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we are going to hear from the FED of course on on Wednesday and I'm curious what you think we are going to hear not just the number which I think is sort of everybody's consensus is 75 basis points but what we're actually going to hear from Jay Powell and then of course we'll hear the jobs number on Friday good morning um he's in a bit of a bind because on the one hand I think he's inclined to validate the market expectation that we are having a Slowdown in the rate hikes and he may combine that with a higher terminal rate as some have suggested on the other hand if he does that and financial conditions continue to loosen then that causes him problems on the inflation front so it's a really tough balance to strike and then there's the financial stability issue on top of that so it's going to be a fascinating press conference and it comes after the droughts number but before the labor report so it is a particularly interesting one this one so you sell the Goldman Sachs report what do you what do you think is is really in the cards at this point so they are looking at inflation they're looking at how persistent inflation has become and they are saying therefore the FED is going to have to go even higher um but the way that which it gets there slows down so it's the old thing between how high how fast how long the hfl and what we do know is is the F that's most problematic for the markets it's the phosphate so to the extent that the FED can get away with slowing I think this Market can try to navigate the higher for longer so look at the pace the pace is really important if the pace stays where it is now then we're going to have this liquidity rally which has been incredibly rewarding once again being challenged by fundamentals does this little rally make sense to you I mean some people think that this is the beginning of something some people think this is a grand head fake I think Joe summarized it very well um this is a market that repeatedly falls in love with liquidity and therefore rallies but the sustainability of those rallies is only there if you get fundamentals improving that is the lesson of the last two and a half years now when you're in that rally it's incredibly powerful it's incredibly rewarding but then you get the fundamentals right so looking forward and I am among the people who don't know looking forward the question is when will fundamentals validate a liquidity rally and that's the that's the big question so far fundamentals haven't validated it and that's why people are worried that we're going to test the lows yet again Mohammed you've been very worried about a hard Landing for a long time is there any chance we actually are in for a soft Landing you saw uh GDP numbers better than people had expected which I think gave some comfort uh to the folks at Treasury and probably at the Fed look I'm not yet in the camp that the recession's 100 I do think the probability is uncomfortably High I wouldn't put it a hundred percent um so is there some possibility of a soft Landing yes but it is meager Andrew unfortunately for for a soft Landing to have happened the FED should have started moving a year ago not and not waited and then had to front load all these rate increases and where are you on the other side of this let's say we actually get to the other side of this I don't know what the other side of this even means you know Larry Summers has talked about this idea that actually even in the best case scenario you sit you sort of live in this sort of stagflation world yeah it's a matter of policy there's nothing pre-ordained about stagflation we can do a lot on the supply side and we should be doing a lot of our supply side we should do more on regulating and supervising non-banks and the FED has to be sustainably serious on inflation you know we have the tools and we have the policies to avoid this long period of stagflation um but the question is will the political system allow these these tools to be deployed in a continuous Manner and that's why next week is so important right
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