Stocks Rise as Government Shutdown Averted; McCarthy's Future

Good morning.

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

The rise in futures comes after a deal was reached over the weekend to avert a government shutdown. Bloomberg Market's reporter Valerie Titel says, we're also continuing to see moves in the treasury market.

The sell off in the treasury market is continuing. Kind of Perversely, if we did get a government shut down, it would cause a maybe a bid into bonds and end this treasury sell off for now, but it looking like we're not getting that. And remember last week, this rise in treasury yields was the really big driver of why equities traded so weak. So perhaps this bounce in equity markets could be a bit short lived if the market does glance over to what's going on in the treasury market.

Bloomberg's Valerie Titel says the next big event for both the treasury and stock markets will be Friday's jobs report.

Well, Nathan, the stock gap spending bill keeps the government opens through November seventeenth, but it does not include six billion dollars in a to Ukraine that President Biden had been pushing for now, the President deserting House Speaker Kevin McCarthy to act quickly on that funding. I fully expect the Speaker to keep his commitments for secure the passage and support needed to help Ukraine as they defend themselves

The priority for me is America and our borders.

Now.

I support being able to make sure Ukraine has the weapons that they need, but I firmly support the border first.

And Speaker McCarthy made those comments on CBS's Face the Nation, which you can hear every Sunday on Bloomberg Radio.

Well, Karen has McCarthy struck that bipartisan deal to a vertic government shut down. The question going forward will be will he remain as House Speaker. McCarthy angered many on the far right, including Florida Republican Matt Gates.

If at this time next week, Kevin McCarthy is still Speaker of the House, it will because the Democrats bailed him out, and he can be their speaker, not mine.

Florida's Matt Gates told ABC's This Week, which can be heard Sundays on Bloomberg Radio, that he'll file emotion to vacate the chair this week. McCarthy shot back at Gates.

He's more interested in securing TV interviews than doing something. He wanted to push us into a shutdown, even threatening his own district with all the military people there who would not be paid, only because he wants to take this motion, So be it. Bring it on, Let's get over with it, and let's start governing.

Speaker McCarthy needs only a simple majority of House members to stop the effort to remove him. Republicans hold a slim majority, just five could join unified Democrats to bounce McCarthy from the Speaker's office.

Well Nathan. Another political news this morning, Florida Governor Ronda Santis says he would not accept any offer to be Donald Trump's twenty twenty four running mate.

Now I'm running for president. We need somebody that can serve two terms. We need somebody that can win states like Georgia and Arizona, which President Trump cannot do, or did not do, even though candidates like McCain and Romney had no problem winning those states.

Governor DeSantis made the comments on Fox News after Trump told striking auto workers in Detroit that he's competing against job candidates in the GOP field and did not see a potential vice president in any of them.

And staying with politics, Karen, California Governor Gavin Newsom will appoint Emily's List President Lafonza Butler to fill the remainder of the late Senator Dianne Feinstein's term. Butler will be the only black woman in the current Senate and just the third in history. Feinstein died last week at age ninety, following months of poor health.

When we turn to the economy now, Nathan, While many on Wall Street expect a softer landing, Bloomberg Economics sees a recession more likely. Our economists see many risks ahead from strikes to higher rates and oil prices.

Now.

Despite the recent oil surge, Karen City Group predicts Brent crude will collapse to the low seventies per barrel next year. Strategist Ed Moore says the global market will swing back to a surplus, checking Brent right now, it's hire by four tenths of one percent at ninety two sixty one per barrel.

Well.

In corporate news, Nathan x may mark this spot for investor Bill Ackman. The Wall Street Journal is reporting the billionaire investor is interested in pursuing a deal with Elon Musk's ex Corporation as part of a new investment vehicle. Acman's investment fund, Pershing Square, is regulatory approval for a new vehicle to target private companies seeking to raise one and a half billion dollars or more. He told the journal that X is absolutely one of the options he's considering.

And sticking with. The tech space care and the head of Microsoft will testify later today in Google's antitrust trial. More on that from Bloomberg's Doug Krisner.

The DOJ has accused Google of paying ten billion dollars a year to rivals, as well as smartphone manufacturers and wireless carriers to make Google Search the default option. Prosecutors hope to use the testimony of Microsoft CEO Satnia and Adella to show how his company couldn't unlock google hold on the search market. Last week, a Microsoft executive said the company failed to secure a deal to put its bing search app on Apple's products, even though Microsoft was

All right, Doug, thanks in More trouble maybe ahead for the commercial real estate market. Investors in Bloomberg's latest Markets Live Pulse survey predict office prices in the US or due for a crash, and the commercial real estate market faces at least another nine months of declines. About two thirds of the more than nine hundred respond in surveyed by Bloomberg believe that the US office market will only rebound after a severe collapse.

It's time now to take a look at some of the other stories making news in New York and around the world, and for that were joined by Bloomberg's Michael LaVar.

Good morning, Michael, Good morning, Nathan. Former President Donald Trump confirmed on his social media post that he will be in and your court room today for the start of his fraud trial. Details from Bloomberg's Dan Schwartzman.

Donald Trump is expected to attend the opening of his New York civil trial today. Trump is accused of committing fraud by inflating his net worth by billions of dollars in financial transactions. The Republican front runner for the twenty twenty four presidential nomination is in jeopardy of losing control of his real estate empire after a judge authorized New York's Attorney General, Letitia James to cancel certificates for companies that hold the assets. Trump's presidence at the civil trial

A massive search is underway for a nine year old girl who went missing over the weekend while on a family camping trip in upstate New York. More than one hundred searchers, including police and residents, are combing Moroe Lake State Park of Albany after Charlotte Senna disappeared while riding her bike in the park Saturday evening. Yesterday, authorities issued

She said, she's wanting to go around one more time by herself.

Do that figure, I'll do it by herself.

Literally fifteen minutes later.

She hadn't come back yet, and that's really when the nightmare begins.

The child was last scene wearing an orange tie dyed Pokemon shirt. Student loan repayments have resumed. About twenty eight million borrowers have to start repaying their federal student loan payments. This is after a more than three year repayment pause. Global News twenty four hours a day, powered by more than twenty seven hundred journalists and analysts in over one hundred twenty countries. I'm Michael Barr, and this is Bloomberg. Hey you you know where you are.

Hi, Nathanay, Michael, thank you so much. Now we'll be sure to check back with you in the minutes ahead. As of course, we do bring you the news throughout the day here on Bloomberg Radio. But now wherever you are you can get the latest news. On demand whenever you want it. Subscribe to Bloomberg News Now get the latest headlines at the click of a button so you

All right, Nathan, much closer game than expected in med Live, especially since Kansas City LEDs seventeen and nothing in the first quarter. You figured to be one of those nights for the Jets. It was not. They rallied, tied the game with the Chiefs won twenty three to twenty two. Plays cost the Jets in the fourth quarter of Zach Wilson fumble at midfield and three minutes later a holding that nellified would have been the jets third intercept for

They're going to. We just we needed we needed some time and saw on the defense. So I mean we had the ball with six minutes, five minutes or whatever it was left and we're at midfield and you know we had a chance right there. So I need to be.

Better despite the loss, far and away the best game that Wilson has played. Two teams at four and oh, the Eagles and forty nine Ers. Miami's first loss was by four touchdowns in Buffalo. Another game at Met Life tonight. It's the Giants and Seahawks, and we'll see how the Giants do in the first half. Through three games, they've been outscored in the first half sixty three to six.

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. It is a crisis averted for now. November seventeenth is the new deadline for Congress to come up with a long term spending deal. But the forty five day stopgap that President Biden signed really at the last minute, does not include aid to Ukraine, and the deal is threatening to cost House Speaker Kevin McCarthy his job with Florida Republican

Well, I think a precedent, Nathan has been set, and that precedent is that enough Democrats will vote for with McCarthy for a budget for maybe to keep McCarthy a speaker. It's a risky move, and some Democrats are saying, you know, why should we do this. He favors impeaching Biden. He renegged on the deal we got on the debt ceiling. But I think that you'll only need a handful of votes, and I think that McCarthy got that handful on Saturday.

He renegged on the deal for spending. Conservatives like Matt Gates say he renegged on deals on their side as well. A big question I have to imagine in Washington, d C. Is how trustworthy is Speaker McCarthy at this point.

That's a valid question, and nobody's perfect. I think you could probably say that he was a pragmatist. He did what he had to do. But you're right, I think many of his own members and most of the Democrats don't trust him. What he trusts are the votes and he got the votes.

And the trust issue. I bring it up because President Biden is now, even hours after signing the bill, coming out calling on Speaker McCarthy and Republicans to make good on Ukraine aid that was left out of this deal. Is Ukraine Aid in jeopardy now?

I don't think so. I would concede to Nathan that the signals this weekend were quite alarming to Western Europe in general and to Ukraine in particular. But I do think the votes are certainly there in the Senate with Mitch McConnell, who did so for an embarrassment on Saturday, coming back to getting of Ukraine aid, and I think Kevin McCarthy also will go along with it.

Are the votes there for border security because we did hear the Speaker over the weekend on CBS saying that he wants to get border security done first. Is that something that Democrats in the House can get behind.

Yes. I think there are two or three things you've got to get done. One is border security and others we've discussed as Ukraine, and the other is getting individual appropriation bills done. There are twelve. The House is about there on four. The Senate has done none, So between now and November seventeenth, you've got to make progress on all three. I'm not sure there's a deal by November seventeenth,

So when you say that there's not going to be a deal till maybe December or January, are you talking specifically about border security? Are you're talking about appropriations bills? What could this look like if the can continues to get kicked further?

Eventually there will be a deal on the total budget. Maybe it'll be the twelve appropriation bills and you add them all up and you've got the budget. But I do think you will get that. And if McCarthy is out, and that's something you can't totally dismiss. I don't see anyone succeeding him who would be more dynamic or more successful in getting a bill done.

Well, let's get to that question, because that is obviously getting a lot of attention now with Congressman Gates saying that he's going to file motions to vacate as soon as this week, how do you see this playing out. Is it going to be another replay of the fight over just installing Speaker McCarthy.

It could be, And you can't overstate the level of antipathy toward Gates among both parties, especially Republicans. A vast majority of Republicans detest him and are hoping that he fails this week with McCarthy. But this could drag on for quite some time.

To your point, if there were a successful motion to vacate Speaker McCarthy, who succeeds him?

Who wants this job's that's the key point. And I think what he has going for in more than anything else, is no logical successor. In a year or so ago, I would have said Steve Scalise, but he's suffering from a serious illness. But right now, no, I don't see anyone who you could say, oh, yeah, that's a logical pick, and that is a great asset for Kevin McCarthy.

Finally, Greg, I have to ask you, after this protracted fight, these weeks of wrangling over whether the government was going to stay open, who's empowered after all this? Which wing of the Congress can say that they notched a win?

There's a new player in town, a big player, and that's Hakeem Jeffries, the House Minority leader, who will call the shots and tell his members in the next few days vote for McCarthy, don't vote for him. I think he'll have a lot of influence. But it's a valid issue that it's a very weak leadership. The markets and the credit rating agencies must not be pleased with what they're seeing. But final point, I think a headwind for the overall economy has been avoided.

Really appreciate your insights this morning after the morning after the deal to get the government continued to stay open. Here, Thank you so much, Greg Valiere, chief US policy strategist at AGF Investments. And with that allusion to the market reaction, the sigh of relief, I think we can say for investors, let's get more on how this market is reacting. We're joined now by Laurie Calvacina, head of US equity strategy

Well, thanks for having me as always, and I think it's a combination of both. You know, September certainly lived up to its reputation as being a week seasonal month. October trends aren't always fantastic, but you know, on average, tend to be a little bit better. And I think also we did see, finally, you know, the market start to pay attention to the government shut down last week. So I do think there's a bit of a sigh

Should there be concerned in the market that this is going to potentially continue this fight over spending about six and a half weeks from now, when the November seventeenth, deadline comes around.

Well, well, I'll tell you that was my instant reaction. And I've seen some some emails floating around some the trading community this morning also, you know, sort of alluding to, Okay, we are we just going to have to do this again, or you know, we just setting up for another showdown in six weeks. And I think, you know, on the one hand, I am, you know, feeling a little bit

Yeah, you mentioned some of those potential catalysts from the ongoing strikes to the start of another earning season. What's the biggest risk that you see for markets as we get this fourth quarter started?

Excuse me? So, I think that the biggest problem that I see. And here, you know, we've heard a lot about sort of tax off selling over the past month. Strange things tend to happen at the end of the year, especially ball attle years, and I don't really get the impression that investors feel like they're getting a whole lot of information coming from Corporate America at this point in time. So I think there's a lot kind of writing on

We have seen some pretty gloomy investor sentiment in recent weeks. Has I gotten overdone?

Do you think?

Or could sentiment erode even further?

Well, if you go purely by the numbers, there's absolutely some room for it to a road at. So we watched the AAII Net Goal Bear survey very very closely, and we watched the four week average because the data points can be quite volatile from week to week. And what we saw last week was that the four week average gap between the bulls and the bears was basically,

So in our last thirty seconds, what where do you see the momentum going this week?

So I think in terms of this week, you know, I do think we're going to have probably a good day to day. I think people are going to be released, that we're going to have some actual economic data to look through at the end of this week, and we can kind of get back to business. So I would expect things to be a little bit steady. I do think we're going to be in a little bit of a lull here before earning season picks up later this month.

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And I'm Karen Moscow.

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