To daybreak australia. Shery the top stories this hour. Israel and hamas trade blame after hundreds are killed in an explosion at a gaza city hospital. President bidens summit with arab leaders is canceled. Haidi u. S. Treasuries and stocks fall. Nvidia slumps as the u. S. Restricts sales of chips made for china. Shery more big bank earnings. Goldman sachs post on earnings drop. We had a mixed picture when it came to the Bank Stock Trading session and of course a lot of volatility in todays session given the soaring yields we saw in the treasury space with the slump resuming. We had the s p 500 finishing almost unchanged. A lot of that to do with the fact that we saw strong Economic Data again a large jump in retail sales also solid Industrial Production numbers that sent the two year yield to the highest point in 17 years. We are watching the u. S. China reports as well as we heard about more restrictions when it comes to technology exports to china. So the Philadelphia Semiconductor index losing more than 1 . Again watching very closely tensions in the middle east and that potential ground offensive from israel at any time. Take a look at the nvidia stock because it was really nvidia that could potentially get hurt big time. If we see those chips made specifically for the Chinese Markets being restricted by the Biden Administration and that leading to the broader sector selloff. Haidi that tension always near the four. Lets look at how this is playing into asian markets. We are watching this chipmakers as we get to the start of trading in japan and south korea later on. Look at the set up when it comes to australia. Needed gains may be. Muted gains maybe. The aussie dollar modest gains. We saw a jump of just about. 5 on the back of what was perceived to be more hawkish than expected comments. There will be a lot more scrutiny on the wording. New zealand we are seeing downside when it comes to the equity session. Bigger losses when it comes to the kiwi dollar. They are leading declines in the g10 space after Inflation Numbers in the Third Quarter given more deflationary than expected. It comes to fx, we are watching the yen. A real chasm is starting to emerge between views on the yen. We are at data and its telling us analysts havent been more divided since 2016. Some are thinking we will see the yen hitting a 30 year low. Everyone else seeing a recovery back to on 40 by the end of the First Quarter and potentially heading into 130 levels as well. Im the thing potentially china domestic activity indicators dated update. Potentially some signs that signs of policy easing are starting to gain traction for this economic recovery. Bloomberg economics expects if you look at the numbers, we will see more resilience. Retail sales is looking to accelerate more. Fixed Asset Investment could get a boost because we saw the bump up in bond issuance and that tends to flatten flatter more spending. Industrial production looks like it may see a modest pullback. Shery we will see if we get to the eye percent growth target for the year. Gaza Officials Say hundreds of palestinians were killed in a hospital explosion that they blamed on an israeli airstrike. An accusation israel has denied. The u. S. Has called for an estimation investigation into the estimate. President bidens meeting with arab leaders has been canceled. What do we know right now about this explosion that hospital in gaza . Guest like you said, we have heard different stories. The Israel Defense forces have said that this was a failed missile attack from islamic jihadists whereas palestinian authorities are blaming israel as are the leaders of turkey and egypt. As we get more answers about what caused the explosion, we will have the ripple effects of this through the region. We have already seen protests in jordan and other surrounding countries and this will escalate the tension between israel and its allies and other countries that are trying to bring a quick solution, quick resolution to this conflict. Haidi what is President Bidens Main Objective in his trip to israel . Guest he has a tricky job. He came out strongly in support of israel in october 7 attack and now as we see conflict develop, as hamas militants are embedded within the civilian population, it will be very hard to balance the line between holding from with israel, urging respect for humanitarian law for the laws of war and making sure that conflict doesnt develop further. In trying to resolve this, President Biden will have to reach out to both israeli leaders and arab leaders which as we heard just now will be more tricky after his summit was canceled. Shery lets bring in the chair of global politics. We keep getting conflicting reports about this blast at a hospital in gaza. We understand civilians have been killed. Where do we go from here . What do you expect to see President Biden do during his visit to israel . Guest i think the truth will come down that its either catastrophic accident or deliberate targeting. When President Biden does comment, bank it will be backed up by u. S. And other intelligence. Its hard to keep this kind of thing secret because so many are watching the hospital side. What President Biden think is thinking is theres a lot of emotion in israel about the next steps going into gaza strip. He is thinking about the and state. Where is the world hope to see this ending up because there will be no lusting lasting peace for israel without a just and durable political solution. Folks have been thinking that you could keep things under control in gaza and maintain security, but we cant go back to that. He is think about where we want to end up and that involves calling for restraint quietly on the israeli side. Thinking about the fact that will have to deal with the political solution when all of this is over. Shery at a time only have about 200 hostages being held in gaza at this moment. Weve heard an interesting report that qatar is acting as a mediator. Reports and people speaking to bloomberg telling us they have been leading some of the negotiations to try to get those people out. Tell us more about who could potentially help in bringing this to resolution. One of the terribly tragic aspects about this hamas surprise chair attack, the scale is one thing, but the fact that they kept their operation so secret so successfully is a surprise. Theres suggestion that keeping hamas in the gaza strip and qatar out of the loop that they possibly didnt know and there possibly reason to suspect they would be wanting to cooperate with qatar and try to find a solution including brokering the release of hostages. There is a slender line of hope. You could be certain that every back channel is available to be exploited and the longer the ground incursion is delayed the more chance there is of offering these hostages. Haidi what is the possibility in terms of what both sides want and are willing to compromise on at this point . As you said in the past, hamas realizes the immense value of holding these hostages for as long as possible. What will they want to get out of the negotiations . Guest thats a really good question. It goes back to what did hamas attend intend by this attack in the first place. We will realize there are more than two sides. Within the Palestinian Community in gaza, there are multiple positions. The tech appears to be designed to prove a response because the hamas militants figure this complete to their advantage so taking hostages would slow things down and buy them time. There are other parties, other elements who dont want that. There are many on the israeli side who are thinking about the political solution at the end. It depends on who has the upper hand on how this can be played. If it was left to the people behind the hamas terror attack in the first place, they would be trying to play for time and soften the pace of the impact with the ground invasion. Haidi how much impact do you think Global Public opinion is having . We are horrifically seeing this play out on all aspects of social media. There have been terrible casualties on both sides and as both sides continue to trade blame for the latest impact on the hospital, i wonder does that play into how committed allies including the u. S. Can be Going Forward . I think it certainly does and we are seeing a really brutal conventional war, but we are also seeing a war of ideas and communication. Its always the case with war, but in the 21st century, the means of control through social media and through misinformation and disinformation are so much more. Their other parties who are not direct combatants. Think of possibly iran didnt know about the hamas attack. They have an interest in what happens. Russia almost certainly wasnt directly involved, but of course he wants a distraction with the war in ukraine. Theres a lot of disinformation campaigns already going on and social media makes it so much easier. We are seeing some social media platforms lose the control that they have in the past. Every nationstate involved has is accountable to what opinion it wants to sway. Arab states are not democracies, but nevertheless they feel pressure from their public. Haidi still ahead, Asset Management on why they think the fed is on pace to raise rates one more time. Goldman sachs suffers its eighth straight quarterly profit drop. This is bloomberg. Ive never felt more optimistic about the firm and our strategy has never been more clear. Regulatory uncertainty and geopolitical risks remain top of mind, i feel confident about the state of our client ranch eyes and opportunities for Goldman Sachs. Shery that was the Goldman Sachs ceo speaking on the Third Quarter earnings call. We have seen the 30 plus drop in profits. We saw the pressure on the stock price in the regular session today. Bank of america gained ground. Traders reported their best thirdquarter results in at least a decade. For more, su keenan joins me. Start with Goldman Sachs, what happened . Its a tale of two different sets of results. Goldman sachs suffered its eighth straight quarterly decline as the ceo asked for patients as he tries to turn his strategy around retreating from the illfated foray into consumer banking. The big hits resulted from real estate and continued dealmaking slump. An additional 358 million loss in impairments, all of that contributing to a 3 drop in profits. One bright spot was trading revenue which came in flat yet it beat expectations of a much bigger 13 drop. That helped soften the blow. Ceo says the firm continues to be very optimistic about the goal of returning meaningful higher returns to shareholders. Firms return of equity is still well below the target. Again, goldman share price is down 25 since its record high late 2021 and it is on track for a second straight annual decline. This is what the ceo has been dealing with. The poor performance of late in the stock has put a lot of pressure on his efforts. The bank looking to move past intense scrutiny of its ceo, hes been battling a lot of the dissatisfaction in the press. They also earmarked an extra 690 million to help quell some of the discontent making sure the walk workers are well paid. Haidi bank of america trading was a bright spot. It was really one of their best performances in a decade. Traders had their best thirdquarter results. In part because both fixed income and equity trading did well and also Net Interest Income that is a key source of revenue, both beat expectations. Stock was up 10 . The net income surged 10 to 7. 8 billion dollars or . 90 per share. Thats beating expectations. We heard from the ceo that they are very happy they were able to glad add client accounts across all part of the business and they were able to do this in they say is a slowing economy that saw Consumer Spending still ahead of last year but continuing to slow. Starting to hear that from a number of banks including the ceo of citibank last week that there is a noted slowing of Consumer Spending and more importantly, arise in the number of bad loans. The outlook is more cautious than some of the looking backward results. We have Morgan Stanley up tomorrow. Haidi staying on bank of america, the ceo says the feds campaign to tame inflation by hiking Interest Rates has successfully slowed u. S. Consumer spending. He says the question is what comes next. Guest lets think about two or three things. What are the consumers doing with the money they have in their accounts . Any given year, we will have 4 trillion spent by our consumers by debit and credit card purchases. That grew at 9 . Yeartodate i would have been telling you in a Second Quarter it still growing strong. Now its down in the yeartodate and the month of september. The consumer has been slowing down there spending because Interest Rates take a toll because as rates went up on their floating rate loans, other things that float, the rates are higher. Mortgage rates are higher. That slows down the Start Student loans. They have to shift spending around. On top of that, they are looking ahead to say i hear things will be bouncing around a little bit, i will spend less. The third thing is the goods they bought during covid, they bought the new couch and stuff, they dont need to buy another one. They have taken their trips and now they are back to core activity. It is slowed by half. The yearoveryear growth spending rate is consistent with 2 inflation and below 2 gdp growth. That rate of 4 is what we had in 20172019 as the economy went into an equilibrium. The fed has won the battle of the American Consumer and they are slowing down. Happens next, we cant predict. Its hard to move around this base a lot so once it slows, it will be hard to keep act up. How much of a Vantage Point do you have . Theres talk about excess savings out of the pandemic, checks that were being written to individuals and the dry powder being drawn down. Give us a sense of how much is being drawn down. Also to what extent is real wage increase replacing some of that . Guest inflation is tough especially on Median Income households in terms of goods and services are higher. Its a higher part of what they buy. Thats the pressure you see in the consumer sentiment. If you look at it and abroad aggregate sense, what you see with this is the consumer is healthy. If you look at the accounts, Median Income 75000 and under that had average balances, they trickling down. The rumors that they would be spent down by christmas 2022 didnt happen. It didnt happen this year. Now its starting to happen slowly. At this rate, it will still be many more months. For the first couple of years after the pandemic, the wages rose quickly then inflation caught up. Multiple years, its more insane. Recently, it is slow down. You are at an equilibrium across multiple years. Are you anticipating more delinquencies and defaults next year on the consumer side . Guest we have seen the earlystage delinquencies in consumer are below 2019. The problem with that is we said they were normalized in 2019. The reality was that was a 40 year low in delinquencies and chargeoffs in our companys history. We are normalized to a level that is very low. The delinquency and chargeoff rates in the card business and mortgage business, we have no chargeoffs. We are a prime lender. We continue to drive the growth. Shery the bank of america ceo speaking to david westin. You can get around up of the stories that you need to know in todays addition of daybreak. Subscribers go to dayb. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Haidi you are watching daybreak australia. Hsbc is blocking staff from texting on their work funds. The band will be applied across the bank and said staff had already been blocked from using whatsapp on work devices. Only a few unregulated roles will be exempt. It comes as an investigation of communication methods. Bloomberg has learned that a foreignexchange strategist is among those leaving. Its an effort to trim costs. Wall street experts have been dealing with the slowdown in trading activity compared to a year ago. Coming up, chief investment strategist to see how he sees the chances of a soft landing in the u. S. This is bloomberg. U. S. Economy has proven to be more resilient than expected. As we sit here today, our client franchise is as strong as ever. If conditions remain conducive, expect continued recovery for Capital Markets and strategic activity. Haidi david solomon. Our next guest says the current framework requires more dynamic asset allocation. He favors japan and em asia equities. Great to have you with us. I find it interesting you still think liquidity conditions are quite healthy. That is not what we have been hearing from the fed. It depends on what measures you look at because it is kind of like the water water everywhere but not a drop to drink. There is massive amounts of liquidity. Brian moynihan was saying the federal reserve, balances for the households, theres plenty of cash out there. It is surprising how resilient they are. The liquidity we have to be concerned with is the credit markets to begin with. You sell the 10 year and the treasury yields. Watch spreads what a name that is a good indicator of what might happen. Where this freezes in the market or start a negative feed back loop. There is liquidity out there but it is not available and ready to be used as much as it was over a year ago. Haidi a bit more value against growth. I find it interesting you