jonathan: this is bloomberg surveillance on tv and radio. >> welcome to balance of power. >> this is bloomberg. >> welcome. sonali: let's get a quick check on markets. another green day. we are seeing a cooling of rates and an s&p 500 up. 10 year yield 4.1 1, 89 basis points decline. and oil is finally breaking 80. that is a 1.2 rise on the day. and a lot of green on the screen, some conflicting views in terms of eco-data.

but certainly a little green is welcome in a sad august. amber: nvidia hitting a fresh all-time high, helping to drive some of that. shares of apple rallying. mark your calendars, september 12, they are coming out with the iphone 15. seasonally, this is a stock that tends to drip -- trade out. we will see if that trend holds. i am also watching a bunch of stocks exposed to cryptocurrencies. risko getting a win in court. it is a win for bitcoin but also for some of is the companies that hold bitcoin assets. sonali: wall street closely watching news out of washington, d.c., where there is a proposal to reduce oversight of midsized lenders, requiring them to be better prepared for potential failures. we are bringing in anything dean , who has been analyzing --

nathan dean. your colleagues expected a significant wave of issuance from the biggest of the banks to begin with -- midsized banks to begin with. that you are seeing expectations cool just a bit. what changed from the posturing from the fdic from weeks ago to now? nathan: this rule is less onerous on what regulators had put out. it was voted upon 5-0. it is a bipartisan proposal. what changed is the definition of long-term debt. this proposal requires -- what was originally anticipated is they would have to issue total loss absorbing capacity debt. that is something that the big banks already have to do. if you were to take that rule and apply it to angst was $100 billion in assets, you would be

looking at 150 billion dollars in terms of a shortfall. because it is only long-term debt and not t that, that short form will be much less. given the bipartisan nature, the less onerous regulations and so forth, this rule is certainly not the scary headline that it could have been that people were anticipating weeks ago. amber: and it does not suggest any new fears beyond what we already went through in march. nathan: absolutely. a second proposal came out at the same time it has to do with resolution plans. if you are in compliance, you will need to pay attention to that, but when it comes to regional banks, there are two proposals that need to be thought about. that includes the basel three endgame, essentially a recalibration risk weighting of assets. that will make requirements go up, but a combination of the basel three proposal, this new proposal that requires banks to

issue long-term debt, regulators have taken steps to ensure that regional banks are not at systemic risk. once implementation of these rules go up, regional banks will be stronger. sonali: that is nathan dean. thank you. we are now going to bring in mike mayo, wells fargo head of the u.s. large-cap banks. you have been writing extensively about all the new rules. now you have the fdic on top of that. what does this mean for the divergence between midsized banks have not seen these types of rules, compared to the biggest of the big, which already have the buffers to whether this kind of a storm? mike: if there is one conclusion from what is taking place this year, it is that goliath is winning. the largest, most heavily regulated banks about performed. there are more resilient, have more capital, more oversight,

stress tests. this is completely different than the prior 50 years. the performance of big banks has been much stronger than expected. that is in contrast to many of the regional banks, which are now going to have more big bank supervision. having said that, i am amazed. this is my fourth decade in analyzing banks. how much change is going to take with the largest banks. for the last decade, you have had the stress test, doubled capital, increased the liquidity. the big banks came to support the economy during the pandemic. job well done. thank you, regulators. i thought mission accomplishment then you have basel three endgame parent lookout. starting the week of september 11, it is conference season on wall street. banks will say what does that mean? it means much more complexity, much more competition on an uneven playing field, and much more cyclicality, procyclical's.

get ready for a punch in the stomach when it comes to some of the reveals about the basel three and endgame depth. sonali: we know that banks will try to fight these rules but at the end of the day, they will have to stomach some of these rules. what is the math? who gets it most -- gets hit the most in terms of increased regulation? issuing more debt, potentially higher. there are so many potential costs embedded in all of these changes. mike: as an independent bank analyst, i see this as a real debate between the banking industry and the regulators. the regulators are rightfully on course to ensure a resilient banking system. when you look at the history of the last 50 years, the bank industry is correct in saying look at the last 10 years. loan losses are at half of the prior level.

there are three categories of risk. credit risk is not so much different, but the market risk and operational risk, some of those changes already had scratch. i cannot wait to hear what the banks say publicly about the math behind it. i do not think the yanks completely knew the math until he worked their way through this. amber: you have highlighted the disparate performance between the big guys in the regionals, but even though large-cap banks have rolled over, you've seen in bank of america and j.p. morgan, what is going on there? are you doing this as an opportunity? mike: it is remarkable. look at the $6 trillion investment grade credit market. on that basis, the largest banks have credit spreads that are much safer than the regional banks. they have not changed a lot since silicon valley.

credit markets are saying banks are strong and resilient. it results in the second quarter, remember when banks got increased guidance from the stocks, up 10%? i would say bank stocks are potentially on the upside. anything good news. you have had the 3rs is the issue for the banks. one is rates. interest rates. we are at the tail end of that. the second are -- "r" would be recession. that looks out the table for now. regulation is the other. it will be more clear sailing for these large banks. you mention citigroup. i cannot find my stocks are $41. amber: is it rotation? concern that even if you are wrong about a soft landing and it is harder, these are difficult stocks to get? mike: i think bank stocks are

priced for a kitchen sink, priced for a recession, price for raising interest margins, price per regulation taking a big tall, price for all these things at the same time. so long as all those things do not happen, we see upside here. this is the so, end of the summer neglected space. it is not like there is big holes. i was on your show in 2007-2008. citigroup paid 200 $50 billion of cdo's. but value got hammered. we do not have something like that now. credit has been stronger for longer. this is definitely an opportunity in the short term to look out for the big reveals coming mid september about the impact of basel three and endgame. but as bloomberg reported today, at least as that relates to

regional banks, extra regulations are not as bad as many had thought. sonali: switching gears to goldman, they are getting out of that united capital business. we also reported that that green scale is entering the home stretch. they are working on their best final offers and have sold this market loans. you look over at jeffrey's and they say that goldman is getting closer to being a more durable and profitable business. are you sold that the job is closer to done for david solomon and john walter? mike: over the last six or seven years, goldman sachs has gone from wall street for straight. ash main street. i never thought that was a good idea. they have lost $3 billion and now david solomon wants to go back to their heritage.

the sale of almost all of united capital announced yesterday the potential sale of green sky, which show that goldman is becoming more got wall street bank, which is been strong for over 150 years. sonali: can they declare victory now? do they have a while to go before the street can be convinced their job is done? mike: i do not think this is a matter of declaring victory. it is about containing losses and containing the degree to which they got sidetracked from their core businesses about global markets and banking, where they have been in investment mergers for the last 20 years and then wealth and asset management. everything else is minor. this is about putting those extracurricular activities off to the site. as we get ready to go back to school, reading, writing, arithmetic or what goldman does best. sonali: banks under $100 billion

in assets, is that the trade given they will not see these new regulations? mike: my colleague jared shaw says, "whew. missed that one." there are opportunities for's below that $100 million threshold. sonali: coming up, we look at shares of best buy. they are rising as the company sees a potential sales turnaround. this is bloomberg. ♪ - [mo] if you're thinking about going o , this is for you. ♪ - i ended up spending less money my entire time at snhu than i did in just one year at my other university. - [juan] my time at snhu has given me more confidence. now i can go for that promotion. - if you're ready to go back to school... you can do it. southern new hampshire university has changed my life.

and it can change yours too. ♪ - [announcer] visit snhu.edu.

let innovation refunds help with your erc tax refund so you can improve your business however you see fit. rosie used part of her refund

to build an outdoor patio. clink! dr. marshall used part of his refund to give his practice a facelift. emily used part of her refund to buy... i run a wax museum. let innovation refunds help you get started on your erc tax refund. stop waiting. go to innovationrefunds.com you really got the brows. was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com sonali: -- amber: this is

bloomberg markets. -- sonali: here to come -- talk about this is anthony. he has a by rate with a price target of $110 a share. today, we stand at $78. andrew: to get to $110, you

would have to see and entrance. best buy has been negative for the past several quarters. a lot of that was pandemic driven demand. and inflation is high, but we did see sequential improvement in topline trends in the second quarter. and we expect to see more in the third quarter and it makes the growth in the fourth quarter. if we start to see that growth again, that is what gets the stock from $78 to $110. amber: what is the story of best buy? there was a big surge during the pandemic. why own it here? andrew: it comes down to a few different things. first, we did see demand pull forward. some point, these products, there is a natural life of these products. you will see a lot of those products that will need to be

replaced. the second thing is, regardless of what is going on at any given time, best buy is the long remaining, national dedicated not -- electronics detailer. radioshack and circuit city are gone. this is a privileged position. it is an incredibly well-managed company. it pays the dividend, buys back stock. and the dividend has a nearly 5% yield. what you are really buying is a fact that at some point, it could be next year, you will see a normalization of consumer electronics. that will be good for best buy. sonali: what is the risk here? even though you see them increasing, adjusting, they did say that laptop tv sales were flat. they did say that there is slight pressure from credit losses. what is the risk? the consumer turns further.

andrew: i am not an economist. but clearly if the macroeconomic environment gets worse, that would be a negative for best buy, given the fact that they sell high ticket discretionary items. but that is the most significant risk i see for best buy. that is -- has more than discounted stock prices. amber: cucumber a lot of retailers, many that have reported over the last week or two. a lot are complaining about shrink and theft. is any problem at best buy? or are things too big to steal? andrew: it comes down to that. these items are too big to steal. cannot doing smash and grab -- cannot do a smash and grab.

that was definitely a positive. best buy is not having anything close to the shrink issues plaguing a number of retailers that i covered. amber: how are you dealing with the issue of shrink? it is a tough one to model, but it is showing up in the bottom line. andrew: absolutely. to be clear, shrink is not new. it is the cost of doing business in retail, but we have seen this increase since the pandemic. we have spoken to some industry contacts. a lot of it has to do with a lack of consequences. in other words, a lot of these retailers are telling their stores if you see somebody stealing stuff, do not confront them. do not try to manhandle them. more more importantly, even when people are being caught, law enforcement is not doing much to prosecute them. until we see consequences of

shrink, it is tough to see how it comes down to it. everything retailers can do if they can put in shrink prevention method -- measures, whether that is putting products in market cases, the problem is beckoned negatively impact the customer experience of the vast majority of your customers who will genuinely buy the product. sonali: between the fundamentals put forward as well as the idea that you cannot steal tds easily, there are reasons that best buy is rising, but who is winning the quarter? andrew: is a great question. to some extent, best buy won the quarter. we have seen a very choppy result by a number of retailers. in some cases, we saw retailers

that missed numbers. in some cases the stop still went down even though they numbers. these are more solid. a few of the retailers are still reporting -- i think all these bargain outlet was slightly a winner. we will see good numbers from them, but it has been a choppy quarter. sonali: thanks. hurricane idalia is gathering force in it lance -- in advance of making landfall on florida. it could cause widespread power outages. the details next. this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes 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. sonali: this is bloomberg

markets. now it is time for today's for what it's worth. $15 million, that is the damage that hurricane idalia could bring as it barrels towards the gulf coast. as it swirls above warmer temperatures, it could become a category three hurricane the time it makes landfall. officials are warning it could produce storm surges of 10 to 15 feet. we will also watch how commodities could be affected -- oil and gorges. as of now, it is expected to stay away from offshore oil and gas sure production, as well as orange groves. sonali: we did see that estimate for losses increase over the last day to $15 million. flights canceled in tampa. rain spreading through wednesday through four about. unclear how much it will hit those cities. this is bloomberg.

♪ thanks to avalara, we can calculate >> talks up, yields down, live sales tax automatically. avalarahhhhhh what if tax rates change? 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

from studio to abenberg headquarters in new york. sonali: we are kicking you off to the closing bell in the u.s. stocks are well in the green. bigger rise on the s&p then we have seen in the last couple of days. 1.2% higher. nasdaq, almost 1.9% gain. 10 year yields cooling. almost a nine basis point