Investors Brace for Key Inflation Data; Google Breakup?

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Good morning, I'm Nathan Hager and and I'm John Tucker. Here are these stories we're following today.

Well, John, the S and P five hundred is coming off its biggest four day rally of the year. It's gained four and a half percent during that stretch. Yesterday, the Nasdaq one hundred climb two and a half percent. In Wall Street's favorite volatility gauge, the VIS, tumbled to around eighteen. Sema Shaw, Chief Global strategistic Principal Asset Management, is still bullish on the markets even if there.

Is a genuine economic slowdown coming through. Given the resilience and the balance sheet strength of households and corporates, is it likely that EFFED can't come to save the US economy with various red cuts. So I put the chance of recession fairly low, which means an after a bit of volatility and pullback, I think the actually market can still ecout some positive gains.

Principal Asset Management Sema Shaw notes that swaps trade is a priced in about forty basis points in FED cuts in September and a total rate reduction of more than one hundred and five basis points for twenty twenty four.

Well, yesterday's rally was fueled in part by producer prices rising less than expected, and later this morning we're gonna get the latest reading on consumer prices. Sarah House is in your ACOUNTABIS at Wells Fargo Corporate and Investment Banking.

We're looking for a zero point two percent increase on booth, the headline and the core. So that's in line with the consensus, but I think the details are going to be really important. So to what extent are we still seeing outright goods deflation and are we seeing more progress on the services side, both in housing but also the non housing services that have been such a such a concern for the Fed.

Wells Fargo's Sarah House. Now, if the consensus holds, it would mark the smallest three month increase for core inflation since early twenty twenty one.

And inflation is also in focus in Europe this morning. Let's get the latest on that with Bloomberg's w and Potts in London.

You and Nathan and John. The headline rates of UK inflation ticked up in July, but by less than expected, with consumer prices two point two percent higher. Than a year ago, But it was a sharp drop in services inflation that really got the attention of traders. That measure fell from five point seven percent to five point two percent. Core inflation also fell to its lowest since September twenty

All right, thanks to you and staying in Europe. Shares of UBS up almost two percent. The Swiss Bank posting higher than expended profit in the second quarter as strong client inflows in investment banking revenue help bolster chief executive officers Sergio or Mahdi's efforts to return capital to shareholders. A year after completing the takeover of Credit Squeeze, the bank says it's on track for pre merger levels of profitability, something Sergio or Madi tails Bloomberg he can deliver.

Of course, is going to take a lot of time, i am but to restore the profitability because the amount of task to be done is huge. But I'm confident that we are on a good way to deliver.

But despite Sergio Armandi's optimism, ubsays it's also expects to book another one point one billion dollars in integration related expenses in the third quarter.

In Asia, John Japan is going to be looking for a new leader once again. Fumio Kashida is withdrawing from his ruling LDP parties leadership race in September. That paves the way for someone else to become Japan's premier. The successor would be the third prime minister for the country since Shinzo Abe stepped down in twenty twenty.

Now to the latest from the Middle East, the United Nations Security Council held a meeting of the tensions in the region as Israel waits for a potential reprisal attack from Iran. US Ambassador Linda Thomas Greenfield repeating calls for a cease fire deal in Gaza.

We've called on both sides to resume urgent discussion on Thursday, August fifteenth in Doha for Cairo to close all remaining gaps and commence implementation of the deal without further delay.

Ambassador Linda Thomas Greenfield says a ceasefire is the best way to bring immediate rely to the people in Gaza. Meantime, the Biden administration has approved a more than twenty billion dollar weapons sale to Israel. We get more of that from Bloomberg's Roz Matheson, Well, this.

Is the approval of a big event still that we knew was in the works, and it's involves up to fifty fighter jets and fifteen fighter jets, upgrades for existing fighter jets, everything from vehicles, ammunition, radar equipment.

It's a big deal.

It's got a lot in it, but the reality is that these planes are not going to come at least until twenty twenty nine, so there's some years away.

Bloomberg's Rhons Mathison reports the US paused weapons shipments to Israel and May over concerns that could be used against civilians in Gaza. Two key Democrats drop their opposition to this weapon sale in June.

Well John, a progressive member of Congress who has been outspoken against Israel's conduct in Gaza, has won her primary in Minnesota with ninety nine percent of the votes counted. Democrat Illin Omar defeated former Minneapolis council member Don Samuels fifty six point two percent to forty two point nine percent. Omar told her supporters her campaign was about joy.

We know it is joyful to want to live in a peaceful and equitable world.

So I am.

Incredibly, incredibly honored by this victory.

Tonight.

Congresswoman Ellan Omar's victory buck's a trend for progressives in Congress to other members of the so called squad. New York's Jamal Bowman and Corey Bush of Missouri lost their primaries. Unlike those races, Pro Israel groups decided not to get seriously involved in the Minnesota race and.

Turning back to the markets now, Dathan shares of Alphabet down almost one percent in early trading. The Justice Department is considering whether to force alphabets Google to break up. More from Bloomberg's Amy Morrison Washington.

Officials with the DOJ are considering what would be a rare bid to break up a big tech company after a landmark court ruling found that company monopolized the online search market. Sources tell Bloomberg that less severe options include forcing Google to share more data with competitors and measures

All right, Amy, thank you. Meantime, a merger is getting closer. Perhaps in the grocery ole. We're watching shares of Kelenova. They're up about seven percent. The Wall Street Journals reporting Mars is expected to unveil a nearly thirty billion dollar deal for the food maker today. Keleanova was spun off from Kellogg last year. Its brands include pop Tarts, Springles and Cheese Its.

And activist investors pushing for sweeping changes at Southwest Airlines, Elliott Investment Management has nominated ten of its own candidates to the board of the struggling carrier. They include the former hands of Virgin West Jet and Eric Canada. Elliott has previously demanded the oulster of Southwest Airline CEO Bob Jordan, and that brings us to five the wait on Wall Street Time down for a look at some of the other stories making news in New York and around the world.

Keep getting richer at the expense of the working class, and people like Donald Trump and Elon Musk, they sneer at labor law, but they don't care about labor law because they don't care about working class people.

The senior advisor for the Trump campaign released a statement saying, in part, the lawsuit is a shameless political stunt to eroad President Trump's overwhelming support among America's workers. Hunter Biden is facing new criticism this morning. The New York Times reports that the president's son wrote a letter to the US ambassador to Italy in twenty sixteen to seek help for a foreign business venture. Hunter Biden's lawyer called the letter to the ambassador a proper request and insisted no

The hurricane washing is being issued for US Virgin Islands to Burgess, Virgia Islands vehicles and Calebra to anticipate a rapid intensification.

Just days ago, Debbie passed through the area, leaving storm damage. Opening statements are expected to begin today in the murder trial of a Las Vegas area politician accused of killing an investigative reporter. Prosecutors accused former Clark County Public administrator Robert Tellis of killing Las Vegas Review Journal reporter Jeff Jerman in September of twenty twenty two Loyola Law School professor and former federal prosecutor Lori Levinson.

The allegations are at the politician. The defendant here, Robert Tellis, was upset at a reporter who had said negative things about him, and in fact, that seems to have been the motive alleged for this crime.

Former federal prosecutor Lori Levinson. Former Houston Mayor Sylvester Turner was picked as the Democrat's nominee to succeed the late US Representative Sheila Jackson Lee, who died last month of pancreatic cancer. Turner will be appearing on the November ballot after securing the most support from local Democratic precinct chairs. Global News twenty four hours a day and whenever you want it with Bloomberg News. Now. I'm Michael Barr, and this is Bloomberg.

John, Michael. Yeah, it's tigned out for the Bloomberg Sports Update. An for that, we said, good warning, John stash Ewer, All right, John.

Had the White Sox one last night. That would have been two wins and two nights after one win the previous month.

Didn't happen.

Yankees won four to one in Chicago thanks to Nester Cortez, who through seven scoreless hittings and Juan Soto, who provided the entire Yankee offense. He was the only Yank to have an extra base hit. Soto had the best home run hitting game of his career, two run shot to left field thirty night solo blast also the opposite way of the Fens solo home run to right in the seventh, actually had a chance in the ninth for a four home run game. He now has thirty three home runs and his teammate Aaron.

Judge has forty two. Here's Soto on the two of.

Them were just coming here and tried to do large jobs down with the day. You know, it's it's really impressive what we've been doing. But at the end of the day, we forget about what we've done.

In the past.

We tried to come every day, tried to focus in that day, and tried to win games.

So for us is.

Really it's really good that you guys appreciate everything.

That we do.

But definitely we come in here every day hungry for.

More Yankee win. Coming after news of Jazz Chisholm's elbow injury suffered Monday night on the head first slide home. He is gonna have further test but the MRI is gonna land Chisham on the injured list with surgery and option. Chism has been a nice addition since the trade was Miami. The Orioles lost to Washington nine to three. The anksor back ahead of ball the More by a half game. In City Field, Oakland beat the Mets nine to four.

Coast to Coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg dot Com and the Bloomberg Business app.

This is Bloomberg Daybreak.

Good morning, I'm Nathan Hager. On a morning of big bank earnings. UBS posted higher than expected profit in the second quarter as investment banking revenue and progress in the integration of Credit Suite helped CEO Sergio or Mahdi's efforts to return capital to shareholders. Sergio or Mahdi joined Bloomberg's Fancy in Lanqua to talk about the results and how higher volatility could be good for client portfolios. Let's listen in for the.

Markets and for many investors.

You know, what happened early on this month has been a week up cal away up cool right, So I mean you look at the magnitude of the movements should make people think carefully about.

Having a proper diversification and being very total about the way you invest. More so, in that sense, the fact that we have.

Basically made back everything within one week or two cannot be taken as a you know, temporary issues. In my point of view, one has to really think that probably is a sign of some elements of fragility in the system.

Does it get easier as maybe we get a FED cut, or does it get more complicated as we go to the US election?

But look, you know.

When central bank cuts, it depends how they cut and why they cut.

So if.

You know, of course there is now a capacity probably to accommodate cuts based on lower.

Inflation, but it's also you know, we need to watch.

Exactly also what are the underlying economic drivers.

And to the extent that the FED is.

Forced to cut more aggressively because of economic downturns, that would not really be good for the market, so we need to really watch why rates would come down and how quickly they come down. In general, we do expect and we see room for a potential rate cuts in the foreseable future, but I wouldn't really be in the camp of predicting that the FED will go as far as the market wants the.

FED to go.

There's been a lot of focus on private markets. How does that interplay actually change and what does it mean for ubs now?

The big change in client.

Behaviors we saw in the last twenty four months was clearly more diversification towards fixed income and so on and so forth.

When the rates comes down, of course, maybe part of it will go to search for higher yield in maybe in private credit, but not only.

But we do believe that as rates comes down, you will see also potentially people moving back to more alternative assets.

And also, which is.

Important to understand the ed winds we face in the industry, but also at US in NII in margins on interest rates will be also upset by clients taking more leverage potentially, So it depends how it plays out, It depends what are the underlying economic dynamics.

Do you worry that there could be a systemic risk for semi systemic risks.

I don't think so. No, I don't think I don't see systemic risk. But volatility.

High volatility doesn't mean that you have systemic risks.

But what does it mean? High volatility means you need.

To be higher volatility? I mean, to be honest, I think if you look at high.

Volatility can be an absolute or a relative concept. So because we have seen solo volatility in the last few quarters, you know, I do believe that we're going to see higher volatility. If this is very high and permanently, it's another matter, but I do believe we're going to see more volatility.

So it can be quarterly results.

If I don't ask you about hiring or actually job losses, can you give us an update on what the next six and then twelve months will bring well you, so that.

You know the restructuring.

And fixing the elements of problems in the integration are unfortunately driving job losses. We are We took down around three thousand counties quarter, so I think that we will continue to do that in order to restore the profitability UBS had before the appuisition.

This is Bloomberg Day. Break Today, your morning brief on the story is making news from Wall Street to Washington and beyond.

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I'm Nathan Hager and.

I'm John Tucker. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg day Break