sonali: welcome to bloomberg markets. the s&p 500 searching for direction. treasuries remain under pressure and traders -- comments from fed chair powell this afternoon. putting much flat on the day. the nasdaq 100 getting there 1/10 of 1% higher. the two year yield, a lift of four basis points for any six on

the day. voting with 5% all week long kid the dollar spot index on its sixth day of increases. we are going to talk about king dollar on this show. before that row going to talk about mid-day movers on the equity side. night at health among the best performers on the s&p 500 beating wall street profit expectations affirming the outlook for the year despite the cost associated with a cyber attack one of its subsidiaries has roiled the health care industry. netflix which is trading above $600 per share just had its price target raised to $700 by guggenheim coding confidence going into thursday's earnings report. bank of america reporting elevated expenses and charge-offs for sour loans higher than wall street expected. 3.2 lower on the day. morgan stanley delivered in trading first quarter revenue exceeding expectations. the company addressed concerns

on reports over money laundering safeguards in its booming wealth management business. that new money way above analyst estimates. the dollar is headed for its biggest rally in over a year on expectations the united states will keep interest rates higher for longer. jay powell delivery remarks later this afternoon and earlier this afternoon mohamed el-erian commented on the move. >> authorities are frozen on the world on how do you react to generalized dollar strengthening. how do you react to increasing interest rates in the u.s. and unfortunately in the past those two things go too far they bring something else with them. sonali: we will discuss this with bloomberg fx reporter anya andrianova. if you think about the relationship between interest rates and what you're seeing in the dollar how do you describe what is going on best? >> sometimes they can work step in step and sometimes the correlation is not always as the

rates go high the dollar does get support. today it is not only the rates. today we have geopolitical risks. that is also increasing the dollars. with that together, it is a pretty good season for the dollar. sonali: how do you think about what happens next? your point about the dollar as a safe haven currency plus what is happening with interest rates, have been a lot of concerns for a long time the dollar has been flying too high. >> rightfully so. there were a lot of forecasts earlier that were about to enter the season of weaker dollar and things will get back to normal. for now, the risk is on the others. -- the other side. the dollar -- we will see it in the next few days or week if we continue getting 1% or 2% more, it can break out and we will have another peak.

with that, many things pointing to the stronger dollar but the rate differential, the risk because many other countries, they cannot afford to cut rates to support the economy and that would weigh on the currency. sonali: you saw that move overnight. what currencies are feeling most vulnerable to the dollar and how does that trade expect to play out over the next couple of days? code today we had christine lagarde saying they will move to cut so that puts em in the spotlight so if they were to move in june, that would weigh on the currency and some people keep on discussing parity. i have not heard names saying it is coming tomorrow but that is part of the discussion. as i mentioned, it has been vulnerable for a long time because of the rate differential. another one is close to us in canada to the canadian dollar. they have to support the economy

and today's data of inflation pointed to they would have to cut. every central bank, even though dollar is not on the mandate and sometimes currency is not on the mandate but they're paying close attention to the dollar and it is getting close to the risk level when it can be detrimental to the other countries. sonali: earlier this week david kelly at j.p. morgan had a don't -- a note on the dollar dynasty linking the u.s. dollar to the rise of the new england patriots and he has called it there would be more headwinds or tailwinds rather to keep the dollar moving higher. how are traders positioned in the currency market if you think about this dynamic? do you see people starting to take chips off the table anywhere or lead hardener -- lean harder into currencies weakening to your point? starcom not so well-versed in sports.

the dollar, their position most positive, speaking about hedge fund, asset managers, other speculative positions. most positive on the dollar since fall of 2022. it is strong and where we are looking, it can get still stronger and that is worrisome. sonali: anya andrianova, we thank you for keeping an eye on these moves and what is ahead. coming up next to we are going to talk about the banks. morgan stanley and bank of america soaring past expectations for first quarter trading revenue. there still pressure on shares of the big banks. we will about why next. this is bloomberg. ♪

sonali: this is bloomberg

markets. it is time for stock of the hour and that is morgan stanley where traders delivered first quarter revenue that exceeded expectations and wealth management unit bought in more than $5 billion in revenue and that is handing a key win for its new fearless leader ted pick. the stock is having its best day since early march. joining us to talk more about it is an analyst for autonomous research who has long been following the stock. even though this rise we are seeing today on the heels of this report, you have morgan stanley down about 3, 3 .4% on the year. how do you think about morgan stanley clawing its way back into the green here for the year? >> thanks for having me on. i would say so far this year the pressure has been more on the wealth management side of the business. you have seen deposits flagged. you have seen pressures on cost margins. clearly a lot that was dispelled

today. good organic growth for morgan stanley. close to best in class. good job on expenses. making a good job to call their way back to breakeven. sonali: the comparison you can make here with their rivals performing relative to the rivals and there was one tough spot in net interest income which fell short of expectations. does that even matter? >> i think at this point the net interest issue is well telegraphed. i recall the issue has been wealth declines. do the responsible thing of moving their money away from low yield deposits into much higher yield assets. that has pressured the likes of

morgan stanley and the wealth management industry. compound that with the last couple years pit we have had poor retail sentiment on the back of weak equity markets. you can see why most folks have not performed that well. as i said, the first quarter really shows a bit of a turnaround. you are seeing equity markets at or close to record highs. you are seeing recovery in capital markets, ipos, excitement around investing should that is helping the likes of morgan stanley picked on a relative basis they have done fairly well. you have to give them credit in terms of what they have built. they have probably built the most well-rounded wealth business in the u.s. you think about the worth of offerings. everything from a full-service traditional advisor to e*trade which is more of an e broker.

they have a workplace solution. kind of hard to find anyone who has that breath of offerings in wealth management should sonali: we think about recent reports that took a hit to the stock, the idea of investigations going on at the wealth manager where the ceo did respond that they have ongoing communications with regulators as all large banks do. do you see this as an issue for the firm in the future? >> i think you have to take it seriously. are a lot of regulators looking at the business. history always suggests when you have these sorts of issues it does tend to lead to some type of process changes that may actually -- overtime should i would say the management team somewhat brushed it off and talked about it being something they have been addressing for a while. the first quarter results shows

it has not impacted the business. when you have regulators looking at your business in this level of detail you have to take it seriously. it is something we are paying close attention to should sonali: another interesting for morgan stanley. you did have them beating on their trading figures. one place they have had intense competition with crosstown rival goldman sachs. you did see them fall for another quarter lower than goldman and equities trading revenue. you need to see them be number one in that business or does that not matter? >> it is a fascinating topic. for morgan stanley, what investors care about is the wealth business. in morgan stanley there is healthy competition. when they think about what is going on at goldman on the institutional side because it is clear goldman is taking a lot of market share. in this quarter goldman was up 10%.

morgan stanley was really up in their trading business. they are doing ok. over the last three to four years, it has been very clear goldman has been the winter. -- the winter. they have taken morgan stanley back to be number one in equities trading. there is some shared loss there. i would say to your point it is fascinating when you talk about it. i'm sure internally at goldman and morgan stanley there is healthy competition from a stock perspective it does not matter as much. what matters for morgan stanley is the wealth business. it is frothy two thirds of the business. sonali: one other piece people tend to care about at the other banks but morgan stanley gets a massive pass on is the efficiency ratio. on one hand they have guided

that 70% is what you can expect for them. on the other hand i made a table this morning. it is the highest of all the big five banks. how do you think about it? >> in these businesses there is always a playoff between capital intensity and human capital intensity. balance sheet intensity and human capital intensity. oldman has much more balanced intensive business. morgan stanley has much more human capital intention to business. you have to pay the people. as a trade-off, their margins if you look at it on a business by business basis looks fine. it is a is this based issue. -- it is a business based issue. shelley: top pick -- and ali: goldman or morgan stanley. >> goldman. we like the cap rocket cycle here -- cap market cycle here. folks are underestimating just how much market share goldman

has gotten overtime time and how much more of a growth business the core institutional business is today. it is goldman here. sonali: we thank you so much. analyst for autonomous research. now to bank of america because traders notched one of the best first quarter's on record with revenue from equities trading jumping 15% to 1.8 $7 billion compared to last year. charge-offs totaled 1.5 billion dollars up 26% from the previous quarter. katherine doherty reported on the results. she covers bank of america closely and joints me now. what do you think investors are reacting more to at this point? the higher charge-offs or the higher costs that missed street estimates? >> it seems to be the expenses and the charge-offs investors are focused on because if you look at the core investment banking and trading divisions, both exceeded analyst estimates

and you are seeing a lot of the same momentum you have been talking about at morgan stanley, goldman sachs. the of a is up there. they are throwing around quite a bit of weight and they are posting some gains. more gains than analysts were expecting by double digits. in terms of the negative sentiment and the reaction you are seeing in the shares which dipped almost 5% at a point today, that is coming from the scrutiny of expenses and the charge-offs which could signal some pain in terms of the economic outlook to expect in future quarters. sonali: if you are brian moynihan, how do you navigate this? on one hand you have had headcount by more than 4700 people since the beginning of last year. talk -- costs tied to competition keep getting higher. they are making money on underwriting. they are making money on trading. how did the keep a lid on costs?

>> first quarter is typically the season we see the highest cost as it relates to employees and paying folks. that is when you see bonuses and expenses tied to compensation come through. i think that is not an atypical moment and it is something analysts were expecting because it shows up every first quarter every year. i would say other expenses -- we had the fdic's charge go through last quarter. that is the big driver pushing expenses above expectations. take that out, expenses were below and did not rise as much as analysts thought they would. sonali: on one hand provision from loan losses were higher than expected. he did hear them say net income would bottom in the second quarter and rise once again. on one note, that is better than

you sell at most of the other banks in terms of lending profits they could ring in. what do we know about credit quality at bank of america and is that what is driving some of the concern? >> the credit cracks are a big concern but i will say executives on the call today repeated time and again these credit costs and the charge-offs they have been seeing, they expect them to level and improve in future quarters. i will say the guidance was improved from the last time management spoke in january. not only did they exceed expectations for this quarter but that means for second quarter even though they said that would be the lowest point of 2024, it would be better than what they projected when they spoke in january. at first you sell the shares bounce up in reaction to the commentary. as you said, in the second half of the year, the expectation is still the and i i will still

grow and from now until -- from the end of the second quarter to the remainder of the year. sonali: we thank you for keeping an eye on bank of america. a complicated story in light of higher for longer interest rates. he coming up we are going to talk about this ago -- the citadel founder ken griffin moving closer to adding a building to the new york city skyline. this is bloomberg. ♪

sonali: it is time now for the wall street beach we look at what is buzzing in wall street. we are looking at ken griffin's efforts to build a 62 story office tower on park avenue. turning us is natalie wong who has reported on this story.

how did the news come out today? ? who was ken griffin resenting the plan to? -- pretending the plan to? >> this plan was announced with eric adams in a historic landmark building shows it is forward. they filed plans with the city and it will be ken griffin's personal investment into building one of the tallest new skyscrapers that will be in midtown manhattan alongside fort nato and routed to two developers in the city can alico this will be for cito and that ago securities was interesting about this and a term of ken griffin's own commitment to new york city, we know he has focused on miami, london in recent years. he has moved away from chicago in a lot of ways. what does new york mean in the scope of citadel and ken griffin's larger empire? dark it is a major commitment to remaining in new york city.

about the scope of this building. it is 1.8 million square feet. it is bigger than what they had proposed two years ago because they bought air rights from saint bartholomew's church in st. patrick's cathedral so they could build taller. what is surprising about this as two years ago the current offices at 425 park avenue had just open and it is already not enough space for citadel so they are planning a much bigger building where they're going to be taking up double the amount of space they currently have at their offices at 425 park avenue. sonali: what does it mean to have an office tower this large being built in new york city where there were already worries about vacancies in the city? >> there is an incredible amount of vacant space in the city but it has been a tale of two markets. for the newly renovated, newly developed old eggs you see a lot of movement and high rents. people want to be in those buildings with amenities like pickle ball courts, golf simulators, restaurants. and it is a big contrast to 3rd

avenue with our a lot of empty buildings and those owners are going to have to struggle to figure out how to attract tenants. sonali: what happened to these offices as new offices are being added to the market? when you cover the investing landscape, are these left for dead? >> a lot of developers in the city are going to have to rethink how to repurpose some of these buildings. that have been talking about conversions. but all the buildings are conducive to conversions. in many ways it might be a slow process of renovating once these big skyscrapers that are newly built are leased up, maybe that will lead to more demand for the smaller buildings where maybe not the top finance companies can afford to pay the high rents for. sonali: very hot topic. the real estate market as well as the future of new york. that does it for bloomberg markets. a quick check on the markets because we have had an s&p 500 trying to break back into the green. a lot of crosscurrents, yields

all the move higher. for 97 above that mark on the two year yield. stick with us through the close. a lot of news ahead. this is bloomberg. ♪ startin is never easy, but starting it eight months pregnant, that's a different story. with the chase ink card, we got up and running in no time. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card from chase for business.

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>> from the world of politics to the world of business, this is balance of power.