1
00:00:03,279 --> 00:00:06,600
Speaker 1: This is Bloomberg Daybreak Asia for is Tuesday March twenty

2
00:00:06,640 --> 00:00:09,840
Speaker 1: eighth in Hong Kong, Monday March twenty seventh in New

3
00:00:09,920 --> 00:00:13,360
Speaker 1: York and coming up today. Gains in financial shares lift

4
00:00:13,480 --> 00:00:17,880
Speaker 1: US equities after First Citizens agrees to buy Silicon Valley Bank.

5
00:00:18,120 --> 00:00:22,159
Speaker 1: The FDIC is launching investigations into manager conduct in the

6
00:00:22,320 --> 00:00:26,040
Speaker 1: SVB and Signature Bank failures, and the US is suing

7
00:00:26,079 --> 00:00:30,160
Speaker 1: the world's largest crypto exchange net. And Yahoo pauses his

8
00:00:30,280 --> 00:00:34,440
Speaker 1: judicial reform midst mass protests. Seven people have lost their

9
00:00:34,440 --> 00:00:37,680
Speaker 1: lives on a mass shooting in Nashville. Biden calls again

10
00:00:37,760 --> 00:00:41,680
Speaker 1: for assault weapons ban, weather warning in India for extremely

11
00:00:41,720 --> 00:00:48,080
Speaker 1: hot weather. I'm at Baxter with Global News. That's all

12
00:00:48,120 --> 00:00:51,680
Speaker 1: straight ahead on Bloomberg Daybreak Asia, The business news you

13
00:00:51,800 --> 00:00:54,680
Speaker 1: need to start your day in just one fifteen minute

14
00:00:54,680 --> 00:00:58,920
Speaker 1: podcast available on Apples, Spotify, the Bloomberg Business app and

15
00:00:59,080 --> 00:01:04,840
Speaker 1: everywhere you get your podcast. Good morning, I'm Dad Prisoner

16
00:01:05,000 --> 00:01:07,959
Speaker 1: and I'm Brian Curtis. Here are the stories we're following today.

17
00:01:08,440 --> 00:01:11,679
Speaker 1: First Citizens Bank shares rallying more than fifty percent after

18
00:01:11,720 --> 00:01:15,360
Speaker 1: agreeing to buy Silicon Valley Bank from the FDIC, and

19
00:01:15,480 --> 00:01:18,520
Speaker 1: the end the game was fifty three percent. Lumbrig Intelligence

20
00:01:18,560 --> 00:01:22,119
Speaker 1: says the acquisition transforms First Citizens into one of the

21
00:01:22,160 --> 00:01:25,840
Speaker 1: top fifteen banks in the United States. The FDIC says

22
00:01:25,880 --> 00:01:28,760
Speaker 1: First Citizens is buying about seventy two billion dollars of

23
00:01:29,000 --> 00:01:33,480
Speaker 1: SVB assets at a discount of sixteen point five billion dollars.

24
00:01:33,680 --> 00:01:37,959
Speaker 1: Lumbrig Sally Blakewell explains why the deal to seal svb's

25
00:01:38,000 --> 00:01:40,640
Speaker 1: fate took so many weeks to occur. I guess it

26
00:01:40,680 --> 00:01:44,920
Speaker 1: was a very complicated situation. They had, you know, a

27
00:01:44,920 --> 00:01:48,200
Speaker 1: lot of sort of deposits and assets, and you know,

28
00:01:48,280 --> 00:01:50,600
Speaker 1: they a lot of them had this kind of upside

29
00:01:50,600 --> 00:01:52,960
Speaker 1: down balance sheet where they had lots of these that

30
00:01:53,080 --> 00:01:56,200
Speaker 1: invested and plowed money into these debt securities. That was

31
00:01:56,200 --> 00:01:57,840
Speaker 1: a big question, you know, the buyer. Does the buyer

32
00:01:57,920 --> 00:02:01,000
Speaker 1: want to take on all of that problem. Ninety billion

33
00:02:01,000 --> 00:02:04,720
Speaker 1: dollars in SVB securities and other assets will remain under

34
00:02:04,800 --> 00:02:09,240
Speaker 1: FDIC control for Citizens. Acquisition of SBB came also with

35
00:02:09,320 --> 00:02:12,760
Speaker 1: an unusual provision, a seventy billion dollars line of credit

36
00:02:12,919 --> 00:02:16,960
Speaker 1: courtesy of the FDIC. First Citizens said that the financing

37
00:02:17,040 --> 00:02:19,639
Speaker 1: is meant to help the bank meet liquidity needs as

38
00:02:19,680 --> 00:02:23,720
Speaker 1: it integrates SVB into its operations. Meantime, things could be

39
00:02:23,760 --> 00:02:26,919
Speaker 1: going from bad to worse for executives at the failed

40
00:02:26,919 --> 00:02:31,919
Speaker 1: Silicon Valley and Signature banks. Bloomberg's Denis Pellegrini explains why

41
00:02:32,320 --> 00:02:34,959
Speaker 1: the boards and the most senior management at the banks

42
00:02:34,960 --> 00:02:38,120
Speaker 1: have already been removed and now management conduct at the

43
00:02:38,120 --> 00:02:41,000
Speaker 1: banks is under the microscope. The chair of the FDIC

44
00:02:41,200 --> 00:02:43,720
Speaker 1: says it's worth noting the two institutions were allowed to

45
00:02:43,760 --> 00:02:47,160
Speaker 1: fail at Martin. Gruenberg also says the FDIC does have

46
00:02:47,280 --> 00:02:51,400
Speaker 1: the ability to hold the directors, officers, professional service providers,

47
00:02:51,520 --> 00:02:55,840
Speaker 1: and even other institution affiliate parties all accountable for losses

48
00:02:55,840 --> 00:02:58,520
Speaker 1: tied to the banks. And I should also mention that

49
00:02:58,600 --> 00:03:02,360
Speaker 1: Gruenberg can also look at any misconduct in the bank's management.

50
00:03:02,600 --> 00:03:05,160
Speaker 1: Denise Pelly Greeny Bloomberg Day Brecation, just to point out

51
00:03:05,200 --> 00:03:08,360
Speaker 1: that mister Gruenberg will also be testifying at a closely

52
00:03:08,440 --> 00:03:11,280
Speaker 1: watched meeting tomorrow. This is a hearing of the Senate

53
00:03:11,360 --> 00:03:14,280
Speaker 1: Banking Committee that'll take place in Washington, and we'll have

54
00:03:14,919 --> 00:03:18,040
Speaker 1: all the details on that for you here on Bloomberg Radio. Meantime,

55
00:03:18,080 --> 00:03:20,560
Speaker 1: the US has made its most forceful move yet to

56
00:03:20,639 --> 00:03:23,760
Speaker 1: crack down on the crypto exchange Binance and its CEO.

57
00:03:24,160 --> 00:03:27,440
Speaker 1: We get more from Bloomberg's and Kates. The Commodity Futures

58
00:03:27,480 --> 00:03:30,240
Speaker 1: Trading Commission alleges in a court filing that Binance and

59
00:03:30,280 --> 00:03:33,240
Speaker 1: its leader, who is known as cz, routinely broke American

60
00:03:33,320 --> 00:03:35,720
Speaker 1: derivatives rules as the firm grew to be the world's

61
00:03:35,800 --> 00:03:39,320
Speaker 1: largest trading platform. The regulators says Finance should have registered

62
00:03:39,320 --> 00:03:43,360
Speaker 1: with the agency years ago and continues to violate CFTC rules.

63
00:03:43,400 --> 00:03:46,320
Speaker 1: Finance and its activities are also being investigated by the

64
00:03:46,360 --> 00:03:49,600
Speaker 1: IRS and the Securities in Exchange Commission. Finance has been

65
00:03:49,600 --> 00:03:52,440
Speaker 1: signaling that it expects to settle with US authorities probing

66
00:03:52,480 --> 00:03:57,040
Speaker 1: its business practices in Washington and Kate's Bloomberg Daybreak Asia Well,

67
00:03:57,080 --> 00:03:59,720
Speaker 1: Disney has begun the first in or round of job

68
00:04:00,000 --> 00:04:03,480
Speaker 1: It's expected to total seven thousand. These layoffs are expected

69
00:04:03,520 --> 00:04:06,680
Speaker 1: to fall on all parts of the company, including theme

70
00:04:06,760 --> 00:04:10,840
Speaker 1: parks and the ESPN sports networks. The cuts are part

71
00:04:10,840 --> 00:04:14,800
Speaker 1: of a strategy saving Disney around five and a half

72
00:04:14,840 --> 00:04:18,200
Speaker 1: billion dollars. This was announced back in February. You may

73
00:04:18,200 --> 00:04:21,000
Speaker 1: recall we have a little bit more detail from Bloomberg's

74
00:04:21,040 --> 00:04:23,600
Speaker 1: Key to Raganathan. We have about five and a half

75
00:04:23,640 --> 00:04:27,280
Speaker 1: billion dollars in cost cuts. About three billion of those

76
00:04:27,480 --> 00:04:30,640
Speaker 1: are from content savings, but about two and a half

77
00:04:30,680 --> 00:04:32,920
Speaker 1: billion are going to be from the non content part

78
00:04:32,920 --> 00:04:35,880
Speaker 1: of it, so the SGNA and of course the head

79
00:04:35,920 --> 00:04:38,560
Speaker 1: count reduction is part of that. But the important thing

80
00:04:38,640 --> 00:04:40,560
Speaker 1: is that the cost cuts are underway, and this is

81
00:04:40,600 --> 00:04:44,520
Speaker 1: really important for them to get back to profitability. That

82
00:04:44,800 --> 00:04:48,560
Speaker 1: is really restoring the magic for Disney Bloomberg's Sky to

83
00:04:48,680 --> 00:04:51,920
Speaker 1: Raganathan Now. Disney CEO Bob Iger said the first group

84
00:04:51,960 --> 00:04:54,479
Speaker 1: of employees will be notified about these cuts over the

85
00:04:54,520 --> 00:04:58,320
Speaker 1: next four days or so. A second, larger round will

86
00:04:58,360 --> 00:05:02,960
Speaker 1: then happen in April, impacting several thousand workers, and the

87
00:05:03,080 --> 00:05:06,920
Speaker 1: last of the affected workers will receive notice before summer.

88
00:05:07,080 --> 00:05:11,479
Speaker 1: Ran and a big deal today in China, Saudi Aramco

89
00:05:11,560 --> 00:05:15,760
Speaker 1: buying ten percent of Rongshung Petrochemical, one of China's refining giants.

90
00:05:16,080 --> 00:05:19,240
Speaker 1: That story from Bloomberg yvon Man. The three point six

91
00:05:19,320 --> 00:05:24,040
Speaker 1: billion dollar deal is Aramco's biggest ever overseas acquisition. It

92
00:05:24,080 --> 00:05:26,800
Speaker 1: includes a provision for the Saudi exporter to sell four

93
00:05:26,880 --> 00:05:29,479
Speaker 1: hundred and eighty thousand barrels a day of crude oil

94
00:05:29,760 --> 00:05:32,799
Speaker 1: to Roshan for more than twenty years. It's a second

95
00:05:32,880 --> 00:05:37,120
Speaker 1: deal in two days that will boost Aramco's exports to China. Earlier,

96
00:05:37,160 --> 00:05:40,120
Speaker 1: Aramco and other Chinese companies agreed to invest in a

97
00:05:40,200 --> 00:05:43,480
Speaker 1: new twelve billion dollar refining plant in now named Province.

98
00:05:43,960 --> 00:05:46,520
Speaker 1: Aramco is doubling down on his strategy to be an

99
00:05:46,520 --> 00:05:49,839
Speaker 1: all inclusive source of energy to China. It aims to

100
00:05:49,880 --> 00:05:53,560
Speaker 1: convert four million barrels a day of crude into petrochemicals

101
00:05:53,560 --> 00:05:56,200
Speaker 1: by the end of the decade. In Hong Kong, I'm

102
00:05:56,360 --> 00:05:59,840
Speaker 1: Van Man Bloomberg Day Break Asia. I'm Brian Curtis along

103
00:05:59,839 --> 00:06:02,520
Speaker 1: with Doug Prisoner Paul Allen will join us in a

104
00:06:02,520 --> 00:06:06,000
Speaker 1: few moments. So Doug sigh of relief really in the

105
00:06:06,040 --> 00:06:09,080
Speaker 1: Marcus with his first Citizens deal. And if you look

106
00:06:09,080 --> 00:06:12,279
Speaker 1: at it, they're getting a twenty three percent discount on

107
00:06:12,360 --> 00:06:16,640
Speaker 1: the SVB assets of their choosing and leaving behind you know,

108
00:06:16,680 --> 00:06:20,440
Speaker 1: the rest with the FDIC. And given the massive gain

109
00:06:20,480 --> 00:06:23,080
Speaker 1: that we saw in the share price of the acquirer,

110
00:06:23,160 --> 00:06:25,440
Speaker 1: which you don't often see, I mean a fifty three

111
00:06:25,480 --> 00:06:28,360
Speaker 1: percent game that shows you the market sees this is

112
00:06:28,400 --> 00:06:32,520
Speaker 1: an extraordinarily good deal for first citizens, and I'm sure

113
00:06:32,600 --> 00:06:34,920
Speaker 1: that the FDIC is happy as well. I think you're

114
00:06:34,960 --> 00:06:37,680
Speaker 1: right about that. And it then takes the focus off

115
00:06:37,720 --> 00:06:40,840
Speaker 1: of the banking system, one that has been kind of

116
00:06:41,160 --> 00:06:44,880
Speaker 1: under the hot spotlight for more than two weeks now,

117
00:06:44,920 --> 00:06:46,880
Speaker 1: it feels like, and it puts it back on the

118
00:06:46,960 --> 00:06:50,040
Speaker 1: FED and its response to the situation that we're in

119
00:06:50,120 --> 00:06:52,640
Speaker 1: right now. Yes, there is stress in the financial system,

120
00:06:52,640 --> 00:06:56,160
Speaker 1: We've seen that, but we're still dealing with this inflation narrative.

121
00:06:56,240 --> 00:06:58,599
Speaker 1: And as we mentioned earlier, the PC data will be

122
00:06:58,640 --> 00:07:01,640
Speaker 1: out on Friday today. The market's becoming a little bit

123
00:07:01,640 --> 00:07:04,000
Speaker 1: more comfortable with the notion of a twenty five basis

124
00:07:04,000 --> 00:07:07,520
Speaker 1: point rate hike in May. What happens beyond that is

125
00:07:07,640 --> 00:07:10,400
Speaker 1: up for debate. Jeff Gunlock, over a double Line, was

126
00:07:10,440 --> 00:07:14,640
Speaker 1: telling CNBC today he believes a couple of rate cuts

127
00:07:14,640 --> 00:07:17,400
Speaker 1: will happen before the end of the year. Rate cuts,

128
00:07:17,760 --> 00:07:20,800
Speaker 1: so the question then becomes what does that mean for markets.

129
00:07:21,880 --> 00:07:24,880
Speaker 1: He essentially thinks that the FED will cave, it will

130
00:07:24,920 --> 00:07:27,880
Speaker 1: give up the fight on inflation because of what he

131
00:07:27,920 --> 00:07:31,680
Speaker 1: sees as recession coming. It's a view, it's not guaranteed.

132
00:07:31,720 --> 00:07:33,560
Speaker 1: A lot depends on the data, and a lot depends

133
00:07:33,560 --> 00:07:36,560
Speaker 1: on how the FED reacts, and that's what makes this

134
00:07:36,880 --> 00:07:40,240
Speaker 1: job so interesting. Then look at Carnival Corporation. The company

135
00:07:40,280 --> 00:07:43,920
Speaker 1: beat expectations today, but analysts were disappointed by the outlook,

136
00:07:44,040 --> 00:07:46,480
Speaker 1: some called it conservative, and the stock was down nearly

137
00:07:46,520 --> 00:07:49,559
Speaker 1: five percent. So going forward, it's going to be really

138
00:07:49,560 --> 00:07:52,920
Speaker 1: the outlook that may dictate a lot of the price section. Absolutely.

139
00:07:53,200 --> 00:07:57,600
Speaker 1: Now it's time for Global News. He's Ranley. Prime Minister

140
00:07:57,680 --> 00:08:01,280
Speaker 1: Benuman Netanyahoo says that he's pausing his plans to modify

141
00:08:01,360 --> 00:08:04,640
Speaker 1: the nation's judicial system, and Baxter has Global News from

142
00:08:04,640 --> 00:08:07,880
Speaker 1: the nine to sixty news room in San Francisco. Ed, Yeah,

143
00:08:07,880 --> 00:08:10,160
Speaker 1: Brian net and Yah who says he wants to prevent

144
00:08:10,160 --> 00:08:13,960
Speaker 1: a civil war, but demonstrators say the protests will continue.

145
00:08:14,360 --> 00:08:16,880
Speaker 1: Estimates of tens of thousands who say net and Yah

146
00:08:16,880 --> 00:08:23,440
Speaker 1: who is trying to become a dictator. We all have

147
00:08:23,520 --> 00:08:26,720
Speaker 1: to fight for our rights because of the plans of

148
00:08:26,840 --> 00:08:32,120
Speaker 1: Benjamin Etanyahu that want to ten this nation into a

149
00:08:32,200 --> 00:08:35,280
Speaker 1: dictator sheep. Now, this forced net and Yahoo to address

150
00:08:35,360 --> 00:08:38,240
Speaker 1: the country to announce the pause to avoid his words

151
00:08:38,520 --> 00:08:42,160
Speaker 1: civil war. I give a real opportunity for a real dialogue.

152
00:08:42,760 --> 00:08:44,880
Speaker 1: We exist on the need to bring about the necessary

153
00:08:44,960 --> 00:08:48,200
Speaker 1: corrections in the legal system, and we are given an

154
00:08:48,200 --> 00:08:52,040
Speaker 1: opportunity to achieve a broad consensus. This is a very

155
00:08:52,080 --> 00:08:55,240
Speaker 1: worthy goal. Now. For a time the economy was brought

156
00:08:55,520 --> 00:08:58,720
Speaker 1: close to a standstill as multiple sectors stopped work. The

157
00:08:58,800 --> 00:09:01,920
Speaker 1: country's main union group then did call off the strike

158
00:09:02,000 --> 00:09:06,600
Speaker 1: following net and Yahoo's comments. Another mass shooting in the US.

159
00:09:06,679 --> 00:09:10,160
Speaker 1: A mass shooting is defined as four or more people's shot.

160
00:09:10,280 --> 00:09:13,640
Speaker 1: ABC is reporting now there have been one hundred twenty

161
00:09:13,760 --> 00:09:17,840
Speaker 1: eight in the United States already this year, just three months.

162
00:09:18,280 --> 00:09:21,080
Speaker 1: In Nashville today, police say twenty eight year old woman

163
00:09:21,200 --> 00:09:24,760
Speaker 1: entered a private Nashville grade school. She entered the school

164
00:09:25,040 --> 00:09:29,600
Speaker 1: through a side entrance and traversed her way from the

165
00:09:29,640 --> 00:09:34,400
Speaker 1: first floor to the second floor, firing multiple shots. Nashville

166
00:09:34,400 --> 00:09:38,000
Speaker 1: Police Department Don Aaron says six people were killed before

167
00:09:38,000 --> 00:09:41,960
Speaker 1: the shooter was killed herself by police. President Biden at

168
00:09:42,000 --> 00:09:44,559
Speaker 1: the White House events stopped to tell parents how sad

169
00:09:44,600 --> 00:09:47,960
Speaker 1: he was to see this again and the shooter in

170
00:09:48,000 --> 00:09:51,599
Speaker 1: this situation, reporter, we had two assault weapons in the

171
00:09:51,679 --> 00:09:56,080
Speaker 1: pistol twenty seven, so I call on Congress again to

172
00:09:56,160 --> 00:09:59,520
Speaker 1: pass my assault weapons being It's about time that we

173
00:10:00,080 --> 00:10:03,240
Speaker 1: began to make some more progress. Parent Ashley Beasley says

174
00:10:03,280 --> 00:10:05,440
Speaker 1: it has to end. I have been lobbying in DC

175
00:10:06,200 --> 00:10:09,040
Speaker 1: since we survived mass shooting in July. I have met

176
00:10:09,080 --> 00:10:12,160
Speaker 1: with over one hundred and thirty lawmakers. How is this

177
00:10:12,280 --> 00:10:15,720
Speaker 1: still happening? How are our children still dying? And why

178
00:10:15,760 --> 00:10:19,040
Speaker 1: are we failing them? And another community mourns its losses

179
00:10:19,120 --> 00:10:22,840
Speaker 1: due to gun violence. Today, India's National Weather Office is

180
00:10:22,880 --> 00:10:25,600
Speaker 1: warning of another heat wave in the coming weeks. This

181
00:10:25,760 --> 00:10:29,439
Speaker 1: after the country experienced its hottest February since nineteen oh one.

182
00:10:29,840 --> 00:10:33,319
Speaker 1: There are concerns that this could mimic last year, where

183
00:10:33,360 --> 00:10:36,719
Speaker 1: India experienced temperatures as high as one hundred twenty two

184
00:10:36,760 --> 00:10:41,000
Speaker 1: degrees fahrenheit. Meanwhile, more tornadoes, flooding rain, thunderstorms or a

185
00:10:41,040 --> 00:10:43,640
Speaker 1: threat through the southern part of the US again later

186
00:10:43,679 --> 00:10:48,040
Speaker 1: today and tomorrow in Alabama, northern Florida, and Georgia. Global

187
00:10:48,080 --> 00:10:50,640
Speaker 1: News powered by more than twenty seven hundred journalists and

188
00:10:50,720 --> 00:10:54,040
Speaker 1: analysts and over one hundred and twenty countries. In San Francisco,

189
00:10:54,080 --> 00:10:58,040
Speaker 1: I'm at Baxter and this is Bloomberg. I'm Brian Curtis

190
00:10:58,080 --> 00:11:01,040
Speaker 1: alone with Paul Allen. This is Bloomberg Break Asia, and

191
00:11:01,160 --> 00:11:03,720
Speaker 1: we get to our guest, Sandy Breger, who is the

192
00:11:03,800 --> 00:11:07,720
Speaker 1: chief client officer at Experience, joining us for a look

193
00:11:07,720 --> 00:11:10,839
Speaker 1: at the markets. Sandy, great to have you with us. Well,

194
00:11:10,960 --> 00:11:14,800
Speaker 1: maybe it's not a fully fledged bank crisis that we have,

195
00:11:14,920 --> 00:11:19,040
Speaker 1: but it's certainly more than a hiccup. It's an unintended

196
00:11:19,080 --> 00:11:22,560
Speaker 1: consequence perhaps of the low interest rates for such a

197
00:11:22,559 --> 00:11:25,160
Speaker 1: long period of time. And we're running a story on

198
00:11:25,200 --> 00:11:28,000
Speaker 1: the terminal now which is quite interesting about this huge

199
00:11:28,000 --> 00:11:31,120
Speaker 1: pile of hidden leverage that has been built up over

200
00:11:31,160 --> 00:11:34,360
Speaker 1: the past decade. How do you see that developing and

201
00:11:34,640 --> 00:11:37,640
Speaker 1: is that a major issue to you? Hi, Brian, Hipaul.

202
00:11:37,679 --> 00:11:40,079
Speaker 1: It's great to be with you guys today, and we

203
00:11:40,559 --> 00:11:45,520
Speaker 1: have concerns the latest banking developments are being attracted by

204
00:11:45,679 --> 00:11:47,840
Speaker 1: the government, but we don't think we're out of the

205
00:11:47,840 --> 00:11:50,679
Speaker 1: woods yet. I think we're all learning that the Fed

206
00:11:50,720 --> 00:11:53,199
Speaker 1: can't just keep cranking up the interest rates and nothing

207
00:11:53,200 --> 00:11:56,520
Speaker 1: will happen besides a coming of inflation. There's a lot

208
00:11:56,520 --> 00:11:59,040
Speaker 1: of different worsks out there. And when we look at

209
00:11:59,080 --> 00:12:02,720
Speaker 1: building portfolio for our clients who are corporate executives, family

210
00:12:02,760 --> 00:12:07,360
Speaker 1: business owners, and entrepreneurs. We're really taking a very holistic approach.

211
00:12:07,440 --> 00:12:10,719
Speaker 1: So when it comes to banking crisis, especially being here

212
00:12:10,720 --> 00:12:14,360
Speaker 1: in San Francisco, having the crisis, which I do actually

213
00:12:14,440 --> 00:12:18,760
Speaker 1: think is a good term unfold in our front yard.

214
00:12:19,520 --> 00:12:21,679
Speaker 1: We've been spending a lot of time with clients making

215
00:12:21,679 --> 00:12:24,680
Speaker 1: sure that the cash that they hold is safe in

216
00:12:24,800 --> 00:12:30,440
Speaker 1: FDIC insured accounts and also moving into treasuries and other things.

217
00:12:30,440 --> 00:12:33,559
Speaker 1: So that's that's first and foremost. If clients are holding cash,

218
00:12:33,600 --> 00:12:37,520
Speaker 1: it's because they have a short term, high priority need

219
00:12:37,559 --> 00:12:39,920
Speaker 1: and we need to make sure it's protected. In terms

220
00:12:39,960 --> 00:12:44,400
Speaker 1: of their longer term diversified portfolio, we really are taking

221
00:12:44,600 --> 00:12:48,880
Speaker 1: a defensive stance toward things. The bond market, with the

222
00:12:49,040 --> 00:12:52,840
Speaker 1: increase in yields in the version of the yeal curve,

223
00:12:53,400 --> 00:12:58,600
Speaker 1: is signaling a recession that is here or is continuing

224
00:12:58,640 --> 00:13:01,839
Speaker 1: to unfold. The style market, though we're saying maybe not,

225
00:13:02,000 --> 00:13:04,720
Speaker 1: so it is a confusing time for investors. We think

226
00:13:04,840 --> 00:13:08,800
Speaker 1: being defensive and ready to move is the way to go.

227
00:13:08,960 --> 00:13:14,680
Speaker 1: So we're we're in fixed income and client portfoliosa liquid

228
00:13:14,720 --> 00:13:18,960
Speaker 1: alternatives for some strategy hedging strategies, and then also in

229
00:13:19,000 --> 00:13:22,000
Speaker 1: the very high quality style. I just want to cycle

230
00:13:22,040 --> 00:13:24,640
Speaker 1: back to your use of the word crisis there because

231
00:13:24,640 --> 00:13:26,679
Speaker 1: there has been plenty of debate whether or not what's

232
00:13:26,760 --> 00:13:29,120
Speaker 1: going on in the banking sect that fits the definition

233
00:13:29,120 --> 00:13:31,880
Speaker 1: of crisis or not. But can we perhaps at least

234
00:13:32,040 --> 00:13:34,240
Speaker 1: say that it looks as if it might have been contained.

235
00:13:34,880 --> 00:13:36,800
Speaker 1: It has been for now, and Paul, I think what

236
00:13:37,320 --> 00:13:40,520
Speaker 1: the crisis is, it's been a crisis of confidence, right.

237
00:13:40,640 --> 00:13:43,960
Speaker 1: Really it's been more around liquidity and making sure that

238
00:13:44,040 --> 00:13:45,920
Speaker 1: everyone feels comfortable that the things are going to have

239
00:13:45,960 --> 00:13:49,160
Speaker 1: liquidity to meet depositors needs as opposed to being an

240
00:13:49,160 --> 00:13:51,440
Speaker 1: issue of solvency. So that is a bit of a

241
00:13:51,480 --> 00:13:55,600
Speaker 1: difference from what we've seen in past crises. And we

242
00:13:55,760 --> 00:14:02,200
Speaker 1: think that the FED, in well FDA c in Secretary yelling,

243
00:14:02,520 --> 00:14:05,920
Speaker 1: are doing a lot to help make the market feel

244
00:14:05,920 --> 00:14:10,360
Speaker 1: comfortable that the cash will be available two depositors in

245
00:14:10,400 --> 00:14:14,800
Speaker 1: the liquidity will be there. But meanwhile, we're concerned that

246
00:14:14,920 --> 00:14:17,840
Speaker 1: these smaller regional banks, which are an important part of

247
00:14:17,840 --> 00:14:22,400
Speaker 1: the economy. They are typically making fifty percent of the industrial,

248
00:14:22,440 --> 00:14:25,600
Speaker 1: commercial and commercial loans and about two thirds of the

249
00:14:25,640 --> 00:14:29,000
Speaker 1: commercial real estate loans in this country. We think they

250
00:14:29,000 --> 00:14:31,320
Speaker 1: are going to be looking at new loans a lot

251
00:14:31,320 --> 00:14:34,240
Speaker 1: more closely, and that credit will be tightened for at

252
00:14:34,280 --> 00:14:37,520
Speaker 1: least a little while. Do you worry about money leaving

253
00:14:37,520 --> 00:14:40,120
Speaker 1: the banking system in the short term because you have

254
00:14:40,200 --> 00:14:42,680
Speaker 1: treasuries offering so much more than what the banks are

255
00:14:42,680 --> 00:14:45,280
Speaker 1: giving you in interest rates and money market funds and

256
00:14:45,400 --> 00:14:49,280
Speaker 1: such that it's natural. It's a natural consequence. And now

257
00:14:49,320 --> 00:14:52,840
Speaker 1: that this is in the news, it's on everybody's newspaper

258
00:14:52,840 --> 00:14:56,160
Speaker 1: on the front page. People are moving their money and

259
00:14:56,360 --> 00:14:58,560
Speaker 1: that means that banks are going to have to do

260
00:14:58,640 --> 00:15:01,600
Speaker 1: a lot more and curl a lot more cost to

261
00:15:01,720 --> 00:15:04,400
Speaker 1: keep those deposits. And it seems like if that's happening

262
00:15:04,440 --> 00:15:06,800
Speaker 1: at this quick a time, it could be another problem coming.

263
00:15:07,720 --> 00:15:11,400
Speaker 1: It could be, Brian, I do think people do need

264
00:15:11,440 --> 00:15:13,600
Speaker 1: to pay attention to their cash out there. It is

265
00:15:13,640 --> 00:15:17,840
Speaker 1: a reminder to be very prudent. And you're right, there's

266
00:15:17,880 --> 00:15:20,960
Speaker 1: lots of interest rate yield reasons for moving money out

267
00:15:20,960 --> 00:15:24,400
Speaker 1: of cash and moving it into equivalence like very short

268
00:15:24,480 --> 00:15:27,640
Speaker 1: term treasuries for the yield and the text benefits there.

269
00:15:27,840 --> 00:15:30,600
Speaker 1: So it's something we've been working with clients on for many,

270
00:15:30,640 --> 00:15:34,680
Speaker 1: many months, and I do think this recent banking situation

271
00:15:34,760 --> 00:15:37,760
Speaker 1: has caused people to take a look at their cash

272
00:15:37,760 --> 00:15:39,800
Speaker 1: with a lot more scrutiny than they have in the past.

273
00:15:40,360 --> 00:15:42,920
Speaker 1: And when we look at the bigger banks in the

274
00:15:42,960 --> 00:15:47,320
Speaker 1: United States, a lot of their deposits have stabilized, which

275
00:15:47,360 --> 00:15:49,880
Speaker 1: is helpful and not includes some of the bigger, mid

276
00:15:49,920 --> 00:15:53,400
Speaker 1: sized regional banks, but it is troubling that we're still

277
00:15:53,400 --> 00:15:57,680
Speaker 1: seeing to see some deposits draining off of smaller banks.

278
00:15:57,720 --> 00:15:59,920
Speaker 1: And I can tell you just in terms of the

279
00:16:00,040 --> 00:16:02,720
Speaker 1: clients that we're working with, a lot of that cash

280
00:16:03,400 --> 00:16:06,280
Speaker 1: is going into treasuries if it wasn't already there. Yeah,

281
00:16:06,360 --> 00:16:09,640
Speaker 1: So in that respect, what's your allocation to bonds and

282
00:16:09,680 --> 00:16:14,120
Speaker 1: treasuries at the moment? Yeah, So again, we're using the

283
00:16:14,160 --> 00:16:16,880
Speaker 1: treasuries more as a cash equivalent for clients who have

284
00:16:17,520 --> 00:16:20,320
Speaker 1: cash reserves that they want to protect in those reserves

285
00:16:20,320 --> 00:16:22,560
Speaker 1: are set aside as I mentioned before, for the high

286
00:16:22,600 --> 00:16:27,360
Speaker 1: priority near term spending needs. But within the diversified portfolios,

287
00:16:27,720 --> 00:16:32,440
Speaker 1: we're about thirty percent fixed income across the portfolio, is

288
00:16:32,480 --> 00:16:35,640
Speaker 1: a little more in the more conservative ones a little less,

289
00:16:35,640 --> 00:16:38,160
Speaker 1: and the more defensive sorry, on the more aggressive ones,

290
00:16:38,840 --> 00:16:42,920
Speaker 1: we have about twenty percent in hedging strategies and then

291
00:16:42,960 --> 00:16:45,640
Speaker 1: the rest, as I was saying before, or in equities

292
00:16:45,680 --> 00:16:51,320
Speaker 1: with an underweight to US stocks and tilting toward overseas investments.

293
00:16:51,360 --> 00:16:53,400
Speaker 1: That's where we see the bright light in this environment.

294
00:16:53,720 --> 00:16:56,120
Speaker 1: I think there's a lot of benefits of investing overseas

295
00:16:56,200 --> 00:16:59,840
Speaker 1: where valuations are lower, divting yields are higher, and the

296
00:17:00,040 --> 00:17:02,480
Speaker 1: recent softening of the US dollar has been helping those

297
00:17:02,520 --> 00:17:05,800
Speaker 1: investments as well. So we had a relief rally today

298
00:17:05,800 --> 00:17:08,199
Speaker 1: and we saw yields bumping back up. It seems like

299
00:17:08,480 --> 00:17:11,600
Speaker 1: people are are heaving a sigh of relief on this

300
00:17:11,680 --> 00:17:15,879
Speaker 1: deal being done. First, Citizens Bank shares rallying fifty three percent.

301
00:17:16,200 --> 00:17:18,000
Speaker 1: That tells you something. I don't know if you had

302
00:17:18,000 --> 00:17:21,000
Speaker 1: a chance to look at it, but it would seem

303
00:17:21,000 --> 00:17:23,840
Speaker 1: obvious that they cherry picked the assets and still got

304
00:17:23,840 --> 00:17:26,479
Speaker 1: a twenty three percent discount on them. Looks like a

305
00:17:26,480 --> 00:17:29,720
Speaker 1: pretty good deal. Your thoughts, It does look like a

306
00:17:29,840 --> 00:17:32,680
Speaker 1: good deal, and I think it is helping the government

307
00:17:33,240 --> 00:17:36,200
Speaker 1: with the story of getting everyone feeling a lot more

308
00:17:36,240 --> 00:17:39,320
Speaker 1: comfortable about deposits and what they're willing to do to

309
00:17:39,400 --> 00:17:42,960
Speaker 1: make people feel secure and avoid this crisis of confidence

310
00:17:43,000 --> 00:17:47,199
Speaker 1: that we've seen. You know, there's certain certainly possible that

311
00:17:47,240 --> 00:17:50,879
Speaker 1: across other banks and other parts of a lending world

312
00:17:50,920 --> 00:17:53,840
Speaker 1: outside of traditional banking, that would just see some more

313
00:17:53,920 --> 00:17:56,919
Speaker 1: problems pop up as interest rates continue to increase. And

314
00:17:57,640 --> 00:18:00,080
Speaker 1: I think the government is doing all the right thing

315
00:18:00,640 --> 00:18:03,920
Speaker 1: and this deal I haven't looked at in particular, but

316
00:18:04,240 --> 00:18:07,359
Speaker 1: just at first blush, that analysis sounds right. It sounds

317
00:18:07,400 --> 00:18:10,439
Speaker 1: like they got they got a nice deal first stepping

318
00:18:10,480 --> 00:18:13,800
Speaker 1: in and helping solve a problem in terms of interest

319
00:18:13,840 --> 00:18:17,760
Speaker 1: rates increasing. We've got Jeffrey Gunlock of Double Line saying

320
00:18:17,800 --> 00:18:20,200
Speaker 1: there's even old that the fid's done with tightening now

321
00:18:20,280 --> 00:18:22,119
Speaker 1: maybe a couple of cuts coming this year. What are

322
00:18:22,119 --> 00:18:26,680
Speaker 1: your thoughts on that. We pay attention to what other

323
00:18:27,359 --> 00:18:32,200
Speaker 1: market commentators are saying, but we are not making decisions

324
00:18:32,200 --> 00:18:34,720
Speaker 1: in our portfolios based on what might happen or what

325
00:18:34,880 --> 00:18:39,119
Speaker 1: might not happen, So we're really maintaining our diversified stance.

326
00:18:39,880 --> 00:18:44,040
Speaker 1: We think it's very difficult to get the calls correct

327
00:18:44,119 --> 00:18:46,080
Speaker 1: on what the Fed's going to do and also get

328
00:18:46,080 --> 00:18:50,439
Speaker 1: the timing of those calls correct. So we're poised on

329
00:18:50,480 --> 00:18:53,760
Speaker 1: the defensive side. And if we see a situation where

330
00:18:54,560 --> 00:18:57,520
Speaker 1: stocks continue to rally much more. We might back off

331
00:18:57,520 --> 00:18:59,600
Speaker 1: the stocks a little bit in the portfolios, or if

332
00:18:59,600 --> 00:19:04,200
Speaker 1: we see situation where they fall in value and invaluations

333
00:19:04,240 --> 00:19:07,400
Speaker 1: come closer to what we think is fair value, then

334
00:19:07,440 --> 00:19:09,919
Speaker 1: we'd move in an opposite direction and start loading up

335
00:19:09,960 --> 00:19:14,160
Speaker 1: more on stock. This is Bloomberg Daybreak Asia, your morning

336
00:19:14,160 --> 00:19:16,639
Speaker 1: brief on this story is making news from Hong Kong

337
00:19:16,720 --> 00:19:19,600
Speaker 1: to Singapore and Wall Street. Look for us on your

338
00:19:19,640 --> 00:19:23,920
Speaker 1: podcast feed every day, on Apple, Spotify, and anywhere else

339
00:19:23,960 --> 00:19:26,720
Speaker 1: you get your podcast. You can also listen live each

340
00:19:26,800 --> 00:19:29,800
Speaker 1: day on Bloomberg eleven three zero in New York, Bloomberg

341
00:19:29,880 --> 00:19:32,840
Speaker 1: ninety nine one in Washington, Bloomberg one oh sixty one

342
00:19:33,000 --> 00:19:36,960
Speaker 1: in Boston, and Bloomberg nine sixty in San Francisco. Our

343
00:19:36,960 --> 00:19:40,200
Speaker 1: flagship New York station is also available on your Amazon

344
00:19:40,280 --> 00:19:44,800
Speaker 1: Alexa devices. Just say Alexa play Bloomberg eleven thirty plus.

345
00:19:44,920 --> 00:19:48,360
Speaker 1: Listen coast to coast on the Bloomberg Business app, Sirius

346
00:19:48,480 --> 00:19:52,680
Speaker 1: XM Channel one nineteen, the iHeartRadio app, and on Bloomberg

347
00:19:52,760 --> 00:19:56,360
Speaker 1: dot Com. I'm Brian Curtis and I'm Doug Prisoner. Join

348
00:19:56,440 --> 00:19:58,359
Speaker 1: us again tomorrow for all the news you need to

349
00:19:58,400 --> 00:20:06,840
Speaker 1: start your day right here on Bloomberg Daybreak, Asia m