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Speaker 1: Good morning. It's Friday, the thirteenth of October in London.

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Speaker 1: This is the Bloomberg Daybreak youurate podcast. I'm Stephen Carroll.

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Speaker 1: Coming up today a looming invasion. The Israeli army tells

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Speaker 1: one point one million civilians and UN staff to leave

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Speaker 1: northern Gaza. Plus in other news, we'll have the latest

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Speaker 1: on the growing political turmoil in the United States, where

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Speaker 1: Steves Galise has walked away from his brief bid to

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Speaker 1: be House Speaker, and the British billionaire Jim Ratcliffe closes

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Speaker 1: in on a major investment in Manchester, United Let's start

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Speaker 1: with a roundup of our top stories. The Israeli army

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Speaker 1: has told the United Nations and more than a million

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Speaker 1: civilians to leave northern Gaza in the next twenty four hours,

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Speaker 1: in a sign that a ground invasion may now be imminent.

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Speaker 1: Israel's military is positioned around three hundred thousand personnel outside

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Speaker 1: the Palestinian territory and struck hundreds of targets in retaliation

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Speaker 1: for the Hamas attacks on Israel that killed at least

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Speaker 1: one thousand, two hundred people. Health authorities in Gaza say

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Speaker 1: airstrikes have killed at least thirteen hundred and wounded. Thousands more.

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Speaker 1: Bushra and her husband were caught up in one of

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Speaker 1: the strikes. A missile hit in the square and there

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Speaker 1: was rubble hitting us as we were walking. There was

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Speaker 1: glass metal.

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Speaker 2: It was like doomsday.

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Speaker 1: Those comments come as Rishie Sunak has urged his Israeli

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Speaker 1: counterpart to protect ordinary Palestinians amid efforts continuing to drive

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Speaker 1: the Hamask group out of Gaza. In a phone call

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Speaker 1: last night, the British Prime Minister urged Benjaminettan Yahoo to

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Speaker 1: allow humanitarian aid into the city. The US Secretary of

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Speaker 1: State Anthony Blinkn is traveling to Saudi Arabia, Egypt, and

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Speaker 1: other allied countries in the Middle East as part of

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Speaker 1: American efforts to keep the Israel Hamas conflicts from spreading further.

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Speaker 1: During his visit to Israel, Blincoln met survivors of Hamas's

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Speaker 1: attack on the country.

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Speaker 3: Yes, we lost a lot of our friends, close friends,

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Speaker 3: and lots of family members. There are a lot of

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Speaker 3: people people that we know that are kidnapped and now

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Speaker 3: and Gaza, and we went through horror. Really, I'm just like,

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Speaker 3: I'm twenty four and I never imagined something like this

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Speaker 3: would happen. Ever in a dance and a music festival.

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Speaker 3: We celebrate in love and we danced and it was amazing.

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Speaker 3: Then the rockets started and gunshots everywhere. We managed to escape,

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Speaker 3: but there are a lot of friends that didn't know

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Speaker 3: you want to bring them. Thank you so much. Here

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Speaker 3: I'm speaking to me, it means a lot.

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Speaker 1: Speaking in Tel Aviv, after meeting relatives of those kidnapped

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Speaker 1: or killed by Hamas, Blinken had this message for the country.

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Speaker 4: The message that I bring to Israel is this, you

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Speaker 4: may be strong enough on your own to defend yourself,

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Speaker 4: but as long as America exists, you will never ever

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Speaker 4: have to.

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Speaker 5: We will always be there by your side.

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Speaker 1: Lincon's trip to Israel comes as the US reached an

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Speaker 1: informal understanding with Katar to hold off distributing six billion

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Speaker 1: dollars in oil revenue that Iran was allowed to access

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Speaker 1: under a prisoner exchange deal. The decision comes as the

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Speaker 1: Biden administration continues to investigate Tehran's possible involvement in last

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Speaker 1: weekend's Hamas attack. European Union regulators have opened an inquiry

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Speaker 1: into Elon Musk's x over the handling of possibly illegal

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Speaker 1: content related to the war between Israel and Hamas. The

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Speaker 1: European Commission has sent the social network a formal request

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Speaker 1: for details of its handling of potential terrorist or violent

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Speaker 1: content on the platform. X formerly known as Twitter, has

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Speaker 1: one week to respond and could be fined if it

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Speaker 1: provides the EU with inaccurate or incomplete information. Thursday was

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Speaker 1: the worst day since March twenty twenty for US government

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Speaker 1: bonds after hotter than expected inflation data and weak demand

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Speaker 1: for Treasury's auction fueled the surge in thirty years yields.

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Speaker 1: Thursday's route began after data showed CPI rowse by three

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Speaker 1: point seven percent year on year in September. The news

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Speaker 1: comes as Boston Fed presidencies and Collins said the recent

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Speaker 1: jump in treasury eels could lessen the need for further

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Speaker 1: hikes if it lasts.

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Speaker 5: The rise in long term meals implies some tightening of

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Speaker 5: financial conditions, and if it persists, it likely reduces the

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Speaker 5: need for further monetary policy tightening in the near term.

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Speaker 5: This reinforces my view that we're very near and perhaps

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Speaker 5: at the peak federal funds rate for this tightening cycle.

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Speaker 1: Collins, who does not vote on monetary policy, this year

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Speaker 1: is the latest in a series of policymakers to signal

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Speaker 1: the possibility that higher long term yields may replace more

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Speaker 1: hikes from the US Central Bank. The Bank of England

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Speaker 1: chief economist Hugh pill says interest rate decisions are becoming

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Speaker 1: quote finally balanced. The BOE's capt rates unchanged at five

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Speaker 1: and a quarter percent last month, amid signs inflation is

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Speaker 1: coming under control. However, policymakers split over decision and investors

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Speaker 1: remain undecided over whether the fastest tightening cycle since the

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Speaker 1: nineteen eighties has now come to an end. The outlook

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Speaker 1: for rates may become clearer next week, when official figures

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Speaker 1: on inflation and the labor market are due to be released.

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Speaker 1: And in the United States, Steve Scalise has abandoned his

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Speaker 1: short lived campaign to become the House Speaker following days

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Speaker 1: of contentious meetings with fellow Republicans. Speaking to reporters, Scalee

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Speaker 1: said it wasn't going to happen today or tomorrow.

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Speaker 4: Our conference still has to come together and is not there.

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Speaker 4: There are still some people that have their own agendas,

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Speaker 4: and that was very clear. We have to have everybody

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Speaker 4: put their agendas on the side and focus on what

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Speaker 4: this country needs. This country is counting.

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Speaker 2: On us to come back together.

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Speaker 4: This House of Representatives needs a speaker, and we need

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Speaker 4: to open up the House again. But clearly not every

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Speaker 4: there and there's still schisms.

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Speaker 3: That have to get resolved.

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Speaker 1: Scalese's decision to withdraw has led several senior House Republicans

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Speaker 1: to express doubt that any member of their party could

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Speaker 1: get enough support to claim the speaker's gavel without getting

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Speaker 1: some help from Democrats. Republicans plan to meet again on

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Speaker 1: Friday morning to discuss their next steps, and Bloomberg understands

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Speaker 1: at the billionaire Jim Radcliffe is emerging as the front

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Speaker 1: runner to invest in Manchester United. The Inniess chairman may

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Speaker 1: end up with an initial stake of roughly twenty five

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Speaker 1: percent of the football giant in a deal that could

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Speaker 1: value the club at more than five billion pounds. Matiti

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Speaker 1: United's board is set to discuss the latest proposal as

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Speaker 1: soon as in the next few days. Well, let's get

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Speaker 1: more now on the latest in the Middle East this morning,

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Speaker 1: Israel has told the United Nations to move its staff

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Speaker 1: from northern Gaza and notify Palestinians in the area to

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Speaker 1: leave an indication that a ground operation could be imminent.

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Speaker 1: The area covered by the warning is home to more

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Speaker 1: than one point one million Palestinians. For the latest were

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Speaker 1: joined by our head of Middle Eastern North Africa, Stuart Livingstone,

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Speaker 1: Walla Stewart, Good morning. What more can you tell us

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Speaker 1: about this warning from the Israeli military and what it

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Speaker 1: means for people in Gaza?

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Speaker 6: Yeah, good morning. So, I mean, I suppose the first

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Speaker 6: thing to say is that this area is one of

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Speaker 6: the most densely populated in the world, and so the

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Speaker 6: notion that you can relocate over a million people in

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Speaker 6: twenty four hours is I think, as the UN has said,

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Speaker 6: pretty much impossible. I mean, for one thing, there's the

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Speaker 6: logistics of moving that many people. For the second thing,

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Speaker 6: you know, where exactly do you put them when everywhere

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Speaker 6: else in gazas are already much pretty full up, you know,

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Speaker 6: there is not extensive empty housing. On top of that,

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Speaker 6: of course, there's been this blockade around the area for

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Speaker 6: some days, and we know that the solitary power plant

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Speaker 6: is off. We still have some generators running, but the

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Speaker 6: fuel will run out, and obviously food and meds are

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Speaker 6: an increasingly short supply, so it is to move the

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Speaker 6: civilian population out, as you say, in anticipation of some

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Speaker 6: sort of ground war. But again referring back to the

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Speaker 6: UN statement, it is going to be a very difficult

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Speaker 6: situation there, I suspect in the next twenty four hours.

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Speaker 6: But again it is pointing as I think I've said

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Speaker 6: the last couple of days towards this feels to be

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Speaker 6: an inevitable ground war. We've got the three hundred thousand

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Speaker 6: reserves called up, We've got the forward base being built.

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Speaker 6: Things are escalating.

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Speaker 1: Meanwhile, Egypt's president has said that Gazans must stay steadfast

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Speaker 1: and remain on their land, but Egypt is also the

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Speaker 1: only option for Palestinians trying to leave Gaza. High significant

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Speaker 1: with the commis that we heard from the Egyptian president.

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Speaker 6: Well, I think we're sort of a couple of days

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Speaker 6: ago we had a briefing from the White House in

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Speaker 6: which they said they were in talks with Israel An

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Speaker 6: Egypt to see if there was some way in which

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Speaker 6: you could move a certain number of people out. That

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Speaker 6: doesn't indeed appear not to have really got anywhere. I

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Speaker 6: suppose part of the issue from Egypt's point of view,

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Speaker 6: as if they move across the border. Where exactly does

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Speaker 6: Egypt put them either, You know, it doesn't necessarily have

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Speaker 6: the facilities for that many people. So to some extent,

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Speaker 6: it does feel like there aren't that many options. I mean,

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Speaker 6: there are some smaller options. We know that there are.

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Speaker 6: There's some sort of planning underway to see if there's

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Speaker 6: a possibility to get certain citizens out of the Gaza strips, So,

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Speaker 6: for instance, the US is thinking about that, but again,

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Speaker 6: the options are very very limited because the size of it,

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Speaker 6: because it's so density population, because there are so few options.

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Speaker 1: After the US Secretary of State Anti Blincoln's visit to Israel,

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Speaker 1: we're now expecting the Defense Secretary to go there as well.

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Speaker 1: This as we have this political wrangling underway in Washington

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Speaker 1: overapproving more spending on military aid for Israel. How does

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Speaker 1: that complicate the US support for its ally, well.

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Speaker 6: I mean sort of. Our big takeaway from that is

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Speaker 6: that what it appears to be is more an attempt

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Speaker 6: now or at this stage, to stop this spreading more widely, so,

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Speaker 6: rather than any notion that they can go in and

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Speaker 6: fix the immediate problem that is the escalation around Gaza,

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Speaker 6: and we suspect increasingly into Gaza. It's more about making

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Speaker 6: sure as best they can that other nations don't join in. Now.

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Speaker 6: They're obviously limitations, so that I mean, the one that

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Speaker 6: we are obviously keeping a very careful eye on is

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Speaker 6: to the north. We have has Bulla in southern Lobonon

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Speaker 6: we know are very well armed, very well organized, and

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Speaker 6: do have form when it comes to attacking Israel. We

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Speaker 6: have had a few relatively low level attacks in the

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Speaker 6: last several days, but obviously nothing on the scale that

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Speaker 6: might be possible. And again similarly, not just on the

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Speaker 6: diplomatic side, but also on the military side, we've had

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Speaker 6: deployments into the eastern Mediterranean from the US that will

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Speaker 6: continue and build up, and that's really intended to be

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Speaker 6: a to terence in the sense that if you have

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Speaker 6: a big navy sitting there, it's going to be much

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Speaker 6: harder for anyone as to join in the highting. Whether

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Speaker 6: it's a of course, is a different matter and remains

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Speaker 6: to be seen.

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Speaker 1: We've also had this news that the US and KAT

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Speaker 1: are to hold off on distributing six billion dollars worth

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Speaker 1: of funds to Iran. How significant is is that development?

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Speaker 6: Well, I mean, I think it's to some extent. It's

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Speaker 6: everyone is trying to figure out to what extent Iran

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Speaker 6: knew about this or participated in the original attack on

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Speaker 6: Saturday morning. I should stress there is no evidence that

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Speaker 6: has been presented so far that they actively knew about

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Speaker 6: or actively participated. But I think what everyone would acknowledge

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Speaker 6: is that Iran has been a backer of her mass

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Speaker 6: for many many years, both financially militarily, and therefore there

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Speaker 6: is a distinction to be drawn between being involved in

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Speaker 6: HAMAS and supporting Hamas, but being actively involved in the

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Speaker 6: planning and execution of the atrocities that we saw on

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Speaker 6: Saturday morning.

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Speaker 1: Okay Stewart Livingston Wallace are head of Middleast and North Africa.

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Speaker 1: Thank you very much for joining us with the latest

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Speaker 1: on the developments in the Middle East. We're going to

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Speaker 1: turn out to news around America's largest banks. Third quarter

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Speaker 1: earning season kicks off today. JP Morgan's City Group in

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Speaker 1: Wells Farga reporting in just a few hours time. We're

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Speaker 1: expecting the numbers from Bank of America, Goldman Sackson, Morgan

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Speaker 1: Stanley early next week. We have Bloomberg's Charlie Wells and

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Speaker 1: Studio to look ahead to those earnings reports. Charlie, good

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Speaker 1: morning to you. What are analysts looking out for today?

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Speaker 2: Well, Stephen, there's going to be an intense interest on

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Speaker 2: interest rate snow pun intended and you know, especially how

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Speaker 2: that is trickling over into net interest income for these

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Speaker 2: large banks. Now, that has been such a positive story

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Speaker 2: for America's largest banks. They have been able to charge

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Speaker 2: more for their lending than they've had to pay out

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Speaker 2: to depositors. But what we are seeing is some pressure

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Speaker 2: here as rates remain higher for longer. We're seeing some

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Speaker 2: pressure on consumer deposits as consumers have more options. I'm

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Speaker 2: thinking money market funds and CDs, but also some you know,

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Speaker 2: some lending softness as well, So that's one key issue

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Speaker 2: I think. Also looking at investment banking revenue, revenue from

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Speaker 2: Trading City Group is the only large bank expected to

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Speaker 2: post an increase there. So it's not going to be

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Speaker 2: an optimistic earning season. I would say early days, but

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Speaker 2: it's tough, okay, So who's expected then to come out ahead?

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Speaker 2: On who are the laggards in this group? Really striking?

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Speaker 2: I think JP Morgan in particular has in this year

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Speaker 2: of banking crises, in this year of you know, bond

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Speaker 2: market surprises of high interest rates. JP Morgan has stood

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Speaker 2: out for overperforming. We see that in their share price.

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Speaker 2: We're seeing that in expectations for their you know, earnings

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Speaker 2: per share expected in the third quarter to be up

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Speaker 2: twenty six percent. When you look at the other banks,

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Speaker 2: expectations are lower. So for Wells Fargo, which is reporting

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Speaker 2: later today an estimate of down four percent for earnings

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Speaker 2: per share, and then City Group also reporting in just

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Speaker 2: a few hours down eighteen percent. So you compare eighteen

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Speaker 2: percent earnings per share estimates to an increase of twenty

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Speaker 2: six percent for JP Morgan.

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Speaker 1: Huge divergence there, Yeah, sure, quite arranged those. On the

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Speaker 1: investment banking side of things, there has been an optic

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Speaker 1: in IPO activity recently from a pretty morribun start, it

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Speaker 1: has to be said, is not going to turn the

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Speaker 1: dial for any of the megabanks.

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Speaker 2: Yeah, so there's been some kind of big name IPOs

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Speaker 2: which might make people think, all right, so it's deal

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Speaker 2: making back, is underwriting back. And look, I think when

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Speaker 2: you look at Instacart, we were again talking about that

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Speaker 2: one for years, looking forward to that as a potential

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Speaker 2: you know, turning point in deal making. And while equities

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Speaker 2: underwriting is expected to boost some of the earnings for

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Speaker 2: these banks. M and A activity has still been very,

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Speaker 2: very muted, and so I think it's not going to

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Speaker 2: be a pretty picture yet again in this earning season,

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Speaker 2: when we've been looking forward so long for a change

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Speaker 2: in that story.

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Speaker 1: What's the bigger picture here for the US and global economy.

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Speaker 2: I think it's really going to be a focus on

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Speaker 2: the US consumer. I think at a time when you know,

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Speaker 2: we're wondering if there can be a soft landing, there

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Speaker 2: is even more volatility in the air now given the

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Speaker 2: geopolitical situation, I think these reports may give indication of

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Speaker 2: where that US consumer is. You know, some bank CEOs

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Speaker 2: have been talking about potential credit worthiness of some of

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Speaker 2: their kind of lower credit store credit score consumers, potentially

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Speaker 2: you know, not being able to pay back some of

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Speaker 2: the loans, and we see that in some of the numbers.

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Speaker 2: So according to some Bloomberg data, there is an estimate

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Speaker 2: that these four large banks have set aside five point

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Speaker 2: three billion dollars for net charge offs. So that's money

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Speaker 2: that they're expecting not to get back from the consumer.

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Speaker 1: This is Bloomberg Day Break Europe. Your morning brief on

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