Israel Strikes Over 100 Targets; Biden's Prime-Time Speech On the War

Good morning.

I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.

We begin with an appeal to the American people from President Biden. As the wars in Israel and Ukraine rage on. The President used a rare primetime address from the Oval Office to make the case that both conflicts represent parallel fights for democracy.

I know these conflicts can seem far away, and snatch will ask why does this matter to America? So let me share with you why making sure Israel and Ukraine succeed is vital for America's national security. You know, history has taught us that when terrorists don't pay a price for their terror, when dictators don't pay a price for their aggression, they cause more chaos and death and more destruction. They keep going, and the cost and the threats to America and the world keep rising.

In his roughly fifteen minute speech, President Biden argue that supporting Ukraine and Israel is vital for America's national security. The White House now plans of formal request to Congress for about one hundred billion dollars in resources for both countries, along with Taiwan and the Southern US border.

Well, Nathan.

The President's speech comes as tensions heightened in the Middle East and Bloomberg's Oliver Crook is covering the war from Tel.

Aviv and as fears of escalation and spillover mount. We should also say Hamas has called for a day of rage today across the Islamic world, where last time they called for it we saw protesters take to the street, really raising the temperatures. Also raising the temperatures of the United States, saying that they're seeing more drone attacks and their installations in Iraq and Syria, and that they've also

And Bloomberg's Oliver Crook says the death toll continues to mount. More than fourteen hundred people in Israel have been killed. The Hamas run Gaza Health Ministry says more than thirty seven hundred Palestinians have also been killed.

Now and Karen will have much more the war ahead. But we now turn our attention back here to the US, where a search for a Speaker of the House is still underway. Round three for Jim Jordan's quest hold the gavel is scheduled for this morning.

In Bloomberg's Edd Baxter has the story.

More twist and turns to even get to this space. Jordan has come off as support of an interim speaker after very heated response from his caucus.

So I'm still running for speaker, and I plan to go to the floor and get the votes and win this race. But I want to go talk with a few of my colleagues, particularly, I want to talk with the twenty individuals voted against me.

Whether that will land him what he needs is a big question as it hangs in the wind and delays action on aid for Israel or Ukraine. Ed Baxter, Bloomberg Radio.

All right, Ed, thank you, We turned to the markets now. Jay Powell signaling the Fed will stand pat at it's November meeting. After speaking at the Economic Club of New York, the fetch here told Bloomberg's David Weston the economy is doing a good job of handling tighter monetary policy.

So the evidence of your eyes is that the economy is handling much higher rates at least for now without difficulties. So notionally, that might tell you that the neutral rate has risen, or it may just tell you that we haven't had rates high enough for long enough. If we have models for everything, we have formulists for everything. Ultimately, as a practitioner, we have to focused on what the economy is telling us, even taking legs into account, what's it telling us?

Does it feel like policy is too tight right now? I would have to say no.

I think the evidence is not that a policy is too tight right now.

And the Fed chief also said a recent run up and long term treasury yields, if they persist, could lessen the need for further hikes at the margin. For the full conversation with FED chair J Powell, head over to our Bloomberg Talks podcast feed, available anywhere you get your podcasts.

Well, Karen, there was plenty of reaction to Powell's remarks.

Yields on two your treasuries declined tenure yields paired an increase that pushed them near the five percent mark. Former New York Fed President Bill Dudley says Powell was pretty out the mystic about the economy.

Basically, you got the impression that he's pretty comfortable with the level of rates and the fact that the economy is a little stronger than expected, well that's a you know, that's a nice problem to have. And the fact that boniles are a little higher, well that's actually maybe going to help deal with the fact that.

Growth is a little bit stronger than expected.

He also implied that he expected growth to slow in the fourth quarter going into next year. So yeah, I think the Fed's on hold until they see whether the economy is slow as much as they anticipate or not.

Former New York Fed President Bill Dudley is now a Bloomberg opinion columnist.

Well, many on Wall Street think rate hikes are over Nathan. In fact, in our latest Bloomberg Monthly survey, economists think the Fed is done raising rates, but they also anticipate a slower pace of rate cuts next year. The economists are also raising their growth projections and reducing their odds of a recession.

There's also some optimism on the auto strike. This morning.

Karen, a top union negotiator, says General Motors and the United Auto Workers are moving toward a tentative agreement that would put an end to a major strike that has dragged on for more than a month. GM, along with rivals Ford and Stillantis, have been trying to cut a deal to end a walk out that started September fifteenth. A GM spokesperson declined to comment.

Another corporate news Nathan, more job cuts may be on the way at UBS. The Financial News is reporting the Swiss bank is poised to target about ten percent of its support staff at credit Sueeze. UBS is taking over its longtime Swiss rival and a government orchestrated deal and pairing a combined workforce that swelled to about one hundred and twenty thousand.

Let's get you updated on the Sam Bankman freed Trialcaren. The third week ended with the testimony of FTX former general counsel can Son, who told the court he resigned after finding a massive hole in ftx's balance sheet. The trial will now take a week long break. It's due to resume October twenty sixth.

Sorry, Nathan.

Thanks. It's time now for a look at some of the other stories making news around the world. For that, we're joined by Bloomberg's John Tucker, John Good Morning, and.

Karen the Pentagonist reaffirming that Israel was not behind that deadly rocket strike on a how but in Ganza this week, Rerigadier General pat Ryder says the US is using its own information to make the determination.

It is our assessment that Israel was not responsible for that explosion. We're continuing to assess that. Initial indications are that this was from an errant rocket that was launched by the Palestinian Islamic Jahad.

Hundreds were killed in the attack. The president of New York based private equity giant Blackstone, John Gray, says he remains committed to funding low income students and cancer research at the University of Pennsylvania, while acknowledging concerns over anti Sabbitic speech on campus.

Some of my colleagues in the financial field and more broadly have raised some really legitimate concerns about hate speech masquerading as free speech in the context of anti Semitism on college campuses at penn and other places.

Jan has bet the center of controversy at her high profile alum demanded that the president and board chair stepped down. A Maryland Circuit Court judge was fatally shot in the driveway of his home last night. Circuit Court Judge Andrew Wilkinson was found with the parent gunshot wounds around eight pm. He was taken from his home in Hagerstown Demeritis Medical Center, where he died of his injuries. The Sheriff's office investigating

Now.

I'm John Tucker and this is Bloomberg Karen.

All right, John, thank you well. We do bring you news throughout the day here on Bloomberg Radio. But now, as John said, you can get the latest news on demand whenever you want it. Subscribe to Bloomberg News Now to get the latest headlines 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 Apple, Spotify, and anywhere else you get

Karn Thursday Night Football.

To kick off Week seven, the Jaguars in New Orleans to face the Saints. Jacksonville jumped in front twenty four to nine. Travis Etn scored twice. The Jags had a pick six back came the Saints to tie the game. Jacksonville ball just over three minutes left.

Jock you going empty backfield for driver three right two Lefty drops look, checks it down underneath. That's a cross round to Christin Karkcurty twenty five, twenty fifty ten. Christian Kirk pull one touchdown Jacksonville, but crossing route to Christian Kirk.

Tags Radio had it and they beat the Saints thirty one to twenty four. Jacksonville's now won four games in a row at five and two it's their best start since two thousand and seven. Jimmy Garoppolo is not going to play for the Raiders Sunday against Chicago. He's got a back injury, and the Bears are expected to be without justin fields. Not knowing if the Raiders will go with the veteran Brian Hoyer or the rookie Aidan O'Connell. Sean Watson may play Sunday for Cleveland. He missed last

I were Bloomberg.

Sports from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syrias exam the Bloomberg Business app in Bloomberg dot Com. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. On day fourteen of war between Israel and Hamas. There are new concerns about a wider conflict, with US bases in Iraq and Syria experiencing attacks at runback groups and Yemen trying to fire missiles

I'm awesome food and represent different threats, but they share this in common. They both want to completely annihilate in neighboring democracy.

Completely annihilated, President Biden speaking. They're in a rare Oval office address this morning. We're joined by a team of reporters. Bloomberg's news director for Europe, the Least and Africa, Roslind Matheson is with us, along with Bloomberg's Oliver Crook in Tel Aviv.

Good morning to you both.

I want to start with you Oliver for just to get the latest on what's been happening overnight in the war between Israel and Hamas.

So some of the context we should give for Friday today is another day of rage that has been called by Hamas. So this is sort of protests across the Islamic world, is what they called for last week. We saw this, you know, thousands took to the streets. And it comes as the IDEF continues to strike targets in Gaza, continues to strike targets in Lebanon. It has not sort of escalated dramatically on the border of Lebanon, but there

There has been a real difficulty getting the Arab world more involved in what's happening here to try to keep this conflict contained. Rosalind matheson what's your assessment of how diplomacy is going at this point.

Well, certainly, we do know there's a lot of conversation going on, as Oliver was just pointing out, although how you have a peace summit without Israel is slightly tricky given there at they're a key player in the conflict.

Obviously with Hamas.

We do know that there is an endless parade of officials from Europe and elsewhere into the region. We do know that also the Arab's talking to each other. A very important thing to note this morning is that we're hearing that the leaders of Saudi Arabia and the UAE

As we await the comments from Arab leaders. Alie, we did hear from President Biden last night from the Oval Office defending continued US support for Israel as well as Ukraine and other global conflict points around the world. How is that message from the President being re in Israel?

I mean, I think it's received positively in Israel. He echoed many of the things that he said when he was here in Tel Aviv just a few days ago. But I think that the tougher cell and the cell that is more important for Israelis is how is this going to go down with the American people? And this is a question that Biden asked openly. Why should the Americans?

What is the risk that this spills over more widely.

Well, that really depends on a ground war if or when it starts. It certainly seems that is Israel's intent still to go into Gaza and what that looks like. We do know that there's been some discussion, including from the US, about perhaps helping frame that. Would it be a more targeted incursion than a full scale war and a lot will depend on that, quite frankly, but also the unknowns of Iran and does Iran just say we

Rosalind Matheson and Oliver Crook of Bloomberg News team coverage as the war between Israel and Hamas extends Intoday fourteen, Olie Roz, thanks to you both for being with us this morning. Now we want to turn from geopolitics to the US economy. We did hear from Federal Reserve Chairman Jerome Powell at the Economic Club of New York giving a speech followed by a conversation with bloom David Weston.

Let's go to part of that discussion.

Now, are you surprised at how resilient the United States economiation across the board. It seems like a very strong economy despite all you've done to try to slow it down.

Yes, so we certainly have a very resilient economy on our hands. We've got the economy growing strongly. If you think back a year, many forecasts called for the US economy economy to be in recession this year.

Not only has that.

Not happened, growth is now running for this year above its longer run trend. So that's been a surprise, driven largely by consumer spending, driven by a very strong job market with people getting jobs with high first time nominal wages, and that as inflation has come down real wages, which is spurring spending. And we've also had inflation coming down, so you know that's it really is a story of

Of rate increases.

On the other hand, if you look at look at interra sensitive spending, these are very much the places where we see where we expect to see and do see effects. So for example, in housing or in you know, the housing effector has been sector.

Has been very affected by higher rates, as purchases of durable goods.

If you look at surveys, people will not say that it's a good time to buy a car or a house.

Quite the contrary.

So we see policy working through its usual channels. It may just be that rates haven't been high enough for long enough. And again it's all happening in the context of a very strong demand.

We've had other speculators.

Maybe the terming out of debt, as you say, both corporate debt and hustle debt, may diminish the effectiveness of rate hikes. Do you have a view of whether that's true, And if it is true, what does it say about mantre plus. Does it mean you have to go farther in the rate hikes or do you just not have the power to affect it.

So no, I don't think that there's a fundamental shift in the way that interest rates affect the economy. There may be some differences in this cycle because of what I mentioned. As I mentioned, we are seeing those are the effects where we expect to see them, which is interrasensitive spending, and also asset prices to some extent in the exchange rate, which you're also seeing a strong exchange rate, which is disinflationary. So I don't think there's a fundamental

How much effect thus far has the FED had. We all have memorized how long and variable legs? How long and how variable? And where are you in that process? Are you at the twenty five percent point the fifercent in terms of seeing it in the effect in the real economy.

So there's there's no precision in our understanding of how long legs are.

One thing that has changed in the modern era is that markets now, over the course of the last thirty years, central banks have decided, instead of being secretive, to be very transparent. And what that has meant is that markets move actually well in anticipation, well before our policy moves. So the transmission from policy moves to financial conditions actually happens before the moves now, whereas that was not the case fifty years ago when Milton Friedman coined the phrase

The largest part of the economy.

In order to conduct monetary policy effectively, do you need at least hypothesis about how much already hit the economy, because it's hard to know how much more you need to do if you don't know how far you've come.

So on legs, I think if you think back, it's been a year now since the last seventy five basis point hike we did. It was the November meeting in twenty twenty two. The first one was in June, so it's more than a year, so we should be seeing the effects. By the way, they don't all just arrive on one day. They arrive and then they're thought to

So when you spoke back in August of twenty twenty and sort of laid out the revisions to the framework as it were, you said that in terms of anticipated growth, the sort of consensus have gone from something like two point five to one point eight percent. I think we're the numbers you laid out of that.

Where are you now? Where's the FED? Where are you?

And what you think? Basically?

The long run growth is.

Long run potential growth is not something that moves around a lot over time. But I would my own guess is it's around two percent. I think that the standard mainstream view would be a little bit below two percent, but I would just say two percent real growth over time. And you know what causes growth is you know, growth in hours worked plus growth in productivity.

Growth in hours worked is.

A function of population growth in the long run and also labor force participation. Many things affect productivity but if you if you drop in reasonable standard longer term estimates of hours work growth and productivity, which is just out put per hour productivity growth, you get something around two percent, and that's higher than most other advanced economies.

As you look at it, do you see historical precedents for having growing economy with high rates over a long period of time, I mean as you look back, I mean like the late nineties, for example. What analogies do you draw as you try to determine what this might be doing at the economy with a longer term.

So that's really a question about what the level of rates will be going for what the neutral level will be, And I think it's very hard to know confidently what the answer to that will be in five years. Some of the reasons why rates were low for the last twenty five years were just the aging of the global population and globalization, and so lots of savings and relatively with an aging population, savings greater than investment, so rates are lower and productivity was low. So all of those

I really don't know.

I wouldn't want to speculate. I mean, my guess is it'll be somewhere in the middle.

But I don't know.

I mean, I think we can say this now, the effective lower bound is not an issue.

You know, we were very concerned about that.

Right now we're very far from the effective lower bound and the economy's handling it just fine. But that's you know, that's because we're at a time of really elevated demand coming out of the pandemic. As we reopened with fiscal stimulus and monetary stimulus. We have very strong deman in the United States. Hard to know what the economy will want in the way of interest rates when when five years from now, in all of the effects of the pandemic are behind us.

This is Bloomberg day Break Today, your morning brief on the stories making news from Wall Street to Washington and beyond.

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I'm Nathan Hager and I'm Karen Moscow.

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