Speaker 1: Good morning.
Speaker 2: I'm Doug Chrisner and I'm Brian Curtiz. Here are the
Speaker 2: stories we're following today. US inflation cooled sharply last month.
Speaker 2: It offers some new hope that the FED will soon
Speaker 2: wrap up the most aggressive interest rate hiking campaign in decades,
Speaker 2: but former New York FED President Bill Dudley says the data,
Speaker 2: this latest data won't stop the FED from hiking in July.
Speaker 3: They're looking at the totality of the data of the
Speaker 3: last three months going to the July meeting, and the
Speaker 3: reality is that commy is still doing quite well. The
Speaker 3: economy really hasn't slowed down enough to make the FIT
Speaker 3: confident that they're going to see that slack of all
Speaker 3: air work that they want.
Speaker 2: Fed officials will take into account upcoming readings on producer prices,
Speaker 2: inflation expectations, and also retail sales before their next policy decision.
Speaker 2: The FED does meet next on July twenty fifth and
Speaker 2: twenty sixth.
Speaker 4: Well, speaking today, if you look at the FED speak
Speaker 4: it appears that a number of officials are poised to
Speaker 4: resume those rate hikes. We heard today from the head
Speaker 4: of the Richmond FED. He's Tom Barkin. He said that
Speaker 4: growth in US consumer prices is still too quick, even
Speaker 4: though it did slow in the month of June, and
Speaker 4: mister Barkin went on to say, if you back off
Speaker 4: too soon in terms of rate hikes, inflation will come
Speaker 4: back strong. We also heard today from the head of
Speaker 4: the Minneapolis Fed, Neil Kashgari. He said banks must be
Speaker 4: prepared in case Fed officials need to tighten policy further.
Speaker 2: If inflation proves more entrenched than expected, policy rights might
Speaker 2: need to go higher, which could further reduce asset prices,
Speaker 2: increasing pressure on banks.
Speaker 4: That is Neil Kashkari, the head of the Minneapolis Fed.
Speaker 4: He went on to say that increasing bank resilience could
Speaker 4: help minimize risk if high inflation is persistent, and he
Speaker 4: said supervisors could insure banks preparedness with high inflation stress
Speaker 4: test to identify those banks most at risk.
Speaker 2: Brian to Corporate News, Walt Disney has extended the contract
Speaker 2: of CEO Bob Eiger for another two years. The story
Speaker 2: from Bloomberg's Charlie Pellett.
Speaker 1: It gives the longtime executive more time to implement his
Speaker 1: turnaround and find a successor. Under the new arrangement, Iiger
Speaker 1: will remain CEO through December thirty first of twenty twenty six.
Speaker 1: The seventy two year old Iiger returned to run the
Speaker 1: entertainment giant in November, after previously serving as CEO for
Speaker 1: fifteen years. At the time, he was given a two
Speaker 1: year deal expiring in December of twenty twenty four. Disney
Speaker 1: made the announcement while Iger was attending the annual Allen
Speaker 1: and Company conference in Sun Valley, Idaho. In New York,
Speaker 1: Charlie Pellet Bloomberg Daybreak Asia, we.
Speaker 4: Go next to the semiconductor's space and Vidia is said
Speaker 4: to be in talks to join a list of investors
Speaker 4: in the IPO of ARM Limited. Now you may know
Speaker 4: that ARM is the British chip designer backed by Japan's SoftBank.
Speaker 4: We have more from Bloomberg savon Men.
Speaker 5: We're told the IPO backers will not be finalized until
Speaker 5: the offering gets underway in the fall. The Financial Times
Speaker 5: reported that in Video was seeking to invest at evaluation
Speaker 5: of thirty five to forty billion dollars. That's lower than
Speaker 5: the eighty billion that Soft Bank wants. Nvidia is a
Speaker 5: longtime partner and client of ARM, and tried to acquire
Speaker 5: it last year after the deal unraveled, soft Bank embarked
Speaker 5: on plans for an arm IPO. The Tokyo firm bought
Speaker 5: arm back in twenty sixteen with hopes of regaining its
Speaker 5: own footing after losing billions of dollars on startup investments. Now,
Speaker 5: SoftBank founder Masayoshi's son hopes the arm IPO can be
Speaker 5: the largest ever by a chip company, and bringing in
Speaker 5: anchor investors could be a big help. In Taipei, I'm
Speaker 5: ivon Mann Bloomberg day Break Asia.
Speaker 2: Chinese Premier Lee Chiang has met with senior executives from
Speaker 2: the leading tech companies in the country. More from Bloomberg's
Speaker 2: Juan Wong in Hong Kong.
Speaker 6: This could be a signal that Beijing is ending is
Speaker 6: crackdown on the tech industry. The meeting included executives from
Speaker 6: Chinese tech firms Ali Baba, Bike Dance, and May Twan
Speaker 6: CCTVs has premierly urged local governments to provide more support
Speaker 6: to internet firms, calling them trailblazers of the era. He
Speaker 6: also pushed the companies to support the real economy through innovation.
Speaker 6: The hope is to bolster the Chinese economy without the
Speaker 6: use of major stimulus and other examples. The Chinese government
Speaker 6: recently urged banks to extend loan relief to developers, and
Speaker 6: President Chi ching Ping called for more foreign cooperation in
Speaker 6: areas including trade and investment in Hong Kong and Joanne
Speaker 6: Wong Bloomberg Day Brick Asia.
Speaker 2: I'm Brian Curtis along with Doug Christner and Doug In
Speaker 2: addition to the premiers meeting, you also had the NDRC
Speaker 2: praising tech companies yesterday, which is pretty unusual for that
Speaker 2: sort of entity. It praised ten Cent, May Twan, Ali Baba,
Speaker 2: and it shows that the policymakers now are looking at
Speaker 2: other ways of stimulating the economy outside of just monetary
Speaker 2: and fiscal support.
Speaker 4: And look at the Nasdaq Golden Dragon China Index in
Speaker 4: the US today, Brian jumping four percent and a call
Speaker 4: from Goldman Sachs the firm strategists see China stocks as
Speaker 4: investible right now. We've talked on this program about obvious
Speaker 4: political risk, whether it's geopolitical or regulatory, along with the
Speaker 4: loss of economic momentum in China. Now many in the
Speaker 4: market have asked this question we have on this program
Speaker 4: as well. Are Chinese stocks investible well? The answer, according
Speaker 4: to Goldman right now is a clear yes, given the
Speaker 4: fact that these risks essentially been priced in now. Goldman
Speaker 4: seemed to plug in a few assumptions here over the
Speaker 4: next twelve months. One is that the economy will grow
Speaker 4: in real terms in terms of GDP at a rate
Speaker 4: of around four point seven percent, and geopolitical tensions will
Speaker 4: kind of assume a three year average, so no real surprises.
Speaker 2: There are really a lot of doubters though these stocks
Speaker 2: are down so much. We've often mentioned that companies like
Speaker 2: ten Cent in Ali Baba, they are really not quite
Speaker 2: the same companies they used to be, and ali Baba
Speaker 2: for instance, still down even after the rallies of late,
Speaker 2: still down about seventy percent, So you'll know that's what
Speaker 2: makes a market. There will be people who will say
Speaker 2: it's worth the risk. Others will say, we know what
Speaker 2: the policymakers are like, and we know that they don't
Speaker 2: support these types of Internet giants, the monsters like may
Speaker 2: Twan like ten Cent and Ali Baba, so it'll be
Speaker 2: interesting to watch that one. I wanted to make a
Speaker 2: quick line here or comment on the inflation numbers, because
Speaker 2: obviously we're leading off with that I like the line
Speaker 2: in one of our stories, too early to pop the champagne,
Speaker 2: but start chilling the bottle. The only thing is particularly
Speaker 2: with us on this program talking to investors, is we
Speaker 2: need to probe the bouncers to see if the guests
Speaker 2: have already vibed too much. The Nastak one hundred to
Speaker 2: that point, the Nasdaq one hundred, with the gains today
Speaker 2: now up forty percent here to date.
Speaker 4: I don't think you can argue with this move that
Speaker 4: we had across the Treasury curve today at the short
Speaker 4: end of twelve basis points to the downside at four
Speaker 4: seventy four at the long end word three eighty five
Speaker 4: right now, so the market's convinced that the FED is
Speaker 4: nearly going to wrap up this project of tightening.
Speaker 2: It depends I guess what happens with Core CPI four
Speaker 2: point eight percent is down definitely from where we were
Speaker 2: a year ago, but it's not down that much and
Speaker 2: it's not down as much as the FED wants. So
Speaker 2: although that three percent handle sounds great for headline CPI,
Speaker 2: the four point eight percent on a year to date
Speaker 2: number four Core is simply not good enough. Lots to
Speaker 2: talk to our guests about and coming up as the
Speaker 2: first guest on the program this morning. In a few minutes,
Speaker 2: we'll be chatting with Ben Emmons, senior portfolio manager at
Speaker 2: New Edge Wealth. Now it's time for Global News. NATO
Speaker 2: has offered assurances of long term protections to Ukraine at
Speaker 2: Baxter with Global News in the San Francisco nine to
Speaker 2: sixty news room.
Speaker 7: Head, Yeah, that's right, Brian. This is half of what
Speaker 7: President vladimerz Alenski wanted and comes after him saying not
Speaker 7: offering membership or a date thereof quote absurd. Now this
Speaker 7: came before the meeting.
Speaker 8: I want to discuss with our partners all these things
Speaker 8: and the sword will will speak today and fight for this.
Speaker 8: It's security guarantees for Ukraine on the way to NATO.
Speaker 7: Now that one he did not get, but after meeting
Speaker 7: with leaders, including US President Joe Biden, the.
Speaker 8: Outcome of the need of summit and illness is very
Speaker 8: much needed and.
Speaker 9: Meaningful success for Ukraine.
Speaker 8: And I'm grateful to all leaders in Needo countries who
Speaker 8: are very practical and I'm presented its support.
Speaker 7: A change of tone, how saying he feels after the
Speaker 7: war is over, Ukraine will secure membership. Now, this is
Speaker 7: the way President Biden sees it.
Speaker 10: And one thing is ze Lensky understands now is that
Speaker 10: whether or not he's in and they doo now, he's
Speaker 10: not relevant as long as he has the commitment that
Speaker 10: remember my talking about saying retreated like guarantee security along
Speaker 10: with a number of other NATO countries of the day,
Speaker 10: how we deal with for example, is long tournament. So
Speaker 10: he's not concerned about.
Speaker 7: That man now, NATO General Secretary Jan Stoltenberg.
Speaker 1: Ukraine is not closer to NATO than ever before.
Speaker 11: Allies reaffirmed that Ukraine will become a member of the Alliance.
Speaker 7: Yes, saying Ukraine will get memberships so that Russian history
Speaker 7: does not repeat itself. Overall, Today, airlines remains a bulwark
Speaker 7: of global security instability, as has been for more than
Speaker 7: seven decades. NATO is stronger, more energized, and yes, more
Speaker 7: united than ever in its history. Meanwhile, the White House
Speaker 7: has issued a statement condemning North Korea's test of a
Speaker 7: long range ballistic missile, calling it a brazen violation of
Speaker 7: multiple US Security Council a UN Security Council resolutions. Meanwhile,
Speaker 7: North Korea calls a test a warning of shocking consequences
Speaker 7: for spy planes flying near North Korea airspace. The ice
Speaker 7: dBm are the most powerful in its arsenal. FBI director
Speaker 7: Christopher Ray has told the congressional hearing today that it
Speaker 7: will comply with a federal judges order banning it from
Speaker 7: communicating with social media companies about misinformation, although Ray says
Speaker 7: it may impact effectiveness of catching foreign adversaries.
Speaker 12: The thousands of active investigations we now have into the
Speaker 12: Chinese government's efforts to steal our most precious secrets, rob
Speaker 12: our businesses of their ideas and innovation, and repress freedom
Speaker 12: of speech right here in the United States.
Speaker 7: And the US as hackers have breached a series of
Speaker 7: email accounts linked to government agencies in the US and
Speaker 7: Western Europe. The government Microsoft described the attackers as being
Speaker 7: based in China. Global News powered by more than twenty
Speaker 7: seven hundred journalists and analysts in over one hundred twenty countries.
Speaker 7: In San Francisco, I'm Ed Baxter. This is Bloomberg.
Speaker 4: Let's take a look now at what's going on these
Speaker 4: days in market action with our guest Ben Emmons. He
Speaker 4: joins us in the Bloomberg Interactive Broker studio in New York.
Speaker 4: Ben is senior portfolio manager at New Edge Wealth. Thanks
Speaker 4: for being with us. Let's begin by looking at the
Speaker 4: inflation story here in the US. People were really celebrating
Speaker 4: this reading on the CPI, both on the headline and
Speaker 4: the core rate coming in a little bit below estimates.
Speaker 4: Do you think it's enough to say that the Fed
Speaker 4: is has succeeded, that it's won the fight, and okay,
Speaker 4: we get another twenty five basis points this month, but
Speaker 4: we're kind of going to be on pause indefinitely.
Speaker 11: I don't think it definitely dug, but it is definitely
Speaker 11: moving in the right direction.
Speaker 9: And then so if you look at that month to
Speaker 9: month change in.
Speaker 11: The core services X housing number, that's particularly what you
Speaker 11: want to look at because that's what the FED is
Speaker 11: most worried about. That month of month was about point
Speaker 11: two five percent, I believe, a lot lower than what
Speaker 11: people had thought. And it's coming off about point five
Speaker 11: early in this year. So it's in a nice to
Speaker 11: send down. And I think if we continue to see
Speaker 11: lower prints though in that particular item, which is really
Speaker 11: where the heat of the economy currenty is right, it's
Speaker 11: all in services and other related sort of ancillary services.
Speaker 11: Then we'll read and tracked to see the inflation getting
Speaker 11: from core infation back from four and change to readly
Speaker 11: towards the fat's target. So it's good progress. The FAED
Speaker 11: is basically being vindicated of what they did was the
Speaker 11: right thing. And I think the bomb market is given
Speaker 11: and fed a lot of credibility today by saying yes,
Speaker 11: rags can now can go down in the future.
Speaker 9: That's why I saw the movie yields.
Speaker 11: On the other hand, they're not exactly done, and you know,
Speaker 11: both Barking and Cascarry were quite clear about it. I
Speaker 11: called it like they want to manage the expectations to
Speaker 11: the finish line. They want to make sure that these
Speaker 11: expectations are not going to suddenly become and get a
Speaker 11: bit higher, right, And that's been the seventies problem, and
Speaker 11: when they ease too quickly and inflation expectations started to
Speaker 11: break up again.
Speaker 2: So you know, there are more hawkish investors and also
Speaker 2: even economists like our own analog who think that inflation
Speaker 2: will tick back up on a technical base. Is because
Speaker 2: of the big numbers that we saw a year ago.
Speaker 2: Those will drop out and then you'll have on a
Speaker 2: comparison basis a tick up and in any case, like
Speaker 2: you said it, maybe that the FED wants to go
Speaker 2: it wants to air on the side of too far.
Speaker 2: So it's not really the all clear just yet, is
Speaker 2: that right?
Speaker 9: No, that's right, Brian.
Speaker 11: I think that this tick up and inflation, that's it
Speaker 11: is technical, but it's certainly something about perception of inflation
Speaker 11: and right how people look at inflation and if it
Speaker 11: continues to be something that's elevated and higher, you know,
Speaker 11: that's the that's worry.
Speaker 9: Like, if you don't lean more against that, then.
Speaker 11: People have expectations that are basically and this is this
Speaker 11: conference board number coming out in the next week and
Speaker 11: a half is a really good sign of that that
Speaker 11: that one year expectation is at over six percent. But
Speaker 11: people still expecting really high inflation from here. You know,
Speaker 11: as long as you don't manage that down further, you
Speaker 11: will end up again in the future potential but again
Speaker 11: higher inflation. So this is the Fat's not a conundrum.
Speaker 11: It's not a dilemma. It's it's more like, this is
Speaker 11: the risk that they're running. Therefore they stay the course
Speaker 11: on this and this message of we need to bring
Speaker 11: inflation really down to two percent, we can't be satisfied
Speaker 11: at three percent.
Speaker 4: So with the meeting at the end of the month,
Speaker 4: is there a risk for Powell, for the FED chairman
Speaker 4: that he sounds a little too dubbish he wants to
Speaker 4: kind of adopt a more kind of a hawkish stance
Speaker 4: just to keep the market on the back foot.
Speaker 1: Yeah.
Speaker 11: Probably, I think he will probably give that hockeyish tone.
Speaker 11: I would think in a way he did recently too
Speaker 11: in that testimony front of Congress, right and in the
Speaker 11: following on the minutes, there's that similar tone in there.
Speaker 11: So I think that he's wary of that. You know,
Speaker 11: within the fet there's a group of people that are
Speaker 11: really hawkish. You could tell that from the top loot.
Speaker 11: There are people saying, no, we have to get the
Speaker 11: six percent rate, that's much more of a better rate
Speaker 11: to get inflation down. But he's more in the camp
Speaker 11: of saying, we cannot really be of those who are
Speaker 11: below where the median is because you know that that
Speaker 11: would not be sufficient. Right, So keep that hockey still
Speaker 11: for sure.
Speaker 2: And in terms of the markets, because most of our
Speaker 2: discussion has really been what the economy is doing with
Speaker 2: the levels of inflation. But what about in terms of
Speaker 2: the markets. I mentioned that, you know, we have to
Speaker 2: see whether or not people have already you know, drank
Speaker 2: from the till a bit too much. Markets have rallied
Speaker 2: pretty sharply in the first half of the year.
Speaker 9: Yeah, that's right, Brian.
Speaker 11: There is a lot of anticipation, right, essentially build upon
Speaker 11: what we saw today. You know, we got the confirmation
Speaker 11: that we're we're in the live path down on inflation
Speaker 11: for now, right, and and so yes, you could say
Speaker 11: that at some point there's a fair bit of that overpriced, right,
Speaker 11: it's just too far maybe pricing, and that's where the
Speaker 11: correction will be. I say, take note of what's happening
Speaker 11: with the dollar and the movement in the end. I
Speaker 11: find that in the striking, you know, the Bank of
Speaker 11: Japan will be at some point making a decision too.
Speaker 11: Is that some of that anticipation everybody said like, once
Speaker 11: the end gets really stronger, that will be the next
Speaker 11: central bank that could start affecting markets, And that's I
Speaker 11: think to be worse.
Speaker 4: Yeah, we've had a couple of big days. I mean,
Speaker 4: in terms of yen strength versus the dollar, we're sub
Speaker 4: one thirty nine right now, and I'm wondering would you
Speaker 4: be betting on some type of modification to the messaging
Speaker 4: from the BOJ when they meet next just preparing the
Speaker 4: markets for change and yield curve control.
Speaker 11: Possibly because it's been going on now for some time.
Speaker 11: The bottom line messages like we keep easying because of
Speaker 11: you know, we still haven't reached our core rate for
Speaker 11: two percent was what he said at in CenTra Ueita.
Speaker 11: But within those minutes and those those policy discussions have
Speaker 11: been coming out, there's been you know a little hints
Speaker 11: here and there that they're willing to make it a
Speaker 11: step in that policy and basically relax that why that
Speaker 11: yukere of control actually you waded to an extent that
Speaker 11: is too in CenTra. So I think they're getting much
Speaker 11: closer to that decision, and that is a big deal
Speaker 11: to markets, I think, because that is in a way
Speaker 11: the last central bank that really is following the s
Speaker 11: and because the end has been so we and people
Speaker 11: borrowing yen, so it's actually being a sort of a
Speaker 11: vehicle for risk taking. You know that that unminded that
Speaker 11: yen carry idea, that's that's going to affect mark us negatively.
Speaker 9: So I carefully watching.
Speaker 2: That strengthen the end though, really over the past ten
Speaker 2: days really feels like more dollar dollar weakness than yen strength.
Speaker 2: I don't think the signals really have been that strong
Speaker 2: out of the Boja, but if because also if you
Speaker 2: look at the yuan, the Chinese REMMB, the CNH now
Speaker 2: seven sixteen. A week ago, we were worried about hitting
Speaker 2: seven thirty. So that that's but that does big A
Speaker 2: little bit of discussion here quickly on China. We've had
Speaker 2: a number of developments lately about non monetary and fiscal
Speaker 2: ways of stimulating the economy. Do you like what you see?
Speaker 11: Well, Brian, there's a lot of liquid he bumped into
Speaker 11: the system now, right, the new loans that came out
Speaker 11: the other night.
Speaker 9: I mean that's more than.
Speaker 11: Triples BBOC contas the exact liquidity you know, very quickly, right,
Speaker 11: So it's a sort of a few there for yeah,
Speaker 11: for biggest stimulus or at least a push. I think
Speaker 11: these PMI data are coming out later in July. You know,
Speaker 11: you could see some effects from that. The cacshin surfaces
Speaker 11: PMI data was a little stronger than expected. That so
Speaker 11: there's already I think some of that stimulus that they
Speaker 11: did earlier in June is impacting data, and the Chinese
Speaker 11: are very technical and very effective in it.
Speaker 2: This is Bloomberg Daybreak Asia. Your morning brief on this
Speaker 2: story is making news from Hong Kong to Singapore and
Speaker 2: Wall Street.
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