>> welcome to "bloomberg markets ." i'm sonali basak. investors bracing for the fed. we are just two hours away from an expected hawkish hold for the central bank, leaving rates unchanged. let's get a check on the markets. we have a second day of declines on the s&p 500. in the less of a decline than a day ago, down 0.4 -- a little less of a neckline than -- a little less of a decline than a

day ago, down 0.4%. two year yield still firmly above the 5% level on the week. you have a two basis point move lower on the day. however, again, we have the big meeting just two hours from now. 10 year yield has been above 4.60 all week and now today even with a two basis point move lower, 4.65. banks soaring after posting better than execute results and exec it is outlining a goal of being better in 2025 following expected losses this year. it is surging now more than 31%. on the other hand, you have starbucks. sales fell for the first time since 2020. the chain cut annual guidance for a third straight quarter, lowering its full-year year revenue growth forecast to a low single-digit percentage. you have starbucks now plummeting about 17%.

back to the fed because the kkr cfo who i spoke to earlier today said he is pessimistic you can see any rate cuts this year. >> we are seeing goods inflation come down. we are seeing sheltered inflation come down. we are seeing core services inflation remain stickier. we have been feeling this way for quite some time that we have been able to position our portfolio to be able to address this. we see interest rates coming down over time but in 2024 -- but we don't see cuts in 2024. sonali: there you he it -- hear it, higher for longer. anna, your team earlier this week read about the dovish pivot from the fed late last year. you saw the markets rally off of that pivot. it begs the question now whether you think that was a mistake for them to make that pivot in the first place and whether they will be a little walking back now and reverse gears this time around. >> i think the change in the fed

communication has made a big difference to financial markets and the economy. they came in december after having said interest rate are going up and there was uncertainty about how much interest rates had to go up. they started talking about rate cuts and the rotation is still they will have three cuts. a very significant rally with the s&p 500 about 20%. we have an rally -- a rally in credits. all of that has released a $10 trillion gain in the financial markets. remember, consumer spending last year in the u.s. was about $19 trillion so more than a 50% increase in household balance sheets in terms of wealth. it is not surprising the payrolls are strong and inflation is strong and retail sales are strong. i think this was not a mistake. this was an unintended consequence of what they did. and just happened to unleash a lot of power for the financial

markets that ended up supporting the economy. sonali: we sit here today, what is the direction for bloomberg economics in terms of what to expect not from the initial decision but the path forward for the fed and the flexibility they have to fight the last mile of inflation? >> what i am watching for today is a very subtle thing, which is to what extent does powell recognize that december pivot was so important installing the progress for disinflation? i think we start to see glimpses of that recognition from him at the imf meeting where he no longer fell back on some of the more dovish comments he had made in the past, which is that the fed will be ready to cut rates even as core pce is about 2% -- above 2%. we think fundamentally the fed is recalibrating the conditions required for rate cuts. the past four months they have learned a lesson, and i am

looking to how much they have internalized that lesson. there is such enormous pent-up demand in the economy. people are staying put, ready for the rate cut. and the moment that happened, everything will come back in a v shape and will unleash further inflation impetus. sonali: let's talk more about this unleashed inflation. to the point you made earlier, the idea that there are certain elements of inflation you are seeing today, let's use the word, are transitory. there are others who believe this is a lot stickier. where do you stand? tortsen: it is simple. you are either in the camp of those thinking auto insurance will come down again, used cars will come down again, shelter inflation will come down again, we will have mean reversion, and therefore it means inflation will come down to 2%. that is what all of our economic models suggest should be the case. or why did inflation excellent

rate the last three months? maybe it is real. maybe it is because consumption has been going up and we had a significant easing in conditions. the fed is leaning on the mean reversal story that everything will be fine. but you have to ask the question. we have had three months of very strong payrolls and continued data. gdp is high as 4%. maybe this is not just some statistical issue. maybe it is real that the economy is we accelerating. that is the challenge today for powell. will he put weight on everything is fine and coming down or is there a risk that inflation might begin to accelerate? sonali: is that something you need to hear from him at this level of holding rates steady where they are? do you need an acknowledgment from the fed that this is perhaps stickier? if not, do you believe this is transitory? tortsen: so i don't believe this

is transitory. i believe this is real. there is a real acceleration in demand when it comes to consumer spending and capex. i am sure some of the reporters, maybe michael mckee, will ask, are you thinking about rate hikes? the answer will be that is a possibility but not our baseline scenario, and once he says that, there is a risk that there is a possibility and maybe the risk is we could see some more momentum in rates across the yield curve. sonali: how do you feel about the potential for rate hikes at this point and how do you believe investors are prepared for it? are there certain data points you are watching that would suggest perhaps even another hike at some point down the road would be appropriate? anna: one of the equations we really lean on in predicting fed funds rate -- plugging in how high inflation has risen to the upside for the fed to hike this

year. it has to. core pce inflation is 3.8%, which right now the consensus is 2.6%. it really has to surprise on the really upside for a rate hike to happen this year. at the same time, if the labor market, if the unemployment rate are to rise to 4.7%, even if inflation is at 3.8% later this year, the fed will actually still cut according to the initial rules because the fed has a dual mandate. sonali: how much do you worry about stagflation at that point? anna: i think the data surprises are headed to the stagflation-light direction. if you look at a broad swath of data including service, inflation is surprisingly up so i think the growth likely is on

a potential growth path where inflation is on a stickier path. sonali: how do you see the risk of economy slowing down at this level? will the fed have room to hike if they needed to? torsten: i think we are looking at the picture getting a lot of attention of the economy where those who have debt, they are generally quite negatively impacted by interest rates going up, whereas those who have assets and in particular those who have cash flows from fixed income assets they are generally doing better. broadly speaking, consumer spending has been reasonably strong including the data over the last week from pce and gdp. all of that suggests we should see reason strong data both when it comes to consumer spending and capex spending. we have a walking because the labor market is strong and it is suggested discontinues but also because of the significant tailwind from financial wealth and cash flow and fixed income really being at the highest levels indicated. in particular, private credit,

public credit, very short cash flows. sonali: does the fed have to be cognizant of this potentially case shaped recovery we are seeing -- k shaped recovery we are seeing heading into an election cycle. the haves and the have-nots are feeling it differently. torsten: they have a dual mandate. so they would talk about it in aggregate, what is happening in aggregate with inflation and employment. but it is clear that those who do not own assets, of course they tend to do better when as a prices go up, whereas those who have debt on the consumer or corporate side, that have a lot of debt and low coverage ratios, they are challenged by the fed having interest rates at these high levels. sonali: what is your expectation not just out of today but into friday, and how does friday's data conflict with what we might here today? anna: i think the friday report will be a conflicting report by itself with the payroll being well over 200,000 hiring whereas

the unappointed rate could be going up. i think the fed will be paying a lot of attention to the unemployment rate. sonali: we thank you so much for your time. that is anna wong. we will talk more about the capital markets next. how the fed's moves are impacting the economy and capital markets. stick with us. this is bloomberg. ♪

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♪ sonali: this is "bloomberg markets," and i am sonali basak. we will get back to our conversation with torsten, who has been watching this higher for longer phenomenon and has been very good at catching the idea that we would be here.

for much longer. but now the question is, how is this going to impact the economy? torsten: the answer to that is quite simple. if you are a balance sheet that is highly sensitive to interest rates, then of course interest rates higher for longer is having a negative impact on the consumer side, that means household have more debt, and this means debt on credit cards, auto loans. you have not seen delinquency rates go up on mortgages because people decide to stay in their home because they have locked in their mortgage at a lower level so mortgage rates are so high and that has meant the effect is that people are staying in the houses. so that is why you are seeing more sensitivity when it comes to consumers like credit cards and home loans. in particular for those who have a lot of debt. likewise in credit. on the corporate side, firms that have a lot of debt, they are generally more sensitive to interest rates. venture capital is the most extreme. venture capital by definition is investing in firms that have no

cash flow or revenue. it is no surprise venture capital is doing so poorly because it will be more sensitive when it comes to financing staying more elevated. sonali: you were talking about the unleased activity and capital markets on the heels of the dovish fed pivot. and with what is happening in the market right now, with expectations of one to know rate cuts this year, do you think -- no rate cuts this year, do you think the exuberance. -- do you think the exuberance will stop? torsten: this is important. it is about what is the response of the high-yield loan spreads, the s&p 500? if on one hand the fed is saying we want to restrict things and slow things down, that is why we are raising rates, but if the stock market decides and the credit market decides we want to still have ig in the broader marketplace because the unit is very high for life insurance companies, pension funds, and

retail, you might have easy financial conditions when it comes to credit markets and equity markets. so it is a tug-of-war, and this is the challenge for the fed as we speak. if the stock market wants to go up, that is, getting the job for the fed in terms of trying to slow things down. it is not our scenario but in the worst case, they may have to raise rates further to offset the significant easy financial conditions we are having coming from very tight credit spreads and high stock prices. sonali: speaking of the k shaped recovery, is there some sort of ripple effect when you are a small business having a hard time getting a loan at a bank versus if you are a corporation and you can tap the bond markets in those markets are still so easy? is that creating another dispersion? torsten: absolutely because if you are a middle-market company and you don't have access to capital markets, of course if you go to your local bank and they say, i'm sorry, we cannot lend to you at the moment, the risk is you cannot get any financing. therefore with rates higher for

longer, you want to be in companies that are very diversified in their businesses so if something goes wrong over here, i can take some cash flow from over here. it generally means the council structure. absolutely, it is the case that firms that have small businesses, middle-market firms that have not very diversified areas of business, they will generally be more sensitive because of financing and the high levered companies will have a more negative impact. sonali: is there some sort of job market ripple effect here? it has been the case in the u.s. that small and medium-size businesses have been a huge driver for the growth of the jobs market. is that as powerful today as it has historically been? torsten: yes, exactly because in the russell 2000, 40% have negative earnings. so it will not take much of a shock of keeping rates higher for longer before some of these companies get harder hit because they do not have earnings.

they have such a negative coverage ratio. so that is why larger cap companies have generally been benefiting and why job growth has been growing in the companies. sonali: we have to leave it there, and we thank you so much for your time ahead of a very critical fed meeting that can certainly change the tone of the year. now a check in on another big event in the market. speaking of capital markets, viking luxury clues line -- cruise line going public in the biggest ipo of the year, really hitting against the fed schedule here. we have not seen the first trade yet but let's discuss this with bloomberg's amy on whether we saw the ipo meet expectations and whether there can be anything else out of the gate after this one. >> i think it is interesting to have this big of an ipo as 1.5 being raised and if the green

she was being raised, $1.8 million, the biggest $1.8 billion, the biggest ipo of the year -- $1.8 billion, the biggest ipo of the year. remember, this month has been brutal in terms of the stock market in general. but the fact that many of the past bigger sized ipos have been able to upsize and price above the rate, it shows there is maybe a disk linking -- dis- linking between the ipo market. sonali: fascinating too because one thing you mentioned to me earlier in the year was the big test for markets on non-tech ipos. how much is this starting to open up the door for those non-tech companies, particularly given where we are in the macro? even if you say there is a doubt on whether the macro is even impacting the listings. >> interest rate is going to

increase the interest burdens of a lot of companies and we have seen that reflected in their earnings and also their balance sheet as well, but this one in particular really gained a lot of meat and confidence. this one is in the consumer arena. there are quite a few that are lining up including harry's and panera. we have not seen quite a lot of those. so we are waiting to see whether this will change the tone after last year. sonali: we thank you so much for keeping an eye on everything ipos. we will speak to norwegian cruise line ceo. of course, a big year for cruise lines, still jumping back. but first, we have a guest on the fed messaging and her interest rate outlook. countdown to the fed. stick with us. this is bloomberg. ♪

sonali: this is "bloomberg markets," and i am sonali basak. i want to bring you breaking news crossing the bloomberg terminal. the united states discussing finalizing bank capital rules as soon as august. of course, this is months away and before the election. a lot of these capital rules were highly contested by the industry and of course in discussions to be rolled back a bit in some critical ways. we are really only weeks now let alone a couple months away from those final rules. we will bring you more as we know it. but for now we will turn back for the fed. it is now time to bring in claire, who sees a rate cut in december and another to cuts in -- two cuts in 2025. what is the biggest risk around your view of one cut in december at this point given that you move your view along with the market? claire: yeah, absolutely.

to me, the biggest risks are really for the most part the past two or three years. the fed is alongside other central banks, sort of balancing between a lot of obviously dominating upside inflationary risks are gradually coming back into view again in the u.s. so obviously that is the number one risk at this point. i think any guidance the fed can give today will -- well in a way could be discounted given if inflation followed in the u.s. that is by and large the biggest risk we are seeing. sonali: it sounds like you think that, yes, today is important but there is much more data ahead of us. talk is through what you are looking for in upcoming data and how to parse through the noise. obviously, this is a market reacting to every economic data point coming out the last few weeks. claire: yeah, absolutely.

i think obviously like you said there has been a lot of volatility when it comes to reaction. that is just a reflection as to the high stage we are seeing in the economy especially with inflation data. i mean, the fed in the cycle has been pretty passive in terms of taking inflation data as they come. that has been working well for part of 2023. the latter half of prince have been coming in progressive. moving forward, the key question is, will the economy have to slow a bit more than the fed would like to see in order for inflation to come lower? or else what sort of position -- how many low-inflation prints? we are thinking two or three. sonali: one big question mark

that has been among the eyes and ears of every economist we have been speaking to is this debate, claire, around whether this inflation we are seeing is something that will abate or something that will last a little longer. how do you feel? claire: yeah. just as a supporting point, the numbers are not great. if you do see, it has doubled within the first quarter of 2024. so that has really dealt a blow to this sort of question as to were the low-inflation prints over the second half of 2023 sustainable given the economic backdrop which currently in the united states is very strong? we are still adding a lot of jobs every month if you look at the data. in terms of gdp, a bit lower, but consumer spending remains really heated. a lot of tailwinds to inflation coming from the macro side.

moving forward, it is a matter of will those encounter higher rates? sonali: we have to leave it there. thank you for your time. stick with us. more "markets" still ahead. tyler dickson. ♪ when i was your age, we never had anything like this. what? wifi?

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sonali: this is bloomberg markets a let's get a quick check on the markets. another down day on the s&p 500 down 0.2% and the nasdaq 100 is down only one half of 1%. the two year yield is hanging above 5% heading into the fed meeting in the 10 year yield is about three basis points lower on the day. some midday movers on the equity side because there are things moving under the surface. garman shares are popping after reporting earnings, sales and margins better-than-expected.

analysts are bullish about wearable demand and potential upside for the business. cds shares are tumbling with its outlook lower citing increased medical costs and his medicare insurance business, adjusted earnings for shares will be at least seven dollars per share, down from eight dollars $.30. breaking news moments ago, u.s. regulators are discussing finalizing those bank capital rules as soon as august. joining is now details katnja johnson. what does it mean for them to have these new rules so soon? >> wall street has been waiting after regulators said in march they would make broader material changes to the plan and a been waiting to see whether that meant scrapping it all together and putting a new foot forward. agencies will not be scrapping their plan but instead they will

make changes including market risk and what that particular capital climate would be. the discussions are still ongoing and it could be finalized as soon as august. some corners of washington are pushing for that and some people at the table are discussing exactly what other broad changes they are making. sonali: thank you so much for bringing us through the timeline. we know those changes are coming fast so keep an eye on our coverage at bloomberg because we are bringing it to you as it happens. i spoke earlier today with the kkr cfo about his confidence for fundraising in the coming quarters and putting that money to work. >> there is a lot of momentum for us across capital raising and we would expect that to accelerate. what we've articulate to our investors as we believe we can raise 300 plus billion dollars of capital over the next three

years. sonali: for more on the m&a market, let's bring in the head of investment banking, tyler dixon. the reason i played some of the kkr interview is that there is so much thinking on this private equity making a comeback and deal making. there are some good notes there about money coming in the door at some of the biggest firms. what about the money going out the door? >> i think it's a good question. the activity in the m&a market has been corporate activity. what we've started to see is some green shoots in the financial monetization category. there is more demand to return capital then we've seen deal activity. we are excited about corporate's , 70% of the activity comes from north america. note -- most of them as mega deals with three times increased of deals greater than $10 billion versus last year.

the financial sponsor community is seeing discipline bite sellers and buyers. i think it will take a little more time. sonali: one big question mark for these mega deals but they are strength to be announced anyway. with ftc, it's been quite aggressive and even the department of justice. what is the calculus for corporate's to do the deals anyway? >> i think corporate's are driven by the fact that we are in a low growth environment and not even growth around the world. when we look at scale, it becomes an advantage in this environment. their costs, higher cost of energy and higher cost of cybersecurity. think of those because spread across a higher base and the ability to take those coast -- those cause and driver earnings. also moving into categories with these big mega themes that have less to do with regulation and more with opportunity.

energy security, transition, technological participation of ai in the future of health care. sonali: your talk about higher costs and its own was the reaction to inflation some of these deals but does it also signal these corporate's are preparing for more inflation for a longer time? >> lower for longer, if it plays out will be the cost of capital means companies will have to be very efficient and that will lead them to doing more strategic transactions and pairing assets that are not core and looking at value on parts of the business that are exciting and we feel pretty good about market conditions to allow financing to happen even if rates are higher. debt markets are on fire. sonali: how long at this level of rates, people are thinking, can the party last in the finance market? >> i think it can last a while. this is been the challenge of the recent past. when we look at the rates at current levels in the context of history, they are pretty

attractive. if we have stable rates and we have reasonable spreads and high equity values and constructive market conditions, those of the requirements for m&a activity. sonali: when you talk to clients like the ones that have the choice between selling themselves to another corporation or potentially hitting the public markets in an ipo, what does that conversation look like given that there is seemingly still insatiable demand for these ipos? >> i think we feel good that the ipo market has gone from green shoes to a garden and we hope it turns into a farm. when we look at the data points recently, we take some confidence that folks are looking at m&a and equity capital market solutions. if we see both of those opportunities, i think that unlocks activities for corporate's financial sponsors in particular. sonali: which garden is growing faster, the m&a garden or the ipo garden?

you saw it in the bank numbers and they held up well and the advisory still trying to get there. >> driven by corporate's, it's a little sluggish and that's to be expected. the capital market has been stronger than the m&a market and it will take time for the m&a market to heat up. sonali: can you think about anything that could stop the party at this point? >> if there were surprises in rate volatility, that would be an issue at the macro level. there is a lot of geopolitical risk out there. those are two things that don't keep us up at night because they are tail risks as opposed to central risks but they will happen later than they normally would. sonali: that's the citigroup head of investment banking. on a day where we are seeing one of the biggest ipos of the year, we have the deal market running hot before the fed meeting later today. coming up next, the ceo of norwegian cruise lines on a record quarter bookings in the

travel boom that still going in 2024. that's up next. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates, exemption certificates or filing returns. avalarahhh ahhh ahhh ahhh

♪ ♪ >> we feel really bullish about the demand we are seeing from our customers and the sustainability of that demand. you seen experiences outpace spend on stuff. that rate has increased twofold coming out of covid. sonali: that was the royal caribbean ceo on the boom and demand for cruises. no reason cruise line shares are struggling today but that is despite record bookings in the first quarter.

investor expectations are skyhigh following that strong report. we will bring in the ceo to talk about what's going on in his business. if you look at what you've given the street, you hiked your guidance and you are still not seeing investors react to the extent you would think. if you say things are going to be better in the future, how do you meet investor expectations at this point? >> thank you for having me on the show today. we are really thrilled for our performance in q1. yields are up 16% in great demand in ticket revenue and onboard revenue and we doubled our ibita last year which is a great indicator of the company. i think anything that happened with the stock today perhaps is a smalltime reaction but we are super focused on the long-term. we raised our eps guidance for the year and their yield guidance for the year. we are super happy with the

cruise guests. sonali: speaker what the competition looks like for cruise goers. you look at your customer base, are you finding more people are coming in that art new to the cruise industry or a new to norwegian? what do the numbers say? >> our competitive sales are not exactly there. you think about the north american market for vacations, cruises make up nearly 2% of it. you had jason at the top of the show when he's not our competitor. our competitors are the hiltons and the marriott's of the world because that's where the guest has a choice. we believe that cruising represents an incredible value compared to hotels and a much better guest experience. our ships are always well-maintained and give a consistent product and we go to fantastic places around the world close to home and far away

and we really see guests continuing to favor cruising as a vacation. new to cruises are up a few points and new to the company is up a few points. sonali: it's not just the idea of royal caribbean and you guys versus the hotel chains. today is interesting because there's another cruise operator going public in one of the biggest ipos of the year. how do you see more entrance into the space particularly when it comes to dollars from public investors? >> i think viking has done a great job over there last few decades in the river cruise space in the ocean cruise space and anything that elevates the cruise experience is good for the industry. at the end of the day, the cruise industry is healthiest when it has good participants with great product and great guest experiences on board. viking delivers that and nclh does that as well and we look forward to new entrants

continuing to build demand for the industry. from a financial investment perspective, any good financial performer in the industry raises the perception of cruising in the financial markets. we are thrilled from that perspective as well. sonali: when we look at your numbers, a lot of beats there. even on operating capacity as well. the revenue is where things felt slightly short of expectations. what was the biggest contributor there? >> i will emphasize what you said, we beat on almost every key metric. we were very pleased with their performance with beating guidance and consensus. revenue talks to some of the items we make a small margin on. we sold guests slightly fewer air tickets. it's not a high-margin item for

us and few of them is better for the company so it didn't impact gross revenue port net revenue which exceeded guidance and consensus. sonali: how sensitive is the consumer you have to the environment we are living in? even if you are excited about this record bookings environment, do you worry consumer sentiment is very fragile? >> we are not seeing any cracks in consumer sentiment in our core demographics. we have three brands and we see improvement all crossed -- all across all demographics. there is sentiment between the higher net worth individuals continues to be really high. couple that with the huge gap experience between us and the alternative vacations plus a value gap that the cruises are priced less than hotels despite having a better experience. we are seeing demand continue to

outperform our expectations despite any cracks we see in other parts of the economy. sonali: we thank you so very much for joining us on a busy earnings time for you. that's the norwegian cruise line's ceo and that's another stock moving. amazon posted its strongest sales growth in a year, sign that the retailers most profitable unit is recovering from a slump in certain businesses. we will break it down with jon erlichman joining us from toronto. he is an cyclopedia as ever about technology. you spoke to an amazon executive earlier so what are they saying about their potential in cloud and ai? jon: we will start with the market relax -- reacted to these amazon numbers. if we hadn't seen the success we saw from a ws, maybe there would be a slightly different narrative from the guidance of the second quarter overall. when you think a year back, when a lot of business customers were

starting to be a little bit uncertain about the economic spending environment, there were questions about what that would mean for amazon web services and yet here we are with ai in full effect and that being reflected in these quarterly results. the number that stood up to me is that on the revenue side, aws cleared $25 billion. an annual run rate of $130 for this business. you'll be hard-pressed to find any corporate software business outside microsoft that size and scale. that's just one part of the amazon business. and the profit story, the fact that the operating margins are already north of 38%. bloomberg intelligence is seeing that heading toward 40%. in an earnings season where companies in technology are continuing to spend on ai, maybe one of the lessons from the medic conference call where mark zuckerberg committed to big numbers and others talking about

the need to spend but also the need to monetize quickly on that spending, that seemed to resonate with the street. amazon is getting a lot of checkmarks from the wall street community so far. sonali: we thank you so much for your time. we have to leave it there for now because we have an ipo opening, the largest of the year. viking cruise line has gone public. let's discuss it with abigail doolittle because we are looking at a bit of a pop, opening at $26.15 and the ipo was $24. where do we stand? abigail: it's a healthy ipo so far considering its price of the high end of the range and that was above that. it has a market value of $10.4 billion. the ceo says this is the cruise line for the thinking person, not the drinking person. they create these cruise lines for the intellectual person and they are kid free and that's where you will see the ads on

pbs about $55 with a fair amount of money. it seems like it's a successful ipo and shows the markets are open their. today we have norwegian cruise lines plunging, down more than 10% and other cruise lines are down in sympathy but we have a pocket of strength for viking. sonali: it's interesting to have this hours for the fed meeting. abigail: it's pretty unusual. i think it signals the level of confidence the company and the bankers had that they could price this successfully and they did that is this niche cruise line. that's one of the takeaways. sonali: we are doing this at relatively low volatility. might this be the last big when we see this year? abigail: i think it's too early to say. we had to see more of the macro backdrop in terms of what the fed says. will this still be the year of the cut? if it isn't, this could be one of the last big ones. sonali: bloomberg's abigail

doolittle, we thank you. viking is roughly 10% higher, trading above $26.60. the ipo price to $24. they had raised more than 1.5 billion dollars in its ipo. coming up next, one of the most anticipated wall street trials begins in a lower manhattan courthouse next week. we will preview the trial next. this is bloomberg. ♪

sonali: this is bloomberg markets. it's time for the wall street beat. today we will look at former founder bill wong as he goes to trial next week. there was a business week that published today about bill wong's dreams that he never told people that started this story.

what was the dream? >> when you walk into his charity office, there is a striking piece of artwork. effectively, there is red paint and minute belated layers of mesh which is hanging over the new york city skyline. it's quite something is the best way to describe it. his dream was it was a vision of the blood of christ, redeeming the sins of the city. that's very interesting because when we think about what will happen starting next week, bill wong goes to trial in a criminal case where the doj has accused him of wire fraud, market manipulation and racketeering. racketeering charges were put in place to take down mob bosses. this will be a real test for him. here is someone who built a massive fortune so secretively and lost it all very publicly now has gotten us to the stage where we have a trial that could be one of the biggest market manipulation cases of its kind. sonali: the big question now

quoted in your story is will this guy go to jail for it? how did they think through what happens next? >> when you think of the charges against him, each count, wire fraud, market manipulation, racketeering, 20 years in jail, there is a serious possibility of that happening. it is novel in some ways because you don't often see cases of this kind. you don't normally even see some individuals in this case, his family office that had $36 billion net assets. billions going down to zero in one week. sonali: you followed this through and through from the beginning. it put wall street at odds and banks have lost billions of dollars and sometimes a single bank lost billions of dollars. has anything really changed about wall street since this initially happened? >> the effect on wall street was

ugly. there was more than $10 billion that were lost. more than $5.5 billion in hits on credit suisse. credit suisse does not exist anymore and that's the kind of impact you can argue he had on the market. regulators stepped in the middle pointing to change. sonali: did they change the disclosure rules for significantly change the swaps rules? >> so far, they've made noises but we've not seen of tangible action that can give us reassurance that another arkagos will not happen but these things take time and i suspect you will see some changes down the road whether it's the swaps disclosure rules or rules targeted at family offices. those with the two key reasons why the company was under the radar. sonali: memories are thin but yours is never. checking on shares of viking before we let you go, they

traded moments ago and are above the ipo price, around $26.50. the fed meeting is close to hitting the tape. keep an eye on bloomberg markets. that does for us today and this is bloomberg. ♪

and they're all coming?

those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly.

>> from the world of politics to the world of business, this is balance of power.