Latest Fallout From the SVB Collapse

Tristate area as a northeaster comes through. Plus, the man behind the twenty seventeen tarr attack in New York City avoids the death penalteam. I'm John Tucker Morahead, I'm John stash Aarons towards the Giants have added a free agent linebacker. All five New York Area NBA MHL teams play tonight. That's all straight ahead on Bloomberg day Break, the business news you need to start your day, and just one fifteen minute podcast each morning on Apple Spotify, The Bloomberg

Business Appen everywhere you get your podcasts. Good morning, I'm Amy Morris and I'm kieron Moscow. Here are the stories we're following today. We continue to see repercussions around the world from the collapse of Silicon Valley Bank. Global financial stocks have now lost four hundred and sixty five billion dollars in market value in two days as investors cut exposure to lenders from New York to Japan, and now the Federal Reserve is launching an internal probe of its

supervision of SVP. Steve Ratner is chairman of will It Advisors. In terms of the regulatory oversight, yeah, I think. I think there are a lot of groups and entities that are going to have to account for themselves the regulators, where were they? And this stuff by there is hiding in plain sight. If you look at svb's balance sheet, you will see at the end of twenty twenty two they made clear that they had potential mark to market

losses on this portfolio exactly equal to their equity. Will It Advisor's chairman, Steve Radner spoke with David Weston and Romaine Bostick on our daily edition of Wall Street Week. Ratner says it's important the American public regains confidence in smaller regional banks. Will Amy Poe Pelticians are also questioning the lack of regulatory oversight. Tennessee Republican Senator Bill Haggerty tells Bloomberg's Joe Matthew he believes Silicon Valley Bank was

mismanaged and regulators missed it. Where was the San Francisco feed in terms of its regulatory oversight? Where the regulatory agencies to sleep at the wheel? Here was it a management team that was more focused on ESG and cashing out stock than they were in managing their bank. Confidently, there are many many questions to be answered here. And Republican Senator Bill Haggerty was a guest on Bloomberg's sound On, heard weekdays from one to three pm Eastern on Bloomberg Radio.

Here the full interview on the sound On podcast available on Apple's Spotify or anywhere else you get your podcasts. And Karen, the government's emergency backstop of the financial system is also coming under fire. Or billionaire Ken Griffin tells The Financial Times the government should not have intervened to protect depositors. Griffin says, quote, the US is supposed to be a capitalist economy and that's breaking down before our

eyes now. At the same time, Michael Burry appears less concerned the investor made famous by the Big Short film, does not see any true danger at the moment and says the crisis could resolve quickly. Well, they're still concern amy over regional financial firms. Moody says placed First Republic Bank, Western Alliance Bank Corp, Intrust Financial, umb Financial, Zions Bank Corp.

And Comerica on review for downgrade. First Republic, which lost almost three quarters of its value over the past three sessions, is up about twenty four percent in early trading this morning, and the pain being felt by regional banks appears to be benefiting the big banks. We get details now live with Bloomberg's Steve Rappaport. Good Morning Steve, Good Morning Amy,

and Karen wall Street. Heavyweights saw an influx of deposits after the collapse of Silicon Valley Bank and other regional lenders. JP Morgan alone received billions of dollars in recent days, sources tell Bloomberg. Bank of America's Citygroup and Wells Fargo also saw a bump in volume as customers move their money on fierce that the crisis will spread. The domino effect began after sbb he suddenly collapsed last week. It's the biggest US bank failure since the financial crisis of

two thousand and eight. Live in New York. I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, thank you. Well. We've seen historic moves in the treasury market following the downfall of Silicon Valley Bank. We get more on that side of the story from Bloomberg Markets reporter Valerie Titel. Those two year yields have rallied over one hundred basis points in

the last three session. That shift in short term, mister Straits is unlike anything we've seen in the last four decades, including the two thousand and eight financial crisis, the September eleventh terrorist attacks, Black Monday, nineteen eighty seven. This repricing

has been phenomenally quick and brutal. We're now pricing in one hundred basis points of cuts for the Fed out through the arrest of this year, and Bloomberry's Valery Titele says markets predict a federal funds rate around four percent by the end of this year. The next trigger for the bond market is likely only a few hours away. This morning CPI report likely to be a major catalyst and will provide water for predictions on the Fed's next move.

Bloomberg's Michael McKee has more. Following the collapse of Silicon Valley and Signature Banks, investors began repricing Fed rate hikes last week. They anticipated four more, a total of one percent. Now just one move is baked in, and by a small margin, as traders bet concern about the banking system will outweigh worries about inflation. But the Fed can't stop worrying about inflation, and if we get a hot print

for February, markets will likely reprice again. Michael McKey, Bloomberg Daybreak. All right, Mike, thank you. I'll Despite what today's CPI report may show, former Treasury Secretary Larry Summer says it still makes sense for the FED to high rates next week.

My guests would still be that it will be appropriate for the FED to move by twenty five basis points at its meeting next week, though conditions are always subject to change, and former Treasury Secretary Larry's Summers predicts a twenty five basis point hike, but says anything larger would not be sensible. And in Europe today, one of the

biggest names in banking continues to have big problems. Credit sweet says it's identified material weakness in its reporting procedures for the last two financial years and is adopting a remediation plan. Credit Swiez also says outlaws at the bank have continued into this month. Shares are down more than a two percent in Zurich thirty five degrees with a winter storm warning in New York. Time now to look at those stories and more in New York and around

the world with Bloomberg's John Tucker. Good morning, John, hi Amy, Well, how much wintry weather will this nor easter bring to the Tri state area. Bloomberg Meteorologists Rob Carolyn has more on the rain and the snow. John, We're on the backside of this storm system. Most of the precipitation has

fallen in the form of rain. It'll switch over to snow by midday in all locations sitting by the time it's winding down this evening only picking up a coating to under two inches, but some of the suburb north and west of town, particularly across Putnam and Orange County into parts of Fairfield County, could have as much as six inches or more snow from this system. It's also going to be rather windy. We'll see some gusts over thirty five miles an hour as the storm system continues

to intensify to the east of New England. John all Right, Ron, thanks very much. A man who drove a truck down a crowded New York City mike Path, killing eight people, avoided the death penalty after a jury failed to agree on whether he should be executed for the twenty seventeen terror attack. The Manhattan Fellow jury deliberated over two days in the sentencing phase of the case against Syfellows Ssipoff, but said it was unable to reach a unanimous decision.

Donald Trump's former attorney and fixer, Michael Cohen, testified before a Manhattan grand jury investigating the former president's hush payment to adult film star Stormy Daniels. Trump has also been invited to testify before the grand jury, but has no plans to do so, saying this is all politics. Trump's personal attorney, Joe Takapina, called Cohen untrustworthy any legal scholar, including former members of the Federal Election Committee. I've said

there's no crime here. There is absolutely no crime, and we should not be going down a row and went to jail for this crime. Michael Cohen went to jail because he was a liar, convicted perjurer on a lot of things. He pled guilby to something that actually wasn't a crime. Tacopinas spoke on ABC's Good Morning America. Former President Trump said he considers Ronda Santis as his strongest

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Here's Bloomberg's John stash Our. Thanks a mean plenty of player movement opening day of NFL free agency butt things for now, all qualiet on the Aaron Rodgers front and no word of a trade between the Jets and Packers. We don't even know if Rogers wants to continue his playing career. He had said he'd let everyone know sooner rather than later. Giants filled the needed inside linebacker. They signed Bobby a. Karaka, who with Indianapolis one of the

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road trip. So far, two losses, then a win. It ends tonight in Portland. Nets look to make it six wins the last seven games they're at Oklahoma City. The Nets are only one game behind the Knicks for fifth in the East. Rangers host Washington, Devil's host Tampa Bay, and the Islanders visit La NCAA tournament begins with two games in Dayton, Ohio. It begins in earnest On Thursday, World Baseball Classic and Phoenix. A nine run first sitting for the US in a twelve to one route of Canada.

The US needs to beat Columbia tomorrow to reach the quarterfinals. Yankees lost with the Twins one nothing mets over the Marlins nine three three run homers for Thomas Nito. Joe peppertone has passed away at eighty two. Brooklyn native was the Yankee first baseman for most of the nineteen sixties. John stash Allard Bloomberg Sport live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on Sirius, XAM, the Bloomberg Business app, and Bloomberg

dot Com. This is Bloomberg Daybreak. Good Tuesday morning. I'm Amy Morris says. We continue to follow the developments around the collapse of SBB the residual impact on the regional banking sector. We turned out to Bloomberg Intelligence senior analyst Term and Jen, whose focus is regional banks Harmon. Always a pleasure. Thank you for taking the time this morning. What are you seeing in the regional banking sector now? Look, we're seeing a rise in the bank shares pre market

this morning, and that's a great situation. I've always been in the view that yesterday's action was really overblown, given the fact that both SVB and another bank that I follow, Signature Bank, were closed by the regulators. But the entire regional banking sector has been really strong. From a liquidity capital standpoint. We're seeing some pressure from deposits, but that doesn't mean that that should be a solvency or next

central risk. It just means that they're just going to have to deal with some funding issues, which the regulators and the and the Federal Reserve shored up over the weekend with the new liquidity facility. Is what they did over the weekend. Enough? What more do they need to help these smaller banks out? Yeah, I think it's it's very enough. It's a very potent facility where banks can borrow from the FED and use their existing assets to

shore up the liquidity profiled the bank. So it is something that is a solution to what the banks are facing today. Will it? Advisors chairman Steve Radner had told Bloomberg Radio that it's important the American public regains confidence in smaller regional banks. How do they do that? What's the next step? Sure? I think another factor that should shore up the confidence is that the fact that the

depositors at both SVB and Signature were backstopped. Everybody from those two institutions that had deposits within those banks are going to be made whole. And the inference is that if any other banks failed, the regulators would do the same action. Let's look back just a little bit, because before last week, nobody had really heard of Silicon Valley Bank. Has this this has had actually more of a global impact,

So I'm wondering, has this surprised you at all? No. The interesting thing about Silicon Valley Bank is that they are deeply embedded into the Silicon Valley venture capital startup community. So they bank despite being a bank that most people never heard of a week ago, they had very strong relationships and if you asked anybody in Silicon Valley, you know, the CEO of Facebook or Google. Everybody would know who

SVB was, And so that's the issue. They banked a lot of the startups and the technology firms globally, and you've seen some folks come out and be very distressed with the issue. Now it sounds as though you feel like the dust may be settling at this point. But Moodies has placed First Republic, Western Alliance, Interest, Financial, umb Financial, Zions, and Co America all on review for downgrade. Is that does that portend to anything else that you might want

to you know, factor in there. Sure, What the Moody's down grades was looking at was the unrealized losses in the security's portfolio of these banks, which is really one of the reasons that SVB was under so much pressure because they were sitting on a fifteen billion lost position,

much higher than any other bank that I followed. And another factor is the deposit flight that's that the regional banks are seeing today and the fact that some deposits are uninsured, and naturally if you have a portion of your deposits that's uninsured, is over the two hundred and fifty thousand dollars limits, you would be prudent to move that to a different institution. So that's something that I'm aware of that I'm monitoring, and that's something that Moody's

is taking a look at as well. It's actually just about to ask you what you're going to be monitoring and what you're watching for today. Yeah, it's really going to be what we're seeing from a liquidity standpoint. Do the banks come out and talk about more about the stability within their deposit base that that's the number one issue within the banks today. So no more shoes are gonna drop. We're all good now. Well, hopefully we can

live for another day. All right, thank you so much, Bloomberg Intelligent Senior analyst Herman Chan Just one more quick question for you. Got about thirty seconds here and looking back, could anybody have seen this coming? There are a lot of fingers being pointed here. Well, we've written about it. We're talking about deposit flight being an issue. We've talked

about the unrealized losses within the security's portfolio. The trajectory of interest rates has been one of the things that has surprised a lot of people, and the pandemic when rates were so low, a lot of these banks built up their securities portfolio in a bid to sort of raise their their revenues because there was not a lot of lending going on. So now these banks are getting caught off sides of bits with their interest rates mismatch

with their funding. You're listening to Bloomberg Daybreak 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 get your podcasts. You can also listen live each morning starting at five am Wall Street time, on Bloomberg eleven three zero in New York, Bloomberg ninety nine one in Washington, Bloomberg one oh sixty one in Boston,

and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Eleca devices. Just say Alexa play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, Sirius XM Channel one nineteen, the iHeartRadio app, and on Bloomberg dot Com. I'm Amy Morris 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