Bloomberg Surveillance 03/19/2024

>> THE FED IS AT THE RISK OFLOSING CONFIDENCE. THEY OPEN THE DOOR FOR RATEREDUCTIONS TOO SOON. >> THERE IS MORE INERTIA TOINFLATION THAN THE FED IS GIVING CREDIT FOR. >> THE CHALLENGE HAS BEENEVERYONE IS WAITING FOR CERTAINTY.I DO NOT THINK WE WILL GET IT. >> THE FED WOULD LIKE A SCRAPOF CERTAINTY ABOUT WHAT THEY'RE GOING TO DO LATER THIS YEAR. >> THIS IS “BLOOMBERGSURVEILLANCE”.

WITH JONATHAN FERRO, LISAABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY, GOODMORNING. BLOOMBERG SURVEILLANCE ON TOUR.HOME OF BANK OF AMERICA HERE IN NEW YORK CITY ALONGSIDE LISAABRAMOWICZ I AM JONATHAN FERRO. LISA ABRAMOWICZ ACTUALLY GOINGTO 731 LEXINGTON AVENUE AND JUST MAKING IT IN TIME.GOOD THING BRIAN MOYNIHAN DOES NOT JOIN FOR ANOTHER 60 MINUTES.LISA: REALLY, THAT IS HOW WE ARE GOING TO START?I WAS PREPARED TO BE HERE EARLY.

JONATHAN: YOU WANT TO TRADE? THIS WILL FILL OUT FOR THE NEXTTWO OR THREE HOURS. BRIAN MOYNIHAN WILL JOIN US IN60 MINUTES. WE WANT TO START WITH THE PRICEACTION. WE BEGIN WITH DOLLAR YEN.SOMETHING TRULY HISTORIC JUST HAPPENED, SOMETHING SINCE –NOT SINCE 2007. THE JAPANESE YEN IS WEAKER EVENTHOUGH WE'VE JUST SEEN THE FIRST INTEREST RATE HIKE IN 17YEARS. LISA: ON ONE HAND PEOPLE WEREEXPECTING THIS.

SOME OF THE RHETORIC OUT OF THECENTRAL BANK WAS NOT HAWKISH. THEY WERE INDICATING THEY WERENOT PREPARED TO HIKE AGAIN. THAT IS WHY THIS CURRENCY PAIRIS DEAD IN THE WATER. I DO NOT UNDERSTAND THIS.THIS IS WHAT EVERYONE WAS WAITING FOR. MICHAEL:– JONATHAN: THERE IS A BIG DIFFERENCEBETWEEN THE END OF NEGATIVE INTEREST RATES AND THE END OFEASY MONEY. THIS IS NOT THE END OF EASYMONEY. THE GOVERNOR GOING OUT OF THEWAY TO SAY THEY NEED TO KEEP.

THINGS ACCOMMODATIVE.THE END OF NEGATIVE RATES, YES, BUT THE END OF EASY MONEY, NOTYET. I GOT ON THE PHONE AND I SAIDWHAT MATTERS IS NOT THE FIRST MOVE, IT IS HOW FAR THEY GO.HOW FAR YOU THINK THE BOJ WILL GO AFTER THIS MOVE OVERNIGHT?LISA: I THINK TO WHERE THEY ARE RIGHTNOW. EVENTUALLY THEY GO HIGHER. RIGHT NOW THERE IS NOINDICATION THERE WILL BE ANY FURTHER RATE HIKES BECAUSE THEYTHEY DO NOT HAVE TO. WHEN YOU TAKE A STEP BACK, THISIS THE END OF THE NEGATIVE RATE.

EXPERIMENT.THIS IS THE LAST CENTRAL BANK TO REMOVE THE NEGATIVE RATEPOLICY. WHEN WE WRITE THE BOOK WILL BECONSIDERED STIMULATIVE OR SUPPRESSIVE OF GROWTH?I WONDER WHAT THE HISTORY BOOKS WILL SAY? JONATHAN:I THINK A LOT OF BOOKS WILL BE WRITTEN AND THEY WILL BEINCONCLUSIVE. EVERY THOUGHT IN THE NEGATIVEERA IS WHAT YOU'LL THINK IN THE NEXT 20 OR 30 YEARS.WILL BE ARGUING ABOUT THIS FOREVER BUT LET'S HOPE WE NEVERGET TO A SITUATION WHERE WE.

NEED TO HAVE A CONVERSATIONABOUT NEGATIVE INTEREST RATES. THE FEDERAL RESERVE HAS GONEFROM ZERO TO 550. THE GLOBAL FUND MANAGER SURVEYFROM BANK OF AMERICA IS OUT THIS MORNING.WILL BE TALKING ABOUT HIGHLIGHTS.GLOBAL GROWTH EXPECTATIONS, TWO YOUR HIGH.RISK APPETITE HIGHEST SINCE NOVEMBER 2021.EPS OPTIMISM THE HIGHEST IN TWO YEAR.THAT IS INTEREST RATES WITH THE FIVE HANDLE IN AMERICA.DOES THAT LOOK RESTRICTIVE.

BASED ON THE FMS SURVEY? LISA:BONDS AND STOCKS ARE OPERATING ON TWO TIMELINES.THEY ARE LOOKING AT THE INFLATIONARY.STOCKS ARE LOOKING AT IS WHAT HE HAPPENING IN THE TECHREVOLUTION. THEY ARE TALKING ABOUT ALLTHESE OTHER THINGS. AT WHAT POINT TO STOCKS WAKE UPTO BONDS? THAT IS WHAT IT SEEMS LIKE.ARE WE GOING TO TEST THE THRESHOLD AT WHICH STOCKS STARTWAKING UP TO THE PROSPECT OF HIGHER FOR LONGER? JONATHAN:BUT WE SPEND MORE TIME TALKING.

ABOUT J AND LESS ABOUT JENSEN.EQUITY FUTURES NEGATIVE .2%. A BOUNCE BACK IN YESTERDAY'SSESSION. IN THE BOND MARKET YIELD STILLHIGH IN CLOSE TO THE HIGHS OF THE YEAR. 4.3183.GRINDING HIGHER OVER THE LAST FIVE OR SIX SESSIONS.EURO 1.0 841. THE CURRENCY PAIR -.3%. LISA: THIS RAISES THE QUESTION ON HOWMUCH EMPHASIS WILL THERE BE TOMORROW ON JAY POWELL INDECIDING WHETHER THE DOLLAR WILL KEEP RALLYING?LET'S SEE WHAT YOU'VE GOT.

WILL THAT BE THE DECIDINGFACTOR? THE BOJ IS OFF THE TABLE.JONATHAN: FED DECISION JUST AROUND THECORNER. WE'LL WILL CATCH UP WITH MARKCABANA AS INVESTORS CONTINUE PUSHING BACK BETS.LIZ EVERETT ON THE BANK OF AMERICA AND MARCY MACGREGOR OFMERRILL BANK OF AMERICA PRIVATE BANK.WE BEGIN WITH THE TOP STORY. THE FOMC MEETING GETTINGUNDERWAY AS TRADERS PUSH BACK BETS ON THE FIRST CUT BEYONDJUNE. MARK CABANA IS LOOKING FOR.

DISCUSSIONS ON THE BALANCESHEET , WRITING “THE FED NEEDS TO PRIORITIZE HOW AND WHEN TOSLOW QT GIVEN THE REDUCTION OF EXCESS LIQUIDITY IN THE SYSTEM.SLOWING QT IS FED PRIORITY NUMBER ONE.”MARK KICKS OFF OUR SHOW THIS MORNING. GOOD MORNING. MARK:THANK YOU SO MUCH FOR BEING HERE. JONATHAN:LET'S KICK IT OFF WITH THE BALANCE SHEET.WHAT ARE THE CONSIDERATIONS THAT GO INTO MAKING A DECISIONLIKE THE ONE THEY HAVE TO CONFRONT FOR NEXT WHEN HE FORHOURS? MARK:.

WE THINK THE BALANCE SHEET WILLBE AN IMPORTANT POINT OF DISCUSSION AND THE FED WILLHAVE TO ANSWER THE QUESTION OF HOW FAR AND HOW MUCH EXCESSLIQUIDITY SO THEY WANT TO REMOVE FROM THE SYSTEM AND HOWCOMFORTABLE ARE THEY PULLING THAT CASH OUT OF THE BANKINGSYSTEM THAT APPEARS TO REALLY BE WANTING TO HOLD AN ELEVATEDAMOUNT OF RESERVE LEVELS AND CASH LEVELS S. LISA:WE ARE TALKING OUT OF BALANCE SHEET THAT STRUNK FROM $9TRILLION. TO WHAT EFFECT HAS THE BALANCESHEET SHRINKING BY $1.5.

TRILLION HAD ON THE MARKET THATSEEMS INTENT ON RALLYING? MARK:THE CLEAREST THING THAT HAS DONE IS PULLED CASH OUT OFMONEY MARKET FUNDS AND PULLED THE EXCESS CASH WITH THE FED.THAT HAS CAUSED MONEY MARKET RATES TO RISE.BILLS ARE NOT AS RICH AS THEY WERE A YEAR OR SO AGO.THAT IS THE ONLY IMPACT IT HAS HAD. IN TERMS OF A BROADERMARKETPLACE IT HAS NOT DONE MUCH.THE FED WILL HAVE TO ASK HOW MUCH DO THEY WANT TO KEEPPUSHING THE BALANCE SHEET.

REDUCTION AND HOW MUCH DO THEYWANT TO RISK PULLING EXCESS LIQUIDITY OUT OF COMMERCIALBANKS THAT HAVE BEEN CLEARLY BIDDING UP TO HOLD THAT EXCESS.LISA: THE FACT IT HAS NOT HAD A CLEARAND OBVIOUS IMPACT ON MARKETS IS A REASON A LOT OF PEOPLE ARENOT PAYING ATTENTION. A LOT OF PEOPLE'S EYES GLAZEOVER AND SAY WE WANT TO SEE WHERE THE DOTS ARE.YOU THINK THERE IS TOO MUCH EMPHASIS ON THE DOTS? MARK:PRIORITY ONE WAS WITH REGARDS TO THE BALANCE SHEETDISCUSSIONS.

THE FED'S REAL FOCUS WILL BEWHAT TO THEY WANT TO DO WITH THE OVERALL SETTING OF INTERESTRATE POLICY, HOW LONG TO THEY WANT TO KEEP RATES AT CURRENTLEVELS AND HOW MUCH RESTRICTIVENESS ARE THEYCOMFORTABLE EXERTING ON THE ECONOMY.THE MARKET IS RIGHT TO FOCUS ITS ATTENTION ON THE DOT PLOT,KEEPING THE BALANCE SHEET SECRETARY BUT SLOWING QT WHENTHEY THINK ABOUT ALL THE CONSIDERATIONS.THAT IS THE NUMBER ONE PRIORITY THEY HAVE.ON THE DOTS COME THE BIG.

QUESTION IS WILL THEY SHOWTHREE CUTS OR TWO CUTS FOR THEIR EXPECTED 2024 OUTLOOK?THAT WILL HAVE A NOTABLE RATE AND MARKET RESPONSE EITHER WAY.THE MARKET IS QUITE DIVIDED ON THIS. YOU TALKED ABOUT THE FUNDMANAGER SURVEY. WE DO OUR OWN SURVEY OF RATESAND FX CLIENTS. WHEN WE ASKED THEM, 68% SAIDTHE FED WILL KEEP THREE CUTS, 75 BASIS POINTS OF TOTAL RATECUTS. THAT SURVEY CLOSED ABOUT A WEEKAGO. THAT HAS PROBABLY SHIFTED A LITTLE BIT AS YOU LOOK AT HOWMUCH THE MARKET IS TAKING OUT.

FED RATE CUTS FOR THIS YEAR,THE FACT THAT THE JUNE MEETING IS AROUND 50/50 IN TERMS OFWHETHER THE FED WILL GO. THE RESPONSES WE'VE GOT SUGGESTTHE MARKET IS CLOSER TO 60/40 IN TERMS OF INVESTORS THINKINGTHEY WILL SHOW THREE CUTS VERSUS TWO CUTS.THAT WILL BE THE BIG QUESTION AND THE MARKET WILL RESPOND INEITHER DIRECTION. IF THEY ONLY SHOW TWO CUTS FORTHIS YEAR, SO THEY TAKE OUT ONE CUT, WE THINK THE TWO YEAR WILLSELL OFTEN BASIS POINTS, WE THINK YOU'LL WILL SEE THEDOLLAR RALLY AND YOU WILL SEE.

RISK ASSETS TAKE IT ON THE CHINTO SOME EXTENT. THAT IS BECAUSE THE MARKET WILLBE QUESTIONING HOW ACCOMMODATIVE IS THE CENTRALBANK GOING TO BE? IF THEY SHOW THREE CUTS AS THEYHAD IN DECEMBER AND AS OUR ECONOMIST EXPECT THEY WILL WETHINK THE TWO YEAR WILL RALLY FIVE BASIS POINTS, THE CURVE.IN AND YOU'LL SEE THE DOLLAR WEAKEN AND RISK ON.IT IS A PIVOTAL POINT FOR MARKETS.I KNOW IF BEEN TALKING FOR A WHILE.LISA, YOU ASKED HOW LONG UNTIL.

THE EQUITY MARKET CATCHES UPWITH THE BOND MARKET. I DO WONDER TO SOME EXTENT HOWLONG BEFORE THE BOND MARKET CATCHES UP WITH THE EQUITYMARKET? YOU CAN LOOK AT PRICE ACTIONAND SAY MONETARY POLICY IS TOO EASY AND RATES ARE TOO LOW ANDTHAT IS WHY THE EQUITY MARKET IS DOING THIS.WHEN I TALK TO OUR EQUITY MARKET FOLKS, WHAT THEY SAY ISWE DO NOT CARE ABOUT INTEREST RATES. HAVE YOU SEEN THE GROWTHPROFILE THESE COMPANIES? HAVE YOU SEEN HOW STRONG THEECONOMY IS RUNNING?.

WE TALKED ABOUT THE FUNDMANAGER SURVEY. RISK APPETITE VERY HIGH.THEY DO NOT THINK THAT WHETHER YOU HAVE TENDS AT 4.30 OR 4.75OR 5% DISRUPTS THE INVESTMENT NARRATIVE.THAT IS A REAL QUESTION THE MARKET WILL HAVE TO REBALANCE.I WONDER IF THE BOND MARKET MIGHT HAVE REBALANCED WHAT THEEQUITY MARKET HAS DONE. JONATHAN:WE ARE IN YOUR HOME SO I WILL NOT CUT YOU OFF.I WANT TO TALK ABOUT SOMETHING YOU SAID.THE EQUITY MARKET WILL TAKE IT.

ON THE CHIN THEN HE LAID OUT ASTO WHY THE EQUITY MARKET WILL TAKE IT ON THE CHIN.IF YOU THINK ABOUT WHAT HAS HAPPENED THIS YEAR, JANUARY 4.1% ON A U.S. TWO YEAR, WE HAVE GONE FROM4.1% TO 4.70 THIS MORNING. OVER THE LAST WEEKS WE'VE BEENIN AND AROUND THAT LEVEL AND EQUITIES HAVE DONE NOTHING INTHE FACE OF THAT WHICH TELLS ME YIELDS CAN GO EVEN HIGHER ANDTHEY CAN KEEP GOING HIGHER UNTIL THEY BECOME A PROBLEM.IS THAT THE RIGHT WAY OF THINKING ABOUT THIS? MARK:I THINK IF YOU ARE LOOK AT WHAT.

FINANCIAL MARKETS WERE TELLINGYOU AND YOU ARE ONLY LOOKING AT FINANCIAL CONDITIONS, I THINKFINANCIAL CONDITIONS WOULD TELL YOU MONETARY POLICY IS NOT TOORESTRICTIVE. JAY POWELL SAYS MONETARY POLICYIS THAT WELL INTO RESTRICTIVE TERRITORY.FINANCIAL CONDITIONS ARE NOT TELLING YOU THAT.I CANNOT HELP BUT REWIND TO WHERE WE WERE LAST SUMMER ANDFALL. AS WE KNOW AT THAT POINT INTIME WE SAW A RATES SELLOFF VERY MATERIALLY.THE 10 YEAR ROSE OVER 100 BASIS.

POINTS.THE 10 YEAR REAL RATE RISING A SIMILAR AMOUNT.RISK ASSETS WERE RELATIVELY STABLE.THE EQUITY MARKET DID NOT GO DOWN.CREDIT SPREADS DID NOT WIDEN. THE FED TOLD US THEY WERE VERYWORRIED ABOUT HIGHER TERM PREMIUM AND THEY FELT HIGHERINTEREST RATES WERE DOING THE WORK FOR THEM.WHEN WE LOOKED AT RISK ASSETS WE SET RISK ASSETS DO NOT CAREABOUT THIS. RISK ASSETS DO NOT CARE ABOUTTHE RATE RISE BECAUSE WE.

THOUGHT IT WAS ALL ABOUT BETTERGROWTH EXPECTATIONS. THE MARKET WAS TAKING FED RATESCUTS AND RISK ASSETS WERE GENERALLY OK WITH THAT AND THENTHE FED SUBSEQUENTLY EASED IN THE FACE OF THAT AND DROVERATES LOWER OVER THE COURSE OF NOVEMBER AND DECEMBER THROUGHVERY DOVISH RHETORIC AND THE TREASURY DEPARTMENT ALSO DIDTHEIR PART. THEY ISSUED LESS LONG DATEDBONDS THAN WE THOUGHT. THE TREASURY AND THE FED EASEDFINANCIAL CONDITION SUBSTANTIALLY AND ASSETS KEPTRALLYING.

I GOING TO THIS TO MAKE THEPOINT THAT RISK ASSETS ARE TELLING YOU THE ECONOMY ISFINE, GROWTH EXPECTATIONS LOOK VERY HEALTHY.MAY BE INTEREST RATES ARE NOT THAT RESTRICTIVE.THAT IS THE KEY QUESTION THEY HAVE TO GRAPPLE WITH AT THEMEETING THE NEXT COUPLE OF DAYS. THE BALANCE SHEET WILL BE AFOCUS. IT IS SECONDARY TO THE SETTINGOF MONETARY POLICY. THEY HAVE TO ASK THEMSELVES HOWRESTRICTIVE OUR WEEK? THAT IS AN OPENING QUESTION FORTHEM. JONATHAN:.

CAN WE WRAP IT UP WITH THETARGET. 4.70 ON THE TWO YEAR. WHAT ARE YOU SAYING? MARK:WE HAVE BEEN SAYING TO CLIENTS THAT CLIENTS CAN BE PATIENT ONADDING DURATION BECAUSE WE THINK RATES WILL CONTINUE TORISE IN THE NEAR TERM AND THAT IS DUE TO THE FACT THAT GROWTHHAS BEEN SO STRONG. RISK ASSETS ARE NOT TELLING YOUFINANCIAL CONDITIONS ARE PARTICULARLY RESTRICTIVE. AS A RESULT OF THAT WE THINKINVESTORS AND WAIT UNTIL RATES ARE AROUND 4.50 TWO AT LONGPOSITIONS AND BE COMFORTABLE.

WITH THAT — AROUND 4.50 TO ADDLONG POSITIONS AND BE COMFORTABLE WITH THAT.OUR END OF YEAR 10 YEAR FORECAST IS FOR .25%, WELLABOVE CONSENSUS. IS TO BE WELL ABOVE THEFORWARDS, NOT REALLY ANYMORE. WE THINK THAT IS CONSISTENTWITH HIS EXPECTED STRONG GROWTH BACKDROP IN THE U.S.ECONOMY AND MAY BE A REASSESSMENT OF THE FED INTERMS OF HOW MUCH THEY WILL BE ABLE TO CUT THIS YEAR.♪ GREAT TICKET — JONATHAN: GREAT TO KICKOFF THE PROGRAMWITH YOU.

MARK CABANA OF BANK OF AMERICAGLOBAL RESEARCH. LET'S GET IT UPDATE ON STORIESELSEWHERE. HERE IS YOUR BLOOMBERG BRIEFWITH SONALI BASAK. SONALI:PRESIDENT BIDEN AND BENJAMIN NETANYAHU HELD THEIR FIRST CALLAND WEATHER MONTHS TO TRY TO EASE TENSIONS OVER ISRAELS WARIN GAZA. BENJAMIN NETANYAHU AGREED TOSEND A GROUP OF ADVISERS TO WASHINGTON ABOUT HIS PLANNEDINVASION OF ROOF AND ANTONY BLINKEN IS HEADING TO THE — TOTHE REGION.

IT WILL EXTEND HIS TRIPS WITHSTOPS IN SAUDI ARABIA AND EGYPT TO PUSH FOR A CEASE-FIREBETWEEN ISRAEL AND HAMAS. DONALD TRUMP IS NARROWING DOWNHIS LIST OF POTENTIAL RUNNING MATES FOR NOVEMBER.BLOOMBERG HAS LEARNED TRUMP HAS RULED OUT VIVEK RAMASWAMY ASHIS VICE PRESIDENT. SOURCES TELL US TRUMP TOLD THEENTREPRENEUR PERSONALLY HE WILL NOT BE HIS VICE PRESIDENTIALPICK BUT IS CONSIDERING THEM FOR A CABINET POSITION,INCLUDING POSSIBLE HOMELAND SECURITY SECRETARY.THE BANK OF JAPAN HAS ENDED ITS.

ERA OF NEGATIVE INTEREST RATESAND IS SIGNALING EASY FINANCIAL CONDITIONS WILL CONTINUE,GIVING CLUES ON WHEN TO EXPECT FURTHER HIKES.THE CENTRAL BANK IS SHIFTING FROM ITS NEGATIVE INTEREST RATEPOLICY AFTER SEEING ITS 2% INFLATION TARGET HAD COME INTOSIGHT AND THE MOVE HAS PROMPTED A SLIDE PAST THE 150 MARKAGAINST THE DOLLAR. THAT IS YOUR BLOOMBERG BRIEF.JONATHAN: MAKING THE CASE FOR TESLA. >> MY VIEW ON TESLA IS IT ISEASY TO GIVE NEGATIVE.

THEY WILL GAIN MORE SHARE INTHE LEVERAGE WILL BE THERE. I BELIEVE ULTIMATELY NUMBERSAND GROWTH WILL START TO GO BACK UP. JONATHAN:DACA — THAT CONVERSATION IS COMING UP NEXT.LIVE FROM NEW YORK CITY, GOOD MORNING. ♪ JONATHAN:LIVE FROM NEW YORK CITY, GOOD MORNING.LIVE FROM THE HOME OF BANK OF AMERICA, WE ARE NEW YORKTHROUGHOUT THIS MORNING FOR THE NEXT TWO HOURS AND 41 MINUTESOR SO.

ON THE S&P 500 FUTURES PULLINGBACK AHEAD OF THE FED TOMORROW. EQUITY FUTURES SOFTER.YIELDS PULLING BACK. VERY CLOSE TO 2024 HIGHS.4.31 ON THE U.S. 10 YEAR. DOLLAR STRONGER AGAINST G10YESTERDAY. 1.0 842. UNDER SURVEILLANCE, MAKING THECASE FOR TESLA. >> MY VIEW ON TESLA IS IT ISEASY TO GIVE NEGATIVE. THEY WERE GOING THROUGH A WHITEKNUCKLE PERIOD. CHINA DEMAND HAS BEEN SOFT.MY VIEW IS ON THE OTHER CITED OF THIS THIS WILL BE A COMPANYON ITS WAY TO 2.5 AND 3 MILLION.

UNITS AND THEY WILL GAIN MORESHARE, THE LEVERAGE WILL BE THERE AND NUMBERS AND GROWTHWILL START TO COME BACK UP. JONATHAN:TESLA LOOKING TO RAISE PRICES ON THE MODEL Y AND REGAININVESTOR CONFIDENCE AFTER BECOMING ONE OF THE WORSTPERFORMING S&P 500 STOCKS OF THE YEAR.JOHN MURPHY MAINTAINING A NEUTRAL RATING WITH A 12 MONTHPRICE TARGET OF 2.80 — OF 280. JOHN MURPHY CITING TESLA'SABILITY TO REMAIN AGILE. LET'S START WITHOUT DIFFICULTTHIS INDUSTRY IS AT THE MOMENT.

WHO GOT THIS RIGHT AND SAWWHERE THIS MARKET WOULD BE? JOHN:I'VE BEEN DOING THIS FOR 25 YEARS AND IT IS AN INDUSTRYTHAT IS DIFFICULT TO GET RIGHT. ONE COMPANY THAT HAS BEEN VERYGOOD AND VERY AGILE AND FOUNDATIONAL HAS BEEN TOYOTA.WHEN YOU LOOK AT THIS RULE THEY HAVE WHERE THEY SAY BASICALLYFOR ALL THE PRECIOUS METALS AND EVERYTHING THEY CAN MAKE SIXHYBRIDS OR 90 HYBRIDS. WITH THOSE 90 HYBRIDS THEY SAVE37 TIMES THE CO2 AS YOU DO WITH ONE EV.THE CONSUMER WILL BE A LOT MORE.

ADOPTING AND A LOT MOREACCEPTING OF HYBRIDS. THAT SEEMS LIKE A GOOD INTERIMSOLUTION UNTIL WE GET HYDROGEN FUEL CELLS WORKED OUT. LISA: TO UNDERSCORE A POINT THAT ISIMPLICIT, ARE YOU SAYING ELECTRIC VEHICLES AS WE KNOWTHEM ARE NOT THE ENVIRONMENTALLY FRIENDLYVEHICLE THAT SAY A HYBRID WOULD BE? JOHN: WHEN YOU LOOK AT WELL THE WHEELTHERE IS A LOT OF DEBATE ABOUT HOW ENVIRONMENTALLY FRIENDLYEV'S ARE.

THE REALITY IS THAT EV'S WORKVERY WELL FOR FOLKS THAT ARE IN LARGE SUBURBAN HOUSES THAT CANPUT A CHARGER IN AND HAVE A SECOND CAR.FOR THE MASSES AND FOLKS THAT LIVE IN CITIES THEY DO NOT WORKSO WELL. IT IS A CHALLENGE. WHAT YOU NEED TO DO IS MAKE ABETTER PRODUCT FOR MOST FOLKS AT A BETTER PRICE AND THEY ARENOT THERE RIGHT NOW AND WE'VE MAJOR ISSUES WITH THE CHARGINGINFRASTRUCTURE. LISA: DO YOU THINK THE ANSWER IS TOALLOW IMPORTS FROM CHINA AT CHEAPER PRICE POINTS OR DO YOUTHINK CHINA HAS ITS OWN.

INTERESTS FOR CREATING ANELECTRIC VEHICLE ECOSYSTEM THAT IS DOMINATING A MARKETPLACETHAT IS A SHORTY? JOHN: ONE OF THE MAJOR COMPLICATINGFACTORS IS IT IS SOAP MACRO AND HAS A MUCH TO DO WITH THEBROADER ECONOMY. IF YOU ARE XI TRYING TO DRIVEYOUR ECONOMY YOU ARE PUSHING THE AUTO INDUSTRY.IT IS THE BIGGEST INDUSTRIAL MANUFACTURING BASE.THEY HAVE A REAL POSITION TO DRIVE FORWARD THE INDUSTRY ANDBUILDER NATIONAL CHAMPIONS AND THEY ARE DOING IT WITH EV'SBECAUSE THEY CAN NEVER GET.

AROUND ON THE POWERTRAIN.THEIR MOTIVATION IS TO DRIVE THE ECONOMY FORWARD. WHAT YOU HAVE SEEN FROM CHINAIS THREE YEARS AGO NET IMPORT EXPORT ON VEHICLES WAS ZERO.LAST YEAR IT WAS ABOUT 5 MILLION NET EXPORTS.THEY HAVE BECOME A BIG PLAYER ON THE GLOBAL STAGE. JONATHAN:DO YOU THINK THIS COULD SPELL THE END OF THE GLOBAL AUTOMARKET? WILL WE SEE REGIONS WITH PAUSEEYES STATE SPONSORED NATIONAL CHAMPIONS OPERATING INDIFFERENT PLACES? JOHN:.

WE'RE KIND OF ALREADY THERE.THE JAPANESE SUPPORT JAPANESE COMPANIES, U.S. SUPPORT U.S.COMPANIES. WE TOOK CHRYSLER AND GM INTOAND OUT OF BANKRUPTCY IN THE U.S.. MANY PEOPLE THINK GERMANYSUPPORTS THE G3. SOUTH KOREA SUPPORTS HYUNDAIAND KIA. IT IS A MAJOR PART OF THEECONOMY. IS A LARGER PORTION OF YOUREMPLOYMENT BASE. SECONDARY MARKET IS TWICE THAT.IF YOU'RE TRYING TO SUPPORT AN ECONOMY THIS IS WHERE YOU START.THEN YOU GET THE POLITICAL.

ASPECTS OF SUPPORT FROM THATLABOR THAT CREATES A REFERENCE FOR POLITICIANS. JONATHAN: YOU HAVE TO HELP US PICK STOCKSBUT I WONDER IF THE GOVERNMENT IS DOING THAT FOR US? JOHN: SOME OF THE INTERVENTION,WHETHER INCENTIVES OR REGULATION ARE SOMETHING YOUHAVE TO CONSIDER. THE WHOLE INDUSTRY IS LIMITEDIN THE UTILITY AND VALUE IT CAN DRIVE FOR CONSUMERS BY SPEEDLIMITS. THE ULTIMATE FUNCTION IS TO GETYOU FROM A TO B QUICKLY, AND.

BECAUSE YOU HAVE A LIMIT, THATIS CALLED LIMIT, IT IS A LIMIT ON THE VALUE YOU CAN DELIVER TOCONSUMERS. LISA: THERE'S A QUESTION BETWEENSUBSIDIES ON ELECTRIC VEHICLES AND THE TREND SHIFTING TOWARDSHYBRIDS. WISHFUL WIN AND WHO IS BESTPOSITIONED TO TOGGLE BETWEEN THAT VISION? JOHN:USUALLY THE MARKET WINS OUT. THE CONSUMER IS PUSHING IN ADIRECTION OF HYBRID. THE BEAUTY IS YOU IMPROVE THEFUEL ECONOMY BY 50% AND THE CONSUMER HAS NO IDEA THEY AREDRIVING A DIFFERENT KIND OF.

POWERTRAIN.IT IS COST-EFFECTIVE. HE DID NOT HAVE TO WORRY ABOUTCHARGING OR PLUGGING IT IN. IN THE NEAR TERM WE WILL SEEHYBRIDS CONTINUE TO GAIN IN POPULARITY. EV'S ARE STAGNATING.IN THE U.S. WE SAW EV'S DROP TO 7% OF THEMARKET. IN CHINA AND EUROPE, YOU ARESTARTING TO SEE A FADE AND THE RATE OF INCREASE ON PENETRATION.WE WILL SEE A MARKET THAT GETS HYBRIDS.TOYOTA IS VERY WELL-POSITIONED, FORD IS WELL-POSITIONED.GM IS PLAYING CATCH-UP.

TOYOTA HAS TAKEN THE LEAD.JONATHAN: JOHN MURPHY OF BANK OF AMERICA.EVERY TIME WE HAVE THIS CONVERSATION I GET THE GREENACTIVISTS STARTING TO EMAIL IN. THE BOTTOM LINE, IT DOES NOTMATTER WHAT THEY THINK. WHEN YOU SPEAK TO THE EXPERTS,THEY ARE NOT THAT ENVIRONMENTALLY FRIENDLY.THEY ARE JUST NOT. JONATHAN:LIVE FROM NEW YORK CITY, IT IS FEDERAL RESERVE DECISION EVEN.IS THAT A THING? IT IS NOW. THEY ARE NOT EVEN AWAKE YET.LISA: THEY WILL BE.

JONATHAN:DOWN .2% ON THE NASDAQ. TOOK US ABOUT 30 MINUTES TOTAKE A DIG AT CHAIRMAN POWELL. TWO YEAR, WHAT A REPRICING WEHAVE SEEN. BACK THROUGH 4.7%. CATCHING UP WITH MARK CABANA ATBANK OF AMERICA ABOUT 30 MINUTES AGO BASICALLY SAYING WEARE NOT SUFFICIENTLY RESTRICTIVE AND THAT OPENS THEDOOR FOR YIELDS TO GO HIGHER AT THE LONG END. LISA:I LOVE WHAT HE SAID. MAYBE STOCKS ARE NOT LISTENINGTO BONDS THAT MAY BE BONDS ARE NOT LISTENING TO THE STOCKMARKET.

RATES CAN BE SUBSTANTIALLYHIGHER AND ALLOW THE ECONOMY TO KEEP CHUGGING ALONG.THERE IS A REASON STOCKMARKETS ARE NOT PAYING ATTENTION TO THEOF RATES WHERE THEY ARE. JONATHAN:YIELDS KEEP PUSHING HIGHER. MONDAY MORNING WE WERE PUSHINGHIGHER. THIS MORNING WE ARE DOWN TWOBASIS POINTS. ON THE 10-YEAR DOWN A SINGLEBASIS POINT. LET'S WHICH OF THE BOARD ANDTURN TO FOREIGN-EXCHANGE AND CHECK OUT EURO-DOLLAR AND A BITOF DOLLAR-YEN.

ONE POINT — DOLLAR-YEN 150.54.ANOTHER DAY OF YEN WEAKNESS IN THE FACE OF THE FIRST INTERESTRATE HIKE BACK TO 2007. WE SHOULD DRAW THE DISTINCTIONBETWEEN ENDING NEGATIVE INTEREST RATES AND ENDING EASYMONEY. I'M NOT SURE THE BANK OF JAPANWANTS TO CALL AT THE END OF EASY MONEY. LISA:WHICH IS THE REASON WE ARE NOT SEEING MORE OF REACTION.KIT JUKES HAS THE BEST EXPLANATION.”THE FX MARKET THUMBS ITS NOSE AT THE BOJ AND HISTORY.”THAT IS WHAT WE ARE LOOKING AT.

THE FX MARKET THING YOU THINKTHIS IS A MOVE, CHECK OUT THE WORLD, YOU ARE SO FAR BEYONDYOU. JONATHAN: I LOVE THE TITLE OF HIS WORKYESTERDAY. SOMEONE TELL THE JAPANESE YENTHIS IS NOT A HISTORIC MOMENT. IF YOU LOOKED AT DOLLAR-YEN YOUWOULD HAVE NO IDEA WHAT HAPPENED IN JAPAN OVERNIGHT.IF YOU LOOKED AT DOLLAR-YEN HE WOULD HAVE NO IDEA WHETHERTHERE WAS A BOJ MEETING. LISA: WAS THIS THE GOAL FOR THE BANKOF JAPAN TO MAKE IT A SYMBOLIC MOVE AND NOT SOMETHING THATTIGHTENED MONETARY CONDITIONS?.

THEY DO NOT WANT TO ENTERANOTHER LOST DECADE OF GROWTH AND THAT WILL BE THEIR PRIORITYREGARDLESS OF WHAT THE REST OF THE WORLD IS DOING. JONATHAN: 100 50: — 150.52 ONDOLLAR-YEN. LIZ EVERETT KRISBERG SEEINGSIGNS LOWER INCOME SPENDING GROWTH IS SLOWING, SAYING “THISCOULD PARTLY REFLECT SOME LOSS OF MOMENTUM AT THE LOWER END OFTHE LABOR MARKET. HIRING SPENDING REMAINS WEAKBUT IS STRONGER AT THE TOP END.” WHAT IS HAPPENING WITH THE U.S.CONSUMER? WE CAN ASK LIZ.

THIS QUOTE FROM YOUR WORK.I HAVE LET THIS THREE OR FOUR TIMES.CAN I SHARE THIS WITH YOU? “MONTHLY MEDIAN VALUE OFSAVINGS AND CHECKING BALANCES ARE MORE THAN 40% HIGHER THAN2019 FOR ALL INCOME LEVELS.” YOU ARE LOOKING ACROSS 69MILLION CONSUMER AND SMALL BUSINESS CLIENTS.THAT IS NOT A TYPO. 40% UP? LIZ: WE HAVE BEEN WORKING AT THEBANK OF AMERICA FOR TWO YEARS TO LEVERAGE THE DATA TO TELUSUS REAL-TIME WHAT IS HAPPENING. THIS IS BEEN THE STATISTIC THATHAS SHOCKED ME BUT IT IS WHAT.

WE ARE SEEING.EVERYONE THOUGHT THE CONSUMER WOULD RUN OUT OF MONEY.THIS YEAR THE CONSUMER HAS BEEN VERY STABLE, KEEP IN THEIRCHECKING AND SAVINGS DEPOSITS 40% HIGHER THAN THEY WEREBEFORE THE PANDEMIC. JONATHAN: THAT IS NOT COMING DOWN, IT HASREMAINED STABLE. LIZ: IT IS COMING DOWN BY TENTHS OFPERCENT BUT IT HAS REMAINED 46 — HAS REMAINED 40% HIGHER.JONATHAN: HOW MUCH OF A CUSHION IS THATFOR THE U.S. ECONOMY? LIZ: THE PUSH AND IS NOT NECESSARILYON THE SAVING SIDE.

THE QUESTION HAS BEEN IN THELABOR MARKET FOR THE LOWER AND MIDDLE INCOME CONSUMER.WHAT WE LOOK AT IS THE ACTUAL MONEY COMING INTO THE ACCOUNT.THE AFTER-TAX WAGES AND INCOME GETTING DEPOSITED.WE SAW FOR LOWER INCOME CONSUMERS THE TICK BACK UP 3.4%.WHEN YOU SEE THE LABOR MARKET REMAINING STRONG, THERE IS NOTAS MUCH NEED TO DRAW DOWN ONTO THAT SAVINGS.YOU MENTIONED THE DIFFERENCE BETWEEN THE HIGHER INCOMECONSUMER AND THE LOWER INCOME CONSUMER.THE BIG DIFFERENCE THERE IS THE.

HIGHER INCOME CONSUMER ISGENERALLY ALSO PARTICIPATING IN THE MARKETS.EVEN THOUGH THERE WAGE GROWTH HAS BEEN NEGATIVE FOR QUITESOME TIME, THEY HAVE THE CUSHION OF EQUITY MARKETPERFORMANCE. LISA: SOME PEOPLE WOULD SAY THATSOUNDS GREAT, BUT THERE IS WEAKNESS UNDER THE SURFACE.IT COMES IN THE FORM OF LEVERAGE AND CREDIT AND WE'VESEEN CREDIT CARD OUTSTANDING'S GO UP SO MUCH, WE HAVE SEEN THEBY NOW, PAY LATER CUSHION. WHAT YOU SAY TO THAT? LIZ:HAVE WE SEEN DELINQUENCIES MOVE.

UP?YES, BUT NOT TO AN AREA WHERE PARTICULAR CONCERNED ABOUT.THE OTHER THING IS WHAT IS THE RATIO OF SPENDING PEOPLE AREPUTTING ON THEIR CREDIT CARD RELATIVE TO THEIR DEBIT CARD?THAT WOULD BE AN INDICATOR THOSE RATIOS ARE THE SAME.HE TALKED ABOUT BY NOW, PAY LATER AND THAT IS INTERESTINGTO CONSIDER. WHEN BY NOW, PAY LATER FIRSTCAME OUT IT DID BOOST RETAIL SPENDING FOR THE PEOPLE USINGIT. UP 40 PLUS PERCENT RELATIVE TONON-BUY NOW PAY LATER USERS.

WHAT IS THE POPULATION USING BYNOW PAY LATER? WHEN WE LOOKED AT OUR DATA,JUST UNDER 9% OF OUR CUSTOMERS MADE A PAYMENT. THAT NUMBER IS GROWING RELATIVETO LAST YEAR, BUT AT HALF THE PACE IT WAS. IT BY NOW PAY LATER GOING TO BETHE BOOST OF LESS THAN 10% OF PEOPLE ARE USING IT? LISA:NOTHING YOU'RE SAYING SPEAKS TO RECESSION OR WEAKNESS ORANYTHING CLOSE TO A MATERIAL SLOW DOWN IN SPENDING.IS THERE ANY HISTORIC COROLLARY.

TO THIS MOMENT SUDDENLY TURNINGSOUTH QUICKLY WITH THE LABOR MARKET THAT STILL LOOKS GOODAND PEOPLE HAVING THAT CUSHION? LIZ: WE KEEP LOOKING FOR THAT.WE ARE JUST NOT SEEING IT. IF WE WERE TALKING A YEAR AGO IWOULD'VE SAID RESILIENT, RESILIENT. THERE WAS NOTHING.WHAT WE ARE SEEING NOW IS NOT RECESSION ON THE HORIZON BY ANYMEANS, BUT THE CONSUMER IS SOFTER. THEY ARE STABLE.THEY ARE SOFTER AND STAYING THERE.LIKE THE DEPOSIT BALANCES THEY ARE STABLE.IF WE WERE HAVING THIS.

CONVERSATION A YEAR AGO, LOWERINCOME HOUSEHOLD DEPOSITS WERE UP 200%.THEY HAVE COME DOWN FROM THAT PEAK AND SPENT THE STIMULUS BUTTHEY ARE STABILIZING 40%. LABOR INCOME CONTINUING TOINCREASE. JONATHAN: YOU THINK THERE IS SPACE TOLEVER UP FOR THE CONSUMER? ANY TIME WE SEE SIGNS PEOPLESTART TO WORRY. EVERYTHING YOU'VE SAID ITSOUNDS LIKE WE HAVE SPACE TO DO THAT IN THIS ECONOMY. LIZ:I THINK EVERYONE IS LOOKING FOR THE CONSUMER TO ROLLOVER THEADVANTAGE WE HAVE AT THE.

INSTITUTE'S WE ARE LOOKING ATTHE DATA AS IT IS HAPPENING AND WE ARE NOT SEEING THE ROLLOVER.JONATHAN: WHAT ABOUT SMALL BUSINESSCLIENTS. IS THERE A DIFFERENCE? LIZ:SMALL BUSINESSES HAVE BEEN VERY RESILIENT AND BEHAVING VERYMUCH LIKE THE CONSUMER. I THINK THEY ARE LITTLE BITSOFTER THAN THEY HAVE BEEN. NOT ROLLING OVER.SMALL BUSINESS WAS SUCH AN ENGINE OF GROWTH THROUGH THEPANDEMIC AND CONTINUES TO BE. JONATHAN:IS IT ACROSS THE BOARD?.

WHAT ARE THE DIFFERENCES FROMSECTOR TO SECTOR? LIZ: THERE IS A GREAT QUESTION AND INEED TO COME BACK TO YOU ON THAT ONE. JONATHAN:WHEN I TALK ABOUT HOW RESTRICTIVE WE ARE A LOT OFPEOPLE POINT TO LARGE COMPANIES THAT CAN COME TO CREDIT MARKETSAND ISSUE DEBT. I WONDER IF SMALL BUSINESSESARE HAVING THE SAME EXPERIENCE BORROWING AS THEIR LARGERCOHORTS. LIZ: I THINK SMALL BUSINESSES AREBEHAVING LIKE THE CONSUMER IS IN THERE A GREAT ENGINE OFGROWTH.

WE CONTINUE TO LOVE DOINGBUSINESS WITH SMALL BUSINESS. THEY ARE DOING OK. LISA: TAKING A STEP BACK AS JAYPOWELL WAKES UP, WHAT ARE SOME OF THE FUNDAMENTAL STRUCTURESHIFTS HAVE BEEN THE ECONOMY TO ALLOW PEOPLE HAVE MORE CASH INTHEIR BALANCES. I WONDER HOW MUCH THE HOUSINGMARKET HAS TO DO WITH THIS. THE FACT THAT A LOT OF PEOPLEHAVE TO SAVE MONEY THEY WOULD THEN PUT AS A DOWN PAYMENT TO AHOUSE. THAT WAS THE MASSIVE PURCHASE.THE FACT THAT IS NOT SO MUCH ON.

THE TABLE BUT IT IS SODIFFICULT TO GET TO THIS MARKET, IS THAT WHY CASHBALANCES ARE SO PERSISTENTLY HIGH WHEN IN THE PAST THEYWOULD BE PUT TOWARD SOMETHING? LIZ: I DO NOT KNOW THAT THAT ISTRUE. YOU HAVE PEOPLE WHO ARE NOTNECESSARILY GETTING INTO THE HOUSING MARKET BECAUSE RATESARE WHAT THEY ARE. AT THE SAME TIME IF YOU ARE INA HOUSE YOU ARE NOT NECESSARILY MOVING.IF YOU LOOK AT RENTAL PRICES WE HAVE SEEN RENTAL PRICES INTERMS OF WHAT PEOPLE ARE.

ACTUALLY PAYING.NOT NECESSARILY WHAT IS BEING ADVERTISED IS GOING UP MONTHAFTER MONTH. IF YOU'RE IN A RENTAL APARTMENTYOU ARE IN THERE FOR THE YEAR. THE RENTAL PRICES ARE OK.ARE THEY INVESTING? NO. WHERE ARE THEY PUTTING THEMONEY THEY DO HAVE? THEY ARE IT INTO THE MARKET.LIZ: THIS — LISA:THIS BRINGS US FULL CIRCLE AND WE WERE TALKING ABOUT ASTRUCTURAL SHIFT WITH RETAIL INVESTORS ACCOUNTING FOR AGREATER PROPORTION OF THE.

OVERALL INVESTING BASE.HOW MUCH IS THAT A STRUCTURAL SHIFT THAT MATERIALLY CHANGESTHE BUSINESS OF BANKING IN SOME WAYS?ALL OF A SUDDEN PEOPLE HAVE MONEY AND INSTEAD OF PUTTING ITINTO A HOUSE THERE PUTTING IT INTO A MARKET AND LOOKING FORWEALTH MANAGERS? LIZ: THAT IS A REALLY GOOD QUESTIONAND ONE WE HAVE NOT LOOKED OUT AND ONE WE CONSIDER LOOKING ATACROSS THE BOARD FROM WHAT PEOPLE ARE DOING IN THECONSUMER BANK VERSUS HOW THEY ARE INVESTING? LISA:WHAT ARE YOU WATCHING FOR TO.

KNOW WHETHER THE CYCLE IS TRULYSHIFTING OR ROLLING OVER? LIZ: I FOCUS ON THE LABOR MARKET.THE LABOR MARKET IS THE DRIVER OF SPENDING AND HOW PEOPLE AREABLE TO ENGAGE AND IF WE CONTINUE TO HAVE A STRONG LABORMARKET, PARTICULAR IN THE LOWER END, WE WILL HAVE A CONSUMERTHAT CAN ENGAGE. JONATHAN: YOUR WORK IS FASCINATING.THANKS FOR SHARING THAT WITH US. LIZ EVERETT KRISBERG.JUST REPEAT THAT LINE. MONTHLY MEDIAN VALUE OF SAVINGAND CHECKING BALANCES ARE MORE THAN 40% HIGHER THAN 2019 FORALL INCOME LEVELS.

ISN'T THAT AMAZING? LISA:IT DEFIES WHAT EVERYONE HAS BEEN SAYING WHAT HAPPENED.THIS WAS SUPPOSED TO BE THE YEAR OF THE SHRINKING CONSUMERBALANCE SHEET. IT IS NOT HAPPENING.THAT HAS VAST IMPLICATIONS. IT IS THE REASON PEOPLE LOOKINGFOR SIGNS OF WEAKNESS IN THE LABOR MARKET THEY'RE HAVING AHARD TIME FINDING. IT GOES BACK TO MARK CABANA'SPOINT — OUR BONDS LISTENING TO THE STOCK MARKET? JONATHAN:LET'S GET YOU AN UPDATE ON STORIES ELSEWHERE.HERE IS SONALI BASAK. SONALI:.

U.S.LAWMAKERS REACHED A HANDSHAKE DEAL TO FUND THE GOVERNMENTTHROUGH SEPTEMBER 30. THE AGREEMENT COMES AFTER THESIDES RESOLVE THE DISPUTE OVER THE FUNDING OF THE DEPARTMENTOF HOMELAND SECURITY. LAWMAKERS WILL RACE TO PASS THEAGREEMENT BEFORE MIDNIGHT DEADLINE THAT WOULD LEAD TO APARTIAL GOVERNMENT SHUTDOWN. BITCOIN CONSIDERS ITS SLIDEFROM AN ALL-TIME HIGH AFTER A RECORD DAILY OUTFLOW FROM THEWORLD'S BIGGEST ETF. THAT WHEN HE $5 BILLION TRUST– THE $25 BILLION TRUST POSTED.

THE MOST OUTFLOW SINCE THE ETFBEGIN TRADING JANUARY 11. THE ETF'S HAVE ATTRACTED IN AT$12 BILLION WHICH HELPED PUSH BITCOIN TO A POINT OF $74,000.THE NVIDIA CEO HAS UNVEILED THE COMPANY SUCCESSOR TO ITS AIPROCESSOR. HE UNVEILED A — A PROCESSORMULTIPLE TIMES FASTER AT HANDLING THE COMPANY'S AIMODELS. >> THE INDUSTRY IS BEINGTRANSFORMED BECAUSE THE COMPUTER INDUSTRY — THECOMPUTER IS THE SINGLE MOST IMPORTANT INSTRUMENT OF SOCIETY.FUNDAMENTAL CHANGES AFFECTS.

EVERY INDUSTRY. SONALI:THAT IS YOUR BLOOMBERG BRIEF. JONATHAN:UP NEXT, THE FED'S NUMBER ONE PRIORITY. >> THE FED'S FOCUS WILL BE WHATTHEY WANT TO DO WITH THE OVERALL SETTING OF INTERESTRATE POLICY. ALONG TO THEY WANT TO KEEPRATES AT CURRENT LEVELS. HOW MUCH RESTRICTIVENESS ARETHEY COMFORTABLE INSERTING INTO THE ECONOMY? JONATHAN:THAT CONVERSATION IS UP NEXT. FROM NEW YORK CITY, THIS ISBLOOMBERG.

JONATHAN:STOCKS PULLING BACK SOMETHING LIKE .1%.NO DRAMA AHEAD OF THE FEDERAL RESERVE.IF YOU'RE LOOKING FOR DRAMA MAY BE YOU ARE LOOKING FOR TOKYO TODO SOMETHING AND THEY DID. WILL BE CURIOUS WHEREDOLLAR-YEN IS OFF THE BACK OF THAT. 150.53. YEN WEAKNESS.THAT PRINCI PAY OR BREAKING OUT ANOTHER .9%.IT IS AN INTEREST RATE HIKE. LISA:THEY TALKED ABOUT WEAKNESS FROM.

OTHER ECONOMIES IN THE REGIONAND THEY ARE TALKING ABOUT THE POTENTIAL FOR THAT KEEPINGPRICE PRESSURES UNDER CONTROL. THE BOTTOM LINE IS NO ONE ISEXPECTING THIS TO BE A RATE HIKING CYCLE WHICH IS THEREASON PEOPLE ARE NOT RESPONDING. JONATHAN: THIS WILL TAKE TIME.THIS DOES NOT JUST HAPPEN OVERNIGHT.THE BANK OF JAPAN WILL SAY WE WORKED ON THIS FOR 17 YEARS,LET'S START HIKING INTEREST RATES. THIS WILL TAKE TIME.THIS IS THE FIRST MOVE OF HOW.

MANY MOVES? JONATHAN: IT IS NOT THE END OF EASY MONEYYET. IT MIGHT BE THE BEGINNING OFTHE END. UNDER SURVEILLANCE, THE FED'SNUMBER ONE PRIORITY. >> FEDERAL FOCUS WILL BE WHATTO THEY WANT TO DO WITH OVERALL INTEREST RATE POLICY, HOW LONGTO THEY WANT TO KEEP RATES AT CURRENT LEVELS, AND HOW MUCHRESTRICTIVENESS ARE THEY COMFORTABLE INSERTING ON THEECONOMY? THOSE ARE THE BIG QUESTIONS.THE MARKET'S RIGHT TO FOCUS ITS.

ATTENTION ON THE DOT PLOT,KEEPING THE BALANCE SHEET SECONDARY BUT SLOWING QT.THAT IS THE NUMBER ONE PRIORITY THEY HAVE. JONATHAN:THE FED RATE DECISION TO OUT AT 2:00 EASTERN.THE MARKET IMPLIED ODDS OF A JUNE RATE CUT FALLING BELOW 50%.BANK OF AMERICA UPGRADING THE OUTLOOK FOR U.S.EQUITIES DRIVEN BUYING UPGRADE TO SMALL CAPS.MARCY MCGREGOR ANTICIPATING SOME CHOPPINESS ASCROSSCURRENTS, INCLUDING THE FED ADJUSTING POLICY BUTOVERALL AND UPWARD TREND.

I AM PLEASED TO SAY THAT MARCIJOINS US FOR MORE. WE CAUGHT UP WITH MARK CABANAAND HE RAISED AN INTERESTING POINT. HOW RELEVANT ARE HIGHERINTEREST RATES TO THE MARKET GIVEN HOW LITTLE EQUITIES HAVEMOVED BACK? MARCI: I THINK INTEREST RATES WILL BEREALLY IMPORTANT FOR THE SMALL CAPS SPACE.AS LONG AS INTEREST RATES STAY REASONABLE THEY ARE REASONSSMALL CAPS CAN SHINE. VALUATIONS HISTORICALLY CHEAPER.BIG PICTURE THEMES LIKE RE-SHORING AND INFRASTRUCTUREDEVELOPMENT THAT WOULD ALL.

BENEFIT SMALL CAPS.INTEREST RATES NEED TO STAY AT A REASONABLE LEVEL AND THAT CANLEAD TO AN EXTENDED PERIOD OF SMALL-CAP OUTPERFORMANCE. LISA:DEFINE REASONABLE? MARCI: OUR VIEW IS INTEREST RATESREMAIN SIDEWAYS. I KEEP TALKING TO CLIENTS ABOUTWHAT MATTERS TO THE MARKET AND WHAT IS JUST NOISE.ONE OF THE TWO THINGS THAT MATTERS IS THE EVENT.THE OTHER IS EARNINGS. LISA: STICKING WITH THE FED BECAUSEAT SOME POINT JAY WILL BE GETTING OUT OF BED. JONATHAN:YOU ARE REALLY FOCUSED ON THAT.

LISA: YOU THINK HE GETS NERVOUS?JONATHAN: 6:30 IN NEW YORK IS LIKE 4:30IN WASHINGTON DC THEY ARE HOURS BEHIND US. LISA:THERE IN THE SAME TIME ZONE. WHAT TO MAKE YOU REASSESS YOURTHESIS IN SMALL CAPS? MARCI: WHEN I THINK ABOUT WHAT MATTERSFROM THE FED IT WILL BE HOW CLEAR IS THE COMMUNICATIONTOMORROW. HOW TRANSPARENT WILL FELT –HOW TRANSPARENT WILL POWELL BE. THE RISK OF CUTTING TOO SOONVERSUS THE RISK OF CUTTING TOO TIGHT FOR TOO LONG.HE WILL TRY TO TAKE THIS.

BOUNCED VIEW.THE RATIONALE FOR WHY THEY CUT RATES WHEN THEY DO.ARE THEY RECALIBRATING POLICY OR ARE THEY CUTTING RATESBECAUSE THE ECONOMY IS SLOWING? THE MESSAGING IS ALMOST MOREIMPORTANT THAN WHETHER IT IS JUNE OR JULY OR WHAT THE EXACTTIMING IS. JONATHAN: AT THE MOMENT THEY APPEAR TO BEPUSHING BACK THE TIME. WE HEARD FROM NEIL DUTTAYESTERDAY. NOMINAL GDP IS SOLID WHICH IS AREASON TO LIKE EQUITIES. YOU LIKE THE U.S.OVER INTERNATIONAL.

WHY RETAIN THAT BIAS TO AMERICA?IS IT A RISK WE ARE NOT DOING TOO WELL? MARCI:HERE IN THE U.S. WE SEE SO MUCH RESILIENCY INEARNINGS. WE ARE STARTING TO SEE THEROTATION UNDER THE INDEX LEVEL. THAT IS DRIVEN BY EARNINGSPICKING UP. THAT IS REALLY IMPORTANT TO THEU.S. STORY. IF YOU LOOK OUTSIDE THE U.S.,YOU'VE PARTS OF EUROPE FLIRTING WITH RECESSION.CHINA HAS BEEN CAUTIOUS IN TERMS OF EASING AND STIMULATINGTHE ECONOMY.

THERE IS MORE EXCITING STORY OFRESILIENCY AND EARNINGS GROWTH. THE EARNINGS PATH MAY BE SLOWIN THE U.S. BUT I THINK THE TREND ISIMPROVING. JONATHAN: ENERGY, HEALTH CARE,DISCRETIONARY, INDUSTRIALS. HOW DO ENERGY AND DISCRETIONARYWORK? ENERGY BREAKING OUT RECENTLY.BRENT CRUDE CLOSER TO $90 A BARREL.HOW DO YOU RECONCILE YOUR VIEW ON ENERGY WITH DISCRETIONARY?MARCI: WE HAVE BEEN ADDING CYCLICALITY.ON THE ONE HAND WE LIKE ENERGY.

ENERGY HAS PERKED UP WITH WTIOVER $80 AND THAT IS STILL A PRETTY REASONABLE LEVEL FOR OILPRICES. I LIKE ENERGY FOR A COUPLE OFREASONS. IT IS INEXPENSIVE IN TERMS OFFREE CASH FLOW AND IN TERMS OF EARNINGS.I ALSO THINK IT PROVIDES YOU A LITTLE BIT OF A WAY TO POSITIONFOR A WORLD WHERE ENERGY SECURITY IS AN ISSUE.RED-HOT GEOPOLITICAL WORLD. WE JUST HEARD FROM LIZ ON THECONSUMER. WE HAVE A CONSUMER THAT ISLARGELY STABLE.

OUR DATA SHOWS THE CONSUMER'SON TWO FEET. WE ARE SEEING NORMALIZATIONS INSPENDING PATTERNS BUT I THINK YOU HAVE A STRONG LABOR MARKETAND AS STRONG AS LABOR MARKET STAYS THE CONSUMER WILL GO WITHIT THAT LEADS TO AN OPPORTUNITY FOR DISCRETION. JONATHAN:LET'S DEAL WITH HEALTH CARE. TRADITIONALLY THAT WOULD SOUNDDEFENSIVE BUT HEALTH CARE IS A COUPLE OF NAMES.I'M TRYING TO WORK OUT WHEN YOU SUGGEST HEALTH CARE, ARE YOUSAYING MORE BROADLY SOMETHING ELSE IS HAPPENING? MARCI:.

I THINK MORE BROADLY IT IS ATCROSSROADS OF INNOVATION AND TECHNOLOGY AND HEALTH CARE ANDWELLNESS AND ALL OF THESE THINGS.I ALSO THINK HEALTH CARE GIVES ME A NICE MIX OF QUALITY.IT GIVES ME A LITTLE BIT OF A BUFFER WITH THE UPS AND DOWNSOF GROWTH AND CAN WITHSTAND MACRO PRESSURES.YOU MENTIONED ATLANTA FED GDP IS SHOWING SOME SLOWING, SOMEMODERATION IN GROWTH WHILE THE ECONOMY STAYS STRONG.I THINK IT COMES OFF THE BOIL IT HAD BEEN ON. LISA:,CHIP THE GAINS IN THE SECTORS.

ARE DRIVEN BY NVIDIA?I SAY THIS BECAUSE YESTERDAY THERE WAS A CONFERENCE WHERETHEY ANNOUNCED A BIGGER AND BETTER CHIP THAT COST TWICE ASMUCH. I WONDER IF YOU WILL LEVERAGETHE GAINS IN PRODUCTIVITY IN YOUR PORTFOLIO, WHY NOT JUSTTHREE TIMES LEVER NVIDIA SHARES? MARCI:WE ALREADY SAW THE MAGNIFICENT SEVEN GO TO THE FANTASTIC FOUR.YOU ARE SEEING A BROADENING AND THEY'LL BE THE STORY FOR THEREST OF THE YEAR. SO MUCH ENTHUSIASM ABOUTARTIFICIAL INTELLIGENCE, BUT AS.

WE SAW IT IS ABOUT REAL DEMANDAND THE FOLLOW-THROUGH. THAT IS THE STORY FOR 2024,WHAT IS NEXT FOR ARTIFICIAL INTELLIGENCE.THERE CAN BE SO MANY BENEFICIARIES.80% OF THE S&P IS TRADING ABOVE THEIR 200 DAY MOVING AVERAGE.THAT GETS ME EXCITED THIS ROTATION MAY HAVE LEGS. LISA:WHAT IS THE BUFFER ASSET CLASS? IS IT CASH OR IS IT STILL BONDS?MARCI: IT WAS A VIEW OF ADDING RISK ONTHE EQUITY SIDE OR BEING INVESTED, NOT OF YOU ABOUTBONDS.

WE STILL LIKE HIGH QUALITYFIXED INCOME. WE WOULD BE SLIGHTLY BEYONDBENCHMARK DURATION. FIXED INCOME IS PROVIDING REALYIELDS AND DIVERSIFICATION. LISA:YOU SAID GEOPOLITICS CONCERNS YOU.WHERE DOES THAT COME INTO PLAY? MARCI: INDUSTRIALS, DEFENSE.ESPECIALLY INTERNATIONAL DEFENSE SPENDING, THAT IS LESSOF U.S. STORY AND MORE IF WE LOOK ATTHE REST OF THE WORLD DEFENSE BUDGETS WILL BE RISING AND ITHINK WE ARE IN THE EARLY.

INNINGS OF DEFENSE ANDCYBERSECURITY. JONATHAN: TO WRAP THINGS UP, BANK OFAMERICA PRIVATE BANK, YOU DO NOT THINK WE SHOULD BE THREETIMES LEVER NVIDIA. BRAMO GETTING EXCITED ABOUT THEBIG SINGLE NAME TRADES. LISA: THIS IS WHAT PEOPLE WERE DOING.DID YOU SEE WHAT THE OPTIONS MARKET WAS DOING AROUND NVIDIA?JONATHAN: ALEX WEBB OF BLOOMBERG SAYS ITFEELS LIKE THE NEW APPLE CONFERENCE GET TOGETHER. LISA:ON STEROIDS. JONATHAN: GOOD TO SEE YOU.MARCI MCGREGOR THERE.

CLEARLY THAT WAS A NO.NEXT, WILL BE CATCHING UP WITH BRIAN MOYNIHAN, CHAIRMAN ANDCEO OF BANK OF AMERICA AND WE'LL WILL CATCH UP WITHCANDACE BROWNING AND WENDY STEWART.THAT IS A STACKED 60 MINUTES AT BANK OF AMERICA. LISA:I AM LOOKING FORWARD TO IT . I ALSO ENJOYED BEINGEVERYBODY'S DIFFERENT HOMES WHERE YOU HEAR THE DIFFERENTNOISES AND UNDERSTAND WITH THEIR ENVIRONMENT IS. JONATHAN:WHAT YOU MEAN THE DIFFERENT NOISES? IT IS NICE TO HEAR THEBLOOMBERG TERMINAL.

LISA: IS ENJOYABLE. JONATHAN: THAT IS MUSIC TO MIKE'S EARS.IT IS A BEAUTIFUL THING. THAT IS THE ALARM IN THEMORNING. THE SECOND HOUR OF “BLOOMBERGSURVEILLANCE” IS UP NEXT. ♪ >> THIS RALLY IS ALL BIG TECH.IT HAS BEEN BROADENING OUT A LITTLE BIT BUT VERY EARLY DAYS. >> IN TERMS OF GETTING MOREBULLISH ON THE EQUITY SIDE, WE WILL HAVE TO SEE SOMEBROADENING.

>> THE MAG7 SIDE, THEY WEREDOWN LAST YEAR, THE THINK THEY WILL BE UP. >> THERE IS A BROADENING OUTHAPPENING IN THE MARKET AND I LIKE THE CYCLICAL STRENGTH. >> THIS IS A FAVORABLEOPERATING ENVIRONMENT FOR CORPORATE AMERICA. >> THIS IS “BLOOMBERGSURVEILLANCE” WITH JONATHAN FERRO, LISAABRAMOWICZ, AND AN REORDERING. JONATHAN:MAYBE IT IS A COINCIDENCE THAT.

BRIAN ARRIVED AND EVERYTHINGGOT VERY BUSY. LISA: HE DID POINT OUT THAT SOMEMAYBE WORK IN EARLY ENOUGH. JONATHAN:FROM NEW YORK CITY, GOOD MORNING.THE SECOND HOUR OF “BLOOMBERG SURVEILLANCE” BEGINS RIGHT NOW.THE S&P 500 SOFTER THIS MORNING. THE TERM OF THE — THE THEME OFTHE FIRST HOUR RIGHT HERE, THIS ECONOMY IS LOOKING RESILIENTBASED ON WHAT WE HAVE SEEN SO FAR. LISA: BULL BULL BUL. IT WAS INCREDIBLY BULLISH.MAYBE IT IS NOT STOCKS NOT.

LISTENING TO BONDS, IT IS BONDSNOT LISTENING TO STOCKS. JONATHAN:WE HAVE SAID THIS A FEW TIMES. THE START OF THE YEAR WE WERETALKING ABOUT SIX RATE CUTS IN 2024, THE MARKETS COMING DOWN,THE FEDERAL RESERVE TAKES IT FROM THREE TO TWO.THE FRONT END OF THE YIELD CURVE AROUND 4%.EQUITIES, SUPER CALM. AS LONG AS THEY REMAIN CALM ANDSPREADS REMAIN TIGHT, DOES THAT OPEN THE DOOR FOR YIELDS TOPUSH HIGHER? LISA: WE HAVE ASKED THIS QUESTION TOPEOPLE WHO HAVE LED TO SMALL.

BUSINESSES AND SAID IS ITDIFFICULT FOR THEM TO PAY BACK INTEREST RATES WHERE THEY ARE?THE ANSWER, NO. IS IT JUST SURVIVE UNTIL 2025OR IS THIS A NEW REALITY WHERE MARCHES ARE INCREASED ANDINFLATION HAS BEEN BENEFICIAL FOR BUSINESSES THAT CAN CHARGEMORE? JONATHAN: WE WILL GET INTO THAT NEWREALITY IN A MOMENT. LET'S START WITH SOME PRICEACTION. EQUITY FUTURES ON THE S&P 500SOFTER, NEGATIVE ON THE S&P, DOWN BY 0.1%.

FOREIGN EXCHANGE, THE BOJ DIDHIKE INTEREST RATES FOR THE FIRST TIME SINCE 2007.WHO WOULD HAVE THOUGHT THAT EVENT WOULD BE A SNOOZER.DOLLAR HAVE BEEN YEN BREATHING OUT BY ALMOST ANOTHER FULL PERCENTAGE POINT TO — LISA:THEIR DISABLED THE ARDENNES WITH NEGATIVE INTEREST RATEPOLICIES. THEY ARE STILL PUTTING APRIORITY ON GETTING INVASION OF TO 2%, NOT DOWN TO 2%.JONATHAN:.

THE STRENGTH YESTERDAY COME ONTHE REVIEW TODAY. BRIAN MOYNIHAN, THE CHAIRMANAND CEO ON THE OUTLOOK FOR THE BANK OF AMERICA.CANDACE BROWNING-PLATT AND WENDY STEWART, THE PRESIDENT OFGLOBAL COMMERCIAL BANKING. WE BEGIN WITH OUR TOP STORY.THE S&P 500 SNAPPING A THREE-DAY LOSING STREAK ASINVESTORS BEGIN TO TURN THEIR ATTENTION FROM JENSEN TO JAY.JOINING US NOW, BRIAN MOYNIHAN, CEO AND CHAIRMAN OF BANK OFAMERICA. WE HAVE TO SAY THANK YOU FORHAVING US. BRIAN:.

THESE TALENTED TEAMMATES AREOUT HOPEFULLY MAKING MONEY FOR THE SHAREHOLDERS. JONATHAN:IT IS GETTING NOISY. WE CAN TALK ABOUT HOW MUCHTHEY'RE MAKING IN A MOMENT. I WANT TO START WITH A CLOSE –WITH A QUOTE. I FIND THIS STUNNING EVERY TIMEI READ IT. “MEDIUM VALUE OF CHECKING ANDSAVING BALANCES ARE MORE THAN 40% HIGHER THAN 2019.”JUST HOW RESILIENT IS THIS ECONOMY STILL? BRIAN:LIZ AND THE TEAM DO A GOOD JOB PUTTING THIS OUT AND WE CREATEDTHE INSTITUTE SO WE CAN GET.

THIS DATA OUT.IT IS A REFLECTION ON WHAT YOU SEE IN THE PAST. 60 MILLIONPLUS CUSTOMERS, 37 MILLION CHECKING ACCOUNT CUSTOMERS. WE WERE SITTING HERE LAST YEARTHIS TIME, WE WOULD BE TALKING ABOUT OUR TEAM PREDICTING ARECESSION SOMETIME EARLY THIS YEAR. THEY TOOK THAT OFF OF THETABLES. NOW THEY ARE BUT ACTING GROWTHTHIS QUARTER. YOU'VE GONE FROM NEGATIVE TOSLIGHTLY POSITIVE. THAT IS RETURNING TO THE MEAN.IT IS NOT AS AS GROWTH, IT IS.

SLOWING DOWN SO PEOPLE CANFORGET WE'RE GOING FOR MY 4% TO 5% GROWTH RATE TO A — PERCENTGROWTH RATE IS LOW DOWN. THE CONSUMER IS VERY RESILIENTAND THAT IS PROVIDING AN ANCHOR. THE FED IS PROVIDING LATITUDE ALOT OF PURSES DON'T HAVE SO THEY CAN BE RESTRICTIVE AND LETTHE ECONOMY CATCH UP. THEY HAVE TO BE MINDFUL OF THECHANGE. THEY HAVE SLOWED DOWN THEIRSPENDING. LAST YEAR IT WOULD HAVE BEEN TOPERCENT GROWTH AND THIS YEAR IN THE FALL IT IS 5% AND NOW DOWNTO 3% TO 4%.

THIS IS THE TENSION WE ARE IN,THIS RESILIENT ECONOMY. ACTUALLY TRYING TO BRINGINFLATION DOWN. MOST CENTRAL BANKS ARE TO GETINFLATION UP. IT'S A DIFFERENT EXECUTION.JONATHAN: YOU ARE DOMINANT IN SMALLBUSINESS LENDING, I WONDER HOW MUCH CONFIDENCE THERE IS ANYCORPORATE AMERICA AT THE LOWER LEVEL AND SMALLER COMPANIESACROSS THIS COUNTRY? BRIAN: IT IS STRONG. LINE USAGE HAS COME DOWN A BITWHICH MEANS THE COST OF.

BORROWING WENT UP AND THEREFOREI AM A BIT MORE CAREFUL. EQUIPMENT PURCHASES, MORECAREFUL. THEY ARE FINE MAKING MONEY ANDTHE PROPHETS ARE STRONG AND THE TEAM TALK ABOUT PROFITS DRIVINGTHIS MARKET, EVEN MIDSIZE COMPANIES.THE AMERICAN ECONOMY IS THE DOMINANT ECONOMY IN TERMS OFACTIVITY AND INTEREST AND INVESTMENT AND LOTS OF GOODTRENDS. WHERE ARE THEY USING THE LINESO MUCH? IT IS MORE COSTLY. THAT IS THE TENSION WE'RE GOINGTHROUGH, TRYING TO FIGURE OUT.

HOW THIS ECONOMY WILL PERFORM.FOUR MONTHS AGO PEOPLE WERE WORRIED ABOUT RECESSION.NOW THEY ARE NOT. DO THEY REALLY WANT TO INVESTHEAVILY IN IT? THAT IS WHERE YOU SEE TENSION.EVERYTHING IS FINE. IT HAS TO WORK THE NEXT TWISTIN THE ECONOMY. LISA: THE PEOPLE WORK FROM YOU — FORUSE OUT INCREDIBLY BULLISH. VISIT YOUR JOB TO LOOK AROUNDCORNERS AND SEE WHAT POTENTIALLY COULD BE THEPROBLEM? OTHERWISE THINGS ARE SUGGESTING4.5% 10 YEAR RATES WILL BE JUST.

FINE FOR THE ACTIVITY. BRIAN:YOU WERE SEEING WE ARE ADJUSTING AS A COMPANY AND ANINDUSTRY AND A SOCIETY TO A SIMPLE THING. FROM 2007 OR 2008 UNTIL 2017,YOU HAD NO INTEREST RATE. AND THEN.YOU HAD AN INTEREST RATE. AND THEN DROPPING RATES.AND THEN COVID SO THEY DROP. WE HAVE NEVER HAD A NORMALINTEREST RATE ENVIRONMENT. IN SLOPING CURVE, A REALINTEREST RATES — IT IS NOT OCCURRED FOR ANYBODY UNDER 40.THEY LITERALLY WEREN'T WORKING.

THAT SOUNDS CURMUDGEONLY BUTTHAT IS TRUE. EVERYBODY IS ADJUSTING SO THESEHYBRIDS AT 4.5% ARE NOT HYBRIDS IN THE GRAND SCHEME OF THINGS,HIGH RATES IN THE LAST 15 YEARS. WE HAVE TO ADJUST TO THAT ANDTHAT WILL TAKE TIME. OUR TEAM IS THE BEST TEAM INTHE WORLD AND YOU WILL HEAR A LOT FROM THEM IN THE DAY.AS YOU LOOK MORE BROADLY, MY JOB AND THE TEAM'S JOB IS TOMAKE SURE WE ARE BALANCED FOR ALL OUTCOMES.THAT IS WHY WE ARE READY BY TOMORROW. LISA:THE BALANCE IS LEADING TO SOME.

FRUSTRATING — FRUSTRATED BOARDTRADERS. A LOT OF PEOPLE SAY THERE'S NOTA LOT TO DO BECAUSE YOU CANNOT GET AN EDGE.ARE YOU SEEING THAT IN TRADING REVENUES, PEOPLE HAVE NOINCENTIVE OTHER THAN TO HOLD NVIDIA, HOLD ON TO THE CREDITTHAT KEEPS ON READING AND MAKE BANK? BRIAN: OUR TEAM HAS COME OFF OF LASTYEAR A RECORD AMOUNT OF REVENUES.WE THINK THEY ARE GOING TO FAREWELL THIS QUARTER.THE TEAM THAT IS OUT HERE, THE.

RESEARCH TEAM UNDER CANDACE ANDINVESTMENT BANKING TEAM ARE DRIVING THE BUSINESS IN GAININGSHARE. INVESTMENT BANKING, WE GAINSOME SHARE THERE. WE ARE ACTUALLY UP AND THAT ISDIFFERENT IN THIS BUSINESS. THEY MADE MONEY EVERY TRAININGDAY LAST YEAR. THEY DO IT THE RIGHT WAY.IS THAT WORK OR NOT? YOU'LL — IS THAT BORING OR NOT?YOU WILL HAVE TO ASK THEM. THAT ABILITY TO KEEP DELIVERINGFOR CLIENTS AND MAKE MONEY AT IT. JONATHAN:.

HAVE YOU OBTAINED — HAVE YOUMAINTAINED THAT MOMENTUM FROM THE FOURTH QUARTER? BRIAN:WE THINK THIS QUARTER STARTED OFF WELL.WHEN YOU GET BIGGER AND BIGGER, IT IS HARDER TO GET THAT GROWTHGOING. JONATHAN: CAMTEK ABOUT THE M&A SLUMP?– CAN WE TALK ABOUT THE M&A SLUMP?OUR WORKING AWAY OUT OF THAT? WE TALKED ABOUT A BIG DEAL ATTHAT TYPE ABOUT IT THEY COULD CLOSE IT OR NOT BECAUSE OFANTITRUST. ARE YOU LOOKING TO EXIT THE SLUMP THIS YEAR?ANNMARIE: — BRIAN:.

UNTIL THERE IS A CLARITY ONPOLICY, THAT QUESTION IS GOING TO COME UP EVERY TIME A DEAL.IS ANNOUNCED. THE COMPANIES ARE TRY TO FIGUREOUT STRATEGIC MOVES. THEN THE QUESTION IS CAN THEDEAL GET THROUGH. WE NEED TO GET THIS RESOLVEDAND HAVE A MORE RATIONAL PREDICTED OUTCOME TO HAVE FOURPEOPLE TO PUT THEIR COMPANY AT RISK FOR THE SELL SIDE.THAT COMES OUT OF OF THE BUYERS SO PUT THEMSELVES AT RISKBECAUSE THE COMPANY HANGING IS A TOUGH TASTE TO BE — A TOUGHPLACE TO BE.

HAVING BEEN THERE AND CAUSEPEOPLE TO BE THERE, IT IS A TOUGH PLACE.WE NEED TO GET A FASTER TURNAROUND.THE IDEA IS THESE TRANSACTIONS DON'T CHANGE THIS MUCH FROMMONTH OR YEAR FROM NOW. PEOPLE NEED TO LOOK AFTER THEMAND DECIDE WHAT THEY'RE GOING TO DO AND GET CLARITY.THE GOOD NEWS IS INVESTMENT BANK REVENUES HAVE STABILIZED.THAT IS GOOD. THE M&A PIECE IS A PIECE THATCOULD COME UNDER PRESSURE. JONATHAN:YOU FIND RELUCTANCE TO MAKE.

DEALS BASED OFF OF WHAT YOUSAID? BRIAN: 100%. JONATHAN: THEY DON'T WANT TO ATTEND THECONVERSATION? BRIAN: NOT EVERYBODY HAS DISTINCTPOWER TO FIGHT FLUTE — FIGHT THROUGH LAWSUITS AND THINGSLIKE THAT. IF YOU SAID YOU NEEDED 10POINTS STRATEGIC IMPORT OUT OF 10, YOU MIGHT NEED 74.YOU MIGHT SAY THIS IS WORSE HANGING ON TO.THAT IS A DIFFERENT ENVIRONMENT. YOU ARE SAYING DEALS ANNOUNCEDAND THAT IS BECAUSE THEY MAKE STRATEGIC SENSE FOR THAT BUYER.

IT HAS BEEN SLOWING THINGS DOWNAND THERE IS RATIONALITY HERE AND AROUND THE WORLD.NONE OF THESE DEALS ARE SIMPLE. THE END OF THE DAY,CONSOLIDATION COMES BECAUSE STRATEGIC IMPORT AND YOU HAVETO LET CAPITALISM RUN. LISA: LET'S TALK ABOUT THE POLICYSHIFT WHICH IS A GENTLE ALLUSION TO THE ELECTION LATERON. THEY COULD OFFER MORE CERTAINTY.WHAT OTHER M&A BOOM COULD YOU SEE AFTER THAT CERTAINTY HASBEEN ESTABLISHED? BRIAN: WE WILL SEE.ELECTIONS ARE ELECTIONS.

THIS COMPANY HAS BEEN AROUNDSINCE 1784 AND THERE HAVE BEEN A LOT OF ELECTIONS SINCE THATTIMEFRAME. DO YOU HAVE A DRAWER FROM 1 –A DRAWER FOR ONE OUTCOME, THE ANSWER IS NO.WE RUN THE COMPANY AND DRIVE IT. THE ELECTION PROCESS AROUND THEWORLD, WE KNOW WHAT WE ARE DEALING WITH AND GO ON.WE HAVE TO BE CAREFUL TO SAY ONE THING LEADS ONE WAY.POLITICIANS HAVE TO GET THINGS RIGHT FOR THE STATE OF THEECONOMY. THEY ARE ALL STRUGGLING WITH IT.LISA: WE TALKED TO A LOT OF.

STRATEGISTS AND THEY SAY NO ONECAN QUITE BELIEVE IT IS TRUMP VERSUS BIDEN AGAIN.THEY ARE TRYING TO FIGURE OF WHO IT IS REALLY GOING TO BE.IS IT GOING TO BE YOU? BRIAN: ME WHAT? LISA:RUNNING FOR OFFICE. THESE ARE THE THINGS THAT ARECOMING UP. BRIAN: I HAVE A GREAT JOB HERE. LISA:[LAUGHTER] JONATHAN: I HAD A FEELING. BRIAN: AT THE END OF THE DAY, OURCOLLEAGUES IN THEIR SHIP ACROSS ALL INDUSTRIES IS TO HELP ANYADMINISTRATION BE SUCCESSFUL.

AND THAT IS WHAT WE TRY TO DO.THOSE ARE TOUGH JOBS. I DON'T THINK I AM RUNNING FOROFFICE. I THINK I HAVE A GREAT JOB HEREAND I HAVE GOT TO CONTINUE TO DO IT AND HELP THIS TEAM ANDEVERYBODY BE BETTER. JONATHAN: THERE HAVE BEEN SOME FIRES TOPUT OUT IN THE INDUSTRY, ONE YEAR SINCE SVB FAILED.IT SEEMS LESS SUGAR WAS A RATE SHOCK AND THIS YEAR WORRIESABOUT A CREDIT SHOCK. HAVE YOU SEEN ANY POSITIVELIGHT FROM REGIONAL BANKS AND AND SHAPE? BRIAN:THERE HASN'T BEEN THE KIND OF.

CHANGE THAT WAS LAST YEAR –KIND OF CHANGE THERE WAS LAST YEAR.THEIR UNIQUE BUSINESS MODEL IS NOT INVOLVED.WE SEE A LOT OF FLOW. THE INDUSTRY ISWELL-CAPITALIZED, HAS GOOD LIQUIDITY.FROM LAST YEAR TO THIS YEAR, PEOPLE SHORED UP LIQUIDITY.COMMERCIAL REAL ESTATE IS A SLOW BURN. IT IS A CLASSIC BURN.WE HAD A ROLLING COMMERCIAL REAL ESTATE RECESSION.THERE WILL BE DIFFICULTIES. THE TRADING ATTITUDE ISN'T THEWAY THE BANKING SYSTEM WORKS.

THAT IS THE VALUE OF THEBANKING SYSTEM. WE WORK WITH CLIENTS COMEDIC ABUILDING AND FIGURE OUT WHAT THE ULTIMATE MENTAL WALLSPROVIDE, YOU REFINANCE IT. SOMETIMES THAT WIPES OUT THEEQUITY. THE TOP 30 BANKS GO TO THESTRESS TEST WHICH IN EFFECT SAYS IF YOUR UNDERWRITING THISIF YOUR UNDERWRITING IN ANY WAY, YOU PROVE IT RIGHT BEFOREYOU GET A CHANCE. THE CAPITAL REQUIREMENTSREFLECT YOUR UNDERWRITING TODAY EVEN THOUGH RECESSION MAY NEVERCOME.

IT REFLECTS YOUR UNDERWRITINGCOMMITMENTS IN AN AREA WHERE COMMERCIAL OR THE STATE DROPSINSTANTANEOUSLY — PERSONAL OVER THE DROPS INSTANTANEOUSLY.THERE IS ANY EFFECT WHICH IS MUCH MORE BUILDING AND SLOWDOWN THE CAPITAL PROVISION TO THESE COMPANIES BUT ON THEOTHER HAND IS NOT A BAD THING. WE FEEL VERY GOOD.DOES THAT MEAN BANKS MIGHT FAIL? THERE HAVE BEEN THOUSANDS OFBANKS THAT FAILED. BUSINESS MODELS CHANGE.THE QUALITY OF THE BANKING SYSTEM IS STRONG. JONATHAN:IN SWITZERLAND, WE TALKED ABOUT.

THE CHANGE IN CAPITAL RESERVERULES. CHAIRMAN POWELL APPEARS TO BACKAWAY FROM THAT. WHAT IS YOUR REACTION TO WHATCHAIRMAN POWELL HAS SAID? BRIAN: WE BELIEVE WE HAVE TREMENDOUSAMOUNTS OF CAPITAL LIQUIDITY. THE STRESS TEST, WE DON'T NEEDTO KEEP MOVING THE RULES AROUND. AS PEOPLE LOOK AT THIS ARE SENTWHAT IS THE REASON. THE U.S. BANKING SYSTEM AND THE U.S.ECONOMY COEXIST IN THE U.S. ECONOMY HAS GROWN FROMPRE-FINANCIAL CRISIS. THE EUROPEAN ECONOMY IS GROWINGLESS. THE U.S.

ECONOMY IS MORE VIBRANT.IT HAS RECOVERED FASTER. EVERYBODY SAYS THAT IS BECAUSEX, Y, OR C. BUT THAT IS BECAUSE CAPITALISMIN A COUNTRY IS GOOD AND THE KIND OF BANKING SYSTEM HELPSTHAT HAPPEN. WE HAVE WEATHERED STORMS. SINCEEARLY 2000 WE HAVE HAD A PANDEMIC, RECOVERY FROMPANDEMIC , THE FASTEST RISE IN INTEREST RATES — RISE ININTEREST RATES, TRADES DEBATES AROUND THE WORLD, SHIPPINGRESTRICTIONS, ALL OF THIS. THE SHIPPING INDUSTRY MADE $1BILLION AFTER-TAX AND BUILD.

HUGE RESERVES.WE DEALT WITH THE PANDEMIC. A FLOOD OF DEPOSITS, SOME OFTHOSE CAME OUT. THAT IS THE RESILIENCY OF THISSYSTEM AND THAT IS WHERE WE HAVE TO BE CAREFUL ABOUT ADDINGCAPITAL. LISA: THERE HAS BEEN A SHIFT IN TERMSOF CONSOLIDATION OF MARKET SHARE IN THE BIGGER PLAYERS.YOU WERE TALKING ABOUT HOW YOU ARE GAINING MARKET SHARE.WHO ARE YOU GAINING MARKET SHARE FROM?IS IT FOR SMALLER BANKS? EUROPE — FROM SMALLER BANKS?EUROPE? BRIAN:.

EACH BANKS HAVE — THEY CAMEFROM. WHETHER IT IS THE INVESTMENTBANK WITH MATTHEW AND THE TRADING TEAM, THAT IS LARGELYCOMING FROM THE LONGTAILED PEOPLE. THIS BUSINESS IS HARD. IT REQUIRES $1 BILLION OFTECHNOLOGY INVESTMENT A YEAR TO HAVE A TRADING PLATFORM.WHEN IT IS THAT HARD, THAT MEANS PEOPLE WHO DON'T GET THERETURN DON'T COME THIS WAY. THAT IS DIFFERENT THAN THECONSUMER BANK. THEY GIVE YOU THE STATISTICSABOUT CONSTANT ACCOUNTS, WE.

HAVE GROWN OUR CONSUMER BASEPROBABLY 4 MILLION CORE CHECKING ACCOUNTS SINCE THEPANDEMIC. THE DEPOSITS ARE UP BECAUSE OFTHE EXTRA BALANCES. IT COMES FROM DIFFERENT PLACES.OUR IDS SUITABLY IN THE MARKET. LISA:WHEN YOU CHECK WITH INVESTMENT IN TECHNOLOGY, HOW MUCH IS THATGOING TO BE ANY ONGOING BENEFIT TO A BANK LIKE YOURS THAT CANINVEST IN YOUR VISUAL INTELLIGENCE WE ARE HEARINGABOUT EVERYDAY? BRIAN: WE HAVE TO BE CAREFUL ABOUT OURFULL INTELLIGENCE VERSUS.

MACHINE LEARNING VERSUS DIGITALPRACTICE. IN 2010 WE HAD 100,000 PEOPLEON OUR CONSUMER BUSINESS. TODAY WE HAD A 60,000 — TODAYWE HAVE 60,000. WE HAD 400 BILLION DEPOSITS ANDNOW WE HAVE 900 BILLION DEPOSITS.THE AMOUNT OF TRANSACTIONS GOING THROUGH IS LIGHT YEARSBIGGER. THE EXPENSE BASE WE RUN THEWHOLE COMPANY ON, NOMINAL EXPENSES OF $64 BILLION IS THESAME WE HAD AROUND 2015. THAT IS ALL OF STUFF WE ARETALKING ABOUT, SUPPLYING.

TECHNOLOGY OVER AND OVER AGAIN.ARE WE PERFECT? ABSOLUTE NOT. IF THERE PLENTY AHEAD OF US?UNBELIEVABLE. EVERYBODY SAYS YOU ARE NOTHIRING, WE ARE HIRING PEOPLE AND BUSINESSES AND PUTTINGREVENUE GENERATION OUT THERE AND TAKING IT OUT OF THEEXPENSE SPACE AND THAT IS A CONSTANT STREAM.IT IS REMARKABLE WHAT YOU CAN DO. IF YOU CAN SNAP YOUR FINGERSAND CHANGE THE WHOLE THING, YOU WOULD HAVE DONE IT. JONATHAN:WHAT YOU SAID IS SO IMPORTANT. I WAS GOING TO ASK IF WE AREGOING TO BE REPLACED BY A BIG.

SUPERCOMPUTER IN FIVE TO 10YEARS AND PEOPLE BEHIND US WERE LIKE TO KNOW THE ANSWER.IN THE NEXT FIVE TO 10 YEARS, I WE SING EACH ADDITIONAL DOLLAROF REVENUE IS GOING TO BE LESS AND LESS LABOR-INTENSIVEBECAUSE OF THIS ADOPTION OF TECHNOLOGY? BRIAN: WE HAD 300,000 PEOPLE, WE HAVE212,000 PEOPLE. IT IS GOING TO HAVE LESS LABORCONTENT. IF YOU THINK ABOUT IT, IT WOULDHAVE LESS LABOR CONTENT BECAUSE THAT IS THE EXPENSIVE PART BUTMORE VALUE-ADDED FROM LABOR.

BECAUSE THAT IS WE — THE WAYMATHEMATICS WORK. IF YOU THINK ABOUT THESETRENDS, THEY KEEP GOING ON. PEOPLE FORGET THESE ARE ALREADYGOING ON. ONE PERSON'S AI IS ANOTHER BAG WITH NECK MODEL — IS ANOTHERPERSON'S — YOU DON'T HAVE TO WAIT FORTHAT POTENTIAL, YOU ARE TAKING IT OUT EVERYDAY IF YOU'REWORKING IT. JONATHAN: NO THREE DAY WORK WEEK COMINGFOR BANK OF AMERICA GET? BRIAN: I AM NOT — SURE I UNDERSTANDTHE METHOD THERE BUT OUR TEAM.

DOES A GOOD JOB. JONATHAN:THANKS FOR HAVING US. BRIAN MOYNIHAN, THE CHAIRMANAND CEO OF BANK OF AMERICA. EQUITIES OBVIOUSLY 500 ITSOFTER. AHEAD ON THIS PROGRAM, NVIDIAUNVEILING BLACKWELL. >> THIS IS HOW WE CHANGE THEWORLD. THIS IS BLACKWELL. JONATHAN:THAT CONVERSATION UP NEXT. JONATHAN:LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING.STARTING WITH THE S&P 500 COME EQUITIES SOFTER THIS MORNING.NO REAL DRAMA, NEGATIVE BY ONE.

— NEGATIVE BY 0.4%.NOT MUCH TO TALK ABOUT. IN THE EQUITY MARKET WE HAVEBEEN OKAY THE PAST FEW WEEKS INCLUDING THIS PRICE WE HAVESEEN IN THE TREASURY MARKET. LISA:TWO STRAIGHT WEEKS OF LOSSES, IT SOUNDS SCARY.WEEKEND IT BACK IN A COUPLE OF HOURS.THE QUESTION IS WHAT IS GOING TO SHAKE THE CONVICTION THISMARKET HAS THAT THERE IS ULTIMATELY STRENGTH, ULTIMATELYPROMISE AND WE SEEM TO BE IN A MARKET THAT WANTS TO RALLY.JONATHAN:.

NVIDIA ANNOUNCING ITS NEWEST AIPROCESSOR, THE FOLLOW-UP TO ITS SIGNATURE PRODUCT THAT FUELEDSALES AND SENT VALUATIONS DURING.MANDEEP SINGH JOINS US FOR MORE. IT FELT STEVE JOBS-ESQUE.HOW MUCH OF THAT WAS A REPEAT OF WHAT WE USED TO SEE FROMAPPLE? MANDEEP: THEIR PRODUCT CADENCE CONTINUESTO IMPROVE. FOCUSING ON LLM'S, TRAINING,INFERENCING, NOTHING A LOT OF PARTNERSHIPS. ALMOST TECH COMPANY — MOSTEVERY TAKE COMPANIES PARTNERING.

WITH NVIDIA SERVER 12 MONTHSTHEY'RE GOING TO COME UP WITH NEW ARCHITECTURE.THEY WILL FIND IT HARD TO CATCH UP AT THIS PACE. LISA: WHERE SHARES.TODAY — WHY ARE THE SHARES DOWN TO THE? MANDEEP: EXPECTATIONS WERE FOR THEM TODO $100 BILLION IN DATA CENTER SALES.THE BOY KEEPS GOING HIGHER AND HIGHER AND AT THIS EVALUATION,WE COULD ARGUE STOCK IS NOT GOING TO TWOX FROM HERE.THEY CAN RUN INTO THAT CYCLE.

CYCLICAL SLOWDOWN.THAT WILL HAPPEN WHETHER IT IS A SIX MONTH FROM NOW AND THATIS WHY MULTIPLE EXPANSION IS VERY UNLIKELY. JONATHAN:THIS IS WHAT ALEX WEBB TOLD US WHEN HE WAS TALKING ABOUT THISEVENT, MAYBE IT WOULD BE A — EVENT IN THE SAME WAY THE APPLEEVENTS USED TO BE UNDER STEVE JOBS. LISA:THERE WAS SO MUCH HYPE. IN THE OPTIONS MARKET, I'MFASCINATED BY THE OPTIONS MARKET. JONATHAN:THE BULLISHNESS? LISA: THERE WERE PEOPLE BETTING DISHSHARE PRICES WOULD DOUBLE,.

DOUBLE D EVALUATION. JONATHAN:IN SHORT PERIOD OF TIME. IT IS CRAZY. JONATHAN:IF YOU ARE BULLISH ABOUT ANYTHING, I HATE TO BRING BRAMOAROUND TO THE OFFICE AND SHE WILL TALK YOU ABOUT — TALK YOUOUT OF ANYTHING. LISA: YOU ARE PROJECTING.YOU WOULD DO THE SAME THING IF I WAS NOT HERE. JONATHAN:I'M JUST NOT AS BAD AS YOU. FROM THE HOUMA BANK OF AMERICAIN NEW YORK CITY, GOOD MORNING TO YOU.

MY TAKE AWAY FROM THATCONVERSATION AROUND MERGERS AND ACQUISITIONS, THE AMOUNT OFCOMPANIES AND CLIENTS THEY COULD ENTERTAIN A DEAL THATDON'T WANT TO ENTERTAIN A DEAL BECAUSE THEY'D BE HANGINGAROUND FOR SO LONG WAITING TO SEE IF D.C.WOULD APPROVE IT IS A PROBLEM. LISA:PARTICULARLY ABOUT THE SIZE. IF YOU THINK ABOUT COMPANIESTHAT HAVE CASH AND THEY WANT TO MAKE A PURCHASE, THE SMALLERCOMPANIES ARE SUDDENLY REALLY ATTRACTIVE ACQUISITION TARGETSWON'T GET CAUGHT UP IN THE.

ANTITRUST ISSUES. JONATHAN:WE WILL RETURN TO THAT THEME IN A MOMENT.WE BEGIN WITH EQUITIES. IN ON THE S&P 500, PULLING BACKA TOUCH, WE SNAPPED A THREE-DAY LOSING STREAK ON THE S&P INYESTERDAY'S SESSION BUT A DECENT DAY. EVERY SINGLE SECTOR ON THE S&P500 WAS POSITED BY THE TIME GOT TO CLOSE.NEGATIVE BY 0.6% ON THE NASDAQ. ON THE BOND MARKET, THEPROSPECT OF YIELDS DRIFTING HIGHER.WE ARE AT 4.32 BUT NOWHERE NEAR.

THE HIGHS OF LAST YEAR BUT WECAN CAME INTO THIS YEAR AND CONSENSUS IS THAT YIELDS WILLBE LOWER BY THE END OF THE YEAR. THE FRONT END OF THE CURVE ISPUSHING BACK AGAINST THAT. WE'VE GONE FROM 4.1% TO 4.70AND A COUPLE OF MONTHS. LISA: PEOPLE WERE CALLING FOR SEVENGREAT CUTS THIS YEAR, REMEMBER WHEN THAT WAS A BASE CASE ANDIT WAS THE ASSUMPTION THAT THE FED WAS PUTTING THREE RATE CUTSOUT THERE BECAUSE THEY WANTED TO SAY THE MARKET IS BACK?THIS IS ONE OF THE BIGGEST SURPRISES.

ULTIMATELY, IS IT BONDS THATHAVE TO CATCH UP TO STOCKS? JONATHAN:THE ECONOMY IS OK WE WILL TALK ABOUT THAT IN A MOMENT.WE ARE SEEING THAT THIS ECONOMY IS BETTER THAN OK ACCORDING TOFUND MANAGERS. DOLLAR-YEN, IS THIS THE SIXTHDAY OF YEN WEAKNESS? LISA: IT IS. JONATHAN:POSITIVE BY 0.1%. THEY HAD THEIR FIRST HIKE IN 17YEARS. LISA: YOU CAN GET THE DIRECTION RIGHTIN THE TRADE WRONG BECAUSE YOU LOOK AT THE RHETORIC WE HEARDFROM THE BANK OF JAPAN, IT WAS.

HERE YOU GO, WE ARE DOING WHATYOU ASKED AND WE WILL REMOVE YOUR CURVE CONTROL AND WE ARECONCERNED ABOUT ECONOMIC WEAKNESS.WE DON'T KNOW WHETHER THE PRICE PRESSURE CAN HANDLE IT.WE DON'T KNOW WHAT WILL HAPPEN WITH CHINA AND ALL OF A SUDDEN,THE END JUST GAVE UP. JONATHAN: YOU HAVE TO COMPARE ANDCONTRAST THE START OF THE RATE HIKING CYCLE OF THE FEDERALRESERVE AND COMPARE IT TO THE CYCLE AT THE BOJ.THE BOJ WANTED THIS INFLATION. THEY'VE BEEN FIGHTING FOR FORIT. IT WAS A CHANCE TO RESET.

INFLATION EXPECTATIONS AND THEFEDERAL RESERVE DID NOT WANT THIS INFLATION.THAT'S WHY YOU'RE GETTING DIFFERENT COMMUNICATION OFF THEBACK OF THE FIRST HIKE FROM THE BOJ COMPARED TO THE FEDERALRESERVE AND THE ECB. LISA: I WONDER WHETHER THIS ISTURBOCHARGING EQUITIES IN JAPAN BECAUSE NOW IT'S MORE OF ADISCOUNT OF THOSE BUYING INTERNATIONALLY.IF THE BANK OF JAPAN GETS NERVOUS, IF THE FED IS MOREHAWKISH, WHAT DOES THAT DUE TO THE WEAKNESS IN THE YEN ANDWHETHER THAT BECOMES A PROBLEM.

IN TERMS OF BAD INFLATIONIMPORTED FROM OUTSIDE. JONATHAN: $1.50 FOR DOLLAR YEN.LET'S TURN TO THE SURVEY, BANK OF AMERICA'S FUND MANAGERSURVEY SHOWING RISK APPETITE AT THE HIGHEST LEVEL SINCEDECEMBER 2021. CANDACE RILEY JOINS US ATAROUND THE TABLE. >> GOOD MORNING, HOW ARE YOU?JONATHAN: I WANT TO TALK ABOUT THEHIGHLIGHTS OF THE LATEST SURVEY. GLOBAL GROWTH EXPECTATIONS,TWO-YEAR HIGH, RISK APPETITE, EPS OPTIMISM TWO-YEAR HIGH, HOWDOES THIS STACK UP TO THE ONE.

WE HAD LAST MONTH AND THE MONTHBEFORE THAT? >> EVERYTHING HAS TICKED UP ALITTLE BIT ACROSS THE BOARD. EVEN SOME SENTIMENT REGARDINGCHINA THE PEOPLE ARE STILL VERY NEGATIVE ABOUT CHINA OVER ALLAND THINK IT IS IN A SECULAR DECLINE AS IT RELATES TO THEMARKETS. WHAT I THINK IS INTERESTINGABOUT THIS FUND MANAGER SURVEY IS WHAT YOU SAID IN THE TITLEOF IT IS BULLS GO GLOBAL. WHAT THIS FUND MANAGER SURVEYIS SHOWING IS THAT EXPECTATIONS AROUND GROWTH AND THEPERFORMANCE OF EQUITIES IS.

EXPANDING OUTSIDE OF TECHNOLOGYAND OUTSIDE THE U.S. AND INTO THE REST OF THE WORLD.THAT'S WHY THIS FUND MANAGER SURVEY IS DIFFERENT THAN THEPRIOR MONTHS. JONATHAN: LET'S GET INTO THE GROWTHOPTIMISM. ARE WE SAYING IT'S NOT JUST THEUNITED STATES? ARE WE HOPING FOR BETTER GROWTHINTERNATIONALLY? >> THAT'S EXACTLY WHAT WE ARESAYING AND WE HAVE A PROPRIETARY INDICATOR CALLEDTHE GLOBAL WAVE WHICH IS DIFFERENT THAN THE FUND MANAGERSURVEY BECAUSE THE GLOBAL WAVE.

IS AN AMALGAMATION OF ECONOMICDATA. THINGS LIKE INDUSTRIAL PRODUCTION, CONSUMERCONFIDENCE, EARNINGS VISION RATIOS, THINGS LIKE THAT.IS JUST FACTS AMALGAMATED TOGETHER AND THAT GLOBALWAVETROUGHED IN JANUARY OF 2024. STATISTICALLY AFTER ITTROUGHED, EMERGING MARKETS PERFORM THE BEST AND ONAVERAGE, THEY ARE UP ABOUT 19% IN THE 12 MONTHS FOLLOWING THETROUGHED. U.S. DOES WELL AND JAPAN DOES WELL,ASIA DOES WELL, THE U.S. JUST DOES A LITTLE LESS WELLTHAN ALL OF THE OTHER AREAS.

IT'S THIS BROADENING OUT OFGROWTH. LISA: HOW PREDICTIVE ARE THESE FUNDMANAGER FEELINGS? IS THIS A CONTRARIAN INDICATOR?IF EVERYONE'S GOING BULLISH, IS THIS SOMETHING WE SHOULD GETCONCERNED ABOUT OR IS THIS A FORWARD LEADING INDICATOR? >> WE DO HAVE AN INDICATORCALLED THE BULL — BEAR INDICATOR AND WHEN IT'S A OF ICOULDN'T THE NUMBER IS EIGHT, THAT IS A CONTRARIAN INDICATOR.PEOPLE ARE TOO BULLISH. THAT INDICATOR IS AROUND 6.5RIGHT NOW SO WE ARE NOT IN THAT.

EXTREME BULLISHNESS AREA YET.LISA: WITH THESE INDICATORS YOU AREPUTTING OUT THERE, IS THERE COMPETITION BETWEEN THE SURVEYS?>> INTERNAL COMPETITION CAN BE A GOOD THING. LISA: WHAT DO YOU FIND THE MOSTRELIABLE NORTHSTAR AT A TIME WHEN WE ARE LOOKING FOR WHATCAN HAVE PREDICTIVE VALUE IN — IN A MESSY DATA ENVIRONMENT? >> I TRY TO LOOK AT THESE AS AMOSAIC RATHER THAN HAVE ONE NORTHSTAR.WE HAVE 84 OF THESE PREDICTIVE.

INDICATORS.THE BULK OF THEM HAVE BEEN RISING SINCE 2022.WE'VE SEEN A REAL BREAKOUT IN A NUMBER OF THEM, PARTICULARLYTHE INDUSTRIAL INDICATOR. THE SEMICONDUCTOR MEMORYINDICATOR IS AT A SEVEN-YEAR HIGH AND THAT'S VERY IMPORTANTBECAUSE WE KNOW SEMICONDUCTOR CYCLE LEADS THE GLOBAL ECONOMYSTATISTICALLY. THEN WE GOT AN INDICATOR WHICHLOOKS AT DIGITAL ADVERTISING THAT'S A RELATIVELY NEW ONE.THAT ONE HAS ALSO BEEN BREAKING OUT AND THAT'S GOOD FORCONSUMER AND SERVICE ECONOMY.

PARTICULAR IN THE U.S..YOU'VE GOT INDUSTRIAL INDICATORS, TECH INDICATORS ANDCONSUMER INDICATORS ALL BREAKING OUT WHICH FITS WITHTHE GLOBAL WAVE AND WHAT THE FUND MANAGER SURVEY WAS SAYING.JONATHAN: HELP ME UNDERSTAND SENTIMENT.SOMETIMES IT FEELS LIKE THIS, EVERYONE IS BULLISH AND THENTHEY CATCH UP. SHE WILL TELL US THE MARKET ISNOT EUPHORIC. HOW DO YOU GAUGE SENTIMENT OFFTHE 84 PROPRIETARY INDICATORS? THIS >> THE MAIN'S SYNDICATEINDICATOR IS A FUND MANAGER.

SURVEY.THE GLOBAL WAVE IS JUST PURE ECONOMIC DATA.THE CONTRARIAN INDICATOR I WAS TALKING ABOUT BEFORE WOULDINDICATE THAT SENTIMENT IS BULLISH BUT IT'S NOT EXTREMELYBULLISH YET. IT'S NOT EUPHORIC. JONATHAN: RE:BENCHMARKING TO EXTREME TIMES LIKE 1999? >> YEAH, THE FUND MANAGERSURVEY GOES BACK TO 1994. A LONG TIME AND AS A MATTER OFFACT, THE JUMP IN THE ALLOCATION TO E WASM ITSHIGHEST SINCE 2017.

THAT'S A BIG JUMP. LISA: YOU STARTED TALKING ABOUT IT'SNOT EUPHORIC, IT'S OPTIMISTIC. DEFINED EUPHORIA.EVERYONE IS TALKING ABOUT HOW INCREDIBLE EVERYTHING LOOKS ANDHOW SURPRISING AND STRONG IT LOOKS AND YOU START TO WONDER.JONATHAN: HOW VALUABLE IS IT TO BENCHMARKTO AN EXTREME TO SAY THAT IT'S NOT 1999 DOZEN THIS EARLY MEANIT'S GOOD. IS IT USEFUL? >> HISTORY DOES NOT REPEATITSELF. BUT YOU CAN LEARN FROM HISTORY.HAVING THESE INDICATORS AND.

HAVING THESE BENCHMARKS ANDLOOKING AT PRIOR TIMES IS VERY HEALTHY. THE WAY FORWARD WILL BEDIFFERENT. IT WILL LOOK DIFFERENT. LISA:LET'S TALK ABOUT THE THIRD RAIL OR PERHAPS THE FIRST REAL FORCERTAIN EXECUTIVES WHICH IS THE USE OF MACHINE LEARNING AND AIAND SOME OF THESE INDICATORS. HOW MUCH ARE YOU DEPLOYING THEABILITY TO TAKE DATA POINTS FROM DATA SETS YOU HAVE, PUTTHEM TOGETHER, STICK THEM THROUGH MACHINE AND GET ARESPONSE, BULL OR BEAR? >> THAT'S EXACTLY WHAT WE ARETRYING TO DO WITH THESE.

INDICATORS.WE USE MACHINE LEARNING, WE USE ALL DIFFERENT TECHNIQUES.MOST OF THEM ARE AGGREGATES. WE NEVER WOULD HAVE BEEN ABLETO DO THESE INDICATORS FIVE OR 10 YEARS AGO.WE DIDN'T HAVE THE CAPABILITY OF AGGREGATING ALL THIS DATATOGETHER. I THINK YOU WILL SEE MORE ANDMORE OF THIS DONE ACROSS MARKETS AND WHAT I THINK ITMEANS IS WE WILL GET BETTER AND BETTER REAL-TIME INFORMATION.YOU HEARD LIZ TALKING ABOUT THE INSTITUTE.WE ARE LOOKING AT 69 MILLION.

ACCOUNTS. THAT'S A LOT OF DATA. THAT'S NOT SENDING SOMEBODY ASURVEY IN THE MAIL AND GETTING THEM TO RESPOND.REAL-TIME DATA ON 69 MILLION ACCOUNTS I THINK THIS IS AWONDERFUL THING ABOUT AI AND I THINK IT WILL ALLOWPOLICYMAKERS TO RESPOND MORE QUICKLY TO BETTER INFORMATION.JONATHAN: LET'S TALK ABOUT THE FUTURE OFGLOBAL RESEARCH AND WHAT IT WILL LOOK LIKE IN FIVE OR 10YEARS? WE SPENT TIME TALKING ABOUT ASHIFT AWAY FROM PUBLIC TO.

PRIVATE MARKETS FROM SINGLENAMES TO PASSIVE INVESTING. THAT IS THE NATURE WHAT YOU'REDOING CHANGING AS WELL? WHAT WILL THIS LOOK LIKE? >> WE'VE BEEN DEALING WITH THATISSUE FOR A LONG TIME AND ONE OF THE THINGS WE'VE TRIED TO DOIS CHANGE THE TYPES OF RESEARCH WE ARE DOING.A GREAT EXAMPLE IS ETF'S. WE COVER MORE THAN 400 ETF'S.PEOPLE THINK ALL ETF'S ARE THE SAME.IF YOU BUY A SECTOR IN THE BANK SECTOR, YOU WILL GET THE SAMEPERFORMANCE. YOU DON'T.

THERE ARE DRAMATIC DIFFERENCES.THE ETF RESEARCH, STUFF ON PASSIVE, WE ARE CHANGING THEKINDS OF THINGS WE ARE FOCUSING ON BUT AT THE END OF THE DAY,WE STILL NEED TO DO THE BASIC SINGLE STOCK IN SINGLE SECURITYTO BUILD UP TO THOSE BROADER PASSIVE SECURITIES. JONATHAN:IF YOU ARE THINKING ABOUT YOUR FUTURE IN THE COLLEGE, IS THEREA FUTURE FOR THEM? >> ABSOLUTELY.IT'S A GREAT JOB BECAUSE YOU GET PAID EVERY DAY TO COME INAND THINK. HOW GREAT A JOB IS THAT?JONATHAN:.

AND YOU GET PAID MORE THANACADEMICS. LISA: I'M THINKING ABOUT WOODY ALLENIN SLEEPER AND YOU HAVE A MACHINE PUTTING IN YOUR DATAPOINTS AND SPITTING OUT BUY, BUY, BUY. JONATHAN:WE WILL LEAVE IT THERE AND IT'S GREAT TO CATCH UP. >> IT'S GREAT TO SEE YOU.JONATHAN: LET'S GET TO AN UPDATE ON OTHERSTORIES. SONALI: GOOD MORNING. THE RESERVE BANK OF AUSTRALIAHAS SIGNALED ITS FINISHED HIKING RATES.

THE CENTRAL BANK KEPT ITSPOLICY ON HOLD FOR A THIRD STRAIGHT MEETING AND MADE NOREFERENCE TO FURTHER IN RACES TO RATES THAT ALREADY SIT ATTHE 12 YEAR. RESERVE BANK GOVERNOR MICHELLEBULLOCK SAYS THEY NEED MORE OF A TRAJECTORY AND INFLATIONBEFORE MORE CUTS. THEY WANT TO RETURN TO TARGETIN LATE 2025. ANTONY BLINKEN WILL MAKE HISSIXTH VISIT TO THE MIDDLE EAST SINCE THE ISRAEL-HAMAS WARBROKE OUT MAKING STOPS IN SAUDI ARABIA AND EGYPT.THIS COMES AT A TIME OF.

INCREASED TENSION BETWEEN THEU.S. AND ISRAEL OVER THE SITUATIONIN GAZA. CINEMA WILL TEST CHUCK SCHUMERAND BENJAMIN NETANYAHU EXCHANGED VERBAL BLOWS INRECENT DAYS. HONG KONG IS FAST-TRACK TOMEASURE FURTHER CEMENTING CHINA'S CONTROL OVER THE GLOBALFINANCIAL HUB. THE APPROVAL OF ARTICLE 23COMPLETES A TWO DECADE CAMPAIGN TO PASS LOCAL LEGISLATIONPROTECTING THE CHINESE STATE. NEW CRIMES LIKE TREASON ANDINSURRECTION CARRY LIFE.

SENTENCES IN THE MEASUREDEFINES A STATE SECRET OFFENSES IN LINE WITH CHINA'S VAGUELEGISLATION AROUND ESPIONAGE. THE MOVE RAISES QUESTIONS OVERTHE CITY STATUS AS AN INVESTMENT IN TOURISTDESTINATION. THAT'S YOUR BLOOMBERG BRIEF.JONATHAN: THANK YOU. UP NEXT, COMMERCIAL REAL ESTATEIN FOCUS. >> COMMERCIAL REAL ESTATE IS ASLOW BURN. IT'S A CLASSIC BURN. YOU GO BACK TO THE LATE 80'SAND EARLY 90'S AND WE HAD A COMMERCIAL REAL ESTATERECESSION SO THERE WILL BE.

DIFFICULTIES. JONATHAN:THAT CONVERSATION IS UP NEXT. LIVE FROM NEW YORK CITY, THISIS BLOOMBERG. ♪ JONATHAN:THE TWO DAY FED MEETING BEGINS IN A COUPLE OF HOURS TIME INWASHINGTON, D.C. AND HERE THE PRICE ACTION WITHEQUITIES PULLING BACK A TOUCH ON THE S&P 500.YIELDS ARE PUSHING HIGHER OVER THE LAST WEEK, 4.32 ON THE 10YEAR AND 4.70 ON THE TWO YEAR. CHECK OUT DOLLAR-YEN, THEDOLLAR A WHOLE LOT STRONGER AGAINST THE WEAKER JAPANESE YEN.THAT'S A MOVE OF .9% IN THE.

FACE OF THE FIRST INTEREST RATEHIKE AND 17 YEARS FROM THE BANK OF JAPAN. YOU WOULDN'T KNOW IT.LISA: IT'S JUST WHAT THEY WERE HOPINGFOR. THERE WAS A REPORT SAYING WEWILL DO IT AND NO ONE CARED. JONATHAN:A FULL RATE HIKE FOR THE BOJ, WE WILL SEE WHAT COMES NEXT.COMMERCIAL REAL ESTATE IS IN FOCUS THIS MORNING. >> COMMERCIAL REAL ESTATE IS ASLOW BURN. IT'S A CLASSIC EARN. GO BACK TO THE LATE 80'S ANDEARLY 90'S, WE HAD A COMMERCIAL.

REAL ESTATE RECESSION SO THEREWILL BE DIFFICULTIES AND WE FEEL GOOD BUT DOES THAT MEANBANKS WILL FAIL? MANY BANKS FAILED IN THE PASTDECADE BUT THE FOLLY OF THE BANKING SYSTEM IS STRONG.JONATHAN: THE BANK OF AMERICA COMMERCIALBANK SOARING AS IT MOVES TO LIMIT ITS EXPOSURE TO CRE. JOINING US NOW TO DISCUSS ISWENDY STEWART, THE BANK OF AMERICA GLOBAL COMMERCIALBANKING PRESIDENT. >> GOOD MORNING AND THANK YOUFOR HAVING ME. JONATHAN:.

THANK YOU FOR HOSTING US.LET'S TALK ABOUT YOUR BUSINESS AND HOW MUCH THINGS HAVECHANGED. WHEN WE TALK ABOUT COMMERCIALREAL ESTATE, I DON'T THINK WE NARROW IT DOWN ENOUGH.HOW MUCH HAVE THINGS CHANGE FOR THIS BUSINESS OVER THE LASTDECADE? CAN YOU PUT NUMBERS ON THAT FORUS? >> IT HAS DEFINITELY SHIFTED.OUR BUSINESS IS MUCH MORE THAN COMMERCIAL REAL ESTATE.THAT'S PART OF IT THAN NOT THE ONLY THING WE DO.WE WORK WITH MIDDLE-MARKET.

SIZED COMPANIES AND WE DO FINDHIS COMPANY'S THAT GENERATE REVENUE THAT IS 50 MILLION ANDGROWING RAPIDLY TO $2 BILLION. SOME COMPANIES ARE PUBLICLYTRADED BUT A LOT OF THEM ARE PRIVATELY HELD.THESE COMPANIES ARE COMPANIES AROUND THE UNITED STATES.THEY ARE TYPICALLY THIRD OF FOURTH GENERATION AND WE AREWORKING WITH THESE COMPANIES NOT ONLY IN THE UNITED STATESBUT ALSO IN CANADA AND THEIR INTERNATIONAL SUBSIDIARIESAROUND THE WORLD. LISA: IT'S RELATED BECAUSE SOME OFYOUR POTENTIAL COMPETITORS IN.

THE PAST FOR SOME OF THESEREGIONAL AND SMALLER BANKS THAT ARE CONSTRAINED WITH RESPECT TOLENDING BECAUSE OF THE COMMERCIAL REAL ESTATE LOANSTHAT ARE ON THEIR BOOKS. HOW MUCH ARE YOU GAINING SHAREFROM THE SMALLER BANKS THAT DON'T HAVE THE SAME KIND OFCAPACITY YOU DO? >> WE DID HAVE A FANTASTIC YEARIN 2023 WHICH WAS A STORY OF GROWTH AREA THERE WAS A LOT OFMARKET DISRUPTION ACROSS THE BOARD THAT WE SAW LAST YEAR.WE DID TAKE SHARE AS A RESULT OF THAT.LENDING IS NOT SOMETHING WHERE.

WE ARE CONSTRAINED.WE ALSO HAVE A LOT OF OTHER CAPABILITIES WE DELIVER TOCLIENTS THAT HAVE NOTHING TO DO WITH THEIR BALANCE SHEET.WHETHER IT'S THEIR DIGITAL CAPABILITIES WERE A LOT OFUNIQUE CASH MANAGEMENT SOLUTIONS, THE INVESTMENT WEMADE AN INTERNATIONAL OR THE INVESTMENT IN INVESTMENTBANKING AND ALSO THE FOCUS WE HAVE A NEW ECONOMY COMPANIESWHICH IS SOMETHING THAT'S RELATIVELY NEW FOR US OVER THELAST COUPLE OF YEARS AS OUR ECONOMY IS CHANGING. LISA:I WONDER IF THERE IS AN.

OPPORTUNITY TO GO STEP FURTHERWITH THE WEAKNESS WE ARE SEEING IN SOME OF THE REGIONAL BANKSTO ACQUIRE WHOLE UNITS TO EXPAND. IS THAT SOMETHING IN THEPOTENTIAL OUTLOOK AT ALL? >> LI BIN FOCUSED ON ORGANICGROWTH, RESPONSIBLE GROWTH HAS BEEN HER MANTRA FOR VET MANYYEARS AND WE WILL CONTINUE TO FOCUS ON RESPONSIBLE GROWTHTHROUGH ORGANIC GROWTH. WE HAVE THE SOLUTIONS WE NEEDTO BE ABLE TO DELIVER FOR OUR CLIENTS.WE CONTINUE TO INVEST AND WE ARE MAKING INVESTMENTS IN OURTEAM SO WE CONTINUE TO HIRE.

MORE BANKERS AND WE ARE MAKINGA LOT OF INVESTMENT IN DIGITAL BECAUSE OUR CLIENTS WANT TO BEABLE TO BANK WHEN THEY WANT, WHERE THEY WANT AND THEY WANTEDTO BE FAST, SAFE, SECURE AND EASY AND WE GOT GREAT SOLUTIONSTO HELP CLIENTS ON THAT FRONT. WE HAVE A CLIENT RECENTLY, NEWCOMPANY WE WERE WORKING WITH THAT WAS DOING BUSINESS IN 13DIFFERENT COUNTRIES IN ASIA. THEY WERE WORKING WITH AVARIETY OF DIFFERENT BANKS AND THEY WERE CONCERNED ABOUT THEEXPOSURE THEY HAD AND THEY COULDN'T MANAGE THE RISK WELLAND DIDN'T HAVE A LOT OF.

VISIBILITY INTO THE DAY TO DAYTRANSACTIONS PLUS THEY HAD A LOT OF CURRENCY RISK.WE WERE ABLE TO SIT DOWN WITH THEM AND LOOK AT THEIR NEEDSAND PUT TOGETHER A GLOBAL SOLUTION AND THEY WERE VERYHAPPY WITH THAT. WE ARE NOW THEIR SOLE PROVIDERSOF THESE ARE THE TYPES OF WAYS WE ARE GOING WITH OUR CLIENTS.THERE IS REALLY NOT AN ACQUISITION OUT THERE THAT CANHELP US WITH THAT. JONATHAN: IS THAT A TREND USING MORE OFTHAT IN ASIA? >> WE ARE SEEING A TREND ALLOVER THE GLOBE.

WHEN YOU THINK ABOUT U.S.BASED COMPANIES AND CANADIAN-BASED COMPANIES WECOVER, THEY HAVE HISTORICALLY DONE BUSINESS IN NORTH AMERICA.THEY ARE REALLY LOOKING AT TAKING ADVANTAGE OF THE GLOBALGROWTH THAT EXISTS FOR THEM. WE ACTUALLY HAVE THREECOMPANIES WE COVERED TODAY AND WE ARE NOT EVEN THROUGH THEFIRST QUARTER. WE'VE GOT THESE THREE COMPANIESLOOKING TO GROW. IT NEVER DONE BUSINESSINTERNATIONALLY, THEY KNOW THEY NEED TO INCREASE THEIR EXPOSUREAND SO WE HELPED THREE.

DIFFERENT COMPANIES INDIFFERENT PARTS OF THE UNITED STATES IN DIFFERENT INDUSTRIESTHAT HAVE ONE GOAL AND THAT'S TO GROW INTERNATIONALLY.ONE ACQUIRED A COMPANY IN THE U.K. AND ONE IN ITALY AND ONE INAUSTRALIA. WE HELPED ALL OF THEM AND IT'SNOT JUST ABOUT M&A, IT'S ABOUT THE CORE BANKING NEEDS THESENEWLY ACQUIRED SUBSIDIARIES WILL HAVE AND WE CAN HELP THEMWITH ALL OF IT. JONATHAN: I WOULD'VE THOUGHT THE LIFE FORA COMPANY IS GETTING HARDER TO GO INTERNATIONAL.I THOUGHT IT WOULD BE MORE.

DIFFICULT BECAUSE OF POLICIESIN COUNTRIES AROUND THE WORLD SEEMINGLY PUTTING THE WALLS UP.IS THAT YOUR EXPERIENCE? >> WHEN YOU THINK ABOUT AMULTINATIONAL COMPANY VERSUS A PRIVATELY HELD COMPANY, THEYHAVE VERY DIFFERENT CONSIDERATIONS.PRIVATELY HELD COMPANIES CAN THINK ABOUT THINGS OVER THEVERY LONG TERM WERE MULTINATIONAL MAY HAVEDIFFERENT CONSIDERATIONS. WHAT WE FIND IS THERE COMPANIESTHAT WE COVER WANT TO GROW WE ARE WELL-POSITIONED TO HELPTHEM WITH THAT. LISA:.

WHO ARE YOUR MAIN COMPETITORS?THERE HAS BEEN THIS DISCUSSION AROUND THE APOLLO OR THE ARIESOR THE OTHER KKR'S OF THE WORLD TRYING TO EAT YOUR LUNCH.ARE THEY THE MAIN COMPETITORS OR IS THE OTHER BIG BANKS, ISIT EVERYONE? >> WE COMPETE WITH EVERYBODYBUT SOME MORE THAN OTHERS. THE LARGE BANKS YOU WOULD THINKOF IN THE U.S. ARE A BIG COMPETITOR.WE CONTINUE TO COMPETE WITH THE REGIONALS. AS FAR AS PRIVATE LENDERS GO,WE DON'T COMPETE WITH PRIVATE.

LENDERS AS MUCH. WE'VE SEEN REALLY NICE LOANGROWTH. WE SAW A GREAT GROWTH THROUGHLAST YEAR AND WE SEE IT THROUGH THIS YEAR. LISA:IT'S INTERESTING YOU MENTION EUROPE, IS IT STRONGER THERE?DO YOU SEE CROSS-BORDER TRANSACTIONS AS STRONGERBECAUSE THE DOMESTIC ONES ARE SO DIFFICULT TO ACTUALLY GETAPPROVED? >> WE SEE A LOT OF GOODOPPORTUNITY INTERNATIONALLY ALL OVER THE PLACE.THERE IS GOOD OPPORTUNITY AND.

WE WILL CONTINUE TO INVESTTHEIR AND WE DECIDE WHERE TO INVEST BASED ON WHERE OURCLIENTS ARE DOING BUSINESS. WE ALSO SEE ASIA AS A GOODOPPORTUNITY. WE HAVE SEEN A LOT OF THEREASSURING THAT HAPPENED LAST YEAR BACK INTO MEXICO AND INTOOTHER AREAS AND THAT WAS ANOTHER GOOD OPPORTUNITIES WEADDED BANKERS THERE LAST YEAR TO TAKE ADVANTAGE OF THAT.JONATHAN: DON'T TIP YOUR TOE INTOPOLITICS BUT WE HEARD FROM THE FORMER PRESIDENT OVER THEWEEKEND THAT IF YOU ARE CHINESE.

EV MAKER AND YOU ARE POSITIONEDIN MEXICO, WE WILL SLAP YOU WITH A 100% TARIFF.I'M WONDERING ABOUT THE FUTURE OF NEAR SHORING. >> WE DON'T FOCUS AS MUCH ONTHE POLITICS, WE FOCUS ON THE NEEDS OF OUR CLIENTS.IF OUR CLIENTS DECIDE THAT'S A GOOD OPPORTUNITY FOR THEM TOMOVE BUSINESS BACK INTO MEXICO AS AN EXAMPLE, WE HAVE BANKERSON THE GROUND THAT CAN SUPPORT THEM AND THAT'S WHAT WE WILL DO.JONATHAN: GREAT TO GET YOUR PERSPECTIVEON THINGS, THANK YOU.

A MONSTER YEAR GROWTH LAST YEAR.WENDY STEWART OF BANK OF AMERICA. NOT THE STORY WE'VETRADITIONALLY HEARD ON THE INTERNATIONAL SCENE OVER THELAST COUPLE OF MONTHS. LISA: BUT THE SEXY SPEAKS TO THE IDEATHAT THERE STILL IS TRADE. PEOPLE ARE LOOKING TO WHERE THEOPPORTUNITIES ARE AND IT'S MORE OF A GLOBAL STORY. IT'S FASCINATING TO THINK ABOUTWHERE THE LENDING OPPORTUNITIES ARE AND THAT SOME OF THE PEOPLESTILL WANT TO BORROW. JONATHAN: NEXT UP, THE THIRD ERROR LOOKSLIKE THIS — THE SPECIAL.

CONTINUES FROM BANK OF AMERICAAND. I'VE GOT TO ASK ABOUT THEPROSPECT OF THOSE MEDIAN DOTS MAY BE MAKING ANOTHER SHIFT FORTHIS YEAR FROM THREE- 2. LISA: CLAUDIA SAHM SAID SHE IS I A.HATER. THE IDEA IS ARE THEY TRACKED BYTHEIR OWN PROJECTIONS OF WHERE THE RATE CUTTING CYCLE WILL GO?IS THAT A PROBLEM AT A TIME LIKE THIS? THIS TO ME IS I WANT TO SEE HOWTHEY MESSAGE THAT GIVEN THE UNCERTAINTY AND GIVEN THAT SOMEPEOPLE ARE LOOKING TO THEM FOR.

CERTAINTY AT A TIME WHEN THEYCANNOT PROVIDE IT. JONATHAN:HOW CONFIDENT AS THE CHAIRMAN OF THE FEDERAL RESERVE, THATNEWS CONFERENCE A DAY AWAY. >> THE FED IS AT THE RISK OFLOSING CONFIDENCE. THEY OPENED THE DOOR FOR THECONVERSATION OF RATE REDUCTIONS TOO SOON. >> THERE IS MORE INERTIA TOINFLATION THAN THE FED IS GETTING CREDIT FOR. >> RATE CUTS ARE BEING PUSHEDBACK FOR THE RIGHT REASONS BUT.

THEY ARE SO COMING. >> EVERYTHING IS WAITING FORCERTAINTY BUT I DON'T THINK WE WILL GET IT. >> THE FED WOULD LIKE A SCRAPOF CERTAINTY ABOUT WHAT THEY WILL DO LATER THIS YEAR. >> THIS IS BLOOMBERGSURVEILLANCE JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIEHORDERN. JONATHAN: LIVE FROM NEW YORK CITY THISMORNING, GOOD MORNING, GOOD MORNING, THE THIRD HOURBLOOMBERG SURVEILLANCE BEGINS.

RIGHT NOW.BANK OF AMERICA'S HOME HERE IN MIDTOWN MANHATTAN.YOUR EQUITY MARKET IS A LITTLE BIT SOFTER.IF I COULD CAPTURE THE LAST TWO HOURS ON THIS PROGRAM IN AWORD, IS BULLISH THE WORD? LISA: I DON'T KNOW IF IT'S ENOUGH,IT'S QUITE BULLISH. IT'S REALLY QUITE OPTIMISTIC.THE ULTIMATE QUESTION IS — DOES THIS CHALLENGE THE IDEA OFRESTRICTIVE AND CAN IT CONTINUE? WHAT WILL DRIVE THE NEXT LEG ITWILL NOT BE NVIDIA WHICH WE SAW YESTERDAY AND THAT WAS THE.JONATHAN:.

LET'S GO THROUGH THIS PIECE BYPIECE AND WHAT IT COULD MEAN FOR THE BOND MARKET. WHAT THE BOND MARKET IS TELLINGYOU AND WHAT THE EQUITY MARKET IS SCREAMING IS THE EQUITYMARKET SO FAR IS SCREAMING A STRONG GDP. IF YOU LOOK AT THE BOND MARKET,WE ARE REPLACING THE FRONT END JUST LIKE THAT IN A COUPLE OFMONTHS AND THE EQUITY MARKET IS DONE NOTHING IN THE FACE OFTHAT. IT FEELS THE STOCK MARKET SOFAR SEEMS COMFORTABLE WITH.

RATES REPRICING HIGHER. LISA:SOME WOULD ARGUE THIS IS THE REASON WHY DECEDENTUNDERPERFORMANCE AND SMALL CAPS NEW SEEN UNDERPERFORMANCE INCERTAIN UTILITIES OR AREAS THAT ARE INTEREST RATE SENSITIVE.WE ARE NOT HEARING COMPANIES ARE HAVING TROUBLE BORROWING.WE ARE NOT HEARING THAT INDIVIDUALS ARE HAVING ISSUESWITH 40% MORE CASH IN TERMS OF THEIR SAVINGS THAN THEY HAD IN2019. PUT THIS TOGETHER AND IT RAISESTHE QUESTION, WHAT IS THE PAIN THRESHOLD FOR RATES?IS IT 4.5% ON THE 10 YEAR?.

IS THE FED GOING TO TEST THATAT A TIME OR DOESN'T SEEM THEY HAVE CONVICTION THAT INFLATIONIS COOLING IS MUCH AS THEY LIKE. JONATHAN:I JUST FIND THIS STAT AMAZING. MEDIUM VALUE OF SAVINGS ANDCHECKING BALANCES ARE MORE THAN 40% HIGHER FROM 2019 ACROSS ALLINCOME LEVELS. LISA: AND THEY ARE NOT GOING DOWNMATERIALLY. JONATHAN: THEY ARE STABLE. LISA:THAT'S ONE OF THE BIGGEST TAKEAWAYS.THIS WAS SUPPOSED TO BE HAPPENING, TAKING WHAT YOURSAVINGS.

THEY SAID THE CASH COMING INTOPEOPLE'S BALANCE SHEETS ON LOWER INCOME HOUSEHOLDS AREINCREASING SIGNIFICANTLY BECAUSE THERE IS A REAL INCOMEISSUE. WHERE ARE THE CRACKS? I'M NOT SEEING THAT AREAJONATHAN: I THINK POLICY IS THE WORRY ANDMAYBE NOT FROM MONETARY POLICYMAKERS BUT FROM THEPOLICYMAKERS ELSEWHERE. WHEN YOU LISTENED TO BRIANMOYNIHAN, IF YOU MISS THAT CONVERSATION HAVE A LOOK.PICK OUT THE PART IN MERGERS AND ACQUISITION.WE ARE NOT SEEING LESS BECAUSE.

THEIR WORRIES ABOUT THEECONOMY, THERE IS WORRIES ABOUT THE DEAL GETTING DONE.A CLIENT CAN EVEN ENTERTAIN THE PROSPECT OF DOING THE DEAL NOTBECAUSE THEY THINK IT'S BAD BUSINESS BUT BECAUSE THEY AREWORRIED ABOUT BEING LEFT TO HUNG OUT TO DRY FOR 12 MONTHSTO WORK OUT WHETHER IT WILL BE APPROVED. LISA:TAKE THAT A STEP FURTHER — HOW MUCH ARE WE LIVING IN AN AREAOF FISCAL DOMINANCE AND FISCAL POLICY DOMINANCE WITH RESPECTTO WHAT'S ALLOWED IN THE MONEY GOING INTO BALANCE SHEETS.HOW MUCH IS THE FED TRYING TO.

FIGHT AGAINST A FISCALDOMINANCE THAT IS ALL-ENCOMPASSING?IT'S BEEN UNDERSTATED BY A LOT OF PEOPLE TO FULLY EMBRACE WHATTHAT MEANS AND HOW MUCH CASH IS GOING INTO THE ECONOMY.JONATHAN: GOT TO FIND SOME TIME TO GOTHROUGH THIS BANK OF AMERICA FUND MANAGER SURVEY. GLOBAL GROWTH ESPECIALLY –EXPECTATIONS, ALL HIGH WITH OPTIMISM ALL ACROSS THE BOARD.BUT NOT EUPHORIA. JONATHAN: WE WILL HEAR THAT WORD IN AMOMENT. LISA:.

PLEASE DEFINE EUPHORIA.JONATHAN: WE WILL GET TO THAT COMPENSATION A MOMENT THE LET'SSTART WITH THE PRICE ACTION, S&P 500 IS LOWER 0.4%.THE BOND MARKET IS STABLE ON A BIG MOVE HIGHER OVER THE LASTWEEK. WE ARE GETTING INTO THE 4.30'SALL OVER AGAIN. LISA: WHAT IS THAT THRESHOLD THATBECOMES A PAIN POINTS? STOCKS HAVE CHUGGED ALONGDESPITE THAT AND THE ONLY HICCUPS HAVE COME BUY THERUMOR, SELL THE NEWS, THE LEATHER JACKET, THE GODFATHEROF THE AI INDUSTRY, WOODSTOCK,.

AIA. BLAH,BLAH, BLAH. JONATHAN:NVIDIA HAS REPLACED APPLE. WHATEVER. NEXT 60 MINUTES LOOK LIKE THIS.WHY THEY THINK MARKETS IN THIS MARKET RALLY WILL BROADENBEYOND BIG TECH AND WE WILL TALK ABOUT THE WORD EUPHORIA ASWELL. LOOKING AHEAD TO TOMORROW'S FEDDECISION. WHY CLIENTS ARE STAYING MINDFULOF GEOPOLITICAL RISK. WE BEGIN WITH OUR TOP STORY,TECH GIANTS ARE LEADING STOCKS.

HIGHER THANKS TO AI EUPHORIA. THANK YOU VERY MUCH FOR BEINGWITH US. >> THANKS FOR HAVING US. >> I THINK THIS IS OUR FIRSTTIME ON TV TOGETHER. IT'S EXCITING. JONATHAN:LET'S TALK ABOUT THE CONSTRUCTIVE MISS YOU BOTHSHARE. WHERE ARE YOU SEEING EUPHORIARIGHT NOW? >> I THINK EUPHORIA IS DRIVENBY THEMES AT THIS POINT SO IT'S AI. EVERYBODY OWNS THE AI PLACE.IF YOU LOOK AT POSITIONING,.

THERE IS A LOT OF BUILDINGEUPHORIA AROUND DISCOVERY AND GL1 SO THERE IS THE MEDICEUPHORIA BAY VP LOOK AT THE ACTUAL ALLOCATION OF FUNDMANAGERS, PENSION FUNDS ARE AT THE LOWEST LEVEL OF EQUITY –PUBLIC EQUITY EXPOSURE WE'VE SEEN SINCE THE 1990'S.THIS IS NOT A MARKET LIKE 1999 WHERE EVERYBODY IS TELLING YOUTO BACK UP THE TRUCK ON ALL EQUITIES.THEY SAY BACK UP THE TRUCK ON A FEW EQUITIES LIKE MEGA CAP TECHIN SOME PHARMA BUT THERE IS NO BROUGHT — WIDESPREAD EUPHORIAIN MY VIEW.

THE POSITIONING SAYS THINGSDIFFERENT THAN THE SURVEY DATA WHICH IS ALSO IMPORTANT.WHAT THEY SAY VERSUS WHAT THEY DO IS SOMETIMES VERY DIFFERENT.I THINK THE RISKS ARE SITTING OUTSIDE OF THE PUBLIC MARKET.LOOK AT WHERE THE CREDIT CYCLE ACTUALLY UNFOLDED.IT WAS IN PRIVATE CREDIT AND PRIVATE EQUITY AND I THINKTHOSE OF THE AREAS, REGIONAL BANKS ARE WORKING OUT THEIRPROBLEMS. I THINK THAT'S WHERE YOU ARE SEEING THE SORT OFCREDIT ISSUES REALLY BUBBLE UP. JONATHAN:HOW CONCERNED SHOULD WE BE?.

IT FEELS LIKE WE MOVED BEYONDWHAT HAPPENED LAST YEAR FOR THE BANKS? >> I THINK THE REGIONAL BANKSARE STILL IN AN AREA WHERE IT MAKES SENSE TO BE VERYSELECTIVE. WE ARE POSITIVE ON SMALL CAPSTHIS YEAR BUT IN FINANCIALS, THAT'S AN AREA WHERE LARGERBANKS HAVE LOOKED BETTER THAN SMALLER BANKS.THERE IS STILL OPPORTUNITY IN THE REGIONALS.I THINK THIS IS A MARKET WERE STOCKPICKING MAKES SENSE.OUR ANALYSTS HAVE DONE A LOT OF.

WORK HERE.THE ENVIRONMENT THIS YEAR HAS GOTTEN MORE OPTIMISTIC FORBANKS GIVEN EVERYONE WAS EXPECTING A RECESSION GOINGINTO THIS YEAR AND NOW WE ARE NOT EXPECTING A RECESSION. I THINK THE BACKDROP FOR M&AGOOD PICKUP OF WE POTENTIALLY SEE AN EASIER REGULATORYENVIRONMENT. WE WILL SEE HOW THE ELECTIONGOES IN COMMERCIAL REAL ESTATE IS AN ISSUE BUT IT MAKES SENSETO BE SELECTIVE AND BE A STOCK PICKER THIS YEAR.THAT'S AN ENVIRONMENT WHERE.

THERE IS A LOT OF OPPORTUNITIES.LISA: DOES THAT MEAN IT'S ALL PRICEDIN THOSE CREDIT ISSUES WE HAVE HEARD? >> I DON'T THINK IT'S ALLPRICED IN. IN POCKETS OF THE MARKETESPECIALLY WHEN YOU LOOK AT THE BROADER BACKDROP WITHIN SMALLCAPS, CREDIT SENSITIVITY, REFINANCING RISK, THERE IS ALOT OF ISSUES THAT HAVE RATES CONTINUE TO MOVE HIGHER OR STAYHIGH, THESE ARE AREAS THAT ARE A LOT MORE CREDIT SENSITIVE ANDWE COULD SEE AREAS LIKE REAL.

ESTATE THAT MAY BE HAVEN'TMOVED AS MUCH. FOR THE OVERALL MARKET LIKE FORSMALL CAPS, THEY HAVE LARGELY PRICED IN SOME OF THE CREDITRISKS. THEY WERE PRICING IN A RECESSION, THEY'RE PRICING INMANUFACTURING RECESSION, THEY WERE PRICING AND TIGHTER CREDITSTANDARDS. I THINK WE ARE IN A BACKDROPWHERE THESE CONTINUE TO EASE, THERE IS MORE UPSIDE IN THATSEGMENT OF THE MARKET. LISA: IT'S FASCINATING TO HEAR YOUTALK ABOUT HOW IT'S NOT A BAD MOMENT LIKE 1999 FOR ALLSTOCKS, JUST SOME STOCKS.

IT SOUNDS LIKE YOU MIGHT WANTTO KEEP BACKING UP THE TRUCK AND THOSE STOCKS BECAUSE THEYARE NOT AS SUSCEPTIBLE TO RATES REMAINING HIGH FOR PEOPLEGETTING COLD FEET AND REALIZING THAT THERE IS SOME WEAKNESS INSOME POCKETS. >> I THINK THAT'S FAIR.I SEE LARGE CAPS AS SAFER UNTIL WE START TO SEE THE FED REALLYCUT INTEREST RATES. WHERE WE ARE NOW IS ANENVIRONMENT WHERE WE ARE PRICING IN THREE OR FOUR RATECUT — RATE CUTS THIS YEAR? IF WE DON'T GET THEM, I THINKTHAT'S THE RISK FOR SOME OF.

THESE MORE CREDIT OF SENSITIVEAREAS LIKE REAL ESTATE AND SMALL CAPS AT LARGE.I THINK THERE IS A LOT OF SMALLER COMPANIES THAT AREECONOMICALLY SENSITIVE THAT CAN DO WELL IN THIS ENVIRONMENT.THE THING I LIKE ABOUT THE S&P 500 IS A LOT OF THE REALLYRISKY STUFF DRIFTED DOWN IN MARKET CAP.YOU ARE STARTING TO SEE THE S&P ALMOST GET HIGHER QUALITY BYATTRITION SINCE 2022 WHEN THE FED STARTED CUTTING RATES. IF YOU LOOK AT CRE EXPOSURE OFTHE LARGE-CAP BANKS, IT'S A.

TINY SLIVER VERSUS WHERE WE SEEIT ELSEWHERE. WHEN I THINK ABOUT WHAT YOUSAID EARLIER ABOUT THIS POLICY HAVING GIVEN CONSUMERS ANDCORPORATE'S A LONG RUNWAY OF MAKING MONEY ON THEIR SHORTDURATION ASSET BASE AND LOCKING IN LONG-DURATION LIABILITIES, ITHINK THAT IS WHAT WE ARE SEEING IN THE S&P 500 AND THEAVERAGE U.S. CONSUMER. THOSE OF THE AREAS WHERE HETHINK WE CAN PRESS THIS. EVEN IF THE FED DOES NOT THATINTEREST RATES, THERE IS STILL RELATIVE HEALTH AND GAINS INTHOSE COHORTS. JONATHAN:.

WHY DO YOU THINK WE BEENCOMFORTABLE WITH HIS REPRICING OF INTEREST RATES HIGHER? WHY ARE WE COMFORTABLE WITH HOTPPI PRINCE. WHAT IS THAT ABOUT? >> THE S&P RALLIED AND PARTS OFIT RALLY BECAUSE THE S&P 500 IS NOW A DIFFERENT ANIMAL THANWHAT IT WAS IN 2007. HALF OF IT IS ASSET LIGHT ANDHAS POSITIVE NET CASH IN THE BIGGEST SECTORS OF TECH.I THINK IT'S A VERY DIFFERENT CREDIT CYCLE.THIS IS WHERE WE NEED TO PAY ATTENTION IS WHERE HAS CREDITBEEN EXTENDED, WHO BORROWED AND.

WHO WILL BE HURT BY A RISINGINTEREST RATE CYCLE. WE ARE STARTING TO SEE THAT BUTI THINK THAT'S WHAT UNFOLDS OVER THE NEXT FEW YEARS.JONATHAN: LEADERSHIP HAS BEEN NARROWPARTICULARLY LAST YEAR. YOU MAKE THE POINT THAT THESMALL CAPS TEND TO OUTPERFORM FOLLOWING PERIODS OF NARROWLEADERSHIP. WHAT IS THAT TREND? >> WE'VE SEEN BOTH SMALL CAPSTEND TO OUTPERFORM AND WE EXPECT THE EQUAL WEIGHTED S&P500, WE SEE OPPORTUNITIES THERE AS WELL.WE ARE IN AN ENVIRONMENT WHERE.

THE MARKET WAS LED BY THESEVERY NARROW THEMES. SOME OF THESE MEGA CAP GROWTHSTOCKS AND NOW YOU ARE AT A POINT WHERE POSITIONING ISSTARTING TO TURN MORE POSITIVE ON ECONOMICALLY SENSITIVETHEMES. WE'VE SEEN INFLOWS INTO SMALLCAPS FOR THE LAST FEW MONTHS BUT POSITIONING IS VERY LIGHT.THESE THINGS RUN IN CYCLES OF SMALL VERSUS LARGE CAPLEADERSHIP, THESE LONGER CYCLES TEND TO LAST ABOUT 10 YEARS. INVESTORS FROM 2013-2020, SMALLCAPS UNDERPERFORMED NOW THE.

AVERAGE MULTI-CAP MANAGER ISABOUT 40% UNDERWEIGHT SMALL CAPS IN THEIR PORTFOLIO.I THINK THIS IS A POINT WHERE YOU ARE STARTING TO SEE MOREINTEREST IN THE THEME, THE ECONOMIC DATA AND MACROECONOMIC INDICATORS ARE TURNING OFF THE BOTTOMS. THAT TENDS TOBE A POSITIVE ENVIRONMENT FOR SOME OF THESE AREAS OF THEMARKET YOUR AVERAGE FUND MANAGER IS UNDER TO LIKE SMALLCAPS OR CYCLICALS. LISA: IT SOUNDS PRETTY BULLISH.THERE IS SOME RISK IF THE FED KEEPS RATES WHERE THEY ARE.

IT'S NOT NECESSARILY THE SAMEKIND OF CONVICTION USED TO HAVE, WHY? >> I CAN ANSWER THAT. FOR ME, IT'S BECAUSE THERE ISMORE HIGH CONVICTION, BULLISHNESS ON EQUITIES.NOT ALL EQUITIES BUT POCKETS. THOSE ARE THE AREAS YOU WANT TOWATCH. HOW MUCH DO THESE AI PLAYS HAVETO BE EARNINGS FROM HERE IN ORDER TO CONTINUE TO GO UP?THAT'S WHERE I WORRY AND I FIRMLY BELIEVE WE COULD SEE ACORRECTION IN THOSE AREAS OF.

THE MARKET AND WE COULD SEE A5% PULLBACK IN THE S&P 500 WHICH HAS BEEN THE STRATABENCHMARK FOR THE LAST ALMOST 20 YEARS NOW.I THINK THOSE OF THE RISKS. OUTSIDE OF THESE THEMES, THEREIS A LOT OF DRY POWDER FOR REAL GROWTH. WHEN YOU LISTEN TO THE INSTITUTE AND CANDACE TALKABOUT THE INDICATORS WE TRACK, IT SOUNDS LIKE THIS IS MORE OFA GDP STORY RATHER THAN AN EARNINGS STORY. LISA: IN A GDP STORY, DON'T BIGGERCOMPANIES HAVE AN ADVANTAGE.

STRUCTURALLY AT A TIME WHERETHEY CAN INVEST IN TECHNOLOGY AND INVEST IN SOME OF THESESMALL NEAR-TERM INVESTMENTS EVEN AS THEY LOCK IN THEIRLONGER-TERM OBLIGATIONS? DOM CHU ULTIMATELY GET SMALLCOMPANIES DISADVANTAGED IN A NEW WAY THAT'S DIFFERENT FROMTHE PAST? >> THERE IS SOME OF THAT BUT IFWE ARE IN A CAPEX CYCLE, A LOT OF THE DOMESTIC SMALLERCOMPANIES ARE THE ONES THAT BENEFIT IF A LARGE MAKE CAP ISSPENDING ESPECIALLY SOME OF THESE COMPANIES REASSURING ANDBRINGING BACK MANUFACTURING TO.

THE U.S..THAT'S A LONGER-TERM THING THAT WILL BENEFIT THE CYCLICALDOMESTIC SMALLER COMPANIES IN THE U.S.. JONATHAN:I ALWAYS ASK YOU THIS, IS THE BIGGEST RISK STILL UPSIDE RISK? >> TO THE S&P? I THINK SO.JONATHAN: I CAN'T BELIEVE YOU'VE NEVERDONE THIS TOGETHER. THANK YOU VERY MUCH AND THANKSFOR HAVING US. UP NEXT, NVIDIA LOOKING TOEXTEND ITS AI DOMINANCE. >> THE INDUSTRY IS BEINGTRANSFORMED NOT JUST HOURS.

BECAUSE THE COMPUTER INDUSTRY,THE COMPUTER IS THE SINGLE MOST IMPORTANT INSTRUMENT IN SOCIETYTODAY. JONATHAN: THAT CONVERSATION UP NEXT, LIVEFROM NEW YORK CITY, THIS IS BLOOMBERG. ♪ JONATHAN:LIVE FROM NEW YORK, ONE HOUR AND 12 MINUTES AWAY AND THESTOCK MARKET LOOKS LIKE THIS. EQUITY FUTURES ARE MOSTLYNEGATIVE THIS MORNING, DOWN BY ZERO 5% WITH YIELDS VIRTUALLYUNCHANGED. NVIDIA IS LOOKING TO EXTEND ITSAI DOMINANCE.

>> THE INDUSTRY IS BEINGTRANSFORMED, NOT JUST HOURS, BECAUSE THE COMPUTER INDUSTRY,THE COMPUTER IS THE SINGLE MOST IMPORTANT INSTRUMENT OF SOCIETYTODAY. FUNDAMENTAL TRANSFORMATIONS INCOMPUTING AFFECTS EVERY INDUSTRY. JONATHAN: HERE'S THE LATEST — NVIDIAINVENTING A NEW AI PROCESSOR DESIGNED CALLED LIKE WELL.THE CEO PROMISING IT WILL BE INDUSTRY CHANGING TECHNOLOGY.BANK OF AMERICA GLOBAL RESEARCH IS WEIGHING IN ON THE AI CRAZEWRITING –.

HE JOINS US AROUND THE TABLENOW. >> GOOD MORNING. JONATHAN:I WILL GO FULL DOOMSDAY. THE END OF ASPIRATION,INCREDIBLY DEPRESSING. WHERE IS THIS GOING?WILL IT BE BETTER THAN THE WORLD I JUST DESCRIBED? >> THANKS FOR INCLUDING ME.JONATHAN: YOU DON'T HAVE TO THANK ME FORTHAT. LISA: GOOD MORNING. >> IF WE TAKE A STEP BACK, THEWAY WE ARE LOOKING AT HOW AI CHANGES VIRTUALLY EVERYTHING WEDO IS IT'S PROBABLY THE THIRD.

TRANSFORMATIONAL WAVE WE AREEXPERIENCING. THE FIRST ONE WAS THEMICROPROCESSOR. THAT TO MICROSIZED ACCESS TOCOMPUTING POWER. EVERYBODY GOT A PC OR THEY HAVEA NOTEBOOK AND A SMART PHONE AND THE 1990'S, YOUDEMOCRATIZED ACCESS THROUGH THE INTERNET ROUSER TO INFORMATION.IN THE 70'S, ACCESS TO COMPUTING POWER IN THE 90'S,DEMOCRATIZED ACCESS TO INFORMATION.EVEN THOUGH AI IS ABOUT 70 YEARS OLD, REALLY THE GENAITECHNOLOGY HAS TO MICROSIZED.

ACCESS TO INTELLIGENCE.THAT'S THE REAL CHANGE. NOW THAT YOU HAVE ACCESS THATDATA SCIENTISTS USED TO HAVE, YOU CAN USE INTELLIGENCESTRAIGHT FROM YOUR SMART PHONE LEVERAGING IN THOSE WAYS.WE THINK WE ARE ONLY IN 1995 OF THIS BUILDOUT.AS SOMEBODY WHO COVERED PARTS OF THE INTERNET BACK IN THE1990'S, I'VE WATCHED THE CYCLES AND THERE ARE DEFINITEPARALLELS WITH THE BUILDOUT AND WE ARE ONLY 15 MONTHS INTO THISBUILDOUT AS MY COLLEAGUE HAS TALKED ABOUT.IT WILL BE YEARS BECAUSE THERE.

ARE DIFFERENT STAGES FOR THAT.JONATHAN: WE'VE GOT TO IDENTIFY WINNERSAT DIFFERENT STAGES. IDENTIFYING WHO THE ULTIMATEWINNERS WERE IN THATPERIOD WAS DIFFICULT SO YOU BOUGHTEVERYTHING. WHAT IS THE BEST APPROACH NOW,HOW DO YOU THINK ABOUT WHO WINS EACH CYCLE? >> IF YOU THINK ABOUT THE STACKOF TECHNOLOGY FOR AI, THE FIRST AND YOU HAVE TO DO IS WILLTHESE MODELS TO YOU CAN LEVERAGE THE AI HAVINGAPPLICATIONS.

THAT'S WHAT YOU ARE SEEING NOW.YOU ARE SEEING THE CHIPS, THE SERVERS BEING BOUGHT ANDDEPLOYED. AT THIS POINT, THE MODELS ARESTILL GROWING. THE BUILDOUT IS STILL HAPPENINGBECAUSE THE APPLICATIONS WE WANT TO USE ON TOP OF THEM ARENOT WHERE WE WANT YET. THE AVERAGE INTELLIGENCE ISPROBABLY A 15-YEAR-OLD INTERN. IT'S GREAT TO HAVE AN INFINITENUMBER OF 15-YEAR-OLD INTERNS BUT YOU DEFINITELY WANTSOMETHING MORE INTELLIGENT OVER TIME.YOU STILL NEED MORE PROCESSING.

POWER, YOU NEED TO UPGRADE THEMODELS IN THE MODELS ARE BENEFITING THE CHIP COMPANIES, THE SERVER COMPANIES BUT ALSOTHE PUBLIC CLOUD COMPANY IS WHERE THE MODELS ARE SITTING. THAT'S WHY WE LIKE MICROSOFT,THAT'S WHY MY COLLEAGUE LIKES AMAZON BECAUSE THOSE GUYS AREBENEFITING BECAUSE THEY ARE HOSTING THOSE MODELS.THAT'S VERY DIFFERENT FROM THE INTERNET.IN THE 1990'S, THE INTERNET WAS BUILT USING DEBT.ALL OF THOSE TELECOM COMPANIES.

RAISED ALL OF THIS DEBT.THE COMPANIES THAT WERE DOING APPLICATIONS ON TOP OF THAT HADNO MONETIZATION MODELS. WHEN THAT STOPPED, THOSECOMPANIES WENT BANKRUPT. WHAT'S DIFFERENT HERE IS THESEMODELS ARE BEING DEALT OUT OF CASH FLOW OF THE PUBLICCOMPANIES, NOT DEBT IN THE PRIVATE COMPANIES ARE USINGEQUITY. LISA: ARE WE FACING THE OTHER TIMES?THIS IS BASICALLY WHERE WE ARE AT. TO PUT A BOW ON ALL OF THIS,THERE IS A BELIEF THAT SOME OF THE BROADENING OUT OF THEEQUITY RALLY WILL STEM FROM.

PRODUCTIVITY GAINS TIED TOARTIFICIAL INTELLIGENCE. ARE YOU SAYING IT'S TOO SOONAND IT WILL TAKE YEARS BEFORE WE SEE IT PERCOLATING TO THEREST OF INDUSTRIES OR ARE YOU POSSIBLY SEEING THEDEMOCRATIZED ACCESS TO INTELLIGENCE MAKING A WORLDBETTER? >> OVER TIME, I THINK IT WILLMAKE OUR WORLD BETTER. I THINK EXPECTATIONS WERE THATTHINGS WOULD GET BETTER IMMEDIATELY.IT WILL TAKE TIME BECAUSE WHAT HAS TO HAPPEN IS CORPORATEADOPTION NEEDS TO TAKE A.

DELIBERATE APPROACH BECAUSETHEY HAVE TO UNDERSTAND THE MODELS.IF YOU ARE REGULATED, YOU HAVE TO EXPLAIN THE BIASES WITHINTHE MODELS BECAUSE — BEFORE YOU CAN USE THEM SO WE WILLTAKE A FEW YEARS. WE HAD THE NUMBER ONE RESEARCHTEAM ON THE STREET. I SURVEYED OUR ANALYSTS TOFIGURE OUT EXACTLY WHAT THEY THOUGHT THEIR SECTOR WOULDBENEFIT FROM AI OVER THE NEXT THREE YEARS. ON AVERAGE, WE EXPECT A 250BASIS OPERATING MARGIN.

IMPROVEMENT WHICH IS $65BILLION ANNUALIZED SAVINGS FOR THE S&P 500.OVER 100 BILLION DOLLARS OF SAVINGS PER YEAR GLOBALLY.THAT COULD BE CONSERVATIVE BECAUSE THAT WAS A SURVEY DONEA FEW MONTHS AGO WITHOUT ALL OF THE APPLICATIONS THAT ARECOMING OUT NOW. WE DEFINITELY SEE IT HITTINGOVER THE NEXT FEW YEARS SO IT WON'T BE A STRAIGHT LINE UP BUTWE DEFINITELY SEE THE LINE MOVING UP AREA JONATHAN:EVERYONE SAYS IT'S DEPRESSING MY COMMENTARY.THE WAY I THINK ABOUT IT IS.

THAT BETTER FOR WHOM?BRIAN SET YOUR SEAT A MOMENT AGO AND WE TALKED ABOUT HOWLESS LABOR-INTENSIVE EACH ADDITIONAL DOLLAR OF REVENUE IS.IF THE SAME FOR THESE COMPANIES ADOPTING THIS TECHNOLOGY, THEREWILL BE A LOT OF PEOPLE WITHOUT JOBS. LISA:THE PEOPLE THAT THEY HAVE ARE PAID MORE BECAUSE THE ACTUALWORKERS WERE ABLE TO MEET THE CHALLENGE AT HAND WERE SMARTERTHAN THE 15-YEAR-OLD INTERN ARE ABLE TO GET PAID ACCORDINGLYWHILE OTHER PEOPLE STRUGGLE TO BE EMPLOYED.THAT'S THE DICHOTOMY WE ARE.

TALKING ABOUT. JONATHAN:THANK YOU FOR THIS DISCUSSION. BEYOND THE DEPRESSING STORY OFAI. I DON'T THINK I'M ALONE. COMING UP, RECORD HOUSING DATAIN HOUSING PERMITS. OUR GUESTS WILL REACT TO THEECONOMY AND THE FEDERAL RESERVE TOMORROW. JONATHAN:THE LAST SLATE OF ECONOMIC DATA GOING INTO THE FEDERAL RESERVE,SOME HOUSING STARTS AND BUILDING PERMITS COMING UP IN AMOMENT. LET'S START WITH PRICE ACTION,EQUITY FUTURES ON THE S&P ARE.

NEGATIVE ACROSS THE BOARD. WE ARE -.5 PERCENT ON THE S&P500. DOWN .8 ON THE NASDAQ. A LITTLE BIT LOWER ON YIELDSTHIS MORNING. LET'S CROSS OVER TO MICHAELMCKEE. MIKE: GOOD MORNING. WE WERE EXPECTING A REBOUND INHOUSING STARTS AND WE DEFINITELY GOT ONE WHETHER ITPROVES THAT THE NUMBER OF HOLES IN THE CROWN IN FEBRUARY, 10.7%INCREASE TO A OVER ONE MILLION ANNUAL RATE FOR HOUSING STARTS.BUILDING PERMITS ARE UP SIGNIFICANTLY. 1.9%.

THAT'S FROM A DECLINE OF 0.3%THE PRIOR MONTH. LOOKS LIKE HOMEBUILDERS AREGEARING UP FOR A SPRING SELLING SEASON.THIS IS AN INTERESTING NUMBER THAT WE EXPECT TO KEEP GOING UPBECAUSE THERE IS NOT ENOUGH HOUSES FOR SALE.IT'S NOT SO MUCH THAT BUT WHEN WE GET MORE HOUSING FOR SALEFROM THE EXISTING HOME MARKET. IT GOT SOME SMARTY ECONOMISTSTHAN I THAT YOU CAN TALK TO ABOUT IT BECAUSE IT'S AQUESTION OF INTEREST RATES AT THIS POINT. JONATHAN:IT'S SORT OF AN UPSIDE DOWN.

WORLD, RATES HAVE GONE UP BUTSUPPLY HAS BEEN CONSTRAINED AND SUPPLY HAS GOING HIGHER.CAN YOU MAKE SENSE OF THIS MIKE: MIKE: FOR US?ONE OF THE PROBLEMS THE FED FACES IS NORMALLY, THEY WOULDBRING HOUSING DOWN AND PEOPLE WOULD SIT AND WAIT AND WHENTHEY CUT RATES, PEOPLE WOULD GO OUT AND BUY HOUSES AGAIN ANDTHEN PRICES WOULD RISE. IN THIS CASE, BECAUSE SO MANYPEOPLE LUCK INTO VERY LOW RATES, PRICES ARE RISINGBECAUSE THERE'S NOTHING ON THE MARKET TO BUY IN THE FED IS NOTABLE TO HAVE THE SAME KIND OF.

INFLUENCE IT HAS AN INTERESTRATE SENSITIVE SECTORS OF THE ECONOMY, THIS IS THE BIGGESTONE. LISA: I'M STRUCK BY THE FACT THAT WEDID SEE A REBOUND BUT IT WAS EVEN BIGGER THAN PEOPLEPREVIOUSLY EXPECTED. THIS HAS BEEN THE THEME THAT ITWAS 1.50 2 MILLION. WHEN YOU LOOK AT THIS, WHATDOES THAT SUGGEST TO YOU ABOUT HOW ECONOMISTS CONTINUE TOLOWBALL SOME OF THE GROWTH AND SOME OF THE DESIRE TO KEEPBUILDING AND EXPANDING? MIKE: IT DEPENDS ON THE NUMBERS YOULOOK AT.

THE ISM NUMBER SUGGEST WE ARESEEING SOME MANUFACTURING BUSINESS SLOW DOWN.THE THING ABOUT HOUSING IS THERE IS A BIG BUILT-IN DEMAND.A LOT OF PEOPLE WANT TO BUY HOUSES AND THERE IS NOT ENOUGHHOUSES FOR SALE. WHAT THESE NUMBERS MAY SUGGESTIS THAT THE SUPPLY CHAINS FROM BUILDING MATERIALS HAVE GOTTENA LOT BETTER. AND THAT BUILDERS ARE ABLE TOFIND WORKERS TO FOLLOW THROUGH ON THEIR BUILDING PERMITS. THIS IS ONE CATEGORY, THE NEWHOME CONSTRUCTION AREA WHERE.

THINGS HAVE GOTTEN A LITTLEBETTER THAN HAVE BEEN EXPECTED. JONATHAN:WE'VE GOT TO LEAVE IT THERE, LOOKING AHEAD TO THE FEDERALRESERVE. EQUITY FUTURES ON THE S&P 500ARE A BAUER OUT FROM THE OPENING BELL, THEY ARE NEGATIVE.JOINING US IS MICHAELGAIPIN ALONGSIDE HIS COLLEAGUE.GREAT TO SEE YOU BOTH. >> THANKS FOR COMING TO ONEBRYANT PARK. JONATHAN: THANKS FOR HAVING US AGAIN.CAN WE TALK ABOUT THE RECENT ECONOMIC DATA?CAN YOU POINT IS SOMETHING THAT.

DEMONSTRATES WE ARESUFFICIENTLY RESTRICTIVE AT THE FEDERAL RESERVE? >> IT'S TOUGH.AS MIKE WAS JUST SAYING, IF HOUSING IS YOUR TYPICALSUSPECT, HOUSING DID REACT, ACTIVITY DID SLOW DOWN BUTMAYBE NOT FOR THE REASONS ONE WOULD EXPECT.I THINK YOU CAN POINT TO BANK LOAN GROWTH IS ANOTHER AREATHAT HAS RESPONDED TO HIGHER RATES BUT OUTSIDE OF MAYBE LOANGROWTH AND HOUSING, IT'S DIFFICULT IN MY VIEW TO FINDSECTORS OF THE ECONOMY THAT HAD.

OBVIOUS INTEREST RATE EFFECTS.JONATHAN: ARE THE LONGER VARIABLE LEGSSUPERLONG? >> WE ARE STARTING TO SEE SOMEIMPACT ON RETAIL SALES AS LONG? THE LAST COUPLE OF PRINT ANDSOFT AND WHAT WAS MORE NOTABLE FOR ME WAS THE DOWNWARDREVISIONS. IT USUALLY LOOKS LIKE FOUR OFTHE LAST FIVE MONTHS OF RETAIL SALES WERE SOMEWHAT WEAK.WE ARE SEEING SOME MODERATION THERE BUT SO FAR IT'S OFFSET BYSTRONG SERVICES CONSUMPTION BUT WE WILL HAVE TO SEE IF THATCONTINUES. LISA:.

WE'VE SPOKEN TO ONE PERSONAFTER ANOTHER AND EVERYONE IS BULLISH THIS MORNING.RETAIL SALES MY PIECE OFF BUT FOR THE MOST PART IT'S REALLYGOOD AND THEN THE ECONOMISTS SAY THERE IS A LITTLE BIT OFWEAKNESS. IS THAT ENOUGH? WE HAD ONE BAD RETAIL SALESPRINT BUT OTHERWISE PEOPLE ARE BEING DISCRETIONARY?IS THAT SUGGEST WE ARE SUFFICIENTLY RESTRICTIVE? >> AS MIKE SAID, IT'S TOUGH.IT'S A QUESTION OF SUPPLY AND DEMAND.WHAT WE EXPERIENCED IN 2023 WAS.

A VERY BROAD SUPPLY SHOCK FROMTHE LABOR MARKET, FROM SUPPLY CHAINS HEALING AND BYDEFINITION, WHEN YOU GET POP A POSITIVE SUPPLY SHOCK, YOU'LLGET ABOVE TREND GROWTH AND DISINFLATION AT THE SAME TIME.WHERE DO WE STAND ON THAT AND IF THOSE SUPPLY SHOCKS GO AWAY,I THINK WE WILL GET A CLEAR PICTURE OF DEMAND UNDER THEHOOD. SOME OF THE WORK WE SUGGESTEDSUGGEST DEMAND IS COOLING OFF A LITTLE BIT BUT THERE IS MOREWAYS TO GO. LISA: IS THIS ENOUGH TO GIVE THE FEDCONFIDENCE THAT THERE IS SOME.

KIND OF TRUE DISINFLATIONARYTREND OTHER THAN JUST COMPS THAT WERE NICE FOR A COUPLE OFMONTHS? >> THE PREMISE TO YOUR QUESTIONI THINK IT'S SAYING DOES THE FED NEED TO DO MORE TO BRINGINFLATION DOWN OR IS SUPPLY ENOUGH?DO WE NEED RESTRICTIVE POLICY TO GET SUSTAINABLY TO 2%?MOST PEOPLE WOULD SAY POLICY IS MODERATELY RESTRICTIVE.IT'S DOING SOMETHING BUT THERE IS RUSSIAN OF HOW MUCH.THEY ARE COMPLEMENTING THAT BY SAYING WE ARE GETTING THISHELPFUL BOOTH AND SUPPLY AND.

THAT IS WHAT'S BRINGINGINFLATION DOWN. THE COMBINATION OF THE TWO ITHINK GIVES THEM CONFIDENCE ABOUT THE OVERALL DISINFLATIONTREND. RATES AT SOME POINT SHOULD MOVELOWER. THE LACK OF COMPETENCE IS ABOUTWHEN DOES THE WINDOW OPEN, WINDOWS THE DATA TELL THEM IT'SOK TO START? THERE IS LITTLE UNCERTAINTYABOUT WHEN TO START BUT I THINK CONFIDENCE THE OVERALLDISINFLATION PRINT IS THERE. JONATHAN:YOUR CALL IS JUNE, WHAT IS.

SPECIAL ABOUT JUNE APART FROMTHE FACT THAT IT'S NOT MARCH? WHAT IS SPECIAL ABOUT THATMONTH AND WHY IS THAT THE MONTH FOR SO MANY PEOPLE ON WALLSTREET? >> THE DATA ALIGNS A LITTLEBETTER IN JUNE IN TERMS OF YEAR ON YEAR RATES OF INFLATIONBEING WE THINK THAT SUBJECTIVE LEVELS –JONATHAN:ARE THEY GOING TO FOCUS ON YEAR-OVER-YEAR AND NOT MONTHOVER MONTH? THEY HAVE SAID WE HAD A GOODSIX-MONTH RUN AND WE NEED MORE EVIDENCE.I THINK THAT HAS SHIFTED US ALL.

TO LOOKING MORE TO YEAR ON YEAR.THE OTHER REASON I WAS A JUNE AS OPPOSED TO MAY OR JULY AS IFYOU THINK YOUR CUTTING RATES EVERY OTHER MEETING, I THINKYOU WANT TO ALIGN THOSE POLICY DECISIONS ON MEETINGS WHERE YOURELEASE NEW PROJECTIONS. I THINK THAT PUTS ALL OF US ONJUNE AS OPPOSED TO MAY OR JULY. JONATHAN:THE CHAIRMAN TALKED ABOUT NEEDING MORE CONFIDENCE.BASED ON THE EVIDENCE WE'VE SEEN BETWEEN THE LAST MEETINGAND THE ONE WE ARE ABOUT TO SEE TOMORROW THAT THIS CHAIRMAN HASLOST OR GAINED CONFIDENCE?.

>> I WOULD SAY LESS CONFIDENCEAROUND THE TIMING BUT STILL CONFIDENCE ON THE OVERALLDISINFLATIONARY TREND. JONATHAN: YOU CAN SENSE AND THAT NEWSCONFERENCE LAST TIME AROUND THAT HE WASN'T WHITECOMFORTABLE TALKING ABOUT THE OVERALL DISINFLATION TRENDANYONE TO KNOW WHETHER AND AVETT WAS DUE TO ONE OFFFACTORS. WHEN YOU LOOK AT THE TREND FORGOODS INFLATION, IS THAT WORRY JUSTIFIED? >> WE GOT ONE MONTH OF GOODSINFLATION AFTER SEVERAL MONTHS.

OF OUTRIGHT DEFLATION SO IWOULDN'T SAY THAT'S A GOOD SIGN YET. IF YOU WANT TO BE CONCERNED,JONATHAN: I WANT TO BE CONCERNED.[LAUGHTER] >> ONE OF THE THINGS AREASTHERE IS THIS QUESTION IF YOU DO IT FROM A MONTH BY MONTHPERSPECTIVE OF WHETHER GOODS DEFLATION WOULD SLOW DOWN ORAND BEFORE HOUSING STARTED TO COOL OFF.IT LOOKS LIKE THAT MIGHT BE THE CASE.IT'S ONE MONTH OF DATA SAID.

DON'T TAKE IT TOO SERIOUSLY BUTTHAT SUGGEST YOU CAN GET STUCK ABOUT 2% FOR A LONGER TIME.THE OTHER CONCERN OUT OF THE JANUARY REPORT WAS THERE IS HISBIG JUMP IN SERVICESEX HOUSING AND WITH THAT CONTINUE OR WASTHAT A ONE OFF AND IT LOOKS LIKE THAT WAS MORE OF A ONE OFF.LISA: THERE IS ALSO THE QUESTION WEKEEP RAISING, OUR FINANCIAL CONDITION CAN BIDDING TO APROLONGED INFLATION STICKING IN THE ECONOMY?DO YOU THINK IT'S IMPORTANT FOR THE FED TO PUSH BACK A LITTLEBIT AND SAY YEAH, IF THINGS GET.

THIS EASY, IF ANYONE CAN BORROWENOUGH STOCK MARKETS ARE DOING GREAT, IF YOU SEE MORTGAGESSTART TO COME BACK TO THE FORE AND YOU GET HAVE A PERCENTAGEPOINT DROP IN THE RATE, DO THEY NEED TO DO THAT TO BRING THIS ALITTLE MORE IN CHECK? >> I THINK THEY NEED TO KEEPFINANCIAL CONDITIONS RESTRICTIVE. I THANKS RALLIED TOO MUCH FROMTHEIR PERSPECTIVE FROM THE OCTOBER/NOVEMBER TIME TOEARLIER THIS YEAR. I THINK THEY KNOW IF WE AREGOING TO START AND EASING CYCLE.

AT SOME POINT, FINANCIALCONDITIONS WILL EASE SO THEY CAN'T HAVE THEIR CAKE AND EATIT TOO BUT I THINK THEY NEED TO KEEP FINANCIAL CONDITIONSRESTRICTIVE ON AVERAGE AND I THINK THEY ARE.OUR PROPRIETARY INDICATORS ARE SHOWING THEY ARE RESTRICTIVEBUT NOT AS RESTRICTIVE AS THEY WERE IN PRIOR CYCLE PEAKS.IF THEY ARE GETTING A SUPPLY-SIDE REBOUND, THATSHOULD BE ENOUGH. TO YOUR POINT, THEY WOULD WANTTO LEAN AGAINST WHATEVER IS EXCESSIVE EASING LISA: LISA:AND FINANCIAL CONDITIONS.

HOW IS THIS RESTRICTIVE? >> THAT'S A GOOD QUESTION. >> HE GETS ALL THE HARDQUESTIONS. >> THE FED WOULD BE WAY MORECONCERNED OF THE MARKETS ARE NOT PRICING THE AMOUNT OF CUTSTHE FED THINKS IS APPROPRIATE. THAT WAS THE CASE EARLIER THISYEAR WHEN MARKETS ARE PRICING SIX CUTS AND THAT WAS CLEARLYNOT WITH THE FED HAD IN MIND. ONCE THE MARKETS PRICING AREASONABLE NUMBER OF CUTS LIKE THREE THIS YEAR OR 2.5, THENWHATEVER THAT IMPLIES FOR.

EQUITIES SPREADS, DON'T THINKTHEY WANT TO GET INVOLVED IN THAT.THEY DON'T WANT TO BE IN THE BUSINESS OF MANAGING RISK SOTHEY ARE REASONABLY COMFORTABLE NOW AND PROBABLY WEREN'T AT THESTART OF THE YEAR IS WHY THE PUSHBACK WAS MORE AGGRESSIVE.JONATHAN: LET'S FINISH ON THE PLAYBOOKFOR TOMORROW. LET'S GO TO PROJECTIONS, ITONLY TAKES A FEW POLICYMAKERS TO GO FROM THE MEDIAN DROP TO 2.IS THAT WHAT YOU EXPECT TOMORROW?.

>> NO, WE EXPECT THEM TO STAYAT THREE CUTS BUT TO CLOSE CALL, IT ONLY TAKES TWO PEOPLETO MOVE UP IN ORDER FOR THE FED TO GO FROM 3-2 CUTS.DO YOU WANT TO SIGNAL THAT? WHAT ARE THE IMPLICATIONS OFTHAT? IF YOU CAN'T JUSTIFY A CUT BYJUNE GIVEN THE BASE EFFECTS WILL BE LESS FAVORABLE FOR THEREST OF THE YEAR, YOU MIGHT NOT HAVE A LEG TO STAND ON TO STARTCUTTING UNTIL EARLY NEXT YEAR. THAT MIGHT BE A REASON TO GETGOING NOW UNLESS YOU ARE COMFORTABLE STARTING NEXT MARCH.FOR ALL OF THOSE REASONS, WE.

THINK IT STAYS AT THREE BUT ITWILL BE A CLOSE CALL AND THAT WILL BE THE BIG FOCUS. JONATHAN:WHAT WOULD YOU LOOK FOR? >> WE ARE ON THE SAME PAGE FORTHAT. IT'S A CLOSE CALL. I THINK YOU WILL GET A BIGUPWARD REVISION AND GROWTH, MAYBE AROUND 1/8 AND WE THINKPC GETS REVISED TO 2-6. WE THINK THERE IS ENOUGH TIMEBETWEEN NOW AND JUNE TO SAY LET'S LOOK AT THE DATA MORE ANDNOT PREJUDGE IT BUT IT'S A CLOSE CALL. LISA:THEY DON'T CARE ABOUT SPREADS AND MICROMANAGING THEM WHENTHEY DO WELL BUT THEY CARE WHEN.

THEY ARE DOING BADLY.WE ARE TALKING ABOUT A FED PUT ALL OVER AGAIN COME ARE WE NOT? >> YOU WANT THEM TO BECONSISTENT? [LAUGHTER] JONATHAN: WERE TRYING TO FIGURE OUT HOWSYMMETRICAL THIS IS. THERE IS A BELIEF IN THE MARKETTHAT THERE IS AN ASYMMETRIC STANCE AT THE FED THAT IFGROWTH IS STRONG, THEY WON'T RESPOND BUT IF IT'S WEEK, THEYWILL CUT. WHAT WE ARE TRYING TO FIGUREOUT WHETHER THAT TEMPERS THEIR ABILITY TO RETAIN THAT OPTIONOF SAYING WE WILL CUT IF THE.

ECONOMY WEAKENS AND WE WON'THIKE IF IT GETS STRONGER. >> ON TOP OF THAT, THERE IS ASYMMETRY OF AN AVERAGE INFLATION TARGET AND YOU AREONLY RESPONDING TO SHORTFALLS OF EMPLOYMENT FROM ITS MAXIMUMLEVEL. ANOTHER REASON TO IGNORE WHAT'SHAPPENING ON THE ACTIVITY SIDE. >> ON THAT SUBJECT, WE GETASKED A BIT ABOUT THE DOWNSIDE RISK AND I THINK THE BIGDOWNSIDE RISK IS IF YOU CAN CUT THIS YEAR AND YOU GET TO YOURINFLATION IS STILL STICKY, THINGS SLOW DOWN AND YOU DON'THAVE THE FED PUT.

WE'VE BEEN ALIGNED WITH THE FEDPUT BUT THE DOWNSIDE RISK IS IF THAT GOES AWAY, THINGS COULDGET STICKY. JONATHAN: IF THE DUAL MANDATE WENT INTOCONFLICT, HOW WOULD THIS FEDERAL RESERVE HANDLE IT? >> IN WHAT SENSE WOULD BE INCONFLICT? JONATHAN: IF INFLATION WAS STILL ABOVETARGET BUT UNEMPLOYMENT STARTED RISING AND THREATENED MAXIMUMEMPLOYMENT. >> I THINK THEY WOULD RESPONDTO THE ACTIVITY SIDE BECAUSE YOU WOULD ASSUME INFLATION WITHTHE LAG WOULD ULTIMATELY.

RESPOND TO THAT ECONOMIC DATA.JONATHAN: WOULD THAT BE THE ASSUMPTION? >> I THINK SO. WE APPRECIATE IT.>> A WEEK LAST WORD THERE BUT THANK YOU. JONATHAN:THE CONVERSATION WILL CONTINUE FROM BANK OF AMERICA.LOOKING FOR THE MEETING WITH THE THREAT OF DROPPING TO TWOGREAT CATS. LISA: IS INFLATION A LAGGINGINDICATOR? IS THE JOBS MARKET A LEADINGINDICATOR AND IS THAT HOW THEY WILL RESPOND?ARE WE LOOKING AT AN IMPLICIT.

3% TARGET RATHER THAN 2?JONATHAN:JONATHAN: THE MEETING TOMORROW IS ALITTLE MORE INTERESTING THAN IT LISA: LISA: WAS A MONTH AGO.I AGREE. LET'S LOOK AT OTHER STORIES.LET'S GET TO THE BLOOMBERG BRIEF. SONALI:HONG KONG HAS A FAST-TRACK MEASURE FOR THE CEMENTINGCHINA'S CONTROL OVER THE GLOBAL FINANCIAL HUB.THE APPROVAL OF ARTICLE 23 COMPLETES A TWO DECADE CAMPAIGNTO PASS LOCAL LEGISLATION PROTECTING THE CHINESE STATENEW CRIMES LIKE TREASON AND.

INSURRECTION CARRY LIFESENTENCES AND THE MEASURE ALSO BROADLY DEFINES STATE SECRETOFFENSES IN LINE WITH CHINA'S LEGISLATION AROUND ESPIONAGETHIS MOVE — RAISES QUESTIONS ABOUT HONG KONG AS A TOURISTDESTINATION. BITCOIN SLIDES AS RECORD DAILYOUTPUT FROM THE WORLD'S BIGGEST ETF TOKEN, THE GRAYSCALE TRUSTPOSTED A 643 MILLION DOLLAR OUTFLOW YESTERDAY.THE MOST SINCE THE ETF BEGAN TRADING ON JANUARY 11 ETF'SOVERALL HAVE ATTRACTED IN THAT 12:00 P.M.DOLLARS WHICH HELPED PROPEL.

BITCOIN TO A PEAK OF NEARLY$74,000. THE FILIPINO PRESIDENT SAID THETHREAT TO HIS NATION FROM CHINA'S SWEEPING PLANES IN THESOUTH CHINA SEAS IS GROWING BUT ARGUED HIS GOVERNMENT'S EFFORTTO ASSERT SOVEREIGNTY OVER DISPUTED AREAS ARE NOT MEANT TOSTART A CONFLICT BY POKING THE BEAR. HE FOR — HE SPOKE WITH US AFEW HOURS BEFORE THE U.S. SECRETARY OF STATE ANTONYBLINKEN. IT DOES NOT SERVE ANY PURPOSETO HEIGHTEN TENSIONS.

THIS IS NOT POKING THE BEAR ASIT WERE. WE ARE TRYING TO DO THE OPPOSITE.THAT'S YOUR BLOOMBERG BRIEF. APPRECIATE IT, THANK YOU.UP NEXT, THE RECESSION THAT NEVER ARRIVED EVERYONE WASTRYING TO FIGURE OUT HOW THIS ECONOMY WILL PERFORM IN FOURMONTHS AGO, PEOPLE WERE WORRIED ABOUT A RECESSION AND NOW THEYARE NOT. THAT CONVERSATION IS UP NEXT,LIVE FROM NEW YORK CITY, THIS IS BLOOMBERG. ♪.

JONATHAN:THE OPENING BELL IS 42 MINUTES AWAY.ON THE S&P 500, EQUITY FUTURES ARE NEGATIVE MOST OF THISMORNING AND A LITTLE BIT NEGATIVE BY 0.4% ON THE S&P 500.YIELDS ARE A LITTLE LOWER ON THE SESSION UNLIKE THE LASTWEEK. DOLLAR STRENGTH HAS BEEN ATHEME OVER THE LAST 20 FOR HOURS AGAINST THE EURO AND THEJAPANESE YEN. EURO DOLLAR IS $1.08. LISA:IF THE EMPHASIS ON JAY POWELL AND WHETHER HE COMES OUT WITH AHAWKISH TONE OR PUSHES BACK.

AGAINST THE ENTHUSIASM ANDMARKETS. THIS WILL BE THE MAIN MACRODRIVER WHEN IT COMES TO FX POTENTIAL VOLATILITY WHICH THISYEAR HAS NOT BEEN GREAT. JONATHAN:ENTHUSIASM IN THIS BUILDING OVER THE LAST THREE HOURS HASBEEN GREAT AND THE CONSTRUCTIVE TONE AT BANK OF AMERICA ISPHENOMENAL. LISA: NOT ONLY THE FUND MANAGERSURVEY SHOWING THE ENTHUSIASM BUT THE CASH. 40%, MORE THAN 40% INCREASE INTHE CASH AND SAVINGS PEOPLE.

HAVE ON THE BALANCE SHEETS. IT'S NOT GOING DOWN SO WHY AREPEOPLE FEELING LIKE THE CONSUMERS RUNNING OUT OF STEAM.IT DOESN'T LOOK LIKE THAT. JONATHAN:THIS ECONOMY IS STRONGER THAN MOST PEOPLE EXPECTED.THE RECESSION THAT NEVER ARRIVED. >> EVERYBODY WAS TRYING TOFIGURE OUT HOW THIS ECONOMY WILL PERFORM.PERFORMANCE AGO, PEOPLE WERE WORRIED ABOUT A RECESSION ANDNOW THEY ARE NOT.

THEY WANT TO INVEST HEAVILY ANDTHAT'S WHERE YOU SEE THE LACK OF TENSION.EVERYTHING IS SOLID BUT IT HAS TO WORK THE NEXT TWIST IN THEECONOMY TO GET BACK. JONATHAN: THE FED'S TWO-DAY MEETINGBEGINNING TODAY AS THE COMMITTEE PREPARES ITS LATESTSUMMARY OF ECONOMIC PROJECTIONS. BANK OF AMERICA SAYS — JOINING US NOW IS LINZIE HANS.GOOD TO SEE YOU. >> GREAT TO BE JONATHAN:JONATHAN: HERE. THANK YOU FOR HAVING US.LET'S START WITH THESE NUMBERS,.

2023, YOU ADDED A RECORD 37 KAND CLIENTS WHICH IS UP 50% VERSUS THE PRIOR YEAR.WHERE DOES THE BUSINESS COME FROM? >> WE HAVE SEEN TREMENDOUSINTEREST IN CLIENTS WORKING WITH FINANCIAL ADVISORS.WE CHALK THAT UP TO A COUPLE OF THINGS.WE LOOK AT THE PACE OF WEALTH CREATION THIS COUNTRY WHICH ISACCELERATING. IT'S REALLY DOUBLED WHEN YOULOOK AT U.S. HOUSEHOLD FINANCIAL ASSETS FORFINANCIAL MANAGEMENT THE PAST.

12 YEARS AND WE DON'T SEE THATSLOWING DOWN. YOU SEE THE GREAT WEALTHTRANSFER, IS NOT GOING TO HAPPEN, IT'S HAPPENING NOW INTHE WORLD BECOMING MORE COMPLEX, NOT LESS.THE BACKDROP THESE TWO MORE IN CLIENTS REALIZING THE VALUE ANDTHE PER PROFESSIONAL FINANCIAL ADVICE DELIVERED BY A HUMANBEING. THAT'S JONATHAN: JONATHAN: OURFINANCIAL ADVISOR. THE HUMAN BEING ASPECT ISIMPORTANT. CAN YOU TALK TO US ABOUT THENATURE OF THE MONEY?.

IS IT CASH FUNDS SITTING INMONEY MARKET FUNDS AND TAKING 5%? >> GOOD QUESTION, WE'VE SEEN ASHIFT. PRIOR TO THE FORECOURT OF LESSER COME WE SAW OUR CASHBALANCES GROW TO A LEVEL THAT WAS THREE TIMES PRIOR TO THERATE CYCLE BEFORE. WE STARTED THE FOURTH QUARTERSEEING THAT CASH MOVE OFF THE SIDELINES.IT'S GOING INTO A COUPLE OF DIFFERENT PLACES LIKE EQUITIESAND FIXED INCOME, OUR CLIENTS TEND TO MOVE INTO OURPROFESSIONALLY MANAGED.

PORTFOLIOS.OR ALL THE SEPARATELY MANAGED ACCOUNTS WE OFFER ON OURPLATFORM. YOU SEE IN EQUITIES IN CLIENTSLAST YEAR LOCK IN YIELDS. WE SAW A LOT OF BOND LADDERS.YOU ARE SEEING ALTERNATIVES LIKE INVESTMENTS.WE ARE SEEING CLIENTS WANTING ACCESS TO PRIVATE MARKETS ASWELL AS PUBLIC AND RAI ASSETS HAVE DOUBLED IN LAST FIVE YEARS.LISA: GOING BACK TO WHERE THE MONEYIS COMING FROM, IS IT ALL THE SAME HOUSEHOLDS THAT AREBUILDING THEIR WEALTH AND THEN.

ABLE TO COME TO YOU OR IS THISA BROADENING NET WHERE PEOPLE ARE EARNING MORE AND ABLE TOINVEST A GREATER PROPORTION OF THEIR ASSETS? >> I THINK IT'S BOTH.THERE IS A LOT OF WEALTH CREATION THAT STILL ISHAPPENING. BUSINESSES ARE CONTINUING TO BESOLD, LIQUIDITY IS BEING GENERATED, WEALTH IS BEINGTRANSFERRED BETWEEN GENERATIONS. YOU LOOK AT BABY BOOMERS THATCONTROL HALF OF THE WEALTH AND THAT'S AN AGE DEMOGRAPHIC WEREMONEY IS NOT GOING TO TRANSFER,.

IT ALREADY IS.YOU ARE SEEING ALL OF THE ABOVE AND THOSE ARE THE CLIENTS WECONSIDER. LISA: I THINK ABOUT THE IDEA THAT THECONSUMERS OF LOCKED-IN BENCHMARK RATES IF THEY HAVEMORTGAGES OR HAVE BOUGHT A HOUSE.THEY ARE NOT PAYING THAT MUCH MORE IN INTEREST BUT THEY AREEARNING MORE NOT ONLY AN INTEREST FROM EVEN SHORT-TERMINSTRUMENTS BUT FROM AN EQUITY MARKET THAT'S DOING JUST FINE. THIS IS WHERE IT COMES FROMTHAT EASY FINANCIAL CONDITIONS.

THAT ARE THESE — THAT THESEARE CONSUMERS THAT HAVE BETTER SPENT CAPACITY.HOW MUCH IS THAT POSSIBLE TO CONTINUE?DO YOU SEE THAT IS SOMETHING THAT HAS LEGS? >> WE SEE A TREMENDOUS AMOUNTOF CASH ON THE SIDELINES. THAT CAME UP EARLIER IN THEPROGRAMS OF THAT MONEY WILL GET PUT TO WORK. WE LOOK AT THAT MONEY MOVINGINTO OUR FEE-BASED PLATFORMS AT A HIGH RATE.WE ARE ON PACE TO WELL EXCEED.

LAST YEAR.IT'S REALLY CLIENT BY CLIENT SO IN OUR BUSINESS, NO CLIENT ISCREATED HE. OUR FINANCIAL ADVISORS WORKWITH OUR CLIENTS TO FIGURE OUT LIQUIDITY NEEDS AND WHAT THEYHAVE TO HAVE ON THE SIDELINES AND HOW MUCH THEY SHOULD PUT TO WORK AND WAS — AND WHAT'S THERISK AND THE TIME MANAGEMENT ALL THAT IS DONE IN A FINANCIALPLANNING CONTACT AND MOST OF OUR CLIENTS ARE ASSET ALLOCATED.MOST OF OUR CLIENTS OF A WELL DIVERSIFIED PORTFOLIO ACROSSEQUITIES AND FIXED INCOMES AND.

ALTERNATIVES IN CASH HAS BECOMEAN ASSET CLASS A GRIN. — AGAIN. THEY SAY IF WE GOT A LITTLEMONEY, WE CAN WAIT AND EARN DECENT YIELDS. JONATHAN:YOU TALKED ABOUT ADDING PEOPLE. THAT'S MUSIC TO OUR YEARS, NOTROBOTS AND AI. HOW IMPORTANT IS THAT TO YOU? >> 65 TRILLION IS WHAT WEESTIMATE ASSETS AT. THIS IS A BUSINESS THAT WEBELIEVE IS BEST LED BY HUMAN BEINGS.YOU NEED MORE ADVISORS TO GO UP AGAINST THE MARKET PLACE TO.

COMPLEMENT THE EXISTING FA'S.IT'S WOMEN'S HISTORY MONTH AND I MENTIONED THAT FOR OURTERRIFIC WOMEN FINANCIAL AND VISORS IN THE INDUSTRY AS WELLAS TALENT THAT SHOULD COME INTO THIS PROFESSION.WE NEED MORE WOMEN TO COME HERE AND FACE-OFF AGAINST THE MARKET.JONATHAN: LED BY YOU AND THANK YOU FORHAVING US. >> ON BEHALF OF OUR COLLIES,THANK YOU FOR BEING HERE. WE ARE HAPPY TO HOST YOU AND WEHOPE YOU'LL COME BACK. JONATHAN: IF YOU HAVE US.I DON'T KNOW IF THEY WANT IS.

BACK. >> THANK YOU SO MUCH. JONATHAN: A PROGRAMMING UP FOR TOMORROW,THAT'S A FEDERAL RESERVE DECISION THEY WILL CATCH UPWITH FRANCIS DONALD AND THEIR OTHER GUESTS.A SPECIAL THANK YOU TO THE WHOLE TEAM AT BANK OF AMERICAAT ONE BRYANT PARK. LISA: AND THEIR INCREDIBLEBULLISHNESS TO KICK OFF FED WEEK. JONATHAN:DOES IT MAKE YOU UNCOMFORTABLE? LISA:OF COURSE IT DOES BUT WE ARE.

BASKING IN BULLISH. JONATHAN:

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