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BUCKLE UP — Federal Reserve Chair Jerome Powell offered some more insight Tuesday into what constitutes a “softish” landing — his latest description of what the economy might be in for as the central bank seeks to tamp down inflation.

At a Wall Street Journal event, Fed reporter Nick Timiraos asked Powell, what’s the difference between “soft” and “softish”?

“If the pilot tells me, ‘Don’t worry, we’re going to have a softish landing,’ I don’t know, I start to wonder what he’s talking about,” Timiraos quipped, to audience laughter.

Powell continued the flight analogy: “Sometimes the landing is just perfect. And sometimes it’s just a little bumpy. So it’s still a good landing — you don’t even notice it, right?”

But seriously, Powell said, the Fed will have to slow growth to bring inflation back down to its 2 percent target. Raising interest rates will tighten financial conditions, which affects the economy, but he warned, “We don’t have precision tools.”

“There could be some pain involved,” he said, “but we think we can maintain a strong labor market, defined as a labor market where unemployment is low and wages are moving up.”

“It may not be the perfect labor market, but it will be a strong labor market,” he added.

Fiscal impact — Fed leaders are always careful to avoid weighing in on fiscal policy decisions. But Powell was more candid than usual when asked about the Biden administration’s $1.9 trillion Covid relief law, which ended up being much bigger than Fed officials had initially assumed.

Did that put the Fed behind the curve in containing inflation?

“There was a lot of stimulus put behind the U.S. economy, that was both monetary policy and that was fiscal policy,” he said. “That was a lot of support for demand, [but] you can’t get the kind of inflation we got without these supply bottlenecks that we’ve had.”

Translation: The White House, Congress and the Fed were all doing a lot to support the economy, which boosted demand — but that’s not the whole story. (That’s a contrast with the message from the White House, which has been reluctant to acknowledge any role fiscal policy played in fueling price pressures.)

Powell went on to reiterate that the supply-side factors, including bottlenecks, shortages and the slow recovery in labor-force participation, were larger and more persistent than expected.

“We now know that in hindsight,” he said. “We’re not setting policy on the expectation that we get relief on the supply side until we actually do.”

Globalization in reverse —  Reflecting on the outlook in the wake of the pandemic, Powell said the global economy might become less interconnected in the near future as companies grapple with fragile supply chains.

“Certainly, in the near term, there is a real possibility that globalization will go into reverse to some extent,” he said.

“To the extent you do that, you’d have more security in your supply chain, more stability, perhaps,” he added. “But it might not be quite as efficient as the amazing global supply chains that we had, which were very, very fast and flexible.”

Immigration slowdown — Looking ahead, he pointed to the potential economic fallout from diminished immigration, including slower population growth and weaker economic output.

“If the population is growing more slowly, there are going to be fewer workers,” he said. And “a big part of the story, really, in recent years is immigration has been quite low.”

He acknowledged that the central bank doesn’t have a role to play in such policies, but “if you have a slower-growing labor market, you’re going to have a smaller economy.”

“That’s a risk in the medium term, but it’s really one for other policymakers to look after,” he said..

IT’S WEDNESDAY — How many of you keep thinking about the bumpy landing analogy? Like, are we going to spill our drinks all over ourselves? Bump our heads on the seat in front of us? Will the emergency slides deploy? At what point do we call it a hard landing, even if it’s not a crash?

So many questions. Send us yours, along with your tips and ideas: [email protected] or @katedavidson, or [email protected] or @aubreeeweaver.

April housing starts and building permits data released at 8:30 a.m. … Treasury Secretary Janet Yellen holds a press conference ahead of the G-7 finance ministers meeting in Bonn, Germany, at 9 a.m. ET … House Appropriations hearing on the SEC budget at 10 a.m. … Senate Banking hearing on energy efficient housing at 10 a.m. … New York state banking regulator Adrienne Harris speaks at WSJ’s Future of Everything conference at 3:50 p.m.

DON’T MISS — Commodity Futures Trading Commission Chair Rostin Behnam will join POLITICO’s sustainability summit at 1:10 p.m. today for an in-person interview with Financial Services Editor Zach Warmbrodt. The 1:1 will be focused on efforts to set ESG standards and Washington’s role, particularly the CFTC. You can RSVP here to watch live.

MANCHIN SEALS THE DEAL? — Michael Barr, the president’s pick to be Fed vice chair for supervision, won’t have his confirmation hearing until Thursday, but he cleared a key hurdle last night on his way to the Senate floor.

Sen. Joe Manchin (D-W.Va.), whose opposition tanked Sarah Bloom Raskin’s nomination for the same job, said on Twitter he intends to support Barr’s nomination after speaking with him last week about the future of banking, the importance of American energy security and the need for a strong response from the Fed on inflation. “I believe he will make a good addition to the Federal Reserve Board,” he said.

That follows an endorsement from the other side of the caucus from Sen. Elizabeth Warren (D-Mass.), who said she would support the pick shortly after the White House announced it last month.

P.S. FROM CALABRIA — In yesterday’s MM, we highlighted a podcast interview with Mark Calabria, the former director of the Federal Housing Finance Agency, who said he worried about delinquency rates for “FHFA borrowers.” In a tweet today, Calabria clarified that he misspoke — The “reference was to FHA, as there is no such thing as a FHFA borrower, my bad.”

ALLIANZ TO PAY $6B TO SETTLE FRAUD CHARGES — Our Katy O’Donnell: “German financial giant Allianz will pay more than $6 billion to settle U.S. fraud charges brought by the Justice Department and the SEC, federal officials said Tuesday.

“Allianz Global Investors, the U.S. asset-management subsidiary of Allianz SE, will plead guilty to one count of criminal securities fraud over the implosion of its multibillion-dollar Structured Alpha funds amid pandemic-driven market volatility in 2020.”

GENSLER: CRYPTO MARKET TURMOIL SHOWS NEED FOR INVESTOR PROTECTION — Our Sam Sutton: “SEC Chair Gary Gensler is leveraging last week's dramatic volatility in crypto markets to double down on his calls for investor protection rules for digital asset lending platforms.

“‘There’s a need to bring greater investor protection to these crypto markets,’ he said Tuesday in prepared remarks to the North American Securities Administrators Association. ‘Central to that are crypto trading and lending platforms, where investors buy, sell and lend around $100 billion of crypto assets a day. The crypto-related events in recent weeks have highlighted yet again how important it is to protect investors in this highly speculative asset class.’”

— Here’s more from Sam on the spectacular failure of Terraform Labs.

LABEL DRAMA — Sam writes: "With TerraUSD’s collapse sparking new concerns about stablecoins, the CFPB on Tuesday released an enforcement memo instructing businesses to not misrepresent claims about about Federal Deposit Insurance Corp. (FDIC) insurance. 'People know and trust the FDIC name and logo, and firms must not prey on that trust by making deceptive representations about deposit insurance,' CFPB Director Rohit Chopra said in a statement. 'Companies undermine competition, erode confidence in the deposit insurance system, and threaten our hard-earned savings when they engage in false marketing or advertising.'

"The memo lands on the heels of Vitalik Buterin, the founder of the widely used Ethereum blockchain, endorsing an FDIC-style program to recompense smaller retail investors whose holdings were wiped out after TerraUSD and its accompanying crypto token, Luna, were obliterated in last week’s market turmoil."

BOSTON BAKED BLURB — POLITICO’s Nick Niedzwiadek caught up with Labor Secretary Marty Walsh on Fidelity’s plan to offer Bitcoin as an investment option for employer-sponsored 401(k) plans: "We’re concerned about it. It’s a big amount of money to invest in your retirement and people are making those decisions,” he said. “We made [that] clear from the very beginning, and right after — right after — we expressed our concern, a couple days later some of the currency went down. Again, I don't wish that on any one industry, but we’re concerned about making investments in an industry that’s uncertain."

FED’S KASHKARI: IT’S NOT CLEAR IF FED WILL HAVE TO INDUCE A RECESSION — Bloomberg’s Matthew Boesler: “The Federal Reserve official who has long been the central bank’s most dovish policy maker said it’s an open question whether he and his colleagues will have to induce a recession to bring inflation down.”

But Bullard says the Fed is right on track, WSJ’s Michael S. Derby reports: “‘We have a good plan for now’ and it’s up to the Fed to ratify the tighter stance of monetary policy financial markets have priced in, Mr. Bullard said in a public appearance.”

EUROPEAN COMMISSION SPELLS OUT PLAN TO SECURE NON-RUSSIAN ENERGY SUPPLIES — Our America Hernandez in Brussels: “The European Commission will wean the EU off Russian fossil fuels through global deals to speed renewable energy and hydrogen production while supplying the bloc with natural gas in the short term, according to an International Energy Strategy document obtained by POLITICO.”

YELLEN CALLS ON EUROPE TO BOOST UKRAINE AID — NYT’s Alan Rappeport: “Treasury Secretary Janet L. Yellen urged European nations on Tuesday to step up their spending to support Ukraine as Russia’s attacks on the country’s critical infrastructure showed few signs of abating.”

U.S. SET TO BLOCK RUSSIAN DEBT PAYMENTS — Bloomberg’s Saleha Mohsin and Sydney Maki: “The Biden administration is poised to fully block Russia’s ability to pay U.S. bondholders after a deadline expires next week, a move that could bring Moscow closer to the brink of default. The Treasury Department’s Office of Foreign Assets Control is expected to let a temporary exemption lapse once it expires on May 25, according to people familiar with the matter.”

Yellen and trade czar Tai are at odds over China — Reuters’ Trevor Hunnicutt and David Lawder: “President Joe Biden will have to resolve a heated internal debate among his aides over whether to cut taxes on goods from China as his administration tries to battle inflation, according to two U.S. officials and three other people familiar with the conversations.”

Bryan Stirewalt has joined K2 Integrity as a senior managing director, and will focus on central bank digital currencies and crypto regime development around the world. Stirewalt was previously chief executive of the Dubai Financial Services Authority. He also served as the co-chair of the Basel Consultative Group and observer at the Basel Committee on Banking Supervision.

Wells Fargo & Co. CEO Charlie Scharf said Tuesday there was ‘no question’ that the U.S. is headed for an economic downturn. — WSJ’s Orla McCaffrey

JPMORGAN SHAREHOLDERS VOTE DISAPPROVAL OF DIMON’S SPECIAL PAYOUT — Reuters’ David Henry: “In an unusual rebuke for Jamie Dimon, CEO of JPMorgan Chase & Co, shareholders on Tuesday clearly disapproved of the special $52.6 million stock option award directors gave him last year to stay on the job for at least five more years.”

WALL STREET WARNS MARKET LIQUIDITY IS GETTING AS BAD AS 2020 — Bloomberg’s Anchalee Worrachate: “Suspicious minds on Wall Street can be forgiven for seeing all the hallmarks of an illiquid bear-market trap in the Tuesday stock rebound. In recent months trading conditions in equities and bonds have gotten worse as money managers struggle to buy and sell in size without moving prices, with echoes of the 2020 pandemic disruption.”