Daniels in our wall street week daily segment. Katie welcome to bloomberg markets. Take a look at markets on this monday morning and there is green on the screen behind me. The s p 500 currently higher by about 8 10 of 1 after two straight weeks of losses. It is the same thing if you take a look at big tech, the nasdaq 100 also up about 8 10 of 1 even though you have tesla and apple on the back foot this morning. Take a look at the bond market and that selloff is continuing to build momentum. 10 year yields almost 11 basis points. We are talking about a 4. 6 to handle when it comes to that 10year treasury yield and that is because of course we got more ecodata this morning and like weve seen, it was very hot. We are going to talk about that a little bit later but lets talk about one stock we are watching this morning, Goldman Sachs. The Bank Reporting that revenue beats across the board, shares are flying right now. For more, we are joined by sonali basak. Give us the rundown because the stock reaction is really telling. David solomon now addressing analyst on how sustainable those gains are in the trading, in Investment Banking. Remember, we are just starting to see come back and lets call in durable david because durability is the word he is using to show that businesses that have typically been volatile over the last couple of decades or so can now be more sustained. What is interesting is seeing being asked by analysts on whether this was an average quarter or a peak order. How would you define it . He said it was strong but he has seen goldman have bigger quarters. Goldman really punching above its way, leaning in on those financing businesses to bring in more trading business and a very volatile market. When it comes to Investment Banking we are just in the early innings here of that 2024 rebound. Still, advisory fees of more than 1 billion. All these fees have also led to more expenses. He is getting questions about those expenses. Compensation expenses really rising at the secondhighest pace year, just behind jp morgan. Goldman executives now telling analysts they are very focused on efficiency. Of course we do know their efficiency ratio in particular did beat wall street estimates. So even with that jump in expenses and goldman executives talking through those inflationary forces, you are still seeing them in those regards. Jonathan shares currently at about 4. 6 , that so far is the best day since last december that holds. Goldman really getting across the board. How does that set us up for the thanks that still have yet to report the likes of bank of america and Morgan Stanley tomorrow . Sonali bank of america, member those big, commercial banks to face a big downturn in fridays trade because you saw worries about that future of net interest income. Her bank of america the trajectory will matter a lot and for Morgan Stanley, Something Interesting is that you saw goldman bring in the Equities Trading revenue above jp morgan. Remember, historically Morgan Stanley has been the leader of that path but in recent quarters, you seem goldman jump above. It sets the bar really high and for Morgan Stanley we are going to want some updates on what is going on in the asset and wealth manager. That wealth manager reportedly facing some pressure, under investigations from u. S. Regulators. So update on that will be critical watching tomorrow. Katie im sure we are going to be speaking to you in just about 24 hours. I thanks of course to sonali basak. Lets take a deeper dive into these assets. Youre going to do that with ryan dietrich. He joins me now on set. Great to see you. Ryan thank you for having some good weather in your city. Katie it took a while to get here. Ryan my sons name is gus, so there you go. Katie it is a great name. Maybe the last fund department, lets talk about earnings. It is the very start a earnings season, it seems to be going ok if your name is goldman, but how are you expecting the rest of the s p 500 and the stock market a large to fare . Ryan to follow the recent trend, coming in in the betterthanexpected. Up about 3. 5 on the s p. We wouldnt be surprised at all if it came in at five, maybe more. 85 of companies are beaten. All in all, you look at this retail sales number, consumer still strong. Are we over eating, are we not . We dont think theres any reason to think this earnings season will not feel surprising to the upside once again. Katie its interesting, for weeks ive been asking to the fundamentals justify what we are seeing when it comes to the price action, when it comes to the broader index. People have told me yes, and then you have jp morgan out with a note this morning saying that a lot of good news when it comes to the upcomings earnings season, it has already been priced in. If there is cap disappointing here just because again, good news is already in the stock market . Ryan theres always a risk when you are five months in a row. Friday there have actually been a lot of companies that had some negative news ahead of time. Theyve got guidance out negative ahead of time. Need that bar is lowered but one interesting thing to us, the first half of april historically isnt that great. April 15, this is the low and that you rally into the end of may. That is just seasonality, you dont blindly invest in that. But of course we got the terrible news of the weekend, maybe late april rally fueled by earnings makes a lot of sense. Katie seasonalitys, if this actually holds, we had a terrible first two weeks to april and now of course we are up 8 10 of 1 , so we will see again if it actually plays out. To focus a little more on earnings, when it comes to the broader price action, we have seen this rally broadening out. We do expect earnings to broaden out in a similar way, or is this really big tech power in america . Ryan we are hearing it is all the tech. But you look going out, it is going to start broadening out. The financials, industrials, there are some areas. I know small caps have struggled but you look at smallcap revenue and earnings, that is where a lot of the growth is going to come from. One more point on the breath of this market, two weeks ago we had 89 of the companies of the s p 500 above the 200 day moving average. That is a lot of for the patient. To us, there is a lot of participation which is a healthy sign for a bull market. Katie we are definitely going to get into small caps. If you weeks ago you made a bold prediction which we will get into but i do want to talk about geopolitics first. The news over the weekend, iran attacking israel and honestly coming into the futures open last night in the open this morning, i wasnt sure what to expect. You take a look at the stock market right now, it seems to be really shaking off that risk of a broader conflict. How do you think about pricing in geopolitical risk into the u. S. Stock market . Ryan its very hard. We took a look going back to world war ii and found 39 major instances. Jfk murdered, 9 11, the big ones. The s p was higher threemonth later on average. So we are not minimizing what is happening but the bottom line is if you are in a recession, if it even causes a recession, right now i think this looks a lot like january 2020. The u. S. To the drone strike on the iranian general. A couple days later, iran struck back in iraq and hit some bunkers were u. S. Troops were supposed to be, but they went there. It seems a little bit like that, and hopefully calmer heads come in. Katie that is a good point, this is a quickly moving situations of definite something to monitor. When it comes to praising geopolitical risk, we are talking about the stock market here and it seems to sort of the tenuous when it comes to pricing that in. What about other markets . If you are looking for a haven, does it make sense to think about those worries as it relates to maybe other Asset Classes . Ryan it does. We had a slight overweight to commodities for well over a year now. Weve got a little bit of gold actually in some of our tactical models. We are bullish, we dont see a recession but there are some reasons to think a welldiversified portfolio makes sense. Im calling this the rocky balboa market. When you have a big down day, 0. 75 , that is not a lot. Weve seen historic jumps that next day this year. Like the most ever. Rocky, you knock them down, he always gets up. With all the news, did you really think it would bounce back today . We are seeing rocky once again with the stock market. Katie someone made a Michael Keaton reference to me last week and i had no idea what they are talking about, but i do get rocky references. Stay with us, with quickly take a look at was moving underneath these markets right now. Lets start with tesla. Katie tesla, one of the worst performers of the magnificent seven announcing a 10 headcount cut globally in line with a number of executives leaving the company. Ari ludlow has been all over this, a brutal two day stretch, a brutal year today. Underwhelming sales as well as consumers pushing back on wanting to buy evs or pay up to buy them as well as the fact that elon musk has to wear a number of hats overseeing Companies Like x, spacex and others that are really kind of detracting away from the upside. In that news of the headcount, normally you see shares riffing off of that. It does seem like the underlying concerns are continuing to bubble for tesla. Katie shares down almost 4 . The fact that you have seen this rally broadening out, maybe that is not as painful to the s p 500 as it would have been about a year ago at this time. But apple, when it comes to apple, china has been the bear case for a while. And we are seeing the worst shipment numbers for the iphone since the pandemic. This along with tesla, two of the maybe not so magnificent seven companies, underwhelming so far year today. Another negative headline we have, seeing a number of updates related to the barricades, related to competition in china and maybe consumers pulling back. Maybe this really does hinge on that market over in china and the ability for iphone and apple to kind of combat some of these rivals. We are seeing their data jumping. What is going on . Is down about 15 . This is not anything really new. This is totally normal. This basically is step one of two for insider shares to at least potentially be able to be traded. They headline risk, people panic, that is ashley not the case with this update. Now the sec will be able to go through this, send back any notes, talk to trump media about what is next. When they deem that effective, some of the dilution from the morans are treated could come into play in the board can expect the process, but all things considered, this is actually something that is quite normal, though we do typically see some pretty sharp declines, so people maybe not continuing to understand some of the minute details. Katie all in all, not a great day for donald trump, also arriving in court in manhattan today for the start of his first criminal trial. More on that later, but bailey lipschultz, thank you so much. Coming up, the u. S. Consumer keeps on spending. Retail sales below forecast. We will break it all down, next. This is bloomberg. Katie u. S. Retail sales feeding march forecasts as consumers keep feeling a surprisingly strong economy. During us with more is mike mckee. I feel like surprising is the right word to describe what weve seen over the past really over the past few months. What did we learn today when it comes to this economy through the lens of retail sales . Basically that you did a good job propping up the economy. Americans just dont seem to want to quit and it seems to be a combination of rising incomes and supplyside benefits. As prices level out, people are able to get merchandise that they want. Wed seen goods prices sort of level out and that is what weve got today in the retail sales report. A much stronger than expected number of seven tens of one for the headline. For the control, 1. 1 . But even more important than that, big revisions to the prior two months. February was revised up to 9 10 on the headline. The control number revised up to a 3 10 gain from flat. At this point, what it looks like is that we are seeing essentially the same amount of spending we saw in that big fourth quarter. Just a second ago you had up the chart showing the changes in the individual sectors for retail, and what it basically shows us is that yes, gasoline is a big tribute gas prices were up, but as you can see, the numbers on the far right, the percentage change for the various parts of the retail sales report, they are spread out among a lot of different categories. There are fewer categories as the rig in january that were below zero. So it looks like a fairly strong spreadout report, and it looks like good news for the economy overall. Katie i did actually buy two pairs of pants yesterday so i am sure we will see that reflected in the april figures. You had a conversation with the new york fred fed president John Williams earlier this morning and he is still expecting rate cuts plural this year. Quickly tell us what you guys talked about. We talked about whether or not they need to cut rates. The economy is strong, unemployment is low and inflation is still falling. And he said yes because real rates are high enough that they could start to slow the economy and the lagged effects of rates would impact the economy down the road. So his base case is still that we get some rate cuts, but as he pointed out, they dont need to do it right away. They can wait for more evidence going forward. Katie really appreciate the breakdown. Of course were seeing a lot of this reaction come through the bond market with yields of sharply. Lets keep the conversation going now with ryan dietrich, chief market strategist. With actually talk about the fed a little bit. It has been shocking to see us go from six rate cuts priced into the conversation, does the fed really need to cut at all . About 6, 7 weeks ago we heard 6, 7 cuts. We thought the economy would be a little bit stronger. Were still im not sure optimistic at the right word, but still expecting to see two or three cuts this year. I get it, the cpi was a little hot, but i big theme has been productivity. When you have higher productivity, that allows for higher wages and it put to cap on inflation so you dont get this spiral of inflation. We are optimistic that we stick with the cut were two, but why are we having less cuts. We still think it is more of a dovish that then we had obviously the past couple years and they cut or two down the road still makes sense. Katie so you take a look at the 10year treasury yield right now, camped out around or. 65 . Quite a move. When you think about some of the areas of the market that youre are feeling good about, small caps for instance, how much do these smaller companies, these Midsized Companies really need rates to come down . Weve liked small and midcap since late last year. Midcaps have done better. It is an important factor but we would say look at the valuations. Ive done this for almost 25 years. Sometimes people say they are cheap for a reason. If the economy comes back, look at the ism manufacturing that we just saw. When you start as see jobs in manufacturing, two or three quarters later, small to midcaps historically lead because it means the economy is getting better. Small to mid, the market is pricing in certain areas. Those are the chief areas. We still think that is an opportunity for people. We are not wildly making this huge bet, we just think that is a place people can find some alpha. We think small is going to play a pretty good catch up before it is all said and done. Katie is that a broad brush strokes opportunity, small and midcap that large . I would say more of a broad look but smallcap industrials, Smallcap Technology has done well. There are some of those more aggressive areas. We have been under weighing utilities and staples for a really long time. Smallcap is not all that different. Lets talk a little bit about volatility. It really hasnt moved in a long time, that feels like it is starting to change. We got above 17 last week, just below 17 at this moment. How do you think about volatility in this market because it has been dormant for a while. We havent had a 2 daily loss three historically very long time. Theres lots of ways we can talk about it, but the peak to trough correction so far has been only 2. 5 . That would tie the police volatility ever. The honest to say we are probably going to have more volatility before the year is done is very high. We wouldnt be surprised at all if we had a 5 a percent correction sometime before the election. Last year, 10. 2 correction into the end of october, still over 20 for the s p. Im not saying rough times would be perfectly normal after 30 rally in 12 months, but to have a welldeserved scary pullback, dont forget, election years, you tend to get a pretty strong summer. It is right before the election when you get those jitters that we had. Katie it is a good reminder, this is an election year. Taking a look at trump and manhattan correlated today the quickly while i still have you, we are talking about equity, market volatility has kind of been left for dead. Bond market volatility has definitely been seen why the updraft. Diva expect that translate into the equity market . Bonds and commodities, you could argue. But the bottom line is yes. It a lot of volatility in some of the other markets can kind of knock into some of the other areas and caused some volatility. But the bottom line, this is a bullish trend and a bull market. We are going to have more volatile moves as we start to move into the second half of this year. We still think this is a full. Katie great conversation as always, the appreciate your time, hope to see you soon. Ryan dietrich, carson group chief market strategist. The social climber segment is up next. This is bloomberg. 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