1 00:00:02,080 --> 00:00:04,560 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:04,559 --> 00:00:06,720 Speaker 1: top stories in the coming week from our day Break 3 00:00:06,760 --> 00:00:07,960 Speaker 1: anchors all around the world. 4 00:00:08,160 --> 00:00:09,360 Speaker 2: Straight ahead on the program. 5 00:00:09,400 --> 00:00:13,560 Speaker 1: Twenty twenty four closes out with a rather hawkish Federal Reserve. Plus, 6 00:00:13,760 --> 00:00:16,759 Speaker 1: can the tech sector keep up its momentum heading into 7 00:00:16,760 --> 00:00:19,160 Speaker 1: the new year. I'm Tom Busby in New York. 8 00:00:19,400 --> 00:00:22,800 Speaker 3: I'm Doug Prisner looking at five possible events for Asian 9 00:00:22,840 --> 00:00:24,000 Speaker 3: markets in the year ahead. 10 00:00:24,200 --> 00:00:26,560 Speaker 4: I'm Stephen Carol E London, who are looking back at 11 00:00:26,560 --> 00:00:28,960 Speaker 4: a historic year in British politics. 12 00:00:31,520 --> 00:00:35,720 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:35,760 --> 00:00:39,680 Speaker 5: eleven three oh New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:40,080 --> 00:00:44,960 Speaker 5: Bloomberg ninety two nine, Boston, DAB, Digital Radio, London, Sirius 15 00:00:45,120 --> 00:00:48,520 Speaker 5: XM one twenty one, and around the world on Bloomberg Radio, 16 00:00:48,560 --> 00:00:50,800 Speaker 5: dot Com and the Bloomberg Business App. 17 00:00:55,040 --> 00:00:56,440 Speaker 2: Good day to you. I'm Tom Busby. 18 00:00:56,480 --> 00:00:59,120 Speaker 1: We begin today's program with the Federal Reserve, which shocked 19 00:00:59,160 --> 00:01:02,400 Speaker 1: investors by signaling fewer rate cuts in the year ahead. 20 00:01:02,880 --> 00:01:05,280 Speaker 1: What does this mean for the markets, the economy for 21 00:01:05,319 --> 00:01:08,199 Speaker 1: the Feds Dot plot for twenty twenty five well for more. 22 00:01:08,400 --> 00:01:13,080 Speaker 1: We're joined by Michael McKee, Bloomberg's international economic and policy correspondent. 23 00:01:13,560 --> 00:01:15,480 Speaker 1: So Michael, let's start by looking at what the FED 24 00:01:15,560 --> 00:01:18,920 Speaker 1: accomplished this past year. Five meetings that are row leaving 25 00:01:19,000 --> 00:01:20,960 Speaker 1: rates unchanged and then boom. 26 00:01:21,560 --> 00:01:23,880 Speaker 6: Well, you could look at it this way. The last 27 00:01:23,920 --> 00:01:26,160 Speaker 6: time we were at four and a quarter to four 28 00:01:26,160 --> 00:01:27,920 Speaker 6: and a half percent was when the Fed was going 29 00:01:28,000 --> 00:01:34,000 Speaker 6: up in rates, and at that point unemployment was high 30 00:01:34,040 --> 00:01:38,880 Speaker 6: and inflation was in the sixth range. Now we're in 31 00:01:38,920 --> 00:01:42,360 Speaker 6: the two range, and we're headed down with the numbers, 32 00:01:42,400 --> 00:01:45,080 Speaker 6: So the Fed will take a victory lap on that. 33 00:01:46,120 --> 00:01:49,360 Speaker 6: We do see inflation stalling out a little bit, which 34 00:01:49,480 --> 00:01:52,720 Speaker 6: raised a lot of questions about whether they should continue 35 00:01:52,720 --> 00:01:55,000 Speaker 6: cutting at the same pace, and they sort of answered 36 00:01:55,080 --> 00:01:57,840 Speaker 6: us by raising their inflation forecast and saying that in 37 00:01:58,080 --> 00:02:00,920 Speaker 6: twenty twenty five they're only going to cut twice. 38 00:02:01,200 --> 00:02:03,640 Speaker 1: Now, at that December meeting, the boat to cut the 39 00:02:03,640 --> 00:02:07,080 Speaker 1: federal funds rate eleven to one, the Cleveland Fed's new president, 40 00:02:07,080 --> 00:02:10,760 Speaker 1: Beth Hammick, preferring to hold rate study. What did she see? 41 00:02:11,240 --> 00:02:15,240 Speaker 6: She suggested before the FED meeting that we're about at 42 00:02:15,240 --> 00:02:19,400 Speaker 6: a time when the Fed wants to pause because we're 43 00:02:19,560 --> 00:02:21,839 Speaker 6: at the upper end of the neutral rate, and that's 44 00:02:21,840 --> 00:02:23,600 Speaker 6: going to be the big discussion going forward is what 45 00:02:23,680 --> 00:02:26,360 Speaker 6: is the neutral rate? The rate of interest that neither 46 00:02:26,960 --> 00:02:31,919 Speaker 6: stimulates or holds back the economy, doesn't create an inflationary 47 00:02:31,960 --> 00:02:35,799 Speaker 6: situation or a deflationary situation, And nobody knows. It's only 48 00:02:35,880 --> 00:02:38,919 Speaker 6: something you can observe in hindsight, but there are a 49 00:02:38,960 --> 00:02:42,919 Speaker 6: lot of guesses. And Beth Hammick works at the Cleveland 50 00:02:43,000 --> 00:02:46,919 Speaker 6: Fed where they have an inflation center, and so they 51 00:02:47,040 --> 00:02:49,360 Speaker 6: were probably telling her that at this point it looks 52 00:02:49,400 --> 00:02:52,960 Speaker 6: like it could be neutral, could be around four percent, 53 00:02:53,440 --> 00:02:56,440 Speaker 6: so she wanted to have a pause. 54 00:02:56,520 --> 00:02:56,640 Speaker 7: Now. 55 00:02:56,720 --> 00:02:59,160 Speaker 6: The other thing that was interesting is that three other 56 00:02:59,320 --> 00:03:02,639 Speaker 6: members of the committee, presumably non voters because we didn't 57 00:03:02,639 --> 00:03:05,680 Speaker 6: get any other dissents, also agreed that they should not 58 00:03:05,840 --> 00:03:10,079 Speaker 6: move rates at this meeting. So there's definitely some gathering 59 00:03:10,160 --> 00:03:12,280 Speaker 6: strength in the hold for a while. 60 00:03:12,120 --> 00:03:15,880 Speaker 1: Camp, and that is inflation. Is that the main driver 61 00:03:16,000 --> 00:03:16,520 Speaker 1: you think that. 62 00:03:16,400 --> 00:03:19,240 Speaker 6: That inflation's moved back to the primary position. It doesn't 63 00:03:19,240 --> 00:03:21,840 Speaker 6: look like there's anything particularly wrong with the labor market. 64 00:03:21,880 --> 00:03:26,040 Speaker 6: Now we'll see first week of January, the first Friday 65 00:03:26,160 --> 00:03:31,960 Speaker 6: we'll get the next jobs report. And while hiring has slowed, 66 00:03:32,000 --> 00:03:36,000 Speaker 6: it hasn't fallen off a cliff. The unemployment rate is 67 00:03:36,080 --> 00:03:38,000 Speaker 6: below where the Fed thought it would be at the 68 00:03:38,080 --> 00:03:41,560 Speaker 6: end of twenty twenty four. So right now they're focused 69 00:03:41,600 --> 00:03:44,960 Speaker 6: on inflation, and they are moving up their inflation expectations, 70 00:03:44,960 --> 00:03:48,720 Speaker 6: in part because it's been sticky and in part because 71 00:03:48,840 --> 00:03:51,480 Speaker 6: they don't know what the president elect is going to 72 00:03:51,520 --> 00:03:53,320 Speaker 6: do in twenty twenty five. 73 00:03:53,360 --> 00:03:55,200 Speaker 1: A lot of uncertainties there. Well, right now it's at 74 00:03:55,200 --> 00:03:56,680 Speaker 1: about two point seven percent. 75 00:03:57,760 --> 00:04:00,000 Speaker 6: Two point seven percent of the headline may go up. 76 00:04:00,880 --> 00:04:06,480 Speaker 6: We're talking PCEE here for the Fed because that's what 77 00:04:06,520 --> 00:04:12,080 Speaker 6: they do, and the PCE headline is going into the 78 00:04:12,240 --> 00:04:16,080 Speaker 6: end of the year is just below or right around 79 00:04:16,120 --> 00:04:17,120 Speaker 6: two and a half percent. 80 00:04:18,160 --> 00:04:23,640 Speaker 1: Now, Fed officials stunned the markets with expectations or signals 81 00:04:23,680 --> 00:04:26,800 Speaker 1: of only two rate cuts. There had been projections of four, 82 00:04:26,960 --> 00:04:31,640 Speaker 1: then three, mostly four. I mean, what's the reason for 83 00:04:31,839 --> 00:04:33,080 Speaker 1: signaling that right now? 84 00:04:34,240 --> 00:04:37,400 Speaker 6: They wanted to, I think, justify the fact that they're 85 00:04:37,520 --> 00:04:39,240 Speaker 6: going to be able to go on hold and they 86 00:04:39,279 --> 00:04:41,960 Speaker 6: probably aren't going to raise rates at the January meeting. 87 00:04:42,600 --> 00:04:45,120 Speaker 6: And if inflation is a problem, then they don't want 88 00:04:45,160 --> 00:04:49,080 Speaker 6: to cut rates anymore, so they raised their forecasts, and 89 00:04:49,160 --> 00:04:50,840 Speaker 6: as we mentioned, part of it has to do with 90 00:04:50,880 --> 00:04:53,240 Speaker 6: what they think may happen under the Trump administration. 91 00:04:53,880 --> 00:04:55,240 Speaker 2: But with the. 92 00:04:55,200 --> 00:04:59,880 Speaker 6: Forecast higher that scared Wall Street more than anything else. 93 00:05:00,279 --> 00:05:05,920 Speaker 6: Is the magnitude of the increase about thirty basis points 94 00:05:05,960 --> 00:05:10,080 Speaker 6: in their inflation forecast, and the number of Fed officials 95 00:05:10,080 --> 00:05:13,839 Speaker 6: who said that we should go on hold scared Wall Street. 96 00:05:14,360 --> 00:05:18,560 Speaker 6: They maybe overreacted to the idea that we would have 97 00:05:18,720 --> 00:05:21,719 Speaker 6: only two rate cuts because the market's immediately priced in 98 00:05:21,800 --> 00:05:25,279 Speaker 6: only one rate cut, and so that led to a 99 00:05:25,320 --> 00:05:27,839 Speaker 6: sell off. I think the end of the day huge 100 00:05:27,920 --> 00:05:30,039 Speaker 6: drop that we saw was probably more related to the 101 00:05:30,080 --> 00:05:32,200 Speaker 6: fact that it's been a good year. People have made 102 00:05:32,200 --> 00:05:37,120 Speaker 6: a lot of money, and most senior traders are going, 103 00:05:37,600 --> 00:05:39,760 Speaker 6: you know, they take the last two weeks of the 104 00:05:39,960 --> 00:05:43,359 Speaker 6: year off, so they figured, well, we'll sell take some profits, 105 00:05:43,839 --> 00:05:46,320 Speaker 6: put them in the bank account since the markets are 106 00:05:46,360 --> 00:05:50,320 Speaker 6: going down. And then the markets came back, so you know, 107 00:05:51,320 --> 00:05:53,200 Speaker 6: we'll see what it portends for next year. 108 00:05:53,600 --> 00:05:55,480 Speaker 1: Now, despite the three rate cuts in a row by 109 00:05:55,480 --> 00:05:57,920 Speaker 1: the Fed, mortgage rates have barely budged. They are back 110 00:05:57,960 --> 00:06:02,640 Speaker 1: above seven percent, while slower, not gone away. What's what's 111 00:06:02,720 --> 00:06:03,360 Speaker 1: the outlook? 112 00:06:03,440 --> 00:06:06,600 Speaker 6: Do you think, Well, if only somebody had asked JP 113 00:06:06,640 --> 00:06:10,000 Speaker 6: howe that somebody you know had asked jpow that And 114 00:06:10,040 --> 00:06:13,400 Speaker 6: basically he pointed out that those are market rates. The 115 00:06:13,440 --> 00:06:16,880 Speaker 6: FED set rates at the short end the two years 116 00:06:17,040 --> 00:06:20,359 Speaker 6: responsive to the FED up maybe through the belly, but 117 00:06:20,480 --> 00:06:23,159 Speaker 6: when you get to mortgage rates, car rates, things that 118 00:06:23,200 --> 00:06:28,000 Speaker 6: are influenced by where your loan is longer, they're looking 119 00:06:28,040 --> 00:06:31,160 Speaker 6: at market rates for that. And market rates haven't come 120 00:06:31,240 --> 00:06:35,920 Speaker 6: down because the market's been concerned about inflation and about 121 00:06:35,920 --> 00:06:37,040 Speaker 6: what Donald Trump might do. 122 00:06:37,360 --> 00:06:40,800 Speaker 1: Yeah, a lot of uncertainties. That next policy meeting from 123 00:06:40,839 --> 00:06:43,039 Speaker 1: the Fed just a month away January twenty eighth and 124 00:06:43,080 --> 00:06:46,839 Speaker 1: twenty ninth, our thanks to Michael McKee, Bloomberg's International Economic 125 00:06:46,960 --> 00:06:50,240 Speaker 1: and policy correspondent. We move next to the US tech sector, 126 00:06:50,279 --> 00:06:53,200 Speaker 1: which exploded in value this past year, mostly on the 127 00:06:53,200 --> 00:06:57,640 Speaker 1: promises of artificial intelligence technology and the burgeoning use of chatbots. 128 00:06:57,960 --> 00:07:00,919 Speaker 1: But we also saw a US tech back with China, 129 00:07:00,960 --> 00:07:04,360 Speaker 1: a large number of tech layoffs, regulator crackdowns over data 130 00:07:04,360 --> 00:07:07,920 Speaker 1: privacy concerns, and more so, what does twenty twenty five 131 00:07:07,960 --> 00:07:10,840 Speaker 1: have in store with a new administration entering the White House. 132 00:07:10,880 --> 00:07:14,040 Speaker 1: Well for more, we're joined by Mark German, Bloomberg's chief 133 00:07:14,160 --> 00:07:18,200 Speaker 1: technology correspondent. Well, Mark, let's start with the biggest developments, 134 00:07:18,280 --> 00:07:21,000 Speaker 1: maybe even setbacks, that you saw in the industry this 135 00:07:21,040 --> 00:07:22,600 Speaker 1: past year, twenty twenty four. 136 00:07:23,520 --> 00:07:27,040 Speaker 8: So this year was obviously very heavy on generative AI. 137 00:07:27,280 --> 00:07:30,360 Speaker 8: You saw lots of companies get into the space. You've 138 00:07:30,360 --> 00:07:33,800 Speaker 8: seen OpenAI roll out new tools. You've seen Apple announce 139 00:07:33,840 --> 00:07:37,600 Speaker 8: Apple Intelligence. You've seen Google really step up their game 140 00:07:37,680 --> 00:07:41,720 Speaker 8: in terms of Gemini. You've seen deeper integration at Microsoft 141 00:07:41,720 --> 00:07:46,480 Speaker 8: through it's copilot initiatives in partnership with OpenAI. So it's 142 00:07:46,520 --> 00:07:49,840 Speaker 8: really all been AI. We're still waiting on Amazon to 143 00:07:49,960 --> 00:07:53,280 Speaker 8: roll out their long promised AI upgrade for Alexa on 144 00:07:53,360 --> 00:07:56,880 Speaker 8: their Eco devices and other hardware products. And we're still 145 00:07:56,880 --> 00:07:59,720 Speaker 8: waiting for Apple to roll out a more comprehensive and 146 00:07:59,800 --> 00:08:02,360 Speaker 8: better or SI. That will happen next year. But I 147 00:08:02,400 --> 00:08:04,680 Speaker 8: would say twenty twenty four, if it would be to 148 00:08:05,000 --> 00:08:08,120 Speaker 8: be remembered as anything in the tech sector, would make 149 00:08:08,120 --> 00:08:09,680 Speaker 8: it the year of artificial intelligence. 150 00:08:09,880 --> 00:08:12,920 Speaker 1: Yeah, I mean it's everywhere now, Amazon, you see it, 151 00:08:13,000 --> 00:08:15,640 Speaker 1: like you said, it's rolling out. Apple is now just 152 00:08:15,720 --> 00:08:18,480 Speaker 1: introduced in the last couple of months. Where does AI 153 00:08:18,560 --> 00:08:19,200 Speaker 1: go from here? 154 00:08:19,280 --> 00:08:19,559 Speaker 2: Though? 155 00:08:20,320 --> 00:08:23,640 Speaker 8: AI is going to become more conversational, and I think 156 00:08:23,680 --> 00:08:27,560 Speaker 8: it's going to become more deeply embedded in different use cases. 157 00:08:27,600 --> 00:08:29,760 Speaker 8: What we've seen is open AI and some of these 158 00:08:29,760 --> 00:08:32,720 Speaker 8: other companies go all the way to one side on 159 00:08:32,760 --> 00:08:36,040 Speaker 8: our official intelligence, allowing it to do many things on 160 00:08:36,080 --> 00:08:39,600 Speaker 8: the user's behalf. There are many, very much concerns about 161 00:08:39,800 --> 00:08:42,000 Speaker 8: AI replacing jobs. So I think what you're going to 162 00:08:42,040 --> 00:08:45,080 Speaker 8: see is now the technologies out there, and maybe we 163 00:08:45,120 --> 00:08:47,560 Speaker 8: can call it sort of a raw form. We'll see 164 00:08:47,600 --> 00:08:50,960 Speaker 8: it get optimized and more deeply integrated into devices and 165 00:08:51,040 --> 00:08:54,120 Speaker 8: for different use cases, for more specific actions and more 166 00:08:54,160 --> 00:08:57,480 Speaker 8: specific sectors within the larger technology industry. So I think 167 00:08:57,520 --> 00:09:00,920 Speaker 8: you're going to see better technology. I think you're going 168 00:09:00,960 --> 00:09:03,560 Speaker 8: to see a bit of a pullback as well in 169 00:09:03,679 --> 00:09:05,679 Speaker 8: terms of how much this tech is going to be 170 00:09:05,800 --> 00:09:09,200 Speaker 8: unleashed and how it's going to be implemented precisely well. 171 00:09:09,200 --> 00:09:11,800 Speaker 1: One thing we learned very recently was Klarna, that is 172 00:09:11,840 --> 00:09:14,640 Speaker 1: a very popular buy now, pay later. They say they 173 00:09:14,640 --> 00:09:18,000 Speaker 1: haven't made a hire in months and they're using AI. 174 00:09:18,240 --> 00:09:21,280 Speaker 1: They've been able to reduce their staff by twenty two percent. 175 00:09:21,360 --> 00:09:24,120 Speaker 1: So just a hint of what it does mean for 176 00:09:24,160 --> 00:09:26,160 Speaker 1: the job sector right in the tech industry. 177 00:09:26,679 --> 00:09:28,360 Speaker 8: Well, there's a lot of jobs that are going to 178 00:09:28,440 --> 00:09:30,920 Speaker 8: be impacted by AI. There's a lot of jobs that 179 00:09:30,960 --> 00:09:33,280 Speaker 8: are not going to be impacted at all BAAI. And 180 00:09:33,320 --> 00:09:35,440 Speaker 8: there are a lot of jobs, probably the rest of them, 181 00:09:35,480 --> 00:09:37,080 Speaker 8: I would split it a third to third and third 182 00:09:37,360 --> 00:09:40,680 Speaker 8: that are going to be augmented and helped by AI. Right. 183 00:09:41,040 --> 00:09:44,480 Speaker 8: You can imagine consumers using AI as well to get 184 00:09:44,520 --> 00:09:47,679 Speaker 8: projects done. I want to know the impact on students 185 00:09:47,679 --> 00:09:48,280 Speaker 8: in school. 186 00:09:48,679 --> 00:09:48,880 Speaker 5: Right. 187 00:09:48,920 --> 00:09:53,200 Speaker 8: There's some people who's liked to compare AI to the calculator, right, 188 00:09:53,520 --> 00:09:55,760 Speaker 8: but the calculator is very different than something that can 189 00:09:55,800 --> 00:09:56,840 Speaker 8: do all your homework for you. 190 00:09:57,280 --> 00:09:58,120 Speaker 2: Yeah, no doubt. 191 00:09:58,600 --> 00:10:01,160 Speaker 1: I want to go back to which I know you 192 00:10:01,360 --> 00:10:04,360 Speaker 1: cover in a big way. This past year, a lot 193 00:10:04,400 --> 00:10:07,439 Speaker 1: of changes at Apple. Probably the biggest is after ten 194 00:10:07,520 --> 00:10:11,920 Speaker 1: billion dollars of investment, they shut down their Apple Car 195 00:10:12,040 --> 00:10:15,920 Speaker 1: division and have they taken a lot of that money, 196 00:10:16,120 --> 00:10:18,439 Speaker 1: a lot of the resources, and put it into AI. 197 00:10:19,440 --> 00:10:22,240 Speaker 8: So they fired about half of the employees working on 198 00:10:22,280 --> 00:10:24,280 Speaker 8: the car project. There were a lot of personnel that 199 00:10:24,320 --> 00:10:26,640 Speaker 8: they didn't need anymore if you're not working on a car. 200 00:10:26,920 --> 00:10:30,280 Speaker 8: There's a lot of very specific engineering work for a vehicle. Obviously, 201 00:10:30,840 --> 00:10:33,120 Speaker 8: they took about the other half and split them up 202 00:10:33,120 --> 00:10:35,320 Speaker 8: amongst a few teams. Some are working in robotics, some 203 00:10:35,360 --> 00:10:38,040 Speaker 8: are working on home devices, some are working on software, 204 00:10:38,080 --> 00:10:40,520 Speaker 8: some are working on cloud. But the vast majority of 205 00:10:40,520 --> 00:10:43,199 Speaker 8: the people they kept are working on AI and generative 206 00:10:43,200 --> 00:10:47,720 Speaker 8: AI more specifically in future iterations of Siri. Future iterations 207 00:10:47,760 --> 00:10:51,040 Speaker 8: of AI tied robotics, type of software and hardware and 208 00:10:51,040 --> 00:10:54,400 Speaker 8: cloud initiatives, and so they really are taking those resources 209 00:10:54,400 --> 00:10:57,680 Speaker 8: and applying them elsewhere. Personally, I think in the short 210 00:10:57,760 --> 00:10:59,960 Speaker 8: term getting out of the car space was a good idea, 211 00:11:00,360 --> 00:11:02,520 Speaker 8: But I think in the long term they're maybe going 212 00:11:02,559 --> 00:11:04,120 Speaker 8: to have to take another look at whether or not 213 00:11:04,160 --> 00:11:06,520 Speaker 8: they don't want to be in the car industry because 214 00:11:06,520 --> 00:11:08,840 Speaker 8: it's just going to continue to heat up. At some point, 215 00:11:08,960 --> 00:11:11,040 Speaker 8: someone's going to have a much better mousetrap in the 216 00:11:11,080 --> 00:11:14,280 Speaker 8: car space. Could and should have been Apple. It won't 217 00:11:14,280 --> 00:11:14,800 Speaker 8: be them. 218 00:11:15,240 --> 00:11:16,520 Speaker 2: It sounds like it's going to be Cha. 219 00:11:16,800 --> 00:11:21,800 Speaker 8: Yeah, China and cars are becoming synonymous. Is the AI 220 00:11:22,400 --> 00:11:25,280 Speaker 8: gets better and better. See, cars are a great example 221 00:11:25,320 --> 00:11:28,480 Speaker 8: of applying AI for use cases that make sense, right, 222 00:11:28,559 --> 00:11:30,959 Speaker 8: having a self driving car that you can rely upon. 223 00:11:31,480 --> 00:11:32,959 Speaker 8: And so I think we're just going to see more 224 00:11:33,000 --> 00:11:35,600 Speaker 8: of that out of China, and we'll see what Google 225 00:11:35,640 --> 00:11:37,480 Speaker 8: and Amazon are able to do in that space as well. 226 00:11:37,520 --> 00:11:39,680 Speaker 8: But at some point I think in the next five years, 227 00:11:39,720 --> 00:11:41,559 Speaker 8: Apple may have to reevaluate it. 228 00:11:42,480 --> 00:11:45,559 Speaker 1: Now, Apple's bread and butter the iPhone, But we got 229 00:11:45,559 --> 00:11:49,280 Speaker 1: some disturbing news from Micron Technology, the US's biggest maker 230 00:11:49,360 --> 00:11:53,280 Speaker 1: of memory chips, that said they're seeing weakness in demand 231 00:11:53,280 --> 00:11:57,200 Speaker 1: for smartphones and PCs. Do you see that as a 232 00:11:57,240 --> 00:12:00,000 Speaker 1: broad based weakness? Do you see any of that evidence 233 00:12:00,240 --> 00:12:01,959 Speaker 1: in Apple or in Samsung. 234 00:12:02,880 --> 00:12:06,640 Speaker 8: I'm seeing it in the sense that the yes, I'm 235 00:12:06,640 --> 00:12:08,520 Speaker 8: seeing it, but it's hard to know exactly what the 236 00:12:08,559 --> 00:12:11,560 Speaker 8: cause is given that the last couple iPhones that rolled out, 237 00:12:12,280 --> 00:12:15,120 Speaker 8: quite honestly, weren't that impressive and didn't include major changes. 238 00:12:15,480 --> 00:12:16,800 Speaker 8: So what we're going to have to do is wait 239 00:12:16,840 --> 00:12:19,240 Speaker 8: and see for when Apple rolls out a major redesign, 240 00:12:19,280 --> 00:12:21,720 Speaker 8: a major revamp to the iPhone, see what that does 241 00:12:21,760 --> 00:12:23,640 Speaker 8: to the market, and see what the sales of those 242 00:12:23,640 --> 00:12:26,360 Speaker 8: devices looks like. If those are strong, we know it's 243 00:12:26,400 --> 00:12:30,400 Speaker 8: an anomaly because there weren't many compelling reasons stuff grade. 244 00:12:30,760 --> 00:12:33,200 Speaker 8: If those results are not so strong, we know that 245 00:12:33,280 --> 00:12:34,079 Speaker 8: something's going on. 246 00:12:34,240 --> 00:12:35,600 Speaker 2: Well, a lot to look forward to. 247 00:12:35,640 --> 00:12:39,520 Speaker 1: Our thanks to Mark German, Bloomberg's chief technology correspondent. Coming 248 00:12:39,559 --> 00:12:42,439 Speaker 1: up on Bloomberg day Break weekend. What's on the horizon 249 00:12:42,559 --> 00:12:46,640 Speaker 1: for Europe's stock market? I'm Tom Busby and this is Bloomberg. 250 00:12:51,840 --> 00:12:54,160 Speaker 1: This is Bloomberg day Break weekend, our global look ahead 251 00:12:54,160 --> 00:12:56,280 Speaker 1: at the top stories for investors in the coming week. 252 00:12:56,520 --> 00:12:59,800 Speaker 1: I'm Tom Busby in New York. Up later in our program, 253 00:13:00,120 --> 00:13:03,880 Speaker 1: bring you five themes investors are looking at in Asian markets. 254 00:13:03,920 --> 00:13:07,559 Speaker 1: But first in twenty twenty four, Europe's political situation has 255 00:13:07,600 --> 00:13:11,800 Speaker 1: been decidedly rocky. The Block's two largest economies, France and Germany, 256 00:13:11,840 --> 00:13:16,840 Speaker 1: have both faced tumultuous governmental shifts, sending shockwaves reverberating around 257 00:13:16,840 --> 00:13:20,720 Speaker 1: the continent, and its economies will twenty twenty five bring 258 00:13:20,760 --> 00:13:23,760 Speaker 1: better fortunes for European investors. For more, let's go to 259 00:13:23,920 --> 00:13:27,640 Speaker 1: London and bring in Bloomberg Daybreak Europe banker Stephen Carroll. 260 00:13:27,840 --> 00:13:31,320 Speaker 4: Tom It's been a jam packed historic year in British politics. 261 00:13:31,360 --> 00:13:34,480 Speaker 4: From the first Labor government in fourteen years, to a 262 00:13:34,520 --> 00:13:38,320 Speaker 4: Conservative meltdown and a long await at elector breakthrough for 263 00:13:38,480 --> 00:13:42,520 Speaker 4: Nigel Faraja's Reform UK, there's barely been a dull moment. 264 00:13:42,600 --> 00:13:45,480 Speaker 4: Bloomberg's UK Political editor Alex Wickham has been speaking to 265 00:13:45,640 --> 00:13:49,760 Speaker 4: James Wilcock and me about the extraordinary events of twenty 266 00:13:49,840 --> 00:13:53,000 Speaker 4: twenty four and making some predictions for the year ahead. 267 00:13:53,760 --> 00:13:56,559 Speaker 9: Regardless of everything that's happened since and all the grumblings 268 00:13:56,559 --> 00:14:00,000 Speaker 9: that people might have with the new government and kiss 269 00:14:00,120 --> 00:14:03,720 Speaker 9: Armor's performance, this is something that people in the Labor 270 00:14:03,720 --> 00:14:07,840 Speaker 9: Party have literally been waiting much of their professional lives for, 271 00:14:08,360 --> 00:14:12,640 Speaker 9: and finally they get the chance to show whether they're 272 00:14:12,679 --> 00:14:16,840 Speaker 9: any better in office and their ideas and policies and 273 00:14:17,080 --> 00:14:21,480 Speaker 9: personalities are any better suited to power than the Conservatives were. 274 00:14:22,320 --> 00:14:24,840 Speaker 9: You know, it is too early to make that judgment. 275 00:14:25,800 --> 00:14:30,320 Speaker 9: We can see some early indications certainly that it isn't 276 00:14:30,520 --> 00:14:32,840 Speaker 9: as easy as they might have thought it was going 277 00:14:32,880 --> 00:14:37,320 Speaker 9: to be. That actually the problems structurally that the British 278 00:14:37,400 --> 00:14:41,880 Speaker 9: state has are hard to resolve, and you can't just 279 00:14:41,960 --> 00:14:44,880 Speaker 9: come in and go well with the nice, cuddly Labor 280 00:14:44,920 --> 00:14:47,800 Speaker 9: Party and we're much better than those those awful Tories. 281 00:14:47,840 --> 00:14:50,840 Speaker 9: Everything's going to be okay. Now it turns out things 282 00:14:50,840 --> 00:14:55,560 Speaker 9: are more complicated than that. And I think how labor 283 00:14:55,600 --> 00:14:58,600 Speaker 9: grapples with those huge trade offs that they're going to 284 00:14:58,600 --> 00:15:00,880 Speaker 9: have to make and political decisions things that are just 285 00:15:01,000 --> 00:15:05,880 Speaker 9: really difficult is basically the story of the last six 286 00:15:05,880 --> 00:15:07,880 Speaker 9: months at least, and probably the next four years. 287 00:15:08,000 --> 00:15:10,160 Speaker 10: There's a linitting contradiction here, isn't there? Because I was 288 00:15:10,200 --> 00:15:13,440 Speaker 10: thinking about what your political theme of the year might be, 289 00:15:14,400 --> 00:15:16,440 Speaker 10: and on one hand there's this big change, as you 290 00:15:16,520 --> 00:15:18,600 Speaker 10: just said, But on the other hand, so much is 291 00:15:18,680 --> 00:15:22,560 Speaker 10: the same, the same economic problems, the same inheritance, the 292 00:15:22,600 --> 00:15:25,560 Speaker 10: same difficulty in getting government to do what it wants. 293 00:15:26,000 --> 00:15:29,880 Speaker 10: You know, what would you say we can learn from 294 00:15:29,920 --> 00:15:31,880 Speaker 10: how labor have kind of taken to power in the 295 00:15:31,880 --> 00:15:33,600 Speaker 10: past of five months. What kind of lessons do we 296 00:15:33,640 --> 00:15:34,040 Speaker 10: take from that? 297 00:15:34,720 --> 00:15:38,120 Speaker 9: You know, Strategically, if you talk to people around Kissed Armor, 298 00:15:38,200 --> 00:15:42,320 Speaker 9: they sort of say, look, don't panic, We've deliberately done 299 00:15:42,360 --> 00:15:44,640 Speaker 9: the hard stuff first. We want to get some of 300 00:15:44,680 --> 00:15:46,480 Speaker 9: this horrible stuff out of the way that we were 301 00:15:46,560 --> 00:15:49,640 Speaker 9: left with by the Tories, that we had to resolve 302 00:15:49,720 --> 00:15:53,720 Speaker 9: the prisons over crowding crisis, the you know, the fiscal situation, 303 00:15:55,080 --> 00:16:00,120 Speaker 9: many other things, and things will get better. That's so, 304 00:16:00,240 --> 00:16:03,480 Speaker 9: you know, they seem to be relatively relaxed about, you know, 305 00:16:03,560 --> 00:16:05,920 Speaker 9: where the fact that things will turn around and this 306 00:16:05,960 --> 00:16:08,840 Speaker 9: is all part of a plan that you know, the 307 00:16:08,920 --> 00:16:11,920 Speaker 9: first year or so might be might be unpopular, but 308 00:16:11,960 --> 00:16:13,320 Speaker 9: then they'll get around to it. 309 00:16:13,560 --> 00:16:14,520 Speaker 11: Now, if you speak. 310 00:16:14,280 --> 00:16:17,760 Speaker 9: To some other people in at the top of the 311 00:16:17,800 --> 00:16:20,760 Speaker 9: Labor Party, they would be perhaps a bit more candid 312 00:16:20,840 --> 00:16:24,560 Speaker 9: and admit that actually, perhaps Labor should have done a 313 00:16:24,600 --> 00:16:29,000 Speaker 9: bit more policy working opposition. Perhaps Labor should have you know, yes, 314 00:16:29,120 --> 00:16:31,440 Speaker 9: criticized the Tories for the things they did wrong, but 315 00:16:31,640 --> 00:16:35,320 Speaker 9: perhaps had a bit more detailed thinking about what they 316 00:16:35,360 --> 00:16:39,400 Speaker 9: would do instead. Because we haven't seen a huge amount 317 00:16:39,520 --> 00:16:42,920 Speaker 9: of big ideas from Labor about in government, about how 318 00:16:42,920 --> 00:16:49,000 Speaker 9: to fix the NHS, about how to fix crime, justice, migration, etcetera, etcetera. 319 00:16:49,720 --> 00:16:53,280 Speaker 9: And that is going to be a huge challenge for them. 320 00:16:53,280 --> 00:16:56,720 Speaker 9: And the danger for kist Arma is this narrative that's 321 00:16:56,760 --> 00:16:59,200 Speaker 9: perhaps starting to emerge over the first six months that 322 00:16:59,280 --> 00:17:02,920 Speaker 9: Labour's disappin pointed or underwhelmed or hasn't provided change. Like 323 00:17:02,960 --> 00:17:06,400 Speaker 9: you say, if that sets in over the next twelve months, 324 00:17:06,560 --> 00:17:08,600 Speaker 9: that will be really hard for him to turn around. 325 00:17:08,760 --> 00:17:10,760 Speaker 9: So he does need a bit of a better story 326 00:17:10,760 --> 00:17:11,560 Speaker 9: to tell next year. 327 00:17:11,800 --> 00:17:14,120 Speaker 4: Yeah, and it's hard not to think about how much 328 00:17:14,160 --> 00:17:17,399 Speaker 4: of a narrative shift there has been since the election. 329 00:17:17,560 --> 00:17:21,440 Speaker 4: It went from this is the moment, here comes change 330 00:17:22,000 --> 00:17:23,359 Speaker 4: to this, let's take a listen. 331 00:17:23,920 --> 00:17:28,919 Speaker 12: Things are worse than we ever imagine. These riots didn't 332 00:17:28,960 --> 00:17:33,880 Speaker 12: happen in a vacuum. They exposed the state of our country, 333 00:17:34,720 --> 00:17:39,880 Speaker 12: revealed a deeply unhealthy society. The tracks in our foundations 334 00:17:40,040 --> 00:17:40,640 Speaker 12: laid bare. 335 00:17:41,560 --> 00:17:44,560 Speaker 4: So that was Kiris Starmer there speaking not long after 336 00:17:44,720 --> 00:17:47,560 Speaker 4: taking up office as Prime Minister. But setting up that 337 00:17:47,680 --> 00:17:50,200 Speaker 4: narrative that you're talking about alex of things being quite 338 00:17:50,240 --> 00:17:51,640 Speaker 4: negative will come back to the rights in a moment 339 00:17:51,800 --> 00:17:54,919 Speaker 4: was another, of course, very important moment this year politically 340 00:17:54,960 --> 00:17:58,159 Speaker 4: as well. But I mean, can can there be a 341 00:17:58,480 --> 00:18:02,639 Speaker 4: tone reset now? Is this a cleverer political strategy to 342 00:18:02,680 --> 00:18:05,720 Speaker 4: say that everything's terrible so that by comparison things can 343 00:18:05,720 --> 00:18:07,040 Speaker 4: look better in a couple of months. 344 00:18:07,320 --> 00:18:09,720 Speaker 9: They'd like us to think that that was the plan 345 00:18:09,760 --> 00:18:12,560 Speaker 9: all along. I think certainly lots of people in labor 346 00:18:12,560 --> 00:18:15,560 Speaker 9: would admit that some of the messaging hasn't been quite right. 347 00:18:15,680 --> 00:18:18,320 Speaker 9: Certainly in the run up to the budget. A lot 348 00:18:18,359 --> 00:18:20,760 Speaker 9: of the really negative messaging from the chance that Rachel 349 00:18:20,760 --> 00:18:27,479 Speaker 9: Reeves was seen is basically hitting economic confidence. The tricky 350 00:18:27,640 --> 00:18:30,120 Speaker 9: thing is that it's really hard to turn that around. 351 00:18:30,400 --> 00:18:33,320 Speaker 9: And when you've had a budget that raised taxes on 352 00:18:33,560 --> 00:18:37,399 Speaker 9: businesses and a lot of rhetoric from the Chancellor that 353 00:18:37,760 --> 00:18:40,840 Speaker 9: didn't quite meet the sort of lofty ambitions on growth 354 00:18:41,000 --> 00:18:44,440 Speaker 9: at the labor we're talking about before the election, she's 355 00:18:44,440 --> 00:18:47,800 Speaker 9: got to go into the new year and convince businesses 356 00:18:47,920 --> 00:18:51,159 Speaker 9: and just the public that Britain's got an economy that 357 00:18:52,200 --> 00:18:55,439 Speaker 9: has strength and is growing and booming and all the 358 00:18:55,440 --> 00:18:57,600 Speaker 9: rest of it. And if she can't do that, then 359 00:18:57,600 --> 00:18:59,560 Speaker 9: it is going to be really difficult for her to 360 00:18:59,600 --> 00:19:03,400 Speaker 9: deliver on her core pledge to have you know, higher 361 00:19:03,440 --> 00:19:07,919 Speaker 9: economic growth in this country. And you know, turning that 362 00:19:08,040 --> 00:19:11,160 Speaker 9: around is she could see that she's starting to try 363 00:19:11,200 --> 00:19:13,119 Speaker 9: to do that. She goes and meets the CBI and 364 00:19:13,160 --> 00:19:14,439 Speaker 9: she says, oh, I don't want to do any more 365 00:19:14,480 --> 00:19:16,840 Speaker 9: tax rises and things like that, but it's going to 366 00:19:16,880 --> 00:19:17,520 Speaker 9: need a lot more. 367 00:19:17,920 --> 00:19:20,120 Speaker 10: Can I ask a very nerdy question about what it's 368 00:19:20,200 --> 00:19:22,520 Speaker 10: like as a journalist to be sort of doing this 369 00:19:22,640 --> 00:19:25,120 Speaker 10: job this year in that we have the regularcount of moments. 370 00:19:25,160 --> 00:19:27,520 Speaker 10: We've had the budget, like you said, you've had the election. 371 00:19:28,040 --> 00:19:31,040 Speaker 10: We have the kind of normal warp and weft of Westminster. 372 00:19:31,240 --> 00:19:34,520 Speaker 10: But this has also been kind of notable because everything 373 00:19:34,560 --> 00:19:36,760 Speaker 10: is on social media nowadays. There's been questions about how 374 00:19:37,000 --> 00:19:40,720 Speaker 10: x works. There's also been new political party sort of 375 00:19:40,720 --> 00:19:42,920 Speaker 10: the rise of Reform, the return of the Live Dems, 376 00:19:43,400 --> 00:19:47,320 Speaker 10: questions over if Westminster's two party system is still actually 377 00:19:47,400 --> 00:19:48,440 Speaker 10: a two party system. 378 00:19:48,800 --> 00:19:51,919 Speaker 11: How have you gone about covering that? Yeah, it's really interesting. 379 00:19:51,920 --> 00:19:55,320 Speaker 9: I mean there is this sort of incumbency problem that 380 00:19:56,280 --> 00:19:58,560 Speaker 9: positions around the world have had, whether it's Joe Biden 381 00:19:58,920 --> 00:20:02,600 Speaker 9: or Emmanuel Macron or Enough Schultz or whoever. In Britain 382 00:20:02,640 --> 00:20:04,960 Speaker 9: we've kind of gone the other way. So around the 383 00:20:05,000 --> 00:20:07,160 Speaker 9: world you sort of see these kind of centrist liberal 384 00:20:07,200 --> 00:20:11,680 Speaker 9: governments losing support and then a sort of populist right 385 00:20:12,440 --> 00:20:15,240 Speaker 9: coming along as an insurgent, Whereas in Britain we had 386 00:20:15,440 --> 00:20:18,400 Speaker 9: a center right government which which was unpopular and gave 387 00:20:18,400 --> 00:20:19,919 Speaker 9: way to a center left government. 388 00:20:19,960 --> 00:20:21,359 Speaker 11: So we've kind of gone the opposite direction. 389 00:20:21,680 --> 00:20:24,240 Speaker 9: That doesn't mean that we can't, you know, just be 390 00:20:24,280 --> 00:20:27,640 Speaker 9: a few years after everybody else. And like you say, 391 00:20:27,720 --> 00:20:29,960 Speaker 9: with the rise of reform Nigel Farwars, this sort of 392 00:20:30,000 --> 00:20:34,080 Speaker 9: fragmenting of British politics. There is a real threat to 393 00:20:34,400 --> 00:20:37,679 Speaker 9: Kierstarma or in any incumbent. And it's not necessarily the 394 00:20:37,680 --> 00:20:40,600 Speaker 9: fact that it's Keir Starmer. It's it's just the fact 395 00:20:40,600 --> 00:20:44,000 Speaker 9: that people are unhappy with how things are going. 396 00:20:44,320 --> 00:20:45,520 Speaker 11: And I agree with you. 397 00:20:45,560 --> 00:20:48,120 Speaker 9: I think social media is just an absolutely massive acce 398 00:20:48,440 --> 00:20:53,119 Speaker 9: accelerator of people's displeasure. You know, you used to get 399 00:20:53,800 --> 00:20:57,119 Speaker 9: people give politicians the benefit of the doubt for a 400 00:20:57,160 --> 00:21:00,920 Speaker 9: few years, and you know, even Boris Johnson was sort 401 00:21:00,960 --> 00:21:05,359 Speaker 9: of still popular long into the pandemic, despite you know, 402 00:21:05,560 --> 00:21:09,040 Speaker 9: varying sort of views on the performance of his government 403 00:21:09,080 --> 00:21:12,240 Speaker 9: over that. And you know, similarly, you could say, looking back, 404 00:21:12,359 --> 00:21:14,920 Speaker 9: Tony Blair won elections after the Iraq War and so 405 00:21:15,000 --> 00:21:17,560 Speaker 9: on and so on. People gave politicians the time of day, 406 00:21:18,080 --> 00:21:20,399 Speaker 9: I think a little bit more than they do these days. 407 00:21:20,400 --> 00:21:23,639 Speaker 9: People are perhaps a bit more cynical, a bit quicker 408 00:21:23,680 --> 00:21:26,680 Speaker 9: to lose their patients. And it's a problem for Kirs 409 00:21:26,720 --> 00:21:30,440 Speaker 9: Starmer because you know, social media it tends to be negative, 410 00:21:30,560 --> 00:21:32,520 Speaker 9: you know, that tends to be the things that do 411 00:21:32,600 --> 00:21:35,760 Speaker 9: well on social media. And journalists play our part in 412 00:21:35,840 --> 00:21:38,720 Speaker 9: that because we love a story criticizing a politician, and 413 00:21:38,760 --> 00:21:40,600 Speaker 9: that's the thing that people read and sol and so, 414 00:21:40,680 --> 00:21:44,280 Speaker 9: and it all sort of perpetuates itself. There is a 415 00:21:44,760 --> 00:21:46,800 Speaker 9: danger for kist Armer that the benefit of. 416 00:21:46,800 --> 00:21:47,920 Speaker 11: The doubt runs out. 417 00:21:48,119 --> 00:21:50,760 Speaker 9: And while he might have expected five years to benefit 418 00:21:50,800 --> 00:21:52,919 Speaker 9: of the doubt, you know, maybe getting himself a second 419 00:21:53,000 --> 00:21:56,199 Speaker 9: term almost by default with his big majority, there's no 420 00:21:56,240 --> 00:21:57,360 Speaker 9: guarantee of that anymore. 421 00:21:57,480 --> 00:21:59,760 Speaker 4: Well, thinking about some of the figures who who are 422 00:21:59,760 --> 00:22:02,359 Speaker 4: going to be you know, perhaps a thorn in Kris 423 00:22:02,440 --> 00:22:05,360 Speaker 4: Dharmer's side. We talked a lot about Niger Ferrars round 424 00:22:05,359 --> 00:22:08,199 Speaker 4: the time of the election. How largely would you expect 425 00:22:08,280 --> 00:22:11,360 Speaker 4: him to be featuring in the political scene next year, 426 00:22:11,480 --> 00:22:13,959 Speaker 4: given of course his ties to Donald Trump. 427 00:22:14,240 --> 00:22:16,280 Speaker 11: Well, this is the thing with Niger Franch. 428 00:22:16,320 --> 00:22:19,359 Speaker 9: He is a sort of genius at getting himself in 429 00:22:19,480 --> 00:22:22,240 Speaker 9: the news. I mean, we've seen with the sort of 430 00:22:22,320 --> 00:22:26,119 Speaker 9: Elon Musk meeting at Mara Lago, this sort of suggestion 431 00:22:26,240 --> 00:22:31,120 Speaker 9: that Elon Musk could donate to reform somehow, whether it's 432 00:22:31,160 --> 00:22:31,560 Speaker 9: true or. 433 00:22:31,560 --> 00:22:32,720 Speaker 11: Not that that could happen. 434 00:22:33,520 --> 00:22:36,680 Speaker 9: Journalists have to talk about it, and Farage for fifteen 435 00:22:36,760 --> 00:22:40,399 Speaker 9: twenty years has been a genius at making sure he 436 00:22:40,480 --> 00:22:43,919 Speaker 9: can't be ignored. And it's a really real challenge for 437 00:22:44,000 --> 00:22:46,840 Speaker 9: journalists because we sort of have to write with skepticism. 438 00:22:47,520 --> 00:22:50,480 Speaker 9: Niga frag is claiming X y Z that may or 439 00:22:50,520 --> 00:22:52,639 Speaker 9: may not happen, and it could all just be a 440 00:22:52,640 --> 00:22:55,160 Speaker 9: bit of smoke and mirrors. That is all about really 441 00:22:55,200 --> 00:22:58,000 Speaker 9: about him getting in the news and creating rowse and 442 00:22:58,040 --> 00:22:59,760 Speaker 9: creating things for him to be in the middle of. 443 00:23:01,240 --> 00:23:03,000 Speaker 11: But it's you can't ignore it. 444 00:23:03,119 --> 00:23:06,680 Speaker 9: Other politicians have struggled for years with how to deal 445 00:23:06,720 --> 00:23:09,960 Speaker 9: with him, and Labor paced this new dynamic now with 446 00:23:09,960 --> 00:23:12,680 Speaker 9: Farage in Parliament for the first time, with Trump in 447 00:23:12,720 --> 00:23:15,679 Speaker 9: the White House, with the president's right hand man Elon 448 00:23:15,760 --> 00:23:19,520 Speaker 9: Musk tweeting every day that Kirstarmer is useless and Britain's 449 00:23:19,600 --> 00:23:24,760 Speaker 9: basket case. This is a new world that is basically unprecedented, 450 00:23:25,040 --> 00:23:27,719 Speaker 9: and I, you know, I don't think kirs Starmer has 451 00:23:27,720 --> 00:23:29,359 Speaker 9: a plan to deal with it. Nobody in the Labor 452 00:23:29,400 --> 00:23:31,320 Speaker 9: has has managed to convince me that they've got a 453 00:23:31,320 --> 00:23:33,080 Speaker 9: plan to deal with it to be fair to them. 454 00:23:33,440 --> 00:23:35,280 Speaker 9: I don't know what the answer is. It's such a 455 00:23:35,320 --> 00:23:38,200 Speaker 9: it's such a it's such a difficult problem. So yeah, 456 00:23:38,359 --> 00:23:41,680 Speaker 9: you know, Forage is is definitely a threat to Starmer, 457 00:23:41,920 --> 00:23:44,440 Speaker 9: and you could see a world where in the absence 458 00:23:44,440 --> 00:23:47,520 Speaker 9: of the Tories' is a credible opposition, Farage takes over. 459 00:23:49,200 --> 00:23:52,480 Speaker 10: So obviously Farage is good at making noise and getting 460 00:23:52,480 --> 00:23:55,040 Speaker 10: press attention. But as you said, the election is not 461 00:23:55,040 --> 00:23:58,080 Speaker 10: for quite a way away. In the next year, do 462 00:23:58,119 --> 00:24:01,680 Speaker 10: you think we're more likely to see the Starmer humbled 463 00:24:01,720 --> 00:24:05,680 Speaker 10: by new Conservaive leader Cammy Baidennock or by the labor 464 00:24:05,760 --> 00:24:07,560 Speaker 10: left what is likely to be the first kind of 465 00:24:07,560 --> 00:24:08,920 Speaker 10: crunch point for this administration. 466 00:24:10,160 --> 00:24:13,960 Speaker 9: Yeah, there is another spending review coming in the spring, 467 00:24:14,359 --> 00:24:17,360 Speaker 9: and Reeves kind of got away with the first one. 468 00:24:17,440 --> 00:24:20,199 Speaker 9: It was pretty unpopular. Cabinet ministers were very unhappy. They 469 00:24:20,200 --> 00:24:23,439 Speaker 9: all rebelled and moaned to Keir Starmer and said, oh, 470 00:24:23,440 --> 00:24:25,840 Speaker 9: we don't like what Rachel Reads is up to, and 471 00:24:25,880 --> 00:24:28,040 Speaker 9: basically because she was a new Chancellor, they all had 472 00:24:28,080 --> 00:24:31,000 Speaker 9: to lump it and go along with the budget and 473 00:24:31,359 --> 00:24:35,000 Speaker 9: the first spending review. Cabinet ministers are promising to be 474 00:24:35,080 --> 00:24:37,840 Speaker 9: tough at this time and say if the Chancellor tries 475 00:24:37,880 --> 00:24:40,359 Speaker 9: it again and you know cuts my budget, I'm not 476 00:24:40,359 --> 00:24:41,960 Speaker 9: going to put up with it this time. It's a 477 00:24:42,000 --> 00:24:45,280 Speaker 9: huge problem because if the fiscal situation isn't any better, 478 00:24:45,400 --> 00:24:48,120 Speaker 9: you know, we'll see what the ABR says in the spring. 479 00:24:48,760 --> 00:24:52,280 Speaker 9: You know, it is ultimately going to be spending cuts 480 00:24:52,359 --> 00:24:56,040 Speaker 9: that are what pay for the government's program, because she 481 00:24:56,080 --> 00:24:57,800 Speaker 9: has said she doesn't want to put taxes up in 482 00:24:57,880 --> 00:25:00,800 Speaker 9: the spring, So that is is going to create a 483 00:25:00,840 --> 00:25:04,080 Speaker 9: massive route in the government that could be existential for 484 00:25:04,359 --> 00:25:08,920 Speaker 9: particularly Reeves's chancellor. She's not popular in the cabinet. Chancellor's 485 00:25:08,920 --> 00:25:11,320 Speaker 9: are never popular in the cabinet because chancellor's job is 486 00:25:11,359 --> 00:25:14,800 Speaker 9: to say no to minister's spending proposals. So you know 487 00:25:15,400 --> 00:25:19,040 Speaker 9: it's not particularly radical that thing that the Chancellor isn't popular, 488 00:25:19,359 --> 00:25:24,400 Speaker 9: but nonetheless she's got a really difficult challenge to keep 489 00:25:24,520 --> 00:25:27,040 Speaker 9: cabinet on side, keep the Labor Party unified. So I 490 00:25:27,040 --> 00:25:29,919 Speaker 9: would say that is the main immediate threat to Labor 491 00:25:29,960 --> 00:25:30,960 Speaker 9: in the new year. 492 00:25:31,320 --> 00:25:34,399 Speaker 4: That's our UK Political editor, Alex Wickham. I'm Stephen Caroen 493 00:25:34,400 --> 00:25:36,479 Speaker 4: in London. You can catch us every weekday morning here 494 00:25:36,520 --> 00:25:39,439 Speaker 4: for Bloomberg Daybreak Europe, beginning at six am in London 495 00:25:39,520 --> 00:25:41,280 Speaker 4: and one am on Wall Streets. 496 00:25:41,320 --> 00:25:44,679 Speaker 1: Tom, thank you Steven, and coming up on Bloomberg Daybreak weekend, 497 00:25:44,680 --> 00:25:47,560 Speaker 1: we look at some of the potential themes for Asian 498 00:25:47,680 --> 00:25:50,800 Speaker 1: markets in the year ahead. I'm Tom Busby, and this 499 00:25:50,960 --> 00:25:55,439 Speaker 1: is Bloomberg. I'm Tom Busby in New York with your 500 00:25:55,440 --> 00:25:57,679 Speaker 1: global look ahead at the top stories for investors in 501 00:25:57,720 --> 00:26:01,240 Speaker 1: the coming week. We move next to the ere's apecific region. 502 00:26:01,320 --> 00:26:04,480 Speaker 1: With twenty twenty four largely in the rear view. We 503 00:26:04,520 --> 00:26:06,560 Speaker 1: want to look at some of the potential themes for 504 00:26:06,640 --> 00:26:09,119 Speaker 1: Asian markets in the year ahead. Let's get to the 505 00:26:09,119 --> 00:26:12,240 Speaker 1: host of the Daybreak Asia podcast, Doug Krisner. 506 00:26:12,480 --> 00:26:12,760 Speaker 5: Tom. 507 00:26:12,840 --> 00:26:15,520 Speaker 3: Twenty twenty four proved to be an eventful year for 508 00:26:15,640 --> 00:26:19,560 Speaker 3: markets right across Asia. There was China's stock market route 509 00:26:19,600 --> 00:26:23,159 Speaker 3: and subsequent rally. There was the unwind of Japanese n 510 00:26:23,240 --> 00:26:27,160 Speaker 3: carry trades, and let's not forget that political crisis recently 511 00:26:27,240 --> 00:26:30,160 Speaker 3: in South Korea. To get a sense of what twenty 512 00:26:30,200 --> 00:26:33,240 Speaker 3: twenty five may look like, I'm joined now by Bloomberg 513 00:26:33,240 --> 00:26:37,000 Speaker 3: opinion columnist Shuley Wren. Shirley joins us from our studios 514 00:26:37,040 --> 00:26:39,720 Speaker 3: in Hong Kong. It's always a pleasure. I wish you 515 00:26:39,760 --> 00:26:42,800 Speaker 3: the best for this holiday season, and I was really 516 00:26:43,440 --> 00:26:45,240 Speaker 3: curious to get your take on some of the things 517 00:26:45,240 --> 00:26:46,200 Speaker 3: that you've been writing about. 518 00:26:46,240 --> 00:26:47,240 Speaker 2: In your latest. 519 00:26:46,880 --> 00:26:51,840 Speaker 3: Column, you highlight five unlikely but not improbable events we 520 00:26:51,920 --> 00:26:54,480 Speaker 3: might want to consider for the new year. Let's talk 521 00:26:54,520 --> 00:26:57,280 Speaker 3: about the Hong Kong property market. This is kind of 522 00:26:57,280 --> 00:26:59,879 Speaker 3: interesting because when I think of property in Asia, the 523 00:27:00,040 --> 00:27:02,959 Speaker 3: first thing that comes to mind is mainline China, not 524 00:27:03,000 --> 00:27:04,640 Speaker 3: Hong Kong. What's happening here. 525 00:27:04,800 --> 00:27:08,760 Speaker 7: Well, Hong Kong's property developers. I mean, we always know 526 00:27:08,880 --> 00:27:14,080 Speaker 7: that they are very wealthy, right, but that hypothesis is 527 00:27:14,119 --> 00:27:17,520 Speaker 7: being questioned in recent months. What's happening now is that 528 00:27:17,600 --> 00:27:22,160 Speaker 7: the some Hong Kong is experiencing a pretty severe commercial 529 00:27:22,160 --> 00:27:25,480 Speaker 7: real estate downturn, just like a lot of other places 530 00:27:25,520 --> 00:27:29,040 Speaker 7: like San Francisco for instance, and some of the developers 531 00:27:29,040 --> 00:27:33,800 Speaker 7: they are quite leveraged and indebted. And then investors are 532 00:27:33,880 --> 00:27:37,399 Speaker 7: questioning whether the tycoon families will come out and the 533 00:27:38,080 --> 00:27:39,639 Speaker 7: rescue their subsidiaries. 534 00:27:39,760 --> 00:27:43,320 Speaker 3: Who is most exposed here? Is it bondholders? Is it banks? 535 00:27:43,760 --> 00:27:47,119 Speaker 7: All of them? I mean, let's just take a new 536 00:27:47,160 --> 00:27:50,240 Speaker 7: World Development as an example. It's run by the Chin 537 00:27:50,320 --> 00:27:53,520 Speaker 7: family and they have made a lot of money selling 538 00:27:53,560 --> 00:27:57,480 Speaker 7: properties and the jewelry to mainland Chinese. Right. And then 539 00:27:57,640 --> 00:28:02,239 Speaker 7: like they have a a lot of bank longs Uh. 540 00:28:02,359 --> 00:28:06,960 Speaker 7: In fact, HSBC is their biggest banker, and they have 541 00:28:07,119 --> 00:28:10,680 Speaker 7: a billion about eight billion worth of the US dollar 542 00:28:10,720 --> 00:28:14,280 Speaker 7: bounds outstanding. And of course they are also publicly listed 543 00:28:14,320 --> 00:28:17,360 Speaker 7: on Hong Kong Stock Exchanged, so they're also shareholders. 544 00:28:17,480 --> 00:28:17,960 Speaker 2: Let's talk a. 545 00:28:17,960 --> 00:28:20,280 Speaker 3: Little bit about luck and Coffee next. This is a 546 00:28:20,359 --> 00:28:23,879 Speaker 3: name that I've forgotten entirely about because of it's delisting 547 00:28:23,880 --> 00:28:24,600 Speaker 3: here in the US. 548 00:28:24,760 --> 00:28:28,760 Speaker 7: Right, Yes, so they came to get listed in the 549 00:28:28,880 --> 00:28:32,480 Speaker 7: US within two years after their funding, and then they 550 00:28:32,480 --> 00:28:37,399 Speaker 7: were founded to have committed accounting fraud in twenty twenty 551 00:28:37,600 --> 00:28:40,400 Speaker 7: and they were forced to delist from Nestack back then. 552 00:28:40,800 --> 00:28:45,440 Speaker 7: But the luckin Coffee has had quite a comeback. They 553 00:28:45,480 --> 00:28:49,680 Speaker 7: sell pretty chea coffee and then their services are more streamlined, 554 00:28:49,960 --> 00:28:53,800 Speaker 7: and in the last few years they suddenly became China's 555 00:28:53,840 --> 00:28:58,280 Speaker 7: biggest coffee chain and they were outnumbering Starbucks in terms 556 00:28:58,320 --> 00:29:01,120 Speaker 7: of a number of stores and in terms sales. And 557 00:29:01,360 --> 00:29:04,600 Speaker 7: to make matters worse for Starbucks. They're actually planning to 558 00:29:05,120 --> 00:29:08,239 Speaker 7: enter the US market because they think that you know, 559 00:29:08,360 --> 00:29:13,000 Speaker 7: Americans are just tired of a seven dollars partake from Starbucks. 560 00:29:13,360 --> 00:29:17,080 Speaker 3: So what about Luckin's financials? Will the financials really allow 561 00:29:17,120 --> 00:29:18,640 Speaker 3: the company to relist in New York? 562 00:29:19,160 --> 00:29:23,000 Speaker 7: Well, to their credit, I mean, the majority shareholders are 563 00:29:23,240 --> 00:29:28,040 Speaker 7: very keen to have a redemption and comeback story, so 564 00:29:28,040 --> 00:29:30,920 Speaker 7: they paid all the fines. I think they paid one 565 00:29:30,960 --> 00:29:33,360 Speaker 7: hundreds and millions of dollars fines to the SEC. They 566 00:29:33,440 --> 00:29:35,680 Speaker 7: just want to have a clean slate, and at one 567 00:29:35,680 --> 00:29:40,600 Speaker 7: point they were hoping to relist with the basically a 568 00:29:40,640 --> 00:29:41,560 Speaker 7: redemption story. 569 00:29:41,920 --> 00:29:44,600 Speaker 3: So you're also looking at what may take place in 570 00:29:44,600 --> 00:29:47,760 Speaker 3: twenty twenty five, unlikely as it may be, and you're 571 00:29:47,760 --> 00:29:50,040 Speaker 3: writing about Chinese century bonds. 572 00:29:50,080 --> 00:29:50,880 Speaker 2: Explain this to me. 573 00:29:51,280 --> 00:29:55,280 Speaker 7: Well, Century bonds were very popular in the Eurozone during 574 00:29:55,320 --> 00:29:59,000 Speaker 7: the you know, like when the European countries they were 575 00:29:59,040 --> 00:30:02,400 Speaker 7: having their deflation, right, Like Austria issued a central bound 576 00:30:02,440 --> 00:30:05,000 Speaker 7: in twenty twenty and it was doing very well. I 577 00:30:05,040 --> 00:30:07,360 Speaker 7: mean like at one point it was trading at one 578 00:30:07,440 --> 00:30:12,200 Speaker 7: hundred and forty cents on the dollar. So that was 579 00:30:12,320 --> 00:30:16,760 Speaker 7: quite popular because investors they just wanted to get any 580 00:30:17,160 --> 00:30:21,240 Speaker 7: fixed income assets that give you any yield, and I 581 00:30:21,280 --> 00:30:24,160 Speaker 7: think that's what China should do. They have been issuing 582 00:30:24,240 --> 00:30:26,479 Speaker 7: ultra long bounds, but they have been quite shy, you know, 583 00:30:26,680 --> 00:30:29,400 Speaker 7: twenty year, thirty year or even once more fifty year. 584 00:30:29,680 --> 00:30:32,880 Speaker 7: But they shouldn't be. I mean, like the Communist Party 585 00:30:34,080 --> 00:30:36,560 Speaker 7: thinks they will be around for another century, right, so 586 00:30:36,600 --> 00:30:38,840 Speaker 7: why not? Yeah, they will be around forever. 587 00:30:38,960 --> 00:30:41,160 Speaker 3: And it looks as though Chinese officials will need a 588 00:30:41,200 --> 00:30:43,959 Speaker 3: lot of money to dig themselves out of what appears 589 00:30:44,040 --> 00:30:44,440 Speaker 3: to be a. 590 00:30:44,440 --> 00:30:47,960 Speaker 7: Very big hole, right, absolutely, So what's happening in China 591 00:30:48,080 --> 00:30:52,040 Speaker 7: is that, you know, because the PBOC, the Central Bank 592 00:30:52,120 --> 00:30:55,320 Speaker 7: keeps on cutting interest rates on the short end, investors 593 00:30:55,400 --> 00:30:59,080 Speaker 7: keep on buying long and bounce like into ten year 594 00:30:59,160 --> 00:31:03,360 Speaker 7: twenty year, right, and the ten year bound has has 595 00:31:03,720 --> 00:31:07,160 Speaker 7: kept on testing record loads. And I think what they 596 00:31:07,160 --> 00:31:09,760 Speaker 7: should do is just to is you even ultra along 597 00:31:09,840 --> 00:31:13,479 Speaker 7: bounds and and so that the benchmark tag ye is 598 00:31:13,520 --> 00:31:14,320 Speaker 7: not just solo. 599 00:31:14,800 --> 00:31:17,200 Speaker 3: You're writing also about the great state of Vietnam. And 600 00:31:17,240 --> 00:31:20,080 Speaker 3: when I read this, I thought immediately of the consequences 601 00:31:20,560 --> 00:31:23,320 Speaker 3: of the trade war, right, that it's likely to unfold 602 00:31:23,360 --> 00:31:25,120 Speaker 3: between the US and China. That's a big part of 603 00:31:25,120 --> 00:31:25,920 Speaker 3: the story, is it not. 604 00:31:26,400 --> 00:31:30,240 Speaker 7: Yes, absolutely, I mean, like, so what's happening since the 605 00:31:30,280 --> 00:31:33,760 Speaker 7: Trump trade war is that Northern Vietnam and a lot 606 00:31:33,840 --> 00:31:35,960 Speaker 7: a lot of Americans are very familiar with that, right, 607 00:31:36,080 --> 00:31:39,080 Speaker 7: Like in the past, Northern Vietnam was not as economically 608 00:31:39,120 --> 00:31:43,080 Speaker 7: prosperous at Southern Vietnam, like a sigone, et cetera. But 609 00:31:43,360 --> 00:31:45,560 Speaker 7: in the past four or five years, a lot of 610 00:31:45,720 --> 00:31:48,640 Speaker 7: Chinese companies they've been moving their supply chain to North 611 00:31:48,720 --> 00:31:51,680 Speaker 7: Vietnam because it's in a way close to China. Like 612 00:31:51,920 --> 00:31:56,040 Speaker 7: whatever the industrial catalog items that they are missing, they 613 00:31:56,080 --> 00:31:59,160 Speaker 7: will just go back to you know, Guangxi to fetch it. 614 00:31:59,400 --> 00:32:00,160 Speaker 11: Right, So. 615 00:32:02,200 --> 00:32:05,040 Speaker 7: I'm worried that Trump is going to see that, and 616 00:32:05,160 --> 00:32:06,880 Speaker 7: let's hope not surely. 617 00:32:06,960 --> 00:32:08,640 Speaker 3: Before I let you go, tell me a little bit 618 00:32:08,640 --> 00:32:10,479 Speaker 3: about what you expect in the new year when it 619 00:32:10,480 --> 00:32:14,760 Speaker 3: comes to European luxury manufacturers and the business they may 620 00:32:14,880 --> 00:32:16,200 Speaker 3: end up doing in Asia. 621 00:32:16,320 --> 00:32:19,720 Speaker 7: So, the European luxury houses, they are having a very 622 00:32:19,760 --> 00:32:22,480 Speaker 7: tough time in Asia this year because I mean they've 623 00:32:22,520 --> 00:32:25,840 Speaker 7: been raising prices like crazy. One Chanel back, I'm sorry, 624 00:32:25,920 --> 00:32:29,080 Speaker 7: I have been shopping shopper for twenty years. One Chanell 625 00:32:29,560 --> 00:32:33,040 Speaker 7: Classic Chanel back hosts like over ten thousand US dollars 626 00:32:33,200 --> 00:32:36,800 Speaker 7: and yeah, just like seven eight years ago, it was 627 00:32:37,360 --> 00:32:40,120 Speaker 7: not even half as much, you know, And then people 628 00:32:40,160 --> 00:32:42,920 Speaker 7: are asking, I think Americans are starting to realize that 629 00:32:43,040 --> 00:32:44,920 Speaker 7: as well, like what am I paying for? 630 00:32:45,080 --> 00:32:45,240 Speaker 10: Right? 631 00:32:45,480 --> 00:32:48,920 Speaker 7: And then the Chinese consumers there the economy is not 632 00:32:49,000 --> 00:32:51,920 Speaker 7: so great that there is a wealth effect, and they 633 00:32:52,000 --> 00:32:54,720 Speaker 7: also have shopped for twenty years as well, and they're 634 00:32:54,760 --> 00:32:56,920 Speaker 7: just saying, Okay, we want to see a bit of 635 00:32:56,960 --> 00:32:59,800 Speaker 7: a value for money. So I think for next year, 636 00:32:59,840 --> 00:33:02,920 Speaker 7: the European luxury houses they have to come up with 637 00:33:02,960 --> 00:33:08,000 Speaker 7: something that's new and interesting or just stop raising prices 638 00:33:08,160 --> 00:33:12,040 Speaker 7: and you know, like just provide better value for their 639 00:33:12,120 --> 00:33:12,800 Speaker 7: luxury goods. 640 00:33:13,040 --> 00:33:14,240 Speaker 2: Surely it's always a pleasure. 641 00:33:14,360 --> 00:33:16,400 Speaker 3: Thank you so much for sharing your views on what 642 00:33:16,520 --> 00:33:20,920 Speaker 3: may happen in twenty twenty five. Bloomberg opinion columnist Shuley 643 00:33:20,960 --> 00:33:23,880 Speaker 3: Wren joining us from Hong Kong. We want to stay 644 00:33:23,880 --> 00:33:26,640 Speaker 3: in China. The country appears to be at a crossroads, 645 00:33:26,760 --> 00:33:29,560 Speaker 3: and Beijing is acting as though it's acutely aware of 646 00:33:29,560 --> 00:33:32,720 Speaker 3: that fact. The challenges are many, although I think It's 647 00:33:32,760 --> 00:33:35,240 Speaker 3: fair to say a lack of confidence appears to be 648 00:33:35,320 --> 00:33:38,480 Speaker 3: the most significant hurdle. We've seen the effects of some 649 00:33:38,520 --> 00:33:42,640 Speaker 3: recent economic stimulus fade, and officials have been signaling stronger 650 00:33:42,640 --> 00:33:45,880 Speaker 3: stimulus to boost consumption. This is a major shift in 651 00:33:45,920 --> 00:33:48,720 Speaker 3: the government's thinking. Let's take a closer look now with 652 00:33:48,800 --> 00:33:51,120 Speaker 3: where things stand in China with Joe Nie. He is 653 00:33:51,200 --> 00:33:54,640 Speaker 3: Greater China Chairman at McKinsey and Company. Mister Ni joins 654 00:33:54,720 --> 00:33:57,520 Speaker 3: us from our studios in Hong Kong. Thank you for 655 00:33:57,600 --> 00:34:00,440 Speaker 3: taking the time to chat with us. I'm curious about 656 00:34:00,480 --> 00:34:03,920 Speaker 3: your analysis given the dynamics in the Chinese economy. If 657 00:34:03,960 --> 00:34:07,719 Speaker 3: you had to pinpoint one thing that really needs to 658 00:34:07,800 --> 00:34:10,080 Speaker 3: change in order for China to thrive. 659 00:34:10,000 --> 00:34:10,680 Speaker 2: What would it be. 660 00:34:11,000 --> 00:34:12,560 Speaker 13: Well, first of all, thank you for having me here. 661 00:34:12,960 --> 00:34:16,520 Speaker 13: I think that confidence in China definitely is the number 662 00:34:16,560 --> 00:34:19,040 Speaker 13: one topic, and I think that that has been praying 663 00:34:19,080 --> 00:34:22,960 Speaker 13: for the last two years. I do think that we 664 00:34:23,120 --> 00:34:25,960 Speaker 13: are moving from a you know, I would say, the 665 00:34:26,000 --> 00:34:29,240 Speaker 13: last two decades of you know, kind of breakneck growth 666 00:34:29,360 --> 00:34:31,080 Speaker 13: right into all of a sudden in the last two 667 00:34:31,120 --> 00:34:34,400 Speaker 13: three years, there seems to be the recognition and maybe 668 00:34:34,760 --> 00:34:38,520 Speaker 13: a you know, a acceptance that growth going forward, it's 669 00:34:38,520 --> 00:34:41,920 Speaker 13: going to be very different from the context from before. 670 00:34:42,360 --> 00:34:44,279 Speaker 13: But what you have is that in the past couple 671 00:34:44,280 --> 00:34:46,520 Speaker 13: of years that actually has been quite a lot of supply, right, 672 00:34:46,520 --> 00:34:48,919 Speaker 13: whether this is going to be industrial production, whether these 673 00:34:48,960 --> 00:34:51,319 Speaker 13: are you know, flats being built. I think that the 674 00:34:51,360 --> 00:34:54,200 Speaker 13: engine that have powered China in the past two decades 675 00:34:54,480 --> 00:34:57,680 Speaker 13: didn't actually stop until quite recently. So all of a 676 00:34:57,680 --> 00:35:00,800 Speaker 13: sudden you have this massive I would say, I demand 677 00:35:01,400 --> 00:35:04,759 Speaker 13: that needs to be recalibrated and there needs to be 678 00:35:04,840 --> 00:35:10,680 Speaker 13: an expectation management from corporates right into citizens in the 679 00:35:10,760 --> 00:35:13,879 Speaker 13: government that we're going into a period of much more 680 00:35:13,920 --> 00:35:16,600 Speaker 13: moderate growth like the rest of the world has been seeing. 681 00:35:16,840 --> 00:35:20,360 Speaker 3: When you hear the term over capacity, is that app 682 00:35:20,560 --> 00:35:23,200 Speaker 3: does it help describe a little bit of what's happening 683 00:35:23,280 --> 00:35:24,560 Speaker 3: on the industrial side? 684 00:35:24,800 --> 00:35:26,879 Speaker 13: Well, I think that, you know, we actually have been 685 00:35:27,080 --> 00:35:29,399 Speaker 13: you know, in seeing in China in the past two 686 00:35:29,480 --> 00:35:32,480 Speaker 13: decades where they feel like if I actually have the 687 00:35:32,520 --> 00:35:36,680 Speaker 13: capacity to build and I have the you know, efficiency 688 00:35:36,920 --> 00:35:39,480 Speaker 13: to do something that is you know more more more 689 00:35:39,560 --> 00:35:41,879 Speaker 13: valuable money in the rest of the world, I can 690 00:35:42,000 --> 00:35:45,120 Speaker 13: export my products. I think that that equation have changed 691 00:35:45,120 --> 00:35:47,359 Speaker 13: a little bit now that there has been a lot 692 00:35:47,400 --> 00:35:50,600 Speaker 13: more I would say industrial protectionism around the world. That 693 00:35:50,640 --> 00:35:52,640 Speaker 13: will change that equation. Now, when you change it, I 694 00:35:52,640 --> 00:35:55,000 Speaker 13: think that you know, you know, the factories in China 695 00:35:55,080 --> 00:35:57,760 Speaker 13: need to you know, get used to that. But unfortunately, 696 00:35:57,760 --> 00:35:59,560 Speaker 13: in the past two years, they actually have been building 697 00:36:00,239 --> 00:36:02,839 Speaker 13: to cater for that demand. And I think that what 698 00:36:02,880 --> 00:36:05,600 Speaker 13: you're seeing right now is there's not a lot of 699 00:36:05,600 --> 00:36:08,360 Speaker 13: new capacity being put on right now, but you're seeing 700 00:36:08,440 --> 00:36:11,040 Speaker 13: a little bit of digestion of the past two years 701 00:36:11,040 --> 00:36:13,440 Speaker 13: of capacity has been built. So I do think that 702 00:36:13,600 --> 00:36:16,560 Speaker 13: it is a oversupply in the sense of a slowing 703 00:36:16,600 --> 00:36:18,960 Speaker 13: demand what you see around the world and in China. 704 00:36:19,280 --> 00:36:21,279 Speaker 13: But at the same time, the saving grace is that 705 00:36:21,320 --> 00:36:23,680 Speaker 13: I would say that the investment has been really really 706 00:36:23,760 --> 00:36:26,160 Speaker 13: melted in the past twelve to eighteen months, so the 707 00:36:26,160 --> 00:36:28,600 Speaker 13: new capacity is going to be much slower. 708 00:36:28,719 --> 00:36:31,880 Speaker 3: So you alluded to this idea of protectionism, and I 709 00:36:31,920 --> 00:36:34,840 Speaker 3: want to explore this a little bit if I can. 710 00:36:35,040 --> 00:36:38,000 Speaker 3: The threats here being made by the incoming Trump administration 711 00:36:38,080 --> 00:36:42,040 Speaker 3: in the US tariffs on imported Chinese goods, and I'm 712 00:36:42,320 --> 00:36:44,840 Speaker 3: aware of how many of the companies doing business in 713 00:36:44,920 --> 00:36:49,400 Speaker 3: China have already begun to reconfigure their supply chains. Do 714 00:36:49,440 --> 00:36:52,759 Speaker 3: you think the tension between Washington and Beijing that we're 715 00:36:52,880 --> 00:36:55,640 Speaker 3: likely to see after the first of the year is 716 00:36:55,680 --> 00:36:59,680 Speaker 3: going to begin to shift trade flows in a major 717 00:36:59,719 --> 00:37:02,360 Speaker 3: way or is this something that will probably get worked 718 00:37:02,360 --> 00:37:04,799 Speaker 3: out through negotiation. How would you evaluate that? 719 00:37:05,560 --> 00:37:08,479 Speaker 13: Well, this is not news, right, this has been going 720 00:37:08,520 --> 00:37:10,560 Speaker 13: on for the last few years. If you are a 721 00:37:10,640 --> 00:37:14,239 Speaker 13: Chinese manufacturer, right, or anyone who's the export business, you 722 00:37:14,320 --> 00:37:16,719 Speaker 13: have been dealing with actually a shifting trade in the 723 00:37:16,719 --> 00:37:18,680 Speaker 13: past few years. In fact, I would say that three 724 00:37:18,719 --> 00:37:22,919 Speaker 13: or four years ago they were much less. I would say, 725 00:37:22,920 --> 00:37:25,600 Speaker 13: ready for the tariffs and for all the you know, 726 00:37:25,719 --> 00:37:27,200 Speaker 13: trade shifts that's going on. 727 00:37:27,320 --> 00:37:27,440 Speaker 9: Right. 728 00:37:27,520 --> 00:37:31,520 Speaker 13: China plus one is a well documented strategy by both 729 00:37:31,600 --> 00:37:34,800 Speaker 13: multinationals as well as Chinese companies. So what you see 730 00:37:35,000 --> 00:37:38,520 Speaker 13: when China, you know, exports the US have dropped from 731 00:37:38,800 --> 00:37:41,360 Speaker 13: you know, until now only fifteen percent of US imports 732 00:37:41,400 --> 00:37:44,920 Speaker 13: are from China, you see. You know, correspondingly, the Chinese 733 00:37:45,000 --> 00:37:48,319 Speaker 13: trade is going to Southeast Asia. R GM right now 734 00:37:48,480 --> 00:37:51,399 Speaker 13: is the largest trading partner right to China. You see, 735 00:37:51,440 --> 00:37:53,800 Speaker 13: actually a lot more Chinese we called the global self 736 00:37:54,040 --> 00:37:57,480 Speaker 13: trade that's going on. So I absolutely think that the 737 00:37:57,520 --> 00:38:01,319 Speaker 13: trade patterns are being reconfigured and that has been going on. 738 00:38:01,680 --> 00:38:03,520 Speaker 13: So I would say with a new and strigon coming in, 739 00:38:04,120 --> 00:38:06,640 Speaker 13: you know, I think it's a continuation of what we're seeing. 740 00:38:06,719 --> 00:38:09,000 Speaker 13: Would that be a celebration a concis, I don't know, 741 00:38:09,080 --> 00:38:11,480 Speaker 13: but I think that it is certainly not news, and 742 00:38:11,520 --> 00:38:13,640 Speaker 13: I think at this time, I think that everyone is 743 00:38:13,960 --> 00:38:16,440 Speaker 13: in some ways much more prepared, you know, for the 744 00:38:16,520 --> 00:38:17,960 Speaker 13: uncertainty of this will happened. 745 00:38:18,160 --> 00:38:19,959 Speaker 3: Mister and I thank you so much for your time, 746 00:38:20,440 --> 00:38:23,640 Speaker 3: Joe and I is Greater China Chairman at Mackenzie and Company. 747 00:38:23,880 --> 00:38:26,359 Speaker 3: I'm deg Krisner and you can catch us weekdays right 748 00:38:26,400 --> 00:38:29,920 Speaker 3: here for the Daybreak Asia podcast. It's available on Apple, 749 00:38:30,120 --> 00:38:32,719 Speaker 3: Spotify or wherever you get your podcast. 750 00:38:33,080 --> 00:38:34,160 Speaker 2: Tom, thank you, Doug. 751 00:38:34,280 --> 00:38:36,400 Speaker 1: And that does it for this edition of Bloomberg day 752 00:38:36,440 --> 00:38:39,160 Speaker 1: Break Weekend. Join us again Monday morning at five am 753 00:38:39,200 --> 00:38:41,600 Speaker 1: Wall Street Time for the latest on markets overseas and 754 00:38:41,640 --> 00:38:43,239 Speaker 1: the news you need to start your day. 755 00:38:43,719 --> 00:38:45,359 Speaker 2: I'm Tom Busby. Stay with us. 756 00:38:45,640 --> 00:38:48,880 Speaker 1: Top stories and global business headlines are coming up right now.