Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
We have three.
Major policy decisions on tap, including from the Fed. We get a preview now from Bloomberg's Michael McKee.
The Fed has signaled it has at least one more quarter point rate increase to go, and a still tight labor market is expected to lead them to go ahead on Wednesday. Futures are pricing in a ninety six percent chance of a move For investors, the real question is what next. Fed officials said in June they anticipated two more rate moves. What did they signal after their meeting? And let's also think the ECB is close to ending its tightening cycle one more move and then on hold.
European markets are still pricing in cuts and President Christine Legard will try to wave those off. In Japan's still a long way to get to where they want to be. Inflation is up but projected to fall, so investors see less than a ten percent chance of a rate move. They may talk about ending yield curve control, but have no plans to do it yet. Michael McKee, Bloomberg Gay break All right.
Mike, Thanks, well, expect moves from all three central banks. That's the call from Ahammadalarian, chief economic advisor for Alliance, and a Bloomberg opinion columnist.
All three are going to hike by twenty five basis points, but that's where the communality will end. I think the FED will come across as stubvish, the Bank of England will still be quite hawkish, and the ECB will be in the middle in terms of the Ford policy.
Guidance and when it comes to inflation, Bloomberg Opinion columnists Muhammadalarian says the FED will ultimately have to settle on a new target rate around three percent and as compared to the current two percent inflation target.
It's also a busy week for earnings, Karen. About a third of the companies in the S and P five hundred roll report this week, and we've already heard from oil giant Chevron. Bloomberg's Doug Krisner has the details.
The results reflect record shale oil output in the Permian Basin adjusted EPs, we're three dollars eight cents higher than the Bloomberg consensus. However, net income fell to six billion dollars. It's the fourth straight quarter of lower results for Chevron. Net income is fallen to nearly half the level of last year when oil price is surged after Russia's invasion
of Ukraine. Now Chevron is on a quest for record shareholder returns and the company is waiving the mandatory retirement age for chairman and CEO Mike Worth in New York. I'm Doug Chrisner, Bloomberg Day Break.
All right, Doug, thanks well, another corporate news. Elon Musk is making another change at Twitter. He's hoping X marks the spot of profitability for the social media company, and we get the details from Bloomberg's John Tucker.
Say goodbye to Twitter's Bloomberg logo. It's being replaced with a stylized x X dot com. Now readdirects to Twitter dot com. Elon Musk hans at affinity for x X dot com was the original name for PayPal. It's in the SpaceX company name. It's in the name for Tesla's SUV. The abrupt change comes as Twitter faces a steep decline and ad dollars and a new rival, it Meta Platforms Threads x is envisioned is an AI powered global marketplace
including payments and banking alongside audio, video and messaging. You knoww York. I'm John Tucker Bloomberg Daybreak.
Thank you, John Well.
It's been a tough summer for Hollywood, between the labor strikes and disappointing blockbusters, but an unlikely double feature this past weekend is giving cinemas something to smile about. Barbie earned one hundred and fifty five million dollars in its box office debut, and it came out the same weekend as Oppenheimer, which brought an eighty and a half million.
About two hundred thousand movie fans bought tickets to both films on the same day that Barbenheimer phenomenon helped theaters turn in their best weekend since Marvel's Avengers Endgame in twenty nineteen.
Lot of more serious know here, Nathan. Let's turn to politics.
Now.
Are US China relations remain largely in focused? Secretary of st Anthony B. Lincoln says the rest of the world is eager to see ties improve between Washington and Beijing, and Bloomberg's Ed Baxter has that story.
Blanc and says he's hearing from all over the globe concern about how it will be managed to.
Make sure that we sustain these lines of communication, that we continue to talk, and that we work on, as I said, both dealing with the differences and seeing if we can cooperate. That's the way we're approaching it. I think it's the responsible thing to do.
Blak And on CNN says both will continue to say things the other does not like, but the relationship will be based on how it is managed going forward. In San Francisco, I'm at Baxter Bloomberg daybreak.
Thanks, and we've had a significant and confusing election result.
In Spain.
Prime Minister Pedro Sanchez has denied his political rivals a majority in parliament after his Socialist party performed better than expected in yesterday's election. The Conservative People's Party won the most seats in Spain's parliament, but the Socialists also saw gains. We get more from Bloomberg's Maria TODAYO in Madrid if you.
Focus on the winner, and if I see that as a conservative party, they won the most votes, but also the most speak The problem that they have is that that is not enough in Spanish politics. ME and the winner will not take you into government if you don't have a majority. Last night is that there are huge pockets of Spanish voters that will go out of vote to prevent what they proceed as the farm Right entering a government.
Bloomberg's Maria Todayo says Pedro Sanchez will remain Prime Minister for the time being, but he may have to call another election later this year. This is Bloomberg. It's time now to take a look at some of the other stories making news in New York and around the world with Bloomberg's Michael bar Good morning, Michael.
Good morning, Nathan. It's not just New Jersey filing a lawsuit against New York City's congestion pricing plan. Staten Island plans to file a lawsuit as well. Borough president Veto Facila, like officials at the Garden State, are pointing to the environmental studies saying will cost more for people in Staten Island and hurt the borough's environment.
To sit here and then say to the people of Staten Island that you're going to pay more and your air quality is going to be worse doesn't make any sense.
Audio courtesy of ABC seven. Many Staten Islanders can't take the ferry and could end up paying even more to get into Manhattan. Below sixtieth Street when the congestion pricing plan kicks in. In a statement from the MTA, contrary to any claim that there was insufficient study, the environmental assessment actually covered every conceivable pretend potential traffic, air quality,
and social economic effect. An unsettling discovery reported at the house of the accused Gilgo Beach serial killer Rex Huerman on Long Island. According to the New York Post, police told a neighbor that investigators found a sound proof room in the basement of the home and believe at least one victim was killed there. Officials have been searching inside the home to determine if any of the victims wherever inside.
Souffolk County Police Commissioner Rodney Harrison says Hewerman's appearance of normality was a cover that hit his true nature.
He lived a double life.
You know.
He had a family and a wife and two kids.
He had a good job in being an architect, but what he did at night, he was a different human being and a dangerous individual.
Suffolk County Police Commissioner Rodney Harrison says that they've been using cadaver dogs, ground penetrating sonar, and an excavator to scour Hureman's backyard. The current heat wave has been setting records across the country. Tens of millions of Americans from California to Florida are struggling to cope with scorching heat, like this man visiting Palm Springs. It was one hundred and twenty yeah, and it's klt like somebody just lit
a match in in front of us. Now. The heat wave is forecast to expand into the Midwest and northern plains. Israeli Prime Minister Benjamin at Yahoo was released from the hospital today after an emergency heart procedure. It comes ahead of a key vote in the government's judicial overhaul plan that has divided the country. Global News twenty four hours a day, powered by more than twenty seven hundred journalists analyst over one hundred twenty countries. I'm Michael Barrd. This is Bloomberg Nah.
Thank you, Michael. Time now for the Bloomberg Sports Update. Good morning, johns Stasho, Good morning Nathan. Two games Subway series starting tomorrow and the Bronx. The Yankees come off a sweep of the Royals. The Mets off a loss last night in Boston. Carlos Carrasco started and got only seven ounce and he was gone, having given up five runs ten hits.
His era is near six. The Red Sox went on to win six to one, as the Mets got only six hits, all singles at the stadium, something that had not occurred in a very long time.
Well, once again, it'll be a three to two from Lyles to Rizzo swung on head high in.
The air, to right, all right back to the wall, and it is gone. Waters went back as far as he could go. Anthony Rizzo has not homers is May.
Twentyth on WFA and forty five games without a homer, so sure enough, Rizzo's teammates gave him the silent treatment when he got to the dugout. The homer part of a four for four day for Rizzou. Yanks beat the Royals, who are forty five games under five hundred, eight to five. Luis Savarino got just his second win. Perhaps more significant
than the victory. Before the game, Aaron Judge, facing live pitching for the first time since the tow injury in early June, Cooperstown Induction Day and into the Baseball Hall of Fame goes Scott Rowland and Fred McGriff. Roland made it despite getting only ten percent of the vote the first time he was on the ballot. McGriff never voted in by the writers, but earned entry through the Veterans Committee. Brian Harmon not exactly a Golf Hall of Famer. He
had only won two tournaments, none since twenty seventeen. The odds on him winning the Open Championship at Royal Liverpool where one hundred and twenty five to one, but a near wire to wire victory. Harmon ended up winning by six shots. Finished thirteen under par, four straight under par rounds four way tie for second. Rriy Ay tie for sixth. Johns Stashnewer Bloomberg Sports.
From coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syrias Exam, the Bloomberg Business app, and Bloomberg dot Com.
This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. It is the start of a very busy week for markets. We have a Federal Reserve decision coming in two days, ECB and Bank of Japan policy decisions as well, and a big batch of earnings on the way. Including some of the megacap tech names that have driven this year's rally in stocks. Let's bring in Lori Calvacina for a look at this market at the start of this week. Laurie is head of US Equity strategy at RBC Capital Markets.
Good morning, Laurie. Good to have with you on with us as always, what do you think is going to be the bigger driver for this market this week? The central banks or the earnings?
Well, thanks for having me as always, Navian, And I think that's actually a fabulous question to start the week off with, because I think it's going to be all about earning.
You know.
One of the things our rate strategy team has talked about on the said is they think the FAED narrative is likely to stay kind of boring for a while. And I think equity investors have already come to that conclusion that we're probably going to get one more hype that's probably the end of it. We'll have to wait and see, of course, that they do want to fight on inflation one. So I think that's you know, sort
of settled in a lot of equity investors' minds. But I think there's a real questions on this earning season, whether or not these big cap tech companies are going to continue to dominate sort of the excitement and enthusiasm around earning, or if it's time for this market to broaden out and see some of the other sectors generate through incremental excitement, which I think, if it happens, could really spark a shift in leadership that a lot of people have been hoping and looking for.
Grace is a couple of questions. I'll start with the first one, whether the excitement we've seen around the artificial intelligence craze. I mean, anytime a company mentions AI, it seems like they get a little bit of a spike in their stock number. Is this the earning season where these companies are going to have to put some meat behind some of that frenzy.
Well, I think that frenzy. I think even a lot of companies who are talking about it, it's something that's talked about as you know, sort of a longer term kind of driver, at least some of the more legitimate conversations. I think that companies do have to be careful there though, because one of the things I've heard over the last couple of months, and we really did see that AI conversation spark in our spike in really May and June,
that's when it really came on the scene. There's a lot of pushback from investors, you know, at least the ones I talk to. We're companies who aren't really that involved. We're trying to make a bigger deal of it than it really is. So I think companies want to be really, really careful not to over hype it because, to be honest, I think it just irritated a lot of portfolio managers.
Okay, And in terms of the breadth question, are you starting to see more breadth get into this market? Do you think that can last?
You know, it's funny. We have a bunch of trades that we monitor in our weekly which comes out on Mondays, and we look at things like banks versus NESC one hundred, regional banks versus mess stack one hundred, small versus large, all the sector trades, and you're starting to see a lot of stuff shift now, the attempts by the banks and the small caps to really kind of fight back and show some leadership. It's been kind of simmering under
the surface for a while. A lot of these trades had stalled at kind of twenty twenty extremes, so I've kind of gotten beaten down as much as they tended to back then relative to some of these other baskets. So I think these are you know, sort of lions that are waiting in the brush to pounce. But so far, you know, we are starting to see it. In July at least, we are starting to see some of that rotation happen. So we'll see if earnings gives it an
excuse to keep going. That's the big question for me these next few weeks.
How do you think earnings will potentially justify some of the valuations that we're seeing in some of these stocks, particularly the megacaps.
So I think that valuation it's a tough moment in time to discuss valuation. Certainly, the growth part of the market looks overextended at this point in time, and I think that is one of the things that could to give give room for this leadership rotation to happen. You know, I don't think there's a lot of a lot of parts of the market that look too cheap, at least on absolute multiple, but if you look at things like
growth versus value, you're back to past peak. So I think one of the things we tend to see in these big recovery trades, and I do think this feels like a recession recovery trade, even though we didn't have a recession last year, I think one got priced in. But at any rate, we tend to see, you know, kind of one part of the market dominate, and then the second half of the rally will be fueled by
kind of a catch up trade. I've been really intrigued by what's going on in healthcare because I think you're starting to see some signs of a catch up trade there. I think financials had really been held back, not just by the banking crisis, but near term recession fears, and we're seeing those really ease up. So I think that gives us some room for some of that catch up, which basically will allow certain multiples to rerate a bit.
Got about thirty seconds left here, Laurie. We are seeing the S and P five hundred just about two hundred and sixty points away from breaking out of the bear market low from last October. Is is this a new bullmarket or are you looking for more choppiness ahead?
So I don't want those terms bullmarket, bear market rally.
I know that sounds.
Strange coming from a strategist, but you know, I think people got stuck in this bear market rally. Oh, it's not real kind of mentality. We were never thinking that way. We've always thought this was a messy post crisis normalization period, similar to two o three and twenty ten, twenty eleven coming out of the GFC in the tech bubble. If that analogy holds, this is about the moment in time
when you should come out of the rut. Basically, those messy normalization periods last things out a year and a half, and that's where we are at this point in the timeline to the pandemic.
This is Bloomberg day Break Today, your morning brief on the story's 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