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up with a big financial forum next week. What is it hope to achieve? I'm Maybe Morris in Washington. We'll look at the final run up to the mid terms and why so many races are neck and neck. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg E lovel Me three on New York, Bloomberg one, Washington, d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties, San Francisco d A B, Digital Radio, London, Sirius XM one nineteen and around the world on Bloomberg Radio dot Com

and via the Bloomberg Business at By. You'm John Tucker. Let's start today's program with a coming FED policy meeting and the US jobs report joining me to talk about these things, Bloomberg Global Economics and Policy editor Mike McKee As usual, So the FED first meets and then the job report comes a couple of days later. Uh, we know what the Fed's gonna do pretty much in the coming week, right, we do. We don't know what they're

gonna do after that. And answer the question you didn't ask yet that everybody will ask me before that is will the Fed see the jobs numbers before they meet? And know they will not? So they'll be as surprised as all of us on Friday when the jobs numbers come out. And that's gonna be the interesting dynamic here. What does j Paull say about the future path of interest rates two days before a report that could influence the future path of interest rates? So it's gonna be

an interesting, interesting news conference from him. Okay, So remind to everybody the linkage between FED policy and jobs keeping. Full employment is one of their mandates. The other mandate is you know, price keeping, price stability, price stability, and those are pretty uh closely linked. Well, the price stability target is, as everybody knows, two percent, as measured by the Personal Consumption Expenditures indicator. The full employment mandate is

not defined. Um, it's kind of know when you see it. The FED tends to think it's around four percent. So at three point five percent right now, we're below that. The forecast from economist Survey by Bloomberg for the October payrolls as it will take up to three point six percent,

but still very low. Still very strong labor market. That suggests people have money to spend and they're spending it, and the Feds trying to bring demand down in order to bring prices down, and that generally means you end up with high or unemployment. As companies produce less stuff, they need fewer people, and that dynamic hasn't kicked in yet except perhaps in the real estate industry. Okay, but they also have to pay them when all those people

are working and paying people money. Uh, that's inflationary, right, I forgot that. I mean those high higher wages. Well, it's the higher wages, it's the fact. It's it's when employees start to ask for more money because inflation is high that the FED gets worried because then it's it starts a circular problem for them, and so they want to get ahead of that. Surveys show that people think that UH inflation is still mostly contained. Their their views

are it's risen a little bit UH. And so the Fed is pretty much certain that it wants to do at least one more seventy five basis point move because they want to try to get ahead of that. They want to by the way, it's three quarters. They want to get ahead of that any kind of wage price spiral and let people know that they are on the gento model. Okay, is there evidence of UH? Is there a threat of a wage price spiral that we like we saw in the seventies. We haven't seen anything like

that yet. And the best guess is we won't have anything like the nine seventies. For one thing, you don't have large pattern union contracts as you did then, where one union and industry gets a new contract with higher wages than everybody else has to match it. So that will help hold down that whole issue. But even UH now we're seeing UH five six seven percent raises over the last two years, earnings rising by that much, and UM, while that's great for workers, then companies have to make

that up somehow. So they raise their their prices and the problem is is that they haven't been able to find workers. There is a supply problem of labor and so that means that A there much less interested in letting people go, which relates to the JABS report and be uh they've had to pay up to get them. And now the question is does the labor market stabilize. Do they find enough people that they can that they

don't have to keep paying more? And the only way they can the FED can effect that is by reducing demand. The higher rates they are having an impact and slowing things down, certainly in housing. Certainly in housing housing basically kind of in a recession. Residential investment in the third quarter according to the GDP report from last week fell uh. That is the kind of numbers we saw in the Great Financial Crisis when housing all collapsed and back in

the early nineties. It's uh. It's a sector that is in deep trouble for right now. Um, it's cyclical, though we know that it comes and it's worse perhaps right now than it has been in a while. But um, at some point there will be more demand for housing and it will pick back up again. But right now it's leading the way down. Okay, so I keep asking this question, but do they have to torpedo employment to

get to their goal off breaking inflation down? Well, at the same time, I don't know, you know, with that employment full employment goal too. To stick with your metaphor, they don't need, they don't necessarily need to torpedo employment. They can just let a little air out of the boat. But the problem is you don't know when that's when when you've actually successfully done that. Bloomberg Global Economics and

Policy Editor Michael McKee. Just ahead on Bloomberg Daybreak weekend, it's also interest rate decision time for the Bank of England. I'm John Tucker, and this is Bloomberg. This is Bloomberg day Break weekend. Are glob to look ahead of the top stories for investors in the coming week. I'm John Tucker in New York. Up later in the program, big high profile gathering in Hong Kong, but first in the UK.

After the political upheaval of the past few weeks, focus is shifting back to the Bank of England, which announces its next rate decision on Thursday. The UK bond markets have settled down since the so called mini budget that

led to the resignation of the Prime Minister. Let's trust, but the bank still trying to reign in inflation running at ten point one and for more, Let's hit to London and bringing Bloomberg Daybreak Europe anchor Stephen Carroll John It's a big week for the UK economy, but it

was meant to be even bigger. Monday the thirty first had been chosen as the date for a fiscal statement from the new Finance Minister Jeremy Hunt, aimed at steadying the shape after the disastrous tax and spending plans of the last government that caused turmoil on the markets and sent the pound plunging to a record low against the dollar.

But that's now been pushed back until novun sevente. Here's the Chancellor, Jeremy Hunt, explaining why the medium fiscal plan is extremely important and I want to confirm that it will demonstrate debt falling over the medium term, which is very important for people to understand. As it stands, the Bank of England will now have to make its right

decision on Thursday without those details. To talk about this, I'm joined by Bloomberg Senior UK economist Dan Hansen and our markets reporter Valerie title as well, Valory, I'm gonna start with you. So, just a couple of weeks ago we were talking about the potential for a meltdown and guilt markets. It seems everything's calmed down now, even the delay of the fiscal statement not causing too many ripples

on the markets. Yeah, a lot has changed, a lot has changed the volatility, and the guilt market has definitely calmed down. Yields have retrace a lot of their move that happened after the mini budget back in September. But the key thing for me looking at the markets is just the the inflationary imp else from the fiscal measures is going to be way smaller. We know that this energy plan is paired back. Yes, we don't have the announcement on Monday, but it looks like fiscal restraint is

definitely on the pipeline down. Where does all of this leave the Bank of England their decision on Thursdays. It's going to change their calculations if they don't have the fiscal statement. I'm not sure it does. To be honest, and it goes to a Valerie just said, I mean, they know this consolidation is coming I mean it won't be in their forecast because the way it works, as the bank isn't allowed to assume anything about fiscal policy.

It has to just take government announcements as given, so it won't have any of the consolidation in the forecast. So all else equal, inflation will be a little bit higher than it otherwise would be once the consolidation is taken into account. But I think the important thing we know now is that Chancellor and the Governor are talking. The Governor will know the rough outline of what the Treasury is thinking. And as you said at the start there, that the market has a been spooked by this delay.

So there isn't really any pressure on the bank to go over and above what it thinks is necessary to just fight inflation. There isn't this need to sort of restore confidence in UK assets, So it's it's really just about focusing on what they think is necessary to bring inflation back down. Where does that leave your forecast for what the Bank of England's going to do? Yeah, so we've been on a bit of a roller coaster, to

be honest. I mean I think it's on the September we saw the market price in two hundred basis points. For this meeting, we've come all the way back down to just about seventy five basis points. I mean, our view is the committee is going to be torn between fifty and seventy five, and I think they'll they'll go for seventy five, They'll go for the slightly bigger option. But I think that the idea of a three digit

rate rise now is completely out the window. It's between is between fifty and seventy five, and I think there is probably enough news on the fiscal side to warrant a slightly bigger move, particularly when you take into account sterling is still down relative to their last four all cost and we still got inflation in double digits and the late markets still very very hot. Okay, wal you've been riding that market Royler coaster with us over the past couple of weeks. How how are the markets feeling

about the Bank of England? Yeah? There, you know, we're the markets really reading this is that we're less likely to have a monster hike. You know, as we just mentioned, seventy five basis points is now priced. It's even dropped a teeny bit below seventy five. But but I think I'll be focused on the division within the MPC. Last meeting, we had a huge array of choices. We had some members calling for seventy five, some for fifty, some for

twenty five. So is that division repeated um? As we know when they met previously, again was on the eve of a big fiscal announcement, and they passed up the opportunity to speed up the pace and stuck with fifty. So, you know, as Dan mentioned, I think they're probably very eager, eager to step up the pace. Given that the market is pricing seventy five. It's giving them a good opportunity

to step it up to seventy five UM. And then the other side of the of the coin is QT, you know, is due to start next Tuesday, on the first of November. Now, remember when the Bank of England met last time, they were not divided on QT. It was unanimous unanimous decisions. So I don't expect that to rock the boat anymore next Thursday. Okay, Don what about

the cleanup job the government has to do? Of course, they have this extra time now to put this fiscal statement together with the full o b R forecast you've predicted that are projected that the clean up from trust anomics will not one and a half percent off the UK's GDP. How will the bank have to balance that

hit to growth with red heart inflation. Yeah, I mean that it's a really start trade off that the Bank of England is facing and and I think actually it'll it will potentially be even worse than their forecast when we when we see them forecast, I think would be

very very weak. Um. I think in reality what that means is the it we might get in November, but I think going ahead to flank would probably be a little bit more cautious, particularly known as consolidations coming and the fact that we know the economy has weakened significantly, particularly since it last put the Bank last put together it's forecast in August and looking at the stay in

the picture is the picture is pretty bleak. I mean, we've got this energy cap coming in that's going to help, but I don't think it's going to prevent the UK falling into recession over the winter and in the first half of three So it's going to be it's going to be a trade off. And as that as the activity data sours, I think the pressure will come off a little bit on the Bank that keeping the pace of rate hikes high, sort of in the seventy fifty range. I think it will give them room to drop down.

I mean, I mean, I don't think they're going to be able to stop until inflation is clearly on a downward trajectory, but the pressure to go big meeting after meeting will drop significantly. What about the mortgage market and all of this because it's you know, it's been because there's the simplest read through that people have had from the market turmoil. Anyway, how much does that factor into a Bank of England decision of what's happening in terms

of the housing market. Well, I think it will factoring quite significantly, and particularly will give them reason to think that the near term outlook will be potentially weaker than they were expecting in August, and I think it will be reason for them to be a little bit more pessimistic about demand outlook in the near term. That's something that will be interesting to see how they characterize what they think will go on with the housing market in

the near term. Okay, Valerie title, our Markets reporter and Dan Hanson, Senior UK economist at Bloomberg Economics. Thank you to you both for your insights. Stephen, thanks a lot. Just to hit on Bloomberg Deybreak weekend. Why so many are keeping a close eye on a big financial meeting in Hong Kong. I'm John Tucker. This is Bloomberg Broadcasting live from the Bloomberg Interactive Broker Studio in New York.

Bloomberg eleven three oh to Washington, d C. Bloomberg to Boston, Bloomberg one oh six, one to San Francisco, Bloomberg nine sixty to the country, Sirius XM Chando one nineteen to London, d A B. Digital Radio and around the globe the Bloomberg Business app in Bloomberg Radio dot Com. This is Bloomberg day Break Weekend. I'm John Tucker in New York with your global look ahead of the top stories for investors in the coming week. Big finance gathering coming in

Hong Kong and for more. Let's go to Hong Kong and Bloomberg day Break Asia host Brian Curtis and his colleague Doug Krisner. John coming up in Hong Kong. The Global Financial Leader's Investment Summit. Not as snappy a title as a vision quest or burning man. But this summit is meant to get Hong kong It's financial mojo back after a period of hibernation, and a number of financial heavyweights will certainly be there, among them Goldman Sachs CEO

David Solomon and Morgan Stanley boss James Gorman. Why are they attending and what is Hong Kong hoping to achieve and what role will U S sanctions play? Some Hong Kong leaders, like the Chief Executive John Lee, are covered by U S sanctions against Hong Kong and Chinese officials for the crackdown here on political freedoms. Lee has said he laughs off those u S sanctions. Joining us now for some insight on the forum is Bloomberg Senior editor

Richard Frost. Richard, thanks very much for being with us. So the panels are themed on three areas, navigating through uncertainty, technology, innovation, and the future of finance and sustainable finance. All these are quite interesting, but as mentioned at the top there, the real story is Hong Kong getting back on its feet. How big is the buy in from some of the big financial institutions. As you mentioned at the star, it's it's a sort of all star lineup really for this

it's been very heavily pushed by Hong Kong. I'm sure there's been quite a lot of strong arming um from authorities here. It was first announced by the Finance Secretary in his budget earlier this year, and Hong Kong has done a lot to try and ensure that um it got as many attendees as possible. When it was announced, there was still mandatory hotel quarantine, and in recent months

it's removed that. It's made a number of concessions two attendees, including allowing them to fly out if they if they get COVID, if necessary, to leave the city by private jet, because Hong Kong really wants to show that after more than two years in self imposed isolation, it's back on the global stage, and so having all these heavyweights come in it really underlines that point. How has the pandemic change the banking and financial services industry in Hong Kong.

We've heard stories about flight of talent in some pockets of the industry. I mean, it's been described as a significant amount of brain drainage. How does it stack up? There has been a notable exodus of residents and bankers and lawyers, etcetera among them. I mean, Hong Kong had is population dropped by a record one point six percent in the in the twelve months through June. Banks retain

a very significant presence here. Nonetheless, UM and their regional headquarters remain remain in Hong Kong, so in in some ways UM it's not UM. It's not affected the presence of banks, but it's certainly made the city a much less appealing place to live in. UM and Singapore in particular, has stolen a march on Hong Kong by trying to

attract the wealthier, wealthier workers. It rolled out new visas UH and and it's It's also been hosting a number of high profile events prior to Hong Kong to to really show that UM that to show how it could rival Hong Kong in terms of being an international finance center. Yeah, and on that point, we just had the Party Congress wrap up in in China. It was seen as disappointing, partially because it seemed national security issues came to the

form over UM say the economy. I'm curious, though, does that work for or against Hong Kong's future it's I mean that that remains to be seen. It's certainly interesting timing for for all the attendees coming to Hong Kong for this summit. It's against the landscape of blasted, blasted kind of market for Chinese assets. We saw huge sell off on Monday in the wake of the National Congress on concern overseas increased control over the nation's top a cool bodies and Hong Kong is going to the scene.

Is going to be remaining as a gateway to China. But with China changing itself and increasingly closing off it remains We've seen how much business um that banks and others can access. Will China continue to put up walls or that continued opening up? All right, Richard, thanks so much for joining us. Interesting inside Bloomberg Senior Editor Richard Frost, and I'm Brian Curtis here in Hong Kong along with

Doug Krisner. By the way, you can catch us every weekday for Bloomberg Daybreak Asia, beginning at six am in Hong Kong and six pm on Wall Street. John, Brian and Doug thanks a lot and just a head on Bloomberg Daybreak weekend. A lot of twists and turns in US politics as the mid terms approach. I'm John Tucker. This is Bloomberg. This is Bloomberg Daybreak weekend, our global look ahead at the top stories for investors in the

coming week. I'm John Tucker in New York. Clark is taking on the mid terms, and it's a fast moving and rapidly shifting dynamic. For more. Lets into our Bloomberg ninety on one newsroom at Washington and Amy Morris Amy, that's right, John, We are approaching what some may be calling the height of the political silly season. It's kind of an anything goes sort of atmosphere. Joining me now to talk about it, Bloomberg political reporter Ryan Teague Beck

with Ryan, it's great to see. Thanks so much for joining us anytime. Let's talk about the polls. There was a poll out this past week with President Biden's approval ratings dipping down to thirty nine percent. It's a Reuters Ipsos poll that puts the president's writing almost the lowest of his presidency. Um and we're getting closer and closer in November eight. So how bad does this bode for Democratic midterm candidates, especially the ones he's been campaigning for

or does it do people pay attention anymore? You know, it's a weird um phenomenon, But it does seem that the presidential approval rating is not as closely tied to the generic congressional ballot. Uh. It's certainly not good for Democrats for Biden to not be more popular than he is. Um, it remains to be seen how much of a drag it will actually be. I don't know, it feels it feels a little bit disconnected, and I'm not sure why that is. Have you seen that before? I mean, we

saw that a little bit with Trump. Obviously, like Trump lost re election even as people voted for a lot of Republicans down ballot, So there were a lot of people who are able to make that separation. And it's

kind of a shift too, I think. And some of these we're seeing some potential for crossover voting in governor states with governor and senate races at the same time, where like they there seems to be a significant number of people who are willing to vote for Republican for governor and then for a Democrat for senator or vice versa, which is unusual because we had been moving more in this direction, a kind of lockstep partisanship, and that there

may be a few races, including something that could be decisive, where that may not happen. Now, let's talk about one of those races that that maybe a toss up. It's pretty tight. The Oz Fetterman debate that's going on or that went on this past week in Pennsylvania. Lieutenant Governor John Fetterman at the debate, I just want to play what he had to say because the big overriding issue for them has been that he had a stroke and what his health might mean for the future in that office.

And so he addressed it elephant in the room. I think he called it. Let's see what he had to say. I had a stroke. He's never let me forget that, And I might miss some words during this debate two words together, but it knocked me down and I'm going

to keep coming back up, all right. So tell me the response to that is it does it say something that he was that open and transparent and pushed it forward because even saying that, um the line he's never let me forget that, that all tries to paint Dr Oz as a bully, and I wonder if that's going to come back to bide him or help him. You know. I think ultimately he could have had a stronger performance in terms of being able to show that he's able

to talk. I think that concerned that people had was like, boy, you know, the whole point of a senators that you get there and you give speeches, which isn't exactly accurate anymore. But that is a genuine concern, and I think that the Federman campaign mishandled it early on by not being more transparent. I think Oz also overplayed his hand a little bit. Um, and I think that the the pushback there has helped soften that a little bit for the Feederman campaign. Um. I don't think it was a good

night for Fetterman. But I also think, like Oz, for example, his answer on abortion did not do him any favor. Let's listen to that answer, at least in part. I want women doctors, local political leaders, letting the democracy that's always allowed our nation to thrive to put the best ideas forward so states can decide for themselves, all right, explain pick at a part. I just think that the answer itself is fairly to rigor, and I think he's basically saying in that that he doesn't want to go

to the Congress and make decisions on abortion. He wants to leave that at the local level, which is probably a good argument for him. But the combination of women, their doctors, and local political leaders, I think was just not It's just such an image that it pops up in your head of like standing there in the doctor's office with like the mayor or something like. It just I don't think it did him any favors. I think

it's not. Uh, it's kind of more of what you might think of as like a gaff, like in the traditional sense, but back when we had gaffs and they mattered. Um. But it's certainly anything on that issue, which he's been very careful to avoid the pitfalls that I think some other Republicans have rushed headlong into um on an issue that has the potential to turn out voters in some states. You said something important back when we had gaffs and they mattered. I know you were being tongue in cheek,

but let me pull on that. I'm not being like, I really mean that. Okay, let me pull on that for a second, because if we are so divided, and we're so entrenched in our own parties and what we already think are do we need debates anymore? People have made up their minds, haven't they. You know. I mean, I'm a political reporter, so I'm always going to be pro debate, and I think that skipping a debate is damaging.

And I think that that not being willing to show up and and debate your opponent is not a good look. And I think that you've seen that in Arizona. Katie Hobbs, who is the Democratic gubernatorial nominee UH declined to interview to a debate Carry Lake, who was very good at debating in the Republican primaries UM and I and and Lake successfully used that against her. And I think that if she loses that race, I think that will be something people will point to and say that was a mistake.

Of course, if she'd done the debate and done poorly, they would also pointed to it instead it was a mistake. But I do think that you can among a certain sliver of independent voters just hearing that you were unwilling to debate, it just doesn't It doesn't sit well. And and also I think that like really debates don't matter that much. Like I think that candidates who shy away from them are shying away from something where the time it doesn't make a difference. So you might as well

do it, because you might as well do it. I mean, I think that the one thing you're trying to avoid is just that that one really bad answer, and and there are times when that happens. I mean, Terry mcculliffe, like had a really bad answer on parent choice in the gubernatorial race in Virginia, and I think that that really really hurt him in the waning days of it. I think in some ways you might avoid that by doing more debates, Like the more debates there are, the

less in any one of them seems all that important. Um, and the better at debating you get, uh, you know. I think in Oz Vetterman that was one of the rare cases where people were really going to be watching it closely. Oz is obviously good on TV, we expected him to do well. Fetterman did not have a great track record in debates before, and uh, you know, people

were going to be watching him very carefully. I think it was a little bit reminiscent of what you see with Biden where conservatives will tend to look at Biden's stuttering and verbal missteps and say, look, there's something wrong with him, He's not up to the job, and Democrats largely blow it off. I think in in this particular case, i'mlike with Biden, I think that there were some independent voters would be looking at it and saying, you know, is he up for the job? So does it surprise

you that it is as tight as it is? And that's not the only race that's tight, I mean, and they're so neck and neck. This is this is the season for making your predictions about a sleeper race and hoping that no one remembers the ones you got wrong. But like, Republicans right now are putting money in New Hampshire where you know, you would normally think that they

wouldn't have a chance, especially with putting money in New Hampshire. Yeah, there's a Senate candidate there, Don Bullduck, who is um prone to saying some pretty goofy things, and he's running against an establishment Democrat with strong name I d who you know normally does pretty well. And you know, Republicans are putting money in that race right now and trying to prop up Don Baldock, who's own campaign doesn't have

the kind of money to do that. UM. I don't tend to think that one's gonna work out for Republicans, but it's a smart play for them because it's a small amount of money with a potential big payoff. UM. And if it's a wave election, you know, try to snag as many of those as you can because you've got those Senate seats for six years, so you know, if you're if you're going to do it, do it. UM. I don't tend to think that one's going to work out for them, But there's other Uh, there's some other

races that I'm watching that are governors racist. I'm super curious to see what happens in Wisconsin. I think that Ron Johnson seems to have the sen At race locked down there, but the governor's race could be a toss up UM, and they could be one of those states where the Democratic incumbent wins re election UM, as does the Republican senator. Wisconsin's very weird state, very polarized UM, but the incumbents may both win there, even though that's

kind of a split decision party wise. UM. Keeping an eye on Arizona just because it's in terms of election denial, it's a hotbed the governors Canadas for governor, senator, attorney general, and Secretary of State, which overseas elections are all election deniers and not just normal election deniers. But Mark Fincham is running for secretary of State is probably like the pre eminent election denier. Uh. And they've all basically said that they would use their position to try to influence

the outcome a future election. So uh, Fincham wants to get rid of using machines to count ballots in a state like Arizona. It would take week and and thousands of people to hand count all the ballots. Um. Hand counting ballots is also not accurate, not as accurate as machines, more expensive and more time consuming. It's a nightmare. Um. So you know, he could really throw things uh at future elections into all kinds of chaos there, as could

the governor candidate carry Lake. All right, Ryan, thank you so much. Anytime. Ian D. Beckwith is Bloomberg political correspondent, and that's what's going on in the nation's capital. For more of our political news coverage, you can tune into Balance of Power with David weston weekdays at noon Wall Street Time, and Soundong with Joe Matthew weekdays five pm Wall Street Time. Right here on Bloomberg Radio, I'm Amy Morris and this is Bloomer John Amy Morris, reporting from

our Bloomberg newsroom in Washington. Amy thanks a lot, and that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at five am Wall Street Time for the latest markets overseas and the news you need to start your day. I'm John Tucker and this is Bloomberg