>> big moves in the stock and bond market. investors getting spooked around the world. bloomberg markets starts right now. market turmoil indeed. it is red across the screen. s&p 500 down 2%. the selling is accelerating closer to the closing bells. where is the money going? the bond market. the 10-year yield going back to technical ranges, 3.83 on the two year yield. a 41 basis point move lower. a lot of repricing, having to do with cuts.

you are seeing 100 basis points worth of cuts priced in from the peak rate from the summer to the end of the year. 100 basis points pressuring the yield on the two year. if you are a bondable, you are raking it in. you are seeing a lot of moves higher in the dollar, a lot pressured by the euro. the counter effects of the credits we story pressuring the currency market. euro-dollar now at 1.05. how much more pressure before we have that parity conversation for the dollar? lastly, nymex crude looking at 65 handle. as we talk about risk sentiment souring, in addition to the iea saying the market is in surplus because russia is still pumping oil. a lot of macro factors. we will dive into it, but let's go to the moment that started the selloff. bloomberg spoke with the saudi national bank of chairman, one of credit suisse, and asked if it would provide more assistance to the struggling bank.

take a listen. >> the answer is absolutely not. for many reasons. outside the simplest, which is regulatory and statuary. 9.8% of the bank, if we go above 10%, all kinds of new rule kick in, whether it be regulator, the european regulator or this was you later, and we are not inclined to get into a new regulatory regime. kriti: sonali basak has followed this all day and joins us on set. this is a story of liquidity at its core. if you are not getting it from the saudi's, what are the options? sonali: it is a liquidity story but credit suisse is very liquid. the problem is if they needed more money or if they faced more deposits, they are in serious strain because they are hitting revelatory limits. that was dashed regulatory limits. that was the router where the saudi national bank's comments came from, the idea that they have regulatory caps, not strategy necessarily. that sparks what we have been

seeing, the confidence everyone has been seeing about with the banking and the crisis of confidence and how fast money moves in this era is of great concern. now you have the treasury department asking to consider the exposure here what kind of risks are tied to credit squeeze with the financial system more broadly. we are now talking about a global financial institution that is seen some severe stresses in the market. kriti: which brings us to the question of contagion. it feels like when the news broke, credit suisse has been struggling a while, therefore, it is an isolated story, but credit suisse works with lots of other banks. where are the cracks to pay attention to? sonali: there have been cracks forming for months and we are reaching breaking points in the market that are starting to exasperate the pains felt by the banking system, by the regulators, and clients. this is the tightening on financial standards, tightening

a liquidity with some major catalysts on the horizon. of course, the ecb, tomorrow, what timing. again, a lot of anxiety under the market. we also need to talk about where there is pain and where there is not. credit suisse is still meeting all of its capital ratios it needs to be meeting. they have a significant client basis that have tended to be quite sticky with liquidity. so what is the endgame? if you do not know that, and in the markets there is classic chris management -- classic crisis management where you have to be comfortable with the trade and that is what is being questioned now when you have one of the larger shareholders unable to put money in. kriti: it brings us to the question of what the traders because if it is not a systemic issue yet, keyword, what is going on with the bond and stock markets? a lot goes down to liquidity for traders who are saying that the

risk is more than what we can handle. that is feeding into what you see in the equity market. you made a good point yesterday, you are seeing it already, the euro today, 1.05. we will intentionally talk about parity at this continues to unfold. when it comes to the swiss national bank and government, from a regulatory perspective, what can they do? sonali: well, they have stepped in before in the past, when you look at credit suisse. this is not the same as that time, right? when you saw a lot of the crisis era trades blowup in 2008, and rescues made, it did not look like it did now. by the way, a lot of those new capital standards and the designations around the banks came after 2008. this is a different form of support that you would see this time around. there is one very big open question in the market, and is there a sense of whether there could be some sort of merger at scale here? that is a big question mark.

what an antinational bank went to buy in at these levels are what the swiss bank? there are concerns about credit suisse and its management issues. kriti: and a lot of players. a quick quote from blackrock's chairman and ceo larry fink. "are the dominoes starting to fall? it is too early to know how widespread the damages." we know that you are well sourced across wall street. what are your sources telling you? sonali: one important thing here when we are talking about the idea of potential contagion is we have seen a lot of strains, yes, on the u.s. banking system when it comes to smaller firms. we have not seen them when it comes to large, systemic financial institutions outside of credit suisse. that is paramount. it is important. it is the idea that people's money is safe at the very end of the day. i think there are longer-term questions out of this. as far as the markets go, i think it is important to realize when you are thinking about

contagion, this is not just about putting the banking system under pressure but clients under pressure, as well. these are all the trades that people flooded into that are being unwound. it will take a day or two to figure out, at minimum, what that looks like. kriti: something we will count on you to bring us the latest details for. sonali basak, thank you. the credit suisse saga coming on the collapse of silicon valley bank and signature bank stateside. if they are unrelated, what is the bigger issue? bloomberg spoke earlier about the ramifications for the financial system. is this systemic at the end of the day? >> it is important because as it was only about $150 billion of assets, one that credit suisse was thinking about, so anything will happen would be up systemic effects are not just the european financial system but also for the global financial system. so if silicon valley bank reaps

the effects of the global financial market, credit suisse would be something more like lehman brothers. kriti: a potential lehman moment. joining us is joe davis, global chief economist and head of strategy group at vanguard. the consensus is that this is not necessarily systemic yet. it is isolated to the banks that we pointed out, so why are the markets selling off? joe: i think it is two things. one is the appreciation at the macroeconomic risk and with that financial volatility was going to evolve over the course of this year. if our view, and others' view was right, that we would be headed for a downturn because that is the trade-off to bring inflation down, i was somewhat surprised that some of the euphoria and elevated risk spirits in the market at the beginning of the year -- not to say this is now pricing in a downturn -- but it was inevitable that we were going to see some repricing because we

are going to see some deterioration in the labor market. kriti: which brings us to the repricing. some of the calls across wall street, like citi calling for 50 basis points of hikes. eventually, the fed expected to prioritize price stability over financial stability. quit calling for 25 basis point cut, what matters more, price or financial stability? joe: i think price stability but financial stability can indirectly impact that economic outcome just to risk aversion and economic loss. right now, to be economy fundamentals would be the baseline view, but at the same time, i appreciate some of the risk aversion in the market. the closer calling something. people think they need the stress and that they have not fully destroy their priced ability mandate. what is driving the source of the uncertainty in the markets

right now? is it idiosyncratic or systemic? that is at the heart of your question. kriti: how are you viewing what the fed and fdic did in terms of backstopping some of the banks over the weekend? some folks on wall street saying this is a form of stimulation and therefore combated with a stop on quantitative tightening. do we need to reevaluate the qe versus qt debate? joe: not necessarily. again, we do not have the complete picture. it is important to separate some of what we are seeing with the repeat of 2008. we do not have significant loan impairment like the quality of commercial real estate loans or residential loans. certainly, there is pressure on certain financial statements, but it is not of a bad magnitude and gets at the heart of the economics. that is a key point of the station here.

whether or not central banks need to address concerns over liquidity and financial stability, i think they certainly provided important support, but the funding program and mechanism, if we are talking about other initiatives, you have to be talking about material downgrade in the economic outlook. kriti: what would that look like? we got mixed data from retail and ppi. it feels like we are seeing a deceleration but much slower than previously anticipated. what do you make of the market reaction pricing and 100 basis points in cuts by year end from the peak policy rate this summer? joe: i think i know two things in this life. one, markets tend to overshoot but forward-looking. in that instance, we knew -- we know the fundamentals would dictate slightly higher interest rates for the u.s. economy and some others, but, you know, the volatility we see can be a drag

on growth. if they see a pause, it would be to reevaluate. the burden for cuts is high, so i am somewhat skeptical of the structure. it would have to get materially worse and start a downgraded economic out forced for that to materialize, in short order. kriti: let's take it across the atlantic to the ecb. sonali basak was just talking about the commentary we might hear off of the news coming out of credit suisse. what could change the game from the european perspective? joe: again, i think the bias is to tighten. which is always a tricky to walk, to separate as best you can liquidity concerns in the market from solvency ones because solvency can ultimately lead to getting more at the heart of economic growth and price stability and all those things that central banks are using the policy rate for. so, when it is not clear, i can

hear reasonable people disagree about pausing for a time until you can get a better picture, but i still think the bias is towards normalizing policy because you have a labor market that is still too tight and inflation too high. i think market conditions would have to get worse, and it would be the reasons why they are getting worse that would be informative for policymakers. kriti: let's bring it back to data we have gotten the last couple of days. i want to focus on cpi. you mentioned the labor story. we are seeing hot payrolls numbers, but on the housing front, the other sticky piece of inflation, you are seeing the deceleration. are you worried about some sort of pop of the housing bubble? joe: i am not worried about a pop in the sense of we are continuing to see rebalancing and there is pent-up demand for home and construction. that is why payrolls unemployment in the construction center has held up. nevertheless, we will see -- housing will be a spot of

disinflation over the course of the next year, but it gets back to ultimately what carries the day, the strength and tightness of the labor market. we will see disinflation but it will come at. a cost that is what the market is starting to wake up to. it was unlikely we would ever have inflation come back down the two without any ramifications of some part of an economic performance. i think we are seeing some appreciation of that. kriti: 30-seconds here, what are you worried about, what is the big risk? joe: well, i worried about policymakers overreacting too quickly to idiosyncratic events. it is a point to keep information flowing and evaluate your assumptions, and then update your priors as we head into next week. kriti: good advice for economists around the world. joe davis of vanguard calling for 25 basis point of hikes at the march 22 meeting. thank you.

coming, rates and volatility and an uncertain consumer that is likely to have ripple effects on the global supply chain. oscar de bok, ceo of dhl supply, joins us next. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

>> the fed is in a difficult spot because what the data is telling us is that the american economy is still quite robust. you have seen the inflation levels, the unemployment levels. my belief is that the trend will be towards continued rate rises. kriti: this is bloomberg markets.

i'm pretty cooped up. that was ron speaking about the economic data, which we saw a slew of. u.s. retail sales fell last month after a surge in january, suggesting the consumer is feeling inflation and higher interest rates at the same time. let's get insight on how the latest economic news has a ripple effect on supply chains. who better to ask and oscar de bok of dhl supply chain, one of the largest logistics companies. when i don't get my package, i lame you, right? oscar: yep. kriti: let's start with the consumer. it feels like there is a certainty that eventually the consumer will stop spending. we are not there yet. when are you forecasting we will get there? oscar: i don't know when we will get there. what we steal see -- still see is volume continuing. if you look at our u.s. warehousing operations, we still see the outline voyage which is

the physical proof of what is happening still. as long as we can keep confidence up, i think that will continue but at this moment, what you see is that stocks are emceeing, and the inbound flow is to start coming up again and it will start to feel those talks again. we sought reduction in volume because we overstocked because nobody wanted to be out of stock. we wanted to make sure everybody had over stock. and now by this time, you see that it started to refill, and that started the supply chain moving again. kriti: you start to see that with the retailers, adding rewarded by the inventory clear out you were talking about. let's talk about the macroeconomic environment because with the clear out, there is still warning for some sort of pullback in terms of volumes when it comes to sales. are you preparing for the pullback of volumes in terms of expansion or growth plans? oscar: at the moment, we see a

year-over-year 18% supply growth. so we are still hiring people to make sure that we actually are able to facilitate those volumes, still investing in digital robotics to be able to make sure we can cover that. that does not mean we keep our eyes closed. we need to constantly keep them open for what happens, and if it does, we can respond fast because we have a good flex in our cost management. at this moment, our point is focusing more on to facilitate the growth of our sales and volumes of customers. kriti: how many people are you hiring? oscar: 2000 people in q4 in the u.s. alone and we have 40,000 people in contract logistics only in the u.s., and that is continuing. kriti: how many are you looking to hire the next quarter or the rest of the year? oscar: rest of the year remains to be seen, to your point on how it will evolve. at this moment, there are no

indicators that mean we have to slow down. i. think wehave to continue let's not forget that -- i think we have to continue. let's not forget, supply chains get more complex. it means orders get more complex, and that means you need more people to be able to facilitate that. it means you need to continue to invest into robotics to cope with that. that is what we need to continue to do. and, to your point, keep our eyes open for what will happen, and whether the consumer trust continues. kriti: that hiring scheme must get expensive given the wages you are seeing right now. is that incentivizing more robotics and is there a correlation? oscar: there is a correlation because of the cost and availability of people, and their ability to respond to fluctuations. so you need robotics to also respond to fluctuations, which is an important element, as well. indeed, that has increased, as well. kriti: what about mere shorey?

-- nearshoring? if it like with the closing off of china, everyone was ready for the supply chains to move from north america to south america. are you seeing evidence or are we back to normal? oscar: i actually call it u s horing. no company is going to trust only one single source point for critical products anymore because you need to have resilient supply chains. yes, there are sparks of things that are being put through the market. for instance, and mexico, the motor sector, we are constructing and selling very easily over there. i have seen it in malaysia and i have seen it clearly there, as well. i see some in turkey, so you see some of that, but it is only shoring. kriti: 30-seconds, the news flow comes fast and furious from the

banking sector around the world, silicon valley bank, credit suisse across the atlantic, i reprice you know what the federal reserve might do, are you seeing a ripple effect and does that affect you at all in the near term? oscar: at this stage, i do not, but it is important we keep consumer confidence so that we stay away from panic because i think that is going to be important. all the other indicators of development actually starts to go in the right direction if we can just keep this away from panic. kriti: certainly something to keep an eye on. oscar de bok, ceo of dhl supply chain, thank you. a crucial conversation. still ahead, liquidity and volatility, two words spooking investors, especially when it comes to the moves in bond yields. stick with us. this is bloomberg. ♪

>> so there is an element of this where this is less about immediate contagion. again, the great financial crisis, there was a lot of this that was about krause counterparty credit risk. that is not what this is about. kriti: you are watching bloomberg markets. i'm kriti group there. you were listening to the ceo of stanley wealth management. the stock market and bond market, wherever you look, there's something to see but what caught my eye was the yields picture because that is where we are seeing a lot of drama. you are now pricing in 100 basis points worth of rate cuts by the end of the year from the peak policy rate, and that is important when it comes to the folks who are trading this day today. the best way to look at it is this chart, four consecutive moves of over 25 basis points.

what does that do? that is a three sigma event. keeping an eye on what those are doing when it comes to taking on that risk. that is one element. we will dive into more. stick with us. this is bloomberg. ♪

>> jon welcome to bloomberg markets. kriti: the stock market is down by 1.4%. it is off its low but all the money flowing into the front end of the curve as you see that repricing and with the fed might do next week read 100 basis points worth of cuts priced into the end of the year from the peak policy rate. that shows up at 3.86, a 38 basis point lower, taking concerns with the credit suisse story, the idea that when you

are worried about any macro global event, we are hopping into treasuries and the dollar. that is the trade you are seeing today. quick shout out to the nymex crude data 66 handled. 7% move lower coming off the souring risk sentiment. jon: it is pretty remarkable, roughly a $10 barrel drop in crew the last week, see that reflected in this country and canada, but with names like a chevron off about 5%, you mentioned the u.s. dollar factor here, the safety of the currency getting attention, arguably the safety of gold will get attention from this period of uncertainty. and microsoft is up, a company that has that big ai partnership with open ai, but outside of that, it is difficult to find green on the screen this wednesday, and that gets us right back to the turmoil we are seeing with credit suisse at the center of that story, down more

than 20%. kriti: certainly something we will be watching it earlier today we did hear from j.p. morgan's bob michele. he waited on the uncertainties of financials and how it affects the frederick policy. bob: this is the tip of the iceberg. there is a lot more consolidation and pain yet to come, so you put your money into the highest quality assets you can find. with credit suisse on the table, they will pause. i think they should pause. i think hiking rates, either the ecb hiking rates this week or the fed hiking rates next week, has the potential to be the greatest gaffe since this ecb height rakes in june 2008. -- hike rates in june 2008. jon: let's get this discussion going with our guests. liz, i will start with euro, the

idea of this being the tip of the iceberg. are you see that reflected in the moves right now, particularly the fixed income world? liz: yeah, we are seeing a lot of cracks. i was looking back to 2008. it was the tip of the iceberg and i heard bob speak today. it is true, like the unraveling a way of different stuff but it was the same kind of thing, people saying this is the tip of the iceberg, and we are seeing a rush into cash like securities and its go up, like the chart of the two year, which is mindbending, today down over 50 at one point. monday down 60 basis points. so you are seeing a pure, classic fear of contagion kind of buying anything they deem as safe right now. kriti: stick with us. linda, there is some news out of the credit suisse saga. bnp paribas stopping to take relations on swaps involving

credit suisse and reducing the counterparty exposure to the bank. that will be a theme you will see from a lot of the trading desks. we will bring you the headlines as we get to it. let's build off of that idea. it feels that the consensus is not necessarily systemic risk. how far until the equity market treats it like it is or are we already there? linda: it is unfortunate about credit suisse and how quickly, even over the weekend, we panicked, said all was well, and then cpi inflation, and now it makes you worry about a tip of the iceberg. any sector has gone through rolling recessions and have gotten hit hard. that is part of a normal cycle, but if the financial sector is the one sector that you will he do not want to become a systemic problem, that increases they surround the economy and credit

suisse is a big name and the future does not look good. what we are going to have to expect is i have heard some third inning type things, better than iceberg way, but i think there is more pain to come, and we will have to remember that our banks are very much on the hold and much more secure than they were at the time of the financial crisis. so we say 3500 s&p will get hit more than likely but we will make our way through this though. jon: we will keep watching equity levels. we heard kriti talking about the growing expectations on what the fed does or does not do, and those growing expectations of rates ultimately moving in the other direction as we roll through the year. but the conservative action we will see banks take, regional banks in particular, going back to what kicked this off with silicon valley bank, you had apollo shifting his you from no

landing to a hard landing on the back of the idea that if banks are going to be more conservative and not lending as much, in many ways, that is the kind of thing that justifies not continued interest rate hikes right now. linda: right. that is the perfect way to say, -- liz: right, that's the perfect way to say, let's be calm, but at the margin, they have to tighten lending standards and that filters through to the economy, slowing economy, small businesses who want to get alone. that trickles through the systematic margin. i think that is what a lot of people, even if they think the banking system risk will be small, some people are saying the fed could cause and if inflation keeps going, they could tighten again later. but, kind of hiking now into this mayhem may not be the ideal

thing, so there are more people saying, no, there are calls all over but some are saying the fed cannot do it, the market pricing less than a coin flip that they go 25 basis point hike next week. fed has a tough job. not that they did not always, but it got a lot tougher. kriti: linda, final word on simply what that kind of hard landing scenario might be like, if, hypothetically, we are looking at a pause going into next week or even a cut as 1 wall st bank is forecasting? do we then have more emphasis that the fed is going to be even more hawkish later in the year? is the 100 basis point cuts that is priced into the market right now over nothing? linda: yes. we think it is over not. i should say we think it is overdone for the 100 basis point cut. we think they will not hike rates next week. they don't have a need because

mainly financial stability risk trumps the inflation risk. i am see comparisons to 1987, when they were assurances the economy was fine, as now, and rates got cut because of concerns. once settled down, rates had to go back up. we continue to have an inflation that is persistent, and we look at the real economy and the job situation that remains tight, the consumer will not stop shopping until unemployment goes up. that is not going to be the case, so that will bloom.it will be -- that will loom. it will be a volatile year. kriti: it will be a fascinating that seven days. linda dussea -- dyessekm and liz mccourt -- duessel, and ms. mccormick, thank you. we are seeing the bnp paribas stop some of the counterparty exposure they were getting to credit suisse.

really starting to see some of the european banks specifically hold off on extra risk. next, paul davies says that the struggling swiss bank needs friends now more than ever. we will get his thoughts, along with allison williams. a conversation you will not want to miss. this is bloomberg.

do you ever worry we'll live forever? no, it's literally never crossed my mind. what if we live to like 100? that's 35 years of being retired. i don't want to outlive our money. and i have been eating all these stupid chia seeds! i could totally live to be 100! why do i keep taking such good care of my- since we started working with empower, we're able to get all our financial questions answered, so we don't have to worry. so you never- no. never. join 17 million people and take control of your financial future to empower what's next. start today at empower.com kriti: this is bloomberg markets. i'm kriti group to with jon erlichman. the federal reserve now working with the u.s. treasury to review the credit suisse exposures. the treasury was already looking into this and some of the banks are. we heard about bnp paribas and

santander considering the market timing. now the federal reserve getting involved, which brings us to our stock of the hour. it is credit suisse. dropping to a record low amid the uncertainty surrounding the bank. paul davies weighed in on the bank could withstand a lot more deposit outflows and some serious interest-rate stress. however, client-side investors need to keep believing this for credit suisse to see out the turbulence." paul joins us alongside allison williams, bloomberg senior analyst for investment banks and asset management. paul, i loved the title of your column today. credit suisse needs friends now more than ever. does it have any? paul: well,i'm sure they must have some somewhere but they are not treating the well today. especially the chairman of its largest shareholder, coming out this morning and saying they

were not prepared to put more capital into the bank if required. i think he was talking about limits on the amounts they could owe, they do not want to go about 10%. it was still a very badly time to comment that did not help. jon: allison, to bring you into the conversation, we are talking about is asian an -- about an organization that is restructuring and the uncertainty that was already in the air creates further competitions. how much time in normal circumstances would credit suisse need to continue to turn things around, and will they be afforded that, you are. ? -- in your opinion? allison: what is difficult with their restructuring is it requires patience and time. there is a lot of execution challenges, and at the end of that plan, the returns they are shooting for are still below a lot of their peers.

in general, the fundamental story, you know, it is something that requires patience and time and in the market like this, where sentiment is negative, certainly that is difficult. and, you know, the feeling right now is that it is not necessarily about the fundamentals. there is fear in the market. there has been since the collapse of silicon valley bank shares last week, and i think that, you know, it is very difficult to come out and i think investors are looking for some sort of backstop. they are looking at a shareholder, as you said, it made comments that they will not be able to provide and support. they had another longtime shareholder who pulled out of their position the last quarters. i think that is why you are seeing headlines that they are asking for the regulator to come

out and give some kind of public support because investors are waiting to get some sign that things could be steadying. kriti: paul makes a point that the duration risk that plagued silicon valley bank and signature bank is not necessarily an issue for credit suisse. it is positioned to navigate those moves much more -- much better than peers. why are people freaking out if that is true? alison: i think because, you know, the fear is that market sentiment can cause real damage to the franchise. we did see that at credit suisse in the fourth quarter before their capital raise. there were a lot of stories about the health of the bank and that really drove down valuations. they came out, completed their

capital ratio, when they revealed the amount of their outflows, it was significant for the fourth quarter. since then, investors have looked for signs of steadying. i think the concern is that there could be damage to a franchise, which depends on sentiment. to paul's point, the benefit -- we are worried about business falling away, but they are not sitting on this big bond portfolio with unrealized losses, like the two banks in the u.s., with chunky deposits that went away quickly. but they still are going to be concerned about quite sentiment what that can do to the flows of the business. jon: paul, you wrote this week about a market that is hunting for weakness. what changes that narrative?

obviously, we are seeing that across most asset classes today. paul: i think what the fed did in terms of backing out essentially all uninsured depositors in the u.s. really ought to have helped in terms of the supply of liquidity in the market now, and also helped more than it has done for credit suisse. if the swiss national bank comes out and says something about the quiddity, as well, says something about how it can provide more to banks or help them if and when needed, that is something that might help underscore faith, but for one of the things for credit suisse, we are going through this complicated restructuring that had these outflows last year, and the common theme the last six months or so is a bit of an information deficit. it has struggled to be able to

answer the questions that investors and analysts have about its numbers, revenues, in the time that it was trying to come up with its restructuring plan, that is when it saw the outflows. it has been a month being unable to update the market on it was going. now, we know what the revenue target is. we know what the return on equity target is over the next three years. it is a relatively disappointing target, but it is very hard for people to work out how it is going to get there and whether it is lowballing or whether it is being optimistic because they just do not have all the numbers that will help model that, so that is the next thing we need to see and hopefully we will see that within a few weeks in terms of some better numbers about what the future of credit suisse will look like. jon: right, asking questions later perhaps and selling for

now as we see it across asset classes. paul davies of the bloomberg opinion team and alison williams of the bloomberg intelligence team, as we monitor the developments. we will stay on the credit suisse story. andrew cunningham joins us to discuss the firm's issues. let's take a look at oil, the price falling outside its recent range, hitting its lowest price since 2021. this is bloomberg. ♪

go. go brain. no, not that one. go this one. go optimizing data. go efficiency. go results. emerson's plantweb digital ecosystem is the brain for smarter, safer and more sustainable performance. go plant go. go boldly. emerson.

jon: this is bloomberg markets. kriti, we have been tracking the story of credit suisse, the global fallout. andrew kenningham, chief europe economist with capital economics, joining us as part of our continuing coverage. we are seeing real-time reassessments, not just of the

future of businesses market valuations but also where the economy heads from here. what is your current assessment? andrew: clearly, we are in a stage with a huge amount of risk and uncertainty as to what is going to happen. the credit suisse situation is much more serious for the global economy then problems with the regional banks we had last week. so, you know, i think there is a significant chance we see changes in monetary policy relative to what we were expecting. the big question in europe is what the ecb will do tomorrow. i am sure going into the meeting and at the beginning that the two day discussions yesterday, they expected to raise rates by 50 basis points, but that now looks less clear-cut. kriti: the swiss national bank has made it very clear that they are not necessarily going to intervene just yet. what would it take for them to step in

--in? andrew: they would have to step in if it looked as though the problems in credit suisse were going to spread to other banks in europe and elsewhere. we have seen reports that the ecb and the fed have been asking for banks in their own jurisdictions what exposures they have to credit suisse. that is a significant risk. credit suisse is designated as a global systemic important bank for a good reason. they might be saying right now that they are not planning to intervene, but it is the kind of thing that can change at short notice. jon: on the regulatory front, what are you watching? we shifted from a conversation on the regulatory regime stateside to what will happen globally on that front, as well. andrew: yeah, well, the bank is part of this gsib group, so it

is of global significance, but its primary responsibility, the swiss authorities to regulate it and intervene if there needs to be an intervention, to look after the bulk of the swiss bank. it is with them, but, no doubt, there are a lot of conversations between the swiss and authorities. so, yeah, i mean, we will have to see what happens. there are a number of ways forward for credit suisse. it basically has three components, the domestic bank, which i am sure they would want to ensure has a future, it has a wealth management arm, which probably would be bias, as it has a valuable client list, and then there is the international investment bank, which is where i think the bigger risks are, and the future of that is uncertain. there are a number of possible

solutions. we have seen all sorts of interventions in the past, including switzerland, where ubs was rescued back in 2008. no doubt there will be people working on what are possible variations on the way to deal with this. i think the key thing for the financial markets is that if there is a resolution or rescue package, it is one which is very decisive and does not have, does not lead to too much contagion to other banks. kriti: certainly something to keep an eye on. andrew kenningham, chief europe economist for capital economics, thank you for that perspective. jon, he is 100% right. this intervention could come in so many ways, something not on the minds of the swiss international bank, but i wonder if it will be as they see the u.s. treasury and federal reserve actively comment on what the exposure might be. jon: and all the monetary policy front, we have gone from the conversation on the fed changing course to what andrew talked about on the ecb, which is also

on the agenda this week. kriti: the markets are selling off, the s&p 500 down 1.3%, 10 year yield, 22 basis points lower. stick with us. more markets coverage ahead. this is bloomberg. ♪

♪ >> price risk on the balance sheet. the market correcting or at least adjusting to what we now know or maybe we don't know. romaine bostick alongside scarlet fu picking you up to the close. scarlet: this is an example of how viral risk aversion can be. this is happening on the ides of march. romaine: the ides of march, they are a precipitous time for all of this to happen. it gets to the idea of how fragile the markets are and how fragile the economy can be. the issue with what is going on with the regional banks in