Episode summary
Daybreak Weekend: US Tech, UK Budget, BOJ Decision | Bloomberg Daybreak: US Edition
Bloomberg Daybreak: US Edition
· · 39 min · Hosts: Nathan Hager
Summary
The episode previewed a busy week for markets, with the Federal Reserve, major U.S. tech earnings, the UK budget, and a Bank of Japan decision all on deck. Nathan Hager said the Fed looks set to hold rates, but Michael McKee argued the central bank still faces pressure from rising inflation, stronger energy prices, and a worsening trend in core services inflation. He said a surprise hike would be unlikely, but it would create a difficult explanation for Kevin Worsh if the Fed moved against market expectations.
Mandeep Singh said earnings from Alphabet, Microsoft, and Amazon could reinforce the AI trade if they show accelerating cloud growth and higher capex backed by clear revenue opportunities. He argued the hyperscalers differ from Meta because they have large cloud businesses and large backlogs, and he expects investors to reward strong return on investment even with bigger spending plans.
In London, Caroline Heepker and UK economists said the new budget is likely to be a “do no harm” package focused on energy support, limited tax changes, and avoiding a bond-market backlash. In Tokyo, Taro Kimura said the BOJ is likely to hold this week and deliver a hawkish hold before hiking in December, with inflation, a weak yen, and market volatility all shaping the timing.
Key takeaways
- Michael McKee said the Fed is likely to hold, but the latest trend in PCE inflation is moving the wrong way, especially on a three- and six-month annualized basis.
- Mandeep Singh expects Alphabet, Microsoft, and Amazon to raise capex guidance, with cloud acceleration helping justify the spending.
- Singh said Google Cloud may have taken share from AWS because of vertical integration and lower costs, while Microsoft, Google, and Amazon all benefit from Anthropic demand.
- UK economists said the budget is likely to focus on targeted energy support and limited new measures, aiming to avoid a bond-market reaction.
- Taro Kimura expects the BOJ to hold this week and raise rates in December, with a terminal rate around 2%.
Notable quotes
“the markets have priced in absolutely nothing happening. And if they did raise rates, then that would be make it difficult for Kevin Worsh”
“The trend is not your friend to use the old cliche”
“capex numbers will be revised higher”
“So the question is really how generous is that support”
“I see my terminal rate at 2%”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we look to the next monetary policy decision from the Federal Reserve along with more key tech earnings in the US.
I'm Nathan Hager in Washington. I'm Caroline Hka in London where we're looking ahead to the UK budget with Britain's government trying to avoid a bond market reaction.
I'm Doug Krner looking ahead at the challenges facing the Bank of Japan. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 991 Washington DC, Bloomberg 929 Boston, DAB Digital Radio London, SiriusXM121, and around the world on Bloombergradio.com and the Bloomberg Business App. Good day to you.
I'm Nathan Hagar. We begin today's program with an October decision from the Federal Reserve. Kevin Worsh and company begin their latest two-day meeting on Tuesday ahead of the monetary policy decision on Wednesday.
For more on what to expect, we're joined by Michael McKe, Bloomberg international economics and policy correspondent, who I think is going to be in Washington as usual for the decision. Am I right, Mike?
I wouldn't miss it. — Well, there you go. Uh but the market is thinking that the Fed is probably going to miss making another move on uh interest rates. Um what are the chances that we actually get a surprise move from the central bank this week?
They'd be pretty small. The mo most of the Fed officials, especially the voting ones, have said that they can afford to wait. And Kevin Worsh in his uh appearance last week did not give anybody any reason to doubt that. He didn't say much, but it sort of what he didn't say that uh that matters.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed meeting
- u.s. tech earnings
- uk budget
- boj decision
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Bloomberg Daybreak: US Edition, this episode and its artwork belong to Bloomberg. Octagon is not affiliated with the show; this page is an independent summary.
