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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: An earning speed from Berkshire Hathaway, but some questions still lingering.

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Speaker 1: Let's get the story from Bloomberg's Denise Pellegreeny.

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Speaker 3: We do pretty much have blowout earnings from Berkshire Hathaway.

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Speaker 3: Billionaire Warren Buffett's conglomerate reporting second quarter operating income that

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Speaker 3: beat the average analyssessment, and that was thanks in large

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Speaker 3: part to strength and its insurance unit. Why do I

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Speaker 3: say that? Because Berkshire had a seventy four percent increase

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Speaker 3: in insurance underwriting earnings. That's us. It cut costs and

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Speaker 3: raise prices At Geico, the thing is price hikes and

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Speaker 3: pullbacks and ad spending like that, well, they can backfire,

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Speaker 3: and that could be happening. Over the last twelve months,

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Speaker 3: policies in force decreased by two point seven million, and

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Speaker 3: that does suggest the cuts to advertising spending are costing

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Speaker 3: the conglomerates. Auto Insure some market share there and another

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Speaker 3: thing to watch for Berkshire's railroad unit BNSF. Well, profit

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Speaker 3: there fell twenty four percent. To d spelling Ay Bloomberg

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Speaker 3: Day BREAKASIE.

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Speaker 2: In the States, the earning season is nearing an end,

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Speaker 2: and in the week ahead, we have several key reports due.

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Speaker 2: We have a preview now from Bloomberg's Charlie Pellett.

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Speaker 4: We've heard from roughly eighty percent of S and P

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Speaker 4: five hundred companies, but there will be plenty more to

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Speaker 4: come this week. Amid questions about current market valuations given

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Speaker 4: the prospects for corporate earnings. Nattie Lovell is senior US

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Speaker 4: equity strategist at UBS Financial Services.

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Speaker 5: We think at some point that the barton has to

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Speaker 5: be pastor earnings and the outlook for that we're maining

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Speaker 5: somewhat subdued in our expectations. We're looking for sort of

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Speaker 5: mid single digit growth over the next twelve months, so

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Speaker 5: we think that this market is probably cap as a

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Speaker 5: result of the earn is outlook.

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Speaker 4: Among this week's most closely watched reports will be Walt Disney.

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Speaker 4: We'll also be hearing from UPS, Lily, Take To Entertainment,

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Speaker 4: and Rivian Automotive in New York. Charlie Pellett Bloomberg Daybreak Asia.

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Speaker 1: As we headline, FED Governor Michelle Bowman says the US

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Speaker 1: Central Bank may need to do more, hiking rates further

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Speaker 1: in order to fully restore price stability. Bowman says she

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Speaker 1: supported the decision to raise rates at the Fed's meeting

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Speaker 1: last month, and she wants to see more proof of

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Speaker 1: sustained disinflation, so, like the rest of us, she's watching

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Speaker 1: inflation data very closely. She said she's keeping a close

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Speaker 1: eye out for signs of slowing in consumer spending and

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Speaker 1: more hints that the labor market could be weakening well.

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Speaker 2: Former US Treasury Secretary Larry Summers was saying a soft

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Speaker 2: landing for the American economy looks more likely than it

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Speaker 2: previously did. However, he's concerned about inflation picking up steam.

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Speaker 2: This is after the July jobs data show to rise

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Speaker 2: in wages. Here is Summer speaking earlier on Bloomberg's Wall

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Speaker 2: Street Week.

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Speaker 6: If you look at wage inflation, it was faster for

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Speaker 6: the month than for the quarter, faster for the quarter

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Speaker 6: than for the year, and running for the quarter at

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Speaker 6: about four point nine percent. That's not consistent with two

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Speaker 6: percent underlying inflation. I don't think we can yet be

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Speaker 6: content that we're not going to see a reacceleration of

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Speaker 6: inflation at some point down the road, and that's the

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Speaker 6: thing that I'm focused on.

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Speaker 2: That is former Treasury Secretary Larry Summers and has he

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Speaker 2: pointed out average hourly earnings increased in July by more

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Speaker 2: than economist had predicted. However, overall job growth was below forecast,

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Speaker 2: and interestingly, data from a separate survey produced an unexpected

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Speaker 2: drop in the unemployment rate.

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Speaker 1: Brian, Yeah, it's really curious and something that we can

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Speaker 1: get into with our guests coming up. Well. Foreign buying

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Speaker 1: of Japanese equities is said to have exceeded that of

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Speaker 1: Chinese peers for the first time since twenty seventeen. Let's

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Speaker 1: get the story. Here's Bloomberg's Bunny Ou in Hong Kong.

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Speaker 7: Global funds snapped up one point three eight billion dollars

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Speaker 7: of Japanese stocks in the last week of July. According

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Speaker 7: to official data. Optimism is running high even after the

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Speaker 7: Bank of Japan adjusted. It's ultra easy monitory stance, and

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Speaker 7: it comes as investors sells Chinese equities on a net basis.

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Speaker 7: China is losing out due to concerns about economic growth

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Speaker 7: and geopolitical tensions with the West. Investors are worry about

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Speaker 7: whether Beijing stimulus will bear fruit. Meantime, some strategists argue

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Speaker 7: that recent changes at the BOJ will turn out to

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Speaker 7: be a positive. They say, with a big overhang removed,

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Speaker 7: stocks will be able to rise further in Hong Kong.

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Speaker 7: I'm Bonnie ol Bloomberg Day Break Asia.

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Speaker 1: And coming up in our interview with Benjamin Netanyahu, he

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Speaker 1: pulls back on the most aggressive elements of the judicial

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Speaker 1: overhaul at BATS will have that story for you. Once

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Speaker 1: the makeup of the judge selection committee is changed, other

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Speaker 1: steps can be halted. Stay tuned will also be playing

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Speaker 1: an excerpt from that coming up. Doug. Just on that

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Speaker 1: last point from Bonnie, there Japan attracting more equity flows

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Speaker 1: than China, no surprise really, We've seen the Nike gain

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Speaker 1: fourteen percent year to date in US dollar terms, while

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Speaker 1: China and Hong Kong are negative. And as she said there,

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Speaker 1: towards the end, investors still doubt the efficacy of the

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Speaker 1: stimulus that we've heard about.

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Speaker 2: Meantime, here in the States, we had a commentary from

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Speaker 2: Bank of America on Friday, the Bank Brian's saying that

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Speaker 2: clients fled equities as they moved to adopt a more

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Speaker 2: kind of risk off approach given a lot of the

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Speaker 2: concerns about economic contraction here in the States, we've been

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Speaker 2: talking a lot about soft landing, But according to b

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Speaker 2: of A, some of the clients are concerned about contraction,

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Speaker 2: and private clients sold stocks in the five days through

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Speaker 2: August second. However, at the same time, bond purchases the

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Speaker 2: strongest since October in the past two weeks.

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Speaker 1: Yeah, we'll see if that bears out in the short term.

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Speaker 1: That sounds like a little bit more of a long

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Speaker 1: term story. Growth is actually popping pretty good in the US.

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Speaker 1: The Atlanta GDP now growth numbers three point eighty six percent. However,

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Speaker 1: when you look at and you wonder, you wonder whether

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Speaker 1: that leads to higher inflation, and maybe that's ultimately because

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Speaker 1: the has to respond to that, maybe that's ultimately what

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Speaker 1: does drive growth down sometime, you know, down the road.

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Speaker 2: The other thing I want to point out very quickly

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Speaker 2: is the move on the part of the PBOC last

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Speaker 2: week to vow a more flexible approach and to use

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Speaker 2: some policy tools to ensure ample liquidity in the banking system.

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Speaker 2: So the story on China involves additional support.

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Speaker 1: Yep, more is coming. We have Mira pandit waiting in

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Speaker 1: the wings. Vice president and global market strategist at JP

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Speaker 1: Morgan Asset Management, she'll join us right after Global News.

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Speaker 1: Israel's Prime Minister Benjamin Nettnaho says that he will not

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Speaker 1: pursue the entire judicial overhaul as originally was planned at

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Speaker 1: Baxter Has Global News. In the nine to sixty, newsman

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Speaker 1: in San Francisco.

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Speaker 8: Ed yeah, Brian exactly. Net Yaho says he's giving it

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Speaker 8: time to hash out. In an exclusive interview with Bloomberg's

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Speaker 8: Francing Lack. While he did say it will rebalance the

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Speaker 8: branches of government.

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Speaker 4: I'm still going to get several months to try to

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Speaker 4: get another consensus.

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Speaker 2: What is it?

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Speaker 4: It would probably be about the composition of the committee

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Speaker 4: that elects judges, with the.

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Speaker 2: Selection of the judges.

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Speaker 3: Yes, how they're selected, right.

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Speaker 4: That's basically what's left.

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Speaker 8: And he says a pendulum should not swing all away

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Speaker 8: from one side to the other. China's Foreign Minister Wangyee

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Speaker 8: is invited the European Union's top diplomat, Joseph Borrow and

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Speaker 8: his delegation for a visit in the fall. This after

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Speaker 8: a trip to Beijing was postponed earlier in the year.

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Speaker 8: The two spoke by phone earlier to set up the

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Speaker 8: early groundwork as well. The statement says they exchange views

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Speaker 8: on regional issues, including Ukraine and Niger. Now we're getting

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Speaker 8: a glimpse of Donald Trump's potential legal defense against the

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Speaker 8: charges in the latest indictment regarding election interference. The main

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Speaker 8: theme is that Donald Trump firmly believed that Mike Pence

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Speaker 8: did have the ability to not go ahead with a

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Speaker 8: certification of the election. Now, Trump attorney John Laurel on

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Speaker 8: ABC has heard here on Bloomberg says, there is an

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Speaker 8: interesting judicial line.

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Speaker 9: I make think that somebody is acting inappropriately under constitutional principles.

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Speaker 9: But mister Pence, who's a lawyer, never said to mister Trump,

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Speaker 9: I think what you're doing is criminal, and that's very important.

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Speaker 8: But former Attorney General William Barr, who served with Trump, says,

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Speaker 8: mister Trump knew. He told him.

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Speaker 10: Three occasions at least, and I told him in no

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Speaker 10: uncertain terms that there was no evidence of fraud that

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Speaker 10: would have changed the opport.

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Speaker 8: And Barr says, a creation of a separate slate of electors, well,

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Speaker 8: that's just very damning.

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Speaker 10: One that he keeps on repeating, is you know that

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Speaker 10: there were more that more people voted than absentee balance

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Speaker 10: that were requested, and that was mixing apples and oranges,

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Speaker 10: and once that was explained to him, we should have

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Speaker 10: heard no more about that.

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Speaker 8: As for Attorney Laura on Pence, if.

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Speaker 9: He testifies consistent with his book, then President Trump will

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Speaker 9: be acquitted.

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Speaker 8: And says he can't wait to get him on the stand.

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Speaker 8: Pence says he has notes and CBS told Trump on

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Speaker 8: many occasions, no, I.

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Speaker 11: Knew the founders of this country would never have given

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Speaker 11: any one person the right to choose what electoral College

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Speaker 11: votes to accept in which ones to reject. I was

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Speaker 11: very consistent with the President about that, and my recollections

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Speaker 11: all reflect that.

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Speaker 8: Running alongside this, the court may rule as early as tomorrow,

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Speaker 8: and what steps to take regarding Trump exclaiming that he

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Speaker 8: will go after the people who have gone after him,

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Speaker 8: as well as what evidence should be given to the

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Speaker 8: Trump legal team and the US lab that was able

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Speaker 8: to finally produce nuclear fusion that produced more energy than

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Speaker 8: it took to create it has done it again. Lawrence

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Speaker 8: Livermore labs here in the Bay Area, says after several

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Speaker 8: unsuccessful tries last week, it completed its process called inertial

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Speaker 8: confinement and that it was successful. Says it wants to

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Speaker 8: go a STEP's future to get high power magnets that

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Speaker 8: could be used by power plants. Global Newspower more than

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Speaker 8: twenty seven hundred journalists and analysts in over one hundred

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Speaker 8: twenty countries in San Francisco, I med Baxter and this

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Speaker 8: is Bloomberg.

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Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis in Hong Kong,

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Speaker 1: along with Rushad's Salamat in London, and our guest is

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Speaker 1: Mira Pandit, vice president and global market strategist at JP

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Speaker 1: Morgan Asset Management. US equity futures are up a little bit.

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Speaker 1: We have the jobs report to talk about this morning, Mira,

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Speaker 1: and so many other things too. We can look more

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Speaker 1: closely at Berkshire Hathaway's earnings and some of these stories

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Speaker 1: here in Asia, but let's start off with the jobs.

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Speaker 1: There's still some debate on whether this was a net

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Speaker 1: positive or a net negative. You had kind of a

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Speaker 1: weak headline number, but then you had unemployment going down

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Speaker 1: and wages were pretty firm.

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Speaker 4: So how did you read it?

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Speaker 12: I read it as a mixed report. I mean, some

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Speaker 12: people are calling it goldilocks. I might still call it

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Speaker 12: a bit mixed because if you think about the one

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Speaker 12: hundred and eighty seven thousand jobs at work created, that

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Speaker 12: is consistent with a more neutral labor market in terms

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Speaker 12: of job gains. But then on the other hand, you

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Speaker 12: did have that elevated wage gain, and that has some

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Speaker 12: people concerned about how that might play out from an

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Speaker 12: inflation standpoint, and more importantly in the near term, how

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Speaker 12: the FED is going to digest this data. And when

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Speaker 12: we think about what the FED has to contend with,

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Speaker 12: we might want to focus on that slower job growth.

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Speaker 12: They might want to focus on stickier wages. We might

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Speaker 12: want to focus on falling headline CPI. They might focus

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Speaker 12: on stickier core inflation. So I think the challenge with

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Speaker 12: the jobs report is it doesn't give a clear enough

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Speaker 12: signal that the economy is kind of zooming into equilibrium.

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Speaker 13: Amir, we're going to be getting the CPI figures this week.

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Speaker 13: What are you looking at and when does the higher

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Speaker 13: oil price start of feeding. I know they'll be looking

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Speaker 13: at the core, but certainly this is something which everybody

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Speaker 13: does actually have to pay ultimately, and it has a

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Speaker 13: feed through to other parts of the inflation kind of

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Speaker 13: components that are in the basket.

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Speaker 12: Absolutely, we can't get too hung up on only core inflation,

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Speaker 12: because the reality is headline is what Americans actually pay

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Speaker 12: and therefore it influences inflation expectations. So that does play

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Speaker 12: into the fed's calculus long term. When I think about

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Speaker 12: this week, we're likely to see some moderate gains in

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Speaker 12: both headline and core CPI, But I think we have

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Speaker 12: to consider on the year over year basis, how those

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Speaker 12: base effects are going to play out over the next

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Speaker 12: couple of months. Because headline CPI peaked last year in June.

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Speaker 12: Therefore the base effects going forward are going to be less.

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Speaker 12: So if you see things like higher oil prices potentially

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Speaker 12: higher food prices, that could slightly raise headline inflation. If

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Speaker 12: we think about core, we actually saw that peak in

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Speaker 12: core inflation last year in September, so we potentially have

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Speaker 12: some reports ahead of us that could actually bring some

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Speaker 12: of the gas out of that core number, But we

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Speaker 12: don't quite know when that's going to play out, and

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Speaker 12: that's a little bit tricky when we think about the

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Speaker 12: Fed's timeline over the course of the fall. If we

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Speaker 12: do start to see inflation tick up a little bit.

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Speaker 12: I wouldn't necessarily think about it as a genuine reacceleration

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Speaker 12: in inflation, though.

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Speaker 1: Would you see do you estimate that equity flows then

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Speaker 1: would basically be moving from the US to other markets?

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Speaker 1: And if so, which ones do you like?

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Speaker 12: Potentially you could see some movement abroad. But the reality

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Speaker 12: is the US is kind of stuck in a pretty

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Speaker 12: comfortable place where equities are past the inflation spikes and

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Speaker 12: the FED hikes, and yet they're looking for some sign

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Speaker 12: of souring economy or souring profit growth, and yet that

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Speaker 12: hasn't happened yet. So I'm not sure that there's a

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Speaker 12: clear catalyst for a selloff. And yet, with valuations as

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Speaker 12: expensive as they have gotten with a significant rally this year,

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Speaker 12: there is some vulnerability there we have to be aware of.

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Speaker 12: So I do think from an investment standpoint, it's important

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Speaker 12: to look at valuations and prices above all. And we're

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Speaker 12: seeing internationally that there are some areas across the world

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Speaker 12: that look a whole lot cheaper than the US and

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Speaker 12: still have some room to run. And I think about

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Speaker 12: what's been driving global equities this year, and you see

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Speaker 12: in areas like Europe and Japan that there's genuine earnings

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Speaker 12: upside that is helping out equities. You see areas like

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Speaker 12: Latin America where easing central banks are starting to have

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Speaker 12: that input on equity valuations overall. So I do think

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Speaker 12: some of those areas abroad can add nicely to a

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Speaker 12: diversified portfolio.

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Speaker 13: Growth visus value.

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Speaker 4: Marry Quickly still.

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Speaker 12: Kind of stuck in do we care about style? Do

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Speaker 12: we care about sector? I'd say we care about companies

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Speaker 12: underneath the surface and which companies are actually managing through

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Speaker 12: some of the headwinds as it relates to margins and

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Speaker 12: as it relates to revenues. So that's really where I'm

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Speaker 12: keeping my eye on, as opposed to one specific style

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Speaker 12: or sector. How company management is doing and how valuations

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Speaker 12: are doing.

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