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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Debaicurate podcast, available every morning on Apple,

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Speaker 2: Spotify or whatever you listen. It's Thursday, the fifth of

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Speaker 2: September in London. I'm Caroline Hepke and.

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Speaker 3: I'm Stephen Carroll. Coming up today. Traders step up bets

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Speaker 3: on bigger rate cuts from the Federal Reserve as US

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Speaker 3: job openings drop to their lowest level in three years.

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Speaker 2: JP Morgan abandons its by recommendation on Chinese stocks over

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Speaker 2: fears about the future of the world's second largest economy.

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Speaker 3: And checkered past, uncharted future. We bring you our exclusive

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Speaker 3: reporting on the challenges facing the British fashion brand Berbery.

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Speaker 2: Let's start with a round up of our top stories.

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Speaker 3: A key segment of the US Treasury yield curve briefly

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Speaker 3: termed positive as traders bet on steeper interest rate cuts

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Speaker 3: from the Federal Reserve, the US two year notes yield

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Speaker 3: dip below the ten years for the second time in

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Speaker 3: two years yesterday. The move came after the July job

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Speaker 3: openings data, known as jolts, came in a lot weaker

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Speaker 3: than expected. Bloomberg's Economics editor, Michael McKee reacted to the move.

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Speaker 4: It is a significant fallow and it does suggest that

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Speaker 4: we are continuing to see the labor market loosen up.

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Speaker 4: We also have some news out now from Raphae Albostik

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Speaker 4: that is timed to this report, perhaps the Atlanta FED president,

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Speaker 4: who is a voter this year, saying that he now

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Speaker 4: thinks that it is as important to look at the

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Speaker 4: labor side as it was the inflation side.

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Speaker 3: Michael McKee adds that the data has renewed focus on

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Speaker 3: Friday's US payrolls report. It's one of the final data

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Speaker 3: points before the FED is widely expected to kick off

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Speaker 3: it's easing cycle this month. There's still big disagreements though,

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Speaker 3: about the pace of reductions, with oak Tree Capitals Howard

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Speaker 3: Mark saying he thinks rates will settle in a range

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Speaker 3: of in between three and four percent.

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Speaker 2: JP Morgan has abandoned it's by recommendation for China these stocks.

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Speaker 2: America's largest bank says that paul growth, tepid policy support,

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Speaker 2: and the US election volatility are all weighing against companies

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Speaker 2: in the world's second largest economy. The LENDA joins a

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Speaker 2: chorus of global firms moving money away from China into

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Speaker 2: more attractive emerging market bets.

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Speaker 3: In the race for the White House, Kamala Haras is

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Speaker 3: calling for a twenty eight percent capital gains tax to

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Speaker 3: be levied on those earning a million dollars or more.

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Speaker 3: The current US capital gains tax rate is twenty percent.

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Speaker 3: The Democratic presidential nominee says the measure would strengthen the

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Speaker 3: US economy.

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Speaker 5: If you earn a million dollars a year or more,

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Speaker 5: the tax rate on your long term capital gains will

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Speaker 5: be twenty eight percent under my plan, because we know

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Speaker 5: when the government encourages investment, it leads to broad based

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Speaker 5: economic growth and it creates jobs, which makes our economy stronger.

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Speaker 3: Kamala Haara, speaking at an event in New Hampshire, Her

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Speaker 3: proposal is less than the thirty nine point six percent

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Speaker 3: rate advocated by current President Joe Biden. It comes as

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Speaker 3: the Vice President endeavors to set out her own economic vision,

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Speaker 3: sharing plans to expand barandal tax credits and offer assistance

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Speaker 3: to first time buyers.

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Speaker 2: Oil is steady eaten, near the lowest level in fourteen months,

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Speaker 2: as a report pointed to US crewed stock pass falling

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Speaker 2: last week. Inventoryes tracked by the American Petroleum Institute are

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Speaker 2: said to have dropped by seven point four million barrels.

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Speaker 2: Those figures are due to be confirmed today, but would

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Speaker 2: represent the biggest decline since June. Crude has tumbled on

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Speaker 2: persistent concerns about the economic outlook in key countries and

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Speaker 2: expectations of ample supply. For Saudi Arabia, the decline in

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Speaker 2: crude prices is hitting its current account. The IMS Saudi

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Speaker 2: Mission chief and in Matti spoke to Bloomberg about the

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Speaker 2: potential impact on the kingdom's finances.

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Speaker 6: If firm or production were to decrease and then the

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Speaker 6: export proceeds were to decrease, sequently, we will have a

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Speaker 6: grand account deficit that would be significantly lower. We are

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Speaker 6: this year project being a modest deficit of about zero

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Speaker 6: point one over the medium term of about two and two

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Speaker 6: and a half percent of.

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Speaker 2: GDP I mean matty from the IMF speaking. There indications

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Speaker 2: that opek Plus is considering a delay to a planned

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Speaker 2: output boost from October failed to halt the recent slide

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Speaker 2: in crude prices.

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Speaker 3: In Vidia says it has been talking to the US

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Speaker 3: Department of Justice about its chip business, but that it

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Speaker 3: hasn't been subpoenaed. The US tech giants responding to a

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Speaker 3: Bloomberg report which revealed American authorities we're probing whether the

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Speaker 3: company had violated competition law. Vanderbilt Law School professor Rebecca

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Speaker 3: Allensworth explains why authorities would want to look at Nvidia.

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Speaker 7: We're not trying to kill anything.

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Speaker 8: We are trying to make this market, which is obviously

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Speaker 8: crucial for the AI race. It's crucial for America's financial

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Speaker 8: world leader status. We're trying to make it competitive because

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Speaker 8: competitive markets wor.

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Speaker 3: Best, Professor Rebecca Allensworth speaking there. It comes after in

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Speaker 3: Vidia's shares of fallen fourteen percent over the past three

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Speaker 3: trading days in the wake of the chip makers earnings.

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Speaker 2: Families of the seventy two victims of the Grenfell Tower

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Speaker 2: fire say that justice will only be served once criminal

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Speaker 2: charges are brought against those responsible. The UK Prime Minister

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Speaker 2: Kirs Starmer issued a state apology after an inquiry into

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Speaker 2: the tragedy found a catalog of failures by government and

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Speaker 2: the construction industry.

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Speaker 9: I want to say very clearly on behalf of the country,

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Speaker 9: you've been let down so badly before, during, and in

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Speaker 9: the aftermath of this tragedy.

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Speaker 2: Kirs Starmer has vowed to stop firms criticized in the report,

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Speaker 2: including King Span, Arconic, and CELATEXS, from winning government contracts.

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Speaker 2: In response to the report, Arconic reject to quote any

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Speaker 2: claim that its subsidiary, Iconic Architectural Products, had sold an

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Speaker 2: unsafe product.

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Speaker 3: In the United States, four people were killed and nine

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Speaker 3: others injured after a fourteen year old gunman opened fire

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Speaker 3: at a school in Atlanta, and Georgia. Authorities say the

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Speaker 3: perpetrator is in custody and will be charged as an adult.

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Speaker 3: Director of the Georgia Bureau of Investigation, Chris Housey, has

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Speaker 3: vowed to carry on my thoughts.

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Speaker 10: And prayers along with everybody standing my head and hand

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Speaker 10: me at every law enforcement ages. In this statement, many

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Speaker 10: I will plot you around this country. They are in

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Speaker 10: our faults and prayers, and we will continue with it.

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Speaker 10: We asked for your patients as we continue.

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Speaker 3: Through this, Chris house even the Georgia Bureau of Investigation

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Speaker 3: speaking there. Amongst the victims were two students and two teachers,

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Speaker 3: according to police, although other identities have not been released.

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Speaker 3: In a moment, we'll bring you up to date with

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Speaker 3: what's happening on the markets where appears cam has been

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Speaker 3: restored after the sell off. Plus bring you our reporting

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Speaker 3: on the challenges facing the new CEO of Burbery. But

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Speaker 3: just a word on a story that caught aar this

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Speaker 3: morning and a move by Visa trying to get involved

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Speaker 3: in account to account payments in the UK. So our

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Speaker 3: colleagues Aichagani and Jenny Strain have been writing about Visa

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Speaker 3: getting involved. It's working with Barkley's, Lloyd's and HSBC on

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Speaker 3: a system that would offer customers a formal process for

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Speaker 3: disputing payments that are made via bank transfer. This is

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Speaker 3: interesting because of new rules that are coming into force

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Speaker 3: in the payments industry next month, which has been the

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Speaker 3: subject of fierce lobbying within this sector as well. And

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Speaker 3: that's according to the draft rules that have been published

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Speaker 3: yesterday by the regulator. The maximum cap for reimbursement has

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Speaker 3: now been reduced to eighty five thousand pounds in cases

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Speaker 3: of fraud. Previous number being discussed was over four hundred

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Speaker 3: thousand pounds, so it's certainly a big reduction on that

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Speaker 3: as well. Going to be very interesting for the payment

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Speaker 3: sector and the question of how victims of fraud on

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Speaker 3: bank to bank transfer can be recovered interesting to see

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Speaker 3: that VISA is also getting involved in this too.

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Speaker 2: We absolute is that a growing issue in the UK

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Speaker 2: Read that story on the Bloomberg terminal this morning. Let's

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Speaker 2: send our attention though, to the markets. Asian stocks regaining

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Speaker 2: some ground lease briefly they were after the global sell off.

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Speaker 2: Traders awaiting this week's US payrolls data in our treasury

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Speaker 2: years also climbed after the ten year rate dropped eight

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Speaker 2: basis points in the prior session. As this slowed down

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Speaker 2: in the US labor market bolstered a lot of bets

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Speaker 2: on steep rate cuts to come from the Fed. Joining

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Speaker 2: US now Bluebag's TV anchor Qritty Gupta to explain and

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Speaker 2: unpack all of this. Basically, has calm actually returned to markets?

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Speaker 2: The focus is certainly back to macro, isn't it It is?

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Speaker 1: And I wouldn't call it calm just yet. That almost

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Speaker 1: feels like drinxing it. It is a little bit of

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Speaker 1: caution though, and it is a bit of waiting on

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Speaker 1: the sidelines and a lot of people, I think, kind

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Speaker 1: of looking at their watches for what's going to happen

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Speaker 1: on Friday, specifically because in the last twenty four hours

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Speaker 1: we got a pretty scary report coming out of the

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Speaker 1: Beige Book in the Federal Reserve. I'm just going to

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Speaker 1: kind of quote Verbenam if i can, but they're basically

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Speaker 1: saying that economic activity grew slightly in three districts while

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Speaker 1: the number of districts are reported flat or declining. Activity

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Speaker 1: rose from five to nine in the current period. That's

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Speaker 1: a big deal. So basically nine out of twelve are

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Speaker 1: either flat or declining. So those are kind of signaling

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Speaker 1: pretty strong recessionary signals. If you think about a contraction,

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Speaker 1: a big trunk of it. If you look at what

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Speaker 1: Bloomberg Economics analyzed, a lot of it is focusing on

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Speaker 1: consumer spending. We keep talking about American resilience driving the

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Speaker 1: global economy. What happens if that goes away? And then

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Speaker 1: of course the auto and the home markets as well.

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Speaker 1: That's where you're starting to see some of that weakness.

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Speaker 1: And this is of course coming off of the weaker

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Speaker 1: manufacturing numbers as well. So to your point, Caroline, the

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Speaker 1: macro absolutely does matter. I think all eyes for a

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Speaker 1: market's perspective is on that labor number on Friday, but

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Speaker 1: the other signals are starting to flash red as well,

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Speaker 1: and I think that's maybe what a lot of market

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Speaker 1: participants are waiting for, but we're showing up. It's not

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Speaker 1: in the stock market. It's actually in the bond market,

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Speaker 1: where bets for the September interest rate decision is now

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Speaker 1: a fifty basis point cut, not twenty five.

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Speaker 3: And interesting to see to look too at the comments

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Speaker 3: Maard Marx mug Tree as well, talking about rate settling

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Speaker 3: between three and four percent. That's kind of an interesting

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Speaker 3: if you're looking at a bit further down the line

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Speaker 3: on where things might end up.

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Speaker 1: Yeah, the argument there is basically, and we've kind of

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Speaker 1: heard this a little bit as well, in the long

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Speaker 1: term that interest rate is higher for longer, is here

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Speaker 1: to stay even after this period of normalization, which, by

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Speaker 1: the way, we're kind of seeing in the disinversion or

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Speaker 1: the uninverting of the disinversion of the curve.

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Speaker 7: I always get this one.

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Speaker 1: Flip, but basically the twos tens curve, which has kind

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Speaker 1: of been and has historically been somewhat of a recessionary

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Speaker 1: saying not every time doesn't disinvert is there a recession,

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Speaker 1: but every time there's a recession, this is a curve

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Speaker 1: that disinverts, and it basically is going back to normal here.

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Speaker 1: And what that means is that you get more premium

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Speaker 1: going further out in the curve with further time, taking

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Speaker 1: on more risk in the long term that you do

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Speaker 1: in the short term. And that hasn't been the case

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Speaker 1: for the last two years or so a lot of

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Speaker 1: because of the Federal Reserve decision making. So the argument

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Speaker 1: that Howard Marx is making is that yes, things may

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Speaker 1: comeing down, things may normalize, The Federal Reserve may be

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Speaker 1: able to have this soft landing with a fifty basis

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Speaker 1: point or a twenty five base point cut, wherever he

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Speaker 1: stands on that, But that doesn't mean that the long

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Speaker 1: term interest rates are going back to two percent or

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Speaker 1: even below, which by the way, is not the case

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Speaker 1: here in Europe.

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Speaker 10: Yeah.

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Speaker 2: Absolutely, And in terms of thinking about the payroll data

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Speaker 2: then Friday, I mean, Powell has made it clear that

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Speaker 2: it's now much more about employment than it is about inflation,

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Speaker 2: So obviously that's going to be a huge issue. Then

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Speaker 2: on Friday, Quitty, thank you so much for being with

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Speaker 2: us this morning. Bloomberg TV anchor Kritty Gupta.

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Speaker 3: Now to a special report about the woes at fashion brand.

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Speaker 3: Berbery is it bringings brings in new CEO Joshua Shulman,

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Speaker 3: The trendscop maker has seen sales and profits tumble as

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Speaker 3: it tried to elevate the brand to compete with the

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Speaker 3: likes of Armaz and Louis Vatan, leaving questions about the

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Speaker 3: future of the brand. Joining us now with more details

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Speaker 3: as our European luxury reporter Angelina Rasquet Angelina, good morning

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Speaker 3: to you. Birbery has seen a string of leaders and

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Speaker 3: strategies over the past decade. How bad is the situation

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Speaker 3: at the company? Now?

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Speaker 4: Yes?

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Speaker 7: Hello, indeed, I mean we found out this week that

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Speaker 7: Burbery will start will stop being treated on the foot

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Speaker 7: see one hundred. So it's being relegated. That's after basically

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Speaker 7: stock price has stumbled since since the record high of

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Speaker 7: April last year. It's fallen by seventy five percent. That's amit,

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Speaker 7: you know, tumbling sales and profits. I mean the background

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Speaker 7: is basically the overall situation, the micro picture. There's clearly

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Speaker 7: been a slowdan in luxury demand, uh with the inflation

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Speaker 7: hitting and Burbery is situated in the middle. If you

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Speaker 7: look at the luxury pyramid, there's you know, the most

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Speaker 7: exclusive brands at the top. You know, you think about

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Speaker 7: row Legs, about patact Philip, about Rmess and Burbery is

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Speaker 7: really like, you know, between affordable luxury and the top.

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Speaker 7: And it was on a strategy basically to elevate itself

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Speaker 7: to become more exclusive in the eyes of the consumer.

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Speaker 7: It wanted to rely less on aspirational consumers, so basically

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Speaker 7: cut back as soon as an inflation hit. But that

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Speaker 7: that strategy has failed, I mean, hasn't hasn't showed, hasn't

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Speaker 7: really born born fruits. And that's why in July they

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Speaker 7: named a new CEO. So the previous CEO just stayed

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Speaker 7: for slightly more than two years and some of the

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Speaker 7: you know, some some people have said, you know, you know,

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Speaker 7: uh that there was a poor implementation of that strategy

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Speaker 7: of elevation. So the new CEO has a lot to tackle.

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Speaker 2: Yeah, absolutely, So tell us a bit about this new

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Speaker 2: CEO then, Joshua Shulman, he's got a lot to tackle.

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Speaker 7: Indeed, So he comes from he was previously at Michael Course,

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Speaker 7: which is an affordable luxury brand. And the question mark

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Speaker 7: is that will Burbery uh stop its elevation strategy and

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Speaker 7: we'll find out about his strategy in November when Burbery

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Speaker 7: reports six months results. We also want to find out

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Speaker 7: what will be his relationship with the designer of Birbery.

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Speaker 7: Daniel Lee was named about two years ago under the

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Speaker 7: former CEO, and whenever there's a new fashion CEO that

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Speaker 7: who gets appointed he or shed they like to name

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Speaker 7: their designer who will translate their commercial vision. So we'll

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Speaker 7: have to see if that relationship, you know, goes well.

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Speaker 7: Daniel is actually introducing his latest collection at London Fashion

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Speaker 7: Week on the sixteenth of September, and last week the

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Speaker 7: collection that he unveiled in February just hit the shelves.

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Speaker 7: So I mean there's still a lot of question marks

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Speaker 7: the internal teams, notably you know, in the design, in

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Speaker 7: the in the creative side. They're under a lot of

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Speaker 7: pressure to deliver, and he'll have also to sort of

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Speaker 7: boost morale of the morale of the troops there.

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Speaker 3: Indeed internally a lot of work to be done there

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Speaker 3: as well. What about the offer to investors, he pointed

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Speaker 3: us to those interim results later in the year. What

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Speaker 3: will the message that the new CEO be trying to

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Speaker 3: communicate to to investors.

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Speaker 7: I mean, yeah, that's a big question mark about his future,

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Speaker 7: his vision, his commercial vision for Birbery. Where does he

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Speaker 7: see it in this pyramid that I was talking about.

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Speaker 7: But overall, the global picture is that the brands and

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Speaker 7: the companies that are in turnaround mode. So if you

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Speaker 7: think about Gucci at Caring or Birbery, it's obviously trickier

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Speaker 7: for them to implement their turnaround when there's a slow down.

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Speaker 7: There's a massive slow down in demand. And what we

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Speaker 7: see in this context is that the most exclusive brands

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Speaker 7: are still ahead of the game. So if you think

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Speaker 7: about Hermes, which did well in the second quarter results,

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Speaker 7: they grew by double digits.

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