Speaker 1: Good morning. I'm Brian Curtis and I'm Doug Prisner. Here
Speaker 1: are the stories we're following today.
Speaker 2: Congress has averted a partial government shut down, sent for
Speaker 2: this weekend, and back to with that story and more
Speaker 2: from San Francisco ed.
Speaker 3: If you want to be a Senate here, Brian, the
Speaker 3: threat of snow tomorrow motivated congress shut down averted in
Speaker 3: any case, as you say, Bloomberg's Laura Davison says, the
Speaker 3: can kick down the road, which presents a whole list
Speaker 3: of problems.
Speaker 4: Congress has been able to keep the government open only
Speaker 4: by kind of kicking the can down the road. The
Speaker 4: one mild success, if your Mike Johnson, is that you
Speaker 4: kept your job at least for now in this But
Speaker 4: looking into March, there's a bunch of different things that
Speaker 4: get a bit more complicated. As you said, they're about
Speaker 4: halfway the fiscal year without actually, you know, doing anything
Speaker 4: beyond just extending last year's budget, and by the time
Speaker 4: you get to the end of April, that's when mandatory
Speaker 4: cuts start kicking into effects. So Congress has a more
Speaker 4: of a real deadline there that they need to act,
Speaker 4: and you decide on something that they want to do,
Speaker 4: and of course you know things that got left on
Speaker 4: the side of the here a tax deal with business
Speaker 4: tax credits, child tax credits, as well as border Ukraine
Speaker 4: and other foreign eight.
Speaker 3: Yeah, so a lot to be done, but done for now. Meanwhile,
Speaker 3: Donald Trump is in the Ukraine funding phray. He's posted
Speaker 3: that any deal on Ukraine and border contain every Conservative
Speaker 3: demand for border and immigration changes. The House planned on
Speaker 3: working on this next week, but this may force GOP
Speaker 3: leaders to reject any moves toward compromise. President Joe Biden,
Speaker 3: en route to Joint Base Andrews this morning, is vowed
Speaker 3: to continue attacks on Houthy targets until they dismantle the
Speaker 3: operations that make the attacks on ships in the Red
Speaker 3: Sea possible.
Speaker 1: Another stopping the huthis so are they going.
Speaker 4: To continue yet?
Speaker 3: Yes, and the Pentagon is clarifying what the operations is about.
Speaker 3: Spokes when Sabrina Singh says the US is not at war.
Speaker 5: What we took, the actions that Central Command took last
Speaker 5: night was to destroy missiles that could be launched and
Speaker 5: that we're preparing to launch either towards US Navy ships
Speaker 5: that are in the region that are in that waterway.
Speaker 5: Or other commercial vessels.
Speaker 3: Badhuthi chief Abdul Malik al Huthi says it's not direct confrontation.
Speaker 3: Says the militants are taking concrete steps to improve their
Speaker 3: military capabilities. He says the US UK strikes will not
Speaker 3: change his stance, and as Pakistan fires missiles into Iran
Speaker 3: this morning, US is concerned about potential regional spread there.
Speaker 3: NSC official John Kirby, these are two.
Speaker 6: Well armed nations, and again we don't want to see
Speaker 6: an escalation of any armed conflict in the region, certainly
Speaker 6: between those two countries.
Speaker 3: And the spokesman for Pakistan's Ministry of Foreign Affairs Moments Balak,
Speaker 3: says these were very targeted.
Speaker 7: Pakistan undertook a series of highly coordinated and specifically targeted,
Speaker 7: precision military strikes against terrorist hideouts in Sistano Belushistan province
Speaker 7: of Hiddan.
Speaker 3: She says, a first strike to halt further violence. NATO
Speaker 3: military leaders announcing that the Alliance will launch its biggest
Speaker 3: military exercise in decades next week. NATO military leaders announcing
Speaker 3: that the Alliance will launch it's the biggest exercise. NATO
Speaker 3: Supreme Allied Commander US General Christopher Cavolle introduced in the exercise,
Speaker 3: He's just marvelous at the scale.
Speaker 8: Steadfast Defender twenty four will be the largest NATO exercise
Speaker 8: in decades, with participation from approximately ninety thousand forces from
Speaker 8: all thirty one allies plus our good partner Sweden.
Speaker 3: Yeah, adding Sweden. The mix global news twenty four hours
Speaker 3: a day and whenever you want it with Bloomberg News
Speaker 3: now in San Francisco. I'm at Baxter. This is Bloomberg
Speaker 3: Brian all.
Speaker 2: Right, time now for the top business stories of the hour. Well,
Speaker 2: Spirit Airlines says it has no plans for a bankruptcy
Speaker 2: driven restructuring. The airline is now taking a hard look
Speaker 2: at his balance sheet. We heard from Bloomberg's George Ferguson.
Speaker 9: Profitability hasn't been good. I'm sure management's lost its focus
Speaker 9: as it's gone through this potential acquisition by Jet Blue,
Speaker 9: and now the difficulty will be, yeah, get getting the
Speaker 9: ship right and getting employees. Management focused on getting this
Speaker 9: airline back to profitability.
Speaker 2: Bloomberg's George Ferguson. Spirit shares have been in a tailspin
Speaker 2: since its merger with Jet Blue was blocked in court.
Speaker 2: Shares have plunged more than sixty percent over the past
Speaker 2: three days. Today they closed down seven percent. Jet Blue
Speaker 2: fared a little bit better. It was up seven point
Speaker 2: eight percent.
Speaker 1: Well, US banking regulators are planning to require banks to
Speaker 1: tap the Fed's discount window at least once a year.
Speaker 8: Now.
Speaker 1: The aim here is to reduce the stigma and ensure
Speaker 1: that these banks are ready for troubled times. Bloomberg's Katanka
Speaker 1: Johnson tells us how this might play out.
Speaker 10: It's very clear if FED regulators, including the OCC, the
Speaker 10: FED and the FCIIC really want to make the discover
Speaker 10: into more attractive by requiring them not just to tap
Speaker 10: the window once a year to make it easier somewhat
Speaker 10: of a fire drill who told me, but also to
Speaker 10: focus on what plans or preparation for accessing it could
Speaker 10: be or could mean. Regulars really want to see a
Speaker 10: number of changes to how banks think about the disco
Speaker 10: window but liquidity.
Speaker 1: In general, that is Bloomberg's Catanka Johnson. Now, it was
Speaker 1: last year the regional banking crisis somewhat revealed that a
Speaker 1: number of banks were not even set up to quickly
Speaker 1: borrow from the Fed's discount window in a pinch Brian Well.
Speaker 2: Blackstone CEO Steve Schwartzman is expecting the FED to cut
Speaker 2: interest rates, and they said those cuts are going to
Speaker 2: have an impact on Wall Street.
Speaker 3: The economy is slowing a bit.
Speaker 9: That's normal with high interest rates. On the other side
Speaker 9: of the latcher, the expectation that interest rates are going
Speaker 9: down is creating animal spirits.
Speaker 2: Again, as Blackstone CEO Steve Schwartzman. As anticipation builds around
Speaker 2: the impending rate cuts, not everyone is ready to go
Speaker 2: all in. Today. Atlanta FED President Raphael Bostik said the
Speaker 2: worst outcome would be for policymakers to act and to
Speaker 2: cut rates and then have to raise them again later.
Speaker 2: That's if inflation were to move higher. Bostik says he
Speaker 2: sees the Fed's first rate cut coming sometime in the
Speaker 2: third quarter.
Speaker 1: Apple was smart watches without that blood oxygen feature are
Speaker 1: being sold today at Apple's US retail outlets. Now this
Speaker 1: comes following a legal setback in Apple's patent dispute with
Speaker 1: the tech startup Massimo. That company makes the blood oxygen sensors. Now,
Speaker 1: Apple itself cannot sell the watches with this feature. While
Speaker 1: an appeal of a US band plays out. The CEO
Speaker 1: of Massimo is Joe Keani. He told us the outcome
Speaker 1: is best for consumers.
Speaker 11: The consumers are better off without it. Apple knew their
Speaker 11: product wasn't good enough to be relied on medically, but
Speaker 11: literally they said, and this is in twenty twenty and
Speaker 11: the chaos of COVID. This is quotation in their document.
Speaker 11: If we launch pulsock symmetry with our we'll gain market
Speaker 11: share from Fitbit.
Speaker 1: That is Joe Keane. He is the chief executive officer
Speaker 1: at Massimo. By the way, Apple believes the appeal process
Speaker 1: on this particular case will take a year or more.
Speaker 2: Brian Well, TSMC is expecting a return to solid growth
Speaker 2: this quarter. It gave itself some room to raise capital
Speaker 2: spending in twenty twenty four. It suggests that TSMC anticipates
Speaker 2: a recovery in smartphone and computing demand. Bloomberg's Ian King
Speaker 2: says industry shifts toward AI could be fueling the confidence.
Speaker 12: Roll back two years ago, and the chip industry executive
Speaker 12: was saying, this time it's different. We're on a path.
Speaker 12: Oh you look at last year and that really wasn't
Speaker 12: the case. Again, we were down. What is different though?
Speaker 12: This time is how some of the end markets are behaving.
Speaker 2: And that's i in king TSMC shares, the eight rs
Speaker 2: in New York were up nine point eight percent, their
Speaker 2: biggest intra day jump since May. And it's quite a
Speaker 2: change from the way it's doc traded in in Taipei yesterday,
Speaker 2: where it was only up a little more than one percent.
Speaker 2: This is Bloomberg Daybreak Asia and right now I'm joined
Speaker 2: by Paul Allen in Sydney, and our guest is joining
Speaker 2: us here live on the program, Chester Dawson, Bloomberg's North
Speaker 2: American Transportation editor, to take a closer look here at
Speaker 2: Spirit Air. So it's one thing for the stock to
Speaker 2: struggle as much as it has, you know, it might
Speaker 2: make it more difficult to raise money. It's a slightly
Speaker 2: soate topic to be talking about bankruptcy, but it's clear
Speaker 2: that that the board now has an issue at hand.
Speaker 2: And what are we learning about how close Spirit could
Speaker 2: get to bankruptcy?
Speaker 13: Well, that is the question de jour, and as you
Speaker 13: noted earlier, the stock has been paying a heavy price
Speaker 13: for it. The company, however, did say in a statement
Speaker 13: that came out late today that it is not pursuing
Speaker 13: or involved in a statuary with structuring, which is a
Speaker 13: kind of a jargonistic and legalists way of saying that
Speaker 13: they're not planning for bankruptcy. It has been a matter
Speaker 13: of a lot of speculation. A number of analysts on
Speaker 13: Wall Street have openly said that that is a very
Speaker 13: real possibility. But the company says it's taking measures to
Speaker 13: shore up its balance sheet and is hoping to you know,
Speaker 13: right the ship.
Speaker 6: All right, taking measures? What does that mean?
Speaker 9: Are we talking about job cuts, slashing roots?
Speaker 3: What's the plan?
Speaker 13: Well, that is also a very good question. They have
Speaker 13: not said much more beyond what they had kind of
Speaker 13: previously outlined in terms of efforts to for example, ground
Speaker 13: parts of its fleet, delay the ontake of some airplanes,
Speaker 13: and other measures, you know, perhaps involving it's stet load.
Speaker 13: So it's a little vague exactly what that means, but
Speaker 13: you're you're right, Typically when you hear that language, you
Speaker 13: do think about drastic cost cuts, including job reductions. If
Speaker 13: they're thinking that, they're not saying so publicly.
Speaker 2: Yes, so they're not even talking about bankruptcy protection, much
Speaker 2: less liquidation, but certainly people in the market have been
Speaker 2: at least thinking about that. The possibility of liquidation. And
Speaker 2: it's ironic because you know what that would do for
Speaker 2: you know, for prices. One only knows, but it probably
Speaker 2: wouldn't be what the judge was expecting. I'm just musing
Speaker 2: aloud a little bit here. I mean, is there any
Speaker 2: chance that to raise funds, that Spirit could raise prices?
Speaker 2: You know it's a low cost carrier, but could he
Speaker 2: raise prices?
Speaker 13: Well, you put your finger on it. The whole point
Speaker 13: of Spirit is to be an ultra low cost carrier,
Speaker 13: so in theory it might be able to try. But
Speaker 13: you know, the whole reason you go to Spirit is
Speaker 13: to get a super cheap fare and kind of a
Speaker 13: no frills flight experience. Now you know the But he
Speaker 13: hasn't said whether it plans to appeal the court ruling
Speaker 13: that broke up plans for the takeover by Jet Blue. However,
Speaker 13: it's very unclear, you know, if it can survive as
Speaker 13: an independent entity, not just because of it kind of
Speaker 13: planned to be taken over by Jet Blue, but because
Speaker 13: the environment has deteriorated so much since that deal was announced.
Speaker 13: You know, it's been very bad for all low cost carriers,
Speaker 13: including Jet Blue, which isn't quite an ultra low cost
Speaker 13: carrier like Spirit, but is still you know, kind of
Speaker 13: a more of a discount carrier than say, Delta is.
Speaker 13: But but those companies, you know, being very domestic and
Speaker 13: very fair focused, have not been doing well. The environment
Speaker 13: has deteriorated a lot. So if it's left to stand
Speaker 13: on its own two legs, so to speak, Spirit faces
Speaker 13: a very difficult future. So it's kind of unclear, you know,
Speaker 13: what comes next. Everybody's kind of waiting for the next
Speaker 13: shooter drop. Clearly the company has got to do more,
Speaker 13: you know, but investors aren't waiting, as you noted, they're bailing.
Speaker 6: Yeah, they sure.
Speaker 9: Uh the ship Rice down sixty two percent and three days.
Speaker 9: Is there any feeling that we're at the bottom yet
Speaker 9: or is there the potential for further losses here?
Speaker 13: Well, it's a little hard to say, but it is
Speaker 13: interesting that when the company finally came out with its
Speaker 13: statement after the close of trading in New York, the
Speaker 13: shares you know, basically traded unchanged in the post market. Obviously,
Speaker 13: they were down during the day, kind of in a
Speaker 13: free fall. But I guess there's some hope that maybe
Speaker 13: this you know, this kind of very late in the
Speaker 13: day statement by the company that it's not preparing for
Speaker 13: bankruptcy at least not immediately, will be some solace to investors,
Speaker 13: But we really won't know, I guess until the market
Speaker 13: opens in New York tomorrow. But it does feel like
Speaker 13: the company is in kind of a desperate struggle to survive.
Speaker 2: You wonder what's a message that would send to the
Speaker 2: Justice Department and to the FTC and just generally too.
Speaker 2: And I trust, you know, the antitrust regulators that they're
Speaker 2: concerned about people. They don't care about the shareholders. I mean,
Speaker 2: that's for other people to worry about. But if the
Speaker 2: result of this is that the airline goes busted, I
Speaker 2: wonder what sort of message it would send to to
Speaker 2: the anti trust people.
Speaker 13: Well, it would be an incredible irony, wouldn't it if
Speaker 13: you know, by by saving or trying to save spirit
Speaker 13: uh spirits independence, that actually was a death sentence. You know,
Speaker 13: I think you're right. I think basically, you know, the
Speaker 13: legal eagles and the court you know, uh clearly was
Speaker 13: thinking about you know, the spirit of your not maybe
Speaker 13: so much about what would happen if if the deal
Speaker 13: was unraveled. And of course, you know, we want to
Speaker 13: be careful. The company has not declared bankruptcy and it's
Speaker 13: still flying. And you know, even if it were to
Speaker 13: do something like that, and I'm just speculating now, chances
Speaker 13: are they would continue operations. But you know, obviously, whenever
Speaker 13: the B word has floated, it scares investors quite a bit,
Speaker 13: and you know, the bad news keeps coming. We just
Speaker 13: got word late of some action by the rating agencies
Speaker 13: which are also sitting up and taking notice, and that
Speaker 13: doesn't bode too well for Spirit either. Just quickly, just
Speaker 13: what's the legacy of Spirits management going to be? Well,
Speaker 13: that's a good question too, because when you know they
Speaker 13: were initially approached by jet Blue, they were buff the offer.
Speaker 13: In fact, they were in favor of a rival takeover
Speaker 13: bid from Frontier, which is another ultra low cost carrier,
Speaker 13: and effectively there was something of a shareholder revolt and
Speaker 13: the board had to backtrack and did accept a sweetened
Speaker 13: bid from Jet Blue. But now you've got to look
Speaker 13: back and wonder about culpability because there is some question
Speaker 13: whether the board made the right call there on the
Speaker 13: way the events have played out.
Speaker 2: And all right, Leicester Wels Yeah, yeah, absolutely, a very
Speaker 2: good point. This is Bloomberg Daybreak Asia Your morning brief
Speaker 2: on the story's making news from Hong Kong to Singapore
Speaker 2: and Wall Street.
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