WEBVTT - ARM's Big IPO, Citi's Executive Reshuffle

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<v Speaker 1>Good morning. I'm Richard Salamat.

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<v Speaker 2>And I'm Doug Prisner. Here are the stories we're following today.

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<v Speaker 1>It is all about what used to be called ARM Holdings. Now.

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<v Speaker 1>This is SoftBank's semiconductor designing unit. It's a file for

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<v Speaker 1>what is said to be this year's biggest IPO in

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<v Speaker 1>the United States. Let's get details now from Bloomberg's Joeannawell.

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<v Speaker 3>The company plans to start its road show the first

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<v Speaker 3>week of September and price the IPO the following week.

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<v Speaker 3>ARM is seeking to be valued in the listing at

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<v Speaker 3>sixty billion to seventy billion dollars. The offering is being

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<v Speaker 3>led by Barclays, Goldman Sachs, JP, Morgan Chase, and Mizuho.

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<v Speaker 3>But there's no sign of Morgan Stanley in ARMS draft

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<v Speaker 3>IPO fouling. That's a rare event for a bank that's

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<v Speaker 3>often a lead advisor on landmark technology IPOs. A successful

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<v Speaker 3>debut by ARM would provide a welcome relief for soft

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<v Speaker 3>Bank after its Vision fund lost a record thirty billion

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<v Speaker 3>dollars last year. I'm joining Wan Bloomberg Day brageisiha Well

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<v Speaker 3>after the.

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<v Speaker 2>Bell in the US Zoom Video Commune locations raised its

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<v Speaker 2>forecast for both profit and sales for the full year.

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<v Speaker 2>The story from Bloomberg's Charlie Pellett.

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<v Speaker 4>It is a positive sign for the software maker's plan

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<v Speaker 4>to expand products beyond its namesake video conferencing software. Investors

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<v Speaker 4>have been concerned about the stagnation of Zoom's once explosive

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<v Speaker 4>sales as the company is challenged by major rivals such

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<v Speaker 4>as Microsoftware, its central product. Zoom's plan to resuscitate growth

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<v Speaker 4>hinges on expanding its tools for large businesses such as

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<v Speaker 4>phone platforms, customer service systems, calendar applications, and chat features,

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<v Speaker 4>fueled by advancements in artificial intelligence. In New York. Charlie

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<v Speaker 4>Pellett Bloomberg Daybreak Asia.

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<v Speaker 1>Right, well, Siddy, let's have a look now what was

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<v Speaker 1>going on at Goldman Sachs reported in wanted to get

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<v Speaker 1>out the personal financial management business. The reasons behind it

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<v Speaker 1>will explain that by Bloomberg's through the Natheragen.

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<v Speaker 5>Goldman Sachs is exploring a sale of an investment advisory

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<v Speaker 5>business that had just bought four years ago, which is

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<v Speaker 5>another Solomon deal, another deal that was struck under its CEO,

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<v Speaker 5>David Solomon, that is being undone. That is the great

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<v Speaker 5>chase of the mass market that Goldman had plotted a

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<v Speaker 5>while back. It's completely being unknown now. And this is

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<v Speaker 5>another sign off that.

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<v Speaker 1>That was a Bloomberg SA. Another ogent saying that GOMEZX

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<v Speaker 1>is in advanced discussions with potential bias.

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<v Speaker 2>We are hearing that City Group CEO Jane Fraser is

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<v Speaker 2>weighing an executive reshuffle. This follows the exit of the

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<v Speaker 2>bank's longtime deputy Paco Ebara. Fraser is looking to simplify

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<v Speaker 2>the company's businesses and organizational structure. Here is Bloomberg's Shanali Basik.

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<v Speaker 6>Remember paco Ebara is on his way out, So what

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<v Speaker 6>does this do? This elevates their business leaders themselves as

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<v Speaker 6>well as giz Drane Fraser, the CEO, more oversight potentially

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<v Speaker 6>into those different businesses as they lose a pivotal leader

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<v Speaker 6>of more than three decades.

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<v Speaker 2>Now, in an effort to simplify operations, City Group will

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<v Speaker 2>officially scrap two of its core operating units. Those include

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<v Speaker 2>the Institutional Clients Group and the personal Banking and Wealth

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<v Speaker 2>Management division.

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<v Speaker 1>Rashan all right, well, let's get back to China and

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<v Speaker 1>the countries is said to be considering ramping up support

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<v Speaker 1>for local government financing vehicles or lgfvs. And this is

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<v Speaker 1>really down to the amount of debt that they're carrying

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<v Speaker 1>in all the worries about them being unable to pay

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<v Speaker 1>that back.

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<v Speaker 7>Bondiau has more, China may set up an emergency liquidity

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<v Speaker 7>tool to provide low cost funds for longer maturities to

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<v Speaker 7>lgfe's that's according to Chinese media allt Taisin. If approved,

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<v Speaker 7>the move would provide cash strapped lgfe's access to funds

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<v Speaker 7>to improve their cash flow and avoid short term liquidity stress.

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<v Speaker 7>There are no official figures for the size of LGF debt,

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<v Speaker 7>but the International Monetary Fund estimates it was seven point

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<v Speaker 7>eight trillion dollars last year in Hong Kong. I'm Bonnie

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<v Speaker 7>al Bloomberg Daybreak Asia.

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<v Speaker 2>We were talking earlier about the rough ride for US treasuries,

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<v Speaker 2>the sell off in the bond market forcing ten year

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<v Speaker 2>yields to a near sixteen year high. We've got a

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<v Speaker 2>ten year last quoted in New York at four thirty three. Essentially,

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<v Speaker 2>the market is bracing for the risk that interest rates

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<v Speaker 2>will remain elevated. We've heard the refrain higher for longer.

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<v Speaker 2>The FED will have its annual gathering, the Symposium in

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<v Speaker 2>Jackson Hole, Wyoming, at the end of the week. Traders

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<v Speaker 2>are expecting a hawkish tone from fedcher J. Powell. He's

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<v Speaker 2>set to speak on Friday. Here's Claudia Strom, founding member

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<v Speaker 2>of Strom Consulting.

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<v Speaker 5>This is not going to be talked about because it's there.

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<v Speaker 5>They're going to hold to two percent, and frankly, I

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<v Speaker 5>will think they will hold it to the very end.

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<v Speaker 2>Claudias Strom talking about the FED sticking to its inflation

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<v Speaker 2>target of two percent. Now, despite the movement in treasury

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<v Speaker 2>yields today, the swaps market is still pricing in the

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<v Speaker 2>fact that the Fed is likely done with its rate

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<v Speaker 2>hike strategy and potentially could begin ending or rather cutting

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<v Speaker 2>next year. And before we get to global news, let's

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<v Speaker 2>just pass along that Charles Schwab will be cutting jobs

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<v Speaker 2>and closing or downsizing some of its corporate offices. The

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<v Speaker 2>associated costs are expected to be between four hundred million

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<v Speaker 2>and five hundred million dollars. We had shares in Charles

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<v Speaker 2>Schwab today down just two tenths of one percent. It's

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<v Speaker 2>time now for a look at global news. The bail

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<v Speaker 2>for Donald Trump in the Georgia election interference trial has

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<v Speaker 2>been set. Let's get to Ed Baxter for a look

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<v Speaker 2>at Global News.

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<v Speaker 8>Eddie, Yes, and it is two hundred thousand dollars DOUG.

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<v Speaker 8>A consent agreement Trump through his attorney also agreeing to

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<v Speaker 8>make no direct or indirect threats of any nature against

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<v Speaker 8>any victim of alleged scheme, including in social media posts.

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<v Speaker 8>This agreement reached before his surrender later this week. Meanwhile,

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<v Speaker 8>Trump is saying again he will not participate in the

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<v Speaker 8>first debate or maybe any of the others for the GOP.

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<v Speaker 8>Bloomberg's Nancy Lyons says this doesn't surprise some political scene watchers.

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<v Speaker 9>A former president has defied naively said he will not

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<v Speaker 9>take part. He cites his wide lead in the latest

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<v Speaker 9>survey of likely GOP voters. The decision does not surprise

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<v Speaker 9>Charlie Cook of the Cook Report.

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<v Speaker 2>Or President Trunk should have his head examined if he

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<v Speaker 2>did go into debate.

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<v Speaker 10>He's got everything to lose, nothing to gain from it.

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<v Speaker 9>As for the eventual nominees for the presidential race, Cook

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<v Speaker 9>tells Bloomberg sound on the only obstacle he sees preventing

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<v Speaker 9>it from being a Biden Trump face off would be

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<v Speaker 9>health related issues in Washington. Nancy lyons Bloomberg Daybreak Asia.

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<v Speaker 8>All right, Nancy, thank you. Japan will begin a contingents

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<v Speaker 8>plan to discharge wastewater from the Fukushima nuclear disaster site

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<v Speaker 8>as soon as this week. NHK reports Prime Minister Fumiokashia

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<v Speaker 8>will meet with his cabinet at ten am local this morning.

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<v Speaker 8>Remnants of Tropical Storm Hillary is still pummeling areas outside

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<v Speaker 8>of the major southern California cities. Flights being disrupted and

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<v Speaker 8>record amounts of rain being recorded major cities. I say,

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<v Speaker 8>feeling they really dodge to major bullet. ABC News Tim

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<v Speaker 8>Pilliam on Bloomberg, saying that there's some blue sky shows.

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<v Speaker 2>We care about our firefighters first in our community as well,

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<v Speaker 2>and if they can go to work.

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<v Speaker 8>In a healthy way, then it's difficult for them to serve.

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<v Speaker 8>This is Tim right now.

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<v Speaker 11>We are seeing conditions improved greatly and that is very

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<v Speaker 11>good news. But Hillary brought record breaking rainfall to southern California.

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<v Speaker 11>Some parts saw up to a year's worth of rain

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<v Speaker 11>in just one day.

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<v Speaker 8>Yeah, but in Palm Springs, yeah, that's the floodwater still

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<v Speaker 8>waiting for water to receive and then to assess damage.

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<v Speaker 8>The storm is moving up through Las Vegas. US President

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<v Speaker 8>Joe Biden has arrived on Maui as famous Chief at

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<v Speaker 8>Deanna Chriswell has already said today that efforts to find

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<v Speaker 8>survivor's temporary shelter has gone very well.

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<v Speaker 9>There are sixteen people that remain in shelters, and we

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<v Speaker 9>have posted two thousand people that we have already moved

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<v Speaker 9>into a hotel rooms.

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<v Speaker 8>Meanwhile, in his first national interview since the burning of

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<v Speaker 8>Lehina Town on Maui, fire Chief Brad Ventura says the

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<v Speaker 8>fires have been devastating for the islands firefighters.

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<v Speaker 3>Firefighters are hurting.

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<v Speaker 5>This is their community, this is their home, These are

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<v Speaker 5>their people.

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<v Speaker 2>Nobody in our department is unaffected by this.

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<v Speaker 8>Yeah, he says, fifteen firefighters did lose their homes. Global

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<v Speaker 8>news power by more than twenty seven hundred journalists and

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<v Speaker 8>analysts in over one hundred and twenty countries. In San Francisco,

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<v Speaker 8>I'm Ed Baxter, and this is Bloomberg.

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<v Speaker 2>Let's get to Lori, heinel our guest. Lori is the

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<v Speaker 2>Global CIO at State Street Global Advisors. She joins US

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<v Speaker 2>from Boston, Massachusetts. It's always a pleasure, Laurie, thanks for

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<v Speaker 2>joining us. Talk to me a little bit about what

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<v Speaker 2>you're seeing in the bond market today. Elevated yields. Yeah,

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<v Speaker 2>some of this may be tied to the notion that

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<v Speaker 2>we're maybe on the verge of a soft landing and

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<v Speaker 2>that rates will be higher for longer. Are you expecting

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<v Speaker 2>the economy to kind of weaken to the point where

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<v Speaker 2>we can be talking about FED rate cuts next year?

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<v Speaker 10>Well, we actually are thinking that we're going to be

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<v Speaker 10>talking a lot more about FED rate cuts next year. Obviously,

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<v Speaker 10>all eyes right now are going to be all what

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<v Speaker 10>the Fed and Chairman Power are going to say at

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<v Speaker 10>Jackson Hole. We believe that they will remain diligent about

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<v Speaker 10>inflation and keep that next rate hike on the table.

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<v Speaker 10>We actually think that the FED has done enough already

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<v Speaker 10>and we're seeing lots of signs of weakening both in

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<v Speaker 10>the economy but also more sustainably lower inflation rates.

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<v Speaker 1>But ultimately, here Laurie, I mean, surely they're going to

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<v Speaker 1>not be cutting rates back to what we've had in

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<v Speaker 1>the post to GFC era because they need to have

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<v Speaker 1>abs to deal with structural changes, which may mean that

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<v Speaker 1>inflation is structurally higher for longer.

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<v Speaker 10>Well, we think that there's a case to be made

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<v Speaker 10>that inflation's slightly higher than it would have been sort

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<v Speaker 10>of pre the COVID era, but certainly not something that

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<v Speaker 10>justifies rates with a five handle. We actually think growth

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<v Speaker 10>in the US next year is going to be sub

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<v Speaker 10>one percent, and there's a risk that we have a

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<v Speaker 10>recession next year. We also look at more near term

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<v Speaker 10>inflationary data, and you're seeing the rolling three months come

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<v Speaker 10>in and around a three handle. So we actually think

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<v Speaker 10>that the FED may be cutting pretty dramatically going into

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<v Speaker 10>next year, as much as two hundred basis points.

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<v Speaker 2>I haven't heard that before. We have a two year

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<v Speaker 2>treasurer right now yielding five percent. Maybe we can pivot

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<v Speaker 2>away from the macro a little bit and talk some

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<v Speaker 2>of what's been happening in the equity market today. Big

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<v Speaker 2>rally in in Nvidia now this company will report results

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<v Speaker 2>on Wednesday. It's certainly become a bit of a proxy

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<v Speaker 2>for the trade and artificial intelligence. Despite higher bond yields today,

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<v Speaker 2>there was no holding back in video. Are you a

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<v Speaker 2>buyer of this the theme of AI?

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<v Speaker 10>Well, we're more a buyer of growth and quality growth,

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<v Speaker 10>especially if we're right about our core call, which is

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<v Speaker 10>that US growth is going to slow pretty dramatically, and

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<v Speaker 10>that's against a backdrop where global growth is likely to

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<v Speaker 10>slow pretty dramatically. Once again, investors are going to be

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<v Speaker 10>looking for those pockets that have some tailwinds, and so

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<v Speaker 10>we do think that large cap US, particularly technology services,

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<v Speaker 10>some of those areas are poised to do better. Yeah.

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<v Speaker 1>Absolutely. You know, when we see the large cap universe,

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<v Speaker 1>I mean, and we've just seen it up till of

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<v Speaker 1>late in the last sort of couple of months of

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<v Speaker 1>dow out performing, which means is a sexual rotation. What

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<v Speaker 1>is that rotation? And is it because of a fear

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<v Speaker 1>of perhaps they're being a slow down and perhaps going

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<v Speaker 1>to companies which are more defensive.

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<v Speaker 10>We think one of the things that's been so remarkable

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<v Speaker 10>about the last couple of months is that the US

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<v Speaker 10>economy has proven much more resilient than many had feared,

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<v Speaker 10>and so we are seeing a broadening out of that rally.

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<v Speaker 10>So the short term out performance is one thing, but

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<v Speaker 10>if you look at the longer term kind of durable

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<v Speaker 10>rally of some of these large cap tech names, they've

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<v Speaker 10>really dominated. If you look over twelve eighteen month period,

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<v Speaker 10>so it is a broadening of bus market continued in

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<v Speaker 10>enthusiasm for the fact that you know, we do have

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<v Speaker 10>robust growth here. Still, third quarter will probably come in

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<v Speaker 10>stronger than what many had anticipated and relatively strong consumer

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<v Speaker 10>So against that backdrop, it's not surprised, not surprised to

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<v Speaker 10>see the market broaden out a bit.

0:12:01.800 --> 0:12:03.840
<v Speaker 2>It is a different story, I think we can agree

0:12:03.840 --> 0:12:07.480
<v Speaker 2>in China. Goldman Sachs recently cutting its target on Chinese

0:12:07.480 --> 0:12:11.080
<v Speaker 2>equities a lot of concern here of what's happening with

0:12:11.120 --> 0:12:14.560
<v Speaker 2>the property market, and Goldman is of the view that

0:12:14.720 --> 0:12:21.520
<v Speaker 2>until Beijing introduces more forceful policy measures, property prices and

0:12:21.720 --> 0:12:25.199
<v Speaker 2>equities will likely continue to slump. And I'm wondering how

0:12:25.200 --> 0:12:26.920
<v Speaker 2>you're viewing the China story right now.

0:12:27.240 --> 0:12:30.960
<v Speaker 10>Well, we have been pretty negative on China for quite

0:12:31.000 --> 0:12:34.000
<v Speaker 10>a while now. We didn't think that the post COVID

0:12:34.040 --> 0:12:36.080
<v Speaker 10>bounce was going to be nearly as robust as what

0:12:36.160 --> 0:12:39.280
<v Speaker 10>many had believed. And as we're seeing, there are still

0:12:39.320 --> 0:12:42.240
<v Speaker 10>overhangs from property market and we think, unfortunately this is

0:12:42.280 --> 0:12:45.840
<v Speaker 10>going to be a long duration kind of workout situation.

0:12:45.920 --> 0:12:47.840
<v Speaker 10>We don't think it's going to be a typical Western

0:12:47.920 --> 0:12:50.280
<v Speaker 10>crisis where things kind of fall out of the bottom,

0:12:50.360 --> 0:12:52.040
<v Speaker 10>you take your medicine, and then you kind of move on.

0:12:52.120 --> 0:12:54.400
<v Speaker 10>We think that they're going to try to navigate some

0:12:54.440 --> 0:12:58.600
<v Speaker 10>sort of a management of that crisis, but it's probably

0:12:58.640 --> 0:13:00.600
<v Speaker 10>going to impact their growth story for the next couple

0:13:00.600 --> 0:13:01.320
<v Speaker 10>of years.

0:13:01.720 --> 0:13:03.760
<v Speaker 1>Lauri, it's interesting you say that, say that you didn't

0:13:03.800 --> 0:13:07.560
<v Speaker 1>quite buy into the bounce after the COVID off the

0:13:07.600 --> 0:13:10.880
<v Speaker 1>COVID restrictions were lifted. Why didn't you believe in that

0:13:11.040 --> 0:13:14.719
<v Speaker 1>in that bounce lasting for a long time? And secondly,

0:13:15.120 --> 0:13:17.080
<v Speaker 1>how does that inform you now that view that you

0:13:17.200 --> 0:13:17.920
<v Speaker 1>just shared with us.

0:13:18.240 --> 0:13:20.600
<v Speaker 10>Well, I think, first and foremost, there wasn't as much

0:13:20.600 --> 0:13:23.960
<v Speaker 10>sort of pent up demand or pent up capacity, if

0:13:24.000 --> 0:13:27.040
<v Speaker 10>you will, as you had in other geographies where you

0:13:27.160 --> 0:13:30.040
<v Speaker 10>had actually a fair amount of fiscal stimulus which was

0:13:30.080 --> 0:13:34.199
<v Speaker 10>actually supportive of consumer behaviors. You also still had a

0:13:34.600 --> 0:13:38.760
<v Speaker 10>number of disruptions from a geopolitical standpoint, concerns about the

0:13:38.800 --> 0:13:41.319
<v Speaker 10>property market, which had been weighing on the region for

0:13:41.400 --> 0:13:44.000
<v Speaker 10>quite some time. And by the way, I guess at

0:13:44.040 --> 0:13:47.000
<v Speaker 10>backdrop where other parts of the world were slowing from

0:13:47.080 --> 0:13:50.000
<v Speaker 10>their post COVID rebounds and not as much take up

0:13:50.000 --> 0:13:52.880
<v Speaker 10>of the capacity that might be available coming out of China.

0:13:53.080 --> 0:13:55.320
<v Speaker 2>So is there a global market Let's put the US

0:13:55.360 --> 0:13:58.640
<v Speaker 2>aside that you're interested in. Can I tempt you to

0:13:58.679 --> 0:14:01.640
<v Speaker 2>take a position in Japanese for example.

0:14:02.360 --> 0:14:05.440
<v Speaker 10>So we keep trying to get excited about Asia. More generally,

0:14:05.480 --> 0:14:07.319
<v Speaker 10>we tend not to do it on a country by

0:14:07.360 --> 0:14:10.600
<v Speaker 10>country basis. So while yes, Japan has been a very

0:14:10.679 --> 0:14:12.800
<v Speaker 10>good performing market here and we certainly like some of

0:14:12.840 --> 0:14:16.640
<v Speaker 10>the names there and are overweight in our global portfolios

0:14:16.679 --> 0:14:20.880
<v Speaker 10>where we have active management at play, it's not really

0:14:21.160 --> 0:14:24.800
<v Speaker 10>where we've gotten to know Asia. More generally, we do

0:14:24.920 --> 0:14:27.720
<v Speaker 10>like Europe, though we think that the European story may

0:14:27.760 --> 0:14:31.640
<v Speaker 10>be a bit under appreciated, and you know, certainly as

0:14:31.680 --> 0:14:34.280
<v Speaker 10>long as the war, you know, moves on there, there's

0:14:34.320 --> 0:14:36.600
<v Speaker 10>a little bit of a lack of enthusiasm. But we

0:14:36.640 --> 0:14:37.400
<v Speaker 10>do like Europe.

0:14:37.480 --> 0:14:39.440
<v Speaker 2>Laurie, thank you so much for taking time to chat

0:14:39.440 --> 0:14:42.080
<v Speaker 2>with us. Lori Heinel, the global CEIO at State Street

0:14:42.080 --> 0:14:45.880
<v Speaker 2>Global Advisors, joining us here on DBA. This is Bloomberg

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