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Speaker 1: This is Bloomberg Daybreak here for this Tuesday, the fourteenth

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Speaker 1: of March in London. Coming up today, Getting those eighties

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Speaker 1: vibe to your treasury Yields rebound after the biggest plunge

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Speaker 1: in decades, Pricing the peak. Traders bet on a pivot

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Speaker 1: after the first US bank fadure since two thousand and eight.

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Speaker 1: A call to strengthen the rule. President Biden makes a

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Speaker 1: play for tougher banking regulations. Ken Griffin on SVB, the

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Speaker 1: UK's Project Yetti and pension pot Boost. Those other stories

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Speaker 1: we're looking at in today's papers, and I'm Leanne Gern's

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Speaker 1: plus the magic Ingredient for growth or a parletry. The

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Speaker 1: UK government gets set to announce new investment zones. That's

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Speaker 1: all straight ahead on Bloomberg Daybreak Europe. The business news

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Speaker 1: you need to start your day in just one fifteen

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Speaker 1: minute podcast on Apple, Spotify, the Bloomberg Business App and

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Speaker 1: everywhere you get your podcasts. Good morning. I'm Stephen Carroll

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Speaker 1: and I'm Caroline Hike. Here are the stories that we're

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Speaker 1: following today. Yields on two year treasuries are beginning to

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Speaker 1: recover today after suffering the biggest drop since the early

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Speaker 1: nineteen eighties. The failure of Silicon Valley Bank and other

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Speaker 1: small lenders pushed the yield down by more than one

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Speaker 1: hundred basis points over the three previous trading sessions. PIMCO

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Speaker 1: Managing director Jerome Schneider says the events have forced a

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Speaker 1: shift in trader beats. Well, obviously there's a change in

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Speaker 1: sentiment here, and the sentiment is simply that, whereas the

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Speaker 1: inflation dynamic people focusing on higher inflation with the FED

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Speaker 1: being on hold for longer, we're simply driving the terminal

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Speaker 1: rate much much higher. That's simply been recalibrated to not

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Speaker 1: necessarily that the Federal Reserve is going to get another

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Speaker 1: rate hike and more importantly might have to entertain rate

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Speaker 1: cuts over that point in time. The simple bondmath simply

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Speaker 1: says that that recalibration means yield should be lower. Jer

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Speaker 1: Jerme Schneider was speaking as global financial stocks lost as

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Speaker 1: much as four hundred and sixty five billion dollars in

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Speaker 1: market value in the wake of spob's collapse. The first

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Speaker 1: US bank failure since two thousand and eight, has turbo

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Speaker 1: charged concerns that more rate hikes will tip the global

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Speaker 1: economy into a recession. Goldman and others now expect the

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Speaker 1: Fed to hold rates at the March meeting, but former

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Speaker 1: Treasury Secretary Larry Summers disagrees. My guests would still be

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Speaker 1: that it will be appropriate for the Fed to move

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Speaker 1: by twenty five basis points at its meeting next week,

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Speaker 1: though conditions are always subject to change. Larry Summers spoke

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Speaker 1: to Bloomberg as traders turn their attention to today's USCPI print.

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Speaker 1: Economy is surveyed by Bloomberg are forecasting a month or

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Speaker 1: month increase of not point four percent. That would be

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Speaker 1: a deceleration from January's no point five percent increase. The

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Speaker 1: shark waves from svb's collapse of hit politics to US

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Speaker 1: President Joe Biden says he intends to strengthen banking regulations.

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Speaker 1: Americans can rest assured that are banking system is safe,

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Speaker 1: your depositors safe. Let me also assure you we will

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Speaker 1: not stop at this, will do whatever is needed. I'm

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Speaker 1: going to ask Congress and the banking regulators to strengthen

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Speaker 1: the rules for banks to make it less likely this

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Speaker 1: kind of bank failure would happen again, and to protect

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Speaker 1: American jobs and small businesses. Biden's team are yet to

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Speaker 1: lay out any policy details on what the tougher regulations

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Speaker 1: could look like. The collapse of s SVB Financial Group

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Speaker 1: last week is set to go down as the second

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Speaker 1: largest bank failure in US history. If it causes the

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Speaker 1: financial crisis, that would pose a major challenge to Joe

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Speaker 1: Biden ahead of next year's elections, and the Prime Minister

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Speaker 1: of Ischi Sunac also sought to reassure markets. I think

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Speaker 1: the other Bank of England governor was right and the

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Speaker 1: chance of right to address this and make it clear

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Speaker 1: that actually our banks are well capitalized and they don't

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Speaker 1: have any concerns about and systemic risk. And as we've

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Speaker 1: seen over the weekend, we've been able to resolve the

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Speaker 1: issue of Silicon Valley Bank in the UK as it's

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Speaker 1: been purchased by HSBC. Now. Sonik is currently in California,

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Speaker 1: Silicon Valley Banks home state, for a foreign visit to

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Speaker 1: the US. He spent his flight there brokering the negotiation

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Speaker 1: to sell off svb's UK arm, protecting these six point

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Speaker 1: seven billion pounds that it had in deposits. HSPC, the

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Speaker 1: new owner of Silicon Valley Banks UK unit as planning

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Speaker 1: to inject two billion pounds of liquidity into the division.

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Speaker 1: The British banking giant bought the UK offshoot so RSVB

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Speaker 1: for a pound yesterday. HSBC CEO nol Quinn told investors

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Speaker 1: the acquisition makes strategic sense and will help to improve

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Speaker 1: the bank's standing in the technology and life science as sectors. Okay,

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Speaker 1: those are a few of our top stories for you

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Speaker 1: this morning, but we'll be focused really the entire day

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Speaker 1: on the fallout from SVB. What does it mean? Clearly

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Speaker 1: more volatility in markets? But do the moves in Treasury's

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Speaker 1: mean recession? Do we get a big snap back in

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Speaker 1: that two year yield we've started to see that. It's

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Speaker 1: a big question given the volatility that we've seen in

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Speaker 1: these last few days, does it sort of reflect reality

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Speaker 1: or not? Is this banking crisis short term or a

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Speaker 1: bigger issue? I also think it raises so many questions, Steven.

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Speaker 1: Does it mean that the two big to fail lenders

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Speaker 1: are just going to be the big beneficiaries. We're already

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Speaker 1: seeing them gain deposits as people sort of leave US

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Speaker 1: regional banks. Does it also her investment in green technology

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Speaker 1: for example? Those are the thoughts spinning around after the

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Speaker 1: failure of SVB. Yeah, I mean, a good counterpoint to

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Speaker 1: all of this is a piece five limbrick opinians Mark

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Speaker 1: Rubinstein this morning looking at the hout. In fact, bank

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Speaker 1: failures have been common and are common, and perhaps just

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Speaker 1: because we haven't been talking about them so regularly, we forget.

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Speaker 1: We have we very short memories when it comes to

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Speaker 1: the sort of thing. Absolutely, but it depends what you

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Speaker 1: mean by a short memory. I mean you have to

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Speaker 1: look back to two thousand and eight to find really

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Speaker 1: a lot of those bank failures. But actually Bloomberg's totted

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Speaker 1: up the number of bank failures five hundred and sixty

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Speaker 1: five in the past twenty three years. But they've been

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Speaker 1: concentrated largely in that global financial crisis of nine. Yeah.

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Speaker 1: I mean, meanwhile, who named the project takeover or to

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Speaker 1: takeover Silicon Valley Bank in the UK? Project? Yetty? Yes,

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Speaker 1: we like that, don't we. All Right, well, let's get

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Speaker 1: a bit more detail than in terms of the fallout

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Speaker 1: from the collapse of Silicon Valley Bank. Our Asia Finance

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Speaker 1: reporter Namila Ahmed joins us now for more. Good to

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Speaker 1: have you with us this morning. Look, the Federal Reserve

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Speaker 1: has begun an inquiry now into the supervision of SVB.

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Speaker 1: What do you think it could uncover? Look, it's an

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Speaker 1: internal probe, so really the Federal Reserve is looking at itself,

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Speaker 1: and what they're looking at is whether Sphoebe and New

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Speaker 1: York Signature Bank, which was closed after he'd failed on Sunday,

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Speaker 1: had conducted the required planning and stress testing that's need

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Speaker 1: as the FED race interest rates starting late last year,

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Speaker 1: and you know, it's really about looking at whether the

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Speaker 1: Fed was really aware of what was going on, because

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Speaker 1: it's kind of a bit embarrassing now that this many

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Speaker 1: months into a rate arising rate cycle that we know

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Speaker 1: has been eroding the value of bond purchasers, that the

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Speaker 1: FED finds itself in this position. At the same time, Nobilia,

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Speaker 1: we have the race underway to buy svb's loan book

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Speaker 1: in the US. Apolo among those expressing an interest. Is

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Speaker 1: there going to be big competition for this? There will

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Speaker 1: be competition among those types of lenders like Apollo, the

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Speaker 1: debt holders, some of the loan sharks, so you know,

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Speaker 1: like to come into bad assets and turn them around.

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Speaker 1: So we're seeing some interest, but as we know, the

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Speaker 1: bid for the SVP assets. The auction process that was

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Speaker 1: run by the regulators over the weekend has essentially still

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Speaker 1: not found a buyer that the assets can be sold to.

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Speaker 1: So it's going to be probably a long drawn out

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Speaker 1: and complicated process. Okay, pressure on other banks, though, is

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Speaker 1: absolutely evident. Shares in First Republic slumped yesterday. Moodies has

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Speaker 1: put all its long term ratings now on review for downgrade.

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Speaker 1: Are the other banks at risk here? Now? Look, it's incredible,

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Speaker 1: isn't it that the regulators are moved to calm the markets,

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Speaker 1: And you know, it probably soothed some concerns, but really

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Speaker 1: nobody has really just become just comfortable with the situation,

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Speaker 1: have they? So? As well as First Republic, as you say,

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Speaker 1: Moodies placed five other US lenders on review for downgrade,

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Speaker 1: and that includes Western Alliance, Desions and co America, and

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Speaker 1: Moodies is concerned over their reliance on uninsured deposit funding

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Speaker 1: and unrealized losses in their asset portfolios. And that's the

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Speaker 1: question that we don't know a lot about is how

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Speaker 1: much actually losses have these banks racked up? And I

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Speaker 1: suspect that we will here in the coming days and

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Speaker 1: weeks more about some of these troubles the regional banks

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Speaker 1: particularly have got themselves into because they're just not as

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Speaker 1: regulated and as well examined as the big banks, Nimili,

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Speaker 1: you're speaking to us from Sydney. Is there further impact

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Speaker 1: to be failed from this collapse where you are undern Asia?

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Speaker 1: More broadly? So far? Obviously bank stocks have been hit

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Speaker 1: like they have all around the globe, but out of

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Speaker 1: the Asian economies, Korea was one that really came out

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Speaker 1: and said that they would be prepared to backstop their

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Speaker 1: banking system. In Australia, for example, the impact isn't that big.

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Speaker 1: Most of the funding here, you know, a lot of

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Speaker 1: the companies here are not funded through SVP. But the

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Speaker 1: concern among the tech community in Asia, in Australia, in

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Speaker 1: South Korea and China is that this has a potential

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Speaker 1: to really stunt growth for them for a really long time.

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Speaker 1: Okay and abiel A, very good to have you with us.

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Speaker 1: Thank you so much for joining us. That is our

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Speaker 1: finance report to Nobila Ahmed. Look, I think it's very

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Speaker 1: interesting also that the fallout from SVB and indeed in

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Speaker 1: the bond markets means the traders are pushing back against

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Speaker 1: the ECB, the European Central Bank delivering hikes or at

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Speaker 1: least scaling back on their expectations of what the hikes

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Speaker 1: are going to be from Europe. And this is huge. Yeah,

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Speaker 1: I mean, look, the signals couldn't have been clearer from

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Speaker 1: the ECB before this week that it was going to

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Speaker 1: be fifty basis points at their next meeting on Thursday,

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Speaker 1: and the fact that that's now in question gives you

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Speaker 1: an idea of how big the scale of the impact

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Speaker 1: has been on market pricing, four central banks and so

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Speaker 1: many parts of the world. I mean, just look at

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Speaker 1: what's happening at the Japanese tenure yield today back then

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Speaker 1: at zero point two four of a yield on the

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Speaker 1: ten years, something that we were talking about at heading

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Speaker 1: the zero point five level so many times over the

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Speaker 1: past couple of weeks. Up next, Ken Griffin on SVB,

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Speaker 1: the UK's Project Yetty and pension pot boost. Now the

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Speaker 1: Paper Review on Blue Birdday Break Europe, the news you

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Speaker 1: need to know from today's papers and joining us this

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Speaker 1: morning blue Beaus Leanne Garin's the headline in the Financial

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Speaker 1: Time At times US capitalism is breaking down before our eyes,

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Speaker 1: says Ken Griffin, what's his take on what's happening with SVB? Caroline,

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Speaker 1: good morning to you and thank you so much so

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Speaker 1: his take, he says the US government should have not

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Speaker 1: intervened to protect Silicon Valley Bank depositors following its collapse.

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Speaker 1: Now Ken Griffin, the billionaire founder of Citadel, has been

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Speaker 1: speaking to the Financial Times. He said the rescue package

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Speaker 1: for SVB shows American capitalism is breaking down before our eyes.

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Speaker 1: Pretty stark words, I think, Caroline and Stephen. He also

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Speaker 1: added there has been a loss of financial discipline with

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Speaker 1: the government bailing out depositors in full. He argues that

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Speaker 1: the strength of the US economy meant that America did

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Speaker 1: not need to take such action. And Griffin's stance really

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Speaker 1: contrast with that of Bill Ackman, another high profile head

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Speaker 1: fund manager, who actually called for the Federal Deposit Insurance

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Speaker 1: Corporation FDIC to explicitly guarantee all deposits right now, warning

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Speaker 1: that there was just a matter of hours. But this

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Speaker 1: really gets the argument, doesn't it. That SVB always said

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Speaker 1: that they wouldn't be this systemic problem with banks to

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Speaker 1: run on banks if something happened to them, But obviously

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Speaker 1: things have turned out very differently. Yeah. No, absolutely, Look,

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Speaker 1: I think it's interesting Ken Griffin's view on this. Also

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Speaker 1: quite interested that Muhammad al Aarin has written a piece

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Speaker 1: on the Terminal this morning talking about how the UK

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Speaker 1: has done better than the United States. I mean he

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Speaker 1: puts it down to a few reasons that we've been

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Speaker 1: a bit slow in the past, so maybe wanted to

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Speaker 1: be speedier this time around. And also the mini budget

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Speaker 1: created so much last year that perhaps the UK has

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Speaker 1: had to do it differently, and actually you reach for

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Speaker 1: these private sector solutions. Indeed, well, let's turn into the

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Speaker 1: Telegraph next, LeeAnne, how Project Yetti rescued US UK tech

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Speaker 1: from Monday morning blood bath. Yes, indeed, so this article

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Speaker 1: is such a great outline of how events in the

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Speaker 1: UK unfolded as chaos engulf Silicon Valley Bank what the

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Speaker 1: paper calls the weekend from Hell for startup Britain and

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Speaker 1: Treasury officials just apparently sprung into action, launching what became

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Speaker 1: code named Project Yetti and hastily arranged video calls on

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Speaker 1: Saturday morning once they got the alert that this was happening,

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Speaker 1: and City Minister Andrew Griffith led emergency talks with startups

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Speaker 1: and venture capital firms as a crisis just unfolded and

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Speaker 1: it happened so quickly, didn't it. As Boss has warned off,

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Speaker 1: this massive blood bath the markets on Monday if the

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Speaker 1: bank was not rescued, so they rarely against the pump

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Speaker 1: here and the Chancellor Jeremy Hunt, was alerted as he

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Speaker 1: was preparing for pre budget interviews on Friday, and by

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Speaker 1: Saturday he was already holding these big talks with a

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Speaker 1: Bank of England Governor Andrew Bailey. Richie Sunak was also

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Speaker 1: preparing to board a flight to San Diego, as we know,

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Speaker 1: for these big defense talks with Joe Biden and Australia's

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Speaker 1: Prime minister. But he held these transatlantic conference calls with

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Speaker 1: Jeremy Hunt, Andrew Bailey and Sam Woods, the head of

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Speaker 1: the Prudential Regulation Authority, and as we know, Hunt then

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Speaker 1: spoke directly to potential bidders including HSB HSBC on Sunday

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Speaker 1: who emerged US as lead candidate. And by the time

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Speaker 1: the markets had opened on Monday morning, we had a buyer.

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Speaker 1: I know it was just a pound, but how fast

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Speaker 1: did that move? And once again Caroline, echoing what Muhammad

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Speaker 1: Alarian said, lot of people think the UK did a

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Speaker 1: great job in stemming this. Yes, although Alarion points out

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Speaker 1: that SVB in the UK was simply much smaller than

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Speaker 1: the the US counterparts in some ways, you know, the

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Speaker 1: hurdle was lower. Also, we did actually speak, of course,

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Speaker 1: of the City Minister Andrew Griffith. Lizzie Berdon, our UK

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Speaker 1: correspondent spoke to him. So we'll bring you that into

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Speaker 1: me a bit later on. Well, let's go to the

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Speaker 1: Times next Lee and the Chancellor to announce pension pot

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Speaker 1: boost for two million must be budget week tomorrow. Budget.

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Speaker 1: I feel like we've been speaking about it for years now,

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Speaker 1: we've got some new headlines coming out of the Times.

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Speaker 1: Nearly two million people would benefit from the move, as

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Speaker 1: Jeremy Hund seeks to address concerns that allowances are driving

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Speaker 1: doctors and other professionals into retirement. Now, I don't know

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Speaker 1: if you can cast your mind back to last week,

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Speaker 1: but this follows a report by our very own reporter

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Speaker 1: Joe Mays, who basically got the scoop on this already.

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Speaker 1: So Bloomberg ahead of the curve and the chance that

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Speaker 1: is going to use a budget tomorrow to raise a

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Speaker 1: lifetime allowance for pension savings to a record level to

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Speaker 1: encourage people to keep on working. According to the Times,

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Speaker 1: he'll boost the Alliance on Tag free pension savings from

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Speaker 1: a one point zero seven million to one point eight million.

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Speaker 1: Listen not he doesn't have much week or room, but

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Speaker 1: there we are. He's trying to help us out when

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Speaker 1: it comes to the pensions. This is Bloomberg Daybreak Europe.

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Speaker 1: You're morning brief on the stories making news from London

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Speaker 1: Bloomberg eleven thirty. I'm Caroline Hitka and I'm Stephen Carroll.

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Speaker 1: Join us again tomorrow morning for all the news you

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Speaker 1: need to start your day right here on Bloomberg Daybreak.