sonali: the banking story is tied to the crypto story.here were arguments about the run-up in crypto tied to how robust the crypto lending market was, tied to the ability of banks to be able to bank these companies. is there hope for the crypto industry when it comes to traditional finance to lend money to provide payment services, given the scale back and regulatory crackdown you been talking about? mike: it is a tale of two cities. in the u.s., foolishly and or excitedly -- and shortsighted billy, the biden administration is making a push against crypto to slow it down at best, if not, squelch it out. hong kong has gotten very crypto friendly regulation, we hired six more people in the hong kong office. do by pushing to be crypto centers. europe having much more clear rules of the road than the u.s.. crypto is a global industry. you can have bitcoin go up despite the u.s.'s reluctance to embrace it. the republican house is not going to let any bad legislation go through. this is going to be more the sec trying to regulate by enforcement

sonali basak joining us with the latest on ubs.cdonald's has reportedly closed offices for a few days as it plans layoffs as part of a broader restructuring plan. the shares have been trading at an all-time high. i want to again go hailing with the bloomberg -- michael halen with the bloomberg investors. given there is decent performance from the business itself, what was your reaction to these were about the layoffs? michael: these have been well communicated. they outline them -- outlined them back in january. not a huge surprise for investors today. when the news first came across, there was that question, why now ? obviously there was pressure for the corporate owned stores and franchisees but when it comes to the top line, mcdonald's has done a phenomenal job. you have to think that in the back of their head they are expecting things to get worse. they have been clear with the communication about that as well. they said a mild to moderate recession in the u.s. was the base case. they think it will be worse in europe because of

sonali, back to the reserve and the charge-offs. the rhetoric from citi, likely recession in the back half. jamie dimon talking about the storm clouds. when do we know if the reserve build starts to reflect that versus normalization? sonali: that is interesting because when you are looking at the net interest income of of a lot of that is coming from the card business. but the question too, people are spending but how much on their cards? jp morgan is saying consumers are overleveraged but they also are saying the consumer is going to hit a cliff at the end of the year. i think it is difficult to understand just how stretched the consumers are. we are seeing them shore up their portfolios but it is difficult to sense how much they are spending on their cards and willing to spend on their cards and feeling they are comfortable enough with the rate of employment, the wage growth they have had, the ability to keep a job into next year to be spending more at scale. such that these banks can keep earning money the way they say they will.

joining us are sonali basak and edward harrison. sonali, what do you make of the fact that schwab is heading higher? >> is early in the day. it will be interesting to see where it ends. deposits, the fall on deposits, it was steep. the reason the deposit pressure is such a big deal is the cost of funding drops with that. on the other hand, you have schwab pulling in more than expect it when you look at total client assets, the interest in coming being above expectation and the certain trading at investment products. that is different from what you saw at state street. investment products below expectations. it seems that we are out of the immediate storm. but, how are these firms going to make money? especially if you think the environment can get worse from here? alix: it is a profitability issue versus a broader economy issue. edward, do you think we are past -- this is hard. past the banking stress peak? edward: yes, i do. i agree with what sonali had to say. i think the acute crisis will go over. other banks, the question is the

sonali: it was in a stadium. there are so many emotions around the deal, you saw that from the swiss people today. we saw the end of the era, more than century long error for credit suisse coming to a close. in the backdrop, you have imf saying there should be a careful review of the deal. prosecutors are taking a look at the deal, as well. a lot of questions. this is not a complete turning of the page, there are a lot of questions about how the deal gets done. the chairman himself was narrowly reelected as he apologized for failing to save the bank. he was confronted before we see what happens at ubs' general meeting as they absorb such a large firm while the swiss populace is wondering whether this is a danger for switzerland to have one systemic rather than two systemic institutions. kriti: all over the banking sector on both sides of the atlantic, thank you as always. i went to bring it back to the united states, specifically downtown manhattan. history is in the making when it comes to american politics. for

sonali: you cannot bake this success into the deposits.p morgan has told you it will not be that sticky. they can come out as they have come in. it is the fact they are making money in this higher interest rate environment that is not necessarily how big the regional banks. if you take a look at large, pnc was one of the worst performers then other banks in the kbw banking index. if you look at the difference between the original banks in the big commercial banks that have big investment banks, even though investment banking has come down a lot, you are looking at jp morgan and citigroup meeting on fixed income trading. these volatile markets and the fact they are exposed to big institutions that are trading volatile markets are another way they are being helped in this environment. not only has that trend continued, big trading desks and offending more than just the consumer banks has continued on into this quarter and let's see if it continues on into the second quarter. kriti: certainly something we are keeping an eye on. a lot of diffe

joining us is sonali bencic and kriti gupta. sonali, we will get to the individual banks in a moment but kriti, cliches exist for a reason. is this a stock pickers market? kriti: everyone has been saying that for two years. look at the companies that are best position. you want to hop into high-quality names. the cliches are ongoing but it might just be -- the reason i say that is because at the end of the day, there are no macro themes anymore because every individual stock has approached the massive amount of balance sheets. yields are coming down because the fed is ending their tightening cycle and therefore buying tech a no-brainer. you cannot think of this market that way. that is a 2022 or 2021 way of thinking. apple is dealing with supply chain issues, tesla is competing with ford and gm on pricing. the fed is no longer the macro economic driver. this is something that mike wilson warned about last october. he said it is going to go from the macro to the micro, he just missed his time. alix: that brings us to the two ceo'

sonali: there iipe effects, the question e e awiowor inlvement.nis port.ca k ntueo mp6 hoon d' aterthba' ueiazethe are a lot of questions a is a plyd sonali: there is a ripple effects, the question is, the question about the deposits and the insured deposits come up again, we are not there yet. there is a small window for a solution to get together but it would require government involvement. it is been a week now since the earnings report. can this bank continue to limp along and the public market? how long does that last for? we thought a solution would be possible. even if a few more banks were to fail, there are ripple effects in terms of the funding. this needs to be contained contm those on the top of the banking system. as for the future, was problematic about what you see in the was problematic about what you see in the report, the push and pull betweenthe focus on management s absolutely appropriate. they do admit to the problems that the fed. certainly we should first and foremostforemost expect managemd the board to monitor and be respo

and sonali basak. over to you. sonali: thank you for joining us.n we look at first republic there are questions if it in's here or if there's a second leg to the crisis. what do you see? dwight: i don't think we know the answer to if the crisis will see another victim down the road . i think that we've learned that the market, and the fed especially, will protect the banking market and i think that that will calm the market over time. there are a lot of strong banks that are continuing to lend, so i don't expect we will see a continuing crisis for a long time. sonali: pat west being able to secure credit, and you see other firms look to folks like you. we reported you paired up to valley to buy assets. how do you feel about your role? are there opportunities to step in at scale to provide credit to the regional banking system? dwight: our role is to look for good opportunities to invest our capital in companies, businesses, financial assets, and i think that we will see opportunities out of the banking world. importantly, we are seeing amazing oppo

sonali -- sonali: it is a live situation and can best be described as a frenzied, last-minute effort the bank. whether it falls into fbi see receivership -- fdic receivership, this could limp along as a blank -- as a bank with a clear hole in its balance sheet. at this point, we have reported a few times now that some banks involved in the rescue have -- prefer and fdic receivership. the fdic deposit fund has taken a massive hit of more than 22 billion dollars tied to the rescue of two prior banks, two failed banks. this whole is a $30 billion hole and been some. the exact amount is not quite understood. it is a large one. no matter what happens to this bank, it is a costly situation for the banks that are in and around the situation already. the government itself and of course for the shareholders that are remaining for fric. ed: i think the idea is the investors are struggling to understand what are the many possible scenarios is most likely to happen? there was talk in the market that now a u.s. takeover is the most likely outcome. sonali: that is what i was trying to convey. this

sonali: he has a stronghold.he history of the leadership struggles and the fight to be president of morgan stanley, let alone the ceo. andy saperstein was a longtime lieutenant of james gorman. they come from consulting backgrounds and they are showing that their strategy and prowess that comes tom: jon comes from a consulting background. jonathan: i do. thank you. charlie will be with us and then we will catch up with john cassidy of rbc capital markets. that is the next chain of events. equities down -- pretty brutal at dinnertime. i first had to argue. tom: i grew up in the same argument, pitch battles at the dining room table. jonathan: i would order ice cream all the time. lisa: lemon gelato, ice cream or gelato? jonathan: just ice cream, wonderful vanilla. [office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo. everything's changing so

sonali basak, the numbers look good.nd ali -- sonali: coming in line with expectations and a little above expectations are the net charge-offs. this is a time where analysts are watching for how consumer credit is doing. so long as they are lending a little more, wall street is accepting they will lose a little money on loans, not more than expected. through the roof on fixed income trading. let's see how long that boost lasts for. jp morgan, citigroup, bank of america through the roof. non-interest expectations above interest as they tried to gain share. jonathan: how do these numbers compare to what we heard from j.p. morgan last week? sonali: when brian moynihan waits to tell you what they expect for the year in interest income. when jp morgan raised fixations by billions of dollars, pressure on bank of america to keep up. you have average deposits declined by 3%, an interesting number to keep an eye on. deposit flight is at bay. a record number of digital logins, exceeding $3 billion -- 3 billion logins, 100 30,000 n

sonali: i want to talk about valuations. you did work on stripe. $4 billion fund raise and a lot of money came from goldman's own private clients. there was a down round. have we hit rock bottom across the industry? do we have more to go when you look at how much further down the valuations are heading? nishi: stripe is a fascinating example. they really bit the bullet and did the right thing for the capitalist structure. they wanted to create enough incentives for retention for the employees to continue this growth journey even at reduced risk. in terms of actual valuations, i think what you are seeing are many companies hoping to survive this period by managing costs and expenses and preserving as much cash as possible at the expense of growth to not have to test evaluation environment. as an investor, you are hoping what stripe will do is unlock more so you can help recapitalize the companies on the next leg of their journey. sonali: do you see that we are in a credit crunch? the reality is it is not just silicon valley b

sonali basak joins us now. walk us through what this call was.trading the macroeconomic environment, i don't think of exchanges. sonali: it is a good place to start because this is really the plumbing of the financial system. the concern is they are not necessarily going to meet their longer-term targets this year when it comes to their business solutions business. remember volumes are highly impacted in times of volatility for exchange businesses in market makers, but things like listings would be cooler in a market like this which is why when you are thinking about morgan stanley's call, you see them not excited about the near term for nasdaq because that business solutions -- solution comprises 75% of the firm's revenue. when you look at this call, they are not making it overweight yet, they are just making it not underweight anymore. last year, nasdaq and sold off more than 12% and virtue sold off 29%. they say the risks are baked in. that is the good side for everybody but they had more of those worries priced into the stock. there big pic h

sonali: it is hard to say. has been a weaker bank than other large banks we have seen in the united states. silicon valley bank as well as first republic, a lot of these work well for her customers that tend two with likes of morgan stanley, goldman sachs were jp morgan. they have not have seen the same love, especially with movement away from posits into money markets. tom: sonali to help us with the banks, always helping us with banks as your art cassidy --gerard cassidy, what is the first thing you will look at from fortress diamond this morning? >> the first thing we are going to look at, what is going on with net interest income and net interest margin? we will be looking at deposits, but it is going to be difficult to figure out until we start to hear commentary from the bank. as you know as the biggest bank in the country, they are front and center with qualitative tightening, deposits are coming out of the banking system which qt was intended to do. though they may have received benefits from the silico

sonali: some clients, they do., you have seen large banks struggle to out bid tanks like silicon valley bank or first republic when it comes to the way first republic sends loans to their clients. there are some clients that the big banks really want and are keeping track of. this deposit flight is not quite healthy when so much of the economy relies on regional banks. this is a broader macro story as well as an individual name story when we look at how tight conditions get. alix: is this going to be peak interest margins? sonali: that is an interesting question. last year, the conversation surrounded how much interest rates would help these banks. because of the maturity and assets they have, they are suffering in other ways. the lending story, the reason you would think it is a peak net interest margin is because you have seen a historic contraction in lending. that is both in commercial and smaller loans as well. alix: you have the deposit debating issue. they have to pay more in deposits and it squeezes them. s

sonali basak joining us.ntioned that arena stop and pickers market and the way the bank stocks reacting today is yes. here to help join us is cole smead. he has bank of america and wells fargo in his portfolio. what you say about bank nationals? cole: the people that have benefited from a near-term crisis, are the biggest and they don't get any real attention or adoration beyond knowing that you are taking a lot rest -- a lot less risk. we are on the fit count --the buffet count. the fed's hiking and tightness with caught -- would cause a recession. that has yet to be seen but the hiking has caused people to lose money. that is not a recession. the frustration of capital markets will continue and something we have been talking about is the commercial banking side of these entities will be a strength. it is not a trading or equities business. we think the lending power of these banks will be where the best money is made over the next five years. dani: great to speak with you. we spoke with a banking analyst ea

jon: let's get some more perspective from sonali basak. that message -- are you hearing more and more of that on the street? sonali: there's a huge question about how the pods will do -- these huge multi-strata funds have a lot of pods around them and revolve around leverage. the cost of leverage have been rising and there are fewer banks to service these funds. when you look, you've seen these funds have to diversify quite a bit and the returns you are seeing on equity, equity long only funds in particular, while they got some rebound this year, they start to be more muted. trend followers have done extraordinarily well. credit long-short managers -- these are the funds starting to do a little better in these environments. a lot of questions about the hedge fund industry. when you heard analysts ask goldman sachs executives about the carnage in the hedge fund universe, there was a concern among the analyst community around whether goldman was concerned. they said they are flocking to the top 100 funds and increasing market share among the

sonali: --ed: bitcoin hitting that high.ontinuing to make gains as they feel good around the digital tokens themselves. there has been this really muted action to their big strategy at wound -- outlined at an event when four hours ago. macron getting a street high from new street research. i guess there is a lot of optimism around the memory space. a big name and a big outperformer is amazon. you look at the gains the stock has made. it took a while to get going after they introduced two new large link which models peered we will talk a lot about this throughout the day on bluebird television. it is focused pretty firmly on cloud customers. it is also a sort of platform to foster an ecosystem of ai. that stock up 0.8% on a two day basis. caroline: and the titan announcement all came within a focus from amazon ceo andy jassy on where they are going to be investing. it is the second annual letter to investors. he is moving ahead with global expansion, looking at efforts to become a bigger player in health care and as a generat

sonali: we have the report here. we have at first and foremost the blame being held at signatures banks own management. i think that is important that both the fed blamed the silicon valley bank management. now, the fdic first and foremost a blaming management of signature bank. however, they did say there are things the fdic could have done different light. one of those things is they could have escalated supervisory actions sooner. they said some of these challenges were -- came down to the staff itself. the problems here both at signature and silicon valley bank reflect the issues that regulators are having supervision as these banks have grown so quickly in the recent years leading up to these banking crises. the fdic saying the fdic could have been more forward-looking and forceful in its supervision as it pertains to signature bank. the outcome of all of this as we have been talking about, are the supervisors and regulators saying that not only can the existing rules change, they are prepared to staff out more

dani: jonathan gray mentioned regional banks we will talk about all of it with sonali basak.e speaking to him. what were your takeaways? sonali: if you look, blackstone shares are up on the day even though assets under management are below estimates. one reason could be they have $200 billion nearly of dry powder. that means as things get cheaper in the market, they can buy things that pretty attractive rates. key businesses that have some secular wind to them include credit markets. we spoke to john gray and others about this idea -- as credit starts to contract in the economy, firms like blackstone can get in, in a deeper way. the jump in stock prices for blackstone or aries, which have brought in a lot of institutional investor money, also their stock prices -- there both up more than 20% on the year on the back of that. alix: we said we do not know whether the regional bank crisis is over, knowing what we know now about deposits and earnings, is the worst over? sonali: it is a great question today because it looked like an all clear yesterday, but today is a lot messier.

sonali: you know what he is going to cover every year.today and i guess we are turning -- turning really important labor date. all of a sudden from joel's to the job reports --jolts to the job reports. lisa: it will probably turn upward by the end of the day because that seems to be the mood, at least that what it was yesterday. is there a signal? is there a signal in risk assets continuing to rally, despite people saying all of the negatives coming out one after the other? tom: we do have the time here for worrying lecture --. . boring lecture. add on inflation to real gdp you, boy does that change the dynamics, including what we will see in washington. we move onto the meetings in the world brings in the international monetary fund. this is a bloomberg surveillance. go. go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars. go big. or go home. from software that delivers new cures at warp speed, to technology that mak

sonali: this has been a couple of weeks where we were wondering and behind the scenes, first republiceir advisors and other banks have been looking for a plan to get them through the worst of the storm. it did not announce one yesterday. now, there is discussion under the surface for a $50 billion to $100 billion of mortgage and securities. a sale like this does not come without sweetener. potential buyers, the ideas they would receive a preferred equity or something that would make it more attractive to buy a business this large. the u.s. government may need to facilitate some negotiations, typically the fbi see -- the fbi see once oversight when a bank is selling assets of this size. but they have not fallen into receivership, they are trying to avoid receivership, trying to keep the bank alive. though it might be in a smaller form than what it had been in the past. jon: we should mention, it was a confusing conference call for the analysts today who were seeking some specifics from the company outside of what they disclosed for the quarter. sonali: they had shown a deposit base of

sonali: i think you have to look at two entities.e big institutions putting money into blackstone, the big drawdown fund. we talk about this at a time when we are talking about that interval fund everyone has been talking about. it's a separate fund you are able to redeem money from him. when you are looking at these returns you are looking at returns that have been 12.3% over time but less than 6% over the last year. i look for a second we are looking at these money managers as according for these individuals as well as large institutional investors. and the question then becomes is it better to lock your money up when you're thinking about the kinds of funds you're thinking about that invest in real estate which is a longer time horizon. alix: i appreciate this money will be in health care a student housing, stuff that should be safer and has a longer growth potential. if the commercial real estate market seizes up and everyone kind of gets squeezed, is there potential of a trickle down who will they keep hearing i have a long inve

sonali basak is joining us for the latest. 30% of the workforce is expected? is more than expected. over a number of years -- this is a much bigger number. he would expect that given these two banks have a lot of places where they overlap. there are clear places they don't. credit suisse does not have a huge u.s. wealth management workforce. that is not a place you would need to cut. that is additional headcount. he wonder what pressure it puts on other wealth management regions around the world where there are a lot more areas of overlap. ubs has a plan to streamline that investment bank. they want to keep the best parts of it. they are willing and reported the last week or so to make sure they retain top employees. they are facing pressure from the market for those employees. that is something that puts pressure on the rest of the workforce you are bidding up some of the talent that you need to be there at a time where attrition could become a problem. guy: nice to have you back. let's talk about what is happening with this prosecutor investigation. is that

sonali: i'm curious about your thoughts on rates and inflation. be the market is not prepared for the eventuality of higher rate and may because are not on the horizon. what is the thing that the market is not seeing about their direction of travel? jon: on the inflation front, i will give you some optimism. we see inflation moving into the rearview mirror. i say that because across our portfolio the statistics are really encouraging. our procurement managers are saying that inflation in terms of input costs was only up to percent. shipping costs have come back to 2019 levels. even wages which were up as as high as 7% are now at 5.6% and the availability of workers has gotten better for our portfolio companies. if you look at the cpi number last month it was 5% that if you exclude shelter, it was up 3.4%. the more challenging news to your question on rates is the fed is going to want to make sure that this inflation really gets down. the idea that they will prevent his mistake. i think they are much more likely to pause, hold rates at an elevated

sonali basak is joining us for more. something disappointing to investors? with net interest income coming in pretty healthy, you have deposits below expectations, charge-offs above expectations, revisions for loan losses also above expectations. all week, we have seen banks show some sense of stabilization, which coming into this, given the selloff we have seen, you would expect it could have been enough. but the idea here that we are not completely out of the woods with pressures on the system is really being seen. the bank index this week, i would like to say it is up but it is pretty much flat. not a lot of fears calmed. >> there was a journal article that talked about what kind of regulation we are going to see from d.c. basically looking at assets and having to provision for them if you are a big over $100 million. is that going to happen, who will get hit? sonali: there are a couple things. how past regulation moves and supervision. on may 1, we are slated to hear the fed's report on how silicom bank was handled. on monday, we will hear from first rep

tuned to this -- whether or not it goes beyond this very specific area. >> abigail doolittle and sonaliak, all over that story. we will keep you posted. markets are still shrugging their shoulders. coming up, we will ask a great analyst on what to expect on tesla after the bell. stick with us. this is bloomberg. ♪ they are not just plain, but learning -- playing, but learning and hanging out together. they are hanging out on roadblox. they could be playing hide and go seek. they could be pretending to run a store or pizza parlor. they could be making the next big game or adventure. so it's really a wide range of things and that involves doing things together. pretending you're together. >> everybody is talking about the metabolix as something that's going to happen in the future -- the metaverse as something that's going to happen in the future but some say that roblox has already built a metaverse. >> there is still so much innovation and invention to be done in this category, it is mind-boggling. >> china is denying reports that it has exported drones to aid russia's invasion of ukrai

sonali basak is prepped and ready. more interesting than the big guys, but what are the key factors? >> i want to look at what will be interesting with jp morgan, provisions for loan losses, concerns about the economy ahead. jamie dimon is calmer about the economy, but he did say a couple of times this year that the consumer will face a cliff at the end of the year. what does that mean in terms of when jp morgan expects concerns? net income is expected to be slightly lower than the prior quarter but well above where they were this time last year. above everything, jp morgan is expected to make money from lending. guy: while i care about jp morgan numbers and banking, what i really care about is what commentary we are going to get on lending standards. how much detail are we going to get about potential tightening? >> if they don't start to tell you in the initial commentary, you can be sure that investors analysts will be parsing every bit of detail in the numbers you are getting. there is no dispute that lending his s

sonali: the glass half joke, half-empty, what are the implications? will continue to hike should they continue to hike? gediminas: we are not targeting growth where targeting the inflation rate. a sonic out of the energy price shocks. what we also see his core inflation, it is speaking. maybe next month or a couple of months later, it will reach its peak. what can be said about core inflation that it is dinky and stickier than it was before. it drives the thinking of the decision. maria: when you sit on the council will you ask for 25 basis points? gediminas: we should not pause midway. we did a week walked by hiking interest rates and we hiked quite a bit in less than one year. maria: the fastest on record. gediminas: we are not done yet, is stubbornly high and we need to fight it. i believe we need to pause in our may meeting. we depend on data, let's see the data when we have it at the table for the decision. maria: there is an important divergence of the debate. should we hold or go for 25 or is the debate we will not stop us about this size of th

breaker on this friday, first republic bank joining us now with details from new york is bloomberg's sonali basak. what do we have in store? >> we do not have an announcement from the fcic but we have news reports showing there could be an announcement eminent about ftse receivership of first republic -- fdic receivership of first republic. a bank -- options have run out and dwindled for a rescue of first republic. there is been very little inclination to step in again, a deal would be hard to do given the big hole that exists in their balance sheet. if the were to fall under receivership would be easy to figure out what to do from there , potentially a sale, asset sales, what have you. the reason we are at this point, i think it's worth noting that because the financial situation of first republic, from earnings on monday where there is very little information to the point we are today has been very very scant information. a deteriorating condition when you look at the look for the bank. >> you can see next to you shinola, the shares are down 45% in post-market trading. weapon from last mo

tom: sonali basak is on that story as well. coming up, david rubenstein of the carlyle group.lisa mateo. after months of north korean missile tests, the u.s. will be puffed -- will beef up the deterrence offered to south korea. president biden and south korea's president will announce the agreement today at the white house. kevin mccarthy has made changes to the debt limit build to try to lure votes from republican holdouts. tax breaks for ethanol have been restored, a demand of midwestern lawmakers. the measure will accelerate new work requirements for medicaid. an independent team of aviation safety experts will review recent near collisions at u.s. airports. the people on the panel will advise the faa on how to improve the air traffic safety system. in january and february, there were eight incidents involving airlines rated as severe by the faa. four resulted in investigations. chevron warns that supply chain disruptions will continue next year. that will complicate output just as airlines are demanding new jets. airbus has flagged shortages on seats, semiconductors, raw m