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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: US course CPI posting this smallest back to back gains

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Speaker 1: in more than two years. JP Morgan's strategist David Kelly

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Speaker 1: sees reasons for market optimism. He predicts that inflation will

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Speaker 1: fall to two percent, with or without any further help

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Speaker 1: from the Fed. Kelly also sees more stock rewards for

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Speaker 1: patient investors, and he thinks that bonds will provide a

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Speaker 1: solid capital gain.

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Speaker 3: The bond market overall is better price than it's been

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Speaker 3: for many, many years. I think there is a one

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Speaker 3: time capital gain there as rates come down as people

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Speaker 3: realize the Federal Reserve is going to have to cut rates.

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Speaker 1: Despite Kelly's optimism, the US stock market was on shaky

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Speaker 1: ground today. As you heard there the S and P

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Speaker 1: five hundred flat and giving up a big gain. Traders

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Speaker 1: are betting that even if the Fed pauses in its

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Speaker 1: rate hiking cycle in September, policy will remain tight to

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Speaker 1: prevent an inflation flare up.

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Speaker 2: Now to today's Fed speak, the head of the San

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Speaker 2: Francisco Fed, Mary Daily, was saying today the CPI data

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Speaker 2: came in largely as expected, and that's quote good news,

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Speaker 2: but she told Yahoo Finance the FED has more work

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Speaker 2: to do.

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Speaker 4: It's also consistent with what we believe will be happening,

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Speaker 4: which is that inflation will gradually make its way down,

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Speaker 4: But it is not a data point that says victory

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Speaker 4: is ours and the FED is fully committed to resolutely

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Speaker 4: bringing inflation back down to its two percent target, that is.

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Speaker 2: San Francisco Fedbank President Mary Daily. Now, FED officials are

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Speaker 2: somewhat divided on how to proceed. You got two camps. Basically,

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Speaker 2: one faction has been arguing that the past year and

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Speaker 2: a half of rate hikes that we have seen pretty

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Speaker 2: much done the job. Others, though, are contending that pausing

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Speaker 2: too soon could risk inflation reaccelerating. Now, the FED will

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Speaker 2: see another CPI report and some jobs data before the

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Speaker 2: next meeting that will happen on September nineteenth and the twentieth.

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Speaker 1: Brian, Well, let's go slightly different direction here. Deputy Treasury

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Speaker 1: Secretary Wally Audmo says that an executive order restricting US

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Speaker 1: investments in China will protect national security, and he wants

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Speaker 1: the US to limit the ability of firms to make

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Speaker 1: investments that would help China's military in any way. Admo

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Speaker 1: weighed in on the financial impact of.

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Speaker 5: This executive order.

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Speaker 6: The goal of this executive order is to make sure

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Speaker 6: that we're limiting the ability of financial flows and then

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Speaker 6: know how that often goes alongside those financial flows, to

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Speaker 6: give countries of concern the ability to get around the

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Speaker 6: things that we're trying to prevent them from getting access to,

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Speaker 6: like the most advanced semiconductors.

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Speaker 1: Audmo said the US Treasury will seek input from companies

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Speaker 1: with an interest in the investment order, and separately, we're

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Speaker 1: hearing that the UK is considering whether to follow the

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Speaker 1: US measures. A UK government spokesperson said that the country

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Speaker 1: would continue to assess potential national security risks that are

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Speaker 1: attached to certain investments.

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Speaker 2: Ali Baba has returned to growth across all its main divisions.

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Speaker 2: The story from Bloomberg's Juan Wong in Hong Kong.

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Speaker 7: Ali Baba reported a better than expected fourteen percent rise

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Speaker 7: in revenue in the last quarter, and it comes at

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Speaker 7: a time of economic turbulence in China and after a

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Speaker 7: blistering crackdown on the private sector. Ali Baba now needs

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Speaker 7: to win the hearts and minds of investors to affect

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Speaker 7: a complicated overhaul. The re orc will split the company

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Speaker 7: six ways. The results provide a solid foundation for Ali

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Speaker 7: Baba co founders Joseph Zai and Eddie Wu. They'll take

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Speaker 7: over leadership from Daniel Jong in September. Separately, Ali Baba

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Speaker 7: also warned of constraints on the global supply of AI chips.

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Speaker 7: The company was enabled to fulfill client demands for AI

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Speaker 7: training in Hong Kong, Join Wang Bloomberg day Bragaisia.

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Speaker 1: Meantime, China's securities watchdog is planning to hold a meeting

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Speaker 1: with developers and banks later today. Bloomberg's Bonniao has that

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Speaker 1: story from Hong Kong.

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Speaker 8: The China Securities Regulatory Commission plans to meet with the

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Speaker 8: two sides this morning. It's the latest in a series

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Speaker 8: of attempts by China to revived a property market. Slumping

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Speaker 8: home sales are hurting builders, including Country Garden. But we're

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Speaker 8: told that Country Garden is not among those invited to

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Speaker 8: today's virtual meetup. Country Garden was once the nation's largest

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Speaker 8: it's not the latest focus of China's property was. The

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Speaker 8: meeting today comes after the Pollit Bureau signaled looser policies

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Speaker 8: for the sector at its meeting in July in Hong Kong.

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Speaker 8: I'm Bonnie out Bloomberg Daybreak Asia.

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Speaker 1: I'm Bran Curtis Long with Doug Christner. So, Doug, the

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Speaker 1: market action today suggests that investors are still a little

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Speaker 1: bit more concerned about valuations and the fact that starts

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Speaker 1: that seemed to be overbought recently rather than over sold,

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Speaker 1: and that was more important than the inflation data, which

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Speaker 1: was perceived as positive. Although the numbers did come in

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Speaker 1: more or less as expected, and yet we did see

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Speaker 1: huge gains in the market that were given up by

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Speaker 1: the end of the day. So it shows you that

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Speaker 1: the market kind of moves and grooves on its own

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Speaker 1: sort of thinking.

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Speaker 2: Most definitely, you're absolutely right. We had very strong gains

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Speaker 2: right out of the gate this morning, and they seem

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Speaker 2: to evaporate as the day went on. Brian. One of

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Speaker 2: the things I thought was interesting today Beijing lifting a

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Speaker 2: ban on group tours to a slew of countries. This

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Speaker 2: is going to include the US, the UK, Australia, South Korea,

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Speaker 2: and Japan. Maybe it's going to test the demand of

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Speaker 2: overseas travel from what had been one of the world's

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Speaker 2: biggest sources of tourists, that being China.

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Speaker 1: My take on this story is that it's not all

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Speaker 1: that great for domestic consumption in China. It's not going

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Speaker 1: to lift the economy too much because this is more

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Speaker 1: about outbound tourism. It's going to be a very big

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Speaker 1: deal for global tourism, and it's good for the countries

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Speaker 1: those five countries that were highlighted in this, but Chinese

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Speaker 1: travelers were able to go to many other countries around

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Speaker 1: the rest of the world, and it was geopolitics that

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Speaker 1: was stopping this. Now they made a change, and as

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Speaker 1: I put in my story yesterday, why well it wasn't

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Speaker 1: really So it's quite interesting. If it's not going to

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Speaker 1: help the domestic economy all that much, why do it?

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Speaker 1: And I think there are some other things working here

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Speaker 1: behind the scenes that become very interesting.

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Speaker 2: You want to speculate on what those may be.

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Speaker 1: Well, I think it's obvious that the US and China

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Speaker 1: are trying to repair the relationship, and this may be

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Speaker 1: part of that. With the West China's standing on the

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Speaker 1: global stage, it may not like the direction that it's taken,

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Speaker 1: and this might be one small way to sort of

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Speaker 1: write a perceived wrong in that China had been constraining

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Speaker 1: travelers from going to those places in some ways.

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Speaker 2: Also today we should point out, and I think you

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Speaker 2: mentioned this earlier, this meeting in Beijing today with the

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Speaker 2: securities regulator trying to solve the problem that has existed

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Speaker 2: in the real estate market. This could be an important development.

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Speaker 1: It could be It'll be interesting to see what comes

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Speaker 1: out of it, and if we learn what comes out

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Speaker 1: of it. And it's just yet another attempt that follows

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Speaker 1: on from the Politburo meeting in July, yet another attempt

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Speaker 1: to tinker at the edges of the property market, other

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Speaker 1: than coming in with just massive steam that's like really

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Speaker 1: dropping interest rates and such, tinkering with ways to make

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Speaker 1: some improvements there. So it'll be interesting to watch that meeting.

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Speaker 1: It's supposed to be this morning our time here in Asia,

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Speaker 1: so we may even get some dribs and drabs before

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Speaker 1: we wrap up the program later on. All right, now

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Speaker 1: it's time for global news crews on Maui are spreading

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Speaker 1: out after the burn area of the devastating wildfires has spread,

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Speaker 1: and they're calling the search and rescue there. Let's get

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Speaker 1: to Ed Baxter, who can clarify this for us ED.

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Speaker 9: What's the latest, Yeah, Brian, the death toll has jumped

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Speaker 9: out at least thirty six. Adam wintrob of Emergency Management

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Speaker 9: says it is a very grim task.

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Speaker 10: We've got a fairly large burned area that the search

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Speaker 10: and rescue teams still need to explore and let's see

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Speaker 10: whether there's static survivors in those areas. We do fear

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Speaker 10: that there may be additional casualties.

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Speaker 9: Yeah, And Lieutenant Governor Sylvia Lukes as the state is

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Speaker 9: trying to take care of residents now and then look

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Speaker 9: into the future.

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Speaker 5: Damage to the infrastructure. It's not just buildings. I mean,

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Speaker 5: these were small businesses that invested in Maui. These were

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Speaker 5: local residents, and you know, we need to figure out

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Speaker 5: a way to help a lot of people in the

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Speaker 5: next several years.

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Speaker 9: And then there's the ongoing task of getting visitors off

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Speaker 9: the island. Today, one hundreds slept at the airport waiting

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Speaker 9: to get out, and Wintraub says the state is suggesting

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Speaker 9: people not try to get in.

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Speaker 10: Recommendation from the state has been avoid unnecessary travel to Maui.

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Speaker 10: If you've got a vacation planned here it's going to

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Speaker 10: be a very different situation under the conditions that we

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Speaker 10: have in place now when we planned.

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Speaker 9: The trip, and President Joe Biden says the military is

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Speaker 9: even in.

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Speaker 11: I've ordered all available federal assets on the island, including

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Speaker 11: the US Coast Guard, the Navy Third Fleet, and the

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Speaker 11: US Army to assist local emergency response crews along with

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Speaker 11: the Hawaiian.

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Speaker 9: National Yeah, but even getting relief money could be a

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Speaker 9: heavy left Bloomberg's Gregory Corte.

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Speaker 12: And so the small number can really throw a wrench

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Speaker 12: into the works, as we saw with the dead limit

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Speaker 12: debate that we just went through. And this was already

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Speaker 12: going to be a difficult budget season as we go

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Speaker 12: into the end of the fiscal year at the end

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Speaker 12: of October or at the end of September beginning of October.

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Speaker 9: So on the island still hotspots seem to be more

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Speaker 9: in the south end now near Kihe, so the major

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Speaker 9: tourist areas of the island have been affected. Typhoon Canan

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Speaker 9: is being felt and sold, and across the border in

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Speaker 9: North Korea's Pyeongyang, maximum wind speeds have weakened a bit

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Speaker 9: seventy two kilometers per hour, but still strong enough to

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Speaker 9: cause disruption. The US National Oceanic and Atmospheric Administration NOAH,

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Speaker 9: saying the odds of an intense hurricane season are growing

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Speaker 9: day by day. Troops have deployed across Ecuador to enforce

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Speaker 9: the state of emergency as six people accused of plotting

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Speaker 9: against the presidential Canada Fernando via Vesindio are due to

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Speaker 9: appear before a judge. The Justice to Apartment of the

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Speaker 9: US has met his deadline for submitting suggested trial date

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Speaker 9: for its election case against former President Trump. Bloomberg's Nancy

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Speaker 9: Lyons has details.

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Speaker 13: The Justice Department is proposing the jury trial begin on

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Speaker 13: January second, of twenty twenty four. That would fit with

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Speaker 13: Special Counsel Jacksmith's request for a speedy trial. Now the

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Speaker 13: clock is ticking on the Trump team to offer its request,

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Speaker 13: which is due August seventeenth. Trump's attorneys have already said

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Speaker 13: they'll argue for a longer timeline due to their client's

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Speaker 13: busy political schedule and his other court cases. Once their

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Speaker 13: request is submitted, it'll be up to US District Judge

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Speaker 13: Tanya Chutkin to set an official trial date. At an

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Speaker 13: August twenty eighth hearing in Washington. I'm Nancy Lyons Bloomberg

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Speaker 13: Daybreak Asia.

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Speaker 9: Global News, part of by more than twenty seven hundred

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Speaker 9: journalist and analysts in over one hundred twenty countries. In

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Speaker 9: San Francisco, I'm Ed Baxter and this is Bloomberg.

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Speaker 1: Him Brian Curtis along with Rashad Salamat in London, and

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Speaker 1: our guest is Dana Peterson, Chief Economists stat the conference

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Speaker 1: board to take a close to lite look at the

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Speaker 1: latest USCPI data data. Thank you for taking out the

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Speaker 1: time to be with us. At the end of the day,

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Speaker 1: looking at this report, we still see quite a lot

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Speaker 1: of interest in things like gasoline and rents and wages.

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Speaker 1: How do you see those moving over the next few

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Speaker 1: critical months.

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Speaker 14: Well, we believe that gasoline prices could tick up a

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Speaker 14: little bit. Certainly, we know that Saudi Arabia is cut

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Speaker 14: back on its production of crude oil and that affects

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Speaker 14: global energy prices and consequently gasoline. But certainly gasoline prices

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Speaker 14: are well below last year's level, so that certainly is

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Speaker 14: providing a boon or rather some relief for consumers. When

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Speaker 14: we think about rents, rents are the biggest part of

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Speaker 14: inflation and actually they are poised to start falling off.

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Speaker 14: And we know that because if you look at home

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Speaker 14: prices and you lag that by about eighteen months, it

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Speaker 14: pretty much does a very good job of telling you

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Speaker 14: where rents are headed. So we're going to get really

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Speaker 14: unrelentsed on rents over the next few months.

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Speaker 15: Now you've got push and pull inflation. We don't seem

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Speaker 15: to much to have much of the wage sort of

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Speaker 15: inflation that we had. It was more intention wasn't it

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Speaker 15: this time last year.

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Speaker 14: Yes, wage pressures are less intense compared to last year,

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Speaker 14: but they're still rising very aggressively. We're looking at wages

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Speaker 14: in the four percent range. Before the pandemic, wages were

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Speaker 14: below three percent. We barely even got to two percent

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Speaker 14: wage growth. So this is quite rapid. And even when

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Speaker 14: we ask CEOs what they're thinking about in terms of wages,

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Speaker 14: they still think they need to raise wages by three

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Speaker 14: to five percent over the next twelve months because they

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Speaker 14: think the labor market is still going to be tight

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Speaker 14: and they're going to have difficulty finding qualified workers and

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Speaker 14: keeping workers as well.

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Speaker 1: Dana. In the broadest sense, inflation is coming down faster

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Speaker 1: than growth is, and that would seem to be a

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Speaker 1: good formula for the US economy. Do you see it

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Speaker 1: that way?

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Speaker 14: Well, certainly, headline inflation is falling pretty rapidly. That's because

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Speaker 14: gasoline prices again are lower this year compared to last year,

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Speaker 14: and food prices are not rising as precipitously as they were.

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Speaker 14: But when you look at inflation less food and energy

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Speaker 14: we call that the core, it's still very elevated. It's

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Speaker 14: around four percent, and that's very far away from two percent.

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Speaker 14: So it's hard to imagine that that's a good enough

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Speaker 14: reason for the FED to stop raising rates at this point.

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Speaker 15: With the job market where it is, and you know

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Speaker 15: where inflation is now and where the FED is with rates.

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Speaker 15: So does this mean there's likely to be no landing.

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Speaker 14: Well, we're not in the quote quote soft landing camp.

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Speaker 14: We actually think there might be a recession. Why because

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Speaker 14: monetary policy takes a while to filter through the entire economy.

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Speaker 14: It's called long and variable lags. And certainly when the

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Speaker 14: interest rates started rising, the housing market reacted first. But

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Speaker 14: now we need to see it filter through what businesses

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Speaker 14: do in terms of investments and also labor markets, and

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Speaker 14: then what consumers are doing. So we know consumers are

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Speaker 14: buying fewer durable goods because financing is elevated, and when

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Speaker 14: we look at services, they're shifting services away from things

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Speaker 14: that they want and luxury items to more things that

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Speaker 14: they need. So all that has to continue to filter

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Speaker 14: through the economy. And that's not a hard landing, but

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Speaker 14: it certainly isn't a soft landing. It's something in between,

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Speaker 14: which we're calling it a short and shallow recession.

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Speaker 1: Dana, thanks so much for joining us. Stana Peterson, Chief

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Speaker 1: economist at the Conference Board. This is Bloomberg Daybreak Asia,

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