[Music playing Alison Kosik ░░░░░░░░ to Markets Now I ░░░░░░░░ Alison Kosik and we ░░░░░░░░ streaming live from New ░░░░░░░░ It s halftime of ░░░░░░░░ trading week Let s ░░░░░░░░ started The Federal Reserve ░░░░░░░░ facing the biggest jump ░░░░░░░░ inflation in almost four ░░░░░░░░ It s expected to ░░░░░░░░ a faster taper but ░░░░░░░░ it missed its chance ░░░░░░░░ keep a lid on ░░░░░░░░ prices Investors are waiting ░░░░░░░░ to hear from Jay ░░░░░░░░ Expect lots of volatility ░░░░░░░░ as Wall Street tries ░░░░░░░░ game out what s ░░░░░░░░ for interest rates And ░░░░░░░░ Clinic the largest virtual ░░░░░░░░ for women and family ░░░░░░░░ has raised more than ░░░░░░░░ million to date We ░░░░░░░░ the founder and CEO ░░░░░░░░ s next for the ░░░░░░░░ Before we get to ░░░░░░░░ of our great guests ░░░░░░░░ let s check out ░░░░░░░░ action on Wall Street ░░░░░░░░ like markets are looking ░░░░░░░░ cautious as investors wait ░░░░░░░░ the Fed s decision ░░░░░░░░ comments about what s ░░░░░░░░ Will the Fed say ░░░░░░░░ than is it being ░░░░░░░░ by the markets We ░░░░░░░░ know very soon So ░░░░░░░░ again all eyes on ░░░░░░░░ Federal Reserve today And ░░░░░░░░ DiMartino Booth is CEO ░░░░░░░░ Chief Strategist at Quill ░░░░░░░░ She s also a ░░░░░░░░ Fed insider who spent ░░░░░░░░ years at the Dallas ░░░░░░░░ And so happy to ░░░░░░░░ you on the show ░░░░░░░░ Danielle Danielle DiMartino Booth ░░░░░░░░ s great to be ░░░░░░░░ on this Fed day ░░░░░░░░ s a crazy crazy ░░░░░░░░ Fed day Alison Kosik ░░░░░░░░ it s a critical ░░░░░░░░ for the Fed What ░░░░░░░░ you expecting to come ░░░░░░░░ of today Danielle DiMartino ░░░░░░░░ You know I m ░░░░░░░░ that we re going ░░░░░░░░ see an expedited tapering ░░░░░░░░ think that Jay Powell ░░░░░░░░ to that in his ░░░░░░░░ recent congressional testimony when ░░░░░░░░ was really grilled by ░░░░░░░░ who ve been hearing ░░░░░░░░ their constituents about this ░░░░░░░░ year runaway inflation that ░░░░░░░░ re experiencing But I ░░░░░░░░ be paying very close ░░░░░░░░ to that dot plot ░░░░░░░░ I think a lot ░░░░░░░░ investors will as well ░░░░░░░░ we want to know ░░░░░░░░ s going to happen ░░░░░░░░ the accelerated tapering What ░░░░░░░░ going to happen after ░░░░░░░░ What s going to ░░░░░░░░ potentially in March And ░░░░░░░░ will be dictated by ░░░░░░░░ number of dot plot ░░░░░░░░ the number of voters ░░░░░░░░ s an anonymous survey ░░░░░░░░ you will But we ░░░░░░░░ see how many say ░░░░░░░░ there might be three ░░░░░░░░ hikes in 2022 And ░░░░░░░░ I think is the ░░░░░░░░ factor for the markets ░░░░░░░░ Alison Kosik How soon ░░░░░░░░ you see the first ░░░░░░░░ next year Danielle DiMartino ░░░░░░░░ You know if you ░░░░░░░░ the math if you ░░░░░░░░ through 30 billion in ░░░░░░░░ and February and March ░░░░░░░░ 15 billion in the ░░░░░░░░ half of March you ░░░░░░░░ get there by the ░░░░░░░░ 17th FOMC meeting And ░░░░░░░░ is not being priced ░░░░░░░░ the markets right now ░░░░░░░░ s really only about ░░░░░░░░ 35 40 chance of ░░░░░░░░ March rate hike being ░░░░░░░░ in today in the ░░░░░░░░ So that would be ░░░░░░░░ surprise for investors Alison ░░░░░░░░ So what s the ░░░░░░░░ here that the market ░░░░░░░░ sort of being more ░░░░░░░░ than maybe it should ░░░░░░░░ Danielle DiMartino Booth Yeah ░░░░░░░░ mean look we ve ░░░░░░░░ a few bumpy days ░░░░░░░░ the stock market But ░░░░░░░░ s get real Stocks ░░░░░░░░ still very close to ░░░░░░░░ all time highs And ░░░░░░░░ think that there is ░░░░░░░░ here to the downside ░░░░░░░░ with some other risky ░░░░░░░░ Think of junk bonds ░░░░░░░░ how reliant so many ░░░░░░░░ of the corporate bond ░░░░░░░░ are needing that zero ░░░░░░░░ rate policy to remain ░░░░░░░░ place Alison Kosik Let ░░░░░░░░ talk about what the ░░░░░░░░ has done up till ░░░░░░░░ Do you think it ░░░░░░░░ missed its chance to ░░░░░░░░ a wage price spiral ░░░░░░░░ DiMartino Booth Well I ░░░░░░░░ t know that we ░░░░░░░░ necessarily seeing a wage ░░░░░░░░ spiral Spiral s a ░░░░░░░░ especially because when you ░░░░░░░░ for inflation wages are ░░░░░░░░ actually negative contracting But ░░░░░░░░ do think that the ░░░░░░░░ of fiscal and monetary ░░░░░░░░ have made it to ░░░░░░░░ there are too many ░░░░░░░░ who continue to be ░░░░░░░░ to stay out of ░░░░░░░░ labor force And that ░░░░░░░░ made it very difficult ░░░░░░░░ many employers to get ░░░░░░░░ workers that they need ░░░░░░░░ hand So wages are ░░░░░░░░ than they otherwise would ░░░░░░░░ if it was not ░░░░░░░░ again the combination of ░░░░░░░░ and monetary policy Alison ░░░░░░░░ If the Fed does ░░░░░░░░ ahead and sort of ░░░░░░░░ its pace of both ░░░░░░░░ and interest rate hikes ░░░░░░░░ soon do you think ░░░░░░░░ could see inflation start ░░░░░░░░ level off even just ░░░░░░░░ little bit Danielle DiMartino ░░░░░░░░ Well you know you ░░░░░░░░ hearing from automakers for ░░░░░░░░ that they expect the ░░░░░░░░ quarter for this massive ░░░░░░░░ in the car market ░░░░░░░░ finally abate You re ░░░░░░░░ home inventories in certain ░░░░░░░░ start to build You ░░░░░░░░ seen second home sales ░░░░░░░░ You ve seen luxury ░░░░░░░░ start to roll over ░░░░░░░░ we re actually seeing ░░░░░░░░ build in that area ░░░░░░░░ the market as well ░░░░░░░░ the supply chain disruption ░░░░░░░░ less disruptive as we ░░░░░░░░ in the retail sales ░░░░░░░░ this morning we re ░░░░░░░░ consumer electronic sales slow ░░░░░░░░ sales hit a wall ░░░░░░░░ if the demand side ░░░░░░░░ the equation starts to ░░░░░░░░ itself then we could ░░░░░░░░ certain pockets of inflation ░░░░░░░░ to come down But ░░░░░░░░ wouldn t anticipate necessarily ░░░░░░░░ s going to be ░░░░░░░░ case when it comes ░░░░░░░░ things such as food ░░░░░░░░ which is your most ░░░░░░░░ need for any given ░░░░░░░░ household as well as ░░░░░░░░ of rents and housing ░░░░░░░░ those types of price ░░░░░░░░ tend to build upon ░░░░░░░░ and for a long ░░░░░░░░ And they re hard ░░░░░░░░ bring down So there ░░░░░░░░ going to be a ░░░░░░░░ of cross tension but ░░░░░░░░ do see some of ░░░░░░░░ cost some of the ░░░░░░░░ inputs coming starting to ░░░░░░░░ off the high boil ░░░░░░░░ Kosik And just looking ░░░░░░░░ broadly at what the ░░░░░░░░ is about to do ░░░░░░░░ about reductions in bond ░░░░░░░░ increasing interest rates and ░░░░░░░░ comes the reduction in ░░░░░░░░ balance sheet in its ░░░░░░░░ 7 trillion balance sheet ░░░░░░░░ do you see that ░░░░░░░░ and what kind of ░░░░░░░░ would that the reduction ░░░░░░░░ the balance sheet what ░░░░░░░░ of impact could that ░░░░░░░░ on the market Danielle ░░░░░░░░ Booth Well I d ░░░░░░░░ to speculate because I ░░░░░░░░ t know that we ░░░░░░░░ going to get there ░░░░░░░░ don t know given ░░░░░░░░ the difference between the ░░░░░░░░ year Treasury yield and ░░░░░░░░ of the 10 year ░░░░░░░░ yield is right now ░░░░░░░░ is just 80 basis ░░░░░░░░ And it was 160 ░░░░░░░░ points back in April ░░░░░░░░ don t know that ░░░░░░░░ necessarily are going to ░░░░░░░░ the runway that the ░░░░░░░░ is necessarily going to ░░░░░░░░ the runway to tighten ░░░░░░░░ that same extent You ░░░░░░░░ back to the example ░░░░░░░░ Jay Powell s first ░░░░░░░░ in office December 2018 ░░░░░░░░ he was attempting to ░░░░░░░░ the Fed funds rate ░░░░░░░░ to 3 and was ░░░░░░░░ able to do so ░░░░░░░░ quantitative tightening because they ░░░░░░░░ shrinking the balance sheet ░░░░░░░░ the same time and ░░░░░░░░ would not withstand that ░░░░░░░░ pressure So I think ░░░░░░░░ s premature to have ░░░░░░░░ discussion at this juncture ░░░░░░░░ I think it s ░░░░░░░░ to be difficult enough ░░░░░░░░ get two or three ░░░░░░░░ hikes off in 2022 ░░░░░░░░ Kosik OK well good ░░░░░░░░ keep in mind as ░░░░░░░░ look out even farther ░░░░░░░░ Danielle DiMartino Booth great ░░░░░░░░ have you on the ░░░░░░░░ today Thanks for your ░░░░░░░░ Danielle DiMartino Booth Thank ░░░░░░░░ for having me.