- jesus g suarez. i did it and it's here. - [speaker off camera] yeah! ♪ - [narrator] next term starts soon. visit snhu.edu. >> we have still a economy in the u.s. which is not landing. it is checking around central bank's ability to control inflation. it is much less direct than might have been thought or hoped. >> inflation has peaked, it is not coming down. that is not the story. >> there are risks that are out there. >> there are certainly possibilities further stress could be triggered at some point. >> this is bloomberg surveillance live from the imf

meetings in washington, d.c. jonathan: live from the nation's capital for our audience nationwide, this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz. i am jonathan ferro. our last day of coverage at the imf spring meetings in washington, d.c. our attention shifts to the bank earnings. stack lineup for you, a flavor of guests coming up. it begins with rbcs gerard cassidy. then, the european commission. looking forward to that conversation on the federal reserve and gloomier forecasts coming out of the imf. we have to start with the banks. wells fargo, jp morgan, we have been waiting. we have seen the data. payrolls and cpi. now, it is about the consequences of the banking shock of the last month.

tom: i think bankers will be watching imf meetings and debris that comes out of these meetings. this is on the jamie dimon's talk about before, macro credential, the summation of risks. john lipsky identified with this years ago, summing up the risks and what does it mean for your global banking business. these are the kind of banks we are going to hear from in the next 48 hours. jonathan: was it truly the port of the storm after the end of q1 we saw weeks ago? lisa: there are two groups of watching this. economists saying, how big is the banking crisis, and the investors saying, can we start buying it? we have those two poles with jp morgan probably not giving the answer because they are the big bank the port and the storm and not out -- susceptible to the outflow and asset classes as some of the smaller regional banks. tom: maybe somebody in their

shop will look at the screen and go, it is not over. i need a mic. jonathan: the whispering doesn't work? lisa: it is not over. there is a serious decline in profitability. is it valid given how much cash they have and given how much people are demanding things? tom: this is a third rail for me, the big banks are minting money even when they have a serious decline in this come about or the other. it -- they do not want to tell this story of how much they are making and how much more they are making now versus 2019 or dare i say even pre-pandemic. jonathan: that is why the data coming up later is going to be fascinating. we got a number from bank of america in the midst of stuff going on the last several weeks. let's try and get a number from jp morgan. look at the stock prices.

since svb went under, s&p 500 is up. lisa, to your point, i think that captures not just the crisis in q1, but beyond that, the profit challenge people expect and further down the road from here. lisa: the delineation between big banks minting money and smaller banks unchallenged on several sites, do you see that divide get bigger? do we get answers to that today? all clear for some of the regional banks? jonathan: i am going to rip black crock -- black rock across the screen. first quarter net inflows 110 -- stop up a little bit. lisa, you go through the numbers. stock price up 5.2%. tom: [laughter] do they have an inflation forecast here? jonathan: do you think the ceo might offer that? lisa: when i am looking at is

interesting. you saw fixed income net inflows at 9 billion. even at fixed income, you saw that increase. earnings, $7.93 versus the estimate. pretty positive. my question is, the mix of active versus passive that has been a good question for that passive. long-term inflows, this is the interesting thing. our asset managers coming back particular early to fixed income but to stocks of $102.7 billion estimated $84 billion? shocking in terms of outperformance. tom: let's get to our guest, the debt work out of the sale them troubled banks. i believe the name blackrock is involved. two leases point, is that -- to lisa's point, is that lucrative? jonathan: let's start off with what you are expecting from jp

morgan, city, wells fargo later this morning. >> we've got to say what it -- when it comes to jp morgan, we are looking for the main thing there will be how many deposits did they gain, what is the cost, what is the provisions? the same for wells fargo and citi. wells fargo, the exposure in the market, a banker on wall street is what that looks like. for strategists, investors, traders today is to get the forward view from these banks relative to where they stand today in the aftermath of what we saw from his regionals. looking ahead. tom: you look like a genius. you have been participating in this bull market. you extended your timeline and the timeline is now. when the bears capitulate, a, have a capitulated yet, and if

so, what does it do to the market when the bears capitulate? >> i think you're putting me on the spot. one thing we have noticed is the bears appeared of late to be speaking out of both sides of their mouth. they saw this rally would have predicted more trouble ahead. i think there is never a time of uncertainty in the markets. it looks now like we are certainly on the mend. the market is telling us very much that improvements remain to be confirmed. they appear to be on the horizon. the fed has so far since it pivoted has been on the right track and very fortunately, the consumer, the business remain showing signs of resilience. we think that is what is driving the market. also, i think -- training is fear and greed. when it comes to intermediate

and long-term investment, there is almost -- there is always a fear of element and grade. we think that is what the market is reflecting. tom: the ferro building. it has a ring to it. jonathan: what would be inside it? lisa: absolutely nothing. jonathan: absolutely nothing? lisa: you would have well appointed furniture. very sparsely arranged. jonathan: so, a furniture store. lisa: [laughter] let's move on. i want to talk about banks, not necessarily furniture stores. you have been optimistic. how optimistic are you to load the boat with bank stocks right now, the kbw index is down 25% in march alone. it seems investors are saying, can we buy, is this the all clear? >> it does appear there has been

some kind of flow going back into those areas. our view is, when it comes to our main exposure to financials, it is within the s&p 500, the big banks, the best of the lot. we have reduced our waiting on the financials sector. we brought it down my recollections from 10.8 from 12.8, the benchmark waiting in financials. near-term volatility and opportunities elsewhere within the sectors looked better to be realized near-term. lisa: what bank would start to increase her allocation two stocks, not just the big ones, but smaller ones? >> i am saying a little more distance into the future, moving into the future and beginning to see there likely might not be more shoes to fall. we have to admit both the

comments over the course of the last few days from jamie dimon and warren buffett related to the potential -- not looking for any kind of disaster, but more choppy water. near-term, we would have to think, we will stay where we are. about 200 basis points light against the benchmark rate of financials. looking to add again. at the end of the day, the world runs on credit. as we move towards this new normal with the end of free money, we think it is a healthier environment we are moving towards where it will be less prone -- it will be more prone to looking at fundamentals rather than wild leverage place. jonathan: that is a constructive view. great to catch up with you. on a day where we get a ton of bank earnings. we will go for them for you. citi, wells fargo, jp morgan possibly later this hour.

i am looking forward to getting this numbers. we have seen signs of stabilization across several indicators. we have seen that in the bond market. to year, we have had wide ranges this week about 15 basis points. 15 basis points on a two year compared to the last several weeks is nothing. lisa: there is a stability in rates giving people confidence perhaps the ability to access what an investment might be worth. we saw yesterday, 4:30 p.m. eastern, there was stabilization, a decrease in some term loans banks had been taken out. to your point, it does seem things like -- it does seem like things have calmed down. tom: they are going to do everything they can to not show their dominance today. lisa: good luck with that. [laughter] tom: it is like at the imf. have you heard anyone at the imf mention china? i am waiting for the first imf

interview where someone says the word china. it is like -- there are these signaling's of what is not said. today, they are not going to say --\ jonathan: the focus this morning is on financial stability. i will say this about the banking events of the year so far, do you consider it an event? a one-off event or the beginning of a process, the start of something? i think there's a lot of people that are drawing a conclusion, suggesting this is the beginning of a process, this is going to take time. the next stop is the data we get from the officer opinions survey. i imagine we will get a flavor of that from the federal reserve when they meet may 3. lisa: which is probably a reason people are more focused on deposits than anything else. the more they keep going out, the more lending will continue to be constrained. jonathan: next later from the

imf, -- of pimco -- eric nelson of unicredit. i am told joining us shortly, bloomberg news and washington, d.c. very cool. equity futures downearnings fror this hour. ♪ lisa: keeping you up-to-date with news from around the world with the first word. the u.s. government struggling to explain how a 21-year-old man in a junior post was in a position to allegedly leak a massive trove of classic darkness. a cyber specialist for the u.s. national guard was arrested in massachusetts and is scheduled to be arraigned in u.s. district court in boston the. the new york times reports he was the leader of a gaming chat group where the doctrines first appeared. in a testy public exchange, germany's foreign minister says

taiwan's destabilization would be a former scenario. if any change in taiwan status would be unacceptable. aging has rented military drills around taiwan in recent months. china warned about the risk on falling debris near taiwan this weekend following a planned satellite launch. a no-fly zone will be imposed for the north of the island. global news powered by more than 2,700 journalists and analysts in over 120 countries. i am lisa mateo and this is bloomberg. ♪

what do you get from the morgan stanley client experience? listening more than talking, and a personalized plan ♪ to guide you through a changing world. ♪

>> the world economy has proven

remarkably resilient. it is yet to overcome the combination of weak growth and sticky inflation. we project global growth to slow down to 2.8% in 2023. >> the imf paints a gloomy picture for the global economy. are you feeling gloomy? >> i am optimistic and always believe in the ability to make progress. the bigger picture is even with the changes they have made in growth forecasts, they are still forecasting growth for the euro area and the european union. jonathan: that was the imf managing director making comments about the outlook, very gloomy stuff. in response was the euro group president. this has been a clear thing over the week so far at the imf spring meetings. the imf has said gloomy stuff, the -- have pushed back. we have seen that from the

treasury secretary janet yellen earlier this week. there has been tension, the imf saying one thing and repeatedly, politicians saying something else. lisa: from the treasury perspective, they thought the imf was influenced by their conversations weeks ago at the height of the banking crisis. they feel it is colored to that perspective and not reflecting strength they are currently seeing in the data. that said, there is perhaps an over dismissive and is by some politicians about ongoing concerns people have that will be represented in today's earnings. jonathan: that is the diplomatic way of putting it. lisa: tom: i try. tom:you prefer the undiplomatic way. what is interesting to me, they both have obviously different mandates. what is interesting, it is different mandates coming out of some big we have never

experienced, a natural disaster, the pandemic. what i would suggest we have learned here and will learn today at these meetings is, the pandemic is not over. the stream of the pandemic through year is bouncing around, the political view and the economic view, as well. lisa: i do not think that was not diplomatic. people are basically saying, fine. it is ok to have an issue with the fact this was not colored right. there is no evidence of credit crisis or credit withdrawals whatsoever after what happened with silicon valley bank. pretty much everyone is saying -- jonathan: sounds great on bloomberg radio, just banging the table. keep it up. it is nice. tom: coming up, this is a joy for us. we speak to someone for a long hour team, into karen has held down the fort.

he joins us now in his new deed -- new duties in washington as our global economics reporter. eight thrilling to see you -- thrilling to see you. your article today on fragmentation and resilience, give us the hong kong update. what is the state? >> it is in a better space than it was. the or port -- the airport has reopen. a lot of restrictions on the ground have been lifted. there is something of a shadow hanging over hong kong. it has not recovered to the financial hub. it has a way to go. jonathan: how difficult was it to cover things from hong kong the past several years? enda: it was difficult. while you were there, you could travel across the region. that is what we always did. suddenly, we were told nobody is going anywhere. nobody could go anywhere for

three years. jonathan: china reopening this year, that was a conversation at the start of the year. supposedly, that was breathing life into a more optimistic view when the global economy. we haven't heard much optimism at the imf headquarters. why is that? enda: china is contributing to some better news. yesterday, india and china will drive half of global growth this year. the bigger picture is one of long worries. some are talking about -- 2008, things were quiet, some people are warning maybe we are in that quiet period. six months from now, higher interest rates will cause pain for the global economy. lisa: weren't people worried about the potential for a quite crunch, having to choose sides with respect to the polls around china and the polls around the u.s., europe and the heiress --

the u.s. and europe separately and what that means politically? enda: this global idea of fragmentation has been a strong theme. i have been surprised it is much stronger than expected. you've got this conversation about which nations get to get supply chains in order to get ready for the next pandemic or conflict. poor nations are saying, fragmentation is going to be bad. there is realigning going on in front of our eyes. lisa: do we have a sense of where the imf's priority is in respect to whether to wreck we askeddemands? in this limbo between defaulting or not, do we have a sense of how heart of a line the imf is willing to strike at fear of perhaps alienating china? enda: a delicate dance going on. beijing made comets overnight making it clear multilateral

lenders need to be clear. they are not going to be in the mix. china making the point -- that is one of the key talking points. tom: in one of your articles this morning, we do not have any china's anymore. you know the run rates of gdp, what kind of run rate is in your head for china forward? is it a 3% gloom, do they get back to the new normal 5%, 6%? can shanghai do better? enda: people are saying 5% this year is possible. slower growth on a much bigger base, much bigger economic ace in china was 10 years ago. anybody looking to china for the global years of double digit or higher growth is gone. jonathan: you mentioned the tension between wealthier nations and former -- poorer

nations. there is tension between rich nations, rich blocks, europe, the united states. -- joined us earlier this week, he was warning about where this could ultimately had. is that a concern you share? enda: it is another subplot going on here. you mentioned the rivalry, the u.s. inflation reduction act is causing tension among key trading partners, especially eurozone members. there is tension. it is a new era for indus policy. that is a key issue. jonathan: have we given up on free trading capital? enda: there is certainly rethinking going on. if you zoomed in, you would say -- 10 years ago. jonathan: great to see you. what a situation. i think earlier this week said

there is no big theme this week, just 10 big different narratives people are trying to push simultaneously. tom: there is narratives based on many theories. it does back to -- some of this is original, some of it is in the textbooks. people are flying theoretically blind. it is not just about the back and forth. it is about the foundational misunderstandings out there right now. jonathan: enda is highlighting the big risk, the idea you have the banking shot the last month. you do not see spillover immediately, start to sound the all clear. there is a real risk involved, not because i believe this is going to get worse. am not making a judgment. i think it is too soon to make any judgment at all. lisa: i think what is highlighted here, john lipsky was talking about this, the lack of unified response to a potential credit crisis. in 2008, everyone was focused on

trying to shore up the global financial system. right now, whose rules are we playing by? jonathan: switzerland's. lisa: good luck with that. no offense to switzerland. is that the existential angst? are we all following the same rules or are we all in deep competition? jonathan a big morning here in washington, d.c. the tension is looking elsewhere. this morning, we are focused on banks. we will look ahead to jp morgan, wells fargo and citi. jp morgan should come later this hour. s&p 500 equity futures a little softer. lines down more than .1%. live from the nation's capital, this is bloomberg. ♪

the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com i screwed up. mhm. (we did it) i got us t-mobile home internet. now cell phone users have priority over us.

and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

jonathan: waiting for numbers from jp morgan, citi, wells fargo. those earnings from many first quarter financial industry, those earnings dropping over the next 90 minutes. equity markets shaping up as follows. equity futures negative .2% on the s&p 500. on the nasdaq, down .3%. in the bond market for once, a tight trading range. a trading range of about 15 basis points on the week on a two year, 3.95. a standout for the price action of the week so far is in the fx

market. dollar weakness, euro strength. euro-dollar short of 1.11. intraday high and intra-date high. dollar index trading with a 100 handle. the dollar index 100, 88. tom: we have printed a 99 handle, we have come down to the 100 level. is it a grind? i'm not there. it is not technically a grind, a beaker dollar. it is certainly story driven. you've got to see what the news flow is to see if maybe we'get this dollar breakdown many of you have looked for. jonathan: in early february off the back of a ecb conference from president lagarde, that is where the debate is. the rate differential side of things. the ecb is basically

communicating there is more to do. i will say there has been a shift in the ecb, officials we have heard from. language talking up 25 perhaps instead of 50 into the unknown. tom: i would suggest as we have seen central bankers parade around here, jerome and the dot plots. lagarde is focused on europe. i think she is less focused on the imf chitchat and much more focused on the mystery and original european experiment. jonathan: for lagarde and other european officials, this is not the europe they fearcenario. to sit here and hardly be talking about the european energy crisis. we have been here for most of this morning. you talked about not mentioning china. how many conversations have you had about european conversation this week?

zero? lisa: basically, they've got a hail mary pass. china reopened earlier. we saw from the homies results chinese consumers are buying and buying in luxury. is this a european strength story? i would argue it is not. i would argue the past couple of sessions, it is a dollar weakness story. it comes at the concerns the credit crunch is going to disproportionally -- tech heavy sectors are not going to lead the same kind of way in the u.s. tom: i'm going to rely on our fx experts. with the former italian prime minister now holding -- what is so important about what he said, i thought he was going to throw my -- his coffee mug at me. this is a sensitive issue for the europeans.

is this a new europe? is this a back story not addressed? jonathan: what a run some of those names have had. lisa: did you see the year over year increase in profits? double digits, incredible. jonathan: asia, europe, flying over to europe to do spending on luxury items. it is better. tom: let's go to someone who is aware of that, sonali bassett -- basik. wells fargo for our international audience and for our domestic audience, this is the idea these banks are different. what will be the signal from wells fargo that you will want to see? sonali: the deposit number will be interesting. we know in this crunch, we have seen among the regional banking system, there has been a flight to quality. jp morgan deposit number will be interesting, this is a number

that has been decreasing quarter over quarter the last few quarters. the last time he saw an increase for j.p. morgan was into the first quarter of 2022. four wells fargo, did they get the same love jp morgan may have gotten when customers pulled the deposits from the likes of silicon valley bank? tom: what is your guess on that? what is your guesstimate? is wells fargo part of the love boat of bricks -- big banks seeing gazillions? sonali: it is hard to say. wells fargo has been a weaker bank than other large banks we have seen in the united states. silicon valley bank as well as first republic, a lot of these work well for her customers that tend two with likes of morgan stanley, goldman sachs were jp morgan. they have not have seen the same love, especially with movement away from posits into money markets. tom: sonali to help us with the

banks, always helping us with banks as your art cassidy --gerard cassidy, what is the first thing you will look at from fortress diamond this morning? >> the first thing we are going to look at, what is going on with net interest income and net interest margin? we will be looking at deposits, but it is going to be difficult to figure out until we start to hear commentary from the bank. as you know as the biggest bank in the country, they are front and center with qualitative tightening, deposits are coming out of the banking system which qt was intended to do. though they may have received benefits from the silicon valley bank deposits, which they did, that might be offset by qt taking deposits away from them and their peers. net interest margin, net interest revenue and deposits and going to the capital market business.

jonathan: i want to pick up on a bank like wells fargo. let's build on that. wells fargo essentially had its growth cap. i wonder if having your growth cap is a good thing, given what we have seen the past couple of years. >> you make a good point. that is one of the reasons wells may not have seen much in deposit inflows. the growth is capped on the deposit side. they have done a good job in remixing their deposits to the consumer away from the wholesale. as you pointed out with growth being capped, should we get into a credit cycle, they should benefit more than maybe some of its peers because of the cap on growth. lisa: we are getting in about 15 minutes or less, jp morgan earnings, pnc financial. which are you more interested in given the focus on regional banks? >> i think the pnc number might

be more important because it will give us a read into other regional banks. they are a large regional bank. as you know, every friday afternoon, we receive the deposit and loan data for the industry from the federal reserve. the top 25 banks, pnc is part of that, the large banks as you saw an increase in deposits the week of the silicon valley failure the week after. there deposit numbers are going to be interesting, along with the margin, as well as a net interest revenue. last year, that was a tremendous driver of earnings for the industry. we expected it to slow down this year. it may be slowing a bit faster than expected before the silicon valley issue. lisa: if you look at and economists were, they are focused on credit crunch, the potential implications for the economy. stock traders are going to say, can we start buying stocks again, can we start buying banks

considering how much they have sold off? what are you looking for to determine whether this is going to be a story around optimism of stocks that have been beaten up and devalued versus a broader, economic, slow malaise that is going to take months to carry out? >> you put your thumb right on it. when you take a look at the stock action since the silicon valley and signature bank failures, the banks have suffered dearly as a group. that deposit fight is over in our opinion. the factors for driving stock prices down should not be as much of an issue. pivoting to what you just talked about, the outlook through the economy is where it becomes more question will. we have received questions now everyday about commercial real estate and the impact it could have on the banking system should we go into some downturn. i think the outlook from jamie dimon and jp morgan, as well as other banks, will be important on the economic outlook more so than on the deposit flight

issue. jonathan: the federal serve struggle to change its outlook over the last couple of weeks. why would the c-suite, a bank like jp morgan be any different? >> i think they've got a better pulls on the economy, especialls enormous input from many different places. jp morgan, citigroup, all the banks reporting today, they are on the frontline. they see it everyday in their customers behavior. they will have a better feel for what is going on. i think that will give us a real-time feel. i think we are going to see that, yes, things are slowing down. i think the stocks have over discounted it. we expect these numbers today to be decent numbers, maybe even good numbers. the stocks hopefully will rally on this news. jonathan: thanks for being this. i know you are going to stay close and break down some of these numbers when they drop. to go through the morning, this

is what the lineup looks like. -- of pimco, -- of the european commission, joining us around this table together with eric nelson of unicredit. the tension going into the market open firmly on the bank earnings through the next 60 minutes or so, we hear from jp morgan, citi, and wells fargo. tom: really rich and really different. i've got to admit as mr. cassidy alluded to, i focused on jp morgan just because of the scope and scale. i know they have a projection into europe that i think gives them a knowledge base the other american banks do not have. jonathan: financial institutions, some of which an audience outside of america might not have heard of before. we start to get a flavor for regionals later this morning. lisa: the fact gerard cassidy said pnc will give us insight into regional banks that hold the question about the fate of

lending in commercial real estate market and some of the smaller consumer lending areas is incredibly important here and i believe we are getting those pnc numbers right now. tom: one of the questions is simply, do they speed up or sped up during the pandemic? is it a new time of evolution for them? jonathan: first quarter revenue pnc financial, the estimate $5.61 billion. share back activity expected to be reduced in the second quarter. we build on those headlines in a moment. we will get you the jp morgan results when they come. live from washington, this is bloomberg. ♪ lisa: keeping you up-to-date with news from around the world with the first word. u.s. pressing the need for allies to coordinate against economic coercion. not just military threats. this as japan prepares to host top diplomats among heightened

tensions to china. the abbasid are to china saying that peace is import pitch china set to be a key focus of discussions at that meeting. china's megabanks are planning at least 40 billion you want to bond sales kicking off a major funding push to comply with global capital rules by early 20 25. bloomberg learned the industrial and commercial bank of china and its three closest rivals are planning to tap domestic that markets to silly new category of total loss re capacity bonds as soon as june. supreme court clarence thomas and relatives sold three georgia properties that include thomas's boyhood home to harlan crow in 2014 according to a report. pro-public assess thomas did not list the real estate sales on his financial disclosure form that year. or report his expensive -- extensive travel. dozens of organizations in children safety experts calling on meta-to terminate its plans to allow minors into its new

virtual reality world. meta-is planning to invite teenagers and young adults to join its metaverse app in the coming world. some argue young people could face harassment and privacy violations on the virtual reality app, which is only in its early stages. global news powered by more than 2,700 journalists and analysts in over 120 countries. i am lisa mateo and this is bloomberg. ♪ at morgan stanley, old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪

this is ge vernova, helping generate and move the energy that our world needs. ♪ welcome to a new era of energy. >> i think we are not over yet. how bad yet, we will have to see. i think this problem is more systemic. we are putting it on a few banks. demand deposits went up by trillions of dollars during the pandemic. they have not come down.

the sources of fragility are there. there will be problems going forward. the question is as you pointed out earlier, how does this play out in terms of credit crunch, which is coming? jonathan: the sources of fragility are there. a fantastic exchange with the professor at the university of chicago and former imf chief economist. we had numbers from pnc moments ago. wells fargo dropping now. waiting for jp morgan. sonali, your job to run through it. sonali: wells fargo trading below its book value. you are having them this quarter meet on estimates when you look at average loans, net interest income, they are above estimates. efficiency is in line, better than estimates. mortgage banking a little above estimates. looking a little clean on wells fargo in a quarter where we have had selloffs among banks weighted towards the consumer. at pnc, you are watching

deposits better than estimates a little bit. a lot of the pain expected is not as bad as was initially thought. tom: what i noticed in the verbiage from pnc and maybe from others is the dreaded word, stable. everybody is stable. it is stable friday on bank earnings. define what stable means to this set of banks. sonali: we are skating on ice in some ways. we are looking at expectations for some of these makes. where looking at worries underneath the financial system. stable means, you saw in the wording john had used earlier, this idea of reduced buybacks. you are trying to watch banks get through potential storms. the deposit number is a big deal for pnc. when we look at the part gerard cassidy was bringing up before, profitability is becoming under pressure for a lot of these firms. have we reached peak net interest margins as we are

watching more pressure on the lending book start to accrue? that is the case for both's that have reported so far. they are lower those net interest margins than a quarter before. lisa: can you help us work through these results and what to keep an eye out for? pnc shares up almost 4% right now in premarket trading. what does it mean when we hear these banks borrowed more from emergency rescue efforts as pnc did? sonali: what has had a huge summit -- huge stigma for a long time, it is not seen as bad as it may have been seen as in the past because we know the banking system at large is trying to get through this storm together. we are seeing more banks borrow from the fed. as you saw before the data suggests, that is starting to cool down. when you see numbers like this, the deposit flows being stable as you say, maybe some of that pressure is starting to ease.

this is a pittsburgh-based bank, not facing the same california issues we have seen in that system. tom: you are the only one i know who read jamie dimon's letter cover to cover. we will look for you on the jp morgan earnings. gerard cassidy still with us. the heart and soul of this is the distance between these five banks, the super regionals, the 4000 other banks. where are we in three years, you are sitting with an institutional investor that is looking at combinations and transactions. where is that 4000 number in three years? gerard: i think the simple answer is, it is obviously lower when you and i started out in the 1980's. we had over 18,000 banks in this country. we are now down to about 4600. in three years, could we see another 300 or 500 the acquired? yes. the hard part today is the

marks. in purchase accounting, you have to mark the balance sheets to market. because of the interest rate environment, the interest rate box are an obstacle to get deals done. once that comes down, i see any activity picking up in 2024 and 2025. in a three year time period, it wouldn't surprise me 300 or 400 banks are consolidated. tom: jp morgan, chase cannot buy out some of those banks. think they are precluded to that. jonathan: getting results from jp morgan now. what does that tell? sonali: i am not supposed to do this. the fact they have been so heavily on fixed income is significant for jp morgan. investment banks have been faring better in training then

you have seen the rest of the banking system hold up. i want to hang onto that. i want to take a look. when you look at the deposit number over at jp morgan, it is in line with expectations. they are not seeing this massive jump or anything like that. we have been talking about the secular decline in regard to interest rates and the decline in deposit relative to the rise in interest rates and that movement of money market funds. it is not like jp morgan is breaking in deposits. those deposit rates have been low at jp morgan. i would say something interesting about jp morgan is, when you look at the total loan number, it is a little bit softer than it was the prior quarter. i think there are a lot of questions. jp morgan is going to set the tone about risk appetite in the market and the propensity to lend. that is a fascinating number from jp morgan. it is not specific to how jp

morgan will fare necessarily in trading today. it is bellwether for the economy to see what their loan book looks like. we will be watching as more of their documents come out to see what their net interest income projections are for this year, given that concern profitability from lending might be under pressure cost making system. tom: we are going to get to gerard. very quickly, this is important. what are revenue --? pnc was down a low bit. jp morgan with a substantial revenue beam. what does that signal to you? sonali: sorry. i thought you were talking to gerard. the revenue beat is interesting. that is why appointed to the fixed income training deed. they are making more money from businesses we got, who are way under pressure this quarter than showing. markets are still volatile.

the buy side has had a significant amount of pressure coming into this year that they thought were going to be all clear. it is significant you are seeing the beat on certain business lines, including investment banking, which has been weaker on the year. you are seeing jp morgan be a beneficiary of that. tom: gerard cassidy with rbc capital markets, what are they not saying this earning cycle, these major banks have this -- have to spend the message. what do they not have to talk about, i would suggest as their scope and scale. gerard: i think they want to make sure you do not scare the market by saying they are taking in these deposits from smaller banks. as sonali pointed out, the deposits, your inflows and outflows. one of the biggest outflows for jp morgan is qt.

i had to double check my numbers. the revenue beat is amazing. it is not just in fee revenues, this company's net interest income quarter to quarter was real strong. i think wells'revenues beat, pnc was slightly below. so far for where the stocks were trading last week to close versus these numbers, these numbers are much better than where the stocks were trading. so far in the three companies that put them out this morning. lisa: what do you make of the increase in the loan laws provisions we saw at wells fargo and jp morgan? at one point, $1 billion set aside from that. gerard: with the new accounting we all are familiar with, current expected credit losses, you have to look to the cycle. as the -- through the economic cycle, that is. i would say with the economy

looking weaker post silicon valley, i think this is evidence showing up in the provision for low losses. we have to remember, credit quality still is very strong for all these banks. there is no evidence of any collapse in credit. they have to prepare now and -- in anticipation of credit losses, which is likely an economic slowdown or recession which we are likely going to see later this year. jonathan: great to catch up with you. increased probability of a moderate recession and yet, basically full year net interest income at $81 billion. make since about one. tom: cassidy nailed that one. that will be front and center on the research call.

jonathan: wells fargo up about .5%. citi building on the gains, as well.

hi, i'm lauren, i lost 67 pounds in 12 months on golo. golo and the release has been phenomenal in my life. it's all natural. it's not something that gives you the jitters. it makes you go through your days with energy, and you're not tired anymore, and your anxiety, everything is gone. it's definitely worth trying. it is an amazing product.

>> we have still a economy in the u.s. which is not landing. it is chugging along central bank's ability to finally and -- finally control inflation, much less direct than might have been thought. >> peak inflation is coming down. that is not the story. >> there are risks that are out there. >> there are possibilities further stress could be triggered at some point.

>> this is bloomberg surveillance live from the imf spring meetings in washington, d.c. with tom keene, jonathan ferro and lisa abramowicz. jonathan: a fantastic lineup of guests in washington, d.c. outside of these corridors from new york, looking at these markets from washington this morning, good morning for our audience worldwide this is bloomberg surveillance on tv and radio. equity futures on the s&p 500 softer by .1%. staple from jp morgan better than that. tom: even wells fargo has had love here. it is going to be a fascinating earnings season in all led by the banks. dare i say, led by tech as well over the exit queue should and given the cards they have been dealt. certainly, the tone this morning particularly on the revenue beat that jerome -- gerard cassidy

talked about, this is a jp morgan that is executing. jonathan: this move in the premarket suggesting a lot of people are relieved. jp morgan up by 4.5%. wells up here and we will get numbers five citi -- from citi in a moment. the coast is not clear. jamie dimon saying financial conditions will likely tighten. i think that is an assessment a lot of people will share. lisa: the two classes listening to these earnings, economists looking for how deep the pain may go in the u.s. economy and stock investors wondering when they can buy. when they could see some increase in valuations, they are getting the signal today. if you look at pnc shares, they are up 5.4% premarket trading, exceeding jp morgan on the better than expected. it does not mean there is not going to be a real economic ramification for reduction in

lending. jonathan: joining us now is sonali. go through the numbers piece by piece. sonali: this beat is incredible. a quarter of the people work worried about the economic outlook. guess what, the returns on tangible common equity of 20 3% are remarkable. that is with jp morgan increasing headcount. they are keeping a handle on costs, boosting headcount as well as increasing their net interest income outlook or the year in a year where banks were not expected to get the same boost from interest rates as they were in prior quarters. unstable, it is important because the first of the big regional banks to be reporting and their deposit number is better even when wall street had expected. you are looking at relative stability and being rewarded for caution when they are reducing their case of buybacks coming

into this quarter. wells fargo also coming in in line with expectations, this stability to come out from these banks at the start of this earnings season is welcome. when you had wells fargo and bank of america coming into today, can they regain some of that stock market value here given that they have made it through the worst so far? jonathan: stay close. when moore come, citi. jp morgan up right now 5.3%. a flavor of the regional banking story, citi should come in the next 60 minutes or so. joining us now is the director of equity research at cfra. you have had about 20 minutes to go through these numbers. what stands out? >> these banks are not only resilient, but making money. in particular in the consumer

areas, strength in the wealth management, credit card was flat. capital markets are strong. i think maybe the conversation has been missing is that we are going to see these banks do better ahead. we hit the trough. i would say the worries about the large banks is over. they are resilient. this is the first time deposits are down but loans are up. that is the first time that metric changed in maybe six quarters. perhaps that is a good thing. quietly, jp morgan is offering a 5% one year cd rate. even if deposits go out, they are quietly taking money from smaller banks. tom: you have been following this for decades. you can go back and look from annual report letters from 15 years ago that are embarrassing and vogue. as the vogue now for these banks

to top their scope and scale? i look at the revenue pop in jp morgan. i would suggest government affairs people are telling us to, shh, do not let anyone know. are they almost to successful? ken: you are spot on. the issue is the messaging. it is not that we have too much capital restricted because there is going to be regulatory cost and more regulation as relates to holding capital especially exiting basel three and gain. the story is making sure investors are comfortable, they can get dividend growth and buybacks at levels commensurate with the last two or three years. that is the debate they have hind closed doors with michael bar and the banks advisors on the stress test. not this year, but year. that is the important thing for

investors, knowing that these banks are not only resilient and profitable, but they can get a total return on their investment. lisa: i want to build on what tom is saying. we are talking about credit crisis and the potential for fragility and jp morgan expecting to bring in $81 billion of net interest income this year, far above what people were expecting. they are minting money. at what point are we expecting some of the discussion from the c-suite to be gloomier then perhaps it really is, to perhaps divert a little attention from what is going on in the bottom line? ken: the bottom line speaks for itself. that is with most markets. gerard was correct. we may have hit peak interest net margins, but looking back the last years at big banks, only jp morgan was able to grow net interest income from 2000 17 mostly because they expanded their loan activity and their book.

overall, the picture is good. that was our point in the middle of march. obviously, there was tremendous concerns about financial stability, but it was a great time at some of the large banks have sold off and we took advantage. i think the capital markets could give you a strong punch in the second half of the year he read right now, we are in the trough in terms of underwriting and mergers and acquisitions. tom: kevin leon's is dead on. max abelson tearing this apart for top line. this is a surreal conversation. the return on equity is 18%. they are minting money. shh, do not let anyone know. lisa: how much of this is a jp morgan story and a broader banking story and is this a question through out the rest of this year as people parse the differential between the jp

morgan's of the world and the -- i do not want to say the silicon valley's of the world, but the average republic banks of the world. ken: there's two iterations here. if you are diversified, you have large capital markets, businesses, you're going to outperform. the second part of this is related as you look at not only be super regionals but smaller banks. they have a narrower total asset mix, higher percentage of commercial real estate loans and commercial loans and the consumer will probably slow down a bit in the second half of the year. we saw that in the jp morgan results on credit card revenue. jonathan: this was wonderful to hear from you. citi coming up later. ken is going to stay close. let's take on this price action. tom: please. [laughter] jonathan: wells fargo is up 2.4%. on the same day at jp morgan and

jamie dimon is telling you there is an increased probability of a moderate recession this year, they are raising their outlook for net interest outcome by about $8 billion. tom: you can run up to 7%. this is a signal tugboat spinning an aircraft carrier in new york harbor. can you imagine the inertial force it takes to pop jp morgan premarket 7%? jonathan: let's see if it sticks. citi, the knicks to deliver earnings. there is a couple of ways of looking at this. one, ok, these numbers, stocks up, the coast is not clear. we have to wait to see if this regional stuff spills over into the broader economy. another way of looking at this as some people might say, the coast is clear, the labor market is resilient, the federal serve needs to do more, let's go 50. lisa: the problem has been the reason for this, you can

basically say whatever you want and have data to back it up. banks are telling the same story. we are in purgatory not sure where we are heading. what is clear to me, the banks are resilient in this data. what is not clear to me, where the consumers are. they are talking about the increased and the loan losses, more so at a wells fargo than a jp morgan with mortgages more present. that is going to increase as we see a growing number of regional banks report. jonathan: did you see the deposits by jp morgan? it is basically its own country. tom: that is a faux pas, as they say. jonathan: just phenomenal. tom: you are correct. this is one of the biggest problems with financial media. i will not mince words about it. we underplay the scope and scale of the mass of these banks. they are virtually canadian like

in the dominance of the system. lisa: are they getting deposits from some regional banks or is this be getting growth? they did increase more than expected. jonathan: what do you think? lisa: i am saying, theoretically, probably. jonathan: what do you think the week after svb? lisa: [laughter] no clue. jonathan: coming up in the next hour, of bloomberg opinion and queens college around this table. from the hq of the international monetary fund. equity futures positive on the s&p 500. the numbers from the banks relative to downside expectations. banks rallying in the premarket. numbers from citi in the next hour. ♪ lisa: keeping you up-to-date with news from around the world with the first word, i am lisa mateo. chinese leader xi jingping met with brazilian president in

beijing. the trip which comes a little more than a month after he visited joe biden in the u.s. shows the importance given by the leftist leader to both countries. his visit to the facility on thursday sent a message she will not pick sides in the u.s. fight against the chinese tech giant. french government says around 380 thousand people took part in a 12 day of protests against president macron's pension reform plans. protester numbers from tech -- from sectors including transport were lower than last week but the paris metro and international train services operating the most normal. france's constitutional council will issue a ruling on the wall this evening. health analytics firm warning there is a more than one in four chance a pandemic as deadly as covid-19 could hit the world within the next decade. they say climate change, growth and international travel and the threat posed by -- diseases arc and trimming to the risk. a setback for boeing as it ramps

up production of the model that is a major cash cow for the company. the u.s. manufacturer causing deliveries of some 737 max jets to address a production issue on the rear end of aircraft. shares fell as much is five .3% as boeing said it expects deliveries to decline in the near term as it expects those expected jets. global news powered by more than 2,700 journalists and analysts and over 120 countries. i am lisa mateo and this is bloomberg. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose.

harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

>> our forecasts are significantly better than the imf forecast. last year, we were the fastest growing economy in the g7. we are confident about the

u.k.'s medium and longer-term prospects. >> what jeremy hunt recognizes is we have had a substantial upgrade for u.k. for this year. we have not gone as high as may some of the other -- we have seen based on better-than-expected in the u.k. jonathan: just a tiny bit of tension between the monetary fund and the rest of the world, that is one snapshot example of that with jeremy hunt, chancellor out of the u.k. and the imf first deputy managing director in washington, d.c. from the nation's capital this morning, good morning. your equity market is shaping up as follows on the s&p 500, unchanged. we will continue these conversations around the imf as we wrap up our coverage. and look ahead to a conversation later. we need to talk about the financials. j.p. morgan setting the tone in a major way for the whole of the

banking industry. jp morgan the premarket up by more than 6%. a lift for wells fargo up i to .65%. numbers from wells fargo, jp morgan, pnc, the flavor of regionals. so far, so good. stable. for jp morgan, they raised their outlook. this was not just about a better first quarter, it was about a better outlook. at a time i thought everyone was thinking the same thing, isn't this the courts are where they take the outlook because of what has happened in the past few weeks? lisa: are the big banks eating the lunch of the small banks? are we saying -- seeing jp morgan with an increase to their net interest income because regionals are losing deposits and lending activity? tom: this goes back to our conversations with tim adams. they do not want to talk about this. for our international audience in particular, i cannot

emphasize enough how sensitive this is in america. going back to 1833, we are uniquely different and how we revere small banks. cannot say that enough. jonathan: more banks to come. citi later this money. when that drops, we will bring that to you. tom: what time is that? jonathan: usually in about 40 minutes or so. tom: right now with us, and marie horton, our chief washington correspondent. i'm going to paint the picture and let you pick it up. i know -- you come out of boston, there is a lot of fancy homes. then, it gets to be scrub pines on the way down to the cranberry capital in the world. down there somewhere, you can hear the screeching planes in the late night as otis air force base, part of the fabric of a relatively poor, southeastern

massachusetts between the fancy resorts were lisa goes for six weeks in the summer and the rest of boston. jonathan: the longest introduction ever. lisa: where are we going with this? [laughter] tom: tell us about the shock of the air force base. >> you are talking about the air force leaker that will be arraigned in washington. the questions are mounting on the biden administration. this started yesterday when the president said, we are close to finding this individual. he downplayed how important this leak was, which might bite the administration in the back. this seems it is an incredibly important -- one of the biggest leaks we have seen in a decade since edward snowden. we spoke to defense secretary mark esper yesterday. how does this 21-year-old for this job that feels like an i.t. job, the support of the space, have access to this kind of

sensitive material? jonathan: u.n. joe mathieu have done wonderful coverage of this. i watched that interview with esper. i think a point the three of you made, it is too early to draw conclusions. is the president drawing conclusions publicly? annmarie: i think what he is trying to do is downplay concerns. politically, this is damaging. it is not the biden administration's fault this 21-year-old had access. this is an issue the u.s. has been grappling with. more people in the u.s. government have access to information since post 9/11 world. the idea is you cast a much wider net, more intelligence to more people, you can catch more threats and issues. now, the pentagon has a problem on their hands and they need to figure out what went wrong. the pentagon spokesperson said we have issues in place, this was an individual, this was a criminal matter that he took misinformation. everyone is asking, how did this person have this level of clearance? lisa: there was the implications

in real-time, is the major implication as you talk with people questions about things revealed about the ukraine strategy, the ukraine russian war, or is this something broader in terms of the alliances and relationships the u.s. has with data sharing and strategizing together? annmarie: there is two points. one, the president said the reason why this leak is -- the issue is important, the content not so much. this is not present day information, but it is when you are showing information about the russian military. today, the washington post has another story based on easily document about special forces within the russian military and how they have been batted down. that is one issue, to put ukraine in a more vulnerable position in the current day. the second is, what does this mean for allies? i think most allies have accepted -- remember a year ago,

they have accepted this is what the united states does. the issue is, it puts leaders like the south korean leader about to come to the united states for a visit, his opposition is saying the u.s. is infringing on our sovereignty. in that respect, it is going to be much harder. they're doing it politely. behind the scenes, people are furious. lisa: behind the scenes is where i want to go. at the imf, there seems to be growing tension between the u.s. and europe and the u.s. and europe with respect to china. those fissures are growing. i am wondering, perhaps it is a stretch to types in there, but is there a feeling the u.s. and europe are not going to be liable allies same way going forward about things like china, trade and as they work in a collective group? annmarie: one,., the president left northern ireland with g sunak and a trade deal was not discussed.

when you're talking about these fissures between europe and the united states, i do not think it is happening behind the scenes. on the u.s. stance with this. we want to have our own strategic autonomy. that was the word,, in the world. jonathan: he said this probably. i had no idea the president might rope me so much. apparently, he loves rugby. annmarie: the president says he prefers his children, grandchildren to play rugby over football because he thinks american football -- jon is here, is safer. tom: this is going down in in rt have the protection and the helmet and that stuff. because of that, there has been this argument they tackle each other differently. annmarie: i have not seen that

with my own eyes. jonathan: in the nfl, you would do helmet to helmet sometimes. lisa: some people say protective gear you where in american football allows some of the contact that causes some concussions more so. jonathan: did you ever think you would be talking about this this morning? lisa: no. [laughter] annmarie: i do not like either. i am a soccer fan. jonathan: good for you. the president is a good fan of the new zealand -- thank you. we should play that clip. when someone tries to get a long with the lad sanded. goes flat. what was he thinking? we will skip this. let's get back to the banks. jp morgan with a big beat this morning, setting the tone for

the financials. kicking off earnings season, q1 earnings season and a major way. jp morgan absolutely flying in the premarket by 5% to 6%. it was more than that at one point. it is not just the nature of the beat, it is a bigger race for the outlook. tom: it is leadership for the major banks. weeks from now, we will start to hear from smaller banks and we hear from a different story. jonathan: our coverage from the world bank imf spring meetings continued from washington, d.c. this morning. good morning. this is bloomberg. ♪ and it's easier than ever to■ get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done.

with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done. i screwed up. -mhm. i got us t-mobile it's easy to make your home an a home internet. ah! now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones.

oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! -woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

jonathan: equity futures software. looking over to new york in the market open in two hours. the data gave the market a live in a big way. ppi softer than expected. claims higher-than-expected. every day you get together and you get a shifting profitability around a range of outcomes i'm not saying it is the base case, i am saying the profitability shifted in his favor. that was behind the lived in the equity market. nasdaq down .5%. bond market. two year, it has been massive every single week four weeks. last week in 360. this week relatively speaking a

bit of calm. 15 basis point range. trading in 380 a little bit. try to about 4% a little bit -- traded 4% a little bit. retail sales coming up later. that jobs in 60 minutes time. tom: we get retail sales today? jonathan: yes. euro-dollar the high of the year , the print came this morning. 11076. we're positive on the euro-dollar but the theme over the last several weeks is clear, euros stronger, dollar weaker. we have a about bank earnings. it is setting the tone for the price action. do you want to pick up on jp morgan? lisa: up at one point. 520% against. wells fargo and he said he trailing that.

cities that reported earnings in have an hour. wells fargo, 2.3%. under the hood, pnc came out the liver to better-than-expected results and those shares are up more than 3%. are we seeing an all clear for the banks are always seeing jp morgan missing money on the hills of everyone flooding into the biggest banks while some of the smaller regional banks see outflows and incredible pressure that strains lending? are we going to see that beverages continue as people go into the big banks and shun originals? tom: i think it is more complex than that. some of what you say i think it is true. there can be trends there. we can see in the coming weeks but on this conference call, do everything they can to not talk about how they are winning. all their victories across many different platforms. jonathan: you do not think they want to scream and shout about

their deposits? tom: can you erase the dividend? we cannot raise the dividend in this crisis right now. jonathan: i think bloomberg intelligence come into this release question whether this was a storm and it looks like it was. tom: here at imf headquarters, it is a dow jones industrial average free zone. spx rounded up 4200. that is a surprise. jonathan: that's the top of the range from 3800 to 4200. tom: citigroup in 30 minutes. this is always a joy. joining us now lupin rahman with pemco -- pimco. a student of the ramifications of the central bank of the world, jerome powell. how big of an influence is mr. powell right now on bolivia,

ghana in the news today and other larger more successful em economies? lupin: the fed cycle is extremely important for major emerging markets, typically in investment grade portion. for the front tier markets that are facing credit stresses, the impact of the fed is relatively smaller than what you would expect. tom: it is smaller than you expected but there is a multidimensional crisis in em now. your study of history at em, how is this distress different from what we have seen back in 1992 and before that? lupin: a take a different view. the crisis is in more developed markets within emerging markets for the first time in a long time. in em you have inflation going down, you have growth.

tom: korea got out front with rate increases. lupin: absolutely. the list is endless. they avoid it deeper processions were as we have soft landing versus hard landing debate in developed markets. when we are thinking about price -- crises in em is a selected number of frantic markets -- frontier markets that are not formed the aggregate part of emerging markets we invest it. for countries like mexico, brazil, south africa, indonesia we are constructive. this new phase within their economies, particularly as they try to come out of this tightening cycle is going to be constructive for em investors. lisa: you said it one of the most exciting imf meetings you have ever been at. why? lupin: we have a lot of discussions on debt restructurings and the role of

multi-development banks and china in debt restructuring. this time around we are seeing debate and discussion, some pushback from china. it is the first time we are in negotiations related to the mdb senior status in debt restructuring and the recent global workshop imf held last week essentially highlighted the mdb will commit more ground financing for some of these debt restructuring countries. lisa: how much of what you were talking about first kenexa this? the crisis is not in the developing world as much with the rate picture. it is much more in the developed world, frankly u.s. the biggest market for these instruments. how much is that coloring the conversation and willingness to allow things to go on and losses together at a time fraud for the developed world? -- fraught for

the developed world? lupin: the impact of high inflation in developing economies is important but it is not the front and center nikos of the debt negotiations. the debt restructuring issues are long-term. it strikes at the heart of how the paris club, china, india, saudi arabia are going to work together in future debt restructuring. these are longer-term issues that all parties recognize the importance of putting front and center. lisa: are you impressed of how imf has handled these discussions? lupin: yes. imf has played his part in being a negotiator between all of these actors. there are elements that imf needs to focus on in lending into the rears and assurances criteria. it is important for countries like sri lanka, ghana who went

through the balance of payment crises by need financing from imf immediately and in a short period of time for imf to iron out when it comes to landing in rears and assurances practices. tom: on a market desk, what do you want from china to signal from china they would do western restructuring? what is the next step? there has to be a china process of restructuring. what does it look like? lupin: we are getting more clarity on what china key issues are in lisa debt restructuring. the first is the seniority of the multilateral development banks. to some extent, the release -- recent announcement and debt

restructuring and it is a valid concern the chinese. many countries coming for debt restructuring have high levels of domestic debt which needs to be addressed but essentially governments find it difficult to impose haircuts on their population and look after the stability of their banking sector. this is an issue that needs to have more work behind it to get a handle on it. tom: we do not have the time for this. can you do a panel with me today? what are you doing at 11:30 a.m.? the other day the mention of rescue culture. is it where everyone has to pay free, as it seeped over to your world of sovereign debt rekabi? do want everyone to be painless or extended duration? lupin: the em world is no stranger to haircuts and very painful restructuring. we got a long history of low

recoveries in some countries at high recovery in others. what we are going to is a shift from -- where we are going to is a shift from private bondholders to official sector in how the official sector should behave and coordinate themselves in resolving debt restructuring. with the collective action causes reforms we saw in the last decade and a half, the private sector is doing its part and the issues are more in the official bilateral sector. jonathan: always been the case. look at what happened in europe. tom: is tension with china going to impinge best practices on a new 21st century imf? lisa: this has been a concern. what are the rules of the world? we're going to take your

shipping line. this is the big issue. tom: the jargon is we go we are in the meanings on technicalities. i did not know what imf technicalities. jonathan: fascinating stuff. lisa: it is. some of these meetings are fraught and everyone talks about row coming to an agreement the top behind-the-scenes and it is a nightmare. jonathan: they make it a bit of a snooze. it has been pretty sleepy. this was great. thank you. lupin rahman there on the latest from international monetary fund at the world bank spring meetings. we catch up with valdis dombrovskis in a moment. we also going to recap the bank earnings for you. j.p. morgan out of the gate with a beat for q1. and a raise for the rest of the year. j.p. morgan up close to 6% in

premarket. citigroup reporting earnings in minute now. tom: 18% return on equities. let's talk about use of cash but will not this time around. jonathan: snapshot of the financial system. big banks looking good relative to expectations. it is about the originals. it always was. lisa: how much of what we saw from deposit increase, the big banks getting a lunch of the small. jonathan: big banks positive in the market. from washington, this is bloomberg. ♪ lisa: keeping you up-to-date with news around the world. the u.s. government is struggling to explain how a 21-year-old man in your your post was in a position to allegedly leak a massive trove of documents related to the ukraine conflict.

chedder, cyber specialist for u.s. air force national guard was arrested in massachusetts and is scheduled to be arraigned in u.s. district court in boston today. your kind support he was the leader of a game each had a group with the documents first appeared. in a testy exchange over chinese counterpart, germany's foreign minister said taiwan's destabilization would be a quote horror scenario and any change in taiwan's status would be unacceptable. beijing has ramped up military drills around taiwan in recent months. china warned about the risk of falling debris near taiwan this weekend following a plan a satellite launch. claims that a no-fly zone will be imposed to the north of the island. opec-plus production because likely to drive up oil prices and more pain on consumers squeezed by inflation. it says global oil markets will tighten more than the previously expected forcing hefty inventory

withdrawals of about 2 million barrels a day on average in the second half of the year. may's quarterly sales jumped as the maker continues to see strong demand from chinese customers. luxury label says first quarter revenue was up 23%. analysts had expected a gain of 16%. those shares rose as much as 2% in paris at the opening of trading. global news powered by more than 2700 journalists and analysts in more than 120 countries. an lisa mateo. this is bloomberg. ♪

the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

>> i have not seen evidence that suggesting a contraction in credit. >> we have seen data releases that have shown certain amount of tightening in credit underwriting standards as well

as the overall level of credit. >> you're being kind. i think she said she saw no evidence of contracting and you say you do. >> there is evidence of tightening of lending standards. jonathan: janet yellen contradicted of by tobias adrian, imf director of monetary and capital markets. that has been a theme of world bank meetings this week. imf with a gloomy outlook and pushback coming from elsewhere whether chancellor hunt speaking earlier this week or from secretary yellen herself suggesting things are not that bad. the economy is doing well and the evidence we see of contracting credit based on data we saw friday, she's not going to acknowledge it. tom: it is always there. there's multiple wise to that

but the political tensions here are different than any other meeting i have been to. jonathan: politics and we can leave it at that. tom: politics but it is the geopolitical tensions that are out there. jonathan: 10 minutes away from citigroup earnings. equities still negative on s&p 500 by .1%. if we check out big banks briefly. if you are tuning in, welcome. you misted. j.p. morgan up 6% in the premarket. it is a beat on the first quarter. it is a raise on the outlook. not so difficult for the major players. tom: it is going to be interesting to say the least. right now, delicate discussion. this is a by lap, we are going to have a bilateral right now. two parties that do not want to talk to each other. we do that with valdis

dombrovskis, commission executive vice president, former of his latvia. the bilateral you go into now across the atlantic ocean with select american officials, is the tension normal in the heart of the gse or is there something new this time about transatlantic bilateral tensions? valdis: good morning. i would highlight strong transit landec corporation, where strategic allies and especially in times like this where we are confronted by russia's aggression against ukraine, war on european soil. we need to work together with u.s. and democratic world. this corporation was in terms of supporting ukraine, sanctions against russia very strong and

good. entrée decide, -- on the tray decide who have the extensive agenda. yesterday and we are still working on some of the monetary aspects of u.s. inflation reduction act but once again we are engaged with u.s. authorities and hope to extend possible issues. tom: from latvia up to estonia to finland and in your world and all of our roles have changed here with felony joining nato. it was a shock to see that it. how did political dialogue you are in everyday change given the shock of the war, finland joining europe. valdis: with finland was a logical choice. if you live next to the

aggressor empire, you need to seek stronger protection. that is what finland did with joining nato and hopefully sweden will be able to join soon. it strengthens the security in the baltic citi region. jonathan: you're always diplomatic. i would suggest you have to put out fires. i would like to understand how europeans will respond if u.s. administration turned around and said they did not want to get caught up in crises that are not ours. what would you say back to that? valdis: when we are confronted with major challenges were better off if we were together as eu and u.s. we strengthen our alliance. jonathan: have you told the french president that? valdis: the position of the eu is very clear on this. eu and u.s. are strategic allies

and especially in current confrontation, we need to work together. jonathan: i get the feeling that you are underplaying the tension between european union and u.s. right now, publicly. when i speak from the u.s. administration or european union i get the same story, we need to work together. what i actually see as an observer is a race in subsidies for united states and european union racing to get its act together to do the same thing. how are you going to resolve that? how do you work together when the u.s. spending a lot of time saying this building america, make america, and by america? valdis: on this to discuss u.s. inflation reduction act, eu has been clear since the beginning. we welcome the climate ambition of inflation reduction act.

also working on these goals -- a few also working on these goals but at the same time we have concerns in the inflation reduction act. we have set up a eu u.s. task force to work on these issues and we are raising these issues bilaterally with u.s. administration and trying to solve them. jonathan: the previous mensuration was heavily criticized for its our to trade. everyone had no problem criticizing the trap administration. is there any difference between this administration and the last one on the trade? can you identify one specific daylight difference between what this one and the last one did? valdis: this demonstration we were able to park long-standing disputes related to still alemee

are working on a global still -- still and elementia him tariffs so now where working on a global. we are constructive engagement and we are working with a deadline of october of this year in mind. lisa: you talk about the relationship between u.s. and europe both when it comes to trade but also military. we have been talking about these leaks that are sensitive from the national security of the united states. does that change your relationship at all with sharing information or doing business with u.s.? valdis: i must emphasize that in situations where aggressive russia increase ambitions of authoritarian regimes, it is important in democratic world to work together.

there are problems but we need to be able discuss, overcome them, and find joint solutions in response to current political situations. jonathan: very kind to give us your kind. thank you for being with us missionary. some delicate issues right now between united states and europe. tom: you talk about surprise of these meetings and each meeting is different and this has been an exciting airy meeting -- extraordinary meeting. i'm surprised by the lack of discussion. the commissioner brought it up. he is one of the few to really address your two is different than year one to any given conflict. jonathan: european economy is so different than what we expected now months ago. this in many ways is the best case situation and why there has been a great effort to

shift away from russia out of necessity and how that also, by the weather, this is one winter . can we get to the second, third, fourth of things are less favorable? that is been captured by the foreign exchange market. we are back at 110. the ecb talk about 50 basis point interest rates hikes space when economy in better shape than i would say anyone anticipated nine months ago. tom: i will go to the grandeur of the moment that lifetime shock of finland being in nato. these are symbols that adjust every dialogue. jonathan: in the next hour, mohamed el-erian dropping by the studio in washington dc. that conversation up next. do not miss that. equity futures just about unchanged. jp morgan rally in the premarket.

numbers from citi up next. ♪ you can't buy great conversations, or excuses to unplug. you can't buy possibilities, and you can't buy moments that matter. but you can invest in them. at t. rowe price we believe your investments should work harder for the future you imagine. and that's where our strategic investing approach can help. t. rowe price, invest with confidence.

>> we cannot declare victory yet. the great inflation is not over until the fed says it is. >> our expectation is inflation will be conquered over time. >> the notion this is inherently inflationary economy is not obvious to me.

>> financial conditions have tightened to some extent but it is in the banking sector we are seeing most of the tightening. >> this is "bloomberg surveillance." live from imf spring meetings in washington dc with tom keene, jonathan ferro and lisa abramowicz. jonathan: what a fantastic week full of brilliant conversations. live from washington dc, good morning. this is "bloomberg surveillance." alongside tom keene and lisa abramowicz. co. you down to retail sales in 30 minutes from now -- counting down retail sales in 30 minutes from now. breathing some life into the bullish view on the equity market, equity futures this morning a touch negative off of the bank of -- back a bank earnings. bank earning so far, so good. jp morgan out of the gate

getting to want to a great start. the stock up almost 6% in premarket. citi out moments ago. lisa: bidding pretty much -- beating across the board. one point $3 trillion of deposits. we will get the comparisons here year-over-year in a minute. you are in the extension of the gain in citi shares is once again the big banks are the port in the storm and were seeing them consolidate their power and that perhaps is the story of the morning. jonathan: if you look at these names would you have we had a banking crisis in the last month? tom: no. they're going to do everything they can to underplay this. they're going to pay homage to the banking crisis happening with smaller bank america. as a rule of thumb, with citigroup you move the decimal to the left as they did a

tin-one reverse split when they were stacked on their back -- flat on their back. citigroup is not jp morgan. citigroup is not a bank of america. citigroup is not even ubs. they are a bank in restructuring road. it is great to see those numbers. jonathan: jane fraser market saw the third best quarter in the last decade in fixed income. lisa: that is what i was watching. i'm thinking you look at the volatility we have seen with rates all over the place you see potential dislocations. this is when banks do the best. you have market bankers making bank and it is what we saw with citigroup. it highlights the dissonance between credit crisis discussions and with the banks are doing with their balance sheets. jonathan: there's an extra level of detail we need. jp morgan still up more than 5%. a beat from jp morgan.

a beat from wells fargo. next week morgan stanley, goldman sachs on deck. equity futures unchanged on the s&p 500. your next stop for the market, u.s. retail sales and we're looking for a soft retail sale print with 10 year up a single basis point. 300-4562. alongside us, at the global headquarters, mohamed el-erian. good morning. mohamed: good morning. can we stop calling it a banking crisis? it was not a banking crisis. jonathan: tell me why. mohamed: a banking crisis is a crisis of the banking system. a few banks called off-site and badly supervise went down the. the big banks are just fine. we see that. the big banks are benefiting from they've got two things, not

only are they viewed as saved, they have diversified business models. you saw what happened. suddenly it is the narrow bank that is risky and universal banks that are resilient. jonathan: if it was not a crisis, why do you think officials needed to use systemic risk exception? mohamed: it crept up on them and they went too far. i understand why they did it. i expect i would have done it to. jonathan: do you think they post systemic risk? mohamed: the deposit run at a press them a lot -- at first republic scared them a lot. it was a failure of's supervision -- of supervision. lisa: let's say this is not a banking crisis. do not rise to 2008 or 1980 scenario but is it a credit crunch that were going to see it evolve? mohamed: we are going through a

major transition which has made some business models incredibly stressed. were going to see that. we're going -- now focusing on the banks. we talk about commercial real estate a but it goes beyond this. when you change which is a great paradigm as quickly as we did it will catch people off. some people able to get back on side, others have business models that do not allow them to get back on side. some of the smaller banks have that issue. they have higher funding costs. deposits have become more flighty they're going to have to contract and they're making loans that the big banks will not make. we're going to have a reduction in credit contraction. jonathan: we have a talk about the federal reserve. he was talking about some of the blame lying in the feet of the federal reserve.

to call of monetary policy officials for their role in some of the instability. where would you stand on that? mohamed: it is important to keep central banks in -- they are very important. i'm a huge fan of central banks. it is important to have some accountability in the system because that is the basis of political independence. no one wants to-year-old the political independence of central banks -- erode the political independence of central banks about a central banks have to own their mistakes to enjoy something important for the system as a whole, the ability to make policy without having to go to commerce. jonathan: one fed official said the move from zero to close to 5% in 12 months was not the problem with the banking system. do you think that has anything to do with it? a decade of zero

interest rates and going from 0% to 5% like that? mohamed: we have three stages of this tragedy. stage one was to lose for too long. in march when the inflation print was 7.5% the fed was still injecting liquidity into the economy. we should've started tightening policy significantly a year ago. the second problem is after this whole long period the fed mischaracterize inflation so we loss nine months of possible policy adjustments. when you started late you end up going higher and staying there for longer. that is the logic. that is why tighter monetary policy is important. the interest rate cycle has been mishandled. his hand -- it is had an impact of what we are seeing of financial tablets and also were going to see in economic turbulence. tom: there is a spectacular

stained-glass window at cambridge of a venn diagram. it is a remarkable window. there are 42 circles at the imf and they are trying to find a venn diagram of politics, economics, debate that gets to a common theme. i cannot find the common theme this time around. what is it? mohamed: i was surprised when you said these are all these issues and no common theme. there is absolutely a common theme and it is a world of deficient aggregate supply. we have gone from demand to a world of deficient aggregate supply. you get inflation. you get interest rate hikes. i could go down the list. if you under respond to that shift, the you start taking all

sorts of issues. tom: the bottom line is there's too much money out there and not enough investable opportunities on a global basis. we have been this way for a while. tract of too much money chasing, not enough constructive ideas? mohamed: we have too much money. but i would love to discuss is the notion that we do not have enough investment opportunities. read going through major transition. energy transition is a major opportunity. the market failures mean we have not been able to take advantage of this important window in investments. if you have a long discussion about what the u.s. has done and not upset the europeans but they are right there trying to address market failures to have more private partnerships to

invest in an area that is under invested. tom: brilliant idea. can he run the port authority? jonathan: raising a really important issue. it is not with the benefit of hindsight. germany and european countries have the luxury of incredibly low interest rates. 10 vet did not make them -- it did not make the move to invest in the way they should have. tom: -- jonathan: when he left the german finance ministry and a set outside as it was something to celebrate. it was a failure of policy over the last 10 years. tom: are we going to see in britain again with the shots we did in others? britain is so kind but with austerity. mohamed: britain has become comfortable with low growth.

we have three issues. michael spence have been working on this for a while. one, inadequate growth models. we have to rethink how we grow. two, inadequate domestic policy implementation and three, inadequate global policy coordination. those are the three big areas. there are solutions to all three. that is the good news but we have to focus the discussion. jonathan: this conversation is not over. mohamed el-erian life from the international monetary fund global headquarters. coming up we catch up with the ceo clear harbor asset management. from washington this is bloomberg. lisa: keeping you up-to-date with news around the world. the u.s. is pressing the need for allies to coordinate against economic coercion not just military threats. this is as japan prepares to host top the medics from a group

of seven nations amid heightened tensions with china. u.s. ambassador st. cloud that equation piece is important. china said to be a key focus of discussions at the meeting. china's megabanks are planning at least 40 billion of on sales kicking off a major funding push to comply with the global capital rules by early 2020 five. bloomberg has learnedstand commd his three closest rivals are planning to tap domestic debt markets to sell a new category of total loss capacity bonds. mitsubishi ufj financial group wealthy clients lost more than $700 million on the credit suisse groups. purchase to the japanese bank brokerage with morgan stanley. japan's largest banking group is holding meetings of senior officials to look into the matter as it reaches out to roughly 1500 clients lost a combined $717 million.

supreme court justice clarence thomas and relatives sold three georgia properties that include thomas's boyhood home to gop mega donor marlene crow in 2014. pro public assessed thomas did not list the real estate -- says thomas did not list the sales or report the travels that occurred over two decades. global news powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> one thing that seems to be off of the table as monetary policy role in creating financial and you have to believe three crises in two decades it has to have played some role. what about qt? it wasn't that apart what we are in now and

that is why we need organizations like imf to start poking. they're hesitant to complain about central banks of the industrial world because those guys are more economist and the imf at sometimes. jonathan: can i pick up on those comments? this line right here, on the lack of criticism of the federal reserve, they are very hesitant to complain about central banks in the industrial world because of those guys have more economists than the imf sometimes. what do you make of those comments? tom: he is enjoying his independence. he was on fire. let me explain why he gets credit. there were 4300 books written on 2007, 2008, and a thousand nine. when i do college lectures i go shut up and read fault lines and it is the concision.

everybody got a different act. he is financial economics which is algebraic concision. jonathan: just wrap up steady, -- citi, we also got mohamed el-erian alongside us this morning in the studio at the imf headquarters. i got to get your response to that. what you make of that? the lack of criticism of the federal reserve? mohamed: historically the imf is hesitant to in any way criticize the federal reserve, the ecb but he finds it easy to criticize central banks in developing countries. jonathan: why? mohamed: look at the voting

power in this intuition. the get what support you need to get things through -- look at what support you need to get things through. tom: we are going to continue this discussion. director of equity research at cf a and decades of experience in use of cash at these major banks. what is a feature use of cash, armament years ago he said this is what they're going to do their dividend increase. with revenue join today can you model out a three or five year persistent use of cash to have been to shareholders at these banks? aaron: they do not have control because regulator's have a bit to say about capital like dividends but they are investing in technology. they are investing in artificial intelligence. they are global banks which means assets are flowing in, not

out of the largest banks. what we will see in the future is an environment where you maximize profitability in slower growth economy. again what we have learned today from the large banks net interests and come, the higher rates year-over-year is astounding but that will become a more challenging in the second half of this year. the operating businesses need to perform and grow to your question. lisa: did we learn anything today about what we are going to hear from the smaller regional banks given pnc did come in better than expected but these are the biggest of the small ones. ken: our financial team are looking at everything closely, but again the smaller banks have a different risk profile in terms of flighty deposits, the

abilities to be diversified and also have a business where they can continue to lend. the smaller banks lend in areas large banks do not which is commercial real estate or construction activity or a small -- to small businesses. they play a vital role in u.s. economy but it is a position. jonathan: do you want to weigh in, quickly? tom: we are in denial going back to 1833 about how you run a national banking system. u.s. model is unique, cherished in this washington, tested every 5, 10, maybe 15 years. it is possible answer as to rod cassidy talked about we're going to come out of the margin with

fewer banks. 4000 down to 3000. jonathan: if you go to some euro town -- rural town in united kingdom, there are no thanks. you get a small truck that will pull up the people do their daily banking and then the truck disappears. tom: i know you want to get back to the fed discussion but less address it, is the canadian model better than the u.s. bottle in baking gateau you sat on the chair -- in bank and? is a five bank model better than what we are doing here? mohamed: that is a hard question. even if it were a barter model, we are not getting there. -- a better model, we are not getting there. the better question is what happens to regulation. you may get a regulatory

overreaction to what is happening. jonathan: i would say the better question is who for? who is it for? is canada better? who for come the banks, the big five, the individuals who have to bank? i know there are many brits who are thinking it is not good for me. mohamed: when silicon valley bank in u.k. it was taken over by hsbc, i was doing a panel in cambridge and there was a venture capitalist there. there was a startup person there. i said what was your reaction? he said i went there and they rejected me. i want to silicon valley bank and they gave me the long and i am a client at hsbc. tom: that is brilliant. that is in the zeitgeist. jonathan: i think that is why some people were almost bemused that the individuals, i would

say had some part in blowing up svb, that was the bank about bank the community. then they exacerbated the bank run in the way they behaved. i will never understand that. they look smart because the bank collapse and their money was not in the institution anymore but ultimately, they were screaming fire. lisa: which raises the question, this is not a banking crisis. it is a banking trimmer and you said it is something else. do you think imf has been to negative and thinking this and run with it and said the actions of a couple bad actors can be extrapolated out to everyone? janet yellen of the treasury is more right. mohamed: i have been consistent on this from day one even when bloomberg economics came out and said u.s. recession 100% profitability. there is nothing certain about u.s. recession. today we can avoid it. the profitability has -- the

probability has gone up. this economy is fundamentally sound. it is fundamentally sound. we get in the way of it. we trip it up. i do not know if he saw the economist covered this week? it is trying to explain why is the u.s. economy surprising to the upside and what are the lessons to learn from that. jonathan: do you believe in of their you take the other side of the economist cover? mohamed: that was the reaction i got when i picked it up on twitter. jonathan: i'm sure it was. have you seen the magazine cover? u.s. economy, writing high. tom: the heart of this, three ratios with six opportunities, and we break it down to productivity. every conversation we have, in morning tv we do not talk much about it but you get to productivity. mohamed: we have not invested

enough in people. others that enable productivity. that the mistake we made for the last 20 years. jonathan: retail sales coming up in five minutes time. jobless claims yesterday it was a bit higher than anticipated. ppi a little bit softer. economist on wall street looking for a negative print on retail sales. catch up with ethan harris and we get mohammed view on u.s. economy and what the fed because that's how data. what is the totality of the data? from washington, this is bloombergtechtv. ♪

as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig.

all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities™.

jonathan: retail sales data seconds away. going into it, equity futures totally unchanged. on a single name basis, jp morgan flying after beating first quarter estimates and raising their guidance for net interests and come i guess the financial sector a lift this morning. jp morgan up 5.8%. citi up 2.3%. getting retail sales, we are looking for a soft print, you get it even softer print. here is mike mckee. michael: america's stayed home and the warnings we got from credit card companies are coming true. retail sales headline down 1% compared to a .4% decline month before.

retail sales x auto down .8% and that is compared with a .1% drop the month before. the control group which is what economists watch down .3%. all in all, it is not a good report on the retail sales numbers. we new autos were bad and now the rest of it looks bad as well. the import price index down .6% and x petroleum down .6%. good news on the inflation front but not good news the consumption front. i will let you check the markets to find out where the spending was during the month of march. jonathan: your equity market basically unchanged on the s&p 500, slightly negative even with better-than-expected numbers are the financial sector. the bond market, yields a bit higher.

two years north of 4%. 10-year 348. lisa: this make sense to me but how much because gas prices were lower? gas down 0.3% versus estimate drop of 0.6%. are we seeing the nominal effects of gasoline prices dropping in the face of a potential decline in the economy? jonathan: yields up. tom: if you are still there michael when i look at retail sales, how does this retail sales rapidly adjusts to one gdp? michael: we get an update of the alliance of fed gdp tracker in a couple of hours based on this money -- atlanta fed gdp tracker based on this data. people have thought the first quarter was better than anticipated. jamie dimon this morning said

consumer spending held up. good point about gasoline and the nominal price. gasoline sales down 5.5% during the month. there certainly a price impacted their. food prices down .1%. not so bad there. for else did we see movement? clothing stores down 1.7%. yet to be careful with the easter affect this time of year. general merchandise down 3%. department stores down 2.5%. there are negatives in their but may have to do with falling energy prices as well. jonathan: good point. mike mckee on the latest retail sales. i think the point you made is important. at first look you got headline which delivers a mess. you look to the market and you see yields higher on two-year by

six basis points. north of 4%. go through it for everyone. lisa: you have the headline number drop of 1% versus the expectation of 0.5% and then if you take a look at a piece components you step out autos, he stripped out gas and it is only at of 0.3%. this is why people are taking a look at this and saying it's not nearly as weak as expected. how long when we paid -- play narrative let, you have soft landing hard landing and every back to soft landing? how long before we get back there? jonathan: we have to wait and see what happens there. can i call it a baking shock? lisa: tremor. jonathan: we still have to wait

and see to what extent financial conditions are going to tie-in the. that speaks to new approach from the federal reserve whoever implied one more interest rate hike they stop at 5.1%. they're not going to be in a rush to deviate from the gun is delivered. tom: mohamed el-erian and john now they bring in ethan areas -- -- ethan harris. you had a bank of america will adjust to this economic data. what is your theme on the american economy, your focus in your friday and weekend writing for monday morning? ethan: i agree with a commentary. if you look at the control measure which goes under gdp estimates it was slightly better-than-expected. the rest of the report was consistent with what our own data was telling us in the

overall weakness of the number and the sectors that were week. we need to be careful here. we started the year off with a solid data ever getting a pay back in to march. the question is this the beginning of that slide into recession. i am leaning in that direction. there is weakening fundamentally going into the economy, some of it gas prices which are not relevant here. but there is fundamental weakening and this is before the stress in the banking system. the curve uncle in the banking system occurred. that is the new name. it is having an impact on lending. i do think the economy will slide into a wild recession at some point in the third quarter. tom: i've got to ask the obvious question.

you have access many would say to the greatest amount of knowledge on the american banking system your team development. when you talk to the banking bankers, the retail bankers, commercial bankers at the bank of america, how does that inform your economic analysis? ethan: we talk to all the businesses. look at our proprietary data, particularly the car data is quite useful for predicting things. it is way too early to talk about exactly how big of the shock is to bank lending from the recent but we really need to focus on regional and smaller banks. we have to wait and see. i do not think bank of america is necessarily the right place to see where the timing is going to come from. lisa: kerfunkle.

does that work for you? mohamed: i cannot pronounce it. why is it the top that leadership pushes back against you in stepping into recession? ethan: it is locally incorrect for the fed to come out and say we were too late hiking and we allowed inflation to spin out of control. and we are going to fix it by creating a mild recession. it is hard for them to make that statement in this political environment. what they have done instead is talk about -- first the staff forecasting a mild recession then they talk about downside risk, they talk about the landing zone. getting ever smaller, now the size of a postage stamp. they do not want to fully acknowledge actually this time around recession is going to be mainly a central-bank story.

i heard your earlier comment about the economy being fundamentally health and i agree with that. the problem is aggregate demand is too high. aggregate supply is not that great. something's got to rebalance here and is the fed rate hikes during the economy off. mohamed: let me ask you more on this. we have a difference between fed staff and effective leadership. we have a difference between foreign policy guidance and where the market thinks the rates are going to go. how long can we live with these differences? ethan: they will get resolved when the fed shows -- they say we do slide into recession in third quarter, at the fed 62 the current narrative when the bond market is going to have to adjust to reality. the problem with the bond market now is it is used to looking at recent business cycles where the

fed cut quickly in the face of recession. the fed cut before recent recessions. this is different. it is a mini version of the 1980's where the fed did not back off from tighter monetary policy for a longer time because they were trying to get inflation under control. they would rather do it with an extended period of weakness. perhaps a mild recession were forecasted followed by a week recovery and chip away at the inflation problem then hammer the economy and create a major recession. i think the bond market is wrong. i think the fed is going to do what they are saying in their projections. jonathan: wonderful to catch up with you. grid call. -- great call. are you sick of this? mohamed sare's anger, taking our jobs.

-- mohammed starts to anchor, taking our jobs. tom: i love you can go english football and american football. jonathan: just like that. tom: it is a rare gift. lisa:ow your response. that was quite a question. how long can this dissonance in the fed go on? mohamed: i think either this ride. the fed is going to impose is view -- i think ethan is right and the fed is going to impose its view. the code ability is so low they cannot risk -- the credibility is so low. the market is more likely to come up to the federal reserve than the federal reserve go to the market. tom: what is fascinating the bank of japan got it wrong what seems now a long time ago. it's all this theory impacted by that single mistake the boj made in 2003? diluted rapes, -- they

lifted rates. mohamed: i will also cite the ecb, coming out of the global financial crisis, they do not want to be embarrassed again. they have been embarrassed several times. we have had the inflation ms. called. there has been a series and we now have evidence that under this fed volatility during the market volatility during the press conference is as high as it was previously. tom: that is because it mckee's question. jonathan: that was the annual review. top job. mohamed is going to stick with us. erika najarian joins us in the next hour. looking forward to this conversation at ubs to talk about big bank earnings and big bank earnings so far, so good.

equity futures negative. this is bloomberg. lisa: keeping up-to-date with news around the world. u.s. government struggling to explain how a 21-year-old man in junior posts is in a position to allegedly leak a massive trove of documents related to the ukraine conflict. jack teixeira, cyber specialist for u.s. air force national guard was arrested in massachusetts and scheduled to be arraigned u.s. district court in boston today. new york times report he was the leader of a chat group where the documents bears appeared. in a exchange by germany's foreign minister said taiwan's destabilization would be a poet horror scenario. any change in how my studies would be unacceptable. aging has ramped up military drills around taiwan in recent months. china warned about the risk of falling debris near taiwan this weekend following a planned satellite launch.

a no-fly zone will be impose to the north of the island. a setback for bowling just as it ramps up production of the model that is a major cash cow for the company. u.s. manufacturer is positing delivery of some 737 max just to address a production issue on the rear end of aircraft. shares fell as much as 5.3% after boeing said it expects deliveries to the client is in your terms. global news powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> our forecasts are snippy only better than the imf forecast but i should say last year we were the fastest growing economy in g7. we are confident about the uk's long-term prospect. >> xiaomi hundred recognize we had a substantial up grade --

jeremy hunt would recognize we had had a substantial upgrade we have not gone as high as some of the other forecasts. but we have seen things are better than expected in the u.k. jonathan: that was as mediating a conversation at a bill burck. -- that was is mediating a conversation at a bloomberg. tom: he did the london olympics. he's probably doing the coronation as well. i reviewed it yesterday. find a coach, i guess i just brought in here as well. jeremy hunt is an interesting guy. he's a different secretary of treasury. jonathan: hopefully we can catch up with him next time. interesting moves in the market and good morning to you. j.p. morgan came out earlier, way better-than-expected. raising their guidance as well.

yields are flying by 15 basis points. i talk about a tight range for a two year treasury. we are back to 4.1%, higher 14 basis points. look at retail sales once, look at it twice and stripped out energy. lisa: that has kinda of been all the data. is this the big story, the head fake energy prices going down which causes a feeling of disinflation that was faster than it was. we have these headlines from fed governor chris waller saying he favors monetary policy tightening more consistently and rates are going to have to remain higher for longer because the progress on the core -- a ghost out the segments -- he goes to stripping out the segments and it is not gone far enough. where do we see reconciliation? bond market go to the fed or the fed go down to the bond market. jonathan: mike mckee you have been working through the headlines. what you see and good morning.

michael: a hawkish speech from christopher wallace today. he is noting inflation did come down a little bit in the cpi but i did not impress them. he thinks it is way too high and he noticed the fed has raised rates to dampen aggregate demand but consumer and businesses showing resilient and he said this growth would mean so far, tighter monetary policy and credit conditions are not doing much to restrain aggregate demand. he says there's more work to do. rates will have to go higher and stay there for longer. it sounds as if he is saying we could go more than once at this point and that may be what is helping contribute to the two year yield rising this morning. he is on the hawkish side. austan goolsbee is a voter this year, chicago fed president saying we have to address inflation and get it down. although he sounds less hawkish.

he has been the most dovish out there lately saying there has been progress made. right now, looks like governor waller is leading the hawk parade. jonathan: mike, thanks for that. here's the latest move in the bond market up 14 basis points on the two year. 4.1% on two year yield this morning. tom: it is fascinating. mohamed el-erian outfront suggesting quarters ago we needed some former interest rate reaching that mr. waller is still trying to catch up to. your comments on an informed economics saying we got to keep going. mohamed: we have a 5.6% core inflation rate and it is not coming down, you have an inflation problem. yes headline came down to 5.1 but of course what people look at it.

-- but core is what people look at . the debate of whether we slip into recession is going to fade relative to the debate of how does the system adjusts to hire for longer. that is going to be the key issues. for the marketplace is with the be technical is dominating fundamentals because there's going to be questions of some of the business models, the reliability of the business models. tom: one of the bombshells reported saying will not get back to 2%. something in the vicinity . will be in a panel here with us in the people in couple of hours and the core debate is -- he calls it the neutral golden locks. -- the neutral goldilocks. mohamed: i am in the camp higher than what it has been in the

past. the key issues is not whether we bring down inflation. it is at what cost? lisa: we're talking about the fed trying to regain his credibility. we heard from chris waller a hawkish tone. two-year far below their expectations. how can the fed regain that with actions without taking ratesmedf analysis, forecast, communication and actions you lose control of the two year yield. two year yield is not supposed to be doing what it is doing. i do not think we quite appreciate what it means to have that volatility at the front end of the curve. it makes cash management complicated. the two year yield is supposed to be anchored by the fed. if you see what it has done,

over the last six weeks we have had a high of 5.08 and a low of 3.58%. jonathan: that is a saying. mohamed: it is. it, case cash management. -- it complicates cash management. look at the technicals of the market. jonathan: you said the federal reserve has been from a source of stability to a source of volatility. we have a few minutes left with you. we are at the heart of the international monetary fund. mr. touche and i know is close to your heart -- it is an institution i know is close to your heart. you're not a part of the imf and you're speaking openly about the values of the institution. how do you make a room like this, they want to sit on the stage and have a conversation moderated by the same establishment journalists we heard from a million times including tom keene and they will ask the same questions

we have heard and they will come out with the same answers we have heard a million times. how do we break the group of events like this, conferences like this one, the world economic forum? how do we change this love? we sit around with the happy talk and we end up with these decisions that cause these volatility. how do we change this? mohamed: by making an effort to have more cognitive diversity. it starts with the fed. i've been on record saying the fed should pursue the bank of england approach of having two external independent members of dl fmc -- d fomc. eob is lucky. the bank of england has a confident of bringing in external members. it is not always easy but it contributes to cognitive diversity. the fed has not and therefore you can groupthink. you have to start at the core of the system. these meetings, the real

discussions happened not onstage, but behind closed doors. it's a different tone behind closed doors then there is on stage. tom: with the media we have today and now the new immediacy of the media, you get back to the rescue culture where all of these well-meaning public officials do not want to be the one to create pain. can we do it pain-free? there's a bank with a marketing scheme wrapped around a banking wrapper out near sfo. and the big bang step in and plenty of 30 gazillion dollars so there's no pain? jonathan: to the point of rescue culture, who got wiped out in the last month or so? investors. tom: several hundred million on one of the japanese banks. jonathan: we're talking about the failure of regulatory oversight, monetary policy. who lost their job? where is the accountability of the people who are attended the event like this? there is none.

chairman powell got -- chairman powell felt inflation and got it two term. tom: you have to ask who is going to be harmed. very simply, the swiss outreach over three banks in switzerland becoming one bank in switzerland over 20 years in that. the swiss people are they the losers? mohamed: the big losers are the people who are less fortunate to begin with. inequality of income, wealth, and opportunity is what suffers in a world like this. jonathan: well said and thank you for being generous with your time. mohamed el-erian. can you down to the opening bell , equity slightly negative. eric nelson joining us from the imf in the next hour. ♪ at pgim we can help you rise to the challenges of today,

when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. this is electric, powered by lexus. ♪ the first-ever all-electric rz.

♪ these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app or upgrade to the speed that's right for you today. hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news

from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel thayour body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works.

>> we can't declare victory yet. the great inflation is not over until the fed says it is. >> our expectation is inflation will be conquered over time. >> the notion this is inherently an inflationary economy is not obvious to me. >>