We see a new alltime high on the s p 500. A very good morning from new york city under audiences worldwide. Alongside manus cranny and katie. Im carol massar. We are also watching oil closely backing off. We want to get to the market boards for you. It is coming after a 2. 7 gain yesterday as we continue to be concerned about escalation in the middle east. Lets bring in the team. Once again i feel like we expect it to be a quiet day but the themes continue. You see oil taking a bit of a breather. That was after a pretty dramatic tuesday that we saw. I know we were asking the question about what was going to wake oil up. What a slide its been since midoctober. It seems in geopolitical premium coming in. Im surprised the 6 is all we got in terms of the repricing. In the past 24 hours we discussed the attacks in the red sea and the u. S. Approach to iraq but the overnight news is about the conversations between joe biden and the qataris. This is about hostage release, this is about pushing the political narrative forward. There is an urgent effort to secure the release of all remaining hostages held by hamas. This goes back to the push forward on politics as the reality on the ground is becoming more heightened. Carol its hard to see how this ends. I was reading a lot, trying to make sense of it because it feels like theres a lot of moves going on trying to figure out would mean something significant in a move towards escalation. You have nonstate groups trying to make keep track of. As an unpredictability of what israel might do and what the military might do and what iran might do in terms of responses. It makes it a complicated situation to figure out does it get worse or could we find some kind of solution. Katie the escalation no one wants into a wider conflict. It seems like that is what we are moving towards. But this week the last trading week of the year this seems to be the conversation to have. You look at markets and they are so quiet as you would expect on december 27. Obviously geopolitics in focus. Hitting a record yesterday. It is up 66 yeartodate. I hate to be irrationally exuberant but its hard to not ignore some of what we got in october. Manus i can only afford one more in equity markets. Its because he says qatar so well. Manus on a more serious note, european bond markets are catching up. Look at the drop in u. K. Yields. Hugely successful auction here yesterday on the 52 week. Very much gorged upon by the bidders. So u. K. Yields are dropping braden again theres this catchup trade in europe from an extra day off. They always have holidays. Katie have we figured out what that is . Manus its called living. We dont know how to do that. Its a reminder from the guest we had yesterday about it being a global bond story. I do think about the cumulative effect of Central Banks of what we get next year in terms of possibly very aggressive easing environment. Katie a nice reminder there are treasury auctions. Corporate america got the message. The Treasury Department still selling bonds. We get the week ahead it was just about a few auctions. Do you want to show the markets, do we do that already. Front running yourself carol . New york crude down about 6 10 of 1 . The number we are watching on the s p alltime high of 4796. Could we get it we are pretty quiet this morning and the 10 year. That is a great set up and backdrop for our next guest. Chief strategist at interactive focus on this wednesday. Steve when you look back at 2023 , how do you think about the year. What do you wish you had thought about differently . Steve the thing that i missed and along with many others was we had the year, of the pain trade caught up to everybody. The pain trade was we would rally dramatically in spite of monetary tightening, in spite of a banking crisis that we did avert and i think this rally that we are seeing now was sort of the pain train in evidence. Carol im getting the tshirts made as we talk to you. Steve we will work out royalties later. I do think this was it, the ultimate catchup trade. We had people underinvested all year. They wanted it in and in a hurry. The other thing to keep in mind is if youre talking in a two in 20 thing. It counts just as much in january. We are not seeing any of it. So thats my concern is we are getting into this environment where no one wants to get in front of santas sleigh but its been on a roll for well before christmas. And certainly this is the week you expect to see it anyway. Manus carol may want an extra pay on the moniker. Carol we are all looking dish manus thats also the institutional environment. European bond markets waking up. U. S. Bond markets are really hitting some extreme positioning. The question of weaponized fall mobi comes where is the most weaponized foam oh. Is it for equity or is it to be long of bonds . Steve it is kind of both. Manus thats a hedge. Steve everybody is in on the party. I was out with a few friends recently. One of them was a retired bond Portfolio Manager and his comment was we could not give bonds away at 5 . Now at 390, no one can get enough of them. Its been this huge change in sentiment. Bonds Portfolio Managers are not immune from the pressures of meeting the benchmarks. I do think it becomes a virtual circle. Stocks start running and people start looking at fixed income. Thats always good for stocks. We really are just getting money flying in from all quarters and its chasing returns and i think its interesting that its chasing duration as we see from continuing inverted yield curve. Katie lets talk at the front end of the yield curve because that bid into cash, nothing has been able to stop it for over a year. Do we start to see the money migrate out. Whats your prediction for where people pick along the curve . Steve it depends on what happens on the desk in the economy. It is not meant as a hedge, it is meant as the existential question Going Forward. If we are going to keep a soft landing we are not getting six rate cuts. If we are going to get six rate cuts which drives money back into risk assets thats probably because the economy sticks. Its hard to reconcile both of those and thats a question we have to concern ourselves with. Will we get a soft landing or the hard landing that we still cant rule out as being priced into bond markets when the fed says we will give you maybe three rate cuts. Markets are expecting four and the market says i see your three and raise you to six. Carol dont you feel like that could be the big mess . If we are so over expecting how aggressive they could be. Katie it feels like the biggest fight brewing into 2024. Im not saying that you are hedging but lets talk about hedging overall. Looking at the vix right now. When it comes to that handle. When you look at the options market, when you look at call ratios, is there that appetite to hedge or is this just a green light to go in on risk. Steve are you thinking like a contrarian or following the herd. The shortterm straight trade , the market is just so exuberant. We still see very aggressive call bids. One of the things thats interesting is the vix is turning two inch higher even over the last couple of weeks which bearing in mind the vix is a 30 day look ahead, its telling me people might be carol its at 13. Steve believe me, people are not hedging. They are dipping their to in. The volume we see is in call activity. One of my colleagues said before the holidays every day i just see people coming in and buying up spx. That is still very much the mindset, people arent hedging. What we are starting to see is a little bit of the vix take up and vix futures are starting to look the curb is very steep. In the short term people do not want to get in the way of this rally and in the longer term there may be more cautious and expecting more backandforth volatility. Remember on that high you mentioned at the top of the show is january 3, 2022 we finished january 2021 much like this. Which is not to say history repeats but that was another period where no one wanted to get in the way of the rally. Are you willing to make a big bet in 2024. Going all in on one investment idea, what would it be . Steve dont fight the pain trade. Its for markets not to continue rallying and for bonds to back up a little bit. If you get the soft landing lets take a soft landing scenario. You dont see yields of 385 or 390 and you dont see equities where they are because they cant cope with bonds going up. Or you have the six cuts materializing because we have had a hard landing which is also constructive for equities. That to me is the biggest risk out there and the one that i can get out of the back of my mind even as markets rally and even as we are full on enthusiastic. It feels like there are some scenarios. I have this expression. Its that point of theres a lot of ways this could still go. Katie im still working around that tongue twister braden manus im not going to try and do that. You are not getting that traditional flow of money into that. People say thats a waste of money, waste of expenditure from the portfolio. Its a question that goes back to where the large cuts or small cuts. Small caps were earned next year. Thats one of the best entry points. Relative to the big cuts and that will be the debate. What is the catchup trade. Rate at the bottom you have utilities down almost 11 . It leads into weaponized foam oh. We are going to get caps as well. Steve of Interactive Brokers we thank you for his time this morning. Bringing up that idea of weve seen such aggressive thought in terms of what we might get for the fed and maybe that doesnt play out. What do we do get not that soft landing but a harder landing. So much of that powell pivoted was poised in there. Global growth will slow down next year so the question is does u. S. Exceptionalism dominate relative to the rest of the world. A lot more to talk about when it comes to the markets. Coming up dana of Investment Solutions. This on a day where it is quiet. S p futures a little changed. This is bloomberg. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Whats happening is the world posture of opposing any expansion is inevitably eroding. They are testing redlines and theyre also normalizing the violence. Thats norman rule. Former Senior Intelligence official making comments. Also watching the markets again we continue to see the s p 500 really inch towards that alltime high. Futures folks called unchanged. Across with the euro, looking at the 10 with 387. New york crude though also backing off that rally. A pretty significant rally. Higher yesterday on concerns about escalation in the middle east. We are down about 7 10 of 1 . A bit of a pullback. Lets talk about the middle east. We have a great guest to talk about geopolitics here in the United States. Policy director of the Tallman Center for american politics. Joining the team here. We do need to start with the middle east. When you look at the situation in the news flow. And we do feel like it comes cryptically and theres meetings at the white house and their stuff going on overseas. Would you make a bet on further escalation as this becomes a more difficult situation or do you see a means to an end somewhere maybe in the new year. I think the problem for the Biden Administration is these other skirmishes may not be directly related to what israel decides to do in terms of bombing in gaza. Israel has said they may not let up or stop and slowdown. Of course we know they can decide the opposite and decide due to u. S. Pressure dealing with egypt maybe that eventually they accomplish goals sooner than they think and it will ease up on the bombing and then you have a massive refugee crisis and a rebuild project in gaza. Thats one territory. It could also be that iran decides they will ramp up with their proxies in a lot of different areas. Those become distinct and separate. Thats a proxy war between iran and the United States. Thats a different ball game and thats hard to explain to the american people. Thats the political problem for the Biden Administration. Carol what do you think their mission or goal is in all of this . Wendy they want to destabilize the United States and make it less influential in the Global Economic and military and political sphere. We gave them access to some of the money that was theirs from selling fuel and oil. And then we pulled back on that access after october 7. We do still control their access to money and still have heavy sanctions imposed supported by a great many countries around the world. They want to get out from under those sanctions and be able to operate like any other country. The only way to do that is to destabilize the world. Thats where this multifront proxy escalation is the concern for everybody. We saw a readout from the biden white house, they are now focused squarely on hostage release. Do you expect another significant progress. Is that the in the sand to keep an ion. The white house saying they also discussed increased aid and the hostages being released was on that agenda. How significant is that in terms of progress and helping the situation. Wendy if hamas knows where the hostages are. They farmed out the hostages they have taken two different splinter groups. So if they actually do control where they are and whatever condition they are in there is a possibility this can conclude more quickly and the hostages can be released. The American Public does not know and its unclear whether they have that knowledge. Thats the first step. Adding the hostages released will decrease any remaining residual support for israel in aggressive bombing in gaza. Of course the administration wants that to be the linchpin of the next couple of weeks. Manus should there be more pressure at this juncture on netanyahu to seek a pathway to deescalate and the hostage release is perhaps the most visible vehicle for that. Will there be more pressure from the white house. Politically, biden bring that to bear on netanyahu to deescalate in any way . Wendy israel is not feeling as if they the world is friendly to the cause because of the subsequent loss of civilian life in gaza. So i am not sure how much the rest of the world including the United States can say to israel, stop. As a country we have not passed an additional aid bill for israel and that plays into this. If we can get in aid bill aid bill. The incentives to listen or diminish if our effectiveness in terms of aid. So thats one issue. Trump, we have not talked about trump trade if trump wins as your see us starts to roll he will ramp up enormous pressure on biden not to abandon israel, not to pressure israel and his rhetoric could be really incendiary. That is another complication when it comes to getting anything through the republicancontrolled house. Katie lets talk more about biden the politician, biden the candidate in the 2024 election. There was a really interesting poll that found support for sending Financial Aid to israel to fund the war in hamas against moss is clearly is deteriorating. 45 of registered voters saying they want more aid for israel which is significant but thats down from 54 in november. How just biden running for office try to appeal to American Voters handle this and message this. Wendy theres vocal constituencies on a lot of sides. There seems to be mass protests for not giving israel this kind of aid. Some powerful voices saying we support our allies and israel as a military ally in the middle east and thats the yard to be made. You can see in the house of representatives a number of republicans do not want to give money to ukraine for example. They want to separate that aid out. Biden saying no. Knowing he will never get ukrainian aid from the house if he decouples them. The appetite for spending billions of american dollars on munitions in particular, i think is diminishing quite a bit and that is a real problem politically and practically for the president in the congress amongst his own Party Members but also amongst republicans. Katie obviously congress was not able to get that ukraine aid through. Republicans standing their ground and sticking that a border security. What does a potential compromise look like in early 2024. Wendy that depends on what happens with the Current Crisis brewing now. A very large number of migrants making their way to the border. Figuring out what to do. That will soak up a tremendous amount of tension in the American Publics mind and i think that is a very important crisis for the Biden Administration going into that election year. We know trump or nikki haley or ron desantis will make that their key issue and there are a lot of people in this country who will vote on that issue rather than casting a vote. What is the most important issue, what is it when it comes to American Voters when they go to the poll. If the economy is good and i propose we will have the attention on foreign affairs. If the economy is shaky thats what they will worry about and they will say why we worse off than we were years ago. I think they have to be an edge to the incoming president. Thank you so much as always wendy. I do think thats interesting. I want to talk about the economy because the labor market is a tight labor market. We talk about high prices are still problematic. How does that ultimately impact biden as a standing president. Ultimately its what kind of slowdown do you get. Wages remain strong. They remain firm. As long as wages remain firm this American Consumer will remain robust. The longevity of spending will endure. As long as there is no massive break or hard landing than the consumer remains fine. Is that enough . Manus the bottom line is due the electorate really believe that bidenomics has made them better off. Carol paul krugman has talked about messaging and the white house needs to get out there. Coming up, kona on the market. This is bl