JONATHAN: EQUITY FUTURE IS JUST STARTING TO TURN A HIGHER INTO THE OPENING. EQUITY FUTURES POSITIVE .4%. "THE COUNTDOWN TO THE OPEN" STARTS NOW. >> EVERYTHING YOU NEED TO GET SET FOR THE START OF U.S. TRADING. THIS IS "BLOOMBERG: THE OPEN"
WITH JONATHAN FERRO. JONATHAN: COMING UP, DEBT LIMIT TALKS INTENSIFYING AS BIDEN HEADS TO JAPAN. DEPOSITS RISE. FED OFFICIALS REVEALING THE DEBATE OVER JUNE. THE FED SPEAK MARATHON CONTINUES. JOHN WILLIAMS CAN -- JOHN WILLIAMS DECLARING WE HAVE TO MAKE OUR DECISION AND SEE WHAT HAPPENS GET THE FEEDBACK AND SEE HOW THE ECONOMY IS BEHAVING. PRESIDENT BARKIN AGREES TO SOME
EXTENT. I ALSO WANT TO REDUCE INFLATION. BEFORE MORE INCREASES ARE NECESSARY I AM COMFORTABLE DOING THAT WILL STOP PRESIDENT MR. THROWING IN SOME HAWKISH NOTES FOR GOOD MEASURE.
IF THAT IS NOT ENOUGH IT SPEAK, BEFORE THE WEEK IS OUT YOU'LL HEAR FROM JEFFERSON, LOGAN, WILLIAMS, AND POWELL, AND MAYBE OTHERS. WHEN YOU LISTEN TO THESE FED SPEAKERS, CONSIDER THIS. AS ALICIA LEVINE INDICATED, MOST FED OFFICIALS ARE DOING THEIR BEST TO CONTEND JUNE MAY BE ALIVE MEETING. ANDREW HALLMAN HORST SAYS ACTIVITY DATA FOR APRIL INCLUDING SOLID RETAIL SALES SUGGESTS GROWTH MAY ACCELERATE IN Q2 RATHER THAN SLOW AS THE FED INTENDS.
INCONSISTENT WITH THE SLOW DOWN, HOUSING ACTIVITY IS BOUNCING BACK FROM A LOW LEVEL. JOINING US IS SARAH MALIK AND MATT MICHIGAN. HIS JUNE A LIVE MEETING? SAHARAH: I THINK THE FED WAS LIKELY ONE AND DONE IN MAY. THEY ARE FOCUSING ON TWO AREAS.
EMPIRE MANUFACTURING LOOKING VERY WEAK. WE'LL BE WATCHING THE PHILLY FED DATA THIS WEEK. EMPIRE MANUFACTURE DOES TEND TO BE VOLATILE. INFLATION IS WHERE THE ISSUE WILL BE FOR THE FED. IT IS FAR FROM THEIR 2% TARGET. WE SAW RETAIL SALES.
AT MOST WE WILL GET A PAUSE FROM THE FIT BUT WE ARE NOT PRICING IN A PIVOT TO RATE CUTS LIKE THE MARKET IS. WE THINK WE GET A PAUSE FROM THE FED UNTIL INFLATION GETS CLOSER TO 2%. JONATHAN: JUST GETTING A HEADLINE THAT JAMIE DIMON AND OTHER CEOS ARE MEETING WITH CHUCK SCHUMER ON THE DEBT LIMIT. IF WE CAN DEAL WITH THE DEBT LIMIT DO YOU THINK THAT OPENS THE DOOR TO A MOVE IN THE MIDDLE OF JUNE? MATT: WE THINK THEY WILL STAY ON HOLD. THE LAGS AND MONETARY POLICY
WILL SHOW UP. THAT IS WHEN THE 75 BASIS POINT HIKES LAST YEAR STARTED. WE THINK THEY WILL PAUSE. THE DYNAMIC THAT IS PLAYING OUT IS THE SEPTEMBER RATE CUT IS BEING PRICED OUT. THAT IS MORE LIKELY TO SEAR NEAR-TERM. WATCH THE DOLLAR. THE DOLLAR IS STARTING TO GET A BID COME AND THAT WILL BE A HUGE RUB POOL FOR THE CONSENSUS IF ANY TYPE OF MONETARY POLICY IS PRICED IN THE DOLLAR GETS A BID AND THAT IS ROTATION AND MARKETS THAT IS NOT HAPPEN YEAR TO DATE. JONATHAN: THAT IS A GEOGRAPHIC ROTATION AS WELL.
THE DATA TURNING THE OTHER WAY IN EUROPE. DO YOU THINK THAT PUSHES BACK AGAINST THE CONSENSUS VIEW THE REST OF THE WORLD CONTINUES TO OUTPERFORM THE REST OF THIS YEAR? MATT: 100%. THE ECONOMIC SURPRISE INDEX HAS BEEN DECLINING GLOBALLY, ESPECIALLY IN THE EURO ZONE. ECONOMIC DATA COMING IN BELOW ESTIMATES.
.1% GDP GROWTH IN Q1. EUROPEAN EQUITIES ARE THE BEST PERFORMERS GLOBALLY. DO NOT THINK I WAS GOING TO SEE THAT AT THE START OF THIS YEAR BUT NEVERTHELESS THAT IS WHAT HAS HAPPENED. EXPECTATIONS ARE NOW COMING UP AND THE DATA IS COMING IN BELOW THAT AND YOU'RE STARTING TO SEE A WEAKNESS IN THE EURO AS OF LATE AND THAT IS A KEY DYNAMIC THAT COULD CHANGE THE UNDERLYING DYNAMICS OF THIS MARKET. MICHAEL: -- JONATHAN:
THE EURO 108.29. NEW LOWS FOR THE YEAR ON PROPER. WEAKER DATA OUT OF GERMANY, WEAKER DATA OUT OF CHINA. DO THINK WE ARE PRICING IN WEAKER GROWTH BEYOND THE INDEX LEVEL STORY, BENEATH THE SURFACE OF THE S&P 500? SAIRA I THINK THE S&P IS STILL PRICING IN A SOFT LANDING. WE ARE ABOVE 4100. WHAT WE HAVE IN FRONT OF US IS THE CONSUMER CREDIT CYCLE BECAUSE LENDING STANDARDS ARE LIKELY TO TIGHTEN. EVEN THOUGH WE HAD A STRONG
FIRST QUARTER OF EARNINGS COMPS ARE TOUGH AND COMPANY REPORTS ARE DEPENDENT ON PRICING POWER WITHIN THEIR REVENUES. I WORRIED ABOUT PRICING POWER GOING FORWARD AS INFLATION DOES START TO MODERATE. IT'LL BE TOUGHER COMPANIES TO HOLD ONTO THEIR PRICING. LOOK AT TARGET.
A SOFTER OUTLOOK BASED ON THE CONSUMER. WE LIKE COMPANIES SUCH AS COSCO. YOU MAY GET A DIVIDEND OUT OF COSTCO. THEY HAVE NOT RAISED SUBSCRIPTION PRICES AND THEY
ARE DUE FOR A PRICE INCREASE. WE ARE LOOKING FOR COMPANIES SUCH AS THOSE WHO CAN BE MORE RESILIENT AND A LIKELY ECONOMIC SLOWDOWN. MARKET VALUATIONS ARE FROTHY GIVEN THE ECONOMY IS LIKELY TO SLOW. JONATHAN:
CHUCK BROM JOINED US YESTERDAY FOLLOWING THE HOME DEPOT RESULTS AND HE SAYS WHAT WE FACE NOW IS A DISCRETIONARY RECESSION IN THE GOOD SECTOR. WE ARE SEEING SIGNS OF THAT OVER THE LAST 12 MONTHS. DO YOU SEE MORE SIGNS OF THAT? SAIRA: WE ARE SEEING SIGNS OF WEAKNESS WITH CONSUMER. THEY ARE STILL SPENDING.
GOING FORWARD THE CONSUMER WILL LIKELY WEAKEN. IT WILL DO YOU -- IT WILL BE DEPENDENT ON THE EMPLOYMENT MARKET. IF PEOPLE FEEL COMFORTABLE IN THEIR JOBS THEY ARE LIKELY TO KEEP SPENDING.
EMPLOYMENT IS LIKELY TO SHOW CRACKS. THAT IS BACK TO THE FIT, WITH THE NEED TO WAIT TO SEE BEFORE THEY START PUTTING IN RATE CUTS. EMPLOYMENT AND CONSUMER FAIRLY RESILIENT. IT IS A SLOW CRAWL TO RECESSION. THAT IS WHY THE MARKET IS NOT PRICING THAT IN. THE MARKET IS FOCUSED ON THE DEBT CEILING. JONATHAN:
WE HAVE SEEN WEAKNESS IN GOODS. THE SERVICES DEMAND WAS PUSHED OUT. WE ARE EXPERIENCING SERVICE DEMANDS THROUGH AIRLINES. THEY ARE LIVING THAT. I WONDER HOW LONG IT SPREADS FROM GOODS TO SERVICES THAT IS A BIG IMPORTANT QUESTION FOR THE FOMC AS WELL. MATT: IT IS ONE OF THOSE FINANCE
TRAPS WHERE YOU GO TO A LOCAL NURSERY THE DAY BEFORE MOTHER'S DAY AND IT IS BOOMING. YOU HEAR THE CASH REGISTER. YOU GO TO THE AIRPORT AND THINK WE CANNOT BE IN A RECESSION. AT THE END OF THE DATE IS ABOUT WHERE WE WERE ON THE COMPS.
THE FACT IS A YEAR AGO WE SPENT $5 TRILLION OF ECONOMIC STIMULUS. FROM NOW ON IT WILL BE HARD TO BEAT THAT PEAK EARNINGS RATE, THAT PEAK ACTIVITY IN THIS ECONOMY. WE BELIEVE WE ARE PAST PEAK EARNINGS AS A RESULT. IT WILL BE A DOWNTREND. IT IS A SLOW ONE. I THINK THAT IS SPOT ON.
IS A SLOW-MOVING DECELERATION. WITH THE FED RAISING RATES AND EVEN IF THEY ARE JUST HOLDING THAT WILL BE RESTRICTIVE AS THE YEAR GOES ON BECAUSE THERE IS DETERIORATION IN THE ECONOMY. IT IS ABOUT PLAYING DEFENSE. WE THINK THE RISE IN BOND YIELDS WILL BE AN OPPORTUNITY, A GIFT TO REALLOCATE INTO FIXED INCOME, MORE TO INTERMEDIATE DURATION AS THE YEAR GOES ON. JONATHAN: YOUR EQUITY MARKET IS POSITIVE 0.4%. I WENT THROUGH THE NAMES FOR
THE WEEK AHEAD. JEFFERSON, LOGAN, WILLIAMS, POWELL. MICHAEL MCKEE HAS CAUGHT UP WITH A FEW OF THESE NAMES. WHAT IF YOU LEARNED OVER LAST COUPLE OF DAYS? MICHAEL: I AM IN AN AIRPORT RIGHT NOW SO I CAN TELL YOU TRAVEL IS STILL BOOMING. THE SERVICE ECONOMY IS STILL GROWING. YOU TAKE A LOOK AT WHAT HAPPENED THIS MORNING WITH HOUSING STARTS.
HOUSING STARTS GO UP 2.2%. WHAT IS REMARKABLE IS HOW STEADY THEY HAVE BEEN DESPITE THE RISE IN MORTGAGE RATES. THE FED IS LOOKING AT THE FACT THAT UNEMPLOYMENT IS 3.4% AND
THEY ARE SAYING HAVE WE DONE ENOUGH. THAT IS THE KEY QUESTION FOR JUNE. THEY ARE PUSHING BACK ON THE IDEA THAT THEY ARE GOING TO NECESSARILY PAUSE BECAUSE THEY WANT TO SEE SOME IMPROVEMENT. THE ATLANTA FED HAS AN UNDERLYING INFLATION INDEX WHERE THEY KEEP TRACK OF THE VARIOUS INFLATION MONITORS. MANY OF THEM ARE DOING WORSE THAN THEY WERE A YEAR AGO AT THIS TIME. IF INFLATION IS STILL STICKY
AND THE ECONOMY IS STILL STRONG, IT IS -- IS 5.25% ENOUGH? THE THING WE LEARNED FROM THIS CONFERENCE IS THEY DO NOT REALLY WANT TO TAKE A POSITION. THERE ARE SOME WHO ARE SAYING WE LEAN TOWARDS A PAUSE, BUT MORE ARE STILL WORRIED, OF THOSE WHO HAVE SPOKEN OUT LATELY. THE WHOLE GROUP IS SAYING WE
NOT MAKE A DECISION UNTIL WE GET TO JUNE 14 BECAUSE WE DO NOT WANT TO STOP TOO SOON IF INFLATION IS STILL STICKY. JONATHAN: MICHAEL MCKEE IN A BUSY AIRPORT. LOOK FORWARD TO HAVING YOU BACK IN THE STUDIO. LET'S TALK ABOUT SECTOR PREFERENCES.
IF THINGS ARE STARTING TO READ ACCELERATE, MAY PUSHBACK AGAINST THAT VIEW, BUT LET'S GO WITH IT, WHAT DOES THAT MEAN FOR INTEREST RATE AND THE SECTOR PREFERENCES? GOING BACK TO THE BANK OF AMERICA FUND MANAGER SURVEY COME ALONG BIG TECH THE MOST CROWDED TRADE. SAIRA MALIK, ANY REASON IN YOUR MIND TO PUSH BACK AGAINST ANY OF THAT? THE LONG BANK COME ALONG BIG TECH YOU, SHORT U.S. BANKS? SAIRA: WE CAME INTO THIS YEAR POSITIVE ON TECHNOLOGY AND WE HAVE BEEN CAUTIOUS ON BANKS BECAUSE SIGNIFICANT INTEREST RATE INCREASES LEAD TO NET MARGIN PRESSURE FOR BANKS WHICH IS WHAT WE ARE SEEING. NOW AFTER THE CRISIS TIGHTER LIQUIDITY, TIGHTER CAPITAL REQUIREMENTS. THANKING IS ALL ABOUT CONFIDENCE SO THIS DOMINO EFFECT COULD CONTINUE. IT IS VERY EASY TO PICK UP YOUR
PHONE AND MOVE YOUR MONEY. I THINK BANK STILL HAVE ISSUES. TECHNOLOGY LOOKS POSITIVE. SOFTWARE TENDS TO BE MORE RESILIENT TO AN ECONOMIC SLOWDOWN. THEY HAVE STRONG BACKLOGS AND GOOD REVENUE VISIBILITY. SEMI CONDUCTORS CAME INTO THE YEAR STRONG.
THEY TAKE A BREATHER BUT WE ARE GOING TO SEE THE BOTTOM OF THAT CYCLE. NORMALLY SEMI'S BOTTLE -- BOTTOM AFTER SIX TO NINE MONTHS. THOSE ARE THE AREAS OF TECH WE LIKE. JONATHAN: ARE YOU ON THE SAME PAGE? MATT: 100%. WELL DONE.
THAT IS EXACTLY HOW WE ARE POSITIONING. WHAT IS FASCINATING ABOUT THESE SURVEYS IS WHAT MACRO REGIME DOES TECHNOLOGY AND EUROZONE EQUITIES WORK AT THE SAME TIME? EUROZONE IS THE NUMBER ONE SECTOR OF FINANCIALS. THEN TECHNOLOGY LOVES LOW-INFLATION, LOW GROWTH, LONGER DURATION ASSET. EUROZONE WILL BE MORE CYCLICAL. THERE IS NOT EVEN A MACRO REGIME. THE ONLY THING TECH AND EUROZONE EQUITIES HAVE IN COMMON IS THEY ARE BOTH YEAR-TO-DATE WINNERS. WHAT THE FUND MANAGER SURVEY IS
TELLING YOU IS THERE IS A LOT OF TREND FOLLOWING AND YOU ARE SEEING THE MOMENTUM'S IN POCKETS OF MARKETS. WE ARE TRYING NOT TO CHASE OUR TAIL AND SOME OF THESE ROTATIONS WITHIN THE SURVEYS FOCUSING ON HIGH-QUALITY COMPANIES, BETTER BALANCE SHEETS, HIGHER ROI. JONATHAN: I SENSE FROM YOU YOU DETECT THAT IS A BIT OF A DISCONNECT THAT NEEDS TO BREAK, NEEDS TO RECONCILE? IS THAT RIGHT? MATT: EXACTLY. EVENTUALLY THE MACRO REGIME WILL DICTATE WHAT WE LOOK LIKE IN THE CYCLE. RIGHT NOW BECAUSE WE ARE IN THIS CHOPPY RANGE WE ARE GETTING THIS DISPARATE PARTS OF THE MARKET THAT ARE WORKING, AND THEN YOU'RE GETTING TREND FOLLOWING INTO IT AND WE THINK YOU'LL WILL END UP CHASING YOUR TAIL.
WE WANT TO BE DISCIPLINED AND FOCUS ON THE FUNDAMENTALS. JONATHAN: MATT MISKIN AND SAIRA MALIK STICKING WITH US. EQUITIES POSITIVE .5%. WITH SOME MOVERS, HERE IS ABBY. ABIGAIL:
NEVER A DOLL DAY, ESPECIALLY FOR REGIONAL BANKS. PAC WEST SEEING A BIG RALLY. PAC WESTMOUNT 9%, WESTERN ALLIANCE UP 11%. THIS AS WESTERN ALLIANCE REPORTS THE SECOND QUARTER HAS GROWN BY NEARLY $2 BILLION. THE RUN CASH NOT HAPPENING. AS FOR TESLA, SOME CONFIDENCE AFTER THE ANNUAL SHAREHOLDER MEETING.
THE COMPANY WILL BE TRYING ADVERTISING. ELON MUSK INDICATED THE NEXT 12 MONTHS COULD BE DIFFICULT. FOR THE CYBER TRUCK FANS IT WILL BE UNVEILED. NVIDIA YIELDS DOWN, BIG TECH HIGHER. TARGET UP 1.4%.
WE HAVE THEM TAKING THE SECOND QUARTER ADJUSTED EPS GUIDE BELOW THE ESTIMATE BUT THEY ARE HOLDING ON THE YEAR AND INVESTORS SEEM TO BE STICKING WITH A LONGER-TERM VIEW THAT THEY WILL MANAGE EVERYTHING THAT IS GOING ON WITH THE ECONOMY AND SLOWING CONSUMERS AND DISCRETIONARY SPENDING. JONATHAN: THANKS FOR THAT. COMING UP, EVERYBODY PLAYING NICE IN WASHINGTON. >> WE JUST FINISHED ANOTHER PRODUCTIVE MEETING WITH OUR CONGRESSIONAL LEADERSHIP. WE ARE ON A PATH TO MAKE SURE
AMERICA DOES NOT DEFAULT ON ITS DEBT. JONATHAN: DEBT CEILING TALKS INTENSIFYING JUST AS THE PRESIDENT HEADS TO PRES. BIDEN: WE JUST FINISHED ANOTHER GOOD MEETING WITH OUR CONGRESSIONAL LEADERSHIP.
I AM ON THE PATH FORWARD TO MAKE SURE AMERICA DOES NOT DEFAULT ON ITS DEBT FOR THE FIRST TIME. I MADE IT CLEAR TO BE GOOSE -- I MET IT CLEAR TO THE SPEAKERS AND OTHER AT THE STAFF WILL BE MEETING TO MAKE SURE WE DO NOT DEFAULT. JONATHAN: SOOTHING WORDS OUT OF THE LATEST HIGH-LEVEL DEBT CEILING NEGOTIATIONS. THE PRESIDENT SAYING TALKS WERE GOOD AND PRODUCTIVE.
THERE IS A CONSENSUS DEFAULT IS NOT AN OPTION AND STAFF WILL NEED TO MAKE SURE THAT IS THE CASE. THE CONSTRUCTIVE TONE ECHOED BY SPEAKER MCCARTHY. >> IS POSSIBLE TO GET A DEAL BY THE END OF THE WEEK. JONATHAN:
CHUCK SCHUMER WEIGHING IN WITH WORDS OF ENCOURAGEMENT AS WELL. >> IT WAS A MUCH MORE CORDIAL MEETING. THERE WERE REAL DISCUSSIONS ABOUT DIFFERENCES WE HAVE ON A VARIETY OF ISSUES. IT WAS ALL RESPECTFUL.
JONATHAN: DEBT CEILING TALKS BETWEEN THE WHITE HOUSE AND CONGRESS EXPECTED TO INTENSIFY AS NEGOTIATORS SEEKER FRAMEWORK AGREEMENT FOR THE PRESIDENT TO REVIEW UPON HIS RETURN FROM THE G7 MEETING IN JAPAN. JOINING US FROM D.C. IS KAILEY LEINZ. KAILEY: THE MOOD MUSIC SEEMS TO BE BETTER THIS MORNING.
TWO TANGIBLE THINGS COMING OUT OF THE MEETING. WHAT IS CONSENSUS THE U.S. WILL NOT BE DEFAULTING, AND TWO THE GROUP OF PEOPLE NEGOTIATING HAS GOTTEN SMALLER. KEVIN MCCARTHY CUTTING SCHUMER AND JEFFRIES OUT OF THE TALKS.
IT IS NOW TEAM WHITE HOUSE TALKING WITH TEAM SPEAKER. CONGRESSMAN GARY GRAVES WILL BE REPRESENTING HIS INTEREST WHILE SHALONDA YOUNG WILL BE HANDLING THE ADMINISTRATION'S VIEW ON THINGS. THEY HAVE THEIR WORK TO CUT OUT FOR THEM TO REACH A COMPROMISE BY THE TIME THE PRESIDENT RETURNS ON SUNDAY FROM ABROAD. SPEAKER MCCARTHY DID SAY THE TWO SIDES ARE STILL FAR APART. WE UNDERSTAND PERMITTING REFORM, COVID FUNDING, MAY BE AREAS OF MIDDLE GROUND. THE ISSUE OF STRICTER WORK REQUIREMENTS FOR ENTITLEMENTS MAY BE A STICKING POINT. I SPOKE WITH DEMOCRATS ON THE
HOUSE AND SENATE SIDE, ELIZABETH WARREN AND HALEY STEVENS, WHO SAID THEY WOULD NOT VOTE FOR A PACKAGE THAT INCLUDES THOSE, BUT SPEAKER MCCARTHY HAS DESCRIBED THAT AS A REDLINE. THE CLOCK IS WORKING AGAINST NEGOTIATORS. BY THE TIME THE PRESIDENT RETURNS WILL BE 11 DAYS OUT FROM JUNE 1 AND BUMPING UP AGAINST THE MEMORIAL DAY HOLIDAY. ANY DEAL AGREED TO STILL HAS TO WORK ITS WAY THROUGH CONGRESS. THE PRESSURE IS ON. DEMOCRATIC LEADERSHIP IS TRYING
TO AMPLIFY THAT PRESSURE. AT 11:00 EASTERN TIME CHUCK SCHUMER WILL BE MEETING WITH BANK EXECUTIVES, INCLUDING JAMIE DIMON AND JANE FRASER TO PUT PRESSURE ON THEM TO PUT PRESSURE ON REPUBLICANS TO AVOID A DEFAULT BECAUSE OF WHAT THEY SAY ARE DRASTIC ECONOMIC CONSEQUENCES. JONATHAN: THANKS FOR THAT. THE PROCESS KAILEY DESCRIBED MIGHT BE THE HARDEST PIECE OF IT. THEY CAN AGREE TO SOMETHING. GETTING IT THROUGH CONGRESS IS A DIFFERENT THING ALTOGETHER.
SAIRA MALIK AND MATT MISKIN WITH US FOR A FINAL WORD. THE PRESIDENT QUIPPED YESTERDAY WE ARE HAVING A WONDERFUL TIME. ARE YOU HAVING A WONDERFUL TIME FOLLOWING THIS? SAIRA: MARKETS WILL STAY HYPER FOCUSED ON THE DEBT CEILING. ONE OUTCOME IS A FULL-FLEDGED RESOLUTION. THE SECOND IS WE REACH THE DEBT CEILING, THAT IS LIKELY 10% DOWNSIDE FOR THE MARKET. THE THIRD IS WE COME UP WITH A SHORT-TERM SOLUTION AND KICK THE CAN DOWN THE ROAD UNTIL THE FALL. THAT WOULD BE MILDLY POSITIVE
FOR THE MARKETS. MY BIGGER ISSUE IS THE REFORMS AND AUSTERITY WITH THIS DEAL AND WHAT DOES THAT MEAN FOR THE ECONOMY GOING FORWARD? WE ARE DEALING WITH AN ECONOMY THAT IS SLOWING. IF SPENDING IS CUT BACK THAT INCREASES THE CHANCES OF A MILD RECESSION. JONATHAN:
WE KNOW THE MARKET HAS PICKED UP ON THE TENSION AND ISOLATED PARTS OF THE BOND MARKET. IF WE GOT AN AGREEMENT, AND LET'S SAY WE GET AN AGREEMENT AND IT GOES THROUGH CONGRESS, THE RELIEF RALLY, WHERE WOULD YOU EXPECT THE RELIEF TO BE BEYOND THE AT RISK MATURITIES? MATT: IS HARD TO SAY. I'M NOT SEEING THIS PRICE DID IN TERMS OF RISK. USUALLY WHEN THIS DOES GET UGLY EASY TREASURY YIELDS FALL OR EASY RISK OFF OR YOU SEE EQUITIES FALL. WE HAVE NOT SEEN IT. I DID NOT KNOW IF THERE IS MUCH OF ROTATION. NOT MUCH RISK IS PRICED INTO
THE MARKET TO BEGIN WITH. I DO NOT SEE MUCH OF A RELIEF RALLY. I THINK WE ARE STILL IN THIS CHOPPINESS. THE DEBT CEILING HAS BEEN
PASSED NEARLY 90 TIMES THROUGH THE COURSE OF THE HISTORY OF UNITED STATES. THIS IS A PLAYBOOK. THE MOST LIKELY OUTCOME IS THEY WILL PUNT. WE WILL GET AN AMERICAN PUNTER TO COME OUT AND WE WILL PUNT IT DOWN THE ROAD AND WE HAVE TO RELIVE THIS ALL OVER AGAIN.
IF YOU LET THIS KIND OF DEVELOPMENT IN POLITICS GO IN YOUR PORTFOLIOS OVER THOSE 90 TIMES, YOU WOULD'VE MADE MASSIVE MISTAKES AS AN INVESTOR. DO NOT FOCUS ON THIS IS ALL I'M TRYING TO SAY. FOCUS ON THE ASSET CLASSES YOU THINK WILL PROVIDE BETTER RETURN POTENTIAL. WE THINK THERE IS POCKETS OF THE EQUITY MARKET, WE THINK THE BOND MARKET LOOKS LIKE A COMPELLING OPPORTUNITY. JONATHAN: IS THIS SOMETHING YOU CAN AFFORD TO IGNORE? MATT: WE THINK IF YOU PLAY OUT EVERY BLACK SWAN AND JUST FOCUSED ON THAT AS YOUR INVESTMENT PROCESS, I THINK YOU WILL MISS OUT ON OPPORTUNITIES OVER THE LONG-TERM. WE HAVE DONE THIS OVER AND OVER AGAIN. IT IS NOT SOMETHING THAT IS NEW
TO THE MARKET. WE WOULD FOCUS ON OTHER THINGS AND THE ECONOMY AND ALL OF THESE OTHER THINGS WE ARE TALKING ABOUT IN TERMS OF MACRO. IT IS A RISK BUT I DO NOT THINK IT IS MUCH PRICED IN AND WE WILL SEE HOW IT GOES. JONATHAN: MATT MISKIN AND SAIRA MALIK, JUST BRILLIANT GOING INTO THE OPENING. MOST PEOPLE TAKING THE VIEW
THAT THIS WILL GET DEALT WITH WHICH IS WHY THE EQUITY MARKET IS BARELY MOVING, AND WHY SOME PEOPLE THINK IF THE MARKET DOES NOT SHOW A REACTION THE URGENCY IN WASHINGTON WILL BE LACKING. DO WE NEED A CRISIS TO GET A SOLUTION? LIBBY CANTRILL OF PIMCO PUSHING BACK AGAINST THAT VIEW. YOUR EQUITY MARKET SEVEN MINUTES OUT FROM THE OPENING, POSITIVE .745% ON THE S&P. LATER, PETER CECCHINI ON WHY
NONBANK LENDERS ARE READY TO PICK UP THE PIECES. THAT CONVERSATION ABOUT SEVEN MINUTES AWAY. JONATHAN: FIVE BINANCE AWAY FROM THE OPENING. EQUITY FUTURES POSITIVE. LET'S GET YOU MORNING CALLS. BARCLAYS UPGRADING WYNN RESORTS TO OVERWEIGHT, SING RESILIENT DEMAND OUT OF LAS VEGAS AND STRENGTHENING MACAU BOOKINGS. EVERCORE UPGRADING NORFOLK
SOUTHERN TO OUTPERFORM NOTING THE QUALITY BUSINESS MODEL. THAT STOCK IS UP 1.7%. CREDIT SUISSE DOWNGRADING WERNER TO NEUTRAL, GROWING CAUTIOUS ON THE TRUCKING CYCLE DUE TO MACRO HEADWINDS. COMING UP, TARGET TOPPING Q1
ESTIMATES BUT DELIVERING A SOFTER OUTLOOK AS CONSUMERS TURN MORE CAUTIOUS. THAT STOCK SOFTER IN EARLY TRADING. UP NEXT WE GET PETER CECCHINI TO WEIGH IN. JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING. EQUITY FUTURES POSITIVE. A BOUNCE AFTER CLOSING AT THE LOWS OF THE SESSION YESTERDAY.
A BOUNCE ON THE NASDAQ, UP .3%. THE DATA OUT OF THE UNITED STATES BETTER. RETAIL SALES RESILIENT. INDUSTRIAL PRODUCTION IS DECENT. HIS HOUSING STARTING TO READ ACCELERATE? SWITCH UP THE BOARD AND GET TO THE BOND MARKET. IN THE BOND MARKET THE FOCUS ON JAMIE DIMON AND JANE FRAZIER MEETING WITH CHUCK SCHUMER TO TALK ABOUT THE DEBT CEILING. NO ONE IN THIS MARKET WANTS TO
DISCUSS THE DEBT CEILING. THE DOLLAR OFF THE BACK OF THE DATA SHOWING SOME STRENGTH. EURO-DOLLAR -.3%. POSITIVE ON THE DAY BY 1.7%. THIS MARKET UP ALMOST 0.5% ON THE S&P, UP ALMOST .4% ON THE NASDAQ. ONE STOP TO WATCH HIS TARGET.
THE RETAILER TOPPING Q1 ESTIMATES BUT PROVIDING A DOWNBEAT OUTLOOK DUE TO SOFTENING SALES TRENDS. BLOOMBERG SIMONE FOXMAN JOINS US WITH MORE. SIMONE: TRADERS ARE PROCESSING STRONG FIRST-QUARTER EARNINGS AND KEEPING THE YEAR THAT THE SAME TIME TALKING ABOUT A SOFT CONSUMER OUTLOOK FOR THE YEAR. WE JUST FINISHED THE EARNINGS CALL. THAT COULD EXPLAIN SOME OF VOLATILITY OVER LAST COUPLE OF
SECONDS. STRONG SPENDING GROWTH ON FOOD AND BEVERAGE. FALLING ON APPAREL AND ACCESSORIES. FOOD AND BEVERAGE NOT AS HIGH
MARGINS AS SOME OF THE COOLER STOP. AT THE SAME TIME TJ MAX THE PLACE BETTY ANALYSTS THINK A LOT OF CONSUMERS WILL SPEND ON DISCOUNT STORES LIKE T.J. MAXX AND MARSHALL'S. WE DID NOT SEE QUITE THE EARNINGS ANALYSTS HAD EXPECTED BUT SEEING MORE FOOT TRAFFIC AT BOTH OF THOSE STORES. THOSE FALLING IN LINE WITH WHAT WE HEARD OUT OF HOME DEPOT. WATCH FOR WALMART TOMORROW. JONATHAN: WILL PICK UP ON THAT STORY TOMORROW. TARGET NEGATIVE. TJX BARELY MOVING.
LET'S TURN TO THE FINANCIALS. BIG MOVES FROM FINANCIALS. WESTERN ALLIANCE HIGHER. ABBY HAS MORE. ABIGAIL: IT IS NOT A PICTURE OF STABILITY.
THE HCP HISTORICAL PRICE WITH PERCENTAGE, WE ARE LOOKING AT A GAIN OF 10%, FOUR UP DAYS IN A ROW. THIS STOCK UP 31% SINCE EARLY JANUARY. THERE IS ALSO AN INCREASE IN 49%. A DECLINE OF 15%. THIS IS THE TURMOIL WE HAVE HAD IN REGIONAL BANKS. THE REASON WE HAVE THE RALLY IS EVERYTHING TO DO WITH THE FACT THEY ARE SAY DEPOSITS FOR THIS QUARTER SINCE THE TURMOIL OF THE LAST QUARTER ENDED, $2 BILLION IN DEPOSITS. LAST TIME THEY GET A CHECK WAS $1.8 BILLION SO IT IS TRENDING
IN THE RIGHT DIRECTION. THE NUMBER OF INSURED DEPOSITS HAS GROWN TO 79% FROM 68% AT THE END OF THE FIRST QUARTER. SOME OF THE FUNDAMENTALS FROM THE WESTERN ALLIANCE IMPROVING, TAKING PAC WEST ALONG WITH IT FOR THE RIDE. WILL BE LOOKING FOR THOSE DEPOSIT NUMBERS. A CRISIS IN CONFIDENCE. IT SEEMS AS IF SOME CONFIDENCE
IS RETURNING TO THE MARKET. LOTS OF VOLATILITY. JONATHAN: IS A TOUGH EFFORT AND DIFFICULT TO CALL. TRYING TO RESTORE CONFIDENCE IN THE NAME.
WESTERN ALLIANCE 35.13, POSITIVE 11% ON THE SESSION. YEAR-TO-DATE TO DATE STILL -41%. A TOUGH YEAR FOR MANY OF THOSE BANKS. ALSO LOOKING AT TESLA. ELON MUSK ANNOUNCING A MAJOR SHIFT IN STRATEGY DURING THE COMPANY'S ANNUAL SHAREHOLDER MEETING, SAYING "WE'LL TRY A ADVERTISING AND SEE HOW IT GOES."
ED LUDLOW JOINS US WITH MORE. ED: WE ARE UP AROUND HALF A PERCENT ON TESLA. WE HAD BEEN UP HIGHER IN THE OPEN. MUTED GAINS RELATIVE TO PREMARKET ACTIVITY. TESLA HAS NOT DONE TRADITIONAL ADVERTISING. ELON MUSK SAYING THEY WILL TRY IT IN AN INTERVIEW WITH CNBC, SAYING IT IS A PLAN HE HAS ONLY AUTHORIZED. THERE WAS NOT MUCH OF A PLAN.
WE RECOGNIZE THAT SINCE ELON MUSK BOUGHT TWITTER, AND THE TESLA OFFICIAL ACCOUNT ON TWITTER HAS RAMPED UP ITS ACTIVITY AS ONE EXAMPLE. THE OTHER MAIN TAKE AWAY FROM TESLA'S GENERAL MEETING IS THE CEO OF REDWOOD MATERIALS, BUT SOMEONE WHO WAS AT TESLA FOR 14 YEARS WAS ELECTED TO THE BOARD. INVESTORS REJECTED A PROPOSAL FOR A KEY PERSON AT RISK REPORT WHICH WOULD REQUIRE TESLA TO PUBLISH AND MAINTAIN AN ANALYSIS OF THEIR TALENT. THE ARGUMENT TESLA HAD MADE IN
ADVISING INVESTORS OR SHAREHOLDERS TO VOTE AGAINST THAT IS IT WOULD BE PUTTING THEIR TOP TALENT IN THE SHOP WINDOW FOR COMPETITORS. OTHER THAN THAT A RELATIVELY STRAIGHTFORWARD AFFAIR. ELON MUSK SAYS HE WILL BE MORE FOCUSED ON TESLA, HAVING FOUND A CEO FOR TWITTER.
HE WANTS TO LEAD EFFORTS WHEN IT COMES TO DEVELOPMENT OF ARTIFICIAL INTELLIGENCE AND HAS NO PLANS TO STEP DOWN AS CEO. OTHER THAN THAT, MINIMAL UPDATES. WE DID SEE A VIDEO SHOWING MODEST PROGRESS IN OPTIMIST, THE EYE POWERED HUMAN ROWBOAT TESLA HAS BEEN WORKING GOT -- HUMAN ROBOT TESLA HAS BEEN WORKING ON. JONATHAN:
I WANT TO PICK UP ON SOMETHING YOU SAID OF LEADERSHIP AT TWITTER. DOES THE SHAREHOLDER BASE BY THAT THEY WILL SPIT -- THAT ELON MUSK WILL SPEND LESS TIME AT THIS COMPANY AND MORE TIME AT THIS ONE? ED: IT IS HARD TO SAY WHETHER THEY BUY IT OR NOT. ELON MUSK HAS NEVER BEEN A PENCIL PUSHING CEO.
THOSE I'VE SPOKEN TO ON THE PHONE IN THE LAST FIVE DAYS -- TO BRING THE ADVERTISERS BACK. ELON MUSK HAS BEEN AT THE FACE OF TECHNOLOGICAL DEVELOPMENT AND PRODUCT DEVELOPMENT, AND BY MOVING TO EXECUTIVE CHAIR, THERE ARE MANY WHO SAY THEY DO NOT SEE HOW THAT CHANGES. THE BIGGER QUESTION IS HOW DOES ELON MUSK WORK WITH LINDY.
WE DO NOT HAVE INSIGHT INTO HOW HIS RELATIONSHIP WORKS WITH THE PRESIDENT AND CEO AT SPACEX. MY UNDERSTANDING IS SHE BASICALLY RUNS THE SHOW AND ELON MUSK COMES IN AND MAKES DECISIONS WHEN NEEDED. IT SEEMS LIKE HE WILL BE A LOT MORE HAND ON AT TWITTER.
JONATHAN: THE STOCK IS JUST ABOUT POSITIVE. GREAT TO CATCH UP. THAT STOCK IS UP .6%. THE BROADER MARKET POSITIVE HALF OF 1%. SIX OR SEVEN MINUTES INTO THE SESSION. NASDAQ UP .33%. IN THE BOND MARKET YIELDS PUSHING HIGHER.
YESTERDAY DATED WAS BETTER, DECENT. FED SPEAK A TOUCH HAWKISH. THROW IN HRP PFIZER DEAL IN THE BOND MARKET. YIELDS STARTED TO RISE IT COULD
TO DOING TO CLIMB AT THE FRONT END. STARTING TO SEE DOLLAR STRENGTH INTO THE MIX. THE EURO BEGINS WITH DOLLAR NEGATIVE 5.35%. -- BY .35%. YESTERDAY TONY DWYER TOPPED ABOUT THE MARKET BEING FINE. JUST NOT WHAT YOU THINK THAT WORD BEADS. PETER CECCHINI JOINS US. WOULD YOU SAY THE MARKET IS
FRUSTRATED, INSECURE, NEUROTIC, AND EMOTIONAL? PETER: I WISH I HAD THOUGHT OF THAT. THAT IS CLEVER. ONE OF THE THINGS THAT IS GIVING PEOPLE SOLACE IS THE S&P 500 STILL HAS A FOUR HANDLE. WHEN YOU LOOK AT THE INTERNALS, EVEN THE S&P 500, YOU ARE LOOKING AT IT INDEX WHOSE CONSTITUENTS, ONLY 40% OF WHICH ARE ABOVE THEIR 50 DAY MOVING AVERAGE. WHEN YOU LOOK AT SOMETHING LIKE THE NYSE, ABOUT 40% OF THOSE NAMES ARE ABOVE THEIR 200 DAY MOVING AVERAGE. THE INTERNALS OF THE MARKET HAVE BEEN WEAKENING. I THINK THE NEUROSIS COMES FROM
A FEW THINGS. YOU HAVE FIVE OR SIX TECH GIANTS WHO HAVE BEEN PROFFERING NAI IS EVERYTHING NARRATIVE AND THAT HAS HELPED THEIR STOCKS. THEIR STOCKS HAVE HELPED THE S&P 500. IT IS A PERCEPTIVE ISSUE RELATIVE TO THE INDEX EVERYONE LOOKS AT FOUR AND ALL IS WELL SIGNAL. JONATHAN:
ONE THING TONY TALKED ABOUT IS HESITANT TO GET LONG AS YOU ARE HESITANT TO GET SHORT. COULD YOU SHARE SOME OF THAT? PETER: PART OF THAT IS THE NAMES THAT HAVE GOTTEN HIT THE HARDEST, THE BANKS, EVEN IF ONE WAS CAUTIOUS FOR THE PROSPECTS OF REGIONAL BANKS, IT WAS DIFFICULT TO GET IN FRONT OF OR TO DEPLOY SHORT STRATEGIES IN FRONT OF THAT SELLOFF. IT HAS BEEN A SLOW TRAIN WRECK IN ALL OF THE NAMES THAT ARE TRADING BELOW THEIR 50 DAY MOVING AVERAGES. IT HAS NOT BEEN EASY. THE NEXT LAKE MIGHT BE CONSUMER NAMES BECAUSE WE ARE SEEING THE CONSUMER PULLBACK IN TRADE. THAT IS AN INTERESTING SPOT TO LOOK IF ONE WANTS TO GET SHORT. CLEARLY ON A HEADLINE ON THE
DEBT CEILING MARKETS COULD BE UP A COUPLE OF PERCENT IN DO NOT WANT TO BE ON THE OTHERS OF THAT. VOLATILITY HAS BEEN GETTING DECIMATED IN LARGE-CAP STOCKS. JONATHAN: IS SUPER DIFFICULT. S&P 500 UP 24%. CARE X REGIONAL BANK INDEX DOWN-HOME IS 30%. IF I CAN PUT YOU ON THE SPOT, IF YOU HAD TO GET LONG ONE RIGHT NOW, INFORMATION TECHNOLOGY OR THE BANKS INTO YEAR END FROM NOW, WHICH WOULD YOU PICK? PETER: THAT IS A GREAT QUESTION. I THINK THE BANKS ARE GOING TO BE CHALLENGED FROM A PROFITABILITY STANDPOINT FOR QUITE SOME TIME.
REGULATORS ARE GOING TO ASSURE THEY ARE TAKING THE PROPER LEVEL OF LOAN-LOSS RESERVES. I DO NOT LOVE A LONG IN THE REGIONALS DESPITE THE FACT THAT THEY HAVE BEEN BEATEN DOWN AS MUCH. LARGE-CAP TECH IS WILDLY OVERVALUED AND BASED ON A NARRATIVE THAT DOES NOT RESONATE WITH ME. IF I HAD TO CHOOSE, IT WOULD PROBABLY BE LARGE-CAP TECH. MICHAEL: -- JONATHAN: LET'S TALK ABOUT THE BANKS AND WHY IT IS NOT THE BANKS. YOU'VE MENTIONED THE BANKS WILL HAVE TO PULL BACK FROM TRADITIONAL LENDING IN CERTAIN PLACES. A NEW START WITH THAT HOW YOU
EXPECT A PULLBACK TO DEVELOP AND IF YOU ARE SEEING SIGNS RIGHT NOW? PETER: WE ARE. WE DO A LOT OF DIFFERENT THINGS. WE ARE AN ALTERNATIVE LENDER IN MANY PLACES WITH THE PRIVATE CREDIT FUND THAT WILL HAVE AN OPPORTUNITY COMMENT WE ARE SEEKING OPPORTUNITIES TO PICK UP THE SLACK FOR WHERE REGIONAL BANKS ARE PULLING BACK. WE ARE ALSO SEEING A LOT OF OPPORTUNITY TO LOOK AT LOAN PORTFOLIOS THAT MAY BE MONEY GOOD BUT THE BANKS CANNOT AFFORD TO HAVE ON THEIR BALANCE SHEETS.
REGULATORY CAPITAL RELIEF TRADES ARE OF THAT ILK. WHILE IT IS CERTAINLY NOT A VERY GOOD THING FOR THE U.S. ECONOMY IT DOES PRESENT OPPORTUNITIES FOR ALTERNATIVE LENDER'S AND ALTERNATIVE INVESTORS LIKE OURSELVES. JONATHAN: BANKS PULLBACK, NONBANK LENDERS STEP IN. ARE THERE PARTS OF THE MARKET THAT NONBANK LENDERS WILL NOT STEP BACK INTO? PARTS OF THE ECONOMY THAT MIGHT GET LEFT BEHIND THAT PERHAPS WE SHOULD NOT TOUCH FOR NOW? PETER: WE ARE FORTUNATE WE HAVE A VERY DEEP REAL ESTATE EXPERTISE THAT EXTENDS FROM RESIDENTIAL REAL ESTATE TO COMMERCIAL REAL ESTATE.
FROM THE TOP OF THE HOUSE WE'VE MADE A CALL, STAY AWAY FROM OFFICE. WE BELIEVE THERE IS MORE PAID TO, IN OFFICE. AT SOME POINT IT WILL PRESENT WHAT WE BELIEVE TO BE A GENERATIONAL OPPORTUNITY.
NO ONE IS SMART ENOUGH TO KNOW EXACTLY WHEN THAT PRESENTS. WE ARE CERTAINLY POURING OVER OPPORTUNITIES ON A REGULAR BASIS TO ASSESS WHETHER OR NOT WE ARE GETTING CLOSER TO A BOTTOM IN OFFICE. THERE ARE OTHER AREAS WE CONTINUE TO LIKE. WE CONTINUE TO LIKE HOUSING.
THERE IS A STRUCTURAL SHORTAGE OF HOUSING. WE BUY FREDDIE MAC PIECES, AND THAT IS A WORKFORCE HOUSING PLAY. GIVEN THAT SHORTAGE OF HOUSING I THINK THAT IS A NICE DEFENSIVE AREA FOR FOLKS LIKE US TO CONTINUE TO INVEST. JONATHAN:
HOUSING STARTS THIS MORNING ARE MUCH BETTER THAN ANTICIPATED. SOMETHING ANDREW HALLMAN HORST TALKED ABOUT. I LOVE YOUR RESPONSE BEFORE YOU HAVE TO RUN. ACTIVITY DATA FOR APRIL INCLUDING SOLID RETAIL SALES AND INDUSTRIAL PRODUCTION SUGGESTS GROWTH BAKED CELERY IN Q2 RATHER THAN SLOW. ALSO INCONSISTENT WITH THE SLOWDOWN, HOUSING ACTIVITY IS BOUNCING BACK.
YOU SEE A REASON TO PUSH BACK AGAINST THAT? PETER: I THINK A COUPLE DATA PRINTS DO NOT A TREND MAKE. THE HOUSING MARKET IS GOING TO REMAIN A BRIGHT SPOT FOR SOME TIME RELATIVE TO THE REST OF THE ECONOMY. I THINK THE WRITING IS ON THE WALL RELATIVE TO THE PROGRESSION TOWARDS A LIKELY RECESSION. WE LOOK AT THE REGIONAL SURVEYS. THEY ARE SCREAMING RECESSION. WE ARE ALREADY SEEING ISM AND PMI IN NEGATIVE TERRITORY FOR SEVERAL MONTHS. THE MICHIGAN SURVEY, AND EVERYONE MAKES FUN OF HOW IMPORTANT IT HAS BECOME, BUT IT IS ALSO SCREAMING STAGFLATION WITH INFLATION EXPECTATIONS RISE EIGHT WHILE EXPECTATIONS OVERALL OUR FLAG EIGHT.
THERE IS LOTS OF DATA THAT IS CONTINUING TO TREAD NEGATIVELY VERSUS HOUSING. JONATHAN: GREAT TO GET YOUR THOUGHTS IS ALWAYS. PETER CECCHINI WEIGHING IN ON A RANGE OF ISSUES. 14 MINUTES INTO THE SESSION. YOUR EQUITY MARKET STILL POSITIVE. ON THE NASDAQ POSITIVE .3%. WHAT DAY WE WERE LOOKING AT,
TARGET. POSITIVE 1.4%. FLAGGING SOLVAY TRADES BUT VACATING THE OUTLOOK SUPPORTING THAT STOCK. WE AT HOME DEPOT DISAPPOINTING. RETAIL SALES, THE CONTROL GROUP, BETTER THAN ANTICIPATED, WHICH IS WHY SOME PEOPLE ARE STILL TALKING UP THE PROSPECT OF INTEREST RATE HIKES IN JUNE AND PERHAPS AGAIN IN JULY. COMING UP, BANKERS TAKING A GRILLING IN WASHINGTON. >> THERE WERE A SERIES OF EVENTS THAT OCCURRED THAT LED US TO WHERE WE ARE TODAY. >> THIS WAS NOT UNPRECEDENTED. THIS WAS BONE DEEP DOWN TO THE
MARROW STUPID. JONATHAN: IT IS THE TURN OF THE REGULATORS, UP NEXT. LISA M.: I AM LIVE IN THE PRINCIPAL ROOM. COMING UP, RICHARD CLARIDA, FORMER FED VICE CHAIR. THAT CONVERSATION AT 10:30 EASTERN AND 3:30 IN LONDON.
THIS IS BLOOMBERG. >> WHY DID YOU LET THINGS GET THIS BAD? WHY DID YOU IGNORE ADMONITIONS FROM REGULATORS? >> NEWS REPORTS AND INVESTORS WRONGLY LUMPED SVB TOGETHER. >> HE MADE A REALLY STUPID BET THAT WENT BAD, DIDN'T YOU? >> THERE WERE A SERIES OF EVENTS THAT OCCURRED THAT LED US TO WHERE WE ARE TODAY. >> THE LAWS ARE NOT ABOVE YOU. I WOULD LIKE TO UNDERSTAND WHY YOU THOUGHT THEY WERE? >> AS WE LOOKED AT LIQUIDITY RELATIVE THE SIZE OF THE BANK WE WERE WE FELT WE HAD AMPLE LIQUIDITY. >> ARE YOU PLANNING TO RETURN A SINGLE NICKEL TO WHAT YOU COST THE FUND? >> THERE'LL BE A PROCESS REVIEW OF COMPENSATION.
>> I WILL TAKE THAT AS A NO. JONATHAN: BANK EXECUTIVES TAKING A GRILLING. TOP BANKING REGULATORS HAVE THEIR TOUR LATER TODAY. IT ADDITION TO FAILURES IN MANAGEMENT MANY OF LAID THE BLAME AT THE FEET OF SUPERVISORS FOR NOT DOING ENOUGH TO PREVENT THE FAILURE OF FOUR U.S. MIDSIZED INSTITUTIONS. WESTERN ALLIANCE CATCHING A
BREAK, NEGATING AN EARLY TRADING AFTER IT INDICATED DEPOSITS HAD BEEN RISING SINCE THE END OF LAST QUARTER. WESTERN ALLIANCE POSITIVE ALMOST 11%. BLOOMBERG STATED JEAN -- BLOOMBERG'S NATHAN DEED JOINS US FROM D.C.. NATHAN: THE SENATE BANKING COMMITTEE BUT THOSE OFFICIALS THROUGH THE RINGER. TODAY THOU SERVICES COMMITTEE
50 OR SO MEMBERS WILL EACH GET THERE FIVE MINUTES. IT'LL BE A LOT OF POLITICAL THEATER. CERTAINLY THINGS WE CAN WATCH WITH OUR POPCORN. THE BANKING REGULATORS WERE TESTIFYING AT THE SAME TIME AND WE LEARNED THREE THINGS. OUR PROPOSAL KNOWN AS THE END
GAME IS COME THAT WILL LEAD TO HIGHER BASIC REQUIREMENTS FOR BANK OF AMERICA AND J.P. MORGAN AND CITIGROUP. REGIONAL BANKS WILL FACE A NEW PROPOSAL ON ENHANCED POTENTIAL STANDARDS FOR LIQUIDITY COVERAGE RATIOS. THIS IS FOR BANKS $100 BILLION IN ASSETS END UP. MOST SURPRISINGLY, THE FDIC'S SAID THEY ARE WORKING ON A PROPOSAL ALONG WITH FIVE OTHER REGULATORS TO RESTRICT ORDER FOR INCENTIVE COMPENSATION AND BONUSES FOR BANKERS.
THIS IS A 2011 PROPOSAL THEY NEVER FINALIZED, SO YOU IF YOU ARE IN THE C-SUITE OR ARE A SIGNIFICANT RISK TAKER, YOUR BONUSES MAY BE IMPACTED. JONATHAN: YOU SENSE BIPARTISAN SUPPORT FOR THESE INITIATIVES? NATHAN: IN TERMS OF CONGRESS, NO. IN TERMS OF REGULATORY ACTIONS THEY CAN BYPASS CONGRESS. INDEED AGREEMENT FROM THE REGULATORS. THE REGULATORS HAVE BOUGHT AGREEMENT FOR THE FIRST THREE ITEMS. BUT IT COMES TO THE INCENTIVE COMPENSATION, I'M NOT
SURE THEY COULD GET THERE. THE THING TO NOTE IS OF A PROPOSAL IS NOT OUT BY SEPTEMBER OF THIS YEAR THEY ONLY HAVE YEAR TO FINALIZE IT BEFORE THE 2024 ELECTIONS. IF THEY DO NOT AND WE HAVE NEW PRESIDENT YOU GET A REGULATORY CHANGE IN THINKING AND THE PROPOSALS MAY NEVER SEE THE LIGHT OF DAY JONATHAN:. APPRECIATE THE UPDATE. JUST BRILLIANT. NATHAN DEAN ON THE LATEST FROM WASHINGTON DC. THE BROADER MARKET WERE THE
SAME. YOUR EQUITY MARKET POSITIVE .2% ON THE S&P, ON THE NASDAQ POSITIVE .1%. THE GAINS HAVE FADED IN THE LAST 10 MINUTES. YIELDS ARE HIGHER BY TWO OR THREE BASIS POINTS.
LET'S GET YOU SECTOR PRICE ACTION. ABIGAIL: TO YOUR POINT ON THAT FADING WE HAD MOST OF THE S&P 500 SECTORS HIGHER. WE STILL HAVE A MAJORITY BUT NOT QUITE AS BETTY. DISCRETIONARY AND FINANCIALS LEADING THE WAY. MOMENTS AGO WE HAD A FEW SECTORS OF MORE THAN 1%. THE WERE SECTORS ARE UTILITIES, STAPLES, AND HEALTH CARE. LET'S TAKE A BIGGER LOOK AT
DISCRETIONARY AND FINANCIALS. THIS YEAR IT IS UNCOMMON TO SEE BOTH OF THOSE HIGHER. THE DISCRETIONARY CATEGORY, MANY OF THOSE STOCKS ARE INCLUDED IN THE MEGA CAP TECH INDEX. ON THE YEAR, LOOK AT THIS DIVERGENCE. IT IS INCREDIBLE. IT IS A TALE OF TWO WORLDS IN TERMS OF STOCKS. TECH STOCKS UP 22% TO 46%. BANKS DOWN 26 TO 35%. THIS DIVERGENCE IS INTRASTATE. IT COULD CREATE FIREWORKS.
-- THIS DIVERGENCE IS INTERESTING. IT COULD CREATE FIREWORKS. JONATHAN: AT THE INDEX LEVEL ALMOST BORING. THE NEED THIS SERVICE SO MUCH IS GOING ON. UP NEXT, YOUR TRADING DIARY.
JONATHAN: GAINS HOLDING FOR NOW. POSITIVE .2% LATER THE DAY PLENTY OF ACTION. LET'S GET TO THE TRADING DIARY. MORE BANK HEARINGS ON THE HILL AT 10:00 EASTERN.
PRESIDENT BIDEN TO DEPART FOR JAPAN LATER. CHUCK SCHUMER BEADED WITH BAG CEOS THIS AFTERNOON. JOBLESS CLAIMS TOMORROW MORNING PLUS MORE RETAILER DIGS WITH WALMART AND OF THE OPENING. CHARIMAN POWELL ROUNDED OUT THE WEEK BY SPEAKING FRIDAY. THAT ROUNDS OUT THE MORNING FOR
US. THANK YOU FOR CHOOSING BLOOMBERG TV. THIS WAS "THE COUNTDOWN TO THE OPEN." THIS IS BLOOMBERG.
2023-05-20