Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
We begin with Apple, still dealing with the fallout from China's plans to expand its iPhone ban. The company's shares have dropped more than six percent over the past two days, wiping out one hundred and ninety billion dollars in value. That came after reports China plans to go beyond banning iPhones for government workers to include employees of state owned companies. All this just days before Apple's latest product launch that's coming up on Tuesday, as the iPhone maker looks to
reignite slowing smartphone sales. Alec Young is MAP Signals chief investment strategist. He says there's a broader threat spooking investors.
There's no question that part of the negative inferences that are swirling around right now is this idea that Apple gets caught up in a nationalist rivalry between the US and China. If iPhones, for example, were to become stigmatized throughout Chinese society over the next few months to the point that it depressed demand, those types of narratives inevitably are popping into investors' minds right now.
Alec Young of mapp Signal says, so far the ban only affects a little more than one percent of iPhone units in China, and checking shares of Apple this morning, they are little changed.
Man.
That's not the only smartphone news coming out of Asia and Nathan. The US government has begun an official probe into an advanced mate in China ship and Huawei's latest smartphone. The Commerce Department says it's we're going to get more information on a purported AS seven and nanimeter processor discovered in the mid sixty pro The chip is made by China's Semiconductor Manufacturing International Corporation, which, like Huawei, is blacklisted
in the US. The Biden administration is trying to limit sales of advanced semiconductors to China, and this could prompt the tightening or expanding of existing restrictions.
Well, Karen, US China relations do remain chilly. As President Biden heads to the G twenty summit in India to meet.
With world leaders.
One of the leaders he won't meet with is Chinese Vice Premier Lie Chiang, who is attending the G twenty in place of China's president, she Jenping, she won't be there, neither will Russian President Vladimir Putin. Instead, the Chinese president is hosting the leaders of two heavily indebted nations next week, the presidents of Zambia and Venezuela.
Well Nathan joining President Biden in New Delhi. Treasury Secretary Jennet Yellen, she spoke ahead of the summit, saying she's been surprised by the strength of global growth and Yellen also discussed China's recent economic challenges.
So see China's growth as slowing over time. That said, China has quite a bit of policy space to address these challenges, so we're monitoring the situation. I don't see it as having very significant direct impact on the United States.
Treasury Secretary Jenet Yellen also pledged further financial assistance for Ukraine and says the US we'll look to you strengthen times with India. Yellen will join President Biden at a meeting with Indian Prime Minister and Narendra Mody today.
Well, meanwhile, back at home, Karen, we're monitoring FED speak for clues about the path of interest rates. In Florida yesterday, Atlanta Fed President Rafael Bostik said, rate hikes need time to work their way through the economy.
I'm grateful to say is that we've seen inflation come down. I feel like we're in restrictive space now and now we just need to let that restriction play out and let it bring inflation, continue to bring inflation down to get back into the range of our target.
In addition to Brafielbostik, we heard exclusively from New York FED President John Williams, who discussed monetary policy with Bloomberg's Michael McKee.
You know, things are moving in the right direction. We've got policy in a good place, but we're going to need to continue to be data dependent, watch the developments and assess what we need to do.
And Fed officials to get a key piece of data next week with the August Consumer Price Index on Wednesday. Listen to our full conversation with New York Fed President John Williams on the Bloomberg Talks podcasts wherever you get your podcasts.
Well as the US deals with unprecedented temperatures this summer, Nathan, we're following the heat crisis in the South. It's a US declared to power emergency in Texas, and Bloomberg's d Maxter has the story.
The declaration is an attempt to help keep power on midst the brutal heat wave this week. It will allow the grid operator to wave some air pollution limits so generators can produce more power. The Energy Department says the expected loadstress caused by the current extreme heat event threatens to cause loss of power to homes and local businesses in areas that might be affected by kurtailments, presenting a risk to public health and safety. The declaration is in
effect until nine local time tonight. I'm at Baxter Bloomberg.
Radio, Okay, and thanks on Wall Street. Goldman Sachs maybe planning to dismiss underperforming workers as soon as next month. That's according to the Financial Times. It says it's part of the bank's annual Staff Evalue EI. The sources say reductions will be at the lower end of Goldman's usual range of one to two five percent workforce cuts.
Well.
Speaking of Goldman and Nathan, the bank's CEO, David Solomon is responding to recent negative news coverage of his leadership style and management of the firm. In a conversation with CNBC, the Goldman CEO said he does not recognize the caricature that's been painted of him in the press. A handful of Goldman partners have left the firm over the past months, with at least five exiting in one week alone this summer.
Solomon called the volume of partner exits absolutely typical, and time now for look at some of the other stories making news around the world. For that, we're joined by Bloomberg's Amy Morris say, good morning.
Good morning, Karen.
About two out of every three Democratic voters say they'd rather see a different nominee than President Biden. This new CNN poll says sixty seven percent of left leaning voters would like the party to nominate someone else.
That's up from fifty four percent.
In March, FBI Director Christopher Ray sounded off on a number of issues during an event called Spy Chat at the International Spy Museum in Washington, DC. Ray spoke about the future of the FBI's cyber defense capabilities.
If you look at our exposure as a country, something like eighty percent of our critical infrastructures in the hands of the private sector. It's our critical infrastructure the bad guys are.
After FBI director Christopher Ray says tech companies should try collaborating more with the federal government on security matters. The dissent is growing louder to Senator Tommy Turberville's blockade of military promotions over a Pentagon policy allowing travel for military members seeking abortions or other reproductive healthcare. Bloomberg's Nancy Lyons has the very latest.
Senator Tommy Tubberville is brushing off criticisms over his hold on roughly three hundred military promotions.
They're already doing the job.
It's just they've got interim on their name.
There's no threat to readiness.
But retired Major General Old Panaro tells Bloomberg sound on Tubberville, who once coached Auburn football, is playing into the hands of the opponent.
If his first string quarterback was ready to play, he would not put his four string quarterback in against Alabama.
Well, that's what we're doing right now Visa Beachina, North Korea, and.
Iran in Washington, Nancy Lyons Bloomberg Radio.
The new head of the CDC says COVID nineteen is here to stay. Doctor Mandy Cohen recommends masking social distancing into other measures and says a new booster will be available as soon as next week. Now, a bill to ban federal mask mandates is coming up short in the Senate.
Ohio Republican JD.
Vance argues that children can't go through another mask mandate.
We know that a generation of school children have suffered significant speech and developmental disabilities because this country panicked instead of using its brain and force toddlers and small children to wear masks.
Vance attempted to pass that bill by unanimous consent, but the move was blocked by Massachusetts Democrat Ed Markey. Global News twenty four hours a day, powered by more than twenty seven hundred journalists and analysts in more than one hundred twenty countries.
I'm Amy Morris. This is Bloomberg Karen. All right, Amy, thank you. It's time now for the Bloomberg Sports updates. And here's John stash Hour, John Karen.
Opening night of the NFL, the Lions visiting the Chiefs, whose fans celebrated last year's Super Bowl victory. Detroit finished last season strong, had a ninety one yard touchdown drive, took the lead in the first quarter.
Trailed at the half, the game turned in the third quarter Mahomes out of the gun. He's got it. Wants to throw Mahomes back throws it is equal. Please sick off.
TikTok by the Alliance five branch with it left side.
He's gone, baby, He's doing the house touchdown.
Detroit Lyons deflected the air, Branch ran under it.
And he took it all the way back.
Brion's radio had the call Bryan Branch are rookie playing his first game. When David Montgomery scored midway through the fourth quarter, Detroit top tenans A City in a upset twenty one to twenty.
The Chiefs had won their last eight season openers.
Latest NFL player to get a mega contract Cincinnati quarterback Joe Burrow on the eve of Week one. Five years, two, one hundred and seventy five million, so fifty five million a year with two hundred and nineteen million guaranteed. He's an Ohio native and has resurrected the Bengals. Team US opened Coco GoF into the women's singles finals.
She blew six match points but pulled.
Out a victory over Carolina and mohovera six y four seven to five Coco seventeen and one. This summer on hard courts, and in the finals shell Play Arena Sabalanca. She lost the first set to Madison Keys at love, but then won the second and third sets, both in tiebreakers.
John Stansh Edward Bloomberg.
Sports from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on SIRISXAM, the Bloomberg Business app in Bloomberg dot com. This is Bloomberg Day Break.
Good morning. I'm Nathan Hager.
What's good for the economy apparently is bad for the market. Strong economic data spooked investors this week with speculation that rates may need to stay higher for longer. Further softening in the US economy leaves the path of rate hikes uncertain. Between now and the next FED meeting, we'll get more data as well as more Fed speak, and we're getting some of that now.
In an exclusive.
Conversation between Bloomberg's Michael McKee and New York Fed President John Williams, they spoke at a moderated discussion at the Bloomberg Market Forum. Let's go to that conversation.
Here's how I see things now. You'll obviously always focused on our dual mandate maximum employment and price stability. Inflation is far too high. But that said, inflation is moving in the right direction. We're seeing the imbalances in the labor market which were really quite pronounced last year. They've been closing job job open have been coming down, the quit rates coming down, the hiring rate in the markets
coming down. So we're seeing movement in the right direction of bringing supplying demand back into balance, seeing inflation come back towards our two percent long run goal.
And we've done a lot.
I think everyone knows you know here in this room, and we raise raised significantly over the last year and a half or so, and we've gotten it to a restrictive stand. So my answer to the question is, right now, I think we've gotten MANTE policy in a very good place in terms of we have a restrictive stance of policy. It is doing having the desired effects of bringing demand and supply more into balance. We're seeing inflation move in the right direction, but we'll have to watch the going forward.
We'll have to keep watching the data carefully analyzing all of that and really asking ourselves the question, is this sufficiently restrictive? Do we need to maybe raise rates again? To make sure that we're keeping that steady progress terms of getting imbalances, you know, shrinking balances in the labor market and bring inflation back down. So right now, I think,
you know, things are moving in the right direction. We've got policy in a good place, but we're going to need to continue to be data dependent, watch the developments and assess what we.
Need to do.
How do you know you're restrictive?
What metric do you use?
Let's see how long did it take to get to our star? Okay, so the you know, I think there's it's there's no right answer to that question. I think you know. The way I think about it is really in terms of real interest rates as a Fed funds rate or more broadly, you know, uh, you know, treasury
yields relative to expected inflation. So you know, depending how you measure it, you look at it, real rates are you know, well above zero, you know, moving you know, somewhere between one and two percent, and that seems to be above typical estimates of the long run neutual real interest rate. And I think the other way you see it is a little bit of in what we're seeing in the economy. Right so we are seeing demand and in the labor market come down according to a lot
of different measures. We are seeing other kind of signs that the economy is moving imbalance as an economy coming down. So I think the two things. One is kind of like where's our versus our star? That's one way to think of it. But the other is what are we seeing happening in the economy. Now there's a second test. There's kind of the are we restrictive? And the second is are we are we sufficiently restrictive to really make sure that we're bringing inflation sustainably down to two percent
and getting the job done? So, you know, I have to I think it's pretty clear we're restrictive. Still an open question as we go forward, and have we got sufficiently restrictive to.
Achieve that we'll get to our star when we get to a Tom called it the ecobabble part of our conversation here. But first, you have raise rates eleven times, you've gone up to five and a half percent top range, but unemployment remains extraordinarily low, and we are seeing signs of the economy accelerating. Now, so do you really think you're sufficiently restrictive?
Well, you know, I think, first of all, in the unemployment rate has been relatively steady over the last year or so. It's it's fluctuating between three point four and three point eight percent where it is today, and I think it's a signing that well, clearly we're not moving, you know, significantly to more imbalanced and unemployment even lower. Normally have we seen the clear signs of unemployment moving
you know, significantly up. But I do think it's a unique time, right because if you look at the unemployment rate, it seems to kind of get to a minimum value of around three point four percent, kind of get there, but then these other indicators have been shifting. So I think what we've seen in the labor market is demand exceed supply. It's not showing up as much in the unemployment rate continuing to go down, but just showing up in these other things like job vacancy, is quit race,
things like that. So to me, the things I'm focused on is really are we seeing the demand and caters supply and becares move together. I would expect the unemployment rate to edge up over the next year somewhat, but again, you know, I see positive signs in the sense that the indicators of demand and supplier moving the right direction. The unemployment rate hasn't moved moved as much.
This is Bloomberg day Break Today, your morning brief on the stories making news from Wall Street to Washington and beyond.
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I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak