CPI Comes in Hot | Bloomberg Surveillance 02/13/2024

>> THE INFLATION PROBLEM IS NOTGOING AWAY. IT WILL CREATE RISK OFFINANCIAL STABILITY ISSUES DOWN THE ROAD. >> I DO SEE THIS BUILDING THATCOULD JEOPARDIZE DISINFLATION. >> EVERY SINGLE INVESTORPRICING IN A SOFT LANDING GETS ME QUITE NERVOUS. >> ALL WE NEED IS A TINY WITHOF LESS DOVISH DATA AND THAT WOULD ALREADY BE ENOUGH TO SAIDPAIN ACROSS ASSET CLASSES. >> IF WE WERE GOING TO GET ASURPRISE ON CPI THEN FOLKS.

WOULD SAY IS THIS REALLYOVERHEATING? >> THIS IS “BLOOMBERGSURVEILLANCE” WITH JONATHAN FERRO, LISAABRAMOWICZ, AND IN REORDERED. JONATHAN:THIS IS BLOOMBERG SURVEILLANCE ALONGSIDE LISA ABRAMOWICZTOGETHER WITH ANNMARIE HORDERN. TYPICALLY WE START THIS PROGRAMTALKING ABOUT INFLATION BUT YOU DO NOT WANT TO MISS THE LISAABRAMOWICZ RANT ON SCHOOLS IN NEW YORK CITY. THEY SAVE, NEW YORKERS.– STAY SAFE, NEW YORKERS.

PARTS OF NEW JERSEY ANDPENNSYLVANIA COULD SEE AS MUCH AS 12 INCHES. LISA:HOW ARE YOU GOING TO DO THIS? JONATHAN:I AM GOING TO KEEP GOING. REMOTE LEARNING, THOUGHTS? LISA:IT IS ADDING INSULT TO INJURY AS A PARENTS.HAVING YOUR KIDS HOME IS A PAIN IN THE NECK.THEN TO HAVE TO OVERSEE THEM AND THEIR LEARNING AND GET ONTHEIR CASE FOR NOT DOING THEIR HOMEWORK ASSIGNMENTS WHILE THEYWERE LOOKING OUT THE WINDOW HOPING TO GO SLEDDING ANDFEELING CAGED IN AND ARGUING.

WITH EACH OTHER IS TOO MUCH.JONATHAN: AS FAR AS THEY ARE CONCERNED TOTHEY BELIEVE IT IS A SNOW DAY OR DO THEY BELIEVE THEY HAVE TOLEARN SOMETHING? LISA: THEY THINK THEY HAVE 10 MINUTESOF LOGGING ON AND TAKING ATTENDANCE AND THEY CAN GOOUTSIDE. I ASSUME THEY HAVE WORK THEYCAN GET DONE AND I ASSUME IS THE PARENT I HAVE TO OVERSEE IT.I THINK YOU GIVE A SNOW DAY OR YOU DO NOT.THIS HALF HALF MAKES IT MORE OF A BURDEN FOR THE PARENTS.WE WILL KEEP YOU UPDATED WITH.

LISA'S OPINION AND GET REALUPDATES WITH DANI BURGER. STAY SAFE IF YOU ARE COMMUTINGTHIS MORNING. LET'S TURN TO THE INFLATIONDATA. WE ARE LOOKING FOR A TWO HANDLEON CPI YEAR-OVER-YEAR ON THE HEADLINE. 2.9% IS THE ESTIMATE. 3.4% IS THE PREVIOUS READ.WE'RE LOOKING FOR SOMETHING CLOSER TO 4%. LISA:YOU ARE LOOKING AT YEAR-OVER-YEAR GOING IN BELOW3% FOR THE FIRST TIME GOING BACK TO 2021.THE ACTUAL COMPONENTS, THE.

BROADENING OUT, THAT SEEMS TOBE THE KEY PHRASE FOR A LOT OF FED OFFICIALS.THE IDEA IS IS IT JUST PRODUCTS? IS IT JUST FOOD AND ENERGY ORIS THERE SOMETHING FURTHER UNDER THE HOOD? JONATHAN:WHAT IS THE RISK WE STABILIZED NORTH OF THE 2% INFLATIONTARGET? THAN THE POLITICAL SPIN WILLBEGIN. I WILL ARGUE THE POLITICAL SPINSTARTED BEFORE THE SUPER BOWL WHEN THE PRESIDENT RELEASED ABUILDING. ANNMARIE: THE PRESIDENT RELEASED A VIDEOFROM HIS CAMPAIGN ACCOUNT.

YESTERDAY THE PRESIDENT WENTAFTER CORPORATIONS, CALLING IT GREEDFLATION AND SHRINKFLATION.HE IS NOT MENTIONING BRANDS BY NAME. HE DID MENTION SNICKERS BUT HEWAS WRONG THAT THE SNICKERS BAR DID NOT SHRINK.EVERY TIME WE GET THE CPI REPORT HE SAYS MORE WORK NEEDSTO BE DONE, BUT TREASURY SECRETARY JANET YELLEN ONCE TODECLARE VICTORY ON THE SOFT LANDING. JONATHAN:IS THIS THE STANDARD OF THE CONVERSATION IN D.C.? LISA:THAT WE ARE TALKING ABOUT.

SNICKERS BARS?ON ONE HAND WE ARE TALKING ABOUT THE SNICKERS BARS ARE NOTBIG ENOUGH — HOW DO YOU MESSAGE SOMETHING THAT IS GOODPROGRESS BUT PEOPLE ARE STILL FEELING THE TWO YEAR CUMULATIVEINFLATION. THE KEY IS TO TALK ABOUT WHEREPROGRESS NEEDS TO HAPPEN AND TREAT PEOPLE LIKE THEY ARESMART AND THEY UNDERSTAND WHAT THEY ARE TALKING ABOUT.JONATHAN: THERE IS A BILL WORKING ITS WAYTHROUGH THE SENATE AT 6:00 IN THE MORNING DOWN IN WASHINGTON,D.C.

YOU TOLD ME THEY HAVE TURNED UPIN GYM CLOTHES. ANNMARIE: SOME OF THEM ARE BEING WOKEN UPTO GET BACK TO THE SENATE FLOOR TO VOTE ON THIS AND IT LOOKSLIKE THEY HAVE THE NUMBERS BUT THE BOAT IS STILL OPEN.THEY WILL BE PASSING $95 BILLION IN THE SENATE FORISRAEL, TAIWAN, AND UKRAINE. LAST NIGHT THE LAST THING IREAD WAS SPEAKER JOHNSON SAYING THIS IS NOT GOING TO HAPPEN INTHE HOUSE. IN THE ABSENCE OF HAVINGRECEIVED ANY BORDER POLICY CHANGE THE HOUSE WILL WORK ITSOWN WILL ON THESE IMPORTANT.

MATTERS. LISA: I RANT ABOUT SCHOOLS ANY RANTABOUT WHAT THE SENATORS WHERE. JONATHAN: I WAS JUST CURIOUS.IT WAS THE FIRST THING ANNMARIE TOLD ME.I THINK IT IS DISRESPECTFUL TO THE OFFICE. S&P FUTURES -.4%. IN THE BOND MARKET DOWN ABOUT ABASIS POINTS. 4.1696. COMING UP THIS HOUR, CHRISVERRONE OF STRATEGAS. NORMAN ROULE, AND JENNIFER LEE.WE BEGIN WITH OUR TOP STORY. THE EQUITY RALLY COOLING AHEADOF THIS MORNING'S CPI PRINT.

CHRIS VERRONE SAYING EVEN IF WEGET A PULLBACK IN EQUITIES, THE FLOOR IS HIGH.TRENDS REMAIN OVERWHELMINGLY POSITIVE FOR A 50 DAY SUPPORTON THE S&P 500 AT ROUGHLY 4770 AT LONG-TERM WORST-CASE 4600.WE GOT THE BANK OF AMERICA FUND MANAGER SURVEY EARLY.I WILL GO THROUGH THE MOST CROWDED TRADES.LONG MAGNIFICENT SEVEN, 61% OF RESPONDENT SHORT CHINA, ALONGJAPAN, LONG CASH. OVERWHELMINGLY, LONGMAGNIFICENT SEVEN. HOW CONCENTRATED ARE SOME OFTHE ACTIONS YOU'VE SEEN OVER.

THE LAST MONTH OR SO? CHRIS:IT IS ONE-SIDED IN TERMS OF LEADERSHIP.THIS IDEA THAT IT SAID STOCKS WORKING THE ENTIRE MARKET ISMISLEADING. YOU HAVE THE SMALL CAPS RIGHTNOW. GIVE THE S&P MAKING TWO YEARHIGHS. IT HAS BEEN A HIGH BAR. THE GOOD NEWS IS THE OTHERSTUFF , THE OTHER 490 STOCKS, THEY ARE NOT GOING DOWN INPRICE. WHEN YOU LOOK AT THE HEALTH OFTHE MARKET, YOU STILL HAVE TO ARGUE IT IS PRETTY BROAD.IT IS WELL PARTICIPATED.

YOU COULD GET A SEASONAL ORSENTIMENT INDUCED PULLBACK. AS WE WROTE 4600 OR 4650 WOULDBE WORST-CASE IN TERMS OF ANY SEASONAL WEAKNESS. JONATHAN:WHEN WE SPOKE TO YOU CLOSER TO THE START OF THE YEAR YOU WERETALKING UP FINANCIALS INTO 2024. WHAT IS THE STATE OF PLAY NOWAFTER THAT SPEEDBUMP WITH NYC BE A FEW WEEKS AGO? CHRIS:IT IS REMARKABLE HOW QUICKLY PEOPLE WANT TO GO BACK TO THEIMAGERY OF LAST FEBRUARY AND LAST MARCH.I THINK IT LOOKS DIFFERENT THIS TIME AROUND.AS THE BANKS AND THE REGIONALS.

HAVE SOLD OFF, WHAT YOU HAVENOT SEEN AT ALL IS ANY STRESS IN FINANCIAL CREDIT.THAT IS A VERY BIG DIFFERENCE FROM A YEAR AGO WHEN YOU BEGINTO SEE STRESS PERMEATE THROUGH THE FINANCIAL SYSTEM THROUGHTHE AVENUE OF CREDIT. THE OTHER THING YOU HAVE NOTSEEN, UNLIKE LAST YEAR WHEN THE REGIONALS CAME UNDER PRESSURE,YOU BEGIN TO SEE THIS PERSISTENT BID FOR THE MARKETSMORE DEFENSIVE CORNERS. YOU SAW IT WITH STAPLES ANDUTILITIES. IF I WILL EVALUATE THECORRECTION WE HAVE SEEN IN THE.

REGIONAL OR THE REAL ESTATENAMES OR THE BANKS OVER THE LAST THREE OR FOUR WEEKS, ILOOK TO IT AS VIABLE. THE TRENDS ARE POSITIVE UNDERTHE SURFACE. AT A MINIMUM LET'S GIVE THEM ALEASH TO RESPOND TO THIS OVERSOLD CONDITION. LISA:BUYING REGIONALS OR BUYING FINANCIALS? JONATHAN:YESTERDAY — CHRIS: YESTERDAY WAS A GREAT EXAMPLEFOR SOFTNESS AT THE TOP OF THE MARKET.USE OUR REGIONALS AND BANKS ACTED VERY WELL OFF OF SUPPORT.I THINK YOU WILL GET A GOOD.

OVERSOLD RESPONSE.THE QUESTIONABLE PARTS OF THE MARKET.THE REGIONALS, THE RATES. WHEN YOU LOOK AT THE BANKS MOREBROADLY CAPITAL MARKET STOCKS BEGIN TO ACT WELL.CONSUMER FINANCE NAMES CONTINUE TO TRADE WELL.AMERICAN EXPRESS AND CAPITAL ONE AND ALLIED FINANCIAL.IT IS OFTEN PERCEIVED AS ONE OF THE WEAKER PARTS OF FINANCIALSTRADE QUITE WELL. JONATHAN: AT THIS POINT — LISA:AT THIS POINT IT IS SORT OF A TEST. TO HAVE A DOWNSIDE THATIS NOT THAT DOWN IS FAIRLY.

BULLISH BUT THE UPSIDE BEINGDRIVEN BY SMALL CAPS IS NEXT LEVEL.WE WERE TALKING ABOUT HOW THE CONSOLIDATION WE HAVE SEEN ISFAR FROM THE DOOM AND GLOOM PEOPLE TALK ABOUT.IS THAT ENOUGH TO GET IN AND BET ON THE BROADENING OUT THATHAS YET TO HAPPEN? CHRIS: I THINK THE STORY THAT THEBROADENING OUT IS YET TO HAPPEN IS MISLEADING.WE ARE ONLY SIX WEEKS FROM SOME OF THE BEST READINGS WE HAVESEEN IN 60 OR 70 YEARS WORTH OF DATA. DECEMBER 14 YOU HAD MORE.

SMALL-CAP STOCKS MAKE A HIGH.THE ONLY CRIME THEY HAVE COMMITTED IN THE ENSUING SIXWEEKS IS CONSOLIDATING THAT MOVE.THIS IDEA THAT THE BROADENING NEVER HAPPENED IS MISLEADING.I THINK IT BEGAN TO HAPPEN IN THE FOURTH QUARTER.WE HAVE PAUSED. ALL SIGNS POINT TO RE-ENGAGING.YESTERDAY WAS REALLY INTERESTING.THE S&P FINISHED LOWER BUT YOU HAD MORE STOCKS UP THAN THEHIGHEST RATING WE HAVE HAD ALL YEAR.INTERNALLY WE LOOKED GOOD, YOU.

HAVE THE SMALL CAPS START TOBREAK OUT. LET'S GIVE THIS MORE LEASH TORE-EXPAND. JONATHAN: IS BECAUSE THE EXCITEMENT ISELSEWHERE. WE ARE LOOKING AT STOCKS THATHAVE DOUBLED IN THREE DAYS AND TRIPLED SINCE THE IPO.NVIDIA IS FLYING AGAIN. I WANT TO TALK ABOUT THECONSUMER JUST BRIEFLY. WE HAVE CPI LATER THIS MORNING.IN A COUPLE OF DAYS WE HAVE RETAIL SALES.IF YOU LOOK AT STAPLES VERSUS DISCRETIONARY, WHAT IS THESIGNAL YOU TAKE? CHRIS:.

WE SAY WE WILL TAKE THE MARKETINTUITION OVER OUR OWN ANY DAY OF THE WEEK.THE MARKET IS THE BEST ECONOMIST I KNOW.THE DISCRETIONARY IS A VERY GOOD BAROMETER FOR HOW THEMARKET PERCEIVES THE ECONOMY. THAT MADE NEW HIGHS YESTERDAYAND SODAS TRANSPORT UTILITIES. ALL OF THE RESPIROMETER'S IWOULD LOOK AT TO GAUGE — ALL THE RISK BAROMETERS I WOULDLOOK AT ARE STILL IN GOOD SHAPE. YOU MENTIONED TO SOME OF THESTORIES ARE BROUGHT. YOU HAVE A LOT OF NEW HIGHS.YOU HAVE TAIWAN AT NEW HIGHS.

CAREER BREAKING OUT.– KOREA BREAKING OUT. IMPORTANTLY, EARLY SIGNS OFCAPITULATION IN CHINA, WHICH IS INTERESTING TO US. JONATHAN:THE MOST UNLOVED EQUITY MARKET IN THE WORLD.DO YOU LIKE IT ENOUGH? CHRIS:PERU'S THE FINANCIAL TIMES, NEW YORK TIMES, THE WALL STREETJOURNAL YOU CANNOT FIND A BULLISH WORD WRITTEN.YOU HAD 82% OF THE SHANGHAI COMPOSITE EXCEPT FOR THE WORSTPART — SOMETHING THERE IS CHANGING RIGHT NOW.I WOULD COVER YOUR SHORTS.

I WOULD LOOK THE PRICE ACTION.LOOK AT THE BREAKOUT IN WIND. LOOK AT THE TURNING DOWN OFCHINA. SOMETHING IS HAPPENING THERE.AT A MINIMUM THE BEARS HAVE TO COVER SHORTS. JONATHAN:CHRIS VERRONE ON THE MOST LOVED EQUITY MARKET ON THE PLANET.I WILL GO BACK OVER THE FUND MANAGER SURVEY FROM BANK OFAMERICA. WE'RE LOOKING AT THE MOSTCROWDED TRADES. LONG MAGNIFICENT SEVEN.NUMBER TWO, SHORT CHINESE EQUITIES. LISA:TO DAMIAN SASSOWER OUR'S POINT.

IS THAT A TRADE, MAYBE NOT ANINVESTMENT. SOMETHING IS HAPPENING.TAKE A LOOK AT MGM. IT SHOWS HOW RISK ON PEOPLEARE, THAT THEY'RE WILLING TO SATE THE TECHNICALS ARE SO BADIT CANNOT GET WORSE. WE WILL THROW A FEW DOLLARSINTO THAT AREA. JONATHAN: IT IS THE PLACE WHERE SENTIMENTIS ROCK-BOTTOM. EQUITY FUTURES NEAR SESSIONBLOWS, DOWN .4%. LET'S GET UPDATE ON STORIESELSEWHERE. HERE IS THE BLOOMBERG BRIEFWITH DANI BURGER. DANI:.

NEW YORK CITY RESIDENTS AREBORN TO STAY HOME TODAY. THE CITY IS FORECAST TO RECEIVEAT LEAST EIGHT INCHES OF SNOW. ERIC ADAMS CLOSED SCHOOL. IF THERE WERE MORE THAN 7.3INCHES IN CENTRAL PARK IT WOULD BE THE MOST SINCE 2022.NORTHERN NEW JERSEY AND EASTERN PENNSYLVANIA COULD SEE AS MUCHAS 12 INCHES TODAY. FORMER PRESIDENT DONALD TRUMPHAS ENDORSED HIS DAUGHTER-IN-LAW TO HELP LEADTHE REPUBLICAN NATIONAL COMMITTEE.FORMER TELEVISION PRODUCER LARA.

TRUMP IS MARRIED TO HIS SONERIC. THE MOVE WOULD TIGHTEN FROMSCRIPT ON THE PARTY. THE CURRENT CHAIRWOMAN RONNAMCDANIEL IS IN DISCUSSIONS TO STEP DOWN.SUNDAY'S SUPER BOWL WAS FROM FROM THE HISTORY BOOKS. THE FIRST BACK-TO-BACK WIN IN19 YEARS AND THE MOST VIEWERS. THAT IS A 7% INCREASE FROM THEPREVIOUS HIGH, SET LAST YEAR. BEDDING ALSO SET A RECORD WITHGAMBLERS IN NEVADA WAGING — THAT IS YOUR BLOOMBERG BRIEF.JONATHAN: APPRECIATE IT.

SURPRISED? LISA:ABOUT THE RECORD? NO. WE WERE ALL EXPECTING IT.JONATHAN: THE TAYLOR SWIFT AFFECT.IS THAT WHAT WE ARE SEEING? ANNMARIE:DEARLY WANT TO TALK ABOUT HER AGAIN? JONATHAN:I WANT TO TALK ABOUT JIM NANCE OF CBSSPORTS. ABSOLUTE LEGEND.LISA: YOU'RE TALKING GOLF? YOU'RE BASICALLY SAYING LET'SSHIFT GEARS FROM THE SUPER BOWL TO TALK ABOUT GOLF. JONATHAN:LET'S NOT. UP NEXT, PRESIDENT BIDENPUSHING FOR A PAUSE IN GUYS A.

— A PAUSE IN GAZA. PRES. BIDEN:THE UNITED STATES IS WORKING ON A HOSTAGE DEAL BETWEEN ISRAELAND HAMAS WHICH WOULD BRING SUSTAINED CALM FOR AT LEAST SIXWEEKS. JONATHAN: THAT IS COMING UP NEXT.LIVE FROM NEW YORK CITY. THIS IS BLOOMBERG. JONATHAN:CPI DATA LATER THIS MORNING. EQUITY FUTURES A LITTLE BITSOFTER. NEGATIVE ONE THIRD OF 1%.DOWN A SINGLE BASIS POINT. UNDER SURVEILLANCE, PRESIDENTBIDEN PUSHING FOR A PAUSE IN.

GAZA. PRES. BIDEN:AS THE KING AND I DISCUSSED TODAY, THE UNITED STATES ISWORKING ON A HOSTAGE DEAL BETWEEN ISRAEL AND HAMAS WHICHWOULD BRING IMMEDIATE AND SUSTAINED.OF CALM TO GAZA FOR AT LEAST SIX WEEKS, WHICH WE COULD THENTAKE THE TIME TO BUILD SOMETHING MORE ENDURING.JONATHAN: PRESIDENT BIDEN PUSHING FOR ASIX WEEKS PAUSE IN FIGHTING BETWEEN ISRAEL AND HAMAS.THE MEETING AMID GROWING CONCERN ABOUT A POTENTIALISRAELI GROUND OFFENSIVE IN A.

CITY WERE OVER ONE MILLIONPALESTINIANS HAVE FLED. KING ABDULLAH CALLING FOR ANEND TO THE WAR, SAY WE CANNOT AFFORD AN ISRAELI ATTACK ONRAFAH. IT IS CERTAIN TO PRODUCE ANOTHER HUMANITARIANCATASTROPHE. JOINING US IS NORMAN ROULE,FORMER U.S. INTELLIGENCE OFFICIAL.COULD WE TAKE A STEP BACK AND LOOK AT THE ORIGINAL OBJECTIVEOF THE ISRAELI MILITARY, WHICH WAS TO DESTROY HAMAS.MUCH PROGRESS HAVE THEY MADE? NORMAN: THAT DIMINISHING THESIGNIFICANT HUMANITARIAN.

CATASTROPHE OF GAZA, ISRAEL HASACHIEVED SIGNIFICANT SUCCESS AGAINST THE LOSS — AGAINSTHAMAS. HAMAS HAD FIVE FOR GRADES.TWO IN THE NORTH HAVE BEEN DESTROYED.THE TWO IN THE CENTER HAVE BEEN DEGRADED.THE FINAL PER GRADE IS LOCATED IN — THE FINAL BRIGADE ISLOCATED IN ROUGH. — IN RAFAH. CONCENTRATION OF CIVILIANS ISWHY THE UNITED STATES WAS PUSHING FOR A LESS INTENSECONFLICT AGAINST THE REMAINING LEADERSHIP. ANNMARIE:.

HOW DOES ISRAEL GO INTO RABAATO GET RID OF THE REMAINDER OF HAMAS AND MAKE SURE THEY AREMAKING SURE THEY ARE PROTECTING PALESTINIAN CIVILIANS? NORMAN:THEY ONLY HAVE TWO CHOICES. FIRST THEY UNDERTAKE A LONGCAMPAIGN TO DEGRADE THE REMAINING HAMAS BRIGADE BUTALSO TO GO AGAINST THE TUNNELS UNDER RAFAH.THIS IS WHERE THE FIGHTERS ARE HIDING.THIS WOULD BE A LONG AND COSTLY BATTLE.THE ALTERNATIVE IS TO MOVE THE CIVILIANS OUT.THE PROBLEM IS THERE NOT MANY.

PLACES TO GO.THEY COULD SEND THEM NORTH AGAIN.NOT A LOT OF FACILITIES FOR THEM IN THAT AREA.THEY COULD WORK AROUND THEM. IT IS VERY COMPLICATED.ANNMARIE: YOU HAD THE HEAD MEETING WITHBILL BURNS. IF THEY GO AHEAD WITH A HOSTAGEAGREEMENT WITH THAT MEAN ISRAEL WOULD NOT GO INTO RAFAH? NORMAN:ISRAEL WOULD SAY A HOSTAGE AGREEMENT WOULD DELAY GOINGINTO RAFAH. HAMAS WOULD PUSH FOR A LENGTHYHOSTAGE AGREEMENT WHICH WOULD.

ALLOW THEM TO SURVIVE ANDDECLARE VICTORY THROUGH SURVIVAL.IF YOU ARE HAMAS SURVIVAL MEANS VICTORY, AND THEN DOMINATINGTHE POSTWAR ENVIRONMENT AND IN ESSENCE RESTORING A MODESTDOMINATION OF GAZA AND THE WEST BANK. LISA:HOW MUCH ARE YOU CONCERNED ABOUT BENJAMIN NETANYAHU ANDHOW MUCH THE NEWS REPORTS SEEM TO SUGGEST HE IS GOING IT ALONEAND DEFYING A LOT OF BIDEN AND WHAT HE IS SAYING?DOES THAT GIVE YOU PAUSE? NORMAN:IT IS A CONCERN BUT I THINK.

PRIME MINISTER NETANYAHU DOESREFLECT A GENUINE BELIEF IN ISRAEL THAT THEY CANNOT SUSTAINANOTHER SITUATION WHERE HAMAS MIGHT RETURN AND REPEAT WHAT ITDID OCTOBER 7. IT IS FAIR TO SAY PRIMEMINISTER NETANYAHU REFLECTS A HARD LINE OF THE RIGHT WING BUTIT WOULD BE UNFAIR TO SAY HE IS THE ONLY PERSON THAT BELIEVESHAMAS MUST BE DESTROYED IN A NEW SITUATION IN GAZA MUSTDEVELOP IN A TWO STATE SOLUTION SHOULD NOT BE RUSHED INTOBECAUSE THAT MIGHT MEAN A HAMAS DOMINATED ENTITY ON THE ISRAELIBORDER. LISA:.

THERE ARE SENATORS IN THEIRPAJAMAS VOTING ON THIS BILL TO GET AID TO UKRAINE IN ISRAEL.IT IS DEAD IN THE WATER BECAUSE THE HOUSES DOCTORING TO BRINGIT. ELON MUSK TALKING TO SENATORSSAYING THERE IS NO WAY VLADIMIR PUTIN CAN USE THE WAR INUKRAINE . WHAT DOES — WHAT YOU MAKE OFTHAT? HOW CONCERNING MS. THAT? NORMAN: IT IS CONCERNING.IT MAY BE POLITICALLY POPULAR TO DENY AID TO EITHER PARTY,BUT PROVIDING PRECISION GUIDED MISSIONS AND STRONGINTELLIGENCE TO PROTECT.

CIVILIANS AND IT ENABLES THOSEPARTNERS WE SUPPORT TO WIN OR SUSTAIN THEIR DEFENSE.IT IS AS SIMPLE AS THAT. IF YOU DENY PRECISION GUIDEDMUNITIONS AND INTELLIGENCE, YOU LENGTHEN THE FIGHT, INCREASECIVILIAN CASUALTIES, IN YOU. UNDERMINE THEIR WILL TO FIGHT.JONATHAN: U.S. RHETORIC IS SHIFTING.PRIVATE MEETINGS ARE SUGGESTING JOE BIDEN IS CALLING THEISRAELI LEADER AN A-HOLE THREE TIMES SEPARATELY.THAT IS A SHIFT IN RHETORIC. MAY BE CONVENIENTLY FROM THISWHITE HOUSE.

HAVE YOU SEEN A CHANGE INPOLICY? NORMAN: NO AT PRESENT. THE U.S.CONTINUES TO FLOW FORWARD, THE COOPERATION OF PLOSSER JUICE ISSTRONG, BUT THE U.S. IS APPROPRIATELY CONCERNED WITHHOW THE RAFAH CAMPAIGN WILL GO. THERE IS NOWHERE TO MOVE THISPOPULATION. IF ISRAEL CONDUCTS A TRADITIONAL CAMPAIGN THECIVILIAN COST WOULD BE ENORMOUS WITH HUGE POLITICALCONSEQUENCES TO DO GUIDED STATES AND A DOMESTIC POLITICALCOMPONENT. I DO NOT THINK ISRAEL INTENDSTO DO THAT BUT THE CONCERN IN.

THE WHITE HOUSE IS INDEEDGENUINE. JONATHAN: SOMETIMES IT IS QUIET WITHREGARDS TO REGIONAL ACTORS. I AM THINKING OF SAUDI ARABIA.WHAT YOU ANTICIPATE WILL HAPPEN WITH THEM TOWARDS THE END OFTHE YEAR? ARE YOU EXPECTING A SHIFT INTHEIR APPROACH TO THE SITUATION? NORMAN: I DO NOT.THE SAUDI'S WILL CONSISTENTLY CALL FOR A CEASE-FIRE, A TWOSTATE SOLUTION WITH A DEFINITE TIME FRAME FOR WHEN THATSOLUTION MUST COME ABOUT, AND A SITUATION WHERE THEHUMANITARIAN ASPECT OF GAZA IS.

RESOLVED.THERE IS ENORMOUS SENSITIVITY IN THE ARAB WORLD TO WHAT THEYSEE AS THE DAILY DRUMBEAT OF THE DEATH OF PALESTINIAN MEN,WOMEN, AND CHILDREN. WE DO NOT HAVE THAT SAMEDRUMBEAT IN THE WEST. THE SALLIES ARE NOT GOING TO SHIFT.JONATHAN: THANK YOU. GOOD TO CATCH UP.FORMER SENIOR U.S. INTELLIGENCE OFFICIALS AS THEPRESIDENT THE UNITED STATES PUSHES FOR A SIX-WEEK PAUSE.CAN WE TALK ABOUT ANGRY BIDEN AND HOW CONVENIENT SOME OFTHOSE LEAKS MIGHT BE.

YOU THINK THAT IS MORE ON HISMENTAL ACUITY THEY WANT TO SHOW HIM BEING FOCUSED AND ANGRYBEHIND THE SCENES. ANNMARIE: HE IS VERY WELL KNOWN TO HAVE ATEMPER. THIS HAS BEEN DOCUMENTED SINCEHE WAS VICE PRESIDENT. THESE LEAKS ARE FROMINDIVIDUALS AT DONOR MEETINGS. KARINE JEAN-PIERRE WAS ASKEDABOUT THIS AND SHE SAID SHE WOULD NOT ELABORATE ON THEPRESIDENTS PRIVATE CONVERSATIONS.CLEARLY THERE IS A LOT OF FRUSTRATION IN THE WHITE HOUSEBUT ALSO WITHIN THE CAMPAIGN.

YOU SEE OUTREACH FROM THISADMINISTRATION TO GO TO PLACES LIKE MICHIGAN WHERE THERE AREGROUPS SAYING “ABANDON BIDEN” THAT FEEL HE HAS TURNED HISBACK ON THEM. JONATHAN: IS A CHANGE IN RHETORIC NOT ACHANGE IN POLICY. THE DEMAND FOR AI HELPING CHIPDESIGNER ARM TO DOUBLE IN THREE DAYS.THAT CONVERSATION IS COMING UP NEXT.LIVE FROM NEW YORK CITY, THIS JONATHAN:CPI REPORT ABOUT TWO HOURS AWAY. NEGATIVE ON THE S&P 500 ABOUTONE THIRD OF 1%.

PULLING BACK JUST A TOUCH ONTHE S&P, SNAPPING A FOUR DAY WINNING STREAK.THE LAST TIME WE HAD A WEEKLY LOSS WAS THE FIRST WEEK OF THISYEAR COME THEN YOU HAVE TO GO ALL THE WAY BACK TO THE END OFOCTOBER. THAT IS HOW GOOD THINGS HAVEBEEN. YOUR EQUITY MARKET PULLING BACK.THE TWO YEAR, 10 YEAR, 30 YEAR SHAPING UP AS FOLLOWS. 4.1618. TWO YOUR DOWN ALMOST A SINGLEBASIS POINT. A QUICK LOOK AT THE EURO.JUST A LITTLE BIT LOWER.

107.81. POSITIVE .1%. U.S.CPI DATA ON DECK. BLOOMBERG SURVEY FORECAST ANDANNUAL RATE OF 2.9%. THIS WOULD BE THE FIRST THREEBELOW 3% SINCE MARCH 2021. BLOOMBERG EXPECTING HOUSING ANDRENTS AND CORE SERVICES TO OVERTAKE GOODS AS THE DRIVER OFDISINFLATION. THIS CONVERSATION PICKED UPWHEN WE HEARD FROM MR. BARKIN OF RICHMOND FED AND HE TALKEDABOUT THE B WORD. WE NEED TO SEE THIS BROUGHT ANOUT. LISA: I AM HOPEFUL BUT NEED TO SEECONVICTION OF SLOWING INFLATION.

— THOSE WERE HIS WORDS.HOW MUCH YOU SEE THIS IN THAT DATA? IT SUGGESTS WE WILL.IF YOU DON'T WILL THAT BE ENOUGH TO KEEP THE FED ON HOLD?IF WE SEE IT BROUGHT AN OUT, IS THAT ENOUGH FOR THEM TO CUT INMARCH? IS THAT WHERE OUR CONVERSATIONIS GOING? JONATHAN: JUST THIS HAVE THE POTENTIAL –AND IT DOES THIS HAVE THE POTENTIAL TO DIP US INTO A LESSFAVORABLE REGIME. I WILL GO INTO THAT QUOTE FROMSTUART KAISER OF CITI. LISA:AFTER HE CAME ON OUR SHOW AND.

AFTER HE PUT OUT THAT REPORT ,CITIGROUP ANALYSTS CAME OUT AND WARNED OF A POTENTIAL 1998SITUATION WHERE THE FED DOES CUT RATES BUT THAT IS FORCED TORAISE THEM AGAIN IN A YEAR OR TWO YEARS.HOW MUCH IS STEWART TALKING ABOUT EXACTLY THAT TYPE OFENVIRONMENT WHERE YOU DO NOT KILL THE BEAST, IT LINKERS ANDYOU END UP IN A DIFFERENT REGIME? JONATHAN: WITHOUT A DOUBT THAT IS THESCENARIO SOME FED OFFICIALS ARE CLEARING. AND WASHINGTON, D.C.THE U.S. SENATE VOTING TO PASS A.

STANDALONE AID PACKAGE FORUKRAINE IN ISRAEL. LEADERSHIP CONFIDENT THE $95BILLION WILL PASS TODAY. SPEAKER MIKE JOHNSON WARNING ITWILL FACE OPPOSITION IN THE HOUSE, SAYING “THE HOUSE WILLHAVE TO CONTINUE TO WORK ON ITS OWN ON THESE IMPORTANT MATTERS.”THIS WILL FAIL IN THE HOUSE? ANNMARIE:IT WILL ABSOLUTELY FAIL IN THE HOUSE AT THE MOMENT.SPEAKER JOHNSON ALREADY POURING COLD WATER ON IT. THE VOTE STARTED AT 5:15 AM ANDMIKE JOHNSON SAID IT WAS DEAD.

IN THE WATER IN THE HOUSE.I AM LOOKING AT THE VOTE COUNT. SENATOR CASSIDY HAS NOT VOTED.WE ARE MISSING TWO SENATORS TO VOTE. THEY HAVE THE VOTES TO GOTHROUGH. IT DOES NOT MATTER IF IT PASSESTHE SENATE SO IT WILL NOT BE PASSING THE HOUSE. JONATHAN:SO WE SHOULD NOT BE TALKING ABOUT IT? ANNMARIE:AT SOME POINT, POTENTIALLY, THERE COULD BE DIFFERENTAVENUES FOR SOME OF THIS AID. THERE IS A LOT OF BIPARTISANSUPPORT OVERALL FOR THESE PROGRAMS. IT IS HOW IT GETSDONE. DO WE DECOUPLE THEM?.

LISA:WHAT DO YOU HAVE IF WE HAVE THE LIKES OF J.D.VANCE OF OHIO SAYING THINGS LIKE WE HAVE TO KILL THIS THINGAND ELON MUSK SAYING VLADIMIR PUTIN CANNOT LOSE?WHAT DOES THAT SAY TO OUR ALLIES, LET ALONE INTERNALLY?IT RAISES THIS QUESTION OF ALLIANCES, A QUESTION OFCONVICTION THE U.S. WILL BE THERE IN THE SAME WAY.JONATHAN: WHY WE GIVE PEOPLE WHO ARESUCCESSFUL IN A VERY NARROW FIELD A VOICE ON EVERYTHING?ON LITERALLY EVERYTHING?.

IF YOU BECOME HIGHLY SUCCESSFULIN TECHNOLOGY OR WHATEVER THE BUSINESS MIGHT BE, WHY DO WE ASJOURNALISTS GIVE THEM SO MUCH OXYGEN TO BASICALLY PONTIFICATEON EVERYTHING UNDER THE SUN? LISA: FAIRPOINT.ELON MUSK WAS TALKING TO U.S. CONGRESS MEMBERS.IN SOME WAYS THE BUSINESS LEADERS HAVE BECOME AMBASSADORSBECAUSE POLITICIANS HAVE NOT BEEN AND ARE NOT REPRESENTINGTHE BUSINESS WORLD IN THE SAME WAY AS THEY HAVE TRADITIONALLY.ANNMARIE: IF ELON MUSK WAS AROUND THISTABLE HE WOULD TELL YOU HE HAS.

DONE MORE FOR UKRAINE THAN THE49 STATES GIVEN WHAT HE HAS DONE WITH STARLINK AND THEINTERNET CONNECTION. HE HAS HIS OWN SOCIAL MEDIAPLATFORM. HE DECIDED TO CORRAL A BUNCH OFREPUBLICANS WHO WERE AGAINST THIS BILL AND SIDED WITH THEM,AND WE WROTE IT UP. JONATHAN: — THE AI BOOM, NVIDIA BRIEFLYOVERTOOK THE MARKET SHARE OF AMAZON BEFORE SETTLING JUST SHYWITH THE VALUE OF $1.79 TRILLION.INVESTORS ALL IN ON U.S.

TECH STOCKS.INVESTORS SING ALLOCATION TO TECH IS THE HIGHEST SINCE 2020.ALEX WEBB JOINS US FOR MORE. WOULD YOU DESCRIBE THIS AS ANAI FRENZY? ALEX: IT CERTAINLY LOOKS THAT WAY,PARTICULAR WITH ARM. WHEN ARM FIRST BECAME PUBLICTHERE WAS A CERTAIN MAN OF SKEPTICISM ABOUT WHETHER IT WASREALLY AN AI STOCK. IT DID NOT LOOK LIKE IT WASDELIVERING MUCH VALUE WHEN IT CAME TO AI.IT SEEMS THE MARKET IS BUYING THAT MESSAGE GIVEN SOME OF THESTATEMENTS MADE LAST WEEK.

IT DOES NOT HAVE THIS DIRECTEXPOSURE NVIDIA MIGHT HAVE, BUT A LOT OF ITS CHIPS DESIGNS AREUSED TO UNDERPIN A LOT OF THESE SPECIALIST CHIPS PRODUCED BYTHE LIKES OF NVIDIA. LISA: YOU HAVE THE UNWANTED JOB OFTRYING TO LABEL WHAT IS REAL AND WHAT IS FAKE.WHAT IS OVERHYPED AND WHAT HAS LEGS.IS THE SUGGESTION OF NAI BOOST THE SALES ENOUGH TO JUSTIFY THERALLY WE HAVE SEEN IN THE ARM SHARES? ALEX: I WOULD LOVE TO PICK THEINVESTOR RELATIONS AND SEE IF.

THE FINANCED TEAMS OF ARM'SBRAIN RIGHT NOW. THEY WANT TO GET THERECOGNITION FOR WHAT THEY'RE DOING NAI.IF THE EXPECTATIONS ARE SET TOO HIGH THE RISK IS YOU SETYOURSELF UP FOR A FALL IF THERE IS DISAPPOINTMENT IN THEQUARTERS TO,. I'VE SPOKEN TO OTHER COMPANIESWHO EXPRESSED THIS SENTIMENT THAT THEY WANT TO BE RECOGNIZEDFOR WHAT THEY ARE DOING. THEY DO NOT WANTED TO BEOVERCOOKED. NVIDIA IS TRADING 35 TIMES ITSFORWARD EARNINGS.

THAT IS NOT WILDLY OUTSIDE THEREALM OF WHAT SOME OF ITS PEERS ARE DOING.THE CASE WITH ARM'S IT STARTS TO GET OUT OF THAT SPACE.MAYBE THEY CAN DELIVER. THAT IS NOT FOR ME TO PREDICT.LISA: CAN WE SAY TESLA IS OUT AS THESE SHARES SURGE AND TESLA ISDOWN 20%? ALEX: IN TERMS OF AI? IT IS FASCINATING.ELON MUSK IS TRYING TO MAKE THE CASE THEY ARE NAI COMPANY.I FOLLOWED THIS SELF-DRIVING SPACE.YOU NEVER HEARD ABOUT TESLA BEING UP THERE AT THE TOP TIEROF SELF-DRIVING TECHNOLOGIES.

YOU THINK ABOUT WAYMO.YOU THINK ABOUT THE GM CRUISE UNIT. AURORA.THOSE GUYS THE TOP TIER. TESLA NOT THOUGHT OF IN THESAME CATEGORY. MAYBE THE MARKET IS WAKING UPTO THAT. SELF-DRIVING IS NOT FULLSELF-DRIVING. WHAT THEY BRAND AS FULLSELF-DRIVING DOES NOT LET YOU GO ON THE ROADS WITH YOUR HANDSOFF THE STEERING WHEEL. IT SEEMS LIKE THAT MESSAGEMIGHT BE TRICKLING THROUGH IT ONLY SCALES WITHIN TESLA. LISA:THE REASON I ASK IS BECAUSE.

WHEN WE ZOOM OUT THERE IS AQUESTION OF WHEN THE AI BOOM WILL TRICKLE OUT TO OTHERCOMPANIES THAT WILL USE IT TO CREATE OPERATIONAL EFFICIENCIES.THIS IS SOMETHING THAT INVESTORS ARE LOOKING AT.CAN WE SEE THE SAME KIND OF BOOST EQUITY VALUATIONS, THESAME KIND OF BOOSTER EARNINGS FOR OTHER COMPANIES OUTSIDE THETRADITIONAL TEXT FEAR — THE TRADITIONAL TECH SPHERE?ARE PEOPLE SNIFFING THAT OUT ALREADY OR IS THAT A YET TO BEDISCOVERED SPACE? ALEX: I DO NOT KNOW THE ANSWER TOTHAT QUESTION.

THERE COMPANIES THAT MIGHT BEWELL-POSITIONED. IF YOU THINK ABOUT SOME OFTHESE BIG CONSULTANCY FIRMS, THEY LIKE TO TALK ABOUT THE LIKES OF ACCENTURE AND THOSEGUYS — THEY LIKE TO TALK ABOUT THE POTENTIAL OF AI ON TWOFRANCE. — ON TWO FRONTS. YOU COULD DO SOME OF THE WORKTHEY HAVE CONSULTANTS DOING AND ALSO THEY COULD BRING THOSECAPABILITIES INTO — THEIR CLIENTS FIRMS. DOESTHAT MEAN THEY ARE NAI PLAY? — DOES THAT MEAN THEY ARE ANAI PLAY? I DO NOT THINK SO.

IT IS STILL SO EARLY IN THEEVOLUTION. INCREASINGLY YOU WILL GET HYPERSPECIALIZED APPLICATIONS OF AI AND THAT IS WHERE THEOPPORTUNITIES WILL EXPLODE. DO NOT KNOW WHO THOSE COMPANIESARE YET. JONATHAN: ALEX WEBB OF BLOOMBERG OUT OFLONDON. A SNEAK PEEK OF THE PREMARKET.ARM -2.65%. WE HAVE BEEN TALKING ABOUT THAT$95 BILLION BILL GOING THROUGH THE SENATE.SENATOR'S UP EARLY TO PASS A $95 BILLION A BILL FOR UKRAINECOME ISRAEL, AND TAIWAN.

THIS IS THE SENATE.YOU SET ALL MORNING THIS WILL NOT GET THROUGH THE HOUSE.ANNMARIE: MAJOR HURDLES. YOU SEE CHUCK SCHUMER TALKINGTO A VERY EARLY MORNING GROUP OF SENATORS. IT CAME IN 70-29.A NUMBER OF REPUBLICANS WERE IN FAVOR OF THIS, BUCKING THETRENDS WE'VE SEEN FROM OTHER REPUBLICANS FOLLOWING DONALDTRUMP'S LEAD. YOU HAVE TO THINK BEFORE THESENATORS EVEN WOKE UP AND VOTED ON THIS FINAL PASSAGE, THEYWERE MET WITH A STATEMENT FROM SPEAKER JOHNSON SAYING THEHOUSE WILL GO ITS OWN WAY.

JONATHAN:TO UNDERTAKE THAT LIVE SHOT AGAIN?WHAT YOU NOTICE ABOUT CHUCK SCHUMER.SUIT AND TIE, READY TO GO. ANNMARIE:I HAVE AN UPDATE ON WHAT THEY ARE WEARING.STEVE DENNIS TOLD ME SENATOR BRITT APPEARED TO BE HEADING TOTHE GYM NEXT. TED CRUZ WEARING A LONGHORNSWEATSHIRT. LISA: I THINK IT IS GREAT THEY WILLGO WORK OUT. BE HEALTHY AND LIVE LONG.JONATHAN:.

HERE IS YOUR BLOOMBERG BRIEF.DANI: PRESIDENT BIDEN IS FORMING ATASK FORCE TO ADDRESS THE MISHANDLING OF CLASSIFIEDDOCUMENTS DURING PRESIDENTIAL TRANSITIONS.THE SPECIAL COUNSEL REPORT FOUND BIDEN KEPT DOCUMENTS INHIS POSSESSION AFTER HE WAS VICE PRESIDENT.WHITE HOUSE OFFICIALS CALLED IT A SYSTEMATIC ISSUE AFFECTINGBOTH PARTIES. THE TASK FORCE WILL PROVIDERECOMMENDATIONS BEFORE THE NEXT PRESIDENTIAL TRANSITION.THE INTERNATIONAL ENERGY AGENCY.

EXPECTS GLOBAL OIL MARKETS TOREMAIN COMFORTABLE. SUPPLY WILL SATISFY DEMAND ANDKEEP PRICES IN CHECK. >> IN THE ABSENCE OF MAJORGEOPOLITICAL TURMOIL FOR MAJOR EXTREME EVENTS, WE WOULD EXPECTA COMFORTABLE OIL MARKET AND COMFORTABLE AIR PRICE EVOLUTIONTHROUGHOUT 2024. DANI: IEA SAYS WORLD CONSUMPTION WILLINCREASE UP TO 1.3 MILLION BARRELS A DAY, A SIGNIFICANTLYWEAKER PACE THAN LAST YEAR. TIGER WOODS IS LAUNCHING A NEWBRAND AFTER ENDING HIS LONG-TERM DEAL WITH NIKE.HE SIGNED A DEAL WITH.

TAILOR-MADE GOLF.THEY WILL CREATE AN APPAREL LINE CALLED SUNDAY RENT.FINANCE — SUNDAY RED. FINANCIAL TERMS OF NOT BEENDISCLOSED. THAT IS YOUR BLOOMBERG BRIEF.JONATHAN: UP NEXT, INFLATION DATA ON DECK.>> AT SOME POINT IT WILL BE APPROPRIATE FOR US TO LOWER THEFEDERAL FUNDS RATE. DO NOT SEE THAT IN THEIMMEDIATE FUTURE THAT I DID NOT WANT TO PREJUDGE WHAT OURDECISIONS MIGHT BE. JONATHAN: THAT INFLATION DATA TWO HOURSAWAY. IN THE S&P 500, -.4%.

IN THE BOND MARKET YIELDS LOWER.4.1657. LIVE FROM NEW YORK CITY, THISIS BLOOMBERG. JONATHAN:STOCKS SLIGHTLY DOWN YESTERDAY. THIS MORNING THE SAME GAME.DOWN ABOUT .4% ON THE S&P. 10 YEAR 4.1637.EURO NOT DOING MUCH. 1.0 774. CRUDE THE SMALLEST OF BOUNCES.$77.42 ON WTI. INFLATION DATA ON DECK. >> THE PROGRESS WE'RE MAKING ONINFLATION IS VERY POSITIVE. AS LONG AS WE HAVE CONTINUEDPROGRESS AT THE CURRENT POLICY.

RATE, I THINK AT SOME POINT ITWILL BE APPROPRIATE FOR US TO LOWER THE FEDERAL FUNDS RATE.I DO NOT SEE THAT IN THE IMMEDIATE FUTURE AND I DO NOTWANT TO PREJUDGE WHAT OUR DECISIONS MIGHT BE GOINGFORWARD THIS YEAR. JONATHAN: FIT OFFICIALS REITERATING IT ISTOO SOON TO CHANGE POLICY WITH JANUARY CPI DATA DROPPING ANDDOES GO HOURS. THE MEDIAN ESTIMATE CALLING FORTHE HEADLINE NUMBER TO DROP BELOW 3% FOR THE FIRST TIME INTHREE YEARS. JENNIFER LEE WRITING “POLICYAND MARKETS WILL NEED TO WAIT.

THROUGH MIXED MESSAGES, BUTWILL LIKELY CONCLUDE OR EVIDENCE WILL BE REQUIRED FORTHE FED TO FEEL COMFORTABLE WITH THE PLAN TO START EASINGMIDYEAR.” JENNIFER LEE JOINS US WITH MORE.LET'S START WITH THE EVIDENCE THESE DISINFLATIONARY TRENDSARE BROADENING OUT. HOW MUCH DO YOU SEE? JENNIFER:WE ARE SEEING SOME EVIDENCE OF THIS BROADENING OUT BUT IT ISNOT AS BROUGHT WITH WHAT THE FED WANTS TO SEE.THIS IS WHERE THE STICKY INFLATION STORY IS STILLPLAYING OUT VERY BROADLY.

THIS IS A STORY AROUND THEWORLD AS WELL, WHICH IS WHY WERE NOT SEEING CENTRAL BANKSCOMING MORE BROADLY QUARTER. I WANT TO SEE MORE EVIDENCE OFTHAT PLAYING OUT AND BEING MORE COMFORTABLE BEFORE THEY CANSTART FEELING BETTER AND MORE CONFIDENT ABOUT CUTTING RATES.LISA: WHEN YOU ZOOM OUT THERE IS ANEXISTENTIAL QUESTION, WILL THE FED HAVE THE ABILITY TO KILLTHE INFLATION BEAST? WILL THEY END UP STAYING ONHOLD , BUT FACING A RESEARCHING INFLATION LATER THIS YEAR ORNEXT YEAR THAT CAUSES THEM TO.

HIKE RATES AGAIN?WE HEARD FROM CITIGROUP'S JASON WILLIAMS OVER THE LAST COUPLEOF DAYS WHERE HE WROTE THE MARKET SHOULD PRICING SOME RISKOF FUTURE HIKES. THIS CYCLE COULD BE MORE AKINTO THE 1998 EASING CYCLE WHICH WAS SHORT-LIVED AND RED TOMORGUE — AND LED TO MORE RATE HIKES. DO YOU AGREE WITH THAT?JENNIFER: THAT WOULD BE A BIG PROBLEM IFTHEY CUT A COUPLE TIMES. THIS IS WHERE YOU CAN SEE A BIGCREDIBILITY ISSUE PLAYING OUT AT THAT POINT.

THIS IS WHAT THE FED WANTS TOAVOID AND WHY THEY ARE SO HESITANT TO CUT RATES TOO EARLY.WE HAVE THE MARKET PRICING IN AT ONE POINT ALMOST 100% CHANCEOF RATE CUT IN MARCH. THANKFULLY CHAIR POWELL CAMEOUT LAST WEEK OR TWO WEEKS AGO AND DISMISSED THAT IDEA ALMOSTCOMPLETELY. THEY ARE JUST TRYING TO TELLEVERYONE TO BE PATIENT, CHILL OUT, SIT BACK, AND WATCH THEDATA AND MAKE SURE WE ARE CONFIDENT.ALL OF THOSE KEYWORDS THEY KEEP THROWING OUT.CONFIDENCE AND PATIENCE.

INFLATION IS HEADED TOWARDS THE2% TARGET ON A SUSTAINED ASIS. THIS IS WHAT THEY WANT TO SEE.I DO NOT THINK A FEW NUMBERS WILL CUT IT. LISA: HOW MUCH ARE YOU GETTING THESENSE THAT SPECIFIC COMPONENTS ARE COMING DOWN WHEN IT COMESTO INFLATION ENOUGH TO BE SUSTAINABLE?DO YOU BELIEVE THIS IS A NEW INFLATIONARY CYCLE THAT MIGHTBE DECEIVING IN THE IDEA IT TRULY HAS BEEN FILLED?– HAS BEEN KILLED? JENNIFER:REMEMBER BACK IN THE OLD DAYS.

WHEN WE JUST LOOKED AT HEADLINEINFLATION AND NOW WE HAVE TO LOOK AT ALL OF THE VARIOUSCOMPONENTS TO MAKE SURE THAT EVERYTHING SHOULD BE COMINGDOWN TO 2%. MOSTLY EVERYTHING HAS TO BEHEADED IN THAT DIRECTION. NOW WE'RE LOOKING AT THINGSLIKE THE SUPER COURT, GOODS AND SERVICES.GOODS INFLATION IS COMING DOWN QUITE QUICKLY.SERVICES IS WHERE THINGS ARE STILL STICKY.YOU STILL THE STRONG U.S. CONSUMER WILLING TO SHELL OUTFOR TRAVEL, FOR CONCERTS, FOR.

GAMBLING.THERE IS STILL A LOT OF STRONG DEMAND FOR SERVICES AND THAT ISKEEPING SERVICES CPI STICKY AND THAT IS WHY THE FED WILL BEPATIENT UNTIL THEY ARE CONFIDENT THINGS ARE HEADED INTHE RIGHT DIRECTION. JONATHAN: THE GAMBLING NUMBERS ARE NOT.YOU SENSE THIS AND THE NEWS CONFERENCE WITH CHAIRMAN POWELL.HE TOLD US WHERE THE SURVEY WAS. THE DATA DOES NEED TO GETBETTER. ULTIMATELY WE ARE SAYING WENEED TO SEE MORE OF THE SAME THING.THIS CHAIRMAN, AND MAYBE SOME.

PEOPLE ON THE COMMITTEE ASWELL, ARE JUST NOT COMFORTABLE THEY HAVE SEEN ENOUGH YET,BECAUSE THEY'RE WORRIED ABOUT WHAT YOU'VE BEEN TALKING ABOUT.THEY START REDUCING INTEREST RATES AND THEY WERE PROBLEMDOWN THE ROAD AND THEY START HIKING AGAIN. LISA:THE PROBLEM IS PEOPLE ARE STILL GETTING HIRED, EARNING REALWAGES, AND SPENDING. WE WILL GET AIRBNB EARNINGSTODAY, WE WILL GET OTHERS. THE SAME KIND OF TRAIN SEEMS TOBE PREVALENT EVERYWHERE. HOW DO YOU GET CONFIDENCE YOUCAN KILL THE INFLATION BEAST.

LOWERING RATES WHEN IT DOES NOTSEEM TO BE ALL THAT RESTRICTIVE? WE HAVE NOT SEEN THE CREDITTIGHTENING YOU WOULD EXPECT GIVEN HOW MUCH THEY'VE RAISEDRATES. JONATHAN: CAN WE TALK ABOUT THE CONSUMERAS WELL? IT IS NOT JUST CPI. IT IS RETAIL SALES.WE HAVE TALKED TO BUT CONSUMER RUNNING ON FUMES.HOW STRONG IS THE CONSUMER NOW? JENNIFER:THE CONSUMER IS STILL IN PRETTY DECENT SHAPE.IT GOES BACK TO THE JOB MARKET. EVEN THOUGH THE JOB MARKET HASCOOLED, WE ARE NOT SEEING JOB.

GAINS OF THE 500,000 FRIDAY.AS LONG AS THERE IS STILL DECENT DEMAND FOR JOBS ORWORKERS COME EVERYONE IS MAKING A DECENT WAGE.THAT IS ENOUGH TO KEEP THE CONSUMER GOING.THEY DO NOT HAVE TO SPEND IT ALL, THEY CAN PUT SOME ASIDEFOR A RAINY DAY. THAT IS OK. WHATEVER YOU'RE MAKING, YOU DONOT HAVE TO BLOW IT ALL RIGHT AWAY. THAT KEEPS THE FUNDAMENTALSUPPORT BELOW THE U.S. ECONOMY GOING.AS LONG AS WE CONTINUE TO RISE, JOB DEMAND IS STILL DECENT,THAT WILL KEEP THE CONSUMER.

MOVING FORWARD. LISA: I AM STRUCK BY THE POLARIZATIONOF THE PEOPLE WE SPEAK TO AND THE NEW PARADIGM.WILL IT BE RE-INFLATIONARY PARADIGM OR WILL IT BE ONEWHERE WE ARE DECEIVED BY THE STRENGTHEN THE ECONOMY?EARLY THIS MORNING WE GOT SMALL BUSINESS OPTIMISM DATA AND ITACTUALLY FELL THE MOST SINCE THE END OF 2022.HERE WE ARE TALKING ABOUT THE RESURGENT DEMAND, THISINCREDIBLE STRENGTH. WHAT IS THE RISK FROM YOURVANTAGE POINT WE ARE WORRIED.

ABOUT THE WRONG THING AND IT ISTHE DECELERATION THAT IS MORE PRESENT? JENNIFER:I AM QUITE WORRIED. WHENEVER I SEE NUMBERSCONTINUING TO BE EXPECTATIONS — LOOK AT THE LAST COUPLE OFREPORTS. OF COURSE I'M ALWAYS THINKINGWHAT ARE WE MISSING, WHAT ARE THE MARKET MISSING.IT ALL GOES BACK DOWN TO THE LABOR MARKET.AT SOME POINT OVER 500 BASIS POINTS OF RATE HIKES ISSTARTING TO HAVE AN IMPACT AND NOT HAVING AS MUCH OF AN IMPACTAS ONE WOULD HAVE IMAGINED.

DURING NORMAL TIMES.THESE ARE NOT NORMAL TIMES. THIS IS WHY WE ARE STEPPING FOROUR FED RATE CUT CALL, NOT UNTIL THE SECOND HALF OF THEYEAR. I DO NOT BELIEVE WE ARE EVER INTHAT MARCH CAMP. I THINK JUNE AND JULY IS THEMOST LIKELY SCENARIO FOR THE RATE CUTS TO START HAPPENING.JONATHAN: IT SEEMS LIKE A LOT OF ECONOMISTS ON WALL STREETCOALESCING AROUND THE SAME MONTH.IT IS GOOD TO HEAR FROM YOU. JENNIFER LEE OF BMO ON THE CPIDATA THAT COMES OUT AND ABOUT.

ONE HOUR AND 36 MINUTES.CPI DATA, 2.9% IS WHAT WE ARE LOOKING FOR, DOWN FROM 3.4%. HEADLINE FOR CORE 3.7 DOWN FROM3.9. MONTH OVER MONTH FIGURE, .2% ISTHE ESTIMATE IN OUR SURVEY. IF YOU TALK ABOUT THE LABORMARKET AND PRICE PRESSURE, ANDREW HOLLENHORST HASSOMETHING TO SAY. “WE CONTINUE TO SEE A STRONGERUNDERLYING TREND OF INFLATION SUCH AS FACTORS AS WAGEINFLATION CONTINUING TO MOVE SIDEWAYS AT 4.5%.”THIS IS WHAT JENNIFER IS.

TALKING ABOUT. LISA:IT COMES DOWN TO THE LABOR MARKET AND THE LABOR MARKET ISSURPRISING TO THE UPSIDE, WHETHER ON NUMBERS WERE WAGEGROWTH, OR WHETHER IT IS SURPRISING TO THE DOWNSIDE INJOBLESS CLAIMS. HERE IS THE DISSIDENTS.YESTERDAY EVERYONE WAS TALKING ABOUT INFLATION RISK IN THE NEWYORK FED PUTS OUT THREE-YEAR INFLATION EXPECTATIONS FROMCONSUMERS. IT FALLS TO THE LOWEST SINCE2013. EVERYONE PILES INTO BONDS. THE RUSSELL 2000 RALLIES.EVERYONE IS WAITING TO COALESCE.

AROUND THAT. JONATHAN:CHRIS VERRONE. WE WILL SEE THE EQUITY MARKETBROUGHT AMOUNT, TAKE A LOOK AT CHINA.WHEN YOU SEE THAT, SENTIMENT IS HIGH. LISA:I WONDER IF THAT IS THE BIAS RIGHT NOW? JONATHAN:IN THE NEXT HOUR, A STACKED LINEUP.THAT IS COMING UP IN THE SECOND HOUR OF “BLOOMBERGSURVEILLANCE.” EQUITY FUTURES -.4% ON THE S&P500. IN THE BOND MARKET, YIELDS 4.1637.I LOOKED AT THE LAST TIME WE.

GOT A CPI PRINT ON JANUARY 11.THE TWO YEAR CLOSED AT 4.24. THE 10 YEAR CLOSED AT 3.96.YIELDS HAVE SHIFTED HIGHER AND THIS EQUITY MARKET IS HIGHEROVER THE SAME PERIOD. LISA: IS POSITIVE FOR THE RIGHTREASON. YIELDS HAVE BEEN HIRED BECAUSETHE GROWTH IS SO GOOD. WE CAN KEEP GOING. JONATHAN:TO SOUND FED UP WITH THIS CONVERSATION ALREADY. LISA:IT IS NOT THAT I'M FED UP. WE WILL NOT GET AN ANSWER.JONATHAN: HOWDY PLAN TO GET THROUGH 2024WHEN IT IS THE MIDDLE OF.

FEBRUARY AND YOU'RE ALREADYSICK OF POLITICS, SICK OF MONETARY POLICY. LISA: IT DOES SEEMS THAT IF IT ISSTEADY AS SHE GOES THE FED WILL CUT RATES THIS YEAR.WE SHOULD BE IN A POSITION WHERE THEY WILL BE CONFIDENT TOCUT. YOU WILL PROBABLY SEE A CUTTINGCYCLE IN MAY. WE WILL SEE AN ECONOMY DOINGWELL BECAUSE OF THE EASY OF FINANCIAL CONDITIONS.INFLATION IS COMING DOWN AND THAT IS THE PERFECT PROGRESSSCENARIO.

THIS IS BLOOMBERG SURVEILLANCEWITH JONATHAN FARRELL, LISA ABRAMOWITZ AND ANN MARIE HERDERAND. JONATHAN:THERE IS A NEW BAR FOR SOME FED OFFICIALS. WHAT THEY WANT TO SEE IS MOREDATA AND BROADENING OUT OF THE DISINFLATION STORY. LISA: THERE IS THIS IDEA THAT IF YOUSEE FACTORS PLAY INTO WHY WE ARE SEEING DISINFLATION ANDCODES THEY WILL FEEL MORE COMFORTABLE.

WHETHER THEY ARE JUST TRYING TOPLACATE SOMETHING OR MOVES THE NEEDLE, IF WE GET THIS DATA ANDSEES SHELTER AND OTHER CAUSES CONTRIBUTING MORE TODISINFLATION. JONATHAN: THE DATA HAS GIVEN US PAUSE. I WAS HOPING WHEN THE ISMPRICES WOULD CLICK HIGHER. LISA: DISINFLATION HAS BEEN DRIVENBY PRODUCTS NOT BY PEOPLE GOING TO BARS AND RESTAURANTS BECAUSEPEOPLE ARE GETTING HIGHER WAGES. UNTIL YOU SEE THAT COMING INMATERIALLY, IS THIS SOMETHING THAT IS A NEW PARADIGM FOR THEPEOPLE ARE GETTING PAID MORE.

AND SPENDING MORE? JONATHAN: I WANTED TURNED TO THE LATESTA WASHINGTON DC, WHEN WE TALK ABOUT PRICE PRESSURE WE NEED TOTALK ABOUT COSBY A SCOPE POLICY. IT IS ANOTHER 95 BILLION BILLFOR FOREIGN AID. ANNMARIE: THIS IS GOING TO UKRAINE,ISRAEL AND TAIWAN BUT BEFORE THEY EVEN TOOK THAT PHOTO THEREWAS A FILIBUSTER ALL NIGHT. WE HEARD FROM SPEAKER JOHNSONWHO THREW COLD WATER ON THIS IDEA IS THAT THE HOUSE IS GOINGTO GO ITS OWN WAY. WHAT YOU SEE NOW AND WHAT WEDISCUSSED WITH AMBASSADOR HALEY.

IS THIS WHERE WITHIN THEREPUBLICAN PARTY WITH DEFENSE HAWKS WHO WON TO SEND THESEWEAPONS TO UKRAINE AND THE ISOLATIONIST APPROACH. JONATHAN:WE ARE JUST GOING THROUGH THE OUTLOOK, A LITTLE BETTER THANANTICIPATED. LISA: PEOPLE ARE STILL BUYING COKE. THE ESTIMATE WAS 5.9 AND IT'S ALITTLE BETTER THAN THAT. WHEN YOU TAKE A LOOK AT THEMIX, NUTRITION, JUICE, DAIRY WERE UP 6% WHILE WATER, COFFEE,TEA. JONATHAN: YOU ALLUDED TO THIS. LISA:IS THIS THE O'S A?.

PEOPLE CARE ABOUT THEIRNUTRITION. JONATHAN: THE STOCK IS BARELY MOVING,POSITIVE 5.2%. EQUITY FUTURES LOOK LIKE THIS,NEGATIVE HERE ON THE S&P BY .5%. EURODOLLAR UP .07. COMING UP WE HAVE JIM SALTER,DAVID BALLIN . U.S. STOCKS ARE TOWARDS ALL-TIMEHIGHS. APOLLO GLOBAL MANAGEMENT POSTEDA RECORD. JIM, IT'S GOOD TO SEE YOU. THANK YOU FOR COMING ON, WELLRECEIVED BY THIS MARKET.

JIM: WE HAVE A BUSINESS AND AN INDUSTRY THAT GETS BETTER EVERYDAY AS THERE ARE MORE RETIREES LOOKING TOWARDS RETIREMENT AND DO YOU HAVE AN OF ALL THE –EVOLVING BANKING SYSTEM. AS AN INDUSTRY, IT'S A SECULARCHANGE. WE HAD A BUSINESS BUT HIT ONALL CYLINDERS AND ALL PARTS OF OUR BUSINESS, GREAT INVESTORPERFORMANCE, AND WE DID SO ON A RISK-ADJUSTED BASIS. JONATHAN: THERE IS A SENTIMENT OUTTHERE, APOLLO IS KILLING IT AND.

THE BANKS ARE STRUGGLING.THEIR LOSS IS YOUR WHEN IS THAT HOW IT WORKS? JIM: IT'S A BRUTALLY COMPETITIVEBUSINESS WEATHER ON THE BANKING OR ASSET MANAGEMENT SIDE. THE COMPETITION FOR MARKETSHARE IS BRUTALLY COMPETITIVE BUT IT IS A GREAT NARRATIVE. THERE IS A MUCH MORE SYMBIOTICRELATIONSHIP THAT EXISTS AND WE ARE A COUNTERPARTY OF THE U.S.INSTITUTIONS. IT'S NOT ON ANY ONETRANSACTION, WHETHER COASTS OF.

THE BROADLY SYNDICATED MARKETERMORE BROADLY. THESE ARE COMPETITIVE WITHINOUR INDUSTRY AND THE BANKS AND THAT WILL NEVER CHANGE. THE FINANCING THAT TAKES PLACE,COUNTERPARTY FINANCING FROM THE LARGE INSTITUTIONS IS CRITICALTO OUR BUSINESS AND WE PROVIDE THEM OPPORTUNITIES ACROSSEQUITY AND DEBT BUSINESSES. LISA:IN HIGH SCHOOL WHEN YOU HAVE TWO FRIENDS THAT ALWAYS TALKABOUT EACH OTHER BEHIND THEIR BACKS BUT THEY ARE POLITEBECAUSE THEY OPERATE IN THE.

SAME CIRCLE.MORGAN STANLEY IS BOLSTERING ITS PRIVATE EQUITY PORTFOLIOAND GOLDMAN SACHS WANTS TO DOUBLE THE SIZE OF ITS CREDITBUSINESS. JIM: WE ARE IN A COMPETITIVE INDUSTRY WITH THEM SMARTESTMINDS BUT AT THE END OF THE DAY IT'S ABOUT YOUR BUSINESS MODELAND HOW YOU RUN YOUR BUSINESS. THERE IS NO DOUBT THERE WILL BEFIRMS THAT WILL START CREDIT BUSINESSES BUT LET'S TAKE ASTEP BACK. PRIVATE CREDIT IS BROADER THANJUST SPONSORED BY OUT.

IT IS A GREAT HEADLINE PRODUCT BUT THAT IS ONE TRILLIONMARKET WHERE PRIVATE CREDIT IS 40 TRILLION.WITH AIRCRAFT FINANCE, SOLAR FINANCE, INVENTORY FINANCE THATIS WHERE WE HAVE A COMPETITIVE TOOL PACKS — BOX. WE HAVE BROUGHT OUR COST OFCAPITAL DOWN. IN YOU ARE IN THE MANAGEMENT ORDISTRESS BUSINESS IN THIS HIGHER RATE ENVIRONMENT PEOPLELIKE TO BUY ANNUITIES. THAT BRINGS SIN A LOT OFLONG-DURATION, LOWER COST.

CAPITAL. LISA:HOW MUCH HAS THE MONEY THAT YOU ARE TALKING ABOUT BEEN THEREASON WE HAVE NOT SEEN THE CREDIT CYCLE PEOPLE WEREEXPECTING? JIM: I THINK WHAT IS GOING ON RIGHTNOW, EQUITY MARKETS WERE UP 20% AND AT THE END OF THE YEAR YOUHAD DEFAULTS APPROACHING 5%. THAT'S A PRETTY UNIQUECHARACTERISTIC. THE STRENGTH OF THIS ECONOMYHAS BEFUDDLED ECONOMIST AND ALL OF YOUR GUEST IT WHEN YOU LOOKAT THE TOP LOTS EVEN WITH THE.

FOLKS THAT HAVE THE INFORMATIONHAVE MISSED THIS. I THINK YOU ARE SEEING SIGNS OFA HARDENING OF ECONOMIC CONDITIONS COMING UP.I THINK THE FED HAS MADE THE RIGHT CHOICE. THEY PUT THEMSELVES IN ANINTERESTING POSITION WHERE THEY CAN COMMUNICATE VOLATILITY WITH A LOT OF WORK LEFT IN THE GUN.IT'S A MUCH MORE RESILIENT ECONOMY. THE U.S.ECONOMY IS THE BULWARK OF THE WESTERN WORLD. JONATHAN:.

THE FEDERAL RESERVE HAS THEABILITY TO RESPOND TO NEGATIVE SHOCKS.OF THE ISSUANCE WE HAVE SEEN SO FAR, THIS BOOM IS SUPPLY ANDFLOOD OF DEMAND IS THAT BECAUSE THE ECONOMY IS STRONG OR ARE WEANTICIPATING LOWER RATES? JIM: THE U.S. CONSUMER HAS PREPAREDTHEMSELVES FOR A HIGHER RATE ENVIRONMENT.CORPORATE BALANCE SHEETS ARE PREPARED WELL AND WHEN THEY SEEFINANCING OPPORTUNITIES DON'T WAIT AROUND FOR PERFECTION ANDTHAT HAS BEEN A GOOD LESSON. THERE HAS BEEN A THOUGHTFULWHEN PEOPLE SEE WHAT IS GOING.

ON THAT THERE HAS BEEN A RUSHAND RISK ON TRADE. THE MARKET HAS BEEN PRICED TOPERFECTION AND EVERY ASSET CLASS WHICH MEANS IT'S A GOODTIME TO ISSUE. FOR US, WE UNDERPERFORM INPERIODS LIKE THIS. WE ARE LOW LEVERED.WE ARE IN A POSITION WHERE IF THERE ARE POCKETS OF VOLATILITYWE ARE WELL-POSITIONED. JONATHAN:YOU WANT TO BE THE LIQUIDITY PROVIDER. JIM: THE STORY THAT HAS NOT BEENSPENT ON IS THE ISSUE OF MARKET.

STRUCTURE THE LACK OF THEABILITIES IN THE IPO MARKET IS FUNDAMENTALLY CHALLENGED. THIS MARKET STRUCTURE ISSUE HASBEEN GOING ON FOR SEVERAL YEARS AND NOW MORE THAN PASSIVE INSCALE WILL HAVE PROFOUND EXPECTATIONS ON HOW PEOPLERAISE CAPITAL. JONATHAN: YOU MENTIONED CREDIT STRESS, IWANT TO ASK YOU ABOUT THAT. ARE YOU SEEING POCKETS OFSTRESS? WHAT ARE YOU SEEING? JIM: IN A VERY BROAD ECONOMY WITHMASSIVE FUNDAMENTAL STRENGTH.

YOU ARE SEEING SITUATIONS WHERECOMPANIES, POOR BUSINESS PLAN OR WAY TOO MUCH THAT WHO HAVENOT RECOVERED FROM COVID. YOU SEE THAT MORE IN THECORPORATE WORLD. AS A CONSUMER THE AVERAGEMORTGAGE IS 3.8. WE ARE NOT SEEING THE SAME PAINAS THEY HAVE IN THE U.K. IN GERMANY. THERE HAS BEEN PRIVATE EQUITYACTIVITY OVER THE PAST 5-7 YEARS. THERE ARE CHALLENGES OUT THERE.JONATHAN:.

JIM ZELTER WITH THIS FOR THENEXT 30, 45 MINUTES. HERE IS YOUR BLOOMBERG BRIEF.DANI: RESIDENCE ARE URGED TO STAYHOME, THEY COULD RECEIVE EIGHT INCHES OF SNOW. 7.3 INCHES WOULD BE THE MOSTSENSE JANUARY 2022. AREAS OF NEW JERSEY,PENNSYLVANIA COULD SEE AS MUCH IS 12 INCHES. CARL ICAHN DISCLOSED A 9.91STAKE BEHIND BLACKROCK AND VANGUARD.

THE STOCK DROPPED 30%.ICAHN SAID THAT HE HAS HAD TALKS WITH MANAGEMENT ABOUT ABOARD SEAT. SHARES OF MANCHESTER UNITED. RADCLIFFE SAID HE WOULDPURCHASE THE STAKE ALLOWING INVESTORS TO SWAP THEIRHOLDINGS FOR $33 A SHARE WHICH IS WELL ABOVE MARKET PRICE.JONATHAN: UP NEXT, INVESTORS ARE LOOKINGAHEAD TO CPI. >> I THINK THAT GROWTH NEWSWILL CONTINUE TO BE GOOD. WE WILL KEEP THE PROSPECT OFRATE CUTS OUT THERE. JONATHAN:.

JONATHAN:INFLATION DATA COMING UP IN JUST A MINUTE.WE ARE -.41% ON THE SMP. 10 YEAR AT 4.15INVESTORS ARE LOOKING AHEAD AT THE CPI. >> I THINK GROWTH WILL CONTINUETO BE GOOD. WE ARE GOING TO KEEP THEPROSPECT OF RATE CUTS OUT THERE AND I THINK WE DO GET 4.5 ONTHE 10 YEAR. THAT FITS A STORY OF BETTERECONOMIC GROWTH AND PUSHING OUT THOSE RATE CUTS. JONATHAN:.

HERE IS THE LATEST, CPI DATAOUT AND JUST ABOUT AN HOUR. THEY ARE HOPING THE HEADLINENUMBER WILL DIP BELOW 3%. SIZE OF ECONOMIC GROWTH ANDRECOVERY ARE SPREADING FASTER THAN ECONOMISTS BELIEVEPOSSIBLE. DAVID JOINS US FOR MORE. IT IS SLOW AND GROW BECOMINGTHE GROW AND GROW? DAVID: WE ARE SEEING NO SLOW DOWN.WE EXPECTED IT IS NOT. THE CONSUMER HAS STAYED HEALTHYWITH INFLATION COMING DOWN WITH REAL INCREASES IN WAGESSTARTING IN NOVEMBER.

HEALTHY CONSUMER BALANCE SHEETSAND THE BIG STORY HAPPENING FOR THE CONSUMER'S IMPORT PRICESARE NEGATIVE. WE ARE IMPORTING AT LESS COSTFROM CHINA AND THAT IS ROLLING THROUGH THE ECONOMY.WHEN YOU LOOK AT THE CONSUMER CONTINUING TO BUY YOU SEECONSUMER CONFIDENCE IN THE MICHIGAN INDEX.ALL OF THIS IS GOING AGAINST THE FACT THAT THE FED HAS KEPT RATES HIGHER FOR LONGER ANDTHAT IS THE QUICK STORY. THINGS ARE GOING BETTER THAN WETHOUGHT. JONATHAN:.

CONSENSUS WAS BULLISH AND WEHAVE PUSHED OUT THOSE RATE BECAUSE AND YET WE ARE STILLBULLISH. HAVE YOU CHANGED YOUR MARKETCALL? OUR MARKET CALL IS MORE BULLISHIN TERMS OF WHAT THE SNB COULD DO FOR THE YEAR. — S&P COULD DO FOR THE YEAR. I THINK WHAT WE ARE SEEING ISTHE MARKET IS TELLING US ABOUT WHAT THE ECONOMY IS LIKELY TODO OVER THE COURSE OF THE NEXT SIX MONTHS WHICH WILL TURN OUTAND EARNINGS.

WE THOUGHT IT WOULD BE UP 5%BUT THEY COULD BE UP SIX, 7% WHICH IS CONSIDERABLY MORE.IT SUPPORTS HIGHER RATES FOR LONGER. IS PAUL SAID BEAR BECOMING BOWLAND THEN BOWL? AT WHAT POINT DOES IT LEAD TO ARESURGENCE IN INFLATION? DAVID: THAT IS WHAT PEOPLE AREWORRIED ABOUT THAT IS LEAST LIKELY TO OCCUR. INFLATION IS GOING TO STAYMODERATED. THE FACT THAT WE HAVEMATERIALLY INCREASING LABOR.

COSTS IN THE ECONOMY HASNORMALIZED AFTER COVID. THERE IS NO REASON TO BELIEVEINFLATION WILL BE A BIGGER PROBLEM. LISA: YOUR COLLEAGUE JASON WILLIAMSWROTE THE MARKET SHOULD PRICE AND RISK OF FUTURE HIKES.THIS CYCLE COULD BE AKIN TO THE EASING CYCLE THAT LED TO MORERATE HIKES. ARE YOU BAKING THAT INTOEXPECTATION? IT IS A VERY CONFUSING MOMENT.DAVID: I THINK THE FED IS SIGNALINGTO US THEY WILL BE GRADED ABOUT.

NOT LOWERING RATES QUICKLY BUTTHERE IS NO INDICATION THAT THERE'D BE ANY RECENT RAISERATES. THE BIGGER STORY IS GOING TO BEEQUITIES IN THE FACT THAT FEWER THAN HALF OF THE EQUITY SECTORSHAD POSITIVE EARNINGS OF THIS YEAR WE THINK IT WILL BE 90% ORMORE IN THE EQUITY STORY INABILITY FOR EQUITIES TO GOHIGHER AS EARNINGS BECOME CLEAR IS WHAT WE HAVE TO FOCUS ON ANDTHERE ARE FEWER VALUE PARTS OF OUR MARKET, INDICATION THATMARKETS ARE ANTICIPATING ALL WE ARE TALKING ABOUT. JONATHAN:.

DAVID BALIN WITH US THERE. NVIDIA AND MICROSOFT, IS THEFAKE JUST GOING TO GET BIGGER? — IS THE BIG JUST GOING TO GETBIGGER? JIM:THE IMPACT OF THE MAGNIFICENT SEVEN IS BROADER — HIGHER THANTHE BROAD INDEX IN THE MANNER IN WHICH CAPITAL FORMATION HAS HAPPENED HAS CHANGED BUT THE MAGNIFICENT SEVEN HAD HAD AMAGNIFICENT PERFORMANCE. IF YOU ARE NOT PICKING THOSESTOCKS HE WILL UNDERPERFORM.

LISA: BIG COMPANIES DO BETTER WITHBETTER PERFORMING CREDIT AND THAT IS A SWEET SPOT FOR YOU? YOU ARE CONFIDENT THEY WILLSURVIVE IN A DIFFERENT WAY THAN SMALLER BUSINESSES THAT DON'THAVE THE SAME STRENGTH? JIM: THAT IS THE KEY TO OUR VIEW OFTHE MARKETS. I HAVE BEEN IN HIGH YIELD SINCE THE MID 80'S THIS SINGLE BESINGLE ISSUE OR HIGH-YIELD BONDS , THOSE ARE DINOSAURS OF.

THE PAST. FOR OUR BUSINESS ATAPOLLO, WE ARE FOCUSING A BIG PORTION OF OUR ORIGINATION ONINVESTMENT GRADE QUALITY RISK. WHEN YOU WERE CONCERNED ABOUTAN ECONOMIC CYCLE THE PEOPLE OF A CONCERNED ABOUT SINCE 2016YOU WANTED TO GO HIGHER AND HIGHER IN CREDIT QUALITY.LARGER COMPANIES WITH LESS COMMODITIES.WE WENT THROUGH 2016 AND LEARNED A LOT OF LESSONS FROMINVESTING WITH ENERGY AND WE WILL NOT DO THAT AGAIN.JONATHAN: WE WILL TEASE THAT OUT IN JUSTA MOMENT, THE AI RALLY.

CONTINUES. THAT CONVERSATION IS UP NEXT,THIS IS BLOOMBERG. JONATHAN:LIVE FROM NEW YORK, 60 MINUTES AWAY FROM THAT ECONOMIC DATA. WE ARE ONLY DOWN ABOUT .43% ONTHE SMP. RUSSELL IS -.4. YIELDS ARE HIGHER OFF THE BACKOF STRONGER-THAN-EXPECTED ECONOMIC DATA. 30 YEAR FOUR POINT 36, 10 YEARAT 4.16. JOBLESS CLAIMS WERE LOWER THANANTICIPATED. LISA:.

PICK YOUR DATA POINT,EVERYTHING IS PERFORMING BETTER THAN EXPECTED. CITIGROUP SURPRISING, THE KEY QUESTION IS WHEN DOES THISCREATE ECONOMIC PROBLEMS? JONATHAN: AND NOW THERE EVEN MORE BULLISH?LISA: THE BULLS ARE GETTING BULLER?JONATHAN: THAT'S HOW YOU WANT TO FRAME IT.LISA: I'M PLAYING AROUND WITH IT.JONATHAN:.

WHO CUTS FIRST ECB, FEDERALRESERVE. THE EURO POSITIVE 1.07 AGAINSTTHE DOLLAR. CPI DATA IS 60 MINUTES AWAY FORECASTING AN ANNUAL BREEDBELOW 3% SINCE MARCH 2021. BLOOMBERG ECONOMICS EXPECTINGTO REPORT LESS DISINFLATION AND COURT CODES. LISA: THE BROADENING OUT ANDCONFIDENCE THAT THIS KID CAN CONTINUE — THIS CAN CONTINUE. HOW MUCH IS HEALTH CARE, RENT,HEALTH CARE? JONATHAN:.

AND THEN IT GETS PERSONALQUICKLY. THE FED WILL TELL YOU WHAT ITTHINKS ABOUT IT. GOOLSBY WILL BE SPEAKING ANDTHEN TOMORROW BOSTIC, DAILY, PLENTY OF FED OFFICIALS AREHERE TO RESPOND TO THIS. LISA: THE KEY QUESTION IS, WHAT HAVEWE LEARNED? JONATHAN: VERY LITTLE.THERE WAS A TAKE AWAY FROM THE LAST NEWS CONFERENCE. THAT CHAIRMAN POWELL IS TRYINGTO HERD CATS. BUT THEY ALL SEEM LIKE THEY'REON THE SAME PAGE TO ME. LISA:.

WHAT IS THE THRESHOLD THATWOULD ALLOW THEM TO CUT RATES? MAYBE THESE BROAD CONCEPTS LIKECONFIDENCE AND BROADENING OUT BECOME SUBJECTIVE AND MOMENTARYPAUSES BUT THIS IS A GOOD POINT. JONATHAN: WERE HAVING A CONVERSATIONABOUT CALVING AND A COUPLE OF MONTHS.MAYBE JUNE, BUT MAYBE NOT. PRESIDENT BIDEN PUSHING FOR ASIX WEEK PAUSE IN THE FIGHTING BETWEEN ISRAEL AND HAMAS MAKINGHIS CASE TO THE KING OF JORDAN. THE SENATE PASSING 95 BILLIONOF AID. ANNMARIE:.

FOR NATIONAL SECURITY ISSUESAROUND THE WORLD. WHY THE — WHILE THEY FEEL THISIS THE RIGHT DIRECTION BUT THIS IS DEAD ON ARRIVAL IN THE HOUSE OF REPRESENTATIVES AND THEMIKE JOHNSON SAYING THAT'S FOR THE SENATE.BUT HE HAS BILL BURNS IN EGYPT WITH THE HEAD OF MOSSAD.JONATHAN: SUPER BOWL SETTING A NEWRECORD FOR TELEVISION VIEWERSHIP. 123 MILLION PEOPLE TUNED IN, A7% INCREASE WHICH INCLUDES THE.

NETWORK AND THE STREAMINGDEVICE PARAMOUNT PLUS DELIVERING THE MOST STREAMEDSUPER BOWL EVER. LISA: I DID SOME FIELD RESEARCH ANDTHERE WERE A LOT OF HATE WATCHERS. THEY HATE THAT TAYLOR SWIFT.I DON'T WANT TO GET HATE MAIL BECAUSE THE HATERS WANT TO HATE.JONATHAN: BUT THE NFL IS DOMINATING ANDFIGURE. LISA: THAT'S WHY YOU ARE HAVING ARUSH ON FIVE BUNDLES. ANNMARIE: IMAGINE IF THERE WAS ANOCCASION WHERE YOU CAN SPEAK.

223 REALLY — 120 3 MILLIONVIEWERS. JONATHAN: WHY DID HE SKIP IT? ANNMARIE:THERE ARE QUESTIONS COMING OUT ABOUT THE PRESIDENT'S ACUITYAND THEY FELT THIS WAS THE WRONG MESSAGE. HE WAS OUT SPEAKING ABOUT THELABOR MARKET AND THE INFLATION IS CORPORATE GREED, SHRINKINFLATION. JONATHAN: IF YOU COULD WEAR OF BASEBALLCAP WITH APOLLO AUDIT AND HANG OUT WITH TRAVIS KELCE WITH THATWORK? JIM: IT IS A FIRST FOR RAY INTOTHINKING ABOUT CONNECTING OUR.

BRAND WITH A BROADER AUDIENCE.FOR US, WE HAVE A 34 YEAR TRACK RECORD OF PEOPLE THINK OF USAND WHAT WE USED TO BE AS A PE FIRM AND WE ARE A BROADERPLATFORM. JONATHAN: LISA IS LAUGHING BECAUSE IWENT FROM FOOTBALL TO GOLF. JIM: I AM A BUFFALO BILLS FAN SO ITWAS A TOUGH GAME FOR ME TO WATCH. JONATHAN: CAN WE TALK ABOUT HOW 401(K)SARE GOING TO CHANGE AS WELL? HOW WAS THIS ALL GOING TOCHANGE IN THE WEEKS, MONTHS, YEARS TO COME? JIM:.

MARK POINTED OUT THE IRONY OFSAVING FOR 20, 30 YEARS BECAUSE OF THE SYSTEMATIC STRUCTUREDEMANDING LIQUIDITY AND THAT LIQUID IS SAFE AND ILLIQUID ISRISKY BUT THAT PARADIGM NEEDS TO BE CHALLENGED. WE ARE TALKING ABOUT MARKETSTRUCTURE AND PASSIVE AND UNDERLYING PERFORMANCE OF AVARIETY OF ILLIQUID ALTERNATIVES HAVE PERFORMED INA ROBUST MANNER ACROSS SEVERAL CYCLES. THE SO-CALLED ENDOWMENT MODELHAS TAKEN ADVANTAGE OF THE.

LIQUIDITY STRUCTURE THEY DON'THAVE TO LIVE BY SO IF YOU HAVE A BROAD D.C.MARKET WITH LONG-TERM OBJECTIVES OF RETIREMENT INCOMEAND SAFETY, WHY ARE WE EXPOSING THEM TO LIQUID, VOLATILEASPECTS? LISA: THERE IS A CONCERN THAT IF YOUHAVE THE ABILITY TO WITHDRAW AND INVESTING IN LONG-TERMINVESTMENT IT CREATES A POTENTIAL FOR A RUN.IF THERE IS A TRIGGER AND PEOPLE WITHDRAW THEIR CASH ITCAN CREATE A SPIRAL? JIM: IF YOU'RE ENDED D.C.PLAN YOU ARE IN DAILY LIQUIDITY.

FUNDS.THAT LIQUIDITY DRAIN IS ALREADY IN THE MARKETS. BUT WE HAVE BEEN CAREFUL NOT TOOFFER DAILY LIQUIDITY PRODUCTS BECAUSE WE KNOW WHAT I GET INTOTHAT ASSET LIABILITY MISMATCH. THE REASON ANNUITIES HAVE DONEWELL IS BECAUSE THERE IS THE LONGER DURATION OF THOSEVEHICLES TO BE ABLE TO REINVEST VERSUS A SAVINGS ACCOUNT THATWE SAW WITH SVB. LISA: IN AN ENVIRONMENT WHERE EVERYONE WANTS EXPOSURE TOPRIVATE ASSETS THAT THERE ARE.

BAD ACTORS THAT COULD CREATEFOR SELLING? JIM: YOU ALWAYS HAVE TO UNDERSTANDWHAT THE WEAKEST COMPETITOR MAY DO.BUT IN MY CAREER THE ONE THAT STICKS OUT TO ME IS THE U.K. PENSIONS WITH THE LDI CRISIS,THOSE ARE LONG-DURATION INVESTORS WHICH HAD TO SELL ALLOF THEIR LIABILITY. I THINK IT IS INTERESTING THATALL OF THE FOLKS HAVE NOT GONE INTO A DAILY LIQUIDITY PRODUCT. IF YOU ARE A PROVIDER OF THOSEHOW YOU GO DOWN THAT PATH BUT.

WE ARE FOCUSED WITH THEDISCIPLINE OF MAKING SURE WE NEVER GET PULLED AWAY FROM THETABLE ON A MANDATE. JONATHAN: I JUST WANT MY 401(K) WITHARM, WHICH HAS DOUBLED IN THREE DAYS.THE WINNERS OF THE YEAR, NVIDIA AND META OVERTAKING THE MARKETVALUE OF AMAZON BRIEFLY. HAVE YOU CALLED THIS A FRENZYYET? MANDEEP: ALL OF THE STOCK MOVES ARE NOTVALIDATED BY EARNINGS SURVEILLANCE.YOU WANT TO SEE ESTIMATES CATCH UP AND WHEN THERE IS A 90% MOVETHAT TELLS YOU THERE IS A LOT.

YOU ARE PAYING OUT FOR FUTUREEARNINGS. WHO KNOWS WHAT THE NORMALIZEDLEVEL OF EARNINGS IS. WITH CHIPS, THE SUPPLY TENDS TO CATCH UP, THERE IS THAT SUPPLY COMPONENT EVERY R&D RESOURCE ISDEVELOPING SHIP TO TRAIN MODELS. YOU ARE PAYING FOR 20 YEARSFORWARD IN TERMS OF EARNINGS. LISA: WHO IS BEHIND THIS KIND OFMOVE? RETAIL INVESTORS WHO WANT TOGET AHEAD OR FUND MANAGERS WHO HAVE BEEN CAUGHT OFF SIDES?.

BOWL BECOMES FULL — BULLBECOMES BULL. MANDEEP:THERE IS A FEAR OF MISSING OUT BUT IT HASN'T TRANSLATED INTOREAL REVENUES. NVIDIA IS SHOWING LATERDATA CENTER GROWTH. WITH ALL THE OTHERS, WHERE ARETHE REAL REVENUES AND HOW LONG WILL IT TAKE FOR THEM TO SHOWUP IN THE NUMBERS? EVERYONE IS CHANGING THAT.THERE IS A REAL KABBALIST WITH THE FED FUNDS STOCK COMING DOWN — THERE IS A REALKABBCATALYST. JONATHAN:.

THE NUMBERS FROM NVIDIA ARE AWEEK FROM TOMORROW. JIM: THEY HAVE TO BE THAT THE RATESBECAUSE THEY HAVE SET EXPECTATIONS LIKE THAT FOR THEPAST THREE ORDERS. IF YOU'RE INVESTING IN ALONG-DURATION ASSET, HOW LONG CAN YOU HOLD THIS FOR IN THEMARKET IS NOT THINKING LIKE THAT. JONATHAN: HERE IS YOUR BLOOMBERG DEBRIEFWITH DANNY BERGER. DANI: THE LATEST RALLY HAS BEENDRIVEN BY THE APPROVAL OF THE APPROVAL OF A SPOTS ETF.

IT REMAINS 19,000 BELOW ITSALL-TIME HIGH. U.S. SENATE APPROVED A 95 BILLIONDOLLAR BILL FOR ASSISTANCE BUT NOW THE LEGISLATION FACES AND ABATTLE IN THE HOUSE. SENATORS PASSED IT THIS MORNINGAND REPUBLICAN LEADERS IN THE HOUSE SAY PRESIDENT BIDEN NEEDSTO TAKE ACTION AGAINST BORDER IMMIGRATION FIRST. TOM SWAZI ISA RACE ON BIDENS POLICIES. JONATHAN:WE ALWAYS SAY THIS, TURN OUT SO IMPORTANT.WHO IS IT MORE IMPORTANT FOR US? ANNMARIE:IF YOU LOOK AT THE MAKEUP OF.

THIS DISTRICT THERE ARE SO MANYVOTERS WHO ARE NOT DECIDED ENDED BUSINESS SWING DISTRICT.THAT IS WHY EVERYONE IS FOCUSED ON IT.THAT'S WHY EVERYONE IS FOCUSED ON THE SNOW. JONATHAN:TURNOUT, I GET IT. >> THE REASON PEOPLE SHOULDCARE ABOUT UKRAINE IS THAT IT IS PRO-AMERICAN COUNTRY BUTPUTIN SAID THAT ONCE HE TAKES UKRAINE THE BALTICS ARE NEXT.JONATHAN: THAT CONVERSATION THIS NEXT,THIS IS LIMBURG. JONATHAN:CPI IS 42 MINUTES AWAY.

SMP IS -.4%. 10 YEAR AT 4.15. THEY ARE MAKING THE CASE FORAID TO UKRAINE. >> OUR WHOLE GOAL IS TO PREVENTWAR. IF YOU LOOK AT RUSSIA RIGHT NOWTHE REASON PEOPLE SHOULD CARE ABOUT UKRAINE IS CITED AS APRO-AMERICAN COUNTRY BUT LOOK AT WHAT PUTIN SAID, ONCE HETAKES UKRAINE POLAND AND THE BALKANS ARE NEXT AND THAT PUTSTHE U.S. THAT WERE. JONATHAN: NIKKI HALEY SAYING IT'S ONLY AMATTER OF TIME BEFORE RUSSIA INVADES THE NATO TERRITORY.

THE SENATE PASSING IN A BILLSETTING UP A SHOW DOWN THE HOUSE. LET'S TALK ABOUT THE RESPONSEOF THE COMMENTS FROM PRESIDENT TRUMP WITH THE NATO SECRETARYGENERAL SAYING TRUMP IS IRRESPONSIBLE AND DANGEROUS.TO WHAT EXTENT UNDERMINES THE DEFENSE CLAUSE OF NATO? >> IT CREATES THE UNCERTAINTYABOUT WHERE AMERICA'S COMMITMENT TO NATO ANDTRANSATLANTIC SECURITY IN THIS RUN-UP TO THE ELECTION AND ITIS NOT HELPED BY THE STRUGGLE.

TO GET THE FOREIGN AID PACKAGETHROUGH THAT HOUSE. THE ANTICS SURROUNDING THATALONGSIDE T DONALD TRUMP'S COMMENTS ABSENT EUROPEANLEADERS . SOME PEOPLE HAVE TURNED THISINTO A CONVERSATION ABOUT PUSHING NATO MEMBERS TO GET UPSO THAT 2% OF SPENDING ON DEFENSE. THAT IS AN ONGOING CONCERNSINCE 2014 BUT THE BROADER CONCERN IS THAT WE HAVE ACANDIDATE LIKELY TO BE THE REPUBLICAN CANDIDATE SAYING HEDOES NOT CARE WHAT RUSSIA DOES.

TOO AMERICA'S CLOSEST ALLIES. IT IS DANGEROUS AND UNSETTLINGAT THE LEASE. ANNMARIE: BUT HAVEN'T THEY HEARD THISBEFORE PUBLICLY AND BEHIND CLOSED DOORS AND VIEW IT ASTRUMP USING LEVERAGE TO FORCE EUROPEAN ALLIES STATED THEIR 2%TARGET? >> NOBODY IS CERTAIN WHAT COMESNEXT IF DONALD TRUMP HITS THE WHITE HOUSE. THERE IS A CONCERN THAT DONALDTRUMP WAS A MAN WHO DID NOT EXPECT TO BE PRESIDENT WHO HAVE.

A LOT OF IDEAS AND BELIEFS ANDSCRAMBLING BUT AS WE LOOK AHEAD TO WHAT HE WOULD DO IN THE 900PAGE DOCUMENT PROJECT 2025 THAT HERITAGE HAS PUT OUT WHICHINCLUDE STATEMENTS ON FOREIGN POLICY. THIS IS A PRESIDENT DESPITE THEFACT THAT REPORT DOES NOT ALIGN WITH DONALD TRUMP IT IS CLEAR,HE HAS A MUCH MORE SERIOUS INTENTION AND PLAN IF YOU WERETO RETURN. HE CREATED UNCERTAINTY BUTWORKING TO BE REELECTED WE WOULD BE LOOKING AT A DIFFERENTPRESIDENT FROM 2016-2020.

ANNMARIE:IT LOOKS LIKE HE IS PUTTING PRESSURE ON REPUBLICANS TOREMOVE AID FROM UKRAINE. IT IS DEAD ON ARRIVAL IN THEHOUSE. WHERE DO YOU SEE THE U.S. ASSISTANCE TO UKRAINE THIS YEAR?THIS IS JUST NOT GET DONE? LESLIE:WHAT WE KNOW AS WE SPEAK TO MEMBERS OF CONGRESS IS THAT THERE IS A MAJORITY, A SILENTMAJORITY OF MEMBERS WHO WOULD LIKE TO SEE THIS DEFENSESUPPORT CONTINUE FOR UKRAINE BUT THE RUPTURE WITHIN THEPARTY IS EXTRAORDINARY.

SENATOR GRAHAM WHO TRAVELS TOMUNICH SECURITY CRISIS SAID HE WOULD GO TO THE BORDER ANDMITCH MCCONNELL STANDING UP FOR UKRAINE. WITH PRESIDENT TRUMP LURKING INTHE BACKGROUND PUTTING THE EMPHASIS ON BORDER SECURITY ANDNOT WANTING TO SEE A DEAL AND PLAYED THE ROLE OF DISRUPTORAROUND SOMETHING THAT IS VERY SERIOUS. IT IS REALLY TURNING INTO ASHARP POINT FOR THE REPUBLICAN PARTY.WILL THEY BE ABLE TO GET THE.

SUPPORT THROUGH FOR UKRAINE? I STILL BELIEVE THAT THEY WILLBUT IT IS HARD TO MAP OUT. WE NEED CLEVER PEOPLE TO FIGUREOUT HOW THAT WILL HAPPEN. JONATHAN: IT IS A STRUGGLE. LESLIE, WE APPRECIATE YOU BEINGHERE. JIM, YOU HAVE ALLUDED TO HOWMUCH FINANCE HAS CHANGED IN THE PAST 25 YEARS. CAN YOU WALK US THROUGH WHATTHIS WILL LOOK LIKE IN THE NEXT 10?.

JIM: THE WHOLE CONCEPT OF OPENARCHITECTURE, WE WERE VERY MUCH DEFINED IN THE TAILWINDS OF THELAST 30-40 YEARS. GLOBALIZATION, TECHNOLOGY,LOWER RATES. THERE WAS MASSIVE GROWTH IN THEGLOBAL GROWTH MARKETS. THE MONETARY POLICY HAD AMASSIVE IMPACT. NOW WE ARE GETTING TO A LEVELSIDE OF THE FUTURE. THE LARGEST DOMINANT PLAYERSAND CAPITAL FORMATION, FIXED INCOME, EQUITY, BANKS WILL PLAY.

ON A GLOBAL STAGE AND AN OPENARCHITECTURE MANNER. PEOPLE WILL PARTNER WITH FOLKSENDED OPENING UP OF HOW PEOPLE THINK ABOUT ALTERNATIVES INRETIREMENT SAVINGS. YOU SEE WHAT IS HAPPENING INCANADA, AUSTRALIA AND MEXICO. IT WILL BE LONGER-TERMRETIREMENT SAVINGS BUT WITH A LOT MORE OPEN ARCHITECTURE.LISA: WHO WILL YOUR BIGGEST COMPETITOR B? LESLIE: A COMBINATION OF EXISTINGCOMPETITORS TODAY. JONATHAN: HE IS NOT GOING TO NAME THEM.LISA:.

I JUST WANT TO KNOW IS THATBANKS, ASSET MANAGERS, TECH COMPANIES? JIM: PEOPLE TALK ABOUT TRANSACTIONSOR COMPETITORS. YOU HAVE TO HAVE AN ADVANTAGEOF THE PRODUCT YOU'RE DELIVERING.YOU CAN HAVE GREAT HEADLINES AND IDEAS BUT YOU HAVE TODELIVER PRODUCT. JONATHAN: WE JUST WANTS A MEDIA DRAMA.JIM: I'M HERE TO INVEST. JONATHAN: >> THE INFLATION PROBLEM IS NOTGOING AWAY.

IT WILL CONTINUE TO CREATE MOREAND MORE RISK OF FINANCIAL STABILITY ISSUES DOWN THE ROAD. >> I SEE THIS THAT COULDPERHAPS JEOPARDIZE THIS INFLATION. >> EVERY SINGLE INVESTOR ISPRICING IN A SOFT LANDING WHICH GETS ME QUITE NERVOUS. >> WE NEED LESS DOVISH DATA ANDI THINK THAT WOULD BE ENOUGH TO SEND SOME PAIN ACROSS THE ASSETCLASSES. >> IF WE WERE TO GET AN UPSIDESURPRISE AND CPI, FOLKS MIGHT.

SAY, IS THIS THING OVERHEATING? >> THIS IS BLOOMBERGSURVEILLANCE. JONATHAN: LIVE FROM NEW YORK CITY THISMORNING, GOOD MORNING, GOOD MORNING.THE THIRD HOUR OF BLOOMBERG SURVEILLANCE BEGINS NOW. 30 MINUTES AWAY FROM THE CPIREPORT IN AMERICAN WE ARE LOOKING FOR A TO HANDLE ONHEADLINE INFLATION. LISA: MY TAKE AWAY IS THINGS ARE –PEOPLE ARE LOOKING FOR THIS TO BE MORE BULLISH.IF YOU GET A DOWNSIDE SURPRISE,.

WATCH OUT.IT WILL BE A RIPROARING RALLY BECAUSE THAT SEEMS TO BE THETONE WE'RE HEARING FROM EVERYBODY. JONATHAN:WHAT ARE WE LOOKING FOR TODAY? IS IT IN-LINE OR MORE OF THESAME? LISA: IT DEPENDS HOW PEOPLE AREFEELING BUT WE WILL BE DEALING WITH POTENTIALLY THE LOWESTINFLATION RATE GOING BACK TO EARLY 2021 AT A TIME WHENPEOPLE ARE STARTING TO SNIFF OUT MAYBE A BROADENING OUT,MAYBE NOT, I DON'T KNOW, IT DEPENDS ON YOUR BIAS. ANNMARIE:IT DEPENDS WHAT'S PLAYING OUT.

AT THE WHITE HOUSE.THEY CONTINUOUSLY TOUT THINGS LIKE THE MICHIGAN SURVEY ANDPEOPLE START TO FEEL BETTER ABOUT THE ECONOMY.THIS IS THE LAST HURDLE WHEN IT COMES TO INFLATION AND THEYWANT TO MAKE SURE THAT PEOPLE ARE FEELING BETTER ABOUTPURCHASING POWER BECAUSE THE JOBS MARKET, THE PRESIDENT WILLREMIND YOU TODAY WHEN HE MAKES HIS INFLATION STATEMENT, HASUNEMPLOYMENT UNDER 4% FOR TWO YEARS BUT CAN THEY GET OVER THEFINAL BUMP? JONATHAN: 4% IS WHERE THE 10 YEAR YIELDWAS ON THE LAST INFLATION PRINT.

WE ARE NORTH OF 4% RIGHT NOW ONTHE 10 YEAR. THE S&P 500 IS NEGATIVE BY 0.4%.THAT'S THE PRICE ACTION SO LET'S GET YOU THE WEATHERUPDATE FOR THE TRI-STATE AREA IN 10 MINUTES TIME. COMING UP THROUGH THE HOUR,HARRIS ASSOCIATES LOOKING AHEAD TO CPI THEN CONCENTRATION RISKIN THE EQUITY MARKET AND TODAY'S INFLATION PRINT ANDWHAT IT MEANS FOR THE MARKETS. THE TOP STORY IS COUNTING DOWNTO U.S. CPI, THE INFLATION REPORTCOMING IN LESS THAN 30 MINUTES.

THE HEADLINE NUMBER COULD DROPBELOW 3% FOR THE FIRST TIME SINCE 2021.EQUITY MARKETS ARE AT AN ALL-TIME HIGH IN THE HOPES THATMAYBE THIS RALLY CAN BROADEN BE THE MAGNIFICENT SEVEN TO THINGSOUTSIDE THE U.S. AND EUROPE AND PERHAPS EVENASIA. DAVID HARRIS JOINS US RIGHT NOW.CAN WE TALK ABOUT THE OPPORTUNITY BE ON THEMAGNIFICENT SEVEN INTO EUROPE AND ELSEWHERE? >> ESPECIALLY FOR INVESTORSLIKE OURSELVES, WE FOCUS ON.

COMPANY SPECIFIC FACTORS,VALUATION METRICS WHICH IS LOW PRICE, I QUALITY. IT'S A REALLY GOOD SET OFOPPORTUNITIES OUTSIDE THE UNITED STATES.IT'S PARTICULARLY IN EUROPE WHERE IN ESSENCE, YOU CAN FINDHIGH-QUALITY IS IS, 12 TIMES EARNINGS, SOMETIMES EIGHT TIMESEARNINGS. IT'S YIELDING MORE THAN THEPRICE RATIOS, GENERATING LOTS OF CASH, EXCESS CASH ON BALANCESHEETS, PRE-CASH FLOW YIELDS ARE LOW DOUBLE DIGITS.THESE VALUATION METRICS FOR US.

ARE JUST HAPPY HUNTING GROUNDS.JONATHAN: NOT JUST YOU BUT I'M GOINGTHROUGH SOME NAMES WHERE THERE IS A MASSIVE DEAL OVER THE LAST12 MONTHS. LUXURY PLAYERS, CHIPS, WE'VESEEN BIG MOVES IN THESE MARKETS. THE LIKES OF THE DAX AND THESTOXX 50 HAD MOVES LAST YEAR BUT NOT AS GOOD AS THE NASDAQ100. WHAT ARE THE KIND OF COMPANIESYOU ARE FOCUSED ON? >> HEADLINE GRABBING NAMES AREBLINDING INVESTORS FROM WHAT'S BEEN BENEATH THOSE NAMES.

TAKE COMPANIES IN EUROPE, THEFINANCIAL SECTOR, MAJOR FINANCIAL INSTITUTIONS LIKE BNPPARIBAS AND FRANCE. THESE ARE COMPANIES THATLITERALLY TRADE AT SEVEN TIMES EARNINGS AND THE YIELD IS AMOST 10% AND HAVE EXCESS CASH AND ARE BUYING BACK THEIRSHARES AT AN AGGRESSIVE AMOUNT AND EVERYONE KIND OF FORGETSABOUT THESE BECAUSE THEY ARE BEING SHIELDED OR BLINDED BYTHE THEME STOCKS LIKE THAT GOP ONES, THE SEMICONDUCTORCOMPANIES. INDUSTRIALS ARE THE SAME THINGWHEN YOU LOOK AT THE GERMAN.

PREMIUM AUTOMAKERS, BMW,MERCEDES-BENZ, THEY TRADE AT ABOUT FOUR OR FIVE TIMESEARNINGS AND THE YIELD IS ALMOST 10%.THEY HAVE SO MUCH EXCESS CASH ON THEIR BALANCE SHEETS THATTHEY ARE BUYING BACK SHARES AS WELL. THESE ARE THE TYPES OFBUSINESSES NO ONE SEEMS INTERESTED IN.NO ONE IS FOCUSED ON CASH FLOW AND VALUATIONS WHICH TO USPROVIDES AN OPPORTUNITY. EVENTUALLY, WE WILL COME DOWNTO EARTH AND WE WILL LOOK AT WHAT MAKES A BUSINESS VALUABLEAND THAT'S THE CASH RICH IT.

GENERATES. LISA: PEOPLE START — STOP BY LINE– BUYINGARM. I WANT TO GO TO BNP PARIBAS.THERE WASN'T ISSUE WITH CREDIT SUISSE AND I KNOW THAT WAS ONESTOCK YOU GOT FULLY OUT OF AFTER BEING A HEAVY INVESTORLAST MARCH. WHAT DID YOU LEARN FROM THATEPISODE? HOW DOES IT COLOR YOUR INVESTMENT IN EUROPEAN BANKSTOCKS TODAY? >> IN ANY BANK STOCKS, YOU HAVETO BE ABLE TO PRICE UNCERTAINTY AND SOME OF THEIR BUSINESSES.YOU DON'T HAVE CLEAR.

TRANSPARENCY INTO THE ASSETS OFEVERY SINGLE BANK. WHAT YOU HAVE TO RELY UPON ISTHE ECONOMY AND THE REPUTATION OF THE QUALITY OF THEMANAGEMENT TEAM. WHAT WE GOT ONE WITH CREDITSUISSE WAS WE BELIEVED AT SOME POINT THEY WOULD BE ABLE TOTURN AROUND THEIR INVESTMENT BANK.THE OTHER THREE AREAS OF THE BUSINESS DID JUST FINE THROUGHTHE CYCLE, THE PRIVATE BANK, THE ASSET MANAGEMENT, THEUNIVERSAL BANK. ALL OF THE STRENGTHS IN THOSETHREE BUSINESSES WERE BLINDED.

BY THE INEPTITUDE OF THEINVESTMENT BANK. OUR BELIEF WAS THAT IF THEYCOULD TURN THAT AROUND, IF THEY COULD FIX THAT, THE OTHER THREEBUSINESSES THEN, THE LIGHT WOULD SHINE ON THE QUALITY OFTHE OTHER THREE BUSINESSES. WITH A SITUATION LIKE BNPPARIBAS, WE DON'T HAVE ANY NEED FOR A TURNAROUND IN ANY OFTHEIR BUSINESSES. THIS HAS BEEN HISTORICALLYEXTREMELY WELL-RUN COMPANY, GOOD CULTURE OF RISK, VERY GOODAT GROWING BOOK VALUE OVER THE LAST 10 YEARS AT OVER SEVEN OR8% PER YEAR AND TODAY THE.

COMPANY TRADES AT 2/3 BOOKVALUE AND IT YIELDS WHEN YOU ADD IN THE STOCK BUYBACK, ITADDS WELL INTO THE DOUBLE DIGITS.WHAT YOU HAVE TO BE CAREFUL OF AND HOPE THEY CAN FIX SOMETHING.WE SOLD OUT OF CREDIT SUISSE AND STARTED SELLING IT AT THEEND OF 2022. WHEN THEY RELEASED THEIR PLANTO RESTRUCTURE, WE THOUGHT IT WAS AN EXTREMELY FAULTY PLAN.WE THOUGHT AFTER ALL THIS TIME, AFTER ALL THIS HOPE, THEY ARENOT GOING TO BE ABLE TO FIX THIS. BY THE WAY, THE PROBLEMS.

INVESTMENT BANK AS WE KNOW ATTHE END OF 2022 WERE FINALLY STARTING TO DRIP INTO THE OTHERSTRONG DIVISIONS. THIS IS ONE OF THE LESSONS.IF THERE IS A BAD DIVISION, IT MIGHT BE BAD FOR REASON ANDSOMETIMES YOU HAVE TO ASSUME IT'S IRREPARABLE. LISA:WAS IT A ONE OFF? DO YOU SEE OTHER ISSUES,SPECIFIC CONCERNS AND OTHER BANKS WHETHER IT'S IN EUROPE ORTHE U.S. THAT HAVEN'T BEEN FULLY IDENTIFIED? >> WAS A ONE OFF?.

IT WAS A ONE OFF I BELIEVE INTHE GREATER SCHEME OF THE EUROPEAN BANKING SECTOR. LIKE ANY COMPANY IN ANY REGION,THEY WILL RUN INTO PROBLEMS. SILICON VALLEY BANK I WOULDARGUE IS A ONE OFF BECAUSE THEY WERE SO IRRESPONSIBLE ONDURATION MATCHING THAT IT WASN'T A CREDIT QUALITY ISSUE.IT WAS THIS DURATION MATCHING WITH ASSETS AND LIABILITIES.THEY WERE SO IRRESPONSIBLE. MANY BANKS ARE NOT SEVERERESPONSIBLE. I NEVER THOUGHT IT WASSYSTEMATIC.

I DO BELIEVE IT WAS MORE OF AONE-OFF IN THE SILICON VALLEY BANK AND THE OTHER REGIONALSWHO GOT CAUGHT UP WITH THE SAME LACK OF RISK CONTROL, SAMETHING IN EUROPE. COMPANY LIKE BNP OR LLOYD'S,THESE ARE THE FINANCIALS WE HAVE THAT HAVE NEVER HAD MAJORQUALITY COMPLIANCE RISK ISSUES. THIS IS WHAT ONE HAS TO LOOKFOR IS THE CULTURE OF RISK CONTROL.IN BANKS, THIS IS NUMBER ONE, RISK IS NUMBER ONE. JONATHAN:LET'S TALK ABOUT YOUR APPROACH TO INVESTING.WE CAUGHT UP WITH APOLLO IN THE.

PREVIOUS HOUR.WE WERE TALKING ABOUT PASSIVE INVESTING OVER THE LAST 10YEARS WITH THE EXPLOSION OF IT AND GETTING SESSION THE BIGGERGETTING BIGGER WITH MONEY GOING INTO EQUITY MARKETS AND GOINGINTO THE MAGNIFICENT SEVEN LIKE OVER THE LAST 12 MONTHS.HOW WOULD YOU FRAME THINGS? DO YOU SEE PASSIVE INVESTING ASTHE ENEMY TO THE KIND OF THING YOU DO EVERY SINGLE DAY?WHAT USE IS IT IF YOU FIND A NAME THAT LOOKS GOOD ON PAPERBUT THE MONEY NEVER COMES. >> PASSIVE INVESTING ISN'TACTIVE INVESTORS FRIEND.

I SAY THIS BECAUSE THE WEIGHTOF MONEY GOING INTO PASSIVE INVESTING MEANS THAT MONEY ISJUST BEING INVESTED IN BUSINESSES IN ESSENCE BECAUSETHEY ARE THERE. THIS CREATES AN EFFICIENTPRICING OF ASSETS. IN THE SHORT TERM AND MAYBE THEMEDIUM TERM, YOU LISTEN TO DAVID EINHORN LAST WEEK, HETALKS ABOUT THE CHALLENGES COMPETING AGAINST THESE.THE WAY THE MONEY MOVES INTO THIS, THE STOCKS THAT MARKETCAPS GET BIGGER AND BIGGER, IT REMINDS ME OF THE IDEA OFPORTFOLIO INSURANCE, AS THE.

STOCK PRICE GOES UP, YOU BUYMORE OF IT. WHEN CARS GO UP, YOU DON'T BUYMORE CARS PRAYED WHEN THE PRICE OF BUSINESSES GO UP, IT GOESAGAINST ECONOMIC FUNDAMENTALS TO BUY MORE OF THEM.IN THE LONG TERM, THIS CREATES OPPORTUNITY FOR ACTIVEINVESTORS WHICH WILL EXPLOIT THESE MARKET INEFFICIENCIES.WOULD ALSO LOOK AT MORE VOLATILE. SOMETIMES OUR CLIENTS DON'TLIKE THE VARYING INDEX. IT ULTIMATELY CREATES MARKETINEFFICIENCY WHICH IS GOOD FOR.

THE ACTIVE INVESTOR BUT IN THESHORT-TERM, IT CERTAINLY ISN'T PAINLESS FOR US LONG ONLY,BORING, VALUE, BOTTOMS UP INVESTORS.WE SOMETIMES GET KIND OF BLOWN AWAY WHERE THE WEIGHT OF MONEYIS GOING WHERE WE MAY BE INVESTED, WHERE THE WEIGHT OFMONEY IS COMING FROM. THAT MEANS WEAKNESS. JONATHAN:I APPRECIATE YOUR RESPONSE TO THAT. WE WOULD LOVE TO DO AROUNDTABLE WITH YOU. IT'S GOOD TO CATCH UP WITH YOU. PASSIVE INVESTING IS THE FRIENDOF WHAT DAVID DOES EVERY DAY.

LISA:IT'S A MATTER WHICH STOCKS YOU ARE LOOKING AT AND IT MATTERSWHAT YOUR THESIS IS BUT THIS IS HOW TRADERS ARE TRADING NOW.IT'S AROUND THESE BASKETS AND WHETHER YOU USE THEM TO BENEFITYOU WERE NOT. THIS IS THE WAY THE NEWSTRUCTURE IS PLAYING OUT. JONATHAN:EQUITY FUTURES ARE NEGATIVE BY ONE THIRD OF 1%.WE ARE 18 MINUTES AWAY FROM THE CPI PRINT.HERE IS YOUR BLOOMBERG BRIEF. DANI:A POWERFUL WINTER STORM IS SET.

TO HIT THE NORTHEAST TODAY INTHE U.S. WITH HEAVY SNOW ACROSS THEREGION NEW YORK CITY PUBLIC SCHOOLS WILL DO CLASSESREMOTELY AND EXPECTING AS MUCH IS EIGHT INCHES OF SNOWFORECAST. ARTS OF NORTHERN NEW JERSEY AND EASTERN PENNSYLVANIAAND SOUTHERN WING WHEN COULD SEE A FOOT OF SNOW AND HUNDREDSOF FLIGHTS HAVE BEEN CANCELED INTO REGIONAL AIRPORTS. HIS SO-CALLED THAT FINGER TRADEIS BEING BLAMED FOR S&L SHARES. THERE WAS A THREE MINUTETRADING HALT DUE TO VOLATILITY.

IT WAS THE BIGGEST ON INTRADAYBASIS SINCE OCTOBER, 2022. PRESIDENT BIDEN IS FORMING ATASK FORCE TO ADDRESS THE MISHANDLING OF CLASSIFIEDDOCUMENTS DURING PRESIDENTIAL TRANSMISSIONS.THEY HAD FOUND THAT BIDEN KEPT IN HIS POSSESSION AFTER HE WASVICE PRESIDENT. HOUSE OFFICIALS CALLED ITSYSTEMATIC ISSUE AFFECTING BOTH PARTIES.THE TASK FORCE WILL PROVIDE RECOMMENDATIONS FOR THE NEXTPRESIDENTIAL TRANSITION. THAT'S YOUR BLOOMBERG BRIEF.JONATHAN: THANK YOU.

UP NEXT, WE LOOK ATCONCENTRATION RISK. >> NARROW LEADERSHIP, EVEN IFIT CONTINUES, IT'S NOT A HEALTHY THING.IT'S MAKING THE S&P 500 AND GROWTH INDICES VERYCONCENTRATED. JONATHAN: THAT CONVERSATION IS NEXT, LIVEFROM NEW YORK, THIS IS BLOOMBERG. ♪ JONATHAN:INFLATION DATA IS MOMENTS AWAY AT 8:30 A.M.EASTERN TIME, ABOUT 14 MINUTES AWAY.EQUITY FUTURES ARE NEGATIVE ONE.

THIRD OF 1% ON THE S&P 500.THE CONCENTRATION RISK THIS MORNING THREATENING THE RALLY. >> NARROW LEADERSHIP EVEN IF ITCONTINUES IS NOT A HEALTHY THING.AFTER ALL THIS TIME, THERE IS STILL A TALE OF TWO CITIESWHERE MAKE A CAP TECH COMPANY ARE THE ONES BEATINGEXPECTATIONS AND GETTING RICHER AND RICHER VALUATIONS, LEAVINGTHE MARKET HIGHER AND HIGHER. IT'S MAKING THE S&P 500 ANDGROWTH INDICES VERY CONCENTRATED. JONATHAN:BANK OF AMERICA SAID INVESTORS.

ARE LOADING UP ON BIG TECH.THE LATEST FUND MANAGER SURVEY SAYS — SARAH IS WITH US AROUND THETABLE. >> GOOD MORNING. JONATHAN:LET'S START WITH THE PERCEIVED RISK.WHY IS NARROW CONCENTRATION IN THE EQUITY MARKET NECESSARILY ABAD THING? >> THERE HAVE BEEN TWO FACTORSDRIVING THE MARKET THIS YEAR AND THAT'S EARNINGS AND THEECONOMY. IF YOU LOOK AT FOURTH-QUARTEREARNINGS, THEY BEEN HEAVILY.

WEIGHTED TOWARD TECHNOLOGYSTOCKS. THE GROWTH IS ABOUT 60% ON THEMAGNIFICENT SEVEN AND OVERALL GROWTH SHOULD BE ABOUT 5%YEAR-OVER-YEAR. WHAT IS THE CATALYST NOW THATTECH STOCKS ARE BEHIND US WITH THEIR EARNINGS.WHAT WE ARE LOOKING AT IS HIGHER FOR LONGER RATES, LESSRATE CUTS THEN THE MARKET EXPECTS, HEAVY ELECTION YEARAND 77 COUNTRIES WITH 60% OF GDP GOING TO THE POLLS.THAT'S MORE HEADWINDS FOR THE MARKET WHEN THE CATALYST ISTECHNOLOGY AND THE EARNINGS.

GROWTH IS BEHIND US RIGHT NOW.JONATHAN: YOUR YEAR AND CALL IS WHERE THEMARKET IS NOW? >> DID IS. JONATHAN:DO YOU HAVE A PREFERENCE IN TERMS OF SECTORS AT THE MOMENTBEYOND BIG TECH? >> IT'S TOUGH TO THAT AGAINSTU.S. TECHNOLOGY BUT WE HAVE TO BESELECTIVE SO COMPANY LIKE AMAZON AND ALPHABET AND THE AISTOCKS ARE HYPED AND THEY SHOULD BE THE WINNERS.WE THINK THE MARKET NEEDS TO BROADEN OUT.WE ARE STARTING TO WARM UP ON.

REAL ESTATE. THE REITS TEND TO DO WELL IN ANAREA WHERE INTEREST RATES ARE STABLE.ENERGY PRICES MIGHT CONTINUE TO DECLINE IMMATERIAL SECTORS HAVEBEEN SQUEEZED TO PERFORM WELL AND FIXED INCOME OVER EQUITIES,EQUITY VALUATIONS ARE AT A PREMIUM, TRADING AT ABOUT 15%ABOVE THEIR AVERAGE. FIXED INCOME LOOKS COMPELLING.LISA: WHAT SCENARIO LEADS YOU TO ANUNDERPERFORMANCE ON THE INDEX LEVEL BUT A BROADENING OUTWHICH REQUIRES ONGOING GROWTH.

AND A RALLY IN FIXED INCOMEWHICH — WITH CUTS TO INTEREST RATES?IS THIS A SOFT LANDING BASE CASE YOU THINK WILL SOMEHOWHURT SOME OF THE BIGGEST WINNERS? >> TECHNICALS AND VALUATIONSARE THE CONCERN IN EQUITIES. VALUATIONS ARE ABOVE AVERAGEAND TECHNICALS ARE IN OVERBOUGHT TERRITORY NOT ONLYFOR TECHNOLOGY BUT FOR THE S&P IN GENERAL.THAT'S WHAT CONCERNS US WITH THESE ADMINS GOING FORWARD.IN FIXED INCOME WITH THE CASH.

STILL SITTING ON THE SIDELINES,WE THINK YOU CAN GET HIGHER TOTAL RETURNS IN FIXED INCOMEGOING FORWARD SO THE CASH EVENTUALLY MOVES BACK INTO THEMARKET INTO LOWER RISK AREAS LIKE EXTON COME WHERE YOU CANREACH MORE AND GET MORE YIELD IN YOUR INVESTMENTS. LISA:ARE YOU TALKING ABOUT LONGER TERM TREASURIES OR INVESTMENTGRADE CREDIT OR HIGHER YIELDS? >> WE LIKE HIGH YIELD LEVERAGEDLOANS. WE ALSO LIKE HIGH YIELD WHEREYOU CAN GET MORE IN TERMS OF RETURNS.IT'S A MUCH HIGHER QUALITY THAN.

IT USED TO BE IN PAST ECONOMICDOWNTURNS. JONATHAN: WE HAVE TO HAVE A CONVERSATIONABOUT COMMERCIAL REAL ESTATE. WHAT ARE THE CONCERNS AROUNDTHAT FOR YOU? IS THAT AN ISSUE THAT HITS ACOUPLE OF BANKING NAMES AND NOT EVERYBODY? >> IF YOU LOOK AT NEW YORKCOMMUNITY BANK, COMMERCIAL REAL ESTATE IS AT A HIGHERPERCENTAGE FOR THEM THAN OTHER BANKS.WE DON'T THINK THAT WILL TURN INTO CONTAGION LIKE WE SAW LASTYEAR WITH SOME OF THE LARGER.

AND REGIONAL BANKS. ALSO WITHINREITS, COMMERCIALREAL ESTATE WITHIN THAT MARKET IS LESS THAN 5% SO THERE AREASYOU CAN INVEST IN WITHIN REAL ESTATE TO AVOID IT.AT ANY TIME, YOU LOOK AT THESE BANKS AND EVERYTHING IS DIGITALAND YOU COULD GET A RUN ON BANKS IN GENERAL BUT I DON'TTHINK IT WILL BE A BROAD-BASED COMMERCIAL IMPACT ON THESEREGIONAL BANKS. JONATHAN: LET'S FINISH ON THE COME — ONTHE CONSUMER. WE WILL GET RETAIL SALES IN ACOUPLE OF DAYS SO HOW SQUEEZED.

IS THE AMERICAN CONSUMER?WE'VE BEEN TOLD THAT REPEATEDLY AND SEEMINGLY, THEY ARE STILLDOING OK. >> WE GET RETAIL SALES THISWEEK WHICH WERE STRONG. THIS WEEK, WE WILL SEE A LITTLEBIT OF A MODERATION. THE CONSUMER IS STILL SPENDINGAND THAT'S BECAUSE OF THE TRILLIONS OF DOLLARS THAT CAMETO THE CONSUMER DURING THE PANDEMIC AND THE GEAR OF LOWINTEREST RATES THROUGH THE PANDEMIC.THE CONSUMER HANGOVER WILL EVENTUALLY COME BUT WE ARE NOTSEEING SIGNS OF IT YET.

WITH INFLATION, THE CONCERN ISTHAT THE FED SAYS THEY WANT TO SEE BROADER DISINFLATION BEFORETHEY START TO CUT RATES. I THINK WE WILL SEEDISINFLATION CONTINUE TO MODERATE BUT IT'S COREINFLATION, THE SERVICES SPENDING, AUTO INSURANCE, IFTHAT STARTS GOING UP, THAT'S NOT GREAT FOR THE MARKET.JONATHAN: LET'S GET A PREVIEW OF THEINFLATION NUMBER WITH MICHAEL MCKEE.THE NUMBER IS EIGHT MINUTES AWAY SO WHAT ARE YOU LOOKINGFOR? MIKE:.

WE ARE LOOKING FOR IMPROVEMENT.THE MONTH OVER MONTH NUMBER FOR DECEMBER WAS REVISED DOWN 0.2%LAST WEEK. IT WOULD BE HARD TO SEE ITGOING BELOW THAT ON A MONTH OVER MONTH BASIS.WE ARE EXPECTING THE HEADLINE INFLATION NUMBER TO COME IN AT2.9% WHICH BE THE — WHICH WOULD BE THE FIRST TIME SINCE2001 THAT IT MANAGED TO FALL BELOW 3%.ECONOMISTS SAY WHEN IT COMES TO THE CORE RATE, IT STILL REMAINSSTRONGLY ABOVE 3%. THE ISSUE IS THE FED DOESN'TREALLY LOOK AT CPI OTHER THAN.

AN INPUT INTO THEIR DISCUSSIONS.THEY WILL FOCUS ON THE PCE REPORT LATER THIS MONTH. LISA:IN YOUR CONVERSATIONS WITH FED OFFICIALS, HOW MUCH ARE THEYLOOKING PASS THIS TO RETAIL SALES AND MORE JOBS DATA?THIS IS CONSIDERED BACKWARD LOOKING SO WILL IT GIVE THEMWHAT THEY ARE LOOKING FOR? MIKE: THEY WILL TAKE THIS APART.CPI IS MUCH EASIER TO DISSECT IN TERMS OF THE NUMBER OFCATEGORIES THAT IT MEASURES. THEY CAN FIND OUT IF THEY AREGETTING THAT BROUGHT DISINFLATION, THEY HAVE TALKEDABOUT IT.

WE WILL LOOK AT THAT TO SEEWHAT KIND OF PROGRESS IS STILL BEING MADE. BY THEIR NATURE, THEY AREBACKWARD LOOKING. THE FED WANTS TO SEE CONTINUEDPROGRESS. JAY POWELL SAID WE DON'T NEEDTO SEE BETTER PROGRESS, JUST THE SAME KIND OF GOOD NEWS.JONATHAN: MORE GOOD DATA, THANK YOU FORBREAKING IT DOWN. CAN WE WRAP IT UP WITH CPI?WHERE DO YOU EXPECT INFLATION TO COME IN OVER THE NEXT COUPLEOF MONTHS ESPECIALLY WHEN THE.

FED MOVES IN A DIFFERENTDIRECTION? >> WE WILL START TO SEE SOMEONEOF A DECLINE. LOOKING AT THE NUMBER TODAY,MONTH OVER MONTH, IF IT COMES CLOSER TO .4%, THAT WILL BENEGATIVE FOR THE MARKETS. IT COMES IN BELOW 2% MONTH OVERMONTH, YOU WILL SEE A LOWER QUALITY RALLY AND PEOPLEPERHAPS WE'LL SEE RATE CUTS SOONER.IN BETWEEN, WE WILL SEE MORE OF THE SAME YEAR TO DATE. WE WILL SEE HOW THE MARKETSREACT WHEN WE GET THE NUMBER.

JONATHAN:CONSUMER CONFIDENCE PICKS UP AS WELL. WE WILL SEE IF IT HAS ANYEFFECT AT ALL. LISA:SOMETHING HAD AN EFFECT ON THE NEW YORK FEDERAL RESERVE THATPOINTED TO THE LOWEST THREE YEAR OUTLOOK FOR INFLATIONGOING BACK TO AT LEAST 2013. SENTIMENT IS SHIFTING. HOW MUCH ARE GASOLINE PRICESDIRECTLY CORRELATED. YOU ARE SEEING THREE DOLLARSPER BARREL OIL. JONATHAN:WASN'T THAT PART OF THE SURVEY?.

LISA:IF YOU MAP OUT THE UNIVERSITY OF MICHIGAN SENTIMENT SURVEYWITH THE PRICE OF GASOLINE, IT JIBES PRETTY CLOSELY. JONATHAN:YOU CAN DO GREAT THINGS WITH POLITICAL PARTIES.IT DEPENDS WHO IS IN THE WHITE HOUSE AND THAT DEPENDS HOWHAPPY YOU ARE ON THE ECONOMY WHICH IS RIDICULOUS. LISA:IT SPEAKS TO WHERE WE ARE AT NOW. WE ARE IN A GREAT PLACE. JONATHAN: WE CAN TALK ABOUT U.S.POLITICS IN THE YEAR AHEAD. LISA:WE ARE AT A PIVOT POINT IN MANY.

PLACES.I'M EXCITED TO DELVE UNDERNEATH IT. IT'S A FASCINATING TIME,IRRITATING IN SOME WAYS. JONATHAN: SARAH, THANK YOU.CPI DATA IS COMING UP NEXT. OUR CHIEF ECONOMIST AT WELLSFARGO IS BREAKING IT DOWN. INFLATION DATA'S AROUND THECOUNTRY AND EQUITY FUTURES ON THE S&P 500 ARE LITTLE BITSOFTER, DOWN 0.3%. JONATHAN:INFLATION DATA AND AMERICA IS ABOUT 20 SECONDS AWAY. ON THE S&P 500, NEGATIVE BY 0.3PERCENT AND ON THE NASDAQ, DOWN.

ABOUT 0.7. IN THE BOND MARKET, THE 10 YEARIS 440 AND THE YIELDS DOWN THREE BASIS POINTS ON THE TWOYEAR. WE ARE DOWN THE BASIS POINTSTHERE AS WELL. LET'S GO OVER TO MICHAEL MCKEE.MIKE: GOOD MORNING. THE GOOD NEWS DOESN'TNECESSARILY CONTINUE. CPI IS UP 0.3% YEAR-OVER-YEAR.THAT PUTS US AT 3.1%. THAT'S DOWN FROM 3.4 BUT IT'SNOT THE 2.9% THAT MANY PEOPLE HAD HOPED FOR.

THE CORE RATE COMES IN AT ZEROPOINT 4% RISE, HIGHER THAN THE 0.3% RISE ANTICIPATED.IT LEAVES CORE INFLATION AT 3.9% WHICH WAS THE SAME THAN AMONTH BEFORE. YOU CAN TAKE THE SCORES AND IWILL LOOK AT THE BREAK DOWN AND THE PROBLEM IS. JONATHAN:I'M SURE YOU CAN GUESS WHERE WE ARE, WE ARE NEGATIVE ON THE S&P500, DOWN BY 0.8%. THE FIRST MOVE IS NOT ALWAYSTHE RIGHT MOVE AFTER ECONOMIC DATA.THE NASDAQ 100 IS NEGATIVE ON THE BACK OF HOTTER THANEXPECTED INFLATION WITH YIELDS.

MUCH HIGHER.THEY WERE LOWER IN THE TWO-YEAR IS HIGHER BY 10 BASIS POINTS. YIELDS ARE UP ON THE LONGER ENDOF THE CURB BY SIX BASIS POINTS. YOU PUSH THOSE MOVES THROUGHFOREIGN-EXCHANGE AND YOU GOT UP STRONGER DOLLAR AND A WEAKEREURO. YOU PUT THIS DATA TOGETHER WITHSTRONG PAYROLLS PRINT AND DECENT WAGE GROWTH WITH ADECENT ISM SERVICES AND YOU START TO GET A LITTLE BIT MOREWORRIED ABOUT MAYBE THE FEDERAL RESERVE NOT BEING ABLE TO CUTINTEREST RATES ANYTIME SOON.

I GO BACK TO THE QUOTE FROMSTEWART KAISER AT CITIGROUP. THE CPI PRINT AS THE POWER TOTOGGLE THE STORYLINE BETWEEN SOFT LANDING AND OVERHEATING.HERE WE ARE IN THE MIDDLE OF FEBRUARY AND THAT CONVERSATIONIS NOT RUNNING AWAY WITH ITSELF BUT IT'S HEATING UP A LITTLEBIT. LISA: I THINK THAT'S WHAT YOU SEE INTHE MARKET. EARL DAVIS GETS A VICTORY LAPAFTER HE WAS TALKING ABOUT SHORTING THE TWO-YEAR.THIS SEEMS TO EDIFY THAT. THE KEY THING HERE IS IF YOUARE NOT SEEING A BROADENING.

OUT, HOW LONG DOES THE FED HAVETO WAIT? NOT ONLY IS THIS NOT AS GOODDATA BUT IT KIND OF FLIES AGAINST SOME OF THE PROGRESSWHICH IS THE REASON I'M CURIOUS. I'M CURIOUS WHETHER WE WILL SEEAN ONGOING ACCEPTANCE OF BROADENING OUT WITH THIS DATAEVEN THOUGH IT'S NOT AS GOOD. IT MEETS THE THRESHOLD FOR JAYPOWELL OR DOES IT? JONATHAN: DO YOU SEE THE BROADENING OUT?DO YOU SEE THE DISINFLATION TREND? MIKE:WE BASICALLY SAY SOME OF THE USUAL SUSPECTS HERE.OF THE BIGGEST REASONS WE SAW.

CPI COME IN STRONGER THANANTICIPATED WAS HOUSING. SHELTER COST WERE UP 0.6% AFTER0.4% THE PRIOR MONTHS IN THE SAME THING IS TRUE OFEQUIVALENT RENT. HOME PRICES ARE STILL PUSHINGUP AND RENT PRICES ARE STILL PUSHING UP THE CPI.GASOLINE PRICES WENT DOWN 0.9% SO THAT'S THE GOOD NEWS BUTFOOD PRICES WERE DOUBLE WHAT THEY WERE THE MONTH BEFORE.FOOD IS SOMETHING THAT CONSUMERS WILL NOTICE ANDHOUSING IS PROPPING UP THE CPI RATE HIGHER THAN THE FED WANTSTO SEE.

MANY OTHER THINGS ARE DOWN SOMELIKE APPAREL WHICH IS DOWN 0.1% IN USED CARS AND TRUCKS WEREDOWN 0.7%. WE ARE SEEING SOME PROGRESS –SORRY, THEY ARE DOWN 3.4%. WE ARE SEEING SOME PROGRESS INTHE AREAS THAT HAD GIVEN US PROBLEMS IN THE PAST. THE BIGONES ARE STILL CONTRIBUTING TO CPI. LISA: YOU LOOK AT THE MARKET RESPONSEAND PEOPLE HAVE EXPECTATIONS FOR A MARCH RATE CUT.THERE IS A 17 PERCHANCE — A 17% CHANCE BAKED IN.IS THIS IS BAD FOR THE FED AS.

IT MAY SEEM IN TERMS OF MOVINGIN THE OPPOSITE DIRECTION? DO YOU THINK THERE ARE ENOUGHSIGNS UNDERNEATH THE HOOD OF SOME SORT OF BROADENING OUTTHAT HE GIVES THEM COMFORT TO CONTINUE WITH SOME OF THE SAMERHETORIC WE'VE HEARD FROM THEM? MIKE:I THINK YOU WILL SEE THE SAME RHETORIC.IT'S NOT WHAT WAS WANTED OR EXPECTED BUT IT ISN'T AREVERSAL. WE SEE THE INFLATION RATES ON AYEAR-OVER-YEAR BASIS GOING DOWN. HOUSING IS A 1/3 WEIGHT IN THECPI WHERE IT'S SMALLER IN THE.

PC WHICH OF THE FED FOLLOWS.I THINK THEY WILL SEE THIS AS PROGRESS BUT FRUSTRATING.THEY WEREN'T GOING UP IN MARCH ANYWAY. THEY WILL NEED THREE CPIREPORTS BEFORE THEY GET TO THE MAIN MEETING SO THERE IS TIMEFOR THIS TO TURN AROUND. PEOPLE ARE WONDERING WHEN HOUSEPRICES AND RENT PRICES START TO GO DOWN OR DO THEY? JONATHAN:THANK YOU FOR BREAKING DOWN THE CPI REPORT.WE COME IN JUST A LITTLE BIT HOTTER THAN EXPECTED MONTH OVERMONTH, HEADLINE CPI 0.3%. THE NUMBER WE WERE LOOKING FORWAS 0.2 IN OUR SURVEY.

WE CAME IN AT 0.4 WERE LOOKINGAT 0.3 SO THAT'S TAKES YOU NUMBER TWO 3.1 THE ESTIMATE WAS2.9%. EXCLUDING FOOD AND ENERGY, 3.9%IN LINE WITH WHERE WE WERE LAST MONTH.LET'S PUSH THAT THROUGH THIS EQUITY MARKET, DOWN HARD BY 1%ON THE S&P 500. DOWN TO FOUR PERCENTAGE POINTSON THE SMALL CAPS. LET'S LOOK AT THE BOND MARKET.TWO-YEAR HEELS ARE A LOT HIGHER, A DOUBLE DIGIT MOVE.– TWO YEAR YIELDS ARE A LOT HIGHER, DOUBLE DIGIT MOVE.ON THE 10 YEAR, YOU PUSH THAT.

THROUGH FOREIGN-EXCHANGE IN THEDOLLAR IS STRONGER AND THE EURO IS WEAKER.JUST ABOUT HOLDING ONTO $1.07. WHAT MICHAEL MCKEE DID THERE ISIMPORTANT. DOES THIS INFLATION DATA CHANGETHINGS FOR THE FED? DOES IT CHANGE THINGS FOR THISMARKET AND WHAT IT HAS PRICED AND COMING INTO THE YEAR?THE IMPLIED FORECAST FROM THE DOT PLOT IS THREE CUTS THISYEAR. THE FED HAD THREE IN THE MARKETWAS SOMETHING LIKE SIX. WE'VE BEEN CHIPPING AWAY ATTHAT AND CHIPPING AWAY AT THAT.

OVER THE LAST SIX WEEKS.NOW WE ARE LOOKING AT WHERE WE ARE PRICE FOR 2024, WE'RE DOWNTO ABOUT A HUNDRED BASIS POINTS. HOW DO WE CLOSE THE SPREADBETWEEN THE MARKET AND THE BED? DOES THIS — AND THE FED.DOES IT CHANGE SOME EVEN THE MARKET?I'M NOT SURE IF IT CHANGES ANYTHING FOR THE FEDERALRESERVE AND WHETHER THAT DOT PLOT FROM THE END OF DECEMBER,IF THEY DID A CUT AFTER THIS WOULD CHANGE TOO MUCH? LISA:THAT'S A GREAT POINT CONSIDERING THE FACT THE FEDHAS BEEN FAIRLY CONSISTENT ON.

PIVOTING.THE MARKET LESSON IS IMPORTANT WHICH IS WHICH AREAS OF THEMARKETER MOST LEVERAGED TO THE IDEA THE FEDERAL RESERVECUTTING MORE AGGRESSIVELY THAN THEY PLOTTED IN THEIR DOT PLOT.I'M LOOKING AT THE RUSSELL 2000. THEY ARE DOWN 2.4%.THEY ARE DOWN HARD AND THIS IS BEEN THE MAIN OBSTACLE TOBROADENING OUT BECAUSE THERE IS A CONVICTION IN A CALL THATMANY PEOPLE ARE BACKING AWAY FROM.SIX RATE CUTS SEEMS LIKE TOO MANY FOR THIS MARKET. JONATHAN:LET'S GET YOU REACTION ON THE.

STREET.WELLS FARGO JOINS US NOW FOR MORE.YOUR INITIAL REACTION TO THE CPI PRINT FROM EIGHT MINUTESAGO? >> IT'S NOT GOOD NEWS.WE WOULD PREFER TO HAVE SEEN SOMETHING LESS THAN THAT BUTMIKE MADE THIS POINT, THE FED IS MUCH MORE FOCUSED ON THE PCETHAN THE CPI. THE WEIGHTS ARE DIFFERENT INTHAT AND THEY THINK IT'S A BETTER MEASURE OF INFLATION.BY THAT MEASURE COME INFLATION IS LOWER THAN THE CPI.THE SECOND POINT IS THE FED IS.

NOT GOING TO MAKE A DECISIONBASED ON ONE DATA POINT. THEY WILL TAKE THE TOTALITY OFTHE DATA AND LOOK AT IT WHEN THEY MAKE A DECISION.AS A RATE CUT GOING TO HAPPEN IN MARCH?KNOWING WHAT I KNOW, PROBABLY NOT.MAY IS A LONG WAY AWAY AND WE HAVE A LONG TIME BETWEEN NOWAND THEN WE WILL SEE HOW THE TOTALITY OF THE DATA PANS OUTBETWEEN NOW AND THEN. JONATHAN: LET'S LOOK AT THE LAST SIXWEEKS. WE HAD A DECENT HOT PAYROLLSBUT REPORT, ISM SERVICES PICKED.

UP AND PRICES PAID STARTED TOPICK UP AS WELL AND MANUFACTURING IS CLOSE TOGETTING INTO EXPANSION TERRITORY.WHAT WE CAME INTO THIS MORNING, THEY'VE SAID THE CPI NUMBER WEJUST GOT HAD THE POWER TO TOPPLE THE STORYLINE BETWEENSOFT LANDING AND OVERHEATING. COUNTY DATA POINTS ARE WE AWAYFROM HAVING A BIGGER CONVERSATION ABOUT THE PROSPECTOF THIS ECONOMY STILL OVERHEATING? >> I THINK IT'S GOING TO BOILDOWN TO GETTING BACK TO THE PCE.

DEFLATOR.THAT MEASURE OF INFLATION, IF YOU GO BACK TO THE 1990'S, I'MNOT SAYING THIS IS A GOLDILOCKS ECONOMY BUT WE HAD VERY STRONGGROWTH IN THE 1990'S AND VERY LOW INFLATION.THAT'S WHAT MATTERS TO THE FED RIGHT NOW.I'M NOT SAYING THE HARD DATA DON'T MATTER BUT I THINK THEYARE PUTTING MORE WEIGHT TODAY ON THEIR — AND WHERE INFLATIONIS. HOW MANY DATA POINTS ARE WE AWAY FROM THAT?BETWEEN NOW AND MAY, WE WILL GET THREE MORE PRINTS ON THEPCE DEFLATOR.

IN LATE APRIL, WE ARE STILLRUNNING NORTH OF 3% IN THE CORE PCE DEFLATOR, WE ARE NOT TALKEDABOUT THE FED CUTTING RATES ANYTIME SOON.THAT'S THE WAY I'M LOOKING AT IT IN BROADER TERMS. LISA:I'M WONDERING WHETHER WE ARE GETTING TO THE POINT OF PEOPLEQUESTIONING WHETHER DISINFLATION CAN CONTINUEWITHOUT A GREATER WEAKENING IN THE LABOR MARKET?I'M LOOKING AT REAL WAGES COMING IN ON AN HOURLY BASIS AT1.4% WHICH IS ONE OF THE HIGHEST READINGS GOING BACK TO2021. HOW MUCH DOES THAT HAVE TO.

SHIFT BEFORE YOU START TO SEEMORE OF A BROADENING OUT OF DISINFLATION? >> IF YOU LOOK AT THEEMPLOYMENT COST INDEX WHICH WE GOT A FEW WEEKS AGO, ON AQUARTERLY BASIS AND ANNUALIZE THAT, THAT'S ONLY 3.5%.IF IT STAYS THERE, THEN WE HAVE TREND PRODUCTIVITY GROWTH.THAT'S CONSISTENT REALLY WITH THE 2% INFLATION RATE.WE'VE GOTTEN TO REALLY GOOD PRODUCTIVITY NUMBERS IN THELAST TWO QUARTERS. YOU CAN'T MAKE INFERENCES OFFOF TWO DATA POINTS.

I THINK WE NEED TO SEE MORE OFTHAT. PERHAPS WHAT'S GOING ON UNDERNEATH THE SURFACE ANDMAYBE I'M GRASPING AT STRAWS IS MAYBE PRODUCTIVITY IS FASTERTHAN WHAT WE THINK. IF IT IS, YOU CAN HAVE THATSTRONGER WAGE GROWTH THAT'S CONSISTENT WITH THE 2%INFLATION RATE. LISA: WHEN DO WE GET OUT OF THISMODEL AND GET INTO SOMETHING WHERE PEOPLE ON BOTH SIDES SAYSWE ARE HEADING TO OVERHEATING OR SOME SORT OF DOWNTURN?WHAT IS THE THRESHOLD OF UNDERSTANDING WHERE THISECONOMY IS IN A POST-PANDEMIC.

REALITY? >> I STILL THINK WE ARE DEALINGWITH NOT SO MUCH SHOCKS OF THE PANDEMIC BUT WE ARE STILLDEALING WITH A LOT OF UNCERTAINTY AS IT RELATES TOTHE GEOPOLITICAL SITUATION RIGHT NOW AND WHEN WE GET OUTOF THIS MODEL. I WISH I COULD TELL YOU THAT.IT'S GOING TO BE QUITE SOME TIME BECAUSE I THINK THEUNDERLYING STRUCTURAL ECONOMY WHETHER IT'S PRODUCTIVITY,THINGS OF THAT NATURE WITH LABOR FORCE GROWTH, THERE ISSTILL A LOT OF VOLATILITY GOING.

ON IN THAT.I THINK WE WILL HAVE A MODEL PICTURE FOR A WHILE YET. LISA:YOU LOOK AT THE BALANCE OF RISKS SO DO YOU THINK THEMARKET IS ACTIVELY PRICING IN THE RISKS OF OVERHEATING ORMORE SIGNIFICANT DECELERATION IN THE ECONOMY? >> I'M NOT A STOCK MARKETSTRATEGIST. IT SEEMS THAT WE CAME INTO THE YEAR WITHEVERYONE EXPECTING A SOFT LANDING.IT SEEMS LIKE IN SOME SENSE, THE EXPECT TATIAN OF THEECONOMY WHETHER IT'S PRICED.

INTO THE MARKET WERE NOT, THEEXPECTATION RIGHT NOW SEEMS TO BE FOR VERY GOOD NEWS.IF YOU DON'T GET GOOD NEWS LIKE TODAY, THAT'S GOING TO UPSETTHAT NARRATIVE AT LEAST FOR SOME. OF TIME. JONATHAN:GOOD TO HEAR FROM YOU. THE MORE I THINK ABOUT IT, THEMORE I THINK IF YOU SAT DOWN WITH THE FED OFFICIAL NOW THATTHEY WOULD TURN AROUND AND SAY I TOLD YOU SO.THIS IS WHY THEY WANT TO WAIT. LISA:THEY WANT TO BE PATIENT AND HAVE THAT LEEWAY AND WE WILLSEE SURPRISES LIKE THIS.

WE HAVE A LOT OF DATA TO LOOKAT BUT WE ARE PROBABLY NOT GOING TO GO IN MARCH. JONATHAN:WHICH IS BASICALLY WHAT THEY'VE SAID REPEATEDLY OVER THE LASTFEW MONTHS. IF YOU'RE TUNING IN NOW,INFLATION DATA CAME OUT ABOUT 13 MINUTES AGO A LITTLE BITHOTTER THAN EXPECTED, ONLY 10 BASIS POINTS HOTTER BUT THATCOULD BE A BIG DEAL ON WALL STREET. WE WERE LOOKING FOR .2%.MONTH OVER MONTH WITHOUT FOOD AND ENERGY, POINT OR AND WEWERE LOOKING AT .3. YEAR-OVER-YEAR, 3.1%.

WE STAY AT 3.9% AND WE WERELOOKING AT 3.7%. EQUITIES ARE A NEW SESSIONLOWS, DOWN 1% ON THE S&P 500. YOU TALKED ABOUT THE SMALL CAPSDOWN BUT 2.4% EARLY THIS MORNING. LISA: THAT HIGHLIGHTS HOW THEY AREMORE LEVERAGED FOR RATE CUTS AND OTHER ASSET CLASSES IS THEREASON WE HAVEN'T SEEN A BROADENING OUT.I'M STILL YOU SEE THE WHITES OF THE RATE CUT EYES, PEOPLE WON'TNECESSARILY GO INTO OTHER LEVERAGED AREAS. JONATHAN:I LOVE THAT LINE.

LET'S TURN TO THE BOND MARKET.A DIGIT MOVE ACROSS THE CURVE. THE TWO-YEAR IS HIGHER IN THE10 YEAR IS HIGHER. 45922, VERY BRIEFLY IF YOU GOBACK TO THE MIDDLE OF JANUARY, THE LAST TIME WE GOT A CPIREPORT, THE TWO-YEAR CLOSED THAT DAY AT 424.WE'VE REPRICED A FAIR BIT ON THE 10 YEAR FROM 4.2691 THISMORNING BACK TO THE MIDDLE OF JANUARY WHERE WE WERE SUB 4%,CLOSING AT 3.96. THE EQUITY MARKET HELD UP INTHAT TIME PRETTY WELL IN THE FACE OF YIELDS REPRICING HIGHEROFF THE BACK OF DECENT ECONOMIC.

DATA.WITHOUT A REAL SCARE, THAT MAY MEAN WE HAVE TO DEAL WITHINFLATION PRINTS. I WONDER HOW THIS CHANGES THESTORY, THE CONNECTION TO HOW THE DATA SPEAKS TO BOND YIELDSAND HOW YOU WANT YIELDS SPEAK TO EQUITY PERFORMANCE. LISA:RIGHT NOW IT SEEMS PEOPLE ARE LOOKING PAST TO SOME SORT OFSIGNIFICANT DEGREE WHETHER WE GET A RESURGENCE IN INFLATIONBUT I WONDER HOW MANY PEOPLE WILL COME TO THIS IDEA OFCITIGROUP WHICH IS A REPEAT OF 1998 AND WILL WE HEAR MORE OFTHAT GOING FORWARD. JONATHAN:.

LET'S GET YOU A WRAP UP OFSTORIES ELSEWHERE. THIS IS YOUR BLOOMBERG BRIEF.DANI: THE U.S. HAS APPROVED A $95 BILLION INASSISTANCE FOR UKRAINE, ISRAEL AND TAIWAN THAT THE LEGISLATIONFACES AN UPHILL BATTLE IN THE HOUSE.THEY HAD AN ALL-NIGHT SESSION TO DEBATE THE BILL AND ITPASTORALLY THIS MORNING. REPUBLICAN LEADERS IN THE HOUSETO MEND PRESENT BY AND TAKE ACTION AGAINST UNDOCUMENTEDBORDER MIGRATION BEFORE PASSING ANY UKRAINIAN AID.SHARES OF JETBLUE ARE HIGHER.

PREMARKET. CARL ICAHN DISCLOSED NINE POINT91% STAKE. STOCK FELL 30% IN THE LAST YEAR.THE FEDERAL COURT STRUCK DOWN AN ALLIANCE WITH AMERICANAIRLINES AND A PLAN OF SPIRIT AIRLINES.HE'S HAD TALKS WITH MANAGEMENT ABOUT A BOARD SEAT.SHARES OF MANCHESTER UNITED CLIMBING AFTER BILLION JIMRADCLIFFE SAID HE'D EXTEND HIS OFFER TO BUY A 25% IN THE CLUB.HE SAID HE WOULD PURCHASE ESTATE BY ALLOWING INVESTORS TOSWAP.

1/4 JONATHAN: JONATHAN: OF THEMARKET PRICE. UP NEXT, PASSING THROUGHINFLATION DATA. >> WE WOULD PREFER TO HAVE SEENSOMETHING LESS THAN THAT. THE FED WILL NOT MAKE ADECISION BASED ON ONE DATA POINT.THEY WILL TAKE THE TOTALITY OF THE DATA LOOK AT THAT AND MAKEA DECISION. JONATHAN: THAT CONVERSATION UP NEXT WITHDAVID KELLY OF JP MORGAN. ♪ JONATHAN:LIVE FROM NEW YORK CITY, INFLATION DATA COMING IN HOT.

>> IT'S NOT GOOD NEWS.WE WOULD'VE PREFERRED SEE SOMETHING LESS THAN THAT.THE FED WILL NOT MAKE A DECISION BASED ON ONE DATAPOINT. THEY WILL TAKE THE TOTALITY OFTHE DATA AND LOOK AT IT WHEN THEY MAKE A DECISION. JONATHAN: YOUR EQUITY MARKETS ARENEGATIVE ONE .2% ON THE S&P 500 WITH YIELDS HIGHER BY NINEBASIS ONCE ON THE 10 YEAR. THIS DOLLAR IS STRONGER.DAVID KELLY IS WITH US, GLOBAL — CHIEF GLOBAL STRATEGIST ATJP MORGAN ASSET MANAGEMENT.

INFLATION DATA 20 MINUTE TO GOSO THE FEDERAL RESERVE SAID WE NEED MORE GOOD DATA, NOT BETTER.WAS THIS GOOD OR BAD? >> THEY ARE SO DETERMINED TOGET INFLATION DOWN TO 2% AS FAST AS POSSIBLE.IT SAYS THE ECONOMY IS COOLING BUT IT'S COOLING MORE SLOWLY.THERE ARE CERTAIN ASPECTS OF THIS REPORT THAT PUSH THENUMBERS HIGHER BUT OVERALL, THE ECONOMY WILL GROW AND THEYTHINK INFLATION WILL COME DOWN YEAR-OVER-YEAR. WE'VE GOT 3.7 PERCENTUNEMPLOYMENT, 3.1% INFLATION.

AND ADD THOSE NUMBERS TOGETHERAND THAT CREATES A MISERY INDEX. THAT'S NOT THAT MISERABLE.THEY SHOULD ENJOY THIS. THIS IS NOT BAD, IS JUSTCOOLING MORE SLOWLY. JONATHAN: THE DOT PLOT IMPLIES MAYBETHREE CUTS THIS YEAR AT THE FEDERAL RESERVE.THE MARKET IS CLOSER TO SIX TO START THE YEAR.IS THIS A BIGGER GAME CHANGER FOR THE MARKET THAN THE FEDERALRESERVE? >> WE ALWAYS MISINTERPRET WHATTHE MARKET IS SAYING. IT'S A WEIGHTED AVERAGE OF TWOSCENARIOS.

ONE IS YOU DON'T HAVE ARECESSION WHERE THE FED CAN DO THESE CUTS OR YOU HAVE ARECESSION AND YOU HAVE TO CUT THREE BASIS POINTS.WHAT HAS HAPPENED IS THE DATA WE'VE HAD IN 2024 HAVE PUSHEDTHE POSSIBILITY OF A 2024 RECESSION GETTING SMALLER ANDSMALLER. I EXPECT WE WILL SEE A REMOTE– A REACTION IN THE MARKET TO THAT.THE MARKET STILL ANTICIPATES AT LEAST THREE RATE CUTS. LISA: I LIKE THE WAY YOU TALK ABOUTHOW THIS IS A GOLDILOCKS KIND.

OF SITUATION.WHAT IS YOUR INVESTMENT RESPONSE TO THIS GIVEN THE FACTTHAT THE MARKET HAS AND PERHAPS MORE AGGRESSIVELY PRICING ADOWNSIDE RISK THAT'S GETTING PUSHED OUT? >> YOU BUY BONDS FOR INCOME ANDDIVERSIFICATION. YOU DON'T BUY BONDS FOR CAPITALGAINS. THERE IS NOTHING WRONG WITHFOUR POINT 25% ON A 10 YEAR TREASURY GIVEN THE RATES WHICHARE COMING DOWN TO 2%. WE DON'T EXPECT MUCH OF ACAPITAL GAIN THERE.

FOR THE EQUITY MARKETS, I THINKTHE IMPORTANT THING IS THE — IS THAT THIS SOFT LANDING ISCONTINUING. WE CAN KEEP ON SLOWINGINFLATION DOWN AND KEEP THE ECONOMY GOING FOR AS LONG AS ITHAPPENS. THINK THAT HELPS WITH PUTTINGMONEY INTO THE MARKET. P/E RATIOS DON'T STOP AT THELIMITS OF PRUDENCE, THEY STOP AT EXUBERANCE IN THIS MARKET ISGETTING EXPENSIVE BUT IT DOESN'T MEAN THE PARTY IS OVERNOW. LISA: IF THIS IS GOOD NEWS FOR THEECONOMY, WHY RUSSELL 2000.

STOCKS PERFORMING WORSE IN THEFACE OF THIS DATA AND THE SUGGESTION THE FED WILL NOT CUTRATES MORE AGGRESSIVELY? >> IT MAY BE A TIMING THING.WHEN YOU BITE SMALL CAPS, IN RECESSION.THE TIMING DOESN'T SOUND RIGHT. ALSO COMING GOT A LOT OFREGIONAL BANKS IN THE SMALL-CAP ARENA THAT ARE GETTING HURTWITH A LOT OF UNPROFITABLE COMPANIES.THE MARKET CAP OF THE TOP 10 STOCKS IS ENORMOUS BUT THEIRSHARE OF EARNINGS IS ALSO PRETTY HIGH.IT SEEMS MONEY HAS FLOATED TO.

THE TOP IN TERMS OF MARKET COPAND THAT'S NOT HELPFUL FOR SMALL CAPS. JONATHAN: I THINK IT'S QUITE ORIGINALYOUR THINKING ON THE ECONOMY. YOU PUT LESS EMPHASIS ON THEFEDERAL RESERVE. IN TERMS OF THE ECONOMY, GOINGTHROUGH THIS PROCESS OF SELF HEALING AND READJUSTING, DO WETALK ABOUT THE FEDERAL RESERVE TOO MUCH IN REGARDS TOINFLATION? >> YES, I THINK THE FED HAS ABIG IMPACT ON FINANCIAL MARKETS BUT A VERY SMALL IMPACT ON THEECONOMY.

THEY SAID THEY MANAGED TO BRINGINFLATION DOWN BUT DID THEY? THE ONLY MECHANISM THEY COULDHAVE DONE THAT IS REDUCE AGGREGATE DEMAND BUT WE SO GDPGROWTH TO 4.9% IN THE THIRD QUARTER.THERE IS NOT THE SLIGHTEST EVIDENCE THE FED HAS SUCCEEDEDIN SLOWING DOWN THE ECONOMY. IT CAN'T TAKE CREDIT FOR LOWERINFLATION IF THEY DIDN'T SLOW THE ECONOMY. JONATHAN:YOU EXPECT US TO GET BACK TO 2% WITH THAT PROCESS CONTINUING? >> WE STILL GOT AUTO INSURANCEUP 20.6% YEAR-OVER-YEAR.

WE KNOW THAT NEW CAR PRICESSTOPPED RISING AND AUTO REPAIR COSTS ARISING MORE SLOWLY.THIS THING HAS TO CRACK. IT'S TAKING ITS TIME BUT IT HASTO CRACK AND SHELTER INFLATION, RENTS ARE BEING NEGOTIATED ATTHE POINT OF RENTAL ARE NOT GOING UP THAT FAST SO THAT WILLCRACK. IF YOU LOOK AT AUTO INSURANCEAND SHELTER, THEY ARE 80% OF THE YEAR-OVER-YEAR INCREASE INCPI. THEY WILL COME DOWN AND FROM ATECHNICAL PERSPECTIVE, YOU CAN GET DOWN TO 2% EVEN IF THE RESTOF INFLATION IS STICKY.

JONATHAN:IF THEY INFLUENCE FINANCIAL CONDITIONS AND NOT INFLUENCINGTHE DIRECTION OF INFLATION, HOW SHOULD THE COMMITTEE SETINTEREST RATES? WHAT SHOULD THEY SET THEM FOR? >> IS A NORMAL LEVEL WHICHWOULD NOT CAUSE FINANCIAL BOOMS AND BUSTS, THEY CAUSETREMENDOUS DISTORTION OF FINANCIAL ASSETS IN REAL ESTATEBY PUSHING RATES WAY TOO LOW FOR WAY TOO LONG AND NOWJACKING THEM UP AND LIVING A GENERATION OF AMERICANS UNABLETO BUY A HOUSE.

STOP IT ALREADY AND GET BACK TOIT NORMAL LEVEL, PRACTICE YOUR GOLF GAME.DON'T DO THIS STUFF AND WAIT FOR THE NEXT FINANCIAL CRISISWHEN YOU'RE ACTUALLY NEEDED AND DON'T MICROMANAGE THE ECONOMY.I THINK THE ECONOMY WOULD DO BETTER. JONATHAN:DAVID KELLY, THANK YOU. CPI COMING IN A LITTLE HOTTERTHAN EXPECTED WITH EQUITIES DOWN BY 1.2% IN BOND YIELDS AREHIGHER. THIS CONVERSATION WILL CONTINUETOMORROW. THAT AND A WHOLE LOT MORE, FROMNEW YORK CITY FOR OUR AUDIENCE.

WORLDWIDE AND OUR AUDIENCE INTHE TRI-STATE AREA, STAY SAFE AS THE SNOWFALL PICKS UP ANDTHE KIDS ENJOY A SNOW DAY. LISA:

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