1 00:00:02,800 --> 00:00:05,160 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,160 --> 00:00:07,440 Speaker 1: the top stories in the coming week from our Daybreak 3 00:00:07,440 --> 00:00:10,080 Speaker 1: anchors all around the world, and straight ahead on the program. 4 00:00:10,119 --> 00:00:14,080 Speaker 1: Another earning season begins this Friday. Some of Wall Street's 5 00:00:14,120 --> 00:00:18,799 Speaker 1: biggest banks reporting, plus the Archagos jury scheduled to begin 6 00:00:18,880 --> 00:00:21,439 Speaker 1: deliberations this week, and we'll get you up to speed. 7 00:00:22,120 --> 00:00:23,759 Speaker 1: I'm Tom Busby in New York. 8 00:00:23,840 --> 00:00:26,400 Speaker 2: I'm Caroline Hedge in London, where we're delving into the 9 00:00:26,440 --> 00:00:30,240 Speaker 2: key issues facing the UK's newly minted governments. 10 00:00:30,360 --> 00:00:32,960 Speaker 3: I'm got Prisner looking at the level of worry over 11 00:00:33,000 --> 00:00:35,879 Speaker 3: the economy among policymakers in China. 12 00:00:35,960 --> 00:00:39,960 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:40,000 --> 00:00:43,800 Speaker 4: Eleve Them three own New York Bloomberg ninety nine to one, Washington, DC, 14 00:00:44,120 --> 00:00:47,560 Speaker 4: Bloomberg one O six one, Boston Bloomberg nine sixty, San 15 00:00:47,600 --> 00:00:52,199 Speaker 4: Francisco DAB Digital Radio, London, Sirius XM one nineteen and 16 00:00:52,280 --> 00:00:55,200 Speaker 4: around the world on Bloomberg Radio dot com and via 17 00:00:55,240 --> 00:00:56,560 Speaker 4: the Bloomberg Business App. 18 00:01:01,000 --> 00:01:03,880 Speaker 1: Good day to you. I'm Tom Busby. Earning season kicks 19 00:01:03,880 --> 00:01:06,479 Speaker 1: off this week. Some of Wall Street's biggest banks will 20 00:01:06,520 --> 00:01:09,679 Speaker 1: be reporting and for a preview, we welcome in Bloomberg 21 00:01:09,760 --> 00:01:15,520 Speaker 1: Intelligence senior banking analyst Alison Williams. Well, Allison, let's just say, 22 00:01:15,680 --> 00:01:19,200 Speaker 1: what are you expecting to see from these big banks 23 00:01:19,200 --> 00:01:23,160 Speaker 1: that start this Friday, JP Morgan, Chase City Group, Wells Fargo. 24 00:01:23,440 --> 00:01:26,440 Speaker 5: A couple of things that we'll be focusing on. First, 25 00:01:26,800 --> 00:01:31,720 Speaker 5: net interest income. This has been an area of pressure 26 00:01:31,720 --> 00:01:34,120 Speaker 5: in recent quarters, but we have seen signs that those 27 00:01:34,200 --> 00:01:37,440 Speaker 5: pressures are abating. And what we're going to be specifically 28 00:01:37,440 --> 00:01:41,040 Speaker 5: focusing on for the banks are what are the deposit 29 00:01:41,120 --> 00:01:47,600 Speaker 5: trends in terms of seeing some of that some stabilization 30 00:01:48,240 --> 00:01:52,200 Speaker 5: on that front. Secondly, are there any changes to the 31 00:01:52,240 --> 00:01:55,920 Speaker 5: outlook based on what we have seen in terms of 32 00:01:56,040 --> 00:02:00,840 Speaker 5: expectations for interest rate cuts and so over the past 33 00:02:00,840 --> 00:02:03,320 Speaker 5: few months, things have been a little bit more stable 34 00:02:03,840 --> 00:02:06,080 Speaker 5: than the bigger changes that we sought to start this year. 35 00:02:06,120 --> 00:02:08,720 Speaker 5: But keep in mind that when we heard from the 36 00:02:08,720 --> 00:02:11,640 Speaker 5: banks in April, most banks were a little bit hesitant 37 00:02:12,080 --> 00:02:16,920 Speaker 5: to make changes to their forecasts based on the movement, 38 00:02:17,080 --> 00:02:20,560 Speaker 5: and so specifically we'll be listening for Wells Fargo to 39 00:02:20,600 --> 00:02:25,200 Speaker 5: see if there's any changes to their outlook. JP Morgan 40 00:02:25,360 --> 00:02:29,079 Speaker 5: has already increased its outlook on the net interest income front. 41 00:02:29,639 --> 00:02:31,200 Speaker 5: That was some of the news that we got at 42 00:02:31,320 --> 00:02:34,600 Speaker 5: Investor Day. We also heard from them that their expenses 43 00:02:34,840 --> 00:02:36,680 Speaker 5: are going to be higher, but some of that is 44 00:02:36,760 --> 00:02:40,680 Speaker 5: because they are pulling forward some investments because they have 45 00:02:40,880 --> 00:02:44,600 Speaker 5: a sizeable gain to work with. And then for Bank 46 00:02:44,639 --> 00:02:49,280 Speaker 5: of America, the bank has been expecting that this quarter 47 00:02:49,320 --> 00:02:51,400 Speaker 5: will be the trough and their net interest income, so 48 00:02:51,440 --> 00:02:55,079 Speaker 5: we'll look for confirmation on that. City group expecting to 49 00:02:55,120 --> 00:02:58,480 Speaker 5: see some weakness, but there are some offsets on the feeline. 50 00:02:58,120 --> 00:03:01,320 Speaker 1: Now besides net interest income. Of a particular note to you, 51 00:03:01,560 --> 00:03:03,520 Speaker 1: trading and fees. 52 00:03:03,520 --> 00:03:08,480 Speaker 5: Trading and fees trading really continues to be resilient, and 53 00:03:09,320 --> 00:03:13,480 Speaker 5: we have said that we expect that this revenue item 54 00:03:13,680 --> 00:03:16,440 Speaker 5: keeps within the historically higher range, and that is what 55 00:03:16,480 --> 00:03:20,000 Speaker 5: we've seen for the past few quarters. We've seen some 56 00:03:20,080 --> 00:03:22,440 Speaker 5: differences in the drivers, but we do expect that that 57 00:03:23,280 --> 00:03:27,800 Speaker 5: continues this quarter and the quarters ahead. Within fixed income, 58 00:03:27,919 --> 00:03:30,480 Speaker 5: it's really the credit trading business that we expect to 59 00:03:30,520 --> 00:03:35,640 Speaker 5: be the outperformer. We've seen good activity in mortgage backed 60 00:03:35,880 --> 00:03:39,640 Speaker 5: securities as well as asset BAC securities. We've also seen 61 00:03:39,720 --> 00:03:46,560 Speaker 5: currency trading showing some positive trends, as well as our 62 00:03:46,600 --> 00:03:51,440 Speaker 5: expectations that equities trading should also be helped by some 63 00:03:51,520 --> 00:03:54,160 Speaker 5: of the very strong stock price movement that we've had. 64 00:03:54,840 --> 00:03:57,920 Speaker 5: We think the prime brokerage business will continue to support 65 00:03:57,920 --> 00:04:00,760 Speaker 5: the bank, So when we look at trading, we're expecting 66 00:04:00,920 --> 00:04:04,080 Speaker 5: that revenue relatively resilient compared to the prior year. We 67 00:04:04,120 --> 00:04:08,440 Speaker 5: do think that we'll see some seasonal decline, which we 68 00:04:08,480 --> 00:04:11,200 Speaker 5: typically do see in the second quarter, but the FEAT 69 00:04:11,240 --> 00:04:15,200 Speaker 5: side is really where investors are focusing on. Trading is 70 00:04:15,240 --> 00:04:17,200 Speaker 5: a much bigger piece of the revenue pool, but the 71 00:04:17,240 --> 00:04:21,440 Speaker 5: FEA side is a focus because we have had such 72 00:04:21,760 --> 00:04:25,200 Speaker 5: lower levels following the boom that we had in twenty 73 00:04:25,240 --> 00:04:28,400 Speaker 5: twenty one, we saw a big decline the following year, 74 00:04:28,440 --> 00:04:32,280 Speaker 5: and then last year really the big rebound that many 75 00:04:32,279 --> 00:04:36,560 Speaker 5: had hoped for failed to materialize. What we've seen in 76 00:04:36,600 --> 00:04:40,320 Speaker 5: the first half is really strong debt issue, and so 77 00:04:40,360 --> 00:04:42,560 Speaker 5: that's where I think we're going to continue to see 78 00:04:43,200 --> 00:04:46,120 Speaker 5: some of the biggest strength in the second quarter. On 79 00:04:46,200 --> 00:04:50,120 Speaker 5: the equity underwriting side of things, we are seeing some 80 00:04:50,200 --> 00:04:55,719 Speaker 5: positive activity within the US and European region, so we 81 00:04:55,720 --> 00:04:58,240 Speaker 5: think that's helpful, but there's still a lot of room 82 00:04:58,320 --> 00:05:03,520 Speaker 5: to run in terms of of overall issued and especially IPOs. 83 00:05:03,560 --> 00:05:06,159 Speaker 5: So we're going to be listening to hear what the 84 00:05:06,200 --> 00:05:09,360 Speaker 5: banks have to say with regard to pipelines and if 85 00:05:09,400 --> 00:05:12,680 Speaker 5: some of the very strong equity prices can help to 86 00:05:12,720 --> 00:05:16,240 Speaker 5: give a little bit lift on that front. Finally, m 87 00:05:16,320 --> 00:05:21,560 Speaker 5: and A, again, this isn't a business that was relatively 88 00:05:22,360 --> 00:05:28,920 Speaker 5: depressed last year and really looking to get some improvement. 89 00:05:30,240 --> 00:05:33,200 Speaker 5: We think that really after the election is when we 90 00:05:33,240 --> 00:05:36,080 Speaker 5: can start to see things pick up a little bit. 91 00:05:36,120 --> 00:05:36,240 Speaker 6: There. 92 00:05:36,279 --> 00:05:39,600 Speaker 5: It's really about the uncertainty, and we think that following 93 00:05:39,600 --> 00:05:43,440 Speaker 5: the election, one way or another, there will be at 94 00:05:43,560 --> 00:05:46,600 Speaker 5: least a little bit more certainty to help CEOs in 95 00:05:46,640 --> 00:05:47,480 Speaker 5: their decision making. 96 00:05:47,800 --> 00:05:51,160 Speaker 1: Well Our thanks to Bloomberg Intelligence channalyist Alison Williams, and 97 00:05:51,200 --> 00:05:53,599 Speaker 1: we stay on Wall Street now, but shift gears to 98 00:05:53,720 --> 00:05:57,120 Speaker 1: the court room. Jurors expected to begin deliberating in the 99 00:05:57,120 --> 00:06:00,600 Speaker 1: federal fraud and market manipulation trial of Our our Kago's 100 00:06:00,600 --> 00:06:03,479 Speaker 1: Capital management founder Bill Wong. And to bring us up 101 00:06:03,520 --> 00:06:07,239 Speaker 1: to speed, I'm joined by Bloomberg Legal reporter Chris Dulmich 102 00:06:08,120 --> 00:06:11,720 Speaker 1: Chris Somemer, calling this Wall Streets trial of the decade. 103 00:06:12,440 --> 00:06:16,839 Speaker 1: Why what is Bill Wang and one time CFO Patrick Halligan? 104 00:06:17,240 --> 00:06:18,640 Speaker 1: What are they being charged with? 105 00:06:19,960 --> 00:06:22,800 Speaker 6: Yeah, and it's a fascinating case. The trial has been 106 00:06:22,800 --> 00:06:27,120 Speaker 6: going on for nearly two months. It started in mid May. 107 00:06:28,320 --> 00:06:31,360 Speaker 6: The two men are charged with kind of separate things. 108 00:06:31,720 --> 00:06:35,320 Speaker 6: Archie Ghost flew up in March twenty twenty one when 109 00:06:35,360 --> 00:06:39,800 Speaker 6: it's biggest position, Viacom, issued a secondary offering and kind 110 00:06:39,839 --> 00:06:44,760 Speaker 6: of set off a domino effects that led the firm's 111 00:06:45,040 --> 00:06:48,279 Speaker 6: counterparties to start issuing margin calls and eventually led to 112 00:06:48,320 --> 00:06:51,800 Speaker 6: its collapse basically a week later or within the same week, 113 00:06:51,839 --> 00:06:55,360 Speaker 6: I should say. Wang and Halligan, the firm's former CFO, 114 00:06:55,839 --> 00:07:00,560 Speaker 6: are charged with a racketeering conspiracy for allegedly lying to 115 00:07:00,680 --> 00:07:04,160 Speaker 6: the banks, to the firm's banks and counterparties about the 116 00:07:04,200 --> 00:07:08,960 Speaker 6: size of its positions, what investments had held, and how 117 00:07:09,040 --> 00:07:12,640 Speaker 6: much credit it had at other banks, which the government 118 00:07:12,680 --> 00:07:15,520 Speaker 6: alleges led to the kind of collapse of the firm 119 00:07:15,560 --> 00:07:19,880 Speaker 6: in the end. Huang is also charged separately with working 120 00:07:19,920 --> 00:07:25,200 Speaker 6: with the firm's former head trader, William Tamida, to artificially 121 00:07:25,200 --> 00:07:28,360 Speaker 6: increase the price of the stocks and its portfolio in 122 00:07:28,480 --> 00:07:30,560 Speaker 6: order to keep it you know, get its grow its 123 00:07:30,600 --> 00:07:35,840 Speaker 6: assets and continue making money. So it's it's a fascinating case. 124 00:07:35,880 --> 00:07:38,040 Speaker 6: Like I said, it's been going on for nearly two months, 125 00:07:38,080 --> 00:07:41,040 Speaker 6: and the two size will give closing arguments on Monday, 126 00:07:41,040 --> 00:07:43,320 Speaker 6: and the jury could get the cases dudents Tuesday. 127 00:07:43,640 --> 00:07:46,400 Speaker 1: So the question for the jury were the actions of 128 00:07:46,440 --> 00:07:50,840 Speaker 1: our kgos just careless, reckless or something much worse? 129 00:07:52,320 --> 00:07:56,640 Speaker 6: Yeah, the real question is whether they were material to 130 00:07:56,760 --> 00:08:00,600 Speaker 6: the bank's decisions whether to extend credit to them. Really 131 00:08:00,920 --> 00:08:04,120 Speaker 6: is the main question there, and what that means is essentially, 132 00:08:04,600 --> 00:08:09,920 Speaker 6: would a reasonable investor or reasonable counter party have taken 133 00:08:10,480 --> 00:08:15,200 Speaker 6: the alleged misstatements that they made to them into account 134 00:08:15,200 --> 00:08:17,840 Speaker 6: when making the decision whether or not to extend credit. 135 00:08:18,800 --> 00:08:21,600 Speaker 6: And the jury will have to decide that question. That's 136 00:08:21,640 --> 00:08:25,600 Speaker 6: a very important question in most of the counts here. 137 00:08:25,680 --> 00:08:32,439 Speaker 6: So it is it's going to be an interesting deliberation. 138 00:08:33,200 --> 00:08:37,000 Speaker 6: We will obviously have no idea how long it will last, 139 00:08:37,000 --> 00:08:38,920 Speaker 6: but the judge will give its instructions to the jury 140 00:08:38,920 --> 00:08:41,480 Speaker 6: on Tuesday morning and they'll get the case shortly after that. 141 00:08:42,040 --> 00:08:43,679 Speaker 1: Well, there's a lot for the jury to get their 142 00:08:43,760 --> 00:08:47,880 Speaker 1: arms around. A thirty six billion dollar family fortune wiped 143 00:08:47,920 --> 00:08:50,640 Speaker 1: out in three days and banks on the hook for 144 00:08:50,640 --> 00:08:53,760 Speaker 1: about ten billion in losses. I mean, what was the 145 00:08:53,800 --> 00:08:56,040 Speaker 1: bank's due diligence? How was that for? 146 00:08:56,559 --> 00:08:56,599 Speaker 7: What? 147 00:08:56,800 --> 00:08:59,400 Speaker 1: I mean, did he look like a safe bet for 148 00:08:59,480 --> 00:09:03,760 Speaker 1: them or or did they just getled. 149 00:09:03,640 --> 00:09:06,040 Speaker 6: That's been well, it's it's a mixed back because they 150 00:09:06,040 --> 00:09:09,000 Speaker 6: are about there are about a dozen different counterparties reading 151 00:09:09,000 --> 00:09:12,520 Speaker 6: from you know, giant investment banks like Goldman, Sachs and 152 00:09:12,600 --> 00:09:15,240 Speaker 6: Credit Sweets, which eventually collapsed in kind of the wake 153 00:09:15,280 --> 00:09:19,240 Speaker 6: of this this blow up. Some did more due diligence 154 00:09:19,240 --> 00:09:21,400 Speaker 6: than others, but a lot of them have kind of 155 00:09:21,440 --> 00:09:24,240 Speaker 6: looked anxious to do business with them. They had become 156 00:09:24,280 --> 00:09:28,640 Speaker 6: a massive kind of player in the family office world, 157 00:09:28,960 --> 00:09:33,240 Speaker 6: and and a lot of times they were maybe taking 158 00:09:33,280 --> 00:09:35,200 Speaker 6: them at base value, like for a long time. This 159 00:09:35,320 --> 00:09:38,840 Speaker 6: is a pretty profitable firm for a long time. Bill 160 00:09:38,960 --> 00:09:43,000 Speaker 6: Wong's you know, thesis and kind of investment strategy was 161 00:09:43,120 --> 00:09:47,600 Speaker 6: by and hold. He had his defenses that he honestly 162 00:09:47,640 --> 00:09:50,040 Speaker 6: believed in these companies that he invested in, and he 163 00:09:50,120 --> 00:09:53,520 Speaker 6: was making investment decisions based on fundamentals, and that he 164 00:09:53,640 --> 00:09:57,240 Speaker 6: wasn't really trying to manipulate the market. But what's clear 165 00:09:57,320 --> 00:10:02,240 Speaker 6: from the trial and the testimony is that starting around 166 00:10:02,240 --> 00:10:06,360 Speaker 6: the time of the pandemic, he increasingly directed his traders 167 00:10:06,360 --> 00:10:12,320 Speaker 6: to trade an increasing amounts both before market and near 168 00:10:12,440 --> 00:10:17,160 Speaker 6: the close to you know, and there's a lot more 169 00:10:17,200 --> 00:10:20,880 Speaker 6: activity than they had ever done before. So it's it's 170 00:10:21,040 --> 00:10:24,720 Speaker 6: really going to be a big question for the jury 171 00:10:24,800 --> 00:10:28,240 Speaker 6: as to what happened here, as to whether or not 172 00:10:28,280 --> 00:10:33,000 Speaker 6: they're actually responsible for, you know, leading these banks into 173 00:10:33,040 --> 00:10:35,120 Speaker 6: these decisions to extend credits. 174 00:10:35,640 --> 00:10:38,240 Speaker 1: And this all began, as you said, with swaps on 175 00:10:38,440 --> 00:10:41,880 Speaker 1: Viacom CBS. Then he got into some Chinese tech companies. 176 00:10:42,280 --> 00:10:44,920 Speaker 1: Did they look like just mundane investments? Did they look 177 00:10:45,040 --> 00:10:47,480 Speaker 1: like big risks at the time. I know, twenty twenty 178 00:10:47,520 --> 00:10:50,600 Speaker 1: hindsight is perfect, but you know, going back to twenty 179 00:10:50,640 --> 00:10:51,319 Speaker 1: twenty one. 180 00:10:52,200 --> 00:10:55,880 Speaker 6: Certainly some of them could be considered risky bets he had. 181 00:10:56,040 --> 00:10:58,680 Speaker 6: You know, the banks consistently asked him whether he had 182 00:10:58,760 --> 00:11:03,520 Speaker 6: hedges in place in you know, pretty liquid companies like 183 00:11:03,600 --> 00:11:07,760 Speaker 6: you know, Google, Facebook and big stocks like that, and 184 00:11:07,840 --> 00:11:09,800 Speaker 6: they wanted to be reassured that he had and he 185 00:11:09,880 --> 00:11:12,320 Speaker 6: did have some edges in place, but ultimately those were 186 00:11:12,320 --> 00:11:15,480 Speaker 6: not really that did not really help him in the 187 00:11:15,559 --> 00:11:19,640 Speaker 6: end because of liquid they they called it, and this 188 00:11:19,800 --> 00:11:24,720 Speaker 6: was a big question in the trial that Archie Ghosts 189 00:11:24,720 --> 00:11:28,439 Speaker 6: claimed that this was a liquidity problem, not a solvency problem. 190 00:11:28,640 --> 00:11:31,480 Speaker 6: The government, of course says they were insolvent. They no 191 00:11:31,559 --> 00:11:35,160 Speaker 6: longer were able to function as a going concern. So 192 00:11:36,240 --> 00:11:39,200 Speaker 6: whether or not it was actually a problem of just 193 00:11:39,280 --> 00:11:42,120 Speaker 6: being able to get the money to pay the margin 194 00:11:42,200 --> 00:11:46,520 Speaker 6: calls and that they weren't able to in the end 195 00:11:46,640 --> 00:11:49,040 Speaker 6: because of this domino effect, or whether or not it 196 00:11:49,080 --> 00:11:52,360 Speaker 6: was because of manipulation and the statements they made to 197 00:11:52,400 --> 00:11:55,199 Speaker 6: the banks. Of course, the defense says in a lot 198 00:11:55,240 --> 00:11:57,080 Speaker 6: of ways, these were not my statements at all, that 199 00:11:57,200 --> 00:11:59,319 Speaker 6: he believed a lot of the things they were saying 200 00:11:59,320 --> 00:12:00,600 Speaker 6: that they were true. 201 00:12:00,800 --> 00:12:01,040 Speaker 4: Wow. 202 00:12:01,120 --> 00:12:05,520 Speaker 1: Well, Closing arguments expected this week in Bill Wong's federal trial, 203 00:12:05,559 --> 00:12:08,400 Speaker 1: Wall Street Trial of the Decade. Our thanks to Chris 204 00:12:08,440 --> 00:12:11,880 Speaker 1: dolmech legal reporter for Bloomberg News, and coming up on 205 00:12:11,880 --> 00:12:14,160 Speaker 1: Bloomberg Day Break weekend, we head across the Pond to 206 00:12:14,160 --> 00:12:16,560 Speaker 1: look at what the results of this past week's UK 207 00:12:16,760 --> 00:12:21,200 Speaker 1: parliamentary election could mean for that country's and Europe's economy. 208 00:12:21,440 --> 00:12:35,760 Speaker 1: I'm Tom Busby and this is Bloomberg. This is Bloomberg 209 00:12:35,800 --> 00:12:38,120 Speaker 1: day Break weekend, our global look ahead at the top 210 00:12:38,120 --> 00:12:41,000 Speaker 1: stories for investors in the coming week. I'm Tom Busby 211 00:12:41,040 --> 00:12:43,880 Speaker 1: in New York. Up later in our program more trade 212 00:12:43,920 --> 00:12:47,520 Speaker 1: and inflation data from the world's second largest economy. But first, 213 00:12:48,000 --> 00:12:50,880 Speaker 1: what will last week's election results in the UK mean 214 00:12:51,000 --> 00:12:53,840 Speaker 1: for that country's economy. For more, we head to London 215 00:12:54,320 --> 00:12:57,599 Speaker 1: and Caroline Hepker, the host of Bloomberg Daybreak Europe. 216 00:12:57,800 --> 00:12:58,079 Speaker 8: Tom. 217 00:12:58,240 --> 00:13:02,920 Speaker 2: After a brief and different dificult election campaign, including many 218 00:13:02,960 --> 00:13:07,040 Speaker 2: hard fought battles over the economy, immigration, and public services, 219 00:13:07,040 --> 00:13:10,559 Speaker 2: to name a few, the British electorate has finally made 220 00:13:10,640 --> 00:13:14,400 Speaker 2: its choice. Whilst the snap summer poll may have come 221 00:13:14,440 --> 00:13:17,320 Speaker 2: as a surprise to many, even those well versed in 222 00:13:17,360 --> 00:13:21,880 Speaker 2: the ways of Westminster, the dismal inheritance awaiting the next 223 00:13:21,960 --> 00:13:25,280 Speaker 2: government will be news to no one. Britain's problems have 224 00:13:25,320 --> 00:13:29,200 Speaker 2: been piling up since the twenty sixteen Brexit referendum, which 225 00:13:29,280 --> 00:13:33,760 Speaker 2: triggered years of Tory political infighting. Add to that a 226 00:13:33,800 --> 00:13:38,480 Speaker 2: global pandemic alongside current geopolitical unrest, and some would argue 227 00:13:38,559 --> 00:13:43,240 Speaker 2: you're left with the perfect recipe for political disaster. Former 228 00:13:43,280 --> 00:13:46,920 Speaker 2: Conservative Government minister Sam Jimar has been speaking to Bloomberg, 229 00:13:47,200 --> 00:13:51,400 Speaker 2: telling us that the next government's navigation of relations with 230 00:13:51,480 --> 00:13:54,359 Speaker 2: the European Bloc will now be critical. 231 00:13:54,800 --> 00:13:57,080 Speaker 8: Foreign investment is a big thing. Is this going to 232 00:13:57,080 --> 00:14:00,319 Speaker 8: be a government that is domestically focused or is going 233 00:14:00,360 --> 00:14:03,280 Speaker 8: to really get out there, almost go on a road 234 00:14:03,320 --> 00:14:06,280 Speaker 8: show and to try and attract for an investment. I 235 00:14:06,320 --> 00:14:10,479 Speaker 8: think here the public is leading opinion rather than the politicians, 236 00:14:10,480 --> 00:14:12,200 Speaker 8: and I think most of the public today, if you 237 00:14:12,240 --> 00:14:16,439 Speaker 8: pull them, we'll say that Brexit has been a mistake, 238 00:14:17,120 --> 00:14:19,480 Speaker 8: to put it bluntly, but I think the direction of 239 00:14:19,520 --> 00:14:23,880 Speaker 8: travel from here is an easy enough relations Where we've 240 00:14:23,880 --> 00:14:27,120 Speaker 8: been is that anything that is from the EU has 241 00:14:27,160 --> 00:14:30,560 Speaker 8: to be treated with deep skepticism and therefore not getting 242 00:14:30,600 --> 00:14:33,360 Speaker 8: involved with So that's one aspect of it. You're quite 243 00:14:33,400 --> 00:14:36,280 Speaker 8: rightly pointed out. I resigned from government in twenty eighteen. 244 00:14:36,400 --> 00:14:38,920 Speaker 8: I read the tea leaves that the Conservative Party was 245 00:14:38,960 --> 00:14:42,480 Speaker 8: embarked on a journey that would not be constructive for 246 00:14:42,560 --> 00:14:45,680 Speaker 8: the country. In fact, it's being destructive for our economy. 247 00:14:46,040 --> 00:14:49,840 Speaker 8: And my personal hope is that we get back on 248 00:14:49,880 --> 00:14:52,640 Speaker 8: an even keel that's not to re litigate the referendum, 249 00:14:53,080 --> 00:14:56,480 Speaker 8: but to actually remove some of the sanctions we've effectively 250 00:14:56,480 --> 00:14:58,040 Speaker 8: imposed on ourselves as a country. 251 00:14:58,120 --> 00:15:01,800 Speaker 2: That was Sam Timo speaking to bloom Radio. Right now, 252 00:15:01,840 --> 00:15:05,840 Speaker 2: the UK is also facing a fiscal strait jacket. This 253 00:15:06,000 --> 00:15:09,840 Speaker 2: is the product of years of crisis spending spurred by 254 00:15:09,880 --> 00:15:13,200 Speaker 2: the COVID pandemic and a need to help families to 255 00:15:13,280 --> 00:15:15,680 Speaker 2: cope with the cost of a living shock after Russia's 256 00:15:15,680 --> 00:15:20,920 Speaker 2: invasion of Ukraine. Today's government is presented with crumbling public 257 00:15:21,000 --> 00:15:25,160 Speaker 2: services that desperately need money, taxes at a postwar high, 258 00:15:25,200 --> 00:15:28,720 Speaker 2: and national debt at levels last scene in the early 259 00:15:28,880 --> 00:15:34,120 Speaker 2: nineteen sixties, which costs sixty billion pounds per year just 260 00:15:34,160 --> 00:15:37,240 Speaker 2: in order to service. As far as the list of 261 00:15:37,360 --> 00:15:40,600 Speaker 2: priorities goes, it's hard to imagine a world in which 262 00:15:40,800 --> 00:15:44,480 Speaker 2: minimizing the country's economic bleeding isn't high on the agenda. 263 00:15:45,000 --> 00:15:48,000 Speaker 2: On the campaign trail, growth was a real buzzword, as 264 00:15:48,040 --> 00:15:51,880 Speaker 2: parties promised that the economy could expand its way out 265 00:15:51,920 --> 00:15:55,680 Speaker 2: of the spending bind. Business leaders will also be key 266 00:15:55,680 --> 00:15:58,920 Speaker 2: in achieving that, but they will likely have their own 267 00:15:58,920 --> 00:16:02,480 Speaker 2: set of demands or the new residents of Number ten. 268 00:16:03,040 --> 00:16:06,640 Speaker 2: Key bosses tell Bloomberg that they're looking for upgraded infrastructure, 269 00:16:06,920 --> 00:16:09,720 Speaker 2: a focus on the skills gap, and a commitment to 270 00:16:09,800 --> 00:16:14,000 Speaker 2: the climate, coupled with a strong preference for lower business rates. 271 00:16:14,240 --> 00:16:19,040 Speaker 2: Their requests won't come cheap. Can Britain's next cabinet keep up? 272 00:16:19,920 --> 00:16:23,280 Speaker 2: Also personal it will be the housing crisis. Bloomberg analysis 273 00:16:23,280 --> 00:16:25,280 Speaker 2: shows that the next government will need to build the 274 00:16:25,320 --> 00:16:28,960 Speaker 2: equivalent of another city the size of London to make 275 00:16:29,080 --> 00:16:34,320 Speaker 2: up for five decades of below target construction. The shortfall 276 00:16:34,520 --> 00:16:38,280 Speaker 2: is driving Britain's worst housing crisis since World War II. 277 00:16:38,600 --> 00:16:43,120 Speaker 2: Alleviating its effects will no doubt be of immediate concern, 278 00:16:43,560 --> 00:16:46,000 Speaker 2: But is it possible to make up the difference? For 279 00:16:46,040 --> 00:16:50,280 Speaker 2: almost five decades, developers and local authorities have failed to 280 00:16:50,320 --> 00:16:53,160 Speaker 2: bring new homes onto the market at the pace of 281 00:16:53,200 --> 00:16:56,960 Speaker 2: other wealthy nations in Europe, or even at the rate 282 00:16:57,040 --> 00:17:01,280 Speaker 2: that Britain managed during the nineteen sixties. So plenty for 283 00:17:01,360 --> 00:17:04,280 Speaker 2: this next administration to be getting on with. Where do 284 00:17:04,359 --> 00:17:08,560 Speaker 2: they start? The new government's proverbial inbox is something that 285 00:17:08,600 --> 00:17:11,520 Speaker 2: my colleague Tom McKenzie and I have been discussing with 286 00:17:11,800 --> 00:17:16,720 Speaker 2: Bloomberg's senior economics reporter Philip Aldrick our City editor Katherine 287 00:17:16,760 --> 00:17:19,760 Speaker 2: Griffiths and our housing reporter Jack Sitters. 288 00:17:20,520 --> 00:17:22,920 Speaker 9: It's the combination of the one hundred percent of GDP 289 00:17:23,240 --> 00:17:27,160 Speaker 9: debt level with high interest rates that has caused real 290 00:17:27,400 --> 00:17:30,000 Speaker 9: constraints on public spending and what the government can do. 291 00:17:31,520 --> 00:17:34,320 Speaker 9: The increase in the debt servicing costs has gone up 292 00:17:34,440 --> 00:17:37,560 Speaker 9: by sixty billion pounds a year since before the pandemic. 293 00:17:37,800 --> 00:17:40,200 Speaker 9: That sixty billion pounds is equivalent to the size of 294 00:17:40,200 --> 00:17:42,239 Speaker 9: the defense budget, and you're not getting anything for that. 295 00:17:42,640 --> 00:17:45,320 Speaker 9: So you have to take money out of services to 296 00:17:45,400 --> 00:17:48,560 Speaker 9: pay for this debt servicing, or you've got to raise 297 00:17:48,560 --> 00:17:50,760 Speaker 9: taxes to do this, or you could borrow more and 298 00:17:50,800 --> 00:17:52,720 Speaker 9: send the debt spiraling further. These are the kind of 299 00:17:52,920 --> 00:17:54,960 Speaker 9: horrific decisions that have to be that are having to 300 00:17:55,040 --> 00:17:57,280 Speaker 9: be made, and that's why we've seen the tax burden 301 00:17:57,359 --> 00:17:59,520 Speaker 9: just drift up to sort of the highest level since 302 00:17:59,560 --> 00:18:03,160 Speaker 9: World War II, because you know, there are these ongoing 303 00:18:03,200 --> 00:18:06,280 Speaker 9: public spending costs which have got no effect on the 304 00:18:06,680 --> 00:18:09,480 Speaker 9: quality of public services. Just just paying our creditors doesn't 305 00:18:09,480 --> 00:18:12,760 Speaker 9: help pay for nurses. So that's been this kind of 306 00:18:12,800 --> 00:18:13,480 Speaker 9: core problem. 307 00:18:13,840 --> 00:18:14,159 Speaker 10: Catherine. 308 00:18:14,200 --> 00:18:16,239 Speaker 11: Let's bring you in at this point in terms of 309 00:18:16,240 --> 00:18:19,160 Speaker 11: how the city of London is adjusting to the new government. 310 00:18:19,200 --> 00:18:21,119 Speaker 11: We saw a course a number of politicians fighting for 311 00:18:21,160 --> 00:18:24,600 Speaker 11: the affections of the city and businesses over the last 312 00:18:24,600 --> 00:18:26,240 Speaker 11: six weeks or so. What is going to be at 313 00:18:26,280 --> 00:18:27,240 Speaker 11: the top of their wish list? 314 00:18:28,200 --> 00:18:30,119 Speaker 12: Well, I suppose, on the one hand, if they had 315 00:18:30,119 --> 00:18:32,760 Speaker 12: a kind of ideal wish list, it would be a 316 00:18:32,880 --> 00:18:36,400 Speaker 12: very very sort of tax free scenario or low taxes. 317 00:18:36,440 --> 00:18:38,840 Speaker 12: So when it's banks, they don't want to have the 318 00:18:39,160 --> 00:18:41,359 Speaker 12: surcharge on their profits, they don't want to have the 319 00:18:41,480 --> 00:18:44,600 Speaker 12: levy on their balance sheets. But I think they are realistic. 320 00:18:44,720 --> 00:18:47,359 Speaker 12: So what they're really looking for, given the constraints that 321 00:18:47,400 --> 00:18:50,920 Speaker 12: feels just outlined, is they want sort of clarity. They 322 00:18:50,920 --> 00:18:54,520 Speaker 12: want consistency, they want a closer relationship with Europe, and 323 00:18:54,560 --> 00:18:56,480 Speaker 12: they want the UK overall to be a kind of 324 00:18:56,560 --> 00:18:59,280 Speaker 12: place where they can attract the best talent. So they 325 00:18:59,280 --> 00:19:02,040 Speaker 12: want all those other things to work well, public services too, 326 00:19:02,080 --> 00:19:03,840 Speaker 12: so they can get people to come and work here. 327 00:19:04,240 --> 00:19:06,880 Speaker 2: Attracting the best talent, though it means somewhere to live. 328 00:19:07,640 --> 00:19:12,520 Speaker 2: In the planning system, the housing landscape has been incredibly difficult. 329 00:19:13,000 --> 00:19:16,760 Speaker 2: Jack considers this is your beat, isn't it? How difficult 330 00:19:16,760 --> 00:19:19,000 Speaker 2: it is going to be to solve the housing problem. 331 00:19:19,280 --> 00:19:21,080 Speaker 13: The fact that you've even got me on for this discussion, 332 00:19:21,119 --> 00:19:24,320 Speaker 13: I guess, is telling of just how much housing has 333 00:19:24,520 --> 00:19:27,879 Speaker 13: risen up the agenda. The reality is today that you 334 00:19:27,920 --> 00:19:29,879 Speaker 13: know a huge proportion of the housing output in this 335 00:19:29,880 --> 00:19:33,760 Speaker 13: country is delivered by a very small number of private developers. 336 00:19:34,600 --> 00:19:37,639 Speaker 13: They're not charities, they're focused on margin, and you know, 337 00:19:37,680 --> 00:19:41,359 Speaker 13: you've had a period of suddenly increasing interest rates, so 338 00:19:41,359 --> 00:19:43,399 Speaker 13: a lot of these housebuilders were very nervous about what 339 00:19:43,440 --> 00:19:45,639 Speaker 13: demand would look like, so they've slowed down the amount 340 00:19:45,640 --> 00:19:49,000 Speaker 13: they've been building. Inevitably, that's going to slow down, you know, 341 00:19:49,720 --> 00:19:51,879 Speaker 13: the overall supply, and you just don't have the money 342 00:19:51,920 --> 00:19:54,520 Speaker 13: there for the public sector to be building in significant 343 00:19:54,560 --> 00:19:56,240 Speaker 13: volume as it did. You know back if you go 344 00:19:56,240 --> 00:19:57,880 Speaker 13: back to the fifties and sixties, which is the last 345 00:19:57,880 --> 00:19:59,879 Speaker 13: time Britain was really building, you know what, we might 346 00:20:00,359 --> 00:20:03,400 Speaker 13: enough homes. The incoming government has got a huge challenge 347 00:20:03,440 --> 00:20:05,480 Speaker 13: to try and stimulate that supply, and it just it 348 00:20:05,520 --> 00:20:06,439 Speaker 13: won't happen quickly. 349 00:20:07,600 --> 00:20:09,680 Speaker 11: On the question, Phil, we'll bring you back in at 350 00:20:09,680 --> 00:20:12,360 Speaker 11: this point. Fiscal rules big feature of course of the campaign, 351 00:20:12,359 --> 00:20:15,200 Speaker 11: and how how a new government will stick to them 352 00:20:15,760 --> 00:20:17,879 Speaker 11: as they as they look to fund services like education 353 00:20:17,960 --> 00:20:20,320 Speaker 11: and NHS do they do, they still need to stick 354 00:20:20,359 --> 00:20:23,080 Speaker 11: to those to those fiscal rules is their rigal room. 355 00:20:23,400 --> 00:20:26,439 Speaker 11: Because of course, loosening the fiscal purse to spend on 356 00:20:26,480 --> 00:20:28,159 Speaker 11: things like tax cuts, it's very different to loosening the 357 00:20:28,200 --> 00:20:30,520 Speaker 11: fiscal purse to spend on things like capex. 358 00:20:30,760 --> 00:20:33,920 Speaker 9: In March, the OvR forecast that Jeremy Hunt had about 359 00:20:33,920 --> 00:20:37,440 Speaker 9: eight point nine billion to spend you know, headroom under 360 00:20:37,560 --> 00:20:40,159 Speaker 9: under under the fiscal rules. So there is going to 361 00:20:40,160 --> 00:20:43,520 Speaker 9: be real constraints on what they can do caused by 362 00:20:43,920 --> 00:20:46,439 Speaker 9: you know this this you need to show, you know, 363 00:20:46,520 --> 00:20:48,800 Speaker 9: fiscal sort of prudence. 364 00:20:49,040 --> 00:20:53,680 Speaker 2: Yeah, Catherine. In terms of then how that how that 365 00:20:53,760 --> 00:20:57,119 Speaker 2: flows into what happens with the UK? How does Britain 366 00:20:57,200 --> 00:21:00,960 Speaker 2: target foreign investment? I mean a few days before the election, 367 00:21:01,040 --> 00:21:04,440 Speaker 2: I remember speaking to the country head a BNP Pariba, Menuelburi, 368 00:21:04,520 --> 00:21:08,320 Speaker 2: and she was saying, you need stability, that is for 369 00:21:08,400 --> 00:21:12,639 Speaker 2: more than just six months. How is Britain going to 370 00:21:12,680 --> 00:21:14,200 Speaker 2: bring foreign investment in? 371 00:21:15,119 --> 00:21:17,919 Speaker 12: So I think the government will start from quite a 372 00:21:17,920 --> 00:21:21,040 Speaker 12: good place, which is that the UK seems quite a 373 00:21:21,080 --> 00:21:23,880 Speaker 12: stable place compared to many other parts of the world, 374 00:21:23,920 --> 00:21:27,400 Speaker 12: not LEAs style continental neighbors. So it's a good starting point. 375 00:21:27,760 --> 00:21:29,879 Speaker 12: But I think there are a few things that foreign 376 00:21:29,880 --> 00:21:32,760 Speaker 12: investors want for a start. They do want stability. They 377 00:21:32,800 --> 00:21:36,280 Speaker 12: didn't like the idea of the HS two extension project 378 00:21:36,359 --> 00:21:39,200 Speaker 12: being going so far down that path and then dropped 379 00:21:39,440 --> 00:21:42,199 Speaker 12: by Richie Sunak, So they don't want to feel that 380 00:21:42,280 --> 00:21:46,320 Speaker 12: kind of domestic politics. Trump's sort of long term planning, 381 00:21:46,720 --> 00:21:48,920 Speaker 12: and they want to have kind of clear sight of 382 00:21:49,160 --> 00:21:52,840 Speaker 12: what the government will do, whether it's green investment, whether 383 00:21:52,880 --> 00:21:55,639 Speaker 12: it's housing or other infrastructure, because they definitely want to 384 00:21:55,680 --> 00:21:56,280 Speaker 12: invest in the. 385 00:21:56,320 --> 00:22:00,240 Speaker 11: UK Okay that on that challenge and then domestically, and 386 00:22:00,680 --> 00:22:02,840 Speaker 11: part of the challenge around building those new homes and 387 00:22:03,280 --> 00:22:06,879 Speaker 11: reaching those targets has been what nimbiism who's been has 388 00:22:06,960 --> 00:22:10,399 Speaker 11: been blamed, so so local populations pushing back on developments. 389 00:22:10,920 --> 00:22:13,800 Speaker 11: When I speak to people about this, those who welcome 390 00:22:14,040 --> 00:22:16,080 Speaker 11: the development of buildings also say what they need to 391 00:22:16,240 --> 00:22:19,760 Speaker 11: also incorporate things like additional hospitals and schools that come 392 00:22:19,800 --> 00:22:24,120 Speaker 11: under pressure. How is the incoming government thinking about addressing 393 00:22:24,320 --> 00:22:26,679 Speaker 11: that part of it? Are they going to rip up 394 00:22:26,720 --> 00:22:30,080 Speaker 11: the regulations to just get that house building going even 395 00:22:30,160 --> 00:22:33,400 Speaker 11: come what may, even if some of those issues are sidelined, 396 00:22:33,600 --> 00:22:35,119 Speaker 11: or are they looking to address that as part of 397 00:22:35,119 --> 00:22:35,440 Speaker 11: the mix. 398 00:22:35,800 --> 00:22:38,639 Speaker 13: Yeah, so I think it's really interesting. And you know, 399 00:22:38,960 --> 00:22:42,520 Speaker 13: in the time that I've spent covering this area, I've 400 00:22:42,560 --> 00:22:46,160 Speaker 13: never never before heard a political party, even though slightly 401 00:22:46,200 --> 00:22:49,040 Speaker 13: whispering it in the manifesto, even ignowledged the idea of 402 00:22:49,040 --> 00:22:50,679 Speaker 13: building on the green belt. Now, you know, lab we're 403 00:22:50,680 --> 00:22:52,600 Speaker 13: talking about building on the gray Belt, the bits of 404 00:22:52,600 --> 00:22:54,800 Speaker 13: the green Belt that aren't actually very attractive. But quietly, 405 00:22:54,840 --> 00:22:57,840 Speaker 13: that's actually really radical. You know, that's been a total 406 00:22:57,920 --> 00:23:00,920 Speaker 13: taboo in British politics for ever since the Second World War. 407 00:23:01,320 --> 00:23:03,840 Speaker 13: So that that is, I guess, probably the first indication 408 00:23:03,880 --> 00:23:07,320 Speaker 13: of a potential significant change on the supply side. So 409 00:23:07,440 --> 00:23:09,960 Speaker 13: the previous governments have done a lot on the demand side, 410 00:23:09,960 --> 00:23:13,159 Speaker 13: policies like help to buy, trying to you know, stimulate demand, 411 00:23:13,240 --> 00:23:15,320 Speaker 13: tinkering with mortgages, all that sort of stuff. But yeah, 412 00:23:15,359 --> 00:23:18,280 Speaker 13: as you suggested, clearly it's it's the supply side where 413 00:23:18,320 --> 00:23:20,959 Speaker 13: the issue really is now, that planning constraint and you 414 00:23:21,000 --> 00:23:22,360 Speaker 13: see it, you know, you see it all the time. 415 00:23:22,400 --> 00:23:26,040 Speaker 13: There's a story in the BBC about you know, a 416 00:23:26,600 --> 00:23:28,920 Speaker 13: development that was had a lot of objections. It quoted 417 00:23:28,960 --> 00:23:31,040 Speaker 13: six people who are opposed to development, not a single 418 00:23:31,080 --> 00:23:33,680 Speaker 13: one who's in favor. Just culturally, there needs there needs 419 00:23:33,680 --> 00:23:35,520 Speaker 13: to be a real change in this country about I mean, 420 00:23:35,600 --> 00:23:39,120 Speaker 13: roads get clogs, schools get overfilled, there aren't enough hospitals. Absolutely, yeah, 421 00:23:39,119 --> 00:23:41,080 Speaker 13: And so this is where you need to have the 422 00:23:41,080 --> 00:23:43,639 Speaker 13: problem is you have planning delegated to a local level, 423 00:23:43,920 --> 00:23:46,280 Speaker 13: decided by counselors who you know are very conscious that 424 00:23:46,320 --> 00:23:49,119 Speaker 13: their local electorate might not like new homes built in 425 00:23:49,160 --> 00:23:50,960 Speaker 13: the you know, in the field near where they live. 426 00:23:51,359 --> 00:23:53,960 Speaker 13: But then you have you know, budget budgetary decisions and 427 00:23:54,160 --> 00:23:56,160 Speaker 13: decisions around a lot of those bigger infrastruture things taken 428 00:23:56,200 --> 00:23:58,200 Speaker 13: at a central government level. So there's there's a lack 429 00:23:58,240 --> 00:23:59,919 Speaker 13: of you know, things being joined up. 430 00:24:00,119 --> 00:24:02,760 Speaker 2: Yeah, Catherine A laughed. Were then on the balance I 431 00:24:02,800 --> 00:24:05,919 Speaker 2: think important for our audience between regulation and sort of 432 00:24:06,040 --> 00:24:07,640 Speaker 2: encouraging growth and prosperity. 433 00:24:08,640 --> 00:24:11,639 Speaker 12: Yes, I suppose. Actually, of course, the UK's sort of 434 00:24:11,800 --> 00:24:15,240 Speaker 12: strong regulatory system is one of its key strengths. So 435 00:24:15,480 --> 00:24:19,040 Speaker 12: I think the government will know that and investors, whether 436 00:24:19,040 --> 00:24:21,720 Speaker 12: they're domestic or for and also know that. But there's 437 00:24:22,080 --> 00:24:25,520 Speaker 12: this real tussle actually since Brexit of the UK needing 438 00:24:25,560 --> 00:24:28,119 Speaker 12: to set its own policy, and that requires kind of 439 00:24:28,359 --> 00:24:31,400 Speaker 12: serious thinking which we just haven't had in the last 440 00:24:31,400 --> 00:24:34,240 Speaker 12: few years. So I think a sense that people really 441 00:24:34,280 --> 00:24:36,600 Speaker 12: think that through how you do balance those two things 442 00:24:36,680 --> 00:24:37,680 Speaker 12: will be really important. 443 00:24:38,000 --> 00:24:41,560 Speaker 2: My thanks to Bloomberg's senior economics reporter Philip Alderick, our 444 00:24:41,600 --> 00:24:44,640 Speaker 2: city ed as a Katherine Griffith, and our housing reporter 445 00:24:44,920 --> 00:24:48,600 Speaker 2: Jack Siddters. I'm Caroline hepget here in London. You can 446 00:24:48,640 --> 00:24:52,399 Speaker 2: catch us every weekday morning for Bloomberg Daybreak Europe, beginning 447 00:24:52,400 --> 00:24:55,600 Speaker 2: at six am in London. That's one am on Wall Street. 448 00:24:55,800 --> 00:24:59,280 Speaker 1: Tom, Thank you, Caroline, And coming up on Bloomberg day 449 00:24:59,280 --> 00:25:02,480 Speaker 1: Break weekend of pre review of some highly anticipated trade 450 00:25:02,600 --> 00:25:06,040 Speaker 1: and inflation data coming out of China. I'm Tom Busby 451 00:25:06,080 --> 00:25:19,560 Speaker 1: and this is Bloomberg. This is Bloomberg day Break weekend, 452 00:25:19,600 --> 00:25:21,960 Speaker 1: our global look ahead at the top stories for investors 453 00:25:22,000 --> 00:25:24,560 Speaker 1: in the coming week. I'm Tom Busby in New York. 454 00:25:24,840 --> 00:25:27,199 Speaker 1: Over in Asia. We'll be getting the latest liew of 455 00:25:27,280 --> 00:25:30,320 Speaker 1: Chinese trade and economic data and for details in what 456 00:25:30,400 --> 00:25:33,879 Speaker 1: investors are expecting, let's head to Bloomberg Daybreak Asia co 457 00:25:33,960 --> 00:25:36,760 Speaker 1: hosts Brian Curtis and Doug Krisner. 458 00:25:36,359 --> 00:25:39,520 Speaker 3: Tom Earlier in the week, the official Chinese PMI data 459 00:25:39,560 --> 00:25:43,320 Speaker 3: showed factory activity contracted for a second straight month in June, 460 00:25:43,320 --> 00:25:46,160 Speaker 3: and at the same time, a sub index of new 461 00:25:46,200 --> 00:25:50,040 Speaker 3: factory orders slipped as demand weekend. Now, this weakness in 462 00:25:50,080 --> 00:25:54,000 Speaker 3: manufacturing is certain not to please policymakers. They've been looking 463 00:25:54,040 --> 00:25:54,880 Speaker 3: for improvement. 464 00:25:55,800 --> 00:25:59,399 Speaker 14: In May. Strong exports capt production lines at the factory's humming, 465 00:25:59,640 --> 00:26:04,679 Speaker 14: but domestic demand remained stubbornly subdued, and rising trade tensions 466 00:26:04,760 --> 00:26:07,520 Speaker 14: with the United States and also with the European Union 467 00:26:07,760 --> 00:26:10,960 Speaker 14: have added uncertainty to the prospects for overseas shipments. 468 00:26:11,040 --> 00:26:14,000 Speaker 3: And we got some perspective on the Chinese economy from 469 00:26:14,119 --> 00:26:18,240 Speaker 3: Shazad Kazi. He is the COO and managing director at 470 00:26:18,320 --> 00:26:19,440 Speaker 3: China Beijes Book. 471 00:26:19,960 --> 00:26:22,359 Speaker 10: I think if you want to talk about the gdp H, 472 00:26:22,720 --> 00:26:24,840 Speaker 10: you know, I agree that we may not get to 473 00:26:24,960 --> 00:26:28,200 Speaker 10: five percent this year despite what the you know, what 474 00:26:28,520 --> 00:26:31,720 Speaker 10: the party claimed up front. But I think pulling back, 475 00:26:31,800 --> 00:26:33,880 Speaker 10: let's talk about where the economy is. It kicked off 476 00:26:33,920 --> 00:26:37,840 Speaker 10: on a pretty solid state in the first quarter, and 477 00:26:37,920 --> 00:26:40,520 Speaker 10: where you're getting to now is that the pace of 478 00:26:40,640 --> 00:26:44,560 Speaker 10: improvement has faded, there's no question about it. But we 479 00:26:44,640 --> 00:26:48,159 Speaker 10: are nowhere near, I think, a level where Beijing starts 480 00:26:48,160 --> 00:26:52,840 Speaker 10: to feel the pressure to unleash stimulus and large enough quantities, 481 00:26:53,160 --> 00:26:55,879 Speaker 10: which is exactly which is what the markets are hoping 482 00:26:55,920 --> 00:26:56,520 Speaker 10: for right now. 483 00:26:56,600 --> 00:26:59,200 Speaker 14: If you're a policymaker and you had been hoping that 484 00:26:59,359 --> 00:27:03,840 Speaker 14: exports and manufacturing would would help bring the economy along, 485 00:27:04,160 --> 00:27:06,600 Speaker 14: knowing that the consumer side was a little bit weak, 486 00:27:07,200 --> 00:27:09,800 Speaker 14: and so that's not really happening. So I think what 487 00:27:10,160 --> 00:27:13,679 Speaker 14: is being suggested by some is that they need to 488 00:27:13,680 --> 00:27:15,920 Speaker 14: do something. Maybe it comes out of the Third Plan, 489 00:27:16,200 --> 00:27:20,680 Speaker 14: or maybe the PBOC just sort of increases the oomph 490 00:27:20,880 --> 00:27:24,600 Speaker 14: of the home buying scheme, which you know, could could 491 00:27:24,680 --> 00:27:27,119 Speaker 14: do the trick. It's just not big enough at the moment. 492 00:27:27,320 --> 00:27:29,760 Speaker 10: And look, you know when when they get into the plan, 493 00:27:29,840 --> 00:27:31,320 Speaker 10: and one of the things I think they may also 494 00:27:31,320 --> 00:27:34,840 Speaker 10: talk about is claim some victory finally housing, you know, 495 00:27:35,000 --> 00:27:39,480 Speaker 10: turning in some somewhat better news by comparison. By the way, 496 00:27:39,480 --> 00:27:42,919 Speaker 10: I should point out, commercial property is starting to suffer 497 00:27:42,960 --> 00:27:45,720 Speaker 10: a little bit, and so increasingly when we think about 498 00:27:45,720 --> 00:27:47,880 Speaker 10: the Chinese property market and what needs to be done, 499 00:27:47,880 --> 00:27:51,280 Speaker 10: in terms of a rescue plan, Investors might go from 500 00:27:51,320 --> 00:27:53,800 Speaker 10: worrying solely about housing to worrying still about housing a 501 00:27:53,840 --> 00:27:56,879 Speaker 10: little bit, but increasingly getting caught up with what's happening 502 00:27:56,880 --> 00:27:58,760 Speaker 10: to commercial real estate in China. 503 00:27:58,840 --> 00:28:01,080 Speaker 3: So we know the story on the inflation, to what 504 00:28:01,200 --> 00:28:04,000 Speaker 3: extent will the PBOC, to Brian's point, kind of lean 505 00:28:04,080 --> 00:28:08,000 Speaker 3: in and do something that is maybe a little controversial, 506 00:28:08,560 --> 00:28:10,560 Speaker 3: something very similar to quantitative easy. 507 00:28:10,720 --> 00:28:13,040 Speaker 10: We're increasingly thinking, you know, hearing about the fact that 508 00:28:13,280 --> 00:28:16,480 Speaker 10: you know, the PBOC wants to get involved UH in 509 00:28:16,560 --> 00:28:19,240 Speaker 10: bond buying and that sort of thing. So there's there's 510 00:28:19,560 --> 00:28:21,960 Speaker 10: there's a likelihood that we get some more information and 511 00:28:22,000 --> 00:28:26,439 Speaker 10: announcements to that end, and that can help. But but 512 00:28:26,680 --> 00:28:30,120 Speaker 10: let me point something out. Liquidity in the system has 513 00:28:30,200 --> 00:28:33,359 Speaker 10: not been a challenge in China, UH, and and that 514 00:28:33,520 --> 00:28:36,360 Speaker 10: is not a challenge today. If anything, I would argue, 515 00:28:36,520 --> 00:28:39,520 Speaker 10: looking at the data, there's plenty of liquidity out there 516 00:28:39,760 --> 00:28:42,360 Speaker 10: and there, and and banks are willing to lend, and 517 00:28:42,440 --> 00:28:44,920 Speaker 10: banks are cutting back on raids, banks are cutting back 518 00:28:44,920 --> 00:28:47,240 Speaker 10: on rejections the way they used to reject loans a 519 00:28:47,280 --> 00:28:48,040 Speaker 10: couple of years ago. 520 00:28:48,640 --> 00:28:48,760 Speaker 2: UH. 521 00:28:49,040 --> 00:28:51,720 Speaker 10: Companies are just not going out there and borrowing. So 522 00:28:52,240 --> 00:28:54,640 Speaker 10: what exactly is the problem and what exactly is the solution? 523 00:28:54,720 --> 00:28:56,720 Speaker 10: We have to always think about that thing will carefully. 524 00:28:56,760 --> 00:28:59,600 Speaker 3: He is Shazad Kazi of China Beage Book and for 525 00:28:59,640 --> 00:29:03,000 Speaker 3: a look at what's happening in the mainland economy. We 526 00:29:03,080 --> 00:29:06,680 Speaker 3: are joined by Bloomberg's Jill Diesis. She is Bloomberg News 527 00:29:06,800 --> 00:29:10,960 Speaker 3: Desk editor. She was also China ecogov editor, and we're 528 00:29:11,120 --> 00:29:14,480 Speaker 3: pleased to have her joining us from our studios in 529 00:29:14,520 --> 00:29:17,760 Speaker 3: Hong Kong. We can talk about the monthly activity data 530 00:29:17,760 --> 00:29:19,800 Speaker 3: in a moment, Jill, we're expecting those numbers in the 531 00:29:19,840 --> 00:29:25,080 Speaker 3: week ahead industrial production, retail sales, to name two. Let's 532 00:29:25,320 --> 00:29:29,040 Speaker 3: jump off what Shahzad was talking about there, particularly as 533 00:29:29,080 --> 00:29:32,160 Speaker 3: it relates to the Plenum. That's obviously the big meeting 534 00:29:32,280 --> 00:29:36,200 Speaker 3: top ranks of the Chinese Communist Party. So we'll concern 535 00:29:36,280 --> 00:29:39,640 Speaker 3: about the economy. Do you think be the primary topic 536 00:29:39,720 --> 00:29:40,920 Speaker 3: of the third Plenum? 537 00:29:41,080 --> 00:29:43,880 Speaker 7: I think at this point it's a bit tough to say. 538 00:29:44,000 --> 00:29:47,120 Speaker 7: I mean, look, the economy has done at least reasonably 539 00:29:47,160 --> 00:29:49,440 Speaker 7: well this year. I realized that some of those numbers 540 00:29:49,480 --> 00:29:53,440 Speaker 7: recently haven't been particularly strong. I think those PMI numbers 541 00:29:53,960 --> 00:29:58,240 Speaker 7: from June thirtieth, in particular a bit weaker than expected, 542 00:29:58,280 --> 00:30:02,520 Speaker 7: seeing that second month straight of traction for factories. But overall, 543 00:30:02,600 --> 00:30:04,880 Speaker 7: I mean, there have been other parts of the economy 544 00:30:04,880 --> 00:30:09,880 Speaker 7: that have held decently well. Exports did actually outperform in May, so, 545 00:30:10,080 --> 00:30:11,959 Speaker 7: you know, leading to you know, there's a lot of 546 00:30:12,000 --> 00:30:15,560 Speaker 7: concerns over obviously how much EU tariffs and the like 547 00:30:15,600 --> 00:30:20,400 Speaker 7: are actually going to impact exports in the future. But 548 00:30:20,440 --> 00:30:22,680 Speaker 7: I think that you know, the economy did at least 549 00:30:22,680 --> 00:30:26,040 Speaker 7: hold up reasonably well from a manufacturing export perspective in 550 00:30:26,080 --> 00:30:28,880 Speaker 7: the first six months of the year. Obviously demand continues 551 00:30:28,920 --> 00:30:32,040 Speaker 7: to struggle, but that is, you know, at least a 552 00:30:32,120 --> 00:30:34,120 Speaker 7: question there. I think what you're likely to see, at 553 00:30:34,200 --> 00:30:36,560 Speaker 7: least with the you know, this third plan of maybe 554 00:30:36,560 --> 00:30:39,160 Speaker 7: there's some talk about the economy, but also I think 555 00:30:39,200 --> 00:30:42,560 Speaker 7: some of those longer term geopolitical goals that Shi Jinping 556 00:30:42,640 --> 00:30:45,920 Speaker 7: ultimately has run developing advanced tech do seem to be 557 00:30:45,960 --> 00:30:48,120 Speaker 7: big factors that he's been focusing on, at least for 558 00:30:48,160 --> 00:30:49,240 Speaker 7: the past couple of months. 559 00:30:49,480 --> 00:30:51,400 Speaker 14: What do you make of that notion that we've heard 560 00:30:51,440 --> 00:30:53,680 Speaker 14: a little bit more about lately, the possibility of the 561 00:30:53,680 --> 00:30:56,480 Speaker 14: PBOC scaling up that home buying scheme. 562 00:30:56,600 --> 00:30:59,240 Speaker 7: That I think is you know, maybe a possibility. So 563 00:30:59,360 --> 00:31:02,440 Speaker 7: this idea is, you know, this home buying scheme introduced 564 00:31:02,440 --> 00:31:05,560 Speaker 7: in May does seem to be maybe you know, there's 565 00:31:05,600 --> 00:31:07,320 Speaker 7: a lot of talk about whether that's really that silver 566 00:31:07,360 --> 00:31:10,400 Speaker 7: bullet to kind of help you know, the property market 567 00:31:10,440 --> 00:31:14,200 Speaker 7: after so many years of you know, issues and problems. 568 00:31:14,560 --> 00:31:16,600 Speaker 7: Right now, a lot of economists are still saying though 569 00:31:16,640 --> 00:31:19,640 Speaker 7: that it does lack the sufficient scale needed to actually 570 00:31:19,680 --> 00:31:22,360 Speaker 7: boost the economy, you know, sort of solve the property 571 00:31:22,800 --> 00:31:25,680 Speaker 7: markets issues. I think that we haven't really seen a 572 00:31:25,720 --> 00:31:28,600 Speaker 7: whole lot of you know, continuous months of obviously you know, 573 00:31:28,640 --> 00:31:31,400 Speaker 7: that in action to to you know, maybe affect something. 574 00:31:31,440 --> 00:31:34,280 Speaker 7: But that does at least seem to point to you know, 575 00:31:34,880 --> 00:31:37,720 Speaker 7: some likely you know, this the strategy that actually might 576 00:31:37,840 --> 00:31:41,000 Speaker 7: be useful in helping the property market. So maybe there 577 00:31:41,040 --> 00:31:42,680 Speaker 7: is some room to scale things out there. 578 00:31:42,800 --> 00:31:45,960 Speaker 3: Brian and I were talking a while ago about the 579 00:31:46,320 --> 00:31:50,000 Speaker 3: very strong reading from Tai seen the manufacturing PMI data 580 00:31:50,040 --> 00:31:53,640 Speaker 3: that measures kind of small and medium sized businesses. So 581 00:31:53,800 --> 00:31:58,200 Speaker 3: let's weigh that against what the official PMI data was indicating. 582 00:31:58,240 --> 00:32:00,840 Speaker 3: And I'm wondering, is there a bit of bycation within 583 00:32:00,880 --> 00:32:04,000 Speaker 3: the Chinese economy right now, which is to say, smaller 584 00:32:04,240 --> 00:32:07,520 Speaker 3: medium sized businesses maybe holding up very well, but the 585 00:32:07,600 --> 00:32:09,600 Speaker 3: larger firms are having some more challenges. 586 00:32:10,200 --> 00:32:13,680 Speaker 7: Possibly. I will point out that there has actually been 587 00:32:13,840 --> 00:32:16,560 Speaker 7: quite a bit of divergence between those gauges over the 588 00:32:16,600 --> 00:32:19,440 Speaker 7: past year or so, the idea that the Kaishin gauge 589 00:32:19,440 --> 00:32:23,080 Speaker 7: actually does outperform the official one quite frequently. I think 590 00:32:23,120 --> 00:32:25,960 Speaker 7: that really comes down to, first of all, as you mentioned, 591 00:32:25,960 --> 00:32:28,320 Speaker 7: it is smaller medium sized businesses. It's also a lot 592 00:32:28,360 --> 00:32:31,160 Speaker 7: more export oriented firms. Is as we mentioned earlier in 593 00:32:31,200 --> 00:32:36,120 Speaker 7: this conversation, exports actually did fairly well in May, so 594 00:32:36,160 --> 00:32:38,280 Speaker 7: maybe that is an indicator that there has been, you know, 595 00:32:38,320 --> 00:32:40,880 Speaker 7: some continue you know that's continuing to hold firm at 596 00:32:40,960 --> 00:32:43,760 Speaker 7: least a bit in June. But ultimately, yeah, I mean 597 00:32:43,800 --> 00:32:46,040 Speaker 7: it's it's difficult to kind of take these things in 598 00:32:46,360 --> 00:32:48,440 Speaker 7: combination with each other, but you know, there is that 599 00:32:48,480 --> 00:32:51,560 Speaker 7: acknowledgement that there's some difference between these things. Does seem 600 00:32:51,600 --> 00:32:54,200 Speaker 7: to cover different firms, maybe more export oriented ones. I 601 00:32:54,200 --> 00:32:57,280 Speaker 7: wouldn't really read too much into the fact that they're diverging, 602 00:32:57,400 --> 00:32:59,240 Speaker 7: just because that's been a pattern that we've been following 603 00:32:59,240 --> 00:32:59,880 Speaker 7: for quite some time. 604 00:33:00,400 --> 00:33:03,520 Speaker 14: Well, let me give you something else that's mildly positive. 605 00:33:04,360 --> 00:33:06,880 Speaker 14: We did see a pickup in auto sales in the 606 00:33:06,920 --> 00:33:10,719 Speaker 14: month of June, and the numbers from BYD at more 607 00:33:10,760 --> 00:33:13,760 Speaker 14: than three hundred and forty thousand cars. That was more 608 00:33:13,840 --> 00:33:16,280 Speaker 14: than one hundred and ten thousand cars more than the 609 00:33:16,480 --> 00:33:20,120 Speaker 14: same month last year. And yes, we know that it 610 00:33:20,160 --> 00:33:23,320 Speaker 14: was because of discounting, but you know, discounting is part 611 00:33:23,360 --> 00:33:27,520 Speaker 14: of what you do in economic conditions to try to 612 00:33:27,560 --> 00:33:29,800 Speaker 14: get the sales moving again. So I wonder if some 613 00:33:29,840 --> 00:33:32,440 Speaker 14: other industries might pick up on that, and whether or not, 614 00:33:32,640 --> 00:33:35,200 Speaker 14: you know, that bodes well for the future. 615 00:33:35,440 --> 00:33:38,080 Speaker 7: Yeah, I think we'll have to see. I mean, certainly, China, 616 00:33:38,080 --> 00:33:40,440 Speaker 7: at least when it comes to cars in particular, has 617 00:33:40,480 --> 00:33:42,800 Speaker 7: been a bit smart about trying to get up demand there, 618 00:33:42,880 --> 00:33:45,239 Speaker 7: So we'll see whether that continues to hold. I know that, 619 00:33:45,480 --> 00:33:48,520 Speaker 7: you know, they've also introduced a variety of other schemes 620 00:33:48,520 --> 00:33:50,800 Speaker 7: over the past several months to try to really really 621 00:33:50,840 --> 00:33:53,480 Speaker 7: boost domestic spending in particular. I think that's been to 622 00:33:53,560 --> 00:33:56,880 Speaker 7: you know, somewhat mixed effect. Obviously, you know, inflation continues 623 00:33:56,920 --> 00:33:59,560 Speaker 7: to be quite low in China, We're still seeing ongoing 624 00:33:59,600 --> 00:34:02,360 Speaker 7: issues with demand there, but there have been various programs 625 00:34:02,400 --> 00:34:04,720 Speaker 7: introduced to kind of get people to buy more home goods, 626 00:34:04,800 --> 00:34:08,399 Speaker 7: for example. So I wouldn't be surprised if you see 627 00:34:08,480 --> 00:34:11,239 Speaker 7: trying to you know, try to you know, gin up 628 00:34:11,280 --> 00:34:14,040 Speaker 7: some domestic demand by turning to those types of programs. 629 00:34:14,120 --> 00:34:17,080 Speaker 3: That's kind of a nice segue into the monthly activity data. 630 00:34:17,080 --> 00:34:19,440 Speaker 3: We've talked a little bit about the export economy, and 631 00:34:19,480 --> 00:34:22,880 Speaker 3: that takes care of some of the industrial production component. 632 00:34:23,600 --> 00:34:26,080 Speaker 3: Retail sales that's going to be key too, and the 633 00:34:26,080 --> 00:34:29,120 Speaker 3: health of the China consumer. I'm wondering whether or not 634 00:34:29,160 --> 00:34:32,760 Speaker 3: there is a way for authorities to dissuade a little 635 00:34:32,760 --> 00:34:35,799 Speaker 3: bit of personal savings. We know that there's been a 636 00:34:35,840 --> 00:34:38,560 Speaker 3: great deal of savings going on and maybe at the 637 00:34:38,640 --> 00:34:41,759 Speaker 3: expense of the retail economy. Is there any way that 638 00:34:41,800 --> 00:34:44,760 Speaker 3: authorities could address that issue as a way of ginning 639 00:34:44,880 --> 00:34:46,239 Speaker 3: up retail sales a bit. 640 00:34:46,800 --> 00:34:48,680 Speaker 7: I mean, this is one thing that they've really been 641 00:34:48,680 --> 00:34:51,600 Speaker 7: struggling with for really the past year, right, you know, 642 00:34:51,680 --> 00:34:54,359 Speaker 7: introducing you know, some you know kinds of you know, 643 00:34:54,520 --> 00:34:56,920 Speaker 7: you know, this idea of introducing programs that are actually 644 00:34:57,000 --> 00:34:59,880 Speaker 7: going to get people to spend more money. As we 645 00:35:00,000 --> 00:35:03,160 Speaker 7: you know, China is you know, incredibly reluctant to roll 646 00:35:03,160 --> 00:35:06,040 Speaker 7: out policies that you'd see and other economies, particularly in 647 00:35:06,040 --> 00:35:08,719 Speaker 7: Western economies, such as offering people subsidies to try to 648 00:35:08,719 --> 00:35:11,160 Speaker 7: get them to spend more. So I'm not sure that 649 00:35:11,200 --> 00:35:14,160 Speaker 7: we're going to see anything on like an extremely massive 650 00:35:14,200 --> 00:35:17,640 Speaker 7: scale there, but yeah, maybe there's other types of programs, 651 00:35:17,760 --> 00:35:20,080 Speaker 7: or at least on like sort of the local government level, 652 00:35:20,320 --> 00:35:23,560 Speaker 7: maybe you'll see local authorities try to introduce some kinds 653 00:35:23,600 --> 00:35:26,120 Speaker 7: of programs to get people spending again. It's just it's 654 00:35:26,160 --> 00:35:30,439 Speaker 7: been obviously an incredibly difficult thing for the for China 655 00:35:30,520 --> 00:35:32,200 Speaker 7: to really kind of get that going. 656 00:35:32,640 --> 00:35:35,240 Speaker 14: More and more programs so one that would affect people 657 00:35:35,360 --> 00:35:39,040 Speaker 14: like you and me and Doug. Non Chinese residents of 658 00:35:39,040 --> 00:35:41,759 Speaker 14: Hong Kong can now get five year visas going into 659 00:35:41,840 --> 00:35:45,080 Speaker 14: China multiple entry, which is kind of interesting. It's a 660 00:35:45,160 --> 00:35:47,160 Speaker 14: small step, but it shows that they're willing to try 661 00:35:47,160 --> 00:35:47,760 Speaker 14: different things. 662 00:35:47,880 --> 00:35:49,800 Speaker 7: I'd actually say, Brian, I mean that's part of this 663 00:35:49,960 --> 00:35:52,680 Speaker 7: ongoing program that China's really been doing to get you know, 664 00:35:52,719 --> 00:35:54,839 Speaker 7: not just you know, residents of Hong Kong, but also 665 00:35:55,200 --> 00:35:59,240 Speaker 7: in international visitors, you know, going to China more frequently. 666 00:35:59,239 --> 00:36:02,480 Speaker 7: I mean, look at the number of visa waiver programs 667 00:36:02,480 --> 00:36:05,239 Speaker 7: that China has implemented over the past several months, right, 668 00:36:05,280 --> 00:36:08,000 Speaker 7: I mean, you just recently saw Australia and New Zealand 669 00:36:08,040 --> 00:36:10,480 Speaker 7: added to this program for allowing visa free entry. There's 670 00:36:10,480 --> 00:36:12,440 Speaker 7: been some major economies in Europe as part of that 671 00:36:12,480 --> 00:36:15,480 Speaker 7: program as well. I mean, China, I think, has really 672 00:36:15,520 --> 00:36:17,400 Speaker 7: been trying to get on the charm offensive with a 673 00:36:17,400 --> 00:36:20,120 Speaker 7: lot of these you know, these international tourists and stuff 674 00:36:20,120 --> 00:36:22,960 Speaker 7: to try to you know, maybe boost you know, international 675 00:36:22,960 --> 00:36:26,000 Speaker 7: spending that way, getting people into China and actually spending 676 00:36:26,040 --> 00:36:28,359 Speaker 7: money improving international tourism that way. 677 00:36:28,600 --> 00:36:31,799 Speaker 3: So obviously, we are heading into a presidential election here 678 00:36:31,840 --> 00:36:34,120 Speaker 3: in the States in November, there's been a lot to 679 00:36:34,200 --> 00:36:37,759 Speaker 3: talked about where tariffs are concerned on Chinese goods. Do 680 00:36:37,800 --> 00:36:40,080 Speaker 3: you think this is a worry for for Beijing. 681 00:36:40,440 --> 00:36:43,080 Speaker 7: Yeah, certainly they're worried about this. I mean, look, you 682 00:36:43,120 --> 00:36:45,759 Speaker 7: just saw, you know, fairly recently, China has really been 683 00:36:45,760 --> 00:36:47,880 Speaker 7: trying to push back against a lot of these tariffs. 684 00:36:48,040 --> 00:36:50,800 Speaker 7: Even the Foreign Minister earlier this year flagged the idea 685 00:36:50,840 --> 00:36:53,400 Speaker 7: of tariffs from the US or the EU, you know, 686 00:36:53,440 --> 00:36:55,800 Speaker 7: as being incredibly unreasonable, as being you know, sort of 687 00:36:55,840 --> 00:36:57,600 Speaker 7: a threat at least you know, some sort of implicit 688 00:36:57,640 --> 00:37:01,080 Speaker 7: acknowledgement there. Very recently you had a pretty high level 689 00:37:01,080 --> 00:37:03,880 Speaker 7: delegation from Germany which has been trying to push for 690 00:37:04,000 --> 00:37:07,160 Speaker 7: negotiation on these tariffs because of how important Chinese goes 691 00:37:07,160 --> 00:37:10,480 Speaker 7: are to the German economy there. You know, they were 692 00:37:10,560 --> 00:37:13,359 Speaker 7: visiting trying to you know, figure things out here. As 693 00:37:13,360 --> 00:37:15,800 Speaker 7: of right now, I mean, you've got some provisional tariffs, 694 00:37:16,040 --> 00:37:19,040 Speaker 7: you know, kicking in definitive duties really more of a 695 00:37:19,160 --> 00:37:22,839 Speaker 7: likelihood in November of this year. But China, I think, 696 00:37:22,880 --> 00:37:24,600 Speaker 7: has really been trying to figure out ways to sort 697 00:37:24,640 --> 00:37:27,160 Speaker 7: of negotiate some of these things down and really preserve 698 00:37:27,239 --> 00:37:29,520 Speaker 7: that kind of trade. Obviously, this is going to be 699 00:37:30,080 --> 00:37:31,160 Speaker 7: a big question for China. 700 00:37:31,360 --> 00:37:34,359 Speaker 3: Jill, thanks so much for sharing your perspective. Jill desis there, 701 00:37:34,360 --> 00:37:37,879 Speaker 3: Bloomberg News Desk editor joining us from Hong Kong. I'm 702 00:37:37,880 --> 00:37:40,759 Speaker 3: Doug Krisner along with Brian Curtis. He's in Hong Kong 703 00:37:40,800 --> 00:37:43,319 Speaker 3: and you can join us weekdays here for Bloomberg day 704 00:37:43,320 --> 00:37:46,560 Speaker 3: Break Asia, beginning at eight am in Hong Kong. Eight 705 00:37:46,600 --> 00:37:47,920 Speaker 3: pm on Wall Street. 706 00:37:48,200 --> 00:37:51,200 Speaker 1: Tom, thank you Doug, and thank you Brian. And that 707 00:37:51,280 --> 00:37:53,560 Speaker 1: does it for this edition of Bloomberg day Break Weekend. 708 00:37:53,760 --> 00:37:56,040 Speaker 1: Join us again Monday morning at five am Wall Street 709 00:37:56,040 --> 00:37:58,560 Speaker 1: time for the latest on markets overseas and the news 710 00:37:58,600 --> 00:38:01,959 Speaker 1: you need to start your day. I'm Tom Busby. Stay 711 00:38:02,040 --> 00:38:04,919 Speaker 1: with us. Top stories and global business headlines are coming 712 00:38:05,000 --> 00:38:06,560 Speaker 1: up right now.