Positive by 0. 5 . It is all about the calendar this week, all about the tech earnings. Tuesday, tomorrow, tesla. Wednesday, meta. Thursday, google and microsoft. Lisa its going to be interesting to see whether even a beat is a disappointment to market because so far that has been the tone. Weve gotten the biggest selloff going back to late 2022. Have we already priced out that potential disappointment set out for a positive upside surprise, or is this a pivot point at a time and a lot of uncertainty . Jonathan lets talk about tesla. Downline 2. 4 this morning. More than 40 yeartodate and we start this week with another round of price cuts. Annmarie a string of bad news is coming to tesla and some tomorrow they are supposed report first revenue decline in four years. A challenging Earnings Call for elon musk. Not just the cuts. Across the board, china, europe and the u. S. , but also the job cuts. The fact that they are trying to basically pin the future on this robotaxi that remains a ton of questions. Lisa i keep thinking to myself is this really a situation of a car company that is trying to mask itself as something else, and our people going to come to that realization . Were looking at a 40 plunge in operating profits. Jonathan tesla, we need to talk about the bond market as well. Last week, when fed officials wondered out loud are we restricted enough . The conversation began to shift. Lisa frankly they were just following the market and it didnt disrupt the market as much as i would expect. The question of the weekend, does this Federal Reserve need to completely change its communication strategy because right now, it aint working at a think a lot of people would be with that. She calls it the uturn. You can call it whatever you want. The big issue is they are losing credibility because their communication strategy is failing. Jonathan lets go to equities. Equity futures look a Little Something like this. Positive on the session coming off the back of it week of losses. The nasdaq 100 coming off the back of its worst day of the year. Tech on friday absolutely hammered. Nvidia down by 10 . Lisa and it was because Super Micro Computer announced a turning date without further guidance. This is what we got set up for this week. First of all, we dont have fed speak, which i think is important. We do get tesla on tuesday, meta on wednesday as well as microsoft and alphabet and a little intel on thursday. How much does that set the tone . When it comes to the data, that is all friday. How much does this confirm the reflationary narrative that we get, and in the absence of fed speak, we can options. A lot of people are focused on these options, record options. 70 billion of 5year note on wednesday and 44 billion dollars on thursday at a time when yields are at the highest of the year. In either buyers going to come in . Jonathan a ton of supply later this week. Mag seven earnings on deck. Terry haynes of pangea policy as u. S. Lawmakers tame amed tiktok and elsa lignos. U. S. Stocks looking to bounce back from the worst week of the year. Macro risk advisor saying this. I am a more diversified than i thought i was set absolutely no one. Dean, wonderful to catch up with you going into a critical week for earnings from the tech. Lets just talk about the performance, the tech cohort about has dominated this market for so long. What are we learning about what has happened . The performance obviously has been unbelievable. What has been even more special in terms of owning this particular group of stocks has been the correlation properties of the stocks. Theyve been incredibly strong in terms of their performance but theyve also been unusually and unsustainably low in terms of their correlation with each other. When we look at the volatility of the s p we are looking at two things at once. One is the volatility of the stocks in the s p and the second is the correlation to those stocks. You just mentioned nvidia went down 10 , basically nothing. Friday, apple was just down 1 , microsoft was down 1 . Earlier this year, that 16 move, that was also really in isolation. The quote you read for me was the just this idea that i think what happens over time that investors tend to certainly price the risk. They price how much they own based on the realized volatility of that asset and as i said, the realized volatility of the s p 500 has been unusually and unsustainably low because of this incredibly muted level of correlation across the three or four stocks. I think that really the fragility of the market, this idea that the stocks just move in isolation. There is no macro factor that is going to drive the performance of the stocks. I think that is a vulnerability for investors. Jonathan is that why you are still advocating for Downside Protection . The market is going through a transition right now. The vix popped up to 1820. It is a lot higher than it was but obviously weve seen it considerably higher than that as well. One of the conundrum that investors have right now is that the increase in the vix has not really been driven by the size of the moves in the s p. The realized volatility is only 10 or 11 which is challenging for investors, a big spread. I think that is basically the Market Pricing in uncertainty. Uncertainty on the Monetary Policy front. You guys review the fed potential changes in its language, we are obviously watching the short end of the curve taking the cuts out of the curve. And of course, the geopolitical risk is something that typically is more bark than bite, but weve got to Pay Attention to it. One of my favorite quotes, most economists know the stock market. I would broaden that out to just the level of risk premium. You can really learn a ton by just analyzing implied volatility. These prices are just singing right now. Gold has rallied substantially in the face of a stronger dollar. Very atypical. Even as goals rallying, these are things that are telling us about an underlying risk dynamic for the market is trying to understand things. It hasnt yet, it is still holdings economy up as a consumer. I do think that there is a lot to be said about this upcoming series of quarterly reports coming as well. You are not lisa the only person who suggests that right now if you listen to the market signals they are telling you we are at some sort of inflation point. Michael orourke at the same kind of idea. What do you think this says about the relationship between bonds and stocks . Is this a point where higher yields is bad news for the stock market and frankly, people are not digesting the good news is good news the same kind of way, meaning that any upside surprise either on earnings or Economic Data could be problematic . I think there is something to that. At some point, the rise of the 10 year and the taking out of these cuts from the short end of the curve intended is something that is going to test the stock market resiliency. Remember, around this time last year the market actually priced in a number of cuts toward the end of 2023. Those did materialize and the stock market did quite well. It is not for sure that the fed has got to stay the course in terms of keeping rates where they are, the u. S. Economy has just proven completely visibly in. One of the things i scratch my head every time that is not enough a part of the conversation around the essential inability of Monetary Policy could to contain the economy is the degree of deficit spending. We are spending 7 more than we take in with a 3. 8 Unemployment Rate. It is pretty unsustainable and i think the issue for investors is when we look at government bonds as a stabilized portfolio, youve got a push and pull. Youve got this incredible supply that is coming, testing investors ability to take it down. You got unsustainable deficits that i think are certainly getting a lot of attention, and then the bond market does want to rally based on geopolitical risk. I dont know that you are going to be able to count a lot on stock bond correlation as you have in the past. And of course because you cant, youve got to really focus a lot more on option strategies than just using bonds as a diversifier. Lisa this week we do have these three problems, the Economic Data, the earnings which are the true test of the mag seven, and we do have those options. What are you looking at they can kindest kind of give us a sense of where we are going at this Inflection Point . Prices going to tell us a lot. What you are trying to do is read with the market is telling you. If you get a bad option, and we see these in the past, and the s p goes down a lot based on that auction, it is telling you about a market level of discomfort. Of course the data itself has become critical again. Core pc on friday, obviously everyone is going to be watching. Those were big data releases for a time in 2022, not so much in 2023. And again i think we are supposed to watch these other assets like oil and gold for indication of just market discomfort. What i would just say is 5 twoyear note yields, it kind of harkens back, youre kind of paid to wait in a way that you werent for a long time. I think you are supposed to really think about what you can earn on the short end of the yield curve at least for now eight it is a lot of uncertainty in the market. Jonathan jonathan weve heard that a few times over the last week, thats for sure. Grandma went through the auction slate this week. Lets do it again. 30 billion bark after about 70 billion of fiveyear notes. There are some record auctions on some of those. This was a big feature of the conversation last week. Americas deficit, the sustainability of u. S. Exceptionalism, the disruption he could cause the rest of the world. And a lot of people lisa didnt have answers of what that disruption could be, suddenly the u. S. Is going to lose the privilege to borrow and spend recklessly, as some would say. The key question to me is you dont know when you hit that threshold and what we heard this basically we are going to hit an Inflection Point when it comes to interest payments. We dont know where it is. We are just bumping up against that danger point. Annmarie most of them think it is going to be a market issue that forces washington to get their act together instead of washington saying look at what the imf put out, a rare warning about the United States, lets do something and be proactive. Dont think so. It is going to be a mess in the market that trickles down to washington. Jonathan we are higher by three basis points or so. The yield at the moment, 4. 65. Here is your bloomberg brief. Dani the New York Stock Exchange is asking stakeholders about their thought on 24 7 trading. The survey asked respondents whether roundtheclock trading all week plus how they would staff the overnight session. Regulators are also assessing an Application Form that happens by a startup that launched the first roundtheclock exchange. U. S. Commerce secretary dena removed the says huaweis latest phone shows that China Remains behind on chip technology. They downplayed the claim of a breakthrough and also said that the tech gap shows that the Biden Administration has been successful in imposing export controls on china. And a rare rolex with a split second chronograph sold for 3. 5 million at an auction. It is a record price for the model. Produced in 1942, is one of just 12 ever made and nine known to exist. The watch has a case damon are of 1. 73 inches making the largest rolex watches ever made. That is your brief. Jonathan Financial Conditions are still using. Up next on the program, tiktok. The idea that we would give the communist party this much of a propaganda tool as well as the ability to scrape 170 million american personal data, it is a National Security risk. Jonathan the conversation about that socalled National Security risk ending up next. traffic noises the road to opportunity. Is often the road overlooked. at enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. Because we believe the more ways we all have to move forward. The further well all go. To me, harlem is home. But home is also your body. I asked myself, why doesnt pilates exist in harlem . So i started my own studio. Getting a brick and mortar in new york is not easy. Chase ink has supported us from studio one to studio three. When you start small, you need some big help. And chase ink was that for me. Earn up to 5 cash back on business essentials with the chase ink business cash card from chase for business. Make more of whats yours. Get your Business Online in minutes with the power of ai. With a perfect name, a great logo, and a beautiful website. Just start with a domain, a few clicks, and youre in business. Make now the future at godaddy. Com airo jonathan bouncing back to snap a sixday losing streak on the s p 500. Yields a little bit higher by three basis points. Lisa said earlier, the good news, the Federal Reserve decision the following wednesday. Just a week or so away. Under surveillance this morning, the clock ticking on tiktok. The idea that we would give the communist party this much of a propaganda tool as well as the ability to scrape wanted 70 million americans personal data, it is a National Security risk. The timeline is a complicate a transaction. Jonathan the house approving legislation of the weekend requiring bytedance to divest from tiktok or the band. The bill attached to an a package for ukraine in israel. The senate is expected to vote on the measure in the coming days. Terry haynes writing we are still of the view that the tiktok issue get stuck with by years end, but how matters in the senate where the debate has been outright ban vs. Letting potus investigate and figure out specifics to take tiktok or any other similar website. For anyone else out there who is confused, what is and isnt going to pass in the senate . The aid package certainly passes. Ukraine, israel, the indo pacific, an awful lot of sanctions and Foreign Policy matters that pass, which i view as a congressional rebuke divided, essentially to get more energy and moving on Foreign Policy. Beyond that, i dont think largely we know yet. There are two main approaches, the one of the ban, the other is lets give the president the direct authority to evaluate websites generally for problems similar to that of tiktok, National Security problems. There has been a debate about that. My instinct is that the wave kind of washes over the people who want that more nuanced approach, and we get right into the full ban, but i dont think we are going to go for a couple of days which approach theyre interested in taking. If that is the case, it complicates things because then the bill would have to go back to the house for final passage. Annmarie they extended the amount of time bytedance would have to sell or divest from six months to one year. Does that help his chances in the senate . I think it probably does. You played senator warren on the bumper and hes absolutely right. This is looked at as much more of a fairness and Business Case matter than anything else. Nobody is trying to shut off tiktok tomorrow, and it is important for senators to be able to say that as they are voting. Annmarie you say you are still of the view that the tiktok issue gets dealt with by the end of the year. Do you mean dealt with in congress or dealt with altogether . This looks like it has a tremendous amount of legal battles ahead. I mean in congress. The posture of the United States government and what they are going to do about it. The legal case, frankly, i will tell you is overblown. The short strokes are that the site somehow his First Amendment rights and all the rest. This is very much uncharted territory legally in the united date generally, but what the First Amendment fundamentally focuses on either right of individuals to speak and nobodys right to speak on the internet is going to be negatively affected if they cant do it on one of one billion sites. Lisa if i were cynical i would suggest may be the one year timeframe pushes us past the election where this becomes an issue that has been dealt with where no one feels the consequences if they are younger and they use tiktok. Is that part of the reason why things were extended to a year . Im pleased you are not cynical, lisa. Annmarie lisa i appreciate that lisa . The short answer is yes. I do think that is a consideration. I also do think that the Business Case of the primary reason, so accusing the United States senders of politics is not a particularly controversial matter passed by november elections is politically important for them. Lisa just talking about the political environment, i spent a lot of time thinking about Mike Johnsons transformation where he was with kant that didnt want to provide funding to ukraine, and he said that this article that im that is transformation, he prayed a lot, do we have a sense of what intelligence documents really guided some of the decisionmaking that could put his ship in jeopardy . Specifically no, but there are sort of two things at work on speaker johnson. One is the pure National Security case, the idea that he got briefed on and from all accounts, everything ive heard, really sought out in just the way he would want from a Senior Leader in the congress. Trying to get the best case and the best view of what the National Security problems were and what the consequences might be. The other thing which i think is underappreciated that speaker johnson is a committed christian, says so, professes so, and the idea that russians were torturing christians became a powerful motivator for him generally, and increasingly the evangelical community in the