Australia Shooting Latest, Previewing China Data

Sixteen people have been killed in Australia’s worst terrorist attack after gunmen opened fire on Jewish people who had gathered to celebrate the first day of Hanukkah at Sydney’s iconic Bondi Beach on Sunday evening. Bloomberg's Paul Allen reports from the scene.

Japan’s December large manufacturers Tankan rose to 15 from 14 in the previous quarter, Bank of Japan data showed. Westpac Head of Business and Industry Economics Sian Fenner previews the week ahead for eco data.

Investors are looking towards the New Year. Eric Teal, Chief Investment Officer for Comerica Wealth Management discusses the upcoming CPI and University of Michigan Consumer Sentiment data, as well as the monetary picture for 2026.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.

Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast Time, Doug Krisner. We
begin in Australia, where the country is reeling after a
mass shooting at a Honka celebration on Sydney's Bandai Beach.
Sixteen people were killed and dozens more injured. This attack
has been officially designated as a terrorist attack. Bloomberg's Paul
Allen is on the scene.

Speaker 3 (00:31):
At the moment.

Speaker 4 (00:31):
The overwhelming sense is one of grief. The mood down
here very very somewhat. There was a floral tribute starting
to build up. An Israeli flag has been draped around
the flowers. An Australian flag visible in the background there
as well, and you'd expect that that tribute's probably going
to build up over the course of the day. Just
a steady stream of people coming here to lay wreaths
and pay their respects. Now, as to who was responsible

(00:54):
for this, two people, a father and son, neither of
whom are on any security watch. The father of fifty
year old as deceased. He was a licensed firearms holder.
He held licenses and legally owned six guns. Police say
all six of those weapons are now accounted for. There
were also two rudimentary IEDs improvised explosive devices found on

(01:15):
the scene. They were active but later disarmed by police
bomb disposal. Now the other gunman, twenty four year old
Navid Akram. His identity became known after it was widely
distributed on social media last night, so there was really
no point in trying to keep that a secret anymore.
He told his mother that he was headed down the coast.
In reality, he was with his father at an Airbnb

(01:37):
somewhere else in the city. That property now also the
target of heavy police presence. Amid all of the carnage
at that Harneko events also notable acts of heroism, not
the least of which from Armad al Amad, a forty
three year old fruit shop owner who an extraordinary video
jumped one of the gunmen from behind and disarmed him. Armad,

(01:58):
al Armed was later shot in the US and in
the hand. He's now recovering in the hospital. Like I said,
an uneasy sense of calm here today, police calling for
Kam saying that this is not a time to be
seeking retribution.

Speaker 2 (02:11):
That is Bloomberg's Paul Allen in Sydney. We turn next
to markets. First in Japan, where the Bank of Japan
reported confidence among Japan's large manufacturers rose in the month
of November to its highest level in four years. This
is the boj's large manufacturer, a ton Khan. It came
in at a reading of fifteen, which was right in
line with estimates. Now, the boj does have a rate

(02:33):
decision later in the week, and money markets are betting
on a quarter point rate hike. Later this morning, we'll
get the monthly activity data for China, and that's where
we started the conversation with Sean Fenner. She is head
of Business and Industry Economics at Westpac. Shaan spoke earlier
with Bloomberg TV host Avril Hong and NML droolers, and

(02:53):
we got Shawn's view on what the China data may
indicate activity.

Speaker 1 (02:57):
We know it's going to be soft. It's it's lost
meant from the beginning of the year. What's going to
be very important is that going forward, what kind of
policy that we actually see to try and support growth,
even if they go for a five percent but to
get that we will need more policy.

Speaker 5 (03:12):
Yeah, I think you really see that in the fixed
asset investment numbers in particular that they're really showing that
sign of deterioration or at least not picking up. But
where do we go then for twenty twenty six and
what's the outlook? Do you see any sort of significant
changes around the inflation outlook?

Speaker 1 (03:27):
For instance, I think inflation's going to remain sort of
quite soft. If we think about sort of the pressures
behind that domestic demand consumption, that's unlikely to pick up significantly.
But on the fixed asset investment side, I think things
are going to look a little bit brighter next year,
notably on manufacturing investment and infrastructure, and that's going to
be that big sort of fiscal push that we're expecting

(03:47):
to provide support.

Speaker 6 (03:51):
Yeah, is that fiscal push going to be enough to
sort of fix the consumer sentiment to stir things in
the Chinese economy?

Speaker 1 (04:01):
That's going to be the big question. I think at
the moment, the focus and the fiscal focus is very
much on that supply side, probably less directly going to consumers.
They're hoping that if they actually sort of boost the
manufacturing investment that will provide support for corporate earnings, investment,
and wages. That transmission looks a little bit sort of ify,
so we'll see actually how that sort of progresses. They

(04:22):
may need to provide more support try and arrest this
decline that we've been seeing in the property market.

Speaker 2 (04:30):
Sean.

Speaker 6 (04:31):
Has also been interesting is the rally we're seen in
the room and be talk to us about how that
is affecting maybe Chinese consumers being a bit more open
to spending. And then at the same time, how does
that affect the exports picture for the country.

Speaker 1 (04:49):
Well, actually, if we think about the relative inflation for
China versus its peers, the fact that's actually been supporting
a real depreciation and effective turns so for export it's
been very good because that means there's you know, it's contained,
you know, continue to provide competition. It's very competitive for China.
For consumers, it very much that it depends on the
domestic front and that yes, it could see some important

(05:12):
price being being higher, but I think overall it's you know,
the domestic pure pressures, demand pool pressures there are just
still very very weak. Even if we have seen that
sort of uptick that we did see in November.

Speaker 5 (05:24):
It's interesting and you know, I see, yes, we've got
that boj decision and most economists that we've surveyed are
expecting them to hike. You're still looking at the risk
though that are tilted perhaps in favor of them standing
pad again.

Speaker 1 (05:37):
Yeah, I mean our baseline is for them to cut,
but it's the BOJ. We do know that they still
want to get a lot of confidence about that sort
of wage sustainability moving into inflation. I mean, positively, we
did see the RENGO wage negotiations. It's another five percent.
They're also looking for real wages to be up about
one percent. So that's pointing in the right direction, but
they may want to just wait a little bit more

(05:57):
for some more data.

Speaker 5 (06:00):
All Right, We've got BOJ, We've got China. That other
one we're going to be watching is us RUNT as well,
because we've got a couple of different data points that
are out. Again, what are you expecting and how does
it also feed into the trajectory for the FED moving
into next year?

Speaker 1 (06:11):
Yeah, so I think it's you know, I mean, this
is sort of a tough lot of data that we're
getting out in the sense that we know there's still
a lot of distortions going on because we haven't had
a full set you know, it's the first lot of
data that we're getting out post the shutdown. To be honest,
I don't think we're going to get a real clear
picture until we sort of move into January we get
the next lot of data, so it could be quite
you know, sort of a bit messy, if you like.

(06:32):
We're probably seeing an increase in the non farm pay
rolls with the unemployment rate about four point four. For
inflation though it's still looking at about sort of three
point one, so we're probably going to get a little
bit of a lift on the goods front. That's a
little bit on the tariffs for services. It's also going
to be sort of quite firm outside, particularly outside of
the shelter. So it's still that balancing act that the

(06:52):
Fed needs to undertake. Sort of this sort of overall
probably that ongoing softness in the labor market confronted with
the sort of upside a risk still to inflation, broader
risk to inflation.

Speaker 5 (07:02):
Yes, certainly that risk that we see reacceleration in next
year as well. Sean, thanks so much for joining us
this morning. That was Sean Fenna, the head of Business
and Industry Economics at Westpac.

Speaker 2 (07:18):
Welcome back to the Daybreak Asia podcast. I'm Doug Chrisner.
There are several key data points for the American economy
due in the coming week. On Tuesday, we will get
the delayed report on October and November employment. We'll also
have retail inflation data for the month of November and
on top of that October retail sales. So for a

(07:39):
closer look at market action, I'm joined by Eric Teel.
He is the chief investment officer at Comerica Wealth Management.
Eric joins from Charlotte, North Carolina. Thank you for being here.
I think we can agree there's been a lot of
volatility in markets lately, not just here in the US,
but globally as well. I'm curious as to how you're

(08:00):
reading the situation right now.

Speaker 7 (08:02):
Well, we've seen I think a shift, Doug, from the
first eight months of the year where we are high momentum,
very concentrated in tech, which is a replay from the
last two years. And I think beginning about two or
three months ago, we saw a rotation of broadening out.

Speaker 3 (08:20):
We anticipated that would begin.

Speaker 7 (08:22):
In small cap and in the smallest companies like microcap stocks.
That's continued to unfold. With that, you've seen some other
sectors come back to life, like financials healthcare, which have
been laggered over the past two or three years. So
I think the conditions are ripe for markets to begin
to broaden more. A lot of that's due to valuations,

(08:45):
but some of the areas that we thinkcent some really
good opportunities for investers would be some of these value
areas that I think are lining up good as we
go into twenty twenty six.

Speaker 2 (08:58):
So how much of that broadening would be due to
expectations for much more in the way of FED easing.

Speaker 7 (09:05):
I think that's an important ingredient, certainly for the financial sector.
Getting lower rates steepening of the yield curve is important,
So I think a lot shouldn't hang just in the
balance of lower rates. It's important, but twenty five business
points here there should not guide consumer centiment should not

(09:28):
really pull the markets a lot further ahead. It's important backdrop,
but there's much more things like growing earnings, getting confidence
back up higher. So we'll see how the monetary picture
plays out, but we need some other things to improve,
and I think that broadening out is going to happen,

(09:50):
which will be good for overall sentiment.

Speaker 2 (09:53):
So speaking, of consumer sentiment. At the end of the week,
we're going to hear from the University of Michigan. We'll
also get numbers this week on retail sales, and I'm curious, Eric,
how you're thinking about the American consumer and the extent
to which we've seen some bifurcation.

Speaker 7 (10:11):
Yeah, I think there's a lot too that is certainly
showing up in the sentiment numbers. When you think about
the impact of tariffs that has been primarily felt on
lower incomes, and so we're going to have to improve centiment.
I think these readings that we're going to get later
this week and really into January, it's going to take

(10:32):
a while for that to begin to improve. There is
a relief on the horizon, particularly as you get into
tax cuts for next year, but it's going to take time.
But you know, some of the things like lower gas prices,
retail sales, they do point to some improvement. But this

(10:53):
is not something I think that's going to turn on
a dime. We need this some fiscal stimulus to kick
in here and I think will begin to shift those
But right now, there's a lot of truth that there
is this sort of K shaped economy. The wealth effect
primarily benefiting the top ten to twenty percent.

Speaker 3 (11:13):
Of the market.

Speaker 7 (11:14):
So we need to get this broadening out not only
of the stock market, but of the overall economy, and
that's really going to be important to drive markets.

Speaker 2 (11:23):
I think that seems to be clear with affordability becoming
a hot button issue right now on the political front,
which then takes us to this week's CPI reading. How
do you view the US inflation story right now?

Speaker 7 (11:37):
It's coming down and it's been I think a good
way to approach getting inflation down the way we've have
really tackled it. However, you look at historically there has
been a second wave of inflation happened in the seventies.
There's areas if you've seen, particularly those that have been

(11:59):
in acted by terrors, that I think temporarily are slow
and not passing along to higher prices to consumers. But
it's really a tight balancing act that we have right
now between the soltening in the jobs market, ongoing sort

(12:20):
of higher inflationary readings, not high, but higher, and so
this is really in balance right now and it can
tilt one way or the other. Again, done a good
job bringing it down. Still much more work to do
and can't take our eye out the ball as.

Speaker 3 (12:36):
It comes into that.

Speaker 2 (12:37):
So Eric, you can understand the Fed's dilemma and why
we have FED presidents like Beth Hammock of Cleveland and
Jeff Schmidt of Kansas City basically saying it's important to
just kind of hang in here right now, not make
another adjustment to the policy rate until the inflation story
becomes a little clearer.

Speaker 7 (13:00):
The inflation story is not going away. It's going to
the back burner with the saltness that we've had in
the labor market. But if you look at what gold
is pointing to, and you look at some structural concerns
that we have with deficit spending, and we know the
ultimate impact of terrors is higher prices. Now, when you

(13:21):
think about how all of that eventually gets cycled through,
it could result in this second wave that we're talking about.
So we can't get too focused on unemployment at this point.
Their saltness, but we have to balance that and that's
the type that we're trying to deal with at this point.

Speaker 2 (13:41):
We saw a little bit of a wabble in the
equity market in the month of November on concern over
some of these high valuations, particularly where big cap tech
was concerned. A lot of head scratching when it came
to the AI trade that seems to have, at least
for the moment subsided. Are you surprised that we have
not seen a meaningful pullback in the equity market?

Speaker 7 (14:05):
Boy, it's been in fits and starts. I think we're
beginning to see some rotation, Doug. You spoke to some
of the things that have surfaced, certainly the amount of
debt and credit associated with many of the AI companies,
and then evaluations, So we've seen that rotation. I think
it's going to be renewed. I've said, let's pay attention

(14:27):
to a January effect when you have a momentum market
of this magnitude taking place, and that has.

Speaker 3 (14:35):
Often led to a reversal.

Speaker 7 (14:37):
That reversal often comes in the first three or four
trading days of January. I think it's being pulled forward
right now, and we're seeing it in some of this
rotation that's taking place. But a January effect has been
pronounced when you see this high momental market and a
high retail component to it like we have this time around.

(14:59):
So I think that story is something we're paying close
attention to certainly looking at all the parallels that have
taken place between the new Economy period and other sort
of boom cycles. And the key is to watch the
credit which tends to be the match that lights the fire,
and that can lead to some really sobering results for investors,

(15:24):
and so we have to be mindful of that as
it relates to market returns here.

Speaker 2 (15:28):
So if you're looking at maybe a little bit of
risk at the early part of the year, are you
expecting things to calm down to the extent that you
would be bullish on twenty twenty six?

Speaker 7 (15:40):
Cautiously optimistic and overused expression, but I don't think any
expression can capture how we feel better than cautious optimism
at this point. Is you look at markets now three
years of a strong recovery bull market, A lot of
fiscal and monetary stimulus has been put toward.

Speaker 3 (15:59):
The markets right now.

Speaker 7 (16:01):
As you look at twenty twenty six, you have to
have a lot of things continue to go right, which.

Speaker 3 (16:06):
I think they can.

Speaker 7 (16:08):
But boy, some of these markets, particularly technology, dug price
to perfection. So we need to be looked for opportunities
outside a handful of technology companies.

Speaker 3 (16:20):
That's why we focus back on.

Speaker 7 (16:22):
Value some of these areas that have really not participated
the last couple of years. You think about the small
cap premium, which has been dormant. So there are opportunities
in the market, but they're not going to be sort
of this high momentum, high retail flavor that's embraced the
market thus fall.

Speaker 2 (16:40):
Well, I'm thinking about opportunities in fixed income. Are you
seeing any some.

Speaker 7 (16:45):
We look at being able to clip the coupon there
where rates are as you get in this sort of
this intermediate range. I think there's opportunity in fixed income.
Sprints remain very tight, Doug, so I would look for
traditional fixed income, maybe municipals, which I think are in

(17:06):
good shape for taxable portfolios. So I'm not seeing it
in high yield and in credit in fixed income, looking
at more traditional areas, I think where you can earn
the five to six and a half percent return without
sort of chasing it in some of the lower quality

(17:27):
credit related issues because you're simply just not being paid
to take that sort of risk at this.

Speaker 2 (17:32):
Point, Eric, believe it there. Thank you so very much.
Eric TiAl is the chief investment officer at Comerica Wealth Management,
joining us from Charlotte, North Carolina here on the Daybreak
Asia Podcast. Thanks for listening to today's episode of the
Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at

(17:52):
the story shaping markets, finance, and geopolitics in the Asia Pacific.
You can find us on Apple, Spotify, THEMBERG podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
and Australia. I'm Doug Prisoner and this is Bloomberg