Good morning.
I'm Brian Curtis and I'm Doug Krisner. Here are the stories we're following today.
An earning speed from Berkshire Hathaway, but some questions still lingering. Let's get the story from Bloomberg's Denise Pellegreeny.
We do pretty much have blowout earnings from Berkshire Hathaway. Billionaire Warren Buffett's conglomerate reporting second quarter operating income that beat the average analyssessment, and that was thanks in large part to strength and its insurance unit. Why do I say that? Because Berkshire had a seventy four percent increase
in insurance underwriting earnings. That's us. It cut costs and raise prices At Geico, the thing is price hikes and pullbacks and ad spending like that, well, they can backfire, and that could be happening. Over the last twelve months, policies in force decreased by two point seven million, and that does suggest the cuts to advertising spending are costing the conglomerates. Auto Insure some market share there and another thing to watch for Berkshire's railroad unit BNSF. Well, profit
there fell twenty four percent. To d spelling Ay Bloomberg Day BREAKASIE.
In the States, the earning season is nearing an end, and in the week ahead, we have several key reports due. We have a preview now from Bloomberg's Charlie Pellett.
We've heard from roughly eighty percent of S and P five hundred companies, but there will be plenty more to come this week. Amid questions about current market valuations given the prospects for corporate earnings. Nattie Lovell is senior US equity strategist at UBS Financial Services.
We think at some point that the barton has to be pastor earnings and the outlook for that we're maining somewhat subdued in our expectations. We're looking for sort of mid single digit growth over the next twelve months, so we think that this market is probably cap as a result of the earn is outlook.
Among this week's most closely watched reports will be Walt Disney. We'll also be hearing from UPS, Lily, Take To Entertainment, and Rivian Automotive in New York. Charlie Pellett Bloomberg Daybreak Asia.
As we headline, FED Governor Michelle Bowman says the US Central Bank may need to do more, hiking rates further in order to fully restore price stability. Bowman says she supported the decision to raise rates at the Fed's meeting last month, and she wants to see more proof of sustained disinflation, so, like the rest of us, she's watching
inflation data very closely. She said she's keeping a close eye out for signs of slowing in consumer spending and more hints that the labor market could be weakening well.
Former US Treasury Secretary Larry Summers was saying a soft landing for the American economy looks more likely than it previously did. However, he's concerned about inflation picking up steam. This is after the July jobs data show to rise in wages. Here is Summer speaking earlier on Bloomberg's Wall Street Week.
If you look at wage inflation, it was faster for the month than for the quarter, faster for the quarter than for the year, and running for the quarter at about four point nine percent. That's not consistent with two percent underlying inflation. I don't think we can yet be content that we're not going to see a reacceleration of inflation at some point down the road, and that's the thing that I'm focused on.
That is former Treasury Secretary Larry Summers and has he pointed out average hourly earnings increased in July by more than economist had predicted. However, overall job growth was below forecast, and interestingly, data from a separate survey produced an unexpected drop in the unemployment rate.
Brian, Yeah, it's really curious and something that we can get into with our guests coming up. Well. Foreign buying of Japanese equities is said to have exceeded that of Chinese peers for the first time since twenty seventeen. Let's get the story. Here's Bloomberg's Bunny Ou in Hong Kong.
Global funds snapped up one point three eight billion dollars of Japanese stocks in the last week of July. According to official data. Optimism is running high even after the Bank of Japan adjusted. It's ultra easy monitory stance, and it comes as investors sells Chinese equities on a net basis. China is losing out due to concerns about economic growth and geopolitical tensions with the West. Investors are worry about
whether Beijing stimulus will bear fruit. Meantime, some strategists argue that recent changes at the BOJ will turn out to be a positive. They say, with a big overhang removed, stocks will be able to rise further in Hong Kong. I'm Bonnie ol Bloomberg Day Break Asia.
And coming up in our interview with Benjamin Netanyahu, he pulls back on the most aggressive elements of the judicial overhaul at BATS will have that story for you. Once the makeup of the judge selection committee is changed, other steps can be halted. Stay tuned will also be playing
an excerpt from that coming up. Doug. Just on that last point from Bonnie, there Japan attracting more equity flows than China, no surprise really, We've seen the Nike gain fourteen percent year to date in US dollar terms, while China and Hong Kong are negative. And as she said there, towards the end, investors still doubt the efficacy of the stimulus that we've heard about.
Meantime, here in the States, we had a commentary from Bank of America on Friday, the Bank Brian's saying that clients fled equities as they moved to adopt a more kind of risk off approach given a lot of the concerns about economic contraction here in the States, we've been talking a lot about soft landing, But according to b of A, some of the clients are concerned about contraction, and private clients sold stocks in the five days through
August second. However, at the same time, bond purchases the strongest since October in the past two weeks.
Yeah, we'll see if that bears out in the short term. That sounds like a little bit more of a long term story. Growth is actually popping pretty good in the US. The Atlanta GDP now growth numbers three point eighty six percent. However, when you look at and you wonder, you wonder whether that leads to higher inflation, and maybe that's ultimately because the has to respond to that, maybe that's ultimately what does drive growth down sometime, you know, down the road.
The other thing I want to point out very quickly is the move on the part of the PBOC last week to vow a more flexible approach and to use some policy tools to ensure ample liquidity in the banking system. So the story on China involves additional support.
Yep, more is coming. We have Mira pandit waiting in the wings. Vice president and global market strategist at JP Morgan Asset Management, she'll join us right after Global News. Israel's Prime Minister Benjamin Nettnaho says that he will not pursue the entire judicial overhaul as originally was planned at Baxter Has Global News. In the nine to sixty, newsman in San Francisco.
Ed yeah, Brian exactly. Net Yaho says he's giving it time to hash out. In an exclusive interview with Bloomberg's Francing Lack. While he did say it will rebalance the branches of government.
I'm still going to get several months to try to get another consensus.
What is it?
It would probably be about the composition of the committee that elects judges, with the.
Selection of the judges.
Yes, how they're selected, right.
That's basically what's left.
And he says a pendulum should not swing all away from one side to the other. China's Foreign Minister Wangyee is invited the European Union's top diplomat, Joseph Borrow and his delegation for a visit in the fall. This after a trip to Beijing was postponed earlier in the year. The two spoke by phone earlier to set up the early groundwork as well. The statement says they exchange views
on regional issues, including Ukraine and Niger. Now we're getting a glimpse of Donald Trump's potential legal defense against the charges in the latest indictment regarding election interference. The main theme is that Donald Trump firmly believed that Mike Pence did have the ability to not go ahead with a certification of the election. Now, Trump attorney John Laurel on ABC has heard here on Bloomberg says, there is an interesting judicial line.
I make think that somebody is acting inappropriately under constitutional principles. But mister Pence, who's a lawyer, never said to mister Trump, I think what you're doing is criminal, and that's very important.
But former Attorney General William Barr, who served with Trump, says, mister Trump knew. He told him.
Three occasions at least, and I told him in no uncertain terms that there was no evidence of fraud that would have changed the opport.
And Barr says, a creation of a separate slate of electors, well, that's just very damning.
One that he keeps on repeating, is you know that there were more that more people voted than absentee balance that were requested, and that was mixing apples and oranges, and once that was explained to him, we should have heard no more about that.
As for Attorney Laura on Pence, if.
He testifies consistent with his book, then President Trump will be acquitted.
And says he can't wait to get him on the stand. Pence says he has notes and CBS told Trump on many occasions, no, I.
Knew the founders of this country would never have given any one person the right to choose what electoral College votes to accept in which ones to reject. I was very consistent with the President about that, and my recollections all reflect that.
Running alongside this, the court may rule as early as tomorrow, and what steps to take regarding Trump exclaiming that he will go after the people who have gone after him, as well as what evidence should be given to the Trump legal team and the US lab that was able to finally produce nuclear fusion that produced more energy than
it took to create it has done it again. Lawrence Livermore labs here in the Bay Area, says after several unsuccessful tries last week, it completed its process called inertial confinement and that it was successful. Says it wants to go a STEP's future to get high power magnets that could be used by power plants. Global Newspower more than twenty seven hundred journalists and analysts in over one hundred twenty countries in San Francisco, I med Baxter and this is Bloomberg.
This is Bloomberg Daybreak Asia. I'm Brian Curtis in Hong Kong, along with Rushad's Salamat in London, and our guest is Mira Pandit, vice president and global market strategist at JP Morgan Asset Management. US equity futures are up a little bit. We have the jobs report to talk about this morning, Mira, and so many other things too. We can look more closely at Berkshire Hathaway's earnings and some of these stories here in Asia, but let's start off with the jobs.
There's still some debate on whether this was a net positive or a net negative. You had kind of a weak headline number, but then you had unemployment going down and wages were pretty firm.
So how did you read it?
I read it as a mixed report. I mean, some people are calling it goldilocks. I might still call it a bit mixed because if you think about the one hundred and eighty seven thousand jobs at work created, that is consistent with a more neutral labor market in terms of job gains. But then on the other hand, you did have that elevated wage gain, and that has some people concerned about how that might play out from an inflation standpoint, and more importantly in the near term, how
the FED is going to digest this data. And when we think about what the FED has to contend with, we might want to focus on that slower job growth. They might want to focus on stickier wages. We might want to focus on falling headline CPI. They might focus on stickier core inflation. So I think the challenge with the jobs report is it doesn't give a clear enough signal that the economy is kind of zooming into equilibrium.
Amir, we're going to be getting the CPI figures this week. What are you looking at and when does the higher oil price start of feeding. I know they'll be looking at the core, but certainly this is something which everybody does actually have to pay ultimately, and it has a feed through to other parts of the inflation kind of components that are in the basket.
Absolutely, we can't get too hung up on only core inflation, because the reality is headline is what Americans actually pay and therefore it influences inflation expectations. So that does play into the fed's calculus long term. When I think about this week, we're likely to see some moderate gains in both headline and core CPI, But I think we have to consider on the year over year basis, how those base effects are going to play out over the next
couple of months. Because headline CPI peaked last year in June. Therefore the base effects going forward are going to be less. So if you see things like higher oil prices potentially
higher food prices, that could slightly raise headline inflation. If we think about core, we actually saw that peak in core inflation last year in September, so we potentially have some reports ahead of us that could actually bring some of the gas out of that core number, But we don't quite know when that's going to play out, and that's a little bit tricky when we think about the Fed's timeline over the course of the fall. If we do start to see inflation tick up a little bit.
I wouldn't necessarily think about it as a genuine reacceleration in inflation, though.
Would you see do you estimate that equity flows then would basically be moving from the US to other markets? And if so, which ones do you like?
Potentially you could see some movement abroad. But the reality is the US is kind of stuck in a pretty comfortable place where equities are past the inflation spikes and the FED hikes, and yet they're looking for some sign of souring economy or souring profit growth, and yet that hasn't happened yet. So I'm not sure that there's a
clear catalyst for a selloff. And yet, with valuations as expensive as they have gotten with a significant rally this year, there is some vulnerability there we have to be aware of. So I do think from an investment standpoint, it's important to look at valuations and prices above all. And we're seeing internationally that there are some areas across the world that look a whole lot cheaper than the US and
still have some room to run. And I think about what's been driving global equities this year, and you see in areas like Europe and Japan that there's genuine earnings upside that is helping out equities. You see areas like Latin America where easing central banks are starting to have that input on equity valuations overall. So I do think some of those areas abroad can add nicely to a diversified portfolio.
Growth visus value.
Marry Quickly still.
Kind of stuck in do we care about style? Do we care about sector? I'd say we care about companies underneath the surface and which companies are actually managing through some of the headwinds as it relates to margins and as it relates to revenues. So that's really where I'm keeping my eye on, as opposed to one specific style or sector. How company management is doing and how valuations are doing.
This is Bloomberg Daybreak Asia, your morning brief on the stories making news from Hong Kong to Singapore and Wall Street.
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Listen coast to coast on the Bloomberg Business app, Sirius XM Channel one nineteen, the iHeartRadio app, and on Bloomberg dot Com. I'm Brian Curtis.
And I'm Doug Prisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia