WEBVTT - Markets Rally on Big Fed Cut; Israel Sees ‘New Phase’ in War

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News.

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<v Speaker 2>Good morning.

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<v Speaker 1>I'm Nathan Hager and I'm Karen Moscow. Here are the

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

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<v Speaker 2>Karen, the surge in futures this morning comes after a

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<v Speaker 2>Vassil session following the Fed's fifty basis point rate cut.

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<v Speaker 2>The S and P five hundred wiped out a one

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<v Speaker 2>percent gain yesterday after FED share, j Powell cautioned against

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<v Speaker 2>assuming big rate cuts would continue.

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<v Speaker 3>I do not think that anyone should look at this

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<v Speaker 3>and say, oh, this is the new pace. Have to

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<v Speaker 3>think about it in terms of the base case. Of course,

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<v Speaker 3>what happens will happen. So in the base case, what

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<v Speaker 3>you see is look at the SEP. You see cuts

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<v Speaker 3>moving along. The sense of this is we're recalibrating policy

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<v Speaker 3>down over time to a more neutral level, and we're

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<v Speaker 3>moving at the pace that we think is appropriate.

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<v Speaker 2>And Jay Powell, the Fed's first rate cut in four

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<v Speaker 2>years was accompanied by projections indicating an additional fifty basis

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<v Speaker 2>points of cuts across the remaining two policy meetings this year.

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<v Speaker 1>Well, Nathan, we have plenty of reaction from the FED

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<v Speaker 1>raid cut. We caught up with Bloomberg Opinion columnist Muhammad Alarian,

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<v Speaker 1>KMPG Chief US Economist Diane Swank, and former New York

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<v Speaker 1>Fed President Bill Dudley.

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<v Speaker 4>We're going to look back and either this will be

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<v Speaker 4>the absolutely white bet, which is be preemptive on the

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<v Speaker 4>labor market after you were reactive to inflation. This is

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<v Speaker 4>a fundamental change in the reaction function. Alternatively, we will

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<v Speaker 4>look at this as being too aggressive. I'm hoping that

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<v Speaker 4>it will be the first.

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<v Speaker 5>This was a huge victory for j.

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<v Speaker 6>Powell, who really laid out at his Jackson Hole speech

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<v Speaker 6>that he was worried about employment, and that is what

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<v Speaker 6>this is about.

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<v Speaker 5>It's pretty much I was expecting in the sense that

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<v Speaker 5>one of the issues that Paul had is how do

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<v Speaker 5>you two fifty without scaring people that you know something

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<v Speaker 5>bad about the economy? And I think you did that

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<v Speaker 5>very well. He basically said, we're doing this because the

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<v Speaker 5>news is good. We've made progress sound inflation, as opposed

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<v Speaker 5>we're doing this because the news is bad. So I

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<v Speaker 5>thought it was a very providing reassurance to people that

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<v Speaker 5>FED thinks that they've got it.

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<v Speaker 1>That was former New York Fed President Bill Dudley. KPMG

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<v Speaker 1>Chief US Economist Diane Swank and Bloomberg opinion columnist Mohammad Alarian.

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<v Speaker 1>The decision was not without some controversy. Michelle Bowman cast

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<v Speaker 1>a dissenting vote in favor of a smaller quarter point

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<v Speaker 1>rate reduction that marked the first ascent by a FED

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<v Speaker 1>governor since two thousand and five.

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<v Speaker 2>Well, Karen, investors aren't the only ones cheering the Fed's

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<v Speaker 2>rate cut. Bloomberg's John Tucker joins us Now and John.

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<v Speaker 2>The Biden Harris administration may have caused to celebrate as well.

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<v Speaker 7>Yeah, Nathan, and they're taking kind of a victory lap.

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<v Speaker 7>In a speech today to the Economic Club of Washington,

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<v Speaker 7>President Biden will celebrate the Fed's decision of slash interest

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<v Speaker 7>rates as a validation of his economic vision. This is

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<v Speaker 7>part of an effort to recast his handling of the economy,

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<v Speaker 7>particularly as voters continue to give him low marks for

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<v Speaker 7>tackling inflation. It's important for both the President personally and

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<v Speaker 7>the Democrats more broadly, as Vice President harr Is is

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<v Speaker 7>locked in that tight election battle Donald Trump, his eighth say,

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<v Speaker 7>Biden will outline ways he believes the economy could still

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<v Speaker 7>be made stronger while pushing costs lower. I'm John Tucker

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<v Speaker 7>Bloomberg Radio.

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<v Speaker 1>All right, John, thank you. It's now to the Bank

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<v Speaker 1>of England and it's turned to make a policy decision.

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<v Speaker 1>That BOE is expected to maintain a patient approach to

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<v Speaker 1>easing at its meeting today after a first rate cut

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<v Speaker 1>last month. And Bloomberg's Lizzie Burdon has more from London.

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<v Speaker 8>It's decision day on thread Needle Street, but economists that

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<v Speaker 8>investors are expecting policymakers to stick to the status quo,

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<v Speaker 8>holding the benchmark rate at five percent. However, wages are

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<v Speaker 8>increasing on a faster Bank of England cutting cycle ahead

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<v Speaker 8>after inflation readings came in lower than Central Bank forecasts

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<v Speaker 8>in July and August. Attential will be focused on Governor

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<v Speaker 8>Andrew Bailey for hints that borrowing costs could be lowered

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<v Speaker 8>again in November after committee members voted narrowly to end

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<v Speaker 8>their sixteen year high last month. Traders are also awaiting

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<v Speaker 8>news on the speed of quantitative tightening, a decision which

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<v Speaker 8>could prove pivotal for new Chancellor Rachel Reeves is October

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<v Speaker 8>budget in London. Lizzie Burden Blueberg Radio.

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<v Speaker 2>Okay, Lizzie, thank you. Now we want to get you

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<v Speaker 2>caught up on the latest developments in the Middle East.

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<v Speaker 2>Israel has declared a new phase in its regional war

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<v Speaker 2>with Islamist groups. It comes as Hesbola official say explosions

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<v Speaker 2>went off in Beirut and multiple parts of Lebanon in

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<v Speaker 2>an apparent second wave of detonations of electronic devices. We

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<v Speaker 2>get more from Bloomberg's Jumana Barsecchi in Dubai.

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<v Speaker 9>It's a second day of communication devices exploding across not

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<v Speaker 9>just baby routes, but across the entire country, eastern Bikar

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<v Speaker 9>as well as southern Bay Roots. And this time the

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<v Speaker 9>catalyst were walkie talkies. These were walki talkies that Hezballah

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<v Speaker 9>group members had been using. They also exploded be it

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<v Speaker 9>in cars and people's houses, even within cafes, so very

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<v Speaker 9>similar in nature to the attack that took place the

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<v Speaker 9>day before. The Lebanese Health Ministry has put u out

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<v Speaker 9>a statement saying that four hundred and fifty casualties were

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<v Speaker 9>brought into hospitals as a result of these attacks. Twenty

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<v Speaker 9>people have now lost their lives.

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<v Speaker 2>Bloomberg's Jewniver said. She notes Israel has not taken responsibility

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<v Speaker 2>for the attacks.

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<v Speaker 1>None of the latest in the presidential race. Nathan and

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<v Speaker 1>former President Trump was on New York's Long Island for

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<v Speaker 1>a rally last night, and he promised to lift the

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<v Speaker 1>cap on state and local tax deductions that he imposed

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<v Speaker 1>as president but is valuable to many New York homeowners.

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<v Speaker 1>Trump also announced plans to go to Springfield, Ohio, the

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<v Speaker 1>city where he said during last week's debate, Haitian migrants

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<v Speaker 1>have eaten people's pets.

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<v Speaker 5>I'm going to go there in the next two weeks.

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<v Speaker 5>I'm going to Springfield, and I'm going to Aurora.

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<v Speaker 1>You may never see me again, but that's okay.

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<v Speaker 5>Gotta do what I gotta do.

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<v Speaker 10>Whatever happened to Trump, well, he never got.

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<v Speaker 6>Out of Springfield.

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<v Speaker 1>Trump also said he'll go to Aurora, Colorado. He's repeatedly

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<v Speaker 1>claimed that city has been overrun by migranted gangs from Venezuela.

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<v Speaker 2>As for Kamala, Harris Karen, the vice president, plans to

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<v Speaker 2>meet with Vladimir Zelenski next week. The Ukrainian president will

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<v Speaker 2>be in Washington, sources say is expected to push his

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<v Speaker 2>country's bid to join NATO and the European Union, along

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<v Speaker 2>with more advanced weapons, as part of his victory plan

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<v Speaker 2>against Russia. Zelensky plans to present that plan to President

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<v Speaker 2>Biden on the sidelines of the UN General Assembly later

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<v Speaker 2>this month.

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<v Speaker 1>Meanwhile, Nathan the International Brotherhood of Teamsters is declining to

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<v Speaker 1>endorse a candidate for president, and Bloomberg's Amy Morris has

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<v Speaker 1>more from Washington.

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<v Speaker 11>It is a blow to both Kamala Harris and Donald Trump.

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<v Speaker 11>Teamster's general president Sean O'Brien released a statement saying that

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<v Speaker 11>neither candidate was able to make serious commitments to the

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<v Speaker 11>union quote to ensure the interests of working people are

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<v Speaker 11>always put before big business. Now, the Teamsters released internal

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<v Speaker 11>polling data showing members had initially favored endorsing Biden over Trump,

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<v Speaker 11>but after Harris became the nominee, the majority of respondents

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<v Speaker 11>back to Trump. And Poland conducted a few days ago,

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<v Speaker 11>fifty eight percent supported endorsing Trump, compared to thirty one

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<v Speaker 11>percent for Harris. And you may recall O'Brien spoke at

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<v Speaker 11>the Republican National Convention in July, the first time a

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<v Speaker 11>leader of the Union has done so. Amy Morris, Bloomberg Radio.

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<v Speaker 2>Amy, thank you. We have breaking news crossing the Bloomberg terminal.

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<v Speaker 2>Apple is set to be warned by the European Union

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<v Speaker 2>that it needs to open up its highly guarded iPhone

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<v Speaker 2>operating system to rival technologies or eventually risk significant fines.

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<v Speaker 2>Sources say EU watchdogs are due to announce under the

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<v Speaker 2>block's new Digital Markets Act that Apple must step into

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<v Speaker 2>line with strict new rules on making operating systems fully

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<v Speaker 2>functional with other technologies.

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<v Speaker 1>And it's time now for a look at some of

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<v Speaker 1>the other stories making news in New York and around

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<v Speaker 1>the world. And for that we're joined by Bloomberg's Michael

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<v Speaker 1>Barr Michael, Good Morning.

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<v Speaker 12>Good Morning, Karen. Lawyers for Sean Diddycomb's unsuccessfully thought to

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<v Speaker 12>keep him out of jail after his sex trafficking arrest.

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<v Speaker 12>The music Moguls lawyers highlighted a litany of home horrors

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<v Speaker 12>at the Brooklyn Federal lockup, described as hell on Earth.

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<v Speaker 12>They include horrific conditions, rampant violence, and multiple depths. Comb's

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<v Speaker 12>attorney Mark agnifano I.

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<v Speaker 13>Told mister Colmbs, I'm going to try and get his

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<v Speaker 13>case to trial as quickly as possible. I'm going to

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<v Speaker 13>try and minimize the amount of time he spends in

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<v Speaker 13>very very difficult and I believe in humane housing conditions

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<v Speaker 13>in the special housing unit of the Metropolitan Detention Facility.

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<v Speaker 12>Audio courtesy of ABC seven. The judge cited possible witness

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<v Speaker 12>tampering by Combs if bail is granted. Combs was sent

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<v Speaker 12>to the Metropolitan Detention Center after pleading not guilty in

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<v Speaker 12>a case that accuses him of physically and sexually abusing

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<v Speaker 12>women for more than a decade. Disgraced movie mogul Harvey

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<v Speaker 12>Weinstein pleaded not guilty to a new indictment charging him

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<v Speaker 12>with criminal sex acts. According to the Manhattan District Attorney's office,

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<v Speaker 12>three separate women have accused Weinstein of section really assaulting them.

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<v Speaker 12>It's not part of Weinstein's conviction, which was later overturned

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<v Speaker 12>on appeal. This morning, a judge in Washington, d c.

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<v Speaker 12>Will sentence five people accused of helping to lead the

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<v Speaker 12>infamous January sixth initial breach of the Capitol. Prosecutors will

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<v Speaker 12>recommend nine years in prison, saying this group was among

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<v Speaker 12>the first to breach a police barricade, saying hundreds, if

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<v Speaker 12>not thousands, of rioters would follow. A new study finds

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<v Speaker 12>that preventable risk factors are driving a global increase in strokes.

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<v Speaker 12>Doctor Valerie Fagan is the director of the National Institute

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<v Speaker 12>for Stroke and Applied Neuroscience at the University of Auckland

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<v Speaker 12>in New Zealand.

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<v Speaker 14>Stroke is probably one of the most preventable and yet

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<v Speaker 14>very fatal and disabling conditions.

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<v Speaker 12>Dr Fagan says strokes killed more than seven million people

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<v Speaker 12>each year. The study, published in the journal Lancet Neurology,

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<v Speaker 12>finds environmental factors like air pollution and heat waves, and

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<v Speaker 12>individual factors like blood pressure and bad cholesterol are behind

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<v Speaker 12>the recent increase. Global news twenty four hours a day,

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<v Speaker 12>whenever you want it with the Bloomberg News. Now, I'm

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<v Speaker 12>Michael Barr, and this is Bloomberg Cameron.

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<v Speaker 1>All right, Michael Barr, thank you, and it's time now

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<v Speaker 1>for the Bloomberg Spores Update with John Stanshowery John, good morning.

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<v Speaker 10>Good morning Karen. Over the last thirty seasons, Yankees have

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<v Speaker 10>gone to the postseason twenty five times, didn't go last year,

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<v Speaker 10>barely finished over five hundred, but headed back clinched at

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<v Speaker 10>least a wildcard when they won two to one in

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<v Speaker 10>ten innings at Seattle Champagne. Then float in the clubhouse

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<v Speaker 10>Aaron Judge hoping there's more of that next month he

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<v Speaker 10>was on the Yes Network.

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<v Speaker 7>Oh well, we're excited, you know, we definitely know the

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<v Speaker 7>job's not finished.

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<v Speaker 4>Now we're hunting this divisions like.

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<v Speaker 12>You get an opportunity to, you know, punch our ticket

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<v Speaker 12>back in the pro season after last year missing out.

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<v Speaker 4>It means a lot.

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<v Speaker 12>You know, he got a special group here.

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<v Speaker 13>The boys are definitely excited, but they know the mission.

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<v Speaker 12>That's that definitely.

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<v Speaker 10>The win last night was helped by a bizarre double

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<v Speaker 10>play in the bottom of the tent. The Meriners had

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<v Speaker 10>runners at first and third. Nobody at Randy or Rose

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<v Speaker 10>Arena struck out and his bat went flying towards the

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<v Speaker 10>head of Julio Rodriguez at third as he got out

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<v Speaker 10>of the way of the bat. Austin Wells through the

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<v Speaker 10>third and Rodriguez was picked off. Orioles lost again, Yankees

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<v Speaker 10>moving out towards Clinton, the division they lead by five games.

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<v Speaker 10>At City Field, the night after the Mets won ten

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<v Speaker 10>to one, they won ten nothing over Washington. Jose Quintana

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<v Speaker 10>went the first seventy and these gave up just two hits,

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<v Speaker 10>brand of nimmoa three on homer. Arizona and Atlanta both

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<v Speaker 10>won the Mets State tied with the d Backs, with

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<v Speaker 10>both teams two games ahead of the Braves. Red Sox

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<v Speaker 10>won two to one of Tampa Bay Milwaukee clinch the

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<v Speaker 10>NL Central Tonight at MetLife It's the Jets home opener

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<v Speaker 10>New England. Also one and one. First ballot for the

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<v Speaker 10>Pro Football Hall of Fame is out. It has sixteen

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<v Speaker 10>first timers, including Eli Manning, John Stashedward, Bloomberg Sports, Jarnon, Nathan.

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<v Speaker 12>Coast to Coast on Bloomberg Radio, nationwide on Sirius XAM

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<v Speaker 12>and around the world on Bloomberg dot Com and the

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<v Speaker 12>Bloomberg Business app. This is Bloomberg Daybreak.

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<v Speaker 2>Good morning. I'm Nathan Hager. The Fed is determined to

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<v Speaker 2>achieve a soft landing. That is the message Chairman Jpowell

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<v Speaker 2>sent to markets as the Central Bank pivots to cutting

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<v Speaker 2>interest rates with a half percent move.

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<v Speaker 3>The economy is growing at a solid pace, inflation is

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<v Speaker 3>coming down closer to our two percent objective over time,

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<v Speaker 3>and the labor market is still in solid shape. So

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<v Speaker 3>our intention is really to maintain the strength that we

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<v Speaker 3>currently see in the US economy.

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<v Speaker 2>That was the Chairman of the Federal Reserve, Jerome Powell

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<v Speaker 2>at the news conference following that fifty basis point cut.

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<v Speaker 2>For more this morning, we are joined by Veronica Clark,

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<v Speaker 2>us economist at City. Veronica, good morning. You were first

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<v Speaker 2>out of the gate with this call. You've said in

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<v Speaker 2>July that the Fed is going to do fifty basis points.

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<v Speaker 2>Was this the right call?

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<v Speaker 6>Yeah, good morning for having me. I do think it

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<v Speaker 6>probably was. Of of course, in the end, the decision

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<v Speaker 6>was very close, and we didn't know what this was

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<v Speaker 6>going to be going into yesterday, the first time in

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<v Speaker 6>a long time that that's happened. But I do think

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<v Speaker 6>the argument for a fifty basis point Kaui is strong.

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<v Speaker 6>Even tar Pale said it, you know the sense in

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<v Speaker 6>which if you had had those July employments, you know,

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<v Speaker 6>data points, just a couple of days earlier, maybe they

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<v Speaker 6>would have cut in July. Maybe you were making up

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<v Speaker 6>first and lost time. But we are never going to

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<v Speaker 6>be further from a neutral interest rate than when you

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<v Speaker 6>start cutting, so it makes sense to do it right away.

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<v Speaker 2>The same time, Palell said, don't get used to it,

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<v Speaker 2>that this isn't necessarily meaning that it's always going to

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<v Speaker 2>be fifty. You agree with that.

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<v Speaker 6>I think if that is is of course going to

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<v Speaker 6>stay pretty optimistic here, and we did have you know,

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<v Speaker 6>the updated economic production yesterday. They only expect the unemployment

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<v Speaker 6>rate to rise maybe another tent or two from where

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<v Speaker 6>we are now, still expecting strong GDP growth, and I

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<v Speaker 6>think if that plays out then and it's fair that

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<v Speaker 6>you know, the pace of cuts would would slow. But

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<v Speaker 6>I think for us, you know, we're always trying to

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<v Speaker 6>you know, first and foremost based our FED call on

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<v Speaker 6>where we think the economic data are headed, and we

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<v Speaker 6>actually do see the chance of more labor market weakness.

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<v Speaker 6>We do have two more employment reports to go before

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<v Speaker 6>we get to the next said meeting in November. I

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<v Speaker 6>think there could still be some weakness in the labor

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<v Speaker 6>market data and those reports we think they're going fifty

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<v Speaker 6>age and in November. Because of that, do.

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<v Speaker 2>You think we need to hear more clarity from Chairman

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<v Speaker 2>Pale about what the path is going to be for rates,

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<v Speaker 2>what the size of the cuts is going to be.

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<v Speaker 2>Is there too much data dependence from this FED.

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<v Speaker 6>I don't think so. I think you know, he said it,

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<v Speaker 6>of course when we're taking it meeting by meeting, it is,

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<v Speaker 6>you know, really just the labor market data now first

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<v Speaker 6>and foremost and I think we do know that their

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<v Speaker 6>reaction function to if the data evolve in a certain way.

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<v Speaker 6>If we do see weaker labor market data, their reaction

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<v Speaker 6>is going to be to support the labor market is

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<v Speaker 6>as much as they can, So we at least understand

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<v Speaker 6>I think that they have a pretty sensitive reaction function

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<v Speaker 6>to any weaker labor market data.

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<v Speaker 2>Do you think there's still a reaction function to inflation?

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<v Speaker 2>Is the FED taking its eye off the ball on

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<v Speaker 2>inflation too soon?

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<v Speaker 6>Yeah? Yeah, I mean, of course that is the other

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<v Speaker 6>important element of their mandate. And I don't think, you know,

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<v Speaker 6>we're you know, dismissing inflation altogether. But I actually was

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<v Speaker 6>a bit surprised that we did have this stronger CPI reading,

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<v Speaker 6>you know, last week, and we thought, maybe, you know,

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<v Speaker 6>the best compromise then among the Hawks and the doves

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<v Speaker 6>was to just do a twenty five even yesterday. But clearly,

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<v Speaker 6>you know, the labor market is taking precedent here. I

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<v Speaker 6>think we had an even response from Para Powell about

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<v Speaker 6>the stickiness of shelter inflation, and he was somewhat dismissive

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<v Speaker 6>of that. So I think the focus for the FED

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<v Speaker 6>is just very quickly shifting to the labor market data.

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<v Speaker 2>And speaking of the split between hawks and doves in

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<v Speaker 2>our last minute here, how significant was it that Governor

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<v Speaker 2>Bowman dissented on this decision?

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<v Speaker 6>Yeah, not surprising. She is certainly probably the most hawkish

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<v Speaker 6>beneficial I was actually even maybe a bit surprised that

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<v Speaker 6>there weren't more descents. Of course, the market was very

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<v Speaker 6>fifty to fifty split on what the size of the

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<v Speaker 6>cut was going to be. We really didn't know up

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<v Speaker 6>until the last minute. I would have thought maybe there

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<v Speaker 6>were even some more hawks, you know, arguing for starting

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<v Speaker 6>a bit smaller. So I don't think that descent is

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<v Speaker 6>too meaningful. If anything, this is more consensus than I

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<v Speaker 6>would have thought in a split posiion.

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