1 00:00:02,960 --> 00:00:08,360 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,000 --> 00:00:13,440 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:13,440 --> 00:00:15,680 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:15,680 --> 00:00:18,320 Speaker 2: anchors all around the world. Straight Ahead on the program, 5 00:00:18,320 --> 00:00:20,840 Speaker 2: a look ahead to US retail sales and what the 6 00:00:20,960 --> 00:00:24,160 Speaker 2: numbers might reveal about the health of the consumer. I'm 7 00:00:24,200 --> 00:00:25,560 Speaker 2: Tom Busby in New York. 8 00:00:25,720 --> 00:00:28,280 Speaker 3: I'm Karlin Hepge here in London, where the ECB looks 9 00:00:28,440 --> 00:00:31,480 Speaker 3: likely to cut rates again face with a weak economic 10 00:00:31,600 --> 00:00:34,200 Speaker 3: fact job in the continent's biggest economies. 11 00:00:34,360 --> 00:00:36,680 Speaker 4: I'm Brian Curtisy in Hong Kong. We look ahead to 12 00:00:36,720 --> 00:00:41,120 Speaker 4: whether China is all in on stimulus or wavering, and 13 00:00:41,280 --> 00:00:43,680 Speaker 4: we preview TSMC's earnings. 14 00:00:44,000 --> 00:00:48,000 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 15 00:00:48,000 --> 00:00:50,519 Speaker 5: E Love Them Free Ow New York, Bloombergen ninety nine 16 00:00:50,560 --> 00:00:54,279 Speaker 5: to one, Washington, DC, Bloomberg ninety two to nine, Boston, 17 00:00:54,680 --> 00:00:58,680 Speaker 5: DAB Digital Radio, London, Sirius XM one twenty one, and 18 00:00:58,760 --> 00:01:01,600 Speaker 5: around the world on Bloomberg Radio dot Com and via 19 00:01:01,680 --> 00:01:03,040 Speaker 5: the Bloomberg Business App. 20 00:01:08,560 --> 00:01:09,160 Speaker 6: Good day to you. 21 00:01:09,240 --> 00:01:11,520 Speaker 2: I'm Tom Busby, and we begin today's program with some 22 00:01:11,640 --> 00:01:15,120 Speaker 2: key economic data out this week. US retail sales for 23 00:01:15,240 --> 00:01:18,759 Speaker 2: September eight thirty am Wall Street Time on Thursday. So 24 00:01:18,800 --> 00:01:20,720 Speaker 2: what will the numbers reveal about the health of the 25 00:01:20,720 --> 00:01:24,160 Speaker 2: consumer and as we head toward the holiday season? Is 26 00:01:24,160 --> 00:01:26,800 Speaker 2: stubbornly high inflation keeping a lid on spending for a 27 00:01:26,840 --> 00:01:30,160 Speaker 2: lot of Americans. Well for more, we're joined by Michael McKee, 28 00:01:30,200 --> 00:01:35,559 Speaker 2: Bloomberg International Economics and Policy correspondent. Well, Michael, retail sales 29 00:01:35,640 --> 00:01:37,600 Speaker 2: rose just a tenth of a percent in August, but 30 00:01:38,200 --> 00:01:41,000 Speaker 2: that was better than forecast. What are you expecting to 31 00:01:41,040 --> 00:01:42,080 Speaker 2: see in September. 32 00:01:43,040 --> 00:01:45,720 Speaker 7: Well, what e kindom is surveyed by Bloomberger expecting to 33 00:01:45,720 --> 00:01:48,960 Speaker 7: see is more progress in that regard. The forecast is 34 00:01:49,000 --> 00:01:53,560 Speaker 7: for a two tenths advanced month over month X autos 35 00:01:53,720 --> 00:01:56,680 Speaker 7: just a tenth, but the control group, which is basically 36 00:01:56,720 --> 00:02:00,840 Speaker 7: what goes into GDP up three tenths is last month, 37 00:02:00,880 --> 00:02:05,040 Speaker 7: which would be a fairly strong performance. Americans still are shopping. 38 00:02:05,080 --> 00:02:10,800 Speaker 7: We haven't seen a major impact on confidence in the 39 00:02:10,840 --> 00:02:13,240 Speaker 7: fact that they can pay for these things. So at 40 00:02:13,240 --> 00:02:16,280 Speaker 7: this point we're expecting to see some strong growth. 41 00:02:16,800 --> 00:02:19,240 Speaker 2: Well, let's talk about why we have that strong growth. 42 00:02:19,280 --> 00:02:22,680 Speaker 2: We have a very solid labor market, surprisingly strong numbers 43 00:02:22,960 --> 00:02:26,480 Speaker 2: the last month. Higher incomes as well. We've seen gas 44 00:02:26,520 --> 00:02:31,400 Speaker 2: prices low this past summer, still pretty low. Inflation has eased, 45 00:02:32,040 --> 00:02:34,000 Speaker 2: and it won't have much of an impact on the 46 00:02:34,040 --> 00:02:36,600 Speaker 2: sales data that we'll see this week. But lower interest 47 00:02:36,680 --> 00:02:37,640 Speaker 2: rates right, all. 48 00:02:37,480 --> 00:02:41,040 Speaker 7: That right definitely won't have an impact on the data 49 00:02:41,080 --> 00:02:44,600 Speaker 7: we see this week. Credit Card rates have not come down. 50 00:02:45,120 --> 00:02:48,200 Speaker 7: I don't think anybody be surprised by that. They're very sticky. 51 00:02:48,760 --> 00:02:51,040 Speaker 7: They go off a lot faster than they come down, 52 00:02:51,480 --> 00:02:54,640 Speaker 7: so Americans are still paying that. But what we're looking 53 00:02:54,680 --> 00:03:00,079 Speaker 7: at is the higher wages people are getting is helping 54 00:03:00,120 --> 00:03:02,600 Speaker 7: because people tend to spend what they make and make 55 00:03:02,600 --> 00:03:06,720 Speaker 7: their spending decisions on what they make. They've had a 56 00:03:06,760 --> 00:03:08,960 Speaker 7: lot of money in savings for a while, and the 57 00:03:08,960 --> 00:03:13,440 Speaker 7: savings rate was revised higher, But it's the wages and 58 00:03:13,520 --> 00:03:17,280 Speaker 7: salaries that sort of determine the momentum that we see 59 00:03:17,280 --> 00:03:20,200 Speaker 7: in spending, and since they have been relatively strong, people 60 00:03:20,240 --> 00:03:22,320 Speaker 7: are still feeling like they can afford it. 61 00:03:23,280 --> 00:03:26,080 Speaker 2: Now as we move into the holiday season. Do you 62 00:03:26,160 --> 00:03:28,720 Speaker 2: think there's indications this is going to continue on. 63 00:03:29,400 --> 00:03:32,200 Speaker 7: It's beginning to look that way. The forecasts earlier this 64 00:03:32,280 --> 00:03:34,640 Speaker 7: year were that we would see a fall off in 65 00:03:34,680 --> 00:03:38,000 Speaker 7: the fourth quarter, and so far we haven't seen that. 66 00:03:38,600 --> 00:03:43,400 Speaker 7: This is September numbers that were getting next on Thursday, 67 00:03:44,440 --> 00:03:48,040 Speaker 7: and that's the third quarter, but it will set us 68 00:03:48,120 --> 00:03:49,720 Speaker 7: up for the fourth quarter. We'll see what kind of 69 00:03:49,760 --> 00:03:52,680 Speaker 7: momentum we have going into the fourth quarter, and so 70 00:03:52,840 --> 00:03:54,800 Speaker 7: far there doesn't seem to be a reason to think 71 00:03:54,880 --> 00:03:58,480 Speaker 7: people are pulling back. As you noted, gasoline prices are 72 00:03:58,560 --> 00:04:01,680 Speaker 7: down even though oil pres are up. We're in the 73 00:04:01,720 --> 00:04:05,480 Speaker 7: winter driving season the beginning of that and less demand 74 00:04:05,560 --> 00:04:09,240 Speaker 7: out there for fuel, and we've got some surpluses that 75 00:04:09,520 --> 00:04:13,920 Speaker 7: have built up in the USL Company's tanks out in Oklahoma. 76 00:04:14,840 --> 00:04:17,880 Speaker 7: So as long as people feel like they've got the 77 00:04:17,920 --> 00:04:20,480 Speaker 7: money and they don't have to put it to gasoline, 78 00:04:21,480 --> 00:04:23,320 Speaker 7: they should continue to spend. 79 00:04:23,760 --> 00:04:26,599 Speaker 2: Now, another surprise help is that dock workers strike. It 80 00:04:26,680 --> 00:04:28,720 Speaker 2: lasted three days and then put on pause. 81 00:04:29,480 --> 00:04:31,560 Speaker 7: That's a big help to the economy overall, because we 82 00:04:31,600 --> 00:04:33,560 Speaker 7: would have had a lot of people who were out 83 00:04:33,560 --> 00:04:37,039 Speaker 7: of work, and that would have slowed the economy and 84 00:04:37,240 --> 00:04:40,560 Speaker 7: probably raised prices after a couple of weeks because we'd 85 00:04:40,560 --> 00:04:43,440 Speaker 7: have shortages of things coming in we did see in 86 00:04:43,480 --> 00:04:47,239 Speaker 7: the CPI last week that food prices food at home 87 00:04:47,600 --> 00:04:50,560 Speaker 7: went up by four tenths, the most in eight months. 88 00:04:51,040 --> 00:04:54,719 Speaker 7: And that's the kind of thing that would have been 89 00:04:54,760 --> 00:04:59,400 Speaker 7: affected fruits and vegetables coming in other foods if the 90 00:04:59,400 --> 00:05:02,360 Speaker 7: port strike continued, and we might have seen a sort 91 00:05:02,360 --> 00:05:06,160 Speaker 7: of a negative jobs report because this week is coming 92 00:05:06,240 --> 00:05:10,640 Speaker 7: up as the reference week for the October payrolls. And 93 00:05:10,680 --> 00:05:13,280 Speaker 7: if you had all those dock workers on strike, along 94 00:05:13,320 --> 00:05:16,160 Speaker 7: with the Boeing workers on strike and the people who 95 00:05:16,160 --> 00:05:18,920 Speaker 7: are out of work because of the hurricanes, we could 96 00:05:18,920 --> 00:05:21,960 Speaker 7: have had a negative print for October, which would probably 97 00:05:21,960 --> 00:05:23,719 Speaker 7: not go over well with public opinion. 98 00:05:24,320 --> 00:05:26,719 Speaker 2: Well and those hurricanes. At least we're going to see 99 00:05:26,720 --> 00:05:32,400 Speaker 2: a big pickup in home building, construction, roads, schools. I mean, 100 00:05:32,400 --> 00:05:35,400 Speaker 2: we're going to see hopefully, hopefully very soon. 101 00:05:35,839 --> 00:05:41,040 Speaker 7: That's the paradox of these natural disasters. You can never 102 00:05:42,000 --> 00:05:45,400 Speaker 7: make light of the suffering of the individual people who 103 00:05:45,800 --> 00:05:47,840 Speaker 7: have gone through this, who've lost their homes and all 104 00:05:47,880 --> 00:05:51,880 Speaker 7: the things that matter to them. But on a macro 105 00:05:52,120 --> 00:05:56,560 Speaker 7: national basis, natural disasters like this are good for the 106 00:05:56,640 --> 00:06:00,680 Speaker 7: economy because of all that spending on new stuff, and 107 00:06:01,400 --> 00:06:05,400 Speaker 7: it adds to GDP, so we will see that effect. 108 00:06:06,160 --> 00:06:09,400 Speaker 7: Seems like from Aleen, the stuff in the Carolinas may 109 00:06:09,440 --> 00:06:12,480 Speaker 7: take longer to fix because a lot of roads are 110 00:06:12,720 --> 00:06:15,760 Speaker 7: out and broken and that'll take a while to do. 111 00:06:16,160 --> 00:06:18,000 Speaker 7: But in a year or two you would look at 112 00:06:18,000 --> 00:06:20,679 Speaker 7: the GDP figures and you wouldn't see a real dip. 113 00:06:20,920 --> 00:06:24,360 Speaker 2: Well, well, you know, let's talk more about housing broader, 114 00:06:24,440 --> 00:06:29,600 Speaker 2: not just from Helene and Milton, but housing prices still 115 00:06:29,600 --> 00:06:31,880 Speaker 2: making home ownership a little tough for a lot of people, 116 00:06:31,880 --> 00:06:34,800 Speaker 2: and that has certainly got to impact retail sales and 117 00:06:34,880 --> 00:06:37,960 Speaker 2: impact and you say, you know, inflation. 118 00:06:37,600 --> 00:06:40,560 Speaker 7: Also, it's something to watch. We did see in the 119 00:06:40,600 --> 00:06:45,840 Speaker 7: CPI report that owner's equivalent rent, which is the weird 120 00:06:45,880 --> 00:06:50,880 Speaker 7: statistical way the government accounts for home prices. We're at 121 00:06:50,920 --> 00:06:53,600 Speaker 7: the lowest in about seven or eight months, just up 122 00:06:53,680 --> 00:06:55,960 Speaker 7: three tenths, and that's what the Fed has been waiting for. 123 00:06:56,040 --> 00:06:59,360 Speaker 7: If that continues, that's good news. It will help prices 124 00:06:59,520 --> 00:07:02,680 Speaker 7: level off. But prices have been going up and the 125 00:07:02,720 --> 00:07:05,559 Speaker 7: big reason for that is that there's not enough homes 126 00:07:05,560 --> 00:07:09,000 Speaker 7: for sale because interest rates are high still for mortgages 127 00:07:09,400 --> 00:07:10,520 Speaker 7: and people don't want to move. 128 00:07:10,640 --> 00:07:14,400 Speaker 2: Well, yeah, it's a cruel cycle, though September retail spending 129 00:07:14,600 --> 00:07:17,520 Speaker 2: data out this Thursday are thanks to Michael McKee, Bloomberg 130 00:07:17,560 --> 00:07:22,000 Speaker 2: International Economics and Policy correspondent. We move next to corporate 131 00:07:22,000 --> 00:07:25,720 Speaker 2: earnings from the world's leading streaming TV service, Netflix, posting 132 00:07:25,760 --> 00:07:28,840 Speaker 2: its third quarter results this Thursday. What will they reveal 133 00:07:28,880 --> 00:07:33,000 Speaker 2: about subscriber growth, revenue from advertising, possible plans to hike 134 00:07:33,080 --> 00:07:37,160 Speaker 2: subscription fees for more. We're joined by Geetha Raganathan, Bloomberg 135 00:07:37,200 --> 00:07:40,920 Speaker 2: Intelligence Analysts on US media. Geitha, Well, two hundred and 136 00:07:40,920 --> 00:07:44,600 Speaker 2: seventy eight million subscribers worldwide can't all be wrong. What 137 00:07:44,640 --> 00:07:47,320 Speaker 2: do you expect to see from Netflix's earnings this week? 138 00:07:48,040 --> 00:07:49,800 Speaker 8: Yeah, Tom, thank you so much for having me so. 139 00:07:49,920 --> 00:07:53,440 Speaker 8: As always, you know, Netflix is still very much a 140 00:07:53,480 --> 00:07:58,640 Speaker 8: subscriber story. Consensus current currently expects about four point three 141 00:07:58,800 --> 00:08:02,720 Speaker 8: million new subscribers ADS for the third quarter, and that 142 00:08:02,880 --> 00:08:05,400 Speaker 8: momentum is expected to kind of continue into the fourth 143 00:08:05,480 --> 00:08:10,040 Speaker 8: quarter with them having lots of heavily anticipated content with 144 00:08:10,120 --> 00:08:12,120 Speaker 8: about seven million gains. So if you kind of just 145 00:08:12,200 --> 00:08:16,760 Speaker 8: look at the overall picture for Netflix, Tom, what we 146 00:08:16,840 --> 00:08:19,800 Speaker 8: saw was we saw a tremendous slow down in subscriber 147 00:08:19,840 --> 00:08:23,440 Speaker 8: growth in twenty twenty two, but twenty twenty three and 148 00:08:23,480 --> 00:08:26,880 Speaker 8: twenty twenty four we're seeing them add close to almost 149 00:08:27,160 --> 00:08:31,120 Speaker 8: sixty million subscribers, so thirty million subscribers in each of 150 00:08:31,160 --> 00:08:33,880 Speaker 8: those years. So I think, really, as investors kind of 151 00:08:34,000 --> 00:08:36,920 Speaker 8: start to think about the story, it's really about where 152 00:08:37,040 --> 00:08:40,640 Speaker 8: is subscriber growth? What is a normal level of subscriber 153 00:08:40,720 --> 00:08:45,480 Speaker 8: growth once you have taken into account these two initiatives 154 00:08:45,480 --> 00:08:49,440 Speaker 8: that they introduced, which was the advertising based tier as 155 00:08:49,480 --> 00:08:52,040 Speaker 8: well as the password sharing crackdown, And so I think 156 00:08:52,040 --> 00:08:53,760 Speaker 8: that is going to be one of the biggest questions 157 00:08:54,080 --> 00:08:56,480 Speaker 8: apart from, of course what you said, which was the 158 00:08:56,520 --> 00:08:59,880 Speaker 8: price increases, we are really banking on a big price entrase. 159 00:09:00,480 --> 00:09:03,720 Speaker 2: Now besides the paid sharing members, the new ones you 160 00:09:03,760 --> 00:09:08,000 Speaker 2: know after that crackdown. Now, do you see more international growth? 161 00:09:08,040 --> 00:09:10,520 Speaker 2: Are there new countries for Netflix to conquer? 162 00:09:11,400 --> 00:09:14,520 Speaker 8: Yeah? So majority of the growth tom is in the 163 00:09:14,559 --> 00:09:18,160 Speaker 8: international markets. You know, that makes up two thirds of 164 00:09:18,440 --> 00:09:21,200 Speaker 8: you know, the subscriber base. Most of the growth, of course, 165 00:09:21,280 --> 00:09:23,959 Speaker 8: is coming internationally. Not to say that the US market 166 00:09:24,000 --> 00:09:26,640 Speaker 8: is not growing. It has actually grown really well after 167 00:09:26,640 --> 00:09:29,520 Speaker 8: they introduced both the ads as well as the paid 168 00:09:29,520 --> 00:09:32,960 Speaker 8: sharing initiative. But yes, as they kind of expand to 169 00:09:33,120 --> 00:09:37,640 Speaker 8: more markets, we definitely expect you know, growth long growth 170 00:09:37,720 --> 00:09:41,040 Speaker 8: runway in a lot of these international markets. Remember, penetration 171 00:09:41,200 --> 00:09:44,600 Speaker 8: for Netflix in the US is very, very high, but 172 00:09:44,679 --> 00:09:47,400 Speaker 8: it is pretty low in some other markets. So if 173 00:09:47,440 --> 00:09:51,439 Speaker 8: you kind of look at Latin America again, penetation is high, 174 00:09:51,480 --> 00:09:54,000 Speaker 8: but if you look at you know, Asia Pacific, it's 175 00:09:54,040 --> 00:09:56,640 Speaker 8: only at about twenty one or twenty two percent. If 176 00:09:56,679 --> 00:09:58,760 Speaker 8: you look at Europe again, it's pretty low. So there 177 00:09:58,880 --> 00:10:03,000 Speaker 8: is substantial for growth. You know, it's just going to 178 00:10:03,160 --> 00:10:06,080 Speaker 8: depend on what are all the different subscription tiers that 179 00:10:06,120 --> 00:10:09,080 Speaker 8: they introduce there to kind of really rev up growth 180 00:10:09,120 --> 00:10:10,880 Speaker 8: in some of those markets now. 181 00:10:10,920 --> 00:10:15,080 Speaker 2: And other growth is advertising revenue, and I know you 182 00:10:15,080 --> 00:10:17,160 Speaker 2: could talk about a couple of deals that they have 183 00:10:17,800 --> 00:10:20,920 Speaker 2: with with major sports networks that's coming up won't be 184 00:10:20,960 --> 00:10:23,120 Speaker 2: reflected in the numbers we're going to see just you know, 185 00:10:23,200 --> 00:10:26,400 Speaker 2: this week, but looking ahead it could really explode. 186 00:10:26,559 --> 00:10:30,200 Speaker 8: Absolutely. So they have kind of downplayed the role of advertising, 187 00:10:30,600 --> 00:10:32,880 Speaker 8: you know, at least for the near term, but we 188 00:10:33,080 --> 00:10:36,520 Speaker 8: know that they are doing so many things that is 189 00:10:36,600 --> 00:10:39,360 Speaker 8: really going to kind of turbo charge that business. So 190 00:10:39,400 --> 00:10:42,240 Speaker 8: one of the big things that the industry is kind 191 00:10:42,240 --> 00:10:46,040 Speaker 8: of looking for, is that Netflix is entering the sports arena. 192 00:10:46,440 --> 00:10:49,920 Speaker 8: They have two NFL games on Christmas Day. Now that 193 00:10:50,200 --> 00:10:53,160 Speaker 8: is going to be big, not just in terms of viewership, 194 00:10:53,360 --> 00:10:55,560 Speaker 8: but obviously they are going to those are That's a 195 00:10:55,640 --> 00:11:00,760 Speaker 8: highly anticipated content when it comes to you know, advertising, 196 00:11:00,840 --> 00:11:03,800 Speaker 8: So you know that is obviously creating a lot of buzz. 197 00:11:04,200 --> 00:11:07,839 Speaker 8: Then you have the much anticipated Mike Tyson versus Jake 198 00:11:07,960 --> 00:11:10,720 Speaker 8: Paul boxing event which is going to happen sometime in November. 199 00:11:11,200 --> 00:11:15,920 Speaker 8: That should drive the subscriber editions, it should enhance Netflix's 200 00:11:15,960 --> 00:11:19,680 Speaker 8: overall reach. So all of those, you know, they're basically 201 00:11:19,720 --> 00:11:22,480 Speaker 8: prepping for advertising to take off in a big way. 202 00:11:22,480 --> 00:11:26,319 Speaker 8: And then remember, starting in January, you have WWE content 203 00:11:26,360 --> 00:11:29,600 Speaker 8: that is going to come to the platform globally for 204 00:11:29,640 --> 00:11:33,000 Speaker 8: the very first time. So they're really investing heavily in 205 00:11:33,320 --> 00:11:37,720 Speaker 8: sports content and sports adjacent content and that should be 206 00:11:37,920 --> 00:11:40,800 Speaker 8: a big draw for the advertising community. 207 00:11:41,960 --> 00:11:45,480 Speaker 2: Now, since Netflix last hiked prices it's a first standard 208 00:11:45,520 --> 00:11:48,479 Speaker 2: tier January of twenty twenty two, a number of competitors 209 00:11:48,720 --> 00:11:51,760 Speaker 2: have done the same. Do you think Netflix is poised 210 00:11:51,800 --> 00:11:53,960 Speaker 2: to increase the cost of both of its tiers? The 211 00:11:54,000 --> 00:11:56,920 Speaker 2: standard and the ad supported one more revenue coming in. 212 00:11:57,480 --> 00:11:59,679 Speaker 8: So I think right now, if you kind of look 213 00:11:59,679 --> 00:12:02,000 Speaker 8: at con census estimates and if you just look at 214 00:12:02,200 --> 00:12:05,640 Speaker 8: sentiment in general, everybody is kind of banking on this 215 00:12:05,760 --> 00:12:09,960 Speaker 8: price increase. They are definitely overdue for a price hike 216 00:12:10,160 --> 00:12:12,560 Speaker 8: on the standard tier, that is the one that costs 217 00:12:12,559 --> 00:12:15,640 Speaker 8: about fifteen and a half dollars in the US. They 218 00:12:15,720 --> 00:12:18,560 Speaker 8: haven't raised prices for almost three years, as you just 219 00:12:18,600 --> 00:12:22,040 Speaker 8: pointed out, Tom, and remember before that they had a 220 00:12:22,040 --> 00:12:25,160 Speaker 8: steady cadence of price increases. It was coming every eighteen 221 00:12:25,200 --> 00:12:27,640 Speaker 8: months or so. It was about a ten to eleven 222 00:12:27,679 --> 00:12:30,080 Speaker 8: percent price increase. So we are definitely looking for a 223 00:12:30,080 --> 00:12:33,600 Speaker 8: pretty big bump this time around. They have the content 224 00:12:33,920 --> 00:12:37,720 Speaker 8: to support it. All of their competitors are raising prices, 225 00:12:37,960 --> 00:12:41,800 Speaker 8: and we know that in general the competitive intensity across 226 00:12:41,840 --> 00:12:43,680 Speaker 8: the board has come down quite a bit. 227 00:12:43,840 --> 00:12:47,079 Speaker 2: Okay, third quarter earnings from Netflicks out this Thursday, are 228 00:12:47,160 --> 00:12:51,479 Speaker 2: thanks to Geet the raganathin Bloomberg Intelligence Analysts on US media. 229 00:12:51,600 --> 00:12:53,839 Speaker 2: Coming up on Bloomberg Day Break weekend, we'll look ahead 230 00:12:53,840 --> 00:12:56,920 Speaker 2: to a meeting of European Central Bank policy makers and 231 00:12:56,960 --> 00:13:00,720 Speaker 2: whether another rate cut may be in the cards, Tom Busby, 232 00:13:00,760 --> 00:13:14,840 Speaker 2: and this is Bloomberg. This is Bloomberg Daybreak weekend, our 233 00:13:14,880 --> 00:13:17,120 Speaker 2: global look ahead at the top stories for investors in 234 00:13:17,160 --> 00:13:20,319 Speaker 2: the coming week. I'm Tom Busby in New York. Up 235 00:13:20,400 --> 00:13:22,960 Speaker 2: later in our program look ahead to a cavalcade of 236 00:13:22,960 --> 00:13:25,800 Speaker 2: economic data out of China and earnings from one of 237 00:13:25,840 --> 00:13:29,160 Speaker 2: Asia's biggest chip makers. But first, the European Central Bank 238 00:13:29,200 --> 00:13:32,120 Speaker 2: has already cut interest rates twice in this cycle, and 239 00:13:32,200 --> 00:13:36,360 Speaker 2: markets are expecting another move lower when policymakers meet this week. 240 00:13:36,440 --> 00:13:40,120 Speaker 2: As inflation slows and near's the ECB's target focus has 241 00:13:40,160 --> 00:13:43,800 Speaker 2: shifted to the weakness in Europe's biggest economies. For more, 242 00:13:43,880 --> 00:13:46,199 Speaker 2: Let's go to London and bring in Bloomberg Daybreak Europe 243 00:13:46,200 --> 00:13:48,439 Speaker 2: Banker Caroline hepgar Tom. 244 00:13:48,480 --> 00:13:51,760 Speaker 3: The European Central Bank has not delivered many surprises on 245 00:13:51,800 --> 00:13:54,960 Speaker 3: its rates cutting journey. The first move in June was 246 00:13:55,000 --> 00:13:59,640 Speaker 3: widely telegraphed, as was the second in September. Now, as 247 00:13:59,679 --> 00:14:02,480 Speaker 3: we can out down to the next meeting, all signs 248 00:14:02,520 --> 00:14:06,880 Speaker 3: point to another twenty five basis point move lower. September's 249 00:14:06,920 --> 00:14:10,120 Speaker 3: Euro Area inflation print came in at one point eight percent. 250 00:14:10,200 --> 00:14:13,760 Speaker 3: That's below the ECB's target, but that good news has 251 00:14:13,800 --> 00:14:17,880 Speaker 3: come with much less positive information when it comes to 252 00:14:17,920 --> 00:14:21,640 Speaker 3: the continued weakness in the major economies in Europe, in 253 00:14:21,680 --> 00:14:25,480 Speaker 3: France and Germany. Now we've been discussing this with Eric 254 00:14:25,520 --> 00:14:28,800 Speaker 3: why Tennis, who is the EMEA head of investment strategy 255 00:14:28,840 --> 00:14:32,360 Speaker 3: at JP Morgan Private Bank, and we began by asking 256 00:14:32,440 --> 00:14:36,520 Speaker 3: him why markets are not currently pricing a recession for 257 00:14:36,600 --> 00:14:37,480 Speaker 3: Europe right now. 258 00:14:37,680 --> 00:14:43,200 Speaker 9: There's definitely been an unfortunate loss of momentum. Economic surprises 259 00:14:43,280 --> 00:14:49,000 Speaker 9: have been surprising to the downside. However, the overall trajectory 260 00:14:49,040 --> 00:14:52,480 Speaker 9: of the economy I would categorize as remaining buoyant enough. 261 00:14:52,720 --> 00:14:55,560 Speaker 9: What happens with the consumer is going to be key 262 00:14:55,640 --> 00:14:59,840 Speaker 9: as we go forward. The ECB likely support with interest 263 00:15:00,080 --> 00:15:03,120 Speaker 9: rates to the downside is also likely to help keep 264 00:15:03,160 --> 00:15:07,680 Speaker 9: things afloat. Linkages to the US are also constructive. The 265 00:15:07,800 --> 00:15:12,680 Speaker 9: US economy has been outperforming most expectations across the board, 266 00:15:12,800 --> 00:15:16,040 Speaker 9: so the degree of linkages across the pond should also 267 00:15:16,080 --> 00:15:20,120 Speaker 9: be at least relatively helpful to keeping Europe, you know, 268 00:15:20,160 --> 00:15:23,600 Speaker 9: sort of carrying forward through, albeit with a lower level 269 00:15:23,640 --> 00:15:26,360 Speaker 9: of growth relative to the US and and other key 270 00:15:26,480 --> 00:15:27,440 Speaker 9: economic areas. 271 00:15:27,960 --> 00:15:30,160 Speaker 10: So what markets are pricing in is sort of quarter 272 00:15:30,240 --> 00:15:32,640 Speaker 10: steady pace of quarter points rate cuts from the European 273 00:15:32,680 --> 00:15:35,520 Speaker 10: Central Bank. Does that tally with how you think that 274 00:15:35,560 --> 00:15:38,880 Speaker 10: the response should go given the weakness in the European economy. 275 00:15:38,560 --> 00:15:41,440 Speaker 9: Yeah, it basically does. The you know, the Europeans have 276 00:15:41,600 --> 00:15:45,400 Speaker 9: the more singular focus on you know, price stability i e. 277 00:15:45,440 --> 00:15:49,400 Speaker 9: Battling inflation. In the US they categorize it more so 278 00:15:49,480 --> 00:15:53,680 Speaker 9: as both price stability i e. Battling inflation and additionally 279 00:15:54,080 --> 00:15:58,240 Speaker 9: helping to ensure full employment. So by that methodology, it 280 00:15:58,320 --> 00:16:01,640 Speaker 9: suggests that the Europeansentral Bank really should just be focusing 281 00:16:01,680 --> 00:16:05,440 Speaker 9: on inflation and inflation alone. But I guess the reason 282 00:16:05,480 --> 00:16:07,640 Speaker 9: I bring that up is even though it's not officially 283 00:16:07,680 --> 00:16:10,920 Speaker 9: part of their mandate to help facilitate the labor markets 284 00:16:10,920 --> 00:16:14,239 Speaker 9: and try to be cognizant of supporting the regional economy, 285 00:16:14,560 --> 00:16:17,720 Speaker 9: I do think that they have that lens and do 286 00:16:17,840 --> 00:16:20,680 Speaker 9: want to try to be helpful if inflation allows them to. 287 00:16:20,840 --> 00:16:23,880 Speaker 9: And the subsiding of inflation in the region and on 288 00:16:23,880 --> 00:16:27,200 Speaker 9: a global level is really helpful because it allows central 289 00:16:27,240 --> 00:16:31,000 Speaker 9: banks to become more accommodative with softer interest rate policy, 290 00:16:31,040 --> 00:16:31,800 Speaker 9: which should. 291 00:16:31,520 --> 00:16:35,680 Speaker 3: Help how far behind the curve is the ECB? What 292 00:16:35,840 --> 00:16:38,400 Speaker 3: is the neutral rate? Has that shifted to your mind? 293 00:16:38,840 --> 00:16:41,080 Speaker 9: I actually think they're doing okay. We don't believe that 294 00:16:41,560 --> 00:16:44,400 Speaker 9: they're behind the curve, and we think that a steady 295 00:16:44,400 --> 00:16:47,960 Speaker 9: as she goes pace feels reasonable to us. There was 296 00:16:48,000 --> 00:16:50,280 Speaker 9: certainly an argument that the FED was behind the curve 297 00:16:50,720 --> 00:16:54,240 Speaker 9: looking over there in many forecasters' minds, and that's part 298 00:16:54,280 --> 00:16:57,160 Speaker 9: of why they did that kind of quote jumbo sized 299 00:16:57,240 --> 00:17:01,720 Speaker 9: cut of fifty basis points. Most recently, I would more 300 00:17:01,720 --> 00:17:05,520 Speaker 9: so categorize that one as not necessarily being behind the curve, 301 00:17:05,600 --> 00:17:07,560 Speaker 9: but a little bit of a twenty five plus twenty 302 00:17:07,560 --> 00:17:10,760 Speaker 9: five catch up there. So now that they are kind 303 00:17:10,800 --> 00:17:15,360 Speaker 9: of started with that larger initial sized cut, I think 304 00:17:15,400 --> 00:17:17,959 Speaker 9: that you know, both major central banks probably can go 305 00:17:18,040 --> 00:17:20,480 Speaker 9: with a bit of a steady as she goes regular 306 00:17:20,560 --> 00:17:21,640 Speaker 9: type of cadence. 307 00:17:22,160 --> 00:17:25,320 Speaker 10: Thinking about the start of earning season in Europe, I 308 00:17:25,400 --> 00:17:29,280 Speaker 10: wonder where you'll be looking for signals around the European consumer, 309 00:17:29,359 --> 00:17:31,600 Speaker 10: given you know what you've just been selling us about 310 00:17:31,600 --> 00:17:33,920 Speaker 10: their centralgy to the European economic picture. 311 00:17:33,960 --> 00:17:38,119 Speaker 9: Consumer always matters that it really matters in the US. 312 00:17:37,920 --> 00:17:40,520 Speaker 9: It for sure matters here in this region as well. 313 00:17:40,920 --> 00:17:44,919 Speaker 9: There has been some softness across the board in conjunction 314 00:17:45,080 --> 00:17:48,600 Speaker 9: with what you know, the general trajectory of economic growth 315 00:17:48,720 --> 00:17:53,600 Speaker 9: has been. Wages have been solid though, and ideally, you know, 316 00:17:53,840 --> 00:17:57,880 Speaker 9: robust enough wages allow consumers to continue to do their 317 00:17:57,920 --> 00:18:01,800 Speaker 9: thing and consume, which is going to be incredibly important 318 00:18:01,800 --> 00:18:04,520 Speaker 9: for how this earning season goes. It is still a 319 00:18:04,600 --> 00:18:07,600 Speaker 9: very nice story in terms of equity market performance on 320 00:18:08,160 --> 00:18:12,440 Speaker 9: a mostly global level in twenty twenty four, so it's 321 00:18:12,480 --> 00:18:17,000 Speaker 9: going to be very contingent upon earning's delivery or lack thereof, 322 00:18:17,480 --> 00:18:19,520 Speaker 9: to see how we do in the remaining two and 323 00:18:19,520 --> 00:18:21,240 Speaker 9: a half months or so of the year. 324 00:18:21,640 --> 00:18:24,199 Speaker 3: That was Eric why Tennis in me ahead of investment 325 00:18:24,240 --> 00:18:27,880 Speaker 3: strategy at JP Morgan Private Bank, speaking to me Andrew 326 00:18:27,920 --> 00:18:33,000 Speaker 3: Bloomberg Stephen Cowell on Bloomberg Radio. So that's an investor 327 00:18:33,040 --> 00:18:36,800 Speaker 3: perspective on the economics here in Europe. Let's hear now 328 00:18:36,840 --> 00:18:40,399 Speaker 3: from Bloomberg Economics on this as we look ahead to 329 00:18:40,480 --> 00:18:43,400 Speaker 3: the next European Central Bank decision just in the next 330 00:18:43,440 --> 00:18:46,879 Speaker 3: few days. I've been speaking to our senior your area economist, 331 00:18:47,200 --> 00:18:50,520 Speaker 3: David Powell. David, is there any doubt over whether the 332 00:18:50,560 --> 00:18:53,320 Speaker 3: ECP will actually cut by twenty five basis points. 333 00:18:53,600 --> 00:18:56,840 Speaker 6: The markets have completely pricedt and we think that's going 334 00:18:56,880 --> 00:19:00,560 Speaker 6: to happen. And those expectations have been reinf forced by 335 00:19:00,600 --> 00:19:03,560 Speaker 6: words from members of the Governing Council. Even some of 336 00:19:03,560 --> 00:19:06,240 Speaker 6: the most hawkish members of the Governing Council in recent 337 00:19:06,320 --> 00:19:09,800 Speaker 6: days have come out saying they support a cut in October. 338 00:19:10,800 --> 00:19:13,240 Speaker 6: So it's pretty clear that that's going to come. 339 00:19:13,480 --> 00:19:13,760 Speaker 7: Okay. 340 00:19:13,800 --> 00:19:15,760 Speaker 3: So any potential surprises. 341 00:19:15,240 --> 00:19:19,000 Speaker 6: Then well, I think what people are going to be 342 00:19:19,000 --> 00:19:22,959 Speaker 6: focusing on is what's said at the press conference, in 343 00:19:23,040 --> 00:19:28,080 Speaker 6: particular where the ECB sees the risks and their risk 344 00:19:28,160 --> 00:19:32,560 Speaker 6: assessment to GDP growth and inflation. Up until now, they 345 00:19:32,560 --> 00:19:36,200 Speaker 6: have seen the risks to inflation as balanced, listing both 346 00:19:36,280 --> 00:19:39,040 Speaker 6: upside and downside risks. I think the biggest surprise might 347 00:19:39,080 --> 00:19:42,080 Speaker 6: be something like if the ECB were to emphasize to 348 00:19:42,119 --> 00:19:45,800 Speaker 6: a greater extent downside risks to inflation given the economic 349 00:19:45,840 --> 00:19:47,040 Speaker 6: weakness in the Euro Area. 350 00:19:47,359 --> 00:19:49,439 Speaker 3: Yeah, that has been the real concern, isn't it the 351 00:19:49,520 --> 00:19:52,359 Speaker 3: slowdown in the economy in terms of the hints that 352 00:19:52,400 --> 00:19:55,800 Speaker 3: we get about what happens further down the road in 353 00:19:55,880 --> 00:19:58,680 Speaker 3: terms of right cuts in Europe. What might we hear 354 00:19:59,000 --> 00:20:02,040 Speaker 3: as for the the US, people are dialing back the 355 00:20:02,119 --> 00:20:03,800 Speaker 3: idea of big rate cuts from the Fed. 356 00:20:04,280 --> 00:20:06,280 Speaker 6: Well, there is a big difference between the US and 357 00:20:06,320 --> 00:20:09,280 Speaker 6: the EU Area, which is a story that has persisted 358 00:20:09,280 --> 00:20:12,399 Speaker 6: throughout this period of monetary tightening and now monetary loosening, 359 00:20:12,400 --> 00:20:15,000 Speaker 6: and that is the US economy is held up much 360 00:20:15,119 --> 00:20:19,879 Speaker 6: better than the Euro Area economy, and so we haven't 361 00:20:19,880 --> 00:20:22,720 Speaker 6: had those positive economic surprises in Europe that the US 362 00:20:22,760 --> 00:20:25,320 Speaker 6: has had, which kind of has reduced those expectations for easing. 363 00:20:25,560 --> 00:20:28,560 Speaker 6: So a December cut is probably you know, it's essentially 364 00:20:28,600 --> 00:20:30,680 Speaker 6: a done deal the markets of price that it's pretty 365 00:20:30,760 --> 00:20:34,679 Speaker 6: much universally expected. And the reason that that is so 366 00:20:34,840 --> 00:20:38,520 Speaker 6: expected is the ECB will have another quarter than of 367 00:20:39,000 --> 00:20:42,160 Speaker 6: data from the National accounts on wage growth, in particular 368 00:20:42,200 --> 00:20:45,760 Speaker 6: compensation per employee, which is the most comprehensive measure of 369 00:20:45,840 --> 00:20:49,040 Speaker 6: wage growth, and in all likelihood that will have decelerated again, 370 00:20:49,480 --> 00:20:55,000 Speaker 6: giving the ECB further confidence that price pressures are ebbing 371 00:20:55,320 --> 00:20:59,480 Speaker 6: and that they can cut without doubts of inflation remaining 372 00:20:59,520 --> 00:20:59,920 Speaker 6: at tark. 373 00:21:00,320 --> 00:21:02,760 Speaker 3: Yeah, and of course inflation is the central mandate for 374 00:21:02,880 --> 00:21:05,160 Speaker 3: the European Central Bag, so how much can they really 375 00:21:05,240 --> 00:21:09,000 Speaker 3: consider growth as a factor given that mandate. 376 00:21:09,359 --> 00:21:12,520 Speaker 6: Well, inflation is essentially determined by supply and demand, and 377 00:21:12,560 --> 00:21:17,520 Speaker 6: growth is aggregate demands. So growth is the primary determinant 378 00:21:17,720 --> 00:21:18,400 Speaker 6: of inflation. 379 00:21:18,920 --> 00:21:21,000 Speaker 9: So while there are. 380 00:21:21,000 --> 00:21:25,560 Speaker 6: Times when the two objectives are not are not calling 381 00:21:25,600 --> 00:21:30,760 Speaker 6: for the same thing, boosting the economy and keeping inflation 382 00:21:30,840 --> 00:21:33,720 Speaker 6: at target. And the ECB, unlike the Foot Reserve, does 383 00:21:33,840 --> 00:21:37,600 Speaker 6: have a mandate of just inflation. They can't ignore growth 384 00:21:37,720 --> 00:21:39,840 Speaker 6: because at the end of the day, if the economy 385 00:21:39,880 --> 00:21:43,320 Speaker 6: remains weak, if aggurate demand remains weak, inflation will be 386 00:21:43,320 --> 00:21:45,840 Speaker 6: below target. And that's something that we really only just 387 00:21:45,920 --> 00:21:48,679 Speaker 6: got over at the time of the pandemic. Don't forget 388 00:21:48,680 --> 00:21:52,440 Speaker 6: before that inflation was below target for nearly a decade 389 00:21:52,720 --> 00:21:56,199 Speaker 6: and Droggy tried a lot of things in order to 390 00:21:56,359 --> 00:21:59,440 Speaker 6: return inflation to target. And one thing we know from 391 00:21:59,520 --> 00:22:03,119 Speaker 6: the UAE is experienced even more clearly from the Japanese experience, 392 00:22:03,440 --> 00:22:06,240 Speaker 6: is that when you have persistently low inflation for a 393 00:22:06,280 --> 00:22:09,280 Speaker 6: long period of time, it becomes kind of embedded and 394 00:22:09,320 --> 00:22:11,320 Speaker 6: that's a difficult situation to get out of. 395 00:22:11,480 --> 00:22:14,840 Speaker 3: Oh yes, Japanification of Europe is a really big worry. 396 00:22:14,920 --> 00:22:17,679 Speaker 3: Isn't it In terms of the economic picture. What is 397 00:22:17,720 --> 00:22:21,480 Speaker 3: your assessment now of how weak Europe is in terms 398 00:22:21,480 --> 00:22:23,320 Speaker 3: of France and Germany. I mean, we know there's been 399 00:22:23,359 --> 00:22:28,200 Speaker 3: political uncertainty, there are enormous global pressures and geopolitical kind 400 00:22:28,200 --> 00:22:32,719 Speaker 3: of tectonic plates that affect what's your concern around economic 401 00:22:32,800 --> 00:22:33,720 Speaker 3: growth in Europe now? 402 00:22:34,000 --> 00:22:38,119 Speaker 6: Well, the main source of weakness in Europe is Germany actually, 403 00:22:38,200 --> 00:22:41,800 Speaker 6: and in particular Germany's industrial sector, which has never really 404 00:22:41,880 --> 00:22:46,159 Speaker 6: kind of recovered in recent years and it's facing a 405 00:22:46,240 --> 00:22:50,240 Speaker 6: number of problems. One is the economic slowdown in China, 406 00:22:50,320 --> 00:22:54,520 Speaker 6: which is a huge destination for German exports. And also 407 00:22:54,560 --> 00:22:57,520 Speaker 6: the Chinese are moving up on the value ladder in 408 00:22:57,600 --> 00:23:01,320 Speaker 6: terms of their own production, so they're less fewer things 409 00:23:01,359 --> 00:23:04,040 Speaker 6: from Germany, like cars, for example, that they're now making 410 00:23:04,080 --> 00:23:07,159 Speaker 6: in China themselves. So there's a structural change going on 411 00:23:07,280 --> 00:23:11,520 Speaker 6: there that's impacting Germany. So that's something that's going to 412 00:23:11,520 --> 00:23:14,600 Speaker 6: persist for a while. But when you take Germany out 413 00:23:14,600 --> 00:23:17,000 Speaker 6: of the picture of Isabelle Schnabel is, a member of 414 00:23:17,000 --> 00:23:20,000 Speaker 6: thecb's executive board, recently did in a presentation that your 415 00:23:20,040 --> 00:23:23,800 Speaker 6: area looks much healthier so other countries are doing better. 416 00:23:24,280 --> 00:23:28,200 Speaker 6: In particular, Spain has had very strong growth, France has 417 00:23:28,200 --> 00:23:31,119 Speaker 6: had growth that's much better than Germany, although that's probably 418 00:23:31,119 --> 00:23:35,159 Speaker 6: been boosted by the Olympics, and that boost will fade. 419 00:23:36,119 --> 00:23:39,480 Speaker 6: So the real worry right now is Germany, and that's 420 00:23:39,520 --> 00:23:41,280 Speaker 6: not going to be easy to solve, given that some 421 00:23:41,320 --> 00:23:42,840 Speaker 6: of these problems are structural. 422 00:23:44,000 --> 00:23:46,879 Speaker 3: And yet, of course, very soon, if not now, focus 423 00:23:46,920 --> 00:23:49,880 Speaker 3: on the US presidential election, and we know that European 424 00:23:49,920 --> 00:23:53,600 Speaker 3: officials are worried about the possibility of a second Trump 425 00:23:53,640 --> 00:23:56,800 Speaker 3: White House. What that might mean to the European economy 426 00:23:56,840 --> 00:23:59,919 Speaker 3: is that also something that people are thinking about. Is 427 00:24:00,200 --> 00:24:03,159 Speaker 3: very split in the very uncertain in terms of the 428 00:24:03,240 --> 00:24:07,040 Speaker 3: US presidential race. But what US policy emerges will surely 429 00:24:07,119 --> 00:24:09,520 Speaker 3: be important for growth in Europe. 430 00:24:09,720 --> 00:24:13,880 Speaker 6: Yeah, the your area is a big exporter, in particular Germany, 431 00:24:14,080 --> 00:24:16,960 Speaker 6: and what we've heard from the Trump campaign is talk 432 00:24:17,040 --> 00:24:20,200 Speaker 6: of tariffs if Donald Trump were to be re elected. 433 00:24:20,800 --> 00:24:22,680 Speaker 6: And when you export a lot of goods, you don't 434 00:24:22,760 --> 00:24:26,879 Speaker 6: like tariffs because that essentially reduces for in demand for 435 00:24:27,480 --> 00:24:33,120 Speaker 6: what you're producing. So undoubtedly that's creating some fears amongst 436 00:24:33,119 --> 00:24:35,600 Speaker 6: policy makers in Europe, and we've heard those aired. Various 437 00:24:35,600 --> 00:24:39,480 Speaker 6: policy makers from around the different areas, not only the 438 00:24:39,520 --> 00:24:42,760 Speaker 6: Central Bank but also the European Commission except for have 439 00:24:43,320 --> 00:24:46,520 Speaker 6: voiced concerns about what that might mean for the Your Area. 440 00:24:46,280 --> 00:24:50,800 Speaker 3: Economy, even as there've also been worries about European protectionism 441 00:24:51,119 --> 00:24:54,760 Speaker 3: versus China, and that is also kind of shaping up 442 00:24:54,760 --> 00:24:58,240 Speaker 3: as quite a big battle line between Europe and China. 443 00:24:58,520 --> 00:25:00,359 Speaker 3: Does that help in the short term hin doing the 444 00:25:00,359 --> 00:25:02,960 Speaker 3: long term ev tarifs on China for example. 445 00:25:03,400 --> 00:25:06,520 Speaker 6: Well, as I mentioned, the German industrial sector is having 446 00:25:06,520 --> 00:25:08,480 Speaker 6: a lot of problems right now, and one of those 447 00:25:08,520 --> 00:25:11,960 Speaker 6: problems is China. One is kind of cyclical, there's a 448 00:25:11,960 --> 00:25:14,480 Speaker 6: cyclical slow down there, but the other is structural, and 449 00:25:14,480 --> 00:25:17,840 Speaker 6: that changes to the Chinese economy and what they're producing. 450 00:25:18,000 --> 00:25:21,800 Speaker 6: In Europe wants to shield the economy from the short 451 00:25:21,880 --> 00:25:24,960 Speaker 6: term impact of those changes, and tariffs are a good 452 00:25:24,960 --> 00:25:27,080 Speaker 6: way to do that, at least in the short term, 453 00:25:27,280 --> 00:25:30,320 Speaker 6: but in the long term they've rarely been helpful as 454 00:25:30,359 --> 00:25:33,000 Speaker 6: a kind of as a strategy to boost the economy. 455 00:25:33,440 --> 00:25:36,520 Speaker 3: My thanks to our senior Euro Area economist David Power 456 00:25:36,560 --> 00:25:39,480 Speaker 3: for joining me ahead of the ECB rate decision in October. 457 00:25:39,560 --> 00:25:42,080 Speaker 3: I'm Caroline Hepge here in London. You can catch us 458 00:25:42,080 --> 00:25:44,679 Speaker 3: every weekday morning for Bloombag Daybreak. Youre at beginning at 459 00:25:44,720 --> 00:25:47,399 Speaker 3: six am in London. That's one am on Wall Street. 460 00:25:47,440 --> 00:25:47,720 Speaker 9: Tom. 461 00:25:48,200 --> 00:25:50,960 Speaker 2: Thank you, Caroline, and coming up on Bloomberg day Break 462 00:25:50,960 --> 00:25:53,200 Speaker 2: weekend and look ahead to earnings from one of Asia's 463 00:25:53,240 --> 00:25:58,399 Speaker 2: largest chip makers, TSMC. I'm Tom Busby and this is Bloomberg. 464 00:26:09,840 --> 00:26:12,200 Speaker 2: This is Bloomberg day Break weekend, our global look ahead 465 00:26:12,200 --> 00:26:14,400 Speaker 2: at the top stories for investors in the coming week. 466 00:26:14,640 --> 00:26:17,560 Speaker 2: I'm Tom Busby in New York. A slew of economic 467 00:26:17,640 --> 00:26:21,159 Speaker 2: data coming out of China this week, including important trade data. 468 00:26:21,440 --> 00:26:24,520 Speaker 2: Let's get to Bloomberg Daybreak Asia co host Brian Curtis 469 00:26:24,560 --> 00:26:24,960 Speaker 2: for more. 470 00:26:25,400 --> 00:26:28,560 Speaker 4: Tom. China appears to be at a key inflection point 471 00:26:28,600 --> 00:26:31,600 Speaker 4: on coaxing the economy out of the doldrums and back 472 00:26:31,640 --> 00:26:34,560 Speaker 4: onto a solid growth path. Coming back from the recent 473 00:26:34,640 --> 00:26:38,280 Speaker 4: week long holiday, doubt was creeping in to whether or 474 00:26:38,280 --> 00:26:41,960 Speaker 4: not this is truly a whatever it takes moment for policymakers. 475 00:26:42,280 --> 00:26:45,480 Speaker 4: Amid those doubts, we've seen a lot of market volatility. 476 00:26:45,880 --> 00:26:49,119 Speaker 4: Now the coming week brings more data on, among other things, 477 00:26:49,200 --> 00:26:53,520 Speaker 4: inflation and trade. China is still suffering from weak consumer 478 00:26:53,600 --> 00:26:57,560 Speaker 4: spending and an ongoing property crisis. Until we start to 479 00:26:57,560 --> 00:27:00,159 Speaker 4: see a pickup in data, it may be hard to 480 00:27:00,200 --> 00:27:04,800 Speaker 4: convince investors that times have truly changed. Let's get to 481 00:27:04,880 --> 00:27:10,120 Speaker 4: James Mager Bloomberg, Senior reporter for the Chinese Economy and Government. So, James, 482 00:27:10,240 --> 00:27:12,119 Speaker 4: nice to have you with us here for this segment. 483 00:27:12,440 --> 00:27:17,600 Speaker 4: It's probably too soon to see any tangible evidence of 484 00:27:17,640 --> 00:27:21,439 Speaker 4: a revitalization in the economy from the official data, but 485 00:27:21,560 --> 00:27:23,640 Speaker 4: we do have some other ways to look at this, 486 00:27:24,119 --> 00:27:27,800 Speaker 4: perhaps confidence from consumers, some of the high frequency and 487 00:27:27,960 --> 00:27:30,600 Speaker 4: anecdotal data that you could be gathering. What are you see? 488 00:27:30,680 --> 00:27:32,120 Speaker 11: I think the first thing that we want to look 489 00:27:32,160 --> 00:27:34,720 Speaker 11: at is we just came out of a week long 490 00:27:34,760 --> 00:27:38,280 Speaker 11: holiday in China, and you know, people traveled more than 491 00:27:38,280 --> 00:27:41,440 Speaker 11: they did last year. I think number of trips was 492 00:27:41,480 --> 00:27:44,600 Speaker 11: out ten percent, but the actual amount of people spent 493 00:27:44,680 --> 00:27:47,840 Speaker 11: on those trips was down two percent compared to prior 494 00:27:47,880 --> 00:27:50,480 Speaker 11: to the pandemic in twenty nineteen, and so I think 495 00:27:50,480 --> 00:27:52,960 Speaker 11: what you're seeing there this year in the Chraine economy, 496 00:27:53,160 --> 00:27:55,920 Speaker 11: people are willing to go out, they are traveling around 497 00:27:55,920 --> 00:27:58,840 Speaker 11: the country. They are you know, some people are going overseas, 498 00:27:58,920 --> 00:28:00,800 Speaker 11: but when they do that, then not willing to spend 499 00:28:00,800 --> 00:28:03,520 Speaker 11: as much. And you're also seeing that in the housing market, 500 00:28:03,560 --> 00:28:05,800 Speaker 11: people aren't willing to buy houses, that walling to make 501 00:28:05,800 --> 00:28:08,560 Speaker 11: those kind of investments. So you know there is activity, 502 00:28:08,880 --> 00:28:11,359 Speaker 11: but people are holding onto the purse stream very tightly 503 00:28:11,560 --> 00:28:14,360 Speaker 11: because they're not confident that things are going to get better, 504 00:28:14,400 --> 00:28:16,480 Speaker 11: and so they're not confident to spend. 505 00:28:16,960 --> 00:28:20,479 Speaker 4: I've heard anecdotally that people have noticed the big gains 506 00:28:20,560 --> 00:28:24,840 Speaker 4: in the stock market and that that could actually convince 507 00:28:24,880 --> 00:28:26,879 Speaker 4: them to spend a little more. But it seems like 508 00:28:26,920 --> 00:28:29,800 Speaker 4: what you're saying is yeah, maybe down the road, but 509 00:28:30,000 --> 00:28:31,240 Speaker 4: still caustious at the moment. 510 00:28:31,480 --> 00:28:35,439 Speaker 11: I think some investors are happy about the stock market 511 00:28:35,680 --> 00:28:39,000 Speaker 11: increases we've seen since the PBOC announced that big stimulus 512 00:28:39,000 --> 00:28:41,560 Speaker 11: package at the end of September, but a lot of 513 00:28:41,720 --> 00:28:44,400 Speaker 11: other stock investors that I've spoken to are still staying, well, 514 00:28:44,440 --> 00:28:46,520 Speaker 11: it's great that stocks are rising, but I'm still underwater. 515 00:28:46,840 --> 00:28:49,920 Speaker 11: You know, my portfolio is worth half what it was 516 00:28:50,480 --> 00:28:53,640 Speaker 11: five years ago, So even if you see a big 517 00:28:53,680 --> 00:28:57,200 Speaker 11: spike in prices now, it's going to take another sort 518 00:28:57,240 --> 00:29:00,320 Speaker 11: of similar size gain for me to even get back 519 00:29:00,360 --> 00:29:03,640 Speaker 11: to being may all again, let alone making any kind 520 00:29:03,640 --> 00:29:06,960 Speaker 11: of profit. So you know, if we see this continue 521 00:29:07,040 --> 00:29:09,640 Speaker 11: over time, that may lead to a wealth effect and 522 00:29:09,640 --> 00:29:11,920 Speaker 11: that may make people more confident, but I think at 523 00:29:11,920 --> 00:29:14,080 Speaker 11: the moment people are still looking at it cautiously. 524 00:29:14,440 --> 00:29:16,720 Speaker 4: Yeah, in order for some momentum, you have to keep 525 00:29:16,760 --> 00:29:19,760 Speaker 4: coming up with innovative ideas. And we saw a couple 526 00:29:20,360 --> 00:29:23,960 Speaker 4: announced by the pbocs, such as the swap facilities where 527 00:29:23,960 --> 00:29:28,320 Speaker 4: institutions can exchange holdings for cash and can potentially buy 528 00:29:28,360 --> 00:29:30,240 Speaker 4: back shares. And I know we don't have a lot 529 00:29:30,240 --> 00:29:33,200 Speaker 4: of details on that, but that is an idea that 530 00:29:33,280 --> 00:29:35,680 Speaker 4: came forward that I think did catch a few people 531 00:29:35,680 --> 00:29:38,719 Speaker 4: by surprise. And then recently we also had Premier Lee 532 00:29:38,760 --> 00:29:43,840 Speaker 4: Chung asking experts for innovative ideas. That seems a little unusual. 533 00:29:44,640 --> 00:29:47,400 Speaker 4: I'm curious, you know, what they're expecting there. 534 00:29:47,400 --> 00:29:49,720 Speaker 11: And I think with the swaps, the swap thing that 535 00:29:49,760 --> 00:29:52,640 Speaker 11: the PBOC announced, it is innovative idea and we'll have 536 00:29:52,680 --> 00:29:54,680 Speaker 11: to see whether companies actually take them up on that 537 00:29:54,760 --> 00:29:58,480 Speaker 11: offer or not. For Premier Le Chang asking for suggestions, 538 00:29:58,640 --> 00:30:01,360 Speaker 11: you know, there has been a lot of crackdowns on 539 00:30:01,480 --> 00:30:05,880 Speaker 11: Chinese economists, you know, criticizing government policy, and there's been 540 00:30:05,920 --> 00:30:09,520 Speaker 11: you know, there was reporting that one economists have arrested 541 00:30:09,560 --> 00:30:13,400 Speaker 11: for making comments criticizing Hiji Pink's policies. And so coming 542 00:30:13,400 --> 00:30:15,040 Speaker 11: out now and saying, hey, we'd like to get your 543 00:30:15,040 --> 00:30:17,480 Speaker 11: ideas about how we can fix the economy. Some people 544 00:30:17,520 --> 00:30:20,080 Speaker 11: may take that opportunity, but other people still I think 545 00:30:20,120 --> 00:30:22,720 Speaker 11: we'll be very cautious about becoming, you know, making too 546 00:30:22,760 --> 00:30:24,160 Speaker 11: many critical suggestions. 547 00:30:24,560 --> 00:30:26,920 Speaker 4: Yeah, it brings back memories of the one hundred flowers 548 00:30:26,960 --> 00:30:30,360 Speaker 4: campaign back in nineteen fifty six. People might be wary. 549 00:30:30,520 --> 00:30:33,000 Speaker 11: Yeah, exactly, come out and tell us your ideas, and 550 00:30:33,040 --> 00:30:35,440 Speaker 11: then the people who speak out too loudly then get 551 00:30:35,520 --> 00:30:39,000 Speaker 11: their heads locked off. I guess figuratively, I just think people, 552 00:30:39,080 --> 00:30:40,840 Speaker 11: you know, there are economists who're making a lot of 553 00:30:40,880 --> 00:30:43,880 Speaker 11: suggestions about the government should do. The question then, is 554 00:30:43,880 --> 00:30:45,600 Speaker 11: is the government really going to listen to them or not. 555 00:30:45,800 --> 00:30:47,560 Speaker 4: Now, when we look at the data that's coming in 556 00:30:47,600 --> 00:30:50,120 Speaker 4: the next week, I mentioned earlier that it's probably too 557 00:30:50,200 --> 00:30:53,920 Speaker 4: soon to see a lot of tangible evidence here, but 558 00:30:54,160 --> 00:30:58,320 Speaker 4: exports have actually been reasonably solid for this year. Has 559 00:30:58,360 --> 00:31:01,280 Speaker 4: been one of the areas that hasn't been too bad 560 00:31:01,400 --> 00:31:04,280 Speaker 4: in terms of the inflation numbers. Are we still kind 561 00:31:04,280 --> 00:31:07,600 Speaker 4: of teetering on the line, particularly on the producer prices side, 562 00:31:07,640 --> 00:31:09,520 Speaker 4: between inflation and deflation. 563 00:31:09,960 --> 00:31:12,720 Speaker 11: Yeah, I mean on the data for September that we're expecting, 564 00:31:12,840 --> 00:31:16,200 Speaker 11: it still shows that producer prices are inflation will be 565 00:31:16,200 --> 00:31:20,160 Speaker 11: even deeper than it was in August. Consumer prices positive, 566 00:31:20,200 --> 00:31:23,120 Speaker 11: but the only just and again that's probably being pushed 567 00:31:23,160 --> 00:31:25,920 Speaker 11: up by high vegetable prices, so really not a sort 568 00:31:25,960 --> 00:31:29,960 Speaker 11: of a sustainable increase in consumer inflation. And yeah, we will. 569 00:31:30,280 --> 00:31:33,040 Speaker 11: The expectation is we will continue to see strong exports. Obviously, 570 00:31:33,040 --> 00:31:35,800 Speaker 11: this is the pre Christmas season now, so lots of 571 00:31:35,800 --> 00:31:38,200 Speaker 11: companies are trying to get Christmas goods and Christmas presents 572 00:31:38,240 --> 00:31:40,600 Speaker 11: out the door and onto ships to the US or 573 00:31:40,640 --> 00:31:44,200 Speaker 11: to Europe. So we should continue to see strong exports. 574 00:31:44,440 --> 00:31:47,680 Speaker 11: But imports are looking very weak, as you know, continuing 575 00:31:47,720 --> 00:31:49,840 Speaker 11: to look very week. The expectation is that they're actually 576 00:31:49,840 --> 00:31:52,280 Speaker 11: going to fall, and actually fall in September, which I 577 00:31:52,360 --> 00:31:55,800 Speaker 11: just go to underscore how bad Chinese domestic demand is. 578 00:31:55,920 --> 00:31:58,360 Speaker 4: All right, James, thanks so much for joining us. Jims 579 00:31:58,360 --> 00:32:01,840 Speaker 4: Mager Bloomberg Senior reporter for the Chinese Economy and government. 580 00:32:02,400 --> 00:32:05,200 Speaker 4: Now let's turn to the chip sector with Doug Krisner 581 00:32:05,240 --> 00:32:07,720 Speaker 4: and a preview on TSMC earnings. 582 00:32:08,000 --> 00:32:11,560 Speaker 12: Thanks Brian. In the week ahead, TSMC will disclose its 583 00:32:11,600 --> 00:32:14,680 Speaker 12: full results for the latest quarter. This is interesting because 584 00:32:14,720 --> 00:32:18,520 Speaker 12: we already have the company's revenue figures. Quarterly sales were 585 00:32:18,520 --> 00:32:22,080 Speaker 12: above forecast, a thirty nine percent increase from last year. 586 00:32:22,120 --> 00:32:24,880 Speaker 12: I think the fair question now is how will those 587 00:32:24,920 --> 00:32:29,280 Speaker 12: sales figures translate into profit. For a closer look, I'm 588 00:32:29,360 --> 00:32:34,040 Speaker 12: joined by Katherine Thorbeck Bloomberg, a columnist covering tech in Asia. 589 00:32:34,240 --> 00:32:37,480 Speaker 12: She joins us from our studios in Tokyo. Thank you 590 00:32:37,520 --> 00:32:40,080 Speaker 12: so much for making time, Catherine. I think now that 591 00:32:40,160 --> 00:32:44,560 Speaker 12: we can focus on what these sales figures really mean 592 00:32:45,200 --> 00:32:47,680 Speaker 12: in terms of the way in which AI spending, the 593 00:32:47,760 --> 00:32:50,840 Speaker 12: hardware spending, has been driving a lot of the positivity 594 00:32:51,240 --> 00:32:55,640 Speaker 12: in TSMC. Is this assuaging worries maybe that people feared 595 00:32:55,640 --> 00:32:57,720 Speaker 12: that AI spending would begin to wane a bit. 596 00:32:57,800 --> 00:33:02,520 Speaker 1: You know, as you mentioned, TSMC's quarterly sales beat forecasts 597 00:33:02,560 --> 00:33:05,160 Speaker 1: and beat even their own forecasts, and so you know, 598 00:33:05,200 --> 00:33:07,400 Speaker 1: there has been some concern over this year over whether 599 00:33:07,440 --> 00:33:10,520 Speaker 1: this is sustainable, whether the generative AI boom is sustainable, 600 00:33:10,560 --> 00:33:13,600 Speaker 1: but TSMC's figures are showing that it's still going very 601 00:33:13,600 --> 00:33:15,720 Speaker 1: strong and the demand for a hardware is still going 602 00:33:15,800 --> 00:33:18,480 Speaker 1: very strong. You know, In the long run, we'll sort 603 00:33:18,520 --> 00:33:20,600 Speaker 1: of have to see if the companies that are buying 604 00:33:20,640 --> 00:33:22,880 Speaker 1: these AI chips will be able to make money off 605 00:33:22,920 --> 00:33:25,400 Speaker 1: of all of their AI investments. But for now, I mean, 606 00:33:25,480 --> 00:33:28,920 Speaker 1: TSMC seems to be really cashing in and really doing 607 00:33:28,920 --> 00:33:31,160 Speaker 1: well and doesn't show any signs at the moment of 608 00:33:31,160 --> 00:33:31,720 Speaker 1: slowing down. 609 00:33:31,840 --> 00:33:36,160 Speaker 12: What about capacity, particularly with the facility on Taiwan, are 610 00:33:36,160 --> 00:33:38,120 Speaker 12: they able to keep up with demand we own? 611 00:33:38,360 --> 00:33:39,920 Speaker 1: So I think that's going to be a big question 612 00:33:39,960 --> 00:33:42,200 Speaker 1: that we're going to see with the guidance that they 613 00:33:42,240 --> 00:33:43,720 Speaker 1: give us, you know, whether they will be able to 614 00:33:43,800 --> 00:33:46,440 Speaker 1: keep up with demand. And I think another question going 615 00:33:46,440 --> 00:33:48,040 Speaker 1: off of that is when they will bring on the 616 00:33:48,080 --> 00:33:50,960 Speaker 1: two nanometer chip mass production. So we'll get some of 617 00:33:50,960 --> 00:33:53,600 Speaker 1: those answers on Thursday. So far, they've been sort of 618 00:33:53,640 --> 00:33:56,800 Speaker 1: assuasion concerns about not being able to meet demand, but 619 00:33:57,240 --> 00:33:59,680 Speaker 1: you know, as we spoke about earlier, demand has been 620 00:34:00,080 --> 00:34:01,480 Speaker 1: very very high for their products. 621 00:34:01,560 --> 00:34:05,040 Speaker 12: This is the main foundry making chips for in Nvidia 622 00:34:05,160 --> 00:34:08,239 Speaker 12: and Apple. Do we know which company is more important 623 00:34:08,280 --> 00:34:09,000 Speaker 12: to TSMC? 624 00:34:09,600 --> 00:34:11,720 Speaker 1: So, I think that's a good question. I mean, Apple 625 00:34:12,000 --> 00:34:15,040 Speaker 1: and Nvidia are the two biggest customers for TSMC, and 626 00:34:15,320 --> 00:34:17,480 Speaker 1: Vidia is obviously sort of the AI darling at the 627 00:34:17,800 --> 00:34:20,399 Speaker 1: heart of this generative AI boom. At the same time, 628 00:34:20,440 --> 00:34:24,440 Speaker 1: TSMC is the sole manufacturer for the chips that go 629 00:34:24,480 --> 00:34:27,920 Speaker 1: into the iPhone processors. There was some concern from some 630 00:34:28,000 --> 00:34:31,480 Speaker 1: analysts about softer demand for the latest iPhones, the iPhone sixteens, 631 00:34:31,840 --> 00:34:34,359 Speaker 1: and how that could impact TSMC. But I think, you know, 632 00:34:34,480 --> 00:34:37,560 Speaker 1: they've gotten so many orders from other customers such as 633 00:34:37,640 --> 00:34:40,960 Speaker 1: Nvidia and such as Intel, and I think that'll sort 634 00:34:40,960 --> 00:34:43,640 Speaker 1: of really booy their earnings this quarter. 635 00:34:44,040 --> 00:34:46,400 Speaker 12: One of the things that we've spoken a lot about 636 00:34:46,440 --> 00:34:48,960 Speaker 12: on the show the fact that people have been worried 637 00:34:49,000 --> 00:34:53,040 Speaker 12: for some time about the over concentration of semiconductor production 638 00:34:53,239 --> 00:34:57,360 Speaker 12: on Taiwan, particularly when you look at the geopolitical tensions 639 00:34:57,400 --> 00:35:01,640 Speaker 12: between the US, China and Taiwan on and we've also 640 00:35:01,800 --> 00:35:05,400 Speaker 12: spoken about the need for the company really to demonstrate 641 00:35:05,960 --> 00:35:09,520 Speaker 12: it's been able to diversify away from Taiwan a bit. 642 00:35:09,600 --> 00:35:09,759 Speaker 3: Now. 643 00:35:09,760 --> 00:35:13,279 Speaker 12: I know TSMC is trying to build facilities in the 644 00:35:13,400 --> 00:35:17,120 Speaker 12: United States. They've also got some facilities underway from what 645 00:35:17,160 --> 00:35:19,960 Speaker 12: I understand, in Japan. You're in Tokyo. Can you tell 646 00:35:19,960 --> 00:35:22,320 Speaker 12: me a little bit about what is happening in Japan 647 00:35:22,440 --> 00:35:23,960 Speaker 12: as it relates to TSMC. 648 00:35:24,280 --> 00:35:28,440 Speaker 1: Sure. So, TSMC is building fabs in Qshu, in Kumamoto 649 00:35:28,560 --> 00:35:31,920 Speaker 1: in the Southern Island in Japan, and from what I've heard, 650 00:35:31,960 --> 00:35:35,080 Speaker 1: that's going very very well. You know, it's actually planning 651 00:35:35,080 --> 00:35:38,680 Speaker 1: on opening on time. They're building out another one, and 652 00:35:38,719 --> 00:35:40,120 Speaker 1: I think they even have plans to build out a 653 00:35:40,120 --> 00:35:41,920 Speaker 1: third one that will really bring the sort of cutting 654 00:35:42,000 --> 00:35:46,040 Speaker 1: edge chips manufacturing to Japan and outside of Taiwan. And 655 00:35:46,080 --> 00:35:47,960 Speaker 1: you know, as you mentioned, I think that this sort 656 00:35:48,000 --> 00:35:51,360 Speaker 1: of US China geopolitical tensions has been casting a shadow 657 00:35:51,400 --> 00:35:55,160 Speaker 1: over TSMC, a sort of longer term shadow. And you know, 658 00:35:55,239 --> 00:36:01,360 Speaker 1: the current presidential elections candidate Trump has sort of express 659 00:36:01,400 --> 00:36:05,920 Speaker 1: some concerns about you know, continuous continual US support for Taiwan. 660 00:36:06,480 --> 00:36:07,640 Speaker 1: You know, I think if you were to take a 661 00:36:07,680 --> 00:36:09,680 Speaker 1: step back though, in my opinion and sort of the 662 00:36:09,680 --> 00:36:13,239 Speaker 1: broader picture, and TSMC's founder Morris Chang has actually said 663 00:36:13,239 --> 00:36:16,600 Speaker 1: this himself, I think if China does invade Taiwan. I 664 00:36:16,600 --> 00:36:19,360 Speaker 1: think we'll have, you know, far bigger concerns than just 665 00:36:19,440 --> 00:36:22,440 Speaker 1: tech stocks and and sort of chip production. But I 666 00:36:22,440 --> 00:36:24,759 Speaker 1: do think that, you know, this has been sort of 667 00:36:24,760 --> 00:36:28,200 Speaker 1: a theme for TSMC since it's been founded, and as 668 00:36:28,200 --> 00:36:31,120 Speaker 1: you mentioned, they're also trying to build capacity in Arizona. 669 00:36:31,719 --> 00:36:34,440 Speaker 1: There were some rumors early on that that was they 670 00:36:34,440 --> 00:36:36,680 Speaker 1: were having a little bit of a struggle there, some 671 00:36:36,719 --> 00:36:41,000 Speaker 1: sort of culture clashes and some labor disputes and getting 672 00:36:41,000 --> 00:36:44,040 Speaker 1: that fab off the ground. They've sort of assuaged some 673 00:36:44,080 --> 00:36:46,520 Speaker 1: of those concerns and said that you know, it does 674 00:36:46,520 --> 00:36:49,560 Speaker 1: seem to be going smoothly. You know, we will see. 675 00:36:49,640 --> 00:36:53,000 Speaker 1: I think bringing on shoring chip manufacturing into the US 676 00:36:53,120 --> 00:36:56,040 Speaker 1: is a very very difficult task for so many reasons. 677 00:36:56,120 --> 00:36:59,360 Speaker 1: I mean, getting the equipment and getting you know, skilled 678 00:36:59,400 --> 00:37:02,080 Speaker 1: labor force, and you know, it's obviously been central to 679 00:37:02,080 --> 00:37:05,880 Speaker 1: the Biden administration's sort of Chips Act and their efforts there. 680 00:37:06,480 --> 00:37:09,439 Speaker 1: But that's it's a very very difficult, if not impossible job. 681 00:37:09,560 --> 00:37:10,759 Speaker 1: So I think we're going to have to see how 682 00:37:10,760 --> 00:37:11,879 Speaker 1: that plays out in the long run. 683 00:37:12,000 --> 00:37:15,880 Speaker 12: We've talked a little bit now just about the expansion geographically, 684 00:37:15,920 --> 00:37:18,920 Speaker 12: but I'm wondering in terms of CAPEX spending, whether or 685 00:37:18,960 --> 00:37:21,680 Speaker 12: not TSMC really has to spend a lot more for 686 00:37:21,840 --> 00:37:25,120 Speaker 12: the current operation in Taiwan in order to keep up 687 00:37:25,160 --> 00:37:29,760 Speaker 12: with a level of sophistication being demanded by a company 688 00:37:29,960 --> 00:37:33,200 Speaker 12: like in Nvidia and having to invest more in the 689 00:37:33,280 --> 00:37:37,400 Speaker 12: sophisticated equipment that comes from the Dutch company ASML. Do 690 00:37:37,480 --> 00:37:38,640 Speaker 12: we know anything about that. 691 00:37:38,960 --> 00:37:41,600 Speaker 1: Yeah, So I think TSMC is really at an advantage 692 00:37:41,640 --> 00:37:44,799 Speaker 1: because it is currently making the most advanced chips and 693 00:37:44,840 --> 00:37:47,680 Speaker 1: then you know, able to get more CAPEX to be 694 00:37:47,680 --> 00:37:50,360 Speaker 1: able to spend more on sort of research and development 695 00:37:50,400 --> 00:37:53,480 Speaker 1: and building out capacity. And so I think compared to competitors, 696 00:37:53,520 --> 00:37:55,680 Speaker 1: TSMC is sort of in the best position. I mean, 697 00:37:55,760 --> 00:37:57,839 Speaker 1: they are already so far ahead of the game and 698 00:37:57,960 --> 00:38:00,440 Speaker 1: you know, have a virtual monopoly on the most advanced 699 00:38:00,480 --> 00:38:02,840 Speaker 1: chips out there, and I think that really sets them 700 00:38:02,920 --> 00:38:04,480 Speaker 1: up in a good place going forward. 701 00:38:04,760 --> 00:38:06,879 Speaker 12: Catherine, thank you so much for making time to chat 702 00:38:06,920 --> 00:38:09,840 Speaker 12: with us about TSMC. As we look ahead to earnings 703 00:38:09,920 --> 00:38:12,440 Speaker 12: in the week ahead, we already know how a revenue 704 00:38:12,440 --> 00:38:15,480 Speaker 12: performed in the last quarter, a thirty nine percent increase 705 00:38:15,680 --> 00:38:19,760 Speaker 12: from last year. Catherine Thorbeck is a Bloomberg columnist covering 706 00:38:19,840 --> 00:38:23,080 Speaker 12: a tech in Asia. Joining us from our studios in Tokyo. 707 00:38:23,520 --> 00:38:26,120 Speaker 12: I'm Doug Krisner. You can join Brian Curtis and myself 708 00:38:26,160 --> 00:38:30,360 Speaker 12: weekdays here for Bloomberg Daybreak Asia, beginning at eight am 709 00:38:30,360 --> 00:38:33,160 Speaker 12: in Hong Kong eight pm on Wall Street. 710 00:38:33,200 --> 00:38:36,400 Speaker 2: Tom, Thank you Doug, and thank you Brian. And that 711 00:38:36,480 --> 00:38:38,760 Speaker 2: does it for this edition of Bloomberg day Break Weekend. 712 00:38:39,080 --> 00:38:41,400 Speaker 2: Join us again Monday morning at five am Wall Street 713 00:38:41,400 --> 00:38:43,840 Speaker 2: time for the latest on markets overseas and the news 714 00:38:43,880 --> 00:38:46,920 Speaker 2: you need to start your day. I'm Tom Busby. Stay 715 00:38:46,960 --> 00:38:49,759 Speaker 2: with us. Top stories and global business headlines are coming 716 00:38:49,840 --> 00:38:50,840 Speaker 2: up right now.