WEBVTT - US ADP Data, Race to Replace House Speaker

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<v Speaker 1>Good morning. I'm Brian Curtis and I'm Doug Krisner. Here

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<v Speaker 1>are the stories we're following today.

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<v Speaker 2>US companies added the fewest number of jobs since the

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<v Speaker 2>start of twenty twenty one in September, and paid growth slowed.

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<v Speaker 2>ADP data showed private payrolls rose just eighty nine thousand

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<v Speaker 2>last month after climbing one hundred eighty thousand in August.

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<v Speaker 2>Bloomberg's Michael McKee tells us what this means for Friday's

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<v Speaker 2>jobs number.

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<v Speaker 3>Over the past year, ADP has overstated the private sector

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<v Speaker 3>job creation seven out of the twelve months, so if

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<v Speaker 3>that follows, then we will have an unusually weak payrolls

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<v Speaker 3>report on Friday, but hard to square with what we

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<v Speaker 3>saw from the ISM manufacturing numbers because ISM went positive

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<v Speaker 3>and the ADP says we lost twelve thousand jobs.

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<v Speaker 2>Not only did ADP say that jobs were lost in manufacturing,

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<v Speaker 2>it also said thirteen thousand jobs were lost in trade

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<v Speaker 2>and transportation and another thirty two thousand were lost in

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<v Speaker 2>professional and business services.

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<v Speaker 1>Let's get to the politics now. Some Republican leaders are

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<v Speaker 1>throwing their names into the hat to become House speaker.

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<v Speaker 1>This is after Kevin McCarthy was ousted yesterday. Second ranking

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<v Speaker 1>House Republican Steve Scalise is officially running, making him the

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<v Speaker 1>leading contender. Hardline Republican Representative Jim Jordan also saying today

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<v Speaker 1>he will run.

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<v Speaker 4>Now.

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<v Speaker 1>The ouster of McCarthy is raising a lot of question

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<v Speaker 1>about everything from a to Ukraine to averting a government

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<v Speaker 1>shutdown in a little more than six weeks. Here's Bloomberg's

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<v Speaker 1>Jonathan Tamari.

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<v Speaker 5>Congress can't do anything, or the House at least can't

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<v Speaker 5>do anything until they elect a speaker. So we're going

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<v Speaker 5>to face some uncertain period of time here where they're

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<v Speaker 5>basically doing no work other than trying to find the leader.

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<v Speaker 5>And then once they do elect a leader, the Republican

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<v Speaker 5>Conference has made clear they don't want to compromise with

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<v Speaker 5>Democrats by just kicking out their own speaker. The next

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<v Speaker 5>person who takes the job is going to face a

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<v Speaker 5>lot of pressure not to compromise, especially so soon after

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<v Speaker 5>they assume the speakership. Will they really want their first

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<v Speaker 5>big act as the leader to be a deal with

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<v Speaker 5>Democrats after seeing the reaction from their own party just now.

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<v Speaker 1>That is Bloomberg's Jonathan Tomorrow. Now the House is aiming

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<v Speaker 1>to vote on a news speaker. October eleventh, bran.

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<v Speaker 2>Well, the trial of FTX co founder Sam Bankman Freed

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<v Speaker 2>moved into day two, and Bloomberg Shanali Bossek says the

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<v Speaker 2>prosecution's case, no matter how strong, is far from a

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<v Speaker 2>slam dunk.

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<v Speaker 6>Part of the defense, as we have learned today, includes

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<v Speaker 6>this idea that a lot of what was happening between

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<v Speaker 6>FTX and the lending of funds to Alameda was not

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<v Speaker 6>only known, but known between company insiders as well as

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<v Speaker 6>people who had lent money to the firm, as well

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<v Speaker 6>as people who had known that the relationships and good times.

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<v Speaker 6>I didn't mind that the two companies had this kind

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<v Speaker 6>of a relationship, and then over time it deteriorated as

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<v Speaker 6>the crypto industry got very volatile and money was lost.

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<v Speaker 2>As Bloomberg Shanali Bassak, Bankman Fred faces up to one

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<v Speaker 2>hundred ten years in prison if he's convicted on all counts.

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<v Speaker 1>US Commerce Secretary Gina Romundo is saying today the report

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<v Speaker 1>of a chip breakthrough by China's Huawei is disturbing. Here's

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<v Speaker 1>Bloomberg's David in Glace even stronger.

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<v Speaker 7>Ramondo said it was incredibly disturbing. Huawei's reported new chip

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<v Speaker 7>has set up a debate on whether the US is

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<v Speaker 7>effective in curbing China's technological advancement. That said, Ramondo maintains

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<v Speaker 7>there is no evidence China can develop advanced chips at scale,

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<v Speaker 7>but she is facing intense pressure from Republicans to titan controls.

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<v Speaker 7>Ramondo emphasized different tools are needed to enforce the US regime.

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<v Speaker 7>She pointed to the restrict Act that would expand American

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<v Speaker 7>authority to review and prevent certain transactions that pose a

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<v Speaker 7>risk to national security. In Hong Kong, I'm daviding gless

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<v Speaker 7>Bloomberg Radio.

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<v Speaker 2>Barclays is dismissing roughly fifty of its senior deal makers.

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<v Speaker 2>Get the story from Bloomberg's and Kates.

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<v Speaker 8>The cuts are part of a plan to trim the

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<v Speaker 8>headcount of Barclay's across the Corporate and Investment Bank, amounting

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<v Speaker 8>to three percent of the workforce in the unit. Barclays

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<v Speaker 8>and its rivals have been contending with a prolonged slump

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<v Speaker 8>and deal making and capital markets activity. Barclay's investment banking

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<v Speaker 8>fees dropped fifteen percent in the second quarter. Goldman Sachs

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<v Speaker 8>has been planning to begin its annual reduction of underperforming workers,

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<v Speaker 8>and City Group has also laid off hundreds of employees

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<v Speaker 8>in Washington and Kate's Bloomberg Radio, Well.

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<v Speaker 2>Doug, we had a little respite from the selling in

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<v Speaker 2>both the bond and stock markets. In terms of the

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<v Speaker 2>stock market, it doesn't seem like there's a whole lot

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<v Speaker 2>of conviction there. One view is that the selling won't

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<v Speaker 2>really abate until you get a meaningful sell off in.

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<v Speaker 8>The magnificent seven.

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<v Speaker 2>Does that happen? We have to wait and see.

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<v Speaker 1>That's a great question. And if you talk to the technicians,

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<v Speaker 1>the guys thenngals that watch the charts, they are saying

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<v Speaker 1>that the S and P five hundred needs to stay

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<v Speaker 1>above its two hundred day moving average, which is currently

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<v Speaker 1>around forty two four. We have been able to do that.

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<v Speaker 1>Some serious pain, though, these technicians say, could be in

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<v Speaker 1>store for the market. We're that level to be violated.

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<v Speaker 2>It's fair to point out that actually, you know, there

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<v Speaker 2>has been a selloff in stocks, and it's actually greater

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<v Speaker 2>than what it appears on the surface. It's fair to

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<v Speaker 2>point out that the equal weight S and P five

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<v Speaker 2>hundred is down year to date and that's with the

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<v Speaker 2>Super seven in there. If you actually strip them out,

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<v Speaker 2>the equal weight would be down much more significantly. So

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<v Speaker 2>it's becoming harder and harder to make the point that

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<v Speaker 2>Bill Gross made today, which is that stocks are overvalued.

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<v Speaker 2>He also said that bond yields must fall significantly to

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<v Speaker 2>justify current valuations. So this is playing out before our

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<v Speaker 2>very eyes.

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<v Speaker 1>Keep your eye on some of the big energy names

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<v Speaker 1>in the Asia session. After we had that pulled back

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<v Speaker 1>in WTI crewed here in New York today we were

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<v Speaker 1>down more than five and a half percent. A lot

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<v Speaker 1>of the government data pointing to extremely weak demand, whether

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<v Speaker 1>you're looking at gasoline or other distillates. And at the

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<v Speaker 1>same time, crude oil inventories are rising slightly at Cushing, Oklahoma,

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<v Speaker 1>And as you know, that's the delivery point for WTI.

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<v Speaker 2>Yeah, WTI what eighty four fifty two, So big drop today. Yeah,

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<v Speaker 2>you're right, It'll be really interesting to see the impact

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<v Speaker 2>on Asian market. Looks mixed now, but may improve a

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<v Speaker 2>little as the day wears on. Now it's time for

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<v Speaker 2>global news. President Biden is front and center today, saying

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<v Speaker 2>that Congress needs to get to work on Ukraine funding

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<v Speaker 2>at Baxter has Global News from the nine sixty News

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<v Speaker 2>from at San Francisco. Ahead.

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<v Speaker 9>Yeah, exactly right, Brian. While House Republicans pick a new speaker,

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<v Speaker 9>President Biden is urgent Congress in the interim to take

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<v Speaker 9>up Ukraine.

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<v Speaker 10>The majority of the American people still supporting Ukraine, and

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<v Speaker 10>the majority of the members of the Congress, both Democrat

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<v Speaker 10>and Republican, are supported. So I don't think we should

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<v Speaker 10>let them games and ship getting away blocking.

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<v Speaker 9>It and sent up. Minority Leader Mitch McConnell agrees, but

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<v Speaker 9>asks for some guidance from the world use.

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<v Speaker 4>It's still a major priority. I think the majority of

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<v Speaker 4>the members of both bodies still support it. We need

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<v Speaker 4>some direction from the administration as to how they intend.

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<v Speaker 11>To go forward.

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<v Speaker 4>Yeah.

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<v Speaker 9>McConnell also says the House needs to get on the

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<v Speaker 9>process of finding a new speaker and says a turmoil

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<v Speaker 9>needs to be halted immediately.

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<v Speaker 4>To do that job for anyone, you have to get

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<v Speaker 4>rid of the motion to vacate because it puts whoever

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<v Speaker 4>the speaker is in a hammer lock of dysfunction. So

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<v Speaker 4>potential dysfunction.

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<v Speaker 9>Yeah. So, as we mentioned so far, Steve Scalise and

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<v Speaker 9>Jim Jordan have said they're interested in the speaker job,

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<v Speaker 9>and it may be an easier process this time around,

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<v Speaker 9>he said, hopefully if you listen to Congressman Matt Gates

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<v Speaker 9>on Bloomberg exclusively.

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<v Speaker 12>Well, I'm for both of them right now. I'm eager

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<v Speaker 12>to hear their plans and their vision. But if the

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<v Speaker 12>House of Representatives goes from the steward of Kevin McCarthy

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<v Speaker 12>to either the stewardship of Jim Jordan or Steve Scalise,

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<v Speaker 12>that's going to come to the delight of many Conservatives.

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<v Speaker 9>He says. The overriding issue is gaining control of spending

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<v Speaker 9>and moving it back to at least pre COVID levels.

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<v Speaker 9>China says it has warned a Philippines supply boat and

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<v Speaker 9>two Coastguard vessels to leave the sea near the Nansha

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<v Speaker 9>Islands and follow the ships throughout. China claims the islands

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<v Speaker 9>are sovereign. Day three of the Trump civil trial, and

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<v Speaker 9>after lunch break, he wasn't in the courtroom. His departure

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<v Speaker 9>comes after he was slapped with a gag order by

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<v Speaker 9>the judge for posts and comments about the law clerk

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<v Speaker 9>and about Attorney General Letitia James, who responded today calling

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<v Speaker 9>comments racist among other things.

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<v Speaker 13>And I will not sit idly by and allow anyone

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<v Speaker 13>to subvert the law. And lastly, I will not be bullied.

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<v Speaker 13>So mister Trump is no longer here. That Donald Trump

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<v Speaker 13>Show is over. This was nothing more than a political stunt.

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<v Speaker 9>Now, before leaving New York, Trump tried to explain how

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<v Speaker 9>he got the loans.

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<v Speaker 10>I borrow money on very underleveraged borrow money on.

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<v Speaker 2>A building or something, many.

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<v Speaker 9>Different things or something. And Trump is complaining about the

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<v Speaker 9>fact he doesn't have a jury trial. The fact is

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<v Speaker 9>neither side asked for a jury, but we're entitled to

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<v Speaker 9>do so. Global News powered by more than twenty seven

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<v Speaker 9>hundred journalists and analysts in over one hundred and twenty countries.

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<v Speaker 9>In San Francisco, I'm at Baxter and this is Bloomberg.

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<v Speaker 2>This is Bloomberg Daybreak Asia. I'm Brian Curtis in Hong

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<v Speaker 2>Kong alongside Grishad Salamat, and our guest is Margy Patel,

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<v Speaker 2>senior portfolio manager at all Spring Global Investments. Got to

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<v Speaker 2>put this disclaimer in. It's a daily news show, so

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<v Speaker 2>we have to talk about the day's events. Margie, I

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<v Speaker 2>know you look longer term. But do you see the

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<v Speaker 2>gains today as just a blip or something of a signal.

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<v Speaker 11>Well, I think it says it's really really hard to

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<v Speaker 11>keep this market down and get the big correction. A

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<v Speaker 11>lot of people would like to see just one starts

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<v Speaker 11>to say the man comes in and takes the market higher.

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<v Speaker 11>And really, if you look at the estimates for the

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<v Speaker 11>latest quarter, looks like we're going to have growth around

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<v Speaker 11>three percent with unemployment well under four percent, it's really

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<v Speaker 11>hard to build a case for a big correction or

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<v Speaker 11>recession anytime on the horizon.

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<v Speaker 14>Well, you know, the thing is what we're seeing in

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<v Speaker 14>the market. So I just want to get your take

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<v Speaker 14>on what's been going on with the bond route and

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<v Speaker 14>what's been going on with the equities as well, And

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<v Speaker 14>just ask you whether an economy which is over fifteen

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<v Speaker 14>years suddenly become predicated on the zero interest rates. Now

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<v Speaker 14>you've got the cost of capital going up, and essentially

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<v Speaker 14>what you've got is getting back to a typical rate structure.

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<v Speaker 14>It doesn't sound like a terrible thing, but it's really

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<v Speaker 14>taking people kicking, screaming, and they seem to be in denial.

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<v Speaker 11>Well that's true, but actually for the average person. They

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<v Speaker 11>probably are benefiting because risk free assets that they had

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<v Speaker 11>in a bank somewhere or in a money market fund,

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<v Speaker 11>we're getting zero now they're getting five percent. So I

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<v Speaker 11>think those people are very happy. And really, if you

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<v Speaker 11>think about it, most companies and even individuals use those

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<v Speaker 11>years of zero interest rates to lengthen out the data

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<v Speaker 11>obligations to lower them over a long period of time.

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<v Speaker 11>Corporations issued data one or two percent for ten years,

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<v Speaker 11>and so they are really immune to the rise we've

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<v Speaker 11>had in rates. And the same thing with a lot

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<v Speaker 11>of consumers who extended the mortgages fix their mortgage rates

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<v Speaker 11>while they were very low. So I think it's more

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<v Speaker 11>where you really see the excesses are in the financial sector,

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<v Speaker 11>where we have a lot of money going into m

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<v Speaker 11>and A, where you have a lot of speculat teams.

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<v Speaker 11>You have the crypto disaster, you had the SPACs come along,

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<v Speaker 11>but all of that hasn't really mounted to much, and

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<v Speaker 11>so it's not going to damage the whole economy as

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<v Speaker 11>you correct now those low interest rate vehicles.

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<v Speaker 2>So Margaret, it sounds like you're reasonably positive. I'd imagine,

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<v Speaker 2>like many money managers, you like the idea of being diversified,

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<v Speaker 2>but people who listen to this show obviously are doing

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<v Speaker 2>so because they're looking for an advantage, They're looking for

0:12:15.000 --> 0:12:18.240
<v Speaker 2>some alpha. Are there some opportunities that really stand out

0:12:18.280 --> 0:12:18.600
<v Speaker 2>for you?

0:12:19.480 --> 0:12:21.840
<v Speaker 11>Well, I think the opportunities are where they've been for

0:12:21.920 --> 0:12:25.839
<v Speaker 11>the last few years. Is number one. The technology sector. Yes,

0:12:25.880 --> 0:12:27.920
<v Speaker 11>here and there. You have names that are maybe very

0:12:27.960 --> 0:12:30.240
<v Speaker 11>pricey for the growth rates, but there are plenty of

0:12:30.320 --> 0:12:33.000
<v Speaker 11>names that will benefit from the high growth of sector

0:12:33.080 --> 0:12:35.839
<v Speaker 11>is going to have and using more and more technology

0:12:35.920 --> 0:12:38.760
<v Speaker 11>and alliers of the economy. And I think some areas

0:12:38.760 --> 0:12:43.439
<v Speaker 11>of the industrial sector where they're tied to incorporating technology

0:12:43.520 --> 0:12:47.079
<v Speaker 11>in their products, you know, differentiated products, and they're benefiting

0:12:47.120 --> 0:12:50.120
<v Speaker 11>from the infrastructure build that we should have and some

0:12:50.240 --> 0:12:54.319
<v Speaker 11>of the restoring, particularly say in building semiconductor factories here

0:12:54.320 --> 0:12:57.040
<v Speaker 11>in the US. So I think there are some attractive areas,

0:12:57.679 --> 0:13:01.080
<v Speaker 11>but those areas have been attractive all year, been good performers.

0:13:02.200 --> 0:13:05.040
<v Speaker 14>How has your strategy really changed over the course of

0:13:05.040 --> 0:13:06.599
<v Speaker 14>the year there, Margie.

0:13:06.600 --> 0:13:10.240
<v Speaker 11>Well, it hasn't because I was always a little skeptical

0:13:10.320 --> 0:13:12.960
<v Speaker 11>about last year at the fetis raising rates. There's going

0:13:13.040 --> 0:13:15.679
<v Speaker 11>to be a recession. We have to get really conservative

0:13:15.880 --> 0:13:19.119
<v Speaker 11>and I just couldn't see it because unlike previous cycles,

0:13:19.480 --> 0:13:22.000
<v Speaker 11>we don't have any sector of the economy, big sectors

0:13:22.000 --> 0:13:25.280
<v Speaker 11>of the economy that's way out of balance, way over leverage,

0:13:25.480 --> 0:13:28.000
<v Speaker 11>and about the sit of wall on liquidity and take

0:13:28.000 --> 0:13:31.439
<v Speaker 11>the whole economy down into recession, think of the housing crisis,

0:13:31.640 --> 0:13:34.640
<v Speaker 11>think of the Internet bubble. Previous cycles we've had with

0:13:34.880 --> 0:13:38.440
<v Speaker 11>energy being way overblown, and so I thought it was

0:13:38.480 --> 0:13:41.840
<v Speaker 11>better to be fully invested. And ironically, the so called

0:13:41.920 --> 0:13:44.640
<v Speaker 11>riskier sectors have done a lot better than the so

0:13:44.720 --> 0:13:46.120
<v Speaker 11>called conservative sectors.

0:13:47.200 --> 0:13:48.640
<v Speaker 2>Yeah, one of the things you said right at the

0:13:48.640 --> 0:13:51.800
<v Speaker 2>outset would definitely be a parent if you think that

0:13:52.000 --> 0:13:54.000
<v Speaker 2>there's a lot of money on the sidelines, you can

0:13:54.040 --> 0:13:56.120
<v Speaker 2>see that on a daylight today, you can get a

0:13:56.160 --> 0:13:59.480
<v Speaker 2>pop pretty quickly. Do you think, though, that we might

0:13:59.559 --> 0:14:03.520
<v Speaker 2>get so clearing in tech before you know, you really

0:14:03.559 --> 0:14:06.040
<v Speaker 2>get that encouragement for money to flood back in.

0:14:07.040 --> 0:14:09.959
<v Speaker 11>Well, you know, you always can have a correction for

0:14:10.000 --> 0:14:13.040
<v Speaker 11>some reason. Certainly we did last year, and that was

0:14:13.080 --> 0:14:14.560
<v Speaker 11>a great buying offer.

0:14:15.160 --> 0:14:18.360
<v Speaker 2>That was more than a correction. Last year twenty seven

0:14:18.400 --> 0:14:21.360
<v Speaker 2>percent down, that was a little bit more than a correction.

0:14:22.160 --> 0:14:25.760
<v Speaker 11>Well, yes, that's true. But what a great opportunity to

0:14:25.800 --> 0:14:30.040
<v Speaker 11>lock in some very attractive return sort of investments. But

0:14:30.160 --> 0:14:32.720
<v Speaker 11>I just I don't really see it, because I don't

0:14:32.760 --> 0:14:37.120
<v Speaker 11>see anything that's big enough to really derail the whole sector.

0:14:37.440 --> 0:14:39.920
<v Speaker 11>Growth may slow down, you may have one name or

0:14:39.920 --> 0:14:42.200
<v Speaker 11>another name blow up because they can't live up to

0:14:42.240 --> 0:14:44.800
<v Speaker 11>their growth rates. But the whole sector, I think should

0:14:44.880 --> 0:14:48.240
<v Speaker 11>still be the best performing part of the market. And

0:14:48.280 --> 0:14:51.360
<v Speaker 11>when you look at this so called safe defensive sectors

0:14:51.480 --> 0:14:56.480
<v Speaker 11>that you thought should have worked last year and this year, utilities, staple,

0:14:56.720 --> 0:14:58.840
<v Speaker 11>even healthcare, they have been disasters.

0:15:00.120 --> 0:15:02.880
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