Call as to whether the u. S. Gets a recession, but he is still expecting one, predicting that we could get rate cuts before the end of next year if the economy slows. Joining us now is nathan sheets. Good to have you. Weve had a day or so to slice and dice cpi. A lot of discussion about shelter away from home and so forth. How does it feed the fed i guess communication over the next few weeks . Yeah, i think bottom line on this cpi report is that it was a reminder to jay powell and his colleagues, yes, they made some progress on inflation, the road back to 2 will be long and challenging. And they still have some work to do. And as a result of that, i think now the fed is going to be kind of shifting its discussion from how high go we do we need to bew long well keep the rate above 5 . And i think ultimately it is going to be a while. We ought to get used to 5 plus short term interest rates. Are you not of the school of thought that shelter at least, or owners equivalent rent, will follow sort of the more recent data out of zillow and new rents and so forth . Ne in other words, the notion that shelter will come to play in the next few months . Yes, absolutely. I would characterize the readings we got on shelter and owners equivalent of rent as somewhat anomalous relative to, you know, what i was expecting and what were seeing more broadly. But even so, i think that there will be other surprises. And specifically i think that this report signaled that that nonshelter Services Component of inflation is still moving forward at a pretty rapid pace. And nonshelter services notably is a larger share of core pce that the fed watches even more closely. And i think ultimately for the fed to really make progress and get traction on the shelter and nonshelter inflation, it is going to require a loosening of the labor market. And that kind of brings in this discussion of recession risks. So is the point, nathan, that we cant get both, the market didnt have its cake and eat it too, it cant get a soft landing with a decline in inflation all the way down to 2 , that doesnt happen . If Something Like that happens, it would be unique relative to the past 60 years in the u. S. Economic history. And this is something that weve looked at very carefully. Over the last 60 year, we identified five similar episodes of rapid wage growth and high inflation. And the end game of all five of those episodes was a march rise in the Unemployment Rate and a recession. So i dont want to say it is absolutely impossible, but it would be historically unprecedented and would require us to answer the thorny question of is this time really different. Nathan, how about employment . Were beginning to look at some 2024 forecasts. Seeing some data that suggests maybe we trough in the 50 5k pe month range, others saying maybe 100 k for the last three quarters. To we ever get negative on nfp . In a recession scenario where the Unemployment Rate is rising meaningfully, then i think that we are likely to see some negative numbers. And recession at some point in 2024 remains my base case. So let me say yes, im not going to be sure priced. It will be painful, it will be challenging. And i wont be sure priced if we see some negative monthly prints on nfp. But as i say that, it will also take a discreet slowing of the economy relative to where we are right now. And dynamics of how we get from the relatively resilient economy into that Slower Economy where, you know, you are seeing negative payroll prints, i think that that is the big question. And that is one that quite frankly im struggling with. Did you guys have concerns about who is going to buy all the u. S. Debt . Yesterday we saw a weaker auction and i think it turned the whole market around, led to some weakness. And there are increasing worries with there not being a speaker of the house, with there potentially being a Government Shutdown on november 17, with no real plan in terms of tackling the debt and deficits and in fact more calls for increased necessary spending on defense, do you worry about treasuries . I have to say that this question of who is going to buy the debt is one that is important to reflect on. And it is a very challenging question. Over the last 20 years, weve had similar kinds of periods where we said, you know, something shifted. Japan wont buy as much, who will buy. And it has always been the case that new set of buyers has stepped in. But in this episode, it is probably not going to be purchased by china and other large foreign reserve managers. It feels like banks are deleveraging, reducing their Balance Sheets and securities holdings. You know, i think that there is still some scope for Asset Managers to be longer duration than they are at the moment. But ultimately i think that the answer of who is going to buy the debt, i think that it has to rest on ultimately on households who are saving and preparing for retirement needing Long Duration safe places to store their money. And i think that is where it is likely to come from in this episode. But im watching this closely and the political backdrop against which all of this is occurring heightens these questions as to who is going to be willing to buy this debt in coming years. And the issuance will be substantial. Nathan, it is interesting to see how the house view at citi feeds your views on commodities and certainly equities. Weve been talking to you guys quite a bit. Appreciate it as always. Thanks. Tightening sanctions on russian crude and escalating tensions in the middle east has oil jumping. Pippa stevens has more. Thats right, and wti is up 3. 5 today wrapping up a volatile week as the market focuses on the wars escalation and as well as the first enforcement of g7 sanctions against russian oim. Treasury imposed sanctions on two shipping companies that it said violated the press cap by carrying russian oil priced above 60. From the start the intent was not to take russian oil off the market completely, but rather to limit their oil revenue. Still in a very tight global market, any threat to supply will have an impact. But it is the israel hamas war that is driving prices especially with the wild card of iran including unconfirmed reports that hezbollah may become involved. Rbc also noting that as the war escalates, the white house will likely come under significant pressure to tighten enforcement of the sanctions against the nation. Finally, bok financials Dennis Kistler telling me there is also Short Covering going on with wcht ti moving back above the 50 day moving average. And with so much uncertainty, traderses dont want to be short going into the weekend. Yeah, a lot of headlines that might change before we get back to work on monday. Pippa stevens. And still to come, why a csuite change has one wall street firm updating Dollar General. And then we continue to monitor the situation on the ground in israel. The latest as israel orders the evacuation of more than a million gaza residents in the north. Sawonhetrtetnsquk t see rur in a moment. Meet gold bond daily healing. A powerhouse lotion that moisturizes, heals, and smooths dry skin. With 7 moisturizers 3 vitamins. And. New gold bond healing sensitive. Clinically shown to heal moisturize dry, sensitive skin. Gold bond. Israel ordering the evacuation of more than a million gaza residents from the north in advance of a possible ground offensive. Allison barber is on the border with the latest. Reporter hey carl, i just lost ifb, the sound to hear you, but i think were on together so ill just talk to you a little bit about what we are seeing here and forgive me if im not answering your question directly. We are on the border with israel and gaza. You can see gaza the smoke plumes in the distance. We have just heard this constant bombardment inside of gaza. At the same time were hearing and seeing israeli helicopters circle overhead where we are. If you look up with me a little bit, you can probably see this helicopter that has been hovering in this area, patrolling around this part. As we stand here and listen, it is really just every few minutes you hear the boom of what is happening inside of gaza. You see the smoke plumes there. Right now we know that there are millions of civilcivilians, hun of thousands misplaced within gaza as israel moves more toward launching what we expect to be a full ground assault. Yesterday i was speaking with a spokesperson with the israeli aga Defense Force and i asked if it is fair for us to characterize this as saying a ground assault is imminent. He told me we have been very clear on our intent, we have mobilized over 300,000 reservists. He says the majority are at the border with gaza. Some are up north dealing with the possible threat of hezbollah. But he said in terms of gaza and possibly going inside, that they have been very clear that they are prepared and ready to do what is needed and they fully intend to ensure they say that hamas no longer has any sort of operating capability to carry out strikes and terrorist attacks like they did this weekend. Thank you very much. We continue to follow your reporting there live on the border of israel and gaza. Continuing our coverage of the israeli hamas war, lets bring in senior fellow and director of research and Foreign Policy michael ohanlon. There are reports that they are rejecting the calls and not letting people leave. Can you describe what were seeing and give us some Historical Context . On that last point, i dont think that there have been too many cases in history where it was ever deemed even remotely realistic to ask an entire population to move out of the way of a pending assault. When i think about for example to the u. S. Operations during the surge in iraq when we went into ifallujah, so forth, i dont recall that we did it, certainly not a city wide level. There was no place for people to go. In this case there really isnt either. And hamas will imspeed this one way or the other. Even if hamas doesnt physically shoot people as they try to move south, it probably has more sway over its own fellow palestinians than ralzisraeli would given ha is not universally unpopular. So i would think the goal is probably not realistic and as much as anything, it is so that israel can ska it tay it tried mitigate the potential indirect harm for civilians that will happen with an invasion whether anybody likes it or not. So in that sense it may be as much for Public Relations as the realistic prospect of achieving that movement of people. So based on your study, long term study of the conflict here, what do you think israel has planned and what do you think the end game is here . Well, first of all, i think whatever israel has planned has developed over the last week to a large extent because while israel has gone into gaza, many times before, several times before, if has gone in for limited purposes in places where it had specific targets in mind and certainly worried about what booby traps and other kinds of ambushes or problems it could encounter along the way but it didnt need a comprehensive plan to try to take down hamas. It had a live and let live attitude. But now it needs to develop a response to an attack that it obviously didnt see coming and still is shocked by the magnitude scale and brutality of the attack. And what that means is i dont think that the military plans previously existed for what israel is now going to attempt. And therefore i think that there will be an element of improvisation along the way and they will have to see what kind of costs they suffer to their own troops and what costs to the innocent civilian population in terms just how far to push this effort. Because what they want to do clearly as Prime Minister netanyahu said the other day is basically take down hamas comprehensively. And really do an intelligence oriented operation that begins by hitting targets they know about and tries to develop more information along the way with each additional place they find each additional prisoner they take, they will try to extract more information and do a relatively systemic effort to demilitarize much if not most of gaza. I think that is their intention going in. But again, not really a plan that they have developed in detail before as best i can tell. I guess the question then would be how much peril is involved in this kind of improve s ization as you put it. And the comments that they are ready to contribute to their side of this effort on their own time line, how dangerous is that . S if d it is definitely dangei think odds are 50 50. But well see. Even though it is an improvised approach, i think the real problem here is that whether you improvise it or not, that has some good at hiding, it is good at ambushing, it is good at booby trapping. And an urban environment provides lots of opportunities and locations and topography xwraef and approach for that to be effective. And when weve looked at places where people have tried to clear large fractions of urban areas, you think about the United States and iraq and we took hundreds of fatalities and efforts to do that, you think about putin and he just leveled entire blocks and sections of the city, obviously had no qualms about the lives that he would extinguish in that process. President of syria with russian help, same kind of thing. Just taking down entire buildings. And israelis cant do that, so they will have to do something more like what we did in places like fallujah and ramadi. It is doable, but you can suffer a lot of fatalities. So i would conclude by saying Anbar Province in iraq is not same thing as gaza, but in terms of numbers of people, it is not entirely difference in magnitude. And when we went into iraq in 2007, again, we wound up absorbing fatalities on our own side that were into the hundreds. And i think probably wound up inadvertently killing maybe dozens if not hundreds of innocent iraqis. So that is the kind of magnitude that i think we have to be prepared for here. Secretary of state Antony Blinken is in jordan today after he went to israel first. He is meeting with the jordanian king and then going to qatar, bahrain, saudi arabia. A pretty extensive trip. Do you expect anything to come out of that productively as far as helping the u. S. And israel . Yes, but i dont think that it will reap the rewards right away. First thing that will happen as i think that were all resigning ourselves to or expecting and with some understanding that the israeli response. And the looming siege of gaza. And i think no one is really expecting that they can stop that. In our case, im not sure we even want to stop it. In the case of the king of jordan, im not sure that he thinks it would be realistic. But the question is at what point do you try to persuade israel that it has gone long enough. So anticipating what kinds of solutions and end games could be envisioned sort of the complete demolition and overthrow of hamas. Which may be the goal for a while, but they may find that they cant really do it, i dont know. The other question would be if and when hamas is overthrown, or at least largely neutered and rendered less powerful, what kind of political rule will then emerge within gaza. And should it be a u. N. Trustee ship, should it be a coalition of other panhandle groups who are already there. And what Security Force would be relevant to make sure that things stay as calm as possible. Those kinds of discussions could be happening between King Abdullah and tony blinken right now. But we may not hear about the contents for a little bit. Michael, thank you very much for joining us from the brookings institution. And also wanted to highlight some of the companies weve been covering here on c natinbc seei donations. Jeffries announcing that it will donate 13 million to ten charities providing aid. And oracle donating 1 million to israels Emergency Medical Service group and pledging to double funds raised by employees. Seeing actions from sdidisney, citigroup and more joining the list announcing donations for israel. And humanitarian crisis there. Lets hope the list gets longer. Meantime wells fargo getting a nice bump as earning beat the street to benefit from higher rates offsetting slower lending activity. Well talk to the cfo later this hour. 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. Hi, my name is damion clark. 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