Daybreak Weekend: US Bank Earnings, Brussels Summit, Japan Sports Day

SPEAKER_1 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Nathan Hager (0:10)

This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we look to some key inflation data along with bank earnings in the US. I'm Nathan Hager in Washington.

Caroline Hepker (0:24)

I'm Caroline Hepker in London where we're asking if Europe's leaders can steer the region through political and economic turbulence.

Doug Krizner (0:30)

I'm Doug Krizner looking at Japan's Sports Day holiday and how it's used to promote health and wellness for the Japanese population.

SPEAKER_1 (0:38)

That's all straight ahead on Bloomberg Daybreak Weekend, on Bloomberg 1130 New York, Bloomberg 99.1 Washington DC, Bloomberg 929 Boston, DAB Digital Radio London, Sirius XM 121 and around the world on bloombergradio.com and the Bloomberg Business App.

Nathan Hager (1:02)

Good day to you. I'm Nathan Hager. We begin today's program with some key inflation data in the US. The Consumer Price Index for the month of September is due out this Wednesday, followed by producer prices Thursday. A key piece of the inflation story before the Federal Reserve's next policy meeting at the end of this month. For more, we're joined by Michael McKee, International Economics and Policy Correspondent for Bloomberg Radio and Television. Correct me if I'm wrong, Mike, but I think this is some of the last inflation data we're going to see before the next decision. Is it going to be make or break for an October move from the Fed?

Michael McKee (1:37)

It is, to a certain extent, not as much as the September numbers were. We had two monthly CPI reports before the last Fed meeting, and only one this time. And basically, everybody knows that prices are going to go up because energy prices rose over the interim period. The question is, when you drill down into it, are other categories, particularly in the services areas, starting to show any kind of relief? And there's mixed feelings in the economic community about that.

Now, we heard from the major decision makers so far at the Fed, at least the guys with the titles after their names, Vice Chairman Philip Jefferson and the Vice Chairman of the Open Market Committee, the New York Fed President John Williams, who said, yes, we need to raise rates again, but we don't necessarily have to do it this month. So the market is operating from the point of view that unless we get a really big surprise in CPI, just a normal rise won't do it because they can figure they'll raise rates again in December.

Nathan Hager (2:40)

Okay. Well, what's a normal rise mean, Mike?

Michael McKee (2:45)

Well, if you look for maybe a 2 tenths percent monthly rise or a 3 tenths percent monthly rise, you also have to figure in base effects. But basically, you get something in the 3 percent range. They would love to see core go under 3 and stay there. But any increase in the CPI that pushes us higher up into the mid threes is going to be a warning signal to the Fed that they're just not making progress yet. And I might mention that for those of you who have trouble sleeping or are maybe on a different shift than Nathan and I, next Thursday is PPI Day. But at 1130 p.m. Eastern time in the US, we're going to hear from Kevin Warsh. He's going to be over at the IMF meetings in Bangkok, and he is going to be interviewed by Kristalina Georgieva, the IMF Badging Director, and we're all hoping she'll say, well, what are you going to do?

Because it's the last Fed appearance by any Fed official before the blackout starts. So he gets the last word.

Nathan Hager (3:53)

Well, I was going to say that puts the blackout period at a whole new meaning when he's getting up that dark and early to make some comments that could potentially move markets here.

But let's dive into the debate about what we could see around the CPI number, whether energy related inflation could be seeping into broader price pressures. What are the sides of the debate that you're looking at?

Michael McKee (4:17)

Well, the biggest one is transportation, because the cost of diesel is obviously through the roof. And we're seeing more and more and more stories about how truckers are having to pass on their price increases. They can't make a living at these levels of diesel unless they raise prices. And then if they're raising prices to their customers, their customers are going to raise prices to you. And it takes a while for all of this to happen, but it should start showing up soon because the prices have been elevated for some time. So a lot of people are watching to see what we get in a lot of different categories of stuff that's trucked a lot. Do vegetables go up? Does clothing go up?