Live on tv and radio. Your bond market reopens stateside with the powerful rally on the 10 year yield. 4. 66. Tom lets see how it comes off as a flight to quality as a general statement. Think we have to let it play out. The news flow from israel is minute by minute literally. Jonathan this is a treasury market that missed out on the haven flows yesterday. And you have to throw in the fed speak which started with your interview with mary daly and letting the bond market do the work for them. Then the rally starts. Lisa i wonder if that will lead them to reverse some of their stance. Is this less of a haven trade type of a bid and more of a response to fed officials signaling that maybe they are done. That really is maybe the confused soon confusion in the tea leaves. Tom i think they are going to wait to see what ppi is. When is cpi wednesday or thursday . But the answer of ppi is possibly more important. Jonathan the update on israel, the latest from Prime MinisterBenjamin Netanyahu said the retaliation has only started. Israel announced its largest ever mobilization, per hundred thousand Army Reservists. 300,000 Army Reservists. They are going to prepare for the next phase of retaliation. Tom it is a mobilization of israel. I would suggest there is no american equivalent. It is around 300,000, that is millions that would be caught up in america. Jonathan the price action on the s p 500, a little firmer. Potentially a third day of gains. The move in the bond market, yields up by 13 basis points. The euro very close to 1. 06. Lisa one of the things will be because of the data or the feds. If the fed doubles down on this message that the bond market isnt doing the work for them, even as the bond market moves in the other way that could turbocharge some of the moves. Janet yellen is speaking at the imf meeting and i am curious to see the tone on uniting different geopolitical factions at a time of increasing splintering today at 1 00 p. M. , President Biden giving remarks on the attacks israel. Itll be interesting to see how he dovetails the u. S. s ability to respond as House Republicans debate who is going to be the speaker. Jonathan the war between israel and hamas in the fourth day with at least 1500 dead. Hamas threatening to kill hostages if civilians are killed in strikes without warning. 11 u. S. Citizens havent died in the conflict. Or Israel Bureau chief, Ethan Bronner, joins us. Where do we stand right now . Ethan 300 guys in uniform waiting on the border. They have set up a base. It feels like we are but days away from major land invasion. It is impossible to imagine them trying to carry out what they claim they want to do which is to end hamasability to do what they did on saturday again. I think markets, everything will start going relatively crazy once that happens and there is the other factor which might has bullet in lebanon join in. There was a warning from iran that israel needs to not do what it is doing in gaza. Tom you are exceptionally experienced on this. I am fascinated how you perceive israels perception of hamas as a terror group. Is it a specific group, entity or a band of thugs . What is the character israel perceives hamas . Ethan fascinating question. Israels view of hamas shifted dramatically three days ago or on saturday. Before then there was regionally it was seen as a group of thugs. Then for 16 years have been ruling in the gaza and have actually been to go shading. There are 18,000 gazans were king and israel. There was a sense that actually it was becoming a more responsible, normal kind of ruling organization. Meanwhile this just happened and it is now viewed as isis like, worse than thugs. There really was just an open slaughter of women, children and the innocence on saturday in a way that is hard to understand. Jonathan it was a massacre. There is no other way to describe it. Thank you very much. John kirby at the National Council 8 45 eastern time. With us is tony dwyer. You are actually bullish cautious before. Tony we talked about an environment ripe for an oversold rally. The Christmas Eve massacre in 2018, you have a lot of the average stocks already smoked. When you get that oversold it is ripe for a tactical bounce. It is tactical until you get it in all areas of credit and that can only come from a major fed tone change. Lisa how much of the events over the weekend altered the framework for how you do things Going Forward in terms of Stock Selection and allocation because of the potential for oil prices two higher of borrowing to increase to fund the conflict . Tony there is no way i can followup the previous speaker. It is a horrific thing. I dont know how to put it in there. This is a gas. Fed says they are datadependent and the data is a gas. This whole weekend thing and the impact on oil, if you told me that was going to happen on friday morning and oil was going to go up 4 i would have put the futures down but that is not what happened in the market rallied. Lisa there is a question on the borrowing front end of financing, we hear overnight in china open to work deficit financing to support the economy. As the geopolitical pressures heat up, does that increase the pressure on different governments to increase the borrowing regardless of concerns about deficits . Tony theyre going to increase borrowing regardless. Lets talk about when the s p pete, it was july 21 and the day janet yellen said she is issuing when the s p 500 peaked, it was july 21 and the day janet yellen spoke. China and japan are depending defending their currencies. And banks are under pressure on the Balance Sheet to extend the Balance Sheet because of the Silicon Valley bank and the regulatory environment. You lost your three biggest buyers. I dont believe the rise in rates is purely fundamental. As a matter of fact, i have been talking about a soft landing is likely the worst Case Scenario because it keeps the fed higher for longer. Higher for longer isnt good. It means you can rollover the debt. Economically i am negative enough that i an shall is starting to think bullish because you get three stages of a decline, you get good news is bad news means that as good a tighten, that was last year. And then you get the news the fed is going to be done. Then you get to bad news is bad news when you actually get into the recession trade and that is when you want to attack. Tom can we call it catharsis . You say to flat out invigorate the dwyer bull market we need a catharsis. Tony can happen from the event but it has to be a change from the fed. You had a drop incorporates, margaret read mortgage rates. The fed only cut twice. It was the treasury market dropping that dropped the Mortgage Market and stimulated the bond market. You had have an improved outlook for money. So for me it is not this great economic study it is common sense. What makes the keene household with all the kids encamps expand . [laughter] jonathan what stops the keene also from spending . Tom i have private equity coming in. [laughter] jonathan what is the common sense call on the banks going into friday . Tony they are down so much that the common sense call is dont make a guess. I dont think it is going to be great. Thank standards are tightening. Small businesses arent optimistic. The business side isnt great but they have been smoked. I think it is going to get out of the way and wait for credit to improve. That is the bad news is bad news when you want to attack banks, the consumer and the early cycle. Jonathan it a sense that high yields are hurting them and not helping, has that been the surprising the story of the year so far . Tony it is but high yields help but spiking yields dont. Lets say the bond market rallies and is helping futures. Here is the problem. You could go down 50 basis points and beat where he were when it was already a problem a little while ago. Like it was in 2019, 2016, what generated the economic recovery was a sustainable drop in treasury and corporate rates. Jonathan tony dwyer there. A big rally in the bond market. Yields are lower by 13 basis points. 10year around 4. 67 right now. Tom the radio at 2. 35 and 13 basis points, thats call it a flight. You are talking about the concern of people having their interior dynamics. They are down 5. 3 standard deviations from the peak. A few back to 2022, you enjoy it at 50 a share. It has been halved. Jonathan really, really tough year. Will get earnings from bank of america next week and jp morgan on friday. Coming up next, Stuart Kaiser, the senior fellow for the middle east and council on foreign relations. That is next. From new york, good morning. background noises this is a clustomer. Hello its what happens when Marketers Group customers with very different behaviors. Into one tangled mess. This is a mess with mailchimp, marketers can use realtime behavior data, to personalize every email for every customer. Turning clustomers, into customers. Intuit mailchimp. The 1 email marketing and automation platform. We are going to exact such a high price that not will hamas do this again but there enemies will never think about doing this again. Iran is the enemy of all, and they are pulling the strings and giving money. As i speak to you iran is trying to push other people into the theater of war. Jonathan the israel minister of strategic affairs. A big question for all of us worldwide whether iran will be implicated directly. We talked about what the working assumption was and how it changed over the last few days. Tom lets review that. It was buried into the heated backandforth between you and the ambassador. It is not that he let slip out but made it very clear that they are studying the immediacy of iran with all of this day by day. Jonathan it sounded like they were looking at incoming intelligence and trying to figure out whether there was anything to be seen conclusively. Lisa he said Something Interesting in response to your question saying initially it didnt look like iran was involved but different information has made them closely. This is an ongoing discussion and investigation and not conclusive as of yet. Jonathan the price action on the s p 500, a lift yesterday and today, up to 0. 2 . Yields lower by Something Like a 13 basis points. One of the best days since spring and the treasury market. Tom i would say it has come back in but not back to center tendency. There was such a run to a higher yield, technically speaking in no way can you construct this as a reversal. Higher in yield but we have only come back so far. Jonathan we have to start with lisas conversation with mary daly, the San Francisco fred at the back end of last week, just raising the idea, strong suggestion they are happy to did the let the bond market do the work for them. Tom you got the Goldman Sachs but the Bloomberg Financial conditions index shows that restriction. Stephen cook is a senior fellow of the these. The definitive book on turkiye false and this june we will celebrate the end of ambition and how america should move forward in the middle east. Thank you for joining us. I want to go to the ambition of the president this morning. He is going to speak. Have to recalibrate with all the legacy of 48, 67, 73. What should be americas ambition day four of this war . Steven it is clear the president is going to throw all of his support to israel. Already there is bipartisan support for anything the israelis need. They will need a resupply of interceptors and there is an antiaircraft battle moving in. It is a warning to hamas and hezbollah not to widen the conflict. That would be the nightmare scenario for the israelis. The United States is getting indirectly or directly involved and i think it is an appropriate policy for the u. S. The question will be is as the conflict goes on the israelis are clearly gearing up for a major Ground Invasion in the gaza strip, occupation of the gaza strip for periods of time, how long will the International Community remain staunchly behind the israelis operation . I think they have leeway with this president in particular with how many israelis were killed in the opening stages of this conflict. Given pattern of events and more innocent people are killed, there will be pressure. Tom this is a iran resurgent . I look around and say this is a complete surprise for many of hamas but probably also iran. Steven certainly iran is playing the role of agent of chaos in the region. The administrations efforts to modify behavior through diplomacy and incentives does not work. It should be clear to everybody by now that trying to in cage with the iranians and begin goodwill through goodwill is not a fruitful avenue to pursue. The iranians are not willing to reciprocate. They want to push the United States out of the region and want to confront israel and this is the result of it. The sooner we all come to that conclusion the better off we will be. Clear policies against iran will come. Lisa it feels like there is a feeling that iran was involved. Yesterday we spoke with ron dermer about this and as they get more information they are realizing there was maybe a more direct role from iran. Is there simply a reluctance to say it outside out loud . Steven i think publicly the indicators would suggest the iranians were involved. Meetings last spring and hamas and hezbollah took a quantum relief increase and it has all the hallmarks of actually has below, irans primary proxy throughout the region. The activity of the Supreme Leader on social media talked about it. Hamas itself banking thanking the Islamic Society for their support. If the israelis publicly pin the iranians, it does call for direct engagement, kinetic action against iran. This would be a step up and confrontation and one has to be sure that the United States and israel have engaged in conversations about the what if. Lisa in your recent article he wrote that under these circumstances no foreign government, including the u. S. Will have no leverage on israel to respond with restraint. Where is the rest of the middle east on this . We have heard about the emirates and qatar to release hostage. It seems that that is a no go. What are people doing . Steven there is not a lot they can do. This is one of the problems, publicly governments have to issue this kinds of statements that went from an bigamists from ambiguous. There is no excuse for the butchering of innocence. Behind the scenes they are seeking deescalation but many were rain remain on israels side. The israelis will have a certain mono leeway to prosecute this campaign but as the civilians suffer, there will be lots of pressure for the israelis to back off. I think the israeli public is demanding the destruction of hamas and that will give them further ability to resist International Pressure that will come from the neighbors as well as europe and some corners of the u. S. As this operation continues. Jonathan thank you for your time. Stephen cook on the council of foreign relations. Tom i am biased as a member and what Richard Haass rebuilt and what they are doing now. It is a set of smart people who work from an operative foundation of humility. You dont have many people wandering around saying i am smarter than you. It is not part of it. Jonathan john kirby is coming up, the National Security director. That conversation a little later. On the s p 500, higher on friday and yesterday and this morning. A rally in the bond market as the treasury market reopens. Yields lower by 13 basis points, 4. 67. End of us and at dovish spreads. And dovish spreads. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. The power goes out and we still have wifi a bank that knows your business grows your business. To do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. 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Jonathan attempting to build on the biggest rally on the s p 500 since august. Firm arrived. 2 on the s p. Up 0. 3 on the nasdaq. Monster rally in the treasury market, twoyear, 10 year, 30 year. The 10 year by 13 basis points, quite a rally. Lisa this to me highlights not just the haven bid but what we have been seeing with respect to the commentary from fed officials. At what point does this move encourage them to go further . Basically it is the selffulfilling cycle that leaves us in this loop with watching fed officials and the fed officials watching the bond market. Jonathan they say they are comfortable with the bond market doing the work for us and then it goes the other way. Tom that is the perversity of the markets. With the news flow going on including a war, how do we make light of earnings season