Lisa abramowicz and Annmarie Hordern i am Jonathan Ferro. Your equity market positive. 4 . We will proceed carefully just like this Federal Reserve ahead of cpi. Lisa proceed carefully although i do dont know i do not know where the bias is in markets. Yesterday everybody seemed to disregard ppi and we got a rally in bonds regardless. How is this leveraged because people want to have a bond rally . Jonathan what a turnaround over the last two sessions. We have dropped back in two sessions. To see the 10 year lisa kathy jones put it well. There is something technical going on. I keep going back to what it means for broader markets and an understanding of what this market is. It is the deepest most liquid market in the world and it is whip sawing around by 20 basis points, 30 basis points more in a couple trading sessions. Jonathan we are fortunate to have Annmarie Hordern with us to work on the latest on israel. Antony blinken landing in tel aviv today and the Israeli Defense minister warning of a difficult war. Annmarie they are talking about a prolonged war. Right now we are seeing prolonged strikes, airstrikes over gaza that has killed over 1000 palestinians, but you have this on the border. 300,000 conscripts have been brought up by the Israeli Government. It looks like they are about to go in for a Ground Invasion. Jonathan the u. S. Cautioning citizens against traveling to israel. The families of british diplomats are being told to leave. Powerful address from the president. Annmarie he was not even supposed to be at the meeting but he decided he wanted to make another speech. He called it a campaign of cruelty. The president also denounced anyone offering justification. He is getting high remarks from leaders of the jewish community, even republicans for the speeches he has been giving. Lisa the problem with this situation is it is a tragic thing, lets just say that. There is also an incredible amount of misinformation and conflicting signals. We heard about saudi arabia and iran having one of their first calls since they normalize relations. We know qatar is involved in this. How does this end . How long will this be . How may people are going to die . These are some of the tragic things we are grappling with. Jonathan we are trying to get clarity on some of the numbers. The state Department Said the death toll among u. S. Citizens has risen to 22. The broader price action and have cpi, we are further by. 4 . There is lived in the equity market. In the bond market want a run of gains. Yields lower. 10year back to 4. 57. Yields up by a single basis point. Lisa it is cpi thursday. 8 30 we get the cpi print. The expectation is for the status quo, although what we are watching for is goods reinflation and this will be key. If you strip out energy and food do start to see things to cup in a way that makes people nervous about where we are in this fight . Treasury department selling 30 year bonds. This might be the most interesting part of the day. Plunging the most since the march disruption we saw with Silicon Valley bank. If you wanted more input, we have fed speakers including atlanta fed president raphael bostic, Susan Collins at 4 00 p. M. They say the same thing. We dont know comment on the margins if the bond market does our work for us, we will let it. What you make of the fact that yesterday we get the Meeting Minutes and some are the rally in bonds and it is the same thing everyone is saying. Jonathan is a strong nod towards what was already happened. Does it stack up with what we heard from chairman powell . Lisa that is the massaging. Jonathan do you think there was some massaging . Lisa i can either confirm or deny. Jonathan Susan Collins had this to say. Likely at the peak of the tightening cycle. U. S. Secretary of state Antony Blinken giving statements to the press with Prime Minister netanyahu in the next 15 minutes. Will look out for those comments. Joining us as the lead equity analyst. Go into the cpi report, what are you in the team looking for . Sophie good morning. We are, along with everyone else looking for things to have moderated. That is the word i disliked passionately but it is one we keep hearing. That is the expectation broadly speaking. As you were just alluding to what i am particularly interested in is what the core read is doing because i think a lot of people get a bit carried away with that overall figure. That will not tell you the whole story. Particularly for me that one thing, if i had to focus on one thing it would be shelter costs. That is a word you used earlier, whip sawing, that has been quite a ride and it is such an intrinsic an important number to look at when we are trying to map consumer demand and consumer mood. For me shelter costs are already a big one. Jonathan lets talk about consumer mood. Lvmh, canary in the coal mine, really . Sophie i know. It is quite a difficult one. Lvmh q3 sales overall, you are looking at 9 uplift. By most standards people would say that is good going. When you look at the level of the slow down from 17 in q1 and q2, h1 overall was a 70 uplift, there a 17 percent uplift. There has been a slow down in luxury. We know luxury customers are some of the most resilient so if they are starting to think twice before picking up that ball of hennessy, what does that mean for less resilient consumers . That is a flashing indicator on the dashboard. Lisa a lot of people might agree with this and say there is slow in Consumer Spending but then they say we are still bullish because that is a perfect slow down and enough to keep things tamped down and has already been priced in. Where is the distinction for you of what has been priced in and has not been priced in . Where is the bias in equity markets into the cpi print . Sophie i think some corners of luxury to have further to fall. We saw a reaction for lvmh. I think there is too much excitement. Not all luxury names are created equal. They do not have the same prowess and strength going into this. Also travel, i have been quite bullish on travel. The way we have categorized travel spend and we know in the u. S. People are prioritizing experienced spending. That plays into travel stocks. Some of the bounces we have seen over the last six to 12 months is indicative of this idea we think everything is Mission Complete and will be smooth sailing. I think as we look into q1 next year we could see more of a dramatic pullback on load factors and margins and some of those big travel stocks. That is something i will be watching. Lisa a number of sleeper stories have gotten off the radar, including the ongoing auto workers strike which we have seen percolate to some of the most profitable ford vehicle manufacturing outlets. We are also talking about some sort of ceasefire in the strike bad words when it comes to what is going on in hollywood. That it is not over at all. From your perspective, how well is this priced in . How much of people understood some of these fights are entrenched and will lead to lower profitability in entertainment and auto manufacturing . Sophie unfortunately for me they are not fully priced in. We know on the auto side of things there are quite a few structural challenges to the sector. People are aware margins tend to be lumpy. There is not that much wiggle room anyway. There is little bit more leeway in a roundabout way. When you start trying to translate this into media and the arts i think there is a notion that it will get sorted, it will not matter. We will hear from netflix and this matters for stocks like netflix. They are nothing without their contents late. Consumers, as there feeling their income get eroded away and spending power diminish we are pickier about where we are throwing those dollars. For the streaming side of things i think there is room for upset. If the contents late is not perfect we are switching who we use. We have gone on quite a wild ride since the pandemic. That is something i would say is to be monitoring. Jonathan are all complaining about our bills. Sophie, thank you. Something we do every week, the price of hulu, netflix. Annmarie how do you feel up lisa how do you feel about that . Jonathan you want me to go on that rant as well . Tom is not here. We have Annmarie Hordern with us all morning. We need to talk about cpi and why this president , even though this economy on the surface looks ok, inflation is moving in the right direction, why that is not translating to any success in the polls . Annmarie it is not. It is a huge headache for this inflation for this administration. Inflation dogs them in the polls. The president continues to get poor remarks in the economy. 84 in this usa today Suffolk County poll talked about the fact that it is higher grocery prices, Higher Energy prices. 84 of these people are saying it is Consumer Prices going up. That is why they are not feeling this economy is doing better, even though the president comes out every jobs day and says look at this jobs market. It is not landing. Lisa there is this bizarre not understanding amongst the economics profession. They say inflation is going down. Still bills are going up. It is disinflation from a year earlier. Things are not stabilizing in a massive way. The recent memory of seeing the bill at a restaurant doubled, going to the Grocery Store likewise, seeing your Auto Insurance bill go through the roof. All of these things, it is jarring for people whose salaries of not kept pace. Jonathan the new york fed puts out a survey of consumer expectation. A large percentage of consumers, 12. 5 , versus 11 in the previous month, expect to not bateman among debt payments. Imagine being in that position. 12. 5 of the country worried about not being able to make minimum payments in the next three years. Annmarie and this is the republican talking point. Even though the rate of inflation is slowing, what republicans will tell you is a family is paying 700 more on their needs than they were prior. Jonathan is a massive problem. Amh will be with us all morning. Coming up at 7 30 we will catch up with Subadra Rajappa as we continue to beat the drum going into the cpi report. Inflation data in america a couple of hours away. Quite a move in the bond market so far. Tuesday and wednesday a rally on the 10 year yield. Here we are on thursday with the yield on the 10 year at 4. 56 . Live from new york city, good morning. Pres. Biden we are working on every aspect of the hostage crisis in israel. We are searching additional military assistant including ammunition come interceptors to replenish the iron dome, and we have move the u. S. Carrier fleet to the Eastern Mediterranean and made it clear the iranians, be careful. Jonathan be careful, the words of the president of the United States delivering remarks to jewish leaders. More remarks expected in the next five minutes. Antony blinken given statements to the press with Prime Minister netanyahu in tel aviv. Interesting reports on the Biden Administration. Officials leaving open the possibility of refreezing 6 billion in iranian oil money. This is become contentious. Annmarie they are getting not just republicans calling on them to do this but also vulnerable democrats up for reelection like Sherrod Brown from ohio. He is the chair of the Senate Banking committee and he says anyone who supports terrorism, we know hamas is backed by iran, should have consequences. You cannot unfreeze this money. It is sitting in qatar banks. Maybe they can make sure iran does not have access to it. Jonathan they keep saying a single dollar has not left that account. Joining us is the Senior Advisor at the transnational threats project. Wonderful to catch up with you again. As we understand it there has been a call between Mohammed Bin Salman of saudi arabia and iranian leaders. What you make of that call . Norman the call is rare and a first between the crown prince and the president. It is consistent with a couple of themes. Saudi arabia which seeks regional stability to ensure its economic progress has inside wideopen about iran. I spoke with many saly were leaders on this issue. I spoke with many saudi leaders. The International Community is working to keep this conflict from expanding and keep its other proxies from engaging in this war as well. Lisa given the read out and talk about how they want to unite for the palestinian aims and avenge some of the zionist policies, this is the language used by saudi arabia, im wondering how much there is this push pull of the middle east and the more moderate nations including qatar and egypt coalescing around that message even as they seek deescalation . Norman that has already happened and saudi arabia has been consistent in its public support for the palestinians and its private frustration with incompetence of the Palestinian Authoritys and its recognition that hamas is a terrorist organization aligned with iran. But the palestinians have legitimate claims to saudi arabia that must be reported. For saudi arabia not to adopt this position it would put itself at risk for iran or turkey stealing the moral high ground on an issue that is close to the hearts of many in the middle east. Lisa there is also talk of hosting irans foreign minister about to make a tour. Is that him also calling for deescalation . Norman no. He is close to the revolutionary guards. His position will be to encourage stronger support for the palestinians and pressure israel and the United States. It is likely he will be received by all of the regional actors. He is not a major Decision Maker but it will be part of the deescalation. Annmarie what about the political leader of hamas who is allegedly having political housing in qatar . Overnight there were a number of individuals and former administrations coming out and saying qatar should be expelling this individual. Will doha receive more International Pressure . Norman almost certainly. This is a complicated issue. Qatar is a valued partner of the United States. It hosts the air base which is our central focus in the persian gulf and the middle east. It has supported the administration robustly on iran and afghanistan. Qatar claims it does not support hamas but supports gaza and uses its relationship to pass messages and deescalate. Hamas has been present in qatar since 2006. It is without a doubt that other political leaders were in qatar and likely played some role in the planning, approval, and celebration of this most heinous act. If this were 9 11 and a country were hosting osama bin laden, how should the world respond to that and would we accept the statement they are just using that relationship to play mediator . This is complicated for the administration. Lisa there two questions that need to be asked. Do some of these calls and negotiations move us closer to deescalation . On the flip side, how much does it signal a percolating of the conflict embroiling more of the region . What are the chances based on the conversations you just talked about of deescalation based on the recent phone calls and discussions . Norman i would switch this around. Escalation will be a product of the drivers of the proxy groups in the area. Lebanese hezbollah has taken a lot of hits in syria. A war with israel would not bring it much and damage its domestic position within lebanon. There will be a calculation by all the proxies that there is a sweet spot. How much can they support hamas without being drawn into a conflict the damages there equities and by showing loyalty to iran in pressure since iran provides them with the training and Political Support to maintain their positions. This is a very complicated dance and therell will be a lot of different players to prevent escalators to prevent escalation and prevent the destruction of other proxies. Annmarie talking about a complicated dance, there is a headline that israel says 97 people have been confirmed as taken hostage into gaza. We talk about this precarious role qatar plays. You think cutter can make any headways do you think qatar can try to make any headway into getting hamas to give back the hostages . Norman it will try. When you look at the 97 hostages, you want to break that down by nationality. You can see china going to iran asking for assistance. You can see a variety of countries trying to use egypt, turkey, and cutter to get and qatar to get hostages out. When we had american hostages in the hand of an iranian proxy, that led to irancontra. We are in the early days of a complicated economic and world catastrophe and we should be humble at thinking about that where this might end up. The hostages issue will be the most complicated for the administration. Jonathan what you make of the conversations about a full Ground Invasion anytime soon . Norman the israelis will not rush into this. The issue with gaza is this is a small area. 25 by eight miles in size. 2. 8 Million People. In this relatively small geography there are hundreds of miles of tunnels. No military has undertaken military operations in areas such as this in modern times and when they have undertaken operations, they usually respond by using thermo barrack weapons and destroying this geography. The United States and britain came close in iraq and syria with areas that were one third the size and buildings much lower to the ground. The civilian and military casualty likelihood for this war will be extreme on all sides. Hamas is prepared for this. Israel will not rush into this event but they are likely to do so after a significant air campaign which is alrea