Speaker 1: Good morning. I'm Brian Curtis and I'm Doug Krisner. Here
Speaker 1: are the stories we're following today.
Speaker 2: US service sector activity rising to a six month high
Speaker 2: in August. It was boosted by a pickup in new
Speaker 2: orders and hiring. We heard from ISM Services PMI chair
Speaker 2: Anthony Navis.
Speaker 3: I think this is actually better than what we've seen historically.
Speaker 3: We see usually a field waning in the summer months
Speaker 3: as people are on vacation. There's not as much hiring
Speaker 3: until September, which is typically the pivotal month of going
Speaker 3: into the last quarter. And what we see now is
Speaker 3: this is even better than what we've seen pre pandemic
Speaker 3: levels at that August threshold.
Speaker 2: Today's services reading put the pressure on US stocks, the
Speaker 2: S and P five hundred closing below forty five hundred,
Speaker 2: the Nasdaq one hundred falling about one percent.
Speaker 1: We go to the Fed next and the latest Beige
Speaker 1: Book survey on the economy. It shows modest growth now
Speaker 1: in terms of the labor market, while the survey indicates
Speaker 1: a bit of slowing not too surprising in July and August,
Speaker 1: and at the same time, many businesses saying they expect
Speaker 1: wage growth to ease broadly in the near term. So
Speaker 1: what does this mean for the Fed's path. Well, Former
Speaker 1: Saint Louis Fedbank president Jim Bullard says the inflation fight
Speaker 1: isn't over yet.
Speaker 3: It's probably wise from a risk management perspective, and probably
Speaker 3: necessary based on.
Speaker 4: The data that we've gotten, that they keep that extra
Speaker 4: rate hike in there.
Speaker 1: That is Jim Bullard. Meantime, the head of the Boston FED,
Speaker 1: Susan Collins, was saying more tightening may be needed and
Speaker 1: policymakers must be patient as they assess the data.
Speaker 5: Now.
Speaker 1: The FED next gathers September nineteenth and the twentieth Brian Well.
Speaker 2: Authorities in China and Japan are stepping up efforts to
Speaker 2: defend their currencies against the surging US dollar. We've heard
Speaker 2: from Bloomberg's Eddie vanderwaldt we've.
Speaker 6: Seen the dollar rally something like four and a half
Speaker 6: percent from the middle of July right and the dollar
Speaker 6: straights really coming back. That will reverberate across markets. Means
Speaker 6: that people are looking for some sort of haven. I
Speaker 6: think at the moment, though, the driving falls behind the
Speaker 6: narrative is that that we were starting to see the
Speaker 6: risk of inflation coming back, you know, with oil prices
Speaker 6: and so on, and that's feeding through into Asian currencies
Speaker 6: in particular, and it's forced the Bank of Japan to
Speaker 6: talk up the risks of you know, the potential for intervention,
Speaker 6: and it's it's forced in China, you know, a lower
Speaker 6: fixing than people had expected.
Speaker 2: Bloomberg's Eddie vander waht the yen has slumped by nearly
Speaker 2: eight percent versus the greenback since the middle of July,
Speaker 2: and yue is down more than six percent since May.
Speaker 2: Trading here for the offshore at seven thirty two oh
Speaker 2: four and Doug that's getting pretty close to the monthly
Speaker 2: low of about seven thirty four. The PBOC doesn't say
Speaker 2: too much, but you know that they're feeling it a bit.
Speaker 1: Most definitely, we've moved to the Chinese trade data next.
Speaker 1: Exports and imports probably both fell in the month of August,
Speaker 1: as China experienced a lot more in the way of
Speaker 1: pressure on growth. Bloomberg's has more from Hong Kong.
Speaker 7: Economists say exports likely fell nine point nine percent year
Speaker 7: on year in the months. That would be a narrower
Speaker 7: decline than the fourteen and a half percent drop in July.
Speaker 7: Analysts say it's largely due to a lower base of
Speaker 7: comparison from last year, when exports started to slow visibly. Meanwhile,
Speaker 7: a steeper decline in imports is expected because of softening
Speaker 7: domestic demand, and that's likely being squeezed by the housing slump. Overall,
Speaker 7: across the board, weakness and trade would underline the need
Speaker 7: for broader and more forceful policy support in Hong Kong
Speaker 7: and joined one Bloomberg Radio Well.
Speaker 2: Apple suffered its worst stock decline in a month, dropping
Speaker 2: three point six percent in this latest session. It followed
Speaker 2: a report that the Chinese government is barring staff from
Speaker 2: using the company's iPhones at work. We get more here
Speaker 2: from Bloomberg's ed La blow the.
Speaker 8: Wall Street Journal reporting that some central agencies in China
Speaker 8: have issued directives via chat rooms and in meetings that
Speaker 8: they should replace their mobile device in the event it
Speaker 8: is a foreign device, not just an Apple iPhone, but
Speaker 8: a non domestic device. I would say remember that Bloomberg
Speaker 8: reported in May of last year that Beijing offered a
Speaker 8: two year deadline or term limit for state corporations and
Speaker 8: indeed government agencies to swap out their foreign brand personal
Speaker 8: computers for a domestic brand, so this is not necessarily
Speaker 8: an unprecedented move.
Speaker 2: That's bloomberg ed Ludlow. Apple's iPhones are among China's bestsellers
Speaker 2: and are common in both the government and private sector.
Speaker 2: And if you missed it, as we mentioned, Apple shares
Speaker 2: down more than three and a half percent in New York.
Speaker 1: Well state side of US lawmakers is saying Chinese chip
Speaker 1: makers SMICK may have violated sanctions by supplying components to Huawei.
Speaker 1: The story from Bloomberg's Baniau in Hong Kong.
Speaker 9: US Congressman Michael McColl says SMIC Warren's investigation. This news
Speaker 9: comes after s SMIC and Huawei recently built a seven
Speaker 9: nanometer processor to power Huawei's latest smartphone. Existing rules require
Speaker 9: any company that intends to supply Huawei with US technology
Speaker 9: to get approval from Washington. It's unclear whether SMIC has
Speaker 9: a US license to supply Huawei in Hong Kong. I'm
Speaker 9: Bonnie Al Bloomberg Radio.
Speaker 2: I'm Brian Curtis along with Doug Christner and Rashad Salama
Speaker 2: will be joining us in a few moments, so Doug
Speaker 2: in that service's data the price is paid component moving
Speaker 2: up a couple of points there, so that wasn't too
Speaker 2: pleasing to investors. If you put that together with the
Speaker 2: higher oil price, all of a sudden you've got these
Speaker 2: new concerns now about whether this will nudge the FED
Speaker 2: off of hold So that's something we can talk about
Speaker 2: with Steve Matthews coming up in a few moments, Bloomberg's
Speaker 2: Economics Reporter.
Speaker 1: The other thing you have to consider is whether or
Speaker 1: not these higher rates are going to add more stress
Speaker 1: to the financial system, and there was an interesting piece
Speaker 1: from Bloomberg Intelligence indicating that US regional banks may need
Speaker 1: to raise significant amount of additional debt to comply with
Speaker 1: new regulatory requirements. We're talking about sixty three billion worth.
Speaker 1: This would be new holding company debt on the part
Speaker 1: of eighteen regional lenders, and this extra capital might not
Speaker 1: be enough, in the words of bi to prevent future failures.
Speaker 2: Yeah, it's very interesting, and it also brings me back
Speaker 2: to that story you mentioned yesterday about the reduction in
Speaker 2: the Fed's balance sheet by more than a trillion dollars.
Speaker 2: That's also something we talked to to Steve about a
Speaker 2: couple of other stories that we'll get to a little
Speaker 2: bit later. Morgan Stanley is now returning to its parish
Speaker 2: view on emerging markets, particularly em currencies, and of course
Speaker 2: it's citing China. Another story. Sources say Great Wall Motor
Speaker 2: is looking to sell at stake in Smult Energy Technologies
Speaker 2: that's a battery maker, and its IPO might be delayed,
Speaker 2: and that's part of the broader story, Doug, that China
Speaker 2: is slowing IPOs to try to help its markets.
Speaker 1: And you pointed out on our production call earlier, Brian,
Speaker 1: that Oak Tree Capital Management co founder Howard Marx was
Speaker 1: expecting more companies to default on their debt. That's interesting
Speaker 1: as well.
Speaker 2: Yeah, absolutely, time now for global news. Asian leaders have
Speaker 2: expressed disappointment over the absence of President Joe Biden at
Speaker 2: the summit. Let's get to head boxer in San Francisco
Speaker 2: in the nine sixty newsroom ed.
Speaker 10: Yeah, that officially will appear in the statement released after
Speaker 10: the summit. Meanwhile, the US has sent Vice President Kamala
Speaker 10: Harris saying economic growth in the region is paramount.
Speaker 11: You have made it a priority for Asian to deliver
Speaker 11: concrete results with a particular emphasis on economic growth, and
Speaker 11: you have been a strong partner as we work to
Speaker 11: restore ian Mar's.
Speaker 10: Path to plagcy and Chinese primarily. Chang highlighted China's strong
Speaker 10: ties with Southeast Asia during the meetings, saying asion has
Speaker 10: challenged by isn't challenged by increasingly complicated geopolitical landscape. He
Speaker 10: also saw some talk about the differences between China and
Speaker 10: Japan on the release of the treated wastewater from Fukushima,
Speaker 10: Japan's Prime Minister of Fumio Kishita saying the utmost attention
Speaker 10: of safety is being paid, and Chinese President Lee saying
Speaker 10: that Japan needs to consult more closely with neighbors regarding
Speaker 10: safety and feelings in the region. It looks very much
Speaker 10: as if US President Joe Biden is cleared ahead of
Speaker 10: the G twenty and India tomorrow. White House spokesman Kareein
Speaker 10: Jean Pierre here with the latest COVID test.
Speaker 5: The President tested negative for COVID nineteen this morning, following
Speaker 5: negative tests on Monday night and also yesterday. He is
Speaker 5: not experiencing any symptoms, which of course is a good thing.
Speaker 10: First, Lady Jill continues to recover from COVID in their
Speaker 10: home in Delaware. A group of voters in Colorado is
Speaker 10: suing to block Donald Trump from state ballots in twenty
Speaker 10: twenty four because of his efforts to overturn the results
Speaker 10: of the election in twenty twenty. They say it is
Speaker 10: a constitutional issue. A federal judge has ruled that Donald
Speaker 10: Trump is liable is liable for defeidning E Jean Carroll
Speaker 10: while he was president. What this means is that on
Speaker 10: damages will be decided only in the jury trial in January.
Speaker 10: Mean while in Georgia, Judge McAfee has denied a request
Speaker 10: to separate co defendants Kenneth Chesbro and Sidney Powell and
Speaker 10: ordered them to stand trial together.
Speaker 12: So, based on what's been presented today, I'm not finding
Speaker 12: the severance from mister Chesboro or Powell is necessary to
Speaker 12: achieve a fair determination of the guilty innocence for either
Speaker 12: defendant in this case.
Speaker 10: So the date sat. October twenty third. Justice Department is
Speaker 10: planning to file charges against Hunter Biden Bloomberg's Nancy Lyons
Speaker 10: as the update.
Speaker 13: An indictment of Hunter Biden is expected by the end
Speaker 13: of the month. That's according to documents filed in a
Speaker 13: Delaware court by Special counsel David Weiss. Biden the son
Speaker 13: of President Biden, had agreed in principle to plead guilty
Speaker 13: to federal tax charges and enter a pre trial diversion
Speaker 13: agreement related to a gun charge, but that plea deal
Speaker 13: collapse back in July. Prosecutor have not specified what charges
Speaker 13: they intend to file against the president's son. Nancy Lyons
Speaker 13: Bloomberg Radio.
Speaker 10: All right, thank you, Nancy. Global News powered by more
Speaker 10: than twenty seven hundred journalists and list in over one
Speaker 10: hundred and twenty countries. In San Francisco, I'm Had Baxter,
Speaker 10: and this is Bloomberg.
Speaker 2: This is Bloomberg Daybreak Asia, normally hosted out of Hong
Speaker 2: Kong and New York, but today Los Angeles and San Francisco,
Speaker 2: with our Doug Prisner there and Rashad Salama in Hong
Speaker 2: Kong joining us now in the program. And our guest
Speaker 2: is Steve Matthews, Bloomberg Economics reporter Steve O. Wise one.
Speaker 2: I know that there are thousands of tiles in this
Speaker 2: FED mosaic, but all of a sudden now, I mean,
Speaker 2: even with the complexity, it seems like with the prices
Speaker 2: paid component in the services data, with the oil price
Speaker 2: ticking up, that it looks like the FED pause may
Speaker 2: be threatened.
Speaker 4: Is that the case, Well, the pause is definitely not
Speaker 4: threatened for September. I think they have clearly signaled that
Speaker 4: they're on pause this month. I think the real question
Speaker 4: is what happens in November. And there's still a lot
Speaker 4: of time to go. So, yes, you're going to get
Speaker 4: some higher inflation figures with higher oil prices. Uh, you know,
Speaker 4: and there is considerable worry, as you quoted Jim Bullard
Speaker 4: of the formerly the Saint Louis FED earlier saying, you know,
Speaker 4: they might pencil in one more rate hike, and that
Speaker 4: seems to be very plausible. I mean, they had one
Speaker 4: more hike in when they did the last set of
Speaker 4: forecasts in June, and they may want to keep that
Speaker 4: option open for November. And the rate rate markets have
Speaker 4: suggested that there's a higher possibility of a hike in
Speaker 4: November than there was even you know, in the last
Speaker 4: few days, because you've just been getting really strong data,
Speaker 4: including today's im services data which showed you know, the
Speaker 4: services sectors looking pretty strong.
Speaker 10: Yeah, but Steve, you know, with every bit of data,
Speaker 10: you get something which contradicts it.
Speaker 2: And as to a certain extent, the Fed base book
Speaker 2: did that.
Speaker 4: Yeah, you you are absolutely correct. I mean the base
Speaker 4: book is kind of a puzzle because it's like, you know,
Speaker 4: if you look at economic surprise indexes, which measure is
Speaker 4: the economic data the real data coming in, you know,
Speaker 4: higher or lower than expectations. It's coming in strong, way
Speaker 4: better than expectations. And you know, you have the Atlanta
Speaker 4: Feds GDP tracker suggesting that you could get five percent
Speaker 4: or more growth. You know, it's early in the quarter,
Speaker 4: so it could could easily and almost certainly come down,
Speaker 4: but you know, it's consistent with a very strong quarter.
Speaker 4: And then the base book comes out and which is
Speaker 4: basically just anecdotal reports from the twelve districts of the
Speaker 4: Fed banks, and it's pretty downbeat. It's you know, the
Speaker 4: growth is modest, and consumers are under pressure, and you know,
Speaker 4: wages are headed lower, so all of the if it
Speaker 4: was just the basebook, it would be very consistent with
Speaker 4: a dubbish outcome and no more hikes. But the real
Speaker 4: data is coming in stronger.
Speaker 2: So if we see stronger news is good news now
Speaker 2: bad news for markets, both the stock and bond markets.
Speaker 4: I'm not sure it's that clear because I think what
Speaker 4: in the end, what they're really targeting is inflation. There
Speaker 4: is a belief among the FED leadership that it's going
Speaker 4: to take below trend growth to get inflation back to
Speaker 4: their two percent target. However, you know, that's just a
Speaker 4: tactic if they if inflation comes down on its own,
Speaker 4: And you know, there are a lot of economists who
Speaker 4: believe that inflation was artificially lifted by COVID and the
Speaker 4: responses to COVID and all the fiscal spending which is
Speaker 4: all kind of winding down. You know, there's entirely a
Speaker 4: possibility that maybe they don't need to go higher, maybe
Speaker 4: they just keep at a high level for longer. So
Speaker 4: I think there's a clear debate. And when you listen
Speaker 4: to the Fed officials, you know, on the one hand,
Speaker 4: you have people like Boston Goolsby and the Chicago and
Speaker 4: Rafael Bostik of Atlanta, who are pretty clearly saying, not
Speaker 4: go so fast, we don't necessarily need to do more.
Speaker 4: And then there's an entire another element.
Speaker 2: Yeah, there is that other element. But I was surprised
Speaker 2: to see yesterday and we played the comments from Christopher
Speaker 2: Waller quite a bit that he's crossed over to perhaps
Speaker 2: pausing and assessing. Steve, thank you for joining the Steve
Speaker 2: Matthews Bloomberg Economics Reporter. This is Bloomberg Daybreak Asia, your
Speaker 2: morning brief on the story's making news from Hong Kong
Speaker 2: to Singapore and Wall Street.
Speaker 1: Look for us on your podcast feed every day, on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts.
Speaker 2: You can also listen live each day on Bloomberg eleven
Speaker 2: three to zero in New York, Bloomberg ninety nine to
Speaker 2: one in Washington, Bloomberg one oh sixty one in Boston,
Speaker 2: and Bloomberg nine sixty in San Francisco.
Speaker 1: Our flagship New York station is also available on your
Speaker 1: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty plus.
Speaker 2: Listen coast to coast on the Bloomberg Business app, Sirius
Speaker 2: XM Channel one nineteen, the iHeartRadio app, and on Bloomberg
Speaker 2: dot Com. I'm Brian Curtis.
Speaker 1: And I'm Doug Prisner. Join us again tomorrow for all
Speaker 1: the news you need to start your day, right here
Speaker 1: on Bloomberg day Break Asia.