Good morning. John and tom have ditched me. Manus cranny is with us, which is a good thing as we try to understand how we can get past a bond market that will not let anything else matter. I want to talk about earnings and geopolitics and everything else. Instead, we are talking about a 19 basis point swing in the 10 year. All of a sudden, crashing down. Manus to bill ackman and bill gross have that much sway in the bond market . The bottom line is, that huge amount of volatility, the one thing that surprised me was why did the equity market it more of a bid on the back of a swaggering move . Was it reappraisal a bond risk . Lisa probably just ptsd. Last month and a half as chest impacted the equity market from the bond market. Hi they to stocks, low bit is tosca manoj offensive strategy when the bond market is moving this quickly because the defense stocks tend to be more bond sensitive and debt ridden. The Equity Investor doesnt know where to turn. Frankly one day is one day in the equity market will say lets see where the trend moves lisa . Are you saying that we are seeing the stock market have more rationality and more control and less volatility than the bond market . Yeah and this is been the story all year. Equities have another thing to hang their hat on and thats called earnings. In broader Economic Conditions and earnings have improved this year relative to last year. Equity markets can trade on that as well. The bond market impacts valuations and high debt stocks and high leverage stocks but not the market at large. The equity market volatility can remain relatively suppressed even when bond market volatility is so extraordinary considering the earnings backdrop. Lisa its shocking as we wait for earnings from the big tech names. When we take a look at davos in the desert, fii conference, tire commentary from the ceos there. It was surprising that suddenly they are striking a note manus manus that is pessimistic. It shifts when you hear from people like jamie dimon talking about 6 on treasury yields. When you go through the rollcall of who is there, you can find the bond trader. Ray dalio says hes more pessimistic on the Global Economy and noah quinn says we are at a Tipping Point of fiscal deficit. They are incrementally becoming more bearish. Lisa the state street ceo said there is a hangover market seems to have from the geopolitical events. How much do you see that . Are we seeing a tamper an equity valuation because of what is going on in israel . You see it mostly because whats happening with yields but oil prices are the proxy for whats happening in the middle east as far as the equity market. When oil prices started accelerating in july, it had an impact on the equity market in rotation and had an impact on Sector Performance and country performance globally. It is starting to show up and earnings as well so the oil users of the world are seeing earnings revision momentum turned sour. The Oil Producers of the world are generally experiencing a positive lift. Lisa we are seeing a little bit of a lift in oil this morning on west texas intermediate and crude. People look at this as a gauge of whats going on in the middle east. Its hard to really get a true read. A 19 basis point swing on the 10 year and 20 one points on the 30 year because of data out of europe. Talking about recessionary conditions in europe. In the u. S. , composite take it comes out. The future investment Investment Conference in riyadh is starting at 7 10 a. M. And jamie dimon will jordan will join us. Alphabet and microsoft reporting earnings after the bell and key to understanding how much more this equity market can rally given what a momentum builder these two have been. 55 gain for alphabet. Joining us now is shawn sulfus. How do you get away from the volatility in the bond market . I dont think you do. What you do is youve got to get through it. We recommend to our investors in times like these when the bond market sets the stock market balancing between gains and losses, look for babies to get thrown out with the bathwater. Think of your goal as beyond and is not in the day, distinguish or between a traitor and a longterm investor. There is plenty of opportunity here. Manus the biggest opportunity, a couple of guess yesterday said now is the time perhaps to be neutral on duration. They are thinking about adding duration. Do you feel more comfortable adding sovereign duration instead of corporate duration . We have a mixed view of that. At the longer duration, we think more corporate. At the shorter end, we think of the guppies. We are overweight equities, underweight fixed income. We think in this environment, its the end of free money is the normalization of Interest Rates, bond buyers are getting something in return for the money when they buy a bond and bond issuers have to pay for the privilege of borrowing money again. We are leaving a time of emergency liquidity to a more normal environment but its difficult because its a dramatic increase in Interest Rates. Its costly for leveraged investors thats not our venue. Manus the terrorism has been reached by the bond market on the equity market. When you look at this structure of the market that happened yesterday, it wasvirulent by anyones estimation. Perhaps the long and shortterm stabilizers of the market have been dislodged. How alarming was yesterday in terms of the moves . The 30 years was 21 basis points. Are the stabilizers removed or should we not worry . Ive been in this business for 40 years. Ive been through every boom bust and recovery cycle since 1983. We see this kind of thing, the one thing that seems clear is this is not a typical to see these kind of dramatic moves. With all the things going on within the market globally across asset classes, it is to be taken into consideration and its quite normal. We are right about where we should be in the process. Its uncomfortable but considering where we been from the financial crisis to the pandemic to the disruptions of supply chains and now to a geopolitical risk that is elevated to extend we havent seen in years, this is not atypical. One of the things that has changed is the degree of bond market volatility which is abnormally high. To you anticipate that to change going into next year and how is the volatility frame your equity Market Outlook . I would have to say when we look at this year, we came in overweight equities and underweight fixed income. In terms of performance, it hasnt been a bad call if you look at the s p 500 versus the Bloomberg Global treasury. It would seem to be the way to go in equities. We would expect Going Forward, we will experience less volatility as the Federal Reserve is able to extend its operations and working its mandate with nascent sensitivity in this hike cycle. They are being helped out by the long end of the bond market. We have seen the yields come up there. This looks like a process that is not comfortable but is one that should reward investors who are diversified and understand and can understand is and can withstand a certain amount of volatility. This is a transitional period. You are overweight on equities and i imagine its been frustrating given the lack of participation in the market. What do you think will catalyze better performance and more distribution of gains cross the equity market . Some of it will be structural. If you look at the case of some sectors, you will find better valuations in other areas but the area of technology is likely to be central to all of this. The fact that Technology Today is in a time of innovation. Its not just for technology, it affects the consumer and business and its embedded in the lives of business and the consumer. Advances in technology affect all sectors, all 11 sectors of the s p 500. If you do a year to date spx on bloomberg, you will see it got a year to date cyclicals have beaten the defenses. Consumer discretionary, Communication Services and im looking at bloomberg but its an eye at test but it hasnt done that badly. Weve seen Earnings Seasons that have once again outpaced expectations. Its not a robust situation, but its consistent improving resilience and thats what weve got to see. Thats got to continue but its a lot of factors working here whether its among the consumer or business or the fed, whether its the size of the u. S. Economy and its diversity. Its been a remarkable story so far. Lisa what is your target by year end . It remains 4900. When we put the 4900, we had had our target put in last december at 4400. We gave it a couple weeks and we saw what was going on. We raised our target to 4900, looking at six7 upside. And last i saw, it was around 17 and it is under observation. At this point, we will leave it at 4900. Lisa thanks so much. Interesting to see, clinging to the bullishness despite all posts hosts of tierney by the bond market. His commentary is interesting. The effective sectors performing the worst of the spp s p 500 is interesting. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. I look at the financial situation, the fiscal spending which is more than is ever i am talking about the u. S. But it is true around the world. It is more than it has ever been with peacetime. This unedited feeling that Central Banks can manage this stuff, i am cautious. I dont think it makes up piece of difference whether the rates are going up 25 basis points or more. Be prepared for it. I dont know will happen. Lisa that would be jamie dimon, of Jpmorgan Chase in saudi arabia and we will hear more from him coming up in an hour when he speaks with david rubenstein. Right now, we are struggling to understand some of the geopolitical developments especially in light of markets that have been relatively sanguine. Crude is trading up the nymex. There is pretty fiery rhetoric and concerning discussion about the u. S. Losing its role on the global stage. Joining us is jennifer flinton. We are hearing about the myriad conflicts that they u. S. Finds itself facing and the inability of play. Fractured government to deal with it. How concerning. Of a fractured government to deal with it. How concerned are you . Jennifer i dont think there are anywhere closer to 217 then they were a few weeks ago which is the magic number to get a speaker on the house floor and with the volatility in the u. S. And the middle east and ukraine. This is the focus that the senate will take on in a supplemental tilt that the president sent to the senate last week. Every time we show this montage of faces, of who could lead, what goes through my mind is how do we go from a field of three last week to a field of nine four . 9 . Went did the newcomers need to do and say what do the newcomers need to do and say to commence the gop . Jennifer it is about bringing different factions of the gop together in the house. You have to conservative hardliners who want to stick to the previous fiscal levels in the appropriation bills and government level that has to be done and we dont have to pass a stopgap residues stopgap resolution to take us to the end of the year or they have to come to an agreement in Appropriations Bills and the senate is marking a different fiscal year than what the house wants to mark. You have to bring in the margarets moderates. Breaking those two factions together is going to be bringing those two factors together is going to be the biggest mountain to climb. The front runner is tom. From a risk perspective for us in the markets, is that the name that delivers continuity, constructor constructive government . Is that the name you are coal asking you are coalescing around . Jennifer the answer is yes and he has executed on getting legislation passed and he understands his conference so having someone at the helm like tom, or tom emmer would be a positive sign. What timeline are we looking at for the next potential Government Shutdown and how does the lack of speaker impact the timeline . Jennifer we are looking at november 17 and it is difficult to see a scenario where the house and senate come together on an agreement on how to fund the government Going Forward prior to november 17 because the house is in such disarray. We will likely have to see some sort of stopgap resolution passed by november 17 and the question in seeing where the republican, republican conference is in regards to electing a new speaker, what is the forcing mechanism . Is it the deadline or is it a supplemental bill for israel or for the rest of ukraine and and bill and the endo in the endo pacific . When you think about the uncertainty coming out of washington and Geopolitical Uncertainty across the world, how does this manifest in Financial Markets . Do we see this play out in commodities, where do you see the most profound trade to emerge . Jennifer we are in earnings season and it is difficult to know how this will play out and we are all in washington sitting on the edge on our seats waiting to see what happens in the middle east and it is hard to see how that doesnt take a predominant place in making decisions Going Forward for washington and i would assume that the markets will have a reaction. Lisa i was reading a column by the axios ceo. Never before we have talked to so many government officials who in a private are concerned about so many overseas conflicts at rest points. At once. Whether it is china and butting up with russia at a time to his voice u. S. Weakness and the fact that the u. S. Cannot get its own house of representatives together, how do you view the conflicts of all these things and how will it affect the u. S. Ability to respond . Jennifer in that same axios report, they were talking about the fact the white house is actively getting intelligence reporting to house members, to the big aid that also to the rest of the conference and caucus in a bipartisan way, to get those members, though senators up to speed on the confluence of those factors. And what it means geopolitically. I think that over the next 34 weeks, there will be so many shifting dynamics internationally and potentially domestically that will force the hand of the republicans in the house to get it together. And move forward with a speaker, whether that is one of these eight, whether it is another member or empowering the current Speaker Pelosi temp. Speaker pro tem. Lisa have to say, how do you price in Something Like this . It is an existential risk to equities. Ultimately, the greater degree of war and geopolitical content conflict ut you tend to have, you see that as a inflationary aspect. At the same time, we have no certainty that we are going to participate considering what is happening in washington and we do not know what the path of spending looks like even for domestic spending let alone geopolitical support. The only real play in the equity market is through rising equity risk premium. We have seen that but you have to wonder how much of the bond market weakness is related to these concerns. We think of it as purely Monetary Policy dynamics and the components of supply and man can be jura by more than monetary can be driven by more than Monetary Policy. If you look at gold and swiss, they have outperformed b enter up until now. 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Since starting golo and release, i have dropped seven pant sizes and ive kept it off. Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . Lisa another day, what will the bottom market bring the bond market bring . Jon ferro and tom keene are off. We take a look at a market trying to bounce on the heels of maybe a little bit of a bond rally yesterday but not today and this as the session grows older shows volatility is the name of the making game. S p futures up 4 10 of a percent. How many guests this morning were trying to understand why we have seen such incredible volatility . You can throw any reason for this. The last clip we played of jamie dimon, does it matter we get another rate hike, no. There was a sense of exhaustion of steepeners and exhaustion of having tried to punch it up and it became exhausting. Lisa a lot of stock figures are trying to figure out when they can talk about earnings. When can we care about earnings and that is the key question . Gina that comes down to the bond market. This has been an interesting earnings season because we have 75 of Companies Meet expectations and that is above the longterm average rate and you are being the longterm forecasts. Analysts are a little too pessimistic. Price reactions even for beats have been waived below average. Have been way low average. Lisa we will talk about the politics of gm to parse through the positives of the earnings plus what we have seen in the striking situation as well as with labor negotiations. Under surveillance this morning, over in the middle east, hamas releasing two more hostages and cause and calls are calling for israel to rethink their round invasion their ground strike. It is hard to get your hands around some of the negotiations