>> welcome. i'm john heilemann with the first word news. the worst canadian wildfire season in recorded history has spread hayes from massachusetts to south carolina and missouri, delaying flights, canceling events enforcing forcing millions to mask up or stay inside. philadelphia and baltimore registered some of the worst readings in the u.s., while washington, d.c. is under a code purple. racing has been canceled that belmont park. new york city schools to be on road construction on friday. there almost 450 active fires in canada. ukrainian president latimer zaleski visited ukraine's south

they get -- latimer zaleski. -- the loading near zelinski. ukraine asked united states for assistance in russian occupied territories. in france, the terror was at the motive behind a knife attack this morning that left six wounded, including four children. i suspect is in custody. he holds syrian citizenship. emmanuel macron called it an act of absolute cowardice. a correction following an interview with cathie wood. we want to make clear binance has not been accused of fraud or criminal activity in any of the current u.s. regulatory actions. global news powered by more than 2700 journalists and analysts in more than 120 countries. i'm john hyland. this is bloomberg. ♪

>> welcome to bloomberg markets. matt: let's get a check on what's going on in the markets. we are looking at gains on the dow jones industrial average, s&p 500 and the nasdaq. s&p up .4%. basically rising to the high levels of the session. the 10-year yield down by about 6.5 basis point. the u.s. dollar index is down. that's a tailwind to risk assets. oil is to $71.15 a barrel. jon: let's start with technology which took a breather yesterday. the bank of canada raised interest rates. with that mean the fed would not move ahead with a posner's week?

investors shied away from the big tech names. they are gobbling them up again. you have names like tesla, which is on a 10-day winning streak. nvidia up about 2.5%. not everything going up. we are watching what's happening with energy stocks today. you were highlighting the price of oil. some of those reports about conversations between the u.s. and iran. a situation with more supply coming to market where the bigger concern has been demand. would it be a surprise to see energy stocks? gamestop at one point today, it's worth in a couple of years. more sales challenges for the retailer and another ceo change. a lot going on with gamestop. matt: we will pay attention to what's going on in the markets. we will talk at some point with lgbt a golfer michelle wi.

i want to focus on the bloomberg invest panel -- the conversation we are hosting. we heard from john fitzpatrick from soros fund management who warned of moore pain ahead. -- more bank pain ahead. >> you will see more failures in the small banks. not the big headlines and the size of the failures we had so far. i think there is more problems under the surface. jon: let's talk to someone who knows the sector called. gerard cassidy joining us and katie greifeld. the idea of pain in the banking sector, what is your right thoughts on that? garard: is reflective of what the u.s. economy does. if we're in for a soft landing, the pain will be less severe.

a hard landing would make it more difficult. amongst the top 20 banks we are not worried about any of them. in any downturn, any recession -- 1990 is one example. 2008-2009, there were bank failures. in a traditional recession there are smaller bank failures. it is something that is very manageable. matt: katie, the kr re-is something -- kre is something we learned about this year. the kbe is the one we all know and love. how have they performed this year? katie: you have seen kre come back to life. it's been a performing kbe, the broader banking sector over the past month. both of those feeling a little pain today.

i would ask you that, gerard. how sustainable is that performance we are seeing out of the regionals outperforming the big banks? garard: it is going to be reflective on with the federal reserve is going to do. one we look at the last tightening cycles, when the on fed funds the bank stocks do quite well. problems in march with the bank failures, it took that off course. to 1994-1995 and even 2040 2006, when the fed reached a terminal rate the bank stocks did quite well after the terminal rate was reached. both the regionals and the money centers. because of what happened in march, the deposit issue, the smaller banks were hit harder. they have a better balance coming up these lows. jon: in terms of the

consolidation story which we heard early on during the banking turmoil that there is ultimately going to be more merger activity in the sector. what is your current view? garard: i think you are right longer-term, but in the near term it is dead. the reason it is dead is because regulatory changes coming. none of the buyers know with the final local be post-silicon valley failure. when we get more rules in place and everybody knows the lay of the land there should be more consolidation. we need to hear a unified message out of washington. we are not getting that. you hear they would like to see more deals. treasury secretary yellen said that. the fdic could not say that. they killed the toronto-first rising deal. there's a mixed message coming out of washington.

we have to see new regulations. when we do probably in the second half of next year you will see a big uptick. matt: what are we seeing in terms of credit tightening at banks big or small? how much is going to head into the shadow banking system? garard: that's a very good question. we certainly have seen banks tighten up their underwriting standards. we have seen that in the senior loan officer survey. there's also demand from customers coming down. yes, banks are in the business of land but they are being conservative because of the uncertain economic environment. the shadow banking system has been steadily eating away at the banks' market share for 40 years . you look at the federal reserve data and the sources of lending into the u.s. economy, banks of the 1980's had about a 42% market share. shadow banking about 25%. today it is flip-flopped. shadow banking has around a 45%

market share and the banks are in the mid 20's. the shadow banking area is where we see the greater credit risks over the next two years, especially in an economic recession. katie: we have seen private credit really boom coming out of what we saw in march. to your point, this is been going on for decades. shadow banking has been taking market share. who is it stealing the market share from? the big behemoths or some of these midsized and smaller lenders? garard: interesting question. it is hard to determine. back in 1980, we had 18,000 banks in the country. where down to about 4600. one of the reasons the banks have been successful even though they lost market share is they have consolidated dramatically and improved on efficiencies and profitability. it is difficult to say it is the

regionals or the money centers. the private equity lenders are certainly taking more risk. you are seeing get in the real estate market. you have noticed the buildings going back to the lenders. it is not jpmorgan chase or bank of america. what you're going to see is the shadow banking market is taking away market share from probably the most top 20 banks. matt: great to get your insight. appreciate you joining us today. head of u.s. bank equity strategy garard cassidy. thank you very much to katie greifeld, process at reporter for bloomberg news for joining us. that bloomberg invest, golfer michelle wi is setting our jason kelly and mark patrick off. wi says she was shocked by the pga merger news this week. she added it was wrong to leave out the players.

you can watch this on live go. let's listen in for a bit. >> they made about $65 million. rob made $1 million. that was not really right. it is not about ethics. it's about trying to provide people like michelle or rob the resources and the access. ♪

jon: this is "bloomberg markets ." time for the stock of the hour. we are watching carvana. shares of the retailer getting a lift next to a well received financial forecast. that does not mean the company is selling more cars.

they are selling more of the loans generated for customers. doing that can boost profit per vehicle sold, at least in the short term. a heavily shorted stock is getting a big pop today. matt: this is a stock that's incredibly volatile as well. it often gets either a big pop or a big drop. it is when i think is still interesting, especially to retail investors. you were talking about gamestop. this almost has the same kind of meme stock quality. it just seems to be so resilient. a lot of investors might've already counted it out. now it bounces back. jon: it's had a rough ride. a couple of things worked against them. used car prices have been trending lower. we have been talking about the interest rate environment which does not necessarily lend itself to more people rushing out and buying cars, especially when credit is involved. that is where the credit part is

interesting. if they are focusing on bottom-line performance and selling more of the loan portfolio faster, even if you're selling fewer vehicles, maybe you get a bottom-line boost from that. matt: interesting to see how the business goes forward with rates. people are paying 8% right now for loans. that is with good credit. difficult business for carvana. let's talk about tech. twitter cofounder and former ceo evan williams has opened up about elon musk's to multi-was takeover for the first time. in an exclusive interview of the new bloomberg original show the circuit with emily chang, william shares his thought on the future of twitter under musk. he spoke with emily and one of the earliest members of twitter's founding team jason goldman. >> yeah, it was surprising. i'm trying to men were the first bursting or if i was aware of it. >> the idea he would buy the

company seems like he's not serious about this. it'll be like the way he sort of put in a reservation on like a fancy sports car. >> there have been moments where i started this thing with some other people along time ago in this office. the world's richest man bought it. it's this big new story. how did that happen? >> was any part of you like, that's interesting. >> i like interesting things to happen. i'm not a fan of thing staying the way they are. that is why we do tech. that is why we start new things. twitter had been getting better and better. the trajectory of improvements in the year or two prior to elon. elon, holy moly. he does crazy things. this will be interesting and fun. we will see what happens. >> yeah. [laughter] >> i was concerned.

everything he was talking about that he wanted to do with the product seemed lightly considered. we have to defeat the bots. there's all the stuff about the culture wars. it became clear that is his primary interest. pushing on these particular cultural issues and his own personal use of the product he wants to make better. >> how do you feel about what he has done so far? >> i don't think he has dialed in quite right yet. >> it's gone pretty poorly. the mythos is belied by most of the things pushed like twitter blue or view count. amplify my tweets so everybody sees them. if you on the product, you can do that. it's just a curious weighted product manager global platform. jon: emily joins us now with more on a colorful interview. you have had these conversations with startup founders turned

tech leaders. a lot of times they are still in charge. this is a different conversation. emily: as you know with twitter there have been so many changing of the guards over the years. what was interesting about what they had to say is ev set elon musk is brilliant but no one is brilliant on everything. one of the fundamental sins of genius is to believe someone who made money on one thing can do anything. that is one of the themes we explore, leadership. we are watching the trailer. what drives these people making decisions intact affecting the lives of billions of people. matt: where the most plugged in person we have among the silicon valley elite. what is the general opinion of how elon musk has dealt with buying twitter? what are people saying outside of ed williams and jason goldman? emily: it is mixed. i interviewed the ceo of uber.

he believes elon's leadership will stand the test of time. you have so many users who have left the platform and a number who are sticking around. we don't know yet. i will say i think the election, the presidental collection will be a huge test if twitter can stand under that kind of pressure. we have to remember he has cut staff 75%. i interviewed a bunch of former engineers for the show. you have 25% of the people working there who wants work. can twitter even stay working through a presidential election? matt: i was thinking when evan was responding. he likes interesting things but he must feel horrible so many workers at the company got the acts. -- ax. it so interesting no one has come up with a viable competitor to twitter. emily: ev says maybe we had the wrong idea. there are a lot of different companies that are trying.

there is blue sky backed by jack dorsey and mastodon. there is tiktok and instagram. what is unique about twitter is one of the engineers put it this way. it is a unique jewel where i can tweet at my congressman and they might tweet back. that's not happening on other platforms. there is a level of grief at the fact that twitter as it was is never coming back. even if it was not perfect and needed to change in it needed to innovate faster, that twitter is gone. ev compares it to myspace or yahoo!. big things like that don't just go away. it will keep going but the brand is forever changed. jon: some great insight or insight, emily. you were mentioning some of those other interviews you had. new episodes of the circuit with emily chang pair every thursday at 10:00 p.m. on bloomberg tv. you can catch it on the bloomberg cap, bloomberg.com, or listen to the companion podcast. coming up, the impact of canadian wildfires south of the border with ilion's under

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jon: this is "bloomberg markets ." heavily polluted air covering much of the eastern u.s. is likely to linger until tuesday as the impact of canadian wildfires ripples south. laura is joining us with more details. you have been asking these questions on how much more we have to be watching for. what are we hearing? laura: we hearing from new york and state officials that while conditions are improving somewhat in new york city, they are anticipating the effects of the smoke could last for several more days. i'll be at a dramatic levels that we have seen yesterday. currently, a host of events in

new york city have been canceled . things like the belmont stakes set for this weekend are touch and go. we will wait to hear if some of these major events are going to go on as planned. matt: katie greifeld, who loves to run cross-country says there was a race in central park that was canceled. there was a yankees game canceled yesterday. a lot of kids, including my daughter will not be able to go to school today because of this, or yesterday. what kind of slow down the you expect in economic activity in the new york metropolitan area? it has 10 million people. laura: it's unfortunate. it is the start of the summer outdoor event season. we have seen things from shakespeare in the park to events in prospect park in central park get canceled at a time when people should be outside enjoying. people can observe their own eyes the streets of manhattan.

they are quieter than they would normally be as activity is shut down. it's another cross for the city to bear after 70 years of slowed economic activity because of the pandemic. matt: do we blame john and the bnn team for this? jon:, on. -- come on. honestly. laura: every official who has spoken on this is talking about the increased impact of climate change on not just the city, not just the state, but the globe. the wildfires are occurring more frequently. all of these changing weather patterns are having an impact. the smoke is not just any work,. not just the northeast it is going all the way south across a lot of the united states. this is a huge impact from just these more frequent extreme weather events. matt: it is pretty unfortunate

the wildfire season starts this early and they are so dramatic. the blame canada mean is not funny anymore -- meme is not funny anymore. we cannot live in this kind of air. jon: obviously, we are also watching-- ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh ♪ ♪

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>> it is your world, jay powell. we are just living it. romaine bostick kicking you off to the close on this thursday. the assessment of policy this week. creating a bit of a rotation. today's outperformance by cyclicals. a rotation, believe it or not back into big tech. microsoft, apple, tesla leading. weekly numbers providing a boost.