>> i am dani burger in london and they are the stories that set your agenda. elusive agreement. still no debt ceiling deal after president biden and house speaker mccarthy meet but they called the talks productive. the optimism is enough to send u.s. stock futures higher. the feds at jim bullard, neel kashkari said more rate hikes may be needed this year as inflation remains sticky just days after jerome powell signaled a pause next month. plus, the qatar economic forum kicks off in doha. we will be speaking supposedly with world leaders in business and government. the debt ceiling drama, gamesmanship, game theory continues and continues to have an impact on markets. we have got to the stage where we are moving on every headline. around midnight, u.k. time we have lines from mccarthy saying that progress had been made. we get a rally. then emmons over a new hedge saying this is a republican,

mccarthy who is doing more than any republican house speaker has done since 2011-2013. to drive a risk on tone. let me show you where we stand with the risk on tone. we are looking at u.s. equity futures moving higher this morning up .1%. we got the pop in futures to those lines or mccarthy. goldman sachs says we are looking at hedge funds, now buying up u.s. stocks over the past two weeks in the quickest based -- pace since october. we are looking a really tight net short levels in s&p 500 latest. ftc data showing we were bearish but maybe we are finally getting the bears washed out. nymex crude moves higher with the risk on tone. why own gold if you're not concerned about the debt ceiling drama? gold falls below $2000. 2-year yields have moved 30 basis points since last monday. we have gone to pricing of one in three as it will get a hike

in june which goes from basically zero odds that we get a hike in june last week. it is a fast-moving picture with james bullard adding his own hawkish fuel to the fire. let's get to reporters from around the world to talk about these major top stories. we need to talk about the debt ceiling saga with bill faries and jill desis is on hand to talk through the most recent federal reserve signals. to the debt ceiling where u.s. president joe biden and house speaker kevin mccarthy remained without a deal on the debt limit after another round of talks on monday. however, they both called questions productive and vowed to keep negotiating. joining us for more on this is bloomberg's bill faries. some positive signals coming from mccarthy and coming from the white house. where do we stand? bill: absolutely. it was the first meeting between president biden and speaker mccarthy since the president returned from the g7. they both describe it as productive. they had their staffs continue to meet afterwards, well into

the monday evening there in washington. they said they will likely be meeting on a daily basis until they get a deal. speaker mccarthy did say that even when they reach a deal, house republicans, the house as a whole will get 72 hours to look over their proposal before there is any vote. you have to build that into any timeline had of june 1. both sides certainly same the kinds of things that sound like a deal could happen as soon as later this week. dani: where are the hurdles at this point? we know mccarthy wants spending cuts to differently. we know that defense spending is off the table. what do they need to get through in terms of reaching an agreement here? bill: i think some of the same things that have dogged these talks for quite a while. you mentioned spending cuts. when the question is how long are there spinning cuts and how deep are they -- are there

spending cuts and how deep are they? are there democrats want the pentagon budget on the table? the republican see that as a redline and what to see big event spending increases. to do that, you would need bigger cuts on the domestic side. there's going to be a lot of haggling over that spirit there's a question about some unspent covid relief funding. it is likely that as much as 50 or $60 billion of that could get claude back. how they can't that in terms of spending cuts and against future spending will be a part of these discussions. dani: bloomberg's bill faries in what is fast becoming a daily segment on the debt ceiling. two fed hawks saw the need to hike rates further this year just days after jerome powell signaled a pause in june. two other officials voiced support for patients. let's get more bloomberg's jill desis. we had bullard, kashkari yesterday.

did their comments suggest that the market had been premature in betting that the fed would deposit rate hikes june? jill: you said it earlier. you went from essentially a baked in consensus that the fed is going to pause in june to now investors are pricing in a 30% chance of a raise. even though where we are at right now there is still it seems like division over it should they raise or pause, maybe even skip, which is something that kashkari had mentioned was a possibility. it plays into what we heard from analysts just a few weeks ago that this is a really, really unclear situation. we are still holding onto the sticky price pressures on the credit and banking issues which are still a major pressure there. it could be possible now that we are getting into if they hold, next month that by july, maybe we see another rate hike again. dani: to that point, if we are

going to be holding in june and here is bullard and the hawkish comments from him saying that we might need to more moves this year, could we really see a skip and that not be the end of the rate hiking cycle? a skip and another move in july? jill: i think we have been hearing that from at least a couple of fed presidents. kashkari raised that possibility that maybe there is a skip or a hike next month before he gets into july -- before we get into july. it might have been from the dallas fed presidents as well recently that less hawkish comments are saying they just want to give themselves breathing room to adjust rates as needed, especially when the data is unclear. we will have to see what happens in the coming weeks. there is a cpi print that comes out on the first day of the next fomc meeting so that will play into things. we will see what the jobs data looks like in june.

certainly a lot here but this is ultimately saying in regards to the possibility for a skip, pause and then followed by hike in july is there so much uncertainty about how is things will unfold this year. they want to get themselves room to adjust rates as needed and whatever direction that may be. dani: the overarching theme is just pricing out cuts in the market for the end of the year. you take neel kashkari saying maybe we pause but we could keep going again. trying to unwind what the market has done for cuts. jill, great catch up with you. it is the qatar economic forum that kicks off in delhi today. the event is a big one in will bring together government and business leaders from around the world. let's get to bloomberg's jennifer zabasajja who was at the conference. so many significant interviews to take place. a lot of important people there. give us a sense of the backdrop, the environment that this is taking place in. jennifer: you are talking a

little bit about some of those things, some issues that are taking place here just in terms of the inflationary environment that we are all in. there is no doubt that we are going to be hearing from a number of leaders from developed and helping a company how that is affecting them. when you take a step back down and look at the major players, the u.s. potentially falling into a recession later this year, you're up with a weaker than expected economy, trying out with a stronger than expected on spec after covid and what that affect is having on the rest of the global environment. in particular, a lot of the discussion is around how the global south and the gulf potentially is stepping up where there are gaps in potential supply chains and trade relations. we are seeing that been discussed a lot here and seeing how a number of economies are going to step up to the plate and create new business opportunities here and over the next few days. we will hear from a number of leaders that you mentioned.

we are hearing from a number of heads of states. i will speak with the president of rwanda in a few hours. rwanda is seen as a major player for the african continent spared we will also hear from hungry sprint minister viktor orban about the ongoing war in russia and how it is having an effect on that country and the countries that it trades with. there is a lot going into this event to talk about aunt really a lot that is going to be looming over every single discussion that we are having here. dani: i can see you station yourself in front of a coffee. that is a brilliant place to be. i'm sure you will need a lot of it this week. what about the key themes are questions that will be asked? jennifer: key themes, i will get a cup of coffee, key themes here are really what you mentioned. we have the inflationary pressures that we are seeing a lot of governments around the world faced with. there is also the idea of the

shift towards a sustainable environment and energy transition that we are staying. for some countries not as just as it is supposed to be made out to be. we will hear from business leaders about what more the public sector potentially needs to do, and also the volatile markets locally. you were talking to your guests about that, how that is having an effect on businesses and the public sector. no doubt, we will hear from the u.s. debt ceiling debate. he started show off with that and that is definitely going to be something that we are hearing from a number of leaders, just how that could potentially affect their economies, the businesses and what they are hoping to see going forward. a lot to pay attention to. a lot leaders that we be hearing from. there are a few on your screen right there. steve schwarzman someone we will hear from soon. a lot to pay attention to here in qatar. dani: it is so telling to have leaders literally from all over the world, and at the debt

ceiling being a concern to many of them really shows how heightened the political debate in washington is right now. jennifer zabasajja at the qatar economic forum. we will return to that in doha later in the show. the future of aviation, another big topic. don't miss our exclusive interview with air asia ceo tony fernandes at 6:30 a.m. london time. let's get you set up for your trading day. some things we will be watching out for. 7:00 a.m. u.k. time the latest numbers on u.k. public sector net borrowing which excludes banks. we are going to get pmi data around europe. france takes it off and we will get germany euro area and u.k.. at 2:45 p.m. u.k. time, u.s. pmi's. shortly after, the latest data on new-home sales in the u.s.. coming up, all eyes on washington both on the debt negotiations and the fed's next moves. we will be speaking with saxo

bank cio steen jakobsen next. this is bloomberg. ♪

how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost... just another word for not as good as mine. save 50% on the sleep number limited edition smart bed. plus, special financing. only at sleep number.

>> i think everyone should be prepared for rates going higher from here. if 5% is not enough in fed

funds, and i have been advising visit to clients and banks, you should be prepared for 6, 7. dani: prepare for rates to go higher. jp morgan chair jamie dimon speaking at the bank's investor day new york overnight spared let's get to steen jakobsen, chief investment officer of saxo bank. are you preparing for higher rates that might look like six or 7%? steen: i think to be honest if i take jamie dimon in the context in which he speaks which is his own banking conference, it is pretty clear what he talks about is that the system itself need to prepare itself for six or 7%. i necessarily diamond thinks this is six or 7% terminal rate that we are going to. i think the second point being there is no one better at creating the narrative and controlling it then jamie dimon and what he tries to my interpretation tries to do here is make the case that the system needs to be re--- built and prepared for potentially as we

have seen from the fed speakers that no one really knows where the next 50 basis points is up or down or we go six months online. that is what his comment is really about. dani: to that point, at the moment, is the bigger risk weighting, pausing, and letting inflation gets out of control, or is it moving at the moment and potentially inducing a recession or a worse recession they might have come already? steen: as you know, it is a difficult question to answer in a sense that on one hand, the federal reserve does not want to be -- see the last hike as being a policy error. on the other hand, they don't want to be policy error and what they did in the 1970's, simply pausing and coming back and doing more. i think everyone talks about data dependency, but really it is about how the high-frequency data evolves. in that cam, i think we are

seeing early signs that the labor market is starting to deteriorate. we certainly saw through the earnings that we saw for consumer companies the most significant of course being walmart, that there guidance is guided lower now for the first time. similarly, in europe if you look at germany, weekly retail sales and industrial production is coming off and moving into negative territory. there is a very hard balancing act. to be honest, i have deemed 2023 the last year because i think there is so much going on in terms of the microstructure of the economy but the macro structure looks at officially calm simply because all of these counter moves in terms of some parts of the economy accelerating. if you take chatgpt, ai and other parts of course, consumer dependent and exposed are very, very likely to slow down so differently. we are not going to get a clear answer. we are going to get a mixed signal but the mixed signal will

be that we see a significant slowdown when we get the data for the end of q2 and into q3. dani: this is different for you because you did previously expect a recession for 2023. have you changed your positioning? if it is about the microstructure right now, the macro picture is not a clean one, what trades do you put on? what you run away from? steen: i was hoping i did not need to do anything for this year but now it seems like with the new view that we are likely with a higher than 50% probability to move into negative growth for 23, -- for q3 which is -.9 for q3 and q4, i don't see it going there. i do think we get a recessionary like scenario. i don't think the debt ceiling helps. i don't think the fact that the federal reserve is going to reissue t-bills to the tune of $1 trillion in on top of that you have the qt.

if we combine everything we talk about, we are going to see through the qt and reselling of t-bills, we're going to see at least one rate hike coming through with tightening. overall, the early signs right now are that we have seen the best of the tailwind from the consumers as the consumers back down. i need to be exposed to trades that are more recessionary like and that makes me more cautious on everything equity except for nasdaq. it makes me look at potential value in fixed income. too early because clearly the technical picture right now is that people are reacting off the fomc, the short-term, and those coming off. basically, i have reduced my exposure to gold and things that leaves with the weaker dollar. dani: a lot of people like the nasdaq right now and medic -- mega cap tech. the s&p is up for the year. at what point does it get too crowded regardless of whether it is safe haven for you are not?

steen: i probably should have qualified and you did it better than me. it is not really the whole nasdaq that i like. i like components in the ai and chatgpt and barred for google. it is clear to me that we are doing with a super, super exceptionality in terms of adoption to this new round, new world. the valuation, google trades at wendy five pe. if this is the real thing, and i think it is, i think something like google is still cheap. there are number of other players taking off. everybody will say it is expensive but google is not even back to where it was a couple of years ago. overall, i do see that this trend is undressed mated by the market. it will have a slight deflationary issue but will continue to keep nasdaq outperforming overall relative to the indices.

i am extremist comfortable of japan that has gone supernova especially. dani: it is weaker today but trading at a multi-decade high. i am afraid we are out of time. steen jakobsen, cio at saxo bank. coming up, ford ceo jim farley shares his market outlook and discuss capturing more of the ev share next. this is bloomberg. ♪

dani: florida expects auto prices to fall by more than 5% -- ford expects auto prices to fall by more than 5% this year and next. the ceo spoke to matt miller about pricing as well as capturing more of the ed market on the sidelines of the company's capital market states in michigan.

>> prices will come down there fully for the customer after all these years of tight supply. >> how much do you think prices will come down and what will drive that? >> we are sitting in our plan this year and next year five plus percent reduction. it is in between where we were maybe in 2019 and where we have been. i don't think we are going to go back to the days a couple years ago of 100 day supply. most people are in the 50 day supply range. i think the natural discounting for someone who has an older product will be in the thousands. you are starting to see now low apr's from a lot of brands who have older product. what is unique about ford as we are basically -- we have an all . we are a bit of a unicorn. the background pricing will be more difficult. >> you said in the past people have asked how do you get from 8% on your ev business and you want to do 10% overall to the 17% that tesla has?

do you get up there or do they see margin pressure? >> both are going to happen. look at what is happening in china with byd and what is happening with tesla. they have reduced their prices on model why their main product by 5000 or $7,000. it goes up and down but is pretty far down. they have had the market to themselves and had a big head start kind of like what we do on pro. now they are seeing a lot more pressure obviously. i think we are going to definitely see that especially in the two row crossover. we think there will be 50-100 models. a lot of people want to grow. it is going to be a great time to buy a two row electric ev for customers like markey. where we compete really in ev pickup trucks, three row crossovers that we will show people today, and the commercial vehicle, ev commercial vehicles. we don't see as much price

petition because there's not as many vehicles or choices there. dani: ford ceo jim farley there with bloomberg's matt miller on competing with tesla. let's get you your first word news with adrian wong in hong kong. adrian: accident biden says he and house speaker kevin mccarthy had productive talks and agreed that u.s. default is off the table. the two met at the white house for over an hour but has still not reached a deal. treasury secretary janet yellen has warned that is highly likely that department will run out sufficient cash in early june. >> i felt we had a productive discussion. we don't have an agreement yet, but i did feel the discussion was productive in areas that we have differences of opinion. we are going to have the staff continue to get back together and work on some of the things that we had talked about. adrian: turkish president recep

tayyip erdogan has won the support of a nationalist rival, boosting his bid to extend his rule. the longshot third candidate sinan ogan has asked his supporters to back erdogan in sunday's run-off. ogan was eliminated from the first round of voting with just 5% of voters backing his candidacy. erdogan led the early vote of but fell shy of 50% majority needed for an outright win. adani's group coordinate is the first of 10 entities to recruit all offers triggered by the scathing hindenburg research report from late january. adani group shares are rallying after a report by an indian court panel found no conclusive evidence of a stock price when it relation as alleged by hindenburg. regulators has until august 14 to complete its investigation spared global news powered by more than 2700 journalists and analysts in over 120 countries. i'm a hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. i had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult

for me to sustain weight loss. golo has been more sustainable. i can fit it into family life, i can make meals that the whole family will enjoy. it just works in everyday life as a mom.

dani: good morning, happy

tuesday, this is "bloomberg daybreak europe". elusive agreement, still a no debt ceiling deal after president biden and house speaker mccarthy need, while they call the talks reductive, the optimism is enough to send stocks higher. neel kashkari says more rate hikes will be needed this year as inflation remains picky just days after jerome powell signaled a pause. plus, the qatar economic form takes off in delhi. we will be speaking exclusively to global leaders in business and government. we were just speaking with steen , who said he is wary of this equity market. wary of the economy, thinks we will get a slowdown. the trade that he and a lot of people like far ai flavored. there is so much uncertainty right now, you either want to sit on the headlines or just follow the foam of trade.

-- foam of trade. trade.z flash: u.s. futures are getting a boost early hours with mccarthy saying they are closer to a deal. we did have goldman sachs and morgan stanley data showing that hedge fund managers are starting to buy stocks. maybe it is the fomo trade. we have seen equities rally consistently despite the fact that yields have come up. we are above or .3% on the two year yield. 30 basis point move in the past week. a market that is now pricing a one in three odds that we will get a rate hike in june. don't buy gold if we are going to get a debt ceiling agreement. that is also manifesting itself at crude. i mentioned a moment ago that government and business leaders are gathering in doha.

the qatar economic from. the event brings focus on major economic issues facing the world and industry leaders. let's get to haslinda. haslinda: they are here to discuss perhaps the news story, can we look beyond headlines in europe and in the u.s., even in china? let's get perspective with tony fernandez. tony: good to be here. haslinda: when we talk about the aviation center, it is apply chains. i that impacting you? tony: first, in about two months time, all of our operations -- we are in some ways in a good position because we bought 362 aircraft quite early on.

while there are delays in the supply chain, i think our order is quite robust, we have a lot of growth. we are going from 200 to 300 aircraft. this is quite something for me, from two years ago when we were struggling to survive, now we are talking about 300 aircraft in the next or c to five years and moving our passenger numbers from 80 million to 150 million. growth is back and we are lucky. there are obviously disruptions, but i am confident the engine manufacturers within the next six months will get their acts together. haslinda: so you expect, we will perhaps be back to where we want to be? tony: so. airbus has a strong production schedule. we will be briefed over the next few weeks. there is a lot of leasing capacity as well. air asia have taken 15 aircraft.

on top of our order book of 362 aircraft, we have a lot of lease aircraft again. where do you see growth, which markets have potential? tony: you are looking at u.s. and europe and really, it is asia's time. you come here to the middle east, and it is booming. i think for many years, southeast asia was kind of passed by as everyone looked at india and china and korea and japan. if you go back, asia stocks, over 3 billion people. we are seeing huge growth in china and india. southeast india has phenomenal growth. gdp is very strong, people have more disposable income. the economic union i have been dreaming about is beginning to take shape. air asia was a pioneer in creating a brand, and now we are getting the fruits of that. we are soon to start an airline

in cambodia and looking at two more countries. i can't say where right now, but there are not many left. i think you can work it out. we have always been focused on 700 million people who will fly out to the rest of asia, the logistics that comes with it. we see a huge amount of growth. haslinda: people want to fly, but it is getting expensive. when we last spoke, you said that ticket prices were justified. are they still? tony: i think it depends on what class. for me, growth has to come with low fares. we stimulate the market. whether those fares are as low as pre-covid, i don't think so. in relative scale with inflation, cost of goods, i think airfares at airasia and other airlines generally at the backend are still very affordable. the fact of the matter is,

despite our capacity adding in, we are still operating at 85 to 90% load factor. we haven't priced ourselves at demand being eroded. haslinda: is there a sense that given how prices are escalating, that may impact demand? tony: i think there is always a chance. i am not too concerned about it at the moment. who knows, i have been in this business 21 years and things can change very quickly. my number one priority is getting growth back, but above that is cost. and getting more efficiencies, driving more costs down. now i think, you are getting the aviation sector really looking at low cost as a really big growth area. i flew from dubai and looking at the terminal two brought back memories of my low-cost terminal. number one priority is cost for me. there are some headwinds and

tailwinds. oil has kind of peaked. and crack which was at $50 is $12. interest rates, i don't think they will last at these rates forever. for us, hopefully the dollar will taper off. there are some tailwinds. haslinda: when it comes to prices, do you see the summer holiday season driving prices even higher? tony: i think prices have peaked. we don't wanted to go any higher, we wanted to go lower, we want to stimulate more traffic. haslinda: succession, you have been quite clear it is top of mind but you are not stepping down. what is the plan? tony: what i was trying to say to your colleagues at bloomberg was that succession planning is very important. too many asian companies don't focus on succession planning. i was highlighting that, that is top of my mind as well, as well as cost. i have lost 12 kilos.

these suits are all much bigger for me now. to buy more close, once i by bloomberg. i am fit, i am excited at really putting in the final piece of our growth. and the rest of the strategy, the logistics division, digital division, and service division. a few more years left in me. i think it is important for investors to know that there is a future after me. and that i am planning for it. not anytime soon. haslinda: a few more years for tony. he is interested in private equity. tony: one day. i will never retire, i will always do something else. i think a corporation must grow out of its founder and be fully corporatized. it interesting, an article made my board want to renegotiate with me and they are asking me to stay on for five years. let's see, there will be announcements soon.

i am excited, i am excited about being here bloomberg and qatar put this together. we met yesterday at dinner, the amount of energy. people talking about a recession, but so much energy at this conference, makes me feel like i have a few more years to go. haslinda: always a pleasure to have you here at bloomberg. handing it back to you, dani. dani: what a great town to end it on. i also like him saying that airfares have peaked. that is also some good news. haslinda at the qatar economic forum. we still have a lot more to come of our coverage there. man is, i know you all miss him. he will be speaking to the ceo of qatar airways later. there are a lot of government officials who will be speaking throughout the conference. bloomberg anchor francine lacqua will be hosting a panel on the new energy paradigm with key

middle east figures, that includes a saudi energy minister. bloomberg's energy -- editor in chief will speak to victor or bond later. up on this program, brussels plays host to 400 european business leaders and policymakers today at the institute of international finance event. we will talk banking and the global economy with iif resident and ceo, tim adams. this is bloomberg. ♪

he snores like an angry rhino you've never heard an angry rhino baby i hear one every night... every night. okay. i'll work on that. save 50% on the sleep number limited edition smart bed.

plus, special financing. only at sleep number. dani: european financial policymakers and market watchers are meeting in brussels today for the institute of international finance european summit. association for the global financial industry is looking at how to build sustainable growth

after a volatile first quarter. joining me now, president and ceo of the institute of international finance, timothy adams. so great to speak with you. we have to talk about europe, because that is what you are focusing on. the debt ceiling first. you served as a chief of staff to both treasury secretary's o'neill and snow. in europe right now, how much of the debt ceiling debate is overshadowing your visit there? tim: thanks for having me here today. it is such a pleasure and honor to be back with bloomberg. it is a topical issue here in europe. everywhere, i am getting phone calls around the world. i think we will work this out. i think the scenario is that political leaders are meeting and meeting quite actively. i think there is some messaging and political posturing for each side score based. i think we will get a deal, but

that is not done yet. dani: what is risk that we get close to the wire and get a repeat of 2011? tim: i would say about one in five. there are a number of people in washington who did not live through those episodes. when you talk to them about a heart moment or downgrade, they are not really there what you are talking about. we have got to go through this cycle again with a whole new crop of people. you have great leadership on both sides, they both want a solution. mistakes can happen. dani: and, it is a reason to be prepared. as you are talking to european financial leaders, what do you expect to hear in terms of what they are concentrated on right now? you have risked playing out in the u.s., you have svb, how similar is the conversation in europe in terms of risk for those financial institutions? tim: some risks are similar.

fragmentation it and global economy concerns about u.s. and china relations. financial turbulence in the u.s., which has some spillover effects into europe. you still have a war in ukraine, concerns about where russia is going, sanctions against russia. there are some idiosyncratic aspects in respect to the issue. bloomberg has a survey out today of european industrialists. it is very optimistic in europe's long-term competitive posture. i think there are issues. also issues that are global in nature. dani: look at you promoting a bloomberg poll, got to love it. concern is there in terms of europe being caught in the middle of the geopolitical debate and tensions between china and the u.s.? we know a lot of banks, hsbc in the u.k., standard charter, also

have grown a lot. how much concern is there that they will be caught in the middle of geopolitical crosshairs? tim: great question. tremendous concern. it is the number one issue i have been getting other than about the debt ceiling which is really episodic. there is a norm is concerned that european industry which has deep roots into china in terms of sales and sourcing could face a perilous time if u.s. and china relations deteriorate further, and they just might. a lot of concern among industrial europe with respect to how china may play out. and maybe potential sanctions someday. against china, which is in the forefront of every industrialist mind. dani: it is that same fear that played out with russia. our financial institutions you speak with willing to continue investing? with china? tim: i think there is some

caution. china is a huge market, enormous opportunities. the industry has been there a long time. like nonfinancial sector leaders, our industry is concerned about the meeting in the long-term. there is some de-risking going on in concert with what we are seeing on the industrial side. there is concern but also hope that we will find a better path forward and we can maintain those relations. dani: i know not to call it a banking crisis, you think it was not a crisis. secretary yellen was speaking to cnn saying she has told the ceo of large banks that more mergers might be necessary. do you think that is right, and does that suggest the turbulence isn't over? tim: i think the mergers is more about signaling. this administration came in indicating that they were not supportive of consolidation in the industry. i think we need consolidation.

we have been consolidating across the banking industry for the last of a new year's. i think she was trying to have some clarification in that consolidation needs to happen. the mergers are really about medium-sized institutions. i think that is right, this is a skill business and you need to deploy billions in terms of putting technology to work at artificial intelligence. i think we will see scale and mergers and she was indicating they are now ok with that. dani: jamie dimon was talking about this yesterday, too. this idea of the bigger banks having the advantage in this environment. can we have those smaller baking institutions, can they survive when you are not just worried about technology but also having the capital to deploy and to back up some of the deposit? tim: jamie was great yesterday. i think what you see is a bifurcation of the industry.

a small community banks playing an incredibly important role in their communities. you see a larger consolidation on the other hand in terms of scale. the big banks have the balance sheet to deploy in terms of putting technology to work. that is the kind of spending one must do in order to compete not only with other banks but technology platform companies. it is a skill business and you need a balance sheet you can put to work. dani: quickly, because we are almost out of time. if we know this risk in terms of the deposit, liability mismatch, we know that risk about the banking crisis, what is the biggest risk you think we are under appreciating at this moment? tim: jamie said yesterday, we still need to watch commercial real estate. there is still in our mess uncertainty about where we are in the cycle. this is a session that has yet

to materialize. the real estate sector seems to be forefront mac most industry leaders. dani: but still your trip in brussels, timothy adams, president of the institute of international finance. also joining us at the event, santander. that will be at 9:00 a.m. london time. stay with us for that conversation. let's get to your business flash with adrian in hong kong. adrian: jp morgan is set to gain an even bigger boost from rising interest rates, thanks to its purchase of first republic bank. they have raised its guidance for net interest income this year to $84 billion. they also see second-quarter revenue from trading and investment banking to slump 15% from a year ago. abu dhabi sovereign wealth fund and fortress investment group have agreed to by softbank's

stake in the u.s. asset manager. they will own 71 percent of equity while fortress will hold a 30% equity interest. sources say softbank is working on plans to become a lender in private credit. first citizens have sued hsbc for allegedly raiding dungeons of employees from silicon valley bank. -- dozens of employees. filed in a california court accuses hsbc of poaching 42 bankers and using sbb's confidential and proprietary and trade good information. hsbc spokesman declined to comment. pac west shares surged after it agreed to sell a $2.6 billion portfolio of real estate construction loans at a discount. the move is part of a previously announced plan to sell assets to shore up liquidity. the buyer kennedy wilson is purchasing the group of 74 loans for about $2.4 billion. they also see remaining future funding obligations of $2.7 billion.

dani: thanks so much. coming up, tech stocks have seen some major tailwinds. nasdaq it's a new high. this is bloomberg. ♪

good night! hey corporate types. would you stop calling each other rock stars? 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. ♪♪

dani: it is all about ai these days and it is providing a powerful tailwind for the nasdaq. they broke into fresh year to date highs. look at nvidia itself. railing 113% year to date. here with is valerie tytel. it feels like this is the only thing people have any conviction about these days. valerie: that is for sure.

this bigot catch-up trade has really seen the nasdaq outperform. the macro backdrop to which it is outperforming is surprising. nasdaq has rallied 5% in the last 10 sessions. that is despite two year yields rising 30 basis points. in fact, when we look at the correlation between two-year yields and the nasdaq, it is the most positively correlated in three years. that goes to show this is really not normally the backdrop to which tech rallies so strongly. to add to that, this is also happening as the dollar is a strengthening. those are normally too big i don't want to say tailwinds but in verse tailwinds that tech normally does not outperform. these are all signs that this rally still has a lot more to go. still a lot of wind behind it. a lot of people have been

raising an eyebrow and doubting this rally, saying it is a mini bubble. this has phenomenal strength behind it, i am not sure i want to fade it just yet. dani: isn't the inverse tailwind a headwind? [laughter] i love it. you also had a another wind pun, thank you so much. valerie tytel on the tech rally. is it for a break europe. please stay with us, we have a lot of extensive coverage from the qatar economic forum. we will also have a discussion with shou chew. next it is markets europe as the debt ceiling optimism sends us into a risk on rally. this is bloomberg. ♪

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. anna: welcome back to "bloomberg