x every day that goes by we get more stability. washington wanted to stop. i think borrowing any other shocks, it is behind us. >> we have repriced a bit. everything is working well. >> the underlying strength of the economy and corporate balance sheet is with us. >> we are in a bear market, and it has gone on for a while. >> let's be clear -- this has been the equivalent to tightening. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> what a difference of bull market makes. live from your city, good morning.

for our audience worldwide, this is bloomberg surveillance. equity futures are elevated if .4%. the headline belongs to the nasdaq 100. >> is 20%. the lows of last year. it's able market. it's up against 14%. they are poised for the best quarterly performance in 2020. is this a whack-a-mole? you sell off and go buy it. >> 18% year to date on the kp x index. look at the homebuilders. we are squaring circles today are -- together. the homebuilders are 30% down. what do the homebuilders know that banks don't? >> they've simply lost value, see you go into them and buy them at that point. there are no knives. it will not cut your hand when you fall, but a lot of people think the housing market has

bottomed, and we have seen this trough in terms of commercial and residential. me go up. i even got a call the other day saying are you planning to sell your home? we've had a lot of interest. as a tight inventory. >> there's that kind of attitude. >> i've not gotten one of these in years. just give you a sense. >> rate cuts are coming around the corner. >> go homebuilders. >> a hundred basis points. it is not forecasted whatsoever. it is interesting they've come out with a private chat with chairman powell read they've indicated what were hike this year. my first take was that they've talked about the doppler. it's the -- the dot plot. >> let me tell you. we have private information. they're going to potentially raise rates. >> we will get data leather -- later. they are going to talk about that, but we expected to come in sub 200,000. we went to the kennedy yesterday, and we went week -- we need to return to it.

>> april 12, cpi. nobody is talking about it. no one is talking about this at all. so when people start talking about the spread between the federal reserve and the market, there's a will more hike, and were saying hundred basis points of cuts around the corner, what it will resolve the spread, it is not the economic data. what would it be? >> i was wondering the same thing. especially we got european data showing spanish inflation came in substantially lower than expected. does this mean they will back away from the rate hikes? >> not at all. it is flat. >> people are not responding to the economic data. it is still a story as we expected to get a strong labor market. >> at what point do they show the cracks to trade on that? >> i keep saying it you keep saying it do. are we waiting for a senior loan officer opinion survey? >> yes. 100%. >> you have to wait until may 8

to get an understanding as to what is going to happen here. >> if there is any other data point, it seems to be a suspicion of people, they will trade on that, but until then, it will be may 8. >> until then, will be looking at tea leaves and hearing reports from banks, and they will say the i word, and they'll say oh my gosh, it's all clear. or there is a banking crisis continuing, they will trade on that. >> i mention the bank earnings from the first year of jp morgan to the bank or -- earnings. equity futures at the s&p 500 is positive five .4%. just to kick off the trading day. it's a notch higher. a little bit higher. not by much. 35677 on a ten-year. on euro-dollar, plus two tens of 1% in the euro's favor. a strong euro. >> a weaker dollar. that is been a trend. a persistent trend. we are talking with mark mccormick. this is the u.s. losing its exceptionalism, or something larger. we are watching those jobless claims. i was looking today at the unemployment rate going back to

2007. i understand that 2020 distorted it, but how quickly does the rate creep higher? >> unless 2020 has some time, it makes me wonder, at what point do we just say this labor market is robust and not distortions. is not wrecked data. this is something we are just not seeing in terms of the week as we are all expecting, and that his wife this weekly data is getting more and more interesting. perhaps we'll get some interpretation. this includes richmond threat -- fed president tom barkan, susan collins, and neel kashkari. what can they possibly say? how can they illuminate the situation? >> they were on the money for much of the year. they came out at the start of january at 540 on fed funds, and they waited. now, listen to him. he is now 540 on fed funds anymore. there's a real belief that what we are seeing in the banking system is a set sit do for rate hikes. >> we haven't seen this yet.

that is the problem. we have no sense of what this will do, so how do they get insight into what they are looking or to confirm the belief that this will cause a tightening in credit conditions. this is a messy part. the treasury secretary is speaking at the national association for banks and business economic conferences in washington dc. she has been interesting recently, and i am curious to hear what she has to say about the economy, about the state of banking, and the credit tightening that she sees, what she is concerned about, because she has a better look at anything. >> why do we call this a special assessment on the industry? what is this about? >> this is not unprecedented to

have a special assessment. >> let's go around the banks and do this whip around. >> is taking a hat. it is the least politically vulnerable for us to bake and make money. here. you should pay for. >> you have benefited from this, arguably. >> so come on and give us $23 million. >> make it sound easy -- make it sound easy. most of this is solvable. don't know if i would use this as a crisis. we should move on. >> is in tokyo. >> honestly, a lot of people have come on said this. we just don't know. we are getting a little concerned about who to believe. >> my crisis is if you have to stay up on a sunday evening, and all of the regulators are getting together because banks are failing, i think that means the definition of a crisis -- if you do that on one weekend or two weekends, with that, the cio of take asset management will join us. good morning. welcome to the program. always great to see. that rally we've seen in the nasdaq, it is up more than 20% from the december low. is at a rally you can get behind? >> not yet. we think it is really predicated on the movement of race and being a primary driver right

now. we have a great opportunity to learn more about the tech sector in the next upper -- couple of weeks, and what we are looking for is evidence of companies who are not hunkering down and scaling back on. that is just information we think will be quite fluid, so we think that will be a push toward cyber. we have a push towards big data. it is certainly still there, but things like dram, you've done a good job of covering the demand for chips, and other software services, so if we see the capex push really stabilize or improve, we are not buyers of technology. >> you just said something interesting. the rally that we've seen is predicated on the idea of rate cuts. is that the entirety of that? a lot of people would disagree with that. >> i don't think that's the entirety of that. there is some degree of that trade from homebuilders not really rallying on much of the fundamentals, but rallying. we think it is too early to call this a 2020 playbook read rates

declining for the earnings cycle. it picks up, but there is a partial explanation. we do have a downdraft, that we had across not just big tech, but also some of the more a cyclical components intact. those speak to asset allocation grab as opposed to being a fundamental basis behind the move, so that is a partial explanation, but not a full expiration. >> how painful is it to be bearish in anything right now? >> i think it is like a plea book has been the s&p 500. you buy s&p 3200, and you ease up if you're in position. it is the same range on the 10 year. i think for us, as big a group as a has-been, it's been cautious, and we've been up in credit quality, duration. that is really work read i think some of the esoteric parts of fixed income, like mortgages,

that's worked for us as well. but i think this is an area where you have to manager tracking, meaning in a very trending market, despite all of the chatter back and forth. 3800 and 4200, that has the blueprint. getting outside of this to the asset allocation of the environment, that is the playbook to run with right now. >> we are trying to work out how we break things out. how we break out from that range. beyond that, most of the spread between the fed in the market will resolve it one way or the other. we spent the last week, and you have as well. what will resolve that? is it the traditional economic indicator? is it the senior loan officer opinion survey that we are waiting or on may 8? thank you. which one is it? >> right now, the financial sector is a primary focus. secondarily, it is the economic data. from chair powell, the economic

data still matters, whether you are looking at daily news flow that suggests otherwise. >> this is not only one of the things to focus on, but 75% of the job openings right now are with companies below 250 on a headcount. seeing what credit flow looks

like to those institutions, seeing what an fip survey data suggests for keeping employees in seats, that is the key. i think it will be interestingly enough, the last resolution between the fed and the market was one by the fed. we told you, inflationary pressures are going to be high. they were. the fed said, there is a bias towards persistent inflationary data. it is something to pay attention to in addition to the financial sector. we think that while the focus is on the financial sector, economic data is a very close second. >> thank you. as always. good to see you. u.s. bank acid management, may 3. that is the other day.

the fomc meeting. the question we keep going back to is will we have sufficient information by the time we get to may 3. for the fed to make a column where the other. >> the fact that he pointed out that the fed is been right in the market has been wrong, there's always this mantra in markets that the markets are correct, but they are looking at data, even if the headlines are not. the pce data we get tomorrow might quite interesting. at a time where we continue to get relatively hot readings on inflation. >> claims, payrolls. shrug your shoulders and move on. >> unless it is triggering things. >> will be joined later to talk about that. we will be around the table new york in the next hour. for new york, good morning. equities are higher. this is bloomberg. >> keep you up-to-date with news from around the world. on the first word, i am lisa mateo. >> the wall street journal is concerned about one of its retort -- reporters who has been detained on spying allegations. according to the security service, an american was detained in the city of yucca terran bird, and he is expected of espionage in the interest of the u.s. government. the u.s. is said to be collecting information about the russian military industrial complex. in kentucky, to u.s. army helicopters collided during a training exercise your fort campbell. governor annie scheer said fatalities are expected. the helicopters are from the 101st airborne division. the fbi see is having big banks cover $23 billion from the recent bank failures. bloomberg has learned that the special assessment to shore up a 100 billion dollars in insurance funds. the regulator will spare small

banks. the president of taiwan made a stopover in new york, but there was a test for the world, they made further estimates for china. beijing said there would be a severe impact with washington. the u.k. is set to outline a strategy to speed up the deployment of renewable power and captured carbon. president biden inflation reduction at. the measures in the draft document seen by bloomberg news will show little in the way of new spending. global news, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg.

>> any time you have a bank failure like this, bank management clearly failed, supervisors failed, and the regulatory system failed red a tearing approach make some sense . it doesn't need to be the same role for all banks. but we do need stronger rules for firms of this size. stronger rules for capital and liquidity. it will be important. >> the federal reserve over the last couple of days testified on capitol hill. you heard a line. bank management clearly failed. super vials failed. the regular tray system failed. take management failed. they lost the job. supervisors failed, and what will happen to them? specially because a lot of people question whether -- you've asked this question. is it a regulatory issue or enforcement issue? it is a failure to act under provisions where you have the

capacity to act and the information to act. how do you solve this problem? >> you've mentioned this. he's probably not the right guy to be on capitol hill over the last couple of days because this is a really good story. xo want to hear from randy. >> and chairman pal. what are they going to do. they have an investigation and they will release in may. until then, all of the proposals we are hearing, how much are we basically windowdressing to say we are on this before we understand what actually happened and how much has anything actually gotten off the ground versus papering over the issue with a feeling that we are on this. >> we have joked that if you have a couple of days are going to the equity market, this will move on, it is like a crisis is over and what a difference a week -- week makes. we've asked this question a few times. do we need to see legislative action to resolve this? you need to change the insurance caps for deposit to address this with >> you don't hear that being asked this week. >> just wait. right now, the big banks are on the hook to pay $23 billion.

let's see what the responses. there is a renewed push. let's hear what the solution is to mark we need to see x, y, and z. so they are just going to get strong-armed. >> i don't know it not sure how they can push back. we can have that conversation in a minute. i'm not sure what power they have to say no. they're not going to do that. >> what is the liability? is it free money for the government and they can do anytime they want much more >> and think any of this is the. i think we will have to pay to burn four. >> it will get baked into fees and things of that nature, but where does that come into the conversation? this is one of my questions when i heard it it is easy to say the big banks, you don't have $23 million. there are consequences it >> no free lunch. i was distracted. amh came down the escalator. in new york. i didn't know that. there would be a look that. s&p 500, lifted it market. basically, unchanged on the tenure.

357 34, the fx market has spanish inflation data little bit later did the euro stronger. >> people point to the core being hot. it is entirely due to energy, but i wonder how much that will start to lead the index lower. considering before we have higher energy prices, there is a percolating effect and the rest of the economy. do they have the reverse of when it comes down. >> let's go back to the banking system joining us on capitol hill, mara rodriguez. the principal at mrv. let's start here. what did you learn of -- or last couple of days. >> i think we really learned that history matters, and this is what happens when we have such a significant decline in history majors people forget things. they forget that basic interest rate risk management and liquidity measures are -- a part of being a bank.

they are certainly going to have some changes in terms of supervisory and on-site examination processes, but there is a lot we don't know. where is craig becker. he needs to be there. he is where the buck stops. where were the word members #we haven't heard from any of them. because of the one source was to provide oversight. it is not the fed or the california regulators did they run the banks. we are still missing the whole range of cast of characters who are really responsible. >> in the meantime, the number we purchased $23 billion. it is not taxpayer funded bailout. it is jp morgan funded bailout. how much is there going to be some sort of consequence to the banks having a special assessment that leads the fbi see whole? >> i can't imagine jp morgan, -- morgan, all of the systemic banks, they will be happy about this. they are not the problem. they are very liquid. they are well-capitalized.

they certainly don't have concentrations of deposit in the way the s&p did. the other regional banks are certainly going to take a hit and i don't believe the community banks will. i think there is no political will on either side of the aisle had not community banks, but that of the day, it will be the american consumer who is going to take a hit because eventually, when it rises for the banks, it will get passed on to depositors. that is not going to be any kind of free lunch -- launch for the american with nothing to do with svp's horrible mismanagement. >> you talked about history and a lot of history managers it in the wall street journal, they wrote a column about how this isn't the same kind of 2008 financial crisis where it happens all at once and rather, it is a slow moving crisis of smaller and medium-sized banks using -- they are losing preeminence in markets. does that resonate with you? >> it dies. what we are seeing is you are

going to have a wide range of investors, journalists, on the who are not looking. here's the next trouble spot. we have a bank that has incredibly large portfolios of souring real estate goals, and you have leverage to that have a very little protection from the lender. so there are some troubles bots. they've been there all along, but with stock races going up, investors were happy. the minute they have volatility or stock prices coming down, investors rediscover the religion of good and due diligence in terms of the credit. so, i think we are going to have a lot of dribs and drabs of these kinds of issues. people are talking about on accounting rules or unusual accounting rules. they've been there all along. they can't move the bombs are in. they can also make all kinds of changes with nonperforming loan reserves, so i think every time

investors net pick or journalist nitpick a bit more, they will find there are serious problem's are still not resolved in the world of vanke regulations, supervision, and accounting. >> one week later, equity markets later, and the questions, the urgencies. it dissipates. i mentioned this a few times. but last time, do we need legislative change right now? what do we need to do in the next 24 hours. what do we need to change? >> what we need to change is to make sure that regulators statewide and at a federal level are empowered to do their job. they need to remove the bank from being in the district bank and trying to remove those conflict of interest. you really need to change the structure so it is empowering both off-site and on-site examiners to do their job. the problem is that when any of them steps up, and they try to tell the truth, there is no

incentive to do that. you need to make sure the banks are 100 billion or more, and they are properly regulated and supervised. you need to do away with trump rule cpa that he designated or change the definition as to what is a systemically important bank, because those regional banks, by definition, they are very concentrated, and they are very important in those regions. hopefully, this time around, all additions on both sides of the aisle have learned the importance of not watering down those regulations. >> that is implied by the fact that is ago, they had to use a systemic rich exception for the banks. thank you for joining us, as always it mrv associates. last couple of days, what do you make of this? >> that people are looking to feel angry and they don't order winter angry -- anger. -- and they don't know where to point their anger.

there is a mess and a lack of political will to actually make any changes or have any lasting consequence. ask how many times have you heard the story were a company is lt of fraud, you find out they don't have a cfo? how did that happen? why did no one look, or why have they been up to no good and they didn't have a chief officer. how did that happen that a bank is under any find out that they had ac. the leadership had a seat on the board of the regulator who is meant to oversee them. it makes sense to me. >> that is russian why the how many other companies, not just banks have other red flags. on the balance sheet. >> we are joined.

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>> the cuts keep coming. roku just moments ago across the bloomberg 200 employees with 6% of the work force. they come back to that story in your that he, good morning. it is the shape of things in the market. .4% on the s&p 500 and we have some more weight to the nasdaq, not catch up another 4%. the nasdaq is up 20% from the december low. i guess we have to call this a new bull market, i guess it bull market looks like this. a two-year going into jobless claims at about two hours from now. the two years that .40886%.

on a two-year. was called a 4.1% yields in a basis went. the 10 year at .3734. the bond market is set by euros and inflation data. the spanish cpi has a big downside surprise. it is still the euro, stronger against the dollar or probably. shaping up like this this morning. euro-dollar 10863. that is a stronger euro against a weaker dollar, but just to return to that story, 6% of the workforce to go ever roku. >> how much more has to be built up and beat out of the system before we believe that tech has right side. that is a question. i've mentioned this before. i mentioned you can search for things rather than to relent in terms of where things are, but i think that -- i think it is a saturation factor. how many devices do people need to buy. this has been the existential question facing a lot of the pandemic darlings.

they now have to realize that the world is not going to be permanently on these rates. >> i've repeated this question, so forgive me for going on for the millionth time, but this is the excess of the last 10 years? does this go beyond the excess of the pandemic on the portfolio of demand? isn't some of this about what has happened in the last decade. >> without a doubt, roku, without a doubt, anyone was desperate for entertainment in any shape or form to deal with kids locked up at home for greater investment in roku during the pandemic then perhaps in pre-pandemic times. >> nothing personal about that. wrote was up i .6%. this is not the first time we've seen this efficiency in the cut. i think meta-has been absently flying here. this is the year of efficiency. they've delivered the cuts. tuberculosis. >> -- the market loves this. >> me a privates to go. >> federal rate cuts as well. >> a ton of fed speak on tap. we will hear from kashkari.

in a time of incredibly elevated uncertainty, we will see markets as underpricing the level of policy races here, they've maintained a base case for policy rates. here's the number. wait for this. 550 to 570 five. despite an undeniably dovish march fomc meeting with the 25 basis point hike it andrew, the man behind the note is joining us here new york. good morning. >> it makes sense. 575 on fed funds that are facing this. >> i think it is not hard to make sense of this as you follow the inflation data, but the big question is, are we going to have a fed focused on financial stability issues or price stability issues. i think that is what we are talking about in the note in terms of the incredible uncertainty. it looks quite uncertain, relative to whether we are going to get this focus on financial stability or focus on price stability which is more hawkish.

last few days, things have stabilized and we've had inflation data later in the week. we moved and ate it -- and her defective price stability. >> was talk about these midst -- mismatches in terms of data and when we can think that. inflation data on april 12. i wonder how long it will take to get the financial stability issues on the calendar and the mismatch the fed has to grapple with. the timeline is all over the place. if you have financial instability, you might have to wait and wait and wait and wait and wait. you may have to wait until 2024 before you see the slow down. >> a could take some time before you see this slowdown coming in and affecting growth data. especially inflation data. if you think about that over the next three to six months, it will be coming in essentially where it was going to come in before the banking sector. we could be waiting to see how this will trickle through and flow through the economy. but if you go back to where we

were just a few months ago, we had some months of softer corinth nation prince and the fed was sounding a bit more dovish fed you can basically see one month of data. there was some revision to the prior data, and it was a more hawkish fed. we think about the fed, the volatility we saw in the two-year yield over the last couple of weeks, and make some sense if you think that they were really moving between these two extremes where could be financial stability. or it could be price stability, and that does mean that policy rates need to get above .5%. >> i love getting your notes. i feel this exasperation as people basically say that rate cuts are over and you say stop the spread we have an inflation problem. what kind of feedback do you get? >> it is interesting. we get a lot of residents on this idea that inflation is still strong and underlying inflation is still strong, but

where there is more of a question from clients, does the fed have the ability to respond to that, and do they have the willingness to do it? that is an important question for the fed in a question they should be aware of asking. one of the key things you want to do with the bank is provided confidence, you have resolved to fight against high inflation. the market really got there.

but i want to go or so, we had to year yields above 5%. now, there are new questions about whether the fed is going to have to give a little bit on the price stability. they will have to focus on the financial mandate and that could be problematic if we start to view the central bank as unwilling to move against inflation. >> how high could these yields go if the fed pauses despite hotter than expected cpi, pc, all of the indicators that we have been watching the financial stability questions. >> we have been watching these interest rate rises because policy rates are rising, but there's another scenario or policy rates could stay lower and we have longer-term rates rising. i think the fed officials are feeling confident because if you look at the longer-term expectations of inflation the market, five years forward, five-year breakevens, that will save relatively stable or consistent with mandate consistency, policies, but i think that what they are watching that starts gliding up, you see higher 10 year yields, the fed is being dovish. that would be a real concern for the fed officials. >> we've said a few times, may 3, they may decide. they have enough permission to make a call hike on may 3? >> i think it will be a difficult meeting. i think they will have enough information to continue hiking at that meeting. the question is, what guidance are they giving beyond that. we saw what happens in the dots, and the last meeting. we could go, the dots indicate where policy should be at the end of the year.

i think there is no question that they are going to move up in that meeting. until they have it in the banking sector. they have to give us some indication of further rate hikes, or there will be not be further rate hikes, and i don't know if you can do again with central banks did a week or two weeks ago. you may remember the hiking by 50 basis points and saying we can't tell you where we go from here. in may, at that time, there may be enough time to view the data, understand what is going with financial stability, giving kinds it will there be further rate hikes are not >> in of thinking with policy affirmation. whatever that means, they spent a long time coming up with that. clearly, they believe that what is developed in the system is a substitute for rate hikes. dear point, i think we can probably agree around the table that if we got this dot plot three weeks ago from 5.1 to 5.6, they may believe the develop in of last couple of weeks with about 50 basis points i've got

no idea how much conviction they have either view or if that is their view, but we can read between the lines how on earth you make an estimate as to how much tightening of lending standards may develop off the back of the story last couple weeks, and the level of fed funds. >> it is really difficult, and i worry a little bit about these statements. the tightening and the credit conditions will substitute for exactly 25 or 50 basis points of rate hikes you're making an assumption about how policy rates transmit through financial conditions, broadly, and how financial broadly transmit through the real economy, and think about what is happened. there is talk about substituting for rate hikes. will be pricing rate hikes ago about why 5%. we had that about 5%. now to year yields are around 4%. a hundred basis points lower. do you think the tightening of credit conditions and

substitutes 100 basis points lower, to the two-year treasury yield? if we don't, markets will be priced with the fed to fully offset or more than offset the tightening that prepared in credit conditions. that is really an issue for the fed if they thought that it was going to be above 5.5%. financial conditions are loosening. there tightening. if you saw the data over the last month, every indicator is turning out. we have a bottom in the housing market, and it's rising from the bottom. i think that should be another concern where you say, it is trying to slow down the economy, and now the second that is most responsive to straights is guarding to re-accelerate. >> given market pricing, how vulnerable is the infrastructure for a market that has been whipped again and again has a lot of agility bacon. how vulnerable is this market to the fed surprise. a massive fed surprise that disrupts were things are.

excite think that is the other real issue for fed officials. given the new evidence of financial stability rings, is the bank trying to smoothly and incrementally guide policy rates, guide market pricing to what you think is the right level to be consistent with inflation. and the issue for the fed is we have a huge disconnect between where the dots are and where the mark it is like we were talking about, if anything, the fed officials want to go higher than that. we start seeing the inflation data come in strong, and we will, all of a sudden, we can be in the back of the fed official rates being much higher, and can you get there in an incremental and smooth way, or has this become a violent adjustment, and look at the volatility we saw in the two-year yield. in some ways, that is reflecting the fact that we can reprice with the fed is going to do. >> they are in a massive fine. once you get into the business of acknowledging the developer's

of the last couple weeks are a for rate hikes, get worse, i just wonder how you keep saying we are going to get no rate cuts this year. if you believe there is a substitute, we are close to what you've indicated is terminal, ultimately, you should be pulling back if things get worse just to maintain the calibration of policy. but this market is not going to see it that way. this market is going to pricing a major rate cut in the cycle. it will pause or they may have to calibrate things in a different direction. >> they already have. conditions of already eased with the tandem of the expected potential of the rate hike in credit stress. >> that's a big challenge support to make. neil said the same thing. if you positive may, how do you stop this pricing even more rate cuts, and this was great. 5.5 read call. -- 5.5. what a call. this is bloomberg.

>> keep you up-to-date with news from around the world, with the first word, i am the -- i am lisa mateo. a reporter from the wall street journal has been detained in russia on spying allegations. he was detained in yucca taryn berg on suspicion of spying for the u.s. government. walter journals deeply concerned about his safety. there is another sign of republicans growing with uncertainty about the ukraine. congressional republicans say billions of dollars for ukraine risks being misspent and could be used for domestic rarities. the house foreign affairs committee chairman, michael mccaul, criticized western european nations were not supplying as much assistance as the u.s.. the msci is lowering the scores of 31,000 funds. the firm says clients have voiced concerns about the upward trend in ratings across the universe.

the commission has told bloomberg they plan to reveal new industry rules regarding environmental, social and government scores. intel says that new chips for the lucrative server market will come sooner than expected. the company will shift to a more advanced production technique and offer more chips that are faster than analysts predicted. the intel ceo is trying to reverse the market share losses by reclaiming technological leadership in the server field. global news, powered by more than 2700 journals and analysts and 120 countries. i'm lisa mateo. this is bloomberg.

ex things are trying to calm down. the fact is, if this is it, it will increasingly look like it is. we will need to go back to the

thing about the fed of a few weeks ago. we need to go back to looking at the data. nothing is broken. we've repriced. everything is working well. so, can we reprice more from this? absolutely. >> that was lee fara jobs state street. -- lee farah jeudy of state street. how winning weeks do we need in the market. how many weekends do we need to be free of banking issues before we go to two or three weeks ago? is this a turn, and the snow is rolling down the hill with a disinflationary bust? >> how many weeks of gains did it take? it's a great question. ultimately, who knows. at a certain point, with this conversation we had with andrew holland, how does the fed pushback against pricing when it's dealing with uncertainty? how does it pushback against rate cuts being priced into the market and easing financial

conditions, causing easier lending standards without knowing if there is a tighter lending standard on the others either is offsetting that? >> let's oppose that the banking data continues. this worker way through this. a standard to advocate, payrolls looking robust, cpi looking steady -- sticky. all that bad stuff. how long do we have to go month after month of that for the federal reserve to say ok, maybe we need to stop waiting. city is making the call. there is a banking system with data. at least for nine months. before we get to 2024. you could get a drip feed. you could hike rates. we said this a few times. a few weeks ago, it was 50 big six -- 50 basis points. three weeks later, everything has changed, and all the sudden, we have a conviction. a disinflationary bust.

that is a big change. >> people thought the bond market was marked at -- smart. we realize that the fed will have to cut a weakness. stocks are saying to look around and smell the roses. they are fantastic, and we have a robust economy. we can go by things. at this point, i do wonder how much stock has it right right now, and bonds may be right eventually, but it will feel wrong. >> can we go back to the conversation of a month ago? we were seeing after tech after tech after tech did we wondered when it was hope in the broader economic data. roku said this morning, 200 employees are going to be cut. welcome to the program. 6% of the workforce. stock is positive in the premarket. we have a bull market in the nasdaq 100, there this morning. but that is good news. that is good news for the stock and good news for investors. not my field or situation, but that is how it is being taken.

>> there were facebook layoffs, metal layoffs, where it was rumored to be, people were employed, but they had no jobs basically to hoard labor ahead of what they expected to be a rapid expansion that never happened, so there is that kind of layoff, and there are the nuts and bolts layoffs we have to look around and say we can't afford to keep you. >> the nature of the layoffs matters. the nature of the company has a significance, and in this particular one, it doesn't mean they have the access to cut, or does it mean they have slower growth and potential going forward. those were different kinds of cuts, and it's important to understand as we get more announcements like this which it is. >> this stock is up 2.8%. this get to the broader story. equity markets right now at one half of 1% on the s&p 500. yields totally unchanged. on the 10 year, the fx market is 108. spanish inflation is soft. you get the headline data a little bit later. crude is 73. on wti. up a little more than 1%.

year-to-date, looking at what is happening, year-to-date, we are 8% on wti, and 8% on brent. let's talk about this. the global head of energy strategy at jp morgan. great to catch up with you. we still got a big triple digit call in the future. you are bearish in the near term. can you explain why? >>. it is one of those things where we've had this new cycle on hold, and the reason is simple. there are far too many, with the dark inventory or the barrel being stored with refineries, that is a result of all of the panic buying from last year. a lot of oil hoarded into the market, particularly in an em world. that is allied with coal consumption, and what that is doing is creating an overhang of excess supply into a surplus that we predicted, which could combine to mean that all prices

don't necessarily have a fall, and we look at the impac and what they are trying to do with managing prices, we think they are going to offend those downsides. that combination leaves us and more of a 60 to $90 range with a downside of recommending to buy once we see the downside materialized. >> what gets us there. it is $70. you can see the potential for $60 over there. what pushes us there if we don't have a potential weakness for globally, it hasn't done that of china is reopening. it has been rather disappointing with global growth. it doesn't materialize. what gets us there? >> first of all, we are walking into a recession. we are traveling. we haven't arrived. that could be a fairly hard

landing, particularly in the u.s., and that is offloading as we speak. this contagion is an unknown, but we have to watch and discover what is next around potential weakening of demand. there is a tightening credit. the third, and this is the obvious, but we have a lot of excess inventory and a surplus we go to in q2. if you like those inventories building, that could weekend the crude market, even if we do see seasonal pickup and demand, so that could provide positioning which i think has been that long with a series of use. also, that is one plane. the other plane is how the dynamic evolves right now. there is been radio silence on that front, and with our relationships with opec, building and the next three to six month, how do they react. that will be something of a reveal to the market in terms of how willing they are to support. his flaws in the market. if it is apparent that they will not support that $70 oil, that

could be another downside to the crude, particularly with how we see these places at the moment. an option that is fairly well embedded around 75 to 80, that option is not certainly there, but it will surprise the downside. >> opec loss. there is a plus there. when his russian supply going to fit in? >> that's a great question. i'd like to know that as well. russian barrels are ultimately floating at full volume in the market. they have surprised everyone with the upside, and if they continue to stay at record levels, particularly in pre-covid, or not, the key point is how do they fit in with the context of opec-plus. i don't think it is necessary open season. they have a lot of vestiges to keep things together, but it does make me wonder, particularly with their discount of crude from a technical standpoint, can they actually choose to material if they were asked to. this is something that puts us

obviously with tension around whether they can comply on a core basis with the opec framework. i think that in itself suggests a precedence to not comply, particularly if there is a need to. they have to come in and take the volume off the market. russia in itself could be problematic in terms of giving compliance across the rest of the group. >> thank you so much. thank you for being with us. j.p. morgan securities. think about the range. 60 to 90 with a touch of downside. it sounds like a recipe. then you go out to 2024, they have 150 on crude. >> mind boggling, but at the same time, anything could happen. oil is one of the hardest trades, no matter what you do. people have been trying to gain this out and been getting it wrong consistently. i think this is an interesting question about russian oil supplies. we were supposed to see prices go up because of a lack of russian oil.

that is the rub. i will point is that change the scenario back to where we were with the russian invasion of ukraine. or do we get some sort of decrease in russian supplies based on the economic pain they are experiencing and the lack of personnel. they are seeing a huge brain trade and a huge flight, particularly with younger people. >> are we saying the sanctions aren't working? is that the measure? 60 to 70? is that we assign sections are working? >> the goal of the sanction was to prevent russian oil from getting on the market, and to prevent money for the oil. to get inside the hands of russians you could ask on both sides is either working. that is a good question. i don't know if we know the answer. >> that is one perk. we will leave it there. we will be joined from t. rowe price. we are looking forward to the conversation. equities are a .6% on the s&p. the rally is continuing. the nasdaq 100 is back and able market.

from new york city, this is bloomberg.

>> every day that goes by we get more stability. i think it is behind us. >> i think we repriced. everything is working very well. >> we are still in a bear market and it has gone on for a long time. >> this is bloomberg

surveillance, with tom keene, jonathan ferro. jonathan: the tone of the interviews have changed after the one week rally. all of a sudden, this crisis is over. equity futures up 6/10 of 1%. the nasdaq up 20% from a december low. lisa: is this a bull market or a bear market rally? it is depending on where you frame it depending on the trajectory. some people will say, let's go. if the fed is going to cut rates , let's get in there. jonathan: since macron talked about this yesterday. he went on to say this, there is no middle ground in a banking crisis, it either

happens or it doesn't. what do you make of that? lisa: it is correct in 2000 eight bank crisis and historical reference points. it is not correct if this is a slow-moving bleeds of deposit that goes out of the smaller banks and restricts lending. that would lead to restrictive credit that will have a accelerating factor. let's say we do not get those bank failures, is that potentially worse if the yields remain high? jonathan: it is absolutely crazy. we are going to ignore cpi, payrolls. lisa: we are going to pay attention to all of these things . does the fed look past the headlines? are they able to look at the data and saying, we have not

gotten closer to our mandate. we are still far from 2% inflation. we need to keep going. can they do that if the market has priced the amount already? -- out already? jonathan: breaking news from roku, another tech firm making cuts. the broader equity market looks like this on the s&p 500. we add some more weight to the s&p. yields unchanged. 357 on a 10 year. euro-dollar, very close to 109. we have spanish cpi. lisa: people are looking above the hood & core above 2%. the fact that people are still are expecting rate hikes for the ecb highlights how different the european region and the u.s. are in terms of how quickly they moved on.

in the u.s., we get jobless claims. how many numbers because it gets before start to care about them and people start to think we are in a strong economy. we have seen the unemployment rate falls to its lowest level. how much could people price in this tightening, end of the cycle before we could see a cycle that could bear out. tom harkin, susan collins, if they aggressively push back on rate cuts and say this market is fooling itself, there could be market moving, especially giving some of the push pull. you look skeptical. jonathan: based on what is going to reconcile the difference between where the fed and the market is right now. we have been talking about this for days.

i am not sure how they can with conviction turn around and say, no rate cuts this year. adapter the incoming information and say, it is not one individual, it is a collective view on things. lisa: when u.s. court can reconcile it? janet yellen at the native conference in d.c. could that be something very significant? jonathan: once you turn around and say the bank of elements is a turnaround for fair rate hikes. lisa: fairpoint. people took the signal from that. jonathan: t rowe price. good morning.

are you going to translate that for us? what is the reluctant and timid bank? sebastien: it is a negative for the economy. it does mean a more dovish fed to, probably not as much as the market thinks. third, it is not a 2008 kind of event. it is not a championship systemic palm. -- bomb. the time slams the brakes, someone head goes through the windshield. here we have a few banks that were not wearing their seatbelts. but it is not systemic. jonathan: your cash position has been big for a while. i looked at your notes. what do you do with your cash and what are you waiting for? sebastien: the bearish narrative

is strong. if you think of the pull plethora flashing red. pmi's have dropped by 16 points. we expect the housing market to go down, in residential seven to 10% this year. default rates in private commercial real estate, very much on a uptrend here today on the way higher than during covid. what is the market doing? 17, 18, price earnings in the s&p 500. that is more expensive than stocks were before the selloff of 2022 if you adjust for the level of rates. earnings expectations are still for positive earnings growth

this year. the bearish narrative is all about the liquidity impulse being negative globally. why am i timid? all of these numbers are from very elevated levels -- very high levels of liquidity, very high house prices, extremely high pmi's. it is a question of, we all are obsessed with the rate of change. we have this cash. it could get worse before it could get better. at the same time, you have to pay attention to the levels. which we do not talk as much. you think of pmi's where they are now, they could bottom somewhere lower. the question is, when do we reach the bar? lisa: i love that you call this a black gunk and not a black someone. -- black duck, not a black swan.

the are still seeing rate cuts being priced in to counter weakness that is still extrapolated out from something that has not happened. sebastien: i think it is the question. can central banks have a flip on the gas and the break at the same time? by that i mean, what you saw with the u.k. lbi situation, where the bank of england started by long-duration guilds, as they were hiking. the ecb is doing something different by backstopping italian bonds while they are resolute about hiking. what is the fed saying? this banking distress is restrictive. the bloomberg financial conditions index is moved by a standard deviation. stabilizing at one standard deviation tighter.

it is restrictive. with inflation where it is and as sticky as it is. by the way, longer-term expectations for inflation, they are up. i think the fed can continue to have the narrative of hiking, maybe another hike of 25. if something breaks, if someones head goes through the windshield again, while implementing emergency liquidity measures, foot on the break, foot on the gas, counterintuitive. this is were global and central-bank policies are going. lisa: how much do you see in declines in equities before you are interested? sebastien: it depends on the circumstances on why we are getting the decline purity want to see the vicks backup. let us usually a good signal.

the liquidity impulse, this is not talked about enough. liquidity impulse is negative. it is being withdrawn from the system. we have yet to fill all of the lag effect of the 500 basis points. given china opening up credits, some level of growth that is reasonable in china. at some point we will unwind qt as well. we are not trying to catch the bottom per se, we have done research that says if you're willing to lehman when things get bad, you do not have to time the bottom -- willing to lean in when things get bad, you do not have to time the bottom. by the way, we are invested. we are underway to stocks, we have some cash. we have a bit of treasuries. jonathan: this was great.

lisa mentioned a few times we are here from -- we will hear from janet yellen later this morning. the treasury secretary janet yellen plans to say that regulators may need to -- a to bolster the financial system and complete. this was always going to be a bit of a split. on the one hand, people were saying we need more regulation, there would be a group of politicians in washington who say this is about enforcement. lisa: how is this going to redo the market if they're looking for a full clear signal? jonathan: we will catch up with anne-marie up in new york. peaches chair, -- peter chair, we will catch up with him. a reluctant and timid b

ear. lisa: a reporter for the wall street journal has been detained on spying allegations. he was detained at suspicion of spying for the american government. the wall street journal says it is deeply concerned about his safety. in kentucky coming to u.s. army helicopters collided thursday night during a trading exercise near fort campbell. there were several casualties. it is not saying whether it was injuries or deaths. the fdic is thinking about having big banks cover a larger than usual portion of the $23 billion hit from the recent banking failures appeared those special assessment will happen in may, to sure up a $128 billion insurance fund.

the president of taiwan made a stop over new york and called the islands feature a test for the world. may further escalate tensions between the u.s. and china. the latest census numbers show manhattan's populations group while new york city's other four bureaus lost residence. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. this is bloomberg. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on

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>> are you aware that judges have ruled that starbucks violated the federal law in the past 18 months? >> starbucks coffee company unequivocally has not broken a law. jonathan: what an exchange between senator bernie sanders in the former ceo of starbucks. what did you make of that? lisa: there seems to be this desire to take a populist tone with the big companies. there is this real dissidence here at a time where you want to have this anger and yet nobody can figure out where to put it. jonathan: the attention to starbucks over unionization.

can you imagine if we did have the same degree of union membership now as we did in the 70's? what kind of pastor we might have seen from headline inflation through the wages? how much this really could have spiraled? lisa: this has been one of the beliefs that people had, especially as labor started to give more power after the pandemic. not that it is a bad thing to get wage increases, it will be harder to -- inflation if you get that kind of increased. where do you put your anger at a nuanced moment when you have facts that are uncomfortable in terms of what you're looking for with respect to the outcome. jonathan: there was a little bit of anger between the two of them. if you want to check it out, check it out on youtube. jonathan: in the bond market, yields unchanged.

in little later today, you will hear from the treasury secretary, janet yellen. according to the wall street journal, she is set to say the following, regulators might need to tighten banking after the collapse of silicon valley bank. she is going to call them and say that a recent tar moral is a sign that efforts both the financial system and complete. anne-marie is up here in new york city. anne-marie: she is probably pointing to what is happened in terms of the rollback of these dodd-frank measures for some of the smaller midsized cap banks. she also says of these event reminders of the urgent need to complete unfinished business. she has tipping her finger to the likes of elizabeth warren and all of the democrats who are saying, we have to look at the easing of these regulations that

happened under the trump administration because of the failed banks. we know there is other issues at play. michael barr was very direct about it yesterday. almost taking a little blame on the supervisors world. yes, we saw all of these things unraveling over the course of the year, but we did not step in quick enough. 17 senators, 33 low liquors in the house. some of them -- 33 lawmakers in the house. some of them is still there today and not pointing back to the lack of --. lisa: the consequence of having to pay for the 23 -- hold of the fbi's budget? anne-marie: they do not want this, the biden administration does not want anything that could lead to a campaign slogan that it was a taxpayer ballad of bengs. what you're going to see --

balance of banks. what you're going to see is a pushback of low liquors. bigger banks maybe -- pushback of lawmakers. lisa: this kind of hurts my head. it is frustrating to understand. people do not want small banks to fail because they want the credit impose. they do not want to crackdown because it will increase the cost of funding. they want big banks to bail them out repeatedly. where is the way out of this? to push pull and this continues forever? anne-marie: i mean it is a great question. this is the landscape we are in. when you actually see is people are, this is what lawmakers talk to us about that their constituents are so concerned if they bank with a smaller bank,

those banks are telling their representatives, you have to do something about this because we are losing deposits. people want to go back to bank of america because they are worried this is another svb signature bank jonathan: you have drawn the distinction between regulation. when banks failed, the leadership quite goes. you often see politics makes a big deal of that. they lost their jobs. when regulators fail, tumbleweed, why does nothing happen? anne-marie: when regulators fail there is all of these hearings and they talk about all of the steps they went through. they talk about these investigations. the fed has investigated itself now three or two times, this is the first time we are seeing them being welcomed.

it is a great question. this was the moment that did it for me this week. a democrat, he said it looks like the super -- supervision and regulation was there. this is really a question of, should congress be the ones that have enforcement on regulators jobs? that is a bill that is circulating between senator elizabeth warren and greg scott, two names you rarely see together about the investigator at the fed? why should that be appointed by the fed governors board? it should be appointed by the president and the senate should be able to give confirmation to the individual because at the end of the day they are looking into this. jonathan: senator warren has questioned chairman powell stability. anne-marie: she called him a dangerous man. jonathan: she wasted a couple of time whether the fed should be investigating itself.

anne-marie: this was the trading scandal. they brought this in house and they investigated it. they investigated themselves. now, this is the collapse of svb. there's another question on washington whether this is the fed in washington or this is supervisory in san francisco. lisa: government has gotten so dysfunctional and they cannot get anything done and they'll just chase their tails examining things? isn't it more than usual? anne-marie: it to maybe feel like that because we are in it at this moment. lisa: it is always like this in divided the government. politicians will tell you, the point of the hearing is to slide into the chair, make your questions and the remarks, get the youtuber click, then they leave. jonathan: what do you think if

they want televised? would it be different? lisa: no, i want everything televised. jonathan: jonathan: their objective is to become youtube video to send to their constituents. if you get rid of the cameras, this to make the -- better? anne-marie: remember when we saw the tension on the floor. would have to see some interesting dynamics. -- we got to see some interesting dynamics. we got a closer look into what was going on. lisa: when people stop banking at a local bank, they feel less connected to the financial system and less connected to the political system. i thought that was fascinating. i understand how that could be the case. anne-marie: i bank in canada and the u.k.. jonathan: get to see you.

looking forward to that. great to have you. lisa, do you bank in canada? lisa: i bank at a very local bank. i am not going to confirm or deny any bank of any sort. lisa: people are like, their community bank, local placed. jonathan: kathy jones is coming out. looking forward to that conversation.

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jonathan: the running continues on the s&p 500. equity features on the s&p 6/10 of 1%. a few hours away from the opening bell. people get so frustrated with the use of the term bull market. 20% move plus. does that bother you? lisa: i think it is funny that some people will call it a bull market if they are positive.

people will say, look what happened before. it highlights the volatility in the lack of certainty amid an environment where we do not have a lot of facts. jonathan: the month of march in the bond market, march is still not over. she one is still not over -- q1 is still not over. we were 102 basis points north of that about three weeks ago. then i think we got about 355. that is where the 10 year is. lisa: is it just fine because we have seen these violent moves and nothing has broken except a cup full of banks except a couple of banks -- except a couple of banks here and there. jonathan: we mentioned the

spread was to defend in the market. the fed to speak alone is not efficient, what is going to resolve this gap is the incoming information. the traditional economic indicators or the offices opinion alone survey. that is not much information to gone. once and get it in may, how much longer do you have to wait into the new get monthly indicators? to resolve that gap, i would say the data would take care of that. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this time around i am not so sure of that.

we talked about roku saying it is going to cut 6% amid staff. -- 2% of its staff. this follows what we heard yesterday. electronic arts also announced some layoffs about 6% of its workforce. this is more of the trend. restoration hardware, though shares are. -- those shares are lower. jonathan: it is amazing what is happening with the homebuilders today. lisa: if you take a look at mortgage rates, they crept back down. jonathan: the arguments against the banks is that they need a tighter lending standards.

what does that mean for the homebuilders? lisa: why are you looking for cohesive logical arguments? we have seen this mortgage -- market. charles schwab shares declining 2%. am i wrong? morgan stanley came out and said that schwab should client plays a cash with low interest accounts that twice the rate that goes bank analyst initially thought. we are a lot of executives come back and push back against that. it lets say banking crisis averted, no more collapses, we

can move on from the hearings and get on with our lives. how much do you see the deposits leading banks that leads to restrictions with traditional banks? jonathan: you saw the stats of the money going to money market funds. to the have to do something about this? have you seen much movement? i have not seen much of that. lisa: i have personal emails ceiling, do not rely on us -- i have received personal email seeing do not rely on this. does the fear of potentially losing your deposits leads people to except. jonathan: i would like to talk to a treasure of the company. we are talking hundreds of

millions of dollars. same for roku. they came out with job cuts this morning. those deposit accounts are not necessarily break the bank in the same kind of way. jonathan: they are insured. some people are at home screaming right now. bitcoin, which is what tesla did for a while. lisa: people can scream bitcoin. jonathan: kathy jones says this. inflation will continue to pull yields lower. what do you think is the relationship about what has taken place in the last couple

of weeks and with these guys are going to do with the fed? kathy: what the fed has proven by hiking rates the last time instead of just pausing for a moment in midst of the banking crisis, they are really ready to continue to push short rate higher -- rates higher until the household and business payment is felt. as they keep doing that, even in the midst of huge volatility in the market and huge headwinds in terms of tightening credit conditions, it tells us that is going to push long-term rates lower. that is probably not accurate in the sense that the fed does not look like they are going to give up easily. probably means we will get further rate hikes and further downward pressure on growth and inflation. jonathan: hard to be precise. it can go through some of the

rates -- can we go through what kind of members to our thinking about? -- numbers you are thinking about? lisa: the two-year looks very good to us. we are probably looking at another 25 to 50 basis points. that is going to pull of long-term yields. i do my think you will see much of a north. as we go to the second half, we will probably see all of that drift down. the short end is not priced for a fed that is going to remain aggressive. lisa: what do you make of the whipsaw action we have seen in the two-year? how do you understand that this is the most illiquid and ivanka markets in the world? -- the most liquefied markets in

the world? kathy: i do not know if it is a structural problem. the rate of change and yields we see from the fed. if we look back a year, no one thought they would start raising rates at this pace. when you have average of change in the underlined policy rate, you are going to get a lot of volatility in yields. i think the market is trying to gain where the fed is going based on a lot of different indicators. you get this high realized volume. i am measure it is a liquidity problem. we are still executing reasonable spreads.

lisa: what is your northstar in terms of data to have conviction amid all of the swirling? kathy: i am watching financial conditions closely. there is a number of other indicators we are watching. that is the bottom line. when i look at the data that i see, this heightened volatility is going to tighten credit conditions. it is going to tighten financial conditions. a lot of underlying indicators beneath the surface. all of those are going to be really important to keep an eye on. jonathan: we need to get away from traditional financial indicators and focus on things like the things like the senior loan survey? kathy: i always paid attention to it. i think it is very important.

the tightening of credit conditions was flagged months before this happened. i think it is important. i think we will probably see a whole bunch of analysts doing underground research in terms of interviewing businesses about their loan conditions. you have to look at the private sector were a lot of lending has taken place. i think there will be a lot of focus there. the traditional spreads these indicators may not give us enough information. jonathan: thank you so much. we have been focused overwhelmingly on the price of money. this is now the story of the supply credit. it is a difference there. lisa: especially if you have banks that do not have the capital to lend and to are discretionary about who they decide to live to -- lend to.

my percent of applications for auto loans were rejected -- nine percent of applications for auto loans were rejected. this is the way it plays out into the economy. i just wonder if the yield is there, there is going to be someone who is going to want to land. even if it is the shadow banking system and how much money they need to pony up and lend out. jonathan: a few more days of this and it will be crisis over. lisa: maybe people need to look at other things that are not quickly moving. jonathan: it is always the market. big time.

futures up on the s&p by half of 1%. lisa: with the first word. the wall street journal says it is concern for the safety of one of its reporters, who has been detained in russia on spying allegations. the american was detained and is suspected of espionage. he was set to be collecting information about the russian military. another sign of republicans growing uncertainty regarding american support for ukraine. millions of dollars for ukraine risks being misspent and could be better used for domestic priorities. michael mccaul criticized western european nations for not supplying as much assistance as the u.s. china's premier because of the country eight anchor for world

peace and says -- eight anchor for world peace and a source for prosperity. he says the economic recovery is picking up pace. we expected will likely produce a better outcome than the first two months of the year. in mexico, the government is blaming private security for the deaths of 39 migrants caught in a fire. none of them opened a door to allow the migrants to escape at a detention center. the fire was started by some of the migrants. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries.

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>> the events over the last few weeks has been a equivalent to

tightening. if anything, i think the fed and global central banks will keep rates higher for longer. not superhigh. jonathan: equity futures high by 6/10 of 1%. good morning to you. your 10 year yield almost unchanged. we have some inflation data out of the euro zone earlier. spanish cpi much softer than expected. i wonder when we get german inflation, 15 minutes? lisa: people are shrugging this off because the headline came in at 3.1%. down 6% in february. if you look under the hood you could see the core inflation stayed at the same area. people are focusing on the core and dismissing.

lisa: the data will speak much louder. this data people are looking at the core. jonathan: german cpi, we will bring that down for you in 30 minutes time. jason, great to catch up with you. i see you have put out work with commercial real estate. there are a lot of fears about what might develop in that economy. jason: you know, certain with respect to commercial real estate, it is important to note you entered this uncertainty from be nine levels. we left delinquencies in the third quarter were a all-time low. they are expected to increase in the year ahead, it is coming from low levels.

if you think about recent events, particularly kind of what is happening in the post-silicon valley world and the potential for regional banks to pull back on lending, at the same time commercial real estate needs to be refinanced. lisa: how are you focusing on it when it comes to specific regional banks that you see are having a disproportionate exposure to real estate loans? jason: the biggest banks, commercial real estate tends not to be the main driver of the loan portfolios. as you go down in size, it does become more meaningful driver. within that portfolio, it is important to distinguish, between the different property types. at the moment, the most concerning of the office sector is giving the fact that you had this big secular ship in terms of work from home post-covid.

at the same time you're are seeing property values decline. higher interest rates making it difficult to service the debt. we have a lot loans maturing over the last couple of years. those banks with exposure has to be --. lisa: at what point do we see that realized? why have we not see more -- see more losses realized? jason: the valley of the client does not necessarily mean you take a loss. -- valley of the decline does not necessarily mean you take a loss. they do build in some cushion. around the averages, there are certainly some loans that have much higher ltv's.

it is certainly something to watch. on the office loans, office buildings have seven to 10 year leases. this problem will take some time to materialized. and hopefully give time for banks to work with our borrowers and manage this in a more thoughtful manner. jonathan: that is the right word to explore, time. how are you thinking about the timeline for this to play out? some people think this shows up in lending standards. what kind of timeline are you thinking about? jason: it is going to take some time to play out. loan losses are at historic lows. we do expect them to grind higher. bengs --keep in mind,

there's a lot of other pockets of commercial real estate that are doing well. the majority of bigger banks are diversified. we do think that the end of the day, loan portfolios are somewhat a reflection of the economy. that will be something to paid a lot of attention to. jonathan: as you and the team looked at indicators of how this has been developing, traditional economic indicators have been the emphasized in some way. what do you and the team look at right now? what do you focus on at the moment? jason: real-time data. deposit flows are at the utmost important post the actions of -- a few weeks ago.

loan growth as well. you talked earlier about tightening lending standards. that is something we will be paying closer attention to in the coming weeks to see what ripple effects recent events are happening on the banking industry. lisa: what about the mitigating factors? i think about the asked attentional question -- existential question. what is this going to look like in 10 years? jason: certainly a good question. we will see. certainly some secular trends as far as not as many people going into the office. you're starting to see more and more people returning to the office. there has certainly been taught in certain cities were turning some offices into residential

properties where there is housing shortages. there is a need for real estate in certain sectors. lisa: even if we do not get other bank collapses, this commercial loan by some of the banks in the sector, how much do you think that has been accurately price delayed into the valley -- priced in to the valuations of the sectors? jason: it has been those with the highest uninsured deposit contributions and very large losses. if you look after that run, the next performing bucket are the things that are overexposed to commercial real estate with many of the stocks now -- down.

given the fact, the concerns of credit post-silicon valley on commercial real estate exacerbated those fears. the market is equipped to realized the potential issue. it will take a fair amount of time to play out. we are all eagerly waiting for the results mid april, expect loan losses to not be something people focus on this quarter. jonathan: interesting. jason, this was wonderful. jason of barclays. april 13, first republic. lisa: how do you believe the story that you see on the ground that is not reflected in with the reports are telling you? that has been one of the main conundrums. jonathan: we returned to the calendar, may 3, federal reserve. lisa: some people think that

before what happened with the banking crisis, the fed was going to make a mistake and overtake him before we saw the light effects -- lag effects coming into the markets. jonathan:if you pasue the market things he had done. features on the s&p up 6/10 of 1% -- features on the s&p up 6/10 of 1%.

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>> things have started to calm down and the fact is if this is it, we do need to go back to

taking about the fed of a few weeks ago. >> this particular banking crisis hasn't spiraled. >> west central banks, they will keep rates higher for longer. >> it is hard for the fed to go back to zero. >> we prepared for the recessions that aren't here. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. jon: q1 still is and over. good morning. this is surveillance live. tk is back with us tomorrow. 6/10 of 1% on the s&p 500 and 30 minutes from now, you will get jobless claims and moments ago, we got german inflation data and that follows spanish inflation. inflation came in much softer

than anticipated and german inflation was lower than it was in a previous month but it comes in a stronger than expected at 720% -- 7.8%. lisa: if you take a look at march consumer prices, they wrote 7.4% versus the estimate of 7.3%. you don't want to get high economic -- heights economic data. ecp says that is what they were looking for. jon: they don't see the parallels between them and the federal reserve and the banking tension that develops into a disinflationary bust in europe like the fed might see in the u.s. lisa: is the inflation different over in europe and the u.s. or is it that they are further behind the u.s. with the tightening cycle and do we understand the level of inflation? if the fed thought they had to get to 5.75% three weeks ago,

have things changed so much that they think they can cut rates down to three? these are the levels of uncertainty. sonali: yes --jon: yes and yes. the novel of financial shock and a u.s. is different to what your business printing. we have this regional bank issue and it should develop into a tighter extender. that is what the base case is leaning and a europe, we have credit suisse and what they said from the ecb is that they have not seen the same deposit flight. you have the disinflationary shop in america that europeans are not seeing on the ground. lisa: sonali was talking about that they have not seeing the same deposit shocks. there was a little bit on the margins but that was on design so at what point is is not by

design and this is undue tightening going to have a material effect on the u.s. at a time when, your pet negative yields not so long ago. it is hard to wrap our heads around. to draw distinctions at a time where we don't understand how this is getting borne out by the economy is difficult. jon: for the u.s., this is not the clean way to do things. this is the dirty way of financial conditions but you can't say the two issues are in conflict. focus on monetary policy and focus on inflation going down when you acknowledge be issues are a substitute of what you are trying to achieve on the monetary policy side. lisa: have we killed that concept of transitory inflation? are there believers in that and is there just hope that this will be made hold -- whole and that will take away the

question? the fed doesn't have a easy path other than hiking to a significant downturn and something breaks unless there is a natural disinflation from year-over-year measures that takes hold. jon: there's always someone out there and i think there are many still who believe time would have solved it in time still can solve this. it is not my view but the ramp down, i know they are. it is a mistake. we will catch them -- up with them later. in the equity market, on the s&p 500, up five or 6/10 of 1%. at the 10 year, 3.56. unchanged on the 10 year. in the fx market, the euro-dollar south of 109 --

1.09. with this now in place to say -- share is peter tchir. let's talk about the happy market and the nasdaq up from a december low. someone from blackrock said that this market, they believe they're going to the old playbook. she says we will not go back to the opa -- playbook -- old playbook. what do you say? jon: i believe --peter: i believe that and the conditions are different and it is not supportive for that and we want to range trade this to the equity market. the fed comes more into play and as the things deteriorate, the fed is in be over -- other direction. jon: is that the range that sticks? peter: i think so and i am fading this rally in the s&p invading it more to the nasdaq

as the outperformance has been greater and i don't like the narrative that we have turned to 2022 and what remains outstanding on the banks, this is different than the u.s. versus europe is people here have alternatives to earning more than 0.2% or whatever bank deposits is paying because we have this cap in rates -- gap in rates. i am watching to see if we see ongoing deposits leading the baby -- banking system and nothing to do with credit concerns and everything to do with the yield alternative and that is not the case in europe because they started their cycle. lisa: do you think this concept of immaculate disinflation hasn't gone away and it is embedded. the fed has an excuse not to hike rates further and everything is fine and inflation will go away? peter: i have been in the camp that we are headed towards inflation in the goods camp and we had four or five solid months where you saw nothing but

deflation. we saw the data bounce. you look at inventories and their creeping higher. you look at shipments are going -- that are going lower. we are in overall deflationary environment. housing is pulling down and health care is something to watch but i think we have overreacted and we have to give this more time and as these companies are pulling back on their jobs, i think data filters through. there is this lack of effect and we aren't -- there are market participants, we don't have that time. lisa: have what point does the 4% implied funds rate by january of next year he sees things enough where things come down -- next year, eases thing enough -- things enough where things come down? jon: i don't think we have peter: --peter: i don't think we

-- we have a huge unwind of position so some of the data and how we look at what is going further out the curve is mispriced. jon: pete, spreads this large are resolved by a speech -- are not resolved by a speech but by information. what we return to -- what is the incoming information that will resolve the spread? is it cpi or payrolls? peter: i think it will be payrolls. that is the one area we have seen wage inflation kick up -- take up --tick up. but the last six months, there were through -- up a few things that went up over weeks and one thing is fraught -- is jobs. they are not showing up in the

jobs numbers so if the jobs continue, the fed will have to hike and if they come back to reality and reflect anecdotal evidence, maybe that is when there is a part. --pause. jon: -- and what is happening in the sector? peter: hopefully, we can move away from bank stocks. as time -- it is time to think about where is the economy and what do we get as we start earnings and it will not be about fiscal earnings but what the future outlook is and i think that is questionable. jon: peter tchir there of academy securities. april 7. lisa: we see the decline in payrolls that people are expecting and it is deceleration in job growth that people have been calling for. what happens -- what is a bigger

surprise to markets, if you get an upside surprise in job creation or massive downside surprise? jon: what is the surprise they will respond to more? lisa: correct. jon: i don't know how much we will ignore decent data. and what it will take to shake the belief because that is entrenched. lisa: there are people who have believed that the fed is overdoing it and they believe this is a chance to remedy errors and they are leaning into that. jon: claims in 20 minutes. if it is up 200 k, -- if it is sub 200,000, what do they say? lisa: no one cares. jon: then it is onto cpi and payrolls. do we ignore this? lisa: you raise a good point. how do you disregard the now because it is a rapidly knowing -- moving scenario. we don't know and we have talked

about this. we don't know where the neutral rate should be in a economy that was flooded with money and is moving at a robust pace. jon: neither does the fed, and for sickly now given that they are saying the timing and lending standards is a substitute for rates. that gets you in a bind quickly. lisa: you will hear from them trying to make sense of this. jon: have you done march madness? have you made a bracket? lisa: i missed it because we had a different kind of march madness. jon: too much quality time. my producer, jamie, what do my bracket traditionally and it is terrible and this year, we did not do one. steve pagliuca has someone in -- has done one and he has done

well. hopefully, we will talk more than that. >> with the first work, i am lisa matteo. in russia, reporter for the wall street journal has been detained on spying allegations. according to the federal security service, he was detained on suspicion on spying on the american government and he is a u.s. citizen. the wall street journal says it is concerned about his safety. two u.s. army helicopters collided thursday night during a training exercise at fort campbell. the military says there were several casualties. they are not saying if they are injuries or deaths. the helicopters were from the one of first -- 101st infantry. the trip may further escalate tensions between the u.s. and

china and beijing says the visit will have a impact on the relationship will washington. the fdic is thinking that -- bloomberg has learned that the special assessment on the industry will happen in may 2 shore up a deposit this -- insurance fund. the regulator is under pressure to spare small banks. 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 matteo in this is bloomberg. -- and this is bloomberg. ♪

>> there is this implicit guarantee that banks can be two big --too big to fail. we start with credit suisse and there was no worried that counterparties of credit suisse weren't going to be made whole and if that is the sense of the land, it will drive business away from these midsized banks and i think we'll have a detrimental effect on the economy. jon: good morning to you all and your equity markets are shaping up as follows. futures up by 6/10 of 1% on the s&p. higher on the nasdaq after entering -- reentering a bull market. it -- it is up 20% from the december low but some people get frustrated about it. lisa: you can say it is a bear market rally.

jon: if you are lisa. the euro-dollar is south of 1.09. right through g10 through much of this morning and the dollar is weaker. joining us is steve pagliuca, senior advisor of bank capital. he is a co-owner of the boston celtics. it doesn't end there but we don't have the time. [laughter] >> you can call me steve. romaine: is a great --jon: it is a great tradition here, march madness happens every year and it is college baseball and people get excited and you have done well this year. steve: i am excited and it is a great group and this is probably the maddest march ever. jon: how many teams have you got left and the last time i did this, i was out after the first couple days. who have you got left?

steve: i have one team left. jon: what is your charity? steve: it is reform alliance. they are an art visitation -- an organization to help prisoners to get people -- jobs. we have to get people out of the cycle and i have a double bonus where my son left his job and he works for the alliance. jon: they should get money off the back of this. steve: i hope so. if uconn wins, reform alliance gets the money. jon: go uconn and go celtics. forza -- where does this end? steve: i am enjoying the teams i have now and their wedding and i

will go to milwaukee and see a big game and celtics playing milwaukee. lisa: you have a life a lot of people will envy. there is a lot of interest of getting into the professional sports game and we have talked about that during the heydays of low interest rates. have you found that change as it becomes more difficult to access capital for a number of individuals? steve: it has changed and we did -- when we did the celtics purchase, it was $360 million and the average club is now worth almost $4 billion. many firms have invested in sports franchises and people put together consortiums. lisa: the field like there is less interest that people are focused on the nuts and bolts of existence rather than the sport of it, because there is another opportunity but also because there are -- they are constrained?

steve: it is the same in his a highly competitive fund environment. in boston, the number one sports town in the country, it is a pleasure and sports as trends headed -- has transcended society and teams are doing a lot of good in the committee like nba cares. they are fantastic organizations. jon: i do you think about a potential exit when you have a stake in sporting organizations. i am thinking about john henry at liverpool and they are looking at these levels and thinking that maybe now is the time to exit. steve: our philosophy is a long-term hold. it is a great asset for a long-term hold so i hope to go to the grave owning estimates and hopefully quite a while from now but long-term hold and i

think the long storm -- they are long-term hold opportunities and appreciation has been so much, there is a big market out there of individuals who want to get involved with sports teams. we are seeing high valuations now because of the interest and the growing television revenues and the whole television landscape changing as we go from bundling to unbundling and bundling again. sports programming is the one solid thing that people will tune in and watch that live so that is valuable to digital properties. jon: and news. as well. that is supporting across passable and football but let's talk about the border economy. if you have money to put to work at the moment, how easy is it to transact? steve: there is plenty of

opportunity and there is a growing biotech sector in u.s. there are technology companies doing well. this period reminds me of coming off the tech crash and a 99. -- in 99. in those days, i would fly to california and someone gave me a term sheet and say you have two days to decide if this country is worth $100 million and has no sales but it is great to put on the internet and i was incredulous. i had many beatings and i was disoriented -- many meetings and i was disoriented. it crashed down in april. lisa: do you think we have gotten a washout that you got in 1999 and heading into 2000 but do you think this is a tenuous moment where valuations have not found the floor? steve: it is still tenuous and

people are going to basics and looking at plat -- as cash flow and looking if prof -- have profitability. most of my career, i think three quarters of my team -- career, team bills were at 4% to 5% so we got trapped in a easy money period for the last 10-12 years. the reckoning has come. lisa: you have an incredible view into small companies and how they access credit. you have -- we have been talking about the restriction of credit weakening the profile of companies. have you seen that evidence? steve: it is an issue and we have invested in many companies, family office and many need more capital because the banks are -- put the silicon valley situation, they are reining in. the markets are reacting and

there is capital out there but that is something to watch. jon: we talked about watch -- what to watch. cpr payrolls. -- cpi payrolls. what do you watch? steve: i travel around and i tried to get to the real economy and see what is happening and talk to people. we have had this savings buildup for -- from covid. which is a good thing. when you go to new york, restaurants are crowded. i haven't seen a huge economic slowdown. there is money out there and lots of jobs and job offerings. many of these tech cuts because the tech companies overspend with cheap money and when it's areas they should have gone to. that is a restructuring to get back to basics and where they are adding value and making money.

jon: figure of efficiency at -- the year of efficiency at meta. plenty of guys trying to send people to the moon. [laughter] lisa: we have talked about that. steve: soon you will have interviews on the moon. jon: i look forward to that end we will send tk first. steve pagliuca. good to see you. in the next hour of liver tv, someone from missoula -- bloomberg tv. we will have someone from mizuho. ♪ s your customer's experience ever better.

lisa: this is bloomberg surveillance. we are moments away from getting data with jobless claims. we are seeing a lift in markets and we have seen the 20% rally since the december lows in the nasdaq. you can see the s&p up 1 -- .5%. we are trying to get signals from bonds as a way for some indication on how the data is evolving. the latest data, we have a cents from michael mckee who is down in washington.

we getting numbers now. -- we are getting numbers now. mike: we are getting any surprising numbers. it does appear that the labor market remains stable and a few more job applicants or job losers may be applying for benefits but it is not a significant change, not to change people have been expecting and the four week living average goes up to 1 -- the second response, to the gdp numbers and consumer spending drops off to 1% from 1.4% and that is a big deal here because people are talking about consumer spending is falling off. i think i have lost you on your end so i will turn it back to

you and you can ask vince how he see things going. lisa: michael mckee, we are seeing markets gyrating around and if you take a look at the two-year, there is little reaction. things are moving along. trying to get your head around where we are in this tipping point because it feels like a model and vincent reinhart has wise words when you are in a muddle. maybe people are waiting for surprise to trade rapidly. vincent, q explain why this is interesting to you -- can you ask wayne why this is interesting? -- can you explain why this is interesting to you? >> we have the sharp turn associated with the financial strains and in small banks and will that show up anywhere?

the most interesting thing about the report mike gave was the data at the top, march 25. the first reading on activity. a really noisy one. that said, it comes after the strains who haven't seen anything. lisa: this is a problem that people have. when they look at the data, it looks strong and it looks like a robust market and inflation is running too hot and not a lot of signs of cracks. what gives you confidence and others confidence that you need to wait and it will come? vincent: the late, great rudy dornbusch had a phrase. everything takes later than you expect and what happens, it happens fast. that is what is happening with the business cycle. the unemployment rate goes up after having gone and -- down a

10th or 2/10. what gets me confidence that bad things will happen to the economy, we had significant federal reserve tightening and tightening in the baking system, particular on the ground -- banking system, particularly on the ground. we have the trading partners slowing. the simplest rating -- reason to expect slowing because trees don't grow to the sky. output is below what we think is the efficient potential and the unemployment rate suggest -- acro economies don't last long in that state and something happens and it is to be downside. lisa: that is why people are focusing on the prognostications

in the economy. michael mckee is back. -- as time of such turmoil -- at a time of such turmoil. mike: one of the predominate teams is that the day we're getting from the government is partial because of the drop rate and it is backward looking so -- rather then, is a little bit more timely and maybe has more validity and some of those numbers are not looking good in terms of consumer spending and these are people that were here yesterday and they see declining medicine in consumer credit card use and the 60% possibility of a recession by the end of the year so there is more of a foreboding move even though the date it not seem to have turned -- data does not seem to have turned.

lisa: can you way in on the idea that the surveys were not accurate but things have been robust enough to give an accurate read on what is going on. vincent: the answers to the question, are there problems with government statistics, the answer is always wake -- yes. the covid and the pandemic and the shutdowns related, it was a stress test of everything including on how we collect data and it is not surprising that response late -- cert -- response rates are lower in the same way coffee places have shut down. we are not going in the office mary -- nearly as much and the patterns of office activity has shifted and it is difficult for the government to catch up. i have sympathy with what mike said, look to how people are shifting. if we are moving online and rely

on private debt service -- sources that are more on top of that but we don't have much of a time series. it is not a long history. it is not like, as chair powell said, it is not like we can run 10 pandemics through the model and say this is what we predict. lisa: vincent, based on the parameter on risk which is right -- rates and the tail risks that are getting wider for the federal reserve, do you think this is appropriate for them to err on the side of over tightening or under tightening? jon: --vincent: when the world gets more uncertain, you would say check -- tech -- take your best shot and aim for the middle of the wider range and i think that is what they are doing. i would not characterize it as under or over tightening but it

is appropriate now they move gradually and be willing to stop if some of that incremental evidence suggests the economy is turning and that is what they seem to be willing to do. that is the whole idea dropping ongoing further increases. that was the idea of chair powell being tentative about the outlook. they got infirm --it firm, but i have -- i hope they have the wisdom to stop if the evidence suggests that. lisa: a lot of people point to the making stress and the withdrawal of credit as accelerating an equivalent of several rate hikes. how many people are supporting nephew at the conference -- that's view at the conference? michael: they had the discussion with the former vice chair of the fed and the problem with the fed is that they don't know. past history predicts that you

see that it tightening and their estimates from 3/10 of one percent to 1.5% in terms of the impact of the economy but the fed is flying blind. we will get a senior loan officer opinion survey in may probably. we probably won't see the data boat that will tell us something about whether things have tightened but they have already tightened. do we think they will tighten more or will be -- are these idiosyncratic situations and the banks that are lending will still be lending to get customers? it is tough for the fed because there is a historical feeling this might happen but there is no data that will tell us when it is happening. lisa: vincent, when you take a step back and we write the history books on this time, how do we look back at the tipping point of fed credibility, now

only with respect to policy but respect to supervision of the banking system? vincent: if you are asking the question, let's take the satellite you and look down, the big issue is loan over loan and it will be a theme running through the macroeconomy and debate -- in the banking sector, keeping rates low for two long and let inflation move up and set up an enormous macroeconomic problem. keeping rates too low for too long may banks complacent and worsened a mission -- mismatch that is natural on bank balance sheets and led to tresses. --stresses. supervision is a layer on top and could we regulate banks better? yes. could we write better banking laws, certainly.

those are weak -- the macro app -- the macro imbalance was lower for longer. lisa: what is the rate that we can go down to that is the new low that would be considered perilous on the levels we talked about? vincent: i think that -- i won't say a level. it is a level relative to some neutral rate and i think it is about changes. this is a time for old-fashioned monetary policy making. we will have to go back to check the model that we have a problem because as mike was saying, the models are reliable -- are not reliable. we don't have shots like we just had. it is about talking to people and being willing to change the stance of policy, based on your

gut feeling about what is happening at the macroeconomy. recognizing you have to fix a problem you created, associated with lower for longer. lisa: vincent reinhart, thank you for being with us and michael, thank you so much as we parse through the data and commentary and the got healing people have in washington dc is that things are not all right the way we can see and the weekly jobless claims coming in at 198,000 and so 200,000. coming up, christian noyer of bnp paribas an difference -- and bank the france. >> the wall street journal says the family denies allegations that one of the reporters was spying in russia.

the american west detained any a city in russia and is expected of espionage --he is said to be collecting -- there was another sign of republicans growing uncertainty around -- about america's support of ukraine and caressed a republican say billions of dollars of ukraine's risk being misspent and could be better used for domestic priorities. michael mccaul criticized western european nations for not supplying as much assistance to the u.s.. the u.k. is set to outline aches strategy to speeding up deployment of renewable power and is being response to the green subsidies at the -- from the inflation reduction act. the price of bitcoin went up -- over 29,000, the highest it has been since last june and that is

when a series of scandals began. overall increase and risk appetite in global markets has increased crisis. the latest census numbers shows that manhattan's popular growth and other euros lost residents. manhattan added over 17,000 residents in july and it is 98,000 residents below its level after the start of the pandemic. 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 matteo and this is bloomberg. bloomberg. 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

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turbines means in the europe area and i would say at this point, it looks that we have somewhat smaller problem than we are seeing in the u.s. so so far, it looks that sfr banks were -- it looks like our banks were resilient. isabel schnabel in d.c. talking about the relatively hawkish term we have heard from the ecb. and -- inflation rates are higher than expected and in spain, it came below but if you take a look at the core, it came in hot and with german inflation, it has gone down and we have the reading 45 minutes ago. coming in stronger than expected with consumer prices rising 7.8%, versus the 7.5% median estimate. i am excited to have our next

guest to understand the connection between the u.s. and europe and now through london as much anymore. how you navigate all of this as a former central bacon, christian noyer, and honorary governor at banque de france. what brings you to new york? christian: i am meeting a number of financial institutions because in the wake of brexit, we have -- financial sector of paris. it is successful because we want to grow the market in europe. we thought that bmb purpose is the best place for europe in market activities. it is working with all the government -- with all the major u.s. banks and french banks. we have more of the 600 asset

management institutions in paris. we have all the major insurance institutions. it is innovative. i wanted to talk to a number of american counterparts to encourage them to continue growing paris. lisa: it is a fascinating time to talk to the heads of firms especially considering the concerns with the banking industry and a u.s. how worried are they about set -- acceleration? jon: --christian: i think they fully understand that the business model that we have is bigger in france and we have mostly five major banks that are universal banks. exactly like the big american banks so they -- the business

model is resilient and we are subject to several rules with important requirements in terms of solvency and liquidity. they are strong and resist well and it is different from what happened with midsized and small american banks, which are a different different -- this is model and very concentrated and not fully compliant with international rules. we believe that there is no risk in our area. lisa: no risk of contingent. -- contagion. people have been talking about more on the u.s. side, because you can earn something on cash, we -- it leads to a flow of capital out of banks.

have you been experiencing that in any significant roi --any significant way? christian: we have not been experienced -- expressing that. our banks are diversified and the only risk you have, if an institution is considered as weak, there will be a flow towards other kinds of -- if it moves to a market instrument, if the banks have large access to capital markets, they can refinance easily, more easily because the central banks had injected so much liquidity and had excess deposits so if some of those assets moved to short-term deals or instruments, it doesn't change the soundness of the liquidity. lisa: a lot of people started this year enthusiastic about european banks and saying it will be a golden era at a time

that had been -- they had been beating up with valuations and finally rates for something. there was an interest rate proposal that could increase possibility -- profitability? is that story still in tact? christian: absolutely and when interest rates move up, you have to be cautious during the time they increase because if your balance sheet is not well hedged, you may have problems. i do not see those problems because the hedging was then -- done well. be issues of liquidity were above the legal requirements and that have been strengthened after the 2008 prices and over time, an increase of interest rates is yielding more revenues for banks and that is good. lisa: you are the first vice

president of the ecb when the euro was launched and it has been a long period of time and a lot of it was negative for zero rates. what would you do if you sat on the ecb and what would you like to see them do? christian: i think -- i have no great advice to give them. i think what they are doing is right, to take seriously the need to come back to price stability, to the target that was defined. i like what the fed is doing here because i do think -- but the beginning of the ecb and i believe in the medium to long-term, having price stability to the level around 2% which is the official target for the ecb and for the fed and all major central banks, of the developed world, is the condition to have maximum growth

and wealth for the people, maximum employment, even in the short term, and may create some difficulties -- and what they are doing is to ensure that we will return to the target of inflation is the right thing to do. the way to do it, it is not impairing growth. we are growing despite the war in ukraine and increasing inflation. we continue to see positive growth and we could -- continue to see an increase in employment and that is true or france. if i look at the unemployment rate, it is the lowest for a long. -- for a long period of time. lisa: some people will point to the images of protest and

garbage collection issues and be pushback -- you have seen -- -- the pushback you have seen in paris and france. this that affect anything you are talking about in terms of growth, net -- and momentum and price stability. christian: it is not. -- does not. [laughter] and may be difficult to understand but two important remarks i would like to make. it shows that france is serious about continuing its reform agenda and second, any reform in the penchant -- pension system, -- we have had resistance but things go on and reforms are done and we consolidate the system bit by bit. where -- what we see is no real change in economy growth. the first quarter is positive and relatively high and

inflation is lower in france than the rest of europe and good interventions by the government to ensure a cap in prices for corporates and households. unemployment is continuing to decrease. lisa: thank you for being. banque de france honorary governor, thank you for being here and coming up at 1 p.m. eastern, the former ftse --fdic vice chair has many conversation going on in bc and janet yellen speaking this afternoon around 3:45 p.m. and we have some released comments from her talking about the need for more regulation. in markets, lift as people

reassess the banking crisis over. this is bloomberg. ♪ these days,

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equity markets up 0.6%. the countdown to the open now. announcer: everything you need to get set for the start of u.s. training -- trading. this is "bloomberg: the open" with jonathan ferro. jonathan: list from new york, coming up the labor market shows continued strength. the fdic's forcing