Good morning. I'm Brian Curtis.
And I'm Doug Krisner. Here are the stories we're following today.
Minneapolis Fed President Neil Kashkari saying that there has been positive action on controlling inflation, but he thinks prices are higher than policymakers are prepared to tolerate. Are we done raising rates.
I'm not ready to say that we're done in terms of cutting rates.
I think we're a long way away from cutting rates because core inflation is.
Still around four percent.
It's still around twice of what our target is.
Beneficials have said that they're carefully assessing incoming data as they craft policy. A report last week showed that inflation continued to moderate in July, and today robust retail sales data showed that US consumers continue to be resilient well.
Disappointing economic data from China is leading investment banks around the world to cut their twenty twenty three growth forecast for the country. Right at the top of the list, it's JP Morgan Chase its full year economic growth forecast for China from five percent to four point eight percent. JP Morgan also shaving its GDP estimate for next year now the firm's economists see in increasing drag on the economy from the property sector that shouldn't come as a surprise.
JP Morgan also saying that China's moved to stop releasing data on youth unemployment is quote disturbing. At the same time, Barclays lowered its estiment for China's growth by about four tenths of one percent to four and a half percent this year, and Barclays cited faster than expected deterioration in the real estate market Brian.
Meantime, Vanguard, Blackrock, and some other firms embracing for even more scrutiny over their investments in China Bloomberg's and Kates as that story.
More than two thousand US mutual and exchange traded funds have two hundred and ninety four billion dollars invested across Chinese stocks and bonds, though not all of that money is under scrutiny. On Capital Hill lawmakers launcher probe over investments in Chinese companies deemed to be national security threats,
and money managers are prepared for tighter oversight. Plus, the Biden administration has signed an executive order limiting specific investments in China and key technology industries in Washington and Kates Bloomberg Day Break Asia Well.
China is said to be buying the most Iranian crude oil in a decade. The story from Bloomberg's Juan Wong in Hong Kong.
The world's biggest oil importer, will take about one and a half million barrels a day of crude from Iran this month. That's according to Dalla intelligence firm Kepler. Rise and global prices are making the discount recruit more attractive. Around's two main grades are set to be trading at discounts of more than ten dollars a barrel to Brent, and that's considerably cheaper than Russian varieties. Iran has been ramping up oil exports this year as it becomes more
geopolitically assertive. Most of the shipments are heading to China. In Hong Kong, Join Wang Bloomberg.
Day brig Asia.
China is calling Taiwan's Vice president launching a quote complete troublemaker who brings the risk of a fierce war. China's Taiwan Affairs Office issued a statement yesterday online. These were based on comments from an exclusive interview that we presented from Bloomberg BusinessWeek, China said that Lie's comments on maintaining a peaceful status quote are quote totally a lie. China's Foreign ministry has criticized the US repeatedly for arranging Li's
stopovers in the country. It said the visit seriously violates the one China principle. Lai is currently visiting Paraguay, which is one of the thirteen countries that Taiwan counts as a diplomatic partner. Back in the US, shares of VinFast Auto soaring in the Nasdaq trading debut. The Vietnamese ev makers now valued at eighty five billion dollars. That's more than Ford or GM or even Mercedes Benz. The company went through a blank check deal, a spack deal valued
at some twenty three billion. We heard from VinFast CEO Leetway.
We had been working on the US listing for like two years and we're very happy that we met it.
Today.
Binfast has become a publicly listed companies in the US. It's not just a it's not a marketing. It's just a milestone that we want to achieve as on path of becoming a global company.
Vin Fast merged with Plank Check Company, Black Spade acquisition, and vin Fast plans to begin operations at it's North Carolina factory in twenty twenty five. Well, markets are a little bit confused here, Doug, and you can kind of understand it. The two biggest data points that we saw in the past twenty four hours stronger US retail sales and China's weak numbers. They would seem to be at odds and telling very different stories. And the other thing
is that investors are grappling with this dilemma. The consensus at the moment is that earnings are projected higher next year and rates lower. If that's in question, well then the multiples are too high, and you'll see the kind of selling we saw today.
That may have been playing out a bit in the treasury market. This sense of division that you described Brian players in the bond market seem to be shortening duration a bit today, So we had to push up in long rates with the tenure rising about two basis points. So remember the kind of inverse relationship between prices and yields, So prices down today, moving more to the short end, prices up and the yield down about a basis point to four ninety five. So I think that's consistent to
what you're saying. And let's remember with cash, Kari is kind of alluding to, right, that we're not in a position here to talk about lower interest rates anytime soon.
And now it's time for Global news. US President Joe Biden says he will visit Maui soon. At Baxter has Global News from him nine to sixty News from in San Francisco. Ed.
Yeah, right, Brian. He's been under fire by people from the island and Republicans on the main line for not being visible enough on securing help during the island's population.
Want to be sure we don't disrupt the Ongonger recovery effort.
Yeah, he says it has been active and spoken to Governor Josh Green on multiple accounts.
Almost five hundred federal personnelment deployed de Maui. Tell communities and survivors get back on their feet. FEMA search and rescue teams are sifting through the ashes in that five mile area.
Yeah, he says he and his wife Jill will visit soon. As for the burned out area, Governor Green says there are multiple environmental problems going on there now.
There is asbestos in the air down there, and they're heavy metals, and we're getting environmental assessments as rapidly as we can from Department of Health, and EPA is here.
And Green says we have an experience in what happened at the nine to eleven sites and have learned from it. Hopefully the death toll now stands at least ninety nine, but surely we'll climb. The state says we'll begin releasing identities of those bodies recovered soon. Georgia indictment against Donald Trump is far more rich, far reaching, and potentially damaging than any of the other three. The most problematic for
Trump is the racketeering. The central count in the indictment, now including one hundred and sixty one specific acts in the further ince of a conspiracy. The cab County is just north of Fulton, and former District Attorney Gwen keys Fleming says the use of the Rico statute makes it very severe.
The case in Georgia is very unique and distinct from some of the other charges, either in New York or federally, largely because of the inability to obtain an immediate pardon if there is a conviction.
And Fleming says the Georgia pardon laws also require completion of a full sentence before a pardon can be granted. As well.
The Rico statute at least has a mandatory minimum of five years. Some of the other charges have or Rico has a maximum twenty years. Other charges range from one to ten years. As I recall, so it really these are serious charges.
And Fulton County DA Fani Willis has ordered all nineteen defendants to surrender by August twenty fifth, says she wants to try them together within the six months. They're eighteen others charged in Bloomberg's Wendy Benjaminson says she would not be surprised if the plan was to get one of them or more to flip.
They are now facing prison time in Georgia State prison, not you know, club fed or anything. And it is the idea is that, yes, that one of them will look at the charges and say do I really want to go to prison for Donald Trump?
And Trump says, you'll hold a news conference on Monday. Hong Kong resident departures have climbed to their highest level since COVID. This outflow shows the region as far from regaining its mantle as the business hub and tourist destination in Asia. Global news powered by more than twenty seven hundred journalists and analysts in over one hundred twenty country in San Francisco, I'm at Baxter and this is Bloomberg.
This is Bloomberg Daybreak Asia. I'm Bran Curtis in Hong Kong along with Vonnie Quinn in New York, and Aaron Gibbs joins a senior partner and CIO at Main Street Asset Management. Aaron, great to have you with us in our studios there in New York. So you probably heard me mention that consensus here is that earnings will be ratcheted higher next year and rates are projected to be lower. And I said, if that's in question, do you think both of those are in question? Or either? Or if so, which one?
Now? I agree with that. I think it's really about the timing, and I think it's what ANALYSTA really doing is pushing everything farther down the road. So originally we've been saying in the first half of the year, and now it's sort of being pushed back to Okay, most of this is going to happen in the second half of the year. So I think the hope is still there, but it's just getting more and more delay. We haven't Wall Street hasn't quite digest that it may not even be until twenty twenty five.
Are we suddenly confused again as to what the Fed is going to do next?
I think, well, partially because we're also just getting conflicting news within our own no neck on global versus what's happening in the US, and certainly it is quite hard to digest. And I think that's interesting just what's been happening in the marketplace, whether you're looking at what's happening and how people are shifting in treasuries, what's going on in the equity markets. But we haven't seen a real
spike in the VIX. Some of the fear gauges, a lot of those are still very stable and at lows. And so even though we've seen these sell offs for the past five days, in a big sell off today, the VIX has been relatively low, and so I think that's sort of indicative of people not really seeing some good signs, seeing some negative signs, and not really ready to completely pull the trigger across the board and be completely pull out of the equity markets within the US.
It is interesting to contrast these strong retail sales numbers in the US with the weak numbers overall that we got out of China, and so I'm interested in your thoughts on that. We're also running a piece on the Terminal that talks about how the deflation in China may not be such a bad thing. If it exports deflation, it'll help the central banks in their job absolutely.
You know, we know that that can have a big impact, particularly on the commodity side and energy, and certainly, even though we love to t about core x food and energy, that does make a big impact. And so I think that would be very helpful, and that's something that the FED would certainly look at. On the other side, the US consumer and their ability to still be willing to spend. You know, we know that it's at a certain point that is going to have to wear out. You know,
we know that cash reserves are going down. We know that just the higher interest rates and just the outlook from corporations has been significantly revised down. We're seeing less m and a activity higher bankruptcies. So we're seeing weakening already within the corporate arena. So while the US consumer still feels very confident that that fear again just not seeing the Vixen index, but the consumers shifting their behavior could follow.
Can I just say, you're extraordinarily brave because you have picks that are very short term one to two months, so go us tell Maren sure.
So, look, I want to be able to trade this. We have seen a real shift. It's been about a four week shift from those megacap technologies into something that's a little more defensive and let's use it, you know, while it's there. So some of my picks are energy. I think actually today the energy sector was down about two and a half percent. I actually think this is a good place to come in, you know, buy on sort of that negative news because the energy trend overall
is still up and very strong. So I think you could get you another few weeks out of that. Another thing, while we're going on the defensive, that has been outperforming just in the past again in the past two weeks, and it's just a new trend is healthcare, particularly managed healthcare, and a high quality company that's just a safe bet to get into. One of my favorites is United Healthcare. Ooh, this is trading so much. It's peroting at about a fifteen percent discount to a lot of its peers.
You know, decent.
Outlook for twenty twenty four, even better for twenty twenty five. So I think, as long as we're seeing this sort of counter trend, defensive trend, which might continue for again about one to two months, United Healthcare very safe bet very little downside, and already breaking through resistance on the upside. So I think an easy play if you want something to while we're in this sort of I don't know what to do mode.
Yeah, you and h was bulletproof last year and everything was stumbling. It had pretty good run and then completely out of favor of the early part of this year. So we know that mean reversion tree do happen. And you're suggesting it'll go back the other direction, it's already started. That give me a mean reversion trade you like with China in mind, you know.
I'm not as familiar with China. I've I'm a little more conservative, So I think, you know, it would really have to be looking at across Asia, and I would say, you know, we've seen a little bit of Japan sort of holding that support, and so if we're in that defensive you might be able to get a week or two on the up side, just as we sort of go more risk off.
This is Bloomberg Daybreak Asia, your morning brief on the story's 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 Krisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg Daybreak Asia.