5 Things You Need to Know to Start Your Day

Nvidia’s rally lifts risk sentiment, Republican presidential candidates spar in their first debate and China’s $9 trillion debt problem. — K [View in browser]( [Bloomberg]( Nvidia’s rally lifts risk sentiment, Republican presidential candidates spar in their first debate and China’s $9 trillion debt problem. — [Kristine Aquino]( Nvidia Rally [Nvidia delivered a third-straight sales forecast that surpassed Wall Street estimates](, boosting its shares by 8% in premarket trading and reviving risk appetite across the globe. The chipmaker at the heart of this year’s artificial intelligence frenzy said sales will be about $16 billion in the three months ending in October, exceeding analyst estimates for $12.5 billion. [Nvidia’s gains have propelled CEO Jensen Huang’s wealth by  as much as $4.2 billion](, boosting his total fortune to $46.1 billion, according to the Bloomberg Billionaires Index. If that gain can be sustained, Huang is poised to end up among the world’s 25 wealthiest individuals, the index shows. Republican Rumble [Republican candidates waged attacks on President Joe Biden’s policies]( and sought to gain ground on the absent GOP frontrunner Donald Trump, in their first debate of the 2024 race. The entire field agreed that Bidenomics was a mistake, with each candidate vowing to dismantle it. When candidates were asked if they would support Trump as the nominee if he were convicted of a felony, most raised their hands, but former governors Chris Christie of New Jersey and Asa Hutchinson of Arkansas demurred. “Whether or not you believe the criminal charges are right or wrong, the conduct is beneath the office of the president of the United States,” Christie said. $9 Trillion Problem [China’s $9 trillion pile of off-balance-sheet local government debt is sharpening the focus on local government financing vehicles](, companies set up across the nation to borrow on behalf of provinces and cities but not explicitly in their name. Bloomberg News interviews with employees at several companies showed they haven’t been able to generate enough income to pay interest on loans, banks have been unwilling to lend and investors are shunning their bonds. That path forward is a treacherous one for President Xi Jinping, given that any default on such vehicles’ bonds risks destabilizing China’s $60 trillion financial system. Risk On Nasdaq 100 futures jumped more than 1% as of 6:20 a.m. in New York, while S&P 500 contracts rose 0.5%. The Bloomberg Dollar Spot Index rallied from its lows of the day, pressuring all Group-of-10 currencies. Treasury yields were little changed, diverging from European and UK rates that remain lower. Gold advanced for a fourth day, set for its longest winning streak since mid-July. Brent crude climbed for the first time this week, while Bitcoin fell. Coming Up… The annual Kansas City Fed Monetary Policy Symposium kicks off in Jackson Hole, Wyoming. At 8:30 a.m. we’ll get jobless claims and durable goods data. At 10 a.m., Philadelphia Fed President Patrick Harker speaks with CNBC from Jackson Hole, while Boston Fed President Susan Collins will speak on Yahoo! Finance at 11:15 a.m. Earnings include Intuit, RBC, TD Bank and  Dollar Tree. What We’ve Been Reading This is what’s caught our eye over the past 24 hours: - Wagner chief Prigozhin, who defied Vladimir Putin, is [presumed dead]( - Saudi Arabia, Iran among[nations invited to join BRICS]( - UK markets join a global rally as [traders reconsider BOE rate hikes]( - [Canada shootings surge 869%]( as pro-gun politics transformed its culture - [Boeing finds a new 737 Max defect](, threatening its delivery target - Ban on Japanese seafood has [Hong Kong sushi restaurants bracing for higher costs](  And finally, here's what Joe’s interested in this morning… Hello from beautiful Jackson Hole. I, along with my co-host Tracy Alloway, am here at the annual Kansas City Fed Monetary Policy Symposium. If you're around, please reach out and say hi. Of course, three years ago at this event, the Fed spelled out a new framework called Flexible Average Inflation Targeting, with the idea being that it would tolerate some indefinite period of above-target inflation, in order to allow for a rapid labor market recovery. Basically, it identified a tradeoff: tolerate higher inflation (bad) in exchange for a more rapid pace of growth and labor market healing than we saw in the 2010s (good). Of course, over the next few years after that framework was announced, everything ran WAY hotter than anyone was anticipating, with inflation far overshooting what anyone was contemplating in August 2020. Since then there's been a lot of handwringing about what policy choices caused this surge of inflation, and what might have been done differently in some ideal scenario. Maybe the Fed should have raised rates sooner. Maybe the Fed should have halted asset purchases sooner. Maybe Biden shouldn't have sent out those checks. Maybe there was too much money sent to state and local governments. Maybe the duration of the student loan pause was unjustified. Maybe the other investment bills (infrastructure, IRA, Chips) are adding too much demand to an already constrained economy. People can go on and on about these questions, and probably they will be debating them (at least in academic circles) for years. Actually, realistically, decades. But for all the talk about policy errors, it's also worth going back to that original tradeoff contemplated by the Fed. Above-target inflation was seen as a worthwhile price to pay for a rapid labor market recovery. And we did get that rapid labor market recovery in spades. The last few years has seen an incredibly tight labor market, with the unemployment rate near multi-decade lows. Other measures of the labor market are robust as well. Wage growth, particularly at the lower end of pay scales, has been robust. The spread between White and Black unemployment has compressed considerably. The prime age employment-to-population ratio is very high. And so it's worth remembering, that all of those things people bemoan -- the checks, the state and local aid, the Fed's patience in raising rates -- all likely contributed to the robust pace of economic activity. And beyond that, you can't just assume that we would've had this strong labor market with some other set of policies. Remember, last year around this time, lots of people thought a recession was basically assured. Instead, the economy has shown almost shocking resilience in the face of a rapid pace of rate hikes. Inflation has obviously cooled down since its peak in 2022. But there are concerns it could pick back up again, with persistent labor market tightness, and nominal wage growth that's above historical trends. So the question is still then about tradeoffs. How much of a price is the Fed willing to pay now, in terms of higher unemployment, in order to get inflation all the way back to 2% and keep it there? Is there some wiggle room on the inflation front? Can the Fed let it hover higher than 2%? Would it ever formally say that above-2% inflation is tolerable? These seem like the big questions in the months ahead, or maybe just in the days ahead. Follow Bloomberg's Joe Weisenthal on Twitter [ @TheStalwart](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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