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Speaker 1: Good morning. I'm Brian Curtiz and I'm Doug Krisner. Here

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Speaker 1: are the stories we're following today.

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Speaker 2: The White House meeting between the President and congressional leaders

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Speaker 2: has ended without a major agreement on funding Ukraine. Let's

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Speaker 2: get Ed Baxter in San Francisco, who has the story.

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Speaker 3: Ed, Yeah, probably no surprise, how Brian. The issue going

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Speaker 3: in was a US southern border, and obviously for House

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Speaker 3: Majority Leader Mike Johnson, it was a chance to well

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Speaker 3: explain GOP grievances.

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Speaker 4: We documented sixty four instances where the President took executive

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Speaker 4: action or his agencies took action to create the current

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Speaker 4: catastrophe that we have at the border. It is a

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Speaker 4: national security and a humanitarian catastrophe, and I articulated that

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Speaker 4: to the President in the meeting. Now, we understand that

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Speaker 4: there's concern about the safety, security, sovereignty of Ukraine, but

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Speaker 4: the American people have those same concerns about our own

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Speaker 4: domestic sovereignty.

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Speaker 3: Now Johnson does say slight progress, but Senate Majority Leader

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Speaker 3: Chuck Schumer, well a difference. Ben.

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Speaker 5: These attacks are a clear example of terrorism violation of

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Speaker 5: international law.

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Speaker 3: Excuse me, that is not mister Schumer. He says. He says, basically,

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Speaker 3: there was just very little progress.

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Speaker 6: There was democratic and Republican agreement that was essential we

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Speaker 6: help Ukraine.

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Speaker 3: Yeah, so a little bit different there. And a meeting

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Speaker 3: at the White House Friday has been scheduled with Biden

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Speaker 3: administration cabinet officials and counterparts from Mexico focus on reducing

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Speaker 3: in migration. Meanwhile, the other congressional issue was funding for

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Speaker 3: the government, with another deadline this weekend. Schumer says, yeah,

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Speaker 3: some progress there.

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Speaker 7: If both sides continue to work in good faith, I'm

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Speaker 7: hopeful we can pass the seer by tomorrow and avoid

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Speaker 7: an unnecessary and costly shut down.

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Speaker 3: And that, of course, it needs the House and the President.

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Speaker 3: The Biden administration has put the Huthi militant group back

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Speaker 3: on Global Terrorism List. It's a turnaround for the administration

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Speaker 3: to remove the Houthis as a US ought to East

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Speaker 3: tensions during the Umanity Civil War, and the NSC official

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Speaker 3: John Kirby underscores the intent here.

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Speaker 5: Today's designation targets the Houthis, not the many people. The

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Speaker 5: United States remains the world's leading donor of humanitarian assistance

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Speaker 5: for Yemen. We recognize that more than fifteen million people

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Speaker 5: in Yemen are still in desperate need of food.

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Speaker 3: So what does it do well, State Department spokes to

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Speaker 3: Matthew Miller.

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Speaker 2: The effect that we think it will have will be

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Speaker 2: to allow us to deny the Houthi's access to the

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Speaker 2: US financial system.

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Speaker 3: Yeah, and Miller emphasizes the US could rescind to the

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Speaker 3: destination if the Houthi stopped their red Sea attacks. Meanwhile,

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Speaker 3: Secretary of State Anthony Blincoln is making his way back

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Speaker 3: to the US from Davos, where he says there's a

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Speaker 3: definite vision for the future.

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Speaker 4: Much of what we're trying to do we can't effectively

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Speaker 4: get done alone.

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Speaker 6: We have to have partners.

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Speaker 3: We have to reimagine it as we've been doing our partnerships. Yes,

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Speaker 3: plane had some mechanical issues, but another will ferry him home.

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Speaker 3: Philippines says it is planning a more robust, in its words,

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Speaker 3: military activity with the US and its allies. Says it

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Speaker 3: is facing more and more aggressive activity from China. Says

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Speaker 3: it wants to build up capabilities to be more effective

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Speaker 3: contributor to regional stability. Global News twenty four hours a

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Speaker 3: day and whatever you want it with Bloomberg News Now

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Speaker 3: in San Francisco. I'm Had Baxter and this is Bloomberg

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Speaker 3: GARB Bliant.

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Speaker 2: All right, thanks very much, said well. The FED says

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Speaker 2: strong consumer spending has helped lift the US economy in

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Speaker 2: recent weeks. That's according to the Beige Book survey. The

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Speaker 2: report said that consumer has delivered some seasonal relief over

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Speaker 2: the holidays and that generally helped meet spending expectations. Nearly

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Speaker 2: all the FED districts reported one or more signs of

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Speaker 2: a cooling labor market. And today we also got US

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Speaker 2: retail data that showed sales rising by the most in

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Speaker 2: three months.

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Speaker 1: Well, JP Moore, Caan Chase CEO Jamie diamond was saying

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Speaker 1: today it's a fine line to walk for investors, but

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Speaker 1: China is open for American business. Diamonds sat down with

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Speaker 1: CNBC on the sidelines of the World Economic Forum in Davos.

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Speaker 8: They've been very consistent in opening up. Took a long time,

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Speaker 8: so we have full license there now. But I think,

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Speaker 8: you know, anyone who is looking to invest in there

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Speaker 8: has to be a little worried. So and you know,

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Speaker 8: the riginal ward has changed dramatically, you know, and of

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Speaker 8: course you know it's coming. Like JP Morgan I always

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Speaker 8: so when it comes to foreign policy, Blincoln decides and

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Speaker 8: the president. You know, I salute. I'm an American patriot,

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Speaker 8: but they want us there. They're not asking America companies

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Speaker 8: to leave.

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Speaker 1: Jamie Diamond there, the CEO of JP Morgan Chase. You know,

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Speaker 1: he is the longest serving CEO of a major US bank,

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Speaker 1: and he has long pointed to geopolitical tensions as a

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Speaker 1: major challenge for the global economy.

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Speaker 2: Ryan and the Treasury Secretary Janet Yellen is calling on

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Speaker 2: the US Congress to pass a temporary spending bill this

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Speaker 2: week and avert a partial US government shutdown. He's Yellen

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Speaker 2: speaking before Washington lawmakers.

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Speaker 7: Failing to fund the government by this Friday's deadline with

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Speaker 7: harm American families and small businesses across the country. I'm

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Speaker 7: heartened there's bipartisan agreement and urge members of Congress to

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Speaker 7: meet the deadline to prevent an unnecessary shutdown and protect

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Speaker 7: the critical domestic and national priorities we've advanced over the

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Speaker 7: past three years.

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Speaker 2: Jennie Yellen, A short term spending measure would fund some

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Speaker 2: US agencies that were set to run out of money

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Speaker 2: at the end of the week. Well, it would fund

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Speaker 2: them through March first.

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Speaker 1: Shares and Charles Schwab were down about one point three

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Speaker 1: percent in the regular session. This is after the company

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Speaker 1: reported a drop in profit for the fourth quarter. Here's

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Speaker 1: Bloomberg's and Kate's new.

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Speaker 9: Assets, said Charles schwabbalt forty eight percent in the fourth quarter,

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Speaker 9: Bank deposits declined twenty one percent, and Schwab's total retail

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Speaker 9: brokerage accounts missed analyst expectations. Schwab had navigated tumultuous year

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Speaker 9: of interest rate hikes that doned its balance sheet and

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Speaker 9: eroded the value of its investments. Consumers also pulled their

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Speaker 9: deposits in search of higher yielding alternatives. Schwab calls it

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Speaker 9: the most challenging time since the bursting of the Internet

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Speaker 9: bubble in two thousand. Washer and Kate's Bloomberg Radio.

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Speaker 2: Meantime, Apple has to stop selling its Series nine and

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Speaker 2: Ultra two smart watches with a blood oxygen feature in

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Speaker 2: the United States. It's another legal setback in a patent

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Speaker 2: dispute with Massimo. Bloomberg's Ed Ludlow says this is far

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Speaker 2: from the end of the story.

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Speaker 10: What the US Court of Appeals for the Federal Circus

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Speaker 10: is saying is they are rejecting Apple's requests for a

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Speaker 10: longer pause on what was the intentional Trade Commission ban

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Speaker 10: that was put in place. The mechanics of that are

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Speaker 10: that they will have to stop selling the Series nine

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Speaker 10: in Ultra two, but a much longer appeals process will

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Speaker 10: play out, and Apple has said that that appeals process

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Speaker 10: can last for about a year.

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Speaker 2: That's Bloomberg's Ed Ludlow. Apple says the appeals process could

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Speaker 2: last a year or more. And we did see Apple

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Speaker 2: trade lower today, down about a half a percent. That

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Speaker 2: was more or less in line with the market.

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Speaker 1: From Apple, We go to its South Korean rivals. Samsung

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Speaker 1: is turning to artificial intelligence to revamp its flagship Galaxy smartphones.

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Speaker 1: We have more from Bloomberg Yvon Man.

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Speaker 11: In Hong Kong, Samsung unveiled it's Galaxy S twenty four

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Speaker 11: phones that it's unpacked conference. All the phones have AI

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Speaker 11: tools based on Gemini technology from Google. The devices can

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Speaker 11: translate phone calls live and transcribe voice recordings. They can

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Speaker 11: also summarize web articles, fixed handwriting, and fill in parts

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Speaker 11: of photos. The launch is one of the most ambitious

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Speaker 11: attempts to weave AI into smartphones interface and features. Previously

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Speaker 11: AI software will be mostly in the cloud. Now it's

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Speaker 11: on the phones. Samsung is targeting double digit growth for

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Speaker 11: its latest smartphone series.

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Speaker 9: In Hong Kong. I'm von Mann Bloomberg Radio.

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Speaker 2: I'm Brian Curtis, along with Vonnie Quinn, and our guest

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Speaker 2: is Michael McKee, Bloomberg International Economics and Policy Correspondent, to

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Speaker 2: take a closer look here at the base book and

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Speaker 2: the US economy. Mike, thanks very much for joining us

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Speaker 2: on balance, because there's always conflicting signals, but on balance

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Speaker 2: from all these districts, is the US economy tilting a

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Speaker 2: little hot, or tilting a little cool, or somewhere more neutral.

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Speaker 6: It's I guess you'd call it somewhat neutral compared to

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Speaker 6: where we've been in the sense that the economy has

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Speaker 6: been very strong. People were expecting it to slow down

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Speaker 6: and cool off quite a bit, But the latest data

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Speaker 6: show the slow down is happening, but not as much

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Speaker 6: as people thought might. The retail sales numbers today very strong,

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Speaker 6: and in general the economy is continuing to perform at

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Speaker 6: a very good level. There is no sign of recession there,

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Speaker 6: so overall kind of status quo to where we have been.

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Speaker 12: Michael, How on earth is the consumer this resilient? Are

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Speaker 12: these all the stock market gains from last year?

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Speaker 6: Well, really, it's funny because you've been out shopping a

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Speaker 6: lot that's on. We don't really know. The stock market

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Speaker 6: gains may fuel a little bit of it, but it's

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Speaker 6: not keeping people. It's not keeping the numbers all the

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Speaker 6: way up because the people who are making big gains

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Speaker 6: in the stock market, they've already been spending and it's

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Speaker 6: not really going to make a change in their day

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Speaker 6: to day lifestyle. It just seems that people have I

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Speaker 6: would say it seems that people have jobs now, more

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Speaker 6: people are working than ever, and each month we get

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Speaker 6: another two hundred thousand or so on pay rolls, and

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Speaker 6: that money is going into their pockets and then going

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Speaker 6: back out again. Is less being spent on gasoline, so

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Speaker 6: there can be more spent on other things. And overall

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Speaker 6: it's just a sign of a reasonably healthy economy that

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Speaker 6: unemployment's low and people are able to keep spending.

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Speaker 2: Yeah, you would think that from the FED standpoint, The

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Speaker 2: fact that firms noted some easing and inflationary pressures that

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Speaker 2: that coupled with pretty healthy spending is a pretty good combination.

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Speaker 6: Yeah, that's the good news for the fat When they

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Speaker 6: look at this, they see the economy is in pretty

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Speaker 6: good shape. It's hard to know exactly if they feel.

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Speaker 6: The retail sales numbers suggest that maybe things are overheating.

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Speaker 6: We'll have to see how January goes, but for right now,

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Speaker 6: it looks like the economy is chugging along at a

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Speaker 6: level it can be sustained because inflation continues to go down.

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Speaker 6: There seem to be lower and lower inflation pressures. We

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Speaker 6: see it reflected in the basebook. And then next week

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Speaker 6: we're going to get the PCEE inflation numbers and there's

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Speaker 6: some forecasts from economists that they will be below three percent.

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Speaker 12: Yeah, Michael, can I ask you about industrial production because

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Speaker 12: the overall rate went up, it's an expansion even though

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Speaker 12: economists were expecting a contraction of December, but the Empire

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Speaker 12: state fell into a trough in the last month's stay.

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Speaker 12: How do we account for both of those?

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Speaker 6: Well, the Empire numbers reflect only manufacturing in New York

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Speaker 6: State and it is a very volatile number. It tends

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Speaker 6: to go up and down a lot. Now, this was

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Speaker 6: an extreme variation on that. But what mostly commis do

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Speaker 6: is looked at the various regional manufacturing indexes from around

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Speaker 6: the country and then we'll get Philadelphia tomorrow and see

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Speaker 6: if they all match up or if somebody is an outlier.

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Speaker 6: And the general feeling is that this was an outlier.

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Speaker 6: Overall manufacturing production rose in December, so the idea of

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Speaker 6: a big drop off in early January doesn't seem correct.

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Speaker 6: So we'll see when we get Philadelphia and we start

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Speaker 6: to get the others coming in. The feeling is maybe

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Speaker 6: it's just kind of a noise from this indicator.

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Speaker 2: Mike. You know, we cover markets aggressively. I mean all

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Speaker 2: throughout the day on Bloomberg. We're doing updates about every

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Speaker 2: fifteen minutes. So I have to ask you this kind

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Speaker 2: of question. You've got inflation coming down, You've got consumers

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Speaker 2: still spending in a reasonably robust fashion, and earnings are

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Speaker 2: up this year. There's not really all that much at

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Speaker 2: the moment to knock the bulls off their purchase.

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Speaker 6: There nothing other than psychology, and of course that plays

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Speaker 6: a big role in the markets. And it's been a

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Speaker 6: feeling that we were due for some sort of correction,

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Speaker 6: which seems to be what's happening. It doesn't seem to

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Speaker 6: be a reason for any kind of gloom on the

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Speaker 6: part of equity investors, except for whatever their view of

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Speaker 6: valuations is. And maybe they felt things ran up too high,

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Speaker 6: But it doesn't look like there is an economic problem,

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Speaker 6: an economic aspect to the down tread that we've seen.

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Speaker 12: Can I ask about Chris Waller, Michael, Is he the

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Speaker 12: only person we should be listening to right now? I

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Speaker 12: like Neil Dotta's comment that he opened the doors to

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Speaker 12: a March coton. Perhaps he's the only one who can

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Speaker 12: close it, and maybe he did that yesterday.

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Speaker 6: Maybe it does seem that the markets have started to

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Speaker 6: reprice after his speech. There's still a majority of view

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Speaker 6: that we could get a rate cut in March, but

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Speaker 6: that is gradually slowing down, and Chris S. Waller does

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Speaker 6: seem to be the new intellectual center of the FED.

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Speaker 11: Now.

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Speaker 6: What we don't know is how Jay powelfields. Because he

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Speaker 6: only speaks once or twice a quarter, we don't hear

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Speaker 6: very much from him. But in terms of those who

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Speaker 6: do speak regularly, Waller's been the one that's been out front.

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Speaker 6: He was the first one to suggest rapecuts could be

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Speaker 6: coming in twenty twenty four before the FED changed its views,

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Speaker 6: and now he's talking about definitely rake cuts, but let's

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Speaker 6: be careful about when and how much.

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Speaker 2: Yeah, he made those comments in November that the chair

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Speaker 2: have sort of had to walk back a little bit.

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Speaker 2: Was there anything he said yesterday that the chair might

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Speaker 2: need to walk back on.

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Speaker 6: I don't think so. I mean, I think what he

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Speaker 6: said made a lot of sense. The FED is very

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Speaker 6: good at saying something that sounds like it's new and

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Speaker 6: it's not my idea of we're probably going to cut rigs. Okay,

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Speaker 6: we knew that and we should do it carefully and

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Speaker 6: not coming too fast. Well, that makes a lot of

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Speaker 6: sense as well. For years on the FED beat, I

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Speaker 6: used to laugh when FED officials would come out and

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Speaker 6: say we're going to be vigilant on inflation. People ran

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Speaker 6: that as a headline and it's sort of like, well,

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Speaker 6: that's your job, that's what you're supposed to be doing.

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Speaker 6: So a lot of times people feel like there's something

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Speaker 6: new there and it really isn't.

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