WEBVTT - Bloomberg Daybreak: December 1, 2022 - Hour 2 (Radio) 0:00:02.440 --> 0:00:05.880 Live from the Bloomberg Interactive Broker Studios. This is Bloomberg 0:00:05.920 --> 0:00:09.720 day Break for Thursday, December one, two. Coming up this hour, 0:00:10.240 --> 0:00:12.920 j Palell moves markets as he signals the pace of 0:00:13.000 --> 0:00:16.760 rate hikes will slow more signs China is softening its 0:00:16.800 --> 0:00:20.720 stands on COVID restrictions. Sam bankman Fried speaks out about 0:00:20.720 --> 0:00:23.680 the collapse of ft X, and a standoff between Elon 0:00:23.760 --> 0:00:27.720 Musk and Tim Cook appears to ease New York subway 0:00:27.720 --> 0:00:30.240 writers may see fears go up next year. Plus, a 0:00:30.280 --> 0:00:33.880 House committee now has President Trump's tax returns. On Michael 0:00:33.920 --> 0:00:37.680 blarm More Ahead, I'm John Standstoward. Sports another home loss 0:00:37.720 --> 0:00:40.080 for the Knicks, beaten by the Bucks, the Nets beat 0:00:40.120 --> 0:00:45.320 the Wizards, the Rangers one in Ottawa. That's all trended 0:00:45.360 --> 0:00:48.680 ahead on Bloomberg day Break on Bloomberg. He Living Free 0:00:48.680 --> 0:00:53.120 on New York Bloomberg one, Washington, d C, Bloomberg one 0:00:53.120 --> 0:00:57.600 oh six one, Boston, Bloomberg nine sixties and Francisco Sirius 0:00:57.800 --> 0:01:01.160 x M one nineteen and around the world Bloombird Radio 0:01:01.280 --> 0:01:08.720 dot Com and via the Bloombird Business app the Thursday Morning. 0:01:08.760 --> 0:01:12.160 I'm Amy Morris, I'm Nathan Hagar futures are moving lower 0:01:12.200 --> 0:01:14.160 this morning. We're coming up to six o one on 0:01:14.240 --> 0:01:16.600 Wall Street, and we check the markets every fifteen minutes 0:01:16.600 --> 0:01:19.520 starting the trading day. On bloomberg SMP futures are down 0:01:19.600 --> 0:01:23.040 down five points, Stown features down sixty nine, NASTAC futures 0:01:23.040 --> 0:01:26.360 are lower by thirty seven points ten. Your treasury is 0:01:26.360 --> 0:01:28.440 a little changed now. The yield three point six zero 0:01:28.480 --> 0:01:31.119 percent yield on the two year four point three two percent. 0:01:31.600 --> 0:01:34.319 Nimex screws up six tenths per center forty five cents 0:01:34.319 --> 0:01:36.920 at eighty one dollars A barrel comes gold is up 0:01:36.920 --> 0:01:39.360 one point seven percent, up thirty dollars fifty cents. It's 0:01:39.360 --> 0:01:43.039 seventy announced. The euro one point zero four two two 0:01:43.040 --> 0:01:45.400 against the dollar, the yen one thirty six point four 0:01:45.440 --> 0:01:49.680 four Amy Nathan, we begin with market moving remarks from JPL, 0:01:49.840 --> 0:01:52.640 the FED chair signaling the Central Bank will back off 0:01:52.720 --> 0:01:55.600 its aggressive base of interest rate hikes as soon as 0:01:55.720 --> 0:01:58.360 this month. The time for moderating the pace of rate 0:01:58.400 --> 0:02:01.200 increases may come as soon as the December meeting. Given 0:02:01.200 --> 0:02:04.400 our our progress in tightening policy, the timing of that 0:02:04.480 --> 0:02:07.080 moderation is far less significant than the questions of how 0:02:07.160 --> 0:02:10.480 much further we will need to raise grades to control inflation. 0:02:10.880 --> 0:02:14.160 Powell's remarks solidified bets the Fed will downshift to a 0:02:14.200 --> 0:02:17.880 fifty basis point rate hike on December four, after delivering 0:02:17.919 --> 0:02:21.280 four straight seventy five basis point moves. Like what, the 0:02:21.360 --> 0:02:24.799 markets surged on Powell's comments. Say. The SMP five hundred 0:02:24.880 --> 0:02:27.280 rallied more than three percent to close it a two 0:02:27.280 --> 0:02:30.840 month high. The NASTAC one hundred jumped four point four percent, 0:02:31.160 --> 0:02:34.040 and with the Dow's seven hundred thirty seven point advanced, 0:02:34.080 --> 0:02:37.880 that index is now up from its September low. That 0:02:37.960 --> 0:02:41.160 meets the definition of a bull market. Sobadra ra Joppa's 0:02:41.200 --> 0:02:44.040 head of US rate strategy associate a general, So, I 0:02:44.040 --> 0:02:46.799 think if you have a picture where inflation is starting 0:02:46.840 --> 0:02:49.360 to moderate, then they might be willing to kind of 0:02:49.400 --> 0:02:52.440 be patient, keep rates steady for the domainder of next 0:02:52.520 --> 0:02:55.840 year UH and then start to orchestrate a soft landing. 0:02:56.120 --> 0:03:00.240 Sbadra Japa expects rates to stay elevated not only next year, 0:03:00.280 --> 0:03:03.840 but into and we saw the Wall Street rally spill 0:03:03.960 --> 0:03:06.919 into markets overseas. Stocks in Europe are up about a 0:03:06.919 --> 0:03:11.320 half percent. Equities in Asia advanced overnight extending gains after 0:03:11.320 --> 0:03:14.680 their best monthly rally in twenty four years. Let's get 0:03:14.720 --> 0:03:18.399 the recap from Bloomberg's Juliet Sally in Singapore. Good morning, Juliette, 0:03:18.440 --> 0:03:21.040 Good morning, Nathan and Amy. After capping a fifteen percent 0:03:21.080 --> 0:03:23.520 gain in November, the m s ci Asia Pacific Index 0:03:23.600 --> 0:03:25.680 jumped as much as two and a half percent Thursday 0:03:25.720 --> 0:03:28.600 to in August high and is inching closer towards a 0:03:28.639 --> 0:03:31.560 bull market. Gauges in China, Hong Kong and Taiwan led 0:03:31.600 --> 0:03:34.440 gains after a top Chinese officials said efforts to combat 0:03:34.440 --> 0:03:37.480 the virus entering a new phase, with the omicron variant 0:03:37.520 --> 0:03:42.440 weakening and vaccination rates rising. Meanwhile, Beijing some restrictions, lifting 0:03:42.480 --> 0:03:45.040 the on and the yen traded at a three month 0:03:45.120 --> 0:03:49.040 high in Singapore. Juliette Sally Bloomberg Day Break, Juliet Thanks. 0:03:49.080 --> 0:03:52.000 COVID policies remained front and center in China, and we're 0:03:52.000 --> 0:03:54.680 seeing more signs Beijing may be willing to soften its 0:03:54.680 --> 0:03:58.520 stance on virus restrictions. Bloomberg Executive editor Paul Dobson has 0:03:58.560 --> 0:04:01.880 more from our Singapore bureau today. We learned that in Beijing, 0:04:01.960 --> 0:04:04.760 some people may be allowed to quarantine at home instead 0:04:04.760 --> 0:04:07.280 of going to quarantine camps, which is obviously good news 0:04:07.280 --> 0:04:09.080 because people would much rather be in the comfort of 0:04:09.120 --> 0:04:11.600 their own homes given the choice a lot of the time. 0:04:12.160 --> 0:04:14.400 Um and and it might give them a little bit 0:04:14.440 --> 0:04:16.760 more confidence to go out at about when when COVID 0:04:16.839 --> 0:04:20.479 isn't around incremensity, that's good news. But directionally that's very 0:04:20.520 --> 0:04:23.360 good news because you know, the market is waiting for 0:04:23.880 --> 0:04:27.640 China to take these decisive steps, you know, the vaccinations 0:04:27.640 --> 0:04:30.960 that are needed for the elderly, the increase in hospital 0:04:31.040 --> 0:04:34.440 beds to be able to start that process of opening up, 0:04:34.440 --> 0:04:36.279 which the rest of the world has already, you know, 0:04:36.320 --> 0:04:39.440 way ahead of Bloomberg's Paul Dobson says, it's been three 0:04:39.520 --> 0:04:43.440 years since the world's first documented coronavirus patient emerged in China, 0:04:43.800 --> 0:04:46.039 and Nathan back here in the US, we are hearing 0:04:46.120 --> 0:04:49.400 public comments now from Sam Bankman freed for the first time, 0:04:49.720 --> 0:04:53.080 the disgraced founder and CEO of the bankrupt FDx crypto 0:04:53.120 --> 0:04:57.840 Empire is denying fraud while admitting to grievous errors in management. 0:04:58.200 --> 0:05:00.719 Whatever happened, why ever it happened, I had a duty 0:05:00.720 --> 0:05:03.800 added duty to all of our stakeholders, to our customers, 0:05:04.400 --> 0:05:07.160 our frederors, a head of duty for employees, for investors, 0:05:07.320 --> 0:05:10.840 and to the regulators in the world to do right 0:05:10.880 --> 0:05:12.640 by them, to make sure the right things happened to 0:05:12.720 --> 0:05:15.240 the company. And uh, they're the I'd do a good 0:05:15.279 --> 0:05:17.919 job of that. I was shocked by what happened this month, 0:05:18.760 --> 0:05:21.400 Sam Bankman. Freed made the comments by video link at 0:05:21.400 --> 0:05:24.000 the New York Times Deal Book Summit. There are still 0:05:24.080 --> 0:05:27.120 unanswered questions about how FTX ended up with an eight 0:05:27.200 --> 0:05:29.880 billion dollar hole in its balance sheet and whether it 0:05:30.000 --> 0:05:33.560 mishandled customer funds well. Meantime, amy has standoff between two 0:05:33.560 --> 0:05:36.640 of the world's most powerful tech leaders appears to be easy. 0:05:36.839 --> 0:05:39.800 Let's get the details live from Bloomberg. Steve Rappaport, Good 0:05:39.839 --> 0:05:42.719 Morning State, Good morning making a namy Elon. Musk is 0:05:42.760 --> 0:05:45.680 burying the hatchet with Apple CEO Tim Cook, saying the 0:05:45.720 --> 0:05:48.520 tip between the tech giants was a misunderstanding that has 0:05:48.560 --> 0:05:51.960 been resolved. The Twitter boss claimed without explanation that Apple 0:05:51.960 --> 0:05:54.400 threatened to block the platform from its app store, but 0:05:54.520 --> 0:05:57.440 yesterday Musk's confirmed he spoke with Cook and says Cook 0:05:57.520 --> 0:06:00.839 assured him Apple never even considered doing so, a number 0:06:00.839 --> 0:06:03.960 of businesses paused advertising on Twitter because of concerns about 0:06:04.040 --> 0:06:06.960 Musk's approach to moderating content. Live in New York, I'm 0:06:07.000 --> 0:06:10.080 Steve Rappaport, Bloomberg Daybreak. All right, thank you, Steve. Now, 0:06:10.160 --> 0:06:12.360 let's get the latest on efforts to avert a crippling 0:06:12.440 --> 0:06:15.880 freight rail strike. The House has passed legislation to block 0:06:15.920 --> 0:06:18.240 a strike, sending it to the Senate, which could take 0:06:18.240 --> 0:06:20.920 action as soon as this week. The House also passed 0:06:20.920 --> 0:06:23.159 a related bill that would add seven days of paid 0:06:23.200 --> 0:06:26.520 sickly to the rail contract. Bloomberg's Joe Matthew spoke about 0:06:26.520 --> 0:06:29.320 that with Art Wheaton, director of Labor Studies at Cornell 0:06:29.440 --> 0:06:33.800 University's School of Industrial and Labor Relations. I agree that 0:06:33.960 --> 0:06:36.880 the workers deserve the seven days off, but they need 0:06:36.920 --> 0:06:39.919 to get enough votes in the Senate for it to pass. 0:06:40.000 --> 0:06:42.840 Otherwise we have a strike. I would guess they're not 0:06:42.920 --> 0:06:45.560 going to add the seven days in the Senate. Art 0:06:45.560 --> 0:06:48.440 Wheaton is director of Labor Studies at Cornell University. He 0:06:48.520 --> 0:06:50.839 was a guest on Sound on Herd weekdays at five 0:06:50.880 --> 0:06:54.000 pm Wall Street Time here on Bloomberg Radio. Finally, Amy 0:06:54.040 --> 0:06:57.200 as inflation pressures remain high. A new survey says New 0:06:57.279 --> 0:07:00.560 York City and Singapore are the most expensive of cities 0:07:00.600 --> 0:07:03.800 to live in. The report comes from the Economist Intelligence 0:07:03.880 --> 0:07:07.200 Unit Tel Aviv, Hong Kong, and Los Angeles round out 0:07:07.200 --> 0:07:09.920 the top five. The survey says the cost of living 0:07:09.960 --> 0:07:12.880 in the world's largest cities rose more than eight percent 0:07:13.080 --> 0:07:15.880 over the past year. Straight ahead, we'll bring your latest 0:07:15.960 --> 0:07:19.040 local headlines and a check of sports. This is Bloomberg. 0:07:23.120 --> 0:07:25.320 Thank you, Nathan, six oh seven on Wall Street. Now, 0:07:25.400 --> 0:07:27.560 let's bringing Michael Barr to find out what else is 0:07:27.600 --> 0:07:29.720 going on in New York and around the world. Good 0:07:29.760 --> 0:07:32.840 morning Michael, Good morning Amy. New York's mt A may 0:07:32.880 --> 0:07:37.000 boost fares on subways, buses, and commuter rail lines by 0:07:37.040 --> 0:07:40.160 five point five percent next year. It is the first 0:07:40.200 --> 0:07:43.200 time the transit provider has implemented such a hike since 0:07:44.680 --> 0:07:48.480 the MTA faces a potential three billion dollar budget deficit 0:07:49.880 --> 0:07:54.080 as weekday ridership has plantawed to about six a pre 0:07:54.240 --> 0:07:57.680 pandemic levels. The m t A tends to increase fares 0:07:57.720 --> 0:08:00.920 by four percent every two years, but Governor Kathy Hoco 0:08:01.000 --> 0:08:04.200 postpone tho science during the pandemic. The house ways and 0:08:04.280 --> 0:08:07.600 means committee will get to look through Donald Trump's tax returns, 0:08:07.800 --> 0:08:10.760 Bloomberg said Baxter as the story the i R s 0:08:10.800 --> 0:08:13.040 as it is complied with the Supreme Court and making 0:08:13.040 --> 0:08:16.240 the returns available, did not confirm whether members of the 0:08:16.280 --> 0:08:19.720 panel have accessed them. The committee reportedly will meet today 0:08:19.760 --> 0:08:22.720 to decide what to do with the returns. This has 0:08:22.720 --> 0:08:24.960 been a long journey, as a committee has been seeking 0:08:24.960 --> 0:08:29.080 the documents since twenty Trump had repeatedly said during the 0:08:29.120 --> 0:08:31.960 campaign that he would make the returns public, but then 0:08:32.080 --> 0:08:34.760 fought all the way to the Supreme Court. The committee 0:08:34.800 --> 0:08:37.360 has argued it needs to see the returns to draft 0:08:37.440 --> 0:08:41.959 legislation on presidential compliance with tax law. In San Francisco, 0:08:42.000 --> 0:08:45.240 I'm at Baxter Bloomberg Daybreak. The US Appeals Court rejected 0:08:45.280 --> 0:08:48.840 the Biden administration's request to reinstate the student debt relief plan. 0:08:49.400 --> 0:08:52.400 President Biden announced in August that the government would forgive 0:08:52.520 --> 0:08:55.520 up to ten thousand dollars in student loan debt for 0:08:55.679 --> 0:08:59.760 borrowers making less than one twenty five thousand dollars a year. 0:09:00.200 --> 0:09:03.959 About twenty six million Americans have applied for student loan forgiveness. 0:09:04.200 --> 0:09:08.720 Loyola Law University Professor Lorie Levinson. These loans are supposed 0:09:08.720 --> 0:09:12.720 to be repaid starting in January, and unless a court 0:09:12.920 --> 0:09:16.840 uphold surfieding plan, then these people who thought they would 0:09:16.880 --> 0:09:20.160 have their loans forgiven will have to start paying. Professor 0:09:20.240 --> 0:09:23.319 Lorie Levinson says the next stop is likely the Supreme Court. 0:09:23.800 --> 0:09:27.600 The New York Grid Operator warned that electricity supplies will 0:09:27.640 --> 0:09:29.920 be tied as early as twenty three as the man 0:09:30.040 --> 0:09:34.400 grows and old generators shut down, increasing the risk of blackouts. 0:09:34.800 --> 0:09:38.000 The New York Independent System Operators says the availability of 0:09:38.040 --> 0:09:41.520 power supplies will then over the next decade as more 0:09:41.559 --> 0:09:44.920 power plants fueled by natural gas shut down and the 0:09:44.960 --> 0:09:48.839 man grows for electric vehicles and home heating. Global News 0:09:48.840 --> 0:09:51.400 twenty four hours a day on air and on Bloomberg 0:09:51.480 --> 0:09:54.439 Quick Tank, powered by more than twenty seven under journalist 0:09:54.440 --> 0:09:57.280 and analysts more than a hundred twenty countries. Michael Barr 0:09:57.280 --> 0:10:03.240 and this is Bloombergaining. All right, thank you make for 0:10:03.320 --> 0:10:05.559 the sports report, brought to you by Try State Outy. 0:10:05.679 --> 0:10:07.959 Here's john s dash Our all right, thanks Amy. The 0:10:08.040 --> 0:10:10.160 Knicks one of their first three home games this season. 0:10:10.240 --> 0:10:13.000 Since then at the Garden, they've gone one and six 0:10:13.440 --> 0:10:15.199 beaten by the Bucks one oh nine, one oh three 0:10:15.240 --> 0:10:17.800 too much. Jana's sons in the compo thirty seven points. 0:10:17.920 --> 0:10:20.520 R J. Barrett of the Knicks with twenty six. Julius 0:10:20.600 --> 0:10:23.400 Randalls had only eight of twenty four, Jalen Brunson eight 0:10:23.440 --> 0:10:25.840 of twenty two. Together, they were just one of twelve 0:10:25.920 --> 0:10:29.280 on three pointers the nets in Brooklyn Pete, Washington one 0:10:29.400 --> 0:10:31.800 one oh seven. That's three straight wins to move over 0:10:31.840 --> 0:10:35.360 five hundred. Kevin Durant continues his terrific season, averaging thirty 0:10:35.360 --> 0:10:39.319 per game, shooting fifty five. Durant scored thirty nine Kyrie 0:10:39.360 --> 0:10:42.520 Irving at its twenty seven. Rangers in Ottawa had the lead, 0:10:42.600 --> 0:10:44.520 looking for more of the Rangers control of the draw, 0:10:44.640 --> 0:10:46.960 send it back up with Savannah Jat up the middle, 0:10:47.040 --> 0:10:49.280 leaves the back into the far wing for VC spins 0:10:49.320 --> 0:10:51.880 to his forehead and backhands upon and at the Savannah Jat. 0:10:52.120 --> 0:10:54.680 Savannah Jat slings it to the newer point and lingery 0:10:54.720 --> 0:10:57.800 with a and they store Prider was in front. I 0:10:57.840 --> 0:11:00.000 think he deflected it and the Rangers take up three 0:11:00.520 --> 0:11:02.559 ESPN New York CALLI it was Grider is eleven goal 0:11:02.600 --> 0:11:04.600 he at fifty two. Last year, the Rangers beat the 0:11:04.679 --> 0:11:09.160 Senators three to one. College Jus Rutgers lost in Miami 0:11:09.040 --> 0:11:11.719 s one Big ten a c C Challenge. The two 0:11:11.760 --> 0:11:15.440 conferences split six games Tuesday and split six more last night, 0:11:15.480 --> 0:11:18.240 Indiana beating North Carolina, who began the season right number 0:11:18.240 --> 0:11:21.080 one Tario's and now lost three in a row. Australia, 0:11:21.200 --> 0:11:24.120 Argentina and Poland all earned their way into the World 0:11:24.120 --> 0:11:27.000 Cup knockout round. France had already flints and four more 0:11:27.080 --> 0:11:30.520 spots up for grabs today. In guitar, the Giants will 0:11:30.559 --> 0:11:32.800 have a visitor at the facility today and old fred 0:11:32.840 --> 0:11:35.640 O'Dell Beckham, the ex Giant, has not played this season, 0:11:36.000 --> 0:11:38.040 now said to have recovered from the torn a c 0:11:38.200 --> 0:11:40.040 l suffered in the Super Bowl while he was with 0:11:40.120 --> 0:11:43.840 the Rams. The Cowboys also very much interested in signing Jack. 0:11:44.280 --> 0:11:47.720 That's Stashward Bloomberg Sports Team. All right, thank you, John. 0:11:47.880 --> 0:11:51.240 Futures are lower s and P features down one, pot 0:11:51.559 --> 0:11:55.640 Dal futures down forty seven, NAZAC features down twenty four points. 0:11:56.000 --> 0:11:58.480 Much more to come on this Thursday morning edition of 0:11:58.480 --> 0:12:07.720 Bloomberg Daybreak. Stay with us. This is Bloomberg, The Bloomberg 0:12:07.760 --> 0:12:09.959 Sports Report was brought to you by Audie. Don't let 0:12:09.960 --> 0:12:12.880 someone else drive off and the Audi model you've always wanted. 0:12:12.960 --> 0:12:15.360 Visit your local Tri state autie dealer to get behind 0:12:15.400 --> 0:12:17.760 the wheel of yours today, or visit Autie Offers dot 0:12:17.760 --> 0:12:24.480 com for more information, markets, headlines and breaking news twenty 0:12:24.480 --> 0:12:27.359 four hours a day at Bloomberg dot com, the Bloomberg 0:12:27.360 --> 0:12:37.000 Business Outland at Bloomberg Quick Tape, She's a Bloomberg Business Lash. 0:12:37.440 --> 0:12:40.000 I'm Nathan Hagar. Futures are moving just to touch lower 0:12:40.000 --> 0:12:43.760 after Yesterday's surge following FED Chair Powell's remarks at the 0:12:43.760 --> 0:12:47.640 Brookings Institution confirming the pace of interest rate hikes will slow. 0:12:47.800 --> 0:12:50.199 We checked the markets every fifteen minutes during the trading 0:12:50.280 --> 0:12:53.680 day on Bloomberg SMP futures right now are down four points, 0:12:53.679 --> 0:12:56.839 STOW futures down six five. Nasty futures are lower by 0:12:56.840 --> 0:12:59.200 thirty four points. The tenure Treasury is up one thirty 0:12:59.240 --> 0:13:02.080 second deal three point six zero percent build on the 0:13:02.080 --> 0:13:04.760 two year four point three two percent. IMAX Screwed is 0:13:04.840 --> 0:13:07.400 up eight tenths percent, up sixty three cents eighty one 0:13:07.400 --> 0:13:10.559 dollar nineteen cents for a barrel of West Texas Intermediate 0:13:10.559 --> 0:13:13.200 Comex gold is up one eight percent, up thirty one 0:13:15.480 --> 0:13:17.760 an ounce, the euro one point zero four two one 0:13:17.800 --> 0:13:20.040 against the dollar. The end is at one thirty six 0:13:20.080 --> 0:13:23.200 point four two. Bitcoins down almost a ten percent, just 0:13:23.240 --> 0:13:26.319 shy of seventeen thousand, one hundred. That's a Bloomberg business flash. 0:13:26.360 --> 0:13:28.880 And now here's Michael Barr McK more on let's going 0:13:28.960 --> 0:13:31.400 on around the world. Michael Nathan, thank you very much. 0:13:31.440 --> 0:13:33.440 A House committee can now get a look at six 0:13:33.520 --> 0:13:36.480 years of Donald Trump's tax returns. It comes a week 0:13:36.520 --> 0:13:39.040 after the Supreme Court cleared the way for their release. 0:13:39.480 --> 0:13:43.120 More Chinese cities are easing some anti virus restrictions as 0:13:43.160 --> 0:13:47.160 police patrol their streets to head off protests demonstrators, and 0:13:47.200 --> 0:13:50.360 several cities demanded an end to controls that can find 0:13:50.440 --> 0:13:53.160 millions of people to their homes. In the NBA, the 0:13:53.240 --> 0:13:56.000 next lost, the Nets beat the Wizards the Celtics one. 0:13:56.280 --> 0:13:59.160 In the NHL, the Rangers won at the World Cup 0:13:59.200 --> 0:14:03.079 four games to including Germany against Costa Rica. Global News 0:14:03.080 --> 0:14:05.800 twenty four hours a day on air and on Bloomberg 0:14:05.840 --> 0:14:08.440 Quick Tank, powered by more than twenty seven un your 0:14:08.520 --> 0:14:12.200 journalist and analysts, more than twenty countries Michael Laren, this 0:14:12.400 --> 0:14:15.360 is Bloomberg Amy. All right, thank you, Michael. It's six 0:14:15.480 --> 0:14:19.160 nineteen on Wall Street Live from the Bloomberg Interactive Broker Studios. 0:14:19.200 --> 0:14:22.640 This is Bloomberg Daybreak. FED Jair J. Powell signaled the 0:14:22.680 --> 0:14:26.080 Federal Reserve will slow the pace of interest rate increases 0:14:26.160 --> 0:14:29.080 next month, while stressing borrowing costs will need to keep 0:14:29.160 --> 0:14:32.640 rising for some time to beat inflation. We welcome global 0:14:32.680 --> 0:14:36.880 market strategist Brian Leavitt with Investco. He joins us now. Brian, 0:14:36.960 --> 0:14:39.520 good morning to you. What's your takeaway from Fed chair 0:14:39.600 --> 0:14:43.320 Powell's speech. You know, it's funny the market loved it. 0:14:43.600 --> 0:14:46.760 Um to your rates came down pretty significantly. I'm not 0:14:46.880 --> 0:14:50.480 sure that the said I'm not sure J. Powell intended 0:14:50.880 --> 0:14:53.800 for that type of reaction from the market, but it 0:14:53.880 --> 0:14:56.520 does suggest to me that we are getting closer to 0:14:56.600 --> 0:15:01.360 the end of the tightening cycle and markets aren't gonna 0:15:01.360 --> 0:15:04.680 wait till the actual pause. Markets will start to sniff 0:15:04.720 --> 0:15:07.920 out a change in policy, and and that's how a 0:15:08.000 --> 0:15:11.680 recovery will commence. So it may already be taking place again. 0:15:11.720 --> 0:15:14.760 I don't think the Fed wanted that type of reaction, um, 0:15:14.760 --> 0:15:17.280 but it's a process that we're we're moving through and 0:15:17.440 --> 0:15:21.160 and should set the stage for a recovery in so 0:15:21.320 --> 0:15:25.120 you don't expect a recession, then well you may have 0:15:25.160 --> 0:15:30.040 a recession. Um. I liken it to nineteen eighty one, 0:15:30.040 --> 0:15:34.800 where inflation did peak in nineteen eighty Volker raised rates 0:15:34.840 --> 0:15:36.400 through the end of the year. You still had a 0:15:36.440 --> 0:15:40.640 recession in eighty one, but the markets had already priced 0:15:40.680 --> 0:15:42.760 in a lot of it, had already been down twenty 0:15:42.800 --> 0:15:46.440 seven percent and started to sniff out the recovery. So 0:15:47.040 --> 0:15:49.760 actually in that recession, markets were positive. So you may 0:15:49.920 --> 0:15:53.440 still have a recession, but the markets are going to 0:15:53.640 --> 0:15:57.160 lead it, lead us out of it. And so the 0:15:57.200 --> 0:16:02.440 markets are already looking towards what that recovery maybe rather 0:16:02.480 --> 0:16:05.320 than focus on a recession which is likely already priced in. 0:16:05.720 --> 0:16:07.400 You know, of like the big story has been the 0:16:07.400 --> 0:16:10.320 protests in China. How much of an impact has that had? 0:16:10.360 --> 0:16:14.160 Can you speak to that? Well, for right now the 0:16:14.240 --> 0:16:17.640 US markets, it's it's largely about the FED. I I 0:16:17.720 --> 0:16:20.400 don't believe that, um, you know, the two year rate 0:16:20.520 --> 0:16:22.520 or what the SMP five hundred has done has been 0:16:22.520 --> 0:16:25.880 focused on Shina because I think the expectation is the 0:16:25.960 --> 0:16:32.000 Chinese authorities will will slowly implement changes UM and and 0:16:32.000 --> 0:16:35.160 and um placate the protesters. But I think there is 0:16:35.200 --> 0:16:39.680 a positive in that you're starting to see in cities 0:16:39.800 --> 0:16:43.680 in China as some of the restrictions ease and and 0:16:43.680 --> 0:16:46.320 that of course would be a positive sign both for 0:16:46.360 --> 0:16:50.560 global demand but also ease concerns that supply chain challenges 0:16:50.600 --> 0:16:53.400 could re emerge. Let's bring it closer to home now 0:16:53.440 --> 0:16:56.160 and talk about holiday shopping season. Have you seen any 0:16:56.200 --> 0:16:59.880 indicators from this season, even though it's fairly early on, 0:17:00.200 --> 0:17:02.160 about how what that will and how that will have 0:17:02.200 --> 0:17:05.560 an impact. I think the most interesting thing we hear 0:17:05.600 --> 0:17:08.240 from the holiday season is from the retail saying that 0:17:08.440 --> 0:17:11.240 UM they're going to be aggressive with some markdowns in 0:17:11.320 --> 0:17:13.600 order to make sure that they're not oversupplied. I mean, 0:17:13.640 --> 0:17:18.280 that's what's interesting, is that businesses cut inventory too late 0:17:18.800 --> 0:17:21.640 during the early days of covid UM, and now they've 0:17:21.680 --> 0:17:24.800 been frantically trying to rebuild while the consumer is slowing. 0:17:25.000 --> 0:17:27.879 So what I'm seeing from the holiday season is a 0:17:27.880 --> 0:17:32.840 consumer that's hanging in there, but signs that clear signs 0:17:32.920 --> 0:17:36.399 to me that the inflation story on goods UM is 0:17:36.720 --> 0:17:41.560 beyond us. That's past a that's story, UM. I mean, 0:17:41.600 --> 0:17:45.000 I'm sorry it two story. We've we've moved beyond the 0:17:45.040 --> 0:17:48.879 inflation and goods UM and that's a positive for for 0:17:49.280 --> 0:17:52.000 the market because it suggests again that the pause and 0:17:52.080 --> 0:17:55.720 tightening is is probably near. Now. The NAVDAC has lost 0:17:55.760 --> 0:17:57.879 more than a quarter of its value this year. What 0:17:57.920 --> 0:18:03.240 do you see for the coming year? Rate? I think 0:18:03.280 --> 0:18:08.600 that rates and inflation are still going to remain higher 0:18:08.680 --> 0:18:10.800 than they were in the last cycle, so that's still 0:18:10.840 --> 0:18:14.680 a bit of a headwind for longer duration assets UM. 0:18:14.720 --> 0:18:18.840 I think that in a recovery, value stocks tend to outperform. 0:18:18.880 --> 0:18:22.280 Now that doesn't mean growth won't make up UM or 0:18:22.359 --> 0:18:25.160 tech stocks won't make up some of what had been lost. 0:18:25.200 --> 0:18:28.360 But we're certainly very unlikely to go back to anywhere 0:18:28.440 --> 0:18:32.080 near the loft evaluations that we had in the prior cycle, 0:18:32.160 --> 0:18:34.320 because you would need to get back to a much 0:18:34.400 --> 0:18:37.359 lower inflation in rate environment and that just doesn't seem 0:18:37.440 --> 0:18:40.240 to be in the cards in three So from a 0:18:40.400 --> 0:18:45.600 style perspective, I would favor the more value oriented UM 0:18:45.640 --> 0:18:49.000 and heavily cyclical parts of the market. Again, assuming met 0:18:49.000 --> 0:18:52.639 a recovery as we expect plays out, and just about 0:18:52.640 --> 0:18:54.800 thirty seconds here, Brian, can you give us a little 0:18:54.840 --> 0:18:59.719 guidance for the coming weeks and months. So my guidance 0:18:59.760 --> 0:19:03.600 would be that you're going to enter a recovery phase 0:19:04.000 --> 0:19:08.040 of the cycle. That seems the most likely next step. 0:19:08.160 --> 0:19:12.919 Most investors miss it because they tend to be focusing 0:19:12.960 --> 0:19:16.080 on the world not being good, when instead the market 0:19:16.119 --> 0:19:19.360 cares about whether things are getting better relative to expectations. 0:19:19.840 --> 0:19:24.560 My expectation as things will get better relative to expectations, 0:19:24.600 --> 0:19:27.800 producing a good backdrop for risk assets. All right, Brian, 0:19:27.880 --> 0:19:29.720 thank you very much for taking the time with us 0:19:29.720 --> 0:19:32.960 this morning. Ending on an optimistic note. Global market strategist 0:19:33.240 --> 0:19:37.119 Brian Levitt with Investco now checking the futures markets. S 0:19:37.160 --> 0:19:40.960 ANDP futures are five points lower, delve futures sixties, seven 0:19:41.000 --> 0:19:45.440 points lower, NASDAT futures down thirty seven points. Ten year 0:19:45.480 --> 0:19:49.040 treasury unchanged, the yield at three point six percent, the 0:19:49.080 --> 0:19:53.080 two year yield at four point three. Now I'm ex 0:19:53.200 --> 0:19:57.480 crude now nine tenths of a percent higher. That's seventy 0:19:57.520 --> 0:20:01.040 nine cents trading at eight thirty three sensor barrel. Much 0:20:01.080 --> 0:20:07.399 more to come on Bloomberg daybreak. This is Bloomberg the 0:20:07.400 --> 0:20:10.240 Bloomberg eleven three oh forecast study and breezy going up 0:20:10.280 --> 0:20:13.119 to forty five degrees, going up to fifty tomorrow A 0:20:13.200 --> 0:20:15.840 little mile They're showers return on Saturday, going up to 0:20:15.920 --> 0:20:25.920 sixty degrees. Broadcasting live from the Bloomberg Interactive Broker Studio 0:20:26.040 --> 0:20:29.200 in New York. Bloomberg in Living free to Washington, d C, 0:20:29.400 --> 0:20:33.120 Bloomberg nine one to Boston, Bloomberg one O six one 0:20:33.200 --> 0:20:36.680 to San Francisco, Bloomberg now sixty to the country, sirius 0:20:36.840 --> 0:20:39.439 XM to A one nine and around the globe the 0:20:39.440 --> 0:20:44.480 Bloomberg Business and Bloomberg Radio dot com. This is Bloomberg Daybreak. 0:20:50.280 --> 0:20:52.800 It's six thirty on Wall Street. Good Thursday morning. I'm 0:20:52.840 --> 0:20:55.520 Amy Morris and I'm Nathan Hager. We're about three hours 0:20:55.560 --> 0:20:57.439 away from the open of US trading. Time for the 0:20:57.480 --> 0:20:59.560 five things you need to know to start your day. 0:21:00.000 --> 0:21:03.320 Out to you by Interactive Brokers. Interactive Brokers charges margin 0:21:03.400 --> 0:21:05.600 loan rates from four point three three to five point 0:21:05.680 --> 0:21:09.479 three rates subject to change. Learn more at ib kr 0:21:09.600 --> 0:21:13.480 dot com. Slash compare first fed Share. J Powell is 0:21:13.560 --> 0:21:16.119 signaling the Central Bank will ease its aggressive pace of 0:21:16.160 --> 0:21:18.800 interest rate hikes as soon as this month. The time 0:21:18.800 --> 0:21:21.320 for moderating the pace of rate increases may come as 0:21:21.359 --> 0:21:24.719 soon as the December meeting. Given our our progress in 0:21:24.840 --> 0:21:28.240 tightening policy, the timing of that moderation is far less significant. 0:21:28.520 --> 0:21:30.960 J Pal's remarks indicate the Fed is likely to shift 0:21:31.000 --> 0:21:33.640 down to a fifty basis point hike at its next decision. 0:21:33.840 --> 0:21:37.200 Equity markets advanced sharply on Pal's comments. David could Love, 0:21:37.240 --> 0:21:40.520 founder of Mainstay Capital Management, says the more dovish tone 0:21:40.600 --> 0:21:43.960 was appropriate for current economic conditions. I think it's a 0:21:44.040 --> 0:21:46.600 recognition too of looking at the data p M E 0:21:46.760 --> 0:21:50.520 s or in contraction territory pending home sales down thirty 0:21:51.200 --> 0:21:54.639 year over year, and we haven't felt the full impact 0:21:54.840 --> 0:21:57.960 of these rate hikes we've had. David Cutler with Mainstay 0:21:58.000 --> 0:22:01.560 Capital Management, believes Pal's calm. It's also indicate he's mindful 0:22:01.560 --> 0:22:03.639 of the Fed going too far with great hikes. Well. 0:22:03.680 --> 0:22:06.320 The SP five hundred closed up three per cent after 0:22:06.359 --> 0:22:09.840 Powell's remarks. The rally extended overseas, as well as stocks 0:22:09.880 --> 0:22:12.760 in Europe and Asia advancing. In China, there is also 0:22:12.760 --> 0:22:15.920 optimism on COVID, with authorities now downplaying the severity of 0:22:15.960 --> 0:22:18.479 the virus. China's COVID czar says the country's in a 0:22:18.480 --> 0:22:20.919 new phase of the pandemic. Back in the U S. 0:22:20.960 --> 0:22:24.800