>> this year has been about the whipsaw. >> we do not think we will see rates to fall right now. >> i think the market is getting ahead of itself. >> could there be rate cuts coming in 2024? sure. >> this is bloomberg surveillance. jonathan: we are back together. it is a beautiful thing.

bloomberg surveillance on tv and radio. tom: the slips are back and they are furious. interest about -- the swiss are back and they are furious. this is about domestic politics and the swiss people are livid. this is a bad call for credit suisse. what they really have, you know the landscape, north of italy, this is a kid from seven switzerland to the rescue. -- southern switzerland to the rescue. jonathan: he wound down the investment bank in a big way. i wonder if this is what it is all about. tom: this skill set -- it is not

the success or the buy, it is what you do not do. right now he has to go into say, asian wealth management, how can we do this in keep the business. i am going to circle back to 70% plus of the swiss people are livid over this merger. lisa: there's now a focus on integration, growing profitability. now it is about to make the bank more seamless. the restructuring skills that sergio is respected with at least with respect with his tenure seems to be one of the main pulling points. jonathan: the president of the united states says crisis over. lisa: this is a problem we have

taken care of. it was a issue of bad management. the question is, why was it missed? if it was not missed by fed regulars in san francisco, what are we talking about? jonathan: we have another set of hearings today. based on the hearings yesterday, this goes back to late 21. went to the board of governors find out about all of this? -- when did the board of governors find out about all of this? tom: i would suggest the markets will ignore this in its entirety. the answer is, the markets right now looking at the screen as you have been gone after your interview to be their next coach. it did not work out. it is a long list. the answer here is simple. the markets are voting with the

president of the united states and saying removably on this crisis -- remove beyond this crisis. jonathan: i think you can split washington dc town committal purity have these sensible people who think it is -- i think you have -- i think you can split washington dc between. the sensible people who think it is one thing. lisa: the fdic chair came out and made a puzzle of a special assessment made in may to cover the costs for silicon valley bank. what kind of precedent does that set? tom: what was great about this, they are under the exact same discussion in switzerland. the conservative crew is saying,

let's get them, we want clawbacks from credit suisse. the liberal group is saying, at least we need more regulation. let's remember, 08, continental illinois when they had 1997 sb c. the overlays here of both the bank crisis lead to this regulatory debate. jonathan: futures up 9/10 of the s&p. i guess no news is good news on the banking front. the ultimate story for risks. tom: jonathan: lisa, down about seven on the two-year, the frontier still around 4% -- the four-year

still around 4%. lisa: today, yes there is a absence of real data, but there is lots of hearings. at 10 a.m., we have more of it. fed officials testifying more again. i want to hear from the fdic chair from this payment pretty program. at 10:00 a.m. we get pending. home sales yesterday we saw home prices did not decline as we expected. do we see sales continue to decline at a rapid pace or is there continue plateauing ? today, the conference is taking place in washington dc, among the speakers, catherine man of

the bank of england. how much emphasis is there on inflation at a time where everybody seems to have moved on to crisis, maybe perhaps there is a pause in the news. jonathan: lisa, thanks for that. tom: major shadow to the legacy of john silvia. -- shout out to the legacy of john silvia. that is the best lineup. i have seen for years. jonathan: let's get to geoffrey yu. i think reflecting on yesterday, just trying to work out whether we have a regulatory problem or a enforcement problem. which one is it?

geoffrey: i think all of them are going to be looking at this globally. you much of after each events over the last few decades they do have a discussion. the pra already: for a tightening of quiddity coverage ratios to make sure all banks have enough cash. i think it is going to be a little bit of both. crucial for central banks whether they want to stay in the discussion. tom: -- he is lecturing on the equilibrium of the system. are we super restrictive right now in our general equilibrium? are we at a point of over restriction? geoff: it really depends on

where your starting point is. the problem, you only find out you are super restrictive after the fact. based on all of communication, right now there is still more hiking rates, inflation, managing price stability that has to remain a priority. i do not think we are in pretty restrictive territory yet geoff: t. lisa: one loosing the effects of credit tightening from some of the reason -- when will we start to see the effects of credit tightening from the regional banks? when will we get the data? geoff: are they showing a clear material sign of things coming off. then realized data, the hard data, our mortgage are starting to come up?

that will take time. as governor bailey has highlighted your the events over the last few weeks has been equivalent to tightening. they have slowed the overall process of a rate hikes. lisa: are you sympathetic to the stock bulls who say if you look around right now things are good. perhaps, you could worry but you are worried sort of a vacuum of information. geoff: i am sympathetic to risks . nothing to do with the fed. the reason we can be positive on risk data by cash on the sidelines, so much sitting and looking at our investment flows. we had another adjustment lower. we are seeing that in our data.

jonathan: i think the nasdaq has had one of the best quarters in 2020. based on what you just said to what is your favorite place to take risks at the moment? geoff: we are looking at emerging markets. this is a area that is heavily sold last year. we are looking at being positive on mexican peso. we are seeing buying in eastern europe. libby could really yield up in inflation. -- maybe you get really yield up in inflation. this is less of a fundamental story. jonathan: thank you. a couple of days stocks do ok

and it is like, crisis is over, what do you want to take risks? lisa: that is basically what we are seeing now. everyone says let's go into bonds and stocks. for the past two days, the nasdaq has underperformed. are we reprising back into the cyclical moments including this higher rate regime? jonathan: how long before we find out what damage we have done here? may 3 is the next fed meeting. i struggle to figure how we got enough time to figure out how much they would substitute for rate hikes? tom: i totally agree. are they going to have enough data to make an informed decision. in maybe our entire history of doing this, this is that the meeting with interest the case -- that is the case. jonathan: going to be back together. this is bloomberg.

>> swiss bankers sergio is returning to the role he has had in 90 years. it will be see ne-yo of nash -- he will be ceo. he will take over after next week's annual general meeting. ukraine's president will insights a russian victory could be perilous. could then build international support for a deal that could foresee ukraine to make unacceptable compromises. zelensky invited china's president. a warning for china from china's

president, a trip that invokes --. is expected to meet with mccarthy in los angeles. now, in france allies of president emmanuel fears street violence spiraling out of control. several of them are urging micron to take the heat out of the demonstrations. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

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jonathan: good morning. equity features my intent of 1%

-- 9/10 of 1%. 5355 on the two-year. look at the ubs, positive in swiss trading up 1.5%. tom: a culture as well as a nation of three languages. right? georgia, how are you doing. this is a guy who is good at academics. he was a footballer? he really wanted to play pro european football.

that is really the experience he brings to all of these financial challenges. jonathan: i imagine he gets paid more by running ubs. lisa: depends on who you are. tom: to the swiss crisis, it is not just about -- this is about the people of switzerland in a complete total uproar. jonathan: we have to make about where -- is coming from. it goes to ubs, he is going to oversee that base. we were talking about that a couple of weeks ago. he was dutch and this guy is swiss, i hear you. the problem child at credit suisse was a problem child at

ubs he dealt with about a decade ago. tom: i think it is really important as a digital modern banking expertise. what is needed, what do we do with 15,000 people? it is not that simple. there we are in the market again. 4.01% in the two year yield. there it is. let's move on. jonathan: that makes me nervous. tom: what makes me nervous is victoria fernandez quoting the dow jones. there i was john patrick -- jan patrick. what is his first order condition with the swiss people, with the domestic debates them

ubs credit suisse? jan-patrick: i think he has to figure out two things in order to get this merger going. the most important one things like, what to do with the credits was that are serving retail and wealth management. there are a couple of issues with that coming from the political side, public side. with them a new entity with how much overlap in terms of clients, how much business will they use. people say i do not want to have my money with one entity. especially what we have learned over the couple of weeks. what will he do with all of the risks and problems within the investment banking. ubs has done a great job to slow the area down. he has to figure out how do i want to handle this.

tom: the memory here, is svb taking out ubs? they build out the growth of investment banking and all of that. that was based in two different cultures in 1997. what is the difference between a investment banker at ubs and credit suisse? jan-patrick: ubs banker is aligned with the concept that ubs has been running and of investment bank is a service interesting to the greater good . credit suisse tried to do the same. i think for everyone working in the credit suisse investment bank, it is time to change that going forward. i am very sure the new entity

whatever it will be called or how it will be ran, will make sure wealth management and everything around this is at the core in the investment bank is a service entity. lisa: the chair of ubs said this, this is the biggest single transaction since two thousand eight. the first time to systemically relevant banks have emerged and bring execution risks. we understand what that execution risk looks like? lisa: it is not a regular motion in terms of market value. it is a mega motion in terms of operational risks that we will have to figure out. i think the market is appreciating what we know about. the risks there is opportunity in there for the new entity if they manage to pull this off. there are lots of question marks

they have to figure out in terms of grill operations, public reception, political pressure. it is very smart to bring the former ceo back in. i think what ubs is doing, something the whole operation out for a perfect start with the perfect person in place to make sure and that you have someone who knows all of the risks, who is aware of them and who is in the probably the best position to tackle them. lisa: this morning i was looking around and trying to understand what is -- has sergio been doing for the last two years? jan-patrick: that is a good question. if you have rent a entity for so long, he probably would have stayed -- if you have around a business for so long, he probably would have stayed in

touch with ubs. ubs has not changed dramatically over the past two years. even though he has been out of the business for two years, he is still 90% in the know of ubs. that is a good thing. jonathan: thank you. i woke up to messages. you know when you read a headline or a new story and you think, why didn't i think of that? i started thinking, this is so obvious, i am annoyed i do not come up with it. it makes perfect sense. tom: i said to myself, you gotta be kidding me. this goes to the spirit of the football player. lisa: my first thought was

how did i not think of this, my first thought, what was this conversation like? how much did he demand from him? tom: this is so urgent, i did not even think they got done with how much did i demand from you? i can't convey enough. you should see what is in those newspapers. the german papers in the swiss papers in german, they are fiery with the emotion in the moment. lisa: we have a sense of what he left and what kind of cultural overall will have to take place when he comes back?

jonathan: he is now running unicredit. i do have say he -- i do not think he is coming back. he was the guy that really --. tom: is the one i believe that really brought in mr. hammers over to ubs. you wonder where the -- as well. jonathan: brian from morgan stanley is going to join us next. equity futures up 9/10 of 1%. we will touch on that in a moment.

jonathan: equities are doing ok. positive on the s&p and nasdaq. the regionals doing ok as well. wicking up to the better equity -- wicking up to a better equity market. -- waking up to a better equity market. i am wondering what difference

the incoming economic data is going to make in the conversation towards fed rate hikes. libya little bit more than a month is a sufficient amount of time for the fed to find out how much timing the bank situation has done going into the next meeting? lisa: can we look at the data with any reflection of reality, supposedly there is a light effect --lag effect. do you embrace of the weaker data and say that the other one will just get remedy? jonathan: if it is good, ignore it, if it is bad, it is going to be really bad. lisa: it is the reason why the fed can cut basis points. tom: they have not seen the labor economy break, yet.

jonathan: in my view, continued micro-policy can contain financial stress in the financial environment. i struggle with this. i struggle with all of these takes. is a policy really in conflict? take a listen to these lines. central banks are deliberately tightening financial conditions to slow their respective economies. with the bank destruction does is make it harder to collaborate -- calibrate the collective tightening. this is about collaboration of policy, not about policy being in conflict. i struggle with that. tom: i think he is onto something. he leads with the bloomberg financial index.

those indexes are fine, let's say there are 11 ratios, some together. the bottom line is, adults have to collaborate -- calibrate with real-time events where you wonder if those financial conditions indexes have efficacy's? jonathan: we will see these in the surveys we are going to get. it is not the claim way of doing it, it is the dirty way of doing things -- clean way of doing it, it is the dirty way of doing things. this was a substitute for rate hikes, to what extent it will be a substitute, that remains to be seen. that does not sound like a policy conflict to me. lisa: there's discomfort of the unknown of the tightening effects. there's a unease right now of the unknown and you are entering

into that with a still cannick type situation where you end up with sudden breaches and that creates a different scene and rhythmic increase in yields. tom: you're catching a life in the dark, maybe that is what the fed is doing. i am looking at bloomberg financial indexes and i am going to use a sophisticated math phrase. it has a real uncertainty. only one i know the math is brian weinstein, he joins us now. morgan stanley investment management. you were dozing off listening to us pretend like we know what we are talking about. what is the level of uncertainty? brian: the level of uncertainty is high. i do not think the fed is the they are having a policy

conflict, but the market does. it is unlikely. lisa, what you were saying is right. this is a ripple number one. we do not know what it is going to cause. we do not know where ripple number two is. tom: so much of this, james lays it out in the beautiful chart he has got in st. louis. the magnitude of the moment, clearly in terms of financial stress, it is not 2008, what is the level of magnitude measured in morgan stanley. brian: it is not as bad as you would have guessed. you are seeing it in the front ends of small banks. we have moved wider. we have steepened the curve. we do not see anything that has pointed to large levels of distress.

jonathan: are there reasons to believe that developments will to a inflation robust? brian: i think the risk has gone higher. the fed is going to speak a lot. they do not know what the impact of all of this hiking and the banking liquidity squeeze has really done. i do not think it has increased the risk of inflation. it will slow down the economy, slow down lending, slow down inflation. the risk of disinflation and the risk of robust is higher? jonathan: where does that lead your call on high-end credits? brian: i am not sure if you want to chase that market. investor great credit looks very good if you can lock in that

yield. i do not know if you need to chase risk if what i said about risk premium is true, you will get better chances. lisa: you said bank chances reflected in credit? has that been reflected? brian: the risk to large bank fund holders, is it higher or is a much safer than we thought there were. it is going to be hard for me to mckay claimed that larger banks -- hard for me to make a claim that large banks are at risk when they are helping us get out of this. i think you have had a recently large movement, larger than high-yield markets. lisa: does this mean you have been loading the vote on bank bonds? brian: the senior debt of large banks, you are going to give 5%

for 10 years, is it the highest level we are ever going to see? maybe not. it is a good thing to know. lisa: when you take a step back, you ask a question that is fascinating, the risk assets to better or worse when rates are high? what is the answer? brian: we have not been at these guilt levels for so long as we had a selloff. -- guild levels for so long as he had a -- we had a selloff. there's a perverse part, the funding costs being higher is working for corporate probability. there is a cost to it. as far as your question, investors come in when yields go up. this is the first time in years. tom: explain, morgan stanley's

plans right now, the permanence of these higher interest rates. it is not that there is a wistfulness to get back to lower interest rates, maybe there is deafening of rapes so much lower. -- it's rates so much lower. brian: we went through this inflationary period where no one believed inflation was possible. we are sitting right in the middle. people who think the fed can go back to zero and make this easy for risk assets are mistaken.

jonathan: brian weinstein of morgan stanley. stocks are doing fine. fantastic reporting coming from the team overnight. it was a roughly $5 million bet on deutsche bank ces. this is a classic case of the tailwagging the dog. a bet that size, to shape this market and take the lead and the equity. that seems like with the story was on friday, and people shaking their heads. based on our reports, lisa, this is what happened. lisa: this emphasizes some of the investigations into europe. this particular trade caused 1.6

billion euros in market value to be stripped off in one day. people are saying, how can this be for one person to manipulate the entire market. it will be a discussion. jonathan: deutsche bank. everyday it is trouble. every time something goes wrong, round of the usual suspects and you knock at the door. that reputation has not gone anywhere. tom: i just watched casablanca again. she decided she was a film major, where do you start? you start with casablanca. every time you start into, it is a different movie. lisa: it is also mistaken identity as well. there was this tortured brief that did not -- deutsche bank

brief. there was so many rumors going on last week, now the fact that they have subsided seems to be like, party on. credit suisse is still aiding textbased. taxation. jonathan: this is exactly what ubs wanted guarantees around some of the costs around the deals because you've been he inherits revelatory issues. tom: greeting swiss bankers and government regulators -- greedy swiss bankers and government regulators. >> president biden and kevin

mccarthy exchanged letters in the fight over raising the debt ceiling. mccarthy is demanding negotiations begin on spending cuts and regulatory changes, the president responded by challenging republics to produce a public budget plan. president joe biden is urging israel's prime minister to reach a compromise on its controversial plan to overhaul the courts. the proposal has stopped protests across israel, the president told reporters they cannot continue down this road. vladimir putin's drive to expand russian armed forces is aiming to labor shortages. the war in ukraine has thrown thousands of workers into the military. government data suggesting next increase over approximately 400,000.

that comes at a time where unemployment is at a record low. bloomberg has learned that j.p. morgan chase, jamie dimon will be disposed over the ranks ties to the latest epstein. epstein was a jp morgan client for five years after he pleaded guilty for soliciting a minor for prostitution. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

>> this is a textbook case of bank mismanagement.

the risk of the banks phase, interest rate risks and liquidity risks, they are quite vulnerable to risks, to shocks, they do not take the actions necessary to meet that. jonathan: day two on capitol hill is coming right up. some news just crossed into bloomberg moments ago. this comes from the extended finance chair. credit suisse is compliant to its 2014 the plea agreement with the u.s. department of justice. the committee goes on to say, investigation uncovered violations of the plea inquiry agreement including a conspiracy involving $1 million of secret offshore accounts of american taxpayers. tom: we made light of it coming

out of the last block. there is nothing like about this memo. this is not only about the headline of credit suisse, other smaller swiss banks. this goes back to, not the arrogance that is completely the wrong word, but the nature of what was done in geneva in 1713, that is how far back this goes. we are swiss, we are different, this is the way we do it. real emotion there and documented. this was a unique part of swiss society. jonathan: let's do the more recent history. we spent the couple of weeks talking about the lesson learned about regulators. are on a sunday evening when this deal happened, we talked about the lessons learned about the banks themselves. jp morgan thing about the

problems they inherited when they took over. that is why this government guaranteed at the slowest was so important to ubs. when you take over a bank like this and it has had a environment like this one, you can inherit. lisa: this also give since two why sergio was brought back because he dealt with the 2008 law cases that they ended up filling with the justice department like many others. he will know how to navigate it. tom: there we are with the news of credit suisse. we will continue to monitor that. you will see it tonight on balance of power. now, the balance of power shifts to rhode island. wendy, when you watch these hearings in the political posturing, how close are we to

the debate that andrew jackson led in the 19th century russian mark would have been doing this, not for decades, we have been doing this for centuries. this distrust of fancy people on wall street. wendy: i mean, there were big fights syngenta around the world of private industry and economy -- there were big fights centered around private industry and economy. this is all alexander hamilton versus thomas jefferson. in the beginning, alexander hamilton won. it is not an accident this is coming out today. the democrats really need to show that in other rounds they are going after rich people, they are going after banks. this is not an accident that is coming out today.

the democrats really are in trouble in some ways. many democrats voted with the deregulation of the loosening of the regulations of the trump administration for banks like svb. this is a problem for them. they allowed -- to participate in the regulation. now they have to clean it up. tom: swiss people are livid over the swiss failures in banking. bring it to the present. already american people engaged, not so much in the hearings, but in the debates on collapsed banks. wendy: we just went through this. when i say we, the vast majority of americans remember the great

recession and the banking crisis. this compounds the distressed and lack of faith in the federal government. if you are parting your beliefs in government like the democrats, but as a political problem when you are in charge. lisa: yesterday there was a lot of finger-pointing at the federal reserve and their lack. of enforcing. what is the policy application of some of that finger-pointing? wendy: we have a private massive bank overseeing other banks. it is not really a deal system for enforcement regulation. elizabeth warren will call for the federal reserve to do something, but at the end of the day, congress has to pass another law. regulations has to be issued. regulations can be influenced by lobbying or court cases. it is a long road. the simple picture, the federal

government did not properly oversee what this bank was doing and did not stop them before it was too late. lisa: let's say they -- the blame over to the federal reserve. then what? does this move independence from the federal reserve? is this called for a increased premium? what is the natural in respect with the criticism? wendy: you have to go to the power of the banking and investment industry. very powerful forces in voices and say, do not blame us for the laziness or the carelessness, greed of one bank or two banks. the rest of us, the big banks do what we are supposed to do. what the american public might cure towards is bigger banks, they trust some more, they seem to be stabled. maybe giving them more power in

the system, which will be bad for regional lending. this is a case where the federal government, meaning the biden administration has to pick a side. are you going to try to intervene and control the fed? trump actually try to control the fed. that is the puzzle for the democrats. wendy: the irony of this is not lost on a lot of people. lisa: we have gone from the big banks are better -- the bigger the better. wendy: this one more layer i think of government -- one more layer of people filling disempowered. now they have to go to the big bank. they may not know the banker they are dealing with. closing regional branches. these are always that the average american seems to start to feel less connected.

if you start to feel less connected, you will start to fill less connected to the political system. jonathan: wonderful to hear from you and tying those things together. so we get this headline, 15 minutes ago, credit suisse is evading tax evasion. just work there it a little further. i do not know where this ends up. this in sub with a mass of fine on the u.s. government on credit suisse, whic is a wealth transfer from switzerland to the united states. imagine if we get one how messy it is going to look. lisa: you know, the politics on both side of this are going to be interesting. people know that there are some

seeds that are underneath the covers that people are concerned about. on the other hand, you are right, what to study for international relations? tom: this is a detailed memo. it says individual names in it. as a immature, tangible allegations against unnamed and named individuals, including employees of credit suisse. this is not some press release, this is a real document. jonathan: the former ubs boss is now the ubs boss begin. it we will get into that. -- we will get into that. equity futures doing nicely this morning. yields lower by five basis

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>> this year has than all about the whipsaw. >> we don't think that rates are going to fall, we think we will see them turnaround. >> we are not in the camp where we think the fed turns quickly. >> the market is ahead of itself. >> could there be cuts coming? sure. but we think there is one more hike this summer. >> this is "bloomberg surveillance." jonathan: the new guy at ubs is

the old guy. live from new york city this morning, good morning, good morning. this is "bloomberg surveillance ." equity futures doing ok this wednesday morning. tom: you and i felt the same way, we saw the headline this morning and we thought why didn't we think of that five days ago. it's so obvious. and as you mentioned there in the last hour, its cultural and domestic. yes it's about wealth management. it's about iv. forget about it. it's about a nation livid they went with one man. jonathan: and now they've gone for the guy with the guy. i love that. tom: i said zoe, help me. how is that, help me here. jonathan: but as tom pointed

out, he's got experience winding down investment banks and making them smaller. lisa: and experience with legal problems. he's going to be dealing with them on all sides of the atlantic. as we learn from the u.s. this morning, coming out with scaling -- skating allegations about tax evasion from ubs. now they have someone who can handle it. jonathan: seemingly the hits just keep coming. the headline from the u.s. senate panel 30 minutes ago, if you are following, credit suisse is still aiding tax evasion. that's the allegation. lisa: and you has to stomach it. ultimately to your point and it's a good point, won't the swiss government basically be backstopping their fines to pay the u.s.? jonathan: depends on how big it is. ultimately if it's big enough,

tom it is a sovereign wealth transfer, isn't it? tom: i'm not going to get myself in trouble here but i agree with you, there is a tiered agreement that i don't know if we know the details. folks don't vote me, the one number i have seen is 170 billion. that seems to be what the people of switzerland are into for the collapse of three big banks going back 30 years and then two big banks going back 30 years. this model is one -- is working out. 100 70 billion large. that's one statistic. jonathan: this was two weekends ago. a weekend before that, the vice chair had their own troubles. lisa, based on what you heard yesterday, what do you want to hear today? lisa: do they back the time to emphasize the big banks and say regional banks need stricter oversight, higher fees, or need to be consolidated.

isn't that the ultimate conclusion? jonathan: not just that but where was the enforcement? why didn't they do anything about it? tom: key question. lisa: that's my problem, they knew there were problems. obvious problems that were flagged. michael barr said he was aware of them as early as february. at a certain point what are we talking about? tom: is very expensive at the bottom of st. james street in london. there's a statue in the street of a guy who was overcome by events. all of what you guys just said is true. you nailed it with the idea of why didn't they do something? it was unimaginable we would see rates move this fast. it wasn't in the realm of thinking. jonathan: do you think it's unfortunate that the vice chair of supervision is the guy taking the heat for it and not the current guy, the chair of the fed as well?

lisa: i would strongly agree. i want to hear from him what was happening with respect to the enforcement being deemphasized. that's what i want to understand. tom: and the fed chair? lisa: yes, correct. i think that's why people are pointing fingers at the federal reserve and lessening the capability of this agency right now. jonathan: let's call this 355 on a 10 year. tom: my single data point has got to be where we were for the last few days when you are doing the interview on the coaching job and we had that two-year breakout to a high-yield regime from the shock of 3.76. jonathan: can you imagine if i left to run a football club? i would you feel? tom: i would grow my beard and

stands next to you. do you like the new ted lasso? jonathan: haven't started it. tom: by consensus of people smarter than me the last episode was the best. nate is at west ham, but he's out of the plot. who is joining is zava who is patterned after the guy, hebrew vindman which -- abrahamavich. jonathan: so made -- me -- basically it's richmond fc? tom: finally you can get into it. jonathan: lisa we will pick that up after we get to our guest. lisa: i have no idea what you're talking about. [laughter] 10:00 a.m., day two of the hearings. treasury officials testifying again before a house committee

about silicon valley bank. we will hear from michael barr and nelly yang of the u.s. treasury department. do they come out with some sort of prescription for how to oversee this? do they talk about the importance of banks getting bigger? the irony, more than a decade after the financial crisis of looking to make banks bigger. pending home sales, the data points that don't matter, but i think it does matter. with people buying bonds there is a question of that brings down mortgage rates, game on, everyone out to the market. are we going to see a plateau in the decline of prices and the gains we are seeing? tom: great chart. for those of you and radio it is a crater of year-over-year real estate and i think a lot of people are not aware, when we come near the year-over-year gain zero bound. lisa: absolutely true but how much more pain is there? perhaps we will hear more on

that today. speakers at the national association of international business economics are incredible. richard clarida do, the former bed -- fed vice chair, as well as catherine mann, isabel schnabel, an incredible lineup when so many have such a poor sense of the path for inflation. jonathan: i understand mike mckee is going to make it down there at some point, so we will get some reporting from him as well. linda, i want to start with this. what is special about 4000 points on the s&p 500 and what do you make of this struggle since november to breakout more than 5% in either direction up or down? linda: good morning, thanks for having me. i would say 4000 s&p is not as important as 30,000 down has

been, but what we haven't gotten past is technicals. technicians are really on top of all of this stuff all the time. i keep reading about the technical levels through which the s&p needs to pass. i think it is something like where we open now. we are at the high end of what has been a tight range. the 200 day moving average for something that has been watched closely for the market and for individual names and sectors to let us know that technicals and technicians are very much involved these days. it's not so much a psychological number anymore but a level. a big one thing average. tom: there is such a respect for the long-term view of federated and one thing i want to go back to is the market drawdown. i was shocked, i did not know

this, nasdaq -24%. the day to day grinding federated, are we still in a bear market? how are you positioning during the duration of this linda: we are still in a -- this? linda: we are in a neutral space right now. we would like to get above the old highs and we think it is going to be a number of years delayed because of the pickle we find ourselves in now, the fed getting in the way, raising rates dramatically and when they do that, it messes things up in the banking area. that's what happens when you rock the boat as much as we have . we are mired in a bear market. all we saw last year was a 25% pullback. garden-variety. we wonder if there is just more

than that with the mess we are in right now. tom: does it makes -- lisa: does it make sense that people are pricing in fewer rate hikes, possibly rate cuts, as well as a stronger economy? linda: it goes to something you were saying a few moments ago, if the market itself doesn't look like it's getting hit that hard and you are having rolling recessions underneath and there is very much liquidity out there , not just with traders but individual investors that aren't married to anything, i see they crushed tech stocks, let's run after tech stocks. right now they seem to have run after tech stocks so in recent days we have hit energy markets, go run after energy. last year we hit stocks and bonds, so let's run after them both. last time i saw $2 trillion in cash on the sidelines. we prepared for the recession. jonathan: linda, you ever gone

for a drink with lisa? i think you have a great time. lisa: i love that. [laughter] jonathan: you talked about the wisdom of crowds last week or lack thereof. i think that linda is speaking to that right there. lisa: love it, i basically picture little cartoon characters running after each sector. that's what it feels like. a rolling ball of money. tom: in literature you have rotation but i don't understand how you have rotation given the broad rotation of the fixed income market now. jonathan: i think rotation is that sophisticated way of making it sound. lisa: it's a washing machine. you get sucked in. tom: you can't do that. lisa: it sounds sensible, right? real purpose and reason. looking forward to that in the next hour. equities are up. this is bloomberg.

>> keeping you up to date with news from around the world, i'm leigh-ann gerrans. ermotti returning to the role that he's had for nine years, returning for the complicated catholic -- acquisition of credit suisse. he will take over after next week's annual general meeting. meanwhile, the u.s. senate committee says credit suisse is still helping rich americans hide assets from the irs almost a decade after one of the bank bus units pled guilty to tax evasion conspiracy. according to a new poll, credit suisse worked with dual citizens to conceal assets from tax authorities. the bank says it does not tolerate tax evasion. volodymyr zelenskyy is warning that a russian victory in

mahmoud could be perilous. telling the associated press moscow could then build international support for a deal that would force ukraine to make unacceptable compromises. zelinski has also invited the chinese president to visit, despite the chinese ties with russia. now the ceo of macy's will retire in february after seven years years of leading the department, succeeded by tony spring, ceo of the company's high-end bloomingdale's chain. global news 24 hours for derek on air and on quicktake, i'm leigh-ann gerrans, this is bloomberg. ♪

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>> ubs has named the interim

chief executive, sergio ermotti. >> he's got to get a grasp of what's going on in the investment realm and bolster wealth management while reducing leverage. >> bloomberg has been speaking to the new boss of ubs, sergio ermotti. >> welcome to bloomberg, sir. >> on each occasion that we have sat down with him he has had a great numbers story to tell. >> three years and, give yourself a mark. >> i'm going to be very generous with myself, it's christmas time. lucky number eight. >> are you all in and committed to this bank going forward? what do you want to say to the market? >> of course i'm committed. >> your final set of results after nine years at ubs. >> amazing, fantastic work.

>> i love it. [laughter] tom: that looked like guy johnson. jonathan: covering ermotti for the best part of a decade. and the news this morning, he's back at ubs, taking the helm. what a turnaround. tom: with this bank, ubs, union bank of switzerland, bailed out by the swiss government in 2008, ermotti parachutes in i'm going to guess two or three years after that and that is where you start to see the bloomberg coverage of the guy that came from merrill, unicredit, over to the gfci. tom: the understanding that is implied in those years, the oldness of those videos, shocking because it wasn't that long ago, the historical, institutional knowledge of managing through a crisis and different cultures, i think that

is really highlighted through this person. jonathan: ubs is up 2% and we will cover that story for you today. equity futures are positive by a tense of 1% on the s&p 500. that's the swiss story this morning. u.s. regulators, including the u.s. vice chair of supervision at the federal reserve, in front of the senate yesterday and in front of the house a little bit later. tom: the hearings are tangible but overlaid by what we saw this morning from the gentleman from oregon. how do you avoid the overlay at these hearings. jonathan: tense stuff to reveal that headline, major violations in a plea agreement. tom: bunch of distractions from washington. let's get to it. amber joins us this morning -- annmarie hordern joins us this morning. any linkage into the release this morning?

i was stunned by the fiery language. >> it was fiery. he calls them greedy swiss bankers who appear to be engaged in massive ongoing conspiracy to help ultra wealthy u.s. citizens evaded taxes and ripoff their fellow americans. at some point potentially this could be brought up in the hearings today but of course, these hearings are about the collapse of three u.s. midsized banks and they will be asking the regulators what happened. yesterday it was clear from the regulators, from the vice chair of supervision that this was mismanagement. but at the same time you saw these lawmakers say to the regulators that if you knew that there were issues that these banks, why didn't you step up? the quote i think was from jon tester in montana. he said it was clear the regulators knew what was going on but no one put the hammer down and there will be a lot of that today.

lisa: was there a cohesive target for lawmaker anger? first they were talking about smaller banks and then larger banks, pushing people towards larger banks that can withstand the stress in the u.s. lisa: the words -- annmarie: the words congress and cohesive rarely belong in the same sentence and that is not happening right now. there is potentially one area where you see lawmakers from both sides of the i'll want a discussion and that's about raising the fbi see cap but besides that you have republicans blaming "woke up banks" as a part of the problem. they blame the higher aggressive interest rates from the fed and the biden administration. then you have democrats on full display yesterday talking about the rollback of dodd-frank in 2018. remember, even some democrats voted for that. tom: digressing from the hearings front and center to the

axios report last night. chris christie in new jersey saying flat out he will never support president trump again. dovetailing with what greg wrote about this morning, the likelihood that the weight of the third party candidate for president. is it too early to start talking about this? annmarie: about a third party candidate? yes, it's too early. in america's progress as a country, people have tried this before. it hasn't worked. but what is interesting is potentially you will start to see a bigger divide. obviously the former president has about a 30% hold on his party and it's very difficult for anyone who, difficult for anyone in the republican party who wants to separate themselves from him to gain the remainder of support. the race, it is still way too

early but at some point there could potentially be a front runner. at the moment, it's interesting to hear about chris christie because at the moment when you hear from the former president, he thinks it's going to be governor desantis. that's the individual he continues to attack. tom: i would love your opinion, you have done so much reporting from europe, for our international audience, it's so odd that america has only a two-party system and not a mishmash like everybody else. with your travels, why are we relegated to a two-party system versus a multiple party system? annmarie: what we don't have a parliament. it's one party rules all for how the american system works. they don't have to set up coalitions. in the past in america we have seen independents try to have

these third-party bids. tom: that worked out. annmarie: will they make a name for themselves but it's impossible. joe manchin, there were reports that he might run as independent in 2024 but this stuff is very, very unlikely. tom: you liking this, jonathan? jonathan: no i would rather get back to the news. lisa: thank you, jon. what do we need -- jonathan: what do we need from the regulators? annmarie: one thing that is interesting and maybe we will get the fed vice chair to talk about, there is a bipartisan bill being introduced by two individuals whose names you don't see together a lot. elizabeth moran and rick scott. this is about an inspector general at the fed and they say that instead of the fed governors anointing who should be on the fed board, it should

be the president and then the senate confirmation. i think that maybe you will see more heat put at these regulators and their supervision of the banks. remember, things are always a bit more rowdy in the house then in the senate but at the end of the day, and a congresswoman told us yesterday, former congresswoman stephanie murphy told us, she has been in these hearings, these hearings are literally only about promoting performative actions for individuals to run on rather than getting to the details. jonathan: youtube clips for the constituents? tom: no. jonathan: something about the house being less focused than the senate. tom: she's the host of "balance of power." she can do that. jonathan: got something, lisa? lisa: keep going. this is the issue, it's a whack-a-mole of anger.

getting people riled up, there isn't cohesion. tom: let me get in front of my april plea, can we have the british system where the campaign is shorter? jonathan: it's not. i've heard a argument for it that it gives you more time to shine a light on the candidate. how convinced are you of that, lisa? lisa: i'm just thinking about that long island congressman. that was a lot of editing time, don't know. just saying. theoretically what are we doing here? jonathan: yields are lower by a couple of basis points. we will hear from the vice chair of supervision a little bit later.

jonathan: good morning to you on a wednesday. let's remember the day of the week. struggling with that at the moment. s&p futures are up. grinding higher on the s&p 500. the russell is a by more than 1%. small caps do it nicely. just going through the week on a u.s. two-year, 20 basis points all over the place, now down six or two? lisa: i don't understand the two-year. it gives me angst. what are we pricing in? and if so, when are stocks going

to wake up? jonathan: ask me in five minutes. lisa: ok, thanks. [laughter] tom: don't you guys get the feeling where we take the surveillance nap and you don't know what's going to greet you on that cell phone? you pick up the phone and it's like a mystery. if you go to the bloomberg terminal lab, you just don't know what is going to greet you right now. jonathan: there is definitely that sense that no news is good news. not spending another weekend talking about failed banks, maybe that explains more than anything why the two year yield was higher monday morning. lisa: so why is it lower today? tom: i mean some of it is quality and high yield. are they cooperating with a recovery to norm? jonathan: depends. -- lisa: depends. we heard about it with respect to senior bank bonds. you have to wonder if others

would do the same. jonathan: back to something like high yield spreads, a month ago that was something like 390. we kind of broke the full five. tom: this is a busy section but i'm reading a lot about commercial real estate. jonathan: what are you learning? tom: it's beginning to affect classe property. it's an assumption that bc is weak and i'm learning there is a lack of transparency and what it means for off the top of my head 200 banks. it's not about jp morgan or bank of america. lisa: i'm learning that the pain that is coming is that it's going to affect lots of other institutions and people are examining that. jonathan: can't get away from the banks tom:, can we? tom:well said. jonathan: want to talk about the banks? lisa: sure let's talk about ubs. [laughter] they are acquiring credit

suisse, we heard about the senate finance committee coming out with explicit language this morning. shares are up as far as american depositors. ubs chair recently said we have to let everybody go through a culture filter to make sure we do not import something into the ecosystem that causes issues. i am glad i am not being filtered through a culture filter. jonathan: did he elaborate on that [laughter] lisa: talking about not wanting to create something bad from the virion and -- virulent element. tom: two hours ago i copied and pasted that out of a german newspaper headline because i didn't understand the german. it was the culture filter thing. lisa: i'm just not sure, i want to think about this and i'm not sure how i would feel if i were an employee going through a culture filter. jonathan: got to be super careful with that kind of

language. on a lot of levels. my frustration with that, we all know some supremely talented people that have worked at credit suisse for a long time. if you are talking about management, name them. don't sit there and say the whole workforce, they need to go through a culture filter. lisa: i couldn't agree more. don't change a whole group of people, many of whom are excellent, with some sort of negative brush that they are lesser than coming into the organization. jonathan: going to get rid of me to zurich? [laughter] lisa: let's talk more about expensive yoga pants, i enjoy them. lululemon is jumping ahead of the opening bell. talking about how their full year sales will grow 15% to 9.3 billion versus 9.1 billion that people have been expecting. people still really enjoy yoga pants. at least theoretically i'm saying. jonathan: are you talking about yourself again? [laughter] lisa: and then micron, we have

seen a really rough run. when is the bottom in semiconductors? seems like the worst is over and that is where you see a lot of the worst of the semi conductor shares owing up, a 2.4% gain with bigger than expected sales in the order. have we cleared out inventories? are we beginning fresh and can people start going into the beaten up areas? tom: bring up the board again. i love the idea that you dovetailed lululemon with micron , the thickness of lululemon. i like how you did that. [laughter] brilliant. jonathan: would you like another word on lulu? lisa: i'm think i good but i'm glad we are not just putting up five bank stocks every morning. i enjoy that we are looking at other corporate stories. jonathan: settle down. lisa: he's buying lulu pants,

too. [laughter] tom: stumbling through wednesday, edward joins us from columbia. i'm going to cut to the chase. you nailed this, working in international economics at harvard years ago, so much about these moments and these crises is fear of making a mistake. that invades monetary policy. what are we afraid of making as a mistake in the new central bank policy? it's difficult, you are balancing three different elements. you don't know what's coming off inflation. you don't know how quickly it is filtering into the real economy. now you don't know what's happening in the banking sector and now down the line you have to prioritize these unknowns. inevitably in my line -- in my

mind, the fed will prioritize inflation. prioritize -- tom: prioritize inflation, financial stability, could that way in on a may 3 fed meeting debate? edward: in my mind, if that were the job of separating the two on paper, but in practice more than anything they have been lucky in the sense that this particular banking crisis hasn't spiraled into the credit markets. they can take comfort in the fact that the liquidity they have put in at this point, again, when they get to the may meeting, it's more likely than not they will be inflows -- focused on inflation once again. lisa: does it make sense to you that we have priced in 100 points in basis cuts by next year?

edward: it's been exceptionally violent, right? peak rate from the second half of the year, just a few weeks ago, to an aggressive easing cycle in the second half. which scenario is most appropriate to the data? something closer to a whole. but now that the banking genie is out of the bottle it's hard to price out the easing cycle in a recession coming forward and that is what markets are really struggling with. lisa: risk assets rallying perhaps because of the slower pace of rate hikes or rate cuts. does it make sense that the only way to get that is the pain that comes with a crisis or a massive credit tightening? edward: it's been interesting. risk is reflecting two things in my mind. the underlying strength in the

economy and of corporate balance sheets is still with us. it's something we enter the year with. we have talked about that at length. the other thing is interest rate volatility that exploded in the past couple of weeks is starting to cool down. that's a positive backdrop for what we see in investment grade markets. markets opening up. not quite so for primary markets in high yield. it's a different price across the risk rates at this point and i would expect those stories to connect in the coming months. lisa: if the fed does cut rates, do you start to get less constructive on treasuries in which you have been perhaps overweight? edward: we like them. one of the things the last couple of weeks has illustrated to us is that treasuries once again play a very effective role as a buffer in the negative

coalition between negative rates and risks have returned as they see a return to safe haven assets. and that's fantastic. if the fed is cutting, they are seeing something on the horizon that is disinflationary. that's a really good story for treasuries. we can argue about where you want to be on the curve of that environment. a long duration with long interest rate risk in that environment. jonathan: great to catch up as always, ed. i can't believe how long the month of march has felt. still got a few more days. the high, the intraday high, 5.08%. the intraday low, 355 on march 24. high of 5.08% with a couple of weeks first -- separating them.

the bust is going to start cutting things by what, hundred basis points in a number of weeks? tom: well that's the broader view. you nailed the framework a great but the narrow view is 2, 3, 4 days. earlier this morning there was a 4.31154% yield. not only broader volatility, there's almost an intraday cacophony to it. lisa: ed talked about that violence and to give you a sense, march 8 when you saw the intraday high, you saw the fed funds rate anticipated to be almost 5.5% by year end. now we are pricing in a 4% handle, perhaps even lower by then. here we are talking about a massive shift in perception and monetary response. tom: so the senior -- jonathan:

so that senior loan officer survey -- lisa: may 8. jonathan: you are ready, aren't you? [laughter] if you don't see exceptional timing and we have done another few weeks with no bank failure, is it back to the old story? lisa: that's why i wonder if there is a risk for 10 year treasuries or inflation expectations. especially if the fed doesn't hike rates going forward, doesn't necessarily get more hawkish. tom: when we are altogether she can frame her bloomberg better. it's a clearer -- jonathan: more polished. tom: polished. posh. it's a very posh gloom. jonathan: equity futures are up eight, 9/10 of 1%. this is bloomberg. ♪ leigh-ann: keeping you up to

date with news from around the world, i'm leigh-ann gerrans. ubs going back to the future, sergio ermotti returning as chief officer to oversee the acquisition of credit suisse. he will retake the role that he held for nine years after the annual general meeting happening next week. president joe biden and house speaker kevin mccarthy exchanged dueling letters in a fight over the debt ceiling. mccarthy demanding that negotiation's begin on a series of spending cuts and regulatory changes, responding by challenging the production of a public budget plan. president biden is urging benjamin netanyahu to reach a compromise on his controversial plan to overhaul the courts. the proposal has sparked protests across israel. the president told reporters that they cannot continue down this road.

finally, the drive to expand russian armed forces is leading to labor shortages. of the war in ukraine drawing hundreds of thousands of workers into the military from other sectors of the russian economy, suggesting a net increase of approximate 400,000 in the russian military last year at a time when unemployment is at a record low. global news powered by 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans and this is bloomberg. ♪ over 5 million people have fallen in love with a portable blender. blendjet 2 gives you ice-crushing, big blender power on-the-go. so you can throw in your favorite ingredients and blend up a delicious smoothie anytime, anywhere.

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was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com the new chase ink business premier card is made for people like sam who make...? ...everyday products... ...designed smarter. like a smart coffee grinder - that orders fresh beans for you. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on purchases of $5,000 or more... plus unlimited 2% cash back on all other purchases! and with greater spending potential, sam can keep making smart ideas... ...a brilliant reality! the new ink business premier card from chase for business. make more of what's yours. >> markets are feeling relatively relieved.

housing markets are repricing the degree of fed tightening. it's too early to say that we are potentially cutting but there is recalibration in terms of the terminal rate in the u.s., which is relevant. jonathan: philip lane of the ecb spoke this morning, chief economist, in an interview he said expects the tensions to settle down and more heists will be needed and they often refer to their baseline view saying that this is what we think will happen, might not happen, but if it does this is what we think we will do and ultimately the baseline is this will settle down. tom: this is really important. can we still look at the disinflationary vectors? professor lane says no. jonathan: there's a thought in the u.s. that we have a dirty disinflationary resolution given

what's happening in the banking system and it's not happening in the same way in europe and maybe that's the important distinction. lisa: remember that transition mechanism and markets and now we don't care anymore? going up as a good thing for the economy? i think probably the ecb feels different. looking at german two year yields, 3.3 3%, they keep saying we are going to hike more and hike more, bond traders say no you are not, no you are not. it's consistent, you don't know what's going on. jonathan: but it's no longer about the standards of money. that's the difference. the data on which day? just to see how much they have tighten things up. it's not about whether or not i can get a loan for five or six of us, it's about whether i can get a loan at four or i'm declined because people don't like my credit profile or something like that.

you know? whatever. tom: we mentioned the commercial real estate overlay. digressing right now, it's going to be a lot of fun. mandeep singh is with us now, senior technology analyst at bloomberg intelligence. also my conductor research didn't come from palo alto. it came out of boise, idaho. potato money in idaho invented and supported micron. they reported yesterday maybe the great unknown of the semi conductor business. i want to get to the metaverse but simply on micron, who are those guys and why was that news yesterday important? they are the -- mandeep: they

are the bellwether of semi conductors. memory tems to -- tends to bottom out first. there was news around incremental demand getting better but on balance it's about how quickly the pcs and the smartphone market will rebound. yes, data center is strong. autos are strong. but that is not the big revenue generator right now. so i do think that they talked about cutting capex. that will bring the market in terms of the inventory they are carrying and they wrote down a lot of it, that's why they have negative gross margins. clearly there is lack of demand on the device side. that was something not clear on the call. tom: from semi's to potatoes and the metaverse, i thought that paul was brilliant yesterday talking about the death of the metaverse and when facebook

renames itself back to facebook instead of meta. how close are we to the death of the metaverse? mandeep: based on it shifting into an era of efficiency, it clearly suggests they are focused more on the revenue-generating aspects of the business. adds, again the core feeds. and then the video ads business. i think that metaverse is still a 2030 thing. what i'm yet to see from meta is just cutting back on spending when it comes to the side of things. they are still very aggressive when it comes to that. probably they will cut back because there is nothing on the horizon suggesting they can monetize right now. lisa: let's put these ideas together. meadow with micron and nvidia counting on that capital

expenditure from large businesses in order to really grow what they do. how much is micron, yes they might have beat low expectations on how much are they seeing or are they expecting to see potential consequences of declines in capital expenditures? mandeep: micron themselves are cutting capex, so clearly there is a chain what on capex and how it impacts customers and suppliers and in this case i think with meta, the good thing they have is that they are using a lot of that capex spending in terms of developing ai capabilities. now a lot of ai and large language models goes into their core business as well in terms of what they can do with regards to showing more personalized ads and offsetting some of the apple changes that were a big pricing headwind. so not all of that capex is going towards metaverse but a large chunk is and that will

have a trickle-down impact on nvidia and all the chip names. it was one of the biggest drivers, you are right. here the chip customers are very concentrated. it's a hyper scale club, guys. lisa: looking at the gains and they are pretty incredible. nvidia, up 130% since the low october. does this make sense to you, this incredible rally in semi conductors after the dire expectations from last year? mandeep: i go back to my earlier comment that they trough at different times. you can say the same about the overall chip market. autos and data centers have held very strong. these guys haven't even seen a slowdown on the drop. but on the pc and smartphone side i think we are close to it. that is why the more diversified you are is a chip company, the better off you are.

jonathan: men deep, thank you, as always. lisa, like you, the first thing i thought after the numbers came out at yesterday was don't care about that company, what's the macro read, what's the story for the economy. lisa: obviously. that's basically the question. people are saying we have bottomed out, we can go ahead and buy more pcs, more computer devices for our children that have already broken all the ones we bought during pandemic. jonathan: ok, personal again. [laughter] lisa: i'm just saying. jonathan: china reopening, reflation, problematic for the u.s., how much has that changed? i've barely heard about the china reopening story at all in the last couple of weeks. the story has just kind of gone quiet as commodities rolled over. lisa: especially regarding how quickly they were brought back up to speed. tom: it was made clear to us a

couple of days ago that it was made within the prism of trade in chinese international development and really what they need is domestic recovery and they are seeing domestic recovery. so what do you make of that manufacturing labor process? maybe we will see that domestic recovery and then you see australia do better. jonathan: so we have gone from bank cut recessions to know landings and narrative hikes and now all of a sudden rate cuts again and this inflationary bust? where's it going to be in two months? lisa: i will tell you. tom: for tomorrow. lisa: i have a serious question. are you ready to write your march 31 year outlook? are you in a better position now than at the beginning of the year? jonathan: definitely a better position then at the beginning of the year.

i would rather for the outlook out now than three months ago. lisa: the bar is low. [laughter] tom: when you were gone, i went to levels. the nasdaq is near, i never thought i would say this, nearing 13,000. the levels, they are within a numbness of crisis in these equity levels, they don't scream bear market. jonathan: things are doing better, up 9/10 on the nasdaq. coming up, and equity market that keeps improving by the minute. near session highs. ♪ >> welcome back to another tennis update. belarus came out on the third round for the 20th when of the season. more than any other layer on the

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>> the fed narrative is an uncertain one. >> think they can just take a

pause in the rate hiking cycle. >> depending on what analyst you talk to it could be anywhere from 25 to 100 basis points because of the crisis. >> at the end of the day what the fed feels relatively confident about his they can handle what is going on in this situation. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. coming up on claims tomorrow all three of us together on radio and on television. for me the headline item of the data which speaks to the healing over the trauma, although great coverage you and lisa did their with the sunday special. 4.11% two year yield for a cup of coffee or early this morning it screams jonathan:. we need to go to canada, cpi no

one cares april 13, first republic reports earnings. then you go to april 14 and you go to to jp morgan. the earnings from the banks and the guidance they give us is perhaps more important than the incoming information so when the federal reserve says we are data dependent, dependent on what data given the development? tom: i missed that and the answer is diamonds can speak. diamond through the press conference is going to give his opinion. the dynamics of money market funds is that data more important than the macro economic data mike mckee follows? jonathan: it's no longer just about the price of money it's the lending standards and how much they tied to it in the weeks to come. lisa: i wonder if jp morgan, if

there is a diversions opening up there that perhaps you are seeing more stress at a time when the jp morgan's of the world don't see the same sort of stress in their business. which data, each viewpoint are we really understanding the microeconomics are they going to underpin the next flight? tom: some challenges here that's been in the press but is fidelity, the jp morgan of market funds i don't of the answer that but money markets funds plan this. lisa: it will also be something that a lot of people will be looking at because where is the money coming from? is it rearranging of bank deposits is this going from risk assets? is it basically a sort of defective credit tightening as seen through these flows? tom: what do you see in the bond market? are you looking at -- i'm looking at the two-year but is there a wants there? jonathan: just think of the range we have seen through the

munch of -- month of march. the next narrative, the next regime shift we have gone from 355 at the low 5.08% of the high in a couple of weeks and now we are at 4%. this a lot of people comfortable with the idea that this is it, the last two weeks rate cuts are coming i remember three weeks ago when this was at no lending they've got to do more to try and get that landing and lisette they're going to go to may 6%. lisa: over at goldman sachs saying what a lot of people have been trying to say which is basically that the banking stress does increase the chance of recession but it is not as they said the economic hurricane that a lot of people are expecting and that he only expects a 35% chance of recession this year. if that's the case, two things, number one does that mean the fed still cuts rates in response to the baking stress and is that what enables the u.s. economy to avoid that stress? and, number two, does it mean inflation is going to be a lot

longer -- a lot higher? jonathan: to different decisions here. the federal reserve makes the decision to pause and then they make a separate decision to cut. the pause is the start of the cuts, they think is the same process ultimately. i think for the fed to start and then stop is a different story that's just to go on this massive cycle. you mentioned something over the week and we talked about it this morning she has pointed this out we are reaching for the old playbook first sign of stress when we spent the last 12 months , the story has changed. maybe they pause but that doesn't mean they come all the way back to three, 2, 1 and who knows what's next. this is about the reaction of the fed and whether we are in a new regime given where inflation is. tom: it's about labor, i mentioned claims getting it out to some, quote, normal number and do we begin to see any form

of disinflation? david rosenberg is on tour talking about it. look at this data because it's more correlated to date optimistically then anything we've seen. john oil, $74 american. jonathan: no news on that and good news for this market for now. equities up by 1/10 of 1% but the president came in yesterday he's said things like it's not over yet i'd never advise that. usually they say we've got it under control. the president also said things are settling down. that's hard to disagree with based on the lack of news in the last week. i mention equities up by 1/10 of 1% if we can get to that board. the story about the divergence that could emerge between the ecb and the federal reserve the euro-dollar 108 50. tom: some of the tweaks the tea

leaves are looking at. head of microstrategy for north america, i love only. --lee. the bank crisis, it should be over. you've seen a few of these, unlike me. how do you know within -- when it ends? >> you don't know when it ends it's just time. time is the greatest healer, tom . another day, no more bad news on the banking side it does look like this is not a systemic problem this is idiosyncratic there are a couple of banks we've seen we know over the last couple of weeks we've seen but since sunday before last things are starting to calm down. and the fact is if this is it, it looks like it is then we do need to go back to the thing about the fed of a few weeks ago.

we do need to go back to looking at the data and saying what's really changed? there's going to be some timing and lending standards. we know that but how much? how much of this is this is it and were done here in terms of banking crisis for now the fed can't rely on some big pullback in lending in order to do the job on inflation they have to carry on doing what they're doing. jonathan: people believe the fed is in the business of breaking things. the fed believes they are in the business of risk management. the information they have between the start of may and now do you think they will get sufficient information to get the quarter hike interest rate? >> yes, i do between -- based between now and make we have no continuation of the banking crisis, the data continues to be strong which the indication is it will. then that's enough. that's enough for them to hike

again in may assuming nothing, we don't break anything else in the banking system. it was three weeks ago that powell spoke to congress and rate then we were pricing a terminal rate of 5.7% we have your entry at the end of this year at 5.5%. four-point twinning at the end of the year. if this is being contained to what we've seen so far does that really change the environment that caused -- that much? lisa: you are the expert at understanding the dynamic. incredibly volatile since we've seen since 2008. how vulnerable is this particular fundamental ecosystem to some sort of shock where the fed says you guys are wrong, we've been telling you this, and rate are going to hike rates. and guess what, we are seeing something different than you are. >> we did have volatile days.

the system, overall, stood up. let's be honest, we have we have five weeks of messaging that's going to come through. last week we had 115 basis points priced in by the end of this year we are now at around 60. already seeing some sort of repricing nothing is broken, we we priced the bid. everything is working pretty well so, you know, can we reprice more from there? absolutely. we won't get back to where we were on march the eighth, not anytime soon but there is room for the rates to move back higher. tom: with your travels here, we do have leaf carriage on the line right now. data my favorite liverpool is the guy that goes for the net. could he actually leave and go to spain as espn is writing? willie, help us here is this the

breakup of your beloved liverpool? >> breaking up for a little while, tom. i think mobile stay. i don't think he's going to go anywhere. last time he was on it was with madrid. i was right for 18 minutes. [laughter] jonathan: that was great. lee, thank you. tom: i don't even understand what we are talking about but the answer is -- jonathan: thanks for bringing it up. tom: so much of our audience cares about this but help me here. it matters if you come in fourth. liverpool is not doing that so these hitters are like, we are out. jonathan: is going to be a

competition with newcastle. tom: but liverpool -- jonathan: they should be up there. what is happening with fenway sports? what's can't get its price. tom: is very partial sort of. jonathan: it's interesting as henry for instance may be looking to exit. i wonder what that says about the valuations at the moment. tom: i got three emails in 10 emails thanks for the football talk. jonathan: another time. abate tense of 1%. mike mccormick joining us shortly. >> keeping you up-to-date with news from around the world with first word, i'm leanne garin's.

once again be the ceo of ubs to oversee the complicated acquisition of credit suisse he is replacing former ceo who has been ceo for two years. he will take over after next week. meanwhile the u.s. senate committee says credit suisse distal helping rich americans hide assets from the irs that is almost a decade after one of the banks units pleaded guilty to tax evasion conspiracy according to a new report credit suisse worked with jewel citizens to conceal assets. the bank says it does not tolerate tax evasion. he told the associated press that moscow could get international support that would force ukraine to make unacceptable compromises. so lenski invited china's

president to visit despite china's ties with russia. the ceo of macy's will retire in february after seven years of leading the department store he will be succeeded by tony spring who says ceo of the company's height and bloomingdale's chain can have a turnaround plan. job cuts and also the focus on digital operating. global news powered by more than 2700 journalists, i'm lisa matteo. this is bloomberg. -- i'm leigh-ann gerrans and this is bloomberg. inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews.

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>> this is a banking crisis but the reason, you know, the reason we got there is very different

than a lot of other banking crises. it wasn't because of bad assets. it was because of duration. really more than anything. there will be eventual impact in terms of lending less that has to have an impact on corporate america. jonathan: barclays head of ficc research amongst other things. you can sense the nervousness there over calling it a banking crisis. this has come up over the last 24 hours. the speed at which some of this happened. there was a reference to this number 100 billion was about to go out the door of svb on friday everyone is talking about the age of digital banking and i totally understand it. it's important when it comes to svb, the speed was a reflection of the character of the deposit base it wasn't just the speed that broke thanks. it was the character, the nature, the concentration of the deposit base that led people to

see how quickly things played out. lisa: the digital aspect is why we didn't see people in line to get deposits and that's the key distinction here but it isn't sort of a necessarily that reason why all of these deposits were withdrawn and that is to your point. when there are problems with the oversight and risk management you have problems with people not wanting to put their money there. jonathan: to make it more simple there's a difference between a number of big hands and a number of small hands. if it's a small number of big hands, you can move 100 billion just like that. that's the reflection of things. the speed was just a reflection, at least for me. tom: you're going to get me in so much trouble here. i've been put in the timeout chair by so many of our listeners and viewers is svb a bank? jonathan: it's a bank it's just a different kind of institution. tom: it's a new kind of

entrepreneurial bank without interest rate discipline is about where i want to be right now. it's just a simple as that. jonathan: i know that lead. it's amazing. [laughter] tom: we've got sensors on the bramo camera. when lisa has something to say, she leads away from the mic when she has some thing to say. that means she's really got something to say when she leans back. lisa: thank you for pointing that out. i was going to say how many other banks are there that are not banks but really are banks that are going to fail? i wondered about that with signature. it's got all of these other institutions. people put their money and thinking it's just the regular bank and it's not. that's the point. if you have the concentration risk you have systemic risk and concerns and it gets painted with a broad brush. jonathan: we are on the same page. tom: look for balance of power

tonight at 10:00 p.m.? jonathan: at 5:00 p.m.. tom: my bowtie is a disaster today. you securities, research report given this chaos? >> stick with the weeklies, term ideas you link to some of these broader things that are still prevalent we have talked about a few times already. while there is a focus on the shock to the u.s. banking system it does take us to research that is very powell for right now. financial sector is one the real economy has won, they are competing and now we know the financial is more important for policy. the other side is there are guardrails to the slowing global economy because china is still coming through the reopening still accelerating and so what you have is the fx market is clear that this is still being

treated as a for the dollar given the guardrails you have around global economy. tom: i have a ways to go here but i'm going to get out in front of the coverage that you will see anything couple of weeks. i'm looking at some idiosyncratic market tensions perhaps off of u.s. banking crisis, perhaps off of the mystery of the central banks of the world. what do you see in the em when i see the blue dollar in argentina pumping out these are little tea leaves, aren't they? >> i think you have your standard playbook which is kind of like which currencies have big vulnerabilities on the credit side, basically they show up in term of dollar liquidity. you kind of want to get the playbook where there is stress coming from the u.s. and which countries will have the repatriation which is purely a function of the current em.

your turkey, argentina, those currencies are basically still not kind of in the lexicon a lot of people trade them as kind of an em group. kind of thinking how relative to asia it works in this because asia is insulated from this crisis very well. some things very connected to the u.s. gross source and the fed outlook, that is something that has been a very focused carry trade which could be formable in this over the next six months. lisa: i think of the dollar as a wrecking ball. it drives through all of these neat narratives that people put out there and checks them and is unpredictable and we have seen this weakening as people price and rate cuts through the end of the year the fed is going to say the baking crisis never happen, it's over, it's not going to have a material impact. we are looking at data that's still hot and we will look at

the information what does that do the wrecking ball of the dollar? >> interesting question because you have to look at what happens over the next three months and the next year. if you look at the correlations, the dollar is not related to rate cuts in the future versus rate hikes right now. when we run like a macro that includes rates, equities the dollar is already trading at premium. if you get what we interest -- anticipate as a few more hikes the bigger move is for a rate cut cycle to begin next year. your resume -- regime is super bullish for the dollar. as an aggregate it's very bearish for the dollar and again we still have the rest of the world outperforming the u.s.. if you get more fed hikes and you get the idiosyncratic weakness in the u.s. that comes with it you also have equities underperforming so when you

layer in the effects equities now those are things that are very important that we see in our framework that tells us what it is driving a performance. if you get the fine-tuning the dollar is generally a bit, it's a bit more two-way the euro tops out at 110 the dollar given peaks around 134 but the next big move in the next 3-6 month after that is the start of a more sustained dollar bear market. lisa: how significant is that? >> it can be quite substantial if you look at it in terms of valuations as you mentioned on em if we get to the end of the fed cycle and we are close to the terminal rate volatility will collapse. it's expensive relative to macro factors. you take that out, you take the capital flows out of u.s. equities, it's other assets particularly in europe and asia and you see a push into emerging markets high-quality carry and

if you see a shift to asia-based growth of currencies like right now we like the korean won. jonathan: are we missing a piece of this? what happened to the other side of the dollar smile? what happened to that piece of the whole process? >> there's two components you have to think about. kind of moves into a full sustained crisis and the other side is exceptionalism. we are losing the u.s. exceptionalism piece if this is a u.s. centric banking crisis or turmoil or shock which forces the fed to change policy because the r-star's, and if the shock is disinflationary given the change in credit standards and ending standards you lose the u.s. outperformance on that smile. on the others if it if this doesn't morph into a global crisis, again this is an impacting asia we are closely

tracking banking sector stocks. outperformance what we see in european sector. euro-dollar should be trading at 112 right now so you're losing both extremes of the smile. i say the obviously bigger one is that this could morph into a global pullback but that is not our base. jonathan: interesting. >> most likely this is u.s. underperformance. jonathan: mark mccormick said it was about rate differentials. and then physically said it was about differentials. lisa: basically. jonathan: more in the next hour of bloomberg tv. ♪ ♪ ever better. it's when disruption hits

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tom: "bloomberg surveillance" good morning, everyone. to see if we get any kind of glimmer on a perfectly employed america. better day here, lisa let's look at the data here quickly. the bottom line is i set up a stick it's up 1% there could have been moments here were nasdaq went under this morning up 1%. lisa: ok game on let's go into that. people want markets to go up that seems to be the theme the interesting thing is you see deals down.

you see people going into bonds and stocks and is perhaps the absence of news that's giving them that sense. tom: we are going to get right to it if you are part of global wall street this is the point where you stop on radio, on television and listen. in this banking crisis you need somebody who is so knowledgeable on it. the 10 banking crisis back to jackson, thomas showed within the crisis perspective, what is the biggest's with this week for you on a day-to-day? >> first of all, it's been nonstop. you can't have it if the banking system is not working and it's a step beyond that because it creates a lack of confidence. you mentioned a history if big panics you can argue whether it was 8, 9, or 10 but let's say 10

in the history of the united states. thanks made mistakes we just had the second and third largest bank failure in american history but the banking industry is built on confidence and when confidence is shaken it can absolutely impact the whole economy. tom: 1831, national bank of middle barry, perfect example of a small bank going wait they're going to come here cash out and give it to james dimon explain to us the dynamic right now of the national banks of middle barry out there scared stiff. >> first of all it's not only the national bank but it's the big banks lead the global banking system this is an industry where the american big inks lead the global financial system. but it's really the midsize banks that i think need to talk about. let's just say for round numbers the big angst today have 60% of the deposits in america, they do

not make 60% of the loans to middle america and small america. so if the deposits are going to the big banks, that they're not the ones making the loans to middle and small america it's going to have an impact on the economy. i think long-term, down the road, we're not going to be in a good place. there is this implicit guarantee that banks can be too big to fail we just saw it with credit suisse. there was really no worry that counterparties weren't going to be made whole and if that is the since of the land it's going to drive business away from these midsize banks and i think it's going to have a detrimental effect on the economy. lisa: why have the steps that the fbi see, the treasury department have taken to basically defect insured deposits for most midsize banks to garner that support? >> we got close but we didn't go

the distance. secretary yellen, when she spoke, still left the door open between implicit and explicit. if you saw what the first reaction was of the fdic with silicon valley it was to give certificates, not deposits money back. i think that actually accelerated the outflows of banks on that friday. i think what we need is orderly -- orderliness. if the administration come out and said we are going to use our authorities we will say any bank that fails of any size for the next year, we are going to guarantee the deposits while we figure this out i think it would be very good for the economy. lisa: putting long-standing solutions aside for a minute you talked about how all of these smaller banks punch above their weight how much have you actually heard of tightening of lending standards of actually retracing some of the loans that some of these regional banks

have been making? >> it's going to be the story of the second half of 2023 that that's going to be happening. it was happening before we had the recent inc. think lynn. i will tell you that story. as soon as covid started, the first thing that happened over 24 months was about $5 trillion of deposits came into the banking system. we had 13 trillion go to 18. never in my career have we seen the deposit system grow that quickly. that was the covid relief and stimulus coming into the system. it's being trained as a purposeful part of our policy so we are probably, according to our numbers, 10% too high in terms of surge covid deposits. number one, ftse deposits are shrinking as a part of public policy. number two, we have this confidence which is a little bit shaken which by the way it's gotten better.

but it is still shaken and that is driving deposit flows too so it's really turmoil in the economy which is going to slow the economy. tom: i got bad news, tom. you're not the most important person at their right now when you look at commercial real estate and his work in mortgages and your security analysts what you guys are known for for decades, j is the guy on what's going to happen with commercial real estate. what is he telling you when you call him? >> about a month ago we came out with this call because another thing is, the banking issue is not specific just to banks. when interest rates go up this fast there are implications and there will be other implications so we wrote a report about a month ago that jay led and he said basically he thinks there is 30% downsides in office

buildings in major markets across the country with about half of that due to the cap rate and about half of it do just a factors of other factors around occupancy and inflation. you are already seeing it. this is a more slow-motion event is going to take two years to play out. but that's the next, thus the next asset. tom: what does it mean for global wall street? what does it mean for the people of manhattan and what does it mean critically for our viewers and listeners ever going to see a 30% negative? >> i think it's going to impact economic growth and i think it will just mean that were not going to have in my opinion, i think it will be a headwind for economic growth as all the industries adjust around that. and it is going to cause banks to tighten their lending criteria which in and of itself is a big form of quasi-marketing types. tom: you see it with car loans now. you can go out, just a general

statement you can get an auto loan because they are tightening up. lisa: i think they are being rejected. >> zero interest rates was the rocket fuel for shadow banking and now we are going to dial that back somewhat in my opinion which will be in effect for slower growth. lisa: teasing out all of the different interconnected pieces can be tough i want to go back to something that can be said that we are still about 10% elevated when it comes to the deposits. you talked about how that's going to get withdrawn and the fed is going to have a sort of accelerated type of tightening feature is that deposit base going to disproportionately leave the regional banks and other words it might be 10% of overall deposits but a much greater portion of just the specific, smaller, and midsize banks given the consolidation. >> it was going to leave the

bigger banks more because they are bigger. our estimate is roughly $60 billion i think we were going to see come out of jp morgan this quarter now it will be less because of the remixing. even jamie dimon has been talking about the fact that he saw billions of dollars of shrinkage in his deposits. i don't want to alarm anybody by that because the industry has been planning for that and new that that was going to happen. remember, when we talk about it, what is that? the fed is tricking the money supply and also it is the yield more rather than bank deposits i think it's navigable but if we put a crisis around it it just makes it trickier. lisa: given the likely increase and flows out of these deposits given commercial real estate and the stress there given the shadow banking system and potential fractures that people are expecting their do you think this banking crisis is over?

>> i think every day that goes by we are getting more stability. i think washington wanted to stop. i think barring any other major sharks is behind us in now that we can deal with some of the other challenged institutions. if we had more time than i laid out the statistics of silicon valley it was off the charts on a couple of risk measures. we had major banks and two failed. we are not underestimating the impact of it. tom: i have time for one question, so many emails here and it was an honor the play. what in god's name is middlebury going d1 hockey? >> baseball made a run at middlebury but when i play baseball we got our fans to go watch lacrosse. tom: get all the visibility.

it was made to happen. >> i would support that. tom: that's the news we need to have today. of course a small matter kbw definitive on banking. i learned sort of like it was to banks and we are beyond. lisa: there are a lot of questions and that is the weakness in the economy is the most important point. disproportionate lending from these regional banks and the question around if people do withdraw assets from them the consequences for the economy are greater although i do wonder with a kuester to see some of these banks offer higher rates again to lure in some of those deposit bases. if they get past it do we get some stability. tom: i think what is underreported here and i mentioned fidelity this morning as i'm old enough, i actually

remember the shock of what some money market fund? i'm still living with those things over there away from the land of kbw and the rest of them. money market fund has changed everything as we all felt decades ago. lisa: you mean because we have to care what they invest in? tom: it's a 5% yield. jamie dimon is not giving me 5%. lisa: if the fed keeps hiking rates, how much is that retching up the tensions? tom: you should see the toasters at the national bank of nettle bari. --middlebury. important interview coming up with the leader of citigroup. stay with us. as futures advanced up 31, this is bloomberg, good morning. >> keeping you up-to-date with news from around the world with first word, i'm leigh-ann

gerrans's ubs is going back to the future. returning to the bank as chief officer to oversee the acquisition of credit suisse. he will replace the ceo in charge for two years people retake the role he held for nine years after the general meeting next week. the german government will increase financial support for ukraine but is much as the $13 billion. it will be used for weapons bloomberg has learned almost half the money will be available this year more than doubling the current amount. president joe biden and house speaker kevin mccarthy exchanged dueling letters over the fight for recent that debt ceiling occurred the is demanded negotiations begin the president responded by challenging republicans to produce a public budget plan. mortgage rates in the u.s. fell

last week to a six week bow. the contract rate on 30 year fixed mortgage declined we basis points to 6.45% the lower rates helped drive a fourth straight increase any applications to buy a home. global news 24 hours a day on air and on quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans and this is bloomberg. ♪

>> the banking system is pretty sound and we are talking about a few banks. we heard it from chairman powell

today this is not something spread across the entire banking system. this is not the credit crisis. this is a situation where it is a few banks. tom: very important to note the leader of citigroup, jane frazier in conversation with david rubenstein look for that important for conversation. tonight at 9:00 p.m. for those opening in asia it's a big -- lisette really extraordinary to see jane frazier speaking there versus the conversation with david westin. it seems a million miles away. lisa: there needs to be some sense of confidence not just in the banking system but a question around the role of the big banks in supporting smaller ones and that is something that came to the floor over the past few weeks. tom: david rubenstein joining

us. it's a happy david rubenstein as he joins us today from his duke university thank you for joining us this morning. so much of this is a distrust of these major banks how did jane frazier frame that you can trust us this time in this big crisis? >> for those who don't know, jane, it's hard to believe but after 250 years of our country's history she's the first woman to have a major money center bank. she's a native of scotland but educated here at harvard business school and worked her way up and for the last two years has been the ceo of the bank. the banking system is in pretty good shape. there are a few problems being dealt with and maybe you can argue first republic bank. was she is saying is the banking community is coming together to figure out how to solve some of these problems and not rely only

on government assistance. tom: say there were three big swiss things in our childhood and now there's one, i guess. we will see how that works out. there is the turmoil of american banking. did you suggest in your conversation with jane that things are being sped up now for the major banks that they're going to have to move and act strategically faster in the coming months? >> in the crisis of 10 years ago one or two exceptions were undercapitalized now the major banks are well-capitalized. leaving credit suisse aside they are well capitalized and they have more of a ability to help other banks. as you saw in the case of first republic the major banks put together money that would go into first republic as deposits and hopefully that will shore up the situation to a more president -- permanent resolution.

i don't think we have a crisis where jp morgan or wells fargo or bank of america everybody is nervous one there is a banking problem but i think this is reasonably under control. lisa: do you think this is the best pr move to happen for big banks? they can be that good golden aldrin and have politicians come out and say you guys should all be more like them. >> i'm sure that might have been in the back of their mind but the truth is the u.s. government used to come in and resolve these things that this case, jamie dimon has taken the lead. you have banks putting in the money and that's unusual you don't usually see that in a voluntary basis. this shows how supportive they are of the problems they see in the banking system. lisa: i love that you are the one that was interviewing jane frazier. that really is the focal point of so many prognostications at

this point from your vantage point the discussion with jane do you get the sense that there truly is a mass wave of credit tightening that is coming upon us that is going to become clear in the second half of this year? >> interest rates have been going up steadily as we know this year and as a result one is supposed to be slowing down the economy but one of the other consequences is some banks are hurt by this the general requirements as it probably usually helps banks as they can charge more. this k, -- this case some pigs have a lot of securities which become worth a lot less when is transfer -- interest rates go up. that produced a credit whole in silicon valley bank and some of these other banks have modest credit holes. raising rates has not been a

good thing for the banks. when interest rates go up it's not that big a problem but right now the bank system is in reasonably good shape. tom: there's going to be a house committee meeting today going after guys like you the fatcats of global wall street. i want you to speak to house republicans today with their immense distrust of the kind of people that blew up svb. what do you say to people representing a broader middle class of america that say who are these guys and why are we putting up with them? >> whenever somebody loses money, governments always come in and say who's at fault? the government will say it's never at fault so i'm not surprised somebody will go after somebody that's lost money for shareholders and so forth. on wall street types i don't

think people are going to be shocked by it. the case of silicon valley bank they clearly did some things that regulators should have been more on top of i think under the banking regulations and laws the federal reserve bank of san francisco was aware of it and was working on it but i don't think they did enough quickly enough to take care of the problem. tom: that's the question the quickly enough of it. can we legislate the courage to be quickly enough? >> whenever you have a financial problem and something goes wrong, you always try to have a fix. but the ingenuity is such that they can always figure a way around some legislative or regulatory constraint. i don't think we are ever going to solve all these financial problems. there is always going to be somebody taking advantage of some rule so i don't think we can fix it overnight and we can't just point a finger at somebody and say it's your fault. tom: david rubenstein, thank you so much.

of from duke university this morning. important conversation with jane frazier tonight at 9:00 p.m. in new york. i want to mention something, lisa which is in the background certainly for america today. we do this with the market up essentially 1%. the moment of history going on in germany right now is absolutely jaw-dropping. it is something unimaginable over the span of two world wars and all of the history that we lived and our parents lived. this is early take of the king of the united kingdom and of great britain visiting the brandenburg gate. you look at something like gregory peck and 12:00 high which was an iconic movie that shattered our illusions of world war ii we went in there and we had to level it within a war led

by the british. this is the king of england returning here before his coronation. here he is in germany being greeted by the german people. sir anthony selden who i have talked to many times speaking to the bbc making a clear the significance of this, once in our lifetimes. lisa: especially in a moment of war. very much departure from the 1940's when it was quite the opposite comes at a time and they are trained to unify our front with a conflict that has not stopped and that continues to rage on in ukraine and i think that is really the crux of the symbolism at this moment to see king charles in germany. tom: overlooking berlin news bureau in germany now and of course the brandenburg gate are those of you on radio it is the

iconic gate that means so much across so many generations. let us get back to what we do abenberg surveillance. which is simply a better take into claims tomorrow in critical inflation data friday. lisa: at what point do we go back to the same playbook when jay powell went before congress and said i mean really this is the issue. i'm looking at the expectations they are creeping up in terms of where there are -- they are going to end the year. it's going to naturally does inflate it. tom: i missed this folks the two year yield explodes. if that's the right word, rounded up to four point2 -- 4.2 percent. please stay with us through the day. including david rubenstein's important interview with jane

frazier. bill isaac later. this is bloomberg, good morning. these days,

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>> looking pretty good this wednesday morning. equity futures higher by .9%. the count onto the open starts right now. announcer: everything you need to get set for the start of u.s. trading, this is bloomberg the open with jonathan ferro. [bell ringing] jonathan: live from new york, coming up, president biden says the banking crisis is combing down. stay tuned for financial

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