Live on tv and radio. Your bond market reopens stateside with the powerful rally on the 10 year yield. 4. 66. Tom lets see how it comes off as a flight to quality as a general statement. Think we have to let it play out. The news flow from israel is minute by minute literally. Jonathan this is a treasury market that missed out on the haven flows yesterday. And you have to throw in the fed speak which started with your interview with mary daly and letting the bond market do the work for them. Then the rally starts. Lisa i wonder if that will lead them to reverse some of their stance. Is this less of a haven trade type of a bid and more of a response to fed officials signaling that maybe they are done. That really is maybe the confused soon confusion in the tea leaves. Tom i think they are going to wait to see what ppi is. When is cpi wednesday or thursday . But the answer of ppi is possibly more important. Jonathan the update on israel, the latest from Prime MinisterBenjamin Netanyahu said the retaliation has only started. Israel announced its largest ever mobilization, per hundred thousand Army Reservists. 300,000 Army Reservists. They are going to prepare for the next phase of retaliation. Tom it is a mobilization of israel. I would suggest there is no american equivalent. It is around 300,000, that is millions that would be caught up in america. Jonathan the price action on the s p 500, a little firmer. Potentially a third day of gains. The move in the bond market, yields up by 13 basis points. The euro very close to 1. 06. Lisa one of the things will be because of the data or the feds. If the fed doubles down on this message that the bond market isnt doing the work for them, even as the bond market moves in the other way that could turbocharge some of the moves. Janet yellen is speaking at the imf meeting and i am curious to see the tone on uniting different geopolitical factions at a time of increasing splintering today at 1 00 p. M. , President Biden giving remarks on the attacks israel. Itll be interesting to see how he dovetails the u. S. s ability to respond as House Republicans debate who is going to be the speaker. Jonathan the war between israel and hamas in the fourth day with at least 1500 dead. Hamas threatening to kill hostages if civilians are killed in strikes without warning. 11 u. S. Citizens havent died in the conflict. Or Israel Bureau chief, Ethan Bronner, joins us. Where do we stand right now . Ethan 300 guys in uniform waiting on the border. They have set up a base. It feels like we are but days away from major land invasion. It is impossible to imagine them trying to carry out what they claim they want to do which is to end hamasability to do what they did on saturday again. I think markets, everything will start going relatively crazy once that happens and there is the other factor which might has bullet in lebanon join in. There was a warning from iran that israel needs to not do what it is doing in gaza. Tom you are exceptionally experienced on this. I am fascinated how you perceive israels perception of hamas as a terror group. Is it a specific group, entity or a band of thugs . What is the character israel perceives hamas . Ethan fascinating question. Israels view of hamas shifted dramatically three days ago or on saturday. Before then there was regionally it was seen as a group of thugs. Then for 16 years have been ruling in the gaza and have actually been to go shading. There are 18,000 gazans were king and israel. There was a sense that actually it was becoming a more responsible, normal kind of ruling organization. Meanwhile this just happened and it is now viewed as isis like, worse than thugs. There really was just an open slaughter of women, children and the innocence on saturday in a way that is hard to understand. Jonathan it was a massacre. There is no other way to describe it. Thank you very much. John kirby at the National Council 8 45 eastern time. With us is tony dwyer. You are actually bullish cautious before. Tony we talked about an environment ripe for an oversold rally. The Christmas Eve massacre in 2018, you have a lot of the average stocks already smoked. When you get that oversold it is ripe for a tactical bounce. It is tactical until you get it in all areas of credit and that can only come from a major fed tone change. Lisa how much of the events over the weekend altered the framework for how you do things Going Forward in terms of Stock Selection and allocation because of the potential for oil prices two higher of borrowing to increase to fund the conflict . Tony there is no way i can followup the previous speaker. It is a horrific thing. I dont know how to put it in there. This is a gas. Fed says they are datadependent and the data is a gas. This whole weekend thing and the impact on oil, if you told me that was going to happen on friday morning and oil was going to go up 4 i would have put the futures down but that is not what happened in the market rallied. Lisa there is a question on the borrowing front end of financing, we hear overnight in china open to work deficit financing to support the economy. As the geopolitical pressures heat up, does that increase the pressure on different governments to increase the borrowing regardless of concerns about deficits . Tony theyre going to increase borrowing regardless. Lets talk about when the s p pete, it was july 21 and the day janet yellen said she is issuing when the s p 500 peaked, it was july 21 and the day janet yellen spoke. China and japan are depending defending their currencies. And banks are under pressure on the Balance Sheet to extend the Balance Sheet because of the Silicon Valley bank and the regulatory environment. You lost your three biggest buyers. I dont believe the rise in rates is purely fundamental. As a matter of fact, i have been talking about a soft landing is likely the worst Case Scenario because it keeps the fed higher for longer. Higher for longer isnt good. It means you can rollover the debt. Economically i am negative enough that i an shall is starting to think bullish because you get three stages of a decline, you get good news is bad news means that as good a tighten, that was last year. And then you get the news the fed is going to be done. Then you get to bad news is bad news when you actually get into the recession trade and that is when you want to attack. Tom can we call it catharsis . You say to flat out invigorate the dwyer bull market we need a catharsis. Tony can happen from the event but it has to be a change from the fed. You had a drop incorporates, margaret read mortgage rates. The fed only cut twice. It was the treasury market dropping that dropped the Mortgage Market and stimulated the bond market. You had have an improved outlook for money. So for me it is not this great economic study it is common sense. What makes the keene household with all the kids encamps expand . [laughter] jonathan what stops the keene also from spending . Tom i have private equity coming in. [laughter] jonathan what is the common sense call on the banks going into friday . Tony they are down so much that the common sense call is dont make a guess. I dont think it is going to be great. Thank standards are tightening. Small businesses arent optimistic. The business side isnt great but they have been smoked. I think it is going to get out of the way and wait for credit to improve. That is the bad news is bad news when you want to attack banks, the consumer and the early cycle. Jonathan it a sense that high yields are hurting them and not helping, has that been the surprising the story of the year so far . Tony it is but high yields help but spiking yields dont. Lets say the bond market rallies and is helping futures. Here is the problem. You could go down 50 basis points and beat where he were when it was already a problem a little while ago. Like it was in 2019, 2016, what generated the economic recovery was a sustainable drop in treasury and corporate rates. Jonathan tony dwyer there. A big rally in the bond market. Yields are lower by 13 basis points. 10year around 4. 67 right now. Tom the radio at 2. 35 and 13 basis points, thats call it a flight. You are talking about the concern of people having their interior dynamics. They are down 5. 3 standard deviations from the peak. A few back to 2022, you enjoy it at 50 a share. It has been halved. Jonathan really, really tough year. Will get earnings from bank of america next week and jp morgan on friday. Coming up next, Stuart Kaiser, the senior fellow for the middle east and council on foreign relations. That is next. From new york, good morning. background noises this is a clustomer. Hello its what happens when Marketers Group customers with very different behaviors. Into one tangled mess. This is a mess with mailchimp, marketers can use realtime behavior data, to personalize every email for every customer. Turning clustomers, into customers. Intuit mailchimp. The 1 email marketing and automation platform. We are going to exact such a high price that not will hamas do this again but there enemies will never think about doing this again. Iran is the enemy of all, and they are pulling the strings and giving money. As i speak to you iran is trying to push other people into the theater of war. Jonathan the israel minister of strategic affairs. A big question for all of us worldwide whether iran will be implicated directly. We talked about what the working assumption was and how it changed over the last few days. Tom lets review that. It was buried into the heated backandforth between you and the ambassador. It is not that he let slip out but made it very clear that they are studying the immediacy of iran with all of this day by day. Jonathan it sounded like they were looking at incoming intelligence and trying to figure out whether there was anything to be seen conclusively. Lisa he said Something Interesting in response to your question saying initially it didnt look like iran was involved but different information has made them closely. This is an ongoing discussion and investigation and not conclusive as of yet. Jonathan the price action on the s p 500, a lift yesterday and today, up to 0. 2 . Yields lower by Something Like a 13 basis points. One of the best days since spring and the treasury market. Tom i would say it has come back in but not back to center tendency. There was such a run to a higher yield, technically speaking in no way can you construct this as a reversal. Higher in yield but we have only come back so far. Jonathan we have to start with lisas conversation with mary daly, the San Francisco fred at the back end of last week, just raising the idea, strong suggestion they are happy to did the let the bond market do the work for them. Tom you got the Goldman Sachs but the Bloomberg Financial conditions index shows that restriction. Stephen cook is a senior fellow of the these. The definitive book on turkiye false and this june we will celebrate the end of ambition and how america should move forward in the middle east. Thank you for joining us. I want to go to the ambition of the president this morning. He is going to speak. Have to recalibrate with all the legacy of 48, 67, 73. What should be americas ambition day four of this war . Steven it is clear the president is going to throw all of his support to israel. Already there is bipartisan support for anything the israelis need. They will need a resupply of interceptors and there is an antiaircraft battle moving in. It is a warning to hamas and hezbollah not to widen the conflict. That would be the nightmare scenario for the israelis. The United States is getting indirectly or directly involved and i think it is an appropriate policy for the u. S. The question will be is as the conflict goes on the israelis are clearly gearing up for a major Ground Invasion in the gaza strip, occupation of the gaza strip for periods of time, how long will the International Community remain staunchly behind the israelis operation . I think they have leeway with this president in particular with how many israelis were killed in the opening stages of this conflict. Given pattern of events and more innocent people are killed, there will be pressure. Tom this is a iran resurgent . I look around and say this is a complete surprise for many of hamas but probably also iran. Steven certainly iran is playing the role of agent of chaos in the region. The administrations efforts to modify behavior through diplomacy and incentives does not work. It should be clear to everybody by now that trying to in cage with the iranians and begin goodwill through goodwill is not a fruitful avenue to pursue. The iranians are not willing to reciprocate. They want to push the United States out of the region and want to confront israel and this is the result of it. The sooner we all come to that conclusion the better off we will be. Clear policies against iran will come. Lisa it feels like there is a feeling that iran was involved. Yesterday we spoke with ron dermer about this and as they get more information they are realizing there was maybe a more direct role from iran. Is there simply a reluctance to say it outside out loud . Steven i think publicly the indicators would suggest the iranians were involved. Meetings last spring and hamas and hezbollah took a quantum relief increase and it has all the hallmarks of actually has below, irans primary proxy throughout the region. The activity of the Supreme Leader on social media talked about it. Hamas itself banking thanking the Islamic Society for their support. If the israelis publicly pin the iranians, it does call for direct engagement, kinetic action against iran. This would be a step up and confrontation and one has to be sure that the United States and israel have engaged in conversations about the what if. Lisa in your recent article he wrote that under these circumstances no foreign government, including the u. S. Will have no leverage on israel to respond with restraint. Where is the rest of the middle east on this . We have heard about the emirates and qatar to release hostage. It seems that that is a no go. What are people doing . Steven there is not a lot they can do. This is one of the problems, publicly governments have to issue this kinds of statements that went from an bigamists from ambiguous. There is no excuse for the butchering of innocence. Behind the scenes they are seeking deescalation but many were rain remain on israels side. The israelis will have a certain mono leeway to prosecute this campaign but as the civilians suffer, there will be lots of pressure for the israelis to back off. I think the israeli public is demanding the destruction of hamas and that will give them further ability to resist International Pressure that will come from the neighbors as well as europe and some corners of the u. S. As this operation continues. Jonathan thank you for your time. Stephen cook on the council of foreign relations. Tom i am biased as a member and what Richard Haass rebuilt and what they are doing now. It is a set of smart people who work from an operative foundation of humility. You dont have many people wandering around saying i am smarter than you. It is not part of it. Jonathan john kirby is coming up, the National Security director. That conversation a little later. On the s p 500, higher on friday and yesterday and this morning. A rally in the bond market as the treasury market reopens. Yields lower by 13 basis points, 4. 67. End of us and at dovish spreads. And dovish spreads. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. The power goes out and we still have wifi a bank that knows your business grows your business. To do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. 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Jonathan attempting to build on the biggest rally on the s p 500 since august. Firm arrived. 2 on the s p. Up 0. 3 on the nasdaq. Monster rally in the treasury market, twoyear, 10 year, 30 year. The 10 year by 13 basis points, quite a rally. Lisa this to me highlights not just the haven bid but what we have been seeing with respect to the commentary from fed officials. At what point does this move encourage them to go further . Basically it is the selffulfilling cycle that leaves us in this loop with watching fed officials and the fed officials watching the bond market. Jonathan they say they are comfortable with the bond market doing the work for us and then it goes the other way. Tom that is the perversity of the markets. With the news flow going on including a war, how do we make light of earnings season and i will take the perversity of the bond market and bring it over to pepsi raises profit forecast as sales beat estimates. That is good news is a bad news. Jonathan will we be drinking less pepsi . Lisa how much will they talk about ozempic in the earnings call. Tom is this what we will see across all of earnings season as we have heard from select strategists, it may not be so bad. Jonathan pepsi up 2. 75 . We will hear from j. P. Morgan at the end of the week. Yields lower, dollar weaker. Or by 0. 3 . The conflict between israel firm or by 0. 3 . The conflict between israel and hamas, israel said they will react aggressively and hamas said they are willing to kill hostages if they if there are civilian deaths without warning. Trying to work out the next phase of retaliation from israel , based on what we saw yesterday, 300,000 Army Reservists building a base near gaza. Get the sense that it is just the beginning. Lisa the images are horrific. We have been watching this unfold. It leaves everyone with a sense of foreboding. Some of the reporting said an additional 60,000 people were called up another number has gone up to 360,000 troops to prepare for what is coming next. It is interesting when it comes to what people are watching. A former white house official said the road to oil crisis leads through iran. The response and whether they world formerly get charged in the court with being in this. Jonathan it was set after the weekend, all questions in the market will there. Tom stephen cook wasnt too optimistic. But the domestic is what we are not seeing the American Media and that is the triangulation between casa, the west bank and the northern border with lebanon gaza, and the west bank and the northern border with lebanon. The idea of forming literally what the dish would call a were government war government. Jonathan i want to turn to the news elsewhere, china considering raising its budget deficit for 2023 with a fresh round of stimulus to help the economy meet its growth targets. China issuing 137 billion of additional sovereign debt for Infrastructure Spending which could raise the budget deficit well above the 3 cap set in march. Lisa i find a response in currency markets isnt that great. This is the base case and a lot of people say it doesnt go far enough. It highlights given where we are, deficit spending to tony dwyers point is not going away. If anything is going to deepen because people dealing with crisis whether geopolitical or at home slower growth, they are going to borrow and spend. Jonathan this one is for you, you are about to go on a big trip, the imf lowering expectations for global gdp. Expected 2. 9 in 2024. Despite that the fund lifting the gdp forecast for the u. S. And raising next years estimate to one point 5 from 1 , citing stronger Business Investment and consumption. Global gdp and the global inflation outlook. Tom this comes after a shockingly conservative you. This is the view of our economists, very cautious a shockingly cautious view. This is the view of our economists, very cautious. I am looking at five years and what is actually not grim but tepid world trade dynamics. Jonathan would you like to talk about your road trip to marrakech . Tom without google nonstop. Jonathan are you going to stop in europe . Tom i dont worry about that. Francine is leading coverage and eric martin will lead the imf coverage for bloomberg news. The most fascinating trend was colby smiths article is yellen is there and is not showing up like me dropping in one day and leaving, she is committed to the meetings. Jonathan she is showing up. Tom the treasury secretarys drop in and get a photo op and leave. That is not what she is doing. She is committed to the meeting. We will get some news out of washington. On the u. S. Economy, we must look at the inflation dynamics of this important cpi report. Where is your vector on cpi . How disinflation area are you . And zeek what is concerning is recent reversal in the lindsay what is concerning is recent reversal. That is why we strip out the volatile components of food and energy so we can get the more clear underlying trend to drive up Monetary Policy decisions but the concern is we have seen Higher Energy prices driving prices for quite some time which eventually leads to a reversal in the core upward pressure so the Higher Energy price steeping into the core component and that can lead to a discernible adjustment. If see inflation showing less improvement towards the 2 target. Jonathan this goes from the fed speak. A great conversation with mary daly followed by jefferson and all seem comfortable to outsource Monetary Policy to the selloff in the bond market. What do you make of that . Lindsey this is not a new message. From the fed, the idea was always this totality of expectations and metrics, meaning yes we have a fed rate hikes also an expectation for organic change in credit conditions, Financial Market response to the feds rate hikes. If we do see this backup returned and Financial Institutions tighten credit standards, than the total policy firming may get us up to that sufficiently restrictive level, do some of the feds work and not if the fed to make that additional tweak. The messaging hasnt changed but it is the reaction from Financial Markets has finally caused the fed to maybe take a pause and say we may not need to do the final action we previously discussed. Lisa is the bond market wrong but the idea that the fed if they pause that will actually push yield lower versus the opposite that it will be that yields will state higher for longer because something moved rake in the Financial System and you will get the higher yield environment for long enough for it to actually hurt the companies and individuals need to refinance and borrowed at. Borrow debt. Lindsey fundamentals are shifting between the hawkish rhetoric and investors buying into the notion of a higher for longer coupled with the notion that deficits do matter and financing this massive expansion of the federal governments Balance Sheet and higher rates will have an impact in further tapping down investment and consumption longerterm as funds have been reallocated to service the debt. We saw the treasury increasing Quarterly Issuance for the first time in two and a half years. It is coming together for this eyeopening experience to suggest we cant continue to spend unchecked and eventually debts need to be repaid. I think the mindset and thought process is finally shifting after years and years of low Interest Rates, mitigating any concerns of a loaded government Balance Sheet having a prolonged negative impact on the domestic economy. Lisa do you see 10 year yields going to 6 because of fundamental and not necessarily structural reasons . Lindsey thanks 6 is a realistic target on a longerterm basis i think 6 is a realistic target on a longerterm asis. There are concerns of long term basis. It was an extraordinary rise from where we were and that is the new normal. I do expect this ongoing volatility between 4 to 4. 5 to be sustained independent of the kneejerk reaction as events on the International Stage unfold. Tom everyone in the game is looking long term out to look at 12 months, good luck with that. You will have a real gdp crystal ball, add inflation to it, nominal gdp which i will call the corporate animal spirit of america, what is the animal spirit going to look like next year . Lindsey when we look out for the economy, the longerterm trajectory, i struggle to model anything above 2 real growth and layer on the fact that the fed will have a different kilts time getting difficult time getting inflation under control. You are talking about a nominal rate closer to 5 . That is not a longerterm basis and i think to your point, that is where we need to be looking. So often we are focused on will we sidestep a recession in the next six to nine months. It is like sing on the last two minutes of a 10 hour run. We need to take a longerterm perspective in the domestic economy, the impact of ai, Democratic International reliance as we look out the conflict. How will this impact the fertilizer, food, Oil Industries . These are some of the components we need to focus on to have a better perspective of the longerterm trajectory of the domestic economy. Tom it is good that lindsey focuses on the last two minutes of a 10 mile run. The last time i did 10 miles jonathan youve got that. Tom the next time i did a 10 mile run, nixon was president. Jonathan we will do it together. Bramo will crush us. Tom when she comes out of the building she stopped traffic. Lisa releasing the energy. Jonathan what did you make of the last 10 minutes of the 10 hours . Morgan stanley expected looking for a pronounce slowdown in the back end of this year. Tom we have a technological superiority but only being applied to part of the population. That is the heart of the matter. How do you expand that out to the havenots in technology . Jonathan down 13 basis points on a 10 year yield. Coming up next is ed alhussainy. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. When i think about is the real rate that is required to bring aggregate supply back into balance with aggregate demand. I think current policy is restrictive in putting downward pressure on the inflation rate. That is really what my concern is. Jonathan that was the fed vice chair speaking at the National Association of business economics in dallas. The fed sounding like it might be done given the selloff. Right now it is a rally, yields lower by 13 basis points on a 10 year. Weaker dollar, stronger euro. Positive by. 3 . Helping hand to the equity orchid. , is a reflex market tom it is a reflex market. See more i have to see more. Jonathan crude, the best day since spring for the performance, a big oneday rally. 50. 4 . A sustained rally and brutal attack over the weekend. Tom we have many good guests coming up. We also will have an important guest on the work in israel. Joining us now is ed alhussainy. Tours of duty at world bank and imf. John has more narrow questions about where are we with rates. Dovetail in what eric martin reports from marrakech which is a moldy global gdp outlook. How does the real Global Economy in world trade affect the yield forecast . Ed it is example of the u. S. Being an outlier for what is going on in the Global Economy the dynamics driving rates, focus on the domestic inflation story and the domestic fiscal outlook. What is going on globally is in the background. You can see submit slowdowns in europe and germany, slowdowns in china, very little spillover into the u. S. Rate market as a result. Tom i look at where the global call is in the rate dynamic in the inflation adjusted rate, the real rate, is the real rate in the United States ample . Is it enough to affect the economy . Ed i think it is. Look at it to the length of what has happened to the inflation story. Inflation has been on a healthy trajectory down and has declined faster than market and fed participants expected. That is in terms of Monetary Policy being effective and restrictive. Looking globally, strength of the dollar and it has played a significant role in slowing the mobile economy. It was less successful for the u. S. Economy. That is a matter of time. Lisa a lot of people were talking about how Major Economies if they would stop spending when rates got to a certain level and how much deficit has been built up over this period of the pandemic, i wonder about that. Do you believe there will be any kind of spending cut back or an acceleration of spending with the hope rates will eventually come back down because there is no tolerance for weakness as we see again and again . Ed it is a difficult question because so much depends on the election coming up in the u. S. And will that refocus congress on fiscal policy and potentially pulling back on the discretionary bits and pieces of spending into the future. We dont know. It is premature at this point to look at this either here in the u. S. Or china and europe. In concluding just because Interest Rates have risen in the course of the last six months or so that that will refocus on pulling the stimulus back and getting to a place where fiscal deficits are much smaller. Lisa to that point, a lot of people traditionally have said we cant predict the government and geopolitical events we will ignore them and go toward history and chug along. Do you sense that has changed and suddenly people are believing that deficits will be bigger and yields will have to be higher and there is going to be a premium that all these different Bond Investors and vigilantes will charge because of this . Ed it is early days. The term premium story has gotten a lot of attention in the course of the last three or four months. It has coincided with treasury issuance being bumped up not just this year but very likely here as well to accommodate a level of borrowing we need. Will the term premium story be the main driver of Interest Rates i dont know. It could shift back to the fed and it could ship that shift back to Balance Sheets and quantitative tightening. I think the point for policymakers on the fiscal side is to make an assessment of whether our potential growth can sustain the current level of debt. The answer has been affirmative for decades. We have not been in a place where deficits have been unsustainable and easier to cover. That equation might change but what we have to do is assess where is the direction and travel for growth . We have significant investments happening in infrastructure and manufacturing in the green transition. It is a question about whether that will deliver the kind of productivity boost. All these remain open questions. They are not enough to pressure policymakers to focus on fiscal debt. Tom the official line back to 2 , the basic idea is some form of reversion to the great moderation. The chart doesnt show that. We are distant from the great moderation. Have you given up on the idea we can get back to what we knew . Ed is such a difficult question because we are still at the tail end of transitioning out of what happened with covid, with monetary, fiscal policy and the resulting inflation. All of these are still in the system and i think the economy is still in the process of adjusting. If productivity improves and the underlying structure of the economy changes out of covid and we can sustain higher rates for longer, then the level of rates will affect the fiscal side of the equation and there is a problem it will become unsustainable and require a sharp pullback in spending and accommodation of higher taxes as well. It is premature right now to look at some combination of demographics, productivity, globalization and conclude we know enough to say yes in fact economy is able to sustain higher rates for longer. Jonathan thank you. Down 13 basis points on a 10 year we have Bank Earnings on friday, ppi data tomorrow and cpi thursday, the big data point of the week. Tom the cpi is a big data point but pepsi earnings and analysis has been pushed aside by the news flow and our job is to stay on top of it, not just for Bank Earnings we get that through the weekend and into next week but then everything afterwards is going to be a complete mystery. Jonathan much more on the latest in israel, the National SecurityCouncil Spokesman john kirby joining us at 8 45 eastern time and we will get an update in tel aviv from our bureau chief. A big week for economic data, stewart kaiser joining us. Tom you wonder how do you write your outlook right now. Cant do it. Jonathan equity futures positive by 0. 2 . A rally in the bond market. Weaker, euro just short of 1. 06. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . background noises this is a clustomer. Hello its what happens when Marketers Group customers with very different behaviors. Into one tangled mess. This is a mess with mailchimp, marketers can use realtime behavior data, to personalize every email for every customer. Turning clustomers, into customers. Intuit mailchimp. The 1 email marketing and automation platform. announcer enough with the calorie counting, intuit mailchimp. Carb cutting, diet fatigue, and stress. Just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy. Release works with your body, not against it, so you can put dieting behind you and go live your life. Head to golo. Com now to join the over 2 Million People who have found the right way to lose weight and get healthier with golo. We are really i think on the verge of a larger geopolitical regional conflict. What happens next in does it become a wider conflict and that has implications. Psychologically there certainly has been a bit of a pullback. Buyers waiting on the sideline. Jonathan big rally in the bond architect. Live from new york city good , morning, good morning. This is bloomberg surveillance, on tv and radio. Yields lower. The treasury market was closed yesterday, the pickup, through endeavors fed speak, quite a rally ash the pickup, add in a dovish fed speak, quite a rally. Tom 13 basis points is the talking point. The 210 spread has come back for basis points. The 210 spread has come back four basis points. Jonathan we have been surprised at the relatively unified dovish response of fed officials. Lisa and around worst Andrew Hallman horst Andrew Hollen horst does it is unlikely to be successful in of longterm. All of the shocks we are seeing our ugly to be inflationary and not disinflationary. Going forward that is there focused. Jonathan turning to the price action, equities with a lift up 0. 2 on the s p. Yields down by 12 basis points. Crude lower this morning by 15 . Lisa we will get a slew of fed speak including raphael bostic, chris waller, Neel Kashkari and mary daly. Do they reaffirm the feeling that the bond market is doing the work for them even if the bond market response and goes the other direction. 1015 a. M. We will hear from janet yellen who will be in morocco at the annual imf meeting. Speaking about what she sees about Going Forward in terms of lending and how does she coalesce allies in the feeling around the imf and world bank at a time of splintered alliances. At 1 00 we will hear from President Biden. Jonathan the war between israel and hamas in the fourth date with at least 1500 dead. The Israeli Ministry responding with strikes overnight. Hamas thrilling hamas threatening to kill hostages if innocent people are killed without warning. Joining us is Ethan Bronner from tel aviv. Good to catch up with you once again. Lets walk through where we are now and the response we have seen so far and the steps you expect in the nottoodistant future. Ethan the israel this have gathered hundreds of thousands of troops on the edge of the border of gaza for an expected ground result. They have been bombarding from the air as well. The americans are sending aid that will help with the patriot missiles, antimissile system, as well as aerial ability to target things. There is basic equipment that soldiers need as well. The big question is will hamas will it be limited to hamas or will hezbollah and the north get involved once israel goes all into gaza. It is hard to know. The situation will be quite dire. Israel has cut off water and there is no place to go because the exit at the end toward egypt has been closed off. Lisa have you sensed a change in the tone with iran and its involvement in the attack . There is a question of whether they want to blame iran because it would necessitate a more aggressive response. Ethan my instinct that is in theory and it is not messaging and they have not been able to determine whether iran had eight specific hand and led this massacre that occurred on saturday in israel. I am not sure they are playing around with calling them responsible. I understanding is a couldnt link them directly to it. Tom if there is talk to a coalition, we need the bronner treatment on the Party Getting together from 30 or 40 years ago, can you have some form of emergency government in a fractured domestic politics . Ethan it is interesting with an analogy with the u. K. The analogy is 1967 when Menachem Begin was considered the loser joined the Labour Government to do the war. There is no doubt they are held together deeply by a sense of mutual survival in the face of enemies. When you see the kind of killing that are that was on saturday, tribal instate wins over on who gets to be the coalition. I believe there will be a Coalition Government and they will stick together for the duration of the war. I doubt it will last after the war. Jonathan thank you very much for being with us. Ethan bronner on the latest from israel. John kirby of the National Security council at 8 45 eastern time. The potential for a third day of gains on the s p 500. With us is stewart kaiser. We said we would be waking up monday talking about the jobs report on friday. Can we sit on the data for a moment. Stuart i was surprised by the response on friday. I thought with the jobs number it so strong who might see bond volatility hold equities back. It held that for 15 minutes and then we went back to normal operations. Friday caps allayed our view on how markets will respond. Big picture, equities like a stronger economy and you would expect them to reorient to that as well. Both payrolls and the mesh played into that. Tom pepsico released results with constructive 2020 for outlook. Typical phrase you see from a guy like you, solid growth. What does that mean . You are the optimist. People are scared stiff or eight different reasons. Stuart at this point solid would be you dont go into a recession and you get a soft landing that doesnt give negative growth. From jobs, payrolls stay strong and you can get a real soft landing. For pepsi, the most important thing is they are talking about 2024. If Corporate America has to revise up to 2024, that is dear case. If they remain cautious going into next year, we probably have something to worry about. Tom pepsico still sues fiscal year organic Revenue Growth of still sees fiscal year organic Revenue Growth in the double digits. Lisa them revising expectations upward, how important is jp morgan and the earnings on friday in setting your forecasts . Stuart the Bank Earnings in general will be important and what they do on reserves. How they talk about the deal calendar will be important. We have had headlines on Capital Requirements and how they message that will be important. Thanks have been a tricky sector. Folks are frustrated that yields are increasing and the banks are performing. Lisa are you worried about so Many Companies holding on and not borrowing for as long as they possibly can because what we are dealing with higher borrowing costs. Once they have to do that, you will see credit distress and banks have any mixed flow on multiple levels. Stuart the credit thing is willing for their ability to refinance. A lot of it doesnt happen for three years. We are getting worked up on something that isnt immediate. We are worried about credit eventtype stuff. We see losses in real estate and companies having trouble selling assets and refinancing that actually have to do it now. We 25 stocks that have near and dear refinancing risks we are worried about but it feels like we may be worried too early. Jonathan you are saying higher for longer isnt a problem soon . Stuart the peer not. The s p is more Investment Grade corporate. A lot of those folks have locked in. It is a risk. Some Companies Need to refinance. It takes one company to have difficulty doing that and it can snowball. If you look at the timing, it is not something that will hit you in the next 12 months. Tom we talk about all this esoteric stuff, it comes down to if you have to pick. Every Stock Selection you have to make a choice. Never did i think the choice would be this broad. Over the last decade, pepsi has cleaned cocacolas clock by 355 basis points, 3. 6 return per year. Jonathan so the chip company beating atlanta. Tom and his world, this is how you keep jobs, you have to pick pepsi over coke. Jonathan thank you. Tom part of american culture. Ui need to show the best master do i need to show the bass master . Jonathan we are down 10 basis points. Surprised to see the move in the treasury market as soon as treasury is opened. Were you surprised to see yields down . Stuart a little bit because the move in oil didnt get deep into it so maybe if update response in bonds would be muted. A little surprised. I have been surprised recently though. Jonathan on treasury us getting increasingly difficulty, down 10 basis points. Lisa there is a conviction. We were talking about the big picture frameworks, too early to tell. Will be will we be dealing with investors pulling back from japan, too early to tell. All the massive linchpins that gave people confidence. Jonathan that has been the story and the treasury market. I am not sure anyone has a clue beyond for. Beyond q4. The border story, equities broader story, equities picking up. Geopolitical tensions in the middle east. Equities positive by 0. 1 . Yields laura wright 10 basis points. Yields lower 10 basis points. Crude at 85. 92. Next hour, the israeli ambassador to the United Kingdom. That conversation just around the corner. Live from new york city, this is bloomberg. Its easy to get lost in investment research. Introducing j. P. Morgan personal advisors. Hey david. Connect with an advisor to create your personalized plan. Lets find the right investments for your goals okay, great. J. P. Morgan wealth management. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Jonathan have you seen personally or are you aware of any evidence that iran was directly responsible in coordinating the attacks over the weekend . Know for sure that iran provides 93 of the military budget of hamas. Did they know about this before hand . Initially we didnt think they did but now there is some evidence they might have known about it. We are working to verify that evidence. Jonathan the conclusion to that question is so important about where this goes and stops and the potential for a real, regional battle. That was the israeli minister of strategic affairs. More on that in just a moment. Equity market positive by 0. 1 on the s p. A lift in yields. We are down to 4. 6945 on a 10 year. A big move overnight off the tensions in the middle east. Have the dumbest remarks we heard from jefferson. Euro stronger. Tom some instability. Our bloomberg washington correspondent Annmarie Hordern will listen what do you suggest President Biden will say . Annmarie he will come out as commander in chief and consoler in chief. He will say the u. S. Continues to stand with israel. Potentially he will talk about aid. There is already appropriations that have been set aside that could go to israel. More secured efforts and aid going to israel. Then he will talk about what we know now as the death toll stands for american citizens killed in this massacre over the weekend, 11. President biden put out a statement and talked about the fact that there are likely americans being held hostage right now by hamas. The fbi put out a statement talking about the fact that they are working with individuals on the ground and is of the utmost importance and urgency that they figure out where the americans are and how to get them back. Tom there is discussion of a war footing cabinet or government in israel. What is the outcome we would like to see of a unified israel, domestic politics of israel . Annmarie i think we just heard from the bureau chief in israel this is a possibility and historically this is what israel has done. Right now the government is Benjamin Netanyahu teaming up with far right parties. We did hear from a former leader yesterday over the weekend talking about the fact that he would be a unity government. What you see happening in israel is there are a lot of questions about how this happened. Where were the security and intelligence failures, especially in a border with gaza and israel. Seemingly there are supposed to be informants and how did this just happened . A lot of people saying we will answer the questions but right now we need to rally around the flag. Jonathan we will hear from the president at 1 00 p. M. Axios reported that regimen netanyahu told President Biden that israel does not have any choice but to release a Ground Invasion in gaza. Has that story developed . In the last . 24 hours has that story developed in the last 24 hours . Annmarie israel right now is calling up 300,000 reservists. So the next obvious move would be this potential Ground Invasion into gaza. This is something that everyone is pretty much anticipating. The issue israel has is they are focused on the border with gossamer and the concern and with gaza and the concern is they are focused some much and the south and what happens to the north if hezbollah gets involved. Lisa that is part of the reason why some people are saying the u. S. Sent the ship to the region to prevent that conflict. What is your sense of what the appetite is in washington, d. C. To pass additional money to send to israel in addition to what is being sent to ukraine, not as a substitute or something that takes away . Annmarie we have reporting that over the weekend lawmakers floated to the white house the idea of linking the two and by doing this you would have a lot of bipartisan support with more aid and appropriate more money for support for israel at the same time linking them with ukraine, this could potentially deal with concerns and fractures and divisions with the Republican Party about how much money they want to send to ukraine. We heard from senator chris her fee and he said they are chris murphy and said they are already working on aid to israel but also getting the aid to ukraine and they could link it. But we still do not have a speaker of the house. But potentially how quickly the house can appoint a speaker is how quickly we can see any packages developed. Lisa is one thing to talk about theoretically but also to deliver. At what point does this accelerate the plan to get some sort of speaker in place . This is the reason why Kevin Mccarthy it said i will come back and be the speaker if you need me to. Annmarie i think there is definitely a lot of pressure on lawmakers to really get their act together within the republican conference to try to coalesce around someone. The issue remains that whether it is jim jordan or steve scalise, none of them can get to 217 at this moment. There was a House Republican caucus reading airing grievances and what we saw yesterday is there was really this gap of leadership on the Republican House side. Former speaker Kevin Mccarthy took that moment and gave a press conference and talk about iran and there needs to be tougher sanctions on a raining crude and how most of it is going to china and they are building up capital. He talked about the need to have ironclad support for israel and he did insinuate and say on a republican talk radio interview that he will deal with do what the conference wants. It is the former speaker who could get the majority of the conference and will he get 217 . He said eight people who said no. It is very unlikely but we cant rule it out. Jonathan next hour we will checkup with john kirby. What would you like to hear from us regarding him . Annmarie john kirby recently gave an interview where he choked up on air but getting a sense of the images and intel they are seeing would be important. What i think is adjusting and i think this is something the u. S. Is trying to grapple with is that at one point you had Jake Sullivan the National Security adviser, talking about the fact the middle east is the quietest it has been in decades. At the same time over the weekend, secretary of state Antony Blinken went out and said they have seen instability between the palestinians and israelis and that has been a concern for months. How do they weigh these two things . Jonathan Annmarie Hordern, thank you very much. This is what john kirby told the press yesterday. Clearly a ran is clearly iran is implicit. We dont have anything to prove. Tom it will come out. The statistic we heard from the former ambassador to the United States rings loud. Will heard from stephen cook earlier we heard from stephen cook earlier. Diplomacy, Foreign Affairs and the politics of this, it is a war in the war will be front and center, just like it was in the early days of ukraine. What will happen in the next six hours in gaza has to be the function. Jonathan we were catch up with the republican from arkansas. Equity market rolling over a touch, still positive on the s p 500 by 0. 1 . Yields lower by nine basis points. The session growing, down nine basis points at 4. 7070 the euro positive against the dollar of 0. 1 . A big move in crude yesterday, lower it today by 0. 4 . 86 on w ti. Loving this pay bump in our allowance. Wonder where mom and dad got the extra money . Maybe they won the lottery . Maybe they inherited a fortune . Maybe buried treasure . Maybe it fell off a truck . Maybe they switched to Xfinity Mobile on the most reliable 5g network. For a limited time, buy one line of unlimited, get one free for a year. Now i can buy that electric scooter im starting a Privateequity Fund that specializes in midcap. You do you. Switch to Xfinity Mobile today. All of the work that were doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. The idea that we have saved five Million Peoples lives, its overwhelming. Its everything. Jonathan equities holding on unchanged. Two days of gains. Positive by 0. 03 . The move fades, negative on the nasdaq, down 0. 02 . You want a mover . Check out pepsico this morning. It is above analysts estimates at 2. 16. Dani just another tom just another example of a dynamic american company. The lights are brighter with inflation and it makes it easier to do business. Lets talk about the bond market. The rally that bramo is responsible for. The shift time and yields may take away the need for the Federal Reserve to do more. Im not sure that is a dovish message. If yields do not stay where they are, if they drop, does that change the view . Suddenly you have to go further. This is a game theory type of moment with a chicken and an egg. What is a loop the loop . We said this to Stuart Kaiser over at citi. Yes we heard from the fed chair jefferson who spoke to the same thing that daily was talking to bud to wake up to 15 basis points lower on the 10 year im surprised this morning to see the scale of the move. Lisa it speaks to conviction. Jonathan the euro pops. They dollar is weaker we are positive on the session by 0. 1 . 105. 79, briefly 106. In the bond market monster rally. We are giving some of that up. In the fx market, a lot of dollar weakness. Under surveillance this morning the conflict between israel and hamas in its fourth day with the death toll passed 1500, israel now regaining full control over towns near the gaza border formerly under the full control of hamas. A Ground Invasion has not yet been confirmed, but President Biden said 11 americans have died in the conflict. Tom i am focused much more on the war than i am on all the other chit chat. Not only a Ground Invasion, but also from the water as well from both sides of the gaza strip from the mediterranean as well is one of the operative theories out there. Tom it was shocking over the weekend, lisa because of land, sea, and by air. Lisa having facetoface communications to avoid the surveillance of israel and others. At what point do we have a sense of a broadening web of blame, it broadening web of conflict and, the reluctance to expand to direct hits against tehran. Jonathan we have taken on other stories. General motors workers in canada walking off the job as contract talks fail. The Union Representing workers in canada failed to get gm to match a worker contract approved by ford. Pressure from both sides of the word at gm. Tom ford came lisa ford came to some agreement with the canadian workers. This is not going away. The strikes are still ongoing in detroit. We have strikes that have widened to other fields as well. This is the dynamic that makes us think inflation will be longerlasting. Jonathan janet yellen will speak at 10 15 eastern time over in morocco. We will also hear jefferson weighed in, saying the following in a position to proceed carefully in assessing the extent of any additional policy firming that may be necessary. I will remain cognizant of the tightening and financial conditions through higher bond yields. Tom clearly the tone you are hearing from them is a nudge towards a further restriction. Jonathan lisa and i were talking about Andrew Hallman horst over at citi. He said this we have lots of data. Ppi. Tom cpi beats all. I would go back to and select cities rents have really rolled over into a deflationary tone. Jonathan developers in the bond market, we are down seven basis points on the 10 year. On the 30 year, we have taken a look twice now. It is down by nine basis points. Tom we last saw james foley on our last trip to london. She had a foreignexchange strategy. How do you change when there is war . We have seen the market really try to grapple with that question today. Yesterday we had the predictable market reactions. Move into gold, for instance. We had oil up. There were no signs of panic. The lack of panic means investors didnt react slowly in one direction. That is why we saw the recovery today. As you keep pointing out those moves are fading and investors are lacking conviction one way or another. That is key will be whether this conflict expands. We have seen the u. S. Move Aircraft Carrier ships into the vicinity of israel, trying to calm tensions in the middle east. Whether that is significant or tom when we have war and we try to be rational, do we just migrate to usd . First of all we have to understand there is a difference here between the sheer horror of some of the events we have heard about over the weekend on the human scale, the sheer terror and panic and despair related to that and the markets the markets have no heart. The market tries to look at issues like will oil supply be limited as a function of this . How does that tie into what fed policy will do . Does this mean that the fed will not hike Interest Rates at the end of the year . The market takes out the human factor and the horror, and looks at this in much plainer, coldhearted light. May be it means that the fed will not have to hike as much. We had commentary from fed officials indicating they may not be so hawkish. What we are seeing in the markets perhaps might no way reflect some of the pain as humans we are seeing as a consequence of these events. Tom you lisa you framed it so well. It highlights how difficult it is to talk about markets at a time of human tragedy. There is a question about how much of what we are seeing in the market is a result of what happened in china overnight. The focus as humans on the imagery in markets, how much has shifted to china . Jane the events in china i have been there all year. There has been huge disappointments over the lack of growth in china. What we have also seen is that there is not necessarily the stimulus we would expect. We have not really seen that sort of stimulus. That is why we have been perhaps disappointed as market watchers again and again about the type of stimulus we have seen. We have seen properties it but not to put money in consumers pockets so they go out and spend. That remains to be seen. Will we be disappointed once again by this lack of stimulus we are use to in china . Lisa as we look at how the events in the middle east progress, how vulnerable is the euro if oil prices sustainably rise if the conflict does advance . Jane europe is of course of varies a very Significant Oil importer. The risk that germany may be following a reception, the eurozone could face session at the end of this year. Jonathan jane foley, the latest on the fx market. John kirby speaking to reporters this morning, saying the unfrozen iranian money has not spent. This is 6 billion. It is becoming increasingly controversial. Lisa some speculated that it was going to find the invasion, fund the attack. It has not been released. There has been discussion about how it is in kind aid to iran, but very much a focus that the u. S. Softened positions against iran ahead of what we just saw. Jonathan this is what Antony Blinken said to abc news over the weekend. Not a single dollar of that has been used. Tom that will mean limitations as well. I cannot emphasize how much some of the analysis we see is to me premature analysis. 300,000 conscripts being called up do not care about those niceties. Jonathan coming up at about 8 45, we will catch up with john kirby the National Spokesman for the National Security council. Lots of chatter about the 6 billion to iran. The real money is on rising iranian oil output as sanctions are enforced. Iran is making 1. 5 billion extra as opposed to if its production was capped at october 2022 levels. Tom away from the war, we will see how this is structured by the two parties. Lisa this administration would like to see oil prices in the u. S. Go down. How do you remove these barrels from the market . It is a tenuous moment we heard yesterday from ellen wald. Jonathan brent crude right now just south of 88. Coming up next, a republican from arkansas on the dysfunction at home into the potential escalation abroad. From new york, this is bloomberg. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . This is about what america is going to do. Whether i am speaker or not, i am a member of this body. I know what history it has had. Jonathan that was congressman Kevin Mccarthy, who at one time looked like he may resign from the house. Things are changing quickly in washington dc. Positive by 0. 1 on the s p, a rally and bonds, a variety of things. Yesterday the treasury market was closed. We are down 10 basis points on the 10 year. Tom we will get right to this because there is so much to talk about. He is a congressman from little rock. He has been a voice for bloomberg surveillance over the years. There are so many stereotypes of judaism in america, and the dias para is extraordinary. It goes back to little rock, arkansas in 1866 and the congregation benai israel. Jonathan a deeply emotional time for everyone involved, even those looking on from the outside. Have you had an Intelligence Report briefing just yet . We have an Intelligence Committee meeting this afternoon so we can pose all these questions that so many of us have. How did this happen and we were not aware of it in advance . Jonathan there is something odd about what we are being told currently from the administration. We heard Jake Sullivan who was optimistic about elements in the middle east. He said that the middle east region is quieter today than it has been in two decades. Congressman, which one was it . Rep. Hill i have traveled in the region since the first of may. I have been in jerusalem, baghdad, ankara, turkey, talking about the need for americas reassurance of the area but there are some key issues. Asad has been welcomed back into the arab league, even though he has done nothing to curtail the murder of his own citizens. He exports a deadly and addictive draghi is manufacturing and selling to the gulf states. I was pleased that the president has begun to make progress with saudi arabia, potentially bringing them into the Abraham Accords initiated by president trump, and to some of us that looks like a direct response that iran is throwing a disruption by fullscale attack. If we find it to be true that they backed hamas, they have been a financer of hamas and hezbollah in lebanon. Tom congressman hill, part of this is a stretch of 10 years, 15 years, which is america bouncing between politics and overfocus on human rights. Frame how that debate will go as you go to that security meeting this afternoon and in the coming days of war. Rep. Hill if you want peace in israel, you needs to have a partner to negotiate with. That is an important thing for americans to understand. There is no one Palestinian Authority that fully represent the citizens who live in gazas represents the citizens who live in gaza. It is difficult to get a two state solution when you do not have two states to negotiate with. That is why the Abraham Accords approach, the involvement of saudi arabia could be a breakthrough in trying to bring peace to the west bank, but that does not change the fact that hamas does not agree with their other palestinian brothers and sisters on the west bank. They are fully committed to war with israel. Tom what do you expect to see at this meeting today . You have been in this meeting a zillion times before. Rep. Hill we will find out what the intelligence says about the partnership that helped hamas carry out a surprise attack on israel. That is the first and most important thing. What is the response of israel to that attack, on their Sovereign Land and what can the United States to do to stand with our ironclad ally in the region to repel it. Though we have the issue concerning to all of us, which is americans that have been killed or held us hostages. That will be an important decision for the president. Lisa congressman, can without a functioning house . Rep. Hill we passed the defense appropriation bill across the house floor, billions of dollars in those bills for our partnership with iran and for counterterrorism and for state and foreign ops to advance the Abraham Accords issue. We will not send a Palestinian Authority until they rein things in. We need a speaker soon because we want our body to have the full voice of the people. Lisa are your colleagues in the Republican Party willing to tie the idea of ukraine aid and israel aid together or is there reluctance to go from one end not the other or to deal with this issue now, given how politically fraught it is. Rep. Hill i think we should treat them separately personally. I am working to find a solution to kick to an out of ukraine. We kick putin out of ukraine. On israel, we need to hear directly from the president after he completes his assessment on what we need to do to support our ally israel that we cannot do with the existing authorities or existing funding. That remains to be seen. We will hear from them soon. We have appropriated 3. 3 billion for israel two weeks ago. There is significant money that has been approved by the house. Jonathan this unfrozen 6 billion is getting a ton of attention. This is the official response from secretary blinken. Not a single dollar from that account is being spending today being spent today. Are we focusing on the right thing here, congressman . Rep. Hill lets be clear. Lets say that i ran this year will have its largest gdp source. We are talking about releasing fungible money back to the government of iran, which is a state sponsor of terrorism, about 6 billion related from oil sales to south korea. It can only be released when they make a Food Assistance purchase but it is still money that goes into the treasury in tehran. The United States has approved the release of 3 billion of natural gas money to iran. This is significant money when you think that their largest Revenue Source is 45 billion. They are eligible to receive this from trust accounts but, we are not naive here. That frees up other money in the tehran treasury. Jonathan we would love to catch up with you again afterwards to get an idea of what you heard from the government. That is the republican perspective on the 6 billion that has been unfrozen. Tom im sure the president will address that. It just hit me over the numbness of the last four days. This is not 67 or 73. We have social media. The social media from the hostages, and of war, and death, and blood is in your face. Jonathan it is absolutely shocking to see how it is played out. From new york city, good morning. This is bloomberg. jennifer the reason why golo customers have such long term success is because we focus on real foods in the right balance so you get the results you want. When i tell people how easy it was for me to lose weight on golo, they dont believe me. They dont believe i can eat real food and lose this much weight. The release supplement makes losing weight easy. Release sets you up for successful weight loss because it supports your blood sugar levels between meals so you arent hungry or fatigued. After i started taking release, the weight just started falling off. Since starting golo and taking release, ive gone from a size 12 to a 4. Before golo, i was hungry all the time and constantly thinking about food. After taking release, that stopped. With release, i didnt feel that hunger that comes with dieting. Which made the golo plan really easy to stick to. Since starting golo and release, i have dropped seven pant sizes and ive kept it off. Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . There is deep. There is deep concern that there was an intelligence failure in israel. Can we expect treasuries to behave as that safe haven status . Options markets are notoriously bad at pricing geopolitical risk. This is bloomberg surveillance with jonathan ferro, tom keene, and lisa abramowicz. Tom the week of Inflation Reports may be off the radar on a thursday as the news flow is extraordinary. James kanter is expected to be with us on Resurgent Energy markets. We continue with our coverage of a war in israel. The israeli ambassador to the United Kingdom is to be with us in this hour. Benjamin netanyahumosts recent quote, they will respond Benjamin Netanyahus most recent quote, they will respond with violence. The question we have asked is whether we will see a full Ground Invasion based on the preparation over the next 24 hours. Tom i wonder if it will shift the markets may be an invasion from water is suggested as well. Im not saying that as a fact. It is a movable feast here. Jonathan this monster rally you are seeing in the bond market for treasuries has two reasons behind it. We were closed yesterday, so we get them today. I want to go back to lisas conversation with mary daly, the first fed official to come out of the gate and suggest that the moves we see in the bond market may take away some of the need to do more at the Federal Reserve, just to allow the bond market to do the work for them. We heard it from jeffreys. Also heard it from logan as well. Tom this critical Inflation Report it was a relief to talk to lindsay in the last 90 minutes about something as prosaic about what will happen thursday. Lisa that feels prosaic and almost comforting to think about those things. The question i have is you cannot really separate that now as, an overhang especially if you get a pop in the price of oil, if you get for the repercussions in iran. As a result how do People Factor in an unknowable . Regardless of what we get tom it eight dollars a barrel on brent crude. 88 a barrel on brent crude. Janet yellen is there with a broad agenda, but when did she come back to the states to face the crisis . Jonathan listen to the language we hear from the administration currently. This is from john kirby the spokesman for the National Security council. You will hear from him on this networking about 40 minutes time. In terms of specific evidence on these sorts of attacks, we dont have anything. Tom our conversation with the ambassador of israel to the United States yesterday noted the new worldwide data check. The 10 year yield is down was down 13 basis points. Jonathan we were higher. Now we are basically unchanged. The dollar is showing some real weakness. Lots to look ahead to. Lots of ppi data. Cpi the big one on thursday going into Bank Earnings on friday. Jp morgan right around the corner. Tom we will pick up our coverage of the war here in a bit. We lead this hour with charles kanter, senior portfolio manager. He has seen wars like this before. You look at a war like this, you study it, but it is removed from portfolio analysis. By and large it is removed from portfolio analysis. We have so many colleagues who are part of this conversation who have loved ones in israel that are candidly getting called up to the reserves so emotionally we have to comfort down into show empathy for the horror of the terror attacks that took place over the weekend. It is earnings week, and for us it will come back to the fundamentals around our company. Jonathan a lot of banks are reporting next week as well. Banks have really struggled. If you had told me the data will be good, the expression will continue, yield will be higher, that is all good things for banks isnt it . Charles they are being required to hold more and more capital. That is a challenge. Because they require more normal capital and others arent, there is decision taking place in the market. That is part of the story. When you see rates move at this speed and in this quantity, you always worry that something might fall off the bus. That is not to suggest that anything will. These companies are very well run, but there is always a risk of that. What you saw with Silicon Valley bank and first republic, you see how quickly the narrative can change. Lisa it was the common belief that banks set the tone for the earnings season. Has that been eradicated because of how closely regulated and specific of their business set is . Charles to a large degree it comes back to the makeup of the market. If we are talking about the s p, 30 of the market is driven by seven or eight companies so by and large those of the companies that more than likely set the tone. Many of those companies are remarkable. Have invested hundreds of billions of dollars in r d to drive future growth. They will be resilient in the backdrop that we find ourselves in. You have to think through the evaluation equation against those 7. Some cell very expensive cars and have a lot of exposure in china some sell very expensive cars and have a lot of exposure in china. Institutions lisa it sounds like you like big tech. Charles we are in an environment where we are all debating what next year looks like. You want to own businesses you are highly confident that can grow earnings regardless of the environment. We like tech because of what it has brought to the ecosystem over the last 20 years. It will include companies in the utilities sectors, more businesses that are down a lot for a variety of reasons and will deliver surprisingly good growth. There is so much bifurcation in the market as it relates to valuations. It is not a market of seven stocks. When you go away from those seven, you find very interesting things. Jonathan i tom i am fascinated by the return of a real yield. I im going to assume along my great theme that there is a great zombie roll up that weekly or markets and we end up, with a strong. How do you identify the strong . Charles you identify the strong through one Pricing Power. Many of the businesses we talked about today enjoy Pricing Power, even on the Consumer Staples side. Dr pepper enjoys Pricing Power because of the oligopoly tom if you are sitting over there, you are the wrong side if you are sitting near me. Jonathan we spend commercial breaks teaching tom. Charles it comes down to Pricing Power, driving revenue opportunity and product video over time. It comes down to Balance Sheets. We are in then environment where the cost of financing has changed a lot. The more coverage you have in getting to the next cycle. We are debating when this cycle ands and the next one be cycle ends and the next one begins. Jonathan coming out of the financial crisis, we used to talk about disruption. Every time i heard that word, it would drive me nuts. Can we talk about something truly disruptive . When you start to hear about ozempic did you start to go through the portfolio and say things are about to change here . We debate on lots of levels on the personal and. Professionally, i think it goes to how believable are the demand rights underneath the company. I thought the head of walmart north america suggested that the behavior they are seeing in more of their state will oriented snacking cola businesses are starting to show things that are unexpected. At the end of the day you have to think longer term. It is a very nuanced conversation. Our consumers going to get access to the drug if they want it at an affordable price . Will Health Care Providers give them access to it . Do they really change their longerterm behavior . It is a demographic conversation potentially as well. I think it is candidly too early to tell. Pepsi is talking about it on their conference call. I do not have the benefit of listening in on that. When you come back to the staple companies, you have to probably weight. When you look at many of these companies, a lot has already been priced and as it relates to particularly some of the Pharma Companies responsible for their drugs. Do you want eli lilly up 50 , or do you want to own cure gore cocacola down 45 keurig or cocacola down 45 . You can understand why some of the Pharma Companies are 50 and why they are down significantly this year. If you start to notice meaningful shifts in how people consume cola and snacks and hostess twinkies and other things like that, they will lie just as well, but it is against an evaluation framework as well. Keurig and dr pepper, you have a Coffee Business and a cold drinks business at the same time. Jonathan we are positive by 0. 05 . The reason i ask that question is because a lot of people out wealthy getting rich off of the obesity epidemic in america, investing in some of the companies you detailed and on the other side having a Health Care Business that deals with it. Some investors have become very rich off of this. I im trying to decide if this is the game changer that turns it all around. Charles i am not a doctor, that it seems like if you followed the data in some of these drugs, it would imply that they are meaningful and longterm. The Health Care Discussion in the u. S. Is a nuanced and political one and it is hard to figure out. 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Jonathan that was the israeli minister of strategic affairs. Your equity market run fades, the stock market is totally unchanged. Bond rally sticks in the bond market. Still lots of euro strength, dollar weakness. That currency pair is firmer by 1. 1 . A big rally in brent crude, the biggest rally we have seen going back to spring. Jonathan the markets tom the markets are there after the close yesterday. We are hugely data dependent on the news. To go to annemarie here in a moment, we need to get to thursday and cpi. Jonathan the fed meetings as well. Based on what we have heard from fed officials so far, i wonder how dated those fed minutes are, tom. Tom you are busting my chops. Jonathan give me your view. Tom my view is that the fed minutes are massively data dependent, and they will shift as they go. I saw literally articles overnight that alluded to back to lisas conversation with mary daly the other day. Excuse me, i bumped the mic. Lisa and decided to play squash with it. Jonathan [laughter] tom i think what is important here is they are shifting their tone, jon. Jonathan a week is a long time in the bond market, and a session is as well based on the movement we are seeing this morning. Tom Annmarie Hordern joins us. I look at the president s speech at, 1 00 p. M. And i guess he will this gas the politics of your washington, but mostly i see shocking speed in war news. What do you think will be the president s tone if we get a continued, more advanced war . I dont see the president at this moment trying to lift from his tone of steadfast ironclad support for israel to defend itself. There was a tweet that secretary blinken put out after his call with turkey that he talked about a ceasefire that was deleted. This administration is trying to stay on message. Kirby will be on this show this hour. The president will address those american lives lost. Kirby this morning was talking about that number could rise. It is americans we are unsure of. It is likely americans have been taken hostage by hamas. Jonathan we will get tom we will get news flow on that. Do we have any presumption of joint israeliu. S. Forces . Annmarie when it comes to the hostages the fbi has said this is urgent and they are focused on the and working with individuals on the ground to find out who those individuals are. The u. S. Sends a lot of aid, support, and military supplies to israel, and of course we have the warships moving into the eastern mediterranean, which we heard from the chairman of the joint chiefs today saying that, that is a deterrent aimed at one person in particular tehran. Jonathan we have talked about the hostages. Still a lot unknown about how many and where they are from. The president to some extent has to address that later this afternoon, but at the same time, lets put it together with this report from ask eos. Benjamin explained to biden Benjamin Netanyahu explained to biden that they have no choice but to invade gaza. Annmarie a very, very dense area of the gaza strip. You have these blocks of buildings and there is a network of tunnels underneath gaza. Likely, what they would be doing is putting hostages in different places around this city to make it very difficult for the idf to go and find them. It will be of upmost importance to the United States. This is what is making it so complicated for netanyahu to go in for a full ground scale invasion. He is calling up 300,000 is really reservists. It looks like they are going all in on gaza. There will be a lot of pressure on the Israeli Government. Nomura talked about how he thinks there is a Chinese National tie there. Potentially there could be another way to get the hostages out, and this is through a network like the qatari government putting pressure on hamas to release those hostages. A country like watar qatar offers asylum to hamas. Jonathan we have heard john kirby needing to address this several times. The 6 billion is the official view of this administration, that not a single dollar of that account has been spent today. It is regulated by the Treasury Department to make sure it is only used for food and medical equipment. Is it inevitable that, that money will be refrozen . Annmarie this money nothing has been used, and to secretary blinkens point it is sitting in qatari banks. We should go back to the beginning of where these funds came from. These funds were from iranian exports under the trump administration. A lot of other countries were getting waivers china, japan, greece. They wanted to make sure they kept the price of oil down. Iran had seized a south korean vessel and they wanted to get these funds out of their country. I would look more to javier blas us point. Iran is exporting the same number of crude since sanctions were put in place five years ago but the iranian minister wants to get to nearly half Million Barrels a day. All of this money is coming from china. A lot of this crude is going to china. Helena croft says what you have now is when is this sanction effort americans are not really enforcing them. At what point does this become sanctions relief . Are they being enforced to their full capacity . Categorically, no. Jonathan are we going to have a chance to ask questions later this afternoon of the president . Annmarie im sure, jonathan. When he gave his speech on saturday, the president walked out without answering any questions. Jonathan annmarie, our chief washington correspondent in d. C. And beyond. That address later. Oh, the questions lined up. Can they answer them . Lisa so far the proxies for the government have not answered them. Jonathan it is almost impossible, tom, to answer some of those questions at the moment. Tom i have been watching nine different media sources this morning but the speed of news flow, the speed of imagery and we all want to have narratives and conversations. That is different than war, which is what this is about. Jonathan lots more still to come. We will catch up with john kirby, the National SecurityCouncil Spokesman. Michael depaulo, jim bianco, and terry haynes. From new york , this is bloomberg. At ameriprise financial, our advice is personalized, based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice . I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Tom bloomberg surveillance, lisa abramowicz, in tom keene. Jonathan ferro is off preparing. The president s comments near 1 00 p. M. We hear sirens in tel aviv. Lisa waiting for what . That is important. The markets are waiting for something. The war that you referenced has changed the narrative with this extra overlay of unknown that is adding to the complication that already was baked into markets with this feeling that we dont even have the paradigm that we are working in. Tom waiting for the ambassador of israel to the United Kingdom and her busy, busy schedule right now. Scheduled around that is carl riccadonna. We will keep it easy. Carl, i love the way you parse cpi. You have a very cautious tone and certitude. The toxic brew of disinflation are we in a mode of disinflation . I think we are in a mode of disinflation for the goods sector for sure, for parts of the Service Sector like shelter costs, but it has yet to be determined for the key piece of the inflation basket, which the fed has acknowledged pretty regularly that Core Services x rents has been a stubborn category. Those are things like education and childcare where labor dominates input costs. We have not seen enough using of wage pressures. Tom a question i have not asked in ages, carl is inflation anchored right now . Does the fed and all the chitchat, including 18 speakers today, are we on anchored . Are we unanchored . Carl we are mostly anchored. When we look at disinflation theories, we are not fully back to where we need to be to say mission accomplished, we are on a track to 2 on a sustainable basis, but the wind is that policymakers backs when we look at the five, 10 year inflation expectations. Those will be sensitive to oil prices. We have to be sensitive to what is happening with oil and gasoline prices, but for the time being the fed can take some confidence that this trend is friendly to their ambitions. Lisa are you saying that the fed and other Central Banks have to respond to tamping down inflation more aggressively, if oil prices have a sustained rise . Carl if oil prices moved higher on a sustained basis and that led to a backup in gasoline prices, we have seen over the last several decades that gas prices factor very importantly into household impression households impression. It is more of a risk that policymakers should be on alert for, rather than one they need to respond to at the moment. Inflation is well above target, but the way the fed is choosing to respond to this is with this higher for longer narrative not the need to adjust the policy rate higher in the near term. Lisa aside from the oil question, are there any larger economic ramifications that youre looking at to understand how the conflict is evolving in the middle east, whether it involves the economic landscape in a more material way . Carl oil is the obvious factor, as you say but we have to watch the risk aversion trade, the flight to quality, what this does to the dollar, what this does to treasury yields. That financial channel will be the most impactful globally, and also for the near term u. S. Outlook and thewe they got kind of quiet on that front for the last several months, but now they really feel like they are at the endpoint or close to the endpoint of the tightening cycle. We are hearing a lot of those conditions of tightening again. The currency move impacts this financial conditions. Lisa one thing the fed does not want to talk about is fiscal policy. This is something people have pointed to because of the higher treasury yields. How much do you think that is what is going on, that the fiscal backdrop has changed and the deficit has come more into focus . Carl i think it is a confluence of factors, so absolutely the inflation forecast is a factor of moving yields, but also fiscal and also trade policy, for an appetite for u. S. Treasuries. It is a lot of different factors, and a unique moment in time when we are getting close to our at the end of the tightening to or at the end of the tightening cycle. Tom could you talk to me about Wage Inflation . I looked at eci, which is wages plus benefits. It is an informative chart. We have moved past skyhigh inflation just barely. Is that wage disinflation trend in place . Carl it is a very light trend to this point in time. The average daily earnings day looked great. We have seen a great improvement on that front. The employee cost index, we will get an update on the first day of their meeting for the november 1 rate decision. If you want to be on a sustainable trajectory, you need wage costs as measured by the aci. We are running at about 4. 6 right now so we are well outside of the zone that would be consistent with that component i mentioned at the onset of our discussion here that Core Services x rents. For that to go down you need to see tamer eci numbers. Tom thank you so much. We greatly appreciated this morning. We have many voices on israel. The news flow is substantial right now. Not only do you have a Coalition Government, and i am using that as my phrase within israel, we talked to taylor bremmer about the analog of that with churchill in 1940. The politics lisa especially at a time when many of the people affected our nationals. Tom a different voice now, an important voice. Israeli ambassador to the United Kingdom joins us in. Her busy schedule as well ambassador, six years ago in the conversation of the politics of israel and the United States, you spoke about jews in israel leading convenient to lives. I thought it was a brilliant comment about the distance of israel from judaism in america, speaking of convenient to lives in america. Has our convenient lives been shattered . Every jew in the world, his life has been shattered after what happened the last 48 hours in israel. I want to tell you a personal story. I was in israel when the war started. My husband and two daughters are still in israel. Tel aviv is under rocket attack as we speak. This is horrendous. We have never seen anything like that. I am speaking as someone who is part of the Israeli Government. I have seen terror attacks in my life. I im not saying it, is unprecedented the way hamas acted barbaric fully against women, against children. We are talking about war crimes being committed by hamas. The International Com munity are exposed. The videos on social media im sure you have seen some of it. I have seen the latest of a child walking to school in israel. These are dark timess in jewish history. This is our first obligation to fight back and make sure hamas never have the ability to fight against israelis. Lisa this is creating a whole host of tensions around the world that have become ethnically focused on both sides, and has erupted into debates, protests and anger on both sides,. How would you like to angle the conversation to foster something more productive . I think it is time to fight and defend the people of israel. Whoever saw the fact that 1000 israelis were killed in cold blood cannot speak to both sides. There is one side who wants freedom, democracy, cares about peoples lives, which is the israeli side. This is good. Versus evil we are fighting in one of israels darkest moments. We need to fight it. It is a Terror Organization recognizing the u. S. And the u. K. Many are comparing it to 9 11. Here are many when you think about israel as a tiny country, 9 Million People, it is actually 10 times of 9 11. The disaster the country is experiencing, every country and the world should support israel. We saw British Parliament color itself in blue and white. We saw downing street with the israeli flag projected onto it. If israel is not protected, all of western civilization is not protected. Lisa what do you make of some of the reports of qatar, even the acting as an even turkey acting as an intermediary . Carl we call on hamas to we call on hamas to release every individual who were kidnapped by hamas. Some of them were tortured. We have seen horrible videos and images that are coming from gaza. They are committing those were crimes and the world must stop them. Tom your politics are clearly to the right. That is how it is established in israeli media. I am an ambassador. I dont follow a government. Tom i understand that. I was talking to Stuart Wallace about combined government in israel. That is in your wheelhouse. Can that be successful, and how will a combination of israeli politics be successful in prosecuting this war . Tom tzipi it is clear to the leaders of the opposition that there never was a greater need for a unity government in israel than at this moment. Israelis are united now. Israelis fight together shoulder to shoulder. We see so many gestures coming from israelis who want to support our shoulder soldiers on the front line. Im sure the unity government will happen and be the reality. Tom ambassador, the Arab Community speaks to different sets or different cohorts of palestinians. Can the arab nations assist israel in speaking to palestine away from hamas . Tzipi this is not something neil. This is a process that has been going on for over a generation. In the last few years there were dramatic breakthroughs between israel and our world with the Abraham Accords, with the ongoing negotiations with saudi. There are times in our world where people want to be close to israel. This radical ideology that hamas is leading based on isis mentality, this jihadi mentality. They want to kill every single jew. They do not recognize the right of israel to exist. This is hamas ideology. This is ideology you have to fight. You cannot negotiate with these type of people. You cannot have peace with hamas. You have to fight back. Lisa what do you make of some of the discussion around iran . There has been a lot of dancing around. They backed hamas but they were not directly involved in orchestrating it . How important will that be to determining the next step for the Israeli Government . Tzipi obviously iran is involved, and obviously iran is the big brain behind activating its proxies. At the moment we have this war to win. The war against iran is something bigger than that, but the world should know the real face of iran and its proxies. Innocent children and the elderly my country is now at a point where almost 1000 funerals are going to take place in the next few days. This is a number we have never seen in our lifetime in one day. The president said that since the holocaust we have never experienced an instance where so many jews were killed in one day. The Cannon Family were all murdered in one day. Think about those families who were destroyed because of this barbaric attack. This is the day to morn with the israelis who lost their loved ones. There are children being executed in front of their parents. Those are days to support israel. Coming here to speak to you and all of the people who care about the future of western civilization, israel is at the frontline, surrounded by very radical people and we need to fight back. Tom thank you so much for joining bloomberg today. She is ambassador to the United Kingdom. There is just the absolute raw emotion that ethan brenner, the journalist was mentioning to us two hours ago. It is not just of the imagery on social media. As you mentioned earlier, we have to remind ourselves of 333 million. The absolute shock is Touching EverySingle Family and community in israel. Lisa you cannot really put it into words. It is horrific to watch. We are watching all of the violence unfold on both sides. It is shocking to see how much we are watching in real time as the tragedies of families are laid bare. Tom we welcome all of you on Bloomberg Radio and bloomberg television. We are focused on the war in israel. The headlines out of tel aviv have been extraordinary. The idea of sirens in tel aviv i cant expand on that right now, but we heard from the ambassador and the immediate danger to her family. John kirby will join us from the biden administration. He is delayed in counsel to the president speaking at 1 00 p. M. This afternoon, someone with real knowledge of this is our Michael Mckee. You know him from pristine analysis, but i want to go back to your earlier tour of duty. I dont think it was london and what we saw in russia but you were front and center in the russian revolution. When the facts change, we change. Politically and economically, the facts have changed. Michael the facts have changed and the interesting question is what did hamas think they would get out of this. We saw biden and israel fighting over months and now it has rocked the country together. Where it, goes from here it is hard to say. We dont know how firmly israel will be with hamas and gaza but it will spiral out of control if the wrong things happen so there is a lot to keep an eye on we. Will look to mike mckee for important data later this week tom . He is a National Security tom we will look to Michael Mckee for important data later this week. John kirby is on tours of duty with the navy. He has realworld experience that when the facts change, admiral kirby changes. Thank you for joining us this morning. In your briefings with the president this morning, what will be your message at 1 00 p. M. . The most Important Message the president will deliver is about the United States longstanding support of israel, the people of israel. Our sympathies are with the loss and shock they are going through but our firm resolve to make sure that they can continue to defend themselves against these terrorist attacks and take action against hamas direct way. People talk about the military assistance we are providing and that we have to a expect we will pay Going Forward. The fear it is engendering in the minds across the region and here in the United States lastly, it is a strong message for a marriage can see her at home that antisemitism has no place. Neither does terrorism. The United States federal government will work with state and local authorities to make sure our jewish friends do not have to live in fear. Tom from an israel template, there are 67 and 73 and those were very different. Admiral zoom mode did not have to worry about social media. How will this effort of israel and the assistance of the United States change because of this modern new cycle crushing the visibility of the terror we have seen . John you cannot have a conflict anymore that is not being brought home to people in real time, micro bits of information and imagery. It gives you a gut punch because it is right in front of your face. Everywhere you turn you feel like you have to react to it. Information is so ubiquitous and accelerated that when appropriate you have to make sure you are slowing down and making the right policy decisions, they you are acting not so much in reaction to what is in the news environment that what you really need to do on the field of battle or in the information space. We saw this in 2014, the narrative war was just as important as the bombs that were dropping and the explosions that were going off. That will be more the case here in terms of making sure there is a common set of narratives about who is at fault here, who are the victims and what needs to be done to move this forward. Lisa there has been a lot of discussion around the 6 billion that the u. S. On froze for tehran. It has not been released yet. I have seen the comments you and others have made. What is the discussion around refreezing it . How likely is it that this administration will refreeze that 6 billion . John it has always been the case that that money could be frozen at any time. We said that when we sent it over to qatar and made it available to the iranians. Even if some had been the regime never sees a dime of it. They never get their hands on it. It goes straight to vendors. The regime will never see a cent of this. Lisa some say this is just a distraction from the real issue, which is essentially that iran ran is getting a lot of money. Are you talking about enforcing sanctions in a more significant way . John i would push back a little bit on the idea that sanctions have been latent. We have added additional sanctions, some 400 sanctions on iran since the beginning of this administration. We are committed to full and total enforcement. Other countries have to enforce their sanctions as well. We have added and increased our enforcement capability not to mention we increased our military presence in the gulf region and now in the eason mediterranean to deter bad actors like iran. Lisa there was a distinction drawn by israeli officials that while it is clear that iran has backed hamas financially it is unclear if they were involved in orchestrating this particular attack. What would the u. S. Do and israel do should iran be determined to be intimately connected with orchestrating this attack . John i wont get into speculating what policy decisions we might or might not make based on where the intelligence leads us. All i can do is reiterate what we have been seeing. We have not seens any evidence that point to irans participation in these attacks. There is already and has been the grave complicity by iran here because they have been supporting hamas for many years, training capabilities, resourcing. The Supreme Leader out there have been praising this attack by hamas. We have not found any direct evidence. Tom with great respect, the conventional effort is like a boeing century e3 intelligence aircraft. You put a couple of them up in the air and gather intelligence. This is 2 Million People in a highly urban landscape, squeezed into a geography that is 2 washington, d. C. s. How do you prosecute intelligence against an enemy sandwiched among 2 Million People . John it is very difficult to do. I wont speak for the israelis. This is for them to talk about. We will continue to share intelligence with them and help them in intelligence gathering. It will be a task for them to work on. It is very difficult. It is very dense, urban, and heavily populated, and hamas this is another example of their barbarity using palestinians who live in gaza as human shields, hiding in mosques and hospitals as command centers. Tom one final question, and i must speak to the navy. Is it properly staffed . Is this a navy that can develop the manpower, the seapower to staff an Aircraft Carrier . John there are now in the eastern mediterranean. It is not just to the Aircraft Carrier. It is several ships around it in its periphery. They are all fully manned, trained, fully ready and armed to look after american National Security interests in the area. Nobody should take advantage of the situation in israel and the United States will always make sure our National Security interests are first and foremost as well. Tom john kirby of the National Security council before the president speaks at 1 00 p. M. I well go back to my arch theme, which is that i am overwhelmed by the modern media. It is still a war, and the war is the war. I as at conventional war like any other war with a lot of damage. Lisa one thing admiral kirby said there is we are experiencing it in real time on social media, the horrific imagery, the tragedies families and israel are dealing with right now. Tom we will continue conversation on this. Of course, the president is speaking this afternoon at 1 00 p. M. Watch for the balance of power tonight with Annmarie Hordern. Good morning. Jonathan live from new york city this morning. Big countdown to the open starts right now. Everything you need to get set for the start of u. S. Trading, this is bloomberg the open with jonathan ferro. Jonathan live from new york, coming up. Israel preparing for the next