Trump Hails Japan Alliance; Hurricane Melissa Nears Jamaica at Category 5 Strength

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1:02Bloomberg 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 begin with the latest from President Donald Trump's trip to Asia. This morning, the president is in Japan, where he's been speaking to sailors aboard the USS George Washington aircraft carrier and heaping praise on Japan's new Prime Minister, Sanae Takeuchi. This woman is a winner. So, you know, we've become very close friends all of a sudden because their stock market today and our stock market today hit an all time high. That means we're doing something right.

1:45The president was joined by the prime minister who promised to fundamentally reinforce her nation's defense capabilities. Earlier, the two leaders met for the first time in Tokyo and President Trump said he stands behind Takeuchi. Any time you have any question, any doubt, anything you want, any favors you need, anything I can do to help Japan, we will be there. We are an ally at the strongest level. President Trump and Prime Minister Takeuchi signed documents aimed at formalizing some of the trade agreement made under her predecessor. That includes a Japanese pledge to fund$550 billion in U.S.

2:19projects. The list of companies interested in funding them includes SoftBank, Westinghouse and Toshiba in areas ranging from energy to AI and critical minerals. Let's turn now to another major story that we're following this morning. Nathan, Hurricane Melissa has intensified into a Category 5 storm as it draws closer to Jamaica. And Bloomberg meteorologist Craig Allen is tracking the storm for us. Hurricane Melissa is now in the top 10 for the strongest on record in the Atlantic. Maximum sustained wind speeds continue around 175 miles per hour with gusts over 215 miles per hour. Jamaica has already been taking a beating through the day, but now the storm, which had been stationary for a few hours, seems to be looping around and starting that north-northeast turn right towards Jamaica.

3:09And at this very slow speed of only 2 to 4 miles per hour, it's likely that devastating hurricane winds, the storm surge of 9 to 13 feet, And 20 to 30 inches of rain or more will last right through the day on Tuesday. It may begin to taper down during Tuesday night, but not before parts of the island are decimated. And Bloomberg meteorologist Craig Allen reporting. Stay with Bloomberg for team coverage of Hurricane Melissa all morning long. Look here in our coverage of the government shutdown in Washington continues now into day 28. The country's biggest federal workers union, the American Federation of Government Employees, is calling on Democrats to go along with Republicans' demand for a clean, short-term spending bill.

3:52But Democrats are mostly resisting that call. Senate Democrat Andy Kim of New Jersey says his party's sticking to its demand to extend expiring health insurance subsidies. A number of Republicans support extending these subsidies. It's just that Speaker Johnson is preventing them from even being here in D.C. for negotiations. You know, this is a dereliction of duty and an abdication of leadership. Senator Andy Kim's comments are being echoed by Republican Senator Tom Tillis. In an interview with Bloomberg Government, the North Carolina Republican says his party should extend Obamacare subsidies for two years and address cuts to Medicaid provider payments or risk antagonizing voters.

4:31Tillis is leaving the Senate when his term expires next year. We turn to the markets now, Nathan, where stocks enter the session in record fashion. In fact, all four major indexes closed at a record high. And Lori Calvacina is head of U.S. equity strategy at RBC Capital Markets. We're hitting levels that we have kind of marked the ceiling in the past decade, but we're not sitting at tech bubble highs either. So I think we have kind of a plain old-fashioned valuation problem where things have gotten a bit over their skis. But I don't think that this compares, frankly, to that peak in 2000. I don't think that this is bubble territory.

5:08And as RBC Capital Markets' Lurie Calvacina and the S &P 500 closing yesterday at 68.75. Investors now turn their attention, Karen, to earnings and the Fed. Jay Powell and company kick off a two-day meeting on interest rates today. We get a preview from Bloomberg's Michael McKee. For the Fed, it's an existential question. How do you know where you're going if you don't know where you are? Almost all data on the economy has been cut off by the government shutdown. Their rate decision will be based largely on what policymakers thought was happening before the shutdown and what they've picked up from companies and consumers in their districts.

5:45It appears they go into the meeting more divided than they have been in years. At least three members have suggested it's too risky to cut rates now. CPI inflation, the one data point we did get, is still rising. About as many say the economy is dangerously close to stalling and a cut is needed. The biggest group is in the middle, perhaps leaning towards a cut. That's what Fed Chair Jay Powell has let the markets price. And as the two-day meeting starts, that's the best bet. Michael McKee, Bloomberg Radio. All right, Michael, thank you. Goldman Sachs CEO David Solomon is downplaying risks in the credit market following the collapse of first brands and tricolor holdings.

6:24We get more from Bloomberg's John Tucker. John, good morning. And Karen Solomon describes recent losses at the regional banks as one-off issues that shouldn't spread to the broader market. I don't see anything in the context of a handful of bad credit situations. It's leading me to say that we have a systemic issue around the corner. Solomon also says the recent losses at the regional banks tied to alleged fraud serve as a reminder to stay vigilant about underwriting standards. He was speaking at the Future Investment Initiative in Riyadh. Solomon sounds more optimistic than some of his counterparts.

6:58The failures of first brands in tricolor prompted JPMorgan Chase CEO Jamie Dimon to warn, when you see one cockroach, there are probably more. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. And speaking of Jamie Dimon, he is continuing his push for workers to return to the office. He is also at the Future Investment Initiative Conference in Riyadh and says junior bankers aren't able to learn as much when they work from home. Zoom is a great tool, so I'm not making fun of Zoom. But, you know, younger people being left behind, their social lives are deteriorating. They don't get ahead.

7:31But even all of us in management, when we meet on Hollywood squares, there's not as honest a conversation. You don't have that constant follow up. Earlier this year, JPMorgan Chase CEO Jamie Dimon ordered all his employees to return to the office five days a week, ending a hybrid work option for thousands of staff. Well, Nathan, banks are also in focus in Europe this morning. HSBC and BNP Paribas reported earnings earlier this morning. And we go to London and get the very latest with Bloomberg's Ewan Potts. Good morning, Ewan. Karen and Nathan, banks taking centre stage today with Europe's biggest lender raising its profits outlook for the year.

8:09HSBC shares gaining here in London. That's despite third quarter earnings taking a$1.1 billion hit to cover potential losses from fraud litigation. And across the water, it's provisions for credit losses making headlines from BNP Paribas, France's largest lender reaffirming its annual targets, but putting aside more money for souring loans in its trading unit. BNP shares lower this morning. In London, I'm Ewan Potts, Bloomberg Radio. All right, Ewan, thank you. And Amazon is reportedly set to cut tens of thousands of jobs as soon as today. Let's get more on that from Bloomberg's Lisa Matteo. Lisa.

8:44Nathan, it could be the largest layoff since rolling reductions in late 2022 and early 2023 that ultimately totaled more than 27 ,000 corporate employees. Reuters reports the terminations this time around, well, it could affect as many as 30 ,000 jobs. Sources telling Bloomberg it'll impact corporate roles in several key departments, including logistics, payments, video games and the cloud computing unit. If you remember back in June, CEO Andy Jassy said that Amazon's increasing use of artificial intelligence would likely shrink its workforce. Lisa Mateo, Bloomberg Radio.

9:20Time 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 Michael Barr. Michael, good morning. Good morning, Karen. Republican lawmakers seized on frontrunner Zoran Mamdani for mayor of New York. As next year's midterms approach, GOP members are trying to make the self-described Democratic Socialists the new face of the Democratic Party. Mamdani spoke to ABC about his proposals for free transit and child care, funded by tax increases that the New York governor, Kathy Hochul, has not shown support for, despite her endorsement.

9:56I think it makes the most sense in the wealthiest city, in the wealthiest country, in the history of the world, that we actually ensure we have the funding necessary to make it a place that New Yorkers can afford. And I'm looking forward to working with Governor Hochul. About 223 ,000 people have turned out so far for early voting in New York. Meanwhile, a new poll has Memdani opponent Andrew Cuomo closing the gap. According to a Suffolk University poll, the former New York governor cut Memdani's lead in half to only 10 points. There's anger in this city. There's frustration in this city. It's all percolating.

10:33Republican Curtis Lewa trails in third with about 11 percent of those polled. The people will determine who the next mayor of the city of New York is through their votes once they're tallied on the night of November 4th. Audio courtesy of CBS2. New York City public schools unveiled an emergency alert system meant to speed response in an active shooter situation. The new system includes a panic button for schools that can initiate a police response in under 10 seconds by overriding the 911 call flow. New York City Mayor Eric Adams says the alert system is the first of its kind in the country. We will save lives by providing rapid response in active shooting situations.

11:21According to Everytown for Gun Safety, in 2025, there have been 141 school shootings nationwide. Global News, 24 hours a day, and whenever you want it with Bloomberg News Now. I'm Michael Barr, and this is Bloomberg, Karen. Thanks, Michael. Time now for our Bloomberg Sports Update, and for that, we bring in John Stashauer. Thanks, Karen. Game 3 of the World Series in Los Angeles lasted 6 hours and 39 minutes. It went 18 innings. It was tied at 5 in the 7th inning and was still 5-5 in the 18th when Freddie Freeman, who hit a walk-off grand slam to win Game 1 of the World Series last year, hit another walk-off home run.

11:59The Dodgers beat the Blue Jays 6-5. They lead the series two games to one. United football in Kansas City. Patrick Mahomes, three touchdown passes. The Chiefs beat the Commanders 28-7. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App.

12:45This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. As we continue to track what is likely to be the strongest storm ever to hit the island of Jamaica, Category 5, Hurricane Melissa continues to churn, threatening widespread devastation through much of the Caribbean. For the very latest, we are joined now by Bloomberg meteorologist Craig Allen. And just about all the accounts, Craig, of what this storm is doing, what it could do, just seem increasingly dire. What is the very latest? Good morning. It is. It comes across as one of the most grim indications that I've seen for an island, one of those Caribbean islands down across the sea there, that it appears that we are going to experience or has already with this five o 'clock report that just came in.

13:33I'm looking at it right now as I'm speaking to you. It is the most intense tropical system worldwide for this year. Okay, the pressure is now down to those who understand there's 901 millibars. That surpasses some of the most intense super typhoons in the Pacific. And now that Melissa is down to this particular pressure, it's also the seventh most intense Atlantic hurricane on record since 1851. So think about that and the type of system that we have here with 175 mile per hour winds approaching the south coast of Jamaica at only three to five miles per hour. In other words, this type of wind could be affecting Jamaica more than 12 hours at a clip, 12 to 18 hours perhaps before it is able to get to the north coast.

14:31So you take a battering of 175 mile per hour winds gusting over 200. You have rainfall of 20 to 30 inches, especially in the more mountainous terrain, which will result in just devastating mudslides. slides, and you've got a storm surge that comes into the south coast at 9 to 13 feet. I mean, most people are 5 to 6 feet in height. Think about salt water coming up 9 to 13 feet. That inundates houses along the south coast of Jamaica. So all of this is probably, as I said, one of the most grim pictures I have seen painted for a storm hitting a Caribbean island. What is driving this intensity, Craig, and why is this storm moving so slowly?

15:20Right now, and for the last couple of days, there's been absolutely no steering currents at all. So you've got Melissa sitting over the warmest water in the Atlantic, anywhere in the Atlantic. The water temperature there is about 85, 86, and that is perfect fuel. That's what a hurricane derives its energy from, the warm, moist air that is rising, coming up from this 86-degree water. And it's just sitting there and cooking. I mean, think about how it has not moved very much because of the lack of steering currents up to this point. But the only good news that I could think of right now is that eventually over the next, let's say, 24 hours or so, there will be something that comes through in the upper atmosphere that's going to pick up the storm and pull it off to the north and northeast.

16:17So by the time that it hits eastern Cuba, it's still going to be a major Category 5, but it then goes towards the Turks and Caicos, the Bahamas, and it's starting to move a little bit faster. It's also away from the warmest water, and therefore it should not be quite as intense when it gets to the Bahamas. There will still even be, you know, hurricane conditions when it gets to Bermuda later this week. But it won't be quite as intense as it is right now, Nathan. But as we say, it's going to be a very, very rough 12 to maybe even 24 hours for the Caribbean. Thank you for this, Craig. That is Bloomberg meteorologist Craig Allen, part of our team covering Hurricane Melissa this morning.

17:03But now we want to get back to our top story of this Tuesday morning. President Trump in Tokyo, heaping praise on Japan's new prime minister, Saneo Takeichi. We very much appreciate the trade. We're going to do tremendous trade together, I think more than ever before. That was the president during his first meeting with the new premier in Tokyo. They've also been speaking aboard a U.S. aircraft carrier, the USS George Washington, promising to boost defense and security cooperation. For the very latest joining us this morning from Hong Kong is Bloomberg's Jill Deesis. Jill, it sounds by all indications like a pretty solid meeting for the new Japanese prime minister.

17:43What are some of the deliverables coming out of it? Good morning. Yes, good morning. Well, I think there's a couple of things really to look at out of this meeting. First of all, you know, I suspect that this is one that Trump himself was probably looking forward to quite a bit. The new Japanese prime minister, Takeichi. So, you know, I mean, in addition to being the first woman prime minister of Japan. She also shares that she's a protege of Shinzo Abe, the former prime minister who Trump was incredibly close with during his first administration when he was elected back in 2016. You know, she's somebody that runs more conservative, is also more hawkish, particularly on the foreign policy defense side.

18:18And so what you saw out of today was, again, a couple of things. First of all, some announcements about Japan increasing defense funding. That's something that Trump has certainly been pushing a lot of his allies, in the Pacific included, to really kind of gun force. So I think that's something that he was obviously very happy with today. The other thing too that I think we saw that was interesting was some agreements that were more related to the US-Japan trade deal. Now, these are agreements that were ultimately reached a little bit earlier this year. We did get a little bit more detail. There was additional promises when it comes to rare earths, for example.

18:55But some of those details, I think, are still a little bit in flux, still a little bit vague. But it does seem like at least there's some broad, sort of sweepy pledges for further cooperation. So I think if you're Donald Trump today, you're probably feeling like you've had a pretty good diplomatic victory. I guess some of the details that I've heard coming out of the aircraft carrier appearance in particular is the president saying that he's approved the first order of 35 fighter missiles and that sort of thing. But in terms of the trade pact as well, Jill, what are some of the details that we're getting out of that?

19:30Yeah. I mean, again, I think, you know, the big thing that we were looking out for was, you know, what else is happening with critical minerals, including rare earths. So what the agreement between these two is ultimately signed was supposed to formalize some elements of that trade deal that Trump ultimately brokered under Takiji's predecessor. Still, again, there's just still lacking in some details. That particular pledge included this idea that Japan could potentially fund 550 billion U.S. dollars worth of projects in the U.S., very similar to some of these investment pledges that the Trump administration has gotten from some other nations.

20:09Now, a lot of these PACs were still very light on details. The critical minerals one in particular. We had some pledges from the U.S. and Japan to coordinate on permitting and financing and mapping, but we didn't get a whole lot in terms of those actual minutiae that I think would go into these trade agreements. And remember, when it comes to trade agreements, I mean, things get really, really complicated. So I think maybe still more to come there. 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.

20:43Eastern each morning on Apple, Spotify, or anywhere else you listen. You 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.

21:20And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

21:36Thank you.