>> the consumer is, once they are let loose, they are going to start spending. >> going forward, what is going to power consumer spending is the services side of the economy, not the goods side. >> everything we follow would suggest every bit of inflation is being passed through, and then some. >> in many cases, it invites higher inflation. >> you are going to see higher inflation. the fed is going to be caught by surprise because it is really following the wrong model. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: wrapping up earnings

on wall street. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside lisa abramowicz, i'm jonathan ferro. tom keene off today. morgan stanley the last big bank out of the gate today, and that is it. we wrap up the numbers, but another discussion about archegos. lisa: the question here, risk management. what are the practices entrenched in a bank, and what does that mean for potential execution going forward? it really is all forward-looking. that is what i expect on the questions in the call, what kind of risk management implementation they have. jonathan: here's the statement this morning. the current quarter includes a loss remitted to beschloss related to a -- includes a loss related to a single client. it is guess who?

i think we know who. lisa: the question is, how anymore archegoses are there? is it idiosyncratic? drink. with these drink and games, are they always an excuse to drink? jonathan: always an excuse to drink. [laughter] i've got a good friend with a bowtie who's in bed drinking, watching this. i'm sure he's enjoying a beverage of his choice, let me tell you. let's get to the price action this friday morning. wrapping up a really long week for many of you on wall street you'd we've had the bank earnings, the data, cpi, retail sales at well. at times today, i can hardly speak. equity futures on the s&p 500 up by about 0.2%. to the bond market we go. at 1.5 640% on tens, yields again -- at 1.5640% on tens,

yields again, the data and how this bond market has responded to it. lisa: this idea that all of the cash in bank accounts, which is been the main story coming out of these earnings, has been going into assets, including bonds. what happens when people withdraw that to spend it? what happens to rates? are we going to get this boom economy with an even higher yield? this idea of people using cash in the real world rather than financial markets, what the implications of that will be. jonathan: just in case it does happen, then you can say you set it. i've noticed that. lisa: that's not the reason why i said it. i am not trying to be right. i am trying to look around the entire potential scenario. i am not throwing things out there to be right. jonathan: with a bias to the downside. lisa: to the clear bias to the scenarios that have been less counted in markets. jonathan: ok, i'll take it. morgan stanley, that your big story this morning. spurred by a 911 a million-dollar hit on the

archegos blowup -- a 911 million-dollar hit on the archegos blowup. that's what we are talking about, yet on the other side of the story, record numbers. let's bring in sonali wasik. they post these -- sonali basak. they post these record numbers and nobody talks about them because we are so used to seeing these numbers. sonali: just amazing results in terms of trading and investment banking. when it comes to morgan stanley, we are still trying to absorb what $911 million means in terms of a loss tied to a civil client. to what extent will james gorman say what goldman sachs said, that these kind of events can happen the future? are we still concerned about excessive leverage and risk taking? morgan stanley, that kind of commentary matters more because they are big in equities and prime brokerage. but this quarter, i am already cutting text messages from their clients, and what they are

saying is $911 million is larger than what was expected, but very small relative to the revenue base. lisa: that is exactly where i wanted to go, the traders in the market trading financials, as well as people that do business with morgan stanley. is a 911 million-dollar headline the one they are focusing on, or are they looking to something else to determine the strength and potential momentum behind morgan stanley? sonali: let's add something else we have been asking for weeks now. why did morgan stanley lose $911 million and goldman did not? what is the difference in risk management, the way they offloaded the stock? it is not quite clear the difference and how this was handled among the two firms. the other question then becomes what does this mean for clients moving forward, a broader array of clients that have sought a lot of leverage, especially for those concentrated long only bets. jonathan: james gorman has been very generous with his time with this network.

we would love to catch up with him again soon. that would be fantastic to hear about what has been going on and why. thank you. sonali basak, our wall street correspondent, off the back of those numbers from morgan stanley. it has been like a horse race trying to cover the stock coverage side of the story. goldman sachs is slightly positive. the broader equity market up on the s&p 500. it has been record high after record high, and we've got another one this morning. lisa: this is exhausting. it is sort of like, well, another record high. there's a question of are we getting too perfect. i think that is some of the nervousness you see in the horse race this morning, where it is hard to gauge where we are. yes, we have analyst expectations that are high for these companies. they are beating, and the shares don't do much because that means the expectations baked into valuations is that much higher. jonathan: you can't help it, can you? lisa and i don't sit right next to each other, but she can see me laughing out of the corner of

her eye. brent schutte joins us now, northwestern mutual chief investment strategist. i think this is an important question. does a boom economy need a boom market? brent: yes. i agree that things appear to be too perfect right now, but you're kind of a goldilocks period, and i hate saying that because it is always famous last words. you are likely to continue to have strong economic growth. i think that is starting to see been because -- to seep in because for the past year or so, fiscal and monetary policy has always been pushing in one direction. now you are starting to have that commentary about the future. does the strong economic growth mean the cycle ends a little bit quicker? doesn't mean we have inflation to have to worry about? i think that is a governor on returns of the future, and you are starting to see conversation about tax hikes, a little bit less fiscal policy. yours in conversations about the

fed potentially starting to tighten. i still think those are far enough in the future that the market can move higher, and i agree with you going up on a daily basis, but i do think underneath that top level, it is a cyclical one-day versus defensive the next day. so yesterday was more defensive's. today might be more cyclical. that i do think cyclical sectors and asset classes when the day moving forward. jonathan: you touched on the speed of this cycle and how quickly things are moving. the duration of the cycle is something that has come onto a lot of people's minds over the last few months. i think morgan stanley has helped lead that effort. a shorter, hotter kind of cycle. do you still think it is too early to thing about what this cycle looks like? brent: no, i am always thinking ahead. one of the things you have seen from the fed is that they have moderated the business cycle. that is what gradual rate hikes

were intended to do, and they did it very well from 1990 on. before the 1990's, you saw more erratic is the cycle. they are now outcome-based, not outlook based. so potentially, that could mean a more erratic end to a business cycle or a more erratic business cycle. certainly, i do expect the cycle to be shorter, but that is still a ways off in the future, and i am not worried about that quite yet. lisa: one reason why i keep trying to poke holes in optimism is not because i'm a debbie downer, but also this idea of what we are missing. because there is a strong consensus that there is a strong optimism justified by the data. the question is, do you hedge? where is the best hedge going further into risk because that is where the gains have been? and if there is inflation, potentially riskier assets will do better. is there a hedge? do you want to be even trying at this point? brent: yes, there is a hedge, and there is always a hedge. to me, the only way this ends prematurely is if we cause the fed to eventually flinch.

policymakers are going to do more. society wants it. so i don't foresee any extreme tightening of any sort. if we had a fourth wave, we would probably get more support. the only thing that changes that narrative to me is if we get rising inflation that causes that narrative to change, and that is something i think investors should hedge for. to me, every investor once to play all in one direction. i think professionals who do this for a living realize we don't know for certain. if you think one side of the distributional is covered by the fed and policymakers, you need to cover the other side. while we do have an equity overweight, we do own tips, we own commodities, and we think investors should as a just in case during that period. jonathan: if i own commodities and we start to see inflation and the fed has to make a move, do i want to own commodities in that environment? brent: i think it is more of a timing perspective. the fed won't move until they

absently have to, and until all of those people come back into the labor force and are actually hired. so inflation is going to move in the near term, which means it is going to be a balance for commodities. then things start moving lower based upon future outlook, but i think that is still off in the future. the fed i think is not going to focus on the inflation mandate like they did past 40 years. they are going to focus on the employment mandate and unemployment at all levels. that is where i think you still have time left. inflation may rise in the near term, but the fed isn't flinching until it gets to be so uncomfortable that they have to. jonathan: good to catch up. brent schutte, northwestern mutual chief invest in strategist. a lift of zero point 2% on the s&p 500. 4171 in the s&p. an all-time high at the end of yesterday's session, and we are set to see another one in this equity market. in the bond market, yields down to 1.5552%.

euro-dollar up a little more than 0.1%. crude doing ok, back to a $63 handle on to beauty i, $63.56 -- on wti, $63.56. we have wrapped up earnings season on wall street, and we are looking for big tech over the next few weeks. equity futures positive. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. there was a mass shooting last night at a fedex facility in indianapolis. according to police, eight people were killed and at least five others hospitalized. authorities say the shooter killed himself. the fedex operation is located near the indianapolis airport. it is not clear whether the shooter worked there. in china, there has not been an economic rebound quite like this one. first quarter gdp rising a record 18.3% from a year ago. you've got to remember, that is when the economy was shut down

in an attempt to control the coronavirus pandemic. china's economy improving only slightly from the fourth quarter of 2020. consumer spending has lagged during the early stage of the recovery, but picked up in the first quarter. in hong kong, media tycoon and pro-democracy activist jimmy lai has been sentenced to 14 months in prison. he was convicted of attending two unauthorized protests. he was also charged with national security offenses. beijing has been pursuing cases against hong kong's most high-profile citizens. the european union will probably not renew its vaccine contract with astrazeneca and johnson & johnson. both vaccines have been linked to rare blood clots. the european union is also talking about contracts with biontech and pfizer. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ mberg.

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>> after labor day, will be back to generally moving towards

being back to normal. but the key is, for cities and towns, as those people who are vaccinated come back to work and go to restaurants, that is good for the environment downtown. we need to get the people commuting downtown, into restaurants, and downtown lights can come back, and the great cities need that. jonathan: brian monahan there, the bank of america chairman and ceo come on the return to normal. from new york city this morning, alongside lisa abramowicz, i'm jonathan ferro. tom keene on vacation today. let's get you the price action. equities doing better than good over the past six months or so. up another nine points on the s&p 500, 0.2%. in the bond market, yields come into 1.5587%. on euro-dollar, $1.1985.

just to talk about new york briefly, have you tried to get a restaurant reservation over the weekend? it is almost impossible. lisa: are you going inside? jonathan: i've been inside a couple of times. lisa: honestly, if you look at the streets, you can feel it coming back. you can feel people trying to get back to normal, but doesn't feel the same. i feel like it is visiting a former life that has been put through the twilight zone. jonathan: you've got to reclaim your former life, lisa. lisa: oh yeah? jonathan: stop waiting to be told we can to get back. lisa: keep going. jonathan: i'm not going to do it. [laughter] let's talk about the airlines. we can do that with helane becker, cowen senior research analyst. we've got the business world, international travel, and leisure, and they all look different. can you walk us through it one by one? helene: business travel is kind of a tale of two businesses, or

maybe three. one is small and medium-sized businesses. those of the folks who need revenue, so they are traveling. then there is corporate business, and that has not come back yet. maybe a little bit, but in general, if you are a big corporation, sales tend to come to you. you don't have to go out and get them. then there's conferences, which i notice are starting to come back. i am going to one this weekend, and aviation conference that i think starts monday. and world of concrete is apparently the first conference in june. that is returning to las vegas. so that if the business side. then you have international, and there's again, two different worlds. one is our hemisphere, where as americans are getting vaccinated, they few more comparable traveling, so they are going to the caribbean, going to beach destinations, mountains and outdoor things, latin american beach destinations, mexico. a lot of the big resort hotels

are making it very easy for americans to test before they go back to the united states because we still have to test, even if you are vaccinated, before you come back. that makes it relatively easy. and then there's europe, which is i think four to six months behind us, and asia is probably a year behind us. i don't see asia coming back really until 2022 at the earliest. even europe fourth quarter maybe. then there is domestic leisure. i think domestic leisure is at least 90% to 95% of the way back, and i think those 1.5 million people we see traveling every day roughly, i think about one million, all but 150,000 or 200,000 of them are leisure. it is pretty amazing that people feel really comfortable traveling, and as they get vaccinated, they are doing

things. i was listening to you guys talking about going back to restaurants and stuff. if i got vaccinated and i am out of my two week window because i got the one axing with two shots -- the one vaccine with two shots, then why can't i go out and start my next -- i said my next normal as opposed to reclaiming my life -- but why can't i start doing the things that i used to do before i got >> down? lisa: i've got to say -- before i got >> down -- before i got locked down? lisa: i've got to say, it makes us almost feel bad about being on those caribbean beaches. it is a question of demand, about how money people they are bringing back into their offices. delta not having enough pilots and flight attendants, they are canceling flights. are you hearing difficulties around this? are they raising some of the wages in response? helane: there's a lot of

questions there, and one of the issues delta had, and i don't know that this is an excuse, but it is what they said, a lot of their pilots were able to get vaccinated, and the faa doesn't let you fly within 48 hours of getting vaccinated, so they had to cancel flights. you would just think they would have timed that a little bit better so it didn't happen over easter weekend. as far as wage rates, i want to tackle that because i think it is really important. the big three airlines, american, delta and united all have open pilot contracts. we think wages at the starting level are definitely going to go up. i am not 100% certain that wages at the top end will go up more than a few dollars per hour. but when the pandemic hit really hearty year ago, and it was exactly a year ago that traffic bottomed at that 85,000 a day level, the airlines worked with their employees to try to get

anybody who was thinking about retiring between 2020 and 2023 to the about retiring last year. some of the airlines worked with their people to cut hours so they didn't have to furlough as many people. one thing to consider for pilots , it is always last in, first out, which means they would've had to furlough a lot of pilots at the lower end of the pay scale and at the lesser seniority level versus keeping those pilots and asking older pilots who are 62 to 65, well, the mandatory retirement age is 65 anyway, working fewer hours to keep more people on the payroll so that when we recover, we are ready to rock 'n' roll, as opposed to having issues. i am hearing there are issues and certain other sectors. jonathan: helane, fantastic to catch up with you. i know how much you care about this industry, and it is good to

see it back on its feet. lisa, it is not just about looking at the tsa numbers and comparing them to where we are last year. it is about trying to work out where the boom is. right now it is domestic leisure, and that is booming again. lisa: the question is how much that can actually boost levels. windows air travel get back online? jonathan: when does international come back? lisa: that is in tandem. how can these airlines get back to where they were, especially given the debt overhang? yes, you can laugh that i am bringing up the negative. jonathan: i'm not laughing. i'm just excited about the weekend. lisa tells me there's about five minutes of data i've got to hang out for. lisa: you are just going to leave after that? jonathan: leasable bring us some more new -- lisa will bring us some more news about morgan stanley as well. just a mild move, off by 0.4% on morgan stanley stock.

alongside lisa abramowicz, i'm jonathan ferro. tom keene back with us on monday. equities at all-time highs, 4170 on the s&p 500, up 0.2%. yields basically unchanged. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide, good morning. alongside lisa abramowicz i am jonathan ferro. tom keene is back on monday. is the moment you've been waiting for. housing starts. upside surprise. the number we were looking for 13.5%. building permits month on month 2.7%. median estimate 1.7%. upside surprise on cpi, blowout number on retail sales. on housing starts -- i know i'm playing it down. it has been a massive sector for this economy over last 12 months. housing starts up 19.4% month on month in march. lisa: just highlighting the lack of inventory to meet the demand. demand so far outstripping what

we see in terms of supply for the housing market. the builders will meet the demand. the question for lumber prices, will they shoot higher after increasing so dramatically. a question for whether this is a good sign for the banks given the fact people left to take out mortgages to buy some of these homes. jonathan: that sector has been flying over the last year. we will turn back to that data in just a moment. we need to turn back to morgan stanley. the stock has turned almost positive. sonali basak has been standing by through the last couple days going over the bank numbers. give us what you are hearing off the back of the numbers this morning. sonali: it is important. the big question was they got hit almost $1 billion on archegos, how much will this impact morgan stanley? our analysts are telling us this is a once in a two decade event for morgan stanley. they are not planning major

changes and major overhauls in that climb -- in that prime brokerage unit which should be nice news for the hedge community. they plan to address this on the call. does james gorman see this as a complete one-off event given the exuberance we are seeing in the market? another thing we can expect from james gorman on the call is now that hat they have e*trade under their wings, how are they viewing the retail trading exuberance in relation to what is happening in the institutional market. jonathan: compare and contrast how the likes of new mora and credit suisse have responded to the same issue. sonali: morgan stanley was pretty quick to sell like goldman sachs had baked. morgan stanley was also the biggest -- their losses were limited to $911 million. if you add that number back to the equities trading number,

they would have been bigger than goldman sachs and jp morgan in the quarter. on the 200 96 6 billion in trading revenue, that would have been mind blowing for morgan stanley a decade ago. it is interesting to see the number come back up. jonathan: we have been desensitized to sum up -- we have been desensitized by some of the numbers. sonali, a fantastic week for you. let's take it back from the bank numbers and take it back to the data. housing starts month on month in america up 19.4%. a blowout number against a median estimate of 13.5%. let's turn to ira jersey for some reaction to this number. your take? ira: a good number, consistent with a lot of the headline numbers we have seen. the fact that these are housing starts does not mean they will be housing sales three to six

months from now. they should be. you would expect that. with interest rates moving higher, housing affordability is not what it was three or four months ago. lisa: we have seen good data point after good data point come out and yet bonds continue to rally. what do make of that? stephen: there are a few think -- ira: there are a few things. you talk about headline numbers being good. retail sales close to 10%. you look at core data, core inflation or core retail sales, the control group, that was pre-much as expected. some people were leading short in rates and thinking yields would continue to go higher because we would get numbers even better than what were expected, particularly in the core numbers. number two, you did have a lot of people leading short, particularly in yield curve steepen or. thinking the long-term interest rates would go up more than the

short-term. we saw little close outs of those kind it -- we saw a lot of close out in those type of trades. i do not think the rally will last long. we are looking at 1.47 to 1.50 to be the floor in 10 year yields. we would be fitting this rally if we get a little more of it. jonathan: good to see you as always. ira jersey, bloomberg intelligence chief u.s. rates strategy spirit let's bring in stephen stanley. what a week. we can move on to the weekend. your take on the data so far this week? stephen: pretty much every high-profile march economic indicator has been far stronger than expected, going all the way back to the ism numbers in the prior week. certainly the retail sales numbers yesterday and now the housing start numbers today. in some ways it was a perfect storm in march because february you had the bad weather, which would've depressed a lot of the february data.

i think march for housing starts was a catch up based on the weather. the housing market continues to be extremely strong and builders will be playing catch-up for a long time. the more starts they can get under their belt, the better it is for the market. jonathan: as an economist, how difficult are you finding it just to keep up? stephen: you have to be nimble. usually when you are doing your gdp trapping estimates they might move by .3%, but you get a number like retail sales yesterday you are revising by 1% or 2% depending on your forecast going in. that relates to the fed as well. the fed has this thought they will be able to move slowly and inched their way back toward normal policy, but if the economy continues to gain ground at the speed we are seeing, things may play out differently. lisa: among the economic mysteries of the week has been

bank earnings and the lack of loan demand. a lot of executives saying this is a good thing there is so much cash people are spending that and paying down their debt. there will be that much more ready to spend later on. do you view with the same way or are there signs of caution within the lack of loan demand? stephen: i think it is a function of the fact people and corporations are very flush. the household sector has gotten three rounds of rebate checks, very generous unemployment benefits, and if you look at the personal income numbers and savings rate, there is no reason for people to borrow. the only reason people will have to borrow his home mortgages. on the corporate side, it is kind of the same thing. we saw the blowout in corporate bond issuance last year and into this year. i think most companies are flush with cash right now and sitting on the cash and waiting to deploy it. there is not much need for a lot of borrowing at this point,

especially -- except specific sectors like home mortgages and student loans. lisa: how do we determine if we have enough momentum to keep the spending up beyond just using cash beyond the next two quarters to wear down some of the cash? stephen: there are various numbers you can look at. the savings rate comes out every month and the fed puts out quarterly data on household financial assets and things like that. those data indicate consumers are flush right now. a lot of money, that is before the latest round of rebate checks. it will take a while for consumers to plow through that, and they have been saving up to do all of the fun stuff they have not been able to do for the last year. travel and go out to events and things like that. there will certainly be a one-off blowout period where everybody is trying to take a vacation at the same time come

everybody is trying to get of the same concerts and ballgames and all the rest. once the dust starts to settle, we will see where we are. we have to -- jonathan: we have to talk about the shift in the reaction function of the fed. it is a framework that would've been perfect for the previous cycle. does it make sense for this one? stephen: it depends how inflation plays out. what they have said is they want to wait to see the whites of the eyes of inflation. the fed has conceded we would get a short-term pop in prices but then they think things will go back into place at or below 2%. if inflation gets well above their target and stays there for more than a few months, i think at that point the new reaction function probably looks a lot like the old one would have. if inflation remains benign i think they will be extremely dovish. they may or may not have that

luxury depending on how prices behave. jonathan: can we call the weekend now? are we done? stephen: certainly. lisa: i am still here. so are you. jonathan: just getting people excited. we are done. i've another program to do. i'll be doing that with blackrock's global lead investment strategist wei lee. looking forward to catching up with erin browne of pimco. what a week it has been. sales, cpi, and there is your bond market. lisa: also bank earnings. a wild week as we try to assess whether we have priced in too much optimism or not enough optimism into earnings. picking up a season that will be interesting. the dynamic, we do not know what happens, how long the cycle lasts. this idea of how long can we see this boom? will it be short or is the short boom going to drive enough

momentum to carry into quarters beyond. jonathan: let's take a seat on the investment committee -- that is mr. wiesenthal saying -- let's get on the investment committee and think about it. the biggest risk was clearly upside risk and we are not positioned enough for it and i do not think economists were optimistic enough. the balance has shifted. now we have economic expectations come through so much higher over the last six months. lisa: the other hindsight capital management committee note will be about the dollar and the idea of the dollar would weaken substantially in the reflation trade would be global in nature. it has not been. it has been concentrated on the united states, and now big question going into the next couple of quarters is too we see it gain traction in europe and the developing world, or are we going to stay in the united states. jonathan: just minting money at hindsight capital. fantastic work. good to see you. lisa: [laughter] great week.

jonathan: i will run away for the weekend. you might see me do another program in about an hour. do not know how present i will be. lisa: prerecorded. jonathan: this is bloomberg surveillance live on tv and radio. this is bloomberg. ritika: with the first word news, i am ritika gupta. there has been another mass shooting in the u.s.. this time in indianapolis, where a gunman opened fire at a fedex facility near the airport. eight people were killed and five others were hospitalized. they say the shooter killed himself. it is not known if the gunman was an employee at fedex. i ran says it has enriched uranium close to levels needed to make a weapon. that adds to the obstacles diplomats are trying to overcome as they try to revive the 2015 nuclear agreement. iran is demanding the u.s. lip sanctions before agreeing to rejoin the treaty.

it will be all about china today when president biden meets with japan's prime minister. this'll be the president's first in person meeting with a foreign leader since taking office. china's shadow looms large over almost every topic. the desk you're expected to discuss human rights, taiwan, and supply chains. china criticize the u.s. record on global warming today. climate envoy john kerry was in shanghai seeking greater cooperation on the issue. the chinese foreign ministry says the u.s. is responsible for the u.s. not reaching -- for the world not reaching the target set by the paris climate accord. president biden is trying to reestablish the u.s. as a leader in global climate action. -- the bank plans to hire more than 300 wealth managers in the next five years and doublets assets under management. that comes after plants

announced to exit retail banking in 13 markets across asia, europe, and africa. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

president biden: the united states is not looking to kick off a cycle of escalation in

conflict with russia. we want a stable, predictable relationship. if russia continues to interfere with our democracy i'm prepared to further actions to respond. lisa: president biden as he engages in a more aggressive foreign policy starts to take shape. we get a sense of what the world may look like at least with relations to the i did states under president biden. we also got a look at what relations might be with the kremlin as there were sanctions on russia. the question is is this that harsh or just the beginning? daniel tannebaum joins us now. i am curious from your perspective of whether these sanctions were harsh and unexpected or perhaps too like given some of the potential allegations? dan: thanks, lisa. as others reported last week, the sanctions were known to be coming in response to the solar wind hack and election battling and other malign activities.

what these sanctions look like were a bit unclear coming into the announcement yesterday in terms of how severe they would be. it is clear this was a proper opening salvo and no attempt for a knockout poncho. also these sanctions -- a knockout punch. also the sanctions were specific to the hacking issues. you still have nord stream 2, issues relating to alexey navalny, as well as the russian euchre -- the russian military buildup on the ukrainian border. there other issues the u.s. could push harder against on russia. i think this was a warning shot. tom: -- jonathan: seeing abounds -- lisa: seeing abounds back in the ruble gaining against the dollar. what could potentially obstruct markets that seems like a realistic escalation between the u.s. and russia? daniel: i think we have seen an

evolution of securities, trading related activity restrictions since 2014 with the beginning of some of the debt and equity restriction sector. crimea was annexed by russia. what we saw yesterday, and again to build up 2019 sanctions that restricted trading in non-ruble denominated sovereign debt, this is only impacting primary market trades. secondary market trades on russian sovereign debt, be it in europe or ruble are still permissible on the secondary market. treasury knew this would have an impact, not an adverse issue similar to one sanctions were dropped in 2018 and you saw a brief destabilization in the aluminum industry. certainly you can touch upon greater restrictions and access to capital more broadly in the span of the secondary market. it is very clear the touch of just the primary market will

only have a limited response. lisa: i want to zoom out a little bit and go to something jean say no was talking about -- jeanne zaino was talking about earlier. she said the biden are very different whether they are dealing with local issues are international ones. what has been your take away given his stance versus the kremlin, given his stance with iran, given his chance with -- his stance with china? daniel: there has been a measured response to all of the issues you just described, whether it is north korea or china, whether it is iran or russia. on day one the president announced a top to bottom review of the existing sanctions portfolio in place for the last 20 years in the u.s. to understand the productivity, the unforeseen consequences. the team that is assembled at state treasury and the national security apparatus have experienced from the bush and obama administration, some from

the trump, they know how to look around the corner and see the unanticipated consequences. that being said, i think the market is still nervous. friends of mine are doing the analysis to to see how these type of moves will ruin their days like the chinese security restrictions ruined their christmas in december. lisa: i love speaking with you because you have a birds eye view of what companies are thinking and their risk offices in terms of charting strategy. how do they get ahead of different administrations. what is their main concern with the biden administration about where sanctions could, and where they could be restricted going forward? daniel: what we see with this administration is less unpredictability than the last four years. if you see some of the appointees of the biden administration coming from more mature sanctions and national security regime of the past, they know how to engage with

institutions. for some of the significant moves, you see treasury reaching out to institutions in advance so they can prepare them. we saw this with libya a number of years ago where banks were notified in advance. the institutions i work with take comfort that they know there's a certain maturity and how the biden administration approaches these issues. they will not be certain knee-jerk reactions to disrupt the reaction in unforeseen ways. lisa: there's also a question internationally. i know this is sensitive and might be something you do not want to weighing on. there is a fascinating story about how international banks are losing market share in some of the biggest asian markets. this has to do with the close relationship of local firms with the governments, as well as restrictions placed on them. how concerned are your clients about that, about pushback and a lack of competitive advantage overseas, bringing them more closely to the domestic economy?

daniel: i am living and breathing this issue almost every day. you've seen china respond with certain counter sanctions that create a significant conflict of law issue for global banks operating in the u.s. and china. it is forcing choice. you've already seen some global banks have picked to china as they reposition senior leadership in the hong kong and greater china areas. i can replicate some of what the u.s. has done to bring foreign institutions to bend the knee towards the u.s.. now you have a threat to that going forward as china tries to exert the authorities they have granted themselves. lisa: does this nervousness represent itself as retrenchment or is it just wariness? daniel: it is wariness although you are seeing potential moves of retrenchment as businesses organize themselves going forward. you've seen some blanks spit off their -- some banks split off

their businesses in china and split the organization from the rest of the world to keep it more manageable. there is a lot of contingency planning happening a class a lot of -- across a lot of large locals. lisa: went as the next time you are getting on an airplane and going overseas? daniel: i do not know. i think my family is ready for me to do it quite soon. lisa: i think that goes for all of us. daniel tannebaum, thank you for being with us. what a week. jonathan was right, getting us to the weekend. the question about the foreign policy of president biden tied to earnings from the big banks, absolutely blowout. markets, there was a bit of a shrug, what if you done for me lately? incredible stats when it came to retail sales. in the markets you are seeing stops respond, the bonds not so much. stocks nearing all-time highs yet again. bond yields heading lower as people -- actually, they turned

higher after the better-than-expected housing stats. the 10 year at 1.585%. coming up, perhaps a view on bitcoin from former sec chair harvey pitt. this is bloomberg. ♪

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at all-time highs. from new york city for our audience worldwide, good morning, good morning. this is "the countdown to the open." 30 minutes away from the opening bell. we begin with the big issue. is this as good as it gets? >> the recovery undoubtedly is rocksolid. >> we all know the economy is reopening. >> we now have powerful economic growth coming through. >> economic data for march is breathtaking. >> the data has been continuing to subside. >> retail sales were significant he better-than-expected. >> markets dominated expectations. >> markets will go higher. >> everything is happening at warp speed. >> when you think things are frothy they get frothy or. >> what you've seen is the rate markets stabilize. >> hard to see what takes th