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Speaker 1: Good morning. I'm Brian Curtis. Here are the stories we're

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Speaker 1: following today. Microsoft setting an expensive price tag on new

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Speaker 1: AI products. We get more from Bloomberg's Erica Herskovitz.

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Speaker 2: Microsoft announced its new corporate artificial intelligence tools called Microsoft

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Speaker 2: Free sixty five. Copilot, will cost thirty dollars a month

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Speaker 2: per user, and that's on top of what most business

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Speaker 2: customers are already paying. Microsoft says the price tag reflects

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Speaker 2: strong demand for corporate AI products and the cost of

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Speaker 2: running them. Copilot, which is based on technology from artificial

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Speaker 2: intelligence startup OpenAI, is currently being tested on about six

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Speaker 2: hundred customers, including General Motors and Goodyear. No word on

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Speaker 2: when it will broadly be available in New York I,

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Speaker 2: America Herskowitz, Bloomberg Daybreak Asia.

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Speaker 1: Morgan Stanley CEO James Gorman said the worst is over

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Speaker 1: for the industry's downturn in trading and investment banking. Is Gorman,

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Speaker 1: speaking earlier with Bloomberg.

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Speaker 3: I do believe it's bottomed. Every CEO I'm talking to

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Speaker 3: has tilted to a more forward looking posture, so I

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Speaker 3: think deals will start getting done. Whether they happen in

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Speaker 3: the back half of this year, I'm not so sure,

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Speaker 3: it might be. It might be next year that it

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Speaker 3: comes to It will definitely be. It will be during

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Speaker 3: next year when we see it, if not this year.

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Speaker 1: Gorman's comments came after Morgan Stanley reported second quarter results

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Speaker 1: that did miss estimates due to a slowdown in trading

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Speaker 1: and investment banking. Still, shares of Morgan Stanley surged after

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Speaker 1: the company executives said that they were more optimistic in

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Speaker 1: the second half of the year. The firm also recorded

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Speaker 1: ninety billion dollars of inflows at its wealth unit and

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Speaker 1: posted a capital ratio well in excess of regulatory requirements

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Speaker 1: and just checking the stock here up about six point

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Speaker 1: five percent at the close. Meantime, Bank of America's second

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Speaker 1: quarter profits soared after its core Wall Street businesses exceeded expectations.

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Speaker 1: The firm's fixed income and equity traders delivered a surprise gain,

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Speaker 1: covering a slight miss in expected net interest income. Bank

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Speaker 1: of America said that revenue from fixed income, currencies and

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Speaker 1: commodities trading rows eighteen percent as clients reacted to changing

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Speaker 1: interest rates. Your CEO Brian moynihan and his reaction on

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Speaker 1: an Eterning's call.

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Speaker 4: Bank America report of one of the best quarters in

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Speaker 4: one of the best first halfs of net income in

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Speaker 4: the company's history. Our results this quarter once again include

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Speaker 4: solid performance and things we control by delivering organic growth

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Speaker 4: and operating leverage. We did that in an economy that

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Speaker 4: remains healthy, that had a flowing rate of growth.

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Speaker 1: One hand also said he expects expenses to decline on

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Speaker 1: a quarterly basis, even as the bank invests in the business.

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Speaker 1: Bank of America shares were up four percent. In New York,

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Speaker 1: IMF Managing Director Chris Delina Gordyeva said that China has

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Speaker 1: shown more openness in debt relief talks. Gorgeva, speaking here

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Speaker 1: on the sidelines of this week's G twenty meeting in India.

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Speaker 5: They have made a very clear statement of commitment to

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Speaker 5: the Common Framework, and they have demonstrated in the case

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Speaker 5: of Zambia, that they're willing to absorb some of the

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Speaker 5: pain that is necessary to bring Zambia's debt to sustainable level.

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Speaker 1: G twenty members have been deadlocked on debt relief for

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Speaker 1: developing nations after conceiving a coordinated plan known as the

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Speaker 1: Common Framework back in twenty twenty. This week, finance chiefs

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Speaker 1: failed to reach consensus over a framework that could be

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Speaker 1: applied to restructuring debt for poorer nations. G twenty leaders

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Speaker 1: the next scheduled to gather at a September summit in

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Speaker 1: New Delhi. And China has released a new consumption plan

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Speaker 1: to try to boost economic growth. More from Bloomberg's Joan

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Speaker 1: Wong in Hong Kong.

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Speaker 6: China's Ministry of Commerce says the eleven point package is

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Speaker 6: aimed that increasing spending on home goods. Local authorities are

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Speaker 6: being encouraged to help residents refurbish their homes, and people

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Speaker 6: should be able to get better access to credit to

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Speaker 6: buy household products. The measures come a day after China

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Speaker 6: posts that weaker than expected economic growth for the second

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Speaker 6: and quarter. The spending plan drew skepticism from some economists.

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Speaker 6: Bacary said the plan marked a small step and offered

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Speaker 6: a few specifics on the potential for direct cash handouts.

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Speaker 6: It also is that policies aimed at property and infrastructure

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Speaker 6: would likely have a bigger impact on the economy in

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Speaker 6: Hong Kong. Join Wong, Bloomberg Day Brigasia.

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Speaker 1: I'm Brian Curtis here in Hong Kong and coming up

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Speaker 1: we'll be chatting with Cheryl Smith, economists and portfolio manager

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Speaker 1: at Trillium Asset Management. Lots to talk about the broadening

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Speaker 1: out of the rally on Wall Street, the idea that

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Speaker 1: we've seen industrials and transports and other companies like the

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Speaker 1: banks today rally. So that's one of the questions that

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Speaker 1: we'll be putting whether or not that continues. A lot

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Speaker 1: of attention on AI today after that Microsoft news, and

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Speaker 1: as mentioned, those stocks did power up today, and then

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Speaker 1: ongoing tensions between the US and China. But a lot

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Speaker 1: of meetings at the top here over the past six

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Speaker 1: weeks or so, what does that mean? That's all coming

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Speaker 1: up now it's time for global news. Donald Trump says

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Speaker 1: he has been informed that he's a target of the

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Speaker 1: grand jury probe into the attempts to overturn the twenty

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Speaker 1: twenty election. At Baxter has the story in the nine

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Speaker 1: to sixty news room in San Francisco.

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Speaker 7: Ed Yeah, exactly right, Brian now posting this has been

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Speaker 7: his method of operation before in his previous indictments to

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Speaker 7: leak it himself. He says he or his attorneys now

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Speaker 7: have four days to appear before the grand jury, So

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Speaker 7: if they so desired, now if this is true, Bloomberg

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Speaker 7: Sound On host Joe Matthews says that Trump's criminal defense

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Speaker 7: calendar is getting very crowded.

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Speaker 8: By my count that would be three in four months,

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Speaker 8: which is remarkable.

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Speaker 9: We know that that's.

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Speaker 8: Probably not going to be the last one, as a

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Speaker 8: grand jury is convened in Fulton County, Georgia on a

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Speaker 8: very similar case, actually investigating efforts to overturn the twenty

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Speaker 8: twenty election.

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Speaker 7: And Michael Zelden, former federal prosecutor and special counsel the

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Speaker 7: Robert Muller investigation on Bloomberg's sound On seys Trump is

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Speaker 7: having a problem hiring enough attorneys.

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Speaker 10: Four sets of lawyers Georgia lawyers. If there's an indictment

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Speaker 10: in New York Alan Bragg case, if there's a group

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Speaker 10: that will take just that case, the mar A Lago,

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Speaker 10: and then this prospective case, you really can't do as

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Speaker 10: a lawyer justice to all these four cases at the

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Speaker 10: same time.

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Speaker 7: And Bloomberg's Wendy benjamin Son says it could actually help

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Speaker 7: Trump politically, which is why he was so eager to post.

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Speaker 11: After the indictment in New York related to hush money

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Speaker 11: payments to Stormy Daniels and after the indictment in Florida

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Speaker 11: in the documents case, it worked for him in terms

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Speaker 11: of pulling in terms of fundraising and public.

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Speaker 7: Republican leaders in the House of Representatives at least are

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Speaker 7: standing by Trump. House Majority Leader Steve Scalies.

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Speaker 9: Once again, this isn't the only time It's happened. Over

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Speaker 9: and over again. You see different attacks by the Biden

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Speaker 9: administration against President Trump.

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Speaker 7: So this is just another case or could it come

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Speaker 7: with charges that could preclude Trump's serving as president under

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Speaker 7: the fourteenth Amendment. The process will be playing out. Meanwhile,

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Speaker 7: the federal judge and the Marlago Secret Documents case has

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Speaker 7: not announced what she plans to do regarding setting up

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Speaker 7: a schedule for his trial. He had asked for it

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Speaker 7: to be put off until after the election. She reportedly

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Speaker 7: signaled some skepticism. Today, she says she will issue a

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Speaker 7: ruling soon. The sixteen fake electors who signed certificates falsely

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Speaker 7: claiming Trump one Michigan have now been charged with state crimes.

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Speaker 7: This is a CNN report. China poses an alarming threat

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Speaker 7: to the US power grid. A US House subcommittee hearing

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Speaker 7: from the president of the North American Electric Reliability Corporation

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Speaker 7: that Chinese sophistication and activities are quote quite alarming, says

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Speaker 7: China continues to demonstrate increasing sophistication, including new adaptive ways

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Speaker 7: to gain access to networks, and South Korea is now detected.

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Speaker 7: Two North Korea ballistic missiles set off today, says likely

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Speaker 7: fell outside Japan's ee Z and the US soldiers to

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Speaker 7: be in custody after choosing to cross the South Korea

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Speaker 7: border into the North. Secretary of State Lloyd Austin.

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Speaker 9: One of our service members who was on a tour

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Speaker 9: Will full Ley, and without authorization, crossed the military demarcation line.

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Speaker 9: We believe that he is in the PRK custody.

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Speaker 7: Austin says Travis King had been in detention in South Korea.

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Speaker 7: He says an investigation is underway. Global News powered by

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

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

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Speaker 7: and this is Bloomberg.

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Speaker 1: I'm Brian Curtisy in Hong Kong along with Cheryl Smith,

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Speaker 1: our guest economist and portfolio manager at Trillium Asset Management.

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Speaker 1: Cheryl on a day like today, after the past week

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Speaker 1: or ten days. It may feel a little frothy to

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Speaker 1: some investors, but it happens at a time when the

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Speaker 1: inflation readings are down at a time that growth is

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Speaker 1: still holding up. We thought inflation might come down with

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Speaker 1: growth coming down, but it's the opposite in a sense,

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Speaker 1: and that seems to have emboldened investors. Does it embolden you?

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Speaker 12: I wish it did, but I'm afraid that what I

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Speaker 12: see when I see the inflation numbers coming down while

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Speaker 12: growth is still holding up, is just the beginning of

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Speaker 12: the play. So if you will, the inflation numbers have

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Speaker 12: come down some, but when you look at the GDP

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Speaker 12: growth for the first quarter and what we're looking for

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Speaker 12: for the second quarter, a lot of that was government spending.

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Speaker 12: It really wasn't consumer demand so much, and we're starting

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Speaker 12: to see stress on lower income consumers. We're starting to

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Speaker 12: see some pulling back the French fry index a little

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Speaker 12: while ago, whether people added French fries to their orders

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Speaker 12: at McDonald's or other elements. So I'm seeing some weak demand.

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Speaker 12: Another example of that would be that Opek has been

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Speaker 12: restricting supply and all they've been able to do is

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Speaker 12: keep the price of oil. They haven't been able to

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Speaker 12: get it to go up, They've just been able to

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Speaker 12: keep it from going down. That's a sign of some

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Speaker 12: weakening demand.

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Speaker 1: There are some other signs, though, at least in some

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Speaker 1: of the financial indicators in the stock market, about investors

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Speaker 1: being attracted more to today, for instance, the banking sector,

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Speaker 1: and we've seen other types of cyclicals rally, industrials and

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Speaker 1: transports and such. You think also that that's kind of

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Speaker 1: just a last ditch effort, but that it will eventually fail.

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Speaker 12: I think that we certainly saw better numbers from most

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Speaker 12: of the banks that have been reporting. Those have been

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Speaker 12: the larger banks. The exception in terms of a sales

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Speaker 12: surprise or earning surprise would have been with PNC Bank,

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Speaker 12: which is smaller one of the major diversified banks. It

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Speaker 12: sort of just joined those ranks, and I think when

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Speaker 12: we see the regional banks we may see a bit

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Speaker 12: more stress there. We're also seeing some additional vision for

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Speaker 12: credit losses. We're also seeing some provisions against commercial real estate,

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Speaker 12: even though that commercial real estate isn't highly levered at

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Speaker 12: those banks. So I think it is a sigh of relief,

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Speaker 12: but not so much a oh everything is fabulous and

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Speaker 12: marvelous and going on forever from here.

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Speaker 1: I had a chance to watch and listen to James

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Speaker 1: Gorman's interview with Bloomberg, and I was a little surprised

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Speaker 1: that when he was asked by Shanali Bossak about challenges

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Speaker 1: hurdles out there, that he actually put US channel relations

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Speaker 1: up there near the top of the list, more so

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Speaker 1: than of faltering US economy. Maybe that's my pivot to

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Speaker 1: US talking a little bit about China. But did you

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Speaker 1: hear those comments, and do you concur I did not.

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Speaker 12: Hear his comments specifically, but I would say that US

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Speaker 12: China tensions are a high risk factor at the moment.

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Speaker 12: One of the key risks that I see face markets

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Speaker 12: despite Yellen and Blincoln both going to China to do talks,

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Speaker 12: and you know, the concern over the intellectual property rights

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Speaker 12: with China continuing to be a major issue. The other

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Speaker 12: issue with China and US China relations I would highlight

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Speaker 12: is that when China reopened from COVID, there was a

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Speaker 12: thought that that was going to be a major boost

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Speaker 12: to the world economy, and it did boost things for

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Speaker 12: a quarter or so, and then it looks as if

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Speaker 12: you know, China is really struggling to keep that demand up.

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Speaker 12: So China has to figure out what do they want

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Speaker 12: to do. Do they want to continue to support Russia

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Speaker 12: and the war with Ukraine, or do they actually need

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Speaker 12: the United States and need the rest of the West

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Speaker 12: as an export market for them. So I think that

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Speaker 12: that will be a major thing that we are thinking

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Speaker 12: about over the next several months. So yeah, I think.

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Speaker 1: Socially, for sure, you know you can you can understand it.

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Speaker 1: But at least from an investment standpoint, it hasn't really

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Speaker 1: held back US assets. The stock market has done very

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Speaker 1: well this year, it hasn't been China. So China has

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Speaker 1: suffered more than the United States. So it is a

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Speaker 1: little interesting that he and I know that everybody knows

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Speaker 1: that US general relations are up there high at the list,

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Speaker 1: but a little surprising to me that he put it

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Speaker 1: almost number one. So when you look at investing in Asia,

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Speaker 1: do you do you have an appetite for taking on

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Speaker 1: risk there or are you more cautious?

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Speaker 12: We don't have a strong appetite for taking non risks

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Speaker 12: abroad or even in the United States. We've been positioning

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Speaker 12: a little bit on the cautious side. And really what

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Speaker 12: we're seeing is that while the aggregate numbers have held up,

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Speaker 12: whether you're looking at the labor market or you're looking

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Speaker 12: at growth, when you look beneath the surface, it is

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Speaker 12: a picture of a few key elements, key industries, holding

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Speaker 12: up what's going on. So services are holding up, the

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Speaker 12: US economy are booing up the US economy, not holding

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Speaker 12: it up for ransom, but buoying it up. And the

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Speaker 12: industry focus of industris has been fairly narrow, just starting

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Speaker 12: to broaden out a little bit again. And when we

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Speaker 12: look at the labor market, we see that the unemployment

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Speaker 12: rates for blacks have gone up, the unemployment rate for

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Speaker 12: teenagers has gone up, the unemployment rate for those who

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Speaker 12: don't have a high don't have a high school education

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Speaker 12: have gone up, and those are typically leading indicators of

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Speaker 12: a softening labor market.

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Speaker 1: So you're pretty cautious. Well, we'll talk again Cheryl at

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Speaker 1: some point and continue the conversation. Cheryl Smith, economist and

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Speaker 1: portfolio manager at Trillium Asset Management. This is Bloomberg Daybreak Asia,

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