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Here is the market is conducting a stress test on the fed. The Federal Reserve and other central banks I think at this stage should stop hiking and provide real reassurance that they are going to protect the financial system and deal with this problem. I think that's really what they need to focus on. That's what they are focusing on right now. That was David Kelly. The chief global strategist at JPMorgan asset management, equity futures at the moment, just about negative down a tenth of 1% on the S&P 500, no real drama here. Going into that ECB decision one hour and about 30 minutes away futures. On the NASDAQ positive by a third of 1% in the bond market two ten 30s, shaping up as follows the two year yield, which is where all the fireworks have been over the last week, up 5 basis points this morning. Still south of four, three 93 83 and just a quick sneak peek of what's developing over at Credit Suisse. Credit Suisse is positive by 21% after Tapping the Swiss national bank for 50 billion Swiss and first republic, a big name that we're watching over here on this side of the Atlantic. First republic come down about 24.5%. A little churning here, they're both waiting for news, but very different news. You know, you wonder what the timeline is on that. I wondered does the S and B or anyone there did they get out in front of the ECB? I just can't imagine that. With what? Decision. I had no idea. No idea. I just can't fathom. No, no, just something about Credit Suisse. How do you get in the way of the ECB with Credit Suisse crisis stuff? You've got to wait till the press conference. With the stock up 20% or so, I'm not sure what they can add at the moment. Yeah, well, it's better. Accomplished. I hope. No, I don't think we're anywhere near a mission accomplished. What we're going to do is continue here with a former vice chairman of the Federal Reserve system Richard Clare is with us global economic adviser. At pimco, in student of his economic history, professor Clare, as somebody spoke of creative destruction this morning, and that reminded me of a guy named Hyman minsky, who long ago and far away had schumpeter as his doctoral adviser. And of course, Hyman minsky and the lore talks about a minsky moment or maybe talks about the efficacy of regulation. Let's bring over the cacophony of another time in Hyman minsky over to what Michael Barr at the fed needs to do. What is the best outcome of bank the new bank regulation and the lessons we're learning in this march? Well, I think that, you know, there's been a lot of progress Don Frank and in particular for the large systemically important institutions with stress testing, liquidity, and all the rest. I think what this episode does reveal is that institutions may look small, they can get big as, you know, SVB, for example, tripled in size in a couple of years, and even institutions of that size as we saw over the weekend can be systemic. So I think the clear direction of travel is going to be that under existing statutes and laws, the fed has enormous flexibility in the way that it's supervises institutions on a case by case basis. And I think we're going to see that level of supervision and particular scrutiny of things like the hold of maturity portfolios being underwater and liquidity and uninsured deposits are all going to be factors in. So the director of travel is going to be tighter vision. Would you suggest our Central Bank will have to adapt to the political realities of Republicans hugely distrustful of the big accumulation of capital almost in a jacksonian way, how big will that umbrella extend out from the two big to fails? I think it's going to certainly extend into a number of the names that are in that 100 to 250. Remind you, that was actually by statute in 2018, the statute said that less Prudential scrutiny for banks under 250 billion. But again, the legislation give the fed a lot of autonomy within that on an individual bank basis. And we're going to see that, I think, with tighter supervision. What we just saw though, a lot of people are putting the finger at the Federal Reserve and saying that they should have had more supervision of this bank and that this was a policy failure that is really interfered now with their ability to raise rates elsewhere. Do you think that that's fair? Do you think that this was a policy mistake? Or do you think that this is a direct result of rolling back that aspect of Dodd Frank in 2018? Well, I've looked into it a little bit again, you know, I'm no longer in that building or talking to those folks. The interesting thing, Lisa, is that the stress tests that were set up very successfully after Dodd Frank typically looked at scenarios with deep recessions, high unemployment, and falling interest rates. And SVP would have done great in that scenario. They didn't have a lot of direct exposure in lending or the like. But what they did have obviously is a lot of exposure in long duration treasuries and mortgages and particularly for something called a global market shock that looks into that. I've also seen some work that indicates, again, I can't judge, but that SVP would have passed the standard fed liquidity test. So clearly, I think they're going to be setting this up when I pre charge where they end up. But I think that is going to be reviewed and changed. That said, rich. And this is the point that Neil Dada made, and he's going to be on later in the show. He said, you know, the fed basically is hiked a lot. Why are they surprised by duration risk? And why is it being treated as a bug rather than a feature of the hiking program from your vantage point? Do you think that perhaps there has been a bit of complacency about the resilience of an economy that's so far hasn't broken, but now it's starting to show some more acute strains. I don't think I'd use the term complacency. What I would say is I broadly agree with Neil and the direction of travel. Look, when you raise rates, you invert the yield curve on a sustained basis, that is intended to tighten financial and credit conditions, and it is tightening financial and credit conditions. And so I hope nobody in the building thought that we could get to this point without there being a tightening and lending. Now, importantly, let me get this on the table. What the fed did Sunday Night was exactly the right move. It's essentially expanding the discount window authority to lend against good collateral, which has been in place since 1913. And that's an entirely appropriate thing for the fed to do to give institutions liquidity against their security portfolio. So I think that was right. But yes, I'm broadly in that camp that when you raise rates and you invert the curve, you're going to make lending more expensive and intermediaries are going to bear some of that burden. Absolutely. How much more likely is a hard landing in your view? A recession that does inflict some more pain today than say a week ago. It's certainly more likely. You know, I've been in the camp consistently since doing your show last fall that we more likely than not, we will see a recession with a rise in unemployment and some negative prints on GDP. Again, when you have a rate hike cycle of this magnitude and how quickly that is going to be the outcome. But yeah, has the odds of a hard landing gone up, they certainly have, I don't think that's my baseline for a hard landing, but sure, the odds have to have gone up somewhat. Richard, I just want to finish on this. This line that you often hear when central banks don't do something we expected them to do. And you hear things like, they might know something we don't know. Does the fed ever know something we don't know? Well, look, the short answer is yes, not often, and not to a great degree. I tell you one situation where we didn't know anything that people didn't know was about the coronavirus. And

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