>> the problem is that credit suisse by some standards may be too big to fail but also too big to be saved. >> this stock has been in huge downfall for two years so there are fairly problems within this institution. >> we simply do not know the degree to which the systemic will isolate. >> as a global bank, there may be counterparty risk for some u.s. banks. >> if some get into trouble, people may look at what is the next one that looks like this. announcer: "bloomberg surveillance" with jonathan

keene, that star than farrell, tom keene and lisa abramowicz. jonathan: equity futures negative zero. here is the story. still in and around two swiss francs a share. late last night in zürich, 1:45 am, a statement drops for 50 billion swiss. tom: this shows the urgency for where we are right now. we have to bounce. were down 60% or 70%, nicely above two swiss francs. we just got a little bit in the last hour. you say, what is next? they are going to mop up the bonds from the transaction but what is next is this bank has to provide clarity on their core profit machine which is wealth management. jonathan: the team at bloomberg reported yesterday the swiss

authorities and credit suisse were discussing ways to stabilize the bank. one option was a public statement. we got one yesterday afternoon and the follow-through overnight. let's talk about the other options. separation of the swiss unit, a tie up with ubs. these are conversations. you said earlier this morning that we have no idea what the conversations are behind closed doors. lisa a: which is the reason why jim reed at deutsche bank put out a note this morning where he said, "yesterday was a day you could look at the screens and wonder what as a research analyst helps anyone. the situation is binary and you are not permitted any of the conversation behind the screens". that is where we all are. we don't know. tom: the norms of surveillance for a person in the control room with communication skills. it is like the gnomes of zürich. it is like silent and quiet. the heritage that they are

dealing with is a heritage of secrecy. it is not a cliché. they are not used to the vibrancy and visibility of silicon valley bank over the weekend. jonathan: as an that blown up over the last 10 years in that country? tom: i don't know. i think it has changed. i would say, and i think -- was say the a lot of it is cultural. lisa a: i will take your point a step further. perhaps this is why it is difficult be a -- to have a cross-border merger. because the culture is distinct. if you have a u.s. bank or other bank come in with a different culture, it becomes difficult. which raises the question of who would be the tie up? i'll do insulate some? -- how do you insulate something? jonathan: ecb of next.

50, 25, or none at all. there are some people talking about cuts. the futures right now. s&p 500, -0.1%. in europe, a lift to the equity market. the dax is of 0.5%. spain and italy up 0.7%. 3.4885 on the 10 year. the two-year is just south of four, up 11 basis points in the u.s.. lisa a: the volatility we have not seen in the benchmark ranks of the world, frankly, unlike what we have seen since 2008. we are watching credit suisse shares and shares of all european banks. are we there yet? have we stabilize? if you look at destocked bank index, we are seeing a bit of a balance but not enough to give us that sense. 9:15, over to you christine

lagarde. what do you do? the ecb decision followed by her press conference at 9:45 a.m., eastern time. doesn't sheep hunt? does she say we are going to reconvene in a week? the ardennes if they do and dammed if they do not. where potential guidance from the u.s. treasury secretary janet yellen. she is testifying for the senate finance committee. this was supposed to be about president biden's plan for the budget. it will now be about silicon valley bank at the small or medium-sized banking system more broadly, and the interconnectedness of u.s. and european banks at time when the european central banks are hoping to raise rates. jonathan: peter oppenheimer, chief open strategist. written catch up with the. really difficult moment so thank you for covering time.

you like to european banks. things have changed in the last week. do you still like them? peter: we do. in a situation like this, there is massive uncertainty. the volatility that you have been talking about, lisa, will continue. it is important to recognize the underlying fundamentals. you have strong capital busters. compared to the european banks during the crisis in 2000 eight. you have stable dynamics, deposits, and ample liquidity. liquidity coverage ratios are around 150% to the end of last year. it is a very different fundamental situation and rising interest rates, which we have been seeing is good for the banks. but, confidence is everything. if all this -- the more this uncertainty continues, they are

likely to be volatile. i think they are in a relatively good place. tom: we know your decades of experience and seeing multiple crises. in you have been to europe many times and what matters is to take lunch at the cone hall. but when you are eating there now, in this crisis, the conan hall, is switzerland part of europe or still separate from europe amid this crisis? peter: i do not think in a banking crisis that anything is separate. in a banking situation where you have cross-border isolation and connectivity. other banks around the world will be talking to swiss authorities and also preparing statements or willing to provide as much liquidity that is required if the situation

continues to unwind. obviously, there is a difficult decision the ecb has to make, as lisa was saying earlier. again, they will emphasize the robustness of the underlying system and their readiness to provide liquidity using some existing tools they already have , potentially providing more. i think they will take some comfort from the underlying balance sheet strength of the banking sector of europe. which, of course, we could not have set a decade go. from that perspective, it is a much more robust underlying situation. lisa a: will you still be bullish on banks if the ecb does not cut rates or indicates they are on pause until they have more clarity? peter: i think it is unlikely they will say they are on pause because that would, if anything, provide some since they are concerned about the contagion effects of this. i think they have to look at the

underlying fundamentals of the economy. we do not expect a recession this year in europe. core inflation, underlying inflation, is above the target rate. they signal strongly they expect to raise rates by 50 basis points. the banking system appears fundamentally resilient. i think they would want to stay the course, but at the same time provide statements that they are sure about their willingness to provide the quoted team to emphasize existing tools that are in place and being built up over the last few years since the sovereign debt crisis. and their ability to look at other things as well if required. jonathan: do you think tighter financial conditions and tighter lending standards are inevitable after what we have seen in the last week? peter: yes, i do. i think this is a function of a massive shift in the capital we have been over the last year or

year and half. you only have to go buy a year and a half. about a quarter of all government debt around the world have a negative. people were paying for the privilege of lending money to governments. that's world has changed. we are getting close to 5% on u.s. dollar cash with zero volatility and risk. that is high hurdle for asset markets to pass. it also means there is tightening in financial conditions and a rise in the cost of capital which is inevitably having an impact on pushing valuations of assets down. it is clearly causing some friction in areas of the financial market. if the underlying situation is robust, and the capital buffers are in place, it will not prevent these problems but may restrict the contagion and the systemic fallout from them.

that is fundamentally important to take away from this. jonathan: we appreciate your time this morning. peter oppenheimer of goldman sachs. i think we are bracing for this now. gdp cut after gdp cut. because what peter described at the end. tom: the outcome of this has been a number of notes. that may remind everyone that doug kass was a world-class bank analyst a few years though, a small start up from five or 10 years ago. doug said he went right to that and the outcome of every crisis is damp investment. lisa a: goldman sachs, put out a no basically raising their recession forecast based on tighter financial conditions, all the way to 35% in the u.s. which is still below the 60% median of economists surveyed by bloomberg. tom: we are struggling to be lights in the midst of this huge

crisis. i mentioned the kronenhalle which is one of the vote -- the most significant records i have ever been to in zürich. i go in and a rack of lamb was $200. i am like, that is not going to happen. so i say let's go prudent and reasonable. the meat loaf at the kronenhalle , just the meat loaf not the credits was $59.30 in the u.s. for meat loaf. lisa a: i think that's the case. [laughter] jonathan: are you hungry? just a little bit. tom: i was with this girl from indiana. she said have the salmon. jonathan: lets because we can talk about this later. this is bloomberg. lisa m: keeping you up-to-date with news from around the world. with the first word, i am lisa

mateo. at the chairman of the u.s. joint chiefs of staff mark milley says he does not know if a russian jet collision with an american spy drone near the black sea was intentional. but he says the u.s. has video evidence suggesting russia's actions were aggressive. defense secretary lloyd austin and his russian counterpoint -- counterpart spoke yesterday in an effort to reduce tensions. polis says they are in talks with czechoslovakia -- poland says they are in talks with slovakia about delivering fighter jets to ukraine. poland says a delivery could take place in the next four to six weeks. menu mike rounds pension reforms face a final vote in the national assembly today. if there is no agreement, the government can use the controversial article 49.3 to pass the bill without a vote. speaking inclusively to

bloomberg, the former french president says he is worried the ongoing strikes could deter foreign investors. >> the risk if there is a continuation of the social conflict bond -- beyond the passage of the law, even if i think the risk is low, is it could this you wait investors from going to france. i think the government should focus precisely on finding rooms of dialogue and opening a new phase discussion. particular with the social partners and the most performance trade union. lisa m: global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. it's easy to get lost in investment research.

introducing j.p. morgan personal advisors. hey david! connect with an advisor to create your personalized plan. let's find the right investments for your goals. okay, great. j.p. morgan wealth management. >> if you do not manager balance sheet well and you do not manage

more well, it will be a matter of time before you see trouble. i do not think it is a lehman moment. i think this is bad and can get out of control by do not think central banks or anyone else can and watch this. jonathan: the saxo bank founder and ceo. credit suisse looks a little something like this. up by about 23% in swiss trading after tapping the s&p for 50 billion swiss franc overnight. we are back to around 2.10. this from jp morgan earlier. "we cs snb liquidity support as not enough. we believe the situation is about ongoing strategy in the franchise erosion. one, a complex change with limited details. two, limited outflows. although you today is still an issue. and three, wealth management historically delivery an average

of 1.3 billion. in our view, the state is no longer an option. they offer a range of scenarios at jp morgan. here is one of the options. takeover scenarios. ubs is letting the leading candidate. tom: culturally it has got to be. it is not funny in zürich. it is a too town with a lot of private banks but there is a heritage few in the air. the majority share is including saudi arabia central bank money. they want to come in and acquire that air and that is what they thought they did with profitability. jonathan: we are at the stage when this is part of the conversation. do they really want to go to one month of the bank in switzerland or want to beef it up and have a combination? but this is all highly speculative stuff right now. christie's does not even want us

to discuss it because -- credit suisse does not even want to discuss it but they want to get through this. tom: you spend a lot more time there than i have. the new zürich is different, as lisa mentioned, from the stereotype of years ago. yet, americans particularly, have a baggage. jonathan: i often tell a story about going over to see rate in duke when i visited. the same questions were asked about the investment bank then. here we are. tom: it has been a decade plus train wreck. as we have really tried to do overnight in this special edition of bloomberg surveillance is not find people, there is enough going out there. we try to avoid that. we do that by finding people that have experience. maggie collins is the -- vanke.

it is a big deal in switzerland to have the separate base which is a heritage. he has done tours of duty extensively at the union bank at switzerland and also at credit suisse. mr. coons joins us this morning. can you imagine ubs and credit suisse? you worked at both. can you imagine them merging? michael: frankly speaking, no. the competition authorities would have a problem. and, the complexity of the merger is too large to be surmounted. that is a very big task with over led to wealth management in oil sectors and oil regions. people that have been banking with credit suisse have deliberately not been banking with ubs and vice versa. a merger of those two would see

a type of attrition. tom: we talked about this yesterday. we have seen traditional eu executive management. for example, at deutsche bank, mr. saving came in to save the day with a more verbal and outgoing management. is the major challenge at credit suisse that they are working under an old eu model and need a new executive regime to create action to fix this crisis? michael: that is probably one factor of the whole bundle of problems. they have had quite a few management changes the last couple years. arguably, each new leader has suffered in the powerpoint presentation and the strategic set up of the bank has not been altered sufficiently.

they need to get something moving. it is still not clear what this bank is supposed to look like in two or three years time. lisa a: we talked a lot about how banks in the u.s. and france have tried to immunize themselves from potential difficulties at credit suisse. they spent a couple months doing so. as credit suisse still an important part from your vantage point? michael: it is one of those too big to fail banks, for a country like switzerland, even though the business is outside switzerland. nobody wants to take the risk that this collapses. that is why the s and p today preventive strike with additional facilities even though the fundamental ratios are still looking normal at credit suisse. the market was wondering how much more outflows does it take

before they seemed to look normal. lisa a: there is discussion about where the client base is from that use credit suisse and what this looks difficult for a u.s. bank or certain european banks to take over or merge with credit suisse given that there is a large bank of middle east and chinese investors that have become difficult in a different kind of transparency regime. what is where view on that. it would be a certain challenge to put it mildly. people have all sorts of options where they can do wealth management in asia. if someone chooses to be with a swiss bank, i am not sure he is 100% confident that tomorrow it would be a french bank. jonathan: i want to finish on this briefly. we talked about this briefly.

after the action in the u.s., do you see this as sufficient or is that a band-aid? michael: that depends on a lot. our equity first -- are equity markets further collapsing or stabilizing? because collapsing equity markets around the revenue. for the moment, it is quite a big statement and it should slow down people who are pondering about withdrawing their money at credit suisse. but ultimately, i would say it is not out of the woods yet. jonathan: thank you for your perspective. michael kunz on what is happening with credit suisse. at the moment, up 23%. one of the options jp morgan suggested on the research side of things is the snb could step in with lots of deposits.

tom: mr. hammers was out yesterday with ubs at a distance from this debacle. i am struck by people who have actually experienced this and there is just no way you can see a ubs and credit suisse merger. i find that bizarre. why couldn't that happen? i never had a straight answer. jonathan: would you want one major bank? tom: no, but you do not have a twist right now. it is -- they just say it is unthinkable that they can see them merge and i would like to know why. jonathan: what is more unthinkable? a tie between two banks in switzerland or a foreigner by the bank? tom: i do not have an answer other than people are quite forceful that they do not want the americans to come in. jonathan: that is why here too. lisa a: i also hear the

americans do not want to come in. that is another issue. the issue that jp morgan races here is they cannot do nothing, because they have to short of confidence. it is not just avoiding people leaving in terms of clients. why would they stay in terms of the reach and talent retention and what they could potentially offer? jonathan: that seems calm compared to this and that was anything but calm. tom: you mentioned mr. dugin earlier. because of where we are with the bond dynamic and the central bank dynamic, we have come to a crescendo of 10 years. jonathan: equity futures right now are unchanged on the s and p. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com what will you do?

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jonathan: live from new york city. morning. equities negative. credit suisse is the one to watch. that stock is balancing by more than 23%. up 23% after putting out a statement overnight. 1:45 a.m. in zürich. his guys have been up all night. saying they will take 50 billion suisse from the snb, the swiss national bank. going to repurchase some debt as well. is that enough? stockstill in and around two swiss franc.

elsewhere, looking at futures just slightly negative. the nasdaq, we submitted the earlier today, yields lower, nasdaq up. as sort of reflexive. the nasdaq up zero. -- 0.3%. the two-year has been all over the place going into the fed next week. the ecb coming up later. let's finish on this name. first republic. this is tricky stuff. first republic is down 16% in the premarket. we have reported they are weighing options, including a potential sale. that stock is down to the premarket and not looking great. tom: there are two stories out there. it is the way this is going down. this is not late credit suisse yesterday, rolling over as the did walked away. technical analysis does not

matter here. this is east coast time for those of you worldwide. about 5:50 a.m. down. that was 30 or 40 minutes ago. in a new leg down, as you highlighted at 6:20, eight minutes ago, boom. jonathan: they say the first republic which was cut to junk by s&p global ratings yesterday is us exploring -- is exploiting -- exploring in terms of a sale. first republic on sunday said this. it had more than $70 billion in unused equity to fund operations which included the federal reserve and jp morgan. still, this stock is struggling. lisa a: this is what s&p wrote in their downgrade. in terms of pylon, it is quite the thing when s&p and fitch has

come out right after you have seen drama in the markets. "we believe the risk is elevated at first investment bank". associate with bank failures over the past week, the hysteria around the potential failure of small and medium-sized banks has a snowfall effect that means that s&p and fitch do not have confidence. this could be considered an investment grade bank end bank without an investment grade rating is very risky. tom: to be honest, i avoid the ratings. i think they are always behind. there is something else going on. sunday, silicon valley, there speculation about who was going to acquire this pain? many say this is the one bank that has a value and a sense of oneness to it that could be acquired. you have to look at the share price action and say there are things we do not know the are not good. jonathan: i think what you said

probably resonates with a lot of people who do not care about ratings either. unfortunately, there are investors that have to care. it didn't change whether they allocate capital. the problem you have at home is you have heard people already this year say u.s. investment grade credit. you have also heard a lot of people say this. the u.s. banking sector is resilience in really strong. the fact the matter is the names we are talking about, we week ago, where investment grade. they were high trade not so long ago. lisa a: there is a saying that the crisis always happens in debt or instruments perceived as safe. that is where usually these crises seven from. that is the concern was only there is risk in areas that people thought were truly risk-free. that becomes very problematic. jonathan: first republic bank free-market -- premarket down

about 16%. tom: since credit suisse has done better, i have that up, and it has more technical veracity to it. a nice spike and then a nice surprise selloff as people exited two or three hours ago. we have rims of over 30 minutes and 50 minutes. jonathan: it feels look a lifetime from the ecb, doesn't it? [laughter] tom: ian lyngen has a notice that everyone in the street with the mo capital markets. i have not talked to so many bonds with him but how he folds central-bank action into what to do with bonds that you own or what you want to acquire. ian lyngen, you take great precedents that lagarde will speak before powell. what are the ramifications that the ecb is out front of the fed march 22?

>> i think this is the first time in recent memory where we can look at be ecb and take a cue for what this might mean for the fed next week. it would have been one thing had it been a limited banking crisis to the u.s. only but the fact that credit suisse is not impacted means the ecb is facing effectively the exact same decision the fed will be next week. you will be looking at what is already priced in which is more than a 25 basis point rate hike as an opportunity for one-way or another, someone to be disappointed this morning. tom: is credit suisse and first republic different from silicon valley bank? are these balance sheet crises or income statement crises? >> i can characterize it more as a baseline confidence crisis. it is more about if it can be contained and isolated them we will not have a problem in the system.

that as it seems now, this is now the fifth bank in the process that is under pressure and overseas and above sickly. i think it regulators in policymakers are going to be apprehensive about the next two or three weeks. jonathan: jp morgan says locking the gate and treasuries. they will keep hiking. what do you say back to that? >> in the front end of the market come on the two-year sector, and we dipped below 4%, that is implying a great deal of caution on the part of the fed. a should certainly -- a positive certainly be on the table next week but the ecb will probably set a broader tone. even if there was a pause, it would not be terminal. there would be some symmetry. it is conceivable for the fed to pause but at the same time increase the duck pond for 2023

which implies restarting later in the year. lisa a: has the fed lost credibility and all the other issues? have they try to forecast the that is on for castable when the market is moving whether the fed does or not? >> i think this is a unique episode for the fed because of the proximity to terminal, i.e. close enough the fed probably knows exactly where we are going to end the process. it would be different if we were having this conversation this time last year when there was still a large number of hikes yet to be realized. if nothing else, i think the market will look at the s&p and the doc market and see how the plan at this point. lisa a: i love your sense of the technical. we talked about how treasury yields are the greatest going back to december 2008. this is highlight, to you, a fragility in the market structure of the biggest market

in the world? >> i would say i had bigger liquidity concerns and was more worried about the overall function of the treasury market during the fourth quarter, and we saw a lot of strains in the variety of different sectors. given that we are really on a monetary policy cycle and there is a broader sense of stability, and we have actually seen a lot of silent investors come back into the market, whether that was during the month of january or even in the most recent week. i think we are back in a reasonably comfortable position from a liquidity and market structure perspective. we are facing a great deal of uncertainty. when one is facing uncertainty in financial markets, buying treasuries is a knee-jerk response. jonathan: do you think it is a mistake for central banks to isolate what is happening in the financial system from a monetary policy they have to make today and this week? >> i would say it is unwarranted

to separate the two at the moment, taking a breather on the rate hike process is prudent. i think that would make sense but that does not mean that is what they will do. i think it is very much up in the air. jonathan: i think you are very honest. that's the problem. when really knows. ian lyngen of bmo capital markets. in mentioned something that were all told from someone much smarter to me who said that chairman powell and christine lagarde are probably looking to each other in the last 24 hours. which is why people like ian that you can infer what the fed will do. lisa a: i love that. because people really say that chairman powell is leading the banks of the world but now it will be the ecb. i cannot imagine what the conversation would have been like though. i don't know what to do, do you? jonathan: you go first this

morning, 9:15 eastern time. this be careful because of the time. 9:15 eastern time is when you get the ecb decision. nine -- 10:45 -- 9:45 is the news conference. you got that? tom: no one told me. i have been saying minutes away. jonathan: lisa whether it twice. tom: tom: coordinated central-bank response is what they do. it is in the research. she is going to get a question today. she will say how about the formula one race? i think they will talk about jetta or ferrari. what they are going to really talk about is -- i know exactly what christine lagarde will do. she is going to go, how do i get through this and do no harm? lisa a: we are not here to close

spreads. [laughter] jonathan: that is the simple one. but lisa, what is no harm? hiking or not hiking? lisa a: which direction are you trying to push it in? tom: first republic 30 minutes ago or 40 minutes ago was actually pretty stable. gone hundred 20 six now, down from the 31 level. we are in the crisis now which means central bankers do not act. that is the gas. jonathan: down 17% on first republic this morning. this is bloomberg. ♪ lisa m: keeping you up-to-date with news from around the world. with the first word, i am lisa mateo. credit suisse search the most on record after tapping the swiss national bank for a $54 million loan and offering a repurchase of $3.2 billion worth of debt.

meanwhile, credit suisse's top shareholders has panic around the banks financial stocks is unwarranted. u.k. to sir jeremy hunt has unveiled a $22 billion -- 20 billion a year giveaway in fiscal statement, using the tightening he was forced to do last year. among the measures were pressed to childcare support, tax-free investments, and extending military spending. tiktok -- the u.s. government may ban tiktok. sources say tiktok told bytedance they must sell their shares or face a ban. tiktok says the investment will not resolve any national security concerns. virgin orbit is said to be halting its operations and further nearly all staff due to funding issues. the company is planning any operational pause.

earlier this year, its first launch out of the u.k. failed to reach orbit in a mishap laying on of a faulty fuel filter. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. a third kid. what if she likes playing golf? it's expensive. we're outlawing golf. wait. can i still play? since we work with emower, we don't have to worry about planning for a third kid. you can still play golf... sometimes. take control of your financial future to empower what's next. >> i think, with credit suisse on the table, they will pause. i think they should pause. i think hiking rates, either the

ecb hiking rates this week where the fed hiking rates next week, has the potential to be the greatest gaff since the ecb hike to rates in june 2008. jonathan: is this a big moment for the ecb all -- all over again? bob michele. tom: i am 100 percent on page with him. the only thing i would changes it would be the greatest gap since the red sox traded mookie betts. lisa and i were talking to -- talking while on break. the answer is they have learned their lessons. why is first republic bank -- give you the quote. jonathan: we are down 17%. tom: we are breaching down a new weakness on first republic bank.

everybody has learned from 2008 and the other crises. lisa a: first investment bank put out a statement yesterday when they were looking at the treasury yields. it was the most inverted over the past couple days going back to 2001. the last time this happened, the federal reserve came out and cut rates the next day. just to give you a look at what the market is signaling here. this is the problem. jonathan: it is the big problem. the saco this is the reason why nouriel roubini hired a good point. they are stuck where they still have to be thinking about inflation. jonathan: i will say, once, twice, three or four times, there are no good decisions today. i do not think it matters. it is sport to be up of central banks. i love playing the game two -- too. but today, next week, it does

not matter what they do, there will be reason to criticize them whatever they have done. tom: i will channel mohamed el-erian today. this is game theory. you are trying to channel real people with flows out of banks are trying to ascertain the best worst outcome. that is tough to do. we do this with someone hugely qualified. chief economist at abn amro. she is that she has a huge understanding of european baking history. as an economist, with your knowledge of european banking history, what should christine lagarde do in the 9:00 u.s. hour this morning? sandra: thank you for those remarkable compliments were making. that is overdoing it a bit actually.

nobody knows what she should be doing actually. i has been listening to your comments in the last few minutes on the table. i do not necessarily agree with what you are singing, because if you just try to decompose the problem and little bit, looking at credit suisse, the most fundamental metric that matters at this point is the total loss of capacity in terms of its rwa and that is at 40% right now. that is way above the 25% or 20% that is demanded from the swiss regulation. i think that a lot of drama is going around in headlines at this moment. so, actually, i do think the ecb

has one thing very clearly in sight and that is that it still has a core inflation problem. it still has a macro resilience that is lasting longer than expected. and it has its previous commentary about going on for longer beyond march. to turn all of the around, while at the same time we are always worried about not being led by markets. i think it gives me a little confidence that she will go ahead with her plan. tom: interesting. there has been different opinions out there right now, to say the least. with that said and with the idea that credit suisse has financial integrity, they still have to go and do business. will there be a european nominal gdp spirit that can get credit suisse, switzerland, and all of europe through this crisis? do you see an oomph to the

european economy? >> that is a really hard question to answer. the resilience in the european banking sector is bigger than probably markets are expecting right now. i think if you look at the ecb stress test on fast flattening of the curves that have been done, it basically showed a resilient picture. if you want to look at the least resilient, it was in italy but even that was not dramatic. for now, i think the turmoil will settle and i think the ecb will continue on his path. jonathan: just in a word, 50 today? is that you recall? sandra: yes.

jonathan: she is not alone. the ecb basically recommitted to it and some believe they will do it. tom: our job is not to inform the debate will listen to the debate. bob michele sandra phlippen and --and sandra: aren't you different camps. tom: does jerome powell have the luxury of not being visible until march 22? we are lucky that christine lagarde, two days into this crisis, is visible. this he have to come out and make an appearance? lisa a: the problem for jerome powell is there is scrutiny about their ability to oversee the financial system because of the missteps of svb and the fed had a relationship with it. there is a dual question of how are they short of their oversight of all and

medium-sized businesses at the same time as there are trying to actually look at some sort of monetary policy. it is a difficult moment for him. jonathan: there is also criticism about how they oversee themselves as well. senator warren has things to say about that. down 22% on first republic bank. tom: john was ahead of me on this story. now have a new leg drop to 24. the low two days ago was a cup of coffee. our at 21.43. jonathan: i am afraid i do not have anything to add apart from our reporting yesterday evening. this was said to first republic after the cuts and fix ratings just yesterday where are supporting -- exploring strategic options including a sale. i will go back to a statement

from the bank on sunday that it had more than $70 billion of unused liquidity to fund operations from agreements i've included the fed and jp morgan -- $70 million of unused liquidity to fund operations from agreements i've included the fed and jp morgan. lisa a: this is the reason first republic looks like it is imploding because it cannot benefit from the fed's new bailout policy. they do not own to post as collateral. this is the balance sheet people are looking at. they are out of the regime that has been that up by the federal authorities. tom: we need to be careful about conflating income statement flow and critically trust analysis with balance sheet analysis. i think everybody involved has great balance sheets, coding credit suisse, bailed out by snb but it has nothing to do with

the present unique and different crises between the separate banks. lisa a: in this particular situation, i think people are looking at this and saying the fed has offered this issue. the fdic has offered this program, so what can different banks do to access it? people are going and looking bank buy to understand what the protections are. tom: i remember the moment when we were stunned that james dimon showed up to go one 800 -- 1-800-bic. where is the jamie dimon to show up for silicon valley? i do not want to speculate because that would be rude but who is going to show up? jonathan: down more than 30% on first republic in the premarket. let's call it -32% on my screen right now. more coverage still to come. former vice chair of the federal

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>> the problem is credit suisse might need to fail. >> the stock has been in a huge downfall for two years. there are problems with this particular institution. >> we don't know the degree. >> there might be counterparty risks for some of the u.s. banks. >> if one gets into trouble, people start going which is

remotely like it? >> this is "bloomberg surveillance." jonathan: ecb president christine lagarde. live from new york city this morning, good morning. this is bloomberg surveillance on tv and radio. equity futures down about .1%. welcome. credit suisse up 24% overnight, tapping the swiss national bank for 50 billion swiss and liquidity. -- in liquidity. here's another one. first republic down about 26% at the moment at one point almost 40 percentage points. tom, this was a $120 stock a week ago. tom: there is no technical analysis on frc in the premarket. it was a plunge beginning get 5:50 a.m. a little bit of a bounce now.

we need to see a bid above that $17 handle, the low on tuesday. jonathan: very little news around it. they are considering a sale after being downgraded to junk yesterday. i keep going back to the bare-bones from the banks so far from sunday evening. they had $70 billion in unused liquidity. lisa: the sentiment has a self-fulfilling prophecy. it wasn't that they were downgraded to junk, but why? sentiment is deteriorating and people could withdraw deposits. the customer base could deteriorate in the face every potential loss of confidence. -- in the face of a potential loss of confidence. western alliance lower by 3%. is this the beginning of another shoe? jonathan: rock and a hard place.

you are christine lagarde. they sat around the table and told him what -- told each other what they think of the situation. lisa: i would totally plant. -- punt. we don't know how this is playing out. the financial market is completely stable and the system is stable. we will provide every facet to make sure it is. we need to see it play out and then they wait and do that. tom: this is the dynamic analysis we have. going back 20 years here on "bloomberg surveillance" to richard clarida. dominic konstam in a moment. devin ryan talking about the securities analysis at the moment. these are people that can deal with the ambiguities, the choices people have to make. jonathan: let's get to those

conversations in a moment. for those just tuning in, the equity market is negative by about .1% on the s&p 500. even with a major move on credit suisse. nasdaq positive yesterday. .2%. the two-year, the 10-year. the two-year, 3.99 . basically unchanged on the 10-year. the belief this morning, a real belief that some people looking to the ecb to give them an idea to what the fed will do. we heard that a few times already. ian luna suggested if ecb makes a move that will be the template for the fed to do the same thing. lisa: is the ecb the central banker to the world? can we say that? here is what we are watching. jonathan: just cut that. tom: i think jerome powell is here and i would like to see

some visibility. it would be timely and appropriate in a prepared statement for him to provide confidence to the system. like secretary yellen did a couple of days ago. jonathan: we think these are resilient, you want one of those? lisa: tom: for a public in crisis it has value. lisa: we are not seeing the confidence building too much. what i'm seeing with the different activities. i'm watching european bank stocks. they were up at one point as much as 2%. now up only about 1%, 1.2%. you have seen the move fade after yesterday we saw the biggest decline going back to march of 2020. at 9:15, ecb rate decision. what does christine lagarde do? the press conference at 9:45 a.m. how do you do no harm? hard to know what the real option is. the worst option. u.s. treasury secretary janet

yellen gets a turn and will testify before the senate finance committee. i don't understand what she can say to give some sort of sense of confidence. tom: a note from powell. [laughter] lisa: does she give guidance for what the central bank should do? it will be important what she says. jonathan: if i'm christine lagarde, i just keep reading verbatim. i keep returning to it. i don't want to say the wrong thing. dominic konstam has to make a call. let's start here. how much daylight is there between what you think they should do and what you expect they will do? dominic: not too much. they are a little behind the fed in terms of raising real rates. if i were to expect the fed to stop and the ecb to raise 50, it is easy for them to scale that

back. i would expect them to push rates a little higher. tom: in 2020 hindsight you absolutely nailed it on this show a number of weeks ago. you pounded the table, a lonely table saying they are super restrictive. as they go into these meetings are they still super restrictive? dominic: yeah. financial conditions are tightening through all of this. the idea -- if you recall last year, the fed paper talking around the r double star. we are seeing it now. rates have basically begun to break aspects of the financial system, particularly in the u.s. which is different than europe. yeah. absolutely super restrictive. the speed with which rates have gone up. you can maybe revisit these levels in a more calmer tone.

you better sort out your financial system first. you can't fight inflation and solve the financial system by raising rates. lisa: we expect to hear from janet yellen this morning that everything is fine in the financial system. we have real resilience. what does it say from your vantage point to risk markets if the fed says, you know what? we were wrong. inflation is not the preeminent concern. we will not raise rates anymore. don't you think that could potentially be a liability for some of the riskier assets? dominic: the issue for the financial system, if you say it is fine from a capital perspective, that is largely true. from a liquidity perspective you have the issue. you sought in the gilt market last year. liquidity problems can become solvency problems. in the insurance sector for example.

it is true you can say the financial system is fine but you have to focus on liquidity. you have to kind of -- when the problem is coming from the so-called risk-free rates and the treasury yield curve, that is your problem. you cannot fight inflation. that does maybe give people a cause for concern around the credibility of inflation. this inflation is sticky and almost beyond the control of the fed. there is a time element with which inflation will come down that you cannot necessarily control. tom: dominic konstam, you invented the linkage of quantitative finance years ago. you have experience at credit suisse. can you imagine ubs merging with the credit suisse you know? dominic: absolutely, yes. i think that is the -- what the

swiss national bank has done is extremely important. a massive liquidity facility. there are idiosyncratic problems that credit suisse. it is kind of fairly intuitive in the long run or the medium-term a resolution would involve the swiss bank finding some kind of tie up. good bank, bad bank. whatever you want to call it. credit suisse has a wonderful private bank and that is what they want to preserve. tom: with the private bank be valuable to other u.k., continental or american banks? there is a mystery here. the new culture of credit suisse, do you denote a new culture? dominic: yeah. i'm not a bank analyst but i would say the private bank has been the jewel in the crown. it's been very impressive. i would imagine it would be

attractive to a lot of people, yes. jonathan: i think we are all bank analyst this week. dominic konstam, thank you. lisa, you talked about this. we will hear from secretary yellen today. we have some text of her prepared remarks. "i can reassure the members of the committee the banking system remains sound and americans can feel confident that their deposits will be there when they need them. this wii's actions demonstrate our resolute commitment to ensure the depositors' savings remain safe." lisa: here lies the question for jerome powell. if this is true, do they have the option of pausing or even signaling rate cuts in the near future if the financial system is sound? can there be a nuanced argument made about the tightening of financial conditions on the heels of this that accelerate the process that don't necessitate raising rates? will that send a message that

can be problematic? jonathan: another point here but it's implied by the actions of sunday. the resolute commitment to depositors. all depositors above what is meant to be the fdic limit of $250,000, is that gone? are we guaranteeing all deposits in america? lisa: and at what cost? are they going to charge a premium for ensuring deposits above $250,000? are they coming up with this in real time and figure out the details later? tom: are all banks in the same pool? jonathan: important question that i don't have the answer to. first republic down 27% in the premarket. credit suisse up 23%. they are dominating the conversation this morning. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world, i'm

lisa mateo. the pentagon released a video showing a russian aircraft intercepting a u.s. air force surveillance drone in international airspace over the black sea. the pentagon says the russian approached the back of the drone and released fuel as a past. the military says it discarded the drone in the sea after the fighter jet poured fuel on the unmanned aerial vehicle and struck his propeller. mark milley says he does not know if the event was intentional but he says the pentagon video suggests russia's actions were aggressive. defense secretary lloyd austin and his counterpart spoke yesterday in an effort to reduce tensions. the european union will provide a clearer legal framework to target family members of sanctioned russian billionaires. it's an important shift after the eu court annulled penalties imposed on the mother of a close ally of president vladimir

putin. the european external action service, the foreign service arm in charge of listings will cement legislation soon. in london, commuters are facing disruption for a second day as rail workers strike across the country. services into the capitol will be restricted as 18 companies walk out over a pay dispute. yesterday about half a million british workers staged a mass walkout timed to disrupt jeremy hunt's annual budget speech. analysts and more than 120 countries. i am lisa mateo and this is bloomberg. ♪ s sure you're ever delivering with freight brokerage to transportation management, truckload capacity and dedicated trucks and drivers.

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>> if anything happens to credit suisse, it will be a systemic effect for the global financial system. if silicon valley bank affects global financial markets, something bad happening to credit suisse would be an order of magnitude more severe. jonathan: the chairman and ceo. good morning to you. the stock is up by 22%. a statement of confidence.

overnight, they tapped the snb and intend to buy back some debt. certainly better than what we saw yesterday but in and around two swiss francs per share on the stock. first republic another one. down 30% in the premarket. downgraded to jump from s&p global ratings. fitch as well. our reporting is they might be mulling a sale. it was $120 something we could go. a big turnaround. janet yellen, the treasury secretary, will go in front of the senate finance committee at 10:00 a.m. eastern time. tom: we have the decision when? jonathan: 9:15 eastern is the ecb. we will have yellen and lagarde

at the same time. i will be watching president lagarde. the treasury secretary putting out some text of her prepared remarks. let's get that quote up again. this is what treasury secretary janet yellen has to say. "americans can feel confident their deposits will be there when they need them. this week's actions demonstrate our resolute commitment to ensure that depositors' savings remain safe." whether there is an applied guarantee for all depositors now and the whole banking system in this country. tom: i don't hear anybody talking against that. the fact is, is that a given? jonathan: it feels that way. it is certainly implied with language like that. tom: dominic konstam, formerly with credit suisse. the former vice chairman of the fed richard clarida will join

us. between them, a tour de force of smaller bank analysis. devin ryan was at sandler o'neill years ago. now with jmp securities. devin ryan, i will cut to the chase. in south bend, indiana, there is first bank. they have hometown values on their website since 1910. are we going to end up where banks are treated the same? the first state bank of south bend treated the same way as jp morgan of park avenue? devin: good morning, tom. i don't think we are going that far. there needs to be small banks and retail banks. the regulators don't want to see all market share go to the top four or five companies in the space. there will be a balance that i think the big question right now we are talking to clients about

is what is next. there's an expectation there will be change coming out of this. that could add expenses for most banks. that could change liability mixes. people will be conservative on the other seida as well. -- side as well. what the fed and fdic did was necessary and stopped a more systemic bank run. we feel good about that. we think the questions are what comes next for the system? jonathan: do you think that guaranteed to depositors is implied now? devin: i think effectively it is. if it isn't, it potentially would be if things got worse. what the fed and fdic was enough to ensure depositors the money is safe. bank runs our confidence thing. we saw that with silicon valley

and some of the reactions since then. in our opinion what is happening is we are moving to an earnings story. interest rates are moving lower. credit is front and center. money did move around late last week. some of the banks are depressed. the money did move around and businesses will be more conservative around what banks are putting their cash in. all those factors are playing into sentiment right now. jonathan: what would be the distinction between svb, first republic and credit suisse which feels a different beast altogether? devin: the big distinction is, first off, silicon valley, a first-year analyst could understand their balance sheet was simple. they could understand where the issues were created. credit suisse is a much more complicated, entangled financial restitution. that is where there is more fear of how complicated the bank is

and how entangled they are the financial markets. i don't cover them so i don't have a strong view there. i appreciate the separate dynamic. that is more for my seat around credit concerns. svb was a duration mismatch & in terms of what the issue was. lisa: silicon valley bank put a spotlight on smaller and regional banks. apollo put out a chart of some of the exposures, the differentials between big banks on the smaller ones. there is much more exposure to consumer credit, to bank loans, commercial real estate at smaller banks that the large institutions. how much business becoming a credit concern in the era of tighter financial conditions and higher rates? devin: great question. that's exactly what this is becoming. whether it is deserved or not, the banks have been managing

through well. the balance sheet dynamics, even at silicon valley and other banks are things we have been talking about for the last year. a lot of this is not new news but it is front and center. there is increasing concern about economic conditions and the tighter backdrop into what that can mean for credit -- and to what that could mean for credit. it comes down to risk management, asset liability management and good banks will come through this. good banks take advantage of these banks take advantage of these moments and gain market share and gain depositors. companies that did not manage wealth will be penalized. those that did will come out in a good spot. lisa: how analogous is this moment to the s&l crisis we saw back in the 1980's? devin: every crisis is different. there is always some

similarities. the sense of fragility right now. when you have an announcement like what occurred over the weekend, that is destabilizing to markets. ultimately that brings risk profiles in. people will be conservative in the near term. investors we talk to move to the sidelines when there is headlines every day, every morning. to try to keep up with it is exhausting. in a lot of cases it doesn't have anything to do with a stock portfolio. it's a challenging time. as i said, we feel good. with the fed and fdic did quickly was important to stabilize the broader system. now you can start to focus on individual names. where are credit risks? what are the effects of lower interest rates? that is the direction we are going. there's a lot of factors here. jonathan: thank you for being

with us. devin ryan, thank you, buddy. first republic down 27.6%. that is the story in the premarket for that name. we said that this morning if these issues developed several decades ago, this would have led to a major crisis almost immediately. policy makers would not have had the whereabouts, the tools, the experience, the speed they reacted to this in the last week. tom: i strongly agree with that. they have much better tools now and the speed thing, well, we learned about twitter over the weekend. jonathan: tensions simmer. it is a slow grind this morning for sure. the ecb decision a few hours away. ♪ the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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jonathan: there are no quiet mornings anymore. they just don't exist. equity futures down about .3% on the s&p 500. credit suisse up 21%. it is doing ok. still around two. we saw the statement of confidence, if you want to describe it that way from the swiss national bank. then the follow-through from credit suisse overnight tapping the snb. pledging to repurchase debt.

equity futures down about .1 -- .3%. 9:45 is when you get that news conference with president lagarde. all that good stuff is about an hour and 45 away. the bond market looking like this. two-year up eight basis points. that is what a quiet morning looks like for the two-year relative to what we have seen. the storm of the last week in the bond market has been unbelievable. lisa: it is how much we have retraced potential for rate hikes and rate cuts of nearly 100 basis points in the next 12 months. jonathan: 110-point move in the last 10 days. lisa: every morning does not seem like a quiet morning. it feels like every day is a year. let's look at the other banks. you talk about credit suisse.

first republic. this is the contagion for people look around and say, who is next? pac west has seen a lot of volatility. down 14%. it is moving as we speak and deepening with the losses of first republic. blessed an down 11%. first republic -- western alliance down 11%. first republic down 25%. comerica down about 43%. the banking system is where the focus is. it has the most potential to disrupt monetary policy. i want to look at this. overnight we heard the committee on foreign investment in the u.s. recommend tiktok's parent company sell their stake in the video sharing app or face a possible ban. snap shares are ripping, up more than 7%. a ban from being used in the united states. tom: by people? by kids?

lisa: either way, meta shares up about 2%. snap shares up 7%. tom: we welcome you on radio and television. extended coverage of "bloomberg surveillance." we are thrilled to bring it for this half-hour richard clarida to say he's a former vice chairman of the federal reserve system and his work at pimco and his work at columbia university as dean of economics. his academic work on the oddities of dynamic stochastic general equilibrium theory. right now that does not matter. thank you so much for joining us this morning. dsg is out the window along with the theories now that any central bank, and particularly at chairman powell's central bank, does bank supervision take strong presidents before monetary theory? -- precidence before

monetary theory? richard: there is more to do on that front. chair powell indicated they will be looking at this. i think the broader situation -- ideally monetary policy focuses on inflation and unemployment and supervision and regulation can focus on financial stability. there are occasions when they are related and that is where we are today. tom: to be delicate about it and it's outside the public sphere now, but this is the point where central banks, including christine lagarde in frankfurt need to pause? richard: well, it's certainly an option. often times the schedule works us to the ecb moves that they after the fed. this spring they are moving a week before. i think all eyes are on the ecb. if lagarde and her committee do decide to pause, that has

potential implications for the fed. it will make a pause by the fed more likely. tom: i categorize you and adam posen along with michael burda as the experts on germany. you have done a great app a gimmick -- academic work on germany over the years. how does the bundesbank respond to this crisis? there's that heritage. richard clarida, will we see the fund's bank reigned supreme and say no, we stay on track to fight 7% to 9% inflation? richard: it is not just the bundesbank. the overshoot in inflation in the euro zone happened after the u.s. on a core basis it is comparable. my sense right now -- we will know soon enough. my sense is they go ahead and hike at this meeting. i think the challenges of managing a pause are not easy when you are pausing when

inflation is well above the desired level. if this was 10 years ago and we had this disruption, i think all central banks would be happy to do an extended pause. they have to really be concerned about their inflation credibility. i think that will be a relevant consideration. jonathan: thanks for being with us. part of the conversation has been the risk of not doing something. maybe you can spook the market just as much by not moving when you had intended to hike 50 basis points. you have confronted delicate moments in the past. does that go through your mind as a policymaker? richard: that's a great question. we confronted that almost three years ago today in march of 2020. we cut rates before the scheduled meeting. we did so again on that sunday, march 15. in both cases the initial market reaction was what the heck do they know that we don't know. it was a negative for risk sentiment.

i can't speak for my former colleagues but if i were there that would be on my mind. especially since the inflation numbers this week show you if anything the inflation is moving in the wrong direction. lisa: this is one of the conundrums for a lot of people. there's a fundamental tightening occurring at a rapid pace when you look at the smaller and regional banks. considering how big a role they play in corporate credit, commercial real estate, the broader credit complex beyond institutional loans. is that enough to accelerate some of the disinflationary force the fed is looking for? richard: we think so. we are looking into that. an important driver of the cycle is the credit impulse. until recently the talk has been the fed is not getting any traction from these rate hikes. we are now seeing that traction, the inverted yield curve and the situation of many financial intermediaries mean the fed is

getting traction. if this persists, and i expect it will, it means we may begin to see the disinflation kick in sooner than otherwise. the fed probably will take that into account. lisa: does that mean 100 basis points of rate cuts in the next 12 months? richard: the short answer is it is too soon to tell. up until now the mantra coming from the fed has been they need to keep them there for an extended period. it is a fluid situation. if you see a cutback in lending, that will begin to show up promptly. and particular, if inflation comes down, that will be a factor. whether or not it is 100 basis points, i will not get into the exact pricing right now. jonathan: i love leaning on your experience. the fed has to get together the projection materials. an sep in this environment. how do they do that?

richard: but short answer is, you know, with great effort and often times the sec projections are pretty straightforward. in march -- i hate to keep coming back to that but it is relevant today. in march of 2020, and i'm not saying there an exact or close parallel, in march of 2020, we did release projections in the meeting because of the huge uncertainty. right now i don't think they will take that step. that could be interpreted adversely. what did they know that we don't know? there projections are finally balanced. if you count the dots, it would only take two participants from the december meeting to move up to actually have the dots shift up by 25 basis points. it will take a lot of folks to move down. yes.

as we we always say, this is a high-stakes meeting for the fed . tom: on twitter there is a sport sank we have to look at 14 years of qe and ask was this a successful experience. let's take it to david landau at deutsche bank. was the negative interest rate model a successful experiment? richard: you mean negative interest rates as we saw on the euro zone, switzerland? tom: in europe, japan, the united -- somewhat in the united states? richard: look, i have not followed that situation at the fed. we chose not to go negative. my observation across two oceans is that negative rates were pretty complicated to implement and explain. i will leave that up to those officials if it was worth it. we did not go down that road in the u.s. tom: i wish you could come back. jonathan: he is coming back in

the next segment. richard clarida sticking with us. tom: i think of the late marvin goodfriend and adam posen with marvin goodfriend about the efficacy of negative rates. the courage to go negative rates and what so many people said is you can go sort of kind of like negative interest rates. landau said if you're not going big time to clear the system, it is not going to work. in hindsight, you wonder. kind of like economics. jonathan: negative rates feel like a lifetime ago. i think we have a really interesting snapshot into the psychology of policymakers on the central bank who do worry about the signal they send if they don't hike. do you inspire confidence if you do? as always been a sense central banks might know something we don't, which i find is quite ludicrous. people think that way when you

get these decisions. lisa: i thought that was fascinating that rich think they will go 50. even at a time when there is a fundamental tightening in the financial conditions going on under the surface. tom: if they do that or something like that, they have to double barrel it. -- it with financial supervision with it. jonathan: if you believe it is contained, do you focus on monetary policy? you look at inflation data and hike interest rates, it's that simple. if you don't think it is, you pause. it is the signal you send from that posit ultimately might worry some people. the real question i keep asking here, can you isolate what is happening in the banking system in the last week for the monetary policy decision today if you believe it will lead to

tighter lending conditions? lisa: weiss is being treated like a bug as opposed to a feature? jonathan: precisely. equity futures on the s&p down .2%. credit suisse higher by 21%. ♪ lisa m.: keeping you up-to-date with the news from around the world with the first word, i am lisa mateo. chancellor olaf scholz says germany has to do a better job at preventing irregular migration and importing people who live in the country illegally. he says germany will continue to provide protection for the more than one million ukrainians who have fled the country following the russian invasion. some 200,000 people from syria, afghanistan and turkey applied for asylum in 2022. poland's defense minister says the country is in talks with slovakia and transferring soviet fire jets to the ukraine. earlier this week, poland's premier set a delivery can take place in the next 46 weeks.

it would cross a threshold among nato member states that have drawn the line at offering kiev airpower -- kyiv airpower. -- tapping the swiss national bank for a loan and offering to repurchase $3.2 billion worth of debt. credit suisse's top shareholder says panic around the bank financial stocks is unwarranted. global news powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo and this is bloomberg. ♪ ♪

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>> what's happening here is the market is conducting a stress test on the federal. central banks at this stage

should stop hiking and provide real reassurance they are going to protect the financial system and deal with this problem. that is really what they need to focus on. jonathan: that was david kelly, chief global strategist at j.p. morgan asset management. no real drama here going into the ecb decision in one hour at about 30 minutes away. nasdaq positive by .3%. in the bond market, the two-year yield where the fireworks have been, up five basis points this morning. 393.83. a quick sneak peek at was developing at credit suisse. credit suisse positive by 21%. first republic down about 24.5%. tom: a little churning here.

you win it with the timeline is on that. does the snb get out in front of the ecb? i can't imagine that. jonathan: with what? policy decision? tom: something about credit suisse. how do you get in the way of ecb with credit suisse crisis stuff? we have to wait for the press conference. jonathan: the stock of 20% or so. lisa: mission accomplished? jonathan: they hope. tom: we will continue here with a former vice-chairman of the federal reserve system richard clarida, global economic advisor at pimco and student of his economic history. somebody spoke about creative destruction this morning. that reminded me of hyman minsky who had a doctoral advisor. he talks about a minsky moment

or the efficacy of regulation. let's bring over the cacophony of another time over to what michael bar at the fed needs to do. what is the best outcome of the new bank regulation and the lessons we are learning in this march? richard: well, i think there's been a lot of progress. dodd-frank and for the larger institutions with stress testing and liquidity and all the rest. what the episode does reveal is that institutions may look small -- they can get big. even institutions of that size, as we saw over the weekend can be systemic. the clear direction of travel is going to be under existing statutes and laws the fed has

enormous flexibility in the way it supervises institutions on a case-by-case basis. i think we will see that level of supervision and scrutiny of things like the hold and maturity portfolios being underwater and liquidity and uninsured deposits will be factors. the direction of travel will be tighter supervision. tom: would you suggest the central bank has to adapt to the political realities of republicans usually distrustful of the big accumulation of capital almost in a jacksonian light? how will that extend out from the too big to fails? richard: it will extend into a number of the names that are in that 100 to 250. that was by statute in 2018. it said less prudential scrutiny

for banks under $250 billion. the legislation gave the fed a lot of autonomy on an individual bank basis. we will see that with tighter supervision. lisa: a lot of people are pointing the finger at the federal reserve, saying they should have had more supervision and this was a policy failure that is interfered with their ability to raise rates elsewhere. do you think that is fair? that this was a policy mistake, or a direct result of rolling back that aspect of dodd-frank and 2018? -- in 2018? richard: i'm no longer in that building or talking to those folks. the stress tests that were set up successfully after dodd-frank typically look at scenarios with deeper sessions, high unemployment and falling interest rates. svb did not have a lot of direct exposure in lending or the like, but they had a lot of exposure

in long-duration treasuries and mortgages. there is something called a global market shock that looks into that. i have seen work that indicates -- i can't judge but that svb would have passed the liquidity test. clearly i think they will be studying this. i think that is going to be reviewed and changed. lisa: this is the point that neil data made -- neil dutta made. why is it being treated as a bug rather than a feature of the hiking program? from your vantage point, do you think perhaps there has been a bit of complacency about the resilience of an economy that so far has not broken but is showing strains? richard: what i would say is i broadly agree with the direction of travel.

when you raise rates you invert the yield curve on a sustained basis. dit conditions. it is tightening financial and credit conditions. i hope no one thought we could get to this point without there being a tightening in lending. let me get this on the table. what the fed did sunday night was exactly the right move. essentially expanding the discount window authority to lending against collateral, which has been in place since 1913. that's an appropriate thing for the fed to do, they get institutions liquidity against their security portfolio. i think that was right. i am broadly in that camp. when you raise rates and avert the curve -- invert the curve, you will make lending expensive. intermediaries will bear some of the burden, absolutely. lisa: how much more likely is a hard landing in your view?

a recession that inflict more pain today than a week ago? richard: it is more likely. i have been in the camp consistently since doing your show last fall that more likely than not we will see a recession with a rise in on appointment. negative prints on the gdp. when you have a rate hike cycle of this magnitude and how quickly, that is going to be the outcome. have the odds of a hard landing gone up? they certainly have. i don't think that is my baseline for a hard-line landing. surely the odds have to have gone up so much. jonathan: this line you often hear when central banks don't do something we expected them to do and you hear things like they might know something we don't know. does the fed ever know something we don't know? richard: well, look, the short answer is yes. not often and not to a great degree. one situation where we did not know anything people didn't know was about the coronavirus.

we did not have any special briefings or insight. jonathan: what about banking troubles? are they things the fed would know about but would not talk about? richard: yes. the fed has supervisors on the ground with thousands of banks that are very granular -- at a very granular level. some of that information is not in the public domain, and appropriately so. jonathan: that is why things become so speculative and the decision is so difficult for the fed chair. tom: can we get him on tomorrow? jonathan: what you don't know is richard clarida will be guest anchoring next week. richard, thank you for being with us on an important morning. richard clarida, former fed vice and currently at pimco. tom: you get to the idea of i level versus rate of change. he feels a level of getting up to defeat inflation is

important, but the speed to get to that level would be the history study of the next 24 months. jonathan: 12 months. zero to 450. tom: i did it on fancy paper and it was fast, fast, fast. jonathan: happy anniversary. 12 months today from the first hike. are we celebrating? not really. i thought that is why rich was on. the anniversary. tom: tang mimosa. jonathan: classy. ♪

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>> bed and other the fed and

other central banks -- the fed and other central banks should stop hiking and protect the financial system. >> the federal reserve would probably do something like hike in march and go into a pause. >> they have to stay the course. to do anything else would really be a misstep. >> i will tell you i do not want to be in the next week, jerome powell. that is a massive pickle. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> good. a banking crisis, stability for those watching credit suisse, stability on frc in america, and it is all to count on christine lagarde. >> down 27%. that speaks to the story.

>> it speaks to the tension of the moment. >> i do not want to be christine lagarde. first out of the gate to address this with a decision. 915 -- 9:15 eastern time, they set the track. tom: what is distinctive here, our team working on this all night, and where i have changed now versus two hours ago is this raging debate of what the ecb and fed will do between .5%, a moderate .25% rise, or pause. i don't know. jon: i don't either. we got some insight from richard clarida, former fed vice chair. the signal associated with the latter may be more than the former. if you don't make a move after committing to, what signal do you send?

that is something that's on the mind of policymakers. tom: in crisis, this single signal is the bond market. what has been the nuance of the bond market in the last hours? lisa: it depends which bond market. you have seen a widespread widening, a bigger risk premium baked in. when you look at the rates market, we talk about the incredible volatility, a lot of people pointing to short-term yield curves, the three versus the two year. it inverted the most over the past couple days going back to 2001. after an inversion of that level back in 2001, the fed came out with an emergency unexpected 50 basis point cut. that basically signals that short-term rates are substantially higher than they will be in a couple months. tom: what is the institutional response?

secretary alan -- secretary yellen had a. jon: this week's actions demonstrate our resolute commitment to ensure that depositors savings remain safe. everyone we speak to now believe there's an implied pledge from authorities in america to backup all deposits regardless of size. tom: our team will follow this. let's go through the date calendar because it is confused by daylight savings time in america. we are in the 8:00 hour on wall street. the festivities begin at the 9:00 hour. jon: 9:15 the decision, 9:45 the news conference. we are set to get some

forecasts. good luck to them. i have no idea what's going to apply next week, next month, never mind your end. tom: my data item is nymex crude. maybe a signal of dampening disinflation, an economic slowdown. jon: i believe it was the ipa that came out yesterday. they talked about a market surplus for crude because of russian supply. that's another factor. tom: let's dive into the hour with george. a wonderful cross-section of guests this morning. what george brings to us is what are they doing out there on an institutional basis? what is the level of panic and is it basically endless phone calls of go to cash. michael: thank you for having me. what our clients are doing are

twofold. first, looking at liquidity positions. they want to know what does our portfolio look like and what kind of liquidity do we have? with that, we are able to answer definitively what they can do and how much maneuverability they have. the second question clients ask is from a positioning standpoint, do they have enough duration? what we have been reminded of is that duration matters and in times of stress having that longer duration position can be very beneficial, particularly in a fixed income portfolio, so as we work our way through this, sort of making sure our portfolios have enough income to be able to meet the obligations of what our clients are trying to do, do they have enough liquidity to be maneuverable in this kind of market, which frankly is difficult, because we know liquidity is challenging the fixed income market, and

lastly, do they have that insulation? do they have that insurance policy built into the portfolio, which is that anchor of duration? lisa talked about the front end curve and fed expectations. those are shifting rapidly. we went from expecting 100 basis points of hikes to 100 basis points of cuts over the next 12 months. radical change in outlook. companies and investors need to be able to position for that. that is precisely what we are doing for them. jon: talk to me about how easy it is to maneuver. these moves we are seeing in the depth of the treasury market, never mind securities people, the two year yield thursday down 20, friday 28, monday 61, tuesday up wednesday down 36. how easy is it to get in and out of the treasury market at the moment? michael: we know it has been challenged. from a size standpoint, you can

move risk. it depends on how big your portfolios are and how much risk you need to move. from our perspective, we have been able to access the amount of liquidity we need, particularly in the treasury market, but in aggregate, it is clear liquidity is challenged. we need to be precise about our decisions. we need to have a little bit of a forward-looking view on the assumption that we may have to sit with this for a few days, maybe longer, to get our portfolios on the right side. liquidity is challenged but not impossible. lisa: that is in the deepest, most liquid market in the world. what about credit? given the spread widening, the increased risk premium baked into high-yield bonds, i wonder whether it's enough. do you view these levels of more than five percentage points over benchmark rates

enough to offset the sudden surge in default risk? george: that's a great question. when you look at credit markets, risk premiums in spread terms, that would tell us that things are getting stressed, but we are not pricing in recessions just yet, and that is something we are looking at. policy, from a stimulative standpoint or restrictive standpoint, is passing through an inflection point in the cycle. we are going from a one-dimensional fight against inflation to a two dimensional fight against both inflation and liquidity within the financial system. that has repercussions for the real economy, not just the banking system. the real economy will experience tighter credit conditions. if we use high-yield spreads, call 5.5%, you know, that looks sort of attractive, but it's not pricing in a recession.

that is the risk as we go forward. so it is premature to say a hard landing is priced in and now it is time to buy. we are not there yet from a valuation perspective. however, i would say, when we look at yields, you are looking at levels that look fairly compelling, so it is this balance between yields and spreads. lisa: to understand the reaction function by markets to the fed, to the ecb, would you go more pro risk or less if the central banks continue with the rate hiking they had planned? george: regardless, at this point, less risk. the reality is the other side of this bout of volatility and policy intervention should be slower growth. the central bank is in a tough spot. we think they will raise rates but they are also fighting a

liquidity problem in the financial system. even though they are using liquidity to fight that battle, the cumulative effect of tighter credit conditions is going to persist. it is probably going to get worse, not better, over the coming weeks and months. on the backside of that is slower growth. so from a credit perspective, we want to be up in quality. we are going to remain up in quality. jon: got to leave it there. smart. george bory. that last piece almost verbatim what we heard from j.p. morgan on the fixed income side, this idea that tighter lending standards are coming, growth will get choked off more. i asked earlier what does the fed know that we do not. on the economy, as we've seen repeatedly, maybe not much, but when it comes to financial risk,

something the former rights chair claritin -- former vice chair richard clarida said, perhaps they know things we don't. so it raises that. it goes back to a thing we have been probing the last couple days. if they don't hike, what is the signal they sent? tom: that is the risk. maybe the data will help. does this data matter in 20 minutes? jon: what data? tom: exactly. can i editorialize? that's a great question. here is the score. that's a great question. abramowitz four, ferro one, and i got the goose egg.

jon: isn't it always that way? nice. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world, i am lisa mateo. the pentagon released video footage showing a russian jet dumping fuel on a u.s. surveillance drone in international airspace and collecting the aircraft, challenging moscow's contention that it no role in the downing. the chairman of the joint chiefs of staff says the u.s. does not seek an armed conflict with russia in the wake of a spy drone incident. defense secretary lloyd austin met his russian counterpart and spoke yesterday in what appeared to be an effort to reduce tensions. treasury secretary janet yellen plans to tell congress today that the u.s. banking system remains sound. she's looking to reassure

lawmakers, depositors and investors before taking what are likely to be tough questions about how the sector was regulated. the hearing comes amid tumult in global markets and worries about financial stability after the rapid collapse of three regional u.s. banks and troubles at credit suisse. global news powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> all eyes on the ecb because if lagarde and her committee

decide, that has potential implications for the fed. my sense is that they go ahead and hike at this meeting because the challenges of managing a pause are not easy when you are pausing when inflation is well above the desired level. jon: hearing from richard clarida, former fed vice chair, echoing that view. citi echoing that, the ecb following through with a larger hike. citi expects 50 basis points. we will have some reading on the fed potentially next week. tom: a historic morning here. you are used to the early morning ecb here. michael mckee joining us, our chief economics correspondent, and maria tadeo in front of the lawn that young

jon ferro used to be in front of. what is an ecb meeting light -- meeting like? jon: big concrete buildings. tom: i will be direct. other than mckee and three or four other people, i get more ecb press conference terse questioning. jon: there was some back-and-forth, some follow-ups. tom: banking crisis means maria tadeo's lunch gets cut back to two hours from three hours. tom: 50 basis points was the pre-commitment. does it change now? maria: yeah. an important point to clarify,

what is the threshold of young ferro, but when you are an ecb reporter, you talk to people, try to get a sense of where consensus is, and it's been all over the place. i have talked to people who have told me this has to be 50 basis points. this was baked in. the data justifies this. the ecb should look through the market volatility we have seen. on the flipside, those who say 25 basis points is worth considering would say, when you look at the forecast and path forward, that is great, but the issue is in the now. so there's three things to watch out for. 50, 25, beyond that. i went to see how much consensus there was. then it comes down to the communications. we have had people comment on this, running commentary, finance ministers, but ultimately, this comes down to

christine lagarde. whatever happens, she needs to defend this decision confidently and instill this confidence in the market. lisa: we have been talking about what do central bankers know that we do not. with the fed, there is this financial supervision arm that gives them insight into the health of the financial world. how analogous is that for the ecb, especially in a disparate europe with different regulatory bodies and also switzerland, which is part of -- which is not part of the eu? maria: it is not because it is a swiss bank essentially. the french prime minister said this was a problem for this was to deal with. the issue is we know the banking world is very connected and european banks are also exposed. that is why you had reports suggesting the ecb was already sounding out to european banks to figure out what kind of

exposure they have to credit suisse. it is important to stress we've not had a lot of communication on this from the ecb for three reasons. they do not comment on specific stock moves. secondly, the timing of this is complicated, because it is a quiet period. yesterday, deliberations were going on. this is a question that will come up repeatedly in this press conference. she will be hammered about the stability of the european financial system, and again, a lot of this will be about the communications. it should instill that confidence the market wants to see. tom: michael mckee, before we come up on economic data in america, you have a huge global perspective here. with the data dependency, and this is now in crisis, how is 8:30 treated differently? how is the data of europe treated differently because they are in crisis? michael: the problem is what the

data are our backward looking. what we will get today and in europe this week will not have anything that really relates to the idea of a banking crisis affecting economic growth. you had richard clarida on and he said it should show up relatively soon, but it will not have shown up yet. in that sense, both the ecb and fed are flying blind. a number of houses have put out analysis of what the credit tightening might mean for economies, but they are also working with the old models. we do not really know if things are going to unfold as they did pre-pandemic. tom: re: economies slowing -- are economies slowing? just as a general statement, people are saying, financial crisis, disinflation, wti under $70.

can you say that there is indications of economic slowdown? michael: there are a few and it depends on what countries you are talking about, which is also an ecb issue. they are all different countries. i would have to pass on that at the moment but i could look that up. i will tell you a issue is, we are expecting a lot of things because this is what's happened in the past, but yesterday, and this got totally overlooked, the atlanta fed came out with its latest gdp now circuit for the u.s. for the third court -- third quarter, 3.15%. so if you are thinking that tighter credit will take demand out of the economy, the fed will be cheering for that. it is really a question of how far it goes. what we have done is moved the banking issue from whether they will survive, because the central banks have moved quickly to underpin them. there maybe one or two in the

u.s. they go down, but the big ones that will be fine. the question is what are their interconnections? maria mentioned the ecb survey, the fed survey. if there's counterparty risk, then you get back to the 2008 issue. if there is not, then it will probably not be as bad. lisa: the interconnectedness of the markets and policy, is there any indication of how close it is of jay powell and christine lagarde? maria: when you look at everything lagarde has said, especially to -- especially in the run-up to big decisions, there has to be a level of coordination. going into this press conference, a statement matters, but i presume this will also come up. will there be a bigger change on the global scale? i did not have a three hour lunch. i had a 30 minute lunch. i did spend two hours yesterday

watching real madrid. jon: there we go. no three hour lunch. we have not done sport all morning. tom: when we go to jena this weekend, formula one. lisa: a 30 minute lunch is today's three hour lunch. tom: i remember when there were many restaurants with white linen and silver and one by one, in america, they just disappeared. michael: you are important. you get lunch. some of us do not. jon: we get lunch at 10 a.m. eastern time. michael: the forecast is for 9/10 of a percent of growth. jon: let's be clear about what time lunch is for us, mike. 10:00. lisa: it is coming up. tom: they served the breakfast. nice touch. jon: enjoying that? i missed that.

thank you. some data that mike will stick with us to go through. we will be joined to go through the ecb decision. looking forward to that. you can hear from jay powell -- from jay pelosky as well. is he still constructive on the european banking story? have the facts changed? have his views changed? tom: i want to hear from mr. de longis. he's got wonderful perspective in the ecb. jon: about 50 minutes away from an ecb decision. equity futures totally unchanged. at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com

tom: bloomberg surveillance. thank you to our team amid this bank crisis. credit suisse has stabilized off the bottom yesterday with some big moves coming back from the opening peak but stabilizing. frc is stabilized at a lower level than what we saw yesterday. ridley getting in the way before lagarde in the next hour is american economic data, and once

again, this is a time where there are claims they are going to reverse, we will get back to a less employed america. michael: you are wrong. not this week. 192,000 for initial jobless claims, in the same range. there was a feeling that last week's 200 11,000 was overstating the numbers. you got some people off work in new york schools. we have fallen back from two hundred 11,000 to 192,000. housing is dead. the housing market is obviously affected by these high mortgage rates. 9.8% after a revised drop of 2% in january. the deal with that was it was

originally reported as -4.5%. building permits up 13.8%. there seems to be some confidence in what's going on. lisa is like freaking out. let me say -- the philadelphia fed, -23.2, a slight improvement, but that tells you there's a concern about manufacturing in the philadelphia district. lisa: this is where data dependency goes to die. in another time, you would have said resilience in the economy, let's go. hiking on the table, how far do you want to go? we are seeing almost nothing in the two-year, very little movement across the board. markets are not responding to this data. have we just killed off data dependency, which was the prime clarion call of every central banker? tom: it is not so much data dependency in a broad sense but in a couple indicators, which would be inflation and the jobs

numbers, and both of those still suggesting strengthen the economy, which falls into what we were talking about with the atlanta gdp. the jobless claims are supposed to be something of a long-term canary in the coal mine. they suggest, if companies are starting to get nervous -- and apparently they are not. labor hoarding is still underway. the one you cannot figure out is that. we did see, over the last couple days, homebuilder stocks rising a lot on this idea that the fed might be cutting interest rates. mortgage rates have dropped a little bit. if that trend continues, you could see why there's been strength. and of course, all these were done before any of this banking stuff. tom: dovetail this with your comment that i missed yesterday on atlanta's effort, atlanta fed's effort, to be on top of

where gross domestic product is right now. i'm sorry. it is almost a boom number. michael: this is as of yesterday. 3.2% for the first quarter. it has more validity than in january. we are starting to get some february numbers. it will change as we go through this month and get the february numbers and get into march. you will then get some idea of what it really is. but the first part of 2023 has held up well. so that's something. again, the fed is looking at what has happened in the past. not sure what that tells us about what will happen in the future. tom: take a break, mike. michael mckee trying to deal with a dependency. your data check was brought to you by lisa abramowicz. none of it really matters. what do you do with a two year

yield up six basis points when you have credit suisse turning -- churning, first republic churning, credit suisse coming up from the trauma yesterday? lisa: no adjustment of the fed funds rates. this is the conundrum. we had data dependency. we said we would get these important reports, the labor market report, the tuesday cpi, and then no one cares. that to me is the conundrum for central bankers. how did they make them care or give into the new narrative that might shift again? tom: they will look asymmetrically and say if we make decision a, what does it mean on an asymmetric basis? and not only in the u.s. but in europe that has surprised a lot of people with optimism. neil is an economic researcher and he's nailed the resilient

american economic experiment over the last couple quarters. wonderful to have you with us and trying to talk not about the banking crisis. with your studies of economics, is it simple that the ecb will ignore the data and the ecb will on plan as scheduled? neil: that's an open question. my sense is that they probably do not go 50. was it not lagarde that was picking up the phone and telling how terrible a decision it was for them to let lehman go under? she will probably err on the side of caution. tom: we will see in the next hour. i have never heard dutta talk about the ecb. lisa: all these random things

that seem to pop up from day-to-day. how do you even chart a path forward when the facts change this quickly? they are material because this leads to an actual tightening in credit conditions lending. neil: that is true. part of the reason the economy was so resilient was that it was not especially credit sensitive to begin with. that's one of the reasons why people talking about long and variable lags shifted to talking about the weather, then seasonal adjustment, and now look, the lag has kicked in. sometimes in this business it is better to be lucky than good. lisa: how do we even know what our biggest challenge or threat is? i go back to something said, which is, if the fed pauses, this could allow an un-mooring of inflation expectations when you have an economy with strength.

what is your concern? is that a preeminent risk or will the tightening take care of itself? neil: absolutely it is a risk. i don't think what has happened in the banking system, unnerving as it may be, is enough to really send the u.s. economy into a below potential growth state. remember, as the data made clear, we went into this with a lot of momentum. you are talking about the atlanta fed saying 3.5% and inflation running 5%. you're talking about an 8%, 9% nominal growth environment, that helps grease the wheels. so let's try to remember the momentum is robust. that gives us a shock absorber once this goes on. at the same time, the inflation died -- inflation data are not encouraging. people looking at the cpi and saying this is a reason to back off, that's ridiculous.

core inflation is running hot. inflation has been so strong that if you didn't look at anything else it would still be up 1%. so the risk is, if they pause, they may have to come in later and they may have to be more aggressive. i tend to sympathize with that view. tom: one of my great themes is europe flat out does not have a nominal gdp persistency like america. we are generally, because of technology and maybe a different demographic and economy, set at a higher level. if you agree, what is your run rate on nominal gdp? neil: we are in a 5% to 6% underlying nominal growth environment now. you talk about 2% real growth, around 4% inflation, so 6% i think is a reasonable benchmark.

tom: that seems to me to be pretty constructive as well. can they pause, the ecb, today, or the fed in a number of days, can they pause with a strong statement that they will resume rate hikes as appropriate at some point? neil: i mean, they could do that, but my sense was, reading the events of last weekend and what the fed has done, my assessment as it goes back to the bernanke discussion about using the right tools for the right job. they tried to fence the banking system to create this expense -- this space for themselves to keep hiking, slow down the economy and underlying demand. rates are a blunt tool that affects all industries at the same time, not just the banking sector, so i thought, in some ways, you could make the argument that what they did over

the weekend was a way to create the space to hike. at the margin, it makes 50 basis points less likely. you cannot talk about a systemic risk exception and still go 50 but you could make a reasonable argument to go 25. the data remain quite strong. and we are not at a point yet that suggests significant economic damage as a result. homebuilding stocks have been doing well. lisa: has the chance of a hard or harder landing become more likely in the past week as we have seen tensions come to the fore? neil: we have because the biggest risk of a hard landing is if the fed follows the market's pricing of interest rates. the fixed income market has an implicit dovish bias and if the fed follows that it risks

entrenching inflation, further pushing the fed away from where the markets are. tom: neil dutta, thank you. back to the two stocks we have been following all morning. credit suisse, i will say, the word i would use in technical analysis is a soup. i don't have much to talk about other than stability at 2.05. first republic has broken down under a 22 level, 21.3, a larger move of 31% down for the day. we will continue our coverage here through the morning on radio, television. a huge calendar coming up. christine lagarde and the ecb in frankfurt and secretary ellen after that. good morning ♪ lisa: a lot going on in london.

services into the capital will be restricted. commuters facing disruption for a second day as real workers strike. those services will be restricted as workers across 18 companies represented by the rmt union walk over a pay dispute. yesterday, about half a million british workers staged a walkout timed to disrupt jeremy hunt's annual budget speech. credit suisse surged after tapping the swiss national bank for a loan. credit suisse's top shareholders say panic around the bank's stocks is unwarranted. poland's defense minister says the country is in talks with slovakia on transporting fighter jets to ukraine. pulling's premier said a delivery could take place in four to six weeks. it's a move that would cross a threshold among nato member

states that have drawn the line at offering kyiv airpower. chancellor olaf scholz says germany will have to do a better job of preventing irregular migration and deporting people who live in the country illegally. the chancellor says germany will continue to provide protection for the more than one million ukrainians who have fled to the country following the russian invasion. some 200,000 people from syria, afghanistan and turkey applied for asylum in 2022. global news powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪ this is ge vernova, helping generate and move the energy that our world needs. ♪♪ welcome to a new era of energy.

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will be making a very serious mistake and, if they appear to be abandoning concern about inflation, they will make a very serious mistake. tom: secretary of the treasury of the united states another time and place ago, lawrence summers. as we approach the ecb meeting, important headlines out from spain. these are market moving headlines. the market moved immediately off this. the ecb has told ministers two days ago that some banks "could be vulnerable." i looked immediately at euro, 1.06, down to 1.0593. i would point out the german two year is trying to discover the low yield of yesterday now, down as well. you have been looking at e.u.

bank reaction. lisa: i want to elaborate more on these comments that the ministers were told in brussels that lenders in that region are less exposed than their counterparts in the u.s., but at the same time, said the ecb could not rule out some lenders might be at risk because of their business models and cautioned not to be complacent. you can see bmp is up .7%, socg en, 1.3%, credit suisse maintaining gains, struggling to remain over two euros per share. people are using this as perhaps the tea leaves for the reasoning of why the ecb would opt to move only 25 basis points rather than 50 with a weaker euro, the german two-year-yield lower. tom: do you think we can say the

body of guests we have talked to over the last 12 hours look for them to be steeled and raise rates? and yet others are heeded don't do that,. lisa: the only consensus i have gotten is that people expect there to be read through from what christine lagarde to -- christine lagarde does and what they expect the fed does. tom: vulnerability like this from the ecb, the first thing we do is look at the markets. chris turner is good at this. he joins us at this moment. which data point do you study in the cacophony of a half hour to get to an ecb decision? do you fall back on the germany to year or is there some other secret data point? chris: like a lot of people, we

look at a variety of indicators. looking at the short end of the european bond market is good. if you say we have been looking as well over the last few days, there might be a cross currency basis swap at the short end of the curve, there had been a little stressed earlier -- stress earlier this week. your guests have been talking about a difficult decision for the ecb coming up. tom: does ing suggest ecb will pause? chris: no. the core view from our chief economist for the eurozone and germany is the ecb would very much like to push ahead with their 50 basis points today, so that is our official call.

we will just have to see if that does come to pass in the context of sticky inflation but also looking forward as well. they will be cutting inflation forecasts. the market will be looking to see if they cut their rate forecasts as well. lisa: how much is your out -- how much has your outlook for growth and rate hikes changed in the past week? chris: bigger picture, we are negative on the dollar for the second half of the year and in a way you could argue that the stress on the financial markets and banking sector we have seen over the last week or so bring forward the point when the fed will ease. the market now pricing and maybe 100 basis points in the second half of the year. up until last week, we thought it would be a modest easing

cycle. that has been brought forward. we do need market conditions to settle first. they are unsettled, while we have these high levels of volatility, particularly in the interest rates, markets, i think when markets settle into looking for value. it is about safety in the short-term. lisa: on the micro side, people are taking a look at european banks the earlier this year, saying, that was the place to be, they were undervalued. does this story mean you can get more involved considering the selloff and discounts or is it the opposite? have we seen risks unearthed that people had not imagined earlier in the year? chris: the market will, as it has been doing, the assimilating all the news that comes in from an investment perspective. looking at what it means on a

relative basis in fx markets for u.s. versus europe, and obviously, the story is mixed, but what we have seen so far is proving the conditions and i'm sure many plans that were kind of set up over the last month or so are being reassessed, but i think the macro probably will come back in the second half of the year.. tom: we are awaiting the ecb decision in the next hour due to daylight savings time. then we will move on to comments by the secretary of the treasury, janet yellen. with us now, chris turner of ing on foreign-exchange. is there a trade to be made or do you simply have to step aside? chris: what the market has done clearly this week in foreign exchange is buy the yen. you can see why. we have not had this kind of stress and financial markets for

quite a while. by markets corrected 20% last year without pressuring the financial markets and the yen did not play that role as a safe haven last year because it was like a macro slowdown, because of the energy crisis as well, which dented the yen's position with higher energy prices. what we are seeing with this pressure is that global rates are now converging towards japan. i think investors are returning to the traditional benefits of the yen. tom: interesting. chris: i think the market will hold onto the yen for the time being. tom: fantastic. chris turner, thank you. green on the screen, the vix at a 28 level, 26.85. if i could sum up everything here, all i could fall back on

his michael rosenberg's bloomberg financial conditions index, which has gone from this new restrictive negative one standard deviation to a little more accommodative in the ether, if you will, little more accommodative, where i would suggest maybe a tilt within the market towards 25 basis points or a pause versus what was bandied about four fun filled days ago. lisa: it feels like a soup trying to make sense of anything. tom: mathematically elegant word. lisa: elegant soup. i am looking at what the parameters of potential binary outcomes are. there are so many different ones and it's difficult to know what the central bankers will do. as a traitor, how do you respond? if you knew the outcome, i would say no. tom: with our maria tadeo in frankfurt. for those of you in america, this is of import for your

investments in america. whatever the decision is, she will hedge it immediately. if it is 50, she will hedge the other way, and if it is pause skew 25 -- pause or 25, she will hedge toward the german central bank's vigilance. lisa: the numbers that were giving us some sort of compass are showing strength. so how do you put this soup together with a narrative that has any consistency? tom: the way you put this soup together, bloomberg surveillance : extended edition, is you have a team. we have -- we have 37 people and it has really come together here. we say thank you to our team for particularly just wonderful guests, richard clarida and

others. we continue strong into this morning, this crisis, on radio and television. stay with us. good morning. ♪ the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

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jon: the ecb 15 minutes away. equity futures down 0.3%. the countdown to the open starts right now. >> everything you need to get start -- set for the start of u.s. trading. this is bloomberg the open, with jonathan ferro. jonathan: live from new york -- coming up, tensions simmer,

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