WEBVTT - Bloomberg Daybreak: December 1, 2022 - Hour 1 (Radio) 0:00:02.480 --> 0:00:05.880 Live from the Bloomberg Interactive Broker Studios. This is Bloomberg 0:00:05.960 --> 0:00:09.719 day Break for Thursday, December one, two. Coming up this hour, 0:00:10.240 --> 0:00:12.960 j Powell moves markets as he signals the pace of 0:00:13.039 --> 0:00:16.800 rate hikes will flow. More signs China is softening its 0:00:16.800 --> 0:00:20.759 stands on COVID restrictions. Sam Bak mcfreed speaks out about 0:00:20.760 --> 0:00:24.080 the collapse of FTX, and a standoff between Elon Musk 0:00:24.079 --> 0:00:28.120 and Tim Cook appears to ease New York subway writers 0:00:28.120 --> 0:00:30.520 may see fairs go up next year. Plus a House 0:00:30.520 --> 0:00:34.080 committee now has President Trump's tax returns. I'm Michael war 0:00:34.320 --> 0:00:37.760 More Ahead. I'm John Stafstoward. Sports another home loss for 0:00:37.880 --> 0:00:40.680 the Knicks, beaten by the Bucks, the Nets beat the Wizards, 0:00:40.720 --> 0:00:45.839 the Rangers one in Ottawa. That's all training ahead on 0:00:45.920 --> 0:00:51.600 Bloomberg Daybreak on Bloomberg Even Free on New York, Bloomberg one, Washington, 0:00:51.680 --> 0:00:55.280 d C, Bloomberg one oh six one, Boston, Bloomberg nine 0:00:55.360 --> 0:00:59.560 sixties and Francisco Sirius x M one nineteen and around 0:00:59.600 --> 0:01:02.480 the world on Bloomberg Radio dot Com and via the 0:01:02.480 --> 0:01:09.640 Bloomberg Business app. Good Thursday Morning. I'm Amy Morris. I'm 0:01:09.720 --> 0:01:12.320 Nathan Hagar futures are moving just a little bit lower 0:01:12.360 --> 0:01:14.160 this morning. We're coming up to five oh one on 0:01:14.160 --> 0:01:16.520 Wall Street. We checked the markets every fifteen minutes during 0:01:16.560 --> 0:01:19.800 the trading day. On bloomberg SMP futures are down three points, 0:01:19.800 --> 0:01:22.880 Staff futures down fifty nine. NASTAC futures are lower by 0:01:22.920 --> 0:01:26.160 twenty five points. Attend. Your treasury is down four thirty seconds. 0:01:26.160 --> 0:01:28.280 The yell three point six percent. You'll in the two 0:01:28.360 --> 0:01:31.920 year four point three three percent. NIME excrudes down two 0:01:31.920 --> 0:01:36.080 tenths percent at eighty dollars forty cents a barrel, Amy Nathan. 0:01:36.120 --> 0:01:38.959 We begin with market moving remarks from J. Pale. The 0:01:38.959 --> 0:01:41.840 Fed chair is signaling the Central Bank will back off 0:01:41.880 --> 0:01:44.880 its aggressive pace of interest rate hikes as soon as 0:01:44.920 --> 0:01:47.720 this month. The time for moderating the pace of rate 0:01:47.720 --> 0:01:50.520 increases may come as soon as the December meeting. Given 0:01:50.520 --> 0:01:53.760 our our progress in tightening policy, the timing of that 0:01:53.840 --> 0:01:56.400 moderation is far less significant than the questions of how 0:01:56.480 --> 0:01:59.840 much further we will need to raise grades to control inflation. 0:02:00.320 --> 0:02:03.720 Powell's remarks solidified bets the Fed will downshift to a 0:02:03.760 --> 0:02:07.440 fifty basis point rate hike on December four after delivering 0:02:07.520 --> 0:02:11.079 four straight seventy five basis point moves. Well, the equity 0:02:11.120 --> 0:02:13.799 markets surged on Powell's comments. Amy The S and P 0:02:14.000 --> 0:02:16.640 five hundred rally more than three percent to close at 0:02:16.639 --> 0:02:19.480 a two month high. The NASDAC one hundred jumped four 0:02:19.520 --> 0:02:22.760 point four percent, and with the Dow's seven hundred thirty 0:02:22.760 --> 0:02:25.639 seven point advance, that index is now up twenty percent 0:02:25.680 --> 0:02:28.480 from its September low, meeting the definition now of a 0:02:28.600 --> 0:02:32.200 bull market. Sobadra Rajappa's head of US rates strategy with 0:02:32.280 --> 0:02:35.200 sociate General, I think if you have a picture where 0:02:35.680 --> 0:02:38.720 invitation is starting to moderate, then they might be willing 0:02:38.720 --> 0:02:41.400 to kind of be patient, keep rates steady for the 0:02:41.400 --> 0:02:44.760 domainder of next year, uh and then start to orchestrate 0:02:44.840 --> 0:02:48.600 a soft landing sucken. Sobadra Rajapa expects rates to remain 0:02:48.680 --> 0:02:52.720 elevated not only next year, but also into and Nathan, 0:02:52.800 --> 0:02:55.320 we saw the Wall Street rally spill into markets overseas. 0:02:55.320 --> 0:02:58.240 Stocks in Europe are up about half a percent. Equities 0:02:58.240 --> 0:03:02.040 in Asia advanced overnight at standing games after their best 0:03:02.120 --> 0:03:05.280 monthly rally in twenty four years. Let's get the recap 0:03:05.280 --> 0:03:08.880 from Bloomberg's Juliet Sally in Singapore. Good morning, Juliette, Good 0:03:08.880 --> 0:03:11.520 morning Nathan and Amy. After capping a fifteen percent gain 0:03:11.560 --> 0:03:14.120 in November, the m s CI Asia Pacific Index jumped 0:03:14.120 --> 0:03:16.040 as much as two and a half percent Thursday to 0:03:16.080 --> 0:03:19.160 in August high and is inching closer towards a ball. 0:03:19.160 --> 0:03:22.160 Market gauges in China, Hong Kong, and Taiwan led gains 0:03:22.200 --> 0:03:24.800 after a top Chinese official said efforts to combat the 0:03:24.840 --> 0:03:27.760 virus are entering a new phase, with the omicron variant 0:03:27.800 --> 0:03:32.359 weakening and vaccination rates rising. Meanwhile, Beijing e some restrictions, 0:03:32.400 --> 0:03:35.040 lifting the on and the yen traded at a three 0:03:35.080 --> 0:03:39.520 month high in Singapore. Juliet Sally Bloomberg Daybreak. All right, Juliette, thanks. 0:03:39.560 --> 0:03:42.360 COVID policies remain front and center in China. We're seeing 0:03:42.360 --> 0:03:45.080 more signs Beijing may be willing to soften its stance 0:03:45.080 --> 0:03:49.080 on virus restrictions. Bloomberg Executive editor Paul Dobson has more 0:03:49.120 --> 0:03:52.160 from our Singapore bureau today. We learned that in Beijing 0:03:52.240 --> 0:03:55.040 some people may be allowed to quarantine at home instead 0:03:55.040 --> 0:03:57.520 of going to quarantine camps, which is obviously good news 0:03:57.560 --> 0:03:59.320 because people would much rather be in the comfort of 0:03:59.360 --> 0:04:01.880 their own homes, given the choice a lot of the time, 0:04:02.440 --> 0:04:04.680 um and and it might give them a little bit 0:04:04.680 --> 0:04:07.040 more confidence to go out and about when when COVID 0:04:07.120 --> 0:04:10.720 isn't around incremensity, that's good news. But directionally, that's very 0:04:10.760 --> 0:04:13.640 good news because you know, the market is waiting for 0:04:14.120 --> 0:04:17.880 China to take these decisive steps, you know, the vaccinations 0:04:17.920 --> 0:04:21.240 that are needed for the elderly, the increase in hospital 0:04:21.279 --> 0:04:24.720 beds to be able to start that process of opening up, 0:04:24.720 --> 0:04:26.520 which the rest of the world has already, you know, 0:04:26.560 --> 0:04:29.360 way ahead of Bloomberg's. Paul dobbs And says it's been 0:04:29.480 --> 0:04:33.359 three years since the world's first documented coronavirus patient emerged 0:04:33.400 --> 0:04:36.279 in China. Back here in the US, we are hearing 0:04:36.320 --> 0:04:39.240 public comments from Sam Bankman Freed for the first time, 0:04:39.600 --> 0:04:42.880 the disgraced founder and CEO of the bankrupt ft X 0:04:42.960 --> 0:04:47.520 crypto Empire is denying fraud while admitting to grievous errors 0:04:47.520 --> 0:04:50.560 in management. Whatever happened, why ever it happened, I had 0:04:50.560 --> 0:04:53.240 a duty add a duty to all of our stakeholders, 0:04:53.240 --> 0:04:55.920 to our customers, our creditor, is a head duty for 0:04:55.920 --> 0:04:59.120 our employees, to our investors, and to the regulators of 0:04:59.160 --> 0:05:01.880 the world to do right by them, to make sure 0:05:02.040 --> 0:05:04.840 the rate things happened at the company, and uh clear 0:05:04.839 --> 0:05:06.520 the I'd do a good job of that. I was 0:05:06.600 --> 0:05:10.280 shocked by what happened this month, Sam Bankman. Freed made 0:05:10.320 --> 0:05:12.680 the comments by video link at the New York Times 0:05:12.720 --> 0:05:16.120 Deal Book Summit. There are still unanswered questions about how 0:05:16.240 --> 0:05:19.480 fd X ended up with an eight billion dollar hole 0:05:19.520 --> 0:05:23.479 in its balance sheet and whether it mishandled customer funds. Well. Meantime, 0:05:23.480 --> 0:05:26.039 Amy is standoff between two of the most powerful tech 0:05:26.120 --> 0:05:28.680 leaders in the world appears to be easing. Let's get 0:05:28.680 --> 0:05:31.479 the details Live with Bloomberg, Steve Rappaport, Good Morning Steve, 0:05:31.520 --> 0:05:34.320 Good Morning, Nathan, and Amy. Elon Muski is burying the 0:05:34.360 --> 0:05:37.320 hatchet with Apple's CEO Tim Cook, saying the tiff between 0:05:37.320 --> 0:05:40.240 the tech giants was a misunderstanding that has been resolved. 0:05:40.480 --> 0:05:43.320 The Twitter boss claimed without explanation that Apple threatened to 0:05:43.400 --> 0:05:46.080 block the platform from its app store, but yesterday Musk 0:05:46.120 --> 0:05:48.920 confirmed he spoke with Cook and says Cook assured him 0:05:48.960 --> 0:05:52.160 Apple never even considered doing so. A number of businesses 0:05:52.160 --> 0:05:55.360 paused advertising on Twitter because of concerns about Musk's approach 0:05:55.400 --> 0:05:58.520 to moderating content Live in New York. I'm Steve Rappaport, 0:05:58.560 --> 0:06:01.280 Bloomberg Daybreak. All right, thank you, Steve, and let's get 0:06:01.279 --> 0:06:04.000 the latest now on efforts to avert a crippling freight 0:06:04.080 --> 0:06:07.800 rail strike, the House has passed legislation to block the strike, 0:06:07.960 --> 0:06:10.400 sending it to the Senate, which could take action as 0:06:10.440 --> 0:06:13.560 soon as this week. The House also passed a related 0:06:13.600 --> 0:06:16.159 bill that would add seven days have paid sickly to 0:06:16.200 --> 0:06:19.240 the rail contract. Bloomberg's Joe Matthew spoke about that with 0:06:19.360 --> 0:06:22.880 Art Wheaton, director of Labor Studies at Cornell University's School 0:06:22.920 --> 0:06:26.880 of Industrial and Labor Relations. I agree that the workers 0:06:26.920 --> 0:06:29.599 deserve the seven days off, but they need to get 0:06:30.120 --> 0:06:32.760 enough votes in the Senate for it to pass, otherwise 0:06:32.800 --> 0:06:35.320 we have a strike. I would guess they're not going 0:06:35.400 --> 0:06:38.680 to add the seven days in the Senate. Art Wheaton 0:06:38.800 --> 0:06:41.400 is director of Labor Studies at Cornell University and was 0:06:41.440 --> 0:06:43.960 a guest on sound on Heard weekdays at five pm 0:06:43.960 --> 0:06:46.880 Wall Street Time here on Bloomberg Radio. Finally, Amy as 0:06:46.920 --> 0:06:50.039 inflation pressures remain high, and new survey says New York 0:06:50.160 --> 0:06:53.480 and Singapore are the most expensive cities to live in. 0:06:53.560 --> 0:06:56.680 The report comes from the Economist Intelligence Unit. Tel Aviv, 0:06:56.760 --> 0:06:59.160 Hong Kong, and Los Angeles round out the top five. 0:06:59.560 --> 0:07:01.559 The survey says the cost of living in the world's 0:07:01.640 --> 0:07:05.120 largest cities rows more than eight percent over the past year. 0:07:05.800 --> 0:07:08.679 Yesterday's Big Games futures are moving just a little lower. 0:07:08.760 --> 0:07:11.400 S ANDP futures now down three points, Stown futures down 0:07:11.440 --> 0:07:15.080 fifty four and NASTAC futures are lower by twenty two points. 0:07:15.120 --> 0:07:18.040 Straight ahead your latest local headlines and a check of sports. 0:07:18.960 --> 0:07:25.000 This is Bloomberg. Thank you, Nathan. Five oh seven on 0:07:25.000 --> 0:07:27.080 Wall Street. Let's bring in Michael Barr with more on 0:07:27.120 --> 0:07:29.400 what else is going on in New York and around 0:07:29.480 --> 0:07:32.200 the world. Good morning Michael, Good morning Amy. New York's 0:07:32.360 --> 0:07:35.720 mt am A boost fares on Sunways, buses, and commuter 0:07:35.880 --> 0:07:39.480 rail lines by five point five percent next year. It 0:07:39.600 --> 0:07:42.360 is the first time the transit provider has implemented such 0:07:42.400 --> 0:07:47.120 a high sense. The MTA faces a potential three billion 0:07:47.160 --> 0:07:52.640 dollar budget deficit as weekday ridership has plateaued to about 0:07:52.680 --> 0:07:56.800 sixty of pre pandemic levels. The m t A tends 0:07:56.800 --> 0:07:59.760 to increase fares by four percent every two years, but 0:08:00.000 --> 0:08:03.240 of a de Kathy HOCl postponed those hikes during the pandemic. 0:08:03.680 --> 0:08:06.080 The House Ways and Means Committee will get to look 0:08:06.120 --> 0:08:09.840 through Donald Trump's tax returns, Bloomberg said Baxter as the 0:08:09.880 --> 0:08:12.360 story the I R s as it has complied with 0:08:12.400 --> 0:08:15.120 the Supreme Court and making the returns available, did not 0:08:15.240 --> 0:08:18.600 confirm whether members of the panel have accessed them. The 0:08:18.640 --> 0:08:21.720 committee reportedly will meet today to decide what to do 0:08:21.800 --> 0:08:24.440 with the returns. This has been a long journey as 0:08:24.480 --> 0:08:28.200 a committee has been seeking the documents since Trump had 0:08:28.280 --> 0:08:30.960 repeatedly said during the campaign that he would make the 0:08:31.000 --> 0:08:33.680 returns public, but then fought all the way to the 0:08:33.679 --> 0:08:36.920 Supreme Court. The committee has argued it needs to see 0:08:36.920 --> 0:08:41.160 the returns to draft legislation on presidential compliance with tax law. 0:08:41.600 --> 0:08:44.199 In San Francisco, I'm at Baxter Bloomberg day Break. The 0:08:44.360 --> 0:08:48.400 US Appeals Court rejects the Biden administration's requests to reinstate 0:08:48.440 --> 0:08:51.960 the student debt relief plan. President Biden announced in August 0:08:52.040 --> 0:08:54.640 that the government would forgive up to ten thousand dollars 0:08:54.640 --> 0:08:57.680 in student loan debt for borrowers making less than one 0:08:58.120 --> 0:09:01.319 twenty five thousand dollars a year. About twenty six million 0:09:01.360 --> 0:09:05.840 Americans have applied for student loan forgiveness. Loyola Law University 0:09:05.880 --> 0:09:09.720 professor Lorie Levinson. These loans are supposed to be repaid 0:09:09.880 --> 0:09:14.520 starting in January, and unless a court uphold surviving the plan, 0:09:15.120 --> 0:09:17.559 then these people who thought they would have the loans 0:09:17.640 --> 0:09:21.679 forgiven will have to start paying. Loyola Law University professor 0:09:21.800 --> 0:09:24.800 Lourie Levinson says the next stop is likely the Supreme Court. 0:09:25.440 --> 0:09:29.199 The New York Grid Operator warned that electricity supplies will 0:09:29.240 --> 0:09:32.600 be tied as early as twenty three as demand grows 0:09:32.679 --> 0:09:36.360 and old generators shut down, increasing the risk of blackouts. 0:09:36.760 --> 0:09:39.960 The New York Independent System Operators says the availability of 0:09:40.000 --> 0:09:43.200 power supplies will thin over the next decade as more 0:09:43.240 --> 0:09:46.600 power plants fueled by natural gas shut down and demand 0:09:46.600 --> 0:09:50.400 grows for electric vehicles and home heating. Global News twenty 0:09:50.400 --> 0:09:53.400 four hours a day on air and on Bloomberg Quick Take, 0:09:53.640 --> 0:09:56.679 powered by more than twenty seven hundred journalists and unless 0:09:56.760 --> 0:09:59.839 more than twenty countries. I'm Michael bar This is Bloomberg Guinea. 0:10:00.400 --> 0:10:05.080 All right, thank you, Michael, Now for the sports report, 0:10:05.120 --> 0:10:07.440 brought to you by Try State OUTI here's John's dash 0:10:07.480 --> 0:10:09.520 our thanks to Amy. The Knicks won their first three 0:10:09.520 --> 0:10:12.280 home games this season. Since then at the Garden, they've 0:10:12.320 --> 0:10:15.080 gone one and six, beaten by the Bucks one thirteen, 0:10:15.120 --> 0:10:17.360 one oh seven too much. Jana's son to the compo 0:10:17.800 --> 0:10:20.680 thirty seven points are j Barrett leather Nicks with twenty six. 0:10:20.800 --> 0:10:24.120 Julius Randall said only eight of twenty four. Jalen Brunson 0:10:24.120 --> 0:10:26.760 was eight of twenty two. Together they were one of 0:10:26.800 --> 0:10:29.720 twelve on three pointers. Then AT's in Brooklyn by Washington 0:10:29.760 --> 0:10:32.240 one thirteen, one oh seven. That's three straight wins to 0:10:32.360 --> 0:10:35.520 move over five hundred. Kevin Durant having a sensational season, 0:10:35.520 --> 0:10:39.040 averaging thirty per game, shooting fifty five percent. He scored 0:10:39.120 --> 0:10:42.160 thirty nine. Kybrier of the United Seven Rangers in Ottawa 0:10:42.240 --> 0:10:44.520 had the league looking for more. The Rangers control of 0:10:44.520 --> 0:10:46.960 the draw, send it back up with Savannah Jat up 0:10:47.000 --> 0:10:48.640 the middle, leaves it back into the far wing for 0:10:48.720 --> 0:10:51.280 VC spins to his forehand and backhand to behind. Then 0:10:51.320 --> 0:10:53.959 at the Savannah Jat. Savannah Jat slings into the air 0:10:54.080 --> 0:10:57.360 point and Lingray with the shot and they store Rider 0:10:57.440 --> 0:10:59.839 was in front. I think he deflected it. At the Rangers. 0:10:59.880 --> 0:11:02.720 They ESPN New York call it it was pridor Is 0:11:02.760 --> 0:11:05.240 eleven goal at fifty two. Last year, Rangers beat the 0:11:05.360 --> 0:11:07.880 Senators three to one. College James Rutgers lost at in 0:11:07.920 --> 0:11:11.880 Miami sixty one on the Big ten A c C Challenge. 0:11:11.920 --> 0:11:15.600 The two conferences split six games Tuesday and split six 0:11:15.640 --> 0:11:19.520 more last night. Australia, Argentina, Poland all learned their way 0:11:19.520 --> 0:11:22.240 into the World Cup knockout round. France had already cleanched 0:11:22.240 --> 0:11:24.880 four more spots up for grabs today in Qatar. The 0:11:24.920 --> 0:11:29.079 Giants love a visitor at their facility today. Odell Beckham Jr. 0:11:29.080 --> 0:11:31.360 The ex Giant, has not played this season, but now 0:11:31.400 --> 0:11:33.679 said to have recovered from the torn A c L 0:11:33.720 --> 0:11:35.800 suffer in the Super Bowl while he was with the Rams. 0:11:35.840 --> 0:11:39.360 The Cowboys also very much interested in signing oh b J. 0:11:39.520 --> 0:11:42.760 The game tonight Buffalo at New England. John Stash Howard 0:11:42.800 --> 0:11:46.640 Bloomberg Sports team, All right, thank you, John, checking features 0:11:46.679 --> 0:11:49.840 now s and P futures down four, Dell futures down 0:11:49.880 --> 0:11:54.400 fifty eight points, NAZDAC futures down. Ten year treasury down 0:11:54.400 --> 0:11:57.079 to thirty seconds, the yield at three point six p. 0:11:57.880 --> 0:12:00.439 Much more still to come on this Thursday MO edition 0:12:00.480 --> 0:12:08.520 of Bloomberg daybreak is Bloomberg. The Bloomberg Sports Report was 0:12:08.559 --> 0:12:10.800 brought to you by Audie. Don't let someone else drive 0:12:10.800 --> 0:12:13.720 off in the Autie model you've always wanted. Visit your 0:12:13.760 --> 0:12:15.800 local twice state Autie either to get behind the wheel 0:12:15.800 --> 0:12:17.920 of yours today, or visit Autie Offers dot com for 0:12:18.040 --> 0:12:25.120 more information, markets, headlines and breaking news twenty four hours 0:12:25.160 --> 0:12:28.120 a day at Bloomberg dot Com, the Bloomberg Business Out, 0:12:28.240 --> 0:12:37.520 and at Bloomberg Quick Tape, He's a Bloomberg Business Flash, 0:12:38.120 --> 0:12:40.640 Nathan Hagar. Global stocks are climbing, the dollar is slipping 0:12:40.679 --> 0:12:42.439 to a three month low. Is fresh signs emerge of 0:12:42.480 --> 0:12:45.120 a softening in China's COVID stance and fed share. J. 0:12:45.280 --> 0:12:48.640 Powell confirms the pace of interest rate hikes maybe set 0:12:48.679 --> 0:12:51.040 to slow. We checked the markets every fifteen minutes during 0:12:51.080 --> 0:12:53.880 the trading day on Bloomberg. Right now, A futures in 0:12:53.920 --> 0:12:56.480 the US are moving lower, SMP futures are down two point, 0:12:56.520 --> 0:12:59.960 STAFF futures down, and SECT futures are down nineteen point. 0:13:00.080 --> 0:13:02.600 The decks in Germany is higher, though by four tenths percent. 0:13:02.840 --> 0:13:05.319 CAC in Paris little change now to the upside ten 0:13:05.400 --> 0:13:07.720 Your treasuries down three thirty seconds deal three point six 0:13:08.280 --> 0:13:10.520 held on the two year four point three three percent 0:13:10.840 --> 0:13:13.040 nime ex screws up a quarter percent of twenty cents 0:13:13.080 --> 0:13:15.760 at eighty dollar seventy five cents a barrel. Comics gold 0:13:15.760 --> 0:13:20.600 moving higher up one point ninety seventy cents sixty gets 0:13:20.600 --> 0:13:23.160 you announce of gold. The euro one point zero four 0:13:23.240 --> 0:13:25.400 four seven against the dollar British pound one point two 0:13:25.440 --> 0:13:27.720 one four six. The en is at one thirty six 0:13:28.040 --> 0:13:31.040 point three four thirty Wall Street Time, we get initial 0:13:31.120 --> 0:13:34.920 jobless claims and the PCE Corps deflator at ten am 0:13:35.320 --> 0:13:38.600 I s M manufacturing data. That's a Bloomberg business flash. 0:13:38.640 --> 0:13:41.240 Now here's Michael Barr with more on what's going on 0:13:41.320 --> 0:13:43.960 around the world. Michael, thank you very much. Nathan. A 0:13:43.960 --> 0:13:46.520 House committee can now get a look at six years 0:13:46.520 --> 0:13:49.679 of Donald Trump's tax returns. It comes a week after 0:13:49.720 --> 0:13:52.640 the Supreme Court cleared the way for their release. More 0:13:52.800 --> 0:13:56.760 Chinese cities are easing samanti virus restrictions as police patrol 0:13:56.800 --> 0:13:59.880 their streets to head all protests. Last weekend, bro to 0:14:00.000 --> 0:14:03.200 masters in Shanghai, Beijing and other cities demanded an end 0:14:03.280 --> 0:14:06.080 to controls that can find millions of people to their homes. 0:14:06.440 --> 0:14:08.600 In the NBA, the next loss, the Nets beat the 0:14:08.600 --> 0:14:11.640 Wizards one thirteen one oh seven the Celtics one. In 0:14:11.679 --> 0:14:14.439 the NHL, the Rangers won at the World Cup four 0:14:14.520 --> 0:14:18.319 games today, including Germany against Costa Rica. Global News twenty 0:14:18.320 --> 0:14:21.160 four hours a day on air and on Bloomberg Quicktake, 0:14:21.440 --> 0:14:24.560 powered by more than twenty seven hundred journalists and analysts 0:14:24.640 --> 0:14:27.200 more than a hundred twenty countries. I'm Michael bar This 0:14:27.240 --> 0:14:30.520 is Bloomberg Gaming. All right, Thank you, Michael. It's five 0:14:30.640 --> 0:14:34.320 nineteen on Wall Street Live from the Bloomberg Interactive Broker Studios. 0:14:34.400 --> 0:14:37.480 This is Bloomberg Daybreak. We're joined now by Chief Market 0:14:37.520 --> 0:14:41.400 analyst Michael Houston at CMC Markets. Michael, good morning to you. 0:14:41.840 --> 0:14:44.200 We're talking about FED chair Pale. He signaled a great 0:14:44.280 --> 0:14:48.000 height slowdown yesterday during his speech. What does that mean 0:14:48.040 --> 0:14:52.440 for equity markets? Well, yeah, good morning. I mean, I 0:14:52.440 --> 0:14:57.120 think we saw the consequences of that statement yesterday in 0:14:57.240 --> 0:15:01.160 the context of a slide in ten year yields as 0:15:01.200 --> 0:15:04.880 well as two yields, but also a spike higher in 0:15:04.960 --> 0:15:09.720 equity markets. And I think it's really confirmation of what 0:15:09.800 --> 0:15:13.280 the market was already thinking that the federal Reserve was 0:15:13.360 --> 0:15:17.640 likely to hike by fifty basis points in December. That's 0:15:17.640 --> 0:15:20.480 pretty much priced in. But I think what's notable now 0:15:20.560 --> 0:15:23.680 it's not really about what comes in December, it's what 0:15:23.760 --> 0:15:26.360 comes after that. And I think some of the data 0:15:26.400 --> 0:15:30.240 that we saw yesterday would bear to suggest that the 0:15:30.240 --> 0:15:32.720 Federal Reserve is probably going to start getting a little 0:15:32.720 --> 0:15:38.600 bit concerned about pushing too hard on raising rates much 0:15:38.600 --> 0:15:42.480 more aggressively than they have been. So for me, it's 0:15:42.520 --> 0:15:45.440 not about what comes in December. Fifty basis points is 0:15:45.440 --> 0:15:48.200 pretty much nailed on. It's what comes after that, And 0:15:48.240 --> 0:15:51.120 I think that, more than anything, is likely to be 0:15:51.680 --> 0:15:54.800 the key focus for the FED meeting in just under 0:15:54.840 --> 0:15:58.840 two weeks time what comes in next year with respect 0:15:58.840 --> 0:16:02.240 to future rate hikes. The past couple of months have 0:16:02.400 --> 0:16:04.760 seen a rally. Do you see this as a bear 0:16:04.840 --> 0:16:08.760 market rally? Yeah, I'm on the fence on that at 0:16:08.760 --> 0:16:10.960 the moment. I think largely because of the fact that 0:16:11.000 --> 0:16:15.440 we're heading into the December period, which generally tends to 0:16:15.480 --> 0:16:20.040 be a fairly low liquidity time of year. You've either 0:16:20.120 --> 0:16:23.240 major money for the year or you've lost your money 0:16:23.280 --> 0:16:25.080 for the year, and you don't want to lose anymore. 0:16:25.480 --> 0:16:28.320 So it's going to take something really substantive, I think, 0:16:28.400 --> 0:16:31.600 to really drive stock markets lower from where they are 0:16:31.640 --> 0:16:34.600 at the moment. I think for now the markets are 0:16:34.600 --> 0:16:38.200 in the holding pattern ahead of these central bank meetings 0:16:38.200 --> 0:16:39.800 in two weeks time. Not only have we got the 0:16:39.800 --> 0:16:44.560 Federal Reserve, we've got the European Central Bank, We've got 0:16:44.600 --> 0:16:47.280 the Bank of England. And the prevailing narrative at the 0:16:47.360 --> 0:16:50.920 moment is that inflation has potentially paid and the bigger 0:16:51.000 --> 0:16:54.400 question now is how quickly does it come down? And 0:16:54.440 --> 0:16:57.600 how long do rates stay at their current levels or 0:16:57.680 --> 0:17:00.440 go higher? So what are you watching or as the 0:17:00.480 --> 0:17:03.160 perspective that I love it when you anticipate my next question, 0:17:03.200 --> 0:17:06.280 whether inflation is peaked and the sort of timeline that 0:17:06.320 --> 0:17:09.520 we're looking at there, I think inflation has peaked. I 0:17:09.520 --> 0:17:11.840 think the bigger question that markets are asking now is 0:17:12.040 --> 0:17:14.159 how quickly does it come down? And for me, I 0:17:14.200 --> 0:17:17.120 think we're near the top of the rate hiking cycle. 0:17:17.560 --> 0:17:20.840 I think the Federals struggle to raise rates by more 0:17:20.880 --> 0:17:23.920 than another fifty basis points over and above what they're 0:17:23.960 --> 0:17:27.840 going to do in December, given the weakness that we're seeing, 0:17:28.080 --> 0:17:30.639 not only in the US economy in terms of the 0:17:30.640 --> 0:17:35.200 manufacturing data, but more broadly in Europe as well. So 0:17:36.160 --> 0:17:39.320 going ahead, I think we'll know more next year, and 0:17:39.359 --> 0:17:42.120 I think we could see some early equity market weakness 0:17:42.480 --> 0:17:45.600 in January February next year. Between now and Christmas, I 0:17:45.640 --> 0:17:47.320 think there's potential for us to move a little bit 0:17:47.400 --> 0:17:51.760 higher before we have another test of the downside. Stick 0:17:51.800 --> 0:17:53.480 down a little bit on that. Where do you see 0:17:53.480 --> 0:17:58.080 those weak spots in the U S data? Well, manufacturing yesterday, 0:17:58.119 --> 0:18:01.200 I mean that's Chicago p and my number was pretty poor. 0:18:01.680 --> 0:18:03.639 I'll be interested to see whether or not the I 0:18:03.800 --> 0:18:08.080 S M manufacturing numbers later today bear that out, particularly 0:18:08.080 --> 0:18:11.600 on the prices paid component, which has had its lowest 0:18:11.680 --> 0:18:15.400 levels since mid So that's where I will be paying 0:18:15.400 --> 0:18:18.280 particular attention to services is holding up fairly well. We 0:18:18.320 --> 0:18:21.520 saw that in the ADP numbers on Wednesday. It will 0:18:21.560 --> 0:18:24.439 be interesting to see whether we're non farm payrolls also 0:18:24.560 --> 0:18:29.240 replicate that trend when they're released on Friday. It's shifting 0:18:29.320 --> 0:18:31.119 gears just a little bit. We only have about a 0:18:31.160 --> 0:18:33.680 minute here, But how is China a factor in all 0:18:33.720 --> 0:18:37.719 of this? It's a factor in so much that if 0:18:37.760 --> 0:18:40.919 they're fully locked down, they're obviously not adding to the 0:18:41.040 --> 0:18:45.880 overall economic output of the global economy. If they're slowly 0:18:45.960 --> 0:18:50.120 starting to move to a gradual reopening, what that does 0:18:50.359 --> 0:18:53.119 is it makes it much less likely that the global 0:18:53.160 --> 0:18:56.919 economy will fall off the cliff in three So a 0:18:56.920 --> 0:19:03.480 gradual reopening is probably the best outlook going forward. If 0:19:03.480 --> 0:19:06.080 they open very very quickly, there is a risk that 0:19:06.119 --> 0:19:10.120 could cause an inflationary spike when it comes to energy prices. 0:19:10.480 --> 0:19:13.640 We don't want that, so gradually opening on the back 0:19:13.720 --> 0:19:17.320 of slowly easing COVID restrictions is probably the best case 0:19:17.359 --> 0:19:21.320 scenario for China. All right, Thank you so much, Michael 0:19:21.400 --> 0:19:25.120 for taking time with us on this Thursday morning, especially 0:19:25.200 --> 0:19:28.400 the day after FED chair Pal made those comments yesterday 0:19:28.440 --> 0:19:31.040 at the Brookings Institution. We appreciate you taking the time 0:19:31.080 --> 0:19:34.840 with us. Chief Market analyst Michael Houston at CMC Markets 0:19:35.520 --> 0:19:39.240 checking the markets, SMP futures down two points, DAL futures 0:19:39.280 --> 0:19:43.240 down fifty one, NASTAC futures down twenty one points, the 0:19:43.359 --> 0:19:46.439 ten year treasury down to thirty seconds, the yield at 0:19:46.480 --> 0:19:51.760 three point two, year yield now at four point three two, 0:19:52.040 --> 0:19:55.520 and Brent crude now trading six tenths of a percent higher. 0:19:55.840 --> 0:19:59.040 That's fifty six cents at eighty seven dollars at fifty 0:19:59.040 --> 0:20:01.520 three cents per barrel. Much more to come on Bloomberg Daybreak. 0:20:01.920 --> 0:20:09.200 This is Bloomberg the Bloomberg eleven three oh forecast. Sunny 0:20:09.240 --> 0:20:11.560 and breezy, going up to forty five degrees with more 0:20:11.680 --> 0:20:14.920 sun Tomorrow a little mile they're going up to fifty showers. 0:20:14.920 --> 0:20:18.120 Return for your weekend on Saturday, going up to sixty degrees. 0:20:22.160 --> 0:20:26.720 Broadcasting live from the Bloomberg Interactive Brokers Studio in New York, 0:20:26.800 --> 0:20:30.760 Bloomberg E living three to Washington, d C, Bloomberg one 0:20:30.880 --> 0:20:34.119 to Boston, Bloomberg one O six one to San Francisco, 0:20:34.200 --> 0:20:37.640 Bloomberg nine sixty to the country, Sirius XM Cho one 0:20:37.720 --> 0:20:40.800 nine and around the globe the Bloomberg Business app in 0:20:40.880 --> 0:20:50.440 Bloomberg Radio dot Com. This is Bloomberg Daybreak. It's five 0:20:50.480 --> 0:20:53.160 thirty on Wall Street. Good morning now, Nathan Hager, him 0:20:53.160 --> 0:20:56.159 Amy Morris. Bloomberg Daybreak is brought to you by s 0:20:56.160 --> 0:20:59.680 E I. Built on advanced technologies and fifty years of innovation, 0:21:00.119 --> 0:21:04.879 SEI offers asset managers a comprehensive and flexible operations outsourcing platform. 0:21:05.119 --> 0:21:07.959 Go to se i C dot com slash managers more. 0:21:08.000 --> 0:21:10.040 About four hours away from the open of US trading, 0:21:10.080 --> 0:21:11.480 Let's get you up to date on the news you 0:21:11.520 --> 0:21:13.720 need to know at this hour. Starting with the FED 0:21:14.000 --> 0:21:16.520 chair J. Powell is signaling the Central Bank will ease 0:21:16.600 --> 0:21:19.280 it's aggressive pace of raising interest rates as soon as 0:21:19.359 --> 0:21:21.960 this month. The time for moderating the pace of rate 0:21:22.000 --> 0:21:24.920 increases may come as soon as the December meeting. Given 0:21:24.920 --> 0:21:28.119 our our progress in tightening policy, the timing of that 0:21:28.240 --> 0:21:31.480 moderation is far less significant than J. Pal's remarks indicate 0:21:31.520 --> 0:21:33.600 the Fed it's likely to shift to a fifty basis 0:21:33.640 --> 0:21:36.960 point hike at its next decision. Equity markets advanced sharply 0:21:36.960 --> 0:21:40.720 on Pal's comments. David Cutlof, founder of main Stake Capital Management, 0:21:40.880 --> 0:21:44.840 says the more dovish tone was appropriate for current economic conditions. 0:21:45.200 --> 0:21:47.600 I think it's a recognition too of looking at the 0:21:47.640 --> 0:21:51.000 data p M E s or in contraction territory pending 0:21:51.040 --> 0:21:54.919 home sales down thirty year over year, and we haven't 0:21:54.960 --> 0:21:58.120 felt the full impact of these rate hikes we've had. 0:21:58.480 --> 0:22:02.160 David Goodlave with main Steak Capital Management believes Powell's comments 0:22:02.240 --> 0:22:05.240 also indicate he's mindful of the Fed going too far 0:22:05.359 --> 0:22:07.880 with rate hikes. Well, the SP five hundred close three 0:22:07.880 --> 0:22:10.800 percent higher after Powell's remarks, Amy and the rally extended. 0:22:10.880 --> 0:22:14.359