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Speaker 1: Good morning.

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Speaker 2: I'm Richard Salama.

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Speaker 3: And I'm Doug Prisner. Here are the stories we're following today.

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Speaker 2: Let's get back to that inflation report here, because underlying

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Speaker 2: CPI ran at a faster than expected monthly clip in August,

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Speaker 2: and according to of course the US Bureau of Labor

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Speaker 2: Statistics here and now, this does potentially leave the door

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Speaker 2: open for additional interest rate increases from the Federal Reserve.

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Speaker 2: This is what former Treasury sectorly Larry Summer's made of

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Speaker 2: it all.

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Speaker 1: My best guess is that inflation is going to be

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Speaker 1: a little strong, and that they're going to need to

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Speaker 1: move again sometime in this cycle.

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Speaker 4: I think it's conceivable. It's not what I predict, but

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Speaker 4: it's certainly possible that they'll have to move more than once.

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Speaker 4: And the market, I think is over discounting that possibility.

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Speaker 2: That is Larry Summers saying also that US stocks may

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Speaker 2: be priced a bit for perfection. Someone is thinking that

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Speaker 2: the American economy has a very narrow window in which

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Speaker 2: to achieve a soft landing.

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Speaker 3: We are hearing the soft bank owned ARM Holdings is

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Speaker 3: going to price its initial public offering at the top

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Speaker 3: end of its marketed range. ARM is selling American depositary shares.

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Speaker 3: They are priced at fifty one dollars each. The chip

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Speaker 3: designer had marketed about ninety five and a half million

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Speaker 3: shares in a range of between forty seven to fifty

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Speaker 3: one dollars. Now at the IPO price of fifty one,

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Speaker 3: ARM now valued at fifty four point five billion dollars.

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Speaker 3: That's according to calculations from Bloomberg News. By the way,

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Speaker 3: this is going to be the largest IPO of the year,

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Speaker 3: and it's being led by Barclays along with Goldman Sachs, JPMorgan, Chase,

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Speaker 3: and Mizuhou Financial. Arm shares are set to begin trading

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Speaker 3: on Thursday. This would be on the Nasdaq market under

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Speaker 3: the ticker symbol a r M Rashad.

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Speaker 2: All right, we have a city group saying it's preparing

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Speaker 2: for a wave of job cuts. This comes as the

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Speaker 2: chief executive, Jane Fraser, restructure as the Wall Street Giant

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Speaker 2: in an effort to reverse a year's long slump in

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Speaker 2: stock prices. Fraser addressed investors at the Barclays Financial Services Conference.

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Speaker 5: Today's announcement is indeed about putting that next step, big

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Speaker 5: next step in place and initiating it, which is to

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Speaker 5: not only put the organization model that best fits our

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Speaker 5: strategy in place, it's also about running the bank differently

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Speaker 5: and about driving clearer accountability for doing so.

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Speaker 2: That is Jane Fraser. City Group says it'll operate five

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Speaker 2: main businesses in the bank, will eliminate the three regional

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Speaker 2: chiefs to oversee operations in around about one hundred and

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Speaker 2: sixty countries around the world. City does not have firm

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Speaker 2: targets for how many employees will be affected.

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Speaker 3: Well more than twenty tech and civil society leaders appeared

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Speaker 3: in a closed door Senate meeting today. The aim here

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Speaker 3: to shape how artificial intelligence is being regulated now. This

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Speaker 3: meeting was organized by Senate Majority Leader Chuck Schumer. It's

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Speaker 3: part of his broader effort to get the Senate up

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Speaker 3: to speed on this rapidly involving technology. On hand was

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Speaker 3: the CEO of Tesla, Elon Musk. He told reporters that

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Speaker 3: the US needs to be proactive when it comes to AI.

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Speaker 6: I think probably of there being some sort of AI

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Speaker 6: regulatory agency that sends on its own, similar to the

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Speaker 6: FA or SEC is likely asport now. The reason that

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Speaker 6: I've been such a prettyle AI safety in advance of

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Speaker 6: sort of anything terrible happening is that I think the

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Speaker 6: consequences of AI going wrong are our sphere.

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Speaker 3: That is Elon Musk. He went on to say that

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Speaker 3: senators should focus their concerns on what Musk called deeper AI.

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Speaker 3: That's a type of artificial intelligence that essentially teaches computers

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Speaker 3: to process data in a way that imitates the human brain.

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Speaker 3: Now Ed, Baxter will have a little more on today's

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Speaker 3: Capitol Hill meeting throughout the program.

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Speaker 2: Rish but guide to China now, with Beijing concerns about

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Speaker 2: security problem with Apple's iPhone appearing to be causing a

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Speaker 2: confusion bloombergs yvon lann has.

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Speaker 7: One Beijing both pushed back on reports about iPhone restrictions,

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Speaker 7: but also raised concerns about security problems with the device.

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Speaker 7: The remarks left US investors unsure about Apple's status in

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Speaker 7: China just as a new iPhone is launching. China is

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Speaker 7: both the company's production base and its biggest international market.

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Speaker 7: We reported earlier that China had plans to expand a

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Speaker 7: ban on the use of iPhones among some state back

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Speaker 7: agencies and companies. If Beijing goes ahead with an iPhone ban,

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Speaker 7: it will be an unprecedented blockade on China's plans to

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Speaker 7: limit foreign technology use in a sensitive environment in Hong Kong.

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Speaker 7: I'm von Man Bloomberg Radio.

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Speaker 3: We go to Europe next to where the European Union

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Speaker 3: is launching an investigation into Chinese subsidies for electric vehicles.

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Speaker 3: European Commission President Ursula vonder Layan said global markets are

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Speaker 3: essentially flooded with cheap Chinese cars.

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Speaker 8: And their price is kept artificially low by huge state subsidies.

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Speaker 8: This is distorting our market and as we do not

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Speaker 8: accept this distortion from the inside in our market, we

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Speaker 8: do not accept this from the outside.

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Speaker 3: That is EC President Ursula vonder Layin. Now the EUS

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Speaker 3: probe is being opened despite concerns about retaliation from China,

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Speaker 3: and it's a sign of growing alarm over the ability

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Speaker 3: of European manufacturers to compete with China's auto industry. So

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Speaker 3: we have Google today reportedly laying off hundreds of its

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Speaker 3: global recruiting team. This according to The New York Times,

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Speaker 3: which says that Google has sought to trim expenses as

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Speaker 3: a way of paying for investments in artificial intelligence. At

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Speaker 3: one point, Google's Reture area recruiting group had more than

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Speaker 3: three thousand employees. It's already been hit hard by layoffs

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Speaker 3: this year. Today, if you're wandering Class A shares in Alphabet,

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Speaker 3: the parent of Google up about one percent. Global News

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Speaker 3: is next. Therey is the potential of an auto industry

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Speaker 3: workers strike at midnight tomorrow. Let's get to head Baxter

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Speaker 3: for Global News, Eddie.

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Speaker 9: Yeah, we're getting a mixed messages, Douglas, your right looks

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Speaker 9: as if the strike may be targeted a small number

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Speaker 9: of factories. You a president Shan Fayn finishing a news

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Speaker 9: conference saying that they're still seeking good sized payhikes.

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Speaker 10: We're making progress at each of the three negotiating tables.

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Speaker 10: We're still very far apart on our key priorities, from

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Speaker 10: job security to ending tiers, from cost of living allowance

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Speaker 10: to wage increases. We do not yet have offers on

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Speaker 10: the table that reflect a sacrifice and contributions our members

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Speaker 10: have made to these companies.

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Speaker 9: So Paine says new tactics.

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Speaker 10: To win, We're likely going to have to take action,

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Speaker 10: and just as we have approached our negotiations differently than

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Speaker 10: we have in the past, we are preparing to strike

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Speaker 10: these companies in a way they've never seen.

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Speaker 9: Before Fain says the plans for strike will be publicly

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Speaker 9: announced tomorrow night. If an agreement is not made in

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Speaker 9: the Interim House, Speaker Kevin McCarthy says he will use

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Speaker 9: subpoena power granted by his actions of opening an impeachment

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Speaker 9: inquiry into President Joe Biden.

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Speaker 10: We don't have.

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Speaker 3: Any of the credit card statements from all the credit

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Speaker 3: cards from this shell companies. We don't have the president's

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Speaker 3: bank statements.

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Speaker 8: We don't have hundred Biden's bank statements.

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Speaker 11: Providing information like that would answer the question and asked

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Speaker 11: what we've learned in the last couple of weeks, wouldn't

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Speaker 11: you want to know the.

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Speaker 9: Answer to yeah, McCarthy says he will get them. As

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Speaker 9: North Korea leader Kim Jong unn meets with President and

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Speaker 9: President of Vladimir Putin regarding munition transfers, the US is

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Speaker 9: saying it is ready to slap more sanctions on both.

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Speaker 9: State Department spokesman Matthew Miller when.

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Speaker 12: You see what looks to be increased cooperation and probably

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Speaker 12: military transfers. As we've said for some time, we have

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Speaker 12: reason to believe they were going to discuss military transfers.

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Speaker 12: That is quite troubling and would potentially be in violation

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Speaker 12: of multiple UN Security Council resolutions.

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Speaker 9: Yeah, Miller says there already sanctions in place. These would

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Speaker 9: be additional and just following up on our coverage on

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Speaker 9: the AI in the summit today in DC, trying to

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Speaker 9: keep up with the AI revolution well. Senate meeting today

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Speaker 9: with tech leaders metas Mark Zuckerberg, exus Eland Musk, former

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Speaker 9: Microsoft CEO Bill Gates, open Aichat, GPT CEO Sam Altman,

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Speaker 9: among others. Democratic leader in Political Reaction Richard Blumenthal says

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Speaker 9: that there are actually some really good information coming out.

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Speaker 13: We are under the cusp of a new industrial revolution

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Speaker 13: with enormous promise but a panoply of perils. And what

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Speaker 13: has impressed me most drammatically today is that there is

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Speaker 13: general acceptance of the need for some kind of regulation

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Speaker 13: to achieve the promise but avoid the risks and dangers.

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Speaker 9: Yeah, but not all the senators listening to the group

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Speaker 9: of tech CEOs regarding AI today are happy. Senator Elizabeth

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Speaker 9: Warren on Bloomberg.

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Speaker 6: They're sitting at.

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Speaker 12: A big table all by themselves.

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Speaker 6: All of the senators are to sit there and ask

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Speaker 6: no questions.

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Speaker 10: That's the setup.

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Speaker 9: By the way, we're told at Musk and Zuckerberg sat

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Speaker 9: at opposite ends of a long table. Yeah, there was

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Speaker 9: no cage there. Global newspower by more than twenty seven

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Speaker 9: hundred journalists and analysts and over one hundred twenty countries.

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Speaker 9: In San Francisco, I'm at Baxter and this is Bloomberg Now.

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Speaker 3: You can get the latest news whenever you want it.

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Speaker 3: With Bloomberg News Now, it's the top stories from our

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Speaker 3: global team of reporters at the click of a button.

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Speaker 3: Get Bloomberg News Now and the Bloomberg Business app, or

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Speaker 3: at Bloomberg dot com or anywhere you get your podcast

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Speaker 3: Daybreak Asia. And our guest is Christina Hooper. She is

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Speaker 3: the chief Global market Strategist at Invesco, joining us here

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Speaker 3: in New York in the Bloomberg Interactive Broker Studio. Nice

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Speaker 3: of you to stop by. It's good seeing you, Thanks

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Speaker 3: so much. How did you kind of read what we

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Speaker 3: learned today with a CPI print. I'm looking at the

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Speaker 3: way in which the market responded. It really did little

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Speaker 3: too kind of alter the expectation. It would seem that

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Speaker 3: the Fed is going to remain on hold next week.

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Speaker 3: Would you agree with that?

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Speaker 11: I definitely agree with that, but with one wrinkle. So

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Speaker 11: I'll say the market was bracing itself for a higher

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Speaker 11: headline CPI print because of oil prices. But and so

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Speaker 11: I think it was rather comfortable. We had a core

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Speaker 11: a touch higher than anticipated, but certainly within a range

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Speaker 11: of what I think is comfortable. And I've said that

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Speaker 11: this is very much a disinflationary narrative, but not every

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Speaker 11: data point is going to be perfect and fit in

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Speaker 11: with that narrative perfectly. The one fly in the ointment

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Speaker 11: could be Michigan inflation expectations on Friday. Now, if we

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Speaker 11: go back to June of twenty twenty two, recall the

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Speaker 11: FED had been messaging in advance of its meeting that

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Speaker 11: it would hike rates fifty basis points, and then we

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Speaker 11: got a one to two punch, We got in an

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Speaker 11: inflation print, and we got Michigan inflation expectations that were

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Speaker 11: j Powell even pointed to those two data points as

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Speaker 11: the reason the FED aired on the side of actually

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Speaker 11: doing seventy five basis points at that meeting. And so

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Speaker 11: I think that if we were to get some cost

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Speaker 11: for concern in Michigan inflation expectations, because we know that

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Speaker 11: consumer inflation expectations are so important to a number of

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Speaker 11: central banks, including the FED, then that might tip the scales,

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Speaker 11: but I think it's highly unlikely. My base case is

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Speaker 11: that the FED sits on its hands next week.

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Speaker 3: So the other thing that I have to ask about

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Speaker 3: in terms of FED policy the degree to which they

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Speaker 3: may be a little concerned about the dollar, not that

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Speaker 3: it needs to weaken from here. If anything, I think

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Speaker 3: that they would want to keep the dollar strong as

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Speaker 3: a way of preventing the economy from importing inflation. When

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Speaker 3: you consider what oil prices have been doing lately. I mean,

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Speaker 3: Brent now is just under ninety two. We've got WTI

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Speaker 3: just under eighty nine dollars a barrel. And to the

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Speaker 3: point we were kind of alluding to a moment ago,

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Speaker 3: energy seems to be the greatest risk now and measuring

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Speaker 3: where inflation may end up. Do you think the FED is,

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Speaker 3: even though they may remain on hold, let's say, for

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Speaker 3: the foreseeable future, they've got a talk tough, largely to

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Speaker 3: keep the dollar firm.

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Speaker 11: I don't know if the FED is that concerned, just

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Speaker 11: because it takes so long for higher energy prices to

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Speaker 11: make its way into core inflation, which is really what

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Speaker 11: the FED is laser focused on. So I'm not sure

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Speaker 11: that the FED is too worried about the US dollar.

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Speaker 11: I think the FED is going to come to the

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Speaker 11: end of its rate hike cycle when it feels comfortable

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Speaker 11: with that. Until then, though, we're going to hear hawkish

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Speaker 11: FED speak. I think next week, if the FED chooses

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Speaker 11: to sit on its hands, it will still sound hawkish.

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Speaker 11: It will reserve that right to hike rates in the future,

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Speaker 11: and that will really stop a lot of what could

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Speaker 11: be a weakening of the US dollar. So it'll take

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Speaker 11: time before we before that really starts. I think it

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Speaker 11: will take until markets are convinced definitively that the FED

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Speaker 11: has ended its rate hike cycle.

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Speaker 2: So Christina, you know we have, of course, this elevated

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Speaker 2: oil price. This takes time to actually feed into the

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Speaker 2: inflation numbers, especially where they are now. But also let's

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Speaker 2: not forget that later on Thursday anyway, we've got another

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Speaker 2: deliage of data, retail sales PPI, initial jobless claims as well.

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Speaker 2: You know, the data is endless, and it all just

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Speaker 2: seems to just muddy the waters.

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Speaker 11: Well, it certainly muddies the waters, but we're seeing a

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Speaker 11: clear picture when we step back, which is that the

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Speaker 11: disinflationary trend is very much underway and the US economy

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Speaker 11: is cooling. And those really are the two key takeaways

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Speaker 11: for the FED. And that's why I think the FED

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Speaker 11: is going to sit on its hands in September and

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Speaker 11: why I think it's unlikely the FED hikes rates again

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Speaker 11: this cycle.

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Speaker 3: So when you look at the treasury curve right now, yes,

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Speaker 3: we are still inverted. Does that necessarily I mean, it's

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Speaker 3: been stubborn and it's kind of implication here that we're

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Speaker 3: looking at a recession. Is that your bet, now, let's

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Speaker 3: say mid next year, that we're definitely going to see

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Speaker 3: some contraction in a meaningful way.

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Speaker 11: I don't think so. My view is that we're going

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Speaker 11: to see a bumpy landing. And by that, I mean,

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Speaker 11: let me take a step back and say, you know

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Speaker 11: that there's this school of thought beliefs that believes we're

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Speaker 11: going to get a soft landing. We're even hearing it

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Speaker 11: from giannet Yellen, and I understand the rationale behind it,

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Speaker 11: but I would say that a soft landing assumes there's

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Speaker 11: very little damage, and I think we will see some

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Speaker 11: significant damage before we see a recovery. We've seen a

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Speaker 11: you know, significant tightening and credit conditions. Things like that

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Speaker 11: don't happen without some kind of damage to the economy.

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Speaker 11: I think we'll avoid a recession, but will certainly feel

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Speaker 11: some pain, you.

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Speaker 2: Know, just thinking about that, and you know, when does

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Speaker 2: actually ultimately we see the whole bond market start to

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Speaker 2: price and perhaps beyond what we're looking at the moment

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Speaker 2: in terms of the longer end, and start to actually

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Speaker 2: properly rely I suppose uninverting as it were.

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Speaker 11: Well, I think that could start to happen soon. We've

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Speaker 11: seen a real stubborn pattern thus far, but that could

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Speaker 11: certainly start to happen soon. I think the real issue, though,

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Speaker 11: is that we do have a significantly long lag typically

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Speaker 11: between when monetary policy is enacted and when it shows

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Speaker 11: up in the economy. And so long as we have

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Speaker 11: you know, a fair level of policy uncertainty about when

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Speaker 11: the FED is going to high rates, we are unlikely

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Speaker 11: to see a lot of movement. I think as we

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Speaker 11: get closer to greater clarity, that's when we could see

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Speaker 11: an unwind begin. But I do believe both the bond

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Speaker 11: and the stock market will start to discount recovery. I

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Speaker 11: think that'll that will begin. The discounting process should happen soon.

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Speaker 11: I think we'll actually start to see a recovery in

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Speaker 11: the back half of twenty four.

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Speaker 3: Christine, I'd like to get your view on what's going

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Speaker 3: on in China right now in the degree to which

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Speaker 3: a weak economy there is really going to hold back

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Speaker 3: global growth in a significant way for the foreseeable future.

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Speaker 3: Is that a fair statement.

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Speaker 11: Well, I think you have to ask the question what's

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Speaker 11: come first, the chicken or the egg, because if we

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Speaker 11: look at the Chinese economy, yes, certainly there are headwinds

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Speaker 11: because the economy didn't get the kind of fiscal stimulus

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Speaker 11: we saw given out in Western developed countries during the pandemic.

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Speaker 11: So that has certainly held back the Chinese economy from

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Speaker 11: a robust reopening. But if we look at the data,

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Speaker 11: services is still fairly good. Where we've seen really the

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Speaker 11: pain is manufacturing, and that really reflects the global slowdown

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Speaker 11: that was caused by Western developed central banks. So the

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Speaker 11: Chinese economy in at least some respects reflecting that global

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Speaker 11: slowdown as opposed to contributing to it. Now we could

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Speaker 11: see going forward if we don't get the If China

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Speaker 11: doesn't get the adequate policy stimulus, it needs the targeted stimulus,

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Speaker 11: then that could be problematic. Thus far, though, I've liked

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Speaker 11: this slow drip and I think it could continue.

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Speaker 3: Oh, we'll see about that. It's a fresh perspective. I've

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Speaker 3: not heard that from anyone that do you like this

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Speaker 3: kind of slow rollout of stimulus.

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Speaker 11: I'll take what I can get.

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Speaker 3: All right, Christina, Always a pleasure. Thank you so much,

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Speaker 3: Christina Hooper there. She is the chief Global market strategist.

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