all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. dani: good morning, happy tuesday. this is "bloomberg daybreak: europe." russian betrayal. president putin denounces

leaders of the wagner group in his first public comments since the aborted muni. u.s. treasury secretary will visit china early next month for economic talks. authorities take steps to prevent the yuan's assent. monetary polity -- policy in focus at the central bank form in portugal. we will bring you the big interviews through the day. a tough session yesterday, no clear catalyst, i.b. just end of the month weirdness, end of the quarter weirdness, maybe you want to sell stocks or by bonds. the sentiment is maybe sell because we are overstretched. let me show you the two-day chart. lower yesterday led by big tech. deutsche bank says we are due for a two to three per -- 2% to

5% selloff. last major selloff was march. it's near the end of the quarter so maybe it is time for that. a very choppy session yesterday into basically unchanged this morning. when it comes to treasuries, a strong bout of bond buying yesterday. it was seem to be led by europe after the weaker eco-data out of germany. there is the two-day chart. you can see that take up higher when the german data hits. not necessarily a clear catalyst so far. we are again looking at some bond selling this morning. led by the belly yesterday. let's see how asian markets are faring. that's get over to charlotte. charlotte: a mixed picture here in asia this morning, investor sentiment still cautious but slightly improving. on the equity side, the msci

asia pacific index has erased early-morning losses and posted mild gains. it advance for the first time in seven days. stocks in taiwan still losing, but hong kong and china have posted some gains. some chinese companies are breaking a five day losing streak. authorities are stepping up efforts to stop a sliding yuan, and the u.s. treasury secretary's visit improved sentiment. investors are watching if the bump can be sustained and if the central bank can dust off its playbook. the chinese premier also predicted positive outlet --

outlook for the economy today. dani: thank you for that round up. that was charlotte yang. you can get a roundup of the stories you need to know to get your day going, daybreak on your terminal. it leads with traders. -- traitors. putin says that is the leaders of the wagner group. he can did -- condemned them in a late-night speech. his first public comments since the mutiny that posed the most serious threat to his nearly quarter-century role. this also comes after wagner leader prigozhin insisted he wasn't trying to oust the government.

members of the group can go home or leave for belarus, but putin did not mention prigozhin by name. >> dear friends, i address once again all russian citizens i think you for your endurance, solidarity and patriotism. civil solidarity shows any ransom, any attempts to organize internal unrest are doomed to fail. dani: putin's comments did little to clarify the mystery around the weekend's events or the fate of prigozhin. the kremlin says he agreed to go to belarus and avoid prosecution as part of the deal to pull forces back brokered by the belarusian president. that's one side of the geopolitics story we are following. the other side is janet yellen in china. lizzy: bloomberg has learned that the u.s. treasury secretary

is planning to go to beijing in early july. it's the first time he will engage in cap -- in talks with her chinese counterpart. i'm wondering if they are laying the foundation for something more significant. a rough patch and relations last year, but a continuation of engagement ever since then. dani: this comes off the back of one can in china, other business leaders in china. i can't help but think the valerie is significant. it's a time when china is trying to give a helping hand to their economy and we just had the strongest fixing bias of the year. valerie: they want to keep foreign investment for sure. two days in a row, the pboc has said a stronger fix for the yuan , trying to cap the pace of it weakening. i don't think the market will see the weakening trend is over, but the pboc wants to slow it down. lizzy: also perhaps worrying for

investors in china, the news about social media. at a time when the investment outlook is deteriorating, china has banned a prominent finance writer from weibo -- i always want to pronounce it like it is german. this is a guy who has written best-selling books on tencent and china's economic transformation. valerie: -- dani: this guy had 4.7 million followers on the social media app and it is an app like china, as some degree it is increasingly harder for foreigners to get a clear picture. we are seeing authorities take steps to limit data access. valerie: are they trying to keep a lid on the situation, undo the crisis of confidence? will be interesting to see if they do more. dani: stocks with a big rally

today. it seems like that or the fixing has done something. lizzy: i want to bring it back to the u.s., you've seen this mass exodus from dove assuages looking for fed rate cuts. this after the fed chair said the central bank is likely to resume tightening after a pause. he told lawmakers we could see a half-point of hikes later this year. viola. the hawkish message translating to a degree. dani: i don't know why, though. this wasn't different from the post fomc, to hikes to come. doesn't feel like anything has changed. valerie: it is the theme of u.s. exceptionalism, the data still holding up in the u.s. well. the u.s. was the standout on friday, doing well. get durable goods today from the u.s., a feeder into gdp. if the fed goes into this month after month pace, they will be hiking in november and i don't

think traders will stand in the way. dani: let's get our day ahead look. we've covered the top stories. let's look at the agenda. first of all, we will get president christine lagarde, she will give a speech around 9:00 a.m., one of the top stories on daybreak. the ecb needs to hike at least one more time. we will have earnings today before the opening of the u.s. market. they have slashed 10% of their workforce. later today, it is the agm of manchester united, i will probably be asleep because i have the bedtime of grandmother, who will have one? -- won? valerie, i know you care more

about the doves versus the hawks at centro. valerie: lagarde, will she have any more surprises today? and also, will she have her scarf on? lizzy: or an owl approach. dani: it is summer, it is too hot for a scarf it [laughter] valerie and lizzy always try to read into monetary policy whether christine lagarde is wearing a scarf. thank you both for joining for this roundtable. coming up, we dive into markets. our guest joins us, some interesting, contrary calls on u.s. credit. that is next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." a new paper out from the fed over the weekend. it is showing the share of nonfinancial firms in distress is reaching a new high for the cycle. in fact, the share of firms in financial distress is higher than during most previous tightening episodes, which you see denoted by whether the line is blue or not, back to the 1970's. joining us is our guest. thank you for joining this morning, great to have you in the studio. we talk all the time about the long and lags some -- in central-bank policy. guy: we are seeing those signs. the paper you referred to is correct. i think the reality is it will get worse. i more focused on the public markets than the private markets but you're seeing crack symptoms of the private markets. i think what you will see is an

acceleration in default levels in the next 18 months and that needs to be reflected in credit spreads, which will definitely go wider the next six months. dani: i think we have that chart. that is the magic of tv, you say the data and we will show it to you. we are nowhere near pricing in a recession in the spreads, if anything, we've seen some of last year's widening, and. what is the catalyst? how we get back to recessionary levels? guy: it's difficult to put your finger exactly on what will drive spreads wider but i think we have the preconditions already. you are seeing an economic data -- we will get durable goods today, they will be reasonably weak. we are beginning to see production figures relatively weak. when we start to see negative earnings figures and other signs of decline, we will see spreads wider. it will probably be a slow grind wider over the summer and into q3, but in the fourth quarter,

we will definitely see an acceleration in terms of the widening spread. dani: is this across credit or just talking the junk? guy: old credit markets are closely correlated. so when the junk goes wider, everything else will follow suit. unlike 2022, where really in percentage terms the worst damage was done in investment grade because it was all about rates, this time it will be high-yield and i think particularly in the u.s. market spreads will lead the way. dani: investment grade is very tempting, you are in the scenario where you have credit terrorists saying look at the yield i can get, it's may be safer than part the equity market. guy: the good thing about ig is there are two parts, in terms of return, there is the spread component. where spreads will be negative the next couple of months. then there is the underlying rate component. when we get signs of stress, you will continue to see government

yields declining. you will probably still have positive total returns and something like european ig the next six months. dani: going on to the overall treasury market, jp morgan and goldman sachs seeing the depth for treasuries is starting to rebounds and concerns are easing. have you seen something similar? guy: these are the most liquid markets. there's a lot of seasonality as well in terms of liquidity. i think what's happening now is we are getting closer to the peak levels, peak interest rates. as a result, when we are at that period, you see liquidity coming back. to go back to the credit example, the more liquidity you have in government, the more it looks like an attractive outlay relative to other asset classes. other asset classes are suffering and liquidity is not as good. the flight to quality and government will the a more impressive argument. dani: historically we see a

rally before the end of the rate hike cycle, correct? guy: yes. dani: do we know it is time to start buying it? guy: a review is in the u.s. we are at the end of the rate hike cycle and in europe probably another two hikes. but even another two hikes would probably get us to something like september for the peak of the rate cycle. and as you say, markets react before. we more or less are at the end of the cycle on the right side and government bond yields will decline the next six months. dani: do we need to see data deteriorate before we make that trade? the most recent dallas fed survey showed into new labor hoarding. it is still a tight labor market. guy: the reality is there is probably in this wave going to be a difference between the labor market, which will remain relatively strong, underlying inflation, which will remain relatively strong, and weakness on the corporate side in terms of corporate profits, and some kind of production data. i think one of the problems

central banks will be dealing with and we will all be dealing with is typically the catalyst for economic weakness and what we focus on is the labor market, probably in this cycle label markets will be stronger. -- labor markets will be stronger. dani: i read another paper, i had today off so all i did was read economic papers. imf had this paper yesterday basically saying in europe, the source of inflation has largely been corporate profits. corporate profits account for nearly half of euro area inflation is what the authors wrote. they increase prices more than the spike in cost of imported energy. if that is the biggest source of inflation in europe, central-bank action, is that enough to bring that in? do we need to look toward fiscal policy? guy: this is a little bit difficult to tell. i think the idea that all of a sudden companies have become greedy and they are fueling

inflation -- and they've never fueled inflation before and never raised prices as much as they could before, that's probably a little difficult to believe. but i think companies have been very lucky in terms of being in the sweet spot, and terms of being able to raise their prices, take advantage of the fact there was a lot of pent up demand and pent up savings that consumers could use. and probably yes, companies have been taking a little advantage. now i think when we look forward, the company's -- they are getting much more of a squeeze. labor costs will be rising, they're dealing with the reset and higher level of commodity prices and they will probably find their pricing power is weaker going forward. in a sense, these things are cyclical. i don't think we need other physical pressure. we don't need a fiscal response and the monetary response is there. you will see the profits

squeezed i think going forward. dani: when you look at last week, for example, a chemical company having very bad earnings, does that say something about cyclical companies and corporate's ability. chemicals are used in everything. guy: it's true that chemicals have suffered particular pricing problems since the fourth quarter of last year. i would say definitely in terms of the whole cyclical sector you have to be more worried. industrial companies, building materials, phasic materials, these kind of high cyclicals where energy costs are an important component. the weakness of the economy will definitely affect these areas. i think that will be the epicenter of the problems we face in credit markets as well the next six months. dani: should i be hiding out in cash right now? do i just want to pick up some t-bills and hide in the yield? guy: i think the government market will be the best performers in the fixed income market over the next six months. i think there are some areas of credit that will do reasonably

well. low cyclicals, things like utilities, senior bank debt, these are areas i think there will be relatively good value. but the defensive mindset will be the right way to play it the next six months. i think the u.k. is tricky, because one of the words we will talk more and more about the next six month will be stagflation. higher levels of underlying inflation and central bank's are having to fight to bring it down, very weak economic growth. unfortunately i think the u.k. is at the epicenter of that and you can be read about sterling as a result. it has been weak, something people love to be up, the headwinds for the currency are very tough. i think that feeds through into generally u.k. assets and it is an area i would avoid. dani: there's been a lot said, the u.k. looks like an emerging market because you have the weaker currency and higher

yield, and some of that is probably unfair. i do wonder if it does make sense to hike aggressively in order to bring strength back into sterling like emerging markets do come up because they don't want to get in a spiral. is that an option the boe should consider? guy: the boe has been pretty aggressive. in one of the charts i think you were showing earlier, the central bank had hiked rates the second-most in the cycle and i think they will continue to need to be aggressive. the question for me is more, as you say, with emerging markets, what typically dictates is the need to defend the currency. are we at that stage in the u.k.? could be potentially? maybe. i think it's the kind of dynamic between interest rates and the currency that will drive the central-bank decisions. and i think it will be tough. i think we will continue to see the bank of england being very tough. dani: guy, thank you so much.

i want to quickly bring you some lines from the ecb, speaking to reuters, saying he sees rate hikes past july but then cuts when inflation under shoots the 2% target. obviously there are -- they are a ways away from that. the forecast doesn't show we will be getting to 2% anytime soon. don't miss our interview from the banking forum at 8:30 a.m. u.k. time. coming up, credit suisse has been fined $900,000 for alleged rule breaking. more on that next. this is bloomberg. ♪

>> some in the west are hyping up the so-called reducing

dependencies and the risking. these two concepts i would say are forced propositions. governments and relevant decisions should not overreach themselves. still less, overstretch the concept of risk or turn it into an ideological tool. we should oppose the politicization of economic issues and work together to keep global industrial supply chains stable, smooth and secure. without peace, nothing can be achieved. this is a hard lesson humanity has learned from history. dani: that was the chinese premier speaking at the world economic forum. opposing de-risking by the west. let's get to some of our top banking stories. credit suisse is to pay a $900,000 fine, peanuts for them,

but still, to settle allegations that he reported debt trades late and missed key indicators to hundreds of thousands of transactions. the u.s. regulators set the banks brokerage in the u.s. reported about 9000 trades late during a 7.5 year period up to march this year. credit suisse, which is now part of ubs, did not admit or deny the findings and declined to comment. elsewhere, bloomberg has learned that goldman sachs plans to add a company veteran to its board. he is very close with david solomon, so maybe a signal that the ceo is shoring up support to quash speculation on his immediate future after five years at the top of the bank. for all of these banks, it's always the succession question we are talking about. a little more of an indicator as to what solomon is planning going forward, and that is more support. coming up, russian president

vladimir putin blasts the wagner group as traitors. still don't have full details on the mystery over the weekend but we will discuss the state of play in moscow next. don't miss out on our conversation with the central bank governors of several countries from the annual forum, a chance for the ecb to iron out differences. christine lagarde will give a welcoming speech at 9:00 a.m. u.k. time. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating

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dani: good morning, welcome back to "bloomberg daybreak: europe." we are just days away from the end of the month, the end of the quarter.

the market action is weird, and of quarter-ness. yesterday, equities selling off pretty substantially, more than 1%. tech was hit even harder. perking up this morning. futures up about one third of 1%. but still, we are getting beat up. deutsche bank says a modest 3% to 5% selloff is overdue. it's been three months since the last meaningful drop in march. do we need a catalyst or do we fade this equity rally into the end of the month? in treasuries, rally yesterday led to the belly of the curve after some week data seemed to spur some bond buying yesterday. guy was just telling us we are near the end of the rate hike cycle for the fed and that's when we usually see a rally, but what will the catalyst be for the rally? that's not clear. elsewhere, china setting the strongest fix for the yuan

versus expectations for the year, maybe 725 is in the line in the sand but the speed at which china was closed for the holiday. what you get when the onshore reopened? substantial weakening that china stepped in and again, the strongest bias of the year. let's get to some other top stories we are tracking. russia being the top one. vladimir putin has condemned the wagner mercenary group as traitors. overnight he made the first comment since so threat to his rule. >> i address once again all russian citizens. i thank you for your endurance, solidarity and patriotism. civil solidarity showed that any ransom, any attempts to organize internal unrest, are doomed to fail. dani: those comments came after

wagner leader yevgeny prigozhin broke his science, insisting he wasn't trying to oust government. joining us is our europe correspondent, maria tadeo. what stood out in the comments? maria: if you look at the speech, the main message is the crisis is over, that russia has crushed this rebellion. is the crisis really over? we have to wait and see. when you read between the lines, three big takeaways one is a thank you to the russian people. vladimir putin spent a huge amount of time on in that speech -- time in that speech saying the russian people spent a lot of time on patriotism. but it is difficult to tell what the russian people think, what they like and dislike, because the state has a such a tight grip on public opinion. he also said that wagner and the members of it who decided not to

continue the march to moscow could now either go home, go to belarus or join the russian army. a lot of the experts i spoke to said vladimir putin just dismantled wagner and that's what it means if you read between the lines. when it comes to the war in ukraine, not a lot has changed. vladimir putin continued to say this was almost an existential war for russian now. when it comes to ukrainian government, repeating the idea that this is a nazi government that operates in ukraine. dani: you said it, it is hard to get a read of public opinion in russia. people who make comments like prigozhin did, maybe you wouldn't hear much about them. we have heard from him, what we know about his fate right now? maria: he put out yesterday an audio message on the telegram channel he uses. it was 11 minutes long. he said he wanted to clarify some aspects of what happened on

saturday. repeating this idea that he was not marching to moscow to overthrow anyone, he just wanted to show what he described as a march of justice. the work wagner had been doing on the ground at times undermined by the russian ministry of defense. the reality is we still don't know the fate of prigozhin. vladimir putin did not mention him by name but he said the rebellion would be brought to justice. there was no deal -- on saturday it was said that the president of belarus had rokita deal, but putin said there was no deal, there would be brought to justice. also where is prigozhin? that is a question. dani: thank you, maria. our europe correspondent. elsewhere in europe, attention turns to monetary policy because in ecb councilmember is

reportedly said that while inflation is coming down, he believes at least one more rate hike is needed. after a pause from the fed and a 50 basis point hike from the boe, top central bankers and policymakers are gathering in portugal today for the annual ecb forum on central banks. also there is francine lacqua. how unsure are officials at this moment about how much more they need to hike? francine: good morning. this is the main question, it's what central banks are trying to grapple with around the world. do they stop, and trying to assess the hikes they've done so far, or power on to make sure core inflation is under control? if you look at the ecb, they are split, it will be good for policymakers to have some face time. also jay powell of the fed is

here and andrew bailey from the boe will be here. if you look at core inflation, it is the one concern they have. it's not really going down as much as the underlying inflation, which could have peaked. the question is, and this is extremely important to keep in mind, in the left 12 months, the ecb has managed to raise interest rates 400 basis points since they assembled last time. the world has changed. if you look at the lighting effect, do they need to stop or do more? we heard from the first deputy managing director, she opened the dinner last night and the question for her is it you have to keep on going if inflation is a bigger threat. if we have financial stability, we need to put our houses in order. dani: i've got to imagine the central banker with the most trouble on his hands has got to be andrew bailey from the boe. how difficult is his prospects?

i would love to be a fly on the wall with the conversations he will be having there. francine: i think you are probably right, when you look at underlying inflation. really the shock figure we had that led to the shock decision of the faces -- 50 basis point hike last week. bloomberg economics are clear that he had no choice but to hike i 50 basis point last week. also just to show the markets they are and top of it. if you look at the way forward, what is crucial, this is something the deputy managing director of the put very clearly, we need to see monetary and fiscal policy in tandem. it's no good if fiscal policy pushes inflation up and monetary policy trying to do the rest. we will see the kind of conversations, and also jay powell, it's hard to pull away from the gravitational pull of the fed. we have the new take of japan governor here as well. dani: really looking for to those conversations. francine lacqua at the ecb

forum. she will bring us some of the top interviews through the week. bloomberg has learned that the u.s. treasury secretary's planning to visit beijing in early july. it's the first time she will engage in talks with her chinese counterpart, a longtime confidant of president xi. elsewhere in china, at a time when the investment a look is deteriorating, china has banned a prominent finance writer from weibo for commenting on the unemployment rate. this author had books on tencent in china's economic growth. in africa, in line with much of the world, kenya has hiked its interest rate, raising by the most in eight years. let's talk africa central banks. joining me is our africa

correspondent, who probably has just as many airline miles as some of those folks in portugal. great to have you on the set. tell us more about the interest rate hike. jen: it was surprising for a lot of people watching the new central bank governor come out. he has only been in office for a week at this point, and not only did he call a surprise meeting, but he hike to the key interest rate to the most since 2015. from 9.5% to 10.5%. what he said in his statements was this was mainly to anchor inflation expectations. what we've seen in the canyon economy the past few months is inflation has really accelerated. consumer prices accelerated more than expected, to 8%. not only that, but the kenyan president has announced his new budget for the next year, starting in july. a lot of the new budget will be coming from taxes. kenyan consumers are not only facing increased taxes on things like sugar and fuel, but now

they will also face price pressures. this was surprising to see from him. it sort of sets the tone for potentially what will be next during his term, that he will have a presser this morning so there's a lot to pay attention to. dani: elsewhere on the continent, and election in sierra leone, they extended pulling time. why? jen: it started over the weekend on saturday, and at this point, what the polls are indicating is the current president is leading. only 50 physics -- only 50% of the vote had been counted but he has a particular -- a pretty clear lead. at this point, a lot of concern over the transparency of this vote. a little unrest over the weekend , as we've seen with some elections across the continent. but he has faced a difficult time throughout his tenure, his

administration. citizens have faced cost-of-living pressure, there's been high debt and unemployment. 60% of the population live in poverty. there's been a lot of frustration with the current administration. but as you mentioned, there's been new tallying. we are watching out, but at this point the indications of the current president is leading. dani: thank you very much, jen. our africa correspondent. coming up, how vulnerable is the u.k. real estate market as the boe doubles down on rate hikes? we will talk all things real estate with ric lewis, who joins us next. this is bloomberg. ♪

dani: bloomberg economics have released their latest u.k.

forecast and expect the economy to tip into recession this winter. joining us for more is lizzy burden. we had thursday's boe jumbo rate hike and we are already starting to see predictions for what this means for the economy. lizzy: that's right, bloomberg economics has changed its call on the back of this more aggressive tightening. we already saw some of it on thursday bit more is expected in the pipeline. bloomberg economics says the inflation in the u.k. isn't going to get back to the 2% target until early 2025. they penciled a shallow recession thanks to the fact that the impact to monetary tightening has been modest, but they say that's the best case scenario. not what you want if you are rishi sunak, the prime minister, who has made it one of his top five pledges to grow the economy this year. this also has a real world impact for ordinary britons with the housing market and interest rates.

only 5% of privately rented properties are affordable to people on housing benefits come up a drop from 23% during the pandemic and does not include utility bills. even more pressure on rishi sunak to extend benefits to people struggling in the cost-of-living crisis. dani: thank you very much, lizzy burden is our u.k. correspondent. let's talk more about the real estate picture. joining us is ric lewis from kristin capital partners. great to have you in the studio, thank you for joining. lizzy was mentioning economic concerns in the u.k., the fact that bloomberg economics thinks they will go into recession, some housing issues and affordability. how are you thinking about investing in this country right now? ric: i think there have been challenges a while. we think about it, sometimes people liken being in the u.k. and real estate to a roller coaster -- great highs and great lows.

most of the time you are seated with a bunch of people waving your hands and screaming to spare and delight. i think most of the challenges we've internalized, we know how to market is and how the economy is going to if you compare it to the u.s., which we should touch on in a minute my asian markets, a relative ok balance. i'm not deep and strong on where the u.k.'s going but we can handle it. rents are rising, probably because we've been through so many market setbacks in talks. you look at covid, inflation, the u.k. budget reset, the war and conflict in ukraine. we never got to above trend growth so we kind of normalized that into the market place and that's how we are pricing right now. dani: how much bifurcation are we seeing in the u.k.? hsbc moving out of canary wharf, looking to downsize in a smaller office. is there a difference between the haves and have-nots? ric: while i've said the market

is not bad in terms of baseline fundamentals there will still be winners, and how do i put this diplomatically? lesser winners in the marketplace. dani: i like that they are not losers. [laughter] ric: just trying to be polite. i think the problem is there are still locations that perhaps aren't future proof, not in the right place, the economic activity is not there. i have to pick on somebody, when you compare it to canary wharf and mayfair, you won't find any less vacancy and vibrancy than the west end, but that is not the case in other parts of the market. dani: you also mentioned the difference between what is happening in the u.s. and i want to get to that. you look at blackstone, for example. their u.s. office exposure is less than 2% of the exposure, it was something like 60% in 2007. how much pain on your expecting

in commercial real estate in the u.s.? ric: it depends on whether i believe the headlines. i think we are only getting now to realize the scale of the problem. if you look at it, people say it is a tenure problem ahead and i don't believe that. i think cycles become faster and sharper, and i think 10 years is 5, 5 is one and one is tomorrow. but there is a problem in the markets in the u.s. what i worry about and we talk about all the time, office has become the o word, it's become an expletive. what i worry is r will become -- is real estate will become an expletive. we know we have a problem and it has to be sorted out in the markets. it could be the risk appetite moves to risk off just at the time when the market opportunity will be the greatest and we won't have a clearing mechanism and will be struck.

dani: is that related to the doom loop that people feared? that things deteriorate, if it goes from office property real estate as a whole? ric: i think it is a problem. there's a big problem capital markets, inc. some have the wherewithal or appetite to solve it. it's been estimated there is 1.4 trillion debts in the u.s., about 50 to $20 billion of drive powder. we have to have risk on by somebody, banks have had a day in the sun with higher interest rates and above trend profits, they don't have the temerity to handle the problem. but you are right, there could be a doom loop. dani: how much do private market step in? i know you just finalized. ric: it will take investors and

cios to understand this is maybe one of the best traits coming out. there is huge opportunity in the private market, absolutely. you don't have the capacity to solve the problem ahead of us and i think there will be a big opportunity, maybe not just now but coming. it is now but it will get better. you can get equity like returns and debt risk. dani: if you have to -- if it means you have to sit through some of the volatility, what do you then do with your portfolio companies? do you have to be more lenient and not just hand in the keys when things get rough? again, if it is just a patch of some of those concerns. ric: my biggest concerns capital markets, we talked about if the markets go risk off at the time displacement is growing and it's the biggest opportunity for windfall returns. i think what we will need is the biggest players in our industry, we politely and lovingly call them the death star managers.

you all know who you are. they will have to show us that you can handle your portfolio problems and still focus on opportunity. they have enough capital and dry powder just like we do but you have to do both and you have to convince your client and your client base and cios that you can't go risk off just when the opportunity is getting better even though you're looking over your shoulder and seeing significant portfolio problems. dani: i have a feeling one of those might start with a p. ric, a pleasure to have you on. plenty more head on "daybreak: europe." this is bloomberg. ♪ i need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right?

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dani: welcome back to "bloomberg daybreak: europe." let's bring on our coanchor tom

mackenzie to look at the next couple of hours on his show. concentration on the geopolitics and china. tom: the headline is we have a new show, markets today, with granular insights on markets for mark cudmore and the smart savanna edwards and myself. dani: don't down sell yourself. tom: hopefully i bring a little charm. we will get more analysis on what is happening in china. the announcement the will be more support for the domestic economy. we've heard this before, investors want to see the rubber hit the road. they want details. we will be speaking to someone who says if you want to get exposure to china, one way is via ferrari. dani: maybe that's how i justify buying my next car, just trying to get exposure to china. you will have some great guests, among them, alan higgins. tom: he has got a bold car --

call. overweight equities, he says there's likely to be a recession, he doesn't think it will be deep, but he says to really undermine equities at this point, you have to see rates at 8% or above. he's got a constructive view on equities, we will get the analysis as to why that is his case for staying exposed to stocks. do you want to really turn a blind eye to the banker? dani: probably not. we will also hear from martin because x from cintra, the ecb trying to smooth over differences. tom: it's always a fascinating summit, the big bankers gathered, and the ecb, when it comes to inflation, to what extent will that inform their view? softer than expected pmi last week, does that give more ammunition to the doves? we know how he did that is amongst the governors. francine will be on the ground

with the latvian governor. one of the hawks, will he continue to push the hawkish message? will they be hikes -- there be hikes past july? that will be live on the show. dani: really looking forward to that and the debut of the markets today program. that is tom mackenzie. don't miss those conversations with central bank governors, from portugal, and of course president christine lagarde. this is bloomberg. ♪

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>> this is bloomberg markets today i am anna edwards live in london. our market slide managing editor joining us from singapore to take us through all of the market