>> the everything rally is likely to continue for longer. >> i think stocks will continue to do well. >> the winners, when momentum is high, can continue to do well. >> there is speculative fervor within the market. >> we remain bullish. >> we remain to be in the sweet spot. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's get you into the weekend. good morning, good morning. for our audience worldwide this

is bloomberg surveillance. amh back in the hot seat. it has been a while. equity futures positive .1%. four day winning streak on the s&p 500. the data is decent. central banks leaning into rate cuts. lisa: which is the reason everyone seems to be risk on which maybe should make people worried but there's no reason not to. you have the fiscal impulse and the monetary impulse. jonathan: a bit of fed speak later. we will hear from romaine bostick. what are you looking for? lisa: he will say i am ready to hear and listen. he will not try to say anything. no one will talk about cleanup on aisle two, because after december people were saying who would say this is premature.

it is clear now it is a dovish pivot. jonathan: shares of apple down yesterday 4%, today higher .2%. the doj suing apple for violating antitrust rules. in re, what stood up -- what stood out to you in that report? annmarie: there are things they are alleging in terms of antitrust. rivals are not able to access the hardware or software that apple keeps closely guarded. for me it had to be they take issue that if you are an iphone user and message the introit user it is the green bubble versus the blue bubble and they say social stigma was part of it. there are a lot of individuals who are pushing back on this and saying is this too far in terms of calling out apple? lisa: what i found interesting is previous antitrust suits did not have a market action. all of those legal actions in europe do not seem to matter. this one matters a lot.

is it the substance of the suit or convenient timing and people are souring on apple. jonathan: can i say both? the list is long. china increasing competition. double digit losses year to date on this stock. lisa: is at the final nail in the coffin for apple not being part of the magnificent seven? jonathan: apple -- alphabet down year to date, apple down double digits. we have priced out rate cuts over the last year. you have apple down double digits, which used to be the market darling, the poster child for u.s. tech, and yet the s&p 500 is up close to 10%. we talked about things we would be surprised about in january, saying if i told to apple would be down double digits in 2024, that we have priced out half the rate cuts we had priced, and then said the s&p 500 would be

up close to 10%? lisa: this goes to the broadening out in the question of where are we in this credit cycle. people were saying late cycle last year. now max kettner is saying maybe it is early cycle behavior given the fact we are seeing potential signs of weakness but where? jonathan: that was quite a change from max kettner at hsbc. this was his note. we are overweight high-yield credit and equities. overweight oil. the sentiment shift has been phenomenal in the last few weeks. lisa: and it is global. people diversifying outside the u.s.. they want a global growth wave even though people said it was from the u.s.. now it is the u.s. is crowded so let's move out and explore this early cycle behavior. are we early cycle because banks are doing maintenance cuts? i do not know the answer to that.

that is a new theme that is developing. jonathan: i know this week is exhausting so let's get straight to it. equity futures positive .1%. yields lower. down three basis points on the 10 year. 4.2375. we will catch up with bob michele, bloomberg's alex webb, and peter oppenheimer of goldman sachs with u.s. stocks cruising to all-time highs. u.s. stocks posting another record heading towards the biggest week of gains this year. bob michele running the soft landing continues to unfold everywhere with the tail risk of re-acceleration or contraction looking equally balanced. what is the biggest risk? fed policy error. either they cut rates too soon or too late. bob joins us. what is the biggest risk out of those options? bob: that the soft landing continues to unfold for the next 18 months and people are still

stuck in cash. every meeting i have, that is the first question i get. i have too much cash, what do i do with it? everything has gone up in price. i sit there and i wonder how can everyone have more cash if every asset price has gone up? where is it coming from? jonathan: really the everything rally. where it is coming from -- where is it coming from? bob: i have lived through this before in 1995. we had our investment quarterly. at the end of 1994 it looked like we were barreling into a recession. u.s. steel had defaulted, the tequila crisis, orange county defaulted, everyone was 100% certain we were going into recession and everyone was risk off and then we had that immaculate soft landing, the fed

took the edge off of things and cut rates from 6% to 5.25%. the markets did fantastically well. surely going into that credit spreads must have widened a lock. lisa coleman looked at me and says you asked me this question every three months. in 1994 they were flat and did not move a single basis point. we are seeing the same thing. the demons are at work. they are waiting for a better buying opportunity. credit spreads are holding in and there is still too much cash. lisa: which raises the question have you shifted the stance on the margins. you used to say the biggest risk is a recession. is this a new call? the idea is equally balanced with a reacceleration and an inflation problem? bob: thank you for reminding me

that a year ago we were also certain we were heading into a recession. [laughter] the regional banking system did blow up and it looked as though -- the fed still went ahead and hike rates 100 basis points in the first part of last year. it looked like recession. in september we threw that away and went to more of the soft landing. we have done reasonably well. i sit here and we try to find where is the smoking gun, where are the demons? where is there proof that there is a frailty that will become manifest in the downside? it is too hard to find. there are more signs going the other way. when we talk to the credit research teams, whether investment-grade or high-yield, they are telling the companies just look better. eva to his starting to get -- ebita is starting to go up

again. companies are more confident about their cash flow and earnings. it feels there is more of a stabilization. lisa: i am struck by all of my conversations over this week in the past week over how much fiscal money has been pumped into the system and how people who received it and companies who received it are not going to go out and spend it on the line items, they will invest in the stock market which is part of the reason there is this wall of money flooding in. is there concern on the government bond aside that there is going to be some sort of coming home to roost with respect to the leverage being transferred from the private sector to the public sector? jonathan: i don't think so. we also -- bob: i don't think so. we also looked at the amount of money and plans like aapra that have yet to be distributed. there is still 44% of the trillion dollars set aside that have yet to go out into the economy.

that is already a song cost. -- that is already a sunk cost. the policy stimulus was literally off the charts. you have to go back when you look at the accommodation of fiscal and monetary to world war ii to have any kind of relative metric. we have a pandemic. now we are coming out the other side. it will take time to work out but it does not seem to be a problem. we cannot be concerned about the amount of treasury supply when the entire treasury curve is trading over 100 basis points through the fed funds rates set the very front end. there is still plenty of demand out there. there is no alternate reserve currency in the world other than the dollar. it's going -- bitcoin. [laughter] let's not go there this morning.

there will be support for the dollar and the easiest way for a large official institution to maintain dollar reserves is to buy treasuries. we are not worried. annmarie: do you think down the road you'll ever have this concern of the path we are on in terms of the u.s. deficit? bob: we are in a world of modern monetary theory, where when there is a crisis -- the pandemic was a big one -- the regional banking crisis people want to say it was not a crisis, but only because the policy response was overwhelming. governments borrow in the central banks help underwrite that. it does not just disappear into the ether. the amount of fiscal stimulus goes into the system somewhere. there is a credit multiplier effect to it and that has helped to boost the economy. we saw that early this year when the treasury dialed back the

expectation on the amount of issuance because tax receipts were up, which is exactly what you want when you apply that amount of stimulus. jonathan: economy is pretty decent. the biggest risk is upside risk. you mentioned the inversion of the yield curve. we have a two year in the moment. a 10 year 4.24. how are you convincing clients to go further out on the curve to pick up less yield? bob: that is a good question. the fed funds rate has to go down to 4% to legitimize the treasury curve where it is. if it comes down to 4% the two year drops down to 4%. 5, 10's, 30's stay about where they are. it is about looking out into the market and looking at the investment-grade credit market where you can pick up another percent going into the

high-yield market. that is where you're starting to pick up yields in the 5.5% and higher, close to 8% range. those are the yields and credit spreads that will come down once the fed starts its rate cutting cycle. jonathan: where is the cash going? what are the biggest things you are advocating for? bob: we like credit. just because corporate america looks so good. i myself have gone full circle on private credit. it is so big, i accepted as a legitimate source of non-bank lending into the system. jonathan: what has changed your mind? bob: the fact that it is larger in size than the public high-yield market, so that is significant. it is getting out there. it is lending to borrowers.

the borrowers are not just sitting on it. they are hiring people and using resources and creating economic activity. put some unimaginable default rate out there. 20%. that still means 80% is money good. while there are problems that are ongoing, they are occurring, and there happening without all of the fanfare if they happen in the public markets. it is a strange form of insurance to the public credit market. it is another reason we like the public credit markets because they look so clean right now. lisa: i love it. good morning, my name is bob, and i have been accepting private credit. [laughter] i think is great. jonathan: when his last time you were this bullish on your asset class? you mentioned the mid-1990's.

when his the last time you were this bullish? bob: you have to go back to the mid to thousands. jonathan: does that make you comfortable or uncomfortable? bob: i feel great because i feel post-financial crisis we have been in a lala land where there has been a lot of policy intervention along the way because it was needed to recover from what happened during the financial crisis. blame the baby boomers. we learned about leverage and housing never went down and we figured out how to blow it up. it took over a decade to put humpty dumpty back together again. we see that is what is happening. we see the 91 first are the

largest population cohort. they are turning 33 this year. i think we can toss away the last 15 or so years and look at the period pre-financial crisis when there will be a demand for capital, there will be a cost to it, there will be a productive use to it. i am very optimistic. jonathan: this was thoughtful stuff. it is great to catch up with you. bob michele of jp morgan. let's get you updated with other stories with your boom -- with your bloomberg brief. yahaira: investors took a bite out of apple's market value following regulator moves against the company. the doj and 16 attorneys general filing a lawsuit accusing apple from blocking hardware and software features on the iphone, claim apple strongly refuted. across the atlantic the company is said to be facing probes about whether it is complying

with europe's digital markets act. tesla has reduced electric car production in china amid sluggish sales and intense competition in the world's largest auto market. sources telling bloomberg the company instructed employees to lower production of the model y sport utility and the model three 3 by working five days a week instead of the usual six and a half. nike warning investors will take a hit pushing shares lower in trading. the world's largest sportswear company says it is working to realign merchandise to better match what shoppers actually want to buy. nike says revenue and earnings are growing next fiscal year as it expects to see a payoff from a cost-cutting plan announced in september. jonathan: up next, the doj looking to rein in apple. >> we allege apple has employed a strategy that relies on exclusionary anti-competitive conduct that hurts consumers and developers.

jonathan: we will see how difficult that is to prove. that conversation is up next. ♪ ♪♪ hello, mia. are you ready to meet your demise? man, we really need to upgrade your trash talk. ♪♪ nice shot... shot... taker. who programmed you?! i'll see you tomorrow. the future isn't scary, not investing in it is.

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(impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo jonathan: lisa on the edge of turning bullish. i don't know how that makes you feel. you're just waking up wondering what should i worry about, stocks are at record highs. lisa is on the edge of turning bullish. lisa: i understand why this could continue. what worries me is the wall of money is going into specific areas that when the tide rules out they could crash. it is hard to see it imminently. jonathan: on the edge of bullish. lisa: you get stimulus from every side. jonathan: never been this close to being bullish.

equities positive on the s&p 500. the doj looking to rein in apple. >> we allege apple has employed a strategy that relies on exclusionary anticompetitive conduct that hurts consumers and developers. for consumers that has meant fewer choices, higher prices and fees, lower quality smartphones, less innovation from apple and its competitors. jonathan: the u.s. department of justice suing apple, accusing the iphone maker of violating antitrust laws by blocking rivals from act -- from accessing hardware and software features. shares wiping out $113 billion in market value. alex webb joins us for more. can we start with the victims? or the alleged victims of these violations? alex: is not necessarily other smartphone companies but it could be other people offering

services on apple's platform. we have heard complaints from spotify about the way not only payments are taken, they have to pay a certain cut to apple if someone signs up for spotify, but apple would not let them tell their customers that if you want to supply online you have to pay that cut. there companies such as the people who want to make mobile payments and contactless payments. at the moment you can only use apple pay with the iphone. one of the things the doj is saying is other services, even android pay should be available. it is a lot of smaller companies. google is a smaller company but not that much smaller. trying to offer products and services through the iphone platform who the doj alleges have missed out. annmarie: i don't know who is waking up and shedding a tear for a credit card company like visa or a bank who says they cannot have a digital player

when it comes to the apple wallet. what is the doj remedy? are they going to call for a breakup? alex: you talk about behavioral remedies. they will be forced to change some of the set up they have in the device. we have seen that already in europe in terms of the menus for what is the default sort -- what is the default search engine when you open a smartphone. what is the default payment service you would use? there are other things. other companies from smart watchmakers who do not have the same smooth operation with an iphone as does the apple watch. they could be forced to open some of those apis to make it easier for competing devices to have their data appear in the apple health app. annmarie: what have we learned from other suits facing apple about the fact that apple says

they need to do this for security reasons? alex: apple often makes this argument that this is about the quality of their service or the quality of the apple experience. if you let a bunch of other unmediated, unchecked apps and services onto the device it will be deleterious to the customer experience but could affect security. the counterpoint is ultimately that is a choice for the consumer to make themselves. if it is true that apple's product lineup is that much better and worse if you let other products and services onto the iphone without apple as a gatekeeper in between, than that is something the market should be able to decide itself. there is a strong counterargument. lisa: a lot of cases we have heard in the eu going against apple, shares have not sold off that much. people shrugged it off. why is this different? alex: this is the broadest full

frontal assault we have seen on the apple ecosystem. we have seen a few tips taken off apple and other big tech companies by the eu in previous years. the fact this is happening in apple's home market is meaningful. whether or not this leads to widespread changes at apple, this is a long way to go and a long way to run. even if the doj were to come out with some sort of victory, the changes are not necessarily about what changes on the device or changes on the operating system. the fear is that has an effect on the apple culture. this is something we saw at microsoft. when they were subject to years and years of antitrust investigations and complaints they became wary of taking risks. that is something that was deemed to have hurt them and

made them less competitive in the medium to long-term. in the extreme long-term they are now the most valuable company in the world again, but there was a good 10 to 15 year period when they were in the wilderness. that is the concern of the effect that could have on apple. jonathan: so many different dimensions to this story. a great wall street journal op-ed piece. is it federal law to require tech to be interoperable? annmarie: that is not clear. what they need to do is show this is a proper monopoly which will be difficult. we have seen apple uphold what they do based on security reasons before. this will take years. jonathan: that stock slightly positive. coming up, helane becker. this is bloomberg. ♪

jonathan: four day winning streak on the s&p 500. positive .1% on the s&p. on the nasdaq up .1. yesterday losses on apple down more than 4%. a loss of more than $100 billion on its large market cap and still the nasdaq 100 closed at record highs. in the bond market, two year, 10 year, 30 year. we have been all over the place. 4.61 this morning. down two or three basis points. jonathan: they are just following the direction from the

fed. they are not concerned about inflation data. there on the right path and they plan to cut. we have a good sense in the market they are going to cut in june. you have federal funding and monetary policy on the same page. jonathan: you know what has had a good week? what is good for banks? higher rates or lower rates? banks have had a good week. five days of gains. best day of december if we close here. lisa: i know we will talk more about some of the capital market activity -- green lights we've seen has allowed new types of dealmaking, new types of activity. money pouring into the system and banks will capitalize at a time to link would are not picking up the way some people expected them to. jonathan: foreign-exchange -- something that has picked up is the u.s. dollar. euro-dollar down to one .0 818.

we are leading into cuts elsewhere. hikes that do not work in japan and cuts in the u.k. and the not too distant future. jonathan: u.s. economy -- lisa: the economy keeps outperforming. every single analyst says they are going in the opposite direction. at a certain point why wanted people still like the u.s.? you talk to people who want to diversify. jonathan: everything with the dollar in front of it has rallied this week. equities, bonds, foreign-exchange. under surveillance, the justice department taking aim at apple, accusing the tech giant of violating antitrust laws. 15 states plus washington, d.c. joining the complaint, saying the iphone maker blocks rivals from accessing hardware and software features on its most popular devices. apple responding to sing the

case is wrong on the facts and wrong on the law. the case comes as the eu is preparing investigations into apple and google for violations of rules. lisa, you point out that typically this is not a stock story, just part of the environment that surrounds the name of apple and google. yesterday felt different. lisa: i cannot wrap my head around if this suit is different and challenges the fun a middle aspects of apple, or whether it is another thing on top of all of the other challenges this company has. to me it does feel different. the fact that the market responded was unusual. annmarie: it has been a down port it comes to apple. china you have tim cook in china trying to shore up this market that is incredibly important. dan ives that wedbush had this to say, the antitrust lawsuit will pick up a stepped up phase of the beltway going after

apple. is this more of the tank when it comes to antitrust regulators looking at apple. jonathan: i do not want to reduce it to one thing but the messaging thing i do not understand. it does not make sense to me. annmarie: you will be ostracized from your group chat. they are talking about social stigma. the issue i take with this, most people on group chats around whatsapp, you do not need to be on an iphone only i message group chat. i'm only on one. jonathan: you are not locked in. you can use other options. you mentioned the social stigma. is that something the doj needs to be focused on? lisa: whether it shows up green or blue on your phone. jonathan: are we going to's tell gucci they cannot put the label on anymore?

that is ridiculous. if this is where we begin, where does it end? lisa: how much of a grasping at straws to try to democratize something that grew up out of a lot of smaller acquisitions. can you backpedal and undo that at a time this is an aggressively antitrust administration? annmarie: the complaint includes a quote from tim cook and someone raised their hand and said i cannot send my mom certain videos, and tim cook said by your mom and iphone, and that is included in the lawsuit. jonathan: let's move on to a stop doing already. -- let's move onto a stock doing all right. read it and in the day with the market value of 8 billion. reddit's most loyal users were allowed to buy -- also touting the benefits of artificial intelligence. the fourth largest ipo of the year so far.

i'm not sure with the api piece of this is. he saw that move yesterday. i would be wondering if i'm going to go public how encouraged i would be about the move we saw? lisa: this is a green light to everybody who wants to close out of investments if you're thinking about private equity or going public and that is a reason i would suspect banks are celebrating because this means a lot more activity. it does remind me of overstock coming out and mentioning blockchain and all of a sudden there's shares -- all of a sudden shares surged. let's turn to fedex. rallying after announcing a $5 billion stock buyback plan. it offered an optimistic outlook despite a difficult demand environment. the results market turnaround after cutting costs and reducing the company's workforce by 22,000. helane becker joins us with more. let's start with fedex.

the outlook for revenue growth is not great. can you tell us how much of the heavy lifting of this company has been done by cost cuts? helane: that is most of what we are seeing. the revenue lines were down year-over-year. the key takeaway is revenue was down, it is the third quarter in a. that speaks to the cost-cutting we have seen. they are in the middle of a $4 billion cost-cutting program by the end of the current fiscal year they will of done $1.8 billion and they will do another $2.2 billion next year so the 2026 fiscal year has $4 billion taken out of costs. if there is a turnaround in revenue growth, and actually we could talk about the revenue, a lot of what we see in revenue is fuel surcharges. in a year or a quarter in which you have lower fuel prices you will have headwind on revenue.

this is part of why it is important to look at revenue excluding fuel surcharges, which actually would have been up. lisa: what are this prospects of growth and wire people debt what are the prospect -- what are the people prospects of growth and wire people optimistic that this will be more profitable company after shrinking? helane: some of what you have is short covering for a lot of people that were short going into the quarter. if you look back, i've cover the company for 30 or more years and it seems like most quarters the stock does go down on the earnings. there a couple where the stock has gone up. to the specific question, i think at some point revenue starts to bounce along the bottom and you start to see improvement. it will not have this poor revenue environment forever. things do turn around.

you start to get into easier comps as the year goes on and then they should start to improve. they are going to be slightly smaller company. we are still forecasting that in 2030 or 2032 they do $100 billion in revenue, up from around $98 billion now. i think the focus in the short term is cost-cutting. it is getting rid of all of the different operating companies and focusing on continuing to deliver a high-quality product to their customers so they can do 3% or 5% rate increases. lisa: a lot of people look at fedex or ups as bellwethers of this economy and when the revenues go down it is a negative sign for consumer spending. right now everyone is trying to come on in apple the other in terms of economic growth and

investing in under the sun. is this a sign of caution that revenues came in lower at fedex? helane: some of it is the fuel surcharge. excluding that we probably have flat revenue. they did say the u.s. was weaker than they expected an international is not improving significantly and there were concerns. what people look at, the consumer, a lot of what they see is consumer spend, retail spend, or spending for airlines we talked about a couple weeks ago. then you think about as people return to their offices, three things to focus on. as people return -- we talked a little bit about pricing, and finally, things will start to wear out. stuff that people bought in 2020

in 2021 will start to have to be replaced. that will start to show improvement. maybe in another year or so. they were really optimistic. they were upbeat. very excited about a lot of the changes happening there. when you think about them being smaller, think about the express division being smaller and think about ground being bigger. annmarie: when you look at fedex potentially, wall street journal is reporting the stronger partnership with amazon. you see that coming to fruition? helane: that is interesting because fedex fired amazon as a client five or seven years ago and now they are talking about getting involved with amazon for returns. returns is big business. amazon makes it very easy to do returns. you can drop things off at various locations. fedex is building that business

and re-engaging with amazon for returns may make some sense. when fedex fired amazon they were a $1 billion revenue contribututor, though it was relatively easy for fedex to replace that revenue and re-engaging with amazon for returns is an opportunity. jonathan: thank you. can we get the stock up quickly. a look at where we are trading in the market. i will do it on the bloomberg. lisa: 12.5%. jonathan: quite a move. lisa: it raises this question how, there is so much ambition when it comes to this idea of future growth when the positive energy is coming from significant cost-cutting. jonathan: let's get you updated on stories elsewhere. here is your bloomberg brief. yahaira: and in the fentanyl crisis is shaping up to be a high priority for voters ahead

of the election. a recent poll sees eight in 10 swing state voters ranking the problem as an important factor in deciding their votes. that is more than the number who cite abortion, climate change, labor, or the current wars. fentanyl has been linked to a quarter of a million deaths. aston martin is type in the bentley ceo to lead the luxury carmaker. hallmark will be aston martin's fourth ceo in four years. the carmaker completed a refinancing earlier in the month to ease concerns over the balance sheets. shares of lululemon are lower in the premarket at the athletic maker forecast a lower-than-expected sales outlook for the first quarter and the full year. the company says visits to stores in the u.s. load at the beginning of the year.

lululemon has had a stunning post-pandemic run and analysts still predict the company will outperform its conservative guidance. that is your bloomberg brief. jonathan: the u.s. versus the rest of the world. >> expectations around growth and the performance of equities is expanding outside technology and outside the u.s. and into the rest of the world. it is a broadening out of growth. jonathan: we will catch up with goldman sachs up next. goldman sachs looking to diversify. ♪

[alarm beeping] amelia, turn off alarm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. why not? did you forget something? my protein shake. the future isn't scary, not investing in it is. you're so dramatic amelia. bye jen. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses and more in prospectus at invesco.com. welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us.

our neighbors, the garcía's, love working with you. because the advice we give is personalized, -hey, john reese, jr. -how's your father doing? to help reach your goals with confidence. my sister's told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial. jonathan: equities on the s&p 500 positive .5%. yields a little bit lower. down to 4.2414 on the 10 year. under surveillance, the u.s.

versus the rest of the world. >> expectations around growth in the performance of equities is expanding outside technology and outside the u.s. and into the rest of the world. the u.s. does well, japan does well, the u.s. just does a little less well than all of the other areas. it is this broadening out of growth. jonathan: market dominance in the s&p 500 leading some investors to look elsewhere. peter oppenheimer of goldman sachs writing "we believe there are many companies outside of the u.s. that should be considered part of a global diversified portfolio and should not be ignored because their base enlisting location is outside the united states." peter oppenheimer joins us for more. if it is winning, even if it is dominant, should i be concerned? peter: the short answer is no. the outperformance we have seen of the u.s., which has been

particular dramatic since the financial crisis has been entirely based on solid fundamentals. the u.s. economy and profits have outgrown those of other regions. as a result of that its valuation has risen a lot compared to other parts of the world and now we are finally seeing a bit of a narrowing in the relative fundamentals. profits are picking up outside the u.s., where valuations are lower. we think the u.s. market could still do well but there are rate opportunities outside and diversification makes a lot of sense. that is true of the sector and the stock level. jonathan: can we also discuss what we are fighting? are we fighting passive flows that cannot care less? peter: passive investing has worked well over the last decade or more in an environment of ever lower interest rates where bigger companies are becoming increasingly dominant in the u.s. equity market itself has

become the highest share of the world markets since the early 1970's. what keeps winning is we continue to win over time and that is been a great environment for passive investment. we think as interest rates stabilized to slightly higher -- they will come down cyclically but they will not come down structurally -- returns at the index level will be slightly lower. that is an environment where the opportunity set is more attractive for active managers and also for more differentiation and diversification across regions and across sectors and styles as well. lisa: when you talk about the case for international i am curious where you are looking, and whether it is regional based or sector based? peter: it is a little bit of both. the u.s. has done extraordinarily well, partly because it has had high exposure to the growth factor,

principally dominated by technology, which has been the winning sector over the last decade. we still like technology. we think the dominant companies have been justified again in their dominance because of incredibly strong fundamentals. we think you have better relative valuation opportunities outside geographically u.s., and indeed last year rather quietly the euro stoxx 50 was slightly stronger than the s&p. many people do not acknowledge that year to date europe has outperformed not just the s&p but the nasdaq. so has japan. it is not that we do not like the u.s.. there are geographic opportunities to diversify. that means broadening out from technology. we think technology will still be crucially important. as interest rates come down and we get the soft landing, the

opportunity for broadening out to more cyclical parts of the market is improving, but also into non-tech companies. we put together a list of what we called ex tech compounder's, global companies outside of the sector that have strong characteristics of reinvestment of the high rate compounding higher returns and they tend to be cheaper and offer good diversification opportunities. lisa: overnight the citigroup team upgraded eu stocks with more upside year to date in their view. it is one of the highest on the street. this is the reason. more certainty on rate cuts. global growth. dollar weakness. much as dollar weakness necessary for this call to work? peter: i am less convinced on the dollar weakness part of that story, though i agree with the other comments you made.

the european economy is growing at a much weaker pace than the u.s.. we are looking at u.s. growth this year of around 2.8% and in europe about .7 percent. we should not forget that the european companies that dominate the indices are very global and they benefit from a recovery in global growth and in a global manufacturing cycle which is beginning to happen. i think what we find for european stocks is the growth trumps the currency. if growth is accelerating european companies do well even if the currency is stronger. it may well be weaker and that will add to its relative competitiveness. we do not think the currency is the crucial part. it is about relative fundamentals. his growth improving? are interest rates coming down? europe is only trading around 13 times pe compared to something

like 21 in the u.s.. u.k. only traits around 10.5 times. there is a valuation opportunity , which is not dependent so much on currency. annmarie: when you look at india and china you say india has good growth and china can be of value opportunity. a lot of people move to india to get away from china. why do you see something interesting in both markets? peter: i think india is a different story. it has high growth rates in terms of the corporate sector and in terms of the economy. it is a relatively expensive market and good exposure to long-term growth. diversification as an investor focus away from china towards india. china is a different story. is a value play.

the market trades around seven times earnings. much cheaper. it has a lot more structure and headwinds. it is much closer to a consensus then india. for evaluation and recovery if we get any policy stimulus, we think there is reasonable upside. jonathan: have to finish on japan. nikkei up something like 22%. they'd we've had a move of something close to 50%. when i by the s&p 500 i know what i am buying, i am buying maker cap tech. when i buy japan, what am i buying? peter: just like the u.s., both europe and japan have seen an increased concentration by stocks, so the biggest companies

in japan are the biggest shares of the thousands we have seen going back over several decades. you are getting dominant large-cap globally exposed companies doing very well. i think the japanese market is much cheaper than the u.s.. of course it has gone up a lot but we should not forget only just broken through the level it got last in 1990 and the fundamentals are finally very different because you are getting expanding nominal gdp. we are finally coming out of the deflation stagnation that has dominated that economy over the last 25 or 30 years, and also quite a lot of restructuring stories because of bottom up focus on improving return on investment from a low level. with rising markets and return on equity going up, that justifies more of a higher valuation. the dominant companies are global companies in areas around

technology, high value-added manufacturing with benefit from a bit of a pickup in global manufacturing cycle as well. we think their pre-well-positioned. jonathan: always enjoy your thoughts. peter oppenheimer of goldman sachs. looking for more out of stocks internationally. nikkei 225 four days of gains. we were talking about what would happen if they hike interest rates? so they hike interest rates, the yen did not rally but stocks keep going higher. lisa: this is the perfect combination for people to be bullish. they can buy the discount. jonathan: quite a run. in the next hour, we will catch up with mohamed el-erian, michael sheppard, tracie mcmillion of wells fargo. all of that and a whole lot more. equities closing at record highs and adding a little bit more weight to that rally, up .1%.

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a lot of investors believe the fed is of bleeding indicator. it is a lagging indicator. the first break because we will see will be driven by inflation. in inflation we have had a supply effect more important than the fed. expectations for inflation

should come back to 2% with growth still being ok. jonathan: at this point in the morning we need to catch up with the equity market. the bullish portion has been overwhelming. bob michele with us earlier this morning when was the last time you were this bullish? the mid to thousands. lisa had almost nothing to say back to him. lisa: everything he says rings true. everyone is making money but on the flipside how do you fight the fed? i'm talking about the bad and the federal government with both prongs printing money? jonathan: we had all times hi, the former darling of the equity market down by 4%. lisa: this has to come with the

doj going after apple and how they r-star's are talking about how other companies can't get into hardware and software but this is been years in the making. we talk about the upcoming election if things go back to trump? it won't. this started under the trump administration. jonathan: there saying look at opportunities outside of america soft and has different views of these. they have graded their out look to 5500. u.s. exceptionalism is going from strength to strength. why would you fight it? lisa: this is the point i was queuing in on, you have u.s. exceptionalism being outside of the rest of the world we this.

now there is the question as you exit exceptionalism being 10 down or expanding its rays across the world with potential profitability? this is a key question. is it percolating outside of america? no jonathan: soft gent despite market optimism review this says not remarkable. lisa: are you talking about the equity rally are specific stocks? the equal weight? some people are talking about certain names that have gotten over their skis. jonathan: equities right now positive by .1%. heading towards the end of the

biggest week of getting so far. the euro is weaker at 1.08. coming up mohamed el-erian. tracie mcmillion of wells fargo and why you should reduce risk. and poonam goyal. the fed will be able to engineer a soft landing? powell and bostic are on top. how overwhelming is the enthusiasm of the last week for this market? mohamed: initially we had bottom-up drivers circular

themes that were powerful but that rally was mayor -- narrowing and now we have a top down factor enabling central banks that are clearly going to do what they want to do regardless of selective data. these two things are really powerful. jonathan: we did the pregame together but not the post game you were with is going into that press conference were you surprised by that press conference? mohamed: i was surprised at the way he stressed patients into ways with inflation running higher, he dismissed the fact that we had surprising hotter than expected balance sheet. he said we may get there slower that monetary policy will see more action than otherwise. on the balance sheet he took such a big step forward when he

could've waited until the next meeting. lisa: what she was going to drop? everyone is bullish and bullish on top of bullet you have to wonder when does a break? on wednesday is the inflation expectation. it will be a higher expectation with the fed. i'm not seeing it and other places why is that? mohamed: you see it in gold. there are record highs on gold. i think what you are seeing is the everything rally, it's going everywhere. market enthusiasm could spread through the rest of the world and that is a consequential statement. if that occurs, the u.s. relative strength is going to be

diminished. it's too early to pivot. to use your phrase, u.s. exceptionalism is not going to spread to the rest of the world. the others are not doing in terms of what the americans are doing. they don't have the entrepreneurial society or the mobility of fact there's the u.s. is truly exceptional. lisa: is it rational for people to stay in the united states and adding more valuations or at such high levels to continue to bet on this ship and not expected to expand? mohamed: i've been asked not question every five years in the u.s. premium has increased in every single years i said don't fade the u.s. to early. i see the temptation to diversify away from the u.s. but

i don't see it i strongest unsupported by fundamentals. this is betting on momentum. annmarie: you mentioned the enthusiasm for the stock market but not the economy. how does that make sense? mohamed: the reason it makes sense and i have learned that the painful way is markets are not the economy. they can decouple from economies for a long time and we are seeing that happen. parts of the world one of the biggest puzzles is while we have found a surgeon to inflows you haven't had them in major markets. we have this book euler situation whereby u.s. investors managing u.s. investment grade bonds that are taking off benchmark bets and that's because it's enough to be in the

u.s.. jonathan: can we go to the gramercy caps on talk about what's happening? what are you thinking about the end of the moment? mohamed: people of been hurt the same reason why people are in cash, they think they could take adequate returns from safer places. jonathan: if we were looking at e.m. and there was a central bank that tacitly accepted higher for longer we would being doing things different with that country? why is it different than the u.s.? mohamed: u.s. is a place people outsource their funds to be managed. they can misbehave much longer in a much bigger way than any other country. lisa: which is why we are waiting for this to show up in longer term bond deals and everyone says it's not going to

happen because we are the reserve currency. his concern inflation only going to show up in gold or will you start to see it wake up? mohamed: we set aside three concerns that are still in play. were not focusing on them right now. one is the u.s. deficit and a tremendous amount of issuance. in october it was who was going to buy all of these bonds? no one cares right now. issue number two, we have taken a small step in japan from exiting from a highly distorted regime but no one is asking the question will japanese investors have to sell foreign securities? and the third one is the banking system. a few banks that are facing difficulties and that's going to

play out this year. lisa: you talk about japan and let's go there for a moment. they had inflation numbers are were hotter than expected and people are not as concerned because the boj is not over hiking or over ambition to tighten the screws. does that make you think that even if that's an outside threat is not going to happen? is not a normalizing cycle taking out the goalpost further out in the field. mohamed: you get me out on a friday and then i front run my financial times article for next week. lisa: it's ok no one is listening. mohamed: i think we will look back on this week as the week in which central banks abandon appoint inflation target for range. this was a point when they realized in the case of the

fact, it's no longer a good idea to have 2% as two or 3%. it will happen in a small way. the first small step was acknowledging inflation will be higher but you see through it. in japan the same thing happen. we will look back on this is an important moment but it will play out slowly. japan will play out very slowly. they will tolerate hotter than expected inflation for longer than expected. in the equity market that is music to your ear and inflation expectations have been well anchored. jonathan: racist question for what that means for the bond market? that's the greatest promotion the financial times is ever had. mohamed: you do it to me every time. jonathan: it's good for everyone

we get a little bit they get a little bit everyone wins. let's get you an update on stories elsewhere. here is your bloomberg green. yahaira: roddick rose 40% with the social media companies closing out $50 a share well above $34. excitement driven by the profiting of growth from ai investment it is the fourth largest with a market cap of 8 billion. investors took 113 bite out of apples market cap following regulator moves against the company. 16 attorney generals accuse them from blocking rivals from accessing hardware and software features on the iphone a claim that iphone refuted. across the atlantic they are

facing probes about wethers complying with the act. tesla instructed employees at shanghai to lower production of the model why and sedan to work five rather than 6.5 days a week. jonathan: next, regulators are closing in on apple. >> apple has gained power not because of its a. superiority but because of lack of regulation. jonathan: all of that coming up next this morning.

jonathan: all day winning streak on the s&p 500. the lana's winning spreads february. s&p futures up .15%. here is the everything rally. yields are lower by two basis points. crude is up in the dollar stronger with the euro down. regulators are closing in on apple. >> apple has maintained his power not because of its superiority but because of its unlawful exclusionary behavior. monopolies like apples threaten the free and fair market on which our economy is based if left unchallenged they will only continued their monopoly. jonathan: the doj is suing apple.

apple has raised a hundred 13 billion in the iphone maker is selling back. saying this could set a dangerous president empowering government to take a heavy-handed designing people's technology. can we start with the apple monopoly what are they getting at here? >> the justice department is saying that clause platform messaging between apple and android communication and not apple smart watches and cloud streaming services. apple is putting its thumb on the scale that hurts consumers and the makers and innovators in these areas not named apple. annmarie: wall street journal says the suit claims apple has suppressed cloud streaming

services to require you to be submitted as a stand alone. because the microsoft activision would create a monopoly. are these regulators talking out of both sides of their mouth? >> that's what it looks like and that is what apple will try to argue. when you parse their statement from yesterday and jonathan was good to show an element of it. saying they are being punished for being innovative, succeeding and drawing consumers. don't blame us people liking our products are gravitating towards what we have to offer because of enhancements like security that people value and we are able to bring by setting higher in different standards for access to our app stores. annmarie: we have seen a robust

regulation from the biden administration but this lawsuit started under trump. do you expect that under trump or biden this is the direction of travel. >> we are in an election year and we have questions about what the trump administration if you selected to return, what it would do in terms of its enforcement of the market. donald trump did not have a huge love affair with the tech industry in the department under trump started this case and pursued it on a lot of the same grounds we're seeing here articulated by the biden administration and in the republican party under trump there is a strong libertarian street. we are seeing the party reject

in part because are trying to make the appeal to little guy voters. lisa: i'm looking for consistency want to understand the framework in terms of what's is desired outcome here, smaller companies? democratization of tax or push up tech became is so they can compete with china? >> that's a great question, what is there and gold? --end goal? they want to make sure innovation is not stifled and it doesn't just apply that attack. to tech. we saw the biden administration to the antitrust a block the

acquisition of albertsons and crackdown on concentration in the grocery aisles. when you hear from the top advisors and administration officials asking them about bide nomics. fair pricing is on their minds. they're not picking national championship but making sure the field is more equal. we haven't seen as rigorous antitrust legislation as we deserve. jonathan: data d.c. on the latest with apple. who really when stucco lawyers who make a lot of money in south korea and china. who wins here, foreign phone makers.

lisa: they are expected to launch a ai infused phone and we have apple racing to catch up with the gemini relationships with google. what is the ultimate goal and how do you create consistency to give people confidence to make deals, have a framework for their business stucco jonathan: this came out at bank of america how do you have a conversation about doing a deal if you feel like you could be acquired. you could be set back one whole year. lisa: any of the banking crisis where they say you have too many banks but you don't want consolidation. it is mindbending. jonathan: how interventionist is america becoming? mohamed: it's becoming more interventionist the interesting

question is does it need to be interventionist? there is a view that industrial policy will be really important and pivoting from old-style growth to new style growth models. lisa: this is one of the reasons why we talk about doubt fight the fed or federal government because this will be crucial if you want to shift away from supply chains. people thought this would be inflationary but now people don't care? why? mohamed: inflation has been coming down without sacrificing goal so it's not a top issue. lisa: is it inflationary? mohamed: of course it is. all of the construction happening in the global economy is inflationary. the rewiring of supply chains

because companies want resilience, inflationary. what's happening in the labor market between the mismatch of skills of what people have is inflationary. on the others do have the promise of ai and people are completely focused on the promise and willing to live with all the other restructures going on. jonathan: there was a piece on the wall street journal whether america is becoming more like china instead where we thought china would become more like the united states? mohamed: that's like saying in my becoming more of an olympic athlete? jonathan: i'm not saying they will become full communist

overnight. we look more like them than they do us in the past couple of years. mohamed: we look more like eric. we have realized government has to play a bigger role in enabling the private sector and private and public partnership matters. jonathan: we found an equity market bear. tracie mcmillion of wells fargo as the s&p 500 its is 20th all-time high of 2024. this is bloomberg. ♪

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jonathan: what awaits. all-time highs at the close on the nasdaq 100. the banks of done tremendous. the banks up for five consecutive days close to 5% this week and some really great gains for jp morgan. lisa: saying they're increasing their diffident for the second time in 12 months. they have so much money they

don't know what to do with it. jonathan: i was looking at the year to date for gains, 19% on citi. after the regional bank stress from last spring. jp morgan is up six, citi is up by 40%. when they are the main players? is their strength a good thing or is it coming at an expense of those politicians want to protect? jonathan: the banks are doing better as is everything else. sensitive bond market, yields

are lower by two or three basis points. 4.61 on the two-year. dollar yen on the week from 1.7 against the yen. usd-jpy 151.57. lisa: mohamed el-erian's call and is going to be a good one. how there will be a seachange on the rate hiking cycle and running inflation between 2-3%. jonathan: i was speaking to tk and he said rep up the script. let's spend a couple of minutes on the ft script. that banks are tacitly accepting

these rate hikes because they need the government to do that for them. what are the consequences going to be? this is a baby step toward something much bigger. we saw that in the contradiction of the 24 protections. for those of us who missed it the federal reserve came out with the meeting projection for 2020 four unemployment lower, grow stronger is cpi revised tire. yet still, it showed three cuts for 2024. we were working out of that's a small contradiction in chairman powell did not seem bothered by it, the substance. what are we going towards we mention the consequences? what will they be to financial markets? mohamed: the critical thing is

when he said this story has not changed. we could argue over 2, 3 because her one more member to move. but when he says the story has not changed when you have had 300 than expected prince. jonathan: has a story change for bond markets? mohamed: we see it in the bond market it is realizing that the curve is going to steepen and we will tolerate inflation for a while but that inflation will be accurate. jonathan: we're trying to figure out if this is good or bad for the long and? what is it mean for bonds, the longer end of the curve? mohamed: i want to talk about

the front and in the belly and but not the long and. lisa: we are taking you there? what is it mean for the 10 mohamed: mohamed: year? an average yield of 4.25 is reasonable. we are volatile around it but is reasonable. the excitement is going to be elsewhere in the curve. lisa: is this the correct move? it's important for the fed to have more flexibility. 2-3% is a stimulative environment to avoid the trap we got into a disinflation. mohamed: here we go full into the article now. taser your question, it's not without risk but it is the right move. it's not without risk because at some point you could destabilize inflation expectation but it is the right move because we live

in a different micro paradigm. supply is not strong enough globally and if you run a two-person inflation target you will sacrifice global well-being. lisa: does that concern you about how markets are not the economy that a lot of the inflation is asset inflation but not real world inflation because low income families are more likely just been in least likely to benefit from the rally in asset prices. how much does this diverse market is from the fundamental economy that could be harmful? mohamed: that is why there has been a call for the people's qe. must not try to hide it. the low income people have not recovered from the 9% inflation.

their wages of gone up but the cumulative impact of the inflation of 2021 has been significant. if you don't believe me go to food banks. i talked to one food bank and they say they are still seeing long lines. underprivileged segments have been hit hard by inflation and the good news is that wages are going up faster than they have in the past but the inflation hit is painful and that explains that despite u.s. exceptionalism it does not get reflected in president by dense paws on the economy because people remember inflation and when you say inflation is better they say prices are coming down. jonathan: well frank, the second plug of the ft is coming out

tuesday. they're gonna sell so many copies. the s&p 500 notching an all-time high of the year but we found someone a little bearish. consumer is weaker. everyone is overwhelmingly constructive but what don't you like? tracy: took collis a bear is a bit of an overstatement. jonathan: it's all relative. i want to say we are medium-term optimistic. we are seeing markets can't keep going up indefinitely. there is data that we have hit all-time highs on the s&p 500 and that's one every three days we hit all-time highs.

a third of the time this year. we could see some weakness through the summer. we could see a rebound towards the end of the year but we really don't see prices moving much higher than where they are today. some weakness during the summer and perhaps a rebound to the levels we see today. mohamed: the lesson of pre-pandemic markets where people had the frame of mind you make it a selloff but it will rebound that we never got those selloffs because people immediately put money to work on any sign of a selloff. why is it different this year? tracie: we don't think it's going be different this year and in fact, typically within a 12 month period we see a 10%

correction. we think that's possible this year. we saw some really strong growth last year, on the s&p 500 is up 35% over the last year and we just think it's probably time to take applause there and thought would be an opportunity not necessarily to buy more than large caps because were already overweight large caps. but potentially to broaden out exposure like small caps and potentially even emerging markets. lisa: the biggest bear on the street. we might see some weakness. so here's my question is this a valuation story or you actually seeing week this people at recognizing a companies or consumers? tracie: one of the things we've

been pointing out is the equity risk premium is unattractive relative to bond yields. valuations are high but experience teaches us that doesn't necessarily provide us with the good timing tool. although valuations are high they could go higher. it can persist especially if equity investors think earnings growth has upside risk which is what we think we are seeing now. it does mean that we think stocks are increasingly priced for perfection. that increases the chances we could see a pullback on disappointing news. lisa: does that mean you are increasing your exposures to bonds? i'm looking at credit spreads at their tiding level since 2021.

that is still more attractive? tracie: we think bonds of 4.2, 4.5 if we were to see that range a good entry point for the long term. we are not necessarily adding to our bond positions at this point. instead we have overweighted short-term fixed income and we think that will provide additional cash to go into riskier assets somewhere down the line when the opportunity looks more attractive. mohamed: we were talking about all this concern from a few months ago about issuance. that we will see massive issuance. has that disappeared? tracie: i don't know for its disappeared because we are

running budget deficits. what did changes the treasury was issuing on the front end of the curve more so the long and. it may change their duration, their maturity then we might start to see those rates rising above it. our forecast for the end of the year does reflect that. we think 4.5% is a reasonable point tn the year. there could be some yield pressure from issuance but at the same time if the federal reserve does start to weaken or start the pullout on quantitative tightening that can offset that as well. jonathan: we tried, thank you very much. it's all relative just not bullish as everyone else. you know what the most bullish

was last year was 5200 and do you know where we closed? 5241. this is happened with fewer rate because priced and what we were looking for. and you know what the story was? everyone was saying this rally is based on rate cuts coming and we were looking for 6, 7 and we not even get three based on the economic data and everyone is upgrading stocks. lisa: what's the biggest risk for you downside her upside, it's still upside risk. jonathan: bob michele said -- lisa: upside risk. jonathan: what is this remind you of? mohamed: it reminds me of the

2000's and other things i don't wanted to remind me of. jonathan: are we there though? mohamed: we are not there yet though. jonathan: you think we might? mohamed: people get carried away. momentum is your friend to tell us your friend. jonathan: where would you look for pockets of things going on little too far? mohamed: i go back to annmarie's point, you need the fundamentals to continue to be positive. there is so much liquidity in the system. there are all these other things. if you're waiting for someone to talk about geopolitics they would hate such a depressing picture and argue there is no way that what happened in geopolitics stances geopolitics. jonathan: s&p 500 unchanged.

here is your bloomberg reef. yahaira: shares of lululemon are lower after they forecast a lower-than-expected sales outlook. the retailers said that visits slow down and shoppers are buying less. analysts predicted what our performance conservative guidance. but i c-shares are rallying in premarket trading as cost-cutting measures deliver better-than-expected did earnings. they are the process of restructuring delivery networks part of a sweeping plan to shrink its workforce by tens of thousands of jobs and they plan to buy back 5 billion of shares. nike warning investors sales will take ahead later this year pushing shares lower. it says is working to realign merchandise with what shoppers

want to buy. they see earnings growing next year despite the slump of the first half of the year. it expects to see a payoff from a cost-cutting plan in december. jonathan: we will talk about retailers coming up next. a softer consumer. >> what we're seeing now is not recession on the horizon but the consumer is softer. jonathan: that conversation this up next. ♪

jonathan: stocks pulling back just a touch. lower and the last 10 minutes or so. yields are still down two bases went. 10 year yield at 4.2414. a softer consumer.

>> if we were talking a year ago i would say resilient. what we are seeing now isn't recession on the horizon but the consumer is softer. they are stable. they are softer and stable. jonathan: shares of nike and lululemon with both retailers issuing a warning. lululemon saying u.s. consumers are little soft coming into 2024. can we start with thank you? when they talk about positioning for the consumer what are they talking about? >> the biggest trend they are missing is through the pandemic innovation was missing. nike is the largest sportswear

marketer in the world so to they need to continue pushing innovation in all sports. jonathan: who do you think is winning as they are not doing well? >> adidas has come back with the new ceo. there are other retailers coming up to the mark, and running lifestyle categories there is increasing competition. jonathan: we appreciate your time nike is down 7% year to date. adidas is up 8%. that's a big win in germany. the german national football team it will no longer be made by adidas but nike. lisa: even the economy minister

said i don't like the way this feels what about a little bit of love to the national team? the german team is like they were the most competitive and it made more sense but it's crazy to not see stripes on the german team. jonathan: this goes back decades and decades. lisa: this was the national champions. are we gonna have to call it a didas because they are no longer the national team. jonathan: is going to be published in the financial times next tuesday. let's get the final where mu looking around the world and all the decisions a hike in the boj a news conference from chairman powell what has stood up for you so far? mohamed: there's a huge

controversy about the english art. jonathan: st. george cross they use different colors on it? is that nike to? and they're refusing to recall it? mohamed: they think it is modern. jonathan: will the politicians intervene? mohamed: they have. they've expressed their opinion. jonathan: after the week we have had so far was talk about the week so far, it's unscripted. boj hikes, what's it out for you? mohamed: central banks took a dovish turn and that is something that's not cyclical it is cyclic care and will talk about it for a while. lisa: if you haven't seen

this to the mid-2000 what takes it to 2007. if this is an everything rally and nothing can fail that can lead to difficult moments. mohamed: you need a big shock. a really big shock, and economic or geopolitical shock. on the economic side we are starting to hear the consumer is driven by net savings and income. net saving has a yellow light flashing and income is a green light. if the labor market because it income becomes an issue that would be softer on that side. geopolitics something that drives oil to over a hundred dollars a barrel. annmarie: there are two hot wars, 90% of the american tech giants will be manufacturing

chips in taiwan. mohamed: 2008 a really respected banker comes and sees me and i ask him, where are we in the psycho and he draws an upside down you. and i asked what is your risk position? and he said fully risk on. he said i don't know where the top is, everyone is also risk on and we can get out on time. the attitude of the markets is you never know where the top is in you don't want to miss out and being judged on a high-frequency basis and there's this arrogance we can all get out when it matters. jonathan: the final question then, that's your experience of

pimco. what which you identify at that time that me to take a different position of marcus? mohamed: pimco tends to be early and it was early on the housing call but is stuck to its guns and messy advantage -- that is the invention of a long-term investor. other from start have the confidence of taking a long-term view and that's a magic of bill gross wired into the system. jonathan: this was fascinating i'm gonna relisten of these conversations. if you want to hear more from mohamed and the financial times column only available the city of london. you can get it elsewhere.

coming up, sarah hunt, kim wallace, and a whole lot more. ♪

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>> the everything rally is peaking for a little longer. >>