♪ jon: welcome to bloomberg markets. sonali: let's get a quick check on the markets. we are back in the green today. the s&p 500 and the nasdaq 100 both up more than 0.2%. they've been flirting with gains and losses all day long and the two year yield has been a stunning move after the strong jobs print and the strong consumer sentiment report. a 12 basis point move higher in the two year yield. it's standing below 4.72 on the day which is the biggest jump in months.

we are back above $70 in crude oil. up more than 2.3% on the day, what a round-trip we've had on oil prices just this week. jon: and ultimately a tough week for crude. a big positive mood today. sometimes on mondays, we are talking about deals and here we are in a friday talking that a deal involving honeywell and carrier. the new honeywell ceo getting to work, the biggest transition we've seen in eight years. carrier rallying on the news and honeywell shares are under pressure to the tune of almost 1.5%. there were earnings overnight from lululemon, a company that has a canadian connection but trades in new york and is -- and initially, investors weren't sure about the guidance but they change their tune and they continued to buy into the story. the stock has been trading at an all-time high. we've got some wall street

chatter with analyst commentary on u.s. bancorp. the piper sandler analyst who covers that bank looked at the credit picture based on update from the company and felt good about it. the target price is around $44 in the stock is up 1.5% today. sonali: republican u.s. senator j.d. vance and democratic senator elizabeth warren are seeking information about the fbi see's sale process when it came to the sale to jp morgan. let's discuss this with hermann chan. what is the most concerning thing about this process where you don't see the republican and democrats getting along on much. >> the issue is that the fbi see -- fdic helped usher in the

sales of first republic and there was a $13 billion loss for that sale. we have to remember that the fdi is trying toc to create a least cost scenario. . they thought the $13 billion loss was the best possible solution for that sale. there were potentially other bidders. we heard from sources that things like pnc and other regional were bidding which could have been potentially better suitors to lessen the systemic risk that jp morgan was able to create. jon: do we have to factor in the time? we were trying to determine what was going to happen. in this letter, there is talk about the spread on what ultimately the deal price ended up being. in real time, when there is worry in the air, do you have to

factor that in as well? >> that's a concern that the fdic probably undertook. the bidders with the regional banks, maybe some of the regionals did not take all of the assets and liabilities of first republic so that has something to do with it potentially. and the structure of the bids may also have had something to do with it. they have been reported to have partnered with private equity and asset managers in conjunction with that bid. it may have created a more complex transaction which may be the fdic was not that attracted to. sonali: we thank you so much for your time. we will bring in another big voice to discuss the banking industry with the former fdic chair sheila bair. something that's been fascinating about what's happening in congress is you have both democrats and republicans frustrated with the

fdic and the federal reserve. is the focus shifting so much on the regulators that it's almost leaving the big banks? >> that's a good question. the figures last spring, those were badly managed banks and the responsibility rests with the management of those banks. that said, many things have been done since then and it clearly shows there is opportunity for improvement in the supervisory process at the fed and the fdic. some of those issues i don't think i been addressed very well. this needs to be front and center. the supervisory process is problematic so when regulators see problems, they are not empowered to act quickly. there are layers of approvals. some of the metrics the examiners use that are set by regulation or by guidance,

liquidity ratios, capital ratios, they don't really work as early warning systems when you have a rising interest rate environment. when interest rates go up, even safe security's like government issued securities, their market value goes down. these metrics so basically treat the securities as underwater securities as risk-free. all of that needs to be fixed. i hope they are in the process of fixing that but those are some of what i thought were some pretty clear problems that emerged as a result of the spring banking failures. they need to be top priorities now. sonali: let's listen to the citigroup ceo speaking to congress this week. this time around, it was more of what the banks had to say to the lawmakers. >> most likely result of increasing the cost of banks to offer a variety of products is that it would move more activity into the less regulated nonbank sector which carries its own risk for consumers and the

stability of the financial system. it would also diminish our industry's ability to compete internationally especially with their european counterparts. sonali: they fought so hard but do you agree? >> they are upset about the so-called basel three that would raise capital for larger banks. they don't really raise capital on landing. it's more on operational risk and market risk. they are really fighting hard against these rules. i would agree with her that there needs to be a more holistic view of the regulatory community about the risk in the bank sector. a lot of credit is flowing into private credit funds. they are not subject to the same level of capital regulation and they are not as transparent. we don't know what the risks look like in the nonbank sector and you need a hollis to approach. i don't think the answer is to

deregulate the banks. you should give them the same standards as these private funds but i think the private funds need more transparency and i think you do that with banks that have lots of relationships with the nonbank sector. they should know more about these private funds or their financial condition. they rely on these big banks for credit lines, there are derivative counterparties and a lot of interactions where the regulated banks should be asking for more information and getting a better sense of what's going on in the nonbank sector and they should have more restrictions. just regulating the banks with capital requirements without dealing with the nonbank sector, that doesn't do anybody any good. you have the same amount of risk just in places that are less transparent. that needs greater attention and

she is right on that. jon: speaking of risk, we spend time trying to determine where the economy is headed from here. david solomon in his comments this week talked about the balancing act when it comes to capital requirements versus what ultimately helps or hurts the economy. let's listen to what he had to say. >> you will always have debates on the margin as to whether there are things we can do that can strangle the system. like a wholesale increase of 25% capital from the largest banks with lots of individual provisions that affect different activities i think is ultimately punitive to economic growth. it doesn't strike the right cross benefit analysis jon: building on your previous comments, having a conversation around regulation which is important, should we have it at a time when there is economic uncertainty? >> i would agree. i don't think the basel iii and

game should be the endgame. we've got distressed commercial real estate and could have a recession next year. i agree regulators should work with banks now. those are the top or a ortiz. -- those are the top priorities. there is a lot of merit in these new rules. they will get done over time but it's important to understand these new proposals stem from the great financial crisis. they've been in the process for 14 years and it's taken this long for regulators to get agreement on issues that occurred in the 2008 financial crisis. even though they have merit, if we waited this long, we can wait a little longer. interest rate risk management should be front and center and risk of recession. sonali: you mentioned about the private credit industry and the idea that regulation potential risks unseen, how useful is a

system that banks are stepping back from when it comes to low income, rural, low income areas? do these new companies truly serve the american economy like the banks you are used to? >> there is a mixed answer to that. there is research that shows that fintech lenders to expand access to credit. it's not economic for many regulated banks, especially rural communities. the ability to apply online sometimes in partnership with banks has improved access. more generally, they don't have the same sense of regulation they don't have that same high tension customer relation that regulate banks have. i worry about the small and beatty -- a medium-size business lending. i'm glad we need multiple sources of credit and i like diversity but i don't like a

quick capital arbitrage. . i don't think these nonbanks have the same commitment. it's more expensive, there is no doubt about that and they don't have the same customer relationship. when the borrower gets into trouble, they won't be able to work it out and deal with that customer. there is a lot of merit when keeping this credit mediation in banks and a lot are going into nonbanks and that's an area of concern. sonali: that was sheila bair and she's the author of money tales, a book series about inflation and the risks of speculation. you gotta teach the kids young about the risks they will see in the financial system. thank you for your time. we will watch shares impairment because they are soaring on a report of outsider interest in the company. those details are up next. this is bloomberg. ♪

jon: this is bloomberg markets. time now for our stock of the hour. we are seeing a double-digit percentage gain in shares of paramount global today. there is m&a buzz in the air after report that people are eyeing the company. wells fargo is betting that possibly larry ellison would want this primarily for the film studio since sky dances a long time partner of paramount. as we saw these headlines today, i thought about one of your recent reports in the future of hollywood. that would be the most

interesting part to me if there was a deal, what would it say about paramount in the netflix world? >> it's been one of the primary parlor games in hollywood for the past year, what will happen to paramount? everyone believes there needs to be more consolidation in the industry as everyone makes the difficult switch from cable and satellite to the streaming era. paramount which is paramount+ and pluto on the streaming side continues to lose huge amounts of money. at some point, there is the belief that sherry redstone will have to tap out and sell to somebody. the speculation has been who is the most likely buyer. sonali: you have these reports, why would they want paramount in the first place and is there something private capital could do for them? >> there are still great assets as part of paramount global, primarily the film and tv

studio, the libraries, there are franchises like south park. down the line, those franchises should have a lot of value but the problem is there is all these linear tv channels that used to throw off a huge amount of money and were great assets 15 years ago. vh1, mtv, comedy central ,bet and those audiences have largely disappeared into tiktok. you have to figure out what to do with those declining assets. what everyone wants is the tv and movie studio which continues to produce hits and has value down the line. jon: we will see how this guessing game plays out. thank you very much. we will take a break and when we come back, labor econ is tent director of research kate bahn will talk about the latest u.s. jobs data. this is bloomberg. ♪

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>> i think what we are seeing is we look at overall trends in the economy. we've seen job growth at record rates, certainly faster than anybody predicted coming out of the pandemic, but it wasn't like a one time boost. it's been year-over-year growth. sonali: this is bloomberg markets. that was the u.s. acting labor secretary julie hsu discussing inequality in the labor market. joining us now to talk about this is katebahn director of research at work rise. everyone looks at the strong numbers but at what point do you start to worry about a barbell effect in the economy and the

impact ripple effect it may have? >> the acting secretary makes a good point that we are in this long run unequal economy. we've seen in the past three years where we have converged. we've seen phenomenon like 40% of the increase in wage inequality from 1980 on, 40% of that has decreased in three years alone. that's great but that still to say there is 60% of that wage inequality that still exist. we think that sweats in the jobs report which was generally pretty good. there is still a disconnect with people's lived experiences and i think those experiences reflect the longer-term trend in inequality. jon: against that backdrop, when you have a report like this and you see wage growth and people are trying to figure out the road ahead for inflation, how do you think about the inflationary effects from wages right now? >> i think it's the same story

many economists have been saying since early on that if there isn't a lot of evidence that wages are driving inflation, there is evidence like record-breaking profits which have driven the inflation. that's what we are still seeing. overall, there is not evidence we just have inflation but there is wage growth at the bottom which is great because the workers have been impacted by these trends but what we want to focus on to make sure we don't back to inflation is looking at where it came from the first place like corporate profits and supply-chain backups and that's where we want to be focused. sonali: i'm interested in the real wages especially for lower wage workers. how much does a rise of wages at that and stave off worries about a softening job market? >> that's a good question. low-wage workers, they spend

more of their money in the economy and have higher marginal propsi tnd spend more of their income. when we have the earning growth at the low end of the spectrum, that is good for managing our economic health. it's good for avoiding recessions to make sure low-wage workers have that income. that's what we seen so far and it's good we've seen it. going forward, if we want to make sure that low-wage workers are able to contribute to our economic health, we need to start thinking about how we sure up those gains and make sure they are permanent. jon: in terms of some of the trends you are noticing beneath the headline numbers on the jobs front, what about an area like job openings? anything standing it to you now? >> i'm usually positive and it's pretty good. we've seen job openings taken down a little bit. they were 8.7 million according to data this week but it's much higher than historical levels

have been. we had an absolute high of 10 million but we are down to 8.7 which is more robust than it used to be. that's a good sign. the problem is, even with moderation back to a more normal level, that's where you see the impact of a little less heat in the economy and that's where workers are marginalized, those who have the fewest opportunities because of factors like discrimination or access to resources. it might be a little harder for them to engage more in the economy if it's not a super hot economy sonali: sonali: from your ago. if you look at the areas you saw job growth like health care and government and jobs, are those gains sustainable? >> i think they could be. those two sectors are really important for having a healthy economy and they are jobs that make other work possible. i think we will see health care

still pretty pretty robust. it's afraid part of our economy. we've seen some robust growth in a market difference from the recovery from the great recession. that is a good sign. of course, government employment is it relies on government funding. market forces there are not as relevant. it's really going to be about willingness to pay for the services that are credible -- critical to make our economy function. jon: thank you for your time today. obviously, the market has been digesting the data over the course of the trading session. we are looking at the s&p 500 higher at this hour. you talked earlier about energy finding some buying interest on this friday. that has helped out to a certain degree but investors are still giving tech stocks a close look. this is bloomberg.

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romaine: a cut check for the data dependent. i am romaine bostick. scarlet: we are kicking off to the closing bell in the u.s.. let's look out stocks are faring today. you think it would be a big reaction in the market to the better-than-expected economic data. this repricing of how much the fed may cut interest rates next year. you look at equities. not much of a reaction. s&p 500 up by 25%, content --

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