Good morning.
I'm Brian Curtiz and I'm Doug Krisner. Here are the stories we're following today.
Democrats and Republicans avoiding a government shutdown. The compromise is a spending bill that will keep the US government open until November seventeenth. The stompgap spending bill was passed by Congress and signed by President Biden on Saturday night. The bill, however, does not include more funding for Ukraine. However, Biden's budget director Shalanda Jung says she sure it will be passed later.
Those votes are there, We know there's a willing coalition, and I certainly expect members and the Speaker to keep their commitment not to us, but the Ukrainian people.
We told we would be there.
That Shalanda Young. The federal stopgap deal also gets financial markets a little breathing room. Some analysts had warned that an extended closure of federal agencies would spur fresh gyrations in the treasury curve and also hit stocks. For now, Democrats and Republicans have watched some time to negotiate longer term funding.
We go to Apple next. The company is blaming a software bug for the way some of its new iPhone fifteens are getting hot. The iPhone maker also said some third party apps are overloading its system.
Now.
Apple said it's working with developers behind these apps, and the company set a fix is coming to address the problem very soon. You know, some users have said on Instagram that these apps are making the phones too hot to handle.
Bran Well, yeah, let's take a closer look at this one two factory downtime that could slam the brakes on Tesla's winning streak. The story from Bloomberg's Denise Pellegrini.
Well, Tesla has broken four quarterly car delivery records in a row, but that could be about to change because over the summer the electric vehicle makers shut down some of its facilities to make upgrades. Also, it's possible it's being hit by consumer inflation pain, with potential buyers having
a harder time making big purchases. Because NLE is surveyed by Bloomberg estimate, Tesla will report as soon as Monday it delivered almost four hundred and fifty seven thousand cars in the third quarter, below the just about four hundred and sixty six thousand units delivered in the second quarter. This would be the first decline since early twenty twenty two. Meantime, in China, Tesla has just released an updated model Y, slightly faster with a new wheel design and added lighting.
The starting price, though remains the same. Denise Pellgrity Bloomberg Radio Well.
Over the weekend we got the official PMI data for China. This would be for the month of September. Some encouraging signs, to say the least, brought a little bit of frailty as well. Bloomberg's Joanne Wong has more from Hong Kong.
China's manufacturing activity returned to expansion for the first time in six months. The official PMI rose to fifty points two in September from forty nine point seven in August. But Bloomberg Economics says the data show that the rebound is highly unbalanced, as a price drop in the chic in manufacturing PMI also signals some fragility. It's a reminder
that without more policy support, the recovery could stumble. The non manufacturing sector Accelerated media communications of financial services are gaining and are becoming key drivers of the recovery in Hong Kong.
Join one Bloomberg Radio.
McCaw's casino gaming revenue growth decelerated last month, but it's complicated. Bloomberg's Bonni Oo has more from Hong Kong.
Gross gaming revenue grew more than four hundred percent to one point eighty five billion dollars in September. That sounds like a massive jump, but revenues are still down about one third from pre pandemic levels. The results were mostly in line with estimates. Growth is expected to accelerate in October, in part due to China's eight day Golden Week holiday. Analyst predict gaming revenue could return to seventy two percent of pre pandemic levels. That would be the highest percentage
since the onset of COVID in Hong Kong. I'm Bonnie Ol Bloomberg Radio.
So it's and take doug in both the Hong Kong and Chinese economies. Now you find yourself constantly saying, well, there was some improvement. Then on the other hand, there was this, and we saw that with the PMI report, and then also for Hong Kong, retail sales jumped in in August, a lot of mainland visitors coming back, but we had a million people leave over the weekend. Just about a million people. We only have seven point three
million people living in Hong Kong. And although that's holiday time and you can understand pend up desire to go, I'm not sure if it's a good thing or a bad thing, because obviously, you know, with that many people leaving, that's a lot of people that wouldn't be spending money in Hong Kong.
And a little bit of debate here in the US, Brian Bloomberg Economics is saying that a US recession is still more likely than a soft landing. Our economist, you're looking at things like the major auto strike that we're dealing with right now, along with the resumption of student
loan repayments. We can maybe say for the moment that the government is staying open, we have avoided a shutdown, but it may they yet come back after November seventeenth, and that may all of these things together may shave as much as one percentage point from GDP for the fourth quarter. And then if you look beyond that, things
like dwindling pandemic savings, higher interest rates, higher oil. Maybe if you take all of this stuff together, we could be looking at a recession before the early part of maybe next year or as soon as the end of this year.
Sounds like you're saying we shouldn't expect too much of a relief rally in the next couple of days. We'll put that question into Dana Doria. She's coming up a cocio at invest Net and also a moment of truth for House Republicans, now what this means for Kevin McCarthy and for a challenger like the Florida Congressman Matt Gates. So we'll see that's something we can put to our guests all throughout the morning.
Any final thoughts before we move into the next phase. No, I think it covered it. But you're right about the risk for the equity market. You know, for September, the S and P five hundred, it had its worst month of the year. And if you look at the quarter that we just ended, the third quarter, the first quarterly loss we have seen since the third quarter of twenty twenty two.
Yeah, it is a mini correction. Does it become a full blown correction in the equity markets? And how do we sort that with all the negative news that is looming again? More fodder for the great guests that we have coming up again, Dana Doria coming up shortly. Now it's time for Global News. Well, House Speaker Kevin McCarthy is facing a movement to oust him from his position. We get more from Dan Schwartzman in New York.
Dan, Yeah, Brian, it's getting very contentious right now. We have Florida Republican Matt Gates saying he's going to be filing a motion this week to vacate the chair. It's a parliamentary process that hasn't led to the removal of this speaker since nineteen ten. The far right Republicans are angry with McCarthy for embracing a bipartisan dealed of what a government shut down that didn't take into consideration the
deep spending cuts that the right wingers had wanted. Now McCarthy's going to need a simple majority of House members to vote for him to be able to stop the effort to remove him. Gates says he's going to do what he can to remove and replace those who won't tackle spending in deficits.
If all the American people see is that it is a uniparty that governs them, and that it is always the Biden, McCarthy Jeffreys government that makes dispositive decisions on spending. Then I am I am seeding the fields of future primary contests to get better Republicans in Washington who will actually tackle these deficits in debt.
That's FLOUDA representative Matt Gates. Earlier today on ABC's This Week, Donald Trump expected to attend the opening of his New York civil trial Monday. Trump's accused of committing fraud by inflating his net worth by billions of dollars in financial transactions.
The Republican front runner for the twenty twenty four presidential nomination is in jeopardy of losing control of his real estate empire after judge authorized New York Attorney General Letitia James to cancel certificates for companies that hold the assets. Trump's presence at the civil trial is not mandatory. In a blow to Ukraine, Slovakia has a lot Robert Fico as its prime Minister. Fiko returns to the post he resigned from back in twenty eighteen after public outrage over
the killing of an investigative journalist. Fico has publicly called for ending military aid to Ukraine, while also deriding the European Union's sanctions against Russia. Thailand expected to see a four billion dollar increase in tourism revenue as a result of the five month holiday period visa exemption program with mainland China. In just the first two days of the program, Thailand saw twenty two thousand Chinese tourists visit the country.
Before the pandemic, Chinese tourists were the number one group of visitors to the country pre pandemic. Now, Thailand is hoping that tourism will help jumpstart its slong economy and keep it from falling into a recession. Europe winning the Ryder Cup, beating the United States sixteen and a half to eleven and a half in Rome, with Roy McElroy leading the way and Tommy Fleetwood delivering the winning points.
The US was coming off a record nineteen to nine win over Europe just two years ago at Whistling Straits in Wisconsin. The US came in confident that they could end the thirty years of losing away from European and sore they haven't won since nineteen ninety three. Team USA is going to get another crack at it to win in Europe. Ireland's hosting in twenty twenty seven, Global News twenty four hours a day, power by more than twenty seven hundred journalists and analysts and more than one hundred
and twenty countries. I, Dan Schwartzman, this is Bloomberg.
This is Bloomberg. Deybreak Asia, Brian Curtis and Rashad Salommat here in Hong Kong. Our guest is Dana Duria Cocio at Nvestnet. Dana, thanks very much for joining us. It's been sort of a negative Paul hanging over markets here of late, particularly equity markets, but the bond market has struggled as well. I don't suppose that the shutdown averted is the catalyst to shock us out of that, is it?
Well, I don't know that it's enough of a catalyst to shock us out of that, but it's certainly good news. I think it's it's news that the market wasn't expecting.
You know, I get information from a lot of economic sources, and I would say to you that it was pretty much assumes to be a foregone conclusion that we were going to have a shutdown, and in fact, a lot of what I was seeing was concern about it being potentially lengthier than average, just because of the acrimony even within the House, let alone, you know, between the House and Senate. So I do think it's a pretty positive
development for markets. I think it has positive repercussions around concerns or at our ability to tackle things like the debt. But to your point, at the end of the day, shutdowns are really not a big impact on equity markets. They're not even a big impact on GDP growth. They really don't have a correlation. So you know, this is nice news for a time, but at the end of the day, probably not a huge impact.
But then you know, the thing is it starts off again. It's only six weeks or seven weeks do we get to all over again that the thing is is there a better way of doing this?
Oh?
Yes, I mean, you know, it's interesting the United States puts itself through this, right, it's a pretty abnormal when it just are that we kind of go through this struggle of are we going to pay our bills? You know, both shut down as well as you know, raising debt limits.
And yeah, there certainly is. But you know, it's a I guess a sign of the times that you have to be really happy that McCarthy kind of stepped up and said, you know what I'm I'm just I'm going to do the sensible thing here, and you know, give us some time to try to work through the problems as opposed to letting the government shut down. So you know, it's incrementalism here, I guess, but yeah.
For sure, it sort of is what it is. I mean, Rish would have us go back to Plato in Theories of society, you know, which is it's not easy to rewrite the way that the US does business. Well, let's talk about the impact going forward. That aside the impact
going forward for markets. Are we in this period where we we should probably expect things to to deteriorate slightly in the equity and bond markets until we get some sort of major catalysts and what that might be, well, we can't imagine at the moment.
Yeah, I think that's fair.
You know.
Part of my comments I'll say are about what should you prepare for maybe than trying to predict exactly which way it goes. And I think everyone's you know, given obviously where markets have gone this year now, notwithstanding September, but just you know, pretty great returns in a year
that the expectation was you know, softness at best. So you know, I think you know, you're seeing even the kind of most dug in bears saying, oh, maybe we will stick this landing, which is fantastic if we do, but unfortunately a lot of you know, monetary policy acts with a lag. Consumer confidence now drifting lower. We know the auto strike, we know loan repayments coming back in. You know, luckily not a shutdown, but just a lot
of headwinds facing the consumer. And you know, personal consumption is far and away the biggest part of GDP as a single element. So and it's been the consumer kind of propping up this economy along with employment. We're seeing a little bit of signs of softness there too, So it's certainly not a reason to say.
Yes.
Just want to say, inflation comes almost always in three cycles. You know, you don't just have one and it is done. I mean, we made in the second cycle, you know, in the offing because we've got high fuel prices. Let's forget that the unions ultimately want more money. That's going to perhaps create that demand pull part of the inflation problem. And the other theory is you can't really kill the beast of inflation without tipping the economy into recession.
It's typically the case, and it's very much that tightening cycles tend to push us into recession. And this was a very abrupt tightening cycle. Right, So your comments are exactly on point. Inflation tends to come in waves. These are all more reasons to be, you know, somewhat cautious, right, if you're an investor, it's not Look, it's not to
say get out of markets. Obviously, that you do that and you potentially miss you know what highs that could be coming still, but you know you should be circumspect and not be sort of chasing equity markets. I think, and I do because exactly the reasons that we're discussing here, right, the consumer getting a little softer, unemployment, and have we really broken the back of inflation? Oil prices suggest maybe not.
This is Bloomberg Daybreak Asia, your morning brief on this story's making news from Hong Kong to Singapore and Wall Street.
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