Haidi a very good morning and welcome to daybreak australia. I am haidi stroudwatts in sydney. We are counting down to asias major market opens. Vonnie good evening from bloombergs World Headquarters in new york, i am vonnie quinn. The top stories haidi thishour period President Biden says chinas economic downturn may reduce the risk of ai one as indias g20 submits its status as a rising power that can blunt beijings influence. Vonnie plus, alibabas former chief leaving the company just months after taking charge of its cloud division. Haidi we do have breaking news when it comes to this highly anticipated arm initial Public Offering, arm reportedly pricing its ipo width and a tradition of the top or above of the 150 dollars a share range, according to reuters. There are also discussing raising the initial Public Offering range. This is the chip designer owned by softbank group. It is closer to securing enough investor support to attain the valuation of 54 point 5 billion that it was seeking. That would be at the top of its indicated range. It is considering asking investors to value it even higher, according to people familiar with the matter. Following Strong Demand from investors, arm will be able to price the initial Public Offering at the top or above that 47 51 pershare range. It would be the biggest stock market debut in two years. We have been seeing a lot of speculation when it comes to whether the valuation will fall. We are now hearing there is a possibility of raising the price range. Theyre also considering potentially keeping the range as is and pricing above it on wednesday which would also lead to evaluation that is higher than 54. 5 billion dollars. This story is reporting that arm will not offer more shares because softbank does not want to retain that 90. 6 stake in arm following the initial Public Offering. Vonnie that is one of the events we are very much looking forward to this week. A massive event given the Mergers Acquisitions space and how vulnerable it has been. And we have been waiting for the arm initial Public Offering for many years. We will get the pricing on wednesday. What else do we get wednesday . Cpi data. That will turn the tone for the market until the fomc meeting and decision the following wednesday. Will see if we get hotter inflation. How much hotter will it be . Enough to change traders minds . . They are still pricing in one more rate hike this year. It was a down week last week for major indices, the s p and the nasdaq. It looks for the moment as features are pointing to a higher open but argosy with the caveat that it is extremely early in the session. It is the first full trading week of september. Yesterday was a holiday shortened week. We had comments from secretary janet yellen predicting that the u. S. Would be able to avoid recession and she feels very confident still in that prediction. That should give a bit of oomph to marketeers who think that is perhaps the outcome we are headed for. At the same time, it is costing more to hedge against a rout these days. There is also the possibility of the strike from United Auto Workers thursday, that could take a huge amount of gdp, u. S. Gdp could be reduced by 5. 6 billion, according to anderson, if that was indeed to happen. We will be watching the prices closely as well. Annabelle pretty big week coming up. You just said u. S. Inflation on wednesday, that is looking to be the highlight. Really telling us where the fed is going next. But the bets are coming in, particularly in the bond space. Will see yields moving higher. We have seen treasuries moving deliberately higher than yields. Fairly needed. The equities picture is pretty sanguine. As you are saying, we are coming off a weekly loss. We have seen two weeks of gains. Last week, to the downside of all. The wait and see ahead of the u. S. Inflation. , coming up on wednesday. Some more interesting moves we are seeing in the currency space, take a look at what is happening in the japanese yen. This morning we are seeing it strengthening pretty substantially, around 0. 7 against the greenback. You can see those moves coming through. What is driving that was two different factors. First was governor what are given comments to local media essentially saying that by the end of the year, he will have enough data to know whether it is time to exit negative rates. That is one factor. The other comes down to the g20. It is that picture of rising tensions between the u. S. And china. Haidi we will stay on geopolitics. Indias g20 summit has wrapped up with an agreement on a joint communique that included a consensus on russias war in ukraine. For more, lets bring in our coanchor haslinda amin, who has been covering the summit in new delhi. You surprised by their decision to stay away, despite the language that was walked back when it comes to the war in ukraine . This is being seen as a win for india. Haslinda i win for india, for modi, and a win for the u. S. And for the g20. Remember that coming into this meeting, there was a highrisk we would not produce a communique. That failure would be a stark contrast to the success of the recently concluded brics meeting. So it is awaiting for just about everybody involved in the g20. For modi, it was a chance to step up and a chance for him to perhaps cement his position as leader of the global south, and xi jinpings absence allowed him to do just that. We talked about how that was a communique . It was not just the success of a communique, it was produced on the first day of the twoday summit. Pretty unusual and a huge piece for india. It came about because the leaders agreed on a toned down description of the war in ukraine, the likes of the u. S. And its allies were pushing for a harder start. A to use the words russias aggression against ukraine, but it was eventually toned down. It was a general expression of the war in ukraine that allowed everybody to come to the table and give their agreement. There were other successes. For instance, the agreement to raise the capitalintensive loans for emerging economies. That would be done via the world bank. Also one thing to note, the African Union will be part of the g20. It rings you back to how it was for the brics nations as well which added 11 members to that grouping. Both are vying for the top spot. Vonnie we are also hearing about the u. S. Wanted to put in place a system that might Counter Chinas belt and Road Initiative in the middle east, tell us a little more about this . Haslinda thats right, in fact, a deal was signed between the u. S. , the middle east, israel, as well as members of the middle east. It is important to note that crown prince mohammad bin salman was part of that grouping as well. The whole idea is to build rail as well as maritime projects throughout the region to Counter Chinas influence. It is also interesting that not too long ago, we had biting himself call crown prince the pariah, but here at the g20, we had a threeway handshake between modi, the crown prince, as well as biotin. It also shows a u. S. That is willing to come to the table to negotiate, to compromise, to counter the influence of china. Haidi President Biden missed the second day of the g20 and made his way to vietnam. Very interesting comments from him on china. Haslinda you are right, remember, these comments, on the back of what he said not too long ago as well, that china was a ticking bomb. In conversations, in fact, at the press briefing in vietnam, he said chinas economic might has reduced, it is facing a lot of economic headwinds and that reduces possibly the chance of china taking on or attacking taiwan. It is an important statement from the president himself. What is also interesting is that while in vietnam, vietnam raised its partnership with the u. S. To the highest level that is accorded to only close partners, like china as well as russia. One point to note is that vietnam possibly is willing to take some pushback from china to raise its relationship with the u. S. , because of the anxieties to do with beijing. Vonnie haslinda amin, Bloomberg Markets asia coanchor who has been covering the summit in new delhi, thank you. U. S. Secretary of state Anthony Blinken has called elon musk starlink satellites service a vital tool for ukraine which he hopes will remain fully available. Bloomberg editor tony czuczka joins us. What is the backstory to blinken s comments on the starlink . Tony it is the latest installment of this complicated relationship between elon musk and the u. S. Government. He was quoted in excerpts from a biography last week, as saying that he had shut down starlink, this vital tool, when ukraine wanted to attack russian warships anchored in crimea, which, of course, is the region of ukraine that russia annexed forcibly. It set up a controversy which is really the latest in elon musk being injected into geopolitics. This is a private company. At the same time, more recently, spacex has become a pentagon contractor. Musk as a private citizen, his company has said that starlink is intended as a civilian tool. But of course, they know it is also being used by the ukrainians on the battlefield. So this was a backup to what secretary blinken was asked about in the interview. Basically he said, i will not comment on the military specifics of this particular episode, whether it is true or not. And over musk confirmed it, what we do expect is that starlink will remain available and it should remain available to ukrainians. So there you have it. It is a big ball of wool, probably wellknown, but it takes all of these twists and turns, as we know elon musk is not shy about broadcasting his opinions. Haidi at the same time, the u. S. Launched a payload of military Early Warning satellites designed to Counter China and russia in space. Of course, we also had President Bidens, about how potentially the chinese economic downturn hits into its ability militarily with regard to taiwan. How does that fit together . Tony it fits together in the sense that there has been a space race, or follow like a star wars situation brewing for quite a while. The question here is can china and russia threatened critical u. S. Satellites that are up there in space . This mission that took off today from Cape Canaveral is the first of its kind by the u. S. They have been quite secretive, the pentagon, about it and they have not released much publicly. But what went up today is a payload of satellites that is being described by some of the officials as kind of a watchdog in space once it is up there. And it is part of a system that is supposed to be fully operational, which we assume has to be a ring of satellites like this by 2026. And it is all intended to double down on this idea that the u. S. Will step in and robustly defend its National Security while not seeking to isolate china and decouple from china economically and also keeping military channels of communication open. But this is a very clear move and it signals that the u. S. Is aware of this, as the u. S. Has said in intelligence assessments very recently. And that it is trying to do something against it maybe against it is not the right thing, but to sort of have more eyes out there in space rather than in these medium orbits on the ground. Haidi tony czuczka, r bloomberg editor in washington, d. C. Still ahead, more analysis on the outcomes of the g20 summit and that communicate with a professor of asiau. S. Relations from the Harvard Kennedy school. But before that we will talk Market Strategy with banrion capital management, as investors prepare for a busy week of ecodata. This is bloomberg. Haidi lets look at the key events we will be watching this week. On the inflation front, u. S. Job numbers for august are due wednesday. Core inflation is expected to remain steady. Janet yellen just told us every measure of price pressure is on the road down. We will also get information and data from india on tuesday. Chinas data dump could shows its economic problems are spilling over into more sectors. Bloomberg economics thinks the pboc will lower its mof rate by 10 basis points. In europe, you see the officials will debate a quarterpoint Interest Rate increase on thursday. The decision could go either way, although the commentary is expected to remain hawkish even if they opt for a pause in the hiking cycle. Some other ecodata to note, jobs numbers out of australia and south and south korea, and initial jobless claims and retail sales too. That is your week ahead. Vonnie a lot to contend with this week. Well, our next guest says afraid rate cut of any kind will only happen if theres an economic downturn and inflation suddenly drops under 2 . Joining us now is shana sissel, ceo and president of banrion capital management. What do you anticipate this week out of the cpi and what it might mean for the fed rate path . Shana well, we saw a slight uptick of cpi in august but i would anticipate it to be flat in september. The yearoveryear number is not as extreme as it was over the summer, and so i think you will see it be flat. I dont expect to see a major downturn. As a result, the fed will likely pause in september as they wait to see what happens with the data through the month of september in the hopes that they will see inflation come down as we have seen some weakness in the job market. Vonnie we certainly heard janet yellen on brought back from the g20 that she is confident in the production for new recession a soft landing, essentially not that much damage to the job market. If that plays out for the rest of this year, does that pose any threat to equities, or do you see any situation where we might have a rout in equities . Shana i think she is being too optimistic. You cant increase Interest Rates and have an official come down still to the levels it has, and not see that impact on Economic Growth. We are starting to see it in some of the outlook as we listen to earnings calls. But Technology Earnings have been stronger. We have actually seen analysts increase their earning estimates. I just dont think that necessarily the macroenvironment will impact stocks that much, but i think if you just look at valuations in general, they are pretty stretched at this point. Even with the slight increase in earnings estimates, we are still looking at 12 Earnings Growth in the next year on the s p. If you add 1 to 2 inflation and 18. 5 , that gives you an s p 500 of about 4600. Not a lot of upside from here. I think is more likely we see a downside from here. So i think shes being overly optimistic. We are seeing cracks in the employment markets, stress on the consumer, and i think we will see a slowdown in the economy. When we see a massive recession . I dont think so. But the longer it takes to see any slow down, i am becoming more and more concerned, because that emboldens the fed to continue to increase Interest Rates, which is more likely to push us into a much deeper recession. Vonnie we are up 16 on the s p every year, despite the drop in september. So is now the time that you would say that the nvidia effect has happened, we are beyond that and we need to maybe make some changes to our portfolio . Shana the nvidia effect is real. It is actually buoying up a lot of Technology Stocks that dont justify being up there they are. Rising tide lifts all ships. We are thrilled to see some change in leadership, we are starting to see Energy Stocks start to outperform. Since july, energy has outperformed all other sectors of the s p 500 by 900 basis points. It is also the only factor in the smallcap indices that has seen a new cycle high. We are starting to see change in leadership. That, i think is what youre talking about, the nvidia effect, meaning the end of one company impacting an entire sector and what the market thinks it is going to do. Vonnie thank you for your time today, a pleasure to speak with you as always, shana sissel is president and ceo of banrion capital management. You can get a roundup of the stories you need to know to get your day going on todays edition of daybreak. Terminal subscribers can go to dayb. You can also customize the settings as well for the news on the industries and assets that matter to you. This is bloomberg. Haidi chinese tech giant alibaba facing another layer of uncertainty in its complicated breakup. The former chief daniel zhang, is leaving the company. Lets bring in and appel in singapore. Months ago, he had agreed to lead the cloud division. Annabelle thats right. It has been quite a sudden departure for the company, announced via a statement from alibaba on sunday. To put it in more context, daniel zhang was the former chief, he was ceo and chairman. Going back a couple of months, it was announced he would eventually stepped down from that role since september so, we knew that was taking place, but he had agreed to leave the desk to lead the companys cloud division. So leaving now does introduce another layer of uncertainty to alibaba just as it is navigating that very complicated breakup. It was announced via internal memo, seen by Bloomberg News on sunday. Daniel zhang had assumed the post after ceding his dual roles of executive officer and chairman. He led alibaba during a period where it ventured into new areas like physical retail, and it ended up becoming one of the companys Fastest Growing businesses. The former ceo is going into something else, still linked to alibaba in some sense because he will be leading or steering a 1 billion tech investment fund. That will be on alibabas behalf. Vonnie it appears jack mas lieutenants are taking the helm completely annabelle . That is absolutely right. It is eddie wu who will be taking on the role, and joseph tsai, both close confidence of jack ma. They formerly will take up their positions as ceo for eddie wu and joseph tsai as chairman, that was announced yesterday. So it is quite