>> we welcome now, our bloomberg audience, here are the first word. news i'm john hyland. russia's defense industry says the forces have captured a city after weeks of intense fighting. would be the first victory for kremmling troops in months. meanwhile ukraine says it has repelled russian attacks near 17 settlements in the east in the past 24 hours. treasury secretary janet yellen says her department will begin taking what she calls extraordinary measures to avoid breaching the u.s. debt limit. in a letter to's -- spoke with bloomberg television estate about the announcement. >> this is simple does not about

new spending. this is not about new investment. this is about the united states government honoring the obligations that prior congresses have already made. it is a sacred -- obligation, full faith and credit in the united states. congress let the deal with the credit -- debt limit, without conditions, without putting our economy risk -- at risk. >> house republican leaders say they will insist on spending cuts in turn for agreeing to boost the spending meant. democrats in the senate and president biden are rejecting the hostagetaking maneuver and want the same deal as president trump. -- $1.6 million, the small sum is because of limits under new york state law, and more fallout could be ahead. the real potential could be the long-term blowback to the business going beyond

reputational damage to freezing out of government contracts. the faa is out with polin neri findings on the computer failure that halted departures. a data file was damaged as a result to fail to follow government features -- procedures. 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 john hyland. this is bloomberg. >> welcome to bloomberg markets. >> let's dive right into the price action, makes picture when it comes to the equity market. premarket we were down by a lot. looking at the sba 500 is

shrugging its shoulders a bit ahead of the long weekend. -- s&p 500 shrugging his shoulders ahead of the long weekend. tesla, banks, the narrative all that you take your pick. the stock market is selling off as well as the bond market, the 10 year yield hovering about five basis points higher. taking his cue from the stock market or the market taking its cue -- the stock market taking its cue from the bond market. what is he getting to me is that the dollar continues to be weaker. note clear direction for the bloomberg dollar index, 0.1%, some of it is a china reopening story, brent crude trading higher on the opening. >> we are so busy with opening stories let's start with key banking players. the stocks that had a jittery start for the most part. jp morgan, bank american -- bank

of america, citigroup, wells fargo all in the green at this hour. continuing to roll through these earnings, we have dealt a-shares under pressure today. keep in mind labor cost hurt bottom line performance. that is a consideration for the airlines. wendy's is bucking the trend as they kick off a new promotion, a week's worth of fries for new customers. carvana, trading again after a halt. down about 14%, obvious we know about the sales struggles and the tricky activity when it comes to the debt picture right now. a tricky time for tesla, how much i we talked about the electric vehicle juggernaut and the challenges the company has had? right now the stock is down 2%, tesla cutting prices up to 20% across the u.s. and europe in effort to boost the demand picture. let's get more perspective on this developing story by bloomberg technology coast at ludlow.

give us a sense -- cohost ed ludlow. give us a sense of this move. ed: tesla to cut prices in the u.s. and it followed suit in the -- in europe as well. it was for the model three and more sick leave for the lower end model why discounted -- more significantly for the lower end model y. the share reaction is negative. we have paired some of the declines earlier in the session, the sales side analyst are split on this. there will clearly be a short-term impact gross margin that we will find out about probably about what quarter earnings in the coming weeks. another ways to look at is another more positive take. it is a leva -- lever tesla can deploy. average seller prices elevated for tesla vehicles compared to two years ago. if you cut prices you are actively proactively addressing the supply demand balance and

crating a new pocket of demand at the lower price point. electric vehicles are expensive. maybe this makes this more affordable for a wider range of consumers. not just north america, but in europe as well. >> let's talk about this from a global perspective, that is the issue in the states comes to this in u.k., france, germany. actually in china to seal with a slashed prices as well trying to appeal to the chinese consumer. ed: china is a second most important market after the unite states. the difference between china and america is it is a much more competitive market place. more domestic players offering a wider range of models across a broader range of prices. tesla has cut prices more than once in recent months in china. at the same time government china -- policy support in china being removed. tax breaks not as widely available in that market.

from a policy perspective, covid zero is being unbound. the pressure on consumer in recent weeks and months has been the spread of covid-19 in china impacting consumer confidence. it is not just a story about macroeconomics. from an inflation or consumer confidence point of view, consumers have not been able to get out and spend because of the spread of the virus. there have been concerns around that. >> something we will keep an ion, ed ludlow all over this story -- an eye on, ed ludlow all over the story. the big question on wall street, is it inflationary or disinflationary? rochester said is more a european debate than an american one. >> china reopening is a bigger deal for europe than is the u.s.. u.s. exports to china is less than 1% of gdp. for the german economy is three times more important at 2.67% of

gdp. just exports to china. the biggest trading partner reopening its stores and tourism flows, makes europe so much more attractive. >> joining us for more on that, edward campbell, managing director and cohead of quantitative solutions, moc -- a multi-asset team. i want talk about the china question. i am very confused about how the consensus calls it inflationary. at the end of the day we can have accurate case counts on cases or even deaths. how can you measure chinese demand, as a consequent global inflation if you have accurate numbers? guest: right, if china does get going will be inflationary. it will give a boost to commodity markets that have pulled back. as you mentioned we do not have a lot of great information to gauge that. with covid running rampant, are

they really can agree open in a way that people expect? i think it is a big uncertainty. jon: let's dive a little deeper. investment wise on that commodity point that you made there. you are bullish on the commodity outlook. here in canada, the stock market 30% ties directly to the commodity trade. we have seen an outperformance of comedian -- canadian duties -- equities versus the u.s.. what make you bullish? guest: we are in a new super cycle bull phase for commodities that started in the shadow of the pandemic. i think it is likely to run for the rest of the decade or more. i do think we are still at risk, short-term, commodities drew down 20% last year from their highs. if we go into a global recession, commodities could see more downside. the main story is a long-term

supply demand imbalance. that is a very good long-term demand and can. constrain supply. i can talk more about that. >> go for it. guest: yeah, what is underpinning things on the demand side? i think fiscal -- will be a defining feature of the post-covid world, increased fiscal assistance going to lower income households. they consume more commodities volumetric lay. energy demand is supporting the long-term commodity story especially for metals. i think there has been a lack of investment in commodity capacity for most of the post gfc landscape. i think the russia ukraine war is in apple fire of existing -- amplifier of existing commodity trends.

scarcity and the long-term commodity demand. the supply side, no more russian supply in ukrainian supply is hampered. on the demand side, more euro to -- terry spending on nato -- military spending on the nato side. jon: that is a helpful breakdown of the long-term watch points for the commodity market. i want to be clear when it comes to the day-to-day fluctuations in the equity market over the next few months they would not surprise you to see some weakness for the broader stock market, is that correct? guest: i do not think the equity bear market is over. i think we are off to a great start this year. i would be where of false dawns. we have seen them before. the market will basically take out its old blows and -- lows and establish new lows. that will be a more durable market bottom. that is likely to happen in the first of the year. i think the equity markets will

rally as they look past the recession. the bear market is not over yet. earnings is the next shoe to drop. >> something we will keep an eye on, some of things to digest when it comes to macroeconomics. coming up, big banks see headwinds into 2023 as a report results come a lot of pain earlier in the session. we will get insights from stefan who covers banks for artists research -- argus research. this is bloomberg. ♪

>> this is bloomberg mar'm kriti gupta alongside john, it is been a big day for big american banks. jp morgan, bank of -- bank of

america, citigroup, wells fargo all have earnings that beat forecast. joining us is the director of research at argus and bloomberg intelligence in your bank analyst. , start with you and talk about whether or not this is fair to say where the rubber meets the road. a lot of the margin pressures that the banks were talking about our kind of priced in. what do you think? guest: i think the banks did ella tilly well this quarter against expect -- relatively well this quarter against expectations. the loan loss provision area we expected a bit lower. banks are being cautious and reserving a bit higher, some banks going as far as saying, citigroup for example, they expect a recession later in the year. the other thing was some wide swings in the revenue components.

30% increase in the net interest income at j.p. morgan. 60% drop in investment banking revenues at citigroup. the big swings in the last year, this quarter they took credit loss reversals. this time of provisions. it is massive swings in some of the items. it is good to see the price that dipped early in the day move back here. i think there is recognition, that the tone of the calls and the expectations, some of the guidance moving forward was reasonable. low to mid single digit loan growth. it is par for the course. we are expecting a little bit of a slowdown. banks are well reserved, good capital levels, will go right through it. jon: to a certain degree you were scratching your head with the initial reaction to the bank stocks this morning.

in terms of messaging that we get from the different players right now, talk to us of the bit more about the closely watched net interest income. when rates are rising, typically that pats the bottom line. we are entering a period were some of that money has to go to depositors and banks have to predict how things will play out this year? >> deposits are the key thing we are watching. we do think the disappointment across the banks was related to the interest income however we would say that we think it is prudent for banks to be cautious. there is so much uncertainty. the deposit question is a big one. we will see those costs go up. eating into the margin. we do not know what will happen with rates this year. given uncertainty quarter to quarter we think it is better for banks to be prudent.

on the positive side of things we did see j.p. morgan coming in when they return on tangible common equity. that is a key metric of measurable bottom line profitability. 20% this quarter beating the target for the year, over the cycle target for the year. and building capital, potentially returning to buybacks. we think those two things are positive. bank of america missed net interest income guidance, missed it in the quarter and the guidance look conservative, even with this guidance we think that the bank will focus on cost control. that should be helpful to the profitability. as far as reserves go, there. are two components to the reserves one is the weakening economic outlook. the other is growth. if you look at the current charge-offs they continue to do well.

the questions for the banks revolve around recession, the depth, breadth, severity of an upcoming recession. the court of the -- quarterly results were generally pretty good. >> we follow-up, the trading revenue really benefiting from the volatility was almost saving the bottom line of all of these banks. what happens in 2023 when inflation comes down and volatility comes down. these traits cannot be the life raft they were before. >> we think the volatility will continue in 2023. that is because we are in and unprecedented -- an unprecedented environment. the uncertainty today extends to the next several quarters. we have never been in a period of quantitative. tightening before we do not know will happen with rates or the economy. we think that there is a level of uncertainty. could we see moderation from this year's levels, potentially

yes. fixed income trading that has been strong this year has not been enough to offset the weakness in fees. the investment bank as a whole have generally earned last year -- less this year because it is been so depressed after a strong 2021. seeing a potential uplift, strong coming into the year, we have a better argot, we will see with the banks can execute -- this quarter. jon: for people trying to make investment decisions in and uncertain economic environment, have yanked ceos talking about the uncertainty. -- bank it ceos talking about the uncertainty. you have been bullish on the banks like bank of america. guest: these banks are very well reserved in terms of capital levels. they are well reserved in terms of loss provisioning.

they can handle a mild or even moderate downturn and recession and not have to do anything crazy like cut dividends or bring buybacks in materially. i agree that the volatility continues in the market. i think trading remains a good source of revenues of these for the first half at least until the fed moves into the background and goes into a more neutral position. i think the rate story is a continued strong backdrop for banks. you will see expansion year-over-year as the rate work their way onto bank balance sheets. they have a good handle on expenses. a lot of them are reining in expenses as we speak in the context of a little bit of a weaker environment. the price-to-book and p/e ratios

are low here and good dividend yields. there is a case for banks. jon: stephen, good to have you back with us, thanks as well to al's and williams, who has a -- allison williams who has had a busy day on the banking beat. when we come back a canadian retailer is having young americans open their wallets after focusing on customer experience. that is next. this is bloomberg. ♪

>> this is bloomberg markets, i am john with critical debt, time for today's what is worth. $100 billion, that is how much the revenue canadian retailer a ritzy a has -- aritzia has

generated. american sales are already higher than those north of the border. >> i had no idea when you flag to the story this was an issue. i know so many shoppers that go there, that expanding in the u.s. was pretty surprising to me. jon: they definitely have that presence in new york. they are quickly getting into a lot of markets around the country and trying to have nice stores, keep from discounting, and leverage social media. they got a shadow from kendall jenner a couple of years ago that helped out as well. >> i'm sure it did in the new york crowd, i am safe to say that you are not there shopper. we do see the equity market hopper to the green a little more. s&p 500 up 0.1%, the nasdaq outperforming, only barely at .3%, the 10-year yield 3.49, the

yield is higher by five basis points, a be there will be something next week. stick with us, for john i am krieger debt, this is bloomberg. ♪ hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance.

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romaine: what a week here, if i over ate these -- disney, a monster rally at crypto, and for some reason -- romaine bostick alongside katie greifeld. katie: it did look like we flipped into the green, looks like financials are leading. we heard from the big banks. romaine: initial reactions were somewhat dour as far as market reactions, then people came to their senses and saw how much money they were making. katie: hand over fist is what you saw