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dani: this is bloomberg daybreak: europe. i'm dani burger in london. manus cranny is in dubai with the stories that set your agenda. >> president joe biden meets congressional leaders today over the u.s. debt standoff. former pimco cio bill gross says buy t-bills because the impact will be resolved. signs of stress. fed reports highlights growing credit risks amidst funding concerns with demand for business loans weakening. plus, china imports plunge as concerns grow among the nations economic recovery but asian stocks rise amid stronger than expected export growth. just minutes ago ubs announces a new leadership team, saying the merger with credit suisse will be completed in the next few weeks. dani, a very good morning.

we have some of the names in the frame and it looked resolutely like a very fuller -- full ubs leadership board. interesting standout one is ulrich horner -- ulrich koerner at the former ceo of ubs will join the executive board but there are names in the friend that we should consider who they are and what their role is. good morning. dani: you pointed this out to me first off. you have some people here who have been at ubs for a very long time. todd tuckner is going to be the new group cfo. he has been at ubs since 2004 and was heading up the cfo for global wealth management at ubs. we have the same investment bank president staying at the home of ubs. ulrich koerner is a significant one. manus: classes on, glasses off. apologies to everyone but what is interesting is that under ralph hamers, iqbal khan was

given sole executive ownership and leadership of wealth management. he remains resident so it doesn't look as if there is any splitting of that role. other interesting names that come to mind here are of course within the investment bank. robert karofsky will remain president of the joint investment bank and the producing -- producer solid -- said he joined in 2014 and that is a interesting one. there is imagery of sergio ermotti. last week's story was a possibility of the universal bank in switzerland may be haft off. he was more scathing when i sat down with him. the other names, iqbal khan remains the sole president. ulrich koerner comes to the board. robert karofsky is a lifer. sabine keller-busse will remain president of corporate banking and president of switzerland of the swiss

business within ubs and credit suisse. dani: it's also worth mentioning that none of this will come as a surprise but in the structure of how the combined group looks, they will remain separate independent entities for now while ubs integrates credits. they say this will be a process that has an integrated phased approach. they also reiterate that they will evaluate all options for credit suisse's business and communicate further on this matter in the coming months. that continued line that they are looking at options for their swiss business. yeah, absolutely and that is where the advanced team and they are over all of the books, over 100 analysts and bankers looking at what is under the hood in credit suisse. we both came down on whether it was bill gross or the sloos

chart. bill gross says it will get done and the debt ceiling will pass and you want to buy t-bills because he says it will get done. you know what? history does not necessarily -- not necessarily a predicate or a performance in the future. dani: fair enough. i'm glad you put your glasses on for this one because the debate is how much do we care? manus: it's going to be a long hour. dani: it's always a quick hour was -- with us together. you take bill gross and i'm going to take sloos. the internet was lit up with was the sloos data a credit crunch? was it bad or just a continuation of what we saw pre-svb? this is interesting thing from cameron crise saying demand evaporated. forget tightening loan standards. demand was gone in a way that was consistent with a recession. is this giving you some

recession anxiety? manus: listen, what amazes me, i sat on a podium with bill winters down here in the middle east and he said he is not tightening up on credit or the credit committees around the world. we had state street in here who said don't worry about that. we thought things would drift off a little. i thought what? maybe i am scarred from too many crises. what is up with the markets? dani: it is fear of a credit crisis but just that. fear. it is not a real one yet. you see some support for asian equities this morning. weekly run us through this. there are some hopes that you can see more support from china when it comes to the real estate sector. european stocks edge higher. u.k. markets are participating today. it was a bank holiday yesterday. u.s. futures drift lower. manus: everybody is set up around the world to talk about the debt ceiling. take it away. dani: we are going to talk about the debt ceiling, the fed's latest survey, china's april

trade data as well. manus, take it away on the trade data. manus: it is the world's second-largest economy. the china export growth load in april and imports plummeted adding to the pressure on the economic recovery. that has already been called into question. let's dissect the data. jill decease joins us now. the expert data was grand but the imports, take me through the exports first of all. is that a ray of hope? >> yeah, on the surface the export headline figure of 8.5% year on year it looks really nice but if you dig deeper into what is underlying that it doesn't really look as strong. first of all, i have to point out that in terms of year on year growth it is a slow down from what we were seeing in march and the other thing is we are comparing year on your number two last april, which you can imagine the base effects are

pretty weak considering that is when shanghai was in lockdown and you saw a massive slowdowns and manufacturing activity across china. on a year on year basis, sure it's a popping number but not really as strong as what you would otherwise like to see. bloomberg economics has also dug into more sequential month on month data to show there is a significant drop off in exports from march to april. ultimately, what that tells us is that we are heading into the next few months of the year where we have been hearing for months and months now that exports are no longer driving economic growth in china in the way we have seen over the past couple of years during the pandemic. that seems like it will continue to be a concern going forward. dani: on the flipside, can china imports help drive the rest of the world? this is a huge figure, a plunge of 7.9% year-over-year in april. jill: it really is, and i think that as of now, we are waiting

for that break down in data to tell us where the weaknesses are but ultimately, economists are telling us this is a pretty big concern for the domestic recovery in china. we have had mixed signals in terms of what economic data looks like. the services sector has seemed strong but about last week's golden week holiday and spending figures were not as strong as expect it. maybe there's issues with demand there. have heard theories about maybe it is a drop off or decline in tech imports tracking with the global slowdown in demand for electronics we have seen elsewhere. ultimately, it is a pretty big concern the imports were dropping that much and i think ultimately, it drives that continued concern about is the domestic recovery and demand in china strong and as sustainable as we need it to be. dani: that is bloomberg still thesis -- jill thesis. fighting will meet with top

republicans and the hope is they can resolve the debt ceiling crisis. at the same time, senate republican leader mitch mcconnell says he will not come to the president rescue on the debt limit by breaking a partisan deadlock. we have u.s. treasury secretary janet yellen reportedly personally contacting businesses and financial leaders warning of the impact that a default would have on the economy. let's get to mark cranfield on this. mark, something about that image is amusing to me. janet yellen heading over and saying hey mr. dimon, have you heard about this issue over a debt ceiling? when it comes to this market, is the markets concerned? are we seeing possible hedging? bill gross is not so concerned but what is the market telling us? mark: in general, traders want to do as little as possible on the story. it is a movie they have seen many times before. they fully expected to get

resolved at the last minute and they don't want to do any hedges that they may have to take off as a loss. but if they are wrong this time, and it does go over the line, and the u.s. treasury has to start cutting back, you probably will see it reflective quickly in the u.s. dollar. you can expect u.s. dollar to sell off pre-hard and pretty fast but people won't want to put their trade on aggressively get just in case this plays out in the normal scenario where there is lots of noise but they eventually come to linda agreement. certainly, if you look at the way the two parties appear to be very far apart, there is definitely a risk that does not get resolved and traders will have the button on the cell hovering above the sell button on the u.s. dollar just in case it goes wrong and they can hit the button when they need to. manus: it's amazing that we are even speculating on what could happen now. yes, it has been resolved before but now we need to think about

what would happen to the dollar. bonds in the rerun in 2011 were actually haven so let's see if they perform like that. they are capped at 3.65% on the back of the bank crises that are rolling on. give us your take. sloos, does it matter? i just had state street saying it doesn't really matter that much. does it matter you? -- does it matter to you? mark: falling demand certainly. as dani was saying, that is really troubling because it already looks as though people are thinking that recession is not far away. then you have to put that into context. the gains are very strong with the u.s. they were market. yes, there are worrying signals in that date up with the state of the labor market is so good that for now, the federal reserve is able to keep interest rates very high. they just hiked again and possibly will hike another time. they are looking past that towards high inflation numbers.

you have a number of conflicting signals that suggest there is nothing wrong with the u.s. economy even though there is a sliding demand situation in terms of these loans. it may play out over the long course but something needs to go wrong in the labor market first before people really worry about it. manus: i think that is the point for bill gross that wages are running up and need to come down aggressively. mark, thank you for being with us. we are waiting for the actual numbers from aramco earnings and cash flow and dividend will be key. this is from aramco. you're talking about dividend but here's the line. aramco to pay a performance linked dividend in addition to the base dividend. maybe this is the saudi reference to a special dividend. that target performance on that dividend is linked to 50-70% free cash flow.

you need to generate 50-70% free cash flow to deliver the special dividend in addition to the base event. that is a lot to chew in at 6:13 a.m. is in it? dani: hopefully we will have more soon. we are still waiting the earnings themselves. coming up, pimco co-founder bill gross says by short on treasuries. we will bring you the market action ahead of a key meeting on the u.s. debt limit. how worried should be be? -- how worried should we be? this is bloomberg. ♪

>> i think it's ridiculous. it is always resolved and not that it is a 100% chance, but i think it gets resolved. i would suggest for those that are less concerned similar to myself, that they by a one month

or two month treasury bill at a much higher rate than they would get with a longer-term treasury bill. dani: bill gross they are, the former cio of pimco and founder. recommending buying short-term treasury. let's get to christian kopf, head of fixed income and fx at union investment. would you agree with bill gross that is ridiculous and always resolved and may buy some one month or two month t-bills? christian: i would agree that it is ridiculous but ridiculous things do happen in the market and i think actually conditions are in place for this conflict to escalate further over the course of this week and the next week because the involved parties have no incentives really to be -- given here. it is going to go down to the wire. there will probably be a resolution but at the very, very last. i don't see anything getting resolved this week. manus: is it prepared for the

worst and hope for the best? how do i do that in -- inexpensively and can you tell me has there been massive hedging going on? what is liquidity like? how do people prepare for a risk oral -- albeit minute this stage? christian: manus, liquidity is still decent. you have these weirdo movements at the very front and of the u.s. t-bill curve where the t-bills mature prior to the decision date and trade at a much lower yield than those that will mature two or three months down the road. there is a bit of a word movement there. apart from that, liquidity is relatively good. how do you play that? the most obvious way would be in the cbs market, the sovereign cds market for the united states and is so illiquid that no one knows how the option will play out there is a credit event. most people are playing it via

the currency market. there is some activity in dollar swiss and dollar-yen. there is less hedging activity and is more speculative demand for the yen and the swiss franc just in case something happens. most of it is taking place in the ball space by options. dani: christian, if you take take out of the debt ceiling debate and continued inflation that we saw strong wage inflation still in the u.s., you have this uncertainty over the economy. all of those things together, stephen englander over at standard chartered because of the mona lisa smile. that is with the dollar looks like right now. the negative part of the curve is longer and more persistent and we are headed for a continued dollar negative bias. do you think that is right? christian: i think that's right. i am a sounding -- sounding like a broken record but we have been short the dollar since october or september last year. i think it has further to go.

our target is 115 on euro-dollar. we have had the senior loan officer survey yesterday in the united states. your correspondent from singapore commented on it and the numbers look rather dire. you had a big drop in demand for credit. you have a very tight supply conditions for credit. it is not a bombshell report in the sense that credit has tightened massively on the back of this regional bank from all that we have seen in february, march, and april. but it is a very weak report consistent with linda economy headed towards recession. we think that the fed will likely hike rates once more in june because of the red-hot labor market and inflationary problems that you mentioned. but most likely, the fed will end its rate hiking cycle then at the last rate hike that we expect on the 14th of june while the ecb is set to hike rates further going into the summer.

that could lead to a divergence in the monetary policy path between those two major central banks and appreciation of the euro against the dollar. manus: there's 500 pips between you and deutsche bank so i would like you to explain the gap. they say for the euro to keep rallying, you've got 115 and we are trading at 109. euro is based on dollar weakness. for it to keep rallying, it's less about the ecb staying hawkish and about fed pivoting to a dovish positioning. do you see rate cuts dragging the dollar down by the end of the year and does that deliver 500 basis points extra for you in euro-dollar briefly? christian: most analysts including deutsche bank, which just cited, super focus on the fed. they have a point because the fed is dictating the financial conditions and markets around the globe. we are in a situation where the

ecb is pursuing its own path. if you listen to the speech that madame lagarde gave at the conference in april, if you listen to the last press conference that she delivered, she is very much focused on bringing down inflation and not just her. we had hawkish members of the ecb governing council. we think the ecb will continue to hike rates and we see at least another three rate hikes but the ecb. that is independent of what the fed is doing. what the deutsche bank analysis does is purely focusing on the fed i think is not enough. you have to keep in mind that we have two players here and the ecb is becoming increasingly independent in setting monetary policy and pursuing price stability. they have a single mandate. they don't have a dual mandate. they will really be focused on inflation control. we've got a lot of members of the governing council from smaller member states of the euro area are facing double-digit inflation in their countries. these people are under

tremendous domestic pressure to do something to bring inflation down in your area. we think the ecb is more determined than the fed to continue hiking rates. manus: christian, thank you so much for being with us this morning. hell of a backdrop there. that's all i've got to say. keep punching them out for us in that garden. christian: thank you, manus. manus: dani lives in west london. dani: i need you to come over and be my garden please. christian: yes, i will bring the lawn more. dani: perfect. manus: fx calls and a little bit of hedge trimming. christian, thank you very much, head of fixed income for affects union investment. we had the announcement from ubs. the leadership team is formed for the merger with credit suisse. it will be completed in the next few weeks. the details to come on bloomberg. ♪

dani: let's get your first word news. standing by his adrian wong in hong kong. >> senate republican leader mitch mcconnell says he won't come to president biden's rescue on the u.s. debt limit by breaking the partisan deadlock. he said he told the president privately it was up to him and house speaker kevin mccarthy to find a solution. both sides face pressure had a meeting later today between the president and congressional leaders. meanwhile, china's export growth slowed last month while imports plummeted adding to pressures on his economic recovery. according to official data, imports dropped much worse than the projection of 042% -- 0.2% decline. export group due to bearable comparison to last year when

much of the country was under lockdown. canada has expelled a chinese in a move that risks backlash from beijing. the finance ministry says it ordered zhao wei to leave, accusing him of interfering in canada's internal affairs. according to local media, he had been looking into penalizing a conservative lawmaker michael chong on his opinions over beijing, which would involve glon 2700 journalists and analysts in over 120 countries. him adrian wong. this is bloomberg. manus: we are going to build on this story, the ubs story throughout the morning, but it is about the effective leadership going through. for me, it is a number different directions we can go but is very ubs. the one thing that stands out for me is ulrich koerner, the ceo of credit suisse before its demise. he comes onto the executive board at ubs but he is a veteran of ubs. he was a chief operating officer at ubs and the big conversation

is whether tom will come back. you have other names we need to check in on. dani: i talk there will be the new cfo. speaking of veterans -- todd tuckner. the previous cfo was young would who has been there y -- youndwood. manus: it looks like iqbal khan, the empire is safe. it doesn't look like and be else -- anybody else is coming in. iqbal khan remains a president of global wealth management. aramco 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)

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manus: this is bloomberg daybreak: europe. prime minister any in dubai. dani burger alongside of with the stories setting your agenda. dani: joe biden meets congressional leaders today over the u.s. debt standoff. the former pin cough -- pimco cio says bm past will be resolved. china imports plunge as concerns grow about the economic recovery. and, ubs has announced a new leadership team saying the merger with credit suisse will be completed in the next few weeks. manus, we were just pouring over those names over the commercial break. have you found anyone yet who comes from credit suisse? manus: not yet. i am waiting on one. ulrich koerner is the only name i see shifting from the credit

suisse executive board. more on that to come. but all options on the table for the swiss business. we will delve into it. why would you put risk on with 10 days until the u.s. will default? tell me why. manus: it is true -- dani: it is true, but crazier things have happened. equities continue to charge ahead despite credit and economic fears, so why not add default fears to the list? but so far this morning, it makes no sense to say that because it is just asian and european equities that are moving higher. part of the reason europe is moving higher is the fact that u.k. stocks need to play catch-up because they were off-line yesterday. jp morgan saying they have downgraded euros on stocks to underweight. the momentum is gone for the europe trade, according to strategist there.

little to no action, this is why i was not enthusiastic about stocks. we got strong tech earnings. palantir, you mentioned ai, their stock after market goes bananas. but this morning we are not too enthusiastic about risk. manus: no, mike wilson is warning earnings are going to fall and it is going to be tough. if you get rate cuts it is because something pretty bad has happened. aramco has given us a release on their dividend strategy. in addition to the base dividend, that comes as the world's largest energy company prepares to wrap up first-quarter earnings for big oil. let's get to saudi arabia. our bureau chief there is matthew martin in riyadh. talk me through this special dividend formula. when does it kick in? how close are we to it being delivered? >> good morning, aramco

surprises all this morning. they preempted the results announcement of the q1 financials by announcing this special additional performance-linked dividend. essentially a percentage of free cash flow go go toward paying a dividend on top of the normal base dividend. at the end of last year, they boosted it to $19.5 billion per quarter. that will remain as the base dividend. on top of that, there is this additional cap on the free cash flow. last year it was $149 billion. they paid $75 billion in dividends. we could see a substantial increased. the oil prices looking weaker than it has in the past.

are we going to see a boost in dividends? we will have to see over the course of the year how the oil price pans out, but at the moment it looks like we are probably not going to see a massive increase. dani: i like how you say this was a surprise. i started scrambling around to try to find their earnings results in this because i thought, they are releasing now. but we are still waiting for those. manus: he maybe had a meltdown, did he? dani: i guess a meltdown is worse than a scramble. make sure we are not scrambling when it does come out. >> as i was saying earlier, it is obvious from the oil price that profits are not going to be what they were a year ago. on sunday, the government announced their oil revenue figures for the first quarter. that showed oil revenues

climbing about 3%. that is a pretty good proxy for what aramco is going to show. some sort of decline from q1. otherwise we are looking out for any sort of narrative from the company about how they are seeing this current recession fears impacting the oil price. obviously, prices have come down substantially. opec responded by cutting production. all those things will eat into aramco's profits short-term. we'll have to wait to see if they give any sense today whether that will mean anything for the pace of investment spending, capex into boosting oil and gas production which they had committed to doing. are they going to continue with that pace, or are they going to want to put the brakes on that? particularly with these big dividend commitments coming through. manus: stay rooted to that seat,

matthew. there is no pressure. you didn't miss a press release. matthew martin in riyadh, locked in the office very early. i feel for him, dani, i really do. oil has had a pretty good two-day rally, but concerns over supplies are offsetting concerns over a lackluster fuel oil demand. crude has slumped as the fed's most aggressive tightening in a generation sponsor recessionary fears. let's get to not your marti -- nadia wiggen at pareto securities. we finished the conversation on aramco. production cuts are in for saudi arabia. that has a material impact for aramco. how do you assess aramco?

they are going to create a special additional dividend if free cash flow gets to a bandwidth of 50-6%. nadia: yes, as you have been saying, it is a surprise move. it is linked to what happens in the future. if we compare that with some other earnings releases, for example, equinor had their capital markets update in the first quarter. they really opt there dip -- upped their dividend, but that is based on what they already earned. if we look at other european majors like shell, there dividends are quite linked to their trading business in terms of that protection. looks like aramco is looking more towards that side of things. but they are still the number one spender in terms of capex.

that is where they have differentiated themselves, but dividends is what shareholders want. dani: does that mean less activity in the oil and gas sector? less drilling, less exploration if aramco is putting what may be the cash flow to work via dividends. nadia: don't expect them to change plans. saudi arabia is pursuing an additional one million barrels of spare capacity by 2027. they are the market leader. since october last year, we have been hearing how opec-plus is trying to get investment across the whole group, including africa. so i do not think this means a change, it just means they feel there will be a lot of money and profits, so they will have money to spend on that. but it also admits that shareholders really care about this. this is when we look at where oil prices are, we are at $73

wti this morning. what are we hearing in terms of fuel sanctioning? we are hearing about the $40 level, even that does not mean the share price goes up. it could even trade lower. this is where the medium-term, next year, the year after that, we see a huge shortage of oil. so we need the spending. manus: in positioning, we have looked at the shorts in equity. the shorts have been clearly in control in this oil market as we go to vienna to an opec+ meeting. how would you characterize positioning as we go to this meeting? nadia: it has definitely been short happy. we probably saw the peak last week. part of this bounce we have seen in oil price as really been short covering. now the market realizes that opec+ definitely can cut supply if it is absolutely necessary. we have the debt ceiling fears

over the next 10 days in america. and the recessionary level. but i think the shorts are starting to get dangerously high, where you start to get nervous. what you need for the next leg up is for the wolf to get in. for that, they need evidence of demand stepping up in china that we can maintain the huge level of apparent demand we saw in march. that can be maintained even through refinery maintenance. and then when we see the stock price probably reported by the iea of oil stocks, we will get confidence back in the markets. we will see the length coming in to offset some of the shorts we have been observing. dani: really wonderful to get your thoughts this morning. nadia martin wiggen, partner and chief oil analyst at pareto securities.ubs

announces a new leadership team. the merger with credit suisse will be completed in the next few weeks. this is bloomberg. ♪

dani: let's get more on that breaking news out of ubs. this was lender's reshuffling its leadership. joining us is patrick winters from the asia finance team. i'm looking at these names, a lot of ubs lifers in this. >> yeah, ermatti has returned to ubs and is laying out his new leadership team. it looks like a continuity play, quite ubs heavy. the one surprise was the change of cfo. they brought in todd tuckner, he is relatively unknown outside of ubs, but has been at ubs for a while.

this looks like an immediate move to put in the managers for the integration at this point in time. manus: some are speculating that naruto may come back, he left as ralph hamers arrived. as dani said, there are some long-term people in the ubs business. bullock, the head of the swiss businesses, we will evaluate all options for credit suisse. that is incremental. a couple weeks ago, he said i'm glad you have met people know how to run a swiss bank. it is a very real live issue whether it is ipo, sold, or integrated. how important is this piece on the chessboard? >> it will be key to a good

evaluation for that business, if they decide to do something with it. ermatti has been at ubs for a long time. as you know, he was at ubs just as a ceo for almost a decade along with the chairman of the time. he has deep connections and knows lots of people of people at the bank. i'm sure you will count on the people he trusts the most and has worked with over a long period of time. if we look at the picks today, it seems to be rather focused on the ubs side. people he has worked with before rather than writing over the executive team from credit suisse, who may not be as pride and trusted in his opinion. -- tried and trusted in his opinion. manus: patrick winters with the first take on the ubs changes at the top, or indeed, talent retention. to turkey, the main opposition

party has accused the government of covering up the true state of the economy and the country's finances priebus get to -- for more, let's get to our tokyo bureau chief. >> he spoke to bloomberg or couple days ago and said he believes the government is concealing the truth about turkey's economy. this is a brought acquisition but the focus is he believes official data on anything from inflation to budget figures cannot really be trusted, until the next new government should they be elected in sunday's election gets a hard look at it. he is frustrated that the stock market is a place where he says small investors are being robbed of their savings. and he is going to start a probe into these dark -- into the stock market should he be

elected. dani: you mentioned the parliamentary election this sunday. what will the focus be for the voters? >> program turkey -- for turkey's 60 million voters, it will be about the economy more than anything else. turkey has gone through the biggest cost-of-living crisis in at least a generation. definitely since our do want came to -- erdogan came to power two decades ago. it has called to down -- called -- calmed down. erdogan has unorthodox ideas about the economy. unlike when central bank for hiking rates to cool inflation, turkey has for the past year been cutting rates. that in turn is altered in an implosion of credit and prices get out of control. that is what the election will be about more than anything else

this sunday. dani: that is onur ant in his temple. the pulsar survey asked which economies will suffer the most in 2023? not looking so great for those of us in the u.k. this is bloomberg. ♪

>> i don't think there is enough real growth for everything to work. >> our expectation for gdp growth is just above 1% for this year, but pretty much flat for 2024. >> puk is showing tremendous resilience. -- the u.k. is showing tremendous resilience. >> it is taking longer to get back to the inflation target. >> what we see in europe is what

weight qualify -- what weight qualify economically as neutral. we don't see recession coming, we see some growth. dani: some responses to this week paret -- this week's pulse survey. joining us to break down the results is a bloomberg senior reporter. where are we struggling the most in developed nations? it seems like it is unfortunate news for those of us who they've here. -- who live here. >> we asked which g-7 nations would see the worst decline in standard of living this year. the u.k. won by a significant margin, something like 60%. people's wages are getting hit.

the u.k. economy has actually been doing somewhat better than it was expected nine months ago. i realize that is not saying much because nine months ago everyone thought we would have the worst recession ever. the other thing that is interesting about it, most countries that have similar high inflation, we have an outlier in terms of double-digit inflation of 10%. manus: sterling is one of those come back kids.

i knew i should have traded down near parity. it is one of the second or third best performing currencies and the g10. which u.k. asset did our respondents say would perform the best this year? i hope it is housing because i have a flat. >> i've got some bad news for you. it is very much not housing. we asked people, what they go for ftse 100 or ftse 250 based on residential property, residential was the big loser. that is interesting in hindsight because the ftse 100 isn't really investing in the u.k., it is investing in companies that make most of their money outside the u.k. it reflects this earlier question about the standard of living going down, which is that given the choice, people want to

put their money that is exposed to the u.k. domestic economy. there was one interesting thing, the professional investors were more keen to invest in g ilts. that implies they expect interest rates to come down towards the end of the year, maybe because the economy is kind of struggling. manus: thank you for being with us, that is john stepek, our senior reporter on the money distilled newsletter. this is one of the most read stories, it is about commercial property, svb tanked yesterday. the stock tanked 17%. why do you say it is the european canary in the coal mine? dani: this is a business model that worked really well with low rates and cheap money.

but they got the ratings cut to junk yesterday by s&p because of a funding squeeze. that business model doesn't work anymore. short-term debt and a floating rate means they are exposed to higher rates. this would be the first domino to tumble perhaps if you are worried about commercial real estate as a whole in europe. manus: if you flip back to one of those bank of america reports, they talk about the boa constrictor around the u.s.a. economy as being commercial property. so this could be kind of prescient. they are one of the biggest commercial landlords. but then if you broaden the scope of this story in terms of debt coming to maturity and rolling over in sweden, over the next five years, that is $40 billion worth of bonds. if we go through a tougher time than last year at newly

minted rates of 3.5 and above in the eurozone and sweden, you are looking at a serious issue. dani: sweden's central bank has like this. the financial supervisory authorities are saying that it is not just a commercial debt problem, it is also a financials debility problem. this means absolutely nothing, but sbb -- it is really hard not to say svb -- they are just one letter away. manus: that is why i got confused on the call this morning. it's good to be back together again. but i am off tomorrow to dubai. so you are on your own again. ♪