It's a really high bar for Fed not to hike rates, says Goldman Sachs' Alexandra Wilson-Elizondo

DOWN S&P, PRETTY MUCH BACK TO THE FLOOD LINE AND A LITTLE BIT OF STRENGTH PICKING UP OUT OF TECH. OUR NEXT GUEST SAYS SHE'S EXPECTING A HIGH IN JULY, BUT THINKS THAT THE CENTRAL BANKS NEED TO BREAK THE BACK OF EMPLOYMENT TO TRULY TAME INFLATION. JOINING US HERE ON SET, DEPUTY CEO OF MULTI ASSET MANAGEMENT AT GOLDMAN SACHS. HIS COMMENTS DID FOCUS ON LABOR CONSUMPTION AND

THAT'S WHAT'S DRIVING THE ECONOMY. >> ABSOLUTELY. FROM OUR PERSPECTIVE, IT'S GOING TO BE VERY DIFFICULT TO OUT-HAWK THE FED RIGHT NOW. THEY'RE VERY FOCUSED ON SECOND-ORDER INFLATION EFFECTS THAT THE BOE IS COLONEL EXPE CURRENTLY EXPERIENCING AND THE MOMENTUM WE'VE SEEN HAS BEEN ON A POSITIVE TRAJECTORY. IT'S REALLY INTERESTING, WE'RE ABOUT TO HIT THE BEGINNING OF THE THIRD QUARTER, AND THIS IS WHEN MOST PEOPLE SAID THE

RECESSION WAS GOING TO START, AND WE JUST DON'T SEE IT THAT'S A HUGE PART OF HOW WE'RE LOOKING AT MARKETS AND ALLOCATING PORTFOLIOS. IT'S LATE CYCLE FOR US IT'S NOT END-OF-CYCLE. >> THE DOTS MOVED YEAR-END UNEMPLOYMENT DOWN, RIGHT WERE THEY 4.5 AND CAME DOWN TO THE LOW 4s, RIGHT? THEY'RE SORT OF SAYING THE SAME THING AS YOU ARE >> THEY ARE. THEY WERE VERY SPECIFIC. THEY

THREW THE KITCHEN SINK AT INFLATION THIS LAST MEETING. THE TARGET WAS TO TELL THE MARKET WE ARE STAYING HIGHER FOR LONGER THE MARKET WAS PRICING IN CUTS THOSE ARE COMPLETELY PRICED OUT AT THIS POINT. THEY JUST DON'T WANT TO SEE THAT EASING AND THAT TENSION RELEASE FROM THE MARKET, AS IT RELATES TO, YOU KNOW, CONDITIONS EASING. >> HOW MUCH OF A POTENTIAL RECESSION, THOUGH, AT THIS

POINT, IS PRICED INTO THE MARKET >> SO WHEN YOU LOOK AT THE YIELD CURVE, IT'S TELLING YOU, YOU KNOW, A PRETTY SIGNIFICANT STORY. IT'S ONE OF THE INDICATORS THAT'S FLASHING RECESSION. BUT HISTORICALLY, YOU LOOK AT WHEN IT STARTED THE INVERSION, THAT WAS LAST YEAR'S TIME FRAME, SOMEWHAT CLOSE TO OCTOBER IS WHEN IT GOT PRETTY SIGNIFICANT USUALLY IT'S ABOUT 12 MONTHS LATER. THAT WOULD GET YOU TO

NOVEMBER, WHEN YOU START TO SEE SOME VERSION OF ECONOMIC CONTRACTION. NOW, WE DO AGREE THAT YOU'RE GOING TO SEE THE ECONOMY SLOWING. AND IT IS, BUT IT'S SLOWING VERY SLOWLY AND THAT GIVES PEOPLE TIME TO ADJUST TO HIGHER INTEREST RATES. AND THE CORPORATE AND THE CONSUMER HAS REALLY SMOOTHED THE VOL OF HIGHER RATES. AND WE THINK THAT THAT'S MEANINGFUL >> DOES THAT EXPLAIN WHAT'S HAPPENED TO

HOUSING, AS PEOPLE HAVE HAD TIME TO ASSIMILATE TO 6.5 -- I GOT THROUGH 6.75 TODAY. >> YEAH, WHEN YOU LOOK AT HOUSING PRICES, THAT'S ONE OF THE DATA POINTS THAT'S REALLY SHOWING YOU THAT THINGS ARE PRETTY STABLE. THAT'S A LOT TO DO WITH SUPPLY SO SUPPLY HASN'T REALLY COME TO MARKET, BECAUSE THE CONSUMER BALANCE SHEET IS PRETTY STRONG SO PEOPLE AREN'T GOING TO BE FOR SELLERS.

THEY DON'T WANT TO GO INTO NEW MORTGAGES WHEN THEY HAVE A 30-YEAR AT 3%, IF YOU WILL SO, YOU KNOW, THE HOUSING MARKET IS A LITTLE BIT RATE SENSITIVE THAN PEOPLE WERE ORIGINALLY EXPECTING. >> JUST GIVEN THE SUPPLY AND DEMAND DYNAMIC THERE >> EXACTLY >> AS WE LOOK TOWARDS THE FUTURE, WE HAVE A 71% PROBABILITY OF A RATE HIKE, AT LEAST THAT'S WHAT THE MARKETS ARE

PRICING IN, IN JULY. YOU BELIEVE IT'S ACTUALLY HIGHER THAN THAT. YOU THINK IT'S ALMOST A NEAR-CERTAINTY THAT WE WILL SEE A RATE HIKE. AND WHAT IS FUELING THAT HYPOTHESIS >> YEAH, IT'S REALLY HIGH BAR FOR THEM, IN OUR PERSPECTIVE TO NOT HIKE JUST THE MOMENT OF THE DATA, EVERYTHING THAT WE'VE SEEN THIS WEEK NOW, WE DO GET REALLY IMPORTANT DATA ON FRIDAY, IN TERMS OF PCE.

WE'RE NOT EXPECTING THAT TO BE A BLOWOUT NUMBER, BUT WE AREING LAST MONTH TO BE REVISED UP SOMEWHAT AND AT THE END OF THE DAY, YOU'VE GOT ROLLING PAYROLLS, THREE-MONTH PAYROLLS AT 300K THAT'S NOWHERE NEAR THAT 80K NEUTRAL LEVEL THAT THE FED HAS EVEN ESTABLISH