>> we are very far away from what these job market reports need to start to look like. >> people have jobs, money and spend. >> this is bloomberg. ♪ -- >> market remains vulnerable. >> 12 months from now we think the fed is aggressively cutting rates. jonathan: from new york city, for our audience worldwide, good morning, good morning. this is "bloomberg surveillance, live on tv and radio.

alongside tom keene and lisa abramowicz i'm jonathan ferro. equities up .9%. the senior opinion survey coming out. tom: is after the percentage move in the banks. it will be interesting. i look at another survey may attempt, and it is cpi wednesday. jonathan: then ppi a day later. look at pack west in the premarket, now it is up to eight. slowly crawling its weight back up. lisa: why, because they cut the dividend? very few people saying let's try

to catch a falling knife. there is a question where there is a larger policy response to bring people back to banks as investors and depositors. this goes beyond faith in getting your money back but the existential profitability of these firms. jonathan: should we talk about payrolls and move in the equity market? data good, equity market up. lisa: are we now at the point where people are putting aside the idea of rate hikes sing the fed will have to cut rates. we have seen the potential consequences of tighter credit yet higher inflation then expected isn't it a problem. when did that change? jonathan: deutsche bank, lost that hiking feeling. tom: last week, we are all exhausted by last week and then

the weekend we didn't recover. it is about supports and resistances, whichever index or series you are looking at. we are collared in trying to break out and it is not happening. jonathan: great song. lisa: thank you for wrecking it for me. now i am going to be singing it. jonathan: we should get tom cruise on the show and get him to do his rendition. tom: he did a thing from the coronation from the jet. a royal contributor noted that. jonathan: you are a royal contributor. [laughter] tom: christian horner was there or something. i don't how he got to the coronation and back to miami. jonathan: good to know. the equity market, futures

positive 0.1%. the bond market, yields high by a couple basis points. lisa joked about the euro against the dollar, look at what the euro-dollar did last week, dead flat, unchanged. lisa: i'm shocked. this is the lack of understanding about which way you are going to go. even when you get economic upside surprises it has not been good for the dollar. we do get the fed's latest senior loan officer survey. it comes out at 2:00 p.m. everyone will explain why it doesn't matter when it comes down. we have seen a pop in some of the bank shares but people will be talking about how it is lagging data. tomorrow the president biden is meeting with mitch mcconnell and

kevin mccarthy. we are not talking about the debt ceiling and yet it was said june 1 is when we run out of money. wednesday, cpi followed by ppi on thursday. are we going to worry about inflation again and rate hikes are a set off the table because people are convinced the tightening and credit conditions will do the work for the fed? jonathan: next hour, biden and the latest post hole not looking good. it is good news. michael: one of the issues market really has to confront is not earnings, earnings have been decent through this quarter. if you look at the three-month change in forward a bottom of estimates, they are positive for the spx, of the companies have

come in. the issue, and i met through 6.50, which is a little low given where we are right now. the real issue is valuation and the valuation argument comes down to, can you really have 18 .5 times four earnings and earnings that's not bad but not robust either and particularly if interest rates are going to have a hard time contracting. if you tell me the 10 year it will be at 2.5% at the end of the year and maybe you can back into this. the math i do, i get to a normalized multiple for higher floor inflation and interest rates than what we have been used to during covid is more like a 16 or 17 times multiple

ban 18 or 19. tom: b for on the page that we can get to resistance. byerly not going to 4300 -- why are we not going to 4300? michael: for me, a defining range. getting through at 4200 is a very important level. we have a sort of touched up against it, but if you look at momentum signals, those are in the short-term rolling over. then you say, we are cut at terminal, we are through this earnings cycle, what great news are we going to have to power through this key resistance level and open up the state to 4300 and then 4400?

politically in that you are saying the market itself sustaining at a significantly higher valuation, 18.5 or 19 times, then things have to be really good. let's not forget there has been a lot of positioning and a lot of people have it on the sidelines and there is some fo mo happening here that is not long-term investment case. lisa: it seems like it is going to continue to be an exhausting year. jonathan: it is sunday, early may, bramo is gone. lisa: it has been exhausting and people being forced to face huge

humility and all of their convictions being upended early. for you, do you have conviction right now we are going to see the kleins into year end or do you think this push-pull of with you get tech as the leadership or some cutting of the rates, all of these things will keep us in this exhausting range for the whole year? michael: there has been tension within the markets since last summer of people speculating there will be this big economic contraction that will clear the air and allow us to come in and see the light at the end of the tunnel. the problem is that foot doesn't fall, we are not seeing it in earnings and the economy. with our reasonably decent ism's and that tension will keep powell on the front foot. with the cuts to fed futures.

probably the dots will get down. the june fomc is around the corner. there is going to be this enduring tension with decent news means earnings don't collapse but multiples probably need to contract if we can't see a path to 2% inflation. at that is the sticking point. the second half of the year is more about people adjusting to the weird reality and probably pe is contracting and six-month t-bills offering healthy alternatives to buying the s&p 500 at 18 or whatever times earnings. jonathan: something's got to give and i feel like i have been saying that repeatedly for five months. tom: to lose this point, whether you are negative or positive you want movement and we are all exhausted by it.

we have an -- a contact. tom cruise at the concert and he did a cameo thing. he is 60 and he chooses his wing man, a new king. i had no idea he was 60. i am clueless. jonathan: a strict surgery is what it is all about. lisa: it is very hard for a guy and i think it is admirable. jonathan: morgan stanley a little earlier, the equity market continues to expect the best of both worlds. rate cuts and growth, the likelihood of both these outcomes playing out in concert this year is low. equities are priced for a lower

probability outcome. mike wilson this morning. lisa: every sunday night when i read these notes is how he tries to spin it in a new way. basically repeating the same message, you are wrong and overly optimistic every week and yet this is exhaustion. at what point does the data come out and confirm it and get the market reaction everyone is looking for? jonathan: let's get it together. david leibovitz of j.p. morgan asset management in the next hour. your equity market on the s&p 500 positive 0.1%. live from new york city, this is bloomberg. ♪

lisa: with the first word, i'm lisa mateo. janet yellen says there are no good options for solving the debt limit, lifting the cap, she told the abc the white house resorting to the 14th amendment would provoke a constitutional crisis. president biden discusses matter with congressional leaders on tuesday. dallas texas investigators looking into whether the man who killed eight people at a shopping mall was interested in white supremacist ideology. the man was killed at a -- by a police officer in the mall. he was wearing a tactical vest and would -- jammed with ammunition. the kishida met -- food kishida -- fukishedo at a meeting with south korea and america first

formal summit between the neighbors in a dozen years. it is a holiday in the u.k. following the coronation of king charles, iii. seven decade weight and marked a turning point for the u.k. and the monarchy as it tries to adapt to the current era of technological and social change. a packed westminster abby said he is not to be served but to serve. global news, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo, and this is bloomberg. ♪ ♪ (upbeat music) ♪ ( ♪♪ ) woah. ( ♪♪ ) ( ♪♪ ) ( ♪♪ )

( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall. this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight.

secretary yellen: there is no

way to protect our financial system and our economy other than congress doing its job and raising the debt ceiling and enabling us to pay our bills and we should not get to the point where we need to consider whether the president can go on issuing debt. this would be a constitutional crisis. jonathan: the u.s. speaking on abc with a simple message, it is congresses job to get it done. this is bloomberg surveillance. friday's session a nice lift, trimming some of the losses come up on the day and down over the previous four days. s&p 500 positive 0.1%. equity features slightly higher. 10 year, 3.4578. the euro against the dollar,

1.1043. tom: it is wednesday with inflation. it has been underplayed in the exhaustion of the banks. need to begin coverage this monday with erica najarian. with all of what the union bank of switzerland has studied in the last two weeks, is it all clear on these troubled banks that bounced on friday? erika: is a big difference between fundamentals and market sentiment. fundamentally we did see the deposit data that came out on friday afternoon and what the fundamentals will tell you is that there is nothing really happening to the industry that is outside the norm of what happens cyclically. in other words, you do have

positive declines when the fed is tightening monetary policy. you saw the reports that came out from the stocks getting hit the most, pacwest and western alliance released data last week, nothing happening on the deposit flow aside as well. the market sentiment is so that the most bearish investors are sort of looking for the next zero, if you will, thinking this is a multistage crisis like the global financial crisis. tom: are you going to learn more with the senior loan officer survey at 2:00 p.m. this afternoon. erika: no, and that is because i think loan growth is going to tighten anyway. if you look at the senior loan officer survey from several

months ago impair that with company -- and pair that with company earnings calls, it is clear the largest and smallest banks are tightening their belts whether or not it is rising funding costs or essentially not wanting to be the last lender heading into a recession. my guess is that the results of the senior loan officer survey will not surprise me and it will say that credit supply is tightening. lisa: there'd generally about how there has been a lack of rebound in the making index? still well below where they have been. does this speak to you about the lack of faith and need for a washout before investors come back? erika: not necessarily. let's separate the liquidity crisis with the cyclical investment case. we are of the mindset that the acute liquidity crisis should be

behind us, but that being said, let's think about what is facing banks, there are rates and how it impacts funding costs near term, the probability of recession which tightens credit supply and increases credit costs as banks anticipate a tougher time from a macro perspective, and is regulatory in terms of structural changes that would tighten regulation for the large regional banks. if you put that altogether, i can understand why the investor community is hesitant to step in. that being said, the price action from last week spurred a lot of calls. i'm not sure if they are necessarily buying but it feels like they are sharpening their pencils thinking all of those things i just mentioned are now discounted into the share prices. lisa: that said, there is a bigger question of the model of the regional banks.

a number of charts talked about how banks with less than 250 billion dollars in assets account for 50% of all commercial and industrial loans and 70% of all commercial real estate loans outstanding. is this a proper business model at a time when deposits could be withdrawn as quickly as they have been and the profitability prospect really changes with rates going up as quickly as they have? erika: that's not a proper statistic. if you think about the entire world of business lending, banks are essentially 1/6 percent of all business lending, including the debt markets and private credit. so banks, including j.p. morgan and bank of america plus the banks you mentioned are 16% of the commercial industrial loans. the other part on the commercial real estate is something like 50%, but if you think about it,

that is a business model that serves the small and medium-sized enterprises in the united states. if you are a shop around the corner or a factory in north carolina, sometimes your community bank or regional bank is closest to your need. if you have a three-story office building summer in long island and again your local regional bank may be the best that fulfills the need. lisa: if you raise an interesting point, are you saying people in the market are overstating an incorrectly resenting the role of small banks in the u.s. economy and have a smaller footprint and less necessary than a lot of people put out there? erika: they are not less necessary at all because the share of the market is based on dollars. the big building across the street behind me is going to be a bigger dollar and that is why that share is as i stated, but

just because the small businesses are smaller from a dollar perspective doesn't mean they are smaller in terms of the impact of the u.s. economy and to employment. i think the smaller banks in the united states that lend to local real estate and local businesses are a key part of the u.s. economy. jonathan: erica najarian of ubs on the financials. fantastic job for the team of bloomberg over the weekend. the financials index sitting on top of the 2007 peak, that would make it 16 years of just nothing, no returns whatsoever from that index. tom: it is so important that phrase, just nothing because that is the motion for certain subsets of banking. the bk ex index is the same thing of different kinds of banks. which kind of banks does warren

buffett own? lisa: basically said it was mismanagement from the top and they did not handle things well and should not have making the loans of no interest for 10 years kinds of mortgages was responsible. coming out and pointing the blame is a big question, where is the regulatory impulse that comes in? what is the consequence for that mismanagement? jonathan: when that chart was put forward, it took 15 years for the financials to recover from the 2007 peak and the drop off thereafter. what about the internet names? how long did that take? tom: forever, and you can go back to the 1970's and lots of markets take a long time to recover and subsets can do well within that but if you are not in the subsets, think j.p. morgan was dominant. jonathan: what about the bust of

last year for the major names? i think we face another decade of minimal returns because of what has blown up over the last 12 months? tom: that was the call from mr. buffett saying he is worried about the next decade. i don't want to give an opinion but clearly what he heard from that gentleman. jonathan: the equity market positive 0.1%. coming up, sitting down with brian armstrong of coinbase, a conversation coming up shortly. cpi just around the corner later this week. this is bloomberg. ♪

jonathan: welcome to the program. this is bloomberg surveillance. the s&p 500, for dailies into friday, we snapped friday's session with a decent day of the gains, down a touch after a solid payrolls report in america. positive zero point 1% on the s&p 500. the nasdaq unchanged. wednesday, u.s. cpi and thursday ppi and later on this afternoon, the city loan officer survey.

in the bond market, two-year looks like this, even with the move higher on friday, down on the week, a list of four basis points. 3.9555. euro-dollar, close on the week totally unchanged last week. this morning slightly firmer, 1.1043. tom: yet the 10 year spread, less inversion, 180 basis points. we will monitor that through the week. right now, one of the clearest speakers in the bitcoin crypto world from rice universities in the toughest dual major, economics and computer science from rice and has made a go of it of his coinbase.

in conversation is brian armstrong. manus: highly educated gentlemen, co-founder and leads the coinbase in his asian. welcome to bloomberg. i am usually on the road tracking bank flows. but i want you to explain how liquidity in crypto world looks in the last 24 hours, a shutter. talk about liquidity. brian: i don't want to touch on other companies in the space but from coinbase's point of view, we had a great quarter. we saw net flows in that regard and revenue up and costs down, a positive adjustment. from that point of view it was a turning point, in this downmarket week generated

adjusted positive it. manus: that is the perfect ceo answer. have you cut costs? brian: we have had a big cultural shift that i have driven along. we have cut headcount in january and produced -- reduced the real estate footprint and looked at the top vendors and had to rebuild architecture to use cpu and data storage and cloud were efficiently. we are going for operational efficiency. manus: crypto was the inflation hedge and now people are saying crypto is my security against an unsafe banking system. do you buy that are have demonstrative evidence of flow that is a result of svb, first republic and the other pending moments of angst that you have a material inflow from that debacle? brian: bitcoin is up 70% year to

date, so a lot of people look backwards. i am never going to make a forward-looking projection of what the crypto prices are going to do. zooming out, this technology is important to the world to update the financial system and the traditional financial system is slow and expensive and is not equal for everybody but people are looking for alternatives in the wake of the bank failures. i am bullish coinbase will help that transition in the world and whatever will happen in a quarter or a year is not for me to say. manus: is u.s. dollar coin the reserve cryptocurrency? brian: the u.s. dollar is still the reserve currency of the world. we have material general -- revenue generation.

it is going to be interesting how that evolves over the next 10 or 20 years because we are increasingly living in a world where the euro and the one -- y uan my don't think the currency is going anywhere. manus: in terms of expansion beyond the u.s., what is your ambition? how big can we be in the uae in your space? brian: we want to increase economic freedom in many countries. we started in the u.s. took a compliance focused approach and became a listed company and that is a big piece of revenue but expanded into other major markets around the world. we are looking for a home to set up an international hub that

could serve the middle east, africa, press of asia. the uae is very attractive. the first country that created a data created new area in crypto. manus: relative to the u.k. and u.s. are they ahead? brian: they are ahead of where the u.s. is. e.u. has released legislation. the uae approach has been more forward thinking been the u.s. so far. manus: everybody is digging around for news. is there an armageddon moment for coinbase in the united states of america? brian: this moment is an opportunity to get regulatory clarity in the united states. we are happy to do that. it is a great role to play in the industry. manus: you are going ahead --

head to head with the s.e.c. brian: we sought out regulation all over the world and trying to be proactive but there wasn't clarity. if there is no clear rulebook in the u.s. we created our own s practices. the 20% we believe are commodities that we list and there is no rulebook. i feel like we have a duty to push back and go see a caselaw that will help bring us clarity in the u.s. manus: s.e.c., what is the question you asked the ceo? brian: crypto is commodities and has some that are securities and we don't list them and we think there should be a robust, healthy market. there are stablecoins that are more like currencies and mft's.

trip total will have regulators and will probably need new legislation passed and there is broad bipartisan support for that to happen. manus: can you see a time when you are gone for the u.s.? brian: we are not going to leave the u.s.. it is it an important market. the good thing about the u.s. is there is rule of law so we reach the right outcome eventually. manus: you are going ahead with coinbase in bermuda and you can do a lot more with more scale. what is the objective brian: it is -- what is the objective? brian: it is having broad coverage around the world. bermuda serves the western hemisphere outside of the u.s. but we also are very interested in the uae to serve this part of the world and it is great access

not just to the middle east but africa and parts of asia. the uae has been business forward and we are looking forward to speaking to people here. manus: what we were sitting and looking at the approval of the etf, is that the turnkey moment, the goldilocks moment on the institutional side of the business? what would that mean for you if that gets regulated? brian: if it etf gets approved in crypto and it should be, that would drive new capital inflow from institutions and would be good for the world. for our business in particular, there are a lot of things we are doing in the institutional space. our customers at coinbase prime are brokers for institutions. we have seen inflows and we purchased one river asset management and i we have an asset management business. manus: are you actively wanted

to build bigger institutionally? brian: we had the best in the world in crypto and we are going to grow that and grow the retail side. manus: there must be something that causes you to flinch at night? the banks? brian: l.a. degree of paranoia is good for every ceo. -- a healthy degree of paranoia is good for every ceo. there were some bank failures in the u.s. and we have five different banks we were working with in the u.s., two of them had issues and we have reestablished back to a level of redundancy we would like to see in the u.s.. i think we are in a healthy place on that. we need to make sure we are vigilant. manus: brian armstrong, co-founder, ceo of coinbase. we are going on stage.

from the uae, good morning. jonathan: thank you, buddy. he is just making sure his guest doesn't run away. tom: i have been in the same situation and you do a chitchat interview and go up on a stage and have to do further chitchat. jonathan: you do the warm, fuzzy stuff on stage and slap him around kind stage. tom: he mentioned the cost-cutting they are going through. we have enjoyed the stock down to 58 and trading and i will call it a range of 50 to 70 but they are reinventing themselves. the crux is they are basically being kicked out of america. maybe that is to inflammatory but gensler is saying this is difficult. jonathan: manus asked the delicate question he didn't want

to ask and a lot of people have an opinion on. lisa: especially whether or not they want to legitimize this asset class. member when we talked about how this asset class was a system of the froth built up over the last 10 years and now it is coming back again. it is the model we are in. -- muddle we are in. jonathan: the s&p 500 positive 0.1%. wednesday, cpi, thursday ppi, later this afternoon the senior loan officer opinion survey. look out from that from the fed. from new york, this is bloomberg. ♪ lisa: with the first word, i'm lisa mateo. treasury secretary janet yellen

says there is no good alternative to congress listing the debt cap. she told abc the use of the 14th amendment would spark a constitutional crisis. president biden scheduled to meet with house speaker kevin mccarthy and other congressional leaders tomorrow to discuss the debt ceiling. a new poll shows president biden's approval rating hitting a career low and shows him trailing donald trump in early voter preferences for next year's election. according to the abc news washington post, only 36% of those approve of president biden's performance and the former president leads him 44-38. russia reportedly has 300,000 troops inside ukraine according to ukraine's defense minister who told the washington post his countries pending counteroffensive is being overestimated and one reason he said is a large russian troop number. the german chancellor and emmanuel macron have a

counteroffensive. the goal is to reset the relationship following criticism that ties have crumbled. micron is -- micron =-- macron a visit to germany. saudi growth slows. gdp rose an annual 3.9% in the first three months compares with 5.5% in the previous quarter. global news, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

♪♪ at morgan stanley, old school hard work meets bold new thinking. ♪♪ at 87 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley.

>> this is 12 reports in a row that wall street has been surprised to the upside.

maybe you should change your model a little bit. that is 12 in a row and has never happened according to the chart i saw today. this is a very tight labor market and will take a while to cool it off and i think we have to be patient on that dimension. jonathan: jim bullard of the st. louis fed your this is the conversation we were having with mike mckee last week. we have had upside surprise after upside surprise going all the way back to last april for the march payrolls report of 2022. on the day, the jobs report, a series of upside surprises. tom: that was the perfect sot to play. what if we get a market that reacts to a bullish fed? right now, 5.0 four, up 50 basis

points is what bullard is saying and make that even tighter. jonathan: federal reserve has shifted and there is a belief the bar is higher than was maybe a higher -- a couple months ago. you mean -- you need the bank stress test fade. lisa: rate cuts priced into the market versus economic data that has surprised the upside at the fastest pace going within a year. at what point do we start to see some sort of consensus consolidated around the banking stress either going away or raining predominate in this narrative? jonathan: you have the bank stress on top of the debt ceiling mess and what you have implied in the previous dot plot with the race and then pause. you have to think the bar is high. tom: i just need to wait for the data.

i am data dependent. i think the jobs report we are going to see and i am looking now and i didn't feed my mouse because it is not going fast. can you imagine if we get a job stay like we had on friday? jonathan: and of the for another hike. lisa: because of the banking stress. jonathan: precisely. lisa: that is why the market ignores what could fuel a rate hike or cut and focus on what confirms their narrative. jonathan: if you go a few weeks without a failed bank, will that data take on more importance? tom: yes. jonathan: the way to where the focus should be will shift summit away from financial stress and back towards traditional indicators.

but i go back to deutsche bank, we have a loss that hiking feeling. that seems to be the conclusion for a lot of people on the street around the federal reserve. tom: i think bullard said it best that they are completely divided. i listened to some people working hard to think through stability or a higher, more persistent rate regime. from mr. bullard, it is going to take a while. we talked to randall crosson or on friday -- krasner on friday. the market wants to say it middle of july, august. what if it is october or dare i say january of next year where everything is more gradual to get where the market is. jonathan: new quotes from bank of america, this contributes to the conversation, it is

difficult to market a labor market and the report reinforces upside risk to the near-term monetary policy and a hike in june cannot be rolled out. ethan harris said, there has been only limited progress in bringing global inflation down with almost no real pain while investors trying to look to nor -- more normal period ahead. there are some people pushing back at the moment. lisa: they are pushing back and we are not seeing it in the pricing and they will say the reason you are seeing rate cuts priced into the market is because of tail risks. either something will happen catastrophic and the fed will the force to cut 100 basis points and others say that is a good chance they'll will have hike further. go back to economic data that is surprising to the upside and inflation has remained stickier. we saw the employment wage component surprised to the upside and at what point do we end up second-guessing this idea

of whether perhaps we are being a little too flippant about the weakness or the imminent doom that some people talk about all the time? tom: let's talk to ian shepherdson. how have you adjusted your american economic call over the weekend? ian: headline payroll number was startling and they were all to the downside. growth has been slowing relentlessly. we have lost the post covid hiring catch-up and out the trend is less than 200000 and slowing consistently. most leading indicators suggest it will slow further. history tells you if you look at the u.s. economic cycles, you go from everyone being fine and zero, how did that happen,

usually three to six months. it happens fairly quickly and i think we are on the verge of that now. lisa: do you think we are on the verge of an immaculate disinflation, soft landing that people work talking about or is there something more pernicious under the surface with the fed holding rates where they are? ian: before svb went down i was for dodging the recession and getting inflation down, but i do think the timing of credit conditions light of the banks will be a big deal. the small business survey is at recession levels already and was there before the banking crisis. i'm very nervous about what it will show in the next few months in terms of credit conditions. they do capital spending and carry a lot of inventory and all those things will become much more expensive for them. i can see a bifurcation where

the large corporate sector does ok but small business sector which is hidden from view is really going to struggle in the wake of this tightening. it will be a much more difficult environment. i think a mild recession is the most likely outcome. lisa: you think we are overestimating or underestimating the role that small banks play in the u.s. economy? ian: it is impossible to overestimate because they have half of commercial lending for real estate and companies. small companies in particular are just captives of the bank here the bank is the only source of finance other than the owners pockets. they are making more difficulty in finance and working capital and has a profound impact on the ability of the small business sector to continue to operate. we get very little data.

mostly is big surveys or big-company data to finance reports that you look below the hood and what is going on in the small business sector, very alarming trends. the own perceptions of credit tightness jumped dramatically in the wake of svb going down and we get more information on that tomorrow. it is not going to be good. it is is it to ignore them and focus on the large sector but most people work personal companies. jonathan: rio at the game this weekend is the big question we want to know -- were you at the game this weekend is the big question we want to know. ian: i was not. tom: i saw and watched. newcastle is the only place they take their tops off? jonathan: doesn't matter what the weather is. tom: is five rows of naked.

jonathan: ian shepherdson, thank you. boxing day, the day after christmas, newcastle and a team in the midlands, freezing cold, newcastle fans behind the goal at the one end with their tops off, seriously. there are some the toughest fans out there and they turn out in force. tom: the experts on nbc thank you for your great coverage. what i find interesting here is big money took over newcastle. jonathan: they are being responsible and not throwing it around the way they did 20 years ago in manchester. they responsible so far. not to get stuck in something we should be talking about. lisa: you did. tom:, chair of the drinking in

newcastle? jonathan: david lee wits of jp morgan up next. ♪ 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

>> we are very far away from what these job market reports need to start to look like. >> we keep printing lots of jobs. people have jobs and money and go out and spend. >> we think this market remains vulnerable. >> the u.s. is settling down while the world is holding up. >> five months from now we think the fed is aggressively cutting

rates. jonathan: let's get your week started. good morning. this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz i am jonathan ferro. equity market positive .1%. cpi just round the corner. later on this afternoon a bank lending survey much-anticipated as the banks run into more difficulties. tom: i have to be focused on inflation. what i'm hearing off of the shock of friday's jobs report everyone is starting with governor krasner. we heard from bullard. the bottom line is inflation report has been underplayed in all of the bank exhaustion we have. jonathan: are you suggesting it will not be long before we are talking about hikes again in june? tom: i am suggesting the rate

hike mantra is in full swing. jonathan: stuart kaiser of citigroup had this to say. markets were risk off for the week but we were supplies to -- we were surprised on payrolls. lisa: i would agree on that. that was a surprising response to economic data that was better-than-expected. we have seen people were worried about rate hikes. the fed does not seem to be back on the table in any way. people saying the banking will take care of that. at what point do we get the fed come back or is this the new reality that we will have rates stay where they are in the economy will continue to surprise to the upside? jonathan: $10 name dropped hard. now $7.60. tom: there is a general rule on a below $10 stock, the media

loves to focus on percent change. it has to be more sophisticated. i did not know if you have the chart in the control room. she crafted this brilliant chart which shows the resistance they have to get through going 7, 8, nine. they are nowhere near breaking through the resistance of the last seven days. on radio it is one price decline , two price declines. jonathan: we had this experience in the euro zone in the debt crisis. you had the greek banking names that became so low in pricing you stop quoting percentage change. tom: that is what the adults do. jonathan: do know what adults do? they quote dow points. tom: minnesota manufacturing and mining may leave the dow. jonathan: pushed.

tom: pushed would be it. a lot like anaconda copper a few years ago. jonathan: good story there. [laughter] equity futures on the s&p 500 up .06%. yields are higher on the 10 year. lisa: today we are fully trained onto a pop p.m.. then people come up with reasons not to care about it. i would say premarket trading pack west shares searching 32% and comerica shares searching 7%. we are seeing a low bit of a this morning as people try to gain some optimism. tomorrow u.s. president joe biden is meeting with congressional leadership, mitch mcconnell as well as kevin mccarthy. debt ceiling. tom: is this the big meeting tomorrow? lisa: this is a really important meeting. how much consensus can they come

to, especially if janet yellen is correct we run out of money on june 1? do we care if cpi is an upside surprise? with the wage data we got an upside surprise and it really is not shaken the underpinnings of the market. tom: it is not europe but they care. we've gone from 8% down to 5%, that is not like germany or the u.k.. still, these rates are unacceptable. jonathan: with us is david leibowitz. how long until we talk about a june hike? david: it is interesting. the point you were discussing prior to the break is what investors need to focus on. everyone is expecting the fed is done. everyone is expecting the fed will start cutting rates. if you think about where the risk lies, it is very much to the upside.

people find themselves flat-footed. the rate of inflation is too high. not to mention jay powell's favorite indicator continues to trend higher, which nobody is talking about. is the fed going to do five or six more 25 basis point hikes? probably not. if you're thinking about a portfolio, it lies net upside risk around the fed doing more than the market expects. that could stay on hold. jonathan: equity leadership, where does it come from? david: the interesting thing we have spent a lot of time talking to clients about is back in march when you start to see stress in the banking system, why are equities going down? the 10 year fell and that boosted names and allow the s&p 500 to keep its head above water. i do not think you will see the market broadly do well in that it firemen because the big heavyweights are too sensitive

to the overall movement of rates. what you end up saying is nowhere market where the average stock starts doing better, maybe utilities, health care staples. tech will not lead us out of this hole if the risk to rates is to the upside. tom: you go to high net worth people and they are scared. the rest of the market has come out of a brutal bear market in october and it has made back a huge part of that loss. i think that is underplayed by people addicted to covering apple every 15 minutes. do lookt as the bottom of a market in october and we are climbing out of it into a positive return for everything else besides apple? david: at the end of the day the problem with saying october was the low reminds me of people saying june was low last year and we had priced into recession because the median decline is 25% peter trough and we did

that. we must have priced it in. let's talk about the growth data , let's talk about the jobs report. this is not an economy when you look across the new low and we could retest there's a distant lows at some time the end of the year. lisa: is good news good news again? jonathan: it is -- david: it is because the market has shifted its interest from inflation to growth and market performance this year has been better. i worry if the inflation data does not cool off then good news becomes bad news because it means the fed will have to do more. we are in a weird state today where it does not seem to us like investors are accurately pricing and the risks around monetary policy we see on the horizon. lisa: if there is another bank failure that emerges, does the data matter about inflation or

do people discount the fed matter what? david: that is the problem. people are saying look what is going on in the banking space. it feels like something we may have seen before. the fed will have to go on hold. i would make the point that banks fail every year, it is not usually the 16th largest bank by assets. i think we could see continued stress and the banking system, but at the lower end as we work through these covid excesses and work through the duration mismatch. i am not sure we are out of the woods but i think the big booms have been hurt. tom: i do not want to get in trouble with jamie dimon, but the bottom line is are we going to see a banking roll up in this country? david: what is interesting that ties back to the structure of the u.s. banking system, which is much more fragmented than what you see in other parts of the world. that caters more to m&a activity

than would be the case in europe. i think that will be premature to say we have seen the end of consolidated banking. tom: that is like when powell is that his press conference reading off a piece of paper. jonathan: i am please you mentioned bank failures and how much more regular they are versus how much they get talked about. the fdic has a table. in 2017 eight banks in america failed. there is a reason you have pointed out. it is that much bigger this time around and seems to be a feeling that could bleed towards a credit crunch more broadly. do you have those fears we get that credit crunch and that is why should not be pricing in higher rates off the back of the robust data because the bank will take care of business? david: i think you do get a further tightening in credit conditions but the mistake people are making his they hear

the word bank in they think 2008. structurally this is a very different issue than 15 years ago. could the market -- we are back to the market during the fed's job for them -- could the market to additional tightening and maybe that means the fed does not need to continue hiking rates? absolutely. you're already seeing in cyclical parts of the economy things like manufacturing, cracks begin to form. is the banking situation going to get the fed to do a complete about-face? that is a complete risk. it speeds up any potential rate cuts later on this year. i think summer time for easy monetary policy may be premature. jonathan: appreciate it. david leibowitz of j.p. morgan asset management. in about five to 10 minutes we will catch up with annmarie hordern in washington, d.c.. her thoughts on this poll from the washington post over the weekend, percentage of those

approving of joe biden's performance has fallen to 36%, six points lower than february. a point off his earlier low. tom: any time you have a president under 40% you have to be talking about it. that is stunning. jonathan: for a long time we talked about him having an edge over former president donald trump. not in this poll. lisa: which raises questions, what if he starts to lose against him? who do they have in the wings. if there is no other front runner, what to they do with that? jonathan: anne-marie in about five minutes. look out for that conversation just around the corner. equity futures positive by 0.25%. this is bloomberg. lisa m.: with the first word, i am lisa mateo. janet yellen says there are no good options for solving the

debt limit stalemate other than congress lifting the cap. janet yellen told abc that the white house resorting to the 14th amendment would provoke a constitutional crisis. president biden discusses the matter with congressional leaders on tuesday. near dallas, texas investigators are looking into whether the man who killed eight people at a shopping mall was interested in white supremacist ideology. the 33-year-old man was killed by a police officer in the mall parking lot. witnesses say he was wearing a tactical vest jammed with ammunition. the japanese prime minister has visited south korea and met with the president and pledged to seek cooperation on high-tech goods. he said the trip helped "deepen the relationship of trust." the visit marked the first formal summit and a dozen years. it is a holiday in the u.k. following the coronation of king charles iii. it marked a turning point for

the u.k. and the monarchy as he tries to adapt to the current era of technological and social change. the king told a packed westminster abbey he had come not to be served, but to serve. in president biden will announce drafting new rules for airlines with stranded passengers. carriers could be required to provide meals and hotels and cancellations due to canceled flights. authorities say they expect air travel this summer to surpass pre-pandemic levels. global news powered by more than 27 hundred journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪ you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star.

hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

>> there is no way to protect our financial system and our

economy other than congress doing its job and raising the debt ceiling and enabling us to pay our bills. we should not get to the point where we need to consider whether the president can go on issuing debt. this would be a constitutional crisis. jonathan: that was janet yellen speaking on abc over the weekend. congress has a job, her message is to get it done. from new york city, good morning. here is the price action. positive .2%. to build on the gains from friday, and decent gains they were off the back of a strong payrolls report, pushing two year yields higher. the follow-through positive on futures. yields higher on the 10 year by a couple of basis points. the euro did absolutely nothing last week. 1.1049 on the euro against the dollar. the poll we have been talking

about, here are the details. washington post abc news poll showing the president lagging trump in early voter preferences. the percentage of those approving of biden's performance has fallen to 36%, six points lower than in february at a point off his previous low in early 2022. let's address the elephant in the room. 56% disapproved of his performance. 68% regarded biden as too old for another term. on the question of who voters prefer for 2024, only 4% viewed trump 76% -- only 44% viewed trump 76 as too old. they also rated trump's mental acuity as higher. what is funny is we are having this conversation out loud. tom: it is also the moment of a former president 78 and the current president 80, everyone

can do the calculations. in reordering is our bloomberg -- annmarie hordern is our bloomberg geriatric correspondent. we witnessed the president at the white house correspondents dinner. it is clearly within the zeitgeist. the answer is 68% worry of his age and i believe for the former president it is only 44%. what does the white house do this morning? annmarie: what they do is what he did at the white house correspondents dinner which make sure he is active and in front of the public and on cameras giving speeches. he just gave an interview friday late in the evening on msnbc. he is going to be having an event today at the white house. this is the way they can try to combat the fact that people think he is too old for the job, if he does the job every day that is one way they can see changing some of the public opinion polls. the president does have a sense

of humor. he joked about his age at the white house correspondents dinner and he says they say i'm too old, i say i am wise. he feels he is fit for the job. he is currently doing the job, everything that is needed. many people are concerned given the fact that he is the oldest president in history. he would be 86 at the end of that term if he were to win. tom: is there a mood of a reshuffle at the white house? the idea of getting in fresh bodies to support the president on the election charge? annmarie: obviously the campaign will have fresh minds and individuals. inside the white house we have recently seen a number of changes with the chief of staff, with the head of the national economic council. i think that is less about biden and reelection and more about the cyclical pattern of and administration. people tend to move on after a year or two and do something

else because these jobs are time-consuming and taxing. there is some interesting fresh faces at the white house. he is also bringing in people he trusts closer involved inside the white house as he looks to finish off these next two years and he becomes a candidate for 2024. lisa: one of those potentially is, let harris who was on stage -- is kamala harris, the first time a sitting vice president has been on the stage with the president since 2016. is that important for the messaging going forward in her role she will be playing? annmarie: i think they want to make sure the vice president is out there on the cameras the same way you see the president. also the president spoke about her in his interview with msnbc saying she has done a fantastic job. many people in the white house think she is underrated with the public. she has not polled well.

potentially she has been leading into the issue of women's health and abortion. that was a huge issue for the midterm elections and will be a huge issue for 2024 and they think she is the right boys to talk about that and potentially this could help their campaign -- the right voice to talk about that and this potentially could help their campaign. lisa: is anyone happy about a redux of the private is -- of the previous elections? annmarie: looking at these bold numbers, it does not seem like many americans are happy these are the two units they want representing either party. tom: we are still close -- jonathan: we are still close to 18 months. lisa: for you in the u.k. -- annmarie: for you and the u.k. this timeline feels like forever. jonathan: let's imagine this is the face-off. the nature of the campaign has to be so different than the nature of the campaign he

conducted through the pandemic and beyond where effectively he could hide and make it a referendum on donald trump. he cannot do that this time around. annmarie: he cannot hide. he will be out and about doing what he needs to do as president and he will have to pick up more events. i know he is going to new york as well. he will be meeting with donors and the democratic party on top of the normal everyday items that the president of the united states have to have, including foreign travel. it is not a referendum on the former president. they would like it to be, but it will be a referendum on the current administration. jonathan: before you run, squeeze this in. give us the timeline for next week or so. there is a meeting tomorrow between congressional leaders in the president. what should we be looking for? annmarie: tomorrow is a huge meeting. what matters is when they walk

outside in go to the cameras on the north lawn, what do congressional leaders say? most notably speaker mccarthy. does he say there is a path forward or do the battle lines, the redlines, delay hard and after tomorrow's meeting? it is a critical meeting. that timeline is getting shorter and shorter. we are less than a month away from with the treasurer says is the x date. jonathan: annmarie hordern in washington, d.c.. you talked about being exhausted lisa. never mind exhausted. 70 people are frustrated with this topic, vertically on wall street. they have no read on what will happen. it is one of those things important to markets and you do not know what to do with it and part of the at risk maturities. tom: the heritage of this is certitude it is no big deal.

it was 2011 and all of a sudden on an afternoon, i remember i was out, i was in my shorts and t-shirt and bowtie and they said you have to come back into the studios. that is how bad it was. jonathan: you cannot tell a story that starts like that. shorts t-shirt and a bowtie. tom: i am walking around central park with that and they said you have to come back to the office immediately. i brought the cigar in and they got angry. 2011 surprised everybody. jonathan: as a base case can we conclude this will rita spending cuts and should contribute toward slower growth? tom: i do not buy that. it is an arch debate over the conservative religiosity of spending cuts versus tweaking the growth of spending. those are two widely different things. lisa: it is a frustrating debate for everybody because it has no positive side.

there is no positive to have this had to out in this contrived manner that puts the u.s. credit rating at risk and this shows a complete inability to get things done and a lack of vision. we are in a model. where is the vision? tom: the conservative teeth those is it a huge positive -- the conservative ethos is it is a huge positive because their constituency cares about this and they want less government. that is all there is to it. they are speaking to their core constituency. jonathan: it is religion until you get in power, that it is separation between church and state. tom: this is the mythology we member from ronald reagan. ♪

you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. hi, i'm lauren, i lost 67 pounds

investment objectives, risks, charges, expenses 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.

jonathan: if you ever tune in on the weekend to the premier league football and start and the players are lining up, i don't know of their playing a song when that happens. they cut to one side of the screen and then you see the players shaking hands and you get a vibe coming to pick up on the vibe of the game. it is sticky. we need that for bramo during commercial breaks. after the debt ceiling conversation -- you would not be the volume up. tom: she looked like she was

landing a plane at jfk. lisa: it is a ditch ingenuous conversation. -- it is a disingenuous conversation. when trump was in office the debt ceiling was raised and there was no issue. now it will bring us to the brink and is annoying and it does not have to work this way. jonathan: politics works for both sides, doesn't it? lisa: always. it is just frustrating. jonathan: the equity market on the s&p 500, losses monday, tuesday, wednesday, thursday. the gains off the back of robust payrolls report. the nasdaq totally unchanged. in the bond market, two year, 10 year, 30 year. the 10-year till sub 30%. we are up five basis points on the two year. know all about the data for the week ahead.

here is your data for the week ahead. cpi and wednesday, ppi and thursday. senior loan officer survey comes later this afternoon. we have been talking about it for weeks. i think lisa abramowicz said may 8 at the end of march. lisa: that will come back and people will say it does not matter. jonathan: chairman powell hannah reed on that already. lisa: and he said basically it showed what we already expected. this is gradual tightening from the rate hikes. we are also looking at single names. there been earnings coming out throughout this week, including tyson foods. this tells you something about the economy. shares down 8.3% in premarket trading, cutting its outlook from each a up -- for meat sales. consumers are switching to cheaper foods. to say consumers can absorb higher costs, can they? which items do not have pricing

power? dish network is down 1.7 percent after missing estimates for earnings sales and showing subscriber losses. they talk about a hack that made things more expensive. i wonder how much cybersecurity will play in this. pack west shares searc 39%. tom: i will do the bath to be responsible to our audience. i will do the resistance math. lisa: i wonder have we seen the worst of it? is this recovery enough? or is this persistent feeling that something has changed and it seems like that is what is baked into the market? jonathan: i thought we had found stability about a month ago and then it hit the fan again. we have to work through a process. you will have bumps along the way through that process. tom: what you mostly saw this weekend is a lack of research. it is an important time to talk to so -- to talk to subadra

rajappa on the silence this weekend over the shocking jobs report and a reset of what interest rates will do as a thermometer of the system. if i say to you where is the 10 year yield twelve-month sound, is this an adjustable number or is it one big socgen gas? subadra: i think we have kept our forecast stable. we have seen this up and down motion in the data week after week. on the one side you have the regional banking crisis. on the others you have strong fundamentals. if you look at the bond market, from early march to now nothing has moved much. the two year has stayed around 4%. the 10-year has stayed between 340 and 360. the 210 curve has been around

-50 54 -60 basis points. there has been a lot of movement within a very narrow range. that said, i think this will continue to be skewed to the downside for yields. if we get strong date of the market will dismiss it. if we get week data i think you will see a move lower in yields. tom: he went right where i want to go. if i look at the bloomberg total return aggregate index, it is a straight line, bill gross, mohamed el-erian success at pimco for 15 years. as you know, down 17%, the mother of all all in bond bear markets and there has been a bounce, but webout it like we talk about stock bounces. are we bouncing off a bond bear market do constructive? subadra: it certainly seems that way.

yield seem like they peach cash yields seem like they peaked in the first quarter of last year. this time around the key difference is the fed funds rate , nobody's expecting the rate to get back to the zero bound, and the decline in yields will be much more modest in gradual. even in our own forecast we have 10 year yields only getting to three and a quarter percent by the end of the year. the ecb is poised to hike more. the bank of japan could widen its band at the june meeting. in this context, inflation is also high in sticky, it'll be hard for a meaningful decline in yields. it will be one of the situations where yields remain range bound. we get very weak data. we price down to a lower range, but will not go back down to the zero lower bound.

lisa: what to people do when there is this tight trading range and you do not expected to break out? they just clock in for an hour making sure nothing changes and take a break? i am wondering how sleepy things are as people realize there is no conviction and there is very little visibility to get it it shone one side or the other -- to get an edge on one side or the other. subadra: you can trade the volatility within the range. you probably want to belong camera -- you probably want to be long gamma. there are no larger direction moves to play in this market given the fact that yields have been range bound. people are positioning for the next leg lower in yields because that seems to be the broader directionality given tightening credit positions. we know policy works with long and variable lags in the credit

picture will remain relatively strong until the bottom falls off. your positioning for that scenario where you see a being full second half and you can see the next leg lower in yields. as we were speaking earlier in your program, i think the market's underpricing the risk of the fed remaining on hold for the remainder of the year, we are pricing in cuts for the second half of the year. if we could get past the regional banking crisis, i do not see any region for the fed to jump into cutting rates in the second half. lisa: what would it take to not get past the regional banking crisis? people are pricing and it will persist. when we signal the all clear? subadra: that is a very difficult question to answer because you are looking at an economy of haves and have-nots. the larger banks are doing quite well. the smaller banks and the small business areas are coming under

a lot of pressure because of the dependency on regional bank. this bifurcation will muddy the picture and in some respects even though the fed continues to say the financial instability concerns, they have chose to deal with that, with inflation, these opposing factors are going to make it very difficult for the fed to adjust policy in a meaningful way. they cannot cut rates and they cannot hike rates. that is when policy gets tricky and they will be on board for the remainder of the year. jonathan: we have to talk about the ecb. erik nielsen from unicredit said this. "my fear that is the lagged effects of the monetary policy tightening begins to hit the economy the european underperformance will be longer and deeper than needed because of excessive monetary tightening." industrial production in germany

downside surprise. factory orders ugly. earnings do not scream trade is good. you think there is a risk perhaps the ecb relative to the fed is the central bank most at risk of making a policy mistake at the moment? subadra: that is always a problem when you are following the fed and not leading the fed. this almost always happens in every cycle where the ecb over shoots. not broader economic fundamentals. broadly speaking, a lot of people are expecting the european economy to go into recession. the european economies in u.k. has done better than people broadly expected. a slow down to be expected given how aggressively the ecb has hiked rates. the trajectory will be the fed

will have to pivot in the ecb will have to pivot thereafter. jonathan: wonderful to get your perspective as always. so back to rishaad but of socgen -- subadra rajappa of socgen. that note, the risk the ecb will deliver excessive monetary tightening relative to the data we are starting to see in spots over the last week show some weakness. lisa: i feel like this is the same conversation we were having six months ago, they were overdoing it and raising rates too far at a time when there were signs of weakness. the signs of weakness never materialized. it is a difficult moment because if you do believe europe is tracking the u.s. on a lag, this is the narrative in the u.s. six months ago. tom: is one of the most misunderstood thing. if you take the nominal gdp of the united states of america and you go back to the financial crisis, guess what, before that,

the euro was advancing nicely. it ended in 2008. i am sorry. radically different trendlines. lisa: perhaps. we do not know of this is the start of something new. the dollar has underperformed in light of the small banks and what is going on. that is one of the distinguishing features between the u.s. and europe. jonathan: the eurozone bank lending survey last week was pretty ugly. they can still hike interest rates and signal they will go again at the ecb. tom: 1.1047. ♪ -- jonathan: it is a total snooze. from new york city, taking the rest of the week off, i am jonathan ferro. this is bloomberg. lisa m.: keeping up-to-date with news from around the world with the first word, i am lisa mateo.

janet yellen saying there is no good alternative to congress lifting the deck cap. she also told abc the use of the 14th amendment would spark a constitutional crisis. president biden is scheduled to meet with kevin mccarthy and other leaders tomorrow to discuss the debt ceiling. a new pulse shows president biden's approval rating hitting your career low. it shows him trailing donald trump in early footer perfect -- early voter preferences for next year's election. only 36% of those surveyed approve of president biden's performance and the former president leads him 44 to 38. russia reportedly has at least 300,000 troops inside of ukraine. he said his counteroffensive is being overestimated and one reason is the large russian troop numbers.

in germany industrial production fell the most in the year. output dropped 3.4% in march, more than twice the decline economists had predicted. the decrease was pronounced in the automotive sector. in saudi arabia, the economy expanded at a slower pace in 2023 and that was due to the oil sector, which grew at its lowest rate in more than a year. sally gdp rose 4% in the first month, compared to 5.5% in the previous quarter. global news powered by 2700 journalists and analysts and 120 countries, i am lisa mateo and this is bloomberg. ♪

>> it is the fed's job to help the banking system.

this idea they can separate monetary policy from financial stability, i disagree with that. the way monetary policy works is through the banking system. some of this tightening is the intended consequences. this is now for the private sector and the government to figure out what happens with the regional banks. jonathan: that was priya misra, phenomenal as always. pac west trading much higher off the lows we saw last week. it was a $10 name last monday. it is an eight dollars name right now. we stay on top of that. on the s&p 500 positive .2%. cpi later this week on wednesday. a ton of fed speak as well. yields higher at the front end. up six basis points on the two year. close to 4% on the 10 year. tom: one of the things we want

to do is get qualified people to talk to. the story is extraordinary. july to mcwilliams has enjoyed the failure of deposit insurance. her father was flattened in yugoslavia years and years ago over of failure of a bank. she wandered into berkeley, sterling academic career including service at a law business in palo alto, california. there is no one more qualified to talk about this banking mass than the former fdic share. thank you for joining us this morning. does this crisis have staying power or are we solving idiosyncratic banking problems? jelena: thank you for having me this morning. i would say we are at the place where this crisis should not have had staying power and yet here we are about five or six weeks in.

i am hoping that we are at the tail end of that. the government does have a number of tools they need to use and i'm happy to chat with you about what those are. the problems are not so much idiosyncratic as much as at this point we have created a crisis of confidence in the banking system and that is where we are. tom: how does real estate folder into this? many will say it is not the drama we have seen over the last number of weeks but commercial real estate, what you observe there? jelena: a lot of the regional banks have high concentrations and exposure to commercial real estate. in good times they are able to navigate the concentrations in their portfolio very well, but we are at the point where there's so much volatility in the marketplace with the market expectations of the banks and the empty offices and a number of commercial markets in the united states are never able to help that. lisa: should banks be in the

business? this is the time when we are seeing the number of smaller regional banks shrink dramatically. should it be their business to provide a majority of the commercial real estate lending? jelena: this goes back to the intrinsic question of the tiered banking system in the united states. you have different banks of different sizes. committee banks are below $10 billion in assets. you've midsized banks above that and below $100 billion, and then you get into the regional land, 100 billion dollars to as high as $500 billion. above that you get into the very large banks. if the regional banks and midsized banks and community banks are not financing local real estate transactions, they will not get financed. the role of these banks in the u.s. economy is so high that people underestimate what these banks mean for our financial ecosystem.

should they be in it, should they not be in it? it is irrelevant. the need to manage the risk in their portfolios and with the rising interest rate environment it will be incredibly difficult for them. the pandemic did not help with people not wanting to come back to offices and you have tens of thousands of commercial real estate, even in some of the most prime locations sitting empty. i was just in san francisco and it is a ghost town. lisa: should there be the same kind of regulatory scrutiny and requirements than some of these regional banks as there are in larger banks? jelena: absolutely not. our regulatory system needs to account for different tiers in our banking sector. these banks present different types of risks than the global systemically important banks. they present a different type of risk than midsized banks. the job is to accommodate that

risk. the job is to manage that risk. when the bank fails he get into a situation we have been in the past few weeks. as much blame as we can put on the banks and the bank risk management, i think there is a portion of blame that goes on the u.s. government. tom: i just looked at the bank assessment rates at the fdic and my eyes glazed over. it is complex. how to -- how much just jp morgan or bank of america pay each year for fdic insurance? jelena: there is a number. it is a lot of money. there just go different sets of formulas. there is a complex bank formula. tom: i don't mean to interrupt, but i am. senator warren would say raised rate on jamie dimon and brian moynihan.

is there wiggle room for the big guys to pay more insurance to take the load off the back of andrew jackson's 4000 banks? jelena: it is very possible the fbi see -- the fdic may come out in that direction with the special assessment they need to make the deposit insurance. some of the banks that have failed and have been sold have created a deficit for deposit insurance fund. at the bottom of that there will be a special assessment but i believe that is where the fdic is heading. lisa: are you concerned about the federal reserve and its role as regulator? it seems like everyone is blaming randy quarles and leaving it at that. but is this something endemic in the role the fed often plays? jelena: to blame a vice chair of supervision for something that

happened about a year and a half after he left office is preposterous. as a former federal reserve staffer, i was there during the 2008 crisis. there are good people working at the fed. they have a lot of mandates we have to satisfy. we are at a place that is about financial stability. the debate about monetary policy and financial stability. banks are not stabilized. we are not going to have financial stability. to the extent the federal reserve takes in-state ability mandate seriously, it is long overdue they take a look at the banking situation in the united states and what the interest rate rises have done to the banking sector. jonathan: thank you for way get on all of this. jelena mcwilliams on the latest in the banking sector. here is the latest. the cfo of apple making a move kicking off a five-part corporate bond deal. need some detail on maturities.

last august they came out with a $5.5 billion bond issue, 23 billion-dollar order both. you can imagine what the order book might look for this one. tom: everybody's doing this, they are coming out with bond offerings even if they do not need the money and they waited two business days until they came out with it. weight of debt at apple is 4.1%, which is absurdly low. cost of debt is 3.3%. the weighted average cost is 0.1%. to they need to do this? no. what are they going to do with the money? jonathan: buy back shares? tom: i guess that is where we are going. the maturities, 2026, 28, 53. i will call it the red herring.

they are the maturities. if you want to bring that up on the screen, that is important. 2053. lisa: these are typically longer duration bonds. we have seen this from apple to microsoft. they are more heavily weighted to the long end. is there a sign they are trying to get ahead of more rate increases or do you think this is just creating liquidity in the market for their other bonds? i do not understand why they would need more trash because they have the size of the german economy. tom: all weekend, the death of apple, the death of tech, it is all overvalued. in cupertino i do not think they got the memo. jonathan: expect it to price today. it is very good market time. tom: we have rob wallner coming up. perfect. jonathan: apple debt offering in

five parts. rob wallner of invesco is joining us shortly. from new york, this is bloomberg. ♪

we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch.

did you know you can get someone to shop for you?

stitch fix really gets me and what i need. even better? they save me a trip to the mall. it's easy: i share my style, size and budget. and they do the shopping for me. stitch fix sends me things that fit and make me feel like a more stylish version of myself. i keep what works, and send back the rest. no subscription required. no commitment. just my style. stitch fix. ♪ >> this is still a very robust economy. the tightening is yet to show up. >> we are still waiting for it.

>> the fed will not quit until the labor market quits. >> you have this temper tantrum against the fed, using bank stocks as a weapon, trying to get the fed to change. >> it is not up to be fed to solve the banking problem. they did what they could do. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning. we have our heads screwed on straight. jon ferro, focused on the senior loan officers survey. they won't mention apple in that survey, will they? >> i doubt it. this is about bank land extended, they were tightening the last couple of months. they are continuing to tighten. it takes some of the work away from the federal reserve, who are looking to get inflation lower. tom: we heard from guests that is the reality and that we will see a different bank. to me, the keyword word i heard

was scale from michael purves. the idea here of smaller institutions, less efficient institutions and what do you do? you get higher on lending. it is a serious issue for a huge body of america. jonathan: with the federal reserve seemingly on pause. it seems to be implied by the dot plot from the fed. ultimately, is good news good news? can we enjoy robust output data without the fear of this fed spoiling it all and hiking interest rates? tom: these are some of the battles. he is looking at the x axis and it is further out there. lisa, your thoughts over a weekend of reading and thinking about how the x axis has changed off the bombshell report we saw? lisa: we have been talking about how important the survey is going to be. after 2:00, everyone will try to discount it one way or another

as being lagging. tighter credit conditions from higher rates. citigroup is saying it is difficult to tease out something that is inappropriate versus the intended design of fed tightening. how do you use this to understand anything, let alone justify not raising rates in the face of relatively hot data stuff? tom: the coupon out 2052, off the october bottom, the apple piece is up 13% for an annualized 25% return on that long bond. apple will make profit total return for people again. jonathan: you have a five-part bond deal debt offering. is this a real test of the debt market in the united states? these are high quality companies, tom. very desirable, fantastic

earnings. cash machines if you will with fat margins. tom: the wheelhouse, long-ago folks, one day, a brilliant woman from the university of chicago said bonds. lisa, this is your wheelhouse. literally four phone calls are made. lisa: they are pushing people away. there are many more people who want to buy this then if they had bonds themselves. tom: oversubscribed. lisa: it will be like a food fight for this, given the lack of debt that has been sold this year. to your point, is this a test of markets? and from apple's point of view, is this a statement of the market condition, especially after earnings that came in better-than-expected? tom: the ultimate responsibility of a cfo to look at capital allocation, they have 4% debt. jonathan: i am thinking of lisa

the first day walking into the office like why are you also happy? lisa: [laughter] more or less true. tom: i'm sitting there and there are all of these were these around me the first day in the office. they think i am a journalist. i full them. pull surprise. the worthies, i was surrounded by. jonathan: ppi the day after, tom mentioned sluice. i hate that phrase. lisa: i can't. jonathan: 2:00 p.m. eastern time, that is coming up. the s&p 500, just about positive, up by 0.17%. tom: gold 2030 as the attention of people like christopher verona. he is enthusiastic on goal.

we get unlucky. he was scheduled to talk about the boring bond market. rob walden joins us. rob, i will rip up the script and keep you out of your compliance office because you can't talk about individual names. we are not going there. but when a big company comes out with an offering, five-part or six part or whatever, is it the stereotype, the cliche, they call fidelity, invesco, pimco and the whole deal is done? rob: tom, i think this is going to be very well received by the market. if you look, we have seen quite a lot of demand for high-quality fixed income. i think the value proposition is quite good. we have positive yields. we have spreads which put the average of the investment market at about 5%. apple will come inside that. we have had tremendous demand. there is more demand for

industrials than there are financials. financials are wider. industrials have been quite well supported. i expect a deal from a high quality issue will be well received. tom: i look where we are and it is simple. do you buy them for maturity? rob: i think if you are a medium-term investor, you can buy somewhere close to 5%, a little bit below 5% over a multiyear period. that would be where a tenure would come. that is pretty good for getting that level of income and a very safe asset that is likely well protected, even if we get some sort of economic slowdown or recession. seems like a good investment for a medium-term perspective. jonathan: away from apple's pricing, can we talk about what it might signal? it brings up the timing over

apple who seems to time the debt market phenomenally well. what happens if you put it on hr is they come out with a bond issue and soon thereafter, you -- i'm wondering if you pay attention to things like that. that very well -- rob: that very well may happen. we have the bond market in an interesting place. it is steeply inverted. from a bond perspective, the further out the curve you go, the less you are paying. we think there is probably a range and we are closer to the bottom of the range with this market that is caught between disinflationary slow growth and a very aggressive fed. there is room for the markets to go back up. in the short-term term, this may prove a good place for them. lisa: does it make sense for

them to raise money at all at a time where money costs something, given they have a cash pile the size of a pretty big economy on their balance sheets? rob: i can't speak to their allocation. i don't have much information there. it would make sense as part of a media term strategy to manage your liabilities. i would have thought to continue to be accurate in the market. lisa: can you talk about the food fight that would emerge over allocations in this type of deal? how it may trade a lot tighter than people would expect. the deal apple gets will be better than people expect it because there has not been much supply. rob: i think it comes back to what i was saying, which is if you are a medium-term investor, there is quite a lot of opportunity to lock in what seemed like pretty good returns. this is for the broad market

overall. if you think you are going to get something close to 5% for 10 years, which is where the ig market is, and those are high-quality issuers. you should be relatively well protected from the fall. that is a compelling value proposition. i would expect there would be quite a bit of demand. you can have over subscriptions and the issue of tightening these things in. but we will have to see how that pans out. jonathan: on the same day, a ton of ig issuance as well. i understand from our team at bloomberg that we will have 15 borrowers tap into the investment grade market today. $5 billion coming from that pool. does that have the potential to push around the treasury market a little bit? rob: certainly, a large amount

of issuance can push things higher. i think what is also important is how much demand that we get. overseas demand has been important to the market. i think that the medium-term, it will all be about the macro fundamentals. short-term, it can be knocked around by issuance or supply and demand issues. medium-term it is about the macro fundamentals. tom: did you get a call from luka today? does he dial 1-800-invesco and you pick up the phone? rob: tom, we have a very solid corporate training desk. they do a great job. jonathan: there is some media training for you, tk. tom: we have atlanta braves tickets. come on down. [laughter] jonathan: thank you very much.

i don't think luka needs to call anyone. lisa: no. jonathan: i think they are all sort of like -- lisa: [laughter] tom: you were great on lvmh. why is this different? jonathan: you would excite the margins to do what it wants to do. lisa: in 2013, there was an investigation over the allocation process because a lot of the small investors felt like they were not getting a fair shake in order to have an opportunity to buy the debt. it is that kind of deal. jonathan: coming up shortly, 20 minutes from now, we will catch up with delete sing -- daleep singh. look for that in 20 minutes time. from new york city. do you feel spring? tom: yes. jonathan: whenever the sun hits your skin. tom: we get summer for -- lisa: we get summer for a day

and then we get winter again. [laughter] jonathan: this is bloomberg. ♪ >> keeping you up-to-date with news from around the world, i am lisa mateo. janet yellen says there are no good options for solving the debt limit stalemate other than congress lifting the cap. she told abc that the white house resorting to the 14th amendment would provoke a constitutional crisis. president biden discusses the matter with congressional leaders on tuesday. near dallas, texas, investigators are looking into whether the man who killed eight people at a shopping mall was interested in white supremacist ideology. the 33-year-old man was killed by police officer in the mall's parking lot. he was wearing a tactical vest which was jammed with ammunition. it is a holiday in the u.k. following the week in coronation of king charles the third. the crowning ended his seven decade wait for the throne and mark a turning point for the u.k. and the monarchy as it

tries to adapt the current era of technological and social change. the king told apac westminster abbey that -- a packed westminster abbey that he came not to be served but to serve. -- hotels and additional compensation due to canceled or severely delayed flights. authorities expect air travel to surpass pre-pandemic levels. global news powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo and this is bloomberg. ♪ the first time your sales reached 100k with godaddy was also the first time your profits left you speechless. at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com

you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

♪ >> banks fail every single year. right? it's just not usually the 16th largest bank by assets.

that is what cop people's attention. we could see continued stress in the banking system broadly. but very much at the lower end as we work through some of these covid excesses and we work through what we know exists today. i'm not sure we are out of the woods but i think the big booms are through. jonathan: fantastic from david. starting a new week without much sign of stress at the moment, on the surface. pac west slashed their dividend and said business was sound. their stock is running in the premarket. in the bond market, a lift. your two-year is higher by close to eight basis points in the treasury market. your 10-year is up by almost six. we learned we will get some bond issuance from apple. a $5 billion offering. tom, across five parts. we will have 15 borrowers come

into the u.s. investment grade market. tom: constructive. 73-31, even they are cooperating . one of the things we realized is the small banks of america will not be salvaged by fort knox. hermann knows it, there is no gold in pac west or the others. and yet, off of the friday joy, they have a fundamentally sound relationship banking model. is it a smaller model? is everyone going to be downsizing in 2024? >> i think you will have a more conservative balance sheet across the board. less interest rate risk. you don't know what will happen over the course of the year. tom: if there is less growth

in the marketing game we saw that was a disaster outside of san francisco, fine, move on from that. move onto to the new model, will it be high single digit, dare i say double digit bank returns become mid-single digit? >> you will have to make an expectation that banks aren't going to grow their balance sheet this year. the deposit issue with deposits flying out of regional bank balance sheets, that means there is less ability for banks to lend. and there are going to be less -- they are going to be less impactful in terms of having the appetite. there is a recession coming down the corner and you want to be careful in terms of what risk you add to your balance sheet. you don't want to compound the problem with credit risk. jonathan: 2:00 p.m. eastern time , a survey much anticipated. what don't we know already that we are looking for from that survey? >> we want to confirm how much

pullback the banks are doing in terms of their building. that is what we are extending. lisa: will it matter or will people discount it? >> i think it will matter because it will be a combination of what banks have talked about in the first quarter. we have heard regional banks talk about narrowing the credit box a little bit on the margins. not being as aggressive in certain areas like auto lending, leverage lending. areas of lending that don't offer the best risk address returns. we are looking for more confirmation of that. lisa: we were speaking with williams of the fbi see and there is concern of stress testing and how high -- i am butchering this -- there is a

question of whether there has been recognition of what higher interest rates and the speed in which they are raised will do to the banking model. do you think we have our head wrapped around that, yet or do you think that is still a mystery to a lot of people on wall street? >> i think of banks like a goldilocks industry. you don't want to be too hot or too cold. with the economy being too hot and interest rates rising as fast as they did, things tend to have an opportunity to break. we saw that with svb and first republic. i think now, there is more of an appreciation of the risks that banks have on the balance sheet. the analysts, the investors, the regulators are more attuned to the balance sheets. tom: i noticed with 18 paragraphs, there are 11 footnotes. hermann chan reads all of the footnotes of everything. if we know those guys in

washington have knowledge about these banks that we don't have, do you get that knowle[laughter] >> there is more data in the sluice, in terms of the eeoc currencies -- idiosyncrasies. jonathan: do you know how may people will open the survey for the first time later on this afternoon? it will be the first time for many people. a lot of people in the treasury market. it is the first time in a long, long time that i can think of that this became -- becomes a key focal point. what is the first thing you will look for? >> we will look for what the survey says in terms of loan supply. our banks pulling back on credit availability and what is driving that pullback? is it going to be concerned about the economy? is it concern about credit? is it concern about other

competitors pulling back as well? all of these things are important as we look ahead. >> is the market component interesting to you? >> there is a limit of both in the sluice. lisa: are you expecting the loan book will come down because companies are not borrowing and of competence in the c-suite that exceeds the lack of competence in consumers, possibly. >> -- i think so. you are seeing consumer loans pullback a little bit. there is just less demand. a couple of regional banks have talked about less capital spending. that all feeds into the main component as well. jonathan: thank you sir. herman chan. it was 10 last monday. it got absolutely hammered.

the low of last week, 248. first day, intraday, 248 on pac west last week. it started as a double-digit name. tom: that is huge gyrations and there is a mystery out there. i go to this word of the morning, which was skill. they are losing skill. how do you do better losing skill? show me an industry where that works out. lisa: over the weekend, there was a story about how the government is trying to rearrange their loan loss sharing agreements to possibly allow for private equity to come in. the argument here is to bring down the pricing so they get a better deal. the government loses less money. so far, they have required bank charters to really participate in this, which left jp morgan and some of the biggest

regionals as the only players in town. how much does that change the yield? tom: that's what it amounts to. jonathan: i saw someone say this week that they will have confidence in the system once you see private-sector solutions without federal bank stops. once you start to see that, they will feel more confident about the situation. i don't think we will see that anytime soon, based on the template that was delivered by first republic and jp morgan because there will be some people who look at stress and say there are benefits to waiting. lisa: especially given the fact they have assets that are fundamentally challenged that if they liquidate, they cannot meet their obligations. it is a huge issue. it is an insolvency issue that creates a problem for the fbi see. tom: a lot of people are saying they are not near the liquidation part. michael saying do the work.

i did a word search. we looked at some, several, a few, none of that verbiage is in the sluice. the sluice is different than the fed minutes. the only thing they have similar is i have never read either of them. jonathan: i believe that. coming up, allow me to promo another property of mine. lisa: before we leave. jonathan: very american tv. tom: is coronation free today? jonathan: kathy jones of charles schwab. all the jokes about british teeth, give me a break. lisa: [laughter] jonathan: come on. from new york, good morning. ♪

go. go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars. go big. or go home. from software that delivers new cures at warp speed, to technology that makes clean energy reliable, emerson innovation helps make the world healthier, safer, smarter and more sustainable. go boldly. emerson. hi, i'm jason and i've lost 202 pounds on golo.

so the first time i ever seen a golo advertisement, smarter and more sustainable. 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 that your 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.

tom: bloomberg surveillance, good morning to you. lisa abramowicz, tom keene and jon ferro. futures up 10 and the vix well under 18 have to the gyrations on friday. 17.46. 3.98% gets my attention. lisa: a lot of people were wondering why we didn't see a greater movement in the tune year yield. the labor market report, the

14th consecutive month we got a nonfarm payrolls report that exceeded expectations. tom: jason furman did better work up at harvard, where he took the quarterly three-month average. which i think is a nice way of doing it. the answer is, we talked about it, it goes out at 240 5000, 265 thousand dollars per month. that has to break. lisa: there has been a slow drip but not enough to get people confidence. what i find interesting is the dollar, more days than not has lost. we have seen a weakening in the dollar, even though we have not necessarily seen a huge falloff in the economic data. good news was good news for equities. but the dollar still faces some headwinds. people wonder perhaps whether we saw the peak earlier. tom: we will have time to discuss it with our good guess. robert schiffman, who is really good at bloomberg intelligence

has the money question of the day. if apple has so much cash, why borrow even more? we will bring that to you in the next 30 minutes. apple, with a rating now. why do they have a aaa rating? maybe it costs too much. that used to be the crux. lisa: why should the u.s. have a aaa if they are about to default? this is really a big question. what is in a credit rating and how important is it to maintain the and what is required to do so at a time when it is so rare, even for a behemoth with a cash pile the size of a pretty big economy? tom: daleep singh joins us. experience in the white house. in the office, is it tomorrow, they will have a meeting on the debt, it is all politics, isn't it? daleep: good morning, tom and lisa. talking is always better than

not talking but i would be surprised if we got a decisive breakthrough tomorrow. mccarthy could lose his speakership if you polled early to the president with an increase in the debt limit. the president can't give a nod to anything near the scale of spending cuts proposed by mccarthy because it would undercut his domestic agenda that was his political base. market complacency is -- tom: u.n. jean sperling have been good at linking this policy dynamic in wall street. as lisa mentioned earlier, wall street seems soundly removed from this discussion, this debate. are they correct on that, to be removed and not worried about this debt crisis? daleep: it is muscle memory. and that muscle memory is dangerous because the context has changed dramatically from

the last time we had a serious default back in 2011. the country is as polarized as it has been in our history. we are rolling over a debt stock that was twice as large as it -- is twice as large as it was in 2011. back in 2011, europe was in an existential debt crisis. china had let to -- yet to lure serious influence from over abroad. there were no alternatives to dollars. that has changed. lastly and most importantly, we are spearheading the most economic sanctions campaign in history. that creates geopolitical incentives for countries to hedge. the debt ceiling needlessly adds impetus to those incentives at a time of geopolitical peril. lisa: why do you think from your vantage point of having worked at the white house and having

worked in the treasury and all of these different agencies, why do you think things have gotten so dysfunctional in washington, d.c.? daleep: the debt ceiling is symptomatic of that polarization. i think it is extreme levels of inequality and technology allows critical movements to gain scales at speeds we have not seen before. we are on the cusp of doing something that great powers don't do. they don't default. they don't talk about default. they don't think about default and your measure of greatness is when no country questions whether you would ever do so. lisa: some people would say that there already are economic consequences to even having this discussion in such real-time and given the fact that it has a more polarized nature to it. what are the longer-term impacts, even if there is a solution that is found the last minute when the market finally wakes up and applies a real pressure that washington is waiting for? daleep: dollar privacy is a

national treasure. it allows us to fund our government at 20-50 basis points cheaper than it otherwise would. it allows us to absorb a shock like the 2011 downgrade of our credit rating. and it allows us to deliver a shock. all of that is put at risk in terms of the long-term scarring. dollar privacy is nothing more than a network. it is rooted in trust and inertia and an assumed lack of alternatives. every network, whether it is in biology or ecology has tipping points. they are usually psychological tipping points. we are now pushing ourselves toward what i would consider to be a very dangerous place, the closer we get to the exit date. a lot is at stake. lisa: this is an important point that people argue against. saying the loss of the dollar supremacy as the global currency has been overstated.

the death of the dollar has been perhaps overwrought. other people like yourself say it is becoming much more real. what are you looking for in the data to show that is actually what is transpiring? that people are moving away from the dollar as the main, dominant currency exchange? daleep: you won't see it on paper. the measure is do you use the dollar to buy or sell stuff? do you use it to borrow money or do you use it to price transactions? on paper, there is nothing to see. this is a tail risk. we are gambling with an exorbitant privilege that has incalculable benefits. it is the type of risk that you should never take. that is the point. tom: i look at this and it is a history which you studied in carolina and up at m.i.t.. the ageless history of our debt caution. i will call it our debt religiosity. the people who say we have to

get rid of the debt, it is like apples corporate debt, a book was written 40 years ago, saying no it is not. how do you respond to people that viscerally feel this government debt is bad? daleep: i don't think we are in a crisis. so long as our nominal gdp growth is higher than the average interest we pay, the math of debt sustainability improves over time. our nominal gdp growth is 7%. it has been in the double digits much of the past two years. for that to be sustained, the market has to believe the money we are borrowing will be put to productive use. that is the key question. i think it argues for the kind of investments that the public sector is making are indeed infrastructure technology. programs that make them more productive. that is the measure of whether the debt that we are borrowing

is going to raise our nominal gdp growth to levels that can sustain a rising interest rate cost. tom: with that beautiful explanation, the trust mechanism is that government will put it into good projects. can that be discussed tomorrow, among the fractured polity in washington? daleep: it can but not with a gun to our head. the consequence can't be we are going to burn the house down. we absolutely should have it discussion. how will we spend our resources to solve problems? extreme inequality, social disparity, vulnerability in supply chains, all of that should be on the table. how will we have that discussion in a way that does not make us a global spectacle? that is the question. tom: this has been wonderful.

daleep singh, my favorite discussion on this. lisa, here is the exact quote from truly an expert on these bond offerings. robert schiffman is priceless at bloomberg intelligence. proverbs toward the net cash neutral goal should benefit further from its planned five tranche non-issuance, particularly for shareholder returns -- where shareholder returns likely exceed $120 billion. lisa: it flies in the face of what people have been putting out there. the era of -- is over because the proposition did not look as good. but for apple, it does. they have nothing to do with their money except by back their shares which will only make their shares more valuable, given there will be fewer of them.

it raises the question, is there really a tale of two halves. the companies that can do this and those that can't get financing and are struggling with some sort of credit crunch and it causes that dichotomy to grow? tom: i would suggest it has always been the case. i will say the concentration here of superiority, michael, way out in front on this at credit suisse, years ago, it is the concentration of these tech companies and other big companies as well. john's favorite, lvmh, same thing. lisa: does it get easier and easier for them to dominate? in 2013, 2014 and 2015, -- tom: it is a $5 billion tranche.

i got 100 10 billion short-term debt and long-term debt for apple. for monday morning tv and radio, that is 5%. lisa: it's not nothing compared to the debt limits of most companies. this really is just because they can and they will. and there is plenty of demand as we have been hearing about. tom: did you get a phone call? maybe that is why pharaoh left. -- jon ferro left. lisa: they have plenty of demand. tom: there it is. we will keep you abreast of this. it is an important story. we make jokes of it but truly historic to see this corporation not come out of it with a deal. adam tooze coming up, this is bloomberg. ♪ >> with the first work, i am lisa mateo. joe biden and kevin mccarthy have arrived at a crucial moment in their debt ceiling fight. the president hosts the house

speaker and other congressional leaders at the white house on tuesday. mccarthy wants spending cuts as a condition of raising the debt limit. the president wants to separate the issues. a default would rock the markets and the white house says it could cost millions of jobs. a new poll shows president biden's approval rating hitting a career low. it shows him trailing donald trump in early voter preferences for next year's election. according to the abc news washington post poll, only 36% approve of president biden's performance. the former president leaves him, 44-38. -- leads him, 44-38. ukraine's defense -- one reason he said is the large russian troop numbers. first-quarter earnings plunged to 6% at kkr. a dealmaking drought continued to weigh on the alternative asset manager.

assets under management grew 6% to $510 billion. kkr's portfolio fell 9% as a firm -- the firm marked down the value of investments. six flags reported first-quarter revenue that beat estimates. attendance was 1.6 million. that was down almost 6% for the previous year. still, better-than-expected. global news powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> the truth of the matter is that if those banks, the regional banks and midsized

banks and community banks are not financing commercial real estate transactions, they won't get financed. the role of these banks in the u.s. economy is so high that people actually underestimate what these banks mean for our financial ecosystem. tom: the former chair of the fbi see, i can't say enough about how she has experienced what so many are going through. her father was wiped out in yugoslavia during a banking crisis. she wandered over to america, excelled at berkeley and has moved higher in the legal business and her tenure at the fbi see as well. this is a joy. we had a huge response from professor toos. he is a columbia university history professor. he was a professor at yale university prior to the and had to replace the giant paul kennedy. real quickly, what was it like

trying to replace paul kennedy at yelp? -- at yale? >> it was a lesson in humility. when i left, he came back. he is firing on all cylinders. a legend in his own lifetime. tom: your essay in march is my early choice for essay of the year. you beautifully walked through the trillion dollar rebalancing as we move from pandemic to poly crisis. what does this poly crisis we -- what is this poly crisis we are living and when does the joy and? when do we get back to some form of stability? >> we probably don't. we actually have to abandon that assumption that the best way to think about the world is as a system that will move back to normality. if you look at the narrow space of finance, does that seem like a reasonable description of the world we have been in since the 2008 crisis or since the late

1990's? it does not seem to be that kind of reality. that is what we are seeing in the banking, this mini crisis that is unfolding in the banking system, where ultimately the big driver of that is the interest rate shock. the interest rate shock comes from where? it comes from this unprecedented surge of inflation which is unlike any we have seen before and follows out of the covert shock which is also quite unlike anything we have seen before -- covid shock which is also quite unlike anything we have seen before. we have had unique and unprecedented disruptions. lisa: one of the responses to it has been bailouts and the moral hazard of not allowing failure, which you have seen in some of the banking institutions in a prior life. what does that do, in terms of the zombies? i know tom has been talking about the zombie roll ups. do you think we end up with a

host of zombies or zombie assets that could have been allowed to persist in an inefficient matter for a longer -- manner for a longer period of time? >> we need new forms of discipline. you look at the legal space and restructuring in the united states, across the world, lawyers and corporate financial offices are actively engaged in that process of trying to figure out new forms of discipline, which are not simply the old-style. we need a preset -- process of freefall bankruptcy, which is the exception. the forms that don't have to consist in systemically dangerous bank failure, which is the type that we have been at risk of. but you are right, we need to be thinking hard about how we adjust and how we find new forms of discipline selection, if you like in darwinian terms, to avoid a process of greater zumba for case and.

-- zombification. lisa: i wondered is this model being challenged? is the private sector, private equity, private debt, some of these private financing companies taking over a greater share of the business that regional banks used to do and rendered them blessed necessary? -- less necessary? >> i would say it is a healthy reminder of the structure of american society and american business, which has met williams was saying, is firmly and solidly rooted in a deep undergrowth of small or medium-size enterprise. that is where a huge part of the job creation goes on. the bank ecosystem that the united states has is internationally unusual. america has a lot of banks. what i think we need to be taking care of is exactly as you say, the huge shifts which are

going on. in terms of risk going forward, in a way, i am more worried about the new private equity zone of very un-transparent finance. trillions of dollars worth of it. than i am about the fbi see small or -- fbi see -- fdic. tom: can't say enough about this effort from 18 months ago. i want you to address the polarities in our politics with the too small to succeed. i am fascinated by the focus of an america that is succeeding like apple, with an effortless five tranche market this morning. that is bloomberg surveillance babel. there is a huge body of america

that feels they are too small to succeed. where are they in a number of years? >> this has to be the big worry. i think we are seeing the bifurcation or a threesome -- three-way separation of the u.s. economy. there are big slices of it that are continuing to thrive. the chips act, the kind of money that is pouring into a genuine revival of manufacturing investment. what i think we have to worry about is the credit crunch which looks as though it is beginning to unfold. if you look at bankruptcies among smaller businesses, those numbers are beginning to spite. that is what is reflected in democratic politics, which ultimately, in distorted ways for sure, but nevertheless, does reflect the title shifts in american society. at this moment, we are beginning to see the point in which the extraordinary labor market

story, which is a huge success of the recovery in covid, america has never seen numbers like this, could be temping -- tipping into something different. a two speed reception or two types of landing. we have talked about hard, soft and no landings. what if one plane lands hard on the other? lisa: you mentioned you were concerned there is an increasing role of private capital away from some of these smaller banks that is playing a part in what you see as this bifurcation that is developing. can you explain and elaborate on that? >> that would be a third element. this is where the story gets complicated. the credit suisse is going to run through the stressed balance sheet of multiple banks. what is riskiest in a sense is precisely the spacing between the high-yield segment.

these are big players in that segment. we are not talking about small businesses here. they are very un-transparently linked at this point. it is not by accident that in bankruptcy and the united states, the private equity owned firms are absolutely dominating the corporate restructuring in a crisis market. that is where this capital goes to play. the returns are outsized. the question we are going to face now is what happens when the risks come home to roost and where the safety nets are and whether they are appropriate to have safety nets. tom: and the new financial as asian as we move into the decade. adam tooze, thank you so much. you addressed this earlier, lisa, this idea of the players with money up to their eyeballs, looking to do something. that is what i say with

financial is asian. what is in it for me, what is in it for us? the answer is well, we are going to forge. lisa: the idea that lvmh and hermes came out with these incredible earnings, incredible profits and then tyson foods chicken came out and downgraded its expectation for the year because consumers were downgrading to less expensive options, highlights and bifurcation realities for people with plenty of money and discretionary spending and those without. tom: the complicated dynamics at whole foods and shifting to where and then you get the chicken and everybody is lined up with the chicken and the frozen chicken. what an extraordinary monday. i believe we are going to do

this again. in the meantime, william gross, pimco co-founder and stamp collector at the 1:00 hour. ♪

jonathan: let's get your week started, live from new york this morning, your equity market just about positive and the countdown to the open starts now. ♪ >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new york, coming up, janet yellen says it's up to congress to lift the debt limit.