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Speaker 1: Good morning.

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Speaker 2: I'm Doug Chrisner and I'm Brian Curtiz. Here are the

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Speaker 2: stories we're following today. Well. Taking a look at Jennet Yellen,

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Speaker 2: she said that the US economy is on a good

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Speaker 2: path to bring inflation down without a major weakening in

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Speaker 2: the labor market. Separately, Yellen weighed in again on US

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Speaker 2: tensions with China. She indicated that tariff reductions are not

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Speaker 2: on the table. She said that China has failed to

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Speaker 2: address the unfair trade practices that triggered US tariff hikes

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Speaker 2: in the country. Let's go back to Yellen speaking exclusively

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Speaker 2: with Bloomberg.

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Speaker 3: Slow growth in China can have some negative spillovers for

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Speaker 3: the United States. Growth is slowed, but our labor market

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Speaker 3: continues to be quite strong. I don't expect a recession.

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Speaker 2: Jenny Yellen also said that any moves to curb outbound

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Speaker 2: US investment to China, which we're expecting maybe within the

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Speaker 2: next month, would be narrowly targeted and based solely on

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Speaker 2: national security considerations. Now, Microsoft's bid for Activision Blizzard gaining

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Speaker 2: more momentum. Bloomberg's Tom Busby on.

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Speaker 4: That after defeating the US Federal Trade Commission's anti trust

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Speaker 4: lawsuit last week. Microsoft on Monday cleared another regulatory hurdle,

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Speaker 4: this one in the UK, in its planned sixty nine

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Speaker 4: billion dollar buyout of the video game maker Activision blizzards

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Speaker 4: officials in the UK, paving the way for the companies

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Speaker 4: to hammer out alternatives to a veto on that deal.

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Speaker 4: Also helping with regulators, Microsoft agree to a truce with

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Speaker 4: Sony to keep Activision's popular Call of Duty games available

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Speaker 4: on the PlayStation for ten more years. Tom Busby Bloomberg,

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Speaker 4: Daybreak Asia.

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Speaker 2: And Breaking News. We hear that Microsoft and Activision Blizzard

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Speaker 2: are nearing the finish line on the deal, but they're

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Speaker 2: not likely to close it by the Tuesday deadline. We're

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Speaker 2: told the companies do not plan to walk away from

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Speaker 2: the deal though, and we'll continue seeking the final regulatory

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Speaker 2: approvals needed for closing. Well Ford Motor Company has mentioned

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Speaker 2: is slashing prices on the electric version of its best

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Speaker 2: selling F one fifty pickup. We get more on that

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Speaker 2: from Bloomberg's ed Ludlow one model.

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Speaker 5: The pro is cut by up to seventeen percent. We

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Speaker 5: just cautioned that the Pro is a model that's directed

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Speaker 5: at fleets and commercial use, but the XLT three one

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Speaker 5: one A drops from sixty four thousand to fifty four

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Speaker 5: nine ninety five. And what Ford are saying is two things,

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Speaker 5: improved capacity, They're able to build more of them at

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Speaker 5: high volume, and also improved cost bill of materials right

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Speaker 5: and that I think is really interesting in the context

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Speaker 5: of inflation right now.

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Speaker 2: Well, Ford is acting in part defend off competition coming

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Speaker 2: from Tesla and General Motors. GM began building an electric

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Speaker 2: version of its Chevrolet Silverado pickup earlier this year, and

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Speaker 2: Tesla revealed over the weekend that it has built its

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Speaker 2: first cyber truck. Investor has reacted negatively two Fords price cuts.

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Speaker 2: Monday shares were down six percent at the end of

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Speaker 2: the day. Well Morgan Stanley Bank of America are among

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Speaker 2: the banks reporting earnings tomorrow in the United States. Let's

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Speaker 2: get a preview here from Bloomberg's Charlie Pellett.

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Speaker 1: Both report before the open of US trading. Analysts and

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Speaker 1: investors will be watching Morgan Stanley for signs of fees

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Speaker 1: stabilizing and a possible decline in trading revenue from a

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Speaker 1: year earlier. Bloomberg Intelligence analysts say the firm's recent plans

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Speaker 1: for job cuts signal a more pessimistic view on capital

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Speaker 1: markets revenue, in contrast with management's optimistic comments on mergers

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Speaker 1: and acquisitions at Bank of America, Analysts and investors will

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Speaker 1: be watching for a potential slowdown in long growth and

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Speaker 1: net interest income in New York. Charlie Pellett Bloomberg Daybreak Asia.

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Speaker 2: Pretty good day from some of the banks that already reported.

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Speaker 2: JP Morgan a two point four percent city group with

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Speaker 2: a gain of one point one percent.

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Speaker 1: Well.

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Speaker 2: The most indebted developer China, Evergrand has released its long

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Speaker 2: delayed earnings results. Get the story from Bloomberg's Joan Wong.

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Speaker 6: Evergraham posts a combined losses of more than eighty one

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Speaker 6: billion dollars over two years. That's according to filings at

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Speaker 6: the Hong Kong Stock Exchange the earnings market. The company's

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Speaker 6: first two full year losses since it's listing in two

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Speaker 6: thousand and nine is a long awaited update. The company's

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Speaker 6: wills have come to symbolize China's housing crisis. Over the

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Speaker 6: past two years. The Chinese government restricted borrowing by developers

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Speaker 6: and consumers curved home purchases. As a result, Evergrand's dead

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Speaker 6: sored to three hundred and sixty billion dollars with the

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Speaker 6: developers filing. The question now is when will the stock

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Speaker 6: start to trade again. Bloomberg Intelligence also says theirs potential

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Speaker 6: now for approval of the firm's debt restructuring plan. In

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Speaker 6: Hong Kong. Joanne Wang, Bloomberg Day, Brigaisia.

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Speaker 2: I'm Brian Curtis in Hong Kong. My colleague Vannie Quinn

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Speaker 2: will join us in a later hour of the program.

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Speaker 2: All of a sudden, we have two major drivers for

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Speaker 2: the bulls. Inflation falling a little quicker than expected, and secondly,

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Speaker 2: a better m and a environment after the Microsoft activision

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Speaker 2: Blizzard deal. Now we mentioned that it's not finally yet,

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Speaker 2: but it is moving towards that. And in addition, you

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Speaker 2: heard the Treasury Secretary there, Jannet Yellen more less shrugging

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Speaker 2: off China's stumbling growth, saying that would affect countries in

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Speaker 2: Asia more than the United States. And as you heard,

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Speaker 2: she's not thinking recession. Our guests coming up shortly, Joyce

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Speaker 2: Chang from JP Morgan. Now it's time for global news.

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Speaker 2: The US is going to bolster its presence near the

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Speaker 2: Strait of Hormuz at bax To with global news in

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Speaker 2: the nine sixty news women in San Francisco.

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Speaker 7: Yeah, that's right, Brian. It comes as a medal of

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Speaker 7: a destroyer and fighter aircrafts, including F thirty five's White HOUSEPTY.

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Speaker 7: Press Secretary Sabrino Sengh says there have been a number

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Speaker 7: of recent incidents involving merchant ships near the Strait.

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Speaker 6: In light of this continued threat, and in coordination with

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Speaker 6: our partners and allies, the Department is increasing our presence

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Speaker 6: and ability to monitor the Strait and surrounding waters.

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Speaker 7: Singh says it's the globe's most important passageway for the

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Speaker 7: transport of oil. Secretary of State Anthony Blincoln says that

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Speaker 7: diplomacy in the area will soon get worse as counter

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Speaker 7: terrorism positions in Egypt, Lebanon, and Israel will soon have

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Speaker 7: no ambassador presence. He's calling on Congress to clear the

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Speaker 7: backlog of confirmations.

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Speaker 8: The reasons that have nothing to do with the omni's

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Speaker 8: qualifications or abilities. They are being forced to proceed through

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Speaker 8: individual forebodes. Over third of those nominees have been waiting

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Speaker 8: approximately a year or more, some longer than eighteen months.

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Speaker 7: Says the country can't continue to operate that Way, Taiwan

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Speaker 7: vice president top candidate for president Eli Chang Tay, will

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Speaker 7: stop in the US next month and route to South America.

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Speaker 7: These plans risk uping tensions again with China. South Korean

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Speaker 7: President yunsukiol has headed to the storm battered towns of

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Speaker 7: South Korea as the latest downpour has left at least

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Speaker 7: forty people dead and nine missing. Extreme weather a major

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Speaker 7: story in the US as well today, the deadly flooding

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Speaker 7: on the eastern seaboard, stretching from Vermont down of the Carolinas.

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Speaker 7: Connecticut Governor Ned Lamont with the key question.

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Speaker 1: What the hell is going on here?

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Speaker 7: Yeah? New Jersey Governor Phil Murphy says, unprecedented.

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Speaker 1: We've seen it, but not at this level.

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Speaker 9: And I think we all fear that that's going to

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Speaker 9: be the new norm, and we can't be dragged by that.

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Speaker 7: We got to get out ahead of it. And Senator

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Speaker 7: Richard Blumenthal takes it a step further.

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Speaker 5: People take for granted that there's going to be affordable

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Speaker 5: produce on their table.

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Speaker 1: We can't take it for granted.

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Speaker 7: Yeah. Death Valley recorded one hundred and twenty eight degrees yesterday,

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Speaker 7: four degrees short of the all time hottest place on

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Speaker 7: Earth record, and New York's air quality drops again today

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Speaker 7: as a Canadian wildfire smoke returns. New York City has

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Speaker 7: a new police commissioner. His name is Edward Caban.

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Speaker 10: The NYPD is the most consequential police department in all

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Speaker 10: of law enforcement. Its story history is a living legacy

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Speaker 10: of valor, bravery, and sacrifice.

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Speaker 7: Go On started his law career enforcement in nineteen ninety one.

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Speaker 7: He becomes the first Latino NYPD commissioner. Georgia Court now

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Speaker 7: is rejected the Trump bid to block the grand jury report.

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Speaker 7: Another loss for Trump CNBC report And guess who now

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Speaker 7: holds the record for the woman with the most Billboard

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Speaker 7: number one albums in history? Traumatic Pause, I Think You

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Speaker 7: Have It, Speak Now Taylor Swift now has twelve with

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Speaker 7: us Speak Now Barbara streisand now number two at eleven.

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Speaker 7: Swift also has four cuts in the top ten at

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Speaker 7: the same time. That ties a record for most simultaneous

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Speaker 7: top ten hits by a living person. Herb Alpert also

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Speaker 7: did it in nineteen sixty six. Global News powered by

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Speaker 7: more than twenty seven hundred journalist and analysts in over

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Speaker 7: one hundred twenty countries in San Francisco. I'm at Baxter

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Speaker 7: and this is Bloomberg.

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Speaker 2: This is Bloomberg Daybreak Asia. Our guest is Joyce Chang,

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Speaker 2: Global Research Chair at JP Morgan. Joyce I referred to

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Speaker 2: it as a couple of gifts for the bulls over

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Speaker 2: the past week, Inflation falling a little quicker than expect

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Speaker 2: and I know there's some qualifications there too, but that's

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Speaker 2: generally the perception. And secondly, a better m and A

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Speaker 2: environment after the Microsoft activision deal, and again there's some

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Speaker 2: qualifiers on that, but people are running with this story.

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Speaker 2: Do you like it? Do you like the environment at

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Speaker 2: the moment?

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Speaker 11: Well, look, I think this environment's still going to continue

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Speaker 11: for a bit of time, but I do caution on

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Speaker 11: some of the longer term risk here, particularly since the

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Speaker 11: valuations are also running along as well. So I think

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Speaker 11: that Look, the June CPI report stole the show last week,

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Speaker 11: both on the headline and the core coming in below expectations.

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Speaker 11: But my question really is is two and a half

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Speaker 11: rather than three percent really declaring victory on inflation. So

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Speaker 11: I think you could continue to see the goods inflation

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Speaker 11: coming down. You can also see some emerging market central

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Speaker 11: banks actually looking to ease ahead. So this could continue

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Speaker 11: for a while. But what I'm more concerned about is

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Speaker 11: that as we see growth reaccelerating and still that more

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Speaker 11: tightening might need to happen in the develop market countries.

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Speaker 11: Are you looking at just consequences further down the road? Now?

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Speaker 11: Maybe that goes into twenty twenty four.

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Speaker 2: Though, Yeah, that's what I think it comes down to

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Speaker 2: kind of which camp you're in. You know, do you

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Speaker 2: believe this is late cycle and do you believe that

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Speaker 2: you know, we have to go through the recession, we

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Speaker 2: have to go through the market bottoming out after the

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Speaker 2: FED starts cutting interest rates, and it hasn't even fully

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Speaker 2: committed to a pause yet. So there's that camp, and

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Speaker 2: then there's the other camp that says, look, you know,

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Speaker 2: this is so different this time because of the pandemic

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Speaker 2: and all that, you can't look at it as a

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Speaker 2: normal cycle. We could be starting a bull cycle here.

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Speaker 2: That's what that camp believes.

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Speaker 11: So I think this run could continue for more time.

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Speaker 11: But what I'm really worried about is that if you

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Speaker 11: look at the services side, services inflation, the tightness of

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Speaker 11: the labor market, I mean, that's still a really big concern,

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Speaker 11: and we have not seen those pressures you going away,

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Speaker 11: So I think that you know, the question is, as

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Speaker 11: we get into the first half of next year and

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Speaker 11: we do start to see more of a growth slow down,

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Speaker 11: but we still see labor tightness, inflation higher than where

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Speaker 11: central banks are comfortable, are you going to see just

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Speaker 11: more pressures on this higher for longer and some of

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Speaker 11: the real rates than you know, the move that we've

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Speaker 11: seen on the tightening playing through next year. Now, I

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Speaker 11: think it's still a mild recession, but I think investors

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Speaker 11: at this point have sort of said we're not going

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Speaker 11: to position for recession right now because this is not

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Speaker 11: the near term trade that we see coming out.

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Speaker 2: Yeah, I'm curious about demand when you see forward cutting costs.

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Speaker 2: They've not dressed this up as we want to stimulate demand,

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Speaker 2: but many people will read it that way. You wonder

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Speaker 2: whether or not we're starting to see some of the

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Speaker 2: early signs of a slowdown.

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Speaker 11: I mean, we are seeing some early signs of a slowdown.

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Speaker 11: I mean, there's definitely a mix in the economic data

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Speaker 11: that's coming out right now. But importantly, the consumer demand

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Speaker 11: still remains very strong, and the labor market conditions remain

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Speaker 11: very tight, and you don't have the kinds of imbalances

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Speaker 11: that we've had on the household balance sheet and the

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Speaker 11: corporate balance sheet. So I still come back to that.

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Speaker 11: You know, it's labor market titans that we're looking at

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Speaker 11: when you might see more of a shift in business sentiment,

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Speaker 11: and we just haven't seen that data really, you know,

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Speaker 11: forthcoming at this point. So I think that investors at

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Speaker 11: this point don't want a position for recession, and they're

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Speaker 11: trying to figure out where can you really find value

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Speaker 11: in this market because so much is price for perfection.

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Speaker 2: Yeah, that's why some have gone to industrials and to transports,

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Speaker 2: and even today at a bounce in banking. So it's

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Speaker 2: a curious one. I wanted to ask you about the

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Speaker 2: Houko system, some of these subtle changes in China, Jijung

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Speaker 2: Province talking about removing these restrictions on household registrations. It's

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Speaker 2: essentially an effort to regain growth, to stimulate growth, but

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Speaker 2: it's also kind of dressed up by President she as

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Speaker 2: part of common prosperity. How do you read this? Is

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Speaker 2: it too small to take real note of?

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Speaker 11: Well, look, I think the government is going to step

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Speaker 11: up some of the policy easing measures because the second

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Speaker 11: quarter really disappointed. But I think this is going to

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Speaker 11: be pretty modest. So there is some nationwide housing policy

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Speaker 11: easing that could be forthcoming. But when we look at

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Speaker 11: monetary policy easing, we're thinking another ten basis points on

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Speaker 11: the policy rate cuts, twenty five basis points on the

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Speaker 11: triple R cuts. So I think that the third quarter

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Speaker 11: should be better for China's growth. But we've taken China's

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Speaker 11: growth down by nearly half a percentage point from where

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Speaker 11: we had it. And the real issue that we're looking at,

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Speaker 11: it's not just the housing market, it's private entrepreneurs. And

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Speaker 11: here we've seen really that private entrepreneurs. You know, that's

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Speaker 11: where the private investment just hasn't come back yet. And

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Speaker 11: so I think, you know, the slowdown was actually broad

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Speaker 11: based in the second quarter, so it's not just housing.

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Speaker 11: But I don't think you can expect the type of

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Speaker 11: stimulus that we've seen from China in the past.

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Speaker 2: Yeah. I've squawked probably more than most about what a

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Speaker 2: change that is about policymaker's approach to the private sector.

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Speaker 2: It hasn't really worked yet, as you said, but will

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Speaker 2: it work going forward if the private sector feels more empowered.

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Speaker 11: Well, look, I think right now the Chinese economy is

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Speaker 11: facing weak demand and week confidence amongst the consumers and

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Speaker 11: the private entrepreneurs. So you know, both the May and

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Speaker 11: the April numbers before that came in below expectations, and

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Speaker 11: we saw that the slowdown was pretty broad based.

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