WEBVTT - Bloomberg Daybreak: July 15, 2022 -Hour 2 (Radio) 0:00:02.720 --> 0:00:06.080 Live from the Bloomberg and directed Burger Studios. Is Bloomberg 0:00:06.160 --> 0:00:10.800 Daybreak for Friday, July two. Coming up the shower. China's 0:00:10.840 --> 0:00:13.720 economy grows at the slowest pace since the onset of 0:00:13.760 --> 0:00:16.720 COVID bank Ernies continue with City Group and while Spargo 0:00:16.800 --> 0:00:20.079 reporting key economic data. This morning is the debate over 0:00:20.160 --> 0:00:24.360 fed policy continues, and President Biden's Nitaly's trip takes center 0:00:24.440 --> 0:00:27.960 stage in Saudi Arabia. New York City Council approves abortion 0:00:28.080 --> 0:00:31.400 rights measures. Plus Governor Hawkel allows millions of dollars to 0:00:31.400 --> 0:00:34.760 fight gun violence. On Michael bar More Ahead, I'm John 0:00:34.800 --> 0:00:37.800 Stash and sports easy win for the Mets, extra any 0:00:37.880 --> 0:00:39.959 loss for the Yankees, and they're playing the second round 0:00:39.960 --> 0:00:45.560 of the Open Championship in Scotland. That's all trained ahead 0:00:45.640 --> 0:00:49.200 on Bloomberg Daybreak on Bloomberg eleven, Free on New York, 0:00:49.400 --> 0:00:54.040 Bloomberg N one, Washington, d C, Bloomberg one oh six one, Boston, 0:00:54.360 --> 0:00:58.520 Bloomberg nine sixties and Francisco Sirius x M one nine 0:00:58.520 --> 0:01:01.800 team and around the world on Bloomberg Radio dot com 0:01:01.880 --> 0:01:08.959 and via the Bloomberg Business App. Good morning, I'm Nathan Hagar, 0:01:09.280 --> 0:01:12.280 and I'm Karen, Moscow and US DOT Index futures are 0:01:12.440 --> 0:01:14.800 rising this morning. We are coming up to five o 0:01:14.880 --> 0:01:16.680 one on Wall Street, and we check the markets every 0:01:16.680 --> 0:01:20.399 fifteen minutes throughout the trading day. On Bloomberg, SNP future 0:01:20.440 --> 0:01:22.920 is up about ten points down, futures up sixty eight, 0:01:22.920 --> 0:01:26.200 and nasday futures up thirties six. The decks in Germany's 0:01:26.280 --> 0:01:29.479 up one point seven percent. Ten year treasury up ten 0:01:29.560 --> 0:01:32.399 thirty seconds, held two point nine two percent. They yield 0:01:32.400 --> 0:01:35.360 on the two year three point one zero percent. Nine 0:01:35.520 --> 0:01:37.360 X screwed oil is up a quarter per cent, or 0:01:37.360 --> 0:01:40.400 twenty four cents at ninety six dollars two cents a barrel, 0:01:40.640 --> 0:01:43.759 and the euro one point zero zero three zero against 0:01:43.800 --> 0:01:46.760 the dollar. Nathan Karen, we begin this morning with economic 0:01:46.840 --> 0:01:50.480 news across the globe. Our first stop is Asia, where 0:01:50.600 --> 0:01:54.640 data show China's economic growth slowed sharply in the second quarter. 0:01:54.880 --> 0:01:57.920 Let's begin our team coverage with Bloomberg Daybreak Asia anchor 0:01:57.960 --> 0:02:01.160 Brian Curtis in Hong Kong. It's the slowest pace since 0:02:01.200 --> 0:02:05.520 the pandemic began back in the economy actually contracted two 0:02:05.520 --> 0:02:08.760 point six percent quarter on quarter. It shows the price 0:02:08.840 --> 0:02:13.080 of China's dynamic zero COVID policies, but trends are improving. 0:02:13.360 --> 0:02:16.600 Retail sales recovered somewhat in June, gaining three point one 0:02:16.680 --> 0:02:20.280 percent year on year, industrial production of three point nine percent, 0:02:20.400 --> 0:02:23.840 mostly in line, and fixed asset investment jumping six point 0:02:23.880 --> 0:02:27.280 one percent. That said, property prices fell for a tenth 0:02:27.280 --> 0:02:30.920 consecutive month, slipping zero point one percent from May in 0:02:30.960 --> 0:02:33.680 Hong Kong, Brand Curtis Bloomberg Day Break A right, Brian, 0:02:33.680 --> 0:02:36.160 thank you well. In Europe today, our focus is political 0:02:36.200 --> 0:02:39.760 turmoil in Italy. Prime Minister Mario drags offer to resign 0:02:39.880 --> 0:02:43.120 has been rejected by the country's president. That leaves the 0:02:43.120 --> 0:02:45.840 door open for a solution that would have Draggy leading 0:02:45.840 --> 0:02:49.440 the government until elections next year begin More from Bloomberg 0:02:49.480 --> 0:02:52.880 Euro Area economist David Powell. The drama is probably going 0:02:52.919 --> 0:02:54.880 to be prolonged in the sense that even if we 0:02:54.960 --> 0:02:59.840 get beyond next week and is able to uh command 0:03:00.000 --> 0:03:03.360 to quit support in parliament, Italians have to go to 0:03:03.400 --> 0:03:06.920 the polls again before next June, and drug has already 0:03:06.960 --> 0:03:10.080 said he won't stand um. So this isn't going to 0:03:10.120 --> 0:03:11.960 be going away. Even if there is a kind of 0:03:12.240 --> 0:03:15.480 short term fix something we're gonna have to be watching 0:03:15.520 --> 0:03:18.320 for quite a while. Plumbers David Powell says the chaos 0:03:18.480 --> 0:03:21.440 was triggered when the Five Star Movement, the second largest party, 0:03:21.480 --> 0:03:24.400 and Druggish Alliance boycott it a confidence vote in the 0:03:24.400 --> 0:03:26.919 Italian Senate. Well back here in the US care and 0:03:26.960 --> 0:03:29.520 the debate continues on whether the FED will high rates 0:03:29.520 --> 0:03:33.040 by seventy five basis points or one percent later this month. 0:03:33.240 --> 0:03:36.080 FED Governor Christopher Waller addressed the issue at an event 0:03:36.200 --> 0:03:39.960 yesterday in Idaho. I fully support another seventy five basis 0:03:39.960 --> 0:03:44.840 for an increase. However, my base case for July depends 0:03:44.920 --> 0:03:50.440 on incoming data. We have important data releases on retail sales, 0:03:51.120 --> 0:03:56.320 housing inflation expectations coming in before the next meet. FED 0:03:56.360 --> 0:03:59.280 Governor Waller says economic ratings will be key, and there's 0:03:59.320 --> 0:04:01.320 more on the way today. The FED will be looking 0:04:01.360 --> 0:04:04.360 at two ratings in particular when it comes to setting policy, 0:04:04.640 --> 0:04:07.440 at least as a case for Cleveland FED President Lorettamester. 0:04:07.920 --> 0:04:10.080 There's more data coming out than I'm going to be 0:04:10.200 --> 0:04:12.800 very attuned to. We have retail sales coming out and 0:04:12.920 --> 0:04:16.760 we have a very important University of Michigan report and 0:04:16.800 --> 0:04:21.600 of course that's important because it has placed Expectations measure UM, 0:04:21.640 --> 0:04:25.239 a consumer measure in there. And Cleveland Fed Presidentmester speaking 0:04:25.240 --> 0:04:27.880 with the Bloomberg We get the retail sales figure today 0:04:27.920 --> 0:04:30.760 at eight thirty am Well Street Time, followed by University 0:04:30.760 --> 0:04:33.440 of Michigan Sentiment at ten oh. Let's turn from the 0:04:33.480 --> 0:04:36.240 economy and out of corporate earnings, Karen, because banks are 0:04:36.240 --> 0:04:39.960 front and center once again after yesterday's disappointing results from JP, 0:04:40.080 --> 0:04:43.599 Morgan Chase and Morgan Stanley. Bloomberg's Jeff Bellinger has more. 0:04:44.040 --> 0:04:46.479 The results from City Group and Wells Fargo will be 0:04:46.520 --> 0:04:50.159 the highlights this morning. Bloomberg Intelligence a City Group likely 0:04:50.240 --> 0:04:53.280 benefited from fixed income trading strength, but a slide in 0:04:53.400 --> 0:04:56.800 banking fees may have offset the gains. Consumers were still 0:04:56.880 --> 0:05:00.440 generally healthy, and that should have helped city's credit card business. 0:05:00.680 --> 0:05:03.359 Wells Fargo is still dealing with the fallout of the 0:05:03.400 --> 0:05:06.159 saga that started in twenty sixteen. When the bank was 0:05:06.200 --> 0:05:09.160 fine for its sales practices. B I s, as well 0:05:09.160 --> 0:05:12.440 as Fargo's profit and returns, could move higher. The feds 0:05:12.480 --> 0:05:15.960 constraint on its balance sheet remains a key hurdle. Jeff 0:05:16.000 --> 0:05:19.359 Bullinger Bloomberg Day Break, Right, Jeff, thank you. Meantime, banks 0:05:19.360 --> 0:05:22.160 are on the hook for a big bill from the government. 0:05:22.200 --> 0:05:25.000 Financial regulators are poised to extract a total of about 0:05:25.040 --> 0:05:27.800 one billion dollars in fines from the five biggest US 0:05:27.839 --> 0:05:31.520 investment banks. Have the story from Bloomberg's Doug Christener, it's 0:05:31.560 --> 0:05:34.880 the price for failing to monitor employee use of unauthorized 0:05:34.920 --> 0:05:39.480 messaging apps for communications involving bank business. In its earnings report, 0:05:39.520 --> 0:05:42.120 Morgan Stanley said it expects to pay a two hundred 0:05:42.120 --> 0:05:45.920 million dollar fine that's identical to what JP Morgan Chase paid, 0:05:46.160 --> 0:05:48.360 and it appears to be the figure being used as 0:05:48.360 --> 0:05:51.279 a benchmark. We are told City Group, Goldman Sachs, and 0:05:51.320 --> 0:05:54.560 Bank of America are all in advanced talks with regulators 0:05:54.680 --> 0:05:57.839 and each may pay a similar amount. These discussions have 0:05:57.920 --> 0:06:00.920 not yet been concluded in the penalties could still change. 0:06:01.240 --> 0:06:03.920 In New York On Christener Bloomberg Gay Break, Doug, Thanks, 0:06:04.000 --> 0:06:06.880 Let's turn to politics now, where foreign relations are in focus. 0:06:06.920 --> 0:06:08.920 It's an important day on President Biden's trip to the 0:06:08.960 --> 0:06:11.680 Middle East as he makes his way to Saudi Arabia Tonight, 0:06:11.839 --> 0:06:14.160 Bloomberg's and Marie Hordern is there and brings us the 0:06:14.240 --> 0:06:17.520 latest from Jedda. President Biden will be meeting with Palestinian 0:06:17.560 --> 0:06:21.040 Authority mood of Boss today before he had over to 0:06:21.360 --> 0:06:24.360 Saudi Arabia. This is really going to be the pivotal 0:06:24.360 --> 0:06:27.719 moment of the trip and a controversial one, especially for 0:06:27.800 --> 0:06:30.880 many within the Democratic Party. President Biden is trying to 0:06:30.920 --> 0:06:34.159 bring the price of gasoline down and need the Kingdom's 0:06:34.160 --> 0:06:37.640 help to get more barrels on the market. But of 0:06:37.680 --> 0:06:41.039 course when he was campaigning, he had vowed to make 0:06:41.120 --> 0:06:44.080 the Kingdom of Briah his administrations, that he would only 0:06:44.120 --> 0:06:46.320 deal directly with the king, and now we know he'll 0:06:46.360 --> 0:06:48.440 be meeting this evening with clown Frience. Mom had been 0:06:48.480 --> 0:06:52.680 Sammon in Jedda, Saudi Arabia and Marie Hordern Boomberg, Gay 0:06:52.680 --> 0:06:56.640 break and Marie thank you. Meantime, back in Washington, Senator 0:06:56.720 --> 0:06:59.760 Joe Mansion's delivered a huge blow the President Biden's economic 0:06:59.760 --> 0:07:02.359 a j and the Democrat told party leaders he would 0:07:02.360 --> 0:07:05.839 not support new spending on climate measures or tax increases. 0:07:06.080 --> 0:07:09.640 Mansion says he will back proposals on healthcare and drug prices. 0:07:10.000 --> 0:07:12.600 SMP futures right now up twelve point, Staff futures up 0:07:12.680 --> 0:07:15.640 ninety three, nastack futures up forty three points. Straight ahead 0:07:15.640 --> 0:07:18.040 your latest local headlines in the check of sports. This 0:07:18.440 --> 0:07:24.920 is Bloomberg five oh seven on Wall Street, seventy four 0:07:24.960 --> 0:07:27.560 degrees in Central Park on an accident on the westbound 0:07:27.640 --> 0:07:29.880 l I E at the Grand Central Parkway. Details coming 0:07:29.920 --> 0:07:32.520 up in traffic. First Michael Barr with war on what's 0:07:32.560 --> 0:07:34.720 going on in New York and around the world. Good morning, Michael, 0:07:34.800 --> 0:07:37.400 Good morning Nathan. The New York City Council has taken 0:07:37.440 --> 0:07:41.400 steps to expand abortion and reproductive care rights. The Council 0:07:41.480 --> 0:07:45.400 passed the package bills, including providing free abortion pills at clinics. 0:07:45.800 --> 0:07:48.720 The New York City Abortion Rights Act also allows people 0:07:48.760 --> 0:07:52.120 seeking abortions from out of state to safely do so. 0:07:52.760 --> 0:07:56.160 New York Governor Kathy Hokel talked about shootings during an 0:07:56.160 --> 0:07:59.560 event in Brooklyn. HOCl announced a new budget allowance of 0:07:59.560 --> 0:08:02.360 over twe million dollars to fight gun violence in the state. 0:08:02.760 --> 0:08:05.920 HOCAL says it would invest in several things, including community 0:08:05.960 --> 0:08:11.320 outreach programs and crime labs investigating shooting statewide. We will 0:08:11.320 --> 0:08:14.480 continue devoting everything we have at our disposal to stop 0:08:14.480 --> 0:08:18.640 this crisis because we are seeing a difference. The governor's 0:08:18.680 --> 0:08:21.760 announcement comes one month after Hocal signed a new gun 0:08:21.840 --> 0:08:26.280 safety bill that banned carrying any firearms into sensitive places, 0:08:26.320 --> 0:08:31.000 including schools and mass transit stations. The Buffalo supermarket that 0:08:31.080 --> 0:08:33.480 was the scene of a deadly mass shooting reopens today. 0:08:33.880 --> 0:08:37.280 There was some debate about possibly shuttering the Top supermarket, 0:08:37.559 --> 0:08:39.840 but this man who lives in the community says he's 0:08:39.920 --> 0:08:43.240 glad that it is reopening because it's the only grocery 0:08:43.280 --> 0:08:46.840 store the community has. We was excited about getting it in. 0:08:46.920 --> 0:08:50.280 Now um have that just taken away from us will 0:08:50.360 --> 0:08:54.319 be more devastations and you know than what we've already 0:08:54.360 --> 0:08:58.120 been through. Yesterday, a federal grand jury and Buffalo returned 0:08:58.160 --> 0:09:01.960 to twenty seven count indictment charge Peyton Gendron with hate 0:09:01.960 --> 0:09:06.520 crimes the suspected shooter. Concern is growing about monkey poks 0:09:06.600 --> 0:09:10.440 in some health experts. About four cases have been identified 0:09:10.640 --> 0:09:13.880 in New York City. This week, the CDC announced several 0:09:13.880 --> 0:09:17.640 efforts to increase access to testing. White House Chief Medical 0:09:17.679 --> 0:09:22.120 Advisor Dr Anthony Founci told ABC the disease is easily treated, 0:09:22.160 --> 0:09:25.240 but should not be ignored. There are vaccines that are 0:09:25.240 --> 0:09:30.400 available to prevent and respond to monkey parks. There are 0:09:30.440 --> 0:09:33.959 anti virals that are available, so we're not in the 0:09:34.080 --> 0:09:37.439 dark about this, although we really must take it seriously. 0:09:38.240 --> 0:09:41.640 Dr Fauci will be on Bloomberg later today at noon. 0:09:42.120 --> 0:09:44.760 Ivana Trump, the first wife of Donald Trump, has died 0:09:44.800 --> 0:09:47.760 in New York City. The police are investigating whether Ms 0:09:47.760 --> 0:09:50.480 Trump fell down the stairs at our Manhattan town house 0:09:50.520 --> 0:09:53.560 on the Upper East Side. Ivana Trump was seventy three 0:09:54.040 --> 0:09:56.400 Global News twenty four hours a day on air and 0:09:56.520 --> 0:09:59.720 on Bloomberg Quick Take, powered by more than twenty dred 0:09:59.760 --> 0:10:02.840 journal list and analyist more than twenty countries. Michael Barne, 0:10:02.880 --> 0:10:10.040 this is Bloomberg, Nathan. Thank you, Michael. Coming up to 0:10:10.120 --> 0:10:12.400 five ten on Wall Street time for the Bloomberg Sports Update. 0:10:12.440 --> 0:10:15.080 Good morning, John Stash, Our morning, Nathan. Second Night in 0:10:15.080 --> 0:10:17.280 the Row or the Yankees and Red's played a game. 0:10:17.320 --> 0:10:19.960 They went ten innings and finished seven six. Last night 0:10:20.000 --> 0:10:22.800 was won one. In the eighth inning, Cincinnati scored three 0:10:22.880 --> 0:10:26.079 off Jonathan low Issaca Yanks tie the game on Eighthenny 0:10:26.120 --> 0:10:28.439 home runs by Aaron Judge and Labor Torres. Reds then 0:10:28.480 --> 0:10:31.000 with three in the tenth off Lucas Littkey and the 0:10:31.080 --> 0:10:33.840 Yanks got two back. Matt Carpenter is eleventh oh run 0:10:34.240 --> 0:10:36.360 in just his sixty eight That fat for the reds 0:10:36.360 --> 0:10:38.440 held on won the series. Yanks have lost four the 0:10:38.520 --> 0:10:41.240 last five. They host the Red Sox tonight. The Socks 0:10:41.320 --> 0:10:44.160 just got swept four straight at Tampa Bay at regularly 0:10:44.160 --> 0:10:46.199 easy win for the Mats eight nothing over the Cubs 0:10:46.200 --> 0:10:49.640 Carlos Carrasco and Trevor Williams. The combined shutout home runs 0:10:49.640 --> 0:10:52.840 for Brandon Nemo and Pete Alonso. Cameron Young is a 0:10:52.880 --> 0:10:55.880 twenty five year old golfer from Westchester. His father is 0:10:55.920 --> 0:10:58.160 the pro at the Sleepy Hollow Club. Young's first of 0:10:58.280 --> 0:11:00.959 a round at an Open Championship was an eight under 0:11:00.960 --> 0:11:05.160 sixty four. At anytime you set foot on that first 0:11:05.160 --> 0:11:08.880 teen year eighteenth greener anywhere, especially on that kind of 0:11:08.920 --> 0:11:13.439 part of the course, UM, there's just no hiding how 0:11:13.440 --> 0:11:18.800 special of the place it is. Um. And it's certainly 0:11:18.840 --> 0:11:21.719 been a goal to get to an Open Championship. Pen 0:11:21.880 --> 0:11:25.120 for my first one to be here, um, it's a 0:11:25.160 --> 0:11:29.120 little bit extra special for me. Lead and today's second around, 0:11:29.160 --> 0:11:32.480 Tiger was on the course now brutal seventy eight yesterday, 0:11:32.480 --> 0:11:35.600 only seven golfers at a higher score. The Utah Jazza 0:11:35.760 --> 0:11:38.760 All Star guard Donovan Mitchell is available in a trade 0:11:38.760 --> 0:11:41.960 that Knicks are interested, but reportedly the Jazz wanted and 0:11:42.000 --> 0:11:45.520 returned four players and six first round draft picks, and 0:11:45.640 --> 0:11:49.720 the Knicks signal John Stashar Bloomberg Sports Okay, John, Thanks. 0:11:49.760 --> 0:11:52.320 Right now, SMP Future is up fourteen points down, Futures 0:11:52.360 --> 0:11:56.200 up a nastac features up forty eight points now. The 0:11:56.240 --> 0:11:59.000 tenure Treasury is up seven thirty seconds yield two point 0:11:59.080 --> 0:12:02.599 nine down. The two year three point one one. This 0:12:03.440 --> 0:12:09.240 is Bloomberg Bloomberg eleven three oh weather. Sunshine in a 0:12:09.320 --> 0:12:12.760 high near eighty five today and tomorrow. Could see some 0:12:12.840 --> 0:12:15.679 late afternoon showers and storms by Sunday, with higher ninety 0:12:15.760 --> 0:12:22.440 by then. Right now seventy four degrees in Central Park. Markets, 0:12:22.520 --> 0:12:25.600 headlines and breaking news twenty four hours a day at 0:12:25.640 --> 0:12:29.040 Bloomberg dot Com, the Bloomberg Business at and at Bloomberg 0:12:29.120 --> 0:12:39.040 Quick Tape is a Bloomberg Business Flash, and I'm Karen Moscow. 0:12:39.240 --> 0:12:42.120 Stocks in Europe are gaining. US stock Index Future is 0:12:42.200 --> 0:12:44.640 edging higher, and bonds advancing at the end of a 0:12:44.679 --> 0:12:47.280 week in which markets have been whipp sawed by shifting 0:12:47.320 --> 0:12:51.280 expectations for monetary tightening by the Federal Reserve and worries 0:12:51.320 --> 0:12:54.080 over global economic growth. We check the markets every fifteen 0:12:54.080 --> 0:12:56.599 minutes throughout the trading day on Bloomberg U S and 0:12:56.640 --> 0:12:59.360 P futures up about twelve points down futures of eighty 0:12:59.400 --> 0:13:02.560 eight Nasty futures have thirty eight the decks in Germany's 0:13:02.559 --> 0:13:05.640 at one point seven percent. Ten year treasury have eight 0:13:05.640 --> 0:13:08.240 thirty seconds held two point nine two percent. The yield 0:13:08.240 --> 0:13:11.240 on the two year three point one zero percent NIMEX 0:13:11.280 --> 0:13:13.360 screwed oil is a three tens per cent or twenty 0:13:13.440 --> 0:13:15.880 nine cents and ninety six dollars seven cents a barrel 0:13:16.160 --> 0:13:18.120 call max school down to tens per cent or three 0:13:18.160 --> 0:13:21.240 dollars ten cents at seventeen o two seventy announce the 0:13:21.320 --> 0:13:24.200 euro one point zero zero three nine against the dollar 0:13:24.280 --> 0:13:26.800 British pound one point one eight four three and the 0:13:26.960 --> 0:13:29.280 end at one thirty eight point seven six. Looking at 0:13:29.320 --> 0:13:32.200 Bitcoin this morning, I've wanted a third percent is at 0:13:32.200 --> 0:13:35.439 twenty thousand, nine hundred forty six dollars. That's a Bloomberg 0:13:35.440 --> 0:13:37.960 business flash now here's Michael Barr with more on what's 0:13:38.000 --> 0:13:40.920 going on around the world. Michael, good morning, Good morning, Karen. 0:13:41.000 --> 0:13:44.400 President Joe Biden will announce three hundred sixteen million dollars 0:13:44.400 --> 0:13:47.880 in USA for the Palestinians today as he seeks to 0:13:47.880 --> 0:13:52.240 revive US ties with the Palestinian authority. Hospital visit and 0:13:52.320 --> 0:13:55.679 a meeting with the authorities President mak Mudabas. Biden will 0:13:55.760 --> 0:14:00.079 later travel to Saudi Arabia. Ukrainian officials say rush and 0:14:00.200 --> 0:14:03.320 missiles that struck a city in central Ukraine killed at 0:14:03.360 --> 0:14:05.680 least twenty three people and wounded more than a hundred others, 0:14:05.720 --> 0:14:09.800 including children. Dozens are missing. In baseball, the Yankees lost 0:14:09.840 --> 0:14:12.200 to the Royals, the Mets beat the Cubs. The Red 0:14:12.240 --> 0:14:15.360 Sox lost to the Raise, the Nationals lost to the Braves, 0:14:15.400 --> 0:14:18.439 the Giants lost to the Brewers. Global News twenty four 0:14:18.480 --> 0:14:20.880 hours a day on air and on Bloomberg Quick Take, 0:14:21.120 --> 0:14:24.280 powered by more than seven hundred journalists analyst more than 0:14:24.760 --> 0:14:28.600 twenty countries. Michael Barr and this is Bloomberg. Nathan. All right, Michael, 0:14:28.640 --> 0:14:31.080 thank you. It is five nineteen on Wall Street Live 0:14:31.120 --> 0:14:34.840 from the Bloomberg Interactive Broker Studios. This is Bloomberg Daybreak 0:14:34.880 --> 0:14:37.880 with a lot of economic and political news for investors 0:14:37.920 --> 0:14:40.360 to digest on this Friday morning. So let's bring in 0:14:40.400 --> 0:14:43.800 Simon French to talk more about it all. Chief economists 0:14:43.840 --> 0:14:46.400 at PAM your Gordon, Simon, It's great to speak with you. 0:14:46.480 --> 0:14:49.440 Let's start off with the latest economic data we got 0:14:49.440 --> 0:14:52.920 out of China showing a pretty big slow down in growth, 0:14:52.960 --> 0:14:56.880 in fact, the slowest since the pandemic began. Is this 0:14:57.000 --> 0:15:00.680 much of a surprise given all the lockdowns the China 0:15:00.720 --> 0:15:04.040 has been imposing on its citizens over the last several months. 0:15:05.240 --> 0:15:09.600 Good morning, Nathan, Yes, it was a it's surprise markets 0:15:09.640 --> 0:15:14.120 the scale of the slowdown. So two point six percent 0:15:14.280 --> 0:15:18.000 quarterly contraction in Q two take the annual rate down 0:15:18.040 --> 0:15:20.800 to almost EREI. It's more point four percent year on year. Now, 0:15:21.360 --> 0:15:24.840 the if you like, the bright spot for the global 0:15:24.880 --> 0:15:27.960 economy is not is the fact that this is mainly 0:15:28.000 --> 0:15:32.320 domestic activity because of social distancing associated with the ongoing 0:15:32.440 --> 0:15:36.040 zero COVID policy. And actually there are, if you like, 0:15:36.160 --> 0:15:40.720 encouraging signs on the industrial output side, which was pretty 0:15:40.760 --> 0:15:44.280 steady it around just under four percent year on year. 0:15:44.760 --> 0:15:48.560 That the pass through to global trade volumes is going 0:15:48.600 --> 0:15:51.560 to be less affected than some of the consumer service 0:15:51.600 --> 0:15:54.320 as side on the Chinese economy, so you don't see 0:15:54.360 --> 0:15:56.360 as much of a risk of spillover, perhaps as the 0:15:56.400 --> 0:16:00.320 markets might give in all those lockdowns and supply chain 0:16:00.480 --> 0:16:04.680 issues that have been associated with those lockdowns in China. Um. 0:16:04.840 --> 0:16:07.400 I think it's a very different set of circumstances to 0:16:07.800 --> 0:16:12.200 previous lockdowns, because, of course the global economy had huge 0:16:12.280 --> 0:16:16.880 demand because of its synchronous lockdowns and pivot towards consumer 0:16:16.960 --> 0:16:20.240 durables consumer good demand, it was putting huge strain on 0:16:20.280 --> 0:16:24.800 supply chains during the early phase the pandemic. You have 0:16:24.920 --> 0:16:28.720 to say now that demand picture, particularly from US consumers, 0:16:28.960 --> 0:16:32.400 is a far lower than it was back in those 0:16:32.440 --> 0:16:35.280 early iterations. So I think that therefore the spillover in 0:16:35.360 --> 0:16:39.280 global supply chains will be commensurately less acute. And I 0:16:39.280 --> 0:16:41.360 think that is one of the reasons why despite this 0:16:42.520 --> 0:16:45.920 data which won't do any favors for global GDP growth, 0:16:46.200 --> 0:16:50.200 I think it's been quite readily absorbed by investors without 0:16:50.240 --> 0:16:53.920 too much indigestion. When I turn to the political situation 0:16:54.160 --> 0:16:57.360 in Italy, as if the Eurozone weren't dealing with enough, 0:16:57.880 --> 0:17:02.840 given the problems with the more in Ukraine and the supply, 0:17:03.040 --> 0:17:06.080 the supply of energy there. Now we have this political 0:17:06.119 --> 0:17:09.560 situation where Mario drag tried to resign as prime minister. 0:17:09.640 --> 0:17:11.960 Now he's trying to keep a government together. Where do 0:17:11.960 --> 0:17:16.160 you see this going Simon? Yes, So it's important first 0:17:16.160 --> 0:17:19.440 and foremost to say that Mario drag has been a 0:17:19.520 --> 0:17:22.600 prime ministers in February one is the sixth prime minister 0:17:22.680 --> 0:17:26.600 that Italy have had in a decade. So political turbulence 0:17:26.720 --> 0:17:29.680 is not unusual, not neither in the last decade or 0:17:29.720 --> 0:17:33.159 in the last seventy five years in Italy. So I 0:17:33.160 --> 0:17:35.440 don't think investors are going to look at that aspect 0:17:35.800 --> 0:17:40.120 as being particularly worrisome. It's more ahead of next week's 0:17:40.160 --> 0:17:43.119 European Central Bank meeting, where they're going to almost certainly 0:17:43.119 --> 0:17:46.679 deliver the first interest rate increase in eleven years. But 0:17:46.800 --> 0:17:51.160 also to say more about the anti fragmentation policy, which 0:17:51.200 --> 0:17:54.760 is to try and stop spreads of peripheral countries like 0:17:54.880 --> 0:17:59.080 Italy from blowing out versus the spreads of German buns. 0:17:59.160 --> 0:18:03.080 And of course Italian political backdrop is an uncomfortable one 0:18:03.160 --> 0:18:08.320 to you know, backdrop to that meeting, because what pressure 0:18:08.359 --> 0:18:10.359 is going to be born to brought on Christian the 0:18:10.440 --> 0:18:14.720 Guard to say, well, if the Italian political situation changes, 0:18:14.800 --> 0:18:17.840 does that change your readiness to intervene and buy a 0:18:17.880 --> 0:18:21.040 disproportioned amount of Italian death. That's the uncertainty of the market. 0:18:21.560 --> 0:18:23.679 And then our last minute here Simon, ahead of that 0:18:23.720 --> 0:18:26.240 ECV decision, of course, the debate continues here in the 0:18:26.320 --> 0:18:28.600 US over whether we're going to see a seventy five 0:18:28.760 --> 0:18:31.400 or one hundred basis point rate HIG from the Fed 0:18:31.760 --> 0:18:34.719 later on this month. How do you think Chris Waller 0:18:34.760 --> 0:18:38.000 did to try to potentially tamp down that speculation of 0:18:38.040 --> 0:18:41.679 a super supersize rate high. I think he did a 0:18:41.680 --> 0:18:43.920 good job. I think the market is very sensitive, isn't 0:18:43.920 --> 0:18:46.800 it at the moment to the idea that the Federal 0:18:46.840 --> 0:18:52.040 Reserve may, through a variety of communication vehicles, push out 0:18:52.080 --> 0:18:54.560 and outside the increased like they did with fifty million 0:18:55.400 --> 0:19:00.480 bits uh the last rate decision. I think the bits 0:19:00.520 --> 0:19:03.200 was a little bit of an overinterpretation of the heat 0:19:03.240 --> 0:19:07.560 in the CPI prints. I think fm C chat suggest 0:19:07.960 --> 0:19:11.960 it's still the key expectation. It's certainly my expectation, but 0:19:12.040 --> 0:19:15.040 it's more the path, isn't it's the residual three meetings 0:19:15.040 --> 0:19:17.080 in twenty twenty two, which I think markets are more 0:19:17.200 --> 0:19:20.000 sens to two and then certainly to see whether these 0:19:20.080 --> 0:19:23.840 rate hikes actually do have an impact on forty plus 0:19:23.920 --> 0:19:26.760 year inflation. Thanks for this, Simon, great having you on 0:19:26.840 --> 0:19:30.520 with us. Simon French, chief economist at PAN. Mr Gordon. 0:19:30.920 --> 0:19:34.680 Right now, SMP futures are up eight points, STAFF futures 0:19:34.720 --> 0:19:38.080 up sixty two and NASAC futures are higher by twenty 0:19:38.119 --> 0:19:40.840 four points ten. Your treasury is up nine thirty seconds. 0:19:40.880 --> 0:19:43.600 The yield two point nine two percent, yield on the 0:19:43.640 --> 0:19:47.800 two year right now three point one zero percent, nime 0:19:47.840 --> 0:19:50.520 ex screwdes hire a bit by two tenths per center, 0:19:50.560 --> 0:19:54.360 twenty cents ninety cents a barrel. The euro right now 0:19:54.480 --> 0:19:59.400 one point zero zero three eight against the dollar. You're 0:19:59.440 --> 0:20:08.359 listening to Bomberg Daybreak on this Friday morning. Bloomberg eleven 0:20:08.400 --> 0:20:11.720 three oh weather, sunshine mid eighties today and tomorrow mix 0:20:11.800 --> 0:20:14.560 of sun and cloud Sunday could see some late afternoon 0:20:14.600 --> 0:20:16.960 showers and storms. Trend the weekend going up near ninety 0:20:17.040 --> 0:20:26.040 degrees right now seventy four in Central Park, broadcasting live 0:20:26.240 --> 0:20:30.199 from the Bloomberg Interactive Broker Studio in New York, Bloomberg 0:20:30.200 --> 0:20:34.280 e Living Freedom to Washington, d C. Bloomberg to Boston, 0:20:34.359 --> 0:20:37.800 Bloomberg one O six one to San Francisco, Bloomberg nine 0:20:37.880 --> 0:20:40.960 six to the country, Sirius XM to the one nine team, 0:20:41.080 --> 0:20:44.560 and around the globe the Bloomberg Business and Bloomberg Radio 0:20:44.680 --> 0:20:53.800 dot Com. This is Bloomberg Daybreak, five thirty on Wall Street. 0:20:53.800 --> 0:20:56.600 Good morning, I'm Nathan Hagar and I'm Karen Moscow. We're 0:20:56.680 --> 0:20:59.120 just about four hours away from the open of US trading. 0:20:59.200 --> 0:21:00.639 Let's get you up to day to the news you 0:21:00.640 --> 0:21:02.840 need to know at this hour. We begin in shine Over. 0:21:02.920 --> 0:21:05.440 The economy grew just four tens of uppers and last 0:21:05.480 --> 0:21:08.480 quarter that's the slowest patients has started the pandemic. But 0:21:08.600 --> 0:21:11.960 Bloomberg macro strategist Mark Hudmore says it's not the g 0:21:12.080 --> 0:21:14.639 d P miss that worries him. The data, I think 0:21:14.720 --> 0:21:16.560 at the moment is first of all, a little bit 0:21:16.560 --> 0:21:18.879 backward looking, and there's a bit of a dynamic here 0:21:18.920 --> 0:21:20.760 where we're kind of going, Hey, bad news is good 0:21:20.800 --> 0:21:22.800 news for markets because it means more policy eason to 0:21:22.800 --> 0:21:25.040 come through. The data this morning did not worry me. 0:21:25.160 --> 0:21:27.639 But the property sector story is getting worse at a 0:21:27.720 --> 0:21:29.679 quicker rate than I think many of us anticipated a 0:21:29.680 --> 0:21:31.880 month or two ago. The credit problems are spreading beyond 0:21:31.920 --> 0:21:33.960 the property sector into the banking sector, and that is 0:21:34.000 --> 0:21:36.880 a concern for China, and Bloomberg's Mark Hudmore says it'll 0:21:36.920 --> 0:21:39.160 be important to see how China performs in their second 0:21:39.160 --> 0:21:41.400 half of the year. In Europe, care and Italian Prime 0:21:41.400 --> 0:21:44.320 Minister Mario drags offered to resign has been rejected by 0:21:44.320 --> 0:21:48.119 the country's president. Bloomberg Shia Albanesi says if Droggy leaves government, 0:21:48.119 --> 0:21:51.679 it will negatively affect markets that he had started on 0:21:51.720 --> 0:21:55.440 a very ambitious pop of reforms to free up the market, 0:21:55.640 --> 0:21:58.679 to beat up competition, to change up the justice system, 0:21:58.720 --> 0:22:01.159 to cut rect tape. These is all on the question 0:22:01.280 --> 0:22:04.480 if he walks away. Bloomberg. Albanesi in Rome says concerns 0:22:04.480 --> 0:22:07.960 over energy and inflation could hamper Italy's economy later this year. 0:22:08.280 --> 0:22:10.800 Back here in the US, Nathan, the debate continues over 0:22:10.840 --> 0:22:13.560 whether the federal hike rates by seventy five basis points 0:22:13.640 --> 0:22:16.119 or one percent later this month. Coming up today, we 0:22:16.160 --> 0:22:18.760 get more economic data for the Central Bank to digest 0:22:19.080 --> 0:22:21.359 du in retail sales will be released around eight thirty 0:22:21.400 --> 0:22:24.560 am Wall Street Time, followed by University of Michigan Sentiment 0:22:24.640 --> 0:22:26.880 at ten. And banks are in focus again today, Karen. 0:22:26.920 --> 0:22:30.960 After yesterday's disappointing results from JP Morgan, Chase and Morgan Stanley, 0:22:31.000 --> 0:22:34.200 we get more from Bloomberg Shinali Bassek. More worries about 0:22:34.200 --> 0:22:36.879 the U S consumer started to rise after JP Morgan 0:22:36.960 --> 0:22:40.840 started reporting provisions for loan losses. The bank also said 0:22:40.880 --> 0:22:44.160