Good morning. I'm Brian Curtis.
And I'm Paul Allen. Here are the stories we have following today.
Well, it's looking largely positive here in the early going, and if you look at equity futures, they're edging higher. Investor fears seem to be receding a little bit, and we've course seen that over the past many weeks. US talks finished flat on Friday in a shortened session, but
it was a fourth consecutive week of gains. The VICS has dropped to the lowest level since early twenty twenty, and news that you just heard there in our headline that Black Friday shoppers had spent nearly ten billion dollars online also adds a note of optimism. It's a positive sign for retailers. They've actually been facing lackluster sales forecast for the holiday season. Bloomberg Intelligence says that any recession in the United States may be closer to ending rather
than beginning. The Conference board is leading index of ten economic indicators has dropped to levels typically associated with recession, and Bloomberg Intelligence says that that, taken with some other models, suggests that the US economy has actually struggled with recession since the middle of twenty twenty two. The US dollar opened Monday morning trading here in Asia. Mixed inflation gauges for the US and the eurozoner do out this week.
They'll be on Thursday. The inflation gauges may support an end to rate hikes around the world. In a corporate note, Origin Energies Board is thought to be unconvinced by a revised takeover proposal made by Brookfield Asset Management and EIG Global Partners. The Australian Financial Review says that directors are leaning toward rejecting that new bid. Now it's time for global news. Momentum is building to try to extend the
Israel Hamas truce beyond four days. At Baxter has the story and the rest of the news from the nine to sixty newsrom in San Francisco.
Yeah, that's exactly right, Brian. This after the release of seventeen hostages in northern Gaza today in the third day of swaps. Prime Minister of Cutter Altony on CBS has heard on Bloomberg says he, along with Israel Hamas and the US have established an office to try and continue the flow of these releases.
All right now we aughtun them mided of the negotiation.
We would always keep the communication open with everyone, and.
That US President Joe Biden says he endorses a longer pause.
That's my goal, that's our goal, to keep this pause going beyond tomorrow, so that we can continue to see more hostages come out and serves more humanitary relief into those and who in need in Gaza.
And n I, says Jake Sullivan on ABC Has Heard On Bloomberg says Hamas has a big part to play in the decision.
Hamas could choose on Tuesday, on Wednesday, on Thursday to continue to release hostages, and then the pause would continue. If the pause stops, the responsibility for that rests on the shoulders of Hamas, not on the shoulders of Israel.
And Sullivan Tomas benefits, he says, from the deal as well. Israeli Prime Minister Benjamin Thatt Yahoo said Israel is making every effort to get all the hostages released now. One of those released today as an American Israeli girl named Abigail Edon. She is four years old.
She's in Israel now and so those who are now rapping Abigail in love and care and the support of services she needs. She's been through a terrible trauma.
Her parents were killed in the October seventh attacks. Negotiations continue on future releases. I meanwhile, US Senator Chris Murphy is saying that US lawmakers should consider conditioning future aid to Israel based on its compliance with international humanitarian law.
Unacceptable and is unsustainable. I think there's both a moral costs to this, many civilians, innocent civilians, children often losing their life. But I think there's a strategic cost. Ultimately, Hamas will get stronger, not weaker in the long run if all of this civilian death allows them to recruit more effectively, enablely inside Gaza.
Now.
Murphy on Cnnsvilian death toll must stop. China's Health Commission says a combination of pathogens is causing a surge in acute respiratory infections across the country. It says influenza is one of the main causes of the spike in cases, and the hopes that this announcement of the statement will cause a lowering of concern that it is some kind of mystery novel virus. Global News twenty four hours a day and whenever you want it with Bloomberg News now
in San Francisco. I'm Ed Baxter, and this is Bloomberg.
All right, Blad, and thanks very much the time six minutes past the hour. Let's take a look now at some of the top business stories of the hour. COP twenty eight, the UN's latest climate change conference, will kickoff later this week in Dubai. Its negotiators are hoping that it can kickstart carbon trading to bring down the cost of fighting global warning. Let's get more from Bloomberg Nathan Hager.
More than one hundred and ninety nations are gathering to discuss us the rules for a new UN overseen emissions market. It would let holders of carbon credits compensate for their own pollution by investing in projects aimed at cutting emissions elsewhere. The goal is to provide more investor certainty. There is concern that existing voluntary projects do little or nothing to curb climate change. COP twenty eight begins on Thursday and runs through December twelfth. Nathan Hager Bloomberg.
Radio sources tell Bloomberg that Middle Eastern wealth funds are facing greater scrutiny on US deals from the Biden administration. It's part of a broader pushback on andaites perceived to have close ties with Beijing. We've got more from Bloomberg's Charlie Palette.
Sources say the Committee on Foreign Investment in the US is reviewing several multi billion dollar deals this year on concerns they could pose national security risks. Officials and President Biden's cabinet are said to be currently reviewing more than half a dozen acquisitions, including deals from Abu Dhabi Investment Authority on Saudi Arabia's public investment fund. While the US remains a preferred investment destination for the region's largest wealth funds,
China has emerged as an increasingly attractive jurisdiction. Charlie Pellett Bloomberg Radio.
Black Friday Shopper has spent a record nine point eight billion dollars online in the United States. Bloomberg's Denise Pellegreney has the story.
Adobe Analytics says demand for electronics, smartwatch as, TVs, and audio equipment helped boost the day's online sales by seven and a half percent compared with last year, as consumers expanded budgets, with more of those buy now, pay later options. Separately, Salesforce says US Black Friday online sales grew nine percent year on your It cited popularity of footwear, sporting goods, health,
and beauty. It's still not clear, though, if this wall translate into better than expected holiday season sales overall, since some consumers have indicated they do plan to snag margins by shopping early this year. Denise Pellegreni Bloomberg Radio.
China has opened probes and the money management business of Jean Xi Enterprise Group. Bloomberg Zevon Man has more from Hong Kong.
The investigation comes days after Jong Ju revealed a shortfall of thirty six billion dollars on its balance sheet. Chinese police said in a statement on we Chat they took criminal measures against multiple suspects. The legal terminology was similar to the case of Evergrand chairman Hui Kayen. Evergance said in September that Huai was suspected of committing crimes. Those affected by Jon Ju's troubles are likely to be wealthy
individuals related to the group's founder, chie Juquin. One of the suspects identified by police is surnamed Schieh in Hong Kong. I'm Yvonne Mann Bloomberg Radio.
In a potential huge shakeup of the ev industry, battery giants are now investing more of their money on new sodium based technology. Bloomberg's Joan Wong has the story from Hong Kong.
Sodium has the potential to make inroads into energy storage and electric via calls, and it could be a game changer. We hear China's BYD signed a deal to build a one point four billion dollars sodium im battery plant last week. Sweden's north Volt also said it made a breakthrough, and China catl set back in April that its sodium batteries would be used in some vehicles from this year. Sodium is cheaper and far more abundant than lysium. The shift from lithium to sodium could mark a big shick up
in the industry. For now, experts say the space looks to be dominated by Chinese producers in Hong Kong, joined Wong Bloomberg Radio.
Australia's government will introduce legislation this week to facilitate a plan to revamp of the Reserve Bank, and the bill follows an independent review of the Reserve Bank of Australia in May, and that made about fifty one. Well, it did make fifty one recommendations for change. They include the confirmation of a dual policy mandate and repealing the Treasurer's
ability to overrule the bank's monetary policy decisions. The legislation will also contain provisions to set up again evenance board to oversee the abi's management. And of course there's a Bipolitan support for this ivohole.
Let's say good morning to James Abate, Managing director and CIO of Center Asset Management. James, thank you very much for joining us on a Sunday there. I want to get your take on that Bloomberg intelligence call that I mentioned a few moments ago about any recession in the United States, Well, it might be closer to ending rather
than beginning. The essential point seems to be that at different times over the past fifteen months or so, different sectors have actually been troubled and have been in a state of recession, and that now we may be getting toward the end. Does your view differ from that?
Right? I mean, we've talked about rolling your session through the US economy. Now over the last several times have had the pleasure to speak with you, and you know, one of the things that we talked about as an unexpected scenario that could basically impact markets in twenty twenty three at the start of the year was that perhaps
the most telegraph recession in history just doesn't happen. And part of that was the fact that when we looked at top down indicators and economist strategists who typically rely upon those top down indicators like the yield curve, inversions, the ism numbers, leading economic indicators, housing construction, et cetera,
et cetera, we're all pointing to recession. But the thing that we cautioned people to look at why recession may not be in the cards at that point in time is if you look at indicators from a bottom up perspective, leverage ratios weren't excessive asset efficiency, which was really a very important point. We hadn't had an undisciplined capital spending cycle leading up to twenty twenty three, which was unprecedented
in most industries. And even though we've had interest rate events stalled earnings, we haven't had a credit event which has basically tipped the economy into a full bone recession. And ironically, I must say now that everyone is on the boat where we're probably leaning towards no landing. We're starting to see bottom up indicators that are indicating that perhaps a shallow recession or outright recession is perhaps more probable now than it was at the beginning of twenty twenty three.
So where does this leave you in terms of right cut expectations in twenty twenty four.
I think that's the issue because right you know, this week we'll get the PCE number, which is the Fed's most favorite indicator in terms of inflation and expectations, and expectations either that will come in around three and a half percent. I think you have to look at other central banks, right you look at South Korea, which is
a heavily export and cyclical driven. It's been the pathfinder for other central banks and they were early to start tightening, and now they're in this what we call hawkish hold bade so to an extent where investors are pivoting or expecting the FED to pivot to some type of easing type of policy. We think it's actually going to be a rather sluggish environment in terms of the FED basically pivoting from its rather restrictive policy at least in terms
of recent history to an outright easing. So the market may be getting ahead of itself. And with the VIX index below thirteen, this is probably a very good time too, you know, because of cost efficiency to stay hedged with inequity portfolios.
It's been a rough period for small caps and they've only just recently caught a bid.
And some people might say that.
That supports the early view that you had, which is that perhaps we've already cleared some of the recession. But I'm really interested in what you said right at the end about seeing some new conditions that tell you that maybe we're actually going to.
Get shallow recession. What all those conditions, The.
Main ones is that when we look at operating profit margins and the aggregate for the SMP five HUND on an equal weighted basis, and this basically eliminates the impact from the Magnificent seven or the largest companies, they remain high and they're rolling over and we haven't seen yet a reversion back to anywhere close to a normalized profit
type of environment. Second act efficiency, which was the thing that we really hung our hat on in the beginning of the year, which was excellent at that point in time, we're starting to see utilization rates starting to roll over,
capital spending starting to increase, and a lot of other dynamics. Thirdly, the thing that we're seeing is that many companies were very prudent in locking in low interest rates when they had the opportunity and have not felt the impact of the rise of the federal funds rate over the past couple of years. Now, as you started to see credits start to roll over, you're starting to see that interest costs.
When you strip out the most you know, the largest companies that are cash rips like Appable, Microsoft, et cetera, their their interest rate, their interest costs are starting to go up as well. So any kind of environment, you know, indicates some type of you know, stress.
I would say that that seems like stress for the stock market, but not the economy.
Well, I think you need to remember that, you know, even looking back at you know, the recession of two thousand and one two thousand and two is very shallow, but you still had a profound rerating in the market. And again this is the issue. We've had the impact of interest rate risk, we've had the impact of stagnation of earnings, we haven't yet had changes in risk premiums
or credit premiums, and they're still at historical lows. So to the extent that we get at you know, continuation of you know, perhaps stagnation of earnings, you don't get the leverage of people are expecting in terms of you know, profit margin expansion visa v sales growth. You still have many geopolitical risks, you know, we have got, you know, all the domestic risks that we have here in the United States entering into the elections of twenty twenty four.
There are many things that can shake investor confidence. And remember, you know, stock markets are three dimensional. It's it's not only earnings and risk free rates, but it's also expectations or appetites for risk, and that could change on a dime.
So just reef in twenty seconds.
It seems like you're suggesting that the stock market's gotten a little ahead of itself.
Now, well, well, I think what we have is an environment where again we've had the S and P five hundred go back to its highs. We're entering environment that is, you know, riddled with uncertainty. I say, it's still cost to fish to stay hedged in equity portfolios. Yeah, given all those risks.
This is Bloomberg Daybreak Asia, your morning brief on the story's making news from Hong Kong to Singapore and Wall Street.
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I'm Brian Curtis.
And I'm Paul Allen. Join us again tomorrow for all the news you need to start your day, right here on Bloomberg Daybreak Asia