WEBVTT - Fed Rate Cut in March in Doubt; High Tech Earnings Continue

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Nathan Hager and I'm Karen Moscow. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 3>It is a day after the Federal Reserve held interest

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<v Speaker 3>rates steady steady for a fourth straight time. Now the

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<v Speaker 3>focus continues to be on when the first rate cut

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<v Speaker 3>will come from Jay Powell and company.

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<v Speaker 4>The FED chair all but took March off the board.

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<v Speaker 5>I don't think it's likely that the committee will reach

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<v Speaker 5>a level of confidence by the time of the March

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<v Speaker 5>meeting to identify March as the time to do that.

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<v Speaker 5>But that's to be seen. So I wouldn't call you

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<v Speaker 5>know when you say, when you ask me about in

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<v Speaker 5>the near term, I'm hearing that as March, I would say,

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<v Speaker 5>I don't think that's probably not the most likely case,

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<v Speaker 5>or what we would call the base case.

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<v Speaker 3>Jay Powell acknowledged the dramatic inflation progress in recent months,

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<v Speaker 3>but repeatedly emphasized the need to see more data confirming

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<v Speaker 3>that downward trend.

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<v Speaker 2>Well, Nathan, reaction still pouring into Jay Powell's news conference.

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<v Speaker 2>We got up with the black Rock managing director Jeffrey

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<v Speaker 2>Rosenberg and former New York Fed President and current Bloomberg

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<v Speaker 2>opinion columnist Bill Dudley.

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<v Speaker 6>I think that's the story, is it May as a June.

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<v Speaker 7>It's not March.

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<v Speaker 1>It's pushing back because they don't want to rush into

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<v Speaker 1>a cutting cycle.

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<v Speaker 6>I think we could expect quantity of tightening tapering to

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<v Speaker 6>happen sometime probably around the.

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<v Speaker 7>First half of this year.

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<v Speaker 6>If the inflation is continues along the same course for

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<v Speaker 6>a few more months, then the Fed Reserve is certainly

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<v Speaker 6>going to start to cut rates. They're just not absolutely

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<v Speaker 6>confident that that's where we're going to be three or

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<v Speaker 6>four months from now.

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<v Speaker 2>And that was Black Rock managing director Jeffrey Rosenberg and

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<v Speaker 2>former New York Fed President Bill Dudley speaking to us

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<v Speaker 2>after the FED decision. FED fund futures now have a

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<v Speaker 2>March rate cut down to thirty eight percent.

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<v Speaker 3>And now Karen, it is the Bank of England's turn.

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<v Speaker 3>The BOE is expected to leave its key lending rated

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<v Speaker 3>a sixteen year high. We get more from Bloomberg's Lizzie

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<v Speaker 3>Burden in London.

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<v Speaker 8>The other thing that I would watch though, is the

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<v Speaker 8>guidance if they drop mentions of further tightening and this

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<v Speaker 8>need to be restrictive for an extended period, that could

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<v Speaker 8>be seen as veering away from the hawkish bias, and

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<v Speaker 8>if they don't do that, it could be seen as

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<v Speaker 8>the MPC giving market. It's a bit of a slap

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<v Speaker 8>on the risk for getting ahead of themselves with the

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<v Speaker 8>rate cook bets.

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<v Speaker 3>Bloomberg's Lizzie Burden says economists unanimously expect the UK's Central

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<v Speaker 3>Bank to leave its key lending rate at five and

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<v Speaker 3>a quarter percent.

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<v Speaker 2>Well, Nathan, it's also a very busy day for earnings

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<v Speaker 2>in Europe, and let's stay in London and get the

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<v Speaker 2>very latest from Bloomberg's creatygupda critty.

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<v Speaker 9>Yeah, Nathan, Karen's some pretty big moves here right here

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<v Speaker 9>in London. Shell up over two percent after beating earnings

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<v Speaker 9>estimates at three and a half billion dollars, buyback announcement

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<v Speaker 9>helping that stock as well, not to mention outstanding trade

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<v Speaker 9>in the gas market. Deutsche Bank on the other hand,

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<v Speaker 9>higher and buy about four percent, the German lender saying

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<v Speaker 9>it's cutting thirty five hundred jobs to focus there on profitability,

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<v Speaker 9>but also a buyback six one hundred and seventy five

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<v Speaker 9>million euros on their bound sheet. And Roche on the

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<v Speaker 9>other hand, dropping four percent twenty fowty four guidance analysts

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<v Speaker 9>are calling quote extremely extremely weak in London, Creaty goop

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<v Speaker 9>to Bloomberg Radio, all right.

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<v Speaker 3>Critty, thank you. Back here in the US, it's another

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<v Speaker 3>huge day for big tech earnings. Let's bring in John

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<v Speaker 3>Tucker for a preview of that.

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<v Speaker 10>John and need to Apple, Amazon meta Platforms all reporting

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<v Speaker 10>the updates. We'll get fresh insights on how the companies

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<v Speaker 10>at the heart of the reason rally on Wall Street

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<v Speaker 10>are matching up to lofty expectations. Apple has suffered five

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<v Speaker 10>straight sales declines in a row. Analyst Dan Ives at

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<v Speaker 10>Wedbush Securities is focusing on demand in China.

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<v Speaker 2>I think China's actually been relatively stable. I think that's

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<v Speaker 2>going to be a breadth of fresh air from Cokin

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<v Speaker 2>Cooper Tino on units on services.

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<v Speaker 10>Amazon dot COM's results will reveal how the online retailer

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<v Speaker 10>perform during the holiday shopping season and how artificial intelligence

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<v Speaker 10>is impacting demand for cloud computing at Facebook parent meta

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<v Speaker 10>platforms may see a continued bounce back from a recovering

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<v Speaker 10>ad market and cost cutting. John Tucker, Bloomberg Radio, All.

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<v Speaker 2>Right, John, thanks, So we continue to follow New York

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<v Speaker 2>Community Bankcorp. Following yesterday's record plunge of thirty eight percent.

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<v Speaker 2>The bank reported a surprise loss yesterday and slashed its

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<v Speaker 2>dividend amid growing concerns over commercial property loans. Bloomberg Intelligence

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<v Speaker 2>Senior banks analyst Herman Chan says the results are an outlier.

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<v Speaker 11>This seems more of a New York community specific issue

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<v Speaker 11>of needing to shore up their balance sheet and facing

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<v Speaker 11>a blip on their credit quality that they need to

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<v Speaker 11>you know, and still some more confidence in the market.

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<v Speaker 2>And Bloomberg's Hermann Chan says Moodies may cut the bank's

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<v Speaker 2>credit rating to junk. The stock is up almost one

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<v Speaker 2>percent this morning.

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<v Speaker 4>Let's turn to policy news.

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<v Speaker 3>In Washington, Karen Key Republican senators are exploring dropping demands

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<v Speaker 3>for new border restrictions and backing a standalone aid package

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<v Speaker 3>for Ukraine and Israel.

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<v Speaker 4>Bloomberg Zed Baxter has the story.

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<v Speaker 12>Minority Leader Mitch McConnell says he and Majority Leader Chuck

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<v Speaker 12>Schumer agreed.

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<v Speaker 10>Two friends in the middle of a huge fight Israel Ukraine,

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<v Speaker 10>they need help.

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<v Speaker 13>We on a democratic side, are pursuing getting all of

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<v Speaker 13>this done. Ukraine is humanitarian aid, Indo Pacific border together.

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<v Speaker 12>Getting it through the House will be another story. Ukraine

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<v Speaker 12>is warning it is facing a critical shortage of artillery shells.

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<v Speaker 12>Ed Baxter, Bloomberg.

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<v Speaker 4>Radio, all right and thanks.

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<v Speaker 2>Elsewhere on Capitol Hell, the CEOs of five social media

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<v Speaker 2>giants got a grilling over their platforms impact on kids'

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<v Speaker 2>mental health and sexual exploitation. Members of the Senate Judiciary

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<v Speaker 2>Committee focused most of their attention on meta platforms. Republican

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<v Speaker 2>Josh Holly had this to say to CEO Mark Zuckerberg.

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<v Speaker 10>Would you like now to apologize to the victims who

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<v Speaker 10>have been harmed by your product?

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<v Speaker 4>Show them the pictures.

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<v Speaker 10>Would you like to apologize for what you've done to

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<v Speaker 10>these good people?

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<v Speaker 2>At that point, Zuckerberg turned to families in the audience

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<v Speaker 2>and apologize for what they've been through. The committee is

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<v Speaker 2>looking for momentum on a bill that would target child's

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<v Speaker 2>sexual exploitation online. Time now for look at some of

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<v Speaker 2>the other stories making news around the world. For that,

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<v Speaker 2>we're joined by Bloomberg's Amy Morris Samy, Good Morning, Good morning, Karen.

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<v Speaker 14>Was a rare bipartisan vote in the House, which has

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<v Speaker 14>passed a seventy eight billion dollar business and child tax

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<v Speaker 14>break bill that would provide a boon for US companies

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<v Speaker 14>with large capital and domestic research expenditures. Republican Jason Smith

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<v Speaker 14>of Missouri expressed his support.

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<v Speaker 2>Each of these policies will help American businesses grow, create jobs,

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<v Speaker 2>and sharpen their competitive advantage against China.

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<v Speaker 14>The measure now heads to the Senate, where Republicans are

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<v Speaker 14>pushing back against a provision that allows some people with

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<v Speaker 14>no taxable income to collect the child tax credit. Senate

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<v Speaker 14>majority leader Chuck Schumer says they're working on a deal.

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<v Speaker 13>I support the tax bill, as I've stated before, I'm

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<v Speaker 13>working with Senator Widen to figure out the best way forward.

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<v Speaker 14>Whitehouse says if it passes the Senate, the President will

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<v Speaker 14>sign it. Negotiations are advancing for an agreement to pause

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<v Speaker 14>the Israel Hamas war and free civilian hostages captured by Hamas.

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<v Speaker 14>Sources tell Bloomberg that conversations are still in the early

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<v Speaker 14>stages and a breakthrough is not expected in the coming days,

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<v Speaker 14>but the proposal, which would mount to the longest pause

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<v Speaker 14>and the biggest hostage release since the war began October seventh,

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<v Speaker 14>has a realistic chance of success and could lead to

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<v Speaker 14>a longer term cease fire. The White House says it

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<v Speaker 14>is monitoring the warning from FBI Director Christopher Ray about

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<v Speaker 14>Chinese hackers preparing to target critical US infrastructure. At today's

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<v Speaker 14>White House briefing, National Security Council spokesman John Kirby said

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<v Speaker 14>the administration prioritizes cybersecurity.

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<v Speaker 11>This is something we monitor very closely all the time,

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<v Speaker 11>and we take all these threats seriously.

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<v Speaker 14>You have to, Kirby says, one element of critical infrastructure

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<v Speaker 14>in the United States is a free and fair election.

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<v Speaker 14>No matter how fast technology changes, AM radio has remained

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<v Speaker 14>a reliable tool for spreading information. Sean Voskell of the

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<v Speaker 14>American Association of Retired Persons says there are still plenty

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<v Speaker 14>of technology deserts.

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<v Speaker 1>Many people don't have the high speed Internet yet, so

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<v Speaker 1>they rely on their AM radio to get through information.

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<v Speaker 14>The carmakers are considering removing free AM radio, replacing it

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<v Speaker 14>with streaming and subscription services that would require fees. FEMA, though,

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<v Speaker 14>says getting free, reliable information in times of emergency is crucial.

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<v Speaker 14>Global news twenty four hours a day and whenever you

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<v Speaker 14>want it with Bloomberg News now, I Ami Morris in,

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<v Speaker 14>this is Bloomberg.

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<v Speaker 2>Karen all Right, Amy Thank you. We do bring you

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<v Speaker 2>You can listen and subscribe to Bloomberg News Now on

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<v Speaker 2>the Bloomberg Business app, Bloomberg dot Com plus apples, Spotify,

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<v Speaker 2>and anywhere else you get your podcasts. Time now for

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<v Speaker 2>the Bloomberg Sports Update with John Stashour.

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<v Speaker 15>John Ken, the news coach of the Seattle Seahawks, is

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<v Speaker 15>half the age of the guy he's replacing. Pete Carroll,

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<v Speaker 15>departed at the age of seventy two. Mike McDonald replaces him.

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<v Speaker 15>He's thirty six, becomes the youngest coach in the NFL.

0:08:59.520 --> 0:09:02.680
<v Speaker 15>He comes Baltimore, where he was the defensive coordinator. The

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<v Speaker 15>only NFL team yet to hire a new coach, the

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<v Speaker 15>Washington Commanders. A deal struck between the PGA Tour and

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<v Speaker 15>the Strategic Sports Group that includes Mets owner Steve Cohen,

0:09:13.840 --> 0:09:17.319
<v Speaker 15>Red Sox owner John Henry, Falcons owner Arthur Glank, the

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<v Speaker 15>Tour gets a three billion dollar infusion, so of purses

0:09:20.800 --> 0:09:23.680
<v Speaker 15>are expected to go up and they will launch PGA

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<v Speaker 15>Tour enterprises where the players will have equity. Meanwhile, that

0:09:28.240 --> 0:09:31.600
<v Speaker 15>PGA Tour deal with Saudi Arabia is still not official

0:09:31.640 --> 0:09:35.160
<v Speaker 15>and the Pebble Beach Tournament begins today. Nick Dunlap recently

0:09:35.200 --> 0:09:38.360
<v Speaker 15>won the American Express Golf as an amateur. He'll make

0:09:38.400 --> 0:09:41.760
<v Speaker 15>his professional debut. Damian Lillard, back in Portland, where he

0:09:41.800 --> 0:09:44.920
<v Speaker 15>spent eleven season, scored twenty five points. His new team,

0:09:45.000 --> 0:09:47.480
<v Speaker 15>the Milwaukee Bucks, lost to the Blazers in the rowe

0:09:47.480 --> 0:09:50.240
<v Speaker 15>and two with the new coach Doc Rivers on the bench.

0:09:50.280 --> 0:09:53.360
<v Speaker 15>Kevin Durant returned to Brooklyn, where he spent three and

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<v Speaker 15>a half seasons. He scored thirty three. The Suns beat

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<v Speaker 15>the nets Kawhi Leonards scored thirty one. The Clippers beat

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<v Speaker 15>the Wizards Flippers of one fourteen of the last seventeen

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<v Speaker 15>West Leaning Minnesota blew out Dallas by thirty four. Cleveland

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<v Speaker 15>won eleven last twelve. Donovan Mitchell scored forty five in

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<v Speaker 15>a win over Detroit. Miami beat Zacramento to in the

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<v Speaker 15>seventeen losing Street Johns Dashedward Bloomberg Sports.

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<v Speaker 16>From coast to coast, from New York to San Francisco,

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<v Speaker 16>Business Appen Bloomberg dot com. This is Bloomberg Daybreak.

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<v Speaker 4>Good morning. I'm Nathan Hager.

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<v Speaker 3>Not so fast on rate cuts, It seems to be

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<v Speaker 3>the message Jaypowllin company wanted to deliver to markets. After

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<v Speaker 3>holding interest rates steady at the Federal Reserves First Policy

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<v Speaker 3>Meeting of twenty twenty four, we.

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<v Speaker 5>Believe that our policy rate is likely at its peak

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<v Speaker 5>for this titaning cycle, and that if the economy evolves

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<v Speaker 5>broadly as expected, it will likely be appropriate to begin

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<v Speaker 5>dialing back policy restraint at some point this year.

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<v Speaker 3>When that point will be, that's the question. For more

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<v Speaker 3>on the Fed decision, we're joined by Bloomberg opinion columnist

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<v Speaker 3>Marcus Ashworth. So, Marcus, do we need to start thinking

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<v Speaker 3>about May rather than March?

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<v Speaker 17>No, I think we still have to expect that a

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<v Speaker 17>move could come in March. It's two more CPI numbers obviously,

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<v Speaker 17>payrolls times two as well, So I think the chances

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<v Speaker 17>are less that there will be a March rate cut

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<v Speaker 17>obviously they quite clearly say it's not their base case,

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<v Speaker 17>but they were very careful not to rule it out.

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<v Speaker 7>So it's data dependent.

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<v Speaker 17>The FED has made is ready and unclear that they

0:11:41.120 --> 0:11:44.040
<v Speaker 17>will be cutting rates this year. Does it really matter

0:11:44.120 --> 0:11:46.560
<v Speaker 17>they kind of cutch him in March rather than May.

0:11:46.800 --> 0:11:50.320
<v Speaker 17>Probably not in the greatest scheme of things. They're taking

0:11:50.320 --> 0:11:54.160
<v Speaker 17>the time right. So if the numbers come in much weaker,

0:11:54.240 --> 0:11:58.079
<v Speaker 17>bear in my big CPI revision on February ninth or so.

0:11:58.200 --> 0:12:00.600
<v Speaker 17>I think they'll be a payroll revis at the start

0:12:00.600 --> 0:12:01.360
<v Speaker 17>of the year as well.

0:12:01.720 --> 0:12:03.080
<v Speaker 7>If either of those come in, you know.

0:12:03.160 --> 0:12:06.559
<v Speaker 17>Dramatically changed and weaker, then I think March will come

0:12:06.600 --> 0:12:10.760
<v Speaker 17>back onto the agenda. So yeah, probably may, but hey

0:12:10.920 --> 0:12:12.040
<v Speaker 17>could still be much.

0:12:12.240 --> 0:12:14.400
<v Speaker 4>Well, what do you think is the risk that we

0:12:14.520 --> 0:12:19.240
<v Speaker 4>do see major revisions to that inflation data that's coming up.

0:12:20.360 --> 0:12:23.280
<v Speaker 17>Big, and I think that's why Walla has flagged it up.

0:12:23.679 --> 0:12:26.840
<v Speaker 17>The revisions were quite sharply down last year. Doesn't mean

0:12:26.840 --> 0:12:30.040
<v Speaker 17>it'll be followed through again, but I think the chances are.

0:12:30.000 --> 0:12:32.959
<v Speaker 7>Reasonable that they are, particularly.

0:12:32.480 --> 0:12:35.000
<v Speaker 17>If you look at the pc D edge and the

0:12:35.040 --> 0:12:39.680
<v Speaker 17>GDP report, it's running around two CPI is a full

0:12:39.720 --> 0:12:40.840
<v Speaker 17>percentage point higher.

0:12:41.240 --> 0:12:42.440
<v Speaker 7>Something's out of whack there.

0:12:43.280 --> 0:12:45.360
<v Speaker 17>Things are always slightly out of whack, but just a

0:12:45.440 --> 0:12:48.120
<v Speaker 17>bit more out of whack than usual. So the chances

0:12:48.160 --> 0:12:51.040
<v Speaker 17>are that that gap narrows is reasonably high, I think,

0:12:51.040 --> 0:12:54.520
<v Speaker 17>and that will only make it more prevalent on the

0:12:54.559 --> 0:12:57.760
<v Speaker 17>FED to start thinking, well, they've done their job. Inflation

0:12:57.840 --> 0:13:00.320
<v Speaker 17>has been beaten. Yes, the economy is strong. It needs

0:13:00.360 --> 0:13:02.800
<v Speaker 17>to be strong, but that doesn't mean that they have to,

0:13:02.960 --> 0:13:05.920
<v Speaker 17>you know, keep rates clearly too strong.

0:13:05.760 --> 0:13:06.440
<v Speaker 7>Than they need to be.

0:13:07.400 --> 0:13:11.520
<v Speaker 17>So you put that into the equation and maybe we

0:13:11.600 --> 0:13:14.360
<v Speaker 17>get an earlier rate cut. But you know, I think

0:13:14.360 --> 0:13:16.920
<v Speaker 17>the Fed's very content to take its time over this,

0:13:17.520 --> 0:13:21.280
<v Speaker 17>and I think that you know clearly there's shelter problems,

0:13:21.320 --> 0:13:23.600
<v Speaker 17>and the problems pompartn you. But then we know shelter

0:13:23.760 --> 0:13:27.160
<v Speaker 17>as a component in CPI is very much lagging, and

0:13:27.240 --> 0:13:29.000
<v Speaker 17>when any of that turns, which looks like it has,

0:13:29.440 --> 0:13:32.440
<v Speaker 17>that will push CPI down substantially over the next year

0:13:32.559 --> 0:13:34.719
<v Speaker 17>or two anyway, So we don't want to get a

0:13:34.760 --> 0:13:36.360
<v Speaker 17>situation we get close to deflation.

0:13:36.920 --> 0:13:38.640
<v Speaker 3>What do you think of there's a risk of a

0:13:38.720 --> 0:13:41.760
<v Speaker 3>problem if the Fed does keep interest rates high for

0:13:41.880 --> 0:13:42.480
<v Speaker 3>too long.

0:13:43.800 --> 0:13:46.240
<v Speaker 17>Well, I mean, look, we just saw with New York

0:13:46.240 --> 0:13:48.240
<v Speaker 17>Community Bank or I mean, you know there is there

0:13:48.360 --> 0:13:52.040
<v Speaker 17>some nasty stuff in the commercial real estate. Also Japanese

0:13:52.120 --> 0:13:56.000
<v Speaker 17>Bank and Azora gets covered by New York not a

0:13:56.040 --> 0:13:57.680
<v Speaker 17>part of the US commercial property.

0:13:58.120 --> 0:14:00.200
<v Speaker 7>So there are you know, we saw the.

0:14:00.360 --> 0:14:04.840
<v Speaker 17>Silicon Valley shakeout last year and the common problems as

0:14:04.840 --> 0:14:08.240
<v Speaker 17>the signature obviously is feeding through to the old Community

0:14:08.240 --> 0:14:11.079
<v Speaker 17>Bank corps. But I mean, you know this is an issue.

0:14:11.360 --> 0:14:14.440
<v Speaker 17>There's no necessary, real need, I think, to make interest

0:14:14.520 --> 0:14:18.120
<v Speaker 17>rates pain any more than it's it needs to be.

0:14:18.200 --> 0:14:19.080
<v Speaker 7>It's done its job.

0:14:19.440 --> 0:14:22.640
<v Speaker 17>It's fed through, and I think you know transitory is

0:14:22.680 --> 0:14:24.960
<v Speaker 17>now two or three years a definition rather than a year.

0:14:25.120 --> 0:14:28.000
<v Speaker 17>But certainly I think we've see most effects Pytrough. So

0:14:28.040 --> 0:14:31.640
<v Speaker 17>the Fed's got it under control. Very impressive behavior from power.

0:14:32.040 --> 0:14:34.080
<v Speaker 17>I wish the same could be said of the British

0:14:34.080 --> 0:14:35.480
<v Speaker 17>Central Bag, but that's another story.

0:14:35.600 --> 0:14:38.360
<v Speaker 3>Now let's get to that story in our last minute here.

0:14:38.600 --> 0:14:40.280
<v Speaker 3>Do you think the Bank of England's going to follow

0:14:40.280 --> 0:14:42.440
<v Speaker 3>the Fed's lead when it comes to pushing back at

0:14:42.480 --> 0:14:43.680
<v Speaker 3>great cut expectations?

0:14:43.680 --> 0:14:44.880
<v Speaker 4>We do have about a minute left.

0:14:45.280 --> 0:14:47.480
<v Speaker 7>Yeah, they definitely will push back. A question is how

0:14:47.560 --> 0:14:48.640
<v Speaker 7>much they'll push back.

0:14:48.720 --> 0:14:51.720
<v Speaker 17>They need more time, and we have a higher wage

0:14:52.680 --> 0:14:56.160
<v Speaker 17>problem in the UK. It's residual, it's sticky, it is

0:14:56.240 --> 0:15:00.240
<v Speaker 17>feeding through. We are have beaten inflation, it's just not

0:15:00.320 --> 0:15:02.720
<v Speaker 17>showing up quite as evidently as is in the States.

0:15:02.920 --> 0:15:03.520
<v Speaker 7>It will do.

0:15:04.000 --> 0:15:06.720
<v Speaker 17>I don't think there's any any real outline now in

0:15:06.760 --> 0:15:09.960
<v Speaker 17>the UK inflation terms. But you know, central banks are

0:15:09.960 --> 0:15:13.080
<v Speaker 17>paid to be cautious and drag the heels. That's exactly

0:15:13.080 --> 0:15:14.600
<v Speaker 17>what banking is going to do. What we want to

0:15:14.640 --> 0:15:18.000
<v Speaker 17>see is that there were three Hawks voting for another

0:15:18.200 --> 0:15:21.480
<v Speaker 17>rate hike last time, madness. I think let's see at

0:15:21.560 --> 0:15:23.360
<v Speaker 17>least one or two of those chase the minor go

0:15:23.520 --> 0:15:27.320
<v Speaker 17>back into a neutral stance, and possibly one will vote.

0:15:27.080 --> 0:15:27.720
<v Speaker 7>For a rape cup.

0:15:29.000 --> 0:15:32.080
<v Speaker 1>This is Bloomberg Daybreak Today, your morning brief on the

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