Little bit as we work our way through the middle of the trading week. The bond market, call mark, for the second time in a week calmer for the second time in a week. The 10 year, down four basis points. Lisa has been talking about this for a while. Are we here for the right reasons or the wrong reasons . The most bullish fms since january of 2022, the biggest jump in Global Growth optimism since may of 2020 at a record jump in allocation to commodities. Jonathan the fund manager survey has the headline fully bully. The most overweight commodities going back, a record jump. This is the set up to yesterday and the day before, jay powell coming out and saying its been a little bit disappointing for us, we might have to wait a bit longer in the reason why people are seeing the potential for pullback, we are not fundamentally shaking the confidence. Jonathan the quote for me yesterday did not come from jay powell. It came from the vice chair, philip jefferson. I will share it with you now, the base outlook is that inflation will decline further with the policy rate hub steady at its current level. At the current level. Our old friend pk would say extending the xaxis. On time and taking longer. Lisa and what you have now in markets, its time. Remember yesterday, what if the fed chair came out and said he was hopeful and not confident . Thats the subtext, they are hopeful and not confident, the reason they are holding it higher for longer and right now the market is trying to come to terms with that. Annmarie i got that sense as well, that we are expecting the confidence to come with more data. John, you mentioned the timeline, that makes me think this is political. If they need more time, theres only a certain number of meetings and data points left before it becomes unfathomable. Jonathan lets talk about the politics. Joe biden calling for higher tariffs on chinese steel. This from lael brainard, the president understands we must invest in manufacturing and we have to protect from unfair exports associated with Chinese Industrial overcapacity. Where is the president today . Annmarie pittsburgh. Jonathan whats he talking about . Annmarie tariffs on steel. Hes talking to steelworkers. You have to think that when you see a policy like this, given how much of this kind of steel is in the marketplace, its 1 of demand in the United States. A little over 1 billion last year. They probably look at what the resident is doing gearing up for the election. Trump and biden both won the state in the elections that they one, and you have to think that they worked backwards. Lisa what do you read into this from the market perspective . If its inflation, you are not going to see tariffs like this going through in a meaningful way. If it really is this idea of economic competition between the u. S. And china, you can expect stickier inflation and this is what the market has been trying to reconcile. Annmarie its neither of them, its purely politics. Jonathan purely politics with economic consequences. We are going down to washington, d. C. In a few hours for the World World Bank spring meeting. This is a bigger issue. They are down there talking up the benefits of free trade. Feels like everyone is throwing in the towel on all of that to get elected. They know that if they Start Talking about doing anything else, they will not win an election in november. Lisa how do they compete with the idea that china has been unilaterally funding other countries to exert influence where they talk joint cooperation and china going its own way, china being the one country that nobody talks about. Im curious how people address how this will shake out and what they are doing to either get them on board or come up with a Cohesive Strategy and the others. Jonathan theres very little cooperation and we will try to talk about it throughout the week. S p 500 futures, theres a bit of a lift here. Yields are up, 45366 on the 10 year. Crude, backing away on wti. Coming up, catching up with state street. Jeffries, the boeing whistleblower is set to testify on capitol hill. And then we catch up on the management shakeup. Jay powell put 5 yields back in play, admitting that cuts will have to wait. Saying that if the fed has not started to ease by july, we dont believe they will be able to cut in september, it will be too close to the election. The timeframe for cuts is closing sharply. Lee, lets get straight to the argument. Why do you think that the election matters that much . Lee if we were in the middle of a cut or hiking cycle, september is a perfectly light meeting. Being within six weeks of an election, you dont want to start a new cycle there. This is why im saying look, if they dont even july, i dont think start a cutting cycle in september, meaning that the november meeting is there until the election, that is why september really for me, its difficult for them to move. Jonathan we have breached in yesterdays session for the second time in a week with the 10 year getting closer. We are trying to figure out if they are up for the wrong reasons or the right reasons. And what it ultimately means for the equity market. How much competition is the bond market providing against stocks now . Lee its starting to be a competition. Two years of that our growth, 10 years are up because we are getting worried about inflation. We are looking at breakevens. You can see the two and fiveyear moving up as well. Look, with the bond market, two and 10 being 10 are moving. Then it becomes a very real challenge for the equity market. Look, i still think as long as the curve is inverted, as long as the market Still Believes that they are about to embark on a series of rate cuts, emphasis can hold in. At the moment, that is where we are. We have extended and pretended so far this year. March, the first start for cutting. Then june. Now we push it back again. The important thing is the market believes we are going to enter and easing cycle. As long as that scenario of equities generally carry, they can all carry on trading as we have been. Maybe it gets more challenging from here, i think it does, but overall the risk environment is passed to as long as the market believes cuts are cutting. Lisa how much conviction do you have that we will be embarking on a rate cutting cycle with a risk on deal at a time that is look shaky . Lee my conviction levels on the whole cutting cycle have been limited for a while. Look, i worry that if we dont if chair powell doesnt get to cutting before july, im not sure we can get one this year. I worry about the base effect in the second half of this year and the shelter component of cpi in the second half of this year. House prices are going back up the u. S. Pc shelter and cpi tends to lag house prices by 12 months, implying that in the second half of the year they start moving back up. Base effects are generally not supported in the second half of the year. The real risk is that in the second half of this year, inflation moves back up again. It hasnt come down as they hoped for in the First Quarter when the base effect was positive. My confidence level is that we are about to enter a really prolonged cutting cycle that is quite low, actually. The market isnt there yet. The market Still Believes that we are, that is why i say risk holding for now, but the end of q3 is when im starting to worry that the market is going to have to have a rethink. Lisa i spent a lot of time last night thinking about the dollar in what it means for other rate cutting cycles around the world. How close are we to a strong dollar starting to break things . Lee i think we are there. One thing ive been amazed by is the market reluctance to price earnings, but we have a huge macro divergence, probably the biggest we have seen in decades. The Interest Rate market has been very reluctant to price other central bike cutting before the fed. They have no choice now. The ecb has pretty much nailed the june move, with chair powell yesterday obviously talking about the fed and the market has been forced to pricing thanks cutting the fed. And thats fine. Fx markets are still not moving that much. Look at where the euro is now. We are pretty much the middle of the range, weve been here for 12 months or so. Its not as though we are in extremes. The yen is a different case but we are not really in extremes. Other Central Banks should be confident to cut rates as they see it. If the euro is getting below parody, maybe we should worry. But that is not where we are right now. Annmarie we heard from Andrew Bailey yesterday at the bank of england and he pretty much imply that they are ready to go before the United States. Is that your base case . Lee it is. This is why we have a negative yield of sterling against the dollar. Look at what the rate are could has pressing. The first bank cut is september. Pretty much the same as where the fed are in terms of rates pricing. That makes no sense to me. U. K. Growth is negative. You can u. S. Growth is twice, 3. 1 in the First Quarter. Very, very different economies right now. U. K. Inflation is higher than expected this morning it is now below u. S. Inflation, headline for the First Time Since 2022, moving in different directions, the u. S. Growing above trend, the u. S. In recession. The bank of england should be cutting before the fed. No doubt about it area the market still doesnt have that price, it has to be pulled forward with sterling weakening and you can see the euros sterling higher in that story. We pulled forward on the ecb but not the bank of england in the same way. Jonathan you talk about parity on the eurodollar, are you actively looking for those levels to come back again . Lee not yet. I got called out for being too bullish on the dollar last year, i thought we would go further and we reverse. I think that the dollar over the next month, couple of months, it is going to struggle to make gains across the board. We have taken so much out of the fed this year, its hard to take a lot more out. Maybe we can in q3, things could change dramatically, but right now you wont see it. Its going to be more idiosyncratic, moving on the dollar, rather than in q2 where we have rate cuts elsewhere. 110 is a long way on that basis. I think that we get down to 120 on the euro, maybe down to the 103 level. Quite a ways from here, honestly, given the ranges we have been used to with these big moves. Maybe not the ones you are talking about. Its possible that the other economies, they continue to weaken, but they seem very wary of cutting too much and that might contain some of the moves. But it is hard to look young the dollar right now. Jonathan lee, good to catch up, as always. We have seen some big moves so far, today, and you might see some bigger ones with yesterday closing out on dxy with six days of Dollar Strength. Lisa we talked about who cares most, the bank of japan, the ecb, or the peoples bank of china . Take a look at the one weakening and the fact that they are avoiding cutting rates even more to avoid further depreciation of currency. This is a massive issue for the other Central Banks. It has got to be front and center. Jonathan what if you are worried about tariffs . Lisa weakening the currency, suddenly you are exporting and more cheap goods. It gets hairy when you start to think about it. Jonathan not saying thats what it is, but it is an interesting dance. Right to bring it up, Dollar Strength is a big issue at the moment, weaker on the session. Updating your stories elsewhere, lets look at the bloomberg brief. The most valuable European Technology firm fell sharp fell short of Equity Analysis for machines needed for highend chips and they are expecting weaker than highend sales in the second order or demand picks up. Lvmh sales growth grew, revenue in the fashion and Leather Goods unit, growing just 2 in the First Quarter compared to 18 growth one year ago. But shares are rising amid relief from investors who feared that results would be worse due to a worldwide slowdown in demand for luxury goods. Record rainfall in dubai led to flights being diverted and cars being left stranded on flooded roads. The United Arab Emirates experienced its heaviest downpour since records began in 1949 at running to the leading office in dubai. The government told employees to work from home and urged private employers to do the same. Schools have been directed to remain closed. John . Jonathan so, they have been seeding the clouds, right, trying to make it rain more aggressively . Lisa how are you coming up with a is fear security . Seriously . This is their own doing . Jonathan i dont know, but they have been seeding the clouds, they have been trying to generate or rainfall for the drainage on the rainfall they have been getting, which is obviously problematic. Lisa man versus cloud will continue. Coming up next. Jonathan you should read about it. Lisa i know. Jonathan up next, bowing under scrutiny on capitol hill. The safety and consistency, and a reputation, you simply cant compete. Everyone is worried about bowing. Jonathan that conversation, up next. 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. Jonathan i love aronowitz. We spent the whole commercial break discussing cloud seeding in dubai. Lisa fascinating, some people say that they might have conducted it. They are saying they absolutely did not. This is a real thing. Jonathan im surprised it hasnt been bigger in the new cycle. Annmarie theyve been doing this since 2002 but they havent put the right drains in case it actually worked . Jonathan its amazing. The amount of flights that have been canceled as well. If you are over there, i hope youre doing ok. Yields are lower by three points on the 10 year, 4006366. Bowing under scrutiny this morning on capitol hill. Of course, everybody in america is worried about what happens without the reputational safety and consistency. You simply cant compete. That is why everybody is worried about bowing. We have got to get bowing back to the point where it can produce. Jonathan the latest, the Senate Holding two hearings around whistleblowing claim over Safety Culture with ongoing safety investigations in a criminal probe. The whistleblower is set to testify but bowing officials will not present at either hearing. Present now, these allegations from whistleblowers, how serious are they . The 777 whistleblower, thats news. The 77 has been a fairly safe aircraft. We have tracked it and we are seeing a rate of five months. We feel a lot more confident there given the track record. Bear in mind, 787 peaked at eight months. Its a lot more pressure on the production line to turn up aircraft numbers. Its of course a bigger aircraft, but the pressure of the volume really hurts. Annmarie are we going to learn something, or is this theater . Jonathan jonathan 4 i think its a bit of 2 Sheila Sheila i think its a bit of theater. There was the ntsb in the senate and we didnt really learn anything new on the alaska flight or the bowing Safety Culture. I dont think we will be hearing much new. Lisa is that news in and of itself, the fact that we are so far past where this happened, there have been lost orders and increasing delays on certain airplanes . Is it surprising that we dont have more answers as the department of justice operates a kind of middle probe . Sheila everyone asks what is going on with boeing. Kayak has a search function where you can ask what kind of aircraft you are on. Is it safe . Yes, complete the say. Public perception is what we need to change. The new ceo when announced, and no one knows how far that search is, no one knows, as well as with new technology coming to bowing and overhauling the culture and cleaning up the production lines a bit. Jonathan ntsb annmarie ntsb on capitol hill, do they see any evidence that things are moving in the right direction for boeing . Sheila it was a bit backwards looking. Very little was given on alaska. We will wait to see what happens with the audit now being complete and what happens with the next steps, but that brings you to summer time where we should see a new ceo in place by then. Bowing is in a kind of purgatory right now where they, on top of that they are producing only 17 737s per month. That brings us to airlines with a capacity being very tight. Jonathan how big is the potential talent pool for the ceo of boeing . Where do you find them . If you are a recruiter, who do you call . Sheila our most popular question every day. It seems that overall sentiment for someone new and outside. We saw it happened six years ago with ge. Larry coptic dismantled ge, they traded as a Public Company at the start of april. Jonathan is that the number we are dialing . Sheila it kind of is. He brings a strong background. There are a number of people on the board and there are also of course other airspace executives as well. Jonathan it might be a few quarters before we get there. Are we going to sit here until we pick up . Sheila we have cut to 400 but with only a handful of deliveries for the year, you will see more pressure on deliveries and depending on when a new ceo is announced, i cant imagine hes going to the rate backup the first time he steps back in. They will probably say that that cash flow target is out the door, we are not talking about the rate, we will focus on quality and once we hit those, we will start increasing rate. Lisa does that mean that we will be flying old airplanes . Because we cannot get the new ones . Jonathan with the ashtrays . Lisa you can see them at the hotel, they made into a bar. But its pretty cool. Sheila i was speaking to the united cfo last night. They had been expecting a lot of new planes this year but they are not getting them. They are positioned to be a bigger airline than they are, but they have to buy those older planes while trying to put up a premium product. Focusing on better wifi, better interiors, better food polity, keeping costs down. For now, the consumer is in a tight spot. When you think about the aircraft that were moved out of their forecast, thats a big capacity reduction out of the u. S. Domestic market that