it seems like the stage is set for the FED to have a slow decline in rates if you continue to see that strong growth you could actually get that soft Landing that we had been looking for it does seem ultimately growth is going to have to slow if the economy slows more than sort of a Goldilocks Landing the FED has room to cut rates maybe a little bit more I do believe in lock productivity is higher and these tradeoffs are going to continue to be the fed's dream come true this is Bloomberg surveillance with Jonathan pero Lisa aboit and anarie hurn live from New York City for our audience worldwide good morning good morning this is Bloomberg surveillance alongside Lisa rabits together with Amry H and I'm Jonathan phoh your Equity Market on the S&P 500 slightly negative down by 0.1% One Bank in Focus since the end of January NYCB that stock is down 6% sent in the pre-market Lisa we're talking about cutting in half more than cutting in half the market cap of this Bank in just about a week downgraded to junk and not just because of concerns about property also because they can't keep their staff around their Chief risk officer and their Chief audit officer departing this month or last month now a question of who's going to lead this Bank key question when you take back is this just a repeat of what we saw last year on every level with respect to Community Banks and are we seeing the beginning of that kind of fear of contagion work its way into markets so with the different so last year is a rate shock that we all had to work through this year potentially I stress potentially a credit shock and it feels like a perfect storm for commercial real estate we've been talking about it now for the best part of 12 18 months it's been on everybody's Horizon you've got higher rates higher vacancy rates and all at the same time you've got these loans coming due as well it's kind of like the perfect storm for this particular spot of credit for this particular spot of credit in this particular Bank the key question is we were talking about a rate shock last year people now saying now is the rate shock because what you actually have now are some of these loans coming due so do you see this sort of delayed and deferred rate shock come to the FL in a more meaningful way and finally we saw someone in Washington asked about this treasury secretary Janet Yellen was asked about it she says I'm concerned she thinks it's manageable she don't want to discuss an individual Bank in depth but clearly this has the eyes of individuals in Washington about potentially if this doesn't stay idiosyncratic so the question I'd ask Bank problem sector problem or Market problem which one is it at the moment at the moment it's a sector problem because if you take a look at just the uh KBW index it's down I think 11% just since January 29th it's also a question with respect to specific banks that are going to that hundred billion dollar level of assets and what kind of regulations but if you saw there were actually European banks that are struggling on the heels of this because of commercial real estate exposure in the United States there's sort of the the sniffing out of something that's maybe a little bit bigger but maybe people are just looking for things to worry about Frankfurt Tokyo New York this is becoming a global issue Bremo that's the reason why I say it's unclear if it's just isolated to this particular sector a lot of people saying it's contained it's idiosyncratic I know you love that word I guess we shall see if you get enough idiosyncratic issues on top of one another it's no longer idiosyncratic right right so we have to wait to see if there are others I will just say today feels like deja vu all over again I was looking at Yoki Bara quotes this morning because I was just feeling like frustrated with this sort of narrative roulette that ran out of themes right we're dealing with one theme after another banking crisis yet again we're dealing with the issue of no Landing soft in who Landing we're dealing with Trump versus Biden we're dealing with Chiefs versus 49ers we're dealing with everything that sort of happened in another year the bundle's back back to the fut exactly that's exactly it we're going talking about sports bundles I mean come on we're going to be talking about that a little bit later just to get you up to speed on NYCB that stock is negative in the premarket double digit losses for the fourth time in five days yesterday and we're down another six or 7% in the pre-market at the moment the broader Market is okay Equity Futures on the S&P 500 shaping up as follows we're negative here by 0. 05% yields are high by a couple of basis points on a 10e 41172 coming up in just a moment we'll catch up with Tony DWI of canor gen as New York Community Bank plunges yet again Kim Wallace of 22v research with a border deal and a for Ukraine set to fail on Capitol Hill and Bloomberg's Geth Ragan Aram with a shake up in sports streaming and Disney earnings on Deck it's back to the bundle RMA back to the bundle I remember when we were talking with Michael Nathanson about what is the the sort of new model for uh streaming and he said it's the old model go back to the bundle well guess where we are right now I guess who's joining us a little bit later Michael Nath Michael's coming up a little bit later this morning look out for that we begin with our top story today losing more than half its market cap in just a week New York Community Bank plunging once more after a ratings cut to junk by Moody saying quote nycb's core historical commercial and estate lending significant and unanticipated losses on its New York office and multif family property could create potential confidence sensitivity Tony DW Cano gener joins us around the table for more tony good morning to you good morning good morning good morning good morning sir it's good to see you buddy in person let's get straight into it do we have a single Bank problem do we have a sector issue or do we have a market problem too it's it's all of the three but it's just not catastrophic I think after the great financial crisis John everybody's waiting for that one thing in the financial sector that's going to blow up the system and create that kind of ultimate wish that we're going to get that creates the low that's identifiable and and this whole commercial real estate thing is it's not levered and owned by the same place that it was during the great financial crisis so it's all three to a lesser degree which is why we're talking in the green room we we kind of still have the zombie we have the zombie economy is you you have a Fed rate hike that has absolutely it's been the fastest rate hike cycle in history into a generationally levered system that's not great but you have a service sector that's still spending money and so you don't know if you're going to go into recession that until you actually go into recession or the FED Cuts rates and and its game on we're just going to be in this period of uncertainty and that showed up in the stock market let's talk about the zombie because what we're talking about is are we seeing rate shocks that are really going to B bear through in commercial real estate why haven't we seen more rate shocks given that we kind of should have given all the prognostication the fact that companies borrowed at such low rates okay let's talk about dwire family right so I have a 7year 71 adjustable rate mortgage it's a 2 and S8 mortgage doesn't really affect me until I have to reset it like higher rates don't affect me I've already gotten mortgage it's not going to change for the next few years but if I had to reset that had I gotten it three years before and it's going into reset then it's got a major change in my monthly payment so the consumer spends on on how much money they have available to them and what kills the zombie Lisa this is you know we got to understand what kills a zombie any good zombie you got to love a good zombie movie World War Z Scooby-Do and the zombie apocalypse you got to love a good zombie right so what kills the zombie is you got to figure out what created it what created it in this situation is a historically uh fast rate hike cycle they went 75 basis points at a clip four meetings in a row so here's what they're going to do as inflation's coming down at the same Pace that it went up now they're going to do 25 basis points and wait and see what happens that's not the way it works historically once they cut they cut takes long longer but then they cut faster what what kills the zombie is you kill what created it that fastest rate hike cycle in history so what are you doing with this I mean how do you deal with zombies that aren't dying and that kind of are haunting out there but in the meantime things are kind of rallying and big Tech is kind of leading and people are trying to rotate for a hot second so our view coming into the year was it was opposite day we had a the stage was set for a rally on on October 27th where you had this ramp you had a historically oversold condition everybody was bearish Russell 2000 was making a cycle low the average stock was down 33% blah blah blah right coming into the year we were an opposite day Pond yields were looking like uh they were going to collapse down to 3% everybody was at 3 and 3/4 on the 10year yield seven rate Cuts were priced in the market it was the opposite of October 27th I think the problem that we have in the market in this zombie like economic environment where it's not discernable is you're chasing your tail so you chase a ramp okay it's good we're all we're good and then it tanks and you're like all right we're going to zero and and at the end of the day over the last 2 years cash has been the greatest performer because outside of the S&P 500 driven by those top 10 the Russell's Down Still 20% from Peak the equal weighted S&P 500 is down over the last two years you know slightly so cash you don't need to make a big call we love big calls come on TV I couldna make a big call I don't need to make a big call the big call is have some kind of medicine for the economy and and for commercial real estate for everything for the government for the election you need lower rates make a big call Tony Tony it's funny you say this because back in October we talked about this you've got yields of 5% on a 10e through 5% on a 2-year no one wants it you drop down to four Pile in let's go and now we've got this reversal once again I think what we're trying to work out from the equity Market perspective is whether we can continue to see a rally built on a fewer and fewer names with gone from Mac 7 to what now Lisa Mac 4 Mac Mac 3 Mac 2 who knows by the end of the week Tony do you expect this Market to broaden out anytime soon well that's so our our call as you know in 2022 is be pretty defensive even in 2023 you know you're going to get the rallies I think we did a good job of calling them I'm waiting for now that you've got the FED has made a pivot fed is not saying we're going to look to raise rates the FED has said we're looking to lower rates the timing of it's unclear but that fed pivot is an important thing to me what that makes me want to do is buy into that kind of weakness we saw in October 27th or any other low that we've had during that period so that's where I'm Different in in the last two years I kind of wanted to rent stocks when they went down you know you get this whoo you want to come in sentiment too negative and you get a nice bounce now I want to own them when they go down because I've had that fed pivot you've had an inflection point in leading economic indicators and money's Supply off of historically weak levels so you you have that kind of framework here's the problem sure let's look at the S&P 500 use can I don't do you know targets are kind of made for TV so it let's use a consensus Target of 5100 that every no calls no targets like you doing coming on TV having print good morning good morning so you're crushing it Tony so 5100 is the consensus Target right that's a pretty small increase from here it's well below the six-month or onee t bill so that's John the call and I'm I'd like to make good calls opposite day in the beginning of the year when everybody wants to chase stocks fade it that was our call October 27th stages set for a rally when everybody's you know selling them in the Russell's tanking there's calls to be made but you don't do it until the indicators both macroeconomic and tactical indicators get you to the right place and they're they're in no man's land right now Tony this is great you're going to stick with us Tony to are there if kind of gener I'm not sure what it is about cartoons and fairy tales we put Goldilocks on life support yesterday we're talking about Scooby-Doo this morning you we tried to broaden the audience here trying to trying to make Lisa laugh we're trying to reach the younger cohort I can say though that the feeling of frustration and turning to cartoons highlights this feeling that we've been here before maybe in a younger year and are just trying to sort of uh I guess embody the frustration that a lot of people feel executive producer writes in do we need to build Tony for the use of John's trademark after the they hit I mean maybe maybe Equity Futures on the S&P negative hit by 0.06% let's get you an update on stories elsewhere this morning here's your Bloomberg brief with Danny Burger hey Danny hey John Pimco says the bank of Japan May scrap its negative interest rate policy as soon as March and Hike multiple times this year the firm predicts that the boj will raise its Benchmark to 0% in March or April before hiking by a quarter point by year end Pimco says quickening wage growth will likely create persistent inflation allowing the central Bank to exit negative rates House Republicans are vowing to bring articles of impeachment for Homeland secretary Alejandro mayoras back to the floor the initial vote failed 214 to 216 after four GOP members sided with Democrats but the Republican majority expects to hold another vote once House Majority Leader Steve scales returns from cancer treatments Republicans charge mayorcas with refusal to enforce immigration laws and failing to secure the Border online talk show host Tucker Carlson says he will soon interview Russ Russian President Vladimir Putin the former Fox News anchor had been spotted in Moscow in recent days the interview would be Putin's first conversation with Western media since the beginning of the Russian invasion of Ukraine Carlson says he also intends to interview Ukrainian President Vladimir zalinski that's your Bloomberg brief John Danny thank you just to take a moment on that story amh I'm not sure we can cover that story without pointing out the criticism of Tucker Carson of traditional media and he failed to acknowledge that there are journalists in that country who have tried to cover this conflict who are now in prison plenty of organizations around the world have reached out for an interview with President Putin they just haven't been given one right and Tucker Carlson in this video he taped in Moscow before he sat down with President Putin which by the way we should note the Kremlin confirms that Tucker Carlson and Putin did in fact sit down and Putin gave him this interview he said that no other Western media bothered to interview Putin two US journalists one from Radio Europe and Evan gershkovich of Wall Street Journal are detained and impr prison in Russia trying to cover that side of the story any more headlines from that of course we'll bring them to you up next on this program the Senate's board a deal Dead on Arrival we can't walk away now that's what Putin's betting on supporting this bill is standing up to Putin opposing this bill is playing into his hands that conversation is coming up next live from New York City this morning you're watching blinck TV live from New York City equities a little bit softer on the S&P 500 we're down here by 0.06% yields a high by single basis point for 1153 on a 10-year under surveillance this morning the Senate's border deal Dead on Arrival all indications are this bill won't even move forward to the Senate floor why a simple reason Donald Trump he'd rather weaponize this issue than actually solve it we can't walk away now that's what Putin's betting on supporting this bill is standing up to Putin opposing this bill is playing into his hands here's the latest this morning the president pinning the blame directly on Donald Trump for tanking the Senate's deal to secure the southern border and provide Aid to Ukraine Kim Wallace of 22v research remaining optimistic that I think can still get done right in this a high conviction call remains that both Israel and Ukraine receive us assistance this quarter possibly as early as this month the fate of the less Market relevant border agreement may not survive in any form but it's too early to know Kim Let's get straight into it sir I've been looking forward to this conversational morning so before it was Republicans who wanted to attach a border agreement to aid for Ukraine and to Israel and now we're talking about unbundling that and still getting the aid done is that right that's certainly a possibility one thing we can't know is what's going to happen next on the house floor and in negotiations between the house and the Senate that's been proven steadily the last year my point is it's now that the Border deal has been jettisoned by the people who asked for it the next pertinent question is does that mean the linkage between a border policy and Ukraine Aid is no longer viable or different way to ask the same question question does Ukraine Aid die in the house along with border policy my guess is no well a lot of Republican Senators to John's Point were linking this and they said they will not sign up for Ukraine aid until the border is fixed not just the Border fixed but parole Asylum provision changes so do they need to still work on the border before they even begin discussing Aid to Ukraine um I'm not sure because reading the bill and I'm not I don't know how many members of Congress have actually read The Langford Murphy Cinema agreement it's extraordinarily detailed it is comprehensive I won't compare it to uh what was done under Reagan but certainly it approximates what Ted Kennedy was attempting to negotiate 30 years ago um everything that's been asked for and we do let's face it we have a Beyond decrepit and broken immigration system not just in the southern border but period but everything that's been asked for more enforcement agents more money for judges to move through Asylum applications and decide on refugees all of that is in the bill along with uh a reform of immigration uh from the top to the bottom it's an expansive bill um I would think that you'd keep that language in the drawer if it's not viable in 2024 keep it in the drawer and see if it can come back in 2025 but the real question and and of course the market relevant question is what happens to the war assistance Aid not just for the countries Israel and Ukraine but also the request for defense industrial based Investments and other things that apply to the us directly well let's go to some of the war aid yesterday in the house there was no agreement on a clean Israel Bill uh this you have Hawks fiscal Hawks saying it's not paid for you have progressives who don't want to vote for it especially because it's no strings attached how does Israel Aid get done without being paid for in the house and at the same time making sure Democrats can vote for it when Biden said he's going to veto a clean bill you know I don't mean to uh certainly this is not jocularity on display but we have a pattern that's been established the last 13 months at least in the House of Representatives and in the senate for that matter each body needs to pass legislation that they can pass and then you find out what the negotiation can become it's sort of a public Discovery process as opposed to one that's usually negotiated in private I am of the Mind strong if you go back to the debt deal in May that was dead three or four times within a week before it was alive and passed quickly um it's hard to predict what the next turn in negotiations are in Congress uh largely because as we saw last night it's very difficult to count votes in the house and in the Senate they are more than likely going to send the house War supplemental Aid with both bills or both countries covered and find out what happens that's certainly one path but I wouldn't preclude the numerous paths I would I would focus more on the outcome and the outcome for most members the their incentives are to provide Aid to Israel and Ukraine how they get there will be interesting to watch well the headline in the New York Times was a day of dysfunction when you take a look at the Wall Street Journal was talking about how people have less confidence in the longer term economic Outlook simply because there is a feeling of not things getting done of things not getting done and then Jay Powell on Monday in the 60 Minutes interview talked about how in the long run the US is on an unsustainable fiscal path and that just means the debt is growing faster than the economy it's probably time or past time to get back to an adult conversation among elected officials about about getting the federal government back on a sustainable fiscal path are there any adult conversations Kim happening right now yes several of them they just don't surface because they don't win the day and they don't drive headlines but chair Powell's point and a lot of people's point is that fiscal risk is coming it's looming on the horizon Washington hopes that it can ignore it for another three or four quarters so they get beyond the election but this is the year that we pass according to cbo's projections and they update their projections today at 2 pm it's the first economic and budget Outlook from them for 2024 they have said beginning this year net interest payments will exceed the primary deficit as part of the total deficit so we will be paying Bond holders more than we are uh paying for programs all of it with deficit spending that's not sustainable I don't know how long it can go on but you have to be concerned about issues like treasury issuance appetite for that issuance and official liquidity all of these discussions are adult and they're going on in the background maybe not on Capitol Hill yet hey Kim this was great it's going to hear from you sir let's do this again soon Kim Wallace there of 22v research Lisa run on time $42 billion a 10year notes coming today tomorrow I believe 25 billion of 30-year bonds it's going to be a record issuance of 10year notes today and this really goes to Kim's point which is we are paying for interest payments with new debt payments this is like a classic pick Bond P toggle bond in uh high yield Bond land which is basically the most risky thing you could possibly do where you basically defer all of your debt interest and you borrow more to pay for it those bonds are not treated kindly in the market yet us treasuries have not yet woken up to that hey Tony let's talk about this what is happening in the fixed income Market I remember a few months ago we were worried about the deficit now we're comfortable again how worried are you so you cannot fix debt with exponentially more debt the issue with that John has been that's been the case since 1987 when I got into the market like this is stuff that strategists and macroeconomists have been talking about since since the early 1980s let me give you a little perspective in that um one of the things that really got us more cautious in 2022 was the moment that Jerome Powell used the word the the name Paul vulker because when you look at when Paul vulker inverted the yield curve and shut down credit which has been the case X private credit and private Equity but when he did that in the early 1980s you were at a generational low in debt to GDP we're at a generational high in debt to GDP in 1982 um house not household government debt to GDP was something like I think it was 40 6% or something like that now it's 131% so when Paul vulker did it and it had the impact that it had that was catastrophic to the economy we did it again with more debt but it hasn't mattered because there's another source of capital and that's private credit and we can get into that in just a bit do you care about the auctions though the auctions stuff you know it was a great shock in when Janet Yellen announced former fed official now working for the Democrat institution said that they were going to lower the amount of long duration maturities when the market was worried about that that was so surprising um so yes I'm I'm worried about it when it's being priced in right now you know the bond market is has been up on a ramp so going into it the Market's already worried about least this goes into the whole thing is like how's the market going to react to an event isn't dependent on the event it's dependent upon how it reacts going into the event so think about you know all of the times that we've had these major surprise moves it's because it's already been discounted it's already been priced in largely it's never universally discounted and we've had a ramp in in treasury yield so some of that is already person ton it's good to see you great to do this every week this is great turning to well there's a price to be paid can could it tell me how much Equity Futures on the S&P just about unchanged coming up next going back to the bundle Disney Fox Warner Brothers crafting their own sports streaming service that's next this is Bloomberg the S&P 500 looks like this right now Equity Futures are slightly negative with the emphasis on slightly we're down 0.01% the nasdaq's doing okay at 0.1% once again the Russell the small caps under performing we're down 5% yesterday okay session for the small caps but rock bottom underperforming sector once again the financials on the Russell looks like the banks in a penalty box brammo all over again given the fact that you've seen the uh KBW index of Regional Bank stocks completely tank you do wonder how much people are treating this as idiosyncratic with respect to New York Community Bank and how much people are extrapolating out to maybe another repeat of last year we'll get into that I word in just a moment shall we let's get to the bond market and let's talk about the swword supply the two-year the 10year yields are just a little bit higher by basis point on a 10year 4 1153 let's call it unchanged on a 2-year at 440 I'll go over the numbers again at least I can talk about the significance of this and give you some scope 42 billion of 10year notes today tomorrow 25 billion of 30-year bonds Lisa that's a lot of Supply yesterday there was a three-year Bond auction that went okay it actually went pretty well question is as you get longer duration how much do people get worried about the sustainability of the debt path the US has how much do people start to bake in that premium how worried are people about resurgent inflation and a no Landing soft Landing who knows Landing kind of economy but there's this issue here as we deal with this when do the auctions become important when they have some kind of Hiccup otherwise people ignore them when yields get closer to 5% maybe maybe or just any kind of disruption that sort of suggests at that that can give people some some room to run with that kind of narrative let's get into foreign exchange the Euro finding some stability just yesterday after the biggest two-day drop going back to September I think over the previous two days before yesterday the Euro right now 10768 positive by .1% this tension around the ECB L you look at the coming out of the United States at the moment strong you listen to the guidance from the Federal Reserve pushing back it's very very difficult to say the fed's going to go before the ECB based on the data in the United States versus the data over in Europe you're feeling that really I actually think the Euro uh the dollar euro the euro dollar is actually quite interesting right now because it's just grinding weaker with the Euro underperforming the dollar and people are saying maybe it has longer to run Isabelle Schnabel in the Ft trying to push back a little bit saying wait a second last mile is going to be tough and nobody really believes her Jane FY of rabber Bank coming up a little bit later this morning just this idea that maybe the Euro can drift back towards parity we'll get her forecast a little bit later and surveillance this morning our top story one of them at least house Speaker Mike Johnson suffering back-to-back defeats House Republicans failing to impeach Homeland Security secretary Alejandra mayorcas Yesterday by a vote of 214 to 216 just moments later a bill providing Aid to Israel without additional funding for Ukraine also failed in the house Speaker Johnson threatening to bring back articles of impeachment against secretary my orcus when the votes are ready in the coming days and Marie it feels like McCarthy on repeat down in Washington DC oh certainly the pressure is rising for speaker Johnson this is what punchable news put out this morning quote it is truly one of the most embarrassing days in recent House GOP history think about embarrassing the last few months have been for this house caucus of Republicans and punch ball saying this is one of the most embarrassing backtack defeats why did you put the clean Israel bill on the floor if you knew it was going to be shut down why did you put my uh impeachment of my orcus on the floor if you knew you didn't have the votes they knew that a few Republicans were going to join Democrats and shut it down this is something that you promised your base you were going to do and then you have back-to-back defeats what are you offering to the Senate to try to get some sort of agreement you your own question why why did they I think they thought potentially they had a little bit of wiggle room with some people not being in present but you did have a Democrat who who was at the doctor who then made it back to vote on this but it just means that they're not whipping correctly so something seems to be off you know with with the structure of how how they're operating but back-to-back defeats it is embarrassing per punch per punch Bow's words well for me I'm just wondering how do you get Beyond just being a party of no amus impeachment no border bill with with some of Ukraine Aid no Standalone Israel Bill no Nikki Haley lost to none of these above uh options in Nevada I mean really like how many how how many NOS can we get in one day isn't the current sitting president campaigning on a big no basically saying Donald Trump no isn't that ultimately the campaign of the current Democratic president this campaign season and In fairness the campaign from former president Trump is no as well so you have no no no no no and no wonder people don't feel particularly confident not much of a vision at all is it exactly no should we move on maybe we should let's talk about financials New York Community Bank losing more than half of its market cap in about a week the stock falling to the lowest level since 1997 and Moody's kind of gets credit to junk the agency warning of nycb's Holdings in commercial real estate nycb's CEO defending the bank after the downgrade and pledging to bring in a new Chief risk officer and chief audit executive when you have to do that ly you know you're in a tough spot they're in a tough spot which is a reason why you're seeing the sheriff's ball uh commensurately the I word is really what we have to talk about how idiosyncratic is this how much is this hinged on two properties that are defaulting how much is this starting to br broaden out given the fact that we're seeing in Germany for example some lenders deal with us commercial real estate issues you're seeing that in Japan you're seeing that with other potential uh firms in the US when do we see it kind of the zombies to use uh Tony dwi's analogy when do we see the zombies actually come to the four and bite versus just kind of lurk out there what's unsettling I think about NYCB is that it was just two loans and I'm not saying it's just two loans but the big part of that story in the last week or so was just two loans the ocratic work is interesting so let's work with that you've got higher rates that is not idiosyncratic a lot of people have got to work with that the commercial real estate thing I don't think we can say it's idiosyncratic for a couple of lenders everybody's got to deal with that vacancy rates are down we're seeing these loans mature this year a lot of them all at the same time that's problematic where there is a unique aspect to the NYCB story is just operating in certain markets where you can't put rents in the way that you'd like them to I think that is slightly unique to some lenders in certain markets but the overall story The over all story higher rates lower vacancy rates all of these deals coming due at the same time I don't think that's that idos synchronic I think that's a big theme a big theme for 2024 you throw in the regulatory overhang and the potential to have to increase withh Holdings if you cross a certain level once again that also is a pressure that's facing some other Banks as well more on that coming a little bit later let's turn to this story Sports streamers are going back to the bundle Disney's ESPN Fox and Warner Brothers are joining forces to launch a sports streaming service to show games usually seen on traditional TV each company will own onethird of the new Venture a name and pricing have yet to be announced but it's expected to launch by the Fall GE ragath and Bloomberg intelligence media analyst joins us now getha let's get straight into it what is driving this story so I think a lot of different things uh John I mean we know that Disney has been talking about taking ESPN over the toop they of course have you know the Marquee Sports packages and of course the flagship ESPN network which houses some of the best properties when it comes to sports uh but really what all of these media companies are facing is number one is cord cutting which is more and more people are leaving the traditional payv bundle we had over a 100 million households paying for it about you know 8 10 years ago right now that number is is 70 million so 30% of that uh base has been eroded and it's probably going to erode and and erode much much faster and so these companies obviously have to make that pivot and do it soon and I think more importantly is also the the question of costs for them because if you look at what all of these big media companies are paying uh it's about $30 billion do that they pay the sports leagues every year in terms of Rights fees I mean just Disney Fox and and Warner Brothers Discovery are paying close to about $20 billion or so so this really kind of helps them pull their resources um you know and definitely helps them bid more aggressively for for rights that kind of come up rather than against each other so G this is a really important point I just wonder what this means if you're the NBA the NFL and you're looking at the sports auctions over the next several years are you disappointed with this does this mean you're going to get less money maybe I mean obviously having more biders in the market definitely works to the benefit of the leagues but having said that we also have many new entrance in the sports bidding Market I I would give you the example of Netflix which just recently uh bought you know WWE for for5 billion you obviously have Amazon and apple which have kind of entered the market in a huge way over the past few years also so we do have big Tech of course we have Google with you know uh NFL Sunday Ticket so we do have a lot of the big uh Tech players kind of uh bidding very aggressively um so it's a little bit of of of both I would say John how close are we Kea to actually going back to a bundle and then you can basically pay either separate amount just to get that or you can get it through both Disney or for potentially Netflix right I mean how how far are we from basically going back to where we were before the streaming yeah it's it's it's funny Lisa I mean we're we've come back full circle right so this what Disney is doing is they know you know Disney Fox Warner Brothers they all know that they have an edge against Netflix because they really own the sports part of the whole media equation I mean Netflix is kind is kind of now dominating when it comes to entertainment content and that's fine but but Disney Fox Warner Brothers they're trying to capitalize on what they have uh and and and you know stem losses and make the most of it so obviously I think what we're going to see in a new world is kind of this bifurcation right you're going to see a sports bundle and you're going to see an Entertainment Bundle Disney obviously is also bundling you know this new sports package with its own Hulu and Disney plus so I think you know that's going to actually help them uh overall in terms of you know selling the entire package but I think pretty much we're going to see the sports bundle and maybe Netflix and another service mofet Nathanson calls it the skinny Sports bundle we've been waiting for is there enough content on this to attract all these consumers I think it definitely has uh enough content does it have everything no it doesn't we're missing you know uh Paramount which has some of the key NFL packages which has you know March Madness uh we're also missing you know uh NBC and peacock and that you know they obviously have some of the NFL packages as well as the Olympics uh so it doesn't necessarily have everything but I think it's definitely a good first start and and it helps the hardcore sports fan kind of get quite a good area of sports content gther I'm thinking out loud which is always dangerous but bear with me I'm thinking back to Hulu which originally was a joint venture between several organizations and now ultimately is something just owned by the Walt Disney Company GTH there was always this question mark about the future of ESPN as you start to come together with other sports TV providers could this be an option further down the road for ultimately the Walt Disney Company to spin off ESPN and just be consumed by this new joint venture run by two other companies yeah definitely think so John I mean that's a really interesting point it's been kind of brought up over the years many many times uh definitely possible I mean I think what they're going to do eventually is of course they have ESPN plus which is you know kind of their skinny streaming service with some of the second tier Sports uh that has about 26 million subscribers right now but I think eventually ESPN plus will probably be shuttered everything will kind of move onto this new streaming platform and who knows yeah probably you know uh maybe the leagues can take a stake in it maybe it will be spun off uh and managed as a separate entity uh but definitely it it uh lays the groundwork for a lot more things to come interesting any ideas about pricing G of this full any numbers out there not yet I mean we knew that the ESPN skinny service only with ESPN content would have to be priced at at least $20 just for kind of it to be uh equivalent to the the linear TV bundle so I think this has to definitely come in at you know maybe well below $100 definitely which is the the Cable Bundle but obviously somewhere I think The Sweet Spot would be somewhere in that $40 $50 range maybe interesting getha thanks for the update appreciate it GE rathan there of Bloomberg intelligence brammo thoughts on this one $40 a month I just I just imagine that they're going to bundle things together and then they're going to sell it back to you at five times the price that the original bundle was at and essentially isn't that what's going to end up happening you can get exactly what you used to have just for you know $437 a month so Hulu is already super super expensive right it's like kind of nuts now I think our producer just said subscription fatigue subscription fatigue is a real thing right so at some point you might have Subs subscription fat fatigue in terms of the number of subscriptions just a question here though of the price and whether people will say fine as long as I don't have to search 10 different platforms for my soccer game on a Saturday I'm okay paying a higher price but still some analysts are calling it skinny and we heard from G is that there's some NFL games if you watch football American football there's some NFL games that you have to go then to another subscription for I mean isn't the whole point drives me nuts of the bundles One Stop Shop but it's not I play this game every weekend it's like where's the game and you're living at home as well it's like what what is the game on is it on peacock or can I just watch this which is the reason why I ask how much are you willing to pay to not have to play that game I'm one of those idiots that will keep on paying you know we just love sport that much keep on paying that's where they're going to get the money I know it's going to get expensive from idiots like me Equity Futures on S&P totally unchanged let's get you an update on stories outwhere this morning here's your blimber brief with Danny Berger hey Danny hey John Donald Trump has been denied immunity in the case surrounding his efforts to overturn the 2020 election he attempted to claim that a sitting or former president is immune from criminal charges the ruling was unanimous from a Washington DC federal appeals court and now moves Trump closer to the possibility of facing a trial ahead of his November's election the Republican front runner has until Feb 12th to appeal the ruling to the Supreme Court sharers of snap plunging in the the pre-market trade it was a disappointing revenue from its holiday quarter fourth quarter Revenue comes in $ 1.36 billion that missed the analyst projections of 1.38 billion the parent company of Snapchat has been restructuring over the past two years and recently announced that they're going to cut the workforce by another 10% Taylor Swift kicks off the Asia leg of her tour in Tokyo today spending on tickets hotels and other related activities is estimated to reach $230 million that's according to a lecture at Tokyo City University Swift performs in Japan through Saturday after which he's expected to fly to Vegas to watch her boyfriend and Chief's tight end Travis Kelce play in the Super Bowl that's your Bloomberg brief John Danny thank you it took the boj 20 years of zero rates and building up a massive balance sheet and all they needed to do was organize a tour of Taylor Swift in Tokyo and also yeah also lonel Messi other that I guess C exactly they're they're doing a good job super straightforward up next on the this program the FED in no rush the last 3 to 6 months has been surprisingly good news uh again I don't want to say we're done yet I don't want to say we're necessarily going to just Glide past all the way to 2% that conversation to next live from New York City this is blimber [Music] surance live from New York City Equity Futures doing okay just about unchanged on the S&P 500 lots of Supply coming up over the next 24 hours 10e Supply today 30-year Supply tomorrow yields just a little bit higher up by two basis points 4121 on a 10-year under surveillance this morning the FED in no rush the last 3 to 6 months has been surprisingly good news uh again I don't want to say say we're done yet I don't want to say we're necessarily going to just Glide past all the way to 2% but fingers crossed uh the data is looking uh positive here's the latest this morning fed officials cautioning against easing too soon Cleveland fed president Leda adding the FED should look to gain more confidence in order to cut later this year Jane Fury of rabber Bank writ in quote the house view is that the FED is unlikely to start cutting rates before June we expect dollar strength to moderate in the second half of the year as the fed's rate cutting cycle kicks off Jane FY I'm pleased to say joins us now for more so Jane that's the longer term View for the second half of the Year let's deal with the near term right now you've got a thre month price Target on euro dollar of 105 my initial question is why is it 105 and not lower given the recent data we've seen well that's right you know that that number's been in there for a while and that certainly seemed more Brave perhaps at the end of last year when uh the consensus appear to believe that the dollar was going to soften the dollar has of course strengthened this year a little bit Lumpy Journey but certainly that's that's been the direction and of course the reasoning for that is that the market has been uh pushing back perhaps reluctantly but pushing back on or anticipating that the FED will cut less than the market had hoped for so we think that's got further to go and we've seen it in the in the comments that you've just read out from two of the FED officials um from a credibility point of view you know why would a central Banker that's worked so hard to get rid of inflation sort of give up at the in The Last Mile and and risk their credibility risk The credibility of the Central Bank uh by by allowing inflation potentially to to rise again when the job's just not quite done yet Jane that's uh very true for the Federal Reserve but it's also true of the ECB e ecb's Isabelle Schnabel trying to hold up the Helm of some of the Hawks saying today in the financial times recent incoming data do not allay my concerns that the last mile may be the most difficult one once we start to cut rates and as I said we are not there yet we must proceed cautiously in small steps may even need to pause on the way down Jane do you believe believe this do you actually take her on her word or do you think that this is just job owning um no you know I I think there is value in in what she saying and I think very specifically with the ECB they're looking at wage inflation so the label Market in in Europe is tight this is a demographic issue we've got it across all of the oecd um and they they're watching that wage inflation if that wage inflation begins to loosen uh well well certainly that they could cut you know perhaps June but perhaps not earlier than that but I think a very interesting perspective for the ECB given the weakness of of the German economy is what do they do then you know what is going to be that the pace of their interest rate cutting cycle maybe into 2025 because certainly if you look at the data that's coming out of Germany again uh very weak industrial data this morning um you know that that there is I think a really good uh argument to say that euro dollar needs to be sort of soft over the next 24 months to allow Germany to to recover and by I mean I I think there's a far greater chance of euro dollar being say 104 112 in the next 2 4 months and sort of 115 and above I think the the Eurozone economy needs it and the strength of the US economy could justify that does that give the ECB more covered to actually go first and go further than the United States just because of that weakness and I'm talking about rate Cuts well again the data has to be there so it is all very much dependent on that wage data I think from from from Europe if if that is softer yes they can cut a little bit sooner if it is not I think they'll wait but it does uh raise questions about how fast they might be cutting into 2025 and and and that could produce you know quite an interesting Dynamic Jamie it's not just European weakness that we need to talk about with regards to the euro it's China too China really struggling and I think we're all struggling to get clarity on a policy extent the policy moves the policy effort coming out of China at the moment Jane where are we going in China we see story after Story report after report that Xi Jinping is about to do something to support the market support the economy and little evidence of it J what are you looking for again you know I think we must realize that perhaps we're looking at China from the perspective that we look at the US economy or the European economy or the Japanese economy where you know stimulating consumption is is is is is where governments tend to go that's not necessarily the story of um of of uh China of of of the government that we have there it is more about trying to uh boost exports and not uh consumption so uh we must reeducate ourselves with respect to that I think that accounts for some of impatience that we have because we don't perhaps understand the different psychology in in in China uh but you know this does affect uh so many other countries you know China is is the biggest consumer of Commodities it's a big export partner to Germany and this definitely comes back to German weakness through um that uh uh that that trade Channel if you look at factory orders for instance they appear to be strong yesterday in Germany but actually if you remove uh aircraft for instance you still see a lot of weakness in in the auto sector and in other parts of the Machinery uh production sector so uh the weakness of China is is coming back in various different channels a dollar China with a seven handle used to mean something Jane that's where we are right now and seemingly people more comfortable with that Jane what are you expecting to develop on the currency side of things well you know from our point of view I think this at more dollar strength you know and I think that is going to be a story uh that's going to carry on like I say until the FED does start to to to cut interest rates and at that point there may be a little bit more more interest in um maybe em for for instance a little bit more interest in in high yields but of course that very much depends on on the broader Outlook of of the global economy and China is part of that as well um but but for now you know I think I think the Chinese REM is is on the back foot one thing that I try to do every morning as I read different headlines is try to parse the signal from the noise and what actually matters and one thing that I hear increasingly in the noise are Central Bankers talking about the Red Sea and some of the potential inflationary pressures particular ularly in Europe is that signal or is that noise for you um I don't think anybody knows yet the fact that we we heard uh Central Bank is talking about this in in Davos and lagard mentioned it we we had Bailey talking about it in January he mentioned it at press conference as you know the bank of England and the ECB therefore talking about this and some others and and I think they flagging it um but right now you know we just don't know um how much this is going to contribute now certainly if we look at uh shipping prices relative to where they were a couple of months ago they've gone much higher but we're still looking at nothing like the sort of situation that we had you know after the pandemic so for for now it's relatively moderate but if this Con U uh situation carries on for for several months then we could potentially be talking about a another add-on uh to inflation but right now I would probably say it's it's more to do with reduced uh disinflation as added inflation you know something subtle there but right now now something to be concerned about but nothing to panic about at the moment hey Jane appreciate the update thank you Jane FY there of rabber bank with a three-month Target on euro dollar of 105 questioning why maybe it should be even lower you strip out the United States the international story right now Lisa not great not great at all especially because you could even use the SW word I mean it's almost stagflationary I thought was you were thinking of a different sww then I was not after hours all right no I'm not going after hours it's still the morning good morning morning good morning thank you but you know honestly I'm just thinking about uh going forward what this potentially could be if you're dealing with wages that are increasing for example in Europe but you also see industrial output really coming down the other s word works too you know for whatever it's worth which is why I thought that's where you were ultimately going coming up on the program in the next hour Kenny Kaminsky of alpha Simplex block co-founder Jim mccy look out for that fantastic conversation through the hour coming up Terry wisman of aari Herman Chan of Bloomberg intelligence with myc CB down in the pre-market once again from New York City Equity Futures Just a Touch negative here we're down by 0.04% on the S&P 500 last week meta had a massive move higher on earnings this morning snap is getting absolutely battered in the pre-market looking like a completely different company to the one ran by Mark Zuckerberg from New York City this morning good morning the second hour of blomberg surveillance up next the FED just can't give you what the markets want the FED to give you if inflation does continue to behave as it's been the committee is a little just struggling to catch up to how quickly the data have moved and what to make of that this idea that you can have stable or improving economic growth but inflation continuing to to decelerate we just thought that was never credible interest rates while they're a dampener aren't really able to offset that big moderation of inflation that we're seeing the inflation Genie is not fitting back in the bottle this is Bloomberg surveillance with Jonathan Perell Lisa abitz and and Marie H the second hour of Bloomberg surveillance starts right now live from New York City for our audience worldwide good morning good morning this is Bloomberg surveillance alongside liso rabits together with Amry H and I'm Jonathan phoh your record Market on the S&P 500 totally unchanged let's work through some single names and start with Uber plenty of earnings out there this morning Uber is doing okay at least are better than expected people looking at fourth quarter earnings coming in or bookings I should say coming in higher than expected but I just do want to note this is their first annual profit for Uber since its IPO and I wonder if this is a ride hailing story or if this is a consolidation of the Behemoth story because Uber certainly is seeing growth that maybe some of the competitors are not that stock is unchanged that looks boring let me show you a name that is anything but snap is down in the pre-market by more than 30% we're talking about a third of the market cap gone in the pre-market unreal look at the numbers we're talking about losses we're talking about misses Lisa nothing pretty about this everywhere you look talking about ad Revenue which was the Boon for the likes of meta which is interesting that you sort of juxtaposed meta and the record gain that it had in market cap last week they're talking about a challenging operating environment particularly with ad revenues uh talking about Revenue increasing by 5% missing the analyst projection also announcing another 10% reduction in staff to quote reduce hierarchy and promote inperson collaboration again how much is this a snap story and how much is this a macro Story how much is this a consolidation of all the business at meta and maybe not at snap well for some companies the so-called Tech session is not over the recession of 2022 that we saw play out quite brutally for even some of the big cap names as well for some names like snap it's not over it's not over and the they're still reducing staff they're still trying to right size the focus in getting back to the office I find fascinating Tech was talking about everyone can work remote and suddenly not so much well that has implications for what we're about to talk about now which is NYCB so I'm sure you're all following this bank at home and the premarket it's doing all right it's negative about 3% it hasn't been doing all right over the last week or so we're talking about double digit losses in the last four or five days or something like that Lisa which is just absolutely unbelievable we've lost more than half the market cap since the end of January and they get back to work get back to the office theme this is what's hurting them commercial real estate in a big way and it hasn't been fully repriced and we're talking about zombies I want to go back to Tony dwi's zombie idea because really it's this question of when does it actually come to the for because everyone's been talking that this is going to be a problem and yet now suddenly we're seeing it come out of the woodwork that is what I think is spooking people the idea that we knew that this was an issue and now suddenly it's become uh something more imminent for secretary Janet Yellen as well so yesterday on Capitol Hill in front of the house Financial Services committee I believe tomorrow amarie in front of the Senate Banking Committee becoming a bigger and bigger issue down in Washington I imagine she's going to a get asked specifically about this again tomorrow because she didn't want to comment on a single name but she did say there is concerns in this sector and she pointed to uh the supervisor she said they need careful attention when it comes to supervisory um but we are aware that this could create Financial stability risk or losses in the banking system what else can she say exactly what I was you took the words out of my mouth I mean honestly she can't be like this isn't a problem and she can't say this is Armageddon it's sort of we're carefully watching it trust us it's the lesson of last year and we mentioned this in the last week or so the lesson of last year wasn't a lack of Regulation it was poorly executed supervision and I think what's interested about our reporting so far this week is basically the regulator was leaning on the specific bank according to our reporting to do something about things and do something about it fast which is not what we saw last year the Fallout though is similar which is interesting because even though Regulators were on them to do something it hasn't stemmed some of the losses but maybe it has given people confidence that they have some supervision we heard that from Jay Powell over the weekend too they're working with a number of banks so everyone's saying okay who else what does it rhyme like what other the names NYCB is one of them down by about 2.86% in the pre-market much better than where it was a little bit earlier this morning the broader Market in the equity Market at the moment on the S&P 500 futures look like this we're negative but only down by 0.07% in the bond market yields are higher by three bases points 41288 Lisa wants this on repeat 10year notes come today $42 billion worth Lisa to tomorrow 25 billion of 30-year bonds and I cave at this with it's not going to matter unless it does right I mean it's sort of talking about Yoki bar quotes but this is a sort of thing where if it gets messy then people will start to talk about debt sustainability and if it goes well people will say debt sustainability is not in anyone's mind it mattered in October not so much now apparently but that can change quickly exactly that can change quickly and it changed quickly based on just treasury secretary Janet yell and saying yeah less longer dated debt than you thought than you expected and so what could shift the sentiment there's really a question of how quickly can this change in a dime and then how self-fulfilling could it be given that sentiment but gets sentiment and that people send to get worked up because nobody really can follow the narrative at a time of deep uncertainty you don't sound frustrated at all the two years up by single basis point the two-year right now 442 coming up this hour Katy Kaminsky of ala Simplex as the FED urges patience on rate Cuts Jim Meli co-founder of block on banking regulation Terry wisman of mcari on us exceptionalism all of that and more still to come we begin with our top story this hour fed officials continuing to push back against early rate Cuts Cleveland fed president the rer saying this quote it would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable And Timely path back to 2% so it's long fixed income still the new short joining us now for more is Katie Kaminsky of Alpa Simplex so Katie that's your line long is the new short is that still the case yes it is and I think the biggest issue for me is that we have not been in position similar to a soft Landing for two years and now suddenly technical signals are agreeing with a soft Landing narrative is this hope or is this potentially something to worry about that's what I'm thinking about right now how does that jive with what we've seen in the data Friday and again on Monday well I mean if you look at fixed income it's kind of in a weight in a holding pattern there's definitely buying pressure which is being pushed off where this huge hopes for cuts so people are thinking we need to get in now before we get the cuts but as you see from the policy speak there is no hurry for cuts anytime soon and so as a result fixed income is sort of floundering back and forth between it's time to be long but at the same time it's going to take more time for cuts than people would like Katie how much do you care about auctions We Care a little bit but it's exactly like you said I mean it's really a no op unless something really happens and it is something that is a risk for the long end of the curve if we are going to see continued higher for longer rates for a longer period of time should we see that weakness in the long end of the curve we might see the steepener without the cuts so I think that's why people are watching it just to see if that could show signs of some fragility in the system I was talking earlier about how I feel like it's deja vu all over again we kind of feel like Back to the Future with this idea of uh you know the no Landing or soft landing and what we're going to do with a reaccelerating US economy If the Fed remains on hold for longer and isn't so quick to cut does that give you more conviction or less conviction with the long Bond call well I think bonds have gone through their cycle we've seen an inversion we've seen a flattening and frankly the next step is a steeper yield curve and so if we do stay longer for higher for longer then you know it could be weakness in the long end of the curve where people kind of lose some Faith uh which you have to watch for I think for us the biggest thing that is a concern is if you have upside risk in inflation that people are really hoping against um that's something that I think we worry about for this year so Katy let's drill deeper let's go through some scenario analysis we've been trying to figure out around the table whether good news is good news for stocks so we've been looking at the reaction in the bond market strong data high yields then we'll go to the equity Market Friday we were okay Monday not so much so KT I'm trying to work out how that Bond stock correlation has been developing over the last few weeks off the back of these upside surprises so I think the biggest thing for us I mean saying going into what you're saying is that everything isn't the same as it used to be we're still seeing positive stock Bond correlation which is consistent with inflation still being a key theme and we're also seeing heightened Bond volatility which is also suggesting that people are very uncertain about the direction of fixed income going forward this is not consistent with a soft Landing where there narrative so I think that's something to watch because it's something that indicates that asset prices are still really focused on inflation is this consistent with a stronger us CED say well I think the challenge here and I think I want to point this out this is something we're talking about right now is the biggest challenge is going to be the role of China in this entire narrative if you look at China and the becom they have moved hand inand so the question you might ask yourself is should China come back online how many of these stories are going to kind of turn the other direction China is a major major player in terms of raw Commodities which often lead the pack when we come to inflation kind of roaring back so I think that's what I'm interested in this year is what happens in China and what is its role in commodity prices that could be sort of a huge factor that we're not thinking about which brings us full circle back to the idea the asset prices and you are very focused on inflation the potential risk of a re acceleration do stocks hold in in that case that seems to be what a lot of people are saying is that stocks are a better BET right now than bonds or cash should we get that inflation surprise I going think about it I mean I agree because when you have an inflation surprise it goes straight to bonds those are longterm cash flows inflation especially in the short run isn't so bad for Equity markets I think the challenges when you hit more restrictive Financial conditions which frankly the data is not suggesting yet and so as a result equities are still looking relatively good and the US is really looking ahead of other regions so I think that's that I would agree with that us exceptionalism is a theme all over again Katie thank you Katy kitki of alpha Simplex we'll catch up with Terry wisman of mcari about that later this hour your record Market on the S&P 500 is totally unchanged let's give you an update on stories elsewhere this morning here's your Bloomberg brief with Danny Burger hey Danny hey John online talk show host Tucker Carlson has interviewed Russian President Vladimir Putin the former Fox News anchor was spotted in Moscow in recent days the interview is Putin's first conversation with Western media since the beginning of the Russian invasion of Ukraine Carlson says he also intends to interview Ukrainian President Vladimir zalinski shares of snap plunging in the pre-market trade this morning following disappointing revenue from holiday quarters fourth quarter Revenue came in at $1.36 billion that missed analyst projections of $1.38 billion the parent company of Snapchat has been restructuring over the past 2 years and announced that they'll cut workforces by another 10% nearly 68 Americans are million Americans rather are expected to place a bet on this year's Super Bowl that's according to the gambling Industries National trade Association and that's a 35% jump from last year the total value of bets is estimated to surpass 23 billion but of that just $1.5 billion dollar is projected to be with legal Outlets Sunday Super Bowl pits the Kansas City Chiefs against the San Francisco 49ers and that's your Bloomberg Reef John that stats amazing not the 68 one the other one Danny thanks for that that's phenomenal just to hear those numbers yeah but how much of that is like squares and things like that people kind of betting across the table versus real kind of formal illegal bets are we going to do our own bet here you want a bet now to be honest I don't know anything about these teams so so the answer to that is no we can do that in a commercial break if you want you know like for a dollar or something like that up next on this program treasury secretary Janet Yellen on Capitol Hill I do have a concern about commercial real estate I believe it's manageable although there may be some institutions that are quite stressed by this problem that conversation up next this is Bloomberg [Music] what did you say live from New York City this morning good morning to you all the equity Market on the S&P 500 slightly lower by 0.04% yield A Higher by two or three basis points on a 10year 41288 and surveillance this morning treasury secretary Janet Yellen on Capitol Hill I do have a concern about commercial real estate I believe it's manageable although there may be some institutions that are quite stressed by this problem here's the latest this morning yell and voicing concern over losses in commercial real estate stopping short of commenting on a single institution this is Moody's cast New York Community Bank or to junk and shares hit their lowest level since 1997 Herman Chan senior us Regional Bank cist of Bloomberg intelligence joins us now for more Herman is this the worst of it or is there still more to come look there's probably still more to come in terms of what's going to happen next with new your community bank and then for the RO broader Regional peers that do have exposure to areas of concern like commercial real estate so the story is not over yet and we're we're rcing for some more bumps in the road Herman do you have a sense of how many banks the Federal Reserve is talking with right now and trying to oversee as well as the treasury as we heard from Jenny yelling yesterday yeah uh I think the the banks that really have higher exposure to commercial real estate there there's a regulatory ratio uh that that's been discussed about 300% of commercial real estate as a percentage of your total capital and there's also another uh regulatory marker 100% of construction lending as a percentage of total Capital so makes that clear that a metric uh may have uh higher regulatory scrutiny in this current uh environment the good news is that NC CB is down 5% Herman Chan at Bloomberg intelligence now I say that's good news because yesterday we were down by 22% Lisa the day before we were down by almost 11 so basically this is what a Revival because it's only down 5% this is stabilization at $4 a share down double digits Thursday down double digits Wednesday we've lost more than half the market cap of this Bank in just about a week which raises this question of okay first of all can it continue does this really jeopardize some of the relationships when you have to come out and say this doesn't jeopardize a relationship it's not a good thing to hear but then also how far does this go when you see the KBW index of Regional Bank stocks down 11% since uh January 29th I think we've all been excited for this conversation all morning joining us around the table is Jim mavy the co-founder of block and former chairman of the board of the St Louis fed joining us around the table for the rest of this hour good morning sir thank you good to see you Jim yes it's going to be a lot of fun we're going to have a lot of fun right now maybe not on this topic though start with a Gloom let's talk about the stress in the regional banking sector your thoughts on last year which seem to be rate stress this year is it going to be the year of credit stress well I mean everyone was worried about the banks uh because there's such a concentration in commercial lending and um commercial real estate isn't worth what it used to be because people aren't going into the office um but the good news is and at the last fed meeting that I was in in Washington DC we discussed this the good news is it's a problem but it's not a surprise so everybody saw this coming so it's baked into the rates like and you you're seeing it play out in the numbers right now we're discussing that but um this isn't going to come as some you know like pandemic like surprise where all of a sudden it knocks the world economy over because we didn't see it coming begs the question why some of these Banks hadn't already provisioned for it NYCB came out in the last week and did just that well it I mean it was a crash I mean the pandemic hit people stopped going to the office you had these long-term commitments these mortgages and and and that doesn't unwind instantly so you can't get out of it it's a game of musical chairs I mean you're stuck with it you know you're stuck with it everybody knows you're stuck with it so you can't just dump it on some other sucker well so someone uh soft Bank well we could we could discuss we can so go about have a lot of fun with that we miss you we miss those days we could talk about you know Adam Newman going back to weor but I am I'm just curious you know when you take a step back uh whether some of the disruption in some of the models makes it more difficult to sufficiently understand the risk you know we're talking about for example svb I'm thinking about some of these other banks in terms of concentration in terms of of just their concentrations of particular asset classes yeah so the models have been um you know sort of slow to respond um but I mean if you look at it the the system really performed quite well during the SBB uh situation because the SBB was sort of a weird Bank it had this very weird concentration of of behaviors and and deposits and and you know this sort of nichy thing in in Silicon Valley um and when it blew up the system reacted so quickly and so well and there was a question were are we going to you know bail out uninsured depositors and the answer you know internally which we all knew of course we were because it's the regulated Financial systems you can contrast that with an unregulated system like what happened with FTX um there was again a problem but there was no regulation there was nobody in there to you know sort of no adult in the room I mean I think literally um and it collapsed and people got wiped out so you know what I look at is you know sort of systemic risk and uh the FTX disaster was a disaster but it sort of proved that the model worked now could we regulate better yes should we absolutely and we're changing the models but you know I was on the FED at the time and um if you watched how the fed the FDIC and the treasury all responded in you know sort of uh in real time to a problem it was very comforting well so you've been on all sides of this which I love yes you know because you've really you've helped uh you you founded block and you also have seen it from the regulatory standpoint you talked about SoftBank we're talking about zombies how many Bad actors are there left who haven't been exposed in some of sort of the new Finance Lots there always lots of the the Bad actors like it's not a it's it's not some sort of thing like we we extinguish it um these people move from thing to thing and uh a lot of them get to uh you know find the next thing u i I don't know what is I'm sure there's going to be a lot of fraud in AI I I'm assuming there's going to be a lot of fraud there there was tremendous amount of fraud in in advertising was we just saw what happened with SNAP and Bloomberg and um you know advertising for years was this just total sess poool of unregulated fraud uh and it's still going on right now that's why companies like U you know Bloomberg are uh so amazing because you guys actually are a solid um you know you know fact creating fact reporting company whereas most of them you you look what's happening with Dow Jones look at how the you know sort of the news World um it's just imploding because of AI you think there needs to be actual regulation for that no it's not it's I AI That's killing news it's the fact that uh you know basically the platforms have hoovered up all the ad money yeah Bloomberg being the exception how are we going to confront an era of disinformation the potential of that coming from AI in the years to come what's the best way of doing that nobody knows right now I mean I think in the world of AI we absolutely need to start thinking about regulation quickly and not just you know sort of government regulation I think what we need is a market of Regulation so in other words we want to have four profit companies that are monitoring artificial intelligence developments um much in the way we have Underwriters Laboratories you know certifies you know probably this keyboard has a UL listing on it so since you've been on all sides I love that you've been on the government side you've also been on the Innovation side there's been this sort of angst that government can't pay enough governments can't pay enough to get the talent to actually counter some of the AI threats and get ahead of them in any real way do you pay Credence to that kind of idea um you know we can pay enough it turns out um you don't actually have to pay top dollar because you know when I was at the FED like the FED has a cap we're basically not allowed to pay much more than the president earns uh to hire people so uh we were hiring people and paying them a quarter or a tenth of what their market rate would be but there's there's some people who will work that way like there are a lot of actually excellent people who come in um and do that so it's it's not just a question of you know you know throwing dollars at a problem to solve it we say that in the Federal Reserve I think you can earn more as a Regional Bank president say on San Francisco for instance than you can as a governor of the board of the Federal Reserve which is kind of nuts yeah I mean when Chris Waller moved to DC like it was took a pay cut didn't he oh no well not much of a pay cut because he was already working for the FED in St Louis but I mean the poor guy couldn't afford housing like just in DC it was no this is a real problem so I think we should allow uh the government uh entities to pay more I think that would be a good thing that we should have this artificial salary cap because the next segment with you is well Jim because you're going to be sticking around with this I've always wanted to ask you this why the banks here in America didn't create block how they missed this how did that happen so I mean I read an entire book on this uh it's called The Innovation stack which I shouldn't promote it because it was published three years ago I I published it during the pandemic so nobody wanted to read about it but look if you think about the world of innovation um the the the the truly transformative Innovation always happens outside of the market because what the market does the market fills its space and it says okay we are going to serve people down to this level and when block started which we used to call Square when Square started the ability for small Merchants to transact using the same tools that the big guys had wasn't there and so we built an entire system underneath what the market at the time was and as a result you know millions of little businesses were able to then you know have the tools so they could take payments and they could do their payroll like they had you know gave them all these tools but that by definition never happens from within the industry so um you my research for the book um basically showed this pattern again and again so the same thing happened you know great example would be Airlines okay so at the time before Southwest Airlines um Airlines were were basically the tool of the rich like you could travel in an airplane if you were rich or if somebody else was paying for it but normal people took the bus and Southwest Airlines basically invented what we now think of as air travel um because they made it cheap they made it yeah you know affordable to everybody and that Innovation never comes from in the industry so the banking industry as it existed in 2009 when we started Square was never going to do what we did we're going to keep talking about it I also want to know if you take any blame for what happens now when you go to get a coffee and they flip the screen around 25 I wonder if you actually take responsibility for that Jim Jim mcau is going to stick with us from New York this is [Music] Bloomberg [Music] stocks on the S&P 500 going nowhere totally unchanged e Futures this morning looked like this with positive 0.08% on the NASDAQ 100 on the Russell of small caps Rock Bottom in yesterday's session the financials this morning down another .5% we'll talk about nycp a little bit later let's turn to the bond market 2E 10 year 30e plenty of Supply coming a little bit later I've talked about the 10e issue $42 billion of 10year notes coming later $25 billion of 30-year bonds coming tomorrow your 30y year this morning is up three basis points to 433 Lisa up three basis points on a 10e to 41269 I'm watching the auctions to see whether there's something that comes to the four that's a little bit less uh positive than yesterday in particular because longer term inflation expectations are starting to creep up as we get this better than expected data and it raises this question when do that start getting priced in in addition to deficit issues and sort of the risk premum that people talk about that's the bond market here's foreign exchange Jane Foley speaking to Lisa and Maria May a little bit earlier of rabber Bank on euro dollar looking for5 in the next three months or so we're at 10770 the real question right now Lisa is why not lower than that why not parity all over again based on what the data looks like in America versus what the data looks like over in Europe at the moment does this thing ever move that much I mean I think that maybe break down from 110 wait till 107 exactly it's been shocking for a couple of months but here's the question right essentially because there is this big Divergence with the US outperforming Europe when does that start to play out a little bit more in a predictable manner in currency Just a Touch stronger is that enough price action for youant just a little bit under sentance this morning your top stories your first one Secretary of State Anthony blinkin heading to Israel with a peace steel building K saying Hamas gave a quote positive response to a proposal which would see a pause in fighting and the release of some hostages blinkin saying the US is studying the Hamas response and has shared it with Israel and Marie we've been closer and closer over the last week how close are we well Biden yesterday when he came out to talk about the collapse of this border deal and talked about was asked about this Hamas uh ceasefire potentially he says there's been some movement but then he said their response was a little bit over the top what does that mean what did Hamas ask for that the president said was a little bit over the top and then how does blinkin his fifth visit to the gulf to the Middle East he's in Israel today how does he sell this to the Israelis when you have Netanyahu saying basically that they are not gonna stop until it's total victory in terms of crushing Hamas a fifth visit in about four months and likely sadly not going to be his last either let's turn to this story every time I do Boeing I do give a warning if you're flying this morning turn the volume down a little bit just for a moment four bolts were missing from the panel that blew out on the Alaska Airlines flight last month this is nuts according to us investigators photos from a preliminary report by the national Transportation safety board suggests the bolts were removed at Boeing's Factory and not replaced in a statement Boeing CEO Dave coun saying quote whatever final conclusions are reached Boeing is accountable for what happened I mean Lisa where to begin with this story where to end I don't want to have to look at what plane I'm flying and yet that's where kind of where I've started to look but I I just again bolts not being put in is not something that you want to hear and it raises this question about the duopoly you can't get away from Boeing so what do they do to try to shore up their uh their production well I was actually on one of these Boeing flights on Alaska went back and it was one of those flights I just hope it wasn't one of those that was missing these four bolts Wall Street Journal this morning FAA keeps trying and failing to fix Boeing is it a Boeing problem or does the FAA need to get more involved which they were on Capitol Hill for grilling yesterday jim I've got a feeling you want to jump in on this story what have you made of this U wear your seat belt I mean uh look the the FAA does a really good job but they've got a problem which is there's one manufacturer we used to have lock we used to have McDonald Douglas we used to have Boeing and they would compete and and that competition has now been sort of sucked out of the market uh you've got Boeing versus Airbus but Airbus is this sort of weird you know sort of state sponsored weird thing um they both build good planes so Boeing they they're solid planes the planes are safe but you know fundamentally uh they've got some management problems and their president basically just said Oops why isn't there more innovation in this sphere why can't we have uh something that breaks out from a duopoly where suddenly another player kind of challenges it's it's the economics of building large planes there's so much regulation there's so much Capital um required uh that you just can't stand up one of these things now the Chinese may be able to do that um but I wouldn't you know jump on one of their planes anytime soon um the Brazilians are actually building uh some pretty decent planes um and then the private Market actually builds you know sort of interesting experimental air aircraft what the the cool thing is that you know at least in the United States we have this thing that allows you to fly anything as long as it's written experimental on the side um so if you go to the EA um you can literally like like literally we can put balloons on this chair and and and and legally fly it in C as long as we R experimental as long as you put experimental on it it's safe um and so it's actually a really good system for Innovation because you'll see a lot of really cool things like um you know basically drones that you can fly now um and they're all over the skies uh they're just not things that you would buy a commercial T just as long as it's not a plane made in China with experimental R yeah you don't want to you know I don't know what the Chinese word for experimental is but it's probably tattooed on somebody's neck these days let's not go there let's not go there a gamechanging moment for sports streaming let's go there Disney's ESPN Fox and Warner Brothers Discovery are joining forces to launch a streaming platform the service aiming to attract viewers that don't subscribe to a pay TV package but offering them all of the sports that would be included from the NFL to college basketball the unnamed service is set to launch by the Fall we don't have a price either Lisa but GE ragath of Bloomberg intelligence suggesting something like 40 bucks a month but to me this really raises the question about whether the new disruption is going back to the old I keep thinking what is the new model for entertainment I'd love to actually hear Jim's thoughts on this what's the new model for entertainment at a time where streaming is kind of coming full circle and there are these disparate services and how do you consolidate enough uh eyeballs and capital to really make it work Jim thoughts so there are only three models that pay for Content uh there's subscription there's advertising and then there's pay-per-view and we've never really gotten pay-per-view working well um I've spent the last six years building something called invisible which allows you to basically sell your eyeballs on your terms and buy peace meal whatever you want so you can get the Wall Street Journal you can get the Atlantic you can get but it right now all we have is news all we have is news in journalism you print journalism which it turns out most people don't want um uh they just you we we handed it to them and not a lot of people were eating from the buffet um but I think eventually what we're going to have is a system where uh if you want to see the game you have access to the game and some intelligent agent some some basically a robot that works for you will say oh Lisa wants to watch this so uh you know she'll pay 30 cents to see this game and then um you know the money will flow and everyone will get paid and that's that's ultimately I think the solution to this because it's bundling and unbundling and signing up and where's the game and oh I have to sign up for peacock in order to watch the Kansas City Chiefs and see if Taylor Swift showed up you pain yeah that this is it's nuts and it's it's frustrating but we're in this world right now where where these are all things being worked out let's go to the data that you have access to and how enables you to make some political predictions what kind of predictions are you making at the moment so invisibly has a political polling arm that um weirdly has been calling the elections correctly so we called the Trump Clinton uh or sorry the the the the Trump Clinton election correctly called the last one um and um the the data right now is really interesting the Democrats are likely to run the only person who could lose to Trump and the Republicans are about to run the only person who could lose to Biden and if either side would pick a different candidate at least from what we've seen they would win but it looks like we're going to have this really weird standoff of uh you know sort of the the the statistically least likely uh uh candidate in both sides what is the data telling you and who would win this rematch right now Trump yeah that's that I mean but look so early to tell and look and what's the spread it's too colors to call I mean it's you know a couple of points it's it's because what happens is you have these weird voters who don't respond to polling correctly and one of the ways that invisibly gets decent polling is we troll the worst parts of the internet like our ads run in the like in the the places that nobody admits they go uh we get all that data um and it turns out that that accurately predicted uh the uh the elections in the past so we hope it's going to still work um but so when Quinn cool up people aren't honest with them is that basically what we're find yes if if if I stand there with a clipboard and I say John who you going to vote with you you you you tell me I'm here for Bloomberg morning consult and and we're not telling the truth is that is that Bas no no turns you just had the conversation with the cameras off we had a very Frank conversation which none of you guys got to hear um but um this is the fact um when you pull somebody as controversial as Donald Trump a lot of people tell you what they think you want to hear and they don't honestly answer so we get them where they really are and they answer honestly and that's honestly what are the worst parts of the internet I mean there's a lot of bad that's there's so much there's so much you really wanted to go I wasn't trying to go there I think we saw a similar I forgot it was called surveillance like I think we saw a similar thing with brexit back in 2016 the people were pulled and it was the difference between a telephone interview versus an inperson polling and all of that stuff as well is that what you're finding then yeah what we find is that if you ask them the question on the page and you don't pull them off the page so that they they trigger into this oh I need to answer correctly um uh then or I should say honestly um they will um they will answer honestly if you don't disturb them from the cat videos or People of Walmart or whatever else this brings up quite a philosophical question it's who monopolize the moral High Ground for the public to believe there was a an answer to the question that you wanted and the answer that they did have they felt like they had to keep in private and it makes me wonder whether we've sort of lost where the country is actually in reality and that the leadership is out there trying to please maybe the fringes of society Without Really directing it down the middle have we lost track of where this country is we have I think because a lot of the leadership is on the coasts and a lot of the energy is in the Midwest and in farm States and in places where you know normal people feel like they don't have a voice uh and I live in St Louis Missouri um I'm from St Louis and this is the the the spirit out there and I've watched uh this develop over the last you know 15 20 years we're not properly connected to uh um you know the center part of the country we've already seen AI play out in this election deep fakes on people's voices How concerned to you about that oh terrified I'm just absolutely terrified and and impressed you know like it's gotten really cool um but spoken like in impressed because it's so good and that is scary it's fantastic and it's going to be the tool that changes lives and changes the way we work and changes the way we think um but right now it is so dangerous uh to use the old system so we used to say oh if you had you know something that was typed it was legit because it would it it cost money to have a printing press you know uh so if it was handwritten it was it was possibly fake but you couldn't fake you know type um and then we got Laser Printers so everybody could fake type and then we got the internet so everyone could fake news uh and now we have ai so anyone can fake video like I might not be saying this he is thanks Emory I want to go back to something you were talking about with this sort of uh disenchantment the point that John was making about the gap between leaders and the populace and what you make if you sort of dovetail that to the economic picture or the overall e economic data seems to suggest real strength and then you talk to people and they don't feel good and everyone's been trying to figure out this dissonance and say well maybe it's just because it takes time for inflation to come in what do you make of it I think there's a lot of um accentuating the negative uh in news because you know the news cycle has to get eyeballs and eyeballs are going to come to you if you make people hysterical uh and you do that again and again on a 24-hour cycle um and people eventually start to get depressed and start to think that their system is you know being attacked and then you've got the you know sort of Silo isation of information where you know you get your information from the sources that that um you want to and and then the algorithms this is you know what YouTube is famous for the algorithms will serve you the stuff that makes you the most engaged and engaged is pretty much enraged so if I can piss you off then you're going to give me your attention I will take that attention I will sell it and that's really unhealthy and that at scale gives us this tremendous division that we're seeing right now and I think the solution for that is to us for us to take control of our eyeballs um you know by essentially having AI or intelligent agents working on our behalf uh sort of pulling from the new sources as opposed to having it shoved down our throats Jim you're going to stick with us in place to say I got to squeeze this in though are you single-handedly responsible for tipping culture going absolutely insane in the United States of America not single-handedly but we we had a big we had a big part of it I mean it's amazing what's happened I and I will tip you for asking me that question are you proud of it I don't have block with me but you know I flip the screen and select 20% I don't think he's ashamed I think you're a no no no no no look um you have a whole class of workers that weren't being appreciated and I think we gave them a a a a way to express appreciation and and and and has it gone too far sure because everybody's copied what we were doing you know but um is it is it appropriate that we treat the people who serve us well yes I think it is and I think they've been unappreciated for a long time couldn't agree more Jim you're going to stick with us thank you sir let's get you an update on stories elsewhere this morning here's your Bloomberg brief with Danny burer hey Danny hey John Himco says the bank of Japan May scrap its negative interest rate policy as soon as March and Hike multiple times this year the firm predicts the central bank will raise its Benchmark rate to 0% in April or March before hiking by a quarter point by the Year's End Pimco says quickening wage growth will likely create persistent inflation allowing the boj to exit negative rates House Republicans are vowing to bring back articles of impeachment for Homeland secretary security secretary rather Alejandro mayorcas to the floor the initial vote failed 214 to 216 after four GOP members sided with Democrats but the Republican majority expects to hold another vote once house Speaker Steve scalise returns from cancer treatments Republicans charged mayorcas with Refuge to enforce immigration laws and failing to secure the Border Donald Trump meanwhile has been denied immunity in his case surrounding the efforts to overturn the 2020 election he attempted to claim that a sitting or former president is immune from criminal charges the ruling was unanimous from a Washington DC federal appeals court and now moves Trump closer to the possibility of facing a trial ahead of November's election the Republican front runner has until Feb 12th to appeal the ruling to the Supreme Court that's your Bloomberg brief John hey Danny thank you up next on the program another round of us exceptionalism we are seeing a a difference in Outlook the growth position in Europe is weaker you know we've seen stronger stronger growth in the US that conversation coming up next from New York this is [Music] Bloomberg [Music] stocks on the S&P 500 doing okay here positive by 0.1% if you're following the fate of myycp and the pre-market that stock is now Higher by around about 10% 462 in the pre-market right now under surveillance this morning another round of us exceptionalism we are seeing a a difference in Outlook the growth position in Europe is weaker you know we've seen stronger stronger growth in the us and the European economies have had taken a much bigger hit on inflation because of their exposure through the energy price so you know they've had a more difficult challenging period over the last couple of years and the growth Outlook is is a bit weaker um including because of actually an aging Workforce in the in Euro area as well compared to the US where we've seen some some remarkable strength in the last couple of years here's the latest this morning US economic data continuing to surprise to the upside MC's Terry wisman writing this when and if the US is no longer surprising positively versus the rest of the world the dollar will weaken for now over the last week the dollar has been stronger Terry joins us around the table for more morning Terry good morning John any reason to believe this won't continue just how good are things in the States and how bad are they everywhere else things are pretty good in the states and uh but you know you can point to a few excesses in the states as well and when we look forward I think as economists we should ask ourselves where are the excesses and can they last I'll point out one the personal savings rate in the US is 3.7% as as per the last uh month of of data that's low compared to Historic Norms you we're used to having in the United States a savings rate that is you know around 5% and and just prior to the pandemic we had a savings rate of 7% are people saving enough for retirement probably not are they going to wake up to this fact at some point they might at that point they're going to start to reduce their consumption and at that point we might see that consumption driven slowdown has it happened yet absolutely not and it's very difficult to predict when it's going to happen you can make a case that can happen organically people just wake up say hey I'm not saving enough or they're shocked into saving more could it be a stock market crash it could be a sense from just reading the headlines that there's a problem in the commercial real estate sector something might cause that when that happens you'll see the economy slow but it doesn't have to happen in the next few months there's nothing that is militating for that to happen immediately it feels like we're putting a bunch of previous years on repeat this year and I was just thinking that all morning I feel like the same stories are coming up again and again and this is one of them soft Landing no Landing we can just push it out we're going to get the weakness it's just going to happen later how do you sort of factor in some of the data that's highlighting a lot more strength than people expected into this it's going to come just wait you'll see look some some people are momentum people they look at a trend and they simply extrapolate it I'm not that kind of person I I don't care about the past I just care about the future but there's some validity to saying that hey if things are going well they're just going to continue to do so because you know on a short-term basis that usually works and if all you have to do is predict what's going to happen in the next month or two then saying look the economy is strong going to be strong the next two months because it's strong today is not a bad approach okay given that the probability of these shocks coming in any given month is low okay but when you extend the Horizon to a year or two well that probably goes up okay and it all depends on what your your investment Horizon is if it's one or two months yeah probably nothing's going to happen if it's a year you've got these worries right is the personal savings rate going to stay as low as it is more important ly are we going to have a problem with commercial real estate right that's the other excess there's plenty Terry wisman and mcari around the table with us together with BL co-founder Jim maavi Jim you're affiliated with emson electric as well yeah I was just I just joined the board last June what are you finding they're telling you about the global economy right now so normally I'm not allowed to share this but we just released earnings like an hour before this program started so I bring to you good news from the world economy cuz no so so this is really cool Emerson Electric nobody's heard of them um but they've been around for over 100 years and they make the stuff that makes the stuff so they make valves and control systems and Industrial Automation so if you're building a plant anywhere in the world you're probably using Emerson equipment so their sales basically show us if the world is optimistic and I have the numbers here hot off the press uh America's up 8% Asia and mea up 15% Europe up 10% it's up worldwide and we have not seen uh something like this in in in many years now now part of this is just Emerson's a pretty well-run company so these are their numbers you have to take out the the sort of well well-run part of Emerson but even if you just look at the broad sectors um the world economy is doing really well and so this is data that um I think is it should be very encouraging for everybody because the world economy um is really the thing that you know keeps us all together as a as a planet and if if everyone's making money we don't have as many wars we don't have as much problems and and this is very very good news it just came out Terry does that make you feel good it it does but at the same time I have to wonder about what the role of China is going to be in this story this year there's there's a lot of excess manufacturing capacity in China these days and if they do not get aggate demand to pick up and households to start to buy yes manufacturing would do okay but it'll be led by China China May dump those goods on on Western markets barring tariffs and non-tariff barriers and then you'll see manufacturers you know outside of China feel the pressure and to some extent that's already happening with electric vehicles uh it's happening to some extent in the US as well maybe we haven't seen as much of it because the consumer has stayed strong and has continued to buy Goods pretty pretty rapidly pretty aggressively and that's keeping the manufacturing sectors around the world okay but I wonder if uh I wonder if profitability will stay strong in a view of this excess manufacturing capacity in China can be dumbed into the rest of the world I also wonder if those American consumers will show up if there's going to be 60% blanket tariffs on Chinese Goods if the former president becomes the next president right and and and we at MCC have been talking about that right I mean you could have a situation where in the case of foreign currency case of the dollar the dollar can actually strengthen in in the event that we have tariffs put on Chinese Goods right because uh Americans will be forced to uh look to their home Market to purchase uh things and that would strengthening the dollar it could also get the FED to potentially hike or more or cut less than they otherwise would so yes if which if the point is that politics is is is very important uh with respect to whether this manufact how how the how the pie is divided around the world with respect to this manufacturing boom I would agree with that and I think the next few months in particular because of the elections around the world not just in the US is going to be very important to determining how that pie is sliced you've both touched on the same topic so let's go there Jim if things are so good why are we talking about trade Wars still why are we seeing Wars take place in places like Ukraine and the Middle East as well why are we seeing heightened tension to your point if things are playing out quite nicely well I mean you it's it's a big world and people get along and don't get along and you know I can't explain War you know thanks for the softball question but like I I nothing I got nothing to add but look generally um if you look at the trends that that that we're looking at um you have uh things like you know decarbonization we've recognized that the planet is heating up and we've taken meaningful steps to build technologies that are going to address that and this is one of the things that Emerson does they build the things that you know give us you green energy they build us things that you know that that are that are helping that transition and those factors are are are are are worldwide and um and very positive now you know are there going to be Wars and problems absolutely but the fact that we're we're looking at these you know sort of Global Supply chains and everybody kind of has to get along because you're just not going to work as as any single you know entity I mean even if China decides to you know sort of go Rogue they can't they no nobody the US can't like we're all connected and that just makes it better I think ultimately this is what we're getting at we used to think the trade relationships pre prevented conflict and then we've seen what's taking place between Russia Ukraine and Europe it hasn't played out that way at all we had a massive trade relationship between the US and China and yet we've still got tension on that front as well Lisa yeah this is true which is the reason why people haven't bought into this tone shift that we've heard from xiin ping in response to the lack of direct investment this is one of the key questions when does it become a problem Terry wisman of mcari Terry good to catch up Jim we can speak to you all morning this was awesome let's do this again soon thank you sir so much fun Jim mcy there the clock co-founder coming up Republican senator Rick Scott of Florida Keith Lerner truest Kathy BOS janit of Nationwide and Michael Nathanson of Moffett Nathanson all of that and a whole lot more the third hour of blomberg surveillance up [Music] next it seems like the stage is set for the FED to have a slow decline in rates if you continue to see that strong growth you could actually get that soft Landing that we had been looking for it does seem ultimately growth is going to have to slow if the economy slows more than sort of a Goldilocks Landing the FED has room to cut rates maybe a little bit more I do believe in Goldilocks productivity is higher and these trade-offs are going to continue to be the fed's dream come true this is Bloomberg surveillance with Jonathan Perell Lisa aboit and Anar hurn the last hour of Bloomberg surveillance starts right now from New York City this morning good morning good morning for our audience worldwide this is Bloomberg surveillance alongside Lisa rabbits together with Amry H I'm Jonathan phoh your Market on the S&P 500 positive by almost 2% recovering in the pre-market NCB check out this stock in early trading positive by almost 12% briefly off the back of this story Lisa we have a new executive chairman to work alongside the CEO again this takes me back a year or 11 months the fact that we're even talking about incredible volatility in a name understand that it is trading below $5 uh per share so you're talking about a lot of volatility with a lot less uh potential market capitalization but how do you rightsize the ship when you've lost credibility how do you rightsize the ship in the face of more zombies in the form of commercial real estate that still have yet to rear their head just to share the name with you alesandro Dinello who had been the non-executive chairman and previously ran Flagstar bankor which NYCB had actually bought back in 2022 so that's a name for you executive chairman alesandro Dello to work alongside the CEO to improve all aspects of the bank's operations just off the back of that news the story pushing higher the stock pushing higher but to Lisa's point this one has been absolutely pummeled over the last week losing more than half of its market cap yesterday we heard from secretary Yellen on Capitol Hill in front of the house Financial Services committee tomorrow secretary Yellen in front of the Senate Banking Committee I imagine this is going to come up all over again and given the fact that now the stock which you didn't want to talk about a specific company but now it's a penny stock she might have to say a little bit more yesterday her quote was I'm concerned but she thought it was manageable but to John Lisa to your point earlier in the last hour what is she going to say of course she has say she's concerned but she also pointed to requires care supervisory attention which maybe compared to 11 months ago the super supervision is actually in place and looking at what's happening in commercial real estate we're talking about a $4 stock now sub4 doar and to bro's Point getting a lot of volatility throughout the whole of this morning so far the broader Market the S&P doing okay positive 2% about 88 minutes away from the oven and Bell yields are high by three basis points lots of Supply through the next 24 hours or so up three basis points to 41269 and the Euro stronger dollar weak just a little bit of strength there for the Euro 10773 that currency pair positive by 2% coming up this hour Keith learner of truist on my stocks still have room to run after hitting alltime highs Senator Rick Scott On the Border bill that's Dead on Arrival According to some and him and Michael Nathanson of Morin Nathanson on Sports streamers going back to the bundle Michael later this hour we begin with our top story this hour stocks moving higher as Traders digest earnings and signals about the fed's path forward Keith learner coci and chief Market strategist at true is saying this after ending with the bang in 23 and a 9we winning streak the market is holding up relatively well after a healthy digestion phase in the first two weeks of the year the S&P 500 broke to an all-time high this reiterates the importance of the feds ability to engineer a soft economic Landing which the market appears to be pricing in we view this as a positive signal Keithan pleas to say join us now for more morning Keith great to be with you are you it sounded so we sounded better than when I wrote that so thanks Jonathan thank you that's what I'm here for just to make everything sound better let's talk about this Equity Market you make this sound better are we standing on the shoulders of fewer and fewer stocks we are and that that is the risk I mean I think as I've heard a lot of the guests everyone wants to see this Market burn out we know it moved from the Magnificent 7 to the Magnificent 5 and maybe that changes to magnificent 2 at some point so we do need to see some uh things Bing out I will say uh as you think about the overall Market we mentioned the market for two years didn't do anything right we had this big move up since October for the last two years you're basically flat when you break out to an all-time high after a prolonged period you know one year later you're up 13 out of 14 times now the caveat the one time you didn't go up which is what we should be focused on is the signal from 2007 where there was a recession afterwards uh as well now we still think recession risk is is is potentially out there but we think it's not the base case at this point I know the street is moving more towards the soft economic Landing as well but the risk to your point is is the crowding the Eco index has underperformed the market cap by almost 20% over the last year that's only happened that the extreme that we've seen is back on coming out of covid and then back to 1999 as well so we we certainly need to see some better action from from the the broader market last time I looked I think we were seeing nine points of that performance for the MA 7 versus the equal weight S&P 500 already this year yeah what's the recipe for better breath improving breath well I think it's partly the economy I think the economy actually surprising somewhat to the upside but also more that Goldilocks scenario where inflation stays you know somewhat constrained in the 10e stays below 430 or so I think we go back about 430 I think that's going to be a risk to the to the overall Market you know that we're having a lot of discussion this morning on some of the uh the regional Banks I mean that's that does show that these higher interest rates are biting in some areas of the market I will say though I mean you think about since the October uh low that we saw um the S&P is up about 38% Regional banks are down 21 so the question becomes how much does that matter for the overall Market you talked about resurgent inflation and I think we have to go there especially given the ism Services data and the fact that we have gotten better than expected data again and again how do you see that playing out does that hurt mag 7 more than it hurts some of the smaller companies that haven't seen the same kind of boom yeah it's a it's a good question and a curious one because in some ways even what we saw the last couple uh last week or so you say better economic data better GDP better ISM that's good for corporate profitability that should be good for small caps but because of the interest rate sensitivity and The Leverage that these companies still have they're underperforming so um you know I think I think the inflation is not going to be a straight line I think it's going to inject volatility but I think this year's you know one of our models is be prepared this is not the time to be on autopilot and I think there will be times that we can use this volatility as an opportunity on both the upside and the downside this year especially with we have 40 elections as well but I think the inflation is a risk that the economy is is on the shortterm basis almost feels like it's re accelerating a little bit you know the pmis have been low for so long they can't really be down forever inventories are actually very low as well so I think that's the risk and that's why the feds push back I think they have scar tissue from this inflation of the last couple years and um I think it makes sense that they pushed back on the rate Cuts so we haven't heard a lot of conviction from pretty much anyone this year it seems like everyone comes on and they're saying we'll have to wait and see we'll look at the data we'll try to figure out where things are can you take us on a tour kind of of your view and how it's shifted over the first say uh 45 days of the year as you take a look out and say okay we're pricing in a soft Landing it still looks like a base case where do you push back where do you change your allocation yeah so we haven't changed our allocations I I will say was somewhat surprising um we're still overweight the US globally and we're still overweight Tech I am surprised by how quickly that the mag 7 has reasserted itself in the first you know month of the year we had that big rally that brought in in in the last two months of the year small caps up 25% so I think that's somewhat surprising we we didn't make a shift yet we we basically October lows we said these markets were so stretched that we thought there would be a bounce into year end so at this point I mean I think the one thing that the economy is a bit stronger we were already saying that we thought the Fed was going to only cut three or four uh Cuts because of that Scot tissue so not not a lot has changed we haven't made any any significant asset allocation decisions yet we're still waiting for more confirmation on a shift to the the average stock we're just not seeing it yet and we we're going to be a little bit late but we want to see a more of a sustainable turn in the meantime people are taking a look at the data and saying what data do we trust and we keep hearing that again and again the latest data coming out of City grips and Andrew hollor pushes against some of the headline data talking about delinquencies now on credit cards surpassing pre-pandemic levels you're seeing this in anecdotal data how much do you trust some of the jobs figures the other uh information that suggests things are reaccelerating yeah well I mean I think there's some challenges with some of the seasonality issues but across the board if you look at you know job openings crit rates initial jobs ACC claims even if we say that Friday's job was employment number was 200,000 instead of 350 or 175 that's still very healthy and actually above Trend as a whole so I still say the economy is we think there's going to be a step down in growth the labor market should cool somewhat but it's still relatively healthy from what we see at this point but the main thing we're looking at too is obviously the the weekly initial claims every week we're looking at the credit markets those are things that we're seeing is are we Sly see some cracks even with some of the the issues in commercial real estate are we seeing it you know manifest itself more broadly we're not seeing it yet that's where we're attuned to at this point Keith before you go favorite sector right now what is it only one you got two I got three give me three I'm going to give you three well we still like Tech but I do think Tech's going to consolidate here a bit okay um we like consumer discretionary which is a mix of growth and kind of that psychical play and believe it or not we do like financials but we like the largic cap financials as well based on the more resilient economy so hopefully I can get one of three right so I can come back and say I was right just on number three which is what we'll follow up on No Doubt a few month time when you come back okay number three the financials do you think that this will be an isolated issue for a small number of small banks in this country if I say that and I'm wrong you'll you'll Replay that in like six mon doubt obviously I'm trying to find out how you think at this point I just I think one the the fed the treasury are very attuned to this they have a Playbook on this as well so I listen I think it's going to hurt the economy I think we're going to see um a majority of w that picks up this year hurt but at this point I think the the larger banks are very well capitalized and um and I think The Regulators on top of it so I at this point it doesn't seem like this is going to be systemic but again you got to watch to see if this s to manifest in credit markets we're not seeing it as of yet you sound like secretary Yellen which may or may not be a good thing in three months time ke it's good to see you great to see you all thank you sir Keith lner there of truist let's get you an update on stories elsewhere this morning here's your Bloomberg brief with Danny Burger hey Danny hey John the troubles in the US commercial property Market which have hit Banks and New York and Japan is spreading to Europe German real estate financer Deutsche fund brief bankk has seen its Bond slump on concerns about its exposure to the sector the bank responded with an unscheduled statement saying it has increased Provisions because of the sector's persistent weakness shares of New York Community Bank have reversed in the pre-market trade they're now higher the bank named Alexandre danello as executive chairman effective immediately the CEO is pledging to bring in new Executives after Moody's cut the bank's rating to junk yesterday the bank has lost nearly half of its market cap in a week after hoarding cas cash and slashing its dividend the bank took on assets from Signature Bank last year including two risky loans and Commercial Real Estate Uber has delivered a beat on bookings in earnings this morning December's quarter marks the third consecutive period of operating profit as Uber looks to trim cost results for the ride sharing company were also given a boost by growing demand in Latin America and the asia-pacific region plans to return more Capital shareholders will be announced last week the Uber CEO dar krah joins Bloomberg TV at 11:00 a.m. and that's your Bloomberg brief John hey Danny thank you coming up next on this program a border deal that's dead on a rival it's been made pretty clear to us uh by the speaker that it will not become law that conversation up next from New York this is [Music] Bloomberg 1 hour and 15 minutes away from the up and B Equity Futures on the S&P 500 positive here by a quarter of 1% yield Tie by two basis points the 10 year 41230 under surveillance this morning a p a deal that's dead on arriv Ral we had a pretty robust discussion about whether or not this product could ever become law and it's been made pretty clear to us uh by the speaker that it will not become law it's the latest this morning Senate Democrats refusing to give up on a bipartisan border deal that would unlock aid for Ukraine mounting GOP opposition is all but certain to syn the measure Senator Rick Scott writing this our Lawless Southern border poses a huge threat The schuma McConnell Biden deal still allows criminals and terrorists that continue to pour into our country we need actual border security Senator Scott I'm pleased to say joins us now for more Senator I'm just going to start the conversation by sharing two quotes with you and you can help me understand who's got this right the first quote is from House Majority Leader Steve scalise who says here's what people pushing this deal aren't telling you it accepts 5,000 illegal immigrants a day the bill as you know sir because you've read it specifically refers to 5,000 encounters your colleague in the Senate Senator lford said this to Fox News if you get to 5,000 which we have been there every single day except except for seven in the last four months seven days in the last four months that it completely closes the Border down it deports everyone Senator why are Republicans struggling to get on the same page on this bill well the problem is this is not a border security bill it's an immigration bill um when you go back home to my state of Florida what people want is they want a border to be secured Chris Murphy who is the Democrat leading the negotiations uh on the Democrat side said the border will never be closed uh so when the when even when you hit that 5,000 all that has to happen is all those individuals get shipped to a you know a port of entry and they can still uh come through so it was it's it's not unfortunately it's not a border security Bill uh it's an immigration Bill and that's why it's not going to happen it was unfortunately just you know you know they did it behind closed doors they didn't ask for people's input uh they sprung it on us uh Sunday night and and it's not something that you know we want to do we want to we we don't want an immigration Bill we want a um a border security bill that's why that's why it's not going to pass today Senator how are you left behind in negotiations though in December in the Wall Street Journal you along with your colleagues like Mike Lee were quoted as saying one of the proposals is that this would reduce illegal Crossings and that number of legal Crossings reduced by about 20,000 from the prior month's level that's what you were looking for those reductions of those Crossings and you said quote we've been told that that's part of the conversation so you've known about some of these conversations from December why are you shocked now oh I'm not shocked um it was clear you know Mitch McConnell made the decision that we would not hold a lawless B Administration to secure the border the only way we could do that is say we will not give you cran Aid on a monthly basis unless the number of people crossing the border and staying here comes down so I've always had a concern about the bill there's a lot of other concerns about the bill but my biggest concern never was addressed we have a lawless Administration that could secure the Border today Trump secured with the existing law and we don't have there's nothing in here that would make Biden secure the Border today and then Chris Murphy said he was clear the Border will never be closed does this bill what you see and you've read through the 300 Pages weaken any immigration law we currently have well I think a lot of a lot of concerns are is that it will prevent a Republican president that does want to secure the Border uh because it will have some limitations on their ability to actually close the border which the president has ability to close the border today so there's a lot of concern that through the court system uh that you know people that want a completely open border like Joe Biden does will be able to go to the courts and forever keep the Border uh open as Chris Murphy said the Border will never be closed that was their plan so here's the problem James Langford is a good person tried hard knows the issue but he was negotiating with somebody that's didn't want to have a secure border and he was hamstrung by Mitch McConnell who said we're not going to tie Biden's hands to force him to secure the Border today that's what florians want they want a secure border today Biden says that he would close the border if this bill became law so why not put it in his hands and see if he does it he could do it today hasn't done it today might I mean he's he the day he came into office he's you know implemented Catch and Release he stopped remain in Mexico he stopped building the wall he sold off the steel so I mean look Biden doesn't want to have a secure border you're going to trust somebody that has shown you through their actions for three years they don't want to have a secure border he doesn't need another bill I mean the only way this is going to happen is we get a president that wants to secure the Border he could do it today he's made the decision Biden to not have a secure border Senator I have to say uh just taking a step back there's just a lot of feeling that there's just utter dysfunction and nobody wants to negotiate with anyone because it's political season and it makes uh Biden maybe have a win rather than uh the former president Trump who's running on this issue how do you push back against that when it seems like some people are rejecting the bill before even reading it well I mean I I told them I my my concern was we've got to we got to make Biden enforce the law and that was my concern all along there's there's a lot of Provisions that here that make this an immigration bill but look what you we should be doing up here is we should be having robust conversations on the senate floor all PE everybody there bring bring your ideas but that's not how this is done what we've been doing I've been up here five years sh mconnell negotiated a deal behind the scenes they show it at the last minute and expect the vote they gave us this bill Sunday night we've not seen any text before and expected us vote on it today that's not the way this should happen Senator I understand you don't like the way this process went done but when you look at say say the border patrol Union they endorse former president Trump they say this is better than nothing you look at the numbers in December more than 300,000 migrants along the Southwest border that's nearly 10,000 a day I've read the text and it says if this deal was in place in December 5,000 encounters the Border automatically shuts at that if you look at those numbers at minimum then this would be cutting December in half how is that not better than what you have today well it doesn't say the Border closes what it says is you have to go to a Port of Entry uh so the Border does not close um so here why aren't we why don't we go back and secure the border with the existing law I mean we we have a lawless president it doesn't matter what bill we pass he's not going to enforce it um so so why doesn't you know Joe Biden do his job he's the president of the United States his responsibility is secure the Border we've got 70,000 people dying a drug overdose we've got terrorists we got human traffickers we got criminals coming across the border why doesn't he do his job that's what that's what the expectation should be is we have a president that does the job you have a Democratic president you have a democratic held Senate the Republicans control one half of one branch of government why is this not an incremental step that you can build on it is a divided government you're going to need Senator Chris Murphy to bring his Democrats along well I mean we why don't we have a secure border I mean we have a lawless Administration I'm not going to support I'm not going to say oh you know I'm I'm okay with 50 terrorists coming into my neighborhood I know I don't want that I'm not I think we ought to have a secure border I don't want drugs coming to my neighborhood I don't want I don't want terrorists I don't want human traffickers I don't want any of this stuff in my neighborhood we we we should we should expect our government to do their job secure the Border we this will not secure the Border we don't have a president's willing to do it there's nothing in this bill that's going to force him to secure the Border president Trump has been uh very public that he does not want to see this bill go through do you speak to him regularly I do and is your sense that this is the top issue he wants to run on and that is why it's become politicized in Washington DC he's not talked to me about it he's not asked he's not asked me not to support it I've been clear all along I want a secure border uh we we've been we've been having the same conversation for months I will support a bill that has a secure border all right but we have to remember the only way that's going to happen is we have something in here that forces Biden to do his job he could do he could secure the Border today he is elected not to secure the Border Senator it's fantastic to catch up with you sir I have no doubt we'll be continuing this conversation in the weeks and months to come thank you for joining us today Senator Rick Scott there on the latest situation down in Washington DC that does not sound like that bill is going to see the light of day anytime soon no but in the future it could potentially F uh work as a framework for for where you see both sides of the ilr the issue is this is a divided government Republicans have control of one part of of Congress and even though they had to deliver uh uh my orcus yesterday Israel they didn't deliver any of these they were pitching this to their base so this becomes a big problem when even the Republicans holding a majority of one part of the government can't get through some some of their bills regardless of what you think about the substance of this bill and we could talk about it all day we're not going to ultimately at the moment this is going to be and is a massive campaign issue for the election in 2024 and if you want to get into the blame game the polling is pretty clear it's not about what I think about it you think about it any of us think about it it's not about what the senator thinks about it either in the court of public opinion right now they're blaming the executive branch they're blaming the White House they're blaming the president now if you don't deal with the bill that's on the table right now does the polling change anytime soon does it start to move against the Republicans and away from the white house so the moment it doesn't look like that at all yeah but President Biden talking about it yesterday and trying to basically put it out there saying we gave him a bill we gave them what they wanted and they rejected it the problem that I have is there doesn't seem to be an honest discussion about even what the facts are out there and I think that when we start questioning what the the facts are and people are disagreeing on that it's hard to have uh any kind of intellectual debate most experts are saying that this 5,000 encounters and an automatic shut down on the border is very similar to title 42 which Republicans loved under the Trump ad Administration so I think John starting that conversation talking about what Steve SC is saying then what langford's saying in the Senate was a good way the Republicans are not actually agreeing on the facts they're not on the same page at all on the issue right now and you can see that based on a communication over the last week or so coming up on the program up next Nationwide Chief Economist Kathy BOS Janis you're watching Bloomberg surveillance with your Equity Market positive a quarter of 1% from New York this is Bloomberg [Music] we are 60 minutes away from the opening B stocks are higher by third of 1% on the S&P 500 up by almost a half of 1% on the NASDAQ positive by3 on the Russ s of small Caps doing okay this morning in the bond market 2E 10 year 30e for those of you that missed it five times a little bit earlier we talked about Supply we'll do it again coming up later 42 billion do of 10year notes after that tomorrow $25 billion of 30-year bonds that's a lot of Supply Lisa going into a bond market that's repriced Ys higher over the last week up another basis point this morning 41153 on a 10y year on a 2-year 441 83 our regular viewers have heard me talk about auctions too much so I'm going to channel somebody else Michael cudel uh portfolio manager over at Pimco saying the auction will certainly get absorbed so that's perhaps a News killer Supply can tell a story that matters at any given moment but bigger picture if you look at just what's suppli is meant for y yields it hasn't meant very much and that basically is just the story that basically we can paint a story and sound Sensational about it record auction wow so much debt so much interest dozens unsustainable and it will all get absorbed this is quite a mood this morning that you're running with quite mood I thought you were into Supply you're not I am I am into Supply but it's just a frustrating story because I'm into it over the longer term and it can shatter Market sentiment but the problem is that some of the logical connections don't work when it comes the market reality and that's frustrating it has been frustrating yes I get it okay Ys are up now basis point 41134 I mean you sound really frustrated about this issue in front exchange the Euro 10782 just about positive stronger there by let's call it a quarter of 1% positive by. 26% on the Euro against the dollar under surveillance this morning half speaker Mike Johnson suffering two set packs just moments apart Republicans failing to impeach Homeland Security secretary Alejandra mayorcas Yesterday by about of 214 to 216 speak speaker Johnson vowing to bring back articles of impeachment against secretary mayorcas in the coming days just moments later a standalone Bill providing Aid to Israel without funding for Ukraine also failed raising questions here MH as to why this bill was even put out there to vote if you knew that it was going to fail well that's why punchball this morning is calling this embarrassing you put votes on you put bills on the floor and you know they're going to fail and you have the majority it's it's concerning the bill is coming back and yes and that is why IAL this morning says that the biggest Factor tamping down talk about another motion to vacate for this this new speaker could be the fact that they don't really have anyone else but if he has any more days like yesterday that might change fast what's going on you have the majority and you cannot get even sometimes Simple Rules through I'm not even going to turn to Lisa to get any thoughts on procedural issues down in Washington because her head might explode so let's talk about this instead you hate that story I do hate it do you like it no I hate it too New York Community Bank Rising this morning some better news the company is saying the following deposits have climbed since the end of last year and liquidity remains ample the bank also announcing the appointment of a new executive chairman shares had fallen to the lowest level since 1997 while Moody's cut its credit grade to junk the ratings agency citing multifaceted Financial risks and saying it could slash the regional lenders rating further if conditions deteriorate we have been absolutely hammered over the last week or so s days and down 60% on that night and dragging down other small uh Banks as well I do have to say this really is uh notable to me that it really has been viewed as a larger issue and not necessarily in terms of some sort of collapse that would trigger rate cuts which might be a positive thing for the overall Market but rather as just sort of this headwind to growth headwind to credit creation as Mike Wilson was talking about a headwind to this idea that we're going to see rates bite it just might not happen on the scale that some people are talking about you've got to separate two issues which is what you're doing systemic risk and just a massive headwind to profitability and tempering their ability to finance the economy could lead to tighter lending standards less financing all round for the small and mediumsized lenders I think that's the ultimate concern here I don't think it has to be the Doom Gloom scenario of say last spring where everyone's worrying about the overall health of the financial system with that all being said this has been a part of the market we've been focused on now for 18 months commercial real estate will hurt some lenders more than others and we know it feels like a perfect we've talked about low vacancy rates higher interest rates the fact that people aren't coming back to the office and the fact that these loans are all maturing some of them at the same time it's like right here right now this year to take it a step further exactly to your point because it's not going to become a systemic failure it's not going to trigger the same kind of policy response that previous systemic failures have you're not going to get the bailout in the same kind of way you will let Banks fail you will let some of the consolidation happen you will let this company get downgraded to junk with more than a hundred billion do of asset assets and that I think is the difference that people are trying to Grapple with what is the broader Market implication of that that there isn't that relief valve in the same way watch this space and we'll see how it develops let's finish on the fed the FED speak parade continues Cleveland fed president ler saying policy makers will likely gain confidence to cut quo later this year adding it would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable And Timely path back to 2% the Minneapolis fed president Neil kashgari saying quot we're not all the way there yet Collins Barkin Balman on Deck a little bit later today Kathy BOS Janson Chief Economist and Nationwide joins us now for more so Kathy we've had some push back over the last week from chairman pal and others too and the data has reinforced that payrolls on Friday really strong ISM services this week Monday was just tremendous and throw in prices paid picking up as well Cathy if you change your view your base case on that first move from this fed hey John good morning um well it does seem like it it's lining up that you're going to get a a later move from the FED um we had been uh looking for a move uh a ray cut in May uh but said June was possible um and it does look like it's lining up to be uh either May or June um and you know I think it it's they're in an interesting position here right because I think what chairman pal told us was that a strong labor market strong economy wouldn't preclude them from cutting rates and I think that's still the case but as you said we're actually seeing some signs of a re acceleration in economic activity so we need more data I guess we're in the same camp as the Federal Reserve we need to see more data uh before we can decide you know when exactly they're they're likely to cut rates and by how much I think that matters as well so Kathy at the moment you were still looking for that soft Landing or rather that mild recession developing midy year Kathy can you tell us on your dashboard right now what's guing guiding that call ultimately for you that leads to a a mild recession in the middle of the year because the data we're looking at just at the surface level really strong labor market report really powerful ISM Services manufacturing actually picking up and getting closer to expansion what's guiding your call yeah no you know there's definitely upside potential for for our for our call here um and and the recent data do give us some pause um you know before we got the Blockbuster and surprising number on Friday for payrolls we actually had seen slowing in the cyclical sectors right so outside of government health care and education which in the prior months had accounted for almost you know eight over 80% of the job gains so that meant the cyclical sectors were seeing a Slowdown of employment Friday's number changed that right not only did we get that strong January number but we got the upper division to December where we were scratching our heads a little bit and why we haven't yet thrown in the towel is that we see the work week continue to decline and and that just stands out as an an aberration to everything else but it maybe maybe it's a warning sign um again I think we need a little more data to be really confident ourselves that you know we're going to avoid this recession the the other thing is the the pop in average AR learning standed out in in a very odd way as well and and maybe there's some seasonal problems right with the data we know December January there's a lot of seasonal adjustment factors um and the fact that the work week fell it artificially could push up average hourly earning so just more clarity the one thing I would also add is we've been watching the consumer and what I find really striking is that the unemployment rate being low at 3.7% yet we're seeing an increase in delinquency for payments of credit cards to a degree that's consistent with recessionary conditions so if things are so good for the consumer in the labor market you know why are we seeing that and and to me and to our team it really shows a consumers overextended themselves and at some point we need to see consumer spending reain in this is something that I know Andrew Hollen hor also pointed to in a report this morning that credit card delinquency data I wondering if it's normal if you can point to another time when we've had this sort of No Man's Land This lack of clarity this conflicting data that people parse through and tell the story they want to tell is there any analog to this you know each each business cycle is unique this one is extremely unique because of the pandemic um so you know there is a a degree of the rebound in usage of credit card that we saw I would say through the halfway point of last year which just was getting back to kind of trend right when we couldn't travel couldn't D out credit card usage plummeted um and then it's come back you know consumers started to embrace credit and that that is all good and I think it was healthy to a degree but then when we saw the pandemic savings be you know almost fully depleted 2.1 trillion you see the savings rate fall you know to you know 3% handle and that's less than half of what we saw pre pandemic and then you see this increase in delinquencies to me that's a consumer who's run too H and and has to pair things back unless somehow we get an increase in supply of labor and we could continue to churn out these really strong labor numbers um you know that's why I think we need a little bit more clarity um to see how this plays out as you're talking I'm just thinking about John's question so so many different people which is how does buy now pay later change some of the uh the data and sort of change the landscape in terms of understanding the consumer does that factor in that some of this debt isn't really even materializing in the same kind of traditional ways because the ways that people are paying for things has shifted so much that that's a great Point um you know we did see the consumer and we'll get Consumer Credit I think either today or or in the next day or so um we'll get cons the latest Consumer Credit numbers what we saw in December is that it picked up quite sharply and the prior months had been trending lower so what we know is probably that buy you know buy now pay later was used pretty extensively during the holiday season now that's okay if when the bill comes due you pay it off in full but M you know we suspect that that's not the case um especially for younger people we see a Reliance on that and when again when you see those delinquency numbers you no one really wants to be more than 90 days laate on their credit cards right the interest rate penalty is so high so me it it just shows us a consumer that is strained um and and unless you know let's put it this way the consumer is not prepared for a slow down the labor market that's where we're concerned Kathy great to get your thoughts and update on them after the data we've seen over the last week Kathy boss janit there of Nationwide let's get NYCB up on the screen check out the share price Alexandra Dello named as the exec chair a little bit earlier on this morning the stock positive Now by 1.2% speaking on a call in the last few minutes giving you a little bit of an update on what's happening with the bank on the ground just the inner workings of it saying it has a strong liquidity and deposit base virtually no deposit outflows from retail branches I'll repeat that virtually no deposit outflow from retail branches going on to say focused on doing whatever it takes to build Capital if we need to shrink sell assets we will we will reduce commercial real estate concentration Lisa as quickly as we can and what you can see is the shares losing that gain that they had earlier now up just 1.4% uh including the potential for what she's now saying is loone sales as one of the options the question I have is if you get for selling when do you start getting a real-time pricing of of of a property that has otherwise been highly a liquid and not really Market priced that stock is up by about 1.4% I think to your point there's always been this feeling that it's art not science when it comes to the pricing of some of these assets 100% a lot of these assets have Mark to market prices that don't reflect Market that is not currently happening here's a key question she tried saying that deposits are steady and saying we haven't seen any outflows that hasn't moved the needle what people are looking at is for for sales and Commercial Real Estate and that I think is what's going to get people's attention credit risk just a final headline for you really curtailed commercial real estate origination in recent months the communication from the bank there just a moment ago any more headlines there we'll bring them to you let's get you an update on stories elsewhere this morning here's your Bloomberg brief with Danny Burger hey Danny hey John us investigators confirmed that the Boeing jet involved in last month's Alaska Air incident was missing bolts on its door panel photos and other evidence from the report suggest that four bolts are removed at Boeing's Factory in Washington and were never replaced the full investigation into the incident remains ongoing could take a year or longer to reach a conclusion Boeing said it will review the report and continue to cooperate with us investigators Ford shares continue to gain after beating on earnings and boosting its Outlook yesterday the automaker is also the latest to lower expectations for electric vehicles CFO John Lawler told analyst the company no longer expects to hit an 8% margin on EVS in the coming years instead Lawler pointed to Growing demand for hybrids expecting sales to grow 40% this year that's a jump from 25% in 2023 nearly 68 million Americans are expected to place a bet on this year's Super Bowl that's according to the gambling Industries National trade Association it's a 35% jump from last year with the total toal value of bets placed to estimate surpassing $23 billion but of that just $1.5 billion is projected to be bet with legal Outlets Sunday Super Bowl pits the Kansas City Chiefs against the San Francisco 49ers that's your Bloomberg brief John hey Danny thank you just want to squeeze in this story from Tesla Dano and adlo our colleagues writing this one up Tesla staff bracing for potential job Cuts after managers were asked to affirm whether each of their employees positions are critical according to our reporting us managers had to make the binary assessment of their deputies roles in recent days Tesla sent out the single line query for each job after canceling some employees by annual performance reviews according to the people behind this reporting least of the stock is higher by 2.5% is this from The Playbook of McKenzie how do you build staff morale I mean seriously if you wonder how uh people would feel if you say is your job critical can you justify it a Tesla issue or sector issue my first question really it's a great question we just saw they outperform with respect to their earnings GM the same thing maybe it's in terms of expectations that Tesla was something other than a car company meeting the reality of being a car manufacturer the latest reporting from our colleagues this morning as again I say the stock is up by 2.7% in the pre-market I'm next on this program we're going back to the bundle another core building opportunity is taking ESPN which is already the world's leading sports brand and turning it into the preeminent digital Sports platform taking a step towards that that conversation up [Music] next live from New York City counting you down to the opening about 42 minutes away equity doing okay session highs actually up a third of 1% on the S&P yields up a single basis point up one basis point to 41134 under surveillance this morning we're going back to the bundle another core building opportunity is taking ESPN which is already the world's leading sports brand and turning it into the preeminent digital Sports platform we're already moving quickly down this path and we are exploring strategic Partnerships to help Advance our efforts through marketing Tech technology distribution and additional content and they are doing just that in the last 24 hours here's the latest this morning Disney Fox Warner Brothers Discovery teaming up to launch a new sports streaming service here in the United States the joint venture will include professional and college sports and is expected to roll out this fall a name and price have yet to be announced Michael Nathanson senior research analyst at Morphin Nathanson predicted much of this and he joins us now Michael it's good to catch up with you sir you were looking for this to take place any surprises for you at all overnight I'm surprised it actually happened because it's logical and but it's much it's puts these guys in conflict with a lot of their Distributors and their own businesses but it has to be done right the bundle has to shrink down to sports it makes perfect sense so Mike can you tell me now and this is kind of a separate story what this is going to mean for the next sale of sports TV rights in the next few years yeah it it should dampen demand because in theory these companies don't have to compete with each other uh you would think they they basically have one product and rather than let's say fox and ESPN challenging each other for college football playoff rights they can work together um maybe they won't be bidding and blind for those rights so those rights you know we we've done a lot of work in our firm we we think we've hit a a top in sports rights values and this is just going to accelerate that change right you saw a couple weeks ago that the wrestling rights WWE rights left Fox to nflix in a global deal and that was a good deal for Netflix so that was a sign of the change that was going to come so Michael can you walk us through some of the financials if you think that we've been uh we've seen the peak in terms of valuation of some of these rights what should a bundle like this cost and how can you view the Partnerships with other potential streaming services okay so that's that's a key question right we don't have we don't have a number yet what what the price should cost I would note though that the companies involved have left off very important Assets in their in their Network bundle so Fox doesn't have Fox News here Warners has dropped a ton of networks from Discovery and Turner and ESPN and Disney has dropped all their non ESPN networks so to begin with they really dropped a lot of expensive networks we're waiting to see what happens on price but in terms of the financials you know I think this is going to start off as a break even business at best right the idea here is to offer customers something to stop them from cutting the cord and maybe stop them from going to YouTube TV which announced 8 million customers yesterday so I see this as you know what we've done over the years we've done a lot of research on consumer Behavior something below $40 $45 that's a really important price point and that will get people's attention then the issue is Lisa is that you have to then add Paramount plus and peacock to get the rest of the sports that you want and those products could be five bucks a month so I'm looking at this as probably some $50 a month which is a $30 savings versus the lower-end bundles in streaming right now Michael who is sports supporting where if Sports goes away those streaming networks no longer can stand alone well sports that's Sports has been preserving the economics of longtail cable networks that really didn't have much of a calling right so if you look at everyone built their business they would lead with sports and they would add 20 channels behind that right Paramount has a slew of channels but CBS drives drives a lead there so I think when you start unbundling Sports networks it's going to put a real pressure on non- news non-sports businesses right so you know our firms call have been consistent over the years which is we don't want to own cable networks that are not tied to sports and news right so but I give Warners credit because they made a tough decision to not carry a lot of their networks in agreeing here so to me I think it's going to hurt you know the paramounts of the world the nbcu and even the Warner Brothers in terms of their Network portfolios over time but but it has to be done the bundle has to get smaller so Michael I've got Hulu already I'll be able to access this right nothing changes for me no you G have you GNA have a decision John do you want to drop Hulu and take this package is that what I've got to decide now yes you will and you have to decide do I Cobble together this package by adding peacock and Paramount to your to your sports bundle right my goodness yeah I know I know it's the the issue is that you we said this a couple weeks ago the industry is not aligned with with their strategies right you have this fragmentation of strategies he and Paramount have done something differently than these other three companies at some point the world's got to come together and agree that a sports Le bundle at a certain price is the right way to go for everyone right right now you've got two Outsiders who don't agree to that it just feels like the consumer loses every time Michael I'm wondering now whether the sports content providers NBA NFL Premier League in the UK they just go their own way now and have their own streaming platform instead of trying to sell it directly to Consumers through these guys I think there's too much risk right if you look at the revenues generated by these companies and affiliate fees there's still such a large amount of their checks are still too large if I'm a team owner to take the risk to go to loan what we've learned John over the years that streaming is a really hard business uh as as we talked about it's it's at this point except for Netflix a no profit business so I'm not sure the league is going to take that risk if the if the checks are still being cut by Disney Fox and Warners we'll take those checks as long as we can Michael I wanted to finish on this just with regards to this topic you remember Hulu was a joint venture Disney took the whole thing over eventually I wonder if this turns out to be like a reverse Hulu for Disney that ultimately this becomes the vehicle to spin off ESPN it's a good question I think this probably intermediate step where you probably you probably need more consolidation amongst the Network owners it's a good it's a good question I think Disney um I you know you I I can't answer it because I would think if you're Disney there's value to your question about having Disney tied to the rest of you know the rest of Espen tied the rest of Disney right right so that is a big cut because Disney has used sports to drive value elsewhere in the Enterprise I don't think that leads to essentially Disney being spun but probably more m&a within the sector so I think your question is a great one but probably three or four years down the line I don't think this this delivers Disney to spin out his pin on this news Disney reports after the market a little bit later it feels ridiculous to talk about them after the fact that meta added a Disney in terms of market cap on Friday and you and I need to talk about meta in the next couple of weeks so let's do that Michael Nathanson of M nathon there he's had a Buy on meta I think since the summer of 2019 just snuck with it really picked up recently he's been absolutely right he's crushed it on that one I do Wonder though you talk about the consumer losing Jim melie had one of the most interesting ideas I thought about AI going out finding what you want to watch charging you whatever rate that is and that that's people that's sort of the future of how this content should be delivered final thoughts this morning I would just say there is an estim a a feeling of frustration in the market with me it's not personal just because it feels like we're talking about a lot of the same stories and not making progress on them and that's frustrating because it's whether it's the economic data that's uncertain or whether it's some of the uh Congressional issues I was going to say there's the same frustrations of a lot of the same stories that are not having endings happening Washington DC also Public Service Announcement President Biden is in New York City today so be careful on the traffic there we go get home quickly I think is the message there tomorrow Richmond fed president Tom Barkin Disney CFO Hugh Johnston George sarellis of Deutsche Bank and Christina company of Invesco a lot more still to come tomorrow morning
