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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: This is the Blue Big Daybreak at podcast Good Morning.

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Speaker 2: It's Wednesday, the fifteenth of October. I'm Caroline Hepga in

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Speaker 2: London and.

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Speaker 3: I'm Stephen Carolin Brussels. Coming up today, stocks rally on

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Speaker 3: hopes for more Federal Reserve rate cuts as Jerome Powell

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Speaker 3: points to a weakening US labor market.

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Speaker 2: The United States and China continue to turn up the

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Speaker 2: temperature on their trade wall.

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Speaker 3: Plus a diplomatic entrance into a crowded field, A look

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Speaker 3: inside the former US embassy in London that's been converted

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Speaker 3: into a luxury hotel.

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

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Speaker 3: Federal Reserve chair Jerome Powell has signaled an interest rate

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Speaker 3: cut is on the cards for October, breathing fresh life

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Speaker 3: into markets rocked by trade fears. The US Central Bank

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Speaker 3: boss pointed several times to the worsening jobs data. When

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Speaker 3: speaking at the National Association for Business Economics annual meeting.

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Speaker 3: He hinted policy should move from being more tight to neutral.

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Speaker 4: For the last few months, we've been able to maintain

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Speaker 4: restrictive stance because the lib market was still pretty pretty solid.

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Speaker 4: I think that the data we got right after the

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Speaker 4: July meeting showed that which adjusted beck always through May,

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Speaker 4: showed that the lib market has actually softened pretty considerably

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Speaker 4: and puts US in a situation where the two resistor

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Speaker 4: are closer to being in balance.

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Speaker 3: Powell added he sees inflation gradually rising, putting the two

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Speaker 3: sides of the Fed's mandate and conflict. Gold price has

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Speaker 3: set a new record of healds on US treasuries, falling

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Speaker 3: to the lowest levels in weeks. Stocks moved higher after

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Speaker 3: Powell's comments, bouncing back from a dip driven by trade fears.

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Speaker 2: President Donald Trump has said that the US could stop

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Speaker 2: trade in cooking oil with China as tensions between the

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Speaker 2: world's two largest economies re escalate. Trump cast the move

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Speaker 2: as retaliation against Beijing for its refusal to buy American soybeans.

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Speaker 2: Trump called it an economically hostile act that causes difficulty

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Speaker 2: for US soybean farmers. Just hours earlier, though the President

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Speaker 2: and US trade representative Jamison Greer had expressed confidence that

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Speaker 2: friction with China would ease through ongoing negotiations, the IMF's

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Speaker 2: chief economist, Pierre Olivier Gurinchas warned that the economic consequences

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Speaker 2: of the trade war are already being felt.

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Speaker 5: The tariff shark is here, and it is further dimming

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Speaker 5: already weak growth prospects.

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Speaker 6: This is clear. Even in the US. Growth is revised

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Speaker 6: down from last year.

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Speaker 5: The labor market is weakening, and inflation has been revised up,

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Speaker 5: and it's persistently above target. Science that the economy has

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Speaker 5: been hit by a negative supply shock.

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Speaker 2: The IMF Chief economists unveiled a dim outlook for growth

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Speaker 2: in the short and long term. He also pointed to

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Speaker 2: ongoing concerns about global government borrowing, especially in Europe.

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Speaker 3: American banks are reporting massive profits but warning of trouble ahead.

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Speaker 3: Goldman Sachs, JP Morgan Chase, and City Group all comfortably

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Speaker 3: beat estimates in their latest earnings reports, with a combined

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Speaker 3: profit of more than twenty billion dollars, but CEOs from

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Speaker 3: all three US giants sended alarm bells about markets being

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Speaker 3: two optimistic. JP Morgan's Jamie Diamond pointed to a pair

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Speaker 3: of recent bankruptcies in the private credit space.

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Speaker 6: I intenda goes up with leeleg I happened in spisure

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Speaker 6: and says, but when you see one cockroach, they're probably

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Speaker 6: more you know, and so we should. Everyone should be

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Speaker 6: four one than this one.

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Speaker 3: Diamond's warning about private credit drew a backlash from those

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Speaker 3: in the space, with Blue al Capital's market Lipschaltz saying

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Speaker 3: he was fearmongering.

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Speaker 2: Now to some breaking news, the Dutch chip equipment maker

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Speaker 2: ASML has reported bookings for the third quarter of five

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Speaker 2: point four billion euros, beating estimates. Net sales for the

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Speaker 2: third quarter came in at seven point five two billion euros,

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Speaker 2: so slightly below estimates of seven point seventy one billion.

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Speaker 2: Investors have been focusing on ASML's outlook for next year

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Speaker 2: for proof that chip equipment makers can catalyze on the

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Speaker 2: AI boom. As renewed trade tensions between the US and

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Speaker 2: China add uncertainty. ASML is saying that it will provide

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Speaker 2: more details on the twenty twenty six outlook in January.

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Speaker 2: The company's shares have rallied forty five percent in just

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Speaker 2: over a month to make it Europe's most valuable listed company.

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Speaker 6: Francis Prime Minister is TheBus.

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Speaker 3: John Loa Karnu has won the backing of the Socialist Party,

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Speaker 3: boosting his chances of surviving two no confidence votes.

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Speaker 6: Tomorrow.

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Speaker 3: The Socialists, who hold leverage in the lower house of Parliament,

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Speaker 3: say they won't move to topple the new government after

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Speaker 3: Locorneo agreed to suspend President Emmanuel Macron's signature pension reform

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Speaker 3: that raises the retirement age. The head of the Socialists

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Speaker 3: in the National Assembly, Barros Val, told lawmakers his party

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Speaker 3: is taking the gamble to give the country a chance

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Speaker 3: at a fair budget.

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Speaker 7: We are capable of bringing down a government. We have

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Speaker 7: done so twice. We have only one compass, the interest

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Speaker 7: of the country, the interest of the French people. I

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Speaker 7: recognize how much it costs us. We are making a bet,

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Speaker 7: a risky bet, whose outcome of the future or reveal.

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Speaker 3: Boris Fellow, the head of the Socialist party in France's

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Speaker 3: National Assembly, speaking there. Mary Lapin's far right National Rally,

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Speaker 3: as well as the far left, have vowed to try

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Speaker 3: to topple La Cornier's government in no confidence votes tomorrow morning.

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Speaker 3: Lawmakers have already forced two of La Corney's predecessors, Michelle

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Speaker 3: Baugnier and France Barberu, to resign over their plans to

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Speaker 3: rein in France's ballooning budget deficits.

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Speaker 6: The largest in the Euro Area.

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Speaker 2: Bank of England Governor Andrew Bailey has warned that the

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Speaker 2: UK economy is performing a little bit under potential. Speaking

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Speaker 2: at in a fe in Washington, he cautioned against threats

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Speaker 2: from both above target inflation but also a softening jobs market.

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Speaker 2: Bailey told an event in Washington that focusing on productivity

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Speaker 2: growth could lift the UK economy.

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Speaker 8: We're putting a lot more empasais on productivity growth really

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Speaker 8: going forwards, and that is the thing that fell often

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Speaker 8: they in the post two thousand and eight period. Certainly,

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Speaker 8: I mean in all countries other than the US, and

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Speaker 8: of course even in the US it's larry focused on

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Speaker 8: the tech sector. If you look at the US, the

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Speaker 8: US absence the tech sector looks.

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Speaker 2: Much like the rest of US Andrew Bailey speaking there. Meanwhile,

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Speaker 2: Chancellor Rachel Reeves is also in Washington, where she'll pitch

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Speaker 2: the UK's economic stability to investors. On Tuesday, The MF

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Speaker 2: predicted Britain will suffer the fastest price growth in the

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Speaker 2: G seven over the next two years and urged the

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Speaker 2: Bank of England to be quote a very cautious about

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Speaker 2: further interest rate cuts.

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Speaker 3: Those are EOTAB stories on the markets in age of

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Speaker 3: the Mscish Pacific again Dex up by one point seven percent,

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Speaker 3: the NIKEA and Tokyo one point nine percent hire, so

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Speaker 3: a big difference in tone from where we were yesterday.

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Speaker 3: Eurostocks fifty futures also by one point three percent. SMP

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Speaker 3: minis on Wall Street are four tenths higher as well.

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Speaker 3: The Bloomberg Dollars Spot index is two tenths weaker, so

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Speaker 3: the eurotrading at one sixteen twenty two goal prices one

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Speaker 3: percent higher again today four thy one hundred and eighty

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Speaker 3: three dollars are troyads.

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Speaker 2: So those are the markets. In a moment. We're going

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Speaker 2: to bring you more on the market reaction to the

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Speaker 2: comments from fair chur jerown Power Plus. We'll also unpack

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Speaker 2: what we have learned from the US Bank earnings. But

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Speaker 2: before that, something else has caught our rye in the

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Speaker 2: luxury department Stephen.

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Speaker 3: Yeah, indeed, so the new US rather the old US

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Speaker 3: Embassy that is now a new hotel, the Rosewood Chancery

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Speaker 3: has opened today. The renovation looks pretty impressive. The inside

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Speaker 3: of the office building has been torn down to try

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Speaker 3: and make it into I suppose a more grand space

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Speaker 3: that The lobby now has one of those crisscross diagree ceilings.

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Speaker 3: The windows and the stone facade have got careful restoration

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Speaker 3: as well. One hundred and forty four rooms. Our colleague

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Speaker 3: Niki Exstein has been to visit it. She does highlight

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Speaker 3: the spa as big a particular highlight.

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Speaker 2: The photo looks amazing of that underground swimming pool, doesn't it.

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Speaker 6: But it doesn't come cheap, No, it certainly doesn't. At

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Speaker 6: a quick look at prices.

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Speaker 3: The cheapest night fourteen hundred pounds before the end of

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Speaker 3: the year now didn't go into next year. But if

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Speaker 3: you're going you will get to, for example, check out

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Speaker 3: which you could do with that staying there as well.

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Speaker 3: The famous eagle, So this was the eagle statue that

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Speaker 3: used to be.

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Speaker 6: Looming over the building as well.

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Speaker 3: It's now been moved the giant gilded eagle to the

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Speaker 3: rooftop bar. And also you may bump into perhaps some

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Speaker 3: visiting royals as well. Nicki says that during her visit

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Speaker 3: she spotted some embossed luggage being whizzed past her in

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Speaker 3: an elevator as well. So it's something to look at

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Speaker 3: as well. But it's a great read if you want

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Speaker 3: to check out what the inside of this new addition

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Speaker 3: to London's luxury hotel scenes look like. We'll put a

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Speaker 3: link to it in our podcast show notes.

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Speaker 2: Absolutely maybe as your next spot when you visit London,

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Speaker 2: Stephen cal who knows. Let's talk a little bit about

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Speaker 2: our main story today. Wall Street's are biggest banks on

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Speaker 2: notching up record hauls for investment banking and trading revenue

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Speaker 2: for this earning season. The market isn't necessarily rewarding top performers, though.

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Speaker 2: Let's get a deep dive into this with our reporter

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Speaker 2: Charlie Wells. What results we have so far Charlie and

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Speaker 2: how is that translating into share prices?

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Speaker 1: Well, the results of an excellent so far, and really

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Speaker 1: they are a reflection of this deal bonanza that we've

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Speaker 1: been seeing. In that third quarter, there was one trillion

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Speaker 1: dollars in global deal volume and we're seeing that translate

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Speaker 1: to fees for these investment banks. If you look at

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Speaker 1: Goldman Sacks, they had forty two percent increase in the

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Speaker 1: quarter in investment banking fees. Solid investment banking numbers coming

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Speaker 1: in from the other major competitors, and solid numbers on

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Speaker 1: that trading front as well, these are very much inline

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Speaker 1: or exceeding expectations, but we're not seeing that in the

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Speaker 1: share prices. We actually saw Goldman Sacks slip yesterday, We

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Speaker 1: saw JP Morgan slip yesterday. We saw an uptick for

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Speaker 1: Wells Fargo, we saw an optic for City Group. But

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Speaker 1: in a lot of ways, some of this performance maybe

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Speaker 1: was a reflection of the optimism that we've been seeing.

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Speaker 1: Maybe a lot of the expectations are kind of baked

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Speaker 1: into some of these share prices. And also some commentary

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Speaker 1: that we got some kind of mixed commentary from executives.

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Speaker 3: Yeah, warnings really being couched by some of what we

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Speaker 3: heard from those CEOs as well. What did they say

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Speaker 3: about where they see the US economy going in the

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Speaker 3: months ahead.

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Speaker 1: Well, there was I would say, kind of cautious optimism,

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Speaker 1: for lack of a better term. I mean, when you

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Speaker 1: hear Jamie Dimond talking about cockroaches the potential in the

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Speaker 1: credit market, as you guys referenced earlier in the program,

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Speaker 1: I think that gives a sense of some jitters, maybe

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Speaker 1: some red flags that people are looking out for. And

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Speaker 1: this was a reflection of other commentary that we saw

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Speaker 1: from executives. So Mark Mason at City Group, their CFO,

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Speaker 1: talking about how the consumer is becoming a little bit

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Speaker 1: more discerning, so kind of being on the lookout for that.

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Speaker 1: And David Solomon, the CEO of Golden Sacks, had an

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Speaker 1: interesting point about the aira that we're in right now

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Speaker 1: and how of course things are going well, but there

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Speaker 1: could be divergence. So some technologies that do win out

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Speaker 1: and some that lose.

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Speaker 2: Okay, So what do we expect then from today the

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Speaker 2: other major lenders reporting?

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Speaker 1: So we're in what I like to call the eye

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Speaker 1: of the bank earning storm because we've had a huge

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Speaker 1: slew yesterday and coming up, We've got more today and

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Speaker 1: we've got Bank of America coming up. Interesting will be

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Speaker 1: to look at net interest income because of course we

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Speaker 1: did have that rate cut just a few weeks ago,

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Speaker 1: so operating in a different rate environment, net interest income

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Speaker 1: potentially changing.

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Speaker 6: There.

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Speaker 1: We've seen a little bit of mixed performance from the

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Speaker 1: other banks and then Morgan Stanley arch rival to Goldman Sachs. Interestingly,

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Speaker 1: with Goldman they had a miss on their equities trading revenue.

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Speaker 1: It came in incredibly solid, but just not quite as

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Speaker 1: high as a lot of analysts have been expecting, so

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Speaker 1: it could be a similar picture there.

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Speaker 6: Okay, Charlie Wells, thank you very much.

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Speaker 2: Stay with us. More from Bloomberg Day baqube coming up

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Speaker 2: after this. Okay, let's bring you more now than on

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Speaker 2: what we have heard from the fetcha your own Powell

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Speaker 2: and how that is being interpreted by investors. Our markets

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Speaker 2: correspondent Noah Melnda joined us now this morning, No good morning.

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Speaker 2: Talk us through then how markets have actually been reading

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Speaker 2: and reacting to Powell's comments, and he was pointing, of

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Speaker 2: course to the weakness in the US labor market.

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Speaker 9: Well, certainly a lot to digest that we've been seeing

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Speaker 9: in recent days here. I mean, of course, when we

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Speaker 9: hear Powell, of course, he's the name that everyone likes

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Speaker 9: to listen to as we're thinking about the details and

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Speaker 9: parsing what he's saying. That's really the indication of what

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Speaker 9: things may potentially look like moving forward here. So if

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Speaker 9: we take a look at what Jerome said yesterday, he

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Speaker 9: pointed several times to the low pace of hiring and

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Speaker 9: also noted that it may also weaken further. So you

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Speaker 9: did see some activity out in the market yesterday at

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Speaker 9: the closing bell. So we did see stocks and lower

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Speaker 9: yesterday in New York City, But we also have traders

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Speaker 9: that are all but surely pricing in a cut at

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Speaker 9: the end of this month in October. So you really

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Speaker 9: are seeing people taking away what Jerome Power is saying

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Speaker 9: as a slight indication here that there could be a

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Speaker 9: cut ahead.

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Speaker 3: So we're still waiting for the September inflation report that'll

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Speaker 3: come just before the next FED meeting at the end

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Speaker 3: of the month. How is that likely to interact with

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Speaker 3: the calculations that policymakers are making ahead of that meeting.

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Speaker 9: Well, it's an interesting time period given the fact that

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Speaker 9: we miss the labor data that always comes at the

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Speaker 9: first Friday of the month, that of course due to

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Speaker 9: the government shutdown that has been ongoing here. So it'll

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Speaker 9: be interesting to see how they utilize this data the

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Speaker 9: inflation report that we will be getting. The only reason

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Speaker 9: that we are getting the CPI report is because they

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Speaker 9: use it towards some of the calculations that they make

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Speaker 9: when it comes to US social security benefits. So they

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Speaker 9: are recalling some people to come back and help get

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Speaker 9: this print out on the docket here. But it's going

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Speaker 9: to be an interesting time period as the bears and

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Speaker 9: bulls are kind of pulling back and forth here in

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Speaker 9: the market, trying to get a good read on what

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Speaker 9: the economy is looking like with little data to work

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Speaker 9: with here.

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Speaker 2: Yeah, absolutely, and so in terms of the news around

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Speaker 2: the fed is it's also the interaction with the trade

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Speaker 2: issue between the US and China that is so important.

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Speaker 9: Absolutely, you are seeing so many headlines flying back and forth.

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Speaker 9: Of course, more recently it's just been the battle between

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Speaker 9: Trump and China here and just trying to find a

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Speaker 9: sense of calm. So you are seeing in the market

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Speaker 9: a lot of people just trying to figure out how

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Speaker 9: they can capitalize on this moment. We've been talking so

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Speaker 9: much about the taco trade, which essentially means Trump always

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Speaker 9: chickens out. So we did see a lot of investors

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Speaker 9: capitalizing on that moment back in April when we saw

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Speaker 9: a lot of those tariff headlines here. So it's about

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Speaker 9: what they can do during this time period and how

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Speaker 9: you can essentially position yourself in a moment of extreme

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Speaker 9: uncertainty and volatility. That's clear here in the market.

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

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Speaker 3: stories making news from London.

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