>> YOU'VE BEEN PAYING ATTENTION. >> ALWAYS THINKING, DOM. >> I TRY >> DOM, THANK YOU. WE'LL CHECK BACK IN WITH YOU IN A LITTLE BIT >>> OUR NEXT GUEST SAYS MARKETS ARE BEING PROPELLED BY THE RELIEF OVER WHAT HAS NOT HAPPENED DESPITE SOME RESIDUAL UNCERTAINTY OUT THERE. FOR MORE ON THAT AND THE SOFT LANDING NARRATIVE, WE WANT TO BRING IN MOHAMED EL-ERIAN FROM ALLIANZ AND PRESIDENT OF QUEENS COLLEGE AT CAMBRIDGE UNIVERSITY. MOHAMED, NO NEWS IS GOOD NEWS, BASICALLY? >> WE'VE HAD NEWS AND IT'S BEEN GOOD NEWS IN THE SENSE THAT IT HAS FUELED THE SOFT LANDING NARRATIVE. AND THIS SOFT LANDING NARRATIVE HAS COINCIDED WITH MONEY ON THE SIDELINE SO THE TWO THINGS TOGETHER LEAD TO SOMETHING YOU WANT TO BE PART OF YOU DON'T WANT TO BE PUSHING AGAINST. THAT IS THE TACTICAL VIEW FOR THE NEXT FEW WEEKS BEYOND THAT WE'RE GOING TO GO BACK TO THE ISSUE OF INFLATION, WILL THE FED OVERDO IT, AND CAN THE ECONOMY AND NONBANK INSTITUTIONS NAVIGATE THE CUMULATIVE IMPACT OF THE RATE HIKES. I WOULD NOT GET IN THE WAY OF THIS RALLY AND IS BEING FUELED BY DOMESTIC FACTORS BUT AS WE SEE TODAY BY INTERNATIONAL FACTORS AS WELL. >>> BANK OF AMERICA HAS THEIR JULY GLOBAL FUND MANAGER SURVEY OUT THIS MORNING I WAS SURPRISED TO SEE THAT, ACCORDING TO THEM, THAT SENTIMENT STILL IS PRETTY BEARISH BE OUT THERE THEY SAID 60% OF INVESTORS EXPECT WEAKER GLOBAL GROWTH. HIGHER LEVELS OF COMMODITIES AND THAT THE FEAR FACTOR IS STILL GREATER THAN GREED THAT'S A RECIPE IF YOU GET GOOD EARNINGS NUMBERS TO BRING SOME OF THOSE PEOPLE BACK INTO THE MARKET >> YES, ABSOLUTELY THAT'S WHY THE TECHNICALS ARE FAVORABLE IS BECAUSE YOU'VE GOT PEOPLE WHO STAYED OUT OF THIS MARKET AND NOW ARE BEING PULLED IN BY A VERY STRONG SOFT LANDING NARRATIVE. SOFT LANDING NARRATIVES ARE WONDERFUL BECAUSE YOU CAN GET HIGHER STOCK AND BOND PRICES, SO THEY BRING PEOPLE IN ACROSS THE BOARD AND OUT OF SHORT-TERM CASH BECAUSE WHAT'S ALSO HAPPENING ON SHORT-TERM CASH IS THAT YIELD ARE COMING DOWN SHARPLY. SO YOU HAVE BOTH THE PUSH AND PULL FACTOR. AND I DON'T EXPECT THIS TO CHANGE ANYTIME SOON. WHEN WE GET TOWARDS THE END OF THE SUMMER, TO JACKSON HOLE, IT WILL GET A LOT MORE INTERESTING. >> MOHAMED, WHAT COULD BE A CATALYST PEOPLE STILL WAITING FOR SOMETHING TO HAPPEN POTENTIALLY IN THE FALL. HOW LIKELY DO YOU THINK THAT IS IF A SOFT LANDING IS MUCH MORE LIKELY WHAT'S TAKEN OUT HERE? IS THE FED POTENTIALLY GETTING TO THE POINT WHERE THEY'RE GOING TO STOP HIKING RATES AND MAYBE THAT LEADS TO A LITTLE COMPETITION IN THE MARKETS >> THAT'S THE HOPE THE MARKET CLEARLY THINKS WE'LL GET ONE MORE RATE HIKE NEXT WEEK AND THAT'S IT AND THE NEXT MOVE WILL BE A CUT THE FED IS NOT THERE YET WE WILL BE LISTENING VERY CAREFULLY TO WHAT CHAIR POWELL SAYS ABOUT THE FORWARD GUIDANCE. WHAT COULD GET IN THE WAY? A FEW THINGS ONE IS A FED THAT OVERTIGHTENS THAT COULD GET IN THE WAY. TWO IS INFLATION PROVES TO BE STICKY THERE'S A NUMBER FLYING TOTALLY BELOW THE RADAR SCREEN, WHICH IS WHAT HAPPENED TO CORE INFLATION IN THE EUROZONE THAT WENT UP RATHER THAN COME DOWN. THE INFLATION DYNAMICS ARE WORTH KEEPING AN EYE ON. DON'T UNDERESTIMATE THE CUMULATIVE EFFECTS OF THE RATE HIKES ESPECIALLY ON THE HIGHLY LEVERED SECTORS. SO THESE THINGS ARE TO WATCH THAT'S WHY YOU WANT TO BE RISK ON, STRATEGICALLY KEEP AN OPEN MIND AND KEEP ON REVISITING THESE THREE FACTORS. >> WHAT WOULD MAKE YOU CHANGE YOUR MIND, SAY, OKAY, FORGET IT, RISK OFF >> OH, IT WOULD MAKE ME CHANGE MY MIND IF THE FED COMES OUT, FOR EXAMPLE, AND SAYS I DON'T CARE ABOUT WHAT'S HAPPENING. I'M STILL GOING TO DO AT LEAST TWO MORE HIKES AND THE MARKET WILL NOT LIKE THAT AT ALL. THAT'S ONE POSSIBILITY THE OTHER POSSIBILITY IS SOME SORT OF SMALL ACCIDENT AMONG THE NONBANK FINANCIAL INSTITUTIONS WE KNOW COMMERCIAL REAL ESTATE IS UNDER PRESSURE. TODAY WE'RE GETTING EARNINGS FROM THE REGIONAL BANKS AND THE DEPOSITS ARE COMING BACK THE BAD NEWS FOR THEM IS THAT FUNDING COSTS ARE GOING UP SIGNIFICANTLY. WE HAVE TO KEEP AN EYE ON THESE THINGS BUT, AS I SAY, YOU SHOULD NOT GET IN THE WAY OF A RALLY DRIVEN BOTH BY TECHNICALS AND A NARRATIVE HAD A HAS BEEN EMBRACED BY TRADERS. >> MOHAMED, DID THE REAL ESTATE, YOU SOMEHOW GO AWAY? DID WE FORGET ABOUT IT ARE WE WEARING BLINDERS? ONLY SEVERAL MONTHS AGO WERE WE TALKING ABOUT REAL ESTATE BEING A PROBLEM FOR SMALL AND REGIONAL BANKS. WHEN YOU THINK ABOUT SOME OF THE CITIES STRUGGLING, AND IT WILL REAR ITS UGLY HEAD PEOPLE THOUGHT END OF '23 INTO '24, THAT'S WHEN YOU START TO SEE THE TRICKLES OF IT OR IS IT THAT AS RATES COME DOWN, ASSUMING THEY DO AND OTHER THINGS GET BETTER, THAT IT CAN BE MITIGATED >> SO LOWER RATES MITIGATE THE PROBLEM BUT DON'T ELIMINATE IT THE ISSUE IS THEY'RE SLOW MOVING SO SOME PEOPLE FEEL IT'S WATCHING PAINT DRY I DON'T LIKE THAT ANALOGY. I LIKE ANOTHER ONE SINCE WE'RE IN THE SUMMERTIME, YOU'RE ON THE BEACH, YOU HAVE A SAND MOUND AND YOU KEEP ON ADDING SAND ON TOP NOTHING HAPPENS FOR A WHILE. YOU HAVE TO BE CAREFUL THAT IT DOESN'T SUDDENLY CHANGE SHAPE. THE REFINANCING REAL ESTATE HAPPENS OVER TIME OVER T
