WEBVTT - Markets Trim Rate Cut Bets, Apple Faces Watch Setback

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<v Speaker 1>Good morning. I'm Brian Curtiz and I'm Doug Krisner. Here

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<v Speaker 1>are the stories we're following today.

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<v Speaker 2>The White House meeting between the President and congressional leaders

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<v Speaker 2>has ended without a major agreement on funding Ukraine. Let's

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<v Speaker 2>get Ed Baxter in San Francisco, who has the story.

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<v Speaker 3>Ed, Yeah, probably no surprise, how Brian. The issue going

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<v Speaker 3>in was a US southern border, and obviously for House

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<v Speaker 3>Majority Leader Mike Johnson, it was a chance to well

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<v Speaker 3>explain GOP grievances.

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<v Speaker 4>We documented sixty four instances where the President took executive

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<v Speaker 4>action or his agencies took action to create the current

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<v Speaker 4>catastrophe that we have at the border. It is a

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<v Speaker 4>national security and a humanitarian catastrophe, and I articulated that

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<v Speaker 4>to the President in the meeting. Now, we understand that

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<v Speaker 4>there's concern about the safety, security, sovereignty of Ukraine, but

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<v Speaker 4>the American people have those same concerns about our own

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<v Speaker 4>domestic sovereignty.

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<v Speaker 3>Now Johnson does say slight progress, but Senate Majority Leader

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<v Speaker 3>Chuck Schumer, well a difference. Ben.

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<v Speaker 5>These attacks are a clear example of terrorism violation of

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<v Speaker 5>international law.

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<v Speaker 3>Excuse me, that is not mister Schumer. He says. He says, basically,

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<v Speaker 3>there was just very little progress.

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<v Speaker 6>There was democratic and Republican agreement that was essential we

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<v Speaker 6>help Ukraine.

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<v Speaker 3>Yeah, so a little bit different there. And a meeting

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<v Speaker 3>at the White House Friday has been scheduled with Biden

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<v Speaker 3>administration cabinet officials and counterparts from Mexico focus on reducing

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<v Speaker 3>in migration. Meanwhile, the other congressional issue was funding for

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<v Speaker 3>the government, with another deadline this weekend. Schumer says, yeah,

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<v Speaker 3>some progress there.

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<v Speaker 7>If both sides continue to work in good faith, I'm

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<v Speaker 7>hopeful we can pass the seer by tomorrow and avoid

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<v Speaker 7>an unnecessary and costly shut down.

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<v Speaker 3>And that, of course, it needs the House and the President.

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<v Speaker 3>The Biden administration has put the Huthi militant group back

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<v Speaker 3>on Global Terrorism List. It's a turnaround for the administration

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<v Speaker 3>to remove the Houthis as a US ought to East

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<v Speaker 3>tensions during the Umanity Civil War, and the NSC official

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<v Speaker 3>John Kirby underscores the intent here.

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<v Speaker 5>Today's designation targets the Houthis, not the many people. The

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<v Speaker 5>United States remains the world's leading donor of humanitarian assistance

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<v Speaker 5>for Yemen. We recognize that more than fifteen million people

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<v Speaker 5>in Yemen are still in desperate need of food.

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<v Speaker 3>So what does it do well, State Department spokes to

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<v Speaker 3>Matthew Miller.

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<v Speaker 2>The effect that we think it will have will be

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<v Speaker 2>to allow us to deny the Houthi's access to the

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<v Speaker 2>US financial system.

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<v Speaker 3>Yeah, and Miller emphasizes the US could rescind to the

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<v Speaker 3>destination if the Houthi stopped their red Sea attacks. Meanwhile,

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<v Speaker 3>Secretary of State Anthony Blincoln is making his way back

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<v Speaker 3>to the US from Davos, where he says there's a

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<v Speaker 3>definite vision for the future.

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<v Speaker 4>Much of what we're trying to do we can't effectively

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<v Speaker 4>get done alone.

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<v Speaker 6>We have to have partners.

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

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<v Speaker 3>plane had some mechanical issues, but another will ferry him home.

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<v Speaker 3>Philippines says it is planning a more robust, in its words,

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<v Speaker 3>military activity with the US and its allies. Says it

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<v Speaker 3>is facing more and more aggressive activity from China. Says

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<v Speaker 3>it wants to build up capabilities to be more effective

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<v Speaker 3>contributor to regional stability. Global News twenty four hours a

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<v Speaker 3>day and whatever you want it with Bloomberg News Now

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<v Speaker 3>in San Francisco. I'm Had Baxter and this is Bloomberg

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<v Speaker 3>GARB Bliant.

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<v Speaker 2>All right, thanks very much, said well. The FED says

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<v Speaker 2>strong consumer spending has helped lift the US economy in

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<v Speaker 2>recent weeks. That's according to the Beige Book survey. The

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<v Speaker 2>report said that consumer has delivered some seasonal relief over

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<v Speaker 2>the holidays and that generally helped meet spending expectations. Nearly

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<v Speaker 2>all the FED districts reported one or more signs of

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<v Speaker 2>a cooling labor market. And today we also got US

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<v Speaker 2>retail data that showed sales rising by the most in

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<v Speaker 2>three months.

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<v Speaker 1>Well, JP Moore, Caan Chase CEO Jamie diamond was saying

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<v Speaker 1>today it's a fine line to walk for investors, but

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<v Speaker 1>China is open for American business. Diamonds sat down with

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<v Speaker 1>CNBC on the sidelines of the World Economic Forum in Davos.

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

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<v Speaker 8>so we have full license there now. But I think,

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<v Speaker 8>you know, anyone who is looking to invest in there

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<v Speaker 8>has to be a little worried. So and you know,

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<v Speaker 8>the riginal ward has changed dramatically, you know, and of

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<v Speaker 8>course you know it's coming. Like JP Morgan I always

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<v Speaker 8>so when it comes to foreign policy, Blincoln decides and

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<v Speaker 8>the president. You know, I salute. I'm an American patriot,

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<v Speaker 8>but they want us there. They're not asking America companies

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<v Speaker 8>to leave.

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<v Speaker 1>Jamie Diamond there, the CEO of JP Morgan Chase. You know,

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<v Speaker 1>he is the longest serving CEO of a major US bank,

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<v Speaker 1>and he has long pointed to geopolitical tensions as a

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<v Speaker 1>major challenge for the global economy.

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<v Speaker 2>Ryan and the Treasury Secretary Janet Yellen is calling on

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<v Speaker 2>the US Congress to pass a temporary spending bill this

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<v Speaker 2>week and avert a partial US government shutdown. He's Yellen

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<v Speaker 2>speaking before Washington lawmakers.

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<v Speaker 7>Failing to fund the government by this Friday's deadline with

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<v Speaker 7>harm American families and small businesses across the country. I'm

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<v Speaker 7>heartened there's bipartisan agreement and urge members of Congress to

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<v Speaker 7>meet the deadline to prevent an unnecessary shutdown and protect

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<v Speaker 7>the critical domestic and national priorities we've advanced over the

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<v Speaker 7>past three years.

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<v Speaker 2>Jennie Yellen, A short term spending measure would fund some

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<v Speaker 2>US agencies that were set to run out of money

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<v Speaker 2>at the end of the week. Well, it would fund

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<v Speaker 2>them through March first.

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<v Speaker 1>Shares and Charles Schwab were down about one point three

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<v Speaker 1>percent in the regular session. This is after the company

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<v Speaker 1>reported a drop in profit for the fourth quarter. Here's

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<v Speaker 1>Bloomberg's and Kate's new.

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<v Speaker 9>Assets, said Charles schwabbalt forty eight percent in the fourth quarter,

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<v Speaker 9>Bank deposits declined twenty one percent, and Schwab's total retail

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<v Speaker 9>brokerage accounts missed analyst expectations. Schwab had navigated tumultuous year

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<v Speaker 9>of interest rate hikes that doned its balance sheet and

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<v Speaker 9>eroded the value of its investments. Consumers also pulled their

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<v Speaker 9>deposits in search of higher yielding alternatives. Schwab calls it

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<v Speaker 9>the most challenging time since the bursting of the Internet

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<v Speaker 9>bubble in two thousand. Washer and Kate's Bloomberg Radio.

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<v Speaker 2>Meantime, Apple has to stop selling its Series nine and

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<v Speaker 2>Ultra two smart watches with a blood oxygen feature in

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<v Speaker 2>the United States. It's another legal setback in a patent

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<v Speaker 2>dispute with Massimo. Bloomberg's Ed Ludlow says this is far

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<v Speaker 2>from the end of the story.

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<v Speaker 10>What the US Court of Appeals for the Federal Circus

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<v Speaker 10>is saying is they are rejecting Apple's requests for a

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<v Speaker 10>longer pause on what was the intentional Trade Commission ban

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<v Speaker 10>that was put in place. The mechanics of that are

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<v Speaker 10>that they will have to stop selling the Series nine

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<v Speaker 10>in Ultra two, but a much longer appeals process will

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<v Speaker 10>play out, and Apple has said that that appeals process

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<v Speaker 10>can last for about a year.

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<v Speaker 2>That's Bloomberg's Ed Ludlow. Apple says the appeals process could

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<v Speaker 2>last a year or more. And we did see Apple

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<v Speaker 2>trade lower today, down about a half a percent. That

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<v Speaker 2>was more or less in line with the market.

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<v Speaker 1>From Apple, We go to its South Korean rivals. Samsung

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<v Speaker 1>is turning to artificial intelligence to revamp its flagship Galaxy smartphones.

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<v Speaker 1>We have more from Bloomberg Yvon Man.

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<v Speaker 11>In Hong Kong, Samsung unveiled it's Galaxy S twenty four

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<v Speaker 11>phones that it's unpacked conference. All the phones have AI

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<v Speaker 11>tools based on Gemini technology from Google. The devices can

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<v Speaker 11>translate phone calls live and transcribe voice recordings. They can

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<v Speaker 11>also summarize web articles, fixed handwriting, and fill in parts

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<v Speaker 11>of photos. The launch is one of the most ambitious

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<v Speaker 11>attempts to weave AI into smartphones interface and features. Previously

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<v Speaker 11>AI software will be mostly in the cloud. Now it's

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<v Speaker 11>on the phones. Samsung is targeting double digit growth for

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<v Speaker 11>its latest smartphone series.

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<v Speaker 9>In Hong Kong. I'm von Mann Bloomberg Radio.

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<v Speaker 2>I'm Brian Curtis, along with Vonnie Quinn, and our guest

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<v Speaker 2>is Michael McKee, Bloomberg International Economics and Policy Correspondent, to

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<v Speaker 2>take a closer look here at the base book and

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<v Speaker 2>the US economy. Mike, thanks very much for joining us

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<v Speaker 2>on balance, because there's always conflicting signals, but on balance

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<v Speaker 2>from all these districts, is the US economy tilting a

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<v Speaker 2>little hot, or tilting a little cool, or somewhere more neutral.

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<v Speaker 6>It's I guess you'd call it somewhat neutral compared to

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<v Speaker 6>where we've been in the sense that the economy has

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<v Speaker 6>been very strong. People were expecting it to slow down

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<v Speaker 6>and cool off quite a bit, But the latest data

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<v Speaker 6>show the slow down is happening, but not as much

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<v Speaker 6>as people thought might. The retail sales numbers today very strong,

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<v Speaker 6>and in general the economy is continuing to perform at

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<v Speaker 6>a very good level. There is no sign of recession there,

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<v Speaker 6>so overall kind of status quo to where we have been.

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<v Speaker 12>Michael, How on earth is the consumer this resilient? Are

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<v Speaker 12>these all the stock market gains from last year?

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

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

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<v Speaker 6>gains may fuel a little bit of it, but it's

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<v Speaker 6>not keeping people. It's not keeping the numbers all the

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<v Speaker 6>way up because the people who are making big gains

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

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<v Speaker 6>not really going to make a change in their day

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<v Speaker 6>to day lifestyle. It just seems that people have I

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<v Speaker 6>would say it seems that people have jobs now, more

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<v Speaker 6>people are working than ever, and each month we get

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<v Speaker 6>another two hundred thousand or so on pay rolls, and

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<v Speaker 6>that money is going into their pockets and then going

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<v Speaker 6>back out again. Is less being spent on gasoline, so

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<v Speaker 6>there can be more spent on other things. And overall

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<v Speaker 6>it's just a sign of a reasonably healthy economy that

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<v Speaker 6>unemployment's low and people are able to keep spending.

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<v Speaker 2>Yeah, you would think that from the FED standpoint, The

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<v Speaker 2>fact that firms noted some easing and inflationary pressures that

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<v Speaker 2>that coupled with pretty healthy spending is a pretty good combination.

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<v Speaker 6>Yeah, that's the good news for the fat When they

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<v Speaker 6>look at this, they see the economy is in pretty

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<v Speaker 6>good shape. It's hard to know exactly if they feel.

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<v Speaker 6>The retail sales numbers suggest that maybe things are overheating.

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

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<v Speaker 6>it looks like the economy is chugging along at a

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<v Speaker 6>level it can be sustained because inflation continues to go down.

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<v Speaker 6>There seem to be lower and lower inflation pressures. We

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<v Speaker 6>see it reflected in the basebook. And then next week

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<v Speaker 6>we're going to get the PCEE inflation numbers and there's

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<v Speaker 6>some forecasts from economists that they will be below three percent.

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<v Speaker 12>Yeah, Michael, can I ask you about industrial production because

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<v Speaker 12>the overall rate went up, it's an expansion even though

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<v Speaker 12>economists were expecting a contraction of December, but the Empire

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<v Speaker 12>state fell into a trough in the last month's stay.

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<v Speaker 12>How do we account for both of those?

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<v Speaker 6>Well, the Empire numbers reflect only manufacturing in New York

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<v Speaker 6>State and it is a very volatile number. It tends

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<v Speaker 6>to go up and down a lot. Now, this was

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<v Speaker 6>an extreme variation on that. But what mostly commis do

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<v Speaker 6>is looked at the various regional manufacturing indexes from around

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<v Speaker 6>the country and then we'll get Philadelphia tomorrow and see

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<v Speaker 6>if they all match up or if somebody is an outlier.

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<v Speaker 6>And the general feeling is that this was an outlier.

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<v Speaker 6>Overall manufacturing production rose in December, so the idea of

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<v Speaker 6>a big drop off in early January doesn't seem correct.

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<v Speaker 6>So we'll see when we get Philadelphia and we start

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<v Speaker 6>to get the others coming in. The feeling is maybe

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<v Speaker 6>it's just kind of a noise from this indicator.

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<v Speaker 2>Mike. You know, we cover markets aggressively. I mean all

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<v Speaker 2>throughout the day on Bloomberg. We're doing updates about every

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<v Speaker 2>fifteen minutes. So I have to ask you this kind

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<v Speaker 2>of question. You've got inflation coming down, You've got consumers

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<v Speaker 2>still spending in a reasonably robust fashion, and earnings are

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<v Speaker 2>up this year. There's not really all that much at

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<v Speaker 2>the moment to knock the bulls off their purchase.

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<v Speaker 6>There nothing other than psychology, and of course that plays

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<v Speaker 6>a big role in the markets. And it's been a

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<v Speaker 6>feeling that we were due for some sort of correction,

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<v Speaker 6>which seems to be what's happening. It doesn't seem to

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<v Speaker 6>be a reason for any kind of gloom on the

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<v Speaker 6>part of equity investors, except for whatever their view of

0:12:39.800 --> 0:12:43.760
<v Speaker 6>valuations is. And maybe they felt things ran up too high,

0:12:43.760 --> 0:12:46.640
<v Speaker 6>But it doesn't look like there is an economic problem,

0:12:46.640 --> 0:12:49.600
<v Speaker 6>an economic aspect to the down tread that we've seen.

0:12:50.559 --> 0:12:53.040
<v Speaker 12>Can I ask about Chris Waller, Michael, Is he the

0:12:53.040 --> 0:12:55.440
<v Speaker 12>only person we should be listening to right now? I

0:12:55.559 --> 0:12:58.400
<v Speaker 12>like Neil Dotta's comment that he opened the doors to

0:12:58.440 --> 0:12:59.960
<v Speaker 12>a March coton. Perhaps he's the only one who can

0:13:00.080 --> 0:13:01.600
<v Speaker 12>close it, and maybe he did that yesterday.

0:13:03.160 --> 0:13:06.200
<v Speaker 6>Maybe it does seem that the markets have started to

0:13:06.360 --> 0:13:11.320
<v Speaker 6>reprice after his speech. There's still a majority of view

0:13:11.559 --> 0:13:13.600
<v Speaker 6>that we could get a rate cut in March, but

0:13:13.679 --> 0:13:19.280
<v Speaker 6>that is gradually slowing down, and Chris S. Waller does

0:13:19.320 --> 0:13:22.320
<v Speaker 6>seem to be the new intellectual center of the FED.

0:13:22.440 --> 0:13:22.640
<v Speaker 11>Now.

0:13:23.679 --> 0:13:26.040
<v Speaker 6>What we don't know is how Jay powelfields. Because he

0:13:26.080 --> 0:13:28.320
<v Speaker 6>only speaks once or twice a quarter, we don't hear

0:13:28.720 --> 0:13:31.079
<v Speaker 6>very much from him. But in terms of those who

0:13:31.120 --> 0:13:34.400
<v Speaker 6>do speak regularly, Waller's been the one that's been out front.

0:13:34.440 --> 0:13:36.640
<v Speaker 6>He was the first one to suggest rapecuts could be

0:13:36.720 --> 0:13:41.600
<v Speaker 6>coming in twenty twenty four before the FED changed its views,

0:13:42.480 --> 0:13:47.720
<v Speaker 6>and now he's talking about definitely rake cuts, but let's

0:13:47.720 --> 0:13:49.280
<v Speaker 6>be careful about when and how much.

0:13:50.040 --> 0:13:52.680
<v Speaker 2>Yeah, he made those comments in November that the chair

0:13:52.720 --> 0:13:54.640
<v Speaker 2>have sort of had to walk back a little bit.

0:13:55.320 --> 0:13:57.680
<v Speaker 2>Was there anything he said yesterday that the chair might

0:13:58.200 --> 0:13:59.199
<v Speaker 2>need to walk back on.

0:14:00.840 --> 0:14:02.960
<v Speaker 6>I don't think so. I mean, I think what he

0:14:03.160 --> 0:14:07.360
<v Speaker 6>said made a lot of sense. The FED is very

0:14:07.360 --> 0:14:10.640
<v Speaker 6>good at saying something that sounds like it's new and

0:14:10.679 --> 0:14:16.240
<v Speaker 6>it's not my idea of we're probably going to cut rigs. Okay,

0:14:16.240 --> 0:14:19.120
<v Speaker 6>we knew that and we should do it carefully and

0:14:19.160 --> 0:14:22.520
<v Speaker 6>not coming too fast. Well, that makes a lot of

0:14:22.560 --> 0:14:25.280
<v Speaker 6>sense as well. For years on the FED beat, I

0:14:25.360 --> 0:14:27.920
<v Speaker 6>used to laugh when FED officials would come out and

0:14:27.960 --> 0:14:31.960
<v Speaker 6>say we're going to be vigilant on inflation. People ran

0:14:32.040 --> 0:14:33.760
<v Speaker 6>that as a headline and it's sort of like, well,

0:14:34.000 --> 0:14:37.240
<v Speaker 6>that's your job, that's what you're supposed to be doing.

0:14:37.840 --> 0:14:40.440
<v Speaker 6>So a lot of times people feel like there's something

0:14:40.480 --> 0:14:43.240
<v Speaker 6>new there and it really isn't.

0:14:43.280 --> 0:14:46.120
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