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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: Karen. Stocks are set for their fifth weekly gain, with

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Speaker 3: rate cut bets giving traders a lot of hope heading

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Speaker 3: into twenty twenty four. Equities are pushing for all time

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Speaker 3: highs after J. Powell indicated this week the Fed could

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Speaker 3: ease monetary policy soon. The S and P is advancing

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Speaker 3: toward its seventh consecutive weekly advance. Oil is looking at

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Speaker 3: its first weekly gain in almost two months. Neil Dutta

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Speaker 3: of Renaissance Macro Research says the Fed is following a

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Speaker 3: framework that will allow the US economy to grow.

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Speaker 4: The die has been cast for this for a little

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Speaker 4: bit of time now, I mean, and that's because inflation

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Speaker 4: is slowing more rapidly than they expect. I mean, I

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Speaker 4: think the Fed is following essentially a rules based framework

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Speaker 4: where they're taking changes in inflation and the unemployment rate

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Speaker 4: and translating that into expectations around the federal funds rate.

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Speaker 4: And that's basically what's happening.

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Speaker 3: In fact, last month, Neil detis that he expected the

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Speaker 3: Fed to cut rates by March, so he says he

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Speaker 3: is not surprised by the.

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Speaker 2: Pivot, but Nathan Dudda's expectations were not shared by many

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Speaker 2: on Wall streets, such as Peter Sheer, head of Macro's

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Speaker 2: strategy at Academy Securities.

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Speaker 5: Really took me by surprise of how comfortable the power

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Speaker 5: was with cutting rates. So when I was at four twenty,

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Speaker 5: I was getting nervous about risk assets because I thought

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Speaker 5: the only way you have to four percent, given what

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Speaker 5: the FED was saying, is for economic conditions to turn

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Speaker 5: much worse. They didn't turn much worse, and yet we're

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Speaker 5: at four percent because of the FED. So I think

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Speaker 5: we have some room for risk to continue to rally,

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Speaker 5: and it's been a great run.

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Speaker 2: Peter Sheer with Academy Securities also tells Bloomberg, despite hawkish

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Speaker 2: stances from the European Central Bank and Bank of England,

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Speaker 2: he expects more growth outside the US. He specifically focused

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Speaker 2: on shine Up. He anticipates further cooperation with the US

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Speaker 2: and increased stimulus measures, and.

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Speaker 3: That's the signal that Treasury Secretary Janet Yellen is sending Karen.

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Speaker 3: She says she's going to visit China again next year

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Speaker 3: with a goal of deepening ties and improving communication with

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Speaker 3: the world's second biggest economy. Speaking of the US China

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Speaker 3: Business Council in Washington, Secretary Yellen said that the discussions

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Speaker 3: will focus on difficult topics, but she expects cooperation from

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Speaker 3: both sides.

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Speaker 6: America's fundamental economic strength means that we have nothing to

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Speaker 6: fear from healthy economic competition with China or any other country.

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Speaker 6: The United States does not seek to decouple from China.

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Speaker 6: This would be damaging to both our economies.

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Speaker 3: Still, Treasury Secretary Yellen says the US will pursue export

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Speaker 3: controls and investment restrictions that have angered China. She did

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Speaker 3: stress the need to engage to prevent what she calls

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Speaker 3: a wide range of diplomatic and financial crises.

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Speaker 2: Well as for the latest moves in China, Nathan, the

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Speaker 2: People's Bank of China pumped a record amount of cash

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Speaker 2: into the economy to try to prop up as struggling

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Speaker 2: property market and boost de mad It marked a bullish

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Speaker 2: signal to investors who have been disappointed in china recent

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Speaker 2: piecemeal approaches to stimulus. Meanwhile, stocks across Asia traded higher

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Speaker 2: on optimism over a FED pivot.

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Speaker 3: Now let's turn to a major move in US banking

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Speaker 3: Karen Bloomberg News has learned City Group is shutting down

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Speaker 3: its municipal bond business. It is one of the most

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Speaker 3: dramatic moves yet in CEO Jane Fraser's ongoing restructuring as

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Speaker 3: she looks to squeeze better returns out of the Wall

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Speaker 3: Street Giant. Bloomberg Finance team leader Sally Bakewell says although

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Speaker 3: the move was expected, it is still a shock.

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Speaker 7: City was an absolute powerhouse in this four trillion market

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Speaker 7: for US state and for local debt. It helped on

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Speaker 7: deals for some very prominent buildings in landmarks, such as

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Speaker 7: the World Trade Center rebuilding the Port Authority of New

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Speaker 7: York and New Jersey. It was also one of the

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Speaker 7: lead underwriters Bloomberg.

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Speaker 3: Sally Bakewell says City will complete the wine down by

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Speaker 3: the end of the first quarter. Source to say the

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Speaker 3: moves expected to effect about one hundred employees and some.

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Speaker 2: More news on the labor front this morning, Nathan General

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Speaker 2: Motors cutting more than one thousand, three hundred hourly job.

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Speaker 2: Is it a pair of plants in Michigan. It comes

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Speaker 2: less than a month after GMS he unionized workforce. It

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Speaker 2: proved a new labor contract the counts will take effect January.

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Speaker 3: First s turned to politics Now Karen and messaging out

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Speaker 3: of Washington. President Biden continues to urge Israel to be

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Speaker 3: more cautious in its war with Hamas. Bloomberg z ed

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Speaker 3: Baxter has the details.

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Speaker 8: A bit of a change from the message he's delivered

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Speaker 8: for the last week. NIC spokesman John Kirby says keywords

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Speaker 8: are lower intensity.

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Speaker 9: Possible transitioning from what we would call high intensity operations,

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Speaker 9: which is what we're seeing them do now, to lower

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Speaker 9: intensity operations sometime, you know, in the near future.

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Speaker 8: Meaning more surgical operations aimed at a Moss leaders rather

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Speaker 8: than the current force. Biden says the focus should be

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Speaker 8: getting Hamas, but also saving civilian lives. I'm at Baxter

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Speaker 8: Bloomberg Radio, all right.

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Speaker 2: And thanks. Meanwhile, in Europe, Ukraine has taken a win

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Speaker 2: and a loss at the EU leader summit in Brussels.

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Speaker 2: The leaders have agreed to open membership talks with Ukraine,

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Speaker 2: but they couldn't not agree on a new financial aid package.

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Speaker 2: That debate will extend into early next year. Hungary's Victor

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Speaker 2: Orbond planned the are blocked the planned fifty billion euro

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Speaker 2: package despite support from the twenty six other EU leaders.

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Speaker 3: The amount of newly committed Western eight for Ukraine has

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Speaker 3: fallen to its lowest level since Russia's invasion almost two

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Speaker 3: years ago. That has Russian President Vladimir Putin expressing renewed

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Speaker 3: confidence in his war aims at his annual end of

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Speaker 3: year news conference.

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Speaker 10: Coming back to the ghouls, they remain unchanged, I will

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Speaker 10: remind you it means the Nazification, the neutralization all of

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Speaker 10: Ukraine and its neutral status.

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Speaker 3: This was President Putin's first end of your news conference

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Speaker 3: since he ordered the Ukraine invasion in February of last year.

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Speaker 11: S and P.

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Speaker 3: Futures are higher by three tens of one percent, up

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Speaker 3: thirteen points. Now futures up one hundred and twenty five points,

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Speaker 3: that's again of a third of one percent, and Nasdaq

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Speaker 3: futures are about a third of one percent higher as well,

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Speaker 3: up fifty three points. Global headlines straight ahead, plus a

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Speaker 3: check of sports. This is Bloomberg.

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Speaker 2: Sor Ry Nathan.

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Speaker 1: Thanks.

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Speaker 2: It's time now for a look at some of the

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Speaker 2: other stories making news around the world, and for that

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Speaker 2: we're joined by Bloomberg's John Tucker. John, good morning, and good.

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Speaker 12: Morning, Karen.

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Speaker 13: Google Will stop telling police witch users we're near a crime.

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Speaker 13: That story in this report this morning from Bloomberg's Amy Morris, Google.

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Speaker 9: Is changing its maps tools so the company no longer

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Speaker 9: has access to users individual location histories. It cuts off

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Speaker 9: its ability to respond to law enforcement warrants that ask

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Speaker 9: for data on everyone who is in the vicinity of

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Speaker 9: a crime. The change comes three months after a Bloomberg

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Speaker 9: BusinessWeek investigation that found police across the US are increasingly

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Speaker 9: using warrants to obtain location and search data from Google,

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Speaker 9: even for nonviolent cases and even for people who had

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Speaker 9: nothing to do with the crime. Google will roll out

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Speaker 9: the changes gradually through the next year on its own

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Speaker 9: Android and Apple's iOS mobile operating systems. Amy Morris Bloomberg Radio.

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Speaker 13: President Biden trying to rally support among seniors, highlighting new

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Speaker 13: government caps and prescription drug prices, saying the effort will

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Speaker 13: help crack down on price gouging by the pharmaceutical companies.

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Speaker 14: Year before we pass the cization, drug maker's jacked up

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Speaker 14: prices nearly four times faster and inflation went on and

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Speaker 14: they were already too high. Let's call this for what

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Speaker 14: it is is, simply, it's a rip off.

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Speaker 13: Under legislation passed by Democrats, pharmaceutical companies are required to

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Speaker 13: pay rebates to Medicare when they increase certain drug prices

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Speaker 13: passed inflation rates into Bloomberg News Morning consult Paul released Thursday,

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Speaker 13: Biden trailed Donald Trump across a number of swing states.

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Speaker 13: US defense officials say a cargo ship caught fire in

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Speaker 13: the Red Sea this morning into being hit by a

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Speaker 13: projectile launched by rebel controlled Yimmen. The attack and eyed

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Speaker 13: Lightberian flag vessel further escalates a campaign by Yemmens, Iran

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Speaker 13: backed Hooti rebels who claim responsibility for a series of

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Speaker 13: missile assaults in recent days. A lawyer for two former

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Speaker 13: election officials told members of a jury and federal court

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Speaker 13: Thursday they should send a message in considering how much

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Speaker 13: former Mayor Rudy Juliani should have to pay for spreading

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Speaker 13: diffamatory lies about them as part of his effort three

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Speaker 13: years ago to keep President Trump in office. At the

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Speaker 13: last minute decision, Juliani decided not to testify as planned

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Speaker 13: on Thursday. Global News twenty four hours a day and

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Speaker 13: whenever you want it with Bloomberg News. Now, I'm John Tucker,

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Speaker 13: and this is Bloomberg.

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Speaker 2: Karen, all right, John, thank you well. We do bring

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Speaker 2: you news throughout the day right here on Bloomberg Radio.

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Speaker 2: But now you can get the latest news on demand,

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Speaker 2: and that means you can get it whenever you want it.

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Speaker 2: Subscribe to Bloomberg News Now and you can get the

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Speaker 2: latest headlines right at the click of a button. Get

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Speaker 2: informed on your schedule. You can listen and subscribe to

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Speaker 2: Bloomberg News Now on the Bloomberg Business app, Bloomberg dot

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Speaker 2: com plus Apples, Spotify, and anywhere else you get your podcasts.

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Speaker 2: Time now for the Bloomberg Scores Update with John Stashauer

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Speaker 2: John Karon.

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Speaker 15: Blowout in the Desert. Just a few days after the

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Speaker 15: Raiders had a home game and lost to the Vikings

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Speaker 15: three did nothing. They had another home game and beat

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Speaker 15: the Chargers sixty three to twenty one. This game was

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Speaker 15: twenty one nothing in the first quarter. It was forty

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Speaker 15: two to nothing at halftime. That's a near NFL record.

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Speaker 15: It was sixty three to seven midway through the fourth quarter.

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Speaker 15: The Raiders rookie quarterback Adan O'Connell through four touchdown passes.

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Speaker 15: The Chargers lost four fumbles. It's the most points the

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Speaker 15: Raiders have ever scored in the game, and it's the

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Speaker 15: most points the Chargers have ever allowed. Celtics twelve and

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Speaker 15: I went home. They've be in Cleveland, won sixteen to

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Speaker 15: one oh seven. Warriors now just ten and fourteen, playing

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Speaker 15: without the suspended Draymond Green. They lost to the Clippers

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Speaker 15: in LA. Won twenty one one thirteen. Big NBA story

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Speaker 15: so far this year the Minnesota Timberwolves now eighteen and

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Speaker 15: five A one nineteen one oh one win in Dallas.

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Speaker 15: Luca Dompson scored thirty nine and the loss. In Sacramento's

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Speaker 15: win over Oklahoma City the Aaron Fox points for the

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Speaker 15: King Shay Gilgess Alexander scored forty three the loss the Thunder.

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Speaker 15: George McGinnis, the Hall of Famer who played for the

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Speaker 15: Pacers and Sixers, has passed away at the age of

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Speaker 15: seventy three. Capital Is lost in Philadelphia four to three

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Speaker 15: in a shootout in LA. On the day that the

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Speaker 15: Dodgers introduced Joe Otani, they added another player, pitcher Tyler Glass,

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Speaker 15: now comes from Tampa Bay with outfielder and Manuel Margo.

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Speaker 15: The Rays get a couple of prospects in return. Remember,

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Speaker 15: Otani is not going to pitch. He's only going to

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Speaker 15: hit in twenty twenty four. Don Statieward, Bloomberg's courts.

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Speaker 2: Karen, all right, John, thank you. While we are watching stocks,

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Speaker 2: they're set for a fifth weekly game this on the

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Speaker 2: Fed pivot, and we want to discuss all of this.

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Speaker 2: We're going to be bringing in Andrew Sheets, the global

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Speaker 2: head of Corporate Credit research Ed Morgan Stanley, for that

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Speaker 2: discussion and ahead of EDSMP futures are higher again this morning.

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Speaker 2: They're up three tenths even percent of about fourteen points.

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Speaker 2: Dwaen Nasdaq futures all also up three tenths of up percent.

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Speaker 2: This is Bloomberg.

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Speaker 11: From coast to coast, from New York to San Francisco,

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Speaker 11: Boston to Washington, DC, nationwide on Syria's exam, the Bloomberg

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Speaker 11: Business Appen Bloomberg dot Com.

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Speaker 3: This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. There

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Speaker 3: is plenty of fuel for optimism in the US market,

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Speaker 3: with the Federal Reserve signaling this week that it is

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Speaker 3: in fact ready to start thinking about cutting interest rates

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Speaker 3: next year.

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Speaker 13: But when it.

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Speaker 3: Comes to global central banks like the European Central Bank

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Speaker 3: and the Bank of England, they're holding firm on higher

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Speaker 3: for longer. So what's this mean for the outlook headed

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Speaker 3: into twenty twenty four. Let's get some answers now from

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Speaker 3: Andrew Sheets, global head of corporate credit research at Morgan Stanley. Andrew,

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Speaker 3: it's great to speak with you this morning. So what

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Speaker 3: does a more dovish FED and a more hawkish ECB

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Speaker 3: mean in your world?

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Speaker 12: So? I think the important starting point is that I

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Speaker 12: think we've seen an evolution of the data that's much

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Speaker 12: better than we or the market would have expected six

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Speaker 12: months ago. You know, over the last twelve months, the

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Speaker 12: US economy has grown three percent year every year, and

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Speaker 12: inflation's been declining. And in Europe you've seen again inflation

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Speaker 12: really start to moderate in a way that the ECB

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Speaker 12: a number of central bank watchers would not have expected

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Speaker 12: six months ago. So I think the important factor, the

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Speaker 12: most important factor, is that this year has been all

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Speaker 12: about inflation, and inflation is finally coming down, which gives

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Speaker 12: these central banks a lot more flexibility to moderate policy

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Speaker 12: as that happens. So again, you know, you've seen central

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Speaker 12: banks react to that a little bit differently, the FED

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Speaker 12: sounding a little bit more dubvish, the ECB sounding a

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Speaker 12: little bit more hawkish, But I think the core message

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Speaker 12: as you go into next year is these are central

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Speaker 12: banks that are done hiking. They're going to be cutting,

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Speaker 12: and the path is going to be easing going forward.

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Speaker 3: But the path is going to be easing at a

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Speaker 3: much different pace. It seems like when we hear this

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Speaker 3: more hawkish tone from the likes of Madame Legarde, what

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Speaker 3: could that mean for a global bond markets If we

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Speaker 3: see higher for longer in the Eurozone and maybe not

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Speaker 3: so much here in the US.

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Speaker 12: Well, I think what the market might test is how

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Speaker 12: credible that more hawkish rhetoric really is. You know, we've

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Speaker 12: seen a very weak PMI data out today from the Eurozone.

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Speaker 12: You're seeing inflation in the Eurozone come down quickly, and

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Speaker 12: on Morgan Stanley's forecast it continues to decline quickly. And

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Speaker 12: so you know, we can understand from a strategic standpoint,

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Speaker 12: not wanting to ease up too early on the rhetoric

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Speaker 12: run inflation, wanting to establish the ECB's credibility on inflation.

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Speaker 12: But as the data continues to come in, as inflation

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Speaker 12: data continues to fall, as the growth data is soft,

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Speaker 12: we'd be surprised. We would not expect the ECB to

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Speaker 12: continue to sound this hawkish into next year, and would

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Speaker 12: expect them to be to be easing policy in line

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Speaker 12: with the FED into twenty twenty four.

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Speaker 3: Interesting, what about the Fed's credibility? Is there a risk

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Speaker 3: that the FED pivots back the other way next year?

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Speaker 3: Is that something in your forecast?

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Speaker 12: It's not in our forecast. And I think the point

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Speaker 12: about credibility is key. You know, credibility is everything in

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Speaker 12: central banking, and I think to the credit of the FED,

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Speaker 12: they are talking more dubbishly as core inflation is coming

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Speaker 12: down on Morgan Stanley's estimates with the latest readings of

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Speaker 12: producer price inflation six month annualized core PCE, and thinking

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Speaker 12: about core PCE is the measure of inflation that the

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Speaker 12: FED cares about the most. Over the last six months,

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Speaker 12: core PCE in the US is running at one point

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Speaker 12: nine percent. It's at the Fed's target. If anything, it's

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Speaker 12: a little below. So the idea that the FED is

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Speaker 12: reacting to that data, it is and it's not done

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Speaker 12: anything yet. It's simply talking about the possibility that it

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Speaker 12: might ease and the fact that the FED thinks the

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Speaker 12: neutral rate is way down at two and a half,

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Speaker 12: two and three quarters. All the FED is doing is saying, look,

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Speaker 12: we have policy way above neutral. Core inflation is rapidly

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Speaker 12: approaching our target. Yes, we will be easing policy next year.

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Speaker 12: I think that's a credible place for the FED to

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Speaker 12: operate from.

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Speaker 3: What about the market credibility of they're pricing in something

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Speaker 3: like what six or seven rate cuts next year when

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Speaker 3: we got three from the dot plot? Do you see

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Speaker 3: the FED moving more in line with the market or

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Speaker 3: the other way around.

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Speaker 12: So the market has moved very quickly. I mean, we

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Speaker 12: had forecasts that we thought were quite dubvish when we

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Speaker 12: put out our outlook in the middle of in early October,

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Speaker 12: in early November, excuse me, you know we had the

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Speaker 12: US tenure at three ninety five. By the end of

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Speaker 12: twenty twenty four, it's more than gotten there. You know,

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Speaker 12: we had three hundred basis points of FED cuts over

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Speaker 12: twenty four and twenty five. Again, a lot of that's

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Speaker 12: getting priced in. So I think objectively, the market's moved

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Speaker 12: to price in more cutting than we have expected. But

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Speaker 12: I think it's also fair to say that it is

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Speaker 12: historically normal. Once the FED thinks that a central bank

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Speaker 12: is done hiking. The market usually expects, usually somewhat overestimates

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Speaker 12: future cuts as the market's trying to balance the probability

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Speaker 12: of a FED staying on hold with something more significant,

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Speaker 12: So a lot has been priced in. But I think

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Speaker 12: the general idea that the market once a FED, once

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Speaker 12: the FED is done, starts pricing in more cuts that

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Speaker 12: is very consistent with what we've seen over prior cycles.

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Speaker 3: Really good to have you on with us, Andrew, at

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Speaker 3: the end of a really interesting week for central banks.

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Speaker 3: That's Andrew Sheets with us this morning, Global head of

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Speaker 3: Corporate Credit Research at Morgan Stanley. This is Bloomberg day

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