Israeli Troops Enter Gaza's Main Hospital; Biden, Xi Hold Key Meeting; Government Shutdown Risk Eases

On today's podcast: 1) Israeli troops entered Gaza’s Shifa hospital compound as part of a “precise and targeted operation” against Hamas that runs the risk of intensifying international ire if it causes more civilian casualties. 2) President Joe Biden and Chinese counterpart Xi Jinping’s carefully choreographed, much-anticipated sitdown on the sidelines of the Asia-Pacific Economic Cooperation summit kicks off Wednesday at the Filoli estate south of San Francisco. 3) House lawmakers overcame partisan animosity Tuesday to pass a temporary government funding bill that greatly lowers the risk of a shutdown even as it delays fights over Ukraine aid, border policies and deep cuts to federal programs. Full Transcript: Good morning, I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today. We begin in the Middle East, where Israel is now carrying out a raid on Gaza's main hospital, Alshifa. The Israeli military calls it a targeted and precise operation against Hamas, but it could add to growing concerns among allies about civilian casualties. Sources tell Bloomberg News the White House is getting more frustrated with Israel's handling of the war and ignoring what the Biden administration calls difficult conversations. But Israeli government spokesman Alon Levy says he is still confident of US support. Israel and the United States a completely in lockstep on the goals of this operation, which is that Hamas must be defeated. President Biden has been very clear from day one. We have been very grateful to him for his moral, material and diplomatic leadership in saying that Israel has every right and every duty to go after Hamas and destroy that terror group and eliminate that threat. That is the only way we can make sure another October seventh massacre doesn't happen. Alon Levy tells Bloomberg Radio Israeli troops are delivering medical aids of the hospital. He says this operation won't be the end of Israel's war with Hamas well. Nathan al Shifa Hospital has now been without power and water for days. Manir al Bersh is from the Hamas run health ministry, and he says newborns are being moved to improve their chances because of shortage of electricity. They have gathered them all and put them on those bids together so that they can have some more tem bricher. You know, the winter is getting inside now Gazza. Without having a proper temperature for them. They immediately die. The UN says only one hospital in northern Gaza is still operational at a minimum level. Back here in the US, Karen, we're following another major story this morning. The threat of a government shutdown is easing. The House has passed a temporary funding bill, and we get the latest from Bloomberg's Amy Morris in Washington. It is a two part measure that would fund some parts of the government through January nineteenth and others through February second, which sets up the possibility of another shut down deadline on Groundhog Day. Democrats bailed out the Republican House Speaker Mike Johnson, whose plan drew opposition from hardliners in his own party because it doesn't cut government spending nor change border policies, and it also doesn't include aid for Ukraine nor Israel. But Senate Democrats are expected to back it anyway. They'll need the cooperation of all senators to meet the Friday night deadline when federal funding lapses. Shington I ma Any Moore is Bloomberg Radio right to me. Thank you well. We are just hours away from the highly anticipated meeting between President Biden and Chinese leader Shi zhen Ping. Their schedule to meet on the sidelines of the Asia Pacific Economic Cooperation Summit in San Francisco. Bloomberg said, Baxter has a preview. It will be the first meeting in a year. She was greeted here by Treasury Secretary Janet Yellen and Governor Gavin Newsom. Students line in the streets waving Chinese flags, and President Biden says communication here is key. We're not trying to decouple from China, but we're What we're trying to do is change the relationship for the better. Biden did say President she needs to ease the criteria for US companies to invest in China and not require those companies to turn over trade secrets. In San Francisco, I'm at Baxter, Bloomberg Radio, thank you. Ed. Turning to the economy, a day after investors shared news that inflation broadly slowed in October, we get two more key readings today, Producer prices and detail sales. Let's get a preview of that from Bloomberg's Michael McKee. Sales are forecasts to have fallen in October, led by gasoline autos and the ongoing drop in inflation. Retail sales are calculated in terms of dollar value, so falling gasoline prices and lower goods inflation should have a major impact. Take those out, and sales are forecasts to be up to tenths, much less than the six tenths gain in September. Analysts will also be watching for an expected slowing in producer prices. They don't feed directly into consumer indexes, but offer a rough guide to the future path of inflation. Michael McKee, Bloomberg Radio, all right, Mike, thank you. About traders are betting the Fed's hiking cycle is over following yesterday's cool inflation print, But a couple of Wall Street titans are throwing caution. We spoke with Citadel founder Ken Griffin. The FED needs to stay on message that they're going to put the inflation genie back in the bottle, and so they if they cut too soon, I think they risk losing credibility around on their commitment to a two percent inflation target. Ken Griffin's caution was echoed by JP Morgan Chase CEO Jamie Diamond. I think they do. They're doing the right thing to pause for now. You know they've raised rates a lot, you know, to wait to see the effect on the economy in the US, particularly as the fiscal spending, the excess fiscal spending is winding down and quantit tight and tiny is kicking in. But I still think you should prepare they might have to do a little bit more, and I think people should be prepared for that just as a kind of a risk management tool. And I'm afraid inflation may not go away that quickly. JP Morgan. Chase CEO Jamie Diamond has said previously he's advising clients to be prepared for interest rates as high as seven percent. Inflation's also in focus in Europe, Karen. In fact, inflation in the UK stumbled to its lowest level in two years. Consumer prices rose four point six percent from a year earlier in October, down sharply from six point seven in September. Slow downs prompting investors to firm up bets at the Bank of England will be able to cut rates as early as this of next year. Well we turned to earnings now, Nathan and profit at ten cent beat estimates. Analysts say it's another sign that Chinese consumers remain willing to spend on games and entertainment during a nationwide downturn here in the US. Arnas continue at Target, TJX, and Cisco all set to report, and time now for a look at some of the other stories making news around the world. For that, we're joined by Bloomberg's Amy Morris, Amy, Good morning, Good morning, Karen. Tens of thousands of people from across the country gathered on the National Mall in Washington, d C. In support of Israel. Organizers encouraged everyone to speak out against anti Semitism in America today. You can't remain silent. You know, that was a mistake who's made during the Holocaust, during the Second World War, they knew what was going on, but they felt, you know, they were too timid to speak off. Speaking remotely from Jerusalem, Israeli President Isaac Herzog thanked the demonstrators for gathering and supported marching for quote good over evil. Israel's assertion that a Hamas command center is under a key Gaza medical complex is being confirmed by the US. Bloomberg's Nanzy Lions has the latest. A Biden administration says it does have intelligence that confirms Iran backed militant groups are using hospitals, including the Al Shifa facility in Gaza to conceal and support their military operations. This is National Security Council spokesman John Kirby. Members operate a command and control node from Al shifa He and Gaza City. They have stored weapons there and they're prepared to respond to an Israeli military operation against that facility. Kirby says the US does not support striking the hospital from the air or seeing a firefight among helpless sick people. In Washington, Nancy lyons Bloomberg Radio Morning continues in Ohio following yesterday's fiery multi vehicle crash that killed six people outside of Columbus, including three high school teenagers. Tusky Valley School Superintendent doctor Derrek Vinarski spoke at a vigil last night at the school's outdoor stadium. There are no words for the sheer magnitude of loss and grief felt by all of US officials say. A semi slammed into a charter bus that was carrying the high school marching band on I seventy A teacher and two parent chaperones were also killed in a vehicle that was following the bus. The massive fire that burned a section of the ten Freeway near downtown LA may have started in a homeless encampment. A Stella Lopez is CEO of the Downtown Industrial Business Improvement District. Homeless people when it gets chilly at night, they start fires. When they need to cook, they start fires. This was a disaster waiting to happen. Officials confirmed there were sixteen homeless people living under the now damaged section of the ten freeway. Global news twenty four hours a day and whenever you want it with Bloomberg News Now. I'm Amy Morris and this is Bloomberg Karen. All right, Amy, thank you. I mean do bring you news throughout the day right here on Bloomberg Radio. But now, as Amy said, you can get the latest news on demand whenever you want it. Subscribe to Bloomberg News Now to get the latest headlines at the click of a button. Get informed on your schedule. You can listen and subscribe to Bloomberg News Now on the Bloomberg Business app, Bloomberg dot com plus Apple, Spotify, and anywhere else you get your podcasts. Find its time now for the Bloomberg Sports Update with John stash Hour John Karon. A big early season college basketball doubleheader in Chicago had started with Duke beating Michigan State seventy four to sixty five, and then top rank Kansas held off Kentucky eighty nine eighty four. The Jayhawks seven foot Hunter Dickinson scored twenty seven points. He at twenty one rebounds. Pensey night of the NBA, with all the games part of the in season tournament. The Warriors had to play without Steph Curry out with a soord knee, and then early in the game, less than two minutes in, there was a fight. Klay Thompson got a jacket and so was Draymond Green, who had Minnesota's Rudy Gobert and I headlocked. The Timberwolves again beat the Warriors one oh four to one oh one. Call Anthony Town scored thirty three wins. Golden State has lost four in a row, six straight win from Miami. Jimmy Butler scored thirty two in a win at Charlotte de Monte. Murray scored thirty two as Atlanta won in Detroit, Indiana can did Philadelphia just its second loss of the season. Pacers won one thirty two, one twenty six in Philly. Tyrese Haliburton thirty three points in the win Joel MB thirty nine in the loss. Rough night for the rookie victor Wembin Yamashatto's four to fifteen eight points. The Spurs lost by thirty six at Oklahoma City. Bruins made a twelve one and two on the season of five to two win at Buffalo, the Capitol shut out Vegas three nothing. Managers of the Year the Orioles, brand In Hyde in the AL after Skipper and the O's to one hundred and one victories Miami Skip Schumacher won NL honors got the Marlins into the postseason. They'll name the cy Young winners today. The Yankees Garrett Cole expected to win in the American League. John Staneshawer Bloomberg Sports from coast to coast, from New York to San Francisco, Boston to Washington, d C. Vationwide on Syrias Exam the Bloomberg Business Appen Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. We want to get you the latest now on the war in the Middle East and the news that Israel's forces are now inside the Alshifa Hospital complex in Gaza City. Facility that it accuses hamasav using as a government center. Alon Levy, Israeli government spokesman, spoke with Bloomberg Radio about the situation on the ground in Gaza and ongoing negotiations to release hostages in the territory. Israeli society is, of course worried sick for the fate of the two hundred and forty hostages have been in Gaza for forty days now since the October seventh massacre. There are children in there, there there are babies, babies. They haven't been given access to the Red Cross. I'm afraid I can't comment on negotiations for their release. You'll understand these are sensitive issues. Human lives are at stake, and when we have information, we will of course update. If the Alshafa Hospital complex is a main one of the main Hamas bases in northern Gaza, once that operation is over, does that mean that the military, the Israeli military has accomplished its main aim in Gaza. In your view, our main aim in Gaza is to destroy the totality of Hamas's terrorists and governing infrastructure. How significant would it be though, if the base that you claim is under the hospital at the hospital in the hospital. How significant would it be if that were something that was dealt with, How big, how significant would it be in terms of the operation. The Sufa Terra compound is of course a very important target. It would be a very serious blow to Hamas. But we should be under no illusions that if that is overrun, and of course we show all that evidence to the international media that the operation will be over because we cannot allow Hamas to regroup, rebuild and remetastasize across the Gaza strip in order to pose a threat to our people. The objective of this war, in response to the October set massacre when Hammas declared war on us, is to destroy Hamas completely so that it can never again pose a threat to our people. Chief of Terror compound is of course very important, but it's not the end, and we know that the days ahead are going to be long and they're going to be difficult. Are you concerned about support from the United States for the military operation fading. We've been reporting about disquiet within the Biden administration with how Israel is conducting this military operation. Not in the least, Israel and the United States are completely in lockstep on the goals of this operation, which is that Hamas must be defeated. President Biden has been very clear from day one. We have been very grateful to him for his moral, material and diplomatic leadership in saying that Israel has every right and every duty to go after Hamas and destroy that terror group and eliminate that threat. That is the only way we can make sure another October seventh massacre doesn't happen by eliminating the terror group that is threatening to do it again. The United States knows that, not only the United States, so do other Arab governments. The United States has been speaking with. We understand they have their own domestic pressures that mean they can't speak openly on the issue, but they understand that the Iranian proxy terrorist group in the Gaza Strip must not be allowed to maintain its territorial control. And that was Israeli government spokesman Alon Levy speaking with Bloomberg's Caroline Hepger and Stephen Carroll for more. We're joined now by Rosalind Mathieson, Bloomberg News Director for Europe, the Middle East and Africa. Roz, good morning. As we watch these developments unfold in the Al Shifa Hospital, we heard those reassurances from the Israeli government spokesman, but the fact does remain that we are hearing as well a lot more frustration, not just from the US but from the international community at large over what is happening in the Gaza strip. Well, that's right. We heard of course from the IDF spokesman a short time ago, and they are confirming this operation which is in the vicinity of the Shifa Hospital. They're saying they're now in the grounds. It's very difficult to know exactly what's going on there though, because there's a communications blackouts that we're getting very little information back out this way about that operation. We do know that Israel said that we're bringing in medical crews and Arabic speakers with them. It's very very delicate, of course, because this hospital has become the focal point on either side. We know that Israel says Hamas has got tunnels under this tunnel. They're using it, they say, as a staging point for attacks, but also it's a center of civilian of civilians who've clustered there in recent weeks into the compound. We know that they've run very low on things like fuel and medicine and so on. So you've got sort of these competing goals going on in a very very delicate environment, and we are getting those global expressions of concern as a result. Is like, when you've got so many civilians and close proximity to a major military operation, how can that be carried out in a way that minimizes the risk of civilians as a result, and it brings into even larger focus as well, this idea from Israel that hamas as strategy is to use civilians as human shields as it continues to carry out this war against Israel. But does this feel though like a sort of a turning point in this war now to have Israeli forces now inside a hospital facility in Gaza. Well, the interesting thing also is that Israel is saying that this doesn't necessarily mean that their operation in Gaza would be finished. They've said their goal is to eradicate Hamas entirely, to ensure that Hamas could never again carry out an attack to the extent that they did on October seven inside Israel. So that's a lot more than just going into this hospital. We are talking potentially weeks and months of fighting inside Gaza, door to door, street to street again, bringing military forces and militants into proximity with civilians who are still in the north of Gaza. It could be a turning point again perhaps in the narrative around Israel on this. You're mentioning the heightened sense of global concern, the comments we're seen not just from aid agencies in the UN, for example, but also from the US, from Europe, from countries in Africa and the region, saying we're really worried about how this could play out on the ground on this particular side. But it doesn't seem at all that this would be the end of the Israeli military operation. There's still a long way from what they're saying that they have to go. And to that point, we're still seeing, even with these public expressions of concern from President Biden, that the Pentagon is continuing to draw down weapons and send them to Israel. What is the balance that the US is trying to strike when it comes to continuing to give this type of support to Israel while expressing concern about the risk of civilian casualties. Well, that's right, so very tricky balancing for the US because they're a strong ally of Israel. They provided Israel for a long time with military assistance, including for the Iron Dome missile shield over Israel, and they've said that they want to continue to support that because that's protecting israelis from attacks coming from Hamas and others Hasbala aerial attacks and that's important and they've said they'll continue that. But beyond that, you have the question of if you're supporting Israel militarily with things like artillery and ammunition, how is that being used? A guess whom might that be used in such a delicate conflict on the ground inside Gaza, And so the US needs to tread very carefully there. And again you're seeing that balancing act just sort of like yes, public support still for Israel. Behind the scenes, we know that they are calling on Israel and urging Israel to proceed very carefully inside Gaza in that growing sense of frustration about how it seems to be proceeding. And then the third concern for the US is also does this conflict still somehow expand and during the US directly militarily in the region. And we know the US has sent a lot more of its military assets into the area. We're talking warships and so on, and actually troops being stationed in the region, so that's going to be a high concern for the US. Also absolutely thanks for this, Roskad to have you with us. Rosalind Mathis and Bloomberg News Director for Europe, the Middle East and Africa, Karen Well Nathan. We want to turn now to our interview with Jamie Diamond, the head of JP Morgan, spoke with our Bloomberg affiliate in Mexico discussing the latest inflation numbers, a potential rating downgrade for the US, and the headwinds that the US economy faces. Let's go to part of that discussion. I think the number is good today. Personally, I think people are overreacting to short term numbers and they should stop doing that because you look at all the adjustments going to them, they're not completely valid. I think inflation is probably a little stickier than that shows. I think they do. They're doing the right thing to pause for now. You know they've raised rates a lot, you know, to wait to see the effect on the economy in the US, particularly as the fiscal spending, the excess physical spending is winding down and quantit tight and tiny is kicking in but I still think you should prepare. They might have to do a little bit more, and I think people should be prepared for that, just as a kind of a risk management tool. And I'm afraid inflation may not go away that quickly. And well. Also, three months ago, Fatur Rating downgraded US credit rating, and this weekend we saw Moodies changing its outlook on the US created rating to Native, pointing to our sharp rise in depth, servicing costs and political polarization. What do you expect in this terms? Yeah, look, I find a little ironic that fiction Moody's been doing that today. So here's what I think they are right to point out those issues. I would take polarization off. That's always been true in democracy. But yes, we have far more debt and more debt financing. We've been a little profitate when it comes to that. But the market is pricing US as triple A, which I think is more right, and the market will be more right than the rating agencies. I also want to point out I find this almost funny. They have a lot of country's rate of triple A. They all live under the protection of the American military, and so I think it's a little peculiar that that makes them triple A, but not America. So America will be fine, but we got to get our hands around these problems. They will not age well. The death it's a lot bigger this year than we thought. There may be consequences of that, and so I do I think the right to point it out and talking about your bank, Jamie, how would you sum up these year twenty twenty three, given that it was such a tough time for the brother industry. I don't look at any one year like it's a mystical thing, you know. I always tell people that profits are like the tip of an iceberg is bobbing in the ocean. You know, the real quality of your companies, your people, your systems, your technology, your products, your services. So we had a good year financially, you know. I know that some banks has some problems. We've been quite clear over earning. But to me, the important thing is that we're going to serve our clients through thicker thin We got plenty of capital, plan liquidity. We're not going to panic no matter what happens the environment out there. We're going to be in Mexico serving your clients, your country, or the way we should be. And you know, I think if rates and I'm hoping that the first Republicans we bought was probably the last domino. But I've always said, provided race don't go up, but we don't have a recession, and I do think banks being prepared for that, that's just a reasonable thoughtful risk management tool. Be prepared for things you don't expect, so you can continue to build your company. How to prepare for the things that you don't expect. The way we do it is we model out how are we to do in two percent ing of rates and seven percent interest rates, how we do with credit losses going up? Stress testing markets around the world. So we do like literally one hundred stress tests a week, and so always looking at that so we can manage through that and then under all those circumstances, we're fine. Find means to me that you don't have to announce massive layoffs and you don't have to like pull out of a country, that you continue to meet the commitments you have to the people in the country and the countries themselves. You know, people don't like bangs who are fair weather friends, and so you know we're going to be there for people all the time, and you know, we've always been careful how we run the bank. There is really a future for fintech startups or will they be outlasted or innovated by banks. Yeah, I think it's the wrong way to look at the question like it's a binary answer. You know, there will be some who will not survive. There will be some who are very smart and they have a great niche idea. There will be some who are more than that, you know, So JP Morgan, we look at all the fintech, we also look at the big tech. You know, we have competition effectively from Apple, Google, Facebook, and so there will always be survivors. And our job is to make sure we're lean, we're mean, we're thinking we're competitive, we're not. It's always better assuming that some of these people be successful than to assume that they won't be successful. And you know, I've pointed out their own meagement teams that there's some great companies out there that we could have built and we didn't like Square and Stripe, and so you know, you've got to be open minded and a little humble about what's going to take place. Saw alone is not going to make you succeed in the future. If you don't believe me, read about the history of all large corporations. Also, I would like you to ask about Mexican economy, which are your perspectives with high interest rates, high inflation, but with the opportunity of nearshuring. Again, I think it's a great opportunity. And you know, a lot of Latin America countries raise their industrates rapidly quickly, and they probably did the right thing for the long run of the economy. You're very low unemployment. You know, inflation is coming down, so hopefully you'll conquer that. I think countries should always look at and I really mean this, like I do with a company, what should they be growing? And you know, I think we've undergrown in America, you know, quite a bit over the last year, and I think Mexico should aspire to do much more. And just like so, that's how I look at it, and to do more all these countries, all of us. You know, it's about policy and you've already mentioned infrastructure, but it's about work skills, effective regulation, transparency, corporate governance, uh, you know, rapid permitting. It's all those things. You know, it's consistency of law that have a country grow and the important part of having a country grow it helps all of the citizens. There's more taxes, you have more a wherewithal you know, it's not just for big companies. You want to grow an economy, you really want it for everybody. Every job created, you know, every job created is a job for someone, and so you know people we need We only be very thoughtful. I can grow economies help and we should do it to benefit all the citizen of our country. You know, not just the you know, the wealthier and the employee, but everybody. This is Bloomberg day Break Today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street time on Bloomberg eleven three to oho in New York, Bloomberg ninety nine to one in Washington, Bloomberg one oh six' one in Boston, and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, Seriusxmbiheartradio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak See omnystudio.com/listener for privacy information.