By 0. 1 . In the last 24 hours, the president of the United States is heading to israel. Tom per is no other story today. There is no other story today. He is basically traveling to a war zone. Jonathan he wants to present prevent the conflict from enveloping the whole region but how to develop a plan to get aid into gaza. Lisa thats one of the key components with the talks with tony blinken. I find it interesting that President Biden will be going to israel and going to jordan right after, entering the zone with Security Issues and Strategic Issues and have the u. S. Will influence this. Tom im reading on the turkish war in world war i and its amazing the parallels to right now. We are out front on diplomacy. Someone asked the secretary of state where hes been and he said he can remember. They have parallels to 1914 as they try to avoid war. The daily mail in london today talks about the tunnel structure of hamas, 40 feet underground and maybe as many as 300 tunnels. Thats the reality for the Israeli Military. Jonathan jordan, bahrain, sat a just saudi arabia, qatar. Hes lost count and the intensity of the diplomacy has been amazing. There is uncomfortable tension over the whole middle east as we all brace for what could be a full Ground Invasion. Lisa its been delayed and people say it wont happen if President Biden is in israel. They are not likely to make the Ground Invasion but what is next . What is the plan afterwards and how do you avoid this becoming a conflict with the words coming out of the iranian government. Tom i get the idea there is diplomacy and we will wait on joe biden but i dont hear enough about the Israeli Military nor should i because they are not doing this for the media. They have to prosecute a war. Jonathan more on this this morning. Plenty on the markets as well with equities a little softer in the s p 500. Negative by 0. 2 percent and yields a little bit higher. Bank earnings, Economic Data and a ton of fed speak coming up later today. Lisa will it have a predictable effect on the 10 year yields . We have no idea. 8 30 a. M. , u. S. Retail sales were september are key to understand just how much extra powder the American Household has to keep fueling this rally. We seen a deceleration in spending from elevated levels. Will we see a leveling off . Fed speakers come to the for today as they have all week. The new york fed president John Williams starts it off. What is going to be the message at a time when they could possibly create more stability in the long and if thats what they want or is this what they want . Also we get earnings today, bank of america and Goldman Sachs coming out before the opening bell. After the bell, United Airlines and netflix earnings. I think that will be one of the key messages. Will earnings take precedence over this cloud of uncertainty that seems to be swirling over the geopolitics . Tom the first thing i notice this morning is euroswiss, a lower number, a stronger swiss franc. Finally the swiss franc is moving. Jonathan im focused on Goldman Sachs in the next hour. According to people with knowledge of the decision, goldmans chief executive has decided to step djing highprofile events that has created a distraction from his work. Is it a coincidence the story is coming out the night before we get earnings from Goldman Sachs . Lisa did you see the pushback from Goldman Sachs . They say he hasnt done it for a full year. Jonathan hes not retired, just a semi retired. He wont be doing it in the hamptons. Tom they are breathing easier this morning. I have no idea whats going on. Jonathan if you are referring to error old producer. Tom also Calvin Harris who is a dj guy. Did you go see him . Jonathan i didnt. Did it go well . Tom i have no recollection. There is like for kids it might years telling him telling me to ask about this. We will do better with jonathan stubbs. Jonathan he joins us now, good morning morning to you. It feels like we are and everywhere everything all at once. We wrote about this in april. When we see markets long on uncertainty and risk and short on conviction for a long time and when that happens, we find the upside hard to make a case for mec markets generally heading sideways. There are some big Structural Forces which support that. There is historic debt burdens and historic rising rates and historic shift politically but thats a feature of todays world. Lisa going forward, what kind of structural aspects are you talking about and how you taking bandage of them . And how you take advantage of them . We drove parallels back to 2020 at the peak of the pandemic . Its not an outright bearish call. We explore the upside persistently. Weve done a lot of work looking at liquidity and earnings which are the two main supports for upside risk. On both counts, its hard to make a bullish case for liquidity which probably needs a macro shock to come through first or earnings which needs the macro conviction to shift toward recovery mode. I think the good news is liquidity earnings his heart is quite hard to find. We go into bearish active strategies. We run a lot of sector repair trades and a few of them, we are running long on luxuries. We have many contrarian valuations. Those are the sector trades we go into when we see stickier markets. Tom i looked at world war ii and when i do that, i look at the Dow Jones Industrial average from 115180. The dow was up 55 . Do you assume the stock market doesnt crater given geopolitical tensions . Its hard to draw parallels through different times. One of the starting points i have today regardless of what topic we are discussing is what i call nxm score. When you take the multiple and combine that is a single score, it depends what kind of equity market we are looking at. Its at the highs of the last 30 years excluding the post covid bubble we saw. We are at the highs we saw in 2000, two thousand seven and the start of 2020. From a corporate perspective, valuations are still very high. Doesnt mean equities cant go up over the next few years for whatever reason but the starting point is quite challenging in the first place. I bring that context into the discussion as well. Tom what should we look for in earnings . You take a more holistic look and we are focused on Bank Earnings today but what are you looking for in earnings . Is it at the top of the income statement or margins down below . Banks the world over had reasonable to strong support for earnings for the last 612 months. They are one of the leading sectors over the last two quarters. When i look at earnings, the first thing i think of and we talked about this before is what is the nominal Growth Opportunity the Global Economy is giving companies . Thats the main feature for revenue growth. In the u. S. This year and europe, nominal growth will exceed 6 . Next year, we think it will be below 4 . We go from this year to next year, weve got a 250 basis point drop in nominal growth in the u. S. And europe and that introduces some headwind. The second line is a lot of the leading indicators on both sides of the pond continued to suggest headwinds on earnings into next year. This is part of the debate that goes into building a strong support for earnings recovery into next year. I think its premature to do that at this stage. Lisa when do stocks become highly susceptible to bond yields and are a driving force . We did a couple of notes on that recently and weve seen that historic drawdown in bonds and we look at the 30 year bond, almost 60 down from peak levels. We see some very aggressive losses or institutions around the world coming through that are supposed to be riskfree Asset Classes. If you take the u. S. , the nasdaq or the s p, often investors are a 500 basis point pickup relative to riskfree and to year free covid and postgfci and thats down to flat. The starting point for capital or the dollar coming to the market now has a competitive spread of Asset Classes from credit to sovereigns to equities together that yield. Equity will have less of an exclusive capital coming from market. The free ride is over but it doesnt mean equities cannot go up but the free ride its enjoyed for the last 1015 years has come to an end. Jonathan easy money. I wish people had told us at the time. Easy money frustrates a lot of people. Lisa has it ever felt easy . And especially right now. Many people were calling for the end of the world when we were full of low rates and said it would create bubbles. Jonathan lets talk about what hasnt been easy this year, bank stocks. Bank of america is down was 20 year to date and goldman is down 8 year to date. Bank of america earnings this hour. I looked yesterday at a representative small bank around the corner from the milliondollar cowboy bar in jackson hole. I looked at a Regional Bank and they have a stadium out there in the midwest and i looked at j. P. Morgan omg, are we deluded but by what we see from fortress diamond and park avenue. Its been carnage. Lisa how much are the jamie dimons of the world getting more separate from the Regional Banks, the divergence simply growing with the haves and havenots. Jonathan the relative underperformance of everyone else, j. P. Morgan has been amazing to see. Coming up, the kbw ceo. From new york this morning, good morning. Fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. On wednesday, President Biden goes to israel. Hes coming here at a critical moment for the region and for the world. First, the president will reaffirm the United States solidarity for israel and their ironclad commitment to its security. President biden will support our clear message to any actor, state or nonstate trying to take advantage of this crisis to attack israel. Dont. Jonathan the present of the United States is heading toward another war zone. Antony blinken speaking in tel aviv. Live from new york city this morning, welcome to the program. Your equity market on the s p 500 is negative by 0. 2 . The next day or so looks like this. Bank of america next hour, Goldman Sachs tomorrow and Morgan Stanley after the bell tomorrow. Things start to pick up with netflix after the close. Tom i think tech is going to have apple november 2. You cut apple, the mystery of the bloomberg article yesterday, sales are slower in china and the stock really didnt react. I dont know what to say. Jonathan manddep singh says its too early to tell whats happening with the iphone. If that weakness is pronounced, i would go straight to the idea of weaker consumer sales trends or competition in china. If its competition, even if you get a rebound in the country, the competition could be real and we will find out if it is in a few months time. Tom it will be interesting to see. Later today, i have the honor of speaking trevitas and his experience with nato and the u. S. Navy. My book of the summer 2 was034 2034 was by elliott ackerman. Its a wonderful must read about the south china sea. The reality here is many pontificate and many talk. For example, the First Battalion eighth marines, if they were in gaza, what would your regiment be doing . We fought in fallujah and before that battle, we were dug into trenches on the outside of the city and the rain waiting to get the order to go in and launch the assault. I assume there are many groups and regiments of Israeli Soldiers sitting in the exact same position now, waiting to get the order to go into gaza. Tom what would you think is the plan . My listen to the general of the marines. They have a fear of urban warfare so what will be different here from your experience and afghanistan and fallujah . Its tough to overemphasize how costly and gritty urban combat is and how much it takes away whatever technological advantage you might have. This is the type of combat that is fought room to room, house to house, block to block. The analogy is its the equivalent of being in a knife fight in a telephone booth. Close quarters and that is a type of fighting we will see in the weeks and months ahead in gaza if the israelis launch a significant ground assault. Lisa there has been discussion that the israeli army has held off on that ground incursion for a number of reasons. It could be conditions are prepping but ultimately, they may choose some other means. They were hinting at that overnight. Do you think that is a likelihood . Do you see another way other than what you just laid out . There is certainly a logic behind it. Hamas knew they were doing with they launch these attacks. These attacks were designed to be a provocation. Obvious move would be for the israelis to go into gaza and hamas knows once the israelis go into gaza and the battle begins, quite quickly, Political Support internationally for the israelis will be as brutal as anything you can imagine. The question to the israelis is how do we accomplish our objective which is the degradation of hamas without being baited into this brutal urban fight inside of gaza . Im certain israels leaders are weighing that and looking for other alternatives of how to degrade hamas without having to fight this battle. If they can find that through limited strikes integrating the leadership of hamas or some of the raids weve seen on the outskirts of gaza, they will take advantage of that so we will have to wait to see what they do in the days ahead. Lisa people described this as another proxy war between iran and the u. S. And between iran and israel and see that as the big question mark. Weve seen the overnight tit for tat one day after another. How do you understand when that becomes a fullblown new front to this war . That goes to the purpose of the president s visit. The purpose of the deployment of two u. S. Carrier battle groups to the region is to provide a strong deterrent against iran launching a broader war from the north with hezbollah. Right now, you are seeing hezbollah and the arabians testing the response not only from the israelis but the west and thus far, we provided a pretty resolute response. That is obviously the big question is how much this war becomes a contagion in the region. Jonathan its hard to understand how meaningful the headlines are. This is from the wall street journal u. S. Military selected roughly 2000 troops to prepare for a potential deployment to support israel. In the story, they say the troops could advise and provide medical support. They are not intent to serve in a military role. From your perspective, how meaningful is a story like that . Israel is one of the United Statesclosest allies. We have crossed military partnerships with them so this is just an effort to both of those partnerships. I would be surprised if you set any type of meaningful deployment of u. S. Combat troops in israel. Among our allies, they are a country that does their own fighting. They are not reliant on the u. S. That being said, we provide them with equipment and resources and i would imagine many of the troops will be enablers as the Israeli Military gears up for a very largescale operation. Jonathan how risky would be to u. S. Personnel on the ground given the conflict you expect to materialize . If the u. S. Did this and i doubt we would at least in the nearterm, its a significant escalation because then you start getting into real wars by proxy and you can see a response from the iranians by putting in their own trainers inside the conflict as well. Whether they are has below fighters or members of the Iranian Revolutionary guard. Jonathan thank you, sarah, lets catch up soon. Thank you, sir. Its unclear if the u. S. Would deploy the troops and where. They say they are preparing to support israeli troops. Thats about all the detail weve got. Tom the answer is logistics and moving stuff around and maybe intelligence. I cant say enough about everybody pontificating. People like mr. Ackerman, this is a key phrase, certain multiple times. This dashed combat and out. Its 1, 2, 3, and four efforts of high combat battle with the kind of experience we need to listen to. Jonathan weve got to try to get clarity on the headlines coming through over the last week or so. We will turn to the Economic Data in a couple of hours with retail sales in a couple of hours. A little bit later this hour, you will get earnings from bank of america. Next hour, Goldman Sachs. The equity market is 0. 2 . From new york, this is bloomberg. To get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. 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