annabelle: we are coming to live from new york. shery: counting down to the market opens in tokyo and seoul. heidi: asian stocks are facing declines. failing to ease the malaise hanging over the financial sector. the u.s. is seeing extradition on fraud charges or terror phone labs co-founder, allegedly trying to travel on fake documents. the tiktok ceo faces a fury of u.s. lawmakers clamoring to ban the app as a data security risk. annabelle: we have the open at the asx 200, there are a couple of things we are focusing on. we have janet's comments, and also the continuing quandary facing the fed, between trying

to manage those financial stability risks and at the same time rein in inflation. those bets that we are going to see fed rate cuts continue to build into the bond space with yields retreating, particularly at the shorter end of the curve. it is starting to become clearer in the data we are getting. in australia, the private reading for pmi filed -- fell to its weakest level since may 2020. the aussie dollar turning negative, the greenback has already been sliding for seven straight sessions. the asx 200 a staggered start, we are looking a little bit weaker. futures have been indicating to a drop of around half a percent. we are continuing to watch those moves in the bond space around other parts of the region, new zealand in particular. also what we are seeing in australia, new zealand, the stocks that are trading weaker. the yen is in focus, a little

bit stronger here. we are continuing to watch that strength coming into the currency. also the pound, but was after the boe hiked by 25 basis wanes. vonnie: not had a ripple effect on the dollar, as well. u.s. futures, very minuscule move higher for s&p. nothing really going on with nasdaq. that is after an exhausting day in which confidence was barrel -- very fragile. the s&p 500 rebounding off of yesterday's declines, up more than 2% above one point. then they wiped out all of those gains and then some, finishing the session at 0.3 percent. the catalyst, banks. a selloff in banks, more regional banks than previously we saw. first republic stocks really taking a tumble. the kbw bank index tells the

whole story. at 3:00 p.m., a little spike higher. it was going to be rebound after janet yellen changed her tone on protecting u.s. bank depositors. she added a line and told congress that regulars are ready to take further steps if needed. if she needs to add that in, what might that actually mean? let's ask somebody who may know more, kathleen is here. very big difference from yesterday. kathleen: what a difference a day makes for a sentence. because janet yellen had gone before the senate to talk about what they have done, what they're going to do. he what people focused in on was she said that the steps have been taken to keep american depositors safe. faang stocks got hit, this was right after the fed decision. an hour later, it confused markets and created a lot of

volatility. so today, she made a stronger statement about being ready to help depositors more. >> the strong actions we have taken ensure that americans deposits are safe. certainly, we would be prepared to take additional actions if warranted. kathleen: of course, she also said it will take legislative action to pass that. that ensures depositors up to $250,000. when svb came down, that took a lot of wealthier people, their deposits above 200 and $50,000 at risk. a lot of small and medium businesses use accounts at banks to do their payrolls. they are not speculators or people who are investing in crypto, these are people who are trying to get their business done and not have it disrupted. this is very, very important. maybe there is not as much pressure as we think, because the latest numbers matt the

discount window is an emerging lending facility that the federal reserve has had for decades. every thursday afternoon, they put out a report, i think it is the h six. the discount window was always watched, because you suddenly see discount window borrowings and people say, someone is having a little trouble. now it has shot up from not much borrowing, last week, $153 billion. the new facility was created to tide over small businesses. now there is svb, who didn't get tied it over. the discount window, very interesting from 100 53 billion to 110 billion. there are still some people who need to go to the window, the concern, maybe they will need extra reserves to write off anything that might happen to their depositors, to their accounts. maybe it is a sign that things

are starting to ease a bit. cross your fingers, no other shoe falls in terms of another bank. for now, also support jay powell's comments yesterday suggesting they are watching closely, but giving us a sense that they are if not confident, they are pretty sure that things are moving ahead, things are getting better, and that will make a big difference potentially to fed policy in future hikes if they are needed. annabelle: u.s. prosecutors will seek the extradition on four charges of terraform labs quan. he helped create the stablecoin which collapse lacks me. bloomberg senior crypto editor has been tracking this for a number of months. how exactly did he end up in montenegro? >> he created okun's that he thought would help to revolutionize finance.

they were a combined value of the thousand dollars -- $60,000. he was in singapore, south korea issued and the arrest warrant, and after that, his whereabouts became unclear. we didn't exactly know where he was until he was detained overnight in montenegro and he was trying to travel to dubai. it is an end for someone who, at one point was actually poking fun at the police. heidi: well montenegro is beautiful, but he will hardly be able to stay there. who gets him? sunil: that is unclear. the south koreans have been trying to build a case against him for some time. they issued a notice for him which was in play when he was detained in montenegro. we saw that the u.s. has charged

him with fraud. the question becomes, where would he end up? it is not highly clear how you would adjudicate competing claims about his prosecution. i think we will have to wait and see. heidi: cannot wait to see the next episode in this particular series. that was senior crypto editor. thank you. annabelle: tiktok ceo has faced a bipartisan grilling on capitol hill as u.s. lawmakers seek to ban the app as a security risk. he insists he has seen no evidence that china has access to user data. he also said security and privacy concerns are just as much and the issue for other forms. >> the potential security privacy and concerns raised about tiktok are non-unique to us. the same issues apply to other companies. we believe what is needed are clear and transparent rules that apply broadly to all tech companies.

ownership is not at the core of addressing these concerns. annabelle: let's bring in chief north asian correspondent, stephen engle. what's the biggest take away from what was a four hour session in congress? stephen: as you can see, he was confident from that grilling, but he kind of had a herculean task to convince a very skeptical bipartisan house that tiktok does not essentially protect the data or does not allow it to get back to its parent company. and therefore could be accessed by the chinese government. as one republican lawmaker from washington said, we are not buying it is essentially what she said. that was kathy rogers from washington. also, another democrat from delaware says, i came here to hear some action that would

allow me to allay our concerns. i have not been reassured by anything you have said so far and that your testimony raise more questions for me than answers. he has faced more than four hours of grilling before the house energy and commerce committee and, he could not necessarily answer direct yes or no questions. that drew some incredulous chuckles by some lawmakers and some frustration. one time he was asked, do bytedance employees have access to u.s. users data? he said, we have seen no evidence of that. another lawmaker asked, yes or no? and the answer was, this is a complex subject. again, another question was, is tiktok a chinese company? he answered, that is not how we see it. again, shou chew said this is an

american data, on american soil by an american company overseen by american personnel. but again, i come back to how i began this report to saying many, many lawmakers were simply not buying it. heidi: have we had much response from beijing? stephen: before his testimony on capitol hill, we did a comment from the administrative commerce in china essentially saying this seriously undermines, if this is a forced sale. keep in mind, the u.s. is considering possible forced sale of tiktok, the international arm of course bytedance. they have a different service in china. and bytedance is more international, it has already been banned by india on government funds in the u.k., as well as europe and u.s. congress people. the ministry of congress --

commerce in china says a forced sale would seriously undermine the confidence of investors from all countries, including china to invest in the u.s.. so much skepticism in the united states towards china and towards national security concerns regarding data. as i said, it would have been a herculean task for shou chew to convince the u.s. lawmakers otherwise. annabelle: chief north asia correspondent stephen engle, joining us from hong kong. one stock we are definitely watching in the sydney session is where block, falling 16% after we saw that hindenburg research took that short position with that research. aiming that short attack at block. it is down at five. but there are key lapses in the cashapp compliance processes. they have already caused -- called hindenburg's claims

misleading. we did see after the issuance of that report alleging they had facilitated fraudsters. it did fly out as much as 22%. it actually ended off those session lows. that was the biggest intraday decline for that stock in three years. hindenburg really bolstering its profile with that recent scathing report on the adani empire earlier this year. this was a report that came out of a two year investigation into block that was published on its website and distributed via twitter. we continue to see that far with block falling just about 15% in this friday sydney's and on those allegations. let's get to su keenan. su: the u.s. justice department is investigating banks including credit suisse and ubs on whether they helped russia oligarchs evade sanctions. the swiss banks were involved in

a recent wave of subpoenas that were sent out by the american government. the information requests were sent before the turmoil that engulfed credit suisse and resulted in ubs proposed takeover of its rival. the bank of new england pushed ahead with another english rate -- interest rate increase predicting the economy will avoid a recession for now. the central bank raged -- raised its benchmark. and left the door open for further increases. andrew bailey is seeking to keep a lid on soaring prices amid turmoil in financial markets. taiwan central bank delivered a surprise rate hike, a day after the u.s. fed continued its tightening cycle. its benchmark rate was raised by 12.5 basis points to 1.875%. making the highest level since 2015. most economists expected the rate to stay unchanged, and

taiwan has hiked rates at five of its last policy meetings to fight high inflation. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. annabelle: still ahead, the imf says fed chairman jerome powell wouldn't do well to recognize how the fed's monetary policy is leading to a banking crisis. executive director joins us later in the hour. and up first, a look at bond markets as the fed doubles down on its hawkish path in the u.s. prepares his actions to protect banks potentially. we will speak with giovanna from bond blocks. thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

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heidi: you are watching bloomberg daybreak: asia. look at the volatility. that volatility at the short end of the curve has eclipsed the swings during the great financial crisis did the key difference is markets are coming out of more than a decade of low interest rate. short dated treasuries rocked by outside moves or an 11th straight trading session as investors are pessimistic about the economic outlook on ted rate cut ater this year more than ever. running us now is joanna,

cofounder of bondbloxx. do we continue to see those moves in the move index? joanna: it has been a really interesting month for treasuries especially in the two-year. or your four weeks ago, you are looking at something over 5%. there is a flipside where the returns month to date have been really impressive in the shorter set of the curve. you are looking at something in ranges of two to 3% in price move, which is different about 2023, you also get a total return out of a bond investment because the yields have been up, they are up after yesterday's rate hike, 475 basis points. there is a good story here on both sides of the price volatility and the yield. annabelle: how do you know what is coming next? the bond market is out of sync with the federal reserve, pricing in more than one. maybe as many as three cuts by the end of this year. joanna: the fed is not saying that. they are continuing their

vigilance to fight inflation, they reiterated that yesterday. i think what you can count on is that you definitely need to be thinking about duration management in your portfolio and treasuries are a really great way to think about that space, because they are so reflective of the market view on where i'm is going. in terms of how you play it, what you definitely want to do is make sure you're taking advantage of the yield side, because the carry is really powerful in your part olio and diversify away from other risk. if you are not about, that would be the missed opportunity versus trying to call a short-term return. vonnie: it is so difficult to know what to do, to up your allocation to bonds or not. there are so many diverging views. i would like to point to another chart which are asia rates correspondent pointed out to us yesterday. fed chairman jerome powell's favorite indicator, the three-month yield 18 months out.

we are negative now by something like 135 basis points. what does that tell you about what's coming? joanna: i think there is a sentiment that there is distress and downturn coming. we haven't seen it yet. this has been a really interesting quarter for economic data. it has been contradictory and confounding. week by week, we need more information and we will have to see what the second quarter is like. i would say, there is a silver lining to investing in bonds right now. on the short end, it is a really great lace to hang out until we understand what is next. at least you are getting paid to do that, for once. yields have gone up in the last year. if you don't know what to do, maybe you should be buying a six-month one-year exposure in tragedies -- treasuries. there is nothing wrong with getting paid now while we figure this out. vonnie: when it comes to

inflation expectations, so much of that depends on where that inflation is coming from. even before the banking turmoil, there were questions about whether we have yet to see that transmission lag. is that the risk that you look at as well? joanna: i think we say it trust the fed, again. they are continuing their fight against inflation, they were really there yesterday where they are going towards their target. the lagging data is difficult to incorporate and process as we go along, but we are not -- inflation is slowing, it is coming down, but we are not done. we could be near the end of the interest rate hike cycle that we think the fed will get the job done and we should be trusting in what they are indicating to us as their next objective. heidi: you seeing more edition of duration and portfolios? joanna: we are. we get to see across the curve from six months all the way up

to 20 years, exactly how people are planning duration. in the last week or so, we have seen a little bit of activity in stepping out of the curve a bit on the 2, 3, five, and seven year yield. we want to lean into the idea that the rate hike cycle is ending and the economy may be cooling-off, there could be some more interesting and attractive returns there. or, if you want to reposition your portfolio from last year where you have been reducing the duration and credit risk, you may want to take on duration on the 10 and 20 year just to anticipate the downturn and or get yourself back to your benchmark of where duration assets are in your overall portfolio. lots of reasons why we are seeing clients take a bit more duration in their portfolio and just in the last recent weeks we have started to see it. heidi: thank you so much, thanks for coming into the studio.

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heidi: the latest business flash headlines. sunak expects a second consecutive year of multibillion-dollar losses amid china's record high market slowdown. they predict a preliminary net loss of as much as $4.1 billion in 2022 following a record loss of $5.5 million in the year prior. toshiba says it has accepted a $15 billion buyout offer from a

japanese group led by japan industrial partners. the offer is almost 10% premium. it gets it one step closer to ending years of uncertainty after multiple scandals but the company on course for a sale. accenture is joining the growing list of companies in the consulting sector that are laying off workers. they will cut 19,000 jobs over the next 18 months, 2.5 percent of its workforce. over half of the job cuts will affect people in nonbillable corporate functions. coming up next, the imf executive director joins us with the funds latest economic outlook amid banking sector turmoil and high inflation. this is bloomberg. ♪

annabelle: we have inflation data coming out of japan. 3.3% in february as anticipated. a step down from january's data as we expected because we are looking at base effects slowing things down in february from january, operating at a higher earlier base. we also have new subsidies which would have push down utility bills. we were looking for a core cpi to decelerate to 3%. it didn't go that much, it did decelerate to 3.3%. it was at 3.1 percent figure as anticipated. energy and fresh food slightly higher than anticipated with a figure of 3.5%. let's get a reaction now in the markets, we are keeping an eye out. annabelle: inflationary pressures still looking relatively strong with that core reading, fresh food and energy.

where that is likely to change the tune of the bod is fairly unlikely. they have been pretty clear that inflationary pressures would upset eyes or so died over the coming months. we do still see that slight bit of strength coming into the japanese yen. we have been watching over the past few days, with these expectations for a policy pivot from the fed. that has eased the pressure. in terms of what else, nikkei futures just coming online in singapore, pointing to a drop at the open. we will be watching how those bank stocks traded, looking for a contraction there given that we had janet yellen's eking about this on thursday saying there will be support for the broader banking sector. if you take out what else we are watching, we do see global banks under pressure in australia. etf trading on 1%, but block,

this is a sydney listing of the company and it does follow the hindenburg research more -- research report, some of these details were already known and markets, we are seeing that slide there in block saying it will investigate taking legal action. aussie three year yield continuing to drop. we did get that pmi reading out earlier. stock slumping to its weakest level since may 2020. it does build the case that we could see a pause from the rba. keeping an eye on what is happening with the bloomberg dollar gauge, we have seen it lighting for next great sessions. we will watch, it is really down to those expectations around a pivot at the fed. vonnie: our next ghost thinks that the svb collapse could be the canary in the coal mine. imf the. former chief economic advisor

for india joins us here in the new york studio along with our global economics and policy editor kathleen. thank you so much for joining us. are you saying there are fundamental reasons why all of these regional banks are selling off so precipitously? >> if you look at the u.s. banking sector, immediately after covid, the savings increase i about 5 trillion. while the loans increased only by 2 trillion. where did the remaining 3 trillion go? one point 3 trillion went into u.s. treasuries and we know very well that the u.s. treasuries market value decreases when the rates are increased. the unprecedented increase in six months has led to about 600 billion plus of unrealized losses. that is the point that i am making by saying this is a canary in a coal mine.

many commentators are focusing on the fact that the kind of deposits that svb had was more than $250,000 which is not insured. the crucial part to recognize is that this loss is about 30% of the equity of the u.s. banking system, that is a very large number. kathleen: i think this is something that many people have not graphs or realized, it has been difficult to deal with. there are banks with a lot of unrealized losses because the value of all those treasuries and securities they held has gone down. and now, yields are up. what is the next step? >> the fed has come up with and where they are trying to kick the can down the road. the program essentially enables banks to borrow by using the discount window, by depositing the securities not at the market value but at the face value. all that does is postpones the

problem, does not solve the problem. as we are seeing, many of these small banks, regional banks, there are deposits that are getting withdrawn from there and going into the large banks, which means the depositors are not convinced that the crisis is over. this will have important rim of or the common americans, because a lot of people, small firms, bank with these small banks, and those are in stress. i think we will have to wait and watch because 30% of the bank equity in stress is a large number. vonnie: and back on the idea of a complete guarantee of u.s. bank deposits. what is more important at this point? achieving term stability in the financial sector, as you say, ongoing credit event in the future has huge ramifications, or is it more important to discourage this idea that we are worsening moral hazard here? >> i think the $250,000

threshold is large enough. if you think about the average american, that is about four or five times their annual income. the median. if someone has more than that, i don't think we would classify such a person or such a household as poor. so, in order to ensure that doesn't get exacerbated, i don't agree that there should be an increase in the threshold for deposit insurance. i think what is critical is for the fed to realize that the rate hike cycle has to end. further increases in the policy rate will only mean even more unrealized losses and that will also affect many of the banks that are possibly unhedged while the problem is being postponed. at some point -- vonnie: didn't we know this was

happening? at the end of zero interest rates, you are going to have higher interest rates. this is a failure of risk management, no? >> yes aim to go around among various stakeholders. i would definitely think that the bank management should have hedged the interest rate risk. i think the large banks have definitely done that, many of the other banks, may not have been optimal and may not have hedged their risks. at the same time, i would also mention that the federal government and the federal reserve it will also have to take some share of the blame. the original sin came from the federal government because the spending like there is no tomorrow. you can't put in that there is a free lunch when you're doing economic policy. the spending during covid was done as if there was a free lunch. that led to the situation where deposits increased so much

because savings increase, at the same time, i think the fed was slow to react and therefore, now they are really hitting the accelerator to make up for lost time. kathleen: this one of the most important points, not being stressed enough. when you go 400 basis points, when you go that fast, what bank can keep up? it is very difficult. let's talk about what you did, because as we met and talked about this recently, you say that you followed a different path, precisely because you thought if you put a lot of stimulus in during the pandemic, it would end up in lots of inflation and problems with the system. what did you do? >> india was unique in recognizing that the covid crisis was not going to be like the other crises which always is

a shock. we also recognize that the covid crisis would be a supply-side shock, that is why we balanced the demand and supply side measures. what we have had in the u.s. and many advanced economies is primarily a response on the demand side but with a strong supply. that is what has led to inflation. if you play history back, if there was a good balance of the demand and supply side measures, then the kind of growth with reasonable inflation that india is seeing, the u.s. could also expect. vonnie: otter emerging markets, we see more resilience this time around. when you take a look at the bailout conditions for sri lanka, how much harder is it going to be for countries that are in dire straits to be able to restructure that debt? >> i think that is a very good point that you raise. it is not just sri lanka. many emerging economies are

facing that distress. i think in times like these, it is really important for the creditors to come together, make decisions in mind that loss of time is also loss of value and ensure that the correct measures , the bitter pills need to be taken in the form of refund. last week, me and my colleagues at the imf board have approved a bailout for sri lanka which will hopefully help them come back to normalcy and being able to access international markets, but also use the foreign exchange to be able to pay for imports and get their economy back on track. heidi: we have to leave it there, but thank you so much for joining us. of course, kathleen. heidi: coming up next, we take a look at funding access for

underrepresented groups that fell in 2022. that was even before the current banking turmoil and the collapse of svb. a key proponent when it comes to funding businesses by people of color, minorities, and female startups. we get a little bit more on the systemic challenges ahead facing small minority business owners in this current environment. this is bloomberg. this is bloomberg. ♪o worry about things like changing tax rates or filing returns. avalarahhh ahhh the new chase ink business premier card is made for people like sam 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...

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su: u.s. prosecutors will sedo cause extradition to new york after charging the terraform's cofounder with fraud. the 31-year-old was arrested in montenegro where authorities say he was trying to fly to dubai using falsified travel documents. he helped create the ust stablecoin which collapsed last may triggering a $40 billion cryptocurrency implosion. the tiktok ceo's appearance in congress did little to calm the bipartisan fury directed at the popular video sharing service. shou chew faced hostile questioning from members of both parties while trying to reiterate tiktok's independence

from its chinese owner, bytedance. lawmakers and the biden administration rx loring how to force bytedance touche dell its share of tiktok or face a band. -- to share its cell of tiktok. >> they have never asked us. >> i find that preposterous. >> i see no evidence of this happening. in order to assure everybody here and all our users, our commitment is to move the data into the united states to be stored on american soil by and the american company, overseen by american personnel. su: swiss national bank president is rejecting the idea of spending off credit suisse is profitable domestic unit. the ether those foundation had a proposed move this week and wants to minimize job cuts. the snb says its priority is restoring the stability of the swiss banking system. >> the credit suisse problem is

much smaller, given the fact that ubs will take over credit suisse. we have a stable banking system in switzerland. obviously, there is some uncertainty on the global scale. that is what we have to continue to follow very closely and observe it very closely to see what is the impact on the swiss situation. su: global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. heidi: the collapse of silicon valley bank has created a void for start ups of all kinds, especially those owned by women and minorities. oh the funding gap is set to widen. we have an entrepreneur in residence at the university of michigan who joins us now. we know that with the collapse of silicon valley bank, there was really a void in terms of

the very unique role that it played within starter culture. how does this affect women startup founders, people of color? we know that gap in terms of their businesses getting funding was already an issue prior to this. rashmi: that is correct. the silicon valley bank incident is a bit of a symptom and not as much a cause in that funding had been falling for about a year in 2022 and we know that disproportionately affected founders from underrepresented groups. so that the bank, i think this can have two effects. one is, silicon valley bank was really a center and a proponent of encouraging founders from underrepresented groups, both in terms of programs, networking, extending lines of credit, and also being a hub and network in

the silicon valley network. as that nexus point, they were able to make introductions and promote the founders. without that support, we will have to see who takes on that role going forward. will the bank fill the void that silicon valley bank occupied? will they have the same philosophy? in addition, obviously capital markets are nervous. there may be more markets that have issues. as capital tightens, that will probably disproportionately affect underrepresented founder groups. annabelle: without svb, in terms of both internal and broader outreach, it made a big impact when it can to dti. a big part of the internal dna. without that, how much harder does it get in terms of being able to get access? as you say, this idea of how much harder it is for these sorts of businesses to reach

some pinnacle of being high-profile, being funded, it starts from the very beginning of having access to really the systemic availability of funding and networking and so many other things. rashmi: yes, it does get harder. as i mentioned, we will have to see if there are other organizations, potentially other banks or nonprofits, ngos, government institutions, other entrepreneurship support organizations, whether other organizations will take up that mantle of really pioneering and championing underrepresented founders. but yes, it will be more of an uphill climb then it was before. vonnie: what does it mean if these companies don't manage to make it, if they have exhausted their lines of credit and somebody doesn't step in in order to tide them over, do they then go into the bucket of companies that have failed, thereby adding to statistics that don't help these people, minorities, people of color, and other types of firms that don't

typically get investment as easy as others? rashmi: that is indeed possible. start ups, regardless of their founders, either need to find bridge financing from banks or they need to see an uptick in their revenues and profits. if we are going into a recessionary environment with tightening capital markets, back it's harder for everybody, it gets even harder from founders from nontraditional backgrounds. vonnie: what is the latest data that you have on these companies and what percentages that we know of are getting funded, percentage for african-american companies, founders that are of other colors, latinx, women founded, and so on. rashmi: sadly, the numbers are very low. nearly every group you look at will be in the low single digits. black founders typically get about 1% of the venture funding out there, women

founding get around two to 3%. if you add up all the founders of color, less than 3%, lgbtq founders, 1%. the numbers are not good. in 2022, they have turned it in the wrong direction. heidi: how do we move out into the right direction? it feels like, along with a lot of other efforts to get diversity and inclusion across the corporate world, the numbers going backwards, despite so much of a push from people like you to try to reverse that trend. rashmi: this is a complex multisystem problem. the solution will have to happen in every part of the ecosystem. what can we do to encourage more founders from nontraditional backgrounds to think about entrepreneurship as a career? could those be mentorship programs with other successful entrepreneurs that they could

learn more about the space from? will we see more coverage in the press of the founders of underrepresented backgrounds? and then, will the funding system change the way it looks at startups that it wants to fund? will they look at founders who are different than founders they have funded before? ideas that are different, customer bases that are different, we will have to see what happens. heidi: thank you so much for joining us today. lecture at the university of michigan school of business. watch us live and see our past interviews on our interactive tv function, tv . you can dive into anything that we talk about, plus become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪

annabelle: toshiba has accepted a $15 billion buyout moving one step closer to ending a troubled chapter in its long history. has been a long time coming, what does it mean for toshiba and one has been the investor reaction?

>> like you said, a lot of people have been waiting a long time, years, almost three years for a resolution to this deal. i think a lot of people are reacting to it in a positive way. the price tag might be a bit disappointing to some, but so far, based on the response, our understanding is that people would be happy to see an end to the deal and looking forward to whether the offer will be successful. heidi: what should we expect next? >> so, in terms of procedure, we will have to see if they get enough number of shares, that is the big question that we need to ask and are waiting for for the next couple months. another big question is, under the assumption that the deal is

successful, the really big question is, what will happen to the management and who will continue to lead toshiba and change it into a better company that everyone is hoping for? heidi: certainly that has the activists out of there. thank you for joining us. our from toshiba, these are the other stocks to watch when trade opens in korea and japan shortly. we are also keeping an eye on gmo payments gateway after the hindenburg research attack on u.s. rider block. tech stocks may move after japan ended restrictions to exports first south korea. market opens in seoul and tokyo are next. this is bloomberg. ♪

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vonnie: this is "bloomberg daybreak: asia" going to go to egypt as of this market opens. japan and south korea coming online after we got up and it was still inflationary pressure in japan. space x playing a role there as well. it is all about what broader markets do today after janet yellen's testimony and as the banking crisis continues to percolate. we are not calling it a crisis yet. haidi: there is a lot of turmoil, and that continues even as janet yellen tried to soften some of her remarks about what regulators could potentially do if things got worse. what an end to the week. i feel like we are all exhausted. annabelle: absolutely, we have the open of japan, korea and the start of trading for cash treasuries. we need to look at what we are

seeing in the two year yield, because it has been fluctuating, outsized it moves for 11 states restaurants. coming online with the 10-year yield. the focus for investors whether the fed is going to be forced to cut interest rates later this year. that will be watched throughout the session. keeping an eye on bank stocks in particular, given we did see them under pressure on wall street, even though janet yellen reassured or told lawmakers at the u.s. would be prepared to take further steps to protect a positive needed. topics index declining at that start of trade. keeping an eye on toshiba, that company not yet, we will be watching for that stock to move given that it has accepted a $15 billion buyout offer. that stock one to watch her. not yet a match on the bid ask spread. let's change up to korea, given in focus today we are watching the tech stocks in particular.

kosdaq outpacing gains for the broader kospi. nasdaq approaching a bull market gaining nearly 20% since the recent lows. a lot of investors moving into large cap names like apple, microsoft has a safety bid, more of a haven stock instead. also watching the korean won, it is sliding as we see the bloomberg dollar gauge turning into green territory. it has been on a six-day slide. keeping an eye on tech stocks in particular after shares of south korea and japan, they may move with japan ending restrictions on certain ship making materials to korea. let's change on now to australia, one hour into the session one stuck in particular extending out to us today and that is a block. it has been hit by a shortselling report in

hindenburg. that company exploring legal action, but payment stocks under pressure today. we are continuing to watch what will happen with the aussie three year yield given that we saw pmi data falling into contractionary territory, worst reading for the private surrey -- story since may 2020. energy stocks under pressure. haidi: let's bring it our next guest who is questioning whether this banking turmoil is the first domino to fall from the rapid increase in rates. with us now is olivier. when you take a look at the notes i was pricing earlier, lots of questions. were market surprise? where do we go from here? is this the first domino to fall? if you are in investor, how are you protecting yourself against future belts of volatility? >> we are seeing all of these

questions simply right now. in january, people rebuilding, in february they question whether they should be and in march they got blindsided by a banking crisis they were not expecting. there were expecting an economic crisis and the fed to come to the rescue but not a banking crisis. there is still a little bit of shock. you have other news coming out like lock news by short-sellers trying to push sentiment into a bearish mood, but right now what they are saying is they do not know, so they are buying large caps, companies that are profitable already that have little debt. that have low volatility. all of these defensive segments of the markets from a factor point of view are going up, and u.s. key digits are going down. we know they are scared. sentiment is just neutral, and all of these questions are up in the air and they do not have an answer for it.

haidi: it a weird place to be scared if you are seeking solace in tech. what do you feel about that rotation we are seeing? >> we are seeing that, because of last year tech took a beating. the valuations there are not too high, especially large cap tech. all of the problems the world is facing in terms of climate, health, aging, all of these will have a technical solution at some point. therefore, technology is a long-term team people want to play, and every time the sector gets cheap, there will be buyers into it was sure. it will recover faster than other sectors. vonnie: it is an exciting time for those able to play volatility. what are you advising in terms of volatility place? how to work around those? >> low volatility strategies have been happening all year in

2021, 2022. it has been a risk off period both years because of the inflation story. the fed is saying we have to get rid of the elephant on our back, because it is really not going to let us breathe unless we get rid of it. the fed and other central banks are telling it investors help is not on the way and if anything helpful take the form of a rescue. that is what we saw with a banking crisis, right? we are wondering what else is out there. interest rates went up too fast too high for us to see the impact. it takes 12, 18 months for the impact to come, and those rate hikes only happened nine months ago. we need more time to see with the damages. we were not expecting damage to balance sheets. we were expecting damage to the economy, consumer spending, the job market, and none of that has happened. it is a confusing time, because

it did it is not playing along with the story. vonnie: where do you see the risks most urgent in the aipac region that might ripple out? >> one of the issues we have seen that i have not given us rest is no one is priced into bond risk. spreads have been pretty flat, and a lot of triple bbb bonds out there, quite a bit of the investment grade is in bbb. especially from china here in aipac. that is the worry. we do not know if there will be a fall off the cliff and some of those in terms of pulling out of the investment universe and going into high yield, and that has not been priced into the corporate bond market. we have priced in rate sensitivity, we have not touched high-yield or low rate, bbb's and things like that in the corporate bond market.

so that is my worry. haidi: is china still interesting at this point? we have seen their be opening trade kind of stall, but it is still ongoing. do you like having any exposure? >> china is interesting from an economic interview. they are at the bottom of their cycle, and they are trying to get a backup, so that is interesting as an investor. you have additional risk premiums on china. one his regulatory risk. you never know when they will dislike a certain sector or industry. you have geopolitical risk premium rising even more after the xi jinping visit to russia. there are some issues there that investors need to get over before they consider buying china, and the risk premiums right now maybe too high for them. especially when there are better things to do at home. haidi: olivier dassier is a head

of research. let's get you to su keenan. su: the firm blocks as it will export legal action against hindenburg research over its report accusing the payments company of enabling fraudsters. hindenburg's two year investigation alleges scammers have taken advantage of pandemic stimulus programs. block says it will work with the sec and fight what it calls the inaccurate and misleading report. block shares plunged as much as 22%. meanwhile bloomberg hasn't learned the u.s. justice department is of is getting banks including credit suisse and ubs on whether they helped russian oligarchs evade sanctions. this was banks were involved in a recent wave of subpoenas sent out by the american government, and the information requests were sent before the turmoil that engulfed credit suisse. that also resulted in ubs's proposed takeover of its

arrival. to the bank of england, it pushed ahead with another interest rate increase hoping the economy will avoid a recession. the central bank raised age benchmark by a quarter-point and left the door open to further increases. governor enter bailey is seeking to keep a lid on soaring prices amid turmoil in financial markets. taiwan's central bank delivered a surprise rate hike a day after the fed continued its tightening cycle. it's benchmark rate was raised by 25 basis points, marking the highest level since 2015. most economists expect the rate to stay unchanged. taiwan has hike rates at five of its eyes policy meetings to fight high inflation. beijing hosts a three day corporate summit from saturday. it is the first china development forum to be fully live since the country's three-year covid isolation ended. ceos including apple's tim cook

and's ceo are expected to attend in person. we are told many u.s. firms are choosing to keep a low profile around that china activities. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg. vonnie: let's get over to annabelle droulers, because there is a company trading now. tell us all about it. annabelle: toshiba has just come online in the last few minutes or so. why we are watching this stock is because they just accepted a buyout offer from a japanese consortium. this buyout offer does valued the company at eight near 10% premium to thursday's closing price. we are not at that yet. that would be ¥4620 per share. it is the bid offered that has been accepted. the offer is expected to start

in late july. we do not know the exact schedule on that. certainly toshiba has faced years of troubles from management issues to being at odds with the japanese government and a very vocal set of shareholders in the company as well. let's change up to another stock we are watching, this is payments company block dropping today. other payments companies in turn , these are mostly moving higher. gmo just came online in tokyo. block we have been discussing in first word headlines with su. it says it is exploring collection against a hindenburg report. a lot of analyst commenting on this including citi, and there are think this call for bringing in lawyers will not be enough to dispel concerns around the company. changing up to what we are seeing in the tech sector in japan and korea, these are some of the big tech movers reacting to japan ending exports of three

key materials that are used in chipmaking to korea. these three companies in tokyo to control the vast majority of those materials. all are moving higher as is samsung in seoul. still in seoul we are watching shares of sm entertainment, they are a little changed, fractionally lower. the offer that kakao has in place to buy sm entertainment at $1000 per share expires today. we're watching this after hybe and it is stake to take control of the company. we really have washed this stock -- watched this stock could slide over the last few sessions. haidi: we have indeed. and a belt latest. we have much more to come on "bloomberg daybreak: asia" including the hunt for do kwon

which comes to an end. we get the details just ahead. tiktok's ceo facing tough questioning from u.s. lawmakers concerned about china's influence over the platform. the highlights from that testimony our next. -- are next. this is bloomberg. ♪ with a partner that always puts you first. start for free at godaddy.com the new chase ink business premier card is made for people like sam 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.

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>> supervision generally, the stress test is become less rigorous over time, and i think more importantly it has become too predictable. and the whole purpose of a stress test is you are trying to stress against the unanticipated. vonnie: that is former fed governor don tarullo on what he sees as flaws in the banking stress test. treasury secretary janet yellen has changed her tone on protecting u.s. bank depositors, telling congress regulators are ready to take further steps if needed. kathleen hays is here. it was one extra sentence, and it made all the difference. we are not sure what direction you asked -- next. >> it was just one sentence, but we have to look at this and say don't we suppose this is clear what happened. janet yellen give a speech,

everyone is wondering what kind of steps they may take to back up what has been done so far, and she spoke right after 3:00 p.m. after the fed's decision at 2:00 p.m. jay powell was still giving his press conference and said that they have taken steps to backup depositors. well, the banks are still waiting to hear what is going to happen. a lot of them are sitting on some precarious positions given aggressive rate hikes from fed. investors hit bank stocks, and that got treasuries attention. today janet yellen was speaking to the senate yesterday and came back to the speed to the house. they said they are ready to do more, and this is what they tried to do and say to get the banks a little bit more secure. let's listen. >> the strong actions we have

taken ensure american's deposits are safe. certainly we would be prepared to take additional actions if warranted. >> what we all know is at stake is the amount insurance, federal deposit insurance corporation pace on deposit among other things. it is a huge backstop if you will put your money in the u.s. and no up to $250,000 of your savings are insured, backed up by the federal government no matter what happens. as a guest last ever said most americans do not worry about it. they do not have $250,000 part of the bank, but there are small businesses who gave their payroll money there to their employees. the short of it is that is something that also perhaps i just, the treasury department is looking at this and does realize they may have to do more. another interesting story, every thursday the reserve bank of new

york without its weekly money supply, reserve balance, etc. report. to what it showed is that the emergency borrowings have come way down. they were up over 150 begin dollars last week. perhaps it means the worst of the storm is over, people are relaxing. they might not be entirely convinced there are not further troubles down the road. they were low do nonexistent before. it is an important step, and the swap lines. remember the first week of svb melting down? that is when the u.s. federal reserve said they were opening swap lines with the bank of canada, european central bank, bank of japan, swiss national bank. those total $590 million, that is not much money. i never signed those swap lines,

other correspondent central banks would take to backup dollar funding in their countries is not being called upon to a big extent. cross your fingers, it looks like there are good signals coming from a low point to may be a higher point, and did many ways quietly a big day for what some of the latest is on this banking crisis that may be is not so much a crisis now we hope. haidi: global economics and policy editor kathy nays. we are turning to tech, tiktok ceo has faced growing on capitol hill as lawmakers were to ban the i. he says there is no evidence china has access to data and says security and privacy concerns are just as much of an issue as for other blood worms. -- platforms. >> the potential privacy concerns raised about tiktok are not unique to us. the same issues apply to other companies. we believe what is needed are

clear, transparent rules that apply broadly to all tech companies. ownership is not at the core of addressing these concerns. haidi: let's bring in stephen engle. he mounted a passionate defense during the four hours, but lawmakers did not seem convinced. >> they were not buying it. as one lawmaker said, essentially chew came well prepared but he did not have the right answers to get what he ultimately wants, and that is to keep tiktok operating in the united states. the biden administration is mulling different measures because of national security and data security threats potentially posed by tiktok, it's 150 million users in the united states. they could force the parent bytedance to deltek talk perhaps to u.s. investors or ban it outright, but the trump

administration try that and they got shot down twice by u.s. courts. it is a sticky situation for the biden administration and bipartisan lawmakers. let me give you a taste of the back-and-forth between them. one lawmaker asked him does bytedance or do bytedance employees have any access to u.s. user data, and chew said we see no evidence of that. not really a clear answer. a ohio representative asked yes or no? do chinese employees including engineers have access to u.s. user data? again chew responded this is a complex subject. that drew some incredulous chuckles from the room. and again, another direct point blank question is is tiktok a chinese company, and he responded that is not how we see it. again, he did himself no favors

and what was undoubtedly a herculean task to convince a very skeptical congress. at time thousand energy and commerce meeting that the chinese government perhaps in an indirect way through bytedance could get access to this data. haidi: stephen engle joining us out of hong kong with the latest on tiktok. we have a big conversation coming up. we speak to bill winters about how regulators need to keep pace with developments taking place in the banking center. that is at 11:15 a.m. if you are watching and hong kong. a quick check of business flash headlines this hour. ♪ for market events

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vonnie: a check of the latest

business flash headlines. to she was that is excepted of $50 million buyout from a japanese group led by private equity firm and industrial partners. the offer is in i was 10% premium for toshiba must closing price on thursday. atticus is toshiba a step closer to ending years of uncertainty after multiple scandals but the company on course for a sale. bloomberg has learned cathay pacific is planning to source up to 50 airbus type aircraft. it sources say hong kong's main carrier is in talks as it seeks to expand following the scrapping of covid curbs in the city. it is said to be looking at a jet market to get planes faster through 2029. apple plans to spend one begin dollars a year to produce movies that will be released in theaters. it is part of an ambitious effort to raise its profile in hollywood and attract subscribers to restraining service. the list of potential releases

includes films from directors martin scorsese and ridley scott. accenture is joining a list of companies in a sector -- more than half of the job cuts at accenture will affect people in a non-global corporate functions. futures pointed higher for the u.s. session, right now topix down .4 of 1%. nikkei225 down about .251%. there is a picture of hong kong this morning. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪ i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please!

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haidi: this is what we are

getting when it comes to japan pmi's just crossing the bloomberg. the merge composite pmi coming in it 51.9. march services pmi coming in it 54.2. we see relative resilience when it comes to both the services sector and manufacturing in japan. this as we see inflation starting to slow pretty sharply ahead of the transition to the head of the bank of japan for the incoming governor ueda. for the first time in 13 months we saw a slowdown as we saw the impact of curved electricity costs, and we count down to the first leadership change at the bank of japan in a decade. in my numbers out now showing relative stability across services as well as composite. watching dollar-yen trading at the moment as we continue to get the big move down when it comes to the greenback. yen's strength continuing to be

underpinned by inflation numbers today. let's get you a look at the rest of the markets. annabelle: it is interesting, the yen is one of the only currencies in asia at that is strengthening just fractionally into the friday session. the dollar actually reversing six straight days of declines, actually high today. currencies are looking mostly weaker, watching the korean won, it was the standout performer in the day prior. expectations revolving around the fed, they will be forced to cut rates given the deteriorating macro backdrop later in the year. we see the two year yield being whipsawed again. in the opening moments, declining again. you can see that being reflected across the sovereign debt space in asia. when you look at what we are seeing in the equities picture, really tracking moves that came from wall street. if you bring up the imf

function, you can see losses in particular. financials, we saw them declining on wall street even though janet yellen moved you to try to reassure there would be some sort of protection for depositors put in place. the nettles off .5 of 1%. i.t. stocks are gaining, that is an interesting to watch. nasdaq on the cusp of entering a bull market, and that is down to investors moving back into bigger favorites like apple, microsoft, safe haven place in the market space. vonnie: thank you for that. u.s. prosecutors will see the extradition on fraud charges of do kwon after his arrest in montenegro. he helped create a terra stablecoin which cause a cryptocurrency implosion. i reporter as been following the story from the very beginning.

it has been a long hunt. we are is kwon now, and what is to come? >> just a few hours ago kwon behind the crypto currency collapse of $40 billion was found and arrested in montenegro , and he is now being detained there with his close aide. he has been caught while trying to fly to dubai using falsified costa rican documents and he was also carrying documents from belgium and south korean traveling documents. enforcement agencies seized some of his laptops and cell phones, so they are going to see for evidence as well. he has been on the run basically, nt has said that he is not, but he has been on the run for the last 11 months or so ever since his cryptocurrency

collapsed in may of last year. haidi: there is a bit of confusion ongoing in terms of who requested his request. is there going to be the risk of disagreement as to where he gets tried and who has priority when it comes to that jurisdiction? >> that is correct. the u.s., sec actually has sued him over fraud about one month ago, and soon after the reports that he was arrested in montenegro, the new york prosecutors actually have been alleging him and have told him that he has eight counts including wire fraud, securities fraud, also including conspiracy. and the south korea prosecutors have also issued a notice through interpol in

mid-september of last year, so he is wanted by both countries, and both countries will have to find out where they will be extraditing him from the balkans. we know from text messages now from prosecutors in south korea is fingerprinted at match that of his, and his close aide that he was traveling with. we will see how it pans out. haidi: let's get you to su keenan. su: we start with treasury secretary janet yellen, she says at the u.s. is willing to ensure more bank deposits beyond the current legal cap. she told lawmakers decisions would be made on a case-by-case basis with the aim of preventing contagion in the financial system. yellen and fed chair jay powell said they both support tougher industry regulation following the collapse of svb and signature bank. the swiss national bank

president is rejecting the idea of spinning off credit suisse's profitable domestic unit. a foundation propose the move this week aiming to preserve competition and minimize job cuts. snb says it's priority is restoring the swiss banking system. >> the problem is much smaller given the fact that ubs will take over credit suisse. we have a stable banking system in switzerland. obviously we have uncertainty on the global scale. we have to follow that closely and act on the situation. su: the tiktok ceo's appearance and congress did little to calm bipartisan fury directed at the service. chew face hostile questioning for members of both parties while trying to reiterate

tiktok's independence from its chinese owner bytedance. lawmakers and the biden administration are exploring how to force bytedance to sell its shares of tiktok are facing ban. >> i have seen no evidence the chinese government has access to that data. >> i find that actually preposterous. >> i see no evidence of that happening, and in order to ensure everybody here, our commitment is to move the data into the net it stays to be stored on american soil by an american company overseen by american personnel. su: global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg. haidi: let's look ahead to the opening of markets in china, the mainland and hong kong have become safe harbors for investors amid the turmoil in the u.s. and europe. let's get to our correspondent in hong kong.

perhaps this was not the next leg of the rally we were expecting, but do we see this kind of risk arbitrage continuing? >> is interesting, because when the entire world is panicking over what is happening in the u.s. banking system and in europe, actually the one place that does not have a new crisis is for the first time in three years china. so when i spoke to people yesterday ended investors who have been bullish on the chinese story, it really waiting for the flows to come in, what they tell me is this really reinforces the bullish case for chinese assets. we are not seeing the huge rally. there is still a lot of tension in the market. the reopening trade as kind of lost momentum, and people are looking for catalyst and data to solidify the case that china's economy is improving. we do not have a banking crisis in china. you have a sensible bank adding

liquidity into the financial system, and the story of the consumer recovery. one analyst yesterday told me that china is really the only inter-economy where consumers can be optimistic about the future, so this is playing into a narrative that may be china is actually the one place where diversification makes sense when volatility end of the markets is increasing by the day. vonnie: it is not for sure there will not be a banking crisis, right? also, where is this money coming from? are the flows coming from international pools of money or domestic? >> i really like that question. this is not to say that there are no problems in china. obviously, we know one of the xi jinping's big priorities is to tackle financial risk and diffuse financial risk. china has not had a financial crisis currently because it kicks the can down the road.

there is concern the only thing it is doing is kicking the can down the road. we are seeing it and managed a soft landing and the housing market. the fact that evergrande released its restructuring plan and markets are fine was almost inconceivable two years ago when everyone was expecting this to cause a systemic crisis. we are seeing some of the flows coming in from em mandates in asia. you are not getting those flows from u.s. funds. u.s. mandates are distrustful of what can happen policy-wise in china. they have been burnt over the past two years and there is lack of confidence there. that will be the big story to drive the next leg up, because there is so much money tied up in those u.s. mandates. interestingly, bank of america's team recently did a trip to the middle east, and they are saying there are some structural interest from funds there. it is not a tactical play from middle east investors, it is a

long-term interest in chinese assets. vonnie: fantastic, we will be putting an alert on your stories to keep us up-to-date. that is sofia and hong kong. columbia university of new york helps us examine the swiss banking turmoil and why they think the central bank is only putting a band-aid on deeper problems with prices. this is bloomberg. ♪

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vonnie: treasury secretary janet yellen as total u.s. lawmakers regulators would be prepared for further steps to protect the banking system if warranted. the comments, day after her remarks on nationwide deposit insurance rattled markets. >> the strong actions we have taken ensure americans' deposits are safe. certainly we would be prepared to take additional actions if warranted. vonnie: let's bring in kathleen hays. also joining us is adjunct professor of international and public affairs at columbia university in new york. irene, the comment that was added today before congress by the treasury secretary. was that game theory getting

involved where yesterday she said we will not do anything, the banking system is fine. then banks dropped and she said we need to say something to placate the situation? >> what i find disturbing is that we are being reassured too much. we keep on hearing from the swiss central bank, from the fed , from all of the authorities that everything is fine. perhaps if everything were fine we would not need to be told it constantly. that to me is the concern. does secretary yellen already see the possibility of more severe contagion, and are these preemptive comments rather than strategic comments? haidi: -- >> one of the most basic things that exist right now is the fact that the fed did 400 basis point of rate hikes in rapid succession.

after being down around zero for a long time, suddenly you have got a 4% yield on the two year, all of these deals that have risen, and you have the banks presumably sitting on securities that are not worth that they once were and they have obligations to me. isn't that the fundamental problem? we do not know how big it is but at the bottom it is not being dealt with. how do we deal with it? >> that is a serious issue, but i think what is also coming out is there has been very poor scrutiny and very poor management and a lot of these banks. if we look at what happened in the u.s., certainly with signature, silicon valley bank and credit suisse, there has been a history, almost a full year of crisis upon crisis that has kind of been covered over. everything is fine, we are

taking care of the immediate problem, and now we go on. the fact of hiking interest rates clearly exacerbated the situation. there is no question. but the collapse of crypto, the inflation crisis, the inability of people to really get a sense of which assets are sound assets and which are not also play a great role, and at the same time we see management in so many of these institutions that have been asleep. haidi: is communication at terrible part of that management? to the point of janet yellen at having to soften her messaging, i can understand why you are skeptical or worried. even as the swiss national bank and regulators in switzerland were trying to soothe investors, we know behind-the-scenes they were orchestrating the marriage between credit suisse and ubs. do you think the communication

as been poor this time around? could it have been better? >> i think the communication could have been better, i think all of the authorities including the central bankers were in a way caught off guard. i do not think anyone could really have predicted how quickly this would happen. and this is what is so disturbing, this is beginning to have more and more the aspect of a contagion, a domino effect. every time the situation calms down, we saw it first republic where the problem seemed to be resolved with a long-term capital management model solution, and it has not worked. so this is the problem. credit suisse, ubs, right now ubs is sounding very positive. certainly the swiss national bank, government is trying to give an extraordinarily positive spin on this, but the reality is this is the beginning of a very complex process. and we are really not sure what will be the impact on other

weaker banks even in europe. >> who do you see as the weaker candidates or the weaker targets perhaps? and how do central banks and their counterparts at finance ministries and treasury, what are they supposed to do about this? >> from my perspective, i look at it from a historical perspective. that is where communication comes in. there is beginning to be a sense that a lot of these banks may have to admit to a lot more weakness than they have previously. particularly even banks that have recovered. for example, a year ago we were looking at credit suisse potentially but we were concerned about deutsche bank, berkeley -- barclay.

sure to make this is going to be the time for authorities and bank management to go back to every single aspect of what exactly is sitting on their books, and what is the real valuation of their asset? and to what point are they still at risk? this is going to be a problem, and more of this is sentiment that things are not really stabilized and things are only superficially resolved. more of this will create the impression of nervousness and tension in the markets. haidi: and if you get to a point like this, arguably you can say the horses bolted. actual scenarios where interest rates are going up probably should have taken place before this. we are at this point. i do think it is fair to say in the interest of moral hazard some of these banks should be allowed to fail because of these poor management, poor supervisory scenarios? >> i think they are we are

caught in the worst conundrum, because we really cannot afford -- and in this particularly generally weak and volatile global environment you have do about a major bank systematically important to fail. unfortunately, the only solution will be to constantly find as suitable as possible resolutions and hope that it all works out and perhaps wait for things to calm down. this is not a good scenario, but i do not see in this environment that either germany, certainly not the u.k., any other country under the ecb would allow a major bank to fail. in fact, this is the one advantage with the swiss situation. switzerland is self-contained, it is not part of the european union, the euro zone. it does not impact or force decisions by the ecb.

that would be much too dangerous . even with switzerland, this is probably the best they can do, and this is going to be a long-term mess. haidi: great to have you with us , irene, adjunct professor at columbia university and kathleen hays joining us. we need to bloomberg radio. hear more from the day's big newsmakers and get in-depth analysis from the team broadcasting live from our studio in hong kong. get there via the app, radio plus. this is bloomberg. ♪

haidi: a chinese developer has warned that investors to expect a second consecutive year of billions of dollars in losses underscoring the plight facing the nation of las vegas builders. let's bring out our asian finance editor. we continue to see this pressure when it comes to the property sector even as the broader reopening is underway in china. >> good morning. this warning is not a big surprise frankly. sunac is one of many developers struggling for more than a year, two years. this crisis began in the middle of 2021. the company posted a record loss for that year, and in 2022 it is

predicting a slightly smaller loss, still $4 billion. that is a big loss. last year we saw the crisis deepened with sales and prices slumping. mortgage boycotts, confidence among homebuyers collapsing. even the stronger players like country garden warning of its first loss since it was listed in 2007. sunac is not alone. vonnie: we thought we had turned the page of this and we even got the evergrande plan to make it seem like we were passed all of this. is there more to come then? >> things are actually looking up. in the chinese property sector, we have had stimulus coming in on the demand-side and financing side from chinese authorities. that is starting to show through. we saw him sales rise in january and february for the first time in almost two years.

prices rose for the first time in 18 months, but really the financing support is really only for stronger developers, the likes of sunac and other defaulted developers able to access this extra financing coming in the form of bank loans and bond issuances. as you mentioned, evergrande and sunac, relate the main priority is finishing up debt restructuring plans. we saw earlier this week, evergrande release details of its proposal. sunac has a similar proposal in mind, swapping debt and extending that, and it seems to be making progress with bondholders. vonnie: thank you, we would keep an eye. that is russell ward. that is it from "bloomberg daybreak: asia." ♪ ow ryder ecommerce makes your customer's experience ever better.

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