Daybreak Weekend: US Jobs, Power Conference, China PMIs

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1:45Tom Busby: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, what this week's September jobs report could tell the Federal Reserve. I'm Tom Busby in New York. I'm Caroline Hepger here in London, where we're shining a spotlight on the women shaping our global economic future. I'm Doug Krishner, looking at whether China's pro-growth pivot is succeeding. That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

2:36Good day to you.

2:37Tom Busby:I'm Tom Busby, and we begin today's program with the September Jobs Report out this Friday. What might another anemic report mean just weeks ahead of another Federal Reserve rate decision? And for more, we welcome Stuart Paul, U.S. economist with Bloomberg Economics. Stuart, thank you so much for being here. Now let's start with some good news. And there was good news. Q2 economic growth, a lot better than forecast, 3.8 percent. Consumer spending strong in August, even if inflation was still a little sticky. And Wall Street, up until this past week, had been hitting one all-time high after another.

3:10Tom Busby:All good news. But it's not all good news, is it? There's a lot of worries out there. Well, the thing that everybody seems to be anchoring on with the Q2 GDP data was this major upward revision to headline GDP growth and to household spending. And household spending ended up growing at an annualized rate of about 2.5 % in the second quarter. As you mentioned, when we finally got the August personal consumption expenditures report, it even looks like household spending continued growing into the third quarter. So that's all good news there. What I'm thinking most about, though, from the last week is that corporate profits for the second quarter were revised down pretty significantly.

3:53Corporate profits only grew about$7 billion in the second quarter. That's down from an initial estimate of nearly$70 billion. And if that's the case, that's a big revision. If that's the case, you would have to think that expansion, investment and hiring plans are going to start to simmer. And when we look at, let's say, small business surveys, capital expenditure plans have never been this low outside of a recession. CapEx plans are low. Investment and expansion plans are low. Hiring plans are also low. So the thing that I'm thinking most about in the outlook is the currently tenuous labor market balance between supply and demand for labor and what that means for the pace of hiring going forward.

4:41Now, when we think about the September jobs report coming out this coming Friday, we think there is going to be about 55 ,000 jobs added during the month. But one thing that we need to continue keeping in mind is that a lot of workers are going to be rolling off government payrolls. These are the folks who took the buyout earlier in the year because of doge cuts. And when that's the case, the pace of hiring could resume slowing to the pace that we saw earlier this summer. This is a very tenuous balance between labor supply and labor demand, which makes us very cautious about the growth and spending outlook as we head into year end.

5:19Tom Busby:And just those federal workers, you're talking thousands or tens of thousands, not just in Washington and Baltimore, but in National Park Services across the U.S. and adjuncts of the Social Security Administration all over. That's right. This is not the sort of thing that's regionally isolated. This is the sort of thing that affects workers around the country. And so I think that when we think about consumer spending, this is not something that just affects businesses locally in Washington. This is something that materially affects our outlook for spending growth. Now, let's talk more about the jobs, not just those federal jobs, because we know about those.

5:55Tom Busby:But we've seen manufacturing, despite the Trump administration's, you know, promoting and touting of more manufacturing jobs coming back here, manufacturing, construction, energy, especially in oil, all seeing declines. And that's not good. It's not. It's basically every month since April, the manufacturing industry has been shedding jobs. And look, Tom, that's the normal state of affairs in an economy that's increasingly services oriented. That's not the state of affairs that policymakers want when they are pursuing industrial policy and protectionism. So there is a part of me that thinks, look, the effect of tariffs, the effect of industrial policy, we're just not quite feeling it yet.

6:39We're not seeing any sort of boost to manufacturing and construction yet. We should wait to see the effects of the policies that the administration is rolling out. But but right now, yes, the manufacturing industry is shedding jobs. Thinking back to the August industrial production report, and this is a win for the administration, there is accelerating auto production, there is accelerating steel production, there is accelerating pharmaceutical production, and accelerating textile production. Those are all wins, but those are very recent. It's too early to say that there's been material progress shown in domestic production as a consequence of tariffs.

7:19Instead, it looks like the growth negative consequences of uncertainty are weighing on aggregate economic activity and aggregate hiring. Until we see those isolated benefits buoying domestic production, it's really just a growth negative story right now.

7:38Tom Busby:And we won't know if the latest tariffs that the president announced on pharmaceuticals, 100%, 25 % on heavy-duty trucks, 30 % on sofas and upholstered furniture. It's just too soon to tell. That could be months down the road before we see any impact of that domestically, right? That's right. So again, August, from an industrial production perspective, it looks like those favored industries were doing relatively well, but I'm not going to read too much into one month's data. It's going to take some time to see the full effects of those industry-specific tariffs. Now, this past week, Fed Chairman Jerome Powell, he said there are serious risks to the economy involving inflation, which we know is well above the target, 2.9 percent, but it hasn't gotten any worse, but also the weakening labor market.

8:24Tom Busby:What does he see? Did he see all these things? Is he seeing months out that I'm not seeing, maybe even you're not seeing, that we are going to see things continue to digress in the labor market? What's just really difficult right now is that labor supply and labor demand have this really treacherous balancing act right now where growth in labor supply is very slow and labor demand is waning. If we rewind the clock, let's say a year ago, there were about 10 percent more job openings than there were unemployed or available workers. Now there are just slightly fewer job openings than there are available workers.

9:02We expect looking ahead to next week when we get the job openings and labor turnover survey data, we expect the number of job openings to fall further to about 7.15 million. So, again, now we're going to have almost 5 percent fewer job openings.

9:18Tom Busby:The September jobs report out this Friday, 830 a.m. Wall Street time. Our thanks to Stuart Paul, U.S. economist with Bloomberg Economics. Well, next we turn to a big change coming this week to the U.S. auto industry, the end of the$7 ,500 federal tax credit for EV buyers. What will it mean for EV makers and for EV prices? What about Detroit's Big Three, who spent billions preparing for an electric engine future? For more, and on who wins and who loses, we're joined by Steve Mann, Bloomberg Intelligence Global Autos and Industrials Research Analyst. Well, Steve, thank you so much for being here.

9:54Tom Busby:Can you tell us, can you just set it up? what happens this week with that Biden-era tax credit and what that program, what has it meant to the EV industry? Yeah, the$7 ,500 Biden tax credit is set to expire at the end of September. And the tax credit has been very helpful to the industry. It's helpful to the automakers, helpful to the consumers. And sales of EVs have been growing until, you know, in the last couple of years. And when it falls, I think EV sales are going to fall off a cliff. And a lot of automakers are actually preparing for that drop-off after September 30th. And how are they preparing for that drop-off and expected drop-off in sales?

10:40A few examples, GM have already announced that they're probably going to stop EV production for the month of December. And then they're also rolling out, they do have plans to roll out a very popular subcompact, compact EV called a Bolt, which sold really well for them in the past. But instead of going full-on production for that new EV, this is going to start with one shift and then maybe ramp it up to two shifts in the new year, depending on demand. And then a couple others, The Japanese automakers are actually discontinuing. Acura is discontinuing one of their EVs as well as Nissan in the North American market.

11:26Tom Busby:And how about Ford? I mean, Ford made a big splash with the F-150 Lightning, the Mustang Mach-E, but have things really dialed back there, huh? Yeah. I mean, Ford continues to lose a lot of money on their EV business. They do sell the Mach-E electric pickup truck is not resonating with the U.S. consumer at all. But they are still planning to launch a more affordable pickup truck, but that's not until 2027. So they've delayed those plans a number of times already. So now it's 2027. We'll have to see what the demand is like in 2026. You know, wouldn't be surprised if they push that out even further.

12:14Tom Busby:And Stellantis, they have, you know, earmarked a Jeep that'll be all electric. Is that still in the pipeline or is that being pushed back? It looks like it's going to be pushed back. Also, Ram, which is their pickup truck division, they've stopped. They're basically not going to roll out that electric pickup truck that was slated for next year. All right. So that's Detroit's big three. Let's talk about the companies that only make EVs. The big one, of course, on everyone is Tesla, but also Rivian, Lucid. We have Faraday. There's a whole bunch of smaller ones. What will it mean? Let's just talk about Tesla.

12:49Tom Busby:That's the one everybody knows. Yeah, look, I think the$7 ,500 EV credit going away is actually a transition period for the EV industry in a couple of ways. One is definitely consolidation. we've talked about some of the automakers discontinuing sale of EVs in the North American market but what it means is you know probably more business for the likes of Tesla and Rivian you know their business is only EVs and so choices for consumers are dwindling and really the only ones that the consumer can look to to buy EVs are the likes of these peer plays. The other thing with this EV credit going away is the transition period for the EV industry.

13:42Now, the consumer cannot rely, or the automaker, the industry cannot rely on monetary incentives to drive demand anymore. It really now needs to go back to the basic. The industry needs to address a lot of the concern that the consumers have with EVs, which is high cost, high prices. as well as the lack of charging infrastructure. We actually put out a deep dive report recently looking at the EV charging industry. And we actually think there's still continued to be a lot of investment in that, 30 billion to be exact, between now and 2035.

14:21Tom Busby:Well, the federal tax credit for buyers of new and used EVs expiring this Tuesday. Our thanks to Steve Mann, Bloomberg Intelligence, global autos and industrials research analyst. And coming up on Bloomberg Daybreak Weekend, we'll shine a spotlight on the women shaping our global economic future. I'm Tom Busby, and this is Bloomberg.

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17:03Tom Busby:This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, we'll try to gauge the health of the Chinese economy with the release of official PMI data. But first, Bloomberg's Women, Money, Power Conference returns to London this week, bringing together some of the most influential names in finance, business and sport to discuss the major issues facing the world, including AI and other new technologies. For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker.

17:36Tom, in the midst of a massive reallocation of capital and tech-driven changes to the global financial system, women are controlling a greater share of wealth and making more of the key financial decisions. Now, in the coming days, Bloomberg's Women, Money and Power event will convene the most influential voices from across the global finance industry for the second year to debate and discuss the critical issues facing the future of investing, real estate, consumer banking and private markets, as well as philanthropists, owners and CEOs. It's an issue that is fast rising up the global agenda. In the UK this year, Bloomberg Analysis found that the average woman working in the UK financial sector earns about a fifth less than their male colleagues, a reflection of how the gender pay gap has stubbornly persisted, even during a period when businesses have pledged to address workplace inequality through diversity, equity and inclusion schemes.

18:39At the same time, women are rising in terms of the world of wealth. A little more than a decade ago think that they controlled less than a third of total US assets. Now by 2030, that's expected to jump to 38%, reaching an estimated$34 trillion. That disparity is likely to feature heavily in discussions at the upcoming Bloomberg Women, Money and Power conference. At last year's gathering, participants anticipated a bumper M &A year in 2025, optimistic that deal-making would pick up due to an anticipated loosening of regulations under President Trump's administration. While those hopes have only partially materialised, there is perhaps more uncertainty in the market now than was expected.

19:31Either way, women remain at the forefront of change. Just this month, Citigroup CEO Jane Fraser told Bloomberg her clients have been much more active in capital markets, investing and deal making after getting greater clarity on taxes, tariffs and deregulation. Here is Jane Fraser speaking to Bloomberg's Jumana Basetji. You've got to look at the collective impact of the tax policy, what's been happening with tariffs and indeed the increasing deregulation that we're seeing. And they work together as a package. I think the most important piece for a corporate clarity. We hate uncertainty. We like clarity.

20:12And our client base now is really starting to act with more confidence now that we've got clarity on those three fronts. So active in the capital market arena in financing, active in much more active in investing, less sitting on the sidelines. And M &A has been very, very active indeed, as we talked about. And on the consumer side, pretty robust spending through the summer. And we saw that really across all categories, helped a bit by a lot lower gas prices. But the consumers being fiscally responsible, being more mindful around some spend, but still the spending levels were very pleasing. So the momentum was pretty strong across all lines of your business in the second quarter.

20:57Of course, you know, I don't want to precipitate the upcoming earnings. But can that momentum continue into the end of the year just in terms of, you know, what you're seeing in advisory, in dealmaking and in trading? Because it was a very strong quarter for trading as well. It was exceptional for us on all fronts. I still see very strong pipelines. I see high level of engagement from clients. I see a sense of urgency as well, given the speed with which industry structures are changing. And there is still growth opportunity. I think growth will be a notch lower. We're keeping an eye on the labor market.

21:34It's a low churn market. So not everything is rosy, but we don't see a recession on the horizon. So Citi increasing in a global bank, obviously establishing here your presence over here as well. But at the same time, we talk about multiple geopolitical shocks that we were speaking about the latest Russian incursion into Poland. We talk about geopolitical risk over here. We talk about tensions between U.S. and China as a bank. How do you navigate all of those potential geopolitical sensitivities and the barriers that are going up around the world? We were in doing business in about 160 countries around the world.

22:12We have local banking license people on the ground in almost 100. And we've been in many of these countries for a very, very long time. So this isn't classic suitcase bankers fly in, fly out. There's a really deep knowledge of what's going on. And a lot of the services we provide are what help the economies and the companies do business every single day. so for us there is a mission to make sure that we are operating with resiliency and with rigor to support our clients and we tend to move activity around the world as clients ebb and flow in different geographies so the Middle East is probably on a rip for the next decade or so in terms of how much investment and new industries new clients coming in other areas we'll probably see some more diminishment in so we just we flex where it is our people are globally minded they move around the world as to where opportunities are and it's a moment where city shines where there is volatility the clients need us that was citigroup's jane fraser there she's one of a host of senior women leading teams who are at the forefront of the global economy this year, many of whom will be in London for Bloomberg's Women, Money and Power Conference.

23:31Also taking part is Bloomberg's Lizzie Burden. We've been speaking about the key themes on the agenda, what she's most looking forward to at the event, who the big players are going to be in attendance. Caroline, we've rustled up some of the most influential voices from across global finance. We're going to hear from Julia Hoggett, the CEO of the London Stock exchange I'll be sitting down with her we've got Emma Wormsley the CEO of GSK the Bank of England's Catherine Mann Maggie Murphy managing director of Aston Villa Women's Football Club and Victoria Bateman who you might know just wrote this book Economica a global history of women wealth and power it's almost as if she knew that we were going to have this event again but hosting these conversations we're also going to have the best of our Bloomberg journalists we've got Stephanie Flanders head of economics and government Michelle Hussain our new editor at large of Bloomberg weekend.

24:22Ruth David, our London Bureau Chief. Danny Berg is in from New York. Shumana Basetchi is in from Dubai. So it's a global affair, this one. And then in the audience, we'll have hundreds of senior finance professionals who've taken part in our New Voices programme, which if you haven't heard of it, is a Bloomberg initiative that funds all this intensive media training around the world to amplify expert views. I'm really proud of that. And they'll be in amongst all the C-suite executives as well. Yeah. So then of all of these leading women, what do you think the topics for conversation are going to be all about?

24:56Well, let me say this clearly. What this is not is a conference about women in leadership or gender focused issues. They're really important issues. But what this is, is a global finance conference that just happens to have all female panellists and moderators. So we're going to tackle the critical issues that are facing the finance industry at the moment, whether that's real estate, consumer banking, private markets, investing. And we're also going to be hearing the future for philanthropists, owners and CEOs as well. And in terms of major developments since last year's conference, there's a small matter of the man in the White House, of course.