WEBVTT - Latest Fallout From the SVB Collapse

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<v Speaker 1>Life from the Bloomberg Interactive Brooker's Studios. This is Bloomberg

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<v Speaker 1>day Break for Tuesday, March fourteenth. Coming up today, Global

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<v Speaker 1>financial stocks loose four hundred and sixty five billion dollars

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<v Speaker 1>following the collapse of Silicon Valley Bank. Treasury eels come

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<v Speaker 1>off their deepest three day plunge in thirty five years,

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<v Speaker 1>and investors now will wait the latest reading on inflation

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<v Speaker 1>with this morning's CPI report. Once in store for the

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<v Speaker 1>Tristate area as a northeaster comes through. Plus, the man

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<v Speaker 1>behind the twenty seventeen tarr attack in New York City

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<v Speaker 1>avoids the death penalteam. I'm John Tucker Morahead, I'm John

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<v Speaker 1>stash Aarons towards the Giants have added a free agent linebacker.

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<v Speaker 1>All five New York Area NBA MHL teams play tonight.

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<v Speaker 1>That's all straight ahead on Bloomberg day Break, the business

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<v Speaker 1>news you need to start your day, and just one

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<v Speaker 1>fifteen minute podcast each morning on Apple Spotify, The Bloomberg

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<v Speaker 1>Business Appen everywhere you get your podcasts. Good morning, I'm

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<v Speaker 1>Amy Morris and I'm kieron Moscow. Here are the stories

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<v Speaker 1>we're following today. We continue to see repercussions around the

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<v Speaker 1>world from the collapse of Silicon Valley Bank. Global financial

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<v Speaker 1>stocks have now lost four hundred and sixty five billion

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<v Speaker 1>dollars in market value in two days as investors cut

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<v Speaker 1>exposure to lenders from New York to Japan, and now

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<v Speaker 1>the Federal Reserve is launching an internal probe of its

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<v Speaker 1>supervision of SVP. Steve Ratner is chairman of will It Advisors.

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<v Speaker 1>In terms of the regulatory oversight, yeah, I think. I

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<v Speaker 1>think there are a lot of groups and entities that

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<v Speaker 1>are going to have to account for themselves the regulators,

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<v Speaker 1>where were they? And this stuff by there is hiding

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<v Speaker 1>in plain sight. If you look at svb's balance sheet,

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<v Speaker 1>you will see at the end of twenty twenty two

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<v Speaker 1>they made clear that they had potential mark to market

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<v Speaker 1>losses on this portfolio exactly equal to their equity. Will

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<v Speaker 1>It Advisor's chairman, Steve Radner spoke with David Weston and

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<v Speaker 1>Romaine Bostick on our daily edition of Wall Street Week.

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<v Speaker 1>Ratner says it's important the American public regains confidence in

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<v Speaker 1>smaller regional banks. Will Amy Poe Pelticians are also questioning

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<v Speaker 1>the lack of regulatory oversight. Tennessee Republican Senator Bill Haggerty

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<v Speaker 1>tells Bloomberg's Joe Matthew he believes Silicon Valley Bank was

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<v Speaker 1>mismanaged and regulators missed it. Where was the San Francisco

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<v Speaker 1>feed in terms of its regulatory oversight? Where the regulatory

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<v Speaker 1>agencies to sleep at the wheel? Here was it a

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<v Speaker 1>management team that was more focused on ESG and cashing

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<v Speaker 1>out stock than they were in managing their bank. Confidently,

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<v Speaker 1>there are many many questions to be answered here. And

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<v Speaker 1>Republican Senator Bill Haggerty was a guest on Bloomberg's sound On,

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<v Speaker 1>heard weekdays from one to three pm Eastern on Bloomberg Radio.

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<v Speaker 1>Here the full interview on the sound On podcast available

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<v Speaker 1>on Apple's Spotify or anywhere else you get your podcasts.

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<v Speaker 1>And Karen, the government's emergency backstop of the financial system

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<v Speaker 1>is also coming under fire. Or billionaire Ken Griffin tells

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<v Speaker 1>The Financial Times the government should not have intervened to

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<v Speaker 1>protect depositors. Griffin says, quote, the US is supposed to

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<v Speaker 1>be a capitalist economy and that's breaking down before our

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<v Speaker 1>eyes now. At the same time, Michael Burry appears less

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<v Speaker 1>concerned the investor made famous by the Big Short film,

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<v Speaker 1>does not see any true danger at the moment and

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<v Speaker 1>says the crisis could resolve quickly. Well, they're still concern

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<v Speaker 1>amy over regional financial firms. Moody says placed First Republic Bank,

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<v Speaker 1>Western Alliance Bank Corp, Intrust Financial, umb Financial, Zions Bank Corp.

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<v Speaker 1>And Comerica on review for downgrade. First Republic, which lost

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<v Speaker 1>almost three quarters of its value over the past three sessions,

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<v Speaker 1>is up about twenty four percent in early trading this morning,

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<v Speaker 1>and the pain being felt by regional banks appears to

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<v Speaker 1>be benefiting the big banks. We get details now live

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<v Speaker 1>with Bloomberg's Steve Rappaport. Good Morning Steve, Good Morning Amy,

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<v Speaker 1>and Karen wall Street. Heavyweights saw an influx of deposits

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<v Speaker 1>after the collapse of Silicon Valley Bank and other regional lenders.

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<v Speaker 1>JP Morgan alone received billions of dollars in recent days,

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<v Speaker 1>sources tell Bloomberg. Bank of America's Citygroup and Wells Fargo

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<v Speaker 1>also saw a bump in volume as customers move their

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<v Speaker 1>money on fierce that the crisis will spread. The domino

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<v Speaker 1>effect began after sbb he suddenly collapsed last week. It's

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<v Speaker 1>the biggest US bank failure since the financial crisis of

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<v Speaker 1>two thousand and eight. Live in New York. I'm Steve Rappaport,

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<v Speaker 1>Bloomberg Daybreak. All right, Steve, thank you. Well. We've seen

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<v Speaker 1>historic moves in the treasury market following the downfall of

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<v Speaker 1>Silicon Valley Bank. We get more on that side of

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<v Speaker 1>the story from Bloomberg Markets reporter Valerie Titel. Those two

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<v Speaker 1>year yields have rallied over one hundred basis points in

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<v Speaker 1>the last three session. That shift in short term, mister

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<v Speaker 1>Straits is unlike anything we've seen in the last four decades,

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<v Speaker 1>including the two thousand and eight financial crisis, the September

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<v Speaker 1>eleventh terrorist attacks, Black Monday, nineteen eighty seven. This repricing

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<v Speaker 1>has been phenomenally quick and brutal. We're now pricing in

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<v Speaker 1>one hundred basis points of cuts for the Fed out

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<v Speaker 1>through the arrest of this year, and Bloomberry's Valery Titele

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<v Speaker 1>says markets predict a federal funds rate around four percent

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<v Speaker 1>by the end of this year. The next trigger for

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<v Speaker 1>the bond market is likely only a few hours away.

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<v Speaker 1>This morning CPI report likely to be a major catalyst

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<v Speaker 1>and will provide water for predictions on the Fed's next move.

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<v Speaker 1>Bloomberg's Michael McKee has more. Following the collapse of Silicon

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<v Speaker 1>Valley and Signature Banks, investors began repricing Fed rate hikes

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<v Speaker 1>last week. They anticipated four more, a total of one percent.

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<v Speaker 1>Now just one move is baked in, and by a

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<v Speaker 1>small margin, as traders bet concern about the banking system

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<v Speaker 1>will outweigh worries about inflation. But the Fed can't stop

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<v Speaker 1>worrying about inflation, and if we get a hot print

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<v Speaker 1>for February, markets will likely reprice again. Michael McKey, Bloomberg Daybreak.

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<v Speaker 1>All right, Mike, thank you. I'll Despite what today's CPI

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<v Speaker 1>report may show, former Treasury Secretary Larry Summer says it

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<v Speaker 1>still makes sense for the FED to high rates next week.

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<v Speaker 1>My guests would still be that it will be appropriate

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<v Speaker 1>for the FED to move by twenty five basis points

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<v Speaker 1>at its meeting next week, though conditions are always subject

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<v Speaker 1>to change, and former Treasury Secretary Larry's Summers predicts a

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<v Speaker 1>twenty five basis point hike, but says anything larger would

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<v Speaker 1>not be sensible. And in Europe today, one of the

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<v Speaker 1>biggest names in banking continues to have big problems. Credit

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<v Speaker 1>sweet says it's identified material weakness in its reporting procedures

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<v Speaker 1>for the last two financial years and is adopting a

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<v Speaker 1>remediation plan. Credit Swiez also says outlaws at the bank

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<v Speaker 1>have continued into this month. Shares are down more than

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<v Speaker 1>a two percent in Zurich thirty five degrees with a

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<v Speaker 1>winter storm warning in New York. Time now to look

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<v Speaker 1>at those stories and more in New York and around

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<v Speaker 1>the world with Bloomberg's John Tucker. Good morning, John, hi Amy, Well,

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<v Speaker 1>how much wintry weather will this nor easter bring to

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<v Speaker 1>the Tri state area. Bloomberg Meteorologists Rob Carolyn has more

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<v Speaker 1>on the rain and the snow. John, We're on the

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<v Speaker 1>backside of this storm system. Most of the precipitation has

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<v Speaker 1>fallen in the form of rain. It'll switch over to

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<v Speaker 1>snow by midday in all locations sitting by the time

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<v Speaker 1>it's winding down this evening only picking up a coating

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<v Speaker 1>to under two inches, but some of the suburb north

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<v Speaker 1>and west of town, particularly across Putnam and Orange County

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<v Speaker 1>into parts of Fairfield County, could have as much as

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<v Speaker 1>six inches or more snow from this system. It's also

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<v Speaker 1>going to be rather windy. We'll see some gusts over

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<v Speaker 1>thirty five miles an hour as the storm system continues

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<v Speaker 1>to intensify to the east of New England. John all Right, Ron,

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<v Speaker 1>thanks very much. A man who drove a truck down

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<v Speaker 1>a crowded New York City mike Path, killing eight people,

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<v Speaker 1>avoided the death penalty after a jury failed to agree

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<v Speaker 1>on whether he should be executed for the twenty seventeen

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<v Speaker 1>terror attack. The Manhattan Fellow jury deliberated over two days

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<v Speaker 1>in the sentencing phase of the case against Syfellows Ssipoff,

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<v Speaker 1>but said it was unable to reach a unanimous decision.

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<v Speaker 1>Donald Trump's former attorney and fixer, Michael Cohen, testified before

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<v Speaker 1>a Manhattan grand jury investigating the former president's hush payment

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<v Speaker 1>to adult film star Stormy Daniels. Trump has also been

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<v Speaker 1>invited to testify before the grand jury, but has no

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<v Speaker 1>plans to do so, saying this is all politics. Trump's

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<v Speaker 1>personal attorney, Joe Takapina, called Cohen untrustworthy any legal scholar,

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<v Speaker 1>including former members of the Federal Election Committee. I've said

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<v Speaker 1>there's no crime here. There is absolutely no crime, and

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<v Speaker 1>we should not be going down a row and went

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<v Speaker 1>to jail for this crime. Michael Cohen went to jail

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<v Speaker 1>because he was a liar, convicted perjurer on a lot

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<v Speaker 1>of things. He pled guilby to something that actually wasn't

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<v Speaker 1>a crime. Tacopinas spoke on ABC's Good Morning America. Former

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<v Speaker 1>President Trump said he considers Ronda Santis as his strongest

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<v Speaker 1>potential challenger for the GOP nomination. Trump attacked as Santis

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<v Speaker 1>during his first twenty twenty four campaign stop in Iowa.

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<v Speaker 1>During his speech in Davenport, Trump said, to Santis opposed

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<v Speaker 1>to ethanol, which is important to farmers in the Midwest.

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<v Speaker 1>Ronda sanctis today and the sanctus to Sanctimonious sanct now.

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<v Speaker 1>Ronda Sanctis strongly opposed deathanol Do you know that. Trump

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<v Speaker 1>also says that when De Santis was in Congress, he

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<v Speaker 1>vanted to raise the minimum retirement age for Social Security

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<v Speaker 1>to seventy years old. Global News twenty four hours a day,

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<v Speaker 1>Powder buy It more than twenty seven hundred journalist and

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<v Speaker 1>analyst over one twenty countries. I'm John Tucker, this is

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<v Speaker 1>Bloomberg aaby all right, thank you, John, time help. But

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<v Speaker 1>the Sports Report brought to you by Tri state, Audie.

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<v Speaker 1>Here's Bloomberg's John stash Our. Thanks a mean plenty of

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<v Speaker 1>player movement opening day of NFL free agency butt things

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<v Speaker 1>for now, all qualiet on the Aaron Rodgers front and

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<v Speaker 1>no word of a trade between the Jets and Packers.

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<v Speaker 1>We don't even know if Rogers wants to continue his

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<v Speaker 1>playing career. He had said he'd let everyone know sooner

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<v Speaker 1>rather than later. Giants filled the needed inside linebacker. They

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<v Speaker 1>signed Bobby a. Karaka, who with Indianapolis one of the

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<v Speaker 1>NFL's top tacklers. Giants also resigned backup money back Matt Brida.

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<v Speaker 1>Raiders needed a quarterback with a departure of Derek Carr.

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<v Speaker 1>They signed Jimmy Garoppolo has a history with Raiders coach

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<v Speaker 1>Josh McDaniels. They were together at New England. Sam Darnold

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<v Speaker 1>went from the Jets to Carolina. Now he's headed to

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<v Speaker 1>the forty nine Ers. Another QB, Mike White, who had

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<v Speaker 1>some good moments as a Jet, signed with Miami. Jameis Winston,

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<v Speaker 1>stained at New Orleans, will back up car the next

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<v Speaker 1>road trip. So far, two losses, then a win. It

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<v Speaker 1>ends tonight in Portland. Nets look to make it six

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<v Speaker 1>wins the last seven games they're at Oklahoma City. The

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<v Speaker 1>Nets are only one game behind the Knicks for fifth

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<v Speaker 1>in the East. Rangers host Washington, Devil's host Tampa Bay,

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<v Speaker 1>and the Islanders visit La NCAA tournament begins with two

0:10:19.120 --> 0:10:22.359
<v Speaker 1>games in Dayton, Ohio. It begins in earnest On Thursday,

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<v Speaker 1>World Baseball Classic and Phoenix. A nine run first sitting

0:10:25.679 --> 0:10:28.040
<v Speaker 1>for the US in a twelve to one route of Canada.

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<v Speaker 1>The US needs to beat Columbia tomorrow to reach the quarterfinals.

0:10:31.440 --> 0:10:33.520
<v Speaker 1>Yankees lost with the Twins one nothing mets over the

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<v Speaker 1>Marlins nine three three run homers for Thomas Nito. Joe

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<v Speaker 1>peppertone has passed away at eighty two. Brooklyn native was

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<v Speaker 1>the Yankee first baseman for most of the nineteen sixties.

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<v Speaker 1>John stash Allard Bloomberg Sport live from coast to coast,

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<v Speaker 1>from New York to San Francisco, Boston to Washington, d C.

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<v Speaker 1>Nationwide on Sirius, XAM, the Bloomberg Business app, and Bloomberg

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<v Speaker 1>dot Com. This is Bloomberg Daybreak. Good Tuesday morning. I'm

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<v Speaker 1>Amy Morris says. We continue to follow the developments around

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<v Speaker 1>the collapse of SBB the residual impact on the regional

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<v Speaker 1>banking sector. We turned out to Bloomberg Intelligence senior analyst

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<v Speaker 1>Term and Jen, whose focus is regional banks Harmon. Always

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<v Speaker 1>a pleasure. Thank you for taking the time this morning.

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<v Speaker 1>What are you seeing in the regional banking sector now? Look,

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<v Speaker 1>we're seeing a rise in the bank shares pre market

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<v Speaker 1>this morning, and that's a great situation. I've always been

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<v Speaker 1>in the view that yesterday's action was really overblown, given

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<v Speaker 1>the fact that both SVB and another bank that I follow,

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<v Speaker 1>Signature Bank, were closed by the regulators. But the entire

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<v Speaker 1>regional banking sector has been really strong. From a liquidity

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<v Speaker 1>capital standpoint. We're seeing some pressure from deposits, but that

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<v Speaker 1>doesn't mean that that should be a solvency or next

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<v Speaker 1>central risk. It just means that they're just going to

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<v Speaker 1>have to deal with some funding issues, which the regulators

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<v Speaker 1>and the and the Federal Reserve shored up over the

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<v Speaker 1>weekend with the new liquidity facility. Is what they did

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<v Speaker 1>over the weekend. Enough? What more do they need to

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<v Speaker 1>help these smaller banks out? Yeah, I think it's it's

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<v Speaker 1>very enough. It's a very potent facility where banks can

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<v Speaker 1>borrow from the FED and use their existing assets to

0:12:20.360 --> 0:12:24.200
<v Speaker 1>shore up the liquidity profiled the bank. So it is

0:12:24.640 --> 0:12:26.960
<v Speaker 1>something that is a solution to what the banks are

0:12:27.000 --> 0:12:30.440
<v Speaker 1>facing today. Will it? Advisors chairman Steve Radner had told

0:12:30.480 --> 0:12:34.319
<v Speaker 1>Bloomberg Radio that it's important the American public regains confidence

0:12:34.400 --> 0:12:37.320
<v Speaker 1>in smaller regional banks. How do they do that? What's

0:12:37.320 --> 0:12:41.280
<v Speaker 1>the next step? Sure? I think another factor that should

0:12:41.320 --> 0:12:44.280
<v Speaker 1>shore up the confidence is that the fact that the

0:12:44.320 --> 0:12:49.319
<v Speaker 1>depositors at both SVB and Signature were backstopped. Everybody from

0:12:49.320 --> 0:12:54.320
<v Speaker 1>those two institutions that had deposits within those banks are

0:12:54.360 --> 0:12:57.959
<v Speaker 1>going to be made whole. And the inference is that

0:12:58.000 --> 0:13:03.360
<v Speaker 1>if any other banks failed, the regulators would do the

0:13:03.400 --> 0:13:06.480
<v Speaker 1>same action. Let's look back just a little bit, because

0:13:06.520 --> 0:13:09.760
<v Speaker 1>before last week, nobody had really heard of Silicon Valley Bank.

0:13:11.080 --> 0:13:13.920
<v Speaker 1>Has this this has had actually more of a global impact,

0:13:13.920 --> 0:13:16.560
<v Speaker 1>So I'm wondering, has this surprised you at all? No.

0:13:17.800 --> 0:13:21.320
<v Speaker 1>The interesting thing about Silicon Valley Bank is that they

0:13:21.400 --> 0:13:28.640
<v Speaker 1>are deeply embedded into the Silicon Valley venture capital startup community.

0:13:29.120 --> 0:13:32.199
<v Speaker 1>So they bank despite being a bank that most people

0:13:32.320 --> 0:13:35.880
<v Speaker 1>never heard of a week ago, they had very strong

0:13:35.920 --> 0:13:40.200
<v Speaker 1>relationships and if you asked anybody in Silicon Valley, you know,

0:13:40.280 --> 0:13:44.600
<v Speaker 1>the CEO of Facebook or Google. Everybody would know who

0:13:44.840 --> 0:13:49.240
<v Speaker 1>SVB was, And so that's the issue. They banked a

0:13:49.280 --> 0:13:54.800
<v Speaker 1>lot of the startups and the technology firms globally, and

0:13:55.000 --> 0:13:59.000
<v Speaker 1>you've seen some folks come out and be very distressed

0:13:59.080 --> 0:14:02.040
<v Speaker 1>with the issue. Now it sounds as though you feel

0:14:02.080 --> 0:14:04.200
<v Speaker 1>like the dust may be settling at this point. But

0:14:04.280 --> 0:14:09.200
<v Speaker 1>Moodies has placed First Republic, Western Alliance, Interest, Financial, umb Financial, Zions,

0:14:09.240 --> 0:14:13.679
<v Speaker 1>and Co America all on review for downgrade. Is that

0:14:14.920 --> 0:14:17.920
<v Speaker 1>does that portend to anything else that you might want

0:14:17.920 --> 0:14:22.920
<v Speaker 1>to you know, factor in there. Sure, What the Moody's

0:14:22.920 --> 0:14:26.480
<v Speaker 1>down grades was looking at was the unrealized losses in

0:14:26.560 --> 0:14:29.760
<v Speaker 1>the security's portfolio of these banks, which is really one

0:14:29.800 --> 0:14:33.480
<v Speaker 1>of the reasons that SVB was under so much pressure

0:14:33.480 --> 0:14:36.040
<v Speaker 1>because they were sitting on a fifteen billion lost position,

0:14:36.920 --> 0:14:40.240
<v Speaker 1>much higher than any other bank that I followed. And

0:14:40.400 --> 0:14:43.640
<v Speaker 1>another factor is the deposit flight that's that the regional

0:14:43.720 --> 0:14:47.680
<v Speaker 1>banks are seeing today and the fact that some deposits

0:14:47.720 --> 0:14:51.120
<v Speaker 1>are uninsured, and naturally if you have a portion of

0:14:51.120 --> 0:14:53.520
<v Speaker 1>your deposits that's uninsured, is over the two hundred and

0:14:53.560 --> 0:14:56.480
<v Speaker 1>fifty thousand dollars limits, you would be prudent to move

0:14:56.520 --> 0:15:00.400
<v Speaker 1>that to a different institution. So that's something that I'm

0:15:00.440 --> 0:15:04.160
<v Speaker 1>aware of that I'm monitoring, and that's something that Moody's

0:15:04.240 --> 0:15:06.040
<v Speaker 1>is taking a look at as well. It's actually just

0:15:06.080 --> 0:15:08.000
<v Speaker 1>about to ask you what you're going to be monitoring

0:15:08.000 --> 0:15:11.120
<v Speaker 1>and what you're watching for today. Yeah, it's really going

0:15:11.160 --> 0:15:15.160
<v Speaker 1>to be what we're seeing from a liquidity standpoint. Do

0:15:15.480 --> 0:15:18.120
<v Speaker 1>the banks come out and talk about more about the

0:15:18.240 --> 0:15:21.160
<v Speaker 1>stability within their deposit base that that's the number one

0:15:21.200 --> 0:15:24.160
<v Speaker 1>issue within the banks today. So no more shoes are

0:15:24.200 --> 0:15:27.240
<v Speaker 1>gonna drop. We're all good now. Well, hopefully we can

0:15:27.240 --> 0:15:30.880
<v Speaker 1>live for another day. All right, thank you so much,

0:15:30.880 --> 0:15:34.880
<v Speaker 1>Bloomberg Intelligent Senior analyst Herman Chan Just one more quick

0:15:34.960 --> 0:15:38.840
<v Speaker 1>question for you. Got about thirty seconds here and looking back,

0:15:38.920 --> 0:15:40.720
<v Speaker 1>could anybody have seen this coming? There are a lot

0:15:40.760 --> 0:15:43.640
<v Speaker 1>of fingers being pointed here. Well, we've written about it.

0:15:43.840 --> 0:15:46.960
<v Speaker 1>We're talking about deposit flight being an issue. We've talked

0:15:46.960 --> 0:15:52.800
<v Speaker 1>about the unrealized losses within the security's portfolio. The trajectory

0:15:53.120 --> 0:15:56.560
<v Speaker 1>of interest rates has been one of the things that

0:15:56.600 --> 0:16:02.400
<v Speaker 1>has surprised a lot of people, and the pandemic when

0:16:02.480 --> 0:16:04.720
<v Speaker 1>rates were so low, a lot of these banks built

0:16:04.760 --> 0:16:07.840
<v Speaker 1>up their securities portfolio in a bid to sort of

0:16:08.960 --> 0:16:12.560
<v Speaker 1>raise their their revenues because there was not a lot

0:16:12.560 --> 0:16:17.000
<v Speaker 1>of lending going on. So now these banks are getting

0:16:17.080 --> 0:16:20.120
<v Speaker 1>caught off sides of bits with their interest rates mismatch

0:16:20.240 --> 0:16:24.640
<v Speaker 1>with their funding. You're listening to Bloomberg Daybreak Today, your

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<v Speaker 1>morning brief on the stories making news from Wall Street

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