Markets Rally on Pivot Hopes; Yellen Plans Another China Visit
On today's podcast:
1) Equities held gains after the Federal Reserve validated bets that it will soon move to easier policy and pushed stock market gauges toward all-time highs.
2) Treasury Secretary Janet Yellen said she plans to visit China again in 2024, seeking to deepen areas of cooperation and improve communication even as she vowed to continue confronting Beijing over national security concerns and human rights.
3) Citigroup will shutter its municipal business, one of the most dramatic moves yet by Chief Executive Officer Jane Fraser as she seeks to squeeze better returns out of the Wall Street giant.
Full Transcript:
Good morning. I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today. Karen. Stocks are set for their fifth weekly gain, with rate cut bets giving traders a lot of hope heading into twenty twenty four. Equities are pushing for all time highs after J. Powell indicated this week the Fed could ease monetary policy soon. The S and P is advancing toward its seventh consecutive weekly advance. Oil is looking at its first weekly gain in almost two months. Neil Dutta of Renaissance Macro Research says the Fed is following a framework that will allow the US economy to grow. The die has been cast for this for a little bit of time now, I mean, and that's because inflation is slowing more rapidly than they expect. I mean, I think the Fed is following essentially a rules based framework where they're taking changes in inflation and the unemployment rate and translating that into expectations around the federal funds rate. And that's basically what's happening. In fact, last month, Neil detis that he expected the Fed to cut rates by March, so he says he is not surprised by the pivot, but Nathan Dudda's expectations were not shared by many on Wall streets, such as Peter Sheer, head of Macro's strategy at Academy Securities. Really took me by surprise of how comfortable the power was with cutting rates. So when I was at four twenty, I was getting nervous about risk assets because I thought the only way you have to four percent, given what the FED was saying, is for economic conditions to turn much worse. They didn't turn much worse, and yet we're at four percent because of the FED. So I think we have some room for risk to continue to rally, and it's been a great run. Peter Sheer with Academy Securities also tells Bloomberg, despite hawkish stances from the European Central Bank and Bank of England, he expects more growth outside the US. He specifically focused on shine Up. He anticipates further cooperation with the US and increased stimulus measures, and that's the signal that Treasury Secretary Janet Yellen is sending Karen. She says she's going to visit China again next year with a goal of deepening ties and improving communication with the world's second biggest economy. Speaking of the US China Business Council in Washington, Secretary Yellen said that the discussions will focus on difficult topics, but she expects cooperation from both sides. America's fundamental economic strength means that we have nothing to fear from healthy economic competition with China or any other country. The United States does not seek to decouple from China. This would be damaging to both our economies. Still, Treasury Secretary Yellen says the US will pursue export controls and investment restrictions that have angered China. She did stress the need to engage to prevent what she calls a wide range of diplomatic and financial crises. Well as for the latest moves in China, Nathan, the People's Bank of China pumped a record amount of cash into the economy to try to prop up as struggling property market and boost de mad It marked a bullish signal to investors who have been disappointed in china recent piecemeal approaches to stimulus. Meanwhile, stocks across Asia traded higher on optimism over a FED pivot. Now let's turn to a major move in US banking Karen Bloomberg News has learned City Group is shutting down its municipal bond business. It is one of the most dramatic moves yet in CEO Jane Fraser's ongoing restructuring as she looks to squeeze better returns out of the Wall Street Giant. Bloomberg Finance team leader Sally Bakewell says although the move was expected, it is still a shock. City was an absolute powerhouse in this four trillion market for US state and for local debt. It helped on deals for some very prominent buildings in landmarks, such as the World Trade Center rebuilding the Port Authority of New York and New Jersey. It was also one of the lead underwriters Bloomberg. Sally Bakewell says City will complete the wine down by the end of the first quarter. Source to say the moves expected to effect about one hundred employees and some more news on the labor front this morning, Nathan General Motors cutting more than one thousand, three hundred hourly job. Is it a pair of plants in Michigan. It comes less than a month after GMS he unionized workforce. It proved a new labor contract the counts will take effect January. First s turned to politics Now Karen and messaging out of Washington. President Biden continues to urge Israel to be more cautious in its war with Hamas. Bloomberg z ed Baxter has the details a bit of a change from the message he's delivered for the last week. NIC spokesman John Kirby says keywords are lower intensity possible transitioning from what we would call high intensity operations, which is what we're seeing them do now, to lower intensity operations sometime, you know, in the near future, meaning more surgical operations aimed at a Moss leaders rather than the current force. Biden says the focus should be getting Hamas, but also saving civilian lives. I'm at Baxter Bloomberg Radio, all right, and thanks. Meanwhile, in Europe, Ukraine has taken a win and a loss at the EU leader summit in Brussels. The leaders have agreed to open membership talks with Ukraine, but they couldn't not agree on a new financial aid package. That debate will extend into early next year. Hungary's Victor Orbond planned the are blocked the planned fifty billion euro package despite support from the twenty six other EU leaders. The amount of newly committed Western eight for Ukraine has fallen to its lowest level since Russia's invasion almost two years ago. That has Russian President Vladimir Putin expressing renewed confidence in his war aims at his annual end of year news conference. Coming back to the ghouls, they remain unchanged, I will remind you it means the Nazification, the neutralization all of Ukraine and its neutral status. This was President Putin's first end of your news conference since he ordered the Ukraine invasion in February of last year. S and P futures are higher by three tens of one percent, up thirteen points. Now futures up one hundred and twenty five points, that's again of a third of one percent, and Nasdaq futures are about a third of one percent higher as well, up fifty three points. Global headlines straight ahead, plus a check of sports. This is Bloomberg sor Ry Nathan. Thanks. It's time now for a look at some of the other stories making news around the world, and for that we're joined by Bloomberg's John Tucker. John, good morning, and good morning, Karen. Google Will stop telling police witch users we're near a crime. That story in this report this morning from Bloomberg's Amy Morris, Google is changing its maps tools so the company no longer has access to users individual location histories. It cuts off its ability to respond to law enforcement warrants that ask for data on everyone who is in the vicinity of a crime. The change comes three months after a Bloomberg BusinessWeek investigation that found police across the US are increasingly using warrants to obtain location and search data from Google, even for nonviolent cases and even for people who had nothing to do with the crime. Google will roll out the changes gradually through the next year on its own Android and Apple's iOS mobile operating systems. Amy Morris Bloomberg Radio. President Biden trying to rally support among seniors, highlighting new government caps and prescription drug prices, saying the effort will help crack down on price gouging by the pharmaceutical companies. Year before we pass the cization, drug maker's jacked up prices nearly four times faster and inflation went on and they were already too high. Let's call this for what it is is, simply, it's a rip off. Under legislation passed by Democrats, pharmaceutical companies are required to pay rebates to Medicare when they increase certain drug prices passed inflation rates into Bloomberg News Morning consult Paul released Thursday, Biden trailed Donald Trump across a number of swing states. US defense officials say a cargo ship caught fire in the Red Sea this morning into being hit by a projectile launched by rebel controlled Yimmen. The attack and eyed Lightberian flag vessel further escalates a campaign by Yemmens, Iran backed Hooti rebels who claim responsibility for a series of missile assaults in recent days. A lawyer for two former election officials told members of a jury and federal court Thursday they should send a message in considering how much former Mayor Rudy Juliani should have to pay for spreading diffamatory lies about them as part of his effort three years ago to keep President Trump in office. At the last minute decision, Juliani decided not to testify as planned on Thursday. Global News twenty four hours a day and whenever you want it with Bloomberg News. Now, I'm John Tucker, and this is Bloomberg. Karen, all right, John, thank you well. We do bring you news throughout the day right here on Bloomberg Radio. But now you can get the latest news on demand, and that means you can get it whenever you want it. Subscribe to Bloomberg News Now and you can get the latest headlines right at the click of a button. Get informed on your schedule. You can listen and subscribe to Bloomberg News Now on the Bloomberg Business app, Bloomberg dot com plus Apples, Spotify, and anywhere else you get your podcasts. Time now for the Bloomberg Scores Update with John Stashauer John Karon. Blowout in the Desert. Just a few days after the Raiders had a home game and lost to the Vikings three did nothing. They had another home game and beat the Chargers sixty three to twenty one. This game was twenty one nothing in the first quarter. It was forty two to nothing at halftime. That's a near NFL record. It was sixty three to seven midway through the fourth quarter. The Raiders rookie quarterback Adan O'Connell through four touchdown passes. The Chargers lost four fumbles. It's the most points the Raiders have ever scored in the game, and it's the most points the Chargers have ever allowed. Celtics twelve and I went home. They've be in Cleveland, won sixteen to one oh seven. Warriors now just ten and fourteen, playing without the suspended Draymond Green. They lost to the Clippers in LA. Won twenty one one thirteen. Big NBA story so far this year the Minnesota Timberwolves now eighteen and five A one nineteen one oh one win in Dallas. Luca Dompson scored thirty nine and the loss. In Sacramento's win over Oklahoma City the Aaron Fox points for the King Shay Gilgess Alexander scored forty three the loss the Thunder. George McGinnis, the Hall of Famer who played for the Pacers and Sixers, has passed away at the age of seventy three. Capital Is lost in Philadelphia four to three in a shootout in LA. On the day that the Dodgers introduced Joe Otani, they added another player, pitcher Tyler Glass, now comes from Tampa Bay with outfielder and Manuel Margo. The Rays get a couple of prospects in return. Remember, Otani is not going to pitch. He's only going to hit in twenty twenty four. Don Statieward, Bloomberg's courts Karen, all right, John, thank you. While we are watching stocks, they're set for a fifth weekly game this on the Fed pivot, and we want to discuss all of this. We're going to be bringing in Andrew Sheets, the global head of Corporate Credit research Ed Morgan Stanley, for that discussion and ahead of EDSMP futures are higher again this morning. They're up three tenths even percent of about fourteen points. Dwaen Nasdaq futures all also up three tenths of up percent. This is Bloomberg from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syria's exam, the Bloomberg Business Appen Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. There is plenty of fuel for optimism in the US market, with the Federal Reserve signaling this week that it is in fact ready to start thinking about cutting interest rates next year. But when it comes to global central banks like the European Central Bank and the Bank of England, they're holding firm on higher for longer. So what's this mean for the outlook headed into twenty twenty four. Let's get some answers now from Andrew Sheets, global head of corporate credit research at Morgan Stanley. Andrew, it's great to speak with you this morning. So what does a more dovish FED and a more hawkish ECB mean in your world? So? I think the important starting point is that I think we've seen an evolution of the data that's much better than we or the market would have expected six months ago. You know, over the last twelve months, the US economy has grown three percent year every year, and inflation's been declining. And in Europe you've seen again inflation really start to moderate in a way that the ECB a number of central bank watchers would not have expected six months ago. So I think the important factor, the most important factor, is that this year has been all about inflation, and inflation is finally coming down, which gives these central banks a lot more flexibility to moderate policy as that happens. So again, you know, you've seen central banks react to that a little bit differently, the FED sounding a little bit more dubvish, the ECB sounding a little bit more hawkish, But I think the core message as you go into next year is these are central banks that are done hiking. They're going to be cutting, and the path is going to be easing going forward. But the path is going to be easing at a much different pace. It seems like when we hear this more hawkish tone from the likes of Madame Legarde, what could that mean for a global bond markets If we see higher for longer in the Eurozone and maybe not so much here in the US. Well, I think what the market might test is how credible that more hawkish rhetoric really is. You know, we've seen a very weak PMI data out today from the Eurozone. You're seeing inflation in the Eurozone come down quickly, and on Morgan Stanley's forecast it continues to decline quickly. And so you know, we can understand from a strategic standpoint, not wanting to ease up too early on the rhetoric run inflation, wanting to establish the ECB's credibility on inflation. But as the data continues to come in, as inflation data continues to fall, as the growth data is soft, we'd be surprised. We would not expect the ECB to continue to sound this hawkish into next year, and would expect them to be to be easing policy in line with the FED into twenty twenty four. Interesting, what about the Fed's credibility? Is there a risk that the FED pivots back the other way next year? Is that something in your forecast? It's not in our forecast. And I think the point about credibility is key. You know, credibility is everything in central banking, and I think to the credit of the FED, they are talking more dubbishly as core inflation is coming down on Morgan Stanley's estimates with the latest readings of producer price inflation six month annualized core PCE, and thinking about core PCE is the measure of inflation that the FED cares about the most. Over the last six months, core PCE in the US is running at one point nine percent. It's at the Fed's target. If anything, it's a little below. So the idea that the FED is reacting to that data, it is and it's not done anything yet. It's simply talking about the possibility that it might ease and the fact that the FED thinks the neutral rate is way down at two and a half, two and three quarters. All the FED is doing is saying, look, we have policy way above neutral. Core inflation is rapidly approaching our target. Yes, we will be easing policy next year. I think that's a credible place for the FED to operate from. What about the market credibility of they're pricing in something like what six or seven rate cuts next year when we got three from the dot plot? Do you see the FED moving more in line with the market or the other way around. So the market has moved very quickly. I mean, we had forecasts that we thought were quite dubvish when we put out our outlook in the middle of in early October, in early November, excuse me, you know we had the US tenure at three ninety five. By the end of twenty twenty four, it's more than gotten there. You know, we had three hundred basis points of FED cuts over twenty four and twenty five. Again, a lot of that's getting priced in. So I think objectively, the market's moved to price in more cutting than we have expected. But I think it's also fair to say that it is historically normal. Once the FED thinks that a central bank is done hiking. The market usually expects, usually somewhat overestimates future cuts as the market's trying to balance the probability of a FED staying on hold with something more significant, So a lot has been priced in. But I think the general idea that the market once a FED, once the FED is done, starts pricing in more cuts that is very consistent with what we've seen over prior cycles. Really good to have you on with us, Andrew, at the end of a really interesting week for central banks. That's Andrew Sheets with us this morning, Global head of Corporate Credit Research at Morgan Stanley. This is Bloomberg day Break Today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast, feat at six am Eastern each morning on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street time, on Bloomberg eleven three to zero in New York, Bloomberg ninety nine one in Washington, Bloomberg one oh sixty one in Boston, and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, SERRIUSXM, the iHeartRadio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak
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Good morning. 0:00:03.080 --> 0:00:05.920 I'm Nathan Hager and I'm Karen Moscow. Here are the 0:00:05.960 --> 0:00:07.440 stories we're following today. 0:00:08.160 --> 0:00:11.080 Karen. Stocks are set for their fifth weekly gain, with 0:00:11.240 --> 0:00:14.200 rate cut bets giving traders a lot of hope heading 0:00:14.240 --> 0:00:17.120 into twenty twenty four. Equities are pushing for all time 0:00:17.239 --> 0:00:20.160 highs after J. Powell indicated this week the Fed could 0:00:20.200 --> 0:00:23.400 ease monetary policy soon. The S and P is advancing 0:00:23.400 --> 0:00:27.000 toward its seventh consecutive weekly advance. Oil is looking at 0:00:27.000 --> 0:00:30.480 its first weekly gain in almost two months. Neil Dutta 0:00:30.640 --> 0:00:33.400 of Renaissance Macro Research says the Fed is following a 0:00:33.440 --> 0:00:36.839 framework that will allow the US economy to grow. 0:00:37.080 --> 0:00:39.240 The die has been cast for this for a little 0:00:39.240 --> 0:00:41.559 bit of time now, I mean, and that's because inflation 0:00:41.760 --> 0:00:44.159 is slowing more rapidly than they expect. I mean, I 0:00:44.200 --> 0:00:47.960 think the Fed is following essentially a rules based framework 0:00:48.040 --> 0:00:52.440 where they're taking changes in inflation and the unemployment rate 0:00:52.479 --> 0:00:55.800 and translating that into expectations around the federal funds rate. 0:00:55.920 --> 0:00:58.520 And that's basically what's happening. 0:00:58.680 --> 0:01:00.800 In fact, last month, Neil detis that he expected the 0:01:00.800 --> 0:01:02.920 Fed to cut rates by March, so he says he 0:01:03.000 --> 0:01:04.479 is not surprised by the. 0:01:04.440 --> 0:01:08.479 Pivot, but Nathan Dudda's expectations were not shared by many 0:01:08.640 --> 0:01:11.560 on Wall streets, such as Peter Sheer, head of Macro's 0:01:11.560 --> 0:01:13.520 strategy at Academy Securities. 0:01:14.560 --> 0:01:17.320 Really took me by surprise of how comfortable the power 0:01:17.480 --> 0:01:20.080 was with cutting rates. So when I was at four twenty, 0:01:20.080 --> 0:01:22.280 I was getting nervous about risk assets because I thought 0:01:22.319 --> 0:01:24.160 the only way you have to four percent, given what 0:01:24.200 --> 0:01:26.920 the FED was saying, is for economic conditions to turn 0:01:27.000 --> 0:01:29.600 much worse. They didn't turn much worse, and yet we're 0:01:29.640 --> 0:01:31.640 at four percent because of the FED. So I think 0:01:31.680 --> 0:01:33.559 we have some room for risk to continue to rally, 0:01:33.560 --> 0:01:34.559 and it's been a great run. 0:01:35.040 --> 0:01:38.880 Peter Sheer with Academy Securities also tells Bloomberg, despite hawkish 0:01:38.880 --> 0:01:41.720 stances from the European Central Bank and Bank of England, 0:01:41.920 --> 0:01:45.920 he expects more growth outside the US. He specifically focused 0:01:45.959 --> 0:01:49.320 on shine Up. He anticipates further cooperation with the US 0:01:49.400 --> 0:01:51.600 and increased stimulus measures, and. 0:01:51.520 --> 0:01:55.760 That's the signal that Treasury Secretary Janet Yellen is sending Karen. 0:01:55.840 --> 0:01:58.480 She says she's going to visit China again next year 0:01:58.560 --> 0:02:01.600 with a goal of deepening ties and improving communication with 0:02:01.640 --> 0:02:04.680 the world's second biggest economy. Speaking of the US China 0:02:04.680 --> 0:02:07.880 Business Council in Washington, Secretary Yellen said that the discussions 0:02:07.920 --> 0:02:11.880 will focus on difficult topics, but she expects cooperation from 0:02:11.960 --> 0:02:12.640 both sides. 0:02:13.600 --> 0:02:19.160 America's fundamental economic strength means that we have nothing to 0:02:19.280 --> 0:02:25.320 fear from healthy economic competition with China or any other country. 0:02:25.639 --> 0:02:29.600 The United States does not seek to decouple from China. 0:02:30.040 --> 0:02:33.160 This would be damaging to both our economies. 0:02:33.639 --> 0:02:37.240 Still, Treasury Secretary Yellen says the US will pursue export 0:02:37.400 --> 0:02:41.200 controls and investment restrictions that have angered China. She did 0:02:41.280 --> 0:02:43.800 stress the need to engage to prevent what she calls 0:02:43.800 --> 0:02:46.720 a wide range of diplomatic and financial crises. 0:02:47.120 --> 0:02:49.360 Well as for the latest moves in China, Nathan, the 0:02:49.400 --> 0:02:51.840 People's Bank of China pumped a record amount of cash 0:02:51.880 --> 0:02:54.320 into the economy to try to prop up as struggling 0:02:54.360 --> 0:02:57.360 property market and boost de mad It marked a bullish 0:02:57.400 --> 0:03:00.480 signal to investors who have been disappointed in china recent 0:03:00.520 --> 0:03:05.000 piecemeal approaches to stimulus. Meanwhile, stocks across Asia traded higher 0:03:05.160 --> 0:03:07.000 on optimism over a FED pivot. 0:03:07.200 --> 0:03:09.639 Now let's turn to a major move in US banking 0:03:09.760 --> 0:03:12.760 Karen Bloomberg News has learned City Group is shutting down 0:03:12.800 --> 0:03:15.400 its municipal bond business. It is one of the most 0:03:15.440 --> 0:03:19.960 dramatic moves yet in CEO Jane Fraser's ongoing restructuring as 0:03:20.000 --> 0:03:22.320 she looks to squeeze better returns out of the Wall 0:03:22.360 --> 0:03:25.800 Street Giant. Bloomberg Finance team leader Sally Bakewell says although 0:03:25.840 --> 0:03:28.000 the move was expected, it is still a shock. 0:03:28.720 --> 0:03:32.359 City was an absolute powerhouse in this four trillion market 0:03:32.480 --> 0:03:36.240 for US state and for local debt. It helped on 0:03:36.400 --> 0:03:39.560 deals for some very prominent buildings in landmarks, such as 0:03:39.560 --> 0:03:43.280 the World Trade Center rebuilding the Port Authority of New 0:03:43.360 --> 0:03:45.400 York and New Jersey. It was also one of the 0:03:45.480 --> 0:03:46.840 lead underwriters Bloomberg. 0:03:46.920 --> 0:03:49.240 Sally Bakewell says City will complete the wine down by 0:03:49.280 --> 0:03:51.120 the end of the first quarter. Source to say the 0:03:51.160 --> 0:03:54.400 moves expected to effect about one hundred employees and some. 0:03:54.320 --> 0:03:56.960 More news on the labor front this morning, Nathan General 0:03:57.000 --> 0:03:59.960 Motors cutting more than one thousand, three hundred hourly job. 0:04:00.120 --> 0:04:02.320 Is it a pair of plants in Michigan. It comes 0:04:02.400 --> 0:04:05.400 less than a month after GMS he unionized workforce. It 0:04:05.520 --> 0:04:08.720 proved a new labor contract the counts will take effect January. 0:04:08.720 --> 0:04:11.680 First s turned to politics Now Karen and messaging out 0:04:11.680 --> 0:04:14.920 of Washington. President Biden continues to urge Israel to be 0:04:14.960 --> 0:04:18.000 more cautious in its war with Hamas. Bloomberg z ed 0:04:18.040 --> 0:04:20.080 Baxter has the details. 0:04:19.640 --> 0:04:21.880 A bit of a change from the message he's delivered 0:04:21.880 --> 0:04:25.280 for the last week. NIC spokesman John Kirby says keywords 0:04:25.360 --> 0:04:27.799 are lower intensity. 0:04:27.320 --> 0:04:30.760 Possible transitioning from what we would call high intensity operations, 0:04:30.760 --> 0:04:33.080 which is what we're seeing them do now, to lower 0:04:33.120 --> 0:04:37.520 intensity operations sometime, you know, in the near future. 0:04:37.320 --> 0:04:40.919 Meaning more surgical operations aimed at a Moss leaders rather 0:04:41.000 --> 0:04:44.080 than the current force. Biden says the focus should be 0:04:44.120 --> 0:04:48.679 getting Hamas, but also saving civilian lives. I'm at Baxter 0:04:48.720 --> 0:04:50.120 Bloomberg Radio, all right. 0:04:50.080 --> 0:04:53.160 And thanks. Meanwhile, in Europe, Ukraine has taken a win 0:04:53.400 --> 0:04:56.520 and a loss at the EU leader summit in Brussels. 0:04:56.560 --> 0:04:59.400 The leaders have agreed to open membership talks with Ukraine, 0:04:59.520 --> 0:05:02.160 but they couldn't not agree on a new financial aid package. 0:05:02.200 --> 0:05:05.360 That debate will extend into early next year. Hungary's Victor 0:05:05.480 --> 0:05:08.680 Orbond planned the are blocked the planned fifty billion euro 0:05:08.839 --> 0:05:12.239 package despite support from the twenty six other EU leaders. 0:05:12.480 --> 0:05:15.000 The amount of newly committed Western eight for Ukraine has 0:05:15.040 --> 0:05:18.360 fallen to its lowest level since Russia's invasion almost two 0:05:18.480 --> 0:05:22.520 years ago. That has Russian President Vladimir Putin expressing renewed 0:05:22.560 --> 0:05:24.800 confidence in his war aims at his annual end of 0:05:24.880 --> 0:05:25.839 year news conference. 0:05:26.360 --> 0:05:31.800 Coming back to the ghouls, they remain unchanged, I will 0:05:31.880 --> 0:05:38.320 remind you it means the Nazification, the neutralization all of 0:05:38.400 --> 0:05:40.240 Ukraine and its neutral status. 0:05:40.520 --> 0:05:43.200 This was President Putin's first end of your news conference 0:05:43.240 --> 0:05:46.440 since he ordered the Ukraine invasion in February of last year. 0:05:47.040 --> 0:05:47.320 S and P. 0:05:47.440 --> 0:05:49.919 Futures are higher by three tens of one percent, up 0:05:49.960 --> 0:05:52.960 thirteen points. Now futures up one hundred and twenty five points, 0:05:52.960 --> 0:05:55.279 that's again of a third of one percent, and Nasdaq 0:05:55.360 --> 0:05:57.640 futures are about a third of one percent higher as well, 0:05:57.720 --> 0:06:01.719 up fifty three points. Global headlines straight ahead, plus a 0:06:01.800 --> 0:06:07.760 check of sports. This is Bloomberg. 0:06:06.960 --> 0:06:07.520 Sor Ry Nathan. 0:06:07.560 --> 0:06:07.839 Thanks. 0:06:07.880 --> 0:06:09.160 It's time now for a look at some of the 0:06:09.200 --> 0:06:11.320 other stories making news around the world, and for that 0:06:11.400 --> 0:06:14.960 we're joined by Bloomberg's John Tucker. John, good morning, and good. 0:06:14.800 --> 0:06:15.440 Morning, Karen. 0:06:15.760 --> 0:06:19.560 Google Will stop telling police witch users we're near a crime. 0:06:19.880 --> 0:06:24.000 That story in this report this morning from Bloomberg's Amy Morris, Google. 0:06:23.760 --> 0:06:26.279 Is changing its maps tools so the company no longer 0:06:26.320 --> 0:06:30.040 has access to users individual location histories. It cuts off 0:06:30.040 --> 0:06:32.839 its ability to respond to law enforcement warrants that ask 0:06:32.920 --> 0:06:35.200 for data on everyone who is in the vicinity of 0:06:35.240 --> 0:06:38.400 a crime. The change comes three months after a Bloomberg 0:06:38.440 --> 0:06:42.680 BusinessWeek investigation that found police across the US are increasingly 0:06:42.800 --> 0:06:46.000 using warrants to obtain location and search data from Google, 0:06:46.360 --> 0:06:49.680 even for nonviolent cases and even for people who had 0:06:49.720 --> 0:06:52.280 nothing to do with the crime. Google will roll out 0:06:52.320 --> 0:06:54.920 the changes gradually through the next year on its own 0:06:55.000 --> 0:06:59.800 Android and Apple's iOS mobile operating systems. Amy Morris Bloomberg Radio. 0:07:00.080 --> 0:07:04.040 President Biden trying to rally support among seniors, highlighting new 0:07:04.040 --> 0:07:07.640 government caps and prescription drug prices, saying the effort will 0:07:07.640 --> 0:07:11.080 help crack down on price gouging by the pharmaceutical companies. 0:07:11.240 --> 0:07:14.040 Year before we pass the cization, drug maker's jacked up 0:07:14.080 --> 0:07:17.800 prices nearly four times faster and inflation went on and 0:07:17.840 --> 0:07:20.480 they were already too high. Let's call this for what 0:07:20.520 --> 0:07:22.360 it is is, simply, it's a rip off. 0:07:22.560 --> 0:07:27.160 Under legislation passed by Democrats, pharmaceutical companies are required to 0:07:27.200 --> 0:07:30.360 pay rebates to Medicare when they increase certain drug prices 0:07:30.360 --> 0:07:35.040 passed inflation rates into Bloomberg News Morning consult Paul released Thursday, 0:07:35.440 --> 0:07:39.040 Biden trailed Donald Trump across a number of swing states. 0:07:39.560 --> 0:07:42.240 US defense officials say a cargo ship caught fire in 0:07:42.240 --> 0:07:44.040 the Red Sea this morning into being hit by a 0:07:44.040 --> 0:07:47.600 projectile launched by rebel controlled Yimmen. The attack and eyed 0:07:47.680 --> 0:07:52.040 Lightberian flag vessel further escalates a campaign by Yemmens, Iran 0:07:52.160 --> 0:07:55.640 backed Hooti rebels who claim responsibility for a series of 0:07:55.720 --> 0:07:59.520 missile assaults in recent days. A lawyer for two former 0:08:00.320 --> 0:08:03.120 election officials told members of a jury and federal court 0:08:03.200 --> 0:08:06.880 Thursday they should send a message in considering how much 0:08:06.960 --> 0:08:10.280 former Mayor Rudy Juliani should have to pay for spreading 0:08:10.600 --> 0:08:13.960 diffamatory lies about them as part of his effort three 0:08:14.080 --> 0:08:17.160 years ago to keep President Trump in office. At the 0:08:17.240 --> 0:08:21.280 last minute decision, Juliani decided not to testify as planned 0:08:21.680 --> 0:08:24.760 on Thursday. Global News twenty four hours a day and 0:08:24.760 --> 0:08:27.920 whenever you want it with Bloomberg News. Now, I'm John Tucker, 0:08:28.000 --> 0:08:29.600 and this is Bloomberg. 0:08:29.680 --> 0:08:31.880 Karen, all right, John, thank you well. We do bring 0:08:31.920 --> 0:08:35.400 you news throughout the day right here on Bloomberg Radio. 0:08:35.480 --> 0:08:38.040 But now you can get the latest news on demand, 0:08:38.160 --> 0:08:40.960 and that means you can get it whenever you want it. 0:08:41.240 --> 0:08:43.439 Subscribe to Bloomberg News Now and you can get the 0:08:43.520 --> 0:08:45.920 latest headlines right at the click of a button. Get 0:08:45.960 --> 0:08:49.360 informed on your schedule. You can listen and subscribe to 0:08:49.400 --> 0:08:53.120 Bloomberg News Now on the Bloomberg Business app, Bloomberg dot 0:08:53.160 --> 0:09:00.920 com plus Apples, Spotify, and anywhere else you get your podcasts. 0:09:01.640 --> 0:09:04.520 Time now for the Bloomberg Scores Update with John Stashauer 0:09:04.679 --> 0:09:05.560 John Karon. 0:09:05.640 --> 0:09:08.360 Blowout in the Desert. Just a few days after the 0:09:08.440 --> 0:09:10.320 Raiders had a home game and lost to the Vikings 0:09:10.360 --> 0:09:13.600 three did nothing. They had another home game and beat 0:09:13.640 --> 0:09:16.560 the Chargers sixty three to twenty one. This game was 0:09:16.559 --> 0:09:18.720 twenty one nothing in the first quarter. It was forty 0:09:18.760 --> 0:09:21.400 two to nothing at halftime. That's a near NFL record. 0:09:21.760 --> 0:09:25.160 It was sixty three to seven midway through the fourth quarter. 0:09:25.240 --> 0:09:28.640 The Raiders rookie quarterback Adan O'Connell through four touchdown passes. 0:09:28.960 --> 0:09:31.840 The Chargers lost four fumbles. It's the most points the 0:09:31.920 --> 0:09:34.120 Raiders have ever scored in the game, and it's the 0:09:34.160 --> 0:09:37.280 most points the Chargers have ever allowed. Celtics twelve and 0:09:37.280 --> 0:09:38.960 I went home. They've be in Cleveland, won sixteen to 0:09:38.960 --> 0:09:41.959 one oh seven. Warriors now just ten and fourteen, playing 0:09:42.000 --> 0:09:44.840 without the suspended Draymond Green. They lost to the Clippers 0:09:44.880 --> 0:09:47.880 in LA. Won twenty one one thirteen. Big NBA story 0:09:47.960 --> 0:09:50.560 so far this year the Minnesota Timberwolves now eighteen and 0:09:50.720 --> 0:09:54.199 five A one nineteen one oh one win in Dallas. 0:09:54.240 --> 0:09:57.080 Luca Dompson scored thirty nine and the loss. In Sacramento's 0:09:57.080 --> 0:10:00.559 win over Oklahoma City the Aaron Fox points for the 0:10:00.679 --> 0:10:04.360 King Shay Gilgess Alexander scored forty three the loss the Thunder. 0:10:04.679 --> 0:10:07.080 George McGinnis, the Hall of Famer who played for the 0:10:07.120 --> 0:10:10.440 Pacers and Sixers, has passed away at the age of 0:10:10.679 --> 0:10:13.880 seventy three. Capital Is lost in Philadelphia four to three 0:10:13.880 --> 0:10:16.480 in a shootout in LA. On the day that the 0:10:16.559 --> 0:10:21.480 Dodgers introduced Joe Otani, they added another player, pitcher Tyler Glass, 0:10:21.520 --> 0:10:24.720 now comes from Tampa Bay with outfielder and Manuel Margo. 0:10:24.800 --> 0:10:27.760 The Rays get a couple of prospects in return. Remember, 0:10:27.760 --> 0:10:30.400 Otani is not going to pitch. He's only going to 0:10:30.520 --> 0:10:34.240 hit in twenty twenty four. Don Statieward, Bloomberg's courts. 0:10:34.000 --> 0:10:37.640 Karen, all right, John, thank you. While we are watching stocks, 0:10:37.679 --> 0:10:41.439 they're set for a fifth weekly game this on the 0:10:41.480 --> 0:10:44.480 Fed pivot, and we want to discuss all of this. 0:10:44.600 --> 0:10:46.960 We're going to be bringing in Andrew Sheets, the global 0:10:47.040 --> 0:10:50.240 head of Corporate Credit research Ed Morgan Stanley, for that 0:10:50.400 --> 0:10:54.720 discussion and ahead of EDSMP futures are higher again this morning. 0:10:54.720 --> 0:10:58.360 They're up three tenths even percent of about fourteen points. 0:10:58.600 --> 0:11:01.920 Dwaen Nasdaq futures all also up three tenths of up percent. 0:11:02.080 --> 0:11:03.679 This is Bloomberg. 0:11:05.640 --> 0:11:08.679 From coast to coast, from New York to San Francisco, 0:11:09.000 --> 0:11:13.640 Boston to Washington, DC, nationwide on Syria's exam, the Bloomberg 0:11:13.679 --> 0:11:15.720 Business Appen Bloomberg dot Com. 0:11:15.880 --> 0:11:20.600 This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. There 0:11:20.679 --> 0:11:24.000 is plenty of fuel for optimism in the US market, 0:11:24.080 --> 0:11:26.839 with the Federal Reserve signaling this week that it is 0:11:27.000 --> 0:11:30.560 in fact ready to start thinking about cutting interest rates 0:11:30.640 --> 0:11:31.200 next year. 0:11:31.800 --> 0:11:32.319 But when it. 0:11:32.280 --> 0:11:35.840 Comes to global central banks like the European Central Bank 0:11:35.920 --> 0:11:39.600 and the Bank of England, they're holding firm on higher 0:11:39.640 --> 0:11:43.000 for longer. So what's this mean for the outlook headed 0:11:43.000 --> 0:11:46.040 into twenty twenty four. Let's get some answers now from 0:11:46.120 --> 0:11:51.000 Andrew Sheets, global head of corporate credit research at Morgan Stanley. Andrew, 0:11:51.040 --> 0:11:52.960 it's great to speak with you this morning. So what 0:11:53.120 --> 0:11:56.680 does a more dovish FED and a more hawkish ECB 0:11:57.040 --> 0:11:57.800 mean in your world? 0:11:59.360 --> 0:12:01.880 So? I think the important starting point is that I 0:12:01.920 --> 0:12:05.160 think we've seen an evolution of the data that's much 0:12:05.200 --> 0:12:08.600 better than we or the market would have expected six 0:12:08.640 --> 0:12:11.240 months ago. You know, over the last twelve months, the 0:12:11.320 --> 0:12:14.280 US economy has grown three percent year every year, and 0:12:14.360 --> 0:12:18.520 inflation's been declining. And in Europe you've seen again inflation 0:12:18.760 --> 0:12:21.520 really start to moderate in a way that the ECB 0:12:22.360 --> 0:12:25.400 a number of central bank watchers would not have expected 0:12:25.440 --> 0:12:27.440 six months ago. So I think the important factor, the 0:12:27.440 --> 0:12:30.040 most important factor, is that this year has been all 0:12:30.080 --> 0:12:33.600 about inflation, and inflation is finally coming down, which gives 0:12:33.600 --> 0:12:37.679 these central banks a lot more flexibility to moderate policy 0:12:37.880 --> 0:12:41.800 as that happens. So again, you know, you've seen central 0:12:41.840 --> 0:12:43.840 banks react to that a little bit differently, the FED 0:12:43.880 --> 0:12:45.760 sounding a little bit more dubvish, the ECB sounding a 0:12:45.760 --> 0:12:47.760 little bit more hawkish, But I think the core message 0:12:47.800 --> 0:12:50.240 as you go into next year is these are central 0:12:50.240 --> 0:12:52.880 banks that are done hiking. They're going to be cutting, 0:12:52.920 --> 0:12:55.200 and the path is going to be easing going forward. 0:12:55.840 --> 0:12:57.559 But the path is going to be easing at a 0:12:57.640 --> 0:13:01.760 much different pace. It seems like when we hear this 0:13:01.920 --> 0:13:05.720 more hawkish tone from the likes of Madame Legarde, what 0:13:05.760 --> 0:13:09.200 could that mean for a global bond markets If we 0:13:09.280 --> 0:13:13.240 see higher for longer in the Eurozone and maybe not 0:13:13.360 --> 0:13:14.800 so much here in the US. 0:13:15.080 --> 0:13:17.400 Well, I think what the market might test is how 0:13:17.640 --> 0:13:20.280 credible that more hawkish rhetoric really is. You know, we've 0:13:20.320 --> 0:13:24.520 seen a very weak PMI data out today from the Eurozone. 0:13:24.559 --> 0:13:28.280 You're seeing inflation in the Eurozone come down quickly, and 0:13:28.320 --> 0:13:32.000 on Morgan Stanley's forecast it continues to decline quickly. And 0:13:32.080 --> 0:13:35.400 so you know, we can understand from a strategic standpoint, 0:13:35.559 --> 0:13:39.000 not wanting to ease up too early on the rhetoric 0:13:39.040 --> 0:13:43.120 run inflation, wanting to establish the ECB's credibility on inflation. 0:13:43.360 --> 0:13:46.000 But as the data continues to come in, as inflation 0:13:46.080 --> 0:13:48.520 data continues to fall, as the growth data is soft, 0:13:49.120 --> 0:13:51.959 we'd be surprised. We would not expect the ECB to 0:13:52.000 --> 0:13:54.680 continue to sound this hawkish into next year, and would 0:13:54.720 --> 0:13:57.920 expect them to be to be easing policy in line 0:13:57.960 --> 0:13:59.960 with the FED into twenty twenty four. 0:14:00.360 --> 0:14:03.600 Interesting, what about the Fed's credibility? Is there a risk 0:14:03.920 --> 0:14:07.080 that the FED pivots back the other way next year? 0:14:07.200 --> 0:14:08.439 Is that something in your forecast? 0:14:08.840 --> 0:14:10.920 It's not in our forecast. And I think the point 0:14:10.960 --> 0:14:14.440 about credibility is key. You know, credibility is everything in 0:14:14.480 --> 0:14:18.080 central banking, and I think to the credit of the FED, 0:14:18.559 --> 0:14:23.560 they are talking more dubbishly as core inflation is coming 0:14:23.600 --> 0:14:26.960 down on Morgan Stanley's estimates with the latest readings of 0:14:26.960 --> 0:14:32.440 producer price inflation six month annualized core PCE, and thinking 0:14:32.480 --> 0:14:35.000 about core PCE is the measure of inflation that the 0:14:35.000 --> 0:14:38.240 FED cares about the most. Over the last six months, 0:14:38.360 --> 0:14:40.760 core PCE in the US is running at one point 0:14:40.840 --> 0:14:44.840 nine percent. It's at the Fed's target. If anything, it's 0:14:44.840 --> 0:14:47.760 a little below. So the idea that the FED is 0:14:47.840 --> 0:14:51.160 reacting to that data, it is and it's not done 0:14:51.200 --> 0:14:54.760 anything yet. It's simply talking about the possibility that it 0:14:54.840 --> 0:14:57.960 might ease and the fact that the FED thinks the 0:14:58.120 --> 0:15:00.760 neutral rate is way down at two and a half, 0:15:00.800 --> 0:15:04.280 two and three quarters. All the FED is doing is saying, look, 0:15:04.280 --> 0:15:07.800 we have policy way above neutral. Core inflation is rapidly 0:15:07.840 --> 0:15:12.120 approaching our target. Yes, we will be easing policy next year. 0:15:12.320 --> 0:15:14.360 I think that's a credible place for the FED to 0:15:14.360 --> 0:15:15.080 operate from. 0:15:15.640 --> 0:15:18.760 What about the market credibility of they're pricing in something 0:15:18.840 --> 0:15:21.320 like what six or seven rate cuts next year when 0:15:21.360 --> 0:15:23.400 we got three from the dot plot? Do you see 0:15:23.400 --> 0:15:25.720 the FED moving more in line with the market or 0:15:25.760 --> 0:15:26.600 the other way around. 0:15:26.920 --> 0:15:29.520 So the market has moved very quickly. I mean, we 0:15:29.600 --> 0:15:32.560 had forecasts that we thought were quite dubvish when we 0:15:32.560 --> 0:15:36.360 put out our outlook in the middle of in early October, 0:15:36.440 --> 0:15:38.720 in early November, excuse me, you know we had the 0:15:39.000 --> 0:15:41.600 US tenure at three ninety five. By the end of 0:15:41.640 --> 0:15:44.640 twenty twenty four, it's more than gotten there. You know, 0:15:44.680 --> 0:15:48.560 we had three hundred basis points of FED cuts over 0:15:48.640 --> 0:15:50.840 twenty four and twenty five. Again, a lot of that's 0:15:50.880 --> 0:15:54.440 getting priced in. So I think objectively, the market's moved 0:15:54.440 --> 0:15:57.280 to price in more cutting than we have expected. But 0:15:58.000 --> 0:16:00.200 I think it's also fair to say that it is 0:16:00.400 --> 0:16:04.320 historically normal. Once the FED thinks that a central bank 0:16:04.440 --> 0:16:09.920 is done hiking. The market usually expects, usually somewhat overestimates 0:16:09.960 --> 0:16:12.760 future cuts as the market's trying to balance the probability 0:16:12.760 --> 0:16:15.760 of a FED staying on hold with something more significant, 0:16:15.800 --> 0:16:18.160 So a lot has been priced in. But I think 0:16:18.200 --> 0:16:21.960 the general idea that the market once a FED, once 0:16:21.960 --> 0:16:24.240 the FED is done, starts pricing in more cuts that 0:16:24.440 --> 0:16:27.040 is very consistent with what we've seen over prior cycles. 0:16:27.600 --> 0:16:29.240 Really good to have you on with us, Andrew, at 0:16:29.280 --> 0:16:31.800 the end of a really interesting week for central banks. 0:16:31.800 --> 0:16:34.160 That's Andrew Sheets with us this morning, Global head of 0:16:34.200 --> 0:16:39.280 Corporate Credit Research at Morgan Stanley. This is Bloomberg day 0:16:39.280 --> 0:16:42.280 Break Today, your morning brief on the stories making news 0:16:42.320 --> 0:16:44.680 from Wall Street to Washington and beyond. 0:16:44.920 --> 0:16:47.680 Look for us on your podcast, feat at six am 0:16:47.760 --> 0:16:51.440 Eastern each morning on Apple, Spotify, and anywhere else you 0:16:51.480 --> 0:16:52.640 get your podcasts. 0:16:52.800 --> 0:16:55.480 You can also listen live each morning starting at five 0:16:55.560 --> 0:16:58.200 am Wall Street time, on Bloomberg eleven three to zero 0:16:58.200 --> 0:17:01.640 in New York, Bloomberg ninety nine one in Washington, Bloomberg 0:17:01.680 --> 0:17:04.679 one oh sixty one in Boston, and Bloomberg nine sixty 0:17:04.800 --> 0:17:05.760 in San Francisco. 0:17:06.119 --> 0:17:09.280 Our flagship New York station is also available on your 0:17:09.359 --> 0:17:14.800 Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. 0:17:14.800 --> 0:17:18.240 Listen coast to coast on the Bloomberg Business app, SERRIUSXM, 0:17:18.359 --> 0:17:22.600 the iHeartRadio app, and on Bloomberg dot Com. I'm Nathan Hager. 0:17:22.400 --> 0:17:25.520 And I'm Karen Moscow. Join us again tomorrow morning for 0:17:25.640 --> 0:17:28.160 all the news you need to start your day right 0:17:28.200 --> 0:17:29.840 here on Bloomberg Daybreak