Q2 2024 HIVE Digital Technologies Ltd Earnings Call

Slide number two I would like to briefly note disclosures.

Except for statements of historical fact, this presentation contains forward looking information within the meaning of the applicable Canadian and U S. Securities regulation. These forward looking statements are based on expectations estimates and assumptions as of the date of this presentation on the next slide I'm pleased to end.

Produce today's presenters.

Holmes Executive Chairman I have <unk>, president and CEO Darcy to Barrus, Chief Financial Officer.

I would now like to hand, the presentation over to Mr. Frank Hall for a macro recap of the quarter Frank Thank.

Thank you Holly.

Thank you all shareholders.

Media people that are listening to this webcast.

We're very happy how we've been navigating shouldn't bring incredible rollercoaster year end.

Let's see if we can.

But the bottom is behind us and the future looks much better.

So I always like the store up one presentations with the.

This beautiful little roller coaster of bitcoin prices and there's a reason for that and I'm going to show in a second but most important is to understand the DNA of volatility been asset class because each one has its own unique volatility and hive daily volatility is six times, the S&P 506 times gold price.

That means 70% of the time, it's a non event to go up or down 6%.

Bitcoin is plus or minus 2% on a daily basis. So that's really sort of volatility on a daily basis has slowed down but over 10 days is quite large. So you can see that we are still three times the volatility over a 10 day two week period bitcoin to hive.

And I think part of that component of that additional volatility has to deal with we used to mining theory, that's gone and now we have this unique AI strategy, which we're gonna talked about you in a second but before you invest.

It's really important to appreciate and respect the standard deviation.

As a company versus the underlying bitcoin now what happens with bitcoin drives the price auction and it doesn't really matter. If you have good news or bad news on that day. It is the bitcoin direction. It appears to be a quant basket buys us sinaville's and other quants that trade these stocks as a basket of raw.

<unk>.

Bitcoin prices it used to be by the day than by the hour and I think it's recalibrating actually by the minute, but what youre seeing here is is that we have a 97% correlation to bitcoin and you can see some of the other companies have a lower correlation pattern and also you can see that.

Hive has a strong correlation to some of the other crypto mining stocks like to right. It's 99% of the time to HUD Adas 95 bit farms is 94, and even though we have better uptime. The riot that correlation is a basket move we move in tandem we move together.

I think it's really important for investors to understand real monster here is the price of bitcoin action.

So what is this importance of bitcoin bitcoin as a decentralized.

So it is portable well it fits into the alternative asset class, just like gold silver and art.

Would show up as an alternative asset class.

Private equity shows up as an alternative asset class. So from that point of view is in good hands and it's a matter of how much do you have in the world of gold the right values of the world manage the largest hedge fund and the world.

As has always a waiting in gold and has had nothing but positive statements disabled bitcoin is like Mozart's Symphony Jupiter Symphony I think it's really important to appreciate that Chris.

Two ecosystem, even with the meltdown in the past 12 months. We have attended many conferences in America, and Europe and they're parked.

I was told today in Lisburn that Theres, one in Lisbon, Portugal, and it's in a football Stadium is 100000 people for our web summit.

And you got to think that's never happened with gold stocks, So would never happen with even a technology conference with Nvidia showing up you're not going to get a 100000 people spending.

700 euros to attend it just.

Question really not going to happen, but the crypto ecosystem is robust around the world and and what's important here is to recognize these nodes that are like posted a $13 goes up to 14000 are decentralized and they're validating the network and it's a global phenomenon and.

That's one reason why even with all the negative news has taken place by them by the bank of international settlements.

Wishes bias towards fee at central banks, and regulatory regimes around the world is not appreciating that there's new demographics of voters. So we're going to be coming in are relating to bitcoin as an alternative asset class and they have these huge conferences.

So I think thats, something big is happening and to recognize that the centralized and theres decentralized bitcoin like gold as a decentralized asset class.

Well one of the other really interesting parts of just recently came out by something in the high to sponsors as.

As education, and we sponsor with Bitcoin magazine and having their research they call. These beautiful graphics and what this graphic here is really profound and showing you that even with the prices in the past year, and then mentioned volatility the number of addresses holding more than a $1000 worth of bitcoin hit an all time high.

So this recent change.

Tone coming out with an ETF, which is still yet to really happen all of a sudden the more interest and I think it's important.

Important to recognize uniqueness of bitcoin cap at 21 billion coins over $19 million in mind less than 10% are to be mined and as less and less suppliers coming out and adoption is rising met cast law would suggest that $100 200000.

600000, you can hear many of these speakers like Kathy would segment 600000 other people save millions of dollars. It's really based on this this met caps law and looking at other adoption processes. So I think it is very very positive and constructive.

But what we do have as we have more and more people coming into mind Bitcoin and bitcoin right. Now there is an opportunity to if you have the fastest computers and <unk>.

Most efficient with computers and you have cheap electricity.

You go out in your mind, but Theres only 900 coins a day that you can mine and harvest basically been around 1% of that network and that network is attracting still more and more miners predominantly coming from bip pain, who is now probably the biggest minor themselves if they were public.

What they do with their own machines before they sell them off to other new miners, but I think it's really important for investors to understand this risk and opportunity.

As the difficulty rises the margins are going to fall and what does that mean, if theres a fixed amount of 900 coins a day means that more and more people are coming into to compete to be able to get a piece of those 900 coins that means there is going to be less it could be less to share.

Youre going to just have a difficulty on the on your margins now win crypto mining companies shut down because there was no profits and the difficulty falls that means there's less miners that means margins are rising.

And we've seen this happen and this will have a big occurrence, where we go through having at the end of April where the embedded module with a bitcoin is that every four years. They have a amount of rewards are offered so we're going to go from 900 coins or date of $4 50, and youre going to have all of these machines competing so.

Basically the revenue is going to have and youre going to have either have more machines to be able to cover your cost or are you going to have to have people fall off the grid basically no pun intended for difficulty money, but this concept is so important to understand the inverse relationship and in capital markets was many inverse relationships.

The price of oil falling is very bullish for airlines profit margins rising rising oil prices hurts profit margins of the airlines industry. So you had the strong inverse relationship. If you have rising government bond yields will that hurts dividend paying stocks unless theyre going to increase their dividend pay.

So I think it's an important concept of markets will be able to identify.

This is an opportunity on a risk right now for the past year. It has been a big risk and iron is going to our CEO is going to go into more granular information in detail and showing you. How we've tried to stay ahead of this and maintaining that were 100% of our network flavors of Green energy focus in Canada.

Iceland and in Sweden, very important and we've been innovators first to go public in September 2017 first of all basically create its own ASIC mining rig with Intel first to buy data centers first to be Green energy focus first to balance the grid, we know that the biggest in Texas, but more.

Province of past year from balanced in the grid and were first to have an AI strategy because of our expertise because we're mining ethereum and when Youre mining a theory, we need expertise and using GPU chips.

We have an incredible team I didnt kill it because our president and CEO electrical engineer also Darcy to bear as the long standing CFO in the crypto ecosystem, guys, whether to bear markets, having acquisitions and our growth profile and the disappearance of a theory I'm going for.

Proof of work to proof of stake and which was for US was always a very very attractive higher margin business to weather those storms.

Gives you lots of resiliency and then we haven't Johan <unk> is the president of Sweden sweetness are an important part for us for many reasons and so it's great to have someone from Sweden thats managing that.

That country for US and then we have Gabriel.

Who is the general counsel, who speak many languages like Johan <unk> and <unk>.

It is not in Europe living he is in Montreal, and so I had this incredible dynamic team. We also have an office in Bermuda.

Or for managing a lot of our financial reporting and getting stuff done from time zone difference between Sweden, Iceland, and then dealing with in Canada. So that we're always on top of our daily production.

So hive has outperformed bitcoin gold price and S&P year to date as you can see a 114% bitcoin was up 62 S&P was up 12% gold is up 1%. So the big push for gold as an asset class that continues you'll see that with central banks acquiring more and more but gold still is.

As related to interest rates in the U S for that 40% demand is was that inverse relationship to the yields in the U S. Bitcoin has got a complete different ecosystem, but it is recognized.

As digital gold it as another form of portable asset and its much more portable that gold is which you can't wear like gold jewelry. So you see there are strengths or weaknesses and I've always been an advocate as a well known gold fund manager that bid.

Coin is one of those beautiful things.

Turning to the asset class and a diversified portfolio.

Hi, there is options of $3 4 million or issues of one nine and it has some warrants outstanding but still is relatively a very tight float.

<unk> have a strong strategy of local community Bowden is 100 miles south of the Arctic circle in Sweden, we basically sponsor the the Hive Arena helps the community. We have 12 kids teams learning and practicing improving or be hockey players. There are three Stanley Cup champions NHL.

Pros from this little community they retire back in this community. So hockey is a very big part of the ecosystem up Bowden and in the Middle you can see one of the photos as Darcy lovely lovely guy that likes to play hockey.

And I don't think he has been playing recently, but that <unk> looks like he's really put on the blades, but what's really important here is our community involvement with the Boden business Center for education, and the same time for kids Theyre not doing silly things on the streets are up their learning this great sport hockey I was very proud of.

When you take a look at the shareholder dilution we've had the smallest amount of dilution that is issuing shares either for a bought deal our ATM.

Some of the other companies have grown in their overall bitcoin.

Production and in a lot.

Wow, that's come at the expense of issuing shares we try to manage our balance sheet is a delicate process do we sell from our hotel position when do we sell when do we do the ATM and we have not gone down the path of predatory lenders, which has gotten many of these other companies into big trouble in the past 18 months.

We have avoided that path. So when when you look at this it's one of the most attractive parts of the shareholder.

The dilution.

And then how it has the lowest G&A per bitcoin mine.

We pay attractive we have bonuses, but we have a different business model. Our model is to be much more like a royalty company rather than being new model there because a gold mining company I'd, rather be newmont, which has a royalty on their assets in Nevada.

And that's what we've done so we have strategic partners and relationships.

Other countries and that has helped us be able to stay lean and be able to weather. These downdrafts the volatility and maintain the payment.

Compensation for the executive team.

And so I am very proud of that.

But as a money manager. This heart is very important but it appears that that is not really key too when you leave the space of CFA cheaper that's been out money managers portfolio managers, what appears to attract the most interest is how big is your hurdle position and what is your growth.

We've had a different discipline and that's one reason why we love mining a theory because it allowed us to have the highest gross margins and to be able to grow our business model with the least amount of shareholder dilution.

So let's talk about macro stuff feel it's really important that you recognize that the imbalance of government policies as what <unk> historically made Goldberg attractive. It's also it makes bitcoin very attractive and is a binary model like the internet of zeros and ones. One you look at a macro economic model any countries curve.

<unk> you can see that there'll be lags and disappointments between their monetary policy and their fiscal policy. So once again theres binary monetary is binary also is what are they doing with interest rates that is real interest rates above the inflationary rates and money supply how much money they're fee at their printing and when it comes to fiscal policy as Tox irregular.

<unk> and rising taxes and regulations as a real drag on the economy and spending where they're spending their money.

Is it in long term infrastructure that will create sustainable jobs or is it just basically welfare payments are boondoggles.

Projects. So it's it's important to see that in this century, we have witnessed this concept of modern monetary theory, where just print more money as a solution to the problem and that is the goal of the outperformed the S&P two to one.

And.

This century, but bitcoin comes along little about half of the century. If you recall it was at 2008. The paper was submitted 2009 the point is into the into the ecosystem and as far outperformed everything and I think we're on things just caught the imagination has been the limited supply.

Capped at 21 billion coins and as more people appreciate is digital portable wealth.

And you have to make or break a golden need you need electricity and if you want to make a bitcoin yet need electricity. So both of them require this financial capital spend on energy.

To be able to make a asset one is tangible.

That is gold and one is intangible that is bitcoin.

And what I'm seeing around the world is that the greater the imbalance between monetary and fiscal policy. The greater has been the price <unk> been a big point in that country's currency and at the same time I can say with goal, but in particular bitcoin has captured the imagination of especially as Democrat.

As you can see these tool guys out there are baby boomers like myself and they have not adopted to.

The millennials and generation X y and Z. So the world has adapted to digital.

Money out from.

From the gaming industry. So we do have a huge transfer of wealth wealth is going to go from baby boomers to millennials theres, a much greater propensity to use digital well, so I think that bodes very well for asset classes like bitcoin.

So comp positive corporate margins through the bear market as you can see last year of September 2022.

We had a theory and mining end and that was a big benefit to even though a bit pointed to start to get sloppy because not a quarter, we had the problems with Celsius.

And other hedge funds imploding, but still nothing compared to the same bank men, who fried the crypto industry and.

And the Fts implosion that took place last year and this quarter really impacted the margins and you can see that it took about six months for it to slowly get a bottom then we had a balance between March and June and then start to rollover during the summer of this year.

<unk> was down.

But with the recent news of the ETF and the SEC, losing cases in the federal court system to ripple and to Gray scale has created a different tone and most important I really think as Larry Fink has done a 180 from trash talking like a hip hop singer about bitcoin and now.

He is serenading about the greatness of bitcoin and whenever there's fear in the global economic World Geopolitics and war.

There is a move to U S treasuries as a move to gold and now another sanctuary another.

Turnover asset has become bitcoin and so now he is pushing for the bitcoin ETF and and I think that that olive branch between the regulatory regime and reaching out to Blackrock <unk> 10 trillion dollars Beast.

Is very positive and constructive in that adoption.

<unk> seen this before I have seen this with gold.

Great concern on retail investors buying gold.

<unk> billion or even gold stocks.

And when the <unk> came out tremendous about our adoption took place and money went into the <unk> and you saw that as sort of a changed attitude towards gold as an asset class was the adoption I think when the ETF space comes out for Bitcoin, we'll get that same type of Ah.

<unk>, and which is positive or constructive in that overall adoption.

We're very proud of going looking last year, and we will see it this year, we'll be able to give you the numbers but.

If you take out and strip out.

Our depreciation because the cycle is so competitive with ASIC chips every two years new chips and.

And whenever you get a bitcoin downturn the orders pushed it to a mark to market breakdown of your equipment also so it will be a backed up this depreciation and we have an accelerated two year depreciation not for it does impact. Your overall you reported earnings, but if you strip that out and you just look at corporate margins from running.

Your business in Europe.

SG&A.

I am very proud of this visual and I think you showed two.

At <unk> continues to show the highest corporate margins.

Frustration when Youre is that people are more focused on <unk> or you're promising going into the future and how much of a hole do you have in your balance sheet.

We have a much more investment.

<unk> of how we're looking at margins and cash flow and we're very focused our strategy is the cash flow return on invested capital, but this is <unk>.

<unk> and part of that is how we managed our cost structure and.

And I think it's shown previous visuals that very proud of these numbers.

Well the future looks great and we're integrating the future of computing with the future of climate to promote sustainability and environmental conscientiousness and I think that our HBC strategy fits into that I did that help fund the company called the gold spot to go public. It was the first AI company. It was the first thing I learned a lot.

AI business in particular, the hub of Montreal being a hub for the intellectual capital of so many phds and machine learning and AI and it was using AI to help the geologist look for gold and dropped.

The high risk capital of exploration down by using AI and so it's always kept me. This was before Covid and has always kept me phosphate. This path. So we started down this path three years ago, a concept of spending money to build at HBC strategy, and then 18 months ago, we purchased a lot of Nvidia chips.

And we were unlike our peers there were single purpose our peers with single purpose only to minor theory, we wanted to have something that allowed us to pivot after mining ethereum, we could go into the HBC and Thats, what we did and we spent close to $70 million buying Nvidia chips and the proof of work to proof of stake jumped.

<unk> did and I think it was a big mistake for many reasons, but let's not talk about that more important is what is our vision for <unk> and AI. So we've slowly started building out it's been a big learning we've got a beta site that started earlier this year in the first quarter it threw off cash flow a quarter million dollars.

And what's interesting is that there is many things we've learned in this journey and part of it was the servers and the Cpus in the basket you have to put them and so having supermicro server. So you can put 10 of these chips into them.

And then you want to give special types of cable and you get paid more for different cable and so it's interesting. If you look at for simplicity, let's say today, Youre, making 15 cents mining bitcoin onto our solar machines ASIC machines that generating above 15.

Yes.

Hi.

<unk> H P C. As we're slowly building it is more like a $1 50. So it has a much higher gross margin.

And so now we've been able to take that from a quarter million a quarter, which is a run rate of a big of the year. We're now at a quarter million dollars a month.

And and so on.

Matter of getting all this equipment.

Putting it together assembling it were in downtown Sweden, Stockholm, and we're downtown Montreal, and we're looking at other assets to expand and acquire.

So our goal is by our year end hopefully this beta site can all be ready in the new year, but where we can get up to a quarter million dollars a week and we see the potential to be a quarter million a day a year from now but.

But those things was risk there or what they will pay for your various chips and as new chips come online, but we have seen several companies make announcements they're getting in the business.

And I really think that it's just more about promoting their story that really don't understand how complex.

It is to provide an <unk> strategy. The first thing is when you're mining bitcoin and youre balancing the grid that needs you are not 100% of the time or 99, 9% uptime that youre that youre mining, but you'll get paper encompass here for not being up 99 by the utility company.

Well when you are into HBC, you have to be up 99, 9% of the time you can't be balancing the grid. So youll have to look at those other dynamics and the cost per megawatt to build in Texas up facility is about $500000 per megawatt.

When it comes to HBC, it's $10 million to $12 million per megawatt. So you have a much bigger capex spend much more sophistication and I'm, just very blessed and there's a lot that we learned with mining in theory, and we have some of the sort of unique.

Learning experience and I like to always tell investors, it's like driving a Porsche.

Hi, or Ferrari versus driving a four 150 pickup truck Asics is a Ford 150 pickup truck a Ferrari is nvidia chips. So it's recognizing the mechanics. The technicians all that stuff are much greater in that space I'm going to turn it over now to is going to give you much more granularity.

And that is our chief financial Officer Darcy. Thank you Frank.

As usual at this point to the presentation I will be taking you through a snapshot of the period looking at the most recently completed quarter and some financial indicators.

First of all I'd like to remind our listeners that our earnings are comprised of our operational earnings or cold cash flow, usually plus our investment earnings which includes realized and unrealized earnings which often includes noncash charges.

Mark to market accounting is a practice that involves adjusting the value.

Of an asset to reflect its value as determined by current market value conditions. The market value is determined based on what a company would get.

Or the asset if it was sold at that point in time.

Mark to market losses are paper losses generated through an accounting entry rather than the actual sale of the security.

The swings and digital assets impact paper profits and losses each quarter.

Bitcoin digital assets do generate unrealized gains and losses each quarter. It is important that investors understand the differences in operating earlier means for losses. In addition to mark to market paper gains and losses each quarter.

Moving on to slide 25, as we can see the second part of this equation is the noncash charges, a noncash charge as a write down or accounting expense that does not involve the cash payment.

Such as depreciation amortization depletion stock based compensation and asset impairments. These are common noncash charges that reduced earnings but not cash flows.

If we move on to slide 26.

Take a look seen during this most recently completed quarter of September 32023, we recorded $22 $8 million of revenue.

And experienced a one $5 million loss in adjusted EBITDA.

It was driven by.

Production of 801 bitcoin equivalent mined.

Tokens.

As you can see on slide 27, we continue to be proud, having a healthy balance sheet.

Our cash position stood at $4 5 million at September 32023.

Along with an additional $46 9 million and digital currencies comprised almost entirely of bitcoin.

We also had $10 million in it.

Mounts receivable and prepaid.

Amounts receivable.

<unk>.

Mostly of sales tax receivables.

Value of our strategic investments as shown there also and we remain.

Having a strong net cash position and healthy working capital to fund our operations and growth objectives.

Our Bitcoin holdings at September 32023 was 1738 Bitcoin this was down slightly from the June 30th.

2023 months and period of 1957 bitcoin.

We have been strategically selling some of our big point over this quarter to continue to invest in higher efficiency, a sick machines to get prepared for the having in the first half of 2024, which is expected in April.

And also some investments we are making in our high performance.

Shipments.

Moving on to slide 28, and switching gears, taking a look at our gross operating margin on a year over year basis, comparing the second quarter of this year compared to the second quarter last year.

Our gross operating margin, which equates to our total revenues minus direct operating and maintenance cost decreased in absolute dollars to $4 6 million or 20% gross operating margin in the most recent quarter compared to $15 9 million or <unk>.

34% gross operating margin in the comparative year quarter.

Gross mining margin is also partially dependent on various external network factors, including the high mining difficulty we continue to experience the amount of digital currency rewards miners received in the market price digital currencies at the time of mining which were on average higher.

In the prior comparative period.

In addition, the company is no longer mining of cerium since the merger on September 14th 2022, which has contributed to the decrease in gross revenue from digital currency mining.

In this most recent quarter as you can see we're reporting a net loss of 29 per share compared to a net loss experienced last year of 41.

Per share at September 32022 period.

Moving to slide 29, taking a look at our year over year revenue. We generated total revenue in the second quarter fiscal 2024 recently completed of $22 8 million versus $29 6 million in the previous year's second quarter.

This decrease in revenues versus the same quarter in fiscal 2023 can be attributable to two main headlines.

There is the ever increasing difficulty hatch rates over the past year that continues to be an experience in this ecosystem.

And two to a significant extent.

Emerge.

And on September 15th of 2022.

As this current quarter and operations moving quarter does not include any period revenues that.

As reflected in our results. This double pumps contributed strongly to the significant drop in revenues that we experienced.

As mentioned previously our gross margin, which equates to our revenues minus direct operating and maintenance cost decreased in absolute dollars to $4 6 million in the most recent quarter compared to $15 9 million in the prior year comparative.

Now taking a look on the next slide of our quarter over quarter fiscal Q2.

We generated revenue in the second quarter of fiscal 2024 of $22 8 million.

<unk> to $23 6 million in the previous Q2 Q1 quarter ended June 32023.

The decrease in revenues versus the previous quarter was impacted by an average statement price of bitcoin comparing the two quarters and 33 less bitcoin bind in this current quarter.

Our gross margin decreased in absolute dollars to $4 6 million in the most recent quarter compared to $8 million in the prior year comparative.

Decrease in gross mining margin versus the prior quarter was impacted for the same reasons as stated above for revenues.

Moving to slide 31, our adjusted EBITDA decreased in the second quarter of fiscal 2024 to negative $1 5 million versus a positive adjusted EBITDA experienced a $5 3 million in the prior quarter.

I will highlight again that adjusted EBITDA is a non IR for us figure.

In the second quarter of fiscal 2024, we experienced a loss of $24 5 million compared to a loss of $16 3 million in the prior quarter.

I would like to thank you our loyal shareholders and stakeholders and at this time I'd like to turn the presentation over to our CEO and president he didnt kill it.

Thank you darcey for that excellent summary of our fiscal quarterly performance I'm going again strategic outlook.

For the year ahead talk about our production to date and recap our growth over the last year, it's been a phenomenal year for hi, next slide let's jump into it.

So we are back to producing over nine bitcoin per day as of mid November 2023, 90 community is a very significant production figure.

And this chart explains why the entire bitcoin blockchain has a block reward.

900 bitcoin per date.

And so 1% of that means you'd be earning <unk> 98 per day. So we're earning upwards of 1% of the entire bitcoin blockchain rewards now in addition to this there transaction fees, which fluctuate anywhere from <unk>.

Usually 1% to 2% and recently, we saw rally at 9% to 10%.

And that will vary with market demand and that's gravy on top for the miners.

But your core Blocker award is 900 Big Quantitate However.

Next slide please.

You do not earn nine bitcoin today, if you have 1% of the network as time goes on.

And what I mean is there is a.

One can called Bitcoin network difficulty.

And this is just a refresher or all the enthusiasm out there and if you're a new market entrant in <unk>.

New high shareholding you want to learn.

We'll just give you a quick primer and difficulty rises.

You earn Max Bitcoin.

For example, with difficulty with to double.

And you're operating capacity, which we call <unk> reader was the scene you'd earn half the bitcoin.

So.

It's difficult that goes up by 30% 30.

30% less big point Similarly, if difficulty falls your production would go up by the scene, but thats just a key principle.

And right now difficulty is about 63 trillion and <unk> number.

Next slide.

This is wet difficulty has looked like over the last year, though it has almost doubled from about 32 trillion two as I said, it's about 63 trillion to date double in the last year.

So what that means is if we sat on our laurels and did not expand we.

We will be producing half the amount of bit quaint today.

And we did a year ago. However, we're actually producing more big quaint to date and we were a year ago. In early November 2022 high was doing a little over EBIT when your data and now we are over 90 days.

So that is scaling with intention is what I talk about <unk>.

Expand the business and maximize their profit we want sounds you'd economics, we're not just about scaling for the sake of scale, yes, we are growing 100%.

In the last year, if you consider the difficulty growth has been 100% because were still producing over nine bitcoin to date.

Next slide please.

This is what our production looks like overlaid so.

So if you think about it in a 30 day month nine when you do would be about 270 Big point, you could see that we've done almost nine queenie data for the last year.

See for a few aberration, we've mined 3220 big point in the last 12 months and again, you see that growing difficulty over the last year and you see how our production has remained steady despite increasing difficulty again we've grown.

Next slide.

This is what that the clean production now it looks like on a quarterly basis. The previous slide this on a monthly basis.

So 801 bitcoin this last quarter.

Next slide please.

And here it is represented on a physical basis.

As you know the price of Bitcoin is that changes it will affect our revenue the revenues of <unk> times the price of bitcoin.

During that period and of course, we saw a drop period end December 2022, because of the MTX bankruptcy.

And that caused our revenue to go down because even though our production was still strong our revenue went down substantially because bitcoin went down to about 16500 during that period and Moreover, as your top line goes down you still have your operating costs and it affects you.

Your margin and the Green bar here is that gross mining margin.

<unk> had a positive gross mining margin even in the most bearish.

The bear market in the last year.

And in fact.

That had been on the uptrend EC period in March we were up to $4 million of gross mining margin doubled in period end June the $8 million gross mining March now on gross mining margin, even though our revenue is strong when you do $8 million this quarter compared to $23 6 million to last quarter revenues effectively held steady even though again.

<unk> gone up our hatch rates also grown to gotten that production up however, our gross mining margin has come down to $4 6 million and why we don't know that it'll Swedish Wang and I'm going to talk about this for a second because there was a lot of speculation and theres a lot of conjecture.

Fear uncertainty and doubt.

And I say this because people were.

Reading about energy taxes in Sweden policy shifts.

They thought that spell doom and gloom for hive.

And I remember reading an article for crypto.

Crypto popular crypto news outlet and they said Oh, this new energy taxes.

Massive increase.

Over what it used to be.

I think they said it was.

Percent increase or tax or so some real headline grabbing number that didn't make sense and here's what really happened and it was a rebate that affected the entire data center industry, not just big quite nicely and the government pullback that BB notes very frustrating for data center operators don't get me wrong, but we navigated navigate things we do.

Control, we still have to find workarounds and solutions.

That means it.

July one the energy tax in Sweden, which by the way worked out to about $2.07 per kilowatt hour.

Okay for all your industry analysts out there and for everybody else that just wants to count to always incentive worked out to about $1 9 million U S that was $1 $9 million use of additional cost which was this energy tax.

That hit Us in this current quarter period end September because that went into effect July okay. So $1 9 million and is unfortunate and we do think that Sweden still a great place to operate one.

We also earned $1 4 million of income from a grid balancing program and Thats unique to Sweden as well so as any jurisdiction. We will have its challenges. It's all about how do we as an executive management team navigate these things.

So im glad to say that we still had a healthy positive gross mining margin if last quarter $4 6 million and if you look at our.

Our corporate margin if you subtract our G&A after that gross margin, we saw had a $1 1 million.

Corporate margin this quarter, which annual Frank covered in his section so.

We've grown the business, we manage the state.

We have positive gross operating margin, even a positive corporate margin during this bear market wrestling with all sorts of.

Curve balls and emerging successfully with a strong balance sheet next slide.

Now again, just just shows E.

Operating margin on it sounds you can just see how we sustained positive gross mining margins.

The eerie emerge last September that was another.

Event, where people were talking about Doom and gloom fear uncertainty and doubt and be successfully navigated through that we've pivoted our gpus to work on.

HBC computing, which I'm going to talk about a little bit later and all of these headwinds about tax and policy in Sweden.

Navigated and by the way, we just found out that will be eligible for rebates for a bitcoin mining business in Sweden, which was another major issue earlier this year that again the media team too.

Port on with a lot of speculation and of course as a company with expertise in new jurisdiction, we have great tax advisers, great professionals, we know how to engage and deal with these issues as they come up so very very happy to see that we've managed to pull through this quarter.

Next slide please.

So to recap our current production, we're doing about nine two big win per day.

For <unk> and in addition to that we're doing 250000, a month right now from our Gpus that are doing high performance computing.

Keep in mind, we were doing $250000 a quarter.

In the last quarter, so we've effectively triple.

Tripled our revenue on our AI income with our Gpus.

$250000 a month, so I'm very excited about that.

In terms of the outlook for the core <unk> mining business. So we did $4 7 million mining margin.

21%.

And that last quarter, the average hedge price was $68 <unk> per day, well guess, what the hash rates in the last week has been between $75 to $80 part of that has been because it's a higher transaction fees.

But things are on the uptrend. So it's looking to be a strong quarter or period end December so we're excited and.

We've got some updates to in this presentation on how we're preparing for the having next slide.

As mentioned.

<unk> grown substantially in the last year, we've grown our high street by 80%.

In the last year.

And that is a function of our.

Commitment to being strategic about how we expand we don't say, we're going to be at 20 <unk>.

Dilute our shareholders.

So all our bitcoin, we've managed to keep a good auto and also scale our production by 80% in the last year and our target for next year <unk> as we navigate through the having sets another 40% of growth.

Next slide please.

So we've talked about to happen.

Be having in 2020.

As highlighted here with the yellow circles, you are looking at a chart of hash price, which tells you the dollars per <unk> per day, you earned operating around the bitcoin mining network. It doesn't matter, if you're in Paraguay or Montreal or wherever this is network wide. The dollar per <unk> per day or you can express this dollar per <unk> per day as well.

So having event we saw cash price you look at the Orange line issues with Fluor back into 2020 it was about.

<unk> per day or $60, a pet ash per day.

And if you look more recently to October November December of 2022.

<unk> actually got worse and you could see how it gets below that Orange line.

What that means is more recently, we've seen worse cash price then after last having event why well because more efficient machines are now online have lowered keeping prices. So it means the network can sustain a lowered global average cash price.

Individual operator are operating machines with more efficiency and those machines.

Electrical breakeven prices based on their efficiency I'm actually going to present, some data, which would be very helpful. For all the analysts enthusiasts out there as he tried to map and predict what might happen to the network and you can never really predict the future perfectly but you could study. The pass you can look at empirical data and understand trends until.

Here, we see that there has been a local minima in the last year of about <unk> <unk> per day Ash price, it's never gone below that because there'd be too much strain on the network to be uneconomical and miners with power often difficulty would drop and thats what causes the hash price to sustain at that level.

Next slide please.

This is a close up because.

We saw some pretty bearish mining conditions in the last month or two and it was on par, but not quite as bad as last November December and so this is quite granular, but again for all the analysts and enthusiasm we have very sophisticated.

Research and analytics at Hyatt that we used to make in our opinion the best decisions for shareholders as we scale the business.

And we study the network very diligently to understand how can we best deploy capital to make.

The best returns on invested capital for our shareholders. So.

Again, you really do mean here what youre seeing is.

We hit low more of them.

More about like $5 five <unk> last November December and we didn't really get below five five.

September October you could see this.

Lower has been supported.

Bye.

The network and the funny thing is though you would actually expect Florida to be even lower this September October because theres been more efficient machines come online, but nevertheless.

Merck has exhibited this quarter value. So we're cognize into that next slide.

Let's see what that means.

Depending on the type of machines that you are operating as I mentioned.

The highest prices for the entire big clean up now.

Now we can look at what it means for an individual operator, depending on the type of machines out.

So for example, right now hash prices back to about $68 a <unk> date.

So that is shown here on this particular slide so big claim with 34900 <unk> been around 36, 37, but and it changes in this model we can update.

Second so.

Here's a snapshot difficulty at about 62 trillion.

And so with these mining economics at a $60 <unk> price with that means is if you haven't been S 19, XP youre going to be doing a $130 a megawatt hour.

Mean S 19, CE pro in between $95, a megawatt hour and if you have a keen and 12 46 or really any other machine that has an efficiency of <unk>, who will retire as youre going to be doing $75 a megawatt hour. Okay and those are three very common machine types and so we're highlighting those speed.

And then you Zimmer you say, okay, well most crypto miners have power costs that are about four to five cents, a kilowatt hour or $40 to $50 a megawatt hour use now look in Sweden, we hedge our power at $3.05.

We get really cheap power, New Brunswick as low as <unk>, some time, and that's all fine and well and that's part of our competitive edge.

We're doing a macro analysis for the entire network. So we can study the pattern of the network and understand where we have performance arbitrage.

How can we outperform but broadly on average a lot of large scale miner sunpower into four to five range. Okay. So what that means.

Just use a nominal $45 a megawatt hour operating costs. So then you would say well how much are you going to be earning.

A J pro while in this case, if youre, earning $95 a megawatt hour a revenue your operating costs are 45 Bucks a megawatt hour that means you're earning 50 megawatt hours, so margins price still pretty decent and the same applies a cana youre going to be earning.

30 Bucks a megawatt hour profit Okay. That's to date next slide.

This is what it might look like after having event is having.

Having our harsh price settles around 36.

<unk> per day and this is an estimate and this is a potential scenario all of the siding you Havent seen cable onda right.

Where by a 19 <unk> pro would only be doing <unk> kilowatt hour revenue of $50 a megawatt hour revenue and I think thats, where the breakeven is going to be I think that.

<unk> pro is going to be doing about 50 Bucks a megawatt hour revenue post having and if you're running older gear like 30% Youll prepare ash machines, you can run a profit profitably if you've got really really cheap power, but in this scenario you could see the road, where it says 30 jewel efficiency you.

Your revenue per megawatt hour is only going to be $40 megawatt hour. So if your power costs, even if your power costs are at three five cents and you've got.

Other nominal cost staff et cetera, maybe you can be breakeven a third each will procure attribution. So our strategy is to upgrade.

Through each of the care ash machines.

Two machines that are 22% or 23, <unk> cash, but more on that later next line.

Okay well in.

In the last 12 months, we have quietly although we've press released it we only buying machines when we see the best possible deals out there I am talking about buying machines at 11, <unk> I'm talking about buying machines last December.

Effectively 100% Rawhide.

And months I'm talking about buying machines for immediate delivery that we wire the money out to date and we have those machines plugged in a few weeks right. We don't go doing big giant headlines that hey, we just ordered 100000 machines and Theyre going to arrive next year, and we just put down to $20 million deposit no because it.

<unk> your cost of capital model, what happens is you.

You might have to dilute because.

Youre, taking a huge chunk out all at once.

You might have issues completing on those purchases in the bear market sustained and you still have those purchase commitments and again they are not immediate delivery. These are delivery spread over a year, but you are putting deposits months and months in advance.

So anyways, we've done 29000, new Asics in the last 12 months.

If there are any generation Asics, we procure 29000, and notably we recently just purchased 40 to 119 key pro and I really like that model because it's got amazing mining economics with 23 <unk>.

Efficiency and we bought them for a very attractive dollar per <unk> price and in the last six months alone. We purchased 80, 919 case and <unk> combined and again that is part of our strategy to prepare for the happy to replace.

<unk> two will prepare ash asics with 22 to <unk> 86, and ultimately bring our fleet wide average.

Below 30 tools at care Ash.

Next slide.

Now in.

In buying those 29 86, and we've made some investments in our AI. That's why we had 5% dilution on our cap table into last year again as a public company first and foremost who we want to drive value for shareholders. We.

We had very little dilution.

We sold some big point strategically.

We're making these expansions.

Next slide.

So the AI.

The funds that everybody likes to talk to me about.

When they go to the conferences and I love to give updates because its very exciting I was just on the line with one of our AI partner.

They are a company we work with where we do <unk> sales of our GPU computing power and they're working with a lot of end users that are at the Vanguard of AI research development.

Nvidia <unk>.

Very popular we found out the fine tuning 13 billion model large language models and in fact, there is a new.

Large language model, a 34 billion parameters called the E. Yi 34 D. E that is going toe to toe with GBP four and again <unk> four is about $1 eight trillion parameters. This model, albeit only has 34 billion parameters.

And it runs on 48, gigabyte Gpus, which is in <unk>. So our gpus are being used for some very very cool.

Large language model.

Operations and even fine tuning.

And in addition to that our 2004 gigabyte card to 85000 are very popular for generally stable.

Diebold season, one five has been growing very popular because there's been a lot of fine tuning on that model and stable diffusion XL as well has been very popular.

And even the 84000 that we have the 16 gigabyte cars. They are really popular to run whisper and westar is an incredibly important.

Large language model that's used for audio transcription. Some of you may be using AI bots to record meetings, which transcribes the audio into a text in summary that the back engine for that is whisper in most applications and that runs really well in our 16 gigabyte card. So.

There's some really cool stuff happening.

With Nvidia Gpus next slide please.

Again as a reminder, our energy is green energy focus hydro and geothermal and this is not projection. This is not pie in the sky.

This is happening now this is a photo of our datacenter and Boden Thats Marin in Yamana.

We've been running Gpus for the past six years, our St and Boden is when the largest if you're reminded in the world and some of those Gpus are still mining.

<unk> earned bitcoin was about 130 <unk> scale, but we're converting them. If you follow our press releases can do.

AI computing, right and Thats, where we are in partnership with Supermicro.

And next slide please.

We just had.

Our Super Micro's with Nvidia Gpus.

Populated in a tier three data center in Stockholm, and we have another tier three data center in Montreal that are live this week next slide please.

And it's very exciting because to date, we are doing 250000 a month.

And revenue from our Gpus doing HPV and AI compete.

And again Thats triple because you'll notice our financials, we booked 250 granted quarter, while we're doing over $8000 a day right now which is 250 <unk>. So we've tripled triple that.

And with our tier three infrastructure going live in.

The outcome and Montreal This week within advanced Enterprise Grade network.

We are on.

On the precipice of.

Hitting our year end target, which we hope to be doing well in excess of 250000, a week by the time, we get to end of this calendar year ended December so it's a very exciting time for us.

So we hope to get to that third step by the end of this year and of course, what isn't projection and what is blue Sky is a 250000 a day and that's that's potential for next year 2024, if we converted all of our Nvidia GPU.

So our target for the end of this year would be 250 Grand a week upwards of that would be about 13% of our Gpus. If we had all 100% of our Gpus doing AI compute below 250000 feet and we're finding about a six to nine month ROI right now as we upgrade our servers are supermicro server.

<unk>, which we <unk>.

<unk> Gpus and in order to unleash hold their computing power to start doing high performance computing when the Gpus are in the existing servers, which are the retail REIT series from the theory of mining data the mind Altcoins.

So we're slowly.

Flipping them over to <unk>, it's a very exciting time in the Hyatt multipurpose next slide.

Stay tuned follow our Twitter.

<unk> posted there and of course, our Youtube.

Speeches at conferences and other cool stuff and other media is there along with this presentation have a great day everybody.

Tuned.

AI and robotics have modernized factories, but a strong cyber security strategy is Paramount security is a top driver of business confidence and manufacturing companies underperform in this area welcome.

To the network effect.

Okay.

Okay.

If you look at earnings topline growth of revenue, we started to see some weakness there the equity market has become more expensive in absolute terms and more expensive relative to fixed income markets are a little bit more volatile right now than the underlying economy is ultimately you will get to an earnings reset we think thats part of next year's Merit I think that you have them.

For opportunities and things that have struggled as you go into 2024. This is Bloomberg surveillance with Tom Jim Jonathan barrel and Lisa Rommel.

Let's get you to the weekend line from New York City. This morning. Good morning. Good morning from audience worldwide. This is Glenn Beck's assignments on television and radio alongside Tom Cain and Alicia for Amazon, Jonathan Federal given equity market to be unchanged on the S&P 500, a one two punch to sentiment yesterday, snapping and de winning streak Kony S&P Teekay one P M.

We had a sloppy bond auction CPM Chairman Powell Chairman, Paul would you close the door over there please close the door.

Joe.

Yeah.

Alright, Thank you for that and what was more important than the auction yesterday the comments of the chairman translate that from people that might have missed it.

Okay.

Kevin has addressed let's just say was disrupted by some climate protection.

So do you feel like you said close the facility closed the door on the fed put yesterday and that's the key question that is the big question. Tommy left open the door I think to another rate move, but ultimately didn't really say anything different to the week before I think my early as with J P. Morgan is pretty fairly well in terms of what he said relative to market expectations. It reached hulkish, Tom compared to what the market was.

Looking for given we're talking about a market. That's again a bunch of accounts in 2020, we had a pullback after eight days straight up I think.

And a lot of technical charge. This morning in the link all of a sudden together.

Lisa let's get it out of the way right now Brian Alright.

Tom wrong, so what happened here 30 year auction did matter, but I looked at the technicals and the yield stayed constrained within the recent pattern. It's not like we had a breakout to a new high yield we just sort of move look we have no clue and I think that that was really the conclusion from the past 24 hours because what we got was an auction.

I mentioned this is the worst on record in terms of the yield to that after the onset it was trading at before the auction. Okay. So that was that a lot of that internal technicals.

Fed chair of how it comes out and says the same thing with a different emphasis that he said before which is we're going to respond to the data, but this time, we might be more hawkish and everyone says Oh my goodness, it's different it wasn't Frank but the fact that there was such a big response leaves people scratching their heads and pointed to conspiracy theories like ransomware attacks for the possibility that that's what's been disruptive.

The bond market. This just highlights how little we know John well, let's get into it. So ICP C. Well till August bank has gone around Manhattan with a USB stick, sending treasury tranches that right basically for and believe the night before it has been going on for quite a while it's very unusual for any banks get hit with a ransomware attack when they basically have to pay off.

The hackers to release some of their system and some of our Counterparties had chopped off the access.

Their systems. So you don't want to be infected and so in order to transact. They were walking around 10, delivering USB sticks to try to make these hall, a very lack of clarity.

All of the articles I've read around how much is actually disrupted the marketplace. The Bloomberg coverage today, what does the cyber the vantage cyber departments of America's Big banks do how do we respond to this do we say all of those Chinese.

It's them its not us gives us a really whole new tone. So arguably at the moment, we have no idea whats going gone based on certain reports its Lafayette criminal gang with ties to Russia suspected at the attack, but Tom I think it speaks to a broader concern.

I'm worried about these kind of issues for a long time and Thats why <unk> been investing in these kinds of issues for a long long time, but more broadly.

You picked up on the same here in the bond market.

Absolutely spooked by Big swing in treasuries again yesterday, a 20 basis point plus move on a 30 year bond following a sloppy auction Lisa we've been asking the question a week if we confused a bond market rally over the last two weeks with bond market stability, because nothing about yesterday look stable I was thinking about Chile.

At that point that you make yesterday when I saw that 'twenty, two point swing and adjoining two basis point swing in 30 year yields. It raises this question, what's really going on and it's the lack of certainty that people have around that going to tamp down the potential by the dip that we saw for a hatchback Andrew and upon my Global Wall Street for our audience on <unk>.

And TV isn't part of the game the people in the game are worried about one word and thats liquidity and I'm going to suggest part of it is maybe going into year end, but.

I wonder how deep the market is right now and to go to the 30 year auction, which I got wrong theres going to be another one right.

There is another auction coming up right now seven years or two years or whatever.

Whatever it's going to be fascinating to see how a lot of people complain that wasn't a 100 year company is it guys, let's start with the price sanctioned. This morning. Good morning equities looks like based on the S&P 500, we snapped the eight day, winning streak Kony S&P yesterday session as it stands coming into Friday with Dan just to touch on the weekend of S&P heading towards.

The loss it was a high by a couple of basis points on a 10 year 464 looking at crude at the moment <unk> 76 <unk>.

<unk> nine tenths of 1% I do want to sit on the dollar just for a moment, yes. Thank you for the euro.

One is 687, so you're giving us bouncing back as of yesterday. The dollar index. It was heading for its best week since July some delta strength kicking it against G 10, even with this equity move to Steve and Tom over the past week or so.

Dollar moving I'll go with that but we haven't talked enough about this is my fault in that we haven't talked about euro yen take up a dollar and look at this odd relationship and if you had said a week ago, John that would be top of the 162 on Euro yen 161, 83, right now Thats, a persistently weaker yen and on a Friday, you got to get to Sunday.

The morning in Japan.

When do they finally blend can act, we're way past that looking at year over year as you see some euro yen session highs in that currency. So that's a weaker Japanese yen, Lisa that kind of as you've had positive when you see about 2%, yes, we've been hearing about money coming out of Japan, and coming into the U S and going into U S bonds in particular your auction as Sean.

Just some questions.

Alright, alright.

730 am honestly, we've been talking all about fed say can we make fun of all the fed speakers not isolated to the U S. It's all around the world ACD pricing Christine Lagarde speaking today at an event in London at 730 Am also at 730, Dallas Fed President Laurie Logan and 90 minutes later, Atlanta Fed President Rafael plastic to speak does it matter right, maybe if they emphasize the right.

People will pick up on it and traded and blame those trains I mean, that's basically where we are at this point today is day two of discussions between Treasury Secretary, Janet Yellen, and China, Vice Premier Haley Fang in San Francisco. This is ahead of next week's meeting between <unk>.

<unk> Peng very curious to hear how this sets up the contura for what's going to be discussed next week, how much can we lower the bar if anyone paying attention to this meeting and all I guess on your radar at all times. This one next week, yes to fair to say I think the science lays the groundwork for next week and a lot of people expecting some kind of charm offensive.

From Chinese officials with the United States, given the foreign direct investment data, we've seen about two weeks, which is not.

And kind of a thing for the Chinese economy, which I think is interesting that the balance of leverage here than it can I am what this team really particularly always focuses on the university of Michigan sentiment.

How much do we see a deterioration in sentiment.

So going back to into inflation is high and we are seeing inflation coming down we do see signs that the economy is slowing, especially and given that we are also expecting some sort of forward luck inflate.

Inflation five to 10, John This comes out I was going to do with a little bit off the radar here, but just can you talk I'm sorry, Mike.

United Kingdom, GDP and I loved Navarre overage Citigroup said, he said the quality of growth and that goes to the Michigan Survey what is the quality of growth in America. What is the quality of growth in the United Kingdom right now and essentially that's into next week and retail sales and see if I can tell you right now at the level of growth in Americas.

So much better than the metal of Kraft in Europe, and a lot of people might point towards the fiscal action that took place in the last few years. The price you pay for that of course with higher inflation. We're looking for CPI next week the politics of old. If this is absolutely fascinating we've got a new poll out Linda can you Simona Council.

To some of the bullet points from this about three times as many Fotis said immigration as their top issue in the 2024 presidential contest as those who set the same about the Israel Hamas will now Brian just to go through some of the numbers here. Some 68% of respondents said they approved funding for border protection our largest share then.

61%, who backing to Israel or 58% to eight.

Eight to Ukraine that really sets things up I think coming into an election year for president Biden, and the GOP, especially when you pair it with other Paul's including those done by Bloomberg. Good morning, consult to talk about the rise of independence that talk about this just.

Page four a biding trumpf.

We match what I think is interesting is it comes just as Joe mentioned.

Drops out since he is not going to announce a reelection bid and there are people paying maybe we're going to see it Joe Manchin Mitt Romney ticket running as independents, which could really throw a wrench into the matter considering the detail right now on both sides for both potential candidates again, when you take a look at that little.

Wayne is from that.

Mentioned misery. Thank you.

Just to share a quote from the Senator from West, Virginia, what I won't be doing is traveling the country.

Speaking out to see if there is an interest in creating a movement to mobilize the middle and bring America together, he's going to travel the country is going to be one of those things friendly. So it's like a listening tool if it will take time.

Okay.

Listen I have a list.

Is he going to read it.

RV and go around and say okay.

Charles.

Van Lee.

For someone in the middle right now I really urge people to look at this Bloomberg article I think it's got some fabulous charts and John I'm going to go back to what we talked about yesterday I am not sure foreign policy as part of the debate in November next year, Texas borders a domestic issue to a lot of people people yesterday emphasizing the economy.

Inflation of matter, Israel, Ukraine, Gaza, Taiwan.

They are going to matter and the voting. This is a real challenge for the precedent. So the GOP it going to take a much harder line on the border and clearly Thats told them well based on our call. This morning, the president wants to maintain America's role on the international stage to support two military fronts at the same time, Ukraine Israel.

Lisa clearly one is a lot more popular than the other now I mean again that can change of course, the catch and I think.

At this point, it's good to get the sort of tea leaves to understand how things are stacking up and what's important to people.

How much this can change given that we've had 14 narrative shifts in the past three days and the fact that basically the events are transpiring more quickly than we can keep a handle on it gives you a sense of that.

Jeff This shifting landscape. It is November 10th ish, and I guess Monday I'm not even sure what day Monday is $11 12, but all of a sudden that break that moment November 15th is honest to me.

The business here the parties start in their studies and the outlooks for next year and all of that and I have no idea and 90 days ago, we'd be in such a jumbo coming up on November 15th and November 17th government shutdown, which precisely nearly in the zeitgeist. This morning in Washington, It might be Christmas parties asked went some I'm not sure if there'll be any kind of.

In Washington, DC as the 12 months 12 months, a long long time, I keep reflecting on the note that came out from Goldman Sachs and Jan Hatzius in the last couple of days I Wonder if you answer Ryan.

What if you don't have <unk> right and you get this extension of the cycle you get a continuation of the disinflation that we've seen so far.

<unk> story will be trying to get that in the U S economy Braemar going into the November election competitive one that was sounding right now I would argue that would be a perfect scenario for president finding of course, who knows because again all of the other events that come around it but if you think about disinflation, you think about a strong economy and managing to land bank that would actually set him up in a much better.

And then may be currently is seen in some of the policy that just makes it sound AC. He said the hard part is over we continue to see only limited recession risk, we expect several tailwind to growth and increase willingness to come even if growth slows that last point yesterday.

And increase willingness to even if growth slows I think this is Michael Rowley is with J P. Morgan is Ken it's not like the message changed from Chairman Powell yesterday.

The market.

It's something else compared to what it does.

The math on this in furrow Liza one to quote you nailed that because the guy from the Booth schools. Chicago was really was upfront on analysis of potential GDP and people like hard. This is important for people on currencies and Feroli, our subduing their view one 8% GDP is that normal a fee.

For 2% unemployment rate is that high. These are guesses were making into not only next year, but 2026, which is the reason why and given the guess is people took such as taken out from the tone of J Paul to your point last week, they heard from him and openness to understand as the economy was slowing and that the rate.

Cynthia restrictive nast was much higher than otherwise implied because of that you're hinting at that yesterday, but again the emphasis was on.

We're not sure if we can have to do more we're not even talking about kind of stop being so.

Close that door to rig counts or something like that yes patient.

Patient next Dallas Humbling back TV coming up very shortly we catch up with him I stand in Washington D. C. On the latest follow later on this morning Christian Horner of Oracle Red Bull racing. That's in the next analyst right here Humbling Brexit lineups.

Shopify Hope you sell at every stage of your business like that let's put it online and see what happens in stage and the site is live that we opened a store in need of fast checkout page. Thank you offset that counted up and ship it around the globe, Dave This one's going to Thailand and that did we just had.

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Okay.

I've made one of the toughest decisions in my life and decided that I will not be running for reelection to the United States Senate.

But what I will be doing is traveling the country and speaking at to see if there is an interest in creating a movement to mobilize the middle I'm going to go with them.

Mentioned as West Virginia announcing his retirement from the Senate and a video posted on X in the last 24 ash to travel the country Teekay Charles It kind of is going to do a charles corrupt and get the pace there, but the middle thing as we can.

One is just with Emory.

The definition of the mill right now is open to a lot of debate.

The middle has swung right here and you really wonder.

We use the word too much but the mentioned calculus in West Virginia must be a fascinating story isn't mentioned have a boat.

Disney I think if you get a bad I think he's got a great day.

The van license movement here in America, and embrace it and monetize.

As video she seamlessly.

If I can actually with the country exactly understand organize and really.

Okay, Great Yeah, and then they take pictures and patch that assertion.

It's not quite I'm fucking up okay and colleagues on the S&P 500 slightly negative. This morning on the S&P, we're pulling back just a touch which meant that winning streak and yesterday session slope bond auction Chairman Powell, just repeating what chairman Powell said that before but ultimately maybe with a different meeting give any easing that we see can we say different meaning apparently teekay yields.

High by a couple of basis points 464, 19 on a 10 year on a 30 year, we hired by three basis points at about $4 79 can we just check kind of change of reach month coming out with earnings a little bit earlier on today look right. We're down about six 8% I thought this line really stood out for me I don't about you guys, but the chairman of reach month, basically saying that the luxury industry.

<unk> put up prices for two years, so it's that you've lost pricing paradigm.

Well again this goes actually something that we've been talking about a lot, which is where is the demand coming from is it from the middle class people, who are stretching or is it for the wealthy individuals you sense that there's some kind of problem around the corner to different kinds of scenarios here or is it because of something else.

Mike people moving away from watches I'm not sure because we haven't seen it across all luxury we have seen our mezz post really good results. So on the other hand, it hasnt been consistent but there are these warnings taking off across all of the earnings sphere is you can find the pockets of anecdotes to point exactly you go back and look at the start shirts.

We'd go like this there is a cyclical nature, where people pull back from luxury but to your point, Lisa we say luxury where there's actually four or five subsets of luxury ruche months like caring hugely challenge with Gucci right now they are across a set of those subsets there in 345 universe.

You mentioned your Mezz, which is just choosing not to be in those lower level luxury lots of complaints about entry level leather goods and the like across luxury Tom not diminished.

You mentioned the watch business the pandemic watchman is over it's just.

Yes.

The way we look at this folks as we look at leases closet. Its full I mean, ameren horns closet, well you can apply them I constantly about that she's got clogging in the role for district of Washington memory, if they found on iPhone.

Right now, let's do this we think we're going to complete two stories together here.

We have a wonderful Bloomberg pull some real acuity about where we are 12 months out from an election and also of course, Mr mentioned his comments from West Virginia, joining us now Ameren Hernan Bloomberg luxury corresponded in Washington, let's get that out of the way Emory right now is luxury so yesterday.

Is it over in Washington.

I don't know if it was ever alive in Washington, but there is a sale at the moment private Sal if you know who to now add palmas, even go check that out there.

We can shopping with Emory.

And Ann Marie I want to conflate. These two together I've got Joe mention who is live 50% votes in West Virginia from a special election of Robert Berg, 53% at years ago, just to cut to the chase before the poll chat did you make this decision because he really thought he could win.

I think that's part of it if you look at our recent Emerson polling.

Have him against Republican Governor again Justice. He is trailing by about 13 points. So this is going to be an incredibly challenging race for him and he's already flirted with the fact that this is going to be the end of <unk>.

Time in the Senate talked about the fact that he does think there needs to be a conversation about the metal, but also you have to look at the reality of what he is phasing in west, Virginia and that was likely going to be at the feed Gregory Courtney in Marlow, writing up our pulp piece that will be talked about I know across all of your world. Today is there a middle in our Bloomberg Paul or does it.

This mass polarity is the Joe mentioned middle out there in the Bloomberg Paul.

Well there absolutely is because theres one key finding when it comes to RFK and that said he is taking fund both when you look at 2020 voters. He is definitely taking from Biogen, but when you look at how voters feel right now he is attracting Democrats because it is named cachet rising to Kennedy, but he is also attracting Trump voters.

And that has a lot to do with the fact that he has.

A lot of dialogue over the past two years when it comes when it comes to COVID-19, and then Antivax movement. So he is 10%.

Obviously, a ton of name IV and recognition, but there is this idea of what we're calling quote double haters and Thats about 19%, we're seeing in our PA and that's people who don't like the current President Joe Biden and definitely don't like the former President Donald Trump.

Haters I love that I think we're going to have to use that there is some question as I look through some of the poll results.

How it president Biden can turn this around we have a year left is there some material.

Policy projection that you can hear about from the Democrats coalescing around the border some sort of a bipartisan agreement to try to deal with some of the problems that people are highlighting.

So I think theres two things that stand out here one is that overwhelmingly in this poll a swing state voters they want to see more being done at the southern border at 68% to 20% in terms of 20% disapprove of what's being done when you look at the disapproval across things like Israel, Ukraine that that number is more so what you see.

Being here is that not a lot of people a lot of people really want to see more work being done on the southern border, but Biden has put this all together in one big Bill and potentially because people are less concerned about say, what's going on in Ukraine, Our China at the moment. They are fine with having a separate sales that we see Republicans are trying to do I'd also note.

This is a hard line for the president to walk right now because still in our poll like our poll showed last month the economy rates number one more than 40% of respondents say that as their top priority. When you look at the foreign policy concerns, 1% care about China, 3% care about what's going on in Israel. So immigration.

Economy abortion, those are ranking much higher and as Paul and can I just ask a stupid question is it when we talk about economy I was just talking about inflation.

Well, that's what people are feeling because the data shows that there is a lot of other optimism happening in the economy. This administration continues to use a superlative that for 'twenty. One mining the unemployment rate has been below 4% that is a huge achievement and that shows that we do have a very strong labor market.

Time and time again when people are concerned with is price of gasoline price of groceries their price of rental insurance that spiked over the summer Mark Zandi in September came out and talked about the fact that before the pandemic where prices are now an average family that is making medium income paying seven hung.

$34 more and that's a problem with what the president is saying the economy is doing better and people are just not failing in omnichannel frustrated.

Is this white house with these pumps.

Very frustrating the president was asked about it yesterday and he says Youre just looking at CNA and you're just looking at New York Times well. This is our second roomba.

Bloomberg News morning, consult Paul that focuses on the states that matter. These are the states that when election, I think with the White House feels right now or the campaign feels right now is that Tuesday, They had a great night, but Tuesday was all about abortion and is that going to be top of line of voters come November of next year. These are very interesting races in Virginia and Glenn Younkin.

You did about a 15 week limit in Kentucky is kind of a unicorn Governor race, and then in Ohio, specifically about abortion.

You have <unk> being struck down by the Supreme Court. It means that the states are looking at abortion. So these are very state specific issues.

Look at Maria It sounds you're dead on on Azande point to me the inflation is not the statistics, we've talked about on Bloomberg surveillance. Its level from 2019, I think everyone out there, including me is looking at every single item back to late 2019, very early 2020, and Thats, how you get to the <unk>.

$700 paychecks and agreement.

The issue just to me and without the heart of the matter Ama's. Thank you Emily and Washington D. C. On the license will catch up with MH on that a little bit later, some without a doubt the fisher.

Price change year over year people companion Pam now so what the type of oil dependent.

I'm so fortunate.

I'm shocked when I look at groceries.

Every item.

John wanted to become the conversation continues Ian Shepardson of Pantheon macroeconomics your equity market just slightly negative. This Friday morning from New York Good morning.

Okay.

Yes.

Okay.

Okay.

Yes.

Okay.

You can almost name one more training. Thanks again on the S&P 500, we look like today its gone into the weekend equity futures pulling back just a touch down a 10th of 1% on the NASDAQ <unk> zero, 2% yesterday snapping an eight day winning streak on the S&P 500, we have 90 days of gains on the NASDAQ responsible for the move higher.

Responsible for the move lower in the bond market to your 10 year 30 year with a big Big focus yesterday on the 30 year maturity very sloppy auction for <unk> is the yield right now a couple of basis points. This morning yesterday at one point Brahmo higher by more than 20 basis points following that mesh that tobacco in the afternoon.

We've been asking is it over or have we gotten some come back to the bond market and the answer is no do we know why no. We can have five different reasons and explanations, including conspiracy theories that are parceling out. This morning, but the real question for me is when is it going to and what kind of economic data points.

To have some clarity on the path going forward and close the door over there and please put up the Brahmo banner Brahmo correct, Tom wrong. So what's the next step with the 30 years. There is a third year auction every every four times a year.

And in a number of weeks there'll be more but right now what we are looking to Israeli CPI next week at the economic data as it comes out and frankly, just understanding some of the technicals underpinning. This when I talk about conspiracy theories John we're talking about.

The ICB C and the unit in the U S of this Chinese bank and a question around hacking and whether you've had any effect whatsoever on liquidity and market. The fact that we are even entertaining that to the degree that we.

Our highlights for lack of certainty of Miami said yesterday, and if even if the fed is done. This volatility is not you can have to live with this might be for a while this fall.

Amid low liquidity, maybe the most interesting.

Global Wall Street quote this week was.

<unk> current it within and NASDAQ VIX of 19.1, yes, it's elevated in the last 24 hours, but the quiet out there and measurement of volatility and liquidity. These statistics, you've talked to a lot of people on wall Street will return to the ICP story in just a moment I want to finish on foreign exchange and just take a look at the euro.

Against the dollar the Dx wide at dollar index full days of strength for days of strength coming into Friday weaker against the Euro. This morning at $106 79, but we've had a real weak dollar strength friendly off the back of equity student, Okay, which is interesting and it's something that Neel Kashkari pointed shale as the dark matter of the uncertain.

Why yields were higher because normally when you have worries about fiscal policy you wouldn't see strength in the currency and he thought that was unusual I think it's interesting on the Savannah at this morning. It helps stories, Israel, saying, it's agree to limited pauses in Gaza strip, citing fully short of what the U S. How does a significant agreement for daily for Hunt.

The Israeli military estimating between 50000 to 100000 people tone and exited northern Gaza in the last few days moveable feast here into the weekend and what struck me within we're all reading the word coverage as we can some real courageous people, giving us net.

Coverage is we're having all these discussions of humanitarian issues and what I believe is hand to hand combat and tunnels.

I mean, theyre underground fighting, which is frightening theres no more on the ground and they are the deaths and Theres. The tragedy and then Theres. The war in information World that has been seen before and I think this is what's really caught my attention over the past couple of days a number of reports highlighting some very clear efforts miscommunicate.

<unk> and disinformation from lots of different corners around the world and this question around how we get a handle on what's truth and what's not and to me. This is something that I am focusing more and more on because this is a new regime and a new front at a time of fast moving information, including domestically here in the United States of America as well as tend to our next story the world's biggest bank ICP C having to.

<unk> through a USB some drive after its U S unit was hit by cyber attack the hack, leaving the Chinese bank unable to clear U S treasury rates and forcing it to send settlement details across Manhattan with the Korea carrying a USB stick low beta criminal gang with ties the Russia suspected of launching this attack Lisa and to your point given how soon.

People will yesterday afternoon by that sloppy 30 year bond auction. Some people trying to work out whether this contributed to that mesh and we have no clarity on that to be very very little and this has had shut down some of the systems as early as later on Wednesday night. So this would've affected trading volumes earlier in the day extensively again.

The details are lacking in my opinion diesels are lagging, but isn't the issue of any bank of any nation do they pay.

These criminal actors do they do they is there.

Act would like yes, I wonder how that govern do they just do it secretly.

Is it like you looking at real estate in Manhattan suitcases of euros.

<unk>.

What are you trying to stop.

Just for the record I rent.

<unk> got out there now houses at my name one two punch to sentiment yesterday, one was that lumpy bond auction too with this fetch a power one of the central bank won't hesitate to rice Rice speaking at the IMF Conference in Washington, Saint <unk> closed the.

If it becomes appropriate to tighten policy fed that we would not hesitate to do so we will continue to move carefully however, allowing us to address both the risk of being misled by a few could months of data and the risk of over tightening on a serious note. There was another interruption to a chairman pound address we saw this at the economic club in New York on the accountable weeks ago. This time around.

Again by climate protest as chairman Powell with Mic walking off stage St closed the door. She felt we should real authentic moment for the Federal Reserve Chairman.

100% of Chinese scripted all the time and then you actually get to say, it's just a reflection of the emotion of the guy incredibly for strength you turned up to deliver an address be part of a panel and when that happens then we have a do we have a new level of protest snow invasive I actually personally witnessed the thing I was doing with Michael Froman now running CFR he was with the government.

<unk> public service and we had protesters within six inches of this before.

I've been on stage afraid.

There are phases, where this far from honestly I think that he doesn't come out looking too bad because it's frustration in cell relate to fall I think for his comments really highlighted to me also response to something that we've been talking about our fed officials are going to come out and try to tick by tick job on the market tighter or looser financial kind of going to be independent and Thats essentially.

So what data are they looking at bond deal today looking at stocks are they saying you know things are getting a little high I don't know if something breaks we're going to get to adjusted now is going to help us with this debate in shepardson is fabulous chief economist at Pantheon Macroeconomics was a real focus on China, macroeconomics, as well and I love your phrase I'm going to steal them from any of the royalty.

To check will be in the mail to pay for the New Castle tickets. We're looking at are pending and macula disinflation is our Immaculate disinflation in place right now.

I think it is but I'm not surprised that pile is not yet ready to say so in public.

The remarks, you made yesterday, what kind of a slightly more alpha version of what he's been saying for a while which is yes. The recent data have been good but they're not yet definitive.

I think thats very nervous about declaring victory and then having to undeclared victory. My guess is that that wouldn't happen I think actually this disinflation is pretty deeply embedded now but this is a fed that really made a hazard things with great transitory fiasco, and I cant. Unfortunately wrong again and the same cycle in the same direction that would look like that didnt loans in the <unk>.

First time round, so they need to maintain this optionality and they need I think.

A couple of weeks are going to keep reminding us until they stop that.

The inflation might come back and that they can't yet be sure. Yes, we like again, if we have to so our markets took and finally, because it has such an enormous rally in stocks and bonds, but fundamentally I don't think its anything very new he's just reminding us that yes.

There's still a chance that we might have to hike I don't think they will but he is not going to let go but yet they're certainly not going to have a conversation about rent cuts anytime soon and based on what you just said, but ultimately do you think there is reason to tolerate some kind of easing and financial conditions.

Yes, I do I mean, I'm not at all concerned that the easing of financial conditions in the last couple of weeks and somehow the interest of all of it is going to spark any sort of resurgence in inflation, because I think the underlying disinflation forces are pretty deeply embedded now across the whole U S economy and in fact that applies in Europe and other places as well, so I'm not too worried about that but.

Maybe you just want a little bit too fast for some people at the fed.

So some hawks.

And of course, <unk> power has to juggle the views of a fairly wide spectrum of opinion across CFO I'm, saying so.

Just wondering I think the dump of things down a little bit.

Of course, I've said over and over again that they are not talking about cutting that's well, yes, no one thinks they're going to be cutting yes, but the real question to me is what they are saying maybe in three or four months time, if we get more good inflation data on more soft payroll numbers on more lower wage gains numbers and then the conversation will shift, but I think <unk> very keen right now or not.

And in that conversation happen in a way that he would consider semi famous or maybe more of a messy bond auctions as well and let's talk about it micro hsiao if market filled asset management. This change just across from me a couple of weeks back and he talked about what was happening just in terms of supply coming to market in the way the bond market was responding to it and he suggested in that maybe this federal reserve.

I have to move away from Q2.

What's your view on that now given developments in the last 24 rash.

I thought it was quite at that point, yet, but theres no question that the the question on <unk> question. The Q T question is something that Im hearing increasingly for people in markets now how much longer can that carry on taking 20 billion out every week over a trillion dollars of year at the steady pace when the funding requirement so pretty big.

As I said, we've had messy auctions and I'm, assuming there will be further messy auctions in our future. So so far the official line is that we're just going to keep doing the qt.

For the foreseeable future, but I'm not sure how long that can hold.

It's all surprised to see a change in the spring, but again, not yes, but not prepared to make the change yes as far as I can tell is do you get the sense that this is a liquidity issue or do you get the sense that there is a profound uncertainty around the economic trajectory of a soft landing a hard landing or reacceleration that we could see in the economy.

It's both it's both I've just spent the last couple of weeks talking to a large number of investors large and small.

Private funds hedge funds banks, the whole sort of array.

The message I'm getting back from us very clearly that there is still a huge spread of views.

People are all across the spectrum. There is no consensus as to where we are.

Going with growth and inflation in our talking to people, who are adamant that inflation is dead forever and others, who are adamant, it's coming back by <unk>. So this is a.

There's a lot of disagreement within markets on that generates volatility, especially when you've got low liquidity.

I don't see this going away, it's going to be with us for a while and it.

It seems like both beneficial to end market participants if it's by how wrong they've gotten the momentum that we've seen in the economy. This year do you have an understanding of why people have gotten it wrong.

This is a gazillion dollars question for economists I think it was a couple of things Firstly, we all assume that people would slow down the rate at which they were spending the savings that they built up during the pandemic and so far that just hasnt happened is carried on.

Pretty much a straight line now whether I can carry on like that over the next thing is a different question because and now lets us most of the remaining savings is in the hands of higher income households, who probably won't spend it so quickly, but certainly up total right now the third quarter, it's been pretty much a straight line rundown I don't again I wouldn't expect that in the second thing is on the on the investment side of it.

Economy, we've seen a huge surge in capital spending triggered by the chip fact on the inflation reduction act. Although it also looks like it's flattening off now, but nonresidential business investment and structures chips factories, mostly 23% annualized rate in the first half of the year that was astonishing. So these have been pleasant surprises but.

Adding it forward into the next six months I think it was much less chance of seeing that story and repeating with the San Francisco meetings coming up being shepardson with pantheon is focused on China is the glass half economically full for president and GM, China does he have a legitimate 5% plus GDP economy.

No it doesn't it.

Isn't going to have that for the foreseeable future.

In the property sector is still extremely deep, we're now in and coming into starting our second year of deflation and PPI for manufactured goods is huge excess capacity that they.

We're not willing to do very large stimulus just sticking with this kind of targeted line and I'm, hoping that you can kind of dampen the impact of the property catastrophe.

We're not going to consume a deflation as well, mostly food prices, but nonetheless, a signal there is is that when the economy.

Growth Hasnt reached any sort of take off points, but it's unlikely.

Likely to do that.

The promise of the Chinese economy run very deep and they go way beyond just the business cyclical demographic problems of a shrinking population and of course I got political problems as well because the presidency is scaring away capital is scaring away innovators.

Is scaring away and with investors and all of these things at the margin are going to crimp unconstrained China's economic growth for a very very long time, so and are returning to that sort of 5% plus story.

We might get the occasional bounce, but theres going to be a big struggle and thanks for the update I. Appreciate it. Thanks Jefferson Pantheon macroeconomics fit to this figure is 2023 and the world's largest bank.

And among pension with a USB stick settling treasury.

<unk> coverage of ICP C.

<unk>.

[music].

If it becomes appropriate to tighten policy further we will not hesitate to do so we.

And we will continue to move carefully however, allowing us to address both the risk of being misled by a few good months of data and the risk of over tightening.

Shutdown.

Good morning Omar.

Good morning.

Wish we could but we can't I wish we could even play out.

We could we counted chairman Powell is the federal reserve monetary policy going forward from here, let's turn to the price sanctioned. This this morning and please on the S&P 500 with negative 0.1% only S&P yields are higher and the bond market by two basis points on a 10 year nothing like the drama of yesterday with a 30 year yield at one.

Point yesterday by more than 20 basis points sloppy $24 billion 30 year auction that Jonathan it tailed in English the supply came at a much higher yield to where the market was trading right before that trading deadline and Lisa ultimately, we price with a much higher yield seemed like five basis points that till yesterday, which is just phenomenally high it's actually.

We have record according to some measurements in terms of how much higher it traded immediately after the sale, which raises the question why do people not show up was this some sort of hack. The interrupted. Thanks. This is sort of what people pointed to at the same time a lot of people are saying its been targeting sloppy because people just don't have a compass of where the economy is going.

<unk> and easily spooked given was taken place over the last months and this phone market. So your 30 year at the moment is higher but only by three basis points of <unk> yield at the moment 479 Prime I was talking about this ICP C <unk> Tom so.

<unk> <unk> bank has had to send a USB stick around Manhattan to clear treasury rates off the back of the pack, which is just crazy to try and get your head around I guess it could happen to anyone and to give you an idea. The Wikipedia is one small paragraph that's not the case for Jpmorgan and other major banks BNP.

<unk> is a mystery to this quote unquote biggest bank in the world. It is a Chinese bank and there is this question around whether Chinese banks have invested as much as U S. Banks in cyber security, we know the U S banks no Nathan targets. They have much more complicated types of protective mechanisms. So here's the question.

Does this mean that the ICB see with that much more susceptible or is this a new level of susceptibility.

The banking system to some of these hacks, it's going to be introducing and then John I think we are going to address this before we go to Jennifer Serein. She's in London. This is not just a new York story cyclical Joseph couriers running around Madison Avenue or a wall Street. This is a global story banks have been worried about these issues for a long time, which is why they've been spending so much.

Money, Tom trying to prevent them from happening. It's just been as you can see we can really spend the whole hour on this we don't have precious minutes with Jennifer syringe is London reporting on this and I really want to make clear folks. This is an active reporting story for Bloomberg News what is the response of London banks to this Jennifer what is the response of new.

Your banks and indeed other state owned enterprises in China.

Yeah, I mean, I think the entire industry really takes not just this incident, but every cyber incident pretty seriously.

<unk> been investing billions.

And I think every bank Ceos.

Get them off to the side of the conference and asked them what keeps you up at night almost every single one of them will say cyber because it's something that they can spend $1 billion on and so forth susceptible to that though I think the entire industry is obviously watching very carefully how ICD handle this how it could impact market.

Really the lesson here.

This is a persistent.

Alright. Thank you can I assume that the decision making on this for this beleaguered large bank will be done in China.

All movements will be back to Beijing, Shanghai and Hong Kong.

So they've made clear in statements that they've put out that this is only affecting this one U S unit and that Hasnt, yet affected other divisions, but they are apparently reaching out back to their home office to make sure that this doesn't spread from here.

And really trying to make sure that the effects are limited and contained to where it's already head.

We understand the mechanics of what actually gets getting interrupted here, but basically my understanding is counterparties closed off their connections with the U S unit of ICP C. In order not to get infected with the virus, which raises this question of how IC BC deliveries and closes some of the transactions and its gotten orders on.

Is that kind of what is going on here.

Yeah, No I think thats exactly right and I think it's interesting because that is generally the response, we've seen from banks as soon as they've identified a risk in the system, They China closing about Boston.

And so that was why you saw a lot of folks yesterday during the treasury auction kind of fighting this incident and that's why it might've been a floppy as you guys said earlier, although it wouldn't affect the number of people, particularly those from China that would be coming in to law.

Look to buy those treasuries right ostensibly those transactions would still at some point come to the fore even if it's on a USB stick going to another bank do we have a sense of whether this actually has prevented Chinese buyers from coming in and transacting in U S treasuries.

Yes, I think there were a lot of market participants are pretty quickly hit back on the idea that this is the sole reason behind yesterday.

Our connectivity and so I think we're still trying to get a sense of justice.

How exactly those tanks will ultimately be handled does this actually end up really.

Really fundamentally changing the way those trains are handled going forward.

So I think we're still kind of in the information gathering stage do.

Do we have a sense because my understanding is that the shutdowns are interruptions really began on Wednesday evening heading into Thursday is trading hours in New York do we have a sense of whether the volatility had been increased whether there is any strange activity affected in markets from a liquidity or purchasing standpoint ahead of that option.

<unk>.

Yes, I mean, I think there's been a lot of market participants kind of pointing fingers and so it's hard to kind of nail down.

Sort of a chicken and egg situation, if you will or people just pointing to this because they know it's a known entity out there or is it some of the sentiment issues that we were talking about earlier, Jennifer who are these guys who has bought who has these people do do we have any clue or is it just a complete mystery.

No I think so our sources are telling us that this is the result of Lafayette, which is a pretty well known criminal gang with types of Russia. They were actually the ones that we're behind.

Trading hack that happened earlier this year in the UK and so to your point earlier this is definitely not.

Our China issue. This is a global issue that every single financial services firms banks and.

Market makers technology firms that just under pending different market. This is something that theyre, all really paying attention to and are all at risk.

So just to wrap things up when things like this happen or other companies.

The clients nervous about doing business with the banks that are under stage in a moment like this.

I think certainly I mean, I think there is something to the idea that you don't want to make a bad situation worse and so we'll see how do you think kind of tread carefully today, but.

Absolutely I mean, a lot of these banks are getting together every month and different days beforehand, and then lines of information sharing around the risk that they are seeing but theres really not a good international standards setting body for that kind of activity is very much like country by country basis.

I'm, sorry that therefore call into question, whether or not that needs to be MRI global effort. John I. Appreciate your time as always Jennifer surround that is pulling back in London. This morning on the license just this crazy story. This developed in the last 24 hours. The ICP C is basically under attack by what could be lock that which is a criminal gangs with ties to Russia. This is what is expected of the <unk>.

The momentum, which is let them to struggled to set a shrink.

Settle trades and send around this USB stick around Manhattan, well it gives us great against the theater right now, but I'll defer to someone like Dan Tannenbaum, who I think.

He has really got some experience here and I. Just my question is do the budgets that we spend millions of dollars or spending on cyber or are we just holding meetings to hold meetings are we actually getting something done to me that's all the questions.

You can get something done, but it's sort of a chicken and egg game, you've got to place that advanced faster than the perpetrators advance their technology to potentially hacking.

Just thinking that if I were advising some children, who have any capacity whatsoever in cyber security it might be a good industry to go into that because it doesn't seem like it's guidance they can see okay.

Thanks JJ.

That's about let's.

Let's say that if you're looking for something to blame that week treasury auction on a lot of people feel inclined to blame on this Lisa I think it's far too soon we do not have the details.

We can jump to that conclusion, it's out there.

This is because it's come up a bit.

Now because our debt and deficits on a control we're spending a trillion dollars.

Look we have no clue, which is the reason why things have been bouncing around because we don't know whether the economy is going to outperform or underperform people completely got it wrong how much this economy will grow this year.

And because they completely did not get how much inflation was going to tick up we've got so many things wrong. How can you have any conviction should know where we're going in terms of benchmark rates things Ronco, yes.

We're going to win the narrative just change in flipping back again and it always round number we'd seen the highest if it's all over then yesterday happened everyone, saying Oh now it's back in the Treasury market has not gone away. He is going to weigh in on this.

Investments that conversation coming up shortly going into the next now your equity market shaping up as follows here the scores equity futures on the S&P negative 0.06% on the S&P 500 yield bleeding, just a little bit higher up a single basis point on a 10 year $463 79 on a 30 year yield after a big move high yesterday by two basis.

Points. This morning, Youll 34, 78 from New York City Good monarch.

[music].

Okay.

Okay.

Sure.

If you look at earnings topline growth of revenue, we started to see some weakness there the equity market has become more expensive in absolute terms and more expensive relative to fixed income markets are a little bit more volatile right now than the underlying economy is ultimately you will get to an earnings reset we think thats part of next year's Merit I think that you have to.

Look for opportunities and things that have struggled as you go into 2024. This is Bloomberg surveillance with Tom gave Jonathan barrel and Lisa Abramowitz.

The longest winning streak in two years is over the life of New York City. This morning. Good morning, Good morning for our audience worldwide. This is Glenn Beck's, if Amazon TV variety of alongside Tom Cain at Elisa <unk>, Jonathan Furrow your equity market on the S&P totally unchanged down of Dan Hot yesterday Teekay pick your poison do you want a plain power, but you want to play soft auction yesterday.

I'm going to blame call, that's where I'm going to go but I think the auction was of value and as I've said all morning, Paramo was right I was wrong on the auction but.

I'm going to blame Paolo and the idea that he pulled back but this morning I got a VIX June of 15.32, and we were 21 word cup of coffee year ago. So even with the one day pullback, it's remarkable where we are I'm going to play in the auction I think once again speaking equity investors developments and bond markets Lisa to see that yields moved higher by more than 20.

Basis points, following that auction space to how nervous people stellar about fixed income and the lack of certainty around benchmark yields and where theyre going to end up I also think it's interesting as you pointed out bonds, leading stocks once again docs, what kind of range bound and suddenly boom down <unk>, 8%.

Neil it's going up bond yields are in control and that is unusual I do not agree that stocks are range bound is that theres a lot of strategies really reassessing yesterday on this.

Today, Okay fine, but just.

This move is eight <unk> was at an eight day move heightened when Australia.

The character of it was somehow different I'll, let the strategy has explained it to me I really want to know what John thinks of this for an example over you'll be inspired by upon market movement for yields to come from faster.

Therefore.

On a 10 year maturity and then Lisa further out the curve to be spooked again at the long end and we said at the start of the way that's why the test would be not in the three year further out on the curve on 10th and then 30% or is that 30 erosion yesterday that really got things coming in the wrong direction for the equity market. Both in you could say it was J Paul but he basically said the same thing you could say it is.

Because people arent necessarily coming to market because of hacks or other things very unclear. We don't know anything about that what this highlights again, its mohamad Larian said and Youre sure.

Yesterday, the volatility is going to continue until we have more clear direction I don't even understand what's going to give us that direction, because even fed chair Jay Powell is saying, we could get this head fake we've gotten a head fake before transitory might've been a head fake well, it's Mohammed set the volatility continues even if the fed is done that's an important point if you're just joining us welcome to the program equity is almost totally on.

<unk> on the S&P 500, we snapped the eight day Winnie straight Kony S&P, the longest winning streak in about two years on the S&P 500, we did that yesterday <unk> would've been really right you'd have to go all the way back to 2004, and we just missed out yields are high. This morning by a single basis point leased at a 10 year 463, 40, we talk a lot about fed speak we do get fed speak to.

We also got ECB sneak 730 am ECB pressing Christine Lagarde speaking at an event in London. She arguably has a hardest story to tell with some of the declines in the economic momentum over there also at that time, we get Lawrie Logan of the Dallas Fed and at nine a M. We get Raphael Bostic that'd be Atlanta fed today next week, we're really going to be focused on this.

And this is kind of going to be laying the groundwork. It's day two of discussions between Treasury Secretary, Janet Yellen, and China, Vice Premier Haley Fang Chan Francisco Biden, and Jason paying or kind of meet next week key issue for me and I think that you've touched on this earlier time. When you were saying where is the balance of leverage is this going to be <unk> being trying to basically core.

The U S and some of those businesses to come back data point foreign direct investment Threatful into China. The meeting I'm actually more interested in estimating between the Chinese later and business latest in America.

They really calm things down and send a consistent predictable message out of China will have that money.

After the photo op in the Chinese take out in San Francisco, whats going to be that message.

I'm lost I don't know what the message is going to be how do you create certainty of policy at a time to try to get foreign direct investment turned positive after turning negative for the first time record I'd be more striving and that's sitting at the Mandarin hotel in the Central District of Hong Kong can you give us back the Hong Kong, we knew and the answer is they have no interest at all.

Meantime, how do people feel and that's really what we're thinking.

I felt really glad that it's Friday, it's healthy University of Michigan, how I feel how you feel about hey.

No.

I wanted to talk about my feelings 10 am people are going to be sharing their feelings of the university of Pennsylvania.

Whether it's going to be highlighting this frustration with how high the bills are at grocery stores also the five to 10 year inflation protection, which doesn't matter until it does if it ticks up in sort of <unk> with this volatility we're seeing bonds, maybe that will actually.

Market to market and we've got to get the Detroit clearly here theyre out with rents and rental change in New Jersey Jersey city's as expensive as Manhattan, New Miller Samuel report I was just thinking about the small print in the press release that might come out later, we could accidentally correlates to a parameter such that skewed the results negatively.

So can I ask you to join US now chief market strategist. The Fs investments Troy wonderful to have you put us on a program to start with fixed income did we confuse upon market rally for bond market stability.

Yes, so I mean first of all humility is in order for any forecast right now, but so much of this cycle, whether it's rates or equities. There is market price action and then theres narratives that all of that price action.

If you think of the way it yields have gone higher this cycle. We've got the three in a quarter for a pipe those second rally back we got some quarter to quarter for a nanosecond and Tom we really like this one we got the five for a Femtosecond and then rallied back hardly positioning was so bearish and so we came back down hard in the narrative builds that we.

Reached the peak in yields and then of course, you have a bad option or you have power pushing back and you have a 20 basis point gap higher the gig from memory is 10 to the minus nine this morning.

Let's go to the reality get off the calendar everybody's got to catch up I saw I'm going to give credit to Goldman Sachs with charter in our hedge funds were out of the market before eight day rally you talk about the edge you own the word alpha how do we create alpha not the year and how do I create alpha after the summer.

24.

Well, so I think in times like this most of your positioning should be in what we refer to as northwest quadrant strategies issue frontier, we have lower ball you materially accepting consistent returns. So there's a few areas we've been focused on heavily.

One would be prepayment sensitive arm, yes, because given where yields are today, there's going to be incredibly low refi activity as far as the ITC. So thats, one area and you're getting attractive carry spreads are relatively wide, we're not counting on spreads to tighten anytime soon until at least the fed stops Qt, which won't happen until recession, but if there is a harder landing.

<unk> been obviously spreads are going to come in.

So get income plus price appreciation another area, Tom non speculative on the direction of rates has been yield curve steepness.

Whether whether we get a bowl steepen out like we had earlier this year are there Steven or more recently, we're fairly agnostic and then for those that can tolerate less liquidity.

When you think of this environment as a private lender.

The bank stepping back you have higher for longer and these are all floating rate loans. So what we referred to as the dare to dream scenario, where we keep rates high we could avoid recession, you're going to have very attractive.

And youre not going to have the hangover recessions those are three areas to <unk>.

Translate Jarden friends, who you just heard gajewski is trying to capture the coupon right now Troy tell me about the equity markets and technology.

Stocks they had been on fire recently Theres the fire continue.

Well when you look at asset allocation. There is certainly no reason not to own growth right.

I'd never understand these arguments why you shouldn't own growth you should own internationally, Japan, you should Oems I mean this is a winner take all economy, both in the U S and globally and unfortunately or Fortunately, depending upon how you look at it thats really concentrate trading and in top five names in the S&P. So the issue we've had with big Kat <unk> Patil.

Over the last several weeks or Mega cap package or the valuations reasonable given realistic earnings going forward, obviously earnings are not going to be nearly as strong as it were the past five years seven years, and we look at those multiples in the event of another round of multiple compression driven by <unk> T in money supply contraction.

Likely going to have some price declines, but as far as the secular holding we don't know why you wanted to have some in your portfolio and then you look for other things to complement that very volatile market environment can you give us a window Troy into the debate that you have at FX investments about your year ahead outlook for 2024.

Oh, yes. So the debates are obviously a lot of fun, but when you think of the economy. We've always been in the higher for longer camp that being said, even worse surprised at how resilient the economy's been.

What we're trying to fine tune.

Seemed to have a crystal ball courses, what's the probability of recession in the next 12 to 18 months is it 50%, 60%, it's arguably higher than 40, probably no higher than 60, and whats the environment, where the fed can thread the needle what's the probability of that whether it's 40% or 30 or even 50 because of the increased business fixed investment and construction spending because.

State and local governments can spend because the housing market at least isn't a dramatic drag on GDP and then in turn what does that mean for inflation forecast. So from a macro standpoint, it's trying with again humility to understand in which scenario is to certain trade expressions generate attractive returns.

Other scenarios do you get better upside or better convexity, a phrase that I know Tom loves well.

Given the range of potential outcomes or longer term treasuries virtually uninvested unless yields are so high to compensate for all of those scenarios.

So that gets back to the scenario analysis, we had cautioned everyone fixed income that again every time market yields have popped up.

Just be aware before it's said and done before we have the next recession, you can really get hammered with the bare steel and Thats, obviously, what happened up until recently.

Clearly have better risk reward in fixed income today than a year ago or two years ago.

But.

Until we have that recessionary outcome or until at least markets truly price did not fictitious we price again, but truly pricing and are you going to Ernie is your yield and you are going to have tremendous amounts of volatility. So we don't think its time yet to extend duration cavalierly.

But more than likely want to think about that and understand it in a recessionary now you don't have as much upside as <unk> had historically because like Where's the 10 Youre going to go Brian goes to 310 year goes to three in quarter, three and half we have upside, but not like the GSE or the eurozone crisis or the pandemic with 2000 <unk>.

We stay in this dare to dream scenario and the fed can thread the needle youre going to get no prices upside you're going to have still a relatively low yield compared to when we have inflation aside in the past and you could get some adverse market price action again like we did yesterday a repeat of yesterday is not what many people one right now Troy. Thank you said, it's going to catch up but that's always true.

Of MFS investments following the state they have losses on the S&P 500 yesterday following a big sell off in the bond market. Once again, if you want just joining us and welcome to the program. The score so looks like this the S&P positive by just 0.01% for once the bond market unchanged $4 62, 41 on a 10 year to choice point the shape of it.

Carefully so we've been talking about this if you want to get long end debt long dated debt away in this market at the moment do you need a steeper curve, especially if you end up believing that the fed is going to effectuate a soft landing if that's the case does that mean.

That yields are going to have to come down the front end that basically they're going to have to cut rates not in response to pain, but proactively in response to lower inflation and that you will get higher yields in the long end, but that those front end rates have to be pinned much lower than the three or three 5%. That's right that youre talking about this federal reserve, Tom just not one that conversation right now basically.

The comments, we had from fetch a pal just yesterday.

But he just said to me Roger I think he came out with his handlers and they said okay. We've got to readjust for market to me what's important John is not to comment yesterday I think we all sort of knew it was coming what's the next comment and particularly what's the comment after next week's fireworks CPI and retail sales wait for the data.

Later in the comments the one in terms of an eight day rally and the shock we've all been through that's when it really gone through the research on the SaaS side on Wall Street assignment that just seems to be this consensus that the labor market is no longer a reason to be hawkish no deaths of Rem Mac has really led that effort, which is ultimately the focus is going to go back to just CPI top what's it look like Morgan Stanley. Thank you.

Get back get back get back to the twos, Okay. No big deal now probably 76 dollar West, Texas intermediate as distinct from the inflation fears of weeks ago, with our fantastic conversation coming out Christy and Horner 30 minutes away.

Oracle Red Bull racing that conversation coming up shortly from New York City.

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Sure.

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Okay.

Sure.

Okay.

I've made one of the toughest decisions of my life and decided that I will not be running for reelection to the United States Senate.

But what I will be doing is traveling the country and speaking at to see if there is an interest in creating a movement to mobilize the middle the.

The Senate as John mentioned in West Virginia are announcing his retirement from the Senate and a video posted on X in the last 24 hours Teekay greeted by surprise surprise plant. They suffered by this I wasn't surprised by it all as an amateur but I'm listening to the pro Anne Marie Horton and last I'll make clear to me there was no surprise here and then he was a significant.

Number of points behind in polling against said Republicans and a very Republican states. So it's a question of 2024 and 2028 is that essentially what's going on and then if it's basically.

Joe Manchin ticket because this has sort of been the speculation on the street for a little bit to those younger show me a third party effort. It's work that's just from parole on.

It's just been a challenge it's just struggled in this system I've got great respect John in the United Kingdom for the Liberal Democrats I mean at least.

I don't even know what are the differences between the three parties, but the answer is at least you got three priorities I've never met a big fan of the UK system.

What's a liberal Democrat where do they fit in somewhere in between some came in between so much between also Joe Man seriously, Jeff as Joe mentioned, we're looking for is looking for the in between it's something in between.

And it shifts the minerals, let's get to the latest pulse Xiaowei Olympic News morning comes out state vote to see U S. Mexico border security as a greater priority than the foreign policy crisis that are increasingly dominating the president's agenda here the numbers about three times as many votes as Tom said immigration is the top issue in the 2024.

So don't show election, we didn't perspective on this right now folks when when the Benjamin Tseng joins us with all sorts of pole experience. When do you just you're the right person at the right time here when we go into the voting booth after labor day. After the October Dash when we go in the first Tuesday of November.

Why do we care about to me foreign policy Nevers, what we care about am I right.

Literally right ton of foreign policy, they never wins election, but right now the Biden administration.

The station is absolutely consumed with the Israel, the mass floor as well as fighting with Congress to get more funding for Ukraine, while Republicans are saying fine, but less than the border well it turns out that voters in the swing states. The seven swings dates that biden needs. If he wants to win reelection alright.

Alright. Thanks.

The majority of them did say, we want more funding for Israel, only one more funding for Ukraine, but two thirds of them said, we won funding for the border and to secure the U S. Mexico border and to do something about immigration. So the administration is really going to have to.

Perhaps pivot and come up with a way to the right.

Critical voters concern when the weather clears memory of the celebration of the GA HW Bush primary win and then dashing up the road at Killington, Vermont certain they were going to win the bandwagon was underway and then it was the economy stupid is this going to be about the economy or is this the culture War.

Election.

I think it is going to be about the economy, if the candidates listen to the voters now while they did prioritize border security, 41% of the swing state voters say the economy is their top issue and so if they focus on school boards and.

Because our culture, where she is like that it will lose the one sort of issue that falls under the culture, where umbrella that is clearly winning elections as we saw earlier. This week is abortion right. A majority of Americans want abortion rights and the Republican Party lost a couple of elections. This week because they focused on respecting them.

When did we have a sense of whether theyre more swing voters then there happened in the past.

Yes, I think there probably are because as my colleague does Green wrote this week, along with Nancy cut nobody wants by Trump.

<unk>.

We call. These the double hadar volunteers, they don't want to be on the ballot and they don't want Donald Trump to be on the ballot, which is why a guy like Robert F. Kennedy in our poll is gaining double digit support so yes, I think disenchanted disillusioned all those words are what describe the electorate.

Right now a year out Tom was saying earlier that typically independent running mates don't actually gained any traction in general elections at the independent candidate for President's have always just taken votes from one party or another is there a sound 20 as Joe Manchin does his van life around the country is there a sense at this time.

<unk> is different but there is enough of a critical mass of swing voters.

Independent candidate could actually gain traction.

I think that could be true because of the double hitters I described the trouble is that a guy like Joe Manson with a D behind his name and sort of the character. He is will tend to pull more votes from Joe Biden, then he will from Donald Trump that was damaged by and probably split enough Democratic votes.

Four four I Trump to win now Robert Kennedy is more interesting because our poll showed that right now he is pulling equally from both trumpf and buy it and the voters. So he unlike rosborough as Sal mentioned earlier would be sort of a nonstarter, but I think manson could have effect if he decides to run for president.

I think you might be too old he would be 80 by the time 2028 arrived.

Don't think pointing to any later than the cards, but.

But he could he couldnt.

I'll turn it around for Trump.

Tell me about the governor of Kentucky to me beneath the radar of the Tuesday elections was a 45 year old John a 45 year old in American politics Wow.

The infant from Kentucky. This guy is political heritage, maybe he's a Democrat declines onboard what do they do with Richard Kentucky.

Well he was extremely popular and Youre absolutely right. This is Mitch Mcconnell state a former coal stayed very Republican.

But it is a state that also has an trying to portion right. After the ROE V. Wade was overturned by the Supreme Court and Andy. This year is a very popular Democratic Governor able to win in a red state. So Democrats might be looking at him in 2028 or 2032 or whatever because he is as you said an infant.

In American politics, these days and it.

It looks like you'll have a nice career ahead of him. When do you think you might last another 40 50 year. So nice when you Benjamin.

Thank you appreciate your time down in Washington, So amazing stats in this power just to shed a little bit more color on this clearly signal for the current precedent swing state voters set they prefer is likely bronco key foreign policy issues. So Paul respondents said, they trusted Donald Trump to navigate the Israel Hamas wall more than binding 44 to three.

31, and preferred the former President Mone that Russia, Ukraine more to buy an 11 point margin and its not only swing states to talk to our expert on this Greg drove folks is just cyclopedic Lisa on the five Ohio's enduro blocked some out and theyre pretty much an equal part five and <unk>.

Says look Youll look at Central Ohio, which is purple is you get and that's going to be the swing of the swing states. One unique aspect of these two conflicts is how much they've split inside each party as well and so I wonder how much that's informing some of the poll results because Democrats are not in agreement. If you go around and try to get some sort of sense of what.

People want to see happen, whether it's with <unk> or whether it's in Ukraine same among Republicans. So maybe it's just that there is enough of a critical mass of people who support the former president Trump at a time when everyone else is kind of splintering I mean really this is this is such a unique moment in both parties in terms of lack of agreement between the two.

Fringes of each party I think the Republican issue was around the Ukraine, Ukraine will hear later and then for the Democrats they cant get consensus somehow support Israel.

Given the extreme fringe on the left side of that part of it and you could hear that from President Biden. When he came out overnight and said Israel is running out of time or this at least with palace in New York Times reported it and he said you know Israel has a certain amount of headway before it expands the conflict and gets a lot of people are angry and creates more hard line people on the other side is there.

Because they actually think so or is this because of the pressure internally to come out and try to take and Thats part quickly some of the latest numbers from our Olympic News morning, consult Paul which came out in the last 24 hours more on that still ahead in the next town with Olympics Anne Marie will catch up with MH again at about 60 minutes time, if you're just showing I guess, a surprise section equities positive by close to two.

At what 0.1% on the S&P 500, trying to bounce back from yesterday's losses in the bond market rallied returns were down two basis points on a 10 year full 60 43 on the two year yesterday, we had the first loss of the week of the month in the equity market on the S&P 500, we had the first close on a two year.

About 55% of the month, so far as well so I went to casually yesterday.

We already had cash excuse me as that working out it was good.

I missed the rally.

I'm sure like Big time from New York come on it.

Okay.

Yes.

Okay.

Okay.

Okay.

Sure.

Attempted to went away kind of pricing in the equity market on the S&P was shaping up as far as we look at it or something like this with positive <unk>.

1%, we're actually down on the weekend of S&P 500, even with that decent run eight days of gains going into Thursday, but yesterdays loss took us back below that line of defense. So yeah. The NASDAQ just about unchanged on the session responsible for all of this just the pump market of course, just check it out but to your 10 year 30 year 10 year at the moment back down by two or three basis points.

59 to 64, and a 30 year, we've done about four basis points to 470 197 is the move yesterday at the long into the curve Lisa just spooked, everybody steadier auction really really sloppy.

Yields setting higher again to the to your auction earlier this week or is it three option and then the 10 year option.

I mean on anyway.

It was a three year oscillate I realize that I misspoke there.

We're looking right now at a situation, where Matt auctions, a raging successes and completely dreadful options just plain bad at summit.

A really disruptive to this feeling of stability that has been a fiction every time people try to coalesce around a first thing I looked at this wondering leases in your world I looked at the difference in yield between the 10 year and 30 year that turns 30 spread and it didn't give me a lot of information there going up and down in tandem right.

I think youre not getting a lot of information from the volatility at all I think that thats actually perfectly suited for all of the things that we're trying to rationalize and give narrow tips to this week last week. The week before etcetera, you took rate on simply agree AMA sharp turn to foreign exchange.

Eric.

Right.

On the Euro 683 were positive <unk>, 1% up until today the dollar having a four day run dollar index stronger for four consecutive days attempting to close out with a strongest weekend back to July just trimming some of those going to the moment on the Euro one of 683 on this refinance this morning, the industrial and commercial bank of China, the world's largest bank launching.

Thorough investigation after being hacked in a ransomware attack a criminal gang known as locked it with ties to Russia suspected orchestrating the attack, which forced the bank to send trades through a career with a USB stick laser across Manhattan still trying to work out what's going on here and ultimately is there any connection between them.

Yes, and a story we were talking about in the bond market yesterday afternoon, and how many computers can really accept USB cards to get the information right. I mean, all of these are real questions at a time when everyone's kind of mobile and it's all in the ether.

Jimmy raised this question to <unk>.

About the security of Thanks, and this question around should we move to a more central clearing model for treasuries or something that is less bifurcated and all of these different entities, but the second question is what does it say about everyone's jumping to the conspiracy theory to explain a failed auctions that have failed option, but a pretty a pretty poorly received one that to me highlight for lack of <unk>.

Certainty around what's really behind when you have to take comfort from a hack.

Because you don't really know what's going on our sweat I think it speaks to how tricky that moment as well said, it's like you know you are in the market place Tammy at facts that messed up the bond market and not something more sinister, which is kind of Weber at West Virginia, Senator Joe mentioned announcing he will not be seeking reelection when his term ends in January of 2025, and our statement mentioned hinting a potential presidential run at.

Third party candidate St quote what I will be doing is traveling the country and speaking out to see if there is an interest in creating a movement to mobilize the middle and bring Americans. Tom. Thanks, again, Florida is American we have to go back and understand most of US elections have been very close in a very Republican state backed as a special election on the death of Rob.

Bird.

Senator Byrd of West, Virginia that was I believe 53% a one I mean, it is a state where he's going to look at a very tough election. So there is a question about whether he set to avoid losing the election or another close Ron.

Right.

It's not that which is the implication there or this question around if you're really looking into an independent burden is this time different or an independent candidate could gain traction in a way that has not been possible over the recent decades and that still remains a question. Let's finish on this story Treasury Secretary, China yen and wrapping up her two day maintain with China's Vice Premier in San Francisco Tonight the maintained.

Reported to be focusing on the increased use of security measures and commercial relations is happening ahead of the much anticipated meeting between president bind to the XI Jing Ping at next week's APEC summit. The two lead is expected to discuss foreign investment terrace, and greater transparency going forward on foreign investments, specifically, Lisa I think that's.

Big Big topic of conversation for next week, particularly given the data we've seen more recently in the past couple of days of foreign direct investment falling declining into China for the first time.

History. This to me it really highlights the concurrent precision paying and possibly his motivation for coming here, but how does he give certainty you asked this question last hour how does it create certainty at a time, where the rules have flipped and flopped and ideology has rolled over economic policy, it's going to be really difficult.

I go to John's point earlier, the body language of this American executive is.

Theres going to be far more interesting how can they get anything done I mean, just as one example, China's bumping up votes against the Philippine Coast Guard in the South China Sea or take it up north to the attentions of Taiwan.

The idea that we're going to give substance here or even the theater that we saw with president Trump and other visits I just don't know what corporate America wants to them they want to stable and predictable policies should make long term investments and in some parts of the world inorganic and let's say if we can provide some kind of soothing words to corporate America to provide it I don't think we can get that in just a week that's going to be an oncoming.

The headline for Morocco, John just out this I heard on stage and Americares Sheila Guard if kept long enough rates will take us to 2% and she's singing from the bundesbank criminal get back to 3% inflation adamant that stick out how much damage you do in between to the European economy, the backdrop of European growth right now right very <unk>.

<unk>, what we're seeing signs of life in America really get back to 2% yield that'll be a great story I believe that's price up in yield down if I get it right. Cathy Jones now gives perspective, chief fixed income strategies in your kitchen. This weekend of what to do she's with Charles Schwab.

Absolutely fascinated with and always open question to you <unk> what are people at Schwab doing with their fixed income money, yes. So what we see in mind sort of the majority of the clients as they've been staying very shortened duration. They are starting to move out they are starting to get some confidence that they have.

Can move a little bit further out the curve or theyre staying at high quality treasuries very very popular along with Cds.

Not really dipping their toes into low quality, but if these yield muni bonds investment grade corporates treasuries are looking attractive and they are getting a little bit more confident about stretching out duration. The pros are worried about liquidity whatever that means in the bond market should our viewers in la.

Listeners be worried about liquidity and full faith in credit simple to buy duration bonds.

I don't think for the average investor the liquidity issue is going to be a big one.

For traders I think for people like us navigating the markets for our clients. It's an issue, but I also don't think it's a critical issue right now in the market you are the one person who I was most looking forward to speak with you today I really wanted to get your understanding of what happened with the failed auction yesterday and whether you could give any credence whatsoever to this.

Yeah, that's a hack of ICP C of the U S unit of ICP C had something to do with how poor it went off.

Don't really know for sure. It is an open question because we haven't had something like this happened before.

It seemed like the when issued market was okay going into it there were a lot of questions. Because we've had such a big rally at the long end, who would show up after rates dropped so much. So there's some questions about that and then you start to get the power comments and then you got <unk>.

That may have had to do with it.

So I think it's kind of a constellation of things, but we'd have such a big rally going into it. After the 10 year went well and the three year well I think that had something to do with people stepping back what sort of signify team that we're actually getting stability and longer term bond yields enough to get some conviction to have some sort of trade that can last more than a couple of.

Yes, we don't have it yet, especially the further out the curve you've got it go beyond 10 years. It really don't have it even the 10 year and you look at the volatility we've had recently up 50 basis points down 50 basis points I don't think we're there yet.

The market needs conviction that the fed is really done and that the hold has some sort of.

Timeframe that you can anticipate and then we start to get that stability. We thought we had it and then Paul spoke and we don't have that how much of this really have to do that with the fed and its policy at a time when people are citing fiscal policy or people are exciting potential.

Potential inflation, where people are siding, just simply where are the buyer is going to come from at a time of changing policy overseas.

We haven't so I tend to think it really has to do with three things that always influence the trend in rates what the fed is doing because you have to discount that theres no way you can get around the fed no matter how hard you try.

What inflation is doing which is tending to recede and then how the economies performing and then you get into these other things like supply and who is buying <unk> in China, Japan, but actually the foreign inflows have been pretty steady. Despite all this chatter we've had the foreign flows hold pretty steady the reserve.

<unk> are pretty steady so I'm less worried about that fiscal policy. Obviously, it's a concern but is it a concern today versus yesterday versus a week ago that is a hard argument to make one year out and my clipping coupons or can I actually invest for total return after a three year Nightmare I think you can get.

Sum total return, it's not that hard when you've got a coupon less large take out a positive total return I'm going to clip the coupon and I'm going to get some capital gain out 12 months I think 12 months from now yes, we have fair value say intends right around four four and a quarter and so if we get there if we get even close to there I'm not going to have a positive.

Return going into next week, when we get CPI, how volatile is the market and how potentially massive could some of the moves b on the heels of either an upside or downside surprise.

I don't think were done with the volatility Lisa.

It's here to stay for a while until we got either that you know confidence about where the fed is and where it's scaling which I don't think the fed really wants to give us too much confidence right I think they want to keep the market a little bit off off center or are we starting to get those labor market numbers that are just so soft that the market is okay now the fed.

It really has to start easing Kathy Johnson of Charles Schwab, Andrew Hahn host City, two published he's had a hawkish via this federal reserve through the whole cycle much more hawkish. The most of the street and this is the kind of thing that is writing now just listened to the shift in language here. The fed is on hold the bar to hike will likely not be surmounted even by the upcoming.

Three months, a stronger core inflation data they expect laser that's a massive massive turnabout from city and Andrew Hahn Horst basically send this buffer another high cure is much higher than you think given the fact that they were talking about another hike, possibly this month and.

But even then the momentum might be difficult for the fed to take on this raises. This question does that mean, along and yields are going to come down or does that mean, they could potentially go up further if the actual economic growth continues to be stronger than expected and inflation does too and the fed remains on hold at Goldman thinks that growth can continue if you just joining us welcome.

Equities right now just pushing a little bit higher on the S&P 500 up by 0.2% yield to a little bit lower by a couple of basis points 450, 983, anticipating the inflation data next week and Kathy on with you the labor market data I've been asking this question I'll Wake County, I'd Love your thoughts on it.

Labor market data the federal reserve seemingly in the views of a lot of people on the street at the moment no longer if you like the market data as a reason to be hawkish.

At what point and you've alluded to it at what point is it a recent speak bearish on risk assets given that it starts suggest something a lot worse.

I think the.

I think we're kind of on the cusp of that possibility because what youre, saying is real income growth slowed down when you look at the labor market data. So we don't really know where NAIRU is anymore that used to be a really popular thing back in the day.

But and I think the fed knows they don't know what that is but if you start to see that.

Unemployment rate rise the hours work continued to decline the average hourly earnings continue to slow youre talking about that income growth really starting to slow down significantly and that's going to have the impact on the economy, I think that kind of the constellation of numbers coming out of that that's really important it's a soft landing talk a moment or.

The destination, it's a moment right now brown Marvin if he gets a four and a half pushing 5% on unemployment I think we might be having a different conversation right, especially if you look at historical precedent and an increase of a half a percentage point and unemployment over six months has never happened. So it wasn't that material, it's a China close the door before you go.

The deal closer Don.

<unk>.

Yes.

Fenty make if we were able to cut youre going to Las Vegas I wish. It was it's cheaper to go to Vegas now to predict.

Pricing when I looked at it.

It's ridiculous we can maybe got two F. One we're going to chat with Christian harnessing principle of Oracle Red Bull racing as we anticipate a much anticipated race in Las Vegas I conversations next.

Okay.

The beautiful thing is is that we have a lot of different growth rates still and I think it would be very boring if they're all the same right and yes, I am very aware that.

We shouldn't go to all the let's say the commercial places, but I think also as Vegas gives you.

Unique opportunity and then time will tell if that's the right way to go or not.

And it is paying for that guy might that absolutely does.

Imminent Red Bull racing Max for staff and speaking to is adamant to summit. So I'm looking forward to a rice, which is now just around the corner, it's still there and John would you say that the F. One is still large and moving off the huge success of Netflix without a doubt big break big breakthrough. Although there are some indications that might be next week's rates I guess wasn't as popular as they.

Hope to be given some indication that ticket prices have come down some hotel prices come down as well, we're going to get to this conversation John quickly here I loved Brazil.

Great horse up and down.

Placements you at that time, let's do this right now and this is going to be fascinating a first time in Las Vegas, and what you need to know is in the vicinity of Tuesday. It will be 73 degrees in Las Vegas. It doesn't matter. If you run a race at 10 PM Midnight Pacific time, one a M. Eastern time success in the <unk>.

Morning, and Banbury, England, and the rest of it Christian Horner as team principal and CEO of Oracle Red Bull racing and John I'm, sorry, it's about tires that to the experts Christian it could well be at that time, because <unk> you, Sir and thank you for being with US I think we have to start by saying congratulations on an absolutely dominant season for you and the team will spend some time too.

Talking about that in just a moment, let's go where Tom win just approaching a new track you Havent had time with you haven't raised on before and with track temperatures that could be very very low Christine what's the approach for you and the team coming into an event like that one.

Thank you Jackie.

It's a massive info.

Yes.

Yes, I was watching Max level stimulate the yesterday bobbing around the Silicon Valley. It looks a great track I mean, it's going to be Super fast.

There's going to be a lot of overtaking opportunities and a pause a goofy like driving on ice.

It just adds another dimension.

Particularly on a road course on those streets.

The drivers in the teens, so the absolute maximum Christine when it comes to stuff like qualifying then how do you prepare for path to put that phospholipid that you're trying to do to get that call in how do you do that what do you do set up with three lapsed before you go for qualifying like what you do.

Well, that's what we're going to come out of what we run on Friday for the first time.

Sorry.

We're going to be learning what it takes to get these prototypes are.

Up to temperature and is it going to be multiple lapsing qualifying rather than a single app. So it could be really interesting to see.

How that's going to play out there is going to be a lot of data to look at.

Yes, the stimulator is it going to be working flat out on Thursday evening, Christine any worries that this could just be a bit of a disaster could end up in chaos.

Below Street rate.

<unk> dramatic.

C&I in Singapore, it's been in Azerbaijan and Monte Carlo.

And this one promises to be a big one I think he is going to be one of the biggest you'd events.

In the sporting calendar this year and so.

I'm confident it's going to be great.

This success Christian owner I was appalled by the accident very early in the Brazil raised your Perez was very much involved in that how do you make the start of the race is safer.

I don't think you can I mean, you go cards that will accelerate.

North of a 100 miles an hour in less than two seconds and you've got 20 very competitive drive is ongoing.

For the atomic positions.

Inevitably, sometimes theres going to be contacted the safety of the cost the safety of the circuits.

Increased dramatically.

Thankfully, we're seeing drivers.

Drivers working away from won't sometimes the library, Norfolk accidents Christian you said 'twenty competitive drivers arguably this 19 and then this one guy on its own out in the front I want to talk about that.

The domination of Max with Stephane, he still so young Christine he's taken over and unprocessed is basically on cost the takeover battle, maybe even in the next couple of rice in terms of race wins. When you go back over the legends of the sport that you've been so close to over the years fungi Senate Shoemaker, even more recently Hamilton, where does Max ranks.

What separates him from the rest.

Well of course, as always incredibly difficult to compare products from different generations.

But what I think is safe to say with what Max was achieved in a short period of time.

We will now three World Championships.

50, 152 complete victory is an incredible incredible record and.

I think that.

He can now be spoken about the same in the same centers in the same category as one of the great just drives the sources of Athene, how far do you think he can go Kristina.

Well I think.

He is still so young is still evolving as a driver as it gains more experience.

And then a lot depends on the equipment that we can given but I think you can achieve a lot more he's motivated is hungry and.

Yes he is.

He just loves these rates and you can see that he is not interested in anything else other than just gone racing. He's been dominant your whole team has been absolutely dominant I remember Ferrari being accused of making the sport boring and assume ACA years do you take it as a compliment when you hit those kind of accessions thrown at you would say.

Well it means that we're doing now Joe.

We're winning but the one thing that is guaranteed and this board is nothing there that I think was stable regulations, we acknowledge.

Improving behind Us and I think the next year is going to converge.

A much more tight championship next year and also 25 before another reset with new regulations in 2026.

Yes.

I think a much much healthier for kristian to that point and I have my auto sport at home John Farrell made me get it I would try to read and I try to understand it a lot of your brother and are really trying to fix their cars now for next year. What do you do when you are as strong as you've been about tweaking the.

Platform into the next season do you leave it alone Julie the car the same as for Stepan has known this year or do you actually try to make improvements.

When you're always looking to improve because you can guarantee.

How does it is it going to be going to be improving and they will be copying some of the philosophy.

Of alcohol Thats on data that we're already seeing that starting to happen and we just got to keep trying to move the goalpost Hi, Brian.

Try and keep developing.

Developing and proving ourselves and so of course for the last few months have actually been very very focused on that.

But of course, you start to get into diminishing returns.

And.

It's going to be tough to improve.

I'll be 20 next year significantly from where I'll be 19 has been this year take us into the pit because to some of us I want to Netflix and I think I'm, an expert I'm not Christian you want to take us into the pit stop.

<unk> three <unk> to <unk>, how do you train for that excellence versus the other teams.

Well I have to say, it's the same as in any discipline, it's all about.

Our practice is about analysis about the small incremental things just where the driver stops.

Two inches too long then that will affect the timing of the store. So it's rehearsal as practices positioning the right people in the right roles.

The right attitude.

And the determination to continually.

To continue to improve and of course, the consistent Christina.

Christine Let's talk about next year, you've got two drivers both under contract. There was a question mark over one of them checkout the.

The drivers you have in the cards in the coming weekend and they're going to be the same two next year.

Are there any people to keep it in the other question market you guys keep replacing that check is going to drive up.

Next year and you've had a tough.

Plus six weeks, but it's not it's a refund is all Michael the rate driven and Sao Paulo was very strong as breakthrough in Austin was strong and <unk>.

He's finding a former Guinea second in the World Championship. These.

Yes over 30 points ahead of Lewis Hamilton with two races.

So let's see what you can do over these next couple of races, but he will be our driver alongside Max.

In 2020, so as a team you expected Max to help them secure that second position or does he have to do this only side.

Well I don't think I don't think it will need the outflow Max to be honest with you I think you just need to finish either ahead or just behind Louis. This we can secure that that second position I think we're treating these remaining races as top finals and that's how we've operated since winning the championship fee rates is going to harm each rate holds huge.

Born to Austin, so rates in Vegas.

We have a phenomenal thing and we're going to be chasing.

Plenty of victory of the year that for sure.

It's just very microphones for the rates on to celebrate my 50 at birth.

Okay.

Christian you want to answer it.

Happy birthday is fantastic.

Congratulations on an absolutely dominant stage and it's just been phenomenal say play out all year and thank you all saw Kristen to you and the team for being a fantastic partner with this program over the last few months as well Christian hone of that same principle as CEO of Oracle Red Bull racing Teekay, absolutely dominant I wasn't like into Las Vegas, and at 10 P. M P.

<unk> time, one am our time with the danger of moving sideways on ice as he said this is not a normal rate at the time.

The grip you're going to be interesting to see returning to market equities right now just about positive.

Okay.

Okay.

Yes.

You need to be comfortable with the fact that if the market comes in 10 or 15% that you are a buyer of the deaths. So quiet in the market is a reflection of stability in the multiple instability and profit given the setup into year end. We can expect some kind of Santa Claus rally theres going to be slower, but I don't think were adult go into global recession, the problem a soft landing.

Session might look the same for a very short period of time. This is Bloomberg surveillance with Tom gave Jonathan barrel and Lisa Abramowitz.

Good morning, everyone, Jonathan Fair, Lisa Ramos, and Tom Cana on radio and television Inc's yesterday Brahmo upfront on a 30 year auction forget about it futures up nine green on the screen and I'm going to get a 14% that was a one day upset Joe you're saying that's a one day I'm looking at the screen right now.

Be it that we have to talk about that one day upset the one two punch to sentiment in the last 24 at one P. M. Sloppy auction two P. M Chairman Powell, let's push chairman power to one side and focus on that off yeah. He's behind the U S equity market rally if the previous eight days watch it inspired by this move in the bond market yields down from 5% to a breaker for 50.

Spilt yesterday by a long and auction 30 year bond some come into market price much much higher and yet the way the market was trading spooked a lot of pay legitimate news yesterday, we had wanted to I'm gonna have triggered that gloom hat trick of angst out there we've looked at the Bloomberg reporting the Chinese bank or at least help me or which of them.

These are 30 year auction that you nailed or the power comments move the market to me it was the Paul comments.

A confluence of events. It was an auction that made people feel uneasy about what the drivers were of the volatility of where the virus where and at what price point and then there was a fed chair Jay Powell, who came out with a different tone than people had expected at least based on last week's press conference Here's the issue and I'll go back to what Kathy Challenge is talking about volatility is here to stay.

That's what she said her words, if that's the case what is stocks deal is this sort of an acceptable level of volatility in treasuries, where stocks Qatar to ignore them. Our treasury is going to be whip sign.

<unk> action for the foreseeable future I'm going to go to the <unk>.

Foreseeable future Wednesday, I'm, sorry, it's a CPI report more data more retail sales next week.

Economic data this week, John maybe a lot to do with the need to look at this to the Canada Wednesday November 15th precedent binding precedent. She set for me on the sidelines of the APEC Summit just confirmed in San Francisco T leaders, who have not spoken stumps since the G 20 summit.

Last year on the agenda AI Fentanyl military communications on the agenda for the President of United States now, let's go back to a morning consult pull together with Bloomberg that we released in the last 24 hours on swing States in America for 2020 for election, Tom just 1% said U S. China relations with our most important issue.

1%.

Pulp lately take the point and again reporting has been wonderful on this when the Benjamin.

I thought gave perspective, its domestic issues and yet that Paul confronts the geopolitics of the moment and Lisa It wasn't one thing like China. It's 567 things that are in November distraction. Yes. There is a question of what crossover there is from National Securities. Some of these other issues right I mean, there's a lot of intertwining of these issues when you talk.

About border security and other things I will say notable that president Biden is doubling down on the international even as some of the polling is saying hey people are focused on the domestic more I'm going to get the syndrome due to check because no. One else is talking about it three or four days in a row, even with UA to speaking Euro yen tells me challenge.

<unk> and <unk> in Japan, I'll be looking Sunday evening, you'll be you.

Youll be.

Come on.

Youre going to be you're going to be out socializing in Manhattan. If you ever claimed back terminal you can buy a may on Sunday afternoon, and Youll see a green dot and you'll see a red Dot next year no doubt about it equities on the S&P 500 look like this on the S&P, we looked like Bob with positive zero point Stover.

But a couple of basis points for 60, Tom The rally back you can forget yesterday for AC.

That was very good.

But oil we've got had mentioned it quickly come up to $76 a barrel that's an underpinning to the market of this talk of enduring Disinflation also an associated favorites wound that term you get a break if you cannot brand get a breaker for fifth taken on a 10 year I wonder if that conversation about slower growth global scale next year do you have to get away from the ambiguity is the end of the weekend.

Senior Vice President of ambiguity barrel and Bank of America Private Bank, Joe Quinlan joins US right now perfect voice to speak to as we recalibrate into the end of the year, So equivalent and what are you doing in asset allocation, let's start with cash I've got it in the money market fund, making 8% am I over cash.

Cash right now.

Not really.

I just got back from the Midwest talking to a lot of our clients. They are happy to be in cash because they are worried about the election. They worry about the geopolitics, but from our perspective to take the cash will be ready to lean into equities gets a shopping list ready to rebuild over the first half maybe first quarter of 2024. So cash is okay now.

Long term returns comparable equity, which sector are you going to lean into let's start large isn't growth or value that will drive us out 24 months.

The sector specifics really energy health care, we still like technology on any pullback you have to own technology. It should be a core holding where long defense cyber security just that youll politics, the reality of the world. So whether it's a mix of growth and value large cap leaders in these various sectors, Joe just on cyber security that.

ICP story's got a ton of attention in the last day or so sending a USB stick around Manhattan to clear Treasury trades. After this attack by locked bit suspect it to be locked anywhere criminal gangs with ties to Russia, Joe how much money is being spent on that area on wall Street for financials and companies all across the country.

John when you add it up it's billions of dollars billions of dollars of Big banks, we've got to move it into the regional banks health care you name it hospitals.

Fortunately, it's a growth industry cyber security.

We don't talk about you can see the images from the middle East, it's right in front of us, but the cyber security, it's invisible, but it's very active and just as dangerous in terms of the overall level of economic activity. So that unfortunately is a growth industry as well across various sectors and I think both stories that you want to be attached to the growth story of divorce from the <unk>.

Michael.

I think other growth stories.

Like the hard assets, we like the infrastructure story, we've seen a little pullback renewable spending, but I think we're on the cost of a kind of a manufacturing construction build out that's going to extend well into 25% to 26. So we're telling clients. These big industrial names right. It's too early to go cyclically industrials banana.

Pull back on any type of.

Type a day, where you can get a good company to cheaper level price to it. So that's what we're seeing here. So Joe how much of your time do you spend talking to clients and saying exactly just said that long term returns come from equities, regardless of the day to day fluctuations in bonds, just ignore that it is becoming noise.

At least it quite a bit because they are worried about the middle east are worried about the election I'm amazed how many clients wanted to talk about the election now so we're going to be exhausted a year out so well.

We're having that conversation, but really since $19 45 to 2022.

Annual average compound returns of the S&P 500 or over 11% because we've got a great private sector. So I know everyone loves cash at 5% plus but when you look at the long term returns of U S. Equities. The S&P 500, it's double so that's the point, we keep pounding home to investors. So when you have these pullbacks you step.

And you buy quality the pullbacks have come on the heels of yields going higher and this I think has been a part of what's been speaking a lot of people is that yes. There was 11% compounded annual return since 1945 came on the heels of a pretty massive bond market rally that fuels a lot of the gains at least over the past 40 years and suddenly we might be setting.

Up for a very different scenario does that matter to you how much do you se ultimately it doesn't matter because the private sector will remain strong.

Little bit of both the private sector is going to be the private sector, but remember Lisa.

We had zero interest rates, we have very low interest rates, we had a 10 year yield below 1% that was the anomaly where going back to normalization. So we get a 10 year yield at 4% four and a half in that range, we get a mortgage 30 year mortgage rate back at say, 656% that's normalization.

So we're normalizing at a healthier level actually in terms of cost of capital, which is going to help set the foundation for more growth more earnings more upside for U S equities Joe.

It's November and I'm going to quote unquote window dress out to the end of the year, telling me about the quinlan window dressing how far behind on Big Tech is institutional Wall Street.

Many of Misfit, we saw last year tech get crushed so a lot of people like I said I'm not touching this and so we saw the missed the rally in the <unk>.

General not just tech, but in general so, but I think people are realizing that a core holding for portfolios is technology the digital economy, the cyber security risks.

High resolution and you add it all up everything leads the technology and we are United States. The big seven whatever another companies where the leaders. So you want to have that as a core portfolio are holding so U S over the rest of the world for UGI.

Still John Unfortunately, I mean, we're looking at flows coming in from overseas, everyone wants to own U S. Everyone wants to come to the U S. So it's still that type of world. We don't want to be so U S centric, but all low all roads when it comes to innovation productivity and leading global growth.

I'd say youre not lonely on that point, Joe. Thank you Sergio Quinn and I have Marilyn Banc of America private bank. The latest on the International front I think China would like some of those flights, let's put it that way getting confirmation just moments ago that binds <unk> set to meet November 15th on the sidelines at the APEC summit laser the first conversation between the two leaders so far.

This year it wont be anticipated, but simultaneously played down by this white houses, it's going to deliver any kind of breakthrough anytime soon I think a lot of people have that doubts expectations are incredibly low and yet people I think framing this as just having a discussion for the first time between these two leaders in at least a year is a good sign of softening tied I got it.

Say it comes at a time, where there's a lot of speculation that China's behind.

And increasingly tight ring with Iran, and Russia, and China. All the names that are kind of put together around some of the geopolitics that if there is a dialogue between <unk> <unk> and president Biden a lot of people are saying just that alone might be a good so I wonder if it's a meeting of complexity.

Simplicity I don't have a strong opinion on that it will be fascinating to see if they stay on first ordered nice cities or are they actually dig into DTE.

Details I could tell you what's on the agenda. According to the officials who brief report is on condition of anonymity on the agenda. The ministry round issues involving artificial intelligence fentanyl and detained Americans in China. The latest report inherit blue impact. If you want just shown in this walk them through the program equities on the S&P 500 positive by zero point.

3%.

A little bit lower by three basis points for 50 944, it's acquire into the week potentially laser potentially gone into the weekend I love watching pre market trading activity and then just seeing how different it is at about two PM in the afternoon. It completely changes on a time at very mile can and it has so to me the conviction here.

Really has to come from either long term are all short term following certain momentum honestly to me. It was so interesting you have Cathy Jones, saying that bond volatility is here to stay and give Joe Quinlan say ignore it all that basically just buy stocks bonds are noise and it's obviously going to keep doing well because that's what they've had.

Six years and if its out so I'm just Blaine heck.

Yeah.

Is there anything to me, it's going to be faster than it based on the Bloomberg reporting and it's not just out of New York John get off the calendar. It is November 10, I believe a week from now we're going to enjoy a government shutdown.

I want to talk and recorded a seven day count the normally it's like I said, we need a countdown clock the government shutdown and usually this is the number one topic now it's Barry behind seven stories, because we've had this story 70 timescale, yeah totally disinterest to it but yes im with you.

Keep it up the headlines out there the Baidu administration shutdown.

Planning call was held on Thursday.

Yeah.

No.

Looks like it's a conference call.

100 people on it I might just coming up next so we can catch that Macquarie. She's on the Korea talking about what they can do what they can get ready for head of that shutdown she's not just in case anyone ever beliefs.

Stuffed teekay is talking about equity features on the S&P 500 positive Eva 0.3% live from New York Good morning.

[music].

Okay.

Okay.

Yes.

Sure.

Okay.

The United States has no desire to decouple from China.

<unk> separation of how economies would be economically disastrous for both of our countries and for the world.

We see a healthy economic relationship with China.

Both countries over time.

Secretary Janet Yellen speaking in a meeting with the Chinese Vice Premier in San Francisco. This is president of <unk> and is set to meet with Chinese President XI Jinping on November 15th Tom We don't want to decouple.

To diversify the capital has become this word that no one wants to use anymore can't say that I don't even think I want to say de risk they want to say things like diversifying.

Language of AGA suddenly go to Catharine men over the bank of England with Michel Rosenberg here, Bloomberg really codify the dysfunction of the relationship and the key phrase I use is not decouple, but our co dependency and maybe the question in San Francisco is how much does China need our commercial business.

To me that with the executives meeting.

Got back to the foreign direct investments that the data that came in generation Dunning negative. So we've been talking about this charm offensive that China. Ultimately official was the need to go on a bit of a charm offensive here and to provide U S latest with some clarity because tell me if you're making a 10 year 15 year investment in a country you want some form of predictable.

Predictable visit we call dead, Hong Kong something stable.

I will always say speaking of Lord Patten the day of the end of Hong Kong is in tears.

In the interview and its just simple as that look at the facts and the observation that we've seen and that's where you get this true bipartisan approach to this important meeting out of Washington, It looks like Bioscience once accounting standards, let's put it that way.

So I'd be surprised if we got anything about that in the next week.

We'll say, we'll have to see joining us now Emory heart and our Bloomberg, Washington correspondent and I guess, we can tilt towards meeting with China and linking into the pull today and I mentioned this earlier, but let's do it with China with this important meeting on the 15th does anybody really care about foreign policy or is that the province of <unk>.

Like you.

Well the part of the United States, certainly does and it means you have to use a lot of capital on it I mean these are things potentially are not top of mind for the American people, but the president is also dealing with issues that necessarily didn't run on.

He has to deal with obviously two massive complex happening right now in the World, Russia invasion of Ukraine, Whats going on in the conference in Israel and Hamas We should note when you look at China. It is.

Not just this concern about economics are potentially whether or not what the future holds for China.

Are they going to invade Taiwan, but the fact of the matter is I think in China on opposite ends of both of these complex power struggle right right now and I think that is why the global community, even if Americans aren't paying attention to it leaders around the world want to see these two countries, even though Jonathan said earlier, there really is no deliverable, but they want to see that.

Dialogue between President Joe Biden MRE.

Maury I believe the president of China will fly back and the government wont be shut down two days later as the president of the United States going to fly across the country to a November 17th shutdown.

Well I guess, that's why she hang paying has his central planning.

Well listen President Biden should be back in time for this deadline remember the government shuts down 12, all one.

Saturday November 18th morning, So they have all of next week to figure out potentially we're going to get a text before this weekend or at least by before the end of the weekend, it's up about what speaker, Mike Johnson plans to do when it comes to keeping the government opened is it going to be a clean CR and slowdown potentially.

Art, a continue resolution to keep the <unk>.

Government funded till next January January 15th or April 15th or Theres going to be this latter approach like some lawmakers I talked to are struggling to even understand what that means but basically having multiple fiscal cliffs, keeping some agencies open and having different due date, but we'll see how the Republican plan in the house of Representatives.

This through I think Jonathan is that he does not want to shut down but remember this is what cost speaker, Kevin Mccarthy is job <unk>.

I wanted to check on what we're looking at internationally with respect to this agent paying precedent Biden meeting you were talking about how some of the conflicts in Ukraine as long as the Hamartia Israel War.

Heightened awareness of an increasing closeness with China.

And Russia, and Iran. How realistic how close are some of these ties becoming as these conflicts escalate.

Well I think these ties are very close I mean look at the drones that Russia is using in Ukraine, Russia hydrants coming from Iran. And this is something that the administration want to put a lot of pressure to stop China and Shanghai Tang has a lot of power in the conflicts. He can really put his thumb on the scale and put some weight and pressure.

I'm, President Putin and Iran to honestly.

Hold back and end to end to stop some of this but China for the most part has said some of the right things in public not I'll remember it took them Dave I don't even know if they fully come out and said it is explicitly to condemn Hamas is horrific massacre on October 7th but Iran.

Of course is getting a lot of cheap fossil fuels at the moment.

Right now theyre getting tons of Kurt from Iran, and Theyre getting basically Russia, so ones that Denis has become a penal colony for Xinjiang Peng and his fossil fuels and Theyre hoarding Harvey fossil fuels from Russia and Iran.

China has a lot of stakes in this as does the United States. One thing we should look forward to analyst meeting, which will all be going in covering this remember they haven't spoken since the last <unk> 20 in Bali. This time, we're going to San Francisco is military.

Military to military engagement that was absolutely cut off when speaker Nancy Pelosi made that trip to Taiwan in August of 2022 of my question is who is Lloyd Austin counterpart at this moment, China has yet to two loans and one after Lee Siang food without it.

In a sense and Murray of how much the geopolitics really is going to dominate yesterday its other issues at play, but how much some of these escalating conflicts and the tit for tat that you're talking about in South Asia C really will be at the crux of what they are dealing with.

Well I think it's going to be a slew of issues right now is going to come up I was looking at some of the Sentinel data and the depth of the United States and everyone, especially Republicans have been pointing to China at this number one influence when it comes to fighting on the United States. They have increased every year over the past decade, and I believe it was last year that is.

Mostly seeing tripling the prior three years. So this is a huge concern and that's showing up in our poll right more Americans want to say eight to the U S southern border than say potentially aid going to Ukraine. So obviously.

Obviously economic cores in the military to military engagement and what is going on right now in these two power shovels in Ukraine and Israel. These will definitely be top of the agenda and I think you just down in Washington D C with Emory automates it between the two latest United States and China, respectively next week, let's say on China what.

Was it for the Chinese economy. This year, we were meant to have this reopening boom.

It didn't happen take a look at the luxury players now year to date reached months getting hammered today, it's down by about 5% to 6% at the moment itself session lowest but ultimately it's down double digits on the year yet to date.

The amount in spring, we were talking about a boom for luxury European luxury RV MH is now up yet that item by one percentage 0.1 with basically wiped out all of the gains for the year on Alpha M. H T. K. This luxury story has not materialized the way people thought it would in 2023 and I take a broader I mean this is a China.

Two it clearly, but I would take a broader into retail sales that we see next week is 70% of the economy, we all know that statistic, but.

I'm going to just dragged luxury down to the broader middle class and even down to the basics of big box retail mystery lets others to it and it's more of a mystery in China than it is in the U S. Because in the U S. The savings and the fiscal impulse kept people spending at a past pay at a pace that has surprised.

Everyone in China, the reluctance to spend even when people have money I think has surprised people they have savings, but they don't want to spend it because there isn't the confidence the economy and the same kind of way.

I'll have underestimated that towards significant someone like China beige book would say it is about just that their confidence in the only conduit. They have which is the property sector separate John from what <unk> does on the Bund in Shanghai, our restaurants had a difficult quarter looking out softer demand for watches Cartier.

I'm, a chartered on a daily basis.

They have Cartier house, Kurt you spotted coming out of a certain store they've got to turn orange with an orange back different different brands and I asked I've actually got some.

Someone sent it to me.

What is it with watches I mean, the idea that somebody wants to buy $30000 on the Rs.

Got a simple yes.

That's a simple like that's a very different conversation so just having.

You're someone who really have masked the workmanship.

So.

I got a swatch and it works.

There's no way you've ever had a slide no way from New York.

Perfect.

Yeah.

Okay.

Okay.

Sure.

Bloomberg surveillance off of the tragedy of yesterday, we look at futures up 13, Dow futures up 106, VIX threatening a 14 level, we go to Alicia <unk> 14 coverage.

Gloomier.

Well you know Lincoln, maybe I'll come back I mean this is basically the issue is that people are trying to fumble around different levels I keep going back to Joe Quinlan, saying, it's getting kind of things just ignore it and just stick with stocks at how many people are going to coalesce around that or is it just a good feeling of that banner that we just talked to and recorded about the president of the United States.

We will meet with the President of China, That's germane to me seem to think that that's giving people confidence to go into risk assets. It takes to fear. It takes one level of fear away and not saying of confidence that's overselling it but.

It's a good take this morning as well Jonathan fair in preparation for I don't know what to show you is doing a real yield he's doing a deal. So we can all afternoon.

Deanna Petersen coming up here again, the futures up 12, but right now this is important down at the.

Honor of Ken Rogoff, the shock Potluck annual research conference at the IMF, Michael Mckee was holding the door for Jerome.

Yes, we're not going to.

Yeah.

Good morning, Mike.

Years and years of doing this and we're not going to go through the litany of Michael Mckee stories, it's the biggest risk for all of these people that drifted off.

Everybody in public life.

It goes through that at one point or another and you want to make sure you don't say, it's the most famous of all was Ronald Reagan when he was joking around and said we begin bombing in five minutes.

And that went out over a live mic.

That caused some consternation around the world, let's talk about the constant issue. We saw yesterday in our data dependency to next week's inflation report does next week's inflation report cure all if it shows a disinflationary tendency probably makes.

Things are a little less volatile for a while put it that way, it's kind of hard to know with everything going on in the world, where you want to end up and I noticed that several bond market strategists are saying one thing you don't want to go long into the weekend, because nobody knows what will happen over the weekend.

But.

The basically Powell.

Ride to push back to where he was the day before the fed meeting or right. After the fed statement came out when everybody was taking that is relatively hawkish isn't as press conferences. So often happens turned out to be more dovish for people and they started pricing in rate cuts.

But.

Whether he is going to be effective at holding that it's hard to say when you look at where the.

Bond yields are today, Okay. We talk all the time, but in reality, how often do you fed officials look at the bond market and then calibrate their discussion points around what they see their well very rarely as.

As long as trades aren't failing their they realize that markets go up and markets go down and there isn't always logic to what's happening and.

So they're not going to get too overly concerned they look at the fed funds futures and they know those can change on a dime, but next Wednesday at 830 in the morning, we get CPI and then.

Who knows where yields could be so.

The fed looks at this stuff and it's like we can't control that we can't do anything about it we were talking about Andrew Hahn horse with Citigroup cutting out earlier today and he was one of the people, saying earlier this year. He expected the fed to hike one more time now he's not and now we think the bar to hike again.

<unk> high and at a time when we do see signs of a slowdown, particularly in the employment data do you agree with that do you think all things being equal the fed is essentially done unless something catastrophic happens.

Or incredible.

And that they are more willing to cut rates.

That last that last phrase there would be where I would disagree.

I think the idea of infinite.

Is not necessarily true I think the bar is higher for another rate increase but it is not as high as the bar for a rate cut at this point the fed accepts the idea that as interest rates stay high and inflation goes down in theory, if inflation goes down that real rates.

Rise and they may want to back off a little bit to keep essentially the same amount of tightness in the market, but they don't know when that's going to happen because they do anticipate and I think Jay Paul said this yesterday the last percentage point Delta.

From three to two is going to be really hard and therefore, they need to keep the pressure on it and so they're not going to put any kind of data on it at this point and they don't want the market's doing that so they're staying away from the rate cut part.

One quick question in the Zeitgeist. This weekend is this summer or this is Claudia Assam who's been a moment supporter.

What we've done she is trying to game recession. She has been extremely clear about what her data says within her equation are we anywhere near a recession based on some rule or any other mchugh measurement not based on the Som rule at this point of interest if unemployment continues to go up you could see that.

But right now she points out you have to go basically 50 basis points higher than where only 30 basis right. So you've got some room between now and then and she also thinks because this has been such an unusual recovery that may be the rule would apply this time that you changed the rules as you look at the rule changed the rules, yes sounds like.

English Premier League Soccer, Michael Mckee. Thank you so much with a brief window and importantly next week on inflation and in retail sales and for that brief wonderfully poses positioned I'll say at the conference Board their chief Economist Dana Peterson.

As consumer America, how are we into the retail sales report next week.

Interesting thing is that consumers continue to complain about life are they're very concerned about inflation, particularly high food and energy prices theyre, saying that interest rates are too high it's impacting their ability to buy homes and they're also more concerned about geopolitics and the state of Washington, So with all of that consumers are saying they are concerned about their future.

As in incomes and EBIT job availability I love that we're going to have a.

Segment about feelings ahead of the feeling survey that we get out of the University of Michigan sentiment survey that we get out at 10 a M.

Closely related our people's feelings with their doings with what they actually are buying.

Well the interesting thing is that when we look at current conditions consumers are still purchasing things, but theyre, putting it on their credit cards. Just earlier. This week, we received data from the New York Fed that shows that credit card use is still up it's rising and also solar delinquencies in delinquencies for credit cards auto loans that even other loans are now.

Slightly above the 2019 level, so consumers have run out of that access savings, especially at the lower end of the income spectrum and they're shifting to very expensive debt to finance their purchases is theres. Some correlation historically between a downturn in sentiment and a recession and the labor market and some of these other.

Indicators that are more closely followed by people at the fed and beyond.

Well, if you look at the consumer confidence index. It almost never tells you what's going to happen with consumption in the GDP nipper data, but it does give you a sense of how consumers are feeling and if they start worrying about the future, especially jobs and business conditions. It oftentimes pre stage is something negative.

Now, we do have a new indicator and a consumer confidence survey and we asked them outright do you expect a recession at some point over the next 12 months now those expectations have eased, but it's still 69%.

Consumers say that there is going to be a recession well, let me go right. There Dana I think thats really really valid and all the work you did all the economic history, you did at Wesleyan, which leads on economic history is there any any ability to pick and call a recession.

Well, we do have our leading indicator and it's usually pretty good at signaling recessions now it's been negative for 18 months and it's been signaling recession for quite some time.

But the thing is that it doesn't have much in the way of services and we know services spending has been very strong and that's a product of the shifting in demand post pandemic less on goods more in services and so it may not be telling the entire story. So we're definitely watching other measures of services, absolutely brilliant and our basic idea here.

And this is important and a question to Dana Peterson is that okay. If it's a services America.

It's the kind of services America, which we really don't understand it can we actually utilized Friedman from David Friedman could be your great grandfather.

Can we utilize Friedman from 1950, whatever I'm wrong in variable lags can we actually.

Have that can seat.

Well I think longer variable lags are very relevant when we look at monetary policy hits the economy at different points in time, so higher interest rates are definitely subdued the housing market and I think when we look at the GDP data from the third quarter businesses are getting bitten by the higher cost of capital now. The next thing is consumers and certainly in.

Our survey as I said, they are complaining about higher interest rates and certainly that's going to start affecting consumers when they have to start paying those elevated credit bills.

At those very high interest rates, how political our people feelings.

Well, we don't have and we don't ask them like how do you feel politically, but we do ask them, what they're worried about and more of them are saying, they're concerned about geopolitics and also what's going on in Washington, but we really should look to see what happens in elections to get a good sense of how consumers feel and we just had one this past week.

The reason why I ask this is because there've been a number of surveys showing big divides the sentiment among different voters based on specific issues and how theyre being portrayed in certain circles I'm just wondering whether that's become a more polarizing factor in some of the sentiment surveys.

In recent years or whether it's always been that way.

Well when you look at some of our well one of our competitors. So they actually do ask people about.

How they feel by political party and it's usually the case that whatever parties and power those felt folks usually feel better.

Dan.

The other party is there depending upon their political affiliation so.

Not really great measure because if your guys in the White house and we feel good about it Dana. Thank you so much Dana Peterson terrific briefly on the data that we look for next week. She is with the conference.

I think things are so topsy turvy right now and I mentioned this we're seven days out from a government shutdown nobody cares I don't care what.

Gordon says in the idea that yeah, we have a huge data next week and Nobody's really talking about it I love that you say that Anne Marie was trying to make us care about the government shutdown. When you basically are trying to make her care about it and give us some information about it because we don't really.

Yeah.

Exactly and the reason why people aren't paying attention is because it seems to happen every other month, but youre right I think the CPI data is going to be a really big deal of spend the real outbound deal, especially because of the volatility and the lack of certainty around the trajectory going forward to me the amount of junk Beingness that you get in bond yields and then commensurately.

Risk assets is just keeping everybody a little bit on their toes.

We've got a dearth I'm going to say of holiday shopping micro analysis, not that I have ever paid much attention to it now of 114 points market surging or it's a brahmo rally the VIX 15.02 trying to give us a 14.

It's bringing in 14, the S&P up 14 points standard and Poor's 500 up three tenths of a percent when you talk about the holiday shopping season do you shop right before Thanksgiving is that Youre, saying, if you if you ever waited in line you're looking for a story.

Zoro opens on the morning after Thanksgiving Here's the history in the old days of a more graceful wall Street.

Good work Christmas Eve take.

Take somebody to lunch or late breakfast, whatever Christmas Eve and then you'd begin your shopping.

You begin your shopping.

11, let.

Let me now.

Christmas If you just go in and find something for someone not a lot of planning.

That was the <unk> prescription.

Greg.

Lot of people used to do the before this retail madness that we all invented why is it that we're here today because there are a lot of places that are shut down the day before Veteran's day.

I'm trying to understand what the bond market.

Holly I had the honor of giving a speech at the New York Stock exchange about this the oddities of when we trade stocks is comical like were off good Friday.

Not off choose your major Jewish holiday and I find that just.

<unk> non modern I think that's almost from a 19th century and you have it here with veterans day, which for the people that served I did not but for the people that served I'm. Sorry. This is an important day to remember one and there will be a moment of silence I believe at 920.

Well I believe that later on this morning.

On our other veterans day is an important holiday to me the sort of confusion around what it is.

There's 35 days left in the year and I've got 40 days of vacation so.

Yeah David.

Yes.

Wherever Sonya Maskin BN watermelon, we'll do that here in a moment market's rally futures up 15, Bloomberg surveillance from New York.

Okay.

Okay.

The fed is moving off center space. The fed is going to have much less of an influence on where rates go from here, but unfortunately that doesn't mean that the volatile David is going to go away why is the fed done because they're going to get the air cover from headline inflation coming down very rapidly. So even though core inflation is going to be.

Sluggish, they're going to get air cover.

Headline inflation that was Mohammed El area in Bloomberg opinion columnist and Queens College, Cambridge, President speaking, which I'm fairly yesterday at a time when many people are expecting the volatility in treasuries to continue regardless of what the fed does John Toth preparing for that night am hour time came here at least a problem like as we head toward the opening bell.

With a lift of Tom Keane strikes to the S&P futures of four tenths of a percent.

Please continue.

The biggest sort of 15 come on $14 95, that's because of the 30 year bond.

Okay. So this is the question does it stick or not I do before we wanted to get to our next wonderful gas. So do you want to just give you a sense of one share moving this morning <unk>. In addition to reach smaller we're talking about response earlier. This was to watch maker, but <unk>, which is the parent company to Johnnie Walker and sprint.

Those shares plunging the most on record after cutting the outlook.

With the head of the company is saying that there are materially weaker performances in Latin America, and the Caribbean is a huge huge deal theres any number of ways of looking at this and if you go to Lv image. The singular disappointment for LVL image was of all things Cognac sales in America and in the fancy Luke.

I'm not an expert at this but in the fancy liquor part of the luxury business I think creators the option. The operative word right now well do you think that this is.

Traffic to the liquor market or is it something that people are moving more to craft, our two specialty things, which might be a trend or do you think that this is actually indicative of luxury demand I mean that to me is one of the key questions with the two pronged spirits and watches I mean, I'm going to make this up I'm going to deal with are wonderful people in London, who are expert at this.

The bottom line.

I think there was a pandemic acquisition.

Lisa maybe you you don't down a bottle of cognac in one night.

I just don't think that's the way it works.

Bought in and log in variable lag here.

Look at the code argued.

Arguably about Lago variable lag during the pandemic with less let's move on now joining.

Joining us.

Good.

MACRA NY melon investment management, as we head into a potentially volatile week next week.

It off with some of that retail spending do we have a sense just sort of sticking with luxury of how much some of the warnings that we're hearing of spirits and India.

What's making stocks indicate something broader.

It's tough to say I would point out that these are items that our very popular during the pandemic. They may be subject to an ongoing with ourselves some longer variable lags that you guys just mentioned.

But that said I'm those are just a couple of sectors that certainly others that are doing much better you take a more cautious view here.

If you capitulated from a more hard landing of more stride in 2024.

Is that back or do you stand with a cautious view on disinflation well here's the thing.

He has been a pretty sanguine on the probability of a soft landing for at least a couple of months now we don't really believe that has changed very much but we still also believe that the tails of the distribution remains softer than usual and we do think that heading into 2024, well can we get a delayed by hardware.

Landing, you've got but I love what you say you are in your research you call. It a slam on the brakes 2024, how does the central Bank is visible is the fed quote unquote slam on the brakes, well we know all believe the fed is done what if inflation stays sticky and employ that it stays chalk theyre trying to thread the needle now.

Or is that not only will inflation stay sticky employment might actually weakened considerably what if that doesn't happen in a front of Miss was Jim Bianco of Chicago, who was one of the first people to say to me what you're saying here was okay celebration and then we'd go level. That's what regards talking about legal level, we don't keep going down.

The gas the range of potential outcomes is sort of shocking to me and the fact that we've got some people on saying exactly what you are saying the risk of accelerating inflation and growth is really significant and other people are saying, we're going to head toward a hard landing and rates are going to go near where they were before I sort of as a benchmark rate at with inflation just highlights why youre seeing ping pong and yields.

Because nobody can fake your it out what will be your guide to understand when that risk shift and becomes a little more visible in terms of which of those two extremes. We end up with I think in terms of the economic data specifically, it's important to watch what happens with the potentially stickier components in the early 2024, we know that.

Some areas such as rent inflation medical care. There there are some dynamics there, they're just kind of base effect.

How will that play out in 2024 once those Wayne are important and also what happens with the participation rate and with employment gains because a lot like we discussed here a lot of their participation games have been helpful. In the <unk>.

To contain some of the wage growth, but it's mostly come from foreign born workers will that continue in 2024 and do you have a sense of whether it's a long and variable lags are just very long or whether they've already been baked in a little bit more than people previously expected right. I mean this has been one of the also big debates and chair Powell talks about this yesterday.

He said it has been perpetually surprising how strong this economy is given how much tightening we have done have we gotten any clarity on that whatsoever. I think that's the bigger corporates that have refinanced early during COVID-19 I still doing very well by and large the smaller businesses are suffering more and but for that to percolate into the broader economy may take.

Long time markets in the move right now futures up 19, we're going to print 'twenty here and standard and poors futures or four tenths of a percent DAU up 144, I didn't do a fancy fibonacci here, but we're basically 50% back to where we were before the carnage yesterday, the VIX leases stunning 14.88 to 10 year in a solid five basis I'm glad you brought.

That up because we've seen this incredible volatility, particularly in benchmark phosphate and credit yields does that affect the economic outlook in a material way it could but over time, because it does affect top corporate refinance themselves the bigger the refinancing needs Fitbit care the impact and I do think that that's going to be a theme into 2024.

The formulas work right now does the math work right now or are we just making this up post pandemic as we go so Danny Peterson, who is on here before I made it very good point, the leading indicators are mostly predicated on the good secretary not services and the Big question right now is more in services.

Well the services inflation remains sticky with employment answer so retail sales next week, that's a services view.

Even though we are buying goods.

I think it's both I think its both.

But that to me highlights why this has been such a difficult period to get your hand around.

I remember earlier this year, we were talking about a rolling recession in different industries that we're going to get worked out different time and there was just a question of whether we would see some coalescing around some downturn or some recovery where are we in that sort of revolving chain of economic cycles. So it doesn't seem to be coming together well.

Well it may be a longer cycle than we'd anticipated it sounds like at least through the end of the year. We're looking at still a pretty robust economy with potentially some gentle decelerating there could be welcome 2024, it's really the bigger question I got it I got a chart here the VIX too quick to make it for TV Radio and this chart looks great on radio and I've got a double.

Like VIX move yesterday, Lisa we just made back all of the Powell comments move and now we attack the 30 year.

Right I mean, this has been the volatility with people trying to get a handle on how much to have faith just quickly Sonya youre, saying next year, it's going to be when we see this massive deceleration.

The lack of conviction around that though it's shocking how much conviction do you have that we're going to see a real drop off and potentially downturn I think people do expect some deceleration and potentially a bigger one than is currently priced bench, but I do think the big issue here is timing because it's so difficult to time. It is also difficult to pricing.

So when you think if someone for the brief here on a Friday Sonya, Michigan was being why Mellon.

With some really good overview of getting into the data.

Lisa you talked about Whiplash whipsaw I mean this is seriously.

The auction from 12 noon yesterday, let's call. It 21 hours I guess, you nailed the optimism that would be coming out today and that it was all over so.

Borrowing from whom I, Brian from Andrew homeowners, Jan Hatzius, and many others some things in the air.

Not me that's what the holiday.

Well no there was something in the air I, let Michael Hartnett over a bank of America, I said that we've gotten from Paris to football.

Pretty shortly.

Of just you know green taking over our fear in a massive way and a lot of people are taking lean into it and embrace it because you know we only have so many months.

Months left we will see three clear thank.

Thank you to all of you for John Faros interview with Christian corner, we're going to lead with a Monday joining us on Monday.

Far more troubled leader of Formula one dealing with a difficult car. It also sure. Louis total for join US on the six o'clock hour on Monday before the Las Vegas Grand Prix from New York Good morning.

I worry that core inflation is going to approved more sticky than deferred.

We anticipate right now.

Do you think the fed is going to push back on all this chatter about pivots. The fed just can't wait till that inflation work itself out I think the fed solution is.