FIVE-MONTH HIGH. ALL THIS AS INVESTORS EYE THE POTENTIAL OF ISRAEL RHEAL STASTATE I RETALIATING AGAINST IRAN'S WEAKENED STRIKES. TIM? >> WE CAME IN THIS MORNING, AND I'M SURE MOST PEOPLE WERE GLUED TO THEIR SCREENS AFTER THE WEEKEND'S EVENTS, AND WE WERE SEEING A RALLY. AND WE WERE SEEING A RALLY WITH POSSIBLY A MOVE HIGHER IN RATES. AND THAT'S HOW WE STARTED OUT THIS MORNING. AND I RECOGNIZE THAT MARKET'S PRICED IN A LOT. HAVING SAID THAT, IT WAS A WEEK WHERE WE SOLD OFF ON THE BACK OF YIELDS. IT WAS A WEEK WHERE WE SOLD OFF ON THE BACK OF A HANDFUL OF THINGS, BUT WHEN THE DAY STARTED TO PLAY THROUGH, AND THERE WAS NO FLIGHT TO QUALITY IN BONDS. THE DOLLAR SHOULD HAVE BEEN RALLYING. THE DOLLAR WAS ACTUALLY OFF SMALL, BUT THE FACT THAT SOME OF THE TRADES THAT I WOULD HAVE EXPECTED TO HAVE SEEN THIS MORNING HADN'T TAKEN PLACE, I JUST FOUND AS WEIRD, THOUGH I KNOW WE WERE IN A PLACE FROM FRIDAY AFTER, RISK WAS SIGNIFICANTLY HIGH. THE VIX CLOSED WELL THROUGH THE LEVELS ON FRIDAY. I THINK WE ARE IN A NEW RANGE NOW. THE S&P CLOSED EFFECTIVELY ON THE LOWS AFTER A POINT REVERSAL, TO CLOSE THROUGH THE 50 TO THE DOWNSIDE AND HASN'T MADE A MOVE LIKE THAT SINCE SEPTEMBER OF '23. SO, I THINK WE'RE IN AN ENVIRONMENT WHERE NOT ONLY ARE WE -- WE HAD A 4% MOVE ALREADY IN THE S&P FROM PEAK TO TROUGH, BUT I THINK THE UNFORTUNATE -- WE'VE CROSSED A RUBE ICON. I THINK THERE ARE ALL KINDS OF IMPLICATIONS, AND WE'RE GOING TO KIND OF CONTEMPLATE THAT TONIGHT. >> IRAN HAS NEVER ATTACKED ISRAEL BEFORE, DIRECTLY, AS OPPOSED THROUGH SURROGATES. AND THAT'S THE RUBICON WE'VE CROSSED. >> YEAH. AND THERE'S TAIL RISKS GALORE. >> I WOULD AGREE WITH YOU. WE HAVE GEOPOLITICAL RISKS IN MULTIPLE PLACES AROUND THE WORLD. YOU WOULD THINK THAT WOULD PULL YIELDS LOWER, BUT WE HAVE THE RETAIL SALES REPORT, VERY, VERY STRONG, STRONGER GROWTH, RISK OF HIGHER OIL PRICES FROM THE MIDDLE EAST, CREATING INFLATION EXPECTATION RISK THAT COULD KEEP SHORT-TERM RATES HIGHER FOR LONG, ALL OF THAT IS FEEDING INTO THE LONG END OF THE CURVE. THE BIG DAY TODAY IS THE SPEED OF THE MOVE. IF YOU HAVE VERY SLOW RISE IN YIELDS AND IT'S BACKED BY S STRONGER GROWTH, YOU CAN SEE HIGHER YIELDS AND STOCKS AT THE SAME TIME. WHEN YOU HAVE A FAST RISE IN YIELDS, IT'S UNSETTLING. AND IT'S NOT NECESSARILY COMING JUST FROM BETTER GROWTH. I THINK THAT'S WHEN THAT TIPS THE BALANCE THE OTHER WAY. >> ALL OF THAT I TOTALLY AGREE WITH, BUT I THINK THIS MARKET WAS ON SUCH A TEAR THAT AT SOME POINT, YOU NEED AN EXCUSE TO START SELLING THINGS OFF. I THINK IF THINGS -- THAT'S A GIANT IF, AND WE GET BACK TO FOCUSING ON EARNINGS, THAT COULD BE GOOD FOR IF MARKET, BUT IT WOULDN'T SURPRISE ME TO JUST CONTINUE TO SEE DOWN FOR AWHILE. THIS MOVE IN RATES IS REALLY QUITE SOMETHING. I DON'T KNOW HOW MUCH TO ATTRIBUTE TO THE RETAIL NUMBER, WHICH WAS SUPER STRONG, ALSO THE REVISIONS TO THE PRY MIOR MONTH >> THEY'RE SEEN AS MORE IMPORTANT, TOO. >> WHY ARE THEY SO OFF? I DON'T QUITE GET THAT. SO -- THAT'S KIND OF, YOU KNOW, AS YOU WERE SAYING, YOU COULD HAVE RISING RATES AND THE ECONOMY DOING OKAY AND THE MARKET SORT OF DOING OKAY THERE, BUT THIS RETAIL NUMBER SEEMED TO ACTUALLY BE A NEGATIVE, RIGHT? JUST FOR WHAT IT DID TO RATES. >> I'LL JUST SAY THIS, YOU JUST SAID, KAREN, YOU WANT TO FOCUS ON EARNINGS, AND I GO BACK TO FRIDAY AND JPMORGAN DOWN 6.5%. I CAN'T REMEMBER WHEN I'VE SEEN IT DOWN MORE THAN 5% IN A NONCRISIS SORT OF PERIOD BEYOND. IT'S A VERY CROWDED TRADE. THEY BECAME VERY BIG MARKET CAP STOCKS, SO, THIS WAS A HALF A TRILLION MARKET CAP THAT WAS DOWN 6% ON A TECHNICAL BASIS, AND LET ME TELL YOU SOMETHING, THERE'S A LOT OF SECTORS THAT ARE BREAKING THESE REALLY VERY NICE 45-DEGREE UPTRENDS THAT HAVE BEEN IN PLACE SINCE OCTOBER. SO, SOME OF THE TECHNICALS ARE STARTING TO BREAK DOWN. ONCE WE GET INTO EARNINGS, WE'RE ONLY DOWN 4% IN THE S&P FROM THE ALL-TIME HIGHS JUST MADE TWO WEEKS AGO. I THINK EXPECTATIONS ARE HIGH. WHAT THE GEOPOLITICS SITUATION DOES, IT MUDDIES THE OUTLOOK, RIGHT? AND SO, IF JPMORGAN SOLD OFF BECAUSE THE CEO, THE BEST CEO ON THE 34PLANET WAS GIVING THIS GUIDANCE THAT INVESTORS WERE NOT GOING TO FEEL GREAT ABOUT, I THINK THERE'S MORE BIG DOWNDRAFT FOR SINGLE NAMES THAT ARE VERY CROWDED TO COME. AND AGAIN, THEY COULD HAVE PUT UP A REALLY GOOD Q-1, BUT IT MIGHT BE ABOUT THE LACK OF VISIBILITY THEY HAVE IN THE FUTURE. AND IF YOU THINK ABOUT THIS, WE HAVE HIGH EXPECTATIONS FOR EARNINGS GROWTH FOR THE S&P 500, IF YOU HAVE THE DOLLAR WHERE IT IS, YOU HAVE RATES WHERE THEY ARE, YOU HAVE COMMODITIES WHERE THEY ARE, I MEAN, THIS IS GOING TO START TO PUT SOME PRESSURE ONG MARGINS, RIGHT? AND THAT'S GOING TO PUT DOWNWARD PRESSURES ON EARNINGS. SO, I THINK WE'RE GOING TO HAVE DOWNWARD EARNINGS REVISIONS THAT ARE GOING TO COME OUT OF THIS. THE S&P JUST SEEMS A
