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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: Minutes from the fed's July meeting show most officials saw

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Speaker 1: significant upside risks to inflation, and many said that further

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Speaker 1: tightening of monetary policy may be required. Investors currently don't

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Speaker 1: expect another rate hike this year, according to futures contracts

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Speaker 1: that watchers will be listening for clues on policy at

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Speaker 1: the Kansas City Fed annual Jackson Hole Conference that is

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Speaker 1: coming up in Wyoming next week. Chare J. Powell is

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Speaker 1: expected to deliver remarks and everybody will be listening.

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Speaker 2: So US Treasury yields turned higher in the afternoon session.

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Speaker 2: We have the tenure now and have mentioned a four

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Speaker 2: to twenty five at one point. We approached a four

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Speaker 2: point three percent. Earlier today, former US Treasury Secretary Larry

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Speaker 2: Summers was saying the recent run up in ten year

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Speaker 2: yields may have further to go.

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Speaker 3: You're looking at four seventy five on the ten year,

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Speaker 3: obviously could end up being higher than that. So nobody knows,

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Speaker 3: but it seems to me we're in a very different era.

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Speaker 2: That is, former Treasury Secretary Larry Summers. He went on

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Speaker 2: to say that the focus of the market over time

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Speaker 2: will be on these bigger government budget deficits. Now, the

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Speaker 2: outlook for the near term, well, mister Summers is saying

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Speaker 2: he'd be surprised if a US recession started this year.

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Speaker 1: We turned to Japan now. The en slump to a

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Speaker 1: level as week as one forty six point thirty nine

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Speaker 1: per dollar against or on the Wednesday trading session. This

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Speaker 1: surpassed levels that saw Japan intervene in the currency market

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Speaker 1: for the first time in years last September. The end

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Speaker 1: tumbled about five percent over the past month. Higher US yields,

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Speaker 1: a broadly stronger dollar, and growing concern about China's economic

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Speaker 1: woes have been contributing factors here. Japan's Finance Minister Shunichi

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Speaker 1: Suzuki says he's watching market trends with doug a sense

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Speaker 1: of urgency.

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Speaker 2: I think we have to go to China and next,

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Speaker 2: where officials have asked some investment funds to avoid being

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Speaker 2: net sellers of Chinese equities. We have more from Bloomberg's

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Speaker 2: Joan Wong in Hong Kong.

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Speaker 4: We hear these funds have been told to refrain from

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Speaker 4: selling more onshore shares than they purchased the Shanghai Stock

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Speaker 4: Exchange to night making such instructions. These latest stipulations come

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Speaker 4: as a crisis bruise in the shadow banking industry. Rare

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Speaker 4: protests were seen in Beijing after Jong Rong International Trust

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Speaker 4: missed payments on dozens of products. Meanwhile, on stimulus, China's

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Speaker 4: top government leaders have vowed to boost domestic consumption and

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Speaker 4: support the private sector. In Hong Kong, join Wang Bloomberg

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Speaker 4: Day Brigasia.

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Speaker 1: Returned to the property sector, now distressed that Chinese developer

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Speaker 1: Country Garden warned about major uncertainties and redemption of its bonds.

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Speaker 1: It also said that trading in some of its local

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Speaker 1: notes will remain suspended. Country Garden made the comments in

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Speaker 1: a filing with the Shanghai Stock Exchange. The builder is

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Speaker 1: on the verge of default if it doesn't make dollar

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Speaker 1: bond interest payments missed earlier this month within a thirty

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Speaker 1: day grace period and interestingly dug the stock. Country Garden

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Speaker 1: was up two and a half percent in the Hong

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Speaker 1: Kong session yesterday.

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Speaker 2: Well down today. We're ADRs and ten cent about three

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Speaker 2: percent loss. In New York trading. This was after the

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Speaker 2: company missed estimates on a revenue for the second quarter.

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Speaker 2: We have more from Bloomberg's bonni Ou.

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Speaker 5: Ten Cent reported a less than expected eleven percent rise

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Speaker 5: in revenue. That's in contrast to other tech giants Ali,

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Speaker 5: Baba and JD dot Com that beats estimates. The lackluster

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Speaker 5: result is a sign of an uneven recovery for China's

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Speaker 5: tech sector. Tencent's net income also came in lower than estimated.

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Speaker 5: It's partly due to a huge fine imposed by regulators

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Speaker 5: that was tied to a government crackdown. On the positive note,

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Speaker 5: online advertising searched thirty four percent, the fastest in almost

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Speaker 5: five years. Separately, Tencent said it plans to unveil its

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Speaker 5: own AI model later this year. In Hong Kong, I'm

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Speaker 5: Bonnie Al Bloomberg Day Break Asia to Argentina.

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Speaker 1: Now, the leading presidential candidate, Javier Milay told Bloomberg News

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Speaker 1: his bold fiscal adjustment will boost the country's reputation, and

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Speaker 1: Malay said that he would make every effort to avoid

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Speaker 1: default in the country's sovereign debt if he gets elected

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Speaker 1: in October. Malay said that he has already developed a

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Speaker 1: plan to dollarize the economy.

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Speaker 6: Atbidal Gay, I think there's a previous discussion about dollarization. Actually,

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Speaker 6: strictly speaking, it's to get rid of the central bank.

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Speaker 6: The dollarization is an instrumental issue. At the end of the.

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Speaker 1: Day, Argentina's assets sold off after Melay came out ahead

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Speaker 1: in the country's primary election. The slump forced Argentina to

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Speaker 1: devalue its tightly controlled official exchange rate by eighteen percent

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Speaker 1: when markets opened back on Monday. Will some other stories

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Speaker 1: we'll be looking at here on the program, A few

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Speaker 1: other interesting lines. Shorting China stocks is very popular now.

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Speaker 1: It's one of the most crowded trades in the market,

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Speaker 1: and that's from a Bank of America survey. And Fitch

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Speaker 1: told us yesterday in our interviews that it will consider

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Speaker 1: reclassifying or looking at China's A plus credit rating. That

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Speaker 1: came from our interviews with Fitch's James McCormack.

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Speaker 2: And Tiffany Wilding, an economist and managing director over at PIMCO,

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Speaker 2: was telling us today markets are not yet fully reflecting

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Speaker 2: the risk from a deterioration in the fundamentals in China,

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Speaker 2: and she went on to say the usual lags deflationary

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Speaker 2: spellovers have likely only just begun to impact the global

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Speaker 2: consumer markets. Wilding went on to say this discounting likely

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Speaker 2: will accelerate, accelerate over the coming quarters.

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Speaker 1: Yeah, sometimes this is in the eyes of the beholder.

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Speaker 1: I heard you do the ten cent earnings that we had,

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Speaker 1: Bonny aw on that report ten cents. Net income rose

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Speaker 1: forty one percent in the second quarter, and that is

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Speaker 1: a big gain in net income. However it miss estimates.

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Speaker 1: Now part of that is a huge three billion dollar

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Speaker 1: fine it had to pay to regulators, So that gives

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Speaker 1: you a little perspective. And also, China is really open

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Speaker 1: for business now with foreign tourists, Doug, but few are coming.

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Speaker 2: Yeah, that's the American airline story right.

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Speaker 1: Absolutely. Now it's time for Global News. The whine House

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Speaker 1: is announcing President Joe Biden will be headed to Maui

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Speaker 1: tomorrow or rather on Monday at Baxter with Global News

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Speaker 1: in the nine sixty news were met.

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Speaker 7: Yeah, Brian, right. This will come as some relief to

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Speaker 7: residents who wondered why he hasn't paid more attention. FEMA

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Speaker 7: Administrator Dean Criswell today says the work though is going off.

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Speaker 8: We have deployed more than seven hundred personnel to the disaster,

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Speaker 8: with more than six hundred already on the island. We

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Speaker 8: have given out two point three million dollars in assistance

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Speaker 8: to families, and we have approved over thirteen hundred registrations

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Speaker 8: for assistance.

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Speaker 7: And she says they'll have forty k nine search teams

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Speaker 7: on scene today, but it is tough going because they

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Speaker 7: don't want to disturb the cultural richness of Loahina town.

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Speaker 8: We're working carefully to search the affected areas thoroughly and

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Speaker 8: compassionately while respecting all of the cultural sensitivities.

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Speaker 7: Governor Josh Green is confirming at least one hundred and

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Speaker 7: six fatalities.

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Speaker 9: It's only seven percent of the ground has been covered,

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Speaker 9: although many of the fatalities were on the road down

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Speaker 9: by the sea. So the numbers will increase, but they

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Speaker 9: will not increase. We hope to catastrophic. For the catastrophic proportions,

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Speaker 9: we just don't know yet.

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Speaker 7: And he says he was asked about the report of

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Speaker 7: finding the remains of a child.

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Speaker 9: I'm just going to be direct with people because you

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Speaker 9: need that we can tell when it's a child because

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Speaker 9: it's a smaller body.

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Speaker 7: They've opened some access to the area in a restricted

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Speaker 7: way at restricted times. China's defense chief in Belarus says

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Speaker 7: NATO tensions mounted as a three day visit to strengthen

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Speaker 7: ties with the staunch allies and NATO member states pump

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Speaker 7: up security with the nation. Visit coincide with increased calls

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Speaker 7: from Poland and the Baltic to titan border security. As

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Speaker 7: a US Congress heads toward another deadline on funding the government.

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Speaker 7: House Speaker Kevin McCarthy and sent A majority leader Chuck

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Speaker 7: Schumer have apparently entered into a deal for a short

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Speaker 7: term reprieve, but Bloomberg's that Julie Fine on balance of power,

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Speaker 7: says the Freedom Caucus may have other ideas.

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Speaker 10: I think that this whole situation is very difficult, and yes,

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Speaker 10: they may cut the deal, but remember how it happened

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Speaker 10: with the Freedom Caucus is they have a lot of

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Speaker 10: power over Kevin McCarthy because of the way his speakership

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Speaker 10: went down.

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Speaker 7: Julie says she feels they may ultimately come back into

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Speaker 7: the barn because they will realize nobody really wants a

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Speaker 7: government shutdown. And Fulton County District Attorney Fani Willis is

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Speaker 7: proposing a March fourth, start date for Trump's Georgia election

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Speaker 7: interference trial. That date is one day before Super Tuesday

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Speaker 7: in the presidential nomination race, and the proposed date also

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Speaker 7: potentially conflicts with Trump's trial in New York on falsifying

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Speaker 7: business records. That want to schedule to begin March twenty fifth.

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Speaker 7: Global News powered by more than twenty seven hundred journalists

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Speaker 7: and analyst in over one hundred twenty countries. In San Francisco,

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Speaker 7: I had Baxter and this is Bloomberg.

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Speaker 1: I'm Brian Curtis, along with Vonnie Quinn our guesst Is

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Speaker 1: Nancy Curtain, Global CIO at ALTI to take a closer

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Speaker 1: look at markets. Nancy, thank you for joining us. So

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Speaker 1: looking at the minutes, the Fed appears just to tad

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Speaker 1: more hawkish than thought. How does this affect your approach

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Speaker 1: to portfolio management?

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Speaker 11: Well, first of all, I have to you know, the

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Speaker 11: Fed minutes were a little backward looking because from their

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Speaker 11: meeting we've had an inflation number that was actually better

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Speaker 11: than expected. You know, two months in a row at

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Speaker 11: zero point two percent. The handle on headline inflation you

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Speaker 11: know three percent. Now, core inflation is still a bit sticky.

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Speaker 11: But remember seventy five percent of that core inflation number

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Speaker 11: was housing owner equivalent, ranch shelter, whatever you want to call.

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Speaker 11: And when we look at the forward indicators like XILORANT

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Speaker 11: et cetera, we do expect that inflation number to continue

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Speaker 11: to grind lower as the year progresses. So look, the

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Speaker 11: Fed's got to remain data dependent here. We've got another

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Speaker 11: jobs number, another inflation number before September. It's pretty clear

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Speaker 11: that the FED, whether they have one more interest rate

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Speaker 11: hike or two, you know, remains to be seen. But

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Speaker 11: they're going to keep rates high here until they break

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Speaker 11: that three percent mark and get closer to their target.

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Speaker 11: But you know, we're encouraged by some of the components

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Speaker 11: of inflation as we look at it.

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Speaker 12: Several of the members want that now to be six

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Speaker 12: percent and not the median. Do you see it reaching

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Speaker 12: six percent and then we see the next rate increase.

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Speaker 11: It's hard to say, right even the FED is so

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Speaker 11: data dependent here, but I'll give you another data point.

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Speaker 11: You know, labor productivity was three point seven percent in

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Speaker 11: the second quarter. Now we're all concerned about wage growth,

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Speaker 11: but remember labor productivity is a direct subtraction from inflation

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Speaker 11: and labor costs are one point six percent. That would

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Speaker 11: be a really pleasing number for the Fed. So look,

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Speaker 11: we're going to have to see inflation continue to grind lower.

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Speaker 11: That's what we expect. One of the risks though, is

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Speaker 11: that it feels as if the US economy here in

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Speaker 11: the third quarter may actually be accelerating. Take a look

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Speaker 11: at that retail sales number industrial production. At the moment,

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Speaker 11: it's a pretty sprightly US economy. So it could be

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Speaker 11: that the Fed looks at that and says we need

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Speaker 11: to go another twenty five basis points in September. Remains

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Speaker 11: to be seen their data dependent, But as I said,

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Speaker 11: we continue to believe that inflation grinds lower here.

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Speaker 1: Yeah, you like the soft lending narrative, and it's easy

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Speaker 1: to be positive, I suppose when you think inflation is

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Speaker 1: coming down, maybe not as fast as hoped for, but

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Speaker 1: it's coming down and growth is very solid. You mentioned

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Speaker 1: a couple of items on the growth profile outlook. We

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Speaker 1: need only look at the Atlanta GDP now forecast, which

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Speaker 1: are shockingly high. But then there's also this to consider

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Speaker 1: that basically the market is still expecting the FED to

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Speaker 1: cut rates next year, so that's built into the picture

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Speaker 1: at the moment, and we are also expecting earnings to

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Speaker 1: get ratcheted higher. But we've had three consecutive quarters of

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Speaker 1: downgrades in earnings, so you're hoping for a lot going forward.

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Speaker 11: Well, let's just take a first look at earnings. I mean,

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Speaker 11: you know, the first quarter earnings were better than expected,

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Speaker 11: and the second quarter earnings we're just kind of wrapping

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Speaker 11: it up now with the retailers. Second quarter earnings were

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Speaker 11: expected to be down seven percent. They'll come in down

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Speaker 11: around the four percent mark, so you know, eighty percent

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Speaker 11: of company's beat. That's a good number. N X Energy

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Speaker 11: actually earnings were in positive territory and X Energy margins

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Speaker 11: actually moved higher from ten point six to eleven point two,

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Speaker 11: So not bad, right, But you're absolutely right. As we

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Speaker 11: look forward to the third and fourth quarter, instead of

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Speaker 11: just to beat on negative numbers, we actually have to

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Speaker 11: see some positive earnings growth because valuations are pretty high

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Speaker 11: here now. The expectation is sort of flatish for the

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Speaker 11: third quarter, about nine percent for the fourth quarter, moving

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Speaker 11: into twelve percent next year. So that's pretty lofty hill

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Speaker 11: to climb here. But if growth remains decent, and as

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Speaker 11: you said, X energy, we could see a decent earnings trajectory.

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Speaker 12: So Nancy Alta manages sixty seven billion dollars or so

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Speaker 12: for global multifamily offices. Correct any concerns about what's happening

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Speaker 12: right now in China? Do you have anybody associated with

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Speaker 12: those areas?

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Speaker 11: So, look, China is a real problem, and it's sort

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Speaker 11: of the antithesis of the United States. The US keeps

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Speaker 11: surprising on the upside in terms of economic stats, and

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Speaker 11: you know, pick a number in China that's actually surprised

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Speaker 11: on the upside because they've all disappointed on the downside.

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Speaker 11: And it's not just the stuttering economy. I think that

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Speaker 11: people worry about, investors worry about and you've heard it

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Speaker 11: all through today. It's what's going on in the property

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Speaker 11: and shadow banking market. And this is a real concern.

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Speaker 11: Why is it a concern Because China wants growth to

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Speaker 11: come from consumption, the consumer, the sea part of its economy.

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Speaker 11: And if there isn't confidence to invest, eighty percent of

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Speaker 11: wealth is in the property market and the other bits

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Speaker 11: sitting there in some of these wealth management firms. And

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Speaker 11: if you're a consumer and you're concerned about whether you're

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Speaker 11: going to get your money back. That's a real problem

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Speaker 11: for consumer confidence and no wonder people aren't spending money.

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Speaker 11: So look, we think China has got to step in here.

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Speaker 11: Fifteen basis point cut and interest rate. It's like a

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Speaker 11: bucket in front of a bit of a liquidity tsunami.

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Speaker 11: We think it probably gets worse. All right, chin has

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Speaker 11: got to step in. They they got to do something here.

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Speaker 11: And it isn't fifteen basis points of an interest rate cut.

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