE IN THE US. WE WILL BE WATCHING THE SAME THING YOU ALL ARE WATCHING. IT IS A NEGATIVE ON OUR EXPECTATIONS FOR THE AMERICAN ECONOMY. LISA: I HAVE HEARD THAT PHARAOH'S BANK LIKE UNLIMITED STATE CREDIT. I'M CURIOUS FROM YOUR vantage point, THIS MORNING WE HEARD FROM A FORMER FED GOVERNOR THAT THERE IS NOT THE SAME DEGREE OF CREDIT RESTRICTION THAT PEOPLE DESCRIBED IN THE RECENT TURKEY IN THE MARKET. THERE IS STILL A BIG INFLATION PROBLEM. IN THE FIELD, WHAT DATA ARE YOU LOOKING FOR FOR YOUR COMPASS?

JONATHAN: WE ARE GETTING WEEKLY REAL-TIME DATA ON EVERYTHING, FROM LOANS, MORTGAGE OBLIGATIONS, INITIAL CLAIMS, WE ARE GETTING REGULAR PRICE SIGNALS FROM BIG DATA SOURCES, WHETHER IT'S AIRFARES, USED CARS, A LOT OF DATA IS STILL COMING IN EVERY DAY. IT WILL ALLOW US TO EVALUATE WHAT IS BEING DEVELOPED. PRETTY CLOSE TO REAL TIME. THAT WAS ONE OF THE THINGS WE REALLY LEARNED DURING THE PANDEMIC: THE AVAILABILITY OF MANY NEW DATA SOURCES. WE ARE WATCHING ALL OF THAT, PARTICULARLY THE PRICE DATA. IF WE WERE ALREADY STARTING TO BE BEARING DOWN ON THE US ECONOMIC OUTLOOK, CONSIDERING THERE WERE SOME TENTATIVE SIGNS THAT THE REBOUND DATA WE SAW IN JANUARY WAS NOT REALLY A BIG BOUNCE.

IF YOU PUT YOURSELF INTO A BANK OFFICER POSITION THESE DAYS, WE DON'T CONSIDER IT AS A GIANT CAPITAL HOLD FOR A SUDDEN STOP. THIS SEEMS MORE LIKELY LESS CREDIT WILL BE APPLIED THAN MORE AND LESS TAX CREDIT WILL BE APPLIED TO THE ECONOMY IS NOT GOOD FOR GROWTH. LISA: IF JAY POWELL ACKNOWLEDGES THIS TODAY AT THE PRESS CONFERENCE. YOU LISTENED TO US: CHAIRMAN POWELL WAS CLEAR: YOU PROJECTED THAT THE S&P PROJECTIONS WOULD BE HIGHER. I DON'T SEE ANY WAY THAT WOULD NOT HAPPEN. SHE THINKS IT'S GOING TO BE THE BIG SURPRISE AT TODAY'S PRESS CONFERENCE.

CAN YOU GIVE US A SENSE OF HOW MUCH YOU AGREE WITH THAT AND WHAT IT WOULD MEAN FOR YOUR ESTIMATES ABOUT THE FAST SETTING OF THE RECESSION? LISA: I THINK THEY WILL INCREASE RATES BY 25 BASE POINTS LIKE IN TODAY'S MEETING. JONATHAN: THE MEDIUM. I was going to revise up by 25 basis points. THAT MAY SOUND HAWKISH AND MAY BE A SURPRISE, BUT WE ALSO THINK THIS COMES WITH VERY DATA-DEPENDENT LANGUAGE. IN THE STATEMENT, SOMETHING ALONG THE LINE OF ANY FURTHER OR FURTHER INCREASE IN THE TARGET RANGE, WILL DEPEND ON THE IMPLICATIONS OF THE ECONOMIC DATA. I THINK A CHAIRMAN POWELL FRAMES THE S&P, HE HAS DONE IN THE PAST.

WE HOPE YOU RECOGNIZE THAT BASIC CASE FOR THE COMMITTEE. THEY NEED TO FIGHT INFLATION. WE HOPE YOU WILL ADMIT THAT THIS DEPENDS ON HOW EVENTS DEVELOP GOING FORWARD. Returning to the tax credit, we believe that you will present strong arguments that thebanking system is resilient and well capitalized. WHILE YOU ARE GOING TO DELIVER THIS FOLLOW-UP MESSAGE, TAKING INTO ACCOUNT THE CREDIT CONDITIONS, YOU WILL UNEQUIVOCALLY SOUND A TONE OF CONFIDENCE ABOUT THE BANKS. LISA: HER TANDEM CONVERSATION WE WILL HEAR FROM SECRETARY JANET YELLEN WHILE WITNESSING. THEY HAVE TO FEEL THE SAME PROGRAM AND WILL PROBABLY TALK ABOUT THE SAME TOPIC.

WE ARE IN A MARKET THAT HAS REMEMBERED ITS RATES RAISES AND REDUCTIONS. IT'S BEEN A PING-PONG GAME FOR A WHILE BETWEEN THAT. PRICES ARE NOW IN CUT BEFORE THE END OF THIS YEAR. DO YOU THINK IT'S PREMATURE BASED ON THE RHETORIC AND THE ECONOMIC DATES YOU'RE SEEING COMING OUT? JONATHAN: THE ECONOMIC DATA WOULD NOT IMPLY THAT THE FED SHOULD COME LATER THIS YEAR. OUR FORECAST FOR CORE PCE INFLATION FOR A WEEK NOW IS THAT IT WILL STILL HANG AT 4.7%. WE FORECAST THE FED WILL CUT RATES LATER THIS YEAR. WE EXPECT A CERTAIN AMOUNT OF DISINFLATION TO BE ESTABLISHED AS WE REACH THE MIDDLE OF THE YEAR WE HAVE LOW CLAIMS.

HIGH INFLATION. OUR EXPECTATION, WHAT HAS ALREADY BEEN TRAINED WITH RATE RAISES, WHAT WE ARE SEEING WITH CREDIT CONDITIONS, IS GOING TO LEAD TO A SIGNIFICANT SLOWDOWN THIS YEAR. LISA: HOW MANY TIMES THIS YEAR HAVE YOU CHANGED YOUR FORECAST? JONATHAN: MEDICAL BATCH SINCE LAST NOVEMBER. -- NOT MUCH SINCE NOVEMBER. ACCEPT THE SURPRISE OF THE JANUARY EMPLOYEE REPORT. IN THE NEXT DATES OF JANUARY AND FEBRUARY THE CONTOUR OF THE EXPECTED GDP SLOWDOWN APPEARED IN THE SECOND HALF OF THE YEAR. IT HAS BEEN VIRTUALLY THE SAME SINCE WE CARRIED OUT THE REVISION IN THE PROJECTIONS IN WHICH WE WENT FROM EXPECTING A SOFT LANDING TO A HARD LANDING.

LISA: HOW MANY TIMES HAVE YOU RAISED YOUR HANDS AT NARRATIVE CHANGES ON WALL STREET? JONATHAN: YOU GO FROM MOMENTS WHEN IT SEEMS LIKE YOU'RE DOING WELL TO LOADS OF CRITICISM THAT'S clarified about you. THE DATA WILL NOT GO IN A LINEAR DIRECTION. SEANN 517 FALLING OFF MY CHAIR - SEE 517 FALLING OFF MY CHAIR. I HAVE BEEN DOING THIS FOR A LONG TIME. THERE ARE SURPRISES ON THE WAY. I THINK THAT IF WE THINK ABOUT THE STARTING POINTS OF THE AMERICAN ECONOMY WITH A LEVEL OF ACTIVITIES, THEY WILL INCREASE. WE HAVE CARRIED OUT A RAPID MONETARY POLICY - RAPID CYCLE OF MONETARY POLICY.

WE ARE REACHING THE POINT WHERE THERE ARE MORE AND MORE SIGNS THAT WE HAVE JUST SIGNED UP WITH THE ACTIVITY. THE ONGOING IMPACT OF MONETARY POLICY SUMMARY. I THINK EVERYTHING POINTS TO A WEAKER SECOND HALF. LISA: THANK YOU SO MUCH FOR BEING WITH US. JOIN US BEFORE THIS MEETING OF THE FEDERAL RESERVE DECISION PRESS CONFERENCE ECONOMIC PROJECTION STATEMENT. MICHAEL MCKEE BACK WITH US. I'M WONDERING, AS WE DISCOVER ALL THE POTENTIAL FEATURES OF THE STATEMENTS LATER, WHAT ECONOMIC DATA THAT APPEARS MIGHT MATTER, RELATED IN A WAY THAT THE DATA WE'VE GAINED OVER THE PAST TWO WEEKS HASN'T?

NOTHING IN THE SHORT TERM. WE DO NOT HAVE THE INFLATION FIGURES UNTIL THE END OF THE MONTH ALI. THAT SHOULD BE THE NEXT TIME FOR ECONOMIC DATA TO SEE WHERE THE FED'S INFLATION MEASUREMENT IS. SORRY FOR HAVING TO WORK ON GOOD FRIDAY, GUYS. BEYOND THAT, IT WILL BE A QUESTION OF WAIT AND SEE. ONE OF THE INTERESTING THINGS THAT EVERYONE IS GOING TO LOOK AT AND NO ONE LOOKS AT, DO YOU REMEMBER YESTERDAY WE DID THE PHILADELPHIA FED MANUFACTURING SURVEY? WE HAVE ALL OF THOSE, THEY ALMOST NEVER REPORTED IN THE SENIOR OFFICIAL LOAN SURVEY. IT IS NOT AN IMPORTANT INDICATOR.

NOW IT'S COMING OUT QUARTER. WE WILL HAVE IT AT THE END OF APRIL. THAT WILL GIVE US AN IDEA OF WHERE BANKS ARE ADJUSTING CREDIT STANDARDS THROUGH ALL OF THIS. I THINK WE WILL HAVE TO WAIT A FEW WEEKS. THE SURVEY IS NOT BEING CONDUCTED AT THIS TIME. IF THERE IS A BIG TIGHT, THAT COULD MAKE A DIFFERENCE FOR THE FED IN THE FUTURE. IF WE DON'T SEE THAT, THEY WILL LOOK THE SAME WAY THEY WOULD PREFER: THEY WERE BEFORE THE WHOLE MATTER WAS BAKED BEFORE IT STARTED. LISA: HOW MUCH ARE YOU EXPECTING TO HEAR DECENT FROM THE FED TODAY?

MICHAEL: THERE IS AN ISSUE OF WHETHER THE FED THINGS ENOUGH WITH A PAUSE OR NOT. I THINK THEY WANT TO SHOW THAT WE ARE IN THIS TOGETHER AND WORK WITH OUR POINTS OF VIEW. THAT RAISES QUESTIONS ABOUT WHERE YOUR PEOPLE SEE SOMETHING WE DON'T. WHAT IS HAPPENING WITH THE REPRESENTATIONS? DIVISIONS OF THE FED. IT'S GOING TO BE A QUESTION THAT I HAVE BANK SECURITY, FINANCIAL STABILITY. I DON'T DO ANYTHING THEY WANTED DIVISIONS ABOUT THAT. THANK YOU VERY MUCH FOR THE DECISION OF THE FEDERAL RESERVE AT 2:30. WE ARE SEEING SOME STABILITY. WE HAVE BEEN COVERING THE BANK OF THE FIRST REPUBLIC FOR quite some time and the ups and downs.

WE ARE LOOKING AT A MORE DOWNWARD PATH, $14 AND $.90 DOWN MORE THAN 5%. THIS RAISES QUESTIONS: WHAT IS NEEDED TO SUPPORT CONFIDENCE IN THE BANK WHICH IS EXPLOILED TO BE HIGHEST TO EXPLORE STRATEGIC OPTIONS AND IS SEEKING SUPPORT FROM THE US GOVERNMENT? WE WILL HEAR FROM JANET YELLEN AT 2 P.M. ABOUT ACTIONS THE UNITED STATES CAN TAKE, WE CAN HEAR SOME SENATORS IN TERMS OF OPPOSITION TO TAKING MORE ACTIONS TO SUPPORT SOME OF THESE FINANCIAL INSTITUTES. COMING SOON, PRESIDENT OF THE WORLD BANK. THIS IS BLOOMBERG. LISA: A RECIPE I THE FIRST BANK OF THE REPUBLIC CAN TRUST AMERICAN BANKING TO SUPPORT THE LENDER.

WALL STREET LEADERS AND AMERICAN OFFICIALS HAVE EXAMINED A VARIETY OF MEASURES TO MAKE THE EARLY REPUBLIC MORE ATTRACTIVE TO A BUYER. THE BANK HAS LOST 89% OF ITS MARKET VALUE THIS YEAR. IT'S DECISION DAY FOR THE FEDERALRESERVE. A QUARTER POINT OR PAUSE INTEREST RATE POLICY. THAT DECISION CAN BE RELEASED AT 2 P.M. IN WASHINGTON. THE UK ANTITRUST SURVEILLANCE BODY WILL CONDUCT AN IN-DEPTH REVIEW. 61 BILLION VMWARE ACQUISITION IN THE CLOUD. REGULATORS SAY THE DEAL WOULD LIKELY LEAD TO A SUBSTANTIAL DECREASE IN COMPETITION. GAMESTOP SHARES ARE STORING IN THE GREEN MARKET. A SURPRISE COURT: FOURTH QUARTER EARNINGS, THE FIRST IN TWO YEARS.

GAMESTOP HAS FIGHTED FOR PROFITABILITY. A BRIGHT PLACE FOR THE COMPANY HAS BEEN THE SALES OF PHYSICAL ELECTIBLES. -- COLLECTIBLES. LISA: -- SHE WAS VOTED MOST VALUABLE PLAYER. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, DRIVEN BY OVER 2,700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I AM LISA MATEO. THIS IS BLOOMBERG. IT IS TOO EARLY TO EXPECT THE FED TO TAKE THE TOWEL, SAY, ON ITS INFLATION, FINDING A COMPLETE PAUSE. IT'S NOT INTIMATE: NOT ONLY CAN IT BE AN VENTILATION POINT FOR THE MEDIA'S TERMS, BUT IT COULD ALSO SEND A SIGNAL THAT THEY KNOW SOMETHING WORSE THAT THE MARKETS NEED TO LEARN.

LISA: ON THE PSYCHOLOGY OF THE FEDERAL RESERVE AND SIGNALING. THIS REALLY HAS BEEN ONE OF THE KEY DISCUSSIONS, NOT JUST WHAT WILL THE RATE DECISION BE, WHAT WILL THE PROJECTIONS AND THE SIGNALS BE? THE NEXT GUEST IS SOMEONE WITH TREMENDOUS EXPERIENCE IN THE TREASURER'S DEPARTMENT, THE WORLD BANK AND IN THE BANKING INDUSTRY. JOIN US HERE IN OUR STUDIO. MANY PEOPLE WHO DOWN PARALLELS WITH 2008. ARE THERE PARALLELS WITH THAT MOMENT AND THE MOMENT WE ARE IN NOW? I THINK THERE ARE PARALLELS AND DIFFERENCES. ARE WAS A MIX AND MATCH OF MATURITY IN SOME OF THE --. DAVID: SOME BIG DIFFERENCES: THIS TIME THE DISCOUNT WINDOW IS AVAILABLE TO BIG INSTITUTIONS.

THAT WAS NOT LIKE THAT THEN. YOU'RE SEEING IT REALLY BEING REALIZED. ANOTHER BIG DIFFERENCE IS THAT THE FED ITSELF IS BUYING HUGE AMOUNTS OF DURATION AND SO ARE THE CENTRAL BANKS. THE BANK OF JAPAN ARE HOLDERS OF GIANT AMOUNTS OF DURATION, WHICH WAS NOT THE CASE IN 2008. CENTRAL BANKS ONLY OWE CENTRAL BILLS. TODAY, I THINK YOUR BIGGEST PROBLEM IS WHERE WILL YOUR GROWTH COME FROM IN THE FUTURE? LISA: YOU MAY WANT TO BELIEVE THAT IN THE REST OF THE WORLD, WHICH IS IMPORTANT. DO I WANT TO TALK ABOUT THE SIMILARITIES AND THE LIQUIDITY MISCELLANEOUS? Liquidity mismatch is neither a credit crisis nor a credit crunch.

In 2008, the liquidity mismatch caused a credit crisis. How close is that kind of direct referral to credit conditions? DAVID: OUR INTEREST RATES DROPPED, AS WERE THE CASE IN 05 AND 06. THAT CAUSES ASSET PRICES TO GO UP. THERE IS A TRAINING AFTER THAT. I THINK THAT'S WHAT WE ARE NOW. THAT IS THE CHALLENGE FACING THE MARKET. HOW DO YOU DISTRIBUTE YOUR LOSSES? I HOPE THEY DO NOT REACH THE POOR, THE DEVELOPING COUNTRIES AND THE AVERAGE TAXPAYERS. IF YOU CREATED THE ENTIRE ASSET PRICE BOOST, CAN YOU SPREAD THE LOSSES BACK TO THE SAME MARKETS? LISA: CAN YOU STATE ON THE DISPROPORTION OF BURDEN SEEN IN SOME DEVELOPING NATIONS WHICH MAY AFFECT THE WORLD'S GROWTH PROFILE?

DAVID: IN THE PAST 10 YEARS, THIS LARGE CONCENTRATION OF WEALTH IN THE ADVANCED ECONOMY WAS FILLED BY FISCAL DEFICIT ALSO THE SAME CENTRAL BANKS BUY DURATION THAT SUPPORTS LONG-TERM ASSET PRICES GO UP OR THERE IS A CONSTANT BUYER OF THOSE ASSETS. THAT DOESN'T LEAVE ENOUGH CAPITAL IN OTHER PARTS OF THE WORLD. THERE IS NO GOOD ACCESS TO GLOBAL CAPITAL MARKETS. Looking ahead, the challenge is that much of the world's capital will be used by the advanced economy to continue rolling over debt. A GREAT CHALLENGE FOR BILLION PEOPLE AROUND THE WORLD. THEY HAVE THIS GREAT POPULATION GROWTH IN MANY COUNTRIES.

THE CAPITOL GOES TO COUNTRIES THAT HAVE DECLINING POPULATIONS. LISA: HOW MUCH DOES THAT REDUCE YOUR OVERALL SHINE PROJECTION AND HOW MUCH HAS IT BEEN REDUCED IN THE PAST MONTHS? WE HAVE LOWER IT A YEAR AND A HALF AGO, RECOGNIZING THAT INFLATION WAS A CHALLENGE. CENTRAL BANKS WILL RISE. THE LATEST, WHAT WE HAVE SEEN IS AN ADVANCED GROWTH IN THE ECONOMY, EXPECTATIONS HAVE RAISED LATE LAST YEAR. THAT'S THE UNITED STATES AND CHINA IN PARTICULAR WHEN CHINA LIFT THE BLOCKADE. AS WE LOOK AT IT NOW, GROWTH IS SLOW BUT POSITIVE IN AN ADVANCED ECONOMY. IN DEVELOPED COUNTRIES NOT MUCH IS HAPPENING.

THE IMPORTANCE OF ENABLING PRIVATE CAPITAL. WHAT ARE THE TOOLS AND TECHNIQUES OF WORLD BANKS IN THE MIDDLE OF A TRY TO MAKE COUNTRIES MORE ATTRACTIVE FOR CAPITAL INVESTMENTS. LISA: We received the Fed's decision later today. HOW IS THAT CONNECTED TO THE REMOVAL OF CAPITAL LATELY IN THE DEVELOPING WORLD? WHAT KIND OF MAGNIFICENT EFFECT COULD THAT HAVE? DAVID: THERE WILL BE SENDING SIGNALS OF WHAT THE PROSPECT IS. I THINK IT IS IMPORTANT FOR THE US AND FOR THE ADVANCED ECONOMY TO THINK ABOUT HOW TO ENCOURAGE GREATER SUPPLY. DOES THAT LOWER THE INFLATION RATE SO THAT CENTRAL BANKS CAN PARTICIPATE OR BE MORE RECOGNIZED?

THEY ARE AFFECTING THE LOANS THAT GO TO SMALL BUSINESSES. THERE ARE WAYS WITH REGULATORY POLICY OR WITH THE DURATION OF PURCHASES MADE BY CENTRAL BANKS. ONE OF THE CENTRAL BANKS BY DURATION, WHICH ENDS UP REDUCING GROWTH ON AVERAGE; PURCHASE DURATION, WHICH ENDS SUB REDUCING GROWTH ON AVERAGE. THEY END UP BUYING HUGE BOMBS, YOUR BONDD S, YOU'RE NOT GROWING FROM THAT. LISA: ALL THINGS EQUAL, MANY CENTRAL BANKS ARE REMEMBERING THE SAME HANDBOOK AND YOU ARE SEEING THE BALANCE SHEET WIDENING IN THE US. HOW SLOW COULD GLOBAL GROWTH BE? DAVID: IT MAY BE A RECESSION. YOU COULD HAVE A GLOBAL RECESSION.

WE FIND THAT WHEN THE GROWTH RATE IS NOT EQUIVALENT TO THE GROWTH RATE OF THE POPULATION. THERE ARE PEOPLE WHO GO BACK ON AVERAGE. THAT DEPENDS A LOT ON THE ADVANCED: THE US IS BY FAR THE LARGEST ECONOMY, SO ITS GROWTH RATE MATTERS. PEOPLE ARE WATCHING WHAT HAPPENS IN THE LOAN OFFICERS SURVEY, THERE WAS ONLY A REFERENCE TO THAT. THAT IS IMPORTANT. OUR BANKS ARE LENDING BECAUSE THEY SEE THESE DIFFICULTIES. . LISA: IN THE EQUAL EVERYONE QAMOR THE POSSIBILITIES OF A GLOBAL RECESSION TODAY MORE GRATEFUL. DAVID: THERE WAS A RECOGNIZATION OF BIG INDIVIDUAL PROBLEMS THAT REGULATORS STRONGLY ADDRESS.

THE BIGGEST PROBLEM, INSTEAD OF LOOKING AT THE SHORT-TERM IMPACT, I THINK WE HAVE TO TAKE INTO ACCOUNT THE IDEA OF WHAT'S GOING TO HAPPEN OVER THE NEXT THREE YEARS TO THE GROWTH RATE OF THE WORLD. HOW TO GET OUT OF THIS TRAP WITH HIGHER INTEREST RATES? I THINK THE SOLUTION HAS TO BE MORE PERFORMANCE. HOW CAN MORE SERVICES AND GOODS BE BROUGHT TO GLOBAL MARKETS TO STOP THE INFLATION TRIP? LISA: WHAT DO YOU HOPE JAY POWELL DO TODAY? DAVID: HE'S THE POLITICIAN. I AM SURE IT WILL SEND VERY STRONG SIGNALS. WHY LISA: LISA: ARE YOU IN NEW YORK?

THERE IS A CONFERENCE TODAY. CLEAN WATER FOR PEOPLE, HELP CHILDREN REACH THEIR FULL HEIGHT AND AGRICULTURE CAN PRODUCE. I AM ALSO MAKING OTHER OFFERS IN NEW YORK. LISA: THE PRESIDENT OF THE WORLD BANK. REALLY INTERESTING IDEA REGARDING THE HOLDING LENGTH OF SOME CENTRAL BANKS AND HOW THAT EFFECTIVELY REDUCES GROWTH IN THE REST OF THE WORLD BY RESERVING SOME ASSETS THAT WOULD GO ELSEWHERE. COMING UP AT 1:30, BLOOMBERG WATCH SPECIAL, FED DECIDES, JONATHAN AND I WILL BE BACK HERE ANALYZING ALL THE SMOKE SIGNALS WHILE LISTENING TO JEROME POWELL. WE HAVE SOME AMAZING COMMENTS, INCLUDING RICH CLARIDA AMONG MANY OTHERS.

THE MARKETS ARE SPINNING TRYING TO UNDERSTAND WHAT EXACTLY TO LOOK FOR. IT STILL WANTS TO GET THE MARKET'S RESPONSE TO ITS RETURN.