though i want to but you are a good dancer. i think it is fair to say that if there is going to be a correlation to increasing prices and walmart have made the decision to withdraw their guidance is probably the best testament that they know they may have to deal with costs and maybe inflationary uncertainty. would you characterize that as may be a likely reason they withdrew their guidance? chair powell: it might be. i do not have a chance to go back and check why. sen. tillis: through the language, it seems almost certain that they think some other input costs were going to go up and they needed to manage the margins so i am just telling my colleagues we need to be realistic that if you have a major household name with guidance because of uncertainty, they have a lot of experts that probably are suggesting there may be some inflationary risk. we have not realized it yet, but i think we need to keep our eyes open and not look past this so

we can manage it if it comes to pass. i don't think there should be a problem with that. chair powell: thank you. sen. tillis: the last thing i want to mention is that you cannot respond to this, but i will tell you if the democrats succeed in preventing us from avoiding the biggest tax hike in the history of this country, it is going to cause great damage to the people who can least afford it. you don't get to respond to this one, but folks -- chair scott: senator also brooks is next. sen. tillis: i am sorry. did not realize she is here. but i need to be open. we need to understand that you will have something to fix if we fail to continue the tax cuts.thank you chair scott: -- chair scott: thank you. sen. alsobrooks: thank you so much. thank you for hosting today's hearing. we think you also chairman powell for your tremendous service to our country. i very much enjoyed the meeting we had earlier this year.

i look forward to working with you. many of my colleagues today have been listening to this hearing and rightly discussed concerns guarding how to nurse our and businesses. i would like to highlight a specific business in maryland that encapsulates the harm that i believe this administration is inflicting. but also the resilience of a proud member of small business. it is a successful pet brand founded by three combat tours overseas. mr. o'brien tightly did if he were to make his products in the united states, he would have to raise his prices 400% just to break even. the tariffs he believes are a burdensome tax that could put companies like his out of business, but the damage does not stop there. they are sold in thousands of other brick-and-mortar stores across the country, all locally owned small business is similarly have to raise prices

or lose sales to pay the president's tax. mr. o'brien started planning for this last summer when president started talking about terrorist during the campaign. he stockpiled inventory and has committed to keeping his prices stable this year, but what they are asking is, what is he to do if the tennis are in place next year? mr. o'brien has calculated he will not have to raise prices, he would likely have to cut his staff to stay in business, so there are 34 million small businesses in america. one for every 10 people. if small businesses like that have to lay off staff or go out of business altogether, what will that do to unemployment in this country, and what effect will that have on the broader economy? chair powell: i mean, just mechanically, i don't want to comment on particular tariff policies, but sure, if companies go out of business, that will hurt employment and activity. sen. alsobrooks: and what we

will see is of course we have so many small businesses and what we are facing is that very prospect, then we will have so many, and we believe the inflation caused by these tariffs will have a very negative impact. if this is the case, what would this mean for american workers? chair powell: the other thing is the tariffs are still in motion. it is premature to say exactly where they are going to land, so we are kind of withholding judgment until we see more. that is where we are. we have not done a decision -- we have not made a decision to do anything. the situation evolves day by day and month by month. sen. alsobrooks: ok. and another question, in our meeting and in your most recent monetary policy report, you spoke of the long-term challenge of housing supply not meeting demand. i look at this issue the same way i did as county executive where i fought hard to leverage private and public sector

dollars to bring more housing to communities that needed it. maryland has a shortfall of nearly 100,000 homes in the pathway to build wealth is therefore narrowing. studies have estimated over the $200 billion invested annually in housing in recent years, only a fraction supports affordable homes for working-class families. we speak to the need to better incentivize private investments into affordable housing construction? i am working with private sector and nonprofit stakeholders on the just ocean but want to know if you can comment on that. chair powell: i would say this, interesting's are slightly restrictive at this point, modestly restrictive. that is waiting on economic activity in the housing market sector, but you are really talking about a different problem. it is not one the fed can really address. that is we have a longer run housing shortage. many other advanced economies

have this too. our tools don't really work to affect that. it is really elected people. you saw this as county executive. it is things the legislature can do that can really address that. -- not us. it is not about interest rates. sen. alsobrooks: the fed is evaluating the leverage ratio rules regarding the amount of capital required to be held by banks to withstand unforeseen risk. i am hoping you can then provide some insight as to what potential changes this framework are meant to achieve. on the other hand, i understand access to capital is paramount, particularly for communities i represent. i understand concerns that a change in these requirements could affect the resilience of the banking sector. i know you cannot speak to the specifics of the coming proposal . would you share insights into what problem the proposed rulemaking is meant to solve?

are you concerned it could lead to a deterioration in resilience of the banking sector? chair powell: i would be glad to. the idea behind it is we we want risk -- is we want risk-based capital because we want banks to be sensitive to the risks they are taking. if the leverage ratio is not risk sensitive, it treats every asset as equally risky. if that is binding, then that interferes with bank incentives to manage their risks and discourages banks from taking on a relatively low risk activity. we have always at the fed wanted to risk-based capital to be the binding one and the leverage ratio to be the backstop. this proposal that we have that we are going to be meeting on in a couple of hours puts out for comment a proposal to restore the backstop characteristics of the leverage ratio. we think it should make -- it will not in any way diminish the

safety and soundness of the financial system, and it will allow for banks to undertake low risk. thanks. sen. alsobrooks: thank you so much. chair scott: thank you. for senators who wish to submit questions for the hearing record, those questions are due one week from today on july 2. chairman powell, you have 45 days from that date to submit your responses to the question. thank you for being here. this committee is adjourned. chair powell: thank you. scarlet: you have been listening to chairman powell testifying before the senate banking committee. this was day two of his semiannual testimony that he gives where he has laid out his view of the economy and what monetary policy looks like. i want to go over the highlights now from two days of testimony with bloomberg's michael mckee. mike is in washington. did we learn anything different

today from what jay powell said yesterday? michael: not really. he did his job dancing around the questions about tariffs and the impact of the budget bill, saying he does not get involved in fiscal matters. the fed stays out of that. but once again made the case the fed does not know what is going to happen because they don't have all the details of the terror plans yet, so the most prudent thing for them to do is wait to decide on interest rates. he got pushed back that from republicans. he got some support from democrats. there was also a lot of talk about bank regulation, particularly the supplemental leverage ratio, which the fed has said it is going to adjust. he was prodded to do so by members of the senate and the house yesterday, but they have already said that is likely coming. not a lot new. the interesting exchange was with senator bernie moreno from ohio who somebody should go

after powell and told him while we were elected by millions of people, you were only elected by one guy and he does not want you in the job. powell just smiled and let that go by. scarlet: he smiled and just let that go by but i get -- but i guess that gets to the comments president trump made at the hague on the heels of the nato summit. can you tell us more about what president trump said with regards to potential successors to jay powell? michael: he basically again said he is insulted -- he basically again got close to insulting powell. he said he has three or four people he could name. within three or four people. a couple of those that have been mentioned often are scott bessent, kevin warsh, kevin hassett, and also chris waller,

who was governor of the federal reserve board now. not sure if those are the names. the president did not underline anyone in particular, but there are four names there and the president says he has four in mind so we will see. scarlet: we will see. thank you so much. michael mckee joining us from washington as we concluded day two of jay powell's testimony to congress. coming up next on "bloomberg markets," we have robert cap and, the vice chairman of goldman sachs, joining us in dallas. he of course is the former fed president of the dallas fed so we will have more on his take on the economy and specifically what is happening in texas. this is bloomberg. ♪

scarlet: this is "bloomberg

markets." i'm scarlet fu. we are at midday on a wednesday. i want to show you what is happening on the s&p 500 in terms of financial market action. not a whole lot for the s&p. unchanged right now, hovering near a four-month high, therefore near a record high as well. the nasdaq 100 made a new high yesterday. small caps are the weak link in equities today with the russell 2000 losing 0.7%. you go to fixed income, and we have yields on the lower end, the shorter end outperforming those on the longer end. the two year yield coming down by three basis points, 3.79%. we have another big auction today. $70 billion of five-year notes at 1:00 p.m. after the two-year option went fairly well yesterday. saw decent demand. and oil prices. that is nymex crude recovering from a today plunge. we us -- from a two day plunge. we are seeing big movements in

american depository receipts of the european super major oil company's. shell losing 1.1% and bp moving up by about 5% the wall street journal reporting shell is holding early-stage talks to bias rival bp, which is also considering the approach carefully. this is something bloomberg has reported in the past so this is not necessarily new in the markets, but you do see a reaction to the latest report from the wall street journal. a reminder, shall has been under pressure from activist investors , and perhaps this is one way of responding to that pressure. let's continue to keep an eye on what is going on when it comes to the federal reserve because jay powell struck a cautious tone during his hearing, saying there is no rush to cut rates as the central bank watches the impact of tariffs and other trump era policies. we will be speaking with robert kaplan when we come back to get his take on those comments and to get his outlook on what we

are seeing in the texas region as well. this is bloomberg. ♪

sara benzino... brandon coley... jablonski auto body llc... -whoo! -yeah! whoo! what'd she call harper? oh, you mean jablonski auto body llc? we actually sold the twins' naming rights. you know, like stadiums do? kids are so expensive these days. -here he comes! -...oasis breeze tan & spa... -whoo-hoo! -yes! if you need a tan, i'm your man. good doing business with you. or...we can look at some investment options -for you... -works for us. the right money moves aren't as absurd as you think.

scarlet: this is "bloomberg markets." i'm scarlet fu. wall street poured millions of dollars into the new york city mayoral race but voters apparently had other plans because a 33-year-old democratic-socialist is now the democratic nominee for mayor after andrew cuomo conceded. his campaign focused on taxing the wealthy, freezing rent, and free public transit, drawing sharp criticism from wall street. let's bring in laurent for more. i sent andrew cuomo conceded but you were at the between party which turned into a watch party. did he concede?

>> he did, but at least that is what his campaign said initially after his speech where he congratulated zohran mamdani on his victory last night. then the cuomo campaign said he has not officially conceded. they are waiting until next week when the board of elections runs the full vote tally and all of the votes that were cast are counted. scarlet: ok so they are waiting for the official result before. tell me more about zohran mamdani. we set it up as this tension between wall street and zohran mamdani, the 33-year-old democratic-socialist. does anyone from wall street support him? laura: not that we are aware of at the moment but we are turned to figure that out. the question is, where do all of the donors who supported cuomo, who poured millions and millions of dollars into his campaign and into independent expenditures backing him go from here? do they think will most of has a path to victory in november running as an independent and a

multi-candidate general election that is competitive for the first time in many years, or are they casting around for another solution? people are scrambling right now. it was scribbling overnight. they are trying to figure out whether or not to back eric adams them of the incumbent. whether or not they called us behind zohran mamdani and hopi moderates or whether or not they continue with into cuomo as their candidate. scarlet: right now for general election, we have the current mayor eric adams, andrew cuomo mother former governor who did not fare well in the primary, and you have zohran mamdani the democratic nominee. laura: and there is a republican candidate, and there is another independent candidate, an attorney. so that is a very large field, more competitive than we usually see in a general election in new york city. scarlet: zohran mamdani, it feels like he came from out of nowhere. if you month ago we had not really heard his name. he ran a campaign in which he became very visible very quickly. laura: yes, he had almost 0%

name recognition back at the beginning of the race in february and march, but he has run a really impressive campaign logistically and has gained a lot of name recognition through viral media, through an army of volunteers he has amassed, and he was able to gather almost 21,000 individual donors. it is a huge number in new york city. has made touch points and interacted with a lot of individual new yorkers during his campaign and was able to grow his name recognition to the point where he won the primary last night effectively. it is not official yet but it looks like that will be the ultimate result. he has been able to capture people's imaginations. the voters who supported him. he is seen as energetic, young, charismatic and able to speak to people where they are in the democratic primary. scarlet: leaning on generational change for a party that has valued seniority. there is an interesting visual in the story you wrote, this map

that shows how strong of a showing mamdani had. and this is not necessarily limited to certain parts of new york. he basically got support from across new york city, across the five boroughs. michael: right -- laura: right. we are crunching the numbers now but what we have heard from the board of elections in the campaign is when all of the numbers come in, what we will see is the electorate split along age lines. voters under 45 overwhelmingly supported mamdani. voters over age 50, over age 60 supported cuomo. and that unlike in previous primary elections, more young voters turned out that normally do. usually they do not vote that much, but they saw a huge number of voters over the past couple of days who have never voted before in an election in the age group of 18 to 44, so that signals a real shift in who is voting and who wanted to weigh in on new york city's next

mayor. scarlet: mamdani had fairly diverse support as well. not just in terms of age group, right? laura: the polling showed he was doing best among young people across the board, but that he was lagging cuomo significant in support among black voters. what we are seeing and what advisors think the numbers will ultimately show as he picked up a diverse coalition of young people across the five boroughs. scarlet: again, surprised the establishment and the wall street money that put its votes behind andrew cuomo community thank you so much, laura. let's get a quick check on the markets right now. not a lot of action in the s&p 500 but we see movement in small caps, down 0.7%. yields at the low end are down. on the long end, not so much. that year yield coming down to 3.79% if you ran it out. let's bring in bloomberg opinion columnist for a little more context.

i want to connect the dots from what we saw and heard from jay powell to how you are thinking about the markets. i know you don't necessarily pay attention to jay powell's every utterance, but did you hear anything from jay powell that changes the landscape or equities and the appeal of equities versus state treasuries? >> i did not really come astana. i did pay attention to what jay powell had to say the last couple of days only because it strikes me we are in a period of very heightened uncertainty. there is always up to today but it seems like there is more uncertainty than usual. i cannot count the number of times i heard the word uncertainty come up. i think markets have been pretty good predictors of it is happening and what the fed is likely to do. i think it is helpful to set the table. the neutral rate of interest for the fed is roughly 2.5% to 3.5%. they are about 4.25% to 4.5% now. the two-year has been coming down to 3.8% to move into the higher end of the mutual rate,

and that sense because as powerful said the bus companies, unemployment is low, inflation is moving to where they want. he is happy, the fed is happy with how things are going, and that gives him room to lower rates. the two-year is saying the fed will lower rates. the question is, when is that going to happen? that is the only piece of the unknown not this stage given that the market has signaled ultimately what the fed is going to do, i think that has been priced into market. there have not been any surprised reactions from the markets, and i think that is pretty much what we should have expected. scarlet: yeah, i would think no surprise given what the s&p 500 is doing at the moment, which is basically unchanged. where is that the small caps -- where does that leave small caps? nir: the problem has been and will continue to be profit ability. you had this enormous gulf of profitability open between the large-cap names and the small-cap names and valuations have followed it. you have effectively very high valuations.

the spread between high and small and large and small has been unusually large for a long time, i would say going on 10 years. some of that is in mag seven, yes, but some of that is the highest quality companies, the highest profit companies, staying away from public markets, and i think that has caused a profitability drag in the small-cap names. the question now is whether you will see a profitability turnaround. if you are adhering to mean reversion, which i am to some extent, i think you can expect higher profits going forward from small caps because they cannot stay in the doldrums forever, and if that happens, valuations will correct to the upside, so on balance i see better things for small caps, but watch the profitability. it is all going to be in their margins. scarlet: always a pleasure to speak with you. nir is a columnist for bloomberg opinion. coming up, we just heard from jay powell, the fed, earlier this hour. coming up next, we will speak with the former dallas fed

president and the current vice president of goldman sachs, robert kaplan, in texas. this is bloomberg. ♪

scarlet: welcome to "bloomberg markets." jay powell struck a cautious tone today, saying there is no rush to cut interest rates as the central bank walked -- watches the impact of tariffs and other policies. for more on what's ahead for the u.s. economy, i want to hand -- hand things over to julie fine, she is sitting with the current on capitol hill, jerome powell is on the hill and is under direct pressure from president trump, who is putting pressure on him to cut those interest rates. he is planning to weigh

inflation. how do you expect this to be received by the business community? >>'s comments are right in line with what the markets in business community are expecting. i have set this a number of times. we are likely in a distant plating world. goods ironically are distant leading, it's enormous overcapacity in the u.s. is a primarily service sector economy. having said that, we are not exactly clear what the level of tariffs are going to be and they are working their way through the economy. he is being appropriately careful, in my view, to make sure that before they move they have accurately assessed the impact of tariffs. that could be as soon as july, but more likely september, and the reason more likely september is sometime in july most likely trump will put out a provisional

set of tariffs and we will see what those are. it may be too soon to move in july. but i think that by september it's possible the fed will be moving. >> you and i have sat down and spoken several times and each time we do, tariffs uncertainty comes up. it still is uncertain. you are talking about hoping for july to be different, but it could also fluctuate in july if you look at history and what has happened through now. >> since april, i would argue, that was probably the height of the uncertainty. i think that since then, with a 90 day clause in some clarity in the provisional 10% rate, the business community is moving towards later -- greater clarity but we are not quite there yet. most business leaders arc clarifying how much they will be negotiating for suppliers, how much comes out of margin, how much if anything goes into

price. they are moving but i think they would be helped by a couple of more steps, but we are getting there. >> we spoke to one business administrator early on who talked about putting a line in contracts to get ready for tariffs and how to handle them. >> by the way, that's already happening. business people around the country, the word surcharge is in all sorts of bills. it's not like we aren't already reflecting the surcharge, but some prices are going up. others are going down to help offset it. the other thing is, you have always got to remember that we have enormous overcapacity in goods, globally. so, that may give you buyers a little more negotiating leverage. >> right now there is cease fire in the middle east, do you believe that all of these

fluctuations adds to the uncertainty of the economy? >> i think that the middle east could have, if it expanded. but if it is contained, i think businesses are looking beyond it . other things, there is positive uncertainty. regulatory change, i think businesses are optimistic about it. immigration is a big topic among business people, because we have shut off the border, appropriately, deporting criminals, but there are 10 million plus workers in this country that are undocumented that are critical in construction and services, agriculture. businesses, that group is uncertain whether they will be allowed to stay, which creates business uncertainty. i hear a lot about labor from businesses. then you got a tax budget bill that earlier in the year we thought would be more contracting. as we sit here now, it may be more likely neutral or expansionary from a fiscal point

of view. those are the pieces of the puzzle businesses are struggling with. >> other areas of uncertainty our colleges and businesses. harvard is obviously having issues with the white house. what you think happens next? >> i would stay away from the blow-by-blow of it, but i'll say the following, as we go through this time one of the critical things that is important in the united states is that we maintain our institutional framework. what do i mean? what has made the u.s. exceptional? magnet for talent, superb universities and higher education, innovation. i believe that whatever the dispute is with harvard, i'm hopeful that will in the fullness of time get resolved. it is in the interest of the united states that it does. it is one of the pieces of the puzzle that makes the u.s. exceptional. >> sitting in texas, texas bureau chief with the global vice-chairman of goldman sachs,

i do want to talk about growth in texas. the texas stock exchange might begin again next year. it is expected to, with nasdaq putting a regional headquarters here, the new york stock exchange increasing how many people they have in texas. what do you think is the next step for growth in texas? >> the story of texas is a migration of people in firms to the state. it's been going on for 10 years. that's why the population and workforce continue to grow. businesses are still regularly looking at coming here to the state. the move of the exchanges here goes a long that. goldman sachs, as you know, we are approaching 5000 plus people here and we are continuing to grow. we think texas is a great place to be. central location, pro-business environment, access to talent, growth in the business community through the state. but the exchanges are recognizing is that this is an

excellent place to be, in the united states. it's got a lot of tailwinds helping the state. >> do you expect that growth to move as it -- and this -- at the same rate, or do you think it was related to covid with businesses moving to texas? >> it might have been helped by covid, but this growth has been going on for years. the population of the state was 22 million 10 million years ago, we are on our way to 30 million. we think we will continue to grow. i cannot predict the rate. the reason is that there are a lot of very attractive features about dallas and the state of texas. it's a magnet for companies. >> rob, thank you for your time today. scarlet? scarlet: thank you so much. julie fine, are texas bureau chief, with robert kaplan, current goldman sachs vice-chairman. coming up, the stock of the hour is fedex and they are hitting their brakes on a forecast,

claiming trade tensions and a unpredictable global economy. but they may have an internal challenge that is even greater then that. we break it all down, next. this is bloomberg. ♪

scarlet: this is "bloomberg markets." breaking news for you, following up on what we told you earlier, shall now says they are not in talks to take over bp, directly contradicting a washington journal report earlier indicating that shell is an early stage to acquire its london based rival. you can see that their shares had tumbled on the initial headline and are now recouping some of those losses and are currently down only .8%.

if you look at bp, you will see the opposite, the inverse, shares had jumped in trading before giving up some of that advance. they are still modestly higher, 2%, as shell denies they are in talks to take over dp. we will continue to monitor this carefully and let you know if there are further updates. meantime, let's transition to the stock of the hour, fedex falling 5.8% after not doing much to offer clarity to investors on what they see going forward. the shipping giant did warn the profit will fall short this quarter, really a sign of the damage from persistent uncertainty over the ongoing from trade war. kelly joins us now with more. looking at the price action, that's disappointment with the lack of certainty from the company. >> that's right, typically at this point they would offer a full forecast, which they didn't do, instead focusing just on

what they think they can see, which is this current quarter, and it actually comes after three consecutive quarters in the last fiscal year where they did cut their guidance three quarters in a row. scarlet: so, the trendline is not great. so many consider fedex a proxy for global trade. given that we don't know what is going to happen, it feels like it has been held hostage to macro headwinds. >> completely. they have a look at all of these different things and if they can't tell where demand is going, it's a good sign that if they don't know, nobody does. scarlet: that's a good way of putting it. the other thing about fedex, it's been a couple of years that they have been talking about cost-cutting. it seems to be the one thing they come back to and when analysts do like to the stock it's because there is more room to go with cost-cutting, but that isn't the same as growth.

bux that's right. they are taking a lot of efforts in spitting off divisions to focus on other divisions. right now they are taking on a massive restructuring by merging their two historically separate delivery networks, which is just going to be complicated and slow-moving. even though investors really like the things they are predicting and that they have already seen, you know, it's hard to tell when really what you are looking for at the end of the day is volume. scarlet: tell me more about this restructuring effort. it's different from what you talked about earlier, the spitting off of the freight prison -- freight business, that had long been planned. what is therowth? two in another way cut expenses? >> far, what we have seen is a lot of expense cutting. they would probably call it driving efficiencies. historically they have had the express network of next day air

shipping, the core foundation of fedex. back in the 90's they added a ground network. that is more residential deliveries, things delivered by truck. the two are so separate, they have separate facilities all over the country, separate labor structures, all of this. now what the company is trying to do is connect the two. that does involve some facility closures. i think that the ceo said that so far they have already closed 290 facilities. from that, you can see that is definitely a cost-cutting focus. >> absolutely. earlier we talked about growth drivers or the lack thereof. what are analysts saying? >> they would definitely be focused on their health care networks. they are focusing, you know, on what really brings in the profit for company like fedex, something that has higher margins. that tends to be more b to b

shipments. that being said, fedex has engaged in an agreement with amazon after separating from them back in 2019 to take on a little bit more e-commerce from amazon. that will be big and bulky packages, actually. so, that is again sort of a higher-margin product for them to be moving. i think that those two right now, they are trying to play in different parts, e-commerce, beaded be, whatever they can. -- b to b. scarlet: this after ups ended their relationship with amazon. >> that's right, the two came kind of back to back. ups had been planning for a while too, how did they say, glide down amazon volume and then earlier this year they said they were accelerating the glide down, which came as a surprise to quite a few people.

it wasn't really telegraphed ahead of time. the reason ups decided to do that was because the amazon volume they had been handling is, i think they are calling it dilutive to their profits. so, with fedex but we are seeing them do is actually go after that less dilutive volume from amazon. they are really picking and choosing. scarlet: sounds like amazon is driving a pretty hard bargain, trying to get the best terms from whoever they deal with. and guess what they want in the end? good stuff. kaylee is one of our transport reporters here. coming up on "bloomberg markets ," a big day in a cold shoulder for the booming private market. details, next in the weekly segment on alternative investments. it's our big take, jp morgan traders getting shut out of the private credit market. this is bloomberg. ♪

sara benzino... brandon coley... jablonski auto body llc... -whoo! -yeah! whoo! what'd she call harper? oh, you mean jablonski auto body llc? we actually sold the twins' naming rights. you know, like stadiums do? kids are so expensive these days. -here he comes! -...oasis breeze tan & spa...

-whoo-hoo! -yes! if you need a tan, i'm your man. good doing business with you. or...we can look at some investment options -for you... -works for us. the right money moves aren't as absurd as you think.

scarlet: this is "bloomberg markets," in traders at jp morgan are coming up empty-handed is the bank pushes into private credit. joining us to discuss it now, carmen cowrote the big take on this. good to speak with you. the whole thing with private credit is that it is private, doesn't shrink, and has fantastic returns as a long-term investment. why and how are jp morgan and other big banks trying to get into it? why do they want to be a part of this? >> the banks felt like they were missing out on the private credit markets. some of them are doing credit deals, but a few of them were trying to create markets for it. kind of like being at the

forefront, they have been trying to make markets. so that for some of the deals they could make trades happened, but it isn't working out as well because of what you were basically saying, the lenders wanted to keep it liquid. scarlet: so, jp morgan is trying, sending out these runs, a list of deals they want to be a part of, and they are not getting much response in return. have they had any luck that we know of? >> they have had some and it's sparse, far between. the main issue is that the lenders that hold it don't want to sell, everyone wants to buy. so, there is no inventory to move around. even if you try to via -- find a seller and a willing buyer, the firms that own the company's still have to consent to those trades. it's just like really hard to make any trade happen. scarlet: jp morgan and other big banks want to create a secondary

market, but the stakeholders don't necessarily want that, they like things the way it is. a big part of that is it has been very lucrative for these non-bank lenders, the credit overall, and big banks were not able to partake because of regulation? bikes that's true. this is what banks do. they are trying to create markets. they've done it with other public markets, it's a big chunk of the jp morgan business, it's normal and unsurprising that they are trying to do this now. what's interesting is that they are getting so much pushback and it isn't really happening. scarlet: absolutely. so, what do private credit lenders say about banks trying so hard to get into this? >> there's many opinions. some people say they don't need the banks, if they need to sell alone, they can do it amongst themselves and they have been operating this way for years, why would they want an outsider coming in? there are other people that think that eventually some will

want to trade, but it won't be the whole market, it will be like the really big multibillion dollar deals that have, like, 20 lenders in them. so, eventually someone will want to sell, but that doesn't mean they will go through jp morgan, necessarily. scarlet: what do you think would be the catalyst for something bigger to open up, where the big banks kinda become more important and pivotal players in the private credit world? >> a lot of people are saying we would need to see a liquidity credit event, lenders selling their holdings. yeah, get them out, get some returns, and maybe it will turn into something from jp morgan, because they already do a lot of business with them. they saw a huge pickup in m&a and some lenders wanted old fees, others wanted new ones. maybe we could see more of a catalyst there. but i'm not sure it's going to

be something that changes everything. it might be like something that slowly happens. scarlet: evolution, got it. carmen, thank you for joining us, carmen is the co-author on today's "big take." jp morgan, trying to get into the credit market. a wild day for shell and bp, shell says they are now not in takeover talks with bp, denying a report from "the wall street journal," later today. simon joins us on the drama. this has been reported on in the past, bloomberg had noted that there was interest between them. what can you tell us in the latest. >> as you said, "the wall street journal" just came out with this story that they were in talks. shell came back to us quickly and said that there were no current talks underway. it was a brief flurry of activity here in new york, even though the markets are closed now.

scarlet: right, we saw that movement because the primary listening training simon, very quickly, bp has been under pressure from activist investors , like elliot. what is elliott pushing it to do? >> proven performance. bp performance over the last several years has been woefully short of what we have seen from shell and from the big american oil companies, like chevron. bp has this very high provost strategy of increasing renewable energy and it looked like maybe more of a deal for banks five or six years ago. investors don't like the

business compared to oil and gas. saying they get a better return. bp has been trying to turn that around. scarlet: good stuff. simon casey, thank you so much, giving us the latest here on shell denying that it is in talks to take over its rival, bp , and again, we can see the movement and the edr's of this company, shell reduce losses following that report, bp transmitting advances. let's take a look. markets are trading overall as we get ready to hand things off over to the folks at "balance of power." s&p 500, little changed at the moment. the nasdaq at a new record high because any gain at this point is a record high. yields on the short end, falling and outperforming those on the long end with a five year auction coming up in just about three minutes. this is bloomberg.

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>> live from washington, d.c., this is "balance of power" with joe mathieu and kailey leinz. joe: president trump heads home from the nato summit with iran talks now on the calendar. welcome to the wednesday edition of "balance of power," as the president flies back to the u.s., with a focus should

respect to shift --shifts back to his big beautiful bill. i'm joe mathieu with kailey leinz. as return back to capitol hill, there is concern that this was light and they will not make the july 4 deadline. kailey: the deadline of july 4 is when the president like to sign the massive legislative package. not only does it have to get past the senate, but re-pass the house of representatives, and both things are in question parliamentarian has yet to finish the work deciding what can be billed. the parliamentarian is working through those measures, and you have this whole thing back together again. vote-a-rama was looking like it was the goal but many things are in flux. joe: they have the monday recess to look forward to and there is a question about whether they would make cap. it would be a working weekend. it has to go back to the house to get to the president's desk by the fourth of july. we will see what brian