charles evans of the chicago fed right now saying optimistic we can reduce inflation and avoid recession do you think that optimism is misplaced well at this point not yet although the more the fed tightens the tougher its going to be with a soft landing we are seeing tentative cracks in the labor market not quite in the nonfarm payrolls but dow jones finally came down a little bit were seeing some softening in growth but at the same time consumption seems to be holding up pretty well and as we said unemployment is holding up so so far a decent mix for the fed but if inflation doesnt come down over the next couple of months theyre going to continue to tighten pretty aggressively and that could definitely have pretty bad effects for 2023 2023 up to 475 and hold through much of next year as they plugged into what this would mean for the equity market if we went to 475 through much of next year how much pain what would we say well the fed the futures market is already pricing somewhere between four and a half and four point six so four point seventy five is a bit above where we are i think as long as we dont hit that 5 percent mark or more the market is pretty much pricing most of it in and should be able to withstand it weve seen earnings expectations come down not just for this earnings season but also for 2023 right now we still have those rate cuts priced in for the end of 2023 but its still a little early to say that the fed would not look through that you know over 12 months to get inflation back to 2 percent and then potentially see what the growth in fact there is and if the economy needs some help to come out either have a shallow recession or have a very sharp slowdown in any case thats what theyre going to engineer so right now the markets probably pricing in something close to dax anything much more hawkish or longer i think would be quite painful i say last time we spoke you saw the june lows withhold they did it what went wrong do you think well you know i think a couple of hard inflation prints really was was the worst of it and the market i guess was expecting a pivot i dont know who thought we would pivot to dove ish i mean pivoting to a pause or to see what the rate hikes are doing lets keep in mind this is the fastest pace of rate hikes the fed has ever done at some point they need to see what the impact is you dont see that after one month so were going to have you know for some percent of hikes within six to nine months and the fed is going to have to have a look at that too i said love you if you on the panic season going into the big banks this friday well everyone is expecting it to be poor earnings expectations have come down everyone thinks this q3 is going to be the opportunity for guidance to be poor for 2023 expectation to be brought down the question really is how much is already priced in at this point of this bad news that pretty much everyone knows is coming so i think were going to get of course some pretty bad surprises lets say something you know around what fedex said although difficult to imagine much worse than the guidance that they gave but i think were also going to have a couple of beats as we usually have tech should hold up better and then the banks i mean so far weve seen that consumers are holding up theres a little bit more of an impact at the lowest wage earners because of inflation but beyond that were still seeing some solidity in the underlying consumption trend