WEBVTT - Daybreak Weekend: Tech Earnings, UK Elections, China PMI Preview 0:00:00.240 --> 0:00:07.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.360 --> 0:00:12.639 This is Bloomberg day Break Weekend, our global look at 0:00:12.640 --> 0:00:14.840 the top stories in the coming week from our Daybreak 0:00:14.840 --> 0:00:17.400 anchors all around the world, and straight ahead on the program, 0:00:17.760 --> 0:00:20.200 look ahead to the April jobs report here in the 0:00:20.280 --> 0:00:23.639 US how that may impact FED policy moving forward. I'm 0:00:23.680 --> 0:00:24.959 Tom Busby in New York. 0:00:25.200 --> 0:00:27.639 I'm Carolin Hetger here in London, where we're keeping you 0:00:27.760 --> 0:00:30.560 up to date as the UK heads to the polls. 0:00:30.800 --> 0:00:34.400 I'm deg Krissner looking ahead to China's PMI data, the 0:00:34.440 --> 0:00:38.000 first reading since those higher US tariffs took effect. 0:00:38.400 --> 0:00:42.440 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.479 --> 0:00:46.160 eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.680 --> 0:00:50.920 Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 0:00:51.360 --> 0:00:54.560 Sirius XM one twenty one, and around the world on 0:00:54.600 --> 0:00:57.760 Bloomberg Radio, dot Com and the Bloomberg Business App. 0:01:02.440 --> 0:01:04.360 Good day to you. I'm Tom Busby, and we begin 0:01:04.400 --> 0:01:07.080 today's program with a look ahead to the April jobs report, 0:01:07.160 --> 0:01:10.959 with non farm payroll numbers out this Friday eight thirty am. 0:01:11.160 --> 0:01:13.680 Wall Street Time Now for more on the strength of 0:01:13.720 --> 0:01:17.959 the US labor market how Friday's numbers may impact FED policy, 0:01:18.000 --> 0:01:23.199 were joined by Michael McKee, Bloomberg International Economics and Policy correspondent. Well, Michael, 0:01:23.280 --> 0:01:25.760 what do you expect to see this Friday in the 0:01:25.800 --> 0:01:26.840 April jobs report? 0:01:28.360 --> 0:01:32.039 Well, we expect to see a slowing in hiring, but 0:01:32.080 --> 0:01:34.640 we don't really have a good idea good handle on 0:01:35.200 --> 0:01:37.880 what the overall number is going to be, because we're 0:01:37.880 --> 0:01:41.399 not really sure at this point how companies are reacting 0:01:41.440 --> 0:01:43.520 to all of the news that we have seen about 0:01:43.520 --> 0:01:46.759 tariffs and the economy. The Base Book, which was out 0:01:46.840 --> 0:01:52.280 last Wednesday, used the word uncertainty eighty times and mentioned 0:01:52.320 --> 0:01:55.200 that companies didn't seem to be laying off people, but 0:01:55.360 --> 0:01:58.160 seem to be making plans to do so if the 0:01:58.200 --> 0:02:01.559 tariffs go into effect and start to hurt their business prospects. 0:02:01.600 --> 0:02:05.880 So we may see a ratcheting down, but the expectation 0:02:06.240 --> 0:02:09.359 is we won't fall off the cliff, and we're not 0:02:09.600 --> 0:02:13.000 expecting at this point. According to economists, a big change 0:02:13.000 --> 0:02:15.760 in the unemployment rate is still supposed to stay at 0:02:15.800 --> 0:02:18.200 four point two percent, So. 0:02:18.240 --> 0:02:21.480 By all appearances, until now, the labor market has remained 0:02:21.480 --> 0:02:25.919 pretty resilient, but that uncertainty caused by the Trump tariffs. 0:02:26.040 --> 0:02:28.560 I guess the question really is how long can that last? 0:02:28.880 --> 0:02:32.160 I mean, the Independence day from President Trump was this 0:02:32.280 --> 0:02:36.880 month in April, So we probably won't see any damage 0:02:36.960 --> 0:02:39.120 or much damage reflected in this report. 0:02:39.200 --> 0:02:46.000 Correct, that's correct. We may see some increased unemployment or 0:02:46.320 --> 0:02:51.520 increased job losses in some of the defense contractor consultants 0:02:51.800 --> 0:02:55.720 that will lose jobs because of the DOSEE firings. It 0:02:55.760 --> 0:02:58.959 isn't clear how many actual government workers we'll see fall 0:02:58.960 --> 0:03:01.320 off the pay rolls because it isn't clear how many 0:03:01.720 --> 0:03:05.440 have been let go. So it's all kind of up 0:03:05.440 --> 0:03:09.680 in the air, and we won't know necessarily what the 0:03:09.720 --> 0:03:13.280 full impact of the tariffs are until del first, because 0:03:13.320 --> 0:03:16.640 Trump put a ninety day hold on that. And I 0:03:16.639 --> 0:03:18.880 think you go back to the basebook, and it suggests 0:03:18.960 --> 0:03:22.640 that companies are waiting to see the impacts because of 0:03:22.639 --> 0:03:25.160 course it was hard for them to hire workers coming 0:03:25.160 --> 0:03:27.839 out of the pandemic, so they're reluctant to let them go. 0:03:28.480 --> 0:03:31.760 They will if they need to to retain their margins, 0:03:31.840 --> 0:03:34.400 but they just don't know yet. So I don't think 0:03:34.440 --> 0:03:35.400 we see much change. 0:03:35.600 --> 0:03:38.320 Yeah, even though all the ingredients are there. We've seen 0:03:38.360 --> 0:03:42.800 consumer sentiment decline, consumers and businesses pulling back spending. But 0:03:43.920 --> 0:03:45.680 it's almost like a hurry up and wait, We've got 0:03:45.680 --> 0:03:48.040 to see what happens with these tariffs and the impact 0:03:48.040 --> 0:03:48.680 on companies. 0:03:49.720 --> 0:03:52.040 It's a little bit like you know, when you'd be 0:03:52.320 --> 0:03:55.280 out playing on the sidewalk and mom would say, don't 0:03:55.280 --> 0:03:57.520 step into the street. I mean, you're right on the 0:03:57.560 --> 0:04:01.560 curb there and we could could fallen into the street. 0:04:02.200 --> 0:04:05.160 And that's what worries everybody. That's what worries the folks 0:04:05.160 --> 0:04:07.960 at the FED. I spoke with Chris Waller, FED governor 0:04:08.320 --> 0:04:13.160 on Thursday, and he said they can only model scenarios 0:04:14.000 --> 0:04:16.200 a possibility of a lot of tariffs, the possibility of 0:04:16.279 --> 0:04:20.520 lower tariff, but if unemployment starts to rise, they will 0:04:20.560 --> 0:04:21.320 have to react. 0:04:21.480 --> 0:04:24.200 You know, I heard that interview put another way, he said, 0:04:24.279 --> 0:04:27.760 tariffs are a tax, and you know the fear is 0:04:27.880 --> 0:04:29.960 higher taxes will lead to a slow. 0:04:29.760 --> 0:04:32.840 Down in hiring, lead to a slowdown in hiring, and 0:04:33.120 --> 0:04:36.560 lead to higher prices. And as prices go up, people 0:04:36.600 --> 0:04:39.640 tend to spend less. So you have an impact on 0:04:39.720 --> 0:04:42.400 demand as well as the supply talk that people are 0:04:42.440 --> 0:04:47.800 talking about. So the general consensus is any level of 0:04:47.960 --> 0:04:50.599 tariff are going to be disruptive. It's only a question 0:04:50.680 --> 0:04:53.600 of how disruptive they are. And then there's a kind 0:04:53.600 --> 0:04:57.719 of psychological aspect to it. If people have heard all this, 0:04:57.880 --> 0:05:02.760 we've seen consumer confidence collapse, do they react more quickly 0:05:03.120 --> 0:05:05.760 to the tariff that we do get, whether they're large 0:05:05.839 --> 0:05:09.839 or small, or do they think, well, we can manage 0:05:09.839 --> 0:05:12.560 our way through it, we can muddle through it. Governor 0:05:12.600 --> 0:05:15.839 Waller thinks that small tariffs, maybe we just get the 0:05:15.880 --> 0:05:20.480 ten percent tariffs would enable people, enable companies to find 0:05:20.560 --> 0:05:24.559 ways to survive it and keep going. But anything larger 0:05:24.600 --> 0:05:27.480 than that would probably cause people to pull back fairly 0:05:27.560 --> 0:05:31.360 quickly because they were scarred by the inflation coming out 0:05:31.360 --> 0:05:32.040 of the pandemic. 0:05:32.400 --> 0:05:35.239 Well, the April jobs report out this Friday, eight thirty 0:05:35.240 --> 0:05:38.240 am Wall Street Time our thanks to Michael McKee, Bloomberg 0:05:38.279 --> 0:05:41.960 International Economics and Policy correspondent. With the first quarter earning 0:05:42.000 --> 0:05:44.480 season in full swing, we move now to some key 0:05:44.600 --> 0:05:48.039 earnings this week from some of big tech's magnificent seven 0:05:48.080 --> 0:05:52.320 meta platforms and Microsoft on Wednesday, Apple and Amazon coming 0:05:52.320 --> 0:05:55.360 on Thursday. For more and what to expect, we're joined 0:05:55.360 --> 0:06:01.000 by Mandeep Singh Bloomberg Intelligence senior tech industry analyst Mandy Well, 0:06:01.040 --> 0:06:02.840 it was just a quarter ago. I think the big 0:06:02.880 --> 0:06:05.839 concern for those megacap tech firms was how much they're 0:06:05.839 --> 0:06:08.960 spending on AI when they expect all that investment to 0:06:09.000 --> 0:06:11.839 start paying off. But that was then. Now it looks 0:06:11.839 --> 0:06:14.640 like the Trump tariffs and all the uncertainty they bring 0:06:15.120 --> 0:06:17.240 putting AI kind of on a back burner along with 0:06:17.320 --> 0:06:19.880 regulatory pressures. I mean, is that what it looks like 0:06:19.960 --> 0:06:20.360 right now? 0:06:20.920 --> 0:06:26.080 Yes, Because all the MAC seven companies are global companies. 0:06:26.240 --> 0:06:30.039 More than fifty to fifty five percent of their revenue 0:06:30.360 --> 0:06:34.000 comes from outside the US. So when you think about 0:06:34.040 --> 0:06:38.680 the international revenue exposure they have, I mean, tariffs will 0:06:38.760 --> 0:06:43.280 clearly play into that. There could be some retaliation in 0:06:43.360 --> 0:06:48.200 terms of, you know, other countries kind of imposing some 0:06:48.279 --> 0:06:52.039 sort of attacks or fine on these companies, or or 0:06:52.120 --> 0:06:56.479 just a pushback in terms of using their products. So look, 0:06:57.360 --> 0:07:00.720 is there any catastrophe lurking for these companies? I would 0:07:00.720 --> 0:07:05.200 say no, But on the margin, I feel like the 0:07:05.360 --> 0:07:08.760 estimates for these companies in terms of growth and profitability 0:07:09.400 --> 0:07:13.760 are likely to go down or sideways simply because of 0:07:13.840 --> 0:07:16.960 the tariff uncertainty, and even though AI is a big 0:07:17.040 --> 0:07:21.760 secular tailwind that will remain, I think in the near term, 0:07:21.880 --> 0:07:24.800 AI won't be enough to make up for any lost 0:07:24.840 --> 0:07:29.720 revenue due to tariffs or just you know macro slowdown 0:07:29.760 --> 0:07:32.800 where companies may pull back on ads or just kind 0:07:32.840 --> 0:07:36.320 of shelf their IT spending projects for now. 0:07:37.160 --> 0:07:40.960 Well, back to tariffs, We've seen that Apple has shifted 0:07:40.960 --> 0:07:43.640 some of its production, almost ten percent of it to India, 0:07:44.040 --> 0:07:46.440 and that is really to kind of not rely so 0:07:46.520 --> 0:07:49.600 much on China a benefit now that we're in this 0:07:49.680 --> 0:07:52.920 tariff war. Have any other companies done a similar move. 0:07:53.800 --> 0:07:57.520 Well, everyone is trying to figure out how to best 0:07:57.640 --> 0:08:02.280 kind of relocate their supply chains to deal with the uncertainty. 0:08:02.800 --> 0:08:06.880 The good things for you know, Meta or Alphabet is 0:08:07.320 --> 0:08:11.440 they have very low exposure to the hardware side, you know, 0:08:11.480 --> 0:08:14.600 which gets impacted the most in the case of tariffs. 0:08:14.680 --> 0:08:17.800 I mean, if you're selling digital services or you know, 0:08:18.160 --> 0:08:20.840 if you have an online business, it's not going to 0:08:20.920 --> 0:08:24.120 get affected by tariffs. At the same time, as I said, 0:08:24.160 --> 0:08:26.600 you know, they will see the impact in terms of 0:08:27.080 --> 0:08:32.200 certain advertisers pulling back their ads spending because of uncertainty 0:08:32.240 --> 0:08:36.280 That is out there. So there are large Chinese advertisers 0:08:36.360 --> 0:08:39.680 like Timu and Shane who were spending almost you know, 0:08:39.760 --> 0:08:45.720 ten billion dollars plus on digital ads across Google and Meta. 0:08:45.920 --> 0:08:49.439 So from that perspective, any pullback from them is going 0:08:49.480 --> 0:08:52.680 to impact the growth rates for these companies, and there 0:08:52.800 --> 0:08:55.000 is a lot of indirect impact, but in terms of 0:08:55.040 --> 0:08:57.840 the direct supply chain impact, I think Apple is the 0:08:57.880 --> 0:09:01.000 most exposed. So you're right, they have to do something 0:09:01.000 --> 0:09:03.560 about it. They don't have a choice and they are 0:09:03.559 --> 0:09:05.920 doing whatever they could do. 0:09:06.000 --> 0:09:10.160 You see the tariffs benefiting anybody or is it all negative? 0:09:11.080 --> 0:09:13.720 Well, I think again, I go back to my comment 0:09:13.760 --> 0:09:18.480 about these companies, the large ones being international businesses. So 0:09:18.720 --> 0:09:22.520 even if you know, you may say, if dollar is weakening, 0:09:22.640 --> 0:09:27.160 that's somewhat helpful, but on the margin, you know, they 0:09:27.240 --> 0:09:31.360 benefit a lot more from selling their products outside the US. 0:09:31.480 --> 0:09:34.760 You have to remember, you know, Asia has the biggest population. 0:09:35.280 --> 0:09:39.719 So because these companies have got large online platforms, more 0:09:39.760 --> 0:09:43.080 than one third of their users who use metal properties 0:09:43.200 --> 0:09:47.280 or you know, Google apps, they're outside the US. That's 0:09:47.320 --> 0:09:50.160 where all of your user growth is. So if there 0:09:50.240 --> 0:09:53.760 is any pushback in terms of using US based products, 0:09:54.000 --> 0:09:54.719 that's gonna hurt. 0:09:55.320 --> 0:09:58.040 Hurt, Yeah, if a third of your market. 0:09:58.320 --> 0:09:59.200 Yeah. 0:09:59.520 --> 0:10:01.480 Now we've seen reports. I want to talk about AI, 0:10:01.640 --> 0:10:03.959 which which the last couple of times you've been here, 0:10:03.960 --> 0:10:07.880 that's all we talked about with these tech earnings. We've 0:10:07.920 --> 0:10:10.400 seen reports of some of these tech giants pulling back 0:10:10.400 --> 0:10:16.000 on leases for AI centers. You know, I mean, is 0:10:16.120 --> 0:10:18.080 are we at an inflection point right now or is 0:10:18.080 --> 0:10:19.800 it just kind of like, let's hold off on this 0:10:19.880 --> 0:10:23.400 capex on AI now and see how this plays out well. 0:10:23.520 --> 0:10:28.320 So two of the four big hyperscalers have reaffirmed their 0:10:28.400 --> 0:10:31.800 capex plans for the full year, and you know, Google 0:10:32.400 --> 0:10:36.520 and Amazon, they said, even with all the uncertainty, and 0:10:36.559 --> 0:10:39.360 this goes like two weeks back, so we had all 0:10:39.400 --> 0:10:44.480 this tariff turmoil going on, but they reaffirmed their capex, 0:10:44.520 --> 0:10:48.120 which goes to show that everyone is still very bullish 0:10:48.160 --> 0:10:51.800 on AI. You're still in the very early innings. They 0:10:51.840 --> 0:10:56.040 see a lot of potential with you know, AI driving 0:10:56.160 --> 0:10:58.600 a lot of their revenue growth down the line, and 0:10:58.640 --> 0:11:01.240 they want to be ahead in terms of investments. So 0:11:01.880 --> 0:11:05.080 I think what will be reassuring this quarter is just 0:11:05.440 --> 0:11:08.880 companies coming out and saying we still will continue to 0:11:08.920 --> 0:11:12.240 invest in AI. Could there be a digestion period in 0:11:12.320 --> 0:11:15.880 terms of, you know, building these large scale data centers. Possibly, 0:11:15.960 --> 0:11:20.320 That's what all these pauses and leases are suggesting, that 0:11:20.400 --> 0:11:23.560 there could be a small pause here and there. But 0:11:24.120 --> 0:11:27.280 the trend is still intact and I think you will 0:11:27.320 --> 0:11:31.320 see a very quick rebound the moment this uncertainty clears out. 0:11:31.360 --> 0:11:32.640 Just a pause, just a pause. 0:11:32.880 --> 0:11:34.880 One last thing, I want to talk about a lot 0:11:34.960 --> 0:11:38.880 of ramped up regulatory pressure on these tech giants, not 0:11:38.920 --> 0:11:41.520 just the US, but the EU especially, and how will 0:11:41.559 --> 0:11:42.439 that impact things. 0:11:42.679 --> 0:11:46.760 Well, right now, it feels like regulatory site may take 0:11:46.800 --> 0:11:50.640 a backseat because of all the tariff's situation and just 0:11:50.920 --> 0:11:54.480 you know, this week, Meta and Google were slapped to 0:11:54.559 --> 0:11:57.240 find by the EU. But that was a drop in 0:11:57.280 --> 0:12:01.720 the bucket. We're talking about seven hundred million euro whereas 0:12:01.760 --> 0:12:05.440 these companies have paid billions in dollars of fines. So 0:12:05.760 --> 0:12:10.880 from that perspective, it feels like you may see regulatory 0:12:11.000 --> 0:12:13.760 stuff take a backseat. But there is that pending case 0:12:14.600 --> 0:12:18.679 for Google in the US, you know, the monopolization case 0:12:18.720 --> 0:12:22.679 where they're asking for Chrome divestiture. I mean, to me, 0:12:22.960 --> 0:12:25.559 that is the big one, and the meta FTC. So 0:12:26.280 --> 0:12:30.640 the regulatory overhang is more within the US than outside 0:12:30.640 --> 0:12:34.600 the US, whereas previously, you know, these companies were kind 0:12:34.640 --> 0:12:36.600 of paying more fines outside the US. 0:12:36.679 --> 0:12:38.600 Wow, well, there's a lot going on and a lot 0:12:38.640 --> 0:12:41.520 to look forward to. Our thanks demand Deep, saying Bloomberg 0:12:41.559 --> 0:12:45.600 Intelligence senior tech industry analysts. Coming up on Bloomberg day 0:12:45.600 --> 0:12:48.439 Break weekend, we'll look ahead to local elections in the UK. 0:12:49.040 --> 0:13:02.600 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:13:02.640 --> 0:13:04.640 day Break weekend, our global look ahead at the top 0:13:04.679 --> 0:13:07.560 stories for investors in the coming week. I'm Tom Busby 0:13:07.559 --> 0:13:10.360 in New York. Up later in our program, look ahead 0:13:10.400 --> 0:13:13.960 to a key economic reading from Beijing amid the uncertainty 0:13:13.960 --> 0:13:17.600 around US tariffs. But first, just over eight months since 0:13:17.640 --> 0:13:20.600 the Labor Party's emphatic victory in the UK general election, 0:13:20.720 --> 0:13:23.840 voters will have their first real chance to pass judgment 0:13:23.960 --> 0:13:26.959 on the party's progress. Polls around the country will open 0:13:27.000 --> 0:13:29.840 in the coming days as local elections get underway. But 0:13:30.200 --> 0:13:33.240 as Prime Minister Keir Starmer done enough so far to 0:13:33.320 --> 0:13:36.080 convince the British public for more, let's go to London 0:13:36.080 --> 0:13:39.720 and bring in Bloomberg Daybreak Europe anchor Caroline hepgar Tom. 0:13:39.880 --> 0:13:43.400 When kir Starmer was elected the first Labor prime minister 0:13:43.480 --> 0:13:47.280 in fourteen years, last summer, he said that a burden 0:13:47.400 --> 0:13:51.679 had finally been removed from the shoulders of this great nation. 0:13:52.320 --> 0:13:56.080 But in twenty twenty five, almost a year into his tenure, 0:13:56.360 --> 0:14:00.280 his government might be feeling more burdened than ever. Part 0:14:00.320 --> 0:14:03.280 of that weight comes in the form of concerns about 0:14:03.400 --> 0:14:08.960 limited economic growth. Just recently, the International Monetary Fund released 0:14:09.040 --> 0:14:14.640 a quote significant downward revision to its UK growth forecasts 0:14:14.679 --> 0:14:18.000 for the next two years, cutting them more than for 0:14:18.160 --> 0:14:23.280 any other leading European country. And that's amid increasing uncertainty 0:14:23.360 --> 0:14:27.760 about what President Donald Trump's tariffs will mean for the country. 0:14:28.480 --> 0:14:31.960 Despite the gloomy outlook, Bank of England rate setter Meghan 0:14:32.080 --> 0:14:36.000 Green has told Bloomberg that there could be some bright spots, 0:14:36.320 --> 0:14:39.720 whilst maintaining that uncertainty prevails. 0:14:40.120 --> 0:14:42.520 Look market pricing has moved around a whole lot over 0:14:42.560 --> 0:14:45.120 the past couple of weeks, and it's also worth pointing 0:14:45.120 --> 0:14:47.160 out that not all of that is focused on what's 0:14:47.200 --> 0:14:51.120 going on in the UK, so traditionally about a third 0:14:51.120 --> 0:14:52.960 of the moves in the gilt curve have been driven 0:14:53.000 --> 0:14:57.520 by things happening outside the UK. These days it's about 0:14:57.560 --> 0:15:00.080 half that's been driven by things happening outside the UK. 0:15:00.280 --> 0:15:03.200 So part of those moves I think reflect what's going 0:15:03.240 --> 0:15:06.160 on globally, and you know, we're just about to go 0:15:06.240 --> 0:15:09.280 into an interest right round, so we'll have to see. 0:15:09.320 --> 0:15:11.520 But I would highlight that those market moves don't all 0:15:11.520 --> 0:15:13.800 reflect to U fundamentals in the UK. 0:15:13.960 --> 0:15:16.400 Because what of the uncertainties If you look at you know, 0:15:16.440 --> 0:15:19.320 there seems to be a lot of disinflationary kind of 0:15:19.360 --> 0:15:23.200 impact from folly energy prices, we could dollar tightening, financial conditions, 0:15:23.560 --> 0:15:26.640 global demand. Does that point to a cont you know, 0:15:27.080 --> 0:15:27.760 in may. 0:15:28.200 --> 0:15:32.520 So that there are factors that are both inflationary and disinflationary. 0:15:32.600 --> 0:15:36.360 You know, I'm particularly concerned. We've had weakness and output 0:15:36.520 --> 0:15:39.520 for about nine months now and we're trying to figure 0:15:39.520 --> 0:15:41.440 out what the big driver of that is, whether it's 0:15:41.480 --> 0:15:44.240 demand or supply driven. I think there are reasons to 0:15:44.240 --> 0:15:47.000 think it's both actually, but I'm more concerned about the 0:15:47.000 --> 0:15:50.480 supply side and that actually on balance, would be inflationary. 0:15:51.120 --> 0:15:53.400 So that's part of it. When it comes to tariffs 0:15:53.440 --> 0:15:56.640 and the developments over the past couple of weeks. There 0:15:56.760 --> 0:16:00.480 again are both the inflationary and disinflationary impulses. So when 0:16:00.520 --> 0:16:03.880 it comes to tariffs, in particular for the UK, we're 0:16:03.880 --> 0:16:08.040 a small, open economy, right. The US is our biggest 0:16:08.120 --> 0:16:10.640 single country trade partner, but the EU of course is 0:16:10.840 --> 0:16:14.840 our biggest trade partner overall. So if you have export substitution, 0:16:15.560 --> 0:16:17.920 then that would tend to push down on growth and inflation. 0:16:18.200 --> 0:16:20.480 If you have trade diversion from other countries that are 0:16:20.480 --> 0:16:22.520 trying to find a new home for their markets, that 0:16:22.600 --> 0:16:25.760 also pushes down on inflation. But we saw during the 0:16:25.760 --> 0:16:28.640 pandemic that if you have a repatterning of supply chains, 0:16:28.680 --> 0:16:31.440 that can push up on inflation. And also if we 0:16:31.440 --> 0:16:34.960 have trade fragmentation writ large, then that tends to reduce 0:16:35.040 --> 0:16:39.000 knowledge spillovers, that reduces potential growth, That tends to be inflationary. 0:16:39.360 --> 0:16:43.280 So something you've mentioned was exchange rates, and those have 0:16:43.360 --> 0:16:46.640 not gone as the economic theory would suggest. Normally, if 0:16:46.680 --> 0:16:50.400 the US announces or imposes unilateral tarifs some other countries, 0:16:50.760 --> 0:16:54.040 the theory suggests the dollars should appreciate the opposite has 0:16:54.080 --> 0:16:57.960 actually happened, and so that in and of itself could 0:16:58.160 --> 0:17:00.960 be disinflationary for the UK, but courses I mentioned the 0:17:00.960 --> 0:17:03.200 EU is the UK's biggest trade partner in the Euro 0:17:03.280 --> 0:17:06.439 has appreciated, so net net, if you look at the 0:17:06.840 --> 0:17:09.480 kind of Sterling exchange rate index, the pounds up a 0:17:09.480 --> 0:17:12.199 little bit. There's a ton of uncertainty around this, but 0:17:12.240 --> 0:17:14.640 they are both inflationary and disinflationary forces. 0:17:14.680 --> 0:17:17.439 But are are you concerned about the the slight recent 0:17:17.480 --> 0:17:20.000 strength and pound does does that change? Actually, you know, 0:17:20.119 --> 0:17:23.120 tightening financial conditions, so it does. 0:17:23.280 --> 0:17:26.000 I mean the currencies have been moving a lot recently 0:17:26.040 --> 0:17:29.520 as well. We've also seen off the back of previous 0:17:29.680 --> 0:17:32.800 kind of structural shift af after the global financial crisis, 0:17:33.280 --> 0:17:36.920 after COVID, the d the dollar didn't always behave immediately 0:17:37.000 --> 0:17:41.000 as the theory would suggest. It weakened and then subsequently rebounded. 0:17:41.040 --> 0:17:42.600 So I think it's a bit too early to say 0:17:43.040 --> 0:17:45.480 kind of where the dust is gonna settle on currencies. 0:17:45.560 --> 0:17:49.199 But I will say if the dollar continues to depreciate uh, 0:17:49.240 --> 0:17:52.080 on balance, that would be uh disinflationary for the UK, 0:17:52.720 --> 0:17:54.800 and and if the opposite happens uh less. 0:17:54.840 --> 0:17:56.600 So So are y are you worried that? And you 0:17:56.640 --> 0:17:58.840 said in the past, actually that there's a danger that 0:17:58.880 --> 0:18:01.919 it could you know, muddy the water on inflation. The 0:18:02.000 --> 0:18:04.160 moves and pounds, so are you're worried that there could 0:18:04.160 --> 0:18:05.760 be a reverse and then it becomes an our broad 0:18:05.800 --> 0:18:08.360 pressure on inflation quite quickly, it could. 0:18:08.200 --> 0:18:13.040 Be that's right. You know, currency forecasters have the hardest jobs, 0:18:13.040 --> 0:18:16.360 second only to energy forecasters. And like I said, it's 0:18:16.400 --> 0:18:18.920 been really violatile. We're not quite sure where they dust 0:18:18.960 --> 0:18:19.440 will set off. 0:18:19.560 --> 0:18:22.399 So that was the Bank of England policy maker Meghan 0:18:22.520 --> 0:18:27.040 Green speaking to Bloomberg's Francine Laqua. Now, an economic resurgence 0:18:27.320 --> 0:18:31.160 was the central promise the Labor Party staked their whole 0:18:31.200 --> 0:18:34.600 election campaign on. But now as the prospect of growth 0:18:34.840 --> 0:18:38.760 moves further off into the horizon and the public face 0:18:38.840 --> 0:18:44.159 growing cost pressures, can the party count on keeping that support. 0:18:44.600 --> 0:18:48.159 It's something I put to Bloomberg opinion columnist Rosa Prints. 0:18:48.600 --> 0:18:52.200 We started by talking about Labour's track records so far. 0:18:52.720 --> 0:18:54.920 It's fair to say that they haven't had a great 0:18:54.960 --> 0:18:59.359 start to their time in office. Almost straight away their 0:18:59.400 --> 0:19:02.760 opinion poll ratings kind of fell off a cliff. You'll 0:19:02.760 --> 0:19:05.560 remember that Labor was elected on a bit of a 0:19:05.680 --> 0:19:10.479 landslide last summer, partly, I think because the Conservative government 0:19:10.520 --> 0:19:14.320 which had been in beforehand was extremely unpopular, so lots 0:19:14.359 --> 0:19:17.280 of people voted Labor to kind of get the Tories out, 0:19:17.680 --> 0:19:20.960 and I think maybe didn't fall massively in love with labor, 0:19:20.960 --> 0:19:23.040 and that was born out when just a month or 0:19:23.080 --> 0:19:26.359 two into their time in government their opinion polls started 0:19:26.400 --> 0:19:28.840 to go south as well. To be fair, they had 0:19:28.880 --> 0:19:32.000 a really tough hand. The economy was in all sorts 0:19:32.040 --> 0:19:34.840 of trouble. They had to deliver a budget that was 0:19:34.960 --> 0:19:38.760 very unpopular. People are feeling the pinch. So although they 0:19:38.800 --> 0:19:43.040 are doing pretty badly, the Conservatives haven't recovered either, so 0:19:43.280 --> 0:19:45.080 kind of everyone's doing badly at the moment. 0:19:45.320 --> 0:19:48.280 What's at stake during these elections then? Why do they matter? 0:19:48.760 --> 0:19:49.000 Well? 0:19:49.040 --> 0:19:52.679 I think they're fascinating elections. There aren't a huge number 0:19:52.680 --> 0:19:55.840 of seats up for grabs. It's one six hundred and 0:19:55.840 --> 0:19:59.960 forty one council seats. That's the local authorities who come 0:20:00.119 --> 0:20:03.000 of run things on the ground. There's also a by 0:20:03.119 --> 0:20:07.000 election to a Westminster seat and some mayoralties, so not 0:20:07.119 --> 0:20:09.600 a massive change of power. But I think it's just 0:20:09.640 --> 0:20:12.080 going to be so interesting to see what the new 0:20:12.119 --> 0:20:15.399 politics of the UK is because, as I said, no 0:20:15.560 --> 0:20:19.720 one party is really breaking through. You've got the Conservatives 0:20:20.080 --> 0:20:23.360 kind of bumping along on about twenty four percent, their 0:20:23.840 --> 0:20:26.719 usual Tory rivals doing a bit worse on about twenty 0:20:26.760 --> 0:20:29.320 one percent. And the real story I think of these 0:20:29.359 --> 0:20:33.200 elections is whether we can see a breakthrough for reform. 0:20:33.400 --> 0:20:37.760 That's the kind of upstart, quite right leaning populist party 0:20:37.880 --> 0:20:41.880 headed by you'll remember Nigel Farage who was the Brexiteer 0:20:41.960 --> 0:20:45.320 in chief during the Brexit wars. And not to forget 0:20:45.320 --> 0:20:48.640 the smaller parties. The Liberal Democrats did better than they 0:20:48.840 --> 0:20:51.280 had ever done before at the last election. They're on 0:20:51.560 --> 0:20:55.359 around fourteen percent, and you've got some Greens doing well 0:20:55.440 --> 0:21:00.080 and some kind of protest and independent candidates, particularly on issues. 0:20:59.720 --> 0:21:02.560 Like the How do you think that the kind of 0:21:02.640 --> 0:21:05.760 bigger picture is going to affect the local elections? How 0:21:05.760 --> 0:21:08.080 do you think that there's going to be that interplay 0:21:08.119 --> 0:21:10.000 between the local and the national. 0:21:10.359 --> 0:21:13.040 That's such a good question. How do we know how 0:21:13.119 --> 0:21:17.120 anyone votes? I think often what happens is that people 0:21:17.440 --> 0:21:20.080 maybe they don't pay attention to politics all that march. 0:21:20.119 --> 0:21:22.359 They've kind of got the party that they believe in, 0:21:22.400 --> 0:21:24.919 and that they always vote for, so they'll tend to 0:21:25.000 --> 0:21:27.760 vote along those traditional lines that they would do, say 0:21:27.800 --> 0:21:31.080 at a general election, unless something has happened in their 0:21:31.160 --> 0:21:35.640 area that they're particularly unhappy about, less commonly that they're 0:21:35.640 --> 0:21:38.520 particularly pleased about, And then it does come down to 0:21:39.000 --> 0:21:43.080 the performance of what they've been used to. So, for example, 0:21:43.200 --> 0:21:47.400 there's a terrible strike going on among refuse workers in 0:21:47.440 --> 0:21:50.000 the second biggest town of Birmingham, I think the people 0:21:50.000 --> 0:21:52.760 of Birmingham may feel differently about their labor council than 0:21:52.800 --> 0:21:55.640 if they hadn't had rubbish pile duff outside their homes 0:21:55.920 --> 0:21:58.919 for weeks. On the other hand, say a party like 0:21:58.960 --> 0:22:02.840 Reform almost quite new, so they don't really have hardly 0:22:02.880 --> 0:22:05.679 any counselors. So people won't be able to vote on 0:22:05.760 --> 0:22:08.360 their record, and it'll be whether they think that they 0:22:08.359 --> 0:22:12.040 can actually trust reform In to run things. You know, 0:22:12.320 --> 0:22:16.120 Reform hasn't got that record of managing things. Will people 0:22:16.800 --> 0:22:19.760 continue to see them as almost a protest vote, or 0:22:19.800 --> 0:22:22.679 will they actually trust them to run local services? 0:22:22.880 --> 0:22:26.399 I mean thinking about Birmingham reports of gigantic rats as 0:22:26.440 --> 0:22:30.080 a result of that strike and the rubbish in the 0:22:30.200 --> 0:22:33.520 streets that we've seen for weeks now in terms of 0:22:33.560 --> 0:22:37.479 the campaigns, what have they looked like for the major 0:22:37.520 --> 0:22:39.680 parties and how much effort do they put in. 0:22:40.119 --> 0:22:42.040 Just to give you a bit of context, So the 0:22:42.119 --> 0:22:45.080 last time these elections were held they held every four years, 0:22:45.600 --> 0:22:48.560 Boris Johnson was the Prime Minister and he was doing 0:22:48.720 --> 0:22:52.320