for the fed. if you dial back to what happened in february last year, the markets rallied big-time. it took an entire month for the fed to come in and act with emergency rate cuts. the boot is a on th -- on the other foot. the market is saying we don't need the rates to be solo for longer given the turnaround in the economy. we do not need rates to be solo. therefore -- so low. they are not going to react for a long while. the markets have taken it on themselves to do the job of the central banks. anna: whenever things move quickly, you always look for who is going to be hurt. this certainly has been a very pasty move. i have been reading about convexity events, forced sellers and treasury market -- in the treasury market. now having to unwind those. is that a substantial part of the story or is that just a sort of a sideshow? ven: i would say it is somewhere in between. i do think that it is a contributive factor to the selloff. i do not think it is an essential part of the selloff, primarily bec

we are speaking to kansas city fed president esther george. president george, i want to start with the jackson hole symposium. it has been more than 30 years now. there was a point in the last several years when you as president of the kansas city fed decided, there are some women here every year that we need more women. what motivated you at that point? esther: kathleen, the jackson hole program has been a their important program because it focuses on broad issues that affect central banking and monetary policy debates globally as you know. when more than a decade ago, we began to look at the program and who was presenting, who would bring views to these important issues we were talking about, we began to identify the need to address some diversity. again, diversity of views and the people that are on that program, e central to understanding -- essential to understanding. we began to look at who are the people on the program who should not be. women for example in the economics profession that could bring insights to the topics we were discus

haidi: and of course fed chair powell dismissing all the concerns of bond investors signaling the fed may get close to tapering. o way, not yet. kathleen: first of all, he is not worried about inflation, unlike larry summers who thinks it could start rising quickly enough to force the fed hand. but he made a lot of points and said basically coming out of the pandemic and going through the pandemic, prices may rise temporarily, but it will not be persistent, it will not be a problem. and even if it is, the fed can deal with it. let's listen to what he said. >> inflation will probably be a bit volatile over the next year or so due to the pandemic. i really did not expect that will be in a situation where inflation rises to troubling levels. if it does turn out that unwanted inflation pressures arise and they are persistent, then we have the tools to be what that, and we will. kathleen: the fed has said many times now, they will give us warning well in advance when they are even thinking about thinking about tapering. cornerstone macro, former head of monetary affairs at the board of gov

and of course it causes a risk to the banks that the fed regulates. i know that in december it was a bright idea that the fed join the network of the central banks and supervisors screening the financial system i think that is a step in the right direction but my question gets to this. a lot of public disclosure on the climate risk and the voluntary varies a lot from company to company which makes it hard to compare risks or interpret what those disclosures mean. could you talk to us whether you think that climate risk disclosures should be standardized or should we continue to allow them to sort of make their disclosures if they make them at all in whatever form they choose? >> i would first like to say the overall response which i agree is a very important problem has to come from elected officials in congress and also the executive branch so that is where this comes from. we have a specific role on climate change which only extends to the scope of the mandate to ensure the resilience of the institutions we regulate and supervise. but on disclosure

the fed helps us get here, so the economy goes to there. so there i completely agree with gary. >> yay. charles: what do you like here? >> i think because of confidence in what we call fiat money is more likely than not going to be the next down cycle. it is going to bring about the next big correction. and i can't tell you when that is going to be. as we accumulate the amount of deficit and debt, at the rate we're doing it right now, i think it gets more and more a case that favors gold. so i do like gold. i will even tell you that bitcoin is starting to -- in my purview because it is alternative to gold trade. charles: right. >> i think you're right, there is not much value out there right now and as long as you see inflation at bay, the fed unlikely to move rates higher because of this abundance of targets they now have, then you do have to remain. all we said, charles -- [inaudible]. we have to protect against the inflation. you can do that by the purchase of tips which the fed is buying. charles: all right. >> put options to -- options

the soon when the fed also again has to has to show their cards. that i think it will be very interesting to see if they were be able to men effect another bluff because at the end of the day last month it was a bluff they weren't able to mount normalize. the rule have to try to to commence their midst meant community that they are doing something i think but it's very very difficult because the action really counts because of that that situation so let's see what kind of rabbit that will try to brew of of the at this time well why did gold investors even listen to the fed you know the picket lumber had a new all time high in a 1000 coppers screaming to the upside oil's birmingham they don't they don't seem to look at what the fed's doing they they just hide because they know inflation is going well i think the traditional gold investors do not listen to the said because they are convinced they don't need to be coincident in moss well i think the marginal side of gold is actually probably the institutional investor in the united states still in the

tom: how will the fed respond at 1.20%? subadra: i don't think they are going to be concerned if the fundamentals warrant a rise in yields. we saw us get to 1.17% this year , a rising real yields which is what we saw this year, it is sort of a healthy reflation trade. i think the fed is not going to be very concerned. i think they are much more concerned about dramatic moves higher or lower in yields. that is going to disrupt the risky assets and general conditions. jonathan: great to catch up. nailed the estimate of this bond market last year. great to catch up. subadra rajappa of socgen. later, cleveland fed president loretta mester be catching up with the audience about what is going on, and dallas fed president robert kaplan as well. tom: are you telling me the fed is not going to start affecting messages in their speeches? jonathan: if we get a 1.1 percent tenure because we reopen this economy -- a one point 2% -- a 1.2% 10 year because we reopen this economy? tom: they are going to say one sentence, and all of a sudde

the fed will welcome that. will the fed address some of the signs they have seen? as i said, i am not against in any way -- i encourage providing targeted support. as for the growth dynamics, the economy has outperformed expectations coming out of the deep hole we fell into one march and april of last year. i don't think -- once we get the vaccines in people's arms, i don't think we have this negative growth hole to fill. think we have a relatively closing output gap, and we're just at risk of doing too much. tom: as you know -- jon: as you know, this is not just about the aggregate numbers, this administration wants to target the bottom leg of the k and do something about the perceived injustices of not just the last year, but the last several years, and part of the plan is to include people that were not part of the asset move we have seen the last 12 months. does that resonate with you, john? john: i am all for addressing those issues, the issues of injustice, the issues of what you say, the bottom leg of the k , but -- and we will see when the ultimate package

the fed has not had to do that much in terms of purchasing. what we have seen is a market that has had confidence there is somebody back there and that is not going to change. what is going to change his short-term purchases. clearly what we are seeing is lower interest rates over the longer-term affecting several areas of the economy. yes they are impacting large companies. there also giving jobs to the housing market. we are also seeing a pickup in auto sales. all of those sectors of the economy are benefiting. jonathan: vaccinating and reopening. nothing else seems to matter. let's get your assumption for the rest of the year. a guest said i should keep my flight booked for the summer for europe. this is what the u.k. had to say, we are still working on quarantine plans using hotels. when are you expecting things to start reopening? when did tom and i get to go to london and host the show from london? david: from our perspective it london, reopening means our kids go back to school and maybe we are able to go to something other than the sup

i do not fight the fed. herein lies the point. the potency. the fed and the treasury. powell and yellen in concert is perhaps more reflective in the dollar trade, down for the fifth day in a row, than it is and what some are saying is a fully priced narrative in the equity market. annmarie: he had a little bit of a nuance rebuttal to the debate you and i have been having across the entire week. larry summers says the package is too big. he's calling on d.c. to go big and pointing to the figure that the economy still needs fiscal support and remember, we had this a debate on inflation. powell says he's not worried about inflation. the fed is going to let inflation run hot. manus: exactly. to finish off the sentence, everybody has to run that piece that says we are still far from a strong labor market. go on and play the rest of the language. the benefits are broadly shared and this is the narrative, and the reason is the evidence. black americans, unemployment was 9.2% in january versus 5.7%. there is the point. the queen of charts has got it. its repricing by the marke

course the fed speak is intended to keep animal spirits alive and just keep consuming keep buying so this is revealing the true state and that's that's what people are concerned about who are in the exorbitant privileged class right wave christine legarde mean what you said because he's offering an escape valve yes right so what mosque is doing he's a scaping these negative interest rates the 0 percent interest rates by buying because the same thing that michael saylor who kicked off the trend in the c.e.o. suites of corporate america and the fact is as we've been saying now for 10 years or more that capital full always flow to where it gets the best return. that's a law of nature just like the sun rises in the east capitol will go where it's treated best what we have the last 25 years or so is collusion on the global central bank level who kept interest rates low and offer no competing rates anywhere else in the world and nomi prins writes about this in her brilliant book collusion but because he came around and offered that escape valve and now there's no putting the genie back in

in the fed does not want to be pushed into trying to tighten reports. so, i think nothing has happened yet to make them question. you see an interesting thing to pay attention to, basis claims a little bit past the dot plot projectors. maybe there is some variability to the idea in 2024, 2025 they may have to hike. but we are still a ways out. still left to see what happens with the economy. caroline: we talk about pent-up demand, i am looking at headlines, holiday up 630%, just on the news of boris johnson talking about a roadmap to opening up the country. the news we see from the reopening trade, is there. but we could talk about good inflation. what would strike you at any point about inflation? >> i think your previous guest was talking about commodities and a super cycle, things like that. food prices go up. that ultimately hurts everybody. ordinary americans. if you go to the grocery store or if you go out to eat, prices are going up. that is less money you have to spend elsewhere. i don't think that is the greatest inflation, i think the best inf

perhaps the fed doesn't move, but the market moves ahead of the fed. at what point does become too hot for rates to rally versus where they could be? neil: real rates are -1%, lisette. give me a call when they are at zero. we can talk maybe then. i still think the idea of interest rates breaking the back of the equity market is a long way away. remember, the biggest risk of the u.s. fixed income market is really when europe is able to reestablish its status, its growth status. that hasn't happened for a while. so i think the risk to the u.s. treasury really builds when you have broad-based participation in the global economy and when europe reestablishes aaa status, and i don't think that is really happened yet. jonathan: i think neil needs to come on weekly to provide lisa some therapy. lisa: therapy? this comes as therapy? jonathan: some bare therapy. tom: i think we are just -- some bear therapy. tom: i think we are just on the edge of fair and balanced. jonathan: neil, just quickly, you mentioned a couple of times you don't think the market is quit

course the fed speak is intended to keep animal spirits alive and just keep consuming keep buying so this is revealing the true state and that's that's what people are concerned about who are in the exorbitant privileged class right wave christine legarde mean what you said because he's offering an escape valve yes right so what musk is doing he's a scaping these negative interest rates the 0 percent interest rates by buying because the same thing that michael saylor who kicked off the trend in the c.e.o. suites of corporate america and the fact is as we've been saying now for 10 years or more that capital full always flow to where it gets the best return that's a law of nature. just like the sun rises in the east capital will go where it's treated best what we have the last 25 years or so is collusion on the global central bank level who kept interest rates low and offer no competing rates anywhere else in the world and nomi prins writes about this in her brilliant book collusion but because it came around and offered the scape valve and now there's no putting the genie back in the

the fed knows uptake was low. janet yellen hinted as much saying they are going to find measures to target small and midsize companies. when we look at what the fed is going to do, we think they are going to welcome inflation. certainly above that 2% mark, which still remains elusive at this point. we are unlikely to see inflation actually materialize. anna: where does this lead for stock markets and the record levels of stocks we see at the moment? what are the signals you are looking out for that would trigger a correction? research by jp morgan talked about the correlations between stocks and bonds, and you see that surge, that can suggest we are going to see correction. what are you hearing in response to this question of the day? >> certainly that is the case. another correlation to watch as the dollar against the s&p 500. if we see the dollar becoming bid again and more of that positioning squeeze, that does tend to deter further upside in terms of the s&p 500. it is important to watch credit spreads. those

dramatic action at the fed. maybe this whole, you know, if you look at the chart, it looks like could go up to 3% we would still be in a downtrend. i don't think to your point that the fed would allow that to happen. the question, people are saying, where is cash going? obviously markets, things like that. danielle, i lamented a lot over last few years of lack of velocity of money. that is how say a dollar circulates in the economy. we've got a chart that suggests somehow maybe this cash is simply finding its way into the coffers of the 1%. is this a coincidence? is it something more sin nester? if that is the case, all money printing in the world won't help the average person? >> charles. exactly right. that is not sinister. sadly it is by design. this is what we call the transmission mechanism of the monetary policy. the way the fed gets liquidity into the system is through a banking system at times unwilling to make loans. they are making loans for federally back mortgages, there is very little risk there. bu

you mentioned fed chair jay powell speaking in front of the senate. i want to recommend everyone read the column from bloomberg opinion, where he talks about the fed as a parent and capital markets as toddlers, and trying to assess how to manage their tantrums while trying to gear them towards independence. anyway, i will recommend that. 10:00 a.m., we are getting u.s. february confidence data, as well as fed manufacturing data out of richmond. interesting to see whether we continue to see any grinding higher in the data, or whether this is a hope trade when it comes to reflation. at 2:30 p.m., we hear from the man who was on the hotseat last week in front of congress, vladimir 10 if -- vladimir tenev, robinhood ceo, under increased scrutiny from regulators, as well as others in the capital markets. jonathan: he has struggled to communicate in the last couple of weeks in a major way. in a major way. you've struggled to commute kate for the last 10 years -- communicate for the last 10 years. tom: yeah, ok. jonathan: you wonder whether he is the mentor

powell to the rescue as comments from the fed chair helped turn the tide on wall street after a more than 350 point slide at one point, but will today's sequel be as good as the original. >>> it's one fund manager versus the world. what kathy wood is doing about her tesla investments as the stock turns negative on the year >>> and emergency order from the faa over those pratt and whitney engines that led to incredible engine fire aboard that boeing 777 jet, and more fallout in texas after the state's week long energy crisis this morning, a mass exodus of the executives once in charge of the lone star energy grilled. >>> and c suite for one of gamestop's executive after the reddit frenzy. it's february 24, 2021, and you're watching "worldwide exchange" right here on cnbc ♪ >>> top of the morning to you, i am dominic chu in for brian sullivan today, and right now, we are seeing shades of green pretty much across the board the s&p implied higher by rou roughly 8 points, dow jones by 45, and the nasdaq up by 46 points implied at the opening bell this is, yes, modest, but well off the l

creates fed coin that they guarantee your deposits they swap out your dollars for a fed coin one for one and they let the banks die in other words are the banks under the bus this is. a heterodox idea but it's gaining some currency out there and your thoughts i think that's entirely possible because you know the banks and wall street these are all cannibalistic i mean they're sharks and they're camels though they'll eat their young men but with their competitors it doesn't matter and you have to remember the largest banks in the world own the stock in the federal reserve which is not part of the government i mean it's government sanctioned but it's not part of the government it's a corporation that issued stark and the largest banks in the world own that so if they do with the banks out of business they haven't really put the banks that own the federal reserve out of business they just created in morocco that point and yes they do want to control the lost city this is why in the orient for them and getting currency into the hands of people that are poor sri currency which is then by

or is it going to result in the fed having to increase fed funds sooner than anticipated? >> it rather depends on what we thought, to use your phrase. the fed funds market is forecasting that there will be an -- there will be no increase until 2026. we are expecting the first hike will occur at the end of next year. the end of 2022. that is assuming we get the vigorous growth of the market is presuming we are going to get. in which case we think the contradiction between interest rates and the inflation rate will be resolved in favor of higher interest rates, which will be higher in real terms, by the way. anna: so you are expecting an interest rate hike early at the end of next year. what do we expect to see on the greenback? >> the dollar is fundamentally weak against the yuan. you are currently looking at the five-year interest rate on u.s. treasuries, roughly the 50 to 60 basis point region, whereas in china, if anything, policy is beginning to tighten. the five yield is over 3%. china also has a substantial account surplus in terms of trade. everything tends to favor

the question is is the fed going to stay dovish? richard clarida is that we will do 5 billion in treasuries, $40 billion in multiples throughout the end of this year. if we have three strong quarters of growth, the fed could bring to the table sometime in the second half of this year. lisa: one thing you did show well at deutsche bank was put out charts showing the divide in the labor market between the haves and the have-nots. at apollo, there is the question when does this divide affect markets, which has been relatively divorced and moving on very different factors because they are dominated by the bigger, more resilient companies. when does it become a real problem you have a two track economy? torsten: i know. it is a k-shaped recovery and this is creating issues with leverage in companies that have earnings, not only because of covid but have not had earnings for three years in a row. what this is also opening up is a number of unintended consequences of the quick reaction the fed has during this crisis. normally a recession c

tom: that may be the policy as well, but then bigo fed meeting to fed meeting. you may be in the crucible with little sentences coming out in speeches from cleveland, kansas city, san francisco and the pressures that you faced in new york. are we going to see it from out in the speeches of federal officers in coming months? bill: it really depends on how strong the rebound in the economy is. what we are hoping is that people get vaccinated and once they are vaccinated, social distancing can be relaxed in the economy can be reopened and when that happens it should accelerate sharply with a big increase in demand in the leisure and hospitality areas in particular. that could be a pretty strong second half of the year if things go well. at that point the fed will start to think about it, how do we start a pullback? the fed doesn't want to pull back prematurely. there are still people who have lost their jobs pandemic started . they don't want to pull back to early and if they do, bond yields go up, stock markets go down, making it harder for the fed to achieve obje

you talk about the fed and the choice they have. i would say that it's a massive assumption that the fed does not act forever. jonathan: on the asset purchase program they might. on rates they put it clearly what the threshold is, tom. tom: when the threshold changes, i change. jonathan: when the people outside of powell, to the periphery, some of the fed presidents may start making noise. heard from the atlanta fed talking about the potential probability of may be reducing the asset purchasing. that is where the volatility might come from. tom: john, i want to dive in to the asset of the day. all of his work with bloomberg. larry summers writes 10 essays, two of them are the summers we knew decades ago. this is one of them. what did lawrence summers say? jonathan: i think it is a clinic. it is compare and contrast between the stimulus package in 2009 and the one being rolled out now.the compare and contrast looking at the output gap then, now, and the size of the package, the message is clear. this package is huge.we need and if it

government spending rose, but you had the fed stepping in. then we had several years of sluggish growth, deepening wealth inequality, and by the way, no inflation. economists are saying we messed up in the financial crisis. we should have just put our foot on the gas and nto let -- not let up. we have the coronavirus recession and we can do just that. that is why biden came in with this proposal for $1.9 trillion. there is trillions more in spending potentially. caroline: it is not just biden pushing this "run it home" t heme, it is formally fed chair janet yellen, now the treasury. she has been surprised of the lack of inflationary push she has seen in the past. now she is willing to risk it, basically. >> absolutely. there is a whole cast of people that are supportive. there is yellen, there is the fed and powell, who have spoken about the need of balancing equity and fixing issues of inequality in wealth and income. this is something biden promised as well. with this stimulus, yes you are helping those at the low end, but you are giving th

piegza: the fed keeps an eye on all. when it needs justification to why they see stable or lower-than-expected inflation, it will be looking at -- even though consumers may feel price increases a bit more, even though we might see supply chain disruption, a higher ppi. tom: in every economic textbook, the markets are chapter 23 and you forget about them because you have to go to a party thursday night. or the markets right now associated with your economics or are they de-linked? dr. piegza: the market is showing stronger expectations than what the underlying structural data indicates print the data suggests it is far from coming out of the woods. the market suggests recovery is right around the corner. there is a sizable gap and downside risk based on where the market is pricing and expectations for a near-term return to normal and sustainable upward momentum in terms of gdp. lisa: the idea of how much to follow data when it is backward looking. we are expecting a seismic shift when people get inoculated and can go out

i have heard fed speaker after fed speaker talk about this. is the fed trying to put itself in a position where it does not make the same mistake as last time where it front ran a paper in the market priced it instantly? is the fed going to wait until right at the last minute before it starts talking about the need for changing policy? and is actively dynamic for the market to deal with this time around? >> it is 100% different dynamic for the market to deal with as the fed has change the parameters around how they view inflation. they want to see their 2% target, but they see that is asymmetric. they will let the inflation target be exceeded for an extended period of time because we have spent so much time below target. their mandate is really a single mandate and that is to get people back to work. we still have half of the people that have lost their jobs because of the pandemic not back in the workforce. they are going to let the inflation run north of 2%. we will likely see and extend a period of time when the fed does not focus on inflat

so it's really for us all about jobs and that's what it is for the feds right now i think the fed is actually ahead of the curve i know the marks like to think the federal reserve is behind the curve. on this the fed is thinking about two things about the economy. one is lower growth positions are more permanent so below 3% growth is probably likely in the future after we get these short-term births. two, the economy can sustain a much lower rate in unemployment than previously thought and still not generate inflation the markets haven't caught up to those two things, the feds have totally reoriented its policy around. >> stephen against this rising interest rate backdrop, do you think there should be more of a focus on where the government is putting its money as debt has the potential to become more expensive? >> look again what you just heard, 10 million job losses in the u.s. is real 1 million joining the labor force as we grow these are absolutely right but the most stimulus is the vaccine you talked about we're going to be stimulating more we're going to have a larger fiscal ea

louis fed president jim bullard. stn.'s coming up at 8:00 a.m. eaer "squawk box" is coming right back ♪ ♪ (kids talking) pnc bank believes that if an app can help you track your pizza... come on cody, where are you buddy? ...then your bank should have the technology to help you track your spending. virtual wallet® was designed to change what people expect from their bank. easily see what's free to spend... ...and where you can save, so you can budget even better. ok, he's gotta be close. six blocks in the other direction. make a left, make a left, make a left! he made a right again. virtual wallet® for digital banking. one way we're helping to make a difference at pnc bank. >>> severe winter storms in texas, and creating unprecedented electricity demand brian sullivan joins us with a look at the impact on the energy sector i just saw you on tv, brian, and i'm going to see you again >> you did, joe, i just see you on tv just now thanks for having me on. listen, it is a serious story. it is a scary story. there are millions without power in t

lisa: you said take the fed at their word. what does their word mean when it comes to asset purchases? at what point are real yields going to become a problem for them? julian: i think we are still a way away from that point. if you look at how the markets have responded in the last couple of weeks, chair powell won't come out and say it, but he's probably not terribly upset that you have seen the equity market pause and reflect on what has happened, and frankly, the wish of the fed is to redress the fact that asset markets out ran the economy to the extent that it did over the last nine months, and closing that gap with a stable equity market is a very noble goal. that is where we are right now. jonathan: i just can't reconcile some of the complaints in this market right now. if real yields climb because growth expectations are better, somehow they are meant to step back and. they step back in, somehow they are fueling financial market instability. just how tough is this job for chairman powell right now? julian: we will say

yeah i mean if the fed now decides they have to increase interest rates it's not going to look good i mean the bond markets are fully dependent on that and the equities markets pretty much true so the entire rally that we've seen over the course of the past few months has been entirely fed by the pumping cash fast for months been almost a year now so that's really what's been driving things so that's the balance the risks we see there that if they stop doing that things crash well toyota talk about spec they seem to be a pretty big deal these days they're taking companies public this year in 2020 want to backs raise more than $38000000000.00 how viable is this sort of vehicle going to be going forward over the traditional i.p.o. process that we've we've seen before is going to be the new weapon of choice because it's easier. well certainly looks that way so going public is a fairly arduous dreary process you have to file all sorts of paperwork with the f.c.c. and with the exchange you have to go on road trips and find investors and things like that there's very few if you c.e.o.'s a s

this is the message we are getting from the fed. haidi: our global economics and policy editor, kathleen hays. still ahead, we are joined by the visa gm for hong kong and macau to discuss the business outlook and cryptocurrency plus how to improve gender diversity in science. rishaad: plus, we are putting questions to amc senior strategist daniel hayes -- amz senior want to save hundreds on your wireless bill? with xfinity mobile you can. how about saving hundreds on the new samsung galaxy s21 ultra 5g? you can do that too. all on the most reliable network. sure thing! and with fast nationwide 5g included at no extra cost. we've got you covered. so join the carrier rated #1 in customer satisfaction. and get a new samsung galaxy starting at $17 a month. learn more at xfinitymobile.com or visit your local xfinity store today. rishaad: your back with bloomberg markets as we look at commodities. oil of about 20% this year. copper just about at nine-year highs. the question many people are asking out there -- is this the start of a long

thank you, fed chairman. and he said he's watching unemployment and consumer spending moving forward. on inflation he said he doesn't see a rise in spending being large or persistent, but that he expects inflation the to be volatile for the next year or so, also saying that growth of the balance sheet will slow but asset purchases will continue. listen to this. >> will continue at the current pace, at least at the current pace until we make substantial further progress toward our goals. >> reporter: that was one thing investors were focused on, are they really going to shrink shah balance sheet. doesn't -- that balance sheet. he also wouldn't weigh in on the $15 minimum wage, he said it's not the fed's job or role to do that. so i thought that was interesting because that could have a chilling effect on the labor market. back to you. neil: jackie, thank you very much. another focus on tesla here, i should say it was down and is down about 13.5% over the last couple of days, this is a bear market, negative ter

this is an issue the fed itself keeps bringing up, even though it's controversial what the fed can do about it but certainly the impression we get from the fed is that they will keep rates low and policy easy until some of the big gaps that are normally present are widened, for example, before the fed changes policy >> got it. steve? thanks very much >>> and markets today started to throw a little bit of a tantrum but powell calmed them a little bit. nasdaq still down but well off the worst levels of the day. let's go to bob pisani for more on today's trading action. mr. p. >> good to see you and you're right we had a little bit of a selling panic, around interest rates and valuations and you're right. things calmed down when powell came on but a lot of damage has already been done. a lot of this is what one trader called the kathy woods selloff runs ark investments and has been a champion of many of these big momentum names, become momentum names because of her sponsorship. like tesla, roku, square, paypal, all of these are heavily owned by funds, particularly the ark invasion funds

creates fed coin that they guarantee your deposits they swap it out your dollars for a fed coin one for one and they let the banks die in other words are the banks under the bus this is. a heterodox idea but it's gaining some currency out there and your thoughts i think that's entirely possible because you know the banks and wall street these are our cannibalistic i mean they're sharks and they're camels though they'll eat their young men but with their competitors it doesn't matter and you have to remember that the largest banks in the world own the stock in the federal reserve which is not part of the government i mean it's government sanctioned but it's not part of the government it's a corporation that issued starke and the largest banks in the world own that so if they do with the banks out of business they haven't really put the banks that own the federal reserve out of business they just created that point and yes they do want to control the lost city this is why in the orient for them and getting currency into the hands of people that are poor sri currency which is then by t

. _ fed chair is saying. it was difficult, we _ fed chair is saying. it was difficult, we were - fed chair is saying. it was difficult, we were warned | fed chair is saying. it was - difficult, we were warned about this by the investment bank goldman sachs because at some point we have to reach a post— pandemic situation, a degree or state of normalcy and that pivotal moment will happen when we start seeing changes in the bond markets. are we at that moment? was goldman sachs right? have we seen a return to normalcy in some way? i right? have we seen a return to normalcy in some way?- normalcy in some way? i think we have not — normalcy in some way? i think we have not seen _ normalcy in some way? i think we have not seen the - normalcy in some way? i think| we have not seen the normalcy because we are still in the pandemic, although there is very encouraging vaccine relates and economic recovery as we see from the data —— so the bond news tells us that investors expecting a strong recovery that has not happened yet but it has also changed very

we get the fed minutes later on in the day. the vix moving higher. we are back up above 20, and the reflation trade living in some commodities. we are still digesting what is happening in texas in terms of shortages. you can't export wheat, for example. guy: let's get back to that data. superstrong data out of the u.s. economy this morning. retail sales surging in january the most in seven months. if you are in the inflation camp, this is the kind of data you want to see. bloomberg's mike mckee joins us to work our way through the data. michael: at 8:29 wall street 10 this morning, the story was -- wall street time this morning, the story was the economy is in trouble. at 8:31, the narrative changed. the pbi comes in at 1.2%. that is just for the month, not year-over-year. industrial production more than double what was forecast. is this the new narrative? not so fast. the one thing with retail sales to keep in mind is most americans got $600 checks during january, and much of that was spent. that doesn't happen every month. second, seasonal adjustme

creates fed coin but they guarantee your deposits they swap out your dollars for a fed coin one for one and they let the banks die in other words i saw the banks under the bus this is. a heterodox idea but it's gaining some currency out there and your thoughts i think that's entirely possible because you know the banks and wall street these are our cannibalistic i mean they're sharks and they're camels though they'll eat their young men but with their competitors it doesn't matter and you have to remember the largest banks in the world and on the stock in the federal reserve which is not part of the government i mean it's government sanctioned but it's not part of the government it's a corporation that issued stark and the largest banks in the world own that so if they do with the banks out of business they haven't really put the banks that own the federal reserve out of business they just created that point and yes they do want to control the lost city this is why in the orient for them and getting currency into the hands of people that are poor sri currency which is then by the wa

gene: the fed will err on the side of being easier. it is the three temptations of jay powell in 2021. the first one is around inflation. data will be noisy, it will be higher for a while, but we don't think the fed will react to that. second, honestly, is around your second point, employment. we have seen the on employment numbers come down. the fed is taking a broader and broader view of what it considers to be maximum employment. that will also cause them to air on the side of being easier. the third temptation will be around financial stability. let's not forget the fed adopted a financial stability mandate after the great financial crisis in 2008. all of the shenanigans we see around gamestop, short squeeze, cryptocurrency will have them take a look at tightening as well. in all three cases, the fed errs on the side of staying easier. kailey: they are providing a backstop in a number of markets, specifically in high yield. junk yield falling to record lows this week, so much issuance coming through. even investment-grade companies

will that continue, will the fed step in? i would argue that they do not step in the until you get financial conditions to go along with that move, and so far you don't. tom: i know romaine has to do his ballet here, but bitcoin above 50,000, who would have thought? jonathan: romaine is on stocks this morning. romaine: going to that energy crisis still unfolding, 34 gigawatts off-line in the central u.s. that is affecting some of the energy names. demand momentum pushing these stocks higher out of last week. that continues into this week because of supply issues. i just got off of a chat with a traitor on the idea that there will be some structural changes here. this goes beyond barrels of oil and natural gas that is out there. they are infrastructure issues that could be resolved at the benefit of a lot of these companies. a lot of states pointing the finger at other states. countries like mexico pointing the finger at the u.s. the reverberations will not only be in the energy market, but this could play out in the next few

swagel: it has remained below the fed's target. before the pandemic, inflation had been below target for a while that was rising. chairman powell said that was not unwelcome. it was welcomed because going back to the fed's target after many years when inflation had been below. this is natural, this is what we expect when the economy is operating above potential as we saw before the pandemic. it is not that inflation zooms up and -- zooms up. wages go up and those are the things we saw before the pandemic. many people would say those are welcomed. having rising wages is a very welcomed aspect of an economy operating at or above potential. as the economy remains below potential with the pandemic, inflationary pressures are muted. it could be negative shocks. we have seen the cold wave sweeping the country is affecting energy prices with disruptions in natural gas and electricity. there will be particular spikes in prices. we see inflation as remaining low while the economy recovers from the pandemic. the new operating framework allow

we are ahead of where fed dots are guiding us. i do not think it is time for him to be pushing back strongly against his expectation, but that is what i will be watching for. jonathan: andrew, thank you. tom: let's be honest. lisa: it is his job to watch this. it is his job. he has to watch this. tom: catherine mann will take the early lunch. the acclaimed catherine mann gets the early lunch. jonathan: the reason i ask this is because we do this repeatedly. every time the semiannual testimony comes up with a chairman powell is coming, and then what happens it is hours on end of unproductive conversation with lawmakers in d.c. i will say i think to a certain degree this is different because of the price action for the last several weeks. does he change the script in any way? they have said repeatedly policy is in a good place. tom: to dovetail into what andrew hollenhorst said, he will not change the script until he gets wage inflation. it is not there. lisa: what does not changing script mean westmark does it open up the possibili

lisa: i was going to defend the fed jonathan: -- i was going to defend the fed. jonathan: were you? do we have more time? lisa: how do they move away from that without affecting income inequality even more? jonathan: i run the clock, so do you want more time? are you sure? tom: i want to defend the weak -- weeknd. jonathan: we have all the time in the world. lisa: [indiscernible] jonathan: we catch up with matt hornbeck of morgan stanley coming up. tom: by the time you go live, we may have bitcoin at $50,000. jonathan: sincerely, have no idea. lisa: it is fine. jonathan: usually, when you have something to say, you get educated. god. the wealth inequality around this. futures up 15 on the s&p. the record high. this is bloomberg. ♪ >> i am ritika gupta. janet yellen is making her case to congress to pass the biden stimulus plan. yellen says the u.s. can return to full employment next year if it is enacted. without it, yellen says it may take until 2025. donald trump's second impeachment trial is almost certain to end in acquittal. it will deliver a public reckoning for a presidency

he said the fed policy has been appropriate given the crisis that they're in and the fed has a long way to go before they even think about adjusting their buying. on that note, you have two perfect guests if they think it is appropriate. quill intelligence danielle dimartino booth, along with walser wealth management rebecca walser. danielle, these are your former colleagues. you're always railing against them. how long can they do? they take the victory laps, we're offering because of our work but continue to make the case for $120 billion in accommodation. can they have it both ways forever? >> charles, what would we do if federal officials had three hands. always on one hand and the other. don't give them a third. don't try to go ahead me, charles. what bullard is saying so hypocritical. the economy clearly does not need as much accommodation the fed is providing. ed fed is afraid to tap the brakes, to suggest they tap the brakes, yet they're saying the economy is set to roar into the second half. they're also saying that they need the stimulus spending and don't worry. we'll take ca

yeah i mean if the fed now decides they have to increase interest rates it's not going to look good i mean the bond markets are fully dependent on that and the equities markets pretty much true so the entire rally that we've seen over the course of the past few months has been entirely fed by the pumping cash in past few months been almost a year now so that's really what's been driving things so that's the balance the risks we see there that if they stop doing that things crash well toyota talk about spec they seem to be a pretty big deal his days they're taking companies public this year in 2020 want to anthrax raise more than $38000000000.00 how viable is this sort of vehicle going to be going forward over the traditional i.p.o. process that we've we've seen before is going to be the new weapon of choice because it's easier. well certainly looks that way so going public is a fairly arduous process you have to file all sorts of paperwork with the f.c.c. and with the exchange you have to go on road trips and find investors and things like that there's very few if you c.e.o.'s a senio

creates fed coin but they guarantee your deposits they swap out your dollars for a fed coin one for one and they let the banks die in other words are the banks under the bus this is. a heterodox idea but it's gaining some currency out there and your thoughts i think that's entirely possible because you know the banks and wall street these are all cannibalistic i mean they're sharks and they're camels though they don't eat their young men but with their competitors it doesn't matter and you have to remember that the largest banks in the world own the stock in the federal reserve which is not part of the government i mean it's government sanctioned but it's not part of the government it's a corporation that issued starke and the largest banks in the world own that so if they do with the banks out of business they haven't really put the banks that own the federal reserve out of business they've just created in morocco that point and yes they do want to control the lost city this is why in the orient for them and getting currency into the hands of people that are poor sri currency which

matt: did we get any indication as to when the fed is going to hike rates? the market expected to bring forward a little. i thought the expectation -- the likely could -- the likely could it could happen in september is rising. ira: that is going up a little bit. we have to remember he said a couple of meetings ago and reiterated it today that they are not thinking about hiking yet. one of the preconditions would be for them to reduce the amount of asset purchases. they are still purchasing 120 billion dollars of agency mortgages and treasury securities every month. they have to taper that. that is the necessary condition that has to exist before they talk about hiking. let's say that happens in december because things are doing better, they say we are going to taper. that taper will last nine months. that is how you get to december 2022 potential for hike. that is early. bloomberg economics thanks that is too early. i think the market may be is getting ahead of itself and building and risk premia that is unwanted. this is not much different than what happen

in the meantime we'll turn to the fed minutes also just released this afternoon. steve liesman with the big highlights >> thanks, sara. minutes from the fed's january meeting even though they came out about an hour ago looked to have been stale from the get-go. they show the fed saw a moderate pace of economic activity and inflation held down by weak demand and lowering oil prices guess what this morning the government comes out with blow out numbers from the january retail sales and the highest one-month rise in producer price inflation since the start of the current series in 2009 oil prices are at the highest level in 13 months still, the minutes' guidance on when and how the fed will shift from the easy monetary policies likely remain relevant but that is saying it will communicate any changes to qe the $120 billion a month in fixed assets it's buying, it will do so well in advance and is likely to take sometime to achieve the metric for lowering it which is, quote, substantial further progress it is also important to distinguish between price increases and ch

actually cannot really do anything about it because the only thing they can do is lower the fed funds rate in order to deal with the short term yields and that's already at 0 to less than a quarter percent so there's no way to go on that so he did exactly what he needed to do which was basically calm the market down to didn't do anything for the short term yields and we could go right back to that formula tomorrow if we could not see any kind of easing but for now at least he calmed down from our taper tantrum that people are worried about that certainly isn't like you accomplish that at least now christine we of course have to talk about bitcoin here the price fell about 17 percent on tuesday so what is causing this pullback and is this the beginning of a down trend. no this is not the beginning of the downtrend because it's really funny how we always resist at this topic every single time we see backwind pulling back a little bit because let's be clear we've seen bitcoin go through 30 percent 50 percent pullback this is not abnormal for this asset and most of the time the reason is

need new regulations we need enforcement of existing regulations you have jennifer yellen who is the fed she spent 20 years on the federal reserve now the treasury secretary she caused these problems she caused these problems the central banks cause these valuation problems the valuation of tesla $800000000000.00 is served the company makes no profits and this market is headed towards a disaster look i don't have i don't have a dog in this fight quite frankly i've been managing money for 40 years and i understand for an institutional side i don't deal with individuals but i understand that and what i would bet anybody on this. anybody is that professional investors went on to read it and they front run brands so they bought those shares before it induced other people to buy those shares and made a bucket load of money which is illegal it's collusion and the f.c.c. if they have any teeth to get their heads out of our asses and go and find out who made money and actually prosecute them because it's clues and it's organized as manipulation against everything free market stand for. john the

yeah i mean if the fed now decides they have to increase interest rates it's not going to look good i mean the bond markets are fully dependent on that and the equities markets pretty much to sell in time rally that we've seen over the course of the past few months have been entirely fed by the pumping cash fast for months been almost a year now so that's really what's been driving things so that's the balance of the risks that we see there that if they stop doing that things crash well tony i want to talk about back they seem to be a pretty big deal these days they're taking companies public this year in 2020 want to bax raise more than $38000000000.00 how viable is this sort of vehicle going to be going forward over the traditional i.p.o. process that we've we've seen before is going to be the new weapon of choice because it's easier. well certainly looks that way so going public is a fairly arduous dreary process you have to file all sorts of paperwork with the f.c.c. and with the exchange you have to go on road trips and find investors and things like that there's very few few c.e