Table more or less. At this point, weve pushed that back to june. And, you know, i guess what i would say is, i think the risk to our forecast would be skewed towards later. That is, i would say the probability of july is higher than than, you know, may. For more on the fed and the economy is bloombergs reade pickert, who has had some time to digest the data all morning. And if you had to read through all the conflicting signs were seeing, which is the biggest conundrum to you. So, you know, really what we saw in the ppi report was price pressures that were driven from the goods side. So a lot of that was gasoline. But there was a big pop in food as well. And so when we think about where inflation goes from here, were not getting a lot of help from the good side of the economy anymore. So in cpi we also saw that core goods inflation rose after a series of outright declines in deflation. So in terms of thinking about where were going from here, you know, were trying to kind of fed officials have said, you know, weve got to watch and see this broadening and inflation. And it will be interesting to see if we start to see that popping up in Core Services and things like that. But for now, you know, if youre not getting as much help from the good side and services has slowed down, then you know you really do need, um, you do need to see some broadening before the fed can, um, can cut. Speaking of cutting, what do you expect out of the dot plot next week . If we watch the expectations on worp go, a latest favorite function on the bloomberg terminal, those expectations for the number of rate cuts this year. Uh, we are still looking and weve lost read for a second here. So lets talk about that rate cut expectation here. Were looking at less than three for the year already on. And trader expectations. Whereas we had been more than three. So not too long ago. So you already have people cutting back their forecasts here for just how many rate cuts. We will see though that first rate cut still expected by the middle of this year. Read. We were just talking here about those rate cut expectations, the dot plot, what do you think is going to going to be factored in here . Yeah. So absolutely. So you know weve gotten a lot of you know the inflation picture has changed a bit since the last time that we got the dots from fed officials in terms of, you know, when we left in december in the last time that these forecasts were were shown, we had really seen this clear, faster than expected deceleration in inflation and in core inflation. And now weve come at the start of the year in january and february with these pops. But in terms of thinking about where the dots are, are generally so far economists have really stuck to their expectations for, you know, around three cuts this year, though, as you know, jay bryson mentioned earlier today, youve really seen the timing start to fluctuate in terms of where folks think when folks think thats going to happen. So, for instance, you know, weve moved from march to may and now to june. Um, and you really heard from fed officials that, um, we are going to talk to brian higgins. He has a strong view about the direction of Interest Rates and how it is going to impact the portfolio, commercial estate, and more. That is a Big Conversation of next. Super excited to open up my diploma from Southern New Hampshire university. Im nervous, im excited. [man] okay, lets see it. Lets see it. Oh my gosh. Jesus suarez, i did it and its here. group cheers [narrator] next term starts soon. Visit snhu. Edu. Visit snhu. Edu. Portfolio, strong. The economy ran through our portfolio looks quite positive. We are not in a recession or on the edge of it. We dont see the normal indicators, yet, suggesting a weakening economy. Sonali that was from earlier today and today we get a look at the economy and Financial Markets from another big player. Brian higgins joins us, his firm has about 25 billion dollars in assets and is in and out of markets every day. Thank you for joining me. Looking at the data that came in this morning, does it support the theory that perhaps inflation is a little hotter and may remain, more importantly, more hot than many expected . Brian i would say yes, its remaining higher. The earlier cuts, you know, now it is perhaps 02. The fed is not going to want to be seen as too political. Anything they do, we believe they will be doing it in may or june and then perhaps after the election in december. The key issue is monitoring fiscal policy. Thats quite easy. The Balance Sheet has shrunk regarding qt but there is a fair amount of stimulus left over from pandemic as well as cancellation of student loans, etc. , etc. Sonali that stimulus, who is being seen by it . A lot of people are still discounting what could happen when the stimulus starts to dry up in a meaningful way. Brian Capital Markets are quite robust. Credit markets have a tight. Lots of dispersion going on. Middle income consumers are getting hurt, like a mcdonalds or a yum brands, starting to see that they can push the pricing like they would like, compression starts to occur and the consumer facing companies are starting to see loans, auto loans, approaching 2008 levels. There are some signs of some slowing, however look at bitcoin, look at gold. The equity index of 2007, perhaps. Theres a lot of signs of excess, perhaps. Its a tale of two cities. Sonali spreads are supertight. Do you think that people are, perhaps, flying away with themselves a little bit . Brian its all about dispersion. We are a single name credit investor. If you look at credit as a question of yield, 80 of that came from spread during the pandemic at the peaks. Its a rate versus spread and you are right, its tight postcovid. Yes, some would say its priced to perfection. We look at those opportunities for credit, long and short. The structure of credit has changed. A lot has happened in etf and portfolio systematic trading. Single name markets are actually quite interesting. Because the indexes are quite tight, there are a number of single names on the short side as well. We are agnostic, we make money long or short. Sonali im interested in that, how do you make money in a market thats rising across all tides . Is there a moment of reckoning to come that gives you more conviction to go short . Brian we would short a name, not a market. On the credit side, shorting would be on your own at your own peril. Going through the year i believe it will be slowing. You are seeing Staffing Companies experiencing difficulties, but the composition of the labor market is robust. But there are early signs. Overall, the economy is fine, particularly because of the fiscal stimulus going on. Sort of like the foot on the gas, foot on the brake. The breaking is not having much of fact because of all the stimulus that was done during the pandemic. Sonali thanks the question, do we see an economy that breaks . Do we fly out of this moment without a significant downturn . Brian i would say would happen over quite some time. Like we said before, i would say that we look at it as going into year end, you will start to see slowing and ultimately it will be looked at as no landing, soft landing, progressing overtime because of the amount of debt issued out there is too high. Its a competition between the money thats raised for the governments and at the corporate level. Its going to be higher for longer in terms of rates. There is a lot of refinancing that needs to go on on the real estate side, on the Corporate Credit side, and generally the easier credits are done then. As you are going to, with new issues cranking up as they have been in the first couple of months of the year, investors will have a choice. Why dont i own this, this is more attractive . Less cyclicality. That will mean that they will toss out some of the more marginal credits. Sonali that begs the question for marginal credits, we could potentially see no rate cuts this year, you said. In that kind of environment, higher for longer, what do you think that means . How high, for how long . Brian hard to say. 400 and 30 on the 10year, at the moment. We could have 100 basis points, etc. We plan that per year. Over time its hard to see a dramatic amount of cuts. More important from our perspective is not the level of rates, but what it does to activity. As you go into a supply demand dynamic, what is the underlying liquidity to be able to do these transactions question mark real estate again went to tight capital. A lot of the issuance was done in 2000 when he won. Rates have gone up, interest burning two or three times. Those levels, continuing. We have seen a lot of those transfer with new regulations and new opportunities on these, lets call them transitional Balance Sheets. Sonali how do you think about the real estate opportunity here . You have made your name in distress. Our prices bottoming for you to get in a bigger way . Brian location, location. Everything is about dispersion and bifurcation. We all know about commercial real estate. If you go to the cities like san francisco, los angeles, a few weeks ago there was a 30 interest in an Office Building that went for a dollar. Yeah, if its a dollar, its an play, but there are always dynamics in these. In new york city a number of buildings have been leased in high numbers with marquis assets. They will be fine. The problem with the moment is transaction volume has gone down 50 . In some cases, more. You dont really have the understanding of what the clearing price is for the asset. While i think there are a lot of opportunities, we look at three ways, right . Acquiring and trading the asset. It comes from securities, those opportunities. We also see opportunities in financing. Teams, 20 in some cases. You are saying trophy assets, cash flow issues, i can come in and have a nice solution for this and make a nice return for ourselves. Acquiring, you have to be quite selective. Sonali looks like there will be a lot of deal flow, but maybe not for some time. Managing partner brian higgins, at king street, thank you for your time. Still had, more commercial real estate and potential bright spots. So much doom and gloom around the sector, our guess will discuss that next. Stick around, this is bloomberg. 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. I dont think that this is like 2008, 2009, in terms of scale of what we are facing. But i do think there will be situations. That is what yates the opportunity, the perception that is so negative, the headlines that are negative, get the value decline has occurred. Im not saying its a vshaped recovery, but bottoming, thats when you want to try to do it. Sonali that was the president of blackstone earlier today. More on his interview earlier later in the hour. But a new report shows that commercial chargeoffs are now on the eyes of manifestation in the banks. There could be paying ahead for major lenders. But there are still a lot of bright spots, like data centers driven by ai. We will discuss this with our Center SquareSenior Investment strategist, as well as abigail doolittle, always all over the real estate sector, uma moriarity. How do you think about that in the context of your job . Uma its a great question. There has been such a focus on what the fed is going to do, what is going to happen with the fed funds rate. From a real estate perspective, whats important is the longterm rate. We are focused on whats happening across the 10year yield and that is going to be somewhere staying close to where it is today, plus or 4 . That is what you need to think about when we think about pricing real estate. Abigail there has been so much doom around cm bs, coming up over the next year to 1 trillion, maybe 1. 5 trillion dollars, and there is a real distinction between that potential pain and that that financing for the publicly traded rates. Can you talk to us about what we are seeing and might get help the private cm bs as well . Uma great question and yes, to your point, a lot of what we are talking about in terms of maturities and even the pain in the commercial real estate pays space is focused in the Office Office asset class. Office is less than 5 of all exposure and rates are largely financed through the unsecured bond market, which is pretty wide open this year. Even this year we have seen great issuances there. Meaning that over time, right, like gse, you have had a lot of pain in the rate sector. Its worked over the last cycle to pull down leverage and make sure that they are appropriately positioned for this specific point in time, right . They have the Balance Sheets to play take advantage of the resetting in the marketplace and externally grow. Abigail you guys also participate in private that. Offering mezzanine and highyield debt financing. What sectors do you favor and what kind of premium are you getting for your risk taking . Uma we are looking at leveraging across a bunch of different types to family, currently. There is strong cash flow with operating access that has strong cash flow. We have this housing shortage across the United States and we are looking at strong fundamentals longterm across multifamily property types, where we feel comfortable in terms of providing some of that type of debt, to be able to get multifamily access on the other side. Sonali when you look at the way that the economy is going, there are concerns that a stronger economy could start to get weaker, some faster than others. You were talking about strong cash flow for some of these properties. What could start to throw them off course and are there any places experiencing strength right now that might not feel so strong one year from now . Uma great question. In terms of where we are currently bullish, these are areas that we think of is not so much cyclical but secular in nature. Think about Senior Housing, where you have a massive wave of population aging into Something Like that. Thats happening regardless of what happens. The other thing thats really helping with the Senior Housing equation is the strength of that underlying wealth of that population that is aging into Senior Housing. Baby boomers have in normas amount of wealth and that is going to help them really pay to have that space as well. Those are the areas we are bullish about, where you have strong fundamentals that are more secular in nature than secular. Cyclical. Abigail i no one of your bright spots, those strip malls that we have all seen with your coffee shop, dentists, nails you are one of the largest investors in the nonessential retail and it has been very successful for you. Talk to us about what is happening there, what was attractive, and do you see those fundamentals continuing in a strong way as well . Uma absolutely. Think about that Shopping Center that is not anchored but has a lot of those services where you have to physically go to the store to consume it. The thesis was these are not really online services. You have to physically go there and visit. We are really focused on the submarkets that have really strong population growth, especially in the suburban submarkets. There has been no retail construction over the last ahead plus across the u. S. And at the same time you have seen a lot of population growth in these suburban submarkets across the southeast and southwest United States. So, we are seeing in normas amounts of demand coming through for these types of centers with no supply. Putting us in a position where we have strong Pricing Power as landlords across the space. The area has to this point survived the ecommerce wave, covid, and we are really strong on the others that it had done really well over the last two years running that strategy. That is an area seeing strength across the United States, has been a quiet megatrend we have been watching in the Retail Sector across the u. S. Sonali uma moriarity, abigail dolittle, on a market that is being very closely watched in light of these higher Interest Rates. Before we go, lets check on the markets, here. Theres a lot of red on the screen, s p 500 is down. 2 . Nasdaq, about in line. Twoyear yield, fluctuating a little bit all day. The 10year yield, still up nine basis points. We saw the 10 move earlier today. Traders really baking in the economic data. Coming up, more on the bloomberg interview with john gray. A lot of talk about in that market, a lot of diverging views on where prices really are. Stick with us, this is bloomberg. Her uncles unhappy. Im sensing an underlying issue. Its tmobile. It started when we got him under a new plan. But then they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. The price lock, the price lock. So, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Okay, thats uncalled for. Sonali this is bloomberg markets. Traders are paring back thats paring back bets on fed rate cuts. Treasury yields, surging on the day. Lets check click on what that means. S p 500 being driven lower by the move. The nasdaq 100 feeling the red, down 2 10 of 1 . The twoyear yield was getting closer and closer to the 470 level but we are seeing it hang out around 468. The 10year yield, four point 428, nine basis points higher. A little bit better than before it. However, remember, its interesting, the inverted yield curve is still inverted but four points less than it was yesterday. On the equity side, lets talk about adobe for a second. Earnings are after the bell. Sales projected to climb for the third consecutive quarter of doubledigit gains. Demand remains steady for creative document cloud products. Lets discuss