>> welcome to daybreak

australia. >> cutting onto asia's market opens. >> i am kathleen hayes. the top stories this hour. investors cheer as alibaba plans at historic restructuring and promises to yield six public listings. >> the dip in other textures ways on u.s. markets with investors recalibrating bids. >> financial assist dutch officials sift to the wreckage of svb and regional lenders. what happens on wall street, the three-day advance ended. the shift is moving away from the banking crisis. it seems to be stabilizing. investors read pricing hike back. tech stocks led the drop you'd nasdaq was down .5%. s&p down marginally as well. a turnaround in the futures on the s&p and the nasdaq. as for the bond market, yields

rose again. the fed can still fight inflation, going from banking worries back to the inflation ain't stte. we can see the u.s. to year is showing a little bit of where it closed is about 2.07. energy shares were a winner. the crash between a rack and the kurdish regions. you can see the quota there at around the same price. the overnight trade of course was driven by alibaba, the spinoff plan, restructuring. raising funds, unlock value through ipo's. you can see what it did for the golden dragon index, alibaba up as much as 15%. let's talk about jim bullard. he made it clear, a special essay that was on the st. louis

fed's website pointing out that they are directing their rate hikes at inflation. they are not worried about bank stress. here is what he said. in appropriate macro prudential policy can contain financial distress in the current environment, while appropriate to monetary policy can continue to put downward pressure on inflation. that is the message he continues to give as he raised his terminal rate hike to 5.6%. another interesting offshoot is the move into growth from value. the index shows global growth stocks up, value down 4%. they think the fed will start cutting rates. haidi: one of the most interesting things is the revaluation when it comes to tech as the growth story. we were seeing indicators of expectations of rate cuts. traders are waiting back into duration. this is when the biggest bets we have been seeing.

the gap between growth and value indexes are the biggest in five decades. it is due to run the risk of being caught out if inflation continues to come and hotter than expected and delays of those rate cuts. it is betting the volatility will spell the end of the central bank tightening cycle. we are seeing them load up on assets that will benefit from the pivot. we have talked about growth versus value, we are also seeing what money markets are doing at the moment in the expectation of 70 basis points of cuts by the time we get to the end of the year. kathleen: the rate cuts won't end anytime soon. alibaba was shares surging 14%. news that the chinese e-commerce group will restructure into it six main business line. the largest overhaul in a more than two decades. it is on the the market has been waiting to see. is this the culmination of years

of regulatory pressure from beijing? >> we have been wondering what alibaba would look like after the regulatory pressure was over. that started about 2.5 years ago with the discovering in the 11th hour of the global ipo that regular said it won't go through. we have seen the regulatory pressure consistent across platform economy to break up perceived monopolies as well as an overreach of by large tech groups like alibaba. what we are getting late last night was a culmination of that regulatory pressure. restructuring internally but i am sure, it has the blessing of the central government. what is going to happen is alibaba, it is largesse, is simply too unwieldy in this regulatory environment. we have seen market value drop

down to 220 billion dollars. losing more than $500 billion in market value in those 2.5 years. it was a -- even though it employs 200,000 people, it was a shadow of its former self because of that regulatory pressure. it was not delivering to investors. here are the main six divisions, cloud intelligence, that is another way of saying ai. that is going to be run by the current ceo. there will be other businesses, e-commerce about 70% of revenue. it will include logistics, local services, entertainment, digital media and the like. the biggest restructuring overhaul in its 24 year history. haidi: what does it mean for ipo's? >> daniel jong said it in the statement that each of these six

individuals will be run independently, they can make their own decision making and strategies going forward. including deciding their own fundraising needs. that means ipo's as well. we know that there has been a moratorium that has come off and on and china, hong kong has been depressed ipo market. we know that amp group had the ipo's covered, there has been talk that it could be revived. no mention of the ipo of aunt coming as a result. if these six divisions are spun off, and they will raise shares, the question is, are these individual six divisions worth more potentially than the pre-regulatory crackdown alibaba. potentially yes. including in divisions like cloud, which is a drag on profitability, the ai intelligence division.

potentially this is the fastest-growing segment of alibaba. down the road, that could potentially have a larger evaluation. it is good news for the ipo market. haidi: our top federal reserve official says svb failed to address clear risks leading to its collapse. list take a listen to what the vice chair michael barr testified. >> this is a textbook case of deaconess -- dank and mismanagement. the risk the banks risked, those are bread and butter taking issues. they were quite vulnerable to risk. they didn't take the actions necessary to me to that. -- to meet that. haidi: what was the main messaging from lawmakers to regulators before the senate banking committee.

>> we heard from lawmakers on both sides of the aisle expressing shock and anger that svb collapsed as quickly as it did. and that they were pointing the finger at federal officials who were sitting before them saying, why wasn't anybody minding the store? we heard from jon tester, a democrat from montana, saying i don't much about accounting, this looks like a big accounting failure. how did you not see this coming? the officials obviously were dealing with the criticism and questions by saying that a lot of things went wrong with management, particularly at svb, they were also talking about signature bank. and the changes will have to be made. the are undergoing a review. it michael barr from the fed, says this will be done may 1 and they will look to make changes. there was a lot of questions

about how could this have happened. we will hear from those officials again tomorrow before the house financial services committee. kathleen: a lot of the questioners questioning if it was the regulations in place or what they were doing. how do the regulators react to this? they were under attack. >> they were and to their policies were under attack. they shifted some of the blame, they looked at management, they kept that textbook case of mismanagement. they also looked at saying that it is probably time for us to make changes to look at how we regulate banks of this size different lee. they also were looking a lot at the management, particularly of

svb, they said that this was just a not a well-managed bank. they took mate -- way too many risks of the long time -- wrong time and were paying attention. kathleen: let's get to you on the markets, particularly alibaba. >> we would be watching china very closely when it comes online in a few hours. picking up on what we are hearing about the banking sector, it does appear that the fears that it would be a contagion risk have been contained for now. we are back in markets today mulling the outlook for the fed, perhaps one more rate hike. equities looking to follow the direction of wall street and pointing to a drop in australian, new zealand already online. we will be watching the inflation data that is due later. it is the infected to agent down to 7% in february. one of the last major data points before the iba meets.

it could be a reason for them to stay pause. when you take a look at the fx space, a washing of the aussie and the yen. the chinese u.n. -- when you on -- or calls from the likes of fidelity, saying we did see reopening rally, take a bit of a breather. we can see abounds coming in the second half, consumption, jobs outlooks are improving. between what we are hearing on the reopening portion and the alibaba, a lot of reasons to stay bullish on chinese stocks. haidi: at least for today. let's get over to a vonnie quinn. >> think you and good morning. the head of south korea's financial watchdog says the property market may lead to default on project financing loans.

authorities have amassed and assessed 5000 projects relying on these loans, they are ready to act. measures have been put in place to cope following and on expected credit crunch last year triggered by developers default. >> that incident, myself and my colleague, including finance minister, head of bank of korea and fsc, we are quite certain we vaccinated. >> prosecutor's have filed a new charge of fenced debt against sam bankman-fried. it alleges the ftx co-founder authorized a $40 million payment in 2021 seeking to regain access to the assets.

bankman-fried has already pleaded not guilty to several fraud charges be a he is accused of funneling billions of dollars from ftx to alameda for personal expenses. >> french makes including -- face collective finds. as part of investigations into tax fraud and money laundering. relating to a dividend are retries strategy would sit shareholders transferred stock to investors based abroad to avoid a dividend tax. hsbc are part of the investigation. bloomberg's sources say jamie dimon will be a deposed over his bank's decision to retain the latest sex offender jeffrey epstein as a client. i data for the test many as not yet been set. a judge has ordered all related depositions to be completed by the end of may. jp morgan's lawyers have previously fought efforts to have diamond deposed saying he had no input on decisions.

global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: get more for exclusive with south korea's chief financial watchdog. he explains what risks he is watching in credit and property markets. with the current banking turmoil is not as bad as 2008. it is not affecting all companies equally. this is bloomberg. ♪

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booking.com, booking. yeah. >> this the textbook case of dank mismanagement. >> we saw serious stress. >> we have used tools to act quickly to prevent contagion. >> we will continue to monitor

conditions. prepared to use all of our tools. >> to ensure that americans deposits are say. -- are safe. >> depositors will have access to their savings. >> our bank a is sound and resilient. >> the collapse of regional lenders test bank today in washington you're at our next guest says despite what analysts are saying, the 22 any free banking crisis has no parallel to 2008. coo and chief investment strategist eva joins us now from boston. i am curious, your assertion is that this crisis, no parallel with 2008. what is the imprecation of that? >> there is a main similarity. we see the round up in home prices in both cases.

in 2008, the prior five year. use a home prices go up by 50%. however, back then, the consumer debt to gdp ratio was about 100%. this time, in the last three year. we, we saw a home prices go up by 40%, but the consumer debt to gdp ratio is about 75%, a 25 year low. we are not concerned this time because now you have a consumer cash levels are rising, corporate bankruptcies are very low, and you have a 70 year low on an unemployment number. we are speaking about to the mismatch of assets and liabilities. it is a far cry from the 2008 crisis. kathleen: what is the indication for the federal reserve? >> our yield markets did not change between before the fed meeting and after. the fed signaled that instead of two-three further rate hikes, we

will see one. the reason is that we had the banking crisis and the tightening standards when it comes to banks. that is equivalent to 1-2 bank heights whizzes consistent with a 50 asus point yield growth. we saw the markets go higher in the last two weeks. that is a pricing in the rate drop -- rate hike drop, but so there is a small -- a big possibility that we are mispricing. we are pricing the wage drop, but not the why. the reason why the rates are dropping, for that reason, it is not a bad time to start thinking of profits off the table. haidi: you are talk about wealth preservation as a priority. >> i think it is not a bad time to, take profits off, and put

them in a more conservative company, such as committees with good cash flow, low debt, moving up in market cap, good relative evaluation. it is not a bad time to do this and have this tactic because we will see the volatility in the market. kathleen: how much dry powder are you keeping at the moment? >> what we are doing, to key strategies. one is that we have redeployed more conservative companies. we have more cash than usual. there is a major difference between what we are doing and the russell 1000 growth. the returns, from two stocks. 90% of the returns come from five stocks.

that is unbelievable. what we are doing is 50% of our returns come from 12 stocks, and 90% come from 30 stocks. it is important to diversify your performance, especially in these volatile times. diversification is key. haidi: always great to have you. this is bloomberg. ♪

kathleen: amc it shares sharply higher in new york following acquisition rumors. the intersect website has reported that amazon maybe planning to scoop up the struggling movie chain which has a market value of about $4

billion. let's bring in the tech editor joining us from san francisco. doesn't amazon acquisition of amc make sense? >> given that amazon wants to make a big splash in hollywood, they are spending more and more money on big productions, movies, tv, they want to make a splash. if you bought a theater chain like amc, that would give amazon a distribution channel for people who want to go back to the theaters. the problem is that a lot of people don't want to go back to the theaters. thing about the last time, how many times have you been to theater since the end of covid-19. people have been really reluctant to go back into theaters, concerned about the spread of viruses, also there

are so many streaming options in the coverage of your own home. including ones that are from amazon. there is a big? about whether it makes sense financially for amazon to make a splash and spend $4 billion or more for a company like amc. haidi: my husband wants to go to the movies for the first time to see john wick. we have been looking at what analysts are saying about the prospects, some of them are skeptical. >> there is skepticism, we have not independently verified this report. we can't say whether it is true or not. amc has been a socio-with amazon in the past. -- associated with amazon. this is one of the stocks that got whipped around and 2021 by a bunch of day traders reading read it posts who had a lot of time on their hands home at

during the pandemic. they would buy and sell stocks like amc, turning into a meme stock. that never materialized. analysts are saying, if it happens, they might want to look at a chain like cineworld. that is becoming out of bankruptcy, that's an acquisition that amazon could make at a discount, lest risky then it went for amc. if it goes for a theater chain at all. kathleen: are there new gimmicks. what is that they need to do, to get people back to the movies? >> think about the experience, if you can add excitement to going to the theater, you are seeing theaters add recliners,

food and drink orders, do people want to go into a theater for that kind of experience. you have to add to something extra. haidi: coming up next on debris, the plan to lit up the house as creating exams for investors. we talk about with a man who wrote the book on alibaba. duncan clark joins us next. this is bloomberg. ♪

kathleen: chinese tech giant alibaba plans to split into six units. it could help unlock value. let's discuss, bring in

annabelle. it comes down to valuations. >> the discount that we see through the unit or value of each business unit but -- versus what they are currently trading. this is the overall view that we are hearing from analysts in the market. this really could act as a catalyst for alibaba to better reflect the value of its underlying businesses. she is looking at potential listings at the cloud arm, watching their -- of them in particular. alibaba is trading at a depressed market evaluation is a group. that is being made worse by some of its more loss nagging units. crystallize value for investors. if you change on bloomberg intelligence, it points out that this is something that would have the backing of beijing.

it could provide to something that helps ease tensions that we have seen between the private sector and officials there. this is china tech selloff is not something that is uncommon. it could serve as a blueprint for the industry. haidi: the value could be easier said than done. >> that something else we are hearing from analysts. while bernstein is saying, when you take of some of parts experts of, you are taking the bullish case. it still is dependent on market sentiment on the day. looking at more recent examples of spinoffs. jd.com is one of them that spun off one of its business units and that stock is still trading well below the analyst targets. others saying the hat -- that would reflect the spun off business unit was too similar to

its main business. that's why we are still seeing the disconnect. bernstein is saying that the business units offer different sorts of valuations or business cases for the overall alibaba company. kathleen: now for more on alibaba's plans look, spring and bde china founder and chairman duncan clark. the author of alibaba, the house that jack ma build. this is jack mott taking his last big step for alibaba. helping to engineer this -- when a mama bird pushes the baby bird out of the nest. >> he has been trying to distance himself of the committee for some time. it really happened dramatically in october 2020. he cannot shake it. this is a sense of -- it's not a

coincidence that he was in the mainland. it is a sign of moving on for the government and the company and for him. it is all about unlocking value for the investors. also for employees. kathleen: what are the next steps? ipo's, how is this going to play out, where is the value getting a lot? >> jack's last name means horse. there is an idea that investors want to move on from the sense of looming whatever it was from the government, too big, and this is not in this deal, but the idea that the government has indicated it is ok to move ahead with restructuring. it will incentivize employees. in the history, they have opportunity to cash out over the years.

also for the capital markets, it's an iconic company, it's a symbol of fresh capital coming into these companies, new transactions which will help the ipo pipeline. it will take time, but it is a positive signal for the company and the markets. haidi: do they have a choice, was this about unlocking value or about something they had to do to survive? >> it's a bit of both. if the logic -- the narrative was it was too big, this is very helpful to showcase to the broader public that the government is serious about not having too much concentration. it's more the new prime minister, the governor of the province when alibaba was in its growth page. growth matters now to him, we

have seen the numbers declining, exports and imports declining. this new government quickly wants to move forward. we have the china development forum. the agenda is fixed on growth. it is not always consistent. her moose that scare the markets and individuals. we do see a progrowth narrative that is emerging. haidi: is it a coincidence to you that this disclosure was made at the same time that we see jack ma emerging and more in the spotlight? >> i don't think it's a coincidence. this was helpful, if you look at what jack ma did when he was there, he was talking about education, ai, etc.. he has only been allowed to speak about rural education and agriculture.

will he be allowed to speak about more topics? i don't know. would he want to? does he want to be a mouthpiece for new government policy, i don't think so. we may see him more. critically around the sense of moving on. haidi: when it comes to the narrative that china is becoming more investor oriented and relaxing its grip on the ongoing tech crackdown, do you think that is correct or are we starting to see policy priorities over the labor markets start to align with investor interests? >> particularly labor market, we are seeing a large crop of new graduates. a lot of those graduates are

becoming postgraduates studies because there aren't enough jobs for a skilled workers. i think employment is a key concern for the government. as well as the ongoing legacy of the property crackdown on local government budgets. moving on from that narrative of restrictive policies, crackdowns, it is important. with the new premier who has business credentials, there is a sense of creating -- beyond the rhetoric showing progress. haidi: the author of alibaba, the house that? mama else. -- the house that jack ma built. >> thank you. bloom has learned white house national security advisor spoke

with china's top diplomat on friday. amid rising tensions. the call happened days ahead of taiwan presidents land to stop in the u.s.. the white house is looking to arrange a phone call between president and xi jinping. that is not expected until after the return. top u.s. officials are outlining what is likely to be the biggest overhaul in banking regulations in years. the fed vice chair says the rules will include higher capital and liquidity requirements for as is north of $100 million. for lawmakers had opposed covert standards for lenders. >> taking up the leadership rings at the heights of its capital marketing systems. an overhaul that emerged investment banking. michael marsh becomes head of the europe middle eastern and africa financing group. three partners in goldman's investment bank are said to be leaving the firm amid a slump in

dealmaking. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haidi: ahead of the watchdog and south korea, it may lead to default on project financing lows. his first ever media interview, he told us slow simply that 40's have assessed 5000 projects relying on these loans. after developer defaults last year triggered an unexpected credit crunch. >> if any serious financial or institutions for consortium company falls, with the versioning of increased interest rates, interest payments or collapse of collecting their incomes from counterparts, that might put a systematic problem on our economy. ever since the incident of a

legoland, we reviewed all project finance, 5000 of them. some of them might fail eventually. what we are trained to do is spread out to the effects throughout the timeline. gradually, as long as we can stop our plane, i don't thing we will see any severe damage on our macroeconomic side. >> after we had central bank's around the world looking up interest rates fighting inflation. in light of that, how would you assess the state of careers -- korea's credit market. >> we survived the legoland and hulu live event. starting from october, we

executed this market stability measures. we have succeeded in stabilizing the bond market out of it. after experiencing that incident , i self and my colleague, -- myself and my colleague, the finance minister, head of bank of korea and fsc, we are certain we have vaccinated out of the previous event. >> the events that happened in california and the ones in switzerland, could that possibly happen here? >> now, i don't think they will be exposed to that risk here in korea.

their balance sheet is a more sound. the portfolio of securities, the proportions are low, mostly a short-term securities. not only that, on the positive side, they have -- the deposit side, they consist of retail, a small amount of deposits. a small chance that the bank around might happen in korea. very slight. >> what about a t-1? >> one of the reasons that terrified the investors in europe, they will wiped out as well. in korea, they are not designed that way.

it's more complicated, more hard to achieve. >> you have been talking about the banks needing to fulfill the social role. an obligation. >> the meaning of social here means, it doesn't mean they need to depart their money out of their pocket for no reason. >> the money feast. >> yes, he said to that. >> do you agree with him? >> in the short run, i want the bankers to acknowledge that the market is designed to their way and they are getting a big chunk of money out of the system. they might alleviate the

interest of burden on individuals, households. kathleen: speaking exclusively to bloomberg. of next, the mp joins us as we only -- a way to the inflation data to evaluate what it could be for the rva's rate decision next week. this is bloomberg. ♪

haidi: our next guest expects australia inflation to come in below consensus. it would further bolster the case for them to hold rates. during the from sydney. -- joins us now from sydney. it seems like all of the stars in terms of what we have seen with the making colonel -- banking turmoil. the political environment making it seem like a pause is more likely. >> that's definitely our view at the moment. all the data has been coming in on the softer side. it has contrasted to the rest of the world. the data has been turning up,

but we saw the australian was one of the only countries that has been slowing an activity. this goes to the heart of the fact that australia is different when it comes to the impact of those rate hikes. the impacts, more potency, the way that the mortgage market is structured and how sensitive our customers are. we think that they are after the end of the hiking cycle. >> we are hearing that australian lenders are in talks with borrowers to provide relief when it comes to those that are struggling to meet home loan repayments. is this another indication that we are seeing a lot more pressure, more than on the fringes due to the way that our mortgage work is set up? >> there are more and echoes of that coming through. we saw that yesterday in the retail sales, they were up 5.2%. that is pretty weak, over the

past few months, retail is spending down .5%, one of its weakest outcomes in a three month basins that we ever had in history. more signs that you are seeing a rise in mortgage delinquencies. there are signs that consumers are starting to crack. things are not collapsing, we won't come down to a recession, but what is starting to be seen as a sign that the right -- rate hikes are working. in australia, the first signs of those rate hikes working will be on the consumer. kathleen: can you break down the goods versus services, the kinds of things where goods prices come down a lot around the world. services tend to be sticky, and rva focused on wages. >> this is the question that we

have an inflation, the way that print parts are moving is quite varied and unlike other cycles where you tend to see things moving together. we saw a huge rise in consumer prices of the past two years. part of that was driven by commodities, consumer demand, that is now starting to come down. that should fade into the lower prices because goods inflation lease to service inflation. the problem around the world has been that wages growth has been strong, and very high wages has been more than offsetting the weakness. australia is different in this regard. we don't have a wage problem. in the u.s. it is that over 5%. we are not seeing signs of a wage breakout happening here. our labor market is starting to weaken at the margins, we don't

think wages growth is a problem here in australia, it's why we think inflation will disappoint to the downside over the coming -- few quarters. kathleen: more people pricing and the rate, not just a pause, a cut. that something that you could see on the table? >> definitely. we have been talking about the risk of rate cuts for a number of months. the reason for that in australia is because we don't think that our current cash rate of 6.5 percent is sustainable when you talk about the neutral interest rate. if we think about what is a sustainable level of an interest rate, we don't think 3.6%, we think about 2.5-3%. we think there will be too much pressure on the consumer. the average household with a mortgage won't be able to sustain continuing to pay these high rates of interest on high levels of mortgage debt.

that's why we see the ipa cutting. haidi: we have more to come here on daybreak. this is bloomberg. ♪

kathleen: a check of the business flash. sunak china has agreed to a debt restructuring program after the first defaulting of public dollar bonds. the holders will get new debt in 2-9 years. noteholders will be able to swap the data into shares of sunak services. micro technology gave a better sales forecast parking hopes that the worst of the industry slump may be over. the largest u.s. banker of memory chips will says sales were better than analyst estimates thanks to improved supply demand balance. the company announced an increase in job cuts. byd's profit soared 440 6% as the chinese automaker sold a record number of ev's. that income was $2.4 million in line with preliminary profit

reported and gerry. they sold 1.8 6 million electric and plug-in hybrids and 2022. more than the previous four years combined at around 30% of all new energy vehicle sales in china. shares slide after david risher says lift is not for sale. he has been a lift board member since 20 to anyone, they will focus on the core ridesharing business and use lower fares to be with uber. the new ceo dashed possibly of sale, which some speculated would, as a result of management shakeup. >> not for sale. >> do you see why people might think you coming in open's the door to that? being acquired by a larger player that does something different, does it not exist you? -- make sense to you? >> my argument is on focus, i making sure that for customers and drivers. haidi: stocks we are watching as

trade opens up in australia. the midweek session is about performance away from the start of cash trading. bank stocks are in focus. inflation will have slowed in february, that will bolster the case to pause. watching payment shares, they could get move hires as apple has brought out its buy now pay later style service in the u.s.. that is it daybreak australia, daybreak asia is next. this is bloomberg. ♪

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