>> John: THE COST BORROWING
MONEY IS HIGHER AFTER THE
FEDERAL RESERVE HIKED INTEREST
RATES DESPITE THE GREATEST
BANKING CRISIS SINCE THE
DEPRESSION.
WALKING THE TIGHT ROPE.
JOINING US NOW THE MARIA
BARTIROMO FOR A DEEPER DIVE ON
THIS.
THE "WALL STREET JOURNAL" ALSO
SAID THIS.
THAT TRY TO WALK THAT TIGHT ROPE
IS FRAUGHT WITH RISK.
ONE IS THAT THEY PROVE
INSUFFICIENT TO PROVOKE A LARGER
BANK PANIC.
A SUDDEN EASING OF INTEREST
RATES NO MATTER THE INFLATION
RATE AT THE TIME.
THE FED COULD BE FORCED TO EASE
BEFORE IT HAS CONQUERED
INFLATION.
YOU TALK ABOUT A BALANCING ACT
HERE.
THIS IS PRECARIOUS AND THE
RAMIFICATIONS ARE HUGE.
>> YES, THEY SURE ARE, JOHN.
THAT CAME ACROSS YESTERDAY WITH
THE FEDERAL RESERVE REALLY
WALKING A FINE LINE IN TERMS OF
TELLING US THAT THE BANKING
CRISIS HAS EASED BUT ALSO
TELLING US THAT THE FEDERAL
RESERVE IS WATCHING THE BANKING
CRISIS FOR ITS ULTIMATE IMPACT
ON THE ECONOMY.
WE KNOW THE FED HAS RAISED RATES
NINE TIMES AND IT TAKES ABOUT
ONE YEAR OF A LAG EFFECT TO FEEL
THE PAIN.
AND FEEL THE IMPACT OF THOSE
HIGHER INTEREST RATES.
WE ARE BEGINNING TO FEEL IT.
WE’VE SEEN IT IN A NUMBER OF
INTEREST RATE SENSITIVE SEGMENTS
LIKE REAL ESTATE AND AUTO AREA.
I WOULD EXPECT WE’LL CONTINUE TO
SEE AN ECONOMY THAT IS SLOWING
AND THERE ARE MANY EXPECTATIONS
WE’LL SEE A RECESSION LATER ON
THIS YEAR.
THE ONE AREA THAT SEEMS TO BE
HOLDING THINGS UP IS THIS VERY
TIGHT LABOR MARKET AND THE FACT
THAT WE CONTINUE TO SEE JOBS
CREATED AND CONTINUE TO SEE
PEOPLE LEAVING AND GOING TO
DIFFERENT JOBS.
TRYING TO BE COMPETITIVE AND AS
A RESULT, THAT IS THE OFF SET TO
WHAT APPEARS TO BE A WEAKER
ECONOMY AND ON YOUR NOTE IN
TERMS OF CUTTING INTEREST RATES,
I HAD ONE GUEST ON THE OTHER DAY
THAT TOLD ME HE THINKS THE
FEDERAL RESERVE WILL BE CUTTING
INTEREST RATES BY JULY 4TH
WEEKEND THIS YEAR.
OTHERS LIKE NANCY LAZAR FROM
PIPER SANDLER SAYS WE EXPECT
RECESSION AT THE END OF THE YEAR
AND CUTS WILL START NEXT YEAR IN
2024.
NO DOUBT THIS IS A REAL BALANCE
THE FEDERAL RESERVE IS WALKING
AND WE’RE IN A SLOWING ECONOMY,
HIGHER INTEREST RATES HAVE
REPRESENTED A SHOCK FOR A NUMBER
OF BUSINESSES AND LET ME JUST
ADD ONE OTHER WARNING SIGN,
JOHN.
THAT IS RIGHT NOW YOU ARE
TALKING ABOUT $1 TRILLION OF
DEBT THAT WILL BE ROLLED OVER.
THAT DEBT WILL COME WITH HIGHER
INTEREST RATES BECAUSE RATES
HAVE BEEN RISING.
WHEN YOU HAVE BUSINESSES THAT
WERE PAYING 4% FOR THEIR DEBT
BUT NOW PAYING 9% OR HIGHER AND
GOING HIGHER, THAT’S A BIG DEAL.
I WOULD EXPECT BANKRUPTCIES THIS
YEAR AS WELL.
>> John: YOU MENTIONED
RECESSION.
TO THAT POINT THE WHITE HOUSE
SEES IT COMPLETELY DIFFERENTLY.
LISTEN TO WHAT KARINE
JEAN-PIERRE SAID.
>> WE DO NOT SEE A RECESSION OR
PRE-RECESSION.
WE SEE A STRONG ECONOMY AND
BECAUSE OF THE WORK THIS
PRESIDENT HAS DONE.
>> John: THEY MUST HAVE AN
ENTIRE CRATE OF ROSE-COLORED
GLASSES IN THE WHITE HOUSE.
THEY APPEAR TO BE THE ONLY ONES
SEEING IT THAT WAY.
>> SHE HAS HER TALKING POINTS.
I DON’T KNOW WHAT SHE IS LOOKING
AT IN TERMS OF RESEARCH.
WE ARE LOOKING AT AN ECONOMY
SLOWING DOWN AND LIKELY TO
CONTINUE TO SLOW DOWN.
RECESSION EITHER AT THE END OF
THIS YEAR OR NEXT YEAR IS BAKED
IN THE CAKE FOR THE ECONOMIST
I’VE SPOKEN WITH.
>> John: ELIZABETH WARREN
DOESN’T LIKE WHAT JAY POWELL IS
DOING AT ALL AND CALLING FOR HIS
HEAD.
LISTEN TO WHAT SHE SAID.
>> DO YOU THINK THE UNITED
STATES IS HEADED FOR A
RECESSION?
>> I THINK THAT IS WHERE JEROME
POWELL IS TRYING TO DRIVE IT.
IT IS A DANGER TO MY ECONOMY.
I THINK HE IS A DANGEROUS MAN TO
HAVE IN THIS JOB.
>> John: SHE DIDN’T SAY SHE
WOULD ACCIDENTALLY TRIGGER A
RECESSION AND THAT HE IS
DANGEROUS AND NEEDS TO GO.
I DON’T THINK THE PRESIDENT IS
LISTENING.
>> I DON’T THINK THAT ANYBODY
WANTS TO DRIVE THE ECONOMY INTO
A RECESSION.
I THINK THE FED MADE MAJOR
MISTAKES BY KEEPING INTEREST
RATES AS LOW AS THEY WERE FOR AS
LONG AS THEY DID.
LET’S FACE IT, YOU HAD INTEREST
RATES AT 0 FOR 15 YEARS.
15 YEARS.
ALL OF A SUDDEN IN 11 MONTHS WE
GO FROM 0 TO 5%.
THAT’S A SHOCK.
IT HAS BEEN A SHOCK ON MANY
BUSINESSES.
IT WILL BE A SHOCK ON CONSUMERS.
LET’S FACE IT, RATES RIGHT NOW
WHEN YOU ARE TALKING ABOUT
CREDIT CARD RATES OR OTHER
RATES, MORTGAGE RATES, YOU ARE
TALKING ABOUT THE HIGHEST RATES
IN DECADES.
SO ALREADY WE’VE SEEN AN IMPACT.
I DON’T THINK JAY POWELL IS
REALLY THINKING I WANT TO DRIVE
THIS ECONOMY INTO A RECESSION.
THAT’S PROBABLY ELIZABETH WARREN
TRYING TO RUN FOR PRESIDENT.
I DO THINK HE HAS MADE A LOT OF
MISTAKES IN TERMS OF MONETARY
POLICY AND TRYING TO FIGURE OUT
HOW TO GET HIMSELF OUT OF THAT.
WE TALKED WITH THOMAS HORNIG A
LOT.
HE SAID NO, TOO MUCH STIMULUS.
I’M NOT ON BOARD.
THE ONE DISSENTER.
HE WAS THE RIGHT ONE TO FOLLOW.
>> John: YELLEN SAID OOPS IN THE