The s p 500 negative by 0. 1 . 16 positive weeks out of 18 for the First Time Since 1971. A long run to friday. We have a double dose of chairman powell, state of the union from the president and a payroll support. Lisa which is the most important aspect for these because its a blockbuster week across the Monetary Policy and economic activity. Ultimately it has to come down to the jobs report, ultimately its can it come down to whether the economy continues to grow at the case people expect. Weather february confirms january. If it does we had a big repricing, what is that mean for the fed and this market . The Market Pricing out only a 25 basis point rate cut or less than that by june for the First Time Since october. We have not seen this type of lack of rate cuts being priced in since going back to late last year. Markets arent really alarmed about that. Maybe people think they are just pushing it back. They are not deferring them indefinitely. Jonathan we begin another week at record highs this monday morning. We are looking ahead to thursday night. The president , the political spin, needs to find a new way to connect with this electric. Electorate. Over the weekend there was a number of poles, New York Times one show a majority of his own voters from 2020 are starting to get concerned about his age. We know he will talk with his legislative wins, inflation reduction act. Abortion, all these things. Its good to be how he says it. Potentially any discussion, does he, Office Someone who is strong and can take down donald trump. I think thats the most important one. Whether the president can get through a 60 minute address, thats how low the bar seems to be in some corners of washington. If you start fading out towards the end thats good be pretty brutal. People are looking for strength, for resilience, some sort of cohesion in the messaging not just what theyre trying to cater to one group and everyone trying to placate. To me the wall street journal had a poll that indicated people feel better about the economy. Not that much but on the margins shifting a little bit. Annmarie theyre not always giving credit to the current president. In all the polls over the weekend, a recent poll in the swing state they show the trump is leading him. Jonathan im looking for a sneak peak the payrolls report. Lisa you think hes can release it . Im just saying i would like a sneak peek at the payrolls report for friday. If you want to just say dust jonathan im pretty sure the president is still in bed. Macys right now getting a big offer. The brocade going up to 24 up from 21. 33 premium to the Closing Price. This stock is up in the premarket. Lisa macys did not like the first offer. Will you reconsider. They want the real estate, the retail business. How will they extract value from a company that just came out and talked about some of the macys chains but also scaling up some higher costs. The stock is up. Lets start the bond market with some price action for you. Negative by 0. 1 percent pulling back just a touch. Yields are higher by a couple basis points. Lets go over how big of a week this is. On tuesday we get super tuesday. 15 states and one territory do vote. We get may be the sendoff or a trump versus biden rematch. On wednesday we get the job openings. We know you guys again to be really interested in the questions some of the punditry we get. On thursday we get another testifying from jay powell in front of the Senate Banking committee. Again nonfarm payrolls to me arguably the most important after that state of the union because it will come down to whether people feel there is some sort of Energy Behind this market. Jonathan the estimate creeping higher over last week. Something like 200 k. Heres the next hour or so on the program. Boosting s p 500 targets, terry haines of pangaea policy and by the state of the Union Address later this week. Boeing looks to buy its most important parts provider. We begin with our top story prayed alltime highs driving some big revisions on wall street. The latest raising the target to 5400 from 5000 prayed lori saying theres more room to run. Saying we are still constructive on the stock market with a price target of 5150. Our most constructive model has been pointing to 54 and 5500 prayed good morning to you. Lets get straight into the reasons to be bullish right now. The big one from our valuation model which is saying if inflation continues to moderate with Interest Rate relief the multiple can be higher than many assume. Thats been a controversial discussion we had prayed the other model that starting to shift is her economic model. 0 to 2 is a weak range in terms of gdp for the stock market. If you look on bloomberg and where the consensus is an moved up from 1. 6 to 2 now. The economic excitement is another reason to get excited about stocks. Jonathan i imagine the pushback you get is because people who, on the program who have upgraded stocks are bullish on the earnings prayed they often talk about bigger multiples. Where does that come from . I was building a new valuation model and had clients who said to me if inflation is ask and Interest Rates are why, i have a model that shows this. Its more of a compass than a gps but you can argue for multiples in the low 20s. People thought that was interesting and eventually they said what happens if you fix gdp assumptions. We found if you look postcovid, gdp is having a positive correlation with pe multiples. Our model goes back to the 60s but there have been certain decades where that did exist. We think the things that are driving pes are changing and its a different dynamic than what we saw. A lot of people are looking at post gse rules of the road and thats outdated to be honest prayed the four most dangerous words in finance over the weekend saying this time its different and people who are worried about some sort of bubble in the magnificent seven are getting ahead of themselves. There is more room to run. Do you agree this time is different prayed that the gains for the First Time Since 1971 is not a warning flag but a sign to keep going. Ive looked at this concentration every which way i can. If you look at concentration spikes in the market. The representation the biggest five or 10 stocks doesnt give you a signal about anything prayed it tells you people are about to be or have been noticed. I dont think its telling us anything prayed that nervousness is still out there in the market. If you look from a pe perspective the top 10 or the top five stocks are getting to levels that have marked peaks in the recent past. The rest of the market has room to run. One of the things that will fuel rotation back to Everything Else is this idea gdp expectations improve which narrow the earnings advantage of those big names. Their time may be running out but it doesnt mean they can. Lisa bank of america upgrading the forecast to 5400 talking about a 5 upward gain from here. You have a 5150 target for the s p on year end. Do you have a range that looks at 54 5500 prayed why have you not upgraded just yet . We thought this market needed to see a bit of a pullback. If you look at the data, its really quite concerning. The net pulls are hovering between one and two standard deviations and typically you get a flat market when thats happening. 6. 5 gains over the next 12. Its not a sort of panic signal but its a caution signal. Cftc is more concerned. The feud its as crowded as its ever been. On the broader u. S. Equity markets you look at the buy side in aggregate we are above the highs we have seen precovid, above the highs in 2018 and well above the highs in 2021 through 2022. I do think we will see volatility in this market. I think we will be higher by the end of the year. 5 pullbacks . I keep getting asked how big will this be and it can be more than 10 because more than 10, we are in the middle of ratcheting up expectations they are looking at that 5 to 10 range. Everybody wants the dip and when i show them the work they are sympathetic to the idea may be markets got ahead of itself but when that happens the dips tend to be shallow. I was struck by credit card spending data in the month of february. People keep talking about how we will get a deceleration prayed the indicators dont seem to suggest that. How do the people who you speak to clients feel about this . Back in august we were in the middle of starting to see Interest Rates move up. There were a lot of doubts over the fed. Thats not the case now. Now it is the u. S. Economy is so hot we will never see cuts. The emphasis is on the economy is so hot and theres a begrudging acceptance, i saw this in the u. S. Last week that this economy is not nearly as fragile as people think. This is something we tend to see postcrisis. We saw it where there was constant fear of dipping into a recession. Ive been starting to describe this as Investment Community ptsd. Theres a lot of sympathy for that. A lot of people who have been around remember that and want to pointed out. What you think bill likes saying potentially no rates rate cuts this year. I did have a few meetings before it was put out. Ive heard this in a few corners. The team was never in the march camp. Theyve been making that call since last summer and we push them on this late last week they said we do think these cuts were about preventing the downturn not sort of arresting one in the middle of it happening. So they think the fed will try to come out and sort of defend the employment side of the mandate and keep the economy from going to a bad place. I think that is right. They have talked about adjustment cuts. Thats been their view for a long time and they are sticking with that. About one hour and 30 minutes now on this program breaking down that big call. Good to see you. Lets get you an update on stories elsewhere this morning. Heres your bloomberg brief. Dani chinas dust wont hold press briefings after the end of the National Peoples congress. It scraps one of the events were a top leader interacts with the public prayed congressional leaders have availed agreed detail through september 30 prayed the package includes provisions to prevent oil sales from the u. S. Strategic reserve to china and to track foreign purchases of u. S. Farmland. It sidesteps lingering disputes over funding for defense, Homeland Security and social programs prayed space x launch the falcon 9 rocket from the Kennedy Space center in florida on sunday. On board there were three nasa astronauts, a russian cosmonaut heading to the International Space station. The spacecraft is set to dock early Tuesday Morning eastern time. Thats your bloomberg brief. A massive week on capitol hill and nikki haley refusing to back down. You signed a pledge to support the eventual nominee. Do you still feel bound by that pledge . I will make the decision i want to make but thats not something im thinking about. Live from new york city this morning, good morning. How am i going to find a doctor when im hallucinating . What about zocdoc . So many options. Yeah, and dr. Xichun even takes your sketchy insurance. Xichun, xichun, xichun youve got more options than you know. Book now. Starting a business is never easy, but starting it eight months pregnant. 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At the time of the debate we had to take it too would you support the nominee in order to get on the debate stage you said yes. The rnc is now not the same. I think i will make what decision i want to make but thats not something im thinking about. Voters heading to the polls for super tuesday on the hill we get jay powell on the hill wednesday. Joining us to discuss is terry haines. Thursday evening, 8 30 when we hear from the president who does he need to speak to in this economy and this country . He needs to speak to everyone of course but fundamentally he needs to speak to people who are unconvinced he is up to the job and people who are unconvinced he has done a good job. Those of the people he needs to focus on. He needs to treat this thing as it not only as a de facto Campaign Speech but to show hes on top of the game and issues. The Washington Post has an opinion piece that says keep the state of the union shorter. He needs to become like truman in terms of sticking to congress and blaming congress but saying he spoke for 73 minutes last year. It is far less important for biden to be comprehensive than it is to be compelling. Does he need to keep this short so we can keep up his stamina for the speech . He needs to be focused fundamentally prayed there is that stamina component but i think its fundamental politically and to markets. The strength of and the certainty of the u. S. Government underpins markets that we havent thought about in quite some time. The laundry list approach of this speech which reads reached its apogee during the bill clinton days has never really gone away. But it absolutely needs to go. What voters need to hear, what citizens need to hear is something shorter, punchier and more focused on what the speech is supposed to be. The state of the union and a little bit less about whatever the laundry list of the government is supposed to be. We had a lot of polls over the weekend, dismal figures for the sitting president. Should the democrats start to be more worried than they already are . The New York Times leading with saying its time for bedwetting, you know where the Political Center is on a lot of this stuff. I think bidens people will do what they did in 2020 which is to get out the vote and not take any of those votes for granted. I dont agree that it is time for panic. My view on this for quite some time now has been you see weakness in trump and a third Party Challenge that has not gelled yet. Trumps weakness comes down to his base is still there but it is by no means everything. What he needs is party unifier which he wont get an independents. Theres very much a path still here for the president if he wants to take it and again not take any of those votes for granted. What do you make of Kamala Harris taking a hard line on israel and hamas. The new role shes going to try to take up . I said for quite a while now that i think people ignore Vice President harris at their peril. She is very unpopular generally speaking. Her gaffes are wellknown in the Political Class but at the same time but she has constituency and there are places in the biden constituency that she can speak to and be very effective in one place there frankly is in a situation like israel gaza where the biden people are trying to speak to the Palestinian Community in the United States and abroad. So her being out there on that stage has the possibility of being very effective for the administration. Jonathan she is young, very young compared to the president. A lot of runway for her career. How does she avoid becoming the next mike pence with no political future if the president does not win this election . What she needs to do firstly of the president does not win she needs to be seen as an effective partner in the election effort. She needs to be seen as someone who did not contribute to that election defeat assuming thats where we are. And thirdly she is still well thought of by the progressive wing of the party, thats where the energy is and the money is and she continues desk and continue to be a player there. An Effective Campaign performance can go a long way there. Kicking off the week with terry haines on the week ahead in washington dc. Lori, ive quoted you about a million times and its regarding politics were talking to clients seems to be like staring at the sun. Has it gotten better . Lori a little bit better. My colleague put it this way, she said there was a begrudging willingness to look at this issue more. I think that is right and i would still say investors are moving pretty hard and its pretty painful. We will see what its like later this week but after iowa and new hampshire, of those were the questions i was dealing with. One investor put it saying i got burned and by trump and 2016 so i have to look at this now. I dont think u. S. Based investors are doing a lot now. Im getting requests for what is the historical playbook around elections, small caps are coming up a lot right now. In 2016 there were a trump trade on the trade war so whether you think we will have sort of a Republican Administration that really cuts taxes, or we have a more isolationist Foreign Policy, both of those seem like buy america trades. To be honest theres not a lot to do right now because is nothing but breadcrumbs to analyze. You said they might be more interested in the state of the union in terms of market moving. How so . Lori i think its more hope i will have something other than breadcrumbs to analyze at the end of the week. I feel like ive been educating a lot of european and canadian investors on social issues which is interesting and matter