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Speaker 1: Good morning.

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Speaker 2: I'm Richard Salami and I'm Doug Prisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: The in battled developer Country Garden It's warning that it

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Speaker 1: may default after reporting a record first half loss that

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Speaker 1: begs bonni Ou as more.

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Speaker 3: The Chinese developer has reported a loss of almost seven

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Speaker 3: billion dollars. Country Gardens said it may go into default

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Speaker 3: if financial performance deteriorates further. The warning highlights how China's

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Speaker 3: deepening real estate crisis has spattered one of its property giants.

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Speaker 3: Country Garden acknowledged that it didn't adopt timely measures to

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Speaker 3: deal with the slowdown. It also failed to recognize the

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Speaker 3: risks of its heavy reliance and lower tier property markets.

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Speaker 3: Country Gardens said it continues to negotiate with bond investors

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Speaker 3: and banks to extend debt maturities to keep it afloat.

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Speaker 3: In Hong Kong, I'm Bonnie Al Bloomberg Daybreak Asia.

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Speaker 2: Later today in China will get the official p MII

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Speaker 2: numbers and they probably will indicate a deterioration right across

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Speaker 2: the board for the month of August. We have more

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Speaker 2: from Bloomberg's Juan Wong.

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Speaker 4: China Services PMI are expected to fall close to a

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Speaker 4: level that would indicate shrinking activity. A post pandemic. Search

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Speaker 4: and service activity had been the main prop to the recovery,

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Speaker 4: but that appears to be running out of steam and

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Speaker 4: some help maybe on the horizon. China Central Bank is

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Speaker 4: strafting preliminary policies to give private businesses better access to

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Speaker 4: funding to boost economic growth in Hong Kong and join

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Speaker 4: Wang Bloomberg Day Brigasia.

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Speaker 1: Now, China's said to improve the first batch of generative

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Speaker 1: artificial intelligence services for public roll out as soon as

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Speaker 1: this week. We hear this Cyberspace Administration of China will

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Speaker 1: soon give the green light a handful of firms, and

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Speaker 1: we're told that the search leader Baidu will be among

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Speaker 1: the first to win approval for its AI models. The

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Speaker 1: move does mark a milestone for China's AI industry and

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Speaker 1: it will allow the country to develop services capable of

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Speaker 1: competing with the likes of Microsoft and Apple's oh Erse

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Speaker 1: Alphabet's Google.

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Speaker 2: Well, we want to talk about what's happening in the

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Speaker 2: US banking complex today because because federal regulators are ramping

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Speaker 2: up demands for corrective action by some regional banks. The

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Speaker 2: story from Bloomberg's and Kate's.

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Speaker 5: The Federal Reserve has issued a slew of private warnings

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Speaker 5: to lenders with assets of one hundred billion to two

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Speaker 5: hundred and fifty billion dollars, including Citizens Financial Group, Fifth

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Speaker 5: Third and M and T Bank. The wide ranging notices

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Speaker 5: have touched on everything from the financial institution's capital and

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Speaker 5: liquidity to their technology and compliance. Examiners are looking for

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Speaker 5: other signs of stress and the system already strained by

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Speaker 5: the collapse of three banks, and it is part of

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Speaker 5: a wider increase in scrutiny impacting lenders of all sizes

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Speaker 5: in Washington and Kate's Bloomberg day Break Asia.

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Speaker 1: All right, let's have a look at what's begging in

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Speaker 1: an Apple in its manufacturing process and how it's perhaps

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Speaker 1: a changing how some of its devices are right so

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Speaker 1: they constructed or made he is Bloomberg's tom busby.

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Speaker 6: Apple is now testing out the use of three D

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Speaker 6: printers to make the steelcasings for some of it soon

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Speaker 6: to be released smart watches, a procedure that would reduce

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Speaker 6: the time it takes to build some gadgets and use

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Speaker 6: a lot less raw materials. Now, if the current work

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Speaker 6: on Apple watches goes. According to plan, Apple could look

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Speaker 6: to expand the process to even more devices in the

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Speaker 6: next several years. At Apple spokesperson declined to comment. Tom

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Speaker 6: Busby Bloomberg Daybreak Asia.

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Speaker 2: After the closing bell Here in the US, Salesforce gave

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Speaker 2: a forecast for both revenue and profit for the current

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Speaker 2: quarter above Street estimates. The story now from Bloomberg's Charlie Pellett,

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Speaker 2: it signals progress in its campaign to cut costs following

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Speaker 2: involvement by activist investors. Over the past year, Sales Forces

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Speaker 2: the market leader in software that helps companies manage their

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Speaker 2: customer relations. It has been narrowly focused on expanding its

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Speaker 2: profit margins, a campaign that was hastened earlier this year

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Speaker 2: by the emergence of multiple activist investors in New York.

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Speaker 2: Charlie Pellette Bloomberg Daybreak Asia. Well I mentioned a little

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Speaker 2: while back that another batch of economic numbers here in

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Speaker 2: the US points to moderation in the American economy. First,

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Speaker 2: USGDP revised lower for Q two an annualized rate now

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Speaker 2: of two point one percent. That adjustment does reflect more

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Speaker 2: moderate business investment, and at the same time today from ADP,

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Speaker 2: the number of American companies adding jobs well fewer than forecast,

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Speaker 2: the fewest in five months. On the positive side, we

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Speaker 2: did have pending home sales unexpectedly move up. If you

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Speaker 2: take a step back and look at the City Group

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Speaker 2: Economic Surprise Index for the US, it extended its plunge

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Speaker 2: below fifty after topping eighty earlier this month. Now, if

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Speaker 2: you don't know, this is a measurement of the data

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Speaker 2: that has been exceeding forecasts. So obviously, now we've got

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Speaker 2: a situation where fewer and fewer numbers are topping estimates.

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Speaker 2: So on balance, everything that we're learning is helping to

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Speaker 2: cement bets on the FED being very very near the

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Speaker 2: end of its tightening cycle. Let's get to Global News next.

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Speaker 2: We've got an updates on Hurricane Adalia, which made landfall today.

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Speaker 2: Dan Schwartzman's here with that.

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Speaker 7: Yeah, did Doug. It's moved into southern Georgia after wreaking

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Speaker 7: havoc in Florida. As of now, hundreds of thousands of

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Speaker 7: Floridians are without power, with more than eighteen hundred flights grounded,

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Speaker 7: and Dahlia coming ashore as a Category three hurricane. Its

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Speaker 7: top winds now though, are down to around seventy five

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Speaker 7: miles an hour. That's barely classified as a Category one HARKing. That's,

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Speaker 7: of course good news. President Biden says he can't deny

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Speaker 7: the science on all these natural disasters.

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Speaker 8: I don't think anybody can deny the impact of a

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Speaker 8: climate crisis anymore. Just look around historic floods, I mean

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Speaker 8: historic floods, more intense droughts, extreme heat, significant wildfires, of course,

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Speaker 8: significant damage.

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Speaker 7: Parts of Florida experiencing flooding, tamp and clear water, seeing

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Speaker 7: waters rise as much as five feet in some areas.

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Speaker 7: Both Visa and Massacard are looking to boot boost the

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Speaker 7: fees that retailers pay when they accept credit and debit cards.

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Speaker 7: Starting in October, online transactions using Visa will have higher fees.

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Speaker 7: Commercial credit, debit, and prepaid card fees are slated to increase.

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Speaker 7: In April to your US, merchants paid a record one

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Speaker 7: hundred and sixty point seven billion dollars in swipe fees.

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Speaker 7: That's an increase of close to seventeen percent from the

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Speaker 7: year prior. The boost and fees is expected that around

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Speaker 7: five hundred million more dollars of costs to retailers. Both

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Speaker 7: Senators Dick Durbin and Roger Marshall now urging both Visa

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Speaker 7: Massacard to withdraw their plans to increase these fees. Both

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Speaker 7: senators have introduced a bill that would enhance competition between

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Speaker 7: credit card networks. Meanwhile, Visa Massacard shares rising to all

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Speaker 7: time highs after the announcement of the fee increases. US

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Speaker 7: officials say they have information that Russia North Korea are

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Speaker 7: negotiating arms deals. The White House says the North would

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Speaker 7: give Russia munitions and other support for its invasion of Ukraine.

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Speaker 7: The two sides are SAENTI have exchanged letters look at

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Speaker 7: increase cooperation with Russian officials, having recently visited Pyongyang. The

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Speaker 7: Biden administration has accused the Russian military and Wagner Mercenary

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Speaker 7: Group of receiving deliveries of North Korea munitions. A federal

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Speaker 7: judge has found Rudy Giuliani liable for defaming two Georgia

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Speaker 7: election workers with voter fraud conspiracies. The former New York

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Speaker 7: City mayor will next face a trial to see whether

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Speaker 7: he will pay damages and if so, how much. US

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Speaker 7: District Judge Beryl Howell also has ordered Juliani to pay

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Speaker 7: one hundred and thirty two thousand dollars to the victims

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Speaker 7: for their legal fees. Giuliani's finances have been a prominent

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Speaker 7: feature in the trial, with a judge saying he has

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Speaker 7: till September twentieth to turnover all financial information that trump.

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Speaker 7: Bali says he will fight any damages and may appeal

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Speaker 7: on the grounds his speech was constitutionally protected. Global News

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Speaker 7: twenty four hours a day, powered by more than twenty

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Speaker 7: seven hundred journalists and analysts in more than one hundred

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Speaker 7: and twenty countries. I'm Dan Schwarzman. This is Bloomberg.

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Speaker 2: Let's bring an Anna Wong. She is Bloomberg chief US economist.

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Speaker 2: We're going to take a look at what's happening in

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Speaker 2: the American economy. Anna joins us from our Washington DC

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Speaker 2: of Bureau, and I think she's on the phone today. Anda,

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Speaker 2: thanks for being with us. Help me understand what's going

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Speaker 2: on with the economy in light of the downward revision

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Speaker 2: in GDP and a pretty soft number today from ADP.

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Speaker 9: Revision really is the theme of what's going on with

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Speaker 9: US statistics right now. So we saw today that GDP

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Speaker 9: growth for the second quarter was revised down by thirty bits.

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Speaker 9: And you know, I recalled that when the second quarter

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Speaker 9: GDP came out it exceeded expectations, But with this revisions,

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Speaker 9: it basically means that in fact GDP growth was was

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Speaker 9: at or below expectations ADP number. I wouldn't put too much,

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Speaker 9: you know, weight on it. However, it's still consistent with

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Speaker 9: the themes that a lot of the growth activity data

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Speaker 9: for the US economy in real time was actually stronger

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Speaker 9: than what after all the revisions are done is showing.

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Speaker 9: So US economy is weaker than it looks.

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Speaker 1: Yeah, and what about the jolt state that was a

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Speaker 1: bit weak than nine three, but still pretty strong. Let's

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Speaker 1: face it here. And I know that it's not that important,

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Speaker 1: but it's getting more and more. I suppose something more.

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Speaker 1: Eyeba was looking at this.

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Speaker 9: Yeah, So you know, we were skeptical about the adult

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Speaker 9: data from last month because it showed a very tiny

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Speaker 9: little drop. Yet the more reliable indicators for that indicate

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Speaker 9: that the temperature of the labor mark or wages and

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Speaker 9: wages are falling much more sharply. So we had thought

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Speaker 9: that maybe the labor mark was cooling much cooler than

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Speaker 9: what jolts data show is true enough, this week's jobs

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Speaker 9: data did verify that, in fact, there were more decline

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Speaker 9: in jobs opening than it seemed. And furthermore, I would

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Speaker 9: also add that a lot of almost half of these

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Speaker 9: jobs eight point eight million jobs opening are by small

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Speaker 9: to medium sized businesses, and a lot of the jobs

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Speaker 9: openings there are aspirational in our view because a small

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Speaker 9: and medium enterprises in US have been facing a search

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Speaker 9: in bankruptcy rates, and I just don't think that those

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Speaker 9: a lot of those job openings are real.

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Speaker 2: So we're talking a lot about the evidence of economic softening.

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Speaker 2: Are a little bit of weakness that is entering into

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Speaker 2: the story. But I'm curious and to get your take

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Speaker 2: on what that means for inflation, because tomorrow here in

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Speaker 2: the States, we're going to get to the pce number,

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Speaker 2: and this is one of the Fed's favorites, right.

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Speaker 9: And well, yeah, tomorrow and the PCEE is likely to

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Speaker 9: show that Powell's favorite indicator, which is the supercore or

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Speaker 9: services core services excluding housing, actually accelerated in July to

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Speaker 9: zero point five percent. That is really high. You know,

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Speaker 9: that is like more consistent with inflation at five percent

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Speaker 9: than at two percent. So that is certainly discouraging. However,

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Speaker 9: we argue that that acceleration is driven by singularly by

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Speaker 9: a very volatile component, which is portfolio management category, which

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Speaker 9: basically tells me nothing about true inflation. So the hope

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Speaker 9: here is that the Fed does look through this high

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Speaker 9: supercore number as it is driven by a very valatile factor,

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Speaker 9: and not put too much weight on this.

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Speaker 1: Of course, we got up to Friday, we've got the

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Speaker 1: non found pay rolls report, but I mean even up

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Speaker 1: to now, I mean, what's your take. Is the general

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Speaker 1: feeling out there that the Fed is, well, they're done

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Speaker 1: for this year? Probably?

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Speaker 9: Yeah, I think after Jackson Hole, Right after Jackson Hole

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Speaker 9: more people were in the campus. The Fed still has

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Speaker 9: one more hike in them. Because powell speech just on

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Speaker 9: the service seems very hawkish, But our interpretation has always

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Speaker 9: that been that Powell is just steadily dubvish. He talks

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Speaker 9: about how real rates are in fact quite restrictive, and

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Speaker 9: the thing is we are being more significant cooling in

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Speaker 9: the labor market, and certainly this week's data reinforce that

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Speaker 9: subtly dubvish message and empowers Jackson's whole speech.

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Speaker 2: So if the labor market is softening. I wonder how

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Speaker 2: that may translate into some of the consumer data we're

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Speaker 2: getting tomorrow, which would include personal spending and income. Is

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Speaker 2: there an expectation now that people are going to begin

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Speaker 2: spending less and maybe we see incomes starting to at

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Speaker 2: least maybe remain steady.

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Speaker 9: Yeah, So on the income component, it's coming down, right,

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Speaker 9: because the labor market is softening and people have less

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Speaker 9: bargaining power, So wage growth and income growth is cuting down. Now,

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Speaker 9: whether consumption will come down as well? Well, that is

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Speaker 9: what's interesting about the US consumer, because the typnical US

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Speaker 9: consumer keeps spending money, spending money that they don't have.

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Speaker 9: Even I think tomorrow's report is likely going to show

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Speaker 9: that July spending was super robust, and that's partly because

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Speaker 9: people are spending on Barbon Timer, on Taylor's Slip concert,

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Speaker 9: on Beyonce concert, and basically people are exhausting the financial resources.

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Speaker 9: And I personally think that we are going to see

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Speaker 9: a very weak Q four consumption because people have overspent.

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Speaker 1: Yeah, apparent, I think apparently, And that we are looking

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Speaker 1: at another eight and a half billion dollars added to

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Speaker 1: GP in the third quarter really because of because of

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Speaker 1: Bobby Hammond and those of the factors that you mentioned here.

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Speaker 1: But you know our consumers spending, right, you know after

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Speaker 1: this there was that spending that they brought forward.

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Speaker 9: In your view, well, I think they if we did

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Speaker 9: not have these four cultural phenomena, these consumers would not

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Speaker 9: be spending because this is at their spending at a

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Speaker 9: time where delinquency rate on auto loans were spiking. On

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Speaker 9: credit cards, we're spiking, they should be hunkering down. So

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Speaker 9: I just think that the typical American consumer is not

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Speaker 9: one that's gifted with foresight.

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Speaker 2: So I'm going to imagine then, based on what you're saying,

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Speaker 2: that the light vehicle sales data that we're going to

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Speaker 2: have on Friday is going to be soft as well.

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Speaker 9: Yes, that's my assumption, and that's driven by rising auto rates.

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Speaker 9: You know, the average interest rate on a used car

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Speaker 9: is thirteen percent now and that's super high. And also

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Speaker 9: we are seeing surging rejection rate for auto loans applications,

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Speaker 9: meaning it's harder for people get to get to qualify

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Speaker 9: for financing. Hanss drop up in autos.

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