Podcast Summary
August Jobs Report: The August Jobs Report is projected to show a return of job growth between 150-200k and a decrease in unemployment to 4.2%, boosting the Fed's confidence in their monetary policy amid low inflation and unemployment.
The upcoming August Jobs Report is expected to show a return of job growth, potentially between 150 and 200,000 new jobs, with the unemployment rate possibly decreasing to 4.2%. These numbers would make the Federal Reserve feel more confident in their current monetary policy, as inflation and unemployment remain low. The PCE inflation data from the previous week also showed that inflation continued to edge lower, while spending was better than expected. These indicators contribute to the belief that the economy is experiencing a soft landing. However, it's important to note that historically low jobless claims, despite some recent fluctuations, don't seem to indicate any significant problems in the labor market.
Labor market discrepancies: The labor market data has been revised downward by 818,000 jobs, but the Fed remains optimistic about the labor market and is not concerned about a weak economy at this time.
The savings rate has dropped to 2.9%, the lowest since the mid-2000s, raising concerns about people's ability to maintain current spending levels without significant wage growth. The Federal Reserve is expected to cut interest rates by 25 basis points in September, but larger cuts could be on the table if economic data deteriorates. The Bureau of Labor Statistics reported a revision of 818,000 fewer jobs than initially reported in the year leading up to March 2023. Factors contributing to the discrepancy include increased immigration, lower response rates from companies, and potential errors in data reporting. Despite these revisions, the Fed remains optimistic about the labor market and is not overly concerned about a weak job economy at this time.
AI servers: Strong earnings from AI servers are driving growth in the IT hardware sector, with Dell outperforming and HPE expected to benefit despite smaller exposure, thanks to partnerships and expansion efforts.
The demand for AI servers is driving strong earnings results in the IT hardware sector, with companies like Dell outperforming due to high sales in this area. HPE, a leading provider of server, storage, networking, and consulting services, is also expected to see positive results from AI servers, despite having smaller exposure to this market compared to Dell and Super Micro. HPE's partnership with NVIDIA to build a private cloud business is also seen as a good sign for both companies, as they aim to expand their reach in the enterprise market. However, HPE's earnings this week are not just about AI servers, as the company remains a major player in the broader IT spending market, which is expected to recover from a recent malaise. While there are signs of growth in the server and storage businesses, consumer demand for PCs may remain sluggish, with potential catalysts such as AI PCs on the horizon.
New UK Labour government's financial challenges: The new UK Labour government acknowledges financial challenges and the need for tough decisions on tax and spending, but this was already expected by many
The new UK Labour government, led by Prime Minister Keir Starmer, has been setting a cautious tone in its early days, acknowledging the financial challenges they inherited and the difficult decisions that lie ahead. Starmer's speech warning of painful decisions and a potentially grim economic outlook was seen as a conventional move in the early stages of a new government. However, Philip Collins, former Chief Speechwriter to Tony Blair, believes that the situation may indeed be as dire as Starmer suggests, and that most people were already expecting tough decisions on tax and spending. The context has changed with the riots and the new government's early actions, but the need for difficult financial decisions was always a given. The AI event by Bloomberg on October 8th could provide valuable insights for businesses facing similar challenges in implementing AI solutions while managing their finances.
Labour Party's Economic Vision: The Labour Party, led by Keir Starmer, must convince the public and media that their vision will make the country better despite economic challenges, as they prepare for significant decisions in the upcoming budget.
The political context has shifted, and the Labour Party, led by Keir Starmer, faces the challenge of convincing the public and media that their vision will make the country better, despite the economic reality of things getting worse in the short term. The second part of the Labour Party's slogan, "before they get better," holds significant weight and rests on the party's ability to change things around. The upcoming budget will be a significant moment for the Labour government, as Chancellor Rachel Reeves lays out her tax and spend plans and navigates the difficult balancing act of keeping the public finances sound while not choking off economic growth. The warnings of tough decisions ahead from the Prime Minister may set a tone for a challenging period as the government tackles these issues.
Labour government challenges: New Labour govt led by Keir Starmer faces challenges implementing policies, resistance from own MPs, budget first chance to show policy direction, unknowns on immigration NHS, pressure for increased public spending, Tory leadership race to watch
The new Labour government, led by Keir Starmer, is facing significant challenges as they implement their policies and navigate internal party pressures. While Starmer was elected with a large parliamentary majority, he is already encountering resistance from his own MPs on unpopular decisions such as the removal of winter fuel payments for pensioners. The budget will be the first opportunity for the public to see the government's policy direction, but there are also unknowns regarding key issues like immigration and the NHS. Additionally, Starmer will need to address pressure from Labour MPs and Cabinet ministers for increased public spending, particularly on areas like justice, health, education, and welfare. The leadership race for the Conservative Party will also be a point of interest in opposition politics.
UK Tory leadership race, tech industry: The UK Tory party leadership race is uncertain with Kenny Badernock leading but Robert Gemmick gaining ground. In tech, HBM chip makers face profitability issues due to high demand for memory chips, especially for AI, and production challenges for NVIDIA's new GPU chip.
The race for the UK Tory party leadership is wide open, with Kenny Badernock currently leading but Robert Gemmick making gains in recent weeks. The upcoming school term and Tory party conference will be crucial in determining if Badernock can maintain her momentum, while James Cleverley and Tom Tugenha aim to make a splash and gain attention. In the tech industry, the demand for high bandwidth memory chips, particularly in the context of artificial intelligence, is experiencing significant growth. However, HBM chip makers are struggling to keep up with this demand, which has led to profitability issues. NVIDIA's production snags with its new Blackwell GPU chip could further impact HBM chip makers, as they are already dealing with supply constraints from other major components. Overall, the demand for memory is expected to remain robust this year and likely into 2025.
High bandwidth memory, Advanced packaging: High bandwidth memory chips will be a major focus at Semicon Taiwan 2024, with Samsung and SK Hynix leading the way. Collaboration between Samsung and TSMC, and advanced packaging technology like CoAS, are crucial for bringing these chips to market.
High bandwidth memory chips will be a major focus at Semicon Taiwan 2024, with both Samsung and SK Hynix prominently featuring their executives in the keynote speeches. This shift is due to the increasing importance of high bandwidth memory chips in the tech industry, particularly for companies like Nvidia. The collaboration between Samsung and TSMC, who were previously rivals, is necessary for Samsung to enter the HBM market and package the chips together. Advanced packaging technology, such as CoAS chip on way for unsubstrate, will also be a significant topic at the event as it's essential to bring all these different chips together. Governments, including those in Taiwan and South Korea, continue to play a significant role in supporting the domestic chip industry with substantial investments and incentives. However, it's important to note that even with the Chips Act and the construction of new fabs in the US, the supply chain issue is not completely resolved as these chips still need to be shipped back to Asia for the advanced packaging process.
TSMC Investment in Advanced Packaging: TSMC, controlling 60% of semiconductor market, invests heavily in advanced packaging to cater to tech giants like NVIDIA, Broadcom, and AMD, impacting trade and causing a shift towards Taiwan
TSMC, the leading semiconductor foundry, controls nearly 60% of the market and is investing heavily in advanced packaging to meet the demands of tech giants like NVIDIA, Broadcom, and AMD. The Semicon Taiwan 2024 conference, while not typically a venue for major announcements, has generated excitement due to potential appearances by industry heavyweights like NVIDIA's Jensen Huang. The conference's impact on trade, particularly regarding US export restrictions on advanced semiconductors to China, has led to a shift in business towards Taiwan. Asian companies are pivoting to adapt to these changes. The conference, while focusing on future technology, will likely provide insights into how these industry developments unfold.
Sports negotiations and deal-making: The Deal' podcast explores the lesser-known side of sports through negotiations and deal-making discussions with sports stars and industry experts
Beyond the public glare of sports, there's a fascinating world of negotiations and deal-making. This is what the podcast "The Deal" explores every week. Hosted by Alex Rodriguez, a former baseball player turned business executive, and Jason Kelly, chief correspondent at Bloomberg Originals, the show invites listeners to join them every Thursday. They discuss topics with sports stars like Serena Williams and Derek Jeter, as well as the masterminds behind renowned brands such as the Harlem Globetrotters and Nasdaq. Tune in to "The Deal" wherever you get your podcasts for an exciting peek into this lesser-known side of sports. And don't forget, starting September 3rd, Bloomberg Radio will be moving to 92 9 FM in Boston. Stay tuned for the latest market news and updates every Monday morning at 5 a.m. Wall Street time.