♪ >> welcome to bloomberg markets. sonali: let's get a quick check of the markets. we are looking at red on the screen, the s&p 500 down 0.4%.

the -- kbw bank index --. overwhelming results under roman results from morgan stanley shook the market. 2-year yields up about 10 basis points. you are looking at a level of 4.24. during earlier today from christopher waller. that is pending the dollar of higher. at the highest levels this december, john. john: moving from the currency story to a lot of real news, let's start with canadian connections. restaurant bands, the parent company of tim hortons but it also overwritten the burger king business. they have reached a deal to acquire their largest burger king franchisee in the united states, more than 1000 burger king locations, part of a plan to improve profitability at burger king that has been playing out in the last couple of years. a deal that has fallen apart

also making headlines at this hour, as we reported here on bloomberg, jetblue and. , according to this federal judge in boston, cannot come together in their planned deal on antitrust concerns. there is a concern from the federal judge about the cost realities that would come from this combination. you initially saw a spike in jetblue airways shares. we also saw a dramatic drop in spirit because of the volatility. we had also seen halt action. spirit shares are down 55%. sonali: 55% is nothing to laugh about, significant moves in the stock. george ferguson of bloomberg intelligence joins us now for more. when you look at how drastic the move is, how unprepared were investors for this, and what is the path forward? george: a lot of investors were

inside spirit airlines for the potential buy by jetblue. the shares hadn't fully bridged the gap between what jetblue is offering as is typical. and it was pretty wide for a while. some people had jumped in i think on the thought that maybe the government had made a good enough case in the trial. our litigation team who followed the trial closely, thought the government did make the best case. clearly now the judge has gone for not allowing this merger which could put spirit -- spirit will have some very difficult days ahead. their segment of the market is very difficult -- photo low-cost carriers. everybody is extremely price conscious. when sliding them. frontier is their major competition. spirit is not profitable as of 3q. next year looks rough with shares potentially -- with fares

potentially falling in the u.s. domestic market. so some pretty rough days ahead first. without jetblue. jon: outside of exploring legal options, what comes next for these companies, and you alluded to really what comes next for the low-cost carrier market. george: i guess jetblue has to figure out where they want to go from here. my guess is they will be able to contest something like this. i wonder if they would because they put a pretty heavy premium on top of spirit, making the offer at well before we have seen the slide in airline shares that we have been over the last bunch of months. so it makes you wonder if it could be in the market that has too much capacity. the onshore low-cost carriers, i don't see it as a separate business units. they are in there competing with, even on the back of delta,

american and united, they are unaltered low-cost carrier and competing against everybody for the most price-sensitive customer and right now it feels like that price-sensitive customer could be under pressure from the higher inflationary costs we have seen, higher interest rates, maybe the job market looks like it is not as white-hot strong as it was previously. i think that means that that traveler may be doing less and may be more price-sensitive and that will be a tough place to compete right now. sonali: george ferguson, thank you so much for your time and analysis. now we move to the financial sector because we are learning more about morgan stanley's 249 within donor penalty to end a multi-year probe equity unit, that the sec's is betrayed the trust of its clients by leaking information. there were some large layers at stake here, kathryn, when it came to unloading some of these

block trades. has there confidence been breached in the process of morgan stanley's block trading business? >> that is what this probe was going into in fine detail. the names themselves were omitted from the report, but the details had little breadcrumbs could lead the way to finding the answer and that's is exactly what this story is on bloomberg today. there are names -- oak tree, blackstone, coming out as some of the firms who were on the other end of trades that they thought were being handled with care by morgan stanley. when all this very sensitive information leaks out to the market, it can be market moving and in this case it benefited some of the hedge funds that were shorting the names that oak tree and blackstone were trying to offload. so when they got a head start, not only they, but morgan stanley ends up profiting at the end of the day. it's a very, very final report coming out.

the detail it sells doesn't include the names, but there is enough numbers in there that you can figure out who at the end was impacted. jon: we were just talking about some developments in the airline sector helps legal remiss editions around that. i wonder what the message becomes from this developing story because when it comes to investors having discussions, or discussions being had with investors about block trades, what kind of gray zone army operating within here? katherine: that is what investors are coming out and say, do not operate in this gray zone. the expectation is that you are protecting your clients' information and you need to do just that. they have evidence that shows there were some bad actors within morgan stanley. the firm has come out, those folks have been -- they have left the bank thus far. the bank said they had dealt

with the matter. . this settlement is really an ability for them to move forward and ensure that they are turning over a new lease and that they will conduct business accordingly within these regulatory frameworks. but you are right, these questions about the advice that can be offered which sometimes seems like ordinary course of business, in this case, it was not. it was information that shouldn't have been out there and there were presentations also that the bank was repairing showing that this is actually something they were touting, that they were willing to protect their clients' information, when, in fact, they were during the opposite jon: thank you for breaking that help that one down -- break that one down, katherine doherty. on wall street right now, they are also thinking about the influence of ai. . sam altman, ceo of openai, doesn't think it will replace jobs to the degree expected. here is what he told brad stone at bloomberg house in dallas.

>> this human drive is so strong, in the way society works is so strong that i think, and the kids believe i'm saying this because it sounded un -grammatical to me. but i think it will change the world much less than what we all think. it will change jobs much less than what we all think. i may be wrong. it would not even compile to me as a sense given my perception of how agi would go. >> have you both changed your views on how significant the job description will be as agi comes into focus? >> you hear coders say i am two times or three times more productive, and i can never code again without this tool. but turns out, and i think this will be true for a lot of industries, the world just needs a lot more code than we have people to write right now.

it's not like we have run out of demand and people can just do more. expectations go out, but ability goes up, too. sonali: goldman-s equity trading jumps, as the wealth business is still underwhelming investors for the year. we will talk more about that, next. this is bloomberg. ♪ ♪ invest with confidence. was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

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earnings and the equities-trading unit was a huge standout with performance triple what analysts were expecting. we have seen shares up on the day close to 0.5%. morgan stanley by comparison stock is moving in the other direction, concerned about what is happening on the business going forward on the wealth management business. there were some charges that investors had to consider. christopher kotowski is a long time bank watcher with oppenheimer and joins us with reactions. great to have you with us. what do you think of a reaction to goldman being up and morgan stanley being down? chris: honestly when i got the press releases -- you get the press releases within the company of minutes of each other in the morning and you go through them, i thought morgan stanley was a little bit light and goldman was a little bit better than expected. but also a big part of goldman's

beat was equity investments. i didn't think we would get this kind of reaction that we seem to be getting today. i suspect may be your prior story about the block trading also weighs on the stock today. i don't think the earnings reports or that different from expectations that you would have this kind of diversions. sonali: almost a 5% decline in morgan stanley. one of the richest banks leading into this moment. but is this about gorman premium starting to fade? i am sure he didn't wake up and what that reaction, but is it a function of higher compensation costs? what are his headwinds at this point? katherine:. >> i was trying to parse through

what it was, and the new bit of guidance was that net interest income was kind of flat. it's not entirely surprising i mean, on the $12 billion revenue base, i think the guidance was within $30 million or $40 million of where we had it previously. at the margin, was it positive? no. but did it deserve this kind of reaction? i think not. the nice thing about morgan stanley's business model now is that where james gorman -- the word he had always used was that the asset and wealth management businesses provide a ballast. i think that's right. to the extent that people are expecting a big capital market the rebound next year, i think goldman is probably the better way to play on that than morgan

stanley. morgan stanley is a more diversified business. at the end of the day, in down markets, morgan stanley had higher returns this year where the investment banking business was

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fund at $2.6 billion, bringing total capital commitments to roughly $5 billion in this latest cycle. and we're going to discuss this with rockpoint co-founder and managing member bill walton, because we know it's been a really rough fundraise environment out there. when you're talking to investors, particularly for an asset class like real estate, what are they looking for right now and how hard is it out there? well, first of all, it's great to be here. great to be in new york. traffic is intense. so we know new york is back. but i think investors today are looking for comfort. they're looking for a long time track

has held us in good favor and we were able to raise the $2.7 billion from investors around the world. as you point out we raise another $2.4 billion in other product we have. sonali: what does this mean for the billions of dollars you have on hand? where are you willing to put money to work and where are you avoiding opportunities in property at this point? guest: in our opportunistic product we are pulled way back. we are incredibly cautious and disciplined right now. and so we will be prepared to move quickly when we see things we like and have confidence and conviction. generally we like multi family. there are great population and demographic things going on. we like multi family,

single-family, industrial. one area we do not like is life sciences. we have a special vantage in boston where our main office is. we have 35,000 feet of existing state, 25% vacant. and you can see, at least in boston, that vacancy could be 35%, 40% or more. that is just not an area for us. >> here in candidate we have record immigration. i was speaking to a real estate investor today that was very bullish on the demographic shift because we got a very tight supply for housing and a lot of demand. when you are trying to make what is it that appeals to you in an area like multifamily? >> the opposition in the u.s. is

predicted to grow as much as 1.8 million a year in the next 10 years or so. slightly lower number. the u.s. needs 1.5 million units every year to keep up with growing population and household formation and also obsolescence in some cases. so multifamily is one of our most favorite products is because you have a natural underpinning of growth. beyond that, certain market in particular, sunbelt, southeast, southwest, florida and texas will outperform. the raw statistics will be even better. i would also mention that in the u.s. depending on which economist you are talking to, if there is anywhere between -- there is anywhere between a 2-7,000,000 unit housing shortage, so it stacks up nicely. we have had so much building in

multi family, it will be 12, 18 or more months for demand to catch up. jon: how close are you watching trends with banks themselves, how much of real estate exposure that they want to have through their own loan portfolios? bill: bill: should not create an opportunity for you as well? absolutely. regional banks, let's define them as 200 $50 billion or less, that 80% of the business's commercial loans, 60% mortgage. historically we have stayed -- we stay in touch with any source of potential deals, we are in touch with regional banks. there is a tsunami of loan maturities coming in the next five years, literally trillions of dollars. the banks, whether it is a money center bancorp regional bank, they don't have the wherewithal to take it all.

you can see in the old days when rates were low, it was easy to extend and hope for the best on the road. rates of 170 basis points, that will be hard to do. so to your point, we stay in touch with the banks. you will have foreclosures, you will have restructurings, new equity issues. whatever we can do to help them solve their problems, we are delighted to do. sonali: there is a sense in the market that the regional banks that are facing these pressures would come to the market and start selling loan books, that prices would be meaningfully lower or at least low enough so private equity to start to bite by the billions. we are not seeing that at scale. what has to give? bill: as you see more maturities, you will see more of that. right now it's not happening. the signature bank deal was a big deal. but as i said a second echo, the tsunami of maturities is still

coming. we want to be poised to take advantage of that. sonali: when it happens. sonali: really quickly, how do you see this in of maturities coming to the market, is it this year, next year, does it signal more pain for the regional banking system? bill: hard to say. i remember doing a deal with morgan stanley a millennium ago at 38. also the. dollar i don't think we know enough. it will be asset by asset, market by market. shorter term, i have seen estimates from $1 billion to billion dollars maturing in the next year or two we. sonali: thank you for your time, bill walton rockpoint group founder, we thank you for your time. jon, still looking at a tough day. when you look at the banking system if you have almost, every bank, most banks in the kbw index down on the day with a push higher in yields.

jon: and you can see some weakness in oil, commodity related stocks have been struggling. energy and materials are the two weakest components. we are looking at a cautious start to the week in new york. /natalie bass i am jon erlichman. -- first sonali basak, i am jon erlichman. this is bloomberg. ♪ how am i going to find a doctor when i'm hallucinating?

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♪ renminbi is a bit of a struggle for direction. live at studio to hear at our headquarters in new york, i am romaine bostick. katie: and i am katie greifeld. two hours to go. he