Bloomberg Daybreak: October 14, 2022 - Hour 1 (Radio)

The shooting in the Raleigh, North Carolina neighborhood has left five dead. I'm Michael blomer More, I'm John Stashower and sports. The Yankees and Guardians played name two this afternoon. Either went for the Astros, the Rangers one the Devil's in

Islanders Laws. That's all Train ahead on Bloomberg Daybreak on Bloomberg eleven three, on New York, Bloomberg ninety nine one, Washington, d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties and Francisco Syrius x M one nine team and around the world Old on Bloomberg Radio dot Com and

via The Bloomberg business Man. Good morning, I'm Nathan Hagar, and I'm Karen Moscow US Dock Index futures are lower this morning, with SMP future is down sixteen points down, futures down a hundred two, NASDAG futures down seventy seven. The decks in Germany is up six tents of percent. Ten year Treasury up seven thirties seconds. You're three point nine one percent and a yield on the two year four point four two percent. Nimex screwde oil is down

three quarters of a percent. It's at eighty eight dollars forty two cents a barrel. Nathan Karen, We enter this final trading day of the week coming off a truly historic day. After falling two point four percent, the SMP five hundred reversed course and closed up two point six percent according to Bloomberg data, going back to never before as the market experienced such extreme readings in both directions

in one day. Dave don Obedient, as chief investment officer at CIBC Private Wealth, Yeah, I don't think a day like this signifies a much at bottom. Obviously, we had a really strong market from mid June to mid August and it was just a bear market rally. But um, yeah, I think we're certainly closer to the end than the beginning of this bowl. Market Dave down Obedien at c IBC believes triggered automated buying helped fuel yesterday's turnaround, but

the turnaround maybe short lived. Nathan Bank of America says stock markets in the US economy will have to experience more pain before the Fed pivots away from aggressive policy. Strategist at the Bank's sake quote, it was a decent counter rally, but Low's won't be reached until next year. They say more economic and market pain will be necessary before the Fed backs down. Well, Karen, the White House was grasping for upside after yesterday's inflation report that's core

CPI rise to a forty year high. President Biden discussed the reading with reporters in Los Angeles. Americans are squeezed by the cost of living. It's been true for years, and folks don't need to be a report to fell them and be a squeeze. Fighting this battle every day is the key reason why I ran for president United States. However, President and Inviiden did note overall inflation was just two percent over the last three months. He said, quote that's

down from eleven percent over the prior three months. Well over the weekend, Nathan the President conceded that a slight recession is possible, but one administration official notes that it's not inevitable. We spoke to US Commerce Secretary Gina Ramondo. I talked to CEOs of the biggest companies and the smallest companies every day in every industry. Yes, they're anxious. Global markets are unstable. The war in Ukraine obviously makes

everything unstable. But they're also telling me customers are buying. Consumers are buying, they are still hiring, American companies are innovating. Commerce Secretary Gena Raimondo made the comments and an interview on Bloomberg Radio and television. Catch the full conversation online at Bloomberg dot com. No one of those CEOs does appear to have a more tepid outlook on the economy. Karen JP Morgan Chase CEO Jamie Diamond discussed inflation and

the FED at a conference in Washington yesterday. I don't know if he could be a soft landing. I don't think so. But in my mild recession or tough recession. My point in the tough recession, yeah, you expect the market. I'm not gonna keep eyes across those three things. But for all of us who have to worry about risk, you, of course you should plant for those things. Jamie Diamond says his gut tells him the Federal Reserve will have to raise rates higher than four and a half percent

in order to detain inflation. Well. Nathan Diamond's bank is among several schedule to kick off earning season today, and we get a preview from Bloomberg's Jeff Bellinger. By the time the markets opened this morning, investors will have heard from JP Morgan, Chase, City Group, Morgan Stanley, and Wells Fargo. Investors will be interested in the results from the last quarter, but they'll likely be even more interested to hear what

banking executives expect going forward. Bloomberg says the big banks will announce they're setting aside billions of dollars to protect against expected loan losses as growing numbers of customers get squeezed by inflation and high interest rates. Jeff well Inger, Bloomberg Daybreak, Thanks Jeff. We also get more economic data this morning in the form of retail sales and consumer sentiment,

with more on that is Bloomberg's Inney del Judais. The prior report covering August showed US retail sales rebounded from the July slump. Bloomberg Economics as today's data will most likely indicates spending on consumer goods move toward pre pandemic levels in September. That's taking inflation into account. Also today, the University of Michigan issues it's US consumer Sentiment and next for early October, and Bloomberg Economics anticipates another sluggish reading.

The sentiment index set a record low earlier in the year. We eat Dealt Judas Bloomberg daybreak right, Benny, thank you. In Europe this morning, speculation is growing the UK government will abandon its plans for massive tax cuts. And let's go live to London and get the latest from Bloomberg's James Wilcock, Good morning, James, Good morning Kowen. Nathan Decas Chancellor quasi class said to London, London in the next hour, un especially cut in short his trip to Washington, UK

ask that's the stage a comeback on the news. It's try to act a youth sound is down the right. The yield Antenia bonds pledged to be a full presentment of the market opens and it all comes as the Bank of England to rap up their emergency bond buying program. Late today in London, James Wilcock, Bloomberg day Break, James, thank you, And in Corporate News this morning, lawyers for Twitter say Elon Musk is being investigated by authorities over

his attempt to take Twitter private. We get the details from Bloomberg's Doug Prisoner. In April, the SEC sent a query to Musk over how he initially disclosed his nine percent stake in Twitter. He did so a week later than regulations allow, and he used a filing typically reserved for passive investors. Then in June, the SEC wanted information on Musk tweeting the deal cannot move forward until he

was given more information about spam and fraudulent accounts. Now in a court filing in Delaware, Twitter's lawyers say Musk has exchanged substantive correspondence with federal authorities as they look into his conduct, and they say, this game of hide the ball must end. In New York, I'm Doug Prisner, Bloomberg day Break, Right, thank you, and Bloomberg Gay Break is brought to you by SEI. Acid managers don't get results that are off the charts when their solutions are

off the shelf. Learn how SEI is operating platform canern infrastructure into a competitive advantage at se i C dot com, slash Tech Straight to head, your latest local headlines, plus a check of sports, and this is Bloomberg. All right, Karen, thanks a lot. It is five oh seven on Wall Street where fifty three degrees in Central Park and dealing with an accident in Queen's westbound Jackie Robinson Parkway at

Metropolitan Avenue. Details coming up in traffic. First Michael Barr with more on what's going on in New York and around the world. Happy Friday, Michael, Happy Friday to you, Nathan. The final January six Committee hearing's theme was that Donald Trump began the plan to stay in office as early as July Bloomberg, said Baxter, as the story to remain

no matter what the vote showed in November. Coach are List Cheney says, what's left we must seek the testimony under oath of January six Central player Donald Trump, followed by a unanimous vote to subpoena from the committee. Meanwhile, the Supreme Court has refused to get involved in Trump's request to return seized documents from our lago. It also refused to reinstate a special master. A major victory for the Department of Justice in San Francisco. I'm at Baxter,

Bloomberg Daybreak ed Baxter. Connecticut Governor Need Lamont has ordered flags flown at half staff in the state after three officers were shot in the line of duty in Bristol. Two of the officers are dead. Governor Lamont said there are too many illegal guns and not enough cops on the streets. I hope when you see your policeman woman on the street corner, you go up and say thank you for what you do. I hope you show a little respect for the folks that are there. Governor Lamont.

State Police said in a release that the nine one one call Wednesday night about the dispute between two siblings appears to have been a deliberate act lower law enforcement to the scene in Bristol. In North Carolina, Raleigh police say a male juvenile is in custody hours after a mass shooting that left five people dead, including an off duty police officer, in the neighborhood. Raleigh Mayor Maryanne Baldwin praise the responding officers, saying they put their lives at

a risk to protect the city. You know, you pray that something like this will never happen here. It did, and I want to thank all the officers who responded in the way they did. Raleigh Mayor Baldwin. Police say there is no word on a motive. North Korea has fired yet another ballistic missile. This launch came as North Korea also flew war planes near the border with South Korea. Global News twenty four hours a day on air and on Bloomberg Quicktake, powered by more than journalists and analyst

more than a hundred twenty countries. Michael Varren, this is Bloomberg, Nathan. Thanks Michael five o nine on Wall Street. Time for the Bloomberg Sports Update. Good morning, John Stashow, All right, good morning, Nathan. Yankees and Guardians. Two days off between games one and two, but set to go one o'clock at the stadium, so unless there's another rain out, no

more days off. The rain was expected and Aaron Bruin was asked before and the effect of a postponement, and it would probably affect the pitching rotation if you went five games and you had to play four in a row. Sure, Um the lineup, No, I mean we play, that's what you do is in baseball as you play every day, So shouldn't affect that. Um, you know, that's more who we're going up against, matchups things like that. Today starts, yes the court Shane Bieber for Cleveland. Houston's up to nothing.

In the other a l d S, the Astros had their slugger You're Don Alvarez to fact you get the game winning three run over in game one, he hit the go ahead two run shots six, inning the game to a four two Astros win over Seattle two game threes. Today tonight in the n LDS, both series tied to one. Week six underway in Chicago, Washington won twelve to seven and to four game losings. The only Commander's touchdown scored by rookie running back Brian Robinson, who has made a

remarkable comeback. In August, he was shot twice in the leg in attempted robbery in DC. Jetson Giants looked to keep their winning ways going Sunday to Jets visit Green Bay Giants home for Baltimore and the Giants punter is back home safety. The native Scott Jamie Gillen was unable to fly home with the team do a visa issue. He was staying at an airbnb in London. Rangers already

two and oh they wont seven three at Minnesota. Chris Cryer, the big season last year, scored his first two of the year, the first and last Ranger goals Islander season opener three one Home lost the Floorida. The Devil's lost five to a Philadelphia John Stashward, Bloomberg Sports, Nathan all Right, John, thank you. SMP. Futures are moving lower down thirteen points down.

Futures down, nastack. Futures down sixty two points ten. Your treasuries up six thirty seconds yield three point nine one percent. As we await bank earnings this morning, we'll get a preview next with Bloomberg. Shinali Bassk. This is Bloomberg, Bloomberg eleven three oh. Weather. Rain will end this morning, It'll turn clear this afternoon. Upper sixties for highs sunny near

seventy Tomorrow, partly sunny, upper sixties for Sunday. Right now, Claudie in fifty three in Central Park Markets, Headlines and breaking news twenty four hours a day at Bloomberg dot Com, the Bloomberg Business atand at Bloomberg Quicktape. This is a Bloomberg Business Flash and I'm Karen Moscow. And US dot Index futures are moving lower this morning, while equities in Europe are extending a rebound that saw US stocks were

back from losses sparked by a hot inflation rating. We checked the markets every fifteen minutes throughout the trading day on Bloomberg, and P futures are down twelve points down, Future is down eighty five. Nowesdays futures down fifty eight. The Daks in Germany up six tents of a percent. Ten your treasury at five thirty seconds, you're three point nine two f cent. The yield on the two year

four point four three percent. Nine X Screwed oil is down half percent or forty four cents at eighty eight dollars sixty seven cents of barrel comes goaled down three quarters of a percent or twelve dollars forty cents at sixty and sixty four sixty an ounce. The euro point nine seven four four against the dollar. British found one point one two seven zero and the end one forty seven point six eight and Bitcoin this morning is at one point one percent and nineteen thousand, six hundred dollars.

It is a busy day for earnings a big Wall Street banks reporting including JP, Morgan Chase, and City Group. He also get a report on September retail sales at eight thirty Wall Street Time as a Bloomberg Business Flash. Now here's Michael Barr with more on what's going on around the world. Munchael, Good morning, Good morning, Karen. The House January six Committee voted unanimously to subpoena former President Donald Trump for his testimony about the one Capital attack.

Earlier in the hearing, the panel presented new video of final speaker Nancy Pelosi and other congressional leaders pleading for help. It also outlined Trump's multipart plan to overturn his election loss. President Joe Biden again criticized high US gas prices and said he'd announced new actions to combat what he described as a key driver of inflation. In baseball, the Yankees will play the Guardians in Game two of the a

LDS after last night's rain out. The Astros lead two games to zip over the Mariners in their a lbs after last night's four to win. In the NHL, the Rangers won, the Devil's Islanders and Capitals all lost. Thursday night football, the Commanders beat the Bears in an action back game twelve seven Sorry too soon. Global News twenty four hours a day on airand on Bloomberg Quick Take Forward by more than journalists analysts more than twenty countries.

I'm Michael bar this is Bloomberg NA. If you love defense Man, what a game. Thank you, Michael. We're coming up to five twenty on Wall Street Live from the Blue Brig Interactive Broker Studios. This is Bloomberg Daybreak, and Karen said it, this is a busy day for bank earnings. We're gonna hear from four of the big six Wall Street firms and starting in just a couple of hours here Bloomberg Global Finance correspondent Shannelly Bassic's been up all

night getting ready for these earnings. I'm sure joining us live this morning. So we got JP Morrigan, Wells, Fargo, Morgan, Stanley City Group all opening their books this morning, Shanally. And we've already heard from JP Morgan's Jamie Diamond doubling down on The idea that a recession is coming makes you wonder how much these banks are preparing for this and whether we're going to see it play out in the earnings. It's true because you have two things going

on at the same time. One Wall Street is expecting these banks to start provisioning at a greater rate for loan losses as they expect the economy to get worse. The question is how much are they factoring in now at the end of the third quarter into the fourth quarter. Is it going to get worse from here? Are they're going to need to add more provisions as time goes on.

The other thing about it is Jamie Diamond, and you heard him talk about this a lot, having to really uh boost their regulatory burdens here and how old more capital due to to do to rules that he feels is arbitrary here. That from him a lot. But you know, the issue here is are the bank's gonna constrain lending in the face of higher interest rates. It's a double edged sword here they're really facing. And I mean that's the story that we've been seeing over the last few

quarters here coming out of the pandemic. This idea of provisioning for loan losses. The banks have been doing it for months now. We've seen the stocks get hammered throughout this year. I mean, how much more loan provision can they do? Is there a possibility that we could see some kind of surprise when it comes to that? We sure can. Right now the street is expecting one point two billion dollars worth of provisions over at JP Morten.

The other thing I would watch for is if charge offs start to rise and loan quality therefore starts to deteriorate. People are worried about credit cards, for example, but I say in the face of higher interest rates, because the banks want to be lending right now because they're making more money from doing so. However, they are worried about consumers. They are worried about credit quality, and are we going to hear a little bit more of that? Well not.

Another thing Jamie Diamond said yesterday in Washington at the International Institute of Finance was that consumers are fine now, but there could be a bit of a six and nine month lag here in terms of that total inflation impact on their wallet. Yeah, it's been kind of a mixed picture, hasn't it. When it comes to the consumer.

You mentioned Jamie Diamond's comments. I know we're not going to hear from Bank of America until Monday, but we've also heard from the CEO there, Brian moynihan, saying that the consumer for the most part, is remaining resilient through this. Where do you expect some of that consumer lending story to particularly play out in the results we get today. There's gonna be a huge focus on mortgages, and that

has been the case. The other question is consumers are not feeling higher savings rates very meaningfully, so are the banks going to start doing that? And now that rates are higher? I would also say that a lot of the stress is not even even us on the consumer side. It's also on the side of large investors in large corporations. People are worried about credit spreads and where they go from here. People are also worried about markdowns tied to

leverage loans. There's already been about two billion dollars of markdowns globally after the second quarter, but things have gotten worse since then, and there's some large deals the banks have to contend with Twitter, Citrix, Nielsen where they might have to mark down hundreds of millions more. Where do you think things are going to play out when it comes to the trading desks. There's been so much volatility in this market. I mean we saw it just yesterday

and could the trading desks kind of come to the rescue. Well, that's been the case most of last year into this year, and even during the pandemic as an activity really boosted in terms of underwriting and new issue and really fixed income trading and currencies and commodities also held up. But now they're clients, The bank's clients are under a lot more pressure, and you don't see that same try to it's kind of trading tailwind that they had just over

the last several months. Really it's already started to wane, and there's an expectation that it starts to have more fractures in it as you see even parts of the more healthy businesses come under pressure. If mortgages in the real economy are under pressure, and there's more problems in that market. Frankly, the trading of mortgages is also a

question mark. Lots to pass through as we get ready for those earnings starting with JP Morgan and Wells Fargo do out around seven am Wall Street time, then Morgan Stanley follows and City Group for the Big Six getting earning season kicking off here on Wall Street. Bloomberg Global Finance correspondent Shinelli Bask, thanks for being here this morning as we await those results. Looking ahead to the market,

open futures are moving a bit lower. SMP futures down ten points, STAFF futures down sixty nine, NASTAC futures are lower by fifty four points ten. Your treasury is up six thirty seconds, the yield three point nine one. You're listening to Bloomberg Daybreak Bloomberg eleven three oh. Weather clearing this afternoon. We'll get up to the upper sixties, sunny near seventy tomorrow. By Sunday will be in the upper sixties once again under a partney sunny sky. Current semperature

in Central Park fifty three degrees. Broadcasting live from the Bloomberg Interacted Broker Studio in New York. Bloomberg E Living Freedom to Washington, d C, Bloomberg to Boston, Bloomberg one All six one to San Francisco Bloomberg and M sixty to the Country Sirius XM Chado one nine tea and around the globe, the Bloomberg Business APT and Bloomberg Radio dot Com. This is Bloomberg Daybreak. It's five thirty on Wall Street. Good morning. I'm Nathan Hagar and I'm Karen Moscow.

Were just about four hours away from the open of US trading. Let's get you up to date on the news. You need to know what this sour. We enter the week's final trading session coming off a volatile day. The S and P fell two point four percent after yesterday's CPI reading, only to close up two point six percent. Data going back to has never seen such extreme readings

in both directions in a single day. Lori Calvacino's head of US equity strategy at RBC Capital Markets, you have to really look stock by stocks, sector by sector, different parts of the market, figure out where you think most of the bad news is baked and where you want to be for the longer term, and start layering in and it may go down more before it goes back up. Lori Calvasino with RBC says we likely have not seen

a bottom yet. She expects volatility to continue as the FED keeps hiking rates and yesterday's turnaround maybe short lived, Karen. That's according to the Bank of America. The firm strategists say stock markets and the US economy will have to experience more pain before the Fed pivots away from aggressive tightening.

They don't expect the bottom until next year. The White House, Nathan Meantime, was grasping for upside after US inflation rose to a forty year high last month, and President Biden spoke to reporters in Los Angeles, we also need to make more progress bringing down the prices across the board. That's why I just couldn't disagree more of my Republican friends who say the biggest problem on our economy right now is it working. Folks are making too much money.

President Biden also says too many Americans are being squeezed by the current cost of living, though he notes overall inflation was just two percent over the past three months. Let's talk corporate earnings now, Karen, JP. Morgan City Group, Morgan Stanley, and Wells Fargo all report before the market opens today. Banks are expected to post the biggest profit decline of any sector this quarter, as analysts turned sour

on the outlook for financials. Outside of results, will be watching for how much cash firms are setting aside for potentially bad loans turning overseas. Nathan's speculation is growing the UK government will abandoned its plans for massive tax cuts. Chancellor Quasi Quar Tang is heading home early from I m F meetings in Washington as the Bank of England ends its emergency bond buying program today. He spoke with

former bo E member Martin Wheeley about the move. Andrew Bailey has given some thought to the question of what help might be needed next week and in what circumstances that could probably be done without continuing the current scheme in operation. Former Bank of England member Martin Wheeley says reversing the plan for massive tax cuts would restore the

UK government's credibility. Futures this morning are lower S and P futures are down sixteen points and straight ahead we have your latest local headlines plus a check of sports and this is Bloomberg. Thanks on Wall Street fifty three degrees in Central Park Still didn't with that crash wise found Jackie Robinson Parkway Metropolitan Avenue. Michael Bars here with what else is going on in New York and around

the world. Michael, thank you very much, Nathan. The House committee investigating last year's attack on the US Capitol voted to subpoena Donald Trump. The committee and a unanimous vote agree to demand documents and testament on me from Trump about his role in the January sixth attack. Committee chairman Bennie Thompson, he is the one person at the center of the story of what happened on January six so

you want to hear from him. In a post on his Truth social platform overnight, Trump said, I will be putting out my response to the Unselect Committee of Political Hacks and Thugs tomorrow morning at eight am. Authorities in the Connecticut say to Bristol police officers who were shot dead had apparently been drawn into an ambush by an emergency call about possible domestic violence. The third officer was

wounded in the gunfire. Late Wednesday night, Governor Need Lamont said there are too many illegal guns and not enough cops on the streets. It's just a reminder what the men in blue, men and women in blue do every day on our behalf to keep us safe and the risk they take. Governor Lamont ordered all US and state flags Lord to half staff a you are opened fund. They are along a walking trail in a Raleigh, North Carolina neighborhood, killing an off duty police officer and four others.

Police say the suspect led police on an hour's long man hunt before he was cornered in a home and arrested. North Carolina Governor Roy Cooper said terror has come to running. This is a senseless, horrific, an infuriating active violence that has been committed. Authorities would only describe the suspected shooter as a white male juvenile. Florida jury rejected the death penalty for the person responsible for the Parkland Schools shooting

that left seventeen students and staff dead. The jury instead recommended the sentence of life without parole. Many family members of the victims were stunned. Global News twenty four hours a day on air and on Bloomberg Quicktake, powered by more than twenty seven hundred journalists and analysts more than a hundred twenty countries. Michael Barr and this is Bloomberg, Nathan, Thanks Michael on Wall Street. Time for the Bloomberg Sports

Update with John Sennshower. All right, Nat the day baseball in the Bronx one o'clock start today, Yankees Guardians game too, Estra Cortez, Shane Bieber. Last night's rain now means no more off days in the series. Astros and Mariners Game two in Houston. Seattle, who blew a four one lead in Game one, had a lead sixth in a one albats huntas just want to let Phil just said good five and the late this Crawford boxes Britty, so you're not does it again? Baby Amy Albert has had the

walk off free run shot to win the opener. Astros won four to lead the series to nothing. Game three tomorrow will be the first postseason game in Seattle in twenty one years. This afternoon is the first one in Philadelphia in eleven years. Phillies and Brains retied at once, so the Dodgers and Padres. They played tonight in San Diego.

The day began for the Washington Commanders with an explosive ESPN report of the team's owner Dan Snyder has not been forced out by fellow owners because he has dirt on several of them and on Commissioner Roger Goodell, and that he can quote blow up the NFL if they try to force them out. Snyder has already been fined and suspended for his actions as team owners. The Commanders then played the Thursday Night Gave in Chicago. They held

on to win twelve to seven. Bears at a first and goal to Washington five in the final minute, but couldn't score. Both teams are two and four. Rangers are two and oh seven three Route in Minnesota three goals in the first period, three more in the third. Islanders opener was a three one home loss the Floorida. The Devil's gave up four straight goals. They lost five to at Philadelphia. Nicks and Nets have their preseason finales tonight.

Nicks host Washington, the Nets to visit in Minnesota. John Stash Howard Bloomberg Sports Nathan Thank you, John seven on Wall Street time for the Trice State Business Report with Bloomberg stot Car construction started on Hatch Life Sciences Longfellow Real Estate Partners New Life Sciences facility on twenty third Street in Queens, New York. Business Journal reports the developers anticipating a two hundred twenty five million dollar investment into

the property. Twenty four technology and biotech companies still in their building and investing Stages have been approved to participate in New Jersey's Net Operating Loss Program. They are a prooved to receive a total of a combined seventy five million dollars to fund working capital or R and D. The program enables participants to sell their net operating losses and unused R and D tax credits to unrelated profitable

companies for cash. Brokers Frederick Ekland and John Comes expect to sell out their newest condo development in Manhattan's Greenwich Village before a single unit is formally put on the market. The pair and anticipate that even with home sales slowing in New York, buyers will quickly snap up all twenty eight apartments at sixty four University Place. That's the Bloomberg Tri State Business Report. I'm Scott Carr. Thank you, Scott on Wall Street. Bloomberg Radio is on the air from

San Francisco to New York, London to Hong Kong. Let's check in with our global news team for some of the top stories heard on our three hundred affiliate radio stations around the world. I'm Steve Podas kan K and X in Los Angeles. We're talking about Littell unveiling a Tina Turner Barbie doll as part of its music series. I'm Corney's Dona Hellan ktr H in Houston mortgage rate search to the highest in twenty years at six point

nine on Gina Servetti. And for w c CEO in Minneapolis, I'm reporting a Twin Cities area inflation is rising at a slower pace than the national rate. I'm Scott Carr w w J in Detroit term reporting a on the first new development at Detroit City Airport in thirty years. Those are some of the stories our twenty seven hundred Bloomberg journalists and in less working on this morning around the world. It's five thirty nine on Wall Street. The

following is an editorial from Bloomberg Opinion. This editorial was written by the Bloomberg Editorial Board in Beijing. Next week, Shijin Ping will almost certainly claim a third term as head of the ruling Communist Party, cementing his status as the most powerful Chinese leader since Mao Zedong. The precedents shattering move is fraught with risks, from economic instability at

home to adventurism abroad. To guard against them, the US must remain disciplined and focused on building up its own strengths. That means bolstering its defenses against economic disruptions, for example, by continuing to reduce dependence on Chinese supply chains. The US also should embrace the advantages of its more open system rather than trying to emulate China's command economy. By clinging to power, she is leading China into uncharted territory.

That's all the more reason for the US to maintain a steady course. This editorial was written by the Bloomberg Editorial Board. For more Bloomberg opinion, please go to Bloomberg dot com, slash opinion or OPI N go on the Bloomberg terminal. This has been Bloomberg Opinion. Listen for Bloomberg

opinion editorials every weekday. At this time, terminal customers can read more at O P I N. Gold futures are adding to their declines now we have SMP futures down fourteen points, STAFF futures down nineties seven NASDAK futures down seventy one points. We'll talk about the wild swings in this market next with Andrew Sheets, chief cross assets strategist

at Morgan Stanley. This is Bloomberg Bloomberg eleven three oh weather clearing this afternoon, We'll get up to the upper sixties today, sunshine high near seventy to start the weekend. Tomorrow will be partly sunny Sunday with highs in the upper sixties once again. Right now fifty three in Central Park Markets. Headlines and breaking news twenty four hours a day at Bloomberg dot com, the Bloomberg Business apt and at Bloomberg Quick Tape. He's a Bloomberg Business large and

I'm camera in Moscow. This updates brought to you by SEI, built on advanced technologies and fifty years of innovation. SEI offers at A managers are comprehensive and flexible operations outsourcing platform. Go to s i C dot com slash managers. And futures this morning are lower. SMP futures down about nineteen points and now features down a hundred twenty seven and

NASDAC futures down ninety three. The ten year treasury of seven thirties seconds yield three point on one percent, and they yield on a two year four point for three percent. And bitcoin is at nineteen thousand, six hundred dollars. That's up one point one percent. That's a Bloomberg business flash. Now here's Michael Barr with more on what's going on around the world. Michael Karen, thank you very much. The House January six Committee wrapped up yesterday's public hearing with

the call to subpoena former President Trump. Trump responded saying the Unselect Committee is a giant scam presided over by a group of radical left losers and two field Republicans. Meanwhile, former President Trump has suffered another setback in the Mara Lago documents investigation. The Supreme Court has refused to get involved in a dispute over whether a third party should

review those classified documents seized by the FBI. In baseball, the Yankees will play the Guardians in Game two of the A l B S after last night's rain out. The Astros lead two games to zip over the Mariners in their A l B S. After last night's Sports You Win. Thursday Night Football, the Commanders beat the Bears twelve seven. In the NHL, the Rangers won, the Devil's

Islanders and Capitals all lost. Global News twenty four hours a day on here and on Bloomberg Quick Take, powered by more than seven hundred journalists and analyists more than a hundred twenty countries. I'm Michael Barr, and this is Bloomberg Nathan. Thanks Michael. We're coming up to five forty nine on Wall Street Life from the Bloomberg Interactive Broker Studios.

This is Bloomberg Daybreak. We're very pleased to be joined this morning by Andrew Sheets, chief cross Assets strategist at Morgan Stanley, as we try to assess these wild swings in the market. Uh, Andrew, good morning. We know from data going back as far as Bloomberg has been around that there's never been an intra day move like what we saw yesterday in the SMP five. What was behind that?

Good morning? Well, I think what we are dealing with is just another extraordinary data point in an extraordinary year. You know, this year is the first year that you've seen both equities and bonds down more than ten percent, you know, going back over the last almost a hundred years. So we we need to get used to. We have gotten used to on precedented moves. But I think another you know, thing that we need to keep in mind is that in bear markets, and I think we are

still in a bear market. You two, you do tend to get these quite violent reversals. And so if we look back to prior reversals of close to this, we saw a number in two thousand and two, we saw some in two thousand and eight. So while it's welcome that we saw some relief, I think it it doesn't necessarily change the broader backdrop. Well, when you say we have to get used to these kinds of wild moves, dig into that a little bit more. What do you mean by that? How much longer do you think we

have to get used to this kind of volatility? Well, I ironically, you know that the data point that I think people were pointing to yesterday that was associated with with the rally in the market, this upside surprise to inflation, I think is actually still a driver of that volatility.

I think as long as core inflation is surprised into the upside, as long as core inflation is still uncomfortably high for the FED, the FED and other central banks by extension can't pivot and can't provide the type of relief that I think markets are are hoping. And so you know, when we think about the market backdrop, I think it's still a sequencing issue. First, the market needs

to get comfortable that rate volatility is coming down. Then markets need to get comfortable with the level of economic volatility. And I think we're still going through that first part. So I think until we start to see some more relief on the on the inflation front, which again we didn't get this month, I think we still face heightened uncertainty in the backdrop. Now we saw traders pretty much

a price seventy five basis point move next month. What's your thinking on where the Fed goes in subsequent meetings. Are we looking at even more jumbo sized rate hikes on the back of that inflation print. Yeah, so, so we we do think that this makes you a seventy

five basis point rate hike quite likely. And I think the challenge here is that, you know, this is the second straight CPI report that's been well above consensus expectations, and so I think as long as we're seeing that tattern, the FED will be under more pressure or the market will certainly think it's more likely that the Fed errors

on the side of caution. So our our interest rate strategist of Organ Stanley have been of the view that the curve will invert more that we'll see the one year rate underperformed the ten year rate, and that's a function of the market, you know, potentially just assigning more risk premium to a higher terminal rate for Fed funds as we get these upsides of RISS to c p I And what impact is that going to have on the stock market if we do see an even deeper

reversion in the yield curve. Yes, I think it's it's still it's still a valuation challenge, you know. I think you have a market where the earnings yield for the smp is is around US six percent UH and the yield on investment grade corporate bonds is around six percent. You know, in that environment, equities are not obviously a cheap asset, even though they have de rated and cheapened a lot a year to date. And so, you know, I think the higher that the front end rate goes,

that obviously puts upward pressure on longer end yields. At a time when when my colleague Michael Wilson in the U S and my colleague Graham Sector in Europe are our equity strategist at Morgan Stanley still think earnings estimates come down so I think this is an environment where the equities valuations have improved, But actually it's often in the fixed income markets, the investment grade credit markets where we think that valuation is currently better. Just thirty seconds

left here, Andrew. But other certain sectors of the market that are looking oversold to you, well, I think at the moment the challenges the defensives are you know, usually work in this environment, but they're well owned. So healthcare is the sector that we like, although it's performed well in Europe. We think energy looks attractive. And we also think banks while perform cyclicals in Europe going into this earning season, and we'll see how banks in the US do.

And um, just a couple hours here. As a bank earning season gets underweight, we gotta leave it there for now. Andrew, thanks so much for the time. Andrew Sheets, chief cross assets strategist at Morgan Stanley with us this morning. Karen Nathan, thank you. It is five fifty three on Wall Straight.

Now to a legal story where watching this morning, Judge James Hoe, a conservative judge on the Fifth Circuit Court of Appeals, is boycotting a Yale law students, saying he will no longer hire law clerks from Yale because of what he called the school's cancel culture. The Trump appointee cited instances where students pro chesti conservative speakers on campus. Judge Elizabeth Branch of the Eleventh Circuit Court of Appeals and other Trump appointee so she will join the boycott,

although other judges have criticized the policy. For more. Bloomberg student Grosso speaks to judiciary expert Professor Carl Tobias of the University of Richmond Law School, Can you explain the reasons why Judge Hoe is essentially blacklisting Yale students? Well, he says himself that he's concerned about the lack of civility I think at Yale, especially where they are outside

speakers who come who might be pretty conservative politically. In some incidents have happened at Yale that troubled him, and so he has said he will not consider Yale students going forward, which is unfortunately regrettable, as his colleague Jerry Smith said, who is equally conservative, but says he enjoys hiring the Yale clerks and the recent ones have been excellent.

Do most conservative judges and conservative Supreme Court justices, higher clerks who are conservatives, yes to some extent, but not exclusively, and judges whom everyone respects, like Justice Scalia, often wanted to have what one clerk called counter clerks who took very different views. Professor Steinfeld, I think at Michigan was saying he was such a clerk for Justice Scalia, and

they hardly ever agreed on anything politically. But he enjoyed the back and forth, and I think Justice Scalia did too. It may be counter productive to not have clerks, as many judges like to do, who will take the opposite perspective from the judge and sometimes went over the judge on the argument to put in perspective. Some of the Supreme Courts most conservative conservatives went to Yale. Clarence Thomas,

Samuel Alito, Brett Kavanaugh, Senator Josh Hall, very conservative JD. Vance, even Stewart Rose, the leader of the oath Keepers, went to Yale. So there are conservatives coming out of Yale, and by doing this, the judges punishing them. Well, I think that's true to some expend Judge Smith, his colleague on the Fifth Circuits that I'm happy to hire them, please send more. And I think a number of judges

feel very similarly. So it is regrettable and unfortunate for the school and Ford students and the judges who may not take excellent students because of that. Do you think a student would ever turn down Yale Law School if they were admitted because certain conservative judges would not take

them as clerks. I doubt. They probably have many, many opportunities, And it's really the judges loss because they received such a fine education and they're extremely well qualified, and so they often write their own tickets anyway, And as Professor Carl Tobias of the University of Richmond Law School speaking with the Bloomberg's Doing Grosso, catch more of that interview, plus analysis of the latest legal news by subscribing to the Bloomberg Law Podcast. Are downloading the show at Bloomberg

dot com slash podcast. Attorneys can find exceptional legal research and business development tools at Bloomberg Law dot com and on the Bloomberg terminal at b law Go. Futures this

morning are moving lower. SMP futures down about nine points down, futures down thirty, nowsday futures down forty h the decks in Germany's up seven tenths of upper sent pen Your treasury up nine thirty seconds here three point nine zero percent, and they yield on the two year four point four two percent, And Nimex screwede oil is down seven tenths of a percent, and top stories straight ahead. This is Bloomberg