Claire overnight financing that are levered to treasuries. The nonbank space is large. Alix when it shakes out does the regulator shift to them . Ubs thinks the default rates will peak in the private market. That tells you there is a significant amount of stress there. That 10 might not break the bank. But if you get through that 10 default rate, how much money do you really lose . Estimate question. Guy so his conviction call about the restructuring of the market. How big is the opportunity, how selectively you have to be . He sees that as his conviction call. How claire is it working . Claire i hear a lot of fear in that space. Theres not a lot of conviction on where we go from here, return to office. Guy are you surprised this is his conviction call . Claire coming from apollo, they are looking for ways to step in. But we see a big uptake in distress. If you have someone like apollo there are lots of opportunities right now. Alix we really appreciate it. There is more from the credit forum as well. Thank you so much for helping us breaking it down. Abigail doolittle is tracking some moves for us. Abigail the s p 500 down. 9 . Nasdaq is down even more. The goldman short nonprofit and shorted Technology Stocks down 4 . The message higher for longer is not resonating well even though its not much of a surprise. The fed has been transparent in terms of their goals and wanting to hike. The idea of money coming out of the system is weighing down on stocks. Look at the nasdaq 100 so far this week, and lets look at the three week. It has been hanging in there but this week has been the directional break taking it down to 4. 5 . As for yields, this is incredible. The two year yield down five basis points at 5. 12. This could be an opening for a move. These losses could lessen or create this window. But the 10 year yield is at 4. 46. And we talked about that this could produce a move above 5 . The s p 500 we have been watching this range over the past few weeks that when you go up to the top the buyers were not willing to buy hi. We are almost at the floor of this range. It is a battle between the bulls and bears. We got some information from the fed that reiterates the idea that the fed is in place for a hiking mode. This range could break up or down but more towards the side of breaking down. Guy potentially, always potentially. Thank you very much. Lets get back to our question of the day, we have seen the bank of england make a call, so now, are we there yet . The fed has been a little more clear in terms of its navigation. Feel like were close to hiking rates. The labor continues labor market continues to be strong. For now, are we there yet . The answer is different depending on which central bank youre looking at. Joanne, in terms of the destination and where we are going and whether the Central Banks are there yet what have we learned in the past 24 hours . Joanne the fed did what it expected it to do. They said we will keep rates here until we get more data and we may have to keep it higher than you all think in the dot plot said they dont expect as many rate because as the market does and that was a surprise. Alix to be fair, it wasnt just the market it was the fed parroting that back. Is that what the market is replying to today . Joanne the dot plot showed fewer because next year the surprised investors who are more on the optimistic side. That is not what the fed sees. They see inflation pressures remaining in investors need to understand there is a lot of uncertainty about how many times rates will have to go up before inflation is under control and headed back to 2 . We made a lot of progress but we are not there yet. Guy we have some commentary coming through from andrew bailey, it is premature to talk about rate cuts. That sounds like a federal bank that is done but he is pulled and pushed over epi data thats all over the place. What we are struggling to understand is the direction of travel for the bank of england. The fed seems more understandable. It wants to figure out what happens next. Do you understand the messaging clearly that the fed is trying to give us . Joanne i think they have been pretty clear. They are trying to be safe around the super court, core services. They see what is happening with housing. Gasoline prices are up and thats not helping the headline target. But it is the wage cycle. As we get strong labor market data. There is not a lot of loosening in the labor market and that is what they are focused on. They are watching the key drivers of ablation and keep data focus to try and make sure to keep the expectations anchored. They are committed to the 2 target. From the stock market perspective the earning for of changed a lot. Alix we love the question where they asked jay powell do you believe your own forecast . Do you biontech here or do you sell it . Do you buy tech or sell it . Joanne if youre trying to build wealth you need to own tech because Technology Companies will be growing. They are responding to the changing demographics of the world. Whether it is a i are the aging population and effecting opportunities. These are the places you need to own if youre going to build wealth over time. Longer term you want to own microsoft, broadcom, cisco. Guy do i need to own them now . This is the key question everyone is trying to understand. If we are higher for longer, with future growth that it different level how do i make that adjustment if the adjustment is still coming . Will there be a better entry point to own the stocks down the road . Joanne trying to time the appropriate entry point is challenging. One thing you said that was on point, rates will be higher for longer. So what are you waiting for some biontech . The decrease in valuations is already in those numbers. Is this a good time to own them . What we expect from here. We expect another rate increase before the end of the year but eventually they will come down. Unprofitable tech, those will remain more challenging and that has gotten more expensive. But the big tech companies, that have significant cash they are not concerned about these interest rates. Thats a good entry point. Alix thanks a lot, we really appreciate it. Coming up, we will look at Lessons Learned from the collapse of spx in the digital dollar. Then we will go back to london, to the credit for them. Some element of concentration is necessary. We are still young firm. Lisa can you elaborate on that . I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. captivating music the first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. were not writers, but we help you shape your financial story. Were not an airline, but our Network Connects global businesses across nearly 160 markets. Were not a startup, but our Innovation Labs use new technologies to help keep your information secure. Were not architects, but we help build stronger communities. Were not just any bank. We are citi. Alix this is Bloomberg Markets, this is a live look in the principal room. Coming up Subadra Rajappa will be joining us. This is bloomberg. We take a look at what is trending on wall street and today, sonali is joined with christian. We want to start with the digital dollar. This is the hill you love. Everyone is still using it, why do we need additional dollar . Its been a terrific instrument for ages. And it is serve the globe very well. We are going into a new future where value has moved on chain and systems of value that will be operated by centralized fashions and others will be decentralized. How do we future proof the dollar and not world . And do so in a way that is consistent with their Democratic Values of economic privacy. Sonali this is the argument thats been made by maxine waters. The idea that you would have other countries get ahead, how do you get people to Pay Attention to that . Chris for many people, it is not an imminent issue but thats what leadership is all about. That is about getting ahead. I had the honor of serving my country and had a career on wall street and this is my way of giving back by asking the questions we should be asking. Sonali why is it that what you have pinned your hat to . Chris the cftc is a remarkable regulator. It sees the entry of more new products than any other regulator and we started looking at Digital Assets and luxuries in 2015. We were doing artificial Bitcoin Mining in 2017. Just to learn what it was all about and we understood as a commission. That is the kind of forward thinking weve done at the commission. I am hoping we can continue to do that. The question for congress, both sides are right in the debate. This concern about privacy and on the left theres a concern about how do we preserve the dollar for the future . We need to go beyond this and start thinking about the core thing is the dollar. How do we preserve the dollar and projected into a Digital Future . Guy you bring up the issue of mining. Lets talk about the crypto world more broadly and spx comes to mind. What mistakes should regulators from those . How do we take this forward . Chris i will tip my hat to the sfdc because they brought crypto into the regulatory envelope by green lining the launch of crypto futures. Now it is fully regulated, transparent, liquid and its wellfunctioning and while police. That is the model and our sister agencies in washington, they learned from that model. You can try to suppress new technology you have to bring it into the regulatory envelope by using regulation as opposed to enforcing atrophy. Alix when you were there was there a relationship with ftx . Chris in the global empire the only part that did not fail was the piece that was regulated by cftc. When ftx failed the one piece of remain valuable was the peas subjected to regulation. What regulators need to do is bring this technology into the regulatory envelope. Sonali on one hand people are worried about nonbanks in the crypto industry, hedge funds, this levered trade markets. These positions have gotten meaningfully bigger. Weve heard theyve leveraged the system 100 to one and sometimes. Chris this was something i wrote about at the cftc, i wrote about this in 2016 we have a major problem developing liquidity and some of our most fundamental marketplace including the treasury market. Part of that is one of the unintended consequence of the dodd act. They moved away from the role of warehousing treasuries and making them available and holding less inventory. The new players into the market, are in the market but theyre out at night. We dont have the same liquidity. A policymaker will see stablecoins as a new source of liquidity for treasury elements. Sonali who cares if hedge funds are levered but at the same time the fed has had to intervene twice since 2019. Will they have to intervene again . Chris what we dont want to do is build up an expectation but it depends on if its a systemic risk. Sonali when you think about the current landscape of regulation, the sec has gone hard on the industry, when it comes to bank records keeping. Where do you think the administration is going in the right direction and where do you feel they are going too far . Chris when it comes to the issue of digital currency, they have taken it a step further. There is good thinking going on. Ive had good conversation with those at the white house and treasury. Unfortunately, this issue is falling into a traditional washington blackhole. Its become criticized and mature people need to draw out of this that both sides are right. Privacy is of critical concern, they cant let us just say no to the Digital Future. We need to move the dollar forward and we can do Digital Networks by big tech and government that protect privacy, where it is built into the design element. They are complaining about something that china is doing and assuming thats what we build in the united states. But we didnt build the civilian union by emulating their economy we beat them with the free market economy. We should do privacy and antisurveillance is the design element on open architecture so people can see that they are not being surveilled. Alix it was really great to catch up with you. Chris giancarlo, thank you so much. This is bloomberg. Guy european assets, Central Banks dictating the narrative. Stocks your is down by 1. 26 . The bank of england pausing today, the bank is having some effect. At the pound is under pressure, down by. 5 . The closes of next that we have much to talk about. This is bloomberg. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Guy thursday, 24th of september. Stocks are down. The central bank is clearly the cause. The difference between them is interesting and why we are getting the reaction we are getting. The countdown to the close starts right now. Announcer the countdown is on in europe. This is Bloomberg Markets european close with guy johnson and alix steel