Bloomberg Surveillance 04/16/2024

>> I LOOK AT 10 YEAR YIELDS,THE MARKET IS TRYING TO GAUGE WHERE THIS WILL SHAKE OUT. >> FOR BONDS, THIS IS ANINFLATION STORY. >> GIVEN POSITIONING ON WHEREWE HAVE IN YIELDS, I THINK WE CAN GO HIGHER. >> WE ARE HAVING THECONVERSATIONS OF, LET'S GET READY TO BUY. >> THIS IS BLOOMBERGSURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ, ANDANNMARIE HORDERN. JONATHAN:.

LIVE FROM NEW YORK CITY, GOODMORNING, GOOD MORNING . COMING INTO TODAY, A TWO-DAYLOSING STREAK ON THE S&P 500, BIGGEST GOING BACK TO MARCH OFLAST YEAR. THAT WAS A MONTH FULL OFBANKING STRESS. NOW, A MONTH FULL OFBETTER-THAN-EXPECTED ECONOMIC DATA INCLUDING U.S.RETAIL SALES. THE10-YEAR, 4.95 ON THE TWO-YEAR. 10-YEAR, 4.6488.ON THE MONTH SO FAR, UP BY MORE THAN 30 BASIS POINTS ON THETWO-YEAR, 40 BASIS POINTS ON.

THE 10-YEAR. MORGAN STANLEY, FOR EQUITIES.SOCGEN, EXPENSIVE VALUATION SITTING COMFORTABLY WITH HIGHERBONDS YIELD. LISA: PART IS THE RIGHT REASON, PARTIS THE WRONG REASON. RETAIL SALES CAME INBETTER-THAN-EXPECTED CAUSING THE INCREASE OF GDP POSITIVEFOR EQUITIES. THE OTHER SIDE, IT IS STEMMINGFROM INCREASING INFLATION EXPECTATIONS GRADING ISSUES OFHOW HIGH THE RATES HAVE TO STAY FOR HOW LONG. JONATHAN:WE HAVE HEARD THE SAME THING.

FROM FED OFFICIAL AFTER FEDOFFICIAL. PATIENCE AND NO URGENCY.MONETARY POLICY IS IN A GOOD PLACE. MONETARY POLICY IS TIGHT.IMMEDIATELY AFTER, HOTTER THAN EXPECTED RETAIL SALES. LISA:CAN THEY GET AHEAD OF THIS? WILL HE HAVE THE FREEDOM TO CUTRATES. IT SEEMS THE MARKET HAS MOVEDON FROM FED SPEAK. IT SEEMS THE MARKET IS LOOKINGAT THE DATA, INCREASINGLY PUSHING OUT POTENTIAL RATE CUTS.FEWER THAN TWO ARE BEING PRICED INTO THE MARKET.WE HAVE HOT INFLATION.

YOU HAVE THIS SENSE, COMMODITYPRESSURES THAT WILL MAKE LIFE DIFFICULT FOR CENTRAL BANKERS.JONATHAN: TONS OF FED SPEAK THIS WEEKINCLUDING CHAIRMAN POWELL, EARNINGS FROM BANK OF AMERICATHIS HOUR, SEVEN: 30 EASTERN FROM MORGAN STANLEY.A LOCK TO WORK THROUGH — A LOT TO WORK THROUGH.WE HAVE THE TALK ABOUT CHINA, DATA IN MARCH A LITTLE SOFTERTHAN EXPECTED. MANY THE TALK ABOUT THERESPONSE POTENTIALLY FROM ISRAEL.FROM THE ISRAELIS, THERE WILL.

BE A RESPONSE. ANNMARIE:EVERYONE IS FOCUSED ON WHAT THE TIMING OF THE RESPONSE WILL BE.WHAT ISRAEL WILL POTENTIALLY HIT. I LIKE TO LOOK AT ACTUALTANGIBLE THINGS IN THE REGION, NOT JUST WHAT PEOPLE ARE SAYING.WE HEARD FROM THE IAEA THAT THEIR INSPECTORS ARE NO LONGERALLOWED TO INSPECT NUCLEAR FACILITIES BECAUSE THE IRANIANAUTHORITIES SAY THEY ARE KEEPING THEM SHUT BECAUSE IT'S SECURITY CONSIDERATIONS. IRAN THINKS THAT THIS COULD BEA TARGET THAT ISRAEL COULD HIT. JONATHAN:JANET YELLEN PREPARING FRESH.

SANCTIONS FOR IRAN BOWING THEUNITED STATES WON'T HESITATE TO INFLICT ECONOMIC PUNISHMENT INRESPONSE TO THE UNPRECEDENTED ATTACK ON ISRAEL. LISA:WHAT IS THE WILLINGNESS TO ABSORB THE CONSEQUENCES OF THATIN TERMS OF HIGHER OIL PRICES? HOW MUCH DO YOU WANT TO ENFORCESANCTIONS THAT WILL CAUSE OIL PRICES TO SPIKE AHEAD OF THEELECTION? JONATHAN: LET'S GO THROUGH THE PRICEACTION FOR YOU STARTING WITH WTI, DOWN .3% TO $85.10.BRENT CRUDE, DOWN .3% TO $89.83. THE EQUITY MARKET PULLING BACKON THE S&P 500 WITH THE.

NEGATIVE FOLLOW-THROUGH FROMYESTERDAY'S SESSION IN THE UNITED STATES IN THE AFTERNOONTO THE EUROPEAN SESSION THROUGH THIS MORNING.MID-DAY, EQUITIES DOWN IN EUROPE ON THE FTSE BY ONE POINT5%. EURO STOXX 50 BY MORE THAN 1%.YIELDS UP BY FOUR BASIS POINTS, CALL IT FIVE.COMING UP THIS HOUR, WE WILL CATCH UP WITH BLACKROCK . CHRIS MARINAC WITH MORGANSTANLEY EARNINGS ON DECK. EQUITY SELLING OFF WITH BONDYIELDS NEAR RECORD HIGHS.

BLACKROCK SAYING, WE REMAINOVERWEIGHT EQUITIES, THE LESS SO THAN A MONTH AGO.WE BELIEVE A STRONG ECONOMY WILL DRIVE DOUBLE DIGITEARNINGS GROWTH WHICH SHOULD ALLOW FOR ADDITIONAL GAINSTHROUGH YEAR END. RUSS JOINS US FOR MORE.STILL OVERWEIGHT. EXPLAIN TO US WHY THE BULLISHTHESIS IS STILL INTACT. RUSS: GOOD MORNING, JONATHAN.LISA DESCRIBED IT WILL. YOU HAVE RATES WHICH CLEARLYTHIS LOCATED THE EQUITY MARKET IN THE SHORT-TERM BUT THEBACKUP CONTINUES GOOD AND BAD.

THE BAD IS STICKY INFLATION.THE GOOD IS AN ECONOMY THAT IS MUCH STRONGER THAN ANYONEEXPECTED THREE TO SIX MONTHS AGO.IF YOU GO BACK TO LAST SUMMER AND YOU LOOK AT THE CONSENSUSOF BLOOMBERG ECONOMIC FORECASTS, ECONOMISTS WERE MAYBE EXPECTING THE ECONOMY TO GROW .5%. THAT OBVIOUSLY REFLECTED A LOTOF ECONOMISTS THAT STILL EXPECTED SUMMER SESSIONPROBABILITY. TODAY THOSE SAME NUMBERS,GROWTH IS EXPECTED TO BE 2% TO.

2.5 PERCENT.LATER, 2.5% INFLATION ON TOP OF THAT, YOU GET TO AN ENVIRONMENTWHERE NOMINAL GROWTH FOR 24 IS PROBABLY GOING TO BE IN THEBALLPARK OF 5%. IF YOU GET THAT, YOU'LL GETBETTER THAN IS DISCOUNTED NOW IN S&P ESTIMATES, SOMETHINGTHAT'S A VERY DIFFERENT DYNAMIC FROM LAST YEAR.LAST YEAR WAS ALL ABOUT MULTIPLE EXPANSION.THIS YEAR, WE THINK THE EQUITY MARKET CAN GO HIGHER, BUT NOTLIKELY TO GO HIGHER IN VALUATIONS, LIKELY TO GO HIGHERON BETTER EARNINGS. LISA:.

WHAT WILL LEAD IT THERE BECAUSEHIGHER VALUATIONS HAS BENEFITED THE BIG TECH COMPLEX.THEY TOOK IT ON THE CHIN YESTERDAY AND SEEMED TO BESTRUGGLING IN THIS MULTIFACETED WORLD. WHAT IS THE LEADERSHIP?RUSS: YESTERDAY TECH DID STRUGGLE,BUT OTHER DAYS TECH HAS HELD UP REMARKABLY WELL WHEN YOUCONSIDER THE BACKUP IN RATES. WE HAVE TO BE MORE SPECIFIC.EARLY GROWTH TECH COMPANIES HAVE STRUGGLED ALONG WITH SMALLCAPS. WHY? THEY ARE SENSITIVE TO THE BACKOF BEEN YIELDS.

YOU THINK ABOUT THEMEGA CAP TECH COMPANIES GENERATING EXTRAORDINARYAMOUNTS OF CASH FLOW, THEY ARE DOING WELL AND WE EXPECT FROMTHIS QUARTER IN PARTICULAR MANY OF THOSE COMPANIES TO LEAD ONEARNINGS GROWTH. LISA:I'M THINKING ABOUT A LOT OF COMPARISONS TO MARCH OF LASTYEAR, THE BIGGEST SELLOFF IN THE S&P, THE BIGGEST SPIKE INTHE VIX OVER THE PAST TWO DAYS, HOW CLOSE ARE WE TO ANOTHERMOMENT LIKE THAT WITH HIGHER YIELDS BASED ON THE FACT THATSMALL BANKS HAVEN'T DEALT WITH.

THE PROBLEMS?THEY ARE STILL MORE VULNERABLE TO HIGHER RATES FOR A LONGERTIME, ESPECIALLY WITHOUT SOME OF THE DEPOSIT STABILITY THAT ALOT OF PEOPLE HAVE BEEN LOOKING FOR? RUSS:I AGREE REGIONAL AND SMALLER BANKS ARE VULNERABLE.WE HAVE BEEN UNDERWEIGHT THAT SECTOR FOR SOME TIME.THE OTHER PART OF THAT IS COMMERCIAL REAL ESTATE.THAT IS PART OF THE ECONOMY TO BE CONCERNED ABOUT.NOT IN THE SENSE THAT WE'RE LOOKING AT A SYSTEMATIC CRISISBUT THAT THESE BANKS HAVE A LOT.

OF FUNDAMENTAL CHALLENGES.AGAIN, YOU COMPARE THE ECONOMY TODAY TO A YEAR AGO, AND A YEARAGO THE CONCERN WAS AFTER SILICON VALLEY BANK AND FIRSTREPUBLIC AND CREDIT SUISSE. WE WERE LOOKING AT ANOTHERSYSTEMIC BANKING CRISIS. I DON'T THINK THAT THAT IS THEPROBLEM TODAY. IF ANYTHING WE HAVE THEOPPOSITE PROBLEM. ASIDE FROM ISSUES AND THESMALLER BANKS, THE ECONOMY IS VERY ROBUST. WE SAW THAT WITHRETAIL SALES. IF ANYTHING, RATHER THAN PEOPLEADDING FED CUTS, THE CASE A.

YEAR AGO, THEY ARE TAKING THEMBACK. JONATHAN: THERE IS A REASON WHY SOMEPEOPLE ARE STILL CALLING THE SURVIVE UNTIL 25.THEY WANT RATES OF THE COME DOWN BY 2025 AND THEY NEED TOSURVIVE UNTIL THEN. IT IS SELF-EXPLANATORY.I AM LOOKING TO SEE WHERE CREDIT IS STARTING TO CONFIRMTHOSE CONCERNS. HOW WOULD YOU FRAME THE MOVEDEVELOPING AND CREDIT? RUSS: CREDIT HAS BEEN INTERESTING.SPREADS ARE TIGHT. WHAT WE HAVE BEEN DOING IN THEPORTFOLIO IS MAINTAINING THE.

CREDIT AND SPREAD EXPOSURE WEHAVE. THAT HAS BEEN A NICE TAILWINDTHAT HAS ALLOWED US TO CARRY ABOVE THE BENCHMARK.YOU HAVE TO GO BACK TO THE STRENGTH IN THE ECONOMY.IT'S NOT THAT THERE WILL BE POCKETS OF STRESS.IF YOU HAVE AN ECONOMY WHERE GROWTH IS SOLID — AND LET'SREMEMBER, MANY COMPANIES, INCLUDING THOSE WITH HIGHYIELD, REFINANCED HOW THEIR DISTRIBUTION OF WHEN THEIRMATURITIES COME DUE. WE REFINANCED THAT IN 2021,2022, SO YOU ARE LOOKING AT AN.

ENVIRONMENT WHERE WE THINK THATTHE DEFAULT RATE FOR MOST COMPANIES WILL STAY LOW.IT IS WELL BELOW THE LONG-TERM AVERAGE.IF YOU HAVE THAT POSITION IN YOUR PORTFOLIO AND YOU CARRYABOVE BENCHMARK, WE DON'T HAVE TO BE IN A RUSH TO SELL IT.JONATHAN: YOU SAID A FEW TIMES IN THELAST FIVE MINUTES THE STRENGTH OF THE ECONOMY.WE HAVE TO BE MORE SPECIFIC, THE STRENGTH OF THE U.S.ECONOMY. CAN WE TALK ABOUT THE REST OFTHE WORLD AND HOW THAT FACTORS.

INTO SOME THINGS YOU ARETELLING US THIS MORNING? RUSS: I THINK THE U.S.IS LEADING IN THIS IS ONE REASON TO REMAIN OVERWEIGHT U.S.STOCKS. WE HAVE BEEN OVERWEIGHT THEDOLLAR VERSUS THE EURO. THIS IS THE DIFFERENTIAL INGROWTH WE SEE. EUROPE IS CLEARLY STRUGGLING ABIT MORE. JAPAN IS DOING OK. CHINA, WE HAD POSITIVE NEWSTHIS MORNING. I AGREE THAT THIS IS A GLOBALECONOMY. AS WE HAVE SEEN MANY TIMES INTHE PAST 20 YEARS, IT IS.

PRIMARILY BEING LED BY U.S.STRENGTH. A LOT OF THAT STRENGTH IS BASEDIN THE U.S. CONSUMER, WHERE YOU HAVE ASTRONG LABOR MARKET, DECENT HOUSEHOLD BALANCE SHEETS, AND ACONSUMER THAT IS WILLING TO SPEND. JONATHAN:FULTON INTO THE POLICY CONVERSATION.WE HAVE — FOLD THAT INTO THE POLICY CONVERSATION. RUSS:BETWEEN THE U.S. AND OTHER CENTRAL BANKS?JONATHAN: LOOK AT THE EURO THIS MORNING,ONE POINT 06.

DOLLAR-YEN THROUGH 1.54.HOW MUCH FURTHER THE ECB COULD GO WITHOUT THE FEDERAL RESERVEJOINING THEM IN A RATE CUTTING CYCLE? RUSS:THE ECB WILL PROBABLY HAVE MORE LATITUDE TO CUT THAN THE FED.THE REASON IS OBVIOUSLY YOU HAVE A WEAKER ECONOMY.IN THE U.S., WE HAVE SOME PERSISTENCE IN INFLATION,PARTICULARLY AROUND SERVICES WHICH YOU ARE SEEING IN OTHERPARTS OF THE WORLD. ONE REASON THE DOLLAR HAS BEENSO RESILIENT IS BECAUSE YOU HAVE THE POLICY TO VERGENCE.ANOTHER — POLICY DIVERGENCE.

ANOTHER ASPECT THAT ISINTERESTING, UNTIL 2021 WHEN YOU THINK ABOUT BUILDING APORTFOLIO, WHAT IS YOUR HEDGE AGAINST EQUITY RISKS?FOR TO — FOR TWO DECADES IT WAS BONDS.WHAT HAS WORKED VERY WELL ON DAYS WHEN EQUITY MARKETS HAVESOLD OFF IS GENERALLY HAVING A LONG DOLLAR, OVERWEIGHT DOLLARPOSITION. IF YOU WORRIED ABOUT THE FEDWHEN THE MARKET IS SELLING OFF, YOU GENERALLY SEE BETTER DOLLARSTRENGTH. LISA: GOLD AND THE DOLLAR, BONDSDON'T WORK THAT WAY.

IS THAT HOW YOU ARE PLAYING IT?RUSS: I AGREE. GOLD HAS EMPIRICALLY WORKEDTHAT WAY. I HAVE TO BE HONEST, CLEARLYTHERE HAVE BEEN CENTRAL BANK BUYING SUPPORTING THAT.WHEN YOU LOOK AT WHAT HAS HAPPENED WITH THE DOLLAR, WHATHAS HAPPENED WITH REAL INFLATION AND INTEREST RATES,IT IS HARD TO EXPLAIN WHY GOLD IS DOING WHAT IT'S DOING.WE ARE IN A ENVIRONMENT OF HIGH GEOPOLITICAL RISKS AND MANYINVESTORS MIGHT LEAN ON GOLD BECAUSE THEY HAVE IN THE PAST,THAT GEOPOLITICAL SAFE HAVEN.

JONATHAN:IT IS GREAT TO CATCH UP AS ALWAYS.STILL BULLISH, STILL OVERWEIGHT THIS EQUITY MARKET.SPEAKING OF GOLD, THE CALL FROM CITIBANK? CRAZY.ALL IS GOLDMAN TOO. LISA: PEOPLE WILL RIDE THE TRAIN THATTHE CENTRAL BANK STARTED. WE HAVE HEARD ACROSS THE BOARD,IS THIS THE NEW HAVEN? GOLD IN ONE POCKET, TRIPLELEVERAGED GOLD FUND, TRIPLE LEVERAGED DOLLAR FUNDS, KICK BONDS TO THE CURVE. JONATHAN: GOLD A LITTLE SOFTER THISMORNING.

ELSEWHERE, LET'S GET YOURBLOOMBERG BRIEF WITH DANI BURGER. DANI:I WAS GOING TO START WITH GOLD, BUT INSTEAD LET'S GET TOGEOPOLITICS. AXIOS REPORTING THE U.S.TREASURY IS PREPARING SANCTIONS FOR IRAN FOLLOWING THE WEEKENDATTACK ON ISRAEL. THE TREASURY VOWING THE U.S.WILL NOT HESITATE TO INFLICT ECONOMIC PUNISHMENT ON IRAN.THE MOVE COMES AS PRESIDENT BIDEN URGES THE ISRAELI PRIMEMINISTER TO BE STRATEGIC AND SHOW RESTRAINT WHEN IT COMES TOPOSSIBLE MILITARY ACTION.

XI JINPING IS PUSHING BACKAGAINST EUROPEAN AND U.S. PRESSURE TO REIN IN CHINA'SPOWERHOUSE INDUSTRIES. THE CHINESE LEADER TOLD THEGERMAN CHANCELLOR THAT CHINESE CLEANTECH EXPORTS HAS HELPEDTHE WORLD TACKLE INFLATION. PRESIDENT XI'S SUGGESTS CHINAMAY NOT BE SWAYED BY WESTERN LEADERS WHO WANT THE COUNTRY TOREDUCE ITS MANUFACTURING CAPACITY.SHARES OF TESLA FALLING IN THE PREMARKET TO THE COMPANY'S TOPEXECUTIVES ANNOUNCING THEIR LEAVING THE COMPANY AMID THECARMAKER'S LARGEST ROUND OF JOB.

CUTS CUTTING 10% OF ITSWORKFORCE TO CUT COSTS AS EV DEMAND SLOWS.SOURCES TELL BLOOMBERG THE CUTS COULD REACH 20% AND SOMEDIVISIONS. ALREADY TESLA SHARES ARE DOWNMORE THAN 30%. JONATHAN: A DIFFICULT MOMENT FOR THATINDUSTRY. FOR SURE. NEXT, ISRAEL IS VOWING TORESPOND. >> ISRAEL PROVED IT HASSUPERIOR MILITARY CAPABILITY AND CRITICALLY THEY DO NOTSTAND ALONE. THE UNITED STATES STANDS WITHTHEM. NO QUESTION THAT IRAN.

RECOGNIZES THE COALITION THATWAS PUT TOGETHER TO HELP ISRAEL DEFEND ITSELF. JONATHAN:THAT CONVERSATION IS NEXT. LIVE FROM NEW YORK CITY THISMORNING, GOOD MORNING. JONATHAN:LIVE FROM NEW YORK, WELCOME TO THE PROGRAM. THE BIGGEST TODAY LOSS GOINGBACK TO MARCH OF LAST YEAR ON THE S&P 500, A WEAK SESSION. CRUDE IS BEHAVING ITSELF, FORNOW. WTI 85 DOLLARS AND ABOUT $.10.ISRAEL IS VOWING TO RESPOND.

>> ISRAEL HAS PROVED TO HASSUPERIOR MILITARY CAPABILITY AND JUSTICE CRITICALLY THAT THEUNITED STATES STANDS WITH THEM. NO QUESTION IRAN RECOGNIZES THECOALITION THAT WAS PUT TOGETHER TO HELP ISRAEL DEFEND ITSELF.AGAIN, I CANNOT SPEAK TO WHAT EITHER SIDE WILL DO GOINGFORWARD. IRAN IS INCREASINGLY ISOLATEDON THE WORLD STAGE, INCREASINGLY MAKING IT HARDERFOR ANYONE IN THE INTERNATIONAL COMMUNITY TO BE SYMPATHETIC TOANY OF THEIR INTERESTS. JONATHAN:THE ISRAEL MILITARY CHIEF.

SAYING IRAN'S UNPRECEDENTEDATTACK WILL BE MET WITH A RESPONSE.ON CAPITOL HILL MIKE JOHNSON IS PLANNING TO HOLD LONG-DELAYED VOTES ON AID TO ISRAEL,UKRAINE, AND TAIWAN. LET'S GET TO THE OPTIONS ON THETABLE. WHAT DO YOU THINK THEY ARE? >> I THINK ISRAEL HAS A NUMBEROF OPTIONS. THEY WILL TRY TO DO SOMETHINGPROPORTIONATE TO SAY WE KNOW THAT IRAN DID A HUGE BARRAGE OFMISSILES ON ISRAELI AIRSPACE SO.

WE WANT TO DO SOMETHING TOCOUNTERACT THAT. MAYBE THEY TARGET A DRONEFACILITY IN IRAN TO TRY TO TAKE OUT THE ACTUAL MUNITIONS THATWERE THE CULPRIT OF THIS ATTACK OVER THE WEEKEND, THAT WAY THEYARE NOT CAUSING ANY CASUALTIES. THEY COULD DO SOMETHING COVERT.THEY COULD DO A CYBER ATTACK. THEY COULD WAIT TO BRING DOWNTHE TEMPERATURE AND ACT AGAIN AT SOME POINT IN THE FUTURE.THEY HAVE SEVERAL OPTIONS. I THINK THERE'S PRESSURE FROMTHE WEST TO TURN DOWN ANY ESCALATION IN THE REGION ANDSAY THAT THEY SHOULDN'T.

RETALIATE.BUT IT SEEMS LIKE ISRAEL IS GOING TO DO SOMETHING, IT ISJUST WHETHER OR NOT IT IS ESCALATORY OR NOT. ANNMARIE:WE LEARNED IN IS TYPICALLY CLOSE — TEMPORARILY CLOSINGITS NUCLEAR FACILITY CITING SECURITY CONCERNS.IS NUCLEAR AN OPTION FOR ISRAEL? JEANNETTE:IN THE PAST THEY HAVE TARGETED IRAN'S NUCLEAR FACILITIES ANDDEVELOPMENT. THAT IS PROBABLY SOMETHING THEYARE CONCERNED ABOUT AND THINKING ABOUT IF THAT COULD BEAN OPTION, ESPECIALLY AS YOU'VE.

HAD INCREASED URANIUMENRICHMENT AND IRAN. I DON'T KNOW IF THAT MIGHT BEON THE TABLE, BUT IT IS SOMETHING THEY'VE DONE IN THEPAST. IT MIGHT BE MORE OF A CYBERATTACK THAN A BOMB SINCEMOST OF THESE FACILITIES ARE UNDERGROUND, BUT THAT ISSOMETHING ON THE TABLE. ANNMARIE:ARE WE AT THE START OF A VICIOUS CYCLE?WHEN ISRAEL RESPONDS IS IT WARRANTED THAT IRAN WOULDRESPOND? IS THAT WHAT YOU WOULD EXPECT?JEANNETTE:.

THAT IS WHERE THIS DELICATEBALANCE COMES INTO PLAY. IF YOU LOOK AT THE U.S.WHEN WE KILL GENERAL SOLEIMANI IN IRAN DURING THE TRUMPADMINISTRATION, IRAN TARGETED U.S. BASES BUT THERE WERE NOCASUALTIES, AND THAT ALLOWED THE ESCALATION TO OCCUR –DE-ESCALATION TO OCCUR. IF THEY TRY TO TARGET SOMETHINGLIKE A MISSILE DEPOT, SOMETHING THAT IS NOT A STRONG STRIKE,JUST A LITTLE MORE TARGETED, THAT ALLOWS THINGS TO CALM DOWNAND NOT REQUIRE IRAN TO RETALIATE AGAIN.THERE DOES HAVE TO BE AT.

BALANCE TO FIGURE OUT HOW THEYCAN SHOW STRENGTH BUT AT THE SAME TIME NOT ESCALATE THINGSFURTHER. I THINK THAT IRAN DOESN'T WANTTO HAVE A MAJOR CONFLICT. THEY DON'T WANT TO GET THE U.S.INVOLVED. THERE IS THAT PIECE OF IT,WHICH IS WHY THE U.S. AND WESTERN ALLIES ARE TRYINGTO GET ISRAEL TO LOWER THE TEMPERATURE AND MAYBE NOTRETALIATE. RITIKA: THIS RAISES THE QUESTION –LISA: THIS RAISES THE QUESTION IFEIGHT IS PASSED IN THE NEAR.

TERM.PERHAPS TWO SEPARATE BILLS FOR ISRAEL AND UKRAINE FINANCING.WHAT YOU THINK THE PROBABILITY IS THAT WE WILL GET SOMETHINGOR SEE ACTION ON THIS FRONT IN THE NEXT COUPLE OF WEEKS?JEANNETTE: WE ARE QUITE OPTIMISTIC THAT WEWILL GET SOMETHING DONE. SPEAKER JOHNSON HAS BEEN MUCHMORE SUPPORTIVE OF GETTING A TO UKRAINE SINCE HAS MOVED INTOTHE LEADERSHIP POSITION. THIS HAS BEEN SOMETHING HE HASTALKED ABOUT GETTING DONE SINCE THEY CAME BACK FROM THE MARCHRECESS.

HE IS PUTTING SOMETHING ON THETABLE. THIS IS A TRICKY PACKAGE HE ISTRYING TO PUT TOGETHER, BECAUSE HE IS TRYING TO CREATE SEPARATEPACKAGES FOR UKRAINE, ISRAEL, AND TAIWAN, BUT ALSO PUTTINGOTHER PIECES IN AS WELL. THINGS LIKE THE REPO ACT SOTHEY CAN SEIZE RUSSIAN ASSETS AND USE THAT TO PAY FORUKRAINIAN RECONSTRUCTION. THE TIKTOK BILL BACK INTO THEPACKAGE SO THE SENATE WOULD BE FORCED TO VOTE ON WHETHER THATAPP SHOULD BE DIVESTED FROM BYTEDANCE.THEY WILL PACKAGE IT AND SEND.

IT TO THE SENATE TO TRY TOFORCE ITS HAND TOWARDS THE END OF THE WEEK.WE ARE OPTIMISTIC THEY CAN GET IT DONE, IT JUST MIGHT BE AMESSY PROCESS AND THERE MIGHT BE CHANGES TO WHAT THELEGISLATION WAS THAT CAME OUT OF THE SENATE. LISA:THE ADMINISTRATION IS LOOKING TO ACT UNILATERALLY AS THEY CAN.TREASURY SECRETARY JANET YELLEN IS SAYING THAT SHE HESITATE TORENEW IRAN SANCTIONS. HOW WILLING IS THE UNITEDSTATES TO ENACT SOME SORT OF POLICY THAT WOULD CAUSE OILPRICES TO SIGNIFICANTLY.

INCREASE AHEAD OF THE ELECTION?JEANNETTE: THAT IS A RISK FOR THEPRESIDENT AS HE GOES INTO THE REELECTION AND INTO SUMMERDRIVING SEASON. WE ARE SEEING GAS PRICES GOHIGHER AND THEY ARE EXPECTED TO GO HIGHER DURING THE SUMMER.THEY ARE NOT LOOKING TO HAVE AN INCREASE IN GAS PRICES OVER THENEXT COUPLE OF MONTHS AS THAT WILL HIT AMERICAN POCKETBOOKS,AND THAT IS NEVER GOOD FOR THE PRESIDENT'S APPROVAL RATINGINTO THE ELECTION. I THINK THAT THEY NEED TO BECAREFUL.

SANCTIONS HAVE HAD A MODESTIMPACT. SO, YOU HAVE CHINA BUYINGIRANIAN OIL, WHICH ISN'T HELPING TO ACTUALLY MAKE THEMENFORCED. THE PRESIDENT DOES HAVE OTHERTOOLS. HE MAY LEAD OIL OUT OF THE SPRTHIS YEAR TO HELP WITH OIL PRICES, BUT I THINK THAT THEYWILL BE TARGETING IRANIAN SANCTIONS.THERE WILL BE BILLS IN THE HOUSE AND SENATE.THEY WILL TRY TO GET THAT ENACTED.THE BIGGER PRESSURE NOW IS TO.

PUT MORE PRESSURE ON IRANEITHER THROUGH CHINA OR TO GET THEM TO MAYBE STOP WITH THATWHO THESE — WITH THE HOUTHIS. JONATHAN:DO WE NEED NEW SANCTIONS OR DO WE NEED TO ENFORCE EXISTINGONES? JEANNETTE: THIS IS THE BIG QUESTION.WE HAVE BEEN PUTTING IN NUMBERS OF SANCTIONS ON IRAN FOR QUITESOME TIME. THE PROBLEM IS, WHAT YOU ARESTARTING TO SEE IS THAT THERE ARE COUNTRIES WHO HAVE BEENSANCTIONED BY THE UNITED STATES, LIKE RUSSIA, IRAN, ANDNORTH KOREA, TRYING TO CREATE.

WAYS TO SKIRT SANCTIONS. WE HAVE HAD TALK LAST WEEK OFCHINA AND THE WAY THAT THEY MIGHT BE HELPING RUSSIA AND ITSWAR WITH UKRAINE BY PROVIDING DUAL USE PIECES THAT GO INTOMILITARY EQUIPMENT TO HELP THEM WITH THEIR OFFENSIVE AGAINSTUKRAINE. THAT IS A SANCTION UNDOING INSOME FORM. WE ARE HAVING OTHER COUNTRIESTRYING TO CHALLENGE THE UNITED STATES' SANCTION REGIME, ANDTHIS IS THE PROBLEM WE ARE MOVING INTO.THIS NEW ERA MULTIPOLAR WORLD.

WITH COUNTRIES LIKE CHINA,RUSSIA, AND IRAN TRYING TO CHALLENGE THE UNITED STATES ANDDISTRACT THE UNITED STATES INTO DIFFERENT SKIRMISHES.YOU HAVE UKRAINE, ISRAEL, AND THE RED SEA AND THAT IS TODIVERT U.S. ATTENTION COME USE RESOURCES,USE THE FEDERAL BUDGET, USE MUNITIONS AND CREATE THEOPPORTUNITY FOR THE U.S. TO HAVE LESS POWER AND OTHERCOUNTRIES TO HAVE MORE. JONATHAN: IT IS A MASSIVE ISSUE.LET'S GO TO ADMIRAL KIRBY YESTERDAY WITH US.IRAN IS INCREASINGLY ISOLATED.

ON THE WORLD STAGE,INCREASINGLY MAKING IT HARDER FOR ANYONE IN THE INTERNATIONALCOMMUNITY TO BE SYMPATHETIC. THE MEMO, RUSSIA AND CHINA, DIDTHEY GET IT? ANNMARIE: I WOULD LOVE TO KNOW WHAT THEADMINISTRATION DEFINES AS ISOLATED.YOU HAVE IRAN PRODUCING MORE THAN 3 MILLION BARRELS A DAYGOING TO CHINA AND SENDING WEAPONS TO RUSSIA.AT THE SAME TIME, FRESH DIPLOMACY WITH ARAB LEADERS.JONATHAN: EXPECTING TO HEAR FROM SECRETARY YELLEN LATER TODAY.COMING UP, LOOKING AHEAD TO FED.

CHAIR JAY POWELL'S COMMENTSLATER THIS AFTERNOON. JONATHAN:A SHAKY START TO THE WEEKEND GLOBAL MARKETS. STOCKS ARE DOWN.LET'S CHECK IT OUT, STOCKS DOWN AND YIELDS UP, A REPEAT OFMONDAY, JUST LESS AGGRESSIVE. ON THE NASDAQ, WE ARE DOWN 0.4.SMALL CAPS DOWN BY 0.9. TECH IS OUTPERFORMING, THEN ITGOT HAMMERED, I CAN'T KEEP UP. EVERY INDUSTRY GROUP WAS ANEGATIVE TERRITORY AT THE CLOSE YESTERDAY.THE TWO-EURO, 4.9 FIVE. UP ANOTHER 45 BASIS POINTS ONTHE 10-YEAR TO 4.64.

THE FRONT END OF THE CURVE, ONTHE 10-YEAR UP MORE THAN 40 BASIS POINTS, A REPRICING INFIXED INCOME. LISA: IT STRIKES ME THE REASON PEOPLESAID THE REASON THE INCREASE IN YIELDS HASN'T AFFECTED STOCKSWAS THE SLOW GRIND. THIS HAS BEEN A SHIFTDRAMATICALLY HIGHER IN THE LIGHT OF THE HOTTER THANEXPECTED CPI. AND THEN THE REEDS HAVE ALLBEEN HOTTER THAN EXPECTED. IT IS THE PACE, IOVERLAY OF GEOPOLITICAL CONCERNS. JONATHAN:THE DATA SO FAR THIS MONTH, WE.

WILL TALK ABOUT IT IN A MOMENT,I THINK IT STARTED WITH THE ISN MANUFACTURING, PRICES PAID,REALLY PUNCHY, AND THAT WAS IT. YIELDS UP AND AWAY, AND THAT ISWHERE WE STAYED. THE BOND MARKET MOVES THROUGHFX, THESE ARE THE NUMBERS YOU GET. EVERYONE AROUND THIS TABLE REMEMBERS WHEN 152 WAS APROBLEM WITH THE DOJ. NOW NOT JUST 155, BUT SOMEPEOPLE TALKING ABOUT 160 ON DOLLAR-YEN. 154.54. LISA: SUMMIT BANK OF AMERICA TALKINGABOUT 160 ON THE JAPANESE YEN.

CAN THEY FIGHT AGAINST THISFREIGHT TRAIN? THIS RAISES THE QUESTION OF HOWFAR THE GLOBE CAN DIVERT FROM THE U.S.IT IS COMPELLING BECAUSE IT IS SUCH A DIFFICULT NUT TO CRACK.IT ISN'T JUST THEIR CURRENCIES, IT IS THE OIL PRICES.WE HEARD FROM THE ECB, ONE MEMBER, WHO SAID THAT WE CANCUT RATES BUT OUR HAND MIGHT BE CALLED BY GEOPOLITICS. JONATHAN:DON'T MISS THE CONVERSATION ON U.S. EXCEPTIONALISM.UNDER SURVEILLANCE, CHINA REPORTING FASTER THAN EXPECTEDECONOMIC GROWTH WITH GDP.

GROWING 5.3% THE FIRST QUARTEROF THE YEAR. THE DATA COMING WITH A REPORTEDSLUMP IN RETAIL SALES AND INDUSTRIAL OUTPUT FOR MARCH.A DECENT QUARTER, WEAKER INTO IT? LISA: PEOPLE ARE WORRIED IT IS LOSINGSTEAM AND WON'T FEEL THE SAME KIND OF GROWTH.ANOTHER TAKEAWAY THAT GOES TO A POLICY QUESTION WE'VE BEENTALKING ABOUT IS THAT THE GAINS CAME FROM FACTORY OUTPUT COMETHE EXPORTING OF CHEAP GOODS TO SUPPORT THEIR ECONOMY.IT IS WORKING ON THE MARGINS.

TO THE CHAGRIN OF POLICYMAKERSAROUND THE WORLD THAT DO NOT WANT CHEAP CHINESE GOODSFLOODING THE REST OF THE WORLD. THAT SETS UP THE SHIFT OFDOMESTIC PROPERTY INVESTMENT THE FACTORY OUTPUT, WHICH ISWHAT A LOT OF PEOPLE DON'T WANT TO SEE. ANNMARIE:DOMESTIC DEMAND IS NOT EVEN FLAT.IT IS UNDERPERFORMING WHEN IT COMES TO CHINA AND THIS IS THEPROBLEM HOLDING BACK THE COUNTRY ECONOMICALLY.BLOOMBERG ECONOMISTS SAY THAT.

THIS PICKUP WAS DRIVEN BYPUBLIC INVESTMENT AND PRIVATE DEMANDS, THE RECOVERY, IS ONTHIN ICE. THERE IS A CLOSER TO THE 5%TARGET BEEN UNDER THE HOOD IN A SHAKY. LISA:ON ONE HAND YOU HAVE TO THINK IF YOU'RE WORRIED ABOUTINFLATION, THE DISINFLATIONARY IMPULSE FROM CHINA HAS TO BESOMEWHAT WELCOME. HOW CAN YOU SAY, WE WANT MOREEXPENSIVE GOODS? ON THE FLIPSIDE, HOW DO YOUTALK ABOUT UNFAIR COMPETITION AND HOW YOU UNDERSTAND WHAT THEGLOBAL LEVEL PLAYING FIELD IS?.

IT'S CONFUSING AND A GREATMOMENT FOR US TO GO TO WASHINGTON, D.C. JONATHAN:LOSE-LOSE FOR POLITICIANS, BUT A GOOD EXCUSE TO GO, I AGREE.SPECIAL COVERAGE THURSDAY AND FRIDAY. LET'S TURN TO MILITARYOFFICIALS IN ISRAEL SAYING THAT THE COUNTRY WILL RESPOND TOIRAN'S FIRST DIRECT ATTACK ON THE COUNTRY.WARNING THAT A TIT-FOR-TAT RESPONSE COULD LEAD TO A WIDERWAR. TELLING BLOOMBERG THAT THE GOVERNMENT HAS BEEN PRESENTED ARANGE OF POSSIBLE OPTIONS.

TALK ABOUT THE POTENTIALOPTIONS. ANNMARIE: WE HEARD POTENTIAL CYBER,POTENTIALLY THIS DIPLOMATIC DANCE THAT ISRAEL NEEDS TO DOTO SHOW FORCE AND STRENGTH, BUT ALSO TO NOT CREATE ARETALIATORY CYCLE. ONE THING THAT IRAN IS DOINGTHAT WE KNOW FROM THE IAEA AS OF YESTERDAY AS THEY AREN'TREOPENING NUCLEAR FACILITIES BECAUSE OF SECURITY CONCERNS.THAT TELLS ME THAT TEHRAN IS WORRIED THAT THAT COULDPOTENTIALLY BE A STRIKE TARGET FROM THE ISRAELIS. JONATHAN:A WORD WE USED YESTERDAY A LOT.

WAS CONTAINED.LISA SAID CONTAINED BUT NOT CALM . LISA:WE DON'T UNDERSTAND WHAT THE RESPONSE IS.I DON'T UNDERSTAND WHO IS LEADING THE CHARGE IN ISRAELBECAUSE THERE ARE THREE MEMBERS OF THE WAR COMMITTEE AT WARWITH ONE ANOTHER AND THEY ARE LONGTIME RIVALS.HOW DOES THE U.S. INFLUENCED THREE WARRING RIVALSTO NOT NECESSARILY ESCALATE THIS?IT IS A FRAUD MOMENT WHICH IS WHY YOU SEE THE NERVOUSNESSUNDER THE HOOD.

JONATHAN:YOU PROBABLY WANT TO KNOW THE PRICE OF CRUDE.BRENT CRUDE IS A LITTLE SOFTER NEGATIVE BY A QUARTER OF APERCENT. 89.88. PRESIDENT MARY DALY SAYING THATTHERE'S NO URGENCY TO CUT INTEREST RATES .WE HAVE A HOST ON FED SPEAK TODAY.CARSON HUNTER, A MACRO POLICY PERSPECTIVE, JOINS US IN NEWYORK. GOOD MORNING, CONSTANCIO. WE ARE TRYING TO WORK OUT WHERETHE FED IS. MICHAEL MCKEE SAT DOWN WITH THEFED PRESIDENT OF NEW YORK AND.

HE SAID MONETARY POLICY ISTIGHT. IS THAT HOW YOU WOULD DESCRIBEMONETARY POLICY RELATIVE THE INFORMATION, THE DATA WE AREGETTING? >> THEY ARE IN A GOOD PLACEBECAUSE THEY HAVE ROOM TO MOVE. IF WE SEE A DETERIORATION THEYCAN MOVE DOWN MEANINGFULLY. THE ECONOMY DOES APPEAR TO BECHUGGING ALONG. WE HAD RETAIL SALES YESTERDAYAND WE CAN DEBATE HOW STRONG THEY WERE UNDER THE HOOD OR NOTUNDER THE HOOD. ON A REAL BASIS YEAR-OVER-YEARUP 0.5% AND NEGATIVE FOR THE.

FIRST TWO MONTHS OF THE YEAR,SO RETAIL SALES ARE NEGATIVE YET TRENDING SLIGHTLY HIGHER.YOU COULD SAY CONSUMERS ARE CHUGGING ALONG.THEIR ARE CRACKS IN THE FINANCIAL SYSTEM IN THE U.S.IN THE SENSE THAT WE HAVE COMMERCIAL REAL ESTATE AS THESLOW BURNING THING. THERE ARE CERTAINLY CRACKSUNDER THE HOOD WHERE WE ARE CONCERNED WITH HOW STRONG THELABOR MARKET IS. INFLATION IS GIVING US A LOT OFMIXED SIGNALS NOW. IF YOU DIG UNDER AND LOOK ATWHAT PERCENTAGE OF GOODS IS.

CHANGING PRICE, THAT IS A GOODINDICATOR WITH REGARD TO IS ALL ALL OF THE PRICE MOVEMENT ONEWAY? WE ARE SEEING IT IS TWO-WAY ONA MONTH-TO-MONTH BASIS, A GOOD SIGN IT WILL TREND DOWN, BUT ITHAS BEEN STICKIER THAN THE FED ONCE, SO THEY ARE IN A GOODPLACE. THEY CAN HOLD RATES BUT IFTHINGS DETERIORATE THEY CAN CUT RATES AND HAVE A SUBSTANTIALIMPACT. LISA: CAN THEY HIKE RATES? CONSTANCE:THEY CAN, BUT THAT IS NOT MY BASE CASE.NO CUTS, I GUESS, BUT PEOPLE.

ARE FLOATING THIS POSSIBLE RATEHIKE. WE HAVE THE RISKS THAT WE HAVEGEOPOLITICALLY. AS YOU WERE TALKING AT THEBOTTOM OF THE HOUR, THERE ARE CROSSCURRENTS.YOU HAVE DEFLATION COMING OUT OF CHINA, POSSIBLY INFLATIONARYIMPACT OF HIGHER OIL PRICES, SO WE HAVE TO WAIT AND SEE. LISA: WHEN YOU TALK ABOUT THE CENTRALBANKING RESPONSE TO GEOPOLITICS, THE CENTRAL BANKTALKED ABOUT HOW GEOPOLITICS POSES THE BIGGEST RISK TO RATECUTS FOR THE ECB.

THIS SPEAKS TO THE IDEA OF THEDIVERGENCE OF THE EURO AND WHAT THAT DOES IF OIL PRICES ARESPIKING. HOW MUCH DO POLICYMAKERS HAVETO RESPOND AND CONSIDER A TIGHTER MONETARY POLICY INRESPONSE TO HIGHER COMMODITY PRICES ON THE HEELS OFGEOPOLITICS? CONSTANCE: IT WAS THE UKRAINE WAR THATCAUSED SO MUCH PRICE INCREASES IN EUROPE, SUPPLY CONSTRAINTS.IF YOU LOOK AT THE UNDERLYING STRENGTH THAT THE INDIVIDUALEUROPEAN ECONOMIES HAVE, THEY ARE MUCH WEAKER THAN THE U.S.AND DON'T WARRANT THIS LEVEL OF.

INTEREST RATES EXCEPT THAT THEECB HAD TO RESPOND TO THE PRICE INFLUENCE BROUGHT ABOUT BYGEOPOLITICS. JONATHAN: IN THE U.K.THERE IS AN INTERESTING CONVERSATION DEVELOPING THATSTARTED WITH GOVERNOR CARNEY YEARS AGO HOW THE SPEED LIMITOF THE BRITISH ECONOMY CHANGED. AN OLD FRIEND OF THIS PROGRAMWROTE IN THE FINANCIAL TIMES RECENTLY. U.K.IS IN THE UNITED STATES COME THEY CAN'T RUN I HIGH-GROWTHECONOMY BECAUSE IT WILL LEAD TO HIGHER INFLATION.WHAT DOES THAT LOOK LIKE IN THE.

UNITED STATES COME THE SPEEDLIMIT OF THE U.S. ECONOMY? CONSTANCE:JOHN WILLIAMS TALKED ABOUT IF WE HAVE HIGHER PRODUCTIVITY ANDFOR A TIME HIGHER IMMIGRATION, AND THAT RAISES POTENTIAL GDPFROM 1.5% TO 2% OR 2.2%, THAT IS MEANINGFUL.YOU ARE COMPOUNDING 40 BASIS POINTS OVER SEVERAL YEARS, ASIGNIFICANT CHANGE. WE ARE DEFINITELY OF THE VIEWTHAT MANY OF THESE PRODUCTIVITY GAINS ARE JUST GETTING STARTED,THAT THERE ARE A LOT OF POSITIVE CIRCLES HAPPENINGWITHIN THE ECONOMY TO FUEL THAT.

IF THAT IS THE CASE, IF WE ENDUP BEING CORRECT AND WE CAN HAVE PRODUCTIVITY GAINS OF 2.2PERCENT RELIABLY FOR SEVERAL YEARS, PLUS SLIGHTLY HIGHERPOPULATION GROWTH DUE TO IMMIGRATION, WE ARE LOOKING ATA POTENTIAL GDP THAT SETS US UP WELL TO HAVE A NICE LATE 1990'SPERIOD OF GROWTH. JONATHAN: WHAT ARE THE TAILWINDS FORDURABLE PRODUCT GOOD — DURABLE PRODUCTIVITY GAINS IN THISECONOMY? CONSTANCE: THIS HIGH LEVEL OF BUSINESSFORMATION. WITHOUT THAT THAT WAS A COVIDTHING AND WOULD FADE.

IT HAS MAINTAINED THIS HIGHLEVEL THAT WE HAVEN'T SEEN, ACTUALLY, THE HIGHEST EVER.WHEN THE DATA STARTED BEING COLLECTED IN 2005, WE ARE WAYABOVE THOSE LEVELS. NEWER FIRMS TEND TO BE MOREPRODUCTIVE, ADOPT NEWER TECHNOLOGIES, AND THAT IS AGOOD THING WITHIN THE ECONOMY. OF COURSE, AI.NOT JUST CHATGPT, BUT ALL OF THE FORMS OF AI THAT AREDEFUSING THROUGHOUT THE ECONOMY, THAT'S SO SIGNIFICANTFOR PRODUCTIVITY GAINS, AND THAT IS REALLY JUST STARTING TOBE DEPLOYED WIDELY. RIGHT?.

A NUMBER OF REALLY WELL-KNOWNAUTHORS TALKING ABOUT THE USE AND DIFFUSION OF THISTECHNOLOGY AND IT IS GROWING AND IT IS EXPECTED TO CONTINUETO GROW. THEN YOU HAVE TECH WORKERSBEING LAID OFF AND THEY ARE DEFUSING OUT INTO THE ECONOMY.THAT DIFFUSION BRINGS TECHNOLOGY KNOW-HOW INTO OTHERCOMPANIES, WHICH IS A GOOD THING.WHEN I WAS AT AIG AND WE WERE TRYING TO HIGHER TECH WORKERS,2022, YOU COULD NOT BUY THEM AT ANY PRICE. WE AREN'T STUPID.WE SAID THIS WILL COME BACK.

EVENTUALLY AND WE HAVE TO SCALEBACK HIRING PLANS. NOW THESE FIRMS ARE ABLE TOHIRE THESE WORKERS AND THAT DIFFUSES TECHNOLOGY THROUGHOUTTHE ECONOMY. ANNMARIE: YOU TALK ABOUT CAPACITYUTILIZATION. WHO IS RANKING HIGHEST? CONSTANCE:MANUFACTURING IS VERY HIGH RIGHT NOW. THAT MAKES SENSE.YOU'VE HAD THIS HUGE BUILDOUT IN MANUFACTURING CAPACITY INTHE U.S., WHERE A LOT OF THE STRUCTURES CAPEX IS GOING, THECHIPS ACT.

YOU ARE SEEING THOSE NEWFACTORIES ARE ALSO MORE PRODUCTIVE.IF YOU'RE BUILDING A NEW FACTORY YOU WILL MAKE EVERYASPECT OF IT THE LATEST TECHNOLOGY. JONATHAN:CONSTRUCTIVE ON THE U.S. ECONOMY.WE WANT TO GET AN UPDATE ON STORIES ELSEWHERE BRIEFLYBEFORE WE GET TO OUR BRIEF LOOKING FOR BANK OF AMERICARESULTS. THOSE EARNINGS WILL DROP ANYMOMENT. LET'S GET YOU UP TO SPEED ONTHE NEWS ELSEWHERE.

DANI:ANOTHER BANK, ANOTHER UPGRADE TO GOLD.CITIBANK'S TARGET IS $3000 OVER THE NEXT SIX TO 18 MONTHS ASMONEY MANAGERS PLAY CATCH-UP FROM DEMAND WE HAVE SEEN FROMCONSUMERS IN CHINA AND CENTRAL BANKS.THE LATEST LEG OF THIS RALLY REACHED AN ALL-TIME HIGHYESTERDAY DRIVEN BY HAVEN BUYING.PRESIDENT BIDEN IS HITTING THE CAMPAIGN TRAIL IN HIS HOMESTATE OF PENNSYLVANIA. THEY WILL BE HIGHLIGHTING THEDIFFERENCES BETWEEN THE.

PRESIDENT'S TAX AND ECONOMICAGENDA VERSUS DONALD TRUMP VERSUS TAX CUTS FOR THE WEALTHYAND CORPORATIONS. PRESIDENT BIDEN'S TRIP WILLINCLUDE PITTSBURGH WHERE NIPPON STEEL' IS DEAL HAS IRRITATEDHIS UNION ALLIES. THE BEST THING TO HAPPEN TOBASKETBALL IN A LONG TIME, CAITLIN CLARK HAS GONE TO THENBA FEVER — WNBA FEVER. HE BECAME A HOUSEHOLD NAMEDURING HER COLLEGE CAREER. CAN SHE DO THE SAME FOR THEWNBA? SHE IS FACED WITH TURNING AROUND THE FRANCHISE WHICHHASN'T MADE THE PLAYOFFS SINCE.

2019. JONATHAN:WRAPPING OF EARNINGS ON WALL STREET. >> THERE ARE BIG MACRO RISKS INTHE MARKETPLACE. I THINK THAT STRENGTH ANDSTABILITY SEEMS TO BE A BIGGER PRESENCE IN THE STRATEGICBOARDROOM OF THESE BANKS. JONATHAN: NUMBERS FROM B OF A.THAT CONVERSATION, NEXT. JONATHAN:EQUITIES RIGHT NOW, THE S&P 500, JUST NEGATIVE.NEGATIVE ZERO POINT 04%, RECOVERING JUST A TOUCH IN THELAST 10 MINUTES.

>> THERE ARE STILL BIG MACRORISKS IN THE MARKETPLACE. WHEN I TALK TO BANK MANAGEMENTTEAMS, IT IS ALMOST LIKE I FEEL LIKE I AM HAVING A CREDITANALYST DISCUSSION MORE THAN AN EQUITY ANALYST DISCUSSION.THEY ARE FOCUSED ON THEIR OWN BALANCE SHEET.I THINK THAT STRENGTH AND STABILITY SEEMS TO BE A BIGGERPRESENCE IN THE STRATEGIC BOARDROOM OF THESE BANKS.JONATHAN: BANK OF AMERICA AND MORGANSTANLEY REPORTING AS WALL STREET'S BIGGEST BANKS WRAP UPEARNINGS.

A SURPRISE 28% JUMP IN PROFITS.BANK OF AMERICA DROP IN NOW. SONALI BASAK JOINS US AROUNDTHE TABLE. IT WAS A STRONG QUARTER.HOW STRONG? SONALI: STRONG ENOUGH.THIS IS GOOD NEWS AFTER WE HAVEN'T SEEN THE SAME AT JPMORGAN AND CITIGROUP. BANK OF AMERICA WITH ITSLENDING PRESENCE RELATIVE TO INVESTMENT BANKING IS WHAT YOUWOULD WANT TO SEE. THEY CAME IN ABOVE WHERE THEYWERE LAST QUARTER. THERE WAS A WORRY THAT THEYWOULD TREND LOWER.

WHEN IT COMES TO TRADINGREVENUE THEY WERE IN LINE TO MISSING A LITTLE ON FIXEDINCOME, BUT EQUITIES BEAT EXPECTATIONS.ALL IN ALL, IT HAS BEEN NET INCOME THAT HAS THE FIRST LOOKON WALL STREET. JONATHAN: THE $700 MILLION FDIC'S SPECIALASSESSMENT EXPENSE, NOT THE FIRST TIME WE'VE SEEN THIS INBANK EARNINGS. IS THIS COMPLETE? HOW FAR ALONG ARE WE IN THEPROCESS? SONALI: IT IS STILL COMING.THE EFFICIENCY RATIO THEY CAME IN ABOVE WHERE WALL STREET WASGUIDING FOR. IT IS AT 67%.

WHERE THEY ARE ALREADY TRYINGTO KEEP A HANDLE ON COSTS ALL OVER THE BOARD, ALL OF THESEBANKS HAVE SUFFERED FROM THE WEIGHT OF THAT FDIC ASSESSMENT.EVEN JP MORGAN GUIDED EXPENSES HIGHER IN PART OF THATASSESSMENT. THE STORY ISN'T OVER.REGULATORY COSTS MAY REMAIN SOMEWHAT HIGH, BUT WE AREGETTING PASSED AT LEAST THAT FIRST YEAR NOW SINCE THE BANKFAILURES. LISA: I AM OLD ENOUGH TO REMEMBERWHEN IT WAS COST-CUTTING TRYING TO REDUCE THE EXPENSES WAS THEFOCUS OF THESE BANKS.

BANK OF AMERICA, FIRST QUARTERCOMPENSATION EXPENSES. WHAT YOU MAKE OF THAT? SONALI:DIRECTION OF TRAVEL IS HIGHER. WE'VE BEEN TALKING ABOUT ITWITH GOLDMAN WHERE IF YOU ARE MAKING MORE MONEY YOU HAVE TOPAY PEOPLE MORE. THAT IS THE PROBLEM, ISN'T IT?SO, ON BALANCE, THAT EFFICIENCY RATIO HIGHER, THAT FLURRY OFIDEAS WITH COMPENSATION BEING HIGHER, REGULATORY CHARGESBEING HIGHER, SO KEEPING A HANDLE ON COSTS.NET INTEREST INCOME CAME IN ABOVE EXPECTATIONS.YOU BEEN POINTING AT IT ALL.

SEASON THAT THAT HAS BEEN A BIGWEIGHT ON THAT NET INTEREST INCOME.FOR THEM TO COME IN HIGHER IS GOOD NEWS. JONATHAN: STOCK IS DOWN BY ZERO POINT 1%IN THE PREMARKET, AN UPSIDE SURPRISE ON TRADING REVENUE.WE ARE JOINED NOW FOR MORE. YOU'VE HAD A FEW MOMENTS TO GOOVER THIS ONE. WHAT IS THE SIGNAL YOU'RETAKING AWAY SO FAR? >> I THINK OVERALL PROVISIONEXPENSES MIXED. WE SAW PROVISIONS RISE FROM BOF A THIS MORNING, WHICH IS A.

GOOD THING BECAUSE THEY HAD AHEALTHY STEP UP. I THINK THAT IT'S INTERESTINGWE ARE SEEING DEPOSITS ACT WELL, THE DEPOSITS FOR THEWHOLE SYSTEM GREW FOR Q1 AND WERE HIGHER FOR B OF A THISMORNING. YOU SEE THAT IN THE WEALTHMANAGEMENT BUSINESS FOR B OF A ON THE BALANCE SHEET IS SEEINGEXPANSIVE WHICH IS A WAY FOR THE COMPANY TO MANAGE NETINTEREST MARGINS AND HIGHER INTEREST RATES. LISA: WE SAW THIS WITH GOLDMAN SACHSAND JP MORGAN.

THE BALANCE SHEET TO ENGAGEWITH FIXED INCOME COMMODITIES TRADING AND OTHERS.HOW MUCH IS THIS A NEW TACK, WE WERE TALKING ABOUT THISYESTERDAY, TO COMPETE WITH THE PRIVATE ASSET MANAGERS? CHRIS:SOME OF THAT IS TRUE. THE OTHER THING THAT ISHAPPENING IS THE BANKS WANT TO GROW NET INTEREST INCOME THISYEAR AND PROVIDE THEMSELVES LATITUDE ON PPN ARE WHICH GIVESTHEM CASH FLOW TO EARN THROUGH THE CYCLE. AS LOSSES RISE, ON COMMERCIALREAL ESTATE OR CONSUMER, YOU.

WILL SEE BANKS FUND THATTHROUGH THE PROVISION EXPENSE. HAVING MORE INCOME COMINGTHROUGH THE BALANCE SHEET MAKES SENSE.FOR ME, THAT'S THE PRIMARY REASON YOU WILL SEE SECURITIESGROWTH. LISA: ARE THEY TAKING MORE RISK ORBEING MORE AGGRESSIVE IN TERMS OF COMMERCIAL LENDING? CHRIS:I THINK IT IS TAKING MORE AGGRESSIVENESS ON BALANCING THE– DAMAGING THE BALANCE SHEET ON CASH AND LIQUIDITY.I DON'T THINK THAT THEY ARE TAKING MORE LOANS.GENERALLY SPEAKING WE WILL SEE.

LOANS A VERY SLOW THIS YEARACROSS THESE LARGE BANKS. JONATHAN:B OF A POINTED OUT THAT THIS WAS THE HIGHEST FOR Q1 AND MORETHAN A DECADE. WHERE'S THE STRENGTH COMINGFROM? CHRIS: FIXED INCOME, FOR SURE.THERE IS BETTER EQUITY ACTIVITY AND CERTAIN PARTS OF THEMARKETPLACE. I THINK THE COMMODITIESCONTINUE TO DO WELL AND THEY ARE A PLAYER.I THINK EVERYTHING IS CONTRIBUTING. JONATHAN:TALK TO ME ABOUT THE KIND OF.

BANK, BUSINESS MODEL, THAT ISTHE OPTIMAL EXPOSURE TO BANKS IN 2024? THERE IS THE THEORY NETINTEREST INCOME WILL BE CHALLENGED BUT THAT STORY CUTSBOTH WAYS. WHAT BUSINESS MODEL YOU WANTEXPOSURE TO? CHRIS:HAVING A BALANCED ATTACK WHERE YOU ARE PART CONSUMER, PARTCOMMERCIAL, YOU HAVE THE INVESTMENT BANK THAT CAN BEHELPFUL. THE WEALTH MANAGEMENT BUSINESSCAN BE A BUFFER. ON THE SAME TOKEN, I THINK THESPREAD BUSINESS BULL BE BETTER.

THAN EXPECTED TO SOME EXTENTBECAUSE BANKS ARE STILL SETTING LOANS ON THE UPSIDE.HIGHER FOR LONGER HAS A CONTRIBUTION SPREADS RISING INTERMS OF LOAN DEALS GETTING BETTER.WE THINK THAT THE COST OF FUNDS WILL LEVEL OUT AS THE YEAR GOESON, THOUGH IT IS STILL QUITE HIGH. ANNMARIE:HOW ARE THEY DEALING THROUGH THE BASEL THREE ENDGAME ANDFRESH REGULATIONS OUT OF WASHINGTON? CHRIS:MOST BANKS HAVE BEEN BUILDING LIQUIDITY FOR THE LAST SIX TONINE MONTHS AND THAT IS THE.

PRIMARY REASON BASEL THREE HASBEEN HOLDING BACK EARNINGS. FROM THE CAPITAL STANDPOINT ITFEELS LIKE WE WILL SEE THE CHANGE IN TERMS OF EXCLUDINGTHE UNREALIZED LOSSES FOR THE REGIONAL BANKS ABOVE 100BILLION DOLLARS. THAT SHIP HAS SAILED.I THINK A LOT OF THE OTHER CHANGES TO RISK-WEIGHTED ASSETSMIGHT BE AS BAD AS — MIGHT NOT BE AS BAD AS EXPECTED.THE RISK-WEIGHTED ASSETS AND GROWTH TO BALANCE SHEET AND HOWTHAT CREATES CAPITAL CALCULATIONS IS WHERE THENUANCES ARE.

WE THINK THAT THERE WILL BE ALITTLE BIT OF RELIEF, BUT THE MAIN TENETS ARE LIQUIDITY ANDCAPITAL MISCALCULATION FOR UNREALIZED LOSSES. ANNMARIE:COMMERCIAL REAL ESTATE HAS BEEN FRONT AND CENTER.BRIAN MOYNIHAN TOLD LISA AND JON RECENTLY IT IS A “SLOW BURN”FOR THE BANKING INDUSTRY. WHEN DO YOU THINK THAT WILLSHIFT OR DOES IT ALL RELY ON THE FED? CHRIS: I THINK IT WILL SHIFT INPROBABLY SIX TO SEVEN QUARTERS. WE ARE STILL IN THE SECOND ORTHIRD INNING OF THIS CREDIT.

CYCLE.WHILE WE MAY NOT BE AS BAD AS WE SAW 15 YEARS AGO THANKS TOLEVERAGE AND MORE EQUITY IN DEALS YOU HAVE HIGHER LOSSESAND PROBLEMS TO DEAL WITH. I THINK THAT THE SLOW BURNATTITUDE IS CORRECT. IF INTEREST RATES COME DOWN ITWILL SIMPLY GIVE BANKS THE FLEXIBILITY TO WORK THROUGH,LOANS A LITTLE FASTER PROVIDE BETTER OPTIONS TO CLIENTS TOWORK THROUGH IN SOME OF THESE LOAN RESETS.MATURITY WALLS THAT WE TALK ABOUT OUR REAL, BUT IT WILLTAKE SEVERAL YEARS THE PLAY.

THROUGH.WE HAVE TO DEAL WITH WHAT IS GOING ON ON MATURITY WALL IN2024-2025 AND THAT IS THE KEY INTEREST WE HAVE. JONATHAN:THANK YOU FOR JUMPING ON TO RESPOND TO SOME OF THESENUMBERS. SONALI BASAK IS STILL AROUNDTHE TABLE. WE HAVE A FEW EXTRA MINUTES.WHAT JUMPS OUT TO YOU? SONALI: EVEN THE CHRIS WAS TALKINGABOUT NET CHARGE-OFFS JUMPING, PROVISIONS ARE LOWER THANEXPECTED. WHAT YOU SEE IS LOAN SOURINGFASTER THAN ANALYSTS EXPECTED.

WE HAVE BEEN TALKING SO MUCH.I THINK THAT WE HAVE BEEN PAYING CLOSE ATTENTION TO THEDRIFT HIGHER IN FICA SCORES IN THE BANK OF AMERICA CONSUMERBASE. CONSUMER VEHICLE LENDING, YOUNEED A FICA SCORE ABOVE 800 AT THIS POINT. JONATHAN: 800? SONALI:FREE CONSUMER CREDIT CARDS, 777, 774 LAST YEAR IN THE SAMEQUARTER. IF YOU LOOK AT NEW ACCOUNTS,THERE IS PRESSURE ON THAT LINE. THE DISCIPLINE BEING INSTILLED.

BY THESE BANKS HAS — LISA:THE DISCIPLINE OR LUXURY OF BEING AT THE TOP?THEY SAY WE WANT THE TOP AND WE WILL GIVE YOU GREAT DEALS.EVERYONE ELSE, REGIONAL BANKS COME YOU CAN PICK UP THE SLACKAND DEAL WITH THE CHARGE-OFFS AS WELL AS THE INCREASINGPROBLEMS WITH RESPECT TO DEMAND? SONALI: A LITTLE OF BOTH.BANKS ARE DEALING WITH HIGHER INCOME CUSTOMERS.JP MORGAN SAID THE SAME THING, LOWER INCOME CUSTOMERS AREWHERE YOU ARE SEEING THE STRESS. CREDIT SELECTION, YOU SEE ITVERY CLEARLY AS THEY ARE.

EXTENDING THAT.WHAT DOES THAT MEAN? CAN THEY SQUEEZE MORE OUT OFTHEIR HIGH NET WORTH CUSTOMERS? MAYBE.ANOTHER POINT THAT CHRIS WAS MAKING HIS INSTITUTIONALBUSINESSES HAVEN'T BEEN GETTING THE PREMIUM IN TRADING THATBANKS HAVE BEEN GETTING OVER THE LAST YEAR.THE IDEA THAT THE WALL STREET REBOUND CAN SAVE THESE BANKS ISUNDER QUESTION WHEN THE VIX IS ALSO ON THE RISE, ISN'T IT?JONATHAN: 800 IS ABSOLUTELY STUNNING.BANK OF AMERICA DOWN IN THE.

FREE MARKET BY 1.3%.WE WILL GET NUMBERS FOR MORGAN STANLEY AROUND 7:30 EASTERN.ABOUT 30 FOUR MINUTES AWAY. COMING UP IN THE SECOND HOUR OF”SURVEILLANCE” WE WILL CATCH UP WITH MOHAMEDEL-ERIAN AND DAVID HUNT ABOUT U.S. EXCEPTIONALISM.THE EQUITY MARKET ON THE S&P 500 IS JUST ABOUT UNCHANGED.FOLLOWING SOME OF THE LOSSES IN YESTERDAY'S SESSION. >> YOU HAVE THIS U.S.EXCEPTIONALISM COMPARED WITH THE REST OF THE WORLD.

>> THE ENTIRE TIME THE FED HASBEEN TECHNICALLY RESTRICTIVE, THE U.S.ECONOMY HAS GROWN ABOVE TREND. >> AS LONG AS THE GROWTHMOMENTUM STAYS ALL RIGHT, MARKETS WILL BE OK WITH IT.I THINK THAT IS REALLY U.S. EXCEPTIONALISM. >> THERE ARE STILL BIG MACRORISKS IN THE MARKETPLACE. >> I THINK IT IS NICE TO SAY WEARE NOT WORRIED ABOUT WHAT IS GOING TO HAPPEN DOWN THE ROADBUT MARKET IS. >> BLOOMBERG SURVEILLANCE WITHTHE JONATHAN FERRO, LISA.

ABRAMOWICZ, AND ANNMARIEHORDERN. JONATHAN: CAN WE SIT ON THE FEELING OFTHE SUN ON YOUR SKIN YESTERDAY IN NEW YORK CITY, BLOOMS OFSUMMER AFTER A LONG WINTER? LISA:AND NOW YOU WILL TALK ABOUT HEAVY GLOOM? JONATHAN:SOFTEN THINGS UP. A LITTLE BIT DELICATE.WE HAVE BEEN WAITING FOR THAT. SMILES ON THE FACES OF PEOPLEIN NEW YORK. LISA: AND NOW THE ECLIPSE. JONATHAN:GOING BACK TO THE BANK DAMAGE OF LAST SPRING.IN THE BOND MARKET, MASSIVE.

MOVES. THE TWO-YEAR, 10 YEAR.THE TWO-YEAR IS VERY CLOSE TO 5%. THE 10 YEAR, FOUR POINT 65.NEW HIGHS FOR 2024. THE MOVE SO FAR IN APRIL, WEHAVE TO START THERE, WE HAVE BEEN TALKING ABOUT SOMETHINGLIKE 12 SESSIONS FOR THE MONTH OF APRIL SO FAR.A MOVE OF MORE THAN 30 BASIS POINTS MOVING MORE THAN 30BASIS POINTS SO FAR IN APRIL ON THE TWO-YEAR AND MORE THAN 40ON THE 10 YEAR. LISA: IT'S THE PACE THAT HAS A LOT OFPEOPLE NERVOUS. THE REASON WHY, WE ARE SEEINGNOTE AFTER NOTE FROM WALL.

STREET SAYING THAT THESE RATESARE GOING TO BITE INTO EQUITY VALUATIONS, WHICH WE ARE SEEING.THE CURIOUS THING IS, PEOPLE STILL ARE OVERWEIGHT EQUITIES.WHERE IS THE LEADERSHIP GOING TO COME FROM?NOT FROM SMALL CAPS OR BIG TECH. WHAT WILL POTENTIALLY BE THEDRIVER OF GROWTH? JONATHAN: THE U.S. DOLLAR AND FX MARKET.I THINK THAT WE ARE FACING THE PROSPECT OF A SIXTH DAY OFDOLLAR STRENGTH. THE DOLLAR IS HAVING ITSLONGEST WINNING STREAK BACK TO SEPTEMBER OF LAST YEAR.YOU CAN IDENTIFY PROBLEM AFTER.

PROBLEM AND I THINK WE HAVE TOSTART WITH THE BOJ. 150 FOUR ON DOLLAR-YEN.DO YOU REMEMBER WHEN THEY WERE GOING TO DEFEND 152. 154.STARING DOWN THE BARREL OF 155. LISA: 160 IF YOU TALK TO BANK OFAMERICA, J.P. MORGAN. ARE THEY GOING TO BE FORCED TORAISE RATES TO DEFEND THEIR CURRENCY?THEY HAVE TO TAKE AMORE MATERIAL STANCE. THIS GOES TO A BROADER QUESTIONOF, HOW MUCH IS THE DISRUPTION IN THE CURRENCY MARKET,POTENTIAL DISRUPTION IN OIL MARKET GOING TO FORCE THE HANDSOF CENTRAL BANKS WALKING ON A.

STRING ON WHERE THEIR ECONOMIESREALLY ARE. JONATHAN: PRESIDENT LAGARDE SAYS WE ARENOT FEDERAL RESERVE DEPENDENT. THEN WE HEAR FROM THE BANK OFGREECE GOVERNOR THAT MAYBE WE CAN CONTINUE TO DIVERT.WE HAVE HEARD FROM GUEST AFTER GUEST THAT YOU CAN TO A DEGREE.WHAT WILL SET THE TONE IS THE COMMODITY MARKET.WHAT HAPPENS WITH CRUDE. WHAT HAPPENS WITH CRUDE I HAVENO IDEA. WE STARTED THE SESSION YESTERDAY BY DISCUSSING APOTENTIAL RESPONSE FROM ISRAEL. ARE WE GOING TO GET ONE AT WHATDOES IT LOOK LIKE?.

ARE WE GOING TO GET ONE?ISRAEL SAYS THAT THERE WILL BE A RESPONSE.WHAT WILL IT LOOK LIKE? I'VE NO IDEA. ANNMARIE:THIS IS THE QUESTION EVERYONE IS ASKING.JEANETTE LOW SAID THAT ISRAEL WANTS TO RETALIATE WITHOUTHAVING TO SPARK A REVENGE CYCLE. IT'S POTENTIALLY SOMETHING WITHCYBER, SOMETHING THAT GOES A LITTLE LESS BOMBS GOING OFFINTO MORE DELICATE, OR SOMETHING LIKE A NUCLEARFACILITY? I'M STRUCK THAT IRAN WANTS TOKEEP THEM CLOSED BECAUSE OF.

SECURITY ISSUES. JONATHAN: LET'S START WITH PRICE ACTIONIN FINANCIAL MARKETS. BRENT DOWN .3%.LET'S TALK ABOUT EARNINGS. EQUITIES JUST ABOUT UNCHANGEDON THE S&P 500.WE HAVE A OUT, UPSIDE SURPRISE ON TRADING REVENUE.THE STOCK BASICALLY UNCHANGED SINCE THE PREMARKET. LISA:NET INTEREST INCOME COMING IN ABOVE EXPECTATIONS, DIFFERENTTHAN WHAT WE SAW JP MORGAN. THE STATISTIC OF THE MORNINGHAS NOTHING TO DO WITH THESE.

HEADLINES. IT IS THE FICA SCORE FOR AUTOLOANS IS 800. THIS IS EVERYONE WHO PAID EVERYBILL BEFORE THEY GOT THE BILL. IT IS SOMEONE WHO BORROWS JUSTSO THEY CAN HAVE AN 800 FICA SCORE.THIS IS THE DIVIDE BETWEEN THE BIG BANKS AND SMALLER ONES.JONATHAN: NO ONE CAN GET A BANK OFAMERICA LOAN? LISA: DON'T EVEN TRY. JONATHAN:COMING UP THIS HOUR, MOHAMED.

EL-ERIAN ON THE GLOBAL STOCKMARKET SELLOFF. WHY BONDS ARE BACK.WE BEGIN WITH TOP STORY OF EQUITIES DELIVERING THE BIGGESTTODAY DROP IN A YEAR. MOHAMED EL-ERIAN BLOOMBERGWRITING THE FOLLOWING. I'VE BEEN ARGUING FOR ALMOST AYEAR NOW. HERE AND ELSEWHERE THAT THE U.S.PRICE INFLATION WOULD BECOME STICKY.WEDNESDAYS HOTTER THAN EXPECTED DATA RELEASE, THE THIRD IN AROW, IS EVIDENCE THAT THIS SCENARIO IS INDEED UNFOLDING.GOOD MORNING.

I WON'T ASK IF YOU CAN GET ANALDA LOAN FROM BANK OF AMERICA, BUT I THINK THE REST OF THESTREET AND MEDIA ARE CATCHING UP. WE HAVE BEEN READ ARTICLESABOUT U.S. EXCEPTIONALISM. WHAT ARE THE SOURCES AND HOWDURABLE DO YOU THINK THEY ARE? MOHAMED:TWO SOURCES THAT SPEAK TO U.S. EXCEPTIONALISM.THE INHERIT ATTRIBUTES OF THE U.S..IT IS MORE FLEXIBLE, BENEFITING FROM HIGHER LABOR FORCEPARTICIPATION, MORE ENTREPRENEURIAL.THE SECOND ELEMENT IS POLICY.

IT HAS BEEN RUNNING A VERYLOOSE FISCAL POLICY. RUNNING DEFICITS OF 7% WITHUNEMPLOYMENT UNDER 4%, UNTHINKABLE BUT IS HAPPENING.ALSO, IMPORTANTLY, THE U.S. IS INVESTING IN THE DRIVERS OFTOMORROW'S GROWTH AND IS WAY AHEAD OF OTHER COUNTRIES INTHAT. YOU PUT THAT TOGETHER AND YOUGET THIS INCREDIBLE ENGINE THAT DRIVES EXCEPTIONALISM. JONATHAN:HOW SUSTAINABLE DO YOU THINK POLICY IS? MOHAMED:MORE SUSTAINABLE THAN PEOPLE REALIZE, BUT THERE IS A LIMIT.THIS CAN BE DERAILED BY TWO.

THINGS.OIL AT 110 OR A FED THAT IS TO TAKE. — TOO TIGHT. IF THESE TWO THINGS COMETOGETHER, POSSIBILITY OF GEOPOLITICS GET WORSE, YOU CANDERAIL U.S. GROWTH. LISA:IN TERMS OF THE PRESSURES OF WHAT IS GOING ON WITH THEMIDDLE EAST AND INCREASE IN COMMODITY PRICES ON THE HEELSOF THAT, ONE THEME THAT WE'VE HEARD IS THAT EUROPE WILL BEHIT HARDER THAN THE U.S. YOU SAY, MAYBE SO, BUT THE U.S.ISN'T IMMUNE? MOHAMED: THE U.S.

DOMINATES IN RELATIVE SPACEALMOST REGARDLESS OF WHAT THE GLOBAL SCENARIO IS.IN ABSOLUTE SPACE, THE U.S. HAS DOMINATED SO FAR. FOR THE U.S.TO CONTINUE TO DOMINATE, WE NEED TO AVOID REALLY HIGHENERGY PRICES AND AVOID OTHER POLICY MISTAKES.IT WILL DOMINATE IN RELEVANT SPACE FOR A LONG TIME. LISA:THE QUESTION THE ECB BOARD MEMBERS WERE TALKING ABOUT,THAT THEY MIGHT NOT BE ABLE TO CUT RATES BECAUSE OFGEOPOLITICS.

DO YOU THINK THAT THIS ONE-TWOPUNCH IS LOOKING MORE LIKELY FOR THE FEDERAL RESERVE?THEY WILL KEEP RATES HIGHER FOR LONGER IN RESPONSE TO HIGHERCOMMODITY PRICES, EVEN AT A TIME OF A POTENTIAL SHOCK THATCOULD CURTAIL GROWTH? MOHAMED: THIS IS A GREAT QUESTION.MOST PEOPLE, NOT EVERYONE, ON YOUR SHOW HAVE AGREED THE LASTMILE OF INFLATION WILL BE COMPLICATED.THAT INFLATION IS MORE STICKY. WHERE THERE IS MASSIVEDISAGREEMENT IS WHAT THE FED SHOULD AND WILL DO.THERE IS MASSIVE DISAGREEMENT.

THOSE WHO THINK THE FED SHOULDHIKE. THE UBS TODAY SHOWED 6%. THOSE WHO THINK LIKE ME THATTHE FED SHOULD MAINTAIN COURSE AND CUT TWICE THIS YEAR BY 25BASIS POINTS. WHY ARE WE ALL OVER THE PLACE? WE DISAGREE ON WHAT THE RIGHTINFLATION TARGET, AND THEREFORE DISAGREE ON HOW THE FED CANBEST LEAD US TO A MANDATE. THIS IS WHERE IT WILL PLAY OUTOVER THE NEXT YEAR. IN ORDER TO PREDICT THE FED, IFYOU THINK WE WILL REMAIN DATA DEPENDENT, WHICH THEY ARE TODAYBECAUSE THEY GOT SO EMBARRASSED.

BY WHAT HAPPENED IN 2021, THENTHE FED WILL NOT CUT. IF, LIKE WE HOPE, THEY WILL GOFROM EXCESSIVE DATA DEPENDENCY TO HAVING A MACRO FRAMEWORK INTHEIR HEAD LOOKING FORWARD, THEY WILL CUT, AND THAT IS WHATWE WILL SEE PLAY OUT IN THE NEXT FEW MONTHS. ANNMARIE: IF THEY ARE DATA DEPENDENT ANDWE HAD HOT RETAIL SALES YESTERDAY AND THEY START TO GETMORE CONCERNED ABOUT INFLATION, IS IT NOT JUST THAT THEY ARENOT GOING TO CUT, DO YOU THINK THAT THEY COULD HIKE? MOHAMED:IF INFLATION GETS MUCH WORSE.

THEY COULD HIKE.IF THEY DO, WE WILL HAVE A REGIONAL BANKING CRISIS.WE WILL HAVE ALL SORTS OF DAMAGE IN THE MARKETPLACE.I THINK THAT IS IN THE BACK OF THEIR HEAD.THE LIKELIHOOD OF THEM HIKING IS LOW. IS IT ZERO?NO, THEY COULD. JONATHAN:WHAT IS THE DIFFERENCE IN 25 BASIS POINTS AND HOLDING FORTHE REST OF THE YEAR? MOHAMED: 25 BASIS POINTS OPENS THE WAYTO HIKING MORE. THAT IS THE DIFFERENCE.TODAY, CHAIR POWELL WILL TRY, I.

THINK, TO DO WHAT HE DIDEARLIER, MAINTAIN MAXIMUM OPTIONALITY.ON THE ONE HAND, I THINK YOU WILL SAY THE INFLATION STORYHASN'T FUNDAMENTALLY CHANGED AND HE WILL PROBABLY USE THEWORD FUNDAMENTALLY. ON THE OTHER HAND, HE WILL SAYWE NEED MORE EVIDENCE TO KNOW WHAT WE DO.HE WILL KEEP HIS OPTIONS OPEN AND THAT IS WHAT HE WILL DO FORA WHILE. JONATHAN: IS IT TOO EARLY TO MOVE AWAYFROM THREE BUMPS IN THE ROAD? MOHAMED:I WOULD HAVE MOVED AWAY A LONG.

TIME AGO, BUT WE WILL PROBABLYMAINTAIN BUMPS IN THE ROAD. LISA: YOU TALK ABOUT THEDISAGREEMENTS AND I'M THINKING ABOUT WHAT FED CHAIR WILLIAMS,THE NEW YORK FED, SAID WHEN HE SAID WE AREN'T THINKING ABOUTTHE TARGET. WE ARE PLAYING IT BY EAR ANDTAKING THE DATA. YOU TALKED ABOUT HOW THEBIGGEST DEBATE AMONG YOU AND YOUR COLLEAGUES IS, WHERE ISTHE ENDPOINT? WHERE'S THE DESTINATION IS THEBIGGEST ISSUE. WHAT GIVES YOU CONFIDENCE THATTHEY SHOULD ADOPT SOME KIND OF.

BELIEF AND GO WITH IT RATHERTHAN LIVE IN COMPLETE CONFUSION? MOHAMED:THE CONFIDENCE THAT I HOPE I HAVE — A LITTLE BIT OFCONFIDENCE AND HOPE — THEY DO HAVE A DUAL MANDATE ANDUNDERSTAND HOW EXCEPTIONAL U.S. ECONOMIC PERFORMANCE HAS BEEN.THEY ARE PROUD OF IT. YOU OPENED WITH HOW DEPRESSINGIT IS THAT WE'VE HAD TWO DAYS OF MASSIVE LOSSES.IF I HAD COME HERE IN DECEMBER AND SAID TO YOU ALL THAT THEMARKET WILL REPRICE FED CUTS FROM SEVEN TO UNDER TWO AND THES&P WOULD BE UP 6%, WHAT WOULD.

YOU HAVE SAID? JONATHAN:YOU ARE NUTS. MOHAMED:WE WERE UP 6% ON THE S&P, 10% IN THE FIRST QUARTER.TO GO BACK TO THE FIRST QUESTION, I DON'T HAVECONFIDENCE, I HAVE HOPE. HOPE THAT THEY UNDERSTAND THEYNEED TO GET AWAY FROM EXCESSIVE DATA DEPENDENCE AND LOOKFORWARD. THEY NEED TO HAVE A VIEW.THEY ARE BEING PRESSED HARD ON TELL US WHAT YOUR VIEW IS.AT SOME POINT COME THEY WILL HAVE TO DELIVER.YOU KNOW, PRESIDENT WILLIAMS.

HAS SAID, THINK ABOUT THETARGET. YOU WILL HEAR THE TERM LONGER-TERM COME IN EVERY TIMETHEY TALK ABOUT THE INFLATION TARGET.IT IS A LONGER-TERM INFLATION TARGET OR MEDIUM-TERM INFLATIONTARGET. THEY WON'T COME OUT WITH AMASSIVE STATEMENT, THEY WILL START OFF A SKATING WHAT ISMEANT BY TARGET. JONATHAN: CAN YOU IMAGINE IF CHAIR POWELLCAME OUT AND SAID, I DON'T HAVE CONFIDENCE I HAVE HOPE? LISA:PEOPLE WOULD CLAP. FINALLY, YOU'RE TELLING US THETRUTH. JONATHAN:.

MOHAMED EL-ERIAN WILL BESTICKING WITH THE. EQUITIES TURNING POSITIVE,HOPEFULLY. EQUITIES RIGHT NOW POSITIVE0.1%. DANI: DONALD TRUMP'S FIRST CRIMINALTRIAL GOT OFF TO A SLOW START. PROCEEDINGS STALLED OVERDISAGREEMENTS ABOUT EVIDENCE AND LAST-MINUTE ARGUMENTS.JURY SELECTION DID NOT KICK OFF UNTIL THE FINAL HOURS OF THEDAY. THE FORMER'S LAWYERS ARGUED WITH PROSECUTORS OVER WHICHEVIDENCE WOULD BE ADMISSIBLE. MORE THAN HALF OF THE FIRSTPANEL OF 96 POTENTIAL JURORS.

HAD TO BE EXCUSED AFTER THEYCOULDN'T BE PARTIAL. FIRST QUARTER WARNINGS BEAT .UNPREDICTABLE RESULTS FOLLOWING A CYBER ATTACK.UNITED SAYS THAT THEY CONTINUE TO MAKE SIGNIFICANT PROGRESS INRESTORING THE AFFECTED SERVICES. BOEING IS RECOMMENDING THATOPERATORS OF ITS 787 DREAMLINER INSPECT A NOSE COMPONENT THATHELPS TO MAINTAIN PRESSURE IN THE CABIN.BOEING ENGINEERS ARE CARRYING OUT A MULTIYEAR STUDY OF THEWIDE-BODY PLANE'S STRUCTURAL INTEGRITY AND THAT IS IN THESPOTLIGHT.

ENGINEERS SAY THAT THEY FOUNDNO RISK OF PREMATURE FAILURE IN THE 787 CARBON COMPOSITE BODY.THE SENATE AT THE SAME TIME WILL HOLD A HEARING TOMORROWWITH TESTIMONY FROM YET ANOTHER WHISTLEBLOWER. JONATHAN:THE SOONER THAT WE STOP HEARING ABOUT THAT COMPANY THE BETTERFOR EVERYONE, INCLUDING THAT COMPANY.NEXT ON THIS PROGRAM COME THE UNCERTAIN PATH TO RATE CUTS. >> WE WILL NEED TO START APROCESS AT SOME POINT TO BRING INTEREST RATES BACK TO A MORENORMAL LEVEL.

MY OWN VIEW IS THAT THATPROCESS WILL LIKELY START THIS YEAR. JONATHAN:THE NEW YORK FED PRESIDENT SITTING DOWN WITH MIKE MCKEE.WE'LL CATCH UP WITH MIKE AND GET REACTION FROM MOHAMEDEL-ERIAN. GOOD MORNING. JONATHAN:IF YOU'RE JUST JOINING US, WELCOME TO THE PROGRAM. IN THE BOND MARKET, THE SELLOFFCONTINUES IN TREASURIES, YIELDS HIGHER BY FIVE BASIS POINTS.4.6488. THE UNCERTAIN PATH TO RATE CUTS.>> I THINK MONETARY POLICY IS.

WORKING AT THE RATES WE HAVENOW. I THINK MONETARY POLICY IS IN AGOOD PLACE. >> WE WILL NEED TO START APROCESS AT SOME POINT TO BRING INTEREST RATES BACK TO MORENORMAL LEVELS. MY OWN VIEW IS THAT THATPROCESS WILL LIKELY START THIS YEAR.AGAIN, IT WILL BE DRIVEN BY THE DATA. JONATHAN:PUTTING BACK RATE CUTS ON STRONG ECONOMIC DATA, COMMENTSFROM CHAIR POWELL, AND A STRING OF OTHER FED OFFICIALS.MIKE MCKEE SAT DOWN WITH JOHN.

WILLIAMS YESTERDAY.GREAT WORK YESTERDAY, AS ALWAYS. WHAT JUMPED OUT TO YOU IN THATCONVERSATION? MICHAEL: THE FACT THAT THE FED ISANXIOUS TO CUT RATES. THE THING THAT WAS NOT SAID INBETWEEN THOSE TWO SOUNDBITES WAS THE REASON THAT THEY THINKTHEY SHOULD CUT RATES BY SOMETIME THIS YEAR IS THAT REALRATES ARE HIGH AND THEY ARE AFRAID OF LACK EFFECTS OF –LAG EFFECTS HITTING THE ECONOMY. THEY ARE LOOKING TO CUT RATESIF THEY CAN, BUT THEY'RE ALL SAYING NOW THAT WE DON'T HAVETO MOVE YET.

WE CAN WAIT FOR THE DATA ONINFLATION AND MAKE SURE THAT IT IS GOING DOWN. LISA:THE INTERVIEW WAS INTERESTING. I FOUND IT MOST COMPELLING WHENHE SAID THEY DON'T TALK ABOUT OR THINK ABOUT THE LONG-TERMTARGET. IT IS A PLAY BY YOU GO, FEEL ITOUT, THOUGH BUMPS IN THE ROAD, FIGURE OUT IF THEY ARE BIG MOMSWERE SMALL BUMPS. DO YOU TAKE HIM AT HIS WORD ORDO YOU THINK THEY ARE THINKING SERIOUSLY ABOUT OUR NET NEUTRALRATE? MICHAEL: I THINK THEY ARE THINKING ABOUTIT BUT ON AN INDIVIDUAL BASIS.

THE LONG RUN, THEY DON'T HAVETO DO ANYTHING BECAUSE IT IS THE LONG RUN AND THINGS CHANGE.IT WAS FASCINATING THAT HE SAID HE STARTED TO THINK THAT THENEUTRAL RATE MIGHT BE HIGHER. HE IS MR. NEUTRAL RATE. IF THATIS THE CASE, IT WOULD MEAN INTEREST RATES STAY HIGHER FORLONGER. THEY WOULD BE HIGHER CERTAINLYTHAN THEY WERE IN THE PRE-PANDEMIC ERA WHEN THEY WEREAROUND ZERO. THE QUESTION IS, HOW FAR BACKDOWN DO THEY GO? IT SOUNDS LIKE THE FED ISBEGINNING TO THINK NOT THAT FAR.

MOHAMED:I LIKE THE WAY THAT YOU GOT HIM TO SAY DATA DEPENDENCY, BUTALSO THE LAG TO LOOK FORWARD. HOW DO YOU THINK THEY WILLCHARACTERIZE THE LATEST INFLATION NUMBER AND HOW DO YOUTHINK CHAIR POWELL WILL CHARACTERIZE IT THIS AFTERNOON?MICHAEL: THAT IS AN INTERESTING QUESTION.OF COURSE, THEY THOUGHT THAT IT WAS A ONE OFF JANUARY AND MAYBEA TWO OFF IN FEBRUARY, BUT A THIRD ONE YOU HAVE TO SAY IT'SA TREND. THEY THINK WE WILL SEE PRICESCONTINUE TO FALL, ALBEIT SLOWLY.

THEY RELY ON THE PCE RATHERTHAN THE CPI. THEY ARE LITTLE LESS WORRIED,BECAUSE WHEN YOU DO THE CALCULATIONS TO TRANSLATE CPITO PCE THEY EXPECT PCE TO COME IN LOWER, BUT ALSO THEY BOUGHTINTO THE IDEA THAT INFLATION IS STICKY AND IT WILL TAKE A WHILE.JONATHAN: MIKE MCKEE, GREAT WORK INWASHINGTON, D.C. BREAKING DOWN THE LATEST FEDSPEAK. THE FINAL WORD FROM MOHAMED.WE TOUCHED ABOUT U.S. EXCEPTIONALISM AND CENTRAL-BANKDIVERGENCE.

WHAT DO YOU THINK THE LIMITS OFTHE DIVERGENCE ARE AND WHAT CENTRAL-BANK ARE YOU THE MOSTFOCUSED ON? MOHAMED: DIVERGENCE IN POLICY ANDOUTCOMES DRIVEN BY BOTH THE MACRO AND WHAT IS HAPPENING ATTHE SECTOR LEVEL. THE GROWTH ENGINES ARE VERYUNEQUALLY DISTRIBUTED AROUND THE WORLD RIGHT NOW.THE DIVERGENCE WILL INCREASE. I LOVE THE FACT THAT YOU SAID A154 YEN WAS SURE TO TRIGGER INTERVENTION.IT HASN'T BECAUSE THE AUTHORITIES ARE FROZEN AROUNDTHE WORLD TO HOW DO YOU REACT.

TO GENERALIZED DOLLARSTRENGTHENING, GENERALIZED INCREASE IN INTEREST RATES INTHE WEST? UNFORTUNATELY, IN THE PAST WHENTHOSE TWO THINGS GO TOO FAR THEY CREATE SOMETHING ELSE, ANDTHAT IS WHAT A LOT OF US WILL BE WORRIED ABOUT GOING FORWARD.JONATHAN: DO YOU THINK THAT SOMETHING ISBREAKING NOW? MOHAMED: I THINK THE GLOBAL ECONOMY HASSTRONG RESILIENCE AND A FASCINATED WITH THE IMF WILLSAY THIS MORNING. DOES IT EXTRAPOLATE FORWARD THESTRENGTH OR SAY THAT THE.

STRENGTH WAS GOOD BUT YOUCANNOT EXTRAPOLATE FORWARD? I EXPECT THE LATTER, BUT ITWILL BE INTERESTING TO SEE. LISA:WHERE DO YOU THINK SOMETHING WOULD BE MOST LIKELY TO BREAK?MOHAMED: IT TENDS TO HAPPEN WHEN BALANCESHEETS ARE IMBALANCED, SO KEEP AN EYE ON CERTAIN REGIONALBANKS. IT IS NOT A BANKING SYSTEMPROBLEM, IT IS A FEW BANKS. KEEP AN EYE ON A FEW COUNTRIESWHOSE DEBT DYNAMICS AREN'T SUSTAINABLE. LISA: LIKE?MOHAMED: LIKE A FEW COUNTRIES.

[LAUGHTER] LISA:THAT WAS INFORMATIVE. I WONDER IF THIS IS ARESTRICTIVE RATE FOR AN ECONOMY THAT SHOWS A LOT OF HEAT?ARE WE SEEING BREAKING POINTS?PEOPLE HAVE BEEN SAYING LOOK AT THE CRACKS.THE CRACKS NEVER GET BIGGER. IN FACT, THEY HAVE GOTTENSMALLER.AT WHAT POINT CAN YOU SAY A COUPLE OF REGIONAL BANKSCAN FALL OUT OF BED BUT WE CAN KEEP CHUGGING ALONG? MOHAMED:I DON'T THINK THE CRACKS GOT SMALLER, I THINK THEY GOTCOVERED BY LIQUIDITY.

DON'T FORGET THE U.S.GUARANTEED EVERY SINGLE DEPOSIT IN REACTION TO WHAT HAPPENEDLAST MARCH. THAT IS HOW THE CRACKS GOTCOVERED. THEY DIDN'T DISAPPEAR, THEYWERE COVERED BY A CHANGE IN POLICY.WE HAVE USED BALANCE SHEETS TO COVER OVER SOME ANY CRACKS. AT SOME POINT WE WILL REACH THEEND OF THE ABILITY TO USE OUR BALANCE SHEETS. JONATHAN:WHOSE BALANCE SHEET? MOHAMED: THE FISCAL AND MONETARY BALANCESHEETS OVER AND OVER. JONATHAN:.

DO THINK WE ARE TESTING THELIMITS? MOHAMED: IF WE WERE PRUDENT WE WOULDBELIEVE THAT, BUT I DON'T THINK THE POLITICAL SYSTEM WILL ALLOWUS TO BELIEVE THAT. JONATHAN: WHERE DO YOU THINK WE WILL LOOKSIX TO 12 MONTHS? MOHAMED: NO DIFFERENT FROM TODAY.WE WILL RUN A HIGH DEFICIT AT A TIME WHEN WE SHOULD BE USINGECONOMIC EXCEPTIONALISM TO FIX THE ROOF WHILE THE SUN ISSHINING. JONATHAN: WHEN WE HAVE U.S.EXCEPTIONALISM IF WE DIDN'T HAVE PROBLEMS ON THE BALANCESHEET? MOHAMED:.

THERE'S A LOT OF GOOD IN THISECONOMY, THERE IS A LOT GOING ON, TREMENDOUS INNOVATION.YES, WE WOULD. ANNMARIE: YOU SAID EARLIER IN THECONVERSATION THAT AMERICAN EXCEPTIONALISM IS BECAUSE OFFISCAL POLICY, THE MONEY BEING FLOATED IN.HOW DO YOU WANT THEM TO DO THAT AND REIN IN THE DEFICIT?MOHAMED: I SAID INCLUDING POLICY.FISCAL, BUT ALSO INVESTING IN THE GROWTH ENGINES OF TOMORROW.THERE IS NO DOUBT THAT THE LOOSE FISCAL HAS HELPED.TOTALLY AGREE WITH THAT.

BUT WHAT I MORE ENCOURAGE ISHOW MUCH IS GOING INTO GENERATIVE AI, LIFE-SCIENCES,SUSTAINABLE ENERGY. THAT WILL POWER GROWTH TOMORROW.IF YOU LOOK AT — TO TAKE IT TO ANOTHER PART OF THE WORLD –OFFICIAL REACTION TO CHINA'S GROWTH, THEY SIGNIFICANTLY BEATEXPECTATIONS OF THEIR TARGET BUT WARNED THE UNDERLYINGGROWTH DYNAMICS AREN'T STRONG ENOUGH BECAUSE THEY UNDERSTANDTHEY HAVE TO PIPIT TO TOMORROW'S ENGINES OF GROWTH.JONATHAN: BRAMO WOULD HAVE TOLD YOUSOMETHING DIFFERENT.

THEY BEAT THEIR OWNEXPECTATIONS. BRAMO SEEMS SKEPTICAL WHEN YOUSTARTED ABOUT CHINA'S GDP BEAT. LISA:THEY WILL LOOK FORWARD TO AN ERA WHERE THEY WILL TRY TOCHOOSE THEIR ECONOMY BY INVESTING IN FACTORIES TOEXPORT CHEAP GOODS TO THE REST OF THE WORLD WHICH RAISES THEQUESTION ABOUT HOW MUCH YOU CAN DIVERSE INTERNATIONAL POLICYFROM DOMESTIC POLICY. MOHAMED: THEY ARE BACK TO USING A WEAKERCURRENCY TO PROMOTE THAT. JONATHAN: AGREED.THIS WAS GREAT.

HOPEFUL, NOT CONFIDENT.I'M GOING TO RUN WITH THAT FOR THE REST OF THE WEEK.HOPEFUL NOT CONFIDENT. THANK YOU, SIR.WE WILL CATCH UP WITH DAVID HUNT ABOUT THE BOND MARKET.FIXED INCOME, TREASURIES, CREDIT.BRAMO, SO MARCH TO TALK ABOUT. A NEW ERA. LISA: WEAKFLATION WAS HIS WORD.WHAT THAT MEANS WHEN EVERYONE IS TALKING ABOUT AMERICANEXCEPTIONALISM AND GROWTH. JONATHAN:HE THINGS THAT BONDS ARE BACK.

TREASURIES ARE DOWN AND YIELDSARE HIGHER BY FIVE BASIS POINTS. THE TWO-YEAR HIGHER BY TWOBASIS POINTS AT 4.94. EQUITY MARKETS PULLING BACK ALITTLE BIT. WE WRAP UP EARNINGS SEASON ONWALL STREET NEXT, LOOKING FOR NUMBERS FOR MORGAN STANLEY.SONALI BASAK WILL BREAK THAT DOWN.THOSE NUMBERS SOMETHINGLIKE FOUR MINUTES AWAY. ♪ JONATHAN: WELCOME TO THEPROGRAM ENDED MORNING TO YOU ALL.FUTURES ON THE S&P 500 BOUNCING BACK A LITTLE BIT.ABOUT A 10TH OF 1% ON THE S&P.

BIGGEST SINCE MARCH OF LASTYEAR. DOING BETTER THIS YEAR. IF WE SWITCH UP THE BOARD TOGET TO THE BOND MARKET, MASSIVE LEVELS BROKEN THROUGH OVER THELAST MONTH OR SO. WE HAVE NOT TAKEN OUT THE HIGHSOF LAST YEAR BUT WE NEW HIGHS FOR THIS YEAR, VERY CLOSE TO 5%ON THE TWO-YEAR, A MOVE OF MORE THAN 30 BASIS POINTS SO FAR INAPRIL. OVER 40 SO FAR IN APRIL. 46488. WE WILL TALK ABOUT BANKEARNINGS IN A MOMENT. LISA WILL LOOK AT THAT.DOLLAR STRENGTH POTENTIALLY A SIXTH CONSECUTIVE DAY OF INCOMEOF THE LONGEST STRETCH GOING.

BACK TO SEPTEMBER OF LAST YEAR.THE EURO TRYING TO BOUNCE BACK. DOLLAR-YEN, WE HAVE A PROBLEM,BOJ. 153 IS REALLY PROBLEMATIC. 154, I THINK THEY ARE IN NOMAN'S LAND. POSITIVE BY A QUARTER OF 1%.THE NUMBERS FOR MORGAN STANLEY, LET'S GET A 35,000 FOOT VIEWAND THEN WE CAN CROSS OVER TO SONALI . WHAT STANDS OUT TO YOU?LISA:LISA: THEY HAD COMPENSATIONEXPECTATIONS COME IN HIGHER-THAN-EXPECTED.WE SAW BANK OF AMERICA BEAT ON THE INTEREST INCOME BUT THEYMISSED $1.8 BILLION VERSUS THE.

ESTIMATE OF ALMOST $2 BILLION,RAISING A QUESTION ABOUT SOME OF THESE BANKS ARE USING THEIRBALANCE SHEET TO GET AHEAD OF SOME OF THE AREAS THAT AREUNDER MORE PRESSURE. JONATHAN: NET REVENUE, $6.88 BILLION U.S.IF WE CAN BRING UP THE STOCK IN THE PREMARKET, IT IS POSITIVEBY LITTLE MORE THAN 3% AT THE MOMENT AT MY LAST LOOK.LET'S CROSS OVER TO SONALI BASAK. WHAT DO YOU SEE? SONALI:THERE ARE A FEW THINGS GOING ON. BOTH MANAGEMENT NUMBER COMINGIN ABOVE ESTIMATES AND THE PRETAX MARGIN ALSO COMING INABOVE ESTIMATES.

THEY WANT TO SEE THE WEALTHENGINE TO DRIVING PERFORMANCE. ALSO BETTER THAN EXPECTED INFIXED INCOME AND EQUITIES TRADING I BELIEVE THEM ABOUTWHAT IS INTERESTING IS THAT EQUITIES TRADING NUMBERACTUALLY COMES IN BELOW WHAT GOLDMAN SACHS BROUGHT IN.THE COMPETITION IS PRETTY STIFF ON WALL STREET TODAY.ANOTHER THING TO LOOK AT IS THE COMPETITION EXPENSE COMING INHIGHER-THAN-EXPECTED. WE HAVE BEEN TALKING ABOUT IT.THIS HAS BEEN A TREND. A LOT OF PRESSURE ONCOMPETITION COST IN A YEAR.

WHERE ACTIVITY IS JUMPING BACK.OVER AT THE INVESTMENT BANK AS WELL, UNDERWRITING FEES FOREQUITY AND DEBT COMING IN ABOVE ESTIMATES, BUT ADVISORY ISCOMING IN A BIT LIGHT. THIS IS ANOTHER AREA OF STIFFCOMPETITION. GOLDMAN'S ADVISORY FEES AREMORE THAN DOUBLE WHAT YOU SEE OVER AT MORGAN STANLEY, SO THECORE INSTITUTIONAL BUSINESSES WILL BE WHERE TED WILL HAVE TOSHOW WHERE THE MARKET SHARE IS BEING GAINED AND LOST IN THOSEBUSINESSES. LISA: YOU MENTIONED TED PICK.THIS IS ONE OF THE FIRST.

EARNINGS SEASONS WE HEAR FROMHIM OR THE SECOND OR THIRD BUT HE JUST TOOK OVER.THERE IS A QUESTION OF WHAT DOES THE NEW MORGAN STANLEYLOOK LIKE? DO YOU HAVE A SENSE FROM THESENUMBERS ABOUT WHERE THE SHIFT IS IN TERMS OF FOCUS? SONALI:IT IS INTERESTING YOU SAY THAT. THIS IS THE FIRST FULL QUARTERYOU HAVE TED REPORTING RESULTS. RIGHT OUT OF THE GATE, THIS ISHIS FIRST SCORECARD. TO THE POINT YOU ARE MAKING,THE NEW MORGAN STANLEY HAS BEEN DRIVEN VERY HEAVILY BY THEASSET AND WEALTH MANAGER.

THEY HAVE BEEN THE KINGMAKER INU.S. ASSET AND WEALTH. WHILE WE SEE THE REVENUEHOLDING UP, THE COMPETITION IN THE INVESTMENT BANK ISSOMETHING HE HAS BEEN FOCUSED ON. HE SAID INVESTMENT BANKINGWOULD LEAD THE CYCLE WITH COMPENSATION COSTS ON THE RISE.HOW WILL THEY PAY FOR THOSE BANKERS AND REGAIN THE CHAIR INTHE EQUITIES BUSINESS? WE WERE TALKING ABOUT ITYESTERDAY WHEN WE TALK TO FOLKS ON THE STREET.THEY SEE HIM SHOWING UP AND BEING COMPETITIVE.WE KNOW MORGAN STANLEY WANTS TO.

RETAIN ITS TOP SPOT HERE ON ALOT OF THOSE INSTITUTIONAL BUSINESSES.WHAT IS INTERESTING IS THE MARKET HAS NOT BEEN REPORTINGTHOSE POOR WALL STREET BUSINESSES YET.THEY DO NOT SEEM TO BE CONVINCED VOLATILITY WILL NOTSTIFLE THE WINDFALLS. HEARING WHAT THEY HAVE TO SAYAFTER GOLDMAN SACHS ON HOW FAR THEY CAN RUN IN INSTITUTIONALWILL BE A QUESTION. LISA: SOME NAMES — JONATHAN:SOME NAMES ARE DOING BETTER. THE BANKING SECTOR WAS DOWN 5%ON THE S&P 500.

SONALI, YEAR-TO-DATE GOINGTHROUGH SOME OF THE STOCK MOVES, LET'S LOOK AT SOME OFTHE SCORES. GOLDMAN IS POSITIVE BY 4%.CITI IS UP BY DOUBLE DIGITS. JP MORGAN IS DOING OK.MORGAN STANLEY IS DOWN ON THE YEAR. WHAT IS HOLDING BACK THATSTOCK? SONALI:IT IS NOT EVEN DOWN BY A LITTLE BIT. IT IS THE ONLY ONE THAT ISDOWN, LET ALONE DOWN BY THAT MARGIN.FOR MORGAN STANLEY, THEY BANK THE WEALTHIEST OF THE WEALTHYIN THE UNITED STATES.

THIS SHOULD NOT BE AS MESSY OFA STORY BUT YOU HAVE A MASSIVE MANAGEMENT CHANGE AND THISOTHER QUESTION ABOUT INVESTIGATIONS BEING FACED ATTHE BEHEMOTH WELL AND ASSET MANAGER SO IT IS A SUCCESSIONSTORY THAT CREATES A LOT OF QUESTIONS AS WELL AS THOSEINVESTIGATIONS THAT YOU DO NOT SEE IN THIS EARNINGS REPORT.THIS IS A QUESTION OF HOW TO PICK WILL BE ABLE — OF HOW TEDPICK WILL BE ABLE TO ADDRESS THIS.ARE THERE ANY FINANCIAL LEVIES COULD BE SEEN AT THE WEALTHMANAGER AT THE END OF THE DAY?.

THIS IS A MATTER OF, ARE PEOPLEMOVING MONEY OUT OF CASH AND INTO MARKETS?THERE IS A SENSE THAT IS COMING. THERE IS A POSITIVE SIGNAL FORTHAT BUT LET'S SEE HOW QUICKLY THAT TRANSLATES. JONATHAN:WE CAN HAVE THAT CONVERSATION RIGHT NOW. THANK YOU.THE LAST BIG NAME OUT OF THE GATE ON WALL STREET, WRAPPINGUP BANKING EARNINGS. JOINING US NOW AROUND THE TABLEIS DAVID, THE CEO. GOOD MORNING TO YOU. DAVID:GOOD MORNING. NICE TO BE WITH YOU. JONATHAN:I WANT TO PICK UP ON SONALI'S.

COMMENTS.THE MONEY COMING OUT OF MONEY MARKET FUNDS AND MIGRATINGELSEWHERE. HAVE YOU SEEN THAT TRENDDEVELOP? DAVID: WE HAVE SEEN THAT.IT HAS BEEN SMALL PIECES BUT IT IS BEGINNING TO PICK UP SPEED.SOME OF THE REASONS ARE OBVIOUS. CERTAINLY AT A HIGHER LEVEL OFINTEREST RATES RELATIVE TO MONEY MARKET FUNDS AS WE BEGINTO SEE RATES PEAK AND THEN DECLINE.DURATION BEGINS TO LOOK A LITTLE MORE ATTRACTIVE.BUT THERE ARE TWO OTHER THINGS.

GOING ON WHICH ARE AT LEAST ASIMPORTANT. ONE IS THAT THE BIG PENSIONFUNDS WITH HIGHER RATES ARE BETTER FUNDED.THEY ARE USING THIS AS A CHANCE TO DE-RISK.AND THAT MEANS FOR THEM THEY ARE MOVING MONEY INTO FIXEDINCOME. THE SECOND IS THAT WE HAVE THECONTINUED DEMOGRAPHIC TRENDS GOING ON NOT JUST IN THISCOUNTRY BUT AROUND THE WORLD, AND RETIREES NEED INCOME.SO WE ARE IN THE PROCESS NOW OF THIS HUGE SHIFT FROMACCUMULATION PRODUCTS TO D.

ACCUMULATION AND INCOMEPRODUCTS. THOSE NEED FIXED INCOME.IF YOU TAKE THE SHORT-TERM SHIFT, YOU ADD TO THEM TWOSTRUCTURAL SHIFTS, WE THINK OVER THE NEXT THREE YEARS WEARE GOING TO SEE BONDS ARE BACK. JONATHAN:THIS SOUNDS LIKE A NEW REGIME AND I WILL GIVE YOUR TEAM A BITOF A SHOUTOUT. PRE-PANDEMIC, REALLY DEFININGTHE BOND MARKET REGIME OF YESTERYEAR.CAN YOU TALK ABOUT HOW DIFFERENT THIS REGIME WILL BECOMPARED TO THAT? DAVID:.

WE THINK IT WILL BE DIFFERENT.YOU ARE RIGHT, THEY WERE ON THE LOWER FOR LONGER FOR QUITE ALONG TIME AND MORE RECENTLY OUR CALL HAS ACTUALLY BEEN WE WILLBE HIGHER. IF YOU GO BACK SIX MONTHS, WEWERE VERY EARLY TO THE WE ARE LOOKING AT TWO CUTS FOR 2024WHEN THE MARKET WAS PRICING IN SEVEN. WE HELD WITH THAT VIEW, AND THEMARKETS HAVE KIND OF COME BACK TO US AT THIS POINT.WE TAKE PRIDE IN CONSIDERED NON-CONSENSUS VIEWS THAT ARELONG-TERM IN NATURE RATHER THAN.

SIMPLY TRADING VIEWS.I THINK WE HAVE MADE A VERY GOOD JOB ON THOSE.I WILL SAY THAT IN ORDER TO DO THAT, YOU NEED A CULTURE THATSUPPORTS PEOPLE TO TAKE THOSE NONCONSENSUS VIEWS EVEN DURINGTIMES WHEN THEY DON'T LOOK SO RIGHT.MANY ORGANIZATIONS HAVE A HARD TIME DOING IT.WE ARE PROUD OF OUR CULTURE TO DO IT. LISA:TO RIP UP THE SCRIPT QUICKLY BECAUSE I HAVE TOM'S SHADOWOVER ME AND COMPETITION EXPENSES COMING UP, IS ITGETTING HARDER TO RECRUIT AND.

KEEP THAT KIND OF TALENT? DAVID:NO QUESTION IT IS. IF YOU LOOK OVER THE LAST 20YEARS, YOU WOULD SAY THAT MANY OF THE FUNCTIONS AND THINGSTHAT USED TO BE DONE IN THE INVESTMENT BANKS ARE NOW BEINGDONE ON THE BUY SIDE. I HAVE 130 CREDIT ANALYSTS.YOU NEVER WOULD HAVE SEEN THAT BEFORE.ALL OF THAT WOULD HAVE BEEN DONE BY GOLDMAN SACHS ANDMORGAN STANLEY AND WE WOULD HAVE BOUGHT RESEARCH FROM THEM.SO THE ACTUAL VALUE CHAIN CONTINUES TO MOVE FROM THE SELLSIDE TO THE BUY SIDE AND I.

DON'T THINK THAT WILL CHANGE.THAT PUTS A LOT PRESSURE ON THOSE OF US ON THE BUY SIDEBECAUSE WE NEED TO MOVE OUR COMPENSATION LEVELS UP IN STEPWITH THAT. SO THE WAR FOR TALENT IS VERYREAL AND VERY PRACTICAL FOR US DAY-TO-DAY. LISA:SO ARTIFICIAL INTELLIGENCE, HOW DO YOU USE THAT?I REALLY AM DIVERGING HERE. I WAS GOING TO TALK ABOUT BONDSBEING BACK. JONATHAN: I WANTED TO TALK ABOUT THEBONUS. LISA: HOW DO YOU MAKE THINGS MOREEFFICIENT TO REDUCE COSTS WHILE.

CONTINUING TO PRIORITIZE THIS?HOW DO YOU SEE THAT PLAYING OUT, OR DO YOU THINK SOME OFTHE GAINS IN PRODUCTIVITY ARE OVERSTATED AND IT REALLY COMESDOWN TO TALENT AND PEOPLE WHO CAN DO THE JOB BEST? DAVID:I THINK WE ARE IN THE MIDST OF A GAME CHANGER ON TECHNOLOGY. IN ASSET MANAGEMENT OVER THELAST DECADE, TECHNOLOGY HAS MOSTLYBEEN ABOUT, CAN WE AUTOMATE THINGS, GET MORE EFFICIENT ATTHINGS? SO IT HAS BEEN A BIT OF A COSTPLAY.

THAT IS NOT WHERE THE GAME ISTODAY. TECHNOLOGY NOW IS ALLOWING USTO MOVE DATA TO THE CLOUD AND THEN DO THINGS WITH ARTIFICIALINTELLIGENCE WE NEVER COULD DO BEFORE. AND SO IT NOW IS BEING USED BYOUR INVESTORS, THE FRONT LINES TO MAKE DECISIONS.THAT IS A VERY DIFFERENT USE OF TECHNOLOGY THAN IT WAS BEFORE.I THINK THAT IS VERY EXCITING, BUT IT MEANS WE ARE NEEDING TOSIGNIFICANTLY UP OUR GAME ON THE USE OF TECHNOLOGY ANDMAKING SURE WE ARE EMPLOYING.

SOME OF THESE LATEST USES OF ITIN OUR ACTUAL INVESTMENT PROCESS AS WELL AS TRYING TOGET MORE EFFICIENT AND SOME OF THE BACK OFFICE FUNCTIONS.THAT IS DIFFERENT FOR THE INDUSTRY. LISA:YOU ARE SAYING IT IS MAKING YOU MORE EFFICIENT BUT YOU NEED ALEANER TEAM. DAVID: IT MEANS THE QUALITY OF JOBS WEHAVE WILL BE BETTER BECAUSE WE WILL TAKE A BUNCH OF THINGSTHAT WE CAN DO MUCH MORE EFFICIENTLY WITH TECHNOLOGY,AND THEN WE WILL BE ABLE TO AUGMENT OUR PORTFOLIO MANAGERSWITH TECHNOLOGY SO THEY ARE.

MAKING BETTER INVESTMENTDECISIONS. THAT IS WHAT THEY WANT TO FOCUSON ANYWAY, SO THE MORE I CAN FOCUS THEM ON THE HIGHER VALUETOPICS, THE BETTER AND HAPPIER THEY ARE THROUGH THE USE OFTECHNOLOGY. >> WHEN YOU LOOK AT AI ANDINFLATION, WEAKFLATION, IS THAT THE REST OF THE ECONOMY? DAVID:THE BIG STORY THAT DOES NOT GET REPORTED ENOUGH IS THE WORLDHAS NOT BEEN IN THE LAST COUPLE YEARS MORE DIVERGENT IN THEIRVIEWS OF GROWTH, SO SPENDING TIME IN EUROPE, I WOULD SAY THEU.K. IS IN A TECHNICAL RECESSION.

RIGHT NOW.YOU SPENT TIME IN GERMANY, GROWTH IS REALLY HARD TO COMEBY AND IT IS NOT LOOKING SO TERRIFIC.INFLATION CONTINUES TO BE A WORRY BUT HAS COME DOWN A LOTAND IS RELATED MOSTLY TO ENERGY PRICES. YOU MOVE TO THE U.S.AND GROWTH IS HIGHER THAN MOST PEOPLE THOUGHT.THE LABOR MARKET IS IN EXCELLENT SHAPE. AND GROWTH APPEARS ANDPRODUCTIVITY APPEARS TO BE BETTER.INFLATION IS HIGHER AND RATES.

ARE HIGHER.I JUST SPENT LAST WEEK IN JAPAN AND IT IS FASCINATING.AFTER LITERALLY 30 YEARS OF TRYING TO GET INFLATION TO GOAGAIN, IT IS A BEAUTIFUL SPRING WEEK, THE CHERRY BLOSSOMS WEREOUT, AND THERE IS A SPRING IN THE JAPANESE STEP.THEY FINALLY HAVE INFLATION COMING BACK.THEY HAVE PRODUCTIVITY NUMBERS THAT LOOK BETTER AND SOMEGROWTH. AND SO THE STOCK MARKET IS ATAN ALL-TIME HIGH, AND YOU FEEL OPTIMISM IN JAPAN.

WE SAW THE NUMBERS COME OUT OFCHINA CHINA CONTINUES TO PUSH ON MANUFACTURING IN ORDER TOGET THE ECONOMY GOING. I THINK ALL OF US WISH THEY HADTHE TOOLS TO GET DOMESTIC PERSONAL CONSUMPTION GOINGBECAUSE THAT IS REALLY THE REBALANCING THEY NEED IN THEIRECONOMY. THE WAY THEY ARE GOING RIGHTNOW WILL FLOOD THE WORLD WITH CHEAPER MANUFACTURING, WHICHWILL MAYBE EXPORT DEFLATION BACK TO FIVE YEARS AGO, BUT ITIS NOT THE BALANCING THAT WE WOULD HOPE.I THINK IF THEY COULD GET THEIR.

DOMESTIC CONSUMPTION GOING, ITWOULD BE GOOD FOR THE CHINESE PEOPLE, THE CHINESE ECONOMY,AND THE WORLD ECONOMY. THE REASON WE COME TOWEAKFLATIO N IS THE WORLD IS VERY DIFFERENT, BUT WHEN YOUPUT THAT TOGETHER, GROWTH IS GOING TO SLOW FROM WHAT HASBEEN. WE ARE GOING TO HAVE HIGHERINFLATION WE BELIEVE FOR LONGER AND HIGHER RATES.THAT IS WHERE YOU GET THE WEAKFLATION PIECE OF IT.IT IS DIFFERENT FROM STAGFLATION.WITHIN THE LABOR MARKET IS.

PRETTY STRONG. JONATHAN:THERE IS A TON TO UNPACK THEIR. I ONE TO UNPACK THE CHINA PIECEOF IT — THERE IS A LOT TO UNPACK THERE.I WANT TO UNPACK THE CHINA PIECE OF IT.THERE IS TALK OF MORE POLICIES GOING AGAINST CHINA FROM THEUNITED STATES. SECRETARY ELLEN HAS BEENTALKING ABOUT THAT THE LAST WEEK.DOES THAT MAKE IT HARDER FOR YOU TO RUN A GLOBAL BUSINESS?MORE DIFFICULT NOW THAN IT USED TO BE? DAVID: YES, IT IS.MANY OF US ARE HEADED TO THE.

IMF MEETINGS THIS WEEK AND ONEOF THE BIG TOPICS WILL BECOME A WHAT ARE THE IMPACTS OF THE NEWCHINESE ECONOMY, AND WHAT WILL THE U.S.ADMINISTRATION DO IN RESPONSE TO THAT?I WILL SAY HAVING SPENT A WEEK IN JAPAN THAT THE COUNTRY THATIS THE NUMBER ONE BENEFICIARY OF THE TENSION BETWEEN THE U.S.AND CHINA IS JAPAN. WHEN I WAS THERE, THERE WERETHREE COMPANIES LAUNCHING NEW CHIP MANUFACTURING CENTERSTHERE. THERE WAS COMPANIES THAT WANTEDTO INVEST MORE IN JAPAN.

JAPAN IS TAKING ON A ROLL INASIA AND IN A PAN ASIAN TRADE THAT I DID NOT HAVE BEFORE.THE OTHER THING IS THE SECURITY ALLIANCES HAVE COME TOGETHER ITHINK FASTER THAN ANY OF US WOULD HAVE THOUGHT.WHEN I SPENT TIME WITH FOLKS IN THE DIPLOMATIC AND SECURITYWORLD THERE, THE COMING TOGETHER OF JAPAN, SOUTH KOREA,NOW THE PHILIPPINES AND AUSTRALIA IS CREATING ASTRONGER ALLIANCE THAN WE HAD BEFORE, SO THESE KINDS OFREVERSE POWERFUL IMPACTS THAT WE HAVE ARE HARD TO PREDICT,BUT THEY CHANGE THE SUPPLY.

CHAINS A LOT. JONATHAN:YOU MENTIONED JAPAN QUITE A FEW TIMES.YOU VISITED THERE AND BUILD A BUSINESS THERE. DAVID:WE ARE ONE OF THE LARGEST ASSET MANAGERS IN JAPAN.WE ABSOLUTELY BELIEVE IT IS A CRITICAL COUNTRY.OBVIOUSLY, IF YOU JUST LOOK AT WHERE THE MONEY IS AROUND THEWORLD, JAPAN REMAINS ONE OF THE WEALTHIEST AND HIGHEST SAVINGSPLACES SO THERE IS A LOT OF MONEY TO MANAGE. JONATHAN:IS THAT MONEY COMING HOME? DAVID:THE MONEY IS COMING HOME TO.

SOME EXTENT BUT ALSO FOREIGNMONEY IS GOING AND BOTH PORTFOLIO FLOWS AND FDI, WHICHIS A FAIRLY NEW STORY. JONATHAN: A MASSIVE CHANGE.I AM PLEASED TO SAY YOU WILL STICK WITH US.LET'S GET YOU AN UPDATE ON STORIES ELSEWHERE BRIEFLY.HERE IS DANI BURGER. DANI: ISRAELI MILITARY OFFICIALS SAYTHEY HAVE NO CHOICE BUT TO RESPOND TO IRAN'S DRONE ANDMISSILE ATTACK OVER THE WEEKEND. THE U.S.AND EUROPEAN ALLIES ARE URGING ISRAEL TO AVOID THE KIND OF TITFOR TAT THAT WOULD SPARK A.

WIDER WAR. THE U.S. HAS SAID THEY HAVE PLACED MORETHAN 500 SANCTIONS ON IRANIAN ENTITIES TO HOLD IRANACCOUNTABLE. ANOTHER BANK, ANOTHER UPGRADETO THE OUTLOOK FOR GOLD. GOLD IS LIKELY TO REACH $3000AN OUNCE ACCORDING TO CITI. THEIR TIMELINE IS THE NEXT 12TO 13 MONTHS. THE FED WILL EVENTUALLY CUTRATES AND THAT IS GETTING LONGER OUT NOW.THE PRECIOUS METAL HAS BEEN ON A TEAR THIS YEAR DRIVEN BYHAVEN FLOWS WITH WARS IN THE.

MIDDLE EAST AND CENTRAL BANKBUYING AND CONSUMER DEMAND IN CHINA. SHARES OF BNY MELLON HIGHER INTHE PREMARKET. RESULTS BEAT ACROSS THE BOARD.TOTAL REVENUE $4.5 BILLION IN THE FIRST QUARTER.TOTAL FEES JUMPED 6%. BUT OF THOSE ARE A BEAT.THAT IS YOUR BRIEF. JONATHAN: THANK YOU.UP NEXT ON THE PROGRAM, DEBATING THE FED'S PATH FORWARD.>> IF YOU THINK WE WILL REMAIN DATA DEPENDENT, WHICH THEY ARETODAY BECAUSE THEY GOT SO.

EMBARRASSED BY WHAT HAPPENED IN2021, THE FED WILL NOT CUT. I THINK THE LIKELIHOOD OF THEMHIKING IS LOW. IS IT ZERO? NO. THEY COULD. JONATHAN:MORE WITH THE PGM CEO DAVID HUNT. JONATHAN:EQUITY FUTURES ON THE S&P 500 POSITIVE BY A QUARTER OF 1%.USE A LITTLE HIGHER, UP FOR BASIS POINTS.DEBATING THE FED PATH FORWARD. >> IN ORDER TO PREDICT THE FED,IF YOU THINK WE WILL REMAIN DATA DEPENDENT, WHICH THEY ARETODAY BECAUSE THEY GOT SO.

EMBARRASSED BY WHAT HAPPENED IN2021, THEN THE FED WILL NOT CUT. IF LIKE WE HOPE THEY WILL GOFROM EXCESSIVE DATA DEPENDENCY TO ALSO HAVING A MACROFRAMEWORK IN THEIR HEAD MOVING FORWARD, THEY WILL CUT AND THATIS WHAT WE WILL SEE PLAY OUT, BUT I THINK THE LIKELIHOOD OFTHEM HIKING IS LOW. IS IT ZERO? NO. THEY COULD. JONATHAN: JAY POWELL SPEAKING LATER TODAYAS INVESTORS LOOK FOR MORE CLUES ON THE FED PATH FORWARD.THE 10 YEAR YIELD CLIMBING TO ITS HIGHEST LEVEL SINCENOVEMBER.

THE FED IS IN NO RUSH TO CUT.BONDS ARE BACK. WE ANTICIPATE INVESTORS WILLMOVE A CHUNK OF FUNDS IN MONEY MARKETS TO HIGH-QUALITYSTRATEGIES THAT HAVE SOME DIRECTION AS THEY SEE RATESBEGIN TO REDUCE. DAVID IS STILL WITH US AT THETABLE FOR SOME FINAL THOUGHTS. LET'S TALK ABOUT WHERE THEMONEY IS SET TO GO. WE HAVE HEARD A MILLION TIMESTHE PHRASE SURVIVE UNTIL 2025. CAN YOU TALK TO US ABOUT THEPOCKETS THAT YOU ARE NOT CONSTRUCTIVE ABOUT, PERHAPSEVEN CONCERNED ABOUT? DAVID:.

WE CERTAINLY HAVE SEEN WHILEYIELDS ARE HIGH, SPREADS ARE COMPRESSED AND SO THERE AREPARTS OF THE MARKET RIGHT NOW WHERE YOU ARE NOT GETTING PAIDFOR THE RISK AND WE WOULD SAY SOME OF THE LOWER QUALITY AREASOF HIGH-YIELD AND OTHERS WOULD FIT THAT BILL AT THE MOMENT.BUT BROADLY, THERE IS WAY TOO MUCH ATTENTION PAID TO EXACTLYWHEN THE FED BEGINS TO MOVE AND NOT ENOUGH TO THE MOSTIMPORTANT QUESTION, WHICH IS THE FACT THAT WE WILL HAVEHIGHER RATES FOR LONGER. EVEN WHEN THEY BEGIN TO COMEDOWN, THEY WILL NOT COME DOWN.

THAT MUCH.THAT IS GOING TO MEAN YOU ARE GOING TO HAVE HIGHER YIELDS FORTHE NEXT SEVERAL YEARS. AS A LONG-TERM INVESTOR, THEFOURTH LARGEST BOND MANAGER IN THE WORLD, THAT IS OUR FOCUS,AND WE BELIEVE BONDS WILL BE A VERY IMPORTANT PART OF APORTFOLIO GOING FORWARD, AS WILL CREDIT WERE BROADLY.WE TALKED A LOT ABOUT THE PUBLIC MARKETS, BUT WE ARE ONEOF THE LARGEST PRIVATE CREDIT MANAGERS IN THE WORLD.AND WE CONTINUE TO BELIEVE THAT WILL BE A REALLY GOOD GROWTHENGINE BOTH FOR INSTITUTIONAL.

INVESTORS, INCREASINGLY RETAILAND HIGH NET WORTH, AND THE MONEY MANAGER BUSINESS BECAUSEBANKS, DESPITE ALL THE EARNINGS YOU ALL HAVE COVERED TODAY,CONTINUE TO PULL BACK FROM THEIR CORE LENDING FUNCTIONSBECAUSE OF CAPITAL CONSTRAINTS. LISA:WHEN YOU TALK ABOUT PRIVATE CREDIT, AND A LOT OF PEOPLEHAVE BEEN GOING INTO THE FIELD AND THERE IS THE IDEA THATTHERE ARE COMPANIES BECOMING BANKS THAT DO NOT HAVE 800 FICASCORES, THE EQUIVALENT OF THAT ARE BECOMING UNBANKED IN PUBLICMARKETS FRANKLY ADJUST BY THE.

BANKS.YOU ARE BUYING THEIR BONDS, HOLDING THEM FOR THE LONG-TERM,HOPING TO CLIP A COUPON OF 7% OR 8%. DAVID:SO IT IS A COMBINATION OF ALL OF THE THINGS YOU SAID.FIRST OF ALL, THERE ARE MANY MIDDLE-MARKET COMPANIES WHICHARE VERY GOOD CREDITS BUT FOR WHOM THE BANKS REALLY CANNOTLEND IT TO THE WAY THEY DID BECAUSE OF THE NEW CAPITALREGIME THAT CAME ON AFTER THE GSC, AND IF WE GET ANOTHERROUND OF INCREASED CAPITAL CONSTRAINTS ON THE BANKS, THATWILL BECOME EVEN HARDER FOR.

THEM, SO THIS GROWTH YOU HAVESEEN IN DIRECT LENDING, WHICH IS LENDING REALLY INTO THESMALLER COMPANIES HAS BEEN QUITE SIGNIFICANT, AND WE THINKTHAT WILL CONTINUE TO GROW. BUT THE OTHER AREA, THIS HASBEEN ASSET-BASED FINANCE. FOR MANY YEARS, MOST OF THISWAS FUNDED BY BANKS AND THE COMMERCIAL FINANCE COMPANIES.WHETHER OR NOT THAT WAS AIRCRAFT LEASES OR RAILCARS ORSOLAR PANELS, AND THAT KIND OF ASSET FINANCE NOW IS COMINGMORE AND MORE INTO A CORE INSTITUTIONAL ASSET MANAGERPORTFOLIO.

WE HAVE BEEN A FAIRLY LARGEPLAYER IN THAT, AND WE WOULD SAY AS WE LOOK TOWARD, WE THINKIT WILL BE ONE OF THE LARGE AREAS THAT FIXED INCOME WILLCONTINUE TO GROW. SO YOU HAVE PUBLIC MARKETSWHERE WE SEE ATTRACTIVE CREDIT. WE HAVE DIRECT LENDING AND SOMEOF THE HIGHER-QUALITY PRIVATE MARKETS, AND YOU NOW HAVE AMARKET THAT IS GROWING, SO WE REMAIN VERY CONSTRUCTIVE ONCREDIT, PUBLIC AND PRIVATE, LOOKING FOR THE NEXT SEVERALYEARS. JONATHAN: LET'S STAY ON PRIVATE AND RAPIDUP THERE AS WELL.

WE CUT UP WITH MARK ANDSENTIMENT CAN YOU DEFINE THE PRIME OPPORTUNITY?HE SAID BASICALLY EVERYTHING THAT HAS A BANK BALANCE SHEET.DO YOU THINK THERE IS SPACE FOR EVERYBODY?HOW BIG OF AN OPPORTUNITY? DAVID:SO I THINK THE GOOD NEWS IS THAT ACTUALLY PRIVATE CREDIT,PARTICULARLY DIRECT LENDING, IS ACTUALLY MATURING.INSTITUTIONAL INVESTORS WHO FOR A NUMBER OF YEARS ALL KINDS OFPEOPLE GET INTO THIS BUSINESS AND SET THEMSELVES UP ANDIMMEDIATELY WERE ABLE TO RAISE.

MONEY.I THINK THAT PERIOD IS NOW OVER. INSTITUTIONAL INVESTORS AREMUCH MORE PICKY ABOUT THE MANAGERS THEY ARE USING TO DOPRIVATE CREDIT. WE ARE SEEING FEWER MANAGERSRAISED MORE MONEY IN THAT SPACE AND I THINK THAT WILL CONTINUEBECAUSE INVESTORS WANT TO SEE IT. YOU HAVE MULTIPLE TRACK RECORDS, HAVE DONE THIS OVERMULTIPLE CYCLES, AND HAVE THE SKILLS TO DO IT.YOUR ABILITY TO SET UP A NEW SHOP AND RAISE MONEY IS A LOTLESS NOW THAN IT WAS YEARS AGO.

THERE WILL BE A BIT OF ASHAKEUP IN THAT AND THAT IS NO BAD THING. JONATHAN:I HAVE LOVED THIS. WE HAVE TO DO IT AGAIN. DAVID:THANK YOU FOR HAVING ME. LISA: WHAT YOU CAN SEE IS THE BIGGERASSET MANAGERS ARE BASICALLY TAKING OVER A LOT OF BUSINESSESTRADITIONALLY ON BALANCE SHEETS. I AM JUST THINKING ABOUT WHO ISWINNING THIS GAME, WHO IS BASICALLY LOSING THIS GAME, ANDHOW ARE THE BANKS FIGHTING BACK? BUT IT CREATES A DIFFERENT TYPEOF ASSET MANAGEMENT REGIME THAT HAS MANY OTHER OPPORTUNITIESTHAT PREVIOUSLY WERE NOT THERE.

JONATHAN:A MASSIVE CHANGE OVER THE LAST FEW YEARS.HUGE COMPARED TO THE PREVIOUS BOND MARKET REGIME.IN THE THIRD HOUR OF “BLOOMBERG SURVEILLANCE,”WE WILL SPEAK TO NICK AND CATCH UP WITH TORSTEN, WHO SAID NOCUTS AT ALL FOR 2024 FROM THE FEDERAL RESERVE.WE WILL CATCH UP WITH HIM IN JUST A MOMENT.EQUITIES DOING OK. YIELDS UP BY FOUR BASIS POINTS.4.64 ON THE U.S. 10 YEAR.FROM NEW YORK CITY, THIS IS.

BLOOMBERG. ♪ >> I LOOK AT 10 YEAR YIELDS THEMARKET IS TRYING TO GAUGE WHERE THIS IS GOING TO SHAKEUP. >> FOR BONDS AND IS STILL ANINFECTION STORY. >> THE LEVEL OF USE IN THE U.S.IS ATTRACTIVE. >> GIVEN WHERE WE ARE IN YOU,WE CAN GO HIGHER. >> NOW THAT WE HAVE SEEN THISGO HIGHER AND YIELDS, WE HAVE THE COMPOSITION OF LET'S GETREADY TO BUY. >> THIS IS “BLOOMBERGSURVEILLANCE”.

WITH JONATHAN FERRO, LISAABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN:REMEMBER WHEN RATE CUTS WERE GOING TO START IN MARCH ANDTHEN JUNE AND JULY AND NOW YOU ARE HERE IN DECEMBER OR MAYBENEVER? TOASTED WILL JOIN US LATER –TOTAL STUDENT — TOLSTEN WILL JOIN US LATER THIS HOUR.THE BIG THREE SPEAK TODAY. WE WOULD HEAR FROM THE NEW YORKFED PRESIDENT. AND CHAIRMAN POWELL HIMSELFLATER ON THIS AFTERNOON. LISA: IS HE GOING TO TALK ABOUT HOPE,CONFIDENCE?.

IS HE GOING TO SAY ANYTHING ATALL WHEN FED OFFICIALS HAVE PUSHED BACK AGAINST THEPOSSIBILITY OF A RATE CUT, AT LEAST ONE IF NOT TWO EARLIERTHIS YEAR? THEY TALK ABOUT PATIENCE.IT MEANS YOU WILL DO WHAT WE THINK AND RIGHT NOW IT IS INTHE CARDS. JONATHAN: MOHAMED EL-ERIAN IN THE LASTHOUR SAID I AM NOT CONFIDENT, I'M HOPEFUL.I TURNED AROUND AND SAID, CAN YOU IMAGINE IF THE FED CHAIRSAID I AM NOT CONFIDENT, I'M HOPEFUL? LISA:.

I THINK IT WOULD — ANNMARIE:IT WOULD BE A SCARY SITUATION. THE UBS NOTE TALKING ABOUTPOTENTIALLY PRICING IN A POSSIBILITY OF A HIKE, NOW YOUHAVE MORE PEOPLE SO THIS IS NOT JUST A CONTRARIAN IDEA FROM ONEPERSON THAT USED TO BE THE FORMER TREASURY SECRETARY.IF WE HAVE STICK INFLATION, COMPLETION OF U.S.GROWTH CONTINUES, IN A LABOR MARKET THAT IS HEALTHY, COULDTHE FED POTENTIALLY MOVE TO THE OTHER SIDE? LISA:FED CHAIR POWELL CAME OUT AND SAID CONFIDENT, I WOULD SAYTHANK YOU. NONE OF US KNOW.

EVERYTHING PERSON WHO HAS COMEON THE SHOW HAS BASICALLY SAID WE HAVE NO CLUE.THIS IS A NEW PARADIGM. WE MAKE THE BEST, WE CAN ANDADJUST ACCORDINGLY ALONG THE WAY.IF HE CAME OUT AND SAID THAT, PEOPLE WOULD SAY, FINALLY, ABIT OF A BREATH OF FRESH AIR. JONATHAN:EQUITIES WOULD BE DOWN. YIELDS WOULD BE UP. ANNMARIE:YOU THINK SO? JONATHAN:IF HE TALKED ABOUT BEING HOPEFUL AND NOT CONFIDENT, THATWOULD IMPLY A THING HAS CHANGED.

BECAUSE A MONTH OR SO AGO, THISEQUITY MARKET BELIEVED THE FED CHAIR SHIFTED INTO A NEW POLICYSTANCE. IF HE GETS STRENGTH, HE DOESNOT NEED TO RESPOND TO IT. SUPPORTED EQUITIES EVEN WITHTHE REPRESSING OF THE FEDERAL RESERVE YOU START TO BE THEFEDERAL RESERVE BACK AWAY FROM THAT, I THINK THE FLOOR PUTUNDER THE EQUITY MARKET THE LAST FEW MONTHS STARTS TO BETAKEN AWAY. LISA: AND NOT A PEOPLE THINK THEPOLICY ERROR SO FAR WAS THE FED PUT BAKED INTO THE MARKET INDECEMBER.

A LOT OF PEOPLE SAID THAT HISFINANCIAL CONDITIONS ENOUGH TO KEEP INFLATION HARDER FOR A BITLONGER. AT WHAT POINT IS THAT TIGHTENING AND FINANCIALCONDITIONS WHAT IS REQUIRED TO GET INFLATION BACK DOWN?DO WE EVEN WANT TO GET IT BACK DOWN? THAT WAS SOMETHING MOHAMEDEL-ERIAN TALKED ABOUT. MAYBE LET IT RUN HARDER FORLONGER BECAUSE THAT IS THE REALITY OF IT.THERE ARE BIG QUESTIONS AND THE FED DOES NOT WANT TO WEIGH INON THEM. JONATHAN: THE LAST TWO DAYS, THE SOLUTIONAND NOT THE PROBLEM ACCORDING.

TO BRAMO.DO WE NEED TIGHTER FINANCIAL CONDITIONS? THE REPRESSING IN THE BONDMARKET HAS BEEN PHENOMENAL. A 40 BASIS POINT MOVE ON THE 10YEAR MONTH TO DATE AND IT IS APRIL 16, SO WE ARE TALKINGABOUT 12 SESSIONS, SOMETHING LIKE THAT. 4.6365. LISA: WHICH IS THE SPEED YOU ARETALKING ABOUT IS THE REASON PEOPLE ARE SAYING I BUY INTOEQUITY VALUATIONS. IT IS COMING FROM A WHOLEDIFFERENT NUMBER OF ASPECTS,.

NOT JUST THE GRADUAL STRENGTH,THE GRINDING OF AMERICAN EXCEPTIONALISM.THIS IS THE REASON WHY PEOPLE ARE UNCERTAIN RIGHT NOW AND WHYPEOPLE WHO THOUGHT STOCKS WERE A GREAT BUY AT HIGHERVALUATIONS ARE GETTING QUEASY. JONATHAN: 49380 ON THE U.S.TO YEAR. WE WILL CATCH UP WITH NICK ASISRAEL VOWS TO RETALIATE IN A CALL FOR NOTE RATE CUTS THISYEAR. INVESTORS WRESTLING WITH THETHREAT OF HIGHER FOR LONGER RATES AND POTENTIAL ESCALATIONBETWEEN ISRAEL AND IRAN.

THE TENSIONS IN THE MIDDLE EASTLOOK CONTAIN FOR NOW BUT WE SEE RISK OF FURTHER ESCALATION, WEILI SAID. A VIEW THAT WE ARE IN A HIGHERFOR LONGER INTEREST-RATE ENVIRONMENT.GOOD MORNING TO YOU. WEI: GOOD MORNING. JONATHAN:ARE YOU HOPEFUL, NOT CONFIDENT WITH EQUITIES? WEI:I AM HOPEFUL AND STILL CONFIDENT BUT MAYBE LESS SOCOMPARED TO BEFORE. THE KEY QUESTION IS AROUNDINFLATION. WE SENT OUT AT THE BEGINNING OFTHE YEAR THAT THIS IS A YEAR OF.

TWO PARTS.THE FIRST PART WILL BE SUPPORTED BY THE NARRATIVE OFTHE IMMACULATE DISINFLATION, AND A SECOND PART WILL BECOME ADERIVED BY THE REALITY OF INFLATION ROLLER COASTER ANDHIGHER FOR LONGER. THE LAST ONE FEELS LIKE PARTTWO. THE QUESTION WE ARE ASKING ISIF THIS IS A BLIP OR PART TWO. I AM CONFIDENT BUT LESS SOCOMPARED TO BEFORE. I THINK THIS IS A FED THATWANTS TO CUT. JONATHAN: LET'S DO SCENARIO ANALYSIS ANDSAY WE HAVE PULLED FORWARD THE.

SECOND HALF CALL.WHAT WOULD THAT MEAN FOR STOCKS? WEI:I THINK IT WOULD BE NEGATIVE. IF YOU THINK ABOUT WHAT STOCKSARE PRIMED FOR AT THIS JUNCTURE, SO FAR, UP MORE THAN6% ON THE YEAR AND RATE CUTS AT THE BEGINNING OF THE YEAR EMILYHAD SEVEN PRICED AND MARKETS AND NOW THERE ARE LESS THAN TWOSO THE ONLY OFFSET SUPPORTING THE STRONG MOMENTUM WASEARNINGS, BUT RIGHT NOW, THE BAR FOR EARNINGS SURPRISE TOTHE UPSIDE HAS RISEN AS WELL, SO EQUITY MOMENTUM IS HAVING TOCLEAR THE EVER RISING BAR,.

WHICH IS WHY IT FEELS A BITDIFFERENT COMPARED TO BEFORE. LISA:WERE YOU MORE CONCERNED ABOUT THE EARNINGS PICTURE THAN RATES?WEI: I AM POSITIVE AROUND THE EARNINGS PICTURE.IF YOU LOOK AT THE GROWTH DYNAMICS WE HAVE EXPERIENCED SOFAR, WE HAVE HAD POSITIVE SURPRISE TO GROWTH AND POSITIVESURPRISED TO INFLATION AND THE BOOST TO NOMINAL GROWTH, WHICHTRANSLATES INTO EARNINGS SUPPORTING EQUITY MOMENTUM. I AM POSITIVE ON EARNINGS BUTRECOGNIZING NOW THAT MARKETS.

ARE EXPECTING THE S&P 500 TODELIVER 11% EARNINGS GROWTH FOR 2024 VERSUS THE HISTORICALAVERAGE OF 7%. THE BAR IS HIGHER.I AM A BIT NERVOUS BUT THERE IS ROOM FOR AI AS A TEAM TODELIVER AND I ALSO THINK THERE IS ROOM FOR EARNINGS MOMENTUMTO BROADEN OUT AS WELL GIVEN THE CYCLICAL MANUFACTURING WEARE SEEING COMING THROUGH IN THE DATA.WE LIKE INDUSTRIALS, ENERGY, MATERIALS FOR THAT REASON.THESE ARE THE SECTORS SEEING EARNINGS UPWARD REVISIONS ASWELL SO WE LIKE ALL OF THOSE.

CYCLICAL ASPECTS BUT ON TOP OFTHE AI THEME THAT IS STILL COMING THROUGH. LISA:YOU TALKED ABOUT BEING UNDERWEIGHT BONDS AND NOTLIKING BONDS AND THAT IS NOTHING THAT HAS PLAYED OUTTHROUGHOUT THE YEAR FOR SURE. THERE IS A QUESTION OF WHAT AHAVEN IS AND WE HAVE BEEN DISCUSSING THIS EXTENSIVELY.IS IT THE DOLLAR? IS IT GOLD NOW INCREASINGLY?WEI: IT IS REALLY HARD ESPECIALLYWHEN WE THINK ABOUT SAFE HAVEN. WE HAVE TO UNDERSTAND WHAT TYPEOF SCENARIO WE ARE TRYING TO.

HEDGE AGAINST. IF WE TALK ABOUTGEOPOLITICS, IT IS HARD TO PREPETITION FOR GEOPOLITICALEVENTS. THINGS HAPPEN VERY QUICKLY.TYPICALLY HISTORICALLY, IT HAS PAID TO FADE THE MOVES RATHERTHAN CHASE IT BUT IT MAKES SENSE TO ASK THE QUESTION, ISTHIS AN EVENT RISK IN WHICH CASE STATING IT HISTORICALLYWORKED, OR ARE WE IN A NEW GEOPOLITICAL PARADIGM IN WHICHCASE WE NEED TO THINK ABOUT SAFE EVEN MAYBE STRUCTUREDREALLY EXPOSURES THAT GIVE YOU A LITTLE BIT OF A MEDIUM-TERMRISK AT A REASONABLE COST.

TALKED ABOUT GOLD.ENERGY INFLATION LEAPT BALANCE. AND THE DOLLAR HAS REALLYWORKED SO FAR IN TERMS OF BEING A HEDGE.ONE HAS NOT WORKED AS WELL IN THIS INFLATIONARY ENVIRONMENT'SDURATION AS A HEDGE THIS TIME AROUND. LISA:MOHAMED EL-ERIAN WROTE ABOUT HOW A GOLD MARKETS AREWELL-PLACED TO HEDGE GEOPOLITICAL RISK PREMIUMS BUTLESS SO IF THIS ACTUALLY BECAME A SERIOUS WIDER CONFLICT.HOW DO YOU SEE THE DIFFERENCE BETWEEN THE TWO? WEI:THAT IS THE DIFFERENCE IF IT IS.

A GEO — AN EVENT RISK OR NOT.MAYBE FADING SOME OF THE IMMEDIATE NERVOUS MOVEMENT HASACTUALLY PAID OFF. YOU TALK ABOUT PEOPLE BUYING THE DIPS WHEN HISTORICALLY,THERE HAVE NOT BEEN A SUSTAINED EFFECT BUT IF WE ARE TALKING ABOUT RISKS OF ESCALATION ANDALSO CHANNELS OF TRANSMISSION MECHANISMS BEING BROADER, THENWE HAVE TO THINK ABOUT GEOPOLITICAL RISK PREMIUM BEINGBAKED IN PORTFOLIOS NEEDING TO BE HIGHER.THIS IS WHERE WE TALK ABOUT.

BEING STRUCTURALLY LONG, SOMEOF THE ENCLOSURES THAT I TALKED ABOUT. LISA:ONE OF THE AREAS YOU TALKED ABOUT WAS ENERGY EQUITIES ANDENERGY IN GENERAL. AT WHAT POINT DOES A RISE INTHE PRICE OF OIL AND OTHER COMMODITIES CHALLENGE SOME OFTHE INDUSTRIAL OVER WEIGHTS THAT YOU HAVE RIGHT NOW JUSTBASED ON HOW MUCH IT IS GOING TO COST WITH THE INFLATIONTHERE? WEI: YES, ENERGY PRICES HAD A $10INCREASE, SHADES OF GLOBAL GDP. I THINK WE ARE LOOKING AT 20 OR30 BASIS POINTS OR SO MUST WE.

ARE TALKING ABOUT A MEANINGFULNEGATIVE IMPACT ON GROWTH AND INFLATIONARY IMPACT AS WELL, SOTHAT FEEDS THROUGH TO THE FED CALCULUS.YES, OF COURSE, THIS IS NOT CORE INFLATION, BUT IF THATANCHORS INFLATION EXPECTATIONS, THAT LEAVES THE FED TO BE MOREPRUDENT IN TERMS OF RATE CUTS GOING FORWARD.SOME OF THE CYCLICAL MOMENTUM MANY FACTORING UPTICK UPSWINGTHAT HAS COME THROUGH IN THE DATA MAY WELL STALL, SO I THINKTHERE IS — I THINK OF ENERGY AS A HEDGE TO OUR CALL BUT ALSOAS A RISK. JONATHAN:.

I JUST WANT TO FINISH ONFOREIGN EXCHANGE. MY FAVORITE FUNCTION ON THEBLOOMBERG TERMINAL, A SNAPSHOT OF THE G10.I WAS GOING TO FINISH ON THIS. THE DOLLAR HAS ABSOLUTELYRIPPED YEAR-TO-DATE, STRONGER AGAINST THE JAPANESE YEN BY QUESTION ON PERCENT — BY A10TH OF A PERCENT. WHAT KIND OF DAMAGES THAT DOINTO THE GLOBAL EQUITY MARKET CALL?HOW DOES THAT PLAY INTO THE OVERWEIGHT WE HAVE SEEN INJAPAN AND PLACES LIKE EUROPE?.

WHAT DOES THIS MEAN FOR THETRADES? WEI: THE DOLLAR IS INVERSELYCORRELATED TO THE RISK SENTIMENT. IT IS DRIVEN BY RATEDIFFERENTIAL AND RISK SENTIMENT. CURRENTLY, IT IS DOING THISBECAUSE BOTH ACTORS ARE SUPPORTIVE FOR THE DOLLAR TO GOHIGHER. WE ARE OVERWEIGHT THE JAPANCALL, BUT OBVIOUSLY, THE WEAKER JAPANESE YEN TRANSLATING TOSTRONGER EQUITY MOMENTUM, THERE IS A BIT OF A AUTO HEDGE THEIRBUT THE STRONGER DOLLAR GAMES AND WE SHOULD QUESTION WHAT WEHAVE. JONATHAN:.

THIS WAS WONDERFUL.TOOK ME A WHILE TO GET THAT. LISA: THAT IS YOUR FAVORITE.WEI: EVERYONE'S FAVORITE. JONATHAN: YOU ARE MY FAVORITE.THANK YOU. THANK YOU. LET'S GET TO THE BLOOMBERGBRIEF. DANI: MORGAN STANLEY SHARES ARE OPENTO PREMARKET. NET NEW ASSETS AND TRADINGREVENUE. MORGAN STANLEY SAID IT WAS ARISE IN COMPETITION COSTS DESPITE HEADCOUNT FALLEN 3%FROM A YEAR AGO. TESLA DOWN IN THE PREMARKET.TWO OF THE COMPANY'S TOP.

EXECUTIVES ARE LEAVING ANDTESLA CUTTING 10% OF ITS WORKFORCE TO SLASH COSTS WITHEV SLOWING. THE CUTS COULD REACH 20% INSUBDIVISIONS. TESLA SHARES DOWN THIS YEAR.DONALD TRUMP'S FIRST CRIMINAL TRIAL GOT OFF TO A SLOW START. THEY STALLED OVER DISAGREEMENTSAND LAST-MINUTE ARGUMENTS. JURY SELECTION DID NOT TAKE OFFUNTIL THE FINAL HOURS OF THE DAY.THE FORMER PRESIDENT'S LAWYERS ARGUED WITH PROSECUTORS OVERWHICH EVIDENCE WILL BE.

ADMISSIBLE.MORE THAN HALF OF THE FIRST PANEL OF 96 POTENTIAL JURORSHAD TO BE EXCUSED AFTER SAYING THEY COULD NOT BE IMPARTIAL.TRUMP BACK IN COURT TODAY. JONATHAN: THANK YOU.UP NEXT THE PROGRAM, ISRAEL WEIGHING ITS OPTIONS. >> THIS WE OPENED IT MILITARYCAPABILITY AND JUST AS QUICKLY, THEY DO NOT STAND ALONE, THATTHE U.S. STANDS WITH THEM. THERE IS NO QUESTION IRANRECOGNIZES THE COALITION THAT WAS PUT TOGETHER TO HELP ISRAELDEFEND ITSELF. JONATHAN:.

THAT CONVERSATION COMING UP.WE WILL CATCH UP WITH A REPORTER IN WASHINGTON, D.C.FROM NEW YORK CITY MORNING, ♪ JONATHAN:WELCOME TO THE PROGRAM TO BOUNCE BACK FROM YESTERDAY'SLOSSES. THIS IS MY BOUNDS. POSITIVE BY 0.15% ON THE S&P. THE EURO HIGHER AND THE 10 YEARHIGHER. ISRAEL WEIGHING ITS OPTIONS. >> ISRAEL PROVED IT HASSUPERIOR MILITARY CAPABILITY.

AND JUST AS QUICKLY THEY DO NOTSTAND ALONE. THE UNITED STATES STANDS WITHTHEM. IT IS NO QUESTION IRAN RECOGNIZES THE COALITION THATWAS PUT TOGETHER TO HELP ISRAEL DEFEND ITSELF.AGAIN, I CANNOT SPEAK FOR WHAT EITHER SIDE WILL DO GOINGFORWARD. IRAN IS INCREASINGLY ISOLATEDON THE WORLD STAGE. THEY ARE INCREASINGLY MAKING ITHARDER FOR ANYBODY IN THE INTERNATIONAL COMMUNITY TO BESYMPATHETIC TO ANY OF THEIR INTERESTS THERE. JONATHAN:ISRAELI MILITARY OFFICIALS.

PLAYING DOWN OPTIONS INRESPONSE TO IRAN'S ATTACK. BENJAMIN NETANYAHU NOW DECIDINGTHE NEXT STEPS AS ALLIES WARN AGAINST A FULL-BLOWN ESCALATION.NICK, LET'S TALK ABOUT OPTIONS. YESTERDAY, THERE WERE TWOQUESTIONS, WOULD WE GET A RESPONSE, AND WHAT WITH THERESPONSE LOOK LIKE? TODAY, WE HAVE ONE.WE ARE GOING TO GET A RESPONSE. WHAT DO YOU THINK THE OPTIONSARE ON THE TABLE AND WHAT MIGHT THE RESPONSE LOOK LIKE? >> THERE ARE A FEW THINGSHAPPENING.

THE BIDEN ADMINISTRATION ISPRESSING ISRAEL TO GO BACK INTO THE SHADOWS SO WE CAN SEE WHEREIRANIAN PROXIES WERE ATTACKING ISRAEL AND ISRAEL WASRESPONDING IN SOME WAYS WITH STRIKES IT WOULD NOT TAKECREDIT FOR, SO ASSASSINATIONS FOR EXAMPLE OR CYBER ATTACKSTHINGS LIKE THAT WHERE IT HAD IN SOME WAYS POSSIBLEDENIABILITY IN THE SHADOW WAR WITH IRAN. THE U.S.DOES NOT WANT ESCALATION HERE. THEY WANT BOTH SIDES TO BE ABLETO SORT OF SAY IT WAS NOT US, FOR EXAMPLE.AND THEY ARE REALLY PRESSING.

THAT FOR ISRAEL.I THINK WHAT YOU WILL SEE IS A RECOGNITION FROM THE BIDENADMINISTRATION THAT ISRAEL NEEDS TO RESPOND IN SOME WAY.IT STILL SEES IRAN AS A SERIOUS THREAT, BUT IT SHOULD NOT DOSOMETHING THAT FEEDS THE TIT FOR TAT VERY PUBLIC ESCALATORYCYCLE THAT COMPELS IRAN TO RESPOND IN ITS OWN RIGHT. LISA:WHAT OPTIONS ARE LEFT ON THE TABLE TO RETALIATE BUT NOTSPARK A REVENGE CYCLE? NICK: THAT IS A GREAT QUESTIONBECAUSE IT REALLY DEPENDS ON SORT OF HOW THE TARGET, IN THISCASE IRAN, INTERPRETS OR VIEWS.

THE ATTACK.I THINK WHAT YOU ARE SEEING IS A LOT A FOCUS ON THE CYBERREALM RIGHT NOW. THERE IS A LOT ISRAEL COULD DOTO HARM INFRASTRUCTURE IN IRAN. IT MAY USE THIS AS ANOPPORTUNITY TO AGAIN GO AFTER IRAN'S NUCLEAR PROGRAM.THERE IS A LOT OF PRESSURE ON ISRAEL TO DO THAT.I RAN HAS PROCEEDED WITH ITS NUCLEAR PROGRAM BY LEAPS ANDBOUNDS IN TERMS OF ENRICHING MORE URANIUM.THAT IS AN OBVIOUS TARGET AND ONE THAT CANNOT BE SOLVED WITHMILITARY STRIKES BECAUSE IRAN.

HAS DONE SO MUCH TO PROTECTTHAT PROGRAM, SO AT THIS POINT IT LOOKS A LOT LIKE THEY WOULDUSE THEIR MASSIVE CYBER CAPABILITY TO DO SOMETHING.BUT AGAIN, THIS IS VERY MUCH A LIVE DEBATE BETWEEN THE BIDENADMINISTRATION AND ISRAEL. ANNMARIE:WE HAVE HAD NEWS THAT JANET YELLEN WILL GREENLIGHT NEW IRANSANCTIONS. WHAT IS LEFT TO SANCTION ON THEIRANIAN ECONOMY OR SHOULD THIS ADMINISTER SHOULD BE PAYINGMORE ATTENTION ABOUT ENFORCING THE SANCTIONS ALREADY ON THEBOOKS? NICK: THAT IS VERY TRUE.

THERE IS VERY LITTLE IN THEIRANIAN ECONOMY THAT HAS NOT BEEN SANCTIONED THE LAST MANYYEARS. WHEN JANET YELLEN SAYS THAT, INSOME WAYS IT SHOWS THE LIMITS OF U.S.LEVERAGE OVER IRAN BECAUSE IT HAS BASICALLY SEVERED THE U.S.FROM IRAN'S ECONOMY THROUGH THE IMPOSITION OF THOSE SANCTIONSFOR SO MANY YEARS. AND THE FACT IS IRAN IS NOTQUITE AS ISOLATED AS THE U.S. WOULD HOPE.IT HAS PRETTY POWERFUL COUNTRIES ON ITS SIDE THAT IRANCAN WORK WITH ECONOMICALLY,.

NAMELY RUSSIA AND CHINA.CHINA BUYING A LOT OF IRANIAN OIL AND THERE ARE A LOT OFSANCTIONS ON IRAN SALES OF OIL BUT SOMETHING THE U.S.HAS NOT SIGNIFICANTLY ENFORCED IN RECENT YEARS, AND THAT ISWHAT YOU HAVE SEEN OIL SALES FROM IRAN GO OUT, SO THAT MAYBE A TARGET. I THINK LESS FOCUS ON NEWSANCTIONS AND MUCH MORE OF A FOCUSED ON SQUEEZING WHAT WEKNOW IS IRAN'S MAIN MONEY SUPPLY, WHICH IS ITS OIL SUPPLY.ANNMARIE: HOW DIFFICULT IS THIS FOR THEBIDEN ADMINISTRATION WHEN THEY.

SHOW UP TO MEETINGS WITHCHINESE OFFICIALS? THERE WILL BE A MENU, A LIST OFOPTIONS TO PRESSURE CHINA. ON TOP, IT LOOKS LIKE THEEXPORT CAPACITY, THE EXCESS CAPACITY THEY HAVE WHEN ITCOMES TO EXPORTS WITH CLEAN MATERIALS.WE ARE POTENTIALLY IN A NEW REALM.THE BIDEN ADMINISTRATION WILL PUT PRESSURE ON THE IRANIANREGIME THAT THEY WANT TO SEE FROM CHINA. NICK:THE QUESTION REALLY THERE IS WHETHER CHINA IS WILLING TOPLAY BALL.

WE ARE IN A VERY DIFFERENTWORLD NOW THAT WE WERE IN 2017, 2018 WHERE YOU HAD SOMEINDICATION THAT DESPITE THE TENSION, THE GROWING TENSIONBETWEEN THE U.S. AND CHINA, THERE WAS ADIPLOMATIC DANCE HAPPENING BEHIND THE SCENES WHERE YOUHAVE CHINA AND EVEN IN SOME CASES RUSSIAN WILLING TO HELPU.S. SANCTIONS ACTIONS ON NORTH KOREA, FOR EXAMPLE, AND ALSO TOSOME DEGREE ON IRAN. WILLINGNESS TO REDUCE SALES OFIRANIAN OIL. WORLD HAS CHANGED SO MUCH SINCETHEN — THE WORLD HAS CHANGED.

SO MUCH SINCE THEN WITH SPIKINGTENSIONS BETWEEN THE U.S. AND CHINA AND THE UKRAINE WAR.IT FEELS VERY MUCH LIKE WE ARE IN A SITUATION WHERE CHINA ANDOBVIOUSLY RUSSIA WILL NOT BE WILLING TO PARTNER WITH THE U.S.TO PUT THE SQUEEZE ON IRAN. ALSO IT IS A DELICATE DANCE FORTHE BIDEN ADMINISTRATION BECAUSE THEY ARE WORRIED ABOUTOIL PRICES SO THAT AS A WHOLE OTHER FACTOR THEY ARE THINKINGABOUT. THIS IS SOMETHING THEY WANT TOSQUEEZE BUT THEY DON'T WANT TO SQUEEZE TOO HARD FOR THEIR OWNSAKE. JONATHAN:.

LET'S FINISH HERE WITH HOWTHINGS HAVE CHANGED FOR YOU COVERING NATIONAL SECURITY.IT FEELS LIKE EVERYTHING IS A NATIONAL SECURITY RISK.JUST HOW BUSY HAVE YOU BEEN? HOW MUCH IS NOT A NATIONALSECURITY RISK RIGHT NOW? NICK: IT HAS DEFINITELY BEEN A BUSYLITTLE WHILE. THE FASCINATING THING THAT YOURQUESTION GETS TO IS HOW MUCH THERE IS AN OVERLAP BETWEENECONOMICS AND NATIONAL SECURITY NOW. THE U.S. HAS BEEN WILLING TO USEECONOMIC LEVERS TO ACHIEVE ITS.

NATIONAL SECURITY AIMS SO YOUHAVE SEEN THAT VERY MUCH IN THE CASE OF SANCTIONS, BUT ALSOWITH EXPORT CONTROLS, TARIFFS, ALL OF THESE MEASURES THAT WERENOT IN THE REALM OF CONSIDERED NATIONAL SECURITY TOOLS, ANDNOW IT JUST FEELS LIKE THERE IS SO MUCH OVERLAP IN THESE THINGSARE SO INTERCONNECTED THAT I DON'T THINK THIS WILL LET UPANYTIME SOON. HOPEFULLY I WILL SEE YOU GUYSAGAIN VERY SOON AND WE CAN KEEP TALKING ABOUT IT. JONATHAN:THANK YOU, SIR. DOWN IN WASHINGTON, D.C.IT MAKES YOU WONDER WHO IS IN.

THE DRIVER SEAT OF THEADMINISTRATION? WHO RUNS THINGS? ANNMARIE:I ALSO THINK IT DEPENDS ON WHAT THE ISSUE IS AND WHAT YEAR YOUARE IN. IT IS AN ELECTION YEAR SODECISIONS WILL BE DIFFERENT. YOU THINK ABOUT THE LNG PERMITWHOLE. IT IS A NATIONAL SECURITY ISSUEWHEN YOU TALK TO EUROPEAN OFFICIALS BUT THISADMINISTRATION LEANED INTO THE CLIMATE INTERESTS OF THEADMINISTRATION. YOU LOOK AT STEEL.IS THIS A NATIONAL SECURITY.

INTEREST?THE JAPANESE SAY THERE IS GREATER STRENGTH BETWEEN THEU.S. AND JAPAN INVITING CHINA. IT IS A LABOR ISSUE BECAUSE ITIS AN ELECTION YEAR. BY THINK LISA MAKE THIS POINT AFEW TIMES. NATIONAL SECURITY IS MAKING A ALOT OF HEAVY LIFTING IN WASHINGTON FOR THEM TO GO AHEADAND EXACT POLICIES. LISA: THE PROBLEM HIGHER COMING –THE PROBLEM I AM COMING UP AGAINST IS I DON'T KNOW WHAT WEARE PRIORITIZING AND A LOT OF THESE GOALS ARE CONTRADICTORY.DO WE WANT TO PRIORITIZE.

NATIONAL SECURITY AND DOMESTICRELIANCE ON THINGS LIKE OIL AND ENERGY, OR ARE WE WERECONCERNED ABOUT MAKING SURE GAS PRICES ARE CHEAP ENOUGH?ARE WE LOOKING TO PRIORITIZE DISINFLATION AND EASING SOME OFTHE CONCERNS FOR THE LOWER CLASS, OR ARE WE TRYING TOCURTAIL CHINA, WHICH WILL LEAD TO MORE INFLATION?THERE ARE COUNTER AIMS WHEN IT COMES TO NATIONAL SECURITY ANDECONOMIC GOALS. THERE HAS NOT BEEN ONE COHESIVETHEORY THAT SEEMS TO ENCOMPASS BOTH OF THEM IN SOME SORT OFUNDERSTANDABLE WAY. JONATHAN:.

LET'S TALK ABOUT THE PRICE ONTHE STREET. YOU REMEMBER WHEN RUSSIA WENTINTO UKRAINE AND ESSENTIALLY THE MESSAGE THAT WAS COMING OUTOF THE ADMINISTRATION WAS BASICALLY HIGHER ENERGY COSTSAT A PRICE WE NEED TO PAY TO PUNISH RUSSIA.WHAT I HEAR IS THE ABSENCE OF THAT CONVERSATION ENTIRELY.IT IS APRIL OF 2024 AND WE ARE A NUMBER OF MONTHS AWAY FROMNOVEMBER OF 2024. EVERY CONVERSATION WE HAVE HADTODAY — LISA YOU REALLY BECAUSE YOU HAMMERED THE SAMEPOINT.

AMERICA RESPONSE TO EVERYSITUATION SEEMINGLY INFORMED BY A HAPPENS TO THE PRICE AND WHATIT MEANS COME NOVEMBER. I THINK THAT IS SHORTSIGHTEDAND HIGHLY PROBLEMATIC. LISA: IT RAISES A QUESTION WITHRESPECT TO PUSHING FOR A RESPONSE TO IRAN IN THE NEARTERM BECAUSE YOU DON'T WANT TO DISRUPT THE PRICE OF OIL BUT ITGOES TO THE QUESTION OF, ARE THE U.S.HANDS TIED IN SOME CAPACITY AND DOES EVERYONE ELSE KNOW IT IFTHE EMPHASIS IS ON KEEPING OIL PRICES BELOW A CERTAIN LEVEL?JONATHAN: REMEMBER GLASGOW?.

LISA: YES. JONATHAN:THANK GOODNESS FOR THEIR OWN SAKE THAT ALL THE THINGS THEYWANTED TO HAPPEN DID NOT HAPPEN. THANK GOODNESS HAVE 13 MILLIONBARRELS A DAY BECAUSE IF YOU THINK THE POLICY DECISIONS INFRONT OF THEM NOW ARE COMPROMISED, IMAGINE HOW MUCH JONATHAN:EQUITY MARKETS SHAPING UP AS FOLLOWS ABOUT ONE HOUR AWAYFROM THE CASH OPEN IN NEW YORK CITY.UNCHANGED ON THE NASDAQ, STILL LOWER ON THE RUSSELL.SMALL CAPS LOWER BY 0.7%.

BIG MOVE SO FAR YOU TODAY ONTREASURIES. JUST PICKING UP THE LAST FEWWEEKS FOR THE MONTH OF APRIL. USE A LOT HIGHER, A LITTLEHIGHER THIS MORNING. 4.9466. ON THE 10 YEAR, 4.6385.MICHAEL MCKEE HAS INFORMATION FOR YOU IN WASHINGTON, D.C.MICHAEL: WE HAVE SOME NEGATIVE ECONOMICNEWS FOR A CHANGE. HOUSING STARTS AND BUILDINGPERMITS DOWN ON THE MONTH OR THAN FORECAST. HOUSING STARTSON A MONTH OVER MONTH BASIS DOWN 14.7%.THE FORECAST WAS FOR A 2.4%.

DECLINE.THEY HAVE GROWN 10.7 PERCENT THE MONTH BEFORE SO NOW WE AREAT A 1,000,300 21,000 PACE ANNUALIZED PACE FOR 1,521,000.THE FORECAST WAS FOR A 9/10 DROP. SO NOT CLEAR IF THIS IS THEWEATHER OR JUST A REBOUND EFFECT, BUT IT IS ONE OF THEFIRST INDICATORS WE HAVE SEEN IN A WHILE THAT SUGGEST ALITTLE SLOWER GROWTH IN THE FIRST QUARTER.THESE ARE MARCH NUMBERS. JONATHAN:CAN WE TALK ABOUT FED OFFICIALS.

AS WELL?LATER TODAY WE WILL HEAR FROM THE VICE CHAIR, THE NEW YORKFED PRESIDENT JOHN WILLIAMS, AND CHAIRMAN THIS AFTERNOON.YOUR REACTION FROM YESTERDAY AND YOUR CONVERSATION WITH THENEW YORK FED CHIEF AND HOW YOU THINK WHAT — HOW YOU THINKTHAT INFORMS WHAT WE MIGHT HEAR FROM THE FED CHAIR? MICHAEL:THE VICE CHAIR OF THE COMMITTEE THAT SETS RATES, THE RIGHT-HANDMAN OF THE CHAIRMAN, SO ONE WOULD THINK JAY POWELL WILLSOUND A LOT LIKE JOHN WILLIAMS AND STRESSING THE FACT THATTHERE IS NO HURRY TO CUT RATES,.

BUT AT SOME POINT, THEYANTICIPATE THEY WILL. WE ALSO HEAR FROM THE VICECHAIRMAN TODAY OF THE FEDERAL RESERVE, FROM JEFFERSON.WE WILL SEE IF HE ADDS TO THAT. I DO WE WILL GET MUCH MORE FROMJOHN WILLIAMS TODAY. HE IS SPEAKING WITH THEPRESIDENT OF THE BANK OF FRANCE SO MORE PROBABLY ABOUT FRENCHISSUES BUT THERE IS A CONSISTENT MESSAGE NOW COMINGFROM ALL OF THESE THAT OFFICIALS THAT DO NOT EXPECTRATE CUTS AT THE NEXT MEETING OR MAYBE EVEN THE MEETING AFTERTHAT. LISA: THANK YOU SO MUCH.

I AM CURIOUS WHAT WE WERETALKING ABOUT EARLIER ABOUT THE IDEA OF, HAVE FED OFFICIALSGAME DOUBT THE IDEA OF NO RATE CUTS THIS YEAR? — GAMED OUT THE IDEA OF NORATE CUTS THIS YEAR? HOW MANY FED OFFICIALS FEEL THESAME? MICHAEL: IT IS HARD TO KNOW BECAUSEMOSTLY THE MESSAGE HAS BEEN THAT WE DO NOT HAVE TO RUSH BUTWE THINK WE WILL CUT RATES. I SPECIFICALLY ASKED WILLIAMSABOUT THAT YESTERDAY, AND HE SAID WE WILL JUST GO WHERE THEDATA TAKE AS.

HE DID NOT RULE IT OUT BUT HEDID NOT EMBRACE IT IN THE SAME WAY THAT THE PERSON FROMMINNEAPOLIS HAS. JONATHAN: THANK YOU, SIR.BREAKING DOWN THE DATA AND THE FED SPEAK.I WAS GOING TO SAY THE FRENCH OF A LOT OF ISSUES BUT THEITALIANS HAVE BIGGER ISSUES. YOU SEE THIS STORY YESTERDAY?MY FAVORITE STORY. ALFA ROMEO HAS HAD TO RENAMETHE SUV THEY HAD COMING OUT CALLED THE MILANO BUT IT WASNOT PRODUCED IN MILAN SO THEY HAVE TO RENAME IT BECAUSE THEITALIANS PUSHED THEM TO.

THEY ARE RENAMING THE JUNIOR ORSOMETHING LIKE THAT. THEY WILL CALL IT THE JUNIOR.STELLANTIS UNDER PRESSURE BY THE ITALIANS FOR USING ANITALIAN CITY FOR A CAR NAME THAT WILL NOT BE PRODUCED INTHAT CITY. I LOVE STORIES LIKE THIS,EUROPEAN RIVALRIES. LISA: THE IDEA OF DO NOT TRY TO.IT IS NOT GOOD ENOUGH TO BECOME MILANO. JONATHAN:SOMETHING LIKE THAT. WHAT YOU SEE HERE IS BASICALLYTHE ARGUMENT. YOU WANT TO USE THE CITY'SNAME, PRODUCE IT HERE. LISA:.

THAT YOU THINK ABOUT THAT WITHTHE SPANISH OIL THEY REBRAND AS ITALIAN OIL BECAUSE THEY USETHE SPANISH. ANNMARIE: THEY DON'T DO THAT.THEY DON'T DO THAT. LISA: NO, THEY TAKE THE SPANISHOLIVES AND GRIND THEM UP BUT PRODUCE IT IN ITALY AND COLINITALIAN. — AND CALL IT ITALIAN.JONATHAN: IT IS DEEMED HIGHER QUALITY ONTHE MARKET. YOU ARE INTO THE MARKET, RIGHT?THE MARKET HAS DECIDED ITALIAN PALM OIL DESERVES A PREMIUMOVER SPINACH ALL OF OIL. LISA:.

THE MARKET IS TRYING TO BOUNCERIGHT NOW. I IMAGINE THEY REIN INTO EACHOTHER IN THE PANTRY. JONATHAN: TALKING POINTS ON ALL OF OIL –OLIVE OIL. BETTER CONVERSATIONS. FROM EASY FINANCIAL CONDITIONSCONTINUING TO BURST INFLATION AND GROWTH INCLUDING CONSUMERSPENDING IN MARCH GIVEN THE ONGOING ACCELERATION IN THEECONOMY. THE FED WILL NOT CUT INTERESTRATES IN 2024. IT HAS BEEN QUITE A CALL, AND IIMAGINE YOU ARE FEELING BETTER ABOUT THE CALL OVER THE LASTWEEK OR SO.

>> WHAT IS HAPPENING IS WHENTHE FED PIVOTED AFTER HAVING SET FOR TWO YEARS THAT RATESARE GOING UP, NOW THEY ARE SAYING RATES ARE GOING DOWN ANDSTILL SAYING RATES ARE GOING DOWN.WHEN THE CHANGE CAME WITH THE FOMC MEETING, THE S&P IS UP $10TRILLION. IN OTHER WORDS THE TAILWIND TOWEALTH IN THE HOUSEHOLD SECTOR AND FOR CORPORATE ANDCONSUMPTION IS NOT SURPRISING. PAYROLLS FOR THE LASTTHREE-MONTH HAVE BEEN STRONG. THEREFORE, IT IS NOT SURPRISINGINFLATION HAS BEEN STRONG.

I THINK THE TAILWIND WILLCONTINUE THE NEXT SEVERAL QUARTERS. JONATHAN:YOU ARE NOT LONELY. OTHERS HAVE JOINED YOU THE LASTCOUPLE DAYS AT SAYING NO CUTS IN 2024, EVEN DEUTSCHE BANKSAYING ONE CUT IN DECEMBER, LIKEWISE FROM BANK OF AMERICA.WHAT IS INTERESTING ABOUT THE WAY YOU FRAME IT IS YOU PUT ITON LOOSER, DZ, FINANCIAL CONDITIONS.WHEN YOU SPEAK TO THE FED, THEY SAY CONDITIONS ARE TIGHT, NOTLOOSE. EVEN WITH CREDIT SPREADS REALLYTIGHT.

WHAT ARE YOU SEEING THEY ARENOT? TORSTEN: THAT IS REALLY IMPORTANTBECAUSE THE DISCUSSION SPLITS INTO TWO POINTS MAINLY IF YOULOOK AT THE RATES AT 5.5, THAT IS CERTAINLY ABOVE MOSTESTIMATES MEANING THE LONG RUN EQUILIBRIUM INTEREST RATE FORTHE ECONOMY, WHICH ONLY THE FED WOULD SAY IS 2.5, SO LOOKING ATRATES ON THEIR OWN AND THE OLD-SCHOOL MODELS IN ECONOMICSLITERATURE, YOU WOULD LOOK AT THAT AND SAY YOU HAVE THEMONETARY POLICIES TIGHT, BUT WHAT HAS HAPPENED IS THAT HASBEEN COMPLETELY NEUTRALIZED AND.

OFFSET BY THE RISE IN THE STOCKMARKET, THE RALLY IN HIGH YIELD AND LOANS, THE INCREDIBLEINCREASE WE HAVE SEEN IN ISSUANCE IN HIGH YIELDS AND M&AACTIVITY COMING BACK. YES, IT IS TO YOUR OLD-SCHOOLTEXTBOOK MODEL TELLS YOU RATES ARE HIGHER THAN WHERE THEY WILLBE IN THE LONG RUN. THAT TELLS YOU POLICIES TIGHT,BUT THAT IS COMPLETELY BE MORE THAN OFFSET.A SUGAR HIGH COMING FROM THE EASING AND FINANCIAL CONDITIONSLIFTING THE WEALTH COMPONENT FOR HOUSEHOLDS THAT IS BOOSTINGCONSUMPTION.

THEREFORE INCREASES IN TRAVEL,RESTAURANTS, AIRPLANES, ENTERING WHAT COMES TO HOTELS,CONCERTS, SPORTING EVENTS. A HUGE TAIL WENT TO CONSUMERSERVICES AND THAT IS WHY IT IS ACCELERATING SO QUICKLY AT THEMOMENT. LISA: ESSENTIALLY YOU ARE SAYING ITIS A POLICY ERROR FOR THE FEDERAL RESERVE CHAIR POWELL TOTALK ABOUT THE POTENTIAL FOR CUTTING RATES? TORSTEN:I DO THINK THIS WAS THE INTENTION.I THINK THE INTENTION WAS TO TAKE THE TEXTBOOK OUT AND SAYWHEN WE RUN THE PHILLIPS CURVE,.

WE GET WHAT MATTERS AND THEYDID NOT HAVE THE INTENTION OF LIFTING FINANCIAL CONDITIONSAND BOOSTING THE STOCK MARKET. UP 25% SINCE NOVEMBER 21. ROUGHLY AROUND $10 TRILLION OR$11 TRILLION INCREASE ADDITIONALLY IN THE HOUSEHOLDSECTOR. IT JUST HAPPENS TO BE WHAT IWOULD DESCRIBE AS A SUGAR HIGH THAT IS NOW LIFTING FOR SEVERALQUARTERS. FOR SEVERAL QUARTERS, WE WILLGET THE TAILWIND WHERE CONSUMERS WILL SAY MY BALANCESHEET LOOKS A LOT BETTER,.

PROBABLY MORE MEANINGFUL FORTHE HOUSEHOLD SECTOR. CONSUMPTION GETTING A HUGETAILWIND AS THE DATA YESTERDAY SHOWED. LISA:THIS RAISES A QUESTION OF WHAT HAPPENS AT THE MARKET STARTS TOAGREE WITH YOU AND MAKE IT NO RATE CUTS THIS YEAR.DOES THAT CURTAIL SOME OF THE SUGAR HIGH?WE ARE STARTING TO SEE SOME PEOPLE ON WALL STREET SAYINGWILL BE SEE YIELDS WHERE THEY ARE BY EQUITY VALUATIONS, SLOWSOME OF THE CAPITAL MARKETS ACTIVITY? DO YOU BELIEVE THAT?TORSTEN: ABSOLUTELY.

I THINK THE RATE HIKES WE HAVEHAD, IT IS ALREADY BITING HARD ON HIGHLY LEVERED CONSUMERBALANCE SHEETS AND CORPORATE BALANCE SHEETS AND PARTICULARLYRETAIL BANKS. THE CONSEQUENCE IS WE STILLHAVE THE NEGATIVE EFFECTS OF THE TRANSMISSION MECHANISMWORKING BUT IT IS ONLY WORKING ON THOSE THAT HAVE DEBT SO WEARE WORKING THROUGH THE PROCESS. AS A SUGAR HIGH STARTS TO FADEIF THE MARKET DOES NOT CONTINUE TO GO UP, YOU WILL BEGIN TO GETTHAT TO DOMINATE. YOU WILL GET THE RISK OF AHARDER LANDING.

FOR NOW, THE ECONOMY SHOULD BERIDING THE WAVE. BECAUSE OF THE YIELDS BEING SOHIGH, PROBABLY HIGHER THAN THEY HAVE BEEN FOR DECADES.THAT IS VERY SUPPORTIVE FOR THE HOUSEHOLD BALANCE SHEET.JONATHAN: TO MAKE THIS CONFUSING, IF WEBELIEVE THERE WILL BE NO CUTS, THERE WILL BE CUTS? TORSTEN:THE FED HAS THE GOAL OF GETTING INFLATION BACK TO 2%.IT IS NOT A 2% — AT 2%. THE TREND IS NOT THE FED'SFRIEND HERE SO THE WORRY IS IT MIGHT TAKE LONGER TO GET DOWNTO 2%.

THE FIGHT AGAINST INFLATION ISNOT OVER. WE MAY GET THE MARKET ENVIRONMENT FOR 2022 THECOMEBACK BECAUSE IN 2022, WE HAD STOCKS DOWN AND RATESHIGHER AND OBVIOUSLY IT WAS NOT GOOD FOR MARKETS OR YOURPORTFOLIO. THAT ENVIRONMENT IS AT RISK OFCOMING BACK IF WE ARE NOT DONE FIGHTING INFLATION. ANNMARIE:WHAT ABOUT HIKES? PEOPLE ARE STARTING TO TALKABOUT THIS. TORSTEN: I THINK THE LIKELIHOOD ISRELATIVELY LOW BECAUSE THERE ARE SO MANY COMPETITIONS INDOING THAT AND SAYING WE ARE.

WRONG AND NOW RATES ARE GOINGUP AGAIN. THERE ARE SOME CHALLENGES WITHTHE BASIC EFFECTS OF INFLATION SO MORE TECHNICAL THINGS.WE HAVE TO GO IN JULY, OTHERWISE IT WILL BE DECEMBEROR NEXT YEAR BECAUSE THE BASE EFFECT IS SUPPORTED FORINFLATION FOR THE SECOND HALF OF THIS YEAR SO IT WILL BEQUITE CHALLENGING FOR THE FED TO GET ALL OF THAT IN PLACE INTIME TO TURN THINGS AROUND AND SAY WE NEED A HIKE OR TWO.THEY WOULD RATHER KEEP RATES HIGHER FOR A LITTLE LONGER,MAYBE ONE OR TWO QUARTERS, AND.

ACHIEVE THE GOAL OF GETTING THEECONOMY AND INFLATION TO SLOW DOWN. JONATHAN:SO YOU THINK IF WE DO NOT GET TWO SOFT PRINTS ON INFLATION,WE GET A RATE CUT IN JULY? TORSTEN:I DON'T SEE WHERE THEY WILL BE COMING FROM.INFLATION IS SHOWING SIGNS OF GOING DOWN MUCH SLOWER THANANYONE EXPECTED. IF I LOOK AT MY BLOOMBERGSCREEN, YOU SEE THAT IS BEGINNING TO ACCELERATE.EVEN GOODS INFLATION WENT THROUGH THE ROLLER COASTER OFBEING NO PROBLEM, BIG PROBLEM,.

NO PROBLEM AGAIN.NOW GOODS INFLATION WITH ENERGY AND OIL, YOU HAVE THAT AT RESTOF PROVIDING SOME LIFT INFLATION. JONATHAN:THAT WAS A REACTION FUNCTION QUESTION, NOT A FORECASTQUESTION. LET'S ASSUME WE GET THE DATA.DO TWO SOFT PRINTS LEAD TO A CUT? TORSTEN:LET'S TURN THAT AROUND AND SAY IF THEY ABSOLUTELY WANT TO CUTIN JUNE OR JULY, WE WILL NEED SOME VERY DRAMATIC SLOWDOWN ININFLATION THE NEXT SEVERAL MONTHS, ABSOLUTELY. JONATHAN:THIS WAS GREAT. REALLY SMART.

FEELING MUCH BETTER ABOUT HISCALL FOR NO INTEREST RATE CUTS IN 2024 GIVEN THE HOT RETAILSALES PRINT WE HAD IN THE LAST WEEK WITH HOT INFLATION AND ALLTHE ABOVE GONE WRONG FOR THE FEDERAL RESERVE.LET'S GET YOU SOME STORIES ELSEWHERE. DANI:PRESIDENT BIDEN IS HITTING THE CAMPAIGN TRAIL IN HIS HOMESTATE OF PENNSYLVANIA. HIS CAMPAIGN SAYS THAT TRIPLEHIGHLIGHT THE DIFFERENCES BETWEEN THE PRESIDENT'S TACTICSAND ECONOMIC AGENDA VERSUS DONALD TRUMP, WHO OVERSAW TAXCUTS FOR THE WEALTHIEST.

CORPORATIONS WHILE IN OFFICE. BUT HE HAS IMITATED HIS UNIONALLIES. SHARES OF UNITED HEALTH CAREHIGHER PREMARKET. IT AFFIRMED ITS OUTLOOK FOR THEYEAR. ANALYSTS WARNED OF A PRINTABLERESULT FOLLOWING A FEBRUARY CYBERATTACK.UNITED SAYS THEY CONTINUE TO MAKE SIGNIFICANT PROGRESS INRESTORING THE AFFECTED SERVICES. BOEING YET AGAIN IN THEHEADLINES RECOMMENDING OPERATORS OF THE 787 DREAMLINERINSPECT A KNOWS COMPONENT THAT.

HELPS MAINTAIN CABIN PRESSURE– OSE COMPONENT THAT HELPS MAINTAIN CABIN PRESSURE.THE STUDY IS IN THE SPOTLIGHT. THE PLAYMAKER FACING MOUNTINGSCRUTINY — IN THE AIR PLAYMAKER FACING MOUNTINGSCRUTINY — THE AIRPLANE MAKER FACING MOUNTING SCRUTINY.TESTIMONY TOMORROW FROM ANOTHER WHISTLEBLOWER.THAT IS YOUR BRIEF. JONATHAN: THANK YOU.UP NEXT ON THE PROGRAM, WRAPPING UP. >> RIGHT NOW, HAVING A BALANCEDATTACK TO WHERE YOU ARE PART.

CONSUMER, PART COMMERCIAL.YOU HAVE THE INVESTMENT BANK THAT CAN BE HELPFUL.I THINK THE WEALTH MANAGEMENT BUSINESS CAN BE A BUFFER.I THINK HAVING ALL OF THOSE, THAT IS WHERE THE LARGENATIONAL BANKS COMPETE EFFECTIVELY. JONATHAN:THAT CONVERSATION COMING UP NEXT.EQUITY FUTURES POSITIVE ONTHE S&P 500. THE OPENING BELL ABOUT 47MINUTES AWAY. JONATHAN:EQUITIES RIGHT NOW ON THE S&P 500 POSITIVE I A THIRD OF 1%.I WANT TO TALK ABOUT CRUDE.

DOWN TO $85.16.SOME HEADLINES COMING THROUGH FROM SECRETARY YELLEN.WE WILL HEAR FROM HER LATER BEGET A CONVERSATION TAKINGPLACE BETWEEN TWO INTERESTING LEADERS MOMENTS AGO. ANNMARIE:BETWEEN PRESIDENT VLADIMIR PUTIN AND THE LEADER OF IRAN.PUTIN ASKED FOR RESTRAINT, ACCORDING TO THE KREMLIN.RESTRAINT, THE IDEA COMING FROM THE U.S.AND WESTERN ALLIES ON NETANYAHU SEEMS TO BE COMING FROM MOSCOWON TEHRAN. WHEN SECRETARY YELLEN SPEAKSTODAY, SHE WILL TALK ABOUT.

RESPONDING TO CHALLENGES IN THEMIDDLE EAST AND WHAT THE ADMINISTRATION HAS LAID OUTDURING THE PAST TWO AND HALF YEARS, WHICH IS SANCTIONS, ANDPOTENTIALLY SIGNAL MORE TO COME. YOU HAVE TO ASK ABOUT WHAT ISLEFT IN THE IRANIAN ECONOMY FOR THIS TREASURY TO GO AFTER?JONATHAN: IT IS NOT ABOUT NEW SANCTIONSBUT ENFORCING EXISTING ONES. IRAN HAS ALREADY SAID AS FAR ASTHEY ARE CONCERNED, THIS IS DONE. THIS IS ABOUT ISRAEL NOW, ISRAEL'S RESPONSE IF THEY WANTTO TAKE ONE, AND WHAT THAT.

LOOKS LIKE. LISA:AND WHETHER I'M IN RESPONSE TO THAT AND THEN ISRAEL RESPONSETO THAT, THE DOMINO EFFECT. ONE VLADIMIR PUTIN IS TRYING TOINDICATE. IT COMES DOWN TO, HOW WILLISRAEL RESPOND? WHAT INFLUENCE DO SOME OF THECOALITION MEMBERS HAVE ON ISRAEL AT A TIME WHEN THEY ARESAYING 300 MISSILES WERE THROWN AT US? JONATHAN:CRUDE IS DOWN BY A THIRD OF 1%. WE ARE DOWN BY 0.4%.UP NEXT ON THE PROGRAM, WRAPPING UP EARNINGS ON WALLSTREET.

>> RIGHT NOW, HAVING A BALANCEDATTACK TO WHERE YOU ARE PART CONSUMER, PART COMMERCIAL.YOU HAVE THE INVESTMENT BANK THAT CAN BE HELPFUL.I THINK THE WEALTH MANAGEMENT BUSINESS CAN BE A BUFFER, SO ITHINK HAVING ALL OF THOSE, THAT IS WHERE THE LARGE NATIONALBANKS REALLY COMPETE VERY EFFECTIVELY.BY THE SAME TOKEN, THE STRENGTH OF BUSINESS WILL BE STRONGERTHAN EXPECTED THIS YEAR BECAUSE BANKS ARE STILL RESETTING LOANSON THE UPSIDE SO HIGHER FOR LONGER ACTUALLY HAS ACONTRIBUTION TO SPREADS RISING.

IN TERMS OF LOAN DEALS GETTINGBETTER. JONATHAN: THE LATEST THIS MORNING.MORGAN STANLEY SHARES GAINING IN THE PREMARKET, BEATINGEXPECTATIONS. IT IS THE FINAL OF THE FIVE BIGWALL STREET BANKS TO REPORT QUARTER RESULTS.SONALI, PUT IT ALTOGETHER. WHAT IS THE TAKE AWAY THE LASTFEW DAYS? SONALI: COSTS ARE ON THE RISEEVERYWHERE. MOST OF THESE BANKS, HEADCOUNTHAS REDUCED. COSTS ARE GOING UP REGARDLESS.YOU HAVE TO BRING IN MORE MONEY.

TO JUSTIFY FOR THAT.IN THE CASE OF MORGAN STANLEY, WHAT IS INTERESTING IS THEYBROUGHT IN $95 BILLION OF NET NEW ASSETS AT ITS WEALTHMANAGEMENT UNIT. THEY WERE EXPECTED TO BRING INCLOSER TO $60 BILLION, SO THE WEALTHIER INDIVIDUAL IS REALLYDRIVING PERFORMANCE AT THE WEALTH MANAGERS IN A REALLYCOMPETE IN THE MARKET, AND PEOPLE ARE EXCITED FOR THEINSTITUTIONAL BUSINESSES TO COME BACK TO GET YOU AFTERBUFFER THE WEALTHY INDIVIDUAL IS ALMOST CONSIDERED ANINSTITUTION HERE WHEN YOU LOOK.

AT A LOT OF THESE BANKS.IN FACT, EVEN STRUCTURALLY, SOME OF THE WEALTHY INDIVIDUALSWERE MOVED OVER TO THE INSTITUTIONAL TRAINING CLIENTS.JONATHAN: 800. THE NUMBER 800, FICO SCORES ATTHE BANK OF AMERICA. TORSTEN IS WALKING OFF THE SETAND THAT IS ALL HE WANTED TO TALK ABOUT.CAN YOU GO THROUGH THE NUMBERS FOR US? SONALI:EVEN CREDIT CARDS ARE UP TO 777. CREDIT CARDS ARE AN AREA WHEREALL OF THE BANKS ARE TRYING TO GAIN MORE SHARE.THE QUESTION THAT HAS NOT YET.

BEEN REALLY ANSWERED, ARE THECONSUMERS TAPPING OUT ON CREDIT? THE FACT THAT WE HAVE RECORDAMOUNTS UPTICK IN AMERICA ALREADY AT RECORD HIGH APRSBEGS THE QUESTION WHETHER CONSUMERS CAN TAKE ON ANYMOREAND HOW MUCH THAT WILL START TO DRIVE LOAN GROWTH AT THESEBANKS. LISA: WE USED TO THINK OF JP MORGANAS KICKING OFF THE EARNINGS SEASON.THIS WOULD SET THE TONE FOR THE REST OF THE ECONOMY.CAN WE REALLY SAY THAT IN ANY CAPACITY IF WE ARE TALKING BUTTHE CONSUMER WITH 800, WHICH I.

NEVER HEARD OF, ON THE SCOREAND 777 ON THE CRITICAL? SONALI: THERE IS A QUESTION OF WHETHERTHE BANKS BANK AMERICA AT LARGE ANYMORE.KEEPING SAVINGS IS ONE THING BUT HOW MUCH CREDIT IS BEINGEXTENDED AND TO WHAT BUSINESSES? YOU WERE TALKING THAT HOUSINGSTARTS A LITTLE EARLIER. HITTING A MORTGAGE IS HARD TOCOME BY FOR MANY AMERICANS. AUTO LOANS TO MISSING SITUATION.YOU ARE SEEING CREDIT START TO DETERIORATE.THE BANKS TELL YOU EVERYTHING IS FINE, THAT THE METRICSTHEMSELVES ARE FINE, BUT THEY.

ARE STILL UNDER PRESSURE TORETURN CAPITAL TO SHAREHOLDERS SO THEY LEAN INTO THEBUSINESSES THAT ARE A LITTLE SAFER. IT IS INTERESTING. IF YOU ARE PAYING AN INVESTMENTBANKER AND INVESTMENT BANKING BUSINESS, THE ROV IS VERY HIGHBECAUSE ALL YOU ARE PAYING FOR IS THE BANKER. BUT WHEN YOU GET TO THE BIGCONSUMER BUSINESSES, THAT IS WHEN THESE THINGS GET A LOTMORE BLOATED AND YOU HAVE TO START TO WORRY ABOUT THE PESKYTHINGS LIKE CHARGE-OFFS. LISA:.

THE OTHER THING WE NOTICED IS THIS QUESTION AROUND THEPRIVATE ASSET MANAGERS AND THE BANKS AND THE IDEA THAT YOUHAVE THE LIKES OF APOLLO BUT ALSO EVIDENTLY PGM EATING THELUNCH OF SOME OF THE BIGGER BANKS. HOW MUCH DO YOU SEE THATREFLECTED IN THE EARNINGS IN TERMS OF WHERE BANKS ARELEANING IN OR WHERE THEY ARE LEANING OUT AND SAYING OTHERCOMPANIES MAY BE BETTER TO TAKE THIS BUSINESS? SONALI:IF I TOLD YOU TODAY BLACKSTONE IS NOT ONLY WORTH MORE THANGOLDMAN BUT ALSO MORGAN.

STANLEY, MOST PEOPLE DON'T EVENREMEMBER THAT IS THE CASE. BY MARKET VALUE, THEY ARELARGER. THAT CREATES A NEW QUESTION.IF YOU ARE A BANK OR ASSET MANAGER OR IF YOU WORK ON WALLSTREET, ISN'T BETTER TO BE IN THE BUSINESS OF MOVING MONEY ORHOLDING MONEY AND PUTTING IT TO WORK?GOLDMAN YESTERDAY SAID THERE PRIVATE CREDIT BUSINESS CANDOUBLE OVER FIVE YEARS TO $300 BILLION. THAT IS JUST ABOUT WHATBLACKSTONE HAS TODAY. IN A COUPLE OF WEEKS, APOLLO IS.

EXPECTED TO BRING IN MORE THANHALF OF $1 TRILLION IN COULD ALONE, NOT INCLUDING EQUITY ANDOTHER HYBRID PRODUCTS. SO THEY ARE BRINGING IN MASSIVEMONEY. WHERE DO THE BANKS MAKE MONEYFROM THAT? BY THE UNDERWRITING FEES, BYFACILITATING DEALS. BUT AGAIN, THESE ASSET MANAGERSARE CERTAINLY COMPETITIVE AND THEY ARE COMPETITIVE ON THE FEEWAR AS WELL. ANNMARIE: COMPETITION COSTS WERE RISINGTHIS QUARTER. WHAT DOES THAT SAY ABOUT THEREST OF THE YEAR? SONALI:.

THEY HAVE TO BE MAKING ENOUGHTO JUSTIFY THAT. THERE HAVE BEEN SIGNIFICANT JOBCUTS THE LAST COUPLE YEARS ON WALL STREET.WE ARE IN THE BEGINNING OF A CAPITAL MARKETS REBOUND.BUT VOLATILITY IS STARTING TO RISE BACK IN THE MARKETS.IF YOU LOOK AT FIXED FUTURES INTO MAY, THEY ARE TRADINGHIGHER THAN THE ONE YOUR AVERAGE.WHAT DOES THAT MEAN?CAN EQUITY AND DEBT UNDERWRITING KEEPGOING? CAN THEY KEEP GOING AFTER ANELECTION IN THE U.S.?.

DOES MNA AT A LARGE-SCALE GETSTOPPED AT THE GATE, OR DO THEY GET THAT THROUGH?SOME PEOPLE ARE SUING TO MAKE THOSE DEALS WORK, BUT SOMECOMPANIES MIGHT TURN AWAY FROM THAT. JONATHAN:YOU HAVE BEEN BRILLIANT OVER THE LAST WEEK.THANKS FOR YOUR HARD WORK. APPRECIATE IT.JUST WANT TO GO THROUGH THE LINEUP FOR YOU. SEBASTIAN OF T.ROWE PRICE, CHRISTIAN, AND DANA. I WANT TO PICK UP SEBASTIANPAGE, WHO WAS AGGRESSIVELY NEUTRAL. HAS THAT CHANGED? LISA:WE HEARD OTHER PEOPLE SAY.

ENTHUSIASTICALLY OR EAGERLYNEUTRAL. HOW DO YOU DECIDE WHICH SIDE OFTHE FENCE TO SIT ON WHEN IT IS SUCH AN AMBIGUOUS MOMENT?I AM CURIOUS ABOUT HIS STOCK CHOICES BECAUSE EVIDENTLY LASTTIME HE CAME, HE CAME WITH SOME T.ROWE PRICE STOCKS THAT WENT UP TO MY KNEES. JONATHAN:I DID NOT NOTICE THAT. HOW DID YOU SEE THAT? LISA:I TRIED THEM ON TO SEE. JONATHAN:I DID NOT GET ANY MERCH AT ALL. DID YOU TAKE MINE? LISA:I TOOK YOURS. JONATHAN:.

NOTHING AMBIGUOUS ABOUT THEEQUITY MARKET MOVES, JUST HIGHER THE LAST FEW WEEKS.A 10 YEAR SITTING AT 4.64, A TWO-YEAR OF 4.94.WHAT WAS CONTRARY AND IS NOW A CONSENSUS.IT WILL BE A LOT LATER IF YOU ARE LOOKING FOR INTEREST RATECUTS. ANNMARIE: THE DRAMATIC — LISA:THE DRAMATIC REPRICING OVER THE LAST THREE WEEKS HAS BEENNOTHING SHORT OF AMAZING. THE FACT THAT THE MARKETS HAVEDIGESTED IT AS WELL AS THEY HAVE UNTIL NOW IS PRETTYIMPRESSIVE.

THE QUESTION IS JUST, HAVE WEREACHED THAT LEVEL? THAT IS INCREASINGLY WHATPEOPLE ARE SAYING AT A TIME WHERE THERE IS THIS OVERHANG OFGEOPOLITICS CREATING CREDIT NERVOUSNESS. ANNMARIE:IT HAS BEEN MONTHS SINCE THE POWER PIVOT IN DECEMBER.HE WILL SPEAK TODAY AND WE HAD SIX OR SEVEN CUTS AND NOWEVERYONE IS QUICKLY MOVING TO THE TORSTEN PART OF THE WORLD.I AM STRUCK BY UBS TRYING TO MODEL IT OUT.THE FACT THAT WE CAN GO HIGHER AND SEE HIKES BECAUSE OF WHEREWE ARE RIGHT NOW. JONATHAN:.

JOINING US, THE MAN BEHIND THECALL, MR. JONATHAN PRINGLE. I THINK THAT IS A MUST WATCHCONVERSATION. THE PROSPECT OF DOING THEUNTHINKABLE. I THINK IT WAS UNTHINKABLE ATTHE START OF THE YEAR, AND MAYBE SORT OF NOT THE CONSENSUSVIEW BUT BECOMING MORE PROBABLE CERTAINLY. LISA:I WANT TO KNOW WHAT KIND OF CONVERSATIONS HE HAD WITHCLIENTS THAT READ THAT AND CALLED HIM UP.WAS IN EXPLETIVES OR PEOPLE SAYING YOU ARE TOTALLY RIGHTAND I AM ON BOARD BUT DID NOT.

WANT TO SAY IT OUT LOUD?PEOPLE SITE AND WILL NOT HAPPEN, NOT A CHANCE, WE WILLJUST HOLD RATES FOR A LONGER TIME.WHAT HAPPENED TO GET THERE? JONATHAN:LET'S FINISH ON HOW HIGH THE BAR IS.THREE HIGH INFLATION PRINTS TO START THE YEAR WE HAD AND AMEMBER OF THE FEDERAL RESERVE JUST IN AN INTERVIEW WITHMICHAEL MCKEE AND SET MONETARY POLICY IS IN A GOOD PLACE.THAT TELLS YOU IT WOULD TAKE A LOT MORE FOR THE FEDERALRESERVE TO BELIEVE IT WAS IN A.

BAD PLACE. LISA:ESPECIALLY BECAUSE HIGH RATES ARE AFFECTING A LOT OF SMALLBUSINESS IS DISPROPORTIONATELY AND THAT IS A PROBLEM. JONATHAN:THE OPEN ABOUT 34 MINUTES AWAY. LIVE FROM NEW YORK CITY THISMORNING, GOOD MORNING. THIS WAS “BLOOMBERGSURVEILLANCE .”

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