Speaker 1: This is Bloomberg Daybreak Asia for this Friday, March tenth
Speaker 1: in Hong Kong, Thursday March ninth in New York and
Speaker 1: coming up today, US equities sell off, notching their worst
Speaker 1: day in two weeks as bank stocks tumble. Traders look
Speaker 1: to tomorrow's jobs report and whether it might prompt more
Speaker 1: hawkish action from the FIT and the Bank of Japan
Speaker 1: may stand pat during Governor Harihiko Kuroda's final meeting, Biden
Speaker 1: budget has increase in defense spending aimed at the end
Speaker 1: of Pacific. The budget would increase US tax on wealthy
Speaker 1: and corporations. Heads of US Intelligence say they don't believe
Speaker 1: China wants to fight a war over Taiwan. I'm at
Speaker 1: Baxter with Global News. That's all straight ahead on Bloomberg
Speaker 1: Daybreak Asia, the business news you need to start your
Speaker 1: day in just one fifteen minute podcast available on Apples, Spotify,
Speaker 1: the Bloomberg Business app and everywhere you get your podcasts.
Speaker 1: Good morning, I'm de Prisoner and I'm Brian Curtis. Here
Speaker 1: are the stories we're following today. Traders getting that US
Speaker 1: payrolls data for the month of February to be released
Speaker 1: at eight thirty in the morning on Friday, Wall Street
Speaker 1: Time Bloomberg's Michael McKee with a preview. January's jobs report
Speaker 1: turned the financial world on its head. More than half
Speaker 1: a million jobs created the government said, almost three times
Speaker 1: what was forecast. The FEDS slowing the pace of rate
Speaker 1: increases is now expected to tighten more and faster unless
Speaker 1: the February numbers reverse course, and that is possible. Economist
Speaker 1: say the January report was boosted by unexpectedly good weather
Speaker 1: and annual statistical adjustments. It might be revised lower and
Speaker 1: estimates put February's job gains back at trend. Another surprise, though,
Speaker 1: and expect a lot of market turmoil. Michael McKee, Bloomberg Daybreak. AJA.
Speaker 1: Well after the bell, we heard from Oracle. The company
Speaker 1: reported quarterly sales pretty much in line with estimates. However,
Speaker 1: the cloud business really failed to meet expectations for higher growth.
Speaker 1: We have more from Bloomberg's Charlie Pellet. Fiscal third quarter
Speaker 1: revenue increased eighteen percent to twelve point four billion dollars,
Speaker 1: just short of analysts average estimate of twelve point four
Speaker 1: one billion, according to data compile by Bloomberg. Cloud revenue
Speaker 1: the highly watched segment that Oracle has been trying to expand,
Speaker 1: rose forty five percent to four point one billion dollars
Speaker 1: in the period ending February twenty eighth. While Oracle's cloud
Speaker 1: infrastructure business renting computer power and storage has been a
Speaker 1: relative laggard in the market, analysts have been optimistic the
Speaker 1: services are gaining customers and helping accelerate growth in New York.
Speaker 1: Charlie Pellet Bloomberg Daybreak Asia Well, a former Goldman Sachs banker,
Speaker 1: has been sentenced in the one MDB International massive fraud
Speaker 1: scheme that story from Bloomberg's and Kates Roger Ang has
Speaker 1: been sentenced to ten years in prison after being convicted
Speaker 1: last April of conspiring to violate US anti bribery laws
Speaker 1: and a launder money. The fifty one year old former
Speaker 1: gold managing director and as one time boss were accused
Speaker 1: of conspire with a financier to pay tens of millions
Speaker 1: of dollars to officials to win business with One Malaysia,
Speaker 1: a state controlled economic development company. The deals were arranged
Speaker 1: by Goldman, which later paid eight billion dollars in penalties
Speaker 1: for its role in the scam and is still subject
Speaker 1: to criminal charges in Malaysia, in Washington and Kate's Bloomberg
Speaker 1: Daybreak Asia and in the States, the nation's largest bank
Speaker 1: has been ordered to turnover records connected to an alleged
Speaker 1: sex trafficking ring more from Bloomberg's Tom Busby. JP Morgan
Speaker 1: Chase has been ordered to turn over more records from
Speaker 1: its CEO, Jamie Diamond, in relation to a lawsuit by
Speaker 1: the US Virgin Islands, which accuses the bank of being
Speaker 1: complicit and facilitating the late Jeffrey Epstein's sex trafficking ring.
Speaker 1: A Manhattan federal judge issued the order on Thursday, a
Speaker 1: day after the bank sued a former top executive, Jeff Staley,
Speaker 1: whose relationship with Epstein is at the center of that
Speaker 1: suit by the US Virgin Islands, as well as another
Speaker 1: by some of Epstein's victims. Now, Epstein killed himself in
Speaker 1: jail while awaiting sex trafficking charges in New York back
Speaker 1: in twenty nineteen. JP Morgan Chase says Diamond is quote
Speaker 1: not relevant to what it calls specious claims by the
Speaker 1: US Virgin Islands, Tom Busby, Bloomberg Daybreak Asia. The Bank
Speaker 1: of Japan will keep its stimulus unchanged most likely in
Speaker 1: this last policy meeting before Governor Harihika Coroda steps down.
Speaker 1: We get that preview from Bloombergs David in Glaze Phil.
Speaker 1: Governor Coroda is known for shock and au tactics, many
Speaker 1: economists do not expect him to deliver one this time.
Speaker 1: The thinking is that Coroda will want to give his successor,
Speaker 1: Kazoo Auieda an open hand when he takes over in April.
Speaker 1: The BOJ will likely hold a short term rate at
Speaker 1: minus point one percent and continue capping a tenure JGB
Speaker 1: yield at half of one percent. Both Coroda and Ueida
Speaker 1: have stated that the two percent inflation target has not
Speaker 1: yet been secured. But further to the surprise angle, Goldman, Sachs, HSBC, NBNP,
Speaker 1: Paraba are among the few that think that Coroda might
Speaker 1: just do it, that he might adjust are scrapped the
Speaker 1: yield curve controlled policy. Will learn more later today. In
Speaker 1: Hong Kong, I'm David Ingless bloom Rick Day Brick Asia.
Speaker 1: The KBW Bank Index down seven point seven per Sad
Speaker 1: and Doug. Investors will naturally worry that this SVB story
Speaker 1: might be some sort of canary in the coal mine story,
Speaker 1: but two points on that the top six banks in
Speaker 1: the country and even the next biggest twenty have been
Speaker 1: forced by regulators to maintain very high levels of capital,
Speaker 1: so many in the industry analysts like Mike Mayo would
Speaker 1: say the overall structure is very strong, and two that
Speaker 1: this is very speculative area that SVB was loaning into
Speaker 1: startups and vcs and smaller banks are like any other company.
Speaker 1: I mean, they can run into trouble, making bad decisions,
Speaker 1: their stocks can even go to zero. That's just the
Speaker 1: way the system works. Painful for the company and as investors,
Speaker 1: but perhaps not too far beyond that. Well, yeah, you
Speaker 1: have a situation too where money that these startups raised
Speaker 1: from venture capital firms get to posited at the bank
Speaker 1: and as they burn through cash, which is becoming an
Speaker 1: increasingly elevated situation. These cash burn rates are creeping up
Speaker 1: as the economy slows down, more difficult to drive business. Right,
Speaker 1: That's going to leave banks a little bit more exposed,
Speaker 1: particularly in an environment where interest rates are rising and
Speaker 1: there are concern over rising deposit cost and the bank
Speaker 1: CEO Greg Becker held a conference call advising clients to
Speaker 1: stay calm. However, the venture Capital firm founders. This is
Speaker 1: the firm co founded by Peter til he advised companies
Speaker 1: to take money out of SVB. Yeah, again an individual story,
Speaker 1: but like you say, it does have a huge impact
Speaker 1: on the banks generally because these higher bond yields, investors
Speaker 1: have been pulling money out of the banks and investing
Speaker 1: in US treasuries. And one of the reasons is the
Speaker 1: banks have been slow to raise the interest that they
Speaker 1: pay on deposits. So how they are managing that transition
Speaker 1: is really important and it will shine the light in
Speaker 1: the bank going forward. And we'll get more on this
Speaker 1: when we get to our guest, Sheena Sistle, coming up
Speaker 1: in a few moments. That will be after we get
Speaker 1: to Global News our US President Joe Biden firing off
Speaker 1: his opening budget bid amounting to some six point nine
Speaker 1: trillion dollars. Head back to it with Global News in
Speaker 1: the nine sixty News from at San Francisco, Eduardo, Yeah, Brian,
Speaker 1: there's very targeted emphasis on China competition here. A major
Speaker 1: increase of investments in the Indo Pacific part of the
Speaker 1: Pacific Deterrence initiative from six point one billion to nine
Speaker 1: point one billion. That being said, Congress appropriated eleven point
Speaker 1: five billion for this year, so next year maybe even more.
Speaker 1: It includes money for missile defense systems in Guam and Hawaii.
Speaker 1: The whole package sets up a heated battle in the
Speaker 1: US of our debt ceiling and government funding overall. Bloomberg
Speaker 1: Joe Mathew runs through some of the asks twenty five
Speaker 1: the tax on billionaires, a near doubling of the capital
Speaker 1: gains tax, a hike in the corporate tax rate back
Speaker 1: to twenty eight percent, and a higher personal income tax
Speaker 1: rate of thirty nine point six percent for people making
Speaker 1: over four hundred thousand dollars a year. The president says
Speaker 1: those making less will not see tax hikes. So the President,
Speaker 1: in a campaign type stump address in Philadelphia, says he's
Speaker 1: seeking fairness around six hundred and fifty billionaires in America.
Speaker 1: I was over a thousand, you know, with the average
Speaker 1: tax they pay federal tax three, and he says they
Speaker 1: should not pay less than a teacher or a firefighter.
Speaker 1: Also said he would protect the so called entitlement programs
Speaker 1: so security. My budget will not cut benefits, and it
Speaker 1: will definitely won't sunset programs like some of my Niger
Speaker 1: Republican friends want to do secure medicare through two and
Speaker 1: fifteen beyond now. The President says he's proposing some deficit
Speaker 1: reduction measures, but Bloomberg math says in twenty twenty four
Speaker 1: would increase from one point six to eight one point
Speaker 1: eight billion, from one six to one eight. His request
Speaker 1: well has little chance of passing in this form didn't
Speaker 1: even pass democratic legislature. Heads of US intelligence today are
Speaker 1: saying they do not believe China wants a war over
Speaker 1: Taiwan today. It is a House Intelligence Committee, and Director
Speaker 1: of National Intelligence Avril Haynes, along with CIA Director William Burns,
Speaker 1: says President she has taken notice of the Allied response
Speaker 1: to Ukraine and says it would hurt his growth, but
Speaker 1: then turned and said, never underestimate China intentions when it
Speaker 1: comes to what it calls unification of Taiwan. US Treasury
Speaker 1: Department says five Chinese companies are directly implicated and supplying
Speaker 1: parts for Iranian drones that wind up in Russia killing Ukrainians.
Speaker 1: It has imposed sanctions on them and Kiev. Dozens of
Speaker 1: missiles launched all over Ukraine today, some eighty missiles, and
Speaker 1: White House spokesman John Kirby says about forty percent of
Speaker 1: Kiev now is without power and says that could well
Speaker 1: just be the beginning. Do you think the next four
Speaker 1: to six months is going to see more vicious fighting
Speaker 1: on the ground in Ukraine? Yeah, the IAEA chief. Meanwhile,
Speaker 1: I was asking for a safe so and be established
Speaker 1: around the nuclear plants in the future and vote today.
Speaker 1: NPC expected to easily back President Chi Jinping for his
Speaker 1: third term. Global News powered by more than twenty seven
Speaker 1: hundred journalist and analysts and over one hundred twenty countries.
Speaker 1: In San Francisco, I'm at Baxter and this is Bloomberg.
Speaker 1: I'm Bryan Curtis along with Paul Allen, and this is
Speaker 1: Bloomberg Daybreak Asia. Our guest is shanea Sistle, President of
Speaker 1: ben Reyan Capital. So Shana A lot going on the
Speaker 1: jobs report, the Fed's interest rate policy, in light of
Speaker 1: this SVB story, the BOJ meeting. What has your attention
Speaker 1: the most this morning? I think the jobs report more
Speaker 1: than anything. It's kind of interesting. The SVB story has
Speaker 1: coming at such an interesting time because we just had
Speaker 1: Herman Powell testifying in front of Congress talking about how
Speaker 1: he's going to continue to be aggressive, that the economy
Speaker 1: remains resilient and the job market remains tight, and then
Speaker 1: all of a sudden you have this major news and
Speaker 1: all the banks sell off, and all of a sudden
Speaker 1: there's genuine people genuinely concerned about run on the bank.
Speaker 1: And this is a large bank, this isn't a small bank.
Speaker 1: And then there's the job report tomorrow, and with all
Speaker 1: the panic around the banking system, if the job report
Speaker 1: is good, that's not good for markets. Yeah, it's a
Speaker 1: very interesting situation, isn't it? And how does this play
Speaker 1: into your opinion about the chances of a recession and
Speaker 1: if there is one, are we going to look back
Speaker 1: on this moment as being somewhat pivotal. Well, I've always
Speaker 1: been of the belief that we are going to have
Speaker 1: a recession. I've been pretty consistent in believing that we're
Speaker 1: going to have a shallow recession. There wasn't and I
Speaker 1: still don't believe there's a lot of cracks in the
Speaker 1: financial system that would warrant it being truly a devastating
Speaker 1: type of recession like we saw after the Financial crisis.
Speaker 1: But I do think that when you're starting to see
Speaker 1: contagion because if you think about this, all kind of
Speaker 1: started with the crypto custodians and then the banks that
Speaker 1: dealt with crypto, and then a lot of the moneys
Speaker 1: in crypto, in blockchain, and so that you're seeing, you know,
Speaker 1: things spread. And I think Silicon Valley Bank is a
Speaker 1: very unique situation. They are the biggest player in the
Speaker 1: venture space. There's not really anybody else that has that
Speaker 1: kind of exposure. But anytime you see a very large
Speaker 1: bank of that caliber come under this kind of stress,
Speaker 1: it can lead to additional stress kind of becoming pervasive
Speaker 1: in the financial markets. And and so I think now
Speaker 1: that's why I'm so concerned about the jobs report, because
Speaker 1: if it's good, and all indications are it's going to
Speaker 1: be a strong job report, it kind of puts the
Speaker 1: feed in the corner. They kind have to stay with
Speaker 1: the policy that they've they've been communicating. It may beg
Speaker 1: this story about whether investors are more concerned now about
Speaker 1: recession than they are runaway inflation. I think that that's
Speaker 1: that's very true. I think so for instance, if you
Speaker 1: get a week number, if you get if you get
Speaker 1: a weak job's number, would that be good or bad
Speaker 1: for the equity complex. I think that would be good
Speaker 1: for the equity complex because I think that is one
Speaker 1: of the key indicators that the FED is looking at
Speaker 1: when making policy decisions. And one of the reasons why
Speaker 1: they have started to look again at becoming more aggressive
Speaker 1: and talking about fifty basis points instead of twenty five
Speaker 1: is because they have not seen the labor markets become
Speaker 1: weaker in any way continuously, a lot of tightness in
Speaker 1: the labor markets, which impacts inflation. Where are you putting
Speaker 1: money to work at the moment, and in particular, I'm
Speaker 1: curious about your cash position. So I'm not a big
Speaker 1: in using cash tactically, although I am using an HF.
Speaker 1: The ticker is THHY. It's the agility shares TAY is
Speaker 1: tactical income because I want to take advantage of yield
Speaker 1: in the market, but I want to have some risk
Speaker 1: management there. And that's a n HF that actually offers that.
Speaker 1: There's another mutual fund, by counterpoint, that does something similar,
Speaker 1: because I think there's a real opportunity, as you pointed
Speaker 1: out earlier in your comments about the banks aren't really
Speaker 1: paying any yield and so cash is not a good
Speaker 1: place to be. That's a losing battle. You want to
Speaker 1: be in fixed income, even if it's short duration, and
Speaker 1: so I'm looking at ways that I can do that
Speaker 1: and have some some risk management there. That said, you know,
Speaker 1: the market seems to have positioned itself for fears to
Speaker 1: the upside for interest rates and inflation. If we do
Speaker 1: get a weak jobs report, as you say, it might
Speaker 1: be actually very good for the stock market. Is it
Speaker 1: possible that that, because of positioning, that you get a
Speaker 1: real big bounce on let's say one hundred thousand jobs
Speaker 1: created instead of you know, more than two hundred. I
Speaker 1: think very well, we very well could. And the job
Speaker 1: market and the tightness of the labor markets really does
Speaker 1: kind of make it difficult for inflation to come down.
Speaker 1: People are employed, people are spending. There's a number of
Speaker 1: other you have to increase incomes and salaries in order
Speaker 1: to attract people to jobs because there's not a lot
Speaker 1: of people looking. There's a number of reasons why having
Speaker 1: tight labor conditions is not a good thing, especially for inflation.
Speaker 1: So if it's a weaker than expected jobs to report,
Speaker 1: that would I would not be surprised to see a
Speaker 1: bounce in the markets that would be seen as the
Speaker 1: markets as a positive thing because it would take some
Speaker 1: wind out of the FED sales. If you will and
Speaker 1: make it, then I think closer about what they do
Speaker 1: this month with their red hyke. This is Bloomberg Daybreak Asia,
Speaker 1: your morning brief on this story is making news from
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Speaker 1: Daybreak Asia.