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Speaker 1: Good morning. I'm Brian Curtis.

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Speaker 2: And I'm Doug Krisner. Here are the stories we're following today.

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Speaker 1: The union representing Ford factory workers in Canada has secured

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Speaker 1: double digit wage increases and improved pensions in a labor

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Speaker 1: agreement with the automaker last Friday. In the US, the

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Speaker 1: United Auto Workers got key concessions from Ford and said

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Speaker 1: that it would spare the company more pain at US factories.

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Speaker 1: In the meantime, the UAW is expanding its strike against

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Speaker 1: rivals GM and Stilantis. Transportation Secretary Pete Bootajidge was optimistic.

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Speaker 1: He said both the UAW and the Big three automakers

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Speaker 1: can both emerge as winners in the dispute. He is

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Speaker 1: Bootajudge speaking on ABC's This Week.

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Speaker 3: If a whole new way of making cars is going

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Speaker 3: to be the way of the world and the way

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Speaker 3: of the automotive sector, then workers ought to be able

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Speaker 3: to benefit from that and thrive on that, just like

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Speaker 3: the last generations of workers did. And there is a

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Speaker 3: win win future to be.

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Speaker 1: Had, Secretary Bootages there on ABC's This Week, heard right

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Speaker 1: here on Bloomberg Radio. The union maintains that companies can

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Speaker 1: afford to meet demands for raises of as much as

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Speaker 1: forty percent. President Biden will be traveling to Michigan on

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Speaker 1: Tuesday to support the striking UAW members.

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Speaker 2: In Hollywood, the big studios and screenwriters are close to

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Speaker 2: resolving a dispute over a contract renewal. Now, these two

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Speaker 2: sides met again today after failing to reach any type

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Speaker 2: of deal on Saturday. We are told the studios have

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Speaker 2: agreed to certain staffing levels of writers for certain TV shows.

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Speaker 2: The figure will increase the number of episodes in each season.

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Speaker 4: Now.

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Speaker 2: At the same time, the two sides have created a

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Speaker 2: structure for writers to receive bonuses for popular shows on

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Speaker 2: streaming services. However, still no agreement on the use of

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Speaker 2: artificial intelligence in screenplay writing. These two sides have meant

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Speaker 2: for five consecutive days in hope of resolving a strike

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Speaker 2: that began at the beginning of May.

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Speaker 1: Right well, the EU's top trade negotiators says the European

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Speaker 1: Union has a very imbalanced trade relationship with China. However,

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Speaker 1: the European Commissioner for Trade, Valdis Dombrovskis, says the Block

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Speaker 1: is not looking to disengage with China. He speaks here

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Speaker 1: from the BUND summit in Shanghai.

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Speaker 5: A broadening access to China's market for foreign companies and

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Speaker 5: maintaining a stable business environment is necessary to ensure fair

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Speaker 5: and mutually beneficing trade relationships. Our long term interest is

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Speaker 5: to embrace reforms and stay open to international cooperation. Here

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Speaker 5: we see China as an important partner.

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Speaker 1: European Commissioner for Trade Valdis dombrovskis He's currently in China

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Speaker 1: for a three day trip and expected is expected to

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Speaker 1: meet with Chinese Vice Premier Holy Fun in Beijing later today.

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Speaker 1: This as the EU says it's trying to strike a

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Speaker 1: new balance in its strategy toward China, seeking to de

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Speaker 1: risk and reduce its dependency on the Asian net.

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Speaker 2: We go to Apple next. The company will reportedly scale

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Speaker 2: up its production in India by more than fivefold over

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Speaker 2: the next five years. The story from Bloomberg's Joan Wong

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Speaker 2: in Hong Kong.

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Speaker 6: Apple surpassed seven billion dollars of production in a country

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Speaker 6: in the last financial year. It's now aiming for forty billion.

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Speaker 6: According to the Press Trust of India, citing government officials.

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Speaker 6: The reports that Apple also has plans to start making

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Speaker 6: AirPods in India next year. That's after shifting its iPhone

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Speaker 6: fifteen production to the country. Meanwhile, India is also looking

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Speaker 6: to expand its overall electronics industry to three hundred billion

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Speaker 6: dollars by twenty twenty six. That's on the back of

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Speaker 6: increased smartphone production and a global push to the risk

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Speaker 6: China supply chains in Hong Kong and joint Wang Bloomberg Radio.

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Speaker 1: Meantime, Chinese developer Evergrand says it is unable to meet

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Speaker 1: qualifications to issue new notes. Bloomberg's Bonni Ao has the

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Speaker 1: story from Hong Kong.

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Speaker 7: The qualifications are under a proposed restructuring of its offshore debts.

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Speaker 7: Evergrand may the comment in a filing to the Hong

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Speaker 7: Kong Stock Exchange. The news comes after Everground canceled key

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Speaker 7: creditor meetings set for today and tomorrow. It said sales

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Speaker 7: have not been as expected and that it must reassess

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Speaker 7: its proposed restructuring. Evergrond is under pressure to finalize a

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Speaker 7: blueprint for its offshore debt restructuring. It is grappling with

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Speaker 7: an even bigger pile of total liabilities amounting to three

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Speaker 7: hundred and twenty seven billion dollars. It also faces a

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Speaker 7: possible winding up petition at a Hong Kong court hearing

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Speaker 7: on October thirtieth that could potentially force Everground into liquidation

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Speaker 7: in Hong Kong. I'm Bonnie Ol Bloomberg Radio.

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Speaker 1: So we start off the week with an uneven outlook,

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Speaker 1: a little bit more positive in the Hong Kong and

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Speaker 1: China markets despite a couple of these stories that we

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Speaker 1: mentioned a little bit weaker. On Wall Street Doug, we

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Speaker 1: had the former Treasury Secretary Larry Summers telling Bloomberg that

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Speaker 1: the FED is too optimistic. I always suggest that the

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Speaker 1: market is not particularly optimistic now after hearing the Fed's message,

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Speaker 1: and it's getting reflect in an area that might make

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Speaker 1: some investors feel uncomfortable, the industrial sector. Small caps trading

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Speaker 1: down pretty sharply here over the past six weeks. They

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Speaker 1: rustle twenty doin eleven percent, the industrials off six percent.

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Speaker 1: You tend to see that when the economy is in

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Speaker 1: or heading toward recession.

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Speaker 2: And this mantra of higher for longer is also putting

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Speaker 2: a lot of pressure on consumer discretionary stocks. Brian. Two

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Speaker 2: of the largest members of the S and P consumer

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Speaker 2: discretionary group, Amazon and Tesla and together they are responsible

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Speaker 2: for nearly two thirds of the decline that we saw

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Speaker 2: last week in the S and P five hundred consumer

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Speaker 2: discretionary group negative six point four percent. So maybe what

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Speaker 2: we're seeing is a little bit of the enthusiasm around

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Speaker 2: artificial intelligence, if that was even connected to this story,

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Speaker 2: that seems to be fading and economic reality seems to

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Speaker 2: be setting in.

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Speaker 1: Yeah, you see the Downjohns Industrial Average only up two

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Speaker 1: percent year to day the S and P five hundred

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Speaker 1: twelve percent. That would still be considered a good year,

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Speaker 1: but it's certainly not the over exuberance that we were

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Speaker 1: feeling in the first half of the years. So what

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Speaker 1: happens from now to the end of the year. Well,

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Speaker 1: that's why we have great guests on the program to

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Speaker 1: get to the bottom of it. Now it's time for

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Speaker 1: Global News. A new presidential performance poll released today paints

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Speaker 1: a very dire approval picture for Joe Biden. Let's get

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Speaker 1: to Ed Baxter in San Francisco. He's covering that and

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Speaker 1: the rest of the Global News Ed.

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Speaker 8: Yeah, that's right, Brian, And it's regarding the economy. Overall,

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Speaker 8: people polled or blaming President Biden for the country's economic

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Speaker 8: ills ABC Washington Post poll shows thirty percent of those

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Speaker 8: approve of the President's performance on the economy, sixty four

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Speaker 8: percent disapprove Bloomberg's market Acatz says, an interesting perception to economy.

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Speaker 9: There's kind of a disconnect between the progress the Fed

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Speaker 9: and in particular, feels it's making on core inflation, moderating

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Speaker 9: the price is for goods that it follows, and what

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Speaker 9: consumers are experiencing on the ground. They're still seeing the

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Speaker 9: price for eggs and gasoline and utilities in particular going up,

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Speaker 9: and they're just not seeing the moderation and the data

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Speaker 9: in their daily lives.

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Speaker 8: Yeah, Mark is in Michigan where the president will be

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Speaker 8: on Tuesday, and Transportation Secretary beat Buddhagic on ABC has

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Speaker 8: heard on Bloomberg, says the administration, well, its economy record

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Speaker 8: is good.

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Speaker 3: More than thirteen million jobs created, that's more than any

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Speaker 3: presidential term in American history. And yes, it takes a

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Speaker 3: while for people to feel the full benefits of those results,

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Speaker 3: just like it's going to take a while to build

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Speaker 3: all of the infrastructure that we're now underway on.

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Speaker 8: And another poll released by NBC shows Donald Trump's lead

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Speaker 8: among Republicans now is at sixty eight percent. Immigration at

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Speaker 8: the US southern border getting a lot of attention today

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Speaker 8: and border patrol James O. Jason Owens on ABC has

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Speaker 8: heard here on Bloomberg says law enforcements is an almost

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Speaker 8: impossible job right now.

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Speaker 4: We see a lot of folks say just push people back,

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Speaker 4: just don't let them cross, or send them back immediately.

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Speaker 4: The US porttital is a law enforcement agency. We enforce

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Speaker 4: the laws that are on the books. We don't have

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Speaker 4: the right, nor should we of denying somebody due process

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Speaker 4: once they are on American soil.

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Speaker 8: Yeah. Meanwhile, New York Mayor Eric Adams has reiterated over

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Speaker 8: the weekend that the migration problem could ruin New York City.

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Speaker 8: China's PLA is urging Chinese military personnel to be careful

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Speaker 8: about with whom they associate, saying socializing with the wrong

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Speaker 8: people is a key reason some leaders have been removed

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Speaker 8: from their positions, saying cadres should purify their social circle.

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Speaker 8: Tropical stormophilia and is drenching the central upper portions of

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Speaker 8: the US East coast. In Bellhaven, North Carolina, Mayor Adam

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Speaker 8: O'Neil says major job is in front of them.

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Speaker 9: I think we've.

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Speaker 8: Probably got a four or five foot surge at least,

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Speaker 8: and we didn't expect that much. Yeah, and New Jersey,

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Speaker 8: New York, New England brace for some heavy rain and wind.

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Speaker 8: And Usher Usher has posted now that he is going

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Speaker 8: to be the Super Bowl halftime entertainment. So Yeah. Global

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Speaker 8: News powered by more than twenty seven hundred journalists and

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Speaker 8: analysts in over one hundred and twenty countries. In't San Francisco,

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Speaker 8: I'm Ed Baxter, and this is Bloomberg.

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Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis in Hong Kong,

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Speaker 1: along with Vonnie Quinn in New York, and Carol Schleife

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Speaker 1: joins this CIO of BEMO Family Office. Carol, we've just

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Speaker 1: been talking about some troubling signs in the economy and

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Speaker 1: it probably has more investors really balancing out the risks

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Speaker 1: inflation risks on the one side and recession risks on

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Speaker 1: the other.

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Speaker 2: What is your base case?

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Speaker 10: I think our base case for a very long time

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Speaker 10: has been that the FED was going to be able

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Speaker 10: to pull off us off landing, and then when the

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Speaker 10: rest of the world, because we've been there since last year,

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Speaker 10: and when the rest of the world sort of jumped

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Speaker 10: on that case. We started pointing out, as you alluded to,

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Speaker 10: that the risks are actually increasing here, at least in

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Speaker 10: the near term. We think there's a pretty evenly balanced

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Speaker 10: set of factors in the economy, both headwines and tail ones.

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Speaker 10: But in the very short term, especially this next week,

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Speaker 10: there's a lot leaning on the riskier side of the

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Speaker 10: balance sheet because you've got the dual strikes that are

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Speaker 10: going on. You've got the potential government shut down where

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Speaker 10: a week and a half or two before we get

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Speaker 10: to start leaning into earnings and the news that they'll

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Speaker 10: give us, and the whole concept of a government shutdown,

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Speaker 10: there's just a lot for investors to fret about in

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Speaker 10: the short run. And if we do shut the government down,

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Speaker 10: we don't get the data that the FED needs to

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Speaker 10: be data dependent, and that makes investors nervous because we

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Speaker 10: all know how much investors hate to vacuum.

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Speaker 11: Well, that's true, hadn't thought of that. Actually is November first, sorry,

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Speaker 11: more likely December thirteenth for another rate hike, assuming as

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Speaker 11: you do that we are going to get one.

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Speaker 10: We don't necessarily think that we'll get another rate hike.

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Speaker 10: We don't think the FED should need to. And you've

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Speaker 10: got enough softening in the economy. You've got enough worry

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Speaker 10: out there. And especially it'll be really important to see

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Speaker 10: how the consumer numbers come in. We also have two

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Speaker 10: big important retailers and are consumer companies in NIK and

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Speaker 10: Costco reporting this week. But you're going to want to

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Speaker 10: see how the holiday selling season goes. When you have

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Speaker 10: the resumption of student loans coming in the next months,

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Speaker 10: well actually in the next week, starting in October, that's

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Speaker 10: going to have a moderating impact on the economy. And

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Speaker 10: so hopefully the FED has the ability to be data

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Speaker 10: dependent and just watched. And I think what got the

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Speaker 10: markets really concerned last week is finally they heard not

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Speaker 10: just the higher for longer, but the higher for potentially

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Speaker 10: a lot longer.

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Speaker 1: Yeah, we understand that they're data dependent, but it depends

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Speaker 1: on the data. I've seen some calls here of late

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Speaker 1: to focus, to go back to focusing on headline, not

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Speaker 1: just core, because we'll probably get some good readings on

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Speaker 1: core this week, but the headline lifted by energy prices

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Speaker 1: is affecting a lot of people. So one do you

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Speaker 1: think that they will start that readjustment and Secondly, I'm

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Speaker 1: really curious about whether or not the FED would feel

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Speaker 1: confident bringing rates down if the economy stays strong, but

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Speaker 1: if inflation does drop.

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Speaker 10: Address in the second point first. It's an interesting conundrum.

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Speaker 10: I think a piece of it. Honestly, the Fed's also

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Speaker 10: trying to balance off not letting, not wanting to let

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Speaker 10: markets get too exuberant in terms of confident that.

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Speaker 5: Oh.

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Speaker 10: You know, the markets have been fighting the Fed for

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Speaker 10: the last twelve to eighteen months. Every time the Fed

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Speaker 10: has said we're going to keep rates higher for longer,

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Speaker 10: the market has started discounting and pricing in cuts sooner.

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Speaker 10: And I think that was one of the things that

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Speaker 10: was surprising last week was you know, the FED governors

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Speaker 10: all and presidents all saying no cuts are pushed out

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Speaker 10: a year or so, so being comfortable cutting. I'm not

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Speaker 10: sure the FED is going to want to cut as

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Speaker 10: much as just sit tight for a long time. But

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Speaker 10: as far as the headline, you know, the important thing

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Speaker 10: is is consumers and consumer attitude and voter attitudes are

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Speaker 10: very much attuned to the gas at their local station.

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Speaker 10: You're driving by it every day, you're seeing it. It's

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Speaker 10: upfront and center. It's I've never quite understood why people

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Speaker 10: took out food and energy because we all eat and

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Speaker 10: we all heat, and it's just such an impact at

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Speaker 10: the margin to consumers, and so you're putting all of

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Speaker 10: this additional weight. But the other thing is is the

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Speaker 10: longer that oil prices stay high, the more likelihood they

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Speaker 10: do have to creep back into the core prices because

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Speaker 10: they are going to impact the production cost of a

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Speaker 10: lot of things.

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Speaker 11: And so, Carl, we're out of time. But you basically

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Speaker 11: said the next earning season is not going to be

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Speaker 11: pretty for all of the reasons you enumerted, right.

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Speaker 10: Well, I actually think we'll get a lot of good information.

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Speaker 10: I think will be I think it'll be supportive to

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Speaker 10: the markets because I think we'll see a lot more

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Speaker 10: strength coming out of these core companies because businesses have

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Speaker 10: proven very resilient. They've rearranged their workforces, they rearranged their costs,

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Speaker 10: they've really done a great job at handling this post pandemic,

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Speaker 10: well the pandemic and the post pandemic environment. So hopefully

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Speaker 10: we get more support for the markets out of the areas.

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