>> you are watching daybreak:

asia. come into live from new york city and hong kong. >> we are cutting on the market opens in tokyo and seoul. >> u.s. regulators are moving swiftly to ensure depositor money is safe. the dollar weakens, u.s. equity futures climbed. china signals policy stability. >> u.s. futures remounting in the asian session. more measures to support the banking sector. we heard that he will be making all deposits available to depositors on monday. that sent u.s. futures rally. paring back some of those earlier gains of more than a percent.

we are still in positive territory after the s&p 500 almost wiped out all of its gains for the year. the worst weeks in september as volatility rattled. we continue to follow that treasury rally as well as people were really rushing to the safety of bonds but we will be watching the cash open in the next hour to see where yields are going from here. in the friday session we have the two year yield collapsing about 28 basis points. we're even seeing oil prices rebounding after a weekly loss. it all has to do with those macroeconomic pressures. question investors really liking these backstops that have come in the last half-hour. we are seeing aussie stocks come online.

we did see that repressing on friday. let's take a look at what is happening for the rest of the region. we are seeing a little bit of haven trading looking stronger. let's get more from our finance reporter with the latest. we are getting a lot of lines coming through and is very fast paced morning of breaking news. we are hearing a lot when it comes to the regulatory side of things.

does this create a backstop? ? it's have taken their pedal off the panic button. even though it does not resolve everything. the question remains if there will still be contagion for this. what is going to happen next? there are a lot of questions remaining, depositors can have access to their money from monday is a -- is a big piece of news. they have said they will also address any liquidity concerns that come out of this. this is very calming news for markets. the fed has also said this is not a redo of 2008. let's see what detail there is. cuesta bank sector is in the precrisis time.

can you tell us what kind of interest or has been so far? >> the treasury officials in the u.s. were hoping for a very swift process. some of the names that have been linked to the assets include hsbc, lloyds, the boyle group asked by one of the top abu dhabi royals interested in the u.k. assets. it remains to be seen how much interest there really is for all of the assets. the bank had about 209 billion dollars of assets. they also had $179 billion of deposits. >> we are still waiting for the results of the auction which we were told late sunday is when we might get news of a buyer.

we have looked at the market side of things, what happens? >> you have to think about what happens to their staff. they have said branches will open tomorrow. that is obviously a very short-term issue. that is a lot of people that would be out of a job. they had look at in banking and the companies they did fund. they saw themselves as the number one go to bank for tech startups. where did they get that funding? maybe it is time for the big banks to step in. maybe you have to go back to goldman sachs. quick let's turn to the more crypto friendly signature bank being caused by u.s. regulators. what do we know about the latest with the signature bank that would be another hit to the

crypto industry? >> it is a huge hit. this is the collapse of silver gate. this bank had deposits around 23 for the crypto sector. that is is coming in the last 30 minutes or so. they will get access to the crypto assess much the same way they are for this, that is sending some reassurance back to the market. we are seeing crypto tokens climbing in the early asian trading. we are saying that risk aversion starting to dissipate as trading gets underway. it really is a significant crypto player. it was key during the fiat world and also the crypto world. how do we get the money off on and around exchanges?

they are seeing how markets are reacting. we continue to get that reaction as well, they're working with various regulatory authorities to stabilize the banking sector. we are really seeing more broadly that sense of hello to morcom being restored after the u.s. deposits were safe, really creating a new backstop for the banks. let's bring in for a little bit more analysis and context in terms of what we are seeing across border markets. let's start off with what we are seeing with regulators. it has just been extraordinary.

>> the whole situation is this wasn't was supposed to happen. all of the safeguards put in for banks, it is a silicon valley bank is the bank. they are supposed to have liquid assets. in particular, how they hedged the interest rate risk. regulators must be a little bit like here we go again. the hope -- what they are saying is they think the systemic risk is an isolated issue. >> we have seen authorities early going to great pains to make that clear that they will make deposits and be supporting households and businesses, that this is not really a bailout

when it comes to this specific company. how much is it to do with the fact that rates are just rising too fast for these businesses and banks had time to adjust to the new landscape? >> i think that risk really put your finger on the point there. that is the risk that is worrying markets globally. that is why you saw such extreme moves down in bond yields and down his docs on friday. stocks are recovering a little bit this morning because it seems like regulators are on the ball. that concern that the fed was going to break things if it kept on raising rates way it has in the way it was looking to do so, that is the forefront of everybody's minds right now. is this the moment where the fed breaks the economy?

quickstart phil reynolds, -- >> garfield reynolds, thank you. we are watching our other top story which is china's new leadership team under president xi jinping now set with some familiar names surprisingly retaining their positions, a sweeping overhaul of key positions was widely expected let's bring in our chief asian correspondent, stephen engle. what does this retention signal? >> that they want continuity. the four main individuals that will oversee the economy is the man with the main hand on the tiller. you have for individuals, two of them are new and to have been retained. we can bring up the screen and look for the four individuals but it really does point to the need through these times.

whether it is all the shocks to the chinese economy and whether it is to navigate through what will be a new super financial regulator, xi jinping embarks on a campaign to overhaul the regulatory bodies and state institutions with more communist party officials overseeing economic policy. he knows other central bank governors. there is continuity there. he will be paired with a man who has been elevated to buy's premier, a role that was served by the economics are before. perhaps this close confident of

xi jinping will become as weather speculated the party chief of the pboc. he will work in tandem with the governor. he is not a senior commons party official, more of a technocrat and an academic but with those international credentials. they can perhaps work as a tandem. on the left of the screen is the new premier there. we will hear more from him today. we will get more of a measure of what kind of man he will be. continuity is key here as china embarks on this regulatory reform on the financial sector. >> stephen engle there, let's get to vonnie quinn with the first word headlines. >> the biden administration is

getting to prepare with more restrictions. sources say the u.s. government has briefed local companies and the new rules may be announced next month. the plan which may double the amount of machines that need special licenses before shipment could create pressure obstacles for equipment makers. it is part of an ongoing effort to hamper the advanced semiconductor industry in beijing. an outbreak in china of influenza has intensified with infections rising. they are prepared to enforce pandemic style lockdowns with school and business closures to curb infections. the chinese center for disease control and prevention says the positivity rate for flues jumped to about 42% last week from 25% the week before. taking more steps to bring back investor confidence. it is complete with a full prepayment of shabbat funding. weeks before its deadline. this financed the acquisition,

they have been repaying borrowers ever since short seller accused of fraud and triggered a $100 million wipeout in shares. india's government has opposed giving legal recognition to same-sex marriages in a landmark era starting monday. the outcome of the case is being closely watched in thailand, japan and south korea are similar debates are gaining momentum. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> breaking news, we will be hearing from president biden later today, addressing congress on how the resolution happened on the silken valley bank. this according to the washington post saying the biden administration ovi briefing congress tonight. this as u.s. financial

regulators move on the sunday to protect deposit funds following the collapse. they also set up any financial backstop and they are seeking to stem fears. we have seen constant rhetoric coming from the administration that the bank sector is more resilient than in 2008 and that they will make sure businesses are supported. we have seen the market reaction already with u.s. futures jumping. coming from regulators to brief congress tonight according to the washington post. you can follow all the latest develop it's on this. you can give commentary and analysis and get it from bloomberg's expert editors. this is bloomberg. ♪

>> let's take a look. we have been watching a lot of these stocks trading asia. we are 20 minutes into the session here in sydney. here are some of the related stocks. 12.1 8 million in global cash reserves are being held. 6.1 million in deposits being

held there. the cash equivalent of 95 million. some of the others we are washing when it comes to their exposure, 1.2 million, we continue to watch the fallout but when you take a look at the collective sigh of relief after it was declared depositors would have access to all money on monday, essentially an emergency bank funding project being there as well. there is a broad sense we will be heading into monday's session with a bit of relief. the fallout is likely to cause them to air on the side of caution. let me start off quickly with your reaction to what we are seeing from the collective of u.s. regulators just over the past hour or so.

give us your take on the steps that have been taken, the market reaction and whether this truly contains the fear of contagion going forward. >> i am relieved to see that on this together. the actions will stave off more and more fears of contagion. the problems will because of the big mismatch. it was a relief to see the markets proceeding without this crisis being thrown into the mix. >> we are also getting some lines out from the fed. officials briefing the media when it comes to this bank funding program. it is big enough to cover all u.s. uninsured deposits.

the new facility is designed to prevent treasury fire sales. it is acting as a lender last result. measures have taken to dramatically reduce a reason to run from the banks. we keep hearing this is not 2008. this is not the equivalency here. the funds are not being bailed out, it is for the protection of depositors. how do you perceive this? this wording and the need to differentiate by authorities and what they are doing? >> the fed task is very clear and they have made it very clear they are fighting inflation. the speed at which interest rates have gone up have been difficult for many businesses to adjust to. in this case, it was seemingly quick imprudent to have such a

large long-duration bond portfolio. even with the treasury credit. it is very susceptible to interest rates. it was pretty clear the fed was increasing interest rates. it was a mismatch that will make you think about whether the risk there was done in as prudent a matter as it should have been. the fed reaction -- the fed is very -- the fed is very considerate about what to do next. they'll have increases from 25 to 75 because elation numbers have come down. even though the latest employment hours were quiet strong, there were signs of wage inflation which the last three months were analyzed to be about 3.6%. there is some improvement that

seems to be continuing on the inflation. as far as the fed goes, i think they have seen it is important to keep up interest rate increases and perhaps only one or two more basis point increases. it also depends on the cpi numbers coming out this week. my best guess is that the guarantee of a deposit allows them to proceed with what they have been doing all along which is to maintain a strong stance against inflation. >> what is the take away investors? especially when you watch markets like asia where they fell in sympathy? we are seeing the pain start to move from smaller risk factors. perhaps even bigger companies. that realization and that fear of contagion that we would see more downside for more risk assets across smaller economies? >> is an excellent question. we have moved away from decades

of near zero interest rates because of low inflation to a new time where inflation is going up. companies working more on the margin are more sensitive to interest rate increases. when we look to investing copies, we look at company was up -- company's with a long track record of operations and to our compounding value on their own. many of these external interruptions, they have dealt with these prices before. they know how to deal with them and take opportunities to expand market share or even by competitors because they are very strong financially. this is just a way for us to get into position. as long as it is not a contagion as might have been the case with

this bankruptcy, it actually helps businesses like us to help navigate the markets. >> we will have to leave it there. this is bloomberg. ♪

>> take a look at what we are seeing, that staggered session still single a bit of a downside. a little bit more limited when it comes to the anxiety we have seen. ce

>> we are getting the latest say

100% of reserves are safe and secure. they do pledge to cover and ensure that they will not be able to process minting and they will have a new transaction bank partner. we will be watching the crypto space very closely as well. >> that is right. how will they be able to get money on and off exchanges?

you can still see those u.s. futures holding onto their gains, more detail here. the fed saying this is a reason to not have any sort of treasury and they also want to dramatically reduce the reasons to run from banks. we have started to see aussie stocks become negative. it does still tell us there are some reverberations through the market. let's look at the sectors in particular. you can see the biggest losses are coming through in the tech space. the question is how will these tech players get access to their funding? it was a keybank and access from other parts of the world including asia. we are seeing financials. still gaining a little bit.

.2 cents. it comes down to that backstop. a lot more to play out on the story. >> a lot happening today. is there anything specific catching your attention? >> it is looking like when japan opens up, we will see the treasury curve steepen. this is around the fed not being able to do what he thought it might have been able to do. our markets have priced out about 50 basis points worth of rate hikes. from the current level, it is 25. not to say the inflation fight is over.

it relegated to strong jobs report on friday. a further complication here just to bring that up is that the fed is in a blackout. we won't get any further indications about what the inflation report might show. you are seeing that very pronounced in these markets. it is looking like short, dated yields will continue to fall. we will see what happens. that is fairly consistent with the 50 basis point hike. that is a stronger one moving forward. all of these announcements you guys have been talking about the last 90 minutes or so, it is targeted to save depositors. not to save investors.

just give it -- and regulators, so far. does this come with broader systemic risks when it comes to the impact of higher interest rates? do you see this is being contained because of what -- a lot of what happened seems quiet idiosyncratic to its case. >> these are great questions. there was a lot of dig in on here. i think the treasury, ftse and fed working together to keep depositors held is something that could stem a potential tide of further bank runs the week ahead.

ensuring signature bank, another primitive move. keeping those depositors at signature could be very critical. they would have loved to have found a buyer but without that, they stepped in to ensure above that $250,000 threshold to guarantee that all depositors will be kept whole. >> jason, is this the end of the huge amount of negative risks facing the market at the moment? are you watching the outcome of the auction it comes to the next steps and butter questions into what happens now going forward for funding of the vc tech and

niche business they had established? >> the silken valley bank really important in the tech industry. there was the bank you banked with based in austin, texas. companies very worried about it. this is the big tech program at sxsw, they spoke yesterday about these topics, the funding and running of a startup at a time of economic uncertainty. it was really the tensions here palpable for people working in tech and of course, not just in the u.s., silicon valley bank, other locations outside the u.s. where they had deposits and funding, all of these things, major risks to tech which is already under pressure and now, there is a question, there is

never just one cockroach that we have seen several banks here fall. silver gate, signature, all tied to tech and silver gate and signature tied to crypto. that is already under lots of pressure. the question is how many other banks are there that could still have problems despite the fed's moves today? they would have taken such extreme measures to prevent other backgrounds and failures as banks mike be forced to market treasuries. that is the question. what else is there? of course, equity and insecure debtholders will not be made whole. >> also, how did we get here? u.s. authorities are coming out right now and trying to emphasize this is not 2008, that the banking industry is much more resilient than back then. and yet we continue to see risks stem from parts that we did not

think could happen. are we going to see more scrutiny from here on out? >> since we are talking about the silicon valley bank, let's invoke a saying that people in silken valley can use which is move fast and break things. while people nobly think this happens in tech and that is a mantra for many tech companies, the fed needs to be careful because the fed should not move fast and break things and we now see the rapid move in interest rates can break things. banks that are holding treasuries, forced to market, they are going to have a shortfall and if customers are highly concentrated in an industry that is under pressure, already having cash flow issues like crypto, like tech, they are going to be forced to try to cover those shortfalls. this is where we find the problem compounds.

today's statement should still restore general confidence in the u.s. banking system. >> does that mean we will see the fed slow down or at least not to as much as was expected before? >> they don't want to move fast and break things. they are probably thinking very hard about how much they're going to raise interest rates. we don't have all the pieces of the puzzle to answer the questions of what comes next. we will get the cpi report for the month of february and we are likely to see your on your rates still be very high and well above the fed's 2% target. >> good to have you with us on a year of -- a year full of news. let's get to vonnie quinn with the first word headlines. >> china has reappointed several

top economic officials at the national people's congress. the pboc governor will remain at the post as well as the finance and commerce ministers. the general is unanimously appointed. he received the most no votes. the biden administration's is said to be preparing more restrictions on the exporting of chipmaking year to china. the plan which may double the amount of machines that need special licenses before shipment could create fresh obstacles for equipment makers. it is part of an ongoing effort for an advanced semiconductor industry. adani group is taking more steps. it has completed a full prepayment of shares worth one point finally dollars weeks before its deadline.

this finance the acquisition. they have triggered a $1 billion wipeout of his shares. global news, powered by more than 2700 journalists and analysts. i am vonnie quinn and this is bloomberg. >> the boj is keeping policy unchanged and this has made markets a key short-term driver. we have more on the news that we have seen. this is bloomberg. ♪ when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow.

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here are some of the stories we are watching. take a look at the moves we are seeing. we are seeing some to mad when it comes to the japanese currency as a drop in the u.s. dollar as we saw that move when it comes to the u.s. yields as well. some of the anxiety dying down in this market. also, the locations we saw with the bank of japan decision as expected, no major change when it comes to policy for the last meeting shared by governor kuroda. so far we have seen an extension of gains in the japanese currency. about a percent against the u.s. dollar. traders are seeing that -- to safety with all the turmoil we

have seen over here. this is governor kuroda's last meeting at the bank of japan. let's discuss the trajectory for policy and the end. he previously served as japan's minister. always good to have you with us. thank you for your time. we are seeing a very volatile day in the markets. we are seeing a big push up for the japanese yen. given the uncertainties globally now and the banking sector here in the u.s., what is the projection of the trajectory for the japanese this year? >> the japanese yen will probably be about 120. probably by the end of the year

it will be really close to the 120 level. >> it is become of expectations we are going to see a policy change when it comes to the humming of where the boj went question mark where could we see that? how will this do with results next week? >> for the time being, i think we are at the back end of the policy. it is expected japanese economy could overshoot to the end of the year or next year. if that happens we may shift too tight in the monetary policy. that could happen sometime next year.

question much more impact? is it really more with what the fed does and questions over with the fed does with the collapse here? does the fed or boj have more control over where the fed comes here? >> what is happening is probably the result of the jank -- bank of japan policies. >> as i said, it will probably go there in short time. >> do you assume that it would take a couple of months to settle into the role? would this be something a little bit more significant in terms of the start of any kind of meaningful policy change?

>> i don't think he will make any major policy change. the path has been taken before. there won't be any surprise for some time i think. >> if we don't see any chance for some time, are you concerned about the market functioning? we have been talking about the dysfunction given this very long qe in previous administrations and governors. >> i don't think there would be any problem with the market, i think they are continuing what has been done and i think the market would go along.

similarly. >> what you did the biggest change japan needs right now is? >> what do you mean by that? for the economy, for growth, for the future >> ethic the economy has been doing very well. i don't expect any major problems facing the japanese economy at this moment. i am quiet relaxed with the path the japanese economy has been following. up to now and probably for the near future.

>> always great to have you with us. this is what we are looking when it looks to the future session as we see continued implications for downside when the start of cash trading begins. we saw both diversified banks and regional banks following by 5.5% in the friday session. we will see how that anxiety is dispelled. we have seen some dramatic moves when it comes to the u.s. releasing deposits are safe. we have created this new backstop. these actions will not fully protect deposit money from them seeking to limit the impact of the fallout and creating protection. we will see if that trickles through to sentiment for the

banks. we did see asian bancshares really falling reaction to the crisis. bloomberg intelligence really seeing that the region faces limited contagion we have more diverse customers here and asset quality is improving as well across asia. we are also looking at signature bank up next. we take a look at the impact on the crypto world. this is bloomberg. ♪

>> let's get more on the winding up location of the collapse. they have closed down signature bank. a key remedial every between crypto and fiat currency. we are hearing that the ftse is setting up signature bridge bank. tell us a little bit about the potential impact on the broader crypto space. we are really going to need another hint to that industry. >> indeed, you are right.

the common link between all of this is a crypto transaction provider. this was a payment transaction pipeline which allows crypto companies to invest through these -- it is very important this is the finance road and the crypto world. this is going to be a big hit. this is one such bank that went down.

where they put their money? this is related to the digital world. it could get more and more difficult for the investors in the crypto world. that is how the market was reacting over the weekend. the collapse led to major stablecoin issues. a lot of things happening in the crypto world. we are seeing a lot of questions to be answered.

class we will be watching many of those sectors related to the crypto space as well as making when the markets opened. asian financial stocks also may move after u.s. financial regulators move to ensure all depositors that the money is safe. we are also watching the biden administration working to further tighten restrictions on the export of semiconductor manufacturing here. ♪ the market opens in korea and japan are next. this is bloomberg. ♪

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>> the reaction across asia coming from the u.s. regulators scrounging to contain the fallout from the collapse of here. yes those u.s. futures rebounding from all of the action including protecting all of the depositor funds. we are here from president biden himself, speaking about the situation monday morning. >> this made such a big difference when it came to market sentiment and cutting some of that negativity. what does this mean when it comes to the fed trajectory? let's go straight to annabelle. >> we have the open of japan and at the start of the day's trading, we are looking risk off

across the board. this is the reaction we are getting to the fallout spreading. we do have depositors that will have all of the access through monday and that has proved to be a little bit of a backstop. at least for u.s. futures. we do have bank stocks brought the coming online. keeping that in perspective with japan, we did see that starting on friday. the focus on tech, where the funding will come from, given the news very much settling on investors. we will be watching how the tech space fares. you can see that underperformance there on the board because we.

we did see them abandoning the take. it is still a little bit of movement coming through. we see that yen moving higher likewise. perhaps a little bit more risk appetite coming back into the session. we did see the kospi trading, keeping in mind we have those numbers coming through in terms of what we are getting for trade data imports. they rose 2.7% year-over-year in the first 10 days of the month. we are also watching for exports. that was a big drop. it is a bellwether for the global economy. that is not a great -- let's change on now. we do see the asx 200 turning negative and the financials index is down .9%.

that is slumping. a lot of focus coming through. we have treasuries coming online. that is down six basis points. the 10 year yield is up five basis concern around the fed and the last one of the rate hiking cycle. those appear to be weakening and this is really the key focus with them. u.s. financial regulators are seeking to show all depositors their money is safe. we are seeing so much messaging from the breadth of federal regulators as well as state regulators when it comes to signature bank as well. >> what is the messaging? there's been a lot of effort.

>> this is about the strongest thing they could have done today. by putting a blanket guarantee to all of the depositors. on monday morning, didn't want to be pushing another handful of banks over the line. the treasury may clear today. they do identify other banks that are in what appears to be a similar situation and signature. basically they are trying to nip

in the bud what might have been a systemic event if the runs had spread to other banks. that is a pre-big step. you mentioned 2008. they said it is very different. i think that is of the judgment on a couple of points. the big banks, the strategic -- systemically important ones, it is true, much better capitalized. they are much more liquid than they were going into the financial crisis. that is a huge advantage. not for shareholders, not for bondholders, this is very

different than the kind of intervention back into thousand eight. quick there was christopher there with the latest on when it comes to the fallout around here. let's discuss where we are seeing the biggest impact in asian trading. what are you seeing? >> it is interesting when you take a look. we are five minutes into the session. we are seeing the likes of industrials, financials, real estate. we are keeping a particular watch on what we see in the i.t. space. it already fell more than 6% on friday. it is about how exposed these

asian tech giants are. also, as a key gateway for funding into the u.s. since that is something tech leaders in this part of the world will be really trying to assess today and through the rest of the week. >> watching the moves in the yen, it has been quiet interesting throughout this morning of breaking news. >> that is right. when you look at the different haven assets, we are seeing this particular treasuries at the longer run. there is a lot of concern here on the market and the outlook for fed rate hikes. they have been discussing those jobs embers that came through stronger-than-expected. still, you see what came through in terms of this. there needs to be an assessment

of financial conditions, deterioration piercing there. we are seeing that expectation of a 50 basis point hike that is being downgraded to around 33% chance of that happening. >> we are also watching for lines coming out of country garden. a chinese developer announcing 11 or profit of one billion you on to 3 billion you want. we have been watching when it comes to the national people's congress between sessions going on in beijing. there's been a housing stimulus and more policy measures. there is limited room for more housing stimulus. the property market remains a major growth overhang when it comes to china's economic growth and rebound prospects as the country comes out of covid.

they are being supported by the international credit line of about 300 billion yuan. the group maintaining a stable financial level and upper luminary net loss of 5.5 billion yuan. all the way up to 7.5 billion yuan. >> harold, always good to have you with us. there was a market stabilization steps if needed. the finance ministry is coming out and saying the financial market volatility and uncertainty has risen. in this environment, how confident are you about the global growth story? >> there is a lot going on.

the impact on markets should be limited. the process is being supported in the u.s.. you are right. although the talk in asia has been about the china reopening, the two markets that have done the best since the beginning of the year are korea and taiwan. that is not because of the opening of china. that is because global growth has been stronger than anticipated. last week's labor data is just another confirmation that the economy is doing very well. europe's ashlee holding up better than expected as well. that has been the key driver of asian markets. there is uncertainty around fed policy path. where are the opportunities in this environment?

>> bond yields have risen because the expectations might have to be more than what markets work anticipating. we have a new governor coming there. we are talking about this in detail. a lot of moving thoughts. i think chinese equities look really attractive. you have a recovery coming through. there is a recovery coming through. most asian investors are really well-positioned. global investors have not joined yet. we might see this global investors coming in through the market as well. think about the beginning of the year. i think it value starts to emerge there.

thailand could be interesting. if tourism numbers come back, it is another. to the point of how the market is repricing what we are seeing for the next meetings, that to yield -- two year yield on the back these prices, much of this depends on how inflation comes in including the data points we get this weekend how markets decide what is happening with the broader contagion story, how it will move fed expectations. in the meantime, everything that has happened over the past week, has it changed your preference when it comes to how you build the portfolio and how you view rate sensitive stocks and asian financials given the scenario when it comes to asian banks as quiet different to what we are

seeing at svp and some of these associated lenders? >> a lot of asian financials are dependent on what happens on u.s. bond yields. if they move up, it is ashlee good for them. we will be trying to move out of these asian banks because -- we have seen some of the numbers coming through the u.s. meaning we will have more interest rate increases than what we anticipated than the very beginning of the year, bond yields have moved higher as well. the tech sector in asia. we have to balance that out. we have to be adjusted. i think throughout this year, we will see fed rates -- fed bond rates go lower.

>> you mentioned china and the opportunities. it is interesting because the narrative there is the low hanging fruit has been picked. some of the easier exposure traits have already been done. there was not really a new catalyst coming out. if anything, the messaging when it comes to the personnel shift has been continuity. >> you are absolutely right. a lot of that is being repriced in. the reopening to a large extent is priced in. we have no need to see confirmation. that gives a little bit of a catalyst to the markets. i think that is not really what i am looking for. i am looking for particular themes. we know the chinese will continue to focus on certain

industries to create self-sufficiency, that is food, energy, you talk about renewables here. semiconductors. you want to look at those parts of the industries. they don't have to dilute existing investors. that is the kind of approach you take. we want to build exposures. that longer-term growth story that needs to unfold in china where we find still good opportunities. >> always great to have you with us. let's get you back to focus on the movers. it is interesting we are seeing the movie and the korean won. some of these risk proxies --

this is the short end of treasuries. >> that is right, it is difficult to judge markets. we are seeing the unbalanced risk aversion coming through in the market. a group of stocks watching at particular. we have that stock plunging the most since early 2020 year. this is what we have been tracking over the past couple of weeks. we are seeing that two year yield here.

just less than a week ago, that was around 107 basis points of difference. this is the outlook for fed rate hikes. you can take a look at the expectations for whether we will see a 50 basis point move at the march meeting. this is another indication of where we would be facing with other lenders. including first republic. that is talking to the depositors about this. the biden administration is said to be preparing more stringent

on the export of chipmaking your to china. sources say the new rules may be announced next month. the plan which may double the number of machines that need special licenses before shipment could create fresh obstacles for equipment makers. it is part of an ongoing effort by washington to an provisions development of the advanced semiconductor industry. taking steps to bring back investors. the law office of the finance the acquisition of family just a mess. they triggered 100 billion other wipeout in the shares. an influenza outbreak in china has intensified with infections rising for six the week.

positivity rates per flu jumped to about 42% last week from 25% the week before. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. quick steelhead, more on the fallout. will assess the risks and what regulators could be focusing on. details coming up.

>> china's new leadership team present she is now set with some familiar names surprisingly retaining their editions. among this caps on was the pboc governor.

keeping on this, what does this signify in terms of consistent policy going forward? >> we expect him to step aside and have a new appointment because they are at that mandatory retirement age of 65. the finance minister also expected to step aside. perhaps this is the ability to navigate china through what will be some challenging times ahead as they launch this soup regular further -- regulator for the financial sector. this will be folded into a larger financial regular.

there are the challenges that still ahead of china as they come out of this covid zero economy and also the regulatory crackdowns we have seen over the last three in particular in the property sector. and there is the u.s. china difficulties right now. this is a known entity around the world. he is an academic, technocrat, a fairly bullish or i should say market friendly. he is an english speaker. he is essentially not a senior communist party official. that is why it is a bit of a surprise. everything we have been talking about all last week is that xi jinping will have put his close confidantes, his close aides as well as senior party officials in possessions of power. it does not mean that he will have discovered all five-year term but at least for right now, it adds continuity to policy at a time of potential turbulence.

the other individuals we saw on the left side of the screen, that was why the expected and it was confirmed on saturday that he will be the premier and he will be speaking later today at the end of the npc press conference. he has not had a central government position. he has either been governor or party chief in shanghai or xiao sue. we will have to see if he is up to the task for a more national position. >> xi jinping will speak at the closing session. are you expecting much? >> i am not expecting much. it will be more ceremonial. you never know. you never know with xi jinping. the advisory body to the national people's congress, he was fairly combative and listed united states by name for a

number of the problems and challenges and struggles with that relationship. we will have to see what xi jinping says. i will assume this will be today for lee chung to answer questions. he will answer questions from local and domestic international media today. xi jinping will give a speech to close up the national people's congress. has anyone guessed what they might say question mark -- say? >> there is a lot to catch up on today. bloomberg subscribers on the terminals, it is also on the mobile and the bloomberg. you just get the news on the industries and assets. ♪

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haidi: take a look at european futures opening up for trading. we see a mixed picture across asia. a bit of respite when it comes to some of these financials and banks, as we see u.s. regulators moving into ensure the protection of svb depositors, creating a backstop. european futures just a little bit in positive -- let's call it flat when the collateral euro stoxx 50 futures. msci europe is up 1.6%. dax futures are looking a bit focused on the positive side after we saw earlier, downside sentiment following the

annabelle: i am annabelle droulers here with a check on market and we have had the fed and other u.s. regulators stepping in to provide a backstop to svb, assuring that all that depositors would receive their money back. that helps turnaround market sentiment. but again, we are still getting more reaction, through, given that we had that the stronger-than-expected jobs numbers. that could have solidified a bigger fed rate hike. but we are getting repricing action. whether they will be forced to pause after the weather 25 basis points is better than the 50-basis point hike. inflation numbers due tuesday. . if they coming harder than expected, traders will have to decide what that means for the outlook for rights in the months ahead. and off that investors are bracing for further volatility. the vix index spiking, already rose on friday. also seeing volatility expected for the nikkei in korea and the japanese yen, which again this

morning is being bid. it's about the retreat into havens. when you move on to the broader gmm function, we are seeing a lot of moves lower in bond yields. it follows the move in the 2-year yield, down around basis -- around 10 basis points. is on the expectation of what the fed will do in its march meeting. you look around at other asset classes, the south korean won is trading higher even though regard trade data showing that exports slumped in the first 10 days of the month. now 16.2%. that is a bellwether for the global economy, so not a great indicator. likewise in equities, they are weaker across-the-board. let's bring up the imap function and see which sectors are faring worse than others in particular. again, it is terry broad- -- very broad-based. every single sector is in the

red. industrials feeling that followed, financials lower, also i.t. stocks. that is one to watch, given there are concerns around access to financing. ha alli of this, and thendi -- all of this, and we still have the closure of the national party congress to be assessing. haidi: giving investors a greater perception of continuity. joining us now is scott kennedy, senior advisor and trustee chair in the chinese business and economics at cssis. not surprising that all of this is centered on the cementing of xi as the party. it's all down to one man. but this one man has a lot of challenges the it the threat of a spill over into conflict with the u.s., structural drugs only

growth and perhaps a domestic crisis in confidence. is that why we have seen him stick to the continuity of candidates? >> scott: certainly, as with the 20th party congress in october, what we have seen in the last week in beijing, with the 14th national people's congress is the cementing of xi jinping's centrality in the political system and the country moving in the direction he wants. the people he kept on, which was almost half of ministers of that rank in the cabinet, were people he had already appointed, who were doing the job he wanted, and china is facing significant headwinds domestically and internationally . so he saw no reason to change course. so we are likely to see china move in the direction it has been going. no fundamental readjustments. if you are happy with what xi

has done in the last decade and you are thrilled with where he is going, if you are concerned about where china is going, you have no reason to become more reassured. haidi: let's tackle each of those challenges one by one. starting with the perceived domestic crisis of confidence and how the broader populace is feeling. as tends to be the case over a century of hurt for the chinese people, if you take a look back in history, these things tend to be forgiven. do you think that crisis is over now that the economy is rebounding and the economy went better than expected in terms of the rebound in covid cases? scott: it depends from what perspective you're looking at. from the people i have met and talked to in china in different cities, they suffered dramatically in the last few years as a result of the lockdowns and also the way in which china left zero covid, with basically zero preparations. we still don't know the full extent of those costs.

yes, people are happy that zero covid and the pandemic are done. they want to the economy to revive again. they want to travel internationally again. they don't one politics in their daily lives. it will take some time to see what happens with consumption numbers and private investment, not just growth, private investment. those will be the two best indicators of whether at the domestic level, xi jinping has restored confidence in his leadership. shery: private investment and also foreign direct investment, right? how much confidence has beijing been able to project to the world? scott: certainly they have sent two different signals at the same time. on the one hand economically, opening some sectors to foreign investment, shrinking the negative list. they will be hosting a group of multinational ceos for the first

time in a few weeks at the china development forum. at the same time you heard from xi jinping nationally as well as foreign minister qigong that the u.s. is at the center of what is wrong in the world and that china will stand tough on a lot of issues including taiwan. so you will see what of those things and that creates a high sense of risk. and companies are adjusting for those challenges. shery: when it comes to american pressure on china, what is the danger of going into a crisis with this power being very much focused on president xi jinping? scott: xi jinping is now the chairman of everything. everything that goes right in china he can take credit for. if things go wrong domestically or in relation with the rest of the world, it's on his shoulders. he can't escape responsibility. china, for all of the criticisms it has of the united states and

its alliance system and dependence on its technology and dollar, its growth the last 50 years has depended heavily on maintaining open ties with the rest of the world. so being able to balance that relationship to keep it from going off the rails will be up to him. in many ways the ball is in his court to figure out a way to find a path towards peaceful coexistence with the west. and if he doesn't, he will take a lot of the blame domestically and from the rest of the world. haidi: scott, the demographics, the structural drags all growth is always an ongoing problem for china. does the inability potentially to solve those problems have any impact on the social contract that we were talking about earlier? scott: sure. chinese people understand the countries not going to grow as fast as it had been. the math will not work that way.

but they want a high-quality life. they want the quality of life for their kids. clean air. health, et cetera, and he has to deliver on that. demographics is a monster pressure. he can address some of that if he wants to open up to immigration and also to raise the retirement age. there are some things you can do which people would like, and some things to solve problems which raise pressure. he has to implement income taxes. so to get a future that is good for china, in some ways, it is going to have to satisfy people's needs. in some ways, he will have to push and do some things which are not very appealing. shery: scott kennedy, thank you

so much for your time. in our latest mliv survey, china's relationship with russia is the biggest wildcard risk markets. our chief china markets correspondent sofia horta e costa joins us now. what a day to be waiting until the market opens. sofia: this was a really interesting mliv survey that we did last week in the middle of the signals your test was talking about coming out of aging and the npc. the increasing focus on xi's ties with russia at a time when he is consolidating power is emerging as a top wildcard risk for markets right now. also, it is interesting to see how chinese markets have done. the msci china index was up 18% for the year in january, and now it is down. investors are kind of giving up on the reopening trade and focusing on the risks out there, that is geopolitics relations

with the u.s., relations with russia. and any policies coming out of beijing with xi surrounding himself with allies, and unopposed leadership was also one that was mentioned. haidi: our chief china markets correspondent sofia horta e costa there with the latest. let's get to vonnie quinn with the first word headlines. vonnie: u.s. financial regulators have moved to protect depositors' fans following the collapse of silicon valley bank. janet yellen says the new financial backstop will protect all depositors and they will have access to their money starting monday. and the fed is creating a new program that offers loans to banks under easier terms than. . typically provided the biden administration is said to be preparing more restrictions on exports of chipmaking gear to china. the administration has briefed local companies that new rules may be announced next month. the plan may double the amount of machines that need licenses

before shipment, is part of an ongoing effort by washington to hamper beijing's development of an advanced semiconductor industry. india's government has proposed legalization of same-sex marriage. in its court filing, the more the administration has said marriage is expected only between a man and woman, and that any deviation can only be voted on by lawmakers, not ruled by courts. the outcome of the case is being watched by countries like thailand and south korea were such debates are gaining momentum. davos powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. shery: coming up next, more on as we be's followed around the globe -- more on svb's followed around the globe. this is bloomberg. ♪

>> we are certainly not looking, and the reforms that have been put in place means that we are not going to do that again. that we are concerned about depositors and we are focused on trying to meet their needs. >> we cannot ignore the collapse of the silicon valley bank. i will consider with the finance and economy ministers in the back of his world, whether or not actions are necessary to

assist israeli companies in distress. haidi: some key voices reacting to silicon valley bank's collapse. that get more of the latest which comes to svb's fall out. it has been the last couple of hours in terms of development from u.s. regulators. i guess on the spectrum of what they could have done, this was a very big spain being sent. sally: yes. what was missing was exactly what the fate of silicon valley bank will be. there was an auction process that started over the weekend. that did not come to any particular concrete conclusion today will be expected that there would be a bid. not a great sign for finding a buyer for silicon valley bank. but the news everybody was looking for was whether the bank procession depositors both insured and uninsured, would be

covered, and the regulators came out today and said they would. in silicon valley bank's case, it is important because it has 170 billion dollars in deposits, but 90% of those are not insured. shery: tell us about the fed's emergency lending program. that in itself showed how concerned the authorities were about a real systemic risk. sally: absolutely. they are almost saying that the scope is hard for this program. it is a bank term lending program that will offer loans to banks under easier terms and they can use this to protect uninsured deposits. beneficial's are saying that this will cover the u.s. ranking system. so who knows what kind of scope that is. whether this is enough is also a big question. the issues that silicon valley bank and at signature bank, they are pervasive in a lot of other

regional lenders. so will this system, this backstop, willie year left to cover the broader system that is not just limited to these two banks? that is another hugely important question everyone has. shery: bloomberg sally bakewell there with the latest on the fallout of svb, really trying to gauge what authorities in the u.s. will do in order to contain the risks. let's now turn to bloomberg's mark cudmore for more on the market reaction. mark, we saw a decidedly positive reaction from the markets. u.s. futures rebounding, asian stocks being supported. is this really a positive development when it comes to the markets? and where do we go from here? mark: this has been a massive step by the fed. he has acted really aggressively on financial stability risks. i think at the moment we are seeing yields have come down a lot because they have made treasuries more valuable.

they basically said to banks in the u.s. that if you're bonds are trading only on the $.60 on the dollar, we will give you liquidity that is a hundred cents on the dollar. we will see yields at the front end later today because once people register that the fed has removed the contagion risk here, depositors have not only be made whole, but since first thing monday morning, and on top of that we now have this emergency bank lending program which covers all other depositors and other banks at their. certainly the banking system is safe. that was the concern for the weekend. i think the markets have not fully registered that because it means the fed can go back to focusing on the price risk, on the inflation part of it. that means 50 basis points may not be entirely off the table in march. i expected will be 25 basis point, but it is more likely to be 50 than zero. what that means for the market is the eels are likely to bones

quite hard later on this week, probably later on today. i expect they are down 11 or 12 basis points in this session, and they may finish higher later today. a complete reversal in yields. that short-term reaction i think is not correct. well this has been very good news for equities, once yields start trading higher again and people realize that things are breaking the margin from tightening policy, the fed is not going to back down on hiking rates. i think the backdrop on u.s. stocks will continue to deteriorate. medium-term, the u.s. equity market is still in a bear market. that has not changed. ultimately the story for yields is higher yields ahead. haidi: it is really interesting the way you have put the fact that we have the backstop, and what it means in terms of freeing up the fed. what about the other issues that are not solved by this the fact that we could see smaller banks and regional, there are concerns about what it means for startups

and broader tech and great-sensitive businesses. does this give the fed pause about how quickly they can continue to tighten? mark: so there are three different questions. . just quickly, i think the tech sector will be really scarred by this. that will be a long-term problem. we are in the long-term equity dry up for the tech sector. easy money is gone. rates have gone higher. they just had a major blow for a lot of the funders. that will be a drag on the u.s. economy over the next 18 months which is why i think u.s. stocks are in a bear market. and u.s. tech stocks are still expensive. what does this mean for other banks? look, small banks going to fold in the u.s. at various times. silicon valley bank was a big bank and that is what it was problematic, very important for the key sector. but there are small regional banks, while such an atrocity

for the local community, it is not going to derail the fed. ultimately the emergency bank lending program make that much less likely. these banks are much safer now than they were a week ago, i think that is what people don't realize. everyone is getting worried about the risks. but the fed has put out a bailout program and said stop worrying so much. that is more of an issue. i have actually forgotten what the third question is. [laughs] haidi: [laughs] shery: hyvee, what was the third question? haidi: i have forgotten what third question. it has been that kind of morning, sherry. shery: that is the question, right? what can the fed do without creating another issue? how does the fed and navigate this especially when going into the fomc? mark: we know that things will break in a tightening cycle,

this happens in every single tightening cycle. what we have been focused on is that parts of the economy will break. we knew some of the speculative sectors like for example many companies in crypto would go down. the speculative tech sector will go down. what we were worried about is what we were not anticipating, and we did not anticipate silicon valley bank to go from not being on the rater, to defaulting in the space of 48 hours. that is one of the things that will break. what has been impressive is how quickly the fed and the treasury reacted. they didn't dillydally, they learned their lessons from the gfc and they came in quickly and said stop worrying about financial stability. we have got that covered. everyone needs to focus on the price risk, which we don't have covered. the fed said today, we are on top of the financial stability problem. sure, some local banks, by the

systemic risk is just not there. haidi: mark cudmore, always great to chat with you there. you can tune into bloomberg radio to hear more from the latest day's newsmakers. we are broadcasting live from the city in hong kong. you can listen via the app, radio+, or bloombergradio.com. this is bloomberg. ♪ for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready

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shery: take a look at how crypto-currencies are trading at the moment. we are seeing the risk-on follow-through into the crypto markets. this quench anything as much as 6% in one point that would give it the most in the market, this coming at a time when u.s. regulators have scrambled to contain the followed from the collapse of svb. we have seen moves to backstop banks, including what is happening at signature bank. really trying to shore up confidence in some of those names when it comes to those banks in the banking system. but of course, the big question is how much of this will really help. some are saying the fed's emergency lending program in itself is an admission of systemic risk.

haidi: yeah, some of the stocks we will continue to watch when it comes to this top story. markets are opening up in hong kong and china. we are watching the chinese years of silicon valley bank. fallout has been spreading to other lenders. chip stocks also in focus. the biden administration is working to further tighten restrictions on exporting semiconductor might affect rain gear to china. we continue to watch that story from a geopolitical angle. let's look at what we're seeing what it comes to the broader markets trading. we have seen the containment of the svb story. depositors will have access to their money on monday. the fed announcing that he emergency bank term lending program which will cover all deposits, not just svb, we are still seeing a sea of red, trading here in asia. markets coverage continues. this is bloomberg. ♪