Trump-Xi High-Stakes Summit; Possible Deal to Open Hormuz

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1:17And like every small business owner, you started with a dream to do what you love and watch it grow. What you probably didn't dream about? Keeping up with cyber threats. That's where MasterCard can help with access to tools that help identify cyber threats to better protect your business. Building your dream business, priceless. For cybersecurity in a changing world, there's MasterCard. Learn more at MasterCard.com slash smallbusiness. Bloomberg 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 in Washington, where Chinese President Xi Jinping is receiving a lavish state visit that's heavy on pageantry, but light on major announcements.

2:06President Trump hosted the Chinese leader at a White House state dinner last night with a who's who in tech and finance leaders in attendance. Americans and Chinese have always exchanged goods, knowledge, customs and ideas. This has been the foundation of commerce and mutual respect between our countries. and together we can continue to build a relationship that promotes prosperity and security for future generations. President Trump gave President Xi a statue of a bald eagle and said their two countries have never gotten along better. Executives from NVIDIA, Apple, Meta, Amazon and OpenAI were on the guest list, along with major Wall Street banks.

2:44President Xi did not bring a business delegation. Well, before the dinner, Nathan, the two leaders did discuss some contentious issues. Bloomberg chief Asia correspondent Stephen Engel is covering the Trump-Xi summit in Washington. AI was in focus. As Xi said, China and the U.S. have both the capability and the responsibility to develop and manage AI for good and also ensure it stays under human control. But few details have emerged on the specifics on how they're going to do that under their newly created U.S.-China AI dialogue. Boomer Stephen Angle reports President Trump posted on social media ahead of the meeting that he wants to keep AI exactly where it is.

3:28The president has called for unrestrained development to keep the U.S. ahead of China. And during the summit, Karen, China's president also urged President Trump to oppose independence for Taiwan. It was his most explicit call yet for the U.S. to change its policy on the self-ruled island. We get more from Bloomberg's Balashpens. The U.S. has had a decades-long policy, and the language they have used is the U.S. does not support the independence movement for Taiwan, which might seem like a subtle change, but it is actually a very significant one, because saying that the U.S. opposes Taiwan independence, there it supposes an active role by the U.S.

4:05in this. Bloomberg's Balashpens says President Xi's comments were reported by China's Xinhua news agency. The White House has not released a readout from the meeting. Well, Nathan, we're learning more about this week's negotiations between the U.S. and Iran on the sidelines of the U.N. General Assembly. A source tells Bloomberg News the two sides are discussing a phased deal for Iran to reopen the Strait of Hormuz and the U.S. to lift its naval blockade. Financial Times reports Iran's foreign minister offered a seven-day proposal to reopen the Strait if certain conditions are met. Bloomberg Energy reporter Stephen Stepchinsky says this would be similar to the memorandum of understanding that both sides reached three months ago.

4:45This has been often speculated, talked about. Officials from both sides have gone back and forth on the possibility of there being potentially a deal in an opening, and you've seen headlines really pushing oil higher and lower in that$100 range over the last week or two. And that's Bloomberg Stephen Stepchinsky. This morning's headlines have a Brent down 1.8 percent at$104.81 a barrel, and NYMEX crude oil also lowered down more than 2 percent at$92.41. Meanwhile, Karen, delegates at the United Nations General Assembly walked out as Israel's Prime Minister Benjamin Netanyahu addressed the global body.

5:24He defended his decision to attack Iran as an easy one, saying Israel's security is at stake. The eternity of Israel will not falter. And the reason is simple. We have no other choice. Israeli Prime Minister Benjamin Netanyahu also called accusations of genocide in Gaza, quote, the biggest lie of the century. Nathan, the Republican-controlled Senate defeated a Democratic resolution to end the war in Iran in a very close 49 to 50 vote. And Bloomberg's Amy Morris reports from Washington. The vote was largely symbolic, but it was also seen as a chance for vulnerable Republicans to distance themselves from the war ahead of the midterms.

6:07Several Republicans said they would like to see the war end quickly, but they're not yet willing to rein in Trump's power to wage it. Most Republican senators facing voters in the fall opposed the resolution. Voters are anxious about the war driving up prices and endangered GOP lawmakers increasingly fear of voter backlash in the election. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. Now let's turn to the weather because that is another major story we are following this morning. A powerful storm is set to hit the northeast. Let's get the very latest now from Bloomberg meteorologist Craig Gallen.

6:42Craig, can you give us an update? The early season nor 'easter is developing, and based on the latest data and weather model solutions, it is really going to impact weekend weather, especially from Philadelphia up to New York City and definitely eastern New England, including Boston. Now, the gusty winds and rough seas are already pounding the coastline. Alerts for strong winds, tidal flooding, rough seas, they're in effect. The maps are closing in to a more unified track, but it will be bending and wavering while moving up the coast. So there will be rain and wind for D.C., but not stormy like around New York City and Boston will be, where the winds may reach 50 miles per hour plus and several inches of rain.

7:25All right, Bloomberg Meteorologist Craig Gallon, of course, we know you're going to be keeping an eye on all this for us, but we can see impacts already with gusty winds, coastal flooding and erosion along beaches, particularly on the Jersey Shore. The storm is expected to last a while. Effects could run into Monday. The most significant impacts forecast from tomorrow afternoon through Sunday morning. The strongest winds are expected to coincide with the heaviest rainfall. Well, we turn to the markets now, Nathan, where a push for a breakthrough in U.S. around talks is sending stock futures higher, crude prices lower, and bonds stabilizing.

7:58This comes after a sell-off of global yields to the highest in decades. George Maris is chief investment officer at Principal Asset Management. The bond market is telling you that inflation is sticky. It's becoming more and more intractable and that the Fed needs to create some demand destruction or as Chairman Worf says, the removal of accommodation, that removal should be a hindrance to overall economic growth, earnings. Now, they're coming from very strong levels, but it should be something to be paying attention to. And so as long as inflation looks like a problem, this is going to be something that the bond markets are going to have to focus upon and equity markets will as well.

8:41And principal asset management's George Marist traders are fully pricing three additional Federal Reserve quarter point hikes over the next year. On the equity front, Karen, it's been a pretty good month for investors in Meta platforms. Shares of the Facebook and Instagram owner have jumped 36 percent in September, putting Meta on pace for its best month in 13 years. The gains come on the release of Meta's new Muse personal AI assistant. It has risen quickly to the top of the app charts and muffled concerns that heavy spending on AI won't pay off. Meta is roughly 1 % gain away from joining an elite group of companies worth at least $2 trillion.

9:20Nathan, we're watching Shares of NVIDIA this morning. They're up less than 1 % in early trading. Elon Musk says Colossus 2, an AI computing cluster built by its ex-AI business, may more than double its current NVIDIA chip count by the end of the year. In a social media post, the billionaire gave the most detailed timetable yet for expansion plans for the Memphis area cluster as he races to expand AI computing capacity.

9:46Time 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. New Jersey Governor Mikey Sherrill called for the resignation of Lieutenant Governor Dale Caldwell after an independent investigation found he allegedly engaged in sexual harassment. Cheryl says the investigation substantiated serious repeated violations of state policy and showed a pattern of conduct that fell short of the standards of the administration. She said the lieutenant governor's resignation is necessary and in the best interest of New Jersey residents.

10:23Lawmakers are commenting afterward that eight sailors aboard the USS Abraham Lincoln aircraft carrier and the ships with it attempted to take their own lives during a 10-month deployment tied to the war in Iran. The Navy secretary sent a letter to Democratic Senator Kirsten Gillibrand, who told ABC it's clear the crew was pushed beyond its limit. The lack of supplies, the lack of ability to have a break, to have dwell time, to have the rotation end at the appropriate time. It was the longest at-sea carrier group ever without going into a port. In Mississippi, the family of Nolan Wells released a state medical examiner's autopsy report, which found that the cause and manner of death as undetermined.

11:09Family attorneys also say they found Snapchats on the 18-year-old's phone that indicate there were suspicious people nearby when he vanished celebrating the Fourth of July holiday on Barrier Islands off the Gulf coast of Mississippi, attorney Ben Crump. The messages on his phone in the snaps will show some of his own friends were concerned about people on Horn Island can be racist. The body of wells was recovered in the waters off Horn Island two days later. New York City lawmakers want to offer financial incentives to whistleblowers who expose dangerous artificial intelligence practices. It's of a package of bills aimed at tightening oversight of the technology.

11:54Global 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. Week three of the NFL underway. Atlanta won 35 to 14 at Green Bay. Both teams are now one and two. Baseball heads Since the final weekend of the regular season, the Cubs and White Sox both just clinched at least a wild card playoff bird. Milwaukee got its 100th win of the season. President's Cup golf in Illinois. The U.S. leads the competition 3-2 heading into the Friday foursomes today.

12:28NBA Hall of Famer Bob Pettit has passed away at the age of 93. He was an 11-time All-Star, the NBA MVP in 1956. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful.

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15:28putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Coast 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 the final morning of the state visit for Chinese President Xi Jinping in Washington, D.C., President Trump has rolled out the red carpet, casting the Chinese leader as a friend, despite intensifying differences over artificial intelligence and trade. President Xi and I have forged a friendship, a truly great friendship, actually built on mutual respect and the vital interests of our people.

16:15That was President Trump welcoming President Xi to the White House before that state visit wraps up today. And we are joined now by Terry Haynes, founder of Pangea Policy. Terry, great to speak with you as always. What's the policy that you see coming out of the last couple of days? Good morning. Good morning, Nathan. A couple of things. From a markets perspective, the results of this summit are good for a variety of reasons. So I'll give you three. First is trade. Not only has the trade truce been extended, but both China and the United States say that there is likely more to come and that a broader trade deal is within reach than they wanted the next two months in order to be able to put that together.

17:00So that's good news, and I think buried under the sniffing about the lack of results. Secondly, on AI, markets generally want AI to continue to be unconstrained, and it will continue to be. but with the promise of additional dialogue between the United States and China on fail-safes and difficulties. And that's a good thing. And thirdly, the United States is encouraging additional investment into China, or excuse me, encouraging China to invest in the United States, also very good, but subject to the Besant red line, as I would call it, the idea that they're not going to be permitted into sensitive technologies or defense technologies, but everything else might be fair game.

17:49So all of these things, I think, are very good for markets. Okay, let's take some of those point by point then. On the trade front, the two-month extension wasn't as long as we had heard from U.S. Trade Rep. Jameson Greer that it could be as long as six months. Is two months going to be enough time to hammer out some of the issues that you and I know about pretty significantly, whether it's the rare earth minerals or agriculture purchases? Both sides agreed to it, so they think it is, firstly. Secondly, I imagine Besson would say, should it not be enough, you can extend for longer. But the new idea this week, I think it's buried under the trade extension, the trade truce, is that the Chinese had brought up, according to Chinese media, had brought up the idea of a longer and bigger trade deal.

18:40The United States' response to that was receptivity, but they couldn't finish that in the next couple of days, thus the kind of short extension with the promise of a longer and bigger deal. So, you know, if they can't put something together in the next two months, then it gets extended for, I would say, another month or two. Markets should not look at that as uncertainty. Markets should look at that, I think, as more certainty that both parties are interested in doing a bigger and longer term trade deal. So that's positive. And when it comes to the artificial intelligence dialogue that we heard about from Treasury Secretary Scott Bessett ahead of this, we did hear from the Chinese leader saying that there should be continued human control.

19:28Could this be a pivot point when it comes to the U.S. and China in their competition over the technology? I don't think it is a pivot point. And people should not mistake that the fundamental positions of both countries are unchanged and will continue to be unchanged. The United States looks at winning AI as an existential competition that it must prevail on. China looks at it very much the same way with an added layer, that winning the AI race and controlling AI in China is of existential importance for the party and the party's control as well. So the bottom lines here are not at all pivoting, but the idea that both sides should be talking about what happens in the event that something goes rogue is good, new and welcomed.

20:29In our last minute, Terry, we also heard from China's official Xinhua News Agency that President Xi urged President Trump to oppose Taiwan independence as opposed to not supporting it. We haven't heard from the White House yet on how that conversation went down. Where do you see the Taiwan issue going now? I see the United States position on Taiwan as unchanged. She was expected to try to pressure the president on this, and so he has. But fundamentally, the United States position exists not just as presidential whim, but also is enshrined in law. Thus, Congress has to be involved. Congress, I think, has made it very clear on a bipartisan basis that it's not going to entertain any changes to the strategic ambiguity policy.

21:21Also, the decisions about arms support for Taiwan have to go through Congress. Those aren't pending for several months thanks to the way that spending plans will go forward through the midterms. Thank you, Terry. Again, good to get you on with us as we continue to monitor the state visit in Washington. That's Terry Haynes, founder of Pangea Policy. Karen. Nathan, preparations are being made ahead of a powerful weekend storm that could bring heavy rain and strong winds to parts of the East Coast. And for more on what we can expect, we bring in Bloomberg meteorologist Craig Allen. Craig, good morning.

22:02Tell us a bit about what's ahead. Is this a classic nor 'easter? Yes. Good morning, Karen. Good morning, Nathan. And it is indeed a nor 'easter and a strong one at that. It does not look like it will have any tropical characteristics, but when you put the two together, it doesn't really matter whether or not it was if it was a tropical system or whether or not it is a classic nor 'easter. It's early in the season for a nor 'easter like this, but it is going to affect areas especially north of D.C. Now, that's not to say that D.C. and suburbs are going to have nice weather. You're not. You'll probably have periods of rain and some gusty winds, and there's certainly some really rough surf along the Maryland eastern shore.

22:50But then as you make your way on up towards New York City, it's even worse, and there's stronger winds. There will be heavier rain, and that will continue, and the coastal sections across Long Island and the Jersey Shore will be pounded by this system. And the same thing as you make your way on up through the Connecticut coast and over towards Boston, where a high wind warning is already in effect. So what's the big concern here? Is it the wind or the rain? I would have to say this time around, it's the wind. There is the possibility, especially along the coastal sections, the Jersey Shore, Long Island, and all the way on out towards Cape Cod and the islands.

23:30I would say that there could be winds that will be gusting between 50 and 60 miles per hour. if not more, there will be heavy rain anywhere from one to three and locally up to four or five inches of rain. Now, normally that's something that we would be able to handle. But I have to mention that, you know, that especially around New York City, it was a very wet late summer. So additional rainfall like that could cause flooding. So it's a very close second in terms of the rainfall. Now, how specific can we get on the timeline here? When does it start and when will everything be wrapped up? Showers will be moving into the New York City area, I would say, sometime later Saturday.

24:15That's not to say that there could be a sprinkle ahead of it, some random or rogue sprinkles that started off, but there will be showers that become steadier and heavier and actually will make New York City and Boston first. Since the storm is coming up from south to north, you may find that a little odd, but it'll hit those areas first, then actually stall and perhaps loop around across the Jersey Shore. And that means it's going to be a prolonged situation both Saturday into Saturday night and Sunday. And I would say right now the end time of this is not going to be until Sunday night or early Monday at the earliest.

24:59This 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. 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.

25:39Search 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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