Good morning.
I'm Richard Salama and I'm Brian Curtiz.
Here are the stories we're following today.
All right, we are looking now at Vietnam as if it's formally upgraded ties with the US on Sunday, shifting the relationship to the highest level of comprehensive strategic partnership. President Biden said the US had an enormous economic opportunity with Vietnam, making the comments during his first visit to the country. Now, this does come as the US seeks to make deeper inroads in the APAC region by offering
nations an alternative superpower to China. Speaking Hanoi, Biden denied the United States is trying to contain China.
I just want to make sure that you have a relationship with China that is on the up and up. Squared away, everybody knows lives all about and one of the.
Ways to do that is to make sure that we are talking about the same things. And I think that one of the things we've done, I've tried into a talk lestat about this from the last this six months has been.
An opportunity to streathan alliances around the world, to maintain stoy.
Biden also told reporters that China's real estate industry is facing problems, saying that President and Shijingping's plans for the Chinese economy are not working.
Meantimes, sources say that Vietnam Airlines is entering an initial agreement to buy about fifty Boeing seven thirty seven Max jets. The deal could have a list price value of about ten billion dollars. The actual amount after discounts is unknown. In the deal, Vietnam's money losing national carrier would replace
more than forty older generation Airbus A three twenty one planes. Now, this order is seen as something of a breakthrough for Boeing, as Vietnam Airlines is currently an all Airbus single aisle jet operator. We had reported back in June that the airline was weighing in order for as many as fifty Airbus A three twenty one Neo jets, and we haven't been able to get in touch with Vietnam Airlines for details on this. Whether or not that means that that early report is no more.
Okay, let's move now to the sidelines of the Group of twenty meeting, where Italy's Prime Minister Georgia Maloney told China that Italy is planning to withdraw from the Belton Road initiative. The most Joanna Won has more from Hong Kong.
Sources say Maloney spoke to Chinese President Chi Jinping about Italy's withdrawal plan. Baloney also says she spoke to Chinese Premier Lichang about the initiative, but a decision had yet to be made. She's been taking her time before deciding how to communicate her government's decision to exit from the plan. Maloney fears trade retaliation after China's ambassador to Italy warned of possible consequences. Baloney said the issue is sensitive and
she'll visit China in the coming months. In Hong Kong, joined one Bloomberg Radio.
In other news, Ali Baba's former chief, Daniel Jong, has decided to quit just months after agreeing to lead the company's cloud division. Bloomberg's Bonnie Au has the story from Hong Kong.
Jiang has taken on the role after giving up his due duties as CEO and chairman of the group. The latest move adds another layer of uncertainty to Ali Baba as it navigates a complicated breakup. Ali Baba has said it wants to operate as a true investment holding company that means individual units can seek funding and list separately. With John's departure, Eddie will will serve as acting chairman
and CEO of the cloud business. As to John's future, he'll now steer a one billion dollar investment fund on Ali Baba's behalf in Hong Kong. I'm Bonnie Al Bloomberg Radio.
We've got Treasury Secretary Janet Yellen saying she's increasingly confident that the United States will be able to contain inflation without major damage to the job market. Also hailing read economic data showing a steady slow down in inflation and a fresh influx of job seekers now trate as we'll have We'll next have their eyes on a report coming out this week which we'll be telling us a bit more about US prices i e. US inflation. Bloom mo Ox Denise PELAGREENI has a look what to expect.
Higher energy prices are expected to push up the headline inflation number for August, with the month on month inflation rate expected to rise to six tenths of a percent and the annual rate quickened to three point six percent from three point two. Take out food and energy, though, and Bloomberg Economics's core CPI likely continued at only a two tens of a percent rate in August, same as last month's rate, making it the longest stretch of subdued
readings since early twenty twenty one. Now you're on year, that core rate is expected to fall to a four point three percent rate, down from four point seven. And Bloomberg Economics also says with the job market cooling and student loan repayments resuming, retrenching demand will continue exerting downward pressure on inflation, and the Fed, according to Bloomberg Economics, has probably already done hiking for the year.
Bloomberg's Denise Pellegrini with that report, Sorry just here, eight minutes past the hour. It's time now for Global News. C twenty leaders reaching compromise wording in their final statement on Ukraine that gives both sides an opening to claim a diplomatic victory. And Baxter has Global News in the nine sixty news room in San Francisco.
Ed, Yeah, exactly right, Brian A. G twenty leaders reaching the compromise. US allies had wanted stronger language condemning Russia for the invasion that did not happen, and Russia can claimed victory there because the US and allies also say the statement contained strong language regarding the invasion. Now, US Secretary of State Anthony Blincoln comment.
The leaders here all stood up very clearly, including in the statement for Ukraine's sovereignty, for its territorial integrity.
I think the statement's a very strong one. But of course there are detractors. Former UN ambassador and Republican presidential candidate Nikki Haley on'sn says it was a win.
For Russia and China.
They're celebrating today.
I mean, what we should have had was Biden should have really pushed hard to acknowledge what he acknowledged a year ago that Russia invaded a pro American freedom loving country.
As for President, Biden focused on the Indo Pacific, having.
India cooperate much more of the United States, be closer to the United States, Vietnam be closer with the United States. It's not about containing China, it's about having a stable base, a stable base in Indo Pacific.
And global warming. Biden saying bigger than nuclear attack.
There's a lot of line dog faced poniceps out there about global warming, but not anymore.
All of a sudden, Oh realize it.
It's a problem, and there's nothing like seeing the light.
Biden also saying he feels China is weakened enough that it won't be in a position to invade Taiwan, and US Vice President Kamala Harris as a policy to cement relationships in the endo PASIL.
For example, when I was in Tokyo last year meeting with CEOs there about what we are doing to coordinate around the semiconductor industry, what we are doing with South Korea to the same extent, ensuring that with our allies, we are strengthening the relationship around our common goals.
Now, Harris on CBS has heard here on Bloomberg, says those relationships are very important. COVID cases on the rise in the US, and doctor Anthony Faucci back on ABC has heard on Bloomberg, says it will increase.
We're having an uptick in cases, which is being reflected by an uptick about seventeen or more percent in hospitalizations. There's no doubt that that is going on, and since we're now at the end of the summer, it is likely that that will increase as we get into the fall.
But says immunity is still pretty high over people who have.
Been vaccinated boosted people who've been infected. The chances of this being an overwhelming rush of cases and hospitalizations is probably low.
Fauci says boosters will be available hopefully before the end of September, and says it is important to get boosted. He also says despite all the debate and crying about masks, they still do deliver a line of added protection. 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.
This is Bloomberg Deabreak Asia. I'm Brian Curtis, along with Rashid Selamat, and our guest is Phil Palumbo, CEO and CIO of Colombo Wealth. Phil. As we get started this week, you just heard the news flow there from both our look at business stories and also Ed's take on the latest global news. What do you think will dominate the minds of investors as we kick off this week.
I think the most important thing is investors are realizing that China's weakening as an economy, and we'd say that when we look at the property devaluation, that we're seeing the trade war with the US, the tensions with the US, which is severe supply chain changes. Now, a lot of companies now are looking to diversify out, especially as the COVID. The consumption story in China is very weak relative to what they really need to get to on a consumer basis.
They are at thirty eight percent is the consumer relative to GDP. In order to get that up, they have to put money into the pockets of consumers. So I think investors are recognizing that the infrastructure build out that they did was overdone. That's not They're not going to be able to do that this time around to really jumpstart their economy. And because of that, I think investors and I think are going to move away from China
and movement places like India. India is a much more attractive country to invest in than China today.
Phil Okay, Sure, when we look at China itself, we've moved to India a bit later on. But the thing is that the household savings are actually up quite considerably since twenty twenty one at the point being with what's happened with property, it's taken away one of the biggest growth engines, and so what the country's thing is arguably having a structure shift. The thing is what's the new engine of growth going to be and would that become investable and that would perhaps be where you need.
To be.
In China. I just think that first investors have to have confidence that they can get over this real estate property issue that they're having, which is very substantial when you look at the quantity of debt that's consumed, that's that is that they have on many the properties in China.
I just think that investors are going to be skittish to deploy capital there and until that's resolved, until we see Chinese consumers spending like they should be and savings not going up as you just talked about just now, I think there's a lot that we have to really think about before you see a lot of capital flowing into China and you're seeing money leaving China and going
into Japan and other countries. So I think there's a lot still needs to be done and reviewed before investors state China series Again.
A moment ago, you said that India looked the better option at the moment.
Why so, India has the first and most important thing for countries go from developing into developed. It all comes down to leadership and good policy making. And Prime Minister Modi has done a phenomenal job since he's been in office in attracting foreign investment into his country. The demographics in India is much more attractive than China. They are one point four billion people and the average age is
twenty nine years old. The average per capita income is only twenty four hundred dollars, so there's plenty of room to grow. And I would suggest that India is the new China. So what China was thirty forty years ago, India is today. And Mody is going all around the world. He's doing a great job politically. Just at the G twenty meeting, they put together this real important deals with the Saudis, the US and the EU, which is going
to be tremendous for their country. So he's really doing a great job that's going to attract money into his liney.
Yeah, Phil, I have to follow up on that because obviously Mody is known as a nationalist, not so much as a globalist. Are you saying that he can wear both hats at the same time.
I think it is wearing both at the same time. I mean, he is a nationalist, but he's definitely you know, creating great, strong relations with many leaders around the country, and you're seeing direct investments into the country. You're seeing direct investments in infrastructure and renewable energy, and so you're seeing a lot of things that are going on with in India and his policies that are improving the growth in You could see it in the growth of the GDP.
You could see it in where the market's trading relative to other emerging market countries. Right, it's trading or it's training at a higher valuation because investors are recognizing that investing in India is a good investment in the long term.
The thing is phil it's very expensive. There's it's I mean, that's what puts a lot of people off here. And is that huge premium that India has enjoyed. If you can argue that something which is likely to put people off.
It sure is right. So a couple of things we have to think about. Number one is, you know, the strong dollar relative to other currencies, right, So when you look at the performance of the Indian market versus the S and P five hundred, there is on the performance there. So there are things that have to unravel before you can make a direct investment in India from a public
stock market standpoints. I don't think you need to necessarily jump in today because of overvaluation, but I do think you're going to get opportunities where the Indian stock market will retrace because of some currency risk perhaps or higher interest rates all around the world. That's putting pressure on emerging markets. So that pressure is going to create a cheaper stock market overorld for India, and that's going to be the opportunity for investors to jump in.
And you mentioned Japan, they've had a good run there too. Obviously, the NYK one of the better performing major benchmarks in Asia. A lot of investors cite some changes in the structural nature of corporate culture. Are you in that camp?
Absolutely? So the corporate culture. The three major things that's attracting investors is there increase in buybacks, dividends and selling off non core assets. Those are three key areas that will that there are tracking investors into their market that I think is sustainable and you've see in supply supply chain shifts into Japan as well. You're starting to see real rates rise for the first time in a very
very long time. You yeld curve control, you know that, I think they're going to start to remove that or start a subside on that, and you start to see rates move up higher, which will attrack capital to their market overall. So these are the benefits that you've seen with in Japan, which is a game change which we haven't seen in a very long time.
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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