>> a very good morning, welcome

to direct australia. i am haidi stroud-watts in sydney. evening from bloomberg world headquarters, and vonnie quinn. thanks remain under pressure, even as janet yellen changes town to further the protections. >>, blocks as it is exploring legal action as shares tumble after hindenburg research accuses it of facilitating fraud. let's get a quick check on wall street. we'll see how futures are shaping up. s&p and nasdaq futures are higher. it was an intensely volatile day on wall street.

fortunes made and lost several times today. the addition of that, the department would be prepared to take an additional action if wanted on deposits. a chill through the banking sector. we saw banks take a further leg lower. that moderated gains also had people claim to tech as a safe haven. the two year yield at one point was down to 3.73%. a huge -- usually valid today. particularly at the front end. we have more weight on the dollar index, the bloomberg dollar index was down for a sixth straight session. let's have a look at some of those banks because it does look like the contagion is spreading just a little bit. comerica and zion are taking much of the rest of it today.

both of those stocks are down more than 50% on the year. first republic also saw declines today. first republic down more than 92%. i do want to point to one stock that is seeing again. 2.5% of its workforce is going. that is 19,000 jobs for accenture. the stock did benefit. the company hired 39,000 people over the last year. i want to point to block as well. we know the hindenburg research facilitated fraud. it is looking for a legal way to defend itself. annabelle. >> payment stocks want to be watching here in asia. while there are a couple of different factors, you mentioned as moves in the dollar. it did turn a little bit weaker and given those comments that yellen made about the banking sector but strategists flip on the direction. morgan stanley turning neutral.

the risk is actually a bit more tilted to the downside. that has big ramifications for asia. not just for fx but the cross into sovereign debt and equities. the direction, we are keeping our eye on the pound in particular. it is fractionally higher. the boe did hike by 25 basis points. we are seeing that the fed will be forced to cut rates later on this year. that is the push and pull between the financial stability and also sticky inflation really complicating the outlook for the central bank. the focus on edge about really being led. we are watching tech stocks in particular. we have some more local factors including economic ones. we have chinese pmi data coming out. we have numbers coming in for the private survey in australia and that actually falling into contraction territory though the reading. 48.7 for the manufacturing pmi.

something that the rba will be tracking as well. were signals coming through retail sales with the outlook for the consumer there in australia. not a great outlook there. we see aussie stocks looking to drop at the open here as much as other ones in the region. >> there is a challenge for central banks at the moment. the boe seems a bit more straightforward. the bank of england raising rates and suggesting the u.k. is likely to avoid a recession for now. andrew bailey made some interesting comments about what he sees as the robustness of the global bank. says they are stronger than a 2008 end at the global banking system is very capitalized, making a repeat of the 2008 global financial crisis unlikely. this coming as the boe raised a cure despite the ongoing turmoil in the banking sector. their prediction is that the

economy will avoid a recession for now. as we know in the u.k., inflation continues to be at that upside risk. request we have japan data as well. we will get a read on what is happening in japan. i want to point to some of janet yellen's comments today. the market was waiting for what she was going to say. she spoke at 3:00 p.m. in the session. the bank index spiked having dropped as she spoke because she put the extra comment in that the treasury department would be willing to take additional actions if warranted. then they began to think what does that mean? does that mean it might be wanted? we don't know what is wanted. we do know that bad loans rose again to almost $100 billion. that is $143 billion or just under. let's have a listen to what janet yellen did have to say.

>> destroying actions, we have made sure that american deposits are safe. we would be prepared to take additional actions if warranted. >> that was the comment on whether something was consoling or worrying, that is debatable. stock market investors are debating that as well. the bank slightly reduce their borrowings from to backstop facilities. that would be the discount window. let's go to bloomberg's and economic policy reward, the best, i saw about this new facility is it does not tell us there isn't more contagion to come. >> that is right. i think you are corrected. the numbers still show significant borrowing from both

the discount window and this new lending facility. it is hard to know, i have to stress what is going on at the individual banks here. are they just taking advantage, getting some extra liquidity during a time when the terms are quiet attractive? there could be the case for many of these banks. or are they truly worried about deposit withdrawals in their own institutions? it is very hard to look through the aggregate numbers and get a good read on that. but certainly it underscores a lot of nervousness out there among banks that so many are tapping these facilities. >> that nervousness was not helping from janet yellen's prepared remarks. they are trying to provide a little bit more reassurance to investors.

>> right. this is a very odd series of events. he mentioned yesterday's testimony. she popped a bubble that had been building in expectations among investors that maybe the biden administration was at least contemplating an emergency if temporary expansion of all deposits. she burst that bubble quake clearly when she said absolutely they were not considering that. they would require legislation. today, not long before she testified, the treasury department released a prepared testimony and expected to be absolutely identical. it was except for this one small portion where she added that line -- he added that they are prepared to take additional actions if warranted. i was uncertain what that

signal. was she leaning the other way from deposits? in the end, not a single member of the congressional panel asked her about that change or about ftse insurance. so we are left still wondering. >> all this just makes me think janet yellen is not someone who is not used to the power of communication and the roles that she has held. bloomberg has learned the u.s. is investigating banks including credit suisse and ubs about whether they held russian oligarchs dodge sanctions. let's get more from the political news director here. we know these types of issues played credit suisse.

but what are we hearing now? >> we are hearing this problem has been going on for more than a year since the invasion of ukraine by russia and the sanctions began being imposed -- that this is now targeting among other banks ubs and credit suisse. this took place before the recent drama involving the banks with this proposed takeover. we are hearing these are among the banks and maybe some u.s. ones as well. these two banks were key in this. one of the reasons -- it just continued its business with russian clients. credit suisse had about 33 -- held about $33 billion for them. they have been very involved

with wealthy russians. this probe is looking into that and the financial professionals. this is including people familiar with the matter. >> that was bloomberg's political news director, jodi schneider. let's get over to su keenan. she has the first word headlines. request is a little too calm bipartisan fury directed at the video sharing service. they faced hostile question from numbers of both parties while trying to rearrange tiktok's independence from the chinese owned ones. lawmakers and the biden administration are exploring how to force them to share their -- sell their share of tiktok. >> i have seen no evidence that

the chinese government has access to that data. >> i find that preposterous. >> i see no evidence of this happening. in order to assure everybody here, overseen by american personnel. >> meanwhile, financial payments from block say they would explore legal action to get hindenburg research over his report accusing the firm of enabling fraudsters. the two-year investigation alleges scammers were using the cash app to take advantage of pandemic stimulus programs. block says it will work with the sec and fight what he calls the inaccurate and misleading report. block shares tumbled as much as 22%. terraform labs co-founder has been charged with fraud by u.s. prosecutors.

the 31-year-old was earlier detained in montenegro just over a month after the sec accused him of fraud. authorities there say he was trying to fly to dubai using ossified travel documents. he helped create the ust stablecoin which collapsed, triggering a $40 billion currency implosion. 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 su keenan, this is bloomberg. >> still ahead, they do little to calm u.s. lawmakers as we saw. seeking to ban the viral video sharing service. we take a look at what really happens from the cyber risk management firm later in the hour. first, a place to hide out as markets face both potential possession and further rate prices. we get more on that strategy next, this is bloomberg.

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>> we have increased the regulation of the banking system from then. request andrew bailey there on the sector turmoil. it is time for investors to

learn a broader lesson from the recent bank stresses and avoid overleveraged companies. dana joins us now. explain to us what you mean by overleveraged companies and how will we know when investors are doing just that? >> thank you for having me. what i would say is this is a time to be looking for more standard quality measures. that means can accompany support itself on its own cash flows? recessions in general, we know that defensive stocks tend to do well. obviously, an environment where interest rates have increased so dramatically, capital markets, credit access, just harder to come by. that lesson is a bit more important for investors. >> it looks like big tech and bitcoin are where people go where they are looking for other

bit of a safe haven. does that follow your thesis at all and mark >> it doesn't. tech right now is interesting. during the bull market and run into covid, tech became synonymous with defense. these are large concerns, they are huge part of the overall market cap. when you talk about traditional defensive areas like health care, consumer staples, you're going for areas like that that are -- health care's low evaluation right now. that is a positive about it. higher dividends could be had in place like consumer staples. you are talking about plays that are countercyclical and a little bit more of a mattress where aztec, i think what you're seeing with tech right now, look at today, outperformance in tech stocks, number one, you have the

curve lower now. the market things rates are coming down. tech stocks have a lot of their value in their terminal values. if the discount rate is coming down, the valuation may be repressed back up from tech. i think this is a bit of a misnomer. we are seeing tech margins coming down. that is not really playing out in what we are seeing with returns here. request to that point, take a look at where we are when it comes to the nasdaq 100. it is pretty close to a bull market after the recent recovery we saw off that low in december. nvidia has double you'd nine straight days. how much cheaper would tech stocks -- big tech -- before you find them to be compelling? especially if you are a mid to long-term investor? >> the problem is that you are

seeing that diversions in tech and value. you are seeing tech be bid up to do that point you are making. i am a long-term believer in value. mid value, obviously financials, banks, they are under a great deal of pressure right now. not for the faint of heart. my caution on tech is it is valuation but also an understanding of what will tech has to play. are we back to a world where tech in general has this massive piece of the overall market cap or are we returning to overall that has more fundamental space? the expectation that tech gets back up to these much higher valuations is what i find difficult.

>> to be clear, you don't have any interest in looking at any of the u.s. bank stops -- bank stocks at this point? >> any sports team is good at a certain point. i get your question. if you diversify the approach, yes. i am not out there taking individual at that. yelling can't provide complete market protection without congress. i think she is signaling to the market that on a case-by-case basis, they will step in. i'm not here to say i think the crisis will be left unchecked but i think it will be -- it will evolve for the average client. >> always great to chat with you . you can get a round up of the stories to get your day going and daybreak today. you can also customize those

settings so you just get the news on the industries and assets that matter to you. this is bloomberg. ♪ ♪ old school wisdom, with a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan built on insights and innovative technology. you get grit, vision, and the creativity to guide you through a changing world.

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>> u.s. prosecutors have charged doug quan with fraud after his arrest a few hours ago in montenegro. he helped create the terror ust stablecoin which collapsed last may, truly a $40 billion cryptocurrency implosion. we are tracking all of this. it has been quiet the past to get to this point. >> that is right. the whereabouts have been at for several months now. he has been tipped off and places including singapore, serbia, dubai for instance. now he has been arrested in montenegro and charged with eight counts including securities fraud, commodity fraud, wire fraud, conspiracy.

this is a month after he was sued by the sec. plus in addition to that, he is facing an arrest warrant and south korea on securities law violations. a lot to work out included what sparked the collapse of the terry ust stablecoin which he was one of the creators of. that is considered one of the biggest implosion as we have seen in the crypto sector. he was arrested as he was attempting to leave the country divided by earlier today. he was using falsified documents. a lot for prosecutors and investigators to work through here. >> seemingly responded to efforts to be contacted -- he has not admittedly responded to evers to be contacted be email so we don't know what jurisdiction might have control over the situation. >> that part is still unclear but he is facing charges in the

u.s. in particular. he has been charged by prosecutors there in new york. he has been stripped of his passport from there. the big question will really come down to trying to unravel what sparked that collapse. that has been linked to as -- linked to ftx. and possibly related to bankman-fried. the big question really relating out -- related to bankman-fried and alameda in addition. >> we will be keeping an eye on this one. and it all, thank you for that. a quick check of the latest business flash headlines. toshiba says it has accepted a $15 billion buyout offer from the japanese movement, japan industrial partners. the offer is almost a 10% premium over toshiba's closing price on thursday. the offer guest toshiba step closer to ending eight years of uncertainty after multiple

scandals put the company on course for a sale. accenture is joining the growing list of companies in the consulting sector that are laying off workers. firms as it will cut 90,000 jobs over the next 18 months. more than half the job cuts will affect people in nonbillable corporate functions. plenty more to come as we look at futures pointing higher in the u.s. session on daybreak australia. this is bloomberg. ♪

>> block, the company says it

will explore legal action against hindenburg research after the shortselling research firm accused the payment company of facilitating fraudsters. for more, let's bring in our guest. what is the company bought being accused of here? >> this is how they enabled insiders to cash out. there are a lot of acquisitions in there. i think the first reaction was that it kind of raises a fairly non-issue and this is also long coming. that is not a huge surprise there. the court doesn't really lend the fact that block knowingly or intentionally did something bad.

having covered emerging-market banks, i can show you that this is not their issue alone. there are other companies in the same boat doing the exact same things that have basically gone to a point of criminality. >> there are a lot of allegations in this report. does anything stand out to you as being more important than others? >> at some point, it looked like they try to have multiple bullets now. three or four things that did stand out to me was on the interchange fee. we would love to see more

transparency on the exchange fee for oil companies, not just block. we saw a lot of regulatory oversight and that is making it very hard to have proper clarity on what exactly they are reflecting company's financials. this is a known issue and u.s. government has been trying to find a proper solution to this. payment fraud existed in our financial system before this. we need to deal with this as money flow digitizes. the u.s. system, the unemployment system has tried to figure out a way to address these payment fraud. what it points to is the regulatory oversight on some of these things need to catch up at times. the third thing was around

entering uncharted territories. history is written with fraud. some of these things will just open up these issues again with regards to how regulators deal with this. >> the company does carry weight with his investigations and its reports. what would the broader implications potentially be in terms of regulation and so on for fintech more broadly if not just the company block and square? >> that is a very fair point. i don't think the regulatory and we get limited to the back. they are coming under tighter regulatory scrutiny. this is about customer due

diligence. i think we'll see me -- we will see more hard set things is done about that. those are some of the issues we see coming. >> great to have urinalysis. let's get you over to su keenan in new york with our first word headlines. chris bloomberg has learned u.s. justice department is investigating banks including credit suisse and ubs on whether they helped russian oligarchs. the swiss banks were involved in a recent wave of subpoenas sent out by the american government. the information request was sent before the crisis and engulfed credit suisse and resulted in ubs's proposed takeover of the travel. this was national bank president is rejecting the idea of spending off the profitable domestic unit.

they had proposed the move this week. aiming to preserve competition and minimize job cuts. the priority is restoring the stability of this -- of the swiss banking system. >> credit suisse is much smaller given that ubs would take over credit suisse. you have uncertainty on the global scale. we will continue to follow that very closely. we will see what the impact is. >> to taiwan central bank now. it delivered a surprise rate hike the fed continued its tightening cycle. its benchmark rate was raised by 12.5 basis points. 1.875%, aiming at the highest level since 2015. most economists expected the rate to stay unchanged. taiwan has hiked rates to fight

high inflation. 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 su keenan, this is bloomberg. >> back to tiktok. the ceo has faced a hostile for our grilling by u.s. lawmakers as he tried to convince democrats and republicans that the apps ownership does not pose a data security risk. >> i have seen the evidence that the chinese government has access to the data. they have never asked us, they have not provided it. >> i find that preposterous. course in order to assure everybody here and all of our users, our commitment is to move the data into the united states to be stored on american soil by an american company, overseen by american personnel. >> our next guest runs a risk management firm and says they

can protect u.s. data so long as tiktok remains u.s. onto. great to have you with us. is this -- can the tiktok ceo simply not win at this point? >> i think so. he floundered during a lot of this. as eloquently as he presented his case. at the end of the day, if the data is being collected in any server effectively where chinese employees or more specifically any government oversight on those employees where that data is available, there is just no winning this argument. the fact of the matter is that he keeps claiming he has seen no evidence of that. there is already an investigation going on about u.s. information being used in some capacity by chinese employees in china so unfortunately he has backed himself into a corner because

you can't freak -- flagrantly suggest it is impossible. i think at the end of the day, there is a no win on that one. he will have to admit that if there is an oversight of some kind, though so far as to say that china's government has to approve a sale, he is digging his own grave in that opinion -- he is taking his own grave in my opinion. >> if you say only u.s. ownership will solve not even all the problems at tiktok, that is not even talking about the other problems that were raised during this hearing in mental health. even if this deal is agreed to for the u.s. side, do you see beijing being amenable to it? >> no. within the community i am part of and many others are, we have watched this manifest over years and multiple administrations at

this point. this is just one example of an organization that happened to have chinese origins. this one is just extremely pungent because of the nature of the organization to begin with. at the end of the day, if there is a u.s. ownership of the data and total control of it, the tactinge. it is simply that there is an encouragement by hackers to collector same sort of thing. there is no need to do anything illicitly because it is available. the minute the status changes to where it is something protective, they will just shift the tactics. we have watched this happen with other organizations where they have implanted people within them, whether they are american or chinese owned. i don't say anything to your point about being complicit. i don't think the chinese will given on their intelligence

information collection apparatus. >> 150 million americans have already downloaded tiktok. is it too late? does tiktok need real-time information or something? >> it is a really good question. i do think arguably it is too late from a completely different perspective. it will be defended with people saying don't delete it, influencers are making an incredible amount of money with it. we watched this whole thing manifest. i commented on this topic when donald trump was pushing for this agenda. now it is a different administration but now it is bigger, to your point. it is loved by the general population that uses it. it is only the few that know the underpinnings of how this works. to answer your question more specifically, intelligence

collection is an ongoing effort. as much as there may have been a very good all of information they have already gotten, there is always new information again, new users to get. i don't think there is ever really an end to intelligence collection and this represents an tenable -- incredible utility. >> they offered $1.5 billion that would be a u.s. investment in data security to try to appease lawmakers and this would also prevent a ripple effect where other chinese apps would have to leave the country. would that not be enough? it sounds like a lot. >> it is a lot by any standards in terms of financial perspective but if you think about how much money has been thrown critical infrastructure within the u.s. and other countries has been way more than that and it is not giving us the coverage we need to protect ourselves from these

types of adversaries. we are talking about a nationstate apparatus in china that would be working to get into these environments if they were closed off to them. you can enter as much money as you want at it until there is a fundamental such -- switch mentality. i wish i could tell the money is the solution. this will be the time, training and experience that gets us there. >> if there is in fact a band, who stands to benefit the most? he talked about the large amount that influencers stand to gain. >> this is sort of a layperson's view of the tool. instagram and meta is probably the biggest winner in the mix. they tend to be the most likely

alternative to the exact same utility that tiktok offers. then again, i think people tend to be very loyal to their respective platforms. a little bit like spotify versus someone else using something. they tend to like what it is. but they will win. i think the u.s. social media giants will take advantage of the situation. there will be an outcry because a lot of people's businesses and livelihoods -- any people's jobs depend on this application to be perfectly fair. it is a tough situation. this is a national security issue that does not necessarily translate down to the general population. it only cares about what they are making financially. i respect their opinion but on a greater, more dark, shadowy underground, this is a usually problematic issue that i don't think will get any better the longer this thing perpetuates. and the more there is pressure on tiktok, the more i think they will be a little bit more smash

and grab about the intelligence question i get more aggressive with it if they know they are going to lose it. >> that is the ceo joining us there. once he mark to come right here on daybreak australia. ♪ people like m who make...? ...everyday products... ...designed smarter. like a smart coffee grinder - that orders fresh beans for you. oh, genius! for more breakthroughs like that... ...i need a breakthrough card... like ours! with 2.5% cash back on purchases of $5,000 or more... plus unlimited 2% cash back on all other purchases! and with greater spending potential, sam can keep making smart ideas... ...a brilliant reality! the new ink business premier card from chase for business. make more of what's yours.

>> >> we have seen signs of inflation really peaking.

it is far too high. we think it is going to come down sharply. we have not seen that happen yet. we have some needs this week on the other way unfortunately. but we need to see it start to come down progressively and get back down to target. that is what we need to see. >> andrew bailey there. rate hikes continuing as the bank of england joined along with others trying to fight inflation and raising rates to do so as they try to reassure investors their banks remain resilient. kathleen hays is here. what is next is that we know the fed maybe pausing. >> it depends on their inflation because their inflation continues to rise. they believe it is going to be temporary and start coming back down.

they went to had with this 25 basis point i took 4.2 5%. this is the highest since 2008. that was the great financial crisis. another landmark reached here. it is the 11th straight increase. it follows hikes at the fed. central bank around the world say they have to fight inflation and they all continue to tell us that they are watching very closely. the hawks ruled here. and the boe led by andrew bailey in this interview said they have to do more, they will. let's listen to a governor bailey said. he said he thinks inflation is going to peek and this is important, this is an anomaly. i think it will come back down. he said the will avoid recession.

and that they are continuing to look past the turmoil. they assume they will be on good footing and by all accounts, they are. the most important thing is inflation right now. >> the philippines raised their cure to the highest since 2007. we talk about this tension of financial stability. clearly inflation is still in the driver seat. quick some countries are far less affected so far by this financial stability, but what is happening to u.s. banks, what happened to credit suisse in switzerland. the swiss went ahead and did their rate hike today. they are convinced they got things under control, this big merger, credit suisse and ubs. they made it clear they are fighting inflation and may have

to continue to do so. they're also going for a rate hike today. there is a key rate up to 3%. they are not worried about financial stability. brazil, big battle for the central bank as they fight back against the president that wants them to cut rates. inflation is still too high. turkey also wants their rates to come down. their inflation is still high. a very interesting array. a big week and a big day for central banks. there was kathleen hays there. we do have a big interview coming up. we will be speaking s was aleta bill winters. he talks about how regulatory authorities need to keep pace with a list of elements and the banking sector. that is at 2:15 p.m. if you're watching here in sydney and be sure to tune into bloomberg

radio to hear more from the days biggest newsmakers. we are broadcasting live from our studio in hong kong. you can listen in via the app. much more ahead. this is bloomberg. ♪

>> the prime minister is on the

cusp of holding power in every man a state and territory for the second time in its 120 year history. the australia government reporter joins us now. what are the expectations? >> this saturday, we will see an election in australia's largest state. it will be a struggle for the 12 year government of the pier deer -- premier dominic to hold power. we are expecting the left labour party to when and if it does, that means the labour party will hold power from western australia all the way across to the tip of new south wales on the other the country, leaving tasmania as last hold out of the coalition. >> that will be a pretty phenomenal development. tell us about china's ambassador's comments. he talked about australia and china and their relations.

have they been derailed by the announcement? >> it is a great question. the chinese government has made no secret of the fact that it strongly disrupts -- dislikes the agreement and considers it a threat to regional stability. what we have seen in the last couple of days is that china might in fact be more relaxed. this is the first event stocks since 2019. the chinese ambassador said that china was no threat to australia. that is a sign that china is going to keep maintaining this warming between the two countries and does not seem that put out. >> we will watch that.

first things first, we keep our eyes on the new south wales election. a quick check of the latest business flash headlines now. investors warning that it expects a second consecutive year of multibillion-dollar losses amid china's record slowdown. they predict a parliamentary loss of $4.1 billion in 2022. this follows a record loss of $5.5 billion in the year prior. evergreens onshore unit has failed to make interest payments for its 520% bond issued in 2020. the payment was due on march 23. the company says it will proactively negotiate with bondholders to be solutions as soon as possible. bloomberg has learned that cathay pacific is planning to source up to 50 of the a320 --

those are your latest bloomberg headlines. let's have a look at futures pointing higher for the final session of the week after a very topsy-turvy thursday session. that is it for daybreak australia, daybreak asia is next. this is bloomberg. ♪

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