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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloemberg

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Speaker 1: Day BAQ podcast, available every morning on Apple, Spotify or

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Speaker 1: whatever you listen. It's Tuesday, the eighth of October here

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Speaker 1: in London.

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Speaker 2: I'm Caroline Hepke and I'm Stephen Carroll. Coming up today.

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Speaker 2: China's stock rally fizzles as traders question Beijing's decision to

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Speaker 2: hold off on unleashing more stimulus.

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Speaker 1: The surprising consequences of trying to protect American jobs by

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Speaker 1: hitting China with ever larger tariffs.

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Speaker 2: And an uncomfortable reality. Treasury analysis reveals Rachel Reeves's eye

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Speaker 2: catching tax hikes on private equity and non dams could

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Speaker 2: cost more than they raise.

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Speaker 1: Let's start with a round up of our top stories.

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Speaker 2: A large rally in China's stock market has cooled as

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Speaker 2: policymakers opted to hold back on adding more stimulus measures.

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Speaker 2: The benchmark CSI three hundred index surged by almost eleven

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Speaker 2: percent in the opening minutes of Trey as the markets

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Speaker 2: reopened after a week long holiday, but around half of

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Speaker 2: the gains were raised after officials at China's top economic

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Speaker 2: planner failed to outline new stimulus measures. Saxobank's chief macro strastist,

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Speaker 2: John Hardy says Beijing will need to go further if

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Speaker 2: it wants to spur additional growth.

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Speaker 3: When you look at the raft of measures that were

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Speaker 3: introduced coming into this long Golden Week holiday, it's a

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Speaker 3: lot of it was around sort of easing credit, so

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Speaker 3: lower rates, looking at the mortgage market, and sort of

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Speaker 3: promising some kind of support for the stock market, which

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Speaker 3: is why I've seen such a profound reaction in the

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Speaker 3: stock market. But to really get the economy going again

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Speaker 3: when you're in a balance sheet recession, Let's look at

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Speaker 3: the Japanese experience. Let's look at what has happened since

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Speaker 3: the global financial crisis. You need, you need to print money,

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Speaker 3: you need you need fiscal stimulus, not just the credit side,

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Speaker 3: and China is going through a balance sheet recession, so

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Speaker 3: we need this big fiscal announcement. Everyone's going to be

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Speaker 3: asking where it is.

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Speaker 2: John Hardy's comments chime with wider skepticism for analysts over

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Speaker 2: the surge and Chinese shares. Many stratists and hedge foot

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Speaker 2: and fund managers have viewed the recent rebound with wariness

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Speaker 2: and said they were waiting for Beijing to back up

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Speaker 2: its stimulus pledges with real money.

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Speaker 1: The price of oil has fallen as a lack of

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Speaker 1: additional stimulus from China has sparked a risk of mood

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Speaker 1: across markets. Brent crude fell below eighty dollars a bowl

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Speaker 1: in early trading, ending a five day rally that began

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Speaker 1: because of fears that Israel might attack Iran's oil infrastructure. Bloomberg.

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Speaker 1: Stephen Stepcinski says that the issue is still front of

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Speaker 1: mind for traders.

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Speaker 4: Still it can go further if we do see some

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Speaker 4: sort of attack on the infrastructure. Now the level, if

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Speaker 4: we get about one point five to two million barrels

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Speaker 4: a day of Iranian crude off the market and OPEC

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Speaker 4: plus doesn't step in to kind of fill that void,

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Speaker 4: you're seeing probably Brent continuing up to the mid ninety

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Speaker 4: dollars level, according to Goldman.

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Speaker 1: Stephen Stepchinsky, who leads our energy team in Asia. Hurricane

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Speaker 1: Milton is also expected to IMpower all in gas production

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Speaker 1: in the Gulf of Mexico in the coming days. Chevron

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Speaker 1: says it has shut in or capped or production at

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Speaker 1: the Blind Faith platform in the Gulf ahead of the

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Speaker 1: Category five storms arrival.

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Speaker 2: Those oil industry precautions came as Milton has labeled the

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Speaker 2: Atlantic's strongest hurricane this year. The category five storm is

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Speaker 2: heading towards the Florida Peninsula with top winds of one

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Speaker 2: hundred and eighty miles an hour, though it's unclear where

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Speaker 2: it will make landfall. The region is still struggling to

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Speaker 2: recover from storm a lens devastation. Governor Ronda Santis says

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Speaker 2: the state is preparing for Milton's arrival.

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Speaker 5: The executive order that I signed over the weekend also

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Speaker 5: orders all disaster debre management sites and landfills to be

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Speaker 5: open twenty four to seven. In the lead up to

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Speaker 5: Hurricane Milton, we had a lot of debris left from

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Speaker 5: Hurricane Helene on Florida's Gulf Coast. That creates a huge

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Speaker 5: hazard if you have a major hurricane hit in that area.

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Speaker 2: This week, Governor r And De Scientis has declared an

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Speaker 2: emergency in fifty one Florida counties. Milton will be the

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Speaker 2: second major storm to strike the state in less than

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Speaker 2: two weeks, in the fifth hurricane to hit the US

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Speaker 2: this year. Moody's RMS Event Response has estimated privately insured

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Speaker 2: losses could range from eight to fourteen billion dollars, with

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Speaker 2: another two billion dollars being covered by the National Flood

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Speaker 2: Insurance Program.

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Speaker 1: Now Here in the UK, Chancellor Rachel Reeves is reviewing

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Speaker 1: her tax pledges on private equity and the ultra rich.

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Speaker 1: Bloomberg has learned that both of the tax hikes are

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Speaker 1: in question after Treasury analysis suggested that they might cost

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Speaker 1: the UK taxpayer more than they raise. Bloomberg's James Orcock

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Speaker 1: has Morenow.

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Speaker 6: The Chancellor has built her political brand on one message.

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Speaker 7: We were elected because for the first time in almost

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Speaker 7: two decades, people looked at us, looked at me, and

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Speaker 7: decided that Labour could be trust did with their money

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Speaker 7: because we saw what happened two years ago when governments

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Speaker 7: play fast and loose with the public finances.

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Speaker 6: Now Rachel Reads is trapped in a fiscal straight jacket.

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Speaker 6: The state needs money and she has pledged not to

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Speaker 6: touch the four major taxes that raise seventy five percent

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Speaker 6: of government revenue and Treasury analysis it says her ideas

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Speaker 6: might cause the wealthy to flee instead of paying up.

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Speaker 6: Some economists have suggested a tax on investors leaving the

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Speaker 6: UK as a way out. Others changing the fiscal rules.

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Speaker 6: The Chancellor privately receives her second round a pre budget

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Speaker 6: OBR forecast today. Ultimately they will shape her final choices

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Speaker 6: for this make or break budget. In London, James Wilcock

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Speaker 6: Blue Mug.

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Speaker 2: Radio Britain is going to rely on the European Union

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Speaker 2: to top up its energy needs this winter. After closing

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Speaker 2: its last coal power plant. The UK plans to up

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Speaker 2: its energy a third after improving its undersea cables to

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Speaker 2: the continent. The chief means Britain will have more energy capacity,

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Speaker 2: but the green transition makes it more vulnerable to global

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Speaker 2: gas prices.

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Speaker 1: The UK is attempting to fast track tech innovation with

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Speaker 1: a new body, AI, space and healthcare technology will all

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Speaker 1: be affected by the change. Bloomberg's tima Adebayo has.

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Speaker 8: More landing just days before a major government investment summit.

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Speaker 8: Officials are hoping the new Regulatory Innovation Office will recharge

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Speaker 8: the business climate. According to the government, it's been designed

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Speaker 8: to reduce the time entrepreneurs wait to get inventions to

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Speaker 8: market and streamline regulation. The plan will initially focus on healthcare, AI,

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Speaker 8: autonomous vehicles and synthetic biology, with expansion plans in the future,

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Speaker 8: but the changes inspired by Boris Johnson's COVID nineteen task

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Speaker 8: force could come too late for the starmer government already

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Speaker 8: facing declining sentiment among businesses and consumers in London. Tima

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Speaker 8: ade Bio Bloomberg Radio.

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Speaker 1: Now, in a moment, we'll bring you up to date

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Speaker 1: on the big moves that we've seen in Asian stock

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Speaker 1: markets this morning, and also bring you details of our

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Speaker 1: Big Take report looking at the consequences, sometimes surprising, of

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Speaker 1: tariffs on Chinese imports into the US. But another story,

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Speaker 1: also called Aurri this morning, this is about Japan's cultural

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Speaker 1: exports for the small screen. I hear you have no

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Speaker 1: Netflix subscription, Stephen Kel No, I don't know.

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Speaker 2: I feel like this is added to the long list

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Speaker 2: of things that I have not seen that people are

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Speaker 2: going to be referencing in conversation. But growd RedR opinion

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Speaker 2: columnists has been writing about Tokyo Swindlers, which is one

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Speaker 2: of the streaming services most watched shows internationally. It tells

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Speaker 2: the stories of fraudster's heist and is based partly on

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Speaker 2: actual events. Now Groad argues that it's a sign of

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Speaker 2: how successful Japanese TV exports could be. Using depictions of

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Speaker 2: modern Japanese society. So perhaps breaking some of the stereotypes

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Speaker 2: of things that you know are usually exported when it

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Speaker 2: comes to Japanese TV. And this is something that growd

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Speaker 2: says could be helpful to the government's goal of wanting

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Speaker 2: to quadruple the total value of its cultural exports in

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Speaker 2: the coming year. It's part of a revamped cool Japan strategy.

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Speaker 1: That's good.

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Speaker 2: So this isthing, this Groad says, is a good example

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Speaker 2: of a concept that could work.

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Speaker 1: Yeah, and look, everyone wants a slice of that cultural

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Speaker 1: export pie, don't they. I mean I Beatles often looked up,

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Speaker 1: Actually what the UK is exporting RuPaul's Drag Race Frozen

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Speaker 1: Planet too. Apparently last year the UK also had a

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Speaker 1: record breaking year in terms of the amount of money

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Speaker 1: that it brought in for TV shows. But yes, this

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Speaker 1: is the new platform, isn't it. Everybody wants their culture

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Speaker 1: to dominate on all of these global streaming services.

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Speaker 2: Yeah, a very interesting one to watch as well. You

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Speaker 2: can read that piece on Bloomberg's Bloomberg dot com and

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Speaker 2: on the terminal.

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Speaker 9: Well.

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Speaker 2: Traders are back to work after the Golden Week holiday

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Speaker 2: in Asia, but the rally in Chinese stocks in the

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Speaker 2: first ninety minutes of the day has faded. Joining us

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Speaker 2: now is Bloomberg Asia Equity Reporter. When you two for

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Speaker 2: more any great to have you with us, talk us

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Speaker 2: through what happened. Then it was a moment of excitement

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Speaker 2: that faded quickly.

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Speaker 10: The market expectation into this rally just has been so high.

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Speaker 10: Like you mentioned, the ro market was closed for a

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Speaker 10: whole week, and during that week, the Hong Kong stocks

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Speaker 10: continued their rally. So I think just kind of taking

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Speaker 10: you back a little bit. The excitement has been building

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Speaker 10: up in the past three weeks from the pboc's joint

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Speaker 10: briefing to the Politbureau, and people are just expecting more

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Speaker 10: policies to come from the government. And the NDRC meeting

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Speaker 10: that we just had a few hours back seems to

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Speaker 10: not meet a lot of these sky high expectations from traders,

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Speaker 10: and that's why we're seeing Hong Kong rally losing some momentum,

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Speaker 10: and also the China stocks pairing back a little and

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Speaker 10: a couple other things are happening here, some profit taking

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Speaker 10: because you see you saw the Hong Kong market having

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Speaker 10: rallied about thirty to forty percent for the past couple

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Speaker 10: of weeks into today, and also we're seeing that rotation

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Speaker 10: from the h shares to on shore Asias because people

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Speaker 10: couldn't really trade ashares until today after the holiday.

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Speaker 1: Yeah, absolutely so, perhaps a bit of a rethink then

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Speaker 1: after Goldenweight, and it also does seem globally though that

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Speaker 1: stretches and fund managers are still quite skeptical.

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Speaker 10: Yes, absolutely so. When you just look at the technical levels,

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Speaker 10: we're seeing some overheat and also for the past two weeks,

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Speaker 10: the RSI is showing that we're in the overbought range

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Speaker 10: no more. The other day caution that this might look

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Speaker 10: like another twenty fifteen bubble burst and things might just

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Speaker 10: be fading away after a strong rally if the policies

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Speaker 10: are not able to support So that would be something

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Speaker 10: that people are watching, monitoring to see if we have

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Speaker 10: data to show that the consumption recovery is really on track,

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Speaker 10: and that would be something very key to see what

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Speaker 10: the numbers come out of this past week of Golden

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Speaker 10: Week holiday, and also if we see more specific policies

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Speaker 10: to follow through and how big the policies are and

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Speaker 10: if the government is actually able to implement those. So

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Speaker 10: a lot of global funds are still waiting for that

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Speaker 10: to happen before they add more to their China exposures.

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Speaker 2: Okay, so lots of question marks over that as well.

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Speaker 2: What about the impact on other markets from what's happening

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Speaker 2: on Chinese stocks.

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Speaker 10: Right So we're seeing that spill over effects to other

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Speaker 10: markets because lots of underweight and global funds right now.

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Speaker 10: So in order for them to beat benchmark in the

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Speaker 10: next two months, we're very close to your end, they

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Speaker 10: have to add more to their Chinese exposure, and that

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Speaker 10: is at the cost of some other regions. And we're

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Speaker 10: seeing money being rotating out of some other Asian countries,

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Speaker 10: including India that has very high value right now, and

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Speaker 10: also Japan. So it's a reversal trade of what we

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Speaker 10: saw earlier in the year of selling China and buying Japan.

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Speaker 10: So we're seeing that float to revers and that was

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Speaker 10: mentioned by JP Morgan Morgan Stanley and also black Rock

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Speaker 10: that as they upgrade their weddings on China stocks, they're

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Speaker 10: actually pairing back expectations for their target levels for Japanese stocks.

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Speaker 6: So these are.

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Speaker 10: Some of the risks that global investors are flagging.

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Speaker 1: Yeah, okay, Wennie, thank you so much for being with

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Speaker 1: us this morning, Bloomberg's Asia Equities reporter Winnie.

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Speaker 2: To now to today's Bloomberg Big Take on the unexpected

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Speaker 2: consequences of tariffs. Our reporters have been to rural America

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Speaker 2: to examine what happened in Pittsview, Alabama, on the US

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Speaker 2: and post pienitive tariffs on Chinese manufacturers, the surprising consequences

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Speaker 2: of trying to protect American jobs. We've got our Asia

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Speaker 2: Government and Economy correspondent Rebecca john Wilkins with us for

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Speaker 2: more on this story. Take us through the tail told

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Speaker 2: in this piece, then, Rebecca, what happened and why the

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Speaker 2: tariff battle rose.

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Speaker 9: Well, it's really a story about two towns in America

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Speaker 9: and two big companies that produce manufacture shipping container trailers.

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Speaker 9: One is a US domestic firm based in Alabama, and

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Speaker 9: the other is a firm that is owned originally by

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Speaker 9: a Chinese state company based in Virginia. And essentially the

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Speaker 9: story is about how both of these companies took advantage

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Speaker 9: and then with somewhat also subjected to this growing momentum

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Speaker 9: to essentially create resilient supply chains that rely less on China.

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Speaker 9: So we saw the emergence from the US company HITS

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Speaker 9: Enterprises in Pits View, Alabama, essentially, alongside other US companies,

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Speaker 9: initiate a punitive tariffs or seeking punitive tariffs on Chinese

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Speaker 9: manufacturers that then was successfully imposed. But as the story

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Speaker 9: from Sean and Bill my colleagues in the US show,

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Speaker 9: both companies then end up being subject to they sort

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Speaker 9: of tips for tap probes about the nature of both

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Speaker 9: of their supply chains and whether they can really fully

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Speaker 9: divest themselves from any reliance on Chinese components.

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Speaker 1: Yeah, so the US manufacturers initially got what they wanted,

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Speaker 1: but in the end, nobody really was happy that the

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Speaker 1: businesses buying the products that they were making weren't happy

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Speaker 1: because prices went up. It really did show this kind

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Speaker 1: of very messy fallout, didn't it.

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Speaker 9: So On the one hand, PITS found that they were

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Speaker 9: using frames from Vietnamese manufacturers. Now customs eventually did rule

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Speaker 9: that actually those frames contained enough Chinese components to be

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Speaker 9: subject to tariffs, and they lost millions in revenue having

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Speaker 9: to deal with those fines as a consequence. And conversely, PITS,

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Speaker 9: among others a Qcie, which is a firm you know,

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Speaker 9: originally owned by Chinese state company of using a plant

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Speaker 9: in Thailand that was sourcing frames from Chinese components. Now

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Speaker 9: CIE was eventually found not guilty of tariff evasion for

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Speaker 9: that probe, but it did cost them. It took a

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Speaker 9: long time for customs to verify and go and check

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Speaker 9: the factories and ultimately in both cases a real a

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Speaker 9: hit to the bottom line and of course jobs and employment.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 2: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 3: Mm hmm.