An historic monday for the bond market. Joining us today is Jonathan Ferro working from the Early Morning hours. Manus cranny will be with us. Manus good morning. You see it on television and hear it on radio, 5. 01 of the 10 year yield. His street this morning. As history made this morning. The first lisa first time you seen it lisa the first time you have seen treasuries go above 5 . On we have a lot of good thoughts tom we have a lot of good thoughts on that. A sharp note in the Financial Times. Hobbit l arian looking Mohamed Elerian looking at it saying it is global. Manus there is the overall momentum. With our saying why are Asset Managers and insurers not stepping in your they simply dont have the complexity. They are not forced into it and so the appetite is not there. You have some of the hedges. Tom should we ask him banking questions so he feels comfortable . Lets take your experience with ubs. How scared would you suggest the big banks are with the price down, yield up unraveling . Manus this will push major banks to review. You are going to have major review of risk this morning. We are shifting into a different paradigm. Tom one more question and then some geopolitics. How does a 5 yield read down through credit . Lisa it is a good question. It hasnt been that traumatic so far. Jim reed at Deutsche Bank writing that he doesnt i. Many people ask how can it be that for 20 years weve talked about the existential risk of yields rising. At what point does that change . Tom the fancy discussion in the mediterranean. An horrific weekend of waiting for war and humanitarian aid. Lisa if you listen to the sunday talk shows, you heard Antony Blinken saying we are worried about our troops in the region. It didnt sound like we were getting closer to resolution but seems like they are holding off on a Ground Invasion, possibly for hostages. Tom total enterprise value, it is real simple. Chevron, buys new york jets petroleum is really what is going on. This is a heritage stock for those of us in the northeast. This is a huge transaction chevron to bypass to buy hess. Lisa i wasnt connecting it. Tom this is the new york jets petroleum conversation. Manus i thought he was going green jersey. Nothing to do with the billions of dollars of oil they got. Tom the beginning of my data check is what i dont know is the 10 year real yield is at. Lisa especially given the fact that we are looking at the highest real yields we have seen since 2009. Do we see that continue as nominal rises . A risk of feel in the market as we get earnings from 30 of the s p so far this week. Earnings from microsoft, amazon thursday. This has been the boondoggle behind the gains this year. Google, alphabet, 54 . Sun, 49 . How high is the bar for these behemoths . Manus and they continue to run . This will point out to five and a quarter and five and half. More importantly, it has to kick in. Tom manus is the phone to his broker. Continue with the brief. Lisa talking about higher rates, we get central bank decisions, bank of canada on wednesday, ecb thursday. The expectation is for nothing and no additional rate hikes but that will be interesting because they have a more difficult situation. Tom lagarde in mara cash in in marrakech. Lisa we get the Third Quarter gdp prints from the u. S. On thursday including core pce. Personal spending. If you look at the atlanta fed gdp, 5. 4 expansion rates in the United States. Tom friday and i were wasting away in margaritaville it was such a successful stressful week. Joining us now on the markets, larry adam, chief Investment Officer at raymond james. As you write this morning trying to figure out with the year end note will be in a bath of uncertainty, what is your level of conviction . Larry we have a lot of conviction on what is happening in the markets. It is important to recognize that it is old data. The gdp report will talk about the spending we were doing at the fourth of july. That is a long time ago. If you look at what is happening in real time, this economy is starting to slow. By the First Quarter of next year we do have a mild recession unfolding. Lisa you talked about this and it is shocking when it climbed above 5 . Do you have more conviction or less conviction as you see how much yields are rising . Larry i would have to say more. I think the higher Interest Rates are starting to bite on this economy. Small business 10 , credit cards 21 . It will take effect soon. Why has it happened, because we had cash in savings accounts. Companies were flush. A lot of that has evaporated and i think this will slow the economy down quickly. Manus what impact does this have on credit . Will you see credits moving higher . Larry dont think credit is pricing in the risk we see going forward. As Interest Rates go lower, i think you will start to see the spreads wide now. Particularly in highyield, i dont think they are pricing in any recession. Tom what are people doing . Raymond james has a reach of invested retirement money. I am assuming that people in bonds are looking at october statements with blood in the streets. What is retail doing . Larry i think one of the reasons why is when we talk to retail investors, known as anna to go out on the curb. The long yield at 4 . You start to see the yields start to be similar at 5 this morning, you will see that appetite increase. We have been talking about being more balanced recently. As we move toward the fed being done with the tightening cycle, that is when you want to extend out and we are in that window when you can transition and take more with your bond portfolios. Lisa you are talking about data showing strength that is a backward looking. If you look at earnings we are getting, it is a mixed picture and confirms some of the strength and ongoing basis and how much are you willing to change her view on increasing caution if the earnings we get is a significant chunk of the s p shows that strength in big force . Larry this is an important week from earnings perspective. 40 of the market cap. The economy is not necessarily the equity market. A lot of companies coming out have been immune. You go to the Technology Space and when you look at the underlying economy when it comes to retail and banking think that is where you will see more weakness going forward. This is a big week because starkly this is the third week of earnings season and if tends to be where you see the expectations move higher. If that does not happen, we will be challenged at the rally going forward. Manus apps estimates for profits were a little high. What scenario will be most important for you as you look at big tech earnings and others down the pike . Is it guidance for 2024 more specific . Larry it is about the guidance. Earnings are inflated for next year. We are looking for earnings to tread water. We will be summer between 220 four to 30 next year. There is a significant amount of digesting of the eventual weakness in this economy that will have to be factored in. Guidance will be the most important. Tom thank you so much. November 2 will be important with apple earnings. Jonathan ferro mills income i am in the pool with an umbrella and cocktail come help me with data. 210 spread going from 100 basis points, slamming up to 11 basis points. We could see twos and tense. Lisa we could see dissen version in a dramatic way. Everyone we could see dissen version disversion. Tom to both of you here, expect the unexpected but how does japan respond to a 5 10 year yield . Manus the biggest rest for japan is they have a slowing gdp. If they were to tweak the rates you have a trillion dollars worth of treasuries that they own. What happens to the flow of treasuries if they tweak . Tom rent crude not brent crude hasnt moved. In the 7 00 hour, we are joined with blackrock. J. P. Morgan Wealth Management knows its easy to get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. Get ongoing advice; and manage your investments in the chase mobile app. We expect that there is a likelihood of escalation by iranian proxies against our forces and our personnel. We are taking steps to make sure we can effectively defend our people and respond decisively if we need to. This is not what we want in our looking for. Dont want escalation. Tom secretary of state blinken. Thank you for joining us. Julie norman will join us she is absolutely definitive and all of her Academic Work considering terrorism and the iago fee of the eastern and middle east. What happened over the weekend . Oliver the release of two hostages record by the qataris. They said they release them on humanitarian grounds. No one knows what that means and why they chose these hostages. The second is about aid. First trucks we saw a roll into gaza, a fraction of what is needed according to every organization or the u. N. Said it needs to get closer to 100 trucks a day to make a meaningful difference. You have continued hammering of gaza. That is the main theater of war going on. More and more on the northern border in lebanon. This will be a concern when you think about the notions of escalation. There have been pinpoint incursions i the israelis into gaza. Incursions by the israelis into gaza. Lisa we know why the hasnt met a Ground Invasion yet . Oliver there is a concern of hostages. When you think about the equation for the israelis. They want to fully dismantle hamas that there are all of these inputs, whether the hostages but also the moral imperative of reducing civilian casualties to very practical consideration which is getting the Political Support of the rest of the world. We had the arab summit over the weekend. The king of jordan said the message to the airport is loud and clear from the west is that palestinian lives matter less than is really once and that is a very dangerous message to be putting out there. Tom thank you very much, oliver crook, in tel aviv. This is an immense pleasure. Dr. Julie norman, author of the palestinian prisoners movement, resistance and disobedience. But basically is the definitive expert on the shades of palestine over the last 20 and indeed the years back to 1948. I want to go back 13 years to your effort on the second palestine and the palestine of now seems to be divided between the terrorists of hamas and other shades of palestine. Can you delineate the other shades or is it a mystery . Dr. Norman it is very important to differentiate hamas and other armed actors from the majority of the Palestinian People and from other aspects of palestinian politics. It is the main body in the west bank and i would point out that the main partner for the west, israel, there are some that are open hoping for the Palestinian Authority can have future leadership in gaza after the war. It will be very difficult. Tom tom they tom are wrapped by their own corruption. A lot of questions about their viability. Tom if i link israeli threats north to hezbollah and i know you have written on twitter, is there a linkage of communication between the three geographies or even is there a link of communication with them back to iran . Julie definitely communication between gaza and the west bank. Hamas has number ship in both places and both are focused on the palestinian cause. Hezbollah is difference. They coordinate to some degree with hamas but are a separate entity based in iran and most operations have been in regards to Israeli Operations in lebanon or at the border. Of hamas and has full of receive backing from iran but over has full a is stronger and over hezbollah is stronger. Manus in cairo there was a peace conference, strong words from king abdullah, chastening the west. But israel, hamas, the u. S. And iran were not at this conference. Do you see this as a step one four progress for the aero arab respond response . Julie we often see the summit in regular times and especially during wartime with different rhetoric coming out. I would echo what oliver said a few minutes ago, and that is a real concern from the u. S. And increasingly in israel about the operation. Israel wants to deplete hamas and have this operation that does that but at the same time youre trying to thread the needle of having such widespread civilian casualties that you are increasing support for hamas and resistance to israel. There are both strategic and moral convictions there that they are aware of. Lisa i was reading reports that the o say we are beefing up security for our own troops in the area. It seemed like things were escalating and the price of oil is going down. People are saying it is deescalating. Which is it . Julie i can comment on the political. If deescalation happens in real terms you would see the influence on oil prices. One of the very strong concerns of the u. S. And one reason they are hoping israel will be more cautious is the concern of escalation, not only to put deterrence measures in place but to make sure u. S. Is ready and prepared for any impossible actions from irans proxies. Tom thank you so much for joining us on her work on palestine over the decades with the University College at london. Manus cranny, you mentioned one of my favorite people, mr. Goetsch. You had him on. What did he say this morning . Manus it is very interesting how all of the media, very little coverage of the meeting in cairo. His point was unless you have the u. S. And iran which is what we are worried about, the proxies and escalations, that in many ways you need more power behind that gathering for you see significant shift. King abdullah spoke and i would encourage if you want to understand other aspects of this , listen to his speech. Tom abdullah and jordan with his american links are extraordinary. You lived in dubai, what is the relationship of them in the country . Manus the uae wants this to deescalate. This is not something they want to escalate. Tom manus cranny with years of reporting on dubai. We will continue with our coverage of the war with iran and hamas. The 10 year yield prints of 5 . Good morning from new york. 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 . 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. aidyl hi, im aidyl, and i lost 90 pounds on golo. Styles and textures. I struggled with weight loss and weight gain my entire life. With all the yoyo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. In one year, ive lost five sizes, and im on my way to lose another three. With golo, i can do it. announcer change your life at golo. Com. Thats golo. Com. Tom good morning. Jonathan ferro on assignment. Lisa his assignment is very nice. I would like to go on a similar one. Tom it is not a cruise ship. He would be up with the captain. Lisa he would be hiding in his room. Tom enjoy your week. Manus cranny joins us. It is a quiet monday but an historic monday, the 10 year yield within the last hour prints of 5 . The 10 year yield, five. 16 on the 30 year bond. The 30 year mortgage at 8. 01 . S p negative 26. The vix well out over 20. 22. 84. Maybe that is indicative of the tension. Dollar fractionally stronger. Oil, 92 on brent crude. Lisa just to follow on with the yield discussion, up one full percentage point on the 10 years since august. Up 40 basis points in the past week. On geopolitics, Israel Holding off on a Ground Invasion of gaza as diplomatic efforts continue to released hostages. President biden has been reaching with all the counterparts trying to prevent the conflict. He is asking for continued flow of aid into gaza. Tom they said you have to go to beirut and understand the oddities of beirut. Manus cranny on the northern border. It is surreal, isnt it . Vishwanath manus it is surreal. The risk to the world as a proxy of hezbollah comes up more aggressively in this turns into something israel doesnt want. Tom in cairo, are they in support . Are there shades of difference between hamas and hezbollah . Manus they are all of concern to israel, the u. S. And the west. To that end it is about escalation. Lisa one of the hardest parts is extricating governments that are not hamas or hezbollah from the governments that are. Hezbollah has a significant part of the leadership in lebanon. Manus none of these proxies would be raising the vexation with tacit approval from iran. That is the back story to any of these proxies. Lisa we will catch up with Annmarie Hordern to get on that. We dont have a House Speaker. We have nine potential candidates on the short the stte for the vacant position among republicans after jim jordans collapse for House Speaker ship last week. There will be a forum here and people are sick of this. Write now a survey comes out, people are like, just get on with it. Manus i thought british politics was tough going during brexit. You just take me to a whole new level. Tom it looks like Hollywood Squares and i will say that i remember stepping on the ice years ago with a bunch of thugs in minnesota. They really play hockey. One said we need an allamerican world class hockey player running the house. Lisa there you go. You can put your hat in the ring, tom. This i find interesting, chevron agreeing to bypass for 60 billion doubt buy hess for 60 billion. This is the second major deal in just two weeks. We had the exxon one a few weeks ago and what this highlights is the need for efficiency, of economies of scale and the feeling that maybe it will get done this time around and there wont be anyone to intercede. Tom publishing and going to the geography, south of america. There will be a definitive moment in the 10 00 hour, alix steel in conversation w