chief market strategist tony dwyer is with us now. you don't think rates are moving higher because the economy is stronger? >> mel, i don't. i think it's moving higher -- if you pinpoint the peak moment for the s&p 500, it was july 31 itself, when janet yellen talked about increasing the size of the treasury and she wants by a third more than expectations, to a trillion dollars for the quarter following the debt ceiling crisis. so, you increase supply significantly, a trillion dollars in a quart, and at the same time, you've got quantitative tightening. so, the fed's not buying them, you've got silicon valley bank, post-sill icon valley banks, whh means the regionals aren't adding to them. and then of course you have japan and china supporting their currency. i really think part of it is a supply and demand imbalance that's caused all of credit to trade to a significant high and that is really to what tim just said, that's going to be the catalyst to rally this thing. really rally this thing, which isn't too far away, is when bond yie

with us is tony dwyer. you are actually bullish -- cautious before. tony: we talked about an environment ripe for an oversold rally. the christmas eve massacre in 2018, you have a lot of the average stocks already smoked. when you get that oversold it is ripe for a tactical bounce. it is tactical until you get it in all areas of credit and that can only come from a major fed tone change. lisa: how much of the events over the weekend altered the framework for how you do things going forward in terms of stock selection and allocation because of the potential for oil prices two higher of borrowing to increase to fund the conflict? tony: there is no way i can follow-up the previous speaker. it is a horrific thing. i don't know how to put it in there. this is a gas. fed says they are data-dependent and the data is a gas. this whole weekend thing and the impact on oil, if you told me that was going to happen on friday morning and oil was going to go up 4% i would have put the futures down but that is not what happened in the market rallied. lisa: there is a

. >> tony dwyer called it higher for shorter, meaning he thinks the data is going to roll, yields will follow. >> ultimately, that's the solution for higher yields, probably is that. i think that's why the market was so reluctant to unwind that recession trade. >> because they knew they would be right eventually? >> yeah. you're always looking for the turn. yes, we have a disinverting or steepening yield curve, which is another warning signs. the reason we were so deeply inverted for so long is because everyone assumed we would get that eventually. >> the geopolitical risk is -- oil is elevated. gold is elevated. hasn't had that much of a market impact, though. when you were talking about a changing of international order, when you're talking about the u.s. potentially having to get involved in a conflict, this is not the typical middle east conflict. >> no. >> especially if roads lead to iran. i do wonder if investors are underestimating how serious it could get. >> i don't think they're rushing to price anything in but i think it partially explains the hesitancy to buy the dips aggre

t t tony dwyer. >> that's next week? >> it's on wednesday morning. but we get the auction sizes so we'll see how treasury secretary yellen is planning to structure it last time they wanted to borrow a trillion dollars meantime we digest the earnings and try to make sense with demand i mentioned visa what's happening with the luxury consumer karen gave us a good snapshot. cracks in that picture i would say. if you look at the commentary there. what we see so far north america not gucci specific is rather clearly traffic. traffic has been weak and we don't see an inflection point on the traffic. love that. the french honesty >> yeah. they're not the first. we've seen a number of the highest end luxury start to talk -- >> not hermes. >> hermes was good >> and then lvmh. >> the size of the business has tripled the last 30 years. so it's impossible to keep growing. >> we knew china was weak but they're pointing out the north american traffic here. the luxury sectors held up better than everybody else and there's the industrials and the movers and transpor

we have seen a global issue and what we hear from tony dwyer that basically higher rates are bad becausee world leveraged to low rates and it is not just a u.s. centric issue. jonathan: welcome to the program, the s&p 500 firm or by 0.4%. in the bond market, some calm stability. 456. that is not the calm you expect to stay i imagine. is this the base case for you now? >> at some point, i don't think it will happen this year but i think at some point we are going to have a period of real instability and of some of the long-term funding people have taken for granted. i look at something like the municipal world, i do not see how they manage themselves through the next two to three years. jonathan: these are huge calls. michael: it is and it isn't. the world will go on. there will be ways of operating that became normal over the last 15 years i won't be possible the next 15 years. jonathan: if you are just joining us and miss some of this, we will make sure to post the full interview on bloomberg.com and bloomberg terminal. thank you. thought-provoking stuff. just an update on the news conf