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Speaker 1: Good morning.

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

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Speaker 2: stories we're following today.

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Speaker 1: The House has elected to authorize an impeachment inquiry into

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Speaker 1: President Biden. Dan Schwartzman has the details in New York and.

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Speaker 3: Yeah, Brian, it has just come down. They have authorized

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Speaker 3: an impeachment inquiry into President Buying. The vote, of course,

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Speaker 3: going strictly on party lines, all two hundred and twenty

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Speaker 3: one Republicans voting in support, all two hundred and twelve

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Speaker 3: Democrats voting against. Authorizing the impeachment inquiry now guarantees that

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Speaker 3: the investigation will go on well into twenty twenty four

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Speaker 3: byen of course, running for reelection, most likely against former

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Speaker 3: President Donald Trump. Speaking of Trump, US District Judge Tanya

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Speaker 3: Chutkin has granted former President Trump's request to pause the

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Speaker 3: twenty twenty election obstruction case, which is scheduled for trial

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Speaker 3: in March, as Trump presses the claim for immunity against

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Speaker 3: criminal charges. The former president is appealing Chutkin's earlier ruling,

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Speaker 3: which denied him immunity for events that took place while

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Speaker 3: he was president. The judge has said her order to

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Speaker 3: pause the case was just to hold on the schedule,

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Speaker 3: and depending on how quickly the immunity issue is resolved,

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Speaker 3: the original dates could still be revived. Japanese Prime Minister

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Speaker 3: Fumio Kishida telling reporters in Tokyo earlier today he is

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Speaker 3: reshuffling his cabinet. Reports have emerged that he would be

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Speaker 3: firing four ministers after a scandal rock the ruling Liberal

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Speaker 3: Democratic Party. The four ministers on the chopping block, including

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Speaker 3: the Chief Cabinet secretary and Trade Minister, are part of

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Speaker 3: a group that have been accused of hiding income from

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Speaker 3: fundraising events. Kishida says the changes to his government will

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Speaker 3: be announced on Thursday. In a news conference in Tel Aviv,

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Speaker 3: Israeli Defense Minister Joav Galantz says the country will continue

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Speaker 3: its war against Hamas until the terror organization is dismantled

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Speaker 3: and all remaining hostages are brought home. Galan's comments coming

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Speaker 3: on the heels of growing international condemnation of civilian casualties

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Speaker 3: in the Gaza Strip, including President Biden highlighting Israel's loss

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Speaker 3: of international support due to what he called the quote

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Speaker 3: indiscriminate bombing that takes place. Elon Musk, who moved to

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Speaker 3: Texas during the pandemic is planning to start a university

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Speaker 3: in Austin. More on that from Bloomberg's Charlie Pellett.

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Speaker 4: That's according to tax filings for the billionaire's latest charity,

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Speaker 4: called The Foundation. The new institution seated with a roughly

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Speaker 4: one hundred million dollar gift from Musk. We'll start with

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Speaker 4: a STEM focus primary and secondary school. According to an

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Speaker 4: application to the IRS for the tax exempt status obtained

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Speaker 4: by Bloomberg, once it is operating, it quote intends to

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Speaker 4: ultimately expand its operations to create a university dedicated to

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Speaker 4: education at the highest levels in New York. Charlie Pellett,

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Speaker 4: Bloomberg Radio.

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Speaker 3: Thanks Charlie, Global News twenty fours a day, whenever you

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Speaker 3: want it with Bloomberg News.

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Speaker 5: Now.

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Speaker 3: I'm Dan Schwartzman, and this is Bloomberg.

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Speaker 1: Let's take a look now at the hour's top business stories. Well.

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Speaker 1: As Doug mentioned earlier, the FED has left interest rates

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Speaker 1: steady and gave its clearest signal yet that the aggressive

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Speaker 1: hiking campaign is done. The dot plot implies no rate

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Speaker 1: hikes and in fact seventy five basis points of cuts

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Speaker 1: in twenty twenty four. Fedschair J Powell, however, insisted that

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Speaker 1: the projections are not a preset plan, as he said,

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Speaker 1: inflation is still too.

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Speaker 6: High, we are prepared to tighten policy further if appropriate.

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Speaker 6: We're committed to achieving a stance of monetary policy that

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Speaker 6: is sufficiently restrictive to bring inflation sustainably down to two

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Speaker 6: percent over time, and to keeping policy restrictive until we're

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Speaker 6: confident that inflation is on a path to that objective.

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Speaker 1: Still, pal said that the FOMC has begun discussing when

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Speaker 1: to ease policy. He said most FED officials now see

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Speaker 1: that risks to price growth as broadly balanced.

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Speaker 2: Stateside. Hedge funds and brokerage firms have some new requirements

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Speaker 2: on certain transactions involving trading in US treasuries. Today, the

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Speaker 2: Securities and Exchange Commission voted to require all transactions involving

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Speaker 2: so called repurchase agreements to use clearing houses to complete them.

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Speaker 2: Here is SEC Chair Gary Gensler.

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Speaker 7: There is a lot of borrowing leverage in the treasury market.

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Speaker 7: Bringing things into central clearing can address that in a

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Speaker 7: number of ways. One is the clearing itself does something

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Speaker 7: called multi party netting, which lowers a lot of risk

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Speaker 7: in the system.

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Speaker 2: That is se SEA chair Gary Gensler. Now, the Commission

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Speaker 2: said the new central Clearing Mandate would apply to treasury

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Speaker 2: transactions in both the cash and repurchase markets, and the

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Speaker 2: new rules could also bolster oversight of highly leveraged positions

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Speaker 2: such as the so called basis trade. Those trades, by

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Speaker 2: the way, do use the repo market.

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Speaker 1: Brian Well City Group is offering to pay some staffers

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Speaker 1: a portion of their bonuses early if they agreed to

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Speaker 1: leave the company voluntarily. Let's get the story from Bloomberg

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Speaker 1: Sally big.

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Speaker 8: Will the city can make less layoffs as part of

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Speaker 8: this broader restructuring that it's unveiled in September, And it's

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Speaker 8: also hope that staffers will see this is the lesser

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Speaker 8: of two evils if they kind of cut and run

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Speaker 8: by taking part of a guaranteed bonus. Now, if they

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Speaker 8: get caught up in, that's better than getting caught up

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Speaker 8: in the likely and anticipated extended cuts next year, when

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Speaker 8: they could end up with no job and no bonus.

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Speaker 1: Bloomberg Sally bake Well City Group has already cut more

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Speaker 1: than three hundred senior management roles as part of its

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Speaker 1: September revamp.

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Speaker 2: We go to Tesla next, the company is recalling more

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Speaker 2: than two million vehicles. This comes after the top US

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Speaker 2: Auto Safety Regulator determined Tesla's driver assistance system autopilot, doesn't

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Speaker 2: do enough to prevent misuse. Here's Bloomberg's Craig Trudeau.

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Speaker 9: This dates back actually to August twenty twenty one, when

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Speaker 9: the National Highway Traffic Safety Administration open an investigation into

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Speaker 9: autopilot after several crashes into first responder vehicles, so there

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Speaker 9: would be an existing craft scene that the Tesla would

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Speaker 9: come upon and run into, say, police car, firetruck and

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Speaker 9: in a Since then, actually NITSA has opened a separate

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Speaker 9: defect investigation into autopilot. There's been all sorts of scrutiny

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Speaker 9: into these systems going back years.

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Speaker 2: That is Bloomberg's Craig Trudell. Now, Tesla said it's expecting

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Speaker 2: to begin deploying an over the air software remedy to

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Speaker 2: take care of the situation.

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Speaker 1: Brian, Well, with all the support that China's economy appears

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Speaker 1: to need, it is a little surprising that China's November

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Speaker 1: credit growth remained slow. Let's get the story from Bloomberg's

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Speaker 1: Yvon Mann in Hong.

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Speaker 10: Kong, aggregate financing rose nine point four percent compared to

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Speaker 10: the same month last year. That follows a streak of

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Speaker 10: single digit growth recorded this year and contrast the double

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Speaker 10: digit expansion that was normal in previous years. We Corporate

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Speaker 10: borrowing and the slow rate of money supply expansion also

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Speaker 10: worried economists. The collapse in the housing market has undermine

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Speaker 10: credit demand for both developers and households. China's annual Economic

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Speaker 10: Policy meetings said the expansion of credit and money supply

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Speaker 10: should match growth and inflation targets. Some economists say that

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Speaker 10: might be a signal for more room to cut interest

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Speaker 10: rates and banks reserve requirements in the months to come.

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Speaker 10: In Hong Kong, I'm von Mann Bloomberg Radio.

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Speaker 2: Chinese property developer Country Garden has surprised creditors. The company

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Speaker 2: has made a full yuan bond repayment. More from Bloomberg's

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Speaker 2: Juan Wong in Hong Kong.

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Speaker 5: Country Gardens Entour Unit says it is repaid a one

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Speaker 5: hundred and eleven million dollars bond in full. The debt

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Speaker 5: had a put option due Wednesday. It added in a

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Speaker 5: filing Tach Engine Stock Exchange that the debt would be delisted.

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Speaker 5: We reported earlier that Country Garden Holdings representatives had remitted

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Speaker 5: funds to fully repay the notes. Outstanding principle and interest

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Speaker 5: sources say it did not provide any reason for the decision,

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Speaker 5: but with this full repayment, Country Garden will avoid a

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Speaker 5: first evault on a local yuan bond in Hong Kong.

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Speaker 5: Joined Wang Bloomberg Radio.

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Speaker 1: Joanne, thank you. Ten minutes now past the hour. This

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Speaker 1: is Bloomberg Daybreak Asia. I'm Brian Curtis and my colleague

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Speaker 1: Paul Allen joins us now from Sydney. Our guest is

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Speaker 1: John Taylor, Stanford University Professor of Economics and also Hoover

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Speaker 1: Institution senior Fellow for a closer look at the FED decision.

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Speaker 1: Mister Taylor, thank you so much for being with Uschi

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Speaker 1: Jpal said that the FED is now well into restrictive

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Speaker 1: territory that is totally new just two weeks ago. He

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Speaker 1: said that it would be premature to say so, so

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Speaker 1: what has happened in the interim.

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Speaker 11: Well, I think the language has changed, But what is

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Speaker 11: important is they didn't get of any indication they were

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Speaker 11: going to move away from the goal of two percent

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Speaker 11: inflation and They reiterated that a couple of times, and

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Speaker 11: so that means I think that's an important thing for

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Speaker 11: the markets to understand. They're not going to go above two.

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Speaker 11: We're going to keep it a tune. That's something that

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Speaker 11: they've agreed upon. The statement that they are a little

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Speaker 11: bit on guard, I think they are always on guard,

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Speaker 11: and I think that what's new to me is that

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Speaker 11: they've focused a little bit more on making sure that

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Speaker 11: there's a possibility of raising rates.

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Speaker 12: Yeah, so it's still not off the table. And one

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Speaker 12: other thing that didn't change is Jpal saying, look, it's

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Speaker 12: still too early to to clear victory over inflation. When

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Speaker 12: you look at the inflation picture, where do you think

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Speaker 12: the fit is in terms of the fun.

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Speaker 11: Well, first of all, don't forget that it was a

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Speaker 11: year and a half ago or so the inflation rate

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Speaker 11: got over nine percent and the interest rate then was

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Speaker 11: only twenty five bases points point twenty five, and so

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Speaker 11: they've made quite a bit of adjustment since then, and

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Speaker 11: inflation has come down, I think partly as a result

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Speaker 11: of that. So the question is now, and it's gone

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Speaker 11: so high that it's zero point twenty five or five

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Speaker 11: point five, is the federal funds rate. So the question

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Speaker 11: is when they will reduce it. He made it clear

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Speaker 11: that they wasn't right away, would be next year sometime,

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Speaker 11: and many of the prognosticators are indicating that it will

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Speaker 11: be a decline sometime next year, and I think there

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Speaker 11: will be of course, that requires the inflation rate to

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Speaker 11: come down a bit.

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Speaker 1: Should we be a little surprised that policymakers didn't push

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Speaker 1: back with some of these market bets, and it could

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Speaker 1: have done so with the dots, because we all know

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Speaker 1: that the dot plot is not really a plan, it's

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Speaker 1: just projections. And it seems like since they didn't push

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Speaker 1: back with you know, the dot plots, maybe suggesting that

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Speaker 1: there was still you know, some hikes to come, that

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Speaker 1: that might suggest that they really are confident they are done.

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Speaker 11: Well. I think they are confident they're done. They're hoping

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Speaker 11: that the inflation rate, don't forget, this two percent goal

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Speaker 11: is still there. And they've made some projections that the

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Speaker 11: interest rate will be coming down in twenty three and

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Speaker 11: twenty five and twenty six, but it's still not all

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Speaker 11: the way to too and so it's a little more

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Speaker 11: gradual than your life. But I think that's true. One

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Speaker 11: thing that's good about the meeting is they've said they'll

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Speaker 11: be rate lowers, lower rates next year. They even said

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Speaker 11: to some extent through the dot plot how much that'll be.

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Speaker 11: But the main thing is they didn't indicate and indicate

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Speaker 11: a reduction right away, and I think Powell made that

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Speaker 11: pretty clear. It's not really ready for that.

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Speaker 12: Yeah, so we've got the dots indicating seventy five basis

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Speaker 12: points of cuts next year, but the market pricing in

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Speaker 12: one hundred and fifty. Why the divergence. Is this hope

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Speaker 12: on the part of the market or is there a

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Speaker 12: credible reason for the disagreement here?

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Speaker 11: Well, the market could be there's so called a tailor

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Speaker 11: rules named after May's thirty years old, and the FED

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Speaker 11: publishes that and their reports and they're talk about it

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Speaker 11: all the time. It could be that the market is

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Speaker 11: looking for a little bit more on inflation and the

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Speaker 11: Fed has indicated it's going to happen. Fed it may

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Speaker 11: be a little more cautious. I think it's okay for

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Speaker 11: the Fed to be cautious. Seventy five basis points or

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Speaker 11: so in twenty twenty fours is quite a bit. They

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Speaker 11: might have to do more than that, but didn't say

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Speaker 11: it'll be less than that or more than that. They

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Speaker 11: say that's the guess, and that's come from the dot plots.

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Speaker 11: It's it's really not a commitment of any way, shape

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Speaker 11: or form, but it's a direction of which I think

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Speaker 11: they're likely to go.

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Speaker 1: So it's not a massive about face. But I wonder

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Speaker 1: whether or not with this kind of change that it

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Speaker 1: would worry some investors that all of a sudden the

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Speaker 1: FED has changed to this degree. Do you think that

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Speaker 1: that might get reflected in market action?

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Speaker 11: You know, I don't think it's if you've looked at

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Speaker 11: it carefully. The FED has not changed that much. The

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Speaker 11: chair has pretty much been on the same page at

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Speaker 11: least for the last five or six days. The notion

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Speaker 11: that they're going to reduce rates is pretty clear. They've

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Speaker 11: stayed that. The notion that the current rate is five

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Speaker 11: point two five to five point five is still there.

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Speaker 11: And so I think in some sense this is a

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Speaker 11: not a surprise. But you're right it might be some

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Speaker 11: people were taking it that way.

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Speaker 1: But John, I mean, we just two weeks ago, just

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Speaker 1: before the blackout period. I mean, here's the direct quote

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Speaker 1: from mister Pelle. It would be premature to conclude with

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Speaker 1: confidence we have achieved a sufficiently restrictive stance. Yet today

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Speaker 1: he said we're well into restrictive territory. Is that not

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Speaker 1: a big change.

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Speaker 11: You know? I think the fact that he clarified that

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Speaker 11: we may have to go the other way if you carefully,

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Speaker 11: he did say that, And to me, it's not as

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Speaker 11: big a change as you like, as you might think.

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Speaker 11: I actually do rely on this so called Taylor rule,

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Speaker 11: which is published there quite a bit, and they've followed

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Speaker 11: it for a while. They were awful while now they're

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Speaker 11: getting back to it. They're very close at this point,

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Speaker 11: and according to what the projection is, it's going to

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Speaker 11: continue that way through the next year and a half.

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Speaker 11: So I think that's the thing to keep in mind.

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Speaker 11: That FED as self keeps it in mind. Terryes referred

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Speaker 11: to that several times, but not today.

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Speaker 12: Does what Brian say. Is what Brian's saying, though an

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Speaker 12: indication of a possible communications breakdown. How is the Fed's

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Speaker 12: communication being in your view?

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Speaker 11: I think it's actually improved, if you like. Right now,

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Speaker 11: with this rate, a quarter five and a half or

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Speaker 11: so is about where it should be given the inflation rate,

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Speaker 11: and given the state of the economy. It's beginning to

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Speaker 11: come down. Remember it was not that long ago the

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Speaker 11: inflation rate was very high nine point one percent. Now

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Speaker 11: it's come down quite a bit. It's not a two,

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Speaker 11: it's not a two, and we have to make sure

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Speaker 11: if that has not changed its commitment to a two

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Speaker 11: percent goal. And so it's moving in that direction. And

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Speaker 11: so I think there's not as much change if you

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Speaker 11: read through the lines that you're indicating, they're basically on

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Speaker 11: their way down. They're doing it in a managed way.

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Speaker 11: I think they could do a little faster, but they're

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Speaker 11: doing their own managed way, and I think that's the

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Speaker 11: right direction to go.

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Speaker 1: Well, I asked about whether the market might react in

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Speaker 1: a certain way. We did see a big dropping yields.

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Speaker 1: Now that doesn't necessarily mean that people are extremely nervous,

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Speaker 1: but with the tenure here ten years right at four

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Speaker 1: percent now, I mean, it's quite shocking that in weeks

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Speaker 1: we've moved from five percent a little above five percent

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Speaker 1: to four point zero one percent on the tenure the

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Speaker 1: two year. I can understand it's really tied to FED policy,

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Speaker 1: but this is a pretty big move down to four

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Speaker 1: percent for the tenure. Do you expect that this is

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Speaker 1: kind of an overshoot at the moment or is this

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Speaker 1: just just the beginning of a lot more.

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Speaker 11: Yeah, let me say I hope, I hope it's not

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Speaker 11: an overshoot. I think ten years is quite a ways out,

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Speaker 11: and you can think about the rate. Maybe it should

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Speaker 11: be as somewhat higher, but not much. Who knows ten

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Speaker 11: years from now. But here you you've got to be

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Speaker 11: very careful to take over the rest of the world

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Speaker 11: in new account. The ECB has just begun to come

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Speaker 11: down as a new governor of the Bank of Japan.

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Speaker 11: There's a question of Latin America, and so the Fed

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Speaker 11: has been wise to begin to lead the way. Remember

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Speaker 11: it just just a year and a half ago they

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Speaker 11: were at point to five, and so it's quite a change.

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Speaker 11: They're well behind the curve. Now you could argue they're

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Speaker 11: too far ahead, but I think they're just about right.

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Speaker 11: And if they continue on this mode then it should

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Speaker 11: it should work out quite well.

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Speaker 12: So we've got a two year of four point four

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Speaker 12: to six, the ten year four oh one, so still invented.

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Speaker 12: When do you see that disinventing.

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Speaker 11: I think it'll happen over the year. If the FED

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Speaker 11: continues with the path they've indicated, and I would I know,

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Speaker 11: I said it a couple of times already, But the

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Speaker 11: so called tailor rule is out there and it's in

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Speaker 11: their proplications and they all know about it, and other

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Speaker 11: central banks do too. And so what has changed I

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Speaker 11: think in the last year and a half is a

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Speaker 11: more adherence to that. We have not seen the discrepancy

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Speaker 11: that existed two years ago. They're really pretty close now,

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Speaker 11: and as the inflation rate begins to come down a

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Speaker 11: little bit further, then they'll they'll they'll continue with that

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Speaker 11: reduction in the rates.

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Speaker 1: So we've talked a lot about the FED, not so

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Speaker 1: much about the economy. What do you think about the

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Speaker 1: path of the economy here? Because, you know, tied to

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Speaker 1: my earlier questions, some people might say, ooh, I mean,

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Speaker 1: maybe they see something that we don't see. How do

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Speaker 1: you feel the economy is churning along.

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Speaker 5: At the moment?

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Speaker 11: I think the economy could be doing better here. You

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Speaker 11: need to think about fiscal policy as well as monetary policy.

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Speaker 11: Need to think about regulatory policy as well as monetary policy.

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Speaker 11: You think about our overall policy with respect to the dollar,

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Speaker 11: with respect to our internationals. But I think the opportunity

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Speaker 11: for the economy to grow more rapidly is there, and

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Speaker 11: I think that should be the focus. Has a fit

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Speaker 11: continues with its efforts to bring inflation down, there should

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Speaker 11: be a renewed effort to keep growth high. And I

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Speaker 11: think that has to do with regulatory policy. It has

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Speaker 11: to do with fiscal policy. It's not just monetary policy,

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Speaker 11: but Montree policy has to be consistent with that. But

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Speaker 11: I think we shouldn't let that maybe three percent three

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Speaker 11: and a half percent goal go away.

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