>> the federal reserve is moving too slow inflation. that is going to have collateral damage along the way. >> the fed is going to bit -- to be between a rock and a hard place. inflation is going to be high in they are going to find it hard 2 or cut. >> that is very rational at this point. >> the fed will need to maintain credibility and safe -- save face but dial that their hawkishness. >> of the market is in serious distress, pausing is ok. announcer: this is bloomberg

surveillance with tom keene jonathan ferro lisa abramowicz. jonathan: good morning. this is "bloomberg surveillance" with tom keene and lisa abramowicz. i am jonathan ferro. equity features stateside on the s&p 500, down by 0.8%. credit suisse down by 0.1%. tom: deposits are not going to bank of america which is another story. is this related to american aching? no but it is also. it is a trust in confidence and you have seen it. i looked at some fancy terminal dynamics of this is the question. the headlines on csfb. the buyers went on strike. jonathan: we heard from the tournament this morning and also the top shareholders in credit suisse. the chairman says state assistance is not a topic. we spoke to a shareholder about 40 minutes ago who said they would absolutely not provide

more assistance to the bank. there is a regulatory story of being a shareholder getting 10%. they have gone across that line. lisa a: this is a saudi national bank chairman who said the answer is not in terms of investing more on this bank for many reasons, outside the simplest reason, which is regulatory and statutory. not a vote of confidence in this bank. they the greatest chance of default in the company going back to the early 2000. how much do we see some kind of threshold moment or can they chug along with the idea they have a three year plan that they will stick with. jonathan: spoke with the ceo yesterday and not exactly a ringing endorsement to one of the top shareholders. the ceo said things were calm and the inflows were there on monday to be seen. we do not know the story of net flows and we need to get that information. they believe they are going to make progress in q1 and we will not find out until we get our april 27. tom: it is a complexity.

what we saw yesterday is a traditional ceo that wants to stay in control by talking out the timeline. no one has that luxury right now. it is not there. have to talk about the clear and present dangers ahead. lisa a: we started out by saying, will this be an add on to the u.s.? it is not. this is a story about a bank that has been struggling for a while but it raises a question of what builds up and creates a scenario that makes it difficult for central banks to onto the story at hand if they are dealing with no financial stress? jonathan: having good times is not a luxury that often happens for these banks. things are getting tougher for financial institutions worldwide. tom: we have great guest lined up today. can we state that there is all clear in american small and regional banking this morning? i am not there yet. jonathan: after one day?

tom: after one day. equity markets did well yesterday. some spreads are doing better. the three-month to two-year is doing better. i am just not to all clear out front of retail sales. jonathan: only a day into this, a day into a bounce. let's see if we get is a two, day three, day four. then we have to get through next week. the federal reserve decision coming up. tom: and what is that going to be? bank of america talking up, could we see a pause get i would say 25 basis points. do we agree on that? jonathan: possibly. i would say it is very split. i could go through the names. i can pick out others saying 25 basis point hike. lisa a: a lot of people, including jason furman of harvard, came out and said if it was not what we saw for the regional banks, it would be a

discussion of why not go 50 basis points. the data is coming in hard enough to justify a move. have we seen the end of this? this that change the narrative? jonathan: credit suisse with a break of two. trading very briefly at 199 -- 1.99. ugly stuff. equity features down about 0.8% on s&p. seeing a similar story in germany. the two year, 2.75. your weakness in them access well. the euro-dollar 1.0684. lisa a: a lot of people used to think this was important before we were worried about the banking system but now, perhaps we shake this off. retail sales for the month of february. we also get u.s. ppi and empire

manufacturing which is interesting as a first look at march. do people keep spending? that is the key question. with the same robustness, even though wages are still deeply negative. wages are not giving up with the pace of inflation so at what point is this eaton to demand that has a lot of inflation. homebuilder sentiment at a time when drapes are your 7%. how much do we see this rebounding anyway? the idea that there is room to tighten war and will not disrupt markets substantially. the earnings we get, including manchester united, which in another moment perhaps we talk about in terms of their potential sale and the glazer family. also adobe and alphabet. i'm curious to see between the haves and have-nots, the market consolidation in the tech giants. all the tech giants have had a different story this year. we hear about job cuts and over enthusiasm in cloud computing.

the earnings will tell a story that perhaps is more consistent than the macro winds that keep flowing in all directions. jonathan: the focus is firmly elsewhere. credit suisse is down 11% at 1.98. we know some fantastically talented people at that institution facing a difficult time. the head of macro strategy at td securities princess. -- academy securities joins us. what is your take on what is unfolding? >> i am watching the cds market. we have seen the one-year job to use say 8% or 9% so someone has to pay that to ensure credit risk per year. part of this is concerning because you are starting to see the curve invert. having said that, two things that are mitigating this is liquidity is still abysmal. liquidity is low, european credit default is not what it once was. the moves can be exaggerated.

there is a move people hold so much that they need to hedge. people have been playing around with parts of the cap structure. you do get small liquidity. it is a concern that we seem to be reaching new highs in terms of cds spreads. other u.s. banks indicate is when it comes to capital raising, you have to be aggressive and get it done early. today's story is an out -- is about not raising capital a few months ago which is what is hurting today. every u.s. bank at the weaker and should be thinking, how do i raise capital? we, in the u.s., have to fill that big void of the unrealized losses in treasuries. jonathan: there were some financial institutions that some people had never heard of that were declared important. how would you describe the importance of credit squeeze the financial system? >> it is an incredibly important company.

i think that we need to see this get resolved because the one thing we do tend to see, unfortunately, is if one gets into trouble, people very quickly start looking at what is the next one that looks remotely like this. it may be unfair but that is the pattern we saw during the european debt crisis in the great financial access. i think we just saw this in the regional banks. this has to be a priority for the ecb to get together. tom: i am looking at deutsche bank and they retell french giant bnp paribas. the same idea with the give array. we do not have time for tech dynamics it is grim. there is no other way to put it. out here. 1.9405 on credit suisse. do you look at this as an eu regulatory contagion or is it contained zurich? >> it should be contained to zurich. but just like the fed was, the ecb has to acknowledge they need

refinance things and put enough firewalls in place to help cs but more importantly to ensure there is no chance of this attracted attention of other banks and people pushing on them. that happened in the u.s. in the past. i like what regulators did in the u.s.. i think they were very aggressive on sunday night. they need to address the core problem which is huge unrealized losses but a step in the right direction. making sure people understand there is time for these to work out. lisa a: the core problem is regulators missed some red flags, not only with respect to credit suisse, but having to go back and rethink some statements as the ftc raised flags. also in the u.s. where there was not even a chief risk officer at svb. at what point does the market lose faith in the ability for regulators to flagged risks that may emerge next? >> one of the problems we face is regulators often get caught

fighting the last battle in the great financial crisis is all about big banks. that is where the focus was. clearly we have to do more to make sure everything is well managed and every spending is with the limits. i think the things they did at the surface is completely allowed to do. why would you want to take that with the gratian west -- degradation risk is a separate question. jonathan: european banks have been a massive train. if we could step away from switzerland for a moment, bnp is down 8%. ing is down 6.8%. can you say the same about europe in the moment that they face this morning? >> not yet. i preferred the u.s. right now because it was way overdone is a very isolated case having regulators came up quickly. i want to see some sense that the regulators in the ecb are coming on doing what they can. i am much more cover but with the u.s. and big market banks.

if anything, i expect news over the weekend where you see progress from some banks short of their capital, whether it is from a merger or getting an infusion. that would be great for the market. with europe, we have to see where this place -- plays out. jonathan: peter tchir of academy securities. credit suisse, 1.89, start down 10%. it is not just a swiss story. the news this morning surrounded by stop. the name credit suisse. determine chairman says state assistance is not a topic, his words. what you heard from a major shareholder over the top shareholder. they would not provide assistance to credit suisse. one of the reasons is the regulatory story of going above 10% as a shareholder. credit suisse is lower off the back of this by 15-16%.

1.89. the low is 1.87. coming, lori were beanie -- lisa m: keeping you up-to-date with news from around the world. with the first word, i am lisa mateo. the pentagon's is a russian fighter jet collided with a u.s. drone above the black sea. russia's defense ministry denies the claim the u.s. european command says the warplane struck the propeller of the drone. the state department is calling it "a brazen violation of international law". half a million british workers are striking today as union stages a mass walkout. trying to disrupt the annual budget. teachers, junior doctors, civil servants and workers only london under an arc join picket lines -- workers of the london

underground are expected to join picket lines. japanese prime minister kishida will meet with the head of the country's largest labor union to try to encourage employers to raise wages. the talks of been attracting extra attention since he called on companies to boost pay as part of his so-called "new capitalism policy", asking for wages that exceed inflation at four decade high. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. i am lisa mateo, this is bloomberg. ♪ ♪ advancing flight for future generations. ♪ welcome to a new era of flight.

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>> the answer is absolutely not for many reasons, outside the simple reason which is regulatory and statutory. we now own 9.8% of the bank.

if we get 10% of the bank, all kinds of. whether the european regulator or the swiss regulator and we are not inclined to get into new regulatory. jonathan: the saudi arabia bank ceo specialize credit suisse right now. 1.83. we are lower by 18%. that is a session low and a record low. our sway is seeing this start to hurt risk appetite worldwide. we could start with the equity markets in the u.s.. equity futures on the s&p down 1%. yields lower by 11 basis points on the u.s. 10 year. two-year yield down nine basis points at four point 16. outside switzerland, let's go to france. socgen down 8%.

bnp down 7%. this was the trade year to date before the last week or so. it is getting to european lenders find themselves in difficulty this morning. tom: off of u.s. but no aggressively off the credit suisse news, going back to november and december, we are now at the speed of the show. the wonderful guest coming up is going to dive into the details. just moments ago, we got to selling pressure on credit suisse breaking up to where it was an hour ago. i want to make clear off the wonderful dynamics of the bloomberg terminal that buyers are on strike. with that statement, by that shareholder, the buyers in mass walked away. jonathan: it many ways, it is obvious you face the regulatory scrutiny. it is kind of strange that he set it out loud in the way he did, on a morning like this, after the week he had -- week we

had. lisa a: is torpedoing his investment. not only did he say it was not a regulatory issue but also they do not want it for other reasons. it raises important it is not just one big investor but the big investors that people hoped would ultimately be the white knight, the middle eastern investors that would have another reason to come short of the bank and they are saying nope. jonathan: the technical term is a volatility halt. that is what often happens when stocks drop too much. we have's, 1.83 on the stock of credit suisse. tom: a second derivative here at 10 minute intervals across the past two hours is a new acceleration. just before we went to air, the breach of 2.00 swiss francs. this is sped up to where you have a halt. jonathan: the ceo said inflows would come to the bank on monday. were not clear on whether that

was net inflows or not. he said they hope to make progress in q1. we all sat and so we have to find that out on april 27 and that feels like a long time. tom: in francine lacqua's defense, she tried to drag him kicking and screaming into aco present analysis in she could not get there. he wanted to stay focused on, you tell me, april, may, june? even at three francs per share, april, may, june does not matter. jonathan: he also has a leading workforce. people have to stay motivated. that is difficult in a time like this. waiting up for them, that is a difficult time watching this happen with your company. do you think they can try to engage with clients, pitch the message, do business? tom: it is trust and confidence. that is like the conflation of liquidity and solvency. lisa a: this goes to the story

of how does this become systemic and lead to inflation broadly. if you have a big bank, it does not matter what the big story is because people start connecting dots. tom: credit suisse shares 1.83 swiss francs. we are informed by ken leon with decades of experience helping us with american banks. his trust and confidence dearth eric -- in zurich? is it the same as in palo alto? is trust and confidence the same everywhere? ken: for investors and customers, yes. it comes in different levels. this one is concerning because it is global. for the fed, they are in the domain of stability which is an issue. there is lots of new takers in this story.

there it is congress or policymakers. what does the central bank of switzerland say about perhaps their major franchise that has dwindled over the years? it is a sad story. tom: trading again at 1.87. a nice little but nowhere above, even in the last 10 minute interval. that would need to get to 1.92. let's continue with ken leon as credit suisse trades this morning. credit suisse is a global name, all part of our heritage. i am thunderstruck at where swiss regulators are. can american regulators apply any sense of force on a foreign bank? ken: they can as it relates to their assess in the u.s. or the cooperation that you see at the highest levels of jerome powell

urging with other central banks around the world, the ecb in particular. but this one, spot on. the timeline is short. you do not have until may or june. jay powell on monday said to michael barr, head of supervision, that i need a report that would be shared with the public by may 1. congress would have hearings about what happened in the u.s. with regional banks. a lot of this is trust and confidence versus panic. when you get into the weeds, that is the important area of what happened, when did it happen, what went wrong? i would like to share more about that because the other major part of the fed's bank supervision. lisa a: there is a story of trust and confidence when it comes into specific issues other it is hedging interest risk or management missteps on consecutive years in the case of credit suisse. where are the linkages beyond a lack of confidence? ken: the weakness is getting

large banks, and now smaller banks, to invest in technology platforms for compliance and regulation. michael, at citigroup for years, was told to invest in did not. then there were penalties and hundreds of millions of dollars spent at citibank. wells fargo is another example. you take this at that scale. credit suisse, it is critical to have this. it has taken us 5-7 years for all of our -- goldman sachs, morgan stanley, to do that. when you get down to midsize banks, 100 billion or more or 10 to 100 billion, they do not have the resources to do this like the large banks who have done it well. on the others, the fed has thousands of bank examiners but in 2018, regulation stay very

focused and tight for those above $250 billion. lo and behold, barney frank is on the board of direction -- board of directors at signature break. the bank examiners and what the banks respond to matters a lot. jonathan: there might be people engaging in this program. ab they never listen or watch this before. they watched what happened with banks over the last week and take an interest in her to talk about credit suisse but they say credit who? have never engaged with this lender before endorsing futures down. why does this bank matter waking up in the u.s. this morning? ken: it is a global bank. there may be counterparty risks for some u.s. banks. there is also significance in the conch of the capital market. if it is not till -- related to

lending in the u.s., it does matter significantly for capital markets and that is what you have to look at in what it impacts in terms of debt equities. jonathan: ken leon of cfra. credit squeeze is now down 16 or 17%. session low 1.83, right now 1.86 of all-time lows. equity futures down more than 1%. with european landers, socgen down 1%, bmp down -- a bnp paribas down 8%.

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jonathan: this is turning out to be a really long week. let's work through this calmly. equity futures down a little more than 1% on the s&p entrée. similar move on the nasdaq. much bigger on the russell. the russell is down 2%. in the bond market, we keep repressing the fed. pricing out hikes and cuts. another 13 basis points on the two-year, 4.11. retail sales and ppi coming later. what matters right now is this chart at credit suisse, down more than 20%. we broke 2, broke 1.90, just

broke 180 -- 1.80. session all-time low 1.76. going to look at the french lenders and bmp. bmp is down around 10%. socgen is down 9.8%. pretty ugly out there. tom: i will say this is the first moment i can compare and contrast to march of 2008. this is not like lehman. this is like stearns. if the swiss government has to figure out what to do, there is no alternative. jonathan: if you are tuning in this morning and looking at credit suisse down 21%, good morning. let's work in the news we've had so far. we heard from the chairman who was speaking at a conference. he said state assistance inside topic. then we heard this from the saudi national bank which is the

top shareholder of credit suisse at the moment, thus under 10%. they do not want to go over the 10% threshold because it would include extra regulatory scrutiny. by finest, was bizarre this moment -- this morning, knowing how delicate these names are. even if you think them, to say them out loud, you must be aware they will carry weight. lisa a: was he trying to tank the stocks? what was he thinking? credit suisse has been under scrutiny for such a long time and testing eight flight of investors for a while. there is sensitivity but also broader sensitivity of this financial risks that has come and's complete leasing -- shaking markets. jonathan: we can come back to data. talking about the retail sales, data, cpi coming back later on call. all of this lined up and everyone thought this would open

the door to 50 after what chairman powell set a week ago. lisa a: right now, we are barely pricing in another rate hike. we have downgraded to a terminal rate of 4.8%. tom: let's get to liz and but i would suggest strongly that this is an evolution across three or two days -- or four days. yields going to bank of america, why will that ended today? the answer is it will not. let's get to liz and saunters. chief investment strategist at charles schwab. i want to make clear, not with executive capabilities. we will not talk to her about the challenges of the major donor to the san francisco museum of modern art. [laughter] tom: we have been here. what is different this time? >> we have been here but when you look back to 2008 and you look back to what was a massive

leveraged of the entire financial system with trillions of dollars of exposure to the alphabet soup of derivatives tied to the mortgage market, this is a different situation. you have a credit suisse like today, i agree with you. i was watching when the comments came out of saudi arabia that we are not doing anything, and that was terribly surprising. one thing about credit squeeze, i do not cover the stock obviously, but this stock has been in a huge downfall for two years. there are clearly problems within this institution that predated what happened with svb. but as a prior guest said, what we do not know was the counterparty risk. i think that is what is setting the market off. i will tell you who i do not want to be in the next week is jerome powell. the fed is in a very massive pickle right now. tom: you have been courageous in

crisis to find opportunities. to do a compare and contrast, off the screen in the bloomberg terminal in frank, the credit crisis is appalling. it is 0.16. their compatriots, ubs, is a larger number. at one point at 0.2. the disparities create opportunity. is there opportunity in the major solid solvent banks? >> i think there is but i would expand that beyond the financial space. i think this is an environment where it is not just about size being a benefit. within the world of traditional banking, i think there is the stability that comes with some of the larger institutions. i think it is really spread across sectors and industries right now. we have talked about this. you have the return of the

risk-free rate which means price discovery. not only do you want to find companies that are self funding that they have strong cash flows and earnings or short duration and equities where they do not have to access credit markets or capital market and can fund their operation, that tends to be larger companies. but i would apply this just outside the financials. we have been fact-based. one of the factors we have been focusing on are these self funding companies, shorter duration companies. i think this phase certainly within the technology and financial space. you apply this kind of screaming across a spectrum of sectors and industries, that is a big risk. lisa a: this morning, when i walked in, i was hoping we could move on from the concerns around financial market stability. it seemed to make since there were stories that were highly in of idiosyncratic -- that were

highly idiosyncratic, specific issues at specific banks. yet, here we are. this is affecting everything with respect to risk sentiment. thrown powell is now priced out of rate hikes, yet again. even on the heels of higher-than-expected cpi data from the margins. from your perspective, is the sentiment telling us something? something important about where we are headed and the facts the rate hiking cycle is over? >> if it is not over, it is probably close to being over. our vice at this point, especially with credit suisse, it's the fed will opt not to do anything even in spite of the tick up in court cpi. -- core cpi. i think they will be careful to not suggest that they are done because if they start to see

stability in the financial system -- but what is really frustrating to me is -- you guys have done a phenomenal job of reporting on all of this, but spend any time on twitter and the misinformation that is out there conflating what has gone on. the blending of fdic and cpc as if they are the same thing. what is the meeting of the fed's new facility as a liquidity funding facility. i have seen this all jumbled together into one animal. there is a lot a people that get their information in a form like this. that has been really tough. the 2000 eight situation was just a lack of misunderstanding because it was -- 2008 situation was just a lack of misunderstanding but here it is a simple concept. conflating fdic and cpc, which we have seen done, is quite frustrating. lisa a: right now we are seeing the european stocks bank index

down about 6%. a twitter fueled run is why a lot of people called what we have seen in the u.s. is that what you see with credit suisse that could accelerate the demise of a bank that otherwise may have a three year plan? >> i do not want to say yes or no. i do not cover the stock and i think it is premature whether we ultimately call this a bank run. what is important that we are seeing is not just the power of social media and how information flow is so much quicker right now but just how speedy changes can be made. when all the media reports and photos of what was happening at svb showed lines, those were not lines of depositors waiting to go into the bank to get their money. it was mostly just gawkers. we change money and move money digitally in an instant. i think it is in the instant

that makes this situation different than prior historical bank runs. jonathan: we appreciate your cool, calm and collected thoughts. liz ann sonders of charles schwab. stocks down more than 20%. 1.77. just off the all-time low. the words that reverie from switzerland come from the saudi national chairman this morning speaking to bloomberg. saying will you offer more assistance? the answer is "absolutely not, for many reasons which is regulatory and statutory". we have not heard from credit suisse this morning but we heard from ubs. the ceo saying they are focused on their own strategy and will not answer hypothetical questions from credit suisse but we are all watching them because you look at socgen down 9%, bnp

paribas down 8%. tom: for those on london wall street amid this big crisis, what is important is the timing of the morgan stanley conference. i am going to guess 5.50 or 5.55 . it is not the hyperbole we have seen ages ago but after the last 38 minutes, he will have no comment at 6:41. jonathan: thomas, you know that being around for a long time, people have visceral reactions to comparing things to 2008. i do not like to go there but one thing that frustrates me about people who do is when we benchmark to those extremes, it is easy to say it is not that and become dismissive of what is happening. so let's not benchmark to the extreme. this because it is not that does not mean this is good. what we have seen over the last week is not good. lisa a: it will tighten

financial conditions meaningfully. we have heard from people who are talking about increased concern about counterparty risk. that is the unknown. what are the counterparty risks? all things being equal, the big banks should benefit from this because they can capitalize on the business but their shares are much lower which is speaking to concern about the broader systemic risks. jonathan: credit suisse is a different beast. tom: it is a global bank with massive asian perspective that no one is talking about. it's is not another silicon valley. it is local. jonathan: credits we stocks down 21%. catch up with simon french very shortly. lisa m: keeping you up-to-date with news from around the world. with the first word, i am lisa mateo. u.k. chancellor jeremy hunt will pledge to unblock business

investment in his first budget today. the pressing issue is high inflation, week growth, cost-of-living crisis, and labor shortages. but with the u.k. tax burden at a postwar high, he will struggle to raise taxes or find savings. bloomberg says a multibillion pound expansion of childcare is under consideration. u.s. prosecutors were investigating signature bank's dealings with clients before a sudden seizure by regulators. we were told officials were examining whether the new york bank took steps to protect money laundering. meanwhile, the fed is said to be considering changes to its oversight of midsize banks following the collapse of three letters over the past week. regulators at the u.s. central bank are weighing capital and liquidity threshold closer to those who apply for big wall street firms. changes would affect banks with assets between 150 about -- $150

billion and $200 billion. argentina cpi spiked over 6% for the month. it registered a 102% increase annually. argentina last saw triple digit inflation in the early 1990's. it's skyhigh consumer prices and severe crop throughout are expected to tip the economy into recession. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. i am lisa mateo, this is bloomberg. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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for credit suisse. >> the answer is absolutely not for many reasons, outside the simplest reason, which is regulatory and statutory. we now own 9.8%. if we go above 10%, all kinds of moves kick in whether it be the european regulator for swiss regulator. jonathan: that was the saudi national bank chairman speaking with the brilliant bloomberg's yousef. credit suisse down by more than 20%. 1.79 on the stock. just obsession lows of one point 72. all-time lows on credit. if we unpack that statement from the saudi national chairman, part of it is obvious. yes, there is regulatory things that kick in want to go above 10%. let's get to two. two is he said there were other reasons that he set out loud. lisa a: you have been bringing

this up all morning, rightly so. why would he do this? this is his own investment in company. everyone would understand if he said he did not want to invest for many reasons, not just regulatory. is this a misspeak or is this a very dramatic reaction at a moment that is highly fraught? tom: let us pause for yousef who just plain and simple crowbar to it out of him. i thought it was interesting. i would also note finally the buyers have shown up on credit suisse. ever so slightly, a lift from 1.72 to 1.78. jonathan: you have to river, there are people waking up this morning who have not seen -- have to remember, there are people waking up this morning who have not seen this and are saying, you think 1.78 is good? saudi arabia currently owns one point 88%.

-- 9.88%. they do not own 10% but soon, they will. if you look at how this is spilling across the bond market, we price the fed even more with 20 basis is on the two-year, 4.04%. i can bring up the german curve. quickly, down about two basis points. the two-year in germany is at a time when some people think, the ecb goes two basis points tomorrow? 50, really? every single eurozone bank on the ex ex 70 is down. the euro stocks a bank exit. lisa a: this is raising a road conundrum for central bankers because clearly, shareholders believe there is some financial issues that go deeper than one bank and one idiosyncratic issue . suddenly they are piecing together into broad risk

aversion. at one point this this count of the data and is this contagion? tom: this is cultural and there is someone in the zeitgeist, i cannot remember who, who said are we really seeing swiss separation from the european continent? what is the swiss neutrality and how unique is the swiss national bank or is it everybody in the same pool? jonathan: some of these moves are really tough. tom: let us get some perspective. yes it is on economics that we can fold it into financial economics in chapter 23, the british textbook. no one ever gets to 23 except simon french. simon, lincoln financial stresses to your economic world. in particular, the combination for christine lagarde. simon: there is a tightening of

financial conditions going on in front of our very eyes this morning. what shareholders are trying to calculate is how this passes through to a real economy that is about to, based on the forward guidance information from the ecb, is going to move 50 basis points. already a tightening of financial conditions being baked in. all ahead of any contagion risk. i, hopefully, was pretty honest in my note yesterday when i said that we simply do not know the two which this is a systemic or isolated thing. whether this was poor balance sheet management or whether this was like we saw in the u.k. in autumn last year. something of a canary in the mine which illustrates potential portfolio losses and realize at the moment that would require

capital raising down the line which is why i think the credit suisse interview you have been talking about for the last few minutes is absolutely relevant to what is on the minds of financial investors at the moment. jonathan: that is absolutely bizarre. in the u.s. of the federal reserve, the term and people often say is worried about being burned. as president lagarde worried about that? simon: it is the analogy of choice at the moment, for good reason. because, yes. because core inflation took longer to a light in the eurozone, they are slow at reaching the peak which has not really pete in eurozone. the policy in terms of high interest rates has come later. it looks like very late in the financial cycle even the events of recent days. i think the degree to which the ecb made the strategic decision, to almost recommit to 50 in

march, now looking like quite a misstep. at a time when they were wanting to move toward data dependency, they laid out forward guidance which was inflexible. that is a reasonable parallel to draw this morning. lisa a: let's build on that. the policy era you highlight that indicated they were going to go 50 basis points at a time when tomorrow people were almost pricing them out, when you take a look at the two-year yield in germany, if they follow on their pledge what happens and what is the consequence if they do not? simon: if they do, it is not the immediate pastor on financial conditions where the communications around that moved tell us about whether they have actually stumbled across terminal rate in the eurozone, having assumed they are about

100 until the start of last week . now 100 or 150 basis points higher. the roe question one has to ask is, why, given the information we have at our disposal, the premium that is now another few days or weeks of data? it is so high in terms of understanding the context and significance of the systemic nature of this, that is it beyond the realm of possibility to do a reverse? i think it is easier for the fed and the bank of england that much harder for the ecb given where they have boxed themselves in. jonathan: appreciate your perspective. simon french of panmure gordon. nobody wants to be chairman powell and you certainly do not want to be christine lagarde going into next week's meeting. credit suisse is now down 21% at 1.76. the all-time low as 1.72.

news earlier this morning. get the saudi national bank, biggest shareholder of credit suisse, was asked whether they would provide more assistance. the answer was "absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory". saying all this out loud. we heard from the credit suisse chairman earlier this morning. he was talking at a conference and basically said state assistance is not a topic. of course, they will not say it out loud if it was. we heard from the ubs executive separately as well he said they do not want to talk about what is going on. ralph hammerson said it was a hypothetical question. it is not just credit suisse this morning. a downturn by 1.7% on the s&p. tom: i'm going to say four big figures on the vix.

71 on spx. dow was at 600 at one point. nasdaq 1.6%. in the dearth of buying and credit suisse, the little breath we got is beginning to fade away in the last three or four minutes. jonathan: you may drop down to 3.90 nine on the two-year yield. very close. down 21 basis. not just stateside but big german curve as well. lisa a: people are saying the tightening will do the job. looking at the european bank and decks of the stocks index is down 7%. not just credit suisse but all banks in europe. jonathan: equity futures on the s&p down by 1.74%. in about 34 minutes time, we catch up with nouriel roubini.

futures are down, yields are lower. this is bloomberg. ♪ e online u.s. stocks and etfs. and a commitment to get you the best price on every trade, which saved investors over $1.5 billion last year. that's decision tech. only from fidelity. get help reaching your goals with j.p. morgan wealth plan, a new tool in the chase mobile® app. use it to set and track your goals, big and small... to set and track your goals. big and small and see how from your first big move to retiring poolside and the other goals along the way wealth plan can help get you there. j.p. morgan wealth management. and move the energy that our world needs. ♪♪

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>> the federal reserve is moving to slow inflation. that is going to have collateral damage along the way. >> the fed is between a rock and a hard place. inflation is high and they are going to find it hard to pause, let alone cut. >> we are debating pricing zero versus 25. i think that is rational at this point. >> the fed will need to maintain credibility, but at the same time dial back their hawkishness.

>> if the markets are in distress pausing is ok. >> this is "bloomberg surveillance." jonathan: what a difference a week makes. live from new york city, good morning. for our audience worldwide, this is bloomberg surveillance. the s&p down by 1.8 percent. one stock and focus, credit suisse, is down 23%. that is an all-time low. we are in the one 70's on credit suisse. the words of a saudi national bank chairman, top shareholder to bloomberg this morning, will you invest more? the answer, absolutely not. for many reasons outside the simplest reason, which is regulatory and statutory. tom: i was telling jon we had two people that survived the lehman wars.

to me it is like bear stearns or march 2008. it is as simple as this. when does the swiss government step in and say this has gone too far? jonathan: the credit suisse chairman said stated -- said state assistance is not a topic they're going to talk about. of course they are not, but it is a difficult time for many people we know who work at that institution. we are going to be distracted trying to work today looking at some of these moves. outside of credit suisse you are seeing the risk emerge elsewhere. there is a massive bid to the front end of the yield curve in the u.s. there are no easy decisions here, lisa, for central bank policy lagarde tomorrow, powell next week. lagarde had pre-committed to 50 basis points. what did they do now? lisa: this was supposed to be the retail sales show. look at the inflation, look at the growth.

right now it is anything back. what a difference a couple of hours makes, or minutes when you talk about contagion risk, where the fear of it. what you see right now's central bankers stuck between committing to fighting inflation like they have said, and raising rates, and saying we are not here to protect the financial system. potentially supporting them by not raising rates, then the moral hazard of that. do you come in to rescue financial institutions? what do you care about the average american dealing with inflation? tom: i want to make clear here -- i should have mentioned this earlier. to all of you in america, other networks are quoting credit suisse in u.s. dollars. we do not do that. we stay quoting in swiss franc's. you are looking at a 174. but we are quoting in swiss franc. jonathan: looking at 174 on credit suisse stock. i will go back to some of the european lenders. we have seen socgen, bnp paribas

get wrapped up in this. emp paribas down about 10%. commerzbank about 9% as well. lisa: when the facts change, my view changes, a financial accident has happened and we are going from no landing to a hard landing given by tighter credit conditions. people are looking at a landscape driven by some of this financial concern we are seeing. jonathan: i said what a difference a week makes. a week ago chairman powell had day one of his semiannual testimony, opening the door to seemingly going 50. we were sitting around the table, ok, how low is that bar? going to get retail sales. no one cares. no one is even talking about retail sales this morning. lisa: right now that is all backward-looking. the landscape has changed. the rapid tightening in conditions have really caused a backdrop that causes attentional hard landing people are starting

to price in. tom: this is crisis in the global sense of it all of a sudden with global suisse -- with credit suisse. it is a bond movie and we are very fixed income here. in london they are looking at an economic slowdown. we have seen that quietly in oil. do we have a financial crisis winked into an oil slowdown? american west texas intermediate just printing below 70. i'm sorry, it is off the radar, but we have to look at the some of these different statistics. jonathan: i will get your attention. yesterday session crude was down 4.6%. there is a supply-side store here in the crude store this morning. the iaea put out a note that reported the crude market is actually back in surplus off the back of what is happening with russia. which is a surprise.

rip up the playbook for 2023. we came into this year thinking, china rebound. here we are on 70 on wti briefly. lisa: you wrote an outlook on march 31? you could write another one. whether it is russia pumping as much oil as they can or potential distress of something breaking. jonathan: it is march 15, so a few more weeks to go. 168, credit suisse down 25%. 25% in swiss trading. a great guest lined up, david kelly of j.p. morgan asset management. great to see you. what a difference a week makes. what do you make of what is unfolding this morning? david: unfortunately it is a predictable further wave after what we saw with svb and signature bank over the weekend. these kinds of crises do work in waves because it is about a confidence crisis.

the federal reserve since 2008 has been conducting stress test. the market is conducting a stress test of the fed. how far can the federal reserve raise short-term interest rates given how low they were for so long? we have discovered that we have now reached the limit of what the federal reserve can do without causing significant problems. they should stop. i have heard other guests talk about how the fed is between a rock and a hard place. i don't believe that. i think they are between a rock and a soft place. inflation will come down. this is not a fundamentally inflationary economy, so the federal reserve and other central banks at this stage should stop hiking and provide real reassurance that they are going to protect the financial system and deal with this problem. i think that is what they need to focus on. tom: the fear out there is personified in flows. i'm not going task you how many

gazillions j.p. morgan took in yesterday. i know you know the number. that is a joke, folks. the answer, dr. kelly, is flows and fear matter. where will the flows lead to? do we lead to a place where portfolios recover? or do we lead to instability into the summer of this year? david: portfolios will eventually recover. i think the key here is it is all about the inflation, actually. people keep talking about hard inflation, but the truth is inflation has now fallen for eight consecutive months. what i think is much more important his wages are growing slower than headline inflation for 23 consecutive months. that tells me workers do not have bargaining power. despite how tight this labor market is. if that is right, then inflation will gradually come down, whether a recession or not.

inflation will gradually he's over the next year or two, and central banks need to allow that to happen. if they do you wind up back in the middle of this decade -- where you were in the little of the last decade. which i think will support both stocks and bonds. i think we will get there but it is going to be a bumpy ride. lisa: in the moment we are in where people are worried about financial market contagion and you could say this is a twitter-fueled hysteria, with people getting concerned and spreading around information, how deep does it go in terms of a crisis in confidence and what that means with respect to lending conditions? what that means for defaults, what that means for how quickly this economy could come to a halt? david: i think there is a lot of protection for the real economy, particularly in the united states. we still have this excess demand for labor which has been keeping payroll growth strong. second of all, there is no real

overbuild in any fundamental sector of the economy. we don't have too many houses or too much inventory. there is nothing that is going to drive this economy into a deep recession. i think lending conditions will tighten. i think we are going to see more of that. i think lending conditions will tighten. i don't expect default rates or problems with loans to increase rapidly unless you have a significant downturn in the economy itself. it is important for authorities to remind people that we are not going to let it all fall apart, and i think this is why the federal reserve should really stop tightening here and focus on that reassurance. the federal reserve and other central banks are really good if they put their minds to it in controlling a crisis. and they can focus on that, because inflation is going to fade. they just have to have enough confidence that inflation is going to fade, focus on reassuring people. we have seen a huge buildup in

capital in the u.s. banking system since 2008. we have well-capitalized banks overall in the federal reserve needs to provide some reassurance on that fact. jonathan: a week feels like a long time in this market. david kelly of j.p. morgan asset management. credit suisse down 20%. all time low, 168. the stock has been hammered. heard from larry fink of black rock today. he said, are the dominoes starting to fall? it is too early to know how widespread the damages. we don't know how the changes will cascade through the u.s. regional banking sector. it alternately lasted about a decade and more than 1000 thrifts went under. reflecting on what has been happening over the last few decades in the banking system. lisa, this is a tough time. dan ives said it was a process we need to work through now.

a multi-month process and you have central banks that need to confront where we are eminently. lisa: one thing larry fink was talking about was perhaps a second domino to fall would be in these medium-sized banks. the third, he points to funds invested in liquid investments. the sort of private equity christian -- private equity question people have been raising. jonathan: good morning to you all on tv and bloomberg radio. credit suisse down 20%. the chairman of the saudi national bank speaking to bloomberg this morning, asked if he could provide more assistance, the answer, absolutely not. for many reasons. that really putting the knife into a stock that was already struggling. the stock now, 1.79. >> keeping up-to-date with news from around the world, i'm lisa mateo. syrian president bashar al-assad is meeting with vladimir putin

in moscow today as the kremlin pushes for a syria-turkey reconciliation. russia will also host talks involving turkey, syria, and iran. the potential deal comes after china brokered a diplomatic detente between iran and saudi arabia. demonstrating its newfound weight in the region. credit suisse's chief executive officer said the bank had seen in flows of client funds on monday after markets were pummeled by the collapse of silicon valley bank. >> with some material good inflows yesterday still. also i had a client meeting that was very positive. so far it is calm, but i think it is early days. lisa m. credit suisse' top shareholder ruled out providing more financial assistance to the bank. >> the answer is absolutely not. for many reasons. outside the simplest reason, which is regulatory and

statutory. now own 9.8% of the bank. if we go above 10% of all kinds of new rules kick in. whether it be by our regulator or the swiss regulator. we are not inclined to get into a new regulatory regime. lisa m. the saudi national bank chairman spoke to bloomberg in riyadh. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo, and this is bloomberg. ♪ retirement tools and advice can help you get there. that's the value of ownership.

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>> i'm wondering whether you would be open to assisting further if there was another call for additional liquidity from credit suisse.

>> if we go above 10% all kinds of new rules kick in. we are not inclined to get into a new regulatory -- jonathan: if they go above 10%, we know that, standing because we set it out loud. i'm sure that the c suite at credit suisse were not happy about hearing that early this morning. 1.81 on credit suisse. we are down by almost 20%. earlier we were down 25 below the session. if you are just waking up, ultimately 1.80, and it bleeds to the rest of the market. equity futures down 1.6% on the

s&p 500. going to be looking at the u.s. banks, heavily weighted. in the bond market we are pricing out highs. down 17 basis points on a two-year in america. we came really close to going back into the threes on a two year earlier. germany is pricing in cuts, but the european has to confront this tomorrow. who knows what they are going to do with socgen down 10%? commerce bank. take your pick in europe. tom: they have a knowledge base of what the next bank is. it's not to be inflammatory, now credit suisse trading here with some kind of activity, bouncing off 1.68. this is the first time credit suisse lifts off that horrific 1.68 level. jonathan: tomorrow is the one-year anniversary of the first interest rate hike of the

cycle. tomorrow. a year in more than 400 interest rate -- this fed was late in this market is screaming "you're done," it week after chairman powell seemingly opened the door to going even faster. tom: there are indicators of this. i go to the land of ira jersey and look at three-month t-bills. they have improved the last couple of days. they are not as inflammatory as they were monday or friday. we are nowhere near yet, saying the rate regime is pulling back from the agony that caused the california mass. jonathan: look how quickly things have changed. lisa mentioned torsten this morning. we have been talking about torsten for weeks. where is the recession? unemployment and month ago was 3.4%. retail sales again. no one is going to talk about retail sales. it has gone from no landing to

hard landing, just like that. lisa: a financial accident has happened, and a lot of people were wondering, what is the terminal right? since nothing has broken for so long that it seemed like this market was resilient. if nothing is breaking may be that terminal rate was much higher. people talking 6.5 percent. suddenly here we are, and perhaps the market saying, something broke, and that means we are done. tom: maybe there is news pending. we need to step carefully here because we have with us someoine cute -- someone hugely qualified to speak on these mysteries. jan-patrick barnert brings with his reporting tangible banking experience. what is the mood, the sweat, the fear that would be at the credit suisse headquarters, the thousands of zurich people working for credit suisse? what is their angst of this morning? jan-patrick: that is hard to

say, but the interesting thing to me is whenever i say something critical about credit suisse the last couple of days people reached out from inside to me, fiercely fighting for their employer and telling me about what they trying to do to make things better. there are still passionate people at credit suisse. the management so far, not so passionate. if you have your stock tumbling that much, i would be concerned for the bank, because we simply don't know what is going to happen next. especially as this is not an isolated issue anymore. we are now moving into a broader banking recession problem, and that is why credit suisse is down 20% and the others are only down a percent or 10%. because the bank now has to find another fire on its balance sheet. and on its earnings. that makes the turnaround where we yesterday heard three years, i would say this three years has now gone to six years.

jonathan: how shock to you to hear the words from the saudi national bank chairman this morning to bloomberg? jan-patrick: absolutely not. the language was hard, when he says absolutely not, but think about it. they took part in the capital raise. if you are responsible as a manager everywhere on the world you are not going, sure, let's ship in another $1 billion down the road here. it is not going to happen. makes sense for me that he says, no thank you. we have put enough money into this bank. given all of the other stuff happening around the bank, why should you take this risk? it is a horrible risk-reward profit at this point. lisa: right now i'm looking at the credit default swaps on credit suisse, which have blown out. that means the price people are demanding to ensure have gone to the highest levels we have seen in history. what is the potential consequence of this for the

european banking system? are people starting to gain that out? jan-patrick: it is a massive issue now you are getting attacked from all sides. you are getting attacked from the central banks when they stop hiking rates. then you are getting attacked from the economic side, with your loan loss provisions going up. then you are getting attacked from your refunding side. especially as credit suisse. this overall is not a great time for banking stocks, and that is why we are seeing them being sold right now. the last three to four months everybody was taking a comfortable position in the overall equity market. but especially in european banks, thinking we get a rounding down of inflation, everybody is safe, the economy is still doing fine. this whole scenario is now gone. that is why the market reaction is so high.

now you have to massively reprice what the economy will look like 12 months down the road. that is where you see banking stocks, no bids there, because that is the first line of defense. why would you own the stock moving into such a scenario? lisa: do we have any intelligence about what wealth management clients are doing right now? whether people are trying to withdraw their money or whether they are staying with credit suisse and saying, we appreciate the product you provide and we are going to be your clients for a longer period of time? jan-patrick: i guess it doesn't really matter. if they take away the money and put it into a safe space the consequence for credit suisse will be the same. i'm not so much concerned they are losing deposits. there are other options in europe where they can get liquidity from. i'm pretty sure central banks will provide that. the issue is, matter what your wealth management clients are doing, it will reduce risk. that means less revenue, less earnings, less prospect for the

stock price. again, why buy the share in this situation? no incentive whatsoever. jonathan: final question. lisa and i talked about it this morning. what would spook this market more tomorrow? if the ecb went 50, or didn't? jan-patrick: that is the interesting question i want to know. i'm not sure. it's going to be horrible for central banks, because you have to put out five fires with one bucket of water. i guess what they will try to do is bring across the message to say, ok, we have noticed there is something going on that is not nice. we take this into account going forward. we will be less data-dependent. we believe inflation is going to come down anyways. especially if economic activities going down. we will try everything to ensure liquidity flows across the economy, to make sure we are not getting a hard landing, that we are not hitting the wall. but this communication is very difficult for central banks to

pull off, to make markets happy. that's going to be interesting to see how they want to do it, but if i have to make a bet i would say no matter what the market will not be super heavy, because they are not putting up a bonanza at this point. they never do in the first commentary, right? the market wants the big measure, and they are not getting that. jonathan: jan patrick warner thereof -- there. -- jan-patrick barnert there. tom: the uncertainty is just -- in every facet. no focus. jonathan: futures on the s&p down 1.6%. nouriel roubini. -- nouriel roubini up next. ♪ ever better.

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jonathan: equity futures right now on the s&p 500 down by 1.6%. the thing you need to watch right now is credit suisse, down by about 20%. credit suisse getting hammered this morning. a session low, all-time low, 1.68. the story with a name this morning. first of all we heard from the credit suisse chairman, who ruled out state aid. not a topic they want to discuss. this was surprising in more ways than one. we heard from the saudi bank national chairman -- saudi bank chairman. going above 10% as a

shareholder, they said there were many other reasons as well. outside the simplest reason, which is regulatory. 1.80 on credit suisse. talked briefly about futures taking some pain in america. given the moves we have seen over the last week that is not a monster move, is it? the two-year bond in america has traded like a penny stock over the last week. it is down 22 basis points. tom: pink sheets. jonathan: very close to 3.99. tom: we are watching american oil near a 69 handle. i want to bring us an update on that 10 minute intervals on credit suisse. up to one comfortable moving average, and now is when we see a retest at 1.80. do we go back down and look at 1.68 or get to a better place? jonathan: deeply uncomfortable for that company this money. the moves in the bond market, we

are pricing in rate cuts, not just in america, but europe too. looking at germany the two year yield is lower this morning. christine lagarde has the unenviable task of working through these issues that are seemingly pre-committing to a 50 basis point rate hike, and now seemingly stuck between a rock and a hard place. we asked the question this morning, what would spooked this market more? if they went 50, or didn't? lisa: what does that say about their willingness to back up a financial system at a time when people say the broader commodity is still doing well, and perhaps too well, with respect to inflation? you were talking about bonds, stocks, take a look at european banks. socgen, down more than 11%. bnp down more than 11%. commerzbank, down almost 10%. if you take a look at the banking index in europe it is down about 7% for the biggest drop going back year.

we are looking at a situation where people are trying to extrapolate out what it would mean with respect to counterparty risk, with respect to other risk that is the -- that is exacerbated by rate hikes. trying to gain that out in europe and the u.s., then putting that into a scenario that used to be inflationary, and now suddenly is not. jonathan: it is so difficult. no one knows. tom, for that reason you de-risk, and ask questions later. we have had a guest after guest now talk up the trade of the year so far, which had been european banks. tom: in the crisis we are in you look to institutions, and i think everyone, we are waiting for regulatory authorities to speak. they did that in america in a measured way. we watched take by take over a long weekend -- tick by tick over a long weekend. in europe there is silence. we are going to continue to

monitor credit suisse. jonathan: down 21% now. tom: it is going to be interesting to see. we are well-timed here. joining us now is david rubenstein. as david knows, i am want to say, we will rip up the script. you with your philanthropy, have a wonderful linkage between financial elites and the government. in america we have seen the government begin to step in. are you surprised that european, and particularly swiss authorities have not stepped in on credit suisse? dave: i am surprised that nothing has happened yet, but it took a day or two for the united states to get its act together, so i suspect it will take a day or two there. member, the u.s. regulatory scheme is different than the european one. we have one regulatory scheme in the united dates, and many

different ones in europe. i don't think the swiss authorities have quite the authority over the banking system that the u.s. one does over our banking system. jonathan: what would you suppose stepping in looks like in switzerland? dave: we did in the united states was we protected depositors. we didn't protect creditors and shareholders or employees. i suspect the swiss situation is more complicated because the existence of the bank is more at stake here, and it is such a well-known bank around the world that i think the swiss authorities have to worry more than just about the depositors. the chairman of the saudi national bank, who i do know, that a statement that you broadcast recently, saying they were not going to put more money in. that was probably a bit of a blow to credit suisse. jonathan: we you surprised that he said that on the record? dave: i was surprised by it. i saw him a few weeks ago and they have a lot of authority,

the saudi national bank, and i suspect they wanted to protect their investment, but there is obviously a reason they are doing that. lisa: there is a theory that perhaps middle eastern investors would like to help credit suisse more substantially so they could do business and have that be the european node. is that basically off the table based on the very public comments we heard earlier this morning? dave: i don't have enough information to say that is the case. i was surprised that the saudi national bank chairman did not want to put more money in, he may be under regulatory constraints. so i just don't have all the facts there. i do know that there is a lot of middle east interest in credit suisse, and over the years there have been a lot of activity between credit suisse and middle east investors. we will have to wait and see. lisa: you said this is more complicated because of all of the interconnectedness of credit suisse and the global banking system. i'm wondering what your concern is, do you think the worry in

the markets this morning is warranted faced on how systemic it really is? -- based on how systemic it really is? dave: in the u.s. regulators thought they had solved the problem. obviously they have not. i think the contagion that spread to europe is something that the regulators here probably did not anticipate. we'll have to wait and see what the impact is. right now the u.s. banking system is in pretty good shape. there are some weak banks, but we do not have a systemic run on the major banks. i would say credit suisse is a major bank in europe. it is still an important bank. if there were to have serious problems i would have more of a contagion effect than silicon valley bank would have on our banking system. tom: some people talk, other people do. in march 2008 you did. carlisle capital was challenged, to be polite about it. you stepped up verbally and with

action to help make people whole . how do we affect that now with this complex crisis we have? dave: there was something that was unanticipated by many people. it came about because the concerns about the regulatory system and rates were going up. here the federal reserve did not spend as much time worrying about the impact on banks and their ability to survive, when interest rates were going up. fed was mostly focused on inflation and not worried about the bank regulatory system. i think they may have been caught unaware of how serious the problem was. tom: so what should powell do here? these are delicate questions? i don't want to put you in a corner, but you have tangible experience here. dave: my experience may not be that relevant for this, but i would say the big decision that has to be made by the federal reserve is, do they increase interest rates by 50 basis points? 25 basis points? or no basis points?

the conventional wisdom in washington today -- the conventional wisdom is not always right -- is that the fed will probably go with 25 basis. if they were to go with no basis points people would have thought they lost their interest in fighting inflation. 50 basis points would be seen as too much. -- i suspect 25 basis points is most likely. lisa: we got this letter from larry fink and he was talking about potentially slow rolling crisis in the u.s., what the first shoe to drop, silicon valley bank. then regional banks. then he pointed at private equity and some of these less liquid assets that have built up in size over the past few years. do you agree that could be a note of concern in the next couple of months and year ahead? dave: private equity is not the same situation as banks. we don't typically have runs on private equity firms. the private equity firms did

quite well in the last recession and came stronger -- came back stronger than ever. i don't see any weakness at all that we have to worry about in terms of a regulatory situation with private equity firms. we are not the problem. i think other banking regulation companies may have problems. clearly private equity firms have air liquide assets, but we have known that for a long time, and we don't have a run on the bank where we have depositors pulling their money out anytime they want to do so. jonathan: we had a run on the bank elsewhere, and the decision made by the authorities was to make depositors whole. we understand there is an fdic limit of two and $50,000. it looks like that is gone. citadel talked about maybe eroding american capitalism, that this was perhaps a mistake. do you take a view on that yet? dave: i think the federal government had to do something, and had they not protected depositors that would have been runs on many banks. i think by protecting

depositors, that was a wise decision. whether they should have protected creditors as well as shareholders, that is a complicated issue. ken has an outstanding record. i really respect him, but i do not think that our capitalist system is falling apart. it has challenges. it always has from time to time. what i think the system is going to survive. tom: in the short term we have commercial real estate -- i saw an orange county shopping mall having challenges in the last 24 hours. his commercial real estate the shadow you are concerned about? dave: when interest rates go up commercial real estate values typically go down. we have seen that impact now. i suspect there are going to be some dislocations in commercial real estate, but this has been going on for a while. ever since the tech bubble burst we saw about a year ago, real estate has been challenged and as interest rates have gone up real estate has been challenged. i think real estate developers

are sensitive to this. i don't see a widespread collapse of the real estate market at all. i think real estate developers learned their lessons from 10 years ago. having made personal guarantees. i suspect the issue will get through this. jonathan: appreciate your time this morning. expected to have a different conversation, but things are moving fast. dave: next time we will talk about my interview with jane fraser. jonathan: that is timely. dave: i will be doing that interview for bloomberg and others, so thank you. jonathan: david rubenstein there of the carlyle group. programming note, you can watch david's interview with penny pritzker on the david rubenstein show, peer-to-peer conversations, tonight at 9:00 p.m. in new york on bloomberg tv. from new york city, with all eyes on credit suisse, it is a break of 1.80. 1.78 on that stock right now. lisa m.: keeping you up-to-date with news from around the world.

i'm lisa mateo. the pentagon says a russian fighter jet collided with a u.s. surveillance drone in international airspace above the black sea, causing the aircraft -- the american aircraft to crash. the u.s. european command says the warplane struck the propeller of the reaper drawn. the state department is calling it a brazen violation of international law. about half a million british workers are striking today, as unions stage a mass walkout. teachers, doctors, civil servants, and workers on the underground are expected to join picket lines with rallies and marches planned near downing street and the house of parliament. capital subway is effectively shut down over a pension and working conditions dispute. japanese prime minister fumio kishida will meet with the head of the country's largest labor union today to encourage employers to raise wages. wage talks have been attracting extra attention since kishida

called on companies to boost pay as part of his new capitalism policy, asking for races that exceed inflation, which is at a four-decade high. imran khan supporters formed a human shield around his house as police got ready to storm the compound to arrest the former premier. a police spokesman says the arrest warrants are to ensure khan will appear in court to face charges of failing to disclose assets related to the sale of state gifts. the former prime minister has been skipping court appearances, signing threats to his life. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo, and this is bloomberg. ♪ er from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

>> i'm wondering whether you would be open to assisting further, if there was another call for additional liquidity from credit suisse? >> the answer is, absolutely

not. for many reasons, outside the simplest reason, which is regulatory and statutory. we now own 9.8% of the bank. if we go above 10% also it's of new rules kick in. whether it be our rule -- our regulator or the european regulator. we are not inclined to get into a new regulatory regime. jonathan: the saudi national bank chairman speaking with bloomberg. those words, shaking this stock. top shareholder of credit suisse not inclined to provide any more assistance. it was a break of two this morning, then a break of 1.80. we are down 20%, session low, 1.68. it has been a long morning already. credit suisse not doing well. that bleeds over elsewhere. equity futures down by 1.7% on the s&p 500. equity futures a whole lot softer in the bond market you will see a move of 18 basis points on a ten-year.

you go further insight to the two year, a move of 22 basis points. three flee a break of four again on a two-year. 4.0 2% on a two year treasury. to have a look at germany briefly, 2.62, next week is chairman power, tomorrow it is president lagarde. tom: the global contagion is credit suisse. the technicals is mostly a dearth of selling going on. that is different than two hours ago. just a touch of buying on credit suisse, but the sellers have clearly paused here to see more information. speaking of information and with an old world perspective we are thrilled to have one of our good friends back, ariel blue beanie, the ceo of roubini macro associates. far more than that, someone brilliantly out front of previous crises. we will keep the introduction short this morning.

good morning to you. how is this crisis different the 1998? how is this crisis different than 2008? nouriel: compared to 2008 right now we don't have the credit risk yet. we are not in a recession, and the losses that occur seem to be related to market risk. a number of financial institutions did not realize that with rising interest rates the price of bonds would fall. last two u.s. banks alone had something like $620 billion of unrealized losses on their securities, with a capital of about $2.23 million. -- 2.2 through mail -- $2.22 billion. for some banks the numbers, like silicon valley bank, of course the number was 100%. there are still other regional banks where losses will be 50%.

tom: i want to go back to your italian economics, your service to president clinton. you were an expert on the regulatory framework. switzerland is a devolved federal government with great strength. what is your knowledge of swiss regulators right now? how removed are they from the credit suisse crisis? can they be active today to help their beleaguered bank? nouriel: well, they can be active today, even if the assistance is delegated. the problem is that credit suisse by some standards might be too big to fail, but also too big to be saved. it is unclear if a federal system has enough resources to engineer a bailout. what they need certainly is more capital. the question is whether they will get that or not. otherwise bad things can happen. jonathan: bad things are happening this morning. i would love your take on this.

some people may be looking up, looking at what is happening with credit suisse, here in the united states and thinking, why is this important? can you explain why -- how important credit suisse might be to the financial system? nouriel: it is important, because we are talking about $700 billion. anything that happens to credit suisse will be a systemic effect for not just the european financial system, but also the global financial system. if silicon valley bank created ripple effects, something bad happening to credit suisse would be an order of magnitude more severe. something like a lehman moment. lisa: a lot of people are talking about the consequences of this on monetary policy. torsten said when the facts change, his views change. he sees, perhaps, the end of a

rate-hiking cycle, as does the market. do you agree with this assessment? have the facts changed? were suddenly rate hikes are out of the picture and you see the inflation story will get solved by a crisis elsewhere? nouriel: i don't think so. i think the dilemma for central banks have gotten worse. the latest economic data for inflation in the eurozone or the u.s. suggest inflation is still too high. it is falling, but not as fast as the fed or ecb want it to be. based on what the economy is doing we need to hike. the fed should go at least closer to 6%. the ecb should bring the right to at least 4%. the problem right now we are facing a situation of financial instability. financial instability would suggest to stop hiking, maybe even cutting rates, maybe even resuming quantitative easing. if you do that you have a risk

of inflation. that existed even before raising rates would have led to stresses in financial markets, like last year where bond yields went much higher. that crisis is becoming more severe today because now we have systemic financial problems, but we are also in a situation where inflation is way too high. this financial stress is going to cause inflation to drop is not yet in the economic data. so there is a dilemma for central banks. lisa: a lot of people are saying they are seeing credit conditions tightening. we heard larry fink saying he sees a split -- he sees a slow-moving crisis that is going to move to private credit, private equity. how does your view tie into this? disinherit credit tightening we see across a whole host of assets? nouriel: certainly there is going to be a tighter -- a tightening, at least in terms of credit spreads. bond yields are falling.

that is an easing of financial conditions that might lead to an economic slowdown. but the reality is inflation today is way too high and is going to remain too high, because the forces behind high inflation, like, for example, a tight labor market, has stayed with us. that is going to be a cause of persistent inflation. eventually tighter financial conditions are going to slow down an economy. there is a real contradiction between achieving economic stability and lowering inflation , and maintaining financial stability. jonathan: what a conflict. i have 45 seconds left. i wanted to give the opportunity to try to answer this. thanks found out that risk was where they thought the safety was. where is the safety now? nouriel: the safety is not in long-term treasuries. i have been writing for over a year if inflation were to be 5%, 10 year treasury eventually has to be 7%.

today they are about 3.5%. last year he lost 20% on your safe bonds more than you lost on the s&p. if they go from 3.5% to 7% over the near term there will be further blowback of long-duration risk assets. the solution is going to be gold and other hedges against inflation. that is where you have to go. investors now are only starting to realizing -- to realize that is what you have to do. jonathan: thank you, sir. nouriel roubini of roubini macro associates, and the author of "mega threats." tom: there was a chapter where roubini was years out ahead of everyone else. he talked about the easy money trap. that is what ta -- talib was talking about. it is not just us.

we have 45 people in the control room. it is critical how outfront our bookers, our team has been on the gravity returning to the system this year. jonathan: we have a fantastic guest lined up for you next. lisa shalett of morgan stanley. that is coming up next. equity futures down 1.75% on the s&p. credit suisse lower by 20%. from new york, this is bloomberg. ♪ >> welcome to another of unity party via update. coco goff celebrated her birthday in the desert. the american had too much for rebecca peterson, closing out the victory 6-4. do not forget you can watch all

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>> i think what the fed to pause on that it is going to send a negative signal. >> if the fed does not take next

week, there will be questions about whether the fed is also committed to price stability. >> the fed is trying to tighten things up and realizing it is not that easy. >> the stress on the system heightens financial conditions. there is a warning about the lag effects of monetary policy. >> this is bloomberg surveillance. tom: good morning. another day, another financial crisis, this time worldwide. it is about zurich and credit suisse, it is about cabinet square in london. there i say credit suisse, first boston attempting to be built in new york. it is global. jonathan: it is and it starts with credit suisse, stop down by almost 23%, just off session lows and record lows. the record low is 1.68 earlier

this morning. top shareholder, and saudi national chairman saying will you provide more assistance? absolutely not. we understand that the regulatory issues across that 10% threshold, that i have sent it repeatedly, to say that out loud when the stuck his them as much as it is and now it is down even more. tom: technical analysis, the stock is well contained and trending down, a straight line pause. moments ago, the stock went lower, 1.70, perhaps a test of 1.68. i do not understand what u.s. regulators of credit suisse and fsa do in cabinet square. what do they do? dial 1-800-sweiss-national-bank?

jonathan: is there a solution? do they need a solution? i do not know. this name has taken a major hit in today's session. the monetary policy christian is fascinating. present lagarde pre-committed to 50. next week, chairman powell, i keep saying this, a week is a long time for this chairman. we could today, we were talking about do we go up? how low is the bar? it is monster high. tom: maybe we will get a test here in a moment of 1.68. lisa, what have you learned this morning? lisa a.: let bank contagion or fear of it is anything but gone. stability is off the table. we are now pricing in 100 basis points for a cut in the next 12 months. how much do we get a response from central banks this question

of we still have an inflation problem, otherwise we would be talking about cpi, ppi coming up in half an hour, retail sales, the market that is running hot. help do you deal with the inflation problem at a time when something seems to be breaking? tom: let's break to the data check. four big figures earlier, 27.47. jonathan: credit suisse down pretty 5%, back down to 1.68 in the last five minutes. in europe, the stock is down 13%. bnp paribas is down 11% or 12%. a week ago, we were talking about this being the trade so far. europe, the economy were doing better. the ecb seemingly is going to keep hiking and all of a sudden, it looks like things are starting to break socgen down more than 12%, bnp more than 11,

commerzbank almost 10%. tom: futures -73. we need, particularly for america waking up, we have got to say this has not only a global banking tinge but also we are seeing global gdp slowdown on west texas intermediate. jonathan: we are sick -- we are seeing headlines you do not typically see. the deposit to deutsche bank is sticking. that is the moment we are in. they've got to come out and say these things out loud. we do not have a problem, deposits are diverse. we are not svb, their deposits were not sticking not diversified. tom: science to the credit suisse trading. we will get reporting on that in a moment. 1.6805 on that.

joining us now it was wonderful perspective, we had david rubenstein earlier, lisa shalett joins us. it would be inappropriate for her to speak for mr. gorman and the executives of morgan stanley in the last four hours. i must ask, because you are with wealth management, how do you contain the phone calls? how do you contain deposit inflows of a certain flight four -- to quality? lisa s.: the most of more and think we are talking to clients about right now is getting folks to understand the difference between what happened in the great financial crisis and what is happening now. in 2007-2008, we had a massive credit problem. there was a quality of credit default risk issue.

this go around, the assets that need to be revalued are not mortgages and real estate. date are in many cases -- they are in many cases sovereign bonds of governments. those are very different things. for the handful of banks that have found themselves in a situation where their funding model on the asset side of their balance she needs -- balance sheets should have been more aggressively marked and risk managed, that is the issue. what is fascinating here is the role of psychology. when you get bank runs, when you get depositors starting to worry about the integrity of their deposits, that is a very different dynamic. i could suggest to you that there is a scenario where the

situation at silicon national bank did not have to happen. if all of the folks who were the major deposit holders, major holders of loans did not suddenly en masse decide not lead to a withdraw at the same tempo to that on social media as an action -- at the same time but to put that on social media as an action. we are living in different types, and we have to understand how important it is, the role that regulators play, the role that capital reserves and capital buffers play. and how important having the integrity of those stress tests is. we talk about their the haves in the last haves. the folks who have been hooked through those stress tests and

the folks who have been allowed, because of their size were organizational structure, to perhaps experience "a lighter touch" of that oversight. jonathan: there is a back of the envelope conversation, maybe too simplistic but it goes like this. after what we saw in the u.s. last week, the focus went back a generation risk, mismanagement of interest rates and exposure, interest rate risk. because of that, people instantly said, wait a minute, what about europe and what we have seen developed there. can you speak to that? lisa s.: i think this is a huge wake-up call. it is a wake-up call that should not be a brand-new thing. understanding if you are going to own financials, if you're

going to be an investor in that sector, understanding the funding model, understanding how it bank is generating cash flows to pay depositors and attract depositors is a key part of your fundamental analysis. there is an element of this where this is less about immediate contagion. remember, the great financial crisis, a lot of it was about cross counterparty credit risk. that is not what this is about. this is about individual banks potentially work overly aggressive in funding themselves out the curve during an episode of central bank tightening. that, one could say, is economics 101.

i -- do i think there may be some other mistakes out there? yes, but i do think that the systemic interconnection of them is very different than in 2008. lisa a.: given that perhaps you do not see the systemic relevance in the same way as 2008, new you still think it is important to hike rates to combat inflation to make sure inflation does not get out of hand in the longer term? or do you think it is time to pause? lisa s.: unfortunately, i have worried about central banks being late to the party on this inflation challenge. i think that if central bank credibility has a chance of being preserved, the fed especially, and secondarily the ecb, needs to continue on their tightening campaign. they need to make clear as they

have what their intentions are, that their goal is to fight inflation to defend the integrity of these fiat currencies. not doing so has much longer term structural damage to the economy in terms of inflation risk premiums, overall policy term premiums, and higher for longer reigns over long periods of time. four the fed, -- for the fed, there out is that the regulatory part of the that is separate from central bank operation, open market operations. they have got to stay the course and to do anything else at this juncture would really be the misstep. jonathan: thanks for being with us.

lisa shalett of morgan stanley has been cautious all year. equity futures software, credit suisse down 24%. >> the international energy agency says mobil oil market are contending with the surplus as russian production device predictions of a slump. oil stockpiles of climbed to the highest in 18 months with russia increasing output last month. the iea has boosted its russian output estimate by 300,000 barrels a day. credit suisse's ceo has said the bank and inflows of funds on monday after markets on u.s. banks were pummeled. >> so far, it is pretty calm. we saw good in yesterday still.

i had a client meeting which was very positive. so far, it is, but i think it is early days. lisa m.: global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. get help reaching your goals with j.p. morgan wealth plan, a new tool in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside

and the other goals along the way wealth plan can help get you there. j.p. morgan wealth management. >> tie am wondering -- i am

wondering whether you would be open to assisting further if there was another call for liquidity from credit suisse. >> absolutely not.

the simplest reason is regulatory stature. they are now at 9.8% of the bank. after that, all kinds of rules kick in. we are not inclined to get into a new regulatory regime. jonathan: i wonder if we could get clarification before the day is out. that was the saudi national bank chairman speaking. those words rocking this stock, not exactly an endorsement, the first couple words of that sentence especially. stop down 25%, new record low, 1.67 print briefly, back to 1.68 . he is stating the obvious. they do not want to go above 10%. i get all of that. but he said there were other reasons as well and started with

the response of absolutely not. not helpful. tom: let's go to military. it is the unexpected. that is the were here. this was unexpected. yousef's interview has been global news. every entity is watching as the market reacts. the market deteriorated in the last 50 minutes. the technical analysis is simple. credit suisse, this is an exceptionally elegant chart and well behaved. the sellers, there is a dearth of selling right now, not like what we saw at 6:00 and 7:00 a.m., but here at 8:17 a.m., i am going to suggest we are seeing a renewed point were buyers pullback and that is how you go to 1.66. jonathan: that is a new record low. the issues this bank faces have nothing to do with the saudi national bank chairman. tom: well set. -- well-said.

jonathan: we have been following this for 18 months. they have said a decade and have tried to help provide assistance by becoming the top shareholder. it is a national bank, but i will say this also, days like today, moments like the moment we are in right now coming have to be careful with the language you use. things like this can happen quickly. lisa a.: it is an emotional sponsor that response. you do not want to feel it inappropriately. it is theoretical, but when you take a step back, people are worried about the next shoe to drop. i go back to what larry fink said. he is concerned about the cascade effect as we realize what higher rates expose us to come in the vulnerabilities. it makes it that much more painful. tom: we heard from david rubenstein earlier whose capital

was challenged in 2008. he said switzerland is different. patrick barnett, who is led coverage in germany with the european banking experience, where are the regulators? our reporting, our team's reporting, but with all of your banking experience before journalism, america, they would be forefront right now. where are they? patrick: european regulators are not known for being the first at the door when you have any kind of crisis. they are usually rather reactive than being at the forefront, but let me say this, some are saying by too hard on credit suisse and there is no issue on the liquidity. let's put that aside. in the whole system, liquidity is good. let's just say there's why

credit suisse is being hammered and that is where the regulator is going to struggle to help. the bank has an earnings issue and everything that is happening now with the potential tightening of credit conditions and potential reduction in interest rates, this will all feed into earnings. that is why the shares have been hammered. if you then get a big shareholder, and i guess he was just speaking his mind there, not providing immediate backup, then you get further issues. other banks are not down that much because they probably have still the opportunity if push comes to shove to say, let's go to the market. we are solvent, we have a working business model and good earnings that will recover from a recession. let's pull in fresh capital. credit suisse have a hard time doing that. that is what the market is pricing in. it is not to say that credit

suisse has a liquidity issue but it is just the fact that earnings are going to suffer and you will have a hard time providing new capital. this way investors are so careful. jonathan: on bloomberg tv, there was a promo for this show. i say something like, what does it mean when the white house says they are looking at market? tom laughs and says -- tom: i cannot remember. they have a bloomberg s&p. jonathan: we laugh about it. we hate the promo, but ultimately, it is relevant. when every hear from officials and they say we are watching it carefully, or whenever you hear from investors who say, we have faith in management's ability to turn this around, it feels hollow. but this medicament we have not got any of that. you've got the s&p, this was national bank saying they declined to comment on credit

suisse. are we saying this straight this morning could be different if the swiss national bank set, we are watching this carefully? and if the saudi national bank chairman said, we have full faith and the leadership at credit suisse. does that make a difference? jan-patrick: absolutely not. we have a totally different situation. i understand the regulators not commenting. i believe whatever they say, unless it is a drastic measure, the market would not care. what we are doing when here is within banking stocks and noble commodity dislike, we are doing a repositioning pretty hard and pretty setting. everybody felt so comfortable in this inflation pressures coming down. we are good, soft landing, everything is fine. that was praised the last three to four months in equity markets. there was good reason to do so. this whole scenario is not out

the window and you have to been repositioned. the banking stocks are at the forefront. again, in this first line of defense, you are selling the weakest, cheapest price as much. no offensive in credit suisse, but among banks, it is the weakest stop at this moment for everything i said before, earnings backup from potential investors. regulars and politicians can do very little to change that. the market forces, the economy will play out at this point. when it gets bigger, we will see if they have to give us a lifeline. lisa a.: how thick is the line between profitability and liquidity issues? jan-patrick: it is not so thick that we have to immediately talk about liquidity problems for credit suisse. two european banks have lots of access to liquidity.

credit suisse has tens of deposits. i'm not seeing them run away immediately. still, it can be an issue down the road. everything is now making through that their stuff is in order and credit suisse probably has a harder time than other european banks ending the message across to its clients. jonathan: test 10, not -- tough time, not just for clients but people working there. credit suisse is down. we all know people who work at credit suisse. mentally talented individuals. imagine trying to work through this and engage with clients this morning tom: that is the heart of the matter. ed madison avenue and cap it square, how do you engage in conversation. 1.68, maybe 1.69, bouncing off of 1.64, a dearth of buying is what i see. i was using my vast knowledge,

follow the money, jan-patrick was talking about profitability but i would be talking about not just this bank but many others where that is the case. lisa a.: when this is become not just a profitability issue but something more significant? that is where you are seeing the tension. jonathan: the conversation continues. we are looking forward to these conversations in the next hour. futures on the s&p down 1.75%. ♪

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what has become a global bank of, credit suisse challenged. moments ago, we have a 1.59 print on credit suisse. it is well contained. lisa a.: this is the question. what is going to not only trigger the stability but also a revival after the top shareholder said he was ruling out further aid for this bank. tom: michael mckee, in charge of international economics.

he has retail sales for us. what do you see? >> we have got ppi and retail sales. the consumer stopped spending in february, it appears. retail sales down, autos down .1%. if you take the control group, there is some better news. that was up half a percent commit the expectation was for a fall of .2%. last month, the number for the control group was revised higher, significantly, 2.3% from 1.7%. all of the numbers for last month were revised higher. the headline retail sales was up 3.2%. the original report was free percent. -- 3%. it does show that americans were still spending but pullback back in some areas. ppi down .1%.it rose

.7% in january. the core rate is flat after a .5% gain last month and a .4% gain forecast. you take out food, energy and trade. trade is not international trade. this is retailers and wholesalers and it is their profit margins. that is up .2%, down from .6%. it shows some fall there. on a year-over-year basis, 4.6% for the headline. i have got to throw this in -- empire manufacturing, down 24 .6%. it was -5.8%. dry in empire manufacturing numbers. tom: we have got a number of moving stories here. and esteemed guest to join us in

seconds. i want to move away from economic data. what is your interpretation of how this federal responded to your economic data and our financial crisis? what would you guess? mike: i do nothing the data today makes any difference to the fed. empire is a tertiary index and retail sales show americans are hanging in there but maybe spending less. ppi is not going to change anybody's mind. therefore, that possess that 25. tom: we look at retail, credit suisse and lisa abramowicz at the two-year. lisa a.: that is what we should look at. you are seeing a complete breakdown, down below 4%. this is the market that has looked at ppi, inflation coming down much more than expected. retail sales diminishing and a week empire manufacturing print.

we are looking at a market is pricing out any further rate hikes. mike: you are a tennis fan? this is like going back and forth with bond trading. bond traders have got to be going crazy. volatility is good for profits, but it is hard to get a read on what is going on in the economy when you're looking at yields right now. they are being pushed around by all kinds of news. what will they be a week from today? tom: the published dividend of credit suisse continues to rise as the price declines. i have got to be careful here. suisse's low is 1.5979. lisa a.: do your guild is dropping as well. 2.54%. what does this mean? is this economic data enough to write of further rate hikes? is this concern about credit suisse and the financial

markets, something raking? mike: particularly for the ecb. they meet tomorrow. tom: and we need some experience. it is interesting that michael mckee is here. what was it 15 years yesterday to bear stearns? that is the most difficult thing here. i would guess seven or 8 years. also draining as is stephen roach data. i am going to cut to the chase with west texas intermediate giving us 69 a bit ago. lisa mentions the two year yield. forget about curve inversion and recession calls, do arts at the american economy deteriorates given banks crises? steven: in this day and age, there is less dependence on bank market than credit markets.

and there is ample to liquidity in the system. we are in a free reserve system. ftse, treasury, federal reserve took aggressive response to the silicon valley situation and the signature bank situation. when you roll it altogether, there is going to be less of a macro impact than a financial market impact. but you have to understand that we are likely now to have an increased probability of a recession. as a precautionary environment, i would say the federal reserve would probably hike rates and then go into's and see where the dust settles and let the markets go from there. i would give it probably three bank six months before they change policy again. lisa a.: let's link financial markets to the real economy. the real economy, we are seeing disinflation, cooling but other aspects of the economy seem to

not beat what we got yesterday. what is the real economy doing? how quickly will it respond what we are seeing in financial markets? steven: if this is not a systemic credit crunch, it is not a massive decline in the macroeconomic environment. it is a shallow recession. it takes time to bring these things to coalesce and bring down the rate of inflation and growth enough to rebalance the labor market. it is an imbalance of labor market that is key here. it continues to be the underlying driver of economic activity. if people are not getting fired, comfortable to quit their jobs and move on, these are the people who are going to continue to spend money and that drives the economy. lisa a.: new yelp will be need was saying there it -- nouriel roubini was saying there is this dual mandate of the federal reserve. full employment is one but they also have to fight inflation, and uncomfortable mix read from your vantage point, which will take precedence next week?

mike: i think what they have decided and the chairman indicated that -- this, he made it clear that the fed is trying to separate the two roles. this comes through with the idea of people misreading the lending facility is quantitative easing. it increases the asset side of the fed's balance sheets, but it does not change the portfolio of the federal reserve. they are looking to separate the two concepts. it's regulatory roach to policy -- approach to policy versus policy with regard to inflation in the labor market. that is a tough bounce, but they are pulling it off nicely. the term lending facility should become a permanent facility. tom: i need to stop and say that you and your colleague absolutely nailed the super restrictive nature of the moment

six weeks ago. you were lonely on that but did a great job. part of that super restriction comes down to commercial real estate. what do you suggest the shadows of commercial real estate will mean, for economic growth but also general financial well-being? steven: when you are looking at the different areas that lead to underlying economic activity, the tax base is in a setback mode. commercial real estate has been an ongoing train wreck for some time. tom: could you speak more clearly? steven: it has been a fairly slow train wreck. to the extent that it accelerates, the banks involved in this and the people involved on the asset side, on the investing side all have a vested interest in restructuring these deals to make them less of an importance in any particular quarter.

kit does not mean that is not has impact in terms of growth. it helps lead to an environment where you have a tight labor market driving consumer spending but all these other factors, which is white you probably get to the shallow recession forecast rather than the hard recession forecast that normally follows a systemic credit issue. lisa a.: larry fink was talking about concerned about a slow-growing crisis that first hits spd, silicon valley and then regional banks and then moves to the private markets. you were talking about the train wreck in commercial real estate. at what point does it become most important for the economy, for sewing inflation, for losing jobs, for all of these metrics that people have been looking for is a side effect, a very negative one of this technique? -- tghtening? steven: if you wind up in a situation where the shadow bank was perceived as at risk, then you could be in that environment

but this shadow banking industry has built up enormous reserves. they have been fearful of this. a lot of them come out of the legacy of gcc. they saw what happened there and understand that if you do not have right reserves. the 10 overwhelmed financials -- fear can overwhelmed financials. right now, we are not in that position so it is hard the whether we will bow that route especially given that they have successfully revamped the banking industry. this term lending facility should become permanent because going to the discount window has become terribly concerning for management. tom: that is all this is. i want to talk to steve forever. can we make this happen? it is a new discount window. steven: and it gives you an opportunity to restructure the bank. tom: you've got to stop talking markets going down. steven is driving the market lower.

the two year yield is well under 4%. look at american oil. lisa a.: what you are seeing is first it was a response to potentially the report that russia was pumping more oil than expected. this is a bigger concern about potential for some global slowdown, 69.86 on wti. tom: rig count and the pretty markets, standard, for sure, 77 jonathan emails in and says the dow is -6.33 and the vix at 28 .08. credit suisse a new low, 1.58. lisa m.: keeping you up-to-date with news from around the world, syrian president bashar al-assad is meeting with vladimir putin in moscow today as the kremlin pressures for a syria and turkey

reconciliation. they will also host four way talks involving syria iran and turkiye. this comes after china broken a diplomatic to todd, demonstrating its newfound weight. china reports a rebound in consumer spending. industrial output and investment. the national bureau of statistics says retail sales rose in january and february. industrial output rose 2.4% in the unemployment rate increased, pointing to a weakness in domestic demand. about half a million british workers are striking today as unions staged a mass walkout. teachers coming junior doctors, civil servants and workers on the london underground are expected to join picket lines was rallies and marches near downing street and parliament. the subway is effectively shut down over pension and working

conditions. apple is delaying bonuses for some corporate divisions and expanding cost-cutting efforts. it will reduce the is the of bonuses for a portion of corporate workers. separately, the company is limiting hiring and leaving positions open when employees leave. managers are also checking office attendance and travel. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

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>> absolutely not. for many reasons as the simplest which is the regular tray statute. we now own 9.8%. about 10%, new rules kick in, whether it be the european regulator or the swiss. we are not inclined to a new regulatory regime. tom: an interview heard around the credit suisse world. yousef shaking fake -- bank foundations this morning with the comments of the saudi national bank chairman on their commitment to credit suisse. i will not review the stock, but lisa and i with our guests coming up will continue to monitor the stock that was at 1.573 romans ago. lisa a.: look at the credit side and the yields on the perpetual

bonds are 30%, almost 14%. -- 1%, most what will be left for investors? tom: help meet with the charts. futures are negative -82, nasdaq behind. we are approaching five big figures on the vix, back near 30 , with bank ramifications, we will go to gina martin adams in a motive, but on the charm offensive, the charm offensive of the swiss ceo of credit suisse, sonali basak steps in there is a geography from kevin square in london to new york at the bottom of addison avenue, which is the heritage of credit suisse.

help factored are they this morning? sonali: credit suisse has been fractured for a long time. the interesting thing is the fact that it has been bleeding for so long is actually what makes it less jarring to see moves like today, but the systemic risk question underpinning the credit suisse question, classic risk question, what is the floor? the comment is a regulatory one, a technical question, not a crisis of confidence, but it is a signal they cannot put more money into this bank. tom: how do you run a bank at under two dollars a share? lisa a.: cap do get confidence if you are saying wait three years? they do not have three years. i am looking at the shares of the u.s. banks, trading lower in sympathy. the fisher, the line -- the fissure, the line between a

profitability crisis and a liquidity issue. at what point are people concerned about something that is more than profitability? sonali: last year, we had a lot of bank executives that were very worried by the risk tied to credit suisse. in recent days, that risk is going down. what happened with silicon valley bank, this is not a global institution. with credit suisse, you have the backing of the swiss government. tom: how do you form credit suisse first boston amid that environment? you suggested at one of daniel ballou's restaurants where you recruit somebody over to drive forward and see the new bank they are trying to build? sonali: there are a lot of questions run the plan. you had the ceo tell you it will not be before 2025 before uci

po. you're bringing on bankers and one that equity, there are a lot of questions about what that qb -- for that equity will be worth. therefore not brought on more investors yet, but we know how wall street works. the more it finds jobs, the more investors are interested in coming in. the role of private capital is interesting, both in the svb situation as well as credit suisse. the swelling of apollo -- tom: there is only 42 people watching. putting american bank to me and pick up credit suisse for next to nothing -- could an american bank in and pick up credit suisse for next to nothing? sonali: that is ours by the worry in switzerland -- that has always been the worry in switzerland. now, there are too many worries about risks inside of credit suisse, everything from west control to qac.

tom: you are reporting it is less likely? sonali: it is less likely. lisa a.: do not be a stranger. i am curious about how this changes over time. on the broader market, some defines accelerating despite rate hikes. gina martin adams, we are lucky to have you. i am curious what you are takeaway is from some of the fragility in the financial system and have it is being born through the rest of the equity outcome complex? gina: we have learned, we said that predicting fear is a false gain. what we are in right now is an environment of fear and fear can take asset values down to low levels. it is difficult to say. our best case is framed by a combination of fundamentals and technicals. the technicals that were

powering markets have broken down pretty significantly because of the fear involved around the financial sector. we have seen the s&p 500 breakthrough critical support levels. we have seen a lot of optimism dismantled. the result is there not great reason to be a hero here. you've got to find a place where you can find the value of the market where you can see sustainable long-term growth. tom: i get the idea of a search for deep value. you're looking at pes of nine or six or five. i am making a joke, but the effect of the at her is people are processing -- pricing and growth fitness and the idea that there are companies that dominate within their sectors. are they going to be repriced on the price-to-earnings basis by price or increasing earnings? gina: this is an excellent point. what are investors going to be

willing to pay for? right now, they are not willing to pay for anything. this is the problem you run into in an environment where fear takes over. the equity market is at a certain point, valuations become more attractive, but when you're looking at that in tax -- index, earnings looked uncertain and you are taking a fire on the s&p 500. that is a difficult proposition. there are segments that have very little exposure to what happens with financials. they are seeing earnings trends are emerging. we are at a point where earnings are probably reaching their loads. -- lows. that means if you can think through where the dynamics of growth will emerge for 2024, there is a case for stocks in certain segments. what are the banks touchable

right now? they are not a portion of our portfolio because of the dynamics of this. tom: we have got to run, but massive shout out to hermann. he shakes when he talks to you, but your bank analyst on regionals and his team have been superb the last couple days. gina martin adams and should only back sick -- sonali basak. lisa a.: what we thought might be subsiding yesterday and even early this morning is very much still on the table and that is a system of risk that is taking priority, potentially for the ecb tomorrow. i am looking right now to your yields around the world cratering from going to the lowest levels since september of last year, even as we get signs

of a robust economy. at what point do these conflicting goals are central banks come out with something that can try to ease the panic? tom: i will leave you with technical analysis, which really works in radio. credit suisse this morning has been extremely well behaved. that is technical talk. it is lost among a declining moving average within a big study of trend. the trend itself right now, there have been a number of times in the 7:00 hour and even now when you are trying to lift above that and we are struggling to do that. there is a dearth of selling right out versus earlier, but, critically, often yousef's interview with the leadership earlier today, the buyers of credit suisse are on strike. coming up, julian emanuel to

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>> the financial sector turbo continues. good morning. equity futures done by 1.9% on the s&p and the kind onto the open starts right now. announcer: everything you need to get set for the start of u.s. trading, this is bloomberg the open with jonathan ferro. jonathan: live from new york, credit suisse plunging to a fresh record low. shareholders