WEBVTT - Traders Await Jobs Report, China Eases Lending Rules

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Richard Saloma 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 3>And it's all about also, you know what that job's

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<v Speaker 3>report is likely to do in the US should provide

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<v Speaker 3>us with just a snapshot of where the US economy is,

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<v Speaker 3>which is of course vital for setting monetary policy. Getting

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<v Speaker 3>that data in a little under fourteen and a half hours,

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<v Speaker 3>Bloomberg's Michael McKee has a preview.

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<v Speaker 4>Barring a surprise, the payrolls report is forecast to show

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<v Speaker 4>a continuing slowdown in hiring during August. Well, this week's

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<v Speaker 4>Jolts report showed the number of openings remains elevated. Monthly

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<v Speaker 4>jobs creation has been trending lower. Companies aren't laying off workers,

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<v Speaker 4>but they are cutting back on hiring as they wait

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<v Speaker 4>to see whether recession forecasts come true. FED officials also

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<v Speaker 4>want to see if unemployment starts to rise. So far,

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<v Speaker 4>it's remained near historic lows, even given the rise in

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<v Speaker 4>interest rates. And of course, top of mind for everyone

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<v Speaker 4>will be average hourly earnings. Thursday's incomes report suggested wage

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<v Speaker 4>game means are finally cooling as demand for workers eases.

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<v Speaker 4>Michael McKee Bloomberg Daybreak Asia.

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

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<v Speaker 2>cutting down payments for home buyers and reducing mortgage rates.

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

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<v Speaker 5>The nationwide minimum down payment will be twenty percent for

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<v Speaker 5>first time buyers and thirty percent for second time purchasers.

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<v Speaker 5>The mortgage rate cuts will be negotiated between banks and customers.

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<v Speaker 5>Both policies will go into effect on September twenty fifth.

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<v Speaker 5>This is China's latest attempt to curup the country's property crisis.

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<v Speaker 5>The announcements came as data showed China's two year property

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<v Speaker 5>slum worsened. This month's sales by the country's one hundred

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<v Speaker 5>largest developers dropped thirty four percent from a year earlier,

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<v Speaker 5>according to the China Real Estate Information Corporation. That was

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<v Speaker 5>the biggest drop in more than a year. In Hong Kong,

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<v Speaker 5>joined Wong Bloomberg Day Brigaisia.

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<v Speaker 3>And indeed staying with property and developers, a group of

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<v Speaker 3>Country Garden creditors are seeking to declare a default on

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<v Speaker 3>a Yuang bond. Let's get to this from Bloomberg's a

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<v Speaker 3>Bonnie Out who has more from Hong Kong.

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<v Speaker 6>Investors have proposed a note be declared in default because

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<v Speaker 6>of a recent downgrade. That's according to a filing to

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<v Speaker 6>the Shanghai Stock Exchange's privatest Closure platform. The investors say

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<v Speaker 6>that effectively hold ten and a half percent of a

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<v Speaker 6>yuan bond effectively due September fourth, but at least fifty

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<v Speaker 6>percent support is needed for each proposal being vaulted. Holders

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<v Speaker 6>of the yuan bond had until yesterday to fault on

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<v Speaker 6>the proposal to call it default. Moody's has downgraded a

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<v Speaker 6>country Garden three notches. As more pressure piles on the

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<v Speaker 6>distressed developer in Hong Kong. I'm Bonnie Olt Bloomberg Daybreak Asia.

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<v Speaker 3>Meanwhile, the China evergrahamd said it couldn't make payments for

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<v Speaker 3>investment products this once due to a liquidity crunch. Its

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<v Speaker 3>restructuring process has been in limber since it defaulted a

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<v Speaker 3>couple of years ago.

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<v Speaker 2>Well, US treasure Secretary of Janet Yellen is heading to India,

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<v Speaker 2>but China is also very much on her mind. The

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<v Speaker 2>story from Bloomberg's Denise Pellegrini.

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<v Speaker 7>Yellen will go to Delhi this second week in September

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<v Speaker 7>joining President Biden at the G twenty summit. This is

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<v Speaker 7>her fourth visit to India in less than a year.

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<v Speaker 7>She'll be meeting her Indian counterparts and seeking to strengthen

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<v Speaker 7>bilateral economic ties. The gathering will also offer another opportunity

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<v Speaker 7>to engage with Chinese officials at a time of mounting

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<v Speaker 7>concern over the potential ripple effect of China's economic slowdown

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<v Speaker 7>and financial strains among the property developers. President Biden says

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<v Speaker 7>he hopes China's President Chi Jimping shows up, but sources

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<v Speaker 7>tell Bloomberg that Chi Jimping will not be attending. Among

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<v Speaker 7>the other issues on the US agenda for New Delhi,

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<v Speaker 7>rallying support for Ukraine and for sanctions on Russia, and

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<v Speaker 7>also bolstering the resources of multilateral development banks. Denise Pellegrini,

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<v Speaker 7>Bloomberg day Break Asia.

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<v Speaker 3>We're hearing that All the Holdings is preparing to set

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<v Speaker 3>a price range for its us IPO before embarking on

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<v Speaker 3>an investor roadshow next week. The ship designer considering pricing

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<v Speaker 3>its shares on the thirteenth of September, and it wants

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<v Speaker 3>to begin trading the next day yes to promote the offering.

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<v Speaker 3>It's expected to come after the Labor Day holiday, and

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<v Speaker 3>we're told arm is aiming to raise between five and

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<v Speaker 3>seven billion dollars with this offering, and the valuation then

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<v Speaker 3>could end up in the range of between fifty and

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<v Speaker 3>sixty billion dollars.

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<v Speaker 2>Broadcom is one of the world's five largest semiconductor manufacturers,

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<v Speaker 2>and today the company gave a disappointing forecast for the

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<v Speaker 2>current quarter. Of the story from Bloomberg's Charlie Pellett.

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<v Speaker 1>It signals that demand for electronic components remains sluggish. Broadcom

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<v Speaker 1>said revenue will be about nine point twenty seven billion

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<v Speaker 1>dollars in the fiscal fourth quarter. That compares with an

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<v Speaker 1>average Wall Street estimate of nine point twenty eight billion dollars,

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<v Speaker 1>with some analysts predicting as much as nine point eight billion.

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<v Speaker 1>The outlook shows that Broadcom is mired in a broad

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<v Speaker 1>spending slowdown, even as the artificial intelligence boom fuels demand

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<v Speaker 1>and pockets of the industry in New York. Charlie Pellett

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<v Speaker 1>Boomberg Daybreak Asia.

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<v Speaker 2>So the employment report for August due tomorrow morning, eight

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<v Speaker 2>thirty am Walls Street Time. We told you about that

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<v Speaker 2>a moment ago. Word today that US small businesses reported

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<v Speaker 2>fewer unfilled positions in the month of August. This is

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<v Speaker 2>data from the National Federation of Independent Business. It shows

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<v Speaker 2>unfilled positions are now at their lowest level since February

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<v Speaker 2>twenty twenty one, and the NFIB also reported fewer small

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<v Speaker 2>business owners raising worker compensation well at the same time today,

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<v Speaker 2>job cuts, that's the survey from Challenger Gray in Christmas.

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<v Speaker 2>Overall cuts totaled more than seventy five thousand in the

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<v Speaker 2>month of August, obviously a number amplified by the bankruptcy

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<v Speaker 2>of Yellow Corporation. That August Employment data due tomorrow and today.

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<v Speaker 2>A survey from twenty two v Research finds sixty percent

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<v Speaker 2>of investors are expecting a softer than estimated number on

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<v Speaker 2>job growth. Let's get to Global News next. Former President

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<v Speaker 2>Donald Trump pleads not guilty in Georgia. Dan Schwartzman is here, Danny.

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<v Speaker 8>Doug, get your popcorn ready, because this is going to

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<v Speaker 8>be something to behold. Trump has waived his right to

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<v Speaker 8>an in person arraignment, sparing him from having to appear

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<v Speaker 8>in court on September sixth, and that would have been

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<v Speaker 8>broadcast live. Trump led not guilty to state charges he

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<v Speaker 8>conspired to overturn the twenty twenty presidential election results. Excuse me.

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<v Speaker 8>The seventy seven year old is one of nineteen defendants

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<v Speaker 8>indicted by Fulton County da Fani Willis if participating in

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<v Speaker 8>a quote criminal enterprise to keep Trump as president. Meanwhile,

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<v Speaker 8>the Atlanta Journal Constitution reports that the Fulton County judge

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<v Speaker 8>has said that Trump court proceedings will in fact be televised.

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<v Speaker 8>China and the US acknowledging that military officials from the

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<v Speaker 8>two countries met earlier this month at a defense chiefs

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<v Speaker 8>conference in Fiji. Admiral John Aquilino, the head of the

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<v Speaker 8>US Indo Pacific Command, in General Shu Sheiling, the deputy

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<v Speaker 8>Joint Chief of Staff of the People's Liberation Army, held

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<v Speaker 8>a meeting for what's believed to be the first time

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<v Speaker 8>since August of twenty twenty two. China had suspended military

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<v Speaker 8>ties with the US after then House Speaker Nancy Pelosi

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<v Speaker 8>visited Taiwan. Relations were then even more strained after the

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<v Speaker 8>U s shotdown in a ledged Chinese spy balloon that

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<v Speaker 8>flew over the country. That was back in February. Former

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<v Speaker 8>House Speaker in Nancy Pelosi and has sit down with

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<v Speaker 8>Bloomberg's Francine Lacoi and Venice Italy. Says, despite differences, we

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<v Speaker 8>do have to work with China.

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<v Speaker 9>We don't have shared values, but we have a shared

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<v Speaker 9>planet and we have to work with the Chinese to

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<v Speaker 9>save the planet because they're now I think the biggest emitter,

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<v Speaker 9>if not us, their second, and they're part of the

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<v Speaker 9>solution in all of this.

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<v Speaker 8>You can see that full interview on Leaders with Lacroix,

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<v Speaker 8>airing at nine thirty pm New York time on September

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<v Speaker 8>twenty seventh in the States, then at six thirty pm

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<v Speaker 8>London time the next day. President Biden says he'll visit

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<v Speaker 8>Hurricane to dally a ravaged Florida on Saturday. The Category

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<v Speaker 8>three storm flooded towns across the state, leaving hundreds of

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<v Speaker 8>thousands without power. Biden has been criticized for a seemingly

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<v Speaker 8>slow response to the wildfire and maw we earlier this month.

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<v Speaker 8>Biden says he has spoken with Governor Ron De Santis

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<v Speaker 8>three times today to assure him that the federal government

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<v Speaker 8>would continue to provide all necessary resources to help the

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<v Speaker 8>state recover in Florida. DeSantis gives an update on power

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<v Speaker 8>outages across the state.

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<v Speaker 10>As of six am today, there are approximately one hundred

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<v Speaker 10>and forty six thousand power outages reported across the state,

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<v Speaker 10>but power is being restored quickly. Thus far, four hundred

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<v Speaker 10>and twenty thousand accounts that lost power during the storm

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<v Speaker 10>have been restored.

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<v Speaker 8>Biden will be in Florida Saturday to tour areas hit

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<v Speaker 8>hard by Hurricane Nadalia. Global News twenty five hours a

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<v Speaker 8>day power by more than twenty seven hundred journalists and

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<v Speaker 8>analysts in more than one hundred and twenty countries. I'm

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<v Speaker 8>Dan Schwartzman. This is Bloomberg.

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<v Speaker 2>Let's get to our guest. Liz Anne Saunders is with us.

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<v Speaker 2>She is managing director, also the chief investment strategistic Charles

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<v Speaker 2>Schwab and Lizen is in Boston, Massachusetts. Lazan, thanks for

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<v Speaker 2>being with us. I'm curious to get your take right

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<v Speaker 2>out of the gate on how you see the economy

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<v Speaker 2>in the States right now and where the FED is

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<v Speaker 2>in all of that mix.

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<v Speaker 11>Sure, and thanks for having me. We've had the view

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<v Speaker 11>that this has been a rolling recession or a series

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<v Speaker 11>of rolling recessions at the sectoral level, meeting segments of

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<v Speaker 11>the economy for more than a year and a half

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<v Speaker 11>right now, and I think that's the best way to

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<v Speaker 11>think about this very unique cycle where we've had recessions

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<v Speaker 11>in areas of housing, housing related, a lot of consumer

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<v Speaker 11>oriented goods, manufacturing, we just had the later offsetting strength

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<v Speaker 11>on the services side and in turn the labor market.

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<v Speaker 11>And I think from the FEDS perspective, part of the

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<v Speaker 11>reason why they're focusing on inflation metrics at a more

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<v Speaker 11>granular level like core services x housing is they want

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<v Speaker 11>to get to the heart of where inflation has been

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<v Speaker 11>most sticky, and that's where it accelerated later. So I

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<v Speaker 11>think the simplicity around recession versus no recession, and in

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<v Speaker 11>turn what the Fed's reaction function misses the nuances that

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<v Speaker 11>make this cycle unlike any other.

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<v Speaker 3>So tell me here as well, then you know when

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<v Speaker 3>you look here at what happened, Liz with the design

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<v Speaker 3>with the PCE number, what did you make of it? It

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<v Speaker 3>was pretty much in line. But again it's not gone up.

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<v Speaker 11>It is it was in line, and it's PCE is

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<v Speaker 11>often in line because although the weights are different, the

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<v Speaker 11>components of PCE you have already via CPI and PPI.

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<v Speaker 11>So economists don't tend to be all that far off,

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<v Speaker 11>at least on the main headline and core numbers. Where

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<v Speaker 11>there was a bit of an upside surprise today was

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<v Speaker 11>in that core services x housing and interestingly, the biggest

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<v Speaker 11>component of that outsize jump up was portfolio management fees,

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<v Speaker 11>and that has been driven by the stronger performance by

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<v Speaker 11>the stock market. So that can obviously ebb and flow.

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<v Speaker 11>But given that that Powell has stressed the desire to

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<v Speaker 11>go to two percent, that two months trend does make

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<v Speaker 11>a longer term trend. They're not there yet on inflation,

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<v Speaker 11>and it's part of the reason why there's so much

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<v Speaker 11>focus on tomorrow's jobs report. Today's action and the market

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<v Speaker 11>was very churn like, and I think that reflects the

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<v Speaker 11>uncertainty with regard to tomorrow.

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<v Speaker 2>So you were talking earlier about the notion of a

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<v Speaker 2>rolling recession. Maybe we have seen a few, one possibly

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<v Speaker 2>in manufacturing, another that was in the housing market, at

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<v Speaker 2>least temporarily. But one of the things that's really surprising

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<v Speaker 2>is how well the consumer is holding up. I was

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<v Speaker 2>struck by the consumer spending number today again in July

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<v Speaker 2>of six tens of one percent. Haven't seen that since

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<v Speaker 2>the beginning of the year. Where is the American consumer

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<v Speaker 2>right now?

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<v Speaker 11>In your view, so they've been in relatively healthy position

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<v Speaker 11>given what had been some of the excess associated with

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<v Speaker 11>this stimulus. Admittedly though that has really wound itself down,

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<v Speaker 11>and given what you're seeing in terms of increased credit

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<v Speaker 11>card usage and now delinquencies starting to kick in, and

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<v Speaker 11>it wouldn't surprise me to start to see a bit

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<v Speaker 11>of a faltering. When you saw the personal income and

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<v Speaker 11>spending numbers today, the spending side was significantly higher than

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<v Speaker 11>the income side, hence the now lower saving trade. I

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<v Speaker 11>think what has been most closely tied to the resilience

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<v Speaker 11>of the consumer has been less about wages, less about confidence,

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<v Speaker 11>but more about the labor market. And I think if

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<v Speaker 11>we start to see more than just the cracks we've

0:12:28.640 --> 0:12:32.120
<v Speaker 11>begun to see in the labor market, that probably puts

0:12:32.679 --> 0:12:36.360
<v Speaker 11>a quicker dent in the consumption side of the economy,

0:12:36.440 --> 0:12:41.200
<v Speaker 11>especially with student loan forgiveness starting to wane here. So

0:12:41.360 --> 0:12:44.439
<v Speaker 11>in addition, a lot of the consumption data retail sales

0:12:45.000 --> 0:12:48.520
<v Speaker 11>is expressed in nominal terms, not in real terms, So

0:12:48.600 --> 0:12:50.840
<v Speaker 11>I think important in this environment is to look at

0:12:50.840 --> 0:12:54.640
<v Speaker 11>what's happening in terms of unit sales as opposed to

0:12:54.800 --> 0:12:58.360
<v Speaker 11>dollar sales in nominal terms, which in many cases is

0:12:58.840 --> 0:13:03.840
<v Speaker 11>sort of looks high because inflation and prices have been high.

0:13:03.960 --> 0:13:07.200
<v Speaker 3>Now when you then look at all of the what

0:13:07.320 --> 0:13:09.719
<v Speaker 3>you've just talked about here, you know, then you look

0:13:09.720 --> 0:13:11.480
<v Speaker 3>at what's going on in the bond market, and it's

0:13:11.600 --> 0:13:14.280
<v Speaker 3>bifurcated in the sense that we've got hedge funds as

0:13:14.320 --> 0:13:18.839
<v Speaker 3>still shorting treasuries in large part, and asset managers off

0:13:18.840 --> 0:13:21.760
<v Speaker 3>for obvious reasons, locking in that yield and buying what

0:13:21.840 --> 0:13:23.600
<v Speaker 3>side of the equation would you be on.

0:13:24.600 --> 0:13:27.920
<v Speaker 11>Well, you know, it's often said that the bond market

0:13:29.559 --> 0:13:32.680
<v Speaker 11>tends to have a more rational perspective. I think maybe

0:13:32.760 --> 0:13:34.959
<v Speaker 11>one of the ways to think about why the bond

0:13:35.000 --> 0:13:38.800
<v Speaker 11>market and the equity market maybe aren't sending the same

0:13:38.880 --> 0:13:42.160
<v Speaker 11>message is I think the bond market tends to live

0:13:42.200 --> 0:13:45.240
<v Speaker 11>in the and if we were on camera, i'd have

0:13:45.280 --> 0:13:49.679
<v Speaker 11>air quotes around the word the real world, meaning you know,

0:13:50.040 --> 0:13:53.440
<v Speaker 11>x inflation. But I think the equity market tends to

0:13:53.480 --> 0:13:57.400
<v Speaker 11>live in the nominal world. And I think that's where

0:13:57.440 --> 0:14:01.240
<v Speaker 11>there's a bit of a disconnect, because the nominal data

0:14:01.720 --> 0:14:04.960
<v Speaker 11>still looks fairly decent. It's the real data that is

0:14:05.000 --> 0:14:08.360
<v Speaker 11>a bit more questionable, and we haven't seen it yet

0:14:08.400 --> 0:14:11.920
<v Speaker 11>in terms of a blowout in credit spreads. But I

0:14:11.960 --> 0:14:14.440
<v Speaker 11>think at some point the equity market is going to

0:14:14.480 --> 0:14:16.800
<v Speaker 11>heed the message from the bond market so.

0:14:16.960 --> 0:14:20.200
<v Speaker 2>Very quickly twenty seconds or so. Would you be expecting

0:14:20.560 --> 0:14:23.880
<v Speaker 2>a significant move lower in stocks between now, let's say,

0:14:23.880 --> 0:14:24.600
<v Speaker 2>in the end of the year.

0:14:26.960 --> 0:14:29.440
<v Speaker 11>Yes and no. You know, I don't try to forecast

0:14:29.440 --> 0:14:33.040
<v Speaker 11>short term moves in the market. I think we're right

0:14:33.080 --> 0:14:35.560
<v Speaker 11>now in a bad news is good news for the

0:14:35.600 --> 0:14:39.240
<v Speaker 11>equity market. That doesn't last in portuity. In perpetuity, I

0:14:39.280 --> 0:14:43.080
<v Speaker 11>think if the news continues to be bad at some point,

0:14:43.400 --> 0:14:45.160
<v Speaker 11>that has a negative impact on equities.

0:14:46.120 --> 0:14:48.680
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