X EVERY DAY THAT GOES BY WE GET
MORE STABILITY. WASHINGTON WANTED TO STOP.
I THINK BORROWING ANY OTHER SHOCKS, IT IS BEHIND US. >> WE HAVE REPRICED A BIT.
EVERYTHING IS WORKING WELL. >> THE UNDERLYING STRENGTH OF
THE ECONOMY AND CORPORATE BALANCE SHEET IS WITH US. >> WE ARE IN A BEAR MARKET, AND
IT HAS GONE ON FOR A WHILE. >> LET'S BE CLEAR — THIS HAS
BEEN THE EQUIVALENT TO TIGHTENING. >> THIS IS BLOOMBERG
SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA
ABRAMOWICZ. >> WHAT A DIFFERENCE OF BULL
MARKET MAKES. LIVE FROM YOUR CITY, GOOD
MORNING. FOR OUR AUDIENCE WORLDWIDE,
THIS IS BLOOMBERG SURVEILLANCE. EQUITY FUTURES ARE ELEVATED IF
.4%. THE HEADLINE BELONGS TO THE NASDAQ 100. >> IS 20%.
THE LOWS OF LAST YEAR. IT'S ABLE MARKET.
IT'S UP AGAINST 14%. THEY ARE POISED FOR THE BEST
QUARTERLY PERFORMANCE IN 2020.
IS THIS A WHACK-A-MOLE?
YOU SELL OFF AND GO BUY IT. >> 18% YEAR TO DATE ON THE KP X
INDEX. LOOK AT THE HOMEBUILDERS. WE ARE SQUARING CIRCLES TODAY
ARE — TOGETHER. THE HOMEBUILDERS ARE 30% DOWN.
WHAT DO THE HOMEBUILDERS KNOW THAT BANKS DON'T? >> THEY'VE SIMPLY LOST VALUE,
SEE YOU GO INTO THEM AND BUY THEM AT THAT POINT.
THERE ARE NO KNIVES. IT WILL NOT CUT YOUR HAND WHEN
YOU FALL, BUT A LOT OF PEOPLE THINK THE HOUSING MARKET HAS
BOTTOMED, AND WE HAVE SEEN THIS TROUGH IN TERMS OF COMMERCIAL
AND RESIDENTIAL. YOU STARTED TO SEE MORTGAGE
RATES CREEP LOWER.
YOU STARTED TO SEE VOLUME GO UP.
I EVEN GOT A CALL THE OTHER DAY SAYING ARE YOU PLANNING TO SELL
YOUR HOME? WE'VE HAD A LOT OF INTEREST. AS
A TIGHT INVENTORY. >> THERE'S THAT KIND OF
ATTITUDE. >> I'VE NOT GOTTEN ONE OF THESE
IN YEARS. JUST GIVE YOU A SENSE. >> RATE CUTS ARE COMING AROUND
THE CORNER. >> GO HOMEBUILDERS. >> A HUNDRED BASIS POINTS.
IT IS NOT FORECASTED WHATSOEVER. IT IS INTERESTING THEY'VE COME
OUT WITH A PRIVATE CHAT WITH CHAIRMAN POWELL READ THEY'VE
INDICATED WHAT WERE HIKE THIS YEAR.
MY FIRST TAKE WAS THAT THEY'VE TALKED ABOUT THE DOPPLER.
IT'S THE — THE DOT PLOT. >> LET ME TELL YOU.
WE HAVE PRIVATE INFORMATION.
THEY'RE GOING TO POTENTIALLY
RAISE RATES. >> WE WILL GET DATA LEATHER —
LATER. THEY ARE GOING TO TALK ABOUT
THAT, BUT WE EXPECTED TO COME IN SUB 200,000.
WE WENT TO THE KENNEDY YESTERDAY, AND WE WENT WEEK —
WE NEED TO RETURN TO IT. >> APRIL 12, CPI.
NOBODY IS TALKING ABOUT IT. NO ONE IS TALKING ABOUT THIS AT
ALL. SO WHEN PEOPLE START TALKING
ABOUT THE SPREAD BETWEEN THE FEDERAL RESERVE AND THE MARKET,
THERE'S A WILL MORE HIKE, AND WERE SAYING HUNDRED BASIS
POINTS OF CUTS AROUND THE CORNER, WHAT IT WILL RESOLVE
THE SPREAD, IT IS NOT THE ECONOMIC DATA. WHAT WOULD IT BE?
>> I WAS WONDERING THE SAME THING.
ESPECIALLY WE GOT EUROPEAN DATA SHOWING SPANISH INFLATION CAME
IN SUBSTANTIALLY LOWER THAN EXPECTED. DOES THIS MEAN THEY WILL BACK
AWAY FROM THE RATE HIKES? >> NOT AT ALL.
IT IS FLAT. >> PEOPLE ARE NOT RESPONDING TO
THE ECONOMIC DATA. IT IS STILL A STORY AS WE
EXPECTED TO GET A STRONG LABOR MARKET. >> AT WHAT POINT DO THEY SHOW
THE CRACKS TO TRADE ON THAT? >> I KEEP SAYING IT YOU KEEP
SAYING IT DO. ARE WE WAITING FOR A SENIOR
LOAN OFFICER OPINION SURVEY? >> YES. 100%. >> YOU HAVE TO WAIT
UNTIL MAY 8 TO GET AN UNDERSTANDING AS TO WHAT IS
GOING TO HAPPEN HERE. >> IF THERE IS ANY OTHER DATA
POINT, IT SEEMS TO BE A SUSPICION OF PEOPLE, THEY WILL
TRADE ON THAT, BUT UNTIL THEN, IT WILL BE MAY 8. >> UNTIL THEN, WILL BE LOOKING
AT TEA LEAVES AND HEARING REPORTS FROM BANKS, AND THEY
WILL SAY THE I WORD, AND THEY'LL SAY OH MY GOSH, IT'S
ALL CLEAR. OR THERE IS A BANKING CRISIS
CONTINUING, THEY WILL TRADE ON THAT. >> I MENTION THE BANK EARNINGS
FROM THE FIRST YEAR OF JP MORGAN TO THE BANK OR —
EARNINGS.
EQUITY FUTURES AT THE S&P 500
IS POSITIVE FIVE .4%. JUST TO KICK OFF THE TRADING
DAY. IT'S A NOTCH HIGHER. A LITTLE BIT HIGHER.
NOT BY MUCH. 35677 ON A TEN-YEAR.
ON EURO-DOLLAR, PLUS TWO TENS OF 1% IN THE EURO'S FAVOR.
A STRONG EURO. >> A WEAKER DOLLAR.
THAT IS BEEN A TREND. A PERSISTENT TREND.
WE ARE TALKING WITH MARK MCCORMICK. THIS IS THE U.S.
LOSING ITS EXCEPTIONALISM, OR SOMETHING LARGER.
WE ARE WATCHING THOSE JOBLESS CLAIMS. I WAS LOOKING TODAY AT
THE UNEMPLOYMENT RATE GOING BACK TO 2007.
I UNDERSTAND THAT 2020 DISTORTED IT, BUT HOW QUICKLY
DOES THE RATE CREEP HIGHER? >> UNLESS 2020 HAS SOME TIME,
IT MAKES ME WONDER, AT WHAT POINT DO WE JUST SAY THIS LABOR
MARKET IS ROBUST AND NOT DISTORTIONS.
IS NOT WRECKED DATA. THIS IS SOMETHING WE ARE JUST
NOT SEEING IN TERMS OF THE WEEK AS WE ARE ALL EXPECTING, AND
THAT HIS WIFE THIS WEEKLY DATA IS GETTING MORE AND MORE
INTERESTING.
PERHAPS WE'LL GET SOME
INTERPRETATION. THIS INCLUDES RICHMOND THREAT
— FED PRESIDENT TOM BARKAN, SUSAN COLLINS, AND NEEL
KASHKARI. WHAT CAN THEY POSSIBLY SAY?
HOW CAN THEY ILLUMINATE THE SITUATION? >> THEY WERE ON THE MONEY FOR
MUCH OF THE YEAR. THEY CAME OUT AT THE START OF
JANUARY AT 540 ON FED FUNDS, AND THEY WAITED.
NOW, LISTEN TO HIM. HE IS NOW 540 ON FED FUNDS
ANYMORE. THERE'S A REAL BELIEF THAT WHAT
WE ARE SEEING IN THE BANKING SYSTEM IS A SET SIT DO FOR RATE
HIKES.
>> WE HAVEN'T SEEN THIS YET.
THAT IS THE PROBLEM. WE HAVE NO SENSE OF WHAT THIS
WILL DO, SO HOW DO THEY GET INSIGHT INTO WHAT THEY ARE
LOOKING OR TO CONFIRM THE BELIEF THAT THIS WILL CAUSE A
TIGHTENING IN CREDIT CONDITIONS. THIS IS A MESSY PART.
THE TREASURY SECRETARY IS SPEAKING AT THE NATIONAL
ASSOCIATION FOR BANKS AND BUSINESS ECONOMIC CONFERENCES
IN WASHINGTON DC. SHE HAS BEEN INTERESTING
RECENTLY, AND I AM CURIOUS TO HEAR WHAT SHE HAS TO SAY ABOUT
THE ECONOMY, ABOUT THE STATE OF BANKING, AND THE CREDIT
TIGHTENING THAT SHE SEES, WHAT SHE IS CONCERNED ABOUT, BECAUSE SHE HAS A
BETTER LOOK AT ANYTHING. >> WHY DO WE CALL THIS A
SPECIAL ASSESSMENT ON THE INDUSTRY? WHAT IS THIS ABOUT? >> THIS IS NOT UNPRECEDENTED TO
HAVE A SPECIAL ASSESSMENT. >> LET'S GO AROUND THE BANKS
AND DO THIS WHIP AROUND. >> IS TAKING A HAT.
IT IS THE LEAST POLITICALLY VULNERABLE FOR US TO BAKE AND
MAKE MONEY. HERE. YOU SHOULD PAY FOR. >> YOU HAVE BENEFITED FROM
THIS, ARGUABLY. >> SO COME ON AND GIVE US $23
MILLION.
>> MAKE IT SOUND EASY — MAKE
IT SOUND EASY. MOST OF THIS IS SOLVABLE.
DON'T KNOW IF I WOULD USE THIS AS A CRISIS. WE SHOULD MOVE ON. >> IS IN TOKYO. >> HONESTLY, A LOT OF PEOPLE
HAVE COME ON SAID THIS. WE JUST DON'T KNOW. WE ARE GETTING A LITTLE
CONCERNED ABOUT WHO TO BELIEVE. >> MY CRISIS IS IF YOU HAVE TO
STAY UP ON A SUNDAY EVENING, AND ALL OF THE REGULATORS ARE
GETTING TOGETHER BECAUSE BANKS ARE FAILING, I THINK THAT MEANS
THE DEFINITION OF A CRISIS — IF YOU DO THAT ON ONE WEEKEND
OR TWO WEEKENDS, WITH THAT, THE CIO OF TAKE ASSET MANAGEMENT
WILL JOIN US. GOOD MORNING. WELCOME TO THE PROGRAM.
ALWAYS GREAT TO SEE. THAT RALLY WE'VE SEEN IN THE
NASDAQ, IT IS UP MORE THAN 20% FROM THE DECEMBER LOW.
IS AT A RALLY YOU CAN GET BEHIND? >> NOT YET.
WE THINK IT IS REALLY PREDICATED ON THE MOVEMENT OF
RACE AND BEING A PRIMARY DRIVER RIGHT NOW.
WE HAVE A GREAT OPPORTUNITY TO LEARN MORE ABOUT THE TECH
SECTOR IN THE NEXT UPPER — COUPLE OF WEEKS, AND WHAT WE
ARE LOOKING FOR IS EVIDENCE OF COMPANIES WHO ARE NOT HUNKERING
DOWN AND SCALING BACK ON.
THAT IS JUST INFORMATION WE
THINK WILL BE QUITE FLUID, SO WE THINK THAT WILL BE A PUSH
TOWARD CYBER. WE HAVE A PUSH TOWARDS BIG DATA.
IT IS CERTAINLY STILL THERE, BUT THINGS LIKE DRAM, YOU'VE
DONE A GOOD JOB OF COVERING THE DEMAND FOR CHIPS, AND OTHER
SOFTWARE SERVICES, SO IF WE SEE THE CAPEX PUSH REALLY STABILIZE
OR IMPROVE, WE ARE NOT BUYERS OF TECHNOLOGY. >> YOU JUST SAID SOMETHING
INTERESTING. THE RALLY THAT WE'VE SEEN IS
PREDICATED ON THE IDEA OF RATE CUTS.
IS THAT THE ENTIRETY OF THAT? A LOT OF PEOPLE WOULD DISAGREE
WITH THAT. >> I DON'T THINK THAT'S THE
ENTIRETY OF THAT. THERE IS SOME DEGREE OF THAT
TRADE FROM HOMEBUILDERS NOT REALLY RALLYING ON MUCH OF THE
FUNDAMENTALS, BUT RALLYING. WE THINK IT IS TOO EARLY TO
CALL THIS A 2020 PLAYBOOK READ RATES DECLINING FOR THE
EARNINGS CYCLE. IT PICKS UP, BUT THERE IS A
PARTIAL EXPLANATION. WE DO HAVE A DOWNDRAFT, THAT WE
HAD ACROSS NOT JUST BIG TECH, BUT ALSO SOME OF THE MORE A
CYCLICAL COMPONENTS INTACT.
THOSE SPEAK TO ASSET ALLOCATION
GRAB AS OPPOSED TO BEING A FUNDAMENTAL BASIS BEHIND THE
MOVE, SO THAT IS A PARTIAL EXPLANATION, BUT NOT A FULL
EXPIRATION. >> HOW PAINFUL IS IT TO BE
BEARISH IN ANYTHING RIGHT NOW? >> I THINK IT IS LIKE A PLEA
BOOK HAS BEEN THE S&P 500. YOU BUY S&P 3200, AND YOU EASE
UP IF YOU'RE IN POSITION. IT IS THE SAME RANGE ON THE 10
YEAR.
I THINK FOR US, AS BIG A GROUP
AS A HAS-BEEN, IT'S BEEN CAUTIOUS, AND WE'VE BEEN UP IN
CREDIT QUALITY, DURATION. THAT IS REALLY WORK READ I
THINK SOME OF THE ESOTERIC PARTS OF FIXED INCOME, LIKE
MORTGAGES, THAT'S WORKED FOR US AS WELL.
BUT I THINK THIS IS AN AREA WHERE YOU HAVE TO MANAGER
TRACKING, MEANING IN A VERY TRENDING MARKET, DESPITE ALL OF
THE CHATTER BACK AND FORTH. 3800 AND 4200, THAT HAS THE
BLUEPRINT. GETTING OUTSIDE OF THIS TO THE
ASSET ALLOCATION OF THE ENVIRONMENT, THAT IS THE
PLAYBOOK TO RUN WITH RIGHT NOW. >> WE ARE TRYING TO WORK OUT
HOW WE BREAK THINGS OUT.
HOW WE BREAK OUT FROM THAT
RANGE. BEYOND THAT, MOST OF THE SPREAD
BETWEEN THE FED IN THE MARKET WILL RESOLVE IT ONE WAY OR THE
OTHER. WE SPENT THE LAST WEEK, AND YOU
HAVE AS WELL. WHAT WILL RESOLVE THAT?
IS IT THE TRADITIONAL ECONOMIC INDICATOR?
IS IT THE SENIOR LOAN OFFICER OPINION SURVEY THAT WE ARE
WAITING OR ON MAY 8? THANK YOU. WHICH ONE IS IT? >> RIGHT NOW, THE FINANCIAL
SECTOR IS A PRIMARY FOCUS. SECONDARILY, IT IS THE ECONOMIC
DATA. FROM CHAIR POWELL, THE ECONOMIC
DATA STILL MATTERS, WHETHER YOU ARE LOOKING AT DAILY NEWS FLOW
THAT SUGGESTS OTHERWISE. >> THIS IS NOT ONLY ONE OF THE THINGS TO FOCUS ON, BUT
75% OF THE JOB OPENINGS RIGHT NOW ARE WITH COMPANIES BELOW 250
ON A HEADCOUNT. SEEING WHAT CREDIT FLOW LOOKS
LIKE TO THOSE INSTITUTIONS, SEEING WHAT AN FIP SURVEY DATA SUGGESTS FOR KEEPING EMPLOYEES IN SEATS,
THAT IS THE KEY.
I THINK IT WILL BE INTERESTINGLY ENOUGH, THE LAST
RESOLUTION BETWEEN THE FED AND THE MARKET WAS ONE BY THE FED.
WE TOLD YOU, INFLATIONARY PRESSURES ARE GOING TO BE HIGH.
THEY WERE. THE FED SAID, THERE IS A BIAS
TOWARDS PERSISTENT INFLATIONARY DATA. IT IS SOMETHING TO PAY
ATTENTION TO IN ADDITION TO THE FINANCIAL SECTOR.
WE THINK THAT WHILE THE FOCUS IS ON THE FINANCIAL SECTOR,
ECONOMIC DATA IS A VERY CLOSE SECOND. >> THANK YOU. AS ALWAYS.
GOOD TO SEE YOU. U.S. BANK ACID MANAGEMENT, MAY 3.
THAT IS THE OTHER DAY.
THE FOMC MEETING.
THE QUESTION WE KEEP GOING BACK TO IS WILL WE HAVE SUFFICIENT
INFORMATION BY THE TIME WE GET TO MAY 3.
FOR THE FED TO MAKE A COLUMN WHERE THE OTHER. >> THE FACT THAT HE POINTED OUT
THAT THE FED IS BEEN RIGHT IN THE MARKET HAS BEEN WRONG,
THERE'S ALWAYS THIS MANTRA IN MARKETS THAT THE MARKETS ARE
CORRECT, BUT THEY ARE LOOKING AT DATA, EVEN IF THE HEADLINES
ARE NOT. THE PCE DATA WE GET TOMORROW
MIGHT QUITE INTERESTING. AT A TIME WHERE WE CONTINUE TO
GET RELATIVELY HOT READINGS ON INFLATION. >> CLAIMS, PAYROLLS.
SHRUG YOUR SHOULDERS AND MOVE ON.
>> UNLESS IT IS TRIGGERING
THINGS. >> WILL BE JOINED LATER TO TALK
ABOUT THAT. WE WILL BE AROUND THE TABLE NEW
YORK IN THE NEXT HOUR. FOR NEW YORK, GOOD MORNING.
EQUITIES ARE HIGHER. THIS IS BLOOMBERG. >> KEEP YOU UP-TO-DATE WITH
NEWS FROM AROUND THE WORLD. ON THE FIRST WORD, I AM LISA
MATEO. >> THE WALL STREET JOURNAL IS
CONCERNED ABOUT ONE OF ITS RETORT — REPORTERS WHO HAS
BEEN DETAINED ON SPYING ALLEGATIONS.
ACCORDING TO THE SECURITY SERVICE, AN AMERICAN WAS
DETAINED IN THE CITY OF YUCCA TERRAN BIRD, AND HE IS EXPECTED
OF ESPIONAGE IN THE INTEREST OF THE U.S. GOVERNMENT. THE U.S.
IS SAID TO BE COLLECTING INFORMATION ABOUT THE RUSSIAN
MILITARY INDUSTRIAL COMPLEX. IN KENTUCKY, TO U.S.
ARMY HELICOPTERS COLLIDED DURING A TRAINING EXERCISE YOUR
FORT CAMPBELL. GOVERNOR ANNIE SCHEER SAID
FATALITIES ARE EXPECTED. THE HELICOPTERS ARE FROM THE
101ST AIRBORNE DIVISION. THE FBI SEE IS HAVING BIG BANKS
COVER $23 BILLION FROM THE RECENT BANK FAILURES.
BLOOMBERG HAS LEARNED THAT THE SPECIAL ASSESSMENT TO SHORE UP
A 100 BILLION DOLLARS IN INSURANCE FUNDS.
THE REGULATOR WILL SPARE SMALL BANKS.
THE PRESIDENT OF TAIWAN MADE A STOPOVER IN NEW YORK, BUT THERE
WAS A TEST FOR THE WORLD, THEY MADE FURTHER ESTIMATES FOR
CHINA.
BEIJING SAID THERE WOULD BE A
SEVERE IMPACT WITH WASHINGTON. THE U.K.
IS SET TO OUTLINE A STRATEGY TO SPEED UP THE DEPLOYMENT OF
RENEWABLE POWER AND CAPTURED CARBON.
PRESIDENT BIDEN INFLATION REDUCTION AT.
THE MEASURES IN THE DRAFT DOCUMENT SEEN BY BLOOMBERG NEWS
WILL SHOW LITTLE IN THE WAY OF NEW SPENDING.
GLOBAL NEWS, POWERED BY MORE THAN 2700 JOURNALISTS AND
ANALYSTS IN MORE THAN 120 COUNTRIES. I AM LISA MATEO.
THIS IS BLOOMBERG. >> ANY TIME YOU HAVE A BANK
FAILURE LIKE THIS, BANK MANAGEMENT CLEARLY FAILED,
SUPERVISORS FAILED, AND THE REGULATORY SYSTEM FAILED RED A
TEARING APPROACH MAKE SOME SENSE .
IT DOESN'T NEED TO BE THE SAME ROLE FOR ALL BANKS.
BUT WE DO NEED STRONGER RULES FOR FIRMS OF THIS SIZE.
STRONGER RULES FOR CAPITAL AND LIQUIDITY. IT WILL BE IMPORTANT.
>> THE FEDERAL RESERVE OVER THE LAST COUPLE OF DAYS TESTIFIED
ON CAPITOL HILL. YOU HEARD A LINE.
BANK MANAGEMENT CLEARLY FAILED. SUPER VIALS FAILED.
THE REGULAR TRAY SYSTEM FAILED. TAKE MANAGEMENT FAILED.
THEY LOST THE JOB. SUPERVISORS FAILED, AND WHAT
WILL HAPPEN TO THEM? SPECIALLY BECAUSE A LOT OF
PEOPLE QUESTION WHETHER — YOU'VE ASKED THIS QUESTION.
IS IT A REGULATORY ISSUE OR ENFORCEMENT ISSUE?
IT IS A FAILURE TO ACT UNDER PROVISIONS WHERE YOU HAVE THE
CAPACITY TO ACT AND THE INFORMATION TO ACT.
HOW DO YOU SOLVE THIS PROBLEM? >> YOU'VE MENTIONED THIS.
HE'S PROBABLY NOT THE RIGHT GUY TO BE ON CAPITOL HILL OVER THE
LAST COUPLE OF DAYS BECAUSE THIS IS A REALLY GOOD STORY.
XO WANT TO HEAR FROM RANDY.
>> AND CHAIRMAN PAL.
WHAT ARE THEY GOING TO DO. THEY HAVE AN INVESTIGATION AND
THEY WILL RELEASE IN MAY. UNTIL THEN, ALL OF THE
PROPOSALS WE ARE HEARING, HOW MUCH ARE WE BASICALLY
WINDOWDRESSING TO SAY WE ARE ON THIS BEFORE WE UNDERSTAND WHAT
ACTUALLY HAPPENED AND HOW MUCH HAS ANYTHING ACTUALLY GOTTEN
OFF THE GROUND VERSUS PAPERING OVER THE ISSUE WITH A FEELING
THAT WE ARE ON THIS. >> WE HAVE JOKED THAT IF YOU
HAVE A COUPLE OF DAYS ARE GOING TO THE EQUITY MARKET, THIS WILL
MOVE ON, IT IS LIKE A CRISIS IS OVER AND WHAT A DIFFERENCE A
WEEK — WEEK MAKES. WE'VE ASKED THIS QUESTION A FEW
TIMES. DO WE NEED TO SEE LEGISLATIVE
ACTION TO RESOLVE THIS? YOU NEED TO CHANGE THE
INSURANCE CAPS FOR DEPOSIT TO ADDRESS THIS WITH >> YOU DON'T
HEAR THAT BEING ASKED THIS WEEK. >> JUST WAIT.
RIGHT NOW, THE BIG BANKS ARE ON THE HOOK TO PAY $23 BILLION.
LET'S SEE WHAT THE RESPONSES. THERE IS A RENEWED PUSH.
LET'S HEAR WHAT THE SOLUTION IS TO MARK WE NEED TO SEE X, Y,
AND Z.
SO THEY ARE JUST GOING TO GET
STRONG-ARMED. >> I DON'T KNOW IT NOT SURE HOW
THEY CAN PUSH BACK. WE CAN HAVE THAT CONVERSATION
IN A MINUTE. I'M NOT SURE WHAT POWER THEY
HAVE TO SAY NO. THEY'RE NOT GOING TO DO THAT. >> WHAT IS THE LIABILITY?
IS IT FREE MONEY FOR THE GOVERNMENT AND THEY CAN DO
ANYTIME THEY WANT MUCH MORE >> AND THINK ANY OF THIS IS THE.
I THINK WE WILL HAVE TO PAY TO BURN FOUR. >> IT WILL GET BAKED INTO FEES
AND THINGS OF THAT NATURE, BUT WHERE DOES THAT COME INTO THE
CONVERSATION? THIS IS ONE OF MY QUESTIONS
WHEN I HEARD IT IT IS EASY TO SAY THE BIG BANKS, YOU DON'T
HAVE $23 MILLION.
THERE ARE CONSEQUENCES IT >> NO
FREE LUNCH. I WAS DISTRACTED. AMH CAME DOWN THE ESCALATOR.
IN NEW YORK. I DIDN'T KNOW THAT. THERE WOULD BE A LOOK THAT. S&P 500, LIFTED IT MARKET.
BASICALLY, UNCHANGED ON THE TENURE. 357 34, THE FX MARKET HAS
SPANISH INFLATION DATA LITTLE BIT LATER DID THE EURO STRONGER.
>> PEOPLE POINT TO THE CORE BEING HOT.
IT IS ENTIRELY DUE TO ENERGY, BUT I WONDER HOW MUCH THAT WILL
START TO LEAD THE INDEX LOWER. CONSIDERING BEFORE WE HAVE
HIGHER ENERGY PRICES, THERE IS A PERCOLATING EFFECT AND THE
REST OF THE ECONOMY. DO THEY HAVE THE REVERSE OF
WHEN IT COMES DOWN.
>> LET’'S GO BACK TO THE
BANKING SYSTEM JOINING US ON CAPITOL HILL, MARA RODRIGUEZ.
THE PRINCIPAL AT MRV. LET'S START HERE.
WHAT DID YOU LEARN OF — OR LAST COUPLE OF DAYS. >> I THINK WE REALLY LEARNED
THAT HISTORY MATTERS, AND THIS IS WHAT HAPPENS WHEN WE HAVE
SUCH A SIGNIFICANT DECLINE IN HISTORY MAJORS PEOPLE FORGET
THINGS. THEY FORGET THAT BASIC INTEREST
RATE RISK MANAGEMENT AND LIQUIDITY MEASURES ARE — A
PART OF BEING A BANK. THEY ARE CERTAINLY GOING TO
HAVE SOME CHANGES IN TERMS OF SUPERVISORY AND ON-SITE
EXAMINATION PROCESSES, BUT THERE IS A LOT WE DON'T KNOW.
WHERE IS CRAIG BECKER. HE NEEDS TO BE THERE.
HE IS WHERE THE BUCK STOPS. WHERE WERE THE WORD MEMBERS #WE
HAVEN'T HEARD FROM ANY OF THEM. BECAUSE OF THE ONE SOURCE WAS
TO PROVIDE OVERSIGHT. IT IS NOT THE FED OR THE
CALIFORNIA REGULATORS DID THEY RUN THE BANKS.
WE ARE STILL MISSING THE WHOLE RANGE OF CAST OF CHARACTERS WHO
ARE REALLY RESPONSIBLE.
>> IN THE MEANTIME, THE NUMBER
WE PURCHASED $23 BILLION. IT IS NOT TAXPAYER FUNDED
BAILOUT. IT IS JP MORGAN FUNDED BAILOUT.
HOW MUCH IS THERE GOING TO BE SOME SORT OF CONSEQUENCE TO THE
BANKS HAVING A SPECIAL ASSESSMENT THAT LEADS THE FBI
SEE WHOLE? >> I CAN'T IMAGINE JP MORGAN,
— MORGAN, ALL OF THE SYSTEMIC BANKS, THEY WILL BE HAPPY ABOUT
THIS. THEY ARE NOT THE PROBLEM. THEY ARE VERY LIQUID.
THEY ARE WELL-CAPITALIZED. THEY CERTAINLY DON'T HAVE
CONCENTRATIONS OF DEPOSIT IN THE WAY THE S&P DID.
THE OTHER REGIONAL BANKS ARE CERTAINLY GOING TO TAKE A HIT
AND I DON'T BELIEVE THE COMMUNITY BANKS WILL.
I THINK THERE IS NO POLITICAL WILL ON EITHER SIDE OF THE
AISLE HAD NOT COMMUNITY BANKS, BUT THAT OF THE DAY, IT WILL BE
THE AMERICAN CONSUMER WHO IS GOING TO TAKE A HIT BECAUSE
EVENTUALLY, WHEN IT RISES FOR THE BANKS, IT WILL GET PASSED
ON TO DEPOSITORS. THAT IS NOT GOING TO BE ANY
KIND OF FREE LUNCH — LAUNCH FOR THE AMERICAN WITH NOTHING
TO DO WITH SVP'S HORRIBLE MISMANAGEMENT. >> YOU TALKED ABOUT HISTORY AND
A LOT OF HISTORY MANAGERS IT IN THE WALL STREET JOURNAL, THEY
WROTE A COLUMN ABOUT HOW THIS ISN'T THE SAME KIND OF 2008
FINANCIAL CRISIS WHERE IT HAPPENS ALL AT ONCE AND RATHER,
IT IS A SLOW MOVING CRISIS OF SMALLER AND MEDIUM-SIZED BANKS
USING — THEY ARE LOSING PREEMINENCE IN MARKETS.
DOES THAT RESONATE WITH YOU? >> IT DIES.
WHAT WE ARE SEEING IS YOU ARE GOING TO HAVE A WIDE RANGE OF
INVESTORS, JOURNALISTS, ON THE WHO ARE NOT LOOKING.
HERE'S THE NEXT TROUBLE SPOT.
WE HAVE A BANK THAT HAS
INCREDIBLY LARGE PORTFOLIOS OF SOURING REAL ESTATE GOALS, AND
YOU HAVE LEVERAGE TO THAT HAVE A VERY LITTLE PROTECTION FROM
THE LENDER. SO THERE ARE SOME TROUBLES BOTS.
THEY'VE BEEN THERE ALL ALONG, BUT WITH STOCK RACES GOING UP,
INVESTORS WERE HAPPY. THE MINUTE THEY HAVE VOLATILITY
OR STOCK PRICES COMING DOWN, INVESTORS REDISCOVER THE
RELIGION OF GOOD AND DUE DILIGENCE IN TERMS OF THE
CREDIT. SO, I THINK WE ARE GOING TO
HAVE A LOT OF DRIBS AND DRABS OF THESE KINDS OF ISSUES.
PEOPLE ARE TALKING ABOUT ON ACCOUNTING RULES OR UNUSUAL
ACCOUNTING RULES. THEY'VE BEEN THERE ALL ALONG.
THEY CAN'T MOVE THE BOMBS ARE IN.
THEY CAN ALSO MAKE ALL KINDS OF CHANGES WITH NONPERFORMING LOAN
RESERVES, SO I THINK EVERY TIME INVESTORS NET PICK OR
JOURNALIST NITPICK A BIT MORE, THEY WILL FIND THERE ARE
SERIOUS PROBLEM'S ARE STILL NOT RESOLVED IN THE WORLD OF VANKE
REGULATIONS, SUPERVISION, AND ACCOUNTING.
>> ONE WEEK LATER, EQUITY
MARKETS LATER, AND THE QUESTIONS, THE URGENCIES.
IT DISSIPATES. I MENTIONED THIS A FEW TIMES.
BUT LAST TIME, DO WE NEED LEGISLATIVE CHANGE RIGHT NOW?
WHAT DO WE NEED TO DO IN THE NEXT 24 HOURS.
WHAT DO WE NEED TO CHANGE? >> WHAT WE NEED TO CHANGE IS TO
MAKE SURE THAT REGULATORS STATEWIDE AND AT A FEDERAL
LEVEL ARE EMPOWERED TO DO THEIR JOB.
THEY NEED TO REMOVE THE BANK FROM BEING IN THE DISTRICT BANK
AND TRYING TO REMOVE THOSE CONFLICT OF INTEREST. YOU
REALLY NEED TO CHANGE THE STRUCTURE SO IT IS EMPOWERING
BOTH OFF-SITE AND ON-SITE EXAMINERS TO DO THEIR JOB.
THE PROBLEM IS THAT WHEN ANY OF THEM STEPS UP, AND THEY TRY TO
TELL THE TRUTH, THERE IS NO INCENTIVE TO DO THAT.
YOU NEED TO MAKE SURE THE BANKS ARE 100 BILLION OR MORE, AND
THEY ARE PROPERLY REGULATED AND SUPERVISED.
YOU NEED TO DO AWAY WITH TRUMP RULE CPA THAT HE DESIGNATED OR
CHANGE THE DEFINITION AS TO WHAT IS A SYSTEMICALLY
IMPORTANT BANK, BECAUSE THOSE REGIONAL BANKS, BY DEFINITION,
THEY ARE VERY CONCENTRATED, AND THEY ARE VERY IMPORTANT IN
THOSE REGIONS.
HOPEFULLY, THIS TIME AROUND,
ALL ADDITIONS ON BOTH SIDES OF THE AISLE HAVE LEARNED THE
IMPORTANCE OF NOT WATERING DOWN THOSE REGULATIONS. >> THAT IS IMPLIED BY THE FACT
THAT IS AGO, THEY HAD TO USE A SYSTEMIC RICH EXCEPTION FOR THE
BANKS. THANK YOU FOR JOINING US, AS
ALWAYS IT MRV ASSOCIATES. LAST COUPLE OF DAYS, WHAT DO
YOU MAKE OF THIS? >> THAT PEOPLE ARE LOOKING TO
FEEL ANGRY AND THEY DON'T ORDER WINTER ANGRY — ANGER.
— AND THEY DON'T KNOW WHERE TO POINT THEIR ANGER.
THERE IS A MESS AND A LACK OF POLITICAL WILL TO ACTUALLY MAKE
ANY CHANGES OR HAVE ANY LASTING CONSEQUENCE.
ASK HOW MANY TIMES HAVE YOU HEARD THE STORY WERE A COMPANY
IS LT OF FRAUD, YOU FIND OUT THEY DON'T HAVE A CFO?
HOW DID THAT HAPPEN? WHY DID NO ONE LOOK, OR WHY
HAVE THEY BEEN UP TO NO GOOD AND THEY DIDN'T HAVE A CHIEF
OFFICER.
HOW DID THAT HAPPEN THAT A BANK
IS UNDER ANY FIND OUT THAT THEY HAD AC.
THE LEADERSHIP HAD A SEAT ON THE BOARD OF THE REGULATOR WHO
IS MEANT TO OVERSEE THEM. IT MAKES SENSE TO ME. >> THAT IS RUSSIAN WHY THE HOW
MANY OTHER COMPANIES, NOT JUST BANKS HAVE OTHER RED FLAGS.
ON THE BALANCE SHEET. >> THE CUTS KEEP COMING.
ROKU JUST MOMENTS AGO ACROSS THE BLOOMBERG 200 EMPLOYEES
WITH 6% OF THE WORK FORCE. THEY COME BACK TO THAT STORY IN
YOUR THAT HE, GOOD MORNING. IT IS THE SHAPE OF THINGS IN
THE MARKET. .4% ON THE S&P 500 AND WE HAVE
SOME MORE WEIGHT TO THE NASDAQ, NOT CATCH UP ANOTHER 4%.
THE NASDAQ IS UP 20% FROM THE DECEMBER LOW.
I GUESS WE HAVE TO CALL THIS A NEW BULL MARKET, I GUESS IT
BULL MARKET LOOKS LIKE THIS.
A TWO-YEAR GOING INTO JOBLESS
CLAIMS AT ABOUT TWO HOURS FROM NOW. THE TWO YEARS THAT .40886%.
ON A TWO-YEAR. WAS CALLED A 4.1% YIELDS IN A
BASIS WENT. THE 10 YEAR AT .3734.
THE BOND MARKET IS SET BY EUROS AND INFLATION DATA.
THE SPANISH CPI HAS A BIG DOWNSIDE SURPRISE.
IT IS STILL THE EURO, STRONGER AGAINST THE DOLLAR OR PROBABLY.
SHAPING UP LIKE THIS THIS MORNING. EURO-DOLLAR 10863.
THAT IS A STRONGER EURO AGAINST A WEAKER DOLLAR, BUT JUST TO
RETURN TO THAT STORY, 6% OF THE WORKFORCE TO GO EVER ROKU. >> HOW MUCH MORE HAS TO BE
BUILT UP AND BEAT OUT OF THE SYSTEM BEFORE WE BELIEVE THAT
TECH HAS RIGHT SIDE. THAT IS A QUESTION.
I'VE MENTIONED THIS BEFORE. I MENTIONED YOU CAN SEARCH FOR
THINGS RATHER THAN TO RELENT IN TERMS OF WHERE THINGS ARE, BUT
I THINK THAT — I THINK IT IS A SATURATION FACTOR.
HOW MANY DEVICES DO PEOPLE NEED TO BUY.
THIS HAS BEEN THE EXISTENTIAL QUESTION FACING A LOT OF THE
PANDEMIC DARLINGS.
THEY NOW HAVE TO REALIZE THAT
THE WORLD IS NOT GOING TO BE PERMANENTLY ON THESE RATES. >> I'VE REPEATED THIS QUESTION,
SO FORGIVE ME FOR GOING ON FOR THE MILLIONTH TIME, BUT THIS IS
THE EXCESS OF THE LAST 10 YEARS? DOES THIS GO BEYOND THE EXCESS
OF THE PANDEMIC ON THE PORTFOLIO OF DEMAND?
ISN'T SOME OF THIS ABOUT WHAT HAS HAPPENED IN THE LAST DECADE.
>> WITHOUT A DOUBT, ROKU, WITHOUT A DOUBT, ANYONE WAS
DESPERATE FOR ENTERTAINMENT IN ANY SHAPE OR FORM TO DEAL WITH
KIDS LOCKED UP AT HOME FOR GREATER INVESTMENT IN ROKU
DURING THE PANDEMIC THEN PERHAPS IN PRE-PANDEMIC TIMES. >> NOTHING PERSONAL ABOUT THAT.
WROTE WAS UP I .6%. THIS IS NOT THE FIRST TIME
WE'VE SEEN THIS EFFICIENCY IN THE CUT.
I THINK META-HAS BEEN ABSENTLY FLYING HERE.
THIS IS THE YEAR OF EFFICIENCY. THEY'VE DELIVERED THE CUTS.
TUBERCULOSIS. >> — THE MARKET LOVES THIS. >> ME A PRIVATES TO GO. >> FEDERAL RATE CUTS AS WELL. >> A TON OF FED SPEAK ON TAP.
WE WILL HEAR FROM KASHKARI. IN A TIME OF INCREDIBLY
ELEVATED UNCERTAINTY, WE WILL SEE MARKETS AS UNDERPRICING THE
LEVEL OF POLICY RACES HERE, THEY'VE MAINTAINED A BASE CASE
FOR POLICY RATES.
HERE'S THE NUMBER.
WAIT FOR THIS. 550 TO 570 FIVE. DESPITE AN UNDENIABLY DOVISH
MARCH FOMC MEETING WITH THE 25 BASIS POINT HIKE IT ANDREW, THE
MAN BEHIND THE NOTE IS JOINING US HERE NEW YORK. GOOD MORNING. >> IT MAKES SENSE.
575 ON FED FUNDS THAT ARE FACING THIS. >> I THINK IT IS NOT HARD TO
MAKE SENSE OF THIS AS YOU FOLLOW THE INFLATION DATA, BUT
THE BIG QUESTION IS, ARE WE GOING TO HAVE A FED FOCUSED ON
FINANCIAL STABILITY ISSUES OR PRICE STABILITY ISSUES.
I THINK THAT IS WHAT WE ARE TALKING ABOUT IN THE NOTE IN
TERMS OF THE INCREDIBLE UNCERTAINTY.
IT LOOKS QUITE UNCERTAIN, RELATIVE TO WHETHER WE ARE
GOING TO GET THIS FOCUS ON FINANCIAL STABILITY OR FOCUS ON
PRICE STABILITY WHICH IS MORE HAWKISH.
LAST FEW DAYS, THINGS HAVE STABILIZED AND WE'VE HAD
INFLATION DATA LATER IN THE WEEK.
WE MOVED AND ATE IT — AND HER DEFECTIVE PRICE STABILITY.
>> WAS TALK ABOUT THESE MIDST
— MISMATCHES IN TERMS OF DATA AND WHEN WE CAN THINK THAT.
INFLATION DATA ON APRIL 12. I WONDER HOW LONG IT WILL TAKE
TO GET THE FINANCIAL STABILITY ISSUES ON THE CALENDAR AND THE
MISMATCH THE FED HAS TO GRAPPLE WITH.
THE TIMELINE IS ALL OVER THE PLACE. IF YOU HAVE FINANCIAL
INSTABILITY, YOU MIGHT HAVE TO WAIT AND WAIT AND WAIT AND WAIT
AND WAIT. YOU MAY HAVE TO WAIT UNTIL 2024
BEFORE YOU SEE THE SLOW DOWN.
>> A COULD TAKE SOME TIME
BEFORE YOU SEE THIS SLOWDOWN COMING IN AND AFFECTING GROWTH
DATA. ESPECIALLY INFLATION DATA. IF YOU THINK ABOUT THAT OVER
THE NEXT THREE TO SIX MONTHS, IT WILL BE COMING IN
ESSENTIALLY WHERE IT WAS GOING TO COME IN BEFORE THE BANKING
SECTOR. WE COULD BE WAITING TO SEE HOW
THIS WILL TRICKLE THROUGH AND FLOW THROUGH THE ECONOMY.
BUT IF YOU GO BACK TO WHERE WE WERE JUST A FEW MONTHS AGO, WE
HAD SOME MONTHS OF SOFTER CORINTH NATION PRINCE AND THE
FED WAS SOUNDING A BIT MORE DOVISH FED YOU CAN BASICALLY
SEE ONE MONTH OF DATA. THERE WAS SOME REVISION TO THE
PRIOR DATA, AND IT WAS A MORE HAWKISH FED.
WE THINK ABOUT THE FED, THE VOLATILITY WE SAW IN THE
TWO-YEAR YIELD OVER THE LAST COUPLE OF WEEKS, AND MAKE SOME
SENSE IF YOU THINK THAT THEY WERE REALLY MOVING BETWEEN
THESE TWO EXTREMES WHERE COULD BE FINANCIAL STABILITY.
OR IT COULD BE PRICE STABILITY, AND THAT DOES MEAN THAT POLICY
RATES NEED TO GET ABOVE .5%.
>> I LOVE GETTING YOUR NOTES. I FEEL THIS EXASPERATION AS
PEOPLE BASICALLY SAY THAT RATE CUTS ARE OVER AND YOU SAY STOP
THE SPREAD WE HAVE AN INFLATION PROBLEM.
WHAT KIND OF FEEDBACK DO YOU GET? >> IT IS INTERESTING.
WE GET A LOT OF RESIDENTS ON THIS IDEA THAT INFLATION IS
STILL STRONG AND UNDERLYING INFLATION IS STILL STRONG, BUT
WHERE THERE IS MORE OF A QUESTION FROM CLIENTS, DOES THE
FED HAVE THE ABILITY TO RESPOND TO THAT, AND DO THEY HAVE THE
WILLINGNESS TO DO IT? THAT IS AN IMPORTANT QUESTION FOR THE FED IN A QUESTION THEY
SHOULD BE AWARE OF ASKING. ONE OF THE KEY THINGS YOU WANT TO DO WITH THE BANK IS PROVIDED
CONFIDENCE, YOU HAVE RESOLVED TO FIGHT AGAINST HIGH INFLATION.
THE MARKET REALLY GOT THERE. BUT I WANT TO GO OR SO, WE HAD
TO YEAR YIELDS ABOVE 5%. NOW, THERE ARE NEW QUESTIONS ABOUT WHETHER THE FED IS GOING
TO HAVE TO GIVE A LITTLE BIT ON THE PRICE STABILITY.
THEY WILL HAVE TO FOCUS ON THE FINANCIAL MANDATE AND THAT
COULD BE PROBLEMATIC IF WE START TO VIEW THE CENTRAL BANK
AS UNWILLING TO MOVE AGAINST INFLATION.
>> HOW HIGH COULD THESE YIELDS
GO IF THE FED PAUSES DESPITE HOTTER THAN EXPECTED CPI, PC,
ALL OF THE INDICATORS THAT WE HAVE BEEN WATCHING THE
FINANCIAL STABILITY QUESTIONS. >> WE HAVE BEEN WATCHING THESE
INTEREST RATE RISES BECAUSE POLICY RATES ARE RISING, BUT
THERE'S ANOTHER SCENARIO OR POLICY RATES COULD STAY LOWER
AND WE HAVE LONGER-TERM RATES RISING.
I THINK THE FED OFFICIALS ARE FEELING CONFIDENT BECAUSE IF
YOU LOOK AT THE LONGER-TERM EXPECTATIONS OF INFLATION THE
MARKET, FIVE YEARS FORWARD, FIVE-YEAR BREAKEVENS, THAT WILL
SAVE RELATIVELY STABLE OR CONSISTENT WITH MANDATE
CONSISTENCY, POLICIES, BUT I THINK THAT WHAT THEY ARE
WATCHING THAT STARTS GLIDING UP, YOU SEE HIGHER 10 YEAR
YIELDS, THE FED IS BEING DOVISH. THAT WOULD BE A REAL CONCERN
FOR THE FED OFFICIALS. >> WE'VE SAID A FEW TIMES, MAY
3, THEY MAY DECIDE. THEY HAVE ENOUGH PERMISSION TO
MAKE A CALL HIKE ON MAY 3? >> I THINK IT WILL BE A
DIFFICULT MEETING.
I THINK THEY WILL HAVE ENOUGH
INFORMATION TO CONTINUE HIKING AT THAT MEETING.
THE QUESTION IS, WHAT GUIDANCE ARE THEY GIVING BEYOND THAT.
WE SAW WHAT HAPPENS IN THE DOTS, AND THE LAST MEETING.
WE COULD GO, THE DOTS INDICATE WHERE POLICY SHOULD BE AT THE
END OF THE YEAR. I THINK THERE IS NO QUESTION
THAT THEY ARE GOING TO MOVE UP IN THAT MEETING.
UNTIL THEY HAVE IT IN THE BANKING SECTOR. THEY HAVE TO GIVE US SOME
INDICATION OF FURTHER RATE HIKES, OR THERE WILL BE NOT BE
FURTHER RATE HIKES, AND I DON'T KNOW IF YOU CAN DO AGAIN WITH
CENTRAL BANKS DID A WEEK OR TWO WEEKS AGO.
YOU MAY REMEMBER THE HIKING BY 50 BASIS POINTS AND SAYING WE
CAN'T TELL YOU WHERE WE GO FROM HERE.
IN MAY, AT THAT TIME, THERE MAY BE ENOUGH TIME TO VIEW THE
DATA, UNDERSTAND WHAT IS GOING WITH FINANCIAL STABILITY,
GIVING KINDS IT WILL THERE BE FURTHER RATE HIKES ARE NOT >>
IN OF THINKING WITH POLICY AFFIRMATION.
WHATEVER THAT MEANS, THEY SPENT A LONG TIME COMING UP WITH THAT.
CLEARLY, THEY BELIEVE THAT WHAT IS DEVELOPED IN THE SYSTEM IS A
SUBSTITUTE FOR RATE HIKES.
DEAR POINT, I THINK WE CAN
PROBABLY AGREE AROUND THE TABLE THAT IF WE GOT THIS DOT PLOT
THREE WEEKS AGO FROM 5.1 TO 5.6, THEY MAY BELIEVE THE
DEVELOP IN OF LAST COUPLE OF WEEKS WITH ABOUT 50 BASIS
POINTS I'VE GOT NO IDEA HOW MUCH CONVICTION THEY HAVE
EITHER VIEW OR IF THAT IS THEIR VIEW, BUT WE CAN READ BETWEEN
THE LINES HOW ON EARTH YOU MAKE AN ESTIMATE AS TO HOW MUCH
TIGHTENING OF LENDING STANDARDS MAY DEVELOP OFF THE BACK OF THE
STORY LAST COUPLE WEEKS, AND THE LEVEL OF FED FUNDS. >> IT IS REALLY DIFFICULT, AND
I WORRY A LITTLE BIT ABOUT THESE STATEMENTS.
THE TIGHTENING AND THE CREDIT CONDITIONS WILL SUBSTITUTE FOR
EXACTLY 25 OR 50 BASIS POINTS OF RATE HIKES YOU'RE MAKING AN
ASSUMPTION ABOUT HOW POLICY RATES TRANSMIT THROUGH
FINANCIAL CONDITIONS, BROADLY, AND HOW FINANCIAL BROADLY
TRANSMIT THROUGH THE REAL ECONOMY, AND THINK ABOUT WHAT
IS HAPPENED.
THERE IS TALK ABOUT SUBSTITUTING FOR RATE HIKES.
WILL BE PRICING RATE HIKES AGO ABOUT WHY 5%.
WE HAD THAT ABOUT 5%. NOW TO YEAR YIELDS ARE AROUND
4%. A HUNDRED BASIS POINTS LOWER.
DO YOU THINK THE TIGHTENING OF CREDIT CONDITIONS AND
SUBSTITUTES 100 BASIS POINTS LOWER, TO THE TWO-YEAR TREASURY
YIELD? IF WE DON'T, MARKETS WILL BE
PRICED WITH THE FED TO FULLY OFFSET OR MORE THAN OFFSET THE
TIGHTENING THAT PREPARED IN CREDIT CONDITIONS.
THAT IS REALLY AN ISSUE FOR THE FED IF THEY THOUGHT THAT IT WAS
GOING TO BE ABOVE 5.5%. FINANCIAL CONDITIONS ARE
LOOSENING. THERE TIGHTENING. IF YOU SAW THE DATA OVER THE
LAST MONTH, EVERY INDICATOR IS TURNING OUT.
WE HAVE A BOTTOM IN THE HOUSING MARKET, AND IT'S RISING FROM
THE BOTTOM.
I THINK THAT SHOULD BE ANOTHER
CONCERN WHERE YOU SAY, IT IS TRYING TO SLOW DOWN THE
ECONOMY, AND NOW THE SECOND THAT IS MOST RESPONSIVE TO
STRAIGHTS IS GUARDING TO RE-ACCELERATE. >> GIVEN MARKET PRICING, HOW
VULNERABLE IS THE INFRASTRUCTURE FOR A MARKET
THAT HAS BEEN WHIPPED AGAIN AND AGAIN HAS A LOT OF AGILITY
BACON. HOW VULNERABLE IS THIS MARKET
TO THE FED SURPRISE. A MASSIVE FED SURPRISE THAT
DISRUPTS WERE THINGS ARE.
EXCITE THINK THAT IS THE OTHER
REAL ISSUE FOR FED OFFICIALS. GIVEN THE NEW EVIDENCE OF
FINANCIAL STABILITY RINGS, IS THE BANK TRYING TO SMOOTHLY AND
INCREMENTALLY GUIDE POLICY RATES, GUIDE MARKET PRICING TO
WHAT YOU THINK IS THE RIGHT LEVEL TO BE CONSISTENT WITH
INFLATION. AND THE ISSUE FOR THE FED IS WE
HAVE A HUGE DISCONNECT BETWEEN WHERE THE DOTS ARE AND WHERE
THE MARK IT IS LIKE WE WERE TALKING ABOUT, IF ANYTHING, THE
FED OFFICIALS WANT TO GO HIGHER THAN THAT.
WE START SEEING THE INFLATION DATA COME IN STRONG, AND WE
WILL, ALL OF A SUDDEN, WE CAN BE IN THE BACK OF THE FED
OFFICIAL RATES BEING MUCH HIGHER, AND CAN YOU GET THERE
IN AN INCREMENTAL AND SMOOTH WAY, OR HAS THIS BECOME A
VIOLENT ADJUSTMENT, AND LOOK AT THE VOLATILITY WE SAW IN THE
TWO-YEAR YIELD. IN SOME WAYS, THAT IS
REFLECTING THE FACT THAT WE CAN REPRICE WITH THE FED IS GOING
TO DO. >> THEY ARE IN A MASSIVE FINE.
ONCE YOU GET INTO THE BUSINESS OF ACKNOWLEDGING THE
DEVELOPER'S OF THE LAST COUPLE WEEKS ARE A FOR RATE HIKES, GET
WORSE, I JUST WONDER HOW YOU KEEP SAYING WE ARE GOING TO GET
NO RATE CUTS THIS YEAR.
IF YOU BELIEVE THERE IS A
SUBSTITUTE, WE ARE CLOSE TO WHAT YOU'VE INDICATED IS
TERMINAL, ULTIMATELY, YOU SHOULD BE PULLING BACK IF
THINGS GET WORSE JUST TO MAINTAIN THE CALIBRATION OF
POLICY. BUT THIS MARKET IS NOT GOING TO
SEE IT THAT WAY. THIS MARKET IS GOING TO PRICING
A MAJOR RATE CUT IN THE CYCLE. IT WILL PAUSE OR THEY MAY HAVE
TO CALIBRATE THINGS IN A DIFFERENT DIRECTION. >> THEY ALREADY HAVE.
CONDITIONS OF ALREADY EASED WITH THE TANDEM OF THE EXPECTED
POTENTIAL OF THE RATE HIKE IN CREDIT STRESS. >> THAT'S A BIG CHALLENGE
SUPPORT TO MAKE. NEIL SAID THE SAME THING.
IF YOU POSITIVE MAY, HOW DO YOU STOP THIS PRICING EVEN MORE
RATE CUTS, AND THIS WAS GREAT.
5.5 READ CALL. — 5.5.
WHAT A CALL. THIS IS BLOOMBERG. >> KEEP YOU UP-TO-DATE WITH
NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I AM THE
— I AM LISA MATEO. A REPORTER FROM THE WALL STREET
JOURNAL HAS BEEN DETAINED IN RUSSIA ON SPYING ALLEGATIONS.
HE WAS DETAINED IN YUCCA TARYN BERG ON SUSPICION OF SPYING FOR
THE U.S. GOVERNMENT. WALTER JOURNALS DEEPLY
CONCERNED ABOUT HIS SAFETY. THERE IS ANOTHER SIGN OF
REPUBLICANS GROWING WITH UNCERTAINTY ABOUT THE UKRAINE.
CONGRESSIONAL REPUBLICANS SAY BILLIONS OF DOLLARS FOR UKRAINE
RISKS BEING MISSPENT AND COULD BE USED FOR DOMESTIC RARITIES.
THE HOUSE FOREIGN AFFAIRS COMMITTEE CHAIRMAN, MICHAEL
MCCAUL, CRITICIZED WESTERN EUROPEAN NATIONS WERE NOT
SUPPLYING AS MUCH ASSISTANCE AS THE U.S..
THE MSCI IS LOWERING THE SCORES OF 31,000 FUNDS.
THE FIRM SAYS CLIENTS HAVE VOICED CONCERNS ABOUT THE
UPWARD TREND IN RATINGS ACROSS THE UNIVERSE.
THE COMMISSION HAS TOLD BLOOMBERG THEY PLAN TO REVEAL
NEW INDUSTRY RULES REGARDING ENVIRONMENTAL, SOCIAL AND
GOVERNMENT SCORES. INTEL SAYS THAT NEW CHIPS FOR
THE LUCRATIVE SERVER MARKET WILL COME SOONER THAN EXPECTED.
THE COMPANY WILL SHIFT TO A MORE ADVANCED PRODUCTION
TECHNIQUE AND OFFER MORE CHIPS THAT ARE FASTER THAN ANALYSTS
PREDICTED.
THE INTEL CEO IS TRYING TO
REVERSE THE MARKET SHARE LOSSES BY RECLAIMING TECHNOLOGICAL
LEADERSHIP IN THE SERVER FIELD. GLOBAL NEWS, POWERED BY MORE
THAN 2700 JOURNALS AND ANALYSTS AND 120 COUNTRIES.
I'M LISA MATEO. THIS IS BLOOMBERG. EX THINGS ARE TRYING TO CALM
DOWN. THE FACT IS, IF THIS IS IT, IT
WILL INCREASINGLY LOOK LIKE IT IS.
WE WILL NEED TO GO BACK TO THE THING ABOUT THE FED OF A FEW
WEEKS AGO. WE NEED TO GO BACK TO LOOKING
AT THE DATA. NOTHING IS BROKEN. WE'VE REPRICED.
EVERYTHING IS WORKING WELL. SO, CAN WE REPRICE MORE FROM
THIS? ABSOLUTELY. >> THAT WAS LEE FARA JOBS STATE
STREET. — LEE FARAH JEUDY OF STATE
STREET. HOW WINNING WEEKS DO WE NEED IN
THE MARKET. HOW MANY WEEKENDS DO WE NEED TO
BE FREE OF BANKING ISSUES BEFORE WE GO TO TWO OR THREE
WEEKS AGO? IS THIS A TURN, AND THE SNOW IS
ROLLING DOWN THE HILL WITH A DISINFLATIONARY BUST? >> HOW MANY WEEKS OF GAINS DID
IT TAKE? IT'S A GREAT QUESTION. ULTIMATELY, WHO KNOWS.
AT A CERTAIN POINT, WITH THIS CONVERSATION WE HAD WITH ANDREW
HOLLAND, HOW DOES THE FED PUSHBACK AGAINST PRICING WHEN
IT'S DEALING WITH UNCERTAINTY? HOW DOES IT PUSHBACK AGAINST
RATE CUTS BEING PRICED INTO THE MARKET AND EASING FINANCIAL
CONDITIONS, CAUSING EASIER LENDING STANDARDS WITHOUT
KNOWING IF THERE IS A TIGHTER LENDING STANDARD ON THE OTHERS
EITHER IS OFFSETTING THAT? >> LET'S OPPOSE THAT THE
BANKING DATA CONTINUES.
THIS WORKER WAY THROUGH THIS.
A STANDARD TO ADVOCATE, PAYROLLS LOOKING ROBUST, CPI
LOOKING STEADY — STICKY. ALL THAT BAD STUFF.
HOW LONG DO WE HAVE TO GO MONTH AFTER MONTH OF THAT FOR THE
FEDERAL RESERVE TO SAY OK, MAYBE WE NEED TO STOP WAITING.
CITY IS MAKING THE CALL. THERE IS A BANKING SYSTEM WITH
DATA. AT LEAST FOR NINE MONTHS. BEFORE WE GET TO 2024.
YOU COULD GET A DRIP FEED. YOU COULD HIKE RATES.
WE SAID THIS A FEW TIMES. A FEW WEEKS AGO, IT WAS 50 BIG
SIX — 50 BASIS POINTS. THREE WEEKS LATER, EVERYTHING
HAS CHANGED, AND ALL THE SUDDEN, WE HAVE A CONVICTION.
A DISINFLATIONARY BUST. THAT IS A BIG CHANGE. >> PEOPLE THOUGHT THE BOND
MARKET WAS MARKED AT — SMART. WE REALIZE THAT THE FED WILL
HAVE TO CUT A WEAKNESS. STOCKS ARE SAYING TO LOOK
AROUND AND SMELL THE ROSES. THEY ARE FANTASTIC, AND WE HAVE
A ROBUST ECONOMY. WE CAN GO BY THINGS.
AT THIS POINT, I DO WONDER HOW MUCH STOCK HAS IT RIGHT RIGHT
NOW, AND BONDS MAY BE RIGHT EVENTUALLY, BUT IT WILL FEEL
WRONG.
>> CAN WE GO BACK TO THE
CONVERSATION OF A MONTH AGO? WE WERE SEEING AFTER TECH AFTER
TECH AFTER TECH DID WE WONDERED WHEN IT WAS HOPE IN THE BROADER
ECONOMIC DATA. ROKU SAID THIS MORNING, 200
EMPLOYEES ARE GOING TO BE CUT. WELCOME TO THE PROGRAM.
6% OF THE WORKFORCE. STOCK IS POSITIVE IN THE
PREMARKET. WE HAVE A BULL MARKET IN THE
NASDAQ 100, THERE THIS MORNING. BUT THAT IS GOOD NEWS.
THAT IS GOOD NEWS FOR THE STOCK AND GOOD NEWS FOR INVESTORS.
NOT MY FIELD OR SITUATION, BUT THAT IS HOW IT IS BEING TAKEN. >> THERE WERE FACEBOOK LAYOFFS,
METAL LAYOFFS, WHERE IT WAS RUMORED TO BE, PEOPLE WERE
EMPLOYED, BUT THEY HAD NO JOBS BASICALLY TO HOARD LABOR AHEAD
OF WHAT THEY EXPECTED TO BE A RAPID EXPANSION THAT NEVER
HAPPENED, SO THERE IS THAT KIND OF LAYOFF, AND THERE ARE THE
NUTS AND BOLTS LAYOFFS WE HAVE TO LOOK AROUND AND SAY WE CAN'T
AFFORD TO KEEP YOU.
>> THE NATURE OF THE LAYOFFS
MATTERS. THE NATURE OF THE COMPANY HAS A
SIGNIFICANCE, AND IN THIS PARTICULAR ONE, IT DOESN'T MEAN
THEY HAVE THE ACCESS TO CUT, OR DOES IT MEAN THEY HAVE SLOWER
GROWTH AND POTENTIAL GOING FORWARD.
THOSE WERE DIFFERENT KINDS OF CUTS, AND IT'S IMPORTANT TO
UNDERSTAND AS WE GET MORE ANNOUNCEMENTS LIKE THIS WHICH
IT IS. >> THIS STOCK IS UP 2.8%.
THIS GET TO THE BROADER STORY. EQUITY MARKETS RIGHT NOW AT ONE
HALF OF 1% ON THE S&P 500. YIELDS TOTALLY UNCHANGED.
ON THE 10 YEAR, THE FX MARKET IS 108.
SPANISH INFLATION IS SOFT. YOU GET THE HEADLINE DATA A
LITTLE BIT LATER. CRUDE IS 73. ON WTI.
UP A LITTLE MORE THAN 1%. YEAR-TO-DATE, LOOKING AT WHAT
IS HAPPENING, YEAR-TO-DATE, WE ARE 8% ON WTI, AND 8% ON BRENT.
LET'S TALK ABOUT THIS. THE GLOBAL HEAD OF ENERGY
STRATEGY AT JP MORGAN.
GREAT TO CATCH UP WITH YOU.
WE STILL GOT A BIG TRIPLE DIGIT CALL IN THE FUTURE.
YOU ARE BEARISH IN THE NEAR TERM. CAN YOU EXPLAIN WHY? >>.
IT IS ONE OF THOSE THINGS WHERE WE'VE HAD THIS NEW CYCLE ON
HOLD, AND THE REASON IS SIMPLE. THERE ARE FAR TOO MANY, WITH
THE DARK INVENTORY OR THE BARREL BEING STORED WITH
REFINERIES, THAT IS A RESULT OF ALL OF THE PANIC BUYING FROM
LAST YEAR. A LOT OF OIL HOARDED INTO THE
MARKET, PARTICULARLY IN AN EM WORLD. THAT IS ALLIED WITH COAL CONSUMPTION, AND WHAT THAT IS
DOING IS CREATING AN OVERHANG OF EXCESS SUPPLY INTO A SURPLUS
THAT WE PREDICTED, WHICH COULD COMBINE TO MEAN THAT ALL PRICES
DON'T NECESSARILY HAVE A FALL, AND WE LOOK AT THE IMPAC AND
WHAT THEY ARE TRYING TO DO WITH MANAGING PRICES, WE THINK THEY
ARE GOING TO OFFEND THOSE DOWNSIDES.
THAT COMBINATION LEAVES US AND MORE OF A 60 TO $90 RANGE WITH
A DOWNSIDE OF RECOMMENDING TO BUY ONCE WE SEE THE DOWNSIDE
MATERIALIZED.
>> WHAT GETS US THERE.
IT IS $70. YOU CAN SEE THE POTENTIAL FOR
$60 OVER THERE. WHAT PUSHES US THERE IF WE
DON'T HAVE A POTENTIAL WEAKNESS FOR GLOBALLY, IT HASN'T DONE
THAT OF CHINA IS REOPENING. IT HAS BEEN RATHER
DISAPPOINTING WITH GLOBAL GROWTH. IT DOESN'T MATERIALIZE.
WHAT GETS US THERE? >> FIRST OF ALL, WE ARE WALKING
INTO A RECESSION. WE ARE TRAVELING.
WE HAVEN'T ARRIVED. THAT COULD BE
A FAIRLY HARD LANDING, PARTICULARLY IN THE U.S., AND
THAT IS OFFLOADING AS WE SPEAK. THIS CONTAGION IS AN UNKNOWN,
BUT WE HAVE TO WATCH AND DISCOVER WHAT IS NEXT AROUND
POTENTIAL WEAKENING OF DEMAND. THERE IS A TIGHTENING CREDIT.
THE THIRD, AND THIS IS THE OBVIOUS, BUT WE HAVE A LOT OF
EXCESS INVENTORY AND A SURPLUS WE GO TO IN Q2.
IF YOU LIKE THOSE INVENTORIES BUILDING, THAT COULD WEEKEND
THE CRUDE MARKET, EVEN IF WE DO SEE SEASONAL PICKUP AND DEMAND,
SO THAT COULD PROVIDE POSITIONING WHICH I THINK HAS
BEEN THAT LONG WITH A SERIES OF USE. ALSO, THAT IS ONE PLANE. THE OTHER PLANE IS HOW THE
DYNAMIC EVOLVES RIGHT NOW.
THERE IS BEEN RADIO SILENCE ON
THAT FRONT, AND WITH OUR RELATIONSHIPS WITH OPEC,
BUILDING AND THE NEXT THREE TO SIX MONTH, HOW DO THEY REACT.
THAT WILL BE SOMETHING OF A REVEAL TO THE MARKET IN TERMS
OF HOW WILLING THEY ARE TO SUPPORT.
HIS FLAWS IN THE MARKET. IF IT IS APPARENT THAT THEY
WILL NOT SUPPORT THAT $70 OIL, THAT COULD BE ANOTHER DOWNSIDE
TO THE CRUDE, PARTICULARLY WITH HOW WE SEE THESE PLACES AT THE
MOMENT. AN OPTION THAT IS FAIRLY WELL
EMBEDDED AROUND 75 TO 80, THAT OPTION IS NOT CERTAINLY THERE,
BUT IT WILL SURPRISE THE DOWNSIDE. >> OPEC LOSS.
THERE IS A PLUS THERE. WHEN HIS RUSSIAN SUPPLY GOING
TO FIT IN? >> THAT'S A GREAT QUESTION.
I'D LIKE TO KNOW THAT AS WELL.
RUSSIAN BARRELS ARE ULTIMATELY
FLOATING AT FULL VOLUME IN THE MARKET.
THEY HAVE SURPRISED EVERYONE WITH THE UPSIDE, AND IF THEY
CONTINUE TO STAY AT RECORD LEVELS, PARTICULARLY IN
PRE-COVID, OR NOT, THE KEY POINT IS HOW DO THEY FIT IN
WITH THE CONTEXT OF OPEC-PLUS. I DON'T THINK IT IS NECESSARY
OPEN SEASON. THEY HAVE A LOT OF VESTIGES TO
KEEP THINGS TOGETHER, BUT IT DOES MAKE ME WONDER,
PARTICULARLY WITH THEIR DISCOUNT OF CRUDE FROM A
TECHNICAL STANDPOINT, CAN THEY ACTUALLY CHOOSE TO MATERIAL IF
THEY WERE ASKED TO. THIS IS SOMETHING THAT PUTS US
OBVIOUSLY WITH TENSION AROUND WHETHER THEY CAN COMPLY ON A
CORE BASIS WITH THE OPEC FRAMEWORK.
I THINK THAT IN ITSELF SUGGESTS A PRECEDENCE TO NOT COMPLY,
PARTICULARLY IF THERE IS A NEED TO.
THEY HAVE TO COME IN AND TAKE THE VOLUME OFF THE MARKET.
RUSSIA IN ITSELF COULD BE PROBLEMATIC IN TERMS OF GIVING
COMPLIANCE ACROSS THE REST OF THE GROUP.
>> THANK YOU SO MUCH.
THANK YOU FOR BEING WITH US. J.P. MORGAN SECURITIES.
THINK ABOUT THE RANGE. 60 TO 90 WITH A TOUCH OF
DOWNSIDE. IT SOUNDS LIKE A RECIPE.
THEN YOU GO OUT TO 2024, THEY HAVE 150 ON CRUDE. >> MIND BOGGLING, BUT AT THE
SAME TIME, ANYTHING COULD HAPPEN.
OIL IS ONE OF THE HARDEST TRADES, NO MATTER WHAT YOU DO.
PEOPLE HAVE BEEN TRYING TO GAIN THIS OUT AND BEEN GETTING IT
WRONG CONSISTENTLY.
I THINK THIS IS AN INTERESTING
QUESTION ABOUT RUSSIAN OIL SUPPLIES.
WE WERE SUPPOSED TO SEE PRICES GO UP BECAUSE OF A LACK OF
RUSSIAN OIL. THAT IS THE RUB. I WILL POINT IS THAT CHANGE THE
SCENARIO BACK TO WHERE WE WERE WITH THE RUSSIAN INVASION OF
UKRAINE. OR DO WE GET SOME SORT OF
DECREASE IN RUSSIAN SUPPLIES BASED ON THE ECONOMIC PAIN THEY
ARE EXPERIENCING AND THE LACK OF PERSONNEL.
THEY ARE SEEING A HUGE BRAIN TRADE AND A HUGE FLIGHT,
PARTICULARLY WITH YOUNGER PEOPLE. >> ARE WE SAYING THE SANCTIONS
AREN'T WORKING? IS THAT THE MEASURE? 60 TO 70? IS THAT WE ASSIGN SECTIONS ARE
WORKING? >> THE GOAL OF THE SANCTION WAS
TO PREVENT RUSSIAN OIL FROM GETTING ON THE MARKET, AND TO
PREVENT MONEY FOR THE OIL. TO GET INSIDE THE HANDS OF
RUSSIANS YOU COULD ASK ON BOTH SIDES IS EITHER WORKING.
THAT IS A GOOD QUESTION.
I DON'T KNOW IF WE KNOW THE
ANSWER. >> THAT IS ONE PERK.
WE WILL LEAVE IT THERE. WE WILL BE JOINED FROM T.
ROWE PRICE. WE ARE LOOKING FORWARD TO THE
CONVERSATION. EQUITIES ARE A .6% ON THE S&P.
THE RALLY IS CONTINUING. THE NASDAQ 100 IS BACK AND ABLE
MARKET. FROM NEW YORK CITY, THIS IS
BLOOMBERG. >> EVERY DAY THAT GOES BY WE
GET MORE STABILITY.
I THINK IT IS BEHIND US. >> I THINK WE REPRICED.
EVERYTHING IS WORKING VERY WELL. >> WE ARE STILL IN A BEAR
MARKET AND IT HAS GONE ON FOR A LONG TIME. >> THIS IS BLOOMBERG
SURVEILLANCE, WITH TOM KEENE, JONATHAN FERRO. JONATHAN:
THE TONE OF THE INTERVIEWS HAVE CHANGED AFTER THE ONE WEEK
RALLY. ALL OF A SUDDEN, THIS CRISIS IS
OVER. EQUITY FUTURES UP 6/10 OF 1%. THE NASDAQ UP 20% FROM A
DECEMBER LOW. LISA: IS THIS A BULL MARKET OR A BEAR
MARKET RALLY? IT IS DEPENDING ON WHERE YOU
FRAME IT DEPENDING ON THE TRAJECTORY.
SOME PEOPLE WILL SAY, LET'S GO. IF THE FED IS GOING TO CUT
RATES , LET'S GET IN THERE. JONATHAN:
SINCE MACRON TALKED ABOUT THIS YESTERDAY.
HE WENT ON TO SAY THIS, THERE IS NO MIDDLE GROUND IN A
BANKING CRISIS, E IT EITHER HAPPENS OR IT DOESN'T.
WHAT DO YOU MAKE OF THAT? LISA: IT IS CORRECT IN 2000 EIGHT
BANK CRISIS AND HISTORICAL REFERENCE POINTS.
IT IS NOT CORRECT IF THIS IS A SLOW-MOVING BLEEDS OF DEPOSIT
THAT GOES OUT OF THE SMALLER BANKS AND RESTRICTS LENDING.
THAT WOULD LEAD TO RESTRICTIVE
CREDIT THAT WILL HAVE A ACCELERATING FACTOR.
LET'S SAY WE DO NOT GET THOSE BANK FAILURES, IS THAT
POTENTIALLY WORSE IF THE YIELDS REMAIN HIGH? JONATHAN:
IT IS ABSOLUTELY CRAZY. WE ARE GOING TO IGNORE CPI,
PAYROLLS. LISA: WE ARE GOING TO PAY ATTENTION
TO ALL OF THESE THINGS SEBA . DOES THE FED LOOK PAST THE
HEADLINES? ARE THEY ABLE TO LOOK AT THE
DATA AND SAYING, WE HAVE NOT GOTTEN CLOSER TO OUR MANDATE.
WE ARE STILL FAR FROM 2% INFLATION.
WE NEED TO KEEP GOING. CAN THEY DO THAT IF THE MARKET
HAS PRICED THE AMOUNT ALREADY? — OUT ALREADY? JONATHAN: BREAKING NEWS FROM ROKU,
ANOTHER TECH FIRM MAKING CUTS. THE BROADER EQUITY MARKET LOOKS
LIKE THIS ON THE S&P 500. WE ADD SOME MORE WEIGHT TO THE
S&P. YIELDS UNCHANGED. 357 ON A 10 YEAR.
EURO-DOLLAR, VERY CLOSE TO 109.
WE HAVE SPANISH CPI. LISA: PEOPLE ARE LOOKING ABOVE THE
HOOD & CORE ABOVE 2%. THE FACT THAT PEOPLE ARE STILL
ARE EXPECTING RATE HIKES FOR THE ECB HIGHLIGHTS HOW
DIFFERENT THE EUROPEAN REGION AND THE U.S.
ARE IN TERMS OF HOW QUICKLY THEY MOVED ON.
IN THE U.S., WE GET JOBLESS CLAIMS. HOW MANY NUMBERS
BECAUSE IT GETS BEFORE START TO CARE ABOUT THEM AND PEOPLE
START TO THINK WE ARE IN A STRONG ECONOMY. WE HAVE SE
EN THE UNEMPLOYMENT RATE FALLS TO ITS LOWEST LEVEL.
HOW MUCH COULD PEOPLE PRICE IN THIS TIGHTENING, END OF THE
CYCLE BEFORE WE COULD SEE A CYCLE THAT COULD BEAR OUT. TOM HARKIN, SUSAN COLLINS, IF
THEY AGGRESSIVELY PUSH BACK ON RATE CUTS AND SAY THIS MARKET
IS FOOLING ITSELF, THERE COULD BE MARKET MOVING, ESPECIALLY
GIVING SOME OF THE PUSH PULL. YOU LOOK SKEPTICAL. JONATHAN: BASED ON WHAT IS GOING TO
RECONCILE THE DIFFERENCE BETWEEN WHERE THE FED AND THE
MARKET IS RIGHT NOW. WE HAVE BEEN TALKING ABOUT THIS
FOR DAYS. I AM NOT SURE HOW THEY CAN WITH
CONVICTION TURN AROUND AND SAY, NO RATE CUTS THIS YEAR.
ADAPTER THE INCOMING INFORMATION AND SAY, IT IS NOT
ONE INDIVIDUAL, IT IS A COLLECTIVE VIEW ON THINGS.
LISA:
WHEN U.S. COURT CAN RECONCILE IT?
JANET YELLEN AT THE NATIVE CONFERENCE IN D.C.
COULD THAT BE SOMETHING VERY SIGNIFICANT? TOJONATHAN:
ONCE YOU TURN AROUND AND SAY THE BANK OF ELEMENTS IS A
TURNAROUND FOR FAIR RATE HIKES. LISA: FAIRPOINT.
PEOPLE TOOK THE SIGNAL FROM THAT. JONATHAN: T ROWE PRICE. GOOD MORNING. ARE YOU GOING TO TRANSLATE THAT
FOR US? WHAT IS THE RELUCTANT AND TIMID
BANK? SEBASTIEN: IT IS A NEGATIVE FOR THE
ECONOMY. IT DOES MEAN A MORE DOVISH FED
TO, PROBABLY NOT AS MUCH AS THE MARKET THINKS.
THIRD, IT IS NOT A 2008 KIND OF EVENT. IT IS NOT A CHAMPIONSHIP
SYSTEMIC PALM. — BOMB. THE TIME SLAMS THE BRAKES,
SOMEONE HEAD GOES THROUGH THE WINDSHIELD.
HERE WE HAVE A FEW BANKS THAT WERE NOT WEARING THEIR
SEATBELTS. BUT IT IS NOT SYSTEMIC.
JONATHAN: YOUR CASH POSITION HAS BEEN BIG
FOR A WHILE. I LOOKED AT YOUR NOTES.
WHAT DO YOU DO WITH YOUR CASH AND WHAT ARE YOU WAITING FOR?
SEBASTIEN: THE BEARISH NARRATIVE IS STRONG.
IF YOU THINK OF THE PE PULL PLETHORA FLASHING RED.
PMI'S HAVE DROPPED BY 16 POINTS.
WE EXPECT THE HOUSING MARKET TO
GO DOWN, IN RESIDENTIAL SEVEN TO 10% THIS YEAR.
DEFAULT RATES IN PRIVATE COMMERCIAL REAL ESTATE, VERY
MUCH ON A UPTREND HERE TODAY ON THE WAY HIGHER THAN DURING
COVID. WHAT IS THE MARKET DOING? 17, 18, PRICE EARNINGS IN THE
S&P 500. THAT IS MORE EXPENSIVE THAN
STOCKS WERE BEFORE THE SELLOFF OF 2022 IF YOU ADJUST FOR THE
LEVEL OF RATES. EARNINGS EXPECTATIONS ARE STILL
FOR POSITIVE EARNINGS GROWTH THIS YEAR.
THE BEARISH NARRATIVE IS ALL ABOUT THE LIQUIDITY IMPULSE
BEING NEGATIVE GLOBALLY. WHY AM I TIMID?
ALL OF THESE NUMBERS ARE FROM VERY ELEVATED LEVELS — VERY
HIGH LEVELS OF LIQUIDITY, VERY HIGH HOUSE PRICES, EXTREMELY
HIGH PMI'S. IT IS A QUESTION OF, WE ALL ARE
OBSESSED WITH THE RATE OF CHANGE. WE HAVE THIS CASH. IT COULD GET WORSE BEFORE IT
COULD GET BETTER. AT THE SAME TIME, YOU HAVE TO
PAY ATTENTION TO THE LEVELS. WHICH WE DO NOT TALK AS MUCH.
YOU THINK OF PMI'S WHERE THEY ARE NOW, THEY COULD BOTTOM
SOMEWHERE LOWER.
THE QUESTION IS, WHEN DO WE
REACH THE BAR? LISA: I LOVE THAT YOU CALL THIS A
BLACK GUNK AND NOT A BLACK SOMEONE. — BLACK DUCK, NOT A BLACK SWAN.
THE ARE STILL SEEING RATE CUTS BEING PRICED IN TO
COUNTER WEAKNESS THAT IS STILL EXTRAPOLATED OUT FROM SOMETHING
THAT HAS NOT HAPPENED. SEBASTIEN:
I THINK IT IS THE QUESTION. CAN CENTRAL BANKS HAVE A FLIP
ON THE GAS AND THE BREAK AT THE SAME TIME?
BY THAT I MEAN, WHAT YOU SAW WITH THE U.K.
LBI SITUATION, WHERE THE BANK OF ENGLAND STARTED BY
LONG-DURATION GUILDS, AS THEY WERE HIKING.
THE ECB IS DOING SOMETHING DIFFERENT BY BACKSTOPPING
ITALIAN BONDS WHILE THEY ARE RESOLUTE ABOUT HIKING. WHAT IS THE FED SAYING?
THIS BANKING DISTRESS IS RESTRICTIVE.
THE BLOOMBERG FINANCIAL CONDITIONS INDEX IS MOVED BY A
STANDARD DEVIATION. STABILIZING AT ONE STANDARD
DEVIATION TIGHTER. IT IS RESTRICTIVE.
WITH INFLATION WHERE IT IS AND AS STICKY AS IT IS.
BY THE WAY, LONGER-TERM EXPECTATIONS FOR INFLATION,
THEY ARE UP.
I THINK THE FED CAN CONTINUE TO
HAVE THE NARRATIVE OF HIKING, MAYBE ANOTHER HIKE OF 25. IF SOMETHING BREAKS, IF
SOMEONES HEAD GOES THROUGH THE WINDSHIELD AGAIN, WHILE
IMPLEMENTING EMERGENCY LIQUIDITY MEASURES, FOOT ON THE
BREAK, FOOT ON THE GAS, COUNTERINTUITIVE.
THIS IS WERE GLOBAL AND CENTRAL-BANK POLICIES ARE GOING.
LISA: HOW MUCH DO YOU SEE IN DECLINES
IN EQUITIES BEFORE YOU ARE INTERESTED? SEBASTIEN: IT DEPENDS ON THE CIRCUMSTANCES
ON WHY WE ARE GETTING THE DECLINE PURITY WANT TO SEE THE
VICKS BACKUP. LET US USUALLY A GOOD SIGNAL.
THE LIQUIDITY IMPULSE, THIS IS NOT TALKED ABOUT ENOUGH.
LIQUIDITY IMPULSE IS NEGATIVE. IT IS BEING WITHDRAWN FROM THE
SYSTEM. WE HAVE YET TO FILL ALL OF THE
LAG EFFECT OF THE 500 BASIS POINTS.
GIVEN CHINA OPENING UP CREDITS, SOME LEVEL OF GROWTH THAT IS
REASONABLE IN CHINA. AT SOME POINT WE WILL UNWIND QT
AS WELL. WE ARE NOT TRYING TO CATCH THE
BOTTOM PER SE, WE HAVE DONE RESEARCH THAT SAYS IF YOU'RE
WILLING TO LEHMAN WHEN THINGS GET BAD, YOU DO NOT HAVE TO
TIME THE BOTTOM — WILLING TO LEAN IN WHEN THINGS GET BAD,
YOU DO NOT HAVE TO TIME THE BOTTOM.
BY THE WAY, WE ARE INVESTED.
WE ARE UNDERWAY TO STOCKS, WE
HAVE SOME CASH. WE HAVE A BIT OF TREASURIES.
JONATHAN: THIS WAS GREAT. LISA MENTIONED A FEW TIMES WE
ARE HERE FROM — WE WILL HEAR FROM JANET YELLEN LATER THIS
MORNING. THE TREASURY SECRETARY JANET YELLEN PLANS TO SAY THAT
REGULATORS MAY NEED TO — A TO BOLSTER THE FINANCIAL SYSTEM
AND COMPLETE. THIS WAS ALWAYS GOING TO BE A
BIT OF A SPLIT.
ON THE ONE HAND, PEOPLE WERE
SAYING WE NEED MORE REGULATION, THERE WOULD BE A GROUP OF
POLITICIANS IN WASHINGTON WHO SAY THIS IS ABOUT ENFORCEMENT.
LISA: HOW IS THIS GOING TO REDO THE
MARKET IF THEY'RE LOOKING FOR A FULL CLEAR SIGNAL? JONATHAN: WE WILL CATCH UP WITH
ANNE-MARIE UP IN NEW YORK. PEACHES CHAIR, — PETER CHAIR,
WE WILL CATCH UP WITH HIM. A RELUCTANT AND TIMID B EAR.
LISA:
A REPORTER FOR THE WALL STREET JOURNAL HAS BEEN DETAINED ON
SPYING ALLEGATIONS. HE WAS DETAINED AT SUSPICION OF
SPYING FOR THE AMERICAN GOVERNMENT.
THE WALL STREET JOURNAL SAYS IT IS DEEPLY CONCERNED ABOUT HIS
SAFETY. IN KENTUCKY COMING TO U.S.
ARMY HELICOPTERS COLLIDED THURSDAY NIGHT DURING A TRADING
EXERCISE NEAR FORT CAMPBELL. THERE WERE SEVERAL CASUALTIES.
IT IS NOT SAYING WHETHER IT WAS INJURIES OR DEATHS. THE FDIC IS THINKING ABOUT
HAVING BIG BANKS COVER A LARGER THAN USUAL PORTION OF THE $23
BILLION HIT FROM THE RECENT BANKING FAILURES APPEARED THOSE
SPECIAL ASSESSMENT WILL HAPPEN IN MAY, TO SURE UP A $128
BILLION INSURANCE FUND. THE PRESIDENT OF TAIWAN MADE A
STOP OVER NEW YORK AND CALLED THE ISLANDS FEATURE A TEST FOR
THE WORLD. MAY FURTHER ESCALATE TENSIONS
BETWEEN THE U.S. AND CHINA. THE LATEST CENSUS NUMBERS SHOW
MANHATTAN'S POPULATIONS GROUP WHILE NEW YORK CITY'S OTHER
FOUR BUREAUS LOST RESIDENCE. GLOBAL NEWS, 24 HOURS A DAY, ON
AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700
JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES.
I AM LISA MATEO.
THIS IS BLOOMBERG. >> ARE YOU AWARE THAT JUDGES
HAVE RULED THAT STARBUCKS VIOLATED THE FEDERAL LAW IN THE
PAST 18 MONTHS? >> STARBUCKS COFFEE COMPANY
UNEQUIVOCALLY HAS NOT BROKEN A LAW. JONATHAN:
WHAT AN EXCHANGE BETWEEN SENATOR BERNIE SANDERS IN THE
FORMER CEO OF STARBUCKS. WHAT DID YOU MAKE OF THAT? LISA:
THERE SEEMS TO BE THIS DESIRE TO TAKE A POPULIST TONE WITH
THE BIG COMPANIES. THERE IS THIS REAL DISSIDENCE
HERE AT A TIME WHERE YOU WANT TO HAVE THIS ANGER AND YET
NOBODY CAN FIGURE OUT WHERE TO PUT IT.
JONATHAN: THE ATTENTION TO STARBUCKS OVER
UNIONIZATION. CAN YOU IMAGINE IF WE DID HAVE
THE SAME DEGREE OF UNION MEMBERSHIP NOW AS WE DID IN THE
70'S? WHAT KIND OF PASTOR WE MIGHT
HAVE SEEN FROM HEADLINE INFLATION THROUGH THE WAGES?
HOW MUCH THIS REALLY COULD HAVE SPIRALED? LISA:
THIS HAS BEEN ONE OF THE BELIEFS THAT PEOPLE HAD,
ESPECIALLY AS LABOR STARTED TO GIVE MORE POWER AFTER THE
PANDEMIC. NOT THAT IT IS A BAD THING TO
GET WAGE INCREASES, IT WILL BE HARDER TO — INFLATION IF YOU
GET THAT KIND OF INCREASED.
WHERE DO YOU PUT YOUR ANGER AT
A NUANCED MOMENT WHEN YOU HAVE FACTS THAT ARE UNCOMFORTABLE IN
TERMS OF WHAT YOU'RE LOOKING FOR WITH RESPECT TO THE OUTCOME.
JONATHAN: THERE WAS A LITTLE BIT OF ANGER
BETWEEN THE TWO OF THEM. IF YOU WANT TO CHECK IT OUT,
CHECK IT OUT ON YOUTUBE. LI JONATHAN:
IN THE BOND MARKET, YIELDS UNCHANGED.
IN LITTLE LATER TODAY, YOU WILL HEAR FROM THE TREASURY
SECRETARY, JANET YELLEN. ACCORDING TO THE WALL STREET
JOURNAL, SHE IS SET TO SAY THE FOLLOWING, REGULATORS MIGHT
NEED TO TIGHTEN BANKING AFTER THE COLLAPSE OF SILICON VALLEY
BANK. SHE IS GOING TO CALL THEM AND
SAY THAT A RECENT TAR MORAL IS A SIGN THAT EFFORTS BOTH THE
FINANCIAL SYSTEM AND COMPLETE.
