tv Bloomberg Daybreak Europe Bloomberg October 17, 2022 1:00am-2:00am EDT
dani: this is "bloomberg daybreak: europe," i am dani burger in london, manus cranny is in dubai with the stories that set your agenda. manus: the u.k.'s liz truss battles to rescue her premiership. the pound gains on expectations of more u-turns from the new chancellor, jeremy hunt. >> i am not taking anything off the table, i want to keep as many tax cuts as i can because our long-term health depends on being a low tax economy and a very strongly believe that. manus: taking a stand. china's president xi backs covid zero at his party congress and doubles down on the policies. chinese stocks slide. the eu plans a temporary overhaul. the gas market with a dynamic price cap.
the latest effort to rein in soaring energy bills. dani, good morning, it was captivating watching the spectacle of the downing street press conference friday night. the gilt market reacted with some verlyn's. -- virilance. good morning. dani: the pound moving higher, at least confident there will be a full u-turn. will we get details today? we are looking at a headline, the u.k. chancellor will make a statement today on the new fiscal plan, that is jeremy hunt, who spent the weekend talking about this idea, as we heard. that those tax raises need to stay in check for now. manus: there is still a confidence void, still a credibility void. the only void they can fill is the fiscal unfunded gap and the question is, how much more
brutal will he be with u-turns and how much longer will she be in power? that is what the market is punting on. dani: a couple things to keep your eye on today, the statement from the chancellor and the open of the u.k. bond market, which will open at -- happen at 8:00 a.m. u.k. time. meantime, let's look at the futures markets. u.k. futures moving lower, not as much as the rest of europe but they did underperform significantly yesterday. some writing that hiking taxes are a big deal for equity investors. it does mean that capex and hiring will be deferred. s&p 500 futures up half a percent. oldman with a note that -- goldman with a note that the entirety of the u.s. stock market is expensive but there are some deals and individual names that have sold off. asian equities moving well, down more than 1%. manus: $15 trillion has been
wiped off the global equity value and wealth destruction is brutal. you have the oil market rallying a little bit, up three quarters of 1% despite xi not moving on zero covid into the war of words between the white house and the house assad moving higher in terms of coercion, accusations from the white house toward other opec nations. dollar-yen, sniffing 150 seems to be the consensus before that is the line in the sand for the bank of japan. michigan inflation expectations break 5%. i think we will debate what is the scale of the bully in the schoolyard according to my guest of the last hour, he says they are driving too hard, too fast and too aggressively and the brutal bully of the dollar we will pay a price for.
dani: oof. let's get to our reporters around the world and our top stories. starting in the u.k., lizzy burden is at downing street. we will also talk about xi's party congress with rebecca wilkins, and juliette saly with the start of trading in asia this week. manus: let's dig into the u.k., the fourth chancellor in as many months, he spoke to the media after his appointment. this is what jeremy hunt told the bbc. >> i am not taking anything off the table, i want to keep as many of those tax cuts as i can because our long-term health depends on being a low tax economy and a very strongly believe that. -- and i very strongly believe that. manus: the concern and speculation swirls around whether the prime minister can cling to power after friday night's news conference. lizzy burden is outside downing
street. you have the president of the united states criticizing the prime minister of the u.k. and taxes are set to go up. this is everything the tories are not, which is prudent and in control. lizzy: yes, even though it was politically humiliating to have to sack her close friend and political soulmate and to reverse the tax freeze and admit she needs to raise corporation tax, really it does very little to balance the books. our economists say she needs to find a 24 billion pounds worth of savings. as you heard from the new chancellor jeremy hunt, it seems more u-turns are coming and we are expecting him to speak today. as a result of all of this, the army hunt seems to be the most powerful figure in the government, which begs the question, what is the point of having liz truss at the top? three tory mps have already said publicly she needs to go. behind the scenes, mps are
asking themselves should they roll the dice on a new leader now? perhaps jeremy hunt or other figures who ran for leadership, or should they wait for what seems like inevitable annihilation in 2024? mp's will have their eyes on the gilt market today, we've seen the pound buoyed in early training, that gilt will be the clue because bank stabilizers are off. dani: more clues from the treasury, we have a tweet saying jeremy hunt will make a statement this morning and bring forward measures from the medium term fiscal plan to support fiscal stability, also writing that the full medium-term fiscal plan will occur as planned on october 31. thank you, lizzy burden the latest on the u.k. let's turn to china. president xi jinping delivered a defined message to the world in his speech at the communist party congress. the message of that china is ready to stand its ground.
he also signaled no chain -- no change in direction for two risk factors, housing market policies and strict covid rules. we are joined by rebecca. what is the vision xi painted of china's global role in the world? rebecca: xi jinping took a strident, defiant tone to paint a picture of china that is more powerful and more influential in the world. essentially saying the national rejuvenation of china was inevitable. even with the sort of dangerous storms and hostile environment he is facing. one of the parts that seemed to resonate most strongly both with xi jinping and the party itself was this message around taiwan in particular. the language itself wasn't particularly unusual, pushing back against foreign interference, saying they will not renounce the possible use of
force, but it was the tone i think that was quite remarkable. xi jinping's voice appear to crack with anger at one point, and it had one of the longest of plazas from the party delegates. it is an important reminder that this political event is mainly about selling this vision of china and china's future to his party and to a domestic audience. manus: rebecca, good to see you. what were the messages on the economic priorities? the market doesn't seem to have taken any great vigor away from his comments around zero covid or indeed the property market. rebecca: quite frankly, i think markets probably priced and a lot of pessimism going into this. there wasn't a lot of hope for a u-turn on covid zero or property and indeed, we did not see any lifting of either of those. there was an interesting point on the future direction gingerly
for economic growth. xi jinping focused on science and education in a way he hasn't done in his 2017 speech could analysts interpreting this is his bet on restoring economic growth and meeting foreign policy targets by focusing on innovation, to try and help revive the economy. that was one bright spot we saw. there was a little nod to how challenging the economic period will be for the chinese people. he encouraged and promoting the idea of the spirit of frugality across society. just a brief hint about the period of austerity we are going into. xi jinping for the first time in a decade about to oversee a china suffering an economic downturn. manus: ok, rebecca. let's see what the week brings in terms of market response as we build up.
rebecca williams, our asia government reported. were governments in asia disappointed by the speech? juliette saly is with us. we thought 145 was the breakpoint to yield curve controlling significant intervention. what do we have today and what do we expect? juliette: the yen still at the 32 year low. let's start with the broader picture. we had the factors rebecca alerted to, there wasn't a turnaround from covid zero policy or strong policy support for the policy sector. csi 300 trading at the lowest levels since the beginning of the pandemic. certainly a lot of weakness in the legs of iron or futures in singapore as well, leading to a negative day for asian stocks and tech players under pressure as well after the broader u.s. tech selloff. the pboc once again trying to stem the decline in its currency
with a stronger fix. they also rolled over the mlf without rate, two .75%. a slightly stronger offshore your one, but city is saying -- offshore yuan, but that will continue to prop up the dollar. the yen, more verbal intervention from the likes of the top official candidate of the g20, and suzuki as well. no inclination we have seen any attempt to stem the decline, which is seen the yen touch a 32 year low. 150 insight, goldman saying that will happen soon. citi say 162 the dollar. others sang perhaps japan will be cautious about intervening without u.s. support. a pickup in yields, the 30 year touching 1.5% for the first time since 2015. dani: jules, thank you.
juliette saly in singapore. let's look at the key things we are watching for this week. bank of america will be releasing their third quarter earnings report after wall street giants reported on friday. tomorrow, the latest findings from a german survey. the u.k. cpi reading for september. also last year's u.s. home sales figures. the week will round out on friday with a septembers a u.k. retail sales data released. manus: yep. coming up, we talk about mr. bullard leaving the door open to the possibility the fed may raise interest rates i 75 basis points at each of the next two meetings. we focus on further fed action. that is next on bloomberg. ♪
>> whether the committee would want to pull some proposed or thought of policy rate increases from 2023 into the december meeting, i think that is a judgment that is premature to make. dani: the st. louis fed president on the possibility of a larger hike in december. we have that data out on friday, continuing to show gains in inflation expectations. manus: well, let's take some of those risks to our guest. the global head of private capital advisory at raymond james. great to have you with us. a lot to chew over the u.k. at a breaking point and the fed -- we know bullard is a front loader, and the question is, my last guest said the fed are bullying,
they are overdoing it, pushing too hard, and the narrative around 75 basis points at both of the next meetings is just too much, it will break something. do you think they will do 75 bips in both and what is the risk of something breaking? >> i think the likelihood of them doing 75 basis points or more is higher after the survey results last week. they are late to the party on inflation control. we know that, and the world economy is paying the price, especially the u.s. real-world impact is getting quite real with these increases. they are afraid of doing too little rather than too much, and yes, the risk of course is that they break growth, and much more important than concerning to me is they are risking financial stability and parts of the market, which is a risk that has yet to be priced in. dani: if that is so, how do we buy risk assets? how do you form a thesis that says jump in here with
everything selling off and buy risk? >> the only where to -- the only place to buy risk is where you get risk adjustment. think about what parts of the markets, including the equity and bond markets, look healthier today versus six months or three months ago. what are we talking about? companies more exposed to u.s. domestic consumer or domestic demand will be better off than global businesses. services businesses that are off than goods businesses. industries exposed to lower growth environment are not that impacted by lower growth and probably that are off. guest services, healthcare services, so on. you have to pick your spot. it is not a good time to go along holistically. manus: can i challenge that a little bit? it is are very well saying step into some of those parts of the u.k., but the wealth effect come i want to deal with this. we have a great article, the wealth effect, 4% u.s. wealth has been wiped out, the second-biggest wipeout since
2008. how much more wary does that make you a value relative to growth even though growth has been trashed? sunaina: very wary. you have to be very careful where you want to pick your spots because yield is not a bad place to be in cash today. fd is yielding 4.5% and going up. where is the risk premium worth investing today? it will be micro, you cannot be macro because of the wealth effect you are talking about. on a real basis, a lot of these assets are not yielding enough for you to take that kind of risk premium on. dani: it is time to be micro, perhaps it was too easy to invest in the past where you bought anything it would go up. the other risk -- there are a lot. u.s. midterm elections coming up, opec-plus determined to push up the price of gas, the war in ukraine continues to get more intense, and you have china as well. what do you fear the most? sunaina: what i fear the most
today is what has started to develop in the u.k. the last couple of weeks, which is the financial stability risk in parts of markets. those airpark it's -- air pockets that can be created. markets are still to use to lower rates and high liquidity. as this pivots, folks will be caught out, and parts of the non-bank sector can be caught out. that risk is paramount because it can be a shock to the market that can destabilize things very quickly. manus: let's talk about deteriorating liquidity. janet yellen wearing -- warning about liquidity and bond markets. bank of america talked about the risk of significant dysfunction and the underpriced risks are credit freezes, breaks and demand. -- foreign demand. the ratcheting higher in terms of some of the spreads, which determine if you on liquidity. are you seeing a material evaporation of liquidity and is
it a concern which we are cognizant of? which we are. understanding of enough at the moment? sunaina: certainly the understanding has yet to occur in terms of which markets and how specifically. what is clear is that as these financial instability issues arise in different markets, it makes central-bank policy incredibly difficult and uncertain to implement. we saw that with the bank of england doing quantitative easing in the long end of the curve all signaling tightening to control inflation. those two things run into each other quickly. dani: i also wonder, you mentioned, these issues are pumping -- are popping up in nonbanking sectors. our central banks equipped to handle that considering they transmit monetary policy through the banking sector? sunaina: they are there as crisis management tools, just as you saw andrew bailey step in
and say i will buy these bonds and make sure the market functions for a short time, two weeks in his case. they can do that. they are the funder of last resort to make markets healthy and function. they cannot afford for the bond market to break. that is not a possibility because of the incredible side effects that has, spillover effects in the real economy. in the short term, all these central banks are looking at other provincial agencies to figure out where the risk lies and how you can do orderly the leveraging of balance sheets to make sure this doesn't spill over again. dani: thank helping us navigate wildness that has been these targets -- these markets. coming up, the new plan the eu is considering to tackle the growing energy prices -- energy crisis. that is next. this is bloomberg. ♪
>> europe in particular will be challenged in the next two, maybe three years, and we are working on fixing that, especially germany, depended on gas coming from russia. there is a lot of activity to deal with this short to midterm challenge. if we look a little bit longer, mid to long-term, it could be a catalyst to go quicker into renewables. manus: the mercedes-benz ceo speaking to bloomberg about europe's challenges and what they face no in terms of an energy crisis and how that might fasten the push into renewables. dani, everybody debates this, an energy crisis delays the
transition but it is not denied, and it is becoming the peak moment as we go to cop, isn't it? dani: it is and we have to contend with what regulations will look like. the european commission is planning put forward a dynamic price cap on the eu's biggest gas exchange, part of a range of measures to tackle the energy crisis. all of this according to a draft document of the plan seen by bloomberg. let's get with our special guest in our london studio, maria tadeo joins us. what is this dynamic price cap? welcome. maria: a dynamic price cap, if you don't know what it is, who can blame you? to take a few steps back, this is the core of the issue -- you know very well the commission has argued when you look at the ttf, the benchmark for gas prices, it no longer replaces -- flex the real price in europe.
oil prices have gone from 40% to 7%. the european union switching to lng. in the interim, what they argue is the volatility and the price swings have to be contained. this is where we get to a dynamic price cap. it means essentially that would allow some moves in the market, but when you go past a threshold, you have a limit. the transaction is closed, essentially. it creates a consensus between those that really want to see a full cap and those that say i don't like it because it could be a disruption for supply. i will say one thing, this is a draft, a lot of things can change. tomorrow the commission will meet again. a lot of things by thursday could change manus: maria, we have run out of time, but you will be with us through the morning. there's always the question of
whether they all get on board with the price cap and what it means. it is perfect to make that point that the gas markets are broken. maria, we will see you a little later on. she is on the ground, we will take advantage of you. up early, maria tadeo in london. let's return to the breaking news headlines. in hunt we trust. you like that? dani: very nice. manus: exactly. maybe we will hear a little more about what he will you turn on in terms of tax. dani: yeah, and we will get those full plans on october 31, we will get something, the treasury says, this morning. millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there.
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manus: this is "bloomberg daybreak: europe," i am manus cranny into by and dani burger is at london hq with the story's your agenda. dani: downing street hotseat. liz truss addled to rescue her premiership. the pound gains on expectations of more u-turns from new chancellor jeremy hunt, do to make a statement later this morning on his fiscal plan. taking a stand. china's xi jinping backs covid zero at his party congress, doubling down on policies. at the center, tensions with the u.s., chinese stocks slide. plus, the you -- eu plans to overhaul their gas market. the latest effort to rein in soaring energy bills. man is, good morning and happy monday. a statement on the way from jeremy hunt, the pound pushing higher against the dollar. manus: we understand the chancellor and bank of england governor spoke last night.
and the head of the doubt -- debt management office to brief them on his plans this is about a reunification of fp with mp, and that is something markets will latch onto. dani: of course we will see exactly how that plays out at 8:00 a.m. this morning when bond markets open. for now, it we are getting some hints from the treasury market moving higher. manus: we are indeed. there is the pound. the past two days, not back to its highs on friday but certainly reversing course from its nadir just over the 103 level 20 days ago when truss- nomics came to bear. to the markets, oil a little higher, when will they intervene when will it be 152? we are dipping this morning as
bullard opens the door perhaps to a larger than expected rate hike in 2022, to summer $2020 rose. the bully in the schoolyard according to my guest, the dollar is the bully. dani: we are looking at both u.k. and wider european futures, in the red this morning, down 3/10 of 1%. jeffries morning that higher u.k. corporate taxes does matter for equity investors, it means less and less hiring. a negative session on wall street on friday after numbers showed inflation expectations fully entrenched. we are getting a little consolidation after that selloff. s&p 500 up -- selloffs up. manus: we are focused on the u.k. obviously in terms of any nuance that comes through. liz truss's position as prime minister is coming under
increased pressure following a series of u-turns in the mini budget, resulting in the sacking of her chancellor. that left her plans for the economy in tatters. the new chancellor jeremy hunt is do to make a statement to the markets a little later on. we are seeing in the times that there is a headline that liz truss has signed off deferring the 1p income tax cut until 2024 but the damage is all but done, lizzy burden outside downing street for us. this is an annihilation of trust-onomics. what do we expect from hunt-on omics. lizzy: the prime minister's press conference on friday lacked detail and an apology.
the you turn on corporation tax and the sacking of her chancellor was politically embarrassing but not doing much to balance the books. we are expecting when hunt makes his statement in the commons today to give us a little more detail on how they will balance the books. economist at bloomberg economics reckon that liz truss needs to find 24 billion pounds in revenue raises and savings. but because truss-onomics is being dismantled, mps are asking what is the point of having her at the top? does she have weeks or months left? they are asking, do we want to cattle -- to gamble on a new election now or face a wipeout in 2024? a lot will depend on the gilt market today, it tanked on friday after the underwhelming statement. see what happens after the boe's
help is gone. dani: what do we expect from the boe in terms of continued support? independence front and center for the boe at this moment. lizzy: that is the message andrew bailey wanted to underscore at the imf over the weekend. he suggested figure hikes are going to be needed, including at the november meeting. take a listen to bailey in washington. >> we will not hesitate to raise interest rates to meet the inflation targets, and as things stand today, my best guess is inflationary pressures will require a stronger response than we perhaps thought in august. lizzy: andrew bailey wants to get back to focusing on fighting inflation, but they will have to see how much pension funds have fortified themselves during this interim period of emergency boe support.
the form the bank of england's help could be extended in could be an extension of delays of quantitative tightening or a new facility. we will have to see how the gilt market reacts. dani: thank you, lizzy burden, outside of fittingly raining downing street. now to our guest, who advises investors on how to navigate a volatile u.k. thank you for joining us. how much longer doesn't liz truss survive and doesn't even matter? -- does it even matter? andrew: it is probably weeks and possibly days. to the extent she is not in control anymore so what kind of doesn't matter in that respect. jeremy hunt is de facto u.k. prime minister at the moment, he
calls shots on this number one issue, which is how the u.k. resource fiscal credibility, and all of the discretionary stuff that lists -- that liz truss wants to do is not really in her power anymore. manus: alex, good morning. how damaging was friday night's press conference in downing street? i was watching, it was someone who seemed like they did not know where to look or what to do. alex: i think it was very damaging. i think it demonstrated that u.k. leadership was not really on the same plane as some other folks, and you have to demonstrate a certain amount of competence. manus: they were brief, alex, the chancellor and liz truss
were brief, and i can tell you that factually, they were briefed before they came out with this version of the budget. they were told not to do it this way. alex: i think they have spent too much time talking to a set of people that didn't necessarily get them to heed those warnings that they were being given. that fatal mistake they made was to try and go further and faster when it comes to their growth plan than they set out frankly in the leadership campaign. canceling a corporation tax increase probably would have been manageable, but blowing the doors off and to scrap 45p to bring down an income tax cut this year, both of now are being canceled, alongside everything to do with ir 35, stamp duty and
etc. wasn't too much for marcus to bear, and it surprised the political markets as well and that's why she is in the difficult position she is in now. dani: it is something she emphasized over and over again nearly to every question she was asked on friday. the markets were unhappy -- not those exact words, but we were surprised at the market reaction, the market was surprised at how far we went. what does it mean going forward not just for the tories but for u.k. politics to have this moment where markets essentially dictated a u-turn and policy? alex: it's not the first time we saw it with the global financial crisis, we saw it in the late 1970's with the imf. i think it is a little bit of a reversion to norma. when it comes to questions like the post-brexit settlement with the u.k., what it means for fiscal conservatives, i think it will be much more embedded and probably much more treasury orthodoxy, ironically considering what russ-onomics
was meant to do. the labour party is 20 or 30 points ahead, surely that will diminish over the coming years but you will see a labour party that will have to work out how you do supply-side growth policy, how you do fiscal conservatives and how to make sure it is more equitable as a consequence. manus: can we square a couple of things away? lots of talk over the weekend, the labour party now on an election footing, very clear. one would not expect any other kind of rhetoric. is there a real risk of an interim election between now and the end of the term? alex: yeah, i think there is a growing chance of it. i think if you have a situation where a significant number of conservative mps or ministers a signal no confidence in the prime minister and you have a significant caucus in the tory
party that says you cannot just change the prime minister again without reference to an election, it will perhaps trigger one, but the tories don't want an election right now. dani: i saw an interesting argument from the guardian that essentially said the tories should hold an election right now because essentially you get labor in charge of a very tough economic environment, meaning there is not permanent damage to the tories. what you make of that? alex: i think it is too clever by two thirds. anyone who try to protect the outcome of the next election in seven years time, they can't even tell you what the markets are going to do when they open this morning. i think it is slightly fanciful. i think they should avoid listening to commentators, no matter how great a journalist she is, and she is, to come out with a political strategy like that. manus: that sounds almost like
truss-onomics. alex, what is hunt-onomics? alex: it is the previous chancellor's economics on steroids. he will go further and faster demonstrating fiscal competence -- manus: will there be a shocker of attacks rise that blows the doors off, quoting the italian job, alex? [laughter] alex: i think you will end up with surprising bloodiness when it comes to the cuts scrapped. i think you might also hear some words about the spending side of things being reduced pity you have a series of big commitments that truss-onomics involved. there is something left unsaid at the moment, what happens to those big protected areas of
before the party congress, he said china would pursue development while ensuring national security. he said taiwan reunification was a matter for the chinese and hailed what he called of the restoration of order in young, -- in hong kong. a delayed statement from g20 finance ministers hadley barrett issues including russia's war with ukraine and climate change. the statement was based on meetings last week as part of annual gatherings in washington. it is usually released within hours of the discussions but clashes between major nations meant that this time it took three days we have heard details of a rebound at goldman sachs according to the wall street journal. the bank plans to combine its flagship trading and other businesses into one unit. the report says the reorganization could be announced within days. rupert murdoch wants to combine news corp. and fox, re-creating the media behemoth he split
apart nine months -- nine years ago. it would likely consolidate power in the hands of his son, currently the ceo of fox. so far, none of the murdoch plan have spoke probably about the deal but it was acknowledged it is in the works on friday. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: jules, thank, juliette saly with the agenda this monday morning. the white house u.s. national security of has told cnn president biden is reevaluating u.s.-saudi relations after the opec-plus output cut leading to an escalating public dispute over oil. >> the president isn't going to act precipitously, he will act methodically, strategically, and take his time to consult with members of both parties and also to have an opportunity for congress to return so he can sit with them in person.
>> is halting arms sales on the table? >> as i was saying, those options include changes to our approach to security assistance to saudi arabia. manus: it is getting extremely tight around the collar here in the oil markets. paul wallace joins me now. the few to the white house and the house assad, the white house saying there is no basis for the cut. from what you have seen, how escalated is the situation? paul: tensions between the u.s. and saudi arabia are at their worst for a very long time, perhaps even worse than after the murder of jamarcus oggi in 2019. -- jamal khashoggi in 2019. we are waiting to see concrete reaction from the u.s.. they have made it clear they
will do something even if jake sullivan says joe biden is going to act without agree, i think it is clear we have to see something. whether it turns out to be a purely symbolic move that doesn't change much on the ground, or something that really does hurt the saudis remains to be seen. we are basically looking at two things. a change or some kind of restriction in arms sales from the u.s. to the kingdom, or perhaps the nopec bill being passed into law. it is a big if but it would certainly be unwelcome in saudi arabia. dani: the other variable is china, of course. how surprised was the market by xi jinping doubling down on his covid zero strategy? paul: i think in some ways the market took this sort of in its stride. the consensus, at least amongst oil traders for a while now, has
been that china is not going to ease its covid zero restrictions anytime soon. perhaps not until march of next year or even beyond. i would say it is pretty much the biggest thing at the moment affecting the markets's outlook. a lot of oil bulls were saying a few months ago, wait for china to reopen and you will see oil consumption in the country go through the roof and that will send prices back to $120 a barrel and perhaps higher. but that obviously has not happened. i think will traders are reconciled to the fact that china will be under covid zero for at least several more months if not even longer. manus: it's interesting that will has snapped higher this morning even on the back of the zero covid comments. let's see what frightens the world more, nopec or the arms sales. 25% of u.s. arms sales go to saudi arabia.
j.p. morgan's bank earnings call. he spoke about this idea, he got a lot of questions about his recession calls, but he basically said at j.p. morgan, the >> in credit are not showing up and it is still healthy. -- the cracks in credit is not showing up and it is healthy. david, we have bank of america on deck. does that seem right? david: certainly on the consumer side. don't forget, these high interest rates have been terrible for the stockmarkets and bond market can be very good for the banks, particularly at j.p. morgan, wells fargo, bank of america. they have big consumer businesses and the difference is what are they paying in deposits versus what they charge for loans? as rates go higher, they simply taken more money. the key metric for j.p. morgan
will be $62 billion for jade -- this year. the other side is investment banking, not very strong at all. ipo's driving up, not a lot of murders -- of mergers. it really depends what part of the bank you're talking about. a big, broad franchise like bank of america or j.p. morgan have a lot more levers to pull to withstand what is a pretty tough market otherwise for banking, no question. manus: david, do you think the red-hot headline this morning, goldman to combine the investment bank and trading, is to make better use of flow and efficiency or is it trying to get ahead of that slow down you have identified in the investment banking that is pervasive? this is a big move. david: the only thing constant at goldman is overhaul, this is the third one in four years. he is undoing some of the things he did two years ago but it is
about streamlining and efficiency. they will combine the wealth management and asset management businesses, which are pretty similar, you are managing money for your customers. also the investment banking and trading. the big move that we reported last week is cutting back on the retail business. that's probably the most significant move and might have the most implications in terms of jobs and costs. they are trying to bring goldman sachs to the masses, if you will. just hasn't worked out, it has been expensive and is not making any money. it is a very crowded space. manus: david, thank you so much, unfortunately time is against us. bloomberg markets: europe is next. this is bloomberg. ♪