Speaker 1: Good morning.
Speaker 2: I'm Richard Salama.
Speaker 3: And I'm Doug Prisner. Here are the stories we're following today.
Speaker 2: Let's get back to that inflation report here, because underlying
Speaker 2: CPI ran at a faster than expected monthly clip in August,
Speaker 2: and according to of course the US Bureau of Labor
Speaker 2: Statistics here and now, this does potentially leave the door
Speaker 2: open for additional interest rate increases from the Federal Reserve.
Speaker 2: This is what former Treasury sectorly Larry Summer's made of
Speaker 2: it all.
Speaker 1: My best guess is that inflation is going to be
Speaker 1: a little strong, and that they're going to need to
Speaker 1: move again sometime in this cycle.
Speaker 4: I think it's conceivable. It's not what I predict, but
Speaker 4: it's certainly possible that they'll have to move more than once.
Speaker 4: And the market, I think is over discounting that possibility.
Speaker 2: That is Larry Summers saying also that US stocks may
Speaker 2: be priced a bit for perfection. Someone is thinking that
Speaker 2: the American economy has a very narrow window in which
Speaker 2: to achieve a soft landing.
Speaker 3: We are hearing the soft bank owned ARM Holdings is
Speaker 3: going to price its initial public offering at the top
Speaker 3: end of its marketed range. ARM is selling American depositary shares.
Speaker 3: They are priced at fifty one dollars each. The chip
Speaker 3: designer had marketed about ninety five and a half million
Speaker 3: shares in a range of between forty seven to fifty
Speaker 3: one dollars. Now at the IPO price of fifty one,
Speaker 3: ARM now valued at fifty four point five billion dollars.
Speaker 3: That's according to calculations from Bloomberg News. By the way,
Speaker 3: this is going to be the largest IPO of the year,
Speaker 3: and it's being led by Barclays along with Goldman Sachs, JPMorgan, Chase,
Speaker 3: and Mizuhou Financial. Arm shares are set to begin trading
Speaker 3: on Thursday. This would be on the Nasdaq market under
Speaker 3: the ticker symbol a r M Rashad.
Speaker 2: All right, we have a city group saying it's preparing
Speaker 2: for a wave of job cuts. This comes as the
Speaker 2: chief executive, Jane Fraser, restructure as the Wall Street Giant
Speaker 2: in an effort to reverse a year's long slump in
Speaker 2: stock prices. Fraser addressed investors at the Barclays Financial Services Conference.
Speaker 5: Today's announcement is indeed about putting that next step, big
Speaker 5: next step in place and initiating it, which is to
Speaker 5: not only put the organization model that best fits our
Speaker 5: strategy in place, it's also about running the bank differently
Speaker 5: and about driving clearer accountability for doing so.
Speaker 2: That is Jane Fraser. City Group says it'll operate five
Speaker 2: main businesses in the bank, will eliminate the three regional
Speaker 2: chiefs to oversee operations in around about one hundred and
Speaker 2: sixty countries around the world. City does not have firm
Speaker 2: targets for how many employees will be affected.
Speaker 3: Well more than twenty tech and civil society leaders appeared
Speaker 3: in a closed door Senate meeting today. The aim here
Speaker 3: to shape how artificial intelligence is being regulated now. This
Speaker 3: meeting was organized by Senate Majority Leader Chuck Schumer. It's
Speaker 3: part of his broader effort to get the Senate up
Speaker 3: to speed on this rapidly involving technology. On hand was
Speaker 3: the CEO of Tesla, Elon Musk. He told reporters that
Speaker 3: the US needs to be proactive when it comes to AI.
Speaker 6: I think probably of there being some sort of AI
Speaker 6: regulatory agency that sends on its own, similar to the
Speaker 6: FA or SEC is likely asport now. The reason that
Speaker 6: I've been such a prettyle AI safety in advance of
Speaker 6: sort of anything terrible happening is that I think the
Speaker 6: consequences of AI going wrong are our sphere.
Speaker 3: That is Elon Musk. He went on to say that
Speaker 3: senators should focus their concerns on what Musk called deeper AI.
Speaker 3: That's a type of artificial intelligence that essentially teaches computers
Speaker 3: to process data in a way that imitates the human brain.
Speaker 3: Now Ed, Baxter will have a little more on today's
Speaker 3: Capitol Hill meeting throughout the program.
Speaker 2: Rish but guide to China now, with Beijing concerns about
Speaker 2: security problem with Apple's iPhone appearing to be causing a
Speaker 2: confusion bloombergs yvon lann has.
Speaker 7: One Beijing both pushed back on reports about iPhone restrictions,
Speaker 7: but also raised concerns about security problems with the device.
Speaker 7: The remarks left US investors unsure about Apple's status in
Speaker 7: China just as a new iPhone is launching. China is
Speaker 7: both the company's production base and its biggest international market.
Speaker 7: We reported earlier that China had plans to expand a
Speaker 7: ban on the use of iPhones among some state back
Speaker 7: agencies and companies. If Beijing goes ahead with an iPhone ban,
Speaker 7: it will be an unprecedented blockade on China's plans to
Speaker 7: limit foreign technology use in a sensitive environment in Hong Kong.
Speaker 7: I'm von Man Bloomberg Radio.
Speaker 3: We go to Europe next to where the European Union
Speaker 3: is launching an investigation into Chinese subsidies for electric vehicles.
Speaker 3: European Commission President Ursula vonder Layan said global markets are
Speaker 3: essentially flooded with cheap Chinese cars.
Speaker 8: And their price is kept artificially low by huge state subsidies.
Speaker 8: This is distorting our market and as we do not
Speaker 8: accept this distortion from the inside in our market, we
Speaker 8: do not accept this from the outside.
Speaker 3: That is EC President Ursula vonder Layin. Now the EUS
Speaker 3: probe is being opened despite concerns about retaliation from China,
Speaker 3: and it's a sign of growing alarm over the ability
Speaker 3: of European manufacturers to compete with China's auto industry. So
Speaker 3: we have Google today reportedly laying off hundreds of its
Speaker 3: global recruiting team. This according to The New York Times,
Speaker 3: which says that Google has sought to trim expenses as
Speaker 3: a way of paying for investments in artificial intelligence. At
Speaker 3: one point, Google's Reture area recruiting group had more than
Speaker 3: three thousand employees. It's already been hit hard by layoffs
Speaker 3: this year. Today, if you're wandering Class A shares in Alphabet,
Speaker 3: the parent of Google up about one percent. Global News
Speaker 3: is next. Therey is the potential of an auto industry
Speaker 3: workers strike at midnight tomorrow. Let's get to head Baxter
Speaker 3: for Global News, Eddie.
Speaker 9: Yeah, we're getting a mixed messages, Douglas, your right looks
Speaker 9: as if the strike may be targeted a small number
Speaker 9: of factories. You a president Shan Fayn finishing a news
Speaker 9: conference saying that they're still seeking good sized payhikes.
Speaker 10: We're making progress at each of the three negotiating tables.
Speaker 10: We're still very far apart on our key priorities, from
Speaker 10: job security to ending tiers, from cost of living allowance
Speaker 10: to wage increases. We do not yet have offers on
Speaker 10: the table that reflect a sacrifice and contributions our members
Speaker 10: have made to these companies.
Speaker 9: So Paine says new tactics.
Speaker 10: To win, We're likely going to have to take action,
Speaker 10: and just as we have approached our negotiations differently than
Speaker 10: we have in the past, we are preparing to strike
Speaker 10: these companies in a way they've never seen.
Speaker 9: Before Fain says the plans for strike will be publicly
Speaker 9: announced tomorrow night. If an agreement is not made in
Speaker 9: the Interim House, Speaker Kevin McCarthy says he will use
Speaker 9: subpoena power granted by his actions of opening an impeachment
Speaker 9: inquiry into President Joe Biden.
Speaker 10: We don't have.
Speaker 3: Any of the credit card statements from all the credit
Speaker 3: cards from this shell companies. We don't have the president's
Speaker 3: bank statements.
Speaker 8: We don't have hundred Biden's bank statements.
Speaker 11: Providing information like that would answer the question and asked
Speaker 11: what we've learned in the last couple of weeks, wouldn't
Speaker 11: you want to know the.
Speaker 9: Answer to yeah, McCarthy says he will get them. As
Speaker 9: North Korea leader Kim Jong unn meets with President and
Speaker 9: President of Vladimir Putin regarding munition transfers, the US is
Speaker 9: saying it is ready to slap more sanctions on both.
Speaker 9: State Department spokesman Matthew Miller when.
Speaker 12: You see what looks to be increased cooperation and probably
Speaker 12: military transfers. As we've said for some time, we have
Speaker 12: reason to believe they were going to discuss military transfers.
Speaker 12: That is quite troubling and would potentially be in violation
Speaker 12: of multiple UN Security Council resolutions.
Speaker 9: Yeah, Miller says there already sanctions in place. These would
Speaker 9: be additional and just following up on our coverage on
Speaker 9: the AI in the summit today in DC, trying to
Speaker 9: keep up with the AI revolution well. Senate meeting today
Speaker 9: with tech leaders metas Mark Zuckerberg, exus Eland Musk, former
Speaker 9: Microsoft CEO Bill Gates, open Aichat, GPT CEO Sam Altman,
Speaker 9: among others. Democratic leader in Political Reaction Richard Blumenthal says
Speaker 9: that there are actually some really good information coming out.
Speaker 13: We are under the cusp of a new industrial revolution
Speaker 13: with enormous promise but a panoply of perils. And what
Speaker 13: has impressed me most drammatically today is that there is
Speaker 13: general acceptance of the need for some kind of regulation
Speaker 13: to achieve the promise but avoid the risks and dangers.
Speaker 9: Yeah, but not all the senators listening to the group
Speaker 9: of tech CEOs regarding AI today are happy. Senator Elizabeth
Speaker 9: Warren on Bloomberg.
Speaker 6: They're sitting at.
Speaker 12: A big table all by themselves.
Speaker 6: All of the senators are to sit there and ask
Speaker 6: no questions.
Speaker 10: That's the setup.
Speaker 9: By the way, we're told at Musk and Zuckerberg sat
Speaker 9: at opposite ends of a long table. Yeah, there was
Speaker 9: no cage there. Global newspower by more than twenty seven
Speaker 9: hundred journalists and analysts and over one hundred twenty countries.
Speaker 9: In San Francisco, I'm at Baxter and this is Bloomberg Now.
Speaker 3: You can get the latest news whenever you want it.
Speaker 3: With Bloomberg News Now, it's the top stories from our
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Speaker 3: Get Bloomberg News Now and the Bloomberg Business app, or
Speaker 3: at Bloomberg dot com or anywhere you get your podcast
Speaker 3: Daybreak Asia. And our guest is Christina Hooper. She is
Speaker 3: the chief Global market Strategist at Invesco, joining us here
Speaker 3: in New York in the Bloomberg Interactive Broker Studio. Nice
Speaker 3: of you to stop by. It's good seeing you, Thanks
Speaker 3: so much. How did you kind of read what we
Speaker 3: learned today with a CPI print. I'm looking at the
Speaker 3: way in which the market responded. It really did little
Speaker 3: too kind of alter the expectation. It would seem that
Speaker 3: the Fed is going to remain on hold next week.
Speaker 3: Would you agree with that?
Speaker 11: I definitely agree with that, but with one wrinkle. So
Speaker 11: I'll say the market was bracing itself for a higher
Speaker 11: headline CPI print because of oil prices. But and so
Speaker 11: I think it was rather comfortable. We had a core
Speaker 11: a touch higher than anticipated, but certainly within a range
Speaker 11: of what I think is comfortable. And I've said that
Speaker 11: this is very much a disinflationary narrative, but not every
Speaker 11: data point is going to be perfect and fit in
Speaker 11: with that narrative perfectly. The one fly in the ointment
Speaker 11: could be Michigan inflation expectations on Friday. Now, if we
Speaker 11: go back to June of twenty twenty two, recall the
Speaker 11: FED had been messaging in advance of its meeting that
Speaker 11: it would hike rates fifty basis points, and then we
Speaker 11: got a one to two punch, We got in an
Speaker 11: inflation print, and we got Michigan inflation expectations that were
Speaker 11: j Powell even pointed to those two data points as
Speaker 11: the reason the FED aired on the side of actually
Speaker 11: doing seventy five basis points at that meeting. And so
Speaker 11: I think that if we were to get some cost
Speaker 11: for concern in Michigan inflation expectations, because we know that
Speaker 11: consumer inflation expectations are so important to a number of
Speaker 11: central banks, including the FED, then that might tip the scales,
Speaker 11: but I think it's highly unlikely. My base case is
Speaker 11: that the FED sits on its hands next week.
Speaker 3: So the other thing that I have to ask about
Speaker 3: in terms of FED policy the degree to which they
Speaker 3: may be a little concerned about the dollar, not that
Speaker 3: it needs to weaken from here. If anything, I think
Speaker 3: that they would want to keep the dollar strong as
Speaker 3: a way of preventing the economy from importing inflation. When
Speaker 3: you consider what oil prices have been doing lately. I mean,
Speaker 3: Brent now is just under ninety two. We've got WTI
Speaker 3: just under eighty nine dollars a barrel. And to the
Speaker 3: point we were kind of alluding to a moment ago,
Speaker 3: energy seems to be the greatest risk now and measuring
Speaker 3: where inflation may end up. Do you think the FED is,
Speaker 3: even though they may remain on hold, let's say, for
Speaker 3: the foreseeable future, they've got a talk tough, largely to
Speaker 3: keep the dollar firm.
Speaker 11: I don't know if the FED is that concerned, just
Speaker 11: because it takes so long for higher energy prices to
Speaker 11: make its way into core inflation, which is really what
Speaker 11: the FED is laser focused on. So I'm not sure
Speaker 11: that the FED is too worried about the US dollar.
Speaker 11: I think the FED is going to come to the
Speaker 11: end of its rate hike cycle when it feels comfortable
Speaker 11: with that. Until then, though, we're going to hear hawkish
Speaker 11: FED speak. I think next week, if the FED chooses
Speaker 11: to sit on its hands, it will still sound hawkish.
Speaker 11: It will reserve that right to hike rates in the future,
Speaker 11: and that will really stop a lot of what could
Speaker 11: be a weakening of the US dollar. So it'll take
Speaker 11: time before we before that really starts. I think it
Speaker 11: will take until markets are convinced definitively that the FED
Speaker 11: has ended its rate hike cycle.
Speaker 2: So Christina, you know we have, of course, this elevated
Speaker 2: oil price. This takes time to actually feed into the
Speaker 2: inflation numbers, especially where they are now. But also let's
Speaker 2: not forget that later on Thursday anyway, we've got another
Speaker 2: deliage of data, retail sales PPI, initial jobless claims as well.
Speaker 2: You know, the data is endless, and it all just
Speaker 2: seems to just muddy the waters.
Speaker 11: Well, it certainly muddies the waters, but we're seeing a
Speaker 11: clear picture when we step back, which is that the
Speaker 11: disinflationary trend is very much underway and the US economy
Speaker 11: is cooling. And those really are the two key takeaways
Speaker 11: for the FED. And that's why I think the FED
Speaker 11: is going to sit on its hands in September and
Speaker 11: why I think it's unlikely the FED hikes rates again
Speaker 11: this cycle.
Speaker 3: So when you look at the treasury curve right now, yes,
Speaker 3: we are still inverted. Does that necessarily I mean, it's
Speaker 3: been stubborn and it's kind of implication here that we're
Speaker 3: looking at a recession. Is that your bet, now, let's
Speaker 3: say mid next year, that we're definitely going to see
Speaker 3: some contraction in a meaningful way.
Speaker 11: I don't think so. My view is that we're going
Speaker 11: to see a bumpy landing. And by that, I mean,
Speaker 11: let me take a step back and say, you know
Speaker 11: that there's this school of thought beliefs that believes we're
Speaker 11: going to get a soft landing. We're even hearing it
Speaker 11: from giannet Yellen, and I understand the rationale behind it,
Speaker 11: but I would say that a soft landing assumes there's
Speaker 11: very little damage, and I think we will see some
Speaker 11: significant damage before we see a recovery. We've seen a
Speaker 11: you know, significant tightening and credit conditions. Things like that
Speaker 11: don't happen without some kind of damage to the economy.
Speaker 11: I think we'll avoid a recession, but will certainly feel
Speaker 11: some pain, you.
Speaker 2: Know, just thinking about that, and you know, when does
Speaker 2: actually ultimately we see the whole bond market start to
Speaker 2: price and perhaps beyond what we're looking at the moment
Speaker 2: in terms of the longer end, and start to actually
Speaker 2: properly rely I suppose uninverting as it were.
Speaker 11: Well, I think that could start to happen soon. We've
Speaker 11: seen a real stubborn pattern thus far, but that could
Speaker 11: certainly start to happen soon. I think the real issue, though,
Speaker 11: is that we do have a significantly long lag typically
Speaker 11: between when monetary policy is enacted and when it shows
Speaker 11: up in the economy. And so long as we have
Speaker 11: you know, a fair level of policy uncertainty about when
Speaker 11: the FED is going to high rates, we are unlikely
Speaker 11: to see a lot of movement. I think as we
Speaker 11: get closer to greater clarity, that's when we could see
Speaker 11: an unwind begin. But I do believe both the bond
Speaker 11: and the stock market will start to discount recovery. I
Speaker 11: think that'll that will begin. The discounting process should happen soon.
Speaker 11: I think we'll actually start to see a recovery in
Speaker 11: the back half of twenty four.
Speaker 3: Christine, I'd like to get your view on what's going
Speaker 3: on in China right now in the degree to which
Speaker 3: a weak economy there is really going to hold back
Speaker 3: global growth in a significant way for the foreseeable future.
Speaker 3: Is that a fair statement.
Speaker 11: Well, I think you have to ask the question what's
Speaker 11: come first, the chicken or the egg, because if we
Speaker 11: look at the Chinese economy, yes, certainly there are headwinds
Speaker 11: because the economy didn't get the kind of fiscal stimulus
Speaker 11: we saw given out in Western developed countries during the pandemic.
Speaker 11: So that has certainly held back the Chinese economy from
Speaker 11: a robust reopening. But if we look at the data,
Speaker 11: services is still fairly good. Where we've seen really the
Speaker 11: pain is manufacturing, and that really reflects the global slowdown
Speaker 11: that was caused by Western developed central banks. So the
Speaker 11: Chinese economy in at least some respects reflecting that global
Speaker 11: slowdown as opposed to contributing to it. Now we could
Speaker 11: see going forward if we don't get the If China
Speaker 11: doesn't get the adequate policy stimulus, it needs the targeted stimulus,
Speaker 11: then that could be problematic. Thus far, though, I've liked
Speaker 11: this slow drip and I think it could continue.
Speaker 3: Oh, we'll see about that. It's a fresh perspective. I've
Speaker 3: not heard that from anyone that do you like this
Speaker 3: kind of slow rollout of stimulus.
Speaker 11: I'll take what I can get.
Speaker 3: All right, Christina, Always a pleasure. Thank you so much,
Speaker 3: Christina Hooper there. She is the chief Global market strategist.
Speaker 3: Add invescode. This is Bloomberg day Break Asia. You're morning
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