1
00:00:01,200 --> 00:00:03,920
Speaker 1: Live from the Bloomberg Interact, a Broker's studios. This is

2
00:00:03,960 --> 00:00:07,120
Speaker 1: Bloomberg day Break for a Friday, March tenth. Coming up today,

3
00:00:07,320 --> 00:00:10,120
Speaker 1: stocks drop on concern over the health of the US

4
00:00:10,200 --> 00:00:13,319
Speaker 1: banking system. Will Street braces for the jobs report After

5
00:00:13,440 --> 00:00:17,000
Speaker 1: last month's big surprise, President Biden kicks off a Washington

6
00:00:17,120 --> 00:00:20,159
Speaker 1: spending fight with a nearly seven trillion dollar budget, and

7
00:00:20,280 --> 00:00:24,200
Speaker 1: China's Jan Ping unanimously wins a third term as president.

8
00:00:24,320 --> 00:00:26,720
Speaker 1: A New York Man jailed for eighteen years for a

9
00:00:26,800 --> 00:00:30,680
Speaker 1: crime he did not commit, is free bus death penalty deliberations,

10
00:00:30,680 --> 00:00:32,640
Speaker 1: and Manhattan to get a snag in the case of

11
00:00:32,640 --> 00:00:36,160
Speaker 1: a terrorist. I'm John Tucker. More Ahead, I'm John Stashafard. Sports,

12
00:00:36,159 --> 00:00:39,280
Speaker 1: the Nixon Nets, Boat Lost, the Rangers, Islanders, and Devils

13
00:00:39,280 --> 00:00:44,120
Speaker 1: all one season ending loss for Saint John's. That's all

14
00:00:44,320 --> 00:00:47,600
Speaker 1: straight Ahead on Bloomberg day Break, The Business news you

15
00:00:47,720 --> 00:00:50,560
Speaker 1: need to sturn your day, and just one fifteen minute

16
00:00:50,560 --> 00:00:55,000
Speaker 1: podcast each pointing on Apple, Spotify, the Bloomberg Business Appen

17
00:00:55,120 --> 00:01:01,360
Speaker 1: everywhere you get your podcasts. Good morning, I'm Nathan Hager

18
00:01:01,600 --> 00:01:04,880
Speaker 1: and I'm Cameron Moscow. Here are the stories we're following today.

19
00:01:05,440 --> 00:01:08,480
Speaker 1: Panic is spreading across the startup world. It's due to

20
00:01:08,520 --> 00:01:11,720
Speaker 1: worries about the financial health of Silicon Valley Bank, a

21
00:01:11,840 --> 00:01:16,280
Speaker 1: major lender to fledgling companies. Svb's top executive is urging

22
00:01:16,319 --> 00:01:19,920
Speaker 1: clients to stay calm, but Peter Teel's founders fund and

23
00:01:20,000 --> 00:01:24,240
Speaker 1: other venture capitalists are advising their portfolio businesses to withdraw

24
00:01:24,360 --> 00:01:27,759
Speaker 1: their money. We get more from Bloomberg Investing editor Russell Ward.

25
00:01:27,959 --> 00:01:31,880
Speaker 1: A sellof started when SPB and announced plans to raise

26
00:01:32,000 --> 00:01:35,000
Speaker 1: more than two billion dollars and a share sale to

27
00:01:35,080 --> 00:01:37,360
Speaker 1: show up capital. This is after it was forced to

28
00:01:37,360 --> 00:01:41,200
Speaker 1: sell assets at a significant loss following a drop in deposits. Now,

29
00:01:41,240 --> 00:01:44,120
Speaker 1: as its name suggests, the bank caters to startups in

30
00:01:44,120 --> 00:01:47,080
Speaker 1: Silicon Valley, which it says has been burning through cash

31
00:01:47,160 --> 00:01:50,120
Speaker 1: during the slump in tech investment, and now startups are

32
00:01:50,160 --> 00:01:53,320
Speaker 1: rushing to withdraw their cash from the bank. Bloomberg's Russell

33
00:01:53,320 --> 00:01:57,840
Speaker 1: Award says SVB shares plunged sixty percent yesterday. This morning,

34
00:01:57,840 --> 00:02:01,960
Speaker 1: they're down another thirty percent. Well, Nathan, another influential name

35
00:02:02,000 --> 00:02:05,520
Speaker 1: on Wall Street, is urging investors to stay calm. Muhammadalarian

36
00:02:05,600 --> 00:02:09,800
Speaker 1: says US banks can contain contagion risk and system stress

37
00:02:09,840 --> 00:02:12,799
Speaker 1: stemming from the turmoil at Silicon Valley Bank. In a

38
00:02:12,840 --> 00:02:15,760
Speaker 1: tweet this morning that Sherman of Grammarcy Funds and Bloomberg

39
00:02:15,760 --> 00:02:18,839
Speaker 1: opinion columnists said the US banking system is solid as

40
00:02:18,840 --> 00:02:21,840
Speaker 1: a whole, but that doesn't mean every bank is well.

41
00:02:21,880 --> 00:02:24,680
Speaker 1: Along with the banking turmoil this morning, Karen wall Street

42
00:02:24,760 --> 00:02:27,960
Speaker 1: is also bracing for the February jobs report after last

43
00:02:27,960 --> 00:02:30,960
Speaker 1: month's huge surprise. Economists are looking for a gain of

44
00:02:31,200 --> 00:02:33,760
Speaker 1: two hundred twenty five thousand jobs. We get more from

45
00:02:33,760 --> 00:02:37,720
Speaker 1: Bloomberg's Michael McKee. January's jobs report turned the financial world

46
00:02:37,760 --> 00:02:40,400
Speaker 1: on its head. More than half a million jobs created,

47
00:02:40,440 --> 00:02:44,360
Speaker 1: the government said, almost three times what was forecast. The

48
00:02:44,480 --> 00:02:47,840
Speaker 1: FED slowing the pace of rate increases, is now expected

49
00:02:47,840 --> 00:02:52,239
Speaker 1: to tighten more and faster unless the February numbers reverse course,

50
00:02:52,600 --> 00:02:56,400
Speaker 1: and that is possible. Economists say the January report was

51
00:02:56,440 --> 00:03:01,160
Speaker 1: boosted by unexpectedly good weather and annual statistical adjustments. It

52
00:03:01,280 --> 00:03:05,560
Speaker 1: might be revised lower and estimates put February's job gains

53
00:03:05,600 --> 00:03:09,519
Speaker 1: back at trend. Another surprise, though at expect a lot

54
00:03:09,560 --> 00:03:13,400
Speaker 1: of market turmoil. Michael McKee, Bloomberg Daybreak, Orry Michael Thank you.

55
00:03:13,440 --> 00:03:16,000
Speaker 1: We now turned to the fight over spending and the debt.

56
00:03:16,040 --> 00:03:19,280
Speaker 1: In Washington, President Biden has unveiled his budget requests for

57
00:03:19,360 --> 00:03:22,240
Speaker 1: the next fiscal year. The six point nine trillion dollars

58
00:03:22,280 --> 00:03:24,880
Speaker 1: package would boost spending on a whole range of programs

59
00:03:25,040 --> 00:03:28,560
Speaker 1: and pay for it with new taxes on the wealthy incorporations. Now,

60
00:03:28,600 --> 00:03:31,839
Speaker 1: the President says that ball is in Republicans court. I'm

61
00:03:31,880 --> 00:03:35,240
Speaker 1: ready to meet with the Speaker anytime tomorrow. If he

62
00:03:35,280 --> 00:03:37,680
Speaker 1: has his budget, lay it down, tell me what you

63
00:03:37,720 --> 00:03:39,200
Speaker 1: want to do. I'll show you what I want to do.

64
00:03:39,480 --> 00:03:41,200
Speaker 1: See where we can agrant it. We don't agree, un

65
00:03:41,240 --> 00:03:44,160
Speaker 1: Let's see what we vote on. President Biden announced his

66
00:03:44,160 --> 00:03:47,120
Speaker 1: budget in Philadelphia. Republicans have called for at least one

67
00:03:47,200 --> 00:03:50,160
Speaker 1: hundred and fifty billion dollars in spending cuts. The president

68
00:03:50,200 --> 00:03:53,240
Speaker 1: would race spending by seventy seven billion next year and

69
00:03:53,320 --> 00:03:55,800
Speaker 1: add five and a half trillion in taxes over a

70
00:03:55,840 --> 00:03:59,000
Speaker 1: decade later. Today, President Biden welcomes the leader of the

71
00:03:59,040 --> 00:04:01,800
Speaker 1: European Union, La Vanderline to the White House. They plan

72
00:04:01,880 --> 00:04:04,920
Speaker 1: to talk trade, the war in Ukraine, and future leadership.

73
00:04:05,080 --> 00:04:07,520
Speaker 1: Amy Morris has a preview from our Bloomberg ninety nine

74
00:04:07,520 --> 00:04:10,840
Speaker 1: One newsroom in Washington, the two sides are expected to

75
00:04:10,880 --> 00:04:14,040
Speaker 1: agree to a plan allowing European firms to benefit from

76
00:04:14,080 --> 00:04:17,279
Speaker 1: some of the subsidies for batteries offered only to US producers.

77
00:04:17,640 --> 00:04:20,840
Speaker 1: That deal would also showcase the strength of the Transatlantic

78
00:04:20,839 --> 00:04:24,920
Speaker 1: alliance and supporting Ukraine against Russia's invasion. Now, as for Ukraine,

79
00:04:24,960 --> 00:04:27,719
Speaker 1: the US and EU will consider strategies to step up

80
00:04:27,760 --> 00:04:31,159
Speaker 1: production of military equipment, but there are questions over funding.

81
00:04:31,360 --> 00:04:34,480
Speaker 1: EU officials are also looking at its relationship with the

82
00:04:34,600 --> 00:04:38,680
Speaker 1: US if President Biden doesn't win reelection, and vonder lyons

83
00:04:38,800 --> 00:04:42,039
Speaker 1: term also ends next year in Washington, I'm Amy Moore's

84
00:04:42,040 --> 00:04:44,359
Speaker 1: Bloomberg Day Break. All right, Amy, thank you. Meanwhile, the

85
00:04:44,440 --> 00:04:47,039
Speaker 1: legal pressure may be close to a breaking point for

86
00:04:47,040 --> 00:04:50,960
Speaker 1: former President Donald Trump. Multiple media outlets are reporting Manhattan's

87
00:04:51,000 --> 00:04:54,360
Speaker 1: district attorney is moving toward a criminal indictment, and Bloomberg's

88
00:04:54,360 --> 00:04:57,360
Speaker 1: said Baxter has the latest. D A Alvin Bragg has

89
00:04:57,400 --> 00:05:00,320
Speaker 1: offered Trump the opportunity to appear before the grand jury

90
00:05:00,360 --> 00:05:03,880
Speaker 1: investigating his role in a payment to Stormy Daniels before

91
00:05:03,880 --> 00:05:06,719
Speaker 1: the twenty sixteen election in New York. It's called the

92
00:05:06,800 --> 00:05:10,239
Speaker 1: cross notice and is given to objects of investigations before

93
00:05:10,480 --> 00:05:14,680
Speaker 1: a formal indictment is handed down. Trump spokesperson says Trump

94
00:05:14,760 --> 00:05:17,960
Speaker 1: was a victim of extortion then he is now. It's

95
00:05:18,000 --> 00:05:21,120
Speaker 1: an embarrassment to the Democratic prosecutors and an embarrassment to

96
00:05:21,160 --> 00:05:25,080
Speaker 1: New York City. In San Francisco, I'm at Baxter Bloomberg Daybreak.

97
00:05:25,160 --> 00:05:27,840
Speaker 1: Thanks d turning overseas, it is a unanimous vote from

98
00:05:27,880 --> 00:05:32,000
Speaker 1: lawmakers in China, granting Shijin Ping and unprecedented third term

99
00:05:32,120 --> 00:05:35,320
Speaker 1: as president. Bloomberg Daybreak Asia anchor Brian Curtis has more

100
00:05:35,360 --> 00:05:38,159
Speaker 1: from Hong Kong. She won the vote twenty nine hundred

101
00:05:38,160 --> 00:05:41,159
Speaker 1: and fifty two to zero. It gives him five more

102
00:05:41,240 --> 00:05:44,400
Speaker 1: years in power and demonstrates his solid grip on the

103
00:05:44,440 --> 00:05:48,000
Speaker 1: Communist Party. She was also reappointed chairman of the Central

104
00:05:48,000 --> 00:05:52,520
Speaker 1: Military Commission. In other moves, the NPC installed former graft

105
00:05:52,640 --> 00:05:55,720
Speaker 1: chief Joo Ledge as its new leader. It gave the

106
00:05:55,839 --> 00:06:00,400
Speaker 1: vice presidency to Han Jung, who replaces Wang Chi Shan. Now,

107
00:06:00,400 --> 00:06:03,520
Speaker 1: the balloting here was all procedural, there was no doubt

108
00:06:03,600 --> 00:06:07,200
Speaker 1: about the outcome in Hong Kong. Brian Curtis, Bloomberg Daybreak.

109
00:06:07,240 --> 00:06:09,719
Speaker 1: All right, Brian, thanks. While staying in Asia, the Bank

110
00:06:09,720 --> 00:06:13,640
Speaker 1: of Japan maintained its easing stance as Governu Haruhiku Kuroda

111
00:06:13,760 --> 00:06:16,880
Speaker 1: held his final meeting after a decade of massive stimulus.

112
00:06:17,080 --> 00:06:20,640
Speaker 1: The decision came shortly after Parliament formally approved Kazoo o

113
00:06:20,760 --> 00:06:28,360
Speaker 1: Ueeda to succeed Kuroda in April. It's thirty five degrees

114
00:06:28,360 --> 00:06:30,960
Speaker 1: in New York. We've got showers possible late today. Winter

115
00:06:31,000 --> 00:06:33,440
Speaker 1: weather advisories in fact north of the city. Starting at

116
00:06:33,440 --> 00:06:35,400
Speaker 1: six tonight. We're gonna get up to the mid forties

117
00:06:35,440 --> 00:06:37,760
Speaker 1: down to the upper thirties tonight as that snow begins.

118
00:06:37,839 --> 00:06:39,039
Speaker 1: Time now to take a look at some of the

119
00:06:39,040 --> 00:06:40,920
Speaker 1: other stories making news in New York and around the

120
00:06:40,960 --> 00:06:43,920
Speaker 1: world that We're joined by Bloomberg's John Tucker. Good morning John,

121
00:06:47,360 --> 00:06:50,040
Speaker 1: and Good morning Nathan. A New York man has been

122
00:06:50,080 --> 00:06:53,039
Speaker 1: released from prison eighteen years empty who was convicted of

123
00:06:53,120 --> 00:06:57,320
Speaker 1: murder based on a mistaken identification. Sheldon Thomas, was arrested

124
00:06:57,360 --> 00:07:00,479
Speaker 1: for it two thousand and four murder after witness identified

125
00:07:00,480 --> 00:07:03,039
Speaker 1: a different person with the same name and a photo array.

126
00:07:03,440 --> 00:07:07,640
Speaker 1: The Brooklyn District Attorney's office reinvestigated the case and discovered

127
00:07:07,640 --> 00:07:11,240
Speaker 1: police concealed the mistake and then explained it away in court.

128
00:07:11,680 --> 00:07:15,640
Speaker 1: District attorney Eric Gonzalez. I met with mister Thomas. You know,

129
00:07:15,760 --> 00:07:19,920
Speaker 1: he was very emotional. I apologized to him and as

130
00:07:19,960 --> 00:07:23,200
Speaker 1: you heard, for himself, he wants to move forward with

131
00:07:23,240 --> 00:07:28,080
Speaker 1: his life. He has a loving family. Thomas's attorney, William Caston,

132
00:07:28,120 --> 00:07:31,120
Speaker 1: says the wrongful conviction put his client behind Barnes for

133
00:07:31,200 --> 00:07:33,800
Speaker 1: more than half his life, and now being released when

134
00:07:33,800 --> 00:07:38,400
Speaker 1: he's thirty five. Where does he start. He doesn't have housing,

135
00:07:39,320 --> 00:07:42,640
Speaker 1: he missed the opportunity to go to college. He doesn't

136
00:07:42,640 --> 00:07:45,880
Speaker 1: have health insurance. Meanwhile, Thomas says he wanted to thank

137
00:07:46,000 --> 00:07:49,920
Speaker 1: everyone who believed in his innocence. A death penalty deliberations

138
00:07:49,920 --> 00:07:51,880
Speaker 1: in Manhattan hit a snag in the case of a

139
00:07:51,920 --> 00:07:55,800
Speaker 1: convicted Isa's terrorist deliberations starting anew after one of the

140
00:07:55,840 --> 00:07:59,400
Speaker 1: jurors was dismissed due to a family emergency and replaced

141
00:07:59,440 --> 00:08:02,880
Speaker 1: with an author The jury is considering whether syfellow Sypov

142
00:08:03,160 --> 00:08:06,080
Speaker 1: deserves the death penalty for killing eight people with a

143
00:08:06,120 --> 00:08:10,480
Speaker 1: truck in a twenty seventeen attack. Wells Nathan mentioned at

144
00:08:10,480 --> 00:08:12,920
Speaker 1: the top of the program old Man Winter isn't done

145
00:08:13,040 --> 00:08:16,000
Speaker 1: yet with the New York area and let's get the update.

146
00:08:16,160 --> 00:08:20,320
Speaker 1: Bloomberg meteorologists Rob called morning Ron John. This next storm

147
00:08:20,360 --> 00:08:22,520
Speaker 1: system is mainly a rain event in the city, but

148
00:08:22,680 --> 00:08:25,360
Speaker 1: inland that's where we have winter weather advisories. From six

149
00:08:25,400 --> 00:08:27,640
Speaker 1: pm this evening through ten am tomorrow. A lot of

150
00:08:27,640 --> 00:08:30,040
Speaker 1: the northern and western suburbs are probably going to see

151
00:08:30,040 --> 00:08:32,360
Speaker 1: three to six inches of heavy wet snow from this storm.

152
00:08:32,640 --> 00:08:34,440
Speaker 1: Even in the city. It may mix with wet snow

153
00:08:34,520 --> 00:08:37,760
Speaker 1: leader tonight and into tomorrow. Morning John. All right, thanks Rob.

154
00:08:38,040 --> 00:08:40,400
Speaker 1: A German police say eight people were killed in a

155
00:08:40,480 --> 00:08:43,960
Speaker 1: shooting at a Jehovah's witness hall in Hamburg, including the

156
00:08:44,000 --> 00:08:47,080
Speaker 1: alleged gunman. Still no word on a positive motive for

157
00:08:47,160 --> 00:08:50,640
Speaker 1: the shooting, and President Vladimir Zelenski has urged a rapid

158
00:08:50,679 --> 00:08:53,320
Speaker 1: or repair of energy infrastructure and areas hit by a

159
00:08:53,320 --> 00:08:57,000
Speaker 1: fresh barrage of Russian missile attacks come power to hundreds

160
00:08:57,000 --> 00:08:59,760
Speaker 1: of thousands in Ukraine. The White town Sends. At least

161
00:08:59,760 --> 00:09:03,400
Speaker 1: a eleven Ukrainians died in the attacks, including five near

162
00:09:03,440 --> 00:09:06,520
Speaker 1: the western city of Leviv. Global News twenty four hours

163
00:09:06,520 --> 00:09:09,120
Speaker 1: a day powered five more than twenty seven hundred journalists

164
00:09:09,120 --> 00:09:12,560
Speaker 1: and analysts and over one hundred twenty countries. I'm John Tuncker.

165
00:09:12,679 --> 00:09:19,760
Speaker 1: This he is Bloomberg. Nathan. Thank you John. Time for

166
00:09:19,800 --> 00:09:22,160
Speaker 1: the Bloomberg Sports Update FRONTI by tri stayed out here.

167
00:09:22,200 --> 00:09:24,800
Speaker 1: Good morning, John Stashamber him morning, Nathan Rare night. Were

168
00:09:24,800 --> 00:09:27,800
Speaker 1: all five New York Area NBA and NHL teams played

169
00:09:27,800 --> 00:09:30,000
Speaker 1: all five on the road. The hoop teams lost, the

170
00:09:30,080 --> 00:09:32,560
Speaker 1: hockey teams won, none of them in a regulation. Nicks

171
00:09:32,600 --> 00:09:35,840
Speaker 1: began a four game trip out West. Zacharimento, much improved,

172
00:09:35,840 --> 00:09:38,000
Speaker 1: tied for second in the West, and the Kings went

173
00:09:38,080 --> 00:09:40,360
Speaker 1: up by sixteen at the half and Nick rally fell short.

174
00:09:40,440 --> 00:09:44,680
Speaker 1: They lost one twenty two, one seventeen, Demantes Savona's twenty

175
00:09:44,760 --> 00:09:46,880
Speaker 1: four points to the triple double. Like the last game

176
00:09:46,920 --> 00:09:50,040
Speaker 1: the lost to Charlotte Knicks, shooting was off. Julius Randall,

177
00:09:50,160 --> 00:09:53,559
Speaker 1: R J. Barrett Emmanuel quickly together four of twenty eight

178
00:09:53,600 --> 00:09:56,240
Speaker 1: on three pointed. Road trip continues tomorrow in LA against

179
00:09:56,240 --> 00:09:58,600
Speaker 1: the Clippers net for in Milwaukee. Even though the Bucks

180
00:09:58,640 --> 00:10:00,800
Speaker 1: didn't have Yannis done to the company sore hand, they

181
00:10:00,800 --> 00:10:03,480
Speaker 1: still won one eighteen one thirteen and they've won nineteen

182
00:10:03,480 --> 00:10:06,480
Speaker 1: their last twenty. Rangers first game since last Satury A.

183
00:10:06,520 --> 00:10:09,439
Speaker 1: Four three shootout win at Montreal. Patrick Kane got his

184
00:10:09,520 --> 00:10:12,400
Speaker 1: first Ranger goal that tied the game. Devil's also wanted

185
00:10:12,440 --> 00:10:14,800
Speaker 1: to shootout three two at Washington. The Islands won an

186
00:10:14,800 --> 00:10:17,280
Speaker 1: overtime four three at Pitts for a Big East tournament.

187
00:10:17,679 --> 00:10:20,040
Speaker 1: Near upset went for Saint John's with the Red Storm.

188
00:10:20,120 --> 00:10:23,560
Speaker 1: Season came to an end an overtime loss to Marquette.

189
00:10:23,559 --> 00:10:26,520
Speaker 1: Wins for Rutgers in the Big Ten and Fordham in

190
00:10:26,600 --> 00:10:30,280
Speaker 1: the Atlantic Ten. Another Yankee starting pitcher is injured, Carlos Vigona,

191
00:10:30,280 --> 00:10:34,200
Speaker 1: and the Yanks key offseason pickoff as a mild elbow stranger.

192
00:10:34,240 --> 00:10:37,600
Speaker 1: It's just kind of early to throw through things right now,

193
00:10:37,600 --> 00:10:40,120
Speaker 1: I would say, so I want to be, you know,

194
00:10:40,120 --> 00:10:43,160
Speaker 1: one hundred percent healthy going. I mean, obviously not all

195
00:10:43,160 --> 00:10:44,680
Speaker 1: of the start going to be one hundred percent, only

196
00:10:45,120 --> 00:10:47,920
Speaker 1: you know, at least mentally hundred percent healthy. Of Brander

197
00:10:47,960 --> 00:10:50,520
Speaker 1: pitch the season with the injury coming you after the

198
00:10:50,520 --> 00:10:53,400
Speaker 1: one to Frankie Mantas, that one likely season ending sounds

199
00:10:53,400 --> 00:10:56,000
Speaker 1: like Rudona. They missed in a couple of starts. John

200
00:10:56,040 --> 00:11:02,199
Speaker 1: Stash Bluebird spools from coast to coast, from New York

201
00:11:02,280 --> 00:11:07,160
Speaker 1: to San Francisco, Boston to Washington, DC nationwide on Sirius XAM,

202
00:11:07,240 --> 00:11:10,880
Speaker 1: the Bloomberg Business app, and Bloomberg dot Com. This is

203
00:11:10,960 --> 00:11:14,920
Speaker 1: Bloomberg Daybreak. Good morning. I'm Nathan Hagar. We are watching

204
00:11:15,000 --> 00:11:18,240
Speaker 1: banking stocks in the US and around the world slide

205
00:11:18,320 --> 00:11:21,160
Speaker 1: lower this morning thanks to turmoil at a bank that

206
00:11:21,200 --> 00:11:24,280
Speaker 1: provides a lot of the lifeblood for Silicon Valley startup.

207
00:11:24,320 --> 00:11:29,559
Speaker 1: Silicon Valley Bank SVB has announced a sudden fundraising effort

208
00:11:30,080 --> 00:11:32,920
Speaker 1: that's led the likes of Peter Teel and other venture

209
00:11:32,920 --> 00:11:36,360
Speaker 1: capitalists to advise their clients to pull out. Let's bring

210
00:11:36,360 --> 00:11:40,160
Speaker 1: in Danny Burger, Bloomberg television anchor and markets correspondent for

211
00:11:40,280 --> 00:11:43,360
Speaker 1: more on what's happening at SVB in the ramifications for

212
00:11:43,360 --> 00:11:46,360
Speaker 1: the financial sector. Danny, good morning. Let's just set things

213
00:11:46,400 --> 00:11:50,120
Speaker 1: up here. What is happening at SVB? To put it

214
00:11:50,160 --> 00:11:54,560
Speaker 1: really broadly, it's one of these unintended consequences of the

215
00:11:54,600 --> 00:11:58,000
Speaker 1: Fed hiking rates that we always talk about actually come

216
00:11:58,080 --> 00:12:01,719
Speaker 1: to fruition. Now that's absolutely it too simplistically, But the

217
00:12:02,120 --> 00:12:05,439
Speaker 1: actual thing that happened here is this weird accounting quirk

218
00:12:05,480 --> 00:12:08,800
Speaker 1: where banks like Silicon Valley Bank are allowed to hold

219
00:12:08,840 --> 00:12:11,840
Speaker 1: bonds on their balance sheet and not mark them down

220
00:12:11,880 --> 00:12:15,679
Speaker 1: when they lose value. They label them held to maturity.

221
00:12:16,040 --> 00:12:19,680
Speaker 1: So SVB said they had ninety one billion dollars of

222
00:12:19,720 --> 00:12:22,120
Speaker 1: these bonds on their balance sheet, but the truth is

223
00:12:22,160 --> 00:12:24,760
Speaker 1: they are worth a lot less than that. And look,

224
00:12:24,920 --> 00:12:28,840
Speaker 1: usually that doesn't really matter. But when it matters is

225
00:12:29,000 --> 00:12:31,520
Speaker 1: if all of a sudden, clients want to take their

226
00:12:31,559 --> 00:12:33,880
Speaker 1: money out of the bank, they want their deposits back,

227
00:12:33,920 --> 00:12:36,079
Speaker 1: and you have to liquidate those bonds, and all of

228
00:12:36,120 --> 00:12:40,120
Speaker 1: a sudden, you're taking huge losses and potentially there's this

229
00:12:40,200 --> 00:12:45,040
Speaker 1: mismatch in assets and liabilities. And that's what happened. They

230
00:12:45,080 --> 00:12:47,839
Speaker 1: have a lot of VC and tech companies. It's been

231
00:12:47,840 --> 00:12:51,439
Speaker 1: a really difficult time. Funding has dried up, so VC

232
00:12:51,640 --> 00:12:54,319
Speaker 1: funds wanted to take their money out, and SVB had

233
00:12:54,320 --> 00:12:57,120
Speaker 1: to liquidate all of its securities that were available for

234
00:12:57,280 --> 00:13:00,280
Speaker 1: sale and then had this gap. They release that press

235
00:13:00,320 --> 00:13:03,360
Speaker 1: that press release yesterday saying that they were looking for

236
00:13:03,400 --> 00:13:07,120
Speaker 1: a capital injection, and so these fears really came to

237
00:13:07,200 --> 00:13:08,959
Speaker 1: a head, and everybody all of a sudden looked at

238
00:13:09,000 --> 00:13:12,320
Speaker 1: SVB and said, wow, this looks a whole lot like

239
00:13:12,440 --> 00:13:16,800
Speaker 1: a solvency issue. So is this an accounting practice that's

240
00:13:16,960 --> 00:13:20,720
Speaker 1: particular to SVB or does this have potential ramifications for

241
00:13:20,920 --> 00:13:24,400
Speaker 1: other bigger banks that people may have heard of. So

242
00:13:24,480 --> 00:13:27,080
Speaker 1: the regional banks have a lot of these. Again, they're

243
00:13:27,080 --> 00:13:28,920
Speaker 1: called held to maturity, where you just say I'm going

244
00:13:28,960 --> 00:13:30,400
Speaker 1: to hold them forever so I don't need to mark

245
00:13:30,440 --> 00:13:32,199
Speaker 1: them down. But of course that's not actually the truth.

246
00:13:32,640 --> 00:13:35,000
Speaker 1: A lot of banks do have this. If you look

247
00:13:35,040 --> 00:13:37,640
Speaker 1: at what's sold off the most yesterday, it does kind

248
00:13:37,679 --> 00:13:40,320
Speaker 1: of go according to who has the biggest pile of

249
00:13:40,320 --> 00:13:44,200
Speaker 1: these bonds. Schwab, for example, has over one hundred billion.

250
00:13:45,320 --> 00:13:47,760
Speaker 1: First Regional, like a lot of these regional banks have them.

251
00:13:48,160 --> 00:13:51,319
Speaker 1: But potentially the difference with SVB is they were really

252
00:13:51,400 --> 00:13:54,320
Speaker 1: long duration. They were you know, let's say thirty year bonds.

253
00:13:54,840 --> 00:13:57,360
Speaker 1: They were mortgage backed security, so they were things that

254
00:13:57,400 --> 00:14:02,320
Speaker 1: were especially susceptible to the FEDS raising rates. So there

255
00:14:02,360 --> 00:14:05,679
Speaker 1: are some weird specific things with them. So it doesn't

256
00:14:05,679 --> 00:14:07,839
Speaker 1: necessarily mean that the fact that everyone else has these

257
00:14:07,880 --> 00:14:11,199
Speaker 1: held to maturity type bonds that they're going to be insolvent.

258
00:14:11,240 --> 00:14:13,880
Speaker 1: But look, it is a risk, and I should say

259
00:14:13,920 --> 00:14:15,959
Speaker 1: it's a risk that even the Fed, the Saint Louis

260
00:14:15,960 --> 00:14:19,600
Speaker 1: fed flagged in a blog post last month, eagle eared

261
00:14:19,600 --> 00:14:22,240
Speaker 1: listeners know you're based in London. How's this affecting the

262
00:14:22,280 --> 00:14:25,960
Speaker 1: European banking sector? Is their contagion risk there? Man? I

263
00:14:26,000 --> 00:14:28,560
Speaker 1: gotta say it is a head scratcher, because you think,

264
00:14:28,600 --> 00:14:31,400
Speaker 1: all right, there's this bank in California most of the

265
00:14:31,440 --> 00:14:35,640
Speaker 1: world hasn't heard about. It's exposed to VC funds. So

266
00:14:35,680 --> 00:14:39,200
Speaker 1: then why is UniCredit selling off? Why is Deutsche Bank

267
00:14:39,560 --> 00:14:43,480
Speaker 1: selling off? But for some of it it's sell now,

268
00:14:43,680 --> 00:14:47,120
Speaker 1: ask questions later. Another component might be that look what's

269
00:14:47,120 --> 00:14:50,040
Speaker 1: on their balance sheet? Do they have unrealized losses? Are

270
00:14:50,080 --> 00:14:52,800
Speaker 1: these banks holding European real estate that we know in

271
00:14:52,920 --> 00:14:56,680
Speaker 1: some sectors have been under pressure? But I do think

272
00:14:56,720 --> 00:14:59,680
Speaker 1: a lot of this is just banks are selling off,

273
00:14:59,760 --> 00:15:03,120
Speaker 1: and globally that happens, there's this interconnection between them. I

274
00:15:03,440 --> 00:15:06,480
Speaker 1: find it hard to make the argument that European banks

275
00:15:06,520 --> 00:15:10,080
Speaker 1: have the same risk as SVB, But it is just

276
00:15:10,120 --> 00:15:13,640
Speaker 1: a case perhaps of investors just combing through the balance

277
00:15:13,680 --> 00:15:16,120
Speaker 1: sheets and just saying, hey, anything that seems related. I'm

278
00:15:16,160 --> 00:15:18,800
Speaker 1: kind of worried about. Is this panic that we're seeing

279
00:15:18,880 --> 00:15:21,280
Speaker 1: in across the banking sector at least for now, something

280
00:15:21,280 --> 00:15:24,200
Speaker 1: that could move the Fed to potentially ease off rate

281
00:15:24,280 --> 00:15:28,600
Speaker 1: hikes to distress the system. It definitely is. For one,

282
00:15:28,640 --> 00:15:31,040
Speaker 1: we know this is something the FED watches. They speak

283
00:15:31,080 --> 00:15:33,400
Speaker 1: to regional banks all the time. I mentioned there was

284
00:15:33,400 --> 00:15:35,680
Speaker 1: a blog post about it by the Saint Louis FED.

285
00:15:35,960 --> 00:15:37,880
Speaker 1: So this is a worry of THEIRS. They don't want

286
00:15:37,880 --> 00:15:40,640
Speaker 1: this to happen. They know regional banks are important to

287
00:15:40,680 --> 00:15:43,960
Speaker 1: this economy, and so look, you can see the market

288
00:15:44,000 --> 00:15:46,320
Speaker 1: pricing in a FED that's going to be more cautious

289
00:15:46,360 --> 00:15:48,920
Speaker 1: because they don't want to break more things. You see

290
00:15:49,000 --> 00:15:51,960
Speaker 1: a two year yield that's moved thirty basis points lower

291
00:15:52,080 --> 00:15:56,080
Speaker 1: in the past two days. You see rate swaps backing

292
00:15:56,080 --> 00:15:59,480
Speaker 1: off from fifty basis point hikes. Part of it, I

293
00:15:59,520 --> 00:16:01,640
Speaker 1: will say, is the fact that this market was so

294
00:16:01,880 --> 00:16:05,120
Speaker 1: short bonds, especially heading into the jobs data today, that

295
00:16:05,120 --> 00:16:08,480
Speaker 1: we're getting a lot of short covering potentially. But I

296
00:16:08,520 --> 00:16:10,840
Speaker 1: think there is this expectation that hey, even if a

297
00:16:10,920 --> 00:16:14,240
Speaker 1: job number comes in really hot, if there is concern

298
00:16:14,400 --> 00:16:18,520
Speaker 1: of financial stability, the Fed can't go fifty basis points.

299
00:16:20,080 --> 00:16:23,040
Speaker 1: This is Bloomberg day Break today, your morning brief on

300
00:16:23,120 --> 00:16:26,600
Speaker 1: the stories making news from Wall Street to Washington and beyond.

301
00:16:26,920 --> 00:16:29,680
Speaker 1: Look for us on your podcast feed at six am

302
00:16:29,760 --> 00:16:33,440
Speaker 1: Eastern each morning, on Apple, Spotify, and anywhere else you

303
00:16:33,480 --> 00:16:36,680
Speaker 1: get your podcasts. You can also listen live each morning

304
00:16:36,760 --> 00:16:39,680
Speaker 1: starting at five am Wall Street time on Bloomberg eleven

305
00:16:39,680 --> 00:16:42,960
Speaker 1: three zero in New York, Bloomberg ninety nine one in Washington,

306
00:16:43,120 --> 00:16:46,240
Speaker 1: Bloomberg one oh six one in Boston, and Bloomberg nine

307
00:16:46,240 --> 00:16:49,640
Speaker 1: to sixty in San Francisco. Our Flagshift New York station

308
00:16:49,840 --> 00:16:53,720
Speaker 1: is also available on your Amazon Elexa devices. Just say

309
00:16:53,760 --> 00:16:57,920
Speaker 1: Alexa play Bloomberg eleven thirty plus listen coast to coast

310
00:16:57,960 --> 00:17:01,360
Speaker 1: on the Bloomberg Business app, Serious Sam Channel one nineteen,

311
00:17:01,480 --> 00:17:05,119
Speaker 1: the iHeartRadio app, and on Bloomberg dot Com. I'm Nathan

312
00:17:05,160 --> 00:17:08,639
Speaker 1: Hager and I'm Karen Moscow. Join us again tomorrow morning

313
00:17:08,680 --> 00:17:11,160
Speaker 1: for all the news you need to start your day

314
00:17:11,240 --> 00:17:13,080
Speaker 1: right here on Bloomberg Daybreak