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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtiz 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: Moody's Investors' service has signaled that its confidence is wavering

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Speaker 1: ahead of a potential US government shutdown. We get more

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Speaker 1: from Bloomberg's Kayley Lines.

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Speaker 3: They say that a shutdown would underscore the weakness of

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Speaker 3: US institutional governance and strength. The statement goes on to

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Speaker 3: say it would demonstrate the significant constraint that intensifying political

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Speaker 3: polarization continues to put on US fiscal policy making. And

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Speaker 3: the reason this might sound so familiar is it was

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Speaker 3: just back in August when Finch downgraded the US credit

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Speaker 3: rating because of governance issues and political dysfunction.

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Speaker 1: Bloomberg's Kayley Lines reporting Moody stopped short of threatening a downgrade,

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Speaker 1: but it did use unusually blunt language in expressing concerns

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Speaker 1: over the looming shutdown. Moody's latest report, which leaves its

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Speaker 1: US rating unchanged, is a sign that debt sustainability and

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Speaker 1: the politics surrounding it will continue to be a theme

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Speaker 1: through the remainder of the year.

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Speaker 2: We heard from the CEO of Goldman Sachs today, David Solomon,

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Speaker 2: He was saying it would be unprecedented for the economy

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Speaker 2: to go through this type of FED tightening without a

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Speaker 2: slowdown in growth. Here he is speaking earlier at the

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Speaker 2: American Energy Security Summit in Oklahoma City.

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Speaker 4: I think it's going to be hard to get the inflation,

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Speaker 4: get to get inflation back to the target, and that

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Speaker 4: probably means if inflation is sticky, we will see additional

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Speaker 4: interest rate increases, and ultimately that probably does lead to

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Speaker 4: a little bit more of a slowdown in the economy.

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Speaker 4: Whether that's a recession or it's just a slow down.

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Speaker 4: You know, it's hard to say.

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Speaker 2: Daddy is David Solomon, the CEO of Goldman Sachs. You'll

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Speaker 2: remember last week two FED officials saying at least one

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Speaker 2: more rate hike is possible as that the FED looks

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Speaker 2: to get inflation back to that two percent target. And

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Speaker 2: today the head of the Chicago Fed, Austin Goldsby, was

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Speaker 2: saying it's still possible for the US to avoid recession.

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Speaker 2: Brian Well.

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Speaker 1: Amazon is planning to invest in an AI startup, Anthropic.

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Speaker 1: It's the latest move by Amazon to become a major

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Speaker 1: player in generative artificial intelligence. Here's Bloomberg's alex Web.

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Speaker 5: Amazon has very much been seen as a laggard in

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Speaker 5: this space. You know you, Google obviously got strong AI

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Speaker 5: chops who bards their front face forward facing like chat model,

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Speaker 5: and so this potentially beefs up their capabilities in that space,

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Speaker 5: which helps them when it comes to the battle for

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Speaker 5: the cloud.

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Speaker 1: Wloomberg's alex Web and Amazon stock traded up one point

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Speaker 1: seven percent. Amazon is committing one and a quarter billion

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Speaker 1: for the initial investment for a minority position in the startup.

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Speaker 1: The final investment could reach four billion dollars. As part

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Speaker 1: of the deal, Anthropic will move most of its software

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Speaker 1: too Amazon Web Services data centers. It will also use

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Speaker 1: Amazon's chips to train AI models used to power chatbots

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Speaker 1: and other applications.

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Speaker 2: Well Ford Motor is halting construction on the battery plant

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Speaker 2: in Michigan worth three and a half billion dollars. We

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Speaker 2: have the story from Bloomberg's Denise Pellgranny.

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Speaker 6: The plant drew scrutiny from Republican lawmakers for its ties

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Speaker 6: to a Chinese battery maker. The plan was to license

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Speaker 6: technology from China's contemporary Amperx technology. Some lawmakers accused company

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Speaker 6: of being affiliated with the Chinese Communist Party, A Ford

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Speaker 6: spokesperson now saying the company is pausing work and limiting

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Speaker 6: spending on construction for now, It's not clear if the

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Speaker 6: political pressure is the reason for the halt. Ford is

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Speaker 6: also throttling back on ambitious electric vehicle production plans as

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Speaker 6: sales growth slows. This plant would have employed twenty five

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Speaker 6: hundred workers and produced enough batteries to power four hundred

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Speaker 6: thousand electric vehicles a year. Denise pellgreny Bloomberg Radio Well.

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Speaker 1: China and the EU have reached a slew of agreements

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Speaker 1: in areas including macroeconomic policy as well as supply chain cooperation. However,

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Speaker 1: China's Vice Premier Holy Fun expressed strong concern and dissatisfaction

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Speaker 1: over the EU anti subsidy probe into Chinese electric vavehicles.

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Speaker 1: The Vice Premier made these comments yesterday after meeting with

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Speaker 1: the European Union's chief trade negotiator, Valdis Dombrovski's.

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Speaker 7: We hold that the EU would exercise cause and to

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Speaker 7: continue to keep his market free, his spanefice European consumers,

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Speaker 7: benefice Korean lowcal development of Europe and the benefic global

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Speaker 7: climate Chrench compensations.

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Speaker 1: Chinese Vice Premier Holi phone. Earlier yesterday, Dombrovski's warned to

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Speaker 1: China that the EU would be more forceful in upholding

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Speaker 1: fair competition and defending its interests against the country. He

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Speaker 1: or rather hub said that China is hoping that the

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Speaker 1: EU would cancel the export restrictions on high tech goods.

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Speaker 1: The EU launched an anti subsidy probe into Chinese evs

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Speaker 1: earlier this month, and China's Commerce ministry has criticized the

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Speaker 1: investigation as a quote naked act of protectionism.

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Speaker 2: The Chinese property developer Evergrand has failed to repay an

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Speaker 2: onshore bond. We have that story from Bloomberg's Joanne Wong

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Speaker 2: in Hong Kong.

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Speaker 8: Evergrand subsidiary Hangda Real Estate. The fault that on five

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Speaker 8: hundred and forty seven million dollars in principle plus interest.

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Speaker 8: The andre bond was due September twenty fifth. In March,

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Speaker 8: hang Da missed an interest payment on the bond, which

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Speaker 8: was issued back in twenty twenty. Hangdas that would actively

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Speaker 8: negotiate with bondholders to find a solution. Meanwhile, Taisien reported

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Speaker 8: that two former Evergrand executives had been detained by Chinese

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Speaker 8: authorities in Hong Kong. I'm Joanne Wang Bloomberg Radio.

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Speaker 1: I'm Ryan Curtis along with Doug Christner. You know China

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Speaker 1: Today put this nicely on the Evergrand story. Evergrand rises

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Speaker 1: from the graveyard to haunt markets. Halloween still a month away,

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Speaker 1: but a renewed crisis at Evergrand has started to scare

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Speaker 1: investors again. And also, Doug, I wanted to revisit that

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Speaker 1: EU China story again because although we mentioned this at

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Speaker 1: the beginning that the Ministry of Commerce put out a

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Speaker 1: statement saying that they had a lot of cooperation, the

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Speaker 1: comments from Holly Phone were pretty sharply critical. And it's

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Speaker 1: interesting that the latest batch of information we got was

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Speaker 1: from the Ministry of Commerce putting a positive spin on it,

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Speaker 1: saying the EU reached a slew of agreements in areas

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Speaker 1: of macroeconomic policy coordination and supply chain cooperation. So I

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Speaker 1: wonder whether or not those comments from Holy Phone were

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Speaker 1: deemed as kind of harsh and they wanted to kind

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Speaker 1: of step in and say, okay, that said we did

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Speaker 1: have some cooperation, So that's something we can put to

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Speaker 1: our guests.

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Speaker 2: Certainly a complicated relationship when you talk about de risking

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Speaker 2: versus decoupling. Right, And before you go, Brian, I want

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Speaker 2: to draw your attention. I don't know whether you saw

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Speaker 2: this FED study today warning on some weakness in the

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Speaker 2: US consumer This study claims all but the richest twenty

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Speaker 2: percent have run out of excess pandemic savings. And at

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Speaker 2: the same time today Mike Wilson was warning about some

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Speaker 2: of the consumer stocks. He is citing a slow down

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Speaker 2: in consumer spending. He's also looking at the issue of

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Speaker 2: student loan repayments, rising delinquencies, where credit cards are concerned,

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Speaker 2: higher gas prices, and some weak data that we've seen

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Speaker 2: in the housing market as well.

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Speaker 1: Yeah, it is absolutely a concern, and we have noted

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Speaker 1: for a while that consumers have been spending a lot

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Speaker 1: on their credit cards and with rates this high, and

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Speaker 1: of course you know if you don't pay off those

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Speaker 1: credit card bills, the rates are stratospheric. But one of

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Speaker 1: the quick comment on the Amazon investment, I know that

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Speaker 1: you worked on this story a little bit too. One

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Speaker 1: of the things I think is interesting about it is

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Speaker 1: that in the past AWS has focused more on developers

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Speaker 1: rather than consumers, so this might mark a change in that.

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Speaker 1: In trying to bring AI more to the consumer side

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Speaker 1: of the equations, so something we can also explore later

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Speaker 1: in the program. Now it's time for Global News. Well,

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Speaker 1: let's get the latest on World News now with head

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Speaker 1: Baxter in San Francisco. He is in the nine to

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Speaker 1: sixty newsroom looking at all the top stories, and I

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Speaker 1: imagine right up there near the top would be President

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Speaker 1: Biden tomorrow showing up on the picket line.

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Speaker 9: Yeah, absolutely, Brian, And we'll get there in just a second.

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Speaker 9: But when lawmakers get back tomorrow, they'll have a very

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Speaker 9: short window to avert a government shutdown. They now will

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Speaker 9: have to work on a continuing resolution. Bloomberg's Kaylee Lion

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Speaker 9: says it's the only way to get anything done.

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Speaker 3: Mechanism of doing so is going to have to be

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Speaker 3: a continuing resolution. They simply don't have time to pass

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Speaker 3: all twelve appropriation bills they would need to. How long

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Speaker 3: that continuing resolution is though, in the House, and whether

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Speaker 3: it can get adequate support in the Republican Party considering

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Speaker 3: Speaker McCarthy can only be afford to lose for votes,

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Speaker 3: is an open question. Granted, the Senate also is working

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Speaker 3: on its own cr through the mechanism of the FAA

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Speaker 3: reauthorization bill. That is something Majority Leader Chuck Schumer is

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Speaker 3: going to try to be working on this week.

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Speaker 9: And Bloomberg's Laura Davison says this could last a while.

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Speaker 10: Sources really are saying that this is going to be

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Speaker 10: you know that Republicans are very much dug in on this,

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Speaker 10: So we're looking at weeks potentially more.

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Speaker 6: The whole idea of going into.

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Speaker 10: A shutdown that what would our liners will tell you

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Speaker 10: they want to extract some sort of concessions from Democrats.

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Speaker 10: They want to hold out as long and try to

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Speaker 10: win things over.

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Speaker 9: And lower reports that the side that causes a shutdown

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Speaker 9: rarely gets any political gain out of it. And for

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Speaker 9: Kevin McCarthy, why would they want to stop paying the

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Speaker 9: troops or stop paying the border agents of the Coast Guard. Yeah,

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Speaker 9: five days in counting. Philippines has removed China's floating barrier

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Speaker 9: in the South China Sea just hours after condemning it.

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Speaker 9: Coastguard says it was at the order of President Ferdinand

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Speaker 9: Marcos Junior. And the UAW strike expands. President Biden will

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Speaker 9: be in Michigan tomorrow and he White House is stepping

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Speaker 9: further into the FRAY spokeswoman Carrina Jean Pierre.

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Speaker 7: This is the president that's made very very clear that

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Speaker 7: he believes that corporate profits should lead to record UAW

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Speaker 7: a record UAW contract.

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Speaker 9: Sean Pierre says, the President has made it very clear

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Speaker 9: he believes corporate profits should lead to UAW A record contract.

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Speaker 9: And Donald Trump goes to Michigan on Wednesday with a

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Speaker 9: tentative agreement of the Hollywood Studio strike. The process begins

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Speaker 9: of getting things back to work, but Stephen wolf Pereira,

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Speaker 9: business officer at Three Pound Studio, says it will not

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Speaker 9: begin immediately.

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Speaker 11: Reality is they need to get back to work. So

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Speaker 11: we're glad that we have a tenement agreement. It needs

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Speaker 11: now to go to the guild members and hopefully on

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Speaker 11: Tuesday they will vote and ratify this, but it's still

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Speaker 11: going to be some time before folks get back to work.

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Speaker 9: And WGA picket lines are down. The United States President

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Speaker 9: Joe Biden has met with leaders from Pacific Islands as

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Speaker 9: the US tries to compete against Chiant's influence in the region.

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Speaker 12: We hear your calls for reassurance that you never, never

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Speaker 12: will lose your statehood or membership of the UN as

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Speaker 12: a result of a climate crisis. Today, the United States

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Speaker 12: is making it clear that this is our position as well.

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Speaker 9: And he directly addressed the issue of rising sea levels,

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Speaker 9: said the US hears the concerns. Global News powered by

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Speaker 9: more than twenty seven hundred journal an analyst in over

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Speaker 9: one hundred and twenty countries. In San Francisco, I'm Ed Baxter,

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Speaker 9: and this is Bloomberg.

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Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis, along with

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Speaker 1: Vonnie Quinn and our guest is Sylvia Jablonski, co founder,

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Speaker 1: CEO and CIO at Defiance ETFs. Sylvia, a point blank question,

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Speaker 1: here are yields rising because of concerns about inflation or

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Speaker 1: confidence in growth?

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Speaker 6: Hi, Brian, great to talk to you today.

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Speaker 13: You know, I think that a lot of this is yeah,

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Speaker 13: I mean, I think a lot of this is just kind.

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Speaker 6: Of fears of fears of growth, fears.

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Speaker 13: Of inflation, and you know, just a lot of uncertainty there.

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Speaker 13: We saw the ten year yield climb eleven basis points

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Speaker 13: to above four point five four percent, and we haven't

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Speaker 13: seen that in well over a decade, so, you know,

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Speaker 13: just just fresh signs of uncertainty and turmoil here and maids.

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Speaker 6: So Sylvia, give us an idea of what you expect

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Speaker 6: will happen growth wise.

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Speaker 13: So you know, I think what will happen in terms

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Speaker 13: of growth is very much dependent on the path that

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Speaker 13: the FED takes. Right, So if we get that one

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Speaker 13: more rate hike and then we get into next year

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Speaker 13: and we have a clear picture of what the Fed

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Speaker 13: plans to do now, and that's essentially you know, two

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Speaker 13: less rate cuts than we're projected before, and we sort

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Speaker 13: of stick to that, then I think, you know, I

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Speaker 13: think we know where we're at, and it feels tangible

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Speaker 13: to achieve that soft landing with slower growth.

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Speaker 6: However, if inflation.

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Speaker 13: You know, kind of spooks us and goes the other way,

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Speaker 13: and you know, price of oil and gas remains high,

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Speaker 13: perhaps we have some hotter than expected reads and the

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Speaker 13: Fed is sort of forced to do additional rate hikes

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Speaker 13: and perhaps you know, no cuts next year. I do

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Speaker 13: think that puts us into a situation where we would

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Speaker 13: be worried about growth. The growth this year has been

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Speaker 13: unexpected and you know, far more positive than you know,

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Speaker 13: we stopped by the markets. We had that over two

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Speaker 13: percent last quarter, two percent the quarter before the consumers

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Speaker 13: holding up, spending has held up. You know, corporate earnings

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Speaker 13: are sort of great, and that's all in the face

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Speaker 13: of these headwinds of high inflation and high rates. So

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Speaker 13: if that sort of gets worse, I do think things

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Speaker 13: will start to crack.

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Speaker 1: And does that, given all your views, does that make

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Speaker 1: the tenure yield at a little over four and a

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Speaker 1: half percent very attractive and in fact, maybe even more

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Speaker 1: attractive at the longer end rather than in the belly

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Speaker 1: of the curve.

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Speaker 13: Yeah, again, I think, you know, I think, I think

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Speaker 13: what really will matter to the market is essentially you know,

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Speaker 13: what happens with the Fed and what happens with rates.

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Speaker 13: I'm not necessarily paying attention. You know, not much changed today,

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Speaker 13: so that move in the yield was a little bit

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Speaker 13: surprising to me. I don't think that, you know, there

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Speaker 13: was any kind of major news that necessarily prompted that.

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Speaker 13: So I think, you know, it'll be really interesting just

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Speaker 13: to see what the Fed does, what happens with inflation

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Speaker 13: into the next couple of months, you know, what happened

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Speaker 13: sort of with corporate earnings, and you know, and then

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Speaker 13: what the bottom line impact will be.

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Speaker 6: Sure, but if you need to preserve cash or make

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Speaker 6: some money now, and then you can't really afford to wait.

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Speaker 6: So what would the betting be here? I noticed today

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Speaker 6: hedgehons are cutting leverage at fastest pace since the twenty

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Speaker 6: twenty crash.

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Speaker 13: Yeah, so it depends on, you know, the sort of

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Speaker 13: the position that you're in. I suppose, on one hand,

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Speaker 13: you know, there are still great ways to generate short

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Speaker 13: term yo than income. Right, you have these short term

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Speaker 13: treasury products still still at the forty five percent range,

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Speaker 13: so you know, sure you could sort of scoop those

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Speaker 13: up in the short term and then you know, if

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Speaker 13: you're a longer term investor, though, I think the recent

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Speaker 13: pullback of the market essentially rallied right in the end

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Speaker 13: of July, and you know, we got to a point

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Speaker 13: where there was a lot of kind of fear of

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Speaker 13: missing out. But then you know, the logic there was like, well,

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Speaker 13: now valuations are sort of too high. How much higher

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Speaker 13: than you know, can we go? What's the good news

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Speaker 13: on the horizon? And the good news on the horizon

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Speaker 13: could be that, you know, the market has pulled back

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Speaker 13: in those you know, August and September duldrums. So if

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Speaker 13: you're kind of a dollar cost averager. You don't need

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Speaker 13: to raise cash in the next three months. These are

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Speaker 13: good entry points because you know, sort of regardless of

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Speaker 13: what happens in the near term, you know, inflation is

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Speaker 13: coming down right systematically, maybe not, you know, kind of

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Speaker 13: like a perfect straight line in the next couple of months,

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Speaker 13: but inflation is coming down. The Fed will come you know,

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Speaker 13: to a halt here and at some point that bodes

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Speaker 13: well for the market, particularly you know, growth stocks, and

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Speaker 13: again they've had a great run, but some of them

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Speaker 13: are now down you know, ten percent in the last

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Speaker 13: couple of months, So there are opportunities there. Short term, sure,

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Speaker 13: you can stay in these cash like products that yield

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Speaker 13: forty five percent, but longer term, you know, scooping out

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Speaker 13: equities tends to win the race.

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Speaker 1: If I could direct the conversation around to China and

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Speaker 1: Asia more generally, a lot of guests on this program

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Speaker 1: do raise politics and policy as one of the reasons

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Speaker 1: that they're a little nervous about China. Normally, politics doesn't

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Speaker 1: affect stock prices too much in your view, is it

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Speaker 1: worth looking at China or would you sort of be

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Speaker 1: hands off for a while?

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Speaker 13: Yeah, I mean, I think, you know, in terms, and

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Speaker 13: again it kind of depends on what kind of investory

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Speaker 13: you are, right, I think if you're looking out to

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Speaker 13: the longer term, you know, two, three, four years out,

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Speaker 13: then there are great opportunities now to scoop up emerging

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Speaker 13: market stocks because you know, they just haven't done what

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Speaker 13: the market expected them to do. This year. US rates

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Speaker 13: remained high, you know, China seeing weakness and growth and

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Speaker 13: demand and things like this. But again, I do think

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Speaker 13: that these things tend to eventually come around. I wouldn't

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Speaker 13: expect to see much performance. I probably, you know, wouldn't

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Speaker 13: dip in if I had a shorter investment timeframe, say,

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Speaker 13: you know, next six to twelve months or so in

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Speaker 13: the region. But longer term, you know, I do think

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Speaker 13: that you're you're looking at something that will be discounted,

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Speaker 13: you know, when you look back too or three years

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Speaker 13: from now. So a lot of this will depend again

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Speaker 13: on stability in the US US dollar price of oil

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Speaker 13: and gas, you know, sort of what the FED does,

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Speaker 13: and you know, just the cross politics between China and

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Speaker 13: the US on parts and production manufacturing. I do think

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Speaker 13: that matters. Again, second largest economy is a huge consumer

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Speaker 13: of US goods and travel and things like this. I mean,

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Speaker 13: if things fall to the wayside, I do think that

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Speaker 13: that sits on you know, both economies growth.

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Speaker 8: Sylvia, you said the EV trade is where the puck

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Speaker 8: is going China or out of China.

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Speaker 6: Well, I think both there.

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Speaker 13: You know, again some of the some of this will

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Speaker 13: impact consumer spending. But you know, if you look at

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Speaker 13: the top names in the US, which are Tesla and Rivian,

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Speaker 13: and you look at the top three names in China,

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Speaker 13: you know, you're seeing an increase in deliveries, You're seeing

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Speaker 13: an increase in profitability margins. They're they're starting to account

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Speaker 13: for you know, larger percentage of sales. So in China

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Speaker 13: about sixty percent of new car sold er electric vehicles.

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Speaker 13: And in the US, you know, we sort of know

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Speaker 13: the test let you know, on Musk story the owner

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Speaker 13: of the EV trade. But you know, this is just

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Speaker 13: something that's sitting at about eighteen percent globally or projected

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Speaker 13: to by the end of the years between fourteen and

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Speaker 13: eighteen now to thirty percent in the next five to

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Speaker 13: ten years. So you're talking about you know, multi you know,

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Speaker 13: hundreds of billions of dollars turning into two point seven

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Speaker 13: trillion by twenty so this is a longer term innovation trade.

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Speaker 1: All right, Sylvia, thanks so much for joining us. Sylvia Jablonski,

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