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00:00> > THIS IS "THE ASIA TRADE." > > THE TOP STORIES THIS HOUR, CAUTION DOMINATES ASIAN MARKET AND RATE CUTS WILL BE LIVE IN JACKSON HOLE, J. POWELL MUCH AWAITED SPEECH. AND PLANS TO INVESTIGATE LISA COOK OVER ALLEGATIONS OF MORTGAGE FRAUD URGING POWELL TO FIRE HER. AND BLOOMBERG REVEALS THAT THEY ARE RAISING $10 BILLION IN ONE OF THE FUNDING ROUNDS IN A.I.’S STARTUP. > > ASIAN MARKETS. WE HAD JAPANESE STOCKS. AND FUTURES AT THE MOMENT NOT DOING MUCH AND WE ARE EXPECTING INFLATION DATA OUT OF SCRAP AND AND WATCHING THE YEN AND WE SAW A RISING DOLLAR. LOOK AT HOW U.S. FUTURES ARE SETTING UP AND WE HAVE DATA OUT OF THE U.S. AND P.M. I. NUMBERS. AND ON THE OTHER SIDE OF THAT EQUATION, THERE WERE MORE SIGNS OF LABOR MARKET WEAKNESS. COMPLICATED PICTURE. U.S. FUTURES GAINING A LITTLE PIT OF GROUND. BUT IT IS ABOUT POWELL’S SPEECH COMING UP AT JACKSON HOLE AS WELL. > > AND WE HEARD SOME OF FED OFFICIALS. THE CLEVELAND PRESIDENT SAID SHE WOULD NOT SUPPORT LOWERING RATES. AND CHICAGO PRESIDENT TOLD US HE HOPES A RECENT SPIKES IS JUST A BLIP. > > FOR SURE. IT FEELS LIKE TO ME A LIVE MEETING. AS YOU KNOW, BEFORE APRIL 2, BEFORE WE GOT SOME UNCERTAINTIES COMING ON THE POLICY SIDE, I BELIEVE WE HAD PRETTY STABLE FULL EMPLOYMENT AND INFLATION IS COMING DOWN THE TARGET. > > LIVE TO JACKSON HOLE. MIKE, HELP US MAKE SENSE WHAT THESE FED OFFICIALS ARE SAYING AND WE SEE HOW AND COME DOWN TO THE LOWEST LEVEL SINCE THE WEAK JOBS’ REPORT. > > BASICALLY WHAT HAPPENED WAS AT THE JULY 30 FED MEETING, ALMOST ALL FED OFFICIALS WERE MORE WORRIED ABOUT INFLATION THAN THE LABOR MARKET AND BAD JULY PAYROLL REPORTS AND BAD REVISIONS AND PEOPLE STARTED WORRYING THAT THE ECONOMY WAS SLOWING DOWN THAT THE RATES NEEDED TO BE CUT. AND SO I LOVE -- AND WILLING TO DO IT AND WE ARE WILLING TO CONSIDER CUTTING RATES IF WE GET AN INCREASE IN INFLATION BEFORE THE NEXT MEETING. ALL KIND OF MOVING TO THE MIDDLE AT THIS POINT. > > WHEN ARE WE EXPECTING IN TERMS OF OTHER CENTRAL BANKERS WHERE POLICY SHOULD GO FROM HERE? > > I THINK WALL STREET IS PRETTY MUCH DEFINESSED OR CONVINCED ITSELF THAT THE FED SHOULD PROBABLY CUT RATES. SO THE QUESTION IS DOES J. POWELL GIVE THEM THAT OPTIMISM OR SELLOFF AFTER HE DOESN’T SAY WE ARE GOING TO CUT RATES. THAT’S THE HARD QUESTION TO ASK. MY DPES IS HE GOING TO SAY THE FED IS KEEPING ITS OPTIONS OPEN. SO IT COULD BE AN INTERESTING DAY TOMORROW ON WALL STREET AND ON GLOBAL WALL STREET. > > IT’S ALSO PERHAPS WORTH TAKING A STEP BACK. THIS IS POWELL’S LEGACY WE ARE TALKING ABOUT. IS HE GOING TO LEAVE A HAWKISH ONE AT JACKSON HOLE? > > HE DOESN’T HAVE A CHOICE ABOUT HOW IT IS REMEMBERED. IT MAY BE THAT IF HE SIGNALS THAT THE FED HASN’T MADE UP ITS MIND YES. THEY BET ON A SIDE. BUT OTHER ECONOMISTS ARE SAYING HE WAS DEVILISH AND OPEN TO IT. HE IS GOING TO DO HIS PEST AND DO WHAT IS MOST APPROPRIATE AND LET HISTORY JUDGE. THE WAY HE SAYS IT, WHAT HE WANTS AS HIS LEGACY IS TURNOVER THE ECONOMY IN GOOD SHAPE TO HIS SUCCESSOR. > > AND THERE IS A LOT OF QUESTIONS ABOUT WHO THE SUCCESSOR WILL BE ESPECIALLY WITH PRESIDENT TRUMP PRESSURING THE FED TO CUT RATES. PRESIDENT TRUMP ASKING COOK TO RESIGN AFTER THE DIRECTOR URGED AN INVESTIGATION ON HER MORTGAGES. BUT TAKE A LISTEN TO WHAT HE HAD TO SAY. > > WE WERE TORE PEOPLE ALMOST EVERY DAY. I REFER PIMM EVERY WEEK AT A MINIMUM TO THE DEPARTMENT OF THE JUSTICE FOR MORTGAGE FRAUD. THIS IS WHAT I AM REQUIRED TO DO. 2008 WHICH IS TO ENSURE THE SAFETY AND SOUNDNESS. DID SHE SIGN THESE DOCUMENTS? I BELIEVE SHE DID SIGN THESE DOCUMENTS? > > IS GOVERNOR COOK NEED TO LEAVE THE FEDERAL RESERVE WHEN IT COMES TO THE CUTS AND HIKES? > > IT PROBABLY WOULDN’T MAKE THAT MUCH DIFFERENCE IN THE SHORT RUN, BECAUSE SHE HAS ESSENTIALLY SUPPORTED THE CHAIR AND IF THE CHAIR WOULD VOTE TO CUT RATES, SHE WOULD VOTE TO CUT RATES. THERE ISN’T A SIGNIFICANT CHANGE THERE. IT WOULD GIVE THE PRESIDENT MORE NOMINEES ON THE BOARD. WHETHER THAT WOULD MAKE A DIFFERENCE, IT’S UNCLEAR. BUT THE INTERESTING THING ABOUT HIS COMMENTS, FIRST OF ALL, IF THEY REFER THOUSANDS OF PEOPLE MORTGAGES FOR FRAUD, HOW COME HE’S DOING IT? YOU WOULD HAVE YOUR EMPLOYEES DOING IT AND SECOND THEY HAVE ONLY PUBLICLY DISCLOSED THREE PEOPLE INCLUDING LISA COOK WHO HAVE BEEN REFERRED AND THEY ARE ALL DEMOCRATS AND ONE WONDER IF THIS IS A PUBLICITY STUNT AND THE DEPARTMENT OF JUSTICE SAYS THEY WILL INVESTIGATE AND THAT IS ODD AND THEY ARE NOT SUPPOSED TO TALK ABOUT OPEN CASES. > > MIKE, REGARDLESS OF WHAT THE OUTCOME IS GOING TO BE FROM THOSE LINGER QUESTIONS STILL THE PRESSURE THE FED FACES REGARDING INDEPENDENCE, WHAT ARE WE EXPECTING TO SEE PERHAPS SOME PUSHBACK AT JACKSON HOLE? > > WE WILL PROBABLY HEAR FROM FED OFFICIALS AND CENTRAL BANKERS FROM OTHER COUNTRIES IT IS IMPORTANT BECAUSE YOUR ECONOMY PERFORMS BETTER AND DO WHAT IS RIGHT FOR THE ECONOMY AND NOT FOR THE POLITICIANS. IT ISN’T CLEAR HOW CLOSELY AMERICANS ARE LISTENING TO THIS BACK AND FORTH BETWEEN THE ADMINISTRATION AND THE FED. PEOPLE ARE GENERALLY MORE CONCERNED WHEN THEY GO TO THE GROCERY STORE WHAT THE PRICES ARE DOING. WE’LL SEE IF IT HAS ANY IMPACT. IT IS A LOT OF NOISE THAT THE CENTRAL BANKERS HERE AND IN EUROPE, TELL US THEY IGNORE. > > MIKE, THANK YOU SO MUCH FOR HELPING US SORT THROUGH NOISE AND SIGNAL. LIVE FROM JACKSON SOLE -- HOLE IN WYOMING. LET’S IMPACT IT MORE. SO, MARK, THE TAKE-AWAY FROM THE FED OFFICIAL COMMENTS IS THAT SEPTEMBER IS ALIERVEL MEETING. > > THERE IS NO COULD YOU TELL. JUST HEARD AT LEAST FOUR FED SPEAKERS BECAUSE THEY ARE AT JACKSON HOLE TOGETHER. THERE IS NO CONSENSUS AMONG THE FED SPEAKERS. CLEARLY ON THIS TIME, STILL A FEW WEEKS UNTIL THAT MEETING AND TIME FOR OPINIONS TO BE OUT THERE. PLUS WHATEVER JEROME POWELL HAS TO SAY LATER ON FRIDAY, IT WILL BE THE WEEKEND SITUATION IN AMERICA AND WHAT INVESTORS HAVE GOTTEN USED TO IS A BOMBARDMENT OF OPINIONS FROM OUTSIDE THE CENTRAL BANK HOW INVESTORS SHOULD BE THINKING. BY THE TIME TO MONDAY, THINGS WILL BE LOOKING DIFFERENT. THERE IS REALLY A LOT FOR INVESTORS TO DIGEST HERE. YOU HAVE THE INDEPENDENCE OF THE CENTRAL BANK. SO THERE IS A PERIOD IN WHICH PEOPLE WILL BE PUTTING HIGHER RISK PREMIUMS LIKE BONDS AND U.S. DOLLARS. THEY ARE THE ONES TO BE REFLECTING THIS CHANGE AND HOW PEOPLE VIEW. EQUITY MARKETS IS A DIFFERENT SPACE AND DEAL WITH OTHER ISSUES. BUT BONDS AND DOLLAR CAN EXPECT A PRETTY CHOPPY PERIOD AS PEOPLE TRY TO PLAY OUT THE SCENARIOS WHETHER THERE IS GOING TO BE A RATE CUT AND HOW QUICKLY IT’S GOING TO COME AND ALL OF THOSE THINGS ARE IN PLAY. > > EVEN COME MONDAY, WE MIGHT NOT SEE THAT REPRICING BECAUSE OF THE MARKETS BEING CLOSED. SO WHAT IS THE MOST LIKELY OUTCOME THAT YOU SEE IN JACKSON HOLE? > > PEOPLE WILL HAVE TO BE VERY DYNAMIC IN THE WAY THEY HANDLE THEIR RISKS IN THE COMING DAYS. YOU HAVE TYPICALLY QUIET PERIODNER TERMS OF LIQUIDITY. THE WEEK LEADING UP TO LABOR DAY IS THE MOST LIQUID AND JUST TO ADD INTO THE MIX. A TRICKY. PEOPLE WOULD PROBABLY PREFER NOT TO BE CARRYING LARGE POSITIONS BUT THE FACT THAT JACKSON HOLE COMES HERE AND MEANS THEY ARE HANGING ON TO SOME RISK. THAT WILL ADD PARTICULARLY ON MONDAY AND A LOT OF PEOPLE WILL BE REASSESSING AND HOLDING THESE THINGS OR DUMP SOME OF THEIR EXPOSURE AND BE IN PRETTY KNEE JERK REACTIONS IN THE MARKET. VERY DIFFICULT ONE. AND WE ARE LOOKING AT THE CURVE TO SEE IF IT JUSTIFIES FURTHER. ALL IN ALL, NOT AN EASY TIME TO BE AN INVESTOR. > > AND 20 YEAR YIELD RISING TO THE HIGHEST SINCE 199 # WHAT WILL BE THE FACT IN JAPAN? > > IF HE WANTS AN INTEREST RATE HIKE WHICH APPEARS TO BE HIS OBJECTIVE AND LOOKING FOR THE RIGHT WINDOW AND GREAT OPPORTUNITY BECAUSE BESSENT HAS SAID BANK OF JAPAN IS HYPED THE CURVE. THAT IS A GREAT CHANCE TO STOP IN HERE AND USE A FOREIGN ENTITY AND GO WITH THE RATE UG HIKE. CENTRAL BANK IS LITTLE MORE OPEN. HE IS VERY GUARDED AND SPEAKING BEFORE THE PRESS AND THE PUBLIC IN JAPAN, HE WATCHES HIS WORDS VERY CAREFULLY. AND MAYBE BE A BIT CLEARER OF WHEN HE THINKS IT’S TIME. JAPANESE C.P.R. PROBABLY GOING TO SHOW INFLATION 3%. JAPAN, NOBODY DISAGREES THEY ARE BEHIND THE CURVE. HERE’S HIS OPPORTUNITY TO SAY, I WANT TO GET ON FOR IT. A COIN TOSS FOR OCTOBER, HE COULD PUSH THOSE ODDS TOWARDS A RATE HIKE. THIS MAY WELL BE HIS OBJECTIVE THIS WEEKEND. > > WILL HE MOVE THE YEN. IT IS PRETTY RANGE-BOUND. > > PEOPLE HAVE BEEN -- THE YEN LOOKS UNDERVALUED. THAT WOULD PLAY OUT IN THE END ON CROSS RATES AND AGAINST THE AUSTRALIAN DOLLAR, THE YEN AND THE POUND AND YEN IS A RELATIVELY PLAY AND INTEREST RATES IN THE NEAR TERM THAT ADDS WEIGHT FOR PEOPLE WHO WANT TO BUY THE YEN. > > THANK YOU SO MUCH. MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. ♪ > > LET’S CHECK IN HOW U.S. FUTURES AND WE WAIT WITH BAITED BREATH THAT POWELL WILL SAY AT JACKSON HOLE. THE ENTIRE TREASURY IS A BIT HIGHER. TREASURIES FELL. AND WHAT WE COULD SEE FROM THE SEPTEMBER MEETING ABOUT A POTENTIAL FOR A RATE CUT AND AS SOME OF OUR STRATEGISTS HAVE BEEN HIGHLIGHTING AND ABOUT THIS CURVE. PRESIDENT JEFFREY SCHMIDT SAID AMERICAN BUSINESSES ARE SHOWING RENEWED OPTIMISM AND PUTTING THE FOCUS BACK ON INFLATION AND SCHMIDT SPOKE WITH US ABOUT THE ECONOMY AND GROWING POLITICAL PRESSURE ON THE FED. > > I’M A LITTLE PHILOSOPHICAL ABOUT THE WHOLE CONVERSATION ABOUT FED INDEPENDENCE AND WHERE OUR ROLE IS IN THE AMERICAN ECONOMY. WE ARE ALMOST 250 YEARS OLD AS A NATION. I THINK THERE IS SOMETHING TO BE SAID. WE WERE BUILT ON WORDS, AND WE CONTINUE TO DEBATE THOSE WORDS LEGISLATIVELY AND JISHLY. WHATEVER AFRICA SHONN WE MAY HAVE, GREAT STEEL IS TESTED BY FIRE. WE CAN ALWAYS DO THIS BETTER, BUT I THINK THE NATURE OF INDEPENDENCE AND I THINK DON’T BELIEVE ME, BELIEVE OTHER NATIONS THAT HAVE CENTRAL BANKS AND DON’T, IT SEEMS TO WORK. BUT I AM ALWAYS OPEN FOR THE CONVERSATION, HOW DO WE MAKE IT BETTER. > > WHAT HAPPENS ON SEPTEMBER 17TH? SO, AS YOU KNOW THIS IS KIND OF AN INTERESTING MONTH BECAUSE WE HAVE JACKSON HOLE, AND THEN WE HAVE QUITE A FEW WEEKS OF DATA TO KIND OF PULL IN. I THINK EVERYBODY’S QUITE INTERESTED IN SOME OF THE THE PRINTS THAT HAPPENED THE LAST COUPLE OF MONTHS AND WHERE THEY GO FROM HERE. SO I’M I’M LIKE EVERYBODY. I THINK THERE WAS SOME FASCINATING CONVERSATIONS AT THE LAST F1NC. MY INTERPRETATION OF WHAT IS HAPPENING ESPECIALLY IN THE LABOR MARKET, THE FIRST COUPLE OF QUARTERS, BUSINESS PEOPLE WERE SAYING THERE IS UNCERTAINTY ENOUGH. AND I THINK THEY COOLED A LITTLE BIT ON THE HIGHER SIDE. THE MOST RECENT COUPLE WEEKS WE HAVE BEEN TALKING TO BUSINESSES IN THE DISTRICT, THERE IS OPTIMISM AGAIN, THEY KIND OF DIGESTED AND AGILE TO WORK THEIR WAY TO THE POLICIES FROM THE ADMINISTRATION AND GOING FORWARD AND MAYBE SEE A LITTLE BIT OF UPTICK. THAT SAID, I BELIEVE THE INFLATION NUMBER IS TRENDING CLOSER TO 3 THAN 2. > > WE HAVE SEEN THAT INFLATION IS A BIGGER DANGER. WOULD YOU SAY THAT’S YOUR VIEW NOW? > > IT WOULD BE MY VIEW NOW. WITH THE UNDERSTANDING OF WHAT MAY HAVE HAPPENED IN THE FIRST COUPLE OF QUARTERS ON THE LABOR SIDE WHICH CONCERNED SEVERAL PEOPLE ON THE COMMITTEE AND ME INCLUDED. BUT I THINK THIS P.P. I. WAS INTERESTING. BUT I REALLY BELIEVE THAT WHEN WE TALK TO A LOT OF OUR -- A LOT OF FOLKS IN OUR DISTRICT, IF YOU HAVE KIND OF A LEAN OR BIAS, IT WOULD BE ON INFLATION SIDE. > > JEFFREY SCHMIDT SPEAKING AT JACKSON HOLE AND ANOTHER SECTOR, THE HOT CREDIT MARKET 1.7 TRILLION AND THERE ISN’T NESSIE WHAT A PRIVATE DEFAULT COULD LOOK LIKE AND THEY COULD BE IN THE RANGE OF 2% TO 3%. PRIVATE COMPANIES HAVE BEEN ABLE TO KEEP DEFAULTS IN ARRANGEMENTS THAT ALLOW THEM TO HAVE INTEREST PAYMENTS. AND LEAVING THEM WITH ONE BIG BILL BUT IF YOU INCLUDE SELECTIVE DEFAULTS, THE LINE IN WHITE IS MUCH HIGHER AS WELL. > > YEAH, IT’S REALLY INTERESTING HOW THIS HOT MARKET, AS YOU SAY IS INDICATING PERHAPS THESE UNDERAPPRECIATED RISKS THAT EVEN THE PRIVATE CREDIT FIRMS THAT HAVE BEEN KNOWN TO GIVE A BIT MORE WIGGLE ROOM ARE ALSO WILL FLAGGING SOME OF THESE RIRVETION FOR RISKS FOR BORROWERS AND HOW MUCH CAPITAL HAS COME INTO THIS MARKET. WE HAVE THE LIKES OF JP MORGAN TALKING ABOUT HOW IT SHOWS INFLOWS TOO MUCH CAPITAL WAS COMMITTED FAR TOO QUICKLY AND STILL WORTH NOTING THAT WE ARE STILL SEEING THAT RETURNS FOR THE PRIVATE CREDIT MARKET ARE ATTRACTIVE, ABOVE 8%. THAT IS STILL INVESTMENT ALTHOUGH IT IS NOT QUITE WHAT IT ONCE WAS. > > THE LOWERING BORROWING HAS GIVEN OPTIMISM. BUT AS YOU SAID, IT IS THE TRANSPARENCY AND THE APPROPRIATION OF MORE RIRVETION AHEAD. SOMETHING WE WILL BE WATCHING VERY CLOSELY. THIS IS BLOOMBERG. ♪ U.S. AND THE E.U. HAVE OUTLINED PLANS THAT COULD REDUCE TARIFFS ON EUROPEAN CARS TO 15% WITHIN WEEKS AND OFFER DISCOUNTS IN STEEL AND ALUMINUM. THE JOINT STATEMENT INCLUDES COMMITMENTS TO FOOD COMMITMENTS AND WHITE HOUSE TRADE. PETER NAVARRO PAVED THE WAY TO THE DEAL. > > I CAN THINK OF NO DEAL MORE IMPORTANT THAN WITH THE EUROPEAN UNION. THIS IS REALLY LIKE AN IMPORTANT MOUNT TO CLIMB AND PRESIDENT TRUMP GOT ON TOP OF THE MOUNTAIN TODAY. IN MANY WAYS, THE UKRAINE SITUATION HAS BEEN A TOTAL WAKEUP CALL FOR EUROPE. > > PRESIDENT TRUMP HAS HINTED HE IS HINTING FOR MORE ATTACKS AS THE WHITE HOUSE PRESSURING PRESIDENT PUTIN. IN A TRUTH SOCIAL POST, TRUMP WROTE IT IS HARD TO WIN A WAR. HE TOLD NEWS MAX WE WILL KNOW WHETHER PEACE CAN BE ACHIEVED. THE KREMLIN HAS BEEN NONCOMMITAL ON ANY SUMMIT WITH UKRAINE’S PRESIDENT. MARCO RUBIO SAID HE WILL ISSUE WORKING VISAS FOR COMMERCIAL TRUCK DRIVERS. THE INCREASING NUMBERS IS ENDANGERING AMERICAN LIVES AND UNDERCUTTING THE LIVELIHOODS OF AMERICAN TRUCKERS. A NEW YORK APPEALS COURT HAS STRUCK DOWN 644 MILLION. THE PANEL UPHELD THAT HE ASSET VALUES. ATTORNEY GENERAL WILL CHALLENGE THE RULING. AND TRUMP’S LEGAL TROUBLES SINCE HIS RE-ELECTION. AND PRESIDENT TRUMP HAS VISITED A POLICE FACILITY THANKING FEDERAL FIRST DEPLOYED UNDER HIS CONTROL AND WILL REMAIN IN THE CITY FOR A WHILE. HE SAID HE WILL BE GOING OL PATROL WITH POLICE AND MILITARY. AND FOCUS ON HIS COSTERAL MOVE TO HAVE TROOPS IN THE NATION’S CAPITAL. > > HOW WE ARE STANDING UP. WAITING FOR NUMBERS TO COME FROM JAPAN. U.S. FUTURES AND FIVE SEEINGS OF LOSSES FROM WALL STREET AHEAD OF J. POWELL’S SPEECH AND A LOT OF CAUTION AND CABBING SON HOLE IS NOT JUST THE BIG MARKET RISK. WE ARE SEEING AUGUST JOBS REPORT. WE HAVE SOME LIQUIDITY ISSUE RISKS AND FUTURES ARE DOWN A TENANT OF -- TENT OF 1 RS%. AHEAD. THIS IS BLOOMBERG. ♪ > > CORE CPI NUMBERS COMING IN ABOVE MARKET EXPECTATIONS. 3.1% YEAR ON YEAR FOR THE MONTH OF JULY. WHEN YOU TAKE OUT CORE FOOD, ENERGY PRICES, GAIN OF 3.4% YEAR ON YEAR FOR THE HEADLINE NUMBER TO COME IN AT 3.1% WHICH IS IN LINE WITH ESTIMATES. IT'S ALWAYS A CORE CPI NUMBER THAT WE CARE ABOUT AND THAT'S COMING IN ABOVE ECONOMIST EXPECTATIONS. VERY MUCH ABOVE THE BOJ POLICY TARGET OF 2%. WE'VE CONTINUED TO SEE THE ACCELERATION IN JAPANESE INFLATION, MAKING IT TOUGHER FOR THE BANK OF JAPAN WHEN IT COMES TO HIKING INTEREST RATES IN ORDER TO GET A DAMPENER ON THE INFLATION TREND. TAKE A LOOK AT HOW BONDS HAVE BEEN TRADING. JGB YIELDS CONTINUING TO SURGE HIGHER. THE 20 YEAR YIELD RISING TO THE HIGHEST SINCE 1999. THE 30 YEAR YIELD VERY CLOSE TO RECORD HIGHS. HIGH YIELDS WHEN IT COMES TO THE LONG AND OF GLOBAL BOND MARKETS HAS BEEN THE TREND. TREASURY YIELDS HAVE BEEN HIGHER AFTER STRONGER-THAN-EXPECTED MANUFACTURING AND FACTORING DATA IN THE U.S.. LET'S GET MORE PERSPECTIVE ON THE OUTLOOK FOR THE U.S. ECONOMY AND FED POLICY AS WELL. JOINING US NOW IS DIRECTOR OF THE GLOBAL JOINT -- LINKAGES LAB. HOW TRICKY OF A MESSAGING ACT DOES CHAIR POWELL HAVE ON HIS PLATE THIS WEEK? > > HI. GREAT TO BE BACK ON YOUR SHOW. INDEED, I THINK THIS IS GOING TO BE A VERY DELICATE BALANCING ACT IN TERMS OF MESSAGING COMING OUT OF THE FED. TARIFF IS A STAGFLATIONARY SHOCK. THE DUAL MANDATE OF THE FED IS COMING INTO TENSION. WE STARTED SEEING THIS ALREADY IN THE DATA. HIGHER PRODUCER PRICE NUMBERS AND ALSO SOME SOFTENING IN THE LABOR MARKET. I THINK IT'S GOING TO BE A DIFFICULT TIME INTO A DIFFICULT ROAD AHEAD. AVRIL: -- SHERY: DO YOU EXPECT THE FEDERAL RESERVE TO CUT IN SEPTEMBER AND SHOULD THEY? > > I DON'T THINK THEY SHOULD. I THINK INFLATION IS RIGHT NOW A BIGGER RISK THAN THE LABOR MARKET. THIS IS MY OPINION. THE GLOBAL LINKAGES LAB CONFIRMS THIS. THE ESTIMATED IMPACT OF TARIFFS ON INFLATION AND UNEMPLOYMENT. RIGHT NOW WHAT'S HAPPENING IN REAL LIFE IS EXACTLY THE SAME AS OUR MODEL ESTIMATES BECAUSE THIS IS ALL ABOUT SUPPLY CHAINS. IT'S ALL ABOUT HIGHER COST OF DOING BUSINESS. SO IT'S GOING TO START WITH HIGHER PRODUCER PRICES, HIGHER COST TO FIRMS. THEN IT'S GOING TO PASS TO CONSUMERS. THIS IS GOING TO TAKE TIME. IT DIDN'T HAPPEN SO FAR BECAUSE THERE WERE INVENTORIES. IF YOU GO DOWN THE STREET AND START TALKING TO FIRMS WHICH IS WHAT WE DO AT GLOBAL LINKAGES LAB, THEN YOU REALIZE HOW SERIOUS THIS IS GOING TO BE. FOR EXAMPLE, A MAJOR FLOORING SUPPLIER TO COMMERCIAL AND RESIDENTIAL CONSTRUCTION IN THE UNITED STATES IS GOING TO INCREASE PRICES A PERCENT STARTING ORDERS IN SEPTEMBER. ON EVERY COUNTRY THAT NOW FACES A RECIPROCAL TARIFF OVER 10%. WHEN THEY BUY THEIR SUPPLIES FROM THOSE COUNTRIES. SO WE HAVE TO WATCH OUT FOR THE SEPTEMBER NUMBERS. IT COULD BE IMPORTANT. THEN GOING FORWARD, I THINK WE ARE GOING TO SEE MORE AND MORE THIS ON THE INFLATION SIDE COMING THROUGH. AVRIL: YOU RAISE A GOOD POINT. EQUATION COULD BE MORE TILTED TOWARDS THE INFLATION SIDE OF THINGS. CAN YOU HELP US UNDERSTAND? A NUMBER OF ECONOMISTS HAD BEEN FLAGGING THAT BY NOW, WE WOULD HAVE SEEN THE INFLATIONARY IMPACTS. WHY IS IT TAKING A WHILE FOR THE PASS-THROUGH TO BE WITNESSED? > > YES OF COURSE. AGAIN, THAT TYPE OF THINKING STARTS FROM THE OBSERVATION THAT U.S. IS ACTUALLY NOT A VERY OPEN COUNTRY. WHY? BECAUSE IMPORTS ARE NOT A BIG SHARE OF GDP. AROUND 10 TO 12% COMPARED TO A COUNTRY LIKE IRELAND OR SINGAPORE OR BRAZIL. SOUTH AFRICA, YOU SEE THAT U.S. IS NOT AN OPEN COUNTRY. IF I PUT A TARIFF OF FIVE TO 10% ON IMPORTS, THAT WOULDN'T HAVE THAT BIG OF AN INFLATIONARY IMPACT ON THE U.S.. THAT'S THE STARTING POINT. I WOULD SAY THIS TYPE OF THINKING IS VERY MIDDLE-AGED. IT DOESN'T WORK IN TODAY'S GLOBALIZED WORLD. TODAY'S GLOBALIZED WORLD IS ABOUT SUPPLY CHAINS, TRADE INPUTS. NOT NECESSARILY ONLY TRADE IN FINAL GOODS. EVEN IF YOU ARE IN THAT SENSE NOT A LARGE IMPORTER IN TERMS OF YOUR FINAL GOODS LIKE THE U.S., YOU BUY A LOT OF RAW MATERIALS AND INPUTS AND PRODUCTS FOR YOUR OWN MENU FAIR -- MANUFACTURING PRODUCTION AND FOR YOUR OWN OTHER SERVICES PRODUCTION. SO THE INFLATIONARY IMPACT THEN IS GOING TO COME THROUGH THAT PRODUCTION SIDE, THE SUPPLY CHAIN SIDE WHICH IS THE STANDARD THINKING THAT DOESN'T TAKE INTO ACCOUNT THE GLOBALIZED WORLD WE ARE LIVING IN. THAT THINKING IS GOING TO SAY, WE DON'T IMPORT THAT MUCH SO IF YOU DON'T DO HIGH TARIFFS, YOU ARE GOING TO GET BY. THE TARIFFS ARE ENDING UP PRETTY HIGH. MAYBE WE ARE NOT PUTTING TARIFFS LIKE 30, 40, 50%. WE ARE NOW CELEBRATING 50% OF EUROPE. MAKE NO MISTAKE. 15% TARIFF ON EUROPEAN UNION IS A PRETTY LARGE NUMBER. I DON'T THINK IT'S RIGHT TO THINK, WE DIDN'T GET 30% SO WE ARE LUCKY. 15% IS HIGHER THAN 10%. IF YOU START ADDING UP ALL THESE TARIFFS, THE UNITED STATES HAS IN ITS -- EFFECTIVE TARIFF RATE OVER 10% COMING FROM 2%. WE ARE CLIMBING. IN A WORLD WHERE WE BUY A LOT OF OUR INPUTS, THAT'S GOING TO HAVE AN INFLATIONARY IMPACT FOR SURE. SHERY: WE WAIT TO SEE HIGHER INFLATION. YOU TALKED ABOUT SOME OF THE SECTORS YOU'VE BEEN SPEAKING TO ON THE GROUND. YOU TALKED ABOUT BUILDERS. WHERE ELSE ARE WE LIKELY TO SEE THAT INCREMENTAL PRICE PRESSURE? WE HAVE SEEN HOW U.S. RETAILERS FOR THE MOMENT SEEMED QUITE HESITANT TO PASS ON THE COSTS CONSUMERS. > > TRUE. IT'S GOING TO COME TO THAT. I THINK SECTORS SUCH AS CONSTRUCTION AND WHOLESALE RETAIL, THESE ARE THE SECTORS TO WATCH. AFTER THAT, PHARMACEUTICALS, STEEL AND ALUMINUM. THE ADMINISTRATION ANNOUNCED THERE WILL BE MORE SECTORAL TARIFFS DOWN THE ROAD AND THEY WILL BE VERY DANGEROUS. WE ALREADY HEARD FROM WALMART AND HOME DEPOT. THEY WERE TRYING TO KEEP IT UNDER CONTROL. THERE WERE TWO REASONS FOR THAT. ONE IS INVENTORIES. THE OTHER IS CONSUMER DEMAND STAYED STRONG. IF WE START SEEING THE CONSUMER DEMAND WEAKENING AND INVENTORIES ARE NOW OUT, THAT'S GOING TO BE AT THE HIGHER PRICE. THAT MEANS EVEN THOSE LARGE GUYS LIKE WALMART AND HOME DEPOT, THEY CANNOT KEEP THIS UP ON THEIR OWN ANYMORE. THEY WILL START PASSING IT NOT ONLY TO THE DISTRIBUTION BUT ALSO CONSUMERS. THE BIG QUESTION IS, HOW MUCH IS GOING TO BE PASSED THROUGH? THE LITERATURE IS CONFLICTED ON THIS. THERE ARE PAPERS SHOWING THAT THE PASS-THROUGH IS HIGH. NEVERTHELESS, THIS DOESN'T CHANGE THE FACT THAT WE ARE GOING TO HAVE INFLATION COMING SOME PLEA FROM THE FACT THAT WE ARE IMPORTING A LOT OF INPUTS IN OUR PRODUCTION IN AMERICA. THERE'S ALSO THE OTHER SIDE OF THE STAGFLATIONARY BULLS. -- IMPULSE. THAT WILL BE ON THE EMPLOYMENT SIDE. THIS GOES BACK TO FIRMS. THE FIRMS ARE SEEING THIS. MY COSTS OF DOING BUSINESS IS HIGHER. MAYBE I HAVE TO THINK ABOUT HIRING NEW WORKERS. MAYBE I NEED TO FIRE SOME WORKERS. IT'S GOING TO HURT WORKERS AND EMPLOYMENT AT SOME POINT. SHERY: GOOD TO HAVE YOU WITH US. WE CONTINUE TO WATCH JAPANESE ASSETS. WE GOT THE INFLATION NUMBER OUT OF JAPAN. CORE INFLATION RISING 3.1% YEAR ON YEAR WHICH WAS ABOVE ECONOMIST EXPECTATIONS BUT SLOWING DOWN A LITTLE BIT FROM THE PREVIOUS MONTH. THE NATIONAL HEADLINE CPI ROSE 3.1%. VERY CONSEQUENTIAL AS WE TALK ABOUT CENTRAL BANKS AND WHAT THE J -- BANK OF JAPAN GOVERNOR WILL DO. WE WILL BE WATCHING FOR ANY COMMENTARY ON THE DIRECTION OF JAPANESE MONETARY POLICY. NICK A FUTURES NOT DOING MUCH AFTER THREE SESSIONS OF LOSSES ALREADY. WE ARE WATCHING THE JAPANESE YEN BECAUSE IT STRENGTHENED AGAINST THE U.S. DOLLAR AFTER WE SAW THE INFLATION NUMBERS IN JAPAN. MORE AHEAD ON THE ASIAN TRADE. THIS IS BLOOMBERG. ♪ > > THE RIGHT TO BUILD ELECTRIC PLANTS. IT BECOMES LIKE A PUBLIC UTILITY. WE HAVE OLD GRIDS. A LOT OF STUFF THAT'S OLD. WE WOULDN'T BE ABLE TO COMPETE WITH CHINA AI. NOW WE ARE LEADING THE AI RACE AND THE ARTIFICIAL INTELLIGENCE IS A BIG DEAL. IT'S THE HOTTEST THING THERE IS FOR PROBABLY 35, 40 YEARS. IT'S A LOT OF PEOPLE DON'T KNOW WHAT IT IS. TRUST ME IT'S HOT, IT'S BIG. AVRIL: PRESIDENT TRUMP SPEAKING IN WASHINGTON. BLOOMBERG HAS LEARNED THAT ANTHROPIC IS NEARING A DEAL TO RAISE AS MUCH AS $10 BILLION OF NEW FUNDING, ONE OF THE LARGEST ROUNDS EVER FOR AN AI START UP. LET'S BRING IN ANNABELLE DROULERS FOR MORE ON THIS ROUTE. SO IT LOOKS LIKE WHAT'S POTENTIALLY BEING RAISED MORE THAN EXPECTED. WHAT DO WE KNOW? > > YEAH. THAT'S EXACTLY IT. HIGHER THAN. AT THE END OF JULY, BLOOMBERG NEWS WAS SAYING THAT ANTHROPIC WAS AN ADVANCED DISCUSSIONS TO RAISE $5 BILLION AND AROUND THAT WOULD HAVE VALUED IT AT $170 BILLION. THE AMOUNT DOES APPEAR TO INCREASE SIGNIFICANTLY, GIVEN STRONG INVESTOR DEMAND. $10 BILLION, IT WOULD BE ONE OF THE LARGEST MEGA ROUNDS WE'VE EVER SEEN FOR AN AI START UP. THE DISCUSSIONS ARE ONGOING. ACCORDING TO OUR SOURCES, THE FINAL AMOUNT COULD CHANGE. IT WOULD CEMENT ANTHROPIC AS ONE OF THE WORLD'S LEADING AI DEVELOPERS. YOU'VE GOT PRESIDENT SAYING THAT THE U.S. IS LEADING THE AI RACE. IT'S A VERY BIG CONTEST BETWEEN THE U.S. AND CHINA RIGHT NOW. SHERY: ANY IDEAS RIGHT NOW ONE HAULED -- ON HOW THE FUNDS WILL BE USED? > > WE UNDERSTAND THAT IT'S GOING TO BE USED TO FUEL COMPETITION DOMESTICALLY. ANTHROPIC IS AGAINST THE LIKES OF OPENAI. HAS RAISED BILLIONS OF DOLLARS THIS YEAR TO TRY TO FINANCE THEIR OWN INVESTMENTS IN DATA CENTERS AND TALENT FOR BUILDING AI MODELS. ANTHROPIC WAS FOUNDED IN 2021 FROM PREVIOUS OPENAI EMPLOYEES BUT IT HAS CERTAINLY BEEN POSITIONING ITSELF AS A RELIABLE SAFETY CONSCIOUS FIRM THAT USERS CAN TRUST. IN TERMS OF WHO IS LEAVING THIS ROUND, I ON-Q CAPITAL. OTHER RESPECTED PARTICIPANTS COULD BE TPG, LIGHTSPEED. THAT'S ACCORDING TO SOURCES FAMILIAR WITH THE MATTER. WE UNDERSTAND ANTHROPIC IS IN DISCUSSIONS WITH SOME SOVEREIGN WEALTH FUNDS INCLUDING IN QATAR AND SINGAPORE. A LITTLE MORE DEEP-POCKETED. AVRIL: ANNABELLE DROULERS THERE5 WITH THE LATEST ON ANTHROPIC. BOEING IS CLOSER TO FINALIZING A DEAL TO SELL AS MANY AS 500 AIRCRAFT TO CHINA. IT'S CONTINGENT ON DIFFUSING THE TRADE HOSTILITIES THAT GO BACK TO TRUMP'S FIRST TERM IN OFFICE. LET'S BRING IN OUR CHINA CORRESPONDENT MINMIN LOW. THIS IS EXPECTED TO BE A CENTERPIECE OF ANY TRADE AGREEMENT BETWEEN CHINA IN THE U.S.. MINMIN: YES FOR SURE. PLANES ARE AS EXPENSIVE AS SKYSCRAPERS. THIS DEAL WOULD GO SOME WAY TO REDUCE THE TRADE IMBALANCE BETWEEN THE TWO SIDES YET IT WOULD BE BENEFICIAL FOR BOTH TRUMP AND XI AND IT WOULD PUT AN END TO THE SALES DROUGHT WE ARE SEEING SINCE 2017 DURING TRUMP'S LAST VISIT TO CHINA. THAT WAS WHEN BOTH SIDES AGREED TO THIS BIG $37 BILLION DEAL. CHINA AGREED TO BUY 300 JET PLANES. SINCE 2019, WE ARE SEEING A SHARP DROP IN THE NUMBER OF ORDERS FOR BOEING FROM CHINA, REALLY COINCIDING WITH THE SHOWERING -- SOURING RELATIONS BETWEEN THE TWO SIDES. THE CHINESE GOVERNMENT HAS BEEN TALKING TO CHINESE AIRLINES TO FIND OUT HOW MANY AIRCRAFTS THEY WOULD NEED. BOEING IS IN TALKS TO WORK OUT THE TERMS OF THIS MEGADEAL, WORKING OUT THE DELIVERY TIMELINE, THE VOLUMES AND TYPE OF AIRCRAFT THAT CHINA MIGHT WANT. AVRIL: CHINA IS TRYING TO BUILD UP OR BECOME A BIGGER PLAYER WHEN IT COMES TO THE HOMEGROWN PLANE MAKING CAPABILITIES. DOES THIS POTENTIALLY IMPLY SOMETHING FOR THEIR EFFORTS? MINMIN: YEAH IT DOES FOR SURE MEAN THAT CHINA ZONE HOMEGROWN PLANE MAKING CAPABILITIES, IT'S NOT ABLE TO RAMP UP AS FAST AS IT WANTS TO. RIGHT NOW THIS BOEING DEAL IS COMING AT THE HEELS OF ANOTHER DEAL THAT WE JUST REPORTED A COUPLE DAYS AGO. CHINA IN TALKS WITH AIRBUS, LOOKING TO BUY AROUND 500 AIRCRAFT. THAT'S A THOUSAND AIRCRAFT FROM THIS BOEING AND AIRBUS DEAL. IT WILL DOUBLE THE NUMBER OF AIRCRAFT THAT CHINA CURRENTLY HAS. THAT'S A VOLUME OF AIRCRAFT, IT'S PLAYMAKER WILL NOT BE ABLE TO KEEP UP WITH THAT. CHINA IS STILL QUITE RELIANT AT THIS POINT ON WESTERN INDUSTRIAL TECHNOLOGY. IF IT COMES THROUGH, THE DEAL WOULD HELP CHINA SECURE A VERY HARD TO GET DELIVERY SLOT, GIVEN THAT BOTH BOEING AND AIRBUS ARE PRETTY MUCH SOLD OUT UNTIL THE 20 30'S. AS YOU SAID EARLIER, A LOT HINGES UPON HOW TRADE TENSIONS ARE BEING RESOLVED BETWEEN CHINA AND THE U.S.. WE KNOW THAT TRADE TALKS HAVE BEEN ONGOING. HAVEN'T MANAGED TO REACH AN AGREEMENT. THIS WILL LIKELY BECOME THE CENTERPIECE OF ANY TRADE AGREEMENT BETWEEN THE TWO SIDES. SHERY: THANK YOU SO MUCH. MINMIN LOW. WHEN WE TALK ABOUT OUR RIVALRY BETWEEN THE U.S. AND CHINA, NOT JUST ABOUT PLANES ARE AI, XIAOMI HAS SUCCEEDED WHERE APPLE FAILED BY LAUNCHING ITS OWN ELECTRIC CAR. THE DRAMATIC PIVOT HAS HELPED THE CHINESE COMPANY GAIN $120 BILLION IN MARKET VALUE OVER THE PAST YEAR. BLOOMBERG ORIGINALS HAS BEEN LOOKING AT THEIR PUSH INTO THE EV SECTOR. HERE'S A PREVIEW. > > A CONNECTED ECOSYSTEM OF PRODUCTS, A DEVOTED FAN PAYS, AND IS CONSTANTLY INNOVATIVE. IF YOU ARE IN THE U.S., YOU MAY SAY APPLE. IN CHINA, IT'S XIAOMI. > > THIS CONSISTENT MARKETING TO THE YOUNGER CONSUMERS IN CHINA HAS CULTIVATED A CULT FOLLOWING. > > FOR MANY CONSUMERS, XIAOMI IS APPLE, TESLA, GOOGLE. > > XIAOMI HAS MANAGED WHAT APPLE FAILED TO DO. BUILD THE CAR. > > XIAOMI SHARES HAVE TOUCHED A RECORD HIGH AFTER STRONG INITIAL ORDERS FOR ITS $35,000 SUV. > > THEY MANAGED TO SET UP COMPLICATED SUPPLY CHAINS IN CHINA AND ESSENTIALLY CHURN OUT THESE POPULAR CARS. > > PROFITS JUMPED AS CUSTOMERS RUSHED TO THE COMPANY'S LATEST OFFERINGS. SUCCEEDING IN THE WORLD'S MOST CROWDED EV MARKET ISN'T EASY. > > COMPETITION IS REALLY FAIR RIGHT NOW. > > GLOBAL BRAND. THIS IS A NO EASY TASK WHEN THE WORLD'S BIGGEST ECONOMY IS EFFECTIVELY OFF-LIMITS BECAUSE OF TRADE BARRIERS. YET CHINESE COMPANIES ALREADY -- ARE ALREADY TAPPING MARKETS BEYOND THE U.S.. SO IS XIAOMI ON EASY STREET OR WILL IT BE A BUMPY ROAD TO SUCCESS? SHERY: SUBSCRIBERS CAN WATCH THE DOCUMENTARY IN FULL RIGHT NOW ON THE TERMINAL. IT WILL BE UP ON THE BLOOMBERG ORIGINALS YOUTUBE CHANNEL A LITTLE BIT LATER. MORE AHEAD. THIS IS BLOOMBERG. ♪ > > TECHNOLOGY IS DEVELOPING SO FAST. > > MY BELIEF IS THAT THE HUMAN ROBOTICS WILL NOT ONLY BUILD THE BIGGEST BUSINESS WE'VE EVER SEEN BY MANY MULTIPLES, BUT IT'S ALSO GOING TO BE THE BIGGEST PRODUCT LAUNCH WE'VE EVER HAD. > > OVER 10,000 ROBOTS WITHIN THE NEXT FOUR YEARS. > > THIS YEAR WE ARE BUILDING ABOUT 2000 ROBOTS. NEXT YEAR WE PLAN TO BUILD OVER 10,000 ROBOTS. > > PRODUCTION IS DIFFICULT. > > THEY ARE BETTER EXPANDING THEMSELVES. IT'S ABOUT AI. > > WHATEVER AI PRODUCED COULD BE DEPLOYED. > > I THINK IT'S THE BEST TIME. > > I THINK THE WHOLE WORLD IS SEEING THE OPPORTUNITY FOR THIS NEW GENERATION OF ROBOTS TO EXPAND SIGNIFICANTLY. SO I THINK THERE'S A LOT OF PROMISE IN THE INDUSTRY RIGHT NOW. SHERY: THIS NEW SURGE OF AI BREAKTHROUGHS ACROSS ASIA PUSHING HUMAN NIGHT ROBOTS CLOSER TO REALITY. BUT NOT EVERYONE IS CONVINCED THE FUTURE IS HERE JUST YET. MANY SAY THE TECHNOLOGY IS IMPRESSIVE BUT NOT YET COMMERCIALLY VIABLE. I'M NOT SURPRISED. I SHARE YOUR SKEPTICISM. WE'VE SEEN THIS MARATHON, TRYING TO BOX AND PLAY FOOTBALL. THEY LOOK PRETTY FUNNY. EXPENSIVE TOYS. DO THEY HAVE A FUTURE? > > THAT'S RIGHT. I THINK THERE'S BEEN A LOT OF HYPE AND A LOT OF PROPAGANDA SUSTAINING THE HUMANOID ROBOT INDUSTRY IN CHINA. THE REALITY IS, IT'S MORE DIFFICULT TO GET A ROBOT TO FULL YOUR LAUNDRY THEN IT IS TO GET IT TO DANCE ON STAGE FOR A FEW MINUTES. A LOT OF THE EXCITEMENT PROPELLED BY AI ADVANCES. THE AMOUNT OF TRAINING AND DATA IT TAKES TO GET A PHYSICAL ROBOT TO NAVIGATE THE VERY UNPREDICTABLE AND MESSY PHYSICAL WORLD IS WAY DIFFERENT THAN GETTING A CHATBOT TO UNDERSTAND TEXT LIKE A HUMAN BEING. I THINK THERE'S A LOT OF TECHNICAL BARRIERS. I THINK THAT QUICK REALITY CHECK ASSIGNED, THEY DO HAVE IN THE LONG-TERM POTENTIAL TO TRANSFORM THE ECONOMY. I DON'T THINK THEY ARE READY FOR PRIME TIME JUST YET. AVRIL: GIVEN HOW THESE COMPANIES MIGHT NOT BE READY IN A VERY INTENSE, COMPETITIVE SPACE, ARE WE EXPECTING TO SEE A LOT OF THESE COMPANIES NOT SURVIVING? > > RIGHT. I THINK WE WILL SEE A HUMANOID HUNGER GAMES. ONE OF MY BIG TAKEAWAYS FROM THE WORLD AI CONFERENCE I ATTENDED LAST MONTH WAS HOW INTENSE THE COMPETITION IS RIGHT NOW. I'VE NEVER SEEN SO MANY ROBOTS IN ONE PLACE AT ONE TIME. IT WAS REMARKABLE. IT'S A DOUBLE-EDGED SWORD. THAT DRIVES INNOVATION BUT AT THE SAME TIME, THE REALITY IS IN THE NEXT FIVE TO 10 YEARS, NOT ALL OF THESE HUMANOID ROBOT MAKERS WILL EXIST. SHERY: CAN THESE ROBOTS BE COMPANIONS AS WELL? > > THAT WAS A BIG DEBATE THAT CAME UP OVER AND OVER. DO WE WANT THEM TO BE TOOLS OR OUR FRIENDS? ULTIMATELY AS ONE IS THE IDEA OF A ROBOT BODY IS, THE ONES I GET ATTENTION ARE THE ONES THAT LOOK HUMANLIKE AND PEOPLE ARE AMAZED AT HOW HUMANLIKE THEY CAN GET. THE ONES THAT MAKE THE BIGGEST DIFFERENCE ARE THE ONES I CAN ACTUALLY DO REAL WORK AND REPETITIVE TASKS AND MAKE AN IMPACT ON COMPANY BOTTOM LINES. ULTIMATELY THAT'S A GOOD THING. THEN WE CAN SPEND MORE TIME BEING HUMANS. SHERY: EXHUME AND I -- WE WILL HAVE MORE OF THIS STORY WHEN WE COME BACK WITH BLOOMBERG TECH ASIA IN THE NEXT HOUR. THESE ARE SOME OF THE STOCKS WE WILL BE WATCHING WHEN TRADING STARTS IN JAPAN AND SOUTH KOREA. KEEP AN EYE ON BANK STOCKS IN JAPAN AFTER CORE CPI CAME IN ABOVE FORECAST. THE BOJ GOVERNOR SAID TO SPEAK AT JACK AND WHOLE -- JACKSON HOLE. WE HAVE SEEN JGB YIELDS AT THE HIGHEST LEVEL IN DECADES. THE 10 YEAR YIELD AT 2008 HI. THIS IS BLOOMBERG. ♪ SHERY: WE ARE COMING DOWN TO ASIA'S MAJOR MARKET OPENS. AHEAD OF CHAIR POWELL'S SPEECH AT JACKSON HOLE, WE HAVE SEEN CONFLICTING DATA OUT OF THE U.S. INCLUDING STRONGER-THAN-EXPECTED FACTORY NUMBERS. WHAT THAT MEANS FOR THE INFLATIONARY PICTURE IN THE UNITED STATES IS A CLEAN QUESTION. WHAT HAPPENS TO SEPTEMBERS RATE CUT? AVRIL: COMPLICATED BACKDROP IF THE FED WANTS TO BE DATA-DEPENDENT. THINK ABOUT HOW JOBLESS CLAIMS ARE TELLING US SOMETHING QUITE DIFFERENT. EVEN THOUGH BROAD-BASED PMI'S ROSE. REALLY THE FED HAS THEIR WORK CUT OUT FOR THEM COMING UP. SHERY: THE BANK OF JAPAN GOVERNOR AT JACKSON HOLE. GROWTH OF 3.1% YEAR ON YEAR FOR THE MONTH OF JULY. THAT LED TO A LITTLE OF A POP FOR THE JAPANESE YEN, AT THE 148 LEVEL AFTER WEAKENING IN THE OVERNIGHT SESSION AGAINST THE U.S. DOLLAR. NICK A STOCKS UP 1/10 OF 1%. THREE SESSIONS OF LOSSES FOR JAPANESE STOCKS. WE ARE REVERSING THAT A LITTLE BIT. WE ARE WATCHING THE 10 YEAR YIELD AS WELL. IT'S ON 2008 YEAR HIGHS. NOT TO MENTION WE HAVE SEEN THE 30 YEAR YIELD REACHING ALMOST RECORD HIGHS. THE 20 YEAR YIELD ALSO WHAT LEVELS WE HAVEN'T SEEN IN DECADES. ALL OF THIS COMING OUT A TIME WHEN THERE ARE ALSO PHYSICAL CONCERNS. TAKE A LOOK AT HOW SOUTH KOREA IS COMING ONLINE. KOREAN STOCKS GAINING GROUND FOR THE FIRST SESSION IN FOUR DAYS. GAINS OF 8/10 OF 1%. KOREAN WON HOLDING STEADY AT THE 1400 LEVEL AGAINST THE U.S. DOLLAR. WE ARE WATCHING GEOPOLITICS AND SOUTH KOREA. WE ARE WATCHING THE TRADE DEAL WITH THE UNITED STATES AS WELL. A SUMMIT WITH PRESIDENT TRUMP NEXT WEEK. AVRIL: EVEN THOUGH THE LIKES OF THE U.S. AND EU HAVE SORT OF MOVED TOWARDS FORMALIZING THEIR TRADE PACT, JAPAN, SOUTH KOREA, WE HAVE THOSE LINGERING QUESTION MARKS AND THE STOCK MARKET MOVES IN THE REGION THIS WEEK. WE'VE BEEN SEEING HOW ASIA STOCKS CONTINUE THEIR SLIDE ON THE REGION BENCHMARK FOR FOUR SESSIONS NOW. WILL IT BE A FIFTH? EVEN AFTER JACKSON HOLE, DO WE GET MORE CLARITY? THINK ABOUT HOW THOSE LIQUIDITY CONSTRAINTS COULD CONTINUE WEIGHING. ASX 200, AN OUTPERFORMER JUST A DAY AGO. YOU ARE SEEING A BIT MORE FIRMNESS AND TREASURIES AGAINST THE BACKDROP OF A DAY AGO. TREASURIES FALLING AS TRADERS TRIM THOSE RATE CUT BETS FOR THE MOMENT. TREASURIES TAKING A LITTLE HIGHER. LOOKING QUITE FIRM ON THE AUSSIE DOLLAR AS WELL. KEEPING WATCH ON BRENT AFTER A TRUMP ADMINISTRATION OFFICIAL TALKED ABOUT THE PRESSURE OF INDIA'S IMPORTS ON RUSSIAN CRUDE. RAMPING UP THE SCRUTINY THERE. LET'S BRING IN OUR NEXT GUEST TO SAID THERE'S A DISTINCT POSSIBILITY, PROBABILITY THAT THE FED MAY NOT CUT RATES THIS YEAR, DEPENDING ON THE DATA. REALLY GOOD TO SEE YOU. WHAT IS YOUR SENSE OF THESE MOMENTUM TRADES UNWINDING? DO WE SEE THEM CREEP BACK IN NEXT WEEK? > > THE MOMENTUM TRADE IS RELATED TO INVESTORS TAKING SOME PROFIT, GIVEN WHERE MARKETS ARE. THE U.S. MARKET FOR EXAMPLE HAS GONE UP OVER A THOUSAND POINTS IN THE LAST 12 TO 18 MONTHS. EMERGING MARKETS UP 20%. THEN MARKETS LIKE KOREA WHICH YOU WERE JUST TALKING ABOUT ARE ACTUALLY UP CLOSE TO 40%. MOMENTUM HAS TO DO WITH INVESTORS TAKING PROFITS AT A TIME WHEN UNCERTAINTY IS HIGH. GIVEN THAT THE FED DECISION WILL COME UP BETWEEN NOW AND SEPTEMBER, THE MOMENTUM DEFINITELY RELATED TO PROFIT-TAKING AHEAD OF UNCERTAINTY. WILL THAT COME BACK? YES. A LOT OF MOMENTUM TRADING IN THE MARKET. I THINK IT WILL COME BACK LATER IN THE YEAR BUT PROBABLY NOT TO THE FED CUT DECISION IS DONE. AVRIL: WHICH MARKET DO YOU THINK IS MOST UNDERPRICING THE TARIFF RISK? > > IN MY OPINION, INDIA IS THE ONE WHERE THE TARIFF RISK IS VERY HIGH AND NOT BEING PRICED IN. IN INDIA, THE RISK HAS TO DO WITH GOODS BUT ALSO OIL EXPORTS. THAT'S THE SECOND SET OF TARIFFS WHICH IS SCHEDULED TO KICK IN ON AUGUST 22. INDIA STILL GOT VERY HIGH EXPOSURE TO OIL IMPORTS COMING FROM RUSSIA AND THEY HAD BENEFITED FROM THE DROP IN OIL PRICES. NEVERTHELESS, IT WOULD RIPPLE THROUGH THE ECONOMY AT A TIME WHEN EARNINGS ARE WEEK ALREADY. IN INDIA, FOR THE LAST FIVE QUARTERS, IN -- EARNINGS GROWTH HAS BEEN AT SINGLE DIGITS. MARKET IS PRICING IN 20% EARNINGS GROWTH. THAT'S THE COUNTRY WHERE I SILLY THE MOST RISKS IN TERMS OF TARIFFS AND THEIR IMPACT ON EARNINGS. SHERY: WE ARE GETTING HEADLINES ON THE BLOOMBERG COMING FROM THE INFORMATION SAYING THAT NVIDIA HAS ORDERED A SUSPENSION TO H20 CHIP PRODUCTION. SINCE END PRODUCTION AND WORK RELATED TO THIS CHIP TAILOR-MADE . THIS IS ACCORDING TO TWO PEOPLE SPEAKING TO THE INFORMATION THAT THE DIRECTOR COMES AFTER WEEKS OF THE CHINESE GOVERNMENT TELLING TECH COMPANIES TO STOP BUYING CHIPS DUE TO SECURITY CONCERNS. WE DO HAVE NVIDIA EARNINGS NEXT WEEK, AT A WEEK WHEN WE HAVE THE U.S. MARKET, THE U.K. MARKET GOING ON HOLIDAYS. WE ARE HEADED TOWARDS THE AUGUST OP REPORT. HOW MUCH OF A RISK THAT ALL OF THIS BE FOR THE MARKETS? > > NVIDIA EARNINGS IS A BIG RISK TO THE MARKET. NOT JUST IN TERMS OF WHAT IT MEANS FOR NVIDIA BUT INVESTOR SENTIMENT IMPACT IT HAS ACROSS THE U.S., ACROSS THE TECH SUPPLY CHAIN, ACROSS EMERGING MARKETS. ONE OF THE AREAS THAT IS GOING TO PROVE TO BE MORE RESILIENT IS CHINA. THEY HAVE BEEN SUPPORTING THE DOMESTIC SECTOR IN TERMS OF AI, SEMICONDUCTOR, AND TECHNOLOGY. IF YOU LOOK AT OTHER MARKETS, IT'S HAD A HUGE DRAWN UP. MOST OF THAT HAS HAD TO DO WITH POSITIVE RIPPLE EFFECTS FROM NVIDIA, SEMICONDUCTORS, ETC.. A GIFT THAT WILL IMPACT INVESTOR SENTIMENT IN KOREA MUCH MORE SO THAN IN CHINA FOR EXAMPLE. > > TELL US MORE ABOUT THE CHINESE MARKET. THERE WAS A LOT OF OPTIMISM OVER THE TECH SECTOR. WHERE ARE WE AT NOW? > > IN CHINA, THE ECONOMIC SITUATION IS POOR. THE INDUSTRIAL PRODUCTION, THE FIXED ASSET INVESTMENT, RETAIL SALES AS WELL AS PROPERTY, ALL NUMBERS WERE DOWN. THE MACRO SITUATION IN CHINA IS TOUGH RIGHT NOW. NEVERTHELESS, INVESTORS ARE INTEGRATING THAT IS ASSIGNED THAT THEY WILL BE SEEING MORE AND MORE POLICY TO OFFSET THAT. CHINA IS UP ABOUT 30% IN THE LAST 12 MONTHS, 20% YEAR TO DATE WITH CHINA SMALL CAPS LEADING THE RALLY. THAT RALLY, WHILE IT DID -- A LOT OF THAT HAS COME FROM POLICY STIMULUS. THE CHINESE GOVERNMENT HAS CHANGED REGULATION AROUND REQUIRING INSURANCE COMPANIES AND MUTUAL FUNDS TO INVEST MORE IN EQUITIES. AS INSTITUTIONAL INVESTORS, RETAIL INVESTORS COMING BACK INTO THE MARKET IN A HUGE WAY. POLICY SUPPORT HAS BEEN PIVOTAL TO WHAT'S GOING ON IN CHINA DESPITE THE FACT THAT THE MACROECONOMIC SITUATION IS VERY WEAK. AVRIL: AT THE END OF THE DAY, WOULD YOU SAY THERE'S POTENTIAL FOR CHINESE OUTPERFORMANCE VERSUS THE REST OF THE REGION IN THE SECOND HALF OF THE YEAR? > > THERE STILL IS. THAT RELATES MORE TO THE STIMULUS. CHINA HAS EMBARKED ON ANOTHER SET OF MEASURES TO SUPPORT PROPERTY PRICES. PROPERTY PRICES ARE 40% OF THE GDP THERE. PROPERTY PRICES ALSO HAVE A BETTER EFFECT. CONSUMERS FEEL RICH WHEN THEIR PROPERTY IS DOING WELL, EVEN IF THEY ARE NOT SELLING IT. CONSUMER SENTIMENT FINDS A LOT OF SUPPORT FROM PROPERTY RACES. THE GOVERNMENT INSTITUTED A SET OF NEW MEASURES TO SUPPORT PROPERTY PRICES INCLUDING BUYING OF DISTRESSED PROPERTIES. AS THAT HAPPENS, THAT'S GOING TO BE ONE BIG SORT OF SUPPORT THAT COULD DRIVE CONSUMER SENTIMENT, INVESTOR SENTIMENT, AND DRIVE MARKETS HIGHER. FOR THE FIRST TIME, WE ARE SEEING THE GOVERNMENT ACTUALLY SUPPORT AND DEMAND THROUGH GIVING INTEREST-RATE SUBSIDIES ON GOODS AND LOANS. PROVIDING FREE EDUCATION AT THE ELEMENTARY SCHOOL LEVEL. NOW EVEN TALKING ABOUT SOCIAL SECURITY FOR LOWER WAGE EARNERS. THERE'S A LOT MORE POLICY SUPPORTS A COMMENT THAT COULD DRIVE THE MARKET HIGHER IN CHINA. SHERY: THANK YOU. APPRECIATE YOUR INSIGHTS. PARTNER AT NIPPON CAPITOL. EVEN AS WE FOCUS ON THE CHINESE CONSUMER AND POLICYMAKING, TURNING OUR ATTENTION TO THE U.S.. THE KANSAS CITY FED PRESIDENT SAYS AMERICAN BUSINESSES ARE SHOWING RENEWED OPTIMISM FILTERING THROUGH TO THE LABOR MARKET AND PUTTING THE FOCUS BACK ON INFLATION. SCHMIDT SPOKE WITH US FROM JACKSON HOLE ABOUT THE ECONOMY AND GROWING POLITICAL PRESSURE ON THE FED. > > I'M A LITTLE PHILOSOPHICAL ABOUT THE WHOLE CONVERSATION OF THAT INDEPENDENCE. WHAT OUR ROLE IS IN THE AMERICAN ECONOMY. WE ARE ALMOST 250 YEARS OLD US A NATION. I THINK THERE IS SOMETHING TO BE SAID. WE WERE BUILT ON WORDS AND WE CONTINUE TO DEBATE THOSE WORDS LEGISLATIVELY AND JUDICIOUSLY. WHATEVER FRICTION WE MIGHT HAVE WITH OTHER BRANCHES OF THE GOVERNMENT, I THINK RATE STEEL IS TESTED BY FIRE. WE CAN ALWAYS EAT BETTER. WE CAN ALWAYS DO THIS BETTER. I THINK THE NATURE OF INDEPENDENCE, DON'T BELIEVE ME. BELIEVE OTHER NATIONS THAT HAVE CENTRAL BANKS AND DON'T. IT SEEMS TO WORK. BUT I'M ALWAYS OPEN FOR THE CONVERSATION. HOW DO WE MAKE IT BETTER? > > THE BIG QUESTION FOR WALL STREET IS, WHAT HAPPENS OUTSIDE OF SEPTEMBER 17? > > AS YOU KNOW, THIS IS AN INTERESTING MONTH. WE'VE GOT JACKSON HOLE AND THEN WE'VE GOT A FEW WEEKS OF DATA PULLING. I THINK EVERYBODY'S INTERESTED IN SOME OF THE PRINCE THAT HAPPENED THE LAST COUPLE MONTHS AND WHERE THEY GO FROM HERE. SO I'M LIKE EVERYBODY. THERE WAS FASCINATING CONVERSATIONS AT THE LEFT -- LAST FOMC. THERE WERE A COUPLE SINCE. MY INTERPRETATION OF WHAT'S HAPPENING IN THE LABOR MARKET IS THAT THE FIRST COUPLE QUARTERS, A LOT OF BUSINESS PEOPLE WERE JUST SINGING, THERE'S UNCERTAINTY ENOUGH. I THINK THEY COOLED A LITTLE BIT ON THE HIGHER SIDE. THE MOST RECENT COUPLE WEEKS THAT WE'VE BEEN TALKING TO BUSINESSES IN THE DISTRICT, THERE SEEMS TO BE A BURGEONING OPTIMISM THAT THEY'VE DIGESTED AND THEY'VE BEEN AGILE ENOUGH TO TRY TO WORK THEIR WAY THROUGH SOME OF THE NEW POLICIES FROM THE ADMINISTRATION AND MAY BE GOING FORWARD. MAYBE WE WILL SEE UPTICK. THAT SAID, I STILL BELIEVE THAT THE INFLATION NUMBER IS TRENDING CLOSER TO THREE THAN TWO. > > WE SAW THAT IN THE MINUTES IN GENERAL. THE COMMITTEE FELT THAT INFLATION WAS A BIGGER DANGER AT THIS POINT. IS THAT YOUR VIEW NOW? > > IT WOULD BE MY VIEW NOW. WITH AN UNDERSTANDING THAT WHAT MAY HAVE HAPPENED IN THE FIRST COUPLE QUARTERS ON THE LABOR SIDE, WHICH CONCERNED SEVERAL PEOPLE ON THE COMMITTEE, ME INCLUDED. I THINK THE PPI WAS INTERESTING. THAT PRINT WAS INTERESTING. I BELIEVE THAT WHEN WE TALKED TO A LOT OF OUR FOLKS IN OUR DISTRICT, IF YOU HAD TO LEAN OR HAVE A BIAS TOWARD, IT WOULD BE ON THE INFLATION SIDE. > > THE KANSAS CITY FED PRESIDENT SPEAKING WITH OUR COLLEAGUE MICHAEL MCKEE AND JACKSON HOLE. OF COURSE, BREAKING NEWS THAT WE'VE GOTTEN IN THE PAST COUPLE MINUTES IS REALLY HOW THE INFORMATION IS REPORTING. NVIDIA HAS ORDERED THE SUSPENSION TO WHICH H20 CHIP PRODUCTION. TOLD THAT SUPPLIERS TO SUSPEND ANY H20 RELATED WORK. THIS IS THE CHIP THAT'S THE MOST SOPHISTICATED ONE IN THE AI SPHERE THAT NVIDIA HAS BEEN ALLOWED TO SELL IN CHINA. WE KNOW HOW THE U.S. ADMINISTRATION EFFECTIVELY BANDED SALE TO CHINA EARLIER THIS YEAR AND THEN REVERSE THAT DECISION. WE ARE KEEPING TABS ON NVIDIA SUPPLIERS IN THE ASIA SESSION TODAY. SHERY: WE ARE WATCHING BANKS IN JAPAN. THE TOPICS BANKS INDEX ALSO AT THE HIGHEST LEVEL IN ABOUT A WEEK OR SO. YOU CAN SEE THE BROAD UPSIDE. A SEA OF GREEN AS WE CONTINUE TO HAVE JGB YIELDS RISING TO THE HIGHEST SINCE 1999. FISCAL CONCERNS AFTER THE UPPER HALF ELECTION. THE 10 YEAR YIELD AROUND THE HIGHEST SINCE 2008. 30 YEAR YIELD AROUND THE HIGHEST EVER. WE ARE NOW SEEING THE UPSIDE WHEN IT COMES TO THESE FINANCIAL STOCKS. MORE AHEAD. THIS IS BLOOMBERG. ♪ SHERY: CHIP STOCKS ACROSS THE ASIAN SESSION. WE HAVE HEARD FROM THE INFORMATION THAT NVIDIA SOLD SOME OF ITS COMPONENT SUPPLIERS TO SUSPEND PRODUCTION WORK RELATED TO THE H 20. THIS WOULD BE THE CHIP MADE FOR THE CHINESE MARKET. PEOPLE SPEAKING TO THE INFORMATION SAYING THAT THE DIRECTIVE COMES WEEKS AFTER THE CHINESE GOVERNMENT TOLD LOCAL TECH COMPANIES TO STOP BUYING CHIPS TO DO THAT SECURITY CONCERN. A SIGNAL THAT ALTHOUGH THE TRUMP ADMINISTRATION MIGHT BE ALLOWING NVIDIA TO RESUME SELLING THE CHIPS, THIS MAY REALLY TURN THE DYNAMIC IN THE CHINESE MARKET AS THE GEOPOLITICAL RIVALRY BETWEEN THE TWO COUNTRIES CONTINUES. A MIXED PICTURE RIGHT THERE. LET'S BRING IN ANNABELLE DROULERS FOR MORE. WHAT DO WE KNOW AT THIS POINT WHEN IT COMES TO NVIDIA? > > THIS IS A MAJOR DEVELOPMENT THIS MORNING THAT WE HAVE FROM THE INFORMATION AS YOU SAID. THE H20 IS THE CHIP THAT WAS DESIGNED FOR THE MAINLAND MARKET IN CHINA. IT WAS HALTED EARLIER, RESUMED. SALES WERE ALLOWED TO RESUME ABOUT A MONTH AGO. THIS MORNING, WE'VE GOT THE PROTECTION HALT. WHAT'S INTERESTING IS THAT IT'S NOT COMING FROM THE U.S. SIDE, IT'S COMING FROM THE CHINESE SIDE, A RESULT OF CHINESE GOVERNMENT POLICIES. IT TELLS YOU THAT NVIDIA'S HOPES OF MAINTAINING THAT FOOTHOLD IN THE CHINESE MARKET TO REMAIN IN LIMBO RIGHT NOW. WHAT THE INFORMATION IS, THE THING FROM CHINESE AUTHORITIES IS THAT NVIDIA'S CHIPS COULD CONTAIN BACKDOORS THAT FUNNEL SENSITIVE INFORMATION OR DATA FROM CHINA TO THE U.S.. THAT'S THEIR BIGGEST CONCERN. THE H20 CHIPS WILL ALLOW FOR DATA OR INFORMATION TO BE TRANSFERRED FROM CHINA TO THE U.S.. CHINA ASKING COMPANIES TO NOT PURCHASE PRODUCTS. THAT'S WHY THE PROTECTION HALT HAS COME INTO EFFECT AGAIN ACCORDING TO THE INFORMATION HERE. > > THIS PUTS NVIDIA SUPPLIERS IN THE SPOTLIGHT. THEY ARE CAUGHT UP IN THE MIDDLE OF THIS. WE ARE SEEING HOW SOME OF THESE CAREER SUPPLIERS LIKE SAMSUNG ELECTRONICS ARE HIGHER IN TRADE TODAY. > > IT'S DIFFICULT TO DROP -- JUDGE, GIVEN THAT WE HAVE SEEN A LOT OF MIXED MOVES FOR TECH AND A LOT OF DOWNWARD PRESSURE OVER THE PAST FEW SESSIONS. GENERALLY, THEY ARE VERY MUCH CAUGHT UP IN THIS. SAMSUNG FOR INSTANCE DOES SUPPLY HBM CHIPS TO THE H20 PRODUCTION LINES. AMCOR DOES ADVANCED PACKAGING OF H20 CHIPS. THIS IS ANOTHER SIGN TO US THAT NVIDIA IS REALLY CAUGHT UP IN ITS GEOPOLITICAL TENSIONS LIKE YOU MENTIONED. WE HAD SEEN A BUYING SPREE FROM CHINESE FIRMS OR THAT'S WHAT WAS REPORTED BY THE INFORMATION THAT THERE HAD BEEN A FLURRY OF ORDERS, 700,000 H20 CHIPS. THE AUDIT IN THE FIRST FEW WEEKS AFTER THE BAN WAS LIFTED. THE HALT APPEARS TO HAVE COME THROUGH FROM BEIJING. IT APPEARS FIRMS ARE HEEDING THAT ADVICE. SHERY: ANNABELLE DROULERS WITHOUT BREAKING NEWS ON NVIDIA. PRESIDENT TRUMP HINTED THAT HE'S OPEN TO UKRAINE LAUNCHING MORE ATTACKS ON RUSSIA AS THE WHITE HOUSE EASTER PRESSURE PRESIDENT PUTIN INTO A MEETING WITH UKRAINE'S LEADER. TRUMP WROTE, IT'S HARD TO WIN A WAR WITHOUT ATTACKING THE INVADERS COUNTRY. PRESIDENT TRUMP REALLY TRYING TO BRING INTO FRUITION THE MEETING. WILL IT HAPPEN? > > WE HAVE TWO OF THE THREE PARTIES SAYING THAT THEY ARE INTERESTED. TRUMP'S WISH -- PUSHING FOR THIS TO HAPPEN. PRESIDENT ZELENSKYY SAY HE DASHES SAYING IT CAN HAPPEN. RUSSIA HAS SHOWN NO INCLINATION TOWARDS MEETING HIM. THEY HAVE CONTINUED THEIR HARDLINE STANCES. IT JUST SEEMS LIKE WHILE THE WHITE HOUSE IS OPTIMISTIC, THERE'S NO INDICATION THAT IS READY TO SIT DOWN FOR DIRECT TALKS WITH THE UKRAINIAN LEADER FOR A CEASE-FIRE, LET ALONE A PEACE DEAL. SHERY: ANYTHING ELSE ON SECURITY GUARANTEES AT THIS POINT FOR UKRAINE? > > SURE. WE HAVE TALKED GOING ON BETWEEN UKRAINE AND EUROPEAN LEADERS, LOOKING FOR IN ARTICLE FIVE TYPE OF ARRANGEMENT THAT WOULD PUT IN SOME COLLECTIVE DEFENSE, THAT WOULD HELP UKRAINE GET SOME EUROPEAN BOOTS ON THE GROUND. THIS IS SOMETHING RUSSIA HAS SUBJECTED -- OBJECTED TO. WE'VE SEEN THE FOREIGN MINISTER OF RUSSIA REPEAT SOME OF THESE MAXIMALIST DEMANDS, IT DOESN'T WANT EUROPEAN TROOPS IN UKRAINE. IT DOESN'T ONE -- WANT EUROPEAN PROTECTION FOR UKRAINE. WHILE THESE TALKS GOES ON, ZELINSKI SAYS WE MUST HAVE SECURITY GUARANTEES IF WE ARE GOING TO HAVE A CEASE-FIRE OR A PEACE DEAL. RUSSIA ISN'T MOVING TOWARDS ANY OF THESE AND IT HAS SHOWN OBJECTIONS TO WHAT HAS DON ON. AVRIL: AT THE SAME TIME, RUSSIA IS CONTINUING STRIKES ON UKRAINE. WHAT ARE WE SEEING FROM THE RUSSIAN SIDE? > > YEAH. WE'VE SEEN MASSIVE DRONE AND MISSILE STRIKES THAT HAVE HAPPENED WHILE THESE TALKS ARE GOING ON. PAR FOR THE COURSE. WHILE TRUMP HAS PRESSURED FOR A CEASE-FIRE, PUTIN HAS RESPONDED WITH MORE TAX -- ATTACKS ON MORE PARTS OF UKRAINE. WE SAW ATTACKS OVERNIGHT ON UKRAINE. SO IT JUST SHOWS THAT WHILE THERE'S A PUSH FOR SOME SORT OF MOVEMENT TOWARDS A CEASE-FIRE OR SOME SORT OF PEACE DEAL, THAT RUSSIA IS RESPONDING BY INCREASING ITS ASSAULT ON UKRAINE, TRYING TO GET MORE TERRITORY AND LAUNCHING MORE DRONE AND MISSILE STRIKES. IT SHOWS THAT RUSSIA IS MUCH MORE INTERESTED NOW IN INCREASING THE MILITARY PRESSURE AND THE ATTACKS THEN SITTING DOWN. SHERY: THE LATEST ON THE NEGOTIATION OVER UKRAINE. WE CONTINUE TO WATCH HOW THE FUTURES MARKET IN EUROPE, AT A TIME WHEN WE SAW A LITTLE BIT OF A WAIVER IN THE OVERNIGHT SESSION. WE HAVE THREE SESSIONS OF GAMES ALREADY FOR EUROPEAN STOCKS BUT INVESTORS WERE TRYING TO PARSE THE DATER ESPECIALLY IN EURO AREA BUSINESS ACTIVITY. WE ARE ALSO GETTING A BIT MORE PROGRESS ON THE U.S. AND THE EUROPEAN UNION TAKING STEPS TO FORMALIZE THEIR TRADE DEAL. WE ARE TALKING ABOUT DETAILED PLANS ON REDUCING TARIFFS ON EUROPEAN CARMAKERS WITHIN WEEKS. WE HAVE MORE AHEAD. THIS IS BLOOMBERG. ♪ AVRIL: HOW MARKETS ARE FARING AS THE COUNTDOWN CONTINUES TO POWELL'S SPEECH AT JACKSON HOLE. RISK OFF WAS QUITE PRONOUNCED IN THE U.S. SESSION THE PAST COUPLE DAYS. WE ARE SEEING A BIT OF A REVERSAL IN THE KOSPI. THIS IS DRIVEN BY SOME OF THE CHIP RELATED STOCKS INCLUDING SAMSUNG AND SK HYNIX WHICH IS ALSO INTERESTING AGAINST THE BACKDROP AS NVIDIA EARNINGS COME OUT NEXT WEEK. ALSO HOW THE CHIP GIANT HAS TOLD SOME OF ITS SUPPLIERS TO SUSPEND ANYTHING RELATED TO THE AGE 20 CHIP PRODUCTION. THE REST OF THE REGION LOOKING QUITE CAUTIOUS AHEAD OF JACKSON HOLE. SPEAKING OF TECH. XIAOMI HAS SUCCEEDED WHERE APPLE FAILED BY LAUNCHING ITS OWN ELECTRIC CAR. THE DRAMATIC PIVOT HAS HELPED THE CHINESE COMPANY GAME $100 BILLION IN MARKET VALUE OVER THE PAST YEAR. BLOOMBERG ORIGINALS HAS BEEN LOOKING AT THEIR PUSH INTO THE EV SECTOR. HERE'S A PREVIEW. > > WHAT TECH GIANT HAS A CONNECTED ECOSYSTEM OF PRODUCTS, A DEVOTED FAN BASE, AND IS CONSTANTLY INNOVATING? IF YOU ARE IN THE U.S., YOU MAY SAY APPLE. IN CHINA, IT'S XIAOMI. > > THIS CONSISTENT MARKETING TO THE YOUNGER CONSUMERS IN CHINA THAT HAS CULTIVATED A CULT FOLLOWING. > > FOR MANY CONSUMERS IN CHINA, IT IS APPLE, TESLA, GOOGLE. > > NOW IT HAS MANAGED WHAT APPLE FAILED TO DO. BILL THE CAR. -- BUILD A CAR. > > SHARES TOUCHED A RECORD HIGH AFTER IT'S $35,000 SUV. > > THEY MANAGED TO SET UP A COMPLICATED SUPPLY CHAIN IN CHINA AND ESSENTIALLY TURN OUT THESE INCREDIBLY POPULAR CARS. > > PROFITS JUMPED AS CUSTOMERS RUSHED TO THE COMPANY'S LATEST OFFERINGS. SUCCEEDING IN THE WORLD'S MOST CROWD IS -- CREDIT MARKET ISN'T EASY. > > COMPETITION IS FIERCE RIGHT NOW. > > GROWTH MEANS TURNING IT INTO A GLOBAL BRAND. THIS IS NO EASY TASK WHEN THE WORLD'S BIGGEST ECONOMY IS EFFECTIVELY OFF-LIMITS BECAUSE OF TRADE BARRIERS. YET CHINESE COMPANIES ARE ALREADY TAPPING MARKETS BEYOND THE U.S.. SO IS XIAOMI ON EASY STREET OR WILL IT BE A BUMPY ROAD TO SUCCESS? AVRIL: SUBSCRIBERS CAN WATCH THAT DOCUMENTARY AND FULL RIGHT NOW ON THE TERMINAL AND ON BLOOMBERG.COM. IT WILL BE UP ON THE BLOOMBERG ORIGINALS YOUTUBE CHANNEL A LITTLE LATER. STICK AROUND FOR BLOOMBERG TECH ASIA AS WE EXPLORE HOW COMPANIES ARE PUSHING THE BOUNDARIES OF INNOVATION FOR HUMANOID ROBOTS. THAT'S COMING UP IN A FEW MINUTES. IN THE MEANTIME, A LOOK AT HOW JAPANESE ASSETS ARE FARING.

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