Bank Stocks Extend Selloff As SVB Races to Prevent A Run

A New York Man jailed for eighteen years for a crime he did not commit, is free bus death penalty deliberations, and Manhattan to get a snag in the case of a terrorist. I'm John Tucker. More Ahead, I'm John Stashafard. Sports, the Nixon Nets, Boat Lost, the Rangers, Islanders, and Devils

all one season ending loss for Saint John's. That's all straight Ahead on Bloomberg day Break, The Business news you need to sturn your day, and just one fifteen minute podcast each pointing on Apple, Spotify, the Bloomberg Business Appen everywhere you get your podcasts. Good morning, I'm Nathan Hager and I'm Cameron Moscow. Here are the stories we're following today. Panic is spreading across the startup world. It's due to worries about the financial health of Silicon Valley Bank, a

major lender to fledgling companies. Svb's top executive is urging clients to stay calm, but Peter Teel's founders fund and other venture capitalists are advising their portfolio businesses to withdraw their money. We get more from Bloomberg Investing editor Russell Ward. A sellof started when SPB and announced plans to raise more than two billion dollars and a share sale to show up capital. This is after it was forced to

sell assets at a significant loss following a drop in deposits. Now, as its name suggests, the bank caters to startups in Silicon Valley, which it says has been burning through cash during the slump in tech investment, and now startups are rushing to withdraw their cash from the bank. Bloomberg's Russell Award says SVB shares plunged sixty percent yesterday. This morning, they're down another thirty percent. Well, Nathan, another influential name

on Wall Street, is urging investors to stay calm. Muhammadalarian says US banks can contain contagion risk and system stress stemming from the turmoil at Silicon Valley Bank. In a tweet this morning that Sherman of Grammarcy Funds and Bloomberg opinion columnists said the US banking system is solid as a whole, but that doesn't mean every bank is well. Along with the banking turmoil this morning, Karen wall Street is also bracing for the February jobs report after last

month's huge surprise. Economists are looking for a gain of two hundred twenty five thousand jobs. We get more from Bloomberg's Michael McKee. 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 FED slowing the pace of rate increases, is now expected to tighten more and faster unless the February numbers reverse course, and that is possible. Economists 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 at expect a lot of market turmoil. Michael McKee, Bloomberg Daybreak, Orry Michael Thank you. We now turned to the fight over spending and the debt. In Washington, President Biden has unveiled his budget requests for

the next fiscal year. The six point nine trillion dollars package would boost spending on a whole range of programs and pay for it with new taxes on the wealthy incorporations. Now, the President says that ball is in Republicans court. I'm ready to meet with the Speaker anytime tomorrow. If he has his budget, lay it down, tell me what you want to do. I'll show you what I want to do. See where we can agrant it. We don't agree, un Let's see what we vote on. President Biden announced his

budget in Philadelphia. Republicans have called for at least one hundred and fifty billion dollars in spending cuts. The president would race spending by seventy seven billion next year and add five and a half trillion in taxes over a decade later. Today, President Biden welcomes the leader of the European Union, La Vanderline to the White House. They plan to talk trade, the war in Ukraine, and future leadership.

Amy Morris has a preview from our Bloomberg ninety nine One newsroom in Washington, the two sides are expected to agree to a plan allowing European firms to benefit from some of the subsidies for batteries offered only to US producers. That deal would also showcase the strength of the Transatlantic

alliance and supporting Ukraine against Russia's invasion. Now, as for Ukraine, the US and EU will consider strategies to step up production of military equipment, but there are questions over funding. EU officials are also looking at its relationship with the US if President Biden doesn't win reelection, and vonder lyons term also ends next year in Washington, I'm Amy Moore's Bloomberg Day Break. All right, Amy, thank you. Meanwhile, the legal pressure may be close to a breaking point for

former President Donald Trump. Multiple media outlets are reporting Manhattan's district attorney is moving toward a criminal indictment, and Bloomberg's said Baxter has the latest. D A Alvin Bragg has offered Trump the opportunity to appear before the grand jury investigating his role in a payment to Stormy Daniels before the twenty sixteen election in New York. It's called the cross notice and is given to objects of investigations before

a formal indictment is handed down. Trump spokesperson says Trump was a victim of extortion then he is now. It's an embarrassment to the Democratic prosecutors and an embarrassment to New York City. In San Francisco, I'm at Baxter Bloomberg Daybreak. Thanks d turning overseas, it is a unanimous vote from lawmakers in China, granting Shijin Ping and unprecedented third term as president. Bloomberg Daybreak Asia anchor Brian Curtis has more from Hong Kong. She won the vote twenty nine hundred

and fifty two to zero. It gives him five more years in power and demonstrates his solid grip on the Communist Party. She was also reappointed chairman of the Central Military Commission. In other moves, the NPC installed former graft chief Joo Ledge as its new leader. It gave the vice presidency to Han Jung, who replaces Wang Chi Shan. Now, the balloting here was all procedural, there was no doubt about the outcome in Hong Kong. Brian Curtis, Bloomberg Daybreak.

All right, Brian, thanks. While staying in Asia, the Bank of Japan maintained its easing stance as Governu Haruhiku Kuroda held his final meeting after a decade of massive stimulus. The decision came shortly after Parliament formally approved Kazoo o Ueeda to succeed Kuroda in April. It's thirty five degrees in New York. We've got showers possible late today. Winter weather advisories in fact north of the city. Starting at

six tonight. We're gonna get up to the mid forties down to the upper thirties tonight as that snow begins. Time now to take a look at some of the other stories making news in New York and around the world that We're joined by Bloomberg's John Tucker. Good morning John, and Good morning Nathan. A New York man has been released from prison eighteen years empty who was convicted of

murder based on a mistaken identification. Sheldon Thomas, was arrested for it two thousand and four murder after witness identified a different person with the same name and a photo array. The Brooklyn District Attorney's office reinvestigated the case and discovered police concealed the mistake and then explained it away in court. District attorney Eric Gonzalez. I met with mister Thomas. You know,

he was very emotional. I apologized to him and as you heard, for himself, he wants to move forward with his life. He has a loving family. Thomas's attorney, William Caston, says the wrongful conviction put his client behind Barnes for more than half his life, and now being released when he's thirty five. Where does he start. He doesn't have housing, he missed the opportunity to go to college. He doesn't have health insurance. Meanwhile, Thomas says he wanted to thank

everyone who believed in his innocence. A death penalty deliberations in Manhattan hit a snag in the case of a convicted Isa's terrorist deliberations starting anew after one of the jurors was dismissed due to a family emergency and replaced with an author The jury is considering whether syfellow Sypov deserves the death penalty for killing eight people with a

truck in a twenty seventeen attack. Wells Nathan mentioned at the top of the program old Man Winter isn't done yet with the New York area and let's get the update. Bloomberg meteorologists Rob called morning Ron John. This next storm system is mainly a rain event in the city, but inland that's where we have winter weather advisories. From six

pm this evening through ten am tomorrow. A lot of the northern and western suburbs are probably going to see three to six inches of heavy wet snow from this storm. Even in the city. It may mix with wet snow leader tonight and into tomorrow. Morning John. All right, thanks Rob. A German police say eight people were killed in a shooting at a Jehovah's witness hall in Hamburg, including the

alleged gunman. Still no word on a positive motive for the shooting, and President Vladimir Zelenski has urged a rapid or repair of energy infrastructure and areas hit by a fresh barrage of Russian missile attacks come power to hundreds of thousands in Ukraine. The White town Sends. At least a eleven Ukrainians died in the attacks, including five near the western city of Leviv. Global News twenty four hours a day powered five more than twenty seven hundred journalists

and analysts and over one hundred twenty countries. I'm John Tuncker. This he is Bloomberg. Nathan. Thank you John. Time for the Bloomberg Sports Update FRONTI by tri stayed out here. Good morning, John Stashamber him morning, Nathan Rare night. Were all five New York Area NBA and NHL teams played all five on the road. The hoop teams lost, the hockey teams won, none of them in a regulation. Nicks

began a four game trip out West. Zacharimento, much improved, tied for second in the West, and the Kings went up by sixteen at the half and Nick rally fell short. They lost one twenty two, one seventeen, Demantes Savona's twenty four points to the triple double. Like the last game the lost to Charlotte Knicks, shooting was off. Julius Randall, R J. Barrett Emmanuel quickly together four of twenty eight on three pointed. Road trip continues tomorrow in LA against

the Clippers net for in Milwaukee. Even though the Bucks didn't have Yannis done to the company sore hand, they still won one eighteen one thirteen and they've won nineteen their last twenty. Rangers first game since last Satury A. Four three shootout win at Montreal. Patrick Kane got his first Ranger goal that tied the game. Devil's also wanted to shootout three two at Washington. The Islands won an overtime four three at Pitts for a Big East tournament.

Near upset went for Saint John's with the Red Storm. Season came to an end an overtime loss to Marquette. Wins for Rutgers in the Big Ten and Fordham in the Atlantic Ten. Another Yankee starting pitcher is injured, Carlos Vigona, and the Yanks key offseason pickoff as a mild elbow stranger. It's just kind of early to throw through things right now, I would say, so I want to be, you know,

one hundred percent healthy going. I mean, obviously not all of the start going to be one hundred percent, only you know, at least mentally hundred percent healthy. Of Brander pitch the season with the injury coming you after the one to Frankie Mantas, that one likely season ending sounds like Rudona. They missed in a couple of starts. John Stash Bluebird spools from coast to coast, from New York to San Francisco, Boston to Washington, DC nationwide on Sirius XAM,

the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hagar. We are watching banking stocks in the US and around the world slide lower this morning thanks to turmoil at a bank that provides a lot of the lifeblood for Silicon Valley startup. Silicon Valley Bank SVB has announced a sudden fundraising effort that's led the likes of Peter Teel and other venture

capitalists to advise their clients to pull out. Let's bring in Danny Burger, Bloomberg television anchor and markets correspondent for more on what's happening at SVB in the ramifications for the financial sector. Danny, good morning. Let's just set things up here. What is happening at SVB? To put it really broadly, it's one of these unintended consequences of the Fed hiking rates that we always talk about actually come

to fruition. Now that's absolutely it too simplistically, But the actual thing that happened here is this weird accounting quirk where banks like Silicon Valley Bank are allowed to hold bonds on their balance sheet and not mark them down when they lose value. They label them held to maturity. So SVB said they had ninety one billion dollars of these bonds on their balance sheet, but the truth is they are worth a lot less than that. And look,

usually that doesn't really matter. But when it matters is if all of a sudden, clients want to take their money out of the bank, they want their deposits back, and you have to liquidate those bonds, and all of a sudden, you're taking huge losses and potentially there's this mismatch in assets and liabilities. And that's what happened. They have a lot of VC and tech companies. It's been

a really difficult time. Funding has dried up, so VC funds wanted to take their money out, and SVB had to liquidate all of its securities that were available for sale and then had this gap. They release that press that press release yesterday saying that they were looking for a capital injection, and so these fears really came to a head, and everybody all of a sudden looked at SVB and said, wow, this looks a whole lot like

a solvency issue. So is this an accounting practice that's particular to SVB or does this have potential ramifications for other bigger banks that people may have heard of. So the regional banks have a lot of these. Again, they're called held to maturity, where you just say I'm going to hold them forever so I don't need to mark them down. But of course that's not actually the truth.

A lot of banks do have this. If you look at what's sold off the most yesterday, it does kind of go according to who has the biggest pile of these bonds. Schwab, for example, has over one hundred billion. First Regional, like a lot of these regional banks have them. But potentially the difference with SVB is they were really long duration. They were you know, let's say thirty year bonds. They were mortgage backed security, so they were things that

were especially susceptible to the FEDS raising rates. So there are some weird specific things with them. So it doesn't necessarily mean that the fact that everyone else has these held to maturity type bonds that they're going to be insolvent. But look, it is a risk, and I should say it's a risk that even the Fed, the Saint Louis fed flagged in a blog post last month, eagle eared listeners know you're based in London. How's this affecting the

European banking sector? Is their contagion risk there? Man? I gotta say it is a head scratcher, because you think, all right, there's this bank in California most of the world hasn't heard about. It's exposed to VC funds. So then why is UniCredit selling off? Why is Deutsche Bank selling off? But for some of it it's sell now, ask questions later. Another component might be that look what's

on their balance sheet? Do they have unrealized losses? Are these banks holding European real estate that we know in some sectors have been under pressure? But I do think a lot of this is just banks are selling off, and globally that happens, there's this interconnection between them. I find it hard to make the argument that European banks have the same risk as SVB, But it is just a case perhaps of investors just combing through the balance

sheets and just saying, hey, anything that seems related. I'm kind of worried about. Is this panic that we're seeing in across the banking sector at least for now, something that could move the Fed to potentially ease off rate hikes to distress the system. It definitely is. For one, we know this is something the FED watches. They speak to regional banks all the time. I mentioned there was a blog post about it by the Saint Louis FED. So this is a worry of THEIRS. They don't want

this to happen. They know regional banks are important to this economy, and so look, you can see the market pricing in a FED that's going to be more cautious because they don't want to break more things. You see a two year yield that's moved thirty basis points lower in the past two days. You see rate swaps backing off from fifty basis point hikes. Part of it, I will say, is the fact that this market was so short bonds, especially heading into the jobs data today, that

we're getting a lot of short covering potentially. But I think there is this expectation that hey, even if a job number comes in really hot, if there is concern of financial stability, the Fed can't go fifty basis points. This is Bloomberg day Break today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify, and anywhere else you

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the iHeartRadio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak