>> good morning and welcome to

bloomberg daybreak australia. >> the top stories this hour, u.s. stocks rise as fears ease from the broader contagion from the banking turmoil. the fdic launches an investigation into the signature bank failures. >> the united states sues the ceo of binance. another modest rise on the s&p 500 as first citizens completes its purchase for svb. people are getting a little bit more relaxed. this is the first chapter in the south of the bacon caicos this -- in the side of the vacant crisis. about 2/10 of a percent.

first citizens of 50%. with the bond market, another selloff today. the 10-year note got up to about 3.5%. it was 3.8 yesterday. while closing above $72 per barrel. there up disruptions in turkey. if there is not going to be a big financial meltdown, then i guess oil will do ok and you can buy oil for a while. haidi: the energy story is certainly one of the parts of the missing pieces. this is what we are seeing in sydney. futures looking pretty positive. the aussie dollar trending more so.

we are waiting for the australian inflation report. that could be a savior for the aussie dollar. there is speculation that the rba will stop raising rates. we will be watching for the impact. also watching for retail sales. one of the rba department heads will be speaking at a banking summit. when i think about the banking turmoil that is ongoing, you almost imagine an octopus. there are so many tentacles, so many different ways to look at this. so many different risks. we are starting to see concern about the amount of hidden leverage across the financial

systems. we are looking at the layers of leverage, not just the layers of leverage, but the level of transparency when it comes to the different types of credit that are prevalent across markets. we are expecting more stress tests, deeper investigations after the recent turmoil. there is a rush to identify where the next round of volatility will come from. we are seeing face huge pile of human leverage that has been persistently built up over the past few decades. kathleen: which is why people are waiting for another shoe to drop. the fed vice chair for supervision released his remarks for tomorrow.

so you have the top financial bank regulators in washington. he said what happened is a casebook test of mismanagement. it will be interesting to see how much he gets asked about mismanagement and how it was supervised. that will be a big question and he did say it looks like banks to probation and regulation may need -- bank supervision and regulation may need to change. we heard from philip jefferson, a fed governor and look at this chart. stocks doing better, starting to price in a may rate hike. let's look at this bounced back in regional bank stocks. su keenan joins us now.

>> we did here that there would be a rescue for -- with first citizens taking over. the completion of bat certainly gave a lift to banks. let's go through some of the charts. what is important to note is that the day began with jitters and the general view is that there are still some turbulent waters ahead. if your looking at the kbw banking index, you can see it is off the bottom. we heard that first citizens have emerged as the leader to take over in this deal and now we are told it is in completion. the big relief again has to do with first citizens buying silicon valley bank.

it also involves purchasing $72 billion in loans. the fdic estimated the cost of svb's failure would be $20 billion. they may well profit in this takeover. haidi: also seeing treasuries retreat as a result. >> yes, treasury yields coming off the lows due to big moves in the two-year. it is important to note that many of the big fat heads. and we did hear from the fed chair governor over the weekend. normally a hawk, but warning about how the weakness in the financial system had perhaps

raised the possibility of recession and that has raised concern the market in general. that while there was relief here in this latest move, there is still uncertainty if not significant headwinds in the financial market ahead. haidi: su keenan there with the latest. we are sharing that ftse has launched an investigation into the management of svb and signature bank. let's get to jodi snyder in washington. in the aftermath of this, you are seen in the united states and europe. what do we know about what the ftse is looking to discover here? >> tomorrow will start the first of two days of hearings in congress into what happened at svb and at signature bank.

this follows last week's hearings on tiktok. what they will be looking that is what did we know, what did the fdic see as the reasons for this? we did hear from martin gruenberg, the chairman of the fdic, saying these two institutions were allowed to fail and they are managers' conduct. they are also hearing from michael barr saying the same thing, that he sees this as a failure of management. they will hit this very hard. svb waited too long to tackle this and the overdue actions sparked the uninsured depositor run which led to the bank's failure. so tough words about management.

we will see what kinds of questions they get tomorrow. this will be lawmakers' first chance to question them about the failures. kathleen: tell us about the people testifying in the upcoming hearings and who they expect to blame. >> we expect there will be a lot of shared blame. management again will be management of the banks will suffer a lot of this. but the questions will be what about supervision and what steps do they think should be taken? you will hear a question from both sides of the aisle in the senate banking hearing tomorrow about how do you rectify this. what steps can be taken so you do not have this happen again. kathleen: jodi snyder joining us from washington dc. the u.s. has taken its most forceful move to crackdown on crypto exchanges.

how big of a deal is this? >> it is a very big deal. it is very hard to overstate that. what we saw today, effectively the cftc went out and sued binance and a couple of other executives, including the ceo. they said binance, which is the world's biggest crypto exchange, was flouting u.s. rules. we knew that u.s. authorities for some time were investigating binance for potential misconduct, but today the united states made its first set of allegations. this raises the stakes a lot for binance. in 2019, they set up a u.s. arm which they claim is separate as

an entity. this raises the stakes for binance on a global level in terms of where they will go from here. haidi: what is the bigger ramification when it comes to crypto more broadly which we know has been suffering from all kinds of pressure? >> if you think about the gamut of regulatory action we have seen, the sec has been saying almost every crypto product you can imagine. they are same big banks should be very careful in involving themselves at all in crypto. and today the derivatives regulator filing a lawsuit in federal court in chicago accusing the world biggest exchange of years of misconduct

effectively. it is a pretty big deal. this is arguably the most concrete step yet that the u.s. government has taken in terms of leveling allegations, because this is the first time the world's biggest exchange has faced a lawsuit like this. haidi: let's get you over to vonnie quinn. >> a woman armed with assault rifles has shot and killed 39-year-old children and three adults at christian elementary school in tennessee. the attacker was killed by police. she is a 28-year-old former student at the covenant school in nashville. president biden again called on congress to ban assault weapons and take more steps to address gun violence. israeli prime minister benjamin netanyahu will delay a controversial plan to weaken the a day of strikes and protests. he is seeking compromise with

the opponents of the bill. >> when there is an opportunity to avoid civil war, i will take a timeout for dialogue. we insist on the need to bring about the necessary corrections in the legal system and we are given an opportunity to achieve a broad consensus. >> south korean officials are making a push to arrest daniel chin who cofounded the terraform labs with this one. prosecutors say he faces charges including fraud and breach of duty. both korea and think you are seeking his extra diction -- extradition. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn.

this is bloomberg. kathleen: thank you. still ahead, disney begins cutting thousands of jobs as they press ahead with that savings drive. details coming up later. this is bloomberg. ♪

>> our view is there will probably be more cost-cutting in that space. the over earning was worse. my suspicion is we figured this out ahead of the actual numbers coming down. because the bond market repriced itself, we think it is elevated

right now. haidi: that is the morgan stanley chief u.s. investment officer. our next guest is looking for growth out of china's reopening story. sharmila whelan from westbourne research joins us from london. great to have you with us. does that mean no soft landing when it comes to the united states? what does it translate to when it comes to fat expectations and do you still see opportunity? >> it is a difficult time. i am seeing no soft landing for the united states or the euro area. at best, another 25 basis points. not because the inflation battle has been won, far from it.

inflation would still be running for per site by the end of the year. it is more because of the turmoil we are seeing in the banking sector and to raise interest rates more aggressively when increase unrealized losses on bank treasury holdings and that is something they cannot afford. haidi: where do you see the best investment places them? >> the developed world, i am looking at moving into defensive stocks and government bonds. i am a firm believer inflation is here to stay. if i am right, i would be looking to move into inflation

index linked bonds. moving from the developed world into emerging markets, china and india. china is a reopening story and that is why the market is rallying. i am cautious about china and if you are looking at this year and beyond, my topic would be india on the equities side. haidi: i want to come back to something you said about how the banking crisis, which seems to be in the early stages of being got under control, how that will feed into decision-making by the federal reserve and maybe even to other central banks and other parts of the world? >> good question, but my view is

that interest rates are close to peaking now more so than ever. it is not because inflation has been defeated, it is because of the quandary best central banks find themselves in. another 25 basis points increase and off of that, focus the monetary policy tightening shrinking the balance sheet. and trying to bring in liquidity. there is a lot of liquid around. the fed's balance sheet is 100% bigger than it was on the eve of the pandemic. it is about 580% larger. there is a lot of liquidity. i think they will be focused on shrinking the balance sheet.

kathleen: do you think the fed is on the right track? would be a good time to pause? >> i do not think they have a choice but for one more interest rate hike and then to pause. the unrealized losses on the treasury bond holdings among the banks is staggering. if there is a run on deposits, the headwind capital basis would be significant and it could snowball and form a systemic risk to the banking sector. haidi: talk to me about the

india strategy because you have long been structurally longgone india. -- long on india. >> the two big giants in asia among developing asia. if you look at india from a structural point of view, it is in a much stronger position than china. if you look at the banking sector, capital is running at about 16% on average. low vision and levels are at 70% plus. that is the banking sector.

if you look at interest coverage ratio, it is running at about 5%. combined with the government's big investment spend, and diaz looking much more positive from the fundamentals point of view. -- india is looking much more positive from a fundamentals point of view. haidi: great to have you with us. sharmila whelan from westbourne research. hsbc speaking here in sydney. they are commenting on the acquisition bet hsbc recently made, saying it made business sense. it was an opportunity not seen very often and it aligns where they want to be in dog european

union tech market. -- in the european tech market. that was some of the earlier moves as we saw the collapse of svb. we have heard that there have been not insignificant inflows when it comes to that unit after its acquisition by hsbc. we are also watching for further reaction. we saw first citizens watching -- reaching that deal to buy svb after its failure. this is bloomberg. ♪

haidi: let's take a look at how australian and new zealand bonds are faring. yields surging off of these lows. a little bit of a pullback when it comes to the banking fees. a pretty significant rise in two-year yields. when it comes to australia, we are watching for the inflation report. before that, retail sales. this is bloomberg.

vonnie: i'm vonnie quinn with the first word headlines. the fbi see is investigating the

conduct of managers at svb and signature bank to determine what led to those banks collapse. martin bloomberg told the senate committee parties will be held accountable. the fed vice chair called the failure a result of a textbook case of mismanagement. the cftc has accused bytedance and its ceo of thinking derivatives rules as the firm grew to be though largest crypto trading platform. their own emails and chat messages show its compliance efforts have been a sham. the suit filed in federal court in chicago is the most forceful u.s. move yet to crack down on the crypto exchange. the chairman of barclays has described the recent allegations of jes staley with his relationship with jeffrey obscene serious and new. it's the first update since ceo left the bank in 2021. he quit after regulars found he

underplayed his relationship with the pedophile financier. he's challenging those findings. global news powered by more than 2700 journalists and analysts. kathleen: fears of contagion the banking sector have eased somewhat. let's bring in annabel. is this coming from jp morgan? annabelle: this is indeed. it is the team led by marco glenna veg. he says this level of uncertainty we have had in the banking crisis is going to play out for a time to come. it's going to be noticeable in two ways. first, you will see upward pressure on risk premium and off that, we will see investors increasing their need for precautionary savings. and we will have economic

forecasts that have a long way to go to catch up with the downshift to economic markets. he emphasized in a note that he's staying cautious around bank stocks and cyclicals in general and has reiterated his view that the first quarter will mark the high points of equity prices over the course of 2023. so it is about staying defensive but the question is where? if you change on what he is still lacking is tech stocks. in the nasdaq versus the s&p 500 over the course of this year, the nasdaq has rallied at nearly 16%. we've only seen gains of 4% on the s&p 500. that's been magnified over the past few weeks with investors turning to the big tech names as a safe haven. we've also seen bond yields moving lower. haidi: not that i'm looking, but beyond banking, what are we

seeing as the next potential risk? annabelle: this is something that has been flagged by morgan stanley for some time. he's been extremely concerned about the outlook for earnings and says evaluations are simply too high. he spoke to bloomberg earlier and started off by telling us he -- where he thinks pricing is going to play out. >> last year, we saw a big degradation in multiples. all of that was due to hire interest rates. none of it was due to higher risk premium, which is part of the multiple pricing and what growth is going to be. i would push back on the pushback, which is the market is going to revalue or devalue the companies that are most at risk of missing estimates. lower quality companies, more cyclical companies, smaller cap companies will have a harder time with what's going on in the

regional bank system. it just takes a little longer and everyone focuses on the s&p 500 or may be the nasdaq 100 as these bastions of safety, and that is true until it's not. >> let's talk about the repricing. last year we were talking about big tech and this year it's going in the opposite direction. meta-shares up 71%. apple shares up 21%. pick your poison and it is up dramatically. how do you pushback against that recovery of names that are supposedly going to come under pressure and a higher rate world? >> these companies took their punishment last year because they were the tip of the spear in terms of valuations. when rates went up, they took it first. you could argue a lot of those groups or stocks are in a recession already.

that's the areas where we are seeing layoff. that's where we see retrenchment in cost. the debate now is how do those companies cut costs and get inferno that where they can see earnings growth again. there is some appetite for that view. our view is there's going to be more cost-cutting in that space because the spending was egregious and the over earning was worse. it's going to be a drip, drip, drip. markets tend to bear this out ahead of the actual numbers coming down and because the bond markets repriced itself overnight, that risk is elevated now more than it has been for the last six or 12 months. >> you have been labeled a bear and then it's easy to be labeled -- you do get constructive. are there any areas that have sufficiently repriced where you are starting to see opportunity? >> financials are starting to

reprice in a meaningful way. not all of these companies are going to have problems like we are seeing in some of these. the other thing i would point out is financials tend to lead the overall market but that's one area for sure. some consumer areas have been repricing for years. we just added a name that is a retailer. there are definitely areas. markets go through these times of a rolling bear market. we came out with that view a few years ago and people have abused it. we are looking for opportunities now. but at the index level, it is unattractive to us. kathleen: mike wilson speaking with lisa on of it. coming up, how the banking turmoil in the u.s. and europe is testing the most bullish emerging-market cases. this is bloomberg. ♪

did you ever stress about us having three kids? no, that was always part of the plan. three kids?! this was never part of the plan! these kids order the lobster mac 'n cheese! what if she wants to play golf? we're going to have to outlaw golf. absolutely no golf in this house! not under my roof! since we started working with empower, all of our financial questions have been answered, so we don't have to worry. so you never- nope. always part of the plan. join 17 million people and take control of your financial future to empower what's next. start today at empower.com

haidi: the mexican peso has become a casualty of recent global want to lead tied to u.s. regional banks. let's bring in michael awoke. -- michael o'boyle. we've looked at the myriad ways we've seen inking troubles

derail, so it is the connection to the super peso? >> the peso is one of the most liquid emerging-market assets in the world. it trades 24/7 and it is easy to put on bets and take bets off. to walk us back, we saw the peso become the super peso last year and at the beginning of this year. it really blew past analyst expectations and surprised to much everybody on wall street. it had broken down the correlations that often drove volatility and the peso in the past really broke down last year. the super peso was basically impervious to the spiking u.s. interest rates. it shrugged off the selloff in u.s. stocks and ended the year much stronger and started the

are much stronger than many people expected. there was a whole bunch of factors behind that that has put mexico and the peso at the right place and the right time. but we saw once again when you get this kind of global volatility and kind of risk aversion, it is going to hit emerging-market assets regardless of individual fundamentals. the peso is very liquid. people had gone very long. when black swans rear their head, the peso is going to be one of the first assets hit. kathleen: now the markets are recovering with the u.s. set to provide more support to banks. will the peso resume its winning streak? michael: we are already seeing it had down there. it has bounced back quite a bit from the low it hit during the first reaction. mexico is the same.

when the peso appreciates, it appreciates by climbing the stairs, but when it depreciates, it goes down the elevator fast. and this time it was a bumpy ride down. but as we have seen increasing calm come back to the markets, we see the peso had back down. it has been trading around 1830 today. strategists are aiming at the 1790 level that was nearly five-year high where it was trading before this volatility hit. the fundamental factors helping the peso are likely to reassert themselves as nervousness about banks in the united states and europe comes down and we could see a good run yet or new expression of the super peso in the coming months. kathleen: michael o'boyle in mexico city. the astonishing run of mexico's so called super peso may affect how central banks across

emerging markets are attacking inflation compared with policymakers and more developing economies. but the turmoil in u.s. and european banking systems is testing systems. i want to call on your history of trading currency and emerging markets around the world. when did you last see a move like this when you have a strong currency boosted by its central bank hiking rates and a crisis comes up and pulls the rug out from under it? marlene: it has a long time from that but although the peso has shown resilience with all the turmoil around the banking sector and now it's going back to the levels we have seen previously. as michael already said, it is trading right now at levels of 1830, so it has a lot of

instability with this movement because of the liquidity. that is what makes this movement so huge and so momentous, but we are coming back here to the 1830's and i think the peso still has room to appreciate more. kathleen: do you see other emerging-market currencies under the same kinds of pressures and do you expect them to abate if u.s. authorities can get this banking crisis to continue to shift into a lower and lower gear and remove these fears of some kind of financial contagion? marlene: yes. this topic affects other currency as the peso is the one currency that can express even

more the risk on or risk of sentiment. it will suffer if something happens or if we still have some other headlines that could affect all the environments. because of this liquidity, because of this way of entering easily or getting out easily, that could affect all these movements. haidi: when it comes to the broader emerging market complex, what's the anchoring currency? is it the u.s. dollar or the yen? what is the biggest factor when it comes to the em complex -- it china, the yuan, or the u.s. dollar? marlene: we are going to be more

focused on what is happening to the u.s. and also what happens in china. it is one of the biggest economies we have, so it will effect the currency we are going to have. so the impact in growth those countries can have will impact the currency. haidi: what other em currencies are you looking out for in terms of specific vulnerabilities other than the peso? marlene: i think all currencies are vulnerable. the issue here is with the msn we talked about, the liquidity that makes it most easily. i think we are really vulnerable of what will happen to the u.s.

because of that dependency we already have with this country. for example, remittances has been an important driver for the msn. it will suffer in this way and will affect the currency and also that will affect consumption because remittances give us the opportunity to have more and the other way, we -- it can affect the export. that we can have to this country. the msn is very vulnerable because of that, of how dependent we are on the u.s. economy because of our export that goes over there. that is why it's a very important topic. kathleen: thank you so much, talking about the super peso and

more. we have some headlines breaking on binance responding to the crackdown on its company and it is being investigated by the commodities future trading commission. it's saying that it respects the work with regulators including with the u.s.. the cftc civil complaint is an unexpected and disappointing, don't agree with the characterization of many issues alleged. we are hearing presumably from the billionaire chief executive of binance, again under investigation for a number of allegations. haidi: this is just the latest regulatory slap for binance. we are hearing more of that

reaction, very dramatic u.s. enforcement action, just the latest and what has been a long history of run-ins between the world's biggest crypto exchange and global regulators. we continue to watch for the response, binance saying they respect regular leaders, including those in the u.s. for a lot of analysts, this has been a long time coming after we have seen similar warnings from the likes of japan, the netherlands and u.k. talking about the fact they allege binance operated without their permission. tune into bloomberg radio for the latest on that story. also from our big newsmakers, get in-depth analysis from the daybreak team. we are broadcasting live from her studio in hong kong. you can listen invited app, radio plus or bloomberg.com. much more ahead. this is bloomberg. ♪ fallen in love with a portable blender. blendjet 2 gives you ice-crushing,

big blender power on-the-go. so you can throw in your favorite ingredients and blend up a delicious smoothie anytime, anywhere. blendjet 2 even cleans itself. just add water, a drop of soap, recharge quickly with any usb port. ready to fall in love? order yours now on blendjet.com ever better. it's when disruption hits your supply chain and ryder makes sure you're ever delivering with freight brokerage to transportation management, truckload capacity and dedicated trucks and drivers.

kathleen: disney is cutting 7000 jobs starting this week according to a staff memo from bob iger. it's a key part of the 5.5 billion dollars savings trend the company announced in february. chris palmeri joins us now from los angeles. why is bob iger doing this now? chris: he was brought in in november. they fired the previous ceo.

the company had lost billions of dollars on its streaming efforts and he was brought in with a mandate of improving the finances of the company and said in february that was going to include $5.5 billion in cuts. about 2.5 billion of that is in operating expenses and we $.5 billion in tv shows and movies they are no longer going to make. haidi: are we looking at companywide cuts? chris: they said it would be across the board. that includes espn and theme parks, which are doing quite well these days. but you can expect the biggest cuts to come in the tv business. that is the area that is really transitioning. people are cutting the cable cord and watching less traditional cable and broadcast tv and streaming more. we are seeing signs of that already. for example, they let go of a

couple of senior executives in charge of production at hulu. they are consolidating that decision-making over other parts of disney. a whole division that was licensing podcasts and other news stories for tv programming. it was let go and dissolved. those are the cuts and overhead and the tv business that are going to be significant. kathleen: let's -- haidi: saudi aramco is buying a $3.6 billion stake in a china refining giant. the 10% position is the second deal in two days, boosting its exports to china. the deals commit to chip away 700,000 barrels of additional oil for china to convert to chemicals. centauri's new ceo says she's seeking m&a opportunities to take advantage of changes in

consumer behavior after covid. she told us they want to make deals worth as much as $5.4 billion over the next few years. she become the first ceo of a list of japanese company with a market cap of more than ¥1 trillion. >> we are working very hard to increase the number of women in the latest position because i think, i believe diversity generates innovation or a new mindset and new way of working. that will enhance the competitive power of our company. haidi: deutsche bank's london hq has sold for $315 million in one of the biggest property deals this year. they partnered with a u.k. equity form to buy winchester huff, which they plan to refurbish. they will move to new

headquarters in the city of london. kathleen: here's the stocks we are watching when trade opens in australia. a brookfield led consortium has agreed after months of delays to a $12.4 billion deal to acquire origin energy. bhp is entering a joint venture with chinese dealmaker hbi us to test carbon capture technology. and asian energy shares may move after oil surged to the highest in two weeks on supply disruptions in turkey. haidi: we are getting m&a news -- a lack of m&a. rejecting a proposal -- this is the us trillion lithium minor saying they substantially undervalues the company, have rejected the proposal with an indicative proposal that came from the world's top lithium producer. they have been spending big when it comes to increasing capacity,

most recently set to spend 1.3 billion dollars on a new u.s. processing facility, clearly looking for acquisition targets as well. that offer has been rejected. that's about it for daybreak australia. we are looking ahead to the start of trading in sydney as we look ahead to asian stocks looking like it's heading for a better day. sidney futures extending gains to about .6%. slightly higher expectations when it comes to benchmark's opening up in japan and hong kong. looking to eke out small gains. we did see some relief when it comes to financial shares rising on the wall street session. this is bloomberg. ♪

as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts... saving you up to 75% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities™.

kathleen: