>> inflation is coming down but we don't think it is going to come down right as asked as markets are pricing in. >> i think it probably has another leg up. >> we are not anticipating the fed will cut rates. >> they are still fighting inflation. >> if we listen to chair powell he was saying we can't give you guidance at the moment. tom: morning. monday after last week, some of us are back and some of us are on assignment. jonathan ferro is on assignment.

lisa is here after surviving last week. i was not here. give us one attic note of the exhaustion -- one anecdote you did to suffer through. tom: you alone are responsible for this situation. in all honesty, people are completely repricing expectations of rate hikes off table and rate cuts very much on the table. a massive repricing. the dissen version -- d is-version of the yield curve. tom: been lather with us and michael wilson down the road. at imposing will join us in the

8:00 hour. i go back to first principles, which, jim beyonca said there is a number of five ways i can learn money. lisa: if you got in a while ago you good earn more because you could see the repricing because of rate cuts. big takeaway for me was that no one has a handle on anything except that credit conditions are tightening and that will restrict the economy. in the fact that we are looking at a market that is all over the place. just go home and not trade is the best thing. tom: there is some action. keith horowitz put out a recommendation. it will be fun to get started on a week with a lot of economic data.

on the data front, a lift in the equity market. can you imagine with the angst of last week, the doll pathway back to 33,000. nasdaq 100 near 13,000 as well. mix at 21.94. resilient equities given the uproar. lisa: that is why i say the best strategy for people is hiding under their beds and hoping will be ok. if you wait long enough they will go back where they were a few months ago. tom: look at west texas intermediate, still under $70 a barrel. we have a further inversion today, on a correlated risk on feel. lots of other things to talk about.

i need a briefing, where do you begin? france-israel protest or our world, i am not sure which. lisa: i am watching a lot of geopolitical issues. what we heard about belarus and ukraine. when it comes to markets, people are trying to get any wisdom they can glean from policymakers. you heard an ecb member speaking at 1:00. governor bailey will speak at the school of economics. interesting to hear if we will see a shift in tone from the german and ecb members given how hawkish it can be. and that we are getting an auction of two-year notes. you could say who cares on one hand and on the other hand we are looking at a situation where there is a massive repricing, with shaw -- with shaw action --

whipshaw action. tom: is the two year yield simply flight to quality? lisa: that is something people are talking about. a complete repricing on how much the fed will cut rates. tom: are you sure they are going to cut rates? lisa: we will get philip jefferson having a conversation. do we get any clarity? there are real questions about what kind of clarity policymakers can give at a time there is so little clarity. yesterday they said they don't how much credit conditions are going to tighten at smaller and medium-sized banks as a result of the heightened ending concerns. tom: i would suggest we are in a

crisis. he has been wonderful about courage to be in the market. benjamin ledlow -- benjamin lather joins us. where can i find courage to own equities? tom: you should be marked --ben: usually more positive now. i think this bank scare accelerates everything inflation is going to come down faster and interest rates are going to come down faster, to where a few months ago we were in for a u-shaped recovery now we are looking for a v-shaped recovery. markets are forward-looking. i think that is where markets get the inspiration. the stock market is a very long duration, defensive's, that is

what will do well. the economy is not particularly well represented. tom: i thought of you this weekend when i saw the new concentration in microsoft and apple. it was highlighted that we have been here before. what is different this time about the concentration in cash flow persistent giants like microsoft and apple? ben: what do you look for, things that have lots of cash, high profit margins, you have the traditional defenses but also big tech. you look for long-duration assets that benefit from the lower cap bond yields and that is the and traditional defenses. the things that will hurt other ones that earnings will fall

faster than we thought, commodities, cyclicals. you just own different things than you did a few months ago. tom: the heart of this crisis is index versus active and how nero is active seems to be the debate? -- and how active seems to be the debate. lisa: everyone said this will be the big area of underperformance. how much can we count on rates being lower than some projections earlier in the year is boosting the stocks this is questions around whether the valuations are still too high in an era of slow growth and multiples? ben: i think that works for them. if you have some growth, people are going to pay for that.

i don't find the valuations demanding. i think the long-term growth profile and balance sheets are worth paying for. there are currently differences but the big tech names around 20 times earnings have good value. lisa: how much are you watching that we are seeing tim cook go to china to talk about business that you are seeing increased rhetoric between the u.s. and china when it comes to a lot of technology. i am thinking about tiktok last week? how concerned are you if there pressure is in the international businesses? ben: it is risk. it is nearly one third of the semis market. it will shave off some of that growth here we are talking about less tech earnings and problems with china.

we could've had this discussion 12 months ago. what is new is the accelerated growth slowdown and bond yields. that is what we are resetting for. i think that is positive traditionally for big tech. tom: tell me about buying europe. i was on the phone talking about the improvements we have seen at deutsche bank. you will see stories from frankfurt throughout the morning. for a guy like you with your london heritage, what is the opportunity in european banking stocks challenged? ben: europe is very different from the u.s.. on the good side, european banks have more capital and more tightly related and have better liquidity. a lot of it is just because the

euro zone crisis was more recent than the financial crisis. the bad news is, if a bank does go down in the european union, the impact will be much greater than it is in the u.s.. lowest gdp in the 50 percent for the u.s. and europe is twice than that. i am reasonably relaxed. europe so far has had much better earnings momentum. we saw that in the fourth quarter. all of that is good but in the back of your mind keep that europe is much more exposed. tom: thank you for getting us started.

pce later this week. forgetting about the banks and all that, they answer is we are where we were a month ago, hanging on inflation data. lisa: it is what the fed looks at and they are clearly concerned about inflation and willing to hike rates at a time where they are not seeing the progress they were hoping for. on the equity markets, continue strong in the 7:00 hour. in the 7:00 hour, mike wilson of morgan stanley. this is bloomberg surveillance. lisa: with the first word, i'm lisa mateo. a failed silicon valley bank has a new owner, first citizens bancshares will buy $72 billion of the assets at a discount of 16.5 billion.

as part of the deal, the fdic will get rates up to $5 million. extraordinary measures to shore up confidence in the financial system after silicon valley bank collapsed. prime minister benjamin netanyahu considering a delay in the judicial overhaul plan after a night of enraged demonstrations. thousands took to the street after he fired his defense minister for criticizing his plan to reduce the power of the supreme court. israel's main trade union wants to drag effecting departures from the airport. a demand of the meeting on vladimir putin's announcement on weapons he said russia will place tactical nuclear weapons in belarus. the valley of the security meeting is unclear. north korea has testfired two more ballistic missiles, adding to a barrage of lunches.

kim jong-un had no immediate response. it came in as the largest amphibious size in five years. twitter is looking for whoever linked parts of its proprietary source code. it was posted in a code repository owned by microsoft and do not reply with twitter's request to remove it. the now want to identify the person who updated the code. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries -- uploaded the code. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countriesglobal news 2, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ ♪ ...a brilliant reality! the new ink business premier card from

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>> i'm wondering whether you would be open to assisting further if there was another call additional liquidity from credit suisse. >> the answer is absolutely not.

the simplest reason is we now own 9.8% of the bank. all kinds of new rules kick in. tom: a certitude in the voice of the interview of the year already this early. changing the world and particularly changing the swiss world. i had the privilege of aerospace engineering with some at the university of colorado in this gentleman was at george washington. it was a huge contingent of arab royalty, persian gulf royalty in the engineering classes developing that certitude. i am as guilty of that as anyone in this poor guy got run over as a civil engineer from george washington university, not

thinking about the ramifications of the certitude. lisa: and the news is the chair of the saudi bank resigned after making those comments as the head of the saudi national bank. it is expected this bank will have less of million dollars of the investment in credit suisse. this is the problem that we are looking at a situation where people are trying to autopsy how much that interview with bloomberg television really led to some of those concerns. over the weekend, one of the swiss authorities said credit suisse with last another day. tom: i read those articles. carefully. as of the financial times did a great job summarizing. what struck me is we have to move on to american banking but 70 plus percent of the swiss people are really not happy with this transaction. lisa: on every level. this is also the banking capital of the world.

it is a black eye for a lot of people. tom: now we go to the atlantic to maine. gerard cassidy has been an advantage to us. is it all quiet on the front, are we beyond the crisis? i don't believe it for a minute. gerard: it has quieted down. the numbers came out as you saw late last week and the deposit outflow from the smaller banks was not immaterial. less than 2%, far less than some of the folks were thinking. it is calming down and you saw that silken valley, they were able to sell that over the weekend to first citizens. both fail banks have now been sold to private banks or banks

publicly traded we are moving in the right direction. is it the all clear signal? probably not but getting close. lisa: do you think for the calls for insurance were overblown that the need for the backstop and certainty was overstated? gerard: thank you for saying that. i couldn't agree with you more. people are finding out that most depositors have confidence in their banks and that being said, when you break down the size of our banks, less than 100 million in assets, the majority of those deposits in those banks are already insured by the government for less than $250,000. that doesn't mean they may not look at a revision of lifting up the deposit insurance levels at some point, i think it was, to your point, overblown.

part of the problem was unfortunately it spread like wildfire on social media and that is one of the biggest issues going forward. lisa: on one have -- hand you have the potential for bank runs but then -- on one hand you have the potential for bank runs but then people drawing money to go into markets into higher rates. you are seeing small banks whose deposits at a faster clip than large banks. at what point is that the problem as well as a lending one? gerard: the mix is changing. when you look at the data from the federal reserve, you will notice something they referred to as other deposits, which are generally benign and -- generally benign interest.

but they have replaced it with is time deposits. cds that tom might remember back in the 1980's. you can get a cd for 13%. those types of instruments are coming back and believe it or not, back in the 1980's, 50% of bank funding was with cds as of the fourth quarter, it was less than 10%. tom: what i remember about the 1980's is you had a haircut and a beard like bob seeger. that is what i remember. jim beyonca said, it is a 5% world, everybody get over it. how does the profitability of the rbc capital markets stocks you follow change in his 5% world? gerard: it comes down to once

again the mix of deposits and for the banks who have been working hard and diligently for the last 20 years and growing the core consumer deposits, the 5% world is very profitable. what investors know now, people weren't looking at the right side of the balance sheet. when you have checking account deposits of consumers and they are basically operating account, banks don't need to pay any interest on it. it is the ease of use and making payments. 5% world, if you have the right deposit mix, like brian morning him -- brian morning him -- brian moynihan. tom: keith horowitz at citigroup , he goes out and puts abide

today on mt of buffalo, you have a moonshot on mtv. -- mtb, how do you get the moonshot out of buffalo bank? gerard: exactly for that reason. you want the slow growth, funded by this cheap court deposits. mtb is one of the best deposit bases. the money is not moving to markets and as a result they don't need to pay for it. you also have a company that never extended its duration like its peers in the security portfolio and they are earning far more in their portfolio. they closed on the people's acquisition just over a year ago

and the cost savings will also drive earnings. they have one of the few banks that has excess capital and has been a great steward of shareholders'capital and they will return it through buybacks. tom: hugely beneficial. gerard cassidy with rbc. what does the intellectual framework to do something to provide action within crisis? that is what cassidy and horowitz and others are doing. lisa: there is a distinction between a banking crisis and a profitability story and that has been hard to tease out. how profitable can you beat lending at a time where it was more difficult to attract cheap deposits. you talk about 5% world being highly profitable, for which brinks -- for which banks?

tom: to me, and gerard is making jokes at me, he reminds me in boston when it was kind percent and 10% cds we are just at the beginning of this reframe from no interest rates to tangible interest rates. a lot of people are getting used to this, including swashbuckling silicon valley bankers. may they rest in peace. lisa: toasters? tom: going back to green stamps. ♪

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tom: jonathan ferro is on assignment. lisa: he will be back on thursday. tom: one of my interns talk to his people and i thought he was going to be here when i got back and i was going to wear my beige suit. now i find out he is out for three days. what is that about? stylist said, you are resting -- rushing the season. for those of you on radio, i am still on the three hour tour. -- three day tour. lisa: while you were in the

jungle and experiencing the beach and calm, one thing people try to reprice was the idea of rate cuts in the face of increased tightening in credit conditions by virtue of banks having less funding. tom: are adults of institutions talking about rate cuts? lisa: a lot of people are saying the fed is wrong and will have to cut rates because of some of this inherent tightening. we had this question around that. it was said, new york term policies remain cautious but i think the banking sector crisis is not a regular -- is a regulatory issue, not monetary policy. central banks continue hiking this year even though they are pricing in easing cycles. the real question is that is underpinning. tom: we will talk about european

banking in a bit. adam posen will join us with an important essay. right now win thin joins us. he is a student of the pacific rim. what do you glean, if it is not monetary policy but regulatory policy is the crisis here what do you glean about the new economic slowdown and that china may miss the mark on 6% economic growth? win: good morning. thanks for having me. this past year, the two main drivers have been fed policy and china covid zero and reopening. the data since then is disappointing. the official pmi will come out and will likely show a significant drop. if you look at export numbers

out of china, korea, taiwan, just a blip. china seems struggling to meet the 5% growth target set. it means global growth will remain under pressure. china is not the savior. we need strong global growth and liquidity for emerging markets and we are not getting that. i think it is a 2024 story. the cycle is working against it. tom: currencies is the litmus paper and the indicator, is the distinction that you are stable dollar or could you surprise and stay strong dollar? win: i believe the selloff in

the dollar is overdone. the market is pricing in three rate cuts by year end. i just don't think that is happening. and obviously mr. powell doesn't leave that. market is trading on fear and panic. once the rate cuts are taken of the market, which i believe they will be, then the dollar can get another leg up higher. we are seeing it come and no more rate cuts for them. they were priced in last week. as you mention, is a fluid situation. are we confident the risk of a fed cut in 2023 are low? i can't make up a story that will happen. lisa: we are being driven by fear and panic as you said and not fundamental and the picture is different for rate and potential cuts as the market

prices and. that said -- prices in. that said with the smaller banks losing posits,, is that can inflation under control faster? win: mr. paul said a large majority of them -- mr. powell set a large majority but we could go for further tightening. it doesn't let the fed off the hook. the u.s. economy, the consensus for jobs, in normal times it would be a stellar report but now it is slowing from elevation. i think you have the pce and core pce later, it seems

inflation is much more stubborn. the easy part getting down from 8% to 4% but the hard part will be getting from 4% to 2%. i think the fed is resolute. we are looking beyond the banking sector. the big takeaway from last week was the sin, we are tightening, and cautious -- was listen, we are tightening and cautious. they bought themselves some time. it is hard for me to see the banking crisis lasting another month and a half. tom: i want to take your holistic view and bounce off the work of the first one i heard

with the phrase super restrictive, which is not just calculations of the bloomberg but an entire macro structure of inflation flows, how close are we to the konstam super restrictive? win: it is a moving target and hard to pin down. we talk about real rates and some rates above 5% but inflation is the moving target and inflation expectations. the chicago fed has eight monetary index that comes out weekly and it is starting to tighten but we are much looser than i think the fed wants to be. this is a moving target and financial conditions will continue to tighten, but if you look at the numbers and financial condition numbers, we are nowhere near the really restrictive.

we are in the restrictive territory, but is at enough to get it down to 2%? i don't envy the fed. and i firmly believe it is a regulatory failure within a banking sector failure. to me, low rates for the cause of these problems, not the savior. it was a wrong thing to do and will add to risk taking. i think we will have two great our teeth -- grit our teeth and get through it and i think we can do the job. lisa: very few are talking about rates getting down to 0%. i want to speak to your expertise on the holistic kind of cross of the world.

going to china and the supposing boom we would get from the reopening and the idea this would spur more growth if not disinflation because of the production would come back online. it has not been an optimistic story. how does that play into your expectations of the ongoing momentum if we don't have the china impulse to the degree people thought? win: the silver lining behind that cloud is the disinflation forces will stay intact. china comes online and copper prices and oil prices surge. we have had a series of soft data readings out of china. i think it is negative for global growth, but the silver lining is that maybe we get the disinflationary forces continuing. i don't think we can count on the china markets being the

savior of global growth. it is much more domestic inward looking and being more self-sufficient and not reliant on the global export chains. other countries are right in trying to find alternatives. tom: thank you so much for joining us. it was a global view of a financial system in crisis. we have been remiss and we haven't done the scorecard on the good monday news of regional banking in america. first republic up large, 25% at one point. a single sentence over the weekend was missed by many, first citizens will by svb. there is action in a

yellen-friendly way. lisa: it is clear there was concern over why the fdic delayed it. there was a feeling that there was a little bit more transparency around the idea that first republic could exist for a longer period of time. deutsche bank shares also rebounding after under pressure last week, up 5%. in germany, how much is this a larger issue of people saying we threw the baby out with the bathwater? tom: with steven arons, we talked about cultural differences between germany and switzerland and the individualistic united states where it is every depositor for themselves. that is the words used by franklin. steven arons emphasized to me that german people is a general

statement stay put with loyalty and deposits. lisa: there is less deposit flight risk generally in europe based on the structure of certain investments. at the same time, deutsche bank has done a lot to get itself into regulatory shape. tom: i just figured it out. it was brought to my attention. the coach of the tots was canned and pharaoh -- ferro will not be in. lisa: will he be the next coach? lisa: with the first word, i'm lisa mateo. silicon valley bank ranches will open under a new name. first citizens bank shares has agreed to by the failed vendor more than two weeks after its collapse.

they will purchase all of the deposits at $72 billion of loans. it will be at a discount of 16.5 billion. some 90 billion insecurities will remain in receivership. credit suisse faces a possible investigation and disciplinary action over how top managers ran the bank in the lead up to its collapse. the banking regulator told the swiss newspaper that officials are considering options. they say credit suisse had a cultural problem that led to a lack of accountability. the uk's independent forecaster said the economy is 4% smaller because of brexit. the chairman of the office for budget responsibility told the bbc that was similar to the impact caused by the coronavirus pandemic. u.k. is the only developed economy not to have recovered two precode levels of gdp growth. china's economic recovery was mixed in march. business confidence and the

housing market improved but according to the latest index of early indicators, falling car sales and weak global demand drags of the economy. salesforce reached an economy -- agreement with elliott who will not go ahead to nominate directors. elliott's multibillion stake in the banker became public in january and put forward a slate of directors. salesforce has been under pressure as revenue growth have slowed. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪ ♪

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this is something we are monitoring very closely. tom: the fed president for minneapolis driving the story. the speakers today from germany. bailey from the bank of england. lisa: jefferson fed governor. tom: 14 more tomorrow. lisa: a lot of speakers and very little clarity. i don't know what they could say that would give us a better sense of what they are doing. tom: american banks up today. futures up 23, even bitcoin up fractionally. twos and tens did invert -- dis -invert. lisa: it will take more than one day as people look at other jitters. there is definitely a feeling of calm. tom: we were on a three island

tour and ginger gave me something on the cruise. lisa: like the mac arena? -- macarena. tom: remove from our world but it is not. it is france and israel are tina fordham joins us now. i have been dying to talk to you about this. i understand in france and want to get to that in a minute. but the image from israel over the weekend was stunning. i interpolated the extrapolation. it is as if 22 million people were protesting in america. who are these people, tina fordham? tina: next, tom and i wish i could hear more about gilligan's

island and if the professor and marianne were there too and i like the beard. big protests over the weekend. back to period of risk and my outlook this year was called firewalking but work it's have been very much focused on the crises in the banking sector and what it means for fed policy. the reason to take a look at these protests from a financial market standpoint is whether or not there are transmission mechanisms and what is behind them. one thing they are not good at is understanding the root causes and into leakages -- enter leakages -- interlinkages. huge population of the country is protesting and going on national strike today in light

of what is called a judicial coup. the proposed reforms amount to the executive branch neutralizing the judiciary as if congress could overtake the supreme court. you have segments of the israeli population coming together. if it was one group, that it would be a flash in the pan. the staying power is that secular israelis as well as the defense reservists. as well as the minister himself, the tech sector, which is the driver of the israeli tiger economy are coming together to say no, this is antidemocratic. it is quite existential for a

country often referred to as the only true democracy in the middle east, and we haven't thought about israel for a long time. tom: in my demarcation of my life is the assassination of rabin in 1995, my demarcation of the old israel of childhood and the new israel. are we in another demarcation point where we were with that assassination 30 some years ago? tina: i think so, unless net and yahoo! and his supporters -- netanyahu and his supporters climbed down. i don't think israeli society will tolerate these so-called reforms. people have fought too hard in the state of israel and it means too much. lisa: we have seen not only protests in israel but france and more populist in nature but

it feels like there are fissures in the democracies of the world as people try to understand the correct path forward whether it is in israel or in france, where people are protesting the increase in the retirement age and wages. how much do you see this percolating into something larger that could affect what we understand in terms of alliances as well as just the wage pressures that are emerging? tina: a really important question. the french protests, american stereotype was the french don't want to work, raising the retirement age from 62 to 64 that is something emmanuel macron campaigned on and as we all know, we are living in shrinking economies where there aren't enough workers in the demographic pyramid but it isn't just the requirement to work

longer but if we want to try to connect it to the resurgence, it is the fact that he is resented for being perceived to ram this change through and to do it without wider support in the french parliament. what is at stake is if we link it back to the u.k. invention -- and the pension sector and taking away a fundamental rights or the public perception that is happening, particularly when it comes to pensions is an electrified third rail. i take issue with the previous speaker, although i know what he meant when he said that markets are reacting without fundamentals but pensions and constitutional rights are

fundamentals, political fundamentals paired our task is to try to understand when they bleed into markets. lisa: tina fordham, thank you for being with us. an important moment given the tensions we see, not just with respect to traditional democracies in the interconnect in this -- interconnectedness in the fissures in democracies but the existential overhang of what is going on in ukraine. tom: this is something we will focus on through the summer. we will attend the meetings of the world bank and the imf. i don't want to go full richard haass, ambassador hoss. but the linkages are there for example in france. the fifth republic in 1958, i was in paris in 1968 when de

gaulle started to fall apart and they picked up the pieces are people i tina fordham are talking about the revolution of a sixth republic or talking about, and all links into the tensions of the financial system , the chris whalen financial system moving from low rates out to this new regime we used to know years ago. lisa: we are shifting from a regime of low inflation to one of higher inflation. at what point does that pressure some of the traditional oversight, traditional democratic structures of nations that were governed and on autopilot for those years of a more stasis kind of economic backdrop? we are seeing this in the u.k., that used to be an area where

you did not see strikes you saw in france and now you are seeing it. how much is this a result of people feeling the erosion of their spending power in an era of high inflation and making demands that they haven't made with a certain visceral angst? the theme for the year and i stand with this is the great zombie roll out and i didn't see any of this coming, including the international relations events. even if we do sell the american banking crisis it is not going away. lisa: i think a lot of people would agree. before jonathan ferro left for the three island crews put together a great set of guests. mike wilson of morgan stanley soon. this is bloomberg. ♪

>> inflation is coming down, but we do not think it is going to come down as fast as markets are pricing in. >> i think it has another leg up. >> we are not anticipating that the fed is going to cut rates. >> they are still fighting inflation. >> powell is saying, we can't really give you forward guidance at the moment. >> this is "bloomberg surveillance." tom: good morning on a monday

after a historic week. jon ferro is not here today. he is on a serious assignment for three days. i think it is looking into my new beard and all that. people are saying, should i keep the beard? on radio, it is a thoughtful process. i heard all around the world anecdotes about what you two were doing, the special broadcast on sunday, the fed show, the exhausting week that it was. why should it continue this week? lisa: i think everyone is a little tired. you were missed. right now, what we're are looking at is exhaustion taking over a market with no new information. the fact there was no new information is information. the fact that there has not been another failure is a fantastic sign and people are rallying around that. tom: they are rallying in the

equity markets as well. the lift here is in the banking stocks, which i think says all. first republic bank has been a challenge, lifting nicely with other moves. is it all clear for secretary yellen? >> there was an article i read over the weekend that i loved that highlighted how they do not want to overpromise measures that will be deemed unnecessary but they want to create this feeling of support for banks. how do they toe that line? they do not know what they do not know. that was the confusion of last week. if we do not get anymore failures, are we in the all clear? do we not need to focus on janet yellen anymore? it gives people a feeling of

stability underpinned by this idea that we still see hot inflation data and economic data. tom: i thought jim beyonca's -- jim's, here, it is like exodus and the old testament when he writes. this was just simple. it is a 5% world. it is that simple. lisa: for what happened last week that still remained in the market, you take a look at what rates are expected to be in january 2024, less than 4%. that is more than a percentage point of rate cuts from may through january. tom: we have an important guest to start the 7:00 hour. we are still under 4%, but that

is constructive. a lot constructive tone out there with this inversion still underplay. i am going to go to spx. what does the spread market look like over the weekend to start? lisa: you have seen spread widening. otherwise, it is calm. that is what people are pointing to. i want to give you a sense of what we are watching today. we hear from the ecb executive board member. the bank of englund governor is speaking at the london school of economics. an auction of the notes that have treated at a time when you have seen a roller coaster, unheard of in modern history in terms of suddenly pricing out any further rate hikes and even rate cuts. at 5:00 p.m., we hear from fed

governor philip jefferson about the transmission and implementation of monetary policy. does monetary policy matter less when the making -- banking stresses do it for you? that is the question facing many people at this moment. tom: a cio at morgan stanley joins us now. many of you hang on every word. i see a massive polarity in the equity markets now. everybody else is dragging along, looking for the next narrative. am i right on that polarity? >> that is right. you guys were talking about the bond market and volatility. we have been focused on that. we think the bond market is jumping ahead of what the fed is saying. that is the first time we have seen that any while, meaning the bond market is somewhat dismissing the fed dot plot, which i find interesting.

the equity market may start to do that. it is already hammered out of the surface, meaning anything viewed as lower quality is being punished. then we are left with 20 stocks carrying the day. tom: 20 stocks carrying the day screams the rollout i have been talking about. with that said, is it a return to what you and i knew years ago or a new, higher interest rate regime for the stock market? >> i think it is a little bit of both. it is a much less predictable world. we are entering a period of higher economic volatility. the last 20 years has been a world of repression where these metrics were somewhat predictable.

that is for companies, the fed, investors. now we are entering a world that is not as predictable. that means higher risk premiums. in our view, people are operating as if we will go back to that predictable world and that is misplaced. lisa: people are reading your prognostications. given the events of the past few weeks, we think guidance is looking unrealistic and equity markets are a greater risk of pricing in much lower estimates ahead of large data changes. given the fact that equities refused to go down, how do you push back and say, you guys are going to wake up? >> we try to navigate that inside the equity markets.

as we pointed out today, all that was due to higher interest rates. none of it was due to higher risk premium, which is the part that is pricing in what growth is going to be. i would push back on a pushback, which is the market starting to revalue or devalue what i would say the companies that are most at risk of missing estimates. lower quality companies and smaller cap companies will have a hard time with what is going on in the regional banking system, so it is happening. it just takes longer and everybody focuses on the s&p 500 or the nasdaq 100 as batches of safety. that is true until it is not. lisa: last year, we were talking about big tech. this year, repricing has been in the opposite direction.

basically, pick your poison and it is up dramatically. how do you push against the recoveries and names that supposedly were going to come under pressure in a higher rate world? >> these companies took their punishment last year. because they were the tip of the spear, when rates went up they took it first. you can argue a lot of those groups are in a recession already. that is the area we are seeing layoffs and retrenchment on cost. i think now, as companies cut costs and have gotten front of it enough that they can now see earnings growth again, i think there is appetite for that view. our view is there will be more costs because the investment which is so egregious and over earning was even worse.

my suspicion is markets tend to figure this out ahead of the actual numbers and because the bond market repriced itself overnight we think that risk for the equity market is elevated now more than it has been. lisa: you have been labeled a bear. people think everything you say is bearish. even when potential you do get constructive. are there any areas you think have sufficiently repriced where you are starting to see opportunity? >> financials have started to reprice. all these companies will have problems, so i think it is happening. financials tend to lead the market, that is one area -- some of the consumer areas have been repricing for years. i think there are definitely areas -- markets go through these periods.

we came out with that view a few years ago and people have used it, but that is the way it works. we are looking for opportunities at the stock level, but at the index level, it does not look attractive. tom: the thing that is different is the pile of money in private equity, private markets. can they be a catalyst for a roll up of all these troubled companies? >> i do not think there are that many troubled companies. i think we have a situation where valuations are out of bounds. i think there is tons of cash out there, private or public money, meaning asset owners that can come in at the right price and will, so whatever we are going to get here in terms of resetting the valuation appropriately, i do not think we

are going to stay at low price levels for a long time. this is a cyclical bear market with some completion to it. your question is around is there enough cash out there to stabilize things, and i think the answer is yes. tom: thank you for the brief this morning. he is with morgan stanley. i thought you were vulnerable and dr. wilson provided wonderful monday therapy. lisa: thank you. i try to get it wherever i can. he is not looking for some sort of structural bear market. i think it is fascinating, what he was highlighting. tom: stay with us. this is bloomberg surveillance. ♪ lisa: keeping you up-to-date with news from around the world. with the first word, i'm lisa mateo. the failed silicon valley bank has a new owner.

first citizens bank shares has agreed to buy at a discount of 16.5 billion dollars. the fbi see will get stock depreciation rights in -- fdic will get stock depreciation rights. head of credit suisse -- the head of credit suisse's largest shareholder has resigned. he was chairman of saudi national bank. his remarks came in an interview march 15. >> i am wondering whether you would be open to assisting further if there was another call for additional liquidity from credit suisse. >> absolutely not for many reasons, outside the simplest reason, which is regulatory. if we go above 10%, all kinds of new rules kick in.

lisa: saudi national bank says he is leaving due to personal reasons. twitter is looking for whoever leaked part of its proprietary source code. that was posted on github, which complied's with twitter request to remove the data. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ (upbeat music) there's more to business than the business you're in. (robot whirring) want smarter factories? that's the internet of things business.

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the banks are in good shape. what is going on in europe is a consequence of what is happening in the united states. michael: -- tom: the president of the united states speaking on a banking crisis. we have had a four once since 2007. -- once crises since 2007. it is bank recovery monday. i guess that is what it is. chris whalen treating -- tweeting out about -- lisa: what really spooked the market was a sense of steps that seemed to be linked together even if they were not. that gave rise to the narrative of concern. tom: the narrative is to get oil above 70. it is.

s&p futures up 7/10 of a percent. i thought the discussion was stunning, chilling. lisa: there are a lot of people concerned about the weakening of judicial power in israel and the firing of the one judiciary who stood up to benjamin netanyahu. then i think that is underpinning what is driving so much attention to this. tom: we will get to washington. i was thunderstruck in talking to sheena fordham about the illusions of france and israel of the assassination. help us with jews in america and conservative, more orthodox jews

in america, which research says these people are very republican. help us with the lobby dynamics you will observe on this monday in washington. >> it puts a lot of people in difficult positions. what you see in israel is a backlash against what the prime minister wants to do. even the president has said, we should take a pause. there have been protests over the past weeks about this judicial overhaul, but it came to a point of just overflowing outrage when got while in london, he sat down for an interview with piers morgan that will be interesting given this moment, fired his defense chief, and now there is havoc in the country. you see the airport is broken up. obviously is really politics matter a lot with jewish

americans, which we have seen lean republican, especially during the trump administration but potentially this is not something that jews in america want to wake up to and see their television screens. tom: the entry that we saw, 600 thousand plus was one estimate of the protest just yesterday. remember the protest in brazil? it was that magnitude. that is enough on israel and we did not even get to france, but there are still banking issues going on. tom: -- lisa: that is where the focus is. we know there will be hearings coming up on wednesday. what are we going to believe from them? i am wondering whether it gives any indication of the willingness to create a different regulatory structure

or other things that people were talking about last week. >> you got the tone of what the hearing is going to be, which is that lawmakers will be upset that something broke in the financial system and they want to point the finger at who was responsible, so wednesday when you have regulators like the fbi see chairman and vice chair for supervision at the fed show up to the house financial services, there will be pointed questions about what went wrong, who should have been supervising this, potentially a lack of oversight at the fed in washington or the supervision at the san francisco fed, and you're going to try to potentially garner some more questions and concerns about the state of the economy. is there underlying risk to other banks? then potentially a discussion about the fbi see cap, which is what lawmakers can actually

change. i think this got the attention of last week with secretary yellen talking about a blanket change. that would have to be in the realm of congress, not something the treasury secretary could come out and do. >> these hearings are probably a nonissue because there is little willingness to be labeled as some sort of bailout friend karyn that is going to loom over everything, so why is washington, d.c. having hearing after hearing on things they are not going to take action on? >> this is another good point. there is also the debt ceiling that is still circulating when you talk about the budget. we know behind the scenes they are working on a deal sheet, what they can go to the white house with an say these are our demands in terms of fiscal spending cuts, but there is going to be hearings because they do need to find out and

look into -- senators i speak to say they want a full autopsy and potentially you have heard some of them talk about lifting the fbi see cap. that will not happen right away. tom: totally unfair question, but i'm going to go with it. with bank stocks doing better, there is a set of good news after the trauma of last week. is there anybody on what -- in washington moving on from this crisis? >> i do not think anyone is moving on. there will be hearings this week on friday morning. we found out there is an unscheduled meeting of regulators. officials are looking at what is going on with first republic. no one is moving on yet, even though the president has said he thought they did a good job.

tom: thank you so much. futures up, nasdaq up .5%. what an odd monday and that it is all clear monday but it is not. lisa: there is still angst out there and a feeling of the next shoe to drop. mike wilson talking about the potential for earnings pressure in a substantial way. this is the lack of longer-term pain people are trying to wrap their heads around, this idea of what happens if the lag effects are more material than people previously thought and you start to feel them in a more significant way. tom: the surprises out there looking at the story, which shows me higher yields, which

really have not budged yet. to see a 5% statistic go to 4.90, i do not believe i have observed that. it went up friday. that is a fact. lisa: we talked about how they went north of 5%. those yields have come down and perhaps because of the floods of cash into money markets as people try to gain that safety, now they are at 4.68%. people used to get nothing out of their cash, so you can think that is still a lure. the problem has not gone away for banks. lisa: -- tom: friday, we saw deposit flows, but they were from a long time ago, like 10 days ago. i am fascinated to see what the next flow data shows us.

. i am going to suggest mann pop are moving their money -- ma and pop are moving their money. i really cannot comment on the niceties of the triple leverage, all-cash fund. it has never been like it has been. we might get our first payoff because of flows in five years. we are looking at that etf again, but this is the 5% world. what has changed is green on the screen. the equity shock of this march. this is bloomberg surveillance. ♪

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tom: good morning. bloomberg surveillance. jon ferro on assignment here over the next number of days. we will see when he returns. lots going on this morning. if you are just waking up, it is an american recovery and the presence of this banking crisis. we just heard the president commenting on the news. futures up a solid 230. i do not think that is a small issue, mike wilson talking about the resiliency, migrating toward 4%. we are not there yet.

oil above $70. it is the summation of good news for banking, and you see premarket moving with the movers. lisa: we are looking at some of the midsized banks. we are seeing gains today with first republic shares up almost 30%. they are down almost 90% since march 8. when we start talking $15.81 a share, based on where we have come from, it is a different kind of scenario. they were as high as 147 dollars a share as recently as february. you can take a look at pack west -- pacwest. deutsche bank is more interesting to me because it is speaking to this question around systemic risk. it came under a lot of pressure,

a lot people came out and fought that. stop throwing the baby out with the bathwater. that is we heard. it is looking a little more interesting. how much are people able to quantify how much you can earn in a 5% world as a bank if you are not worried about funding pressures that seem to have stabilized? tom: i did a survey of nine newspapers. deutsche bank was not a story this weekend. based on what i read thursday and friday, i am sitting in the cabana and it is a bunch of bankers having rum punch and everybody is wired in on the phone to bloomberg, going, is this credit suisse? the answer is no. then the story evaporated. tom: people can do an autopsy of strange market moves and what people misunderstood or what games people were playing, but you are seeing elevated credit

insurance protection. have the concerns abated or just subsided for the moment as people reassess what is next? tom: do we look for announcement this morning or through the day? lisa: not right now because right now you are not necessarily seeing that urgency. anne-marie talked about we heard friday. janet yellen was there. they were trying to assess what would happen. they are on it. they do not want another we need to raise 50 basis points. tom: there we are, futures up .8% at s&p. we need a brief and get it now for someone who is holistic here , her iconic work on foreign-exchange over the years. laura rum joins us now.

i have been dying to ask you. you go right to the confidence of americans. is it a confidence of one america, two americas, or even three americas? how do you study our confidence in crisis? >> right now, none of the confidence measures are back to where they were pre-covid. for a strong is the economy is, confidence has been tempered through the last year, and now, depending on where you look, it does look more fragile, but i think we are going to see the direction things are moving in over the next month. it is the one piece of data this week that i think is important and could be telling, the consumer confidence data. when we look for the talk of recession and the air again, the

volume has been turned back up to 11 on that, but if you look at the underlying macro data it is still strong and confidence could be the weak link. tom: excuse me. i am gasping over the plague in the caribbean. i want to talk about the disconnect between interview over interview stating the slow down of america and the statistics i see. what is your gdp call for the ending first quarter? lara: it is over 3%. the labor market is really strong. i want to roll my eyes when i hear people talking about cracks in the economy because you have to take out a microscope to find any sign of significant slowing. so can we maintain this? probably not. do we slow to something -- i have been expecting some kind of slow down.

i do not think that is a bold call. the fed is aggressively raising rates. they usually push the economy into slowness. my outlook has always been for the end of 2023. the question now is, have the banking-related uncertainties -- is that going to pull some kind of mild recession forward? this is the problem for the fed. they are not out of the woods. they are still stuck with this difficult policy. if you look at the data, continued rate hikes are a no-brainer. i feel like they tried to minimize the banking, systemic issue and try to look at the data and they are trying to pivot but it is hard. tom: the consumer confidence number is going to crater.

that speaks of a 3% gdp number. lisa: and better-than-expected services activity. how do you push back against a market seeing rate cuts of almost hundred basis points next january? how much are they wrong in your view? before we see rate cuts? lara: i push back hard against the rate could expectation. we will see that temper over the coming several months. the cutting of 100 basis points to me is more of an indication of a chance that we are going to hit some systemic banking, that is the probability. it is not just 100 basis points of rate cuts, but if the fed really sees a recession coming they will do something. i think the timing of all of that plays out later.

when you think about the fed, they still have a big inflation problem. for them, they are try to separate the banking from the economy. they did not address quantitative tightening. i think lost in all of this is the fact that cash reserves is the share of bank assets for big banks it is high, for -- but for small banks it is low. we are down to 6%. we will see what they do as they look back and reassess these banking measures because you cannot kind of give the banking system money on the one hand and take it away on the other hand. lisa: a lot of people would glean a little honesty from them if they see the balance sheet going up. there is a question about messaging. do you think if we do not see anymore bank failures that the

credit tightening from banks will not be sufficient to do the work for the fed to the degree that markets think? how do you extrapolate that in an absence of information that people are worried about? >> i think we will get information. angst will talk more about lending standards. standards will tighten some want, but we have seen one of the reasons the fed has had to raise rates is because our economy is less sensitive than it has been. when everybody had interest only mortgages, it did not take as many rate hikes to slow us down. tom: you have been great pushing back against the gloom. i guess in crisis it is normal to have gloom. is the call here to say that

america will prosper? >> for the first -- for the next two, three quarters, absolutely. i think the economy remains resilient and the fed policy challenge is going to go away. volatility will stay with us and yields now have corrected down so far. i do not know we can get back to where we were, but i think we are headed back up. tom: i wanted to cue the american patriotic music there. who knew a bank crisis was coming? i did not know it. it is not the gloom but the measured caution on our economic prosperity. i believe i heard it is a 3% gdp . nobody saw that.

lisa: you are basically america is strong. a lot of people point to this resilience and this is the tension. on one hand, you have a fed that does not want things to be this strong and terms of growth because that is going to cause inflation to keep going so they are going to keep raising rates if we do not get a banking crisis. if you get a banking crisis, things go too quickly and it is out of control. tom: i am going to ask this. what is wrong with just pausing and letting secretary helen and others handle illegitimate deposit fear? what is wrong with pausing and waiting for data to come in? lisa: you're not alone. a lot of people are saying the same thing, adamant that the fed needed to pause. people agree, saying this is the time to assess because there is

an effect coming into the market. the concern is inflation still is running hot. is there going to be a mistake on that side? tom: the parlor game here, i look at pausing and you can say we are going to pause and we are ready to jump back on the inflation fear if we see it. lisa: if they had paused and then said there is no banking crisis, everything is sound, why did you pause? tom: west texas intermediate in recovery. stay with us. this is bloomberg. ♪ lisa: keeping you up-to-date from news -- with news from around the world i'm lisa mateo. , silicon valley bank branches will open under a new name today. the fdic says first citizens and c-shares has agreed to buy

the failed vendor more than two weeks after its collapse. they will purchase all of the deposits and about $72 billion of loans. it will be at a discount of 16.5 billion. some 90 billion in securities will remain in receivership. credit suisse faces a possible investigation and disciplinary action over how top managers ran the bank in the lead up to its collapse. switzerland's banking regulator told the swiss newspaper that officials are considering options. she says credit suisse had a cultural problem that led to a lack of accountability. in israel, prime minister benjamin netanyahu is considering a delay in his judicial overhaul plan after a night of demonstrations. thousands protested after he fired his defense minister for criticizing his plan to reduce the power of the supreme court. in germany, it is a day of travel chaos. air and rail services came to a halt due to a one-day strike. workers are demanding bigger pay hikes because of inflation. in france, unions are planning a 10th day of strikes tomorrow

over the president's decision to raise the retirement age. millions of people have joined the protests since january. apple ceo tim cook discussed supply chain issues with china's commerce minister today, underscoring the importance of the relationship between the company and its partner. apple's most important products are predominately assembled in china. i am lisa mateo. this is bloomberg. ♪ than the business you're in. (robot whirring) want smarter factories? that's the internet of things business. accelerating r and d? data science business. hey. have a look. managing global supply chains? shrink our carbon footprint business. thank you. (in foreign language) that's where deloitte comes in. with a potent blend of acumen and technology to help advance and connect all that it takes to excel in business ...

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chase for business. make more of what's yours. >> this time is different. i do not think we have the systemic issues and the banking system we did then. obviously the fed now, having raised rates so aggressively, does have some ammunition to cut

rates and improve the situation, but it is what you do not know that you are worried about. tom: the cio there. guys like him live for the sweat of this, the fear of it that is out there as being opportunistic. thank you for joining us to stagger through on a key assignment. all of a sudden -- i think he is being interviewed for us. lisa: i love how he is being interviewed for some central banking position as well as coaching. tom: i think it is going to be a change. to that point, i think this is an important -- guys like mary

or go belly -- mario live for fear. >> there are enough people who live for the fear that the fear has not happened. how do you figure out with the opportunity is if the opportunity is not as good as it would be? tom: we are going to look at part of the market nobody is talking about because fear sells and cheerleading does not. that is the 12 stocks going up, led by microsoft. alex webb joins us here. i do not want to talk about financial ratios. i want to talk about something slipped under the zeitgeist over the weekend. bloomberg owns the high ground on apple rumors. he put out a blistering note over the weekend saying,

everybody has this wrong, apple is aware of our most requested features. are we underestimating apple's dominance and ability to innovate? alex: i think it has been interesting if you compare apple to google in recent months. people are starting to get very skittish about google's mid to long-term prospects, a combination of chet gpt boosting microsoft got tiktok also a place where young people go to find restaurant recommendations. that is a space google has owned for a long time. we have realized how resilient apple is. the way they are rooted in day-to-day use, if they have iphones they are unlikely to trade those iphones in. the big threat is what is the next generation of hardware that

is perhaps going to succeed the smartphone? that is where apple is throwing money when it comes to smart glasses. tom: they have the huge amount of money. it has been on a run, like over at microsoft. away from your mission, i look at united health care. is this a time where apple and others with persistent cash flow reload? apple has 5.1% debt. every classroom in the world would say mr. cook is handling that wrong. alex: apple has consistently said they want to be cash neutral. the challenge they have is, no matter how fast they sell debt, they also print money because they have $100 billion of free cash flow every year, so it is a challenge for apple to get to that point.

they are gradually getting there, but in that sense, they are a victim of their own success. they do significant buybacks. they have started returning more money to shareholders. they do not have the appetite for big deals that microsoft does with its tens of billions of dollars it is spending. apple sees not only risk but regulatory risk. they do not want to draw attention to parts where they might be dominant. that money does come back to shareholders in various forms. it is a challenge to do it at the pace at which they are making it. lisa: you say regulatory challenges, but there are challenges in terms of business over and china. i'm curious how much that is preeminent in the concern bucket for tim cook at a time that we are talking about tiktok earrings and legislation. -- keyrings and h letters -- hearings and legislation.

alex: there was a lot of talk about the symbiotic relationship between apple and china. in many ways, tim cook is an important resource for china when it comes to ensuring that trade remains open because we started to see they are trying to bring more manufacturing into places like india, more easily said than done. it is not just a question of having a factory. you have to have the entire supply chain. you have all the components that go into it, from circuit boards and beyond, that are made also in china. you might have high-value semi conductors out of taiwan, but a lot of the rest of the supply chain is local to manufacturing. lisa: how much our big tech giants pitted against each other in this regime?

i cannot get over the rally we have seen. they are up more than 70% this year and i wonder how they are going to benefit if tiktok gets banned because they can perhaps assume some of the traffic. then you have other companies considered big tech that rely on china for doing business. how much are they pitting their lobbyists against each other now? alex: when you think about the software platform type companies like facebook and google and there is much talk about global tech and western ecosystems, google and facebook do not have access to china. there is cloud business that google has, but the main search business is not in that market. they do not particularly count on it for growth. apple is kind of a platform. it needs that market to sell

products, so it is in a different situation. one hesitation about facebook is, when you think about the relationship with tiktok, tiktok can be useful to facebook because it can saying, we do not have a monopoly. we have competition. do not break us up. would you rather have us or the chinese? that is literally something the president of facebook will say, so there is a little nuance. tom: the pathbreaking work of mark gurman got look for it over the weekend. i want to frame this. isabel schnabel out of berkeley was the star. she came in not as a stranger -- we all know who she is, but she

stopped traffic out of the swamp, listening to her talk about the moment. here she is again moving markets. lisa: bloomberg reporting people who spoke with the sources said that she pushed for the ecb statement to say that more hiking was possible. she basically was more hawkish on concerns of inflation, arguing against saying that we are done and really trying to remove any explicit wording but also to indicate it was important to be more aggressively tackling inflation. we have continued to hear that same kind of tone from ecb members even as u.s. officials have been more reserved with how much more is required. tom: dxy includes the euro. the two day dxy chart gets you

down to a 102 level. we have not broken down yet. lisa: this is going to be interesting. why didn't the girl rally? -- euro rally? basically, market sand, you are not. tom: the headline news, american banks doing better this morning. stay with us. this is bloomberg. ♪ >> welcome back to a special miami update. the indian wells champion takes her first step when she faces mertens in florida following her dramatic victory. you can watch all the action exclusively live on tennis channel.

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>> central bank's playbook when there is stress, throw >> liquidity added. >>this credit >> -- stress, throw liquidity at it. >> they do not believe there is

a credit crisis. >> unfortunately, real things are breaking now. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. lisa: we are back with tom keene. jonathan ferro is off. why are we seeing risk off? crisis is not over but paused. tom: during the crisis we observed, -- first republic advances this morning. lisa: we did not see another crisis. we have not seen a continuation in terms of small and medium sized bank angst.

that is a sign of natural credit tightening and easier potential monetary policy. tom: there are nuances here. it is a busy data week as well. i go mckee will look into the pce numbers later -- michael mckee will look into the pce numbers later. 3% present gdp buoyant is how he but that -- put that. jim bianco said it is a 5% world. lisa: the nodes of uncertainty right now. do have hawkish central bankers are due have a crisis that causes a pause -- or do you have a crisis that causes a pause? "the downside risks have gotten bigger.

central banks were always going to force a landing one way or another." tom: i'm so fed up with this. this started with v-shaped. i remember sitting in the studio with the late great ken prewitt, looking at v-shaped and nothing shot -- nothing stopped from there. what will the next phrase be? what will the media say is the narrative right now? i don't think there is a narrative right now other than survival based on flows of the closets. -- based on flow of deposits. lisa: it was interesting how we were speaking with mike wilson of morgan stanley about seeing opportunity in the financial stocks. the nasdaq is still doing better than good at a time when people see that as a time when people see that.

-- at a time when people see that as a stalwart of strength. tom: that is a key thing, this is a resilient market led by a few select things. lisa: today is a divergence from tech outperformance. tom: listen to you! lisa: this question around financials leading, you are seeing yields a bit higher. you see strength, you see stability, people start to price in more rate hikes. tom: someone said to me, "how do you get -- did you get this cough? you go out in the sun, and the trick is if you go back under the mango tree, you get that terse cough. lisa: i'm crying for you. tom: have you ever done the big cruiseship thing?

people ask me "is 'bramo as gloomy as she seems?" we should do a surveillance cruise! could you see ferro on a cruise? if the paycheck is enough, ferro will be " -- lisa: survivor crews! -- survivor cruise! at least for -- lisa hornby joining us now. i went to get your sense of what has changed. do we have enough stability to go risk on today? >> i think possibly temporarily. deutsche bank amongst others are

still standing this monday morning. we are not quite out of the woods yet. part of it is there is a bit of a sentiment to swing. everyone has gone bearish. everything seems to be a little calm her right now so there is probably a technical point again the positive direction -- pointing in the positive direction. that is going to cause things to break. we have had an element of that. lisa a.: people are having this polar experience, where it is either the banks are collapsing, we are going back to zero. everyone wil hide under their mattress. or the fed eases and everything will be amazing! the fed will tighten credit

conditions in a way that will have to hurt. at what -- have we priced that into the credit spreads? lisa h.: i think the point you make highlights how much uncertainty there is in the market and how much potential volatility there is to come. we can look at what is discounted at the end of the year. markets are pricing in 100 basis points of rate cuts by the end of the year. there is a huge gap, a huge spread in the views out there. ultimately you need to be compensating more. you need more risk premium embedded in markets, not less. tom: there is a point where you passed and i didn't a liability of how bonds are accounted for. the magnitude of the rate

movement we have had has held to maturity accounting. do you have any transparency or vision of the true state of held to maturity debt in this crisis, or is it unknown on a monday? lisa h.: you are asking me to draw back on a few years here! the big banks are certainly regulated to a different degree than some of the smaller regionals who have become known in the headlines recently. certainly the size of those books were larger than even some of the larger u.s. regionals than even some of the larger u.s. regional. books need to be marked -- there is a threshold of when those books need to be marked. the bottom line for us is you need to know what, you own and you need to know what is on the books and this is where credit analysts come into the fore.

this is the environment where they get exposed. tom: we saw a health issuance last week. you think we will see a a lot of issuance out there? lisa h.: the last couple of weeks there have -- they have been very, very light. we think there is a a lot of pent up issuance to come. it is interesting some of the health care issues -- there is still a bid for defensive, health care, pharma things. tom: -- lisa a.: which dislocation over the past few weeks are you taking advantage of, lisa? our there any -- are there any areas where there is enough baked in that you think this is an attractive moment?

lisa h.: there has been opportunity in our view in agency mortgages. there are some opportunity and the banking sector. we have seen some opportunity there over the last few weeks, particularly in the more fraught moments. as i alluded to with health care, the whole market has cheapened. there are certainly diamonds in the rough there. in our view you still want to err on the more defensive side. there is more volatility to come. we may be in for a bit of a tactical balance. the market feels firmer today and people have gotten offsides, but there is opportunity emerging. tom: thank you so much. you see it in the 2 year yields,

3.94%, not yet up to 4% yet. i think this is a huge conundrum and i am fascinated by the challenge that chief financial officers have right now. how do you brief, or more importantly how do you and who do you listen to about what to do with the portfolio or what to do as a next move in issuance? i don't have any wisdom on that at all. lisa a.: this is the conundrum for them. they are looking out into a black box of whether rates are going up or down. they are not sure what the borrowing environment is going to be like. are you going to lock in rates now higher than they were a year ago but perhaps higher than -- but perhaps lower than they will be? tom: once they get going, they are like lemmings.

one or two during norma's -- it is one of the great surprises of april. lisa a.: it is the who though. it is the top rated companies. i think of that has gotten some people concerned. it has to reopen for there to be the liquidity and the ability to fund raise and have the ipo's people are looking forward to keep things moving along. tom: torsten slok of apollo group, this is the 8:30 hour. this is bloomberg surveillance. ♪ >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo. the failed silicon valley bank has a new owner. first to citizens will by $2 billion of silicon valley bank's assets.

the fdic will get stock appreciation rights in exchange. the head of credit suisse's largest shareholder has resigned after his comments helped spark a slump in the bank's shares. he was the chairman of the saudi national bank. his remarks came -- >> i'm wondering whether you would be open to assisting further if there was another call for additional liquidity from credit suisse. >> the answer is absolutely not for many reasons. we now own 9.8% of the bank. all kinds of new rules kickin. >> he is leaving due to personal reasons. north korea has testfired two

more ballistic missiles adding to a recent barrage of missiles. the launches came as u.s. and south korea conducted their largest amphibious exercise in about five years. bank of america has agreed to a 10 year deal to sponsor the boston marathon, one of the nations oldest running. next year it will -- the terms of the deal were not disclosed. they will take over from the boston-based john hancock, which has sponsored the wrist for almost four decades. i'm lisa mateo. this is bloomberg. ♪

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>> what is unclear is and that credit crunch -- that is what we are monitoring very closely. tom: chris curry on face the

nation. you can hear face the nation. you want to know when i have been wrong, lisa? lisa a.: enlighten me. tom: let's put the talk shows on bloomberg radio, see if you can hear me yelling three floors away. that is the dumbest idea i have ever heard. day one it was successful! it was stunning how people would listen to neel kashkari two on sunday afternoon. lisa a.: it is important to know what market moving people have to say. sunday talk shows give you a sense going forward. tom: that is true. we did that with our ncaa bracket as well. let's digress here from a second. i know there has never been a year like this.

does the gambling industry -- is this a profit opportunity for them that march madness is so mad or is it a losing opportunity? >> i thought we were going to talk about emerging markets! tom: we are getting there. >> it has been fantastic for the sport. all of the number ones are out. it could be south beach versus boca raton in the championship! the championship from houston to south florida, basically to accommodate the mass demand. tom: you and michael bar with bloomberg business of sports, the dry norma's -- the ginormousness of this, does it get better when everyone's bracket is as bad as mine? >> 2006 was the quintessential

upset year. here we are seeing much the same thing. the huskies look pretty dominant out there. tom: i wish he would get as excited about argentina as you do about george mason. >> everything is hunky-dory. the dollar is down in 11 of the last 19 sessions. you do not usually see that in a crisis situation. for me it is all about this dollar weakness. that is telling me 2 things. you're seeing three-month 10 year real yield curve in the u.s. flattening significantly, which is a short-term indicator of what the short-term situation is for the dollar. maybe this is real lack of confidence -- i know! sprinkle it altogether. the dollar has been down pretty significantly. lisa a.: people have been talking about the death of the

dollar for a long time. damien: myself included. lisa a.: the chinese yuan as a possible reserve currency. a lot of people are pushing back. you saw last week even when the ecb came out and raised rates, they have come out with more hawkish discussions and rhetoric. you saw the dollar gain against the euro. we are not trading on rate differentials to the same degree. what are people looking for? is it a wash of noise and macro bets? damian: carrie is the reason you are seeing chile and singapore versus israel. you have the pound end the euro leading in the gfx. high yielders --

lisa a.: if it is a rate differential story, at what point do higher rates in the face of higher inflation mean growth? damian: i would have to say i have no idea. lisa a.: thank you! damian: truthfully you have to take note of why this is a little different. dollar weakness. tom: i thought of you. mr. putin is talking about china and the yuan will be a dominant global currency. you and i have been taught -- have been reading about this what if for 30 or 50 years. do you buy the idea that it will be a global currency? damian: at some point further down the road. certainly not as a mechanism of

payment, not certainly where the u.s. dollar or the euro is. i don't think that will change in the foreseeable future. what am i looking at? i will tell you -- i am looking at exports. lisa a.: i will ask myself a question and then i will answer it! [laughter] damian: that will show up squarely in japan, south korea and taiwan. you're noticing a little bit of a rebound. tom: there is a guy with an australian accent back here going " don't you dare ask him anymore questions," instead i will ask you about the australian dollar. there was a huge run on aussie. i that ands easy trade over -- is that an easy trade over a pacific rim commodity? damian: really your housing

market domestically in places like australia, new zealand, the central banks cannot hike rates as much. a lot of people have been selling the currency in those countries that have housing issues because the central banks cannot hike rates to fight inflation. that is why you saw aussie down. that is why you may see sweden down, even canada. lisa a.: i want to just wrap this altogether because there is a lot of here. march madness in markets as well of a different type. the weaker dollar story has been a preeminent christian -- question mark emerging from a soup of uncertainty. i'm curious whether you think based on some of the technicals we have seen whether it is sticky, whether you can see this

persisting in a more meaningful way, or whether you think this is a head fake as people grasp at straws to figure out what they can sell, when they can liquidate and some of these other more technical factors? damian: we have hit it on the head. the reason the dollar is weakening is their positioning in foreign markets. that is what is different this time. when you saw the carry trade unwind, you are not seeing that to the extent this time around. tom: march madness in the markets. i love that. lisa a.: i'm stealing it from someone. tom: final four miami, i get it. damian: i like fau miami. i liken all beach -- lisa a.: where is your progeny going to school? damian: university of miami!

lisa a.: just making sure! [laughter] damian: yukon and university of miami, both are playing, both are electric kids, dynamic! there is no fee! tom: orange juice -- damian: with the rum. tom: thank you, with bloomberg intelligence. i am going to quote what i was watching over the last week, this argentinian peso. this was the quoted number, 2.0 6. the depreciation of the -- the devaluation of the argentinian peso. it is idiosyncratic and removed, but the turkish lira 19.09. you wonder how that factors into

their extraordinary foreign-policy challenges. that's a big number. lisa a.: you really feel for that entire recovery process. i think it accounts for that during a time when there are seeing that depreciation. tom: there was no question over the weekend. the most interest was from dr. posen. he will join us on america's new domestic foreign-policy. we may lose jobs. stay with us. this is bloomberg surveillance. ♪

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tom: bloomberg surveillance, good morning everyone. jonathan ferro, lisa abramowicz, and tom keene. jonathan ferro is off for a much deserved vacation. 32,640 on the dow. i turned away to have some apple tang. we have come halfway to 4% in the last 20 minutes! lisa a.: john was saying it trades like a penny stock. the volatility we have seen on the two-year is historic.

this is basically a vacuum of uncertainty people are trying to trade around. you can see that reflected in the action. tom: lifting up near 2%, $70 and $.58. lisa a.: it is driven by the financial stocks. you have heard that from not only the stock picture but also from the bond picture there with lisa hornby, saying they were picking up those financial bonds. on both sides people are saying this was perhaps overplayed. lisa a.: the next 30 -- tom: the next 30 minutes are extraordinary. thank you to our team for the weekend work. right now joining us, torsten slok, chief economist of apollo global management. i want to emphasize that torsten with his work at deutsche bank gives a global view to the u.s. trauma right now.

you are known for one paragraph -- what is the one paragraph, the one chart that matters for tuesday morning? torsten: what matters the most at the moment, is as lisa was saying is the uncertainty over what the behavioral rationale should be as a result of what we are seeing at the moment? everything we are seeing is telling you maybe this is a modest tightening in conditions. what we do not know is the second order effect, namely what will the behavioral change be in terms of lending standards. will it be harder to buy commercial real estate, to buy anything? as a result of that it is still a bit unknown how deep this is going to be. tom: i get the idea that there are unknowns here. we may end up -- or maybe not

worried about concentration of banking but remove the people who could not make it from 0% divide -- 0% to 5%. is that the apollo view? torsten: the uncertainty is what the response will be. if you look at the quantity of responses in terms of pricing, i can see that on my bloomberg screen. if you start to do small regressions on think about what does the tightening of lending standards we saw in 2020, if that corresponds to what we see today then we may have more coming,. tom: he is the only guy i know who actually understands the screen. that is what he is talking about. it is all greek to me, but

there it is. lisa a.: central bankers do not know how much additional tightening is being implied into the market through a tightening in lending standards. if they are in the dark as well, if they do not have a clear sense of this and the data we keep getting continues to be strong, what is to stop them from continuing to hike in spite of all the naysayers in the market? torsten: the whole situation is a function of data dependency. if there is a lot of uncertainty about what is coming in the future, you do not know how to quantify that. we all have to guess what are the implications of this? the risks or more to the downside, but what the fed and central-bank around the world are waiting for is will this slow down the data? are jobless claims going to go up every friday for the coming weeks? we have already seen durable

goods begin to slow down but the bottom line is we already had a slow down coming because of the lag effects of rate hikes. add onto that a banking crisis. lisa a.: is it fair to call what we have experienced a banking crisis? tom: a really good question. lisa a.: we seem to see stability. there are certain specific banks that had specific risks that blew up and now we see an ongoing sense of resilience. is it fair to call it a banking crisis? torsten: a bank run is the number one characteristic of a banking crisis. this banking crisis is not like a normal banking crisis. a normal banking crisis is because of a credit loss. we are seeing losses on the most liquid side namely on treasuries. we have never before had a

banking crisis in a strong economy. lisa a.: what is the distinction between a liquidity crisis where it is deposits being withdrawn and a credit crisis? torsten: lisa m.: that is -- torsten: that is why what matters now is how the banks respond to the liquidity crisis. will they lend more? will they look at assets in a different way? will that make them hold back? if they begin to hold back, though risk is this could magnify the slowdown. we were debating if this would be a hard landing without a banking situation. tom: it is inappropriate for me to ask about -- it is appropriate for me to ask you about deutsche bank. away from deutsche bank, explain for our american audience why european financial banking

dynamics are so different and original from. the american model torsten: there are a lot of -- and original from the american model. torsten: there are a lot of studies that suggest loans tend to be lower in europe. we saw from the fed last friday in the u.s. where money was moved from small banks. that has basically more pronounced effects then we would see in europe. tom: the financial times did a full treatment of swiss culture in their banking. 70% of the swiss people are dead set against the meeting of these 2 banks. do the people of europe have a voice in this or is it the elites who get to fix the bank? torsten: the european banking sector is much more dominant.

we have a bank driven financial system. tom: stunning. torsten: w were joinede w-- the conclusion is that the u.s. has a market-based financial system. europe has a bank based financial system. banks play a more important role. in the u.s. the vast majority of credit comes from outside the banks. that means that the markets play much more significant role in the u.s. financial system. the u.s. financial system is more diversified. you can go to more sources in the u.s. then you can europe. lisa a.: there is less deposit data in europe than there is in the u.s., but there is a greater dependency on banks. if there is no issue in the banking system, if credit suisse was a troubled bank that had

been troubled for a long time and it came to a head on a number of different issues, than is lending going to remain stronger and foster a stronger economy in europe down the u.s.? torsten: that is correct but the issue here is what is the behavioral change going to beat not only in u.s. regional banks but in banks globally. if banks globally begin to pull back, in a more bank based economy you would expect a more negative effect. that is why the diversification of the u.s. system -- if you were a company, we would go to the bank. if the bank said no we could go to private equity. there are so many different areas to raise funds. that is the beauty of u.s. capitol market -- to raise funds. that is the beauty of u.s. capitol markets. tom: we have to make a decision here.

torsten, should i lose the beard or not? it looks suave on you. on me it looks up and down. torsten: you guys always look good here. lisa a.: all right. tom: 1280 something people say keep the beard and there is one person who says lose the beard. lisa a.: and that person is the most important person to you. tom: she is still bitter that perdue was a loser in the first round, but she grew up on the edge of the amish district in western indiana. these are hugely important part of the indiana economy. i got an email from her saying "you got to lose the beard before you come in, or at least use honest amish>" rachel is talking to me about honest amish beard wax being the

way to go, and it is what got me through the day here. lisa a.: maybe you can pair the beard wax with your bowtie wax and your lapel wax -- [laughter] tom: part of it is to bring this back to what we do here, my travels shows a boom economy. there is no recession out there. lisa a.: which is what torsten was really getting at. everyone is looking around themselves and seeing everything is strong. if you're backwards looking, you will keep hiking rates. there is a dissonance between what we are looking at now and what may come. torsten slok, that was fantastic. coming up on the open, i will leave. coming up on the open, hoxha and jack manley will be talking

about the column and how much you can bet on the calm as we look ahead. tom: small caps of 1.3%. i'm sorry there is an open this market this morning -- an umph in this market this morning. lisa a.: it is the good news of no news. nothing blew up! tom: dollar weakness there. bloomberg reporting that dr. schnabel of germany saying higher rates is something that makes sense. adam posen next. ♪ lisa m.: keeping you up-to-date with news from around the world, with the first word. the fdic's says first citizens bancshares has agreed to buy silicon valley bank more than two weeks after its collapse.

the firm will purchase all of their deposits at about $72 billion --- and about 70 $2 billion of svb's loans. credit suisse faces disciplinary action. switzerland's banking regulator told a newspaper that they are considering options. she says credit suisse had a cultural problem that led to a lack of accountability. prime minister benjamin netanyahu is considering a delay in his plan after a night of demonstrations. netanyahu fired his defense minister for criticizing his plan to reduce the power of the supreme court. in germany it is a day of travel chaos. workers are demanding bigger pay hikes because of inflation. in france unions are planning a

10th day of strikes over emmanuel macron's choice to raise the retirement age. tim cook discussed supply issues with china's commerce minister today. he underscored the importance of the relationship between the leading u.s. tech companies and their manufacturing partner. global news, powered by more than 2700 analysts in 120 countries. i'm lisa mateo into this is bloomberg. ♪

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tom: the former secretary of the treasury there lawrence summers over the weekend with david westin. pricing is better in europe. pricing is better in america as well. the level is extraordinary -- 4028 on xps futures up seven points right now. the vix comes in constructively 21.35. it is important to bloomberg surveillance, we try to capture the zeitgeist among the adults in the room. this weekend jason furman who spoke at harvard said "shut up and read it." shut up and read it is the

phenomenal and hard-hitting essay of dr. posen. he his definitive -- he is definitive. adam posen, embedded in your article is that a trump-biden trade policy gives us the risk of losing american jobs. i thought we were gaining jobs from sea to shining sea? >> i'm afraid not, tom. thank you for the intro and for having me today. the issue is first we have a finite number of skilled workers, people from these companies, qualcomm, tokyo electronic. they do not have the american workers here who can do the job.

if they do they have to hire them from somewhere else. it is not like skilled engineers are unemployed in the u.s.. if you force things to be built here at higher expense then you get less competitiveness for the rest of the country. they will be paying more for semiconductors. that is fine if you think it serves some goal but it will hurt. third, you will never export any of this. you are bringing stuff home in order to make it noncompetitive. we did this with turning nafta into the and -- this is not a jobs creation program. tom: someone who is definitive on this was william klein. all of our debate, including gop end democrats is simplistic,

bilateral tension and william klein had the courage to say " you have got to think multilateral and bilateral of singapore and china, singapore and mexico, mexico and south korea." how naive are we in a simplistic china-u.s. study? dr. posen: bill is right and i'm trying to make the same case, that the u.s. cannot simply say "we do this. you have to play along and no one is going to react." mexico, australia, they have agency. they do not have to passively deal with whatever the u.s. does and if the u.s. decides to play hardball to make them play along, then we become a police force and make enemies. it is not a viable strategy. i would describe it as overconfidence. tom: at gunpoint years ago i was

forced to read ricardo 1817 cover to cover. it is a tough read. there is some distance to it, centuries ago. adam posen, our trade policy is spaced from a distance, may be the middle 20th century. do we need a new trade policy for a more open, technological world? dr. posen: we need a new trade policy in the u.s.. the rest of the world has continued to open up, has continued to do more trade, more investment. as i argued in a foreign affairs piece the u.s. has been de-globalizing since 2000. blaming everything on the china shock does not make sense. every other country was exposed to the china shock, and they continue to grow, or they had

the same decline in manufacturing jobs. in germany, we looked at the ohio of germany. they lost more manufacturing jobs than we did, despite all of these things the americans claimed the germans did. our trade policy is not the problem. our politics is the problem. it refuses to acknowledge that america cannot have everything it wants and some people in rural, many fracturing jobs have to adjust like people in the cities have adjusted through the years. tom: can there be a middle ground in washington on trade, or do we have to live with the polarity we have seen for the last 8, 9, 10 years? dr. posen: i don't think it is an issue of polarity. tom: excuse me, yes. my error. dr. posen: it is fine.

extremism is the majority position. just as on other issues like communism i the 50's at home like environmentaln issues before the 70's, like civil rights -- i don't mean to say this is on par with those but, congress is sometimes wrong. we have to confront these views. tom: adam, you leave with -- lead with america's zero-sum economics. how do we get away from what we all intuitively understand is not a good thing. how do we get back to something constructive off of solo 1957? dr. posen: there are two tracks. we have to be more aggressive about confronting china. part of the whole trade issue is people in foreign policy

security not wanting to do the hard work on the security side, but it does not work. it is not that economics is more important, it just doesn't work. beef up the security side. the second side, as you said ,is so low ask robert gordon -- s olo-esque, robert gordon. made by america instead of in america, money towards r&d, money towards education, money towards supporting standards that allow us to get innovation from the free world. made by americans instead of made in america. tom: his article, i cannot say enough about. do not listen to me, listen to professor furman -- " america's zero-sum economics does not add

up." it is without a question the read of the weekend. a good launch for our coverage, which you will see from original spring meetings of the international monetary fund. i have goosebumps about it. through the pandemic we are back to some form of normality as the imf move student morocco in -- moves to morocco in november. lisa abramowicz will leave in the jon ferro hour. that is what we are calling it. the vix 21 .2. a very constructive market led by small-cap, up 1.2%. the big story in the last hour has been the two year yield up 19 basis points. that is a huge move for those keeping score.

curved is inversion and the real yield. this was something torsten slok was talking about, the leveling down of the real yield, really an interesting conundrum. i would also note oil up 70 six dollars on brent crude. we are seeing some kind of move equivalency in germany. some dollar weakness as well. it is a monday of an extraordinary week. please stay with us through the week on the american banking crisis and the good news -- america's smaller regional banks advance this morning. stay with us on radio and on television. this is bloomberg. ♪

>> everything you need to get ready for the start of u.s. trading, this is bloomberg the open with jonathan ferro. ♪ lisa: coming up first, first citizens bank injecting liquidity into markets. fed speak returns with a warning on recession risks. . >>