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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtiz and I'm Doug Krisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: US job openings in October fell to the lowest level

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Speaker 1: since March of twenty twenty one. It adds to evidence

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Speaker 1: that the labor market is cooling, and it reinforces market

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Speaker 1: expectations that the FED will be able to cut interest

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Speaker 1: rates next year. We heard from Alian's chief economic advisor,

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Speaker 1: Mohammed el Arian. He says financial markets are wrong to

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Speaker 1: expect imminent cuts.

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Speaker 2: I do believe that the FED is done raising weights,

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Speaker 2: but I don't think they will validate what's currently priced

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Speaker 2: in by the markets in terms of weight cuts next year.

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Speaker 1: Elaran also warned that the FED needs to recover what

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Speaker 1: he thinks is a bit of lost credibility on forward

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Speaker 1: guidance with the markets. Otherwise, he thinks the recent loosening

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Speaker 1: of financial conditions will undermine FED policy going forward.

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Speaker 2: Meantime, the head of Bank of America, Brian moynihan, was

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Speaker 2: saying he still expects a soft landing rather than a

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Speaker 2: recession here in the US. Here's more and Hand, speaking

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Speaker 2: at the Goldman Sacks US Financial Services Conference.

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Speaker 3: The reality is going to be a slowdown, but we

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Speaker 3: have it as being positive. The way customers are spending

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Speaker 3: their money is leveled out. In other words, there's not this,

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Speaker 3: you know, good service, this massive change. So some things

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Speaker 3: are growing faster, but it's leveled out, meaning that all

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Speaker 3: the category to kind of grow and plus or minus

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Speaker 3: the average, and so that's all good news at the

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Speaker 3: economy's normal life.

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Speaker 2: That is Brian moynihand the CEO of Bank of America.

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Speaker 2: By the way, his remarks kind of track with some

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Speaker 2: of the recent data points that we've been talking about.

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Speaker 2: American consumers have been pulling back on their spending, particularly

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Speaker 2: for big ticket items, as borrowing costs remain elevated.

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Speaker 1: Ran Well Goldman Sachs says it'll probably see compensation costs

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Speaker 1: rise even as the bank is set to post another

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Speaker 1: year of slumping profits. Your CFO, Dennis Coleman, on the comp.

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Speaker 4: Side, our perspective will remain very much pay per performance,

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Speaker 4: but recognizing the performance of some of those core businesses,

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Speaker 4: I would say on a common benefit expense basis and

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Speaker 4: expect us to be upload to single digits for the

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Speaker 4: full year.

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Speaker 1: Goldman stop leaders have focused more attention on the bonus

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Speaker 1: pool after saying that last year's pay slump contributed to

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Speaker 1: public sniping and a lot of that was targeted at

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Speaker 1: CEO David Solomon. This year's paid decisions also signal a

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Speaker 1: more measured move after two consecutive years of wild swings

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Speaker 1: In compensation.

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Speaker 2: Moody's Investor Service has cut China's credit out look. We

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Speaker 2: have a little bit more from Bloomberg's and Kate's Moody's load.

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Speaker 5: It's outlooked for Chinese sovereign bonds to negative, underscoring deepening

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Speaker 5: global concerns about the level of debt in the world's

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Speaker 5: second largest economy. Moody cites China's use of fiscal stimulus

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Speaker 5: to support local governments and its spiraling property downturn, adding

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Speaker 5: that they pose risks to the economy. China says it

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Speaker 5: is disappointed by Moody's decision and that its economy will

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Speaker 5: be highly resilient and has large potential. In Washington and

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Speaker 5: Kate's Bloomberg Radio.

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Speaker 1: Here's a bit of a perplexing one for you. Saudi

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Speaker 1: Arabia has slashed its crude oil prices to Asia by

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Speaker 1: the most since February, and that's even as its cutting

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Speaker 1: production along with its allies to try to boost prices elsewhere.

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Speaker 1: That's why I say it's a complicated story. Bloomberg's Yvon

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Speaker 1: Man here is to explain.

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Speaker 6: Saudi Aramco lowered its flagship Arab Lights price for January

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Speaker 6: by fifty cents. Is now priced at three dollars and

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Speaker 6: fifty cents a barrel, more than the benchmark. The cut

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Speaker 6: was less than the market estimated, but it's the first

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Speaker 6: reduction since June. The cut marks a concession that nearby

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Speaker 6: markets have weekened as supplies serves from non OPEC producers.

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Speaker 6: In particular, Saudi Arabia is facing heated competition of cheaper

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Speaker 6: sweet crudes. In addition to cutting prices to Asia, Saudi

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Speaker 6: Arabia is also trimming some supplies to the US. In

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Speaker 6: Hong Kong, I'm Von Mann Bloomberg Radio.

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Speaker 2: Volkswagen says independent auditors have found no sign of forced

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Speaker 2: labor at the company's joint venture place in Hianjan. We

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Speaker 2: have more from Bloomberg's Juan Wong in Hong Kong.

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Speaker 7: Volkswagen's that Berlin based consultancy Learning audited the facility in

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Speaker 7: Urumchi last month and that no evidence of forced labor

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Speaker 7: was found the Urumchi plan does not actually manufacture any vehicles.

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Speaker 7: It handles quality control for vehicles already assembled. Last year,

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Speaker 7: the UN's top human rights official found that China had

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Speaker 7: committed serious human rights abuses in Shinjiang. Volkswagen's connection to

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Speaker 7: the controversy has had financial market consequences. A downgrade forced

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Speaker 7: several institutional investors to back away from VW stock in

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Speaker 7: Hong Kong. Joanne Wong Bloomberg Radio.

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Speaker 1: Now it's time for Global news. Israel is rebuffing calls

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Speaker 1: for it to halt its campaign in Gaza as its

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Speaker 1: forces continue to push south at backs with the story

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Speaker 1: and more from the nine to sixty news room in

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Speaker 1: San Francisco.

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Speaker 8: Ed, Yeah, that's right. Brian and u N has said

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Speaker 8: there is not a safe refuge in Gaza and has

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Speaker 8: called in Israel to stop the attack. So response, well,

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Speaker 8: Israeli Prime Minister Benjamin that Yahoo is calling out human

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Speaker 8: rights groups for failure to speak out about the rape

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Speaker 8: and mutilation of Israeli women at the hands of a

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Speaker 8: moss I.

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Speaker 9: Say to the women's rights organizations, to the human rights organizations,

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Speaker 9: you've heard of the rape of Israeli women. Horrible atrocities,

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Speaker 9: sexual mutilation, Where the hell are you? I expect all

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Speaker 9: civilized leaders, governments, nations to speak up against this atrocity.

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Speaker 8: He says for the war to end quickly, the globe

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Speaker 8: must stand with Israel. Bloomberg's Nick Wadam says the US

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Speaker 8: is applying pressure for the bloodshed to end.

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Speaker 10: So this is in response to pressure from the US

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Speaker 10: and others, essentially saying, listen, you got to wrap this

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Speaker 10: up because international support will not be able to be sustained.

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Speaker 10: So Israel really pushing back and saying we are going

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Speaker 10: to take as long as we need to eradicate a moss.

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Speaker 8: And then Yahoo advisor Mark Redgev on Bloomberg's Balance of

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Speaker 8: Power today said they are taking precautions as.

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Speaker 10: The fighting new stats.

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Speaker 9: We've kept a humanitarian corridor open so people who late

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Speaker 9: to move out can still move out. We simply don't

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Speaker 9: want to see civilians caught up in the.

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Speaker 8: Crossbid and IDF spokesman Lieutenant Colonel Richard Heck says the

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Speaker 8: campaign will continue, but is targeting operatives and not civilians.

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Speaker 9: While we've been operating, we are ensuring that there is

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Speaker 9: minimum harm to civilians.

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Speaker 8: With soldiers on the grind going from building to building now.

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Speaker 8: US President Joe Biden has come out and said international

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Speaker 8: organizations should forcefully condemn the violent acts committed by Hamas.

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Speaker 8: Israel also has said today that we consider another short

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Speaker 8: term cease fire in an agreement if it can be

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Speaker 8: reached with a mos to return more of its one

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Speaker 8: hundred and thirty seven hostages still in captivity. Ukrainian President

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Speaker 8: Vladimir Zelenski has canceled his address to the US Senate

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Speaker 8: as negotiations have stalled on the sixty one billion dollar

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Speaker 8: new weaponry and other aid. White House said that it

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Speaker 8: could completely run out of resources to assist Ukraine by

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Speaker 8: the end of the calendar year. Some four hundred military

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Speaker 8: officers have been confirmed by the Senate day after Senator

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Speaker 8: Tommy Tuberville lifted his confirmation blockade. It did leave out

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Speaker 8: some two dozen or so four star positions, so it

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Speaker 8: doesn't deal with leadership near the top, and the Pentagon

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Speaker 8: says it's encouraged, but spokes from Brigadier General pat Ryder

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Speaker 8: says normalizing will take some time. It's not like just

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Speaker 8: flipping a switch.

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Speaker 11: When people can move where the people that are moving

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Speaker 11: out of the positions are going, and so all that

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Speaker 11: has to be carefully orchestrated and done in a way

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Speaker 11: that enables us to continue to conduct the operations without

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Speaker 11: having significant impact not only on the mission but also

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Speaker 11: on the individual family members.

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Speaker 8: The writer says, unclear how long it'll take, and President

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Speaker 8: Joe Biden, at a campaign fundraiser in Massachusetts today said quote,

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Speaker 8: if Trump wasn't running, I'm not sure I'd be running.

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Speaker 8: Bloomberg's won Day. Benjamin says a bit of an odd

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Speaker 8: thing to say, noting that polling has shown that voters.

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Speaker 12: Are worried about his age, the voters are worried about

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Speaker 12: his ability to beat Trump this time, and so I

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Speaker 12: I think that that's not the kind of messaging that

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Speaker 12: if I were his pr people, I would be thrilled.

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Speaker 8: With global news twenty four hours a day, whenever you

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Speaker 8: want it, with Bloomberg News. Now in San Francisco, I

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Speaker 8: met Baxter, and this is Bloomberg.

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Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis, along with

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Speaker 1: Vonnie Quinn and Doug Christner and Michael McKee joins us

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Speaker 1: Bloomberg's International Economics and Policy correspondent to take a closer

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Speaker 1: look at the US economy, so it's always confusing, but

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Speaker 1: it's great to have you on to help explain things.

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Speaker 1: This Jolt's number was down, but it's still pretty high

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Speaker 1: all things considered. We did have prices moderating in the

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Speaker 1: service sector data, and taken together, the market thinks that

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Speaker 1: the FED perhaps will be able to start cutting next year.

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Speaker 1: How is the market kind of responding to this data, Mike.

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Speaker 13: The market took the data as good news, the idea

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Speaker 13: that it is maybe getting closer to a soft landing.

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Speaker 13: Because of this, the Fed's been looking for a decline

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Speaker 13: in job openings to help make the case that the

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Speaker 13: labor market is getting a little bit looser and that'll

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Speaker 13: take some of the wage pressure off the economy. And

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Speaker 13: the jolt's number came in much lower than anybody anticipated.

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Speaker 13: It is worthwhile to remember, though, as you pointed out,

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Speaker 13: that it is still at eight million, seven hundred and

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Speaker 13: thirty three thousand, still about three million higher than the

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Speaker 13: average before the pandemic. So there's still a lot of

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Speaker 13: job openings, but it is progress in the direction the

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Speaker 13: FED wants to see.

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Speaker 14: It's interesting how much voltaly we're seeing in treasuries, Michael,

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Speaker 14: I mean the tenure is above five percent literally just

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Speaker 14: a little more than a month ago, and we're below

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Speaker 14: for twenty now. It's a massive move, but I guess

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Speaker 14: it's kind of to be expected given what markets are reprising.

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Speaker 13: Markets are prone to overreact to things, and it will

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Speaker 13: be interesting to see over the next few days, when

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Speaker 13: we get the jobs report on Friday and we get

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Speaker 13: the CPI report next Tuesday, how they react to whatever

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Speaker 13: data comes out. Then suppose we have a little bit

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Speaker 13: higher inflation, they might change their minds. The Fed's going

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Speaker 13: to look past that for the time being. They can't

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Speaker 13: do anything about the volatility, and they still see delayed

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Speaker 13: lag impacts on the economy from their own raising of

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Speaker 13: interest rates. So at this point you just kind of

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Speaker 13: got to watch and see what happens. There's almost no

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Speaker 13: way to predict what's going to happen, other than to

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Speaker 13: say that the way the market is pricing the FED

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Speaker 13: is probably not going to happen, because markets change all

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Speaker 13: the time.

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Speaker 1: We have plenty of people pushing back against the FED

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Speaker 1: maybe cutting as early as March. I mean, that's not

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Speaker 1: consensus yet. I think Doug said, who was in the

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Speaker 1: swaps market a sixty percent likelihood, and it's more likely

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Speaker 1: around May. Mohammedel Arian says the FED needs to recover

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Speaker 1: its credibility. Tell us more about your interpretation of his comments.

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Speaker 13: Well, I think what he's talking about is has not

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Speaker 13: well back up and say the FED stopped giving forward guidance,

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Speaker 13: and so the markets are kind of trying to figure

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Speaker 13: things out on their own, looking for clues and FED

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Speaker 13: official statements. And last Friday, when Chairman Jay Powell spoke,

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Speaker 13: he talked about the FED having rates in very restrictive territory,

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Speaker 13: which was a new way of expressing it for him,

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Speaker 13: and suggested that the FED was done raising raids, and

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Speaker 13: then he sort of softened the way he talked about

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Speaker 13: rate cuts, saying that they they're not ready to do

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Speaker 13: rate cuts. He was much further on that at the

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Speaker 13: FED last news conference, and so the market decided to

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Speaker 13: price in a significant amount of cutting and move it up.

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Speaker 13: The only thing is is this is it's sort of

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Speaker 13: one of the most unknowable things at this point. It's

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Speaker 13: really going to depend on how fast inflation comes down

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Speaker 13: and or that you get recession. Doesn't look like a

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Speaker 13: recession in the numbers that we're seeing right now, we'll

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Speaker 13: see how inflation behaves. We get another CPI report next Tuesday.

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Speaker 14: Well, Michael, it's always interesting to have think pieces and

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Speaker 14: what ifs and so on in our Christine Niquino did

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Speaker 14: a very interesting one on our m Live blog today

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Speaker 14: talking about the nearly one hundred and thirty basis points

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Speaker 14: of productions that rates traders are seeing over the next year,

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Speaker 14: that that would only reverse a quarter of the FED

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Speaker 14: tightening we've seen since March of twenty twenty two. And

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Speaker 14: you compared it a little bit with what we would

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Speaker 14: have seen in two thousand and seven, two thousand and eight,

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Speaker 14: as well as twenty nineteen and twenty. Is it fair

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Speaker 14: to do that our conditions at all similar from a

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Speaker 14: federal reserve point of view, given that on the one

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Speaker 14: hand we had housing crisis and on the other hand

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Speaker 14: we had COVID.

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Speaker 13: Nineteen, conditions are not the same. Certainly, the COVID nineteen

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Speaker 13: pandemic created any economic situation unlike anything ever seen before.

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Speaker 13: There were no models or central bankers here or anywhere

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Speaker 13: else to follow and try to figure out what was

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Speaker 13: going to happen. When inflation took off, the FED realized

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Speaker 13: it had to react quickly or it could face a

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Speaker 13: situation like the nineteen seventies where inflation got out of

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Speaker 13: control because people didn't think the Fed would act. So

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Speaker 13: now they have raised rates before the pandemic we were

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Speaker 13: at zero. Is that the right place to be? Probably not,

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Speaker 13: So when rates start coming down, they won't come down

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Speaker 13: as far as they had. The issue is going to

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Speaker 13: be where does the FED think the neutral rate is.

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Speaker 13: For a long time, they've said two and a half percent.

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Speaker 13: It might be a little higher than that if the

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Speaker 13: economy continues to grow strongly, But the days of zero

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Speaker 13: percent interest rate from the Fed, those are done. So

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Speaker 13: then it becomes a question, as Christine pointed out, of

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Speaker 13: where do you set the rate? And then the question

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Speaker 13: will be in the markets of how are you setting

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Speaker 13: the rate?

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Speaker 1: Hard to predict going forward. Just a month and a

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Speaker 1: half ago, it was consensus that would get a rate

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Speaker 1: a hike at sometime at the end of the year,

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Speaker 1: November or December. That looks, you know, not likely now,

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Speaker 1: but I guess everything's relative on Wall Street. So you

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Speaker 1: have to make these predictions, but just don't take them

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Speaker 1: so seriously.

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Speaker 13: Well, it's funny because the FED makes predictions once every

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Speaker 13: three months. The markets make predictions, you could say, every.

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Speaker 10: Second of the day.

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Speaker 13: Yeah, and they're constantly changing their minds, So the Fed

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Speaker 13: and economists don't take market moves completely seriously. As the

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Speaker 13: famous economist Yogi Barra once said, predictions are hard, especially

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Speaker 13: about the future.

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Speaker 1: Yeah, yeah, all right, Mike, Thanks very much. Michael McKee,

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