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

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Speaker 1: following today. US President Joe Biden has written a letter

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Speaker 1: to congressional leaders explaining the military strikes on Iraq. At

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Speaker 1: Baxter has that story in more from the nine to

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Speaker 1: sixty newsroom in San Francisco.

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Speaker 2: Exactly right, Brian. The theme is that they're meant to

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Speaker 2: deter further Iran proxy forces from attacking, to degrade and

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Speaker 2: disrupt efforts against the US military installations. And the US

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Speaker 2: says it has now shot down ten more drones and

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Speaker 2: five missiles launched by Iran Backedhothi's Now Bloomberg's Jonathan Tamary says,

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Speaker 2: a Biden administration is walking a very fine line here.

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Speaker 3: There are reports from our colleagues at Bloomberg that the

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Speaker 3: US is even considering military strikes against the Houthis. But

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Speaker 3: that is something that is a step that would not

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Speaker 3: take lightly. Again, with the fear that you don't know

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Speaker 3: where these things will spiral in the Middle East, and

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Speaker 3: they don't want to draw in. The US doesn't want

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Speaker 3: to be drawn into a conflict there, and they don't

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Speaker 3: want to be drawn their allies to be drawn into

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Speaker 3: a wire.

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Speaker 2: And ABC military analyst Mick Molroy says they'll also be

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Speaker 2: carrying out sea attacks if necessary.

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Speaker 4: Basically offshore military assets that can deliver fire on the

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Speaker 4: targets to assist them. So that is one of the

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Speaker 4: big reasons why the United States did this. They obviously

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Speaker 4: don't want it to happen, but they're trying to deter

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Speaker 4: it happening.

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Speaker 1: Now.

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Speaker 2: Two major shipping companies say they will limit shipping in

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Speaker 2: the Red Sea. We'll have more on that in just

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Speaker 2: a few minutes here. Meanwhile, in Israel, its military chief

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Speaker 2: says the war against a Moss will last for many

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Speaker 2: more months, and retired US Navy Admiral James Travitas says

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Speaker 2: that the White House is giving more stern warnings to

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Speaker 2: prevent a prolonged conflict.

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Speaker 1: There's a host of long term costs that's going to

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Speaker 1: be associated unless the Israelis start to dial it back.

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Speaker 2: Stavridis also saying that something needs to be done very

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Speaker 2: quickly to get aid into Gaza. The Buid Administration has

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Speaker 2: announced its final package of the year for Ukraine. It's

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Speaker 2: a two hundred and fifty million dollar package weapons and equipment.

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Speaker 2: Secretary of State Anthony Blincoln's as the aid is imperative

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Speaker 2: for Ukraine to fight against Russian aggression, but that it

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Speaker 2: is perative the imperative now that Congress act when it

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Speaker 2: gets back. Donald Trump is one another round in the

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Speaker 2: legal fight to keep him off the Republican primary ballot

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Speaker 2: in Michigan next year, after the state Supreme Court left

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Speaker 2: intact a lower court ruling that rejected efforts to bar

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Speaker 2: him over his role in the January sixth attack on

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Speaker 2: the Capitol. Michigan's Secretary of State Joscelyn Benson says she

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Speaker 2: had to step aside for the ruling.

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Speaker 5: An over but the question of who should decide squarely

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Speaker 5: still remains in the courts.

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Speaker 6: Not with.

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Speaker 2: Still I'll make it to the Supreme Court. Meanwhile, prosecutors

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Speaker 2: in Trump's election interference case are asking a judge to

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Speaker 2: reign in Trump's rhetoric. Bloomberg's Nancy Lyons has details.

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Speaker 7: Federal prosecutors working for special counsel Jack Smith are asking

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Speaker 7: a judge to keep Donald Trump and his attorneys from

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Speaker 7: claiming tra jurors that the case was brought against him

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Speaker 7: as a partisan attack by the Biden administration. In the motion,

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Speaker 7: secutors say Trump is trying to inject quote irrelevant and

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Speaker 7: prejudicial issues into the case. The motion was filed two

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Speaker 7: weeks after Judge Tanya Chutkin froze the case while on

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Speaker 7: appeals court considers Trump's claim that he is immune from prosecution.

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Speaker 7: In Washington, Nancy lyons Bloomberg Radio.

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Speaker 2: Thank you, Ncy Global News twenty four hours a day

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Speaker 2: and whenever you want, with Bloomberg News now in San Francisco.

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Speaker 2: I'm Ed Baxter, and this is Bloomberg all right, Brian, all.

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Speaker 1: Right, dad, thank you very much. Time now for the

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Speaker 1: top business stories of the hour.

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Speaker 6: Well.

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Speaker 1: As mentioned earlier, Apple has won a court ruling pausing

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Speaker 1: a US sales ban on its newest smart watches. The

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Speaker 1: ruling buys the company some time in an ongoing patent

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Speaker 1: dispute with medical device maker Massimo, and as Bloomberg's Mark

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Speaker 1: German predicted earlier, the watches are already back on the store.

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Speaker 5: Shows getting this repri via this emergency order through impell

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Speaker 5: at court in DC. That definitely puts the watch on

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Speaker 5: track to probably go back on sale today through January tenth.

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Speaker 5: That minimum or retent is when the ITC is going

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Speaker 5: to respond and try to shoot down this motion. But

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Speaker 5: this particular court in DC has a history of not

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Speaker 5: granting these emergency lifts if they don't believe that this

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Speaker 5: will stick long term.

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Speaker 1: That's Bloomberg's Mark German. Mark will join us later in

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Speaker 1: this hour and the ITC that he referred to there.

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Speaker 1: The US International Trade Commission blocked the import and sale

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Speaker 1: of two Apple Watch models earlier this month, citing patent infringement,

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Speaker 1: and Apple stock traded essentially sideways Today well, the New

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Speaker 1: York Times is suing Microsoft and open Ai. We get

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Speaker 1: the story from Bloomberg's Karen Moscow.

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Speaker 6: In a lawsuit file today, The New York Times claims

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Speaker 6: that technology firms relied on millions of copyrighted articles to

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Speaker 6: train chatbots like chat, GPT and other AI features, allegedly

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Speaker 6: causing billions of dollars in statutory and actual damages. The

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Speaker 6: Times did not specify its monetary demands. Representatives from Microsoft

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Speaker 6: and open Ai did not immediately respond to requests were comet.

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Speaker 6: The suit is a sign of the increasingly fraud relationship

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Speaker 6: between the media and a technology that could upend the

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Speaker 6: news industry. Karen Moscow Bloomberg.

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Speaker 1: Radio shipping giant Marisk is preparing to resume sailing through

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Speaker 1: the Red Sea. The move is thanks to a new

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Speaker 1: multinational maritime task force to protect vessels from attacks by

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Speaker 1: Hooti rebels from Yemen, and, as Bloomberg's Brendan Murray notes,

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Speaker 1: at the moment, the decision by Marisk is the exception,

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Speaker 1: not the rule.

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Speaker 8: It seems that they're going to take the ships crossing

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Speaker 8: through the Suez Canal on a case by case basis

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Speaker 8: and on the basis of reducing the risks of these attacks.

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Speaker 8: So if they can, if they can get assurances that

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Speaker 8: they're going to have the protection from the navies that

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Speaker 8: are allied to protect maritime shipping, then it sounds like

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Speaker 8: they'll do that.

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Speaker 1: That's Bloomberg's Brendan Murray reporting. Marisk is the world's second

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Speaker 1: largest container line. In the meantime, shipping giant Hoppog Lloyd

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Speaker 1: said that it would keep its vessels away from the

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Speaker 1: Red Sea. The container liners said it would continue to

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Speaker 1: reroute its vessels via the Cape of Good Hope. That's

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Speaker 1: a detour of several thousand miles. It follows a spate

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Speaker 1: of attacks on merchant ships on a route that handles

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Speaker 1: about twelve percent of global trade. Goldvin Sachs and Morgan

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Speaker 1: Stanley expect a slump in China's housing construction to get

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Speaker 1: worse in twenty twenty four. We get the story from

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Speaker 1: Bloomberg's Bonny au in Hong Kong.

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Speaker 9: Consensus from ten investment banks and brokerages says that housing

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Speaker 9: slump wire worse than next year. Goldman Economists have one

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Speaker 9: of the most parish forecasts. They expect a double digit

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Speaker 9: contraction and will estate's fixed asset investment next year. Morgan

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Speaker 9: Stanley sees the gauge dropping seven percent, while UBS expects

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Speaker 9: a five percent decline. If they're right, that leaves China

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Speaker 9: on track to post three straight years of contraction in

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Speaker 9: property construction in Hong Kong. I'm Bonnie Al Bloomberg Radio.

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Speaker 1: This is Bloomberg Daybreak. Asha. Let's say good morning Asia.

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Speaker 1: Time to Ben Emmon, Senior portfolio manager and head of

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Speaker 1: fixed income at New Edge Wealth. Ben, great to have

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Speaker 1: you with us, especially during this holiday season. A lot

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Speaker 1: seems to have been discounted now in markets over the

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Speaker 1: past couple of months. No need to mention all of

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Speaker 1: them that the Feds at the center, the soft lending

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Speaker 1: is there too, and seasonal conditions and all of that,

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Speaker 1: So it seems like we would need some new catalysts

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Speaker 1: in the new year. If we're expecting the risk assets

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Speaker 1: to perform, well, what might they be.

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Speaker 10: Hey, Brian, happy holidays. I think that it's going to

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Speaker 10: be about the economy first and foremost. I've noted that

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Speaker 10: some of the data coming through let's say manufacturing data

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Speaker 10: or services, there's some uptick there or at least some

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Speaker 10: improvement from the last weeks in say November and December.

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Speaker 10: And so I think that if the economy show some

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Speaker 10: acceleration in January and that would be the catalyst for

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Speaker 10: the risk asset rally to continue. Otherwise it will be

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Speaker 10: back towards trying to focus on the big event next year,

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Speaker 10: which is the presidential election and any uncertainty that comes

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Speaker 10: along with that. Right, So, I think first and foremost

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Speaker 10: the economy, Brian, and does look like we're having a

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Speaker 10: little bit of an improvement of momentum there again.

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Speaker 1: So your corner of the sandbox obviously is fixed income.

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Speaker 1: Can we see bonds and stocks rally together now for

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Speaker 1: a while or for how long?

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Speaker 10: Yeah, it seems to be that we're back to that idea,

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Speaker 10: right the wedge of the rising SMP and falling bond heels,

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Speaker 10: and of course this is all driven by the inflation

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Speaker 10: picture that continues to improve. The latest number of the

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Speaker 10: core PC deflator was very encouraging fact actually you may

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Speaker 10: have read I mean I thought there was a somewhat

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Speaker 10: level of deflation start to show up there in that index.

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Speaker 10: This helps off obviously bond deals to go down and

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Speaker 10: that in turn drives up stock price. At least that

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Speaker 10: has an influence. I think that is to an extent.

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Speaker 10: Can you could see that continue? As I mentioned, if

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Speaker 10: the economy shows again this resilience, this sort of acceleration

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Speaker 10: and strength that we've seen before, I do think there

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Speaker 10: will be a bit of a fork in the road

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Speaker 10: for bond yields. So let's see what happens here. We

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Speaker 10: do have a lot of new supply coming in the

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Speaker 10: new year for treasuries. That still will be something that

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Speaker 10: Treasure Mark has to confront next year. There's lots of

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Speaker 10: supply and potentially strongly econing.

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Speaker 1: We had strong demand for some fifty eight billion dollars

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Speaker 1: of five year notes, and as mentioned, that sent bond

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Speaker 1: yields slumping and earlier yesterday, I guess we had some

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Speaker 1: solid two year auctions that drew buyers in. What do

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Speaker 1: you attribute that to?

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Speaker 10: Yeah, I think this is about the year ends rally

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Speaker 10: in both stocks and bonds. It must be that there's

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Speaker 10: still fair bit of funds or other investors that were

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Speaker 10: underweight in their duration in their portfolio or underweight treasuries.

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Speaker 10: I think that's part of that, that you're getting that

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Speaker 10: short covering, as they say. On the other hand, obviously,

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Speaker 10: as I mentioned that the inflation data is very encouraging

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Speaker 10: for bond heelds and it does show up in the

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Speaker 10: pricing of rate cuts right We're now about about one

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Speaker 10: hundred and seventy five basis points of cuts priced by

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Speaker 10: March or twenty twenty five. So I think that does

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Speaker 10: fuel a bit of the demand coming into these treasure auctions.

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Speaker 10: As I said, like, you know, it could change again

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Speaker 10: when the new refunding is announced in January, and it

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Speaker 10: may be more supply again, So it may be just

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Speaker 10: temporarily you know, reprieve here at these auctions at the moment.

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Speaker 1: So if we continue to see bonds do well, you

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Speaker 1: think it's more due to inflation coming down and not

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Speaker 1: concerns about stumbling growth ahead. And if that is your

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Speaker 1: core belief expand on it a little bit.

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Speaker 10: Yeah, I think Brian, that the inflation picture has dramatically shifted.

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Speaker 10: And you know, for some time I was too in

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Speaker 10: that camp of that inflation sticky and the fat had

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Speaker 10: no choice, but I don't you stay higher for longer,

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Speaker 10: but potentially had to raise a bit further. But it

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Speaker 10: turned out to be not entirely right, because you know,

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Speaker 10: the pandemic effect on inflation is really easing off. And

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Speaker 10: I think what as I mentioned the PCE deflator that

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Speaker 10: came out last Friday, drilling that basket, you know, there's

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Speaker 10: about fifteen percent of the index is now in a

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Speaker 10: more consistent deflation, meaning prices are down more than one

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Speaker 10: percent for the last six months, and so that becomes

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Speaker 10: a I think a different story for the bomb market

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Speaker 10: next year. If that continues that deflationary trend and we're

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Speaker 10: getting even more deflationary pressure in the CPI pc in disease,

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Speaker 10: then I cannot see the thirty yields staying where it

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Speaker 10: is now. Won't be a lot lower, right, we want

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Speaker 10: to go to price in more raycuts. So I think

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Speaker 10: that's the potentially the story.

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Speaker 1: I saw your piece yesterday about the PBOC providing a

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Speaker 1: lot of excess liquidity into the markets. Liquidity that is

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Speaker 1: not finding its way into the Chinese equity market, is

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Speaker 1: it finding its way into US assets?

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Speaker 10: I think to extent it is. And it's somewhat of

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Speaker 10: an indirect way, right because you know, we as you know,

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Speaker 10: like when the BBC inject liquidity into the Chinese banking system,

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Speaker 10: that's fair will be and I think the Chinese banks

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Speaker 10: either put that money into Chinese bounce or deposits, or

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Speaker 10: they buy sometimes have to buy dollars right on behalf

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Speaker 10: of the PBOC. But as you know that the yuan

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Speaker 10: has been strengthening sort of since I think mid November

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Speaker 10: or so, and the euro has been strengthening too, So

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Speaker 10: I think it comes through the weakness of the dollar,

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Speaker 10: and that weakness of the dollar is obviously affecting commodity

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Speaker 10: prices and also stock prices and emerging markets. So it's

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Speaker 10: a bit that I think indirective fact. I guess it's

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Speaker 10: that the one is strengthening on this idea that if

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Speaker 10: this equity injection, which by the way is quite substantial

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Speaker 10: now it's three and after e y one five hundred

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Speaker 10: million of dollars, if that does start to have some

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Speaker 10: sort of positive effect on the Chinese economy, that the

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Speaker 10: strengths you want, you know, is being carried over to

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Speaker 10: the weakness of the dollar and sort of that indirect

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Speaker 10: effect of global assets.

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Speaker 1: Yeah, yeah, no, I wasn't. I didn't mean to cut

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Speaker 1: you off. I mean, I think it's an interesting thought

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Speaker 1: because you know, Chinese exports, South green exports, if they

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Speaker 1: stay strong, will will send one kind of message. And

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Speaker 1: if the yuon stays strong, it could actually help the

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Speaker 1: consumer in China to a certain degree. So I wonder

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Speaker 1: whether or not, I mean, do you think there's much

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Speaker 1: likelihood that we could get mean reversion next year, that

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Speaker 1: maybe US and European assets move sideways and we get

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Speaker 1: some rallies in Chinese and Hong Kong stocks. They've been moribun.

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Speaker 10: Yeah, they'd be very moribun. Then, I think, you know

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Speaker 10: that that sort of idea that we're seeing in small

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Speaker 10: caps in the usset, this ketchup idea, because that's been

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Speaker 10: the lagging sectors right and against tax, that you get

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Speaker 10: some sort of similar fact internationally, Like, yeah, Chinese stocks

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Speaker 10: and Hong Kong stocks have really lact a year. One

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Speaker 10: of the few marks that actually are down with quite

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Speaker 10: substantial amount. So if this you one, strength is a

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Speaker 10: signal of as you mentioned, the x book sceptor is

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Speaker 10: improving and dost profits ofvern I were improving. Yeah, the

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Speaker 10: Chinese stocks have some scope to alley here.

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Speaker 1: Yeah. I think that would make a lot of people

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Speaker 1: happy anyway. Thanks Ben ben Emmon, the Senior portfolio manager,

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Speaker 1: head of Fixed Income at New Edge Wealth. This is

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