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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: The drop in stocks comes on more disappointing economic news

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Speaker 3: out of China, and industry survey shows China's services sector

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Speaker 3: side its slowest growth this year in August. Meanwhile, China's

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Speaker 3: Country Garden Holdings has averted default on its dollar debt

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Speaker 3: by paying coupons on two bonds within their grace periods.

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Speaker 3: We get more on the troubled developer from Bloomberg's China

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Speaker 3: Credit editor Kevin Kingsbury in Hong Kong.

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Speaker 4: Certainly it takes a worry off the table right now

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Speaker 4: that they've made these twenty two point five million dollars

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Speaker 4: worth of payments. Comes on top of extending a yuan

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Speaker 4: bond by three years over the weekend and making a

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Speaker 4: separate payment of about six hundred thousand dollars on a

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Speaker 4: offshore bond as well. So it kind of shows that

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Speaker 4: we're even talking about a payment of six hundred thousand dollars.

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Speaker 4: It would sound like peanuts, but it just shows just

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Speaker 4: how much worry there has been about Country Garden, that

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Speaker 4: each and every payment has gotten some increased scrutiny as

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Speaker 4: to whether or not this copany He's going to be

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Speaker 4: able to survive and be able to get through this

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Speaker 4: rough patch here without any defaults.

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Speaker 3: Bloomberg's Kevin Kingsbury says the payments by country guard in

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Speaker 3: time as it tries to sort through one hundred and

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Speaker 3: eighty seven billion dollars of liabilities.

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Speaker 2: Meanwhile, Nathan Bloomberg Economics says China may never eclipse the

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Speaker 2: US as the world's biggest economy. Therefore, cash shows China's

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Speaker 2: GDP may briefly surpass that of America in twenty forty,

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Speaker 2: but even then it will happen by only a small

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Speaker 2: margin before falling back behind. Before the pandemic, the expectation

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Speaker 2: was that China would be the leading economy by the

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Speaker 2: start of the next decade.

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Speaker 3: In Stink with the Economy, Karen, one major Wall Street

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Speaker 3: firm thinks the US may avoid contraction. Let's get that

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Speaker 3: story from Bloomberg's John Tucker.

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Speaker 5: Good Morning John, and Nathan Goldman. Sachs has grow more

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Speaker 5: confident the US ken Skirterer recession. They've lowered the odds

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Speaker 5: to fifteen percent from twenty percent. So why the change?

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Speaker 5: The firm's chief economist Yan Hansi says, among other things,

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Speaker 5: solid job growth will boost wages. At the same time,

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Speaker 5: he says cooling inflation may keep the Federal Reserve from

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Speaker 5: raising industrates any further. Hatzi says a September rate hike

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Speaker 5: by the Fed is off the table, and the hurdle

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Speaker 5: for a November hike is significant. Goldvin's fifteen percent recession

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Speaker 5: asked of it well below a Bloomberg consensus of sixty percent.

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Speaker 5: The firm is also more optimistic than peers and US

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Speaker 5: economic growth, predicting an average two percent pace through the

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Speaker 5: end of next year.

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Speaker 2: In New York.

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Speaker 5: I'm John Tucker, Bloomberg Radio.

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Speaker 2: All right, John, Thanks well. Another call out of Goldman

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Speaker 2: this morning, this one on the equity side. Strategists led

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Speaker 2: by Peter Oppenheimer say AI is not a bubble, saying

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Speaker 2: the rally can continue. Goldman names eleven US stocks as

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Speaker 2: near term beneficiaries of the AI revolution, including Nvidia, Microsoft,

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Speaker 2: and Meta.

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Speaker 3: Well, Karen A big paydays in store for bankers working

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Speaker 3: in one of the year's most highly anticipated IPOs, sources

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Speaker 3: tell Bloomberg Investment banks working on arm holdings initial public

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Speaker 3: offering are set to share upwards of one hundred million

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Speaker 3: dollars in fees from the chip designers listing. The soft

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Speaker 3: bank owned ARM is poised to pay the banks two

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Speaker 3: percent the five billion dollars that's seeking to raise in

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Speaker 3: the IPO.

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Speaker 2: Well, Nathan, we may have a takeover in the works.

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Speaker 2: Bloomberg News has learned private equity firm Toma Bravo as

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Speaker 2: in advanced talks to my health records software company next

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Speaker 2: Gen Healthcare. Next Gen, which rose six percent on Friday,

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Speaker 2: up another ten percent in early trading.

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Speaker 3: Two stocks being added to the S and P five

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Speaker 3: hundred are also on the move, Karen. Both Blackstone and

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Speaker 3: Airbnb are up more than five percent. The two will

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Speaker 3: replace Lincoln National and newer brands prior to the start

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Speaker 3: of trading on September eighteenth.

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Speaker 2: Well, let's turn to Washington now, Nathan, and some news

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Speaker 2: on Jill Biden's health. The White House says the First

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Speaker 2: Lady tested positive for COVID nineteen yesterday. The President was

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Speaker 2: tested last night and came back negative. President Biden is

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Speaker 2: set to attend the G twenty summit in India this weekend.

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Speaker 2: The White House is not saying whether the First Lady's

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Speaker 2: diagnosis will affect his travel plans well.

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Speaker 3: Meantime, Karen Elon Musk is blaming the US Anti Defamation

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Speaker 3: League for the slump in advertising revenue at his social

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Speaker 3: platform x. We get that story from Bloomberg's at Backster.

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Speaker 6: Ads sales are still down sixty percent, Musk posting, primarily

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Speaker 6: due to pressure on advertisers mounted by ADL. He in

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Speaker 6: a series of posts says it has been quote trying

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Speaker 6: to kill the platform since he bought it, falsely accusing

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Speaker 6: it and him of being antisemitic. Musk says it is

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Speaker 6: a pro free speech platform, but against antisemitism of any kind.

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Speaker 6: He says he is as well. He says legal action

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Speaker 6: is an option in San Francisco. I'm at Baxter Bloomberg Radio.

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Speaker 2: All righted, thanks, So we now turn to labor unrest overseas.

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Speaker 2: Chevron's liquefied natural gas workers in Australia are threatening two

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Speaker 2: weeks of twenty four hour rolling outages at two major

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Speaker 2: export plans. It's an escalation of a dispute that is

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Speaker 2: threatening global fuel supply. Be caught up with Colin Parfitt,

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Speaker 2: Chevron's vice president of Midstream, at the Gas Tech conference

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Speaker 2: in Singapore.

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Speaker 7: With committee find a solution there, and we want to

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Speaker 7: find solution that's a win win winn. We want to

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Speaker 7: find it.

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Speaker 4: It's a win for chev On, a wind farm employees

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Speaker 4: and a win for the gas markets.

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Speaker 2: And Chevron's Colin Purfect says the company has not canceled

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Speaker 2: or delayed any LNG shipments as a result of the

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Speaker 2: strength threat. All right, Nathan, thanks in time now for

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Speaker 2: a look at some of the other stories making news

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Speaker 2: around the world. For that, we're joined by Bloomberg's Amy

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Speaker 2: Morris Samy, Good morning.

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Speaker 8: Good morning, Karen. Congress returns to Capitol Hill today after

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Speaker 8: its summer recess, facing a possible government shutdown in just

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Speaker 8: a few geeks. Paul Helke is a professor of practice

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Speaker 8: at the O'Neill School of Public and Environmental Affairs. He's

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Speaker 8: also the founding director of the Civic Leaders Learning Center

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Speaker 8: at Indiana University.

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Speaker 9: In order to avoid a government shutdown, we need to

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Speaker 9: have our elected representatives start thinking about the common good

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Speaker 9: and majority rule and the importance of the budget rather

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Speaker 9: than fighting out there their fringe partisan agendas.

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Speaker 8: Professor Helmke says current partisan rancor in Washington makes it

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Speaker 8: highly likely that there will be no continuing resolution, much

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Speaker 8: less a full budget. A heat wave is expected to

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Speaker 8: bring one hundred degree temperatures to tens of millions of

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Speaker 8: Americans this week. It is likely to be between the

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Speaker 8: lower and high nineties today in places like Philadelphia, Washington,

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Speaker 8: d C, New York City, and Chicago. DC and Baltimore

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Speaker 8: are under hot weather emergency declarations through Thursday, and a

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Speaker 8: heat advisory is in place in New York City through

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Speaker 8: Wednesday night. It's been about seventeen months since Republican governors

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Speaker 8: from Texas and Arizona started sending thousands of migrants to

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Speaker 8: d C, Los Angeles and New York City, along with

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Speaker 8: other cities and protest of President Biden's border policies. The

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Speaker 8: Washington Polish reports there are more questions now about short

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Speaker 8: term shelter as those buses keep coming. SAMU First Response

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Speaker 8: says DC has received about sixty bus loads of a

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Speaker 8: islum seekers since May, raising the total number of buses

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Speaker 8: sent to the district in the past year to two

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Speaker 8: hundred and thirty nine. In New York, State Attorney General

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Speaker 8: Letitia James is calling for coordination between federal, state, and

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Speaker 8: city officials. New York Governor Kathy Hochel and New York

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Speaker 8: City Mayor Eric Adams have been exchanging letters in recent weeks,

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Speaker 8: but Letitia James says that doesn't help.

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Speaker 10: The letters, the accusations, the recriminations don't serve anyone. And

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Speaker 10: what we really need is someone to coordinate, and so

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Speaker 10: I would urge everyone to get together in a room

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Speaker 10: or on a zoom call to appoint a a migrant

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Speaker 10: and czar.

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Speaker 8: More than one hundred thousand migrants have arrived in New

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Speaker 8: York City over the past year, with more than half

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Speaker 8: of them overwhelming the city's shelter system. Global News twenty

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Speaker 8: four hours a day, powered by more than twenty seven

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Speaker 8: hundred journalists and analysts in more than one hundred twenty countries.

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Speaker 8: I'm Amy Morris. This is Bloomberg Karen.

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Speaker 2: All right, Amy, thank you. It's time now for the

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Speaker 2: Bloomberg Sports some day. For that, we bring in John

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Speaker 2: stash Hour, John Karen.

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Speaker 11: Was a busy week one of college football, the entire

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Speaker 11: preseason top twenty five playing over a five day span,

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Speaker 11: mostly no upsets. There was a big one Saturday when

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Speaker 11: Colorado won at TCU. There was also an upset last night.

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Speaker 4: Leonard from the Shotgun takes a step, quick look to

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Speaker 4: the leftoks to Ron straight ahead, trying to break a tackle.

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Speaker 6: He does.

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Speaker 4: He's got a first out.

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Speaker 7: In More thirty twenty leader touchdown. Goodness, how the Blue

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Speaker 7: Devils have.

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Speaker 11: The lead their field sports the Call. Duke upset ninth

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Speaker 11: Frank Clemson twenty eight to seven. It's the Blue Devils

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Speaker 11: first win over a team ranked in top ten since

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Speaker 11: nineteen eighty nine. US Open saw top seed Carlos Alcarez

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Speaker 11: advanced to the quarterfinals of straight set victory. Alex Zaverev

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Speaker 11: won his match over Yannick Sinner at one forty am

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Speaker 11: New York Times. The match went four hours, forty one minutes.

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Speaker 11: Two upset so the women's side third seed is Jess Pagoula,

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Speaker 11: trounced by a fellow American, Madison t sixty one sixty

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Speaker 11: three and as Javor lost to Jiang Qinaan two and

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Speaker 11: four baseball saw Baltimore beat the Angels six to three.

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Speaker 11: The Red Sox won seven to three at Tampa Bay.

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Speaker 11: They had lost their last thirteen games at Tampa. The

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Speaker 11: Giants were shout out by the Cubs five and up.

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Speaker 11: In his cup, pitcher Justin Streitch Steel improved as sixteen

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Speaker 11: and three eight innings loud only two hit struck apps

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Speaker 11: twelve the A's loss at Toronto six to five in tenanings. Also,

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Speaker 11: Minnesota won a Cleveland twenty to six. Just Dashawer Bloomberg sports.

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Speaker 12: From coast to coast, from New York to San Francisco,

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Speaker 12: Boston to Washington, DC, nationwide on Syrias XAM, the Bloomberg

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Speaker 12: Business app in Bloomberg dot Com. This is Bloomberg Daybreak.

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Speaker 3: Good morning, I'm Nathan Hager, and we are heading into

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Speaker 3: a holiday shortened trading week with losses for stocks pretty

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Speaker 3: much across the board around the world. Yet more weak

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Speaker 3: economic data out of China, this time in the services sector,

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Speaker 3: is putting a damper on sentiment after a week that

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Speaker 3: saw the S and P five hundred rise to and

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Speaker 3: a half percent on encouraging economic data for the US.

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Speaker 3: So let's get this trading week started. We're joined by

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Speaker 3: laur Calvacina, head of US Equity strategy at RBC Capital Markets. Laurie,

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Speaker 3: it's great to speak with you. As always. What does

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Speaker 3: ongoing weakness in China mean for investments here in the US?

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Speaker 7: Hit Well, thanks for having me as always, and look,

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Speaker 7: I think there are two issues. Whenever we see you know,

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Speaker 7: sort of weakness in China is one, what does that

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Speaker 7: mean for US equity markets from a flow perspective. China

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Speaker 7: was one of the hot trades to start the year.

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Speaker 7: There was a lot of negative views on the US

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Speaker 7: and we've really seen that reverse, you know, in recent months. Unfortunately,

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Speaker 7: we're not getting those inplos and the US equity funds,

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Speaker 7: especially on the large cash side right now, so we'll

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Speaker 7: need to watch that. But secondly, what are the skill

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Speaker 7: of our effects into the US economy? And right now

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Speaker 7: the vote seems to be that they'll be minimal. On

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Speaker 7: the US economic outlook seems to be improving if you

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Speaker 7: look at some of the calls that are being made

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Speaker 7: around the street today, while the view on China and

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Speaker 7: even Europe frankly seems to be softening. So I think

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Speaker 7: those are really the two you know, kind of cross

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Speaker 7: currents that are somewhat conflicting that we have to keep

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Speaker 7: an eye on.

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Speaker 3: No, I would be curious to get your call your

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Speaker 3: team at RBC are thinking with particularly now that we've

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Speaker 3: gotten this call from Goldman Sachs that the chance for

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Speaker 3: a recession in the US is now down to what

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Speaker 3: fifteen percent? Are you that bullish?

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Speaker 7: Well, you know, it's interesting we watch you know, we

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Speaker 7: watched the Goldman call. They're certainly quite prolific and vocal,

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Speaker 7: and I think they've had a you know, sort of

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Speaker 7: a good sense of where things are headed in terms

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Speaker 7: of broader sentiments. But we've also been watching very closely

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Speaker 7: that consensus data point tracked by Bloomberg, which has been

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Speaker 7: sort of stubbornly stuck at the sixty percent level and

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Speaker 7: not moving even though the news flow around the economic

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Speaker 7: discussion has been improving. So I'm not quite sure what's

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Speaker 7: going on with that ladder data set. But I do

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Speaker 7: think this call today is interesting. You know, I have

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Speaker 7: the luxury of being the US equity strategist, not in

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Speaker 7: as so I make calls on the market as opposed

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Speaker 7: to that GDP forecast directly. But what I do tell

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Speaker 7: clients is it feels to me. And you know, this

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Speaker 7: is something we were saying early last year that this

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Speaker 7: really smells more like twenty fifteen twenty sixteen, where the

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Speaker 7: economic damage may not quite end up being a recession,

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Speaker 7: maybe something you know, sort of a cousin to a recession.

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Speaker 7: But regardless, you know, my job is to call the

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Speaker 7: equity markets, and I think we've priced in a recession

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Speaker 7: last October. Whether or not we get one still remains

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Speaker 7: to be seen, but I think we've paid the price

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Speaker 7: for one that we may not even end up getting.

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Speaker 3: So where do you see the momentum for stocks at

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Speaker 3: this point? With the with the way that the economic

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Speaker 3: backdrop looks right now.

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Speaker 7: So I think that stocks are at an interesting point.

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Speaker 7: You know, we've noted, similar to some of my other

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Speaker 7: competitors on the street, that sentiment has gotten a little

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Speaker 7: bit stretched over the summer. That's something we haven't liked.

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Speaker 7: The appeal of stocks relative to bonds has been worsening,

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Speaker 7: and that has actually been showing up in the flows,

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Speaker 7: which is a little bit of a concern to me.

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Speaker 7: Actually heading into sort of a seasonally tough period of

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Speaker 7: the year. The last five or six years, August through

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Speaker 7: October has not been a friend to the US equity market.

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Speaker 7: That being said, the economic narrative does seem to be

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Speaker 7: improving a little bit at the margin. I think that

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Speaker 7: the conference season that we're heading into now post Labor

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Speaker 7: Day has historically proven very, very valuable to investors because

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Speaker 7: we can get answers to some extent to questions on

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Speaker 7: whether or not those spillover effects from China will end

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Speaker 7: up influencing the US. We know from the last reporting

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Speaker 7: season and really the one before it that whatever this is, economically,

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Speaker 7: it is starting. We are starting to see pockets of

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Speaker 7: weakness in certain parts of the consumer, certain parts of

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Speaker 7: the corporate psyche. How bad that is really getting, I

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Speaker 7: think is going to be a key topic in this

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Speaker 7: conference season the next few weeks.

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Speaker 3: And one aspect of the market that you watch pretty

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Speaker 3: closely is the impact of politics. We do have the

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Speaker 3: prospect of a government shutdown at the end of this month.

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Speaker 3: Is that something that you're concerned about. Is that something

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Speaker 3: that you're warning your clients about.

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Speaker 7: You know, we've been talking a little bit more about

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Speaker 7: the election than the government shutdown, and frankly, we've been

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Speaker 7: getting more questions on the election next year than the

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Speaker 7: government shutdown. But I do think, you know, we are

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Speaker 7: starting to hear more rumblanks about this potential shutdown just

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Speaker 7: over the last week or so, and in a context

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Speaker 7: in which you know, you sort of enter into again

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Speaker 7: this seasonally kind of tough period for markets. It's definitely

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Speaker 7: something to keep an eye on. I do think that

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Speaker 7: equity investors tend to think when these issues come up

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Speaker 7: that it will go down to the wire, it will

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Speaker 7: get resolved at the end. So you really, you know,

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Speaker 7: probably won't see it take too much of a hit

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Speaker 7: until you really get close, you know, to that particular

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Speaker 7: you know, date of stress. But it is, you know,

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Speaker 7: it is. It is definitely a concern.

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