Good morning.
I'm Richard Salama.
And I'm Doug Prisner. Here are the stories we're following today.
Let's get back to that inflation report here, because underlying CPI ran at a faster than expected monthly clip in August, and according to of course the US Bureau of Labor Statistics here and now, this does potentially leave the door open for additional interest rate increases from the Federal Reserve. This is what former Treasury sectorly Larry Summer's made of it all.
My best guess is that inflation is going to be a little strong, and that they're going to need to move again sometime in this cycle.
I think it's conceivable. It's not what I predict, but it's certainly possible that they'll have to move more than once. And the market, I think is over discounting that possibility.
That is Larry Summers saying also that US stocks may be priced a bit for perfection. Someone is thinking that the American economy has a very narrow window in which to achieve a soft landing.
We are hearing the soft bank owned ARM Holdings is going to price its initial public offering at the top end of its marketed range. ARM is selling American depositary shares. They are priced at fifty one dollars each. The chip designer had marketed about ninety five and a half million shares in a range of between forty seven to fifty one dollars. Now at the IPO price of fifty one, ARM now valued at fifty four point five billion dollars.
That's according to calculations from Bloomberg News. By the way, this is going to be the largest IPO of the year, and it's being led by Barclays along with Goldman Sachs, JPMorgan, Chase, and Mizuhou Financial. Arm shares are set to begin trading on Thursday. This would be on the Nasdaq market under the ticker symbol a r M Rashad.
All right, we have a city group saying it's preparing for a wave of job cuts. This comes as the chief executive, Jane Fraser, restructure as the Wall Street Giant in an effort to reverse a year's long slump in stock prices. Fraser addressed investors at the Barclays Financial Services Conference.
Today's announcement is indeed about putting that next step, big next step in place and initiating it, which is to not only put the organization model that best fits our strategy in place, it's also about running the bank differently and about driving clearer accountability for doing so.
That is Jane Fraser. City Group says it'll operate five main businesses in the bank, will eliminate the three regional chiefs to oversee operations in around about one hundred and sixty countries around the world. City does not have firm targets for how many employees will be affected.
Well more than twenty tech and civil society leaders appeared in a closed door Senate meeting today. The aim here to shape how artificial intelligence is being regulated now. This meeting was organized by Senate Majority Leader Chuck Schumer. It's part of his broader effort to get the Senate up to speed on this rapidly involving technology. On hand was the CEO of Tesla, Elon Musk. He told reporters that the US needs to be proactive when it comes to AI.
I think probably of there being some sort of AI regulatory agency that sends on its own, similar to the FA or SEC is likely asport now. The reason that I've been such a prettyle AI safety in advance of sort of anything terrible happening is that I think the consequences of AI going wrong are our sphere.
That is Elon Musk. He went on to say that senators should focus their concerns on what Musk called deeper AI. That's a type of artificial intelligence that essentially teaches computers to process data in a way that imitates the human brain. Now Ed, Baxter will have a little more on today's Capitol Hill meeting throughout the program.
Rish but guide to China now, with Beijing concerns about security problem with Apple's iPhone appearing to be causing a confusion bloombergs yvon lann has.
One Beijing both pushed back on reports about iPhone restrictions, but also raised concerns about security problems with the device. The remarks left US investors unsure about Apple's status in China just as a new iPhone is launching. China is both the company's production base and its biggest international market. We reported earlier that China had plans to expand a ban on the use of iPhones among some state back
agencies and companies. If Beijing goes ahead with an iPhone ban, it will be an unprecedented blockade on China's plans to limit foreign technology use in a sensitive environment in Hong Kong. I'm von Man Bloomberg Radio.
We go to Europe next to where the European Union is launching an investigation into Chinese subsidies for electric vehicles. European Commission President Ursula vonder Layan said global markets are essentially flooded with cheap Chinese cars.
And their price is kept artificially low by huge state subsidies. This is distorting our market and as we do not accept this distortion from the inside in our market, we do not accept this from the outside.
That is EC President Ursula vonder Layin. Now the EUS probe is being opened despite concerns about retaliation from China, and it's a sign of growing alarm over the ability of European manufacturers to compete with China's auto industry. So we have Google today reportedly laying off hundreds of its global recruiting team. This according to The New York Times, which says that Google has sought to trim expenses as
a way of paying for investments in artificial intelligence. At one point, Google's Reture area recruiting group had more than three thousand employees. It's already been hit hard by layoffs this year. Today, if you're wandering Class A shares in Alphabet, the parent of Google up about one percent. Global News is next. Therey is the potential of an auto industry workers strike at midnight tomorrow. Let's get to head Baxter for Global News, Eddie.
Yeah, we're getting a mixed messages, Douglas, your right looks as if the strike may be targeted a small number of factories. You a president Shan Fayn finishing a news conference saying that they're still seeking good sized payhikes.
We're making progress at each of the three negotiating tables. We're still very far apart on our key priorities, from job security to ending tiers, from cost of living allowance to wage increases. We do not yet have offers on the table that reflect a sacrifice and contributions our members have made to these companies.
So Paine says new tactics.
To win, We're likely going to have to take action, and just as we have approached our negotiations differently than we have in the past, we are preparing to strike these companies in a way they've never seen.
Before Fain says the plans for strike will be publicly announced tomorrow night. If an agreement is not made in the Interim House, Speaker Kevin McCarthy says he will use subpoena power granted by his actions of opening an impeachment inquiry into President Joe Biden.
We don't have.
Any of the credit card statements from all the credit cards from this shell companies. We don't have the president's bank statements.
We don't have hundred Biden's bank statements.
Providing information like that would answer the question and asked what we've learned in the last couple of weeks, wouldn't you want to know the.
Answer to yeah, McCarthy says he will get them. As North Korea leader Kim Jong unn meets with President and President of Vladimir Putin regarding munition transfers, the US is saying it is ready to slap more sanctions on both. State Department spokesman Matthew Miller when.
You see what looks to be increased cooperation and probably military transfers. As we've said for some time, we have reason to believe they were going to discuss military transfers. That is quite troubling and would potentially be in violation of multiple UN Security Council resolutions.
Yeah, Miller says there already sanctions in place. These would be additional and just following up on our coverage on the AI in the summit today in DC, trying to keep up with the AI revolution well. Senate meeting today with tech leaders metas Mark Zuckerberg, exus Eland Musk, former Microsoft CEO Bill Gates, open Aichat, GPT CEO Sam Altman, among others. Democratic leader in Political Reaction Richard Blumenthal says that there are actually some really good information coming out.
We are under the cusp of a new industrial revolution with enormous promise but a panoply of perils. And what has impressed me most drammatically today is that there is general acceptance of the need for some kind of regulation to achieve the promise but avoid the risks and dangers.
Yeah, but not all the senators listening to the group of tech CEOs regarding AI today are happy. Senator Elizabeth Warren on Bloomberg.
They're sitting at.
A big table all by themselves.
All of the senators are to sit there and ask no questions.
That's the setup.
By the way, we're told at Musk and Zuckerberg sat at opposite ends of a long table. Yeah, there was no cage there. Global newspower by more than twenty seven hundred journalists and analysts and over one hundred twenty countries. In San Francisco, I'm at Baxter and this is Bloomberg Now.
You can get the latest news whenever you want it. With Bloomberg News Now, it's the top stories from our global team of reporters at the click of a button. Get Bloomberg News Now and the Bloomberg Business app, or at Bloomberg dot com or anywhere you get your podcast Daybreak Asia. And our guest is Christina Hooper. She is the chief Global market Strategist at Invesco, joining us here in New York in the Bloomberg Interactive Broker Studio. Nice of you to stop by. It's good seeing you, Thanks
so much. How did you kind of read what we learned today with a CPI print. I'm looking at the way in which the market responded. It really did little too kind of alter the expectation. It would seem that the Fed is going to remain on hold next week. Would you agree with that?
I definitely agree with that, but with one wrinkle. So I'll say the market was bracing itself for a higher headline CPI print because of oil prices. But and so I think it was rather comfortable. We had a core a touch higher than anticipated, but certainly within a range of what I think is comfortable. And I've said that this is very much a disinflationary narrative, but not every data point is going to be perfect and fit in with that narrative perfectly. The one fly in the ointment
could be Michigan inflation expectations on Friday. Now, if we go back to June of twenty twenty two, recall the FED had been messaging in advance of its meeting that it would hike rates fifty basis points, and then we got a one to two punch, We got in an inflation print, and we got Michigan inflation expectations that were j Powell even pointed to those two data points as the reason the FED aired on the side of actually
doing seventy five basis points at that meeting. And so I think that if we were to get some cost for concern in Michigan inflation expectations, because we know that consumer inflation expectations are so important to a number of central banks, including the FED, then that might tip the scales, but I think it's highly unlikely. My base case is that the FED sits on its hands next week.
So the other thing that I have to ask about in terms of FED policy the degree to which they may be a little concerned about the dollar, not that it needs to weaken from here. If anything, I think that they would want to keep the dollar strong as a way of preventing the economy from importing inflation. When you consider what oil prices have been doing lately. I mean, Brent now is just under ninety two. We've got WTI
just under eighty nine dollars a barrel. And to the point we were kind of alluding to a moment ago, energy seems to be the greatest risk now and measuring where inflation may end up. Do you think the FED is, even though they may remain on hold, let's say, for the foreseeable future, they've got a talk tough, largely to keep the dollar firm.
I don't know if the FED is that concerned, just because it takes so long for higher energy prices to make its way into core inflation, which is really what the FED is laser focused on. So I'm not sure that the FED is too worried about the US dollar. I think the FED is going to come to the end of its rate hike cycle when it feels comfortable with that. Until then, though, we're going to hear hawkish FED speak. I think next week, if the FED chooses to sit on its hands, it will still sound hawkish.
It will reserve that right to hike rates in the future, and that will really stop a lot of what could be a weakening of the US dollar. So it'll take time before we before that really starts. I think it will take until markets are convinced definitively that the FED has ended its rate hike cycle.
So Christina, you know we have, of course, this elevated oil price. This takes time to actually feed into the inflation numbers, especially where they are now. But also let's not forget that later on Thursday anyway, we've got another deliage of data, retail sales PPI, initial jobless claims as well. You know, the data is endless, and it all just seems to just muddy the waters.
Well, it certainly muddies the waters, but we're seeing a clear picture when we step back, which is that the disinflationary trend is very much underway and the US economy is cooling. And those really are the two key takeaways for the FED. And that's why I think the FED is going to sit on its hands in September and why I think it's unlikely the FED hikes rates again this cycle.
So when you look at the treasury curve right now, yes, we are still inverted. Does that necessarily I mean, it's been stubborn and it's kind of implication here that we're looking at a recession. Is that your bet, now, let's say mid next year, that we're definitely going to see some contraction in a meaningful way.
I don't think so. My view is that we're going to see a bumpy landing. And by that, I mean, let me take a step back and say, you know that there's this school of thought beliefs that believes we're going to get a soft landing. We're even hearing it from giannet Yellen, and I understand the rationale behind it, but I would say that a soft landing assumes there's very little damage, and I think we will see some significant damage before we see a recovery. We've seen a
you know, significant tightening and credit conditions. Things like that don't happen without some kind of damage to the economy. I think we'll avoid a recession, but will certainly feel some pain, you.
Know, just thinking about that, and you know, when does actually ultimately we see the whole bond market start to price and perhaps beyond what we're looking at the moment in terms of the longer end, and start to actually properly rely I suppose uninverting as it were.
Well, I think that could start to happen soon. We've seen a real stubborn pattern thus far, but that could certainly start to happen soon. I think the real issue, though, is that we do have a significantly long lag typically between when monetary policy is enacted and when it shows up in the economy. And so long as we have you know, a fair level of policy uncertainty about when the FED is going to high rates, we are unlikely
to see a lot of movement. I think as we get closer to greater clarity, that's when we could see an unwind begin. But I do believe both the bond and the stock market will start to discount recovery. I think that'll that will begin. The discounting process should happen soon. I think we'll actually start to see a recovery in the back half of twenty four.
Christine, I'd like to get your view on what's going on in China right now in the degree to which a weak economy there is really going to hold back global growth in a significant way for the foreseeable future. Is that a fair statement.
Well, I think you have to ask the question what's come first, the chicken or the egg, because if we look at the Chinese economy, yes, certainly there are headwinds because the economy didn't get the kind of fiscal stimulus we saw given out in Western developed countries during the pandemic. So that has certainly held back the Chinese economy from a robust reopening. But if we look at the data,
services is still fairly good. Where we've seen really the pain is manufacturing, and that really reflects the global slowdown that was caused by Western developed central banks. So the Chinese economy in at least some respects reflecting that global slowdown as opposed to contributing to it. Now we could see going forward if we don't get the If China doesn't get the adequate policy stimulus, it needs the targeted stimulus,
then that could be problematic. Thus far, though, I've liked this slow drip and I think it could continue.
Oh, we'll see about that. It's a fresh perspective. I've not heard that from anyone that do you like this kind of slow rollout of stimulus.
I'll take what I can get.
All right, Christina, Always a pleasure. Thank you so much, Christina Hooper there. She is the chief Global market strategist. Add invescode. 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 to one in Washington, Bloomberg one oh six to 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, serious XM Channel one nineteen, the iHeartRadio app, and on Bloomberg dot Com. I'm Doug Krisner and I'm Richard Salama.
Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia