Big Tech Earnings | Bloomberg Surveillance 10/25/2022
The day to day volatility is mind boggling. Traders here a whiplash. And I think that's true of people across the market. We do think we'll begin to see some
moderation in inflation. It's clearly been surprising to the upside. Month after month, I think investors are waiting for the other shoe to drop. Have the markets seen their bottom? We're all talking about the risk of recession. But markets sell to me. Don't have it priced in.
The market is back in charge. This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa Abramowicz life from New York City for our audience worldwide. Good morning. Good morning. This is Bloomberg Surveillance on TV and radio alongside Tom Keene and Lisa Abramowicz Jonathan Ferro.
Equity Futures Negative T.K. by four tenths of one per cent today. All of big tech earnings kicking off later after the Big Sur currencies and other issue soon. Equities got some free time today is going to look at as Microsoft shares, as Google's share, as you say.
I got to stop tonight about 8:00 p.m., his time and look at that performance. It starts today. We were all on to Thursday, which is one of the busiest days of the year. Did you see HSBC coming down?
I read a part of London lost. Your visions are moving in the wrong direction and they are a Chinese subset. And I read every word of our report and HSBC, and you really wonder if that's what's coming down the pike. The the follow on from a China with 3 percent GDP. Chinese equities yesterday got absolutely hammered this morning again. Lisa, renewed currency weakness for China.
How much is this going to really, really influence the policy when we're talking about this yesterday? This isn't going to necessarily be the check that it was at the United Kingdom simply because Xi Jinping doesn't seem to care as much about the market response. Still, I do wonder what businesses are going to do. I mean, it's HSBC continued to double down in China or do an increasing number of companies start moving away because it just isn't necessarily economically sound to take a 736 40. What you make of that WTNH right now, 736 40 Joel Weber just brought it up and it's well outside to standard deviation.
Let's review this. Is it fixed? Is it floating? No. The currency is managed around a band and right now we are definitely unmanaged on the Chinese currency. I'm going to call John right now to a log access here in real China in real time. You can do that in the Bloomberg terminal. And there's convexity in China. There's an acceleration here of yuan.
We've seen at terminals today, we're selling terminals. Give us an idea. Let's get to the price action this morning. Good morning to you and good morning to the sales team here at Bloomberg as well.
Equity futures look like this. Sunny S&P 500 big sack reporting a little bit later after the close futures negative four tenths of one per cent on the S&P, down about 15 points year or two lower by five or six basis points for 1837. The euro still stuck beneath parity, 98 65, negative a tenth of 1 per cent. And in a moment, some we'll catch up with Yotam Rochester. He's looking at dollar and potentially 160. 160 is the number in his note this
morning. Everybody recalibrating their in servos later on from Deutsche Bank. It's going to be interesting here to look at that. I'm going to call it idiosyncratic story, but folded much in with Jordan. John, is Sterling a 113 18 as we go to the Suna speech here in 30 minutes or so? It's a massive. Now what for the United Kingdom? We'll keep it on that in about 25 minutes time, 30 minutes time.
Look at a crude 83 30 on WTI, Lisa, negative one point five per cent today. I think it's fair to say that the week starts today. Right. I mean, this is a massive week. And today we start with the tech earnings, as well as a number of economic data points, including some of the house pricing data. The S&P CoreLogic case Schiller Index coming out at 9 a.m.
along with some F each at a house price data. How much do you see a rollover in house prices and how quickly does this bleed into runs? Yesterday, Joel Weber saw Red start to come down actually quite significantly. But it's not going to trickle into the CPI for kind of quite a while. So at what point does it matter to the Fed? At 1 p.m., we get the U.S. selling forty two billion dollars of two year notes.
Who shows up? Right now, we're seeing those yields continue to climb. Can we breach that four and a half percent and sell it at that level? And how many people start piling in? Because perhaps this is the peak, as we heard yesterday. Some are speculating today that earnings after the bell include Microsoft and Alphabet. Microsoft is expected to see the slowest
growth in sales going back to 2007 17. Alphabet arguably more interested in John, because that's the advertising tool, right? That's the snap other side of the story. Are we seeing advertisers start to pull back? Could that be a sign of some kind of broader trend in the economy? Alisa, thank you. Looking for the earnings a little bit later, getting earnings right now on U.P.S.. Here are some other numbers for you. Revenue in line. APAC beats some for the third quarter,
296 versus 265 year over year. The estimate was to 85. Adjusted EPS coming in at two ninety nine, reaffirming the outlook as well. Some reaffirming the full year outlook this morning.
And this is important, again, on a logistics basis, a national basis with Federal Express is well, Julian Emanuel has his revenue model modeling right now up eight point eight percent revenue. That's. That inflation induced revenue growth, you're you've seen corporations. That's a big number. Looking forward to GM added a bit later. Some really want to find out what the tone is at this auto market in this country, given what's happening with interest rates right now. Tom Keene, you imagine going out and buying a new car? How much that's going to cost you? Well, I think the interest rate story is profound and occurring with this leader has a global story on what the interest rate impact is on central banks. The interest rate impact on their car is
a three year depreciation year, maybe a four year depreciation. And we haven't even talked, as Lisa just alluded to, to a 7 percent mortgage. What does that do in American? What's it in the United Kingdom? I mean, no problem for autos, though, specifically. I wonder if we go from undersupply to oversupply just like that in a space of 12 months. That's something UBS indicated potential. Well, just a few weeks ago, we don't
talk enough about it, but this is the David Rosenberg theory. There is a camp with Mr. Rosenberg of Toronto that you're going to see a rapid path to disinflation. We saw that not once, John, but twice
1947 to 1953. Stochastic up you go, inflation gloom. Down you go. Looking forward to those numbers a little bit later this morning, a Matt Miller going to catch up with the CEO of GM later on in this program. We're gonna catch up with John in Rochester now, the NFL strategist over at Nomura and Jordan.
I teased it a little bit earlier, a few minutes ago. Let's go there. I saw the number 160 and dollar yen next to it in your note. Walk us through it. Well, that wasn't my view, John. It was the view from clients this time last week. On Monday, I'll sit next to you guys in
that table. So we met clients around the New York area and Connecticut as well. And we're looking for 155 at Nomura in dollar. And I think at this Bank of Japan
intervention, what you've clearly seen over the past, let's say twelve hours, an extreme lack of volatility. Now we're in a 40 pit range where the previous two weeks have been a big volatile in terms of that march up to nearly 152, then that near 6 yen swing down on the intervention on Friday done during New York hours when liquidity was very thin. And just after that Wall Street Journal article talking about the Fed becoming perhaps a bit more dovish in terms of when they will slowdown rate hike. So I think we've had some temporary setbacks for that long dollar, dollar and trade. But the fundamentals are still pretty
clear, John, that the US interest rates are rising. The Japanese are not. That is your long dollar, dollar and carry trade. But for me, on the fundamental side,
from the trade side, the dollar yen is likely to keep rising from Japanese imports as this winds are going out and buying LNG, buying coal, buying oil, even though energy prices are cooling down seasonally as we get into winter. Those prices should accelerate, pushing dollar and higher towards 155. Another have the honor of a formal tea at the Bank of Japan with all the pomp and circumstance is different than the Fed folks at the Fed.
You're over at Starbucks and you're paying for it. That's how they do it in America. Jordan, give us an insight on the debate at the Bank of Japan. Is a Carol Massar only or is it actually
a debate? They're like there is a B.O. here at Fed. There's definitely a debate Kuroda is, of course, representing the rest of the bank, Japan, when he speaks on their behalf. But he is also the guy in charge.
And when we get to March and April, the question for clients is crowed as time comes to an end. Who will be the next to lead the bank? Japan. And will that lead to policy change? And if you look at rates, markets, rates, markets would tell you, yes, we think that something will change at least on the 10 year parts to the. Will the band's be wider on the yield curve control? Will they give it up altogether on the 10 year move it to the 5? If you look at the Japanese GDP curve, even 10 is below 10 years are trading above the sorts of levels set by the 10 year yield curve control. So the markets are challenging the bank, Japan as we speak.
They're holding onto that 10 year. But the rest of the curve is pricing a change in policy to come. And is the message so far for this year? Jordan, that currency vigilantes will win that we're seeing that when it comes perhaps eventually to Japan, although it hasn't happened yet. And then it has come already to Great Britain, where you see a little bit more upside at least versus where you used to with the pound. Indeed. Well, for the Jenny used to be
everyone's risk off hedge of choice. The only clients I've met who are long the yen are using in their portfolio as their potential risk off in case we get dollar weakness. And as you've seen over this past year, that just hasn't worked. The fundamentals really did change for the yen compared to the global financial crash. The carry trade still drives the power. It does track U.S.
yields quite well. But on the trade side now, the trade deficit is not your risk off currency of choice when this is a risk off driven by energy prices. And then for the UK, I think the UK is the canary in the coal mine for everybody around the world.
Even for the US. For Janet Yellen. For the Fed. You don't want to do UK seems to be the conclusion from talking to foreign policy makers when it comes to budgetary constraints. Don't push it. And also when it comes to interest rates, don't suddenly get dovish and allow inflation to run hot. I know we were just talking about the
previous section used car prices. I think they will continue to fall perhaps quite aggressively. But labor markets are really tight and the risk now is the second round effects for services and that's a lot harder to tame than inflation dragon. So I think for the time being, the Fed's go to 75, then they'll do 75 again, then slow down into the new year. That Wall Street Journal talked about the idea of perhaps slowing down to 50s come December. That's the debate for the dollar right now. That's why euro and cable have become
quite boring to trade. It's. Everyone's waiting for this Fed meeting next week. Yeah, I think the message will be, nope, we're going ahead. We're still staying hawkish and the dollar will rally and Christmas and then waiting for the CPI print the week after that. Jordan Awesome. NIKKEI company, as always. John Rochester of Nomura. John, I was talking about dollar yen
there and the intervention from the Bank of Japan. The team here at Bloomberg broke down the data. Four fifths of the weakness in the Japanese currency this year has come outside of Japanese trading hours, and that's why the intervention from the BMJ time is coming. Guess what? Outside of Japanese trading hours. It's just completely clumsy and it comes
back to core theory. And I guess some people can support their core theory, but shows people are saying, you got to be kidding me. One thing Jordan mentioned there. It's absolutely critical is everyone's looking at liquidity within the system, using the United Kingdom as the example. And the F are A or a house much akin to labor or a house of another time and place is spiking up and is right at the moving average from the pandemic level. Jordan said RTX got boring, rather boring.
I don't think that anyone's got ISE to 150 dollar. Maybe it's boring now relative to what we've seen over the last few months, in fact, the whole of this year. Coming up, John Barron of BlackRock. Looking forward to catching up with him in the next hour. A comment from him on the midterms and the importance of it in about an hour from now. Looking forward to that conversation live from New York City this morning. Good morning. This is Bloomberg. Keeping you up today with news from
around the world with the first word. I'm Lisa Mateo in the U.K., where she soon CAC spent the summer predicting that Liz Truss would trash the UK with her plans if she became prime minister. Well, now his prize for being right is a chance to fix the damage trust caused her neck. We'll meet King Charles, the third today to formally replace trust. It's a rapid turnaround for Suna, who lost a trust in the race for the job.
Bloomberg has learned that Adidas plans to end its partnership with Kenya West in recent weeks. The rapper and designer has made controversial statements, including anti-Semitic posts on social media that's turned his easy line into a lightning rod for criticism. It's estimated the brand is accounted for up to 8 percent of Adidas sales. The US won't change its stance toward China as a result of Xi Jinping seizing more power. Advisers are still trying to set up a meeting between President Biden and the Chinese leader at the conclusion of the Communist Party Congress last week. Gee placed allies in top posts and pave
the way for a third five year term. NATO is increasingly concerned that Russia's desperation over battlefield failures in Ukraine may lead to the Kremlin to escalate the war. And that could involve a massive attack on a target like a dam or even a weapon of mass destruction. NATO says that for now, there's no sign Moscow is actually preparing for such an attack. An instant messaging service, WhatsApp says it's fixed, an issue that's cause of widespread outage.
Tens of thousands of users reported disruptions, including not being able to send messages or connect to the server. WhatsApp is owned by metal platforms, global news 24 hours a day on air and on Bloomberg Quicktake. Powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Matteo.
This is Bloomberg. I can't think of a Mark Gurman more consequential election that I've been involved in and we've been involved in. You know, whether we maintain control of the Senate and the House is a big deal. And so far, we're running against the
tide and we're beating the tide two weeks away from the midterms. The president of the United States live from New York City has the price action this morning. And good morning to you. Your equity mark is slightly negative on the S&P 500 coming off the back of a big day of gains on the S&P, a day of gains of more than one full percentage point to kick off the trading week with down about a half of 1 per cent this Tuesday morning. It was a lower by six basis points for 1795 on a 10 year euro on negative a tenth of 1 percent, 98, 67. And before we get deep into U.S. politics, UK politics in about 15
minutes from now. So we should hear from the new prime minister along as she sooner. The player as he won't be surrounded by supporters of that. That's nice. And the solitary and alone. Let you take a breath.
On this particular moment, it's Tom Keene, three prime ministers and three cups of coffee. Very difficult to implement austerity in a cost of living crisis in many places around the world. Interesting. We'll talk a lot about this Lizzie
BURDEN. I know it loses at 10 Downing Street a bit less in about 10 minutes. Yes, very good right now. We will catch up with Annmarie Horden in Washington. We are two weeks away. It is Tuesday, two weeks away from an election. Emory got 18 ways to go.
Here's a political he leads. Go back and forth. And what I sense out here is a measure of apathy. Give us your summary of what turnout looks like in the character of apathy in both parties. We a lot of the polls and you could see that more than 50 percent and a lot of them say that they intend to go out to vote. They want to go out to vote. When you think about apathy, there does seem to be a sense from voters that there is this frustration when it comes to the economy right now.
And that continues to show up in every single poll across the board, whether it's a question on the economy or inflation. Those are the top priorities. The issue is there's not a lot the government can do to fix that right away.
Right. The Democrats commonly say this is a global issue. That is true. They try to back away from some of the legislative measures they took that maybe the Republicans say added to inflation.
But overall, the world is dealing with inflation. This is something that is is difficult for the current administration to try to defend, even though they are doing that. But when you think of apathy, that's where it's coming from. How can the growing impact my life?
And this is what I'm struggling with. And across the board, it's gas prices. It's grocery bills. And it's paying for housing and rent to the candidates and the political experts. Do they trust the polls? It's a great question, a lot of people say you cannot trust the polls, President Biden yesterday speaking at the DNC headquarters says you cannot trust the polls because the polls have been wrong before. You were just talking about really soon at the polls were wrong in United Kingdom during Brexit.
The polls have been wrong here in the United States. But at the moment, what you are seeing and what is typical, especially for mid-term elections, is that the polls are they are getting closer and they're getting more narrow as we head into the final 14 days. We should also note that a lot of people off already even voted. Right. There's been early voting for weeks in this country. It's been really difficult to balance
the domestic and the international and Marie, but the international has really hung over everything when it comes to the domestic politics. How much what do you make of the fact that certain Democrats are pressuring President Biden to speak with Vladimir Putin at this tenuous moment, two weeks ahead of the election? It's an interesting moment because we also heard similar rhetoric regarding Ukraine from the Republicans. Last week, Kevin McCarthy, the leader, the Republican leader of the House, likely will be the next speaker of the House if there is going to be a red wave in terms of the House talking about they're not going to be a blank check for Ukraine, that there is not just going to be this constant funding for Ukraine while people are dealing with kitchen table issues every day and potentially going into a recession. Now you have progressives saying maybe we should start negotiating with Russia to make sure that there is a diplomatic path forward for Ukraine. The White House is saying there is not going to be any negotiations with Russia unless that is what Ukraine wants.
They constantly say nothing about Ukraine without Ukraine. We should know that the progressives did come out and say we are not against with the Biden administration is doing. But they do want this path forward in terms of diplomacy. And that's as a number of issues are mounting on. What I'm looking forward to is in
December, when there potentially needs to be more spending, whether it's military, financial, humanitarian aid, that the Bush administration is likely going to push for Ukraine. Is there going to be more pushback not just from these Republicans, but also within their own party? How much of this is also being driven just by the inflationary outlook and what is what's going to happen with gas prices heading into the winter? It's a great question, because, Lisa, what's coming up at December 5th? That's when those EU sanctions are going to bite, which means it's going to be incredibly challenging, even if you want to be able to accept Russian crude on the global oil market. You can't because maybe the shipper or the insurance company comes from a European which are dominate in this sector, whether it's a Cypriot or a Greek ship. It's going to be challenging to get this crude around, which is why you saw at the last G7 they discussed a price cap that at this moment is a very contentious issue, because if they cannot get this price cap aboard, allowed this Russian crude to flow, that means that this Russian crude is likely going to only stay in Russia and potentially be shut ins.
And that is just going to elevate this price at a very difficult time. Jonathan said it yesterday, though. What they have going for them right now in Europe and even in the United States is the fact that is an incredibly warm out and potentially it's going to be a warm winter. MH Thank you. Dan RTS, let's pick it up right there. Happy being talked about. Gas prices in Europe down by more than
70 percent from the August peak ticket, down by more than 70 percent and today down by a couple of tenths of one percent. But to see them back at ninety nine is their luck in nine. Normally it's warmer. So whether it's the weather and they've got the supply, they got the storage up to be specific. So they met their storage targets ahead of schedule.
We brought those headlines along the way of the last couple of months and then we started to hit some warmer weather as the cooler period starts to click in some. So October has been a whole lot harder. We may start to bear in mind some day it can get pretty cold in parts of Europe, even in October. So that's the good news so far. And we'll see if that continues. But Sandy, that's contributed to a lower
gas price in Europe over the last week or so. Mr. Rosenberg, earlier and there's a whole school of thought here gaming out a sustained inflation, whatever the level is, whatever the country. And there's a lot of people saying the microeconomics of the system clicks in and down. You come to some form of disinflation that consistently some about a month ago, I think we were all tremendously concerned about industry getting shut down, rolling shutdowns throughout Europe, rolling blackouts throughout Europe. And Lisa, now maybe you can park that for a moment, but no idea if that starts to reemerge as a conversation that weeks to come. But still, we need to have a
conversation about next winter and the winter after that and whether they can repeat the trick of getting that storage up to capacity where they want it to be in about twelve months from now. So right now, one thing that I've been reading about is how there's almost a glut of natural gas. Some of these storage units. So at what point do we start talking about how much of this has been priced into euro area valuations that have been completely beaten up? Gas prices right now, 98 handle in the Netherlands, still European benchmark, I mean.
It's impressive. Gee. You know, the earnings aren't that good. We'll talk about that. Three hours away from the open about life from New York, good morning to you. Your Tuesday morning price action looks a little something like there.
Sunny S&P 500. Negative a third of 1 percent after some big gains to kick off the trading week. Yesterday on the S&P, on the Nasdaq were down about two tenths of 1 percent. This is how the bond market shaping up. On Friday, we had a little look at 460 on a two year. This Tuesday morning, we're down another 4 basis points to 446 64.
They stay on the front end and go over to the other side of the pond, to the U.K., the gilts, the two year, two year bond yield in the U.K. yesterday down 37 basis. Covid biggest move in 30 years themselves. Simone Foxman biggest as well. The big move, lower down another 4 basis points this morning.
Seen that the new prime minister about to speak to them in about four minutes time. The attention that shifts from him ready to the budget and then over to the Bank of England in about a week from now. Your thoughts on this. And John, I'm going to go to what we've done with Draghi at Davos and all. Is this guy a technocrat like Draghi or
is there something different here in the political equation? I think it would be wrong to call him a technocrat at this point. Some what's interesting to me actually at this point is whether the chancellor is Jeremy Hunt and whether we actually get the budget in the way we thought within the budget at the end of this month. And what that looks like, do they go even further when it comes to spending cuts, further austerity? Possibly a loser here.
But, John, one final question. Where does Mr Gove fit into this? Who is Michael Gove and where does he fit into the form? Probably a question for Felicity Burton and Ricci soon himself. Tom Mackenzie, you read this. I'm looking at GM right now. Covid ended with EPA asset 225. Any estimate at 189? Yeah, pretty much the other way. But Mary Barra will join us later.
Matthew Miller will be speaking to her. Let's do this right now. We need to go to 10 Downing Street. Lizzie Burdon is there for this historic moment. There have been many moments, Lizzie. What will be the distinction today as he walks from the door to the podium versus when an optimistic Liz Truss walked to the podium weeks ago? What's the key distinction this morning? To me, the key distinction between Russia seen I can lose trust is that he is a pragmatist and he has proved that throughout the pandemic. He was actually accused of being a socialist, so generous with his pandemic support programs like the furlough scheme. And indeed, he raised taxes to pay for
healthcare, even though fundamentally he says that he is a tax cutter. And European leaders are going to be hoping that that pragmatism trumps poses to Brexit as well. Really soon, it's really going to have to keep that in check on both taxes. Unbreakable.
If he wants to keep the Tory right on his side and that along with the other employees who put him in power, not the party membership, not the public, and say that coalition is going to be fragile and and crucial. There's, you know, a lot of people on this side of the Atlantic that just want to stop talking about the UK and British politics. Let's get through the next couple of weeks. Do we get a budget deal at the end of the month? And when the bank giving the meets, will they have a deeper understanding of how many Spanish spending cuts will actually get from this prime minister? Well, we've already heard from various Bank of England deputy governors in recent days, and they say the Bank of England, the Treasury have already been talking, even though reticent spokesmen will not yet confirm that the Chancellor is going to be Jeremy Hunt. Although it looks increasingly likely or
whether the day is going to be October the thirty first. In soon knock more than any prime minister would be aware of the effect of surprising the markets. And so you can probably expect that he is going to confirm who his chancellor will be and what the date of that budget will be later this afternoon, along with the rest of the cabinet.
Let's how difficult is it for issuing a snack to issue cuts in words with respect to spending, given the fact that he is very wealthy, that he doesn't necessarily represent the mainstream in any kind of populist way? I struggled to hear you say that, but in terms of this, the difficult job that lies ahead for rescue dog, even though he's had two runs at being prime minister, the characterisation in the national press today is that the easy part is over now the difficult decisions begin. But Labor leader Ken Starr has already characterizing it as austerity 2.0. It's very, very difficult politically. But the good news for Russia, Su Keenan, is that he's always said that it was going to be difficult, that he's going to be honest with the public. In fact, he resisted the temptation to say, I told you so interested nomics was imploding.
But he has laid the foundations to deliver these difficult decisions. The thing is, he's going to have a cabinet full of ministers who are going to want to bring back on money to spend on their pet projects. And when he's got to hold this coalition together, he's not going to just want to disappoint anyone. Test for the prime minister announced. Some lecterns out in front of Number 10 Downing Street. It's his first appearance as prime minister to direct address the public in the UK to say he's on time. Well, he's got to.
Is he going to be one of those prime ministers that late all the time? Well, that would be a Bill Clinton record call doing a Bill Clinton in Samoa. You know, I don't know your president, but it's in that camp to take him. Yeah. My my head is spinning on his job. Do you have a sense here as we await Russia's sooner, that this is finally stability or is it going to be in the next two, three weeks the same chaos? Tracy Alloway.
There is a hope that this man is going to be the face of stability. And Tom, I mentioned this and it might sound snarky, but I think it's a hope for a lot of people in this market that after today, T.K., we can stop talking about the UK. What does he have to do? To Lizzie's point, we still need to work out who the chance is going to be.
Michelle, it's gonna be Jeremy Hunt. If that's the case, okay. That man needs a deeper understanding of what the fiscal approach is going to be and then it's on to the bank having the new help from that. So we just get back to where they were and we can move on from all of this and move on from it quickly. The fact of the matter is that the British people, T.K., won't move on from it quickly because this cost of living crisis that we're talking about worldwide at the moment is dominating in the United Kingdom as well. Interest rates are going to have to go
higher. Mortgage costs are getting more expensive and a cost of living time is going in the wrong direction. Real rates are moving up there. And as we heard from Jordan, Rochester's United Kingdom, just OUTFRONT of many other nations in the struggle.
I'm Bloomberg Radio. We welcome you. A shot of 10 Downing Street with a different podium than the trust podium, more stark, more corporate. I will editorialize and off on the port side, rather, on the starboard side. The right side of the door is Mr. Su Keenan will come out. Is Lawrence the cat with his back to the door? Because there's a rumor.
Will Mr Sonic live at 10 Downing Street when you're that fence? Well, there we go. I guess that was in the Zeitlin. How many prime ministers has got camp out left town in the last few years? Lazy. Can I just come to you quickly before the prime minister walks out? What is the governor of the bank having to want to hear today? Don't worry about the stability he's been promised. He wants to know who the chancellor is and when this when this budget is going to be. And if he can confirm that it is Jeremy Hunt and it's now October the 1st first as expected. The markets that we have today and the
governor, I'll be happy. Ultimately, he wants cooperation between the economic institutions of the UK. And we heard from the chief economist Hugh Pelle earlier taking a veiled, thinly veiled swipe at the trusts administration for really undermining the Office for Budget Responsibility and the Bank of England. You would hope that that's going to end now with this administration. Thirty seven minutes after the hour. Futures at negative 12 and the VIX. Hundred thirty is of note here. Earnings coming out. We'll get to that in a moment.
Lizzie, I want to sneak this in. If I can. And very importantly, John will hopefully go to IRNA on time. Prime minister here. Lizzie, will he tour the country? Will he like King Charles after the funeral? Will he? Will he go to Wales? Will he go to those cities that were labor and became conservative? Will he go to Scotland? What does a new PM do? I'm sure he will in his constituency, don't forget up north in Yorkshire. I think he might be the first prime minister from a Yorkshire constituency. Correct me if I'm wrong. He obviously took over.
You'll know this, Tom from William Hague. But he's going to need to strengthen the union, because this chaos in the Tory party has only given Nicola Sturgeon, the leader of the Scottish National Party, confidence. And he's also going to have to charm the red wall seats that put Boris Johnson into office with such a landslide. At the moment, it looks like the Tories will be wiped off the electoral map when they come to a general election. So his message has been unite or die.
He's going to have to unite the country as well as the party. Unspoken, John, is he's a allowed he's 40 some years old. He's the youngest prime minister from 1812.
It's an impressive statesman way back. He's very close to talk to love. He's a he's a kid. I think only a few years younger than Tony Blair was when he became. Okay. Thank you. But you look at the John Tucker, see
that as American politics and 42 a show. It's like in Finland, in Estonia. This is could be Speaker Pelosi's child. I'm with you. It's show. Houses everywhere. You went there, right? Did it. Leslie, we talked a lot about this being a parliamentary democracy that the leader of the Conservative Party needs to be able to govern the party within parliament. Lisa, let's talk about the party membership of the Conservatives. Is this their guy?
No, we wouldn't know Audrey, because it never got to that I'm sure many of the membership were annoyed about that. It could have ended up being so divisive. It didn't have to go to the membership. But I don't think it's wise to say that he would have lost Patty Lawton because perhaps the membership would have had buyer's remorse after putting trust into number 10.
But I'm sure that the party MP is grateful that we didn't have to go through the drama, the psychodrama of a leadership election put out to the membership yet again, because this is it. I mean, I've just been stood here seven weeks ago. You'll forgive me if I've got a bit of deja vu.
It's unbelievable to me that we've been doing this the way we have. I've said a few times we've got a system to deal with it. This is the system to deal with it. I do wonder if the certain aspects of the policies announced by Jeremy Hunt, the chancellor, who we expect to be the chancellor in the weeks and months to come. Tom, certain aspects that you might have to revisit, the number one that I'm thinking of is the idea that you only offer support to offset the energy pain through to April of next year. I just wondered, T.K., whether that's
something they have to revisit pretty early on if the crisis after energy supplies continues. There's this word that's propped up, I'll say Sunday, maybe Saturday, but austerity and the new definition of austerity and the fundamental thing, John, as you mentioned earlier, may be Lisa, you mentioned it. It is austerity within a higher nominal rate regime. People at home, they don't care about fancy bow tie, real read stuff. They're looking at higher nominal rates across everything they do. The former government, the former
leader, to be specific, less trusts tried to do something different some and it failed. Markets weeded out very, very quickly. And I just want to see what the options are available for any government right now facing down a cost of living crisis, high inflation in places like the United Kingdom. What they can actually do? How much fiscal space is there to help out the people of countries like the United Kingdom? I believe we've lost Lizzy Burdett has some numbers in Berkeley Street. Let's go to Lawrence CAC. You think, Larry?
You think Larry's got something to say on that probe? Sure. Well, she said it's deja vu over. Can you imagine the jar do the right? Oh, honestly, seeing this one a few times, we all have we are waiting for the British prime minister, Rishi, soon that when he walks out of that door, he will do so as the leader of the Conservative Party and of the leader of the United Kingdom. When those comments begin, we'll bring those comments to you. Take care. We also need to talk about the earnings that are coming out. And I will say, Ali DAX is something coming to talk about briefly, Adidas. They have been silent for weeks on the
relationship with Kenya West. And finally this morning, they come out and Satish, they are terminating the partnership with Kenya. No. After the anti Semitic comments from him over the last couple of weeks. Lisa, many people incredibly
disappointed estate in this company this long to make this comment. Wasn't he responsible for about 8 percent of their sales or some something like that? And they're saying that they're going to take a write down. The media fact is, two hundred and forty four forty six point five million dollar hit to net income in the current fiscal year. You're right. It took them a long time because he's pivotal to their sales. At what point does this become, though, a deal breaker, given some of the recent shenanigans? Isn't that disappointing, though, for companies that preach all of this stuff about diversity and inclusion? Do you get comments like that and they go silent for weeks because he's key to their sales? Isn't that absolutely ridiculous? Think about how many times companies want to distance themselves from certain individuals because they've done certain things, whether it's drugs, steroids, performance enhancing drugs about to step away and then you get anti-Semitic comments by someone key to your company and you say nothing for weeks about it. OK. Just to be completely transparent.
This was a discussion at the dinner table because there were certain members of the family who really like Konya West's music. And can they keep listening to it? And they had this whole debate trying to rationalize it. And he just said, you know what? You either have a credo or you have some sort of ethic that you follow or you don't. And that's the bottom line. That stock is down by about 4 percent in the premarket somewhat.
It's talk about GM as well. General Motors, that quarter adjusted EPS 225 estimate 180 night revenue just a little bit lighter. Nothing overly concerning in this going into a conversation and interviewed some with the leader of GM a little bit later in the next hour and 15 minutes or so. She'll be sitting down with Matt Miller Alix Steel. It's a beast of its own. And I'm going to give a major shout out
to my colleague over at Citigroup, which I think was way out front on this, the absolute mediocrity of GM and the surge that we saw up through the pandemic and frankly, a roll over to revisit the mediocrity of 2018. The 10 year annual return that Mary Barra has had to be challenged by is five point zero six percent, five percent a year. Shareholder return. Can you rationalize that given an auto
company granted pandemic. Granted national issues. Granted technology issues and the rest. But you just wonder, when is it safe to say they get dramatic where they start developing free cash flow like some of the Europeans? That Germanic? Yeah, I mean, it's like Mercedes or BMW and and the rest. I don't know. But I just there's always a spin here.
There's always something new. They're mentioned and electric vehicles today, they're going to increase production and they're OK. Great. Where's the shareholder return? That's what I just I'm looking for it at 5 percent per year.
You want the new excuse? Right now, 3M, 3M, the company sees full year adjusted EPS at ten dollars, 10 cents to 10, 35. Previously they had seen 10, 30 to 10, 80. What do they blame in drumroll, the uncertain macro environment and Rameau, the US dollar that we've got, that's going to be the CAC. But at some point there is some truth to this, right? I mean, the appreciation is pretty dramatic. And how much are international companies from the U.S.
really going to suffer as a result? But this is the second downgrade to its outlook so far this year for 3M. How many of these multinationals have to do that before there's some sort of bigger sense? And how much really visibility do we have about how long this is going to continue for and really how much is has to do with the dollar? I mean, I can tell you're somewhat skeptical, John, about whether no excuse for something else. You know, drum roll. Could it possibly be? I'm just saying, I'm not surprised.
Okay. That's all I'm saying. I'm not surprised. We'll keep an eye on the earnings for you. We understand the prime minister still
not arrived at Number 10 Downing Street. When he gets them. We have that address. We'll bring that to you. Okay. The prime minister running late for an audience with the king. A little bit earlier this morning. This is a new king. And know I don't I'm not privy to the
short meetings of an ancient queen. But you wonder if this is a new style of King Charles where there's a substantial conversation. I don't know. I believe we're following the now up the mountain from Buckingham Palace. So we're not doing it. You want to do that? Let's to come back and listen. Not acceptable.
I really don't want to do this kind of thing. So, you know, I'll have. This week it. Going to be who was going to pick him up within the autumnal glow.
All right. The lead in just a moment. Lisa, though, goes past horse guards parade. I can't hold on to Westminster. There's this ceremony today.
It's at Number 10 Downing Street. Tried to excuse. It's dumb. I mean, I've been I've been living for this moment, Lisa, for 20 years. Have you? It's really as if everything has been built up to this. Follow the car from the palace. Do you love this guy? I mean, I know he married into a lot of money in that.
But how did he make his money? Was he a classic investment banker at Goldman? That kind of background, he came, you know. You know, my design. But he wasn't like chief economist. Let's be clear. He was a dealmaker. Well, but this is the reason why it's gonna be difficult for him to make some severe cuts to spending at a time of austerity given his own largesse. I'm just wondering how that's going. I don't buy into that. But we've had we've had huge filthy rich people back centuries that have run things.
I mean, is it uncommon to have somebody being read and there's loaded. There's levels of loaded. But is it is. So what? That he's that wealthy and whose families are wealthy? Looks like they just come past Trafalgar Square. So would you want him to stop at Greggs? I thought we went to this pick pick up some guy.
That's when the prime minister actually arrives at Number 10 Downing Street. Bring those comments to you. Take you in to carry on following the car. Well, I think we're done. I don't think we have a choice. Maybe. Maybe their views of the buses are stopping, of course, here. They they promenade back to 10 Downing Street, where Lizzie BURDEN is.
I want to get back to earnings in to say the tech earnings today. And I think, Lisa, you mentioned this in your brief. Google is the real first look at the future of digital advertising, which is a growing part of Amazon's business. And of course, there's others out there. And my problem is we conflate Google and was SNAP. We can play Google and with Facebook. And I just think that's off the mark and then get a little look at Microsoft after the close as well.
So very important. Big names then on to Thursday keeps open about Thursday. First ISE huge. You want to talk about tech. Did you see the tech names in China yesterday? Absolutely hammered. Alabama by T.J. Dell at one point yesterday were all
down about 20 percent. I did a fancy chart of Alibaba and the plunged is the right word, John. But back to a long term support line of where they've been for years that they go through to a crisis low.
No. But they're certainly back to a support that speaks ill of the equity markets and the trust in the new regime. Let's touch base with undercurrent on some of this, the Bloomberg chief Asia economic correspondent. And we saw the events over the weekend.
We saw the fallout in this market. And let me tell you, when the affects market ended, it continues. Yeah, it does continue, at least with the currency, say you can point to fundamentals there, John. The sell off in yuan was delayed. It's not clear that the authorities are
allowing it to weaken. We're seeing it go back to levels both onshore and onshore. We haven't seen in some cases at all. In fact, now that does, of course, affect the strong U.S. dollar, but it does reflect what's going on in China. Sentiment is very negative and turning even more negative post Congress.
There's no sign of a pivot on Covid zero. No sign of a pivot on the real estate story either. So that's what's happening in the equity stories. I got to jump in. The prime minister of the United Kingdom, Richie, soon act addressing the British people. Let's take a listen. I've just been to Buckingham Palace and
accepted His Majesty the King's invitation to form a government in his name. It is only right to explain why I'm standing here as your new prime minister. Right now, our country is facing a profound economic crisis. The aftermath of Covid still lingers. Putin's war in Ukraine has destabilised energy markets and supply chains. The world over. I want to pay tribute to my predecessor, Liz Truss.
She was not wrong to want to improve growth in this country. It is a noble aim, and I admired her restlessness to create change, but some mistakes were made not born of ill will or bad intentions. Quite the opposite, in fact. But mistakes nonetheless. And I have been elected as leader of my party and your prime minister in part to fix them.
And that work begins immediately. I will place economic stability and confidence at the heart of this government's agenda. This will mean difficult decisions to come. But you saw me during Covid doing everything I could to protect people and businesses with schemes like furlough. There are always limits.
More so now than ever. But I promise you this I will bring that same compassion to the challenges we face today. The government I lead will not leave the next generation, your children and grandchildren with a debt to settle. That we were too weak to pay ourselves. I will unite our country not with words,
but with action. I will work day in and day out to deliver for you. This government will have integrity, professionalism and accountability at every level.
Trust is earned and I will earn yours. I will always be grateful to Boris Johnson for his incredible achievements as prime minister. And I treasure his warmth and generosity of spirit. And I know he would agree that the mandate my party earned in 2019 is not the sole property of any one individual.
It is a mandate that belongs to and unites all of us. And the heart of that mandate is our manifesto. I will deliver on its promise a stronger NHS, better schools, safer streets, control of our borders, protecting our environment, supporting our armed forces, levelling up and building an economy that embraces the opportunities of Brexit, where businesses invest, innovate and create jobs. I understand how difficult this moment is.
After the billions of pounds, it cost us to combat Covid after all the dislocation that caused in the midst of a terrible war that must be seen successfully to its conclusions. I fully appreciate how hard things are, and I understand too that I have work to do to restore trust. After all, that has happened. All I can say
is that I am not daunted. I know the high office. I have accepted and I hope to live up to its demands. But when the opportunity to serve comes along, you cannot question the moment, only your willingness. So I stand here before you ready to lead our country into the future. To put your needs above politics. To reach out and build a government that represents the very best traditions of my party. Together we can achieve incredible things. We will create a future worthy of the
sacrifices so many have made and fill tomorrow and every day thereafter with hope. Thank you. Rishi Su Keenan, British prime minister there the message, pretty simple, difficult decisions to come for the UK economy. Mistakes have been made.
I'm here to fix them from New York City for our audience worldwide on TV and radio. This is Bloomberg Surveillance with Tom Keene and Lisa Abramowicz. Some Jonathan Ferro NIKKEI. Pretty blunt to the point that tough decisions to come Dani Burger carefully worded. I thought, you know, moving from the past to the very recent present, Twitter lit up as some of these phrases were mentioned. But I do think, John, from many people,
this is the first time they've heard the prime minister speak working to restore trust, Lisa, quote. After all that has happened, trying to ride out some of the goodwill that he built over the Covid era and how much they did to extend some of the aid to individuals and including the furlough program. How far does that get this administration at a time of potential austerity in the face of higher heating bills and just all in higher cost? He didn't use the word austerity. The message, isn't it? We will not leave it to the next generation with debt to Satya Nadella. Ultimately, Lisa, they're going to go
hard Jonathan Ferro. And this is the difficult thing. How do you effect an economy in optimism at a time when that's going to mean some serious declines in the economic output of this nation? Some people talking about this as the world's sixth biggest economy. For now, we have heard that from economists were how delayed do you project a feeling of strength into the future? Less about an outside number, 10 Downing Street. Let's head over to Lizzie. Now, Lizzie, you've followed that
address by the British prime minister. It went on for several minutes or so. Talk to us about the reaction in the U.K. so far. Well, the reaction behind the black doll was raucous applause, really? I was trying to push hard on the reset button that he did pay tribute to Boris Johnson and Liz Truss, but brutally, very clearly. He said that trust under trust.
Mistakes were made. And he also took a swipe at Boris Johnson, saying that now is the time for professionalism, accountability, integrity. But he still needs to draw that thread of continuity between himself and Boris Johnson because he is riding on Johnson's Monday here. And that's why he's underscored his commitment to the manifesto from 2019. He was referring to Brexit levelling up the National Health Service. All the pledges that he needs to deliver
on if he wants to be elected by the electorate in two years time, January 2025 at the latest. But ultimately, as you say, is a realistic message. That's the message that he was trying to deliver throughout his leadership campaign in the summer. This was kind of his moment to say, I told you so. He resisted the temptation until he's been stood in front of that black door.
He didn't say it well to us. Atomics was imploding. But now, yeah, he's going to have to make some really, really tough decisions and harder yet because of the damage trust trust bequeathed him. Leslie, how important is it for issues to now not to be speaking to fellow employees, but to the general population? For example, in two years time to actually see some programs through after such tumult out with three prime ministers so far this year? Well, yeah, he's got a big job on his hands. He needs to unite the party, but also the country. And that goes hand-in-hand with steering Britain out of this economic crisis, because, as you say, he's going to have to choose between tax rises and spending cuts. And if he goes too hard on the tax rises, he's going to alienate the Tory right.
And they've put him in to number 10. So it's very difficult. And as you say as well, he's going to have to appear he's going to have to convince the public that he's genuinely empathetic of that situation. When he's the word that is overwhelmingly associated with vicious eunuch surveys show is not that he's the youngest prime minister in over 200 years or that he's the first British Asian in office. Is the fact that he's rich. And I think that is interesting when you
contrast that with American politics, where that seemed to serve Donald Trump well, it was almost giving him credibility Alisyn. Wonderful to hear from you, Lucy Burton. Outside number 10 Downing Street, minutes after hearing from the British prime minister really soon.
The message, the headline. Difficult decisions to come from New York. Let's wait for the price action for you on the S&P 500 slightly negative. We're down a quarter of one per cent on the S&P with a big DAX earnings. Still to come. Futures are negative just a little bit. Yields are lower by 7 basis points 417
32 and the earnings keep coming through. And I can tell you, Coca-Cola out just moments ago, raising their full year guidance, full year adjusted organic revenue. Now looking at plus 14 percent to plus 15 per cent on the estimate had been positive, thirteen point four percent. Better numbers from Kodak moments ago nailed it. And this has to do with pricing persistency.
Can you raise prices into inflation? Julian Emanuel has modelled eight point eight percent revenue lift. And here's Coke just as a quick. Blush, John, I meant to say leading the way a revenue beat a well, organic revenue up 16 per cent, the estimate, Lisa. Nine point eight one. And that's even including a five to six
percent currency headwind. So it wasn't an excuse even though they did a nod to it, which is sort of your question of it's one thing to blame the effects issue. It's another to say that's the reason for the disappointment. Reaffirming your outlook is as good as a beat these days. I would suggest GM did that as well about 15, 20 minutes ago. Leaks from a catch of the CEO in about an hour from now. Yeah, that's one of the things that are
going to be watching to to whip through some of the other things that we're looking at today. We got a slew of economic data, including August, U.S., FHA, FAA, a house price index, as well as the S&P CoreLogic 20 City Index. How much do you start to see those
prices roll over? And what's the lead time really into the core CPI measures that we look at? 1 p.m., the U.S. is selling 42 billion dollars of two year notes. Who shows up for these bond auctions? It looks attractive for some. And others say perhaps it has to go five higher for looking at a 5 percent Fed funds rate for a year or more. And today, the earnings do continue after the bell. We are sort of drum beating to Microsoft and Alphabet, given that those account for such a huge proportion of the overall index. And Microsoft, I believe, John, is
expected to come in with the lowest sales increase going back to 2017. So how much does that really give a guide for where we are right now? A couple of names. So we'll have something to say about foreign exchange up short stuff a little bit later this afternoon.
Then the big names like Apple coming up on New Year's Day. I think it's like 2, 3 percent as sort of the typical average model. And we're clearly out over there for even 6 percent. You may have a few that are 7 or 8 percent substantial.
We get lucky this morning. Jump out around a table with us, the head of the BlackRock Investment Institute and formerly so much more than that. John, fantastic to catch up with you, sir. I read the weekly note from the
BlackRock Investment Institute that came out just yesterday. And you talked about the significance of the midterms. And you guys don't think they're that significant in the future returns over the next several months. Why? First of all, it's so great to be here. You know, we think the usual playbook for the midterm is that, you know, if you have divide guard, divided government or a house, as it tends to be a boost for markets. But as anything else this time around them and usual playbooks don't apply.
We think the main stories about their foretold recession that we're going to have we believe in in the current in the next year. And as a result, we think that this is the second sideshow. The important for the future of the country in everything. But in terms of markets, we don't think that's an important driver.
Swap lines, front, center or major discussion at the meetings in Washington here a week or so ago. Give us BlackRock estimate of how countries will have to go to the Fed given the global power shortage, the liq
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