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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the BlueBag Daybecut podcast, available every morning on Apples,

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Speaker 2: Spotify or whatever you listen. It's Wednesday, the twenty third

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Speaker 2: of October here in London. I'm Caroline Hepkin.

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Speaker 3: And I'm Stephen Carroll. Coming up today. Soft landing signals

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Speaker 3: US bongialds haven't climbed this much after a FED cut

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Speaker 3: since the nineteen nineties.

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Speaker 2: Christine Lagarde says Donald Trump should see how hard central

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Speaker 2: banking is in person. Will bring you our exclusive interview

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Speaker 2: with the ECB president.

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Speaker 3: Plus an E coli outbreak linked to McDonald's burgers in

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Speaker 3: the United States has left one person dead and dozen sick.

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Speaker 2: Let's start with a round up of our top stories.

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Speaker 3: Two year yields have climbed thirty four basis points since

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Speaker 3: the Federal Reserve cut rates in September, and move not

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Speaker 3: seen since nineteen ninety five. Global bands have been sliding

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Speaker 3: this week as investors weigh the resilient US economy. Bank

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Speaker 3: of America sy Brian moynihan has urged Federal Reserve policymakers

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Speaker 3: to be measured.

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Speaker 4: We've got to get back in line, and so they're

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Speaker 4: on that path.

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Speaker 2: They're late to the game.

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Speaker 5: They've got to make sure they don't go too hard now,

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Speaker 5: and that's what they are all trying to figure out

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Speaker 5: watching the data.

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Speaker 3: Brian Moynhunson, speaking exclusively to Bloomberg, the Bank of America CEO,

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Speaker 3: added that he expects the FED to cut rates by

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Speaker 3: fifty basis points by the end of the year. The

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Speaker 3: US moves have sparked a global sell off, with yields

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Speaker 3: on Japan's forty year notes hitting a sixteen year high.

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Speaker 2: Christine Legard has challenged Donald Champ's views on monetary policymakers

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Speaker 2: and global trade. Speaking during an interview with Bloomberg Television,

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Speaker 2: the ECB president invited the Republican nominee to the Central

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Speaker 2: Bank's headquarters in Frankfurt.

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Speaker 6: He should come and visit us, and you know, I

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Speaker 6: have thousands of hard working people, economist, jurists, computer scientist,

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Speaker 6: and I can assure you that they work super hard

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Speaker 6: every day, not just once a month.

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Speaker 2: The ECB's Christine Lagarde, speaking to Bloomberg's Francine Laqua. Now,

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Speaker 2: the former US president, told Bloomberg earlier this month that

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Speaker 2: the FED chair has quote the greatest job in government,

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Speaker 2: you show up to the office once a month. The

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Speaker 2: presidential contender has also pledged goods tariffs of sixty percent

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Speaker 2: on China and as much as twenty percent on everyone else.

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Speaker 2: Laguard pushed back on Trump's approach, suggesting that the United

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Speaker 2: States thrives during periods of trade.

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Speaker 3: Meanwhile, Donald Trump has promised tax breaks on car purchases,

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Speaker 3: but only for vehicles made in the United States. Speaking

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Speaker 3: during a rally in North Carolina, the presidential hopeful said

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Speaker 3: he wants to restore manufacturing jobs and protect the industry,

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Speaker 3: criticizing his opponent's track record.

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Speaker 4: As your president, the American dream, We're going to bring

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Speaker 4: it back. Our country is being crippled and destroyed by

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Speaker 4: Kamala Harris.

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Speaker 3: Donald Trump speaking there. In addition to tax breaks for

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Speaker 3: car buyers, the Republican candidate has pledged to impose steep

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Speaker 3: taro of sun cars and other products made in Mexico, China,

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Speaker 3: and elsewhere. He and his Democratic rival Kamala Harris are

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Speaker 3: in a tight race across seven battleground states. Trump is

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Speaker 3: leading by one point one percentage points according to the

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Speaker 3: Real Clear Politics average of polls. The United Auto Workers

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Speaker 3: have endorsed Harris for president, but Trump has made inroads

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Speaker 3: with rank and file union members are potentially decisive voting block.

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Speaker 2: And now to some breaking news this morning from Deutsche Bank.

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Speaker 2: It has reported its third quarter earnings in terms of

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Speaker 2: fixed income sales and trading revenue. They were both a

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Speaker 2: beat on the average analyst estimates, so fixed income sales

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Speaker 2: and trading revenue coming in at two point one billion euros.

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Speaker 2: The estimate had been for just a notch over two

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Speaker 2: billion euros. Into terms of net revenue seven point five

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Speaker 2: billion euros, that's five point two percent year on year increase.

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Speaker 2: Asset management revenue was up at eleven percent. Investment banking

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Speaker 2: revenue also up at eleven percent year on year, so

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Speaker 2: that one of the top results out this morning for

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Speaker 2: Europe from Deutsche Bank.

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Speaker 3: The chip designer arm is canceling a license that allowed

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Speaker 3: longtime partner Qualcom to use its designs to create chips.

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Speaker 3: Quialcom sells hundreds of millions of processors annually, and the

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Speaker 3: move could force it to stop selling many of its products.

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Speaker 3: That risks as much as thirty nine billion dollars of

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Speaker 3: its revenue and could disrupt the entire PC and smartphone market.

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Speaker 3: Speaking before Bloomberg broke the news, Arm CEO and A

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Speaker 3: hass was asked about the dispute.

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Speaker 5: I'm not going to build an electric car. I'm not

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Speaker 5: going to build a phone. I'm not going to build

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Speaker 5: a data center. So to look at the value chain

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Speaker 5: relative to who builds chips, relative to whether your end

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Speaker 5: cut business is a chip business or a product busines,

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Speaker 5: it's gotten a lot more gray. We follow what the

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Speaker 5: industry is demanding, and what the industry wants to see

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Speaker 5: is solutions getting the market faster, and that's what we're

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Speaker 5: focused on. Qualcom not much I can say on that

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Speaker 5: other than we're headed to a trial. I think it's

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Speaker 5: the third week in December. We feel very good about

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Speaker 5: our case. We think our case is quite simple and straightforward.

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Speaker 3: I'm CEO na Has speaking there at Bloomberg's London Tech Summers.

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Speaker 3: Representatives fore Armed declined to comment. Qualcom spokesperson said the

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Speaker 3: British company was trying to strong arm a longtime partner, ARMS,

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Speaker 3: giving the US company an eight week period to remedy

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Speaker 3: the dispute.

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Speaker 2: And a severe E Coli outbreak tied to McDonald's has

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Speaker 2: left dozens of Americans sick and one dead. The US

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Speaker 2: Centers for Disease Control and Prevention has issued a food

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Speaker 2: safety alert and says that the true number of infected

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Speaker 2: is likely to be far higher. McDonald's USA President Joe

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Speaker 2: Erlinger says that the company is taking swift act.

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Speaker 7: The decision to do this is not one we take lightly,

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Speaker 7: and it was made in close consultation with the CDC.

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Speaker 7: It's important to note that the majority of states and

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Speaker 7: the majority of menu items are not affected. Other beef

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Speaker 7: products at McDonald's, including the cheeseburger, Hamburger, Big Mac, mcdoubell,

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Speaker 7: and the Double Cheeseburger, are not impacted.

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Speaker 2: Ales say that Erlinger's next actions will be critical for

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Speaker 2: how investors respond. Major outbreaks can haunt restaurant chains for years.

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Speaker 2: With McDonald's shares falling as much as ten percent yesterday

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Speaker 2: in extended trading. Now in a moment, we'll be going

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Speaker 2: to a discussion about the FED, the shifting views on

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Speaker 2: the fed's rake path, what it means for the dollar,

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Speaker 2: and other stories. But lots of earnings out this morning.

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Speaker 2: I mentioned Deutsche Bank, but also later in the US

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Speaker 2: we're going to get some important figures. Tesla analysta projecting

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Speaker 2: a slight decline in earnings per share to two dollars

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Speaker 2: twenty four full Tesler. The CONCENTSUS estimate is for revenue

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Speaker 2: at roughly twenty five point three billion dollars. Investors are

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Speaker 2: really focused when it comes to Tesla, which is reporting

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Speaker 2: in the US after market, on the gross margins, the

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Speaker 2: forward looking guidance. Remember, of course, Elon Mask the CEO,

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Speaker 2: made that big bet on autonomous vehicles, unveiled the company's

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Speaker 2: Robotaxi on the tenth of October. And we'll also get

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Speaker 2: Boeing Plus eight and T and Coca Cola, so lots

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Speaker 2: of earnings out today.

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Speaker 3: Yeah, and of course we're pureing the lats too from

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Speaker 3: the European companies as well. We mentioned the Deutsche Bank

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Speaker 3: earnings there a moment ago, beating on fixed income trading,

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Speaker 3: a key business for the bank, so lots to watch

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Speaker 3: on that front as well. Let's turn back though to

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Speaker 3: the moves that we've seen on bond markets. Treasury eels

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Speaker 3: inching higher again this morning, the global sell off on

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Speaker 3: bond markets continuing. Yields on Japan's forty years sovereign notes

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Speaker 3: have risen to the highest and sixteen years as well

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Speaker 3: we've got our market's live strats. Just Marry Nicolo with

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Speaker 3: us for more on this. So, Mary, this move that

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Speaker 3: we've seen since the FED meeting ten years yields up

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Speaker 3: about forty basis points. What's your reading of where we

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Speaker 3: are in the selloff now and what perhaps might halt us.

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Speaker 1: Yeah, there's a few key factors that are precipitating the selloff.

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Speaker 1: So I would argue that first it's the resilience of

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Speaker 1: the US economy, and then that feeds into what's the

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Speaker 1: second factor, which is the pairing back of expectations of

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Speaker 1: FED easing obviously, and then of course, finally, we're nearing

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Speaker 1: the US elections and there are concerns over a ballooning

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Speaker 1: fiscal deficit, and of course, in the event of some

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Speaker 1: sort of clean sweep that we get, that indication of

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Speaker 1: a larger fiscal deficit just looms large. So there's a

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Speaker 1: few factors here that are coming into play, and it's

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Speaker 1: likely not to debate until we see the outcome of

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Speaker 1: the US elections.

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Speaker 2: Interesting, the Bank of America CEO has also been speaking

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Speaker 2: to Bloomberg, and he's urged caution in terms of FED

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Speaker 2: cutting market see almost the ninety percent chance of reduction

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Speaker 2: in a couple of weeks time. How likely is a

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Speaker 2: pause really or a skip in terms of a rate cut?

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Speaker 1: Yeah, I think for the upcoming meeting, basically because the

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Speaker 1: FED signaled that they're going to cut in November, I

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Speaker 1: think that's almost a done deal in line with what

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Speaker 1: the market is thinking. But a pause could gain traction,

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Speaker 1: especially depending on the outcome of the elections and of

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Speaker 1: course the data from the US. So a Trump presidency

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Speaker 1: does bring the thread of imports and with that comes

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Speaker 1: the potential ramifications of higher inflation. And it will also

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Speaker 1: come down to how the labor market unfold. So I

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Speaker 1: would say the trajectory is still unclear, but probably skewed

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Speaker 1: more towards a wait and see approach rather than consecutive cuts,

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Speaker 1: in line with what the market was original originally thinking,

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Speaker 1: because at the end of the day, the FED is

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Speaker 1: still data dependent.

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Speaker 3: Mary, how does all of this rethinking about the FED

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Speaker 3: affecting markets elsewhere in the world as well? We mentioned

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Speaker 3: that the Japanese yields rise a to the highest in

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Speaker 3: sixteen years on the forty year How are we seeing

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Speaker 3: this story play out across markets elsewhere?

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Speaker 1: Yeah, we've seen a rapid sell off in bonds globally,

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Speaker 1: so it hasn't been specific to the US, but it's basically,

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Speaker 1: you know, when the US sneezes, everyone catches a cold,

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Speaker 1: and that's really coming through in the bond markets. And

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Speaker 1: of course, because of that and the rise in yields,

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Speaker 1: we're seeing a strong bid for the dollar, and that

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Speaker 1: is also weighing on emerging markets and emerging market currencies.

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Speaker 1: So bond volatility is high, which poses a threat to

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Speaker 1: bonds and effects just more broadly. And I think you're

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Speaker 1: going to continue to see that the US dollars shining

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Speaker 1: a little bit brighter as that resumes.

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Speaker 2: Yeah. Christina Girlsman, speaking to Bloomberg in Washington on the

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Speaker 2: sidelines of the IMF and World Bank annual meetings, she

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Speaker 2: seemed confident about the direction of travel on European raids.

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Speaker 2: What did you take away from her comments?

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Speaker 1: Yeah, I think the ecb'st challenges are very different than

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Speaker 1: the FED at this point, for it's very much about

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Speaker 1: growth and that is slowing markedly and becoming an increasing concern.

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Speaker 1: And at the same time, the upside is that inflation

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Speaker 1: is declining, declining, so it's offering them some comfort to

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Speaker 1: reshift their focus on growth. We've already seen it with

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Speaker 1: some of their more hawkish members, Isabelle Schnabel, and she's

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Speaker 1: repeatedly made that shift in some of her recent convents.

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Speaker 1: So yeah, services CPI may be sticky, but the slow

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Speaker 1: down in growth is obviously going to lead to some

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Speaker 1: further declines in inflation. So they're now focused more on

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Speaker 1: growth than anything else. And of course we've seen Germany's

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Speaker 1: disappointing data that's a concern for them. And then of course,

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Speaker 1: with China's economy still far from a real turnaround that

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Speaker 1: could support the global economy, it's really the onus will

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Speaker 1: be on the ECB and their policy and the need

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Speaker 1: to do more to just help stabilize growth in the Eurozone.

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Speaker 3: Okay, Mary Nicola, our market's live struts, thank you very much.

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Speaker 2: Now to the Middle East, where Israel's Prime Minister and

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Speaker 2: the US secret of State have agreed that the killing

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Speaker 2: of the Hamas leader opens new possibilities for ending the

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Speaker 2: conflict in the Girlsa strip, but they gave no indication

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Speaker 2: of an agreement for what happens next. Our Middle East

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Speaker 2: Baking News editor Dana Krach joins us for more. Good

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Speaker 2: Morning Dona in terms of what has emerged from this

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Speaker 2: meeting in what is of course, you know, the last

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Speaker 2: few weeks of the Biden administration what has emerged.

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Speaker 4: So it seems there are no signs of clear progress

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Speaker 4: here from what Blinkin wants to achieve with his eleventh

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Speaker 4: trip to the region, where if he started in Israel

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Speaker 4: and met with Nataniell for about you know, an hour

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Speaker 4: and a half, and they concluded that the killing of

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Speaker 4: Yehesn war would open the door or potentially possibilities for

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Speaker 4: the end of the conflict, but they stopped short of

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Speaker 4: saying what that would look like. And that's the sticking point.

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Speaker 4: Think you as is trying to push for a cease

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Speaker 4: fire to at least start talking about post war period

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Speaker 4: the day after in Gaza before the US election. They

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Speaker 4: want this kind of a win, a diplomatic win for themselves,

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Speaker 4: but that is of course proving difficult that it has

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Speaker 4: in the past. Blincoln said, they want to see a

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Speaker 4: unified Gaza in the West Bank, governed by the Pastinian authority,

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Speaker 4: and we know how Israel feels about that. They don't

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Speaker 4: trust the Pasdanian authority, but at the same time hasn't

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Speaker 4: really given an alternative to that, so it seems there

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Speaker 4: isn't really a plan though they said they discussed in

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Speaker 4: much detail about post war Gaza and what that would

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Speaker 4: look like, but doubt that there is any progress toward that.

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Speaker 3: Okay. In Lebanon, mean while Donna, Israel has confirmed that

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Speaker 3: it killed a likely successors the leader of Hezbollah, but

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Speaker 3: there's no sign of the violence abating there.

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Speaker 4: Yes so we saw yesterday the Israel Army is confirming

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Speaker 4: that they killed the likely successor of Hassa Masrilla, though

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Speaker 4: they said that last week that he was apparently dead.

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Speaker 4: No Hasbala hasn't really confirmed or denied that they're being

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Speaker 4: very quiet about the killing of their you know, expected

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Speaker 4: expected leader and know the violence hasn't abated. And we

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Speaker 4: saw Natanyahu yesterday also saying that they would continue hitting

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Speaker 4: his Allah in Lebanon until the residents of the northern

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Speaker 4: Israeli towns can go back and ensure they sit their safety,

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Speaker 4: and they want hab Allah to withdraw from the area.

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Speaker 4: We saw Amice Hakstein, the Biden envoy in Lebanon yesterday,

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Speaker 4: trying to also reach a ceasefire agreement to.

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Speaker 6: At least.

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Speaker 4: Get his Allah and Israel indirectly, of course, to agree

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Speaker 4: on certain terms, especially that you and Security Council Resolution

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Speaker 4: seventeen oh one, and how on what it would look

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Speaker 4: like for the southern Lebanon, how it would look like

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Speaker 4: under that Security Council resolution, more army soldiers, Lebanese army soldiers,

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Speaker 4: more you and peacekeepers and of course no sign of Hasba.

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Speaker 4: That's what Israel ultimately wants.

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Speaker 2: Briefly, the FBI is investigating the leak of classified documents

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Speaker 2: that detailed Israeli preparations to retaliate against Evan, something that

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Speaker 2: the world is still expecting. What more can you tell us? Right?

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Speaker 5: So we saw the.

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Speaker 4: Leak documents on telegram last week. They report Israel conducting

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Speaker 4: covert drone activity and preparing munitions like long range air

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Speaker 4: launched ballistic missiles. This is of course embarrassing for the

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Speaker 4: US because this is another classified leak, and of course

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Speaker 4: we saw the FBI investigating it and saying that the

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Speaker 4: US President Biden is also following up on this investigation.

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Speaker 4: This is also a bit awkward for the US because

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Speaker 4: it shows that it is routinely spying on its own allies,

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Speaker 4: including Israel, and is trying to convince Israel not to

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Speaker 4: attack you oil or nuclear facilities in Israel, so it

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Speaker 4: could raise tensions between these two allies, as we've seen

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Speaker 4: in the past over the over Israel's response to Iran's

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Speaker 4: attack on October.

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Speaker 3: Okay, Donna Grace, thank you very much for joining us.

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Speaker 2: It's bring in one of our top interviews this morning.

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Speaker 2: The ECB president Christine Legard has told Bloomberg that the

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Speaker 2: Central Bank will remain cautious and not jump to conclusions

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Speaker 2: when it comes to cutting interest rates for Europe. She

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Speaker 2: also defended the work of monetary policymakers after recent criticism

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Speaker 2: from Donald Trump. Legard has been speaking exclusively to Blueberg's

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Speaker 2: Fossy Laqua in Washington.

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Speaker 6: And at the moment, we are not totally unhappy with

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Speaker 6: what we see because it looks very much that inflation

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Speaker 6: is on the right track of des inflation. You know,

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Speaker 6: we come from very high numbers, as high on average

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Speaker 6: for the whole of the EU area as ten point

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Speaker 6: six percent, and the latest reading we had for the

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Speaker 6: inflation in September was one point seven So you know,

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Speaker 6: those numbers are relatively reassuring. They are only a number,

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Speaker 6: and we are not looking at one data point as

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Speaker 6: I have said repeatedly, we're looking at a lot of

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Speaker 6: data to make sure that this this inflationary process continues

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Speaker 6: to be well on track. But you know, we also

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Speaker 6: have to be cautious, and you know, we cannot jump

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Speaker 6: to conclusion that, Okay, done deal, we've broken the neck

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Speaker 6: of inflation. No, And I think caution leads us to

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Speaker 6: look at all the data that are coming in whichever

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Speaker 6: form it takes, whether it's survey indicators as we had

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Speaker 6: a lot of that in September, or whether they are

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Speaker 6: more model derivated, as when we have projection exercises, and

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Speaker 6: we will be looking at that and continue to be

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Speaker 6: data dependent. But of course courses are not jumping to conclusions.

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Speaker 8: So when you look at inflation, could it actually could

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Speaker 8: you achieve your target a little bit earlier than expected?

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Speaker 6: That would be my hope.

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Speaker 3: You know, if.

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Speaker 6: Our target is two percent medium term, and I'm absolutely

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Speaker 6: confident that we will reach that target sustainably in the

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Speaker 6: course of twenty twenty five, is it going to be

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Speaker 6: early in twenty twenty five, is it going to be

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Speaker 6: very late in twenty ten to twenty five. I think

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Speaker 6: really will be determined by data, by the state of

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Speaker 6: the economy, by energy prices, by the transmission. You know,

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Speaker 6: we look at three components. We look essentially at inflation outlook,

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Speaker 6: we look at underlying inflation, we look at transmission of

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Speaker 6: our monetary policy. And on the basis of that sort

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Speaker 6: of three pillar analysis, we can assess whether we are

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Speaker 6: definitely on track. And when do you think it's a

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Speaker 6: little bit sooner?

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Speaker 8: I mean, so we of course at Bloomberg look at

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Speaker 8: every single word.

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Speaker 6: No, I know, I know, so I'll be quite not.

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Speaker 8: First quarter, second quarter, or is it just too soon

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Speaker 8: to say.

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Speaker 6: I think it's too soon to say, because I wouldn't

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Speaker 6: be loyal to our principle of data dependency if I

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Speaker 6: was to tell you it's going to be on such

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Speaker 6: time in the course of twenty five. I think we

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Speaker 6: all governors of the Governing Council, and I'm sure you

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Speaker 6: will be hearing lots of them in the next few

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Speaker 6: days because they will be on air very much. I

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Speaker 6: think we are all confident that twenty five is the

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Speaker 6: year when we reach our target.

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Speaker 8: So we recently had an interview with the US presidential

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Speaker 8: candidate who said TIFFs was his favorite word. I imagine

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Speaker 8: because of Lso your background former IMF, former trade minister.

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Speaker 8: This is not your favorite word. What is your favorite word?

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Speaker 6: I think fair trade is a key boost for growth,

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Speaker 6: for employment, for innovation, for productivity, and I would say

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Speaker 6: that it's something that we should not throw away because

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Speaker 6: in any period of time where this country, the United States,

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Speaker 6: has thrived, we're periods of trade, not periods of I'm

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Speaker 6: going to retire behind my boundaries and play at home.

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Speaker 4: No.

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Speaker 8: Do you worry about central banks being political or being

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Speaker 8: dragged into the political sphere?

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Speaker 6: No, because I think there is a huge resistance to

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Speaker 6: that in the decisions that we make, despite what is

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Speaker 6: being suspected here or there in any you know, place

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Speaker 6: in the world. And I think for those central banks

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Speaker 6: which have the privilege of independence, either by virtue of

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Speaker 6: the treaties or the tradition, it's critically important to hang

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Speaker 6: on to it and to defend it because the credibility

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Speaker 6: of an institution like a central bank really is a

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Speaker 6: factor of how independent it is visibly the politics. And

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Speaker 6: it's precious. It's very precious.

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Speaker 8: But do you think that that you'll come under attack

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Speaker 8: more not you personally, but to central banks. Donald Trump

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Speaker 8: said j. Powell had the easiest job, because it's a

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Speaker 8: flip of a coin every every every month, he.

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Speaker 6: Should come and visit us. And you know, I have

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Speaker 6: thousands of hard working people, economists, jurists, a computer scientists,

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Speaker 6: and I can assure you that they work super hard

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Speaker 6: every day, not just once a month, and they are

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Speaker 6: extremely conscientious and determined to really do the best job

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Speaker 6: they can to deliver the right monetary policy and secure

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Speaker 6: what is our common good, which is our currency. So

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Speaker 6: we defend the euro and we fight for the Euro,

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Speaker 6: just as the FED defends the dollar. It's for the dollar.

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Speaker 6: I'm sure I don't want to speak for j. Powell,

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Speaker 6: but I'm sure that's how he sees his job.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 3: You can also listen live each morning on London Dab Radio,

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Speaker 3: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 2: Our flagship New York station, is also available on your

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Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

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Speaker 3: I'm Caroline Hepka and I'm Stephen Carol. Join us again

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Speaker 3: tomorrow morning for all the news you need to start

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Speaker 3: your day right here on Bloomberg Daybreak.

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Speaker 6: Europe