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Speaker 1: Good morning.

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Speaker 2: I'm Doug Chrisner and I'm Brian Curtiz. Here are the

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Speaker 2: stories we're following today. US inflation cooled sharply last month.

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Speaker 2: It offers some new hope that the FED will soon

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Speaker 2: wrap up the most aggressive interest rate hiking campaign in decades,

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Speaker 2: but former New York FED President Bill Dudley says the data,

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Speaker 2: this latest data won't stop the FED from hiking in July.

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Speaker 3: They're looking at the totality of the data of the

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Speaker 3: last three months going to the July meeting, and the

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Speaker 3: reality is that commy is still doing quite well. The

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Speaker 3: economy really hasn't slowed down enough to make the FIT

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Speaker 3: confident that they're going to see that slack of all

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Speaker 3: air work that they want.

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Speaker 2: Fed officials will take into account upcoming readings on producer prices,

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Speaker 2: inflation expectations, and also retail sales before their next policy decision.

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Speaker 2: The FED does meet next on July twenty fifth and

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Speaker 2: twenty sixth.

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Speaker 4: Well, speaking today, if you look at the FED speak

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Speaker 4: it appears that a number of officials are poised to

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Speaker 4: resume those rate hikes. We heard today from the head

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Speaker 4: of the Richmond FED. He's Tom Barkin. He said that

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Speaker 4: growth in US consumer prices is still too quick, even

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Speaker 4: though it did slow in the month of June, and

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Speaker 4: mister Barkin went on to say, if you back off

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Speaker 4: too soon in terms of rate hikes, inflation will come

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Speaker 4: back strong. We also heard today from the head of

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Speaker 4: the Minneapolis Fed, Neil Kashgari. He said banks must be

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Speaker 4: prepared in case Fed officials need to tighten policy further.

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Speaker 2: If inflation proves more entrenched than expected, policy rights might

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Speaker 2: need to go higher, which could further reduce asset prices,

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Speaker 2: increasing pressure on banks.

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Speaker 4: That is Neil Kashkari, the head of the Minneapolis Fed.

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Speaker 4: He went on to say that increasing bank resilience could

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Speaker 4: help minimize risk if high inflation is persistent, and he

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Speaker 4: said supervisors could insure banks preparedness with high inflation stress

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Speaker 4: test to identify those banks most at risk.

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Speaker 2: Brian to Corporate News, Walt Disney has extended the contract

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Speaker 2: of CEO Bob Eiger for another two years. The story

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Speaker 2: from Bloomberg's Charlie Pellett.

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Speaker 1: It gives the longtime executive more time to implement his

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Speaker 1: turnaround and find a successor. Under the new arrangement, Iiger

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Speaker 1: will remain CEO through December thirty first of twenty twenty six.

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Speaker 1: The seventy two year old Iiger returned to run the

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Speaker 1: entertainment giant in November, after previously serving as CEO for

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Speaker 1: fifteen years. At the time, he was given a two

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Speaker 1: year deal expiring in December of twenty twenty four. Disney

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Speaker 1: made the announcement while Iger was attending the annual Allen

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Speaker 1: and Company conference in Sun Valley, Idaho. In New York,

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Speaker 1: Charlie Pellet Bloomberg Daybreak Asia, we.

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Speaker 4: Go next to the semiconductor's space and Vidia is said

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Speaker 4: to be in talks to join a list of investors

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Speaker 4: in the IPO of ARM Limited. Now you may know

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Speaker 4: that ARM is the British chip designer backed by Japan's SoftBank.

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Speaker 4: We have more from Bloomberg savon Men.

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Speaker 5: We're told the IPO backers will not be finalized until

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Speaker 5: the offering gets underway in the fall. The Financial Times

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Speaker 5: reported that in Video was seeking to invest at evaluation

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Speaker 5: of thirty five to forty billion dollars. That's lower than

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Speaker 5: the eighty billion that Soft Bank wants. Nvidia is a

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Speaker 5: longtime partner and client of ARM, and tried to acquire

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Speaker 5: it last year after the deal unraveled, soft Bank embarked

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Speaker 5: on plans for an arm IPO. The Tokyo firm bought

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Speaker 5: arm back in twenty sixteen with hopes of regaining its

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Speaker 5: own footing after losing billions of dollars on startup investments. Now,

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Speaker 5: SoftBank founder Masayoshi's son hopes the arm IPO can be

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Speaker 5: the largest ever by a chip company, and bringing in

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Speaker 5: anchor investors could be a big help. In Taipei, I'm

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Speaker 5: ivon Mann Bloomberg day Break Asia.

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Speaker 2: Chinese Premier Lee Chiang has met with senior executives from

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Speaker 2: the leading tech companies in the country. More from Bloomberg's

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Speaker 2: Juan Wong in Hong Kong.

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Speaker 6: This could be a signal that Beijing is ending is

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Speaker 6: crackdown on the tech industry. The meeting included executives from

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Speaker 6: Chinese tech firms Ali Baba, Bike Dance, and May Twan

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Speaker 6: CCTVs has premierly urged local governments to provide more support

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Speaker 6: to internet firms, calling them trailblazers of the era. He

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Speaker 6: also pushed the companies to support the real economy through innovation.

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Speaker 6: The hope is to bolster the Chinese economy without the

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Speaker 6: use of major stimulus and other examples. The Chinese government

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Speaker 6: recently urged banks to extend loan relief to developers, and

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Speaker 6: President Chi ching Ping called for more foreign cooperation in

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Speaker 6: areas including trade and investment in Hong Kong and Joanne

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Speaker 6: Wong Bloomberg Day Brick Asia.

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Speaker 2: I'm Brian Curtis along with Doug Christner and Doug In

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Speaker 2: addition to the premiers meeting, you also had the NDRC

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Speaker 2: praising tech companies yesterday, which is pretty unusual for that

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Speaker 2: sort of entity. It praised ten Cent, May Twan, Ali Baba,

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Speaker 2: and it shows that the policymakers now are looking at

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Speaker 2: other ways of stimulating the economy outside of just monetary

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Speaker 2: and fiscal support.

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Speaker 4: And look at the Nasdaq Golden Dragon China Index in

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Speaker 4: the US today, Brian jumping four percent and a call

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Speaker 4: from Goldman Sachs the firm strategists see China stocks as

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Speaker 4: investible right now. We've talked on this program about obvious

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Speaker 4: political risk, whether it's geopolitical or regulatory, along with the

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Speaker 4: loss of economic momentum in China. Now many in the

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Speaker 4: market have asked this question we have on this program

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Speaker 4: as well. Are Chinese stocks investible well? The answer, according

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Speaker 4: to Goldman right now is a clear yes, given the

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Speaker 4: fact that these risks essentially been priced in now. Goldman

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Speaker 4: seemed to plug in a few assumptions here over the

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Speaker 4: next twelve months. One is that the economy will grow

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Speaker 4: in real terms in terms of GDP at a rate

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Speaker 4: of around four point seven percent, and geopolitical tensions will

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Speaker 4: kind of assume a three year average, so no real surprises.

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Speaker 2: There are really a lot of doubters though these stocks

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Speaker 2: are down so much. We've often mentioned that companies like

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Speaker 2: ten Cent in Ali Baba, they are really not quite

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Speaker 2: the same companies they used to be, and ali Baba

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Speaker 2: for instance, still down even after the rallies of late,

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Speaker 2: still down about seventy percent, So you'll know that's what

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Speaker 2: makes a market. There will be people who will say

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Speaker 2: it's worth the risk. Others will say, we know what

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Speaker 2: the policymakers are like, and we know that they don't

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Speaker 2: support these types of Internet giants, the monsters like may

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Speaker 2: Twan like ten Cent and Ali Baba, so it'll be

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Speaker 2: interesting to watch that one. I wanted to make a

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Speaker 2: quick line here or comment on the inflation numbers, because

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Speaker 2: obviously we're leading off with that I like the line

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Speaker 2: in one of our stories, too early to pop the champagne,

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Speaker 2: but start chilling the bottle. The only thing is particularly

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Speaker 2: with us on this program talking to investors, is we

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Speaker 2: need to probe the bouncers to see if the guests

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Speaker 2: have already vibed too much. The Nastak one hundred to

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Speaker 2: that point, the Nasdaq one hundred, with the gains today

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Speaker 2: now up forty percent here to date.

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Speaker 4: I don't think you can argue with this move that

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Speaker 4: we had across the Treasury curve today at the short

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Speaker 4: end of twelve basis points to the downside at four

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Speaker 4: seventy four at the long end word three eighty five

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Speaker 4: right now, so the market's convinced that the FED is

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Speaker 4: nearly going to wrap up this project of tightening.

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Speaker 2: It depends I guess what happens with Core CPI four

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Speaker 2: point eight percent is down definitely from where we were

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Speaker 2: a year ago, but it's not down that much and

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Speaker 2: it's not down as much as the FED wants. So

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Speaker 2: although that three percent handle sounds great for headline CPI,

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Speaker 2: the four point eight percent on a year to date

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Speaker 2: number four Core is simply not good enough. Lots to

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Speaker 2: talk to our guests about and coming up as the

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Speaker 2: first guest on the program this morning. In a few minutes,

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Speaker 2: we'll be chatting with Ben Emmons, senior portfolio manager at

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Speaker 2: New Edge Wealth. Now it's time for Global News. NATO

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Speaker 2: has offered assurances of long term protections to Ukraine at

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Speaker 2: Baxter with Global News in the San Francisco nine to

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Speaker 2: sixty news room.

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Speaker 7: Head, Yeah, that's right, Brian. This is half of what

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Speaker 7: President vladimerz Alenski wanted and comes after him saying not

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Speaker 7: offering membership or a date thereof quote absurd. Now this

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Speaker 7: came before the meeting.

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Speaker 8: I want to discuss with our partners all these things

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Speaker 8: and the sword will will speak today and fight for this.

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Speaker 8: It's security guarantees for Ukraine on the way to NATO.

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Speaker 7: Now that one he did not get, but after meeting

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Speaker 7: with leaders, including US President Joe Biden, the.

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Speaker 8: Outcome of the need of summit and illness is very

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Speaker 8: much needed and.

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Speaker 9: Meaningful success for Ukraine.

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Speaker 8: And I'm grateful to all leaders in Needo countries who

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Speaker 8: are very practical and I'm presented its support.

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Speaker 7: A change of tone, how saying he feels after the

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Speaker 7: war is over, Ukraine will secure membership. Now, this is

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Speaker 7: the way President Biden sees it.

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Speaker 10: And one thing is ze Lensky understands now is that

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Speaker 10: whether or not he's in and they doo now, he's

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Speaker 10: not relevant as long as he has the commitment that

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Speaker 10: remember my talking about saying retreated like guarantee security along

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Speaker 10: with a number of other NATO countries of the day,

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Speaker 10: how we deal with for example, is long tournament. So

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Speaker 10: he's not concerned about.

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Speaker 7: That man now, NATO General Secretary Jan Stoltenberg.

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Speaker 1: Ukraine is not closer to NATO than ever before.

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Speaker 11: Allies reaffirmed that Ukraine will become a member of the Alliance.

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Speaker 7: Yes, saying Ukraine will get memberships so that Russian history

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Speaker 7: does not repeat itself. Overall, Today, airlines remains a bulwark

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Speaker 7: of global security instability, as has been for more than

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Speaker 7: seven decades. NATO is stronger, more energized, and yes, more

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Speaker 7: united than ever in its history. Meanwhile, the White House

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Speaker 7: has issued a statement condemning North Korea's test of a

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Speaker 7: long range ballistic missile, calling it a brazen violation of

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Speaker 7: multiple US Security Council a UN Security Council resolutions. Meanwhile,

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Speaker 7: North Korea calls a test a warning of shocking consequences

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Speaker 7: for spy planes flying near North Korea airspace. The ice

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Speaker 7: dBm are the most powerful in its arsenal. FBI director

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Speaker 7: Christopher Ray has told the congressional hearing today that it

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Speaker 7: will comply with a federal judges order banning it from

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Speaker 7: communicating with social media companies about misinformation, although Ray says

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Speaker 7: it may impact effectiveness of catching foreign adversaries.

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Speaker 12: The thousands of active investigations we now have into the

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Speaker 12: Chinese government's efforts to steal our most precious secrets, rob

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Speaker 12: our businesses of their ideas and innovation, and repress freedom

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Speaker 12: of speech right here in the United States.

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Speaker 7: And the US as hackers have breached a series of

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Speaker 7: email accounts linked to government agencies in the US and

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Speaker 7: Western Europe. The government Microsoft described the attackers as being

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Speaker 7: based in China. Global News powered by more than twenty

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Speaker 7: seven hundred journalists and analysts in over one hundred twenty countries.

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Speaker 7: In San Francisco, I'm Ed Baxter. This is Bloomberg.

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Speaker 4: Let's take a look now at what's going on these

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Speaker 4: days in market action with our guest Ben Emmons. He

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Speaker 4: joins us in the Bloomberg Interactive Broker studio in New York.

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Speaker 4: Ben is senior portfolio manager at New Edge Wealth. Thanks

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Speaker 4: for being with us. Let's begin by looking at the

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Speaker 4: inflation story here in the US. People were really celebrating

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Speaker 4: this reading on the CPI, both on the headline and

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Speaker 4: the core rate coming in a little bit below estimates.

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Speaker 4: Do you think it's enough to say that the Fed

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Speaker 4: is has succeeded, that it's won the fight, and okay,

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Speaker 4: we get another twenty five basis points this month, but

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Speaker 4: we're kind of going to be on pause indefinitely.

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Speaker 11: I don't think it definitely dug, but it is definitely

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Speaker 11: moving in the right direction.

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Speaker 9: And then so if you look at that month to

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Speaker 9: month change in.

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Speaker 11: The core services X housing number, that's particularly what you

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Speaker 11: want to look at because that's what the FED is

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Speaker 11: most worried about. That month of month was about point

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Speaker 11: two five percent, I believe, a lot lower than what

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Speaker 11: people had thought. And it's coming off about point five

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Speaker 11: early in this year. So it's in a nice to

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Speaker 11: send down. And I think if we continue to see

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Speaker 11: lower prints though in that particular item, which is really

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Speaker 11: where the heat of the economy currenty is right, it's

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Speaker 11: all in services and other related sort of ancillary services.

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Speaker 11: Then we'll read and tracked to see the inflation getting

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Speaker 11: from core infation back from four and change to readly

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Speaker 11: towards the fat's target. So it's good progress. The FAED

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Speaker 11: is basically being vindicated of what they did was the

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Speaker 11: right thing. And I think the bomb market is given

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Speaker 11: and fed a lot of credibility today by saying yes,

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Speaker 11: rags can now can go down in the future.

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Speaker 9: That's why I saw the movie yields.

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Speaker 11: On the other hand, they're not exactly done, and you know,

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Speaker 11: both Barking and Cascarry were quite clear about it. I

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Speaker 11: called it like they want to manage the expectations to

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Speaker 11: the finish line. They want to make sure that these

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Speaker 11: expectations are not going to suddenly become and get a

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Speaker 11: bit higher, right, And that's been the seventies problem, and

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Speaker 11: when they ease too quickly and inflation expectations started to

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Speaker 11: break up again.

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Speaker 2: So you know, there are more hawkish investors and also

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Speaker 2: even economists like our own analog who think that inflation

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Speaker 2: will tick back up on a technical base. Is because

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Speaker 2: of the big numbers that we saw a year ago.

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Speaker 2: Those will drop out and then you'll have on a

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Speaker 2: comparison basis a tick up and in any case, like

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Speaker 2: you said it, maybe that the FED wants to go

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Speaker 2: it wants to air on the side of too far.

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Speaker 2: So it's not really the all clear just yet, is

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Speaker 2: that right?

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Speaker 9: No, that's right, Brian.

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Speaker 11: I think that this tick up and inflation, that's it

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Speaker 11: is technical, but it's certainly something about perception of inflation

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Speaker 11: and right how people look at inflation and if it

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Speaker 11: continues to be something that's elevated and higher, you know,

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Speaker 11: that's the that's worry.

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Speaker 9: Like, if you don't lean more against that, then.

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Speaker 11: People have expectations that are basically and this is this

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Speaker 11: conference board number coming out in the next week and

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Speaker 11: a half is a really good sign of that that

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Speaker 11: that one year expectation is at over six percent. But

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Speaker 11: people still expecting really high inflation from here. You know,

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Speaker 11: as long as you don't manage that down further, you

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Speaker 11: will end up again in the future potential but again

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Speaker 11: higher inflation. So this is the Fat's not a conundrum.

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Speaker 11: It's not a dilemma. It's it's more like, this is

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Speaker 11: the risk that they're running. Therefore they stay the course

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Speaker 11: on this and this message of we need to bring

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Speaker 11: inflation really down to two percent, we can't be satisfied

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Speaker 11: at three percent.

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Speaker 4: So with the meeting at the end of the month,

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Speaker 4: is there a risk for Powell, for the FED chairman

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Speaker 4: that he sounds a little too dubbish he wants to

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Speaker 4: kind of adopt a more kind of a hawkish stance

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Speaker 4: just to keep the market on the back foot.

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Speaker 1: Yeah.

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Speaker 11: Probably, I think he will probably give that hockeyish tone.

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Speaker 11: I would think in a way he did recently too

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Speaker 11: in that testimony front of Congress, right and in the

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Speaker 11: following on the minutes, there's that similar tone in there.

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Speaker 11: So I think that he's wary of that. You know,

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Speaker 11: within the fet there's a group of people that are

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Speaker 11: really hawkish. You could tell that from the top loot.

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Speaker 11: There are people saying, no, we have to get the

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Speaker 11: six percent rate, that's much more of a better rate

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Speaker 11: to get inflation down. But he's more in the camp

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Speaker 11: of saying, we cannot really be of those who are

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Speaker 11: below where the median is because you know that that

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Speaker 11: would not be sufficient. Right, So keep that hockey still

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Speaker 11: for sure.

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Speaker 2: And in terms of the markets, because most of our

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Speaker 2: discussion has really been what the economy is doing with

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Speaker 2: the levels of inflation. But what about in terms of

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Speaker 2: the markets. I mentioned that, you know, we have to

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Speaker 2: see whether or not people have already you know, drank

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Speaker 2: from the till a bit too much. Markets have rallied

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Speaker 2: pretty sharply in the first half of the year.

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Speaker 9: Yeah, that's right, Brian.

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Speaker 11: There is a lot of anticipation, right, essentially build upon

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Speaker 11: what we saw today. You know, we got the confirmation

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Speaker 11: that we're we're in the live path down on inflation

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Speaker 11: for now, right, and and so yes, you could say

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Speaker 11: that at some point there's a fair bit of that overpriced, right,

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Speaker 11: it's just too far maybe pricing, and that's where the

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Speaker 11: correction will be. I say, take note of what's happening

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Speaker 11: with the dollar and the movement in the end. I

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Speaker 11: find that in the striking, you know, the Bank of

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Speaker 11: Japan will be at some point making a decision too.

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Speaker 11: Is that some of that anticipation everybody said like, once

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Speaker 11: the end gets really stronger, that will be the next

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Speaker 11: central bank that could start affecting markets, And that's I

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Speaker 11: think to be worse.

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Speaker 4: Yeah, we've had a couple of big days. I mean,

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Speaker 4: in terms of yen strength versus the dollar, we're sub

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Speaker 4: one thirty nine right now, and I'm wondering would you

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Speaker 4: be betting on some type of modification to the messaging

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Speaker 4: from the BOJ when they meet next just preparing the

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Speaker 4: markets for change and yield curve control.

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Speaker 11: Possibly because it's been going on now for some time.

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Speaker 11: The bottom line messages like we keep easying because of

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Speaker 11: you know, we still haven't reached our core rate for

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Speaker 11: two percent was what he said at in CenTra Ueita.

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Speaker 11: But within those minutes and those those policy discussions have

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Speaker 11: been coming out, there's been you know a little hints

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Speaker 11: here and there that they're willing to make it a

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Speaker 11: step in that policy and basically relax that why that

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Speaker 11: yukere of control actually you waded to an extent that

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Speaker 11: is too in CenTra. So I think they're getting much

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Speaker 11: closer to that decision, and that is a big deal

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Speaker 11: to markets, I think, because that is in a way

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Speaker 11: the last central bank that really is following the s

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Speaker 11: and because the end has been so we and people

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Speaker 11: borrowing yen, so it's actually being a sort of a

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Speaker 11: vehicle for risk taking. You know that that unminded that

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Speaker 11: yen carry idea, that's that's going to affect mark us negatively.

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Speaker 9: So I carefully watching.

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Speaker 2: That strengthen the end though, really over the past ten

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Speaker 2: days really feels like more dollar dollar weakness than yen strength.

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Speaker 2: I don't think the signals really have been that strong

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Speaker 2: out of the Boja, but if because also if you

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Speaker 2: look at the yuan, the Chinese REMMB, the CNH now

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Speaker 2: seven sixteen. A week ago, we were worried about hitting

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Speaker 2: seven thirty. So that that's but that does big A

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Speaker 2: little bit of discussion here quickly on China. We've had

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Speaker 2: a number of developments lately about non monetary and fiscal

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Speaker 2: ways of stimulating the economy. Do you like what you see?

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Speaker 11: Well, Brian, there's a lot of liquid he bumped into

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Speaker 11: the system now, right, the new loans that came out

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Speaker 11: the other night.

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Speaker 9: I mean that's more than.

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Speaker 11: Triples BBOC contas the exact liquidity you know, very quickly, right,

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Speaker 11: So it's a sort of a few there for yeah,

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Speaker 11: for biggest stimulus or at least a push. I think

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Speaker 11: these PMI data are coming out later in July. You know,

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Speaker 11: you could see some effects from that. The cacshin surfaces

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Speaker 11: PMI data was a little stronger than expected. That so

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Speaker 11: there's already I think some of that stimulus that they

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Speaker 11: did earlier in June is impacting data, and the Chinese

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Speaker 11: are very technical and very effective in it.

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