WEBVTT - Daybreak Weekend: Global Market Expectations for 2025 0:00:02.080 --> 0:00:04.560 This is Bloomberg Daybreak Weekend, our global look at the 0:00:04.559 --> 0:00:06.720 top stories in the coming week from our day Break 0:00:06.760 --> 0:00:07.960 anchors all around the world. 0:00:08.160 --> 0:00:09.360 Straight ahead on the program. 0:00:09.400 --> 0:00:13.560 Twenty twenty four closes out with a rather hawkish Federal Reserve. Plus, 0:00:13.760 --> 0:00:16.759 can the tech sector keep up its momentum heading into 0:00:16.760 --> 0:00:19.160 the new year. I'm Tom Busby in New York. 0:00:19.400 --> 0:00:22.800 I'm Doug Prisner looking at five possible events for Asian 0:00:22.840 --> 0:00:24.000 markets in the year ahead. 0:00:24.200 --> 0:00:26.560 I'm Stephen Carol E London, who are looking back at 0:00:26.560 --> 0:00:28.960 a historic year in British politics. 0:00:31.520 --> 0:00:35.720 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:35.760 --> 0:00:39.680 eleven three oh New York, Bloomberg ninety nine to one, Washington, DC, 0:00:40.080 --> 0:00:44.960 Bloomberg ninety two nine, Boston, DAB, Digital Radio, London, Sirius 0:00:45.120 --> 0:00:48.520 XM one twenty one, and around the world on Bloomberg Radio, 0:00:48.560 --> 0:00:50.800 dot Com and the Bloomberg Business App. 0:00:55.040 --> 0:00:56.440 Good day to you. I'm Tom Busby. 0:00:56.480 --> 0:00:59.120 We begin today's program with the Federal Reserve, which shocked 0:00:59.160 --> 0:01:02.400 investors by signaling fewer rate cuts in the year ahead. 0:01:02.880 --> 0:01:05.280 What does this mean for the markets, the economy for 0:01:05.319 --> 0:01:08.199 the Feds Dot plot for twenty twenty five well for more. 0:01:08.400 --> 0:01:13.080 We're joined by Michael McKee, Bloomberg's international economic and policy correspondent. 0:01:13.560 --> 0:01:15.480 So Michael, let's start by looking at what the FED 0:01:15.560 --> 0:01:18.920 accomplished this past year. Five meetings that are row leaving 0:01:19.000 --> 0:01:20.960 rates unchanged and then boom. 0:01:21.560 --> 0:01:23.880 Well, you could look at it this way. The last 0:01:23.920 --> 0:01:26.160 time we were at four and a quarter to four 0:01:26.160 --> 0:01:27.920 and a half percent was when the Fed was going 0:01:28.000 --> 0:01:34.000 up in rates, and at that point unemployment was high 0:01:34.040 --> 0:01:38.880 and inflation was in the sixth range. Now we're in 0:01:38.920 --> 0:01:42.360 the two range, and we're headed down with the numbers, 0:01:42.400 --> 0:01:45.080 So the Fed will take a victory lap on that. 0:01:46.120 --> 0:01:49.360 We do see inflation stalling out a little bit, which 0:01:49.480 --> 0:01:52.720 raised a lot of questions about whether they should continue 0:01:52.720 --> 0:01:55.000 cutting at the same pace, and they sort of answered 0:01:55.080 --> 0:01:57.840 us by raising their inflation forecast and saying that in 0:01:58.080 --> 0:02:00.920 twenty twenty five they're only going to cut twice. 0:02:01.200 --> 0:02:03.640 Now, at that December meeting, the boat to cut the 0:02:03.640 --> 0:02:07.080 federal funds rate eleven to one, the Cleveland Fed's new president, 0:02:07.080 --> 0:02:10.760 Beth Hammick, preferring to hold rate study. What did she see? 0:02:11.240 --> 0:02:15.240 She suggested before the FED meeting that we're about at 0:02:15.240 --> 0:02:19.400 a time when the Fed wants to pause because we're 0:02:19.560 --> 0:02:21.839 at the upper end of the neutral rate, and that's 0:02:21.840 --> 0:02:23.600 going to be the big discussion going forward is what 0:02:23.680 --> 0:02:26.360 is the neutral rate? The rate of interest that neither 0:02:26.960 --> 0:02:31.919 stimulates or holds back the economy, doesn't create an inflationary 0:02:31.960 --> 0:02:35.799 situation or a deflationary situation, And nobody knows. It's only 0:02:35.880 --> 0:02:38.919 something you can observe in hindsight, but there are a 0:02:38.960 --> 0:02:42.919 lot of guesses. And Beth Hammick works at the Cleveland 0:02:43.000 --> 0:02:46.919 Fed where they have an inflation center, and so they 0:02:47.040 --> 0:02:49.360 were probably telling her that at this point it looks 0:02:49.400 --> 0:02:52.960 like it could be neutral, could be around four percent, 0:02:53.440 --> 0:02:56.440 so she wanted to have a pause. 0:02:56.520 --> 0:02:56.640 Now. 0:02:56.720 --> 0:02:59.160 The other thing that was interesting is that three other 0:02:59.320 --> 0:03:02.639 members of the committee, presumably non voters because we didn't 0:03:02.639 --> 0:03:05.680 get any other dissents, also agreed that they should not 0:03:05.840 --> 0:03:10.079 move rates at this meeting. So there's definitely some gathering 0:03:10.160 --> 0:03:12.280 strength in the hold for a while. 0:03:12.120 --> 0:03:15.880 Camp, and that is inflation. Is that the main driver 0:03:16.000 --> 0:03:16.520 you think that. 0:03:16.400 --> 0:03:19.240 That inflation's moved back to the primary position. It doesn't 0:03:19.240 --> 0:03:21.840 look like there's anything particularly wrong with the labor market. 0:03:21.880 --> 0:03:26.040 Now we'll see first week of January, the first Friday 0:03:26.160 --> 0:03:31.960 we'll get the next jobs report. And while hiring has slowed, 0:03:32.000 --> 0:03:36.000 it hasn't fallen off a cliff. The unemployment rate is 0:03:36.080 --> 0:03:38.000 below where the Fed thought it would be at the 0:03:38.080 --> 0:03:41.560 end of twenty twenty four. So right now they're focused 0:03:41.600 --> 0:03:44.960 on inflation, and they are moving up their inflation expectations, 0:03:44.960 --> 0:03:48.720 in part because it's been sticky and in part because 0:03:48.840 --> 0:03:51.480 they don't know what the president elect is going to 0:03:51.520 --> 0:03:53.320 do in twenty twenty five. 0:03:53.360 --> 0:03:55.200 A lot of uncertainties there. Well, right now it's at 0:03:55.200 --> 0:03:56.680 about two point seven percent. 0:03:57.760 --> 0:04:00.000 Two point seven percent of the headline may go up. 0:04:00.880 --> 0:04:06.480 We're talking PCEE here for the Fed because that's what 0:04:06.520 --> 0:04:12.080 they do, and the PCE headline is going into the 0:04:12.240 --> 0:04:16.080 end of the year is just below or right around 0:04:16.120 --> 0:04:17.120 two and a half percent. 0:04:18.160 --> 0:04:23.640 Now, Fed officials stunned the markets with expectations or signals 0:04:23.680 --> 0:04:26.800 of only two rate cuts. There had been projections of four, 0:04:26.960 --> 0:04:31.640 then three, mostly four. I mean, what's the reason for 0:04:31.839 --> 0:04:33.080 signaling that right now? 0:04:34.240 --> 0:04:37.400 They wanted to, I think, justify the fact that they're 0:04:37.520 --> 0:04:39.240 going to be able to go on hold and they 0:04:39.279 --> 0:04:41.960 probably aren't going to raise rates at the January meeting. 0:04:42.600 --> 0:04:45.120 And if inflation is a problem, then they don't want 0:04:45.160 --> 0:04:49.080 to cut rates anymore, so they raised their forecasts, and 0:04:49.160 --> 0:04:50.840 as we mentioned, part of it has to do with 0:04:50.880 --> 0:04:53.240 what they think may happen under the Trump administration. 0:04:53.880 --> 0:04:55.240 But with the. 0:04:55.200 --> 0:04:59.880 Forecast higher that scared Wall Street more than anything else. 0:05:00.279 --> 0:05:05.920 Is the magnitude of the increase about thirty basis points 0:05:05.960 --> 0:05:10.080 in their inflation forecast, and the number of Fed officials 0:05:10.080 --> 0:05:13.839 who said that we should go on hold scared Wall Street. 0:05:14.360 --> 0:05:18.560 They maybe overreacted to the idea that we would have 0:05:18.720 --> 0:05:21.719 only two rate cuts because the market's immediately priced in 0:05:21.800 --> 0:05:25.279 only one rate cut, and so that led to a 0:05:25.320 --> 0:05:27.839 sell off. I think the end of the day huge 0:05:27.920 --> 0:05:30.039 drop that we saw was probably more related to the 0:05:30.080 --> 0:05:32.200 fact that it's been a good year. People have made 0:05:32.200 --> 0:05:37.120 a lot of money, and most senior traders are going, 0:05:37.600 --> 0:05:39.760 you know, they take the last two weeks of the 0:05:39.960 --> 0:05:43.359 year off, so they figured, well, we'll sell take some profits, 0:05:43.839 --> 0:05:46.320 put them in the bank account since the markets are 0:05:46.360 --> 0:05:50.320 going down. And then the markets came back, so you know, 0:05:51.320 --> 0:05:53.200 we'll see what it portends for next year. 0:05:53.600 --> 0:05:55.480 Now, despite the three rate cuts in a row by 0:05:55.480 --> 0:05:57.920 the Fed, mortgage rates have barely budged. They are back 0:05:57.960 --> 0:06:02.640 above seven percent, while slower, not gone away. What's what's 0:06:02.720 --> 0:06:03.360 the outlook? 0:06:03.440 --> 0:06:06.600 Do you think, Well, if only somebody had asked JP 0:06:06.640 --> 0:06:10.000 howe that somebody you know had asked jpow that And 0:06:10.040 --> 0:06:13.400 basically he pointed out that those are market rates. The 0:06:13.440 --> 0:06:16.880 FED set rates at the short end the two years 0:06:17.040 --> 0:06:20.359 responsive to the FED up maybe through the belly, but 0:06:20.480 --> 0:06:23.159 when you get to mortgage rates, car rates, things that 0:06:23.200 --> 0:06:28.000 are influenced by where your loan is longer, they're looking 0:06:28.040 --> 0:06:31.160 at market rates for that. And market rates haven't come 0:06:31.240 --> 0:06:35.920 down because the market's been concerned about inflation and about 0:06:35.920 --> 0:06:37.040 what Donald Trump might do. 0:06:37.360 --> 0:06:40.800 Yeah, a lot of uncertainties. That next policy meeting from 0:06:40.839 --> 0:06:43.039 the Fed just a month away January twenty eighth and 0:06:43.080 --> 0:06:46.839 twenty ninth, our thanks to Michael McKee, Bloomberg's International Economic 0:06:46.960 --> 0:06:50.240 and policy correspondent. We move next to the US tech sector, 0:06:50.279 --> 0:06:53.200 which exploded in value this past year, mostly on the 0:06:53.200 --> 0:06:57.640 promises of artificial intelligence technology and the burgeoning use of chatbots. 0:06:57.960 --> 0:07:00.919 But we also saw a US tech back with China, 0:07:00.960 --> 0:07:04.360 a large number of tech layoffs, regulator crackdowns over data 0:07:04.360 --> 0:07:07.920 privacy concerns, and more so, what does twenty twenty five 0:07:07.960 --> 0:07:10.840 have in store with a new administration entering the White House. 0:07:10.880 --> 0:07:14.040 Well for more, we're joined by Mark German, Bloomberg's chief 0:07:14.160 --> 0:07:18.200 technology correspondent. Well, Mark, let's start with the biggest developments, 0:07:18.280 --> 0:07:21.000 maybe even setbacks, that you saw in the industry this 0:07:21.040 --> 0:07:22.600 past year, twenty twenty four. 0:07:23.520 --> 0:07:27.040 So this year was obviously very heavy on generative AI. 0:07:27.280 --> 0:07:30.360 You saw lots of companies get into the space. You've 0:07:30.360 --> 0:07:33.800 seen OpenAI roll out new tools. You've seen Apple announce 0:07:33.840 --> 0:07:37.600 Apple Intelligence. You've seen Google really step up their game 0:07:37.680 --> 0:07:41.720 in terms of Gemini. You've seen deeper integration at Microsoft 0:07:41.720 --> 0:07:46.480 through it's copilot initiatives in partnership with OpenAI. So it's 0:07:46.520 --> 0:07:49.840 really all been AI. We're still waiting on Amazon to 0:07:49.960 --> 0:07:53.280 roll out their long promised AI upgrade for Alexa on 0:07:53.360 --> 0:07:56.880 their Eco devices and other hardware products. And we're still 0:07:56.880 --> 0:07:59.720 waiting for Apple to roll out a more comprehensive and 0:07:59.800 --> 0:08:02.360 better or SI. That will happen next year. But I 0:08:02.400 --> 0:08:04.680 would say twenty twenty four, if it would be to 0:08:05.000 --> 0:08:08.120 be remembered as anything in the tech sector, would make 0:08:08.120 --> 0:08:09.680 it the year of artificial intelligence. 0:08:09.880 --> 0:08:12.920 Yeah, I mean it's everywhere now, Amazon, you see it, 0:08:13.000 --> 0:08:15.640 like you said, it's rolling out. Apple is now just 0:08:15.720 --> 0:08:18.480 introduced in the last couple of months. Where does AI 0:08:18.560 --> 0:08:19.200 go from here? 0:08:19.280 --> 0:08:19.559 Though? 0:08:20.320 --> 0:08:23.640 AI is going to become more conversational, and I think 0:08:23.680 --> 0:08:27.560 it's going to become more deeply embedded in different use cases. 0:08:27.600 --> 0:08:29.760 What we've seen is open AI and some of these 0:08:29.760 --> 0:08:32.720 other companies go all the way to one side on 0:08:32.760 --> 0:08:36.040 our official intelligence, allowing it to do many things on 0:08:36.080 --> 0:08:39.600 the user's behalf. There are many, very much concerns about 0:08:39.800 --> 0:08:42.000 AI replacing jobs. So I think what you're going to 0:08:42.040 --> 0:08:45.080 see is now the technologies out there, and maybe we 0:08:45.120 --> 0:08:47.560 can call it sort of a raw form. We'll see 0:08:47.600 --> 0:08:50.960 it get optimized and more deeply integrated into devices and 0:08:51.040 --> 0:08:54.120 for different use cases, for more specific actions and more 0:08:54.160 --> 0:08:57.480 specific sectors within the larger technology industry. So I think 0:08:57.520 --> 0:09:00.920 you're going to see better technology. I think you're going 0:09:00.960 --> 0:09:03.560 to see a bit of a pullback as well in 0:09:03.679 --> 0:09:05.679 terms of how much this tech is going to be 0:09:05.800 --> 0:09:09.200 unleashed and how it's going to be implemented precisely well. 0:09:09.200 --> 0:09:11.800 One thing we learned very recently was Klarna, that is 0:09:11.840 --> 0:09:14.640 a very popular buy now, pay later. They say they 0:09:14.640 --> 0:09:18.000 haven't made a hire in months and they're using AI. 0:09:18.240 --> 0:09:21.280 They've been able to reduce their staff by twenty two percent. 0:09:21.360 --> 0:09:24.120 So just a hint of what it does mean for 0:09:24.160 --> 0:09:26.160 the job sector right in the tech industry. 0:09:26.679 --> 0:09:28.360 Well, there's a lot of jobs that are going to 0:09:28.440 --> 0:09:30.920 be impacted by AI. There's a lot of jobs that 0:09:30.960 --> 0:09:33.280 are not going to be impacted at all BAAI. And 0:09:33.320 --> 0:09:35.440 there are a lot of jobs, probably the rest of them, 0:09:35.480 --> 0:09:37.080 I would split it a third to third and third 0:09:37.360 --> 0:09:40.680 that are going to be augmented and helped by AI. Right. 0:09:41.040 --> 0:09:44.480 You can imagine consumers using AI as well to get 0:09:44.520 --> 0:09:47.679 projects done. I want to know the impact on students 0:09:47.679 --> 0:09:48.280 in school. 0:09:48.679 --> 0:09:48.880 Right. 0:09:48.920 --> 0:09:53.200 There's some people who's liked to compare AI to the calculator, right, 0:09:53.520 --> 0:09:55.760 but the calculator is very different than something that can 0:09:55.800 --> 0:09:56.840 do all your homework for you. 0:09:57.280 --> 0:09:58.120 Yeah, no doubt. 0:09:58.600 --> 0:10:01.160 I want to go back to which I know you 0:10:01.360 --> 0:10:04.360 cover in a big way. This past year, a lot 0:10:04.400 --> 0:10:07.439 of changes at Apple. Probably the biggest is after ten 0:10:07.520 --> 0:10:11.920 billion dollars of investment, they shut down their Apple Car 0:10:12.040 --> 0:10:15.920 division and have they taken a lot of that money, 0:10:16.120 --> 0:10:18.439 a lot of the resources, and put it into AI. 0:10:19.440 --> 0:10:22.240 So they fired about half of the employees working on 0:10:22.280 --> 0:10:24.280 the car project. There were a lot of personnel that 0:10:24.320 --> 0:10:26.640 they didn't need anymore if you're not working on a car. 0:10:26.920 --> 0:10:30.280 There's a lot of very specific engineering work for a vehicle. Obviously, 0:10:30.840 --> 0:10:33.120 they took about the other half and split them up 0:10:33.120 --> 0:10:35.320 amongst a few teams. Some are working in robotics, some 0:10:35.360 --> 0:10:38.040 are working on home devices, some are working on software, 0:10:38.080 --> 0:10:40.520 some are working on cloud. But the vast majority of 0:10:40.520 --> 0:10:43.199 the people they kept are working on AI and generative 0:10:43.200 --> 0:10:47.720 AI more specifically in future iterations of Siri. Future iterations 0:10:47.760 --> 0:10:51.040 of AI tied robotics, type of software and hardware and 0:10:51.040 --> 0:10:54.400 cloud initiatives, and so they really are taking those resources 0:10:54.400 --> 0:10:57.680 and applying them elsewhere. Personally, I think in the short 0:10:57.760 --> 0:10:59.960 term getting out of the car space was a good idea, 0:11:00.360 --> 0:11:02.520 But I think in the long term they're maybe going 0:11:02.559 --> 0:11:04.120 to have to take another look at whether or not 0:11:04.160 --> 0:11:06.520 they don't want to be in the car industry because 0:11:06.520 --> 0:11:08.840 it's just going to continue to heat up. At some point, 0:11:08.960 --> 0:11:11.040 someone's going to have a much better mousetrap in the 0:11:11.080 --> 0:11:14.280 car space. Could and should have been Apple. It won't 0:11:14.280 --> 0:11:14.800 be them. 0:11:15.240 --> 0:11:16.520 It sounds like it's going to be Cha. 0:11:16.800 --> 0:11:21.800 Yeah, China and cars are becoming synonymous. Is the AI 0:11:22.400 --> 0:11:25.280 gets better and better. See, cars are a great example 0:11:25.320 --> 0:11:28.480 of applying AI for use cases that make sense, right, 0:11:28.559 --> 0:11:30.959 having a self driving car that you can rely upon. 0:11:31.480 --> 0:11:32.959 And so I think we're just going to see more 0:11:33.000 --> 0:11:35.600 of that out of China, and we'll see what Google 0:11:35.640 --> 0:11:37.480 and Amazon are able to do in that space as well. 0:11:37.520 --> 0:11:39.680 But at some point I think in the next five years, 0:11:39.720 --> 0:11:41.559 Apple may have to reevaluate it. 0:11:42.480 --> 0:11:45.559 Now, Apple's bread and butter the iPhone, But we got 0:11:45.559 --> 0:11:49.280 some disturbing news from Micron Technology, the US's biggest maker 0:11:49.360 --> 0:11:53.280 of memory chips, that said they're seeing weakness in demand 0:11:53.280 --> 0:11:57.200 for smartphones and PCs. Do you see that as a 0:11:57.240 --> 0:12:00.000 broad based weakness? Do you see any of that evidence 0:12:00.240 --> 0:12:01.959 in Apple or in Samsung. 0:12:02.880 --> 0:12:06.640 I'm seeing it in the sense that the yes, I'm 0:12:06.640 --> 0:12:08.520 seeing it, but it's hard to know exactly what the 0:12:08.559 --> 0:12:11.560 cause is given that the last couple iPhones that rolled out, 0:12:12.280 --> 0:12:15.120 quite honestly, weren't that impressive and didn't include major changes. 0:12:15.480 --> 0:12:16.800 So what we're going to have to do is wait 0:12:16.840 --> 0:12:19.240 and see for when Apple rolls out a major redesign, 0:12:19.280 --> 0:12:21.720 a major revamp to the iPhone, see what that does 0:12:21.760 --> 0:12:23.640 to the market, and see what the sales of those 0:12:23.640 --> 0:12:26.360 devices looks like. If those are strong, we know it's 0:12:26.400 --> 0:12:30.400 an anomaly because there weren't many compelling reasons stuff grade. 0:12:30.760 --> 0:12:33.200 If those results are not so strong, we know that 0:12:33.280 --> 0:12:34.079 something's going on. 0:12:34.240 --> 0:12:35.600 Well, a lot to look forward to. 0:12:35.640 --> 0:12:39.520 Our thanks to Mark German, Bloomberg's chief technology correspondent. Coming 0:12:39.559 --> 0:12:42.439 up on Bloomberg day Break weekend. What's on the horizon 0:12:42.559 --> 0:12:46.640 for Europe's stock market? I'm Tom Busby and this is Bloomberg. 0:12:51.840 --> 0:12:54.160 This is Bloomberg day Break weekend, our global look ahead 0:12:54.160 --> 0:12:56.280 at the top stories for investors in the coming week. 0:12:56.520 --> 0:12:59.800 I'm Tom Busby in New York. Up later in our program, 0:13:00.120 --> 0:13:03.880 bring you five themes investors are looking at in Asian markets. 0:13:03.920 --> 0:13:07.559 But first in twenty twenty four, Europe's political situation has 0:13:07.600 --> 0:13:11.800 been decidedly rocky. The Block's two largest economies, France and Germany, 0:13:11.840 --> 0:13:16.840 have both faced tumultuous governmental shifts, sending shockwaves reverberating around 0:13:16.840 --> 0:13:20.720 the continent, and its economies will twenty twenty five bring 0:13:20.760 --> 0:13:23.760 better fortunes for European investors. For more, let's go to 0:13:23.920 --> 0:13:27.640 London and bring in Bloomberg Daybreak Europe banker Stephen Carroll. 0:13:27.840 --> 0:13:31.320 Tom It's been a jam packed historic year in British politics. 0:13:31.360 --> 0:13:34.480 From the first Labor government in fourteen years, to a 0:13:34.520 --> 0:13:38.320 Conservative meltdown and a long await at elector breakthrough for 0:13:38.480 --> 0:13:42.520 Nigel Faraja's Reform UK, there's barely been a dull moment. 0:13:42.600 --> 0:13:45.480 Bloomberg's UK Political editor Alex Wickham has been speaking to 0:13:45.640 --> 0:13:49.760 James Wilcock and me about the extraordinary events of twenty 0:13:49.840 --> 0:13:53.000 twenty four and making some predictions for the year ahead. 0:13:53.760 --> 0:13:56.559 Regardless of everything that's happened since and all the grumblings 0:13:56.559 --> 0:14:00.000 that people might have with the new government and kiss 0:14:00.120 --> 0:14:03.720 Armor's performance, this is something that people in the Labor 0:14:03.720 --> 0:14:07.840 Party have literally been waiting much of their professional lives for, 0:14:08.360 --> 0:14:12.640 and finally they get the chance to show whether they're 0:14:12.679 --> 0:14:16.840 any better in office and their ideas and policies and 0:14:17.080 --> 0:14:21.480 personalities are any better suited to power than the Conservatives were. 0:14:22.320 --> 0:14:24.840 You know, it is too early to make that judgment. 0:14:25.800 --> 0:14:30.320 We can see some early indications certainly that it isn't 0:14:30.520 --> 0:14:32.840 as easy as they might have thought it was going 0:14:32.880 --> 0:14:37.320 to be. That actually the problems structurally that the British 0:14:37.400 --> 0:14:41.880 state has are hard to resolve, and you can't just 0:14:41.960 --> 0:14:44.880 come in and go well with the nice, cuddly Labor 0:14:44.920 --> 0:14:47.800 Party and we're much better than those those awful Tories. 0:14:47.840 --> 0:14:50.840 Everything's going to be okay. Now it turns out things 0:14:50.840 --> 0:14:55.560 are more complicated than that. And I think how labor 0:14:55.600 --> 0:14:58.600 grapples with those huge trade offs that they're going to 0:14:58.600 --> 0:15:00.880 have to make and political decisions things that are just 0:15:01.000 --> 0:15:05.880 really difficult is basically the story of the last six 0:15:05.880 --> 0:15:07.880 months at least, and probably the next four years. 0:15:08.000 --> 0:15:10.160 There's a linitting contradiction here, isn't there? Because I was 0:15:10.200 --> 0:15:13.440 thinking about what your political theme of the year might be, 0:15:14.400 --> 0:15:16.440 and on one hand there's this big change, as you 0:15:16.520 --> 0:15:18.600 just said, But on the other hand, so much is 0:15:18.680 --> 0:15:22.560 the same, the same economic problems, the same inheritance, the 0:15:22.600 --> 0:15:25.560 same difficulty in getting government to do what it wants. 0:15:26.000 --> 0:15:29.880 You know, what would you say we can learn from 0:15:29.920 --> 0:15:31.880 how labor have kind of taken to power in the 0:15:31.880 --> 0:15:33.600 past of five months. What kind of lessons do we 0:15:33.640 --> 0:15:34.040 take from that? 0:15:34.720 --> 0:15:38.120 You know, Strategically, if you talk to people around Kissed Armor, 0:15:38.200 --> 0:15:42.320 they sort of say, look, don't panic, We've deliberately done 0:15:42.360 --> 0:15:44.640 the hard stuff first. We want to get some of 0:15:44.680 --> 0:15:46.480 this horrible stuff out of the way that we were 0:15:46.560 --> 0:15:49.640 left with by the Tories, that we had to resolve 0:15:49.720 --> 0:15:53.720 the prisons over crowding crisis, the you know, the fiscal situation, 0:15:55.080 --> 0:16:00.120 many other things, and things will get better. That's so, 0:16:00.240 --> 0:16:03.480 you know, they seem to be relatively relaxed about, you know, 0:16:03.560 --> 0:16:05.920 where the fact that things will turn around and this 0:16:05.960 --> 0:16:08.840 is all part of a plan that you know, the 0:16:08.920 --> 0:16:11.920 first year or so might be might be unpopular, but 0:16:11.960 --> 0:16:13.320 then they'll get around to it. 0:16:13.560 --> 0:16:14.520 Now, if you speak. 0:16:14.280 --> 0:16:17.760 To some other people in at the top of the 0:16:17.800 --> 0:16:20.760 Labor Party, they would be perhaps a bit more candid 0:16:20.840 --> 0:16:24.560 and admit that actually, perhaps Labor should have done a 0:16:24.600 --> 0:16:29.000 bit more policy working opposition. Perhaps Labor should have you know, yes, 0:16:29.120 --> 0:16:31.440 criticized the Tories for the things they did wrong, but 0:16:31.640 --> 0:16:35.320 perhaps had a bit more detailed thinking about what they 0:16:35.360 --> 0:16:39.400 would do instead. Because we haven't seen a huge amount 0:16:39.520 --> 0:16:42.920 of big ideas from Labor about in government, about how 0:16:42.920 --> 0:16:49.000 to fix the NHS, about how to fix crime, justice, migration, etcetera, etcetera. 0:16:49.720 --> 0:16:53.280 And that is going to be a huge challenge for them. 0:16:53.280 --> 0:16:56.720 And the danger for kist Arma is this narrative that's 0:16:56.760 --> 0:16:59.200 perhaps starting to emerge over the first six months that 0:16:59.280 --> 0:17:02.920 Labour's disappin pointed or underwhelmed or hasn't provided change. Like 0:17:02.960 --> 0:17:06.400 you say, if that sets in over the next twelve months, 0:17:06.560 --> 0:17:08.600 that will be really hard for him to turn around. 0:17:08.760 --> 0:17:10.760 So he does need a bit of a better story 0:17:10.760 --> 0:17:11.560 to tell next year. 0:17:11.800 --> 0:17:14.120 Yeah, and it's hard not to think about how much 0:17:14.160 --> 0:17:17.399 of a narrative shift there has been since the election. 0:17:17.560 --> 0:17:21.440 It went from this is the moment, here comes change 0:17:22.000 --> 0:17:23.359 to this, let's take a listen. 0:17:23.920 --> 0:17:28.919 Things are worse than we ever imagine. These riots didn't 0:17:28.960 --> 0:17:33.880 happen in a vacuum. They exposed the state of our country, 0:17:34.720 --> 0:17:39.880 revealed a deeply unhealthy society. The tracks in our foundations 0:17:40.040 --> 0:17:40.640 laid bare. 0:17:41.560 --> 0:17:44.560 So that was Kiris Starmer there speaking not long after 0:17:44.720 --> 0:17:47.560 taking up office as Prime Minister. But setting up that 0:17:47.680 --> 0:17:50.200 narrative that you're talking about alex of things being quite 0:17:50.240 --> 0:17:51.640 negative will come back to the rights in a moment 0:17:51.800 --> 0:17:54.919 was another, of course, very important moment this year politically 0:17:54.960 --> 0:17:58.159 as well. But I mean, can can there be a 0:17:58.480 --> 0:18:02.639 tone reset now? Is this a cleverer political strategy to 0:18:02.680 --> 0:18:05.720 say that everything's terrible so that by comparison things can 0:18:05.720 --> 0:18:07.040 look better in a couple of months. 0:18:07.320 --> 0:18:09.720 They'd like us to think that that was the plan 0:18:09.760 --> 0:18:12.560 all along. I think certainly lots of people in labor 0:18:12.560 --> 0:18:15.560 would admit that some of the messaging hasn't been quite right. 0:18:15.680 --> 0:18:18.320 Certainly in the run up to the budget. A lot 0:18:18.359 --> 0:18:20.760 of the really negative messaging from the chance that Rachel 0:18:20.760 --> 0:18:27.479 Reeves was seen is basically hitting economic confidence. The tricky 0:18:27.640 --> 0:18:30.120 thing is that it's really hard to turn that around. 0:18:30.400 --> 0:18:33.320 And when you've had a budget that raised taxes on 0:18:33.560 --> 0:18:37.399 businesses and a lot of rhetoric from the Chancellor that 0:18:37.760 --> 0:18:40.840 didn't quite meet the sort of lofty ambitions on growth 0:18:41.000 --> 0:18:44.440 at the labor we're talking about before the election, she's 0:18:44.440 --> 0:18:47.800 got to go into the new year and convince businesses 0:18:47.920 --> 0:18:51.159 and just the public that Britain's got an economy that 0:18:52.200 --> 0:18:55.439 has strength and is growing and booming and all the 0:18:55.440 --> 0:18:57.600 rest of it. And if she can't do that, then 0:18:57.600 --> 0:18:59.560 it is going to be really difficult for her to 0:18:59.600 --> 0:19:03.400 deliver on her core pledge to have you know, higher 0:19:03.440 --> 0:19:07.919 economic growth in this country. And you know, turning that 0:19:08.040 --> 0:19:11.160 around is she could see that she's starting to try 0:19:11.200 --> 0:19:13.119 to do that. She goes and meets the CBI and 0:19:13.160 --> 0:19:14.439 she says, oh, I don't want to do any more 0:19:14.480 --> 0:19:16.840 tax rises and things like that, but it's going to 0:19:16.880 --> 0:19:17.520 need a lot more. 0:19:17.920 --> 0:19:20.120 Can I ask a very nerdy question about what it's 0:19:20.200 --> 0:19:22.520 like as a journalist to be sort of doing this 0:19:22.640 --> 0:19:25.120 job this year in that we have the regularcount of moments. 0:19:25.160 --> 0:19:27.520 We've had the budget, like you said, you've had the election. 0:19:28.040 --> 0:19:31.040 We have the kind of normal warp and weft of Westminster. 0:19:31.240 --> 0:19:34.520 But this has also been kind of notable because everything 0:19:34.560 --> 0:19:36.760 is on social media nowadays. There's been questions about how 0:19:37.000 --> 0:19:40.720 x works. There's also been new political party sort of 0:19:40.720 --> 0:19:42.920 the rise of Reform, the return of the Live Dems, 0:19:43.400 --> 0:19:47.320 questions over if Westminster's two party system is still actually 0:19:47.400 --> 0:19:48.440 a two party system. 0:19:48.800 --> 0:19:51.919 How have you gone about covering that? Yeah, it's really interesting. 0:19:51.920 --> 0:19:55.320 I mean there is this sort of incumbency problem that 0:19:56.280 --> 0:19:58.560 positions around the world have had, whether it's Joe Biden 0:19:58.920 --> 0:20:02.600 or Emmanuel Macron or Enough Schultz or whoever. In Britain 0:20:02.640 --> 0:20:04.960 we've kind of gone the other way. So around the 0:20:05.000 --> 0:20:07.160 world you sort of see these kind of centrist liberal 0:20:07.200 --> 0:20:11.680 governments losing support and then a sort of populist right 0:20:12.440 --> 0:20:15.240 coming along as an insurgent, Whereas in Britain we had 0:20:15.440 --> 0:20:18.400 a center right government which which was unpopular and gave 0:20:18.400 --> 0:20:19.919 way to a center left government. 0:20:19.960 --> 0:20:21.359 So we've kind of gone the opposite direction. 0:20:21.680 --> 0:20:24.240 That doesn't mean that we can't, you know, just be 0:20:24.280 --> 0:20:27.640 a few years after everybody else. And like you say, 0:20:27.720 --> 0:20:29.960 with the rise of reform Nigel Farwars, this sort of 0:20:30.000 --> 0:20:34.080 fragmenting of British politics. There is a real threat to 0:20:34.400 --> 0:20:37.679 Kierstarma or in any incumbent. And it's not necessarily the 0:20:37.680 --> 0:20:40.600 fact that it's Keir Starmer. It's it's just the fact 0:20:40.600 --> 0:20:44.000 that people are unhappy with how things are going. 0:20:44.320 --> 0:20:45.520 And I agree with you. 0:20:45.560 --> 0:20:48.120 I think social media is just an absolutely massive acce 0:20:48.440 --> 0:20:53.119 accelerator of people's displeasure. You know, you used to get 0:20:53.800 --> 0:20:57.119 people give politicians the benefit of the doubt for a 0:20:57.160 --> 0:21:00.920 few years, and you know, even Boris Johnson was sort 0:21:00.960 --> 0:21:05.359