Environment. Where we are is the new eaglewood librium just a new equilibrium. The higher for longer will stay there. We understand we establish price stability as key. They are not giving up the 2 inflation target. The economy is doing fine and i think the economy is on its way to 2 by the end of the year. This is bloomberg surveillance. Jonathan the third hour of bloomberg surveillance begins right now, live from new york city, there are many ways to get a read on the u. S. Economy. You could ask the ceo of the biggest bank in america, jamie dimon, Francine Lacqua will do that in 10 minutes time. You can look for the data at 8 30 a. M. Eastern time in the jobless claims come of the estimate is 220 or look to a large retailer like walmart in the premarket posited by more than 5 after a beat on the top and bottom line. Lisa there is a cohesive thread coming together and its not clean and neat and dramatic. It is a slow softening. Its clear with walmarts extreme beat on the heels of higher Income Customers looking to get discounts in an inflationary environment. Annmarie Bloomberg Intelligence are writing that this appeal that walmart has even for the higher end wealthy and the consumer coming in, wanting to discount because inflation is biting. How long will that last for that company specifically. It tells us in the hard data from walmart that the Consumer Sentiment is starting to resonate. People are concerned about inflation. Jonathan a welcome calling for an unwelcome deterioration and what is the distinction between the two . Lisa a welcome cooling is something that keeps inflation in check will not necessarily causing jobless claims to rise that much which is why 8 30 a. M. Will be important in an unwelcome cooling is something that happens and it is usually it is not a clean and steady per trajectory. Its not a linear progression. It usually comes suddenly and there is a jump up and unemployment. Thats what some paper are calling including citigroup. Jonathan 8 30 a. M. Eastern time. Alltime highs at the close wednesday on the s p 500 and the nasdaq 100 for the First Time Since march. We are up by zero point 05 on the s p 500 and yields are unchanged on the bond market. Coming up this hour, John Hancock Investments as the s p had to new record high in the jp morgan Ceo Jamie Dimon live from paris with Francine Lacqua and Michelle Meyer reacting to jobless claims data. We begin with the big issue good news is good news. The cpi print sends stocks above 5300 for the First Time Ever but met miss can says this met joins us now for more. Walk me through the regime you think we are in. We still think we are in a bad news good news regime and its one thats challenging for asset allocated because Treasury Bonds are acting like small cap crypto stocks. I did not see this coming. This is relatively new to the cycle. Im looking at the cfa books in the Intelligent Investor and other finance books and i was wondering where they were on that. This is a Challenging Market and one we think will be a bit counterintuitive. We think its a phase and we like the treasury part, the highlevel test a Higher Quality bond part of the market in the rally then we are seeing in the junk rally. It plays into the strength of the lower quality market. Markets in general are sunning themselves on soft landing island and we think this is a great time to do some risk. Jonathan you dont want to take in the sun and take a rest . And have a cocktail . No, we think its a bit of a welcome gift. The bar is lower right now for q1 for all these Economic Data points. The cpi report on inflation and the concern last year was relatively high. You are getting comps on lower data but the last year data was much higher. From here on out, inflation felt meaning lee from last year. The bar will be harder to beat, its similar with Earnings Growth, the bar in q1 is lower and it goes up from here. The estimate from the street is about 9 and from there it goes all the way to double digit Earnings Growth by the end of the year. 13 Earnings Growth the next year and we 21 times on the s p. Thats as good as it gets being priced in. Right now, were looking for income as a return driver and alternatives of the dollar could be a great diversifier for portfolios. Also thinking about defense more broadly. Jonathan bonds and stocks have rally then you alluded to the bonds but on stocks, what would you trim . Are we trimming whats happening in small caps . Are we trimming whats happening with big tech over the last five days . Where would you trim . We would start with the russell 2000. The russell 2000 right now, we hear a lot of fundamentals about small caps being cheap and we agree with that. But nearly 40 of the russell 2000 companies dont make money, they are not profitable. Whats been driving small caps lately are crypto minors and mean stocks. If you have a fundamental thesis on the russell 2000 that it street or there is another micro thesis, what is driving it is a lot of speculation. If you want to go along speculation, thats a great way to do it but thats the place we would trim first. Internationally, economies have been improving and weve been warming up to that, europe in particular but we think this china trade may also be starting to get stretched and overbought. A lot of headlines and everyday you get a new one out of china. For us, the fundamentals are still not Strong Enough to support it. Lisa you are not in the camp of buying european bonds to diversify away from the u. S. And align yourself more closely to the easing cycle . Youre not leaning into that . Its what we are looking at and duration is a tailwind, i get it. Congrats to those that grab that what we are seeing is just a massive yield disadvantage. We are thinking about bonds is a longerterm investment for clients. There was a point where we were up almost 6 yields on mild credit bias in portfolios. Newness will bonds we like but what we are seeing is the yield advantage is so amazing in the United States. Im really getting excited about the yield area. Lisa its inspiring. Keep going. You say you paint the picture that we are in now and we are coming off a mini cycle of its own that started in november with the pivot from fed chair powell. How much is that a way to look at this and i think its a good point that essentially, the problem of rate cuts and fueled risk assets to fuel Economic Growth and inflation to keep things chugging along the, longer than people expected. Is that how you view things . Exactly and its about context. Six month ago, the fed was talking about rate cuts. The bond market said sure. We will double that, we will up the ante if you will and they said six cuts will be priced in. Pricing in six cuts can you imagine if the fed had said we would cut six times . Of course we will get reacceleration of growth and inflation. That was six months ago and the fed has to deal with that. They have to peel that back. But thats what a mini cycle look like. You saw a lot of Economic Activity in november around the inflation pressures and it has reaccelerated and now the rates have come up and we look at housing. Housing is a critical part of this whole economic equation in the housing Builder Sentiment index they came out yesterday ticked down for the first time in six months. If housing is starting to slow, thats a good indicator this mini cycle might be slowing. Go back to the small caps in the lower profitable companies, they will not like it. Right now they are loving the risk on move but we think the fundamentals will deteriorate underneath the hood. Jonathan we appreciate the update. Looking ahead to more Economic Data in about 21 minutes with jobless claims in america. Up next, a conversation of the morning, the Jpmorgan ChaseCeo Jamie Dimon live from paris with Francine Lacqua, that conversation is around the corner. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. Jonathan live from new york city, welcome to the program, equity futures on the s p 500 are just about positive with Economic Data, jobless claims around the corner. Its time for the conversation of the morning. Francine lacqua sitting around with the Jpmorgan Chase chairman and Ceo Jamie Dimon. Good morning. Francine good morning. Its my highlight of the day, jamie dimon had a lot to talk about. Thank you so much for hosting us at your Global Market conference. What is market turbulence looking at now . Are the markets getting ahead of themselves . I wouldnt call it turbulence, we have good Healthy Markets for quite a while. They are kinda predicting a soft landing and you see that in credit spreads which are kind of low and the market is kind of wide open. Thats all good. There is a lot of times in history where that was true in the next year it wasnt true so we will see. I dont pay as much attention to monthly numbers as people do. Francine what do you think the future is for inflation . Im worried about it because we have big fiscal deficits in the underlying inflation may not go away the people expect. I look at the future, the green economy, the remote ovation of the world, the infrastructure, the restructure in trade, fiscal deficits, i think there a lot of Inflationary Forces in front of us that may keep things higher than people expect. The surprise would be rates are higher in inflation is a little higher and maybe slow growth. Also geopolitics as a another issue. That could be determinative and what the economy does next year and we will just not know. Francine do you think its 5050 whether the fed cuts or hikes . I really dont pay that much attention to that. The fed will have to follow the data and i dont know what the data will say. They are doing the right thing and being patient now. They will not know for a couple of months. Francine but no big correction . That means you are not worried about it . I am i said stocks are high and rates are staying high. Whatever the worlds pricing in for a soft landing, i think the chances of something going wrong is higher than people think. Francine in the u. S. . In the u. S. But also global. Francine what does that mean for markets . Maybe nothing. Credit spreads will cap out. Francine why is the market not pricing that in . Its happy talk. It comes from low rates and several banks are reducing rates may be geopolitical things disseminate and got dont cause problems. The future is not predictable like that. Im a student of history and i watch these inflection points and i go back. I go back to the booming markets of 1972 and the collapse of 74. The collapse of 82, the 87 market crash, 1990 real estate crash and almost all of them were not predicted the year before. I look at these factors that drive these things which are not known. As a company, we prepare for all these things. Francine what do you see is the main stress right now . If its geopolitics, its not priced in. Is it distressed or something going on you worry about . Is it multiple factors . Geopolitics could create the main stress we are worried about in terms of oil and gas prices. There are alliances in trade but i think the surprise would be higher rates because inflation doesnt go down. Maybe inflation goes up next year. Inflation may be in the cards nothing to do with what we see today. That is to me the surprise. If you have higher rates and god for bid stagflation, you will see stress in real estate and Leverage Companies and private credit, things like that. Francine so its unpredictable to the new normal . I think its been the norm my whole life. Francine not worse now . No. Francine what happens between china and the u. S. And what does that mean for you in china . The geopolitical situation is tense between ukraine and russia and iran and the terrorist activities in israel. North korea, weve never had nuclear blackmail before and this has expected our relationship with china. Its hard to have a great relationship with china. We arent different sides in ukraine and put taiwan aside, having said that, i think if the right thing for america to fully and deeply engaged with china competitively. Every nation will do what its them whats in its own interest. We should define social america properly. There is unfair trade and negotiate that or do it ever you can do but engagement is what you need to do. China is not a natural enemy of the United States, they have their own problems so to me, we can Work Together as best we can and then we have common interests, climate, antinuclear proliferation, antiterrorism. Francine how does that work for a bank working in china . You have to be cautious. You look at china from a risk reward basis, it used to be good and now its not so good anymore. Ive got that number but 1500 multinationals in china, they are not leaving china. We are much more cognizant of things being higher in hong kong is in that book as well. I look at china and hong kong as one from a risk standpoint. Francine what does a Trump Administration mean for the u. S. Economy . I dont know. Francine because its unpredictable or its too soon to figure out the policies . If you look at history, who was elected president may 9 may affect next year is we are a big tanker and that will happen. The more important thing is what we do in the geopolitical situation and being clear that American Leadership is needed to keep the world safe for democracy and that means economic alliances which can boost trade. I think we should spend more time in trade and it means nato and it means russia should not win in ukraine because if they do, i think it could tear asunder this western world. Francine youve ruled out the treasury secretary so what would it take you to get into politics . I love my job. Im not sure i want to do Something Like that. Francine even if youve got the call . Would be hard to say no . I dont know, probably yes. I love my job and i have no intention of leaving it. Francine we are in france at a Global Market conference so what you expect from causal three from basel three . President macron has done an outstanding job. He wants to grow his economy and is much more innovation. Basel three, weve been clear that we thought it was excessive. Not well thought through and i would like to know what the endgame is, what are they trying to a compass with private credit . 80 of money let the system and the government is having a bailout system for companies because banks dont have the ability to provide liquidity and top markets . They are looking at it. I trust jay powell to look at and analyze what they need to do. It may end up in a lawsuit or Something Like that. The amazing thing is that the endgame in america is 30 more capital than a european bank. Why are we arguing about International Deals when we dont do them . The regulator should ask the question, what do you want . How do you want the system to work . Do you want public or private credit . Just dictate it. If you dont want levers lending, just dictate it. We are guardians of the financial system. We bank and 100 competent countries and we are underground in 60 countries. We support middlemarket companies, do they want that or not . Francine do they know are they still trying to figure it out . I dont think its quite clear from any announcement theyve done. You guys write about it. There was no Detailed Analysis about costbenefit and what they are trying to accomplish and what the outcome will be. Francine thats why we are asking you. Talk to me about friends. You are positive on president macron . If he relaxes labor laws, would you hire more in this country . He did relax labor laws. Francine what if he relax more . Possibly. Ive got i see 800 million a day and when you have more money, you tend to hire more and thats been true for us since ive been a jp morgan. Im confident with the people and you have a hiring capability in france and you tend to do more things there. My view is that we will do more things here. The regulation they put in place, the labor flexibility they put in place, those things make a difference. It will not just lift up jp morgan here but we pay a lot of taxes here which helps lift up all citizens. I dont think president macron did that jp morgan. He knows his country needs to grow and bring innovation and thats a you build a better country. Francine you have the largest wealth fund in the world. Americans seem to work harder, is that fair . I hate total statements like that. A lot of europeans work hard. When you see the thing about work hours, its somewhat true. Americans are hardworking but i see that here, too. The innovation people here work as hard as the United States. Francine in terms of headcount in the u. K. Come its of the highest its ever been and you are giving you recently met with possibly the next Prime Minister in the u. K. , what do you think . I like the fact that both the conservatives in the labor governmen