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Speaker 1: Good morning. I'm Brian Curtins. Here are the stories we're

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Speaker 1: following today. Israel is pushing deeper into Gaza and around

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Speaker 1: Gaza City. The Prime Minister is promising indefinite security forces

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Speaker 1: at Baxter With that story and the rest of the

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Speaker 1: news from the nine to sixty News.

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Speaker 2: We'm yeah, thanks for having. This is the one month

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Speaker 2: mark since of moss raids into Israel, and Bloomberg's Nick

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Speaker 2: Wadhams reports forces are hitting now what they say is

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Speaker 2: the heart of Hamas.

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Speaker 3: What we're hearing is that Israeli troops are actually fighting

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Speaker 3: inside Gaza City, moving in from the north and the south,

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Speaker 3: so it looks like they've essentially encircled Gaza City, which

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Speaker 3: is where they believe a lot of Hamasa's military leadership.

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Speaker 2: Is and Prime Minister Benjamin netanyahuo and talking with ABC's

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Speaker 2: David Muir, says the question of how long Israel will

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Speaker 2: remain in Gaza is a major topic.

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Speaker 1: President Biden has said that it would be a mistake

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Speaker 1: for Israel to occupy Gaza.

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Speaker 4: Who should govern Gaza when this is over?

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Speaker 5: I think Israel will for an indefinite period, will have

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Speaker 5: the overall security responsibility because We've seen what happens when.

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Speaker 2: We don't have it, and that Y'ah who are also

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Speaker 2: saying so far not agreeing to any kind of pause

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Speaker 2: as he's been pushed to by the US to do

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Speaker 2: for humanitarian reasons and aid for Israel, well, it's hanging

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Speaker 2: still up in the US Congress. House Speaker Mike Johnson

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Speaker 2: saying it is tied to the IRS.

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Speaker 6: Has to bipartisan Israel support measure, which is exactly at

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Speaker 6: the level that is requested by the White House and

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Speaker 6: Israel fourteen point five billion dollars we included to pay

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Speaker 6: for sorry, and unfortunately some of our Senate Democrat friends

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Speaker 6: have taken issue with that.

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Speaker 2: And there's a problem with Ukraine aid as well. Republicans

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Speaker 2: want to tie to the border.

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Speaker 7: We're very serious about this, and I think it will

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Speaker 7: be difficult to get the package across the floor in

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Speaker 7: the Senate without a credible border solution.

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Speaker 2: And that of course is Senate Minority Leader Mitch McConnell. Meanwhile,

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Speaker 2: Johnson says that House Republicans preparing a temporary spending bill

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Speaker 2: to avert a government shutdown in a week and a half.

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Speaker 6: We're working earnestly on that. We certainly want to avoid

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Speaker 6: a government shut down. It's a dangerous time around the

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Speaker 6: world right now. We recognize that, and we're doing our job.

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Speaker 2: Off your elections in some US states today with the

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Speaker 2: issue of abortion front end center since the Supreme Court

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Speaker 2: threw the issue back to the state, so Ohio's election

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Speaker 2: today as an extremely important bell weather to whether it's

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Speaker 2: an issue with traction. Bloomberg's Kaylee lions.

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Speaker 8: We've seen post the fall of Roe versus Way that

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Speaker 8: abortion is a real turnout driver, especially in special elections

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Speaker 8: in which abortion rights advocates have notched a lot of victories.

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Speaker 8: And once again, if this is indeed cementing abortion rights

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Speaker 8: into the constitution of what is more and more a

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Speaker 8: red state, it could be a pretty big signal about

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Speaker 8: what's going to drive turnout in the wider election in

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Speaker 8: twenty twenty four.

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Speaker 5: And Virginia, this.

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Speaker 8: Is a real big test for the Republican governor, Glenn Youngkin.

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Speaker 8: He is trying to cement control of the entire state

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Speaker 8: legislature by flipping the Senate from the Democrats and retaining

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Speaker 8: control of the House. Whether or not that effort is successful,

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Speaker 8: it could be a pretty big bell weather for twenty twenty.

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Speaker 2: Four and for a potential candidacy for Youngkin for twenty

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Speaker 2: twenty four, as well Global News twenty four hours a

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Speaker 2: day and whenever you want it with Bloomberg News Now

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Speaker 2: in San Francisco. I'm Ed Baxter and this is Bloomberg Brian.

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Speaker 1: Thanks very much. I'm Brian Curtis. Along with Paul Allen,

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Speaker 1: we look now at some of the top business stories

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Speaker 1: of the hour. FED policymakers are emphasizing the need to

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Speaker 1: get consumer prices down to the central banks two percent target.

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Speaker 1: In the latest FED speak, Minneapolis FED President Neil Kashkari

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Speaker 1: said that the fight against inflation is not over.

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Speaker 5: We're going to let the data guide us.

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Speaker 2: We've moved very aggressively.

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Speaker 9: We've made a lot of progress on inflation.

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Speaker 3: We're not done yet, meaning inflation is not back to

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Speaker 3: our target, and if we need to do more, we will.

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Speaker 1: Kashcari said that there is no discussion at this point

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Speaker 1: at the FOMC about cutting interest traits. Separately, Chicago FED

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Speaker 1: President Austin Goulsby told CNBC that reducing inflation is the

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Speaker 1: number one priority. FED Governor Michelle Bowman said he was

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Speaker 1: too soon for officials to know what the full effects

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Speaker 1: of the recent rise in yields will be, and that's

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Speaker 1: something that we'll be discussing with our guest in just

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Speaker 1: a moment. Bowman also said that she is expecting more

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Speaker 1: interest rate hikes.

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Speaker 10: The US officials will seek to limit some access to

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Speaker 10: federal home loan banks. This comes after multiple failing landers

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Speaker 10: turned to the one point three trillion dollar system and

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Speaker 10: desperate bids to survive Match's banking crisis. The story from

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Speaker 10: Blimbeck's Charlie Pellett.

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Speaker 5: After a review of the system that lasted more than

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Speaker 5: a year, the Federal Housing Finance Agency will move fhlb's

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Speaker 5: away from serving as lenders of last resort for financial

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Speaker 5: firms in turmoil and back to their roots in housing finance.

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Speaker 5: According to a report, The plans ratchet up federal oversight

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Speaker 5: seek to push banks toward the Federal Reserve's discount window

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Speaker 5: in times of extreme stress in New York. Charlie Pellett

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Speaker 5: Bloomberg Radio.

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Speaker 1: Well, in a rare move, we're hearing that Apple is

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Speaker 1: delaying software overhauls to fix some glitches. The story from

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Speaker 1: Bloomberg's Tom busby.

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Speaker 9: The tech giant pausing development of next year's iOS system

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Speaker 9: software updates for the iPhone, iPad and other devices after

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Speaker 9: a proliferation of bugs in earlier versions, and to give

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Speaker 9: itself enough time to work out those glitches now rather

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Speaker 9: than adding new features. Engineers at Apple, known for its

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Speaker 9: clean interfaces, easy to use controls, and commitment to privacy,

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Speaker 9: have now been tasked with fixing those flaws and improving

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Speaker 9: the performance of the software. Tom busby Bloomberg Radio.

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Speaker 1: Tom, thank you. Let's take a quick look at Apple's

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Speaker 1: share prize. It didn't seem to really affect investors this

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Speaker 1: story about the delay, because Apple traded up one point

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Speaker 1: five percent in today's session.

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Speaker 10: Were Chinese President Shijimping will meet with top US business

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Speaker 10: executives next week, Bloomberg's and Kites reports.

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Speaker 4: Ji is set to attend to dinner with corporate leaders

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Speaker 4: when he visits San Francisco for the Asia Pacific Economic

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Speaker 4: Cooperation Summit. As the US and China continue to work

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Speaker 4: on stabilizing relations this year. Hi on Je's list of

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Speaker 4: priorities for his US trip as calming foreign investors who

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Speaker 4: are increasingly nervous about doing business in China due to

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Speaker 4: issues including geopolitical tensions, a slowing economy and detention of employees.

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Speaker 4: Chief executive officers of major US companies are on the

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Speaker 4: guest list for the dinner in Washington and Kates Bloomberg Radio.

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Speaker 1: Which old President Biden has been briefed on what his

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Speaker 1: advisors see as a Chinese plan to build a military

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Speaker 1: facility in the Gulf nation of Oman, and we hear

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Speaker 1: that Omani officials are amenable to the idea. Bloomberg's Nick

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Speaker 1: Wadhams has.

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Speaker 3: More As far as we understand from what folks were

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Speaker 3: telling us, China and Oman have had early conversations and

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Speaker 3: those conversations are continuing. I mean, and there's a great deal.

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Speaker 3: We don't know, you know, the extent of this base

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Speaker 3: would what's assets would be stationed there, and then you

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Speaker 3: know even where it would be. So there are a

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Speaker 3: lot of unknowns here. But what we do know is

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Speaker 3: that there is this broader push by China to expand

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Speaker 3: its influence in the Middle East and beyond.

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Speaker 1: Bloomberg's Nick Wadams Oman is of strategic interest given its

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Speaker 1: proximity to the Strait of Hormuz is one of the

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Speaker 1: most vital shipping lanes for oil and liquefied natural gas

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Speaker 1: in the Middle East.

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Speaker 10: The International Monastry Funds has upgraded its projections for China's

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Speaker 10: growth this year. I've got the story from Bloomberg's David

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Speaker 10: and Glaze in Hong Kong.

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Speaker 11: The upgrade comes after China recorded stronger than expected growth

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Speaker 11: in the third quarter that followed Beijing's release of numerous

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Speaker 11: policies to support the recovery. The IMF now expects China's

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Speaker 11: GDP to expand five point four percent in twenty twenty

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Speaker 11: three and four point six percent in twenty twenty four.

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Speaker 11: That's up point four percentage points from its earlier projections. Now,

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Speaker 11: the IMF says Beijing's recent plan to issue more sovereign

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Speaker 11: debts was a factor for the upgrade. The fond says

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Speaker 11: lower growth next year can be attributed to China's property

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Speaker 11: slump and weaker external demand. UBS and JP Morgan Chase

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Speaker 11: have also upgraded China's growth in Hong Kong. I'm David

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Speaker 11: Ingless Bloomberg Radio.

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Speaker 1: Joining us now on the program is Edward Harrison, Bloomberg

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Speaker 1: team leader for the Americas and FX and Rates, to

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Speaker 1: discuss the market news of the day. So we had

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Speaker 1: the FED speak Edward, it's a given that inflation is

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Speaker 1: still too high, so nothing new to hear FED officials

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Speaker 1: saying it. Where there's indecision now, it seems, is whether

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Speaker 1: higher yields are helping the Fed objectives, and policymakers seem

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Speaker 1: to be fudging a little bit here by saying they

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Speaker 1: need more time to assess your thoughts on that.

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Speaker 12: Yeah, I think that if you listen to the different

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Speaker 12: threads go from Bostic to Bowman in terms of from

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Speaker 12: the most dubbish to the most hawk is hearing them

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Speaker 12: all say is that we are not going to lower

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Speaker 12: interest rates anytime soon. They're all saying that it's not

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Speaker 12: clear where the economy is going to head, so that

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Speaker 12: at a minimum, we're going to hold for a longer

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Speaker 12: period of time. And then the question is is you

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Speaker 12: know how long is that time going to be and

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Speaker 12: what we're going to do after that? Bostic pretty much

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Speaker 12: says do not hike again, and Bowman says, yes, we

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Speaker 12: will hike again. But really, you know what the market's

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Speaker 12: not taking into account is that every single Fed official

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Speaker 12: is saying, yes, we are going to hold for a

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Speaker 12: considerable period.

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Speaker 10: Why is it that the market seems so convinced or

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Speaker 10: some sections off it that we're going to see easing

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Speaker 10: because we've seen this before a few months ago, haven't we.

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Speaker 12: Well, you know, it's a it's a seed change there, Paul,

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Speaker 12: because I feel like, basically, you know, we have a

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Speaker 12: post out in our group about this is the seventh

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Speaker 12: time during this particular rally that the mark It have said, Okay,

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Speaker 12: that's it, We're going to the Fed's going to start

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Speaker 12: cutting interest rates. In fact, the market is priced in

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Speaker 12: one hundred basis points of cuts in twenty twenty four,

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Speaker 12: the FED and their last summary of economic projections they

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Speaker 12: said they would do it fifty basis points at the most.

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Speaker 12: So you know, it's just they're looking for the FED

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Speaker 12: to bail out the market and it just hasn't happened yet.

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Speaker 1: Well, you know, I when I look at the stock market,

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Speaker 1: like the S and P five hundred is still down

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Speaker 1: over the past two years, so I feel a little

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Speaker 1: bit uncomfortable. And people keep talking about how much the

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Speaker 1: equity market is rallied. And it's true that the Super

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Speaker 1: seven or the Special seven, whatever you want to call it,

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Speaker 1: have rallied a lot this year, but overall the market

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Speaker 1: is not particularly effusively to the upside right, and the

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Speaker 1: fact that it's chopping around within a sort of five

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Speaker 1: to ten percent rate, that doesn't seem to me to

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Speaker 1: be a big deal, Edward, does it to you?

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Speaker 12: No, it doesn't, you know, Brian, I'd go with the

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Speaker 12: Magnificent seven, which is a class song as well.

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Speaker 1: By the way, Yeah, I always avoid that because it's

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Speaker 1: so commonly used. You know, I always thinking this morning,

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Speaker 1: should I call it this stupendous seven or what?

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Speaker 12: Well, you know, without those seven we would actually be

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Speaker 12: the s and P five hundred would not be, you know,

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Speaker 12: in the green in the way that it is. You know,

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Speaker 12: it's really because of those seven stocks. And if you

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Speaker 12: look at the Russell two thousand as an example, it

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Speaker 12: shows you there's much more pain, there's much more skepticism

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Speaker 12: outside of that. So if you take it over the

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Speaker 12: course of those two years, as you're doing, then you

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Speaker 12: can see that, yes, we've had a considerable amount of

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Speaker 12: pain and over a very long period of time, which

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Speaker 12: two years is in market thinking, that's why they want

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Speaker 12: the relief. The relief comes from lower discount rates that

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Speaker 12: come from lower yields on longer term treasuries, and that's

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Speaker 12: what the market is looking for.

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Speaker 10: I'm going to adopt what you just said. I'm going

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Speaker 10: to call them those seven. So if we look at

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Speaker 10: those seven, that's quite pricey. But what's driving this when

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Speaker 10: the rest of the market's so flat? Is it, Tina?

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Speaker 10: You know there is no alternative? Is it DII? Is

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Speaker 10: it something else?

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Speaker 12: Well, that's a good question, because really I think it

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Speaker 12: has to do with the fact that perhaps growth is scarce.

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Speaker 12: You know, we are in the midst of an earnings recession,

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Speaker 12: potentially because we're in the earning season. Now we're getting

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Speaker 12: out of that earnings recession. But if you remember, there

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Speaker 12: were eight companies in that group. I had an acronym

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Speaker 12: about a year ago, two years ago phantom Man to

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Speaker 12: compose all of those eight and that includes Netflix, and

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Speaker 12: Netflix was basically kicked out of this magnificent seven group.

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Speaker 12: And now we're down to seven. And the reason that

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Speaker 12: we're down to seven is those are the companies that

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Speaker 12: have been tried and true, as the other companies have

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Speaker 12: bobbed about and done less well. So it's a very

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Speaker 12: narrow approach in terms of the stock market.

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Speaker 1: I started out by asking you about FED positioning on

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Speaker 1: whether or not higher yields are helping them achieve their objective,

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Speaker 1: and we know that they have fudged a.

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Speaker 7: Little, as I put it.

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Speaker 1: And the tricky part is, I mean, are they looking

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Speaker 1: at the tenure yield at five percent or four and

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Speaker 1: a half percent, because that's the kind of swing we've

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Speaker 1: seen in just the last week.

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Speaker 12: Well that is interesting because one of the Fed officials

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Speaker 12: of Waller, he was talking about that how we've had

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Speaker 12: a magnificent upswing in yields, but really we've gone down

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Speaker 12: some almost fifty basis points since that time. So you know,

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Speaker 12: we're about halfway between the neutral and the tightness that

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Speaker 12: we had at its peak when it was at five percent.

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Speaker 12: So there's a certain reflexivity there. That is, if the

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Speaker 12: Fed officials say that, Okay, we're or maybe about don

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Speaker 12: we still need to worry about inflation, but the market

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Speaker 12: takes that it's dubvish, then we immediately have losing in

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Speaker 12: financial conditions, and that in and of itself causes the

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Speaker 12: Fed to have to hide potentially in the future.

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