sonali: this is bloomberg markets..s. new home sales declined in june for the first time in four months, suggesting interest rates and high property prices are starting to strain the market. home prices have climbed for a fourth month due to demand and tight inventory. the fed is watching housing prices closely with the dallas fed president warning that a rebound in housing prices would pose an upside risk to inflation down the road. here to discuss is kevin thrope with cushman & wakefield. thank you for joining us. if you take a look at the risks to inflation and the path the fed is on, do you think they will need a hike above and beyond what we might see today? kevin: i do not think so. i think this is pretty baked in, the fomc will follow through as expected. i think that might be the last hike. the fed has more than doubled the long run equilibrium rate, i think sufficient enough to slow the economy and bring inflation in. we are seeing good progress in inflation. stickier components, core cpi turning in the right

-- should ali -- sonali basak.n the united states, foreign-based front to upside projections. quiet in high-yield. no sales but we did learn about 4 billion in debt which includes high-yield bond and leverage loans to back the purchase of a majority stake. we talked to bruce richards earlier. bruce: there's a bifurcation of quality. when you look at double d credit in the markets, it is a much better quality index than it has ever been. you don't have many of those companies because they lacked in fixed rate bonds instead of floating rate. i'm talking about those two floating in the private goods. those are the companies that are most highly leveraged that are showing the most stress as it relates to debt service. sonali: joining us is vishwanath tirupattur peter tchir and peter tchir -- and peter tchir. i yields don't tell the story. what has to give? peter: --vishwanath: there is going to be very much quality dependent decompression ahead of us. the most honorable part of the markets are indeed the indicated leve

sonali: thank you for your time. as james gordon, ceo and chairman -- that is james gorman, ceo and chairman of morgan stanley. matt: he said he things banking has bottomed and may not come back until 2024 but it does coming and shares are outperforming, up 6% on a daily basis. i thought to look back at morgan stanley over the last five years. if you type up any equity on the bloomberg terminal, you will see a five-year view. i put in morgan stanley is rivals, jp morgan, goldman sachs, wells fargo, bank of america, citi and morgan stanley has outperformed all of them over a five-year period. they are doing much better in the long run than any other banks so far over the last five years. i thought that was very interesting that they continue to outperform. amber: it absolutely is. they had a message five years ago going back focusing on wealth management and they delivered her this is an interesting set up for goldman sachs because have gotten disparate views of what the capital markets look like. at morgan stanley an

sonali: thank you so much does youtube shorts. sonali: -- youtube shorts.i: thank you so much. deutsche bank, ahead of their earnings coming european time overnight, announcing buyback with a sign of strength before we get new international capital standards for the banking industry. we will also be looking ahead to microsoft ai progress and the activision deal after the bell. when you think about this, john, what will you be watching for? frankly all i can think about is activision. jon: you know that was a huge hurdle for the company, undoubtedly. but at the same time building on what we were just talking about with alphabet, there's a lot of ai hype in the air and microsoft is one of the companies putting that pressure down right now but some of that is not fully realize at this point. you have got their cloud business, the traditional cloud business starting to show sluggish performance compared to what we saw previously. so there is a potential scenario where you have one corner that doesn't necessarily live up to the stock market expectations. microso

sonali: this is bloomberg markets. want to mention the bloomberg news is reporting the birkenstock may have an ipo of more than an $8 billion valuation which could come as soon as september. l.catterton is working with goldman sachs and jp morgan on the potential listing. the company sales have been boosted by the blockbuster bargain movie -- barbie movie. my birkenstocks are black. someone who covers private equity, the return of the ipo market. heading back to market is exciting from what i understand. jon: it's great reporting by bloomberg and you are right, it opens up so many doors to speak about whether you talk about bernard are now - arneau they look for potentially large payday if the ipo market comes together but the fact that you got a business which is more than a couple of hundred years old which has leaned into that fashion opportunity. they made spotlighted barbie build all those high-profile luxury partnerships to really put a premium on this cooked up real many consumers are feeling cash-strapped for t

sonali: so interesting because it is a three horse race.n has answered on the call that there are three candidates. he has not given a name. the clock is get -- taking. we will talk to him this afternoon and hopefully we will hear the criteria because if the asset manager are bringing in that much money, does the trading had have to be the new head of morgan stanley when maybe trading is not the future? kailey: i know mr. gorman will face the tough questions from you on that and many other topics. thank you so much. that interview with james gorman, the chair and ceo of morgan stanley will be taking place on tv and radio on 1:30 p.m. new york time. let's get more on bank earnings, david george baird senior analyst is joining us. he has a neutral rating on the stock, a 30 dollar price target and that is where bank of america is trading. the stock up about 4%. what is your read on the print? david: we got the quarter was pretty good. i think the quarter was solid. sentiment towards banks over the last obama -- couple months in the so-called p

sonali: it's all of the above.ong-term structural challenges they face, we have the endgame release coming out next week on what that looks like, and banks like pnc all of a sudden become more under the surface when it comes to stricter regulation. that is cost. ultimately that is a cost. jonathan: let's set up the next 60 minutes, the next three minutes we get bank of america in a moment, morgan stanley later. you are catching up with james gorman i 1:30. let's start with pfa which drops now. net interest income, 14.2 $9 billion, the estimate $14.3 billion. sonali will dig through this and we talk about loans a moment ago, 1.3 5 trillion and the bank in line. for anyone interested in equity trading interview that comes at 1.6 2 billion, 1.5 4 billion, credit losses at $1.13 billion. trading revenue, $2.76 billion. the stock is up in early trading by 1.6%. shelley, you have about six he second so go ahead. sonali: there are a few things i want to cut through. one is their trading revenue is very aggressive. they ha

joining us is sonali basak. the trading oversight in addition to those banks that will be looked at for this. sonali: that is the most important part, the idea that risk-based requirements waiting for credit rules, operational risks. banks have their own internal models. you have the fed vice chair of supervision saying they want standardized models so they are getting a better idea of what it means to go through certain risk metrics. they also want certain standardized risk metrics and individualized trading desks within the banks. the critique is what this means for certain types of trading. the argument michael barr is making is that a treasury intermediation happens at the top of the bank. it should not really impact that but if it does, they will look further. an additional two dollars of capital for every $100 of assets is expected to be the additional charge. guy: the fed always said it does not like surprise. is any of this a surprise? sonali: some of this has been telegraphed for a couple of weeks. the

sonali: it sounds like a movie. matt: i have a viewer with a question, asking if goldman sachs pivots away from consumer driven businesses, what do they pivot to? also will any other u.s. big banks try to fill that void or will they try to stick to the morgan stanley type of wealth management this is final? mike: goldman sachs is going back to the future. they are going back to their roots of over 150 years of serving large wholesale clients. they have two main businesses, global banking markets, general capital markets where they have been the leader for decades, and then they have wealth and asset management, where they are trying to serve high net worth customers, do more with private equity off of their balance sheet. everything else, get rid of it. they are pivoting back to their areas of greatest strength. who picks up the slack? that's a question for the banking industry. i asked jamie dimon on the earnings call last friday, what about these new capital regulations? if capital must go up 20 percent for the ba

sonali: do you have to refile for etf? application further back in the pile. michael: ourselves and investors are optimistic, hoping for a favorable outcome from the court, in which case we would work immediately proactively to ensure gbtc goes on the exchange as an etf. sonali: the advent of these filings have given more hope into these being approved. have you had discussions to have one of these agreements in your own etf? michael: it's actively in discussion. however many years since the sec started looking at applications, one area of focus has been on surveillance sharing. they want to surveill the market. it remains to be seen whether these constructs will satisfy the mandate. time will tell. guy: morning. a lot of excitement now. etf status. it feels like a coin toss. what odds would you put on there being an etf by the end of the year? michael: i've been on before. it's a matter of when, not if. when i zoom out, gbtc has opened the door to so many investors to access bitcoin in their portfolios and has paved the w

sonali: let's talk about macro environment for a second.ked about uncertainty being the killer of dealmaking. is some of the certainty clear to killer lee when it comes to them laois and? jonathan: yeah, i think the good news on inflation -- killer particularly when it comes to inflation? jonathan: yet input costs coming down now less than 2%. we see wages running higher than midweight last year. growing less than 5%. forward indicators and hiring bank and sees -- vacancies are also happening. the labor market is softening and i think it will be helpful as the market moves forward. what i think will happen? i think they will raise rates it sounds like one more time and then they will hold them for a long period of time to try to slow the economy. we expect they will be successful in doing that. we do not think this is 2008 or 2009 in terms of slowdown but you have to anticipate some slowing of economic activity and increase in unemployment. but at this point, we have gone through an inflation shock and interest rate shot, now we have a bit

sonali: here's a question i have about airlines.out it, the credit companies reported earnings, they are extending loans like crazy, the consumer looks a little stretched when you look at how much debt they have taken. there is a question about when they will hit a cliff at the end of this year. how much can they really buy now pay later more to fund things that they want to do, go out and buy luxury goods and take an airplane to europe? sonali: fundamentally, consumers will borrow to meet their goals and my job is to provide a viable, transparent and ultimately better alternative anchor cards. if you see the growth of by now and pay later, you can see we are making a dent in taking more and more of the consumer spend. we are not adding to it in terms of an commensal debt that is unsustainable as a farm. other players may do other things but our fundamental design criteria is if we do not believe you can pass back, we will not lend you money. that is what is enshrined in our design notion of the late fees, no tricks. we will not ben

joining us now is sonali basak.in with results because this morning, bank of america and morgan stanley getting nasty rewarded by this markets. what should be attributed these moves to and how does a rate through to goldman? sonali: net interest income will be higher for the year. morgan stanley saying things turn around in its most pressure businesses. underwriting tends to lead before advisory comes back. you have senior not only a surge in in morgan stanley shares, every bank in the bank index is up today, including western lands which has not yet reported. you wonder if we are reaching a turning point, if investors believe the worst is over. pnc is also up on the day, even after slashing guidance. the question becomes, is the worst over? for bank of america, if you look at the harshest hit parts, bank of america saying they have reserved enough for this and the losses can be contained. this is going to be the exercise of this season, making sure those losses can be contained. guy: is the worst over for regional

sonali: it is good news for wells fargo.them coming in with revenue at about $20 billion above the $20 billion estimate. -- $20.5 billion about the $20 billion estimate. there's an expectation this quarter that wells fargo is going to come in above citigroup in revenue. you are still seeing pressure on the stock at first. you do have eps beating estimates. charge-offs coming in at 760 4 million just above estimates but nothing to cry home about. wells fargo we wash consumer presence when it comes the mortgage market, there's a question about whether there will be greater delay when we are thinking about those charge-offs when it comes to single-family homes. net interest income coming above expectations. jonathan: jp morgan as well. investment banking revenue 1.4 9 billion u.s. dollars, estimate 1.3 billion. jamie dimon expecting probable changes to come for bank liquidity. there is another headline that jumps out as you work to the release, the provision for credit losses for the second quarter 2.9 billion, the estimate 2.6

basak--bloomberg's sonali basak. a pleasure to have you. let's talk about the macro picture, mike. you are a unique guest. we have an inflation number that is encouraging this morning. it looks like that fed rate hikes have had some good effect in bling -- bringing down inflation. cpi at 3%. what is your take? >> markets have been waiting for inflation to break. the fed have said we expect two more cuts, the market was skeptical. this number probably says they will still cut, even though they probably should not, in july. but that will probably be the last cut unless things change dramatically. the markets are sniffing that out, a big selloff in the dollar, euro dollars and the short rate contract rally, fixed income rally. it is good. matt: what does it look like from your perspective? the fed raising rates, it is necessary to bring down the inflation. last year we had 9.1% cpi readings. it has done damage to your industry, the crypto industry. how do you view rising rates from galaxies perspective? mike: we have al

sonali: i'm glad you mentioned that.nd acquisitions, it matters for initial public offerings. there are a lot of backers out there, investors as well as baker's -- bankers who are saying bite the bullet. if you need the capital, you can get a eddie decent price right now while the markets have opened up again. -- at a decent price right now while the markets have opened up again. if you have enough cash on hand, it is a sign of strength to make it through this period. there is a case being made in the market that biting the bullet and raising the money in a down round that is not so bad could make sense. alix: does private equity see a soft landing or do they feel like they are in a hard landing? sonali: soft or hard landing, there are a couple of dynamics to be aware of. mergers are coming back. is it worth private equity or other companies to recapitalize some of their firms to get through the economic timeframe or do you bite the bullet and say some of these firms are going to have to restructure or head into bankrupt

sonali: you have a wall street giant stepping into the crypto industry. embrace it if you are a native and you think there should be another system? what's the point of blackrock getting in? john: two worlds. the white glove service of blackrock. low fees, etc., than the deeper intricacies where only a native crypto firm really understands it. all the stuff that larry fink is talking about, labs provide him with a subnetwork, blockchain is a service with all the features for compliance and use cases. we have already partnered with the wisdom tree, wellington, and hero doing similar things. -- ttro doing similar things. sonali: there are a lot of questions out there about fee compression when it comes to bitcoin space. how do you net out the effect for coinbase as more etf's get it? john: there's deftly going to be compression on the retail side. on the institutional side, coinbase is making huge strides. all five of the top etf filers, blackrock and cboe are using coinbase as a surveillance partner. if these mega-traditional financial institutions trust c

that is bloomberg's sonali basak.nali will have an exclusive interview with a man who oversees trading and investment banking at citigroup. that will be 4:30 p.m. in new york. stay with bloomberg for that one. plenty to ask him about. it is just running up to the european close, a little over 30 minutes to go until we get there. i want to get a check on markets because we are continuing to react to the week pmi data. in germany, manufacturing some 40 for the first time since the pandemic. the last time we got that reading was the financial crisis, to give you an idea of how grim that was. the euro immediately reacted -- kind of awkward timing because we had record short bets vs. the dollar. if you did that with a stronger euro, you were out of luck today. euro we can invite .4%, unable to break above -- euro weakening by .4%. a six-month low, confirming week cpi readings we got in the u.k. perhaps we are looking at an inflation trend which has turned a corner. u.k. 10-year yields come in five basis points. the overall

sonali: i am curious about what this means for the wall street job architect? had significant layoffs. james gorman said they are probably done with layoffs but there is not so much hiring. how are you seeing things play out? rob: i think 2021 in the first half of 2022 was an unprecedented level of activity in capital markets, both large-cap and private capital markets. everybody was scrambling for talent. irving was overhanging. -- there was over hiring. there needed to be some correction. i think it is largely behind us. a lot of people are feeling like they have excess capacity, but that is ok. a good way to take market share as things improve is to have excess capacity that i can throw at that. guy: great to catch up. we appreciate you stopping by to see us. rob brown, lincoln international ceo. and thanks to sonali basak act. this is bloomberg. ♪ kailey: we are about to wrap things up. here is what we are watching today -- earnings after the bell, tesla, ibm, zions, united airlines, netflix, and the companies crossword -- -- company's crackdown on password

sonali: exactly.nks there is a wide range of investors that would get impacted, particularly mom-and-pop investors that have bought into financial product more than ever before, a lot of things that you might see some wind taken out of the system and selling even more because there is more retail hands owning it all about amber: you said you might get a fundamental selloff exacerbated by technical factors, and that is where i thought the commentary on the tensions between u.s. and china -- you want to talk about a fundamental factor that could spark a selloff, that would be a it. sonali: absolutely, and the interesting thing is how hard it is to gauge. the interesting thing is not just simmering tensions between china and taiwan, the ideas how much clients are diversifying on the back of these tensions. the idea that you are seeing the changes in global trade relationships and investors are following that money, places outside of china, asia in particular, feeling a lot of the benefits of movement and

sonali basak and michael mckee. capital higher requirements for the eight largest banks, 16% for large banks that aren't quite of gigantic size. this is in some ways in line with what we were expecting, but what do hikes of this magnitude mean for these banks? sonali: there are higher capital requirements, but there is this tiered system. lenders between $100 billion in 250 billion dollars in assets, that jump could be as little as 5% or more. these were banks that were not previously added to the fed's stress test. banks under 250 million dollars in assets. you're seeing one ramification. the inclination of banks to either have a lot less then 100 billion dollars in assets or banks meaningfully above to comply with the rules to grab some scale so that they can weather this idea of holding more capital for certain businesses that they are engaged in. the important thing is that you've had a host of banks react to the idea that trading desks could face more rules. you already have bankers starting to roadmap the type

sonali: there are not a ton of assets, and as 600 million etf's.engine number one is small but mighty. they fought exxon and are focused on sustainability. the idea is to bring the active management on cross fixed income into etfs. this is a new member of the etf world. in the deal it would bring on jennifer grancio. so a big moment for this group here. when i spoke to katie they mentioned they could double or triple the amount of etf's on this platform pending regulatory approvals. dani: i forgot that engine number one story, it a david and goliath. even though you have put together your risk story everyone was to spill their hearts when it comes to the next big risk. sonali: the twist out apollo they mention the same issue, the idea of complacency and credit markets. we saw a household name default. listen to what paco had to say. >> we have not seen a degeneration of credit. maybe in real estate but if you look at the fundamentals of middle-market credit, banks are not seeing that in their portfolios yet. we may be too optimistic and we are all

sonali: there is frustration knowing their higher capital rules for the biggest banks. what we have to focus on is they want to change the rules around credit trading and operational risk. they will not be looking at trading overall, they are looking at it by level, which is a greater degree of scrutiny than they have given them in the past. this means that in the future, that would impact potentially the returns you get from risk tanking -- risk taking. when it comes to smaller banks, they are trying to expand rules across banks to ones with $100 billion in assets and more. they are looking to have them start accounting for unrealized losses and available-for-sale portfolios. this is what we saw get into a lot of issues when we saw the demise of silicon valley bank and others in the banking system. a clear recognition there are things the federal reserve and other supervisors were not seeing. matt: supervisors did not do anything about it. it is interesting timing, it comes at the same time the fed wants to continue pursuing qt, you have a flood of treasury issuance an

winning is now is sonali basak. -- joining us now is sonali basak.an, his departure. sonali: julian salisbury was the ceo of a $2.7 trillion asset management giant within goldman sachs. this is the big bet. after consumer, they are doubling down on asset and wealth management, and this was a key leader who had a star rising at goldman. he is joining six street, which is $65 billion in assets. it is a private asset giant that has only been growing, started by a former goldman partner, with other goldman talent including marty chavez, the former cfo at goldman, who is also a partner there, hired just two years ago, so certainly a big move in talent here. a significant person to be leaving goldman at this particular time. dani: even just -- kailey: even just six street itself, all the names, that is a lot of people from goldman. it is not the only string of exits they have had. how big of a problem is this for the bank? sonali: the people i named moved a long time ago, but the recent moves are very notable. think about katie koch, a significant executiv

sonali: this is interesting. mark is not only the reset of the clo market, these rolling deals into this higher interest rate environment. the supply here. there is not a large supply, a robust supply of clo's. what supports the nonrigid loan market moving forward? that is a critical question when you think about moving forward and which investment banking deals come back. if you think of equity is going to support this market and the clo issuance is not strong, how do you get from a to point b? guy: private equity still feels gunned up. great stuff as ever. tune in later today. rate conversation coming up, -- great conversation coming up. bloomberg wealth with david rubenstein. he speaks to marty nesbitt tonight at 9:00 p.m. new york time. this is bloomberg. ♪ >> sellers are less eager to sell an environment and can get the best price and rising interest rates have made it harder to justify higher prices. there are fewer deals available. most companies that are being sold are really good companies. there is a lo

i want to thank sonali basak for joining us.s been a fascinating couple of decisions on the ftc and the sec now that could change the way we view regulation. this is bloomberg. ♪ we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch. back in the day, sneaker drops meant getting online to wait in line. a literal ton. now with xfinity mobile... ...we get the fastest mobile service and can get the freshest kicks asap. i got this. save hundreds a year over t-mobile, at&t and verizon with the best price for two lines of unlimited. nice job, little sis! they grow up so fast.

sonali: live new york, i'm sonali basak in for matt miller."bloomberg crypto," a look at the world of decentralized finance. sonali: but new bill for crypto oversight that we will discuss more with congressman frank lucas. kaylee: a shifting market structure, we will speak to a ceo. sonali: and world coin makes its official debut.

sonali: hi, i'm sonali basak. this is "the next big risk."ting is a business of managing risk for the long-term. in a year where recession fears abound, a war in ukraine rages for a second year, and geopolitical tensions across the globe are boiling under the surface, three wall street veterans look five to 10 years

sonali: i am glad you tied is to the fed. david rubenstein tided to fiscal policy.time in the white house and says inflation is easing. if you look over time, there are reasons the longer-term trajectory might lead to more inflation that could make things worse. guy: and you wonder whether real assets do better and that kind of scenario. how do financial assets doing that kind of scenario? what a week. thank you very much. the next big risk is friday, july 21. you can watch it at 8:30 p.m. new york time. that is saturday morning in london. 8:30 a.m. in hong kong. i would definitely be tuning in. let's take a look at some of how some of the stock stories are moving in the u.s.. tesla warned we could see more blows to its profitability going forward. let's get another take on what is happening with bloomberg's detroit bureau chief. to what extent should what we got yesterday from tesla be a surprise? this is company moving more into volume. that will have a margin impact. they flag it and everyone was surprised. david: i'm not so sure everyone was surprised. in some w

sonali: welcome to the best of bloomberg invest 2023. i am sonali basak.t for opportunity is a daunting challenge, given fears about recession and historic volatility. bloomberg's annual invest conference brought together the biggest names in finance, economics, and investing to discuss strategies around those

sonali basak joining us now. i know it's been a dude of a few days. give us the recap.n the regionals because you did have a day where you had both starting higher. those gains have now reversed. they are now lower on the day. it's interesting because you are at comerica, one of the worst five performers on the kbw bank index. you are seeing pressure on these banks and the industry at large even with interest income rising. you are seeing american express also take a hit. this is spending growing. the reason we have american express and capital one net connect is interesting. american express tends to have a consumer base that is wealthier and therefore they have been expected to hold up well through the storm expected in the market. however, you are seeing revenue rise less than expected and therefore they are taking a hit to their stock price today as well. i will point out that capital 1 -- the reason i am pointing out as they have been the best performer in the kbw bank index and they are coming in better-than-expected and maintaining their gains. a messy week all i

(soft music) sonali: welcome to the best of bloomberg invest 2023. i am sonali basak.for opportunity is a daunting challenge, given fears about recession and historic volatility. bloomberg's annual invest conference brought together the biggest names in finance, economics, and invest

they hang out with sonali basak. they have leverage. they have a martini shaken, not stirred. jonathan: does that mean you are smooth? tom: i'm not smooth, god and no. jonathan: i feels like, globally, pulling back from those peak rate hiking cycles, going into summer. tom: i will give the journal credit. i can't remember who -- maybe it was bloomberg. all of the disinflation out there, and the u.s. is at the best position of this inflation, and the united kingdom is finally rotating around. that is a good feeling that you've got. jonathan: let's see if we can keep that through the summer. we need more like that, but has been good for the last month or so, compared to where we were. let's touch base with the market. s&p futures up 0.4%. it is sparking a rally in the global bond market. treasuries are doing well. the tenured is 3.76. lisa: large banks -- goldman sachs reported 730, and we have zion throughout the day. i am interested in regionals. goldman sachs is a fascinating story, in terms of what happens post market, but tanks have climbed back -- banks have climbed back t

sonali: that is a great question.of banks we are going to hear from have different footprints. we will watch credit card business is closely because in macro data you have seen deterioration in credit quality and some loans start to go bad. that may not be the same for the biggest banks, but the readthrough into next week -- capital one is the best performer you are seeing. it is up meaningfully this year. through the season, we will watch credit metrics. another that is interesting is goldman, selling about a billion dollars of its loans. they report next week's -- next week. are there any costs of sushi it with the sale? that happened last quarter. even the big investment banks here. guy: big day coming up. it will be fascinating to see what those numbers are. meanwhile let's turn to what is happening in the allied sector. delta, out of the gate strong numbers. we have seen earlier gains given up in terms of share prices and significant growth ahead. brooke sutherland joins us now. when does it slow down and when do

sonali: let's talk about the macro environment because earlier you talked about uncertainty being theor of dealmaking. is that uncertainty clearing, particularly as it comes to inflation? jonathan: yeah, i think the good news on inflation is it is trending down. the fed is really winning this war and not ready to declared victory but what we see in our portfolio companies is input costs coming down to less and to percent. we see wages which were running higher than 7% made last year growing at less than 5%, forward indicators in hiring and vacancies are also positive. so, the labor market starting to soften. it is still pretty strong but i think that is going to be helpful as the fed looks forward. what do i think happened? i think they are going to raise rates it sounds like one more time and then hold for a longer period of time to try to slow the economy. we expect they will be successful in doing that. dani: the man that now overseas $1 trillion, blackstone president and coo jonathan gray speaking to brooks sonali basak. the private equity fund to reach that milestone but will the

gorman was happy to celebrate this and speaking to sonali basak. let's take a listen. >> i do believe it has bottom. every co i have talked to has tilted to a more forward-looking posture. so, i think deals will start getting done. whether they happen on the back half of this year, i am not sure. it might be next year but it will be during next year when we see it if not this year. dani: looked, the idea of dealmaking coming back, i have heard one of this optimism from the private equity people i talk to but at the moment, it is just that. it is just optimism. we need to see it come through. valerie: all the big banks reporting so far had beat equity rising and all but city bank -- citibank have passed estimates project underwriting as well. bank of america has a surge in trading. up 18% year on year. i don't think many about selected big trading beats to come this quarter but bank of america shook the boat and that narrative yesterday. dani: they have wall street and main street under lock at the moment. we will speak exactly about that with octav

sonali: earlier. always earlier.ing here just how bad provisioning really gets over a long period of time. and just how bad the conversion is into delinquencies and worsening credit metrics across different types of loans. it is a credit cards, auto loans, hard-core consumer business that is -- people are more worried about when we get the recessionary views. jamie dimon out there saying it is anyone's guess of whether it is a hard or soft landing. that is not we hear from others with janet yellen taking a more optimistic tone. but you see caution at least with jamie dimon america's largest bank with the system hard to handicap. guy: it is amazing. trying to figure out what is going on here coming down the pike toward us. thank you and great coverage coming up from her and the rest of the team throughout the rest of the week. she will join us as we work our way through the numbers. we talk about that picture as we had through the end of the day. europe today has been about china. the disappointing chinese data contin

shery: morgan stanley ceo james gorman speaking with sonali basak.ve more to calm on "daybreak asia." this is bloomberg. ♪ shery: japan's rising inflation may prove to be a blessing in disguise or retailers, customers have been able to swallow the first price rise for chicken nuggets since 1980 six, helping both earnings and the outlook for retailer shares had that spring in our senior asia stock reporter. i got to say, takes me back to my japan days where it was the best in japan. it's getting more expensive now. hideyuki: yes, it is. there's growing signs that at least for now, consumers seem to be comfortable with price hikes so far so what happened over the past couple of weeks is that there have been some very good earnings from retailers which took some investors by surprise and one example here -- one of the top three convenience store operators here. after it has announced very strong earnings, its stock prices rose which is kind of rare. we have seen the operator of the shop. they announced a very good earnings and that is partly because of

haidi: citigroup global market ceo paco speaking to bloomberg's sonali. you the latest from the corporate front. citadels first trading revenue slid from last year. sources say the firm generated 2.7 3 billion dollars in revenue in the first six months of the year after a record 4.2 billion dollars in the first half of 2022. citadels saw a volatility it fueled surge last year as rate and recession fears generated trading windfalls. ubs will pay about 387 million dollars in fines related to misconduct by credit suisse in its dealings. ubs has agreed to pay 268 point $5 million for the unsafe and unsound credit risk management practices at credit suisse and a consent order with the fed. u.k. regulators have find ubs a record penalty of $112 million. bloomberg learned apple is asking suppliers to produce around 85 million units of the iphone 15 this year, roughly in line with reduction orders in 2022. the company will hold shipments steady despite projections of a decline in the overall smartphone market. the tech giant is considering raising the price of it

sonali basak joins us now, she has been following the banks analysts calls.ncratic things, particularly when it comes to citigroup and upside when it comes to wells fargo. >> the big three have increased net interest expectations. jp morgan this year is supposed to bring in more than $30 billion more in net interest income then 10 years ago -- two years ago. cost deposits might be rising, it is uncertain what that will mean in the longer term. that cost tight to interest and deposit betas, there is a question about what that means for wells fargo and citigroup. $87 billion looks nice for jp morgan. the question is, what is normal? is that normalized over a period of years, does it stay this high? >> i am guessing when you get numbers like umitch that reinforce the fed needs to height, that has got to be troubling for deposit betas. what does the readthrough look like if we get higher rates? >> you have not seen deposits repricing in a meaningful way. you have seen it in the high yield products. typical savings account over jp morgan, you are getting a basis p

it has been the first trading session -- sonali: amazing first half, i'm skeptical the second half canh a rally. light volumes, still an update. tough economic data ahead. >> manufacturing data having an impact on the market today, a little bit disappointing. we see a drift

shery: the blackstone president and coo speaking to sonali basak.omberg learned microsoft and alphabet are set to commit to safeguards on artificial intelligence. the pledges will be voluntary and are being made at the white house's request. the biden administration previously warwned the firms that they must -- warned the firms that they must ensure technology does not lead to harm. an internal memo by openai says it supports open licenses for committees. it suggest it is willing to use the dat -- to reveal the data it uses to train image generators. let's talk to our next guest who runs an ai firm used by traders. su keenan joins us in our studios. let me get started with your views on what trends you are seeing in terms of ai and how wall street is using your technology. >> there is a lot of excitement about the technology, also uncertainty about where it will lead us. what we have seen is there is very quick experimentation with the technology. the early cases we have seen in at least our technology is people are using it to better search for da

we are up on the binance token, and as we fade on ripples and the initial move, sonali basak, is doing all of vanke earnings across this. and we thank her. just a note that my husband is a senior manager over a coinbase. you want to stick at the story with bloomberg because if you want to hear from the ceo himself, as well as pat, a former senator from pennsylvania and a member of the advisory council over a coinbase. those conversations are coming up in the next hour. meanwhile, turning to a loss in the tech community. nick hmmm for has died after a battle with terminal bone cancer. he cofounded the successful investment platform nutmeg. the idea was rejected 45 times in a row but went on to strength to strength, but by jp morgan were 27 million pounds. it was said that he was one of britain's most successful entrepreneurs. he was 43 years old. but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so t

sonali basak is running us now. the key question is why does this have to happen?e concerned by this? >> i don't know that we should be concerned. before you see banks going into receivership, it is a very positive signal, which is top of capital markets a couple times here. if you think about the deals they've done with kennedy-wilson or areas management, this offloading before they got to this point. and remember, bank of california as well as pac west together will only be a bank with about $36 billion in assets. bank of california smaller by the asset base but hopefully strengthens them as they faced some of these secular headwinds that the larger industry is facing. interest -- interestingly is the private equity industry. 20% of the combined company and warburg also taking a board seat as they move along. >> what did you make of deutsche bank's earnings especially after we ended the american banking reporting season? >> not surprisingly that they are facing significant cross pressures as well. remember they did announce that yesterday as well. interestingly e

we will bring sonali and mike back as we continue to digest what is happening here.here is the biggest disconnect? alix morris is going to be joining us next. this is bloomberg. ♪ >> i think this is a market that has really done well in the tech sector so far this year for good reason. but especially from the earnings perspective, there are some healthy undercurrents going on as well. alix: that was on bloomberg tv earlier. the question of the day, or the next couple of hours, where is the biggest disconnect in the market? you could look earnings vs. recession, credit vs. equities, economics, inflation. alix morris joins us now. where do you think the biggest disconnect is? >> one of the biggest issues we are going to face is the short end of the curve is high and this inversion means recession. janet yellen was saying there is a chance of recession. six months ago, we were talking recession being imminent. what does that mean for some of the names that are out there? it is probably good news. traditional cash flow models have been historically done a great job of pr

. >> that was jonathan speaking to bloomberg sonali basak.h net worth for interest in japan. this follows a strong start with securities. skidmore >> what are the risks of investing in this fund? what do they have to say? >> good morning. with this fund, in annualized the returns of the vehicle which it feeds into. this is a fund investing in speculative loans. how do companies do with high interest rates, slowing economy? will default unravel some of these loans? blackstone says they are well-positioned and have built up a position for weakness down the road if it comes. and all of these loans are essentially secured as well. they think they can handle anything that goes. what's the fun seems to have gotten off to a pretty good start. given the broader environment, why is that so challenging? >> here japan unlike much of the rest of the world, rates are still at minus levels from the bank of japan, this fund is offering about 8% annualized, that is the track record of the u.s. fund it is based off of. it is mouthwatering when you consider th

sonali: jonathan: tuesday morning, good morning to you.ies are in positive territory a little bit. zero point 06% on the s&p 500. it's going to be a lot of attention on that index today with some reporting including alphabet and microsoft after the close today and method tomorrow. down by four or five basis points on the two year and the tenure is higher by a couple of basis points. lots of data through this week but the main focus, the egg attention will be chairman powell tomorrow in his conference with the fed decision with probably another fed hike. that conversation will be in washington, d.c. a little bit later. tom: my reader goes up when no news is expected. they don't want all this anticipation garbage. they want michael mckee to stand up in the middle of the press conference. will we see that tomorrow? jonathan: looking forward to michael mckee's questions and that press conference. remember sub parity in late december? we have come lower and we were talking about a winning streak for the euro a week or so ago but that has turned

tom: that's sonali basak tv out there. mark zandi is that name you may not know from moody's. of the 2008 recession, the great financial crisis. is written a couple of books on it but he said in early 2008, we will come out of this and be resilient and we will move forward. dr. zandi joins us now from moody's analytics. do you have the optimism you had them now? can you look to the future and see in america of productivity and real gdp gain? >> yeah, i can. what's the warren buffett adage -- don't that against the american economy. that's pretty accurate. it goes up and down and all around but cutting through all the ups and downs, the economy is resilient and i think their prospects are good long run. tom: almost to the point of new york university on technology and growth, the technology miracle we have in america now with stocks and the ai and all that, how do you overlay technology now as an optimistic force for america? >> that's key to driving the productivity gains. technology innovation, entrepreneurism is what makes the american economy exceptional and makes it tick.

tom: we will have all of that for you with sonali basak, coming up on tuesday and wednesday.o go beyond it to what we see with the rest of the earnings. that goes back to the fort announcement, or all these people at the bloom of outstanding revenue, 4% revenue growth suddenly because -- became a percent revenue growth. the calls on that will be absolute fascinating. lisa: you have been great on that. and revenue growth might slow with slower inflation. that is the interesting conundrum. tom: misery here on a monday. green on the screen, uncertain. it's like the yankees and the red sox tied for last place. good morning. ♪ >> growth is slowed, but our labor market continues to be quite strong. i don't expect a recession. i think that we are on a good path to bringing inflation down. the most ration -- most recent inflation data were encouraging that we're making progress on getting inflation down. tom: yellen viejo, a most original secretary-treasurer. i cannot emphasize that enough. really unique in the modern history of the office. i will take it back to andrew mellon a few