WEBVTT - China's Outlook Dims, Fed Officials Mull Policy Shift

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<v Speaker 1>Good morning. I'm Brian Curtis.

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<v Speaker 2>And I'm Doug Krisner. Here are the stories we're following today.

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<v Speaker 1>Minneapolis Fed President Neil Kashkari saying that there has been

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<v Speaker 1>positive action on controlling inflation, but he thinks prices are

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<v Speaker 1>higher than policymakers are prepared to tolerate. Are we done

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<v Speaker 1>raising rates.

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<v Speaker 3>I'm not ready to say that we're done in terms

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<v Speaker 3>of cutting rates.

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<v Speaker 1>I think we're a long way away from cutting rates

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<v Speaker 1>because core inflation is.

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<v Speaker 3>Still around four percent.

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<v Speaker 4>It's still around twice of what our target is.

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<v Speaker 1>Beneficials have said that they're carefully assessing incoming data as

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<v Speaker 1>they craft policy. A report last week showed that inflation

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<v Speaker 1>continued to moderate in July, and today robust retail sales

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<v Speaker 1>data showed that US consumers continue to be resilient well.

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<v Speaker 2>Disappointing economic data from China is leading investment banks around

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<v Speaker 2>the world to cut their twenty twenty three growth forecast

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<v Speaker 2>for the country. Right at the top of the list,

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<v Speaker 2>it's JP Morgan Chase its full year economic growth forecast

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<v Speaker 2>for China from five percent to four point eight percent.

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<v Speaker 2>JP Morgan also shaving its GDP estimate for next year

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<v Speaker 2>now the firm's economists see in increasing drag on the

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<v Speaker 2>economy from the property sector that shouldn't come as a surprise.

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<v Speaker 2>JP Morgan also saying that China's moved to stop releasing

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<v Speaker 2>data on youth unemployment is quote disturbing. At the same time,

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<v Speaker 2>Barclays lowered its estiment for China's growth by about four

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<v Speaker 2>tenths of one percent to four and a half percent

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<v Speaker 2>this year, and Barclays cited faster than expected deterioration in

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<v Speaker 2>the real estate market Brian.

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<v Speaker 1>Meantime, Vanguard, Blackrock, and some other firms embracing for even

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<v Speaker 1>more scrutiny over their investments in China Bloomberg's and Kates

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<v Speaker 1>as that story.

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<v Speaker 5>More than two thousand US mutual and exchange traded funds

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<v Speaker 5>have two hundred and ninety four billion dollars invested across

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<v Speaker 5>Chinese stocks and bonds, though not all of that money

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<v Speaker 5>is under scrutiny. On Capital Hill lawmakers launcher probe over

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<v Speaker 5>investments in Chinese companies deemed to be national security threats,

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<v Speaker 5>and money managers are prepared for tighter oversight. Plus, the

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<v Speaker 5>Biden administration has signed an executive order limiting specific investments

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<v Speaker 5>in China and key technology industries in Washington and Kates

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<v Speaker 5>Bloomberg Day Break Asia Well.

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<v Speaker 2>China is said to be buying the most Iranian crude

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<v Speaker 2>oil in a decade. The story from Bloomberg's Juan Wong

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<v Speaker 2>in Hong Kong.

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<v Speaker 6>The world's biggest oil importer, will take about one and

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<v Speaker 6>a half million barrels a day of crude from Iran

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<v Speaker 6>this month. That's according to Dalla intelligence firm Kepler. Rise

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<v Speaker 6>and global prices are making the discount recruit more attractive.

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<v Speaker 6>Around's two main grades are set to be trading at

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<v Speaker 6>discounts of more than ten dollars a barrel to Brent,

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<v Speaker 6>and that's considerably cheaper than Russian varieties. Iran has been

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<v Speaker 6>ramping up oil exports this year as it becomes more

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<v Speaker 6>geopolitically assertive. Most of the shipments are heading to China.

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<v Speaker 6>In Hong Kong, Join Wang Bloomberg.

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<v Speaker 2>Day brig Asia.

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<v Speaker 1>China is calling Taiwan's Vice president launching a quote complete

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<v Speaker 1>troublemaker who brings the risk of a fierce war. China's

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<v Speaker 1>Taiwan Affairs Office issued a statement yesterday online. These were

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<v Speaker 1>based on comments from an exclusive interview that we presented

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<v Speaker 1>from Bloomberg BusinessWeek, China said that Lie's comments on maintaining

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<v Speaker 1>a peaceful status quote are quote totally a lie. China's

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<v Speaker 1>Foreign ministry has criticized the US repeatedly for arranging Li's

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<v Speaker 1>stopovers in the country. It said the visit seriously violates

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<v Speaker 1>the one China principle. Lai is currently visiting Paraguay, which

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<v Speaker 1>is one of the thirteen countries that Taiwan counts as

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<v Speaker 1>a diplomatic partner. Back in the US, shares of VinFast

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<v Speaker 1>Auto soaring in the Nasdaq trading debut. The Vietnamese ev

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<v Speaker 1>makers now valued at eighty five billion dollars. That's more

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<v Speaker 1>than Ford or GM or even Mercedes Benz. The company

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<v Speaker 1>went through a blank check deal, a spack deal valued

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<v Speaker 1>at some twenty three billion. We heard from VinFast CEO Leetway.

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<v Speaker 7>We had been working on the US listing for like

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<v Speaker 7>two years and we're very happy that we met it.

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<v Speaker 5>Today.

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<v Speaker 7>Binfast has become a publicly listed companies in the US.

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<v Speaker 7>It's not just a it's not a marketing. It's just

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<v Speaker 7>a milestone that we want to achieve as on path

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<v Speaker 7>of becoming a global company.

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<v Speaker 1>Vin Fast merged with Plank Check Company, Black Spade acquisition,

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<v Speaker 1>and vin Fast plans to begin operations at it's North

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<v Speaker 1>Carolina factory in twenty twenty five. Well, markets are a

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<v Speaker 1>little bit confused here, Doug, and you can kind of

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<v Speaker 1>understand it. The two biggest data points that we saw

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<v Speaker 1>in the past twenty four hours stronger US retail sales

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<v Speaker 1>and China's weak numbers. They would seem to be at

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<v Speaker 1>odds and telling very different stories. And the other thing

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<v Speaker 1>is that investors are grappling with this dilemma. The consensus

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<v Speaker 1>at the moment is that earnings are projected higher next

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<v Speaker 1>year and rates lower. If that's in question, well then

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<v Speaker 1>the multiples are too high, and you'll see the kind

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<v Speaker 1>of selling we saw today.

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<v Speaker 2>That may have been playing out a bit in the

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<v Speaker 2>treasury market. This sense of division that you described Brian

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<v Speaker 2>players in the bond market seem to be shortening duration

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<v Speaker 2>a bit today, So we had to push up in

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<v Speaker 2>long rates with the tenure rising about two basis points.

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<v Speaker 2>So remember the kind of inverse relationship between prices and yields,

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<v Speaker 2>So prices down today, moving more to the short end,

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<v Speaker 2>prices up and the yield down about a basis point

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<v Speaker 2>to four ninety five. So I think that's consistent to

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<v Speaker 2>what you're saying. And let's remember with cash, Kari is

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<v Speaker 2>kind of alluding to, right, that we're not in a

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<v Speaker 2>position here to talk about lower interest rates anytime soon.

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<v Speaker 1>And now it's time for Global news. US President Joe

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<v Speaker 1>Biden says he will visit Maui soon. At Baxter has

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<v Speaker 1>Global News from him nine to sixty News from in

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<v Speaker 1>San Francisco. Ed.

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<v Speaker 8>Yeah, right, Brian. He's been under fire by people from

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<v Speaker 8>the island and Republicans on the main line for not

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<v Speaker 8>being visible enough on securing help during the island's population.

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<v Speaker 4>Want to be sure we don't disrupt the Ongonger recovery effort.

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<v Speaker 8>Yeah, he says it has been active and spoken to

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<v Speaker 8>Governor Josh Green on multiple accounts.

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<v Speaker 4>Almost five hundred federal personnelment deployed de Maui. Tell communities

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<v Speaker 4>and survivors get back on their feet. FEMA search and

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<v Speaker 4>rescue teams are sifting through the ashes in that five

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<v Speaker 4>mile area.

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<v Speaker 8>Yeah, he says he and his wife Jill will visit soon.

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<v Speaker 8>As for the burned out area, Governor Green says there

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<v Speaker 8>are multiple environmental problems going on there now.

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<v Speaker 9>There is asbestos in the air down there, and they're

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<v Speaker 9>heavy metals, and we're getting environmental assessments as rapidly as

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<v Speaker 9>we can from Department of Health, and EPA is here.

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<v Speaker 8>And Green says we have an experience in what happened

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<v Speaker 8>at the nine to eleven sites and have learned from it.

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<v Speaker 8>Hopefully the death toll now stands at least ninety nine,

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<v Speaker 8>but surely we'll climb. The state says we'll begin releasing

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<v Speaker 8>identities of those bodies recovered soon. Georgia indictment against Donald

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<v Speaker 8>Trump is far more rich, far reaching, and potentially damaging

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<v Speaker 8>than any of the other three. The most problematic for

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<v Speaker 8>Trump is the racketeering. The central count in the indictment,

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<v Speaker 8>now including one hundred and sixty one specific acts in

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<v Speaker 8>the further ince of a conspiracy. The cab County is

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<v Speaker 8>just north of Fulton, and former District Attorney Gwen keys

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<v Speaker 8>Fleming says the use of the Rico statute makes it

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<v Speaker 8>very severe.

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<v Speaker 10>The case in Georgia is very unique and distinct from

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<v Speaker 10>some of the other charges, either in New York or federally,

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<v Speaker 10>largely because of the inability to obtain an immediate pardon

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<v Speaker 10>if there is a conviction.

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<v Speaker 8>And Fleming says the Georgia pardon laws also require completion

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<v Speaker 8>of a full sentence before a pardon can be granted.

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<v Speaker 8>As well.

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<v Speaker 10>The Rico statute at least has a mandatory minimum of

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<v Speaker 10>five years. Some of the other charges have or Rico

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<v Speaker 10>has a maximum twenty years. Other charges range from one

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<v Speaker 10>to ten years. As I recall, so it really these

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<v Speaker 10>are serious charges.

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<v Speaker 8>And Fulton County DA Fani Willis has ordered all nineteen

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<v Speaker 8>defendants to surrender by August twenty fifth, says she wants

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<v Speaker 8>to try them together within the six months. They're eighteen

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<v Speaker 8>others charged in Bloomberg's Wendy Benjaminson says she would not

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<v Speaker 8>be surprised if the plan was to get one of

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<v Speaker 8>them or more to flip.

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<v Speaker 3>They are now facing prison time in Georgia State prison,

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<v Speaker 3>not you know, club fed or anything. And it is

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<v Speaker 3>the idea is that, yes, that one of them will

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<v Speaker 3>look at the charges and say do I really want

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<v Speaker 3>to go to prison for Donald Trump?

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<v Speaker 8>And Trump says, you'll hold a news conference on Monday.

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<v Speaker 8>Hong Kong resident departures have climbed to their highest level

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<v Speaker 8>since COVID. This outflow shows the region as far from

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<v Speaker 8>regaining its mantle as the business hub and tourist destination

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<v Speaker 8>in Asia. Global news powered by more than twenty seven

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<v Speaker 8>hundred journalists and analysts in over one hundred twenty country

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<v Speaker 8>in San Francisco, I'm at Baxter and this is Bloomberg.

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<v Speaker 1>This is Bloomberg Daybreak Asia. I'm Bran Curtis in Hong

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<v Speaker 1>Kong along with Vonnie Quinn in New York, and Aaron

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<v Speaker 1>Gibbs joins a senior partner and CIO at Main Street

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<v Speaker 1>Asset Management. Aaron, great to have you with us in

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<v Speaker 1>our studios there in New York. So you probably heard

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<v Speaker 1>me mention that consensus here is that earnings will be

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<v Speaker 1>ratcheted higher next year and rates are projected to be lower.

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<v Speaker 1>And I said, if that's in question, do you think

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<v Speaker 1>both of those are in question? Or either? Or if so,

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<v Speaker 1>which one?

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<v Speaker 11>Now? I agree with that. I think it's really about

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<v Speaker 11>the timing, and I think it's what ANALYSTA really doing

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<v Speaker 11>is pushing everything farther down the road. So originally we've

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<v Speaker 11>been saying in the first half of the year, and

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<v Speaker 11>now it's sort of being pushed back to Okay, most

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<v Speaker 11>of this is going to happen in the second half

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<v Speaker 11>of the year. So I think the hope is still there,

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<v Speaker 11>but it's just getting more and more delay. We haven't

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<v Speaker 11>Wall Street hasn't quite digest that it may not even

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<v Speaker 11>be until twenty twenty five.

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<v Speaker 12>Are we suddenly confused again as to what the Fed

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<v Speaker 12>is going to do next?

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<v Speaker 11>I think, well, partially because we're also just getting conflicting

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<v Speaker 11>news within our own no neck on global versus what's

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<v Speaker 11>happening in the US, and certainly it is quite hard

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<v Speaker 11>to digest. And I think that's interesting just what's been

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<v Speaker 11>happening in the marketplace, whether you're looking at what's happening

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<v Speaker 11>and how people are shifting in treasuries, what's going on

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<v Speaker 11>in the equity markets. But we haven't seen a real

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<v Speaker 11>spike in the VIX. Some of the fear gauges, a

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<v Speaker 11>lot of those are still very stable and at lows.

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<v Speaker 11>And so even though we've seen these sell offs for

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<v Speaker 11>the past five days, in a big sell off today,

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<v Speaker 11>the VIX has been relatively low, and so I think

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<v Speaker 11>that's sort of indicative of people not really seeing some

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<v Speaker 11>good signs, seeing some negative signs, and not really ready

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<v Speaker 11>to completely pull the trigger across the board and be

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<v Speaker 11>completely pull out of the equity markets within the US.

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<v Speaker 1>It is interesting to contrast these strong retail sales numbers

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<v Speaker 1>in the US with the weak numbers overall that we

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<v Speaker 1>got out of China, and so I'm interested in your

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<v Speaker 1>thoughts on that. We're also running a piece on the

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<v Speaker 1>Terminal that talks about how the deflation in China may

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<v Speaker 1>not be such a bad thing. If it exports deflation,

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<v Speaker 1>it'll help the central banks in their job absolutely.

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<v Speaker 11>You know, we know that that can have a big impact,

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<v Speaker 11>particularly on the commodity side and energy, and certainly, even

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<v Speaker 11>though we love to t about core x food and energy,

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<v Speaker 11>that does make a big impact. And so I think

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<v Speaker 11>that would be very helpful, and that's something that the

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<v Speaker 11>FED would certainly look at. On the other side, the

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<v Speaker 11>US consumer and their ability to still be willing to spend.

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<v Speaker 11>You know, we know that it's at a certain point

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<v Speaker 11>that is going to have to wear out. You know,

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<v Speaker 11>we know that cash reserves are going down. We know

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<v Speaker 11>that just the higher interest rates and just the outlook

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<v Speaker 11>from corporations has been significantly revised down. We're seeing less

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<v Speaker 11>m and a activity higher bankruptcies. So we're seeing weakening

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<v Speaker 11>already within the corporate arena. So while the US consumer

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<v Speaker 11>still feels very confident that that fear again just not

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<v Speaker 11>seeing the Vixen index, but the consumers shifting their behavior

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<v Speaker 11>could follow.

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<v Speaker 12>Can I just say, you're extraordinarily brave because you have

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<v Speaker 12>picks that are very short term one to two months,

0:12:24.760 --> 0:12:27.160
<v Speaker 12>so go us tell Maren sure.

0:12:27.320 --> 0:12:30.560
<v Speaker 11>So, look, I want to be able to trade this.

0:12:30.640 --> 0:12:33.080
<v Speaker 11>We have seen a real shift. It's been about a

0:12:33.120 --> 0:12:38.120
<v Speaker 11>four week shift from those megacap technologies into something that's

0:12:38.120 --> 0:12:42.200
<v Speaker 11>a little more defensive and let's use it, you know,

0:12:42.280 --> 0:12:45.240
<v Speaker 11>while it's there. So some of my picks are energy.

0:12:45.320 --> 0:12:48.439
<v Speaker 11>I think actually today the energy sector was down about

0:12:48.480 --> 0:12:50.240
<v Speaker 11>two and a half percent. I actually think this is

0:12:50.280 --> 0:12:52.120
<v Speaker 11>a good place to come in, you know, buy on

0:12:52.200 --> 0:12:55.800
<v Speaker 11>sort of that negative news because the energy trend overall

0:12:56.200 --> 0:12:59.319
<v Speaker 11>is still up and very strong. So I think you

0:12:59.320 --> 0:13:02.679
<v Speaker 11>could get you another few weeks out of that. Another thing,

0:13:02.840 --> 0:13:07.079
<v Speaker 11>while we're going on the defensive, that has been outperforming

0:13:07.280 --> 0:13:09.400
<v Speaker 11>just in the past again in the past two weeks,

0:13:09.400 --> 0:13:13.120
<v Speaker 11>and it's just a new trend is healthcare, particularly managed healthcare,

0:13:13.880 --> 0:13:16.160
<v Speaker 11>and a high quality company that's just a safe bet

0:13:16.200 --> 0:13:19.960
<v Speaker 11>to get into. One of my favorites is United Healthcare. Ooh,

0:13:20.080 --> 0:13:22.480
<v Speaker 11>this is trading so much. It's peroting at about a

0:13:22.559 --> 0:13:24.920
<v Speaker 11>fifteen percent discount to a lot of its peers.

0:13:25.920 --> 0:13:27.040
<v Speaker 7>You know, decent.

0:13:26.760 --> 0:13:30.080
<v Speaker 11>Outlook for twenty twenty four, even better for twenty twenty five.

0:13:30.559 --> 0:13:32.920
<v Speaker 11>So I think, as long as we're seeing this sort

0:13:32.960 --> 0:13:37.080
<v Speaker 11>of counter trend, defensive trend, which might continue for again

0:13:37.120 --> 0:13:40.319
<v Speaker 11>about one to two months, United Healthcare very safe bet

0:13:40.600 --> 0:13:43.960
<v Speaker 11>very little downside, and already breaking through resistance on the upside.

0:13:44.000 --> 0:13:46.520
<v Speaker 11>So I think an easy play if you want something

0:13:46.840 --> 0:13:48.839
<v Speaker 11>to while we're in this sort of I don't know

0:13:48.880 --> 0:13:50.120
<v Speaker 11>what to do mode.

0:13:50.440 --> 0:13:53.160
<v Speaker 1>Yeah, you and h was bulletproof last year and everything

0:13:53.200 --> 0:13:57.000
<v Speaker 1>was stumbling. It had pretty good run and then completely

0:13:57.000 --> 0:13:58.679
<v Speaker 1>out of favor of the early part of this year.

0:13:58.679 --> 0:14:00.760
<v Speaker 1>So we know that mean reversion tree do happen. And

0:14:00.800 --> 0:14:03.960
<v Speaker 1>you're suggesting it'll go back the other direction, it's already started.

0:14:04.000 --> 0:14:06.320
<v Speaker 1>That give me a mean reversion trade you like with

0:14:06.520 --> 0:14:09.040
<v Speaker 1>China in mind, you know.

0:14:09.000 --> 0:14:12.760
<v Speaker 11>I'm not as familiar with China. I've I'm a little

0:14:12.760 --> 0:14:16.640
<v Speaker 11>more conservative, So I think, you know, it would really

0:14:16.679 --> 0:14:20.520
<v Speaker 11>have to be looking at across Asia, and I would say,

0:14:20.680 --> 0:14:25.440
<v Speaker 11>you know, we've seen a little bit of Japan sort

0:14:25.440 --> 0:14:28.600
<v Speaker 11>of holding that support, and so if we're in that

0:14:28.680 --> 0:14:30.480
<v Speaker 11>defensive you might be able to get a week or

0:14:30.480 --> 0:14:32.840
<v Speaker 11>two on the up side, just as we sort of

0:14:32.880 --> 0:14:33.800
<v Speaker 11>go more risk off.

0:14:35.480 --> 0:14:38.320
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