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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: Bank earnings resumed this morning with Morgan Stanley and Bank

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Speaker 3: of America set to report. That's after mixed results from

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Speaker 3: lenders last week. We get a preview from Bloomberg Intelligence

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Speaker 3: senior analyst Alison Williams.

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Speaker 4: Net interest income is going to be the key variable

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Speaker 4: that we're going to be looking at for Bank of America,

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Speaker 4: and that's after we saw upside to both the quarterly

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Speaker 4: numbers as well as guidance on that particular line items

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Speaker 4: from some of the biggest banks last week. Bank of

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Speaker 4: America should get some benefit from the card loans where

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Speaker 4: we've saw some good growth. They do have some exposure there. However,

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Speaker 4: weakness on the commercial and industrial side could be a negative.

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Speaker 4: As for Morgan Stanley, the deposit costs are a factor

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Speaker 4: for them, But really the bigger picture is going to

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Speaker 4: be on the trading and fee side of things, just

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Speaker 4: because that tends to be a little bit more volatile.

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Speaker 4: Equity trading is a week spot this quarter. Fees are studying,

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Speaker 4: but they're setting at pre pandemic levels. Are there some

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Speaker 4: signs of hope going into the second half or will

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Speaker 4: that be pushed out till twenty twenty four.

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Speaker 3: Allison Williams with Bloomberg Intelligence says flows for June could

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Speaker 3: be key for Morgan Stanley. The bank saw those steady

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Speaker 3: in May after seasonal outflows in April.

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Speaker 2: Meantime, Nathan wall Street banks will face stiffer rules on

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Speaker 2: mortgage capital than their global peers. Bloomberg News has learned

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Speaker 2: the change is part of a sweeping overhaul due to

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Speaker 2: be unveiled by regulators at the end of this month.

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Speaker 2: Bloomberg's Katanga Johnson breaks down the changes.

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Speaker 5: What this measure will require is for banks to put

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Speaker 5: more capital aside to how boffer against any potential defaults

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Speaker 5: or losses. And while there are certain standards that globally

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Speaker 5: that banks a ball flights as well be imposed to

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Speaker 5: the US centers scoch just a little bit.

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Speaker 2: Beyond, and Bloomberg's Katanga Johnson says the FDI SEE, the

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Speaker 2: FED and the Office of the Controller of the Currency

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Speaker 2: are declining to comment on the move. Where told, the

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Speaker 2: regulators are likely to unveil the changes on July twenty seventh.

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Speaker 3: Well, the economy is going to be in focus as well.

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Speaker 3: This morning, Karen. When we get retail sales data for June,

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Speaker 3: economists forecast a solid half percent gain. We get more

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Speaker 3: from Bloomberg Economics correspondent Michael McKee.

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Speaker 6: Americans likely spent more during June as auto sales at

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Speaker 6: other discretionary purchases rose, helping boost sales and increase in

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Speaker 6: consumer sentiment, brought on in part by lower gasoline prices.

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Speaker 6: Retail sales are calculated on a dollar basis, so gas

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Speaker 6: will be a drag on the numbers, but it means

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Speaker 6: there was more available to spend on other things. June

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Speaker 6: is usually a good month at outdoor and gardening stores,

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Speaker 6: and home remodeling has been relatively strong. Inflation's contribution to

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Speaker 6: the data is shrinking, so the headline numbers will give

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Speaker 6: a little clearer picture of the consumer economy. Good numbers

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Speaker 6: should lift markets as the outlook tilts more towards a

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Speaker 6: soft landing. Michael McKee, Bloomberg Daybreak.

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Speaker 2: All right, Michael, thank you. While turning to geopolitics now,

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Speaker 2: tensions between the US and China continue to take center stage.

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Speaker 2: We're learning the US plans to limit investments in ships,

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Speaker 2: AI and quantum computing in China likely by next year.

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Speaker 2: At the same time, though the scope OFO'SE limits is

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Speaker 2: being cut back. Bloomberg's Amy Morris has details from Washington.

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Speaker 7: The Biden administration's plans to restrict investments in China will

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Speaker 7: be narrowly focused on cutting edge technology, only new investments,

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Speaker 7: and likely won't take effect until next year. Treasury Secretary

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Speaker 7: Janet Yellen tell's Bloomberg the restrictions are narrowly targeted.

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Speaker 8: They would focus on a few sectors, in particular semiconductor's,

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Speaker 8: quantum computing, and artificial intelligence.

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Speaker 7: This is part of the administration's effort to limit China's

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Speaker 7: capabilities in developing next gen tech, but the original scale

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Speaker 7: of the program has been cut back to include only

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Speaker 7: new investments and not the biotech and energy sectors, sources

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Speaker 7: tell Bloomberg. Officials won a proposal by the end of

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Speaker 7: next month. In Washington, I may me Morris Bloomy daybreak.

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Speaker 3: All right, a me thank you. While the Whitehouse looks

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Speaker 3: to restrict investment in China, it's also looking for common

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Speaker 3: ground with Beijing on climate change. Special Climate Envoy John

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Speaker 3: Kerry met today with China's Premier League Kiang. Negotiations are

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Speaker 3: aimed at a series of issues, including global climate targets,

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Speaker 3: methane abatement, and the use of coal fired power.

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Speaker 2: And turning to corporate news now, Nathan, it could take

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Speaker 2: a little more time for Microsoft to close its takeover

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Speaker 2: off Activision. The original deadline for the sixty nine billion

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Speaker 2: dollar deal was today. The companies are still waiting for

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Speaker 2: final regulatory approvals, including a key one in the UK.

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Speaker 3: The meantime, big tech more broadly has been on a

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Speaker 3: tear Karen. The Nasdaq one hundred has gained forty three

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Speaker 3: percent this year. That has some on Wall Street worried

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Speaker 3: about a pullback, including Arc Investment Management CEO Kathy Wood.

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Speaker 3: She tells us notes of caution are popping up in

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Speaker 3: equity markets.

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Speaker 8: You know what's interesting is to see funds having nice

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Speaker 8: moves and flows not follow I think there's a wall

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Speaker 8: of worry up out there. It is about further interest

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Speaker 8: rate increases. What's going to break next? It's about a

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Speaker 8: hard landing.

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Speaker 3: Kathy Wood says she's still focused on growth tied to

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Speaker 3: artificial intelligence. She's buying shares of companies that could benefit

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Speaker 3: from the technology. Stay tuned for more of our interview

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Speaker 3: with the Ark Investment CEO. It's coming up shortly on

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Speaker 3: Bloomberg Daybreak.

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Speaker 2: Well, despite those concerns from Kathy Wood and Nathan, investors

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Speaker 2: are bullet shawn tech and they expect a soft landing

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Speaker 2: for the US economy. Those are the findings of Bank

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Speaker 2: of America's latest global survey and show sixty eight percent

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Speaker 2: of fund managers expect an economic slow down without a recession,

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Speaker 2: and being long on big tech stocks top the list

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Speaker 2: of most crowded trades in the survey. And this is Bloomberg.

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Speaker 3: Time now to take a look at some of the

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Speaker 3: other stories making news in New York and around the world.

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Speaker 3: For that were joined by Bloomberg's Michael Barr.

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Speaker 9: Good morning, Michael, Good morning, Nathan. To Florida judge who

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Speaker 9: issued accord ruling last year that critics said was unduly

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Speaker 9: fait favorable to former President Donald Trump is set to

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Speaker 9: preside over the first pre trial conference in his landmark

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Speaker 9: criminal case concerning the willful retention of classified documents. Prosecutors

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Speaker 9: and defense lawyers are scheduled to appear today before US

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Speaker 9: District Judge Ellen Kennon. They will discuss the rules and

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Speaker 9: procedures that will govern how classified evidence is used in

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Speaker 9: the case. Meanwhile, Donald Trump has suffered another legal defeat,

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Speaker 9: Bloomberg said. Baxter reports, this one in Georgia.

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Speaker 10: Trumpet attempted to have the election probe stopped and that

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Speaker 10: Georgia Supreme Court said no, the decision unanimous. An announcement

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Speaker 10: from Fulton County District Attorney Fanny Willis is expected soon

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Speaker 10: to announce whether a grand jury has brought indictments in

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Speaker 10: the case. Trump's attorneys have argued that Georgia's special grand

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Speaker 10: jury process is generally unconstitutional and that the DA has

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Speaker 10: been permitted to turn the twenty twenty election probe into

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Speaker 10: quote a Jerry rigged investigative weapon. Quote in San Francisco,

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Speaker 10: I'm at Baxter Bloomberg daybreak.

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Speaker 9: House, Democrats introduced a resolution to censure Republican Congressman George

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Speaker 9: Santos of New York. Fellow New York Representative Richie Turres,

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Speaker 9: a Democrat, says Santos quote repeatedly lied to voters in

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Speaker 9: his district.

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Speaker 6: The breadth and depth of his deception is so staggering

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Speaker 6: that it cries out for congressional punishment.

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Speaker 9: Congressman Tourist says, after seven months of delay by the House,

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Speaker 9: Republicans doing nothing is no longer an option. Phoenix has

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Speaker 9: set to break a record today with heat. Phoenix tiede

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Speaker 9: a record yesterday of eighteen straight days of one hundred

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Speaker 9: ten degrees or higher, and the forecast is for it

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Speaker 9: to be one hundred and seventeen degrees every day through

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Speaker 9: the end of the week. Hollywood's historic double strike continues

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Speaker 9: as actors have joined writers on the picket line. Entertainment

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Speaker 9: attorney Jonathan Handel says the studios and unions aren't anywhere

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Speaker 9: close to an agreement.

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Speaker 11: I have a fear that there may be nothing in

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Speaker 11: the current dynamic that will drive the parties back to

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Speaker 11: the table until the.

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Speaker 9: Oscars actors are demanding higher pay and AI protections. Global

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Speaker 9: News twenty four hours a day, powered by more than

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Speaker 9: twenty seven hundred journalists and analysts in over one hundred

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Speaker 9: and twenty countries. I'm Michael Bard. This is Bloomberg, Nathan.

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Speaker 1: Thank you, Michael.

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Speaker 12: Time now for the Bloomberg Sports update. Here's John Stanshout.

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Speaker 12: Thanks Nathan. The losses just mounting for the Yankees. Seven

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Speaker 12: in the last nine, sixteen in the last twenty seven.

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Speaker 12: The Yankees are in sole possession of last place this

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Speaker 12: late in the season for the first time since nineteen

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Speaker 12: ninety In Anahe'm just like the day before. In Denver,

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Speaker 12: Yanks had a late three to one leads seventh inning.

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Speaker 12: Joe Hey Otani up as the Tine run.

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Speaker 13: Here's the pin the Swineys and drives them all deep

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Speaker 13: out in their left center field.

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Speaker 9: It's south by.

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Speaker 14: The wall.

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Speaker 13: Here, Hey, get to Johnny and Earnstone and tonight on

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Speaker 13: this Monday night is showtime.

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Speaker 9: Hey LAA.

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Speaker 15: Angels would then score tenth inning to win four to three.

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Speaker 15: The Yanks truckout seventeen times. John Carlos Stan Anthony Rizzo

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Speaker 15: combined zero for ten, striking out five times. Yanks got

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Speaker 15: a good start from Luis seven Arena. Then Michael King

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Speaker 15: came in, got only two outs, walk three, gave up

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Speaker 15: that O'tani homer, which was his thirty fifth. He's on

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Speaker 15: pace to hit sixty red Sox won seven nothing. In Oakland,

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Speaker 15: Will combined one hitter with eighteen strike ads, and that

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Speaker 15: drops the Yanks to sole possession of the seller. As expected,

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Speaker 15: the deadline passed, no new long term deal for the

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Speaker 15: Giant Saquon Barkley. The same thing happened to a couple

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Speaker 15: of other top running backs. The Raiders Josh Jacobs, the

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Speaker 15: Cowboys Tony Pollard all figured to play on the franchise tag.

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Speaker 15: Although Barkley may not be in a hurry to sign it,

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Speaker 15: he can then skip training camp and not be fined.

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Speaker 15: The sale to Washington Commanders from Dan Snyder to Josh

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Speaker 15: Harris King namsly approved by the NFL Finance Committee, heads

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Speaker 15: to a vote of all the owners. The Jets reluctantly

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Speaker 15: agreed to be on HB Those Hard Knocks Training Camp

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Speaker 15: reality show. They demanded that scenes where they cut players

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Speaker 15: not to be shown. N Dashaward Bloomberg Sports.

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Speaker 9: From coast to coast, from New York to San Francisco,

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Speaker 9: Boston to Washington, DC, nationwide on Syrias Exam, the Bloomberg

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Speaker 9: Business app in Bloomberg dot Com.

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Speaker 5: This is Bloomberg Daybreak.

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Speaker 7: Good morning.

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Speaker 9: I'm Nathan Hager.

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Speaker 10: Kathy Wood.

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Speaker 3: She is a big name on Wall Street, known for

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Speaker 3: her bets on tech companies like Tesla, Twitter, and in Nvidia.

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Speaker 3: She did miss out on the latest Games Foreign video though,

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Speaker 3: selling shares before the aikraze sent the chip maker soaring.

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Speaker 5: Well.

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Speaker 3: Now we're getting Kathy Wood's view on the broader tech

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Speaker 3: industry and what's next for equities in the space. The

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Speaker 3: Arc Investment Management CEO sat down for an interview with

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Speaker 3: our colleagues Carol Master and Matt Miller late yesterday. Let's

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Speaker 3: listen into that conversation now with Kathy Wood.

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Speaker 16: Kathy, nice to have you back. Matt and I were

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Speaker 16: just talking before we got going. Nasdaq one more than

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Speaker 16: forty percent best first half for the index. Investors are

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Speaker 16: definitely chasing risk this year, anything that feels euphoric, irrationally

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Speaker 16: in your view, that maybe we need a little bit

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Speaker 16: of a correction here.

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Speaker 8: You know, what's interesting is to see funds having nice

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Speaker 8: moves and flows not follow I don't think. I think

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Speaker 8: there's a wall of worry up out there. It is

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Speaker 8: about further interest rate increases. What's going to break next,

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Speaker 8: It's about a hard landing. It's about a hard landing

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Speaker 8: in the context of now China and Europe really seeing

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Speaker 8: struggling and how will that reverberate. So we actually think

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Speaker 8: that and we've been saying this for some time, that

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Speaker 8: deflation is the bigger risk out here, and I think

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Speaker 8: we're going to see an unwinding of auto prices. That

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Speaker 8: the Ford F one fifty lightnings price decline is going

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Speaker 8: to be the first of many, many auto cuts that

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Speaker 8: we'll see. And if you remember, during the early stage

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Speaker 8: of COVID and the supply shocks, at one point the

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Speaker 8: combination of used cars and new cars accounted for a

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Speaker 8: third of the increase in inflation. I think you'll see

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Speaker 8: that on the downside here, and we're going to get

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Speaker 8: to two percent inflation, I think, much faster than many

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Speaker 8: people think, with perhaps a harder landing, more for corporate

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Speaker 8: margins than anything else, because if you see these discounting

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Speaker 8: and you see consumers respond to discounts, maybe real growth

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Speaker 8: kind of. I still think we'll have a harder landing,

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Speaker 8: but maybe with price declines we'll stave that off.

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Speaker 14: That hard landing.

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Speaker 11: For a while, well, we were hearing investors say that

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Speaker 11: inflation is no longer concern number one. Growth is really

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Speaker 11: what the market is concerned about now. And so you

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Speaker 11: think we're going to have a recession, Kathy.

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Speaker 8: Yeah, If you look at real corporate revenue growth, it's

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Speaker 8: down one point one percent year over year as of

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Speaker 8: that was as of the first quarter. That is consistent

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Speaker 8: with gross domestic income down one point one percent. This

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Speaker 8: is real gross domestic income down one point one percent

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Speaker 8: year over year. Gross domestic income and gross domestic product

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Speaker 8: over time equal one another. It's an identity, but the

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Speaker 8: information flows are different. And income you get a lot

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Speaker 8: from the IRS, a lot.

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Speaker 14: Of income data.

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Speaker 8: The product data, product and service data is a little

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Speaker 8: bit more sampled and erratic, but over time, so we

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Speaker 8: could already be in that downturn. And the GDP numbers

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Speaker 8: we'll just catch up later on.

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Speaker 11: What about the inflation numbers. I mean, we come down

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Speaker 11: over the last year from nine point one percent CPI

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Speaker 11: to three that's pretty quick. And you know, I've talked

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Speaker 11: to you a couple of times in the last couple

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Speaker 11: of years and you've mentioned a concern about deflation rather

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Speaker 11: than inflation. Do you think we're going to start to

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Speaker 11: see that coming as we see it in other major economies,

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Speaker 11: most notably China.

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Speaker 8: Yes, it's very interesting to Chinese Deflation is so their

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Speaker 8: price prices are down according to the PPI five point

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Speaker 8: four percent year over year, and I do believe they

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Speaker 8: are going to export it over time. So yes, we

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Speaker 8: do think we're going to see price deflation but there

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Speaker 8: are two flavors of deflation. There's good and there's bad.

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Speaker 8: The good deflation has to do with innovation, and we

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Speaker 8: have centered our research around five major platforms, all of

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Speaker 8: which are technologically enabled and deflationary, and they're becoming a

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Speaker 8: bigger part of the pie electric vehicle sales. For example,

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Speaker 8: Tesla's making sure that it's passing along the cost declines

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Speaker 8: from its drive electric drive trains to consumers so that

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Speaker 8: it can sustain demand. Anything having to do with innovation,

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Speaker 8: the best companies are going to pass those costs along

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Speaker 8: to the consumers. And so I think you're going to

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Speaker 8: see much broader based deflation in not only the transportation sector,

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Speaker 8: but perhaps everywhere because artificial intelligence training costs AI training

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Speaker 8: costs are dropping. Get this, seventy percent per year. Seventy

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Speaker 8: percent per year. Now that's the good deflation is causing

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Speaker 8: booms in activity.

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Speaker 14: But we do know that.

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Speaker 8: Disruptive innovation will disturb or disintermediate the traditional world order.

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Speaker 8: Think electric vehicles and gas powered vehicles. You know, these

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Speaker 8: auto companies ninety to ninety five percent of their revenues

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Speaker 8: are still tied to the internal combustion engine.

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Speaker 16: So, Kathy, when people talk about AI. Do you think

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Speaker 16: it's going to upend the labor market substantially.

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Speaker 8: The history of technology over time is that it's a

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Speaker 8: net job creator. In the short term, you'll see some displacement,

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Speaker 8: You'll need some retraining. But I like to remind people

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Speaker 8: about the Internet. In the early days of the Internet,

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Speaker 8: when we're trying to figure out what it was and

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Speaker 8: how it was going to work, we had no idea

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Speaker 8: about Uber or Airbnb businesses that could not exist without

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Speaker 8: the Internet. And I think the same is going to

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Speaker 8: be true in the AI world as well. I think

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Speaker 8: it's going to be a tremendous boon to productivity. It

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Speaker 8: is the equivalent for knowledge workers of the assembly line

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Speaker 8: in the industrial age.

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Speaker 14: This is the new assembly line. And you know what happened.

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Speaker 8: Because of the original assembly line, Well, a lot of

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Speaker 8: people left the farms.

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Speaker 14: There are a lot of farmers then and.

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Speaker 8: Moved into businesses and activities that they didn't dream were

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Speaker 8: possible before that.

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Speaker 14: And I think the same will prove true. Now.

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Speaker 11: Hey, it love it little Henry Ford history there.

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Speaker 16: I like it, love love, love no, but it's like

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Speaker 16: this big picture. One thing I want to ask you,

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Speaker 16: kind of whittling it down a little bit.

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Speaker 2: You know.

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Speaker 16: One of the things in the headlines today has to

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Speaker 16: do about Dad j Oones. You did an interview and

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Speaker 16: you talked about Twitter and writing down your stake in

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Speaker 16: Twitter by I think about forty seven percent since Elon

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Speaker 16: took it over. You're still bullish long term, So help

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Speaker 16: me understand that right down against a long term bullish view.

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Speaker 8: Sure that we have no choice in this. This is

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Speaker 8: we have a pricing committee. We calculate our net asset

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Speaker 8: value for the ARC Venture Fund every day and we

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Speaker 8: get a lot of markers. There's trading on the secondary

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Speaker 8: market less. So with Twitter, we are trying to find

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Speaker 8: some Twitter. We love to buy some at this level.

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Speaker 8: But while a Fidelity has marked it down and some

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Speaker 8: of the other large managers have marked their positions down

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Speaker 8: dramatically based on yes, we are still getting information about

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Speaker 8: advertising sales not picking up dramatically yet, but they're in

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Speaker 8: very early stage. With Linda joining the team, we'd love

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Speaker 8: to buy it. We think longer term. We think that

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Speaker 8: Elon understands what a super app is. After all, he

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Speaker 8: did get started in the payment space and sold his

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Speaker 8: company to PayPal. In the last week, Twitter has gotten

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Speaker 8: money transmitter licenses from three or four states, and they're

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Speaker 8: going to cover the land and we chat pay taught

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Speaker 8: us a lot about what a super app is in

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Speaker 8: terms of not only information flow, but financial activities and commerce.

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Speaker 8: So we think Elon has grand plans, and you know,

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Speaker 8: it's also been interesting. I think some of these markdowns

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Speaker 8: may be a result of Threads.

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Speaker 14: I don't know.

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Speaker 8: I don't get involved in that decision making, but if

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Speaker 8: you look at Threads already, the engagement activity is plummeting.

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Speaker 8: I think people know that Threads is no Twitter.

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