Good morning. I'm Brian Curtis and I'm Doug Krisner. Here are the stories we're following today.
US companies added the fewest number of jobs since the start of twenty twenty one in September, and paid growth slowed. ADP data showed private payrolls rose just eighty nine thousand last month after climbing one hundred eighty thousand in August. Bloomberg's Michael McKee tells us what this means for Friday's jobs number.
Over the past year, ADP has overstated the private sector job creation seven out of the twelve months, so if that follows, then we will have an unusually weak payrolls report on Friday, but hard to square with what we saw from the ISM manufacturing numbers because ISM went positive and the ADP says we lost twelve thousand jobs.
Not only did ADP say that jobs were lost in manufacturing, it also said thirteen thousand jobs were lost in trade and transportation and another thirty two thousand were lost in professional and business services.
Let's get to the politics now. Some Republican leaders are throwing their names into the hat to become House speaker. This is after Kevin McCarthy was ousted yesterday. Second ranking House Republican Steve Scalise is officially running, making him the leading contender. Hardline Republican Representative Jim Jordan also saying today he will run.
Now.
The ouster of McCarthy is raising a lot of question about everything from a to Ukraine to averting a government shutdown in a little more than six weeks. Here's Bloomberg's Jonathan Tamari.
Congress can't do anything, or the House at least can't do anything until they elect a speaker. So we're going to face some uncertain period of time here where they're basically doing no work other than trying to find the leader. And then once they do elect a leader, the Republican Conference has made clear they don't want to compromise with
Democrats by just kicking out their own speaker. The next person who takes the job is going to face a lot of pressure not to compromise, especially so soon after they assume the speakership. Will they really want their first big act as the leader to be a deal with Democrats after seeing the reaction from their own party just now.
That is Bloomberg's Jonathan Tomorrow. Now the House is aiming to vote on a news speaker. October eleventh, bran.
Well, the trial of FTX co founder Sam Bankman Freed moved into day two, and Bloomberg Shanali Bossek says the prosecution's case, no matter how strong, is far from a slam dunk.
Part of the defense, as we have learned today, includes this idea that a lot of what was happening between FTX and the lending of funds to Alameda was not only known, but known between company insiders as well as people who had lent money to the firm, as well as people who had known that the relationships and good times. I didn't mind that the two companies had this kind of a relationship, and then over time it deteriorated as the crypto industry got very volatile and money was lost.
As Bloomberg Shanali Bassak, Bankman Fred faces up to one hundred ten years in prison if he's convicted on all counts.
US Commerce Secretary Gina Romundo is saying today the report of a chip breakthrough by China's Huawei is disturbing. Here's Bloomberg's David in Glace even stronger.
Ramondo said it was incredibly disturbing. Huawei's reported new chip has set up a debate on whether the US is effective in curbing China's technological advancement. That said, Ramondo maintains there is no evidence China can develop advanced chips at scale, but she is facing intense pressure from Republicans to titan controls. Ramondo emphasized different tools are needed to enforce the US regime.
She pointed to the restrict Act that would expand American authority to review and prevent certain transactions that pose a risk to national security. In Hong Kong, I'm daviding gless Bloomberg Radio.
Barclays is dismissing roughly fifty of its senior deal makers. Get the story from Bloomberg's and Kates.
The cuts are part of a plan to trim the headcount of Barclay's across the Corporate and Investment Bank, amounting to three percent of the workforce in the unit. Barclays and its rivals have been contending with a prolonged slump and deal making and capital markets activity. Barclay's investment banking
fees dropped fifteen percent in the second quarter. Goldman Sachs has been planning to begin its annual reduction of underperforming workers, and City Group has also laid off hundreds of employees in Washington and Kate's Bloomberg Radio, Well.
Doug, we had a little respite from the selling in both the bond and stock markets. In terms of the stock market, it doesn't seem like there's a whole lot of conviction there. One view is that the selling won't really abate until you get a meaningful sell off in.
The magnificent seven.
Does that happen? We have to wait and see.
That's a great question. And if you talk to the technicians, the guys thenngals that watch the charts, they are saying that the S and P five hundred needs to stay above its two hundred day moving average, which is currently around forty two four. We have been able to do that. Some serious pain, though, these technicians say, could be in store for the market. We're that level to be violated.
It's fair to point out that actually, you know, there has been a selloff in stocks, and it's actually greater than what it appears on the surface. It's fair to point out that the equal weight S and P five hundred is down year to date and that's with the Super seven in there. If you actually strip them out, the equal weight would be down much more significantly. So it's becoming harder and harder to make the point that Bill Gross made today, which is that stocks are overvalued.
He also said that bond yields must fall significantly to justify current valuations. So this is playing out before our very eyes.
Keep your eye on some of the big energy names in the Asia session. After we had that pulled back in WTI crewed here in New York today we were down more than five and a half percent. A lot of the government data pointing to extremely weak demand, whether you're looking at gasoline or other distillates. And at the same time, crude oil inventories are rising slightly at Cushing, Oklahoma, And as you know, that's the delivery point for WTI.
Yeah, WTI what eighty four fifty two, So big drop today. Yeah, you're right, It'll be really interesting to see the impact on Asian market. Looks mixed now, but may improve a little as the day wears on. Now it's time for global news. President Biden is front and center today, saying that Congress needs to get to work on Ukraine funding at Baxter has Global News from the nine sixty News from at San Francisco. Ahead.
Yeah, exactly right, Brian. While House Republicans pick a new speaker, President Biden is urgent Congress in the interim to take up Ukraine.
The majority of the American people still supporting Ukraine, and the majority of the members of the Congress, both Democrat and Republican, are supported. So I don't think we should let them games and ship getting away blocking.
It and sent up. Minority Leader Mitch McConnell agrees, but asks for some guidance from the world use.
It's still a major priority. I think the majority of the members of both bodies still support it. We need some direction from the administration as to how they intend.
To go forward.
Yeah.
McConnell also says the House needs to get on the process of finding a new speaker and says a turmoil needs to be halted immediately.
To do that job for anyone, you have to get rid of the motion to vacate because it puts whoever the speaker is in a hammer lock of dysfunction. So potential dysfunction.
Yeah. So, as we mentioned so far, Steve Scalise and Jim Jordan have said they're interested in the speaker job, and it may be an easier process this time around, he said, hopefully if you listen to Congressman Matt Gates on Bloomberg exclusively.
Well, I'm for both of them right now. I'm eager to hear their plans and their vision. But if the House of Representatives goes from the steward of Kevin McCarthy to either the stewardship of Jim Jordan or Steve Scalise, that's going to come to the delight of many Conservatives.
He says. The overriding issue is gaining control of spending and moving it back to at least pre COVID levels. China says it has warned a Philippines supply boat and two Coastguard vessels to leave the sea near the Nansha Islands and follow the ships throughout. China claims the islands are sovereign. Day three of the Trump civil trial, and
after lunch break, he wasn't in the courtroom. His departure comes after he was slapped with a gag order by the judge for posts and comments about the law clerk and about Attorney General Letitia James, who responded today calling comments racist among other things.
And I will not sit idly by and allow anyone to subvert the law. And lastly, I will not be bullied. So mister Trump is no longer here. That Donald Trump Show is over. This was nothing more than a political stunt.
Now, before leaving New York, Trump tried to explain how he got the loans.
I borrow money on very underleveraged borrow money on.
A building or something, many.
Different things or something. And Trump is complaining about the fact he doesn't have a jury trial. The fact is neither side asked for a jury, but we're entitled to do so. Global News powered by more than twenty seven hundred journalists and analysts in over one hundred and twenty countries. In San Francisco, I'm at Baxter and this is Bloomberg.
This is Bloomberg Daybreak Asia. I'm Brian Curtis in Hong Kong alongside Grishad Salamat, and our guest is Margy Patel, senior portfolio manager at all Spring Global Investments. Got to put this disclaimer in. It's a daily news show, so we have to talk about the day's events. Margie, I know you look longer term. But do you see the gains today as just a blip or something of a signal.
Well, I think it says it's really really hard to keep this market down and get the big correction. A lot of people would like to see just one starts to say the man comes in and takes the market higher. And really, if you look at the estimates for the latest quarter, looks like we're going to have growth around three percent with unemployment well under four percent, it's really hard to build a case for a big correction or recession anytime on the horizon.
Well, you know, the thing is what we're seeing in the market. So I just want to get your take on what's been going on with the bond route and what's been going on with the equities as well, And just ask you whether an economy which is over fifteen years suddenly become predicated on the zero interest rates. Now you've got the cost of capital going up, and essentially what you've got is getting back to a typical rate structure.
It doesn't sound like a terrible thing, but it's really taking people kicking, screaming, and they seem to be in denial.
Well that's true, but actually for the average person. They probably are benefiting because risk free assets that they had in a bank somewhere or in a money market fund, we're getting zero now they're getting five percent. So I think those people are very happy. And really, if you think about it, most companies and even individuals use those years of zero interest rates to lengthen out the data obligations to lower them over a long period of time.
Corporations issued data one or two percent for ten years, and so they are really immune to the rise we've had in rates. And the same thing with a lot of consumers who extended the mortgages fix their mortgage rates while they were very low. So I think it's more where you really see the excesses are in the financial sector, where we have a lot of money going into m and A, where you have a lot of speculat teams.
You have the crypto disaster, you had the SPACs come along, but all of that hasn't really mounted to much, and so it's not going to damage the whole economy as you correct now those low interest rate vehicles.
So Margaret, it sounds like you're reasonably positive. I'd imagine, like many money managers, you like the idea of being diversified, but people who listen to this show obviously are doing so because they're looking for an advantage, They're looking for some alpha. Are there some opportunities that really stand out for you?
Well, I think the opportunities are where they've been for the last few years. Is number one. The technology sector. Yes, here and there. You have names that are maybe very pricey for the growth rates, but there are plenty of names that will benefit from the high growth of sector is going to have and using more and more technology
and alliers of the economy. And I think some areas of the industrial sector where they're tied to incorporating technology in their products, you know, differentiated products, and they're benefiting from the infrastructure build that we should have and some of the restoring, particularly say in building semiconductor factories here in the US. So I think there are some attractive areas, but those areas have been attractive all year, been good performers.
How has your strategy really changed over the course of the year there, Margie.
Well, it hasn't because I was always a little skeptical about last year at the fetis raising rates. There's going to be a recession. We have to get really conservative and I just couldn't see it because unlike previous cycles, we don't have any sector of the economy, big sectors of the economy that's way out of balance, way over leverage, and about the sit of wall on liquidity and take the whole economy down into recession, think of the housing crisis,
think of the Internet bubble. Previous cycles we've had with energy being way overblown, and so I thought it was better to be fully invested. And ironically, the so called riskier sectors have done a lot better than the so called conservative sectors.
Yeah, one of the things you said right at the outset would definitely be a parent if you think that there's a lot of money on the sidelines, you can see that on a daylight today, you can get a pop pretty quickly. Do you think, though, that we might get so clearing in tech before you know, you really get that encouragement for money to flood back in.
Well, you know, you always can have a correction for some reason. Certainly we did last year, and that was a great buying offer.
That was more than a correction. Last year twenty seven percent down, that was a little bit more than a correction.
Well, yes, that's true. But what a great opportunity to lock in some very attractive return sort of investments. But I just I don't really see it, because I don't see anything that's big enough to really derail the whole sector. Growth may slow down, you may have one name or another name blow up because they can't live up to their growth rates. But the whole sector, I think should
still be the best performing part of the market. And when you look at this so called safe defensive sectors that you thought should have worked last year and this year, utilities, staple, even healthcare, they have been disasters.
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I'm Bryan Curtis and I'm Doug Krisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg Daybreak Asia