RUSH TRANSCRIPT With Maria ░░░░░░░░ live right now Time ░░░░░░░░ the word on Wall ░░░░░░░░ top investors watching your ░░░░░░░░ Joining me now is ░░░░░░░░ of U S Rates ░░░░░░░░ farinelo Cfra chief investment ░░░░░░░░ Sam stoval and wealth ░░░░░░░░ president Brian bendig Thank ░░░░░░░░ for being here Mjp ░░░░░░░░ advisor Brian thank you ░░░░░░░░ much Great to see ░░░░░░░░ gentlemen Sam I want ░░░░░░░░ kick things off with ░░░░░░░░ I m wondering what ░░░░░░░░ impact on the eurozone ░░░░░░░░ will be as a ░░░░░░░░ of the war on ░░░░░░░░ and I m wondering ░░░░░░░░ you expect weakness in ░░░░░░░░ eurozone to impact the ░░░░░░░░ States Look at the ░░░░░░░░ market this morning trading ░░░░░░░░ Triple digit move on ░░░░░░░░ dow this morning with ░░░░░░░░ S P and the ░░░░░░░░ also trading higher this ░░░░░░░░ after stocks finished lower ░░░░░░░░ You re calling yesterday ░░░░░░░░ bull market s second ░░░░░░░░ Tell me about the ░░░░░░░░ performance that you re ░░░░░░░░ for in the face ░░░░░░░░ what a macro story ░░░░░░░░ look like as well ░░░░░░░░ higher interest rates Well ░░░░░░░░ morning Maria Good to ░░░░░░░░ to you again I ░░░░░░░░ basically the market continues ░░░░░░░░ zigzag as it weighs ░░░░░░░░ information regarding inflation oil ░░░░░░░░ the Fed the Russian ░░░░░░░░ and as you had ░░░░░░░░ mentioned what about the ░░░░░░░░ growth prospects for Europe ░░░░░░░░ expectation is we ll ░░░░░░░░ see about a 3 ░░░░░░░░ a half percent gain ░░░░░░░░ GDP in the developed ░░░░░░░░ mean countries this year ░░░░░░░░ countries this year but ░░░░░░░░ s down from 5 ░░░░░░░░ a half percent in ░░░░░░░░ and most of the ░░░░░░░░ is like throw be ░░░░░░░░ in the developing like ░░░░░░░░ to be in the ░░░░░░░░ economies of Europe and ░░░░░░░░ markets in general There ░░░░░░░░ pressure We question whether ░░░░░░░░ will spill over into ░░░░░░░░ U S Dramatically We ░░░░░░░░ a 1 rise in ░░░░░░░░ in one q that ░░░░░░░░ where the pressure is ░░░░░░░░ throw be found We ░░░░░░░░ GDP to bounce by ░░░░░░░░ to 3 and a ░░░░░░░░ percent for the remaining ░░░░░░░░ of this year Maria ░░░░░░░░ Well I mean look ░░░░░░░░ s Nancy LA alazar ░░░░░░░░ the economy right n ░░░░░░░░ The Russia Ukraine war ░░░░░░░░ spike in energy prices ░░░░░░░░ the odds of an ░░░░░░░░ eurozone resession with manufacturing ░░░░░░░░ likely to drop through ░░░░░░░░ signaling a sharp decline ░░░░░░░░ GDP consumer spending and ░░░░░░░░ earnings Is that priced ░░░░░░░░ the market right now ░░░░░░░░ you think if we ░░░░░░░░ weakening pmis in Europe ░░░░░░░░ effects happen in the ░░░░░░░░ S and estimates come ░░░░░░░░ for earnings I think ░░░░░░░░ weakness in Europe is ░░░░░░░░ that is anticipated already ░░░░░░░░ real question is by ░░░░░░░░ much will it spill ░░░░░░░░ into the U S ░░░░░░░░ think that obviously the ░░░░░░░░ market is a better ░░░░░░░░ of what will happen ░░░░░░░░ the economy than vice ░░░░░░░░ Traditionally because the stock ░░░░░░░░ peaks about six months ░░░░░░░░ of the start of ░░░░░░░░ And certainly the longer ░░░░░░░░ see oil prices remain ░░░░░░░░ the way they are ░░░░░░░░ now at 115 for ░░░░░░░░ Texas intermediate we re ░░░░░░░░ that every 10 increase ░░░░░░░░ the price of oil ░░░░░░░░ a prolonged basis takes ░░░░░░░░ 20 basis points of ░░░░░░░░ GDP I think that ░░░░░░░░ put additional pressure on ░░░░░░░░ economy and let s ░░░░░░░░ it last year 2021 ░░░░░░░░ had 47 year on ░░░░░░░░ growth in S P ░░░░░░░░ whereas this year expectations ░░░░░░░░ for 7 and a ░░░░░░░░ Maria well it s ░░░░░░░░ reason that we re ░░░░░░░░ the Federal Reserve s ░░░░░░░░ of rate hikes to ░░░░░░░░ greg as the Fed ░░░░░░░░ rates in a slowing ░░░░░░░░ They raised rates at ░░░░░░░░ March meeting last week ░░░░░░░░ ahead to the next ░░░░░░░░ I know you say ░░░░░░░░ has signaled 50 basis ░░░░░░░░ hike in may Goldman ░░░░░░░░ said it s going ░░░░░░░░ be 50 of 50 ░░░░░░░░ points in may June ░░░░░░░░ s the impact here ░░░░░░░░ Maria good morning And ░░░░░░░░ s great to be ░░░░░░░░ you again I mean ░░░░░░░░ s that is the ░░░░░░░░ dollar question here I ░░░░░░░░ the Fed is they ░░░░░░░░ in a really really ░░░░░░░░ box and to be ░░░░░░░░ I think they put ░░░░░░░░ in this box by ░░░░░░░░ so slowly You and ░░░░░░░░ have had the pleasure ░░░░░░░░ talking over the last ░░░░░░░░ of years about these ░░░░░░░░ conditions that they ve ░░░░░░░░ in place for quite ░░░░░░░░ time here So I ░░░░░░░░ got a couple of ░░░░░░░░ this morning One is ░░░░░░░░ the Fed is saying ░░░░░░░░ want to get to ░░░░░░░░ expeditiously Those are the ░░░░░░░░ from Chairman Powell And ░░░░░░░░ you look at market ░░░░░░░░ right now for 2022 ░░░░░░░░ s a astounding where ░░░░░░░░ started the year where ░░░░░░░░ are right now We ░░░░░░░░ priced for two and ░░░░░░░░ quarter 220 which is ░░░░░░░░ the estimate for neutral ░░░░░░░░ terms of the war ░░░░░░░░ Ukraine and Russia right ░░░░░░░░ the inflationary pressures I ░░░░░░░░ in normal times would ░░░░░░░░ we ll discount it ░░░░░░░░ ll hope for inflationary ░░░░░░░░ to come down But ░░░░░░░░ think the chairman is ░░░░░░░░ we can t do ░░░░░░░░ anymore because we re ░░░░░░░░ inflationary expectations So he ░░░░░░░░ laying out a three ░░░░░░░░ plan here I think ░░░░░░░░ the end and he ░░░░░░░░ that in his speech ░░░░░░░░ is not they re ░░░░░░░░ going to tackle inflation ░░░░░░░░ time soon You re ░░░░░░░░ going to see inflation ░░░░░░░░ down any time soon ░░░░░░░░ because of one rate ░░░░░░░░ So we have to ░░░░░░░░ at that I think ░░░░░░░░ terms of a longer ░░░░░░░░ plan The yield curve ░░░░░░░░ signaling certainly we favored ░░░░░░░░ yield curves I think ░░░░░░░░ have the potential to ░░░░░░░░ invert there and certainly ░░░░░░░░ parts of the treasury ░░░░░░░░ are going to invert ░░░░░░░░ I think the Fed ░░░░░░░░ needs of to use ░░░░░░░░ balance sheet here Because ░░░░░░░░ rate increases they hit ░░░░░░░░ consumer directly right So ░░░░░░░░ the Fed raises the ░░░░░░░░ rate all banks are ░░░░░░░░ to raise their lending ░░░░░░░░ as a consequence of ░░░░░░░░ If they start rolling ░░░░░░░░ the balance sheet and ░░░░░░░░ that flow in I ░░░░░░░░ that s probably going ░░░░░░░░ be a much more ░░░░░░░░ way to hopefully land ░░░░░░░░ soft landing Maria yeah ░░░░░░░░ crazy was it that ░░░░░░░░ Fed was actually continuing ░░░░░░░░ buy securities up until ░░░░░░░░ a month ago I ░░░░░░░░ you talk about the ░░░░░░░░ sheet You re up ░░░░░░░░ more than 9 trillion ░░░░░░░░ I know that you ░░░░░░░░ that the economy can ░░░░░░░░ all these rate hikes ░░░░░░░░ Let s talk about ░░░░░░░░ inflation You think the ░░░░░░░░ can withstand three to ░░░░░░░░ rate increases due the ░░░░░░░░ of the labor market ░░░░░░░░ re seeing cracks in ░░░░░░░░ housing market already inflation ░░░░░░░░ 40 year highs has ░░░░░░░░ cut into consumer spending ░░░░░░░░ are your thoughts on ░░░░░░░░ sectors that are most ░░░░░░░░ by these rate hikes ░░░░░░░░ where the economy is ░░░░░░░░ Do you see cracks ░░░░░░░░ housing right now Thanks ░░░░░░░░ That s a great ░░░░░░░░ In the short term ░░░░░░░░ don t see housing ░░░░░░░░ mod of moderating now ░░░░░░░░ there is a supply ░░░░░░░░ issue And we do ░░░░░░░░ consumers still wanting to ░░░░░░░░ for opportunities in the ░░░░░░░░ market because they know ░░░░░░░░ are going to increase ░░░░░░░░ do expect month over ░░░░░░░░ inflation still to go ░░░░░░░░ on a headline number ░░░░░░░░ due to the fact ░░░░░░░░ we have elevated wages ░░░░░░░░ also on the housing ░░░░░░░░ rents is a significant ░░░░░░░░ into overall inflation and ░░░░░░░░ numbers and we do ░░░░░░░░ rents this year to ░░░░░░░░ sticky but I think ░░░░░░░░ you think about it ░░░░░░░░ forward part of this ░░░░░░░░ still trying to reopen ░░░░░░░░ services economy trying to ░░░░░░░░ the supply chain and ░░░░░░░░ from an overall inflation ░░░░░░░░ and I still think ░░░░░░░░ over the balance of ░░░░░░░░ year we ve the ░░░░░░░░ prices in commodities we ░░░░░░░░ see additional supply come ░░░░░░░░ and we should see ░░░░░░░░ over the course of ░░░░░░░░ year moderate So you ░░░░░░░░ to the end of ░░░░░░░░ year the headline CPI ░░░░░░░░ should be coming down ░░░░░░░░ we believe that there ░░░░░░░░ a target at around ░░░░░░░░ and the reason why ░░░░░░░░ economy can withstand some ░░░░░░░░ these rate increases is ░░░░░░░░ fact that we re ░░░░░░░░ into this period of ░░░░░░░░ with a strong labor ░░░░░░░░ strongoungoungoung maet csuonrsrsrs hlt ░░░░░░░░ an sdlltipendingnd tndnk at ░░░░░░░░ ge ge g newewewew ░░░░░░░░ eainearn min minininwa frd ░░░░░░░░ wamaa riririig See see ░░░░░░░░ tnd t he er ░░░░░░░░ mele thale yhaououch gr ░░░░░░░░ ari b Gr tgreaogreeee ░░░░░░░░ genemenenen en we ppwecippeciatou ░░░░░░░░ Tim anu ss Sir ░░░░░░░░ aeadhehihisor ningni comi ung ░░░░░░░░ mthonon siesiheesi fl ulalsc ░░░░░░░░ insion begon Weewewe t ░░░░░░░░ you y live tovivvi ░░░░░░░░ joinintheonveonatioonnll ingong thisth morngor ░░░░░░░░ es andonicaic crowl cey ░░░░░░░░ here re ll ge ░░░░░░░░ tockhishiicicicic nel when we ░░░░░░░░ right back You re ░░░░░░░░ mornings with Maria live ░░░░░░░░ fox business.