Jonathan good morning good morning, this is bloomberg surveillance. Alltime highs on the s p 500 and nasdaq 100. You have the data, here comes the fed speak. All on deck following the softer than expected inflation rate. Lisa we have heard hawkish speak even from jay powell saying it hasnt come down as quickly as we would like an the market said we dont believe you and we dont care. Even eight 1 10 of a percent miss in terms of the cpi is enough to bring back the prospect of a september rate cut. Jonathan the rate cut talk simmers into the summer. We had another read on cpi the same day as the next fed decision june 12. Another read in july and another at the end of july. Is that enough time to have the conversation about a rate cut. Annmarie neel said it is unknown in terms of how much downward pressure there is on the economy and that tells me we need to sit here for a while longer. He was Neel Kashkari said it is unknown terms of how much downturn pressure there was on the economy and tells me we need to sit here for a while longer. Lisa yesterday saying 6000, at what point does the fed getting away from the narrative and at this point the weakness is being dismissed. Disinflation is baked in and it doesnt matter what fed officials say, the key question will be how much is it dependent on fed rate cuts at all or not a reacceleration of inflation. Jonathan the fed chair has retained this faster cut rates regardless of what happens with Economic Data. The question we have is was it q or inflation data. It is not just about inflation but retail sales coming in softer than expected. In an hour, we will get the numbers. Annmarie we are seeing weakness in the retail sales number but in consumer sentiment. Home depot softer. People starting to defer some of the big projects they want to take on. What are Everyday Americans at buying and not and are they stopping for the big ticket items. Jonathan walmart positive by 0. 8 . June 27, september 10, abc. Did we just agree to some debates . Annmarie they did agree to debates and they are going outside the commission and going right to the networks. They want to put it on twitter and some people say they take the under. There are some that are skeptical that donald trump and joe biden will show up. Jonathan they want the option to cut off microphones as well. Lisa that is the point of the skeptical and people who dont think its going to happen and what happens to the traditional way debates are established. There is trump who says there is one from foxnews and biden saying we dont know about that one. Jonathan any time from any place with conditions. Equity futures on the s p, positive by. 1 on the s p 500. Yields lower by a single basis point. What a turnaround in the bond market over the last month or so. The euro just a little weakness after the weaker dollar, 1. 0870. We will catch up with julie and emmanuelle later. And bloombergs George Ferguson as the doj moves for personal prosecution of boeing. Slowing inflation fueling recordbreaking rally. Julian emanuel saying our base case remains an ongoing correction that ultimately tests the s p 500. The potential for further nearterm upside cannot be eliminated given the economic surprises lie at the exact intersection of goldilocks and too cold. Julian joins us for now. What did you make of it yesterday . Julian the market liked the tick lower in the monthly number and was certainly celebrated. You look at retail sales, the intersection of goldilocks and too cold. If you strip out gasoline, the number would be weaker than the headlines. For us, around the feds activity or lack of activity or whatever their path is leading has certainly driven it but the bottom line is 3. 4 percent cpi, 0 retail sales, other signs of economic weakening, that doesnt say the upside is unlimited as the market is trying to behave. Jonathan this is a record high you want to sell . Julian we want to be tempered about it. What i would say is this, when you are facing a momentum market the likes of which we have, to say that momentum is going to stop on the dime is a very difficult call. We do think this is one of the times. Think about the beginning of march, last summer, when all of the news feels as if nothing can go wrong. That is probably the time to do a little bit of hedging. Lisa which wouldve been six months ago, a while back when people are basically saying things seem like they are priced to perfection. What gets us to 47. 50 . Julian it is the intersection of inflation staying stubborn and if you think about the months coming up, it is not likely the readings are going to get a lot better which is i think why you will probably see today the fed governors come out and talk about counseling patience. The Monetary Policy of the last two years is finally starting to kick in. Lisa you said the equity market is promoting it and some would disagree and say it is promoting the idea that things are going great. The financial conditions matter, could we accelerate inflation on the other end. Why do you disagree . Julian again, this is the fine line. You are going to have annuals in the next few months that will make it seem as if inflation is sticky. The longer term course is the same course we have been on for the last year and that is lower inflation and frankly that is part of the benefit of the slowing economy but it is a gradual process and i think the market is a bit too overenthusiastic about the fact that this is the path to success without bumps. Annmarie you think inflation is coming down and you to say that the rate cuts are not guaranteed. What are you sure thinking now . If what is your thinking now . Julian it is a very fine line. The data does prove it sticky they will have to reconsider and i think that is why you are seeing the narrative come out the way it is. Given the political schedule, it may end up being no cuts this year. Jonathan record highs on the nasdaq and s p 500, small caps participating. What do we do now . Julian i think the case for small caps is interesting. Jonathan why . Julian we have seen this time and again throughout the last decade or two when the enthusiasm around large cap tech gets the way it is and next week will be an interesting time to test that enthusiasm when we get the stars earnings recorded. The discount is extreme, the seasonality around the russell indices is reliable. The sentiment is small caps have been funding short for active managers for two years now. Jonathan the new york fed president speaking, april cpi positive developments is restrictive and we have heard that a few times. You just said maybe no cuts this year and then straight afterwards sent by small caps. What is the relationship between the two . Julian interestingly enough, if you actually dont cut this year, you may in fact hold longerterm yields in stock by remaining with that degree of discipline. When you think about stocks in general, they are much more sensitive to longerterm yields in terms of discounts. Lisa how much is the confusion evaluation story . It is hard to make the argument for small caps if you see inflation a question of where we are between the goldilocks and something more pernicious in terms of a hard landing and not sure what will happen with fed rate cuts. Is the case for small caps valuation . Julian valuation is more important than it has been in quite frankly it is uncomfortable for us to talk about valuation. When you get to these kinds of extremes and theyre not extreme extreme come in y2k, you got to 6300. We dont think that is the case this time that nothing tends to last when you get to the extremes. Lisa is that there is a broadening out and not just with small caps but with the idea that not everything is in a i play. Utilities are an ai plate. How much do you ai play. How much do you ride this out from industry to industry . Julian the comparisons with the internet in the 1990s are apt but to get to full internet adoption over the course of the last 20 years, you had several recessions, several bear markets, it is not a smooth line function. We do think the potential for ai to secularly improve productivity across the entirety of Corporate America is there. Jonathan we will get a bonus round with you. Kit juckes is joining us. He said the lack of conviction and tendency to be led if not by the nose than by each of the major data points makes the choppy markets and not trendy ones. He goes on to say should anyone try to over interpret data be full by random shortterm surprises. You wonder how quickly this conversation can change from data point to data point. Kit juckes around the corner. Here is your bloomberg brief. Dani the slovakian leader were shot in public. The first assassination attempt on the european leader in more than two decades. The 59yearold admitted to the hospital in very serious condition. The police said the gunman had a clear political motivation. He returned to power last year as a force of opposition in brussels. Chinese president xi jinping confirmed the relationship with russia remain strong and told Vladimir Putin the ties between the two nations should last for generations. Putins trip to the nation returns as russia intensifies the war against ukraine. It is said that it is one of the main stabilizing factors in the international arena. U. S. Cpi data accidentally published 30 minutes early yesterday. No obvious sign that the early publication moved markets, but the bureau of labor statistics said it is launching a full investigation. This isnt the first time the data practices have come under scrutiny. A month ago bloomberg reported that a correspondent talked about it and talk with major firms including jp morgan and blackrock. Jonathan it goes without saying that is a problem. We have been joking about it may be leaking a day earlier but maybe it was 30 minutes. Lisa i was thinking why didnt i look at the website earlier. Why didnt anyone catch this . Jonathan because we were staring at the bloomberg terminal for when it should come out. Up next, the fed sitting tight. We probably need to sit here for a while longer to figure out where underlying inflation is headed before we jump to any conclusions. Jonathan you will hear more from julian moore and kit juckes on the others. Live from new york city this morning, good morning. Do you want to close out . Should i . Normally id hold. But. Taking the gains is smart here, right . Feel more confident with stock ratings from j. P. Morgan analysts in the chase app. When youve got a decision to make. The answer is j. P. Morgan wealth management. Smiled with the rising sun discover our newest resort, sandals st. Vincent and the grenadines now open. Visit sandals. Com or call 1800sandals jonathan equities on the s p 500 about unchanged. Yields no on the 10 year, 4. 3342. That the fed sitting tight. Published downward pressure is it putting on the economy . That is an unknown. That tells me we need to sit here a while longer until we figure out where underlying inflation is headed for we jump to any conclusions. Jonathan the minneapolis fed president repeating the fed is likely to hold rates steady for a while longer as investors bring forward rate cut bets. The index fall into a onemonth low with treasuries adding to their advance following the cpi data. Kit juckes joins us for more. You wrote about it this morning the next data point seems to be no trend. Is that what you are replicating this morning, dont get excited about yesterday it could change the next month and the month after . Lisa definite kit definitely in the short run. I think we probably are close to learning the next move the fed will make is a cut and not a hike. So the upside for the dollar is somewhat capped by that. We have had three cpi monthly prince followed by a point prints followed by a wheat free. We have an election coming a point free. It we have an electi coming we have an election coming. Lisa fireworks and the eurodollar cross. Are you explaining why we are not moving out of this any time soon and saying it needs to be a tighter range that people are going to get their faces blown off if they try to do something that is more bold . Kit in my mind, eurodollar is in the 106110 range and i think it goes higher next year. It is almost that bad. The really surprising thing in this sense is that after all the shocks we have had from the macro events, geopolitical events since the beginning of 2020 that the u. S. Economy is having soft landing which i would not have believed possible. We are settling down and really saying, what happens next . Lisa there is a question on the european side saying that was a number of gdp prints coming stronger. Certain regions going that way. How much is that something that could drive strength. It is not just the you u. S. But also overseas. Kit it was pessimistic about europe and it was impossible to think this piece of european news could make things worse and now we are moving to a point where instead of the stagnation we have slow growth and i think the most growth sensitive currencies, the norwegian krone are stands out in kroner stands out. They have leverage on the recovery sentiment. The key for europe will be the German Economy because clearly the situation in ukraine and germany is reluctant on natural gas and clearly heavy industries and the tray position with china are all fairly serious issues and the trade position with china are all fairly serious issues. Went all the news is nothing but bad, it doesnt take much for a currency to go up on the back of slightly better news. Julian the narrative has been that the ecb has been able to give out this declaration of independence from the fed in terms of its own rate cutting cycle. Is there a price on it eurodollar where the declaration of independence has to be amended . Kit not necessarily. Certainly the declaration of independence if we got back under the 2022 low at 95. We only got there on the back of the biggest terms of trade shock in favor of the dollar and negative for the euro since any of us were born. That is a long way away in terms of what the situation is. I think it is solid. Where it gets tested is by the fed hiking while the ecb is easing. If the would have raised rates twice and the ecb would have cut twice at the same time, i think i would go and hide under the sofa for some of the data points. I dont think it is written in stone they have to move step for step. You can see by the yen, you can have big currency moves that dont have a major impact on the economy. The japanese are not getting the kind of economic recovery you would like to see whos currency has lost that much value. Jonathan we noticed the ministry of finance in japan looking at the news and is the worst over for them in the fx market . Kit tell me if we have seen the height in the 10 year notes is the answer. It doesnt feel to me and probably one solid data print that gets us to 160 again. People who have been selling the yen have given back some of their profits but every day they pick up more money from the carry of that trade and volatility is coming back down so trades are getting less expensive. They are getting a period of calm but you wouldnt declare the fight over yet. The basic driver, the huge Interest Rate differential, has not gone away. Jonathan im thinking of going into the weekend as a fan. A tough couple of days for us fans. Lets get numbers from deere, they see 7 billion u. S. , the previous range 7. 5 to 7. 75. The stock is down by close to 6 in early trading. Lisa farm income has been easing in part because prices have been coming down. This is the flipside to disinflation or in some cases outright deflation. It has been a driver of earnings, the idea that we have disinflation not the panacea for some of the industries people were thinking. Jonathan what is your reaction to this one . Julian the agricultural income has been under pressure and not a story well understood when you think of the price of cocoa for example in recent months. Wheat prices have been in a downtrend for months on months and our Analyst Thinks that the ag cycle has to work its way through. Lisa the idea that the shares are lower by 6 tells you something in terms of the reaction function we have seen so far. Any misses we have talked about, are we pricing and potential weakness and we wont see the massive reaction or is this the new normal . Julian this is the Second Quarter running and we would expect that to happen next quarter as well because the stock market has been a market of stocks and not a stock market, very uncorrelated. You will have these individual reactions in extremes and less about, if you get misses like this you will get the reaction but a lot of is positioning. Jonathan and 35 minute you will get walmart. What would you look for from a name like that when they report . Julian it is a generalized state of the consumer and is there any pressure that they are seeing on the low end consumer because that is where the stress has been noted in recent weeks. Jonathan those numbers 35 minutes away. Thank you. Lets turn back to deere, they netted 7 billion u. S. , the re the previous range was 7. 5 to 7. 7 nine. Stop down 6 . They say they are managing the industry level to adapt to the changes and adapt to the business for the future. That stock is negative in early trading. We will talk about a stock that has been negative. George ferguson on the possible criminal prosecution of boeing. That conversation is just around the corner. Walmart numbers 34 minutes away with equity futures positive just about an coming into thursday at record highs. And theyre all coming . Those who are still with us, yes. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. Hi, im tali, and i lost 85 pounds on golo. All my life i struggled with my weight. I tried every diet, and i even had weight loss surgery. But, after complication, i had gained everything back extremely fast. I was unhealthy, miserable and depressed. Following golo, and taking release, i was able to lose weight gradually and keep it off. I wish id started sooner. Dont wait, go straight to golo. Com. Jonathan live from new york, welcome. Equity futures just about positive, alltime highs in the s p 500 and nasdaq for the First Time Since march. We are positive and more weight to the rally up. 1 . To the bond market, what a turnaround we have seen in treasuries. Think about where we were in the front end of the curve, closing out at 4. 7382. Lisa 10 basis points on a 10th of 8 downside miss yesterday, i read note after note and they all had completely different interpretations. Basically the rbc saying it will begin in december. Another says we have seen a stalling out at 3 . Evan has a different take and interpretation. Jonathan they did not everyone has a different take and interpretation. Jonathan they did not play out yesterday. Lisa everything is good news for equity markets and you are talking about hitting that sweet spot that kit juckes was talking about. Jonathan the dollar index having the worst day of the year so far in yesterdays session. Against the euro, 5. 1 . Negative by. 1 . The euro getting close to 109. Lisa sunlight we are in a weakening dollar trend is saying we are caught in this range. Unclear how much you can derive from this but there has been a broader story about exceptionalism broadening out and that is due to the fact that the u. S. Is not alone and creeping outside the country. That is what i am watching. Jonathan kit juckes put it perfectly in is no that we are at the mercy of the next Economic Data point. Anyone can try to over interpret the data and are in danger of full by random shortterm surprises. This is what we have been warned about by Mohamed Elerian. Seven cuts up to 12. Lisa seven cuts up to one or two. Lisa do we go to deere and the agriculture demand or do we go to walmart and what they say about the Economic Outlook . What will be the next when it gets the overview we used to get . Jonathan we will see if it flexes higher, we will get worried about the prospect of the turning over, goading from goldilocks to two cold which is what Julian Emanuel was talking about. Boosting bets for two rate cuts this year, investors looking ahead to later market data with jobless claims into our time. A fed speak. A host of fed speak. President biden and former President Trump agreeing to two debates, the first match of on cnn and september 10th on abc and will not be sponsored by the nonpartisan commission that has organize these events for decades. Annmarie 37 years. This was a long time coming. Remember the rnc said they are leaving the commission and now the biden camp is saying we are not happy with the way the commission has worked. It has become obsolete and the commission put out a statement saying we will prepare for the dates if you say you want to show up and they are usually held at universities with a live audience. That will not happen in june. Jonathan can we talk about the importance of why it is in june and my team biden wants to make this happen. Annmarie they see how dismal the poll numbers have been for the biden camp. And the idea is to get a boost potentially. Remember the biden polls got a boost after the state of the union. He had a Strong Performance in got a boost in the polls. Potentially you do it with the debate and bring back the former president and some of the rhetoric that doesnt bode well with the swing voters. Lisa while the former president sits in the courtroom his poll numbers are going up and we are at a place where one person is trying to give a sense of what is going on and play different angles and then you have one president sitting in a court room about hush money trial. Annmarie inflation and what you see in poll after poll, even the biden camp says dont look at the polls too much but it is early in the timeline but inflation remains the number one issue and when you ask respondents who do you trust more in the economy, continuously they trust the former president. Jonathan it is part of the campaign and working in his favor. The second thing is biden did very well and won an election not as the incumbent and making it a referendum on the other guy but able to do it because we were in a pandemic and he could hide away and leave the spotlight on donald trump as everyone was suffering at home and go to the polls later on. He cant do that this time and he is the important incumbent and the referendum is on him. Im not sure how they turned that. Annmarie he has to be in front of the cameras. We saw him giving an interview to Yahoo Finance and it was three minutes long. He only got a short amount of time. Is biden going to sit down longer for interviews that would be normal in an Election Year . Jonathan usually in debates like this you get to know the candidate but i cant think of two candidates more wellknown than these two. Lisa what is the purpose . Will it be a mudslinging match and who can last . Jonathan this is about early voting which is why team biden wants to go early. They want it done in june because they know people will make their minds up. There is a relief in the biden camp that there are people who have connected with the election just yet and when they do they will lean toward him. This is why i think the june debate will be a big test of that theory. Do we actually get that bump in the data afterwards. Annmarie it could be a huge bump for the former president. To lisas point, he has been in court and they have been following him walltowall with this he can talk about Something Else other than the hush money trial. Jonathan boeing facing a possible criminal prosecution. The department of justice said the playmaker violated a prosecution agreement tied to two fatal crashes of 737 max. They have four weeks to respond before the doj decides how to move forward. George ferguson joins us for more. This is a company that is struggling. Talk about what is at stake and what we could see coming from the government. George my sense is this will not be about the fine money but about the doj Holding Boeing Accountable for what they promised to do which is put in better oversight, better compliance measures. I think they have to be careful because boeing is a very important component of the u. S. Economy and defense establishment. I would say the company is already hurt financially and we saw him going into the financial bond markets a couple weeks ago for 10 million to shore up cash and to divert. They need the turnaround to happen in the second half of this year and start to generate cash or minimize the burden burn and stay on financial footing. They have to be careful about any fines they would impose an it is really about holding defeat to the fire on the compliance, internal controls and keeping the spotlight on that for boeing until they fix that and become a better manufacturer. Jonathan isnt that difficult to simultaneously say that boeing is a special case but at the same time hold their feet to the fire . George i think it is. It is challenging but maybe it means you cant do it so much with money but you will have to use others like getting inside the company, increasing your oversight of the company to do it. Annmarie can you think of another company in this spot of too big to fail, too important to fail in the u. S. Industrial complex . George i think there are a number of companies that the administration would think it too big to fail. The reason i use the word administration is i would go back to remember the general motors. The Obama Administration realize they were too big to fail and couldnt let all of the jobs go away. Another super important american manufacturer. They changed roles to make sure they shepherded gm through the problems. There are a lot of Companies Like that we would look at in the economy that are too big to fail. Lisa it raises the question as we shift towards a more industrial policy type of framework, Central Planning framework with investments and other companies to try to build up other infrastructure, just focusing on boeing period while much boeing. Boeing and. You just how much these have been able to be as effective as they have. George boeing, i follow where you are going with the question. You may need to rephrase it because i dont totally get it. Lisa what im trying to figure out is is is a case of a boeing not necessarily having the oversight and the reason why issues that keep on dogging them , going back to 2009, how much does this stem from a lack of oversight, and discipline that has not been implemented on this company . George i apologize for not getting it in the beginning. What is challenging about boeing is they are the only commercial aircraft manufacturer in the country. When the regulators approach them and try to oversee them, the people inside boeing are typically the smartest in the room and that makes it difficult to put effective oversight into the company. We have seen that it has been part of the breakdown we have seen over the last number of years where the faa has been deep enough into their processes to tell whether or not they are doing a good job or not. Part of the story is probably going to be the faa reauthorization and adding a bunch of money in the budget and focusing more on oversight of these manufacturers. The manufacturers, knew the most about the business and there was no one outside that could put a good critique on the company. Jonathan what are you expecting from the shareholders in the next 24 hours . George it is very difficult for the shareholders to put proper oversight on the company. It is a very technical business, an important engineering business. Big blocks of votes dont know enough about it to put pressure on it but they do understand when it is not working and it is not working now and the pressure will be on the Management Team and the challenge is finding the new Management Team, people who think they are good manufacturers and people who can set up good systems inside and getting them on board. Right now you cant apply much pressure on the Management Team because they are on the way out. Jonathan very little news on who might be taking that role. Thank you. George ferguson of bloomberg on the latest on boeing. Lets get you updated. Lets get to your bloomberg brief. Dani the Chinese Government planning a meeting with the government and financial sector. Bloomberg reported that china is considering a proposal that would have local governments buying millions of unsold homes. Many properties would be converted into affordable housing. Chinas cabinet is aiming to finalize the plan by the end of the month. Lets get a quick check on deere shares, cutting profit outlook for the year, declining income from agriculture has put pressure on the worlds biggest Farm Machinery maker. Specifically falling grain prices, giving farmers less money to spend on machinery. The company ceo said they are proactively managing production to adapt to demand changes and position business for the future. Netflix will be airing to nfl games on Christmas Day, the latest push for sports for netflix. The company signed a threeyear deal with the league but that also gives them at least one Christmas Day game on netflix in 2025 and 2026 and also adds one more that form you are going to need if you want to watch all the nfl games. As it stands, game set to stream on netflix, espn plus, peacock, amazon prime and youtubes sunday ticket. That is your bloomberg brief. Jonathan coming to a bundle near you, im sure. Ive got problems with this. I dont get the football thing on Christmas Day and i love watching sports but Christmas Day is not for football games. Lisa do you think families want to sit around and talked the entire day . Jonathan i do. Lisa a lot of people are thinking of something to grease the wheels. Jonathan the italians would never play on Christmas Day. Coming up next if we see the labor market crack, it will be sensitive even if we are at the 2 level. Equity futures just about positive. Live from new york, this is a bloomberg. Do you want to close out . Should i . Normally id hold. But. Taking the gains is smart here, right . Feel more confident with stock ratings from j. P. Morgan analysts in the chase app. When youve got a decision to make. The answer is j. P. Morgan wealth management. Jonathan a few things look forward to. We will get numbers from walmart. After that, we will get more Economic Data, jobless claims around the corner. Equity futures on the s p 500, just about positive and adding to gains from yesterday at alltime highs at the close on wednesday on both the s p 500 and nasdaq. Yields unchanged on the 10 year, 4. 3361. I know the fed is talking about we have to get back to 2 , but i think there is a wiggle room there. When it comes down to it, if they say those last few tenths of a percent are worth destroying the labor market, they will hold off on that and they will be very sensitive. If they start to see the labor market crack they will be sensitive even if we are not quite at the 2 level. Jonathan u. S. Jobless claims due out in two hours time. It was written, the base pays continued productivity growth but if the fed has to cut because a weaker job data, the outcome is not as clear. We are probably looking at a soft patch to a mild recession. Constance joins us now. How were you feeling yesterday . Constance i was feeling good about it and the fed should feel good because we are on a trajectory to the more normal inflation rate. We are starting to see cracks in other parts of the economy. With all the delinquency data, and upticks in autos and credit cards. Looking at the ism data on the jobs index. We saw softer jobs print and the issue for the fed is that if they have to cut because it is jobs weakening faster than inflation, they are behind the curve. That being behind the curve puts us at a greater risk of a soft patch. Jonathan can we get into the evidence about being behind the curve. How much weight would you put on retail sales yesterday . Constance you have to look at march and april it together. You have passover, seasonals. Taking them together, it wasnt super week but we are seeing it finally at moderate, four years of buying ridiculous amounts of goods and now we are buying Services People are coming back on medical services. Lisa we were wondering how to read in jobs from last week and what upside we get. How much are you seeing a shift . You talk about labor reporting coming to an end but what does that do for the death of jobless claims . Constance it would suggest they will move higher. We are watching all of the different data points closely and when people switch jobs they are not getting much of a premium in pay for as much as a bump up in pay. We have a lot of signals there is softness in the labor market. We could muddle along with the softer market and be just fine or it could just turn negative so i hate to say data dependent but at these Inflection Points you have to be datadependent. Lisa it like we have been part of in an Inflection Point for a while, but when do we see alltime highs, rally into bond markets and companies able to borrow. How much will that offset any weakening that might be happening . Constance i dont think we have bad at this Inflection Point for a long time. In 2023 we were in the camp and a lot of forces could propel that. A lot of forces propelling the stock market higher is the productivity story. That is helping a certain segment of the economy but we are getting back to the economy where the bottom part is feeling the pinch and you are seeing an uptick in delinquencies and auto loans and credit card loans. That is a sign of weakness and that is a sign that people are feeling the pinch of higher for longer rates. Annmarie the last data report was one of those we have seen in terms of feedback and there has been questions about how reliable the data is. You are also scraping the internet for what companies are saying, what do you rely on. What is really constance happening . Constance happening . Constance you need to triangulate for a number of different sources. Anytime you have a regime change will see data that becomes noisy. When data becomes noisy, it is an indication there is a shift a foot. We are very attuned to the fact that there is this underlying weakness and it is which comes first, the fed rate cut in all the things that come along with that . One rate cut will not do it but it is the promise that we are going to cut rates to the point where we can have a positive slip in yield curve and that positive slip changes the game with regard to lending and it is a whole series of things that have to happen. That is why at the timing is very tenuous because we are starting to get weakness already and the fed is unlikely to cut in june or july. Annmarie how does immigration play into how you are viewing the labor market . Constance it was significant when we had a strong labor market, tight labor market, more labor supply allowed labor market to be coming into better balance. Now that increased labor supply could become part of a problem. We think on balance it is good but the long run it is very good. We are like most developing countries, lower birth rates and facing a world where we might have population declines. In the developed world but not emerging markets and that changes the game in terms of economics. Longterm it is good for the economy but in the short term we could see some softness in the labor market. Jonathan does it work does it worse for the bottom leg . Constance when you look at the inflation data and Everybody Knows i do this tweet every month when the data comes out and i look at the price increases from february 20, 2010 now and then i annualize them because the absolute numbers look big but the annualized numbers are big on a lot of components. If you dont have a lot of disposable income you are forced to pay and the prices become more onerous. Looking at insurance going up, that is a harder thing to swap out thans like if me for prices go up you will swap to chicken. Changing your insurance is more onerous and you can push back but not an easy substitution. People feel they dont have a choice and that leads to not only the actual impact for households but how they end of feeling and why you see in surveys like Consumer Confidence you see them depressed even though we have had the three year expansion. This goes a large way to explaining what people might see an inconsistency in what you see and the data. Constance look at the inflation data and you see why people feel the way they feel. And we need to be forwardlooking and the fed needs to be forwardlooking and if we look forward we can see that is not going to continue. That is not people on the street just living their lives and they are not thinking about that and what it will be like going forward. They are where the past will continue. Jonathan we hope it the path will continue. Jonathan we hope it doesnt. Much more Economic Data to come. We will get jobless claims and we should get numbers from walmart. The question we have been asking is do you look at the companys of the data . We have an answer, look at both. Annmarie Mohamed Elerian said was in 2021 they werent listening to ceos on the call saying that inflation was down the pipeline. Jonathan they mustve been talking about deflation. Lisa lets see how that goes this time. How much is walmart a real read and how much is a down shifting from upper tears . Very curious to see the earnings. Jonathan i think both. Here is the lineup, we will catch up with Michael Collins of pgim fixed income. From new york, this is a bloomberg. Food isnt just fuel to live. Its fuel to grow. My family relied on public assistance to help provide meals for us. These meals fueled my involvement in theater and the arts as a child, which fostered my love for acting. The feeding America Network of food banks helps millions of people put food on the table. When people are fed, futures are nourished. Join the movement to end hunger and together we can open Endless Possibilities for people to thrive. Visit feedingamerica. Org actnow the fact is we are in a Good Environment for earnings. The market has positioned itself. I would be a big cautious. I have 5400 on the s p im still working on the timing