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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: The job support tomorrow in the US may set the

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Speaker 1: tone for the Fed's policy meeting in November. We get

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Speaker 1: September employment data at eight thirty in the morning Wall

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Speaker 1: Street Time. Let's get a preview here from Bloomberg's Michael McKee.

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Speaker 1: It's not what the Fed does, or, to a lesser extent,

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Speaker 1: what it says. It's how the market reacts to the

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Speaker 1: September payrolls report that will matter. Bond deals have leaped

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Speaker 1: upwards in the past few weeks, tightening financial conditions and

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Speaker 1: raising recession worries. The Bloomberg economists consensus forecast calls for

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Speaker 1: slower job growth, but Wall Street's Whisper Numbers suggests traders

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Speaker 1: are positioned for a strong payrolls report. It may be

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Speaker 1: a classic case of good news being bad news for

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Speaker 1: the markets, and at FED trying to slow labor demand

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Speaker 1: to keep inflation in check. Michael McKee, Bloomberg News.

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Speaker 2: And that takes us to the latest Fed speak. Today

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Speaker 2: we heard from the head of the San Francisco Fed,

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Speaker 2: Mary Daily. She said the FED could hold steady. Here's

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Speaker 2: the caveat if the labor market and inflation both cool,

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Speaker 2: or if financial conditions remain tight. Here is Daily, speaking

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Speaker 2: earlier with Bloomberg.

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Speaker 3: The bond market has tightened quite considerably over about thirty

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Speaker 3: six basis points since we met in September. Well, that

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Speaker 3: is equivalent to about a ray hike, right, and so

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Speaker 3: then the need to do tightening additionally is not there?

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Speaker 2: Mary Daily?

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Speaker 4: There?

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Speaker 2: She is the head of the San Francisco FED. We

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Speaker 2: also heard today from the head of the Richmond FED,

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Speaker 2: Tom Barkin. He was saying surging treasury yields reflect strong

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Speaker 2: economic data as well as heavy supply from the US Treasury.

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Speaker 2: Barkin went on to say he sees a narrow path

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Speaker 2: to a soft landing, one that will avoid a recession.

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Speaker 1: Right well, US banks have raised their economic growth forecasts

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Speaker 1: for China. Let's get the story from Bloomberg.

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Speaker 5: Jen Kates, JP Morgan Chase strategists say recent data suggests

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Speaker 5: the economic slowdown in China since April has likely bottomed

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Speaker 5: and a turn around as underway, and that trend, coupled

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Speaker 5: with additional policy support, means China is on track to

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Speaker 5: meet the upgraded five percent target. For its gross domestic product.

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Speaker 5: City Group is also boosting its GDP projection for China

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Speaker 5: to five percent. Still, economists have pointed to concerns about

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Speaker 5: consumer confidence because of a week job market and the

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Speaker 5: financial troubles of property developers in Washington and Kates.

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Speaker 2: Bloomberg Radio Elon Musk is being pressed to testify before

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Speaker 2: the Securities and Exchange Commission about his stock sales ahead

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Speaker 2: of mister Musk's purchase of Twitter. Here's Bloomberg's Tom Giles.

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Speaker 6: The things that they're looking into. In particular, he tweeted

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Speaker 6: back in May of that year about how the deal

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Speaker 6: cannot move forward. This all came out in the middle

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Speaker 6: of last year. It was basically the things that he

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Speaker 6: said publicly about the deal. The sec is wondering whether

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Speaker 6: those things were on.

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Speaker 2: The up and up Bloomberg's Tom Giles. There now attorneys

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Speaker 2: from mister Musk are saying their client has testified numerous times,

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Speaker 2: and they added, quote enough is enough, Brian.

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Speaker 1: While we moved next to the fraud trial of FTX

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Speaker 1: founder Sam Bankman, freed co founder Gary Wong took the

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Speaker 1: stand today and provided some damning testimony to the court.

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Speaker 1: We get more here from Bloomberg's Ava Benny Morrison.

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Speaker 7: He walked into the court. He didn't make eye contact

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Speaker 7: with Sam. He sat in the witness box and we're

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Speaker 7: speaking very quickly and could tell he was a little

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Speaker 7: bit nervous, sort of reciting everything that happened at FTX

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Speaker 7: in front of a court room full of people. He

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Speaker 7: said that, yes, he committed a financial crime with Bateman Freed,

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Speaker 7: he altered the code that allowed Alameda to borrow billions

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Speaker 7: of dollars from FTX.

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Speaker 1: That's Bloomberg's Ava, Benni Morrison. We also heard from another

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Speaker 1: of bankman Freed's MIT classmates, Adam Rdidia. He testified that

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Speaker 1: Bankman Freed privately expressed concern about a potential eight billion

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Speaker 1: dollars shortfall at FTX. Bank Man Freed's lawyers, who are

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Speaker 1: arguing that he made some mistake but had no ill intent,

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Speaker 1: will continue to try and undermine some of those weaknesses

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Speaker 1: put forward in court. Well, let's take a closer look

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Speaker 1: at the backdrop here at markets because we're heading into

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Speaker 1: the weekend, last final or the final day of the

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Speaker 1: trading week here in Ash. I would say Doug that

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Speaker 1: we've got more fed speak out there, which you mentioned

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Speaker 1: talking about market rates doing some of the Fed's job.

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Speaker 1: We have seen rates down and now we have oil

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Speaker 1: down quite significantly. XL down ten percent in a week.

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Speaker 1: That's sort of like giving the peace sign markets.

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Speaker 2: Yeah, so far this week WTI and I'm talking four

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Speaker 2: trading days here, WTI is down more than a nine percent.

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Speaker 2: To your point, Brian, and we were talking a short

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Speaker 2: while ago about the fact that WTI today and New

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Speaker 2: York trading broke below that fifty day moving average for

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Speaker 2: the first time since July. So the big question is

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Speaker 2: whether or not this downward path for oil will be sustained.

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Speaker 2: But you're right too to point out the fact that

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Speaker 2: the FED ed was kind of alluding to the fact

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Speaker 2: that the market has done some heavy lifting for the Fed.

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Speaker 2: Mary Daily Today, the head of the San Francisco FED,

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Speaker 2: we talked about this story a short while ago. She

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Speaker 2: was saying that the recent push higher in bond yields

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Speaker 2: has been equivalent to about one rate hike from the FED.

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Speaker 2: So I'm going to assume that's about twenty five basis points.

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Speaker 2: And we got some fresh data today from the Investment

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Speaker 2: company Institute. Money Market funds now at a fresh record

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Speaker 2: high We're seeing a lot of money move in, about

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Speaker 2: sixty four point one billion into US money market funds

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Speaker 2: in the week ended yesterday given the spike in market rates.

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Speaker 1: Yeah, and we mentioned that the jobs report will set

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Speaker 1: the tone. I think also the CPI next week will

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Speaker 1: be very important, so to be a little bit of

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Speaker 1: a one to two punch, A couple of other stories

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Speaker 1: will get to China's aggression pushing other countries closer to

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Speaker 1: the United States. That's from the Pentagon's Number two Kathleen Nick's,

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Speaker 1: a story that ED will be taking a look at.

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Speaker 1: And also this is sort of interesting. Even China's closest

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Speaker 1: supporters in Taiwan are turning Wherry. This is an interesting

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Speaker 1: piece on the terminal about gin Men, a very small island.

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Speaker 1: It's just a mile and a half off the coast

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Speaker 1: of China, which is part of Taiwan. And then as

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Speaker 1: we mentioned as well, JP Morgan and City raising their

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Speaker 1: growth estimates on China. So a lot coming forward here

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Speaker 1: on Bloomberg Daybreak Asia. Now it's time for Global news.

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Speaker 1: US President Joe Biden saying that the southern border wall

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Speaker 1: will be built. Head Baxter with that story and the

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Speaker 1: news in San Francisco.

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Speaker 8: Ed, Yeah, that's right, Brian, not all of it, but

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Speaker 8: more of it at a way at President Homeland National

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Speaker 8: Security meet end today, saying he is cornered borderwall.

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Speaker 9: When money was appropriated for the border wall. I tried

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Speaker 9: to get them reappropriated to redirect that money. They did,

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Speaker 9: they wouldn't And in the meantime, there's nothing under the

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Speaker 9: law other than they have to use the money for

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Speaker 9: what was appropriated.

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Speaker 8: And Bloomberg's Ryan Tige Beckworth says, all some environmental concern

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Speaker 8: will be waved. This was not expected.

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Speaker 10: It's definitely not something that you would expect because he

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Speaker 10: had explicitly promised, and I quote him directly quote not

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Speaker 10: one foot border wall would be constructed if he were.

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Speaker 8: Elected, Ryan says. The President says he had to use

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Speaker 8: the money for that purpose. Ask whether the President asked

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Speaker 8: whether he would he thought it would stop migration, he

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Speaker 8: said flatly. No high level meeting on migration US today

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Speaker 8: between Homeland Security, Department of Justice, State Department, and Mexican authorities.

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Speaker 8: Homeland Secretary Alejandro Majorcas.

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Speaker 4: Today's high level security dialogue is the first to include

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Speaker 4: migration as part of its agenda. An essential component of

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Speaker 4: our National and Regional Security.

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Speaker 8: Meeting in Mexico City. Russian President of Vladimir Putin saying

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Speaker 8: pieces of grenade were found in the bodies of Wagner

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Speaker 8: founder Yevgeny Progosian and other Mercenary leaders who died in

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Speaker 8: the plane crash. Putin handed progotion had been a drug user.

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Speaker 8: Putin says no evidence of external impact on the aircraft.

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Speaker 8: He says, unfortunately they didn't test for alcohol or narcotics

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Speaker 8: in the blood of those who died. And Putin also

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Speaker 8: said today that Russia may revoke the ban on nuclear

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Speaker 8: weapons tests, complaining about US failure to ratify a treaty

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Speaker 8: that imposed the ban. The wrangling for House Speaker is

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Speaker 8: on both Jim Jordan and Steve Scalise looking for support.

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Speaker 8: Congress is out of session until Tuesday, will caucus then

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Speaker 8: and some added spice. Bloomberg's Laura Davison's Balance on Balance

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Speaker 8: of Power Today with Joe Matthew and Amrie Hordern reports

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Speaker 8: Donald Trump says he will be there.

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Speaker 11: You know, obviously Trump is famous for making a decision

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Speaker 11: and then un making that decision, or you know, calling

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Speaker 11: an audible at the last moment. But if House Republicans

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Speaker 11: change their rules, and there's several House Republicans calling it

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Speaker 11: that he could be speaker, which would really throw a

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Speaker 11: whole wrench not only to House politics, but twenty twenty.

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Speaker 8: Fours seeing of the speaker's roster with the gavel, he'd

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Speaker 8: loved that. Joe almost backtor Reality the TV most pointed

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Speaker 8: attack yet on the case against Donald Trump for subversion

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Speaker 8: surrounding trump efforts to interfere with the twenty twenty election.

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Speaker 8: Trump attorneys have asked the judge dismissed the case as

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Speaker 8: a whole. They argue he's immune from prosecution for actions

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Speaker 8: they say we're taken as his official role as president,

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Speaker 8: and US Pentagon says China's growing assertiveness in Asia's pushing

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Speaker 8: other countries to strike new partnerships with the US. Deputy

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Speaker 8: Defense Secretary Kathleen Hicks points new agreements with the Philippines,

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Speaker 8: enhanced cooperation with Japan and South Korea. Also points to

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Speaker 8: the aucas alliance with the UK and Australia. Global News

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Speaker 8: powered by more than twenty seven hundred journalists and analysts

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Speaker 8: in over one hundred twenty countries. In San Francisco, I'm

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Speaker 8: ed Baxter, and this is Bloomberg.

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Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis in Hong

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Speaker 1: Kong alongside Rashad so On, and our guest is Ryan Belonger,

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Speaker 1: is managing principal and founder of Claro Advisors. Ryan, thanks

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Speaker 1: very much for joining us. So we mentioned that we

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Speaker 1: had fairly big drop in bond yields from one point

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Speaker 1: to the next on the ten year, as much as

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Speaker 1: seventeen basis points so and also roughly a ten percent

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Speaker 1: drop in oil prices. Is that enough to put soft

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Speaker 1: landing back into the conversation?

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Speaker 12: You know, I don't think it is. I mean, I

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Speaker 12: think it's a nice reprieve. People can breathe a sigh

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Speaker 12: of relief for a little bit here. But we've just

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Speaker 12: got a lot of data coming out soon that I

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Speaker 12: think it's going to just continue to reflect weakness in

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Speaker 12: the economy, and you know, in particular the payroll data

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Speaker 12: that we kind of got a.

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Speaker 13: Sneak peek at with the ADP report.

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Speaker 12: I just think it's going to be difficult to get

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Speaker 12: the soft lending done.

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Speaker 13: I do think we should give the Fed, you know,

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Speaker 13: a lot of credit.

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Speaker 12: So far they've got they've gotten it to a pretty

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Speaker 12: good spot. I just think it's probably more likely than

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Speaker 12: not that they they overtightened, and you know that's better

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Speaker 12: than the alternative.

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Speaker 14: Right, And don't they need to overtighten. Don't they need

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Speaker 14: to put the economy into recession and ode for them

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Speaker 14: medicine to work.

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Speaker 13: Yeah, I totally agree.

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Speaker 12: And I think comes that you know of probably a

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Speaker 12: decent recession, nothing severe, but you know, recessions are just part.

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Speaker 13: Of the economic cycle, and I think that'll play itself out.

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Speaker 12: But you're starting to see, you know, a fair amount

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Speaker 12: of cracks in the system. Most of the leading economic

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Speaker 12: indicators have turned negative for a substantial period of months,

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Speaker 12: and I just think the one of the you know,

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Speaker 12: things that happens with rising interest rates is a lot

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Speaker 12: of refinancing costs where coming to home to roost. I mean,

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Speaker 12: next year, the commercial real estate market alone has almost

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Speaker 12: one trillion of assets that need to be refinanced.

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Speaker 14: Yeah, yeah, sorry, I just want it's just good care

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Speaker 14: on the same thing about recession, et cetera, et cetera,

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Speaker 14: because you know, it's a horrible thing to say, but

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Speaker 14: does American need a recession given that you know, they've

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Speaker 14: the Central Bank not just of course the fad, but

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Speaker 14: that has essentially been masking the economic and business cycle

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Speaker 14: with their actions and monetary policy to stop of course

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Speaker 14: what had the worst of the GFC, and also ever

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Speaker 14: since then with the free money aspect, that maybe the

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Speaker 14: economy needs some kind of a cleansing effect.

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Speaker 13: You know, I'm a big proponent of that.

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Speaker 12: I mean, I think if nothing else, it'll get the

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Speaker 12: decision makers in Washington to get on a better fiscal path,

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Speaker 12: which I think is you know, something that really needed

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Speaker 12: to be talked about more and I think will be

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Speaker 12: as especially as we get.

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Speaker 13: Into a recession. It's just, you know, we have a

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Speaker 13: we have.

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Speaker 12: A spending problem, and we're spending a considerable amount of

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Speaker 12: our GDP on entitlements and an interest costs. I mean,

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Speaker 12: we're going to spend probably close to the ten eleven

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Speaker 12: percent of our federal revenues on interest payments alone, and

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Speaker 12: other TRIPA A Ready companies spend one percent.

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Speaker 13: So we got we got to figure that out.

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Speaker 1: Let me raise an interesting scenario though. You get a recession,

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Speaker 1: in other words, you get two quarters of negative growth,

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Speaker 1: but you don't really lose that many jobs. You know,

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Speaker 1: usually you do. But if we don't this time, and

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Speaker 1: that might be the case because we see that companies

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Speaker 1: are reluctant to lay people off. Does that make it okay?

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Speaker 1: Does that sort of bring back the soft scenario?

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Speaker 13: Thinking it could? I mean, anything's possible.

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Speaker 12: I just think, you know, typically recessions are a little

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Speaker 12: bit more severe than just that.

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Speaker 13: I mean, I think we've only had.

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Speaker 12: Two or three soft landings, you know, in the last

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Speaker 12: seventy years, and none of those involved the scenario that

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Speaker 12: we have now. So I'm just thinking, you know, it's

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Speaker 12: more likely than not, but it is possible, and I

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Speaker 12: do think the Fed's done a really good job so far.

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Speaker 12: There's a lot coming down the road that people should

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Speaker 12: be focused on as it released to their portfolios.

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Speaker 1: So if you bring the hard landing into the picture,

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Speaker 1: since you've already had a pullback in stocks, what does

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Speaker 1: a hard landing mean for the stock market.

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Speaker 12: Well, you know, I think we've had a you know,

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Speaker 12: the last six weeks or so have been a pullback.

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Speaker 12: But if you zoom out a little bit more than that,

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Speaker 12: you've got equities still trading at above historical market pe.

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Speaker 12: So there's still kind of expensive historically. I mean, if

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Speaker 12: you go back to look at the two thousand and

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Speaker 12: eight recession, we traded at ten twelve multiple on earnings.

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Speaker 12: We're still at you know, eighteen seventeen eighteen on the

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Speaker 12: S and P. So I think there's a meaningful pullback

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Speaker 12: that could happen in certain sectors. I mean, if you

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Speaker 12: look at the medians, stock and the S and P

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Speaker 12: this year, it's flat. You know, most companies are flattered down.

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Speaker 12: It's just it's a handful of companies, as we've all

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Speaker 12: been telling people and reading about, that have been driving

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Speaker 12: this performance. So I think that will you know, those

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Speaker 12: games will come back, and I think people just have

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Speaker 12: to adjust their portfolios accordingly.

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