Speaker 1: Good morning. I'm Richard Salamat.
Speaker 2: And I'm Doug Prisner. Here are the stories we're following today.
Speaker 1: It is all about what used to be called ARM Holdings. Now.
Speaker 1: This is SoftBank's semiconductor designing unit. It's a file for
Speaker 1: what is said to be this year's biggest IPO in
Speaker 1: the United States. Let's get details now from Bloomberg's Joeannawell.
Speaker 3: The company plans to start its road show the first
Speaker 3: week of September and price the IPO the following week.
Speaker 3: ARM is seeking to be valued in the listing at
Speaker 3: sixty billion to seventy billion dollars. The offering is being
Speaker 3: led by Barclays, Goldman Sachs, JP, Morgan Chase, and Mizuho.
Speaker 3: But there's no sign of Morgan Stanley in ARMS draft
Speaker 3: IPO fouling. That's a rare event for a bank that's
Speaker 3: often a lead advisor on landmark technology IPOs. A successful
Speaker 3: debut by ARM would provide a welcome relief for soft
Speaker 3: Bank after its Vision fund lost a record thirty billion
Speaker 3: dollars last year. I'm joining Wan Bloomberg Day brageisiha Well
Speaker 3: after the.
Speaker 2: Bell in the US Zoom Video Commune locations raised its
Speaker 2: forecast for both profit and sales for the full year.
Speaker 2: The story from Bloomberg's Charlie Pellett.
Speaker 4: It is a positive sign for the software maker's plan
Speaker 4: to expand products beyond its namesake video conferencing software. Investors
Speaker 4: have been concerned about the stagnation of Zoom's once explosive
Speaker 4: sales as the company is challenged by major rivals such
Speaker 4: as Microsoftware, its central product. Zoom's plan to resuscitate growth
Speaker 4: hinges on expanding its tools for large businesses such as
Speaker 4: phone platforms, customer service systems, calendar applications, and chat features,
Speaker 4: fueled by advancements in artificial intelligence. In New York. Charlie
Speaker 4: Pellett Bloomberg Daybreak Asia.
Speaker 1: Right, well, Siddy, let's have a look now what was
Speaker 1: going on at Goldman Sachs reported in wanted to get
Speaker 1: out the personal financial management business. The reasons behind it
Speaker 1: will explain that by Bloomberg's through the Natheragen.
Speaker 5: Goldman Sachs is exploring a sale of an investment advisory
Speaker 5: business that had just bought four years ago, which is
Speaker 5: another Solomon deal, another deal that was struck under its CEO,
Speaker 5: David Solomon, that is being undone. That is the great
Speaker 5: chase of the mass market that Goldman had plotted a
Speaker 5: while back. It's completely being unknown now. And this is
Speaker 5: another sign off that.
Speaker 1: That was a Bloomberg SA. Another ogent saying that GOMEZX
Speaker 1: is in advanced discussions with potential bias.
Speaker 2: We are hearing that City Group CEO Jane Fraser is
Speaker 2: weighing an executive reshuffle. This follows the exit of the
Speaker 2: bank's longtime deputy Paco Ebara. Fraser is looking to simplify
Speaker 2: the company's businesses and organizational structure. Here is Bloomberg's Shanali Basik.
Speaker 6: Remember paco Ebara is on his way out, So what
Speaker 6: does this do? This elevates their business leaders themselves as
Speaker 6: well as giz Drane Fraser, the CEO, more oversight potentially
Speaker 6: into those different businesses as they lose a pivotal leader
Speaker 6: of more than three decades.
Speaker 2: Now, in an effort to simplify operations, City Group will
Speaker 2: officially scrap two of its core operating units. Those include
Speaker 2: the Institutional Clients Group and the personal Banking and Wealth
Speaker 2: Management division.
Speaker 1: Rashan all right, well, let's get back to China and
Speaker 1: the countries is said to be considering ramping up support
Speaker 1: for local government financing vehicles or lgfvs. And this is
Speaker 1: really down to the amount of debt that they're carrying
Speaker 1: in all the worries about them being unable to pay
Speaker 1: that back.
Speaker 7: Bondiau has more, China may set up an emergency liquidity
Speaker 7: tool to provide low cost funds for longer maturities to
Speaker 7: lgfe's that's according to Chinese media allt Taisin. If approved,
Speaker 7: the move would provide cash strapped lgfe's access to funds
Speaker 7: to improve their cash flow and avoid short term liquidity stress.
Speaker 7: There are no official figures for the size of LGF debt,
Speaker 7: but the International Monetary Fund estimates it was seven point
Speaker 7: eight trillion dollars last year in Hong Kong. I'm Bonnie
Speaker 7: al Bloomberg Daybreak Asia.
Speaker 2: We were talking earlier about the rough ride for US treasuries,
Speaker 2: the sell off in the bond market forcing ten year
Speaker 2: yields to a near sixteen year high. We've got a
Speaker 2: ten year last quoted in New York at four thirty three. Essentially,
Speaker 2: the market is bracing for the risk that interest rates
Speaker 2: will remain elevated. We've heard the refrain higher for longer.
Speaker 2: The FED will have its annual gathering, the Symposium in
Speaker 2: Jackson Hole, Wyoming, at the end of the week. Traders
Speaker 2: are expecting a hawkish tone from fedcher J. Powell. He's
Speaker 2: set to speak on Friday. Here's Claudia Strom, founding member
Speaker 2: of Strom Consulting.
Speaker 5: This is not going to be talked about because it's there.
Speaker 5: They're going to hold to two percent, and frankly, I
Speaker 5: will think they will hold it to the very end.
Speaker 2: Claudias Strom talking about the FED sticking to its inflation
Speaker 2: target of two percent. Now, despite the movement in treasury
Speaker 2: yields today, the swaps market is still pricing in the
Speaker 2: fact that the Fed is likely done with its rate
Speaker 2: hike strategy and potentially could begin ending or rather cutting
Speaker 2: next year. And before we get to global news, let's
Speaker 2: just pass along that Charles Schwab will be cutting jobs
Speaker 2: and closing or downsizing some of its corporate offices. The
Speaker 2: associated costs are expected to be between four hundred million
Speaker 2: and five hundred million dollars. We had shares in Charles
Speaker 2: Schwab today down just two tenths of one percent. It's
Speaker 2: time now for a look at global news. The bail
Speaker 2: for Donald Trump in the Georgia election interference trial has
Speaker 2: been set. Let's get to Ed Baxter for a look
Speaker 2: at Global News.
Speaker 8: Eddie, Yes, and it is two hundred thousand dollars DOUG.
Speaker 8: A consent agreement Trump through his attorney also agreeing to
Speaker 8: make no direct or indirect threats of any nature against
Speaker 8: any victim of alleged scheme, including in social media posts.
Speaker 8: This agreement reached before his surrender later this week. Meanwhile,
Speaker 8: Trump is saying again he will not participate in the
Speaker 8: first debate or maybe any of the others for the GOP.
Speaker 8: Bloomberg's Nancy Lyons says this doesn't surprise some political scene watchers.
Speaker 9: A former president has defied naively said he will not
Speaker 9: take part. He cites his wide lead in the latest
Speaker 9: survey of likely GOP voters. The decision does not surprise
Speaker 9: Charlie Cook of the Cook Report.
Speaker 2: Or President Trunk should have his head examined if he
Speaker 2: did go into debate.
Speaker 10: He's got everything to lose, nothing to gain from it.
Speaker 9: As for the eventual nominees for the presidential race, Cook
Speaker 9: tells Bloomberg sound on the only obstacle he sees preventing
Speaker 9: it from being a Biden Trump face off would be
Speaker 9: health related issues in Washington. Nancy lyons Bloomberg Daybreak Asia.
Speaker 8: All right, Nancy, thank you. Japan will begin a contingents
Speaker 8: plan to discharge wastewater from the Fukushima nuclear disaster site
Speaker 8: as soon as this week. NHK reports Prime Minister Fumiokashia
Speaker 8: will meet with his cabinet at ten am local this morning.
Speaker 8: Remnants of Tropical Storm Hillary is still pummeling areas outside
Speaker 8: of the major southern California cities. Flights being disrupted and
Speaker 8: record amounts of rain being recorded major cities. I say,
Speaker 8: feeling they really dodge to major bullet. ABC News Tim
Speaker 8: Pilliam on Bloomberg, saying that there's some blue sky shows.
Speaker 2: We care about our firefighters first in our community as well,
Speaker 2: and if they can go to work.
Speaker 8: In a healthy way, then it's difficult for them to serve.
Speaker 8: This is Tim right now.
Speaker 11: We are seeing conditions improved greatly and that is very
Speaker 11: good news. But Hillary brought record breaking rainfall to southern California.
Speaker 11: Some parts saw up to a year's worth of rain
Speaker 11: in just one day.
Speaker 8: Yeah, but in Palm Springs, yeah, that's the floodwater still
Speaker 8: waiting for water to receive and then to assess damage.
Speaker 8: The storm is moving up through Las Vegas. US President
Speaker 8: Joe Biden has arrived on Maui as famous Chief at
Speaker 8: Deanna Chriswell has already said today that efforts to find
Speaker 8: survivor's temporary shelter has gone very well.
Speaker 9: There are sixteen people that remain in shelters, and we
Speaker 9: have posted two thousand people that we have already moved
Speaker 9: into a hotel rooms.
Speaker 8: Meanwhile, in his first national interview since the burning of
Speaker 8: Lehina Town on Maui, fire Chief Brad Ventura says the
Speaker 8: fires have been devastating for the islands firefighters.
Speaker 3: Firefighters are hurting.
Speaker 5: This is their community, this is their home, These are
Speaker 5: their people.
Speaker 2: Nobody in our department is unaffected by this.
Speaker 8: Yeah, he says, fifteen firefighters did lose their homes. Global
Speaker 8: news power by more than twenty seven hundred journalists and
Speaker 8: analysts in over one hundred and twenty countries. In San Francisco,
Speaker 8: I'm Ed Baxter, and this is Bloomberg.
Speaker 2: Let's get to Lori, heinel our guest. Lori is the
Speaker 2: Global CIO at State Street Global Advisors. She joins US
Speaker 2: from Boston, Massachusetts. It's always a pleasure, Laurie, thanks for
Speaker 2: joining us. Talk to me a little bit about what
Speaker 2: you're seeing in the bond market today. Elevated yields. Yeah,
Speaker 2: some of this may be tied to the notion that
Speaker 2: we're maybe on the verge of a soft landing and
Speaker 2: that rates will be higher for longer. Are you expecting
Speaker 2: the economy to kind of weaken to the point where
Speaker 2: we can be talking about FED rate cuts next year?
Speaker 10: Well, we actually are thinking that we're going to be
Speaker 10: talking a lot more about FED rate cuts next year. Obviously,
Speaker 10: all eyes right now are going to be all what
Speaker 10: the Fed and Chairman Power are going to say at
Speaker 10: Jackson Hole. We believe that they will remain diligent about
Speaker 10: inflation and keep that next rate hike on the table.
Speaker 10: We actually think that the FED has done enough already
Speaker 10: and we're seeing lots of signs of weakening both in
Speaker 10: the economy but also more sustainably lower inflation rates.
Speaker 1: But ultimately, here Laurie, I mean, surely they're going to
Speaker 1: not be cutting rates back to what we've had in
Speaker 1: the post to GFC era because they need to have
Speaker 1: abs to deal with structural changes, which may mean that
Speaker 1: inflation is structurally higher for longer.
Speaker 10: Well, we think that there's a case to be made
Speaker 10: that inflation's slightly higher than it would have been sort
Speaker 10: of pre the COVID era, but certainly not something that
Speaker 10: justifies rates with a five handle. We actually think growth
Speaker 10: in the US next year is going to be sub
Speaker 10: one percent, and there's a risk that we have a
Speaker 10: recession next year. We also look at more near term
Speaker 10: inflationary data, and you're seeing the rolling three months come
Speaker 10: in and around a three handle. So we actually think
Speaker 10: that the FED may be cutting pretty dramatically going into
Speaker 10: next year, as much as two hundred basis points.
Speaker 2: I haven't heard that before. We have a two year
Speaker 2: treasurer right now yielding five percent. Maybe we can pivot
Speaker 2: away from the macro a little bit and talk some
Speaker 2: of what's been happening in the equity market today. Big
Speaker 2: rally in in Nvidia now this company will report results
Speaker 2: on Wednesday. It's certainly become a bit of a proxy
Speaker 2: for the trade and artificial intelligence. Despite higher bond yields today,
Speaker 2: there was no holding back in video. Are you a
Speaker 2: buyer of this the theme of AI?
Speaker 10: Well, we're more a buyer of growth and quality growth,
Speaker 10: especially if we're right about our core call, which is
Speaker 10: that US growth is going to slow pretty dramatically, and
Speaker 10: that's against a backdrop where global growth is likely to
Speaker 10: slow pretty dramatically. Once again, investors are going to be
Speaker 10: looking for those pockets that have some tailwinds, and so
Speaker 10: we do think that large cap US, particularly technology services,
Speaker 10: some of those areas are poised to do better. Yeah.
Speaker 1: Absolutely. You know, when we see the large cap universe,
Speaker 1: I mean, and we've just seen it up till of
Speaker 1: late in the last sort of couple of months of
Speaker 1: dow out performing, which means is a sexual rotation. What
Speaker 1: is that rotation? And is it because of a fear
Speaker 1: of perhaps they're being a slow down and perhaps going
Speaker 1: to companies which are more defensive.
Speaker 10: We think one of the things that's been so remarkable
Speaker 10: about the last couple of months is that the US
Speaker 10: economy has proven much more resilient than many had feared,
Speaker 10: and so we are seeing a broadening out of that rally.
Speaker 10: So the short term out performance is one thing, but
Speaker 10: if you look at the longer term kind of durable
Speaker 10: rally of some of these large cap tech names, they've
Speaker 10: really dominated. If you look over twelve eighteen month period,
Speaker 10: so it is a broadening of bus market continued in
Speaker 10: enthusiasm for the fact that you know, we do have
Speaker 10: robust growth here. Still, third quarter will probably come in
Speaker 10: stronger than what many had anticipated and relatively strong consumer
Speaker 10: So against that backdrop, it's not surprised, not surprised to
Speaker 10: see the market broaden out a bit.
Speaker 2: It is a different story, I think we can agree
Speaker 2: in China. Goldman Sachs recently cutting its target on Chinese
Speaker 2: equities a lot of concern here of what's happening with
Speaker 2: the property market, and Goldman is of the view that
Speaker 2: until Beijing introduces more forceful policy measures, property prices and
Speaker 2: equities will likely continue to slump. And I'm wondering how
Speaker 2: you're viewing the China story right now.
Speaker 10: Well, we have been pretty negative on China for quite
Speaker 10: a while now. We didn't think that the post COVID
Speaker 10: bounce was going to be nearly as robust as what
Speaker 10: many had believed. And as we're seeing, there are still
Speaker 10: overhangs from property market and we think, unfortunately this is
Speaker 10: going to be a long duration kind of workout situation.
Speaker 10: We don't think it's going to be a typical Western
Speaker 10: crisis where things kind of fall out of the bottom,
Speaker 10: you take your medicine, and then you kind of move on.
Speaker 10: We think that they're going to try to navigate some
Speaker 10: sort of a management of that crisis, but it's probably
Speaker 10: going to impact their growth story for the next couple
Speaker 10: of years.
Speaker 1: Lauri, it's interesting you say that, say that you didn't
Speaker 1: quite buy into the bounce after the COVID off the
Speaker 1: COVID restrictions were lifted. Why didn't you believe in that
Speaker 1: in that bounce lasting for a long time? And secondly,
Speaker 1: how does that inform you now that view that you
Speaker 1: just shared with us.
Speaker 10: Well, I think, first and foremost, there wasn't as much
Speaker 10: sort of pent up demand or pent up capacity, if
Speaker 10: you will, as you had in other geographies where you
Speaker 10: had actually a fair amount of fiscal stimulus which was
Speaker 10: actually supportive of consumer behaviors. You also still had a
Speaker 10: number of disruptions from a geopolitical standpoint, concerns about the
Speaker 10: property market, which had been weighing on the region for
Speaker 10: quite some time. And by the way, I guess at
Speaker 10: backdrop where other parts of the world were slowing from
Speaker 10: their post COVID rebounds and not as much take up
Speaker 10: of the capacity that might be available coming out of China.
Speaker 2: So is there a global market Let's put the US
Speaker 2: aside that you're interested in. Can I tempt you to
Speaker 2: take a position in Japanese for example.
Speaker 10: So we keep trying to get excited about Asia. More generally,
Speaker 10: we tend not to do it on a country by
Speaker 10: country basis. So while yes, Japan has been a very
Speaker 10: good performing market here and we certainly like some of
Speaker 10: the names there and are overweight in our global portfolios
Speaker 10: where we have active management at play, it's not really
Speaker 10: where we've gotten to know Asia. More generally, we do
Speaker 10: like Europe, though we think that the European story may
Speaker 10: be a bit under appreciated, and you know, certainly as
Speaker 10: long as the war, you know, moves on there, there's
Speaker 10: a little bit of a lack of enthusiasm. But we
Speaker 10: do like Europe.
Speaker 2: Laurie, thank you so much for taking time to chat
Speaker 2: with us. Lori Heinel, the global CEIO at State Street
Speaker 2: Global Advisors, joining us here on DBA. This is Bloomberg
Speaker 2: day Break Asia. You're morning brief on the stories making
Speaker 2: news from Hong Kong to Singapore and Wall Street.
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