US-China Trade Tensions Flare; US Shutdown Enters Day 14

Bloomberg Audio Studios, Podcasts, Radio News.
Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the
stories we're following today.
Karen, we begin with geopolitics. Tensions are heating up again
as China threatens further retaliatory measures against US curbs on
its shipping sector. Beijing announced the move after the US
Trade Representative began an investigation into China's maritime industry. We
get the very latest from Bloomberg's Jill Desis in Hong Kong.
This is an escalation in what really has been a
long standing dispute between both the US and China over
mariton dominance. We've really seen several months ago the US
announced US port fees for Chinese ships that were coming
into those ports, amounting to the tune of millions of
dollars of potential fees is set to go into effect
this week. We've also seen these two countries really kind
of trade tit for tat sort of retaliatory measures against
each other over the last several days, even involving some trade,
particularly when it comes on the China side, to some
new export curbs they were placing on materials related to
rare earth issues. And then now obviously you're seeing a
lot of this kind of snowball into what's happening on
the shipping front.
Bloomberg's Jill Lisis in Hong Kong says the dispute has
consequences for the global economy. Vessels are involved in eighty
percent of world trade.
Well, adding to the tensions between the US and China.
Nathan words from Scott bessen The Financial Times is reporting
the Treasury Secretary has accused China of trying to hurt
the world's economy. This comes after Beijing and post sweeping
export controls on rare earths and critical minerals papers as
Bessend is expecting to meet Chinese Vice Premier Hollifong one
more time before Trump and she meet in South Korea
later this month.
Well, now, let's get to the latest from the Middle
East and President Trump is back in Washington after a
whirlwind trip to the region, where he celebrated the ceasefire
between Israel and Hamas and laid out a vision for
a broader Middle East piece.
I'm not talking about single state or double state or
two state.
We're talking about the rebuilding of Gaza.
President Trump spoke to world leaders at a signing ceremony
in Shermail Shake, Egypt, but challenges remain for maintaining the piece.
Stuart Livingston Wallace leads Bloomberg's Middle East coverage.
You have that international pressure, but also you potentially have
boots on the ground, and while the US is deploying
I think something like two hundred personnel within Israelti monits
and the ceasefire, they have no intention of actually going
into Gaza itself. So that probably has to be in
international force number two.
Money.
It is going to cost an enormous amount of money
to rebuild Garza, I mean, let alone clearing the rubble,
then you have to start again. That money has to
come from somewhere, and I think the hope is that
a lot of that will come, in particular from the
Gulf region.
Bloomberg Stewart living Ston Wallace reports other points of President
Trump's twenty point piece plan remain unclear, like disarming Hamas,
but the President predicts they will happen well elsewhere.
In Washington, Nathan, it is now day fourteen of the
government shut down. House Minority Leader Haking Jeffries is calling
Democrats back to Capitol Hill today in a show of
solidarity even though they won't have anything to work on.
Speaker Mike Johnson has canceled votes for a third week
in a row and is keeping his members in their districts.
Our members are doing very productive work. We're in constant
communication with them, and we are ready to come back
and continue the work in our committees and everything on
the House floor. We will return the legislative session as
soon as the Democrats come to their senses and open
the government.
And that was how Speaker Mike Johnson on Capitol Hill.
And as the shutdown continues, members of the military are
set to miss their first paychecks tomorrow. Treasury Secretary Scott
Besson told Fox's Business his agency is prioritizing payments to
ensure service members get paid. Past Treasury secretaries have questioned
whether it's possible to set aside some payments over others.
Outside of fight over raising the Dutch Seal.
Let's get to news outside Earth. Karen SpaceX's Starship rocket
has managed to launch satellites and make it back to
this planet intact. The milestone is critical to CEO Elon
Musk's aim of preparing the rocket for regular space missions.
Here is the moment of launch from Starbase in South Texas.
Three two one.
We have liftoff, Go super Go Starship, thanks for all
the historic flights.
Pad On.
Ten minutes after that, Starship super Heavy boosters split from
the spacecraft as planned, before splashing down in the Gulf
of Mexico. The success marks a step forward in Musk's
ambitions to carry NASA astronauts to the Moon in under
two years and eventually to establish civilization on Mars.
Well, we turned to the markets now, Nathan, where bank
earnings are front and center. JP Morgan, Goldman, Sag City Group,
and Wells Fargo all report this morning, and we get
the very latest of Bloomberg's John Tucker John good morning.
Yeah, good morning, caring Yeah. Wall Street's biggest bank sent
for another strong quarter, lifted by resilient trading desks and
also a rebound and deal activity that's helped us send
their stocks to fresh eyes. Seema Shad, Principal Global, expects
to the financials to help lift all boats.
We can see continued performance from financials, so along with
those tech stocks which continue to drive the market, we
would think that financials can join in with Roddy and
help push the aktimak a little bit further.
And then you have those two recent corporate blow ups
tring Color Holdings and First Brands. They're igniting concerns about
potential cracks, and credit bank executives likely to get a
question about that during the earnings calls this morning. Questions
on the outlook for more bank mergers will also probably
come up after last week's announced eleven billion dollar acquisition
of Comerica by fifth third the biggest US bank stocks,
by the way, have outpaced the S and P five
hundreds gains over the past twelve months. In New York
Home John Tucker Bloomberg Radio.
Meantime, Nathan Philadelphia FED President Anna Paulson is signaling she
favors two more quarter point rate cuts this year. Paulson
says monetary policy should look through the impact of tariffs
and consumer price increases. I anticipate that twenty twenty six
we'll see growth near potential and inflation rising and then
succeed subsiding as tariffs, together with current and past monetary
policy restrictiveness, work their way through. And Philadelphia Fed President
Anna Paulison made those comments at the National Association for
Business Economics Annuel Conference in Philadelphia. Time now for a
look at some of the other stories making news in
New York and around the world, and for that we're
joined by Bloomberg's Michael Barr.
Michael, Good Morning, Good morning, Karen. New York Attorney General
Letitia James attended a rally for New York City mayoral
candidate Zoron Mamdani to offer her support for the Democratic
front runner, first public appearance since she was indicted on
federal charges of bank fraud and making a false statement.
Following President Trump's call for her prosecution, James defied the
President Monday night, referring to her successful prosecution of the
Trump business.
I will now, I will wake, I will then I will.
Pick audio courtesy of ABC seven. James took the stage
to thunderous and sustained applause and chance of we Love
Tish during the boisterous rally. The northeaster that pummeled the
East Coast is finally moving out to sea. Wind gust
reached forty to sixty miles per hour across the Northeast.
A woman in New York was killed after heavy winds
blew a solar panel off a carport and hit her
in the head. Streets were swumped from Ocean City, Maryland
to the New Jersey shore. Many coastal areas experienced flooding
and beach erosion. This homeowner is in Bowers, Delaware.
With the heavy wind and the heavy surf and the
high tide, we just had an extraordinary loss of sand
here on the beach front.
Off Cape Cod, Massachusetts. Cruise pulled a man to safety
after he was spotted in the water near a ferry
in Arizona. A microburst ripped off roofs, knocked down semi trucks,
and flooded neighborhoods in Tempe Monday afternoon when gusts up
to seventy one miles per hour hit the city. Madagascar
President Andre Rogelina says he has fled the country to
an undisclosed location in fear for his life. Following a
military rebellion. Rogelina has faced weeks of anti government protests,
which reached a pivotal point on Saturday when an elite
military unit joined the protest and called for the president
to step down. Global News twenty four hours a day
and whatever you wanted with the Bloomberg News Now Michael Barr.
This is Bloomberg.
Hearn he thanks Michael. Time now for our Bloomberg Sports update,
and for that we bring in John Stashauer.
Thanks Gavin.
The Seattle Mariners, with two more wins, are going to
the World Series for the first time ever. They won
ten to three in Toronto. They hit two three run
homers in a two run shot and now they go
home with the two games to non lead on the ALCS.
Game one of the NLCS are the Dodgers, behind the
pitching of blakesnew a two to one win in Milwaukee,
a pair of Mond of Night football games. The Falcons
beat the Bills twenty four to fourteen, and the Bears
on a last second field goal won in Washington twenty
five twenty four. That's your Bloomberg Sports update.
Stay with us. More from Bloomberg day Break coming up
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Bloomberg Business out. This is Bloomberg Daybreak.
Good morning, I'm Nathan Hager. Another morning of trade tensions
between the US and China. The latest move sanctions on
the US units of a South Korean shipping giant Hanwah Ocean.
That's after President Trump threatened one hundred percent tariffs China's
rare earth export restrictions last week. Treasury Secretary Scott Besson
says there's still room to negotiate.
I believe that China is open to a discussion on this,
and if they're not, we have substantial levers.
On our own.
That was Treasury Secretary Scott Besson in an interview on
Fox Business. We're joined now by Bloomberg Markets reporter Valerie
Titel and Valerie. In just the last few days, it
seems like the back and forth has really ramped up here.
How significant is this move by China on sanctioning Hanwa
Good morning, Well.
It's definitely taken the risk rally of yesterday on a
back foot, with those Nasdaq futures down nearly a percent,
s and P five hundred down seven tents, so treasuries
are rallying as well on the back of this. So
it is a broad risk off on this announcement from
China that they have launched a probe into US impacts
on its shipping sector. They specifically call out the US
trade Representatives Section three oh one investigation. Now they have
sanctioned five companies, and this becomes a part of a
long standing dispute over maritime dominance. Now. Back in April,
Washington announced plans to curb China's shipbuilding prowess and it
seeks to build up its own American capabilities, which has
forced China to lose some market share in the space.
Now Chinese shipping has faced severe penalties even for calling
at US ports, so it does seem like there is
some sort of tit for tat now happening over maritime dominance.
We also heard from Scott Bessant, writing in the FT
in the early hours of this morning, accusing China of
trying to damage the global economy with its sweeping export
controls on rare Earth. So it doesn't seem like things
are calming down at the moment. There were some pretty
strong language in this ft op ed from Scott Bessent,
saying that China is trying to export their way out
of a deflationary depression that will harm their standing in
the world Nathan. The report also said that the US
will be prioritizing this issue as world leaders convene in
DC for the IMF meetings. They did report that Besson
is still expecting to meet his Chinese counterpart, Holy Punng
one more time before Trump and She are set to
meet in South Korea at the.
End of the TA And to that point, Valerie, we
also heard from Secretary Besson that he still thinks China
is willing to talk, that negotiations can happen. But given
all this back and forth, is their sign that there
is that willingness on the Chinese side?
Well, look, I think what markets are really watching for,
Nathan is whether this Trump She meeting still happens at
the end of October. If that is called off, I
think there would be growing speculation that the relationship between
US and China will be damaged, and damaged in almost
an irreversible way as the US tries to in some
way delink its economy from China. Now, that's a hard
thing to do given the reliance that the US has
on Chinese exports, especially when it comes to these rare
earths that are critical for the defense space. So all
these topics are coming front and center again. I think
it was really the move last week on rare earth
that caught Trump's eye because If you think back to
the beginning of this year, the first detente between the
US and China was around agreeing about rare earth continuing
their export from China into the US. And it seems
like they've ripped up that script that was really a
key part of their first agreement in order to back
off the tariffs that Trump announced back in April.
And in just thirty seconds. I guess this all puts
into question whether there can be yet another pause in
the China US trade pause.
Yeah, that's right. The latest three month pause does lapse
after the supposed Trump's meeting with she in November, so
that is just another risk event now on market's minds
for perhaps higher tariffs. Remember Trump did threaten one hundred
percent additional tariffs on November first. That would take the
all in tariff freight to one hundred and fifty five
percent between the US and China.
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