Speaker 1: Good morning.
Speaker 2: I'm Brian Curtiz and I'm Doug Prisner. Here are the
Speaker 2: stories we're following today.
Speaker 1: US bank stocks fell after Moodies downgraded ten small and
Speaker 1: medium sized American lenders, and it said that it might
Speaker 1: do the same with a handful of major firms. But
Speaker 1: he said that higher funding costs, potential regulatory capital weaknesses,
Speaker 1: and rising risks tied to commercial real estate are all
Speaker 1: strains that are prompting the review. Now we heard from
Speaker 1: Richard Beauvet at odeon Capital. He said the move came
Speaker 1: late for Moodies.
Speaker 3: I think that when the second quarter earnings came out,
Speaker 3: it was evident that the banking industry was suffering. And
Speaker 3: the reason why it was suffering is because basically, as
Speaker 3: interest rates go up, and this sounds stupid to say,
Speaker 3: the value of financial assets go down. And if he
Speaker 3: took a look at the balance sheet of each one
Speaker 3: of these banks, the value of their financial assets were
Speaker 3: going down very, very sharply. That meant that the industry
Speaker 3: was in trouble.
Speaker 1: Declined for firms that had their ratings cut, including M
Speaker 1: and T Bank closing down one point four percent, and
Speaker 1: also the KBW Regional Bank Index was down one point
Speaker 1: four percent.
Speaker 2: We got a surprise earnings report after the bell today
Speaker 2: from the nation's number two ride hailing service. That story
Speaker 2: from Bloomberg's tom Busby.
Speaker 4: Everything seemed to align for Lift last quarter, which had
Speaker 4: been struggling to bounce back from the pandemic lockdowns and
Speaker 4: a shortage of drivers. But recent costcuding measure seemed to
Speaker 4: have worked and lower fare prices drew back more writers
Speaker 4: to the service that helped Lift beat Wall Street estimates
Speaker 4: and even raise its outlook for the current quarter. Revenue
Speaker 4: for the second quarter just over one billion dollars, where
Speaker 4: earnings coming in at sixteen cents a share. Analysts were
Speaker 4: expecting a loss of one cent per share. Shares of
Speaker 4: Lyft soaring in after hours trading tom Busby Bloomberg day
Speaker 4: Break Asia.
Speaker 1: Actually there was a quick change in after hours and
Speaker 1: Lift shares and now down five point eight percent. Rivia
Speaker 1: nudged up on its production guide guidance for the year
Speaker 1: and narrowed its loss expectation. This comes after the company
Speaker 1: narrowly missed its production target last year it grappled with
Speaker 1: supply constraints and rising competition. Rivian cited an improved supply
Speaker 1: chain outlook for its revised expectations, we get the story
Speaker 1: from Bloomberg's Ed Ludlow.
Speaker 5: They raised guidance modestly for the year by two thousand
Speaker 5: units fifty two thousand evs across their two consumer vehicles
Speaker 5: and the van that they build for Amazon. I reported
Speaker 5: earlier in the year that Rivian executive had told staff
Speaker 5: that actually their plan is to build sixty two thousand.
Speaker 5: But what's interesting about this print is that they are
Speaker 5: showing the benefits of scaling up.
Speaker 1: And that's Ed Ludlow. Separately, Rivian reported second quarter earnings
Speaker 1: that beat analyst expectations, and the shares currently are up
Speaker 1: one point three percent.
Speaker 2: In late trading, we Work said there is substantial doubt
Speaker 2: about its ability to continue operating. The company cited sustained
Speaker 2: losses along with canceled memberships for its office spaces. Now,
Speaker 2: we Work is going to focus over the next year
Speaker 2: on reducing rental cost, negotiating more favorable leases, and increasing revenue.
Speaker 2: The company also wants to raise a little bit of
Speaker 2: capital now. This warning comes just months after we Work
Speaker 2: struck a deal with some of its biggest creditors and
Speaker 2: soft Bank to reduce its debt load by around one
Speaker 2: point five billion dollars. We Work shares are down in
Speaker 2: late trading.
Speaker 1: Brian Well, Chinese developer Country Gardens stock and bonds plunged
Speaker 1: as noteholders said that they had not yet received coupon payments.
Speaker 1: Bloomberg's Bonnieau has more from Hong Kong.
Speaker 6: The noteholders said they had not received payments as of
Speaker 6: yesterday afternoon. Data showed the company owned ten point five
Speaker 6: million dollars of interest on a dollar bond that matures
Speaker 6: in twenty twenty six, and that are twelve million dollars
Speaker 6: is due on a note maturing in twenty thirty. In
Speaker 6: a statement, Country Garden set a deterioration in seals and
Speaker 6: a refinancing environment has hurt us cash flow. Country Garden
Speaker 6: is one of the few major Chinese developers yet to default,
Speaker 6: and a failure to pay were pummel market confidence. The
Speaker 6: builder is facing more than two billion dollars of bond
Speaker 6: payments over the rest of this year in Hong Kong.
Speaker 6: I'm Bonnie Al Bloomberg Daybreak Asia, A.
Speaker 1: Couple of other stories will be looking at China says
Speaker 1: it's Europe's own fault for the soaring trade deficit.
Speaker 7: With Beijing.
Speaker 1: China says that it wants to buy more high tech
Speaker 1: goods but cannot. And also we had the weak China
Speaker 1: export and import numbers yesterday, Doug. And it turns out
Speaker 1: that the US is now buying more goods from Mexico
Speaker 1: and Canada than from China. The US buying twenty five
Speaker 1: percent less in the first half of this year than
Speaker 1: last year in terms of the value of goods. And
Speaker 1: added to that, Taiwan's trade surplus surging to a record high.
Speaker 1: So a lot's happening on the trade front.
Speaker 2: Yeah, we knew, Brian that the US was planning at
Speaker 2: some point to restrict investment in China. Well, now we're
Speaker 2: being told that the restrictions will likely apply only to
Speaker 2: Chinese companies that get at least half of their revenue
Speaker 2: from cutting A areas like quantum computing and artificial intelligence.
Speaker 2: One source is a part of the story, which you
Speaker 2: can find on the Bloomberg terminal incidentally said that this order,
Speaker 2: expected to be announced in the coming days by the
Speaker 2: Biden administration, is going to prohibit investment in AI for
Speaker 2: military end users. Notification will be required for investments in
Speaker 2: other AI activities.
Speaker 1: Yeah, there's so much tension between the two. It's a
Speaker 1: little more than this pull back on it, and the
Speaker 1: headline in all the paper is today in Hong Kong
Speaker 1: and likely in China as well, will be things like
Speaker 1: de risking and re shoring, shipping away at China's trade picture,
Speaker 1: chipping away at China's exports. So we'll be covering that
Speaker 1: in greater detail all throughout the program. Now it's time
Speaker 1: for Global News. Well, let's get right over to Ed Baxter.
Speaker 1: We are looking at China no longer the US's largest
Speaker 1: importer of goods, which I just headlined there. Ed Baxter
Speaker 1: has more from San Franceancisco a ed.
Speaker 8: Yeah, let's detail it out, Brian, China now sells fewer
Speaker 8: goods of the US and Mexico or Canada. Bloomberg Emerging
Speaker 8: Markets correspondent Sherry On says the US imported about twenty
Speaker 8: five percent year to year less from China the first
Speaker 8: six months of the year.
Speaker 7: According to analysts, perhaps a supply chain diversification is working
Speaker 7: against China. I had an emergen markets analyst from Delta saying,
Speaker 7: you know what, Mexico is a more interesting story because
Speaker 7: the realignment of supply chains is already happening that way,
Speaker 7: especially with those trade tensions, geopolitics being an issue and
Speaker 7: the economic recovery slumping.
Speaker 8: Now goods from Mexico in the same period we're up
Speaker 8: five point four percent, so for the US trade partners
Speaker 8: now Mexico, Canada, China, Germany and Japan. The former co
Speaker 8: CEO of FDx, Ryan Salem, as the negotiations with prosecutors,
Speaker 8: reportedly to plead guilty to criminal charges. Sources are saying
Speaker 8: that the Republican mega donor may enter a plea as
Speaker 8: soon as next month that may include campaign finance law violations.
Speaker 8: Bloomberg's Ava Barry Morrison says this has been a long
Speaker 8: time in coming.
Speaker 9: Ryan Salem had a bit of an insight into the
Speaker 9: political fun sorry political donation side of STX, so I
Speaker 9: think it took them a long time to get information
Speaker 9: about what he was involved in, cross checked out with
Speaker 9: other people as well.
Speaker 8: Aft Exit made donations to both Republicans and Democrats. At
Speaker 8: this point, it is unclear whether he will enter into
Speaker 8: cooperation deal to testify against co founder Sam Bankman freed.
Speaker 8: July now officially the Earth's hottest month on record, taking
Speaker 8: that record away from a year earlier July, the average
Speaker 8: temperatures hit Paris cap of one point five celsius during
Speaker 8: that was covered in the Accord. Now, the Arctic sea
Speaker 8: ice dropped fifteen percent below average. It is the lowest
Speaker 8: level since satellite observations began. The EU of Copernicus Climate
Speaker 8: Change Service is warning of dire consequences if the trend
Speaker 8: is not reversed. Ron Decantas has brought in a new
Speaker 8: campaign manager in Bloomberg's Wendy Benjaminson says, James Uthmeyer has
Speaker 8: served as chief of staff and dessentis Governor's office.
Speaker 10: But has never run a presidential campaign before. And there
Speaker 10: are lots of people in this town who have run
Speaker 10: presidential campaigns. But he so keeps so closely to the
Speaker 10: people he knows and trusts that he's putting inexperienced people
Speaker 10: in charge.
Speaker 8: Detractors say, insulating himself with cronies from Florida. This follows
Speaker 8: a string of layoffs and strategy ships, same to the
Speaker 8: addressing declining polling numbers. State leaders in Maryland are surveying
Speaker 8: the damage from yesterday's major storm activity. A stretch of
Speaker 8: highway had a row of utility poles lining it and
Speaker 8: forty seven people trapped inside their cars because of it.
Speaker 8: Governor Wes Moore says they were all rescued, but sections
Speaker 8: of the state are thrashing.
Speaker 11: This is going to take some time to fix.
Speaker 6: The damage from last night is significant.
Speaker 8: The authorities say most of the remaining customer with our
Speaker 8: power will be restored by tomorrow night. Global newspower by
Speaker 8: more than twenty seven hundred journalist and analysts in over
Speaker 8: one hundred twenty countries in San Francisco. I'm Ed Baxter,
Speaker 8: and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis here in
Speaker 1: Hong Kong along with Rashad so I'm not in London.
Speaker 1: A flash here across the Bloomberg terminal. Amazon is in
Speaker 1: talks to be an anchor investor in the arm IPO,
Speaker 1: So that is the unit of SoftBank that's coming to
Speaker 1: market we think quite soon. And that, of course, or
Speaker 1: this story here from Reuters, So we'll get you details
Speaker 1: on that as much as we can. Going forward. Let's
Speaker 1: get to our guest, Sarah Ponzak, Vice President UBS Private
Speaker 1: Wealth Management. Well, I mentioned that we did see we
Speaker 1: did see some losses on Wall Street today but they
Speaker 1: were not as bad so as to take away the
Speaker 1: games we saw yesterday. And we also had the dip
Speaker 1: buyers kind of entering the frame today. So I'm not
Speaker 1: sure how to frame the action today, but it seems
Speaker 1: a little more negative then perhaps the way I've just
Speaker 1: put it, Sarah, your thoughts on the action today.
Speaker 12: I think we have to put it in context of
Speaker 12: the pretty unbelievable year that we've seen for stocks so far.
Speaker 12: You know, through July, the for seven months of the year,
Speaker 12: the S and P five hundred was up about twenty percent.
Speaker 12: That was the best start to a year in the
Speaker 12: first seven months since nineteen ninety seven, so pretty phenomenal.
Speaker 12: And when you think about the shift that we saw
Speaker 12: from last year through the beginning of the year through
Speaker 12: the middle of twenty twenty three, it's really been this
Speaker 12: change in perception of the assumption and the expectation that
Speaker 12: we're going to fall into a recession to you know,
Speaker 12: everyone kind of now believing and the consensus being that
Speaker 12: we're going to have a soft landing. So when we
Speaker 12: think about these past couple of months, you think about
Speaker 12: that shift to you know, investors, economists throwing away that
Speaker 12: recession call now believing in a soft landing. They're really
Speaker 12: not being much negative news over the course of the summer,
Speaker 12: to all of a sudden, a weekly last week in
Speaker 12: which we get the Fitch downgrade of US sovereign debt
Speaker 12: and then a day like today in which you have
Speaker 12: the Moody's downgrade of regional banks. It's just negative news
Speaker 12: in this stock market world in which there really hasn't
Speaker 12: much been much negative news. So it's healthy to see,
Speaker 12: you know, some volatility on the negative news. And if anything,
Speaker 12: it seems complacency is more so a risk at this
Speaker 12: point in.
Speaker 11: Time, complacency in being the watchword, Sarah, given that we
Speaker 11: saw the S and B banking index after those downgrades
Speaker 11: from moody is sending the banking index absolutely to the
Speaker 11: floor and then a recovery, a massive recovery to just
Speaker 11: be just off the the gain line, as it were.
Speaker 11: Should people be worried. It does portend for of course,
Speaker 11: more liquidity tightening and loans which would not be given out,
Speaker 11: which are all going to do the Fed's job in
Speaker 11: some ways or amplify what the Fed's doing.
Speaker 12: Right, So it's interesting to see that whereas heading into
Speaker 12: the year Originally, you know, the impetus for investment was
Speaker 12: more so to fade gains, believing that they wouldn't be sustained.
Speaker 12: And how quickly that has changed, you know, in the
Speaker 12: face of fomo fear of missing out, to dip buying
Speaker 12: whenever we do see some type of downdraft in the market,
Speaker 12: because you know, some people now believe that we are
Speaker 12: going to see you know, further gains and if they
Speaker 12: sold and went to cast at the beginning of the year,
Speaker 12: it's a difficult position to be and you feel as
Speaker 12: that you need to get in at some point in time.
Speaker 12: So we do see this impetus of dip buying now.
Speaker 12: But when we think about, you know, the larger ramifications
Speaker 12: of the downgrades that we did see from Moodies on
Speaker 12: some of those regional banks, this is not entirely new news.
Speaker 12: You know, we have been listening to and thinking about
Speaker 12: what is going on in the banking system for months
Speaker 12: now after what we saw with you know, a couple
Speaker 12: regional bank failures, and again this sheds more light and
Speaker 12: it does bring focus back to the fact that you know,
Speaker 12: the fallout that we saw with a few regional banks.
Speaker 12: It's very possible. It's not over. There could be more
Speaker 12: dominoes to fall, and we need to take you know,
Speaker 12: we need to take stock of that when we think
Speaker 12: about the overall US banking system. But really, all in all,
Speaker 12: this isn't necessarily new news.
Speaker 1: Yeah, in terms of well, I imagine you know you
Speaker 1: have some contact with high net worth individuals. I'm curious
Speaker 1: whether or not they're talking more about diversification now rather
Speaker 1: than riding the gains that we saw in the first part.
Speaker 1: And if so, what are they diversifying into they.
Speaker 12: Are I actually had a conversation with a high networth
Speaker 12: client individual today who was asking, Okay, you know, should
Speaker 12: we be diversifying out of some of these high flying,
Speaker 12: big tech names that have really driven the gains this year?
Speaker 12: And our response was yes, especially if you have more
Speaker 12: exposure to some of these names that have just led
Speaker 12: the way this year been even the index, then yes
Speaker 12: it could. It could take sense to take some chips
Speaker 12: off the table and diversify those gains a bit. So
Speaker 12: what we've been saying, ubs' chief investment office has really
Speaker 12: been pounding the table on two key themes, one of
Speaker 12: them being you know, if you missed out on the
Speaker 12: gains this year, or if you are not diversified, if
Speaker 12: you have a significant amount of capital tied up in
Speaker 12: just a few big tech names, maybe it does make
Speaker 12: sense to now look to the laggards, look to value,
Speaker 12: look to more defensive areas of the market. Maybe look
Speaker 12: to an equal weight version of the S and P
Speaker 12: five hundred and we have seen this broadening out over
Speaker 12: the past month or so. You know, you look at
Speaker 12: value stocks, you look at small caps. It has happened.
Speaker 1: It definitely has happened, Sharon. We have noted it on
Speaker 1: this program quite a lot. To RSP is one ETF
Speaker 1: that one can look at for the equal weight. We
Speaker 1: enjoyed the conversation, Sharah. Thank you. Sarah Ponzak, Vice President
Speaker 1: UBS Private Wealth Management. This is Bloomberg Daybreak Asia morning
Speaker 1: brief on the stories making news from Hong Kong to
Speaker 1: Singapore and Wall Street.
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