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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: FED Governor Chris Waller says that policymakers can't afford to

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Speaker 3: proceed carefully with interest rate increases.

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Speaker 1: He's Waller speaking with CNBC.

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Speaker 4: There's nothing that is saying we need to do anything

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Speaker 4: imminent anytime soon, So we can just sit there, wait

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Speaker 4: for the data, see if things continue. The biggest thing

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Speaker 4: is just inflation. We got two good reports in a row.

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Speaker 4: Can wait and see what a third one looks like

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Speaker 4: and see whether this low inflation is a trend or

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Speaker 4: it was just an outlier or a fluke.

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Speaker 3: Fed Governor Chris Waller on CNBCE. Separately, Cleveland FED President

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Speaker 3: Loretta Mester said that the Fed may need to raise

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Speaker 3: interest rates a bit higher. However, she thinks there is

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Speaker 3: still time before the next Fed decision. Fed officials will

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Speaker 3: gather next. On September nineteenth and twentieth.

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Speaker 2: We had the price of crude oil rally, not just

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Speaker 2: here in New York, but the Brent contract as well.

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Speaker 2: This was after Saudi Arabia and Russia said they'd extend

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Speaker 2: production cuts. As these countries try to offset weak global demand.

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Speaker 2: In New York, crude oil was up one point three

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Speaker 2: percent we closed. Let's see eighty six sixty nine the barrel.

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Speaker 2: That's the highest level since about mid no November of

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Speaker 2: last year, and in turn that boosted many of the

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Speaker 2: energy stocks. Here's Jim Bianco of Bianco Research.

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Speaker 5: Since late June, crude oil prices are up more than

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Speaker 5: twenty seven percent right now. Gasoline prices haven't caught up

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Speaker 5: with it, and they probably will when you see a big.

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Speaker 1: Move like that.

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Speaker 5: And yes, I know that Saudis have been voluntarily cutting,

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Speaker 5: They've extended their cuts, but those have been in place

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Speaker 5: for months. It's more consistent with a strong Atlanta fed

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Speaker 5: GDP and strong data in downgrading the probabilities of a

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Speaker 5: recession because people are consuming energy because the economy is

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Speaker 5: moving forward. I think that that will continue to be

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Speaker 5: the case.

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Speaker 2: That is Jim Bianco there of Bianco Research. By the way,

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Speaker 2: this rise in the price of oil will likely cause

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Speaker 2: more displeasure for consumers in the US. The Biden administration

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Speaker 2: is trying to avoid the threat of four dollars a

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Speaker 2: gallon gasoline. Now, gasoline prices are already at their highest

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Speaker 2: seasonal level in more than a decade, right.

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Speaker 3: And this one is interesting, a big ipo, but perhaps

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Speaker 3: a little disappointing. Soft Banks ARM Holdings is planning to

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Speaker 3: raise at least four point eighty seven billion dollars in

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Speaker 3: an initial public offering, and we hear it's aiming for

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Speaker 3: a valuation of close to fifty five billion dollars. It

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Speaker 3: would be the biggest stock debut of the year, but

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Speaker 3: not nearly as big as was initially expected. We get

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Speaker 3: more here from Bloomberg.

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Speaker 1: To ed Ludlow.

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Speaker 6: Previously, we believe that ARM wanted to raise between eight

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Speaker 6: and ten billion dollars at a much higher evaluation, say

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Speaker 6: sixty to seventy billion dollars. But what happened or transpired

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Speaker 6: was soft Bank acquired the twenty five percent stake of

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Speaker 6: ARM that the Vision Fund held, and we know that

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Speaker 6: all told, after the transaction, SoftBank will still control ninety

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Speaker 6: percent of the shares, which is an interesting dynamic given

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Speaker 6: the kind of big name cornerstone or anchor investors that

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Speaker 6: are on this deal, which include Apple and Vidia, AMD, Alphabet, Intel,

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Speaker 6: among others that Bloombergs reported.

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Speaker 3: Bloomberg's Ed Ludlow Arm set in a filing with the

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Speaker 3: Securities in Exchange Commission that he will offer ninety five

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Speaker 3: and a half million American depositary shares for forty seven

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Speaker 3: to fifty one dollars each.

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Speaker 2: Well, the Chinese property developer Country Garden has avoided its

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Speaker 2: first default. It did so by paying interest on two

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Speaker 2: dollar bonds within a grace period ending September fifth and sixth. Now,

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Speaker 2: this did bring a little bit of relief during a

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Speaker 2: liquidity crisis which has shaken China's financial markets. Here's Bloomberg's

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Speaker 2: Rebecca Chong Wilkins in Hong Kong.

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Speaker 7: So they have rustled up this twenty two point five

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Speaker 7: million dollars, they say, and they have told noteholders in

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Speaker 7: order to avoid an official default, they've made that payment

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Speaker 7: within the grace period. But Country Guard just this year

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Speaker 7: has to raise another just over half a billion US

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Speaker 7: dollars to pay off at least four bond maturities and

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Speaker 7: another coupon that comes due this month. So we certainly

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Speaker 7: not over the sort of will they won't they excitement

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Speaker 7: that we've seen all through the last thirty days of

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Speaker 7: this grace period.

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Speaker 2: That is Rebecca Chung Wilkins. By the way, so far

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Speaker 2: this here shares in Country Garden are down about sixty

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Speaker 2: two percent.

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Speaker 3: Right meantime, China DOUG is said to be looking to

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Speaker 3: raise funds to bankroll investments in chip making and research.

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Speaker 1: We'll breaks Joan Wong with the story.

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Speaker 8: In Hong Kong, the China Integrate a Circuit Industry Investment

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Speaker 8: Fund is establishing his third and largest investment pool of

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Speaker 8: about forty one point one billion dollars. Writers reported that

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Speaker 8: the process may take time and it's unclear who the

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Speaker 8: potential investors are or when it might launch, but the

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Speaker 8: country's finance Ministry may contribute about eight point two billion

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Speaker 8: dollars to the fund. Despite local media enthusiasm, it remains

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Speaker 8: unclear how Chinese players can circumvent strict US curbs on

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Speaker 8: technology shares and chip related firms. We are mostly down

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Speaker 8: Tuesday in the wake of weak economic data in Hong Kong.

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Speaker 8: Join Walt Bloomberg Radio DOUG.

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Speaker 3: We're seeing a lot of coordinated action now on the

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Speaker 3: property sector in China, and it appears to be coming

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Speaker 3: from the top Country Garden. We just did that story.

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Speaker 3: They made the interest payments on two dollars bonds within

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Speaker 3: the grace period. It's not clear if they got help

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Speaker 3: from the state on that that. We might learn more

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Speaker 3: about that coming up. But mortgage and down payment rules

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Speaker 3: have been relaxed, the banks have been told to lower rates.

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Speaker 3: One key question, and we can we can put this

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Speaker 3: to our guests today, is it too late it made

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Speaker 3: something that That's something that we just don't know at

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Speaker 3: the moment, but it might be.

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Speaker 2: Well, obviously this is going to buy Country Garden a

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Speaker 2: lot of time. I think the company's got to sort

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Speaker 2: through about one hundred and eighty seven billion dollars US

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Speaker 2: worth of liabilities. The other thing that I want to

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Speaker 2: point out very quickly, Brian, is that the FED so

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Speaker 2: far has offloaded about a billion dollars from its bond holdings.

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Speaker 2: We reached a record in April of last year about

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Speaker 2: eight point four trillion, So right now I think the

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Speaker 2: balance sheet works out to around seven point four trillion,

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Speaker 2: And all of that rollof has been happening without too

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Speaker 2: much in the way of market disruption.

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Speaker 3: Absolutely, that seems to be quiet, quietly happening.

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Speaker 1: That's something else we can talk to our guests about. Doug.

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Speaker 3: Let's take a look now at Global News. Indian Prime

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Speaker 3: Minister Narendra Modi has added a bit of nationalism to

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Speaker 3: the G twenty at Baxter has Global News from the

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Speaker 3: nine to sixty news room in San Francisco.

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Speaker 9: Ed.

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Speaker 10: Yeah, we're not even reading between the lines here. Brian

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Speaker 10: dinner invitations have replaced the word India with ancient Sanskrit

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Speaker 10: word Bahrat. Barrot has used interchangeably with India, and the

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Speaker 10: constitution often appears in popular songs and movies. In recent months,

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Speaker 10: Mody's party has begun using the Sanskrit version, and it's

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Speaker 10: included now on the dinner invitations for the G twenty.

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Speaker 10: A careful eye on US President Joe Biden's South after

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Speaker 10: his wife Jill tested positive for COVID this week. White

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Speaker 10: House spokeswoman Corrina Jean Pierre here, the.

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Speaker 11: First Lady is experiencing miles symptoms and will remain in

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Speaker 11: Delaware for the week. President Biden tested negative last night

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Speaker 11: for COVID nineteen and tested negative again today. He's not

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Speaker 11: experiencing any symptoms, so.

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Speaker 10: The President will leave this week. White House National Advisor

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Speaker 10: Jake Sullivan says the trip is still on.

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Speaker 12: On Thursday, the President will travel to New Delhi, India

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Speaker 12: to attend the G twenty Leader Summit. On Friday, President

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Speaker 12: Biden will participate in a bilateral meeting with Prime Minister

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Speaker 12: Modi of the Republic of India, and on Saturday and Sunday,

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Speaker 12: the President will participate in the official sessions of the

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Speaker 12: G twenty summit.

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Speaker 10: Now, Sullivan says the US remains committed to working with

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Speaker 10: emerging markets, and the G twenty will show the world's

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Speaker 10: powers can work together even in challenging times. As for China, well,

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Speaker 10: President Chi Jimpang, as we've been reporting, will not be there,

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Speaker 10: so Sullivan said, nothing China relate to this schedule at

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Speaker 10: this point.

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Speaker 12: Nothing's been scheduled. But the President has said before that

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Speaker 12: he's looking forward to picking up the conversation that he

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Speaker 12: had with President she and Bali last year, and he

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Speaker 12: fully intends to do that in the months ahead.

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Speaker 10: Yeah, formal G twenty sessions are this weekend. After two

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Speaker 10: freezing incidents in the past two months, Senate Minority Leader

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Speaker 10: Mitch McConnell returned to the Senate floor today. Bloomberg's Nancy

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Speaker 10: Lyons has more from Washington, d C.

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Speaker 13: I'm glad to welcome our college back.

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Speaker 14: Senator McConnell made no reference to his health, but did

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Speaker 14: say there's plenty to do in the coming weeks.

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Speaker 13: This month, of course, Conmerce needs to address our nation's

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Speaker 13: most pressing needs with townly appropriations, and we need to

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Speaker 13: keep the lights on. I'm all over.

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Speaker 14: First, Well, McConnell did not reference his health. His colleague,

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Speaker 14: Senate Majority Leader Chuck Schumer did.

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Speaker 1: I'm glad to see him back and doing.

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Speaker 14: Well in Washington, Nancy lyons Bloomberg Radio.

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Speaker 10: Now, the job one is keeping the government open. Right

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Speaker 10: wing of the Republican Party, and the High House might

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Speaker 10: try to make that very difficult. Bloomberg's Wendy Benjaminson says

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Speaker 10: they'll be calling what they what they call a mini bus,

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Speaker 10: a shaved down version of the budget introduced this week.

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Speaker 15: McConnell and Schumer have both said that spending bills in

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Speaker 15: the Senate at least always pass on a bipartisan basis,

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Speaker 15: that you always get both sides to agree to keep

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Speaker 15: the government going, and that these votes the mini bus

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Speaker 15: might be a signal to House Republicans to get this done,

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Speaker 15: keep the government running, keep all those checks coming for

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Speaker 15: senior citizens and veterans and all those people, keep planes

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Speaker 15: in the air, all that sort of stuff.

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Speaker 10: Meanwhile, US congressional doctor, says Center Republic lender McConnell shows

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Speaker 10: no evidence of seizure, disorder or stroke. Global newspower by

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Speaker 10: more than twenty seven hundred journalists and analysts in over

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Speaker 10: one hundred and twenty countries in San Francisco, I'm Ed Baxter,

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Speaker 10: and this is Bloomberg.

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Speaker 3: This is Bloomberg Daybreak Asia. I'm Brian Curtis, along with

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Speaker 3: Rashad Saloma, Doug Crisner on markets indead, looking at news

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Speaker 3: for us. Let's get to our guest, Eric Lynch, chief

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Speaker 3: investment officer at Sharf Investments.

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Speaker 1: Eric, let me ask you about what might be a

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Speaker 1: mild contradiction in capital markets.

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Speaker 3: As Doug mentioned earlier, we have companies just rushing now

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Speaker 3: to lock in borrowing costs before central banks can raise

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Speaker 3: rates further. And yet you have company like Blackrock and

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Speaker 3: Pimco betting now with real money that the FEDS tightening

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Speaker 3: cycle is ending. Which is it? Which one is right?

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Speaker 3: Or is that just the market doing what it does.

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Speaker 9: Yeah, that's a great question. It's a great conundrum, isn't it.

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Speaker 9: Like how you outline that? I think the question comes

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Speaker 9: down to what is more important with the FEDS to

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Speaker 9: mandate going forward, is it inflationary pressures or is it

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Speaker 9: full employment? You know, if you consider the fact that

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Speaker 9: you know, the current administration still has a little approval ranking,

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Speaker 9: it's pretty telling. It means that there's a lot of

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Speaker 9: citizens the United States that are being impacted more by

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Speaker 9: their wallet than they are by the increase of asset prices.

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Speaker 9: So what that tells us and kind of we keep

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Speaker 9: what you can kind of read between the lines of

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Speaker 9: pal following the last meeting is that they're still heavily

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Speaker 9: focused on what inflationary pricing is doing to consumers, and

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Speaker 9: I think there's still going to be a bias towards

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Speaker 9: tiding that even further, at least keeping Hawker stance. And

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Speaker 9: so what that tells us is that you know, rates

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Speaker 9: may be higher for longer.

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Speaker 16: Well absolutely end Eric. When you look at what's going

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Speaker 16: on with the bond buying at the moment, it's pretty

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Speaker 16: much bifurcated. On the one hand, you have asset manages

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Speaker 16: in long term players actually buying bonds and got the

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Speaker 16: head gas that's shorting them. So there you go.

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Speaker 1: That tells you everything.

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Speaker 16: Which side do you be on?

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Speaker 9: Yeah, I think there's still a room to be hawkish here.

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Speaker 9: I mean, let's let's look at the ground level for

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Speaker 9: a second, get out of the clouds. Dollar General reported

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Speaker 9: last week it's a bell weather for the low income consumer,

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Speaker 9: but it's a very large demographic. Unfortunately, United States, they

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Speaker 9: had negative same source of sales on the quarter despite

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Speaker 9: nominal increase of the prices.

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Speaker 1: Right, that's not great.

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Speaker 9: And because they had to bring markdowns even to get

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Speaker 9: consumer traffic, the gross margin and the operating margins to

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Speaker 9: clined annual kind of year every year, Arnie's for shared

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Speaker 9: actually declined by twenty eight percent, And so that's just

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Speaker 9: another indicative indication that the consumer in the US is

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Speaker 9: hurting and the FED is going to maintain a hawker stance.

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Speaker 3: It's interesting that in your notes you say that non

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Speaker 3: US stocks are more attractive than US s docs at

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Speaker 3: the moment.

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Speaker 1: So where would you be focusing.

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Speaker 9: Yeah, well, I would kind of preface it by saying,

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Speaker 9: we think there's more opportunities outside of the US. You know,

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Speaker 9: I'm sitting here in Lo Scattos, California, domosile of Netflix

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Speaker 9: Silkon Valley. It's kind of blasphemous to whisper this, but

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Speaker 9: we do think that there's not a scarcity of growth

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Speaker 9: and profit growth. There are opportunities outside of megacap us

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Speaker 9: det and so specifically we think outside of the US

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Speaker 9: there are opportunities and let's call it revenge spend. Still

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Speaker 9: as the economy kind of consumption transitions from goods the services.

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Speaker 9: Things like UK Basemith and Nephew are recovering quite nicely

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Speaker 9: from the pent up demand of elective orthopedic surgeries, and

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Speaker 9: things like Heinek in the Netherlands are going to still

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Speaker 9: continue to recover from the on trade consumption of alcohol.

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Speaker 9: So both of those things, just to put in perspective,

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Speaker 9: we think are going to produce earnings growth at twenty

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Speaker 9: four of about fifteen to seventeen percent. That's versus consensus

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Speaker 9: s and P growth for twelve and these are only

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Speaker 9: priced at fourteen to fifteen times earnings versus the SMP

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Speaker 9: price around nineteen and so that's a good opportunity of

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Speaker 9: these multinationals that has some revenue exposures to the US,

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Speaker 9: but they're just treated very differently because they're done without

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Speaker 9: outside of it.

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Speaker 16: Yeah, what about Chinese these companies themselves, would you be

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Speaker 16: interested in them? I know you talk about buy do it,

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Speaker 16: and certainly you can. You've already talked about people who

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Speaker 16: would be proxies for China in the roundabout way there.

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Speaker 16: But tell us about where you see value, if at all,

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Speaker 16: in terms of the Middle Kingdom.

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Speaker 9: Yeah, it's a great question. There's a lot of regulatory

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Speaker 9: and now economic risk, as you just outlined before in

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Speaker 9: the property market. You know what we've seen in prior bubbles,

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Speaker 9: if you want to call it that, we'll see if

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Speaker 9: it is as the market's to plate and there's an

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Speaker 9: epic center, whether it's Tacking two thousand, the United States

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Speaker 9: arts saving as a long crisis, what have you. If

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Speaker 9: you get away from the epicenter, obviously you're improving your

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Speaker 9: probability of perhaps making good risk adjusted returns. And so

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Speaker 9: it's released to China. You know, we all we do

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Speaker 9: think it's kind of an interesting fact that the market

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Speaker 9: doesn't seem to be penalizing a lot of US big

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Speaker 9: cap companies with Chinese exposure, like Apple very much. But

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Speaker 9: Bidy remains very very cheap, so by looks really cheap.

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Speaker 9: Twenty percent running growth price at fourteen times.

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Speaker 1: Eric, thank you.

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Speaker 3: Eric Lynch, chief investment Officer of Sharf Investments. This is

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