>> there's certainly a lot of uncertainty and fear is showing up in >> the bank stocks. >>you will see a lot of gyrations in the market because investors are nervous. >> it's another source of volatility in a highly vile little market. -- in a highly volatile market. >> you're not seeing a meltdown in the oakley market and not really seeing water risk or contagion in all markets. >> i don't think this will lead to a recession. i'm still in the soft landing camp. >> this is bloomberg surveillance. jonathan: what a move in the last 24 hours, live from new york city this morning, good

morning, this is bloomberg surveillance on tv and radio. futures are positive zero .4% on the s&p 500. 8:30 a.m. eastern time, cpi in america. that is the biggest reappraisal of fed policy in a single 24 hours. tom: i think we've ever seen. you've got to go back to the independence of the fed and 1952 to get historical perspective. people are alluding not to 08 but 98 which is different set of cards. i want to know where five or six banks are. i've been watching credit suisse this morning. what people want to know including our sophisticated audience, should i move my money? jonathan: credit suisse is lower this morning by 4.5%.

first republic, absolutely bashed in the last couple of days with that stock bouncing by little more than 20%. we've gone from north of 5% to below 4% all in three days, unbelievable. got 25 basis points on her hands on the two year yield. i've got goldman, wells fargo, barclays and others looking for a pause. pimco suggested that maybe the fed pauses in march. i share this quote with you from the team at namura. we expect the five -- the fed to cut t five basis points. we expect the fed to stop qt. lisa: this was shocking because it raises this issue of have

they deflated -- defeated inflation? this is the ultimate question of the morning. if an asteroid were facing the earth, would the central banks print money and when have we run out of ammunition if inflation is still a problem is still something central banks have to fight? jonathan: the estimate is for cpi to come it at -- to come in at 6%. tom: we will have to see this in the service sector. i cannot say enough of how mr. powell right now needs help and assistance from the data. talk about data dependent, this is a whole new character of data dependency we've never seen. jonathan: on the s&p 500,

positive by 0.4% on the s&p 500. the move over the last three days has been phenomenal. euro-dollar is -0.2%. lisa: 8:30 a.m., what will be the biggest pain to trade? this market is inflicting the most pain of the most market participants. we get february u.s. cpi at a time when many people expect inflation to remain hot in the u.s.. looking at core inflation, the expectation is to go from 5.8% -five .6%. if it remains hot, what does the market do and what does the fed do when it has moved ahead of fed rhetoric? we hear from the eu finance were gathering today in brussels to

discuss the economy. this is two days ahead of the ecb policy decision. the two year yield is absolutely cratering in sympathy with what we see in the u.s. does this make sense? does a bank for a couple that are on the peripheries having issues mean that globally, fed rates and ecb rates are paused and headed downward? at 5:30 p.m., we hear from the fed governor. she's talking about innovation and the banking system. does she talk about anything with respect to financial stability risks? people will be parsing through any indication the fed can get that they are possibly going to posit a time when inflation -- going to pause when inflation is still high. jonathan: this market screams

the fed is done, is the fed done? >> i don't think so. i think the fed is committed to inflation and it's still hot. the consumer is still hot in the market is forward-looking but the market is preparing for a hard landing. for next week, they go another 25. i don't think the bar for 50 is high. we look for .5 today on cpi. they put a witty big bazooka in place with their program sunday. i think they will point to that. i was worried on sunday that this went for make liquidity crisis to a capital crisis. the fed has put a huge facility in place. i think we will stem the capital concerns. tom: you have been so successful on price up, yield down on the

10 year yield and there is a rumor you may become an -- a minority investor in the toronto maple leafs. i want you to talk about what you do when you are so fortunate with a crisis move. do you tactically go to cash? do you tactically pull induration? what do you do after such a successful set of trading days? >> i think you take some chips off the table. the economy still strong and this crisis is still unfolding. i took half of our position all because it was a huge move and i don't think the fed is done. i think you want to be liquid and keep an eye on a lot of stress indicators, the funding markets,. the moment it becomes a capital issue, we are looking at congress. i am more negative if this turns into a capital issue. i was comforted by what the fed did so i think you're supposed to take some of those risks off

and be in liquid assets so you don't have to do any fire sales. they had to go out and sell safe assets. duration risk is real so keeping some cash, potentially next week, we think you will earn 5% on cash. it's attractive when it's highly liquid. i think you are supposed to keep risk like and keep an eye out for opportunities. if the front end gets repriced further, i think the fed will be between a rock and a hard place. inflation will be high and they will find it very hard even to pause let alone cut. lisa: many people are saying yes but. we are seeing a fed that typically raises rates until something breaks and it seems like something is breaking. we've had bank failures but we also are seeing volatility, the likes of which we have not seen in 40 years. even looking at the implied

volatility bank of america move index, surging to the highest level since 2009. is that something breaking in and of itself in market function? >> i look at different measures of market function and i think volatility is not great but when the fed is hiking, financial conditions tightening and the fed always wants not a disorderly tightening but we are getting that right now. i think they will watch a few more bank failures and then the fed stopped. i think the fed needs to come out and say there is no stigma. it's to prevent banks from having to sell. if they sell that facility, maybe it needs a priya

department and we can prevent the fire sales. the issue is that we knew there were these unrealized losses but is when you have to realize it and go to the market that is skittish and try to raise capital, that's when the problems begin. i agree it's very volatile but this facility is in place. the fbi see -- the fbi see -- the fbi see - the fdic is playing a significant part. we are all watching for that thursday evening balance sheet result when that comes out from the fed. i think you will see access and that will tell you that the fed has facilities in place to prevent the liquidity crisis from becoming worse. the market always overdoes things because we have positions

on and then you take it off. i think you take a step back and the economy is still strong. it's been three days so if the fed can come in and provide these facilities and we can stop these fire sales, i think we can all calm down a little bit. jonathan: thank you for that. it's been three days. all these calls and the federal reserve, i get it. maybe you've got to reassess things. all these calls, where are we in a weeks time? or two days? tom: this is what's known as uncertainty. we don't have a set of outcomes. you are literally flying blind. you look at the screen in the summation statistic for me is how restricted we become with all these gyrations. jerome powell is looking -- i will let an adverb come and hear from our guests -- he's in a

highly restrictive market and that was not the case four days ago. jonathan: this conversation will continue. we will catch up with j.p. morgan a little later this morning. your equity market is positive on the s&p 500 by half of 1%. first republic is higher by more than 20% in the premarket after getting battered in the last few days. credit suisse is one to watch, down 4% and down again in switzerland. in the bond market, yields are progressively lower the last couple of days but higher this morning by about three basis points. lisa: keeping up-to-date with news from around the world with the first word. in china, president xi jinping and russian president volodymyr zelenskyy are said to be planning a video call. that would be their first ever

conversation since russia's invasion. the wall street journal reported it could come after president xi visits moscow, and a trip could come as early as next week. in the u.s., president biden says he expects to speak with china's leader soon once the government in beijing returns to work following the national people's conference. the u.s. system of federal home loan banks is ramping up the amount of cash it has available to deploy as a failure of several u.s. lenders. it's sparked expectations that word regional lenders will need to type of refunds. the system which is a key source of cash for regional lenders raised 88.7 billion dollars through the sale of short-term notes exceeding the 64 billion initially plan. fannie mae has postponed the sale of more than $500 million mortgage linked bonds sold by namura. fannie mae alerted investors that the 542 million credit risk would be delayed citing market conditions.

securities are riskier than regular fannie mae mortgage bonds because they are among the first to take losses when homeowners fail to make payments. u.s. prosecutors are looking into chat group conversations among prominent trading firms about a potential veil out of the terra project. they are probing conversations among employees. they are looking at whether possible market manipulation was involved. global news, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo and this is bloomberg. ♪

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but do whatever is needed. i will ask congress and the banking regulators to look at the rules for banks and make it less likely this kind of bank failure will happen again. and to protect american jobs and small businesses. jonathan: the president of the united states of the united states live from new york city this morning, good morning. after that address and after what we heard sunday evening from officials, the treasury, the fed, the fdic, many thought we would get a bounce in small regional banks. first republic was lower by 60%, western alliance was down by almost 50%, chimarica down about 27% and many people founded surprising but you get a bounce tuesday by more than 20% but what was yesterday about? lisa: that's the reason people got nervous. if what the federal reserve and what the fdic did was not enough

to stave the panic, what would be? this morning, we see the whipsaw in the other direction. western alliance shares are up almost 20%. how much do you get this sense of relief today? jonathan: we say we are data dependent but dependent on what data? dependent on the prices we get at 8:30 a.m. tom: to me it's two separate issues. clearly, the financial products predominance over the economic part. they are linked. there seems to be a belief that we escaped flow angst of thursday, friday and monday. i don't buy it for a minute. people have these things. my frame of mind here is we've got to follow these stocks that

have the interior pulse of this flow. jonathan: it was said it could be a multiyear process, not a couple of days. tom: let's take a different perspective. we have the chief executive officer of sweden's electa. he has perspective on the american banks and perspective on the pension responsibilities in his suite and across europe and frankly worldwide. october of last year, a small matter of a busted sure thing in the united kingdom, a bailout by the bank of england literally within hours. what we have observed over the last four days and we look at sweden as the bastion. one of the shadows within the swedish pension system right now is pricing commercial real estate. is it a different nuance of

european banking? what are the shadows you confront this morning? >> good morning. thank you for having me. the swedish pension system is very robust. it's more robust than it's been the last 15 years but having said that, about liquidity. the issue you brought up about the you k last year and in the past week or so is a lot of liquidity. the ease with which one can move capital with digital programs has changed. looking at the balance sheet across all the pension funds in sweden and the north region, they are very robust today. tom: do you bring the money home? my experience on the geography

of crisis is when indict, bring it home. do swedish pension plans and european continental plans just bring the assets home? >> the underlying fundamentals of the u.s. market is still very attractive for any investor. in the mid to long term, the u.s. will always be able to attract investors to attract into the market space. that also goes for the pension funds. looking at the size of many pension funds in the nordic and european space, they need to diversify into the u.s. market and other regions around the globe. i have a positive mid to long-term view on the u.s. market capacity to bring shareholder value to us. jonathan: let's talk about the problem this morning, how does the swedish pension fund and depth allocated to signature

bank, first republic and svb? >> we invested in those companies starting in 2017 until 2019 and we been growing that allocation over the years. we obviously thought that was good for us in investing with what has happened last week. it's a big figure for us as an investor. we need to learn something from that and take action. it's a failure and i want to put that in proportion to what we are managing in the total portfolio. it's 1% of our total capital we manage. from a customer point of view, this does not have a material impact. it will not impact the pensions we are allocating to customers. jonathan: there are some odd decisions we need to talk about in the fact that you're

allocated to those names percent of the conservative swedish lenders, you sold those positions last year. is just what happened, what happened and why did you buy more of those names and buy more conservative names? >> those are two separate issues. the divestment of the swedish banks is a standalone assessment. it was made at a different time. talking about the u.s. banks, what we liked about them was their position when it comes to transformation in the digital space in the u.s. market generally speaking. we had a discussion with a silicon valley bank because we saw the withdrawal of deposits and the investments the company did in the long term with government securities and what that meant when came to liquidity and duration aspects.

without the actual plan the company had was they were transparent about it and we thought they followed through. last week, the company acted not in court it's with the plan we had discussed with them. that was the big mistake from the company side. jonathan: it surprise many people including the regulator in the united states. how did you respond to that in the last couple of days? you identified thank you hold that have not managed their interest rate risk properly. do you were you hold some european banking names that maybe in the same position or even worse given what's happened with the bond market there over the last couple of years? >> we see in the european market as well a withdrawal of deposits. we are monitoring that closely. we are monitoring the exposure we have to the banking sector.

the last few days has been escalating a little in the european market but we are monitoring that. the loss to equity ratio is completely different in the european space compared to some of the banks in the u.s. market. jonathan: do you hold credit suisse? >> no, we don't. jonathan: have you sold any names in the last 48 hours around european banks? >> we have not. we hold shares into nordic banks. lisa: you have also taken on these credit risk transfers over the past couple of years to take on the risk associated with european bank books tied to commercial loans, distressed that. how confident are you that those will be solid investments?

>> i think the banking sector in europe is stronger than what it was prior to the global financial crisis. a lot of things are happening now and it's clearly a transition phase the market is going through with the enormous increase in the interest rate we have seen in the past few months and the speed of that. we have not transitioned through that yet. i think the nordic banks that we own shares in our in a good position as of today. lisa: i'm wondering how you're handling the fallout and whether you're getting out of positions or doubling down. what has been the positioning over the last couple of days? when you talk about the silicon valley bank and the signature bank being in receivership, it's more of a legal issue to ensure

that we protect our legal rights there. i don't expect any value to come out of that as of today. when it comes to first republic, is very volatile and it's a today. it fell a lot yesterday but it's up today. we have not taken any decision yet but we are ready to take decisions as we see appropriate for us at any stage but we haven't taken any major actions. tom: as every crisis unfolds, we make note of sweden's wonderful work many decades ago and vetting central bank. without stockholm handled a crisis. the theme seems to be the shadows for the mysteries of private equity and venture capital. in america, conservative money is addicted to the potential return of that group. are you exposed to private equity and venture capital long-term holdings and do you

worry if there could be real issues therewith liquidity? and are up equity portfolio, our investment model is focused primarily on more mature companies and we invest directly in those. we are looking for strong cash flow rather than potential growth and future positive cash flow. that means we basically don't have any private equity exposure. tom: you've been doing this for a few years, do you assume in crisis with the weight deals are gyrating and the way all central banks have become more restrictive in the last four or five days, do you suggest that the expected return of pension portfolios will come down? yes, i think the next 10 years will be more difficult to generate return. i think we will see changes in the investment models in the

pension fund industry in order to secure return for the beneficiaries. tom: we have had interest rate come in as we've come back and normalized yields within the european sphere. will the zombies go away whether they are banks or anything else? to use just we will see combinations and transactions to clear a companies that have had essentially a free lunch for 16 years? i think some companies >> have benefited too much of the central banks and the fact that we been living in a world where cost of capital has been serial. i don't think that a sustainable in the long-term and i would suspect that some differences

out there will struggle to more normalized interest rate levels long-term. jonathan: the first deputy governor of the central banks is addressing parliament at the moment. people believe things are breaking in the central banks need to rake away. what's your take on that? >> i didn't hear the question. jonathan: the first deputy governor of the ricks tank is speaking to parliament now. he suggests we need more tightening despite the volatility. the conversation in the last 24 hours is some people believe things are breaking and central banks should back away. what is your take on that? >> i think in the market space, we see things tightening and that should be playing into the policy decisions going forward.

it's a very difficult essay -- assessment to make. we are worried that we are breaking the markets. we need to bring down the inflation because that's the longer term10 number one0 purpose of all participants. i think the market tightening that's happening should be catering to that consideration. jonathan: we appreciate the opportunity to speak with you at this difficult time. they have exposure to all the wrong names over the last few days. good morning to you, we will go through some price action. the equity market on the s&p 500 is slightly positive slightly negative yesterday. we are positive by a half of 1% in the s&p 500 with yields higher on the 10 year and a whole lot higher on the front

end after being lower over the last three days. this morning, the two year is up 27 basis points. let's start with the u.s. side of things, first republic is positive after being slaughtered the last couple of days, up i-22 percent and credit suisse is down 4.8% and just off record lows. lisa: this is not just the fallout from what we saw in the banking sector. it's also because there is a new headline that they found material control lapses after the sec reported in the last two years even though they say it presents a financial condition but these are not and you want to read about at a time when there are russians about the integrity of balance -- when there are questions about the integrity of balance sheets. tom: these headlines from credit

suisse are important. pricewaterhousecoopers made that happen. the american audit system stepped up and said no, we will not agree to this and pwc came in and said maybe not. jonathan: they think it fairly capture their results. that doesn't mean the story is done. that's the last thing you want to be saying when the stock is near a record low and there has been management issues there for a long time. tom: with accounting, is always ratios, compare and contrast, i will not pontificate if the numerator or denominator is bad. the auditors are looking at the construction of the ratios and saying maybe it's a little off here. what's important is pwc stepped in here. lisa: i wonder who will come in and be the way tonight because

this is a story that's been leading to record lows. what is the solution here? this is something else in a chance for middle east investors to come in and invest. tom: this is off of three moving averages. i'm looking at a 10 minute interval chart. there is a middle moving average that this stock cannot break through. six intervals that tried to go through in the cannot bring it up. jonathan: walking into the building in london, the credit suisse ceo will sit down with francine lacqua in about 90 seconds. let's start with the news first.

stocks are at a record low. how much trouble are we facing here? tom: we make jokes about it but let's be honest, we are flying blind. signature bank, i was not surprised because i know that heritage of new york state regulation. i don't have a clue about swiss regulators -- switzerland regulators but in america, you're under five or under four and everybody sits up and watches. we will be under two in a bit. lisa: how do you project confidence when is one bad headline after another? how do you garner influence whether it's wealth management or depositors at a time we have incredible competition with banks and how much does the pressure in the u.s. add to the difficulties in restoring a lot of the support event from previous investors? jonathan: that conversation is coming up shortly, the credit

suisse ceo sitting down with francine lacqua. we will pass over to them in a moment. starting with equities, interesting to hear the swedish pension fund, that's a problem. talked about the duration issue. in europe, if you think some u.s. inks have mismanaged their interest rate risk, think about what's happened to duration in your over the last 12 months. tom: we look at america at the belly of the curve and tenures as the benchmark. pension funds over there are much more conservative outside of the crisis, don't they feel comfortable locking in for 25 years? jonathan: it's the story in the gilt market in the u.k. which is why there is such a long way to

maturity. s&p futures are just about positive, a big turnaround in the bond market. your two year yield is higher by 26 basis points after being lower by 100 basis points in three days. we can head over for london to catch up with francine leak -- francine lacqua and the credit suisse ceo. francine: it's another difficult day for credit suisse so what can you tell about -- tell us about the outflows? >> this is a very recent thing that happened. it's pretty calm right now and we had good inflows yesterday. i think it's early days. francine: are you suggesting that you could get inflows?

>> yesterday was a positive sign. in comparison tosvb, it's a different situation. we are different and have higher standards when it comes to capital funding and liquidity. this situation is important. we have a strong ratio which has improved. franicine: outflows have not reversed but actually lowered. >> they have significantly moderated. we got an update on february 9. it is very clear and you talked about that, what has happened in the fourth quarter. we are fully focused on it to

turn around but it takes longer than two months. francine: but then you have material weakness today, what happened there? almost every day, there's some kind of bad news in your share prices at a record low so that can't be a comfortable position. >> we published our annual report today. the natural result -- the national outlook is unchanged. we delayed the report in previous years. there are questions the sec had and we answer those. we had always we had a material weakness in the financial reporting control which we are addressing forcefully. francine: how are you addressing that? >> it's not their fault. you work together with the auditor but it's something we

are addressing. francine: you have an anchor investor that put 1.5 million in the bank and their share value has gone down by one third so what kind of conversations are you having with them? >> no one is happy about the share price development. this is the right plan and we are executing ahead of the plan. it's an unpleasant situation but we manage the expectation. francine: are you not getting pressure from big shareholders to do more and have more options on the table? >> i'm not pleased with the development but we are executing and once we're executing, then we show the market that this is a three-year process and we are executing it. the market will acknowledge

thatf and follow-up. rancine: what about breaking up the bank? should all options be on the table? how do you regain? >> i am fully convinced of the spreadsheet and we're executing. that's why we said in october that things can change. the bank needs to be changed. it's a three-year transformation you can't come off into it -- into two months and say why is everything after? francine: will you break up the bank? >> it makes sense what we are doing, an entirely different risk portfolio and we will be profitable.

francine: when will you be able to say the worst is behind us? >> it's a two-year transformation and we said we would have a loss this year and this is something you need to understand. in order to restructure costs, changes are coming this year before we see benefits out of the transformation, that happens because it takesf three years. ranicine: that's a long time and a lot of the shareholders will ask questions. anything could happen. >> a ratio is strong and it's getting stronger as we speak. our capital ratio is very strong at 14.1% as we get into the fourth quarter so we everything we need to go through the transformation. franicine: will the first quarter be strong enough to keep shareholders off your back? >> we will make a loss in the

first quarter but we will see progress as well. there is business momentum. the market business as we discussed, it weakened in q4 but it looks better and wealth management, we are making progress, not where we should be but we are making progress. francine: are you comfortable with the banking system as a whole? >> this is somewhat an isolated problem. if you look at large banks, i think we will manage through it. franicine: talk to me about first boston. >> the timeline for the merger is not change. we want to create liquidity. we are working with their

internal plans forcefully and i would expect results in 2025. franicine: any news about the 25% that goes to the first boston merger? >> the rest is up to us. this is our part of the bank. we are going into liquidity. we will probably majority held and then we will make a decision how things develop. fr youa are still looking fornicine: >> not sure if it's an anchor investor. we've had a lot of interest from certain parties to be invested. francine: middle eastern investors?

> different parts of the world. i will inform you first when it happens. francine: how far away are you from this? >> we are pretty close. i will tell the market when. francnine: what is most difficult about your job? >> to make it understandable, i would say we are absolutely doing the right things that will take some time to get through and this is what we try to do to regain the trust of the bank over the next couple of months. francine: is it more important to regain the trust of shareholders or clients? >> i would say one of the best experiences in this difficult months of last year, they are very supportive of this dish of us and they are listening to us in they are doing active things to support it it's a fantastic

experience. we are executing at payson ahead of plan. francine: why are they taking money out if your clients are happy? >> if you are in the situation we were in an october, we were not legally able to speak. two thirds of the elephant is stemming from the tober levels alone. at the moment we could reach out , we talked to our clients, more than 10,000 clients and wealth management and it has created momentum. francine: are you frustrated you haven't been able to get ahead of that quicker? >> we are really doing the utmost and i'm proud of what my colleagues and my people have done in six months.

francine: to date? you look at the share price at a record low, does your stomach sink a little bit? >> it's nothing which i like but i cannot control what i cannot control. i control the execution. francine you think the share: price will catch up? >> it will. francine: that's the credit suisse chief investment officer. jonathan: what a timely conversation. credit suisse down but 4.9% in the stock at about $215. i'm surprised to hear that the credit suisse ceo said the firm saw a credit float influx on monday. tom: that's one day. i think a lot of people and i'm

looking at the 10 minute intervals stock and that's not what we do but this is the mood of a crisis in the financial world right now. the fact is during her wonderful interview, he didn't generate a bid on the bloomberg screen. there was no good during that conversation. jonathan: she did a wonderful job asking all the right questions. he is in a tough spot. you get q1 results on the 27th of april. it feels like a long way away. in a world where a world where bank can fail in 24 hours as we saw with signature bank and the silicon valley bank, one month is a long time. tom: april 20 seven is when the red sox are out of the pennant race but it's too far along. these guys are hardwired to look strategically except he did not answer the present tensions and

crisis other than to say i believe he said they are close to large pools of money coming in. we went back-and-forth on that before a great conversation. he should have identified the immediacy. we are not going to make this a technical show but the answer is, he did not find a bid on the chart. jonathan: the audience out there are the sharpest and smartest on the planet. he didn't say net inflows, he said client inflows and i think that's probably an important distinction. lisa: he also said he is seeing progress growth and she said what kind of progress and he said business momentum.

she said client inflows? he said business momentum. tom: you are better at this than i am -- it's been six days of no sleep. you know the symbols for this, what does their debt structure look like including their reddit default swaps? lisa: they are pricing in a near record level of distress. you are seeing the market right now ray signals of concern about this bank but given how far it's falling, how can they resurrect it? the market is saying no, jonathan: the stock is down 5%. tom: we don't want to do a fancy

thing but we will continue to monitor credit suisse. as initial resistance, two point -- 2.16? are those pennies, what is 100 -- how do you figure this? we will go to another bank doing better this morning and that would be citigroup. the chief u.s. economist of citigroup is with us. you have led the way on some form of vector to get to higher interest rates. this is where we are going. did they go too far too fast? >> i think we don't know. i think we will find out that it's not the case they have gone too far or that they've gone too fast. they want to achieve price stability, financial stability

and achieve full employment. we've been in a situation there were only one issue was priced in that was too high and now they have to balance between financial stability -- tom: i went back pre--volcker in the first derivative of what they accomplish. it's never been such a steep movement. did they -- to keep it simple and sensational with great respect to the chairman, did his trajectory with his fed compatriots because this financial upset we are living now? >> causation is a difficult question because we know that higher interest rates have to do with what's going on the banking system now. if the fed pauses, i would argue that you will get higher

interest rates because inflation was higher and now we have the fed moving against inflation which of the appropriate thing for the fed to do think about what the fed is trying to achieve, they are trying to tighten conditions and slow the economy. you would like that to happen gradually and smoothly. it usually doesn't happen that way. it's not good for a bank to fail and we cannot say that is caused by the federal reserve. the federal reserve is moving too slow inflation that will have collateral damage along the way. we've been talking about that for at least a year now that the fed should be honest about the fact that when you raise interest rates and slow the economy, your constraining credit. it is painful. lisa: you still think we are heading to 5.5% of an interest rate. how difficult is that becoming to defend at a time when people

are saying the fed is done. >> it's interesting. we've been on the phone talking to clients about this about what feels like an attorney to which is only a couple of days. consensus is that there is no consensus. there are those that think this could materialize into a bigger financial sector problem. if that's the case and we continue to ask. the kind of volatility we experienced yesterday with the fed hiking, probably not. we will probably not get to a higher rate. we would risk economic growth that would bring inflation down intentionally. when i look at what's going on, i do not see that as the likely scenario. what we have going on now is still relatively constrained to one part of the economy. we have deposits that are moving around the banking system that are not flowing out of the banking system so far.

that risk is there that there will be a financial stability issue that prevents the fed from hiking further. the early read on this is that's probably not going to prevent the fed from hiking further and then you move back to the price stability issue. if the fed does not hike next week, there will be questions about whether the fed is committed to price stability. the fed has to balance the financial stability and the price stability. not hiking next week would send a signal that perhaps the fed is not that committed to price stability. jonathan: zero consensus right now, thank you for joining us. goldman sachs, wells fargo and barclays are looking for a cut and they're looking for the end

of qt as well. citigroup and bank of america are still looking for a move next week. a week is such a long time in this market. tom: we are all data-dependent been around that is to maintain greenspan's measure. the person who had the best four days alan greenspan. he used to pound the table and andrew stood his ground that he wanted rates higher faster. greenspan would have said measure it out, take your time, observe the data nationally. jonathan: we will observe the data at 8:30 a.m. with cpi just around the owner. just just around the corner. futures right now on the s&p 500

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surveillance. karina: hardly anybody is talking about cpi tuesday. good morning it nick, good morning. this is wennberg surveillance live. tom keene, data is 19 minutes away. tom: we are looking toward it. let me say nothing has changed in terms of the split between goods and deflation anticipated by some. to me is fascinating, nobody is talking about this. we are going to get down to two dollars gas this summer and lisa is getting the hummer out. can we get the handle on west texas? jonathan: we are talking about the financial services sector. credit suisse is recovering a

little bit. it is still low for that name. first republic was battered yesterday, 18% this morning. how are small regional banks doing? they got hammered yesterday. tom: there is a team looking at this. they had good hours of calm this after what we saw yesterday. it still comes down to flows. what francine was talking about, he did not want to talk about flows. lisa it was great on that. it's like our start. jonathan: that's the view they are trying to push this morning. i hear you. we've got to dock about the federal reserve. you have heard the calls. here they are. it's always fantastic to hear from him. they all joined the cause. rate cut, we talked to citi.

he said there is no consensus. he says he thinks they are still going to hike. lisa: it is still present at the highest levels in four decades. this concern about financial stability we haven't seen it shake out. some of these shares indicate we have passed the corner on this. that is unresolved. how does the market handle hi cpi, when people priced down yesterday. you could see some real gyrations at a time when the applied volatility is the highest. it's a search to the highest level since 2009. jonathan: just the reassessment yesterday was phenomenal. a 60 basis point move. tom: i did the thing for twitter and youtube yesterday.

where is jerome powell? if i was the president, i would have secretary yellen and chairman's powell speak. lisa: to say what? tom: institutions in crisis should speak. when surveillance is in crisis, jonathan ferro speaks. jonathan: what a timely arrival to the national economic council. tom: she arrives, i would like her to manage the red sox. the answer is yes. it is usually timely and be of great assistance. my question to all of america, i lost my train of thought. you've got to listen to the public. they are scared stiff. that hasn't gone away. jonathan: why are you laughing? lisa: he said lael brainard.

you said she helped orchestrate this, to offset what's happening? tom: john i would never say that. lisa: i wonder what her assessment having worked at the fed would be. timely. jonathan: that's a loaded timely. tom: let me go through the historic path on this, including final lunch i had with anna schwartz. she was in her 90's. friedman schwartz and alan and milton friedman, a guy name ben bernanke is the one that codified the strength of the financial system is what keeps the fed going in crisis. that's where we are now. brainerd studied this linkage in history of finance that chris weyland is brilliant.

the financial system linked in the central bank battle. all three of us are guilty of this. we do the parlor game. it doesn't matter right now. jonathan: you mentioned policymakers speaking more. the last thing you want to do is chase your talent keep announcing new things. the announcements of sunday are they efficient? there is still nervousness. give it another day. the hope is it is sufficient. the more you come out and talk about something new, you are saying everything we announced sunday didn't work. lisa: i think silence is the perfect response. you are right. right now, that they are quiet is highly convenient for fed officials. what do you say at a time of great uncertainty? tom: he could come out with a prepared statement that i'm sure

vice president brainerd helped him with. he doesn't have to ad lib. this. frankly, we could stay even with credit suisse for the last 20 minutes. we could stay more constructive than it was yesterday afternoon. jonathan: let's go through it. nor equity market elevated by 0.5%. that is a bounce. a minor loss of 0.10 per set. -- percent. bond market yields are higher by two or three basis points on the tenure. that is much higher on the two-year peeled we are up by 20 basis points after drifting aggressively lower over the previous three days. we are all fed up this morning with the federal reserve. what about the ecb? it's going to make a call on thursday after using this language.

they were suggesting strongly we would get 50. now, here we are going into thursday. lisa: i think the ecb is in a much worse position. the fed has a couple of extra days. as you've been saying, that's like a couple of years in this market. we get the cpi report. what does this market do with hot inflation. that is a mystery wrapped in the mysteries of the moment. we are expecting core inflation to come down to 5.5 percent. what happens if it stays hot at a time when the fed is fighting inflation? the finance ministers are gathering in brussels. the reason i find it interesting what they have to say is this is just two days before the rate decision. you've seen it complete

repricing of the u.s. market. that german two-year fell dramatically yesterday. it's only 2.8% from not so long ago. we are looking at the discussion from the fed. they're not going to be fought -- talking about fed policy. it is also potentially in the forefront. jonathan: has that speech been rewritten? i can't believe that is still on schedule. tom: she is very good. jonathan: i don't care how amazing you are. tom: i'm in the qui are giving away family secrets.

many of our guests over the last number of days, they want to come on for the smart conversation. jonathan: i'm happy to say that this morning, phil ran through the raiment. i need to be on bloomberg surveillance. what do you make of this reassessment? >> i thought match marden us -- march madness was a basketball thing. this is crazy. one of the things we say is bonds are a really nice place to be except for last year. now we see you have a market where bonds are negatively correlated to equities. the second thing is if the meeting were today, the fed would be tone deaf. to move rates higher.

i than qui should be questioning whether there is a tightening cycle. for the near term, it would be hard to believe that a move hiring rates would be warranted right now. tom: what do you see in the last three or four days. how are clients reacting? are they allocating to a new position? are they standing pat? are they scared stiff? >> we were looking at the yield curve last week. the t-bill was the highest yield. tom: a lot of people are saying we had 5.00 and everybody said that looks good. jonathan: i would also say i think the chairman last week had an october 2018 moment. that caused some havoc in the

fourth quarter. i'm not sure why they were that aggressive. what clients are thinking is there is negative correlation again. i think that's what people are thinking the most. for us, i think that the five-year part of the curve. that's the combination of yield must direction. lisa: i am wondering how you have reset your understanding of markets on the heels of the volatility we've seen in the prospect of fewer rate hikes. >> i think financial stability is an m1 a priority. the way we are resetting, it's not full employment. it's financial stability for policymakers.

at the same time, that's too premature to think that. it's only been a couple of days. the way we are resetting, we had an overweight situation. that seems like a long time ago. we move 50 or 60 basis points lower. where underweight the u.s. dollar. i think that makes some sense in this environment. if your move all of those rate hikes, if this is moving it, that creates a good environment for the euro. you put that altogether, it's a pretty defensive portfolio. not in a way where we are underweight equity. we have a preference, but we are

neutral on our benchmark for equity. the duration and dollar story go hand-in-hand. jonathan: everything looks very challenged. it's always great to catch up. thank you. it's unbelievable we had two days of testimony. i know we are using that language. these things don't happen in a single day. it's unbelievable that the fed chair was able to sit there for two days and have no idea that bank of america was about to collapse. tom: you have to measure the trust and confidence. he ran a bank at one point. jonathan: that conversation is coming up. ♪

>> it's pretty calm. we had it information yesterday. the meeting was very positive.

i think it's early days. jonathan: that was the credit suisse ceo. the stock is down 3.4%. they are off session lows. they are seeing material good inflows yesterday. we will have to get more detail in it. the next earning report comes in about a month. they say we will see some progress. we will get that q1 report on april 27. april feels like a very long way away in a market moving. new republic is up nicely. that's another lift. tom: we open up for a tuesday morning, 41 is the last frc. we are going to run right to it. david george, with decades of

experience, what are you writing this morning. what matters right now for david george? >> we wrote this morning this is an asymmetrically positive risk reward for regional bank stocks. this is one of the best i've seen in the last 23 years. tom: what of the skill set that a given bank is not seeing outflows, and that given bank has trust and confidence? >> part of it is it's difficult to predict customer behavior.

something that has gone undiscussed in the financial media is it's important to know that they have $220 billion in deposit. they had 18 branches. u.s. bank has 5000. the average deposits at most u.s. banks is -- the granularity of most u.s. regional banks are infinitely different than the kind of banks that have been reported and have failed. obviously, we are in a time where investors have long memories. that is where you get these opportunities. lisa: this is across all the banking sectors as well as beyond. the immediacy of been able to withdraw in real time.

the ability for there to be a bank run that happened so quickly that even regulators are caught off guard. how does that change your risk assessment at a time when it's paying something? >> i'm not concerned. to your second point, the movement of funds into treasuries and higher yields, that's been going on for over a year. that is not a new phenomenon. how people are feeling about that is new. fundamentally, that's been happening for several months and several quarters. in terms of the movement of the deposits and things like social media, that's not that helpful. most customers at regional banks do not have millions of dollars.

they've got maybe $5,000 in a checking account. a small business as $100,000. they are focused on running their business. the similarities between silicon valley and most other main street banks couldn't be more different. lisa: there is concerned about the interest rate risk. i wonder from your perspective, what about the nuts and bolts of unrealized losses and balance sheets haven't hedged against a dramatic rise in interest rates among the assets they used to back those deposits? >> as part of the dodd frank legislation, the have to own securities as part of the lcr. silicon valley and banks that are 200 $50 billion are no longer subject to that.

the big banks we talk about our subject to that. in terms of the interest rate risk, there are banks sitting on it securities. these are treasuries. these are securities. despite that, you have banks that -- they made 8 billion last quarter? this is just not a crisis. 2008 was a crisis. this is a very short-term drop in confidence that was driven by one bank. from my perspective, there are unrealized losses. those are becoming engaged. that will change over time.

those banks will have securities until maturity. i think just to say these banks -- that's not electorally honest. jonathan: you do sound somewhat frustrated with the way the story has been covered over the last three days. what would you like to hear more of going forward? what are the questions it of been missing? >> i think the constant focus on your money, social media is engaged. i think it's important to just distinguish between banks and their funding and customer bases. this particular situation is

frustrating. when you've got screams fire in it credit theater, that's not helpful. that's another discussion. the main thing is just having some differentiation between banks. there will be beneficiaries of this. all of the large banks will benefit from this. your big 10-15 banks will be net beneficiaries. that has not been discussed. jonathan: that is something we talked about a lot. a lot of money will go to the sip's. david, this was great. let's make this regular. it's going to be a story for the next couple of months. tom: david george is a huge part

of the fabric of the midwest. the answer is is he knee-deep in will they roll up or consolidate? will a strong be weaker? unfortunately, i don't think it was mr. george. it was probably mr. schwartzman who did that. this is the way it is. there was crisis. i'm not going to give an opinion on silicon valley and what they were doing. we can have our opinion on that. the fact is it's tuesday and it's not friday. you do a workout of a blown up bank. that's what we see when we see the blackstone headline. i didn't write this.

jonathan: i think david made a good point. there are some irresponsible comments over the weekend. lisa: you are talking about some of the venture capitalists? jonathan: i think those of the voices that make it difficult for policymakers to do the things they say we should do. it sounds like you're doing it for them. lisa: gary said he would investigate some of this for securities issues. jonathan: equities right now are up 0.8%. that's a turnaround in the last 10 minutes or so. ♪

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. jonathan: equities firmer, close

to session highs. on the nasdaq 100, up 7/10 of 1%. first republic followed a lot for obvious reasons. we will pick up on that in a moment. a 100 basis .2-year in three sessions. we have not seen moves like this since the 80's. i don't the queen ever seen a

reassessment like we did yesterday to price out all of those rate hikes. i think we had a peak rate priced in last week of something like 560. what is a peak now? 490? it's unbelievable. i keep forgetting this, i keep reminding myself. the ecb has a meeting on thursday. they threw all of their communications committed to 50. they were leaning in that direction. every thing is gonna quiet. do they back away? tom: it's a different cultural force. i think here with the inflation rates we have reported, i'm

going to say this. it will be fascinating to see how the core of europe adapts to crisis. also to the sustained level of inflation. it's not the same as the united states. jonathan: we repriced the ecb in a major way. lisa: i don't understand how they respond to this. that brings us to what we want to take a look at today. yesterday, they were down it. today, they are up by more than 50%. how is this due to the sales? how much is it? people are reassessing the backstop and realizing they got oversold. shares were down heavily, if we

get pac west, those are up 39%. the bounce back has been tremendous and a time where we are looking at potential stability. jonathan: we opened last week at 123. lisa: how much is this bottom feeders? you see that coming up from a host of investors? i don't know what the noises. donovan: where's the fed next week? we will get a clue in about 60 minutes. we've got 311 on payrolls. tom: frc is the best news for jerome powell right now.

this is a joy. what we want to do, we want to talk to people who actually do innovation and technology. he is a guy who put all sorts of transactions together for his sapphire ventures. we are glad he could join us. i wanted cut to the chase. you unloaded on marc benioff. could you that today? can you get transactions done after this crisis? >> thanks for having me. sapphire invests in companies that we think have consequence. i like we can unload any company. we do have a transaction going on.

that hasn't stopped. i don't think people who are looking at quiet companies have slowed down. tom: you studied at booth. they will tell you when crisis debt becomes more costly. you pointed out and in a note this morning. the debris of silicon valley is there is going to be a new cost to technology and innovation. how large will that burden be? flex that is going to be a huge burden. large corporations were looking. for them, they don't have a debt partner. that's what is happening. it's the small startups that depend on venture debt.

they are all going to have a huge issue because the cost of capital has gone up. for a company that has a lot of revenue, they are backed by an investor. those kind of debt instruments are probably gone for now. lisa: are you providing capital yourself, to bridge the gap in order to avoid high interest loans? >> yes. the first thing we had to do on the weekend was figure out. we actually put together a deafblind. they're going to fund payroll personally. they are going to fund the payroll personally. they did not have to go without

their pay on wednesday. thank fully, that did not happen. what's going to happen is people are worried about the cost of debt, how things are going to happen. we are looking at the companies that might need more equity funding. lisa: you said deals are still getting done at a rapid pace and there is lots of interest. i'm curious as people say tighter monetary conditions creates more innovation and stable businesses. at what cost? do you see evaluations coming down in order to get these transactions done it? >> i think valuations are in the public market. it's interesting. the tech stock went up. i think the people who are driving this are taking the long-term view of what they can

do without advice. the firms are driven. they are definitely looking in terms of valuation. tom: i get the idea there are banks, maybe they've got a better relationship over a latte and silicon valley is a stereotype. why can't the big bikes -- banks do this? why can't they deal with wells fargo for jp morgan or the others? >> i think it was a matter of trust. a lot of the time when the banks see who they work with, the company got into trouble. they didn't have the trust to make that work.

that doesn't happen when you have a big bank and you don't have that trust and relationship. you might have debt managers who are not the same. this is a matter of trust. that was the thing that was missing when you deal with large banks. they are looking at numbers. you can't call somebody and say they are missing for a couple of months. those don't happen with them either. lisa: i would like to follow up on something you said. you said this follows the public market. we saw a decline last year in public markets. from your vantage point, how much is the decline already realized in venture capital? how much more is there to go? >> i think the later stage deals

are starting to happen. they are being done. there are a lot of companies that have high valuation. we haven't gotten to the point where we raise other equities. we probably have more equity with some structure. this makes a lot more sense. jonathan: we've got about two minutes left. when this was unfolding last week and you had portfolio companies, what were you trying to do? >> first and foremost, we were figuring out what assets they had.

the first thing of course is friday and saturday, that's all we worked on it. the second question everybody has to look at, which should open their accounts? jonathan: did you feel like you were part of this collapse? >> no. i think everybody was caught by surprise. we look at the balance sheet, people don't pay attention to the balance sheet. at the getty but he was paying attention to the balance sheet. jonathan: one theory is doing the rounds. i want you to respond to it.

the vc and your portfolio companies, who up the bank that serve you by heading to the exit and telling portfolio companies to do the same thing. the authorities stepped in on sunday and made you hold. >> at on the anybody did this together. if you look at it, you have to pay a lot and make sure it's done. venture debt is not available. it's going to be much more expensive. i don't think there is a coordinated effort. somebody on twitter heard from their friend, to be we should move the money. it's a psychological thing. the bank runs not coordinated. it just happens.

everybody started doing the same thing. jonathan: it's a classic bank run. thanks for your perspective. equity futures up three quarters of 1%. ♪ >> keeping up-to-date with news from around the world with the first word. germany's largest munitions manufacturers says europe's defense industry can't meet needs unless they double capacity. it is producing a chest two thirds capacity due to lacking orders. ukrainian and european officials of warned repeatedly that sufficient supply of artillery conditions will prove a decisive factor in the app -- ongoing work. ron desantis expressed strong misgivings over u.s. support for ukraine and its defense against russia, breaking with the buy demonstration but also prominent

republicans. he said in a statement the protective u.s. southern border and bolstering the american military should take priority. president biden is authored an oil project alaska, despite opposition from environmental's. it is a middle ground for the president as he seeks to transition from fossil fuels while being bound by the decisions of pastor ministrations. the project was already approved under donald trump. global news 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

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jonathan: the two-year is up 24 basis points. last wednesday, north of five. yesterday, south of four. tom: brent crude can't get above

80. it's tertiary. we've got to look at the stocks. we had a nice lift in the troubled agony of yesterday and friday. jonathan: first republicans in name we keep going back to. the stock is up. it is still down, but recovering. let's call it to 23 and be kind. tom: because of time in the -- into the inflation report, we won't pretend there is a financial crisis. let me ask one question on the history of economics. he is vincent reinhart, the chief economist at dreyfus and mellon. he read -- lead research under alan greenspan it was considered definitive at herding cats over there. i would love to talk to chairman greenspan about this this morning. i will use you as a proxy.

were we? did we get out of -- in front of our skis? i look at the first derivative. i've never seen the abruptness on a log axis like this time around. in hindsight, would you suggest we lost our way? >> alan greenspan talked about letting the air out of the balloon slowly. i would go back to the transcripts in 1994 when participants were banging on the table about how inflation had gotten out of control. it was important to contain inflation. greenspan just kept saying 25 basis points. he was referred to as quarter-point out. al.

he picked up the pace. they lost control the narrative. tom: did jerome powell lose control of the narrative? >> i think he's done a pretty good job at explaining why they are doing it. in the early 1980's, this was serious and he expressed it with considerable vigor. i think there are questions about when they stepped up from 50 to 75. i still have the scars of june 13 when they made a pivot. i think there is a question of stepping down from 50 to 25. let's face it. if you raise the federal funds rates up 1%, you are going to break some.

in some sense, the surprising thing, how isn't there more restraint? jonathan: i appreciate that. >> you are going to break some china. the client response was but china's been doing fine. lisa: that's hilarious. jonathan: there been some bank failures. we want you to comment on the bank failures. how do you think given what we've learned through history how this federal reserve will confront the bank failure it sets monetary policy next week. they've got an 80's inflation problem. do they still have that problem? >> they made some progress. we are talking about something that is much more contained. it's going to be less pressing a

problem for the participants. who are the nobel laureates? they set up what it takes to have a self fulfilling run on financial institutions. you could teach that class. bernanke said that cascading failures can cramp economic activity. the regulators did that over the weekend. the key issue is the separation of principal. that's the view that if you do bank supervision and regulation correctly, then you have a free hand on monetary policy. there is a dark side to the separation principle. if you decide to deflect the

course of your on a terry policy, you are admitting you didn't get it right. lisa: which is the subject of an investigation right now. why they didn't see a bigger problem here to begin with. there is an issue. if they did come up with this program to stave off some systemic risks, is there a greater risk in your view then inflation getting out of control and have a problem that has already been solved? >> i will admit that looking at the report brought back terrible memories of the first facts that came through on long-term capital management. what was interesting about that was they are both in the public domain. there is a bit of similarity in

that regard. then the question is in retrospect, do we think it was appropriate to ease and keep the funds rate low, even as the economy seemed to whether the blow. if you did crisis management right, you should have a free hand. jonathan: they consider around the table as a committee and they have to decide if they stop hiking, does it undermine the policy? >> i would say two things about that. earlier, i was lamenting the most effective force for policy moderation wasn't going to be on the foc table. that actually matters. people talking about 50's were least concerned. tom: does the president have to step in and say we are in a crisis and i would like the vice

chairman to stay at the fed? >> that's terrible. that train already left the station. that says you have second thoughts about the independence of your central bank. jonathan: it's a difficult one to answer. i asked anne-marie if this administration isn't thinking much about the importance of the federal reserve to take away the vice chair. >> i don't think it's particularly unique among administrators not to play the chessboard to many steps forward. i think it's a reflection of a surplus. the natural tendency is to say the bench depth of good economist that can step in is deep.

let's fix the one problem and go on to the next problem. what that neglects is the culture, the institution. the senate doesn't act fast. it takes a while to fit it in. that's an issue. jonathan: thank you for setting this up. from nick city, equity futures are up 0.8%. -- new york city, equity futures are up 0.8%. ♪

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>> as soon as there is a problem with one bank, fear israel. >> there is a purposeful effort

to drain liquidity and drain those deposits. >> the fed has to keep inflation under control. that is the main focus here. >> the fed is going to be winging it, which is what they have been doing all along. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning everyone. 30 minutes from an inflation report hugely anticipated and tick by tick, still anticipated as we look to this financial crisis. shares do better and someone noticing the debris from silicon valley. is the senator from massachusetts. i should say in advance of warren's wheelhouse is bankruptcy. jon: her wheelhouse is also beating up chairman powell. here is the quote from the senator of massachusetts, "for

cheiro -- fed chair powell -- lining up on risks directly contribute to these bank failures. to have credibility there will be one. powell must publicly and immediately recused himself from this internal review. it is an pro -- it is appropriate to have independence necessary to do his job." is this just an opportunity stick moment from the senator of massachusetts to take a another dig at chair powell or does she have a point? tom: we just spoke to vincent reinhart. he said don't shake the ship right now. certainly a powell read hughes -- a powell recused would shake the ship. on the financial side, the bank side, republican or democrat, senator warren speaks for some authority here. this is her academic purview. jon: it is embarrassing for the

fed chairs to be on capitol hill during a federal monetary policy at four hours before a bank collapse in america talking about the pace of right -- pace of rate increases. on the surface it didn't seem like he knew any of this was going to play out. just on regulation, back in 2018 a lot of people have talked about the former administration pushing the derivative or he effort. 17 of senator warren's democratic colleagues joined that push as well. a lot of soul-searching needs to take place in congress on a lot of issues. tom: what this really harkens to is the investigative process forward. we are still not out of this crisis, even with better stock performance today. how many hearings, how many studies, how much analysis with -- will there be? lisa: vincent reinhart was brilliant on saying if you manage the financial risk, if you manage any kind of systemic problems in the financial

system, then you can let monetary policy have an independent course. that, if on the front hand was not done, that raises a question on the backend. can they continue to raise rates at a time people are still worried about financial stability, and suddenly we have a real crisis of monetary crisis and credibility? tom: 0.5 percent prior, this is the monthly statistic as mike mckee said, it is jumbled out. don't look at year-over-year. we are looking for some form of disinflation from 0.5 percent down to 0.4%. they are in my ear, get back to the crisis. jon: for the headlines, the newspapers in this country, the news, your local news, they often go with the headline, year-over-year print. that is potentially around 6%. that is down from 6.4%.

wall street, big focus on month over month call. we are looking at that to come. previously 0.4%. vincent reinhart said the fact they have to confront a psychological question next week. it is increasingly important as the days go by, they announced a lot on sunday evening and they clearly announced in a way they thought was sufficient to really insulate the financial system in america. the president came out monday morning and a sickly said the same thing. if you have got inflation in and around 6% and as fed chair you back away from financial stability concerns, are you undermining what you announced the week previously? are you basically suggesting that wasn't enough? maybe they think that wasn't enough and they can go on hiking, but ultimately that

question will linger about what they should do. back away, go forward, does the data warrant it? tom: they have got to move the assets out. the fundamental thing over the weekend was waiting to see who would take the misery out of these companies. the key thing is, it didn't happen. banks did not step up to acquire this. because they didn't give them a great enough haircut. it is as simple as that. but they had to get there fast for the president's comments monday morning. that is what they did. jon: no idea what the market does, no idea what the print does in 24 hours time. maybe the market starts doing work for them. maybe bank lenders tighten as well given developments of last week. lisa: you highlight an important point. if they emulate -- if they immunize the financial system, why should they compromise when small business came in hotter than expected at 6:00 a.m.

eastern this morning? we see surprises in the economic data and we are still talking about inflation. this is a really difficult moment for them. perhaps the market will do the work but will that take care of the inflation we are dealing with? jon: price action up 3% on the s&p. just off session highs. credit squeeze down 1.7%. that recovers off session lows. session highs mid republic and other small banks in the premarket. things doing ok so far. about 23 minutes away from the cpi print. tom: right now it is really important and we really need to be quiet on global wall street and listen. if you're not a part of global wall street, this is your conversation of the day. in the last 24 hours i have heard 1, 2, three people alluded back to 1987. sam's the wall in 19 --sam stovall in 1987 was in a hospital because his father was having a routing.

the 23-year-old at the time was bailing out robert stovall by getting straight -- by getting trades done. he -- it was strange in 1987. he now joins us, not from a hospital bed. sam stovall, are there illusions here -- allusions here to 1987? sam: how did you get all that information? tom: chet gdp pulls up desk chat gpt. sam: the question being has the fed gone too far. also the question, will this be throwing us forward into recession, the risk of recession and what is going to happen with the fed? i think the fed will need to

maintain credibility, will need to save face, but at the same time dial back their hawkishness to account for the concern we are facing right now. lisa: it sounds like you are in the camp they raise basis points more than 25. is that correct? sam: absolutely. the feeling inflation is coming in, cpi about 6%, another stairstep downward, core rate coming down year-over-year level. i am not supposed to be talking about. positive indication. retail sales also expected to come in at 0.3%. not the 3.0% from last month. inflation still is a concern but they have to address the current environment. lisa: a lot of people are saying this is another reason to get more bullish on a soft landing near to. this idea if the fit doesn't go as far, it will do less plain -- less pain it to the overall economy. do you follow that or do you get more risk-averse? this potential pause, potential

retracement and hawkishness could dictate greater weakness than people realized. sam: we are seeing some movement away from small and mid-cap stocks. the implication is banks are going to be a bit more luck to be lending to more riskier clients. that itself could have an impact on slowing economic growth in the u.s.. our economists are not coiling -- are not calling for a recession but history overwhelmingly says we are heading for a recession. i take the difference of the two and say it is likely to be fairly mild. when the fed does pause, history says they start to cut rates nine months later and that the s&p is up 13%, led by the financials on average more than 22%. if the fed pauses and stays paused, investors are going to start moving back into equities. jon: we mentioned to headlines

from senator warren. she put out a statement, she put out a tweet as well. "fit chair powell contributions directly contributed to that. " other people think it is a poorly ran institution. she says it is appropriate for the vice chair to have the independence necessary to do his job. i imagine senator warren wouldn't like what she is hearing. tom: there is many bars out there. michael bar -- jon: that was andy barr, forgive me. tom: i read this statement many times. there is michael bar, bloomberg sports, and vice chairman. and then there is andy barr. he does that with maria right now.

you are going to see republicans pushing back as they did. there is immediate and raging debate over how the republicans and which part of the republicans, how they will respond to this crisis. jon: republican representative andy barr. thanks for that, takei. -- thanks for that, tk. we catch up with republican, french hill. futures positive. this is bloomberg. ♪ lisa: keep you up-to-date with news from around the world with the first word i am lisa mateo. chinese president jinping and ukraine's what amir zelenskyy said to be planning a video call in what would be their first conversation since russia's invasion.

wall street journal reported it could, after xi visits moscow, a trip that may happen next week. as an biden says he expects to speak with china's leaders soon once the government and beijing returns to work following the national people's congress. credit suisse ceo says the bank has seen inflows of client funds on monday after markets and u.s. banks were pummeled by the collapse of silicon valley bank. >> so far it is pretty calm. even saw material good inflows yesterday. i had a client meeting which was very positive. so far it is calm. lisa: she spoke exclusively with bloomberg's francine. federal home loan banks ripping up desk ramping up the amount of cash. more regional lenders will need it to tap into funds. the fhlb system a key source of cash for regional lenders raised

$88.7 billion through the sale of short-term notes, exceeding the $64 billion that was initially planned. fannie mae has postponed the sale of more than $500 million of mortgage link bonds sold by morgan stanley. bloomberg has learned fannie mae alerted investors that the deal of 542 million dollar credit risk transfer security would be delayed setting market conditions. security are more riskier than regular bonds because they are among the first to take losses when homeowners fail to make payments. 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 am lisa mateo and this is bloomberg. ♪

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when they expect it. discover how ryder ecommerce makes your customer's experience ever better. >> this is not a bailout of government taxpayer dollars, this is simply using fees that are assessed on all banks by the fbi see in such a time they

would need them -- by the fdic in such a time they would need them. jon: that was governor kathy hochul. von market 359 point 22. yields a bit high -- bond market 3.5941. tom: credit suisse in recovery high. thank you for that important interview with their leader in london. if rc -- frc nudging up. jon: they are doing better. first republic bank we have followed very closely. tom: a former banker with little rock with us right now. he has become very familiar to

americans in a study. he is french hill, republican from arkansas. you ended up where this bank began. her massage, enter jackson's spectacular home east of nashville. that is where this debate started. republicans are jacksonian. they are scared stiff of the big money of new york. and the democrats of the urban mill, you push against that. how is this battle going to play out? are we still in fear of the second bank of the united states? rep. hill: i love the history lesson. jackson was a super controversial president but today we are faced with a situation where after 10 years of easy money and amazing amounts of fiscal stimulus, some management teams have forgotten their obligations to their

depositors and their shareholders. we have a real laxity in risk management and some of our financial institution. perhaps we have got laxity in the supervision of those institutions as well, particularly in the case of silicon valley. tom: do we need to treat the banks, such as delphi you ran in arkansas, do we need to treat them like the smaller banks out of dodd-frank? do we need a one regulatory system russian mark is that the lesson learned? rep. hill: some of the cause of dodd-frank made them harder to return -- to provide a return. barney frank supported it to make modifications in dodd-frank regulatory burdens on small financial institutions. i don't think in any way, shape or form it reduce the obligations of the bankers for their risk management, legal requirements or for the supervisors to do their routine

job on a quarterly basis to make sure the system is safe and sound. lisa: you keep mentioning the supervision. i wonder how much you fault jerome powell federal reserve for the supervision you are talking about. rep. hill: silicon valley bank clearly had risk management problems in their strategy about short-term deposits that were uninsured, invested in long-term treasury and mortgage securities. the california bank regulators, state bank regulators were the principal regulators backed up by the san francisco bank of the fed. they do have a supervisory obligation. this bank grew very fast over the last two years. that is usually a huge red flag to supervisors. perhaps they could have intervened and helped the management team steer into a more safe and sound direction. lisa: do you think things have stabilized enough that you have confidence given the intelligence you have received

that the stability in the financial system is sound and we are unlikely to see something else like this in the near future? rep. hill: you never know what is going to happen in the future but we do have a safe and sound making system with good capital and earnings and generally good liquidity planning across the nation. that is clear over the past decade. but with low interest rates at 0% and a sharp increase in rates, some management teams were not prepared for handling that in the right way. so we may have bumps in the road as a result of that. you have certainly seen that in the case of silicon valley last week. lisa: you have come on the show before and talked about how inflation, its attacks on the poorest members of our society. when inflation gets this high it becomes punitive for so many families. how important is it from your vantage point to see the ongoing rate hikes or some sort of continuation in monetary policy

regardless of some of the concerns we have seen in the -- seen in the financial system or do you think perhaps what we have seen is enough? rep. hill: it is a tough question. that is the anguish of central banking, to try to balance these factors. the fed has a central obligation to all of us and our families of price stability. so, they have got to have that as their principal mission. they will look at financial fragility as well. but i think the fed should stay on track using their best judgment and looking at the data and make sure they can beat this inflation and get it back down to closer to their target of 2%. tom: if we get to some new insurance regime, the belief here, congressman, is that banks are going to pay for it, not the taxpayer. i get that idea. but is our best bank of ed ville, arkansas, are they going to have to pick up the tab for the irresponsible behavior of west coast technocrats?

rep. hill: back into thousand 8, 2 thousand nine, we moved to risk-based from yams based on the back -- based on the banks, rating, made by regulators. that was a step to make sure people who run a poor shop pay i higher deposit insurance premium. now the question is, should we have some sort of premium on top of this risk-based premium that will cover these sorts of situations where a bank is determined to be, like they did this weekend, systemically important? and yet we are insuring deposits for which no premium was paid. this is an important area for policy to the -- to consider. we looked at it back into thousand eight to 2010. we need to look at it back in the new face of this banking system. and twitter runs, which was precipitating this collapse last week. tom: in the rotunda, what is the common ground senator hill of

you and senator warren? rep. hill: both senator warren and i want a safe and sound banking system. we want to make sure in the digital asset space that the rules of the road are clear and that we don't have this speculation we have seen in that market and that criminals are prosecuted and fraudsters are prosecuted. i would say to senator warren, we have a robust regulatory system with plenty of rules on banks of all sizes. what we need to see is vigorous supervision of those banks by their primary regulators at all stages of the economic cycle. jon: does that mean walking back some of the deregulation we saw going back to 2018? rep. hill: i don't think so. it was a very bipartisan, modest tearing of the construction that came out of dodd-frank. i don't think you can lay the collapse of the banks last week at the foot of 2155. i just don't think that is

relevant. i think what is relevant is risky management practices, with or without dodd-frank and lack of supervision by the primary regulator. jon: the regulator use the systemic risk exception. what we have acknowledged over the weekend, basically all banks in america carry some degree of systemic risk. should they all be regulated in the same fashion, regardless of size? rep. hill: tearing is important. but should we have a base that reflects systemic risk? that would be something someone has to think through analytically how someone would assess that in fair and balanced way. you are right, regulators this weekend determined silicon valley's reach went well beyond its branches in california and new york, as it related to the economy. jon: the banking system,

politics down in d.c., congressman hill. just because that bill in 2018 was bipartisan doesn't mean it was good, just to be clear. [laughter] there is going to be debate about that. in the next hour, we are going to run through with kathy jones. michael capon from bank of america. big lineup. mike mckee is going to break down that for you. he is going to jump in and just a moment. from new york, this is bloomberg. ♪

tom: bloomberg surveillance on radio and television. across this nation, worldwide. thank you for your comments over the last couple of days. lisa has read everything of one of them. into the inflation report we go. lisa: this is an important moment. if inflation comes in high, what does jay powell do after what we have seen at the reset of rate hike increases? tom: completely focused on the inflation report, michael mckee. mike: we come in for the most part on point.

.4% gained. a little worry at .5% gain. more than .4% expected. it doesn't make a difference year-over-year basis. year-over-year falls to 5.5% from 6%. headline cpi matches expectations and comes in at 6%, down from 6.4%. a little progress. we will have to check in and see where that extra 10% comes in. we are not seeing the big decline in rent. lisa: i am looking right now at the two year yield, it is not moving that much. on the margins this was a harder than expected core reader. you are seeing fantastic pop even further. i wonder how much people are

looking past this and saying this is all irrelevant because financial markets have changed. there has been a tighter condition. this is all backward looking and doesn't really have an effect. mike: it is kind of funny. thursday of last week we would have said a number like this would have the fed freaking out and that .5% gained in the core would have people saying oh, they should go 50. now they are going nothing or 25. it doesn't really change the trend. inflation is slowing but it is not coming down very fast and the fed has more work to do. it is shelter, according to the bureau of labor statistics that pushed everything up again this month. right now we are looking at .8% gain in shelter. that is up .1% from a month before. that is the broader sector. i will get to oe i and rent. that really didn't help at all. we did see a bit of a gain in

gasoline, which was expected, by 1%. used cars, which everybody watches is down 2.8 percent. that is more than was thought. how to make sense of all this? tom: you have to look at this while we grew ethan harris. mike: i am looking to see if we have the update on that yet. it looks like we do. the core, housing is up 6.2%. that looks like it hasn't changed since the prior month. goods inflation drops to just one person. a big change there. 7%, another increase in services inflation. tom: we would like to see that trend for chairmanship powell -- chairman powell and the rest of the fed. vix 25 to 25.55.

i believe i can click here, lisa and get on frc. lisa: we have seen incredible rebound throughout the morning. pack west. tom: we will have to see on that. this is a joy. his name is ethan harris. he is an author and also head of global economics research at bank of america securities. in that book, you talked about a theme vincent reinhart talked about. are we in this mess because we became unmeasured? ethan: i don't think alan greenspan's legacy is really that strong right now. i think we got into this mess because like a lot of central banks and a lot of economists, the fed started to believe inflation was largely dead and you didn't have to worry about a sloped phillips curve.

to put a technical term on that. they adopted a very passive monetary policy. now we are seeing a massive catch up the fed. financial actions happen when you are hiking rates very fast. some of this is a legacy of the fed and other central banks starting to slowly deal with inflation. tom: the legacy and reality i have seen within brian moynihan and his reality of -- his modern banking, any other ceo has a granular feel. all that research on your banking side, do you see a financial integrity to our banking system needs the mass of bank of america? ethan: i don't want to comment on bank of america specifically. tom: no, i mean the other banks. ethan: one of the questions were investors these days is how healthy is the aggie system?

-- is the banking system? the banking system is heavily regulated, heavily capitalized. you're always going to have stress events. i would think of this as a stress event. not just strong financial banking system, but strong financial system in general. lisa: we look at the balance of risk right now. the financial system is strong, you have the supports, you get a sense of rebound, it doesn't really tighten financial conditions all that much from where we were stopped given the lower expectations for fed rate hikes, you have a easier financial conditions you did just a bit ago. at what point does that become a huge risk for inflation that does not come down? ethan: i think we need to recognize we are in the middle of a stress event. it is very hard to predict where things are going. the markets will always price out the central bank during a crisis like this.

but the real question is, does the policy efforts, does it work? if it works, the fed then goes back to the regularly scheduled program and they have to deal with inflation. if it doesn't work then monetary policy gets drawn into the process of supporting financial system. our view is ultimately it works and the fed goes back to hiking interest rates. our view would be that the markets understandably are in a very risk off mode. ultimately the defense is going to have to fight inflation. lisa: this is why you are in the camp of another five basis -- 25 base rate hike next week. these long and variable lags have come to the floor and put a lower cap on how high rates can go. ethan: i think unquestionably this stress in the system now

tightens financial conditions and is a warning about the lagged effects of monetary policy. it has been surprising how little impact the fed has had until now. they hiked at a very fast pace. now we are seeing some effects. perhaps extreme effect. it does have to make you a little bit more cautious how far the fed needs to go. tom: let's get out in front of michael capon in the next hour. he is a good economist. let's get the harris, capon view. were you guys sitting over the last couple of weeks going this dance is just a little bit off? ethan: no, i don't think so. i think the original error was waiting too long to hike. the gradualism of greenspan, hiked early so you can hike slowly wasn't carried out. tom: the shadow of greenspan is that they didn't do it?

ok. mike mckee is diving into 47 pages of data. can you enjoy services inflation? mike: services go up 2.6%. housing, rent up. rent to primary residence up .8%. .1% more than it was in the month of january. a big boost in the lodging category for shelter. up to .3%, more than double what it was in the month of january. airfares were up. i would be interested to see if ethan would go as far to extrapolate the way i am here. if you are looking at where you might be seeing wage increases, leisure and hospitality, food away from home up .6% for the

second month in a row. full-service meals up .6%. that is .1% higher than it was. prices are going up at restaurants. alcoholic beverage prices went down. tailed off in inflation. lisa: to that point, ethan i would love you to weigh in on this, because we have seen people willing to spend on services and that isn't diminishing. distress in the financial system really change that if people can get their deposits and everyone just goes on their way? ethan: if you can get past the panic markets in the -- the panic moments in the markets, which there is, it hasn't threatened a recession yet. as mike pointed out, there is a lot of inflation in areas where labor costs are important. you cannot fix your inflation problem just by getting an improvement in supply chains. you need to get the service side

under control. you need a normal labor market. we don't have a normal labor market. lisa: vincent reinhart was on and he said if this federal reserve comes out and doesn't hike rates because of potential financial system stress, it is them saying that program was not efficient to stave off any stress. do you agree if they do not raise 25 basis points that will be a policy era -- policy error given the data we have seen? ethan: he and i were grad students together. i think it depends on how stressed the markets are. if the markets are in serious distress, pausing is ok. if they are improving a lot and the fencing is working, you can wonder whether the fed has confidence in its ring fencing. that is a legitimate concern. tom: you and vincent reinhart, his later career is nine of his.

do we risk losing our dynomism because of the silicon valley crisis? ethan: the covid crisis has taken some of the mojo out of the economy. the tech sector to some degree is expanded. this is a temporary thing. tech is still going to be a driver going forward. tom: don't be a stranger. dr. harris is with the bank of america. lisa, i don't know what to make of the inflation report. we have got to market reaction. lisa: to me, what i make of it is, lack of market reaction. if they came out even slightly higher, people root -- people would reassess on the margins, but not much. tom: this is bloomberg. ♪ lisa: keep you up-to-date with news from around the word -- around the world with the first word, i am lisa mateo. parler mary brinkmanship over his plan to raise some attire --

raise the retirement age. forcing lawmakers from the senate will meet behind closed doors to finalize a single bill to be presented for a vote in both houses. unions will gather their forces for another day of strikes and protests against the proposed changes. the u.s. is urging turkey to ratify the membership ids of sweden and finland into nato as pressure builds on two remaining holdouts. to improve the expansion of the military alliance. officials from turkey, sweden and finland have been trying to break an impasse that has held up nato's expansion since the two nordic countries were invited to join in june. turkey, the only holdout besides hungry it wants sweden to crackdown on troops considered terrorists in exchange for agreeing to a recession. president biden plans to sign a new executive order intended to reduce gun violence. biden will announce a move during a visit to the location of a mass shooting in monterey park, california. the president is invoking

limited authority of the executive branch to edge the country closer to firearm background checks, something he has been unable to get through congress, even though it rains popular in voter surveys. a victory for uber and other gig economy companies. a current law classifies gig companies classified as contractors instead of employees. a lower ruling found proposition 22 that let's companies treat workers estate contractors. instead of employees. 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 am lisa mateo. this is bloomberg. ♪ and it's easier than ever to■ get your projects done right.

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>> if the meeting were today, the fed would be absolutely tone deaf to move rates higher. i don't think we should be questioning whether the

tightening cycle is over yet. that is premature. at least for the very near term it would be hard to believe that a move higher in rates would be warranted right now. tom: phil kemp oreo, jp morgan. thank you for coming in today. we appreciate his effort to get into our studio. off the inflation report, many reporting, including kevin judge. she is in toronto and says housing the key driver of inflation. lisa: 7% of the increase. big contributor on the cpi. inflation hotter than expected. you saw an upside surprise in the core reading in month over month basis. you are seeing in the fed rates market about a 5% fed funds rate , terminal rate being priced in which is marginally higher. a very difficult one for fed chair jay powell. tom: credit squeeze in zurich in

the afternoon with a better price appearance after their ceo spoke to our francine lacqua in london. look for that out on bloomberg digital. this troubled bank from 138 down to 41 the low. that is a brown -- that is a bounce this morning. lisa: at one point it was up 65%. now up 58%. similar moves in pac west. up most 40% this morning. off a very low base. still incredibly depressed, relative to where it was. stability revival, autumn fishers, whatever you want to call it. tom: people look at the short-term market, three months market, other things, alphabet soup, old mcdonald joins us now.

chief u.s. interest rate strategist for bloomberg intelligence. ira, thank you for taking time this morning. what does it say for our trust and confidence now? >> in trust and confidence, people still think the u.s. is going to be money good. you look at some of those t-bills from august and they are pricing in for a small chance of default by the government due to the debt ceiling. regardless of that, taking the market moves the last couple of days, you can actually see how poor liquidity is. you don't get 50%, -- you don't get 50, 60 basis point moves even with the repricing of the fed's terminal rating without liquidity being really drained. that is for sure. lisa: i wanted to pick up on that. that is exactly where i wanted to go with you. you say liquidity is so poor and yet we saw 300% increase in trading volumes yesterday and treasuries. massive spike in volatility.

what do you mean when you say there is a lack of liquidity? ira: basically when you have the regulatory environment like it is, it is hard for traditional intermediaries to increase the size of their balance sheet, whether they want to go long or short and they are able to step in the middle of some of these large moves. keep in mind a lot of these moves, certainly the large rally we saw yesterday, a lot of that happened during european hours, unsurprisingly given the news that came out over the weekend. so when you look at things like bid offer spreads, naturally they are going to spread because of volatility. you have these air pockets where people just are not willing to trade at every price necessarily. at least not in reasonably big size. because the treasury market right now is over $20 trillion and the size of some of the

funding markets have basically remained the same over the last dozen years, you just have this mismatch of people able to level up and take risk on a moments notice that you did before. so, that is kind of the downside of production regulations. the good thing is you can have what happened over the weekend with svb and signature, is depositors can be made whole because actually the regulations worked the way they were intended. but on the others, the downside of that is that the markets themselves wind up being somewhat more volatile than they would be otherwise because you don't have the elasticity of balance sheets you once had in the financial system. lisa: there is a question about when something breaks and people are looking to silicon valley bank. i wonder if we can take a look at some of the volatility, biggest moves we have seen going back where than 40 years and saying that is breaking too. positions being staffed out, exerting pain over all markets

and fulfilling prophecy. at one point this that introduce risk for participants, banks, all sort of entities that use these most liquid markets in the world to hedge old risk? ira: in the rates market, in my market, there are a plethora of instruments in the menu of different ways to hedge. whether it is futures, options on futures, outright options, over-the-counter swaps, there is a whole bunch of instruments used to hedge. some investors and some institutions either are not willing to pay for those hedges may don't understand those hedges, and don't necessarily understand the risk they have to take. some of what is going on at the moment, some of the regulations worked as intended. but the unintended consequences are things like holding a lot of mortgage backed securities that

are on hedge on europe or for leo that are very underwater. that are not trading at par, they are trading at $.20 on the dollar. they have to hold those in order to make some of the regulatory -- meet some of the regulatory environment. tom: i want you to talk about the emotion of rates going up and all of a sudden, and lisa you could tell me to the minute, looking at btm, where money market fund as a proxy became 5.00% and everybody at 4.99% was yeah, yeah, yeah. and then boom, let's go. did that shift of emotion to a new, big handle change things, 5.00%, did that shift the markets? ira: not to 5%, generally, but now you have an alternative to other lower yielding assets, or

assets with a lot of volatility. i have spoken to a lot of investors, multi-asset and most -- multi-acid investors who can go anywhere. whether it is equity, fx, or rates. i am buying one yield -- one year yields now. it is not quite equity return we expect, but given the volatility of a lot of different markets, it seems like a reasonable place to park some money for a while. so, yeah, there is the fact you have an inverted curve and these yields that are not historically high, but high versus the last 15 years just seems attractive to a lot of investors. you are seeing some money flow that way. tom: ira jersey with bloomberg intelligence. look for his work on the bloomberg terminal with his team. the stick in the dow, up a stick. vix, 24 point 45. the vix in from the sweat a few

days ago. lisa: massive surprise given an aneurysm to some people in the central bank who have to deal with that. as well as financial stability risk. the move index, volatility gains for bonds, still very high, still surging at the highest levels we have seen going back to 2009. it doesn't reset necessarily at real time. go to what ira jersey was just talking about, have we experienced many flash crash in the treasury market? in the wake of poor liquidity by big banks and a complete lack of conviction of where things are? what does that do longer-term if you get these bouts of volatility in rates? i am talking about six-month while agility. back up today for .92%. massive swings you see in these instruments. tom: to the common of the president, the first order

condition is to maintain trust and confidence in the banking system. among others, french kyl of arkansas laid out today clearly how unique the san francisco, silicon valley, santa clara, whatever it is experience was. we seem to be getting beyond that. maybe the most important headline today was knowing that a shorts man is looking at whatever the debris is on their balance sheet. it doesn't make it the single most porting headline today whether the blackstone comes in hand. lisa: blackstone, apollo among those reported to have been among these assets. have we cleared the air, have we avoided something more significant? it seems there is a moment of calm reassessing with data. tom: horton matthew, balance of power tonight.

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jonathan: if you looked at cbi and payrolls and we did not have a banking collapse with the conversation be this fed might be going 50? that is not the conversation. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: live from new york. battered bank stocks looking to about