Speaker 1: Good morning. I'm Brian Curtiz and I'm Doug Prisner. Here
Speaker 1: are the stories we're following today. Kevin McCarthy no longer
Speaker 1: Speaker of the House of Representatives. Let's get to ed
Speaker 1: Baxter Eddie.
Speaker 2: Yeah, quite a day, Doug history. The vote turned out
Speaker 2: to be relatively close.
Speaker 3: The Ya's are two sixteen, the nays are two ten.
Speaker 3: The resolution is adopted without objection. The motion to reconsider
Speaker 3: is laid on the table. The office of Speaker of
Speaker 3: the House of the United States House of Representatives is
Speaker 3: hereby declared vacant.
Speaker 2: Now, there was a thought that Democrats might rescue McCarthy.
Speaker 2: Democratic Congressman Adam Schiff says the Democrats didn't vote to
Speaker 2: save him because he's just plainly not trustworthy. We don't
Speaker 2: feel that it's in the best interest of the country
Speaker 2: to have the House of Represents continue to alert from
Speaker 2: crisis to crisis. Now right wing republic and Matt Gates
Speaker 2: has been the lightninggrod behind this movement and says nobody
Speaker 2: trusts McCarthy, and.
Speaker 3: McCarthy has made multiple contradictory promises, and when they all
Speaker 3: came to he lost votes of people who maybe don't
Speaker 3: even ideologically agree with me on everything.
Speaker 2: Now, McCarthy before the vote said he doesn't regret any
Speaker 2: decisions he's made.
Speaker 1: The end of the day, keeping government open and paying
Speaker 1: our troops was the right decision.
Speaker 4: I stand by that decision.
Speaker 2: So next well, electing a new speaker. Now, the last
Speaker 2: one resembled mud wrestling, and Bloomberg's Wendy Benjaminson says, backroom
Speaker 2: deals or what ultimately brought McCarthy down.
Speaker 4: That's right. And the one backroom deal he made that
Speaker 4: presumably the next person who's up for speaker will not
Speaker 4: make is the concession to allow any one member to
Speaker 4: post this motion to vacate. And that's what Matt Gates
Speaker 4: demanded in return for to vote to make McCarthy the speaker.
Speaker 4: And now that has come up home to rust and
Speaker 4: Matt Gates has vacated him a speaker. So that was
Speaker 4: a deal that you know didn't turn out so well
Speaker 4: for McCarthy.
Speaker 2: So now, if you want to put another wrinkle on
Speaker 2: all of this, Bloomberg's Rick Davis says, McCarthy still has
Speaker 2: cards to play.
Speaker 5: It's really up to Kevin McCarthy right now, do you
Speaker 5: want to be nominated to try another run for speaker
Speaker 5: where you think you can get more than two hundred
Speaker 5: and ten votes next time, or do you open it
Speaker 5: up to somebody else to be nominated and see how
Speaker 5: their luck fares. This is really the biggest question on
Speaker 5: the floor of the House of Representatives right now.
Speaker 2: Yeah, so your witnessing history. Next steps are to try
Speaker 2: and elect a new House Speaker that will suck up
Speaker 2: most of the energy out of the chamber until the
Speaker 2: process is completed. Global News powered by more than twenty
Speaker 2: seven hundred journalists and and lists over one hundred and
Speaker 2: twenty countries, and we'll continue to have more details on
Speaker 2: this breaking story in San Francisco. I'm Ed Baxter. This
Speaker 2: is Bloomberg Brian.
Speaker 6: It absolutely will have a lot more on this coming
Speaker 6: up shortly with Henrietta Treys, managing partner and director of
Speaker 6: Economic Policy at Vada Partners and get her insights. But
Speaker 6: first we'll take a look at some of the other
Speaker 6: top stories. Treasury yields hitting new multi year highs after
Speaker 6: the government reported an unexpected increase in US job openings
Speaker 6: during August. We get more here from Bloomberg's Michael McKee.
Speaker 7: We've gone up in terms of job openings by six
Speaker 7: hundred and ninety thousand, two over nine million. Again, that
Speaker 7: is a significant increase. For the Jolts report job openings
Speaker 7: and labor turnover hirings. The number of people getting hired
Speaker 7: changed little, is still at about five point nine million,
Speaker 7: so a very stable situation there. And then the quit
Speaker 7: rate everybody's been focused on. The quit rate doesn't change
Speaker 7: at all. Quits three point six million, pretty much the
Speaker 7: same as the prior month, and that leaves the quit
Speaker 7: rate unchanged at two point three percent.
Speaker 6: Berg's Michael McKee the jump in job openings was mainly
Speaker 6: driven by white.
Speaker 1: Collar position and today's data on the labor market did
Speaker 1: boost the case for the Fed to keep rates elevated.
Speaker 1: We heard today from the head of the Atlanta Fed,
Speaker 1: rafae Elbostik. He was saying rates should be held at
Speaker 1: elevated levels for a long time as a way of
Speaker 1: bringing inflation back down to the Fed's two percent target.
Speaker 1: He also said he is expecting just one rate cut
Speaker 1: being appropriate in twenty twenty four, and that would happen
Speaker 1: sometime near the end of next year. Meantime, the head
Speaker 1: of the Cleveland Fed, Lorettamester, was saying she would support
Speaker 1: another rate hike. In November, we also heard from US
Speaker 1: Treasury Secretary Janet Yellen, and she said she's keeping an
Speaker 1: eye on this run up in market interest rates.
Speaker 8: I'm very optimistic about the US economic outlook. Short term
Speaker 8: inflation is coming down in the context of an extremely
Speaker 8: strong labor market. We are now engaging in a very
Speaker 8: substantial program of investments to strengthen our economy.
Speaker 1: That is US Treasury Secretary Janet Yellen. Interestingly, she said
Speaker 1: it's not a given that interest rates wilstay elevated for
Speaker 1: a long period of time, right.
Speaker 6: Well, a lot of uncertainty in the markets, and we
Speaker 6: saw that with what happened to the end, the yen
Speaker 6: rebounded from the weakest levels of the year with a
Speaker 6: strong rally. Bloomberg's Joan Wong has the story.
Speaker 9: Japan's currency reached one fifteen point one six per dollar
Speaker 9: on Tuesday in New York trading. The yen then sold
Speaker 9: nearly two percent in a matter of seconds to as
Speaker 9: strong as one hundred and forty seven point four to
Speaker 9: three per dollar. It lasts traded at around one forty nine,
Speaker 9: with traders selling yen again as US yields rose to
Speaker 9: the highest level since two thousand and seven. There's speculation
Speaker 9: that Japanese officials were acting to slow the currency slide,
Speaker 9: and official with Japan's Ministry of Finance had no comment
Speaker 9: on whether Japan had intervened on the yen in Hong
Speaker 9: Kong joined Wang Bloomberg Radio later.
Speaker 1: Today, the Reserve Bank of New Zealand has a rate decision,
Speaker 1: and the RBNZ is seen keeping rates on hold at
Speaker 1: five and a half percent. Even so, the central bank
Speaker 1: is also expected to keep open the option of future
Speaker 1: rate hikes. We have a preview from Bloomberg's Paul Allen.
Speaker 10: All Twenty two economists surveyed by Bloomberg expect a hawkish
Speaker 10: hold from the Reserve Bank of New Zealand. Today. Inflation
Speaker 10: is trending down but still well outside the target band,
Speaker 10: but growth is holding up. Revised data shows the country
Speaker 10: actually dodged a shallow recession in the second quarter. A
Speaker 10: hold would certainly come as a relief to the governing
Speaker 10: Labor Party, with opinion polls indicating a heavy election defeat
Speaker 10: and store in ten days time. Uncertainty over who forms
Speaker 10: the next government may also tempt the RBNZ to wait
Speaker 10: and see if changes to fiscal policy are coming, Paul
Speaker 10: Allen Bloomberg radio.
Speaker 6: Back in the United States, jurious election was conducted today
Speaker 6: in the trial of Sam Bankman Freed, he's accused of
Speaker 6: swindling billions of dollars from the crypto Exchange FTX. Tomorrow,
Speaker 6: the prosecution will begin laying out its case. Here's Bloomberg's
Speaker 6: Kayley lines.
Speaker 11: The prosecution also will be assisted by the accounts of
Speaker 11: multiple key witnesses, some of the Bankman Fried's closest associates
Speaker 11: at the time all of this went down, Gary Wong,
Speaker 11: who co founded FTX with him, Nishad Saying who used
Speaker 11: to be ftx's head of engineering, and Caroline Ellison, who
Speaker 11: was the CEO of alime To Research, the aforementioned training firm,
Speaker 11: and also his ex girlfriend. All of them have already
Speaker 11: pleaded guilty to federal charges and are cooperating with prosecutors,
Speaker 11: so they will be able to lean on their testimony
Speaker 11: on the defense side. Though Sam Bankman Freeing already leading
Speaker 11: up to this trial, has said repeatedly it was never
Speaker 11: his intention to commit fraud, and intention is what is
Speaker 11: going to have to be proven over the course of
Speaker 11: this trial.
Speaker 6: That's Bloomberg's Kayley Lines bankman. Freed has pleaded not guilty
Speaker 6: to all seven charges, including fraud and conspiracy to commit
Speaker 6: money laundering. I'm Brian Curtis along with Doug Christner, and
Speaker 6: the big story of the day Republican Kevin McCarthy ousted
Speaker 6: by this disas within his own party. Joining us now
Speaker 6: is Henrietta Trees, managing partner and director of Economic Policy
Speaker 6: at Veda Partners. Henrietta, thanks so much for joining us.
Speaker 6: I think that's the right way to put it, that
Speaker 6: he was ousted by dissidence within his own party. We
Speaker 6: know that the big part of the story, as well
Speaker 6: as the Democrats refusing to rescue him, and we talk
Speaker 6: about that in a moment. In the short term, it
Speaker 6: means that the speakership battle will begin again, and it
Speaker 6: doesn't mean that Kevin McCarthy won't get the job back.
Speaker 6: So how do you see that moving and is there
Speaker 6: a lot of horse trading coming?
Speaker 12: I think it's a very good point. The unknowns are
Speaker 12: more voluminous than anybody would care to admit. I think
Speaker 12: that what is plaining is that his replacement, Patrick McHenry
Speaker 12: is not there of his own volition. You could see
Speaker 12: that as he gabbled out this afternoon. I think Speaker
Speaker 12: McCarthy would be just a glutton for punishment if you
Speaker 12: tried to go for this again. More realistically, you'll see
Speaker 12: representatives emerans plice either have their names thrown into the
Speaker 12: ring to either be dismissed by themselves personally Scalise for example,
Speaker 12: for health issues, or they will immediately sort of be
Speaker 12: rejected by the far right again for being part of
Speaker 12: the establishment or old guard. There are one hundred and
Speaker 12: ninety six to two hundred and ten members of the
Speaker 12: Republican Party who have supported Kevin McCarthy over the last
Speaker 12: five days, and for many in the far right that's
Speaker 12: just an untenable position for them to take. So I
Speaker 12: think the effort to get to two eighteen is going
Speaker 12: to be fraught, and we could easily be here for
Speaker 12: weeks before we have a final speaker.
Speaker 1: Yeah. Late last month, I don't need to remind you.
Speaker 1: Moody's the only remaining major credit greater to give the
Speaker 1: US a top rating, said confidence in the US was
Speaker 1: wavering a bit insofar as the firm was concerned because
Speaker 1: of their concern about governance. Where does that leave us
Speaker 1: right now in terms of how markets have to discount
Speaker 1: the dysfunction that we seem to be seeing.
Speaker 12: I think it's a perfectly valid position at this point.
Speaker 12: They do not have anything to take to any incoming
Speaker 12: speaker and say this is our clear list of demands.
Speaker 12: They are worried about the border, but don't know if
Speaker 12: they can send border funding or border policy to a
Speaker 12: piece of legislation. They're worried about Ukraine funding, but the
Speaker 12: Senate Republican Conference wants all the Ukraine funding that they
Speaker 12: can get. They are worried about the debt and the deficit,
Speaker 12: but they're looking to trim sixty billion dollars in spending
Speaker 12: this year when sixteen trillion dollars needs to actually be eliminated.
Speaker 12: So I think that what's happening is you're confronting a
Speaker 12: bunch of freshmen and relatively new House members who want
Speaker 12: it all and don't know how to get any of it.
Speaker 12: And that's effectively what the ratings agencies have called them
Speaker 12: out for.
Speaker 6: Let's talk for a moment about the Democrats refusing to
Speaker 6: rescue McCarthy. Is that pure politics? I mean, this puts
Speaker 6: the Republican Party in disarray. Some might even say chaos.
Speaker 6: Is it the right thing for the country or was
Speaker 6: this a move really just to get a leg up
Speaker 6: on the Republicans.
Speaker 12: You know, there were what five or six House Democrats
Speaker 12: that didn't vote today that should have been more than
Speaker 12: enough for McCarthy to work with. He got more than
Speaker 12: that in the previous votes that he needed to maintain
Speaker 12: the speakership or to even secure the speakership. He has
Speaker 12: lost less members than that on certain key and procedural votes,
Speaker 12: such as the ones on the motion to adjourn over
Speaker 12: the weekend. There were plenty of Democrats that were not
Speaker 12: present and voting had he been able to keep the
Speaker 12: far right from eating into his caucus, So I'd have
Speaker 12: a hard time ascribing blame to Democrats here. It's also
Speaker 12: really hard to imagine Minority Leader Jeffries given an opportunity
Speaker 12: to say, you know, go vote for another speaker, when
Speaker 12: of course they have the permission and the ability to
Speaker 12: vote for Jeffries, which is what we'll see from them
Speaker 12: throughout next week as they start taking votes on the
Speaker 12: speaker's position.
Speaker 1: I think we can agree this rebellion was precipitated by
Speaker 1: some of the bipartisan deals McCarthy put together one on
Speaker 1: preventing a default on us, said the other just the
Speaker 1: other day on government funding, which only takes us through
Speaker 1: November seventeenth. What happens after November seventeenth.
Speaker 12: Yeah, that's the question. The bipartisanship is really obviously the
Speaker 12: problem for the far right, but that is the math
Speaker 12: that we have to work with. The Senate is controlled
Speaker 12: by Democrats, so that doesn't change here. I think what
Speaker 12: immediately needs to happen is we need to reassess our
Speaker 12: odds or I certainly do, about what the prospect is
Speaker 12: for a shutdown on November eighteenth. And I think that
Speaker 12: what we need to start off with is a hope
Speaker 12: at the barest level that we can get some standalone
Speaker 12: appropriations bills done for perhaps defense or maybe agriculture, get
Speaker 12: those buils done so that when we do face November eighteenth,
Speaker 12: it's not a full shutdown. But the odds of a
Speaker 12: shutdown have to start at sixty five percent or higher.
Speaker 12: For my clients, I usually am at about five percent.
Speaker 12: I'm very bearish on these kinds of things. I was
Speaker 12: only at twenty five percent we would shut down going
Speaker 12: into this weekend. Now that we're in this new world.
Speaker 12: I think you have to start at least sixty five.
Speaker 12: There's a strong argument to make for seventy five, and
Speaker 12: I bet the street will be much higher than me
Speaker 12: come Monday morning.
Speaker 6: We could talk until the cows come home about this story.
Speaker 6: From the inside look out, but I want to go
Speaker 6: outside the United States. I look at the press out
Speaker 6: here in Asia a lot for a feature that we do,
Speaker 6: and oftentimes you hear people talk about American exceptionalism. Is
Speaker 6: this the opposite of that? I mean, does the US
Speaker 6: look somewhat in disarray with something like this?
Speaker 12: We are in an exceptional state of disarray. And there's
Speaker 12: a great quote that's effectively, we are a functional dysfunctional unit.
Speaker 12: And I wouldn't be surprised if you hear that all
Speaker 12: over the world. Now, I mean, this is the height
Speaker 12: of dysfunction. And it's not even party on party, you know,
Speaker 12: this is intra party fighting that we see here, and
Speaker 12: these slim majorities are exactly what it makes it so
Speaker 12: difficult to govern. I can imagine some of the old
Speaker 12: guards coming out and saying, you know, this kind of
Speaker 12: dysfunction is what keeps America, you know, and our democratic
Speaker 12: rights alive. But it is obviously the kind of thing
Speaker 12: you think of. If you want to say something good
Speaker 12: about a dictatorship, you don't have to go through this.
Speaker 12: So I wouldn't be surprised if that's the argument. I mean,
Speaker 12: the disarray in the US, particularly when it has real
Speaker 12: ramifications on things like at Ukraine, are understandably a big
Speaker 12: concern for our allies and not so allies abroad.
Speaker 1: So the temporary speaker now is Representative Patrick McHenry Henrietta.
Speaker 1: Can he bring the temperature down? Do you think effectively?
Speaker 12: I actually have a lot of questions about what he
Speaker 12: can do. I want to know if he's capable of
Speaker 12: path legislation. I want to know if he could put
Speaker 12: legislation on the floor. I don't expect him to immediately
Speaker 12: come in and claim the mantle of speaker. I think
Speaker 12: he's going to, at least for several hours or days,
Speaker 12: make it plain that he did not want this position.
Speaker 12: He was on McCarthy's shortlist and is not doing this
Speaker 12: of his own volition. I don't know a happy warrior
Speaker 12: is quite the way to term this yet, because I
Speaker 12: don't think he's very happy. But I do think that
Speaker 12: he is going to be the person that's in power
Speaker 12: for probably a few weeks, which will give him time
Speaker 12: to secure a foothold within the conference and try to
Speaker 12: unite them around him. And it's the heavy task but
Speaker 12: certainly could be accomplished.
Speaker 6: This is Bloomberg Daybreak Asia, your morning brief on the
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Speaker 1: I'm Brian Curtis and I'm Doug Krisner. Join us again
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