>> this banks care xl or is everything we were expecting this year. >> it is still a bit unknown how deep this is going to be. >> the market is trading on fear and panic. >> we think that risk for the equity market is elevated now. >> the fed sees the recession coming and they will do something. >> this is bloomberg surveillance with tom, jonathan ferro,. jonathan: tom: good morning, from new york on radio and television worldwide, thank you so much for joining us this morning. a calmer monday and maybe a

calmer tuesday as well. what has changed? 4%, 2% yield, is that recovery and crisis over? lisa: you start to say crisis over the new price out the rate cuts, higher yields and then back to square one? are we talking about the same thing we were talking about three weeks ago? tom: confidence numbers are important and we have important guests coming up. the answer is, i think it's calmer but we are beginning to count up the credits and the debits of the last 14 days. lisa: mohamed el-erian had an opinion today talking about not conflating some sort of meltdown in the financial sector. he said basically there is a slow moving tightening cycle that will transpire from what we sow with respect to smaller size banks and he said that's what we

need to focus on. tom: not only that but this idea that first quarter is as good as it gets for different markets, maybe for the american economy. you talk about consumer confidence, banking confidence and where that stands now or where it stands into april is a huge mystery. lisa: do you feel like confidence to go on vacation and go out to eat or go to hotels? that confusion is the difficulty people have. everyone says this guy will fall but you look around and the sun is out. this is a tension underpinning everything. tom: we can look at the data and i guess you can get this in your brain, the new news is we are data-dependent. we are back to our data dependency on the market analysis. and also dare i say our

financial banking system analysis as well? lisa: no one cared about the data last week. we wanted to see if another bank failed. now what? is it the same kind of data? we will see but there is also the loan bank officer survey that we get on may 8. these are the sort of data points people look for for evidence of tightening in the banking sector. tom: the key data point is what inflation does which includes the banking system. this is a warning, but when you see the bank that took out svb up 45% in the market yesterday, you have to ask what is going on? the wall street journal had a great editorial outlining that. the vix is under 21 so it's a constructive vix off the

unchanged monday we had. the statistic today is the 4% to year bond. the 10 year yield is up and it was interesting yesterday how the assumption is there of this subsumed real yield across all rations with inflation-adjusted yield counts for the slow down we are supposed to have. lisa: people are talking about how the silver lining, the soft landing as the fed cuts rates and you get basically an economy that keeps going. you are not alone in this. when you talk about data dependency, first at 9 a.m. come the latest reading on the housing price indexes. this will be very interesting at a time when potentially tom: thank you for doing this chart. lisa: mortgage rates will come

down so what happens to home price demand? will you see people come back into the market? at 10 a.m., not only do we get consumer confidence but we get that banking hearing in washington, d.c.. the fbi see chair will be there and the treasury undersecretary will be there and they will be expected to say the banking system is strong but problematic with management issues. i want to understand whether people are interested in policies or they think too much was done about some of the measures that have been taken. we do get some earnings today and this will be very interesting. walgreens, micron, and dave and buster's. that's a classic discretionary spend. i'm curious what we see with respect to profits and demand in some of these areas where people will easily cut them if they are

hurting. tom: i was in a walgreens yesterday. bramo talked to her people and she said get a covid test. i never going to walgreens. what i noticed is this modern theft thing, everything is locked down including the covid test. i am negative but i had a martini and then i had the covid test. everything was locked down. lisa: this is a huge issue. there were times in the aftermath of the pandemic where i saw people stealing things out right and coming in with bags and emptying shelves as they locked up everything. you wonder what kind of nod that gives to earnings. tom: one of the things we missed is a data check on europe. it was quite the 10 days for europe.

katrina dudley is with franklin mutual are you optimistic about europe? >> i think we look at what happened last week in europe was kind of contained until the end of last week from the banking crisis which started in the united states. i think that was a positive but toward the end of last week, we so what was happening in the u.s. and the european markets and we saw some downward pressure with the european banking stocks. as i look at europe, i think the structural drive that we've been talking about for a couple of months continues to underpin that market so we continue to be optimistic. tom: over the weekend, there was some nice articles showing the swiss people rebelling against a swiss bank bailout of credit suisse.

does that carry over in the financial sector in europe to where there is a huge tension between people, governments and the banking industry? >> i think there has been a lot of tension in the european banking industry already. we need to understand that the weight the euro zone is constructed is it's a series of countries in each of those countries has a central bank that will support that in country banking system. we saw that with deutsche bank and we've seen that support come out for germany. we've seen it with credit suisse and ubs and the swiss national make stepping in as well. you will see that on a country basis and it's a real reflection of the fact that europe is just a series of countries that have come together to create the euro zone but the nationalistic interest still exists. lisa: the larger question is, are we at the end of rate hiking

cycles? what is your view? >> i think the fed is very data dependent they are also watching that pce number coming out friday. i think they will be glued to the bloomberg screen as i am. they will be watching to see whether or not there is any easing and inflation pressures. if there is, i think they can take a pause in that rate hiking cycle. i've heard a lot of people thinking we're going to have rate cuts toward the end of this year. we are not in the camp that we expect the fed to turn so quickly. we think they are more likely to take a pause in terms of the rate hikes and potentially though there's been a lot of quantitative tightening in the market, we are starting to see some of that ease. lisa: if that's the case, how do you play it in a market that's priced in a hundred basis point cuts in next year? >> we simply need to take a step

back. i think that's the benefit of being a long-term investor. you can take it step back and have a look. i think we were very concerned that the banking crisis and the increase in rates would really impact the smaller midsize companies. we talked in the past about the industrial sector and we talk about the three legs of the investment piece. look at the legislation is positive and that's still in place and we look at those structural drivers, electrification, but the third leg was your supplier base needed financing in order to expand. we've seen customers step in to the uncertainty that you normally get from the financial sector. we are continuing to be very positive on the industrial sector demand because that third leg of the stool continues to be long. tom: i am seeing images of paris

in revolt. i've seen talk about a collapse of the fifth republic of emmanuel rick ron -- emmanuel macron. can you go along france given the turmoil? >> i think what you need to understand is what has happened in each of these markets. look at the response to the energy crisis. they stepped into the market to support that low end consumer and it's those consumers that are going to remember that and where the popular pressure really counts which looks at these markets fragmenting. i think the argument has gone out the window and we think europe stays together and that's important for all the markets in europe. tom: thank you for helping us start the show this morning. all day, we are talking about bond volatility.

it's the number one thing and we will do the move chart later. when you look at bond volatility, what does bramo look at? lisa: i look at the rate hiking and rate cutting expectations. i don't do it with respects to my prognostication. i do what's being priced into the market in the gives a sense of the market pricing come a fed reaction function which is key to whether it's a hard landing, less hard landing and we get to the end of this inflation cycle. tom: i have no clue what she just said. we will look at this this morning, bond volatility and the two year yield is back up to 4%. it's a tuesday with economic data including consumer confidence. futures are negative three and

jonathan ferro will be back tomorrow. stay with us, this is bloomberg. ♪ lisa: keeping you up to date, in nashville, tennessee, police have identified the person shot and killed three children and three adults at a christian elementary school. audrey was described as a 28-year-old white nashville resident who identified as transgender. she is believed to be a former student at the school and was killed in a shootout with police. u.s. regulators are now investigating manager conduct in silicon valley bank and signature bank failures. the fed vice chairman for supervision called silicon valley bank's collapse a textbook case of mismanagement. he and the fdic chairman testified before senate -- testify before a senate committee meeting today.

more protests in france protesting the unpopular pension reforms. they are calling on emmanuel macron to negotiate in the last negotiations ended in chaos. another sign the cost of living crisis in the u.k. isn't over. inflation in british shops hit a record high this month, 8.9% according to the british retail consortium. food prices rose more, up 15%. global news, powered by more than 2700 journalists and analysts in more than 120 countries. and this is bloomberg. ♪

the new chase ink business premier card is made for people like sam who make...? ...everyday products... ...designed smarter. like a smart coffee grinder - that orders fresh beans for you. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on purchases of $5,000 or more...

plus unlimited 2% cash back on all other purchases! and with greater spending potential, sam can keep making smart ideas... ...a brilliant reality! the new ink business premier card from chase for business. make more of what's yours. >> the bond market is somewhat dismissing of the dot plot because it reprice itself

overnight. we think the risk for the market is elevated now more than it's been for the last 6-12 months. tom: that is mike wilson of morgan stanley, sharp yesterday on the back and forth. i think it's important in the models of the last 10 days, spx 4004, down 32,600. the nasdaq somewhere near 13,000. the vix was around 30 and it hasn't come into bull market levels. it's a good take over the last 15 days. lisa: people took a look at the banking crisis that did happen and that seems to have subsided and they said it will cause the fed to cut rates but the economy is still doing well so risk on. tom: we will have to see. to me, it's a mystery off of economic data.

lisa: the question is whether we have gotten past the banking crisis. we are not going to be in washington dc at these hearings going on today and they will have a hearing with a number of different dignitaries and officials including michael barr who is the head take a listen to what he said. how much can they draw a distinction between these as specific events having to do with bad management versus broader stress that could be born out through less lending and potentially additional failures? tom: the challenge with these beginning hearings with

discussions in washington, what actually happened in the last 10 days. gregory vallier joins us now. you and i have seen this before. we've had for life -- once-in-a-lifetime events since 2007 and there will be a stream of hearings. does the hearing today matter in which one does matter down the road? >> i think this hearing matters a lot. there's got to be an explanation as to why the san francisco bed overlooked these flashing signals. i think there will be tough questioning. i think the credibility of the fed, and this is not hyperbole, the credibility of the bed is on the table today. lisa: why do you say that? what are people going to be looking at to understand to determine whether the fed is the right body to have oversight and whether it's efficient? >> i'm not sure they are the

only body. michael barr would be a key player, but i would reiterate that there were flashing red signals that the san francisco bank which had a very cozy relationship with the silicon valley bank chose to ignore. lisa: how much will we be talking about what more congress can do to shore up confidence in how much will we talk about what they actually have done and why they did what they did how quickly and which agencies were in charge of it? >> everybody wants to make political points today. any sweeping reform is really unlikely. they can't agree on anything right now including a budget deal. the idea that they will come up with new regulations is unlikely. let's see what the barr study comes up with in mid-may. i don't see any big changes right away. lisa: you said this is an important set of hearings today in the senate and tomorrow in

the house so what's the consequence of this is a challenge to fed credibility, as you say? >> if it isn't, it may metastasize and go to the other big fed problem and that's how incredibly inconsistent the fed has been an interest rates. monetary policy has not been smooth and i think there is a lot of this is an to go around on that. tom: within these hearings will be reports and i like the brevity of three paragraphs. it happened in the wall street journal editorial this morning that laid out the government cost. it's a bailout or bail in whatever your politics are. the bank went up 45% yesterday on taking out a fancy technology bank where a latte in san francisco costs eight dollars. we all get the stereotype, it's out there. in these hearings, when they

describe how the government is financing the bail out of this elite bank, does -- tell us how gop and democrats will respond? >> the thing we've got to look for is to restore some confidence. as much as i like janet yellen, she had a terrible week last week and confused people. to a certain extent, jerome powell haskin's debt has confused people as well. i'm not saying these problems will go away instantly but i think the rhetoric has to inspire more confidence. tom: you been following this for decades and you remember when it was a rare occurrence but it's not rear anymore. i've been there and i spent a lot of time in nashville over the years. there is nothing funny here. what is comedy is the lack of response at the federal level of this nation as we devolve to states rights.

is this ever going to change? >> probably not. i wish i could tell you something more encouraging but i don't see the votes. that's what i do every day, i look at issues and say who has the votes. i look at the house with kevin mccarthy, very conservative house and i don't see the votes to do anything more on gun control. tom: where is the middle on this? >> probably someplace in the senate there are enough moderate senators why think would go along. there might even be enough moderates on immigration. many things have to be addressed but with this house, it will be very difficult. tom: thank you so much this morning. we need to be transparent and suggest that michael bloomberg, founder of bloomberg has contributed and has helped launch every town for gun safety that advocates for universal background checks and other gun-control measures.

it won't go away, will it? lisa: and it's a tragedy every single time, six individuals lost their lives and that's what we are waking up to at a time when the nation is completely devastated. tom: you can feeln the foreigness where jonathan ferro asks what this is about and you can see it worldwide whether it's the lack of guns in japan or everywhere. you and i live it with jonathan going what is this? lisa: it's not only for jonathan but a lot of people in the united states in a real divide right now between people who view this is something that's acceptable and people who view this as something that is ridiculous. there are two different camps that i think are entrenched at this point. there are not enough for -- votes to come out against it in

this particular nation. tom: i will give you a personal anecdote. my father was a life number of the nra back when it was a different organization. he said to me many years before he died, he said i made a mistake. it's interesting to see the back-and-forth area we continue to cover this story this evening on balance of power. they will really move delicately through another terrible tragedy in nashville and the other issues we see in washington as well. it's a mixed market today that we greet on a tuesday across this nation. we are looking mostly at bond volatility. you mentioned that you bring it over to the fed game. i honestly don't know when the next fed meeting is. lisa: i am also looking at how

credit markets are performing and whether they are rallying in tandem with stocks. something has to give, either inflation needs to be more persistently higher for their needs to be something more material that happens to bring down inflation that it hasn't come down yet. tom: a research zeitgeist of the last 24 hours says there is little evidence that inflation is not abating. the fed meeting is may 3. to give us a view of the foreign exchange market next, jeremy stretch. on radio and television, this is bloomberg surveillance. ♪

sfx: [soft beach sounds] c'mon ref, that's a foul! jay? jay's back? gimme a time out. huddle up! i call the time outs. didn't expect to see me so soon, huh? well, i invest in a fund that fuels innovation, like next gen video conferencing, and when i saw your defense in the first half, i had to step in! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. coach, what are you doing?! this thing goes fast. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com these days, our households depend on the internet more and more.

families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app or upgrade to the speed that's right for you today.

tom: bloomberg surveillance, good morning on television and radio across the nation. jonathan ferro is on assignment, maybe we will see him tomorrow or the next day. we are looking at a data check. only one number matters, 4.02% and an elevation of the two year yield. i will dovetail this into the bloomberg financial conditions index which showed a little bit of restriction yesterday which is a constructive sign of crisis over, do you feel that? lisa: i think there is a lot of

noise and people are looking for signals amid the mayhem. i of the banking crisis are that will restrict lending that we have not seen yet. tom: the yen is $1.31 and has been stronger. 1.08 on euro-dollar. that gives you an indication of some of the dollar dynamics. is it weak or is it strong with futures negative for the vix. joining us now is jeremy stretch head of fx strategy. everybody needs to rewrite their note and that's were we are. stable dollar, strong dollar for

a consensus that it must be a weak dollar? >> good morning. we do expect the dollar to gradually lose value over the next few weeks and months. the fed narrative is uncertain in the context of policy. i think the market is possibly getting ahead of itself as far as them cutting but it will be the case that the dollar narrative will be less than constructive this year. the context in the banking sector uncertainty, the balance sheet date it will be interesting because we are seeing balance sheets between the fed and the ecb moving in opposite directions now. tom: this includes the canadian dollar and maybe australian well but comes back to china in this new theme that maybe china is

not rebounding like it should be. across the cibc platform, can you suggest china can show growth or less growth and what does it mean for the commodity complex currencies? >> you got to remember how growth composition of china will be formed. we have to recognize that if we are going to see china in a growth area, it's probably going to be more driven by domestic rather than external demand. we will clearly see domestic demand rising. we are going to see some demand or impact on the committee -- on the commodity spectrum. there will be other associated commodities that will remain well supported. there are clearly challenges -- as far as the narrative, it will not be a smooth transition and we will see many bumps in the road and that will be the

reality. in the context of the china growth story, it provides some constructive nest to the commodity spectrum and that should play out in terms of the way the commodity currencies form as a consequence. lisa: you always have to be an expert on something and it feels like a kinship to what we do every day. how much are you becoming an expert on banks and understanding the depths of the fissures we have seen. >> that is the nature of this role. i think there is obvious question regarding the resilience of the primacy of the banking sector. we are also looking to understand how the transition in terms of the deposits will have an impact in terms of the broader lending strategies. after the debacle last week, we

are thinking about the primacy and hierarchy in terms of the debt profile. there are number of moving parts here. clearly, i think markets are feeling relatively relieved in the context of the last 48 hours with no further concerns. is it to early to say the risk is over? it probably is but as long as we don't see another systemic crisis playing out, i think we will see immediate related concerns and underlying safety risks diminishing. we have to come back to the realization that were getting pretty close to the end of these tightening cycles and that the tops -- the subtext out of this whole cycle. lisa: how does that play into a currency call? is that why we are seeing dollar

weakness? >> i think that is the case. we had chair howell reopening that narrative on 50 basis points for the most recent fed but i think that was always going to be a step too far, in our opinion. we went into this crisis assuming we would see 50 basis points and then 25 and another three more to come and we still feel that's about right. i think we are seeing arc its repricing the degree of fed tightening. it's too early to say they will cut this year but i think they will do recalibration in terms of the terminal rate in the u.s.. in the context of where we are going in the euro zone, there is probably another 50 basis points of tightening to come. it's the reorientation of terminal rates that has underlined the dollar narrative.

i think we will continue to see investors looking for the diversification moving back into those currencies which had been low yielding. the big story that will still be relevant this year will probably be the come back in the yen. lisa: so you think there will be a shift back to haven trades that haven't gotten did to the same degree. at what point does the terminal rate matter if not the pace? the higher rate hiking cycles and the emerging markets garnering a lot of flows but now people are wondering if those rates will be punitive to the economic growth. are we at that point? >> i think we are getting close to that now. that's something that i think is in ongoing discussion. i think it's the whole uncertainty regarding the fiscal backdrop in the monetary

backdrop but i think the context of japan is coming through. i think there is an ensuing appetite among the fund manager community in terms of it probably is going to be the case in this relatively uncertain backdrop with some degree of catch up coming from the boj with yen appreciation. how do you play that? there are a number of ways of playing that across a number of currencies. tom: what flow dynamic or flow narrative keeps you up at night? you mentioned boj and i saw a distressing note about what happens. what is the money flow, the dollar flow mystery i need to think about into 2024?

>> i think japan is probably the most interesting dynamic to consider. if we are going to see the domestic life companies keeping more money on shore so there will be less transition in international markets, i think that will be a relevant story. if we see this adjustment in terms of this spirit heralding a degree of policy normalization which is likely perhaps early in the second half but i think it is a likely scenario but i think we will see less money coming out of japan. i think we will see a stronger yen is a reflection of that. we will see if we see less of the international demand coming back to the u.s. markets. tom: thank you so much. sorry for the coughing this morning.

we are just getting through it. it's been going around, jonathan had a couplehank you. tom: we have bond volatility this morning. it matters for commodities. liz and saunders at schwab out with a early in chart placing the uniqueness of the moment. she says it's not going away, do you agree? lisa: people think it's not going away and it might come down as people get a clear sense of whether we have hit the peak terminal rate is far as fed funds but i don't think people believe we will enter this new regime of stasis and inflation. that's the key that will lead to the volatility. tom: we are not going back to what we see so let's bring up the charge. -- up the charts.

we go back here, it's a lack of volatility and you know what happened in 07 and 08 and relative lack of volatility and up we go. i did a fancy moving average study and we are not in that yet. lisa: it's interesting to see the bond volatility, the implied volatility in treasury yields is not actually matching with a lack of moving in the vix or a lack of movement in the implied volatility in stocks. that is what people have pointed to. there is a larger issue that if you don't have consistency in bonds, can you have consistencies and other risk assets that are priced off of that bond yields? tom: everybody is saying what are you talking about? if i'm in a money market fund, do i care about bond volatility? lisa: yes, if you're in a money market fund and suddenly bonds

move dramatically, you might lose some volatility but you can get more income. if you see rates go down dramatically, then you go back to risk assets looking better on a risk-adjusted process and we go back to that low rate world. that's the issue that people are looking at and the reason why people are bidding up risk assets. tom: do we go back to the nerve on a we had? -- nirvana we had? maybe we can talk about futbol. lisa: i think we should listen to nerve on a. tom: -- nerve anna. nirvana. stay with us on television and radio. lisa: from with news from around

the world, i'm lisa mateo. police in nashville, tennessee say the shooter killed three children and three adults at a ashen elementary school may have been annexed student. audrey hale was described as a 28-year-old white resident identified as transgender. she was shot dead by police. did the federal reserve do enough to oversee the silicon valley bank that collapsed earlier this month. a group of senators want to know this and they sent a letter to the fed chair asking if the central bank exercised its full authority to supervise silicon valley bank and other midsize banks. the head of the national security agency cybersecurity arm says popular video sharing arm tiktok is china's trojan horse. he told the conference that tiktok poses a long-term strategic concern. there have been calls to ban the app in the u.s.. a big structural change at alibaba.

it is splitting its business into six main units. each of them will explore ipo or fundraising when the time is right. units will cover commerce, media and the cloud. adidas and beyonce have agreed to and their fashion partnership. that comes after years of weak sales for the ivy park line of clothing. sales fell 50% in 2020 adidas was paying beyonce about $20 million per year. global news, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo and this is bloomberg. ♪ inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews.

just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done.

>> i don't think we are in the place we were in in 2007 and 2008. we have to be very vigilant.

if i give you the answer, i don't think it's a problem going forward. i don't want to give you the idea that we are not vigilant because we are. tom: andrew bailey, bank of england governor. i'm a big fan and i've interviewed him a number of times and he's tangible and has his fingers into it. there is a belief that andrew bailey probably has operational integrity. we have to remember he is the one who was hesitant to declare victory. lisa: there is also a distinction between the inflation we are seeing in the united kingdom and what we see in the u.s., trigger by some of the food and energy prices and rising and surprising to the upside but not having piqued just yet. that pressure causes perhaps

more of aent in the fed. tom: we begin with a really important idea. it's not over and we don't know where it will go. we need to review the first guy that had to deal with this whose name was bailey. i believe it was in october, the derivatives. that was structure and i looked at the literature as a marketing campaign. was silicon valley bank any different as a marketing campaign? lisa: what is the next shoe to drop? are there other marketing campaigns we will see once the tides roll out? how much are we starting to see that and is at the beginning or are we seeing the brunt of it? that's one of the key questions as we look to the next shoe to drop if we are done with this crisis. what will be the fallout? tom: christophermaranack joins

us now. is the crisis over? >> i think we are getting to the and. the two troubled banks have been resolved and that we see resolution from signature bank and yesterday with citizens buying silt -- silicon valley. i feel like we are on the road to recovery. when earnings are announced in a few weeks and then april, you will see that her results in much better deposit flows then the last two weeks. tom: we will get more reporting on deposit flows in one of the themes out there is at 5%, forgetting about bank prices, money will move to money market funds, do you agree? >> money market mutual funds moves 250 billion dollars the last two weeks so clearly there has been movement. in the big picture, there is a lot less deposit outflow in the

system, only 4.5% as of friday nights it more muted and we been normalizing the positive all along but it felt a lot worse the last two weeks. tom: you go out to traditional banking outside philadelphia and that's a place like anywhere in america. what i detect is banking by marketing concept. when you talk to bankers who are normal people, how do they feel about marketing concept-driven ideas intruding in this crisis on their normal banking? >> to most customers, they are looking for service and interest rates. it's been very slow increase of deposit rates and i think we will see a meaningful impact and higher rates in q1 and q2.

it's a much more muted response and customers want surety and they want advice so as not always about interest rates. tom: that's the dog barking in the background. it's the same as chipper jones. lisa: he's having angst about the banking system. tom: and the braves have beat the red sox about four times in spring training. lisa: there is an article by mohamed el-erian that i keep going back to because it highlights this one aspect that people are honing in on an even if we don't get collapse in the financial system or another bank, there will still be a grinding tightening, and acceleration and how much these regional banks withdraw some of their credit. how much are you tracking that and do you believe that narrative? >> i think their credit always gets tightened in a crisis like this. we sought in 2008 and i think

banks will be discerning. there is pipeline lending that was done in january and february and i'm sure it became tighter in the last three weeks. i think new loans will be very much lower in the third and fourth quarter and we will see higher rates. bank and loan rates will be higher as they charge more for risk. that will offset some of the higher deposit rates. your question is good and ultimately credit is getting tighter. lisa: could we seek banks survive and thrive especially if they consolidate business? do you see a more dramatic constriction and overall growth in the u.s.? >> i think dramatic is what i would disagree with. i think we it will be an increment lower. banks are still taking risks for their customers. leverage over all is lower today

than years ago and a lot of banks are lending at $.60 on the dollar when they use to lend on 90 and 100. we have less leverage in the system and ultimately, that's a key to what banks write-off with their problems. i think reddick is tighter for sure but if anything, there are companies in good financial positions moving forward in those who still struggle so we expect to see a higher level of credit issues this year and next year. lisa: how much of a risk premium will be charged for some of the smaller and regional banks that could suffer deposit out flows? how much will that be a lasting feature that the valuation story will be more disparate going forward on the behemoths versus the natural subject -- versus the regionals. >> the outflow theme we think

has been incorrect. you will see a lot less outflow than folks of understood and you will see more clarity about the level of granularity of deposits at the smaller and midsized banks. i think it's an opportunity for them to give more disclosure on deposits. that will be a huge difference when we see earnings come out in a few weeks. tom: wall street journal editorial lays out the banks going up 45% yesterday. how to the banks you follow compete with a bank that has a massive support gains, losses, deposit coverage, etc., deposit flight -- how do other banks compete with someone so helped by the government of the united states of america? >> the reality is, a lot of it comes down to individual relationships with bankers. you can have a lot of government

support in time but it doesn't have anything to do with individual relationships. businesses see a bank is a trusted advisor. i don't think the government aid has much to do with that. if anything, it can be an ongoing conversation about what the customers need and ultimately what they need to grow their business. i think businesses are slowing down as a result of this crisis this month and that goes back to credit tightening. many businesses decided not to increase their workers incrementally based on what they have seen. tom: thank you so much. i learned a lot there. there is a lot of flows here but everything it tells me as you can argue about this or that kind of bail out. we are bailing out these institutions instead of having them run out and go out of

business and i don't know what it means for the other banks. lisa: we have redefined the system. how do you determine what's a systemically important bank? is it because it has emphasis in one industry? how is a bank determined to be big enough or important enough or relative -- relevant enough to trigger a response from authorities that had the willingness to respond. tom: last week was hysterical and now futures are -35 and the yield is 4%. that's come a long way in the last 48 hours. lisa: i just keep watching the bond volatility and the round-trip we keep taking and yields are lower than they were. tom: west texas intermediate has a nice to date lift, well above $72.

amy silverman will be with us coming up. this is bloomberg. ♪

>> this banks care accelerates everything we were expecting this year. >> it's still a bit unknown exactly how deep this is going to be. >> markets are operating on fear and panic. >> it just repriced itself overnight and we think risk for. the equity market is elevated now >> the fed sees the recession coming and they will do something. >> this is bloomberg surveillance with tom keene, jonathan aro, and lisa

abramowicz. tom: good morning, everyone, a tuesday on radio and television. we may be be on crisis. the list of guests we have, what a statement on our team working saturday and sunday to raymond out beyond the crisis of last week. they did a great job yesterday getting all the voices. lisa: there is the immediacy of who is next and there is long lags. how much is this the beginning of the lag effect taking hold and seeing the concert whence of the fastest rate hiking series in history. tom: we look -- we talk with other bond experts. maybe deposits won't fly out the door like they have been. i see no way we can see crisis over. lisa: i think most people would

agree with epics it's not just the banking system. is the broader sense of how this affects credit and how it affects people's independency or resilience of a market that showed some cracks. i think that -- i think that's what it goes to.we attorney see the consequences or the pain of what this rate hiking cycle has wrought, how much conviction do they have to go if these cracks continue? tom: a correction, i thought these hearings this week were so what and all of a sudden, there is first citizens, up 45%. the market arbitrage in the government bailout got sweet terms and all of a sudden, these hearings -- they matter. lisa: especially for the market. there were hedge funds and private equity firms that wanted

to pick up the assets of the silicon valley bank that were rejected because it wasn't politically correct. you need to be the right kind of buyer and the needs to have the protections in place to make sure there was not more deposit outflows. what is the president we are setting. tom: besides a cough, we have a wonderful guest to start off the hour. futures are negative with a little bit of lightness. the big news this morning in the two year yield space, futures are up. the real yield 1.30 and if you want to look for some for of strength from gloom, west texas intermediate 72.92.

we thank jeremy stretch for helping out and currency markets , the euro $1.08 22. lisa: there are auctions but there are other things going on that are more important including the data we get. do we see ongoing stability after a steady decline in year-over-year prices and this will be one of the big questions. if you get stabilization and mortgage rates, does it offer sums of work to one of the most sensitive areas? that's been underpinning the belief that if the fed backs away, does the problem come back? at 10 a.m., we get data on consumer confidence. there will also be the hearings in washington, michael r of the federal reserve and the fdic

chair. the system is resilient and everything is under control they say the questions then begin, who is next and what did you do and why did you do it? they will look back and they will ask why did the that miss glaring red flags? is this something to undermine the faith in the banks? we just got walgreens earnings that came out in terms of second-quarter sales and adjusted eps. it's pretty much in line with the year estimates are you are seeing a small pop in those shares. we also get micron, lululemon and dave and buster's. a bond of other reports after the bell. i am trying to understand the consumer confidence as reflected in the earnings. tom: it's bizarre and speaks to the confusion of the moment.

one of our most popular guests with clear explanations of the derivatives market is amy wu silverman. there are cross moments and the pros talk about skew being important. you say there is a new skew. what is skew? >> good morning area skew is just your demand for hedging, your demand for downside protection. what was missing in 2022 was skew essentially disappeared from the options market. nobody wanted to hedge and no one was worried about downside and that's with the s&p going down 20% was about. we came into this year with this same momentum everyone was focused on. the biggest change that happened

with the silicon valley bank is that skew has reappeared the downside tail is still there. tom: where the opportunity there for mere mortals? how do you play this type of tail? >> the really simple way is that you can own protection and you can make options more volatile. we are number -- nowhere near the momentum we have seen in rate volatility. why is the vix so resilient? i would say it's going through midlife crisis now because if you look interested day and look at zero data options and look at these shorter tenors, they are

flagging more risk than with the vix is computing. the instrument is not matching the flavor of the day of how options are trading now. lisa: let's talk about the sentiment. if you see people hedging against it downturn but not selling their holdings, they are renting downside protection so what does that mean is terms -- in terms of the conviction about the future? >> i think the biggest difference is the way the market is trading. last year, we had a draw down but it was very orderly. it was a path that steadily marched down and this year has all been about the whipsaw. look out quickly consensus changed in the bond market and equities. i think what that gives you ga ppiness for the market in the markets love that because that

increases your realized volatility and that's what you need to play the plan options. it can't be just that the market marches up or down, it has to have those swings and now we are getting those swings and that makes the options quite profitable. tom: the mathematics of a resilient market. we are all about bonds but the heart of the matter is the basic world of the equity market is 3% gdp and there is inflation on top of that so you do the math area it's like 8% nominal gdp that folds over into revenues. what does it mean for the stock market? i guess it means resiliency lisa: some think that's the case for stocks that even if you have

placing that stays above the 2% level from the fed target, we get resilient earnings. in that scenario, bonds are wrong, long-term bonds are wrong because you will get long-term and laois and and have a different kind of fed regime. that is the tension right now, either bonds are wrong or the stock market is wrong. tom: bonds are never wrong, they are early ahead of the stock market and there is a lot of information. the heart of the matter on analyzing bonds and equities now are not the one or two inflation points but in this post-pandemic time, four or five inflation narratives and i have no idea how they react to those markets? lisa: you say bond market gets it right but there is nothing to get right. bonds have a theory but there

was a note that said bonds are wrong, the fed will not cut rates. you will see a higher inflation regime for a longer time but it's unclear whether you get this. that is something that this market hasn't wrapped its head around. tom: april 12 is the cpi report. lisa: this week we get core pce that's a key indicator as well as personal spending. what do we see in terms of willingness to keep delivering cash into the hands of airplanes and hotels and the other discretionary items?

this is one of the big question marks overhanging the market. tom: the fed meets before the jobs report of may. that's interesting. one less data point to work with. lisa: people will say does data matter? at that point it might matter. tom: yes, that's an important question and you would like to think this will be solved by then. futures are negative for and dow futures are negative seven. 4% on the two-year which is running away. stay with us on radio and television, this is bloomberg surveillance. ♪ lisa: keeping you up-to-date with news from around the world with the first word. in nashville, tennessee, police have identified the person shot and killed three children and

three adults at a christian elementary school. andrea hale was described as a 28-year-old white national resident who identified his transgender. she is believed to be a former student at the school and she was killed in a shootout with police. u.s. regulators are now investigating manager conduct in the silicon valley bank and signature bank failures. the fed vice chairman for supervision called the collapse a textbook case of mismanagement. he and the fbi see chairman will testify before a senate committee hearing today. u.s. aircraft carrier group has arrived and south korea as north korea's leader made new threats. he said pyongyang is ready to use nuclear weapons any time, anywhere. north korea raised tensions to new levels last time the u.s. carrier group wasn't south korea six months ago. that included firing its first missile over japan in five years. in france, unions are holding

another nationwide day of strikes to protest president emmanuel macron's but unpopular pension reforms. union leaders are calling on him to negotiate. last thursday, protest ended in chaos when some hard-core demonstrators fought with right police. a big structural change it out about. the chinese e-commerce giant is splitting its business into six main units each of which will explore ipo's or fundraising when the time is right. the units will encompass e-commerce, media and the cloud. global news, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com the new chase ink business premier card

is made for people like sam who make...? ...everyday products... ...designed smarter. like a smart coffee grinder - that orders fresh beans for you. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on purchases of $5,000 or more... plus unlimited 2% cash back on all other purchases! and with greater spending potential, sam can keep making smart ideas... ...a brilliant reality! the new ink business premier card from chase for business. make more of what's yours. ever better. it's when disruption hits your supply chain and ryder makes sure you're ever delivering with freight brokerage to transportation management, truckload capacity and dedicated trucks and drivers.

>> the debt and deficit has been a problem for a very long time. it's something we have to reckon with but it's not going to be by

flirting with allowing america to default on its debt. that's exactly what china wants and that's what our competitors want to see. they want to see our system not working we need to have ruthless conversations and come up with results about some of our permanent costs and some of the other costs. tom: haley stevens is an interesting person. i have the clearest memory of her in detroit with steve ratner wandering by me with his chief of staff. she was one of the detroit red wings. she was tough. she was steve ratner's chief of staff. at the time, we had a good interview but she was tough as nails. she almost got a five-minute major. lisa: you still bear the scars? tom: i do.

haley stephenson of michigan there, the spirit of the moment. that image was from balance of power yesterday. they were looking for themes in a boring february which changed. she joins us now. one little story in the washington post today which is tangential to what we do, the wife of the supreme court justice, mr. thomas. ginni thomas said she received $600,000. the answer is money corrupts. can you state in your reporting that money corruption led to the banking crisis we are in now? maria: annmarie: i will leave that to michael barr as he addresses lawmakers today. the question is that these lawmakers want to find out -- everyone wants him autopsy

before they look at raising an fbi see cap or raising more funds. was it a regulatory error or mismanagement error and they want to get into the fact of what exactly happened here. also, is there more risk in the system now? that will be a lot of questions facing the regulators today. also, these hearings, they also just become statements that lawmakers want to make, essentially going into a 2024 election cycle. tom: i'm sorry for repeating myself but the swiss fury, the people of switzerland's fury over ubs/credit suisse. what's the constituent fury that is wrapped around these hearings today? annmarie: when you talk to a lot of lawmakers, state -- they said

they are hearing back home, they are concerned and the call them. this is what senator roger marshall said to us last week -- he says from kansas, he's getting all these calls from constituents asking if they should be getting out their deposits from the smaller banks and putting them into a bank of america or jp morgan. many republicans don't think the federal government was clear enough. some of that they say is a political instigation against the treasury secretary janet yellen, but these are the concerns they are facing with their constituents, every day people and businesses. a lot of businesses will go over the fbi see cap of $250,000 and they have to make payroll. that's where the concerns are for some of these lawmakers. tom: i want to emphasize that businesses are everyday people.

there is a delusion that small business somehow is not every day people and i aggressively disagree. this is always featured by joe mathieu on balance of power. lisa: some of the small businesses have to do payroll. they all do in the account through it date -- they account through it -- they account for through these banks. they are concerned about the integrity of those shares. i'm concerned about the size of banks and how you are seeing consolidation. if you look at first citizens which acquired the silicon valley bank assets, their assets have risen to more than $200 billion from $42 billion three years ago through a series of acquisitions. is there a greater willingness on the part of representatives to allow banks to get bigger after years of saying big is bad? annmarie: at this point, the

expansion of the banks, like svb which expanded, what democrats will point to on the back of dodd-frank to being one of the top 20 biggest banks before they fell, before fti see had to take them -- before fbi see had to take them under control. this will be the main point for the democrats, the fact that they will try to hammer the regulators up bout if there was enough supervision, they will want to point to the fact and draw a line between the failure of these banks and the rollback of some of that regulation for these smaller midsized banks in 2018 and they will ring up examples like you mentioned. lisa: do you think policymakers will say that's the reason for this? will they put the blame on the loosening of regulations around smaller banks or will they stay political and say as little as possible? annmarie: i think they will try

to say -- stay as political as possible but also talk about the work they did before this crisis. from the pre-testimony, we know that michael barr will talk about the number of times he and the fed has pointed out potential risks. most notably about the svb short-term paper. tom: dumb question, can the president take a victory lap yet on the bank crisis? annmarie: i don't think so, the president has tried to step away from this after he came out before the market opened when he talked about what they did about two weeks ago. the only other time we have heard from the president was when he was in canada and he said they've done a good job. he said he does not see in explosion but potential he, it will be rocky but he doesn't

think things will explode on wall street. i think with the president is trying to do is have the treasury secretary and the fed lead on it and take a step back. he's going today to north carolina and he is in full on campaign mode. he and the vice president and his cabinet will go to 20 odd states to talk about what they deem is the biggest victories of the prior two years and that's the inflation reduction act and bipartisan infrastructure. tom: thank you so much. i have to point out balance of power at 5 p.m. there is an immediate buzz on the intensity of it. just like us, they are not on speaking terms. lisa: fabulous. tom: they don't talk all day and they show up at 5 p.m. and do the show and there are no notes or preparation. it's very intense. lisa: it sounds like a different kind of intensity. it will be interesting to hear

the fallout from the hearing today as people try to claim the fed and how it ties into inflation. tom: they will be testing how angry they should be. lisa: they want to blame somebody but not have to be accused of it. if you have the agencies bailing out banks, you don't have to read to -- assume responsibility. how much will you see that game played out in real time? tom: the u.s. dollar deposit rate, one month, 5.02%. is anyone modeling out of those numbers up? i don't think one single person is saying persistent inflation or sustained service sector inflation, deposit rate 5.2%. nobody is there. lisa: andrewhollenhorst has

been persistent and he says the fed will get to 5.5% and that's pushing against the grain but he's not alone. tom: the three month libor is the old-style system from 2008. 5.16%. the three month libor is 5.16%. it's like the bank seen in mary poppins. you seen that? lisa: of course. you mean punching through the hat? tom: we will be back. lisa abramowicz and tom keene, jonathan ferro back tomorrow, this is bloomberg. ♪

tom: bloomberg surveillance on tuesday on radio and television. interesting day, there is no crisis but we are looking at markets that are nuanced. a lift to the market in the last five minutes, from red to red and green. these are fractional moves, not so in the two year note. lisa will be impressed that i know it is u.s. gigi -- usgg2yr. thank god someone

invented the thing where you can see a list of things to go. the plunge and yields, 5% down well under four percent. the low on the two-year was 3.76 ish. lisa: shocking, it has been volatile. this is underpinning uncertainty about the path forward for all risk assets. tom: i look at the two-year, it is the metric here for everybody watching and listening but there has got to be other metrics as well and to me it is not outside the 30 year mortgage and that, it is the inside space that is more informative. lisa: they are different aspects. i am watching stocks in the retail sector that are fascinating. consumers are going to lose confidence and everybody is going to stop spending -- we are not seeing it.

that is what our guest was talking about yesterday. the parent company of calvin klein and tommy hilfiger, shares up almost 12% on premarket trading after delivering earnings that beat expectations and looked for strong growth this year. square this with the sense that nobody has money and no one is going to spend. this is the reality check. adapting, adjusting, making profits and having sales. walgreens boots alliance, shares higher, but up more than 2% after beating on the second quarter and meeting expectations for profitability. tom: this is after a failed meeting. walgreens of london and boots, it did not work from day one. lisa: this is a company that can earn a lot on people who want to buy face cream that cost a lot of money, so they can get boosted on that. tom: and they charge 20 five

cents for the bags to carry the stuff home. i need walgreens therapy. lisa: we are trying to understand the retail theft which we have heard across a whole host of different retailers but particularly with drugstore rings. specific gangs are going after drugstores in particular. lift we are seeing up about 4.6%. this is interesting. they did just appoint the new ceo. reaffirming first-quarter guidance. how do they compete with uber? can they call back with uber gaining dominance? tom: when the bentley is in the garage, i am taking lyft. but do we need a competitor?

is almost a proxy utility. what is the difference between the weight you and i use uber and--the way you and i use uber and lyft? lisa: it is shocking. tom: we are living this life and it is shocking what you end up paying. lisa: i also use the subway, what is it a utility? or do you need the competition? it used to be there is no competition with taxi's. another is, and brought down the prices but they are starting to creep up. we will see. tom: dan ives -- of wedbush was on twitter talking about this. lisa: a question underpinning the moves is whether there is going to be a change in fed

policy. victoria fernandez of cross mark talking about the tightening of financial conditions from the banking issues over the last three weeks has allowed the fed to take a more dovish approach to hiking rates. we see only 125 basis point hike left in the rate hike cycle. now you can reassess what is the damage and start to get bullish on assets that previously were left for dead in the new regime. tom: joining us is victoria fernandez, she is out there across the rest of america, also on because i have a final zero and she had one or two of the final four. she is our resident genius for march. there is a banking crisis and it plays differently among the financial centers than it does across texas and the rest of the

country. tell us how the financial crisis, the banking crisis we are in adjusts strategies across global investments? victoria: first i'm going to say unfortunately my cougars are no longer in the final four. but we will go from there. when we look at what is going on in the banking sector, we have to say all of this has tightened financial conditions. that is the point we are looking at here. when you have tighter financial conditions, which the fed has been trying to do for such a long period of time and has not been very successful, the banking crisis did it quickly. people are saying pending on what analyst you talk to, it could be from 25 to 100 basis points of rate hikes they have seen because of the crisis built-in. here's what we have to watch. when you have tighter financial conditions, we were talking about smaller banks, let's look at the senior loan officer

survey in a couple of weeks and see what is happening with lending. it is probably coming down. that will affect economic activity. that flows through to earnings because pricing power is gone. margins are going to get hit and that flows through the labor market. they want to see this happening. it fits into the story. that can change quickly if the data changes. tom: how do you change equity allocation? the charm of crossmark is you are working with real people, everybody is scared about the banking news we see. given some level of super restriction, how do you change your equity allocation? victoria: i guess we can talk about the dow because jonathan is not there. we have seen it down today but

we have seen the nasdaq and s&p higher because big turnover, people going into tech stocks, what we are doing is trimming some tech stocks because they have had this run and we don't anticipate we are going to see it because we don't think rates will fall. we will see them turnaround. we look at names with strong balance sheets, good business models. that is what we focus on. we have cyclical and growth too with some value names. it is when we hit the recession, which we would have said that is a in the year but now more summer. that is when you go a little growth your. -- growth. you look at the lower quality names that tend to do better. tom: what are the "lower quality names" in the dow jones industrial average?

victoria: we are looking at names that do the opposite of what we are talking about. that typically do not have the strongest balance sheet, the earnings are not strongest. we are not buying them so compliance would be an issue. tom: no one is watching. victoria: but i will say names we have been adding to, jp morgan because of what has happened, their evaluations look strong. some more stable names we have and health care names, we will, of those in go into some other names, looking at cyclical growth names once we hit a recession in the middle of the year. lisa: if the fed cuts rates, do you get more bullish on risk assets? victoria: it is interesting. it depends why we are seeing rates cut. if it is because we anticipate a recession we will wait longer.

if we are in a recession and we are cutting rates and it is start of the new sustained bull market, i think you can do risk assets. don't want to go into those names until we get to the recession. you don't get your bottom in the market before that. we need to wait and see. we are not saying 100% we have seen the bottom. so we are being cautious and biding our time. i would rather be late then get there early and not have anything. lisa: what is the best hedge against potentially higher inflationary environment for longer? victoria: you are asking a bond girl so i need to tell you, have diversification in your portfolio by adding fixed income and not just short-term. you're setting yourself up for reinvestment risk once bonds return --mature. add fixed income, the equity adds those things. tom: 30 seconds.

united health care with the giant deal, it takes them to 12% debt which many in the textbooks would say is under dented -- debted. they are up 25 .6% per year on their stock. will we see issuances by the quality names of the dow jones industrial average? victoria: i would not be surprised, especially if people anticipate rates will go higher. if they believe there is more work to do, we could see issuance and lock in lower rates. tom: victoria fernandez at crossmark global investments. it is a theme, when i was in stuart with a rum punch, six guys from goldman and three from morgan stanley, some buddy from crossmark, we are all hanging out. there is that united health care bond offer and i said this is the beginning.

every cfo has to look and go, we have got to get more bonds. lisa: you get volatility and benchmark rates become difficult. it is difficult to time the market. that's what we have seen with the new issuance market frozen. tom: is it unfreezing? lisa: slowly. people want to have more certainty at a time where there's little. tom: we have seen improvement in the tape. red and green on the screen, futures flat, dow futures --for victoria fernandez, dow jones industrial average futures, top 26. lisa abramowicz and tom keene, jon ferro back tomorrow, this is bloomberg surveillance. lisa: keeping you up-to-date with news from around the world, i'm lisa mateo. police in nashville, tennessee say a shooter who killed three children and three adults in a

christian elementary school may have been a former student, hale was 26 years old and identified as transgender and was shot by police. 30 nine died in a mexico migrant center fire, --did the fed do enough to oversee silicon valley bank? that is what republican and democratic senators want to know. they have sent a letter to jerome powell asking if the central bank exercised its full authority to supervise this bank and other midsize banks. google has asked a federal judge to dismiss that was government case over dominance in the digital advertising market. ugo argued in monday's filing that the case ignores the company's biggest. rivals and online advertising .

the ad business is one of the main sources of revenue. adidas and beyonce have decided to end their partnership. sales for the iv park line of -- ivy park line of clothing have been low. 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. ♪

a third kid. what if she likes playing golf? it's expensive. we're outlawing golf. wait. can i still play? since we work with emower, we don't have to worry about planning for a third kid. you can still play golf... sometimes. take control of your financial future to empower what's next. >> i don't think we are out of the woods. our position has been if the fed tightens aggressively it exposes the risk in the system and that

will cause things to break. we have had an element of that. tom: lisa hornby, she was outstanding on where we are in bonds yesterday. now 4.03, i thought she was on fire. lisa: a lot of people taking a look at what the market is pricing and saying bonds are usually smarter than everything else. tom: bloomberg surveillance in the seven :00 hour on radio and television across the nation, more news do the morning and interesting guests in the next hour to discuss views of forward. these hearings today, i'm sorry, i was wrong. i thought they were a nonevent. they've got some real merit. not yelling and screaming, there could be tension. lisa: there is punditry, but more important, to understand

what policy could emerge is going to be salient. tom: what will be interesting is the bipartisan effort in washington will not be mentioned. that is on china. bloomberg reported alibaba shares, the rising in the premarket, the chinese e-commerce giant announcing a historic overall splitting into six separate units. what is so important about this is a meeting i attended a lifetime ago, eight years, summer 2015 in a packed waldorf-astoria, jack ma announced alibaba. i have never experienced anything like what i witnessed of his coronation at the waldorf-astoria on the new alibaba. lisa: he used to be a rock star. it was tim cook on steroids. elon musk coming out and a

cheering crowd. how much things have changed, a very different china with a very different backdrop in terms of supporting businesses. tom: some perspective, our expert on china, stephen engle and hong kong. -- in hong kong. i want your perspective on the government, xi jinping and jack ma. is ma still part of the new alibaba? stephen: yes and no. he is the cofounder and i loved the story about meeting him. i have met him many times and he always talked, a bit of a chest puffed out about regulation and how he had to stay ahead of regulators. obviously regulators caught up with him in october or thereabouts of 2020, discovering

the multi-universe ipo for ant financial. the company has been obliterated. it has been sidelined, but alibaba has gone from an $800 billion valuated company down to 200 $20 billion. they are going to not break up, but be reshuffled. is this a government order? we don't know. will it unlock more value than the pre-breakup? pre-ant breakup? a lot of questions. lisa: there is an underlying feature, government intervention and businesses that used to be the darling. steve jobs -- he used to be steve jobs, but more so. he would get these rockstar events. what does this say in terms of

the climate and how quickly it is changing in modern china? stephen: the government is trying to say the right things. they are having a forum in beijing at the state guess tight -- guest house. tim cook, ray dalio and others are there. but a number of big-name ceos estate away, not wanting the blowback in the united states because of the relationship troubles between china and the united states. they're going to have their world economic forum that started today as well. they are trying to make the sales pitch back to skeptical global investors after three punishing years of covid zero and the simultaneous regulatory crackdowns on the platform economy and the private sector. crown everyday -- property, online gaming. they are talking up the private sector.

the government wants to support the private sector but we have rolled our eyes because we get tired of the narrative for three years of saying they want to do this and acting differently. i'm going to throw cautious on this. market likes this right now. they think it is an opportunity to reinvigorate and get the entrepreneurial spirit back into alibaba. it has been dwindled down by regulation and largess. lisa: what is the public perception to the intervention of the communist party of china in some of these previously much heralded companies that represented the mainland? stephen: there is a lot of frustration. i talked to my sources in mainland china. there is frustration. few people will go on record to say that but there has been a power grab and in the top echelon of leadership. xi jinping almost the absolute

ruler with his loyalists as his deputy. there is skepticism that the good old days perhaps for the private sector --we don't know. tom: with your expertise, behind the red doors in beijing they are recalibrating after the political moment of november. the coronation of moving xi jinping forward. we are hearing reports from bloomberg news and others that the belt and road initiative to be polite is struggling. how successful is the business, the finance, the chinese capitalist experience? >> it is struggling. coming out of covid zero, that estimated confidence and investment coming into china. perhaps it harmed in a tangible

way the confidence that others have in china. the belt and road initiative has turned into what some would say is debt diplomacy in countries that are having debt issues. the jury is still out on the belt and road. tom: one final question. is the new hong kong open for business? stephen: it seems like it. they are doing everything they can. we will have to see whether the ipo market is going to rekindle confidence in hong kong. that is interesting, i will come full circle on the alibaba story. the ceo says each of those six individual units will be able to do their own fundraising. if that means ipo, that means ipo. it will be up to the heads of the divisions. no restructuring like this could

come without the lessening of the central government, so ipo's could be coming back. tom: stephen engle from hong kong today. what is important to me, i was in washington and i had back to back orville schell and the giant jonathan spence at yale university. you look at the search for china. the classic textbook. this seems to be a continuum. another hundred pages of an eight hundred page book. it seems to migrate forward with a new always of this giant country. we talk about numbers, it is about the people. lisa: this used to be a nation that prioritized growth above all. it wanted to incorporate itself as a factor of the world into the global ecosystem and rise to be a world power. now the focus has shifted. we are talking about the inward

look about bringing up the middle class and coming up with policies that run counter to the growth profile and preeminence in terms of corporate excellence. tom: an example on the terminal, bloomberg reporting of china anti-graft agency to expect --inspect the major state owned firms, the continued experiment. stay with us, this is bloomberg surveillance. ♪

as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities™.

everything's changing so quickly. before the xfinity 10g network, we didn't have internet that let us play all at once. every device? in every room? why are you up here? when i was your age, we couldn't stream a movie when the power went out. you're only a year older than me. you have no idea how good you've got it. huh? what a time to be alive. introducing the next generation 10g network. only from xfinity. the future starts now.

>> the fed is aggressively raising rates. at some point they usually push the economy into a period of

deep slowness if not construction. >> they should pay more for equities now than a month ago. >> the bond work is dismissing the dot plot. >> i don't think the rate cuts are happening. >> we had a slow down because of the lag effect and now a banking crisis increases the risk slowdown will be faster >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. lisa: can we write the chapter on the banking crisis before it is over? good morning. jon ferro will be back tomorrow. for canoes may be. i'm curious -- i think news may be. i'm curious when it comes to the banking markets, crisis averted. tom: the tape is a yield back

about 4%. the two year yield. this is where all the emotion is seen and i correlate that with the west texas intermediate lifting above $69. there is a feel-good this morning. lisa: this is my debbie downer moment. am looking at a situation where there are two conflicting ideas. people are saying the crisis will not cause massive stress but the fed will still cut rates at a time when you have inflation running hot and economic data that is strong. what are people seeing that has to play out that is not yet? tom: jonathan ferro is not here to defend you. the parlor game is overplayed to make money or opera --or guess what they fed is doing. the top of the market in q1, no

recession, buoyant gdp, a better america and in equity market that will go down even though it is two stocks, microsoft and apple. the basic idea is we are still data-dependent to the may 3 meeting. is there any idea they could raise rates at may 3? lisa: i love him and can't wait for him to come back but i don't need him to defend may. but people are saying this guy is sunny, why do you think it will fall? others are saying it is the first crack, or one of them that is going to hit in the more significant way. tom: i did not look at the definitive money market screen of bloomberg, with a yield measurement screen from 20 five years ago, it is the go to.

the answer is well above 5%. lisa: you pointed the two year yield, that is a place to watch. up marginally, 4% across the board. 10 year yields up 3.5 4% --three point 54 percent. s&p futures basically fat -- flat. can we say the all clear, rally and get a sense that the fed will cut rates and we will still see growth continue? the soft landing people say seems unrealistic. tom: good morning to you. adam posen was with us yesterday and one reason we had him is because dr. fuhrman of harvard, teacher of a definitive economics course, it was on globalization and all of the

dynamics out there. we have a guide to start us strong. why don't you bring in bradley rogoff? not kenneth. bring him in on this bond mess. bradley: i had feldstein at harvard. tom: i wonder what he would say. he would say we have to clear out the losers. riley: probably. tom: we are not doing that now. lisa: how do you make sense as the head of research at barclays, how do you understand if the market is wrong to price in rate hikes in disinflation? bradley: i will start with we don't agree. could there be rate hikes --rate cuts in 20 20 four? sure. what we think there will be one more hike this summer.

it is hard to marry where equities are, which don't seem to go down, and you look at what the market is pricing in terms of eventual cuts. you were alluding to some stuff around banks. this is a banking crisis. but the reason we got there is different than a lot of other banking crises. it was not because of bad assets. it was because of duration more than anything. i think there is a distinction between that. if you had to choose your crises, i would rather have this. lisa: but there is a distinction between the idea of bank failures and credit materially constrained and more suddenly than in the past. how do you draw the distinction and price that into a market looking for 2008 or all clear? bradley: that's the difference. right now we can say we are

clear of the crisis we through, especially the last couple of weeks. but it has consequences and they don't have to be 2008. they can be slower growth. whether we get to a modest recession in the back half of the year or next year, or low, which we are close to, those have a big impact and are not consistent with where equities are today. tom: a guy emailed who is watching this on jetblue, thank you directv. he has a question, we head low rate free lunch for decades and now we are back. is this rate regime behavior forward like what we studied, or is it new?

bradley: we don't have to go back that far. we can go back if teen years, more than 15 years ago and have that. the difference is that prior we did not have the low rate regime. i don't think it is just that we have this, more normal as opposed to high, rate regime. you have the period of low rates, it leads to assets and fixed incomes pricing at a substantial discount. that leads to the disconnect that led to problems we saw in banks. i think a low rate regime is causing the problem. tom: the financial system, going back to the glorious volume on the american financial system and crisis, i have a guy on an airline watching this. what signals is the fear out there. should we fear the new rate

regime? bradley: i don't know we need to fear the current regime. they do have some room through non-extraordinary policy to have an impact if we get to a place where inflation has come down, this year or next year and growth has come down. you would almost have more fear if this was happening at rates were at zero. tom: this is the heart of the matter. so many younger people did not study martin feldstein a million years ago, can we celebrate that this is maybe normal with proper incentives of capital versus the comment on zero? lisa: it is too soon to tell. to your point, this is key, it is one thing to have a normal rate of interest. it is another to do it after

years of 0% rates and inflated assets that caused leverage to build up at a rate that might be infeasible. how do you discern something that will give you income versus something that will cause higher defaults and create a higher risk premium? bradley: that's interesting. i am sure you have a lot of people saying how are the fed hikes going to impact the economy? the answer is maybe the consumer. higher levered assets in credit. the world i spend my time in. it was the safest assets that led to the first part. that is what you are getting two. there will eventually be some impact on those risky assets. lower rated, high-yield bonds and all those. but like 2020 is helpful -- it is hard to say looking back jack

-- back --but there is not as much leverage in the system. having the preview, i don't think it will be as extreme. lisa: this is a big question. is it perhaps froth we have already seen pushed out, or is there another shoe to drop? where would you look? bradley: it is how far up. there will be impact in terms of banks lending less, that has an impact. i think we come into this fundamentally in a good spot so we don't expect normal recession default rates, 10 or 12% that you have seen, probably half that. there are other areas. if you think about the increase in rates, commercial real estate comes up frequently.

that is why i came into the studio. that is where with cap rates, they have to move when rates move. i think there are other areas and that has an impact. tom: 30 seconds left, a perfect time to dive in. commercial real estate is challenged. bradley: it is. we are focused on the office, we think the peak to trough could be up to 30%. tom: thank you, bradley rogoff with barclays, a theme for the summer as well. lots of people watching commercial real estate. red and green on the screen, this is bloomberg. ♪ lisa: keeping you up-to-date with news around the world with the first word, i am lisa mateo. in nashville, tennessee police identified person who shot and

killed three children and three adults at a christian elementary school, audrey hale described as a 28-year-old white nashville resident identified as transgender. she is believed to be a former student and was killed in a shootout with police. at least 30 nine migrants have died at a fire at an immigration center across from el paso, texas. this city is a crossing point for those wanting to enter the u.s.. regulators are investigating managers conduct in the silicon valley bank and signature bank failures. the vice chairman for supervision called the collapse a textbook case of mismanagement. the fdic chairman testified today. some banks and france had been raided by the financial prosecutor. it is an investigation into tax fraud and money laundering related to dividend payments.

among the banks searched, the hsbc. they could face fines more than one point $1 billion. a structural change at alibaba, splitting its business into six units, each will explore ipo's or fundraising when the time is right. they will encompass e-commerce, media and the cloud. 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. ♪

the new chase ink business premier card is made for people like sam who make...? ...everyday products... ...designed smarter. like a smart coffee grinder - that orders fresh beans for you. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on purchases of $5,000 or more... plus unlimited 2% cash back on all other purchases! and with greater spending potential, sam can keep making smart ideas... ...a brilliant reality! the new ink business premier card from chase for business. make more of what's yours.

>> markets are pricing three rate cuts, i don't think that's happening. it is hard for me to see the

banking crisis last another month and a half. at that point, -- tom: win thin there. he was outstanding yesterday, a view of higher interest rates and the overwhelming reality, not so much higher interest rates but the speed of movement. we have seen that in the last two days moving on to four .02% in the two-year yield. it is a yield structure of lower highs. we have by no means broken out into a yield recovery. lisa: north of five percent yield seems far away when people are around a 4% range. we have not talked a lot about jobs in the labor market. that is important as we talk about the push in the u.s. to bring business home,

particularly in the semiconductor industry. i am curious to hear from people who are trying to hire and expand at a time we have a tightness in the labor market. gregg lowe is going to be meeting with president biden who will visit his semiconductor manufacturer in durham, north carolina. i want to start there. we talk about the initiatives to bring semiconductor and tech manufacturing to the u.s.. how difficult is it to hire people? gregg: first, thinks for having me. we make semiconductor chips using technology where there is a significant transition from silken to silken carbide in the industry -- silicon carbide in the industry. we are the future of the technology. scientists and engineers are excited to come on board. we are also doing -- we bring in

interns and we show what the technology is like. it has been positive. from a labor perspective, the folks operating the machines and our factories is more difficult. but we try to increase--to create an environment that incentivizes people and makes it feel like they are making an impact. that is how we are dealing. lisa: how much are you counting on immigration or a sense we will get an increase in the labor force to ameliorate that when we hear such a push to bring business home and manufacturing back to the u.s.? gregg: what is important is developing a pipeline of potential employees. you do that by motivating students to pursue finance --science, technology, engineering and math. we do that through scholarship

programs, paid internships, things that incentivizes students to study the technology areas that are important to us. if you can increase the pool, you can increase your workforce. i think the other thing that is important is that women and minorities are underrepresented in a science and technology. have a push at the high school and college level to encourage more women and minorities to join and study engineering and math. our intern program, 50% are female and greater than 50 percent are diverse. having that as an extra effort increases the pool of potential employees. tom: you know if the mathematics. there is a vector of the value of a manufacturing operation and

the government subsidies in general given out. there is a function of when those lines cross. at what point is breakeven on the project the president will visit, one year, five or further? gregg: the demand for our technology is exploding. we have shown investors that our power device business will have a compounded annual growth rate through 2027, 60%. the payback is shorter than you think. especially when you get the incentives we are expecting for this program, the payback is inside of five years for something like this. when the demand is going off the charts, you can fill the capacity quickly. our new york wafer -- we put a

shovel in the ground in march 2020, you're starting to open it up, it is essentially sold out. the world's largest factory. lisa: all of this comes in the face of calls from market prognosticators of recession. the idea people are going to slow consumption. how much does that contrast with what you are seeing on the ground? gregg: we have a secular growth story that is going to be unstoppable. what is happening is the adoption of electric cars is happening at a faster pace than anyone anticipated. the adoption of silken carbide -- silicon carbide in electric cars is happening. we don't see the growth rate slowing. silicon carbide enables two things, the court will go further with the same -- cart will go further with the same

battery, and faster refueling. i can charge my car in 20 minutes and get 250,000 --two hundred 50 miles of range. tom: gregg lowe, we greatly appreciate you. dovetailed with the most talked about essay and it is not that simple. people want simplistic analysis and it is off the mark. lisa: it is interesting to hear about the businesses. greg was talking about the resilience of his business. you wonder about the hiring prospects for these companies trying to expand at a time when it is difficult to hire, particularly in factory jobs. this has been a concern, we have this plan to expand our tech manufacturing that we don't have the people. tom: i went with dr. pozen yesterday. opposed to what we heard there.

we mentioned william klein, a huge influence on me. he is with the peterson institute where pozen is. he emphasized that looking at a bipartisan or two part analysis was naive. if we are putting the intel factory plan in the u.s., it sounds great. what it is not just about the factory in china. bouncing off that are the adjacencies, including latin america and europe. there is a huge issue that makes this discussion more complex. certainly to create jobs in the carolinas is a good idea. lisa: taking a step back, we were talking about secular increase of inflation, that would be sticky. people are saying it will go down by itself and we missed it. it was just a distortion from the pandemic. that is the angst underpinning

business decisions as well as what you are seeing in markets. this is a tipping point. we are not sure what we are going to because this is a regime change. the data is not giving us clarity at a time of rate hikes. tom: the great mystery here, i'm not talking about where is my portfolio in three years, i'm talking about someone's lifetime or our kids lifetime, is the technology overlay. what greg low --gregg lowe talked about is part of the overlay. i don't want to editorialize. but john would say i am. someone will be a technological winner and loser in america and the issue is how to drag those losers along and allow them to

prosper in the new america. we don't know where we are going. lisa: and we don't know what the technology will be. you asked whether the primary market and credit was still closed. you actually see about 13 companies coming to market. tom: i will take that. lisa: we will carry that coming up on the open with the cofounder and ceo of--we also have the ceo of power stock capital --our sock capital. this is bloomberg. ♪

tom: jonathan ferro, december avoids in tom keene, jonathan ferro on assignment, who may be here tomorrow and we are looking forward to it. getting ready to drive the conversation forward, a little red on the screen, a little angst. the two year yield, four point 00%, 10 year yield three .54%. we're going to take inventory of the economic statistics and get a brief on the week with michael mccabe. >> this is a week of tertiary

indicators. we're not getting a lot of stuff that will tell the fed a lot. but up in the month of january. it does suggest there is stuff to clear out but do we see any prices dried -- drop because of it? that will be the question. after a .3 decline, this is probably related to china, the disruption of the trade flows during that time period. we've also seen the trades balance is out, negative 90 $1.6 billion, up from -91.1. a little wider trade deficit for february, a little pressure on growth. tom: what does that mean? exports takeaway imports, which means there is also a domestic measurement of the economy.

how is the separation? where does that stand? michael: if you are buying overseas, you are not buying stuff made in the u.s.. it is hard to tell, either because the economy is strong and people want more stuff in the u.s. can't produce it or because the u.s. is not making's of people can afford and they want a different mixture. that is something economists try to figure out going forward. this is a bit more about banks and fed speak. even for fed speak it is not -- tom: he has been doing this so long, we can rip the script. but let's go to the hearings we will see today. what is mr. powell's best outcome of the hearings? michael: probably if the vice chairman can convince them along

with the fbi see and treasury representatives that congress should look at and overhaul of the insurance limits and the law that enables them to bail out -- excuse me. tom: let's have a group cough. nobody has covid. michael: there concern about whether the fed and fdic overreached. they are using the powers in the law to do what they felt was the best in the short run because they could not know what else was going on. it is time to then think about how you manage the move --u.s. system. this would be a change to ensure that all deposits, it creates moral hazard questions but it is something only congress can decide. that would be the most important

outcome here. tom: michael mckee with us, he says tertiary data, i would say we see it later. michael: the next fed meeting is not until may 3. this will not make a lot of difference. tom: we will wrap it together with jay bryson of wells fargo. thrilled you could join us. so many are looking at the non-recession call with the 3% real gdp growth. give me color about what the next corridor or than rest of the year looks like. jay: our senses that the u.s. will be in a recession by the third quarter. it is a slow moving train wreck, not anything sharp. but we have rates that are elevated and you have the lag

effects of that and some sort of credit tightening will be going on in the banking system given what we have seen. those put headwinds on the u.s. economy and causes growth to turn negative in the third quarter. at this point we are not there. tom: can we say there are two america's? there is an america prospering or not and recession, evident by windows of consumption we see, but is there another that is not prosperous? can you suggest that there are two americas in a disparate economy? jay: that has always been the case. who gets hurt most during slowdowns or downturns? blue color workers --blue collar workers.

in the worst part of a downturn that we saw in 2010, unemployment rate goes up to 10%. have 90% of the workforce still working in that environment. we always had that. if you look now, what sectors are weaker would be manufacturing, flat at best. housing has taken it on the chin as well. the service sector is holding up. tom: jay bryson and michael mckee in the same set is good. he will frame out what you write about, the crazy dots. you know i don't like them. jay bryson will comment. how unusual are the dots? mike: people commented on 24 and 25, they are dispersed. that is not unusual especially for two years out. but do you think the fed like

most people is uncertain about what will happen over the next two years and we can't read a lot into what they are telling us about what they think will happen? ethan: that -- jay: that is dead on. the most recent statement, they think what is going on and credit markets will have a slowing effect but it is hard to tell what. for each of the dots, there is a big confidence interval, an area of uncertainty around each. each member has to put down where they think the rates will be at the end of the year. but for all of them, given what we are going through, there is uncertainty around each dock. you see it next year with the wide dispersion in terms of the end of 2024. >> with the dots, they said we

will have to raise one more time. do you they get there? i was talking about how may third is next meeting, a lot of data to go. will he get a rate increase or is the data and your sense of the economy leaning toward it not happening? jay: i think it is predicated largely on what happens in terms of markets in the coming month. i think at the end of the day, with the fed feels confident about is they can handle what is going on and if everything calms down, by the time the meeting rolls around -- tom: i guess i lost some audio. we're trying to figure that out. i believe we lost audio with dr. rice and of wells fargo. we will continue to welcome all of you. i will go to you mike mckee, he taught in alabama, to the east

is the georgia school of the legendary richard timberlake. it is almost a school of thought that reaches out to the dallas fed. i wonder if the georgia school would suggest the dots have been efficacious. have a not? -- have they not? >> people in academia will debate it. but the fed argues it is because it gives forward guidance and puts context around the forecast. tom: have you seen them be efficacious or are they part of the parlor game? >> i can't say i am a big fan of the dots. when there is a full complement of fed officials, there are 19 dots. with the market tends to take them as one. the consensus median as a fed

forecast for what they're going to do. it is not really that. it gets the fed in trouble and we have talked about this, you get later into a quarter or a quarter after, they have put out an dot plot and everybody says the fed is behind because they think this. their views have evolved, they just have not put out a new dot plot. tom: we have lost him on technical difficulties and we will continue with mike mckee. friday is important. let's go back to mckey 101. boring cpi, at the grocery store, inflation, maybe producer price index. is the price of used cars, real estate is the worst it has ever been but the pce deflator. what is it? mike: the inflation numbers the government uses to adjust gdp for inflation.

to take out what price changes mean for that. it is the fed's favorite indicator. they feel it more accurately represents what people spend on a regular basis. that is what they tie their two percent target two. talk about the cpi on a year-over-year basis, but the pce is five .4% lower than cpi but still too high for the fed. that is what they are looking at. when we get it friday, that will be something they want to see. tom: pce, core deflator, surveyed to be unchanged. do you suggest we could get that back to two? or is there a new set point about that? -- above that? >> the feeling is they have to

try or they lose credibility with the markets. can it be done? it will depend whether the economy has evolved back to the old normal where there is a certain amount of inflation. it could be 3%. it has been said to percent was not a magic number, just the one most of the world central banks have landed on as a decent figure to aim for in a world of zero interest rates. now we are not there. tom: the first economic data of the week. we will continue with that on friday. two year yield back under 4%, 3.9 7%. stay with us on radio and television. this is bloomberg surveillance. ♪ lisa: news from around the world, i am lisa mateo. police in nashville, tennessee say the shooter who killed three children and three adults at a

christian elementary school may have been an x student. audrey hale was described as a 28-year-old white national resident identified as transgender who was shot dead by police. did the federal reserve do enough to oversee silicon valley bank that collapsed? that is what republican and democratic senators want to know. they sent a letter to jerome powell asking if the central bank exercised its full authority to supervise silicon valley bank and other banks. unions in france are holding another day of strikes to protest the unpopular pension reforms. new leaders are calling on the president to negotiate. thursday, protests ended in chaos with some demonstrators fighting with riot police. google has asked a federal judge to dismiss the case over dominance in the advertising market. google argued it ignores the

biggest rivals in online advertising and it calls for raking up the ad technology business, one of the main sources of revenue. 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. ♪ what does it mean to be ever better? its your customers getting what they ordered when they expect it. discover how ryder ecommerce makes your customer's experience ever better.

>> we should have more positive equities than a month ago. this is scare rather than crisis

accelerates everything we were expecting. if growth is going to go faster, inflation will come down faster, interest rates will come down faster. tom: leading our coverage yesterday, a global market strategist on his enthusiasm for the equity market. it is off our radar in the bank crisis. annmarie hordern and joe mathieu tonight on balance of look for that. very much looking at the effect in these hearings, may be the first salvo of what we will see for months. futures negative eight, dow futures -40. i am member of the cfa institute . i am biased about the glory that comes out of charlottesville. i have always preached that we need cfa level four. it is three tests, one test level three -- level two, we

need a level four exam just to increase the pain. what we know is it has evolved to be a world exam that had to deal with a pandemic. the news and the results that catherine doherty reports is a pandemic recovery in the success rate of the initial cost rates. getting near the classic 40 1% level. i should mention the raging debate in the cfa, it is a program because of the length of studying and maybe what we will see down the road. great to know there are so many people that have participated in the program. romaine bostick is involved. many others as well. so it is outcome of the pass rate is taking up, always constructive. not taking up is the success in crypto of the dominant player, binance. i started screaming about two :00 a.m. this morning, get katie

greifeld to explain what i knew was coming and everybody said no. the u.s. authorities are going after this dominant global player. why is anyone surprised? i have been waiting for this. katie: you have been asking for months and i have not had a good answer. but now we deal. coming from the cftc, this case is about letting american customers use and trade crypto derivatives. were not supposed to be able to do that if you are an american customer. that is at the heart of the case. it was instructing americans to set up vpns to trade derivatives on the binance platform not based in the u.s.. there is also a second part, directing vip customers which you can read as big market makers, to open accounts under

the name of shell companies. the cftc said there have been looking at this since 2021. tom: are they front running the sec? explain the dynamic of cftc versus sec in this crypto player. katie: i was surprised when i read that headline. basically because this is about derivatives, the sec has been looking into binance, but specifically about whether it supported the training of unregistered securities. because it concerns derivatives chiefly and what american customers are doing, that is why. tom: so binance goes --we don't need american customers. do they pull away from the united states and canada? katie: that is the narrative,

where does this leave the crypto industry in the u.s.? we could see binance continue to focus on overseas operations. but part of it is if you think about the large market makers, institutional market makers, they are based in chicago and new york. at binance you want those on your platform. tom: who is market makers? katie: jump has had a lot of forays into crypto. it is not specific to this case but if you think about the heft of market-making institutions, what powers the is equity markets and the crypto markets, and a lot of them are based in the u.s.. tom: i would have said with these headlines, bitcoin would have gone down x amount. has it surprised you? katie: it went down a little yesterday. but we are at 20 7000, as 15,000

months ago. bitcoin has been resilient. have seen liquidity drop-off. there are firms that track this. you can see that coin liquidity at 10 months lows. we are seeing this resilience but that might be because no one is -- tom: who is on the bid? remaining on twitter --crypto skeptic on twitter has had strong language. who is on the bid? katie: probably not institutions. it was the institutional embrace of crypto, wall street, now i think he would be hard-pressed to find a corporate treasurer picking about adding bitcoin to their balance sheet. you do have these professional money managers and asset

managers thinking about how to offer access to crypto for their clients. but the big wall street embrace of crypto has gone away. you are left with true believers who bought bitcoin five or 10 years ago. lisa: -- tom: you're telling me 16,000 to 20 this --27 thousand is a true believer bounce? katie: that was a lot of retail coming in and a lot of institutional investors thinking about it. the promise that you had people thinking. tom: the bank of international settlements is adamant. they say that is what it was. we are not there anymore. katie: we are not. tom: now what? katie: when we see retail comeback, when that happens, i don't know. it is a macro asset.

we went from 69 down to 15,000. this is a good measure of risk appetite. the line on the chart was what happened to tech stocks but more dramatic. tom: you are telling me bitcoin is trading off the nasdaq 100? katie: not a direct link but in terms of the risk sentiment. you often see bitcoin rallying when tech stocks rally. tom: but you are telling me liquidity is low. katie: liquidity and volume is low, but more often than not, this asset class trades alongside tech. tom: i'm blown away by the resilience given the binance announcement. katie: you could say the same about the nasdaq, never is

happening in the banking sector, they have been rallying. big tech has become a haven and you have bitcoin rallying in light of whatever is going on in the industry. tom: is our global team reporting binance response? is there a news element? katie: it does seem binance is going to fight this. they have talked about how they don't shy away from challenges. expect a response. it does not seem they are just abandoning the u.s.. tom: we're not going to abandon the story. it happens to be tuesday. binance en bloomberg crypto at one :00 p.m., with matthew miller, kailey leinz, maybe she should have a crypto moment. i have been looking at this, a story worth following. in the final minute, remember

that michael mckee exists. we are launching an economic data, tertiary data until friday. we will have to watch the data. we are still data-dependent and part of that will be deposit flows from a challenged american banking industry. we are going to see that in the banking hearings. not data but the emotion will,. i urge all of you within global wall street to stay attuned to not the politics in the back and forth, but the actual observable data on a data-dependent american banking industry and as we always do on surveillance, to look at the data dependence of the american economy and around the world. special thanks for stephen engle, late in hong kong on alibaba. future's negative eight, dow futures -41.

we had to do that for the tory a fernandez. the vix 20 one point 07. this is bloomberg. ♪ ree with a partner that always puts you first. start for free at godaddy.com the new chase ink business premier card is made for people like sam who make...? ...everyday products... ...designed smarter. like a smart coffee grinder - that orders fresh beans for you. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on purchases of $5,000 or more... plus unlimited 2% cash back on all other purchases! and with greater spending potential, sam can keep making smart ideas... ...a brilliant reality! the new ink business premier card from chase for business. make more of what's yours. as a business owner, your bottom line is always top of mind.

so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. - [announcer] imagine phaving fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music)

lisa: a bit of softness range bound as we count down to the open which starts right now. ♪ >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. ♪ lisa: coming up, stocks on hold and treasuries extending their declines and traders are trying to break