much the fed can do. now he has taken a more neutral position. if we were to see more federal spending next year, to the extent that increases demand, you have heard some of fed officials -- you have heard fed officials saying we do not need that now. we do not need to increase demand now because supply chains are stretched. the biden administration and treasury secretary have said this will not add to the debt. she has shed -- said she does not think it would have inflationary impact. host: there was a meeting in rome. 15% global corporate tax was agreed upon by all these countries. is that feasible? what do corporations think about this? guest: there are some companies that say the more there is a loving -- level playing field, the better. there has been a race to the bottom over the past 20 years, but the devil is in the details. it is still uncertain how this is going to shake out domestically, how much of it has to go through congress, so there has been a lot of anticipation and positive hopes this y

it's a big unknown now and we have a more hawkish fed, but you have to listen to what the fed is telling you, what powell is telling you, that while we don't know about the new covid strain, we do know we have higher than expected gdp and much higher than expected inflation and that they should be tapering sooner rather than expected and i've been talking about that for months now so now the next two weeks we get a bunch of data. we get new details on the covid strain and we also get inflation data, ppi and cpi, so if the data strain news is positive it's a big f and it's a big fingers are crossed and you get hotter, cpi and ppi inflation data you should be tapering and you step back ask you have to wait for more details and i'm waiting for more details i'm waiting for new detail, but if you completely wait you'll miss some great long-term opportunities. we have medicines out there that exist that work and more are coming we have a very high vaccination rate in the u.s., 70% so i don't think you'll see closures. so that's why i do want to look for opportunities and i do want to look for

the fed do? they will say one hike in q3, one in q4, and they will repeat the move the year after, and it sounds very smooth and orderly. can you inform our audience -- you just agreed with that to some extent. can you inform our audience how? william: the market expects the peak federal funds rate to be around 1.75%. that is the lowest peak ever, going back to the 1950's. this idea that somehow the peak is going to be extremely low in an environment where inflation is extremely high just seems completely inconsistent to me. lisa: a lot of people will argue one of the reasons why is because of all of the debt that has been issued, because of the high valuations in stocks, that pensions rely on retirees, so they will argue the fed could torpedo it. william: of course, the fed does not want to cause a premature recession, but policy has to tighten financial conditions. tighter financial conditions is the mechanism that slows down the economy and prevents the economy from continuing to overheat. obv

the fed is clever. they can achieve this by talking more hawkish lee, letting the long end selloff, -- hawkishly, letting the long end selloff do the work. looking for the end of taper will be the beginning of lift off and they may even pull forward that first hiking into the second quarter of 2022. i think that's premature. taylor: is that the right way to think about it, pulling forward and connecting the two, the taper and rate hike and if you are doing a faster taper you are pulling forward a rate hike? margaret: i think that's how the market -- peter: i think that's how the market is thinking about it but it is incorrect. they will try to separate those decisions as much as possible and make us aware that hiking has a much higher standard than changing the pace of bond purchases. the market got a little over its skis pricing in so many rate hikes. the market will realize this fed will be cautious and we got ahead of ourselves. taylor: do you agree? margaret: yes, i do. when you look at tapering, ev

in the fed is actually nailing it? robert: i think the fed has shown very good balance, and that implies that they have really good odds of airing this. you see the chair focused on the here and now, and getting the jobs back, on getting a smooth taper done. if this move taper is accomplished, they have run way. they need to raise rates, they can raise rates. this is a chair with the experience of raising rates too fast and crushing the markets, so if they need to hike rates, they have been cautious about how they need to do that. they have been very and just to raise rates. i think that is good for them. lisa: it is fascinating that your view is controversial at a time when mohamed el-erian assaying the fed is well behind the curve, when bill dudley agrees, saying the fed will have to raise rates to upward of 3% or 4% in order to get things under control. while you totally disagree and think the fed will struggle to get to their 2.5% target, let alone anything above that? robert: i think the thing that people are over

-- janet yellen did that during her time at the fed, and then the fed reversed course and lowered them back, all the four covid, with no substantial damage to the economy -- all before covid with no substantial damage to the economy. not getting behind the curve. another way to say it is, when you are steering a very big ship that turns only sluggishly, when you see an obstacle, you have to start turning long before you get to that obstacle. that is what monetary policy is, it's a very long killer, because of the lags on the economy. you have to start making adjustments promptly. i think the fed needs to recognize that. i am guardedly optimistic looking at the trends in their rhetoric that they may get on the program and be responsive. the data point do keep coming in in ways that are concerning. i think now, with all of this overhang of political certainty passed us, -- past us, if congress moves quickly, i hope they will, to confirm the powell-brainard team, i think it will put us in a position to carry on as best as possible monetary policies. david: to what extent with the fed be a

purchases that the fed has been making to juice the economy. we've got hot inflation. he says it's time to retire the word transitory to describe those higher prices. we have reaction, analysis and what this all means for you and your investments, this hour, what's next for the market, bonds, oil, we'll drill down on biotechs, emerging markets and melissa, we will tackle the financials >> a lot of ground to cover in the next hour. major indices suggest the focus changed to fighting inflation rather than disruptions from new covid variants a bounceback within the last half hour, the dow down by 486 points, by 1.4%. s&p 500 4595 is the level, down by 59 points or about 1.25% and the nasdaq which was up -- down excuse me by more than 2% at this hour down by 1.25%. let's get straight to bob pisani with more on what seems like a turnaround at this point, bob. >> a little bit, but it doesn't take away the kind of shock investors really taken off guard by powell today. he's thrown a bit of a monkey wrench into the investor playbook already a monkey wr

for the fed. i never questioned, and i, to this day, i will never question the intention. what i question, rather, is whether their tools are able to help the american people in the way that they believe. i came out of qe1 100 percent believing that it was necessary, because we had actually helped to stabilize the economy, but wondering if there wasn't a fundamental problem with the approach, in that the tools of the fed worked through the wall street banks, and in so doing, were disproportionately benefiting the wrong people-- the people who didn't really need the help. >> jacoby: so basically, what you're saying is that you were seeing, in practice, something very different than what was supposed to happen, theoretically. >> yeah, i saw that wall street is a private sector actor, and wall street has its own interests,nd wall street can do what wall street wants. and the fed was, on some level, at the mercy of, of wall street. >> jacoby: huszar and others inside the fed had been counting on congr

the fed will never allow that to happen. all of my colleagues and i are paying close attention to the data. if we thought long-term inflation expectations were becoming unanchored, we would make adjustments to make sure that did not happen. matt: that was neel kashkari speaking with kathleen hays. president biden's next pick for the chair is said to be coming down imminently. to break that down for us is washington bureau chief peggy collins. how soon do we expect this decision to be made? peggy: a lot of people are thinking it will be made before thanksgiving there are couple of question marks there. when they say a decision will be announced, will it be just fed chair, as powell's term is coming up, or will they announce a slate of candidates? the biden administration has the opportunity to change a fed considerably in the next few months. there are up to four open seats at their prerogative. the question is if they will announce 1, 2, or a full slate. matt: we know that at least senator warren says that jerome powell is a

fed--- euro-dollar weaker. the middle of december, one month away, the lineup of central-bank decisions, the 15th and 16th will be phenomenal. matt: it's going to be amazing to watch -- at least it will be fascinating to watch, i don't know if "amazing" is the right word for watching an ecb meeting. you pointed this out, as we see coronavirus infection start to explode in the core of europe, in the biggest economy in europe, the engine of europe's economy in germany, is christine lagarde going to have to rethink tapering of that bond buying program? jonathan: you don't enjoy those ecb presses? does that not do it for you? matt: no. i've gone to way too many. ever since the woman poured pink powder all over mario draghi -- jonathan: i remember. matt: they've increased security to the point where it is not fun. jonathan: i think it was confetti. 1.1280 nine on euro-dollar. euro weakness. good morning. romaine: whatever the ecb and other central banks decide, investors have decided l to airlines setting up for a f

if the fed being damaged here? is the fed's credibility being put under pressure? austan: i don't think so because even with this, everything is behind-the-scenes. you didn't get to see in public when any of the discussions were or how they were thinking about it, and the fact that the number one and number two nominees are people that the market is very familiar with and they're already there, to me this doesn't seem like it undermines the fed's credibility or does damage. i think it slowly seeps out the capacities of the fed the longer you go without nominees, and we had this environment under obama, then under trump, and we continue to have it now, where they are understaffed. it raises the relative importance of the regional bank governors who are not nominated through the normal political process. they are chosen by the regional banks boards themselves. they have a lot more power on the fomc when there aren't governors that are nominated from washington, so i will watch that dynamic. alix: that is such a good point. before we let you go, i went to get your tak

he also talks about the federal reserve, the fed and the fed appointments the administration needs to make in the coming weeks. the choices need to remark that the major challenge for the central bank is containing inflation. larry summers with a series of tweets this morning just moments ago. tom: former president of harvard college and secretary of treasury as well. this is an exceptionally strong monday, and jon, lisa and i say thank you to our team. jeffrey lacher with us in moments. quietly sandwiched in is elaine kamarck, director at brookings, on why presidents fail and how they could succeed again. it was an acclaimed book inside the beltway a number of years ago. all agree this president is failing. how does he succeed again? elaine: thank you for having me. he succeeds again by learning lessons early on in his presidency. i will tell you, he's had one piece of good luck, which is it took bill clinton until his midterm election, two full years , to see what was going wrong and do a reset of his presidency, and he won then in 1996. so clinton had his come to jesus moment, if y

it should begin any moment he will be joined by current fed chair powell and fed governor brainard who are to speak. let's talk with david bahnsen with the bahnsen group we are here on a day that is portion of the market you thought was overlooked anyhow, right? >> yes those sectors that are really benefitting today happen to be areas we're over weighed in. i don't think it is that much related to the fed announcement because those things had come off last week. there's a bit of a recovery rally at play. j overall i think the theme is alive and well for anyone worried about increasing hawkishness from the fed, i don't know where it would be coming from, but the worry is not there today, kelly >> ee lab -- elaborate on that for a minute >> there are things we have done very well, wu there are certain things sometimes you get wrong the thing we have never gotten wrong is this belief that the fed is going to continue be dovish because they have to be, and there are periods of time where markets get worried. well, maybe it is different, there's a bit of media attention and other understand

the fed has already been politicized. trump also tried to politicize the fed. one of the reasons i am pleased that jay is getting renominated is he has been very good at getting the congress and also the president to leave them alone to the extent that he could. he has been very successful in doing so so i think it is critical that these other issues not become part of the fed's mandate. >> bill, what would you add to that what are you going to be watching for now there are still a number of vacancies. >> absolutely. in fact i would say rick isn't worried enough i think my main worry is -- [ laughter ] -- what's powell going to do about the new appointments because i hear echos of jimmy carter he wants to have a deverse board, we could be facing disastrous appointments like miller whose notion of fighting inflation was disastrous a disastrous monetary policy which i hope we can avoid. >> you have stability there at the top the avoid -- i remember g. william miller. he was immense will he forgettable, truly i mean -- but you have got two veteran policy makers at

but in 2018 when the fed did try to normalize policy in 2018, when the fed did attempt to shrink its balance sheet. boy markets did not like it one bit and it forced within a year's time, it force what we now know as the power pivot in january of 2019 and markets have been going straight up ever since then. but outside of the cove, it flash recession for 2 months, recession and ko, it's actually proven to be the best thing that's ever happened to the stock market given the violent rally that we've seen ever since then. is our investors addicted to fed liquidity? absolutely, it will not be pretty if they truly try to normalize monetary policy. former veterans that are daniel dean martino booth october emergency of open was l. c. thank you both for all of that. thank you for oil prices, we're up on monday, but still down overall from the past few weeks, there is a lot of pressure on the oil market right now. things to rising cobra, 1000 cases in europe, and then this potential release of japanese in indian oil reserves. in fact, prices of the brand and west us west texas intermediate w

extrapolating to determine a fed funds rate is just premature. jonathan: how lonely will the fed be early next year? will others join in with this pivot? subadra: first of all, we don't know if they are going to pivot because i would say the key take away from the fomc minutes is that they do think inflation is going to be transient and is going to come down by the second or third quarter of next year. they still believe they are not really going to pivot, so it really depends on when we get one more cpi print before the december meeting. you are going to get information on employment, which we already have a pretty strong trajectory for. we are also going to get a third data point before the december meeting. will other global central banks follow the u.s.? perhaps not. i think global monetary policy is probably going to remain a secret us -- remain asynchronous wells for next year. lisa: we've gotten about 100 different fed officials speaking at different forums. what is your sense about anything, if anything, we have learned that is new or has

the fed is behind the curve. i am glad they finally did what they do. >> you forecasted the fed might reduce their bond purchases by half going from $120 billion to $60 billion. but you questioned was that enough to slow down inflation. in your opinion, with the fed still buying those mortgage-backed securities, is that enough to slow down inflation? >> no. because the fed is still system lative overall interest rates are near zero in the short-term and purchases are continuing so the federal reserve still has its foot on the accelerator. and that's not needed in this booming economy. >> robert, what do you make of the fact -- this might be nitty-gritty but we love to spec speculate. they announced they would taper now. they are basically tapering now. they are not waiting until december to begin that would you read that as sort of a slightly hawkish, that they are kind in a hurry to start this and kind of get that clock started to wine things down. and then in the long run move the rate hikes >> they are so far

does it matter if he is not leaving -- leaving the fed? we have lael brainard speaking with president biden, potentially interviewing for the fed chair nomination. you said, does it matter there are hawks that will give pushback to a potential fed chair lael brainard? how much of a concern is it to markets that there will be more disagreements among fed members? how much uncertainty does this bake into markets. the short-term energy outlook expect to give insight to how dire the situation is and release some strategic petroleum reserves. gasoline is the key issue into the midterm elections. can they keep it from climbing too much? jonathan: bitcoin, all-time highs approaching 70,000. do you want to do the why on bitcoin? lisa: the overarching idea is it is a macroeconomic bet. you see the debt to gdp ratio skyrocket and real yields go lower. it is replacing gold. that has been the overriding concept. that is the most logical reason for the overarching rally here in jonathan: your turn. tom: tiffany's is going to sell a bitcoin bracelet? yo

any fed chairman in history. i mean, he's been actually sensational terms driving marcus up look, all the programs he put into place all the monitor policies to kids. so he sort of invented on the fly. it was, it was absolutely storing it just when i thought he had run out of trixie, come and came up with a new program buying new kinds of securities and bonds like that. so. absolutely. so he's been fantastic for markets and of course mom was very happy to see him. the question is, how good is this in the medium term now? and it's looking like he's reached the end of the road in his bag of tricks, i think. yeah, my expectation nazario is that if any one group in the world we're talking about here, right, is excited about this idea of more of the same or what president biden referred to in his statement as economic stability and success. it would be wall street, right? because after all, the fence policies, cheap money, abundant cheap money. and if your world is to take on debt and to leverage debt, this is kind of

it's not a fed induced issue. liz: is the fed scarred or blinded, we have october adp report, 571,000 private-sector job that is way higher than what was expected. >> going to michelle's point i think they are scarred from the financial panic from 2008. there are all these people who believe that the first round of quantitative easing, we did qe1, qe2, qe three from 2008 and 2015 and we did not get any inflation. this one is different. what happened back then, the monetary base the quantitative easing did not flow when to the m2 measure of money and never expanded the deposits in the banking system in a huge way this time we have 36%, one third more m2 that is deposited in all banks. today that we had back in february of 2020 you cannot increase the money supply by 36% without having inflation. it is so simple, you mentioned milton freedman, he said watching too. i believe milton freedman was right and jerome powell is wrong. liz: you are the best of the best, thank you very much. we can simply say it'll be great.

the fed will not be as concerned about that. here is the number that maybe will get some attention, durable goods down .5%, they are expected to be up .2%. it was down .4% in september. take out transportation and we are up .5%. i can look into this. there's is probably a boeing effect the number of chats they sold and also cars. cars have been hard to sell. one more number. that is capital goods orders. nondefense up .6%. the september number revised to a .3% gain. businesses are spending. tom: let me look at the market. a mixed reaction. you look at the data and we will come back to you in two seconds. futures, a little but of a lift to the tape. the yield space once to move but it cannot. .602 on the two your yield. even in the 30 year bond i do not see much movement. lisa: what caught my eye tension was the jobless claims is so strong, but as mike said there is a seasonal aspect. there was the additional knee-jerk pop. it seems like right now the bias is for reasons for the fed to hike. that is what we saw in the knee-jerk r

the fed chair tanking the markets. he says inflation is not saying it is transitory let's get to dom chu nor the damage we are seeing today >> the damage is session lows. if you look at the dow we are off 630 points, roughly thereabouts. 1.75% to the downside. s&p 500, 4577 there, off about one and two-thirds percent as well the nasdaq composite, down 271 points, 15,511 the last trade there. yes, this is the session low right now. all 11 sectors in the s&p are lower on the day financials are very much in focus along with interest rates given the fed testimony along with treasury secretary janet yellen before the banking committee. i want to highlight the difference between ten-year note yields and two-year note yields, one aspect of the yield curve. it is 92 basis points. why it is important is that it represents the lowest levels all the way back to january of this year so the yield curve is now compressing. that is putting pressure on bank stocks certainly something to keep an eye on speaking of, if you look at some

coming up, fed officials to taper. european lockdown heading into a big month of central bank calls. begin with the big issue, zero consensus. >> inflation. >> inflation. >> getting to the inflation conversation. >> we talk a lot using words like transitory. >> transitory. >> not transitory. >> inc. smaller. >> this word, transitory, has been dissected far too much. >> the problem needs to be about with -- needs to be dealt with. >> we could see a situation where inflation continues to be entrenched. jonathan: joining us now to discuss is, you threaten nero's gene tannuzzo and zachary griffiths of wells fargo. jean, we have to start with you. we have goldman going in july. we have you out in december 2023. how comfortable are you with that outlook right now? >> it is in line with our economic forecast, where we have brought slowing. we have inflation also peaking early next year, then decelerating. the fed is going to let the economy run hot, try and bring people back into the labor market, and they will hike late 2023

jonathan: not just the next fed chair but the next fed rate. morgan stanley says, q1 2023, inflation starts to moderate. lisa: fascinating call. i was struck by the idea that the federal reserve has the ability to push back against the political shift, trying to fight inflation. how do they do that and wait long enough to raise rates? how much does that depend on the morgan stanley call that we will see inflation pressures roll off? jonathan: we will find out who runs the fed as well. here we are in the middle of november reading tea leaves. a wall street journal piece indicating that an interview went on longer than expected. that is basically all we have got -- reading the tea leaves and some reports about how some interviews went couple weeks ago. lisa: we do not even understand what the parameters want -- what does a biden administration want? a more dovish fed? or is it just about the employment market? we do not even know. jonathan: we have no idea. watch this space, hopefully some point later this week, we may find something else. equity

so the fed has to keep an eye on both of those. caroline: you really helped steer the federal reserve in terms of commute occasion and it was interesting -- at the very top, many in the market thought she would be more dovish. is this going to be more semantic but the federal reserve will give the bandwidth to the market to run a little hot? andrew: they need to have a clear plan and strategy how they are going to bring inflation back down to their target. the target is a 2% target for a specific index. inflation is currently running more than double that. consumers are expecting inflation to continue running high, 5%, 6% or more for the coming years. the fed needs to preserve ordinate -- convince families that if inflation comes back down toward the target, it has to do it carefully because if it hits the brakes too hard, we could have a big economic slowdown and that would hurt the job market. it's a tough challenge. taylor: from your perspective, on economics, how big is that tap dance at this moment? we've had a lot of guests s

do you think this fed is a lot different than the fed we saw, the paul volcker we saw in the 1970's and 1980's, in terms of not only its adoption us but its desire to put -- not only its dovishness but it's desire to please markets? lara: you hit on something important. when you look at market pricing it feels like we internalize a senior number of rate hikes next year. the equity market has not made that adjustment. i think equity markets may still be carrying the memory of the last two rate hike cycles when they were able to push the fed back to neutral, away from hiking. they still carry with them the idea financial conditions may override some of what the fed talks about with their economic mandate. we have to remember going into this rate hike cycle that rate hike cycles are difficult, it is a fraud path to walk and they are -- it is a fraught path to walk in the fed needs to give conviction they are working on solving the inflation problem or else markets will throw a tantrum. matt: i know it is trendy to be really transparent. when you were at the fed it certainly was not their m

now talking about the fed, so the fed is expected to start their taper. announce the taper this week we think they're going to do 15 billion a month per month. so that will say they would end that in june of '22. so as mike's talking about rate hike, just to remember, fed funds, we're at zero zero to 25 at the 2022, that puts fed funds at 75 basis points so that is a wonderful environment when fed funds are at 75 and you have the ten-year between say 150 and 2. that's actually a healthy environment. what's not healthy is staying at zero so i think that low rate environment that is here to stay because remember, we have about 30 trillion of, we have 30 trillion of u.s. debt by the end of the year. as rates average 1%, that's $300 billion a year in interest that we'll be paying so the fed needs to keep rates low. i think that bodes well for technology and a bunch of other sectors. so i think inflation will be higher and you know, i want to close this thought on something that i heard satya say on his earnings call he said digital technologies are a deflatio

the fed is still -- it just tells you how slow-moving the fed is. i think labor supply is going to come up and i think the fed will have a good story to tell. they will continue to stick to that. the risk is there is more of a shift in policy sometime later next year. lisa: let's say the data continues to come in and the fed feels like it needs to hike rates. how high can rates go given where the economy is and how much debt we have incurred? neil: that is the issue. if you look at the pricing in the forward market, the curb is so flat. if i'm interpreting the market correctly, it is less -- let's hike twice and be done, which raises the question why hike at all? to me the back end of the curve looks very mispriced. there looks to be a significant amount of momentum in the economic situation. demand is running strong and continues to run strong. you mentioned about how real wages may slow demand. that is unlikely in my view because aggregate incomes are surging. it is not about what people are making, it is about how any people are working, how long

is the fed going to do much to stop it? probably not. yvonne: the great markets, we have seen things ease a little bit, but how is that playing in the outlook for risk assets now? mark: they have had some success recently, you see a lot more volatility in the short term with markets, particularly in free -- and the three months future contracts. traders are taking on the data. they are saying central banks might say this is temporary, this is all transient in terms of inflation, but the data tells us oth. the are seeing a pickup in wages and wage inflation in the united states. in europe is trying to clear signs. in the traders are saying we can't wait for central banks to sort this out. you can see they have had some success. the last week the reserve bank of australia walked away from the 0.1% target on the three year bond. and you could probably put that down to the fact that the market push them so far and said there was no point in defending it any further. the have also seen some wild things in u.k. rates and u.s. rates, but the un

all three of those individuals will help to fill out this late at the fed. -- the slate at the fed. >> tell us more about the remaining seats and the remaining announcements by the president who said they will bring new perspectives and different voices to the central bank. how will they change the mission of the fed? >> i don't think they change the core mission. you heard the president reinforce the importance of the fed's independence in pursuing the dual mandate around maximum employment and price stability. what they would bring as diversity of perspective and thought. the president is committed to the idea that a body that makes such vital decisions for the american economy should reflect america and the diversity of life experiences this economy reflects. you will see people who have real expertise, expertise in the field but also bring perspectives we have not had on the fed board historically and will add to the decision-making process. >> assuming you have a shortlist, do you expect announcements by the end of the year? ? that is our focus. we will try to get it done in the

what fed chair powell said today is he thinks the fed ought to discuss an accelerated taper now, he did say we're going to get more information on the new variant over the next two weeks, but my sense of this, carl, is the default position of the fed right now is to certainly discuss accelerating taper and maybe to actually accelerate it and it really comes from the fed chair's testimony where he seemed to suggest that the right reaction to the new variant may be less policy or less stimulus. let's listen to what fed chair powell said. >> at this point the economy is very strong and inflationary pressures is high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases with announced at the november meeting, perhaps a few months sooner and i expect that we will discuss that at our upcoming meeting in a couple of weeks >> and in case you didn't get that the first time he actually went back and repeated that again later on in response to another question from a senator, carl so, all this again comes from his testimony where he said, look, if you'

what can the fed really do. are we in a situation where there is not much jerome powell company can really affect? >> up until the september meeting, the petted been very clear that, while the recovery had made significant progress, thresholds of substantial for further progress had not been met. the policy was not yet warranted. that all changed in september when that chairman himself came out and said that both components of the fed's dual mandate, stable and full employment had met. that left the door wide open for eight november taper announcement. the following september employment report, the displaying rise of under 200,000, there was concern that the fed would begin to backpedal on that path forward towards externally measures. but we have to remember that the fed has been erring on the side of caution for quite some time. one data point should not deter the momentum to begin the process of rolling back the extraordinary measures with first stage of that taper announcement. we do, very much, expect the t

or as i like to say more fed, more fed influence as relates to tightening leads to volatility i just don't know when it happens. while we believe we have a taper priced in, i am not sure we do there are still adjustments to be made in yield curves. we are seeing markets getting ahead of possibly our central bank and this federal reserve king and various members have said they expect moving rates the next two or three years. that may be moving in. it is coming at a time when inflation is giving central bank zero room to maneuver. they have all wanted inflation above the 2 to 3% rate, they have got it in spades in every corner much the economy. i don't think this is a nonevent considering it's always where you come from. we come into this moment at all-time highs and maybe a fresh round of peak con play si. -- complacency >> the formal announcement of the taper won't be a huge volatility in the market -- and you know how we feel about consensus views, we tend to go against them, or at least you do >> i think tim ended with vix, and he is right. even the small caps have started to parti

the fed night -- the fed might not pull the trigger anytime soon. it is quite a move. the one that looks little bit off as the front end of the euro, we are not convinced that is as true as it sounds in terms of rate hike expectations. lisa: some people argue the reasons why markets are not responding is because it is not when the fed lifts off, it is how many hikes there are, and if there is a sooner hike it means a shorter cycle and we will see growth decelerate significantly thereafter. do you buy into that narrative that we are bringing them forward, we are not increasing the number of hikes are making it a tighter cycle? padhraic: i think the issue is the room that is provided to the fed by the 10 year curve. we look at the 10 year today. it is one .60. it -- it is 1.60. it has had a tendency to fall. it is important that rises towards 2% so the fed has room to hike. if that drips down towards 1.50 or 1.40 there's an issue. it is why the two years having a difficulty because the tenure should not be at 1.60. there is a real dilemma in terms of where the two year s

fed speak, that is next. this is bloomberg. ♪ jonathan: live from new york city i am jonathan ferro. , this is "bloomberg real yield." time for the final spread. chairman powell, on the calendar. jobless claims and the u.s. bond market will be closed for veterans day on thursday. a consumer sentiment survey out on friday. for the fed speak, anything you need to hear next week? kathy: i think i will -- they will try to reinforce the message that powell sent. we have had a lot of dispersion on opinions on the part of various fed speakers. we have the renomination or maybe not renomination of powell coming up. i think is where the focus will be is will he be around in a couple of months. jonathan: and reportedly, chairman powell at the white house yesterday. and a report is that the white house is meeting with chairman powell. does chairman pol get a second term. yes or no. kathy: george: george: yes. yes -- kathy: yes. george: yes. matt: yes. jonathan: is tapering tightening her or no? george: yes. kathy: no.

they want the fed to pull back. let's be clear by pullback, by tapering what they really mean is they want fewer jobs available. that's what happened after the last crisis. the fed pulled back to support too soon. some families never recovered. we can't make that mistake again. for senators who wish to submit questions for the record, they're due one week from today, tuesday, december 7. secretary yellen, chair powell, you have 45 days to respond to any of those questions. thank you. again, the committee is adjourned. [captions copyright national cable satellite corp. 2021] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> c-span is your unfiltered view of government. we're funded by these television companies and more, including wow. >> the world has changed. today, the fast, reliable internet connection is something no one can live without, so wow is there for our customers with speed, reliability, value, and choice. now more

in terms of where that leaves us , if there is a change at the fed, a brainard fed, is that a change in approach with a more hawkish kind of federal reserve? matt: first -- john: i said roman empire and the like there. i don't think there is much chance of us getting a hawkish fed out of these personnel changes. in fact, we lost two of the more hawkish participants of the fomc in the boston and dallas fed president and they are undergoing searches right now for replacements. but at some point, inflation is going to prove to be an unacceptable problem. what the fed doesn't realize, they seem to think that somehow engineering inflation will help the economy to a degree, but the public doesn't like in -- inflation. behavioral evidence is clear on that. at some point it will be unacceptably high, the fed will have monetized the supply shop and of the fed will have to get tight. where could that happen? could be six months out, 12 months out, 18 months out. but that sows the seed of the next recession and the downturn in the equity market that you were asking your previous guest about. ma

the fed might accelerate it, december, early next year the the fed could pick up the pace. larry summers talking about a much more aggressive game and i would be surprised if the fed pbtd up on that. you get the sense that monetariles tightening -- it is not rg really tightening. it is slowing the stimulus. tom: where are we on the question of inflation? the framework to have fed poses the challenge and we have been discussing that. around the growth and inflation. inflation targets. also the labor market and the broadness within the labor market. how does that play into the considerations of the fed? >> clearly the tradeoff for the fed and the bank in general, frightened by a surge resurgence of the covid pandemic. i think inflation has been really challenged. we're seeing high angels will longer than expected, in the u.s. in particular. cpi inflation. price inflation is. it all pickd up recently. that said, i think it is correct to say high angels will is -- iy due to -- to the extend that we see -- in terms of supply disruptions and moderation. moderation in inflation. f

jonathan: december 15 is that fed meeting. forecast will shift, how much i don't know, but some think they need to big-time. colin robertson, your reaction. colin: if we were going to say that the taper would quicken, my view would be that two or two and a half are not nearly enough. i think there are repercussions with the fed pivoting at this point to lower the taper, start rate increases. it would be comfortable to think that it could be systematic and just a couple of hikes that wouldn't stress the market but i think the opposite would happen. to bob's point, yes, that that, when they finished hiking in december 2018, i didn't think they had any vision that they would start using rates in 2019, so they can pivot. ultimately, the case that bob laid out, actually points to the fed be more cautious, even with everything happening in the last year, versus not. their biggest mistake over the last five years was tightening too far, too fast. jonathan: let's talk about how you push it through this bond market. subadra, is the cas

tom: that was atlanta's fed chair. jerome powell will retain his position as fed chair and brainerd is promoted to second in chand. let's get back to bloomberg -- you talked about consistency and that's the strewview from the markets and in economists in terms of renomination of powell and elevation of brainerd and there's a growing chorus around the need or consideration of a faster pace of a taper. >> yeah, you are absolutely right, tom. clearly it offers some stability. a big political dimension to what's going to happen to u.s. monetary policy. whether it's who gets the job. powell should be -- should have support. even though he's a known, he's -- the trajectory for policies he's well understood by everybody, next year will be a different story. inflation is accelerating. the fed narrative on price pressures being somewhat transtear and the changes have not yet come through there are significant question marks over the fed narrative and it's expected that heading into next year there'll be pressure on the fed to d

if the fed would do — the us economy. if the fed would do its _ the us economy. if the fed would do its job _ the us economy. if the fed would do its job we - the us economy. if the fed would do its job we would l the us economy. if the fed - would do its job we would have would do itsjob we would have a tremendous spurt of growth. that all changed with the pandemic. with the global economy in the world's financial markets taken, the fed cut us interest rates to near zero and resumed its bond buying programme. if the fed we are doing all we can to help shepherd the economy through this difficult time. those actions earned him president biden�*s endorsement on monday. when a country was haemorrhaging jobs last year, and there was panic in our financial markets, his steady and decisive leadership help to stabilise markets and put our economy on track to a robust recovery. economy on track to a robust recovery-— economy on track to a robust recovery. the challenge today facina recovery. the challenge today facing america's _ recovery. the challenge today facing

the fed must lead among central blanks -- banks globally. he has underscored the importance of the fed taking a proactive role in the months and years ahead and years ahead in making sure financial regulation is staying ahead of emerging risk, from innovations and cryptocurrency or the practice of less regulated non-bank financial institutions. having served as vice president during the depths of the 2009 financial crisis, having worked with president obama to put in place a stronger financial rules of the road, i understand the stakes of our regulations falling asleep at the switch. jay along with other members of the fed board that i will nominate must ensure we never again expose our economy to those kinds of risks. i respect his independence. i also trust he will follow through on significant prioritization, with the skill he has shown in his service to date. now, some will question why i am re-nominating jay. when he was a choice of a republican president. why am i not picking a democrat, fresh blood, or taking the fed in a different di

if the fed does get a little more -- if the fed acts quicker to taper, pair back the stimulus and raise interest rates, does that risk a recession or choking off the growth >> i see the u.s. economy being on the strong growth spurt at the moment unemployment has been falling fast we have seen over 500,000 jobs a month since president biden was elected. and i think that's going to continue into next year, driving down unemployment. so you know, there's strong support for economic growth that's coming from policy and from the buffer stock of savings households have built up so it's up to the fed to decide just how much monetary policy support is necessary given those other factors. >> the dollar right now, secretary yellen, is trading at the highest level since july 2020 does that comfort you or do you worry about the impact on growth and corporate profits? >> i think growth is poised to be very strong over the coming year and unemployment to decline. but i think what we do see in the marketplace with the strong dollar and generally low longer term interest rates is confidence that inflat

of the markets on big fed days. they going into the waiting, holding type situation we are seeing that today as well the dow has drifted lower than it was earlier this morning, down about one third of %. 116 points to the downside 35, 936 the last trade there 46, 124 for the s&p. and the nasdaq up 14 points. 14,654 the last trade there. the russell 2000, this etf tracks it. we will put a gold star by it. it did had it a record thai high today. as we can see here it is trying to get out this channel that we have seen for some time in that small cap index. if there is a break, it could be good for the better part of the market up 1.2%. better than expected jobs data was out this morning ahead of the big jobs report coming out on friday. consumer names being helped out buy retail supports. tapestry, gap, ravel lawyeron, under armour, pvh, all up between 4 and 5%, some of the biggest gainers in the s&p 500 then we will end with the all bird's ipo a huge move higher, up $65 this company priced the ipo at 18 a share it is

did the markets overreact to omicron or are they too optimistic what, if anything, will the fed do about the new variant how will bond markets react to that >>> plus, jack dorsey steps aside from twitter, the stock shooting up on the news, now falling back we will look at what it could mean for the company >>> we begin the hour with a market come back dom chu has the numbers. >> we are ten points on the nasdaq from getting everything we lost on friday's session, that's how dramatic it has been. but there are interesting cross currents playing out the reopening trade, yes, it is bouncing back a little more but not nearly as dramatic as technology, media and communication services for example, the dow industrial lost roughly 905 points. we have gotten 346 back. we are at session highs right now. the s&p lost about 106 points. we have gotten 75 of those back. but the nasdaq lost 353, and just a couple of moments ago we got to about 340 points upside or so, so the nasdaq is the outperformer here, up about 2% 1.5% gains for the s&p and the dow industrials about 46%. one of the themes i just s

i cannot imagine anymore dovish fed chair, but we do know that markets test new fed chairs. so i am very pleased to see that there's increasing likelihood he will stay. his discussion today, i can't imagine him omitting the word transitory, but the bottom line is in those five factors he laid out back at jackson hole, they have slowly unwind -- slowly unwound to suggest this might not be transitory. the market has done the work for him. so even if he sounds more hawkish, the market has gotten their anyway. lisa: how much is his credibility at risk if he does not acknowledge some of the inflation we are seeing not only with respect to consumer prices, but also on the wage side? alicia: i think he will acknowledge it, but ultimately, transitory is a funny thing. it can mean different things at different times. right now it means sustained for long, but eventually will turn the other way. i think there is some evidence in the real economy that this can happen. we heard overnight vietnam has all those nike factories open. we have all of the gm factories open in the midwest, havi

louis fed. our thanks to michael mckee as well, not only on retail sales in this economy but on the delicacies of the fed forward. the day extraordinary. are we going to do this tomorrow and wednesday? i think we have to. lisa: i think we are obligated to come in every day of the week and i think we want to because it is a fascinating moment. to think that james bullard is talking about other tools to tighten, including allowing the balance sheets runoff would be a game changer, including also raising rates before the end of taper because the taper is priced in. these are innovative approaches, not the consensus by any means, but highlight the sense of concern people have that the balance of risks is getting more heavily weighted to inflation that seems to be picking up quite a bit. tom: it shows our economics, our finance, our investment wrapped around the politics of this been demoed. there is no other way to put it. sobering statistics out of germany, switzerland, and austria. stay with us on

a few of your fed colleagues in the past week have said they are either certain that the fed needs to speed up the pace of the bond taper, or at least talk about it seriously. how about you? raphael: i think there are good arguments to be made that we really should be considering how fast we execute the taper. there is a lot of uncertainty in the market. inflation is at a very high level. i think it is important. if we need to be moving interest rates that we get the taper out of the way first. a faster taper it would certainly give us more optionality as we move into 2022 and see where the data takes us. i definitely think it is appropriate for us to be talking about tapering, and being open to a faster one. we are going to see some more data between now and when we have to make that decision. those conversations will really guide us in having perspective on what the appropriate pace is and whether we need to move faster. kathleen: the next meeting is december 14, so you will have that data in hand. are you inclined to say, gee, you want to be talking about, and maybe even in favor o

by fed officials and this follows obviously the resignation of two regional fed presidents i'm just wondering, do you think there's more that you will need to do to rebuild the credibility of the fed such as requiring officials to put their assets in blind trusts also, if you could speak to whether you have any concerns that any rules or laws were broken by fed officials. thank you. >> so you know, let me just say that the system -- the ethics system we had in place had been in place for decades and had as far as we know, served us well and then that was no longer the case and so we had no moment of denial about that as a group we stepped in and we took the actions that we took and within one fomc cycle, we announced a new set of rules to try to put us back where we need to be, which is we need to have the complete trust of the american people that we're working in their interest all the time absolutely critical to our work as it is for any government agency and i feel like this called that into question, so we reacted, i would characterize it, strongly and forcefully if there were