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Speaker 1: Good morning. I'm Doug Krisner. Here are the stories we're

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Speaker 1: following today. The US Senate has extended its session to

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Speaker 1: work on aid and border security. Let's get to Ed Baxter.

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Speaker 1: He's in the Bloomberg newsroom. Eddie, Yeah, thank you very much, Doug.

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Speaker 1: End of the traditional congressional session today, but Senate majority

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Speaker 1: of Leader Chuck Schumers is saying, don't go home. There's

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Speaker 1: work to be done on Israel and Ukraine funding.

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Speaker 2: For sure, we hope to come to an agreement, but

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Speaker 2: no matter what, members should be aware that we will

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Speaker 2: vote on a supplemental proposal next week.

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Speaker 3: Now.

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Speaker 4: Basically, go home if you want, but miss the vote

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Speaker 4: if you do. The White House, by the way of

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Speaker 4: saying that negotiations are going in the right direction. Russian

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Speaker 4: President Vladimir Putin holding his annual news conference today. Bloomberg's

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Speaker 4: Greg Sullivan says, exuding optimism and confidence.

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Speaker 5: We've heard about the war in Ukraine that came up

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Speaker 5: early on, where he gave an unusual amount of detail,

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Speaker 5: including the number of troops that are there. But what

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Speaker 5: was significant they're also was that he ruled out the

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Speaker 5: need for a second mobilization, actually saying that a recruiting

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Speaker 5: campaign the government is currently doing has pulled in enough troops,

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Speaker 5: even saying more than data initially planned.

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Speaker 4: Yes, Sullivan says. Putin also said the economy was turning around,

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Speaker 4: and of course ahead of elections there, EU leaders have

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Speaker 4: agreed to open membership talks with the Ukraine. This an

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Speaker 4: historic political win for Kiev. EU Council President Charles Mitchell

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Speaker 4: saying a clear signal of hope for the people and

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Speaker 4: for the continent. Israel reiterating today that the war with

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Speaker 4: Hamas will take a long time. This is more questions

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Speaker 4: are asked about limiting civilian casualties, especially by the US

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Speaker 4: calling it a lower intensity war. Pentagon spokesman General Major

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Speaker 4: General Pad Ryder says the US is working very hard

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Speaker 4: to get that now.

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Speaker 1: We will continue to expect that Israel conducts his operations

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Speaker 1: in accordance with the law of arm conflict.

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Speaker 4: Yeah, and Israel's Defense minister then saying that it's going

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Speaker 4: to be several months or more longer war. US National

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Speaker 4: Security Advisor Jakes Reullivant has met today with Prime Minister

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Speaker 4: net Yahoo and his war cabinet, as well as other

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Speaker 4: officials and the White House says he got a detailed

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Speaker 4: briefing on Israel's war plan. Swing states are swinging away

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Speaker 4: from President Biden. The Bloomberg News Morning Consult Battleground poll

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Speaker 4: released today shows Donald Trump is leading in all seven

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Speaker 4: of the states that are likely to side the election

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Speaker 4: next year. Bloomberg's Rick Davis.

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Speaker 6: Michigan is a classic study of a swing state that

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Speaker 6: means everything to Joe Biden. Joe Biden does not win

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Speaker 6: the presidency without Michigan, and yet Michigan was tied in

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Speaker 6: the previous two polls that Bloomberg did and is behind

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Speaker 6: now Trump for the first time in this series.

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Speaker 4: In Michigan, and Rick says, a poll shows that neither

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Speaker 4: party voter is excited about another Biden Trump matchup. Hong

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Speaker 4: Kong police are offering one hundred and twenty five thousand

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Speaker 4: dollars reward for information on five local dissidents reside overseas.

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Speaker 4: This a double down on its controversial use of bounties

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Speaker 4: to chase after pro democracy activists in the name of

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Speaker 4: national security. Global news twenty four hours a day and

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Speaker 4: whenever you want it with Bloomberg News Now in San Francisco.

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Speaker 4: I'm at Baxter and this is Bloomberg.

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Speaker 1: All right, Eddie b thank you so much. Let's get

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Speaker 1: to the business news flow now and we'll begin with

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Speaker 1: the FED and that do it dubvish pivot from yesterday.

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Speaker 1: It's really been the driving force behind what was a

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Speaker 1: rally in the equity market today. But today it looked

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Speaker 1: as though some signs of exhaustion began to manifest market

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Speaker 1: technicals pointing to overbought levels, and that makes the equity

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Speaker 1: market a little vulnerable here to a pullback. At the

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Speaker 1: same time, today, some of the big names on Wall Street,

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Speaker 1: the big banks, are anticipating FED rate cuts will happen

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Speaker 1: earlier and faster in the new year.

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Speaker 7: Here is Bloomberg's and Cates, Goldman Sachs economists the three

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Speaker 7: twenty five basis point interest rate cuts next year starting

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Speaker 7: in March, and for the Fed's preferred inflation gauge to

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Speaker 7: sload it just over two percent, lightly higher than the

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Speaker 7: Central bank's target. Barclay's is now calling for three reductions

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Speaker 7: in twenty twenty four, beginning in June, from just one

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Speaker 7: ahead of this week's FED meeting, and JP Morgan bumped

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Speaker 7: its view on the start of the easing cycle to

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Speaker 7: June from July and is looking for interest rates to

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Speaker 7: be trimmed five times next year. In Washington and Kate's

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Speaker 7: Bloomberg Radio.

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Speaker 8: The European Central Bank kept interest rates steady today, but

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Speaker 8: President Christine Legard said policy makers mustn't get complacent following

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Speaker 8: a slump in inflation. She said there aren't during upside

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Speaker 8: risks to consumer prices, and in the news conference, Leguard

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Speaker 8: was asked if a rate cut was even discussed during

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Speaker 8: the last policy meeting.

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Speaker 9: We did not discuss rate cuts at all. No discussion,

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Speaker 9: no debate on this issue. And I think everybody in

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Speaker 9: the room takes the view that between high and cut

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Speaker 9: there's a whole plateau, whole beach off hold. You know,

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Speaker 9: it's like I don't know solid liquid gazz. You don't

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Speaker 9: go leak from solid to gas without going through the

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Speaker 9: liquid phase. So this was just not discussed.

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Speaker 8: There is sublimation, but never mind, we'll move on. Leguard's

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Speaker 8: comments come despite the latest ECB forecasts offering further grounds

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Speaker 8: for optimism. Headline inflation is seen averaging five point four

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Speaker 8: percent and twenty twenty three, but forecasts show lower price

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Speaker 8: gains at two point seven percent next year and two

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Speaker 8: point one percent and twenty twenty five.

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Speaker 1: It's still a great metaphor though, wouldn't you agree? Oh yeah,

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Speaker 1: it is absolutely. Let's get to the Bank of England next.

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Speaker 1: The BOE keeping interest rates steady today at a fifteen

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Speaker 1: year high. The GOOEE also sticking with its measures that

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Speaker 1: borrowing cost will remain elevated for some time, despite growing

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Speaker 1: bets in the market for a wave of rate cuts

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Speaker 1: in twenty twenty four. Here is BOE Governor Andrew Bailey

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Speaker 1: after today's decision.

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Speaker 10: Our job is to achieve the two percent inflation target sustainably.

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Speaker 3: Now we're making good progress.

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Speaker 10: Inflation has come down from eleven percent to is today

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Speaker 10: just over four and a half, and it will come

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Speaker 10: down further, but we have to achieve it sustainably, so

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Speaker 10: there is more to do. So I'm encouraged by where

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Speaker 10: we are, but we have got more to do to

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Speaker 10: get to that target and that's what we will do.

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Speaker 1: That is the Governor of the Bank of England, Andrew Bailey. Now,

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Speaker 1: the BOE also said it could high creates again if

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Speaker 1: there was evidence of more persistent inflationary pressures.

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Speaker 8: Paul, but we get the Chiner activity figures for November

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Speaker 8: later on today. Bloomberg's Rashad Salamat has a preview.

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Speaker 11: Industrial production and retail sales are both expected to show

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Speaker 11: big games last month compared to a year ago. However,

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Speaker 11: the headline numbers may flatter to deceive. Don't forget November

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Speaker 11: twenty twenty two is a time when large parts of

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Speaker 11: China were only just starting to emerge from COVID lockdowns.

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Speaker 11: Bloomberg Economics expecting industrial production rising four point nine percent,

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Speaker 11: up from four point six percent in October. Meanwhile, economist

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Speaker 11: surveyed giving a forecast of just over five and a

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Speaker 11: half percent. Our economists a month on month day I

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Speaker 11: will likely paint a grimer picture, though early indicate it

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Speaker 11: suggests manufacturing continue to slow in the month and the

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Speaker 11: property slumps drag on overall consumer spending persisted. On retail sales,

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Speaker 11: Bloomberg economists it'll rise eight point eight percent from seven

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Speaker 11: point six percent the prior month consensus. It's for twelve

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Speaker 11: and a half percent in Hong Kong. I'm Richard Salamat

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Speaker 11: Bloomberg Radio.

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Speaker 1: US Treasury Secretary Janet Yellen will be revisiting China again

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Speaker 1: next year. The story from Bloomberg's Denise Pellegrini.

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Speaker 12: The Treasury Secretary, says a significant portion of the agenda

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Speaker 12: we'll focus on discussing difficult areas of concern with her counterpart,

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Speaker 12: and she also says she'll try to deepen areas of

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Speaker 12: cooperation and improve communication, even if she vowed to continue

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Speaker 12: confronting Beijing over national security and human rights. In plan

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Speaker 12: remarks to the US China Business Council in Washington, yell

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Speaker 12: And also made clear the US would continue to pursue

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Speaker 12: export controls and investment restrictions that have angered Beijing, but

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Speaker 12: she also said it's crucial to engage with China in

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Speaker 12: ways it could prevent potential diplomatic and financial crises. Ella

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Speaker 12: has emerged as something of a good cop in the

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Speaker 12: Biden administration's handling of China relations, through a relationship building

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Speaker 12: trip to China and also through meetings here in the US.

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Speaker 12: Denise pelgreny Bloomberg Radio.

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Speaker 8: All Right, we have got a city group shutting its

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Speaker 8: municipal business, and that business was once the envy of

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Speaker 8: its arrivals. We've got more from Bloomberg's Charlie Palette.

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Speaker 13: It is one of the most dramatic moves yet by

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Speaker 13: CEO Jane Frazier as she seeks to squeeze better returns

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Speaker 13: out of the Wall Street Giant. According to a memo

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Speaker 13: to staff seen by Bloomberg News, the bank decided the business,

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Speaker 13: which has tumbled in the rankings for underwriting state and

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Speaker 13: local debt, is quote no longer viable given our commitment

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Speaker 13: to increase the firm's overall returns. City Group intends to

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Speaker 13: complete the wind down by the end of the first quarter.

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Speaker 13: In New York, Charlie Palett, Bloomberg.

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Speaker 1: Radio, let's take it close to look now at some

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Speaker 1: of this week's Central Bank action with our own. Michael McKee,

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Speaker 1: Bloomberg International Economics and Policy corresponded, Joining us from here

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Speaker 1: in New York City. Michael, it's always a pleasure we

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Speaker 1: can get to the Fed momentarily. Let's talk about what

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Speaker 1: happened today with the ECB and the BOE both leaving

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Speaker 1: rates unchanged and both a lot less dubbish than the Fed.

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Speaker 1: Any sense of why they took that more hawkish point

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Speaker 1: of view.

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Speaker 2: For the Bank of England, it's basically that inflation is

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Speaker 2: higher and wage growth is stronger than the Bank would

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Speaker 2: like to see, and they don't think they're out of

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Speaker 2: the woods. Yet in terms of inflation, the ECB has

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Speaker 2: seen inflation come down a lot more. But again they're

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Speaker 2: also concerned that because they can't control energy prices, they're

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Speaker 2: much more exposed to energy and they don't know exactly

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Speaker 2: what's going to happen with the pattern wage negotiations that

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Speaker 2: are coming up.

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Speaker 3: At the beginning of the year. They don't want the markets.

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Speaker 2: To get carried away with the idea of Breke cuts,

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Speaker 2: so both banks pushing back on that idea without rejecting

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Speaker 2: the idea that in twenty twenty four they could be

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Speaker 2: cutting rates.

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Speaker 8: Well, we have seen trade as getting carried away with

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Speaker 8: the idea of FED right cuts. What are markets saying

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Speaker 8: about the possibility of right cuts from the ECB and

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Speaker 8: BOE next.

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Speaker 2: Year, Well, the markets are pricing in rate cuts for

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Speaker 2: both of those banks. I think four was the last

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Speaker 2: I saw for the Bank of England, which seems like

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Speaker 2: a lot given the bank, as I said, has a

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Speaker 2: much greater inflation issue than the United States or.

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Speaker 3: The Bank the European Central Bank.

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Speaker 2: The question for the ECB is for how they're going

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Speaker 2: to do this, because they've still got they are still reinvesting,

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Speaker 2: they're rolling over bonds, which the FED stopped, and so

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Speaker 2: they may continue that for a while then slowly get

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Speaker 2: out of that, and that would be a signal that

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Speaker 2: rate cuts might be coming.

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Speaker 1: So let's bring it back to the FED. Because of

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Speaker 1: that pretty dubbish pivot yesterday, I may have surprised the

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Speaker 1: market quite a bit. An enormous rally in treasuries yesterday

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Speaker 1: and at the short end of the curve. I think

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Speaker 1: the two year was down nearly thirty basis points and

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Speaker 1: we were lower today in yields across the curve. Michael,

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Speaker 1: do you think this is concerning the Fed? That this

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Speaker 1: pivot has created so much easing and financial conditions? May

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Speaker 1: not that be a little worrisome if.

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Speaker 2: It continued, and if it translated into lower borrowing costs immediately,

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Speaker 2: it might concern the Fed. But we've seen rates go

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Speaker 2: down over the last month as the buckets anticipated the FED.

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Speaker 2: But we didn't see credit card rates or auto loan

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Speaker 2: rates falling. We didn't see the prime rate falling. Margat

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Speaker 2: rates came down, but only into the sevens, so it's

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Speaker 2: not an immediate transmission mechanism. The financial conditions indexes reflect

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Speaker 2: a lot of what goes on in equity markets. The

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Speaker 2: fact that equity markets are buoyed is good news for

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Speaker 2: consumer spending going along. But at this point I think

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Speaker 2: the FED is going to wait and see what happens.

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Speaker 2: They suggest that they're going to be cutting rates, but

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Speaker 2: they didn't say when the markets think it's going to

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Speaker 2: be earlier. The FED will judge on a meeting by

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Speaker 2: a meeting basis, when they think they need to do it.

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Speaker 8: We've still got an inverted yield curve, though I don't

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Speaker 8: we with the tenure right now three ninety two two

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Speaker 8: at four thirty eight, so spread of about forty six

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Speaker 8: basis points. What's the expectation around this normalizing?

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Speaker 2: It should continue to normalize, But the yield curves are

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Speaker 2: kind of in a position of, well, it's been signaling

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Speaker 2: something that hasn't happened, because basically this is a completely

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Speaker 2: different economic cycle. But the question is where does the

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Speaker 2: ten year go? Where do the longer rates go? When

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Speaker 2: we don't know exactly where the Fed is going to go,

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Speaker 2: the market has to reflect what they think both the

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Speaker 2: FED rate is going to be and the inflation rate,

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Speaker 2: and then some sort of time discount, and at this

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Speaker 2: point nobody quite knows where the FED ends up.

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Speaker 3: We know they won't go.

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Speaker 2: Back to zero, but do they go back to five

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Speaker 2: or four or three percent? Son Till the markets figure

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Speaker 2: that out, it's going to be hard to get a

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Speaker 2: handle on exactly where the deal curb stops.

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Speaker 1: Michael, we had the retail sales numbers today, What do

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Speaker 1: they tell us about the health of the American consumer.

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Speaker 2: The American consumer seems healthy and willing to spend. The

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Speaker 2: retail sales numbers were good. Now, you generally have to

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Speaker 2: take them over a couple of month average because they

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Speaker 2: do get revised quite often. And while we were up

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Speaker 2: three tenths on the overall number, we were flat. That

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Speaker 2: revised down from a two tents gain, So basically it

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Speaker 2: was still a small gain, but it was a gain.

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Speaker 2: And the things that people bought were clothing and toys

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Speaker 2: and sporting goods and electronics, the kind of things that

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Speaker 2: we expect them by in the holiday season. So it

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Speaker 2: does seem that consumers are not pulling back too much

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Speaker 2: at this point.

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Speaker 1: So you combine that with the weekly jobless claims numbers,

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Speaker 1: and it looks as though the US is going to

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Speaker 1: manage a soft landing right very quickly.

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Speaker 13: Fair point.

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Speaker 3: Well, it's a fair point.

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Speaker 2: You have take the jobless claims numbers with a bit

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Speaker 2: of a great assault at this time of year because

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Speaker 2: of all the holidays, but it does shows still straight.

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