Speaker 1: Good morning.
Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the
Speaker 2: stories we're following today.
Speaker 3: Bank earnings resumed this morning with Morgan Stanley and Bank
Speaker 3: of America set to report. That's after mixed results from
Speaker 3: lenders last week. We get a preview from Bloomberg Intelligence
Speaker 3: senior analyst Alison Williams.
Speaker 4: Net interest income is going to be the key variable
Speaker 4: that we're going to be looking at for Bank of America,
Speaker 4: and that's after we saw upside to both the quarterly
Speaker 4: numbers as well as guidance on that particular line items
Speaker 4: from some of the biggest banks last week. Bank of
Speaker 4: America should get some benefit from the card loans where
Speaker 4: we've saw some good growth. They do have some exposure there. However,
Speaker 4: weakness on the commercial and industrial side could be a negative.
Speaker 4: As for Morgan Stanley, the deposit costs are a factor
Speaker 4: for them, But really the bigger picture is going to
Speaker 4: be on the trading and fee side of things, just
Speaker 4: because that tends to be a little bit more volatile.
Speaker 4: Equity trading is a week spot this quarter. Fees are studying,
Speaker 4: but they're setting at pre pandemic levels. Are there some
Speaker 4: signs of hope going into the second half or will
Speaker 4: that be pushed out till twenty twenty four.
Speaker 3: Allison Williams with Bloomberg Intelligence says flows for June could
Speaker 3: be key for Morgan Stanley. The bank saw those steady
Speaker 3: in May after seasonal outflows in April.
Speaker 2: Meantime, Nathan wall Street banks will face stiffer rules on
Speaker 2: mortgage capital than their global peers. Bloomberg News has learned
Speaker 2: the change is part of a sweeping overhaul due to
Speaker 2: be unveiled by regulators at the end of this month.
Speaker 2: Bloomberg's Katanga Johnson breaks down the changes.
Speaker 5: What this measure will require is for banks to put
Speaker 5: more capital aside to how boffer against any potential defaults
Speaker 5: or losses. And while there are certain standards that globally
Speaker 5: that banks a ball flights as well be imposed to
Speaker 5: the US centers scoch just a little bit.
Speaker 2: Beyond, and Bloomberg's Katanga Johnson says the FDI SEE, the
Speaker 2: FED and the Office of the Controller of the Currency
Speaker 2: are declining to comment on the move. Where told, the
Speaker 2: regulators are likely to unveil the changes on July twenty seventh.
Speaker 3: Well, the economy is going to be in focus as well.
Speaker 3: This morning, Karen. When we get retail sales data for June,
Speaker 3: economists forecast a solid half percent gain. We get more
Speaker 3: from Bloomberg Economics correspondent Michael McKee.
Speaker 6: Americans likely spent more during June as auto sales at
Speaker 6: other discretionary purchases rose, helping boost sales and increase in
Speaker 6: consumer sentiment, brought on in part by lower gasoline prices.
Speaker 6: Retail sales are calculated on a dollar basis, so gas
Speaker 6: will be a drag on the numbers, but it means
Speaker 6: there was more available to spend on other things. June
Speaker 6: is usually a good month at outdoor and gardening stores,
Speaker 6: and home remodeling has been relatively strong. Inflation's contribution to
Speaker 6: the data is shrinking, so the headline numbers will give
Speaker 6: a little clearer picture of the consumer economy. Good numbers
Speaker 6: should lift markets as the outlook tilts more towards a
Speaker 6: soft landing. Michael McKee, Bloomberg Daybreak.
Speaker 2: All right, Michael, thank you. While turning to geopolitics now,
Speaker 2: tensions between the US and China continue to take center stage.
Speaker 2: We're learning the US plans to limit investments in ships,
Speaker 2: AI and quantum computing in China likely by next year.
Speaker 2: At the same time, though the scope OFO'SE limits is
Speaker 2: being cut back. Bloomberg's Amy Morris has details from Washington.
Speaker 7: The Biden administration's plans to restrict investments in China will
Speaker 7: be narrowly focused on cutting edge technology, only new investments,
Speaker 7: and likely won't take effect until next year. Treasury Secretary
Speaker 7: Janet Yellen tell's Bloomberg the restrictions are narrowly targeted.
Speaker 8: They would focus on a few sectors, in particular semiconductor's,
Speaker 8: quantum computing, and artificial intelligence.
Speaker 7: This is part of the administration's effort to limit China's
Speaker 7: capabilities in developing next gen tech, but the original scale
Speaker 7: of the program has been cut back to include only
Speaker 7: new investments and not the biotech and energy sectors, sources
Speaker 7: tell Bloomberg. Officials won a proposal by the end of
Speaker 7: next month. In Washington, I may me Morris Bloomy daybreak.
Speaker 3: All right, a me thank you. While the Whitehouse looks
Speaker 3: to restrict investment in China, it's also looking for common
Speaker 3: ground with Beijing on climate change. Special Climate Envoy John
Speaker 3: Kerry met today with China's Premier League Kiang. Negotiations are
Speaker 3: aimed at a series of issues, including global climate targets,
Speaker 3: methane abatement, and the use of coal fired power.
Speaker 2: And turning to corporate news now, Nathan, it could take
Speaker 2: a little more time for Microsoft to close its takeover
Speaker 2: off Activision. The original deadline for the sixty nine billion
Speaker 2: dollar deal was today. The companies are still waiting for
Speaker 2: final regulatory approvals, including a key one in the UK.
Speaker 3: The meantime, big tech more broadly has been on a
Speaker 3: tear Karen. The Nasdaq one hundred has gained forty three
Speaker 3: percent this year. That has some on Wall Street worried
Speaker 3: about a pullback, including Arc Investment Management CEO Kathy Wood.
Speaker 3: She tells us notes of caution are popping up in
Speaker 3: equity markets.
Speaker 8: You know what's interesting is to see funds having nice
Speaker 8: moves and flows not follow I think there's a wall
Speaker 8: of worry up out there. It is about further interest
Speaker 8: rate increases. What's going to break next? It's about a
Speaker 8: hard landing.
Speaker 3: Kathy Wood says she's still focused on growth tied to
Speaker 3: artificial intelligence. She's buying shares of companies that could benefit
Speaker 3: from the technology. Stay tuned for more of our interview
Speaker 3: with the Ark Investment CEO. It's coming up shortly on
Speaker 3: Bloomberg Daybreak.
Speaker 2: Well, despite those concerns from Kathy Wood and Nathan, investors
Speaker 2: are bullet shawn tech and they expect a soft landing
Speaker 2: for the US economy. Those are the findings of Bank
Speaker 2: of America's latest global survey and show sixty eight percent
Speaker 2: of fund managers expect an economic slow down without a recession,
Speaker 2: and being long on big tech stocks top the list
Speaker 2: of most crowded trades in the survey. And this is Bloomberg.
Speaker 3: Time now to take a look at some of the
Speaker 3: other stories making news in New York and around the world.
Speaker 3: For that were joined by Bloomberg's Michael Barr.
Speaker 9: Good morning, Michael, Good morning, Nathan. To Florida judge who
Speaker 9: issued accord ruling last year that critics said was unduly
Speaker 9: fait favorable to former President Donald Trump is set to
Speaker 9: preside over the first pre trial conference in his landmark
Speaker 9: criminal case concerning the willful retention of classified documents. Prosecutors
Speaker 9: and defense lawyers are scheduled to appear today before US
Speaker 9: District Judge Ellen Kennon. They will discuss the rules and
Speaker 9: procedures that will govern how classified evidence is used in
Speaker 9: the case. Meanwhile, Donald Trump has suffered another legal defeat,
Speaker 9: Bloomberg said. Baxter reports, this one in Georgia.
Speaker 10: Trumpet attempted to have the election probe stopped and that
Speaker 10: Georgia Supreme Court said no, the decision unanimous. An announcement
Speaker 10: from Fulton County District Attorney Fanny Willis is expected soon
Speaker 10: to announce whether a grand jury has brought indictments in
Speaker 10: the case. Trump's attorneys have argued that Georgia's special grand
Speaker 10: jury process is generally unconstitutional and that the DA has
Speaker 10: been permitted to turn the twenty twenty election probe into
Speaker 10: quote a Jerry rigged investigative weapon. Quote in San Francisco,
Speaker 10: I'm at Baxter Bloomberg daybreak.
Speaker 9: House, Democrats introduced a resolution to censure Republican Congressman George
Speaker 9: Santos of New York. Fellow New York Representative Richie Turres,
Speaker 9: a Democrat, says Santos quote repeatedly lied to voters in
Speaker 9: his district.
Speaker 6: The breadth and depth of his deception is so staggering
Speaker 6: that it cries out for congressional punishment.
Speaker 9: Congressman Tourist says, after seven months of delay by the House,
Speaker 9: Republicans doing nothing is no longer an option. Phoenix has
Speaker 9: set to break a record today with heat. Phoenix tiede
Speaker 9: a record yesterday of eighteen straight days of one hundred
Speaker 9: ten degrees or higher, and the forecast is for it
Speaker 9: to be one hundred and seventeen degrees every day through
Speaker 9: the end of the week. Hollywood's historic double strike continues
Speaker 9: as actors have joined writers on the picket line. Entertainment
Speaker 9: attorney Jonathan Handel says the studios and unions aren't anywhere
Speaker 9: close to an agreement.
Speaker 11: I have a fear that there may be nothing in
Speaker 11: the current dynamic that will drive the parties back to
Speaker 11: the table until the.
Speaker 9: Oscars actors are demanding higher pay and AI protections. Global
Speaker 9: News twenty four hours a day, powered by more than
Speaker 9: twenty seven hundred journalists and analysts in over one hundred
Speaker 9: and twenty countries. I'm Michael Bard. This is Bloomberg, Nathan.
Speaker 1: Thank you, Michael.
Speaker 12: Time now for the Bloomberg Sports update. Here's John Stanshout.
Speaker 12: Thanks Nathan. The losses just mounting for the Yankees. Seven
Speaker 12: in the last nine, sixteen in the last twenty seven.
Speaker 12: The Yankees are in sole possession of last place this
Speaker 12: late in the season for the first time since nineteen
Speaker 12: ninety In Anahe'm just like the day before. In Denver,
Speaker 12: Yanks had a late three to one leads seventh inning.
Speaker 12: Joe Hey Otani up as the Tine run.
Speaker 13: Here's the pin the Swineys and drives them all deep
Speaker 13: out in their left center field.
Speaker 9: It's south by.
Speaker 14: The wall.
Speaker 13: Here, Hey, get to Johnny and Earnstone and tonight on
Speaker 13: this Monday night is showtime.
Speaker 9: Hey LAA.
Speaker 15: Angels would then score tenth inning to win four to three.
Speaker 15: The Yanks truckout seventeen times. John Carlos Stan Anthony Rizzo
Speaker 15: combined zero for ten, striking out five times. Yanks got
Speaker 15: a good start from Luis seven Arena. Then Michael King
Speaker 15: came in, got only two outs, walk three, gave up
Speaker 15: that O'tani homer, which was his thirty fifth. He's on
Speaker 15: pace to hit sixty red Sox won seven nothing. In Oakland,
Speaker 15: Will combined one hitter with eighteen strike ads, and that
Speaker 15: drops the Yanks to sole possession of the seller. As expected,
Speaker 15: the deadline passed, no new long term deal for the
Speaker 15: Giant Saquon Barkley. The same thing happened to a couple
Speaker 15: of other top running backs. The Raiders Josh Jacobs, the
Speaker 15: Cowboys Tony Pollard all figured to play on the franchise tag.
Speaker 15: Although Barkley may not be in a hurry to sign it,
Speaker 15: he can then skip training camp and not be fined.
Speaker 15: The sale to Washington Commanders from Dan Snyder to Josh
Speaker 15: Harris King namsly approved by the NFL Finance Committee, heads
Speaker 15: to a vote of all the owners. The Jets reluctantly
Speaker 15: agreed to be on HB Those Hard Knocks Training Camp
Speaker 15: reality show. They demanded that scenes where they cut players
Speaker 15: not to be shown. N Dashaward Bloomberg Sports.
Speaker 9: From coast to coast, from New York to San Francisco,
Speaker 9: Boston to Washington, DC, nationwide on Syrias Exam, the Bloomberg
Speaker 9: Business app in Bloomberg dot Com.
Speaker 5: This is Bloomberg Daybreak.
Speaker 7: Good morning.
Speaker 9: I'm Nathan Hager.
Speaker 10: Kathy Wood.
Speaker 3: She is a big name on Wall Street, known for
Speaker 3: her bets on tech companies like Tesla, Twitter, and in Nvidia.
Speaker 3: She did miss out on the latest Games Foreign video though,
Speaker 3: selling shares before the aikraze sent the chip maker soaring.
Speaker 5: Well.
Speaker 3: Now we're getting Kathy Wood's view on the broader tech
Speaker 3: industry and what's next for equities in the space. The
Speaker 3: Arc Investment Management CEO sat down for an interview with
Speaker 3: our colleagues Carol Master and Matt Miller late yesterday. Let's
Speaker 3: listen into that conversation now with Kathy Wood.
Speaker 16: Kathy, nice to have you back. Matt and I were
Speaker 16: just talking before we got going. Nasdaq one more than
Speaker 16: forty percent best first half for the index. Investors are
Speaker 16: definitely chasing risk this year, anything that feels euphoric, irrationally
Speaker 16: in your view, that maybe we need a little bit
Speaker 16: of a correction here.
Speaker 8: You know, what's interesting is to see funds having nice
Speaker 8: moves and flows not follow I don't think. I think
Speaker 8: there's a wall of worry up out there. It is
Speaker 8: about further interest rate increases. What's going to break next,
Speaker 8: It's about a hard landing. It's about a hard landing
Speaker 8: in the context of now China and Europe really seeing
Speaker 8: struggling and how will that reverberate. So we actually think
Speaker 8: that and we've been saying this for some time, that
Speaker 8: deflation is the bigger risk out here, and I think
Speaker 8: we're going to see an unwinding of auto prices. That
Speaker 8: the Ford F one fifty lightnings price decline is going
Speaker 8: to be the first of many, many auto cuts that
Speaker 8: we'll see. And if you remember, during the early stage
Speaker 8: of COVID and the supply shocks, at one point the
Speaker 8: combination of used cars and new cars accounted for a
Speaker 8: third of the increase in inflation. I think you'll see
Speaker 8: that on the downside here, and we're going to get
Speaker 8: to two percent inflation, I think, much faster than many
Speaker 8: people think, with perhaps a harder landing, more for corporate
Speaker 8: margins than anything else, because if you see these discounting
Speaker 8: and you see consumers respond to discounts, maybe real growth
Speaker 8: kind of. I still think we'll have a harder landing,
Speaker 8: but maybe with price declines we'll stave that off.
Speaker 14: That hard landing.
Speaker 11: For a while, well, we were hearing investors say that
Speaker 11: inflation is no longer concern number one. Growth is really
Speaker 11: what the market is concerned about now. And so you
Speaker 11: think we're going to have a recession, Kathy.
Speaker 8: Yeah, If you look at real corporate revenue growth, it's
Speaker 8: down one point one percent year over year as of
Speaker 8: that was as of the first quarter. That is consistent
Speaker 8: with gross domestic income down one point one percent. This
Speaker 8: is real gross domestic income down one point one percent
Speaker 8: year over year. Gross domestic income and gross domestic product
Speaker 8: over time equal one another. It's an identity, but the
Speaker 8: information flows are different. And income you get a lot
Speaker 8: from the IRS, a lot.
Speaker 14: Of income data.
Speaker 8: The product data, product and service data is a little
Speaker 8: bit more sampled and erratic, but over time, so we
Speaker 8: could already be in that downturn. And the GDP numbers
Speaker 8: we'll just catch up later on.
Speaker 11: What about the inflation numbers. I mean, we come down
Speaker 11: over the last year from nine point one percent CPI
Speaker 11: to three that's pretty quick. And you know, I've talked
Speaker 11: to you a couple of times in the last couple
Speaker 11: of years and you've mentioned a concern about deflation rather
Speaker 11: than inflation. Do you think we're going to start to
Speaker 11: see that coming as we see it in other major economies,
Speaker 11: most notably China.
Speaker 8: Yes, it's very interesting to Chinese Deflation is so their
Speaker 8: price prices are down according to the PPI five point
Speaker 8: four percent year over year, and I do believe they
Speaker 8: are going to export it over time. So yes, we
Speaker 8: do think we're going to see price deflation but there
Speaker 8: are two flavors of deflation. There's good and there's bad.
Speaker 8: The good deflation has to do with innovation, and we
Speaker 8: have centered our research around five major platforms, all of
Speaker 8: which are technologically enabled and deflationary, and they're becoming a
Speaker 8: bigger part of the pie electric vehicle sales. For example,
Speaker 8: Tesla's making sure that it's passing along the cost declines
Speaker 8: from its drive electric drive trains to consumers so that
Speaker 8: it can sustain demand. Anything having to do with innovation,
Speaker 8: the best companies are going to pass those costs along
Speaker 8: to the consumers. And so I think you're going to
Speaker 8: see much broader based deflation in not only the transportation sector,
Speaker 8: but perhaps everywhere because artificial intelligence training costs AI training
Speaker 8: costs are dropping. Get this, seventy percent per year. Seventy
Speaker 8: percent per year. Now that's the good deflation is causing
Speaker 8: booms in activity.
Speaker 14: But we do know that.
Speaker 8: Disruptive innovation will disturb or disintermediate the traditional world order.
Speaker 8: Think electric vehicles and gas powered vehicles. You know, these
Speaker 8: auto companies ninety to ninety five percent of their revenues
Speaker 8: are still tied to the internal combustion engine.
Speaker 16: So, Kathy, when people talk about AI. Do you think
Speaker 16: it's going to upend the labor market substantially.
Speaker 8: The history of technology over time is that it's a
Speaker 8: net job creator. In the short term, you'll see some displacement,
Speaker 8: You'll need some retraining. But I like to remind people
Speaker 8: about the Internet. In the early days of the Internet,
Speaker 8: when we're trying to figure out what it was and
Speaker 8: how it was going to work, we had no idea
Speaker 8: about Uber or Airbnb businesses that could not exist without
Speaker 8: the Internet. And I think the same is going to
Speaker 8: be true in the AI world as well. I think
Speaker 8: it's going to be a tremendous boon to productivity. It
Speaker 8: is the equivalent for knowledge workers of the assembly line
Speaker 8: in the industrial age.
Speaker 14: This is the new assembly line. And you know what happened.
Speaker 8: Because of the original assembly line, Well, a lot of
Speaker 8: people left the farms.
Speaker 14: There are a lot of farmers then and.
Speaker 8: Moved into businesses and activities that they didn't dream were
Speaker 8: possible before that.
Speaker 14: And I think the same will prove true. Now.
Speaker 11: Hey, it love it little Henry Ford history there.
Speaker 16: I like it, love love, love no, but it's like
Speaker 16: this big picture. One thing I want to ask you,
Speaker 16: kind of whittling it down a little bit.
Speaker 2: You know.
Speaker 16: One of the things in the headlines today has to
Speaker 16: do about Dad j Oones. You did an interview and
Speaker 16: you talked about Twitter and writing down your stake in
Speaker 16: Twitter by I think about forty seven percent since Elon
Speaker 16: took it over. You're still bullish long term, So help
Speaker 16: me understand that right down against a long term bullish view.
Speaker 8: Sure that we have no choice in this. This is
Speaker 8: we have a pricing committee. We calculate our net asset
Speaker 8: value for the ARC Venture Fund every day and we
Speaker 8: get a lot of markers. There's trading on the secondary
Speaker 8: market less. So with Twitter, we are trying to find
Speaker 8: some Twitter. We love to buy some at this level.
Speaker 8: But while a Fidelity has marked it down and some
Speaker 8: of the other large managers have marked their positions down
Speaker 8: dramatically based on yes, we are still getting information about
Speaker 8: advertising sales not picking up dramatically yet, but they're in
Speaker 8: very early stage. With Linda joining the team, we'd love
Speaker 8: to buy it. We think longer term. We think that
Speaker 8: Elon understands what a super app is. After all, he
Speaker 8: did get started in the payment space and sold his
Speaker 8: company to PayPal. In the last week, Twitter has gotten
Speaker 8: money transmitter licenses from three or four states, and they're
Speaker 8: going to cover the land and we chat pay taught
Speaker 8: us a lot about what a super app is in
Speaker 8: terms of not only information flow, but financial activities and commerce.
Speaker 8: So we think Elon has grand plans, and you know,
Speaker 8: it's also been interesting. I think some of these markdowns
Speaker 8: may be a result of Threads.
Speaker 14: I don't know.
Speaker 8: I don't get involved in that decision making, but if
Speaker 8: you look at Threads already, the engagement activity is plummeting.
Speaker 8: I think people know that Threads is no Twitter.
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