Australia, counting down asias major market opens. Shery the top stories this hour. The u. S. Stock rally hitting a wall following hot jobs data. The s p 500 has its worst day since april, the vix of the most in five months. Haidi u. S. Companies added more jobs in july than expected. Inc. Of america reversing its outlook for a recession. Shery Brazil Central Bank cut its key rate by 50 basis points. U. S. Futures coming online in the asian session, Downside Pressure in the new york session, asher on u. S. Stocks and bonds. This on investors having to digest high job numbers and treasury debt issuance. The day after the Credit Rating downgrade of the u. S. This coming at a time when we continue to see the treasury selloff. We are talking about yields reaching new highs, the 10 year yield at the highest level since november. An upsurge in the yields earnings. It led to more momentum. It is still earnings season, 169 s p 500 Companies Reporting earnings. Qualcomm being the latest. The Downside Pressure of 7 because they gave a week forecast. A smartphone device, mobile market not recovering china demand. Take a look at oil prices in the asian session, a little bit of upside. The risk off sentiment being felt despite the fact we saw u. S. Stockpiles plunging. We were watching the Brazil Central Bank rate decision. Plenty for markets to digest. Emerging economies are embarking on an easing cycle. The Brazil Central Bank has kept the rate at 2. 75 for nearly a year. It has now cut the rate not by the expected d5 basis points, but by 50 basis points. Only 11 economists expected a big rate cut. Lets get details from our economics and government editor travis who joins us from brazil. Rate to have you with us. The surprise was not just the 50 basis points height, which was greater than most economists had expected, but they are seeing another 50 basis and cut in the future. Travis the expectation was they would cut, it was a coin flip whether it would be 25 or 50. People were brought were looking for signals. To say they expect the pace to be 50 basis points Going Forward was interesting. The other major aspect has been resilient being the First Central Bank start hiking rates, and now is the first bank to start cutting. Chile cut last week and latin america is leading the cycle while the fed and European Central bank are moving in the other direction. Haidi this was the first meeting to include a eula appointee. How does that play into the political environment the central bank is operating in . Travis we will see because lula said he expected a rate cut but renewed his there are questions given his appointees joining the board about how the bank will operate Going Forward because it is its formal autonomy was entrenched two years ago. It will be interesting to watch his reaction now. This is a bigger cut than people expected and signals there are bigger cub cuts coming in the future. Shery will they be able to do that . The divergence in paths from Central Banks and emerging economies eyes with what happens with the path of inflation. Brazil has lowered below its annual inflation target, but for how long and what could be the variables . Travis that is still the big open question, how far they go. They said in their statement they are going to monitor inflation expectations, and want to take on monitor and have moderation Going Forward. There is a question about how far they will go. The big news is that they went this far and this fast. Shery our brazil and latin economics editor travis, as we await other emergingmarket central inc. Decisions that could lead an easing cycle. Here in the u. S. The 6. 5 trillion stock rally is hitting a wall following labor market data that ramp up in treasury issuance and aqs credit downgrade. A u. S. Credit downgrade. A lot for investors to digest. How big was the Market Impact given that this is historic, a second Credit Rating downgrading . Traders were concerned about turbulence in the treasury market and the hot jobs data that renewed concerns that the Federal Reserve will have to tighten further. Many macro folks i was speaking to say this is not a concern. What spooked investors today was the u. S. Treasury sting its quarterly bond sales and spiking yields further pressured tech shares and weighed on the broader market. We saw the s p 500 drop more than 1 . When you look big picture, today is not a concern. It is the next few days that will be make or break about whether this will become a bigger risk off event. Investors took this as an event to do profit taking after the they are waiting to see what we see from the rest of Earnings Results with amazon and apple, the bar has been set high for tech companies. As well as the jobs report, that will give them a clue as to whether the fed is done. Haidi the iranian is we are seeing a turn in market sentiment, a lot of wall street banks are feeling optimistic about the economy. Alexandra just a couple of days after we saw biggest verbs on l street change their outlook on the s p 500. He saw city increase its target, oppenheimer increase its target. Because a lot of the strategists are in a bad place as we get into the second half of the year after missing out on a rally. A lot of them have been cornered into revising their outlooks. However sometimes it is a concern when you see strategists increase equity allocation. Bank of america has an indicator that serves as an indicator. It is sometimes a sign of selloff ahead. They still say it is neutral territory and the signal is closer to buy them so. I spoke to my sources who are saying the a lot of people who set out the rally could see this pullback an opportunity to get in on the stock market. Shery bloombergs equities reporter. Another wall street economist reversing the u. S. Recession forecast is a shift supported by job market strength. Kathleen hayes is here with us. We are talking about bank of americans change of mind coming after a week coming a week after the fed sees no recession ahead. Kathleen more and more saying, the labor market that keeps going, jobless claims that keep following falling. This is what is making people change their mind and throw in the towel. That is the case of the team at bank of america who have been forecasting a recession. Here is what they said in their report today. Growth in the economy for the past three quarters has averaged 2. 3 . The Unemployment Rate is near time lows. Wage and price pressures are moving in the right direction gradually. We think of a recession as being defined as to quarters of negative gdp growth. The actual definition in the u. S. Has four factors. One of them is jobs. That is one of the main things you are looking at. Lets look at this adp jobs report. This is the gauge of private job. It came at 324,000. This adp number has a terrible correlation with the size of payroll changes. It is a good indicator of direction. It underscores that we will get a positive job number on friday jobs are expected to rise by 200,000. If there is not going to be a recession, is the fed going to be able to pause . That is what people are asking. Bank of america is saying have moved their forecast for when it cuts might start until the middle of 20. The rate hikes the middle of 2024. The rate hikes will still show up in the economy. The fed may have more to do. Bank of america is saying we will get this soft landing. Shery we are in a hiking path for the bank of england. We are expecting that decision. 25 or 50 basis points . Kathleen echoes of brazil but in the other direction. In june the bank of england surprised with a 50 basis point. People are saying they will hike again. This time they will sit back and do 25. The inflation rate has gone from 8. 7 to 7 . The core has only gone from 7. 1 to 6. 9 . There is sticky inflation, may be they will do the 50 basis point move. And this is something that what make it markets are expecting 75 basis points more of hikes from the bank of england in total. I am thinking, they could do three 25s, or 50 and then a 25. Inflation is too high, they have to do more, we are waiting to see the size of the move. Shery kathleen hays, we have live coverage coming up of the big inc. Of england decision followed by governor baileys news conference. Lets take a look at how all of this is feeding into the thursday start of trading in asia. Aussie futures are charting off on the back foot. Downside indicating early losses. We saw u. S. Bond yields hitting 2023 highs. Stocks tanking. The spookiness from the flooding of Government Debt and strong labor data, a mixed bag of factors going into the asia open. The aussie dollar seeing strength at 65. 40. The dollar seeing a four high. Kiwi stocks are off by. 6 . When it comes to broadly, we are expecting another difficult day for asian stocks after we saw the Asian Pacific clocking its worst day since march. Losses of over 2 due to the selloff in highflying tech stocks with the move in bond yields. Still ahead, constructs tell us why qualcomm remains wellpositioned despite revenue forecasts. That is coming up, this is bloomberg. I need it cool at night. You trying to ice me out of the bed . Baby, only on game nights. You know you are retired right . Am i . Ya save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number®. Affixed rating downgrade came as a surprise. A bit of a head scratch. The likelihood of any impact small. This does not move the needle. The bigger impact will be politics and reputation. There is a governance problem. Markets will brush off. The u. S. Treasury market is the key. There is no viable alternative. In the long run, very little impact. Haidi some of our guest reacting to the downgrade of the u. S. Debt rating. Our next guest says recession rating is still high. The opportunities with theresa spath, founder at zuma wealth. From what the fed and a number of wall street banks, why argue more pessimistic . Terri i would not say we are pessimistic. What we are concerned about is this increasing complacency when it comes to what is going on in the economic backdrop of the u. S. We are hearing an increasing chorus of people saying that the risk of recession is low, the fed is going to thread the needle. We think there is way too many risks still out there that suggest that is not the highest probability outcome this stage of the game. Haidi International Developed equities is where you are seeing opportunities. Terri when we look at the u. S. , we talked touched more on that. Think there has been an increase of breadth in the stock market in the u. S. , not just the tech stocks leading the way, the are seeing a broader spread. We think that is positive. However we also have been pointing out that many investors have been missing the boat when it comes to International Developed stocks. You are missing what is going on in europe, where we are seeing strength. On a relative cases in terms of valuation, it has never been as cheap relative to the u. S. In 20 years. When we see that, that makes us sit up straight. It means you better have a lot of exposure to International Developed, because those are going to avert. Shery these are still markets where the Central Banks are continuing to hike rates. We are expecting the bank of england to hike. They are perhaps cheaper than the u. S. , but would you not find value in of secure corners, even in delving markets . Terri yeah, another area that we have been positive on is india, we are seeing strong infrastructure spending, great population growth, a smart population, democratic society. It will surpass china in terms of its size, it will surpass other countries in europe. We are constructive on india, that will be very interesting. We are pointing out on the International Side is that do not own just a few tech stocks, to borrow a quote from the barbie movie, that is so popular now. It can be fun until it is not. Make sure you have exposure to international development. Make sure you have exposure to emerging markets, select diffley. We are constructive on india. Shery do you go into the treasury space and we are expecting more debt . We are expecting the tweak in the boj policy. Terri if you are talking about u. S. Treasury bonds, have been positive on that. Lock in your 5 , do not think its will be higher than that. You saw a little today because of the news coming out, lowering the rating for the u. S. It pushes yields up. But most of those rate increases are in the rearview mirror. We do not think the fed needs to raise rates in july or in september. Their tools are looking at backward data for forwardlooking is also. They have done enough. You have seen the highest rates in the u. S. , and lock those in. Because we do not think they will go higher from here. Haidi you called what happened today a blip, is the fitch downgraded a blip in the longer implications it could have for marcus . Terri it was a great piece you put together before this segment that showed the various commentary. Most of it was dismissive. I do not think we are quite as dismissive. We questioned the timing, there was nothing in particular that seemed to drive the decision. The rationale was valid. We think there are concerns for the creditworthy credit worthiness of the u. S. , it is high. I do think what they pointed out, when we look at the fiscal stimulus that is lifting all ships, it is gone. You have an inverted yield curve, higher interest yields for corporations, there is a lot more risk in the global outlook. That is being reflected in their view on what is going on in the u. S. Haidi when you take a look at the longterm structural impact on potential inflation, and it comes to Energy Markets and agricultural and grains, is there more upside to inflation risk then what we are looking at in the shortterm . Terri that is in an interesting question. The market seems to say yes, there is a risk of inflation to the upside. That would go along with a thesis of both being stronger than expected Going Forward. Is that possible . Absolutely. However we are in the camp that growth will slow down. When you see Interest Rates going up globally as rapidly as they have, never before seen, there will be an impact. It is like slamming on the brakes in a car. There is going to be implications for that. We do think that will slow down the economy faster than the fed or bank of england belief. The risk to that point of view is that we are wrong, and growth will be every strong, and which case you will see inflation in commodities. That is not our base case scenario. Shery good to have you back, founder and cio at zuma wealth. You can get a roundup of these stories in todays edition of daybreak, terminal subscribers go today two daybgo. Terminal subscribers can find it by entering daybgo. This is bloomberg. The first time your sales reached 100k with godaddy was also the first time your profits left you speechless. At the counter or on the go, save 20 with the lowest transaction fees and keep more of what you make. Start saving today at godaddy. Com 76 of 23andme Health Customers surveyed reported taking healthier actions. And keep more of what you make. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Shery here are some of the top corporate stories. Carlyle group has posted a 26 drop in it secondquarter earnings. The ceo says the firm is in negotiation for an effort to minute cost and profit margins. It follows the report of the most then but three months. Record quarterly profit thanks to a surge in travel and collapse of is smaller rival. Indigos net income reached 300 374 million, double analyst forecast. Flew more than 23 billion passengers during the order, up 12 from last year. Indian billionaire is said to be buying a majority stake in saudi in sanghi industries. It will propel a donnie adanis potential. Back in the day, sneaker drops meant getting online to wait in line. Now with xfinity mobile. We get the Fastest Mobile Service and can get the freshest kicks asap. I got this. Save hundreds a year over tmobile, at t and verizon with the best price for two lines of unlimited. Nice job, little sis they grow up so fast. Im a fan. From xfinity. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Shery qualcomm falling and afterhours trading, reporting softer than expected third order revenue and fourthquarter guidance was week. Was weak. Lets bring in our next guest who says qualcomm is very well positioned in an industry that has lots of room to grow. With us now is david traier, ceo at new constructs. Give us your reaction to the latest numbers. David this is not much of a surprise. This is about Revenue Growth in this business. It is a hard margin, high return on invested capital business. The question is, what kind of growth can they sustain and what is a supercompetitive this next . A great company, not a great stock because the expectations baked into a current price are pretty high. Shery are you concerned about the broader industry and how that demand is not picking up, especially in china . David yeah, it is becoming a more mature and crowded market. March are that the penetration is high, there is not a lot of Additional Market share out there for free. Or competitive because you have more people competing for a diminishing amount of market. Growth is going to be harder to come by. What our modeling shows is that the key n