Good morning. I'm Brian Curtis and I'm Doug Krisner. Here are the stories we're following today.
Minneapolis FED President Neil Kashkari says the US will likely have a slowing economy, but the country will avoid a recession. He told CBS has faced the nation that US inflation.
The outlook is quite positive.
The economy continues to surprise how resilient it is. That's a really good thing. The unemployment rate is still very low at three point six percent. Nonetheless, I'm not going to dismiss the hardship that Americans are feeling. High inflation for several years has really put a dent in people's pocketbooks. We're now starting to dig our way out of that, so we're making progress.
Despite the positive inflation data. Kashkari said that the fed's aggressive tightening campaign ending it won't end without job losses. He said unemployment may reach four percent. On Friday, we'll get the closely watched US jobs report. It's projected to show that higher increase at a healthy, yet more moderate clip. Kashkari said that the FED will remain data dependent as it decides whether more rate hikes are in the car well.
As mentioned earlier, it's going to be a big week for US earnings, including megacap Tech the story from Bloomberg's Denise Pellegrini.
Apple and Amazon are both scheduled to report quarterly results after the closing bell Thursday. Investors will be watching for more about Apple asking suppliers to keep iPhone shipments flat. You're on your We're also hearing Apple expects revenue to grow through price hikes for iPhone Pro models instead going forward.
Apple's reliance on Chinese manufacturing is also of concern because of sour relations between Washington and Beijing, and also investors will be interested in anything Apple has to say about AI. As for Amazon, Bloomberg Intelligence says, watch to see if strength and streaming and advertising will be offset by slowing consumer and enterprise spending. Also, anything about online shopping and
Amazon's push into pharmacy and grocery will be of interest. Shopify, PayPal, Qualcom, Western Digital, and Advanced micro Devices also report this coming week, along with Pfizer and merc Denise Pelgriny Bloomberg day Break Asia.
US banks have been told to step up their contingency funding roadmaps. We get that story from Bloomberg's and Kate's.
Agencies, including the Federal Reserve and the FDIC, have told lenders to review their plans for filling funding needs in times of stress to ensure they have access to a range of liquidity sources. The issue was spotlighted by the collapse of Silicon Valley Bank earlier this year. The guidance is part of a bid by federal regulators to encourage financial institutions to incorporate the Fed's discount window as part of their contingency planning. In Washington and Kates Bloomberg Day Break Asia.
We go to China next, where the government says it will soon announce new measures to boost consumption the story from Bloomberg's Boneou in Hong Kong.
These new directives follow a slew of other policies unfailed in recent weeks to revived economy growth. Momentum weakened in the second quarter as the property markets slumped. Just Friday, China laid out the plan to boost consumer industries. It also pushed efforts to grow an exchange dedicated to helping small firms get access to funds. Earlier this month, measures were introduced to lift sales of cars electronic products and
rural consumption. The new consumption package will be announced this afternoon in Beijing. In Hong Kong, I'm Bonnie Olt Bloomberg day Break Asia.
Meantime, Francis Finance Minister Bruno Lamarre has called on Chinese companies to invest more in Europe. Bloomberg's Joan Wong has that story from Hong Kong.
Lamire said his talks in Beijing were positive on a variety of topics such as agro industry, finance, and electric vehicles. He singled out EV's and other sectors that would help fight climate change. The two countries said they'd work together on improving the regulatory environment surrounding cosmetics and data. Address concerns over intellectual property rights of French companies in China. Lamire said he wants to get better access in China.
He added that.
Decoupling is not possible. More meetings will be held in France before the end of the year. In Hong Kong, I'm joining Bloomberg day Break Asia.
And on that Bruno Lamier said that de risking with China doesn't mean that China is risk so that's a further sort of softening of this whole idea of how much words matter in how countries characterize they're dealing with China. So if you're de risking and China's not a risk, I suppose that's just what diversification.
It's going to be very interesting to see what the government rolls out in terms of this new stimulus. And I was struck by the news last Friday, Brian, As I'm sure you're well aware that the Security Regulatory Commission in China unveiled proposal to loosen some of the limits on market makers for the Beijing Stock Exchange. Now, this exchange was launched back in twenty twenty one, and the aim here was to create a broader financing for some
of the small firms, particularly tech startups. And I'm wondering whether the government now is really leaning in on trying to revitalize the entrepreneurial spirit a little bit more.
Well, that for sure, But to even have them push out measures focused on markets, on stocks and the bond market even is really quite surprising because it's not something that we've been used to, at least under this regime. And then if you look at the environment in the US, we have a piece running which I think is quite interesting. People can look for on the terminal that the year that was supposed to be the year of the bond
market has completely changed. Now it's being overrun by all this demand for equities, and that has launched a rally right through the world. And it sort of starts to make you think whether there's a new wall of worry to climb investors worried about how much equities have rally.
Speaking of walls of worry, another story from the Bloomberg terminal about Chinese firms lining up to invest in South Korea's battery industry. Now the aim here is to kind of get around the Biden administration's efforts to limit China's involvement in the ev supply chain of That was pretty interesting.
Yeah, another story that we can spend some time on this morning. And then there's this one that the new Barbie film is reigniting discussion in China about feminism and women's rights. And as you know, there's not much in the way of roles for women in the power structure in China, so it comes at an interesting and opportune time.
Now it's time for global news.
Germany is warning officials its own officials that China is stepping up spying in the country. At Baxter has Global News from the nine to sixty newsroom in San Francisco.
Ed.
Yeah, when you go see Barbie, Brian, We're endeavoring to get your doll to take in with you.
I'd loved it, love it, and I'll wear a pink T shirt.
There you go.
Okay, yeah, as you say. Germany warning its officials about China stepping up spying notice as China significantly stepped up efforts to obtain intelligence information in recent years and has built up a worldwide network of contacts and is constantly striving to expand. It also warned companies of caution and restraint in any active activities that could be interpreted as cooperation with a foreign secret service. China also getting a lot of attention on the US campaign trail, as well
as a battle against fentanyl as well. A Republican Canada for President and former UN ambassador Niki Haley says the China military prowess continues to be built, continues to buy up US soil and property. She says that must stop.
We wouldn't allow them to buy us soil. We would take the land that they bought back from them. We would go and say, no more, are we selling any sort of sensitive technologies that allow them to build up their military and threaten the US. We would stop that. We would tell our universities you either take Chinese money or American money, but the days of taking both are over, and we'd get that Chinese infiltration out.
Yeah.
She says she would ban Chinese companies from having access to sensitive technologies, not do business with any companies involved in technology theft. As for fentanyl on CBS, facination has heard here on Bloomberg says it must be addressed number one.
Cause of debt for adults eighteen to forty nine. Margaret is fentanyl. And don't think for a second China doesn't know what they're doing. So what I would do is say to China, we will end all normal trade relations with you when until you stop killing Americans.
Center Majority Leader Chuck Schumer today says a bill that will dent fentanyl trafficking is ready to go.
For years, Chinese laboratories have been cooking up formulas of death and freely trafficking legal sentinel across New York and the United States, and this legislation can stop them dead in their track.
Schumer says the bill will allow the president to declare a state of emergency with the ability to putting sanctions on China and on Mexico as well. US will give Taiwan three hundred and forty five million dollars in armed services and training, using a fast track authority that has relied on to speed up arms the Ukraine, US and Australia have reached an agreement to expand the US military footprint as both countries bolster defense ties and response to China.
China Central Government telling local affair in Beijing and other areas of the North to be prepared for flooding. Donald Trump's Political Action Committee spent forty point two million dollars on legal costs in the first half of this year. Bloomberg sources say the group Save America set to disclose the amount and of filing tomorrow. New York Times says the money is significant enough that it could cause a
potential money crisis for the campaign. Global News powered 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.
I'm Brian Curtis in Hong Kong, along with Rashad Salomat in London, and our guest is Steve Sasnik, chief strategist at Interactive Brokers. Steve, I almost don't know where to start. We've got a pretty quiet vis at thirteen. We've got the bond market that's been pretty steady here of late, trapped with yields trapped in a tight range, equities that have been pretty positive. We talked about how there might be a new wall of worry, and that being that equities have gained too much too soon.
How do you stand on that point?
Well, good morning, Brian, and thanks as always for having me. You know, I'm actually sort of of that same belief that you know, the thing we have to fear most is the lack of fear. You know, I if you go back to the old saying, be greedy when others are fearful, and be fearful when others are greedy, well, you know, I think we're at a very greedy period
right now and with very little fear being displayed. And and you you know, there's a million many different ways to do it, vics being one, and probably the most prominent, but that that starts to be concerning.
Is it time? Then if it is concerning, Steve to perhaps change your out, perhaps look elsewhere, perhaps look a different asset classes, emerging markets instead.
Rashard, I think that's that's I think one should always be looking at alternatives. I think, you know, especially when something's been working so well for so long, you know, it's tough to move away. It's tough to it's tough to fight the momentum. And I'm not really saying do that, but yes, I think that makes sense. I think if nothing else, you know, you have ten year US yields above four percent, you have you know, short term rates you know at five or or you know the very
short term rates above five. So there is an alternative. There are places to put your money that that that can be safe if you think that stuff is going to come up. And we are, you know, a month away from what's always been a seasonally tricky time for global equities, particularly in the US.
Does it feel a little like it's still going to run though for a while, maybe through August and then maybe then the mood might change.
It does feel that way, you know it Right now? The momentum is so strong, and and you know, for example, we you know, we had that big bounce back on Friday, but you know, after the boj move, but it turns out, you know, the kind of little mini free week out we had Thursday afternoon was I think many ways emblematic of what happens when people are caught off guard. And I think so many people you know, are on one side of the trade right now, you know, they really
flipped out, you know, Thursday after noon. Yeah, very short periods. I'm not necessarily even knowing why, because I don't think everybody fully appreciated that it was the Nikai story driving driving the market lower here.
Oh, certainly before and everybody knew what was going on with the Nike report, but they didn't know exactly what was going to come out, And with the gyrations of the market gave you a sense that, hang on a second, are they or are they not abandoning YCC. In many ways, this is the first, the precursor to them doing it, but really it couldn't make sense of it. And I think that the Yen's behavior of a course of about twenty minutes is actually emblematic of that.
Yeah, I mean, I think it's fascinating because last I guess two fridays ago, you know, I was on I was actually on Bloomberg Television in the States and in the UK, and you know, it was right after there was a different story saying that they weren't going to change their ICC policy at all, and so you know, I was asked and I said, oh, you know, boj should be the most interesting one, but it seems like
they won't be. Then you know, then fast forward a week and you know, you know, they they they do what they said, they weren't what was reported they weren't going to do originally, and the market's just flipped out there they're having it was it was very minor uncertainty, but it's interesting how how spooked, you know, some real
uncertainty got the marketplace. And not to me, it doesn't mean that it's time to abandon ship, but it tells me you've got to be a lot more wary because because people really do react very We turned from we turned from greed to fear very very quickly. Do you think turn it right around again?
Can we sniff out a little bit of coordination efforts here between or among the FED the ECB and the BOJ, because it looks like you've got the Fed and the ECB maybe moving into a little bit of of an easing, not not necessarily easing, but easier than where they were, and that maybe, you know, they're always worried about markets running up, so maybe it's time for the BOJ to hint at just hint at getting a little bit more hawkish.
Yeah, well, I mean, the BOJ you know, sort of the last easy central bank, you know, left Domino to fall, so to speak. You know, I think the rhetoric coming out of the Fed and the ECB is very much like, you know, all right, we're not really going to raise rates,
but we're leaving it on the table. But the problem is what they have to They have to be very assiduous in their rhetoric because traders, if traders hear that there's some chance that they might not raise rates or that they might be easing, well then they take that to heart and run with it. And we saw that,
you know, after Powell's comments. What we saw early Thursday was basically, you know, he said we might raise, we might not raise, and more or less Regard said the same thing, and the market's heard, oh we might not raise, that's wonderful, and off we went. So they the rhetoric will have to continue. And I think that, and now I think it's interesting that the boj is sort of on that same rhetorical side.
Well.
Absolutely, and it's interesting, you know, you win Powell switch from goldilocks not to not to gold amulet to raise or not to raise, which is what Lagarde is also echoing. Whereas and I just want to just carry on with the same sort of theme here, Richard. The third my kingdom for a horse is that's what everybody in China's screaming for with regard to stimulus.
It's not just China. I think global markets are screened, you know they they are so eager for Chinese stimulus. And I and you know the story, the story that you know about the regulators calling in the brokers and trying to prop up the market. That is the stuff that that you know, That's that's what traders want to hear, is you know, anything any stimulative, any stimulus. But we've
been disappointed by Chinese stimulus. Before I think everybody was expecting this big COVID recovery would happen just organically it didn't. I think what it hasn't happened. The markets have been itching for some some sort of sign that that there would be real stimulus from China, and up till now
it's been baby steps. So I think, you know, if there's overt manipulation, overt goosing of the stock market, shall we say, traders want to hear that sort of thing, whether or not it's the right policy, whether or not it's it's going to be long term effective. Any move that stimulates markets is just being you know, wrapped up by traders eagerly.
Yeah.
Well, Risch asked you about emerging markets earlier, and I think we can note that EEM has had a nice bounce here and uh and stocks like ten Cent and Alibamba have had something like a ten percent bounce in there. How how strong could this phase be about money? Perhaps rather than going back to the bond mark, if it eases out of US stocks that it feeds into emerging market stocks.
That really becomes a question of does the risk on trade that we're seeing broaden, and if and if it does broaden, emerging markets are a natural beneficiary of that, and especially if if, if we really do skirt a recession. Well, if we skirt a recession in the you know, in the G seven countries or at least in the US, you know, the emerging markets are definitely benefit from that, from that type of from that type of economic environment
and that type of risk on thinking. So yeah, you do have to be considering, you know, smaller, smaller economies risk on markets. You know, the dollar. You know that the dollar is not as much of a headwind as it's been to a lot of them as well, which which is another good sign. So yeah, it's it's clearly something to keep in mind.
Okay, Steve, we got really one time for one more question. We don't want to steal too much time from Ed Baxter, although he did have me carrying a Barbie doll into the movie theater. But anyway, number one, pick here, what's the best way to make money over the next few weeks.
I think what you want to do for the next couple of weeks is start to diversify. I think if you're in stocks and making money, I think you don't necessarily run for the exits, but I think you start to hedge your bets, whether that's with options or volatility trades and moving into a little bit of fixed income, just broadening your portfolio out a little bit, getting a bit more defensive, because I think we've had this great run and I want to see it persist. But I
want people to be little less risk. There's risk taking, little more risk averse.
This is Bloomberg Daybreak Asia, your morning brief on this story is making news from Hong Kong to Singapore and Wall Street.
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I'm Brian Curtis.
And I'm Doug Chrisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia