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Speaker 1: Life from the Bloomberg Interact, a broker's studios. This is

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Speaker 1: Bloomberg day Break for Thursday, March sixteenth. Coming up today,

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Speaker 1: Bettit Sweet surges the most on record after yesterday's massive selloff.

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Speaker 1: That's after the Swiss National Bank gives a lifeline to

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Speaker 1: the troubled lender. The credit suee's turmoil threatens to impact

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Speaker 1: today's ECB decision, and First Republic Bank may put itself

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Speaker 1: up for sale, a major escalation in the standoff between

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Speaker 1: the US and China over TikTok. Plus former Trump lawyer

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Speaker 1: Michael Kohn completes his grand jury testimony. I'm John Tucker,

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Speaker 1: MORI Hin, I'm John Stansh Aaron Sports Aaron Rodgers says

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Speaker 1: his intention is to play for the Jats. A key

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Speaker 1: member of the Mets was injured at the World Baseball Classic.

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Speaker 1: That's all straight ahead on Bloomberg day Break. The business

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Speaker 1: news you need disturn your day in just one fifteen

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Speaker 1: minute podcast each pointing on Apples, Spotify, The Bloomberg Business

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Speaker 1: Appen everywhere you get your podcasts. Good morning, I'm Amy

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Speaker 1: Morris and I'm kieron Moscow. Here are the stories we're

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Speaker 1: following today. We begin with turmoil around Credit Sweet. Shares

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Speaker 1: of the bank are surging after the yesterday's massive sell off.

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Speaker 1: That's as Credit Sweet taps the Swiss National Bank for

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Speaker 1: as much as fifty four billion dollars. It's also offering

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Speaker 1: to repurpose the debt. We began our global team coverage

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Speaker 1: with Bloomberg's Oliver Crook in Zurich. We heard that the

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Speaker 1: Swiss authorities would be speaking with Credit Sweets and the

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Speaker 1: fruits of that emersion about two am last night, and

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Speaker 1: the SMB Swiss National Bank would make liquidity available to

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Speaker 1: Credit Suis fifty billion francs, the first such moves for

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Speaker 1: a major Flish banks. It's the two thousand and eight

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Speaker 1: financial crisis. Now the question is will it be enough?

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Speaker 1: And it's really remarkable the speed at which all of

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Speaker 1: this has unfurled on really what was very little news

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Speaker 1: yesterday was essentially the line from the other SMB, the

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Speaker 1: Staudi National Bank, thing that they would not add more

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Speaker 1: liquidity into the bank but really for regulatory reasons, with

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Speaker 1: the only reason they actually gave. This morning, the chairman

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Speaker 1: out on CNBC is saying that everything is fine. Panic

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Speaker 1: was unwarranted, but really is going to be up to

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Speaker 1: the market to determine whether today is like the end

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Speaker 1: of the story for curret suits or is going to

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Speaker 1: continue to roll on. It's Bloomberg's Oliver Kirk reporting firms Zurich.

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Speaker 1: Now investors and government officials are responding to the Credit

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Speaker 1: Suis and news. Bloomberg's Leanne Gerrans is following that part

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Speaker 1: of the story and continues our team coverage from London.

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Speaker 1: When rates rise quickly, things get broken. Now. That is

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Speaker 1: a sentiment from Danny blanche Flower and also from a

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Speaker 1: Larry Fink speaking to me yesterday. Danny blanche Flower, he's

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Speaker 1: a former Bank of England policymaker, told me confidence in

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Speaker 1: banks is a fragile and it seems this has been

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Speaker 1: in the offering for a while. And the German Finance Minister,

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Speaker 1: Christian Lindi, was asked about the potential threat to Europe's

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Speaker 1: biggest economy from Credit Suis, his standing firm. He said,

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Speaker 1: German banking sector is indeed a stable bloombergs Lean Geron's

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Speaker 1: reporting from London. Meantime, Bloomberg's Francy Quah knows Credit Suis

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Speaker 1: quite well. She's interviewed the firm's top brass for years,

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Speaker 1: including an exclusive interview earlier this week with CEO Ulrich

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Speaker 1: Kerner for Credit Suis. She says time is of the essence.

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Speaker 1: The problem is at if your share price falls twenty

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Speaker 1: five percent, if the SMB FINNMA have to step in,

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Speaker 1: if you have to buy back bonds to give that confidence.

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Speaker 1: I mean a three year plan. Really well, you can't

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Speaker 1: wait three years. You need to turn around something. So

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Speaker 1: we could see a lot more drastic action being taken

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Speaker 1: much sooner as brun La Bloomberg's Francy in la Qua reporting. Meantime,

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Speaker 1: the Credit Swis turmoil could have a major impact on

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Speaker 1: today's rate decision from the European Central Bank. Bloomberg's Max

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Speaker 1: Ramsey has that angle as we continue our team coverage

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Speaker 1: from Frankfurt. There was already a fast debate about the

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Speaker 1: future of the rate path from the ECB even before

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Speaker 1: the collapse of SVB and the global market route set

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Speaker 1: off by Credit Suisse. Back in February. Christine the God

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Speaker 1: said it would have to be extreme circumstances to throw

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Speaker 1: the Central Bank off from a fifty basis point move

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Speaker 1: at this meeting. We'll see later on whether this is

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Speaker 1: sufficiently extreme, but markets have massively trimmed their bets on

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Speaker 1: future hikes, and many, including Bloomberg Economics, now expect twenty

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Speaker 1: five basis points today, not fifty. Bloomberg's Max Ramsey reporting

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Speaker 1: from Frankfurt, where we expect that ECB rate decision around

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Speaker 1: nine to fifteen Wall Street time, while turmoil swirls in

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Speaker 1: the banking industry and follows through to the markets. JP

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Speaker 1: Morgan Chief Investment Officer Bob Michael thinks both the ECB

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Speaker 1: and FED need to change plans. I think with credits

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Speaker 1: us on the table, they will pause. I think they

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Speaker 1: should pause. I think hiking rates, either the ECB hiking

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Speaker 1: rates this week or the FED hiking rates next week,

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Speaker 1: has the potential to be the greatest gaff since the

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Speaker 1: ECB hike rates in June two thousand and eight. JP

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Speaker 1: Morgan's Bob Michael notes markets are now uncertain about how

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Speaker 1: the FED will react next week. Markets are currently pricing

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Speaker 1: sixteen basis points of tightening at Wednesday's meeting. Well back

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Speaker 1: here in the US, Amy Bloomberg News has learned the

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Speaker 1: Treasury Department is actively reviewing a US exposure to Credit Suite,

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Speaker 1: so Bloomberg Steve Rappaport continues our global team coverage with

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Speaker 1: that part of the story. Steve, good morning, Good morning,

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Speaker 1: Karen and Amy. A source tells US officials at Treasury

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Speaker 1: are working closely with the Federal Reserve and European regulators.

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Speaker 1: That's after shares of Credit Suite suffered their worst single

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Speaker 1: day loss on record. Treasury typically reaches out to banks

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Speaker 1: to gather data about their next steps when the global

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Speaker 1: financial system takes a hit. Traders are still on edge

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Speaker 1: following the collapse of three regional banks in the US.

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Speaker 1: Live in New York. I'm Steve Rappaport, Bloomberg Daybreak. Thank

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Speaker 1: you Steve. This morning. First Republic Bank is front end

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Speaker 1: center in the turmoil. We're told the lender is exploring

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Speaker 1: strategic options, including a sale. Bloomberg's Dog Prisner reports the

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Speaker 1: options also include shoring up liquidity. Last Sunday, First Republic

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Speaker 1: cited had more than seventy billion dollars in unused liquidity

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Speaker 1: to fund operations from agreements that included the FED and

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Speaker 1: JP Morgan Chase. But yesterday both SMP Global and Fitch

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Speaker 1: cut their ratings on First Republic to junk. We're told

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Speaker 1: a potential sale is expected to draw interest from larger rivals.

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Speaker 1: No decision has been reached, and First Republic could still

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Speaker 1: choose to remain independent. In New York, I'm Dak Prisoner,

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Speaker 1: Bloomberg Daybreak, Thank you, Karen, five oh seven on Wall Street,

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Speaker 1: thirty six degrees in New York. It's going to be

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Speaker 1: sunny today as we go up to fifty five degrees.

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Speaker 1: Time now for a look at some of the other

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Speaker 1: stories making news in New York and around the world.

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Speaker 1: Where that We're joined by Bloomberg's John Tucker. Good morning John,

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Speaker 1: Good morning Amy. The US has told TikTok's owners in

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Speaker 1: China to sell their shares, a risk of ban of

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Speaker 1: the popular video sharing app. Our sources say it's a

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Speaker 1: major escalation in the long running standoff over privacy concerns

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Speaker 1: around Chinese control of its data and algorithm. TikTok's owner,

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Speaker 1: Bike Dances. Devestment does not solve problems with the US.

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Speaker 1: Donald Trump's former fixer, Michael Cohen testifying for a second

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Speaker 1: time before a New York grand jury investigating the former

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Speaker 1: president for potential crimes tied to hush money payments made

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Speaker 1: to porn star Stormy Daniels during the twenty sixteen campaign. Meanwhile,

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Speaker 1: Daniels met with Manhattan prosecutors yesterday. A federal judge in

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Speaker 1: Texas weighing whether a key drug used for medication abortion

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Speaker 1: should be pulled from the market. The anti abortion group

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Speaker 1: Alliance for Hippocratic Medicine is arguing that the FDA never

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Speaker 1: should have approved the drug methi pristone in the first place.

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Speaker 1: John Sego is the lead attorney for Texas Right to Life.

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Speaker 1: The goal was not to see if this drug was

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Speaker 1: safe for the market, It was to expand abortion accent.

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Speaker 1: Attorney Sego says the Clinton administration fast track the drug.

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Speaker 1: Lawyers for the DOJ and the FDA have rejected that claim.

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Speaker 1: Rachel O'Leary Carmona is executive draft of Women's March. She

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Speaker 1: says the drug is safe, It's been approved for twenty

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Speaker 1: three years. There is no scientific backing for this whatsoever.

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Speaker 1: I think that they're saying it and they're just hoping

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Speaker 1: that people repeat it, and it's false. There is no

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Speaker 1: scientific backing for any aspects of the case. Federal Judge

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Speaker 1: Matthew kiss Marek says he will rule as soon as possible.

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Speaker 1: The NYPD says several pedestrians, including two kids, were injured

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Speaker 1: enter an out of control vehicle jumped a curb at

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Speaker 1: Washington Heights last evening at Broadway and West one hundred

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Speaker 1: ninetieth Street. All six pedestrians survived. Police say the driver

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Speaker 1: faces DWI charges. A one time aide to former New

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Speaker 1: York eventery Andrew Cuomo, who accused him of sexual harassment

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Speaker 1: and a federal lawsuit, has filed a separate lawsuit against

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Speaker 1: the State. Shouted Bennett claims New York is liable for

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Speaker 1: Cuomo's sexual harassment and for the action of his top

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Speaker 1: aides who failed to take corrective action. Global News twenty

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Speaker 1: four hours a day, power by more than twenty seven

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Speaker 1: hundred journalists and analysts in more than one hundred twenty countries.

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Speaker 1: I'm John Tucker, and this is Bloomberg Amy. All right,

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Speaker 1: thank you, John ton Now, but the sports report frocks

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Speaker 1: you buy. Try State outie for that. We bring in

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Speaker 1: Bloomberg's John stash Hours Amy. It is the fear of

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Speaker 1: all the Major league teams who signed off on allowing

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Speaker 1: their players to leave the comfort of their spring training

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Speaker 1: to go play in the World Baseball Classic in Miami.

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Speaker 1: Big five two win for Puerto Rico, eliminating the tournament

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Speaker 1: favorite Dominican Republic. Edwin Diaz got the last out and

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Speaker 1: in the celebration, suffered what appears to be a serious

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Speaker 1: knee injury. Had to be carried off the field. He

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Speaker 1: was in tears. This could be a devastating blow to

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Speaker 1: the Mets. Diaz was sensational last season, cashed in with

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Speaker 1: a new one hundred million dollars contract. US won its

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Speaker 1: game three two over Columbia. Mike Trout drove in all

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Speaker 1: three US advances to play Venezuela in the quarterfinals tomorrow.

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Speaker 1: Aaron Rodgers went on the Pat McAfee show to talk

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Speaker 1: about his quarterbacking plans Friday. I made it clear that

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Speaker 1: my intention was to play, and my intention was to

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Speaker 1: play for the New York Jets. Okay, and I haven't

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Speaker 1: been holding anything up at this point. It's been compensation

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Speaker 1: that the Packers are trying to get for me and

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Speaker 1: kind of taking her hughsing. When asked what attracts him

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Speaker 1: to the Jets, Rogers was effusive in his praise of

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Speaker 1: New Jets OFFENSI according to rom Nathaniel Hackett. He said

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Speaker 1: Hackett has meant more to him than any other coach.

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Speaker 1: Islander six three win at Anaheim, two goals for brock Nelson.

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Speaker 1: Rangers host Pittsburgh tonight, nets back home for Sacramento and Cuba.

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Speaker 1: Tournament begins in ernest sixteen games. Last night Dayton Ohio

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Speaker 1: Fairley Dickinson won by twenty five. The Knights went four

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Speaker 1: and twenty two last season. They advanced. They'll play top

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Speaker 1: seed per Due tomorrow. John stash Ellen Bloomberg Sport live

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Speaker 1: from coast to coast, from New York to San Francisco,

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Speaker 1: Boston to Washington, d C. Nationwide on Sirius XAM, the

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Speaker 1: Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak.

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Speaker 1: Good morning, I'm Amy Morris. Credit suis tapping the Swiss

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Speaker 1: National Bank for as much as fifty billion francs or

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Speaker 1: if that's fifty four billion dollars. Joining us now Bloomberg's

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Speaker 1: Francy and Lakwi with more on what might happen next, Francy,

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Speaker 1: and just bring us up to speed with where we

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Speaker 1: are now with credit sweets. Well, look, Aby, we had

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Speaker 1: a big, big, big message of support from policymakers, from

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Speaker 1: the regulators and from the Swiss National bank so lost.

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Speaker 1: Night's statement, which was followed through today, basically focused on

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Speaker 1: Kretsweet's liquidity, which is good because investors really needed certainty

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Speaker 1: on that front. The question now is what about capital now?

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Speaker 1: Right now, if you look at the fundamentals, Kreditswie exceeds

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Speaker 1: its requirements, But what happens if they need more now?

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Speaker 1: Issuing more shares would be quite painful, so selling assets

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Speaker 1: is probably the more likelier route. The bank had previously

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Speaker 1: said that it wants to keep its asset management business,

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Speaker 1: but that's still a prime sale. Candidate of Kreditswie isn't

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Speaker 1: a page for the moment. I mean, yesterday was crazy

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Speaker 1: at me if you think back about what we live through.

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Speaker 1: I mean, the credit default swaps were like in full

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Speaker 1: distress mode. People are saying like, look, is this the

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Speaker 1: start of something very ugly. Now, let's remember this is

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Speaker 1: not a bank that's anything like the Silicon Valley Bank.

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Speaker 1: So in terms of fundamentals, it has very healthy levels

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Speaker 1: of liquid acids. They already had a string of central

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Speaker 1: bank facilities in multiple countries. But the problem is when

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Speaker 1: there's panic, when there's fear out there, you don't exactly

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Speaker 1: know where it ends, and credit is really embedded in

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Speaker 1: the financial system as a whole. So the worry yesterday

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Speaker 1: was we don't know where this ends. And it seems

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Speaker 1: that all policymakers came together in saying, guys, we got this.

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Speaker 1: We are providing new facility that we have credits. And

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Speaker 1: so the questions remain on what does it mean for

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Speaker 1: clients outflows and what does it mean for the European

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Speaker 1: Central Bank. You say that they're embedded in this system

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Speaker 1: as a whole, does that shore them up and give

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Speaker 1: them more protection or does that create a greater risk

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Speaker 1: of contagion. Well, that one hundred percent gives everyone else

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Speaker 1: a bit of possible thought or panic, because it means

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Speaker 1: that if they go under, if something ugly happens at kreisuits,

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Speaker 1: and we could see contagion across the world. I mean,

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Speaker 1: yesterday European banks were slammed. There were seven percent, six percent,

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Speaker 1: and you heard first from the US Treasury saying, look,

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Speaker 1: we're looking at exposure of US banks to credits. Please

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Speaker 1: remember this is all interlink. They have interbank facilities, they're

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Speaker 1: lending to each other. So because it's so embedded, if

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Speaker 1: something ugly were to happen, although the fundamentals yesterday, frankly

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Speaker 1: did not warrant anything really ugly happening. Then it could

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Speaker 1: have taken part of the system down with it. Today,

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Speaker 1: look we're seeing the shares flying for the moment, they're

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Speaker 1: down up twenty four percent. Whether this is short beats,

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Speaker 1: whether this is hedge funds repositioning, or whether this is

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Speaker 1: a more long term sustained rally is to be seen.

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Speaker 1: Of course, there are questions about what happens to this bank,

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Speaker 1: or what happens to other parts of the banking system,

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Speaker 1: given the level of fear in the markets. Now, you

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Speaker 1: had to sit down interview just a couple of days

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Speaker 1: ago with the CEO. Al right, corner tell us about that,

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Speaker 1: what your takeaway was, and if it gave you any

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Speaker 1: insight into how we got here. So, first of all,

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Speaker 1: it was a very uncomfortable interview. I mean, this was

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Speaker 1: way before all of this mess happened. That was yesterday. Now,

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Speaker 1: what happened yesterday was their biggest shareholder said that they

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Speaker 1: would not put more capital, that they would not spend

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Speaker 1: more money today. They said this was because of regulatory

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Speaker 1: concerns because they already owned ten percent. So if you

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Speaker 1: own more than ten percent of the bank, they could

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Speaker 1: be in trouble. So this is what happened yesterday. I

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Speaker 1: spoke to him the day before, where the share price

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Speaker 1: was at a record low. He you know, it was

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Speaker 1: uncomfortable that he remained calm. He said, look, I have

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Speaker 1: a three year execution plan, and he kept on saying

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Speaker 1: I can work on the execution plan. I can deliver.

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Speaker 1: What I cannot do is actually control the share price.

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Speaker 1: So we had a ten minute conversation. It was convincing

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Speaker 1: in the fact that he was actually very open. I

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Speaker 1: asked him about some of his biggest shareholders, what kind

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Speaker 1: of relationship he had with them at the time. He said, look,

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Speaker 1: I just need time because I need to execute, and

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Speaker 1: it's obvious that the market didn't give him time. Now,

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Speaker 1: there are two things I mean that we need to

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Speaker 1: remind ourselves. First of all, you know, they had some

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Speaker 1: record deposit outflows last year, so this is not you know,

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Speaker 1: a great sterling a bank. They did rebuild its cushion

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Speaker 1: against more withdrawals, which is the technical way to measure this,

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Speaker 1: which he was explaining to me as a liquidity coverage ratio,

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Speaker 1: which basically means that they can pay at least half

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Speaker 1: of their liabilities and deposits. So it sound, but if

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Speaker 1: they lose the face with clients, if people pull out

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Speaker 1: their money, if their bankers leave, they're going to be

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Speaker 1: in trouble. Despite all of the support from all corners. Okay,

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Speaker 1: we only have about a half a minute here, but

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Speaker 1: I have to ask you what you are watching for

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Speaker 1: in the next few hours and the next few days,

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Speaker 1: in the next few weeks with credit suees outflows. I

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Speaker 1: don't know when we'll start hearing from the bank about

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Speaker 1: what clients have done, but this is one hundred percent crucial.

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Speaker 1: If we hear about hundreds of billions of dollars having

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Speaker 1: left the bank in terms of client money, that's going

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Speaker 1: to be troublesome. So we have to watch and see

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Speaker 1: what the clients do, what the depositors do. One hundred

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Speaker 1: percent Again, even if they're their sound financially, this could

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Speaker 1: be a feedback loop. So if you don't have much

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Speaker 1: more right, if you don't have the confidence, then it

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Speaker 1: does become a liquidity problem, even if you didn't start

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Speaker 1: off with a liquidity problem. You're listening to Bloomberg Daybreak today,

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