WEBVTT - Auto Strike Continues; Big Week for Rate Decisions

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Nathan Hager and I'm Karen Moscow. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 3>We begin with day four of the autoworkers' strike, with

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<v Speaker 3>no progress to report. This morning, the president of the

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<v Speaker 3>United Autoworkers Union says he is unmoved by a twenty

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<v Speaker 3>one percent pay raise offer from Stallantis. Sean Fain spoke

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<v Speaker 3>with CBS's Margaret Brennan.

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<v Speaker 4>You know, our demands are just We're asking for our

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<v Speaker 4>fair share in this economy and the fruits of our labor.

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<v Speaker 5>So twenty one percent is a no go for you.

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<v Speaker 6>It's definitely a no go, and we've made that very

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<v Speaker 6>clear of the companies.

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<v Speaker 3>Sean Fain made the comments on CBS's Face the Nation,

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<v Speaker 3>which you can hear every Sunday on Bloomberg Radio.

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<v Speaker 2>Well Nathan, former Vice president and Republican presidential candidate Mike Pence,

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<v Speaker 2>is laying the blame for the United auto Workers' strike

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<v Speaker 2>on President Joe Biden's economic policies. He says a transition

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<v Speaker 2>to electric vehicles is threatening jobs.

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<v Speaker 4>What I'm hearing around the country is that that auto

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<v Speaker 4>workers are very concerned about Joe Biden's Green Nude deal.

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<v Speaker 4>Heavy handed effort to use taxpayer dollars to drive these

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<v Speaker 4>automotive companies into electric vehicle production.

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<v Speaker 2>Mike Pence made the comments in an interview with The

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<v Speaker 2>Bloomberg's Joe matthew And and Marie hord Dern. Find the full

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<v Speaker 2>conversation on the Bloombergs Talks podcast, available wherever you download podcasts.

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<v Speaker 3>Turning to markets, Karen, this is a big week for

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<v Speaker 3>central bank decisions. The Fed, Bank of England and Bank

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<v Speaker 3>of Japan all make decisions this week, and we get

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<v Speaker 3>a Fed preview from Bloomberg's Michael McKay.

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<v Speaker 6>The Fed has made its meetings more interesting by not

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<v Speaker 6>telegraphing exactly what it will do this week. Policymakers are

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<v Speaker 6>forecast to hold the nation's benchmark interest rate in a

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<v Speaker 6>range between five and a quarter and five and a

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<v Speaker 6>half percent. They still have one more rate move to

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<v Speaker 6>go this year, at least according to their own outlook

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<v Speaker 6>published in June. Does that remain in the so called

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<v Speaker 6>dot plot and do they adjust their forecasts for growth, inflation,

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<v Speaker 6>and unemployment. The jobless rate is still well below where

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<v Speaker 6>they had predicted it would be. While it's unlikely this,

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<v Speaker 6>central bankers would surprise with the rate move, the adjustments

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<v Speaker 6>they make to their economic outlook, and what Chairman j

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<v Speaker 6>poul says about that will matter a lot to investors.

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<v Speaker 6>Michael McKee, Bloomberg Radio.

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<v Speaker 2>All right, Mike, thanks, so as we await those policy decisions.

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<v Speaker 2>Morgan Stanley investors see a tough twenty twenty four on

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<v Speaker 2>the horizon, the firm's equity strategist Mike Wilson says, after

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<v Speaker 2>a sharp stock rally this year on the back of

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<v Speaker 2>resilient economic growth, investors now have a more negative outlook

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<v Speaker 2>for risk assets in twenty twenty four. Wilson says there's

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<v Speaker 2>a growing debate among clients about whether a recession has

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<v Speaker 2>been avoided altogether or if it's just been delayed until

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<v Speaker 2>next year.

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<v Speaker 3>In Europe, this morning, shares of Associate General are down

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<v Speaker 3>seven and a half percent. The French bank strategic plan

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<v Speaker 3>is disappointing investors. The company's new CEO cut revenue and

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<v Speaker 3>profitability targets, surprising investors who'd hoped for a boost to

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<v Speaker 3>the underperforming stock.

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<v Speaker 2>Well, we turned to politics now, Nathan and House Speaker

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<v Speaker 2>Kevin McCarthy is proposing a deal to temporarily avert a

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<v Speaker 2>government shut down. His demands include an eight percent spending

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<v Speaker 2>cut for domestic agencies and a resumption of border wall construction,

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<v Speaker 2>as Bloomberg said, Baxter reports, McCarthy says a government shutdown

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<v Speaker 2>would be a self defeat for Republicans.

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<v Speaker 7>McCarthy says it would undermine his party's leverage and negotiations

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<v Speaker 7>over spending cuts sought by his party itself, because.

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<v Speaker 5>When you shut down, you give all your power to

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<v Speaker 5>the administration. But how are you going to win your

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<v Speaker 5>arguments to secure the border if the border agents don't

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<v Speaker 5>get paid. How are you going to win the arguments

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<v Speaker 5>to get wokeism out of the Department of Defense if

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<v Speaker 5>even our own troops won't be being paid.

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<v Speaker 7>McCarthy on Fox says this week he hopes to get

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<v Speaker 7>a short term funding bill out of the House the

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<v Speaker 7>Senate another issue. I'm at Baxter Bloomberg Radio, Okay, ed,

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<v Speaker 7>thank you.

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<v Speaker 3>Some scathing words from House Minority Leader Hakim Jeffries. He's

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<v Speaker 3>blaming Republicans for a possible shutdown and impeachment inquiry against

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<v Speaker 3>President Joe Biden.

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<v Speaker 8>House Republicans are in the middle of a civil war.

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<v Speaker 8>Civil war has the following attributes chaos, dysfunction and extremism.

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<v Speaker 8>The House Republican civil war is hurting hard working American

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<v Speaker 8>tax payers.

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<v Speaker 3>How Democratic leader Hakim Jeffries made those comments on ABC's

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<v Speaker 3>This Week. You can also catch that program Sundays on

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<v Speaker 3>Bloomberg Radio.

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<v Speaker 2>Well Nathan, former President Donald Trump, has given his first

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<v Speaker 2>interview to a major TV network since leaving office. The

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<v Speaker 2>runaway front runner for the Republican nomination in twenty twenty four,

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<v Speaker 2>had a wide ranging conversation with a new moderator of

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<v Speaker 2>NBC's Meet the Press, Kristin Welker.

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<v Speaker 9>If you were reelected, would you pardon yourself?

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<v Speaker 10>I could have pardoned myself.

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<v Speaker 2>Do you know what?

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<v Speaker 11>I was given an option to pardon myself.

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<v Speaker 10>I could have pardoned myself when I left.

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<v Speaker 2>And the former president also continued to insist that twenty

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<v Speaker 2>twenty election was rigged and it was his decision to

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<v Speaker 2>try to overturn it.

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<v Speaker 3>I watched that election, and I thought the election was

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<v Speaker 3>over at ten o'clock in the evening.

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<v Speaker 11>You were listening to your instincts.

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<v Speaker 10>My instincts are a big part of it. That's been

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<v Speaker 10>the thing that's gotten me to where I am. Int thanks,

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<v Speaker 10>but I also listen to people.

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<v Speaker 2>And you can hear Meet the Press every Sunday at

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<v Speaker 2>eleven a m. Wall Street Time right here on Bloomberg Radio.

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<v Speaker 3>Turning to geopolitics, Karen, we may have some progress on

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<v Speaker 3>US China relations. National Security Advisor Jake Sullivan and Chinese

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<v Speaker 3>Feign Minister Wangyie have met in Malta. A US official

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<v Speaker 3>says they discussed a potential leaders meeting and other issues

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<v Speaker 3>in the relationship. The talks come at a critical time

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<v Speaker 3>in US China relations. Wang is scheduled to visit Moscow

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<v Speaker 3>for talks with Russian Foreign Minister Sergei Lavrov this week.

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<v Speaker 3>Other world leaders are headed to New York for the

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<v Speaker 3>United Nations General Assembly.

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<v Speaker 2>Ray Nathan, thank you. It's time now for a look

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<v Speaker 2>at some of the other stories making news around the world.

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<v Speaker 2>For that, we're joined by Bloomberg's John Tucker.

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<v Speaker 1>John, good morning, and good morning to you, Karen.

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<v Speaker 6>Time and action.

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<v Speaker 12>World leaders gathering this week in New York for the

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<v Speaker 12>United Nations General Assembly, and on the streets have been

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<v Speaker 12>happened before the meeting, seventy five thousand protesters calling for

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<v Speaker 12>an end to fonsil fuels. They want President Biden to

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<v Speaker 12>stop approving new oil and gas projects and to declare

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<v Speaker 12>a climate emergency. Emma Bretta was among the organizers.

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<v Speaker 2>We're targeting Wyatt because he needs a completely reverse course.

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<v Speaker 2>He's not even showing up to the Climate official summit,

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<v Speaker 2>which is completely unacceptable.

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<v Speaker 12>Ukraine's President Zelenski will be there at the General Assembly

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<v Speaker 12>meeting Thursday and will address Congress and meet with President Biden.

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<v Speaker 12>On Friday. Ahead of the meeting of the UN General Assembly,

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<v Speaker 12>Elon Musk visited the Turkish President Ertawan in New York,

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<v Speaker 12>spending about forty five minutes discussing artificial intelligence at a

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<v Speaker 12>potential factory. According to Erduwan's office, he invited Musk to

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<v Speaker 12>open a Tesla factory in Turkey. A deal broker by

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<v Speaker 12>the Biden administration the Free Americans and Iran's custody includes

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<v Speaker 12>unfreezing six billion dollars in Iranian oil revenue and the

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<v Speaker 12>release of five Iranian nationals in US custody. The exchange

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<v Speaker 12>has drawn criticism from both parties. On Capitol Hill, the

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<v Speaker 12>head of the Senate Intelligence Committee, Mark Werner, is expressing

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<v Speaker 12>concern about what Iran may do with that six billion dollars.

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<v Speaker 12>He wants more details and the constraints being placed on

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<v Speaker 12>the money. China's military sent one hundred three warplanes toward

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<v Speaker 12>Taiwan in a twenty four hour period and what the

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<v Speaker 12>island's defense ministry calls a recent new high. China, which

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<v Speaker 12>claims Taiwan as part of its territory, has conducted increasingly

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<v Speaker 12>large military drills in air and waters around Taiwan. They

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<v Speaker 12>turned back at the last minute. A two hundred and

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<v Speaker 12>fifty thousand dollars reward has been offered for the capture

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<v Speaker 12>the suspects responsible for the deadly ambush of an La

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<v Speaker 12>County Deputy sheriff of the weekend. He was shot and

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<v Speaker 12>killed in an apparent ambush at a red light. The

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<v Speaker 12>La County Sheriff, Robert Lunaz, asking the public for its help.

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<v Speaker 9>And we need you now more than ever. We come

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<v Speaker 9>out and help everybody twenty four to seven, and we

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<v Speaker 9>need you now to help us. We need you to

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<v Speaker 9>help us capture the coward that committed this murder.

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<v Speaker 12>Global News twenty four hours, Power Bludd, more than twenty

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<v Speaker 12>seven other journalist and analysts, and more than one hundred

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<v Speaker 12>twenty countries. I'm John Tucker. They see is Bloomberg.

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<v Speaker 2>Karen All right, John, Thank you, and now get the

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<v Speaker 2>latest news whenever you wanted with the Bloomberg News Now.

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<v Speaker 2>It's the top stories from our global team of reporters

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<v Speaker 2>at the click of a button. Get Bloomberg News Now

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<v Speaker 2>on the Bloomberg Business App, Bloomberg dot com, and anywhere

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<v Speaker 2>you get your podcasts. Time now for the Bloomberg Sports Update,

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<v Speaker 2>and here's John stash Hour John Karen's.

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<v Speaker 10>Some teams off to surprising two and oh starts in

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<v Speaker 10>the NFL, like the Tampa Bay Buccaneers, who needs Tom

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<v Speaker 10>Brady Baker Mayfield and the Box Beach Chicago twenty seven

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<v Speaker 10>to seventeen. Atlanta is two and oh down twelve in

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<v Speaker 10>the fourth quarter. The Falcons rally the top Green Bay

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<v Speaker 10>twenty five to twenty four. Even bigger comeback by the Giants,

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<v Speaker 10>who killed by three touchdowns third quarter at Arizona and

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<v Speaker 10>one thirty one to twenty eight. They lost last week

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<v Speaker 10>to Dallas forty to nothing, and the Cowboys beat the

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<v Speaker 10>Jets thirty to so two wins over the New York

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<v Speaker 10>teams by combined score of seventy to ten. Last night

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<v Speaker 10>in New England, Miami won twenty four to seventeen. The

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<v Speaker 10>Dolphins are two and oh. The Patriots are row and two.

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<v Speaker 10>Forty nine ers off to a two and oh start.

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<v Speaker 10>They beat the Rams thirty to twenty three, and the

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<v Speaker 10>Ravens are two and oh a twenty seven to twenty

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<v Speaker 10>four win at Cincinnati, Bengals a zero and two in

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<v Speaker 10>their quarterback Joe Burrow tweaked the CAF injury that bothered

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<v Speaker 10>him in the preseason baseball. The Orioles tied the game

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<v Speaker 10>and the ninth and tenth innings and then beat the

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<v Speaker 10>Rays five to four and eleven. They leaked Tampa by two.

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<v Speaker 10>In the Al East, both teams of Clint's playoff bers.

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<v Speaker 10>Nashvill's won and eleven innings in Milwaukee. Red sox fourth

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<v Speaker 10>straight loss was three two at Toronto, the Giants won

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<v Speaker 10>a wild win a Colorado eleven to ten. Alabama had

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<v Speaker 10>a narrow win Saturday at South four after losing to Texas,

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<v Speaker 10>and the Crimson Tide now out of the top ten

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<v Speaker 10>in the rankings for the first time since twenty fifteen.

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<v Speaker 10>They had been in the top ten one hundred and

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<v Speaker 10>twenty eight.

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<v Speaker 1>Poles in a row.

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<v Speaker 10>John Stanshawerd Bloomberg's four.

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<v Speaker 7>From Coast to Coast from New York to San.

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<v Speaker 2>Francisco, Boston to Washington, DC.

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<v Speaker 7>Nationwide on Syrias Exam, the Bloomberg Business app and Bloomberg

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<v Speaker 7>dot Com. This is Bloomberg Daybreak.

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<v Speaker 3>Good morning, I'm Nathan Hager. We are getting set for

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<v Speaker 3>a trading week that will be dominated by central bank decisions,

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<v Speaker 3>not the least of which is the Federal Reserve coming

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<v Speaker 3>out with its latest policy decision on Wednesday, before the

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<v Speaker 3>Bank of England and Bank of Japan follow What is

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<v Speaker 3>the trajectory for the market before the Fed gives investors

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<v Speaker 3>its latest signal on the path for interest rates. For more,

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<v Speaker 3>we're joined by Lori Calvacina, head of US Equity Strategy

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<v Speaker 3>at RBC Capital Markets. Laurie, great to speak with you,

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<v Speaker 3>as always. What is going to drive the market reaction

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<v Speaker 3>when we finally do hear from Jpollin Company on Wednesday?

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<v Speaker 11>Well, well, thanks for having me as always, and obviously

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<v Speaker 11>the central banks are the big story of the week,

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<v Speaker 11>you know. Unfortunately, our race strategy team thinks that this

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<v Speaker 11>is going to probably be another fairly boring said meeting.

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<v Speaker 11>They see basically no risk that we're going to get

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<v Speaker 11>a hike coming up. They don't expect anything particularly interesting

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<v Speaker 11>coming out of the commentary. They think the FED really

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<v Speaker 11>likes how the data has been progressing. You know, I

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<v Speaker 11>think they have talked a little bit about how there

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<v Speaker 11>might be some focus on the twenty twenty four PC

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<v Speaker 11>numbers coming up, and that's something you know that markets

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<v Speaker 11>on the equity side could definitely be paying attention to

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<v Speaker 11>and digest. But in general, you know, we expect things

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<v Speaker 11>to sort of soldier on after this meeting.

0:11:29.720 --> 0:11:32.640
<v Speaker 3>Yeah, it's interesting how the market has managed to soldier

0:11:32.720 --> 0:11:37.319
<v Speaker 3>on despite the elevated interest rates, the dramatic rise in

0:11:37.320 --> 0:11:41.000
<v Speaker 3>interest rates we've seen for more than a year now.

0:11:41.480 --> 0:11:46.119
<v Speaker 3>How do you explain the rally that we've seen despite

0:11:46.520 --> 0:11:47.800
<v Speaker 3>elevated interest rates.

0:11:48.520 --> 0:11:50.959
<v Speaker 11>Well, I think the simplest explanation, and I'll be honest

0:11:50.960 --> 0:11:52.720
<v Speaker 11>with you, this has been coming up a lot in

0:11:52.760 --> 0:11:56.040
<v Speaker 11>our conversations with client space in the US since June.

0:11:56.360 --> 0:11:58.920
<v Speaker 11>I'm not sure quite why that it really started then,

0:11:59.760 --> 0:12:02.440
<v Speaker 11>but in general, we think that companies in particular as

0:12:02.480 --> 0:12:05.200
<v Speaker 11>well as consumers have really continued to benefit from the

0:12:05.240 --> 0:12:07.880
<v Speaker 11>era of low interest rates this year. And what I

0:12:07.960 --> 0:12:09.920
<v Speaker 11>mean by that is, if you look at the mortgage

0:12:10.000 --> 0:12:13.000
<v Speaker 11>rate or the effective interest rate, on mortgage debt outstanding,

0:12:13.080 --> 0:12:15.400
<v Speaker 11>so you know, not just where people are getting their

0:12:15.440 --> 0:12:17.679
<v Speaker 11>rates today, but what they've got locked in based on

0:12:17.720 --> 0:12:20.080
<v Speaker 11>all the activity of the last few years. It ended

0:12:20.080 --> 0:12:22.520
<v Speaker 11>two Q about three point six percent. That's really a

0:12:22.559 --> 0:12:27.600
<v Speaker 11>mind boggling statistic. Think about it from a public company perspective.

0:12:27.640 --> 0:12:30.240
<v Speaker 11>I've actually crunched the data three different ways for the

0:12:30.320 --> 0:12:31.800
<v Speaker 11>S and P five hundred to make sure I was

0:12:31.840 --> 0:12:34.920
<v Speaker 11>getting the right numbers. The lowest number I came up

0:12:34.960 --> 0:12:37.280
<v Speaker 11>with for two Q was one point seven percent and

0:12:37.320 --> 0:12:39.800
<v Speaker 11>the highest I came up with was three point one percent,

0:12:39.840 --> 0:12:41.640
<v Speaker 11>which is looking at a median of the S and P.

0:12:42.559 --> 0:12:45.000
<v Speaker 11>And we think that's really happened because companies, you know,

0:12:45.200 --> 0:12:47.400
<v Speaker 11>they sort of listened to investors in recent years and

0:12:47.400 --> 0:12:50.280
<v Speaker 11>went out and locked in long term debt at low

0:12:50.360 --> 0:12:52.760
<v Speaker 11>rates and really you know, took down their variable rate

0:12:52.800 --> 0:12:56.160
<v Speaker 11>dead and short term debt. So the plunchline here is

0:12:56.160 --> 0:12:58.440
<v Speaker 11>they just really haven't felt the dight of these interest

0:12:58.520 --> 0:12:58.959
<v Speaker 11>rates yet.

0:13:00.120 --> 0:13:02.360
<v Speaker 3>That raises the question of whether we're going to start

0:13:02.400 --> 0:13:04.960
<v Speaker 3>to feel that bite in twenty twenty four. What's your

0:13:05.040 --> 0:13:05.480
<v Speaker 3>view on that?

0:13:06.480 --> 0:13:08.880
<v Speaker 11>So you are starting to see both of those statistics

0:13:08.880 --> 0:13:11.800
<v Speaker 11>I mentioned creep up. I will tell you I wasn't

0:13:11.800 --> 0:13:14.480
<v Speaker 11>actually at our industrial conference last week, but the reports

0:13:14.480 --> 0:13:17.400
<v Speaker 11>from the field that I heard were that one of

0:13:17.400 --> 0:13:20.240
<v Speaker 11>the big topics was deleveraging. It seemed to come up

0:13:20.280 --> 0:13:23.760
<v Speaker 11>in just about every conference company recap that I read

0:13:23.800 --> 0:13:26.360
<v Speaker 11>from the team that was on the ground there, And

0:13:26.440 --> 0:13:28.800
<v Speaker 11>we actually took a look at the statistics around de

0:13:28.920 --> 0:13:31.560
<v Speaker 11>leveraging and how often companies are mentioning this across not

0:13:31.679 --> 0:13:33.800
<v Speaker 11>just the S and P or the industrials, but across

0:13:33.800 --> 0:13:35.520
<v Speaker 11>the whole Russell three thousand and we found it's been

0:13:35.600 --> 0:13:38.719
<v Speaker 11>quite elevated over the last few years. So I think

0:13:38.760 --> 0:13:41.000
<v Speaker 11>one of the ways that companies are preparing, you know,

0:13:41.040 --> 0:13:43.640
<v Speaker 11>for potentially the need to free sentance at higher levels

0:13:43.760 --> 0:13:47.040
<v Speaker 11>is simply to pay down debt. We know that most

0:13:47.120 --> 0:13:49.880
<v Speaker 11>S and P companies have average weighted maturities of five

0:13:49.960 --> 0:13:51.800
<v Speaker 11>years or more. There is a decent amount, you think

0:13:51.840 --> 0:13:54.520
<v Speaker 11>about twenty five percent have average weighted maturities in the

0:13:54.520 --> 0:13:57.120
<v Speaker 11>next two to five years. So if the FED does

0:13:57.200 --> 0:14:00.400
<v Speaker 11>start cutting next year as anticipated, even the debt that

0:14:00.440 --> 0:14:02.600
<v Speaker 11>does need refinancing is going to get a little bit

0:14:02.640 --> 0:14:05.280
<v Speaker 11>of relief. So I do think this is you know,

0:14:05.400 --> 0:14:08.960
<v Speaker 11>kind of a headwind for companies in future years. It's

0:14:09.040 --> 0:14:12.000
<v Speaker 11>something that seems like it's been very well managed so far.

0:14:12.120 --> 0:14:15.600
<v Speaker 11>I think companies have enough runway they can manage around it.

0:14:15.640 --> 0:14:17.680
<v Speaker 11>That doesn't mean that we're not going to see some impacts,

0:14:17.679 --> 0:14:20.040
<v Speaker 11>but it feels like a headwind as we're ascending a

0:14:20.040 --> 0:14:22.000
<v Speaker 11>mountain as opposed to a cliff that we're about to

0:14:22.040 --> 0:14:22.520
<v Speaker 11>fall off of.

0:14:23.080 --> 0:14:25.640
<v Speaker 3>One thing that we have started to see more of

0:14:25.760 --> 0:14:29.920
<v Speaker 3>in recent weeks is inflows into US stocks. As we

0:14:30.000 --> 0:14:34.320
<v Speaker 3>think about where this market could go for the rest

0:14:34.360 --> 0:14:38.720
<v Speaker 3>of this year, in our last minute, what impact could

0:14:38.760 --> 0:14:42.720
<v Speaker 3>that have on valuations for the stock market. Is there

0:14:42.720 --> 0:14:45.480
<v Speaker 3>a risk that the US market starts to get overbought

0:14:45.520 --> 0:14:46.800
<v Speaker 3>with these inflows coming in.

0:14:47.680 --> 0:14:50.720
<v Speaker 11>So we've started to see sentiment deteriorate. Whether you're looking

0:14:50.720 --> 0:14:52.920
<v Speaker 11>at the CFTC data, it's come in just a little

0:14:52.960 --> 0:14:55.840
<v Speaker 11>bit or the AAII data has come in quite a

0:14:55.840 --> 0:14:58.200
<v Speaker 11>bit since hitting our peak over the summer. But the

0:14:58.320 --> 0:15:00.400
<v Speaker 11>enflows are starting to come back, and there's starting to

0:15:00.400 --> 0:15:02.080
<v Speaker 11>come back to the growth part of the market in

0:15:02.120 --> 0:15:04.320
<v Speaker 11>a big way. A lot of this is passive driven

0:15:04.520 --> 0:15:06.960
<v Speaker 11>based on the analysis that we've put together, so it

0:15:06.960 --> 0:15:09.200
<v Speaker 11>does generate from upside risk heading into the end of

0:15:09.240 --> 0:15:09.560
<v Speaker 11>the year.

0:15:12.000 --> 0:15:14.920
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