Shutdown Continues with Senate Vote Expected; US-China Trade "Breakthrough"

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1:09Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we are headed into day three of the government shutdown in Washington. The Senate is expected to hold another vote today on a stopgap spending bill to reopen the government into mid-November. Democrats are holding firm on demands to extend health care subsidies that expire at the end of the year. And now President Trump is threatening to slash jobs at what he calls Democrat agencies that don't align with his agenda. White House spokeswoman Caroline Levitt was asked how deep the cuts could go.

1:51It's likely going to be in the thousands. It's a very good question, and that's something that the Office of Management and Budget and the entire team at the White House here, again, is unfortunately having to work on today. Congress Secretary Caroline Leavitt at the White House. Now, some budget experts have questioned whether it's legal to conduct permanent layoffs during a shutdown. House Minority Leader Hakeem Jeffrey says Republicans have refused to negotiate. This is the first week of their shutdown, but we've had months of chaos and cruelty unleashed on the American people, and the American people are paying close attention.

2:22House Democratic leader Hakeem Jeffries, a Washington Post poll, finds more voters blame President Trump and Republicans for the shutdown than Democrats by a 17-point margin. If the Senate does vote today, Majority Leader John Thune says he is unlikely to hold further votes into the weekend. The House doesn't return from its recess until Tuesday. Well, Nathan, if it weren't for the government shutdown, investors would be looking forward to the jobs report. That data comes out the first Friday of every month, and Bloomberg's Michael McKee tells us what we could have expected. It's not exactly Sherlock Holmes' dog that didn't bark, but the government shutdown means no jobs report today, so no warning or reassurance on the state of the economy.

3:02Alternate data, ADP employment and ISM manufacturing, suggesting hiring remained weak in September. That, in theory, could keep the Fed on track to cut rates at the end of the month. The hope, of course, is the folks in Washington can settle their little feud and get the payroll data out before that. and before we miss any other key indicators. Michael McKee, Bloomberg Radio. All right, Mike, thanks. Well, the shutdown has got gold on track for its seventh consecutive week of gains. Bullion has soared more than 45 % this year. The price is now on track for the biggest annual gain since 1979, and stocks enter today's session at all-time highs.

3:42Walter Todd is chief investment officer at Greenwood Capital. We think the market's a little bit over at skis. It's kind of, I heard someone say the other day, price for perfection in a very imperfect world. I think that's a good description of where we are right now. So we do see the opportunity for some broader volatility, even though individual name volatility has been significant. Greenwood Capital's Walter Todd. Stock futures are higher this morning, setting the S &P 500 up for a sixth straight gain. That would be its longest winning streak since July. Now, the latest on the trade war, Nathan Treasury Secretary Scott Besant predicts, quote, a pretty big breakthrough in the next round of talks with China, even as the Trump administration takes steps to support American farmers, hurt by a decline in Chinese purchases of soybeans.

4:30Besson spoke on CNBC. As I leave the trade negotiations for the U.S. with my counterpart on the Chinese side, the vice premier, what gives us great comfort is the respect that the two leaders have for each other. So it'll be very helpful for them to be able to speak in person and set the framework for trade going forward. Treasury Secretary Scott Besant says the upcoming negotiations will occur before the scheduled November 10th truce expiration date. Besant also says news on support for American farmers and the soy sector in particular is expected to be announced next Tuesday. During the company news now, Karen, we're watching shares of applied materials in the pre-market.

5:16They're down more than 3%. The largest U.S. maker of machinery used to manufacture semiconductors says an expansion of rules that restrict the export of its products to China will take another chunk out of its revenue. Applied materials expects it to cost$600 million in fiscal 2026, which runs through next October. We have a setback for Boeing, Nathan. Bloomberg News has learned the company's 777X is slated to fly commercially for the first time in early 2027 instead of next year. The delay could result in potentially billions of dollars in accounting charges, with analysts estimating the non-cash accounting charge could run from$2.5 billion to as much as$4 billion.

5:59Boeing executives are set to discuss the extent and cost of the latest scheduled slip for the jet when Boeing reports earnings on October 29th. Well, Karen, it was a rough session for credit companies TransUnion and Equifax, their drop came after Fair Isaac announced a new program that gives mortgage lenders a way to get its credit scores without buying them from those companies or Experian. Shares of Fair Isaac, which goes by the name FICO, surged 18 percent. And there may be a big AI deal in the works, Nathan. Bloomberg News has learned Global Infrastructure Partners is in advanced talks to acquire Macquarie-backed aligned data centers.

6:40Sources say Align could be valued at about$40 billion in a transaction. A deal would mark the latest in a series of deals as investors vie for exposure to the leaders of the AI technology. At$40 billion, GIP's deal for Align would rank among the world's five biggest transactions this year, according to data compiled by Bloomberg.

7:04Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's John Tucker. John, good morning. Good morning, Karen. Police in the UK say they've identified the man who killed two at a Manchester synagogue where worshippers were gathering for Yom Kippur. And Bloomberg's James Wilcock has more. Jihad al-Shami, a 35-year-old British citizen of Syrian descent. Investigations are still ongoing. And the Home Secretary this morning says two things. Firstly, we don't yet know if this is a terrorist cell. And secondly, that the perpetrator was not known to authority.

7:37So it's worth saying Al-Shami is Arabic for the Syrian, and it is sort of a known nom de guerre for jihadists to take a name. So that may not yet be relevant to the investigation. The attacker drove his vehicle into worshipers and was shot dead by police. Three others remain in the hospital. It's sentencing day for Sean Diddy Combs in his prostitution-related convictions in New York. Prosecutors argue the music mogul deserves at least 11 years in prison as the defense pushes for time served. A fire broke out a Chevron oil refinery just outside Los Angeles last night. It sent towering flames into the air that were visible for miles.

8:13Officials in El Segundo urged people to stay indoors. Nobody was hurt. And Munich Airport temporarily shut down late yesterday after a string of drone sightings in the area. It's the latest mysterious drone overflights in the airspace of European Union member countries. And Taylor Swift's 12th studio album, The Life of a Showgirl, is coming out today. She posted this message on X. Hey, it's Taylor. Check out my new album, The Life of a Showgirl, now on YouTube and YouTube Music. And baby, that's show business for you. Well, Swift is now worth$2.1 billion. That's up a billion dollars from two years ago when the Bloomberg Billionaires Index first outed her as a member of the Three Commas Club.

8:57Global News, 24 hours a day. And whenever you want it with Bloomberg News Now. I'm John Tucker, and this is Bloomberg. Karen. Thanks, John. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. There were three decisive game threes in the baseball wildcard playoffs, starting with Detroit 6-3 win at Cleveland. The Tigers move on to play Seattle. The Cubs beat San Diego 3-1. Next up for them is Milwaukee. And the Yankees will now play Toronto. They shut out the Red Sox 4-0. Rookie pitcher Cam Schlittler went 8-inins allowed. No runs struck out 12. Overtime in the NFC West, the 49ers stopped the Rams on a fourth down in OT.

9:35San Francisco won 26-23. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepke in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now.

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10:48Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. On day three of the government shutdown in Washington, D.C., both Republicans and Democrats appeared dug in, and now the White House is warning the first federal layoffs from the funding lapse could come. As soon as today, House Speaker Mike Johnson says the Democrats are in a needless fight with President Trump. How important is it to appeal to the radical left of your base and hurt Americans, because if they drag this on through the weekend, more and more people will be hurt.

11:26That's House Speaker Mike Johnson speaking on Capitol Hill. This morning, we are joined by Terry Haynes, the founder of Pangaea Policy. Terry, good morning. How deep could the pain go? How seriously do you take this idea from the White House that we could actually see layoffs come out of this shutdown? Good morning, Nathan. I take very seriously the possibility that what the White House might do is institute these kinds of layoffs, rifts, furloughs, firings, whatever they want to call it, whatever they want to do. Frankly, it's a signal for, among other things, it's a signal for travel or the direction of travel here.

12:08You've got a situation where if this ramps up in this particular way, among other things, Trump will have much less desire to want to end the shutdown because then Congress has a much greater likelihood of being able to overturn those firings. There's a question, isn't there, about whether it's legal to use a shutdown to conduct reductions in force. There are federal government protections for jobs that would need to be overturned in some way, wouldn't there? Oh, yeah, absolutely. I think the administration wants kind of two practical fights. One, it wants to be seen as going up against public unions, which they think are illegal and a bad thing anyway, number one.

13:02Anything that limits the executive's ability to oversee the executive branch is a bad thing. Think of it that way. Secondly, back to my earlier point, it's that once a shutdown is over, Congress has a great ability to actually remedy a lot of this stuff through the annual appropriations bills. And, of course, Democrats have a lot of leverage there, and they'll, of course, want to take that leverage and do something with it to reinstate a lot of those jobs. So, you know, the gun that's being held, the metaphorical gun that's being held to public employees' heads, I think, is quite real and quite large.

13:40That raises a question about whether some of those jobs could be rescinded through rescissions that the White House budget director has carried out in the past. But that's probably an argument for another day. In the meantime, I think we're expecting another vote in the Senate on the clean continuing resolution that Republicans have put out there. What are we expecting when it comes to how this fight over the spending bill that's on the floor will continue? There's a lot of different tripwires that happened today. I don't think anything gets resolved today. Let me just say that first. But you'll have a Thune Johnson press event at 11 o 'clock.

14:23The Senate Democrats have a lunch at noon. Thune, I think, announced today's Senate vote at 1.30. And let's remember, that's not just on the temporary spending bills, but it's also on more Trump nominees. So the signal that Schumer and Democrats give on those nominees, I think, also plays into this a little bit, since Republicans have been upset about what they think of a Schumer obstructionism there. After that, I think nothing probably happens differently. But the question will be whether or not more Democrats peel off from the three that already have. And I think the answer to that today is no.

15:04But what I think happens is a lot of pressure behind the scenes to say, particularly from Maryland and Virginia senators, to say, look, the problem with the public employees is so large that we can't deal with this that much longer. Why don't we just declare victory by announcing negotiations with Republicans on the health care matter and be done with it for now? Just 30 seconds left, Terry, but is there a risk that Republicans go too far with this pressure campaign, this idea of carrying out mass government layoffs? Oh, absolutely, yeah. What's interesting about this from a kind of a political tactical perspective is Republicans have judged the moment very well.

15:49And I'm not taking their side on any of this by saying so. I'm just saying they've judged it very well. And you've got a situation where, you know, but if they start pressing it too much, and there's always a temptation for that, you know, they risk making the problem worse. And, you know, as I say, frankly, making the prospects for full year spending and, you know, on things like defense and other things that much more unattainable. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen.

16:29You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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