Speaker 1: This is Bloomberg Daybreak Asia for this Wednesday, March twenty
Speaker 1: ninth in Hong Kong, Tuesday March twenty eighth in New
Speaker 1: York and coming up today, top US financial officials outlined
Speaker 1: what is likely to be the biggest regulatory overhaul of
Speaker 1: the banking sector in years. Micron Technology gives a better
Speaker 1: sales forecast than analysts had feared, and Ali Baba announces
Speaker 1: plans to split its empire into six business units. A
Speaker 1: US warship docs in South Korea for the first time
Speaker 1: in sixty years. North Korean hackers posing as journalists gather
Speaker 1: international intelligence. Biden says chip production must be done on
Speaker 1: the US. I'm at Baxter with Global News. That's all
Speaker 1: straight ahead on Bloomberg Daybreak Asia, the business news you
Speaker 1: need to start your day in just one fifteen minute
Speaker 1: podcast available on Apples, Spotify, the Bloomberg Business app and
Speaker 1: everywhere you get your podcasts. Good morning, I'm Doug Prisoner
Speaker 1: and I'm Brian Curtis. Here are the stories we're following today.
Speaker 1: Top US financial officials outline what's likely to be the
Speaker 1: biggest regulatory overhaul of the banking sector in years. That
Speaker 1: Vice share for Supervision. Michael Barr, FDIC Chairman Martin Gruenberg,
Speaker 1: and Treasury Undersecretary for Domestic Finance Nelly Leung all testified
Speaker 1: before a Senate panel. They brought forth an initiative aimed
Speaker 1: at addressing underlying issues that contributed to the collapse of
Speaker 1: Silicon Valley Bank and other US lenders. Michael Barr outlined
Speaker 1: future steps we need to move forward with our work
Speaker 1: to improve the resilience of the banking system, including the
Speaker 1: Basel three endgame reforms, a long term debt requirement for
Speaker 1: large banks, and enhancements to stress testing with multiple scenarios.
Speaker 1: We must also explore changes to our liquidity rules and
Speaker 1: other reforms to improve the resilience of the financial system.
Speaker 1: So a lot being considered here. Martin Gruenberg called for
Speaker 1: serious attention to the capital requirements for the secure these
Speaker 1: portfolios of banks with assets at higher than one hundred
Speaker 1: billion dollars. He also said the FDIC would lay out
Speaker 1: options for potential changes to deposit insurance coverage. At the
Speaker 1: moment it's capped at two hundred and fifty thousand dollars. Well.
Speaker 1: The founder of the crypto exchange FTX Sam Bankman Freed,
Speaker 1: is facing more criminal charges. He is now accused of
Speaker 1: conspiring to bribe Chinese government officials. That story from Bloomberg's
Speaker 1: Denis Pellegrini. Prosecutors alleged bankman Freed authorize bribing at least
Speaker 1: one Chinese official with at least forty million dollars worth
Speaker 1: of cryptocurrency in twenty twenty one, and the prosecutors say
Speaker 1: this was all part of an attempt by bankman Freed
Speaker 1: to get the officials to unfreeze accounts at Almeter Research,
Speaker 1: a Hong Kong based trading firm affiliated with FTX. Those accounts,
Speaker 1: they say held more than a billion dollars in cryptocurrency.
Speaker 1: With this new charge of conspiracy to violate the Foreign
Speaker 1: Corrupt Practices bankmen Freed now faces thirteen criminal accounts. He's
Speaker 1: already pleaded not guilty to fraud related to bankrupt FTX
Speaker 1: and Alameda. He's out unbailed. Trial scheduled for October. Denise
Speaker 1: Peligudy Bloomberg day Breakasia, China's online commerce leader Ali Baba
Speaker 1: announced plans to split its Empire into six business units.
Speaker 1: The move free ump the company's main divisions from e
Speaker 1: commerce and media to the cloud to operate with far
Speaker 1: more autonomy. It also lays the foundation for future spinoffs
Speaker 1: and market debuts. We heard earlier from Bloomberg Stephen Engel,
Speaker 1: ali Baba has gone from an eight hundred billion valuated
Speaker 1: company down to about two hundred and twenty billion, So
Speaker 1: now they're going to kind of be reshuffled. Is this
Speaker 1: at government order? We don't know. Is it going to
Speaker 1: unlock more value than the pre breakup, if you will,
Speaker 1: or pre at breakup? We don't know yet, a lot
Speaker 1: of questions to be answered. Ali Baba's shift to a
Speaker 1: holding company structure is rare for major Chinese tech firms,
Speaker 1: and it could present a template for Ali Baba's peers
Speaker 1: through China. Decentralizing Ali Baba's business lines and decision making
Speaker 1: power also addresses one of Beijing's primary goals during it's
Speaker 1: sweeping crackdown on the tech sector that was launched a
Speaker 1: couple of years back. Ali baba eightrs closed fourteen point
Speaker 1: three percent higher. But Steve's point, if you look at
Speaker 1: the shares, they're trading around eighty four dollars and twenty
Speaker 1: five cents in Hong Kong. They topped out over three hundreds,
Speaker 1: So that's why a company that used to have an
Speaker 1: eight hundred billion dollar valuation is now down in the
Speaker 1: two hundred's done well after the bell Here in the US,
Speaker 1: we heard from Micron Technology. The company gave a forecast
Speaker 1: for the current quarter better than some analysts had feared.
Speaker 1: That story from Bloomberg's Charlie Pellett, Micron is the largest
Speaker 1: American maker of memory chips, and the quarter is sparking hope,
Speaker 1: but the worst of a brutal industry slump maybe over.
Speaker 1: Micron said sales will be as much as three point
Speaker 1: nine billion dollars in the fiscal third quarter. That compares
Speaker 1: with an average of analysts estimates of three point seven
Speaker 1: five billion. CEO Sonja Morotra said customer inventories are getting better,
Speaker 1: and we expect gradual improvements to the industry's supply demand balance.
Speaker 1: The forecast suggests the memory chip market may be poised
Speaker 1: for a comeback after a rough stretch. In New York,
Speaker 1: Charlie Pellett Bloomberg Daybreak, Asia, AMC shares rose more than
Speaker 1: thirteen percent after the Intersect website reported that Amazon is
Speaker 1: weighing a possible acquisition of the movie theater chain. AMC
Speaker 1: has struggled financially as consumers have returned slowly to cinemas
Speaker 1: after the pandemic. Bloomberg's Tom Giles says acquiring AMC would
Speaker 1: be a win for Amazon. Amazon wants to make a
Speaker 1: splash in Hollywood. They are spending more and more money
Speaker 1: on big production shows and movies, and if you wanted
Speaker 1: a traditional outlet for distribution of those movies as people
Speaker 1: tentatively come back to theater, this is one way they
Speaker 1: could do it. The Intersect website said that AMC theaters
Speaker 1: could serve as a platform for the twelve to fifteen
Speaker 1: movies that Amazon plans to release in cinemas every year.
Speaker 1: I'm Brian Curtis along with Doug Krisner. Paul Allen will
Speaker 1: join us in a few moments. So a big move
Speaker 1: here by Ali Baba Doug. It gets a little bit
Speaker 1: more interesting though, when we think about other big Chinese
Speaker 1: tech companies. Ten Cent was up eight percent, JD up
Speaker 1: four percent. On the one hand, they might benefit as
Speaker 1: well in unlocking value. But on the other you know,
Speaker 1: this move could provide a lots stiffer competition for these companies.
Speaker 1: Some of the other companies by these specialized Boba Units
Speaker 1: Bloomberg Intelligence said, for instance that may twine and C
Speaker 1: might struggle a little bit. I would say this, no
Speaker 1: matter what, Hong Kong looks to benefit from a lot
Speaker 1: of lucrative IPOs coming, and I'd expect Hong Kong Exchanges
Speaker 1: in clearing to probably do well in today's session. I
Speaker 1: would say that's a safe at the other thing to
Speaker 1: think about when it comes to competition, maybe this is
Speaker 1: what Beijing would like to see because in that environment
Speaker 1: of tougher competition, that's where the innovation comes. And I
Speaker 1: think the government has already acknowledged the fact that innovation
Speaker 1: is needed in order to drive the next level or
Speaker 1: level of recovery in the Chinese economy. So maybe maybe
Speaker 1: that's part of the design here. Brian. Yeah. And the
Speaker 1: other big story that we obviously rolled out, and I'll
Speaker 1: just pose a question to you and you can have
Speaker 1: fun trying to answer it. Does the market want to
Speaker 1: see more regulation of the banks or more punishment of
Speaker 1: those who get themselves in trouble? Well, I think the
Speaker 1: market probably was well prepared for the idea that we're
Speaker 1: going to see tougher regulation, particularly for some of these
Speaker 1: MidCap banks that have been flying underneath that two hundred
Speaker 1: and fifty billion dollars level that was set when Dodd
Speaker 1: Frank was revisited a couple of years back. So the
Speaker 1: conversation now not only from Michael Barr, who is the
Speaker 1: Vice Chair of Supervision at the FED, but Mark Gruenberg,
Speaker 1: who is the Chair of the FDIC, talking about banks
Speaker 1: with assets over one hundred billion needing serious attention. So
Speaker 1: I think now that the market is kind of embracing
Speaker 1: this idea and really, if at the end of the
Speaker 1: day it means greater stability for the financial system, than
Speaker 1: I think a number of people are going to be
Speaker 1: on board with that. I think a lot of people
Speaker 1: would also like to see more of a separate look
Speaker 1: at regulation and supervision. Regulation is one thing, and they
Speaker 1: may have to write some new laws, but the supervision
Speaker 1: is something that should be like on an ongoing basis
Speaker 1: and maybe should have gotten out in front of what
Speaker 1: the management at Silicon Valley Bank was doing. It's something
Speaker 1: that we can try to unlock further with our guest.
Speaker 1: We have Christina Hooper coming up, chief Global market Strategist
Speaker 1: at Invesco, and we'll be taking a closer look at
Speaker 1: the markets now it's time for global news. Well, for
Speaker 1: the first time in sixty years, a US Navy warship
Speaker 1: has dopped at a South Korean port at Baxter has
Speaker 1: Global News in the nine sixty. Newsman San Francisco ed,
Speaker 1: yeah right, Brian, the US has an over seventy year
Speaker 1: relationship history, but yes, it has been sixty years. Carrier
Speaker 1: USS limits is in boosts on harbor as the two
Speaker 1: nations carry on military drills and international waters. Captain Craig
Speaker 1: Cicola says, an important mission if pour call reflects the
Speaker 1: mutual interest and the share goals between our countries, just
Speaker 1: to maintain peace, your dialogue and diplomacy. This is North
Speaker 1: Korea has been banging the drum on growing nuclear capabilities. Meanwhile,
Speaker 1: suspected North Korean hackers are posing as journalists and trying
Speaker 1: to gather intelligence about international officials posing as journalists. From
Speaker 1: the Voice of America, US President Joe Biden is kicking
Speaker 1: off his Investing in America tour, making remarks at a
Speaker 1: factory in North Carolina that he says is lined up
Speaker 1: to make semiconductors. He says, Republicans are content with the
Speaker 1: work being done elsewhere. You want to see our clean
Speaker 1: energy future to China to make his dependent and overseas
Speaker 1: supplies and supply chains, export jobs overseas, weaken our energy security.
Speaker 1: And meanwhile, Biden also talked about getting an assault weapons
Speaker 1: ban passed in Congress. Last year, we came together to
Speaker 1: pass the most significant gun safety legislation in thirty years.
Speaker 1: It was bipartisan. We got it done, and don't tell
Speaker 1: me we can't do more together. So I again call
Speaker 1: on Congress to pass the Sloman's Man about Republican Senator
Speaker 1: John Tone says this is not the right time with
Speaker 1: Nashville happening yesterday with respect to any discussion of legislation.
Speaker 1: It's premature. There's an ongoing investigation, and I think we
Speaker 1: need to let the facts come out fact well. Nashville
Speaker 1: police chief says an investigation shows that the perpetrator owned
Speaker 1: seven illegally purchased weapons, including semi automatic. Three of those
Speaker 1: weapons were used yesterday doing the horrific tragedy that happened,
Speaker 1: and says she was under mental healthcare programs. The wide
Speaker 1: ranging hearings on the banking crisis who've been talking about
Speaker 1: today brought to the four again long time bank regulation
Speaker 1: critic Senator Elizabeth Warren showed what she said was an
Speaker 1: example of lacks regulations. Xaminers were asking too many questions
Speaker 1: that they should quote let us know, end quote. Now
Speaker 1: there's a banking regulator who makes it clear that she
Speaker 1: is there to serve the big banks instead of the
Speaker 1: American public. Now, Warren wants to make sure that regulations
Speaker 1: are changed for any bank holding more than one hundred
Speaker 1: billion dollars in assets. Ukraine has a new voice for
Speaker 1: its attack warning systems. Now, I want to let you know.
Speaker 1: This is a demonstration. Okay, a demonstration. Now the voice
Speaker 1: is that of Luke Skywalker, Mark Hamill. Attention, air raid alert.
Speaker 1: Proceed to the nearest shelter. Don't be careless. Your overconfidence
Speaker 1: is your weakness. And then the all clear. Attention, the
Speaker 1: air alert is over. May the force be with you. Indeed,
Speaker 1: Global News powered by more than twenty seven hundred journalists
Speaker 1: and analysts and over one hundred and twenty countries. In
Speaker 1: San Francisco, I'm at Baxter and this is Bloomberg. Let's
Speaker 1: get to our guest. Christina Hooper joins US chief Global
Speaker 1: market Strategist at Invesco. Christina, the market must be doing
Speaker 1: something right here in that it would appear that both
Speaker 1: the bulls and the bears are kind of equally frustrated.
Speaker 1: They're not getting their way. They're not but perhaps that's
Speaker 1: a good thing, certainly better than some of the alternatives. Right.
Speaker 1: The reality is there is a fair amount of confusion
Speaker 1: about where the economy is going from here, are we
Speaker 1: passed this mini banking crisis? And what will the FED
Speaker 1: do going forward? So I think it's fair to expect
Speaker 1: this kind of market environment. That's a question that we
Speaker 1: actually should be putting to you, not you, Why do
Speaker 1: you answer it? While you're at it? It was rhetorical,
Speaker 1: but yes, So my expectation is that we're likely to
Speaker 1: see the FED hike rates one more time now. I
Speaker 1: think there's probably a slightly more than fifty percent chance
Speaker 1: of that, and of course they are data dependent, so
Speaker 1: that could change. But then I would expect the Fed
Speaker 1: to hold it does not want to cut rates, and
Speaker 1: unless we see a very significant deterioration in the US economy,
Speaker 1: I don't think they will cut rates, at least not
Speaker 1: in the next several months. Now. Of course, what happens
Speaker 1: with markets, I think markets will get more comfortable the
Speaker 1: more distance we have from the last banking issue that
Speaker 1: popped up on. The more distance we have from that,
Speaker 1: and once we get to a FED pause, I think
Speaker 1: markets are going to start to look out and start
Speaker 1: to anticipate in economic recovery next year and could move
Speaker 1: into more of a risk on stance. That's certainly not
Speaker 1: the case today, but that could change now. I do
Speaker 1: think the economy experiences a downturn, possibly a mild recession
Speaker 1: in the back half of this year, but I don't
Speaker 1: think it's a deep recession. I don't think it's a
Speaker 1: broad based recession, and I think we see an economic
Speaker 1: recovery in twenty twenty four, just as markets are likely
Speaker 1: to discount. And where do you stand on the inflation question?
Speaker 1: Do you feel that the fight is getting towards the end,
Speaker 1: the things are coming under control, especially when you consider
Speaker 1: the lagging impact of the right hinks we've seen so far.
Speaker 1: I think it's all about the lagging impact. I think
Speaker 1: the FED is going to be satisfied enough with progress.
Speaker 1: This is not going to be perfect. It's not going
Speaker 1: to be an immaculate disinflation, but I do think we're
Speaker 1: going to see significant progress this year, and it's going
Speaker 1: to be enough to satisfy the Fed, hence the change
Speaker 1: in position and the move to a pause. And speaking
Speaker 1: of rhetorical questions, one that I pose to Doug earlier,
Speaker 1: perhaps you heard it. Do you think the market wants
Speaker 1: to see more regulation of the banks here or would
Speaker 1: they rather see more punishment of those who get themselves
Speaker 1: in trouble. I don't think the market wants much more regulation,
Speaker 1: but I think it's willing to tolerate smart regulation, and
Speaker 1: so that's hopefully what we'll ultimately get. You know, sometimes
Speaker 1: with regulation you can get overkill that's not very smart.
Speaker 1: So I'm hoping for smart regulation that is both forward
Speaker 1: looking and of course reacting to what's happened. Yeah, in
Speaker 1: terms of regulation, there's quite a lot. If we take
Speaker 1: a look at the dog Frankek for example, that's two thousand,
Speaker 1: three hundred pages long. There are four hundred rules and mandates.
Speaker 1: Is a question of there being enough regulation or perhaps
Speaker 1: maybe too much, and is it not being enforced correctly? Well?
Speaker 1: I think that if you were to write a post
Speaker 1: mortem on Dodd Frank, you'd largely say that it was
Speaker 1: a success in terms of really addressing kind of the
Speaker 1: key issues that impacted and caused the global financial crisis. Now,
Speaker 1: one could argue and make a very good argument that
Speaker 1: it was overkilled, that there was a lot more to
Speaker 1: it than was necessary. But I think a lot of
Speaker 1: the key elements have helped improve the environment and prevented
Speaker 1: the kind of crisis we saw in two thousand and
Speaker 1: seven through two thousand and nine. So Bloomberg listeners are
Speaker 1: smart people. One in particular has a million dollars safely
Speaker 1: tucked into four different accounts at banks. But once to
Speaker 1: know what the Christina Hooper Blue Ribbon call is to
Speaker 1: do with that money? Now, well, it all depends on
Speaker 1: your time horizon, but I'm assuming that they have a
Speaker 1: long time horizon, and so I would say it is
Speaker 1: time to really think about one's exposure to a broad
Speaker 1: array of asset classes. So certainly it's nice to have
Speaker 1: keep one of those buckets in cash for now, but
Speaker 1: start deploying the others into equities. I'm excited about equities
Speaker 1: outside the US, particularly Asia em in this environment. I
Speaker 1: think that China reopening is going well, and I think
Speaker 1: it's going to exceed many people's expectations for this year,
Speaker 1: and that will be a positive that will have a
Speaker 1: halo effect for Asia EM in general within fixed income
Speaker 1: investment grade credit. In terms of the emerging markets position,
Speaker 1: we still have a persistently strong US dollar that would
Speaker 1: rather way on EM. Do you see that changing? I
Speaker 1: do think that's going to change, certainly. The US dollar
Speaker 1: strength is typically a function of three things, right, interest
Speaker 1: rate differentials, growth differentials, and of course the perceived need
Speaker 1: for a safe haven asset class like the US dollar.
Speaker 1: So we've gone through some difficult times recently, but I
Speaker 1: would anticipate that as we move through the year that
Speaker 1: is likely to change and we won't see the dollar
Speaker 1: astrong okay in forty five seconds. This big move by
Speaker 1: Ali Babat. Does that set a template for even American
Speaker 1: big tech companies. Well, I certainly think there are technology
Speaker 1: companies out there thinking about how to unleash opportunities, unleash
Speaker 1: interests and excitement. I don't know if we're going to
Speaker 1: see many follow that same path, but I'm sure it's
Speaker 1: a consideration right now as it should be. This is
Speaker 1: Bloomberg Daybreak Asia, your morning brief on. This story is
Speaker 1: making news from Hong Kong to Singapore and Wall Street.
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