WEBVTT - China Seeks Foreign Investment, US Retail Earnings This Week

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Brian Curtiz and I'm Doug Krisner. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 1>Higher bond yields affecting markets generally right around the globe.

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<v Speaker 1>We had also the US government reporting producer prices rising

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<v Speaker 1>more than expected in July. Service costs were up the

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<v Speaker 1>most in nearly a year. The benchmark tenure yield, the

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<v Speaker 1>baseline for the broader financial system, has been pushing back

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<v Speaker 1>toward last year's highs of about four and a quarter percent.

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<v Speaker 1>As mentioned, we're at four point fifteen as we get

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<v Speaker 1>started this week. The former bond king Bill Gross says,

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<v Speaker 1>the yield on the tenure is headed higher.

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<v Speaker 3>You know, if you had one hundred and thirty five

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<v Speaker 3>basis points to two and a half or even three

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<v Speaker 3>percent on FED fund check, you get to a point

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<v Speaker 3>where we are now. And that suggests that all of

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<v Speaker 3>the bulls on treasuries, on the tenure and maybe even

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<v Speaker 3>on the long run, I think their arguments are a

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<v Speaker 3>little misplaced.

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<v Speaker 1>In the coming week, markets who will be analyzing minutes

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<v Speaker 1>from the Fed's July I'm meeting for clues on where

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<v Speaker 1>rates might be headed. In the following week, the focus

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<v Speaker 1>will shift to the fed's annual gathering of global Central

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<v Speaker 1>bankers in Jackson Hole, Wyoming.

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<v Speaker 2>Well, some of the biggest US retailers are about to

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<v Speaker 2>grab the earning spotlight in the week ahead. We'll hear

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<v Speaker 2>from Walmart, along with Home Depot and Target. They are

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<v Speaker 2>all scheduled to report quartal results. One question is on

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<v Speaker 2>how middle income American consumers will have responded to higher prices.

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<v Speaker 2>Here's Joe Feldman, senior analyst at Telsey Advisory.

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<v Speaker 4>Middle is kind of squeezed right now, and that's where

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<v Speaker 4>we're seeing that middle has been trading down, That aspirational

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<v Speaker 4>customer has traded down a little, and middle has traded down.

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<v Speaker 4>So I think that still positions Target and Walmart pretty well.

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<v Speaker 2>That is Joe Feldman speaking on the Bloomberg Surveillance podcast.

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<v Speaker 2>By the way, last quarters, some retailers like Target and

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<v Speaker 2>Macy's were very cautious, but now with recession calls fading.

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<v Speaker 2>Here's one analyst, Andrea and Yee over at Barclay. She

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<v Speaker 2>is forecasting the US retail shares will outperform next year.

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<v Speaker 2>Ran well.

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<v Speaker 1>US Steel is exploring multiple offers now as it rejects

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<v Speaker 1>a buyout offer from its rival Cleveland Cliffs. Let's get

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<v Speaker 1>the story from Bloomberg's Denise Pellegreeni.

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<v Speaker 5>Manufacturer Cleveland Cliffs offering to buy the iconic Pittsburgh based

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<v Speaker 5>steelmaker and a cash and stock deal as it looks

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<v Speaker 5>to create one of the world's largest steel makers. Cleveland

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<v Speaker 5>Cliffs offering to pay seventeen dollars fifty cents a share

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<v Speaker 5>in cash and one point two to three of its

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<v Speaker 5>own shares for each US steal stock, and says that

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<v Speaker 5>applies a value of thirty two bucks fifty three cents

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<v Speaker 5>per share as of Friday's clothes, and that would be

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<v Speaker 5>a forty three percent premium to US Steel's last closing

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<v Speaker 5>price of twenty two seventy two. But US Steel calls

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<v Speaker 5>Cleveland Cliffs offer unreasonable. Earlier in the day, US Steel

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<v Speaker 5>senator received multiple offers for all are part of the

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<v Speaker 5>company and was initiating a strategic review. Denise Pellegreni Bloomberg

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<v Speaker 5>Day Break Asia.

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<v Speaker 1>And again, as Denise mentioned there, Cleveland Lifts was flat

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<v Speaker 1>of the session on Friday, but we did have a

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<v Speaker 1>very modest gaining US deal, as she mentioned, up about

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<v Speaker 1>one percent to twenty two seventy two.

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<v Speaker 2>We go to China next, where the government is issuing

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<v Speaker 2>a plan to attract more foreign investment. The story from

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<v Speaker 2>Bloomberg's Juan Wong in Hong Kong.

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<v Speaker 6>China State Council is encouraging foreign companies to set up

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<v Speaker 6>research and development centers here. The plan will help accelerate

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<v Speaker 6>work on foreign projects in the biofarm and telecom sectors.

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<v Speaker 6>Will also increase fiscal and tax support for foreign businesses.

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<v Speaker 6>The goal is to improve the business environment as China

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<v Speaker 6>seeks to bolster ris economy. So far, the economy has

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<v Speaker 6>shown few signs of a rebound. New stress and the

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<v Speaker 6>property market and deflation are threatening the growth outlook in

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<v Speaker 6>Hong Kong. Join Wong Bloomberg Day, Brick Asia and with

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<v Speaker 6>more on properties.

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<v Speaker 1>Chinese developer Country Garden says it will suspend trading in

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<v Speaker 1>nearly a dozen onshore bonds. Six yuan denominated corporate bonds

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<v Speaker 1>issued in twenty twenty one and twenty two will be

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<v Speaker 1>suspended from trading today. That's according to five links to

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<v Speaker 1>the Shenjen Stock Exchange. Three additional bonds will be subject

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<v Speaker 1>to suspension on the Shanghai Exchange. It comes after Country

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<v Speaker 1>Gardens said he would report a multi billion dollar loss

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<v Speaker 1>for the first half of the year. The developer apologized

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<v Speaker 1>and said that his planning to hold meetings soon with

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<v Speaker 1>bondholders on various repayment options. The company's shares fell another

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<v Speaker 1>six percent in Hong Kong on Friday, closing below one

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<v Speaker 1>Hong Kong dollar for the first time ever. DOUG The

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<v Speaker 1>China loan data that came out late Friday was shockingly low,

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<v Speaker 1>around just one eighth of the previous month and less

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<v Speaker 1>than half of the Bloomberg survey estimate. So it seems

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<v Speaker 1>that both both businesses and households are de leveraging there.

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<v Speaker 1>We'll keep a close eye on trust funds today and

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<v Speaker 1>trust products. A lot of rumors circulating on Friday. I

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<v Speaker 1>mentioned that stocks were slammed. The CSI three hundred traded

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<v Speaker 1>down two point three percent. That's spread as well to

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<v Speaker 1>Hong Kong and also through the Shanghai market, so today

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<v Speaker 1>could be quite fascinating.

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<v Speaker 2>It's interesting with the weakness that we're seeing in China's economy.

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<v Speaker 2>Even so, Bloomberg Economics is expecting the PBOC to hold

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<v Speaker 2>its one year medium term lending facility rate steady this week.

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<v Speaker 2>That's a two sixty five This would mark the second

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<v Speaker 2>month of what Bloomberg Economics is essentially calling a tactical pause.

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<v Speaker 2>We did have that ten basis point rate cut back

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<v Speaker 2>in June, and I think Bloomberg Economics would agree with

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<v Speaker 2>what you're saying, Brian, that the economy clearly needs a

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<v Speaker 2>lot more in the way of support and it will

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<v Speaker 2>be delivered. B E sees that happening in the third

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<v Speaker 2>quarter of the year.

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<v Speaker 1>It's such a cautious, piecemeal approach. It's just really surprising.

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<v Speaker 1>People are looking for something dramatic, something that's in the

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<v Speaker 1>shock and aw category, but we're not getting it.

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<v Speaker 6>Yeah.

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<v Speaker 1>I wanted to mention Neil Ferguson as well. I don't

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<v Speaker 1>know if you saw his pride, but he's not a

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<v Speaker 1>kid anymore, doesn't believe in Santa Claus, the tooth Fairy

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<v Speaker 1>and soft landings. I thought it was great. He said

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<v Speaker 1>if pilots had the same success rate as the Fed,

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<v Speaker 1>none of us would fly. And he gets Humpty Dumpty

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<v Speaker 1>and Goldilocks and Ulysses in there as well. I guess

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<v Speaker 1>you know, he's maybe not so far away from what

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<v Speaker 1>Bill Gross is saying, and that he sees too hot

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<v Speaker 1>becoming too cold and rates. He thinks rates are going

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<v Speaker 1>to head.

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<v Speaker 5>Up from here.

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<v Speaker 2>On the other side, I want to point out what

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<v Speaker 2>the economist over at Goldman Sachs are saying. They are

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<v Speaker 2>expecting the Fed to begin lowering interest rates by the

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<v Speaker 2>end of next June, you know.

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<v Speaker 1>And there was an interesting piece that Neil put in there.

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<v Speaker 1>I didn't see this in the Wall Street Journal, but

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<v Speaker 1>I know you really read the newspaper, so you might

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<v Speaker 1>have seen this from James Macintosh that if the US

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<v Speaker 1>measured inflation the way Europe does, then inflation and core

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<v Speaker 1>inflation would already be down to two point three percent.

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<v Speaker 1>Apparently Europe doesn't use owner's equivalent rent. Yeah, so that's

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<v Speaker 1>quite interesting.

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<v Speaker 2>It's a good point.

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<v Speaker 1>Right now, it's time for Global news. The Maui wildfire

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<v Speaker 1>is now the deadliest in the US in one hundred

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<v Speaker 1>five years. At Baxter as Global News from the nine

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<v Speaker 1>sixty newsroom in San Francisco.

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<v Speaker 7>D Yeah, that's right, Brian. The death troll now stands

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<v Speaker 7>at ninety three for the fires. But my police chief,

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<v Speaker 7>John Pelletier says the search and recovery efforts are at

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<v Speaker 7>a very early stage.

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<v Speaker 8>We're going as fast as we can, but just so

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<v Speaker 8>you know. Three percent, that's what's been searched with the dogs.

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<v Speaker 8>Three percent. We got twelve more dogs on the way today.

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<v Speaker 8>We just made that. I made that request, FEMA made

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<v Speaker 8>that happen. They're on their way. But think about how

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<v Speaker 8>hot and how humid it is, and we can only

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<v Speaker 8>go as fast as that animal can go.

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<v Speaker 7>But tongress Jill Takuda on CBS has heard here on Bloomberg,

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<v Speaker 7>so she understands people want to get back into the

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<v Speaker 7>area to see if there's anything left or to recover,

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<v Speaker 7>but that it's too dangerous and that the sanctity of

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<v Speaker 7>the people who didn't make it out must be observed.

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<v Speaker 7>She did, though, visit Lihinatown herself, to.

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<v Speaker 9>Still see fires smoldering in the distance, to see cars

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<v Speaker 9>literally melted into the puddles that have hardened over on

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<v Speaker 9>the road, x's on buildings and cars, to say that

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<v Speaker 9>it has been searched, signs of casualties or even life.

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<v Speaker 7>Meanwhile, Governor Josh Green says the state will investigate why

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<v Speaker 7>the emergency siren systems were not activated and whether life

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<v Speaker 7>and property could have been protected.

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<v Speaker 10>We have doubts that much could have been done with

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<v Speaker 10>a fiery, fast moving fire like.

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<v Speaker 7>That, but he says that it's caused by climate change

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<v Speaker 7>and hurricane passing through producing winds now. One thing he

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<v Speaker 7>does say interesting, he knows for sure Maui needs to

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<v Speaker 7>protect itself from outside interest moving in and buying up

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<v Speaker 7>any land that could be abandoned.

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<v Speaker 10>We will, through whatever emergency powers we have to use,

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<v Speaker 10>prevent this land from going outside of state ownership.

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<v Speaker 7>Now four days on, still remains unclear the cause, although

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<v Speaker 7>Hawaiian law firm says it is going to look into

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<v Speaker 7>the possibility that down power lines could have triggered at

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<v Speaker 7>least one of them. China's Foreign ministries criticized Taiwan's Vice

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<v Speaker 7>Premier Lai Chang tay stopover in the US. Official statement says,

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<v Speaker 7>seriously violate. It's the one China principle. Orange barricades have

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<v Speaker 7>been set up around the Fulton County Courthouse in Atlanta,

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<v Speaker 7>where Donald Trump may face his fourth criminal indictment this week,

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<v Speaker 7>oh at the Georgia Secretary of State's Office. Gabriel Sterling

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<v Speaker 7>today on ABC Has Heard on Bloomberg said that Trump

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<v Speaker 7>knew he had lost the election but continued to push

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<v Speaker 7>for the votes.

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<v Speaker 11>We've been saying this over and over again. We counted

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<v Speaker 11>the ballots three times. He lost this state, and he

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<v Speaker 11>continued to say he didn't lose it. And it's just

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<v Speaker 11>creating a lot of tension and a lot of chaos.

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<v Speaker 7>Which Sterling says could lead to violence.

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<v Speaker 11>Somebody will be motivated by some of this kind of

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<v Speaker 11>language at some point and do something stupid. It's not

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<v Speaker 11>me an organized thing. It's not going to be a

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<v Speaker 11>bunch of conspirators together. It's mean one probably mentally unstable

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<v Speaker 11>individual who's going to be radicalized to this process.

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<v Speaker 7>And the Grand Jury is due to meet on Tuesday,

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<v Speaker 7>and oh no, no, it looks as if the Musksuck

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<v Speaker 7>cage fight is not going to happen. Mark Zuckerberg says

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<v Speaker 7>it's time to move on from the speculation. He says, quote,

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<v Speaker 7>if Elon ever gets serious about a real date and

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<v Speaker 7>official event, he knows how to reach me. Otherwise, time

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<v Speaker 7>to move on. I'm going to focus on competing with

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<v Speaker 7>people who take the sports seriously well. Global news power

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<v Speaker 7>by more than twenty seven hundred journalists and analysts in

0:10:15.679 --> 0:10:18.760
<v Speaker 7>over one hundred twenty countries. In San Francisco, I'm at

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<v Speaker 7>Baxter and this is Bloomberg.

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<v Speaker 1>This is Bloomberg Daybreak Asia. I'm Brian Curtis along with

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<v Speaker 1>Vonnie Quinn in New York, and a guest is Walter Todd,

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<v Speaker 1>President and Chief investment Officer and managing director at Greenwood Capital. Walter,

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<v Speaker 1>So we can talk about higher yields, and we can

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<v Speaker 1>talk about possible soft landings and such. I wanted to

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<v Speaker 1>point out that we've now seen Nvidia, Broadcom, Microsoft and

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<v Speaker 1>Apple all selling down now about ten to thirteen percent.

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<v Speaker 1>I'm curious from your point of view whether that's reality

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<v Speaker 1>setting in or if it's Algos and their mean reversion

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<v Speaker 1>strategies or programs or just sort of sensible rotating and balancing.

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<v Speaker 12>Yeah, well get evening from the US. Yeah. I think

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<v Speaker 12>it's probably a little bit of each of those things.

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<v Speaker 12>Quite honestly. I mean, I think when you look at

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<v Speaker 12>the reactions that stock so far I've gotten from earnings,

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<v Speaker 12>it's they've been pretty quote unquote violent, but in both directions.

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<v Speaker 12>And I think the super micro computer SMCI last week

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<v Speaker 12>could be a potential playbook for Nvidia. You really good earnings,

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<v Speaker 12>but yet the stock was down twenty five percent. Not

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<v Speaker 12>that Nvidia is going to drop twenty five percent, But

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<v Speaker 12>you get my point. So I think there is some

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<v Speaker 12>kind of rationalization going on and people looking for more

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<v Speaker 12>undervalued parts of the market. You've seen that with energy,

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<v Speaker 12>You've seen it a little bit in healthcare, although not

0:11:43.200 --> 0:11:45.280
<v Speaker 12>to a great degree, And I think you could see

0:11:45.280 --> 0:11:48.600
<v Speaker 12>some more of that as we work through the fall, Walter.

0:11:48.720 --> 0:11:51.160
<v Speaker 11>We have been seeing breath improved just a little bit

0:11:51.160 --> 0:11:52.360
<v Speaker 11>in the S and B five hundred.

0:11:52.440 --> 0:11:54.680
<v Speaker 6>Does that give you any hope that maybe we are

0:11:54.720 --> 0:11:55.680
<v Speaker 6>not in for a correction?

0:11:57.720 --> 0:12:00.880
<v Speaker 12>Yeah, it is, you know, encouraging to see more than

0:12:00.920 --> 0:12:04.120
<v Speaker 12>more than seven days participating, for sure, But you're still

0:12:04.160 --> 0:12:06.559
<v Speaker 12>you still see a pretty you know, dramatic spread between

0:12:06.600 --> 0:12:09.640
<v Speaker 12>the SMP and the equal weight SMP almost a little

0:12:09.640 --> 0:12:11.719
<v Speaker 12>over nine hundred basis points there on a year to

0:12:11.800 --> 0:12:15.080
<v Speaker 12>date basis, So it's still pretty narrow from from that perspective,

0:12:15.960 --> 0:12:18.280
<v Speaker 12>I think, you know, if you look at the past year,

0:12:18.280 --> 0:12:20.720
<v Speaker 12>we've had two kind of eight to nine percent corrections,

0:12:21.040 --> 0:12:24.200
<v Speaker 12>one in December of twenty two, one in February March

0:12:24.440 --> 0:12:27.760
<v Speaker 12>around the bank failures. So I think it would be

0:12:27.840 --> 0:12:31.400
<v Speaker 12>natural and probably healthy ultimately, if not too much fun

0:12:31.559 --> 0:12:34.679
<v Speaker 12>necessarily to have a eight to nine percent. We're down

0:12:34.720 --> 0:12:37.240
<v Speaker 12>about three percent right now. You know, down eight to

0:12:37.280 --> 0:12:39.079
<v Speaker 12>nine would take you to around forty two hundred on

0:12:39.120 --> 0:12:39.559
<v Speaker 12>the SMP.

0:12:40.840 --> 0:12:43.680
<v Speaker 1>So we have still a lot of bears around, although

0:12:43.720 --> 0:12:46.720
<v Speaker 1>many have capitulated. But in the bear camp you have

0:12:46.800 --> 0:12:49.040
<v Speaker 1>some that think that inflation will rear its ugly head

0:12:49.040 --> 0:12:52.160
<v Speaker 1>again and the FED has to just get on steroids

0:12:52.800 --> 0:12:55.040
<v Speaker 1>once again. And then you have others that say, no,

0:12:55.120 --> 0:12:57.280
<v Speaker 1>they've already done too much, and you know you've got

0:12:57.320 --> 0:13:00.240
<v Speaker 1>recession coming and there's really no way to avoid it.

0:13:00.760 --> 0:13:03.040
<v Speaker 1>How do you actually see the full picture at the moment.

0:13:04.040 --> 0:13:08.200
<v Speaker 12>Yeah, it's very complicated, honestly. Right now, I keep going

0:13:08.240 --> 0:13:10.280
<v Speaker 12>back to this Mark Twain quote, is it ain't what

0:13:10.320 --> 0:13:12.040
<v Speaker 12>you don't know that gets you into trouble. It's what

0:13:12.080 --> 0:13:15.120
<v Speaker 12>you know for sure that just ain't so. And that

0:13:15.160 --> 0:13:17.840
<v Speaker 12>feels like that captures the moment right now. So I

0:13:17.880 --> 0:13:19.640
<v Speaker 12>do think it's going to be tough to get inflation

0:13:20.080 --> 0:13:22.520
<v Speaker 12>down from three percent to two. So if the FED

0:13:22.640 --> 0:13:25.480
<v Speaker 12>is truly intent on getting there in a hurry, then

0:13:25.520 --> 0:13:27.240
<v Speaker 12>I think they're going to continue to raise race and

0:13:27.280 --> 0:13:29.920
<v Speaker 12>I do think that would be a mistake. Right now, I.

0:13:29.960 --> 0:13:32.240
<v Speaker 1>Got a question. I hate to cut you off, and

0:13:32.360 --> 0:13:34.000
<v Speaker 1>I got a question and we got a sneak itting,

0:13:34.280 --> 0:13:37.760
<v Speaker 1>which is, I'm a little bit confused because we hear

0:13:37.800 --> 0:13:40.320
<v Speaker 1>a lot that recessions are usually caused not by what

0:13:40.360 --> 0:13:42.640
<v Speaker 1>you know, and you just mentioned that by some sort

0:13:42.640 --> 0:13:47.280
<v Speaker 1>of exogenous occurrence. And yet many people really believe in

0:13:47.400 --> 0:13:50.360
<v Speaker 1>the in the inversion of the yield curve as a

0:13:50.400 --> 0:13:53.280
<v Speaker 1>signal that you have to have recession. I mean, they

0:13:53.280 --> 0:13:54.360
<v Speaker 1>can't both be right.

0:13:55.440 --> 0:13:57.600
<v Speaker 12>No, I agree, that's what makes it so complicated. I mean,

0:13:57.640 --> 0:14:00.800
<v Speaker 12>that's what everyone knows for sure. I mean myself in

0:14:00.840 --> 0:14:03.080
<v Speaker 12>the same camp. I mean, I'll look at the history

0:14:03.360 --> 0:14:05.440
<v Speaker 12>and what these signals are. You know, I've told you

0:14:05.480 --> 0:14:08.000
<v Speaker 12>in the past, and they're not working at this point.

0:14:08.040 --> 0:14:09.160
<v Speaker 12>I think a lot of that has to do with

0:14:09.200 --> 0:14:11.960
<v Speaker 12>the distortion coming out of COVID and some of the

0:14:12.360 --> 0:14:14.640
<v Speaker 12>dynamics there with the labor market and all the excess

0:14:14.640 --> 0:14:18.160
<v Speaker 12>capital floating around in the financial system right now. I

0:14:18.160 --> 0:14:20.880
<v Speaker 12>think it's just making a very confusing picture right now.

0:14:24.160 --> 0:14:27.000
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