Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
We begin in Asia, where stocks surged overnight. China's CSI three hundred rows nearly three percent. The Hangsing and Hong Kong climbed four percent. The catalyst China's Politbureau signaling more support for the economy. Bloomberg Daybreak Asia anchor Brian Curtis as more from Hong Kong.
Policymakers are admitting that the recovery has sputtered because of weak confidence. Confidence was mentioned multiple times. The Politburo statement focuses on boosting consumption, helping private business, and carving out a more supportive stance on the property sector. The cumulative weight of so many policies is not lost on investors, from rate cuts to triple our cuts, action to boost
household spending, construction, cars, tech, and more. But the key now will be the actual measures to implement the broader policy that's still to come. In Hong Kong and Curtis Bloomberg day.
Break, Hi, Brian, thanks well. Markets are applauding the stimulus from China. Now, the question is when we'll see these measures take effect. From that, we turn to Bloombergy China Economy editor Jill Deesis.
I would expect that you're going to start seeing this over the course of the next few weeks and months. Remember this is a mid year review meeting. This is the paullup Bura meeting every year where they traditionally set the course for economic agenda not just for the next month, but for the next six months. So I think that you know what that means from what we've been hearing from economists is maybe you see some cuts in policy interest rates toward the end of the year.
In Bloombery, Stale desis as the offshore you want is stronger following the news, is currently trading at around seven point one four per dollar.
Well back here in the US, Karen, we are laser focused on earnings today. Nearly three dozen companies in the S and P five hundred it'll be reporting, including Microsoft and Google. We get more on the outlook for Microsoft from Bloomberg's Tom Busby.
Despite its thirty billion dollar investment in artificial intelligence pioneer Open AI, sales growth at Microsoft is expected to remain below ten percent for last quarter. A midwekening demand for its cloud computing services after years of runaway growth. Still, analysts expect to see adjusted earnings of two dollars fifty five cents a share, that would be a fourteen percent jump over the same period a year ago, and revenues
of fifty five and a half billion dollars. Tom Busby Bloomberg Day Break, All right.
Tom, thanks, well, whon't we wait for Microsoft's earnings. The corporate world remains a buzz over elon Mus's decision to say bye Bye Birdie. As Bloomberg John Tucker reports, the new rebranding of Twitter could cost the company billions.
Analysts and brand agencies tell Bloomberg elon mus move to turn Twitter into Acts wiped out anywhere between four billion and twenty billion dollars in brand value. The call it a mistake, they say, is an understatement. Alan Adamson, the co founder of the marketing at brand consulting group Metaphors, calls the move completely irrational from a business and brand point of view. In the way of an explanation, must tweeted or axed yesterday that the move is not simply
a company renaming itself. It's remaking the business into a broad platform for communications and financial transactions in New York Ime. John Tucker, Bloomberg Daybreak.
Thanks John. Outside of earnings, it's all about the Fed this week. We are one day away from the Central Bank's next policy decision, when it is expected to hike rates by another quarter percent. Higher rates mean bigger earnings for banks like City Group. We spoke with Citigroup Institutional Clients Group CEO Paco Ebarra.
Rates is a positive part of the story because we have to remember that we've had many years with zero rates, with rates almost debt. You know, very little uncertainty about the race we're going to do, and we have now a comeback of the race business.
That's the good news for big banks. On the flip side, City Group's poco Ebara says new capital requirements that regulators will propose this week could hinder the bank's ability to trade certain products.
Well, Nathan, we're getting more detail else about JP Morgan Chase and its alleged ties to disgrace financier Jeffrey Epstein. The US Virgin Islands has filed documents in its lawsuit against the bank. They show then CEO Sandy Warner told Jess Staley in two thousand he should meet with Epstein, calling him quote one of the most connected people I know. The Virgin Islands is seeking at least one hundred and ninety million dollars from JP Morgan in its lawsuit accusing
the bank of enabling Epstein's sex trafficking. The bank argues the Virgin Islands turned a blind eye on his crimes and organized visas for his victims.
Well Karen, another top name in finance's facing pressure from Capitol Hill over his ties to Epstein. Leon Black of Apollo Global Management is under investigation at the Senate Finance Committee. It's over one hundred and fifty eight million dollars in payments to Epstein for advice on a state planning taxes and running his family office. Lawmakers want to know whether that money amounts to gifts that Black now owes taxes on and politics.
This morning, Nathan, there's word of another shake up in the presidential ca campaign of Rohn DeSantis, sources Town Bloomberg, The Florida governor is making a change in leadership after pressure from donors and supporters. DeSantis is elevating digital director Ethan Elion to deputy campaign manager. That's as the presidential hopeful becomes increasingly frustrated by his campaigns spending under current campaign manager Kinera Peck.
Where told.
Peck's position is being questioned as the campaign enters a critical stretch ahead of the first Republican primary debate next month.
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 Bark and Bonnie Michael.
Good morning, Nathan. We're learning more about the case of suspected Long Island serial killer Rex Huerman. The bodies of victims, all women, were found more than a decade ago on Gilgol Beach. The search has intensified at Huerman's home. Suffolk County Police Commissioner Rodney Harrison clarified what was found inside.
There's not a soundproof film. There is a vault where he secured numerous amount of guns. Somehow, I believe that the sound performing the vaults that message got miscushrewed, But there is a vault.
An excavator has been digging through Hureerman's backyard. The record smashing heat wave across the US continues today. Phoenix, Arizona is expected to see its twenty sixth consecutive day of one hundred ten degrees or hutter and the pavement itself is causing a spike in contact burns. Doctor Kevin Foster is the director of the Arizona Burn Center at Valley Wise Help.
Most people don't realize that the pavement, concrete, cement sidewalks rocks. The temperature of those surfaces can get to be one hundred and seventy to one hundred and eighty degrees, which is just a little bit below the boiling temperature of water, so it only takes a fraction of a second to get a really bad burn.
Meanwhile, experts say water temperatures in the nineties off Florida could fuel stronger hurricanes this year. New York City Mayor Eric Adams is cracking down on on sidewalk scaffolding. Some have been ie sores for too long. Adams announced the Get Sheds Down Plan.
Whilest ibo sheds were created to protect New Yorkers now have become unsafe constructions and it is, as we stated, a safe haven for criminal behavior.
There are about eighty nine hundred active sheds in New York City that have been up, averaging four hundred eighty days and some more than ten years. President Joe Biden is expected to sign a proclamation today that establishes a national monument honoring Emmett Till. He was the black teenager from Chicago whose abduction, torture, and killing in Mississippi in nineteen fifty five helped propel the civil rights movement. The White House proposed a set of rules today to improve
insurance coverage for mental health conditions. It's part of a broader plan to fight rising rates of anxiety, depression, and other ailments. Global News twenty four hours a day, powered by more than twenty seven hundred journalists and lists in over one hundred and twenty countries. I'm Michael Barr. This is Bloomberg NAGGA.
Thank you, Michael.
Time out for the Bloomberg Sports update. Here's John Stashout.
Thanks Nathan.
Mets and Yankees split a couple of one run games last month at City Field. Now they play a two game Subway series at the stadium with tonight, Justin Verlander facing Domingo Herman. Verlander comes off his best outing against the White Sox. He went eight innings, allowed only one run, three hits. Herman had that perfect game a few weeks ago. Last time out at the Angels, he gave up five runs.
The two teams the Yanks are chasing for a wildcard spot both won last night Toronto in eleven innings over the Dodgers. Houston in a wild one over Texas ten to nine. The Yanks trail the Blue Jays by two and a half games and the Astros by three and a half. The Orioles one again, three two at Philadelphia. The Yankees are in Baltimore this weekend. The Orioles have won thirteen of their last sixteen. They lead the Al
East by two and a half over Tampa Bay. It has to say the LEAs been a rough summer at Northwestern. Allegations of hazing on the football team bullying on.
The baseball team.
Both coaches have been fired, and now a former volleyball player has filed a lawsuit charging hazing and racism, and another former football player is suing and Lloyd Yates is the first to go public.
We were all victims, no matter what our role was at the time, but the culture was so strong there we felt we had to go with it to survive, to be respected, and to earn the trust within the football program.
Yeah was a quarterback from twenty fifteen to seventeen. I blow out of the Buffalo Bills that were counting on Nahim Hines to be a big part of their offense and special teams. He had a game last season where he ran two kickoffs back for touchdown, but heinz Will missed the season do an injury suffered as a jet ski accident. The NFL has to spend another player for gambling, bringing the total number this offseason to ten. John Stashchetwar Bloomberg Sports.
From coast to coast, from New York to ten 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. What's next for the US property sector?
Starwood Capitol Group Chairman Barry Sternlick says, between work from home, low mortgage rates, and other post pandemic phenomena, there is a lot of uncertainty and distress. Sternlock sat down on the latest episode of Bloomberg Wealth with David Rubinstein for an extended conversation on the path ahead for US real estate let's listen to part of that conversation.
The work from home phenomenon is a US phenomenon. If you go to England or Germany. I was just we have some investments, oh if shore and I was just looking at rents are up in vacancy rates in the top EU German property markets Berlin, Frankfort, Munich, Homberg or less than five percent. You and I go to the Middle East, they're full. We have offices in Asia, they're full. In the US you have two markets. You have the really nice buildings that are ESG compliant, that are lovely,
like the one we're sitting in. This place is buzzing, and they're back because it's a fun place to be.
And if you're in a building with lots of cubicles and it's dark and there's no life and love, so nice buildings, even in a city is as currently destitute of San Francisco, from an office market perspective, the best buildings are still leased, and so you're going to see a bifurcation of the market in office The nice buildings will stay rented and my guess is at pretty good rates and the B and C stuff is going to be maybe fields of grain or something'll be very pretty.
We have all these little mid block parks in New York City because there won't be anything else to do with those buildings, and nobody will carry them because there's no hope. Some of those cities that have issues on commuting, like New York or La Downtown, La Downtown San Francisco, the c that are difficult to commute to, that's where the pressure is so hard from workers saying I don't want to drive into the city an hour and a half and drive home an hour and a half every day.
But I also think a nice little recession will clear this and you'll see people come back to the office and in your town. Take the Amazon HQ two. They're expecting people in those offices four days a week come the fall. So the other thing about office day it is AI. AI is going to hit a couple of these industries that have been big users of office space.
You think artificial intelligence is obviously coming, but what industries you think will be most effective.
Legal is probably the number one industry that could be disrupted by AI. You can search every precedent in the history of mankind with a machine. You don't need a paralegal to do that anymore, and they'll write the brief for you. So the legal profession is probably target one. Not far behind is advertising, when the machine is going to update advertising and keep bombarding you with more and more ads, with more and more offers until you take one.
Humans won't be there. They'll be maybe guiding it, but it'll be it'll change advertising. It's another big user of space finance. You tell me, I mean, there's a buttons now on your computer. They'll be running a lot of the stuff for you. It could fundamentally shake up permanent demand for office now.
Sometimes people are saying that the best investment opportunity now is to stress real estate debt. But you think it's too early for that.
They're just beginning to you know, we were going to give back an office building and they said, well, not so fast. If you want to, we'll restructure a loan and we'll cut it the loan in half, and you put the money in here, and we'll take this as a junior note. Because the banks don't want the assets back.
And why don't they want them back because they think it's going to go down even further.
Yeah, because they got to carry them they're not set up to carry these assets right, and they got to go hire someone. They got to go to the leasing themselves. It's not their business. They'd rather have a GP like your old firm Carlisle or Starwood or Blackstone, hold onto the asset and try to work it out.
So a lot of fortunes were made in the real estate world, you know seven oh eight when people bought distressed real estate, and all in late eighties two when the RTC was here. So do you see funds being formed to buy these assets, but you think they won't be available for a year or two.
Right now, you have an unusual situation in the real estate market. It's because everyone's sort of looking at the yield curve and it says rates will be lower later. Everyone says, you know, survive till twenty five, hold onto your assets. So transaction volumes have plummeted. Unless you have to sell something today. Nobody wants to sell anything today. They think tomorrow will be rosier. For the most part, everybody's pushing any sales back. And I think transaction advising
apartments are down sixty percent, industrial down seventy percent. It's a very dry you know, there's no IPOs and there's no sales in housing.
Do you see a recession there because prices are going to come down at some point, or you don't see a recession in housing.
The housing markets had a very unusual situation where powells. Increase in rates has diminished supply and people. And I'm not sure we've ever had a situation where so many people have locked to have locked in their mortgage costs. So right now people are sticking in their house, which has diminished the supply of homes for sale. I wonder when rates come down, homes will be sold like people will start because the mortgage will no longer be a
reason to hold onto the house. And whether that will offset will probably be an increase in supply as the bills resume a more normal cycle. So maybe the housing market just stagnates for a while, but over time it's headed up.
This is Bloomberg Daybreak 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 know to start your day right here on Bloomberg Daybreak