Trump Teases Xi Talks at APEC; Vance Expects Troop Payments Despite Shutdown

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with 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. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

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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 on President Trump's trip to Asia. He is now in South Korea, ahead of tomorrow's crucial meeting with Chinese President Xi Jinping. At an APEC CEO summit, the president touted the close relationship between the U.S. and South Korea. We're partners. We're serious partners. We're wedded, and we have a very special relationship, a special bond. In fact, we're working with you on chip building, where you're going to come in.

1:41We were the number one in the world during World War II. We produced a ship a day. Can you believe it? And on his way to Korea, the president predicted he would lower tariffs on Chinese goods over fentanyl, and he also said he'll speak with President Xi about access to NVIDIA's Blackwell AI chip. That would be a major concession if it is included in a trade deal. Ahead of tomorrow's meeting, China booked its first purchases of U.S. soybeans this season. Sources tell Bloomberg at least two shipments are booked for delivery later this year. In exchange, the U.S. is holding off on threatened software export controls against China.

2:13A White House official says Presidents Trump and Xi will meet mid-morning tomorrow, though the exact timing has yet to be determined. Well, Nathan, in Washington, it is now day 29 of the government shutdown. If it extends to day 31 this Friday, members of the military will start to miss paychecks. Vice President J.D. Vance says he thinks the Trump administration can work around that. We do think that we can continue paying the troops, at least for now. But we've got food stamp benefits that are set to run out in a week. We're trying to keep as much open as possible. We just need the Democrats to actually help us out.

2:45And Vice President Vance spoke after a meeting with Republican senators on Capitol Hill. He's not saying how the troops would be paid. Meantime, 25 states, including New York and the District of Columbia, are suing the Trump administration over expiring food stamp benefits. They're arguing the White House must use nearly$6 billion in contingency funds to keep the program running as long as possible. Let's turn to the Fed now, Karen. Jay Powell and company are widely expected to cut rates for a second straight meeting later today, but will there be more cuts ahead? Bloomberg's Michael McKee is in Washington with a preview.

3:20For Wall Street, today's meeting is less about what's now than it is about what's next. A quarter percentage point rate cut is baked into markets. What investors want to know is, are further cuts coming, perhaps as soon as December? That's going to be a tricky question for the Fed and Chair Jay Powell. They're not providing new economic forecasts at this meeting, and there's not much data these days on how the economy is performing. We may get some indication of which way policymakers are leaning if there are significant dissents either to cut more or stand still. Traders will also be watching for an announced end to QT, the Fed's balance sheet runoff.

3:57Michael McKee, Bloomberg Radio. All right, Michael, thank you. In addition to that Fed decision, investors will also be looking forward to earnings from a trio of big tech powerhouses. And Bloomberg's John Tucker joins us with a preview. John, good morning. And good morning, Karen. Yeah, today we're going to hear from Microsoft, Meta Platforms, and Google Parents Alphabet. And that's where Aaron Kessler of Seaport Securities is focused. We think Google is probably benefiting the most right now from AI, both on its Google Cloud platform, as well as leveraging AI for advertising as well. And investors trying to figure out whether the billions that have been poured into computing infrastructure will keep flowing and ultimately deliver returns.

4:37Well, the Magnificent Seven Group is projected to deliver profit growth of 14 % in the third quarter. That's nearly twice the 8 % expended profit growth for the broader S &P 500, but also would be the slowest pay since the first quarter of 2023. Apple and Amazon, they open their books to investors tomorrow. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. And staying with big tech, shares of NVIDIA are rallying this morning on more than 3%. And for more on what's behind the move, we're joined by Bloomberg's Lisa Mateo. Lisa. Good morning, Nathan. Yeah, it has to do with NVIDIA's Blackwell chips.

5:12Months ago, President Trump said he'd consider allowing the company to export a downgraded version of them to China. Well, now, just ahead of his highly anticipated meeting with Chinese leader Xi Jinping, those flagship AI accelerators, they're now on the agenda with President Trump saying, quote, we'll be speaking about black wells. Now, this is a big turnaround from Washington's years long campaign to curtail China's progress in artificial intelligence. Yesterday, CEO Jensen Wang spoke about the company's future partnerships, also downplayed fears of an AI investment bubble. AI has now become good enough because of reasoning capability, research capabilities, its ability to think.

5:50It's now generating tokens and now generating intelligence that's worth paying for. And that's CEO Jensen Wang at NVIDIA's GTC event in Washington, D.C. NVIDIA on track to become the world's first$5 trillion public company. Lisa Mateo, Bloomberg Radio. All right, Lisa, thank you. Well, we're also tracking the path of Hurricane Melissa this morning. It's made landfall in Cuba after pummeling Jamaica as one of the strongest Atlantic hurricanes on record. And Bloomberg meteorologist Craig Allen joins us with the latest. Craig, good morning. Good morning. It was a very interesting night with the hurricane going back up to a Category 4 at one point while it was over the water.

6:31Now that it has made landfall, this second landfall over eastern sections of Cuba, about 60 miles to the west of Guantanamo, it is beginning to weaken just a little bit once again over land. The Category 3 with 115 mile per hour winds, still a major hurricane. There's still going to be major damage across eastern sections of Cuba. And then after that, we have the storm moving off to the north and east at about 10 to 15 miles per hour. So unfortunately, the Turks and Caicos, as well as most of the Bahamas, are under a hurricane warning as well. Yes, we will. All right, Bloomberg Meteorologist Craig Allen.

7:04Thank you. All right, Karen. Well, as for the markets, we'll turn back there with futures mixed this morning. S &P futures are a touch higher after another record close on Wall Street. Ed Yardeni of Yardeni Research thinks stocks are headed even higher. I think the bull market continues here. we've still got some good news ahead. Some of it's been discounted, of course, but the Fed is expected to lower the Fed funds rate two more times this year, so that would get us down to 3.5%. By the way, I don't think the economy really needs it, so a lot of this stimulus is probably going to feed the bull market.

7:44Ed Yardeny of Yardeny Research predicts the S &P 500 will reach 7 ,000 by the end of the year. in europe bank earnings in focus once again as a trio of big banks report let's go to london and get the very latest of bloomberg's u.n pots you and good morning karen and nathan a beat from ubs a beat from santander and a beat from deutsche bank germany's biggest lender reporting a 19 rise in revenue at its fixed income trading unit outpacing estimates over in switzerland ubs posting net income of$2.5 billion for the latest three months, smashing estimates for$1.4 billion. The results supported by a release of provisions related to the settlement of a tax evasion case.

8:26And to finish off the trio, Spain's biggest bank posting its sixth consecutive quarterly profits record. Santander boosted by better results from the US and lower provisions for souring debt. In London, I'm Ewan Potts, Bloomberg Radio.

8:43Time 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. Israel's army says it began reinforcing the Gaza ceasefire agreement. It comes after Prime Minister Benjamin Netanyahu ordered forceful strikes against Hamas in response to attacks on Israeli soldiers in Gaza. Meanwhile, President Trump was asked about Israel accusing Hamas of violating a ceasefire order by not returning all the bodies of hostages and allegedly firing at an IDF soldier. Nobody knows what happened to the Israeli soldier, but they say it was sniper fire.

9:22And it was retribution for that, and I think they have a right to do that. The president spoke with reporters on Air Force One. The Border Patrol commander in charge of President Trump's immigration crackdown in Chicago is being reined in by a federal judge. U.S. District Judge Sarah Ellis gave Greg Bovino an earful about the tactics he and his agents are using and ordered him to start providing her with briefings every day. The U.S. military struck four alleged drug vessels in the Pacific. Authorities say 14 people were killed and one survived. President Trump claims the alleged drug trafficking is being orchestrated by Venezuela's authoritarian leader, Nicolas Maduro, former Defense Department official Mick Mulroy.

10:08Essentially, there's about 20 percent of our naval forces are now in the Caribbean, which is very unusual. It's simply not needed to do counter-narcotics operations to hit these small boats. Maduro's government says President Trump's real goal is not fighting drug trafficking, but a forced regime change in Venezuela. It is the 11th time in less than two months the U.S. has carried out strikes on alleged drug-carrying vessels. Global news 24 hours a day and whenever you want it with the Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you.

10:48Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. The Toronto Blue Jays were coming off losing in 18 innings. They had to play World Series Game 4 without George Springer, and they had to face Shohei Otani at the plate and on the mound. The Jays trailed the Dodgers 1-0 third inning. There's a fly ball to deep left center field, headed back there. It is gone. Brad Jr. gives the Jays the lead. The franchise face putting the team on his back. I'll tell you, this guy's amazing and he's ready for everything. I mean, this is the first mistake that Otani has made.

11:28On Fox Sports, it stayed 2-1 until Toronto scored four times in the seventh and the Jays won 6-2 to tie the series at 2. Otani, after his Game 3 heroics, 0-3 at the plate and was the losing pitcher, Toronto manager John Schneider asked about the Guerrero homer in the seventh inning rally. It's a huge swing to get us going. And I think that gives you some momentum. And, you know, Shohei settled in, struck out quite a few in a row after that. But, you know, our at-bats there kind of just, it was a Blue Jay inning. You know what I mean? Varsh, Ernie, and then you kind of went to work. But the swing from Vlad was game changer.

12:07Game five tonight, same pitchers as game one. The Dodgers, Blake Snell, the Blue Jays go with rookie Trey Yusavage. Nixon, Milwaukee, and a 12-point lead at halftime. Back came the Bucs to win 121-111. Giannis went to the camp for 33 minutes, 37 points. Jalen Brunson led the Knicks with 36. Rangers, a 2-0 win at Vancouver. 64th career shutout for Jonathan Quick. Islanders lost in Boston 5-2. The Devils, 8-game winning streak, came to an end. An 8-4 loss of Colorado. Dallas over the Capitals, 1-0. New Orleans Saints, 1-7, beating only the Giants. They're making a quarterback change. 26-year-old rookie Tyler Schupp will replace Spencer Rattler.

12:45the Baltimore Ravens play tomorrow night in Miami. Lamar Jackson will return after missing three games with injured hamstring. John Stashauer, Bloomberg Sports, Karen Nathan. Stay with us. More from Bloomberg Daybreak coming up after this. I'm Carol Masser. And I'm Tim Stenevec, inviting you to join us for the Bloomberg Business Week Daily Podcast. Now, every day we are bringing you reporting from the magazine that helps global leaders stay ahead. We've got insight on the people, the companies and trends that are shaping today's complex economy. That's right, Tim. We're all over global business, finance, tech news, all as it is happening in real time.

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14:08Coast 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. And the key event of President Donald Trump's trip to Asia is now just a day away before his face-to-face encounter tomorrow with Chinese President Xi Jinping. the president is telling business leaders in South Korea today he expects a good outcome. Presidency of China is coming tomorrow here, and we're going to be, I hope, making a deal. I think we're going to have a deal. I think it'll be a good deal for both.

14:43That was President Trump speaking at an APEC CEO summit in South Korea. Joining us for more this morning from Hong Kong is Bloomberg's Jill Deesis. And Jill, some of the commentary that we're hearing from the president ahead of this encounter is pretty interesting. This idea of lowering tariffs on Chinese goods related to the fentanyl crisis, as well as talking about NVIDIA's Blackwell chip with President Xi. That would be pretty major. Good morning. Good morning, Nathan. Yes. I mean, you know, first of all, I want to make clear, you know, a lot of what's been building up to this particular meeting between President Donald Trump and Xi Jinping has already been really widely telegraphed.

15:21You kind of get the feeling like from, you know, the broader Trump administration that, you know, they've been working behind the scenes for at this point weeks to try to smooth over a deal. We did actually get a sense of that broad framework agreement actually over the weekend. So this does kind of feel like in some ways, you know, maybe there's some attempts to, you know, not have too many surprises here. Although, obviously, we've heard from Trump himself today who did put out some of those really, really interesting comments. So first of all, him saying that, you know, he's he thinks that China is going to make, you know, making some sort of favorable moves on the what he called the fentanyl situation.

15:57So that idea of potentially lowering tariffs there, I think, would be fairly significant. You know, there's other media reporting that Trump is considering cutting what's a 20 percent tariff to as low as 10 percent on Chinese goods over fentanyl in particular. So that's something that you're, you know, we're certainly keeping an eye on. But it really is those NVIDIA comments as well that I think are really, really interesting. So what Trump was suggesting here is that he was open to providing China with access to this Blackwell AI processor from NVIDIA as part of any trade deal. I mean, that would be a major concession.

16:31I imagine that national security hawks in Washington maybe not too particularly happy about that idea. But it does seem like that's something that could come up in these talks. And it's something that's certainly getting the market's attention this morning. I mean, how significant would that be? how difficult would it be to make that part of a trade deal, given the significant restrictions that are already on NVIDIA right now, not just from the U.S., but from China as well? Yes, that's right. And that's actually something that Chief of NVIDIA Jensen Huang has actually said. I mean, he noted that Trump has actually licensed NVIDIA to ship to China, but it's China that's blocked them from being able to ship to China.

17:09That's from Jensen Huang himself. He was speaking at a company in Washington. I think, you know, look, this has been a lot of back and forth this year. A lot of this really does come down to not just sort of the overall trade agreement, but also obviously some pretty significant national security concerns about what it would mean to supply China with any kind of advanced chips that's being made by an American company. You know, we did see earlier this year there were some concessions in the form of the U.S. government saying that it would approve licenses for a particular type of NVIDIA chip that was designed to comply with export controls, not to ship over like extremely advanced technology.

17:45You know, obviously that hasn't occurred. So it does seem like there would be some significant hurdles to actually getting something like this over the line. You know, I mean, look, Trump goes into a lot of these types of meetings, you know, saying a lot of things. I think there's still some consideration over what that back and forth actually looks like. So it's not really just about even what the president says tomorrow, but also what some of these deals look like once we actually get some really, really hard specifics. We should get some idea in the hours to come. The White House is saying that this encounter is going to happen mid-morning tomorrow in South Korea.

18:17So it's just, as we say, hours away. Thank you for this, Jill. Really appreciate it. That is Bloomberg's Jill Deesis ahead of the Trump-She meeting with us this morning from Hong Kong. karen nathan we want to get the latest on hurricane melissa and we're joined once again by a bloomberg meteorologist craig allen craig the storm making landfall in cuba it's a little weaker than it was when it hit jamaica but still a major system what's the latest absolutely 115 mile per hour winds it did go back up to a category four last night while over the water and heading towards the eastern coast of Cuba, made landfall around Santiago de Cuba.

18:56And it is that that's the second most populated city over eastern sections of Cuba there. And right now is about 60 miles to the west of Guantanamo. So we have 115 mile per hour winds. The winds are down a little bit, just like you said. At the same time, though, the rain is continuing. The storm surge is going to continue right through the day today and then we'll take off to the northeast at about 10 to 15 miles per hour, a little bit faster than it was yesterday. That is a good thing to try to get it out of any particular region. But the southeast Bahamas are now under a hurricane warning. So the Turks and Caicos probably won't be a direct hit on some of the areas like Nassau or Freeport or the other portions of the Bahamas where there's major vacation or tourism.

19:46But the Turks and Caicos, too, will also feel the effects of the storm today. And does that mean the U.S. is in the clear then? Well, the U.S. is in the clear in terms of any kind of direct hit. You're absolutely right. And there will be some rough surf and, I would think, rip currents along the southeast coast as the storm tries to pull away. But a direct effect with any kind of rain and wind is highly unlikely. The storm is going to take a track to the north and east. And by the time we get to the end of this week, you know who's next once again? Bermuda. Likely to see winds that will gust up to about 100, 115 miles per hour there, too, as the storm takes off to the north and east.

20:29So it's still a Category 1, at least, by the time it gets to Bermuda and then takes off into the North Atlantic. Fortunately, as I said, the east coast of the United States will not feel any direct effects. Okay, but it sounds like this storm has some staying power then. How long is it going to be with us? Yes, you know, that's right. It goes into the North Atlantic. It takes the entire week. But talk about staying power. As soon as it moves off Jamaica, it reintensified once again. Could briefly reintensify when it moves off Cuba a little bit later on this morning. But then it will go down. There are other factors there.

21:04The water is not quite as warm. There's more wind shear. and therefore I don't think it'll be able to get as strong as it ever as it was once again in the rest of Melissa's life. All right, well, what's behind Melissa? Is this the end of it or do we have to watch anything else? Well, the hurricane season officially runs until November 30th, so there could always be another system. But right now I'm happy to say that the rest of the Gulf, as well as the Caribbean and the Atlantic Basin, are pretty quiet for the time being. There's nothing more to watch for at least another two to five days. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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22:26I'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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