WEBVTT - US Shutdown Averted, China's September PMIs

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Brian Curtiz and I'm Doug Krisner. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 1>Democrats and Republicans avoiding a government shutdown. The compromise is

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<v Speaker 1>a spending bill that will keep the US government open

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<v Speaker 1>until November seventeenth. The stompgap spending bill was passed by

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<v Speaker 1>Congress and signed by President Biden on Saturday night. The bill, however,

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<v Speaker 1>does not include more funding for Ukraine. However, Biden's budget

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<v Speaker 1>director Shalanda Jung says she sure it will be passed later.

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<v Speaker 2>Those votes are there, We know there's a willing coalition,

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<v Speaker 2>and I certainly expect members and the Speaker to keep

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<v Speaker 2>their commitment not to us, but the Ukrainian people.

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<v Speaker 3>We told we would be there.

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<v Speaker 1>That Shalanda Young. The federal stopgap deal also gets financial

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<v Speaker 1>markets a little breathing room. Some analysts had warned that

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<v Speaker 1>an extended closure of federal agencies would spur fresh gyrations

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<v Speaker 1>in the treasury curve and also hit stocks. For now,

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<v Speaker 1>Democrats and Republicans have watched some time to negotiate longer

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<v Speaker 1>term funding.

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<v Speaker 2>We go to Apple next. The company is blaming a

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<v Speaker 2>software bug for the way some of its new iPhone

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<v Speaker 2>fifteens are getting hot. The iPhone maker also said some

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<v Speaker 2>third party apps are overloading its system.

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<v Speaker 1>Now.

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<v Speaker 2>Apple said it's working with developers behind these apps, and

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<v Speaker 2>the company set a fix is coming to address the

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<v Speaker 2>problem very soon. You know, some users have said on

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<v Speaker 2>Instagram that these apps are making the phones too hot

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<v Speaker 2>to handle.

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<v Speaker 1>Bran Well, yeah, let's take a closer look at this

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<v Speaker 1>one two factory downtime that could slam the brakes on

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<v Speaker 1>Tesla's winning streak. The story from Bloomberg's Denise Pellegrini.

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<v Speaker 3>Well, Tesla has broken four quarterly car delivery records in

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<v Speaker 3>a row, but that could be about to change because

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<v Speaker 3>over the summer the electric vehicle makers shut down some

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<v Speaker 3>of its facilities to make upgrades. Also, it's possible it's

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<v Speaker 3>being hit by consumer inflation pain, with potential buyers having

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<v Speaker 3>a harder time making big purchases. Because NLE is surveyed

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<v Speaker 3>by Bloomberg estimate, Tesla will report as soon as Monday

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<v Speaker 3>it delivered almost four hundred and fifty seven thousand cars

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<v Speaker 3>in the third quarter, below the just about four hundred

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<v Speaker 3>and sixty six thousand units delivered in the second quarter.

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<v Speaker 3>This would be the first decline since early twenty twenty two. Meantime,

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<v Speaker 3>in China, Tesla has just released an updated model Y,

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<v Speaker 3>slightly faster with a new wheel design and added lighting.

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<v Speaker 3>The starting price, though remains the same. Denise Pellgrity Bloomberg

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<v Speaker 3>Radio Well.

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<v Speaker 2>Over the weekend we got the official PMI data for China.

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<v Speaker 2>This would be for the month of September. Some encouraging signs,

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<v Speaker 2>to say the least, brought a little bit of frailty

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<v Speaker 2>as well. Bloomberg's Joanne Wong has more from Hong Kong.

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<v Speaker 4>China's manufacturing activity returned to expansion for the first time

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<v Speaker 4>in six months. The official PMI rose to fifty points

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<v Speaker 4>two in September from forty nine point seven in August.

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<v Speaker 4>But Bloomberg Economics says the data show that the rebound

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<v Speaker 4>is highly unbalanced, as a price drop in the chic

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<v Speaker 4>in manufacturing PMI also signals some fragility. It's a reminder

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<v Speaker 4>that without more policy support, the recovery could stumble. The

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<v Speaker 4>non manufacturing sector Accelerated media communications of financial services are

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<v Speaker 4>gaining and are becoming key drivers of the recovery in

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<v Speaker 4>Hong Kong.

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<v Speaker 5>Join one Bloomberg Radio.

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<v Speaker 1>McCaw's casino gaming revenue growth decelerated last month, but it's complicated.

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<v Speaker 1>Bloomberg's Bonni Oo has more from Hong Kong.

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<v Speaker 5>Gross gaming revenue grew more than four hundred percent to

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<v Speaker 5>one point eighty five billion dollars in September. That sounds

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<v Speaker 5>like a massive jump, but revenues are still down about

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<v Speaker 5>one third from pre pandemic levels. The results were mostly

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<v Speaker 5>in line with estimates. Growth is expected to accelerate in October,

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<v Speaker 5>in part due to China's eight day Golden Week holiday.

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<v Speaker 5>Analyst predict gaming revenue could return to seventy two percent

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<v Speaker 5>of pre pandemic levels. That would be the highest percentage

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<v Speaker 5>since the onset of COVID in Hong Kong. I'm Bonnie

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<v Speaker 5>Ol Bloomberg Radio.

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<v Speaker 1>So it's and take doug in both the Hong Kong

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<v Speaker 1>and Chinese economies. Now you find yourself constantly saying, well,

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<v Speaker 1>there was some improvement. Then on the other hand, there

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<v Speaker 1>was this, and we saw that with the PMI report,

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<v Speaker 1>and then also for Hong Kong, retail sales jumped in

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<v Speaker 1>in August, a lot of mainland visitors coming back, but

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<v Speaker 1>we had a million people leave over the weekend. Just

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<v Speaker 1>about a million people. We only have seven point three

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<v Speaker 1>million people living in Hong Kong. And although that's holiday

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<v Speaker 1>time and you can understand pend up desire to go,

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<v Speaker 1>I'm not sure if it's a good thing or a

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<v Speaker 1>bad thing, because obviously, you know, with that many people leaving,

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<v Speaker 1>that's a lot of people that wouldn't be spending money

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<v Speaker 1>in Hong Kong.

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<v Speaker 2>And a little bit of debate here in the US,

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<v Speaker 2>Brian Bloomberg Economics is saying that a US recession is

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<v Speaker 2>still more likely than a soft landing. Our economist, you're

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<v Speaker 2>looking at things like the major auto strike that we're

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<v Speaker 2>dealing with right now, along with the resumption of student

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<v Speaker 2>loan repayments. We can maybe say for the moment that

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<v Speaker 2>the government is staying open, we have avoided a shutdown,

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<v Speaker 2>but it may they yet come back after November seventeenth,

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<v Speaker 2>and that may all of these things together may shave

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<v Speaker 2>as much as one percentage point from GDP for the

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<v Speaker 2>fourth quarter. And then if you look beyond that, things

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<v Speaker 2>like dwindling pandemic savings, higher interest rates, higher oil. Maybe

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<v Speaker 2>if you take all of this stuff together, we could

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<v Speaker 2>be looking at a recession before the early part of

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<v Speaker 2>maybe next year or as soon as the end of

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<v Speaker 2>this year.

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<v Speaker 1>Sounds like you're saying we shouldn't expect too much of

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<v Speaker 1>a relief rally in the next couple of days. We'll

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<v Speaker 1>put that question into Dana Doria. She's coming up a

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<v Speaker 1>cocio at invest Net and also a moment of truth

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<v Speaker 1>for House Republicans, now what this means for Kevin McCarthy

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<v Speaker 1>and for a challenger like the Florida Congressman Matt Gates.

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<v Speaker 1>So we'll see that's something we can put to our

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<v Speaker 1>guests all throughout the morning.

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<v Speaker 6>Any final thoughts before we move into the next phase. No,

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<v Speaker 6>I think it covered it. But you're right about the

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<v Speaker 6>risk for the equity market. You know, for September, the

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<v Speaker 6>S and P five hundred, it had its worst month

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<v Speaker 6>of the year. And if you look at the quarter

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<v Speaker 6>that we just ended, the third quarter, the first quarterly

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<v Speaker 6>loss we have seen since the third quarter of twenty

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<v Speaker 6>twenty two.

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<v Speaker 1>Yeah, it is a mini correction. Does it become a

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<v Speaker 1>full blown correction in the equity markets? And how do

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<v Speaker 1>we sort that with all the negative news that is

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<v Speaker 1>looming again? More fodder for the great guests that we

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<v Speaker 1>have coming up again, Dana Doria coming up shortly. Now

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<v Speaker 1>it's time for Global News. Well, House Speaker Kevin McCarthy

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<v Speaker 1>is facing a movement to oust him from his position.

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<v Speaker 1>We get more from Dan Schwartzman in New York.

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<v Speaker 7>Dan, Yeah, Brian, it's getting very contentious right now. We

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<v Speaker 7>have Florida Republican Matt Gates saying he's going to be

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<v Speaker 7>filing a motion this week to vacate the chair. It's

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<v Speaker 7>a parliamentary process that hasn't led to the removal of

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<v Speaker 7>this speaker since nineteen ten. The far right Republicans are

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<v Speaker 7>angry with McCarthy for embracing a bipartisan dealed of what

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<v Speaker 7>a government shut down that didn't take into consideration the

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<v Speaker 7>deep spending cuts that the right wingers had wanted. Now

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<v Speaker 7>McCarthy's going to need a simple majority of House members

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<v Speaker 7>to vote for him to be able to stop the

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<v Speaker 7>effort to remove him. Gates says he's going to do

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<v Speaker 7>what he can to remove and replace those who won't

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<v Speaker 7>tackle spending in deficits.

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<v Speaker 8>If all the American people see is that it is

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<v Speaker 8>a uniparty that governs them, and that it is always

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<v Speaker 8>the Biden, McCarthy Jeffreys government that makes dispositive decisions on spending.

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<v Speaker 8>Then I am I am seeding the fields of future

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<v Speaker 8>primary contests to get better Republicans in Washington who will

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<v Speaker 8>actually tackle these deficits in debt.

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<v Speaker 7>That's FLOUDA representative Matt Gates. Earlier today on ABC's This Week,

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<v Speaker 7>Donald Trump expected to attend the opening of his New

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<v Speaker 7>York civil trial Monday. Trump's accused of committing fraud by

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<v Speaker 7>inflating his net worth by billions of dollars in financial transactions.

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<v Speaker 7>The Republican front runner for the twenty twenty four presidential

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<v Speaker 7>nomination is in jeopardy of losing control of his real

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<v Speaker 7>estate empire after judge authorized New York Attorney General Letitia

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<v Speaker 7>James to cancel certificates for companies that hold the assets.

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<v Speaker 7>Trump's presence at the civil trial is not mandatory. In

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<v Speaker 7>a blow to Ukraine, Slovakia has a lot Robert Fico

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<v Speaker 7>as its prime Minister. Fiko returns to the post he

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<v Speaker 7>resigned from back in twenty eighteen after public outrage over

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<v Speaker 7>the killing of an investigative journalist. Fico has publicly called

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<v Speaker 7>for ending military aid to Ukraine, while also deriding the

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<v Speaker 7>European Union's sanctions against Russia. Thailand expected to see a

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<v Speaker 7>four billion dollar increase in tourism revenue as a result

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<v Speaker 7>of the five month holiday period visa exemption program with

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<v Speaker 7>mainland China. In just the first two days of the program,

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<v Speaker 7>Thailand saw twenty two thousand Chinese tourists visit the country.

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<v Speaker 7>Before the pandemic, Chinese tourists were the number one group

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<v Speaker 7>of visitors to the country pre pandemic. Now, Thailand is

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<v Speaker 7>hoping that tourism will help jumpstart its slong economy and

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<v Speaker 7>keep it from falling into a recession. Europe winning the

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<v Speaker 7>Ryder Cup, beating the United States sixteen and a half

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<v Speaker 7>to eleven and a half in Rome, with Roy McElroy

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<v Speaker 7>leading the way and Tommy Fleetwood delivering the winning points.

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<v Speaker 7>The US was coming off a record nineteen to nine

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<v Speaker 7>win over Europe just two years ago at Whistling Straits

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<v Speaker 7>in Wisconsin. The US came in confident that they could

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<v Speaker 7>end the thirty years of losing away from European and

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<v Speaker 7>sore they haven't won since nineteen ninety three. Team USA

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<v Speaker 7>is going to get another crack at it to win

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<v Speaker 7>in Europe. Ireland's hosting in twenty twenty seven, Global News

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<v Speaker 7>twenty four hours a day, power by more than twenty

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<v Speaker 7>seven hundred journalists and analysts and more than one hundred

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<v Speaker 7>and twenty countries. I, Dan Schwartzman, this is Bloomberg.

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<v Speaker 1>This is Bloomberg. Deybreak Asia, Brian Curtis and Rashad Salommat

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<v Speaker 1>here in Hong Kong. Our guest is Dana Duria Cocio

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<v Speaker 1>at Nvestnet. Dana, thanks very much for joining us. It's

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<v Speaker 1>been sort of a negative Paul hanging over markets here

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<v Speaker 1>of late, particularly equity markets, but the bond market has

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<v Speaker 1>struggled as well. I don't suppose that the shutdown averted

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<v Speaker 1>is the catalyst to shock us out of that, is it?

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<v Speaker 9>Well, I don't know that it's enough of a catalyst

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<v Speaker 9>to shock us out of that, but it's certainly good news.

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<v Speaker 9>I think it's it's news that the market wasn't expecting.

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<v Speaker 9>You know, I get information from a lot of economic sources,

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<v Speaker 9>and I would say to you that it was pretty

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<v Speaker 9>much assumes to be a foregone conclusion that we were

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<v Speaker 9>going to have a shutdown, and in fact, a lot

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<v Speaker 9>of what I was seeing was concern about it being

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<v Speaker 9>potentially lengthier than average, just because of the acrimony even

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<v Speaker 9>within the House, let alone, you know, between the House

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<v Speaker 9>and Senate. So I do think it's a pretty positive

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<v Speaker 9>development for markets. I think it has positive repercussions around

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<v Speaker 9>concerns or at our ability to tackle things like the debt.

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<v Speaker 9>But to your point, at the end of the day,

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<v Speaker 9>shutdowns are really not a big impact on equity markets.

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<v Speaker 9>They're not even a big impact on GDP growth. They

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<v Speaker 9>really don't have a correlation. So you know, this is

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<v Speaker 9>nice news for a time, but at the end of

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<v Speaker 9>the day, probably not a huge impact.

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<v Speaker 10>But then you know, the thing is it starts off again.

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<v Speaker 10>It's only six weeks or seven weeks do we get

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<v Speaker 10>to all over again that the thing is is there

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<v Speaker 10>a better way of doing this?

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<v Speaker 3>Oh?

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<v Speaker 9>Yes, I mean, you know, it's interesting the United States

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<v Speaker 9>puts itself through this, right, it's a pretty abnormal when

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<v Speaker 9>it just are that we kind of go through this

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<v Speaker 9>struggle of are we going to pay our bills? You know,

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<v Speaker 9>both shut down as well as you know, raising debt limits.

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<v Speaker 9>And yeah, there certainly is. But you know, it's a

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<v Speaker 9>I guess a sign of the times that you have

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<v Speaker 9>to be really happy that McCarthy kind of stepped up

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<v Speaker 9>and said, you know what I'm I'm just I'm going

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<v Speaker 9>to do the sensible thing here, and you know, give

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<v Speaker 9>us some time to try to work through the problems

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<v Speaker 9>as opposed to letting the government shut down. So you know,

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<v Speaker 9>it's incrementalism here, I guess, but yeah.

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<v Speaker 1>For sure, it sort of is what it is. I mean,

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<v Speaker 1>Rish would have us go back to Plato in Theories

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<v Speaker 1>of society, you know, which is it's not easy to

0:11:41.360 --> 0:11:45.560
<v Speaker 1>rewrite the way that the US does business. Well, let's

0:11:45.559 --> 0:11:49.360
<v Speaker 1>talk about the impact going forward. That aside the impact

0:11:49.480 --> 0:11:52.880
<v Speaker 1>going forward for markets. Are we in this period where

0:11:52.880 --> 0:11:59.000
<v Speaker 1>we we should probably expect things to to deteriorate slightly

0:11:59.240 --> 0:12:02.640
<v Speaker 1>in the equity and bond markets until we get some

0:12:02.640 --> 0:12:05.360
<v Speaker 1>sort of major catalysts and what that might be, well,

0:12:05.400 --> 0:12:06.600
<v Speaker 1>we can't imagine at the moment.

0:12:07.800 --> 0:12:09.040
<v Speaker 3>Yeah, I think that's fair.

0:12:09.440 --> 0:12:09.679
<v Speaker 10>You know.

0:12:10.160 --> 0:12:14.079
<v Speaker 9>Part of my comments I'll say are about what should

0:12:14.120 --> 0:12:16.959
<v Speaker 9>you prepare for maybe than trying to predict exactly which

0:12:17.160 --> 0:12:19.839
<v Speaker 9>way it goes. And I think everyone's you know, given

0:12:19.880 --> 0:12:23.400
<v Speaker 9>obviously where markets have gone this year now, notwithstanding September,

0:12:23.800 --> 0:12:28.160
<v Speaker 9>but just you know, pretty great returns in a year

0:12:28.200 --> 0:12:31.920
<v Speaker 9>that the expectation was you know, softness at best. So

0:12:32.320 --> 0:12:34.920
<v Speaker 9>you know, I think you know, you're seeing even the

0:12:36.440 --> 0:12:38.800
<v Speaker 9>kind of most dug in bears saying, oh, maybe we

0:12:38.960 --> 0:12:41.959
<v Speaker 9>will stick this landing, which is fantastic if we do,

0:12:42.440 --> 0:12:45.679
<v Speaker 9>but unfortunately a lot of you know, monetary policy acts

0:12:45.679 --> 0:12:49.560
<v Speaker 9>with a lag. Consumer confidence now drifting lower. We know

0:12:49.760 --> 0:12:52.840
<v Speaker 9>the auto strike, we know loan repayments coming back in.

0:12:54.160 --> 0:12:57.040
<v Speaker 9>You know, luckily not a shutdown, but just a lot

0:12:57.080 --> 0:13:01.600
<v Speaker 9>of headwinds facing the consumer. And you know, personal consumption

0:13:01.760 --> 0:13:04.760
<v Speaker 9>is far and away the biggest part of GDP as

0:13:04.760 --> 0:13:07.559
<v Speaker 9>a single element. So and it's been the consumer kind

0:13:07.559 --> 0:13:10.640
<v Speaker 9>of propping up this economy along with employment. We're seeing

0:13:10.760 --> 0:13:12.760
<v Speaker 9>a little bit of signs of softness there too, So

0:13:13.200 --> 0:13:15.560
<v Speaker 9>it's certainly not a reason to say.

0:13:16.880 --> 0:13:17.200
<v Speaker 8>Yes.

0:13:18.559 --> 0:13:23.520
<v Speaker 10>Just want to say, inflation comes almost always in three cycles.

0:13:24.080 --> 0:13:25.880
<v Speaker 10>You know, you don't just have one and it is done.

0:13:26.200 --> 0:13:28.560
<v Speaker 10>I mean, we made in the second cycle, you know,

0:13:28.720 --> 0:13:31.880
<v Speaker 10>in the offing because we've got high fuel prices. Let's

0:13:32.000 --> 0:13:34.240
<v Speaker 10>forget that the unions ultimately want more money. That's going

0:13:34.240 --> 0:13:39.000
<v Speaker 10>to perhaps create that demand pull part of the inflation problem.

0:13:39.240 --> 0:13:42.360
<v Speaker 10>And the other theory is you can't really kill the

0:13:42.400 --> 0:13:45.200
<v Speaker 10>beast of inflation without tipping the economy into recession.

0:13:46.920 --> 0:13:50.079
<v Speaker 9>It's typically the case, and it's very much that tightening

0:13:50.080 --> 0:13:52.800
<v Speaker 9>cycles tend to push us into recession. And this was

0:13:52.840 --> 0:13:56.880
<v Speaker 9>a very abrupt tightening cycle. Right, So your comments are

0:13:56.920 --> 0:14:00.199
<v Speaker 9>exactly on point. Inflation tends to come in waves. These

0:14:00.200 --> 0:14:03.480
<v Speaker 9>are all more reasons to be, you know, somewhat cautious, right,

0:14:03.480 --> 0:14:05.880
<v Speaker 9>if you're an investor, it's not Look, it's not to

0:14:05.880 --> 0:14:08.439
<v Speaker 9>say get out of markets. Obviously, that you do that

0:14:08.520 --> 0:14:12.840
<v Speaker 9>and you potentially miss you know what highs that could

0:14:12.840 --> 0:14:15.640
<v Speaker 9>be coming still, but you know you should be circumspect

0:14:15.679 --> 0:14:18.679
<v Speaker 9>and not be sort of chasing equity markets. I think,

0:14:18.760 --> 0:14:22.200
<v Speaker 9>and I do because exactly the reasons that we're discussing here, right,

0:14:22.240 --> 0:14:26.000
<v Speaker 9>the consumer getting a little softer, unemployment, and have we

0:14:26.120 --> 0:14:30.560
<v Speaker 9>really broken the back of inflation? Oil prices suggest maybe not.

0:14:33.800 --> 0:14:36.600
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