Silvergate Implosion and SVB Security Sale Spur Bank Selloff

of Pacific. The budget would increase US tax on wealthy and corporations. Heads of US Intelligence say they don't believe China wants to fight a war over Taiwan. I'm at Baxter with Global News. That's all straight ahead on Bloomberg Daybreak Asia, the business news you need to start your day in just one fifteen minute podcast available on Apples, Spotify, the Bloomberg Business app and everywhere you get your podcasts. Good morning, I'm de Prisoner and I'm Brian Curtis. Here

are the stories we're following today. Traders getting that US payrolls data for the month of February to be released at eight thirty in the morning on Friday, Wall Street Time Bloomberg's Michael McKee with a preview. January's jobs report turned the financial world on its head. More than half a million jobs created the government said, almost three times what was forecast. The FEDS slowing the pace of rate increases is now expected to tighten more and faster unless

the February numbers reverse course, and that is possible. Economist say the January report was boosted by unexpectedly good weather and annual statistical adjustments. It might be revised lower and estimates put February's job gains back at trend. Another surprise, though, and expect a lot of market turmoil. Michael McKee, Bloomberg Daybreak. AJA. Well after the bell, we heard from Oracle. The company

reported quarterly sales pretty much in line with estimates. However, the cloud business really failed to meet expectations for higher growth. We have more from Bloomberg's Charlie Pellet. Fiscal third quarter revenue increased eighteen percent to twelve point four billion dollars, just short of analysts average estimate of twelve point four

one billion, according to data compile by Bloomberg. Cloud revenue the highly watched segment that Oracle has been trying to expand, rose forty five percent to four point one billion dollars in the period ending February twenty eighth. While Oracle's cloud infrastructure business renting computer power and storage has been a relative laggard in the market, analysts have been optimistic the services are gaining customers and helping accelerate growth in New York.

Charlie Pellet Bloomberg Daybreak Asia Well, a former Goldman Sachs banker, has been sentenced in the one MDB International massive fraud scheme that story from Bloomberg's and Kates Roger Ang has been sentenced to ten years in prison after being convicted last April of conspiring to violate US anti bribery laws

and a launder money. The fifty one year old former gold managing director and as one time boss were accused of conspire with a financier to pay tens of millions of dollars to officials to win business with One Malaysia,

a state controlled economic development company. The deals were arranged by Goldman, which later paid eight billion dollars in penalties for its role in the scam and is still subject to criminal charges in Malaysia, in Washington and Kate's Bloomberg Daybreak Asia and in the States, the nation's largest bank has been ordered to turnover records connected to an alleged

sex trafficking ring more from Bloomberg's Tom Busby. JP Morgan Chase has been ordered to turn over more records from its CEO, Jamie Diamond, in relation to a lawsuit by the US Virgin Islands, which accuses the bank of being complicit and facilitating the late Jeffrey Epstein's sex trafficking ring.

A Manhattan federal judge issued the order on Thursday, a day after the bank sued a former top executive, Jeff Staley, whose relationship with Epstein is at the center of that suit by the US Virgin Islands, as well as another by some of Epstein's victims. Now, Epstein killed himself in jail while awaiting sex trafficking charges in New York back in twenty nineteen. JP Morgan Chase says Diamond is quote not relevant to what it calls specious claims by the

US Virgin Islands, Tom Busby, Bloomberg Daybreak Asia. The Bank of Japan will keep its stimulus unchanged most likely in this last policy meeting before Governor Harihika Coroda steps down. We get that preview from Bloombergs David in Glaze Phil. Governor Coroda is known for shock and au tactics, many economists do not expect him to deliver one this time. The thinking is that Coroda will want to give his successor, Kazoo Auieda an open hand when he takes over in April.

The BOJ will likely hold a short term rate at minus point one percent and continue capping a tenure JGB yield at half of one percent. Both Coroda and Ueida have stated that the two percent inflation target has not yet been secured. But further to the surprise angle, Goldman, Sachs, HSBC, NBNP, Paraba are among the few that think that Coroda might just do it, that he might adjust are scrapped the

yield curve controlled policy. Will learn more later today. In Hong Kong, I'm David Ingless bloom Rick Day Brick Asia. The KBW Bank Index down seven point seven per Sad

and Doug. Investors will naturally worry that this SVB story might be some sort of canary in the coal mine story, but two points on that the top six banks in the country and even the next biggest twenty have been forced by regulators to maintain very high levels of capital, so many in the industry analysts like Mike Mayo would say the overall structure is very strong, and two that this is very speculative area that SVB was loaning into

startups and vcs and smaller banks are like any other company. I mean, they can run into trouble, making bad decisions, their stocks can even go to zero. That's just the way the system works. Painful for the company and as investors, but perhaps not too far beyond that. Well, yeah, you have a situation too where money that these startups raised from venture capital firms get to posited at the bank and as they burn through cash, which is becoming an

increasingly elevated situation. These cash burn rates are creeping up as the economy slows down, more difficult to drive business. Right, That's going to leave banks a little bit more exposed, particularly in an environment where interest rates are rising and there are concern over rising deposit cost and the bank CEO Greg Becker held a conference call advising clients to stay calm. However, the venture Capital firm founders. This is the firm co founded by Peter til he advised companies

to take money out of SVB. Yeah, again an individual story, but like you say, it does have a huge impact on the banks generally because these higher bond yields, investors have been pulling money out of the banks and investing in US treasuries. And one of the reasons is the banks have been slow to raise the interest that they pay on deposits. So how they are managing that transition is really important and it will shine the light in

the bank going forward. And we'll get more on this when we get to our guest, Sheena Sistle, coming up in a few moments. That will be after we get to Global News our US President Joe Biden firing off his opening budget bid amounting to some six point nine trillion dollars. Head back to it with Global News in the nine sixty News from at San Francisco, Eduardo, Yeah, Brian,

there's very targeted emphasis on China competition here. A major increase of investments in the Indo Pacific part of the Pacific Deterrence initiative from six point one billion to nine point one billion. That being said, Congress appropriated eleven point five billion for this year, so next year maybe even more. It includes money for missile defense systems in Guam and Hawaii. The whole package sets up a heated battle in the

US of our debt ceiling and government funding overall. Bloomberg Joe Mathew runs through some of the asks twenty five the tax on billionaires, a near doubling of the capital gains tax, a hike in the corporate tax rate back to twenty eight percent, and a higher personal income tax rate of thirty nine point six percent for people making over four hundred thousand dollars a year. The president says

those making less will not see tax hikes. So the President, in a campaign type stump address in Philadelphia, says he's seeking fairness around six hundred and fifty billionaires in America. I was over a thousand, you know, with the average tax they pay federal tax three, and he says they should not pay less than a teacher or a firefighter. Also said he would protect the so called entitlement programs

so security. My budget will not cut benefits, and it will definitely won't sunset programs like some of my Niger Republican friends want to do secure medicare through two and fifteen beyond now. The President says he's proposing some deficit reduction measures, but Bloomberg math says in twenty twenty four would increase from one point six to eight one point eight billion, from one six to one eight. His request well has little chance of passing in this form didn't

even pass democratic legislature. Heads of US intelligence today are saying they do not believe China wants a war over Taiwan today. It is a House Intelligence Committee, and Director of National Intelligence Avril Haynes, along with CIA Director William Burns, says President she has taken notice of the Allied response to Ukraine and says it would hurt his growth, but then turned and said, never underestimate China intentions when it

comes to what it calls unification of Taiwan. US Treasury Department says five Chinese companies are directly implicated and supplying parts for Iranian drones that wind up in Russia killing Ukrainians. It has imposed sanctions on them and Kiev. Dozens of missiles launched all over Ukraine today, some eighty missiles, and White House spokesman John Kirby says about forty percent of Kiev now is without power and says that could well

just be the beginning. Do you think the next four to six months is going to see more vicious fighting on the ground in Ukraine? Yeah, the IAEA chief. Meanwhile, I was asking for a safe so and be established around the nuclear plants in the future and vote today. NPC expected to easily back President Chi Jinping for his third term. Global News powered by more than twenty seven hundred journalist and analysts and over one hundred twenty countries.

In San Francisco, I'm at Baxter and this is Bloomberg. I'm Bryan Curtis along with Paul Allen, and this is Bloomberg Daybreak Asia. Our guest is shanea Sistle, President of ben Reyan Capital. So Shana A lot going on the jobs report, the Fed's interest rate policy, in light of this SVB story, the BOJ meeting. What has your attention the most this morning? I think the jobs report more

than anything. It's kind of interesting. The SVB story has coming at such an interesting time because we just had Herman Powell testifying in front of Congress talking about how he's going to continue to be aggressive, that the economy remains resilient and the job market remains tight, and then all of a sudden you have this major news and all the banks sell off, and all of a sudden there's genuine people genuinely concerned about run on the bank.

And this is a large bank, this isn't a small bank. And then there's the job report tomorrow, and with all the panic around the banking system, if the job report is good, that's not good for markets. Yeah, it's a very interesting situation, isn't it? And how does this play into your opinion about the chances of a recession and if there is one, are we going to look back on this moment as being somewhat pivotal. Well, I've always been of the belief that we are going to have

a recession. I've been pretty consistent in believing that we're going to have a shallow recession. There wasn't and I still don't believe there's a lot of cracks in the financial system that would warrant it being truly a devastating type of recession like we saw after the Financial crisis.

But I do think that when you're starting to see contagion because if you think about this, all kind of started with the crypto custodians and then the banks that dealt with crypto, and then a lot of the moneys in crypto, in blockchain, and so that you're seeing, you know, things spread. And I think Silicon Valley Bank is a very unique situation. They are the biggest player in the venture space. There's not really anybody else that has that

kind of exposure. But anytime you see a very large bank of that caliber come under this kind of stress, it can lead to additional stress kind of becoming pervasive in the financial markets. And and so I think now that's why I'm so concerned about the jobs report, because if it's good, and all indications are it's going to be a strong job report, it kind of puts the feed in the corner. They kind have to stay with

the policy that they've they've been communicating. It may beg this story about whether investors are more concerned now about recession than they are runaway inflation. I think that that's that's very true. I think so for instance, if you get a week number, if you get if you get a weak job's number, would that be good or bad for the equity complex. I think that would be good for the equity complex because I think that is one of the key indicators that the FED is looking at

when making policy decisions. And one of the reasons why they have started to look again at becoming more aggressive and talking about fifty basis points instead of twenty five is because they have not seen the labor markets become weaker in any way continuously, a lot of tightness in the labor markets, which impacts inflation. Where are you putting money to work at the moment, and in particular, I'm

curious about your cash position. So I'm not a big in using cash tactically, although I am using an HF. The ticker is THHY. It's the agility shares TAY is tactical income because I want to take advantage of yield in the market, but I want to have some risk management there. And that's a n HF that actually offers that.

There's another mutual fund, by counterpoint, that does something similar, because I think there's a real opportunity, as you pointed out earlier in your comments about the banks aren't really paying any yield and so cash is not a good place to be. That's a losing battle. You want to be in fixed income, even if it's short duration, and so I'm looking at ways that I can do that and have some some risk management there. That said, you know, the market seems to have positioned itself for fears to

the upside for interest rates and inflation. If we do get a weak jobs report, as you say, it might be actually very good for the stock market. Is it possible that that, because of positioning, that you get a real big bounce on let's say one hundred thousand jobs created instead of you know, more than two hundred. I think very well, we very well could. And the job market and the tightness of the labor markets really does kind of make it difficult for inflation to come down.

People are employed, people are spending. There's a number of other you have to increase incomes and salaries in order to attract people to jobs because there's not a lot of people looking. There's a number of reasons why having tight labor conditions is not a good thing, especially for inflation. So if it's a weaker than expected jobs to report, that would I would not be surprised to see a bounce in the markets that would be seen as the markets as a positive thing because it would take some

wind out of the FED sales. If you will and make it, then I think closer about what they do this month with their red hyke. This is Bloomberg Daybreak Asia, your morning brief on this story is making news from Hong Kong to Singapore and Wall Street. Look for us on your po cast feed every day, on Apple, Spotify,

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