about $5 billion per day according to estimates. the inflationary impact is also a potential threat. european futures pointing to

gains after the downside yesterday. u.s. my -- markets managed seek out gains. ftse 100 futures pointing to gains of 24 points. nasdaq futures holding above the 20,000 level and currently flat. you have major markets in asia closed, including hong kong and mainland china. closed now for the national day. and the two year yield at 3.63% as we assess where the fed goes. markets paring some of those bigger bets. 65 from 75 basis points in terms of expected cuts. christine lagarde opening the door for an additional cut this month. brent at $70.84.

and gold at 2639, up five points. let's check in on what's happening in asian markets. the nikkei gaining after heavy losses yesterday, down almost 5% today. now making up for all those losses but up to percent. we are waiting for confirmation that your -- that the leader of the governing party will become the new prime minister. speaking at the national association for business, fed chair jerome powell emphasize the u.s. economy remains on solid footing, setting the table for further cuts. take a listen. >> if the economy evolves as expected, policy will move to a more neutral stance but we are

not on any preset course. the risks are two sided and we will continue to take decisions meeting by meeting. tom: joining us now is mark card more. your assessment of what we heard from powell? is this a fed chair who is opening the door to 25 basis points versus 50 at the next meeting. >> that is how it's being perceived. i don't think he said loads new but there was certainly the emphasis of he will get to neutral overtime. you know i have been in the camp that rates markets have gotten over exuberant and pricing an aggressive round of rate cuts that would only be justified if there was some hidden crisis on the horizon. and it is unlikely when the economy goes into recession and the public sector is pumping so much money into the economy.

it requires a severe contraction. the upside is for yields into your end. and in that context powell's comments would always see a bigger upward move than a downward move because you cannot price in more cuts. we have a change in the interpretation of the pace but i don't think he added much new. i think we go into a jobs market this week where the data is still asymmetrically skewed for a bigger rise, but that said, given that all year this market has been pushing for rate cuts, if we get a weak number, then i think yields will try to grow lower. tom: but otherwise, higher from here. you have to wonder whether this strike, for the first time since 1977, goes to the u.s. and gulf coast with the capacity around half of all u.s. trade. in terms of the potential

inflation, how significant could this be for the economy of the u.s. and markets? >> it depends how long it lasts. it is a weird one because we have known this would happen for a long while. it was well telegraphed and there have been no real developments on negotiations up until yesterday when there was a hand that there might be something -- a hint that there might be something. no one is pricing must disruption. people are going to wake up to those headlines going this is the first time since 1977, and it will get worried about it. the real impact will be only if this sustains for a number of weeks or months. and there's an expectation that if this drags on much longer that president biden will step in and make sure there is a resolution.

if president biden does not step in in the coming weeks, this will be a risk that is not yet priced in and will mean higher yields and a slowdown in the economy. >> the ball is in biden's court. thank you very much indeed for the analysis across these markets. >> scorching focus to what is happening in the is -- in the middle east. israel has become what it is describing as targeted ground raids in lebanon. they have been striking targets in villages close to the border that pose what they say is an immediate threat to communities in northern israel. let's get more from joumanna bercetche. what is the latest on the ground in lebanon? >> there was speculation that a ground incursion was imminent and it appears to be the case

that these so-called targeted ground raids have begun. at this point it is unclear exactly how many israeli military troops are involved in these efforts but they have set their forces are striking targets located in villages close to the border that pose an immediate threat to israeli communities in northern israel. and lebanese media are citing that a refugee camp close to one of the sewed -- the cities in the south was targeted overnight in their work explosions also heard in beirut. >> they have not commented on the developments overnight but we heard from the deputy secretary-general overnight and he was saying that the group's forces were prepared to fight the israelis on the ground. he said we are ready if the

israelis decide to enter by land. of course, hezbollah is diminished incapacity according to our bloomberg colleague in israel. the israeli ministry thinks it has eliminated all but one of hezbollah's top 11 commanders and our colleague in jerusalem is saying israel believes it has destroyed about half of hezbollah's precision guided missiles. so from what we can read is that this is an incursion that's begun and they are specifically aiming for military infrastructure. >> so one key question is what israel's longer-term goals are. one analyst quoted saying is this the beginning of the end or the end of the beginning? what is our assessment of where israel goes from here and the international response?

>> israel have articulated the new war objective, which is to restore security to the northern border and allow the 60,000 residents who have left the border since the beginning of the war to return safely to their homes and not be at the risk of hezbollah firing rockets at them. and key to their assessment of whether they have achieved this is whether they think they will launch those attacks on to northern israel. you also have to think about it from the perspective of hezbollah and whether they are inclined to keep pushing ahead with these attacks or whether they are -- either in a capacity of being less take a bowl of launching such attacks because of the blows they have taken over the last couple weeks and may be in a position to actually agree to some form of a cease-fire. if this cease-fire does go

ahead, would that mean that israel would be allowing and giving hezbollah the time to regroup? that is the calculus at play. at the same time, the international community is looking for a diplomatic solution. the u.s. and the french very actively involved. with many european nations calling for the implementation of a cease-fire because of concerns about the death toll in lebanon as well as the number of people displaced, close to one million being spread out. and even the united nations deciding 100,000 have left lebanon and gone into syria in the last couple of days. a diplomatic channel has not appeared to have worked. >> huge numbers of civilians impacted.

joumanna bercetche with the latest on what could be seen as a significant day indeed for that region. >> a vote is taking place in the japanese parliament that will see a new prime minister formally elected. he won the leadership of the liberal democratic party friday. and our politics and economics reporter joins us. what do we know about this new administration? >> there is the vote going on in parliament which will confirm the leader and then his most immediate priority is this general election he is called for october 27 and he will have to lay out a vision for the country. many people did not expect him to become the prime minister in

this dramatic vote so we he will -- so he will have to put some meat on the bones of his economic policies. he has talked about continuity from the previous administration of trying to defeat inflation and raise wages and bring more economic growth to the countryside of japan but he has provided few specifics on that so we are looking for him to lay out how he will go about these goals that he's got and he also needs to bring the party together because it's a party that has been written by scandals. and there are lawmakers who have taken kickbacks. he may need to exhort his authority. he is someone who has been on the outskirts of the party so it's a challenge for him to show he is in charge and can convert his public support into a victory for the party and he also has other challenges like

dealing with foreign policy. and we expect them to travel to southeast asia. they have talked about setting up an asian nato. this will be an opportunity for him to bring up what to do so it's a moment in the sun for someone who has not experienced much of the limelight in recent years. >> really important update. alastair gale in tokyo in terms of what to watch for for the domestic and international implications of this likely new prime minister. we are going to get euro area cpi. inflation data has suggested there is a comfortable path to that 2% target for the ecb with markets pricing in a 90% chance of a further cut this month from

the european central bank and christine lagarde seemed to be nodding to that. we will get u.s. manufacturing data so a gauge of the health of the manufacturing sector of the u.s. and after the close something on the consumer stateside with nike earnings crossing. we will have those for you. you can see that stock has been challenged, down around 20%. a roundup of the stories you need to know to get your day going. terminal subscribers can go to d.a. why bigo on the terminal. coming up, president xi jinping warns of potential obstacles ahead for china. in his first speech after beijing's stimulus barrage as the country's golden week holiday gets underway. more on that next. this is bloomberg. ♪

tom: the holiday kicks off just days after beijing announced stimulus measures aimed at boosting consumption and hitting those growth targets. i am joined by minmin low out of hong kong, not on holiday today. what do we expect in terms of the golden week activity, a pickup in terms of china's consumer?

minmin: that is the first big test, whether the euphoria we are seeing in the chinese stock market will translate to a recovery in consumption sentiment on the ground. that's an open question. the chinese government is expecting close to 2 billion trips on shore, a near 20% surge compared to 2019 levels, but key to watch is not the total number of trips but the per capita spending, because that still has lagged. during the may day holidays, it beat pre-pandemic levels. the question is how much momentum is behind that? that europe is said to be one big destination for chinese travelers with overseas flight bookings doubling according to some platforms like trip.com. that is some of the most robust signs yet that chinese consumers could be returning in force. also a key metric to watch for

global tourism recovery given that chinese travelers are some of the biggest spenders in the past, at least in pre-pandemic times. tom: absolutely. real spending have to in previous -- spending heft in previous years. we have been hearing from president xi jinping commenting for the first time since this stimulus action from the pboc. he is reaching once again for those analogies for the weather, saying there will be obstacles and difficulties. even major challenges like surging torrents and storms. he's not sounding very upbeat. minmin: yeah. it is quite a somber tone here. it is a departure from his 2019 speech during the 70th anniversary of the founding of the pb rc. that was a much more sunny speech. this time though, aside from his usual refrains around chinese

sovereignty, he added that warning about preparing for rainy weather ahead, perhaps encapsulating some of those concerns around the geopolitical and economic headwinds that china is facing, especially with the u.s. election. that's a very tight race that could potentially flip the risk on sentiment to risk off overnight if trump wins the election in november. you had that huge rally, really an eye-popping gain of 8.5%. the chinese stock benchmark had a rally. some are saying maybe president xi is tempering expectations because the sentiment driven rally can be materialized quickly but the longer-term fundamental shifts in the economy will take months and years to materialize, so perhaps tempering expectations as well. tom: ok. bloomberg's minmin low joining us from hong kong with the latest on the golden week and what we have been hearing from president xi jinping in china.

christine lagarde voices are support for banking tieups as the ecb examines unicredit's potential takeover of commerzbank. we have the details next. this is bloomberg. ♪ ♪♪ ♪♪

♪♪ ♪♪ sandals jamaica sale is now on. visit sandals.com or call 1-800-sandals welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcía's, love working with you. because the advice we give is personalized, -hey, john reese, jr. -how's your father doing? to help reach your goals with confidence. my sister's told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial.

tom: welcome back. christine lagarde has reinforced her support for banking tieups as the ecb examines unicredit's potential takeover of commerzbank. for more, let's bring in bloomberg's oliver crook in berlin, someone who has been tracking all of this for us in detail. christine lagarde weighing in, making a, not specifically about unicredit and commerzbank that she was careful on that front -- but nonetheless it seems like a pretty specific intervention. what do we learn? oliver: this was a speech that

was supposed to be about monetary policy, economic conditions within europe, in front of the members of european parliament for the first time since they have been elected, but the very first question she got from an mep, who is neither italian or german but spanish, was about this banking tieups, the potential takeover of commerzbank. take a listen to what she had to say, tom. >> i believe that cross-border mergers, if they produce larger institutions that are more agile, that have more scale and depth, has lots of benefits. it's not without liability, without potential risks, but of course, it is for the undertakers of those initiatives in the private sector to measure all that and to determine whether it does make sense. oliver: as you say, she did not say this was specifically about commerzbank or unicredit but it is significant because the decision about whether unicredit

can elevate its stake about 10% in commerzbank is still with the ecb. what we heard from lagarde is that in principle she does not see anything wrong with it. she says her role as supervisor is to ensure everything is done by the book and permitted. this was a speech that was in many ways a lot more political than some of the ecb speakers in the past would've been willing to go into, because she was also talking about how important it was to get europe more integrated into capital markets to achieve the goals laid out by mario draghi, maybe music to the ears of the new commission, which was inspired by this mario draghi report, but controversial territory for the head of the ecb to wade into. tom: she was also to talk about macroeconomic policy. the question about inflation and the journey of the ecb to get to that target, did she essentially keep the door open around a further cut, a third cut, this

month? oliver: certainly the market interpreted it that way. we have a 90% chance of a rate cut to the market. she was doing a victory lap around inflation, saying how much they have brought it down, talking about the german figure we got, which was under 2%. a couple flies in the ointment. she said in the fourth quarter inflation will go back up because of the base effect versus last year. we should also say that despite the fact that we got 1.8% out of germany yesterday, core is still stuck. it is still at 2.7% in germany. that is not going away. the third thing we need to pay attention to his we have reporting yesterday that basically germany expects zero growth this year, not any kind of recovery. we have been waiting for the german recovery for a number of years and basically getting a confirmation from the government that that's not going to happen and we are starting to feel that

on the corporate side in germany, as we have seen at least with the auto sector. tom: bloomberg's oliver crook, thank you. crossing the terminal now. the strike is underway on the east coast and gulf coast of the united states of america, the first time since 1977. u.s. dockworkers to stay on strike as long as needed. that's according to the union. this could cost the u.s. economy up to $5 billion per day according to some analysis. could also have an inflation impact. ♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

♪ tom: these are the stories that

set your agenda. jerome powell is not in a hurry to move lower. economy on solid footing. israel targeting ground raids in southern lebanon, defying calls for restraint. u.s. dockworkers go on strike at every major port. it will cost four point $5 billion per day in losses. let's check in on markets. there is an impact on capacity for half of trade. will the president intervene?

european futures pointing at gains after losses yesterday. a check on business leaders suggested they are pessimistic. nasdaq futures are flat and s&p notched a record high. jay powell cautious, was he pushing back on the view that you will get a cut? 363 on the two-year. of 1/10 of 1%, and other cut may be coming this month.

71.80 on brent. gold up 3/10 of 1%. expecting official confirmation of the leader of the ldp. officially confirmed as the prime minister. nikkei up after losses. soft yen helping stocks. the israeli military has begun targeted ground raids in southern lebanon. despite international appeals for restraint.

joumanna, what is israel hoping to achieve? joumanna: mmm, the key is in the statement from the idf, targeted ground raids, striking targets in villages close to the border that pose a threat to israeli communities and another comment by the idf saying 98th division has begun targeted operations, limited operations. the goal is to strike hezbollah infrastructure that could pose a threat in israel. no response from hezbollah but we heard from the attorney

general and niece they were ready if israelis enter by land but of course they are operating in diminished capacity including secretary-general taken out on friday in a big airstrike. then before that operatives got injured so it is diminished and the question is how will they respond to the ground incursion. two rockets were intercepted, they were intercepted but trying to put up a defense, it is clear from israel's language and the idf that they are hoping to

achieve restoration of security and they need to be convinced hezbollah well no longer fire rockets into the north. tom: what is an expected response from iran? do they get involved? joumanna: everyone was waiting to see how they would respond to the killing and over the weekend the language was restrained. we heard from the ayatollah and hezbollah is an important asset for verizon, hezbollah is the crown jewel but even though the

-- the -- the -- the ayatollah was mourning the death of his good friend, no imminent sign they wanted to get involved in regional conflict. we've heard certain commanders are sent to regroup and rebuild. still falling short of getting involved, division within the regime. if you listen to the language of the president he addressed the general assembly and his tone was conciliatory. looking to reopen negotiations, watered-down sanctions hampering the economy.

irgc commanders have said they seek retribution on the killing. they have not taken revenge so to speak on the act of killing in toronto, so iran is it a wait and see situation. tom: horizons middle east & africa anchor joumanna. hezbollah has targeted soldiers in the israeli border and we will keep across the story across programming. some other stories making the news, shares in right move close the lowest in almost a year.

this comes after the property portal rejected a fourth takeover proposal. calling it unattractive. goldman sachs executed trades in bonds. hedge and distressed buns are bidding for the debt of the large water provider. 3 billion pounds of bonds have changed hands this month. we mean september. as the company struggles to raise equity. u.k. business confidence drops to the lowest level since liz truss fallout. business optimism fell 48% amid

fears of tax hikes brought in by the uk's labor government. french prime minister is planning to raise up to 18 billion euros to regain control of finances. he will push back a budget deficit target ahead of his first speech to parliament today. eleanora, an economist joins us from paris with the latest. francis budget deficit is double the ceiling. how difficult will it be for the prime minister to bring it within the targeted 3% level? eleanora: challenging to meet the rules. current debt is above 110%, huge

deficit, divided national assembly will create more challenges for the government to propose plans that will give consolidation without triggering its own demise. the new rules ask countries to keep debt below 60% or a plausible downward path. it will need to increase its primary balance. these targets are ambitious but if they were implemented they would put debt into a sustainable path. timing is not great, markets are jittery. the spread between french and

german bonds has widened. from the pre-election average of 50 basis points, putting strain on the fiscal position and weighing on economic activity. if spreads stay wider gdp could be 0.5% or lower. by the fourth quarter of 2025 compared to what it will be if spreads return to pre-election levels. tom: guild premium is there as you said. emmanuel macron worked hard. reforms around pensions.

eleanora: it is on the table because both main opposition groups, left-wing and far-right have vowed to reverse it if they were to be elected. it is a risky move. it extends the working age and accelerates the increase of contribution. it is crucial for long-term sustainability but if we suspend the changes it is halting implementation of reforms and will have significant implications so it would reduce the fiscal benefits by 2030 and

that could bring 15 percentage points debt to gdp higher. it could impact participation rates for all the workers and bring gdp lower. tom: eleanora from bloomberg economics, indeed. setting us up with the first speech from the prime minister of course and potential implications. coming up, u.s. dockworkers go on strike. i will bring you the fresh comments, the latest from the union and implications for u.s. economy up next. this is bloomberg. ♪

tom: major ports in the u.s. have shut down with dockworkers on strike as long as needed. they have the capacity to handle half half of trade volumes. brendan, what happens next, love? brendan: the biden administration will come under pressure to end the strike. business groups are saying this cannot go on. it will snowball into pain we

cannot afford. the union said the offer fell short. they said they were prepared to fight so strong words but does not sound like the union is offering concessions. tom: what is your assessment of the impact on the u.s. economy? brendan: anywhere from one to $5 billion a day so this goes on for a week, half a million containers will stack up. ships will be anchored outside the port and work through the

backlog. so it could take a month. that is why there is emphasis on ending it quickly. tom: yeah, and maybe the biden administration has to -- has to step in at -- at some point in the run-up -- in the run-up to the crucial election. what are the locations? >> the election is five weeks from today. if biden signs with the union he -- he -- he -- he sees them dig in for a long strike. if he signs with employers he is signing with foreign owned companies, so there is no -- no

easy route politically. whether we get a similar kind of stance from them, there is a -- there is a -- the timing could not be worse really. tom: yeah, well, indeed. dockworkers striking and on the picket lines with vendors and boards in philadelphia. one port affected by the strike. in terms of what to watch for, do we have a sense of where the leverage lies?

there is potential inflationary impact, how do you see the chips falling? >> interesting to see how quickly the pain reaches the consumers. manufacturers, it boosted inventories, so you would think there would be a buffer there for weeks to -- two -- to withstand the shock. food and -- and -- and -- and cannot sit on ships indefinitely or it will spoil. the consumer is the big question. how quickly will this lead to economic hardship into the holidays? it is the big time of year for

retailers, but we will see how well they have prepared themselves. tom: bloomberg's brendan murray, what to watch for as well. indeed. plenty more coming up including a breakdown on jobs dater from the u.s.. this is bloomberg. ♪ whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice... i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial.

♪ >> labor market is everything so this is the question, did they cut 50 because inflation has come down?

tom: morgan stanley's strategist mike wilson talking about the importance of the labor market. payrolls on friday so a picture will become clearer. you've seen a steady move lower in terms of private sector jobs. five months where the move has been lowered. bloomberg expects the number tomorrow will be 123 thousand jobs after an increase of 99,000 in august. cooling market.

in terms of where the market is heading in the cooling, we know the tilt for many officials is toward the labor market cooling. you heard that from jay powell. let's flip the board and look at this move in the chart, the move of chinese equities. 26% increase in equities for china, close today for the national holidays but a gain versus the u.s.. they filter across and markets have been delinked in terms of stimulus, not fed fru into

stocks. worth reflecting on inflation closer to the 2% target. christine lagarde is comfortable setting the scene for a further cut and inflation has been that move. core is still sticky. coming up, speaking with larry fink. ning trade is next, this is bloomberg. ♪

the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time.

that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

anna: good morning, i'm anna edwards and our away from the opening trade. dockworkers go on strike. jerome powell not in a