Bloomberg Surveillance 02/06/2024

THIS MARKET IS EXTREMELY PROFITABLE ON THE UPWARD. WHAT WE WILL SEE HERE IS AN EXPANSION IN THE GROWTH OF QUALITY. WHAT HAPPENS - WHAT HAPPENS HERE IS AN EXPANSION TO AREAS THAT ARE NOT AS RISKY AS WE THINK. WE BELIEVE THERE IS AN OPPORTUNITY FOR THE SMALL LAYERS TO CATCH UP. THIS IS THE BLOOMBERG WATCH WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. LIVE FROM NEW YORK CITY, GOOD MORNING TO THE PUBLIC AROUND THE WORLD. THIS IS BLOOMBERG SURVEILLANCE, I'M JONATHAN FERRO. YOUR STOCK MARKET IN THE S&P 500 COMPLETELY UNCHANGED. IN THE BOND MARKET SOME BIG MOVEMENTS. 27 HIGHEST BASE POINTS IN THE TWO YEARS.

DEUTSCHE BANK YESTERDAY, WHICH ABANDONED ITS RECESSION CALL, PRAYED IT HAS HAD RESISTED SINCE APRIL 2022, GOING BACK TO SOMETHING LIKE TWO YEARS. LISA: IT SEEMS A BASE CASE TO TALK ABOUT HOW THE FED CAN'T REDUCE RATES AS MANY TIMES AS THEY PREVIOUSLY THOUGHT. THERE IS A NARRATIVE SHIFT UNDERWAY THAT THE ECONOMY IS NOT SLOWING DOWN ENOUGH TO BECOME GOLD RICH. NOW FED RATES ARE NOT AS RESTRICTIVE AS MANY PEOPLE EXPECTED. JONATHAN: WHEN I came in this morning, Goldilocks was on life support. THE KIND OF TOMORROW WE WILL HAVE. LET'S LOOK AT SOME OF THE CALLS FOR YOU.

CONSIDERING THE RISK OF RISE IN RATES. HSBC BELIEVES FARE PRICES ARE MORE LIKELY TO RISE THAN DOWN FOR NOW. CONTRARY TO THE CONSENSUS NARRATIVE, THE ECONOMY HAS NOT YET MADE A SOFT LANDING AND PROBABLY WON'T. LISA: THIS ALSO EXPLAINS WHY MATT AT DEUTSCHE BANK HAS A BASE CASE FOR A NEUTRAL RATE OF 3.5 PERCENT AND POSSIBLY UP TO 4%. TALKS ABOUT WHAT NEEL KASHKARI SAID YESTERDAY: WE ARE LOOKING FOR A HIGHER NEUTRAL RATE. HOW RESTRICTIVE IS THE FED FUNDS RATE WHEN YOU HAVE AN ECONOMY THAT IF IT DOESN'T SLOW DOWN, COULD EVEN ACCELERATE. JONATHAN: JUST PHENOMENAL. LISA: Since the headline figures were higher than expected, but the prices paid were the most sought after since August 2012.

It's the Red Sea disruptions, the fact is that things are getting more expensive. IT ALL SOUNDS VERY Gloomy, SO FORGIVE US. RICH GOLD ON LIFE SUPPORT. A TICKET IN D.C. WHO APPARENTLY IS DEAD ON ARRIVAL. ANNMARIE: POTENTIALLY IS ALSO ON LIFE SUPPORT. REPUBLICAN BILL JAMES LANKFORD, AUTHOR OF PART OF THIS BILL, SAYS HE IS NOT WILLING TO HOLD HIS FUNERAL YET. WHAT WE KNOW BEHIND CLOSED DOORS, ONE PUNCH BOWL HAD AN EXCELLENT REPORT THAT SAYS WHAT MITCH MCCONNELL, WHO CONTINUES TO SUPPORT THIS BILL, HAS SAID THAT THE POLITICAL MOOD HAS CHANGED. So if this goes on much longer, we could potentially see them return.

MANY LOUD COMPLAINTS IN WASHINGTON DC. LISA: I AM VERY DEEPLY FRUSTRATED BY THIS STORY. IT FEELS LIKE A GAME OF POLITICAL CHECKERS AND IT'S NOT THE REAL ISSUES THAT NEED TO BE DEALING WITH THE WITCHES, THE INTERNATIONAL INVOLVEMENT OF THE UNITED STATES AND WHAT CAN HAPPEN WITH THE BORDER PATROL. THESE ARE THE TOPICS WE NEED TO TALK ABOUT. THIS IS WHO PUTS US IN THE BEST POSITION. THIS IS WHY PEOPLE HATE WASHINGTON DC AND POLITICIANS. THE DIFFERENCE BETWEEN GOOD POLITICS AND POLITICS. ANNMARIE: I WOULDN'T SAY THAT. Going back to what TERRY HAINES SAID YESTERDAY, THERE IS A 60% CHANCE IT WILL BE DONE.

WE POTENTIALLY SPEND WEEKS AND MONTHS, THERE COULD BE SOMETHING TO GO BACK TO. THIS IS HOW IT WORKS WASHINGTON, THERE IS NO DEAL UNTIL THERE IS AN AGREEMENT. LET'S MOVE ON TO THE PRICE ACTION ON THE S&P 500 COMPLETELY UNCHANGED. WHAT MOVEMENT WE HAVE SEEN IN THE PREVIOUS TWO DAYS. THE TWO YEAR OLD IN 446. THE 10 YEAR OLD IN 4.16. LISA: WHAT I FIND FASCINATING IS THAT IT'S NOT JUST THE TWO AND FUTURED EXPECTATIONS, IT'S A LONG-TERM RATE FOR 10 YEARS. THE BIGGEST INCREASE IN HOLDING YIELD IS COMING BACK TO 2022. THAT I THINK IS REALLY ATTRACTIVE FOR THE ASSET CLASSES.

JONATHAN: 1.0730 IS WHERE THE EURO SPREADS WALL STREET WITHDRAWS CALLS, JOHN LEVER OF THE EURASIA GROUP. THE SENATE ON THE BRIEF OF COLLAPSE AND JEANNIE CORONADO AS THE FED CONTINUES TO REJECT ITS FIRST RATE CUT. WE START WITH OUR MAIN STORY, A SERIES OF HIGH SURPRISES ON WALL STREET. RAYMOND JAMES' LARRY ADAM EXPECTS THE MARKET TO CONTINUE. SAYING WE'VE BEEN IN THIS BOND MARKET FOR 1.3 YEARS VERSUS THE AVERAGE BULL MARKET OF 5.5. WE STILL SEE LONG-TERM RISE. LARRY JOINS US NOW FOR MORE. LET'S GO DIRECTLY TO THE DATA. EMPLOYMENT DATA EXPLOSION REPORT ON FRIDAY. ASSET SERVICES LOOK TREMENDOUS.

HOW MUCH WEIGHT ARE YOU PUTTING ON THAT DATA? THIS IS IMPORTANT DATA THAT WE CONTINUE TO RECEIVE. WE ARE STILL SKEPTIC ABOUT SOME OF THOSE EMPLOYMENT NUMBERS. IT DOES NOT COMPLY WITH WHAT AMERICA SPEAKS ONLY CORPORATE AMERICA. YOU ARE SEEING A LOT OF LAY OFFS. I would say that with those strong numbers, if they continue to come, the path in which we think we will enter a recession will narrow, because historically to have a recession it is necessary to lose around a million jobs. IF YOU SEE THAT STRONG GROWTH, YOU PROBABLY WON'T SEE THAT JOBS LOSS THIS YEAR AND YOU COULD GET THE SOFT LANDING WE'RE LOOKING FOR.

LISA: THERE IS A FEELING THAT THE ECONOMY IS STRONG, WHEN DO YOU START RECONSIDERING WHAT RESTRICTIVE MEAN? WHAT IS THE NEUTRAL RATE. HOW DOES THAT PLAY A FACTOR IN YOUR THESIS? LARRY: GOOD NEWS IS ALWAYS GOOD NEWS. WE HAVE THE BASE CASE FOR THE STOCK MARKET TO COME OUT. IF THE FED AVOID A RECESSION, THERE IS A LOT OF UPWARD RISK IN THE FORECAST. GOOD NEWS IS GOOD NEWS. IF WE HAD A RECESSION, THIS WOULD LIKELY RAISE EARNINGS FORECASTS AND THE STOCK MARKET PRICE HIGH. IT'S ALWAYS GOOD TO SEE THIS GOOD NEWS IN THE LONG TERM.

MANY ANALYST ANALYZES WHY THE ANALYST, WHY THIS IS DIFFERENT FROM OTHER REGIONS. OUR PEOPLE POINT TO THE STIMULUS AND THE FACT THAT IT'S STILL COMING. HOW MUCH IS IT LINKED TO US INDUSTRIAL POLICY AND THE FACT THAT IT WILL BE ANOTHER BURN OF MONEY THAT WILL FLOOD THE SECTOR? LARRY: WE BELIEVE IN THIS INDUSTRIAL RENAISSANCE THAT HAS BEEN CARRIED OUT. IF YOU CONSIDER THE MONEY RESERVED, WHETHER IT'S THE CHIPS ACT OR THE AMERICAN RECOVERY ACT, THERE ARE STILL TENS OF BILLIONS OF DOLLARS IN THE SPACE TO BRING THAT MANUFACTURING TO THE U.S. IN THE FORESEEABLE FUTURE.

WHAT IF THIS LEADS TO PERSISTENT REPRECATION AND HIGHER INTEREST RATES AND REPRECATION OF INTEREST RATES? CAN YOU EXPLORE THAT SCENARIO WITH US? IF THAT HAPPENS, WHAT AREAS ARE NOW MOST VULNERABLE? LARRY: IF INTEREST RATES GO UP, THAT WON'T APPLY TO THE STOCK MARKETS. OUR FORECAST INTEREST RATES ARE GOING DOWN BECAUSE WE SEE A GENTLE DOWN IN THE MIDDLE PART OF THE YEAR. ONE AREA WHERE MANY PEOPLE THINK HIGHEST INTEREST RATES ARE COMING TO MEGA TECH: MAKING CAP TECH STOCKS. WE'VE BEEN TALKING ABOUT THAT SINCE THE BEGINNING THAT THEY HAVE BEEN FOR THE MOST PART INSULATED FROM THE HIGHEST INTEREST RATES.

THAT TENDS TO BE BETTER GROWTH AND CREDIT GROWTH DRIVES THOSE MARKET SECTORS. WHERE I AM CONCERNED ABOUT INTEREST RATES RISE IS IN SECTORS SENSITIVE TO INTEREST RATES. YOUR CONSUMER COMMODITIES WILL BE MORE NEGATIVELY IMPACTED IF YOU SEE THOSE HIGHER RATES. WHEN IT COMES TO FINANCE, BANKS. I THINK THEY ARE IN GOOD SHAPE. IT IS ALWAYS INTERESTING TO SEE THESE HEADLINES ABOUT THE POSSIBILITY OF A BANK FAILING. PLEASE NOTE THAT REGIONAL BANKS ARE 1% OF THE S&P 500. IT IS A VERY SMALL PORTION. IF WE LOOK AT IT WITHIN THE S&P 500, THEY WILL BE LARGE CAPITAL BANK STOCKS.

THEY WILL BE INSURANCE COMPANIES. FOR THE MOST PART THEY CONTINUE TO DO WELL AS THE EARNINGS SEASON GOES ON. THERE IS TALK OF AN INCREASE IN CAPITAL MARKET ACTIVITY THIS YEAR. IF YOU LOOK AT WHAT HAPPENED YESTERDAY IN THE SURVEY, THEY ARE TALKING ABOUT MORE BANKS GRANTING LOANS IN SEARCH OF MORE DEMAND. I THINK THERE IS A PROFIT CAPACITY FOR THE BIG BANKS IN THE FUTURE THAT IS STILL PRETTY SOLID. WE WERE TALKING ABOUT HOW THE SENIOR LOAN OFFICER WAS READING IT AND THINKING THIS IS NOT INTERESTING AT ALL. THIS DOES NOT GIVE US INFORMATION. IT TALKS EXACTLY WHAT LARRY IS TALKING ABOUT.

YOU SAID YOU'RE EXPECTING A SMOOTH PATCH, PRAY I DON'T SEE IT. DOES THAT MAKE YOU MORE BULLISH OR BEARISH? IT MAKES US MORE OPTIMISTIC BECAUSE WHAT THAT WILL DO IS INCREASE EARNINGS AND OBVIOUSLY RAISE OUR TARGET ON THE S&P 500. HISTORICALLY, WHEN THESE RECESSIONS OCCUR, THEY OCCUR FAST. IF YOU LOOK AT THE LAST 12 RECESSIONS, THE CORNER BEFORE THIS RECESSION HAPPENS THE GDP GROWTH IS AROUND 2.6%. NEXT QUARTER, WHEN THERE IS A RECESSION, GROWTH FALLS VERY FAST. IT CAN HAPPEN VERY FAST. THIS IS ACTUALLY SOMETHING THAT PEOPLE USED TO SAY A LOT IS THAT HIGHER RATES WILL MAKE STOCK PRICES DOWN.

WHAT IS THE RATE AT WHICH YOU ARE UNCOMFORTABLE WITH STOCK VALUATIONS? THERE IS SOME PERFORMANCE THAT GIVES YOU A LITTLE THANK YOU. I THINK THERE ARE TWO THINGS. I THINK IT'S THE LEVEL AND THE TIME. , WE WERE IN THE SHOW ONCE BEFORE AND MADE 5% ON THE 10-YEAR TREASURY YIELD. AT THAT LEVEL, THAT REALLY STARTS TO SLOW DOWN THE ECONOMY A LITTLE BIT AND WE SEE IT BECAUSE IT WAS NOT ONLY IMPACTING THE HOUSING MARKET, BUT YOU ARE SEEING MANY COMPANIES NOT ENTERING THE MARKET TO GET ADDITIONAL FINANCING. AS THIS HAS FALLEN VERY FAST, YOU SEE A RESURGENCE IN CORPORATE ACTIVITY WHICH WILL HELP SUPPORT THIS ECONOMY.

I THINK IF THEY REACH THAT 5% LEVEL, I THINK THAT BEGINS TO TAKE ADVANTAGE OF THE ECONOMY. JONATHAN: I REMEMBER LAST SPRING THE ONLY THING THAT MATTERS WAS PAYROLLS, NOT THE CPI. FROM THE OPINION SURVEY OF SENIOR LOAN OFFICERS, WE HAVE NOT TALKED ABOUT THAT AT ALL. I can give you the main paragraph in case you missed it. U.S. BANKS REPORTED TIGHTER CREDIT SITUATIONS IN THE FOURTH QUARTER, ALTHOUGH THE PROPORTION OF THOSE STANDARDS WAS REDUCED. IT'S GETTING TIGHTER, JUST NOT AS TIGHT AS BEFORE. THEY'RE SORT OF SLOWING THE PACE OF HOW THEY ARE AND BASICALLY IT'S NOT THAT BAD.

PEOPLE ARE STARTING TO EXTEND THAT CREDIT. IF YOU ARE LOOKING FOR THIS THIS IS NOT IT. IT DID NOT LEAD TO THESE LENDING RULES BEING OVERFLOWED. WE RETURN TO THE CALL FROM BANK DEUTSCHE. THIS WAS HIS PERSPECTIVE. INCREASE RATES BETWEEN 5% AND 6% IN THE FED FED. BIG CALL. SIGNIFICANT RECESSION BY THE END OF 2023. THAT WAS ULTIMATELY THE VISION THAT WE SEE A LITTLE PAIN IN THE LABOR MARKET AS WE BRING INFLATION TOWARD THE TARGET. SPRING OF LAST YEAR BANKING STRESSED LENDING STANDARDS. HERE WE ARE AGAINST OUR

2024

. INTEREST RATES WILL BE REDUCED IN MARCH WITH RATINGS DATA TO START THE YEAR.

TO YOUR POINT, YOU CAN FEEL THE CONVERSATION TURNING SLIGHTLY. I THINK IT NEEDS ANOTHER MONTH OR TWO MONTHS OF THE SAME DATA SO FAR TO REALLY CHANGE PEOPLE'S THOUGHTS ON THIS. YOU CAN SEE THE DIRECTION IT'S GOING. LISA: PEOPLE STILL SAY IT'S EARLY BUT THERE IS A CHANCE THAT WE WILL REVERSE THIS AND HAVE A REPEAT WHERE THE ECONOMY IS BETTER THAN EXPECTED. AND EVERYONE IS RAPINED WITH THE INVENTORY. JONATHAN: THERE WERE NO LOANS LAST YEAR IN FEBRUARY. LISA: WE'RE IN FEBRUARY SO THERE'S NO LANDING. FLOATING. JONATHAN: EVERYTHING SEEMS TO BE REPEATED IN THIS MARKET. WHAT DO YOU CALL IT, NARRATIVE ROULETTE?

LISA: THAT WAS VERY WELL SAID. JONATHAN: NARRATIVE OF TABLE TENNIS. THIS MORNING WE GIVE YOU AN UPDATE ON THE STORIES. DANI: SOUTHERN CALIFORNIA EXPERIENCES HEAVY RAINFALL AND FLOODING THANKS TO POWERFUL PACIFIC STORM REID NATIONAL WEATHER SERVICE SAYS RAINFALL IS EXPECTED TO DECLINE TODAY ALL FLOODING AND MUDSLIDES REMAIN AT RISK AS STORM MOVES TO THE EAST. THE SO-CALLED ATMOSPHERIC RAINFALL UP 10 INCHES OF RAIN CAUSING $11 BILLION OF DAMAGE. PALANTIR SHARES ARE SOARING AFTER THE COMPANY REACHED A BIGGER-THAN-EXPECTED EARNINGS OUTLOOK DRIVEN BY AI DEMAND. THE CEO TOLD BLOOMBERG THEY ARE REBUILDING TO MATCH THE SEARCH. IT ALSO MARKED THE FIRST YEAR TO BE PROFITABLE WITH A NET INCOME OF $210 MILLION.

APPLE VISION PRO USERS ARE DISCOVERING THE PAIN OF LOSING THEIR PASSWORD. THE COMPANY INSTRUCTS USERS THAT THEY WILL NEED TO BRING THE DEVICE BACK TO THE STORE OR MAIL IT IF THE DEVICE IS DISABLED AFTER ENTERING THE PASSWORD INCORRECTLY TOO MANY TIMES. IT IS APPLE'S MAIN HARDWARE CATEGORY IN AN ESSENTIAL DECADE. JONATHAN: HAVE YOU SEEN A VISION PROFESSIONAL IN THE WILD? DANI: I WENT TO THE APPLE STORE AND SAID CAN I DO A DEMO OF THIS THING AND THEY SAID THE WAITING LIST IS THREE DAYS? ANNMARIE: THREE DAYS TO TEST A $3,500 PRODUCT? WHEN YOU POTENTIALLY ADD MORE STORAGE SPACE, THE KIT TO CARRY EVERYONE, THAT'S WHAT MOST AVERAGE AMERICANS EARN FOR A MONTH.

JONATHAN: I'VE SEEN THE VIDEO OF PEOPLE WALKING THROUGH THE CITY. THAT IS NOT THE FUTURE I WANT TO PRAY FOR: I WANT IT. LISA: IT'S THE FUTURE MY ELDEST SON TALKED ABOUT LAST NIGHT. BY SAYING YOU DON'T NEED AN IPAD CORA DUST, YOU CAN OVERLAY - YOU DON'T NEED AN IPAD. YOU CAN OVERLAY YOUR EYES. JONATHAN: NOW KIDS WANT A $3,500 VISION PRO. NEXT ON THE SHOW, PRESIDENT BIDEN DELIVERS A PIECE TO CONGRESS. PAY ATTENTION TO WHAT THE SENATE DOES. IT GIVES US CONTROL AND STILL MEETS THE NEEDS OF PEOPLE WHO ARE LEGALLY HERE. JONATHAN: YOU'RE WATCHING BLOOMBERG WATCH.

JONATHAN: STARTING THE WEEK DOWN FROM ALL-CHRIST HIGHS ON THE S&P 500. UNCHANGED RETURNS, ANYTHING BUT UNCHANGED IN THE NEXT PREVIOUS SESSIONS. RIGHT NOW THIS MORNINGYEAR 10 4.1559. PRESIDENT BIDEN MAKING A REQUEST TO CONGRESS. PAY ATTENTION TO WHAT THE SENATE DOES. YOU HAVE BIPARTISAN OFFERS AND WE WILL SEE IT THIS WEEK. THE BIPARTISAN LAW GIVES US CONTROL AND STILL MEETS THE NEEDS OF PEOPLE WHO ARE ILLEGALLY. CLOSE THOSE WHO DO NOT PASS THROUGH THE ENTRY POINTS. JONATHAN: GOP SUPPORT is souring on a deal to impose new restrictions on the U.S. border and Locke's aid to Ukraine. PLANNED VOTE IS TOO SOON WITH GOP CHIEF NEGOTIATOR JAMES LANKFORD SINGH, LEGISLATION IS A WORK IN PROGRESS.

THE DIRECTOR OF THE US EURASIA GROUP AND FORMER POLICY ADVISOR TO MITCH MCCONNELL JOINS US NOW. How narrow is the path to getting this bill passed by Congress? RIGHT NOW I DON'T THINK THERE IS ONE. THIS BILL HAS BEEN COMPLETELY REJECTED BY THE HOUSE OF REPRESENTATIVES AND THAT IS THE KEY QUESTION. MANY SENATORS WOULD BE WILLING TO VOTE IN FAVOR OF THE AGREEMENT IF THEY THOUGHT IT COULD BECOME A LAW. BUT THE HOUSE TELLS THEM THERE'S NO CHANCE OF THIS BECOMING LAW BECAUSE THEY'RE SIMPLY NOT READY TO LEGISLATE AROUND THE BORDER. THAT'S A REALLY Narrow PATH EVEN THOUGH THE SENATE MANAGED TO APPROVE SOMETHING THIS WEEK THAT LOOKS LESS AND LESS LIKELY.

INSTEAD OF ARRIVAL AT THE HOUSE WHICH MEANS THERE IS NO WAY FORWARD. SENATOR JAMES LANKFORD SAID HE IS NOT YET PREPARED TO HOLD A FUNERAL. WE'VE SEEN WASHINGTON TAKE... THINGS TAKE A LONG TIME. DO YOU THINK THAT'S ANY POINT THEY WOULD HAVE TO COME TOGETHER TO DEAL WITH? THERE IS STILL HELP FOR UKRAINE THAT NEEDS TO BE DONE. THERE IS A LOT OF INTERESTING AID FOR UKRAINE AMONG REPUBLICANS AND DEMOCRATS IN THE HOUSE AND SENATE AND IF A UKRAINE LAW IS PUT ON THE GROUND, IT WOULD SURELY BE PASSED, BUT THE QUESTION IS HOW TO GET THAT LAW ON THE GROUND.

THERE ARE STILL OTHER VEHICLES OUT THERE. YOU HAVE TO FINANCE THE GOVERNMENT BEFORE MARCH 8TH THIS BORDER TRADE AGREEMENT FOR UKRAINE WAS ORIGINALLY PRESIDENT BIDEN'S IDEA THAT WAS APPROVED BY THE PUBLIC LEADERSHIP, BUT THE BORDER AGREEMENT WAS JUST A BAD COMPENSATION BECAUSE REPUBLICANS ARE NOT INTERESTED IN MAKE THE BORDER. UKRAINE HAS OTHER ROADS, IT IS NOT DEAD YET. THE BORDER IS STILL A BRIDGE TOO FAR FOR AMERICAN POLITICIANS PRAYED ANNMARIE: THEY OFFER TO BIND THEM DUE TO PRESSURE FROM THE REPUBLICANS. AT SOME POINT OUR VOTERS WILL BLAME THE REPUBLICANS IF THIS AGREEMENT IS NOT FULFILLED. UNFORTUNATELY FOR BIDEN THE INCUMBENT TENDS TO BE BLAMEED FOR THE THINGS THAT HAPPEN IN THE WORLD AND THE SITUATION AT THE BORDER IS SOMETHING THAT BIDEN IS DEALING WITH NOW.

In many ways, Republicans' rejection of this bill, which actually seems like a reasonable compromise that's to the right of where Democrats would have been five years ago, helps Biden shift the blame, it's a bit of baseball internal for Biden to do it. HE IS THE EXECUTING PRESIDENT AND TAKES RESPONSIBILITY FOR WHAT IS HAPPENING. LISA: I AM INCREASINGLY FRUSTRATED BY THIS NEGOTIATION BECAUSE IT FEELS LIKE POLITICAL CHECKS AND WE ARE NOT TALKING ABOUT THE REAL ISSUES OR WHAT NEEDS TO BE DONE AND IT DOESN'T SEEMS LIKE THERE IS AN HONEST MEETING OF THE MIND. YOU HAVE WORKED FOR MANY DIFFERENT MEMBERS OF CONGRESS, HOW DIFFERENT IS IT TODAY THAN FIVE OR 10 YEARS AGO?

THE DIFFERENCE THAN 15 YEARS AGO IS THAT THERE WERE BAD FAITH ACTORS WHO WERE TRYING TO COMPROMISE 15 YEARS AGO, THERE JUST WEREN'T MANY OF THEM AND THEY DIDN'T HAVE THE MEGAPHONE TODAY. NOW THOSE BAD FAITH ACTORS HAVE GROWN UP TO SIMPLY ATTACK ANYTHING THAT MOVES AND THAT'S THEIR ONLY INSTINCT IS TO SAY NO AND THEY BENEFIT BY TAKING THE ESTABLISHMENT AS THEY CALL IT AND THEY CAN RAISE FUNDS FROM IT, THEY CAN BE ON SOCIAL MEDIA IF THEY'RE GONE THEY REJECTED THIS LAW EVEN BEFORE KNOWING WHAT IT CONTAINED. IT'S DIFFICULT TO DO SOMETHING. IT'S FRUSTRATING TO SEE IT BECAUSE IT MEANS WE WILL HAVE THESE CONTINUOUS CRISES ON THE SOUTHERN BORDER.

ONLY THE FINGER POINTS TOWARDS THE OTHER SIDE. LISA: A QUESTION OF APPROVAL OF AID TO UKRAINE. 35% CHANCE THE TAX LAW WILL PASS ON YOUR SIDE. CAN YOU EXTRAPOLATE IF YOU ARE CURRENTLY A SENIOR ECONOMIC ADVISER TO MITCH MCCONNELL WHAT WOULD YOU SAY IS THE POSSIBLE CONSEQUENCE OF NOT TAKING ACTION? THIS TAX BILL IS A MOSCOW MODEL STIMULUS FOR NEXT YEAR, IT IS A SENSIBLE TAX CUT FOR CORPORATIONS. Ironically, the tax cut for corporations is a tax increase that Republicans implemented to finance the reduction of a corporate tax rate in 2017, so they are trying to undo a part of their own bill.

THAT BILL COULD PROBABLY DISAPPEAR AND THERE WERE SOME UNHAPPY CORPORATE LOBBYERS BUT THE AID TO UKRAINE IS VERY BIG AND UKRAINE IS FIGHTING A FIGHT AGAINST AN AGGRESSIVE NEIGHBOR WHO LOOKS LIKE THEY ARE PREPARED TO MAKE SOME PROFITS THIS YEAR IF THEY CAN GET THIS MONEY. IF WASHINGTON CAN CONTINUE TO GET SUPPORT FOR ITS ALLIES, THIS IS A SIGN THAT PEOPLE LIKE CHINA, NORTH KOREA, IRAN AND RUSSIA WILL TAKE AND INTERPRET AS WASHINGTON'S WEAKNESS. IT WILL SHOW HOW THE DYSFUNCTION IS UNDERMINING AMERICA'S GOAL OF GLOBAL LEADERSHIP. I'M SURE THOSE CONGROS MEMOS AGREE WITH ME, IT'S ONLY IN THIS MASS THEY ARE STUCK IN WHERE THEY CAN DO ANYTHING.

JONATHAN: I LOVE JOINING BECAUSE I KNOW YOU CAN ANSWER THIS QUESTION. IN THIS BILL SOME CONSERVATIVES ARE POINTING TO A SPECIFIC STEP THAT APPEARS TO IMPLY THEY THINK YOU WOULD ALLOW 5,000 BORDER CROSSINGS EACH DAY BEFORE CLOSING THE BORDER. I KNOW it's not that simple. CAN YOU TELL US WHAT IT REALLY SAYS AND MEANS? IT IS A VERY CONVOLUTED PROVISION. IF SENATOR MCCONNELL OR LANGFORD WERE DRAFTING THE BILL ON THEIR OWN, THIS IS NOT WHAT WOULD LOOK LIKE. ONCE ILLEGAL CROSSINGS EXCEED 5,000 PER DAY, THEY CAN CLOSE THE BORDER, WHICH MEANS NO MORE ASYLUM SEEKERS OR BARELY ANY ASYLUM SEEKERS AND THEY COULD INCREASE ENFORCEMENT AT THE SOUTHERN BORDER.

THIS IS NOT ALLOWING 5,000 PEOPLE A DAY IN, IT IS MAKING ENFORCEMENT MUCH STRICTER THAN THE CURRENT CONDITIONS AT THE BORDER AND CLOSING THE ASYLUM PATHWAYS, WHICH ARE ONE OF THE MAIN WAYS PEOPLE ARE CROSSING INTO THE STATES UNITED RIGHT NOW. IT WOULD SEND A SIGNAL TO OTHER MIGRANTS TRYING TO REACH THE U.S. BORDER THAT THEY BETTER STOP COMING. I AGREE WITH PRESIDENT BIDEN. IT GIVES THEM SOME POWER AND IT ALSO GIVES POWER TO A FUTURE PRESIDENT TRUMP IF HE WINS OFFICE. THIS IS CLEARLY A VICTORY FOR PEOPLE CONCERNED ABOUT THE BORDER. JONATHAN: I CAN FEEL THE FRUSTRATION ON THE OTHER SIDE OF THE DESK on this topic.

LISA: THE ISSUE IS THAT THE INSIDE OF THIS LAW CAN BE DEBATED, IF IT IS VALUE, NO, IF IT IS EFFECTIVE OR NOT, I WOULD LOVE TO HAVE THAT DEBATE. DON'T HAVE A DEBATE ABOUT WHO HELPES AND WHAT IT MEANS IN TERMS OF POPULARITY CONTESTS THAT'S GOOD IT HAPPENS AT SOME POINT. JONATHAN: POLITICS VERSUS POLITICS. IN AN ELECTION YEAR. OUTLOOK FOR EUROPEAN BANKS AS UBS LOOKS TO GO BEYOND THE ACQUISITION OF CREDIT SUISSE. STOCK FUTURES ONLY A NEGATIVE TOUCH ON THE S&P. FROM NEW YORK CITY, THIS IS BLOOMBERG. JONATHAN: IS GOOD NEWS REALLY GOOD NEWS?

WE ARE TRYING TO RESOLVE THIS IN THE STOCK MARKET THE S&P 500 IS SLIGHTLY NEGATIVE IN FUTURES. POSITIVE ON THE NASDAQ BY 0.16%. YESTERDAY THE SERVICES READING LOOKED TREMENDOUS. OFFERING THE HIGHEST PROFIT IN APPROXIMATELY A YEAR. FUTURE DEMAND INCREASES TO A MAXIMUM OF THREE MONTHS ALSO LOOKS DECENT. PRICES PAID BUT THEY RAISED. RETURNS GREATER THAN TWO, 10 AND 10 YEARS. HIGHER TWO-YEAR YIELD. NOW LOWER A LITTLE ONE OR TWO BASE POINTS. LISA: PEOPLE THINKING ABOUT HOW MUCH THE FED CAN REDUCE RATES AT A TIME WHEN THEY ARE SEEING SIGNS THAT THERE IS A REAL ACCELERATION IN THE ECONOMY. THE KEY QUESTION REMAINS: WHEN HIGHEST YIELDS ARE HIGHER TO BITE THE ECONOMY LONGER?

JONATHAN: ARE WE RESTRICTIVE ENOUGH BASED ON YESTERDAY'S DATA? LISA: OTHER PEOPLE SAY THAT MAYBE WE HAVE TO REASSESS. JONATHAN: DOLLAR INDEX RIDING YESTERDAY TO THE STRONGEST LEVELS SINCE MID-NOVEMBER. THE EURO BREAKS HERE. 1.0733. LET'S START WITH OUR TOP STORIES. A SENATE AGREEMENT TO IMPOSE US BORDER RESTRICTIONS AND AID TO UKRAINE IS ON THE BRIEF OF COLLAPSE. REPUBLICAN SENATOR SAYS WEDNESDAY'S VOTE WOULD BE TOO SOON. WOULD TAKE CREATIVE ACTION AGAINST ILLEGAL BORDER CROSSINGS AND ACCELERATE DEPORTATIONS OF MIGRANTS. Republican presidential front-runner Donald Trump rejected the bill and House leadership called it dead on arrival. FOR THOSE OF YOU AT HOME WHO THINK MAYBE FINANCIAL JOURNALISTS, LISTEN TO POLITICO THIS MORNING.

THE TOPIC OF THE NOTE TOMORROW, EVERYTHING IS APPARENT DEBT. ANNMARIE: THE REPUBLICAN AUTHOR OF THE LAW SAID IT'S NOT GIVEN TO STAND, YET. THIS IS THE POLICY OF THIS BUILDER. IT BECAME DIFFICULT TO REGISTER FOR A CLOTURE MOTION TOMORROW. PRESIDENT TRUMP SAYS THIS LAW IS A GREAT LAW FOR THE DEMOCRAT AND A DEATH WISH FOR HIS PUBLIC PARTY. IMMIGRATION HAS BECOME A BIGGER PROBLEM AROUND NOVEMBER. THE ECONOMY IS BETTER ACCORDING TO OUR SURVEYS. PEOPLE ARE RATING IMMIGRATION TO BE A MORE PRIORITY. WHEN IT COMES TO A TRUST DEFICIT WHEN VOTERS ASK ABOUT TRUMP OR BIDEN, THEY SEE THAT TRUMP DOES BETTER WHEN IT COMES TO IMMIGRATION AT THE SOUTHERN BORDER.

JONATHAN: THE FIRST LINES OF WHAT APPEARS IN THE CONVERSATIONS IN WASHINGTON D.C. THE NUMBER 5000. THIS BILL ONLY GIVES SHUTDOWN AUTHORITY AFTER 5000 MEETINGS PER DAY. CAN YOU BUILD THAT A LITTLE? ANNMARIE: SENATOR KYRSTEN SINEMA IS VERY FRUSTRATED, SHE IS AN INDEPENDENT WHO WORKED ON THE LAW. SHE SAID THE BORDER AUTOMATICALLY CLOSES WHEN ENCOUNTERS WITH MIGRANTS REACH 5,000, IT DOES NOT MEAN 5,000 MIGRANTS ARE ALLOWED TO ENTER EVERY DAY. IT IS NOT LEGALIZING, IT IS MAKING IT AN AUTOMATIC BRAND. THE CONSENSUS IN WASHINGTON IS NO, I WOULD SAY THERE IS A POSSIBILITY THAT THERE WILL BE A YES IN THE FUTURE.

JONATHAN: LET'S GO TO THE WASH, TO CHINA. THE STOCK MARKET HAS BEEN ALL OVER THE PLACES. CHINESE GOVERNMENT: PRESIDENT MORE THAN A YEAR. WE HAVE SEEN MANY REPORTS SAYING THAT PRESIDENT XI JINPING IS ABOUT TO DO SOMETHING. WITH LITTLE DETAIL OF WHAT IT WILL DO. LISA: XI JINPING IS RECEIVING ADVICE FROM ADVISORS. WE'VE HEARD THIS MANY TIMES BEFORE: YOU CAN BUY STOCKS, DENTAL STOCKS. Ultimately, they are basically putting band-aids on them unless they come up with a coherent plan for how to counter the lack of enthusiasm in spending, the lack of enthusiasm and demand for credit, and, frankly, fair policy consistency.

ANNMARIE: WHO DO YOU REPORT TO WHO? DOES XI JINPING REPORT TO THE REGULATORS OR ARE THEY REPORTING TO HIM? JONATHAN: I THINK HE DOES THE INFORMATION. THIS IS WHAT WE NEED TO DO. MAKE YOUR POINT ABOUT THE NEW YEAR I THINK THIS IS IMPORTANT. THEY DON'T WANT CITIZENS TO COME HOME TO THEIR FAMILIES TALKING ABOUT HOW BAD THIS STOCK MARKET IS. THEY WANT TO FIX IT BEFORE THE WEEKEND. LISA: WHAT INSTRUCTS YOU? TAKE THEM TO COURT IF THEY LOOK FOR OR SELL THINGS? JONATHAN: ISN'T THAT CALLED THE NATIONAL SELECTION? LISA: IT HAS TO BE SOMETHING GOOD.

THE KEY IS THAT IT'S SIMPLY NOT IN STOCK. YOU CONTINUE TO SEE THE LOSSES. HOW LONG DO PEOPLE STILL BUY STORY IF IT HAS NO LASTING POWER? JONATHAN: A LITTLE CLARITY ABOUT WHAT HAPPENED LAST WEEK. INCREASING PRESSURE FROM A MAJOR US REGULATOR FOR THE COMMUNITY BANK OF NEW YORK TO REDUCE ITS DIVIDENDS AND STOCK CASH. THIS SENIOR EXECUTIVE HAD BEHIND-SCALE CONVERSATIONS WITH THE OFFICE OF THE COMPTROLLER OF THE CURRENCY BEFORE LAST WEEK'S DRASTIC MEASURE. THE DECISION TO CREATE RESERVES WAS PART OF AN EXPECTED TRANSITION TO HARDER REQUIREMENTS AFTER ACQUIRING ASSETS FROM SIGNATURE BANK LAST YEAR. LISA: THEY EXCEEDED THE THRESHOLD THAT MAKES THEM SUSCEPTIBLE.

JAY POWELL TALKED ABOUT HOW THEY WORK ON VARIOUS THINGS. I WONDER WHAT OTHER CONVERSATIONS ARE BEING HAD BEHIND THE SCENES. PEOPLE POINT TO THESE BECAUSE THEY ARE MOVING TOWARDS THAT THRESHOLD OF 100 BILLION DOLLARS. HOW MANY THERE ARE? THAT'S A KEY QUESTION WHEN PEOPLE TALK ABOUT THIS. JONATHAN: THE MAXIMUM CRITICISM WAS NOT ABOUT REGULATION, BUT ABOUT SUPERVISION, THE APPLICATION OF PHYSICS, OF EXISTENCE. IS THIS DIFFERENT FROM WHAT WE LIVED A YEAR AGO? LISA: YOU HAVE TO WONDER, GIVEN THE ASSIGNMENT TO THIS, HOW MUCH MORE IS GOING ON. IS IT ENOUGH TO ELIMINATE THE CONCERNS ABOUT A CREDIT RESTRICTION IN THE MARKET?

JONATHAN: LET'S GO TO EUROPE. UBS STOCK FALLS AFTER MISSING THIRD QUARTER ESTIMATES. AND SHARE THE BUYBACKS AGAIN WITH WHAT THE CEO CALLS A PIVOTAL YEAR. I THINK IT'S ONE THING TO BE WILLING AND IN THE COMING YEARS TO SACRIFICE A MAJOR PART OF THE CORE GROWTH TO IMPROVE OUR FINANCIAL RESOURCES. JONATHAN: JOIN US FOR A DISCUSS, LET'S GET RIGHT TO THAT. WHAT ARE THE GOALS FOR

2024

AND BEYOND? I guess the biggest target that caught my attention is that they're looking for an 18% return on equity, which is very bold for a European bank, even for UBS. INVEST EFFORTS IN THE VERY IMPORTANT CENTRAL ASSET MANAGEMENT UNIT.

THESE ARE TWO VERY AMBITIOUS GOALS. I WOULD SAY THEY ARE NOT OUT OF THE WAYORDINARY. THEY GIVE US A CLEAR PATH OF WHAT THEY WILL BE THINKING RIGHT NOW AND HOW THEY WANT TO GO WITH THIS NEW ENTITY. THE OTHER BIG OBJECTIVE WAS TO SAVE COSTS. ALSO SHOWING THAT THEY ARE ON THE PATH OF MERGER AND TRYING TO RAISE THOSE SYNERGIES AT THE CENTER OF THE WHOLE IDEA TO DO IT AND MAKE THE WHOLE MERGER WORK. I SAY THESE RESULTS ARE PRETTY GOOD. THERE ARE PROBABLY SOME THINGS THAT WORRY US. TODAY'S RESULT WAS VERY reassuring. JONATHAN: THERE WAS SOME CONCERN THAT SOME MONSTERS WERE HIDING ON CREDIT SUISSE'S BALANCE SHEET.

JP: WE DON'T KNOW YET. UBS TELLS US THEY ARE VERY SURE ABOUT EVERYTHING THEY HAVE OUTSOURCED BY TALKING TO THE NON-CORE LEGACY UNIT THEY DON'T EXPECT BIG CREDITS. BECAUSE OF TODAY'S RESULTS THERE WAS NOT MUCH TO WORRY ABOUT. COULD THERE BE SOME TRAP DOORS ON THE PATH? THAT IS ALWAYS POSSIBLE. IF YOU LOOK AT WHAT WAS SAID DURING THE CALL THEY HAVE 6000 DIFFERENT BOXES FOR THE MERGER TO WORK. I'M PRETTY SURE ONE OF THOSE IS CREDIT QUALITY AND ASSET QUALITY. THEY STILL HAVE TO GO THROUGH A LOT OF THINGS AND CONSIDER WHAT THE MARKET IS GOING TO DO.

IN GENERAL AND PRETTY SURE THERE IS SOMETHING IMPORTANT, BUT IT WOULD BE A CONCERN FOR THE MARKET, THEY'VE ALREADY TOLD US. LISA: THE WORLDLY CONCERNS OF MANY WEALTH MANAGEMENT CLIENTS WANT TO DIVERSIFY BETWEEN TWO COMPANIES AND MIGHT STAY AWAY FROM UBS WHO WERE PREVIOUSLY WITH CREDIT SUISSE BECAUSE THEY WANT DIVERSIFICATION. DO WE HAVE ANY FEELING WHAT'S GOING ON WITH THAT? JP: THAT'S A BIG PROBLEM. IF YOU LOOK AT THE NUMBERS, YOU CAN TAKE THE TARGET OF 5 TRILLION INVESTED ASSETS AND IF YOU GO TO CREDIT, YOU CAN CALCULATE THE GROWTH RATE THEY ARE ASSUMED FOR THIS IS BASICALLY INTEREST AND DIVIDENDS ON THOSE INVESTED ASSETS.

REALLY CALCULATING A LOT OF ORGANIC GROWTH, SAY. THE BANK SAID WE STILL HAVE TO CONSIDER THAT WE HAVE PEOPLE LEAVING THE BANK BECAUSE THEY DON'T WANT TO BANK WITH UBS ONLY OR FOR ADVISORY REASONS OR WE DON'T WANT TO BE JUST ANOTHER CUSTOMER BECAUSE THEY HAVE STATED ABOUT OPTIMIZING THE BUSINESS AND NOT TAKING EVERY CUSTOMER ON BOARD . LOOK AT THE HOLISTIC LINE RATIO AND YOU WANT TO HAVE A COMPLETE IDEA OF NOT JUST A LOAN FOR EXAMPLE OR JUST DOING BROKER FOR THE CUSTOMER. THERE IS STILL POTENTIAL. THEY ARE LOSING SOME OF THOSE EXITS. SOME PEOPLE MAY ARGUE THAT THOSE GOALS ARE A LITTLE VAGUE, TO SAY, AND THE PATH TO THE GOAL IS NOT CLEAR.

I guess UBS IS DOING THE BEST THEY CAN AT THIS POINT. THERE ARE MANY MOVING PARTS BUT IT'S VERY IMPORTANT TO ME WHAT THE FAILURE WAS ACTUALLY, UBS IS VERY GOOD AT THIS POINT AT CONNECTING THE DOTS. THEY ARE GIVING US THE POINTS BY TELLING US THE STORY OF HOW WE WANT TO ACHIEVE WHAT THEY ARE SETTING FOR. THAT IS MORE IMPORTANT FOR INVESTORS, AT LEAST FOR THE LONG-TERM ONE, BECAUSE THEY WANT TO UNDERSTAND HOW MANAGEMENT THINKS, WHAT IS FUNDAMENTAL AND WHAT IS NOT. I THINK THEY ARE DOING A GOOD JOB ON THIS. LISA: THE QUESTION IS WHETHER UBS IS THE MODEL FOR WHATEVER WAS FOR THE MAJOR EUROPEAN BANKS OR IS IT JUST BENEFITING FROM THE BOOM WE ARE SEEING WITH OTHERS THAT ARE REALLY DELIVERING RESULTS IMPRESSING SOME INVESTORS.

JONATHAN: GAETZ - JP: IT'S DIFFICULT TO USE THAT AS A BLUEPRINT. THEY HAVE BEEN VERY SIMILAR IN BUSINESS TERMS AND FOCUS ON WEALTH MANAGEMENT AT THE CORE, TO MAKE THINGS EASIER. THEY DO NOT HAVE A MAJOR IMPACT ON CROSS-BORDER MERGERS. THAT'S WHY IT MAKES IT VERY DIFFICULT TO SAY THAT THIS IS GOING TO WORK FOR ALL BANKS. IT IS reassuring for the sector as a whole that a big merger can be achieved, but there is still an issue of huge fragmentation in Europe, different standards when it comes to capital and how capital can be moved between shares and entities across borders.

THAT IS A PROBLEM THAT MUST BE RESOLVED BEFORE WE CAN TALK ABOUT CROSS-BORDER MERGERS. THAT'S STILL A FAR FAR DOWN THE WAY. JONATHAN: DON'T MAKE PEOPLE EXCITED JP. THIS IS THE LATEST THIS MORNING FROM THE WALL STREET JOURNAL. HERE IT IS: JP MORGAN PLANS TO BUILD 500 MORE BRANCHES IN THE NEXT THREE YEARS. EXECUTIVES ACCORDING TO THE WALL STREET JOURNAL ARE TARGETING A 20% SHARE OF AMERICAN DEPOSITS. A 20% SHARE OF AMERICAN DEPOSITS. LISA: FOR JUSTICE, WHERE ELSE DO THEY HAVE TO GO? IF THEY WANT TO GROW THEY JUST HAVE TO DOMINATE MUCH MORE. IT'S JP MORGAN'S GAME EVERYONE ELSE IS JUST PLAYING IT.

JONATHAN: THE 13% DEPOSIT SHARE WHICH IS ALREADY A PRETTY AMAZING NUMBER. AND WE'RE ONLY GOING HIGHER. BUT SCHEDULE AN UPDATE THIS MORNING. DANI: THE US SECRETARY OF STATE IS ON HIS FIFTH VISIT TO THE MIDDLE EAST SINCE THE HAMAS ATTACK ON ISRAEL. NEGOTIATORS IN EGYPT AND QATAR ARE PROPOSING AN AGREEMENT WITH HAMAS TO PAUSE THE FIGHTING AND ALLOW THE RELEASE OF THE SIGNIFICANT ISRAELI HOSTAGES. INTERNAL ISRAEL WILL RELEASE PALESTINIAN PRISONERS. THEY MUST MAKE STOPS IN THE West Bank. NIKKI HALEY HAS REQUESTED PROTECTION FROM THE SECRET SERVICE AFTER RECEIVING THREATS AGAINST HER. SHE CONFIRMED THE THREATS AND THE INTERVIEW WITH NBC BUT DID NOT REVEAL MORE DETAILS.

HALEY'S QUALIFICATION WILL BE DETERMINED BY THE SECRETARY OF HOMELAND SECURITY AFTER CONSULTATION WITH THE CONGRESSIVE COMMITTEE. KING CHARLES IS RECEIVING TREATMENT FOR AN UNSPECIFIED FORM OF CANCER. AT BUCKINGHAM PALACE PROSTATE CANCER IS RULED BUT IT DOES NOT SPECIFY MORE DETAILS. THE PALACE ADDS THAT KING CHARLES WILL CONTINUE WITH STATE BUSINESS AND OFFICIAL PROCEDURES, REMAINING POSITIVE ABOUT HIS TREATMENT AND HOPES TO RETURN TO FULL PUBLIC SERVICE AS SOON AS POSSIBLE. JONATHAN: APPRECIATE THE UPDATE. THE FED DEPENDENT ON DATA. IF WE CONTINUE TO RECEIVE MORE DATA LIKE WE HAVE GOT, WE WILL BE FAR BEYOND THE PATH TOWARDS NORMALIZATION.

THAT'S COMING NEXT LIFE FROM NEW YORK CITY, THIS IS BLOOMBERG. ♪ JONATHAN: LIVE FROM NEW YORK CITY, STOCKS LOOK LIKE THIS ON THE S&P 500. STOCK FUTURES NEGATIVE 0.1%. THE RETURNS ARE GOING NOWHERE. CERTAIN STABILITY AFTER CHAOS. THE LAST DAYS. LISA: WHY OLD. JONATHAN: DOUBLE DIGIT -- WILD. JONATHAN: PAYROLL EXPLOSION REPORT FOR FRIDAY TO THE END OF THE WEEK. PRETTY TREMENDOUS. LISA: THERE WAS A VERY CLEAR CHANGE IN MOOD. IT WAS NOT SO UNCERTAIN WHAT IS HAPPENING, THIS WAS SUDDENLY AN ATTEMPT TO REVALUATE THE SLOWLY FALLING PATH OF INFLATION AND IF THE FED CAN'T REDUCE RATES AS MUCH AS POSSIBLE, IT'S A RESET.

PEOPLE ARE SAYING HOW MUCH MORE IT NEEDS TO COME. JONATHAN: 34 BILLION DOLLARS IN BULLETIN FOR THREE YEARS. 42 BILLION NOTES 10 YEARS FROM TOMORROW. LATER IN THE WEEK WE WILL GET $25 BILLION OF 30-YEAR BONDS. LISA: I THINK IT'S... IT'S IMPORTANT. WE'RE BASICALLY TALKING ABOUT SUPPLY PROBLEMS AND YOU DON'T CARE WHEN WE RETURN TO SOMETHING FAMILIAR IN THIS LOW INFLATION NARRATIVE. IT'S A REALLY GOOD NARRATIVE TEST, IT DOESN'T NECESSARILY SHARE THE AGENDA FOR DEFICITS, IT SET THE TONE. JONATHAN: GET THE LIST, HE'S BRAMO'S FAVORITE IN THE TERMINAL. IT SEEMS LIKE THE ECONOMY HAS BEEN VERY STRONG ON THE GROWTH FRONT.

IT HAS GREAT EMPLOYMENT NUMBERS, BETTER THAN EXPECTED GDP NUMBERS. BUT AT THE SAME TIME WE HAVE BETTER THAN EXPECTED INFLATION. IF WE CONTINUE TO RECEIVE MORE DATA LIKE WE HAVE GOT, WE WILL BE FAR BEYOND THE PATH TOWARDS NORMALIZATION. JONATHAN: CHICAGO FED CHAIR SITTING WITH MICHAEL MCKEE MAKING REMARKS ON CHAIRMAN POWELL. LOOKING FOR MORE DATA. ALL READY TO TALK LATER TODAY. LISA: THERE IS A SUBTLE CHANGE, AUSTIN TENDS TO GO MORE TO THE SUPPLY SIDE. BY SAYING IT'S POSSIBLE DURING THE POST-PANDEMIC RECOVERY PERIOD, WE'RE BASICALLY LOOKING AT SOMETHING SUBSTANTIALLY ABOVE NEUTRAL. JONATHAN: WHERE DOES THAT LEAVE EMERGING MARKETS?

AS IF IT WAS NOT ALREADY A FIGHT FOR EMERGING MARKETS. GETTING TREMENDOUS DATA IN AMERICA. WE HAVE TO KEEP TALKING ABOUT CHINA, IT IS NOT INVERSIBLE. PRESIDENT XI JINPING VISITED THE PBOC. IN CHINESE VARIABLE INCOME. ALIBABA HAS LOST 75% OF ITS MARKET VALUE SINCE 2020. JONATHAN: THAT'S AMAZING. PROBABLY THE CHEAPEST STOCK YOU WILL FIND IN CHINESE: CERTAINLY NOT INVESTABLE BUT POTENTIALLY TRADEABLE. LISA: WHICH MIGHT LEAVE PEOPLE SCRATCHING THEIR HEADS, ARE YOU SAYING THAT IT DOESN'T MATTER WHAT XI JINPING DOES REGARDS TO TRULY PROVIDING THIS MARKET, ONLY THE MEETING IS A NEGOTIABLE EVENT? DAMIAN: WHAT YOU ARE ASKING IS WHAT THE CROSS PROTECTION CLAUSES ARE ACTIVATED BY FINANCIAL VEHICLES.

LISA: 100%. DAMIAN: WHICH IS VERY GREAT. THEY HAVE NEVER DEFAULTED ON THEIR PUBLIC DEBT: WONDERING ABOUT THE GUARANTEES THEY HAVE TO ADDITIONALLY HAVE TO PROVIDE THE BONDHOLDERS TO KEEP THEM COMFORTABLE TO FINANCE EVERYTHING THAT HAPPENS LOCALLY. I THINK SERIOUSLY WHAT I'M LOOKING AT THIS WEEK, IN ADDITION TO THE INFLATION DATA FROM CHINA, IS THE EXPORT DATA FROM LATIN AMERICA. JUERGEN SEES IT FIRST IN THE EXPORTERS. I'll be looking at exports out of Brazil just to get an idea of ​​what this is like. WE WON'T HAVE A SENSE OF THE CHINESE DOMESTIC MARKET UNTIL MID-MARCH. WE MAY GET SOME ECONOMIC DATA, BUT WE SHOULD NOT HAVE ANY INDICATION AS TO WHAT MARK--EMMERGING MARKETS WILL BE.

ANNMARIE: WE ASKED WHO WAS INFORMING WHO. HOW IMPORTANT IS THE LUNAR NEW YEAR WEIGHT FOR OFFICIALS? DAMIAN: THEY NEED TO FIX THE SENTIMENT OVER THE NEXT WEEK OR TWO SO THAT PEOPLE SPEND AND RETAIL SALES RECOVER. I THINK MESSAGING IS CRITICAL RIGHT NOW. XI JINPING PRESENTED IT ARGUING. WILL IT BE MORE REGULATIONS ON THE SHORT BRAIDED SIDE OR WILL IT BE A REAL STIMULUS IN THE RIGHT PLACES? THEY HAVE NOT YET SUCCESSFUL. IT'S A KIND OF PRECURSOR. IT TOOK A LONG TIME TO FIND THE SHIP AND EVEN WHEN THE STOCK REACHED ITS PEAK IN 2020 IT WAS FAR FROM THE PEAK IN 2015.

I'M NOT TERRIBLY OPTIMISTIC BUT... JONATHAN: CAN YOU TELL US WHY? I HAVE BEEN RELUCTANT TO DO THAT. VERY DIFFERENT APPROACH THROUGH THE PANDEMIC, WHY HAVE THEY BEEN SO RELUCTANT? DAMIAN: THE LARGEST 15-year leverage and debt buildup in world history preceded what we just witnessed. XI JINPING PRISON IS TRYING TO DO THE RIGHT THING BUT IT HAS BECOME TOO BIG. YOU MAY THINK YOU'LL HIT THE BRAKE AND THINGS ARE TAKING A BREAK. IT'S THE SAME WITH THE PANDEMIC. WE ACTUALLY NEVER SAW THAT. IF YOU LOOK AT THE ENERGY DEMAND, OIL DEMAND. CHINA IS GOING TO BE A THIRD OF NEW OIL DEMAND THIS YEAR.

THEY ARE REDOING THEIR REFINING INDUSTRY, THE MARGINS ARE IMPROVING. THERE ARE MANY REASONS TO BE BOLD ABOUT WHAT'S HAPPENING IN CHINA AND HOW IT'S SPILLING OUT. AS IT RELATES TO CHINA. JONATHAN: IF THIS WAS THE BEAR'S DREAM, THE BALANCE SHEET RECESSION MADE YEARS AND YEARS AGO IN CHINA, DO YOU SEE ELEMENTS OF THAT MATERIALIZING? DAMIAN: IT NEVER MATERIALIZED TO THE EXTENT WE THOUGHT IT WOULD BE SEEN NOW THE WATCHERS ARE NOW BACK SO PEOPLE ARE WATCHING THE FISCAL DEFICIT AND RESERVES TO GDP IN THE US THERE WILL BE A GREATER FOCUS ON VALUE AGAINST THE CARRIE, EXPECTS COMPRESSED AT A GLOBAL LEVEL.

IT MEANS THERE IS NOT SO MUCH MONEY, PEOPLE WILL LOOK FOR VALUE AND THAT'S WHERE THE FUNDAMENTALS COME IN. LISA: I THINK ABOUT HOW THEY ADDRESS THE CHINA QUESTION. AND DATA WILL BE RELEASED TOMORROW THAT IS EXPECTED TO SHOW THAT THE US TRADE DEFICIT WITH CHINA REACHED ITS LOWEST LEVEL IN AT LEAST 13 YEARS, DRIVEN BY A FALL IN IMPORTS. IF WE LOOK AT IT AS PART OF GDP, THOSE LEVELS LAST SEEN SINCE THE EARLY 2000'S. HOW MUCH OF THIS IS PROOF OF WHAT'S TO COME. DAMIAN: IS THAT INDICATIVE OF US DEMAND OR IS IT YOUR SUPPLY OUT OF CHINA OR MAYBE LOGISTICS?

LISA: YOU ARE SUPPOSED TO ANSWER THE QUESTION. DAMIAN: I DON'T HAVE THE ANSWER. JONATHAN: AS YOU KNOW, WE LOOK AT PLACES LIKE MEXICO, VIETNAM, THOSE CHINESE EXPORTS ARE MAKING A STOP THERE, CAN YOU REALLY GET A CLEAR READING OF THE RATIO BASED ON THAT? DAMIAN: WAS IT THE MOST ILLIQUID WAY TO PAY CHINA? . IF YOU CONSIDER IT BASED ON CARRIE AND VALUE, IT IS ONE OF THE LOWEST YIELDING AMONG ROYALTIES ON THE MARKET. I THINK HE HAS RECOVERED A LITTLE. If you look at it from a value point of view, it is still quite expensive. THOSE ARE TWO BLOWS AGAINST THE CHINESE YUAN AS AN INVESTMENT CASE, CURRENCY SPECULATOR OR RISK MANAGER.

FROM THAT PERSPECTIVE, IT WILL BE A DIFFICULT JOB FOR CHINA INVESTORS. JONATHAN: ASK YOUR OWN QUESTIONS AND ANSWER THEM. COMING SOON IN THE NEXT HOUR ON BLOOMBERG TV. CHIEF MARKET STRATEGIST BNP PARIBAS, CIO OF THE GLOBAL LIQUIDITY MARKET. AND GEORGE FERGUSON OF BLOOMBERG INTELLIGENCE AT BOEING. BLOOMBERG'S SECOND WATCH HOUR IS RIGHT AROUND THE CORNER. NEGATIVE BY 0.1 PERCENT. LIVE FROM NEW YORK, THIS IS BLOOMBERG. ♪ I FEEL LIKE THE FED IS LOCKED AND WILL CUT RATES IF NECESSARY. THE FED HAS INDICATED THAT IT HAS ALREADY FINISHED RAISING INTEREST RATES, MAYBE AT SOME POINT LOWER INTEREST RATES. THE DATA WILL NOT BE SIGNIFICANT BEFORE THE JUNE MEETING.

IT IS DIFFICULT TO GET CONSENSUS TO INITIATE OUTAGES SOON WHEN THE FULL SCALE OF THE DATA HAS NOT YET BEEN SEEN. THIS IS A FED THAT DOESN'T WANT TO MAKE ANOTHER MISTAKE. THIS IS THE BLOOMBERG WATCH WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. GOOD MORNING, GOOD MORNING. THIS IS BLOOMBERG SURVEILLANCE. I'm JONATHAN FERRO. THE S&P 500 NEGATIVE BY 0.1%. BELL, A SERIES OF SURPRISES HIGH CALLS PENDING ON WALL STREET. LISA: SHE SAID THAT IF YOU WERE WITH THE NON-FARM PAYROLL REPORT IT IS CONFUSING AND RAISES QUESTIONS ABOUT VALIDITY, BUT YOU HAVE BEEN WRONG IF YOU DISCOUNTED NUMBERS THAT LOOKED TOO STRONG BECAUSE THEY DID NOT FEEL CORRECT.

THAT HAS BEEN A TOPICCONSISTENT DURING THE PAST 12 TO 18 MONTHS. FRANKLY, IT'S BEING CONFIRMED VIA ISM SERVICES DATA. JONATHAN: THE TITLE NUMBER INCREASED IN JANUARY ACHIEVING THE BIGGEST GAIN IN A YEAR. A PROXY OF FUTURE DEMAND INCREASED TO A THREE-MONTH HIGH. WE HAD MANUFACTURING LAST WEEK GETTING CLOSER TO EXPANSION. WHICH HAS BEEN IN A FALL OR SOMETHING LIKE TWO YEARS. PRICES PAID FOR MATERIALS ARE THE MOST INCREASED SINCE 2012. HIGHER SHIPPING COSTS, INCREASE IN PRODUCT PRICES. IN ALL AREAS EVERYTHING IS RECOVERING AGAIN. LISA: WHERE IS THE SLOWDOWN HAPPENING? IT DOES NOT HAPPEN IN MANUFACTURING. WE ARE SEEING THINGS GETTING UP A LITTLE.

DO WE HAVE A LANDING? It begs the question: DOES GOLDILOCKS HAVE PROBLEMS WITH OUR GOLDILOCKS? JONATHAN: THE LANDING STORY, IS IT TOO SOON? YOU SAID THAT RICH DE GOLD IS ON LIFE SUPPORT. LISA: IT MEANS THEY WILL PROBABLY HAVE TO MAINTAIN THE RATES, IF TRUE, FOR LONGER HIRING AND THEY WILL HAVE TO BE MAINTAINED. WE'RE SUDDENLY STARTING TO TALK ABOUT THE POTENTIAL THAT IT MAKES SENSE FOR THE FED TO NOT CUT RATES UNTIL AFTER THE ELECTION LATER THIS YEAR. JONATHAN: ECONOMIC DATA STARTS THE YEAR LOOKING EXCELLENT. A CAPTIVE AUDIENCE ON SUNDAY AFTERNOON MAY BE 120 MILLION AMERICANS IN FRONT OF THEIR TELEVISION SCREENS.

YOU RECEIVE THE OFFER TO DO A PRE-SUPER BOWL INTERVIEW AND YOU WILL BE ABLE TO TALK ABOUT THESE GOOD THINGS. AND THEN HE SAYS NO AND HIS COMPS DIRECTOR SAYS, WE DON'T KNOW WHO WILL BE PAYING ATTENTION. MAYBE THEY ARE PREPARING THE CHILI AND PUTTING THE BEER IN THE BOX. THOSE ARE THE WORDS OF THE BIDEN CAMPAIGN. LISA: IT SEEMS THAT THIS ADMINISTRATION DOES NOT TAKE ADVANTAGE OF THE 150 MILLION EYES TO TELL A GOOD STORY OF THE MOMENT, TWO YEARS OF UNEMPLOYMENT BELOW 4%. WE SEE THE PRESIDENT TALKING ABOUT ECONOMY WITH SPECIFIC GROUPS. I WAS IN NEVADA BEFORE THE DEMOCRATIC PRIMARIES.

YOU'RE GOING TO LOVE THIS. WHEN HE TALKED ABOUT FALLING INFLATION, HE TALKED ABOUT THE BEST ECONOMY IN THE WORLD AND MORE WORK TO BE DONE. HE SAID THE HIGH PRICES WERE PARTLY THE WORK OF "A BIT OF CORPORATE GREED." THESE ARE SOME OF THE ISSUES HE TALKS ABOUT WHEN IT COMES TO SHIPPING COSTS. THE MANAGEMENT IS GOING TO HAMMER WHAT THEY THINK IS THE CORPORATION'S PROBLEM. JONATHAN: YOU HAVE TO COMMUNICATE THAT THE ECONOMY IS AS GOOD AS YOU THINK IT IS WHEN MANY OF THE SURVEYS DO NOT AGREE WITH YOU. AND TWO IS IMMIGRATION. THERE IS A BILL WORKING IN CONGRESS AND MANY PEOPLE THINK IT'S DEAD ON ARRIVAL.

WE HAVE THE OPPORTUNITY TO TRY TO COMMUNICATE THE SUBSTANCE OF THE LAW AND WHY YOU THINK IT WILL HELP YOU DO A JOB IN A WAY YOU CAN'T NOW. AT THE MOMENT YOU FEEL LIKE REPUBLICANS AND THE CONSERVATIVE MESSAGE HAS HIDNAPPED THE LAW AND SPINTED IN A WAY THAT MAKES YOU NOT GOING TO ADDRESS THE UNDERLYING PROBLEMS ON THE SOUTHERN BORDER. ANNMARIE: THAT'S WHY YOU SEE THE ADMINISTRATION HAS TO COME OUT AND TALK ABOUT THE LIGHT WILL WORK. THEN HE SAYS HE WOULD GIVE THEM AUTHORITY TO CLOSE THE BORDER. THERE IS AN ISSUE AROUND THE 5,000 MIGRANTS CROSSING THE BORDER THAT MANY CONSERVATIVES ARE SAYING THAT ALMOST MAKES IT LEGAL FOR 5,000 MIGRANTS TO CROSS THE BORDER.

KYRSTEN SINEMA HAS HAD A LOT OF PROBLEMS WITH THIS. SHE SAYS HE'S BEING MANIPULATED. SHE SAYS THAT IF THERE ARE 5,000 ENCOUNTERS A BORDER AUTOMATICALLY CLOSES, GIVING THE PRESIDENT SOME AUTHORITY SIMILAR TO TITLE 42 DURING THE PANDEMIC. LISA: THE LAST HOUR EXPRESSED A LOT OF FRUSTRATION ABOUT THIS AND I WON'T REPEAT IT, BUT DESPITE SOME INACTIONS AND PARALYSIS THAT WE TALK ABOUT IN WASHINGTON, A LOT OF STIMULUS HAPPENED. YOU BEGIN TO WONDER HOW MUCH IS SUPPORTING A LOT OF THIS NARRATIVE THAT WE ARE RECOVERING. TO COMPLETE THE CIRCLE, BECAUSE THIS IS WHAT PEOPLE TALK ABOUT WHEN I TALK TO THEM, THAT THERE'S A LOT OF MONEY BEING PUMPED INTO THE ECONOMY.

ANNMARIE: HEART OF THE STRUCTURE. THE INFLATION REDUCTION LAW. AND THEN FRENCH FRIES. $166 BILLION ALREADY FOR CHIPS WITH THE CHIPS AND SCIENCE ACT AND MUCH OF THAT IS NOT EVEN IN THE FIELD YET. THEREFORE, THERE IS A LOT OF DEMAND TAKING PLACE FOR THE MONEY THAT WILL POTENTIALLY LEAVE OUT OF WASHINGTON. IT'S NOT ALL THERE YET, BUT WE WILL POTENTIALLY SEE SOME OF IT. JONATHAN: I CAN FEEL THE FRUSTRATION EVEN WHEN YOU TRY TO CONTAIN IT. LISA: I'M TRYING TO BE GOOD. I THOUGHT IT WAS REALLY DIPLOMATIC. ANNMARIE: TRYING TO GET THAT AND THEN SOMETHING BIPARTIST WHEN IT COMES TO IMMIGRATION, SOMETHING THAT HAS BEEN DEBATED IN WASHINGTON FOR DECADES.

JONATHAN: HERE'S THE BROADEST PRICE ACTION IN THE S&P 500 WITH STOCK FUTURES SLIGHTLY NEGATIVE BY 0.06% IN THE BOND MARKET YIELDS DON'T CHANGE, 4.15 20. FOREIGN EXCHANGE, THAT CURRENCY NEGATIVE BY 0 .7%. COMING SOON, BNP PARIBAS ON RESETTING MARKET EXPECTATIONS. THE MAIN END OF THE PERFORMANCE CURVE. AND GEORGE FERGUSON ON BOEING'S LATEST CHALLENGES. LET'S START WITH OUR TOP STORY: THE RECESSION BALLS AS THE AMERICAN ECONOMY FORWARDS. MARKETS ARE FINALLY WAKEING UP TO THE RISK OF INFLATION AFTER IGNORING IT FOR MONTHS. IT'S CLEAR THAT THE GOLD RICH NARRATIVE OF ACCELERATING GROWTH AND SLOWING DOWN INFLATION WAS A FAIRY TALE. DAN MORRISON JOINS US FOR MORE.

LET'S DELIVER WHY THE GOLDEN RICH NARRATIVE WAS A FAIRY TALE. WHAT ARE YOU WATCHING? WHAT HAPPENS TO THE ECONOMIC MIX AT THE MOMENT? DANIEL: GOLD RICH TORY MADE SENSE BEFORE THE PANDEMIC, BUT THE DISTINCTION WE'RE TRYING TO MAKE BETWEEN GOLD RICH AND SOUTHERN LANDING IS THAT WE HAVE ACCELERATED GROWTH. AT THE SAME TIME WE HAVE A SLOWING INFLATION. THAT'S NOT THAT GREAT ENVIRONMENT. IT'S OBVIOUSLY BETTER THAN A RECESSION, BUT IT'S STILL SLOW GROWTH. AT THE BEGINNING OF THE YEAR WE HAD THE IDEA THAT WE COULD HAVE MORE THAN THREE PERCENT GROWTH IN GDP AT THE SAME TIME THAT INFLATION WAS FALLING.

THE IDEA THAT YOU CAN HAVE STABLE ECONOMIC GROWTH OR IMPROVING THAT INFLATION CONTINUES TO SLOW DOWN. WE THOUGHT THAT WAS NEVER CREDIBLE AND AFTER FRIDAY'S PAYROLL DATA AND SENSE I THINK THAT'S THAT IDEA. LISA: THIS IS A CONVINCING IDEA TO ME AND I WAS JOKING THAT GOLDILOCKS IS ON LIFE SUPPORT AND YOU POINTED OUT THAT IT WAS FICTIONAL TO START. WHAT DOES IT HAVE TO GIVE? IS IT THE SOFT LANDING OR THE INFLATION ASPECT THAT CONTINUES TO FALL DOWN WITH THE CONTINUED STRENGTH OF THE ECONOMY? DANIEL: ULTIMATELY IT LOOKS LIKE GROWTH WILL HAVE TO SLOW DOWN EVEN IF THE ECONOMY REALLY REFUSES TO DO SO.

TAKING INTO ACCOUNT THAT WE BELIEVE INTEREST RATES ARE AT A RESTRICTIVE LEVEL, AND WE CAN DEBATE ALL DAY IF YOU WANT, BUT THE EFFECT WILL REDUCE ECONOMIC GROWTH. WE APPRECIATE THAT THIS HAS NOT HAPPENED YET, IT IS BECAUSE OF THE FISCAL STIMULUS THAT HAS BEEN PUT INTO THE ECONOMY. IT IS THE BATTLE BETWEEN MONETARY POLICY ON THE ONE HAND AND FISCAL POLICY ON THE OTHER. BUT RATES HIGH ENOUGH FOR ENOUGH TIME AND US GROWTH RATES WILL SLOW DOWN. IT'S NOT JUST THAT US GROWTH NEEDS TO SLOW DOWN, IT NEEDS TO SLOW DOWN BELOW THE TREND GROWTH RATE, WHICH MEANS IT NEEDS TO BE SOMETHING BELOW 1.75% FOR INFLATION TO RETURN TO TARGET.

WE ARE VERY FAR FROM THAT. LISA: TELL US HOW THIS INFORMS YOUR INVESTMENT. YOU ARE NOT EXACTLY BEARISH. YOUR NOTES SOUND LIKE THEY STILL CONSTRUCTIVE, BUT MAYBE NOT AS CONSTRUCTIVE OR YOU THINK THINGS WILL DRAIN MORE LATER. HOW DO YOU SEE THIS CHANGING YOUR LOOK? DANIEL: I THINK THIS IS THE TIME WE ARE CONCERNED WITH. WE APPRECIATE THAT MONETARY POLICY IS OPERATIONAL WITH A DELAY AND CLEARLY THE FED WILL NOT CUT RATES ANY SOON. PREVIOUS INCREASES AND CURRENT LEVELS OF INTEREST RATES WILL CONTINUE TO SLOW DOWN THE ECONOMY. ARE WE GOING TO SEE A SUDDEN SLOWDOWN AT SOME TIME LATER IN THE YEAR?

WE THINK THAT IT IS ULTIMATELY WHAT WILL BE REFLECTED IN THE MARKET PRICES. SO FAR WHAT IS SEEN IN EQUITY INCOME IS A RELATIVELY HIGH LEVEL OF VERY SUSTAINED GROWTH. WE DON'T THINK THAT WILL LAST. WHEN YOU SEE THAT SLOWDOWN, YOU WILL HAVE TO SEE SOME WEAKNESS IN STOCK PRICES. JONATHAN: IF THE MAIN TECH PLAYERS ARE ELIMINATED, IS THIS REALLY WHAT WE SEE IN EQUITY? DANIEL: I THINK SO. IF YOU TRY TO TAKE THE RUSSELL 1000 VALUE INDEX AS A REPRESENTATIVE OF THE NON-TEXTILE PARTS OF THE S&P, IT STILL HAD A DECENT YEAR LAST YEAR AND IS STILL LOOKING FOR 9% TO 9% EARNINGS GROWTH THIS YEAR. -- PROFIT GROWTH FROM 8% TO 9% THIS YEAR.

ALTHOUGH THERE IS JUSTIFIED OPTIMISM, IT IS ONLY A QUESTION OF WHETHER OPTIMISM AT THIS LEVEL IS SUPPORTED. JONATHAN: TALKING ABOUT THE NEW RISE IN INTEREST RATES AND PARTS OF THE STOCK MARKET THAT COULD BE VULNERABLE. LET'S TALK ABOUT FINANCES. IS THAT PRESSURE ON FINANCES AGAIN? I WONDER IF LAST WEEK'S EVENTS WERE REALLY ONE-OFF OR IF YOU EXPECT TO SEE MORE OF THAT IN THE COMING WEEKS. DANIEL: IN GENERAL, IF WE LOOK AT THE RELATIVE PERFORMANCE TRADE-OFF OF GROWTH VERSUS VALUE, YOU'RE RIGHT. ON ONE HAND, IF INTEREST RATES GO UP, WE KNOW THE SENSITIVITY ASSESSMENTS OF GROWTH STOCKS.

YOU'RE RIGHT, IT WILL DEFINITELY AFFECT WHAT WE SEE IN FINANCIAL AND ENERGY TERMS, WHICH IS ANOTHER KEY PART OF THE VALUE INDEX. IT WILL BE THAT DYNAMIC ON THE ONE HAND THAT DRIVES ECONOMIC GROWTH, BUT ON THE OTHER HAND, THE DISCOUNT RATES. INTEREST RATES WILL TELL WHETHER OR NOT REAL GROWTH VERSUS DYNAMICS CONTINUES THIS YEAR. LISA: WHAT IS THE THRESHOLD FOR BENCHMARK RATES AT THE POINT WHICH IT REALLY CHALLENGES A LARGE NUMBER OF VALUATIONS IN THE S&P AND THE RUSSELL 1000 AND 2000? DANIEL: IF YOU REALLY THOUGHT POLICY RATES NEEDED TO GO UP, YOU WOULD BE WORRIED IF THERE WAS A TIP POINT IN TERMS OF THE STOCK MARKETS.

FOR US, IT'S NOT THAT RATES SHOULD GO UP, IT'S THAT YOU WON'T GET 150 BASIS POINTS IN FED CUTS THIS YEAR THE WAY THE MARKET THOUGHT AT ONE POINT. POWELL SEEMED INSISTANT THAT 75 LOOKED LIKE A REASONABLE NUMBER. IF YOU ARE WORRIED ABOUT THE OUTLOOK LATER IN THE YEAR, YOU DON'T WANT TO PAINT UNDER THE PICTURE. LAST YEAR UNTIL THE END OF THIS YEAR SHOULD BE IN POSITIVE TERRITORY, BUT NOW THEY ARE TRYING TO CALIBRATE WHAT THAT MOVEMENT SHOULD BE. JONATHAN: DANIEL MORRIS OF BNP PARIBAS ASSET MANAGEMENT. LET'S COME BACK A MONTH OR TWO. THAT WAS ALREADY TALKED ABOUT THIS YEAR AND I THINK IT'S WORTH REVIEWING.

LAST YEAR, CONSTRUCTIVE ON RISK. CONTINUE WITH THAT THROUGH THE BANKING STRESS OF LAST SPRING AND EVEN THOUGH THE FEDERAL RESERVE CONTINUES TO INCREASE INTEREST RATES. 2024, CHANGE COURSE AND WRITE, THE GREATEST RISK IS NOT A SUDDEN DETERIORATION IN RESULTS ACTIVITY BUT A REVISION OF RATES. I KNOW IT'S NOT EVEN THE LAST DAYS, BUT WE HAVE HAD A CLAIM FOR THE HIGHEST INTEREST RATES WITH THE BANK DATA FROM JANUARY. HOW MUCH WEIGHT DO YOU PUT ON THE ECONOMIC DATA FROM JANUARY? WE HAVE BEEN TALKING ABOUT THE DIFFERENCE BETWEEN SERVICES AND MANUFACTURING. HOW WITH THE CLOSING OF THE SPREAD?

WOULD SERVICES COME TO MANUFACTURING OR WOULD MANUFACTURING COME TO SERVICES? THIS IS STARTING TO HAPPEN. MANUFACTURING COMES CLOSER TO SERVICES. LISA: EVEN BEFORE SOME OF THE PROSECUTORS THAT WILL DRIVE MORE GROWTH IN CERTAIN AREAS. IT RAISES THE QUESTION WHETHER THE RATES ARE TRULY RESTRICTIVE: WE ARE NOT TALKING ABOUT HIGHER IN TERMS OF POLICY RATES. THIS IS DIFFERENT. WE ARE TALKING ABOUT REALLY HIGHER RATES THAN THEY HAVE BEEN IN A LONG TIME, TAKING JAY POWELL AT HIS WORD TO REDUCE PART OF THE MOMENTUM. TO YOUR POINT: DO WE TAKE THIS DATA AT ITS NORMAL VALUE? THAT'S WHY PEOPLE ARE LOOKING AT THE CRP REVIEWS ON FRIDAY.

HOW LONG WILL WE HAVE AN INTENSIVE VERIFICATION TAKING INTO ACCOUNT THAT SOME ANECDOTAL DATA DOES NOT CONFIRM WHAT THE HEADLINE NUMBERS SAY? JONATHAN: IT WORTH REPEATING THIS IS AN OBSERVATION WHERE WE ARE NOT A JUDGMENT OF WHERE WE ARE GOING. BREAKING NEWS, ANOTHER MONTH, FEBRUARY DATA LOOKS LIKE JANUARY, YOU GET A CHANGE IN TERMS OF PROBABILITY ON A RANGE OF OUTCOMES AND WE'RE GOING AWAY FROM THE SOFT LANDING AND BACK TO WHAT WE TALKED ABOUT 12 MONTHS AGO. WHAT LANDING? LISA: NO LANDING WILL LEAD TO A HARD LANDING, BECAUSE THAT'S WHAT WE HEAR FROM EVERYONE. THE SLOWDOWN WILL BE SUDDEN AND YOU WILL HAVE TO FIX THE SCREWS OF THE ECONOMY AS INFLATION FALLS TO KEEP IT LOWER.

WE WILL DO A REPETITION OF LAST YEAR. JONATHAN: AN INTERESTING START TO 2024. THE S&P 500 NEGATIVE ALMOST 0.1%. GIVE HERE YOUR BLOOMBERG REPORT. ISPOTIFY IS HIGHER IN PRE-MARKET TRADING AFTER THE FIRST QUARTER SINCE FIRST QUARTER SUBSCRIBER GROWTH EXCEEDED ESTIMATES. IN TOTAL, SPOTIFY SALES REACHED 3.6 BILLION EUROS, A LITTLE BELOW ESTIMATES. SPOTIFY LAID OFF 70% OF ITS STAFF IN DECEMBER AND RAISED MONTHLY SUBSCRIPTION PRICES BY A DOLLAR AND U.S. UBS SHARES ARE FALLING THIS MORNING AFTER THE BANK'S FOURTH QUARTER EARNINGS ESTIMATES MISSED THE ESTIMATES. A BUYBACK OF UP TO A BILLION DOLLARS IN STOCK THIS YEAR AND AN INCREASE TO THE COST SAVINGS GOAL. 2024 IS A FUNDAMENTAL YEAR.

I THINK ONE THING WE NEED TO DO IS BE WILLING AND IN THE NEXT YEARS TO SACRIFICE A LITTLE CORE GROWTH TO IMPROVE THE RETURN OF OUR FINANCIAL RESOURCES ON THE BALANCE SHEET. RED BULL IS INVESTIGATING CHRISTIAN HORNER COME, THE CEO OF ITS FORMULA ONE TEAM, FOR ALLEGATIONS OF INAPPROPRIATE BEHAVIOR. HE HAS DENIED THE ACCUSATIONS. I SPOKE TO THE TEAM DIRECTOR AT WILLIAMS RACING WHO SAID IT IS IMPORTANT TO HAVE A CULTURE OF ACCEPTANCE. THESE ALLEGATIONS ARE ALLEGATIONS. I AM AFRAID OF NOT UNDERSTANDING WHAT IS BEHIND THEM AND THE MEANING OF WHAT HAS HAPPENED. THE ONLY THING I CAN SAYIF THIS HAPPENS, OUR GUARD will fully support us to fix it and make sure we have a culture that accepts everyone.

DANI: THAT'S YOUR BLOOMBERG REPORT. JONATHAN: APPRECIATE THE UPDATE. NEXT, PURSUE THE FED'S GOAL. WE CHASE 2% OVER TIME. PLANS FOR WORK OR MORE ALIGNED. WAGE GROWTH ACROSS THE BAY SPECTRUM IS RETURNING TO MORE NORMAL PATTERNS. JONATHAN: THAT'S NEXT ON THE SHOW. THIS IS BLOOMBERG TV. ♪ JONATHAN: TWO HOURS AND ABOUT 13 MINUTES FROM THE OPENING BELL. BEING HARASSED AT THE DESK. LISA: OH, COME ON. JONATHAN: THE RETURNS DO NOT CHANGE. THE YEAR 10, 4.1578. THIS MORNING, PURSUING THE FED'S TARGET. THE PRICE CAPACITY GOAL IS CLEAR. WE ARE LOOKING FOR 2% INFLATION OVER TIME. LABOR SUPPLY DEMAND IS MORE ALIGNED AND WAGE GROWTH ACROSS THE WAGE SPECTRUM IS RETURNING TO MORE NORMAL PATTERNS.

IT IS DANGEROUS TO PROCLAIM WITH CERTAINTY THAT ANY PANDEMIC-ERA PHENOMENA WILL SHAPE FUTURE LABOR MARKETS, BUT THESE ARE POTENTIALLY SIGNIFICANT DEVELOPMENTS THAT COULD BE PARTICULARLY IMPORTANT DRIVERS OF FUTURE LABOR MARKET DYNAMICS. JONATHAN: ATLANTA FED CHAIR RAPHAEL BOSTIC SAYS THE CENTRAL BANKS' INFLATION TARGET REMAINS AT 2% AND WAGE GROWTH IN THE JOB SUPPLY IS NORMALIZING. He chose not to discuss the timing or trajectory of interest rates in his prepared remarks, and speculation is growing about when we might see the first interest rate cut. JULIE CORONADO SUGGESTING THAT NOW IS THE TIME TO WRITE, THE QUESTION IS VERY WHAT ARE WE DOING AT 5.5 PERCENT?

IT'S TIME TO START ADJUSTING THE NOMINAL RATE OF THE FUNDS. JULIA CORONADO JOINS US NOW. LET'S TALK ABOUT THAT. THE CHAIRMAN OF THE FEDERAL RESERVE SAID WE NEED TO SEE MORE DATA, MORE GOOD DATA, NOT BETTER DATA. JUST MORE DATA. NOT EVEN THAT GOOD. JUST GOOD, HE SAID. JONATHAN: ANY REASON WHY WE WON'T SEE THIS IN THE NEXT THREE MONTHS? FOR NO REAL REASON. YOU HAVE TO NEED THE DATA TO RATIFY IT AND THE DATA CAN ALWAYS SURPRISE US, BUT IF INFLATION CONTINUES BEHAVIOR AS IT HAS BEEN, IT WILL QUICKLY APPROACH 2%. I THINK WHAT WE ARE HEARING FROM THE FED IS THAT THE COMMITTEE IS FIGHTING TO CATCH UP ON THE RAPID CONDUCT OF DATA.

AND WHAT TO DO WITH IT. IT CERTAINLY CHALLENGES ALL OUR MACRO MODELS FOR INFLATION TO FALL SO QUICKLY WITH SUCH A HEALTHY LABOR MARKET. So, there are still some skeptics. I THINK CHAIRPERSON POWELL MIGHT BE HAVING A CHALLENGE IN RUNING EVERYONE ON THE COMMITTEE. I THINK HE WANTS TO TAKE THE FIRST STEP BASED ON A STRONG CONSENSUS. I THINK HE'S HAVING A BIT OF CHALLENGES IN MANAGING THE COMMITTEE, SO HE, IN A VERY NON-DATA-DEPENDENT WAY, REMOVED MARCH FROM THE TABLE. JONATHAN: LISA SAID IMMEDIATELY AFTER THE FED MEETING DURING THE PRESS CONFERENCE TO US AROUND THE TABLE, IT'S LIKE GRAZING CATS.

YOU SAID THE SAME THING. WHAT IS THE STATEMENT AND THE PRESS CONFERENCE YOU CALLED THAT GAVE YOU THE IMPRESSION THAT MAYBE THINGS ARE DIVIDED ON THE COMMITTEE RIGHT NOW? JULIA: FOR ME THE MOST DECLARING MOMENT WAS WHEN HE REMOVED MARCH FROM THE TABLE. HE SAID IT IN A TALAXING WAY THAT HE DOES NOT BELIEVE THIS COMMITTEE HAS THE CONFIDENCE FOR MARCH. THINK IT'S UNLIKELY, I THINK IT WAS THEIR TURN. IT WAS NOT A REFERENCE TO THEIR OPINION BUT TO COLLECTIVE TRUST, SUGGESTING THAT THERE WERE SOME CONCERNING PEOPLE WHO WERE DEEPLY SKEPTIC OF WHAT THEY HAVE SEEN OR THE LIKELIHOOD OF CONTINUING.

I THINK THAT WAS THE MOMENT IT WAS, THAT DOES NOT DEPEND ON THE DATA AND HE WAS NOT REFERRING TO HIS OWN OPINIONS. WE KNOW THAT PRESIDENT POWELL HAS BEEN MORE ENCOURAGED AND OPTIMISTIC ABOUT THE FLOW OF DATA. MORE WILLING, PERHAPS BECAUSE HE IS NOT AN ECONOMIST, TO ACCEPT IT AS IT IS AND BUY ITS STAYING POWER. DATA WILL HAVE TO RATIFY IT, BUT IF THEY RATIFY IT THERE IS NO REASON NOT TO MOVE IN MARCH. NOW THERE IS TENSION BETWEEN THE FED SAYING THEY WILL START THE CUT PROCESS LONG BEFORE REACHING 2% AND TAKING OFF THE TABLE, RIGHT?

BECAUSE WE ARE CLOSER TO 2%. WITH A COUPLE MORE MONTHS WE COULD BE VERY CLOSE. I THINK IT'S JUST THE CHALLENGE OF CAT HERDERING. LISA: YOU SAID IT'S CLEAR THAT THE FED HAS A POLICY IN A RESTRICTIVE PLACE. TALKING ABOUT MATCHING CATS, IT'S ALSO THE MARKET AND PEOPLE WONDER HOW RESTRICTIVE THAT IS. IF YOU ARE SEEING GROWTH IN JOBS LIKE WE SAW ON FRIDAY, ISM IS ALSO OFFERING SERVICES LIKE LAST MONTH. JULIA: THAT'S A FAIR QUESTION. I THINK ONE OF THE THINGS THAT HAS BEEN THE BIG MACRO SURPRISE OF 2023 WAS THE PRODUCTIVITY BOOM. WE HAD BEEN BULLISH PRODUCTIVITY WHICH WOULD BE STRONG IN 2023 AND WOULD HELP REDUCE INFLATION AND MAKE IT EASIER TO COMPENSATE FROM THE FED THAN THEY EXPECTED, BUT IT WAS MUCH STRONGER THAN WE EXPECTED.

THE SECOND HALF OF THE YEAR WAS A BOOM IN PRODUCTIVITY FOR THE YEAR. IT IS CLOSE TO 3%. THAT'S A GREAT PERFORMANCE AFTER A VERY BAD PERFORMANCE IN 2022 WHEN SUPPLY CHAINS DRAGGED US DOWN. IT IS MASKING, I THINK, SOME RESTRICTION IN MONETARY POLICY, WHICH COULD MEAN THAT THE NEUTRAL RATE, AT LEAST FOR NOW, IS HIGHER. THE GREAT UNCERTAINTY, AND JAY POWELL MENTIONED IT IN HIS PRESS CONFERENCE: WE DON'T KNOW IF WE WILL GET PRODUCTIVITY INCREASES LIKE THOSE WE SAW IN 2023 OR ANYWHERE NEARBY. IF WE DO SO, IF WE ARE NOT ONLY IN A POST-PANDEMIC PRODUCTIVITY DIVIDEND BUT IN A STRONGER TREND, THEN THE NEUTRAL RATE COULD BE HIGHER.

ON THE OTHER HAND, IF THIS IS A ONE TIME PRODUCTIVITY DIVIDEND, WE COULD SEE A SUDDEN STOP OF THE ECONOMY AS IT SLOWS DOWN. THE RESTRICTION WOULD COME AND THEY WOULD HAVE TO CUT FASTER. I THINK THOSE ARE THE UNCERTAINTIES WE ARE FACING. LISA: WE HAVE ABOUT 60 SECONDS LEFT. DO YOU BELIEVE IN GOLD RICH OR DO YOU THINK IT'S INACCURATE AT THIS TIME? JULIA: I BELIEVE IN RICH GOLD. I HAVE BEEN BULLISH PRODUCTIVITY AND I THINK THE TREND IS BETTER. THAT COULD MEAN A HIGHER NEUTRAL RATE, BUT WHAT IS HIGHER? IT IS NOT 5.5%. IT COULD BE 3%, MAYBE 3.5%.

I think productivity is higher and offsets will continue to be, you know, the Fed's dream come true for now. JONATHAN: SOMEWHERE IN THIS COUNTRY THERE'S A KID WHO WAKES UP AND PLAYS ON BUSINESS NEWS ABOUT ACCIDENTS INSTEAD OF THE CARTOONS AND HEARS YOU ASK: DO YOU BELIEVE IN GOLD RICH? THIS CHILD IS NOW FIXED ON TWO ADULTS ARGUING WHETHER GOLDILOCKS IS REAL OR NOT. LISA: WELCOME. WE CAN TALK ABOUT THE FED POLICY ON ANOTHER OCCASION. JONATHAN: STAYING AWAY FROM YOUR GOLD WEALTH IS REAL OR NOT, GRAZING CATS. LISA: It seemed like there was some kind of gap, a disparity between your point of view and what you had to read and adhere to in the statement.

HE SEEMS TO HAVE MORE CONVICTION IN THE 60 MINUTE INTERVIEW WHERE HE EXPLAINED EXACTLY WHAT IT WAS ABOUT. IT'S INTERESTING. I wonder how heated those conversations are. JONATHAN: 60 MINUTES IT IS MORE COMFORTABLE TO SPEAK FROM YOUR OWN OPINIONS. REFLECTING THE COMMITTEE'S CONSENSUS AT THE PRESS CONFERENCE IS TREMENDOUSLY DIFFICULT TO DO AND I THINK WE SAW IT LAST WEEK. JONATHAN: STOCKS ARE A LITTLE LOWER ON THE S&P AND THE NASDAQ AND THE SMALL CAPTIONS AND THEY STRUGGLING ALL OVER THE AREAS. -.01% IN THE S&P AND NASDAQ 100. IN THE BOND MARKET A GREAT READJUSTMENT IN THE LAST TWO DAYS.

THE TWO-YEAR IS AT 4.47 AFTER TWO DAYS OF DOUBLE-DIGIT EARNINGS ON A TWO-YEAR PERFORMANCE. LISA: PEOPLE ARE ALMOST TOTALLY TURNING OFF THE IDEA OF A RATE CUT IN MARCH. ARE THEY GOING TO RELOAD THEM AND WAIT FOR WEAKNESS AND CUT AT 50 BASE POINTS? WHAT PEOPLE HAVE YOU BEEN TALKING TO WHO SAY THAT MEANS THEY WILL CUT MUCH MORE AGGRESSIVELY LATER IN THE YEAR? WILL WE KNOW LANDING AGAIN? THE IDEA THAT THIS GROWTH AND EXPANSION IS SUSTAINABLE? THAT RAISES THE QUESTION OF HOW MUCH THEY CAN CUT. JONATHAN: THEY LOOK FOR A RESILIENT DOLLAR. THE EURO RETURNED TO NEGATIVE BY 0.1%.

THIS HAS BEEN A BIG DOWN FOR THE EURO DURING THE LAST WEEK. LISA: THEY ARE NOT ALONE. STANDARD CHARTERED SAID EVEN MORE STRENGTH IN THE DOLLAR COULD BE SEEN JUST BECAUSE THE ECB IS MOVING AND MAYBE IN THE OPPOSITE DIRECTION WITH THE DATA TO JUSTIFY IT. IN THE US WE ARE TALKING ABOUT SURPRISING RESILIENCE WITH MORE FISCAL STIMULUS UNDERWAY. JONATHAN: THE DOLLAR INDEX IS THE STRONGEST OF THE YEAR SO FAR. GOING BACK TO MID-NOVEMBER, THAT'S THE DOLLAR, THE EXCHANGE MARKET. YOUR TOP STORIES, THE US-UKRAINE BORDER A DEAL ABOUT TO COLLAPSE WITH REPUBLICAN SENATORS SAYING TOMORROW'S VOTE ON THE $118 BILLION BILL WOULD BE TOO SOON.

IT WOULD UNLOCK SIGNIFICANT AID FOR UKRAINE AND IMPOSE NEW BORDER RESTRICTIONS WITH THE UNITED STATES. DONALD TRUMP LEADED THE REJECTION OF THE LAW, CALLING IT "A DEATH WISH FOR THE REPUBLICAN PARTY." ANNMARIE: THIS IS SOMETHING THAT IS SURELY ON LIFE SUPPORT. WHAT YOU HEAR FROM REPUBLICAN SENATORS, ESPECIALLY FROM MANY WHO WANTED TO LINK THESE TWO POINTS, WE WILL NOT GIVE TO NATE UNTIL WE FIX OUR SOUTHERN BORDER. MITCH MCCONNELL SAYS THE PROBLEM IS NOT THE LAW, IT'S THE POLITICS AROUND IT. WHEN YOU HAVE THE FORMER PRESIDENT WHO IS NOW YOUR LEAD RUNNER TO BECOME THE GOP CANDIDATE UNTIL NOVEMBER AND POTENTIALLY THE NEXT PRESIDENT SAYS THIS IS A DEATH TO DEMOCRATS, A GIFT TO DEMOCRATS, I WANT TO ENGAGE IN THIS ISSUE, DON'T GIVE THIS FOR THEN.

JONATHAN: THE EDITORIAL BOARD SAID THAT IF REPUBLICANS REJECT THIS LAW, THEY WILL GIVE AN ARGUMENT TO THE DEMOCRATS. THE GOP WANTS BORDER CHAOS THAT THEY CAN EXPLOIT AS A CAMPAIGN ISSUE. AT THE MOMENT, IN THE SURVEYS IT IS CLEAR THAT THE BLAME LIES WITH THE WHITE HOUSE AND NOT THE CONSERVATIVES. THE SURVEY ON THAT TOPIC WILL BE THE ONE WE WATCH IF THIS BILL IS NOT PASSED. ANNMARIE: SENATOR LANGFORD SAYS I STILL WILL NOT HAVE A FUNERAL FOR THIS LAW AND THAT'S WHY I SAY HE'S ON LIFE SUPPORT. THE ELECTORATE WILL NOT ONLY BLAME JOE BIDEN BECAUSE HE'S IN OFFICE, BUT THEY WILL LOOK AT THE REPUBLICANS AND SAY IT'S A DIVIDED GOVERNMENT AND THIS IS A BIPARTISAN AGREEMENT.

WHY DON'T YOU REGISTER? LISA: NO ONE WANTS TO HEAR MY DISTRIBUTION ON POLITICS VERSUS POLITICS, BUT IT RAISES THE QUESTION ABOUT ENGAGEMENT. IF YOU SEE THIS HAPPEN OVER AND OVER, HOW WILL YOU GO TO THE ELECTION IF YOU FEEL DISENCHANTED WITH POLITICS VERSUS POLITICS? JONATHAN: DOES THIS NOT MAKE PEOPLE GO TO THE POLLS BECAUSE THEY'RE SICK OF WHO'S IN CONGRESS NOW? LISA: AND THEN WHO ARE YOU VOTING FOR? JONATHAN: MORE OF THE SAME? POLITICIANS ARE INTERESTED PEOPLE WHO ONLY WANT TO GET RE-ELECTED, REALLY? LISA: WE DON'T NEED TO GO HERE, BUT THERE IS FRUSTRATION AND PEOPLE ARE WATCHING THIS BECAUSE IT DETERMINES A LOT OF THE FUNDING AND FOR THE MARKETS LIKE YOU JONATHAN: I'M SURPRISED THAT THOSE PEOPLE EXIST.

LET'S GO TO DEUTSCHE BANK, THE FALL IN THE CALL FOR RECESSION IN THE UNITED STATES. THE US CHIEF ECONOMIST SAYS THE ECONOMY PERFORMED AS BEST IT COULD LAST YEAR AND NOW WE THINK THE ECONOMY WILL LAND ON THIS NARROW PATH AND A RECESSION WILL BE AVOIDED WITH LIMITED COST TO THE LABOR MARKET. ALTHOUGH INFLATION COULD REFIRM IN THE SHORT TERM, IN THE END WE BELIEVE IT IS FALLING SUSTAINABLY TOWARDS THE FED'S TARGET. WE HAVE TO REFRAM THIS. WHAT A CHANGE OF THIS IS FOR DEUTSCHE BANK, WHICH GOING BACK TO APRIL 2022 SAID IN THE RECESSION AT THE END OF 2023 THAT WE HAVE THE RIGHT TO CALL THE FED AND THE INTEREST RATES WOULD BE BETWEEN 5% AND 6%.

NAILED THAT. PRETTY LIKE EVERYONE ELSE HAD THE CONSEQUENCE OF THAT COMPLETELY WRONG MOVE. THEY THOUGHT WE WOULD HAVE TO SEE PAIN IN THE LABOR MARKET AND UNEMPLOYMENT BELOW 4% FOR TWO YEARS. THAT WE WOULD HAVE TO SEE INFLATION RETURN TO 2%. THERE IS HOPE THAT WE CAN RECEIVE THEM WITHOUT A RECESSION. LISA: MAKING YOUR UNEMPLOYMENT BASE CASE INCREASE TO 4.1% VERSUS THE EXPECTATION OF A MORE MATERIAL INCREASE IN UNEMPLOYMENT. THIS IS WHAT YOU LIKE UNDER THE HOOD AND BEGINS THE QUESTION: WHAT DOES IT DO FOR POLICY RATES? THEY SAY IT MEANS THE FED CAN CUT 100 BASE POINTS. I THINK IT WAS 105 BEFORE THIS.

IN THE LONG TERM, THIS IS KEY, WHAT DOES IT MEAN ABOUT WHERE THE RATE CAN BE TO KEEP THE ECONOMY MOVING FORWARD? IT USED TO BE 3%. NOW 3.5 PERCENT MAYBE 4% IN THE LONGER TERM. TO ME, THIS IS ONE OF THE KEY QUESTIONS AS PEOPLE RE-EVALUATE REFINANCING ABOUT HOW SUSTAINABLE SOME OF THE RATES ARE. JONATHAN: A GAME CHANGER ALSO FOR THE STOCK MARKET. THERE IS HOPE THAT WE WILL GO BACK TO THE OLD WORLD PRE-2020 AND WE CAN START IN THE STOCK MARKET. THAT'S A BIG CHALLENGE. A CHALLENGE TO WHAT IS A QUESTION I KEEP ASKING. A CHALLENGE FOR BIG TECH, WHICH ARE LOSING THEM IN PROFITS, OR FOR FINANCIAL COMPANIES THAT REALLY SUFFERED LAST YEAR?

LISA: GREAT QUESTION. I DO NOT KNOW THE ANSWER. IF I HAD IT I WOULD PROBABLY NOT BE HERE, BUT IT WILL BE INTERESTING IF THE RUSSELL 2000 IS A TEA LEAF OF WHAT'S TO COME. SOME OF THE COMPANIES HAVE NOT HAD TO FULLY REFINANCE OR FACE THE MUSIC OR DIVERCT CASH FROM THEIR ASSET HOLDERS AND PUT IT TOWARDS THEIR DEBTORS WHILE REVALUATING A NEW PLATFORM. IS THAT WHAT DEVALUATION IS SOMETHING OUT OF? JONATHAN: MATT, THANK YOU FOR SENDING THAT CALL, A FASCINATING READ. BOEING COME EXECUTIVES DEALING WITH AN ONGOING SAFETY CONSEQUENCE COULD HAVE CONSEQUENCES. THE LARGEST UNION WILL DEMAND A 40% WAGE INCREASE OVER THE THREE OR FOUR YEARS.

HOPING TO CAPITALIZE THE RESURGENCE OF THE AMERICAN LABOR MOVEMENT AND THE SHORT SUPPLY OF AEROSPACE WORKERS AND THEPRESSURE ON BOEING TO STABILIZE WORK IN ITS FACTORIES. THE UNION WARNS OF POSSIBLE STRIKES TO GET THEIR WISHES. MORE BAD NEWS FOR THIS COMPANY, POTENTIALLY. ANNMARIE: HOW CAN THEY DEAL WITH THIS ON TOP OF EVERYTHING ELSE? THE UNION SAYS THAT WE DON'T TAKE STRIKES LIGHTLY, BUT WE ARE WILLING TO DO THEM. IT SEEMS THEY HAVE A LOT OF LEVERAGE BECAUSE BOEING IS FACING A WHOLE LOT OF PROBLEMS. JONATHAN: AFTER THE UAW WE ASK THE QUESTION: IS THIS A SIGN OF THE TIMES?

A NEW AGE? A LABOR POWER REGIME? OR THE OFF ARMS OF HISTORY OUTSIDE THE PANDEMIC? WHICH IS IT? LISA: A LOT OF PEOPLE ARE SAYING THEY ARE PROBABLY DYING. I WOULD POINT TO UPS'S PROFITS AND THAT THEY CUT, SIGNIFICANT CUTS, FOLLOWING THEIR LABOR NEGOTIATIONS. JONATHAN: WE CAN COMPARE DATA WITH ANECDOTES. SOME OF THE EXAMPLES YOU ARE SEEING FROM CORPORATE AMERICA, ESTEE LAUDER OUTAGES FROM YESTERDAY AND FRIDAY'S EXPLOITING JOBS REPORT. THERE HAS BEEN EXAMPLE AFTER EXAMPLE OF COMPANIES THAT DO NOT HIRE BUT FIRM. JONATHAN: THIS IS ALSO SEEN IN THE TECH SPACE. I WAS READING ABOUT THIS YESTERDAY TALKING ABOUT THE LABOR MARKET HOW MUCH IS SEASONAL AND HOW MUCH IS REALLOCATED TO OTHER AREAS.

DELETE THE QUESTION ABOUT THE OWNER'S NUMBERS. JONATHAN: RETURNS BASICALLY DON'T CHANGE AFTER RECORDING HIS BIGGEST TOD - THE TWO BIGGEST DAYS IN MONTHS. TRAINS ARE NO LONGER IN LINE WITH OUR VIEW OF 75 POINT BASE CUTS THIS YEAR. MORE VALUE ALONG THE CURVE THAN WHEN FED FUTURES CALLED FOR MORE THAN SIX RATE CUTS. I LOVE TO SAY THAT WE ARE UNITED FOR MORE. DEBORAH, THE MARCH MEETING. A LOT OF PEOPLE ARE POURING COLD WATER ON HIM, BUT THIS MIGHT BE INTERESTING. I KNOW YOU ARE INTERESTED, THERE WILL BE A BIG CONVERSATION ABOUT THE BALANCE SHEET AND QT MAY BE ENDING.

I THINK THERE WILL BE MORE DETAILS ON HOW THE QT PROCESS PROGRESS THROUGHOUT THE REST OF 2024 THROUGH 2020 FIVE. I THINK THAT WILL BE THE FOCUS OF THE MEETING. THE RESILIENCE OF THE ECONOMY, THE EMPLOYMENT NUMBER THAT WE JUST SEE, WE WILL RECEIVE ANOTHER LABOR REPORT, OBVIOUSLY, BEFORE THE MARCH MEETING. SO, ADDITIONAL INFORMATION. WHAT HAPPENS FROM AN INFLATION PERSPECTIVE GOING INTO THE MARCH MEETING, I THINK THAT WILL BE THE MAIN THING IN MIND. That being said, I don't see much change in the current trajectory that we're seeing, which is continued wage inflation and continued strength from a jobs perspective.

MAYBE SOME RIGIDITY FROM AN INFLATION PERSPECTIVE GIVEN WHERE WE ARE FROM A WAGE AND RENT INFLATION PERSPECTIVE. WE WERE TALKING FROM UNION AND THE UAW AGREEMENT EARLY THIS YEAR, OR LAST YEAR, ABOUT WHAT'S GOING ON WITH BOEING NOW, IT LOOKS LIKE THE STAGE IS SET FOR THE FED TO HAVE A SLOW DECREASE IN RATES. NOTHING PRECIPITOUS. NOTHING IS WHAT IT IS: MEETING AFTER MEETING STARTING IN THE SPRING OF THIS YEAR WE THINK IT IS THE SECOND HALF OF THAT. LISA: YOU'RE THE KEY PERSON I WANTED TO TALK TO BECAUSE IF RATES ARE NOT GOING TO FALL AS FAST, IS THERE THAT MUCH CASH ON THE MARGIN OR IS IT HAPPYLY PARKED IN MONEY MARKET ACCOUNTS AND SHORT-TERM DEBT?

DEBORAH: I THINK IT'S HAPPYLY PARKED. IF YOU LOOK AT THE MONEY MARKET INDUSTRY LAST YEAR, 1 TRILLION DOLLARS. DEPOSITS LOST 1 TRILLION DOLLARS. THAT IS NOT A COINCIDENCE. THERE IS SOMETHING TO BE SAY ABOUT WHAT CAME OUT OF DEPOSITS AND MONEY MARKET FUNDS. I AM NOT SAYING THERE IS NO CASH ON THE SIDE. There are certainly those who are using the liquidity and money markets as a safe haven in the context of no longer being in the stock market and the longer-term fixed income market. THE RESILIENCE OF THE MARKET FROM THE POINT OF VIEW OF CASH LONGEVITY IS THERE.

LISA: HOW MUCH OF THE $6 TRILLION IN MONEY MARKETS WILL FLOW INTO RISK ASSETS LATER THIS YEAR? THAT HAS BEEN ONE OF THE BULL STORIES FOR MANY STOCK MARKET PROGNOSTICERS. HOW MUCH DO YOU SEE THIS AS SOMETHING THAT DEPENDS ON FEDERICO? ES: FED RECALLS VERSUS A FALACEAL STATEMENT? DEBORAH:DEBORAH: THE FLOW LEFT FROM THE RETAIL AND LEFT FROM THE WAREHOUSES. WHAT HAPPENS WHEN THE FED STALKS FROM A RATES POINT OF VIEW AND COMES DOWN THE OTHER SIDE? INSTITUTIONAL CASH COMES TO THE MARKET. It arises from direct values ​​because Derek's values ​​are now lower. Direct values ​​are now lower.

AT THE LAST MINUTE, THERE MAY BE AN AMOUNT, LET'S CALL A COUPLE OF HUNDREDS OF BILLION, FLOWING DUE TO THE RE-ENTRY INTO THE RISKIER ASSET MARKETS. THAT SAID, I THINK ASSETS FOR THESE PRODUCTS WILL CONTINUE TO INCREASE IN 2024, TAKING INTO ACCOUNT OUR EXPECTATIONS FOR RATE CUTS FROM 75 BASIC POINTS TO MAYBE 100. THEY'RE TALKING ABOUT YEAR-END RATES OF 4% TO 4.5%. JONATHAN: MEANWHILE, ARE THERE NO RATE CUTS UNTIL MID-YEAR BASED ON HOW THE CONSENSUS IS CHANGING? DEBORAH: THAT'S OUR PERSPECTIVE RIGHT NOW. JONATHAN: LET'S END THE BANKING SYSTEM. Given that the bank lending process implemented by the federal reserve last year is set to expire last month, how much stress is building up on regional banks in the market based on your reading of the last few months?

DEBORAH: JONATHAN, IT LOOKS LIKE THE LARGEST REGIONAL BANKS ARE VERY COMPLETE RIGHT NOW AND DO NOT HAVE THE SAME GEOGRAPHIC RISKS AND CONCENTRATION THAT SOMETHING LIKE MORE REGIONAL COMMUNITY BANKS HAVE. THE SYSTEM, THE TERM BANK FINANCING PROGRAM, WAS DESIGNED FOR THE LARGEST REGIONAL BANKS AND NOW THEY APPEAR TO HAVE MUCH LESS STRESS. YOUR STRESS ARISED LAST YEAR DUE TO THE RAPIDLY INCREASE RATE ENVIRONMENT AND THAT IS BEHIND US RIGHT NOW. YOUR PORTFOLIO MUST RETURN TO TRADITIONAL TENSIONS, THE LOAN PORTFOLIO. IN MOST POINTS THEY ARE WELL DIVERSIFIED. JONATHAN: THANK YOU FOR JOINING US EARLY THIS MORNING. I SAY EARLY BECAUSE DEBORAH HAS A MORE ACTIVE SOCIAL LIFE THAN ME.

WHEN SPENDING THE NIGHT AT A CONCERT, WHAT TIME DID YOU GO TO SLEEP LAST NIGHT? LISA: I DON'T WANT TO TALK ABOUT THAT. JONATHAN: GOOD FOR THEM. SHARES IN THE S&P NEGATIVE ALMOST 0.1%. AN UPDATE ON THE STORIES, HERE IS YOUR BLOOMBERG REPORT. DANI: BLOOMBERG REPORTS THAT BEHIND THE SCENES CONVERSATIONS BETWEEN THE COMMUNITY BANK OF NEW YORK AND US WATCHDOG LED TO THE SURPRISING DECISION TO STOCK CASH AND REDUCE THE DIVIDEND. LAST WEEK'S DRASTIC MEASURES WERE PART OF AN EXPECTED TRANSITION TOWARDS HARDER CAPITAL REQUIREMENTS. NEW YORK. BE AWARE OF RISKIER COMMERCIAL REAL ESTATE AND LOANS. TOYOTA'S MARKET VALUE HAS RISE TO A NEW UPPER HIGH OF JPY 50 TRILLION FOR THE FIRST TIME IN ITS HISTORY.

A LITTLE LESS THAN $40 BILLION. JUMPED IN REACTION AMONG THE UPWARD REVISION IN EARNINGS GUIDANCE. STOCKS RISE THROUGHOUT THE YEAR DUE TO STRONG SALES AND A WEAKER YEN. THE NEW GUIDANCE EXCEEDED ANALYSTS' ESTIMATES. ASTON MARKET IS SHAKING ITS C-SUITE AGAIN. THE COMPANY IS LOOKING FOR ITS FOURTH CEO IN FOUR YEARS. ACCORDING TO BLOOMBERG SOURCES, THE CURRENT DIRECTORS OF OTHER LUXURY CAR MANUFACTURERS HAVE BEEN CONTACTED TO REMOVE THE CURRENT CEO. HE IS THE CEO OF ASTON MARTIN SINCE 2022. THAT'S HIS BLOOMBERG REPORT. JONATHAN: FOUR CEOS IN FOUR YEARS. AT THIS POINT, DO YOU GET A NEW RECRUITER? LISA: AT A CERTAIN POINT YOU HAVE TO THINK ABOUT A NEW THESIS OF WHAT YOU ARE LOOKING FOR.

JONATHAN: NEXT ON THIS SHOW, MORE HEADWINDS FOR BOEING. WE CAUSED THE PROBLEM. WE ESTABLISH ADDITIONAL QUALITY CONTROLS AND INSPECTIONS AT BOEING AND OUR SUPPLIER. JONATHAN: LIVE FROM NEW YORK CITY, THIS IS BLOOMBERG. ♪ JONATHAN: S&P 500 FUTURES STOCKS ARE NEGATIVE BY 0.04%. IF YOU WANT A MOVE, CHECK OUT HERTZ STOCK, WHICH IS DOWN 7%. LISA: INFORMANDOLISA: GREATER THAN EXPECTED LOSSES DUE TO LIQUOR VEHICLES. UNLOAD ABOUT A THIRD OF THEIR FLEET AND TALK ABOUT HOW EXPENSIVE IT WAS TO REPAIR THEM. RESIDUAL VALUES WERE DECREASING. THE CEO SAID WE CONTINUE TO FACE HEADWINDS RELATED TO OUR ELECTRIC VEHICLE FLEET AND OTHER COSTS DURING THE QUARTER AFTER HAVING PREVIOUSLY BEEN LEADING THE CHARGE IN THIS WAY.

SHOWS THE HYPOS AND GROWING PAINS IN THE TRANSITION. JONATHAN: THE PUSH TOWARD VEHICLES FOR HERTZ WAS PART SEEING THE FUTURE AND PART A MARKETING TRICK. If you get Tom Brady on board, let's get an electric vehicle. WHAT YOU SAID I THINK IS THE CRITICAL ELEMENT, THAT WE DON'T DISCUSS ENOUGH, THE COST OF MAINTAINING THESE VEHICLES IS THE LOSS OF VALUE OVER TIME. THAT WAS BEHIND THIS DECISION, NOT JUST THAT THE CONSUMER DEMAND WAS NOT IN THE FORM THEY ANTICIPATED. THERE WERE THOSE ISSUES TOO. LISA: WHEN I WAS THINKING ABOUT BUYING A CAR THERE WAS THE QUESTION IF YOU'RE GOING TO HAVE MORE DEVELOPED AND CHEAPER EV'S LATER, WHY ARE YOU GOING TO KEEP IT NOW IF YOU'RE NOT GOING TO HAVE THE SAME KIND OF VALUE LATER?

THIS HAS BEEN A REAL CONCERN THAT A PRACTICE THAT HERTZ COULD BE SEEING. ANNMARIE: THEY BOUGHT 100,000 THEY WANT TO BECOME A MASSIVE PUSH IN THE MARKET BUT THE DEMAND IS NOT THERE. YOU HAVE SEVERAL DEALERS WRITING TO THE BIDEN ADMINISTRATION SAYING IT NEEDS TO SLOW DOWN ON THIS AMBITIOUS PLAN OR ON THE US ELECTRIC VEHICLE NETWORK BECAUSE THE DEMAND IS NOT THERE. THERE IS A LOT OF ANXIETY ABOUT SCOPE AND COST IS A PROBLEM. WE ARE SEEING THE CONSEQUENCES OF MOVING POTENTIALLY FAST IN THE TRANSITION. JONATHAN: DID WE SAY THE OUTREACH ANXIETY WAS A CONSEQUENCE OF THE DISINFORMATION CAMPAIGN?

LISA: REACH ANXIETY SOUNDS LIKE SOMETHING THAT HAPPENS TO A DOG. JONATHAN: THE RIGHTS HOLDERS TO MARRY Barrow SAYING WE WANT THE HYBRIDS. MARÍA BARRA, WHAT DID YOU TALK ABOUT? LISA: HYBRIDS. THERE IS A REALITY CHECK. IS IT A BREAK IN THE ROAD OR DOES IT CHANGE THE COURSE OF THE ROAD? MANY PEOPLE SAY IT'S A BLOW IN THE ROAD. JONATHAN: HERTZ IS DOWN 6.9%. MORE HEADWINDS FOR BOEING. WE CAUSED THE PROBLEM AND WE UNDERSTAND IT. WE ESTABLISH ADDITIONAL QUALITY CONTROLS AND INSPECTIONS AT BOEING AND OUR SUPPLIER. WE ISSUE TO STRENGTHEN PERFORMANCE. JONATHAN: LATEST FROM THIS MORNING, THE COMPANY THAT FINDS THE MOST POORLY DRILLED HOLES IN THE 747 fuselages AT BOEING FACES A POTENTIAL LABOR BATTLE WITH UNION LEADERS ASKING FOR A 40% WAGE INCREASE FOR WORKERS OVER THE NEXT THREE YEARS FOUR YEARS.

FAA ADMINISTRATOR MIKE WHITAKER WILL WITNESS IN CAPITOL HILL TODAY. PREPARED REMARKS SAID THE FAA WILL CONSIDER THE FULL EXTENT OF OUR ENFORCEMENT AUTHORITY TO ENSURE THAT BOEING IS HELD RESPONSIBLE FOR ANY NON-COMPLIANCE. GEORGE FERGUSON SENIOR, AEROSPACE AND DEFENSE ANALYST AT BLOOMBERG INTELLIGENCE, JOINS US FOR MORE. CAN YOU FIND OUT HOW MUCH A NIGHTMARE THIS COULD BE FOR BOEING LATER TODAY? GEORGE: NO CEO WANTED THIS TO HAPPEN, BUT I DON'T THINK THERE ARE MANY OPTIONS. THE FAA, ITS REPUTATION HAS BEEN DAMAGED BY BOEING. I THINK AS A REGULATOR THEY NEED TO COME IN AND MAKE SURE THAT THE MANUFACTURING PROCESS IS STABLE AND THAT BOEING IS BUILDING SAFE AIRCRAFT.

IF WE HAVE A PROBLEM, GOD FORBID, PART OF THIS WOULD BE IN THE HANDS OF THE FAA. NO CEO WANTED THIS TO HAPPEN, BUT I THINK IT IS NECESSARY RIGHT NOW. I THINK A LOT WILL BE ABOUT GREATER OVERSIGHT AT BOEING, IN THE MANUFACTURING FACILITIES, AND THERE WILL BE QUESTIONS FOR THE FAA AS WELL. IF THEY HAVE THE STAFF IN PLACE AND THE RESOURCES TO GO OUT AND SUPERVISE PROPERLY. LISA: IS IT THE FAA'S JOB OR BOEING'S JOB TO MAKE SURE PLANES ARE SAFE? GEORGE: AT THE END OF THE DAY, BOEING'S JOB IS TO BUILD AN AIRPLANE ACCORDING TO WHAT THEY HAVE CERTIFIED BY THE FAA.

BOEING'S JOB IS TO BUILD A SAFE AIRCRAFT AND TO BUILD IT CORRECTLY, BUT IT IS THE FAA'S RESPONSIBILITY TO SUPERVISE THAT PROCESS. THEREFORE, IT IS NECESSARY THAT THERE ARE APPROPRIATE CONTROLS AND INSPECTIONS SO THAT THEY CAN FEEL SATISFIED THAT THE WORK IS BEING DONE IN ACCORDANCE WITH THEIR AUTHORIZATIONS. LISA: WE WERE TALKING ABOUT SOME OF THE LABOR ISSUES AND THE POTENTIAL FOR A STRIKE AND I WAS WONDERING WHAT IS MORE OF A PROBLEM AND WHAT IS AT THE HEART OF THE PROBLEMS. HOW MUCH IS BOEING'S PROBLEM A WORKFORCE PROBLEM REGARDING MORE LINEUP, RETENTION AND FULL STAFFING?

GEORGE: A LOT IS WORKFORCE. EVERYONE I SPOKE TO IN THE INDUSTRY TALKS ABOUT THE TURNOVER WE HAVE DURING THE PANDEMIC AND THE DIFFICULTY IN GETTING WORKERS EVEN NOW. THE UNIONS ARE GOING TO HAVE A LOT OF LEVERAGE. THE WORKFORCE STILL LOOKS, OR AT LEAST THE US WORKFORCE LOOKS LIKE THERE IS SHORTAGE IN SOME AREAS. I HOPE YOU GET A GOOD PAYMENT PACKAGE. THE MAIN CHALLENGE HERE IS THAT THE ROTATIONS REALLY DEPLETED THE AMOUNT OF EXPERIENCE IN THE LINE AND THEY NEED TO BE ABLE TO RETAIN THAT EXPERIENCE SO THEY CAN BUILD PLANES. FACTORING WITH MANY AIRCRACKED IS DIFFERENT THAN OTHER TYPES OF MANUFACTURING WHERE HIGHER VOLUMES AND MORE TEMPLATES CAN BE MADE.

YOU PURCHASE MORE CAPITAL TOOLS THAT WILL HELP COMPENSATE ANY DEFICIENCIES IN THE WORKFORCE. THERE IS A LOT OF MANUAL WORK THAT IS NOT CAPITAL TOOLS THAT ACCOMPANIES IN THIS BUSINESS. THEREFORE, YOU NEED INTELLIGENT AND WELL-TRAINED PEOPLE ON THE LINE AND FOCUSED ON THE DETAIL. IT'S DIFFICULT TO DO. YOU WILL PROBABLY RECEIVE A NICE PACKAGE. JONATHAN: WHAT ARE WE MISSING NOW THAT WE HAD BEFORE THE PANDEMIC? GEORGE: THERE ARE MANY EXPERIENCED GRAY-HAIRED PEOPLE ON THE LINE. BEFORE THE PANDEMIC WE SAW MANY EXPERIENCED PROFESSIONALS ON THE LINES. DURING THE PANDEMIC THEY LEFT. I guess they decided to move to Jacksonville or something.I'M JUST SAYING THEY WENT TO SUNNIER COASTS IN THE NORTHWEST.

THEY WERE IN AN INDUSTRY THAT SAW THE ACCIDENTS, THE MAX WAS GROUNDED, THE NEXT THING YOU KNOW YOU ENTERED A PANDEMIC, AIR TRAVEL REACHES ALMOST ZERO, PEOPLE JUST RAISE THEIR HANDS AND I SAID THAT'S IT. I'M 62 YEARS OLD, BOEING IS GOING TO OFFER ME A PACKAGE BECAUSE THEY ARE TRYING TO REDUCE COSTS IN THE LONG TERM. I'LL TAKE THE PACKAGE, MOVE AND DO SOMETHING ELSE. THEY HAD TO DELIVER THAT PERSONNEL AND BRING NEW PEOPLE, TRAIN THEM, AND THAT HAS BEEN A SERIOUS CHALLENGE. JONATHAN: IT'S GOOD TO CATCH UP. GEORGE FERGUSON OF BLOOMBERG INTELLIGENCE ON THE CHALLENGES FOR BOEING AND ALSO FOR SPIRIT AEROSYSTEMS.

SPIRIT SUSPENSION GUIDE. NO SURPRISE. WE SAW THE SAME AT BOEING. LISA: HOW CAN YOU PROVIDE GUIDANCE? THEY DON'T EVEN KNOW THE PARAMETERS OF THE REGULATORY REGIME AND THEY DON'T KNOW WHAT THE FAULT IS. I WONDER WHY THIS HAS NOT BEEN AN AREA THAT IS TALKED ABOUT MORE? THEY HAVE BEEN ALL BOEING AND NOT SOME OF ITS SUBCONTRACTORS. THIS ASSUMPTION IS THAT SUBCONTRACTORS AND DISCOVERIES WILL CONTINUE. JONATHAN: THE BOOKS THAT WILL BE WRITTEN ABOUT THE PANDEMIC AND THE PEOPLE WHO WERE TIRED AND ALMOST IRRESPONSIBLE. LISA: IT'S SUCH A HUMAN STORY. WE TALK ABOUT THESE NUMBERS BUT THIS IS A HUMAN PROBLEM BECAUSE IT IS A TYPE OF DETAILED PRACTICE FOCUSED ON ART.

JONATHAN: THE BEACHES OF FLORIDA. LISA: NOT ANYWHERE, JACKSONVILLE. JONATHAN: THIS MARKET IS EXTREMELY POWERFUL ON THE UPWARD. WHAT WE WILL SEE IS AN EXPANSION IN QUALITY. WHAT HAPPENS IS AN EXPANSION TO OTHER AREAS OF THE MARKET WHICH ARE NOT AS RISKY AS WE THINK. WHEN WE THINK ABOUT EXPANDING, WE THINK THERE IS AN OPPORTUNITY FOR SMALL CAPITAL COMPANIES TO CATCH UP. THE MARKET IS READY AND WANTS TO SPIN. THIS IS THE BLOOMBERG WATCH WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. JONATHAN: THERE'S A GROUP OF THAT... OF INVESTORS WHO WANT ME TO ROTATE. THIS IS THE BLOOMBERG WATCH ALONG WITH LISA ABRAMOWICZ AND ANNMARIE HORDERN.

THE STOCK MARKET ALMOST UNCHANGED. ALL OF THIS TALKS ABOUT ROTATION, ABOUT GETTING AWAY FROM BIG TECHNOLOGIES AND GOING ELSEWHERE. SO FAR THIS YEAR THE WEIGHT HAS DOWN THE SAME DURING THE YEAR. THE MAX SEVEN HAS INCREASED BY 8% OR 9%. ANNMARIE: THE ROTATION IS AWAY FROM SEVEN. JONATHAN: WHO IS IT, META, MICROSOFT? LISA: NVIDIA AND AMAZON. JONATHAN: HOW MUCH IT IS DISTORTING WHAT IS HAPPENING ELSEWHERE. WHEN WE TALK ABOUT GOOD NEWS BEING GOOD NEWS, HAS IT BEEN FOR THE STOCK MARKET? SMOOTH: NOT FOR MANY SMALL LAYERS OR OTHER SMALL ACTIONS. WE HAVE NOT SEEN THAT ROTATION AND THAT IS THE FINAL RESULT.

IT FEELS LIKE DEJA VU AGAIN. IT SEEMS LIKE WE HAVE SOME KIND OF WEAKNESS. BUT HE PUT 2023 ON REPEAT. JONATHAN: WE TALK ABOUT NOT LANDING AND BASED ON ISM AND PAYROLL AND EMPLOYMENT REPORTING SERVICES. TALKING ABOUT THE PROSPECT OF GETTING AWAY FROM THE GOLD RICH. LISA: AND GET A NO LANDING. ARE WE JUST IN 2023 PRESS REPEAT OR IS IT SOMETHING DIFFERENT THAT MAYBE SOMETHING WILL ARRIVE IN THE MIDDLE OF THE YEAR? JONATHAN: POLITICS IS FASCINATING AND WHAT IS BEGINNING TO SHAPE THE STOCK MARKETS. YESTERDAY WE HEARD MCDONALD'S COMPLAIN ABOUT WHAT WAS HAPPENING IN THE MIDDLE EAST AND WAS HURTING THEIR RESULTS.

WE SAW IT FROM STARBUCKS. WE HAVE HAD MCDONALD'S AND STARBUCKS. WHICH ARE THE POSTER OF INTERNATIONAL BUSINESS THAT FLY THE INTERNATIONAL FLAG. ANNMARIE: YOU HAD A BOYCOTT ON MCDONALD'S AND STARBUCKS BECAUSE CUSTOMERS DID NOT LIKE WHAT THEY WERE SAYING ABOUT WHAT WAS HAPPENING BETWEEN ISRAEL AND GAZA AND ALSO ABOUT COCA-COLA. WE TALKED TO THE CEO ABOUT THE FACT THAT THEY ARE HAVING PROBLEMS IN TURKIYE. TURKISH AIRLINES WANTED TO GET RID OF COCA-COLA. HOW MUCH ARE THEY GOING TO BECOME BIGGER PROBLEMS THIS YEAR NOT ONLY WITH GAZA-BORN ISRAEL BUT WITH AN ELECTION IN THE UNITED STATES THAT IS VERY TENDUO AND EMOTIONAL AND WHAT DOES THIS MEAN FOR AMERICAN CORPORATIONS?

LISA: MCDONALD'S SAYS IT WILL CONTINUE WHILE THE CONFLICT CONTINUES BUT DIDN'T SAY ITS STORE SAW IMPACTS. STARBUCKS SIDED 5% AND SAID IT HAD TO DO WITH THIS. JONATHAN: THIS COMES BACK TO WHAT WE TALKED ABOUT, HOW MUCH IT WILL BE A CHALLENGE FOR THE MULTINATIONAL. THIS IS JUST A POLICY, IT DOESN'T CARE ABOUT THE ECONOMY. EUROPE IS TERRIBLE, CHINA IS A CHALLENGE. APPLE TALKED ABOUT ALL THESE THINGS AT THE SAME TIME. LISA: THAT'S WHY THEY WANT THINGS BACK TO SMALL AMERICAN BUSINESSES. THIS IS EXACTLY ONE REASON WHY PEOPLE ARE ASKING FOR AN EXTENSION. REALLY WHAT IS CONFUSION FOR ALL THE STOCKS EXCEPT THE MAG 4 AND 2, OR LET'S SEE HOW LONG IT TAKES US TO GET A MAG 1.

AND THAT'S THE KIND OF THING THAT WORKS CONSISTENT. JONATHAN: THE ENTIRE MARKET IS ON THE SHOULDERS OF NVIDIA 2024. THE EQUITY REMAINS COMPLETELY UNCHANGED. ADJUSTMENT IN THE BOND MARKET AND WE WILL DISCUSS THAT IN A MOMENT. ADVANCING MORE THAN 20 BASE POINTS BY ALMOST 30 MORE BASE POINTS. 10 YEARS AHEAD, 10 YEARS ALMOST UNCHANGED AT 4.1481. THE DOLLAR IS JUST A TOUCH STRONGER. 1.0 737. COMING SOON WELLS FARGO OFFERS A REALITY CHECK FOR THE MARKETS. LARA REIM ON HER CALL TO CUT SURGICAL FEES AND HOBBY AIR BLAS -- JAVIER BLAS. Stocks inch back from all-time highs as WALL STREET RETHINKS BEDS. RECENT DATA ONLY CONFIRMS THE BELIEF THAT THE FIRST RATE CUT WILL OCCUR IN JUNE OR WORKING, OR LATER.

THE MARKET IS OVERLY OPTIMISTIC ABOUT THE NUMBER OF CUTS AND WHEN THEY WILL START. OUR OPINION IS THREE RATE CUTS STARTING IN THE SECOND HALF. DARRELL, I LOVE TO SAY, IS AROUND THE TABLE. LET'S TALK ABOUT RATE REDUCTION CALLS. WE ARE STARTING TO SEE A TWO-YEAR ADJUSTMENT: TWO-YEAR RETURNS GO UP. HOW MUCH MORBID, HOW MUCH MORE ADJUSTMENT WILL WE SEE? DARRELL: FOR THE STOCK MARKET TO BECOME ATTRACTIVE, I THINK YOU HAVE TO SEE SOMEWHERE A NEIGHBORHOOD OF 5% TO 8% DOWN FROM TODAY. THAT'S NOT UNUSUAL TO GET THOSE TWO TO 3% DEDUCTIONS. IT IS TOTALLY POSSIBLE. REMEMBER, LET ME BE YOU BACK.

THIS TIME LAST YEAR THE CONSENSUS WAS THAT 85% SAID WE WERE HEADING INTO A RECESSION, AND THE FUTURE FEDERAL FUNDS CURVES HAVE THREE INTEREST RATES COUNTED TOWARDS THE SECOND HALF OF 2023. WE KNOW THAT NEVER HAPPENED. HERE WE SAID THAT THE CONSENSUS IS THIS, SOFT LANDING AND FOUR TO FIVE LOWER RATES. 10 TO 12%PROFIT GROWTH. WE HAVE KILLED THE BEAST OF INFLATION. MY BET IS THAT WHEN YOU TURN FORWARD AND LOOK BACK, THE CONSENSUS IS BAD. JONATHAN: A REPETITION OF LAST YEAR? DARRELL: A REPETITION TO THE SENSE THAT THE FED CANNOT GIVE WHAT THE MARKETS WANT THE FED TO GIVE.

IF YOU DESCRIBE THIS YEAR SO DATE, IT HAS BEEN BORING. STOCK MARKETS RISE UP. THE VIX IS STILL LOW AND GOLD HAS NOT BEEN A PROBLEM AND OIL PRICES HAVE NOT BEEN A PROBLEM. WE ARE REPEATING RATES TO RECTIFY SOME OF THOSE CUTS. I THINK YOU HAVE TO SEE FOR US IN 2024, THREE THINGS HAPPEN. IF INFLATION WAS IN FASHION IN 2023, THIS YEAR IT IS THE LABOR MARKET AND EARNINGS WE HAVE TO TALK ABOUT BECAUSE THEY ARE NOT AS GOOD AS WHAT PEOPLE THINK. AND THIS IS WHAT THE FED DOES. WILL THOSE THREE THINGS DETERMINE THE PATH OF 2024?

LISA: AND NVIDIA? DARRELL: THEY ARE 30 TO 35 TIMES THE SALES. YOU ARE CORRECTLY AND EXACTLY RIGHT THAT YOU ARE NARROWED. TAKE OUT THE NUMBERS. WE HAD SIX OF THE SEVEN REPORTS. NVIDIA IS THE ONLY ONE LEFT ON FEBRUARY 21. IF YOU LOOK AT THE GROWTH OF SALES AND PROFITS, THE ENTIRE S&P HAS SALES GROWTH OF 4.5% AND PROFITS GROWTH OF 2%. THE MAG SEVEN, A SALES GROWTH OF 14% AND THEIR MARGINS HAVE EXPANDED YEAR AFTER YEAR IN THIS CORNER. IF I LOOK AT THE OTHER 493 STOCKS, I GET 2% SALES GROWTH AND THE MARGINS HAVE CONTRACTED BETWEEN 110 AND 120 BASIS POINTS. UNDER THE SURFACE, THE DURABILITY OF DEMAND, MAYBE THE IDEA THAT IT'S NOT EXPANDING AND PEOPLE ARE NOT LINKING TO VALUE.

LISA: CAN YOU EXPLAIN TO US HOW YOU SEE THE EVOLUTION OF THE CALENDAR? IF YOU THINK THE CONSENSUS IS WRONG AND WE ARE TALKING ABOUT SOFT LANDING AND A FED THAT WILL CUT RATES AND INFLATION WILL GO DOWN, WHERE IS EVERYONE WRONG? INFLATION CUT: DOWN, RATES OR WEAKNESS THAT WILL SUDDENLY HIT? DARRELL: IF I HAD TO QUALIFY THAT, THE FED, INFLATION AND WEAKNESS IN THAT ORDER. I THINK THE CONSENSUS HAS MOVED SO HARD THAT WE HAVE WON A WAR AND A BATTLE. AND IF YOU LOOK AT THE PERFORMANCE CURVE IT REMAINS DEEPLY INVERTED. IF I TAKE THE SIX MONTHS TO 10 YEARS, 100 BASE POINTS WILL BE AVOIDED.

IF WE HAVE THE ECONOMIC INDICATORS WITH 18 MONTHS IN A ROW IN NEGATIVE TERRITORY, THAT DOES NOT HAPPEN. IT HASN'T HAPPENED SINCE 1951. IF YOU LOOK AT THE ISM MANUFACTURING, WHICH IS TWO POINTS UP, WHICH IS STILL 15 MONTHS AWAY IN CONTRACTION TERRITORY, AGAIN, IT'S NOT BEARISH OR NEGATIVE, IT'S TO BALANCE THE CONVERSATION. IT HAS LENDED TOO MUCH INTO EUPHORIA AND EVERYTHING IS GOING WELL AND WE HAVE WON ALL THE WARS. JONATHAN: CAN WE TALK ABOUT MARGINS? I HAVE ANOTHER HOLDER. DOC YOU SIGN, - ODCUSIGN WORK CLIPPINGS. LISA WAS TALKING ABOUT UPS, 14% OF THE 85,000 MANAGEMENT JOBS ARE STUCK. ARE WE IN THAT PERIOD IN WHICH WE STARTED TO PROTECT MARGINS AND ATTACK COSTS?

DARRELL: YOU SEE IT IN THE CORPORATE EARNINGS REPORTS. AND WHAT PEOPLE MISS IS THAT THEY ARRIVE JUST ON TIME. IT'S EXACTLY ON TIME FROM A HISTORICAL POINT OF VIEW. WE HAVE TO CALIBRATE BASED ON HOW MUCH WE ARE GREASEING THE ENGINE. IF YOU GO BACK TO THE 1950S AND TAKE EACH PERIOD OF ECONOMIC SLOWDOWN, IT WILL WEAK AFTER THE FIRST 23 MONTHS AFTER THE FIRST FED HISE. 23 - 23 MONTHS OF 2020 UNTIL - FROM FEBRUARY 2022 ARRIVES IN FEBRUARY. LET'S RECOGNIZE THE PAYMENT. I WOULD LOOK AT THE NEXT MONTHS BECAUSE YOU WILL SEE THE UNEMPLOYMENT RATE INCREASE AND SOME CORPORATE LAY OFFS WHICH ARE COMPANIES DEFENDING THEIR MARGIN LINE BECAUSE THEY NO LONGER HAVE THE POWER TO SET PRICES.

AND THEREFORE THEY HAVE TO MAKE A NUMBER OF PROFITS, WHICH WE THINK THAT A GROWTH OF 10 TO 12% IS TOO HIGH. JONATHAN: WE WANT TO PLAY RECOVERY UNTIL RECRESSION. IS IT TOO EARLY TO GET EXCITED ABOUT things like small caps? DARRELL: WE WERE WATCHING OUR INVESTMENT STRATEGY COMMITTEE CLOSELY ON THE SMALL LAYERS. THEREFORE, EVERY YEAR PEOPLE WANT TO DECLARE THAT THIS IS THE YEAR OF THE VERSALUSTAS. IT'S HAPPENED FOR THE LAST FIVE OR SIX YEARS AND EVERY YEAR HAS BEEN BAD. WE STARTED TO SEE THAT TURN IN DECEMBER. Suddenly, small caps are underperforming large caps by six or 700 basis points.

What's compelling is that the tightness of where S&P earnings multiples lie against small caps is as tight as it has been in decades, meaning that small caps are cheap compared to large caps. Is that a function of large caps being too expensive? MAYBE. THE SMALL LAYERS HAVE NOT HAD THE SAME MULTIPLE EXPANSION AS THE LARGE LAYERS THEY ENJOYED IN 2023 OR 2022. THERE COULD BE A CONVINCING VALUATION CASE. THEY WILL HAVE TO DEAL WITH THAT HIGHLY LEVERAGED BUSINESS MODEL WITH HIGHER RATES AND THAT WILL AFFECT THE GROWTH OF PROFITS. JONATHAN: REMINDS ME OF WHAT WE SAID ABOUT EUROPEAN STOCKS.

MANDATORY EVALUATION THAT DID NOT WORK. DARRELL: WHICH HE'S WRONG. JONATHAN: OTHER THAN THE LAST 12 MONTHS. IT HAS BEEN NICE TO SEE YOU. BRILLIANTLY EXPLAINED JUST LOOKING AT THE EARNINGS AND WHAT IT MEAN FOR AMERICAN CORPORATIONS FROM THE STOCK MARKET AS WELL AS BELOW THE SURFACE. STOCK FUTURES TURN POSITIVE. WE ARE UP 0.05%. LET US GIVE YOU AN UPDATE ON STORIES ELSEWHERE. HERE IS YOUR BLOOMBERG REPORT. DANI: ANTONY BLINKEN IS ON HIS FIFTH TRIP TO THE MIDDLE EAST SINCE THE OCTOBER 7 ATTACK ON ISRAEL. HE WILL MEET THE PRESIDENT OF EGYPT BEFORE TRAVELING TO DELHI. LEADERS ARE PROPOSING AN AGREEMENT WITH HAMAS TO PAUSE THE FIGHTING AND ALLOW THE RELEASE OF THE REMAINING ISRAELI HOSTAGES.

ISRAEL WOULD RELEASE PALESTINIAN PRISONERS. IT IS EXPECTED TO MAKE STOPS IN ISRAEL AND THE WEST JORDAN IN THE COMING DAYS. BPS URGES ITS - AFTER WINNING ON PROFITS. THEY WILL BUY BACK SHARES WORTH $1.57 BILLION IN THE FIRST TWO QUARTERS OF THIS YEAR. EXXON, CHEVRON AND WILL HAVE EXPECTATIONS. THE DAMAGES ARE MILD: HERTZ IS SLIDING AND RECORDING HIGHER THAN EXPECTED LOSSES. THIS FOLLOWS THE DECISION TO CUT 20,000 TESLA OR A THIRD OF ITS VEHICLE LEAD. YOU LOST MONEY RENTING THEM AND IT'S A BIGGER TREND OF SLIDING DEMAND FOR EB AND TESLA PRICE REDUCTION ON POPULAR MODELS. THAT'S YOUR BLOOMBERG REPORT.

JONATHAN: A REALITY CHECK ON EVs. IS IT DIFFERENT IN EUROPE? DANI: IT'S THE FREIGHT INFRASTRUCTURE. I HAVE RENTED A TESLA FROM A CAR RENTAL COMPANY AND I CAN DRIVE AROUND THE UK AND HAVE NO PROBLEMS FINDING ONE OF THOSE HYPER SPEED CHARGING STATIONS. IT'S ABOUT PRICES AND ALSO THE INFRASTRUCTURE IS NOT HERE. JONATHAN: VERY TRUE. THIS CONVERSATION WE ARE HAVING IN AMERICA WITH AMERICAN CAR MANUFACTURERS IS DIFFERENT THAN THE EUROPEAN EXPERIENCE. ANNMARIE: ALSO DIFFERENT CULTURALLY. EUROPEANS ARE WILLING TO GET ON THE TRAINS AND HAVE A BETTER TRAINED INFRASTRUCTURE. THEY HAVE A LESSER GEOGRAPHICAL DISTANCE TO TRAVEL.

THE UNITED STATES IS A DRIVER COMMUNITY AND THAT'S WHAT IT DOES. HERE UNITED STATES OFFICIALS TALK AND ARE CONCERNED ABOUT TRUCKS AND DRIVING BECAUSE EVEN GETTING THE FOOD ON YOUR FARM TO THE TRUCK TO THE TABLE AND IT ALL INVOLVES A CAR. JONATHAN: DOWN 8% IN EARLY TRADING. A BORDER AGREEMENT TO THE POINT OF COLLAPSE. THE ONLY WAY TO DO THINGS IS TO WORK IN A BIPARTIST WAY. THE AMERICAN PEOPLE ARE SMART AND WILL KNOW EXACTLY WHO TO BLAME IF THIS BILL DOESN'T EVEN GET A HEARING INTHE HOUSE OF REPRESENTATIVES OF THE UNITED STATES. JONATHAN: WE'LL GET INTO THAT NEXT.

LIVE FROM NEW YORK, THIS IS BLOOMBERG. ♪ JONATHAN: NEW YORK CITY LIFE. EQUITY IS SIMPLY POSITIVE. BECOME POSITIVE BY 0.1%. ONE HOUR 30 MINUTES FROM THE OPENING BELL. A BORDER AGREEMENT About to collapse. CONGRESS'S ABILITY TO PASS ANY TYPE OF BORDER SECURITY OR IMMIGRATION REFORM HAS BEEN A POINT OF FRUSTRATION. IT HAS BEEN VERY COUNTER-PROFESSORING. THE ONLY WAY TO DO THINGS IS TO WORK IN A BIPARTIST WAY. THAT IS WHAT THIS LAW REPRESENTS. THE AMERICAN PEOPLE ARE SMART AND WILL KNOW EXACTLY WHO TO BLAME IF THIS BILL DOES NOT GET A HEARING IN THE UNITED STATES HOUSE OF REPRESENTATIVES.

JONATHAN: GOP SUPPORT FLAWS FOR A DEAL TO IMPOSE NEW BORDER RESTRICTIONS AND UNLOCK AID TO UKRAINE. DONALD TRUMP OPPOSES THE DEAL, SAYING "IT IS A GREAT GIFT FOR DEMOCRATS AND A DEATH WISH FOR THE REPUBLICAN PARTY." MICHAEL SHEPLER - MICHAEL SHEPARD JOINS US FOR MORE. THE OPINION OF "THE WALL STREET JOURNAL" IF THE REPUBLICANS REJECT THIS LAW THEY WILL GIVE THEM THE ARGUMENT THAT THE REPUBLICANS WANT BORDER CHAOS. IF THIS HAPPENS, WHO WINS THE BLAME GAME? MICHAEL: IT'S HARD TO WATCH. THE VOTERS WILL DECIDE THAT. IT WILL BE VERY INTERESTING TO SEE HOW THIS DEVELOPS BECAUSE THERE ARE SO MANY ELEMENTS, MANY ELEMENTS LINKED TO IT.

AID FOR ISRAEL IS RECURRENT AND THE SITUATION WE ARE SEEING ON BOARD, AT THE BORDER, IS REALLY CHAOTIC. FOR PRESIDENT JOE BIDEN AND DEMOCRATS TRYING TO KEEP AND MAKE SOME GAINS IN CONGRESS AND INTRODUCTIONS IN THE HOUSE. A LEVEL AT WHICH YOU CAN POINT THAT. THEY ARE REPUBLICANS THAT THE REPUBLICANS HAVE NOT FULFILLED WHAT THEY REALLY WANTED. THEY WANT AN AGREEMENT AND A NEGOTIATION LIKE THIS THAT WILL ALLOW THEM TO SOLVE THE BORDER AND NOW THEY ARE BACKING BACK. ON THE OTHER HAND THE POLL HEADLINES DO NOT FAVOR BIDEN AND THE DEMOCRATS. IN THE POLE OF CONSULTATIONS, IT WAS PRESIDENT JOE BIDEN WHO DRAW THE LAMMEST.

ANNMARIE: IF THIS PROLONGS AND LOOKS LIKE IT'S GOING TO PROGRESS. YOU MENTIONED AID TO ISRAEL AND UKRAINE. Last night, the White House said the president would veto a standalone Israel bill. WILL IT EVER HAVE TO COME TO THAT? MICHAEL: IS THIS A GOOD QUESTION THAT OUR TEAMS HAVE BEEN ASKING? AND UKRAINE AND ISRAEL? AT WHAT MOMENT WILL THESE TWO ELEMENTS OF THE GREAT FRONTIER PACKAGE WHICH AMOUNTS A TOTAL OF 118 BILLION DOLLARS HAVE TO BREAK UP? A BIG PART OF THOSE TWO... WHICH ARE GOING TO UKRAINE. -- I WOULD GO TO UKRAINE. FOR THE PRESIDENT THE CLOCK IS MOVING IN UKRAINE AND ALSO ON THE BORDER.

YOU HAVE TO MEASURE IF YOU HAVE ANY KIND OF POLITICAL SUPPORT. ONE QUESTION WE HAVE BEEN ASKING IS WHETHER THE PRESIDENT WILL MEET WITH MIKE JOHNSON TO REACH SOME TYPE OF BREAK IN THIS GROWING IMPASSE. REMEMBER THAT BIDEN SUBMITTED THIS REQUEST IN OCTOBER. THIS IS NOT SOMETHING THAT APPEARED IN JANUARY. THERE HAVE BEEN MONTHS OF NEGOTIATIONS WITHOUT END OR PROGRESS. ANNMARIE: WHO IS RESPONSIBLE FOR LINKING THEM. MANY PEOPLE SAY IT'S THE PRESIDENT WHO LINKED HIM. Wasn't it because he was goaded by Republicans who refuse to give foreign aid money when there was no money for the southern border?

MICHAEL: THE REPUBLICANS FROM THE BEGINNING WANTED TO BIND THEM SO WE COULD ARGUMENT THAT WE WON'T HANDLE SECURITY ABROAD WITHOUT HANDLING SECURITY AT HOME, AT LEAST AT THE SAME TIME, IF NOT WORSE. THE ARGUMENT HAS BEEN THAT WE TRY TO UNITE THEM AS ONE BIG SECURITY PACKAGE INTERNALLY FOR THE US, BUT EXTERNALLY FOR ALLIES LIKE UKRAINE AND ISRAEL. JONATHAN: NIKKI HALEY HAS A PROBLEM. WE DON'T TALK ABOUT HER, BUT WE TALK ABOUT BIDEN AND TRUMP. HOW CAN YOU GET A HEARING BEFORE THE BIG SHIPS COMING? MICHAEL: MAYBE I NEED TO DO MORE THAN THE SATURDAY NIGHT LIVE APPEARANCE WE SAW OVER THE WEEKEND.

IT'S HARD FOR SHE TO OVERCOME, EVEN IN HER HOME STATE OF SOUTH CAROLINA from him. TRUMP IS COMING A LOT BECAUSE OF HIS CONSISTENCY, CONSISTENT. IT IS NOT THAT THEY REJECT HER LIKE SOMEONE FROM PALMETTO STATE, IT IS SIMPLY THAT THERE ARE VOTERS, IT IS AN EVANGELICAL AND VERY CONSERVATIVE CHRISTIAN STRENGTH. THOSE PEOPLE LIKE TRUMP AS PRESIDENT FOR MANY YEARS AND THEY WANT MORE OF THAT. THEY ARE IN THE KIND OF REJECTING NIKKI HALEY FOR HER ROLE. -- THAT PAPER. ADVANCE WILL BE DIFFICULT. THEY ARE DOING A LOT OF ADVERTISING IN THE SEVEN MAJOR MARKETS THAT MAKE UP SOUTH CAROLINA.

WE HAVE TALKED AND REPORTERS HAVE BEEN IN CONTACT ABOUT ADVERTISING AND FUNDRAISING PLANS. IT HAS BEEN RAISING FUNDS FROM BUSINESS AND WALL STREET INTERESTS FROM PEOPLE WHO WANT TO SEE IT AS THE ALTERNATIVE. LISA: WALL STREET WANTS TO SEE IT BUT REPUBLICANS IN CONGRESS DO NOT. 19 SENATORS AND 98 HOUSE MEMBERS ATTEND A TRUMP FUNDRAISER NEXT MONTH. DO YOU HAVE ANY SUPPORT FROM YOUR PARTY IN WASHINGTON? MICHAEL: IT'S VERY NARROW AND NOWHERE TO THE ENTHUSIASM AND SUPPORT THAT TRUMP GETS. IF WE OPEN OUR CONVERSATION TALKING ABOUT THE BORDER AGREEMENT, YOUR ROLE CANNOT BE OVERESTIMATED. HE HAS ALREADY DRIVEN AND DRIVEN THE AGENDA AND THE CONVERSATION.

IT HAS GOT A LOT OF ENDORSEMENTS LONG EARLIER THAN IN 2016. JONATHAN: THANK YOU FOR THE UPDATE. MICHAEL SHEPPARD FROM BLOOMBERG IN WASHINGTON. WE ARE NOT TALKING ABOUT NIKKI HALEY AND SHE DOESN'T HAVE ANY HEARING. WE ARE TALKING ABOUT THE CURRENT PRESIDENT, ABOUT THE FORMER PRESIDENT WHO ORCHESTRATES WHAT IS HAPPENING IN CONGRESS. NIKKI HALEY DOES NOT PRESENT. Do we know what your thoughts are on this bill? I DON'T. LISA: THAT'S A GOOD POINT. I SAW THE STORY ASKING FOR SECRET SERVICE PROTECTION. AND YOU WONDER HOW MUCH ANimosity THERE IS TOWARD ANYONE OTHER THAN DONALD TRUMP AND THAT CHARACTER WHO HAS TO PLAY AT A TIME WHERE HE'S DEFINITELY GOING TO WIN, SEEMS TO BE TRYING TO STAY IN THE RACE.

ANNMARIE: OVER THE WEEKEND SHE TALKED ABOUT THE FACT THAT SHE THOUGHT WET, THAT TRUMP WAS BREATHING OFF THE REPUBLICANS, MANY OF THEM SUPPORT HIM AND APPEAR AT HIS FUNDRAISER. SHE SAYS THIS IS VERY POLITICAL AND CALLED HIM FOR BEING TOO POLITICAL, SIMILAR RHETORIC FROM THE WHITE HOUSE. JONATHAN: WHO IS TO BLAME, LET'S GO BACK TO THAT EDITORIAL. WHO IS GUILTY? IS IT REALLY ABOUT SUBSTANCE OR MAINTAINING AND PRESERVING AN ISSUE TO CAMPAIGN ON? IF REPUBLICANS "REJECT THIS BILL, THEY WILL DELIVER TO THE DEMOCRATS AND ARGUMENT THAT THE GOP WANTS BORDER CHAOS THEY CAN EXPLOIT AS A CAMPAIGN ISSUE." DO YOU SEE IT OR NOT?

THE ELECTORATE CLAIMS THE CURRENT PRESIDENT, NOT THE REPUBLICANS. WILL THAT CHANGE? LISA: NOT TO THINK OUT LOUD BUT DO YOU PLAN ON DEMOCRATS PRESENTING A COHESIVE MESSAGE WHERE THEY CELEBRATE A VICTORY OR ON THE OTHER SIDE WE NEED SOMETHING TO BE DONE AND THE REPUBLICAN IMPOSED IT. YOU HAVE PEOPLE PUSHING AGAINST DEMOCRATS AND FISHERMEN - PROBLEMS WITHIN THEIR OWN urinal - OWN PARTY. ANNMARIE: THEY CAN WORK BETTER IF TRUMP WINS, AND MY KRATZ WILL DEMAND MORE IF THE REPUBLICANS DON'T SHOW UP NOW AND THEY COULD GET A WATERED BILL AND THE SUBSTANCE COULD BECOME MORE COMPLICATED.

JONATHAN: NEXT, LAURA RHEIM ON HER CALL TO REDUCE SURGICAL FEES. S&P STOCK FUTURES POSITIVE BY 0.1%. THE RETURNS LOOK LIKE THIS, A LITTLE LOWER, 4.14 IN TWO YEARS, A LOWER OF TWO BASE POINTS. 4.45. ONE HOUR ONE MINUTE FROM THE OPENING BELL. THIS IS BLOOMBERG. JONATHAN: LISA AND THE COMMERCIAL BREAK, AN OFFICIAL REVIEW OF CODY LOCKS THE FAIRYTALE. GOLDILOCKS IS A BRAND. LISA: I THOUGHT WE'D KEEP THIS DURING THE BREAK. JONATHAN: WE NEED TO KNOW HOW MUCH ENTERTAINED YOU ARE IN THE COMMERCIAL BREAK. THE PEOPLE IN YOUR... PEOPLE ALREADY ADORE YOU AND PEOPLE WOULD LOVE YOU MUCH MORE IF WE HAD A LIVE CAMERA.

LISA: I THINK GOLD RICH IS SOME KIND OF BRAT. LET'S PASS. JONATHAN: IS THIS CRITICISM FROM A FAIRY TALE OR FROM PEOPLE LOOKING FOR THEIR RICH GOLD INFLATION? LISA: I WAS TALKING ABOUT THE FAIRY TALE BUT SOME ELSE CAN DO THAT, I CAN'T. JONATHAN: STOCKS ON THE S&P, WERE UP 0.1% AND 0.2% ON THE NASDAQ 200. ABOUT 60 MINUTES. A RE-EVALUATION OF THE PERFORMANCES, BRINGING THEM BACK TO THE HIGH AND THIS MORNING A LITTLE DOWN, TWO BASE POINTS. IN THE 10 YEARS, A SINGLE BASE POINT FALLS DOWN. TO FINISH OFF IN THE FOREIGN EXCHANGE THE EURO NEGATIVE 5.1%. YOU MENTIONED WHY THIS DOLLAR STRENGTH PERSISTS ON THE SAME PAGE.

ANNMARIE: THE MUD IS HIGH ENOUGH FOR THERE TO BE ANY KIND OF CHANGE IN THE FEDERAL RESERVE. IF THEY WILL PROLONG THE RATE CUT CYCLE, IT TALKS ABOUT THAT DIVERGENCE THAT WAS TALKED ABOUT AT THE ECB MEETING. JONATHAN: YOU NEED COMPENSATION DATA TO ACCUMULATE. NOW THE DATA IS ACCUMULATING IN THE OTHER DIRECTION. WHERE ARE WE ON THE SURPRISES INDEX, A SERIES OF POSITIVE SURPRISES RELATIVE TO WHERE THE EXPECTATIONS WERE? LISA: IT IS THE MOST POSITIVE THING TO GO BACK TO NOVEMBER AND THAT IS GOING IN THE WRONG DIRECTION WHICH IS PART OF THE PROBLEM. THEY EXPECTED A SLOWDOWN AND THEY WERE WRONG.

AND THEY HAVE UPDATED WHICH BRINGS US TO THE SAME STORY. JONATHAN: IT'S BEEN 12 MONTHS AGO AND IT'S AMAZING. ON THE REPETITION. HERE ARE THE TOP STORIES. THE CHINESE GOVERNMENT WILL SUPPORT THE DISCUSSION OF THE ACTIONS. CHAIRMAN GIGI PAGA EXPECTS TO MEET REGULATORS TODAY WITH OPTIONS WHICH ARE REMOVED BY NEARLY $7 TRILLION FROM 2021. THIS RAISED THE BENCHMARK INDEX TO ITS BEST DAY SINCE 2022. FOREIGN INflows TOTALED $1.7 MILLION, MOST THIS YEAR. WE HAVE TALKED A LOT AND IT'S TIME TO SEE ACTION. LISA: IS IT? IT IS THE NON-INVESTABLE BUT TRADABLE MARKET. AND HOW TO LEAVE BEFORE REALITY SETS IN. THERE SHOULD BE A PACKAGE.

BUT ESSENTIALLY PEOPLE ARE HOW WE CAN BUY THE NEWS. JONATHAN: YOU SAID SOMETHING LIKE AN INVESTMENT IS A TRADE THAT HAS GONE WRONG, HAS IT GONE WRONG? AN INVESTMENT IS A TRADE THAT HAS GONE BAD. WE MOVE THE STORIES, THE UNITED STATES MAKE AN ATTACK ON TWO HUTHIS, SEE DRONES AS THE ATTACKS CONTINUE IN THE RED SEA. EXPLOSIVE DEVICES DETERMINE AN ​​IMMINENT THREAT. THEY SAY HOUTI REBELS CLAIM RESPONSIBILITY FOR TWO MORE ATTACKS. ANNMARIE: IF THEY CONTINUE AND THE BROWSING INDUSTRY WARNS TO BE CAREFUL. WHAT THIS SHOWS IS THAT EVEN THOUGH THE US HAS RETALIATED, IT HAS NOT STOPPED.

JONATHAN: HOW ARE THE STRIKES THAT TOOK PLACE DIFFERENT? DID YOU NOTICE IMMEDIATELY AFTER THE MARKET CLOSED, IT WAS DIFFERENT AND HOW IS IT DIFFERENT FROM WHAT WE HAVE SEEN DURING THE LAST MONTH? ALBERTO: THERE -- ANNMARIE: THEY ARE TRYING TO DEGRADE THE MISSILES. THE STRIKE WAS IN RESPONSE TO THE THREE DEAD SERVICE MEMBERS. AND THAT WENT TO THE FACILITIES SUPPORTING THE REPRESENTATIVES USED FOR SYRIA, FOR SYRIA AND THE ADMINISTRATION SAID IT WOULD BE MAINTAINED. LISA: I'M FOCUSED ON THE IMMINENT CREDIT – INTERNET TRAFFIC. AND THEN THE HOUTHIS PUBLISHED A MAP AND IMAGES OF THE INTERNET CABLES ON THEIR CHANNEL AND THEY REPRESENT 70% OF THE WORLD INTERNET TRAFFIC.

I'M TRYING TO DO A DEEP DIVE. JONATHAN: THEY HAVE THE WILL AND THE ABILITY. DO THEY HAVE THE CAPACITY? ANNMARIE: THAT'S A GOOD QUESTION, BUT THE UNITED STATES IS CONCERNED ABOUT THOSE CABLES UNDER EGYPT, THEY PAY EGYPT A LOT OF MONEY. JONATHAN: HERE'S THE LATEST IN CALIFORNIA. A POWERFUL STORM HAS CAUSED $11 BILLION IN DAMAGES AND ECONOMIC LOSSES. ACCUWEATHER DOES THE CALCULATION AFTER 10 INCHES OF RAIN FELL ON THE MOUNTAINS AND WESTON - IN LOS ANGELES. IT HAS KILLED TWO PEOPLE AND LEFT PEOPLE IN THE REGION AT RISK OF LANDSLIDES. LISA: HONESTLY, IT'S A TRAGEDY TO SEE PEOPLE'S HOMES FALL DOWN.

RAISES QUESTIONS ABOUT SECURING AREAS PRONE TO MUDSLIDES. FOR SOME TIME. WE'LL JUST HAVE TO FOLLOW THEM AND HOPE THEY STAY SAFE. ANNMARIE: THIRD WETEST DAY SINCE 1877. NEARLY ONE MILLION CUSTOMERS HAVE NO POWER. THIS IS GOING TO BE A BIG PROBLEM AND IT'S SCARY. JONATHAN: ANY MORE INFORMATION WE WILL SHARE WITH YOU. WE ARE 55 MINUTES FROM THE OPENING BELL. STOCK FUTURES WERE POSITIONED NEAR 0.1% AND RETURNS RETURNED FROM THE 22 TO HIGH. DOWN TWO BASE POINTS TO 4.45. AUSTAN GOOLSBEE TELLING MICHAEL MCKEE HE IS NOT WILLING TO RULE OUT A RATE CUT. WE WILL LISTEN TO KASHKARI, COLLINS AND HARKER.

LARA RHAME SAYS "IT'S INCREDIBLE HOW LONG IT HAS TAKEN THE MARKET TO LOSE HOPES OF A TRIM. MY EXPECTATION IS THAT WE HAVE TWO OR THREE RATE CUTS IN THE SECOND HALF OF THE YEAR." SHE CALLS THEM SURGICAL FEE CUTS. SHE JOINS US FOR MORE. LET'S TALK ABOUT WHAT'S HAPPENING. WE HAVE HAD A RE-EVALUATION OF WHAT IS HAPPENING WITH THE FEDERAL RESERVE AND THE YIELDS HAVE RISED IN THE LAST TWO SECONDS: DOUBLE-DIGIT SESSIONS. ARE YOU SURPRISED BY HOW LITTLE WE HAVE MOVED AND YOU HOPE WE'LL USE MORE? --MOVING MORE? LARA: IT HAS BEEN A RE-EVALUATION SINCE WE ARE AT 5% UNTIL OCTOBER, THERE IS SPACE TO HAVE MORE RE-EVALUATION.

THIS IDEA THAT WE ARE DRIVING MONTH-TO-MONTH RATE CUTS, THAT IS THE QUESTION OF HOW WE ARE PASSING BACK AND REASSESSING AS INVESTORS THE IMPACT OF A HIGH-YIELD WAR, A HIGH-YIELD WORLD. THE FULL OFFER OF TREASURE THAT IS ONLINE IS ADDED. WE WILL BE ABLE TO MAKE THOSE OPTIONS, WHICH IS A GREATER PERFORMANCE. THE GENIE OF INFLATION WILL NOT ENTER THE BOTTLE AGAIN. THAT'S A HIGH PERFORMANCE STORY. AND THEN THE GROWTH AT THE END OF THE DAY, IT REALLY SURPRISES ME THAT THE RETURNS ARE HIGHER THAN THEY ARE. JONATHAN: WHY DO YOU THINK IT IS BETTER TO EXPRESS MORE SOLID DATA ON THE BOND MARKET AT THE LONG END OF THE CURVE AND NOT AT THE END?

LARA: I THINK THAT INVESTMENT AND THE FACT THAT SHORT-TERM RETURNS ARE HIGHER THAN THE LONG-TERM IS STILL A SIGN THAT THE BOND MARKET IS NERVOUS ABOUT SOME SPEED OF ACCELERATION, OR MUSCLE MEMORY OF THE FACT THAT WHEN WE HAVE PROBLEMS THE FED LOWERS RATES TO ZERO. THE FED IS IN A PLACE, A GOOD PLACE, WHICH HASN'T BEEN IN LONGTIME. IF THE ECONOMY SLOWS DOWN MORE THAN A GOLD RICH LANDING AND I AGREE WITH LEE SAID THAT THE PHRASE IS OVERUSED. THE FED HAS GROWN UNTIL... IT HAS BEEN KNOWN TO CUT RATES A LITTLE MORE. BUT THESE FORECASTS FOR ME HAVE TO COME WITH SOME MORE SIGNIFICANT ECONOMIC SLOWDOWN WHICH WOULD NOT BE GREAT FOR EQUITY.

LISA: YOU WERE TALKING ABOUT HIGHER RETURNS IN THE FUTURE, HOW MUCH HIGHER COULD YOU FOR CFA DAIMLER? MANY PEOPLE THINK WE ARE IN THE FUTURE. LARA: YOU LOOK AT THE LONG PATHS OF HISTORY IN WHICH NOMINAL GDP WAS CLOSELY ALIGNED WITH LONG-TERM RETURNS. I DON'T WANT TO MAKE SOME CRAZY FORECASTS OF RETURN OVER 6%. BUT IF YOU LOOK AT WHERE WE ARE GROWING TODAY AND SET IT AT A NOMINAL GDP GROWTH OF 5%. I don't think it's out of the question that we hit 5% 10yr at some point this year and I don't think the markets are ready. THE COMPLACENCE WE ARE SEEING COMES FROM TWO PLACES: THE EXPECTATIONS THAT GROWTH WILL BE VERY OPTIMISTIC AND INFLATION WILL FALL.

IT IS ALSO DUE TO COMPLACENCE THAT RETURNS REMAIN LOW, LONG-TERM RETURNS WILL REMAIN LOW, AND WE NEED TO PREPARE FOR A LOT OF VOLATILITY IN RETURNS. WE SAW IT LAST YEAR AND I THINK IT'S STILL GOING ON. LISA: ONE OF THE BIG THINGS PEOPLE HAVE BEEN STRUGGKING WITH IS WHAT IS THE NEUTRAL RATE? IF RATES GO UP, YOU COULD SEE THINGS MOVE FORWARD. IF YOU... DO YOU HAVE THE FEELING THAT 5% OR 4% RETURNS ARE RESTRICTIVE? LARA: THIS IS SOMETHING THAT I HAVE DEBATED A LOT BECAUSE TO A LARGE EXTENT WE CANNOT MEASURE THE NEUTRAL RATE. IF WE LOOK BACK IN HISTORY, WE HAVE NEVER ACTUALLY SIT AT A NEUTRAL RHYTHM FOR A PERIOD OF TIME.

THE FED IS ALWAYS IN VERY RESTRICTIVE OR ACCOMMODATIVE TERRITORY. WE DO NOT TEND TO LOOK AROUND A 2.5 TO 3.5 PERCENT FUNDS RATE. EACH FEEDING CYCLE BEGINS BECAUSE WE HAVE HAD A SHOCK, OR A VERY STRONG GROWTH SHOCK OR A VERY WEAK SHOCK. TODAY WE ARE SITTING BEARING THE MOMENTUM OF A STRONG SHOCK. I THINK IT COULD BE ANOTHER SIX QUARTER BEFORE WE HAVE A SENSE OF WHERE WE ARE. Meanwhile, wage and inflation pressure is increasing. JONATHAN: LAST YEAR I REMEMBER OUR CONVERSATION, INFLATION MAY NOT GO THE LAST MILE. THAT'S WHAT YOU SAID. HE STILL SEEMS TO BELIEVE THAT IS THE CASE.

WE HAD CHAIRMAN POWELL AND THE PRESS CONFERENCE AND THEY WERE NOT COMFORTABLE TO SAY ON BEHALF OF THE ENTIRE COMMITTEE THAT THEY HAVE MORE CONFIDENCE THAT WE WILL GET BACK TO THE PERCENT AND THEY WANT TO SEE MORE DATA, MORE OF THE SAME, NOT THAT BUT GOOD DATA. -- NOT BETTER, BUT GOOD DATA. YOU ARE CONCERNED THAT THE IMPROVEMENT MAY BE SINGLE FACTORS. IT'S CLEAR TO ME THAT YOU MIGHT ACTUALLY THINK IT'S DUE TO SINGLE FACTORS. WHAT WILL HAPPEN IN THE NEXT SIX MONTHS THAT IS NOT REPEATABLE? LARA: GOING FROM 6% TO 3% HAS BEEN MUCH EASIER. I'VE BEEN USING THE ANALOGY OF A LONG ROAD TRIP WITH A BUNCH OF KIDS IN THE BACK OF THE CAR.

IF A COUPLE OF THEM START ACTING BADLY, THE WHOLE JOURNEY WILL BE REALLY DIFFICULT. I THINK WE ARE STARTING TO SEE THEM PERFORM AGAIN. I THINK WE HAVE HAD A PERIOD, A SHORT PERIOD WHEN WE SEE ENERGY, PRICES OF GOODS AND PROGRESS IN SERVICES MOVING TOGETHER. BUT SERVICES ARE STARTING TO GO UP. I think goods deflation may have run its course and I think energy is open to geopolitical risk. THERE ARE GROWING INFLUENCES THAT ARE GOING TO CAUSE A COUPLE OF KIDS TO DO GOOD OVER THE NEXT SIX MONTHS. JONATHAN: NAME OF THE CHILDREN IN THE BACK OF THE CAR, FEDERATION OFFICIALS?

OR IS THIS MARKET PARTICIPANTS? LARA: I THINK CHILDREN ARE WHAT'S DRIVING INFLATION HIGHER, SHIPPING COSTS, SERVICES AND RATES, AND WAGES UP. It comes from the fact that food prices remain too high for consumer comfort. IT COMES FROM MANY PLACES. JONATHAN: THANK YOU. THAT WAS BRILLIANT. LISA: THE SET LIKE MCDONALD'S WHICH YOU STOP TO TRY TO FEED THE CHILDREN TO TREAT THE PROBLEM THAT'S DISTRESSING EVERYONE A. BUT IT'S NOT GOING TO WORK BECAUSE THE UNDERLYING PROBLEM IS THERE. JONATHAN: PRESIDENT MICK - PRESIDENT POWELL IS RONALD MCDONALD. IS THIS GOING IN THE NEWSLETTER? LISA: THAT'S A GOOD ANALOGY.

JONATHAN: I WILL REVIEW THIS INTERVIEW. LET US GIVE YOU AN UPDATE. HERE IS THE BLOOMBERG REPORT. DANI: TREASURY SECRETARY JANET YELLEN WILL TESTIMONY THIS WEEK. SHE WILL SPEAK BEFORE THE HOUSE FINANCIAL SERVICES COMMITTEE TODAY AND THE SENATE BUSINESS THURSDAY. LEGISLATORS ARE EXPECTED TO QUESTION HER ABOUT THE STATE OF THE ECONOMY AND THE FIGHT AGAINST INFLATION. WILL DISCUSS THE POTENTIAL FOR TOUGHER REGULATIONS FOR ASSET MANAGERS AND HEDGE FUNDS. DOCUSIGN, THE LATEST TECH FIRM TO ANNOUNCE LAYOUTS AND REDUCED 6% WITH THE MOST COMING FROM SALES AND MARKETING. 32 THOUSAND TECHNOLOGY WORKERS HAVE LOST THEIR JOBS. THE CUTS COME FROM COMPANIES LIKE SNAP, AMAZON, SALESFORCE AND META.

VISION PRO USERS ARE DISCOVERING THE PAIN OF LOSING THEIR PASSWORD. YOU WILL HAVE TO BRING YOUR DEVICES BACK TO THE STORE OR MAIL THEM TO CUSTOMER SERVICE IF THE DEVICE BECOMES DEACTIVATED AFTER ENTERING THE ACCESS CODE INCORRECTLY MANY TIMES. THIS IS THE FIRST MAJOR NEW HARDWARE CATEGORY IN NEARLY A DECADE. THAT'S THE BLOOMBERG REPORT. JONATHAN: NEXT, BIG OIL COMPANIES OFFER OPTIMIZED PROFITS. IT WAS A YEAR OF RECORDS FOR US. RECORD OIL AND GAS PRODUCTION OF 3.1 MILLION BARRELS PER DAY. A REALLY SOLID PERFORMANCE AND THAT ALLOWED US TO RETURN A RECORD OF $26 BILLION DOLLARS TO SHAREHOLDERS, ALMOST 10% OF OUR MARKET CAPITAL.

JONATHAN: GOOD MORNING, CUTTING IT OFF, COUNTING TO THE OPENING BELL WITH STOCK FUTURES ON THE S&P 500 POSITIVE BY 0.1%. A BEAUTIFUL NEW YORK CITY. YOU ARE WATCHING BLOOMBERG TV. JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING, COUNTDOWN TO THE OPENING BELL. WE ARE 43 MINUTES AWAY. VARIABLE INCOME IS GOING WELL. THEY ARE BEING PUSHED IN THE LAST 24 HOURS BY THE BOND MARKET. YIELDS WERE UP AGGRESSIVELY LIKE FRIDAY, BUT STOCKS WERE DOWN THROUGH THAT. IF YOU CAN, MAKE SOME SENSE OF THIS. META AND AMAZON THANK YOU BECAUSE THEY WERE NOT SO PRESENT ON MONDAY. 4.1578 ON THE 10 YEAR YIELD.

LARGE OIL COMPANIES OFFERING OPTIMIENT PROFITS. IT WAS A YEAR OF RECORDS FOR US. WORLD RECORD OIL AND GAS PRODUCTION OF 3.1 MILLION OIL BARRELS. IN THE FOURTH QUARTER WE HAVE A RECORD PERMIAN PRODUCTION OF 870,000 BARRELS PER DAY. A REALLY SOLID PERFORMANCE: ON ALL BOARDS IT ALLOWED US TO RETURN $26 MILLION TO SHAREHOLDERS. JONATHAN: JUST AMAZING. THE MAIN OIL PLAYERS DELIVERED WHAT THEY PROMISED TO INVESTORS: GROWTH AND PROFITABILITY. BP JOINS CHEVRON AND EXXON IN BEATING ESTIMATES AND ANNOUNCING A BUYPACK PLAN. BP, EXXON AND ALL THE ABOVE, YOUR HEADLINE AND HEADLINE, THE COOLEST BORING: GOLDEN QUARTER FOR INVESTORS, CAN YOU EXPLAIN HOW GREAT THESE CAPITAL RETURNS HAVE BEEN?

JAVIER: LAST YEAR CHEVRON, EXXON AND BP GAVE AN EXTRAORDINARY AMOUNT OF MONEY AND WHAT IS GOOD IN THE LAST QUARTER THESE THREE COMPANIES, BP HAS ALSO JOINED BECOMING MORE REGULAR, NOTHING BLINKS IN THEM, GOOD DELIVERY AND A LOT OF CASH, EXACTLY WHAT INVESTORS NEED TO RAISE AND GIVE THE CASH THEY NEED. LISA: THIS IS HOW THEY RECONNECT, HOW MUCH THEY NEED WITH HIGHER OIL PRICES SINCE THAT IS ONE OF THE SURPRISES THAT OIL HAS NOT RECOVERED FROM THE POTENTIAL PRESSURES. JAVIER: THAT WAS A BIG QUESTION LAST YEAR BECAUSE MANY INVESTORS SAID THAT THESE COMPANIES ARE DOING WELL BUT IT IS THE BACKGROUND, THE INVASION OF UKRAINE AND THE SITUATION IN THE MIDDLE EAST.

WE DON'T HAVE ANY OF THAT. OIL HAS BEEN PRICE BELOW $100 FOR MANY MONTHS AND THAT'S WHY GAS PRICES ARE AT RECORD HIGH. THE MARKETS HAVE FALLEN TO THE FLOOR AND ARE STILL ELEVATED BY HISTORICAL STANDARDS BUT THEY ARE NOT AT LAST YEAR'S RECORD HIGHS. BIG OIL ARE PERFORMING. ONE OF THE THINGS THAT HAS IS FOR COMPANIES TO REVIEW THEIR OPERATIONAL EXPENSES. THEY ARE MAKING IT STRONGER AND CAN OPERATE IN OIL PRICE ENVIRONMENTS THAT ARE STILL HIGH, 75 OR $80 A BARREL BUT NOTHING LIKE THAT $100 MORE. LISA: FASCINATING. THAT BEGS THE QUESTION HOW MUCH CAN THE stock recover to reach valuations elsewhere based on dividends and financial acumen, regardless of price?

JAVIER: THAT IS AN IMPORTANT POINT. IN TERMS OF EVALUATION WE HAVE SEEN THE BEST THERE IS. BIG OIL WILL NOT GO BACK TO THE 1990S AND 2000S, WHERE INVESTORS REALLY LOVED IT. IT WILL BE A SECTOR THAT MANY INVESTORS WILL NOT TOUCH BECAUSE OF HOW MUCH MONEY THEY ARE RETURNED, THEREFORE EVALUATIONS WILL BE UNDER CHALLENGE. IT HAS RECOVERED AND THEY ARE AT LEAST ONE SECTOR THAT IF YOU ARE AN INVESTOR AND YOU LIKE THE PERFORMANCE IN RETURN THAT IT IS OFFERING, IT IS A SECTOR IN WHICH THEY NEED TO WORK, THEY NEED TO RECONSIDER. ANNMARIE: I FELT LIKE I WAS BACKWARDS WHEN EXXON AND CHEVRON TALKED ABOUT INCREASING IN THE PERMIAN AND SAUDI ARABIA, ABANDONING PLANS TO EXPAND OVERCAPACITY.

DO YOU SEE THE US BECOMING AN EVEN BRIGHTER SHINING SPOT? JAVIER: I THINK IT WILL STAY BRIGHTER. I SEE MORE PRODUCTION COMING FROM THE UNITED STATES. I EXPECT THE GROWTH RATE OF US OIL PRODUCTION TO SLOW DOWN COMPARED TO LAST YEAR. I ALSO SAID THAT LAST YEAR AND I WAS WRONG. THE RHYTHM BARELY DECLINED. EVEN MORE INTERESTING, WE WILL HAVE MORE PRODUCTION GROWTH COMING FROM CANADA AT THE SAME TIME WE HAVE MORE PRODUCTION COMING FROM BRAZIL. IT'S THE WHOLE AMERICAN CONTINENT, A BIG BRIGHT PLACE FOR OIL PRODUCTION AND THE SAUDIS HAVE THE CHALLENGE. ANNMARIE: HOSTILITIES AGAIN IN THE RED SEA, BUT THE OIL DOES NOT EXPLODE.

HOW MUCH LOYAL, HOW MUCH LOYAL, AND LOWER PRICES WILL BE IF WE ELIMINATE ALL VOLATILITY? JAVIER: I DO NOT THINK THE MIDDLE EAST IS A BIG FACTOR IN THE VALUATION OF THE OIL PRICE. CURRENTLY THE MARKET IS COMPLETELY IGNORING THE GEOPOLITICAL RACE. AND I DON'T THINK THERE IS MUCH GEOPOLITICAL REASON TO APPLY TO OIL. IF EVERYTHING IS WRONG IN THE MIDDLE EAST, I DON'T SEE NATE, I DON'T SEE A DISADVANTAGE. CAN WE LOAD TWO OR THREE DOLLARS? YES, BUT IT IS DRIVEN BY SUPPLY AND DEMAND. THE DEMAND SEEMS RELATIVELY GOOD. YES, CHINA IS A CHALLENGE. BUT I WILL CONSIDER THE GROWTH OF OIL DEMAND IN 2024, ONE MILLION BARRELS A DAY IS A GOOD RESOLUTION FOR WHAT IS HAPPENING IN THE WORLD.

JONATHAN: ASK THE QUESTION OF WHY CRUDE OIL IS NOT HIGHER SO WE CAN FINISH. WHERE THIS CONFLICT COMES FROM AND WHY WE CAN IGNORE WHAT HAS BEEN DEVELOPING IN THE MIDDLE EAST IN THE PAST THREE OR FOUR MONTHS. REMEMBER 2019 WHERE THE HOUTI MILITANTS TOOK A PART OF THE SAUDI PRODUCTION. WE DON'T SEE THAT DEVELOPING. WHY ARE WE SO COMFORTABLE IN TERMS OF WHAT HAS BEEN HAPPENING IN TERMS OF CHRIST GROSS: THE PRICES? JAVIER: THE HOUTHIS WERE ABLE TO BLOCK SAUDI CAPACITY FOR A FEW DAYS AND THEN PRODUCTION FASTLY CAME TO THE MARKET. THE MARKET IS EFFECTIVELY SECURED.

WE CAN LOSE A LOT OF PRODUCTION IN THE MIDDLE EAST, THIS HAS NEVER HAPPENED AND THEREFORE THE MARKET JUST BECOME COMPLACTIVE. THERE IS A LOT OF CAPACITY IN THE UNITED STATES ERIC M. SAND SAUDI ARABIA. AT THE SAME TIME THERE IS A LOT OF PRODUCTION COMING FROM THE UNITED STATES AND CANADA AND THE MARKETS SEE IT THEY'RE COMING. AND NON-OPEC PRODUCTION WILL LIKELY BE MORE THAN ENOUGH TO MEET ALL DEMAND. JONATHAN: RAW BRENT 78.53. GREAT FOR CATCHING UP. WE SHOULD DO THIS MORE OFTEN. HAVE AN EXPLOSION. OUT OF LONDON TODAY. CRUDE CRUDE IS POSITIONED BY 0.7%. WTI RAISE POINT WE PERCENTAGE -- 0.75%.

MORNING LESSONS, TAKEAWAY, IS GOLDEN RITE ON LIFE SUPPORT? LISA: I'M SURE I HATE PEOPLE WHO LOVE GOLDEN RITE. THERE IS A QUESTION IF WE TALK AGAIN ABOUT A LANDING AND WHAT IT LOOKS LIKE. WHAT A STRONG LANDING POTENTIAL AND HIGHER NEUTRAL RATE LOOKS LIKE IN THE FUTURE. THESE ARE SOME OF THE MOST HEART DEBATES. JONATHAN: Going back to what you said, Goldilocks is just a fairy tale. LARA RHAME SUGGESTS RATES NEED TO GO UP MORE ALONG THE CURRENCY, WHICH CAME INTO WHAT WE HEARD FROM DEUTSCHE BANK SAYING MAYBE NEUTRAL BANK IS CLOSER TO FOUR THAN THREE.

LISA: ARE WE RESTRICTIVE? WE ARE SEEING STRONG GROWTH IF IT CONTINUES AND WE ARE NOT RESTRICTIVE, IT MEANS IT IS SUSTAINABLE TO HAVE A 5% RATE AND STILL SEE GROWTH. MAYBE IT IS A RATE OF 4% AND IT IS FAR FROM 0%. JONATHAN: IF GOLDILOCKS IS ON LIFE SUPPORT, WILL THE BILL GOING TO THE CONGRESS FLOOR DEAD ON ARRIVAL? EVERYONE WANTS TO SAY IT IS. POLITICO, WHAT IS THE TITLE? ANNMARIE: EVERYTHING IS DEAD. JONATHAN: IS IT? ANNMARIE: THE BIPARTISAN HARD INFRASTRUCTURE TOOK MONTHS TO GET THROUGH. BIDEN TALKED ABOUT THAT WHEN HE CAME TO OFFICE. 2021 HAS PASSED. THE PROBLEM IS THAT THE ELECTIONS ARE IN NOVEMBER.

THE CLOSER WE COME TO THE ELECTION. HOW DIFFICULT WILL IT BE FOR REPUBLICANS TO REGISTER? THIS MORNING THE EDITORIAL BOARD, IF THE REPUBLICANS DO NOTHING, THE ELECTORATE WILL SAY IT'S NOT JUST DONALD TRUMP WHO WANTS TO MAKE IT AN ELECTORAL ISSUE AND THEY WILL START BLAMING THE REPUBLICANS FOR THIS. JONATHAN: IS IT CONVENIENT FOR BOTH PARTIES TO EXTEND IT AND FIGHT ABOUT IT FOR THE NEXT COUPLE OF WEEKS? ANNMARIE: IT IS NOT CONVENIENT FOR DEMOCRATS. BIDEN IS THE ACTING PRESIDENT AND INTEGRATION: IMMIGRATION IS BECOMING THE BIG DEAL IN THEELECTIONS. THE ECONOMY AND IMMIGRATION ARE THE MAIN ISSUES.

JONATHAN: QUICKLY BECOME THE MAIN STORY. TOMORROW A STACKED LINEUP FOR YOU. BLOCK CO-FOUNDER JIM MCKELVEY AND MICHAEL NATHANSON OF MOFFITT NATHANSON. FROM NEW YORK CITY, GOOD MORNING, IT'S NOW FOUR MINUTES UNTIL THE OPENING BELL.