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