1 00:00:02,200 --> 00:00:05,120 Speaker 1: This is Bloomberg Daybreak Weekend, our global look ahead at 2 00:00:05,160 --> 00:00:07,280 Speaker 1: the top stories in the coming week from our Daybreak 3 00:00:07,280 --> 00:00:10,520 Speaker 1: anchors all around the world. Straight Ahead on the program. 4 00:00:10,560 --> 00:00:13,160 Speaker 1: As earning season continues, we take a look at the 5 00:00:13,200 --> 00:00:16,920 Speaker 1: impact on markets plus big tech earnings in focus. I'm 6 00:00:17,000 --> 00:00:18,480 Speaker 1: Nathan Hager in Washington. 7 00:00:18,520 --> 00:00:21,200 Speaker 2: I'm Stephen Carlin London. We're looking ahead to the challenges 8 00:00:21,239 --> 00:00:24,480 Speaker 2: facing the Bank of England. That's next interest right decision. 9 00:00:24,680 --> 00:00:28,120 Speaker 3: I'm Deck Chrisner looking at a challenging decision on rates 10 00:00:28,160 --> 00:00:30,120 Speaker 3: for the Reserve Bank of Australia. 11 00:00:30,840 --> 00:00:35,240 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleventh, 12 00:00:35,240 --> 00:00:38,600 Speaker 4: three year on New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:39,080 --> 00:00:43,280 Speaker 4: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 14 00:00:43,760 --> 00:00:47,000 Speaker 4: Sirius XM one twenty one, and around the world. I'm 15 00:00:47,040 --> 00:00:50,240 Speaker 4: Bloomberg Radio dot Com and the Bloomberg Business App. 16 00:00:54,840 --> 00:00:57,680 Speaker 1: Good day to you. I'm Nathan Hager. We begin today's 17 00:00:57,680 --> 00:01:00,600 Speaker 1: program with a focus on the market. Or more than 18 00:01:00,680 --> 00:01:04,080 Speaker 1: halfway through third quarter earning season and with stock still 19 00:01:04,120 --> 00:01:06,920 Speaker 1: finding ways to set records, what's the outlook for the 20 00:01:06,959 --> 00:01:09,600 Speaker 1: week ahead and for the final two months of this year. 21 00:01:10,120 --> 00:01:13,440 Speaker 1: For that, we're joined by Amanda Agatti, chief investment officer 22 00:01:13,480 --> 00:01:17,000 Speaker 1: at PNC's asset management group. Amanda, it's great to have 23 00:01:17,080 --> 00:01:19,800 Speaker 1: you with us on this weekend show, and I know 24 00:01:19,840 --> 00:01:22,720 Speaker 1: you've been pretty positive on the earnings picture thus far. 25 00:01:22,840 --> 00:01:25,679 Speaker 1: How do things look to you now that we're at 26 00:01:25,720 --> 00:01:28,640 Speaker 1: the point that we sit at now, Well, it's. 27 00:01:28,480 --> 00:01:30,920 Speaker 5: Always great to be with you. Thanks so much for 28 00:01:30,959 --> 00:01:35,480 Speaker 5: having me. We're feeling really positive about this stage of 29 00:01:35,560 --> 00:01:38,880 Speaker 5: Q three earning season. It was actually a pretty positive 30 00:01:38,920 --> 00:01:44,400 Speaker 5: setup even before earning season started, very strong, sort of 31 00:01:44,440 --> 00:01:48,760 Speaker 5: consistently positive revisions over the course of Q three, So 32 00:01:48,800 --> 00:01:52,360 Speaker 5: we set a pretty high bar coming into earning season itself, 33 00:01:52,360 --> 00:01:56,320 Speaker 5: and believe it or not, at this stage of earnings reporting, 34 00:01:56,400 --> 00:02:00,240 Speaker 5: we are handily exceeding it. So by my math, we're 35 00:02:00,240 --> 00:02:04,000 Speaker 5: expecting about seven point two percent earnings growth for the 36 00:02:04,040 --> 00:02:07,360 Speaker 5: S and P five hundred before earning season started, and 37 00:02:07,400 --> 00:02:10,680 Speaker 5: we're tracking well in excess of nine percent, So i'll 38 00:02:10,680 --> 00:02:13,400 Speaker 5: give it an a grade so far. There's still some 39 00:02:14,320 --> 00:02:16,560 Speaker 5: distance to go yet, but that's a pretty strong result 40 00:02:16,560 --> 00:02:19,079 Speaker 5: and I think it's been enough to support the market 41 00:02:19,160 --> 00:02:21,040 Speaker 5: certainly at these valuation levels. 42 00:02:20,880 --> 00:02:23,240 Speaker 1: So now that we're through you know, some of the 43 00:02:23,280 --> 00:02:27,760 Speaker 1: biggest big cap names to report so far this season, 44 00:02:27,880 --> 00:02:30,280 Speaker 1: what are you looking at in terms of whether we 45 00:02:30,320 --> 00:02:32,480 Speaker 1: could see this momentum continue to build. 46 00:02:32,800 --> 00:02:37,080 Speaker 5: Yeah, the most critical thing is what happens with revisions 47 00:02:37,120 --> 00:02:40,120 Speaker 5: for Q four and even for twenty twenty six. And 48 00:02:40,160 --> 00:02:42,600 Speaker 5: so because the results that have come in so far 49 00:02:43,080 --> 00:02:46,880 Speaker 5: have handily exceeded that high bar, it's actually pushing revisions 50 00:02:47,000 --> 00:02:49,640 Speaker 5: up for the balance of the year and setting the 51 00:02:49,680 --> 00:02:53,920 Speaker 5: stage for you know, well in excess of thirteen percent, 52 00:02:54,000 --> 00:02:57,600 Speaker 5: maybe fourteen percent, not to get too superstitious with you, 53 00:02:58,280 --> 00:03:01,760 Speaker 5: in terms of earnings growth for next So it's really 54 00:03:01,840 --> 00:03:04,560 Speaker 5: all about the trend. It's not so much here and 55 00:03:04,639 --> 00:03:07,160 Speaker 5: in the moment, it's sort of how is this setting 56 00:03:07,240 --> 00:03:09,800 Speaker 5: the stage for what's to come? And I think the 57 00:03:09,840 --> 00:03:13,000 Speaker 5: market is very focused on, you know, what happens over 58 00:03:13,040 --> 00:03:16,040 Speaker 5: the next four quarters and certainly what happens with with 59 00:03:16,160 --> 00:03:18,400 Speaker 5: the FED. So we're getting a good result here, but 60 00:03:18,520 --> 00:03:20,839 Speaker 5: the trend line is really what matters. Well. 61 00:03:20,840 --> 00:03:25,360 Speaker 1: With the stock levels as high as they are right now, Amanda, 62 00:03:25,480 --> 00:03:28,000 Speaker 1: could we be due for a pullback? 63 00:03:28,600 --> 00:03:28,760 Speaker 6: Oh? 64 00:03:28,800 --> 00:03:33,120 Speaker 5: Well, I mean a pullback is always a possibility. It's 65 00:03:33,160 --> 00:03:38,200 Speaker 5: sort of normal natural functioning, market health and behavior. We 66 00:03:38,320 --> 00:03:42,000 Speaker 5: haven't had much of a pullback more recently since that 67 00:03:42,120 --> 00:03:45,160 Speaker 5: V shaped bounce we had in the springtime. So I 68 00:03:45,240 --> 00:03:48,040 Speaker 5: always say yes to that question. But that doesn't mean 69 00:03:48,080 --> 00:03:51,760 Speaker 5: that I feel particularly concerned or you know, bearish about 70 00:03:51,760 --> 00:03:56,640 Speaker 5: the backdrop. Right now, valuations are pushing it. I would 71 00:03:56,680 --> 00:04:00,240 Speaker 5: describe them as sort of pricing for near perfection when 72 00:04:00,280 --> 00:04:03,480 Speaker 5: the backdrop is clearly not quite perfect. There's still a 73 00:04:03,480 --> 00:04:06,160 Speaker 5: lot of purple haze of policy uncertainty there. So with 74 00:04:06,280 --> 00:04:09,080 Speaker 5: valuations at these levels, it just doesn't give the market 75 00:04:09,120 --> 00:04:13,200 Speaker 5: a ton of headroom when some noise comes into the backdrop. 76 00:04:13,280 --> 00:04:15,600 Speaker 5: So do I think things get a little choppy from here? 77 00:04:15,680 --> 00:04:18,480 Speaker 5: I think that's possible. But we've been in a period 78 00:04:18,520 --> 00:04:22,680 Speaker 5: of pretty low volatility, and so seeing a little bit 79 00:04:22,680 --> 00:04:27,000 Speaker 5: more volatility actually makes me feel better about the sustainability 80 00:04:27,160 --> 00:04:28,239 Speaker 5: of the rally going forward. 81 00:04:28,360 --> 00:04:31,680 Speaker 1: Yeah, we've talked before about the purple haze of policy uncertainty. 82 00:04:31,720 --> 00:04:35,320 Speaker 1: We're just coming out of a very important meeting between 83 00:04:35,440 --> 00:04:38,680 Speaker 1: Presidents Trump and Shi Jinping of China where they got 84 00:04:38,680 --> 00:04:42,760 Speaker 1: that one year trade truce. Does that lift some of 85 00:04:42,800 --> 00:04:46,400 Speaker 1: the fog for you or do you see more potential 86 00:04:46,400 --> 00:04:47,400 Speaker 1: for uncertainty to come. 87 00:04:47,920 --> 00:04:51,000 Speaker 5: Yeah, it's I mean, I think it helps on a 88 00:04:51,040 --> 00:04:54,679 Speaker 5: relative basis, We definitely as it relates to trade and tariffs. 89 00:04:54,720 --> 00:04:58,360 Speaker 5: In total, we definitely feel like the purple haze has 90 00:04:58,440 --> 00:05:01,560 Speaker 5: lifted a bit. It's more of a narrow band in 91 00:05:01,640 --> 00:05:04,200 Speaker 5: terms of best and worst case kind of scenarios, and 92 00:05:04,240 --> 00:05:07,160 Speaker 5: so that I think has really helped the market kind 93 00:05:07,200 --> 00:05:09,960 Speaker 5: of wrestle with that, try and assign some level of 94 00:05:09,960 --> 00:05:12,960 Speaker 5: a pe multiple and kind of move past some of 95 00:05:13,000 --> 00:05:16,000 Speaker 5: the worst case scenarios that we were worrying about and 96 00:05:16,080 --> 00:05:18,880 Speaker 5: anticipating in the first half of the year. But this 97 00:05:19,360 --> 00:05:22,600 Speaker 5: purple haze is not just about tariffs and trade, right. 98 00:05:22,640 --> 00:05:26,240 Speaker 5: We have a government shutdown looming pretty large here, right, 99 00:05:26,320 --> 00:05:30,880 Speaker 5: and so key questions around when, how if the shutdown 100 00:05:30,960 --> 00:05:33,320 Speaker 5: is going to come to an end that is creating 101 00:05:33,400 --> 00:05:36,160 Speaker 5: more I think near term purple haze for me, and 102 00:05:36,839 --> 00:05:38,800 Speaker 5: to some degree, I think it will start to weigh 103 00:05:38,839 --> 00:05:41,560 Speaker 5: on the market. It hasn't yet because the market typically 104 00:05:41,760 --> 00:05:44,800 Speaker 5: kind of ignores these things, But this one's going on 105 00:05:44,839 --> 00:05:48,640 Speaker 5: a bit longer than what I think anybody engaged in 106 00:05:48,720 --> 00:05:51,320 Speaker 5: this would like to see. So that's a little bit 107 00:05:51,320 --> 00:05:53,800 Speaker 5: of near term purple haze that we're watching carefully. And then, 108 00:05:53,800 --> 00:05:57,800 Speaker 5: of course, with the FED meeting earlier this week, palthrowing 109 00:05:57,839 --> 00:06:01,559 Speaker 5: some cold water on what happens in decent that's adding 110 00:06:01,600 --> 00:06:04,320 Speaker 5: a little purple haze monetary policy uncertainty too. 111 00:06:04,520 --> 00:06:08,640 Speaker 1: That's Amanda A. Gotti, chief investment Officer at PNC Asset Management. 112 00:06:08,800 --> 00:06:10,680 Speaker 1: Now let's take a closer look at the big tech 113 00:06:10,720 --> 00:06:12,880 Speaker 1: earnings we saw this past week and what they could 114 00:06:12,960 --> 00:06:16,240 Speaker 1: tell us about markets going forward. For that, we're joined 115 00:06:16,240 --> 00:06:20,160 Speaker 1: by Ivan Findeseth, Senior Partner and Chief investment Officer at 116 00:06:20,200 --> 00:06:22,840 Speaker 1: Tigris Capital Partners. It's great to have you with us 117 00:06:23,120 --> 00:06:26,920 Speaker 1: on the weekend program. Ivan. After we've heard from five 118 00:06:27,120 --> 00:06:29,840 Speaker 1: of the mag seven names, I think we could probably 119 00:06:29,880 --> 00:06:33,240 Speaker 1: say was a mixed reaction. Was it a mixed result 120 00:06:33,320 --> 00:06:34,120 Speaker 1: for you? 121 00:06:34,160 --> 00:06:38,520 Speaker 7: No, I think everything is going well. I think that 122 00:06:38,600 --> 00:06:42,560 Speaker 7: the pullback in meta platforms is definitely a buying opportunity. 123 00:06:43,120 --> 00:06:46,760 Speaker 7: They continue to invest in advancing AI and it will 124 00:06:46,760 --> 00:06:48,799 Speaker 7: continue to pay off as it has in the past. 125 00:06:49,440 --> 00:06:51,680 Speaker 7: So I still say we are in the first inning 126 00:06:52,279 --> 00:06:57,840 Speaker 7: of a huge AI world series. This bullish investment trend 127 00:06:58,040 --> 00:07:01,200 Speaker 7: has a lot more to go. And I'm going to 128 00:07:01,240 --> 00:07:04,320 Speaker 7: say every company is going to invest in AI, and 129 00:07:04,400 --> 00:07:07,599 Speaker 7: every company is going to be an AI company. It's 130 00:07:07,640 --> 00:07:10,640 Speaker 7: going to drive their business, whether it's supply chain management, 131 00:07:11,240 --> 00:07:15,760 Speaker 7: whether it's price optimization, whether it's finding new leads and 132 00:07:16,200 --> 00:07:20,040 Speaker 7: generating marketing initiatives. AI is going to be an engine 133 00:07:20,080 --> 00:07:22,920 Speaker 7: behind multiple aspects of every company. 134 00:07:23,320 --> 00:07:25,720 Speaker 1: Just to play a little bit of a devil's advocate 135 00:07:25,760 --> 00:07:28,760 Speaker 1: on that, I wonder though, whether after we've seen some 136 00:07:28,880 --> 00:07:32,040 Speaker 1: of the market reaction to these results this past week, 137 00:07:32,120 --> 00:07:34,600 Speaker 1: whether we're going to see a sort of a split 138 00:07:34,880 --> 00:07:38,720 Speaker 1: as to how some of these biggest names see that 139 00:07:38,920 --> 00:07:40,440 Speaker 1: AI investment pay off. 140 00:07:40,800 --> 00:07:43,640 Speaker 7: There's always going to be bumps in the road. And remember, 141 00:07:43,680 --> 00:07:49,280 Speaker 7: these companies are investing for the next three five plus years, 142 00:07:49,320 --> 00:07:52,320 Speaker 7: and the AI engines that we have now are going 143 00:07:52,360 --> 00:07:54,800 Speaker 7: to pale in comparison to what we have in the future. 144 00:07:55,560 --> 00:07:58,680 Speaker 7: Will still in the early stages, So there's going to 145 00:07:58,720 --> 00:08:02,280 Speaker 7: be new technologies emerging that will over take maybe some 146 00:08:02,320 --> 00:08:05,200 Speaker 7: of the previous technologies, and companies will continue to learn 147 00:08:05,880 --> 00:08:09,080 Speaker 7: as the large language models will continue to learn and 148 00:08:09,160 --> 00:08:12,560 Speaker 7: create these data factories that create the data that they 149 00:08:12,600 --> 00:08:13,440 Speaker 7: will learn from. 150 00:08:14,120 --> 00:08:17,240 Speaker 1: Certainly, an arms race we've seen that in terms of 151 00:08:17,280 --> 00:08:20,240 Speaker 1: the reported spending tens of billions of dollars by just 152 00:08:20,280 --> 00:08:24,240 Speaker 1: about every company that's reported in this past week. Where 153 00:08:24,240 --> 00:08:27,400 Speaker 1: do you see things stacking up in terms of the race, 154 00:08:27,400 --> 00:08:29,120 Speaker 1: who's winning, who's placing, who's showing. 155 00:08:29,640 --> 00:08:34,000 Speaker 7: Certainly Amazon is winning, Google is winning, Microsoft is winning, 156 00:08:34,080 --> 00:08:37,840 Speaker 7: and Meta is winning. And then the companies that use 157 00:08:37,880 --> 00:08:42,559 Speaker 7: their platforms will also start to win as well. Companies 158 00:08:42,600 --> 00:08:46,920 Speaker 7: that use, for example, the travel industry to use AI 159 00:08:47,080 --> 00:08:52,080 Speaker 7: for optimum pricing for airline tickets, for hotel rooms, for 160 00:08:52,200 --> 00:08:56,160 Speaker 7: cruise line tickets. So there's going to be a lot 161 00:08:56,160 --> 00:08:58,360 Speaker 7: of different ways to win and a lot of different 162 00:08:58,400 --> 00:09:00,120 Speaker 7: ways to use the technology. 163 00:09:00,120 --> 00:09:03,880 Speaker 1: Certainly saw Amazon Web Services kind of hit things out 164 00:09:03,880 --> 00:09:07,720 Speaker 1: of the ballpark with their twenty percent year over year 165 00:09:07,920 --> 00:09:10,920 Speaker 1: growth number for Amazon Web Services, sort of staying in 166 00:09:10,920 --> 00:09:13,160 Speaker 1: the lead in terms of the cloud. Do you see 167 00:09:13,600 --> 00:09:17,280 Speaker 1: any market shifts in that cloud business around? You know, 168 00:09:17,360 --> 00:09:20,600 Speaker 1: some of those big players we've been talking about, like Amazon, Google, 169 00:09:20,640 --> 00:09:21,960 Speaker 1: and Microsoft. 170 00:09:21,640 --> 00:09:24,480 Speaker 7: They're going to continue to gain market share and customers 171 00:09:24,520 --> 00:09:27,360 Speaker 7: between the three of them. Remember, large companies that use 172 00:09:27,760 --> 00:09:30,640 Speaker 7: they use more than one platform because you need backup, 173 00:09:30,760 --> 00:09:34,880 Speaker 7: you need redundancy, and each platform is going to have 174 00:09:34,920 --> 00:09:37,920 Speaker 7: the strength and weaknesses that companies are going to need 175 00:09:37,960 --> 00:09:43,440 Speaker 7: where they want to have the fastest processors for some inferences, 176 00:09:43,920 --> 00:09:48,280 Speaker 7: and then you know secondary tertiary processing for other functions. 177 00:09:48,320 --> 00:09:53,000 Speaker 7: So it's not a zero sum name amongst the cloud 178 00:09:53,040 --> 00:09:56,720 Speaker 7: service providers. And then you got, of course the GPUs 179 00:09:56,800 --> 00:09:59,880 Speaker 7: that power all of this coming from in Nvidia, InVID 180 00:10:00,280 --> 00:10:03,320 Speaker 7: wins on every front. And when they talk about another 181 00:10:03,400 --> 00:10:06,960 Speaker 7: company catching up to by the time a company catches 182 00:10:07,040 --> 00:10:10,360 Speaker 7: up to Invidious Carr processor, they already have multiple new 183 00:10:10,400 --> 00:10:14,760 Speaker 7: processors in the pipeline. When other competitors catch up to 184 00:10:14,800 --> 00:10:16,840 Speaker 7: the Hopper, they got the Blackwell, they catch up to 185 00:10:16,840 --> 00:10:19,760 Speaker 7: the Blackwell, they got the Rubin, and when you know, 186 00:10:19,800 --> 00:10:21,720 Speaker 7: they catch up to the Ruben, the next one is 187 00:10:21,760 --> 00:10:28,800 Speaker 7: the finement. So in videos thinks multiple steps ahead, and 188 00:10:28,880 --> 00:10:32,720 Speaker 7: Invidious power is that they have the software that's used 189 00:10:32,960 --> 00:10:37,359 Speaker 7: to get the value and the processing power from their processors. 190 00:10:37,400 --> 00:10:40,680 Speaker 7: Their coud to software is a big driver of their 191 00:10:40,800 --> 00:10:42,000 Speaker 7: GPU processors. 192 00:10:42,160 --> 00:10:44,240 Speaker 1: Yeah, let's talk a little bit more about video because 193 00:10:44,240 --> 00:10:47,040 Speaker 1: you've seen the CEO, Jensen Wang, making a lot of 194 00:10:47,080 --> 00:10:51,440 Speaker 1: deals this past week at the APEC summit in South Korea. 195 00:10:51,600 --> 00:10:55,400 Speaker 1: Investing into AI startups as well. What's your read on 196 00:10:55,440 --> 00:10:57,679 Speaker 1: some of the latest moves that Jensen Wong has been 197 00:10:57,720 --> 00:10:59,559 Speaker 1: making in terms of investment. 198 00:11:00,120 --> 00:11:03,520 Speaker 7: Staying steps ahead of everybody. He's sinking into the future. 199 00:11:03,880 --> 00:11:06,800 Speaker 7: You want to be the on the forefront of every 200 00:11:06,840 --> 00:11:10,280 Speaker 7: front and be ahead of the curve, and he's doing that. 201 00:11:10,360 --> 00:11:13,040 Speaker 7: And there is a lot of money that will be 202 00:11:13,120 --> 00:11:16,959 Speaker 7: invested in various startups that help to train the problem, 203 00:11:17,000 --> 00:11:20,880 Speaker 7: you know, the AI process. So it makes sense in 204 00:11:20,960 --> 00:11:23,920 Speaker 7: Nvidia is a large investor in a lot of different 205 00:11:24,840 --> 00:11:29,120 Speaker 7: emerging technologies and then some may emerge and go on 206 00:11:29,280 --> 00:11:31,880 Speaker 7: to be industry leaders, some may not, but you know, 207 00:11:31,960 --> 00:11:36,240 Speaker 7: that's the kind of venture capital investing game. But then 208 00:11:36,280 --> 00:11:39,640 Speaker 7: they also benefit that they become in Nvidia customers as well. 209 00:11:40,440 --> 00:11:43,120 Speaker 1: And you know, going into all of these earnings, there's 210 00:11:43,160 --> 00:11:46,840 Speaker 1: been the debate about whether these companies are spending and 211 00:11:46,920 --> 00:11:50,600 Speaker 1: whether investors are spending into an AI bubble. Now that 212 00:11:50,640 --> 00:11:53,360 Speaker 1: we've gotten through these earnings, where do you sit on 213 00:11:53,400 --> 00:11:54,320 Speaker 1: that debate. 214 00:11:55,320 --> 00:11:59,079 Speaker 7: As far as it's a bubble, Yeah, it's not meaning 215 00:11:59,080 --> 00:12:01,200 Speaker 7: that a bubble that is a fad and the bubble 216 00:12:01,240 --> 00:12:05,040 Speaker 7: will burst and we'll no, it's not a bubble. Things 217 00:12:05,120 --> 00:12:08,160 Speaker 7: may get ahead of themselves from time to time, and 218 00:12:08,240 --> 00:12:10,880 Speaker 7: stock prices may run up and then pull back, but 219 00:12:11,040 --> 00:12:15,840 Speaker 7: it's not really a bubble. It's a powerful trend that 220 00:12:15,920 --> 00:12:19,160 Speaker 7: will continue to move forward. Just like you know, there 221 00:12:19,200 --> 00:12:21,600 Speaker 7: were some bubbles in the beginning of the Internet in 222 00:12:21,600 --> 00:12:24,199 Speaker 7: the nineties, but now you know that were there were 223 00:12:24,240 --> 00:12:27,439 Speaker 7: many other competitors to Amazon. There was etoys, at pets 224 00:12:27,480 --> 00:12:29,920 Speaker 7: dot com. But you know, look at where Amazon is today, 225 00:12:30,559 --> 00:12:33,160 Speaker 7: look at where Microsoft is today, look at where Google 226 00:12:33,280 --> 00:12:37,000 Speaker 7: is today, look at where Apple is today. So there 227 00:12:37,040 --> 00:12:40,640 Speaker 7: will be huge winners into the future as well. 228 00:12:41,320 --> 00:12:43,559 Speaker 1: Appreciate this, Ivan, thanks again for being with us. 229 00:12:44,640 --> 00:12:45,079 Speaker 7: Thank you. 230 00:12:45,360 --> 00:12:49,400 Speaker 1: It's Ivan find Sethie's chief investment officer at Tigris Capital 231 00:12:49,440 --> 00:12:52,840 Speaker 1: Partners Andy. Coming up on Bloomberg Daybreak weekend. Bank of 232 00:12:52,920 --> 00:12:56,040 Speaker 1: England policymakers are meeting this week for their latest interest 233 00:12:56,120 --> 00:12:59,680 Speaker 1: rate decision. We'll get the details from our team in London. 234 00:13:00,040 --> 00:13:13,840 Speaker 1: I'm Nathan Hager and this is bloomber This is Bloomberg 235 00:13:13,880 --> 00:13:16,400 Speaker 1: Day Break weekend, our global look ahead at the top 236 00:13:16,440 --> 00:13:19,160 Speaker 1: stories for investors in the coming week. I'm Nathan Hager 237 00:13:19,240 --> 00:13:22,559 Speaker 1: in Washington. Up later in our program, we'll turn to Australia, 238 00:13:22,640 --> 00:13:27,840 Speaker 1: where core infleetion accelerated beyond expectations last quarter. But first 239 00:13:28,000 --> 00:13:30,760 Speaker 1: Bank of England policymakers are meeting in the coming days 240 00:13:30,800 --> 00:13:34,600 Speaker 1: for their latest interest rate decision. Investors are not expecting 241 00:13:34,640 --> 00:13:37,400 Speaker 1: the UK Central Bank to cut rates, but the recent 242 00:13:37,480 --> 00:13:39,760 Speaker 1: data have made the path ahead less clear. 243 00:13:40,120 --> 00:13:40,480 Speaker 3: For more. 244 00:13:40,600 --> 00:13:42,920 Speaker 1: Let's go to London and bring in Bloomberg day Break 245 00:13:42,920 --> 00:13:44,559 Speaker 1: Europe banker Stephen Carroll. 246 00:13:44,400 --> 00:13:47,040 Speaker 2: Nathan the Bank of England is becoming something of an 247 00:13:47,040 --> 00:13:49,840 Speaker 2: outlier among its global peers. The ECB appears to have 248 00:13:49,880 --> 00:13:52,760 Speaker 2: finished its rate cutting cycle well. The Federal Reserve is 249 00:13:52,800 --> 00:13:56,199 Speaker 2: continuing on its easing path, but the bue's base rate 250 00:13:56,320 --> 00:13:59,160 Speaker 2: is still four percent, and that doesn't look likely to 251 00:13:59,280 --> 00:14:02,520 Speaker 2: change in the days. Although Goldman Sachs economists they're calling 252 00:14:02,559 --> 00:14:05,640 Speaker 2: for policymakers to reduce interest rates at their next meeting, 253 00:14:05,880 --> 00:14:08,800 Speaker 2: that's booking the market consensus that the central Bank will 254 00:14:08,880 --> 00:14:11,960 Speaker 2: keep rates on hold. On the data front, inflation held 255 00:14:11,960 --> 00:14:14,360 Speaker 2: steady at three point eight percent in September, which is 256 00:14:14,520 --> 00:14:16,920 Speaker 2: less than economists had forecast but still well above the 257 00:14:16,960 --> 00:14:20,680 Speaker 2: central Bank's target. November's budget could add to the uncertainty 258 00:14:20,720 --> 00:14:24,000 Speaker 2: over price pressures, something the Chancellor Rachel Reeves acknowledged in 259 00:14:24,080 --> 00:14:26,920 Speaker 2: recent days as she addressed a gathering of business leaders 260 00:14:26,960 --> 00:14:28,880 Speaker 2: in Saudi Arabia. 261 00:14:29,000 --> 00:14:32,360 Speaker 8: Look for me and my government in the United Kingdom, 262 00:14:32,400 --> 00:14:36,640 Speaker 8: our number one priority is growing the economy, but we 263 00:14:36,720 --> 00:14:39,880 Speaker 8: need to do that on a sort of a foundation 264 00:14:40,040 --> 00:14:43,160 Speaker 8: of stability. And we do live in a more uncertain world. 265 00:14:43,240 --> 00:14:45,400 Speaker 8: We can see that all around us, which have our 266 00:14:45,440 --> 00:14:51,800 Speaker 8: newspapers and TV channels we watch. That's uncertainty, whether it 267 00:14:51,880 --> 00:14:55,480 Speaker 8: is higher tariffs, whether it is conflicts around the world. 268 00:14:55,800 --> 00:14:59,920 Speaker 8: And that's why building relationships with our allies is more 269 00:15:00,040 --> 00:15:04,160 Speaker 8: important than ever to build that security and resilience into 270 00:15:04,200 --> 00:15:07,000 Speaker 8: the system. That's why in the United Kingdom would put 271 00:15:07,040 --> 00:15:10,960 Speaker 8: real focus this last year on secure and trade deals. 272 00:15:12,080 --> 00:15:14,040 Speaker 2: So that's the chance of Rachel Reeves there speaking to 273 00:15:14,120 --> 00:15:17,720 Speaker 2: some of the backdrop for this upcoming interest rate decision 274 00:15:17,760 --> 00:15:20,640 Speaker 2: from the Bank of England, how will policymakers balance the 275 00:15:20,720 --> 00:15:24,160 Speaker 2: data and the broader economic concerns. Our chief UK economist 276 00:15:24,200 --> 00:15:27,720 Speaker 2: Dan Hanson is worthy now to discuss. Dan. Let's start, 277 00:15:27,760 --> 00:15:30,840 Speaker 2: as Bose, with the concrete parts of this and the data. 278 00:15:30,960 --> 00:15:33,600 Speaker 2: What are the signals that we have from those numbers? 279 00:15:33,600 --> 00:15:34,720 Speaker 2: Of the Bank of England will be watching. 280 00:15:35,320 --> 00:15:37,840 Speaker 9: Yes, so you mentioned it at the start there. I 281 00:15:37,840 --> 00:15:40,720 Speaker 9: think you've had you've had slightly weaker than expected inflation, 282 00:15:41,040 --> 00:15:43,320 Speaker 9: but the key point you said it is inflation is 283 00:15:43,360 --> 00:15:47,440 Speaker 9: still almost double the Bank of England's target, but there 284 00:15:47,440 --> 00:15:49,520 Speaker 9: has been you know, there was good news in that 285 00:15:49,560 --> 00:15:51,880 Speaker 9: September print. It was a little bit weaker than expected, 286 00:15:51,920 --> 00:15:54,240 Speaker 9: and it's always one of these things of should we 287 00:15:54,240 --> 00:15:56,640 Speaker 9: look at the level of inflation, which we probably should, 288 00:15:56,720 --> 00:15:58,760 Speaker 9: or should we look at what inflation did relative to 289 00:15:58,840 --> 00:16:01,400 Speaker 9: forecasts and that's to to be how markets respond, and 290 00:16:01,400 --> 00:16:05,720 Speaker 9: markets have responded quite dubvishly to that inflation print. You 291 00:16:05,800 --> 00:16:09,200 Speaker 9: take that alongside. We've had data on growth that's been 292 00:16:09,240 --> 00:16:11,840 Speaker 9: probably a touch weaker than the Bank expected, but they 293 00:16:11,880 --> 00:16:13,560 Speaker 9: haven't been placing a huge amount of weight on the 294 00:16:13,560 --> 00:16:18,920 Speaker 9: growth data. The pay data has been weaker than expected, 295 00:16:18,960 --> 00:16:23,280 Speaker 9: and that's important and that's something that at least in 296 00:16:23,320 --> 00:16:25,960 Speaker 9: August the Bank focused on when it cut interest rates. 297 00:16:26,360 --> 00:16:28,080 Speaker 2: I mean, something that Andrew Bailey has brought up sort 298 00:16:28,080 --> 00:16:30,000 Speaker 2: of repeatedly over the past couple of years is that 299 00:16:30,040 --> 00:16:32,200 Speaker 2: it's one of those things that has made the UK 300 00:16:32,280 --> 00:16:36,360 Speaker 2: situation particularly I suppose challenging for the Bank of England 301 00:16:36,400 --> 00:16:40,200 Speaker 2: is that wages were rising at pace, which was adding 302 00:16:40,240 --> 00:16:40,960 Speaker 2: to the complication. 303 00:16:41,240 --> 00:16:44,480 Speaker 9: Yeah, and exactly right. And what's happened since the peak 304 00:16:44,520 --> 00:16:47,160 Speaker 9: of wage growth is that wage growth has slowed, but 305 00:16:47,200 --> 00:16:50,560 Speaker 9: it has slowed quite slowly, and that has meant that 306 00:16:51,080 --> 00:16:53,840 Speaker 9: the bank has been cautious about how it fast it 307 00:16:53,840 --> 00:16:55,720 Speaker 9: will cut interest rates. I mean, if you think about 308 00:16:55,720 --> 00:16:58,160 Speaker 9: where we are at the moment, private sector pay growth 309 00:16:58,280 --> 00:17:00,880 Speaker 9: running a little under four and a half percent, we 310 00:17:00,920 --> 00:17:03,040 Speaker 9: need pay growth in the UK, or the Bank of 311 00:17:03,120 --> 00:17:04,760 Speaker 9: England i should say, needs to pay growth in the 312 00:17:04,880 --> 00:17:07,960 Speaker 9: UK of around three percent to hit its two percent 313 00:17:08,040 --> 00:17:11,240 Speaker 9: inflation target. So there's still some way to go. One 314 00:17:11,280 --> 00:17:13,760 Speaker 9: really positive thing on this front, at least if you're 315 00:17:13,760 --> 00:17:16,760 Speaker 9: an inflation targeting central bank, not if you're a household 316 00:17:17,080 --> 00:17:20,920 Speaker 9: is that indicators of pay growth are pointing downwards. Forward 317 00:17:20,920 --> 00:17:24,680 Speaker 9: looking indicators, so pay settlements and the like are pointing 318 00:17:24,680 --> 00:17:28,520 Speaker 9: to pay growth closer to that three percent mark. But 319 00:17:29,040 --> 00:17:31,520 Speaker 9: it's still early days, so twenty twenty six, not a 320 00:17:31,520 --> 00:17:33,520 Speaker 9: lot of people know what their pay rise is going 321 00:17:33,520 --> 00:17:35,960 Speaker 9: to be for twenty twenty six. Yet that information will 322 00:17:35,960 --> 00:17:37,960 Speaker 9: start coming through in the first quarter of next year, 323 00:17:37,960 --> 00:17:40,320 Speaker 9: and that's something the bank will be focused quite heavily on. 324 00:17:40,520 --> 00:17:44,000 Speaker 2: Okay, So essentially is that why you don't think the 325 00:17:44,000 --> 00:17:45,960 Speaker 2: bank is going to cock rate at this meeting. The 326 00:17:46,040 --> 00:17:48,760 Speaker 2: market expectations have moved a little bit, but the general 327 00:17:48,840 --> 00:17:51,200 Speaker 2: consensus is no move this time around. 328 00:17:51,320 --> 00:17:52,879 Speaker 9: Yeah, so we saw some We saw a little bit 329 00:17:52,920 --> 00:17:55,080 Speaker 9: of movement on the change in the Goldman call that 330 00:17:55,119 --> 00:17:57,920 Speaker 9: you mentioned, not a huge amount, but a little bit. 331 00:17:58,280 --> 00:18:00,600 Speaker 9: It seems to have come back. Now we've got maybe 332 00:18:00,760 --> 00:18:03,920 Speaker 9: four or five bases points price, so twenty twenty five 333 00:18:03,920 --> 00:18:09,240 Speaker 9: percent chance of a cut see, not very high. Our 334 00:18:09,359 --> 00:18:12,720 Speaker 9: view is that if you take there has been dubbish 335 00:18:12,800 --> 00:18:15,040 Speaker 9: news in the data, particularly in the price is data, 336 00:18:15,840 --> 00:18:19,400 Speaker 9: but the fundamental point is that inflation still nearly double 337 00:18:19,440 --> 00:18:22,560 Speaker 9: the target. You've mentioned the budget. That is a huge 338 00:18:22,640 --> 00:18:25,399 Speaker 9: element of uncertainty. We saw what happened last year with 339 00:18:25,440 --> 00:18:29,399 Speaker 9: the budget, and I just there is no reason given 340 00:18:29,400 --> 00:18:33,240 Speaker 9: where interest rates are. They're at four percent, but there's 341 00:18:33,280 --> 00:18:35,640 Speaker 9: probably not a huge amount of distance for the bank 342 00:18:35,680 --> 00:18:40,199 Speaker 9: to travel before they finish cutting interest rates. Skipping a 343 00:18:40,240 --> 00:18:42,720 Speaker 9: meeting is not really a big deal. Just to wait 344 00:18:42,720 --> 00:18:45,399 Speaker 9: for that, particularly that information about the budget, but also 345 00:18:46,760 --> 00:18:49,680 Speaker 9: for your own credibility. Is a central bank cutting rates 346 00:18:49,680 --> 00:18:52,040 Speaker 9: when inflation is three point eight percent is quite a 347 00:18:52,080 --> 00:18:54,080 Speaker 9: hard sell, even if there is a story to be 348 00:18:54,160 --> 00:18:57,920 Speaker 9: told about perhaps the labor market is loose, pay growth 349 00:18:57,960 --> 00:19:00,480 Speaker 9: is coming down, pay growth is still above the levels 350 00:19:00,520 --> 00:19:03,639 Speaker 9: that are consistent with the two percent target, Inflation is 351 00:19:03,680 --> 00:19:07,439 Speaker 9: still high. So you've got time on your side, and 352 00:19:07,480 --> 00:19:09,280 Speaker 9: so that's why I think they will hold at this 353 00:19:09,400 --> 00:19:10,080 Speaker 9: upcoming meeting. 354 00:19:10,240 --> 00:19:11,800 Speaker 2: And you mentioned the budget there. Of course, the big 355 00:19:11,880 --> 00:19:15,879 Speaker 2: change that did impact particularly price pressures was the increase 356 00:19:15,920 --> 00:19:18,560 Speaker 2: in the payroll tax for employers, and that was something 357 00:19:18,600 --> 00:19:20,720 Speaker 2: that took us a bit of time to see coming 358 00:19:20,760 --> 00:19:23,520 Speaker 2: into data. Do we have the full effect of that now? 359 00:19:23,680 --> 00:19:26,320 Speaker 2: Is everyone sort of aware of what effect that increase 360 00:19:26,359 --> 00:19:27,880 Speaker 2: in employers' national insurance had? 361 00:19:27,960 --> 00:19:28,160 Speaker 5: Now? 362 00:19:28,640 --> 00:19:32,040 Speaker 9: I think we're nearly there with it all passing through. 363 00:19:32,200 --> 00:19:33,800 Speaker 9: I think by the end of this year it will 364 00:19:33,880 --> 00:19:38,080 Speaker 9: be in the data. Getting it teasing it out from 365 00:19:38,119 --> 00:19:40,199 Speaker 9: everything all the other noise that's been going on is 366 00:19:40,280 --> 00:19:44,480 Speaker 9: very very difficult, but I think you can see that, Yes, 367 00:19:44,840 --> 00:19:47,560 Speaker 9: there was an impact on employment, Yes there was an 368 00:19:47,560 --> 00:19:52,000 Speaker 9: impact on prices. Possibly an impact on wages less sure, 369 00:19:52,600 --> 00:19:55,000 Speaker 9: but I think it has it appears to have flown 370 00:19:55,040 --> 00:19:59,080 Speaker 9: through into the data. Now looking to the budget, what 371 00:19:59,160 --> 00:20:02,040 Speaker 9: the Bank will be what is not just I mean, 372 00:20:02,040 --> 00:20:03,679 Speaker 9: there are a lot of things that will be watching. 373 00:20:03,840 --> 00:20:06,880 Speaker 9: First of all, it will be the profile of the 374 00:20:07,000 --> 00:20:11,080 Speaker 9: fiscal consolidation that Reeves announces. What matters for the Bank 375 00:20:11,240 --> 00:20:14,160 Speaker 9: is where the consolidation lands, because the Bank only thinks 376 00:20:14,160 --> 00:20:17,560 Speaker 9: three years ahead, okay, and the fiscal forecast is five 377 00:20:17,640 --> 00:20:19,639 Speaker 9: years So if the Chancellor puts it all at the 378 00:20:19,640 --> 00:20:21,760 Speaker 9: back end of the forecast, it means nothing for the 379 00:20:21,760 --> 00:20:26,360 Speaker 9: Bank of England. Point two will be it's most likely 380 00:20:26,359 --> 00:20:28,880 Speaker 9: going to be tax risers. We know that, fine, then 381 00:20:28,920 --> 00:20:32,800 Speaker 9: it's whether it's indirect tax increases. So that played a 382 00:20:32,800 --> 00:20:34,960 Speaker 9: part in the inflation story this year as well. Vehicle 383 00:20:35,000 --> 00:20:35,680 Speaker 9: Act that would. 384 00:20:35,560 --> 00:20:39,040 Speaker 2: Yeah, because something like VAT is being flows as a possibility, 385 00:20:39,080 --> 00:20:40,840 Speaker 2: of course, where it's still waiting and we're several weeks 386 00:20:40,880 --> 00:20:43,000 Speaker 2: away from the budget, and that the government's promise has 387 00:20:43,000 --> 00:20:46,600 Speaker 2: been that they wouldn't raise income tax, National Insurance or VAT, 388 00:20:47,920 --> 00:20:49,639 Speaker 2: the question of whether or not that position might be 389 00:20:49,680 --> 00:20:51,920 Speaker 2: shifting still very much in the debate, so we won't 390 00:20:51,960 --> 00:20:54,720 Speaker 2: dwell too much on it. But a VAT increase would 391 00:20:54,760 --> 00:20:56,960 Speaker 2: presumably be particularly bad news for inflation. 392 00:20:57,040 --> 00:21:01,600 Speaker 9: Absolutely, so indirect taxes vat veh collect exercize duty, fuel duty, 393 00:21:01,640 --> 00:21:03,720 Speaker 9: all of those things would flow straight into the CPI 394 00:21:03,800 --> 00:21:06,000 Speaker 9: basket and make the Bank of England's job much harder. 395 00:21:06,040 --> 00:21:09,399 Speaker 9: I think Rachel Reeve's listening to her her rhetoric around 396 00:21:09,400 --> 00:21:13,000 Speaker 9: this budget. She's very conscious of the inflation story now 397 00:21:13,040 --> 00:21:17,240 Speaker 9: and I think probably in hindsight, wouldn't have gone through 398 00:21:17,240 --> 00:21:19,480 Speaker 9: with some of the policies she went through in October 399 00:21:19,560 --> 00:21:22,520 Speaker 9: last year in the budget last year because there has 400 00:21:22,560 --> 00:21:25,159 Speaker 9: been an inflationary impact thinking about them, not just the 401 00:21:25,240 --> 00:21:28,720 Speaker 9: national insurance increase, You're thinking about the minimum wage, You're 402 00:21:28,760 --> 00:21:31,200 Speaker 9: thinking about what happened with I say, with vehicle excise 403 00:21:31,320 --> 00:21:34,440 Speaker 9: duty and other components of the CPI basket as well. 404 00:21:34,520 --> 00:21:39,800 Speaker 9: So what I think you'll see is policies announced in 405 00:21:39,840 --> 00:21:42,639 Speaker 9: the budget at least that will be disinflationary. But the 406 00:21:42,640 --> 00:21:44,439 Speaker 9: Bank just wants The point for the Bank of England 407 00:21:44,440 --> 00:21:46,919 Speaker 9: is it just wants to know that they're disinflationary, and 408 00:21:46,960 --> 00:21:49,399 Speaker 9: that's a reason not to go ahead and cut interest 409 00:21:49,480 --> 00:21:53,240 Speaker 9: rates just now. But think about when to cut interest rates. 410 00:21:53,640 --> 00:21:56,680 Speaker 9: People are talking about December. For me, that still feels 411 00:21:56,680 --> 00:21:58,560 Speaker 9: a little bit too soon. I think it'll probably be 412 00:21:58,560 --> 00:21:59,680 Speaker 9: in the first half next year. 413 00:22:00,080 --> 00:22:02,119 Speaker 2: Is there anything that the Bank of England can do 414 00:22:02,280 --> 00:22:04,560 Speaker 2: to help the Chancellor in her job as well? I 415 00:22:04,600 --> 00:22:07,160 Speaker 2: know that's not their job, but just you know, given 416 00:22:07,200 --> 00:22:09,640 Speaker 2: that the influence on borrowing cast is important and does 417 00:22:09,760 --> 00:22:12,360 Speaker 2: matter when it comes to the very constrained fiscal situation 418 00:22:12,400 --> 00:22:13,440 Speaker 2: the British government's in. 419 00:22:14,400 --> 00:22:18,080 Speaker 9: Well, I mean, they could stop consettive tightening straight away 420 00:22:18,680 --> 00:22:22,760 Speaker 9: if they wanted to directly help the help the treasury, 421 00:22:22,760 --> 00:22:25,480 Speaker 9: but obviously it's an independent central banks. They're going to 422 00:22:25,520 --> 00:22:28,399 Speaker 9: do what they're they're going to do. I mean, the 423 00:22:29,080 --> 00:22:32,280 Speaker 9: key point for the for the fiscal forecast will be 424 00:22:32,480 --> 00:22:36,800 Speaker 9: the window. So the OBR, so the UK fiscal watchdog 425 00:22:38,119 --> 00:22:41,720 Speaker 9: takes a snapshot of the market curve into its forecast 426 00:22:42,320 --> 00:22:44,480 Speaker 9: and the key point will be what window has it 427 00:22:44,560 --> 00:22:48,320 Speaker 9: taken for its for its forecast and whether we've had 428 00:22:48,440 --> 00:22:51,560 Speaker 9: we've had a falling guilt yields recently good news for 429 00:22:51,600 --> 00:22:54,800 Speaker 9: the Chancellor, good news for the Chancellor. Exactly whether that 430 00:22:54,800 --> 00:22:58,000 Speaker 9: makes it into the OBR forecast, there's a lot of 431 00:22:58,080 --> 00:23:02,119 Speaker 9: uncertainty about that. So that's directly how the Bank of 432 00:23:02,160 --> 00:23:06,480 Speaker 9: England can impact or make Rachel Reeves's job easier, is 433 00:23:06,560 --> 00:23:11,120 Speaker 9: by cutting interest rates, being dubvish, pushing down on long 434 00:23:11,200 --> 00:23:13,680 Speaker 9: term borrowing costs, pushing down on short term borrowing costs 435 00:23:13,680 --> 00:23:18,040 Speaker 9: as well, because that affects the debt interest picture. Beyond that, 436 00:23:18,560 --> 00:23:21,200 Speaker 9: I think you know we heard there about from Rachel 437 00:23:21,240 --> 00:23:24,359 Speaker 9: Reeves about the government's priority is to grow the economy. 438 00:23:25,200 --> 00:23:30,840 Speaker 9: Of course a big fiscal consolidation, so the government raises taxes, 439 00:23:31,359 --> 00:23:33,240 Speaker 9: that makes it more likely the Bank of England cuts 440 00:23:33,280 --> 00:23:36,199 Speaker 9: interest rates. But that's very much a short term story, 441 00:23:36,280 --> 00:23:38,280 Speaker 9: and I think what Rachel Reeves is talking about is 442 00:23:38,320 --> 00:23:40,800 Speaker 9: the supply side, the long term trajectory of the economy. 443 00:23:40,800 --> 00:23:45,160 Speaker 9: Can the economy grow faster permanently? And they're the policies 444 00:23:45,200 --> 00:23:47,160 Speaker 9: that the government is focused on. A monetary policy can't 445 00:23:47,200 --> 00:23:49,640 Speaker 9: do much about that. That's very much about supply side 446 00:23:49,640 --> 00:23:53,960 Speaker 9: reform and also about the makeup of tax in the 447 00:23:54,080 --> 00:23:54,720 Speaker 9: UK as well. 448 00:23:55,760 --> 00:23:58,119 Speaker 2: Coming back to this Bank of England decision, I mean, 449 00:23:58,200 --> 00:24:00,679 Speaker 2: how important is the votes black going to be when 450 00:24:00,720 --> 00:24:04,040 Speaker 2: it comes Are we expecting a divisors a monastary policy committee. 451 00:24:04,160 --> 00:24:06,000 Speaker 9: Well, one thing that's going to be really interesting about 452 00:24:06,000 --> 00:24:08,120 Speaker 9: this is that. A speech a couple of weeks ago 453 00:24:08,160 --> 00:24:11,560 Speaker 9: by Hugh Pill noted that the minutes are going to 454 00:24:11,560 --> 00:24:15,320 Speaker 9: have a section for each policymaker to explain their thinking, 455 00:24:16,240 --> 00:24:17,800 Speaker 9: which is something we haven't had from the Bank of 456 00:24:17,840 --> 00:24:19,640 Speaker 9: England before. So we're going to hear from all nine 457 00:24:19,640 --> 00:24:23,000 Speaker 9: of them about exactly how they are thinking about it. 458 00:24:23,080 --> 00:24:25,639 Speaker 9: So up until now, fun for you. Oh yeah, I 459 00:24:25,680 --> 00:24:30,520 Speaker 9: mean I can't wait. I am. Up until now, we 460 00:24:30,920 --> 00:24:32,359 Speaker 9: look at as you've just said, we look at the 461 00:24:32,400 --> 00:24:35,160 Speaker 9: vote split and we try and tease out from that 462 00:24:35,720 --> 00:24:38,640 Speaker 9: how close each member was to voting for a cut 463 00:24:38,760 --> 00:24:41,440 Speaker 9: or not voting for a cut and exercising an awful 464 00:24:41,440 --> 00:24:45,800 Speaker 9: lot of judgment in the process. Now, or at this 465 00:24:45,880 --> 00:24:47,680 Speaker 9: upcoming meeting, you're going to hear a little bit more 466 00:24:47,680 --> 00:24:49,879 Speaker 9: about what each one of them is thinking, and I 467 00:24:49,920 --> 00:24:52,880 Speaker 9: think from that you will be able to ascertain how 468 00:24:52,960 --> 00:24:56,840 Speaker 9: close each member was to voting for a cut, you know, 469 00:24:56,880 --> 00:25:00,000 Speaker 9: for the hawkish, for the likes of Hugh Pill, Catherine Mann, Yeah, 470 00:25:00,080 --> 00:25:02,000 Speaker 9: we know that they're probably going to be miles away 471 00:25:02,040 --> 00:25:04,199 Speaker 9: from it. What's going to be much more interesting is 472 00:25:04,200 --> 00:25:06,720 Speaker 9: how close the likes of Andrew Bailey and Sarah Breeden, 473 00:25:07,280 --> 00:25:11,000 Speaker 9: who are the They're basically the marginal voters. They're the 474 00:25:11,000 --> 00:25:13,480 Speaker 9: swing voters, I should say, on the on the committee. 475 00:25:13,640 --> 00:25:15,680 Speaker 9: If they if they go for it the cut, then 476 00:25:15,680 --> 00:25:18,240 Speaker 9: it's there's going to be a cut. I don't our 477 00:25:18,240 --> 00:25:20,560 Speaker 9: baseline is they won't, but I'm just saying they're the 478 00:25:20,560 --> 00:25:22,200 Speaker 9: two people to watch. So if you're going to read 479 00:25:22,200 --> 00:25:24,520 Speaker 9: the minutes and take the time out of your day 480 00:25:24,560 --> 00:25:27,879 Speaker 9: to do it, they're the two to look at and 481 00:25:27,880 --> 00:25:30,440 Speaker 9: see how close they were to voting for a for. 482 00:25:30,359 --> 00:25:30,960 Speaker 4: A rate cut. 483 00:25:31,040 --> 00:25:34,080 Speaker 2: Okay, Dan Hansen, our chief UK economist, thank you very much, 484 00:25:34,119 --> 00:25:35,960 Speaker 2: and we'll have full coverage of that Bank of England 485 00:25:36,000 --> 00:25:39,520 Speaker 2: decision across our Bloomberg platforms. I'm Stephen Carolyn London. You 486 00:25:39,560 --> 00:25:42,240 Speaker 2: can catch us every weekday morning here for Bloomberg Daybreak Europe, 487 00:25:42,240 --> 00:25:44,919 Speaker 2: beginning at six am in London and one am on 488 00:25:45,040 --> 00:25:45,680 Speaker 2: Wall Streets. 489 00:25:45,760 --> 00:25:48,960 Speaker 1: Nathan, thank you, Steven. And coming up on Bloomberg Daybreak weekend, 490 00:25:49,000 --> 00:25:51,320 Speaker 1: we'll look to new economic data out of China and 491 00:25:51,359 --> 00:25:54,479 Speaker 1: what they mean for global markets. I'm Nathan Hager, and 492 00:25:54,600 --> 00:26:07,640 Speaker 1: this is Bloomberg. I'm Nathan Hager with your global look 493 00:26:07,640 --> 00:26:10,200 Speaker 1: ahead at the top stories for investors in the coming week. 494 00:26:10,480 --> 00:26:13,919 Speaker 1: Now we go to Australia, where core inflation accelerated beyond 495 00:26:13,960 --> 00:26:18,680 Speaker 1: expectations last quarter, further complicating the path for further policy 496 00:26:18,720 --> 00:26:21,879 Speaker 1: easing for the Reserve Bank of Australia. The RBA is 497 00:26:21,920 --> 00:26:24,199 Speaker 1: set to issue a rate decision in the week ahead. 498 00:26:24,440 --> 00:26:27,520 Speaker 1: For more, we turned to Bloomberg Daybreak Asia podcast host 499 00:26:27,680 --> 00:26:28,919 Speaker 1: Doug Krisner Nathan. 500 00:26:29,000 --> 00:26:32,439 Speaker 3: Before last week's reading on Australia's inflation, money markets had 501 00:26:32,480 --> 00:26:36,080 Speaker 3: been expecting the RBA to cut its policy rate. Well. 502 00:26:36,080 --> 00:26:39,439 Speaker 3: Then came the reading on core consumer prices again quarter 503 00:26:39,560 --> 00:26:43,000 Speaker 3: on quarter of one percent in Q three, and that 504 00:26:43,080 --> 00:26:46,679 Speaker 3: seems to validate the RBA's assessment that its efforts to 505 00:26:46,720 --> 00:26:49,960 Speaker 3: rein in core inflation have stalled. For a closer look, 506 00:26:49,960 --> 00:26:53,359 Speaker 3: I'm joined by Bloomberg's James McIntyre. He is our economist 507 00:26:53,720 --> 00:26:56,679 Speaker 3: for Asia in Sydney. James, thank you so much for 508 00:26:56,720 --> 00:26:58,920 Speaker 3: making time to chat with me. To what extent were 509 00:26:58,920 --> 00:27:01,639 Speaker 3: you surprised by that core consumer price reading. 510 00:27:02,600 --> 00:27:06,000 Speaker 6: We were quite surprised, as was everyone. So we'd anticipated 511 00:27:06,000 --> 00:27:08,320 Speaker 6: inflation would be a little stronger than what the RBA 512 00:27:08,440 --> 00:27:11,239 Speaker 6: had factored into their last set of forecasts that they 513 00:27:11,320 --> 00:27:13,119 Speaker 6: made back in August. They're going to make a new 514 00:27:13,160 --> 00:27:17,480 Speaker 6: set of forecasts with this in November ahead of this meeting, 515 00:27:17,760 --> 00:27:20,159 Speaker 6: and that CPI data is going to result in them 516 00:27:20,480 --> 00:27:23,560 Speaker 6: very much changing where their inflation outlook is, at least 517 00:27:23,560 --> 00:27:26,440 Speaker 6: in the short term. The question is, though, what will 518 00:27:26,440 --> 00:27:29,639 Speaker 6: it mean for the medium term, and that's going to 519 00:27:29,640 --> 00:27:31,600 Speaker 6: be the kicker for policy down the track. 520 00:27:31,760 --> 00:27:35,680 Speaker 3: So help me understand what was particularly hot in contributing 521 00:27:35,760 --> 00:27:38,640 Speaker 3: to this one percent gain. Are there areas that we 522 00:27:39,280 --> 00:27:42,080 Speaker 3: can talk about here and where prices were kind of 523 00:27:42,080 --> 00:27:43,920 Speaker 3: accelerating at a faster pace. 524 00:27:44,600 --> 00:27:48,240 Speaker 6: A few, a few areas, some expected, some unexpected. On 525 00:27:48,280 --> 00:27:51,399 Speaker 6: the expected side, there's been some there'd been a pickup 526 00:27:51,440 --> 00:27:55,440 Speaker 6: in electricity prices a year ago and three months ago 527 00:27:55,680 --> 00:27:58,399 Speaker 6: there'd been some rebates from the government and those no 528 00:27:58,480 --> 00:28:01,080 Speaker 6: longer being there means that the we're facing the real 529 00:28:01,119 --> 00:28:03,760 Speaker 6: price now, So that's an expected tick up in inflation. 530 00:28:04,119 --> 00:28:06,920 Speaker 6: But there were some prizes that we've seen in other 531 00:28:06,960 --> 00:28:09,960 Speaker 6: places around the world, like New Zealand in terms of 532 00:28:10,000 --> 00:28:13,160 Speaker 6: holiday travel and accommodation, a little bit hotter prices there, 533 00:28:13,440 --> 00:28:16,160 Speaker 6: and a little bit within the core there's some signs 534 00:28:16,200 --> 00:28:20,160 Speaker 6: that rental inflation, which had been easy has bottomed, might 535 00:28:20,200 --> 00:28:22,480 Speaker 6: be turning around. So there's a few things there that 536 00:28:22,520 --> 00:28:25,520 Speaker 6: are temporary, some that are seasonal, and some that are worrying. 537 00:28:26,080 --> 00:28:29,840 Speaker 6: All in all an unhappy picture for the RBA. 538 00:28:29,920 --> 00:28:31,560 Speaker 3: So do we need to look at the other side 539 00:28:31,560 --> 00:28:34,520 Speaker 3: of the coin and say that Australia's economy is doing 540 00:28:34,600 --> 00:28:37,440 Speaker 3: reasonably well, perhaps stronger than people had assumed. 541 00:28:38,360 --> 00:28:40,800 Speaker 6: Well, when we look across the data, that's not how 542 00:28:40,920 --> 00:28:43,880 Speaker 6: That's not how I'm seeing it. Consumer spending is still 543 00:28:44,400 --> 00:28:47,480 Speaker 6: quite challenged and if anything, it's sort of adding up 544 00:28:47,640 --> 00:28:50,960 Speaker 6: along with a bit of extra slack in the labor market. 545 00:28:51,320 --> 00:28:55,480 Speaker 6: Growth was not too much stronger or not too flash hot. 546 00:28:55,800 --> 00:28:59,160 Speaker 6: All of those indicators are suggesting that the RBA does 547 00:28:59,200 --> 00:29:01,480 Speaker 6: still have some work to do on monetary policy. The 548 00:29:01,880 --> 00:29:05,640 Speaker 6: Central Bank does think that its current monetary policy setting 549 00:29:05,880 --> 00:29:08,280 Speaker 6: is too tight. The question is really going to be 550 00:29:08,320 --> 00:29:11,200 Speaker 6: about how gradual is this easing going to be? And 551 00:29:11,240 --> 00:29:13,160 Speaker 6: the inflation data means that it's going to be a 552 00:29:13,200 --> 00:29:13,800 Speaker 6: little longer. 553 00:29:14,000 --> 00:29:17,280 Speaker 3: Are you hesitant to use a descriptor like stagflation? Is 554 00:29:17,320 --> 00:29:18,200 Speaker 3: that inappropriate? 555 00:29:20,280 --> 00:29:22,080 Speaker 6: Look not yet? You know, you could look at it 556 00:29:22,120 --> 00:29:25,120 Speaker 6: in terms of unemployment rate is ticking up. It's only 557 00:29:25,160 --> 00:29:27,520 Speaker 6: at four point five, so it's still low and inflation 558 00:29:27,680 --> 00:29:29,400 Speaker 6: is a bit higher. But I think some of this 559 00:29:29,480 --> 00:29:32,800 Speaker 6: inflation is I hate to use the t word transitory 560 00:29:33,120 --> 00:29:35,640 Speaker 6: or temporary, but some of that's not really going to 561 00:29:35,680 --> 00:29:37,440 Speaker 6: be with us over the course of the year ahead 562 00:29:37,480 --> 00:29:40,160 Speaker 6: and especially two years out, which is where the RBA 563 00:29:40,320 --> 00:29:42,320 Speaker 6: is going to be thinking about when it's setting rates. 564 00:29:42,640 --> 00:29:44,760 Speaker 3: So where does the RBA go from here? 565 00:29:44,760 --> 00:29:47,320 Speaker 6: In your view, they don't go anywhere when it comes 566 00:29:47,320 --> 00:29:50,600 Speaker 6: to the November meeting, and that means that we're starting 567 00:29:50,640 --> 00:29:53,080 Speaker 6: to think about, well, what's going to happen in the 568 00:29:53,120 --> 00:29:55,560 Speaker 6: new year. The next meeting after that will be in 569 00:29:55,640 --> 00:29:58,920 Speaker 6: February in twenty twenty six, and what's interesting there is 570 00:29:58,960 --> 00:30:03,200 Speaker 6: that they will extend their projections, including their inflation forecast, 571 00:30:03,280 --> 00:30:05,600 Speaker 6: by another six months. So we've got a few more 572 00:30:05,600 --> 00:30:08,400 Speaker 6: months of economic data, some of this inflation washing through, 573 00:30:08,800 --> 00:30:11,680 Speaker 6: some signs that we really aren't getting the consumer spending 574 00:30:11,720 --> 00:30:14,080 Speaker 6: pick up in the economy that we're hoping for, and 575 00:30:14,160 --> 00:30:18,000 Speaker 6: another six months onto the projection period. In my view, 576 00:30:18,080 --> 00:30:19,920 Speaker 6: our base case is that's going to be enough to 577 00:30:19,920 --> 00:30:24,240 Speaker 6: get the RBA dragged into another gradual using next year, 578 00:30:24,320 --> 00:30:26,800 Speaker 6: and we see more cuts in twenty twenty six. 579 00:30:27,040 --> 00:30:31,000 Speaker 3: So what you know about sentiment, whether it's from consumers 580 00:30:31,120 --> 00:30:34,080 Speaker 3: or on the part of businesses, what are those readings 581 00:30:34,120 --> 00:30:35,000 Speaker 3: look like right now? 582 00:30:35,800 --> 00:30:38,480 Speaker 6: Yeah, So when it comes to a sentiment, what we've 583 00:30:38,520 --> 00:30:43,040 Speaker 6: been seeing is we had been seeing business conditions being okay, 584 00:30:43,320 --> 00:30:47,120 Speaker 6: not too flashot, but consumers still being pessimistic and taking 585 00:30:47,160 --> 00:30:50,000 Speaker 6: a step back in the October reading. Not getting a 586 00:30:50,080 --> 00:30:52,640 Speaker 6: rate cut in November as many might have been expecting 587 00:30:52,720 --> 00:30:54,960 Speaker 6: is probably going to mean that those consumers are going 588 00:30:55,040 --> 00:30:58,000 Speaker 6: to still remain quite depressed, especially when it comes to 589 00:30:58,080 --> 00:31:01,280 Speaker 6: looking at their consumer at their own per personal circumstances 590 00:31:01,880 --> 00:31:05,120 Speaker 6: over the months and the year ahead. So not a 591 00:31:05,160 --> 00:31:08,040 Speaker 6: great impetus there on the consumer side of the picture, 592 00:31:08,240 --> 00:31:12,160 Speaker 6: and that sluggish consumer spending pickup that's ultimately going to 593 00:31:12,200 --> 00:31:14,160 Speaker 6: be one of the factors that gets the RBA back 594 00:31:14,200 --> 00:31:16,320 Speaker 6: off the bench and cutting again next to you. 595 00:31:16,640 --> 00:31:20,120 Speaker 3: But I'm wondering whether or not if consumer expectations for 596 00:31:20,520 --> 00:31:24,200 Speaker 3: inflation do remain stubborn, that that could further complicate matters 597 00:31:24,240 --> 00:31:25,120 Speaker 3: for the RBA. 598 00:31:25,240 --> 00:31:28,080 Speaker 6: It could, but we're not seeing a labor market that's 599 00:31:28,120 --> 00:31:32,400 Speaker 6: allowing consumers to turn any of those expectations into wage 600 00:31:32,440 --> 00:31:35,080 Speaker 6: gains that are going to be problematic. If anything, we're 601 00:31:35,120 --> 00:31:38,440 Speaker 6: seeing wages growth continuing to ease back along with the 602 00:31:38,520 --> 00:31:42,560 Speaker 6: RBA's expectations or forecasts for that wage growth to ease back, 603 00:31:42,840 --> 00:31:46,120 Speaker 6: so we don't necessarily have a labor market and consumer 604 00:31:46,200 --> 00:31:50,200 Speaker 6: inflation expectation dynamic that's that's going to be particularly spicy 605 00:31:50,280 --> 00:31:53,600 Speaker 6: or problematic for prices and could could have caused some 606 00:31:53,640 --> 00:31:54,680 Speaker 6: problems for the RBA. 607 00:31:55,200 --> 00:31:58,280 Speaker 3: So I know we recently had a meeting between Prime 608 00:31:58,280 --> 00:32:03,240 Speaker 3: Minister Albanizi and President Trump. I know you're an economist 609 00:32:03,240 --> 00:32:06,200 Speaker 3: and I'm not asking for political commentary, but are the 610 00:32:06,280 --> 00:32:09,280 Speaker 3: animal spirits a little bit more alive in Australia after 611 00:32:09,320 --> 00:32:09,840 Speaker 3: that meeting. 612 00:32:10,720 --> 00:32:14,280 Speaker 6: Well, it's a positive. We're all looking for in these meetings, 613 00:32:14,360 --> 00:32:17,280 Speaker 6: these bilateral meetings and these deals, for something good to 614 00:32:17,320 --> 00:32:19,920 Speaker 6: come and a good outcome to come for our economy 615 00:32:20,160 --> 00:32:23,600 Speaker 6: visa the US, and that's definitely what We've got. Another 616 00:32:23,720 --> 00:32:27,560 Speaker 6: big investment co investment with the United States to unlock 617 00:32:27,640 --> 00:32:31,840 Speaker 6: critical materials that's an important geopolitical flash point for the 618 00:32:31,920 --> 00:32:33,200 Speaker 6: United States and for the world. 619 00:32:33,640 --> 00:32:35,600 Speaker 3: James will leave it there. It's always a pleasure. Thank 620 00:32:35,640 --> 00:32:38,800 Speaker 3: you so very much. Bloomberg's James McIntyre. He is our 621 00:32:38,840 --> 00:32:42,240 Speaker 3: economist for Asia in Sydney. Let's turn next to the 622 00:32:42,360 --> 00:32:45,520 Speaker 3: Chinese economy and look ahead to the trade data in 623 00:32:45,600 --> 00:32:48,440 Speaker 3: the week ahead. Joining me now is David Chu from 624 00:32:48,480 --> 00:32:51,480 Speaker 3: Bloomberg Economics. David, thank you so much for making time 625 00:32:51,520 --> 00:32:53,760 Speaker 3: to chat with me. If you don't mind, I'd like 626 00:32:53,840 --> 00:32:56,480 Speaker 3: to move beyond the details of the meeting that we 627 00:32:56,680 --> 00:33:00,480 Speaker 3: just had recently between Presidents Trump and she I'd like 628 00:33:00,520 --> 00:33:03,880 Speaker 3: to better understand what's happening in the overall Chinese economy. 629 00:33:04,080 --> 00:33:06,480 Speaker 3: I mentioned the trade data that we're expecting in the 630 00:33:06,520 --> 00:33:10,400 Speaker 3: week ahead, and we know that the export economy in 631 00:33:10,480 --> 00:33:14,760 Speaker 3: China has been very supportive of overall growth. Talk to 632 00:33:14,800 --> 00:33:18,400 Speaker 3: me now about the markets other than the US where 633 00:33:18,440 --> 00:33:21,400 Speaker 3: Beijing has been building these trade relationships. 634 00:33:22,160 --> 00:33:25,800 Speaker 10: The thing is that China's export to the US is 635 00:33:25,880 --> 00:33:29,880 Speaker 10: facing significant headwinds, and if you look at the data 636 00:33:30,320 --> 00:33:32,760 Speaker 10: and has been drawing. But on the other hand, if 637 00:33:32,760 --> 00:33:35,960 Speaker 10: you look at the China's export shipment to the other 638 00:33:36,120 --> 00:33:40,480 Speaker 10: trade partners such as the Southeast Asia and Europe, you 639 00:33:40,520 --> 00:33:44,960 Speaker 10: would see that these trade partners supported China's exports over 640 00:33:45,000 --> 00:33:48,320 Speaker 10: the past several months. If you look at what the 641 00:33:48,360 --> 00:33:51,840 Speaker 10: government did, you can see that China is trying to 642 00:33:51,880 --> 00:33:56,720 Speaker 10: build up a better trading relationship with these trading partners. 643 00:33:57,160 --> 00:34:01,840 Speaker 10: We think that China's ship with the other partners could 644 00:34:01,880 --> 00:34:05,600 Speaker 10: be strengthened, and yes, from China side, I think it's 645 00:34:05,640 --> 00:34:08,280 Speaker 10: just necessary. But on the other hand, to be honest, 646 00:34:08,320 --> 00:34:11,680 Speaker 10: the other trade partners may be cautious about the China's 647 00:34:12,239 --> 00:34:16,360 Speaker 10: export because people have been talking about that China is 648 00:34:16,440 --> 00:34:21,640 Speaker 10: deverting some exports to the trade partners, so things could 649 00:34:21,680 --> 00:34:23,760 Speaker 10: be complicated looking forward. 650 00:34:24,320 --> 00:34:26,240 Speaker 3: One of the things that we've heard a lot about 651 00:34:26,800 --> 00:34:30,279 Speaker 3: when we study the manufacturing economy in China, and this 652 00:34:30,320 --> 00:34:33,080 Speaker 3: is not a new concept, that over capacity has been 653 00:34:33,120 --> 00:34:36,000 Speaker 3: a real issue and a real problem, and it's been 654 00:34:36,080 --> 00:34:40,080 Speaker 3: cited in by many trade partners as being one of 655 00:34:40,080 --> 00:34:44,279 Speaker 3: the ways in which China has been exporting deflation. Is 656 00:34:44,320 --> 00:34:46,440 Speaker 3: that still very much a concern for the government. 657 00:34:47,360 --> 00:34:50,920 Speaker 10: Well, I think the overcapacity itself is a concern for 658 00:34:51,000 --> 00:34:56,719 Speaker 10: the government because China is facing a sluggish demand, especially 659 00:34:56,760 --> 00:35:01,520 Speaker 10: in the domestic consumption. So that the governm side that 660 00:35:01,520 --> 00:35:05,560 Speaker 10: they are going to do something to restrain the over capacity, 661 00:35:06,000 --> 00:35:10,040 Speaker 10: because such as decide that they are going to do 662 00:35:10,160 --> 00:35:13,719 Speaker 10: something anti evolution. But on the other hand, we have 663 00:35:13,800 --> 00:35:17,279 Speaker 10: to say that it could not be easy because if 664 00:35:17,320 --> 00:35:21,400 Speaker 10: you look at what happened back to about ten years ago, 665 00:35:21,760 --> 00:35:26,560 Speaker 10: that UH over capacity reduction in China actually led to 666 00:35:26,840 --> 00:35:30,359 Speaker 10: some great pressure in the in the drop market. So 667 00:35:30,480 --> 00:35:33,520 Speaker 10: that now is a it's a dilemma for the for 668 00:35:33,560 --> 00:35:36,040 Speaker 10: the government on the one hand, the one they do 669 00:35:36,120 --> 00:35:39,439 Speaker 10: want to cut the over capacity. On the other hand, 670 00:35:39,480 --> 00:35:42,640 Speaker 10: they have to take care of the labor market. So 671 00:35:42,760 --> 00:35:47,759 Speaker 10: that given all of this, I think the government had 672 00:35:47,840 --> 00:35:51,680 Speaker 10: to has to take a gradual pressure on this on 673 00:35:51,680 --> 00:35:54,719 Speaker 10: this front. So but this is UH. This may not 674 00:35:54,800 --> 00:35:58,040 Speaker 10: be a good news for the trading partners, you know, 675 00:35:58,160 --> 00:36:01,839 Speaker 10: because of the weak domestic consumption, China has to rely 676 00:36:02,080 --> 00:36:07,279 Speaker 10: on the export more than before, so that other trade 677 00:36:07,320 --> 00:36:11,799 Speaker 10: partners may feel that China is exporting more and more 678 00:36:12,239 --> 00:36:16,880 Speaker 10: lower price goods to them. But for China, I think 679 00:36:17,040 --> 00:36:19,480 Speaker 10: that is the choice of no toys. 680 00:36:20,080 --> 00:36:21,560 Speaker 3: One of the things that we have seen a lot 681 00:36:21,600 --> 00:36:24,200 Speaker 3: of recently in the US has been aggressive spending on 682 00:36:24,360 --> 00:36:27,080 Speaker 3: artificial intelligence, and i'd like to get your take on 683 00:36:27,920 --> 00:36:30,960 Speaker 3: what you're seeing in terms of the AI spend in 684 00:36:31,080 --> 00:36:33,560 Speaker 3: China right now and the degree to which the government 685 00:36:33,719 --> 00:36:37,560 Speaker 3: is almost encouraging, fostering this type of spending. 686 00:36:38,560 --> 00:36:41,600 Speaker 10: Yes, you're right, I mean the government is encouraging the 687 00:36:41,719 --> 00:36:44,960 Speaker 10: development in the AI side. If you look at what 688 00:36:45,160 --> 00:36:50,000 Speaker 10: happened over the past week, the China just had the 689 00:36:50,040 --> 00:36:55,640 Speaker 10: fifteen five year plan proposal disclosed, and the government emphasized 690 00:36:56,280 --> 00:37:00,239 Speaker 10: the development of high tank including AI. They think the 691 00:37:00,400 --> 00:37:05,520 Speaker 10: new industries led by AI and the other such as 692 00:37:05,560 --> 00:37:10,719 Speaker 10: semiconductors and other news sectors can be the new engine 693 00:37:10,960 --> 00:37:14,720 Speaker 10: for China's development in the longer future. 694 00:37:15,239 --> 00:37:17,439 Speaker 3: David will leave it there, Thank you so very much. 695 00:37:17,520 --> 00:37:21,320 Speaker 3: David Chu there from Bloomberg Economics. Also in the week ahead, 696 00:37:21,360 --> 00:37:24,200 Speaker 3: we'll get the inflation data for South Korea. Now, these 697 00:37:24,280 --> 00:37:27,960 Speaker 3: numbers will be released as the Bank of Korea considers 698 00:37:28,040 --> 00:37:30,480 Speaker 3: adding to its gold reserves for the first time in 699 00:37:30,520 --> 00:37:33,560 Speaker 3: more than a decade. Last week, the BOK said it 700 00:37:33,600 --> 00:37:37,320 Speaker 3: would monitor markets to decide on the timing and size 701 00:37:37,360 --> 00:37:40,560 Speaker 3: of any gold purchases, and a decision would be based 702 00:37:40,600 --> 00:37:44,560 Speaker 3: on the evolution of its international reserves and the trajectory 703 00:37:44,600 --> 00:37:48,400 Speaker 3: of gold, as well as the direction of the Korean one. 704 00:37:48,760 --> 00:37:51,239 Speaker 3: We'll look out for that in the days ahead. I'm 705 00:37:51,239 --> 00:37:53,760 Speaker 3: Doug Krisner. You can catch us weekdays for the Daybreak 706 00:37:53,800 --> 00:37:57,640 Speaker 3: Asia podcast. It's available wherever you get your podcast. Nathan, 707 00:37:57,800 --> 00:37:58,359 Speaker 3: Thanks Doug. 708 00:37:58,520 --> 00:38:01,280 Speaker 1: Then that does it for this edition of Bloomberg Daybreak Weekend. 709 00:38:01,400 --> 00:38:04,080 Speaker 1: Join us again Monday morning at five am Wall Street 710 00:38:04,120 --> 00:38:06,760 Speaker 1: Time for the latest on markets overseas and the news 711 00:38:06,760 --> 00:38:09,520 Speaker 1: you need to start your day. I'm Nathan Hager. Stay 712 00:38:09,560 --> 00:38:12,479 Speaker 1: with us. Top stories and global business headlines are coming 713 00:38:12,560 --> 00:38:14,240 Speaker 1: up right now.