1 00:00:02,000 --> 00:00:04,560 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:04,559 --> 00:00:07,200 Speaker 1: top stories in the coming week from our Daybreak anchors 3 00:00:07,240 --> 00:00:09,400 Speaker 1: all around the world, and straight ahead on the program 4 00:00:09,640 --> 00:00:13,640 Speaker 1: CPI PPI Retail Sales. We've got a busy week of 5 00:00:13,680 --> 00:00:16,760 Speaker 1: economic data ahead. I'm Tom Busby in New York. I'm 6 00:00:16,800 --> 00:00:19,240 Speaker 1: Stephen Caren in London, where the UK's Chancellor is facing 7 00:00:19,280 --> 00:00:21,880 Speaker 1: a chorus of calls for tax cuts and more spending 8 00:00:21,920 --> 00:00:24,639 Speaker 1: in his budget. I'm Brian Curtis in Hong Kong the 9 00:00:24,760 --> 00:00:28,680 Speaker 1: implications of Apple supplier Home High setting up a plant 10 00:00:28,760 --> 00:00:31,960 Speaker 1: in India. I'm Joe Matthew in Washington. We'll look ahead 11 00:00:31,960 --> 00:00:35,880 Speaker 1: of the first Republican primary on the calendar. That's all 12 00:00:35,960 --> 00:00:40,080 Speaker 1: straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three, 13 00:00:40,120 --> 00:00:44,040 Speaker 1: on New York, Bloomberg ninety nine one, Washington, DC, Bloomberg 14 00:00:44,120 --> 00:00:47,640 Speaker 1: one oh six one, Boston, Bloomberg nine sixty, San Francisco, 15 00:00:47,880 --> 00:00:52,080 Speaker 1: DAB Digital Radio, London, Sirius XM one nineteen and around 16 00:00:52,120 --> 00:00:54,760 Speaker 1: the world on Bloomberg Radio dot Com and via the 17 00:00:54,800 --> 00:01:01,000 Speaker 1: Bloomberg Business App. Good day to you. I'm Tom Busby, 18 00:01:01,040 --> 00:01:04,319 Speaker 1: and we've got February jobs report on Friday, and this 19 00:01:04,360 --> 00:01:07,840 Speaker 1: week the economic data does not slow down. We'll get CPI, 20 00:01:08,040 --> 00:01:12,200 Speaker 1: PPI and retail sales for February. For more, I'm joined 21 00:01:12,240 --> 00:01:16,600 Speaker 1: by Ira Jersey, Bloomberg Intelligence senior rate strategists, and Jess Menton, 22 00:01:16,680 --> 00:01:20,640 Speaker 1: she's deputy team leader for US Equities for Bloomberg News. Ira, 23 00:01:20,760 --> 00:01:23,160 Speaker 1: We're going to start with that February jobs report that 24 00:01:23,160 --> 00:01:25,840 Speaker 1: we got on Friday. Another strong headline number, three hundred 25 00:01:25,880 --> 00:01:28,840 Speaker 1: eleven thousand jobs added, more than forecast. The news, though, 26 00:01:28,920 --> 00:01:31,840 Speaker 1: was mixed, the unemployment rate moving two notches higher, and 27 00:01:31,920 --> 00:01:35,720 Speaker 1: although wage growth did slow, it still moved up, ramping 28 00:01:35,800 --> 00:01:38,679 Speaker 1: up inflationary pressures. Let's hear what President Biden had to 29 00:01:38,680 --> 00:01:41,240 Speaker 1: say about the report. This may be the part of 30 00:01:41,800 --> 00:01:44,840 Speaker 1: pleased me the most about the report of jobs reports. 31 00:01:44,920 --> 00:01:47,560 Speaker 1: People who've been staying out of the job market are 32 00:01:47,600 --> 00:01:52,240 Speaker 1: moving back in, beginning to move back in. Jobs are available, Okay, Ira. 33 00:01:52,640 --> 00:01:55,160 Speaker 1: The Federal Reserve says it all the time. The decision 34 00:01:55,240 --> 00:01:58,400 Speaker 1: policymakers will come to on interest rates will be data driven. 35 00:01:58,840 --> 00:02:02,080 Speaker 1: What does this data mean for the Federal Reserve. Yeah, 36 00:02:02,120 --> 00:02:04,080 Speaker 1: it means a little bit more of the same. I 37 00:02:04,120 --> 00:02:06,840 Speaker 1: think that the fear that they Fed was going to 38 00:02:06,920 --> 00:02:09,720 Speaker 1: hike fifty basis points is still on the table, but 39 00:02:09,800 --> 00:02:12,440 Speaker 1: not not because of just this number, but because of 40 00:02:12,480 --> 00:02:15,799 Speaker 1: how strong the January data was. I think that the 41 00:02:16,000 --> 00:02:17,560 Speaker 1: Fed is going to be a little bit happier with 42 00:02:17,600 --> 00:02:20,840 Speaker 1: some of the some of the numbers within the payrolls 43 00:02:20,840 --> 00:02:22,960 Speaker 1: report that we received on Friday. But but I think 44 00:02:23,000 --> 00:02:25,959 Speaker 1: importantly this week's data, as you mentioned at the top 45 00:02:26,000 --> 00:02:28,399 Speaker 1: of the at the top of the show, it's going 46 00:02:28,440 --> 00:02:30,680 Speaker 1: to it's going to matter way more so the CPI 47 00:02:30,800 --> 00:02:33,440 Speaker 1: data on Tuesday, as well as the PPI data later 48 00:02:33,440 --> 00:02:36,600 Speaker 1: in the week, and then retail sales of course is 49 00:02:36,600 --> 00:02:38,679 Speaker 1: going to be huge as well. And keep in mind, 50 00:02:38,720 --> 00:02:41,520 Speaker 1: we get this data right when the Federal Reserve goes 51 00:02:41,520 --> 00:02:44,160 Speaker 1: into their quiet period, so we're not going to hear 52 00:02:44,200 --> 00:02:47,240 Speaker 1: a lot of reaction from members of the Federal Reserve 53 00:02:48,520 --> 00:02:51,240 Speaker 1: by the time we get the numbers until that we 54 00:02:51,280 --> 00:02:55,160 Speaker 1: actually get the release of the meeting minutes, meeting statement 55 00:02:55,280 --> 00:02:57,840 Speaker 1: on March twenty second. All right, the FED meets. It's 56 00:02:57,880 --> 00:03:00,919 Speaker 1: less than two weeks away, the twenty first, the twenty second. 57 00:03:01,360 --> 00:03:05,360 Speaker 1: Already after that February jobs report, swaps are talking about 58 00:03:05,880 --> 00:03:09,240 Speaker 1: the chance of a fifty basis point hike now only 59 00:03:09,280 --> 00:03:11,840 Speaker 1: at fifty percent, so a lot of people counting on 60 00:03:11,919 --> 00:03:15,120 Speaker 1: a smaller one. Is anybody counting on a supersized one 61 00:03:15,200 --> 00:03:18,480 Speaker 1: even bigger than fifty basis points? Yeah? I think that 62 00:03:18,760 --> 00:03:20,720 Speaker 1: given the volatility and some of the issues that we're 63 00:03:20,720 --> 00:03:23,400 Speaker 1: having in the financial sector right now that really affected 64 00:03:23,520 --> 00:03:26,640 Speaker 1: rates late in the week last week, you know, moving 65 00:03:26,680 --> 00:03:28,960 Speaker 1: two year yield to twenty five basis points because of 66 00:03:28,960 --> 00:03:31,200 Speaker 1: what went on with SVB and some of the other 67 00:03:31,240 --> 00:03:35,680 Speaker 1: financial institutions in the equity market. That seventy five is 68 00:03:36,880 --> 00:03:39,800 Speaker 1: at you know, almost a zero percent probability at this point, 69 00:03:39,840 --> 00:03:42,720 Speaker 1: I think. But so the question still remains fifty or 70 00:03:42,720 --> 00:03:46,280 Speaker 1: twenty five. You know, you get somewhat slower PPI data, 71 00:03:46,360 --> 00:03:49,120 Speaker 1: somewhat slower retail sales data, and then you know, fifty 72 00:03:49,120 --> 00:03:52,880 Speaker 1: five probably becomes more likely, you know, the probability that 73 00:03:52,960 --> 00:03:55,000 Speaker 1: that chance that you mentioned of a fifty or twenty 74 00:03:55,040 --> 00:03:58,080 Speaker 1: five that keeps bouncing around massively, so that the market 75 00:03:58,160 --> 00:04:01,600 Speaker 1: is still very skittish as and and really uncertain about 76 00:04:01,640 --> 00:04:04,080 Speaker 1: what the Fed's move is going to be, just because 77 00:04:04,120 --> 00:04:07,720 Speaker 1: this coming week's data is so incredibly important to that decision. 78 00:04:08,000 --> 00:04:11,800 Speaker 1: And Jay Powell made that exceptionally clear over during his 79 00:04:11,880 --> 00:04:15,200 Speaker 1: testimony last week before the House Financial Services Committee and 80 00:04:15,240 --> 00:04:18,040 Speaker 1: the Senate Banking Committee. And about that data good news. 81 00:04:18,080 --> 00:04:20,320 Speaker 1: We have Jess right here, and Jess, why don't we 82 00:04:20,320 --> 00:04:23,800 Speaker 1: talk about Well, first we're going to get CPI right Tuesday, 83 00:04:23,880 --> 00:04:27,240 Speaker 1: then PPI, and then we'll get to retail sales. But 84 00:04:27,320 --> 00:04:30,520 Speaker 1: let's talk about those two and the difference and what 85 00:04:30,560 --> 00:04:33,159 Speaker 1: you're looking forward to seeing. Well, the big thing, and 86 00:04:33,600 --> 00:04:36,760 Speaker 1: as you know, the big focus is always on consumer prices, 87 00:04:37,080 --> 00:04:41,240 Speaker 1: but producer prices might arguably just be as important. And 88 00:04:41,240 --> 00:04:43,360 Speaker 1: the reason is when I'm talking with my sources, they 89 00:04:43,400 --> 00:04:45,160 Speaker 1: like to look toward that as far as what do 90 00:04:45,200 --> 00:04:48,640 Speaker 1: you input costs look like? And they look to that 91 00:04:48,720 --> 00:04:50,880 Speaker 1: as far as maybe we'll see the signs of relief 92 00:04:50,920 --> 00:04:55,000 Speaker 1: there before they start filtering into consumer prices. So I've 93 00:04:55,040 --> 00:04:58,280 Speaker 1: been tracking the CPI PPI spread, and this is something 94 00:04:58,320 --> 00:05:01,440 Speaker 1: Gina Martin Adams of Bloomberg Intelligen her team crunch the 95 00:05:01,520 --> 00:05:05,680 Speaker 1: numbers very frequently on in the spread actually turned positive 96 00:05:05,720 --> 00:05:08,560 Speaker 1: for the first time in December in two years. And 97 00:05:08,600 --> 00:05:12,080 Speaker 1: the reason that matters is that bodes well for corporate 98 00:05:12,120 --> 00:05:15,440 Speaker 1: margins and then in turn eventually also for stock prices, 99 00:05:15,480 --> 00:05:18,279 Speaker 1: so you are seeing those glimmers of hope there on 100 00:05:18,320 --> 00:05:20,800 Speaker 1: the producer prices side, even though in January is data 101 00:05:20,800 --> 00:05:22,599 Speaker 1: we saw a tick up a bit, but if we 102 00:05:22,640 --> 00:05:25,880 Speaker 1: can see that trend continue. When I'm speaking with my sources, 103 00:05:25,960 --> 00:05:28,200 Speaker 1: they feel like that will eventually filter even more so 104 00:05:28,960 --> 00:05:31,839 Speaker 1: toward consumer prices. So that's going to be a big 105 00:05:31,880 --> 00:05:34,440 Speaker 1: focus next week as well, in addition to just the 106 00:05:34,440 --> 00:05:38,560 Speaker 1: headline number on CPI. And the headline number is we're 107 00:05:38,600 --> 00:05:41,760 Speaker 1: looking at a four tenth of one percent increase, correct, 108 00:05:41,880 --> 00:05:45,159 Speaker 1: and that is lower than January it is exactly, and 109 00:05:45,200 --> 00:05:47,520 Speaker 1: then year over year that would be at six percent. 110 00:05:47,560 --> 00:05:49,440 Speaker 1: I know we focus more on month over month to 111 00:05:49,520 --> 00:05:51,880 Speaker 1: see that trend. But something that also is important if 112 00:05:51,920 --> 00:05:54,240 Speaker 1: you look at the past eight hiking cycles of the 113 00:05:54,240 --> 00:05:57,719 Speaker 1: Federal Reserve, they didn't stop until the terminal rate was 114 00:05:57,760 --> 00:06:00,719 Speaker 1: above CPI, So we still have a bit of a 115 00:06:00,920 --> 00:06:03,960 Speaker 1: gap there, but it's beginning to narrow more. So the 116 00:06:04,040 --> 00:06:07,040 Speaker 1: question is how much further, obviously would the Federals or 117 00:06:07,160 --> 00:06:08,680 Speaker 1: have to go. If you even just look at the 118 00:06:08,720 --> 00:06:11,080 Speaker 1: bank side of things, Citigroup and Goldman sacks they had 119 00:06:11,120 --> 00:06:14,520 Speaker 1: actually lifted their forecast recently that they're expecting fifty basis 120 00:06:14,520 --> 00:06:16,839 Speaker 1: points at this next meeting, But JP Morgan and Bank 121 00:06:16,880 --> 00:06:19,960 Speaker 1: of America are still holding that view of twenty five 122 00:06:20,000 --> 00:06:22,279 Speaker 1: basis points. But a lot of that does hinge on 123 00:06:22,320 --> 00:06:25,279 Speaker 1: what that CPI data is going to look like next week. 124 00:06:25,360 --> 00:06:27,320 Speaker 1: So that's going to be really key to see how 125 00:06:27,360 --> 00:06:30,640 Speaker 1: do these banks views change potentially on what that number 126 00:06:30,680 --> 00:06:33,039 Speaker 1: does look like and IRA, how does that factor in 127 00:06:33,240 --> 00:06:36,520 Speaker 1: with your thinking on what the FED is thinking? Yeah, 128 00:06:36,560 --> 00:06:39,920 Speaker 1: so I think it's important to note that you know 129 00:06:40,040 --> 00:06:43,880 Speaker 1: that the FED has tended to hike until quote unquote 130 00:06:43,440 --> 00:06:46,320 Speaker 1: the federal funds rate has been positive. But keep in 131 00:06:46,320 --> 00:06:49,719 Speaker 1: mind that the indicator that they look at form for 132 00:06:49,760 --> 00:06:52,840 Speaker 1: the inflation gates, their preferred measure is the PC to Flater. So, 133 00:06:53,600 --> 00:06:56,720 Speaker 1: and the gap between CPI and PC has widened quite 134 00:06:56,720 --> 00:06:58,719 Speaker 1: a lot. You used to be around forty five fifty 135 00:06:58,760 --> 00:07:01,840 Speaker 1: basis points. Now it's over one hundred basis points. So so, 136 00:07:01,839 --> 00:07:03,880 Speaker 1: so the fact that you have this this big divide 137 00:07:03,920 --> 00:07:06,599 Speaker 1: between those two inflation measures UM you know, you know, 138 00:07:06,640 --> 00:07:09,800 Speaker 1: I think is important because if if UM, if PC, 139 00:07:10,440 --> 00:07:13,680 Speaker 1: the PC deflator remains around five point four percent, then 140 00:07:13,760 --> 00:07:16,160 Speaker 1: if the Federal Reserve hikes another seventy five basis points. 141 00:07:16,200 --> 00:07:19,320 Speaker 1: They're there, whereas if if the Federal Reserve were to 142 00:07:19,440 --> 00:07:21,960 Speaker 1: only UM were to look at CPI, they might have 143 00:07:22,000 --> 00:07:24,600 Speaker 1: to actually hike much higher, because you're talking about, you know, 144 00:07:24,680 --> 00:07:29,080 Speaker 1: six percent, a six percent CPI number this week, assuming 145 00:07:29,080 --> 00:07:31,720 Speaker 1: that we get it now. Importantly, a lot of the 146 00:07:31,760 --> 00:07:33,680 Speaker 1: inflation data that we look at, and if you look 147 00:07:33,720 --> 00:07:38,280 Speaker 1: at CPI on that three month rolling basis, cpis come 148 00:07:38,320 --> 00:07:40,760 Speaker 1: off quite a lot. And when you look at and 149 00:07:40,760 --> 00:07:43,480 Speaker 1: when you look at core goods in particular, they're actually 150 00:07:43,480 --> 00:07:46,640 Speaker 1: growing at a negative rate. So so the good sector 151 00:07:46,680 --> 00:07:49,360 Speaker 1: inflation is over, it's really going to be you know, 152 00:07:49,440 --> 00:07:53,800 Speaker 1: where is how does the services sector inflation really ramp up? 153 00:07:53,800 --> 00:07:58,080 Speaker 1: Particularly the what j Powell has said is kind of 154 00:07:58,080 --> 00:08:00,840 Speaker 1: the Fed's new UM measure that they really look at, 155 00:08:00,880 --> 00:08:05,480 Speaker 1: which is core services excuting housing. So around forty percent 156 00:08:05,520 --> 00:08:10,600 Speaker 1: of CPI is this core services, that services excluding energy services. 157 00:08:10,920 --> 00:08:16,080 Speaker 1: So if those data come out very strong, then the 158 00:08:16,120 --> 00:08:18,720 Speaker 1: Fed reserved while they might only go twenty five basis points. 159 00:08:18,720 --> 00:08:22,200 Speaker 1: Remember we also get the Summary of Economic Projections, which 160 00:08:22,240 --> 00:08:25,640 Speaker 1: includes that dot plot. So it's possible that if inflation 161 00:08:25,720 --> 00:08:29,000 Speaker 1: seems to be stickier than the FED is hoping, then 162 00:08:29,240 --> 00:08:31,040 Speaker 1: those dots could go higher and we could see a 163 00:08:31,080 --> 00:08:33,679 Speaker 1: higher terminal rate being priced in. So again, like instead 164 00:08:33,679 --> 00:08:35,480 Speaker 1: of five and a half percent, maybe it's five and 165 00:08:35,520 --> 00:08:38,200 Speaker 1: three quarters or six percent winds up getting placed in 166 00:08:38,240 --> 00:08:40,240 Speaker 1: those dot plots, and I think that the market will 167 00:08:40,320 --> 00:08:43,840 Speaker 1: react to any significant uptick in the dots this month. 168 00:08:44,000 --> 00:08:46,520 Speaker 1: I'm glad you brought up the dot plots because on 169 00:08:46,559 --> 00:08:48,960 Speaker 1: the equity side of things, when I've been speaking with 170 00:08:49,000 --> 00:08:52,160 Speaker 1: my sources, they feel like, especially portfolio managers, they feel 171 00:08:52,160 --> 00:08:55,440 Speaker 1: like the equity market can withstand a potential peak terminal 172 00:08:55,520 --> 00:08:57,600 Speaker 1: rate of around five and a half percent, maybe even 173 00:08:57,640 --> 00:08:59,800 Speaker 1: a little bit higher. But something that spooks them is 174 00:08:59,840 --> 00:09:02,559 Speaker 1: more or when it gets potentially closer if it were 175 00:09:02,600 --> 00:09:05,240 Speaker 1: to happen at six percent or higher. But they feel 176 00:09:05,280 --> 00:09:07,600 Speaker 1: like when you're looking at where the market is trying 177 00:09:07,640 --> 00:09:09,280 Speaker 1: to figure that out. At the end of January it 178 00:09:09,400 --> 00:09:12,360 Speaker 1: was just below five percent. Now it's those projections trying 179 00:09:12,400 --> 00:09:14,600 Speaker 1: to figure out maybe that's around five and a half percent. 180 00:09:15,400 --> 00:09:18,040 Speaker 1: Barclays was actually thinking that the median dot plot could 181 00:09:18,040 --> 00:09:20,920 Speaker 1: potentially rise from five point one percent, which it was 182 00:09:20,960 --> 00:09:23,920 Speaker 1: in December, to potentially five point four percent so even 183 00:09:23,960 --> 00:09:26,800 Speaker 1: if we do see that happen with the Federal Reserve, 184 00:09:26,920 --> 00:09:29,640 Speaker 1: when it comes to the equity markets, they're arguing that 185 00:09:29,679 --> 00:09:32,079 Speaker 1: if that is where the Fed does go, you might 186 00:09:32,120 --> 00:09:34,520 Speaker 1: not necessarily see some sort of sell off in the 187 00:09:34,559 --> 00:09:36,679 Speaker 1: broader equity markets because that's kind of what they've been 188 00:09:36,679 --> 00:09:38,960 Speaker 1: pricing in. But if you see sort of a dramatic 189 00:09:39,080 --> 00:09:42,120 Speaker 1: change there where maybe it's above five and a half percent, 190 00:09:42,200 --> 00:09:45,000 Speaker 1: that's where potentially we could see some bigger movements and 191 00:09:45,040 --> 00:09:48,559 Speaker 1: bigger swings to the downside in stock prices. One other 192 00:09:48,600 --> 00:09:52,680 Speaker 1: big data point coming out this week retail sales. Retail sales, 193 00:09:52,679 --> 00:09:57,240 Speaker 1: the survey says point one percent month over month increase. 194 00:09:57,720 --> 00:09:59,679 Speaker 1: At least it's an increase nothing like what we saw 195 00:09:59,720 --> 00:10:02,600 Speaker 1: in ja January. Well, especially because that number in January 196 00:10:02,600 --> 00:10:05,480 Speaker 1: came in a lot stronger than expected than even in December. 197 00:10:05,559 --> 00:10:07,840 Speaker 1: Typically you would you would see that in December because 198 00:10:07,880 --> 00:10:11,079 Speaker 1: that ties into holiday sales, but that also carried over 199 00:10:11,120 --> 00:10:15,120 Speaker 1: into January, so some of that potentially has arguably been 200 00:10:15,160 --> 00:10:17,680 Speaker 1: maybe it's due to seasonality factors, But if we do 201 00:10:17,800 --> 00:10:21,760 Speaker 1: begin to see that pull back, that could actually potentially 202 00:10:21,840 --> 00:10:24,319 Speaker 1: bode well for equity prices because they kind of want 203 00:10:24,320 --> 00:10:26,520 Speaker 1: to see this sweet spot where obviously you want the 204 00:10:26,559 --> 00:10:29,160 Speaker 1: consumer spending because that's more than two thirds of what's 205 00:10:29,160 --> 00:10:31,880 Speaker 1: pushing the economy and growing the economy, but not spending 206 00:10:31,920 --> 00:10:35,040 Speaker 1: so much to where this is keeping the inflation equation 207 00:10:35,080 --> 00:10:37,520 Speaker 1: a problem for the Federal Reserve. So it's pulling it 208 00:10:37,559 --> 00:10:40,439 Speaker 1: back enough to where you feel like what the Federal 209 00:10:40,480 --> 00:10:43,280 Speaker 1: Reserve has been doing is beginning to filter into the economy, 210 00:10:43,320 --> 00:10:45,720 Speaker 1: but not so much to where you are starting to 211 00:10:45,720 --> 00:10:49,040 Speaker 1: worry about the economy going into a recession. I re jest. 212 00:10:49,120 --> 00:10:51,160 Speaker 1: Thanks so much for joining us. Coming up on Bloomberg 213 00:10:51,200 --> 00:10:53,880 Speaker 1: Daybreak weekend, we had to London to preview the UK 214 00:10:54,080 --> 00:11:09,400 Speaker 1: Chancellor's upcoming budget proposal. I'm Tom Busby and this this 215 00:11:09,559 --> 00:11:12,320 Speaker 1: is Bloomberg Daybreak Weekend, our global look at the top 216 00:11:12,360 --> 00:11:15,240 Speaker 1: stories for investors in the coming week. I'm Tom Busby 217 00:11:15,280 --> 00:11:18,200 Speaker 1: in New York. Up later in our program, Apple's partner 218 00:11:18,280 --> 00:11:21,720 Speaker 1: Fox con plans to invest about seven hundred million dollars 219 00:11:21,760 --> 00:11:25,000 Speaker 1: on a new plant in India, but first in the UK. 220 00:11:25,200 --> 00:11:27,920 Speaker 1: The Chancellor, Jeremy Hunt will unveil his tax and spending 221 00:11:27,960 --> 00:11:31,080 Speaker 1: plans in the coming days, with the business community calling 222 00:11:31,120 --> 00:11:35,800 Speaker 1: on him to incentivize investment and tackle skills shortages. This 223 00:11:36,000 --> 00:11:39,960 Speaker 1: is the UK economy narrowly avoided recession last year. For more, 224 00:11:40,080 --> 00:11:42,520 Speaker 1: let's head to London and bring in Bloomberg Daybreak Europe 225 00:11:42,520 --> 00:11:46,640 Speaker 1: anchor Stephen Carroll to Jeremy Hunt's downplayed hopes of any 226 00:11:46,720 --> 00:11:49,720 Speaker 1: major large ast from the UK government in this budget, 227 00:11:49,960 --> 00:11:52,960 Speaker 1: but an improvement in the economic situation is giving him 228 00:11:53,000 --> 00:11:56,480 Speaker 1: a bit more room to maneuver. He faces calls for giveaways, 229 00:11:56,520 --> 00:12:01,280 Speaker 1: including freezing fuel jusy improving public sector pay, something he's considering, 230 00:12:01,320 --> 00:12:05,679 Speaker 1: according to Bloomberg, reporting tax breaks to boost business investment 231 00:12:05,800 --> 00:12:08,560 Speaker 1: on Bloomberg Radio, We've been discussing this with Tina Lee, 232 00:12:08,640 --> 00:12:11,960 Speaker 1: Deutsche Banks UK and Ireland chief executive. For me, it's 233 00:12:12,040 --> 00:12:15,080 Speaker 1: really around how do you create an environment that attracts 234 00:12:15,120 --> 00:12:18,760 Speaker 1: investment whilst at the same time dealing with some very 235 00:12:18,840 --> 00:12:22,440 Speaker 1: real issues that are not yet resolved. And we've seen 236 00:12:22,440 --> 00:12:25,240 Speaker 1: the news around the FED and making sure that inflation 237 00:12:25,800 --> 00:12:29,439 Speaker 1: is something which needs to be overcome and that's true 238 00:12:29,480 --> 00:12:32,480 Speaker 1: here in the UK as well. So more broadly, I 239 00:12:32,520 --> 00:12:36,120 Speaker 1: think what I'll be looking for is what happens around 240 00:12:36,600 --> 00:12:40,000 Speaker 1: public sector pay, because again that will feed through into 241 00:12:40,040 --> 00:12:43,680 Speaker 1: the inflationary numbers and ultimately set the tone I think 242 00:12:43,679 --> 00:12:46,560 Speaker 1: for the latter half of the year because remember I 243 00:12:46,559 --> 00:12:50,680 Speaker 1: mean we do have a backdrop of the Northern Ireland Protocol, yes, 244 00:12:51,040 --> 00:12:53,959 Speaker 1: and whilst that not has yet been signed, I think 245 00:12:54,000 --> 00:12:57,240 Speaker 1: we're all optimistic that will happen. So that's Tina Lee 246 00:12:57,320 --> 00:12:59,959 Speaker 1: from Deutsche Bank Bloomberg's New UK kind of as Danhanson 247 00:13:00,080 --> 00:13:02,720 Speaker 1: with being now from more on this down looking ahead 248 00:13:02,720 --> 00:13:07,360 Speaker 1: then to the budgers, what source of fiscal headroom? How 249 00:13:07,440 --> 00:13:09,760 Speaker 1: much money does Jeremy Hunt have to play with? Yeah, 250 00:13:09,760 --> 00:13:11,960 Speaker 1: so I think it's the way to think about it 251 00:13:12,000 --> 00:13:13,920 Speaker 1: is sort of through two lenses. One is in the 252 00:13:13,960 --> 00:13:15,839 Speaker 1: short term, So in the short term he's got a lot. 253 00:13:16,240 --> 00:13:19,200 Speaker 1: So borrowing has come in significantly under what the OBR 254 00:13:19,320 --> 00:13:22,679 Speaker 1: was expecting, somewhere in the region of thirty to forty 255 00:13:22,679 --> 00:13:25,839 Speaker 1: billion pounds. So this fiscal year and next fiscal year 256 00:13:26,000 --> 00:13:29,160 Speaker 1: we think borrowing will be around that much lower. So 257 00:13:29,640 --> 00:13:33,480 Speaker 1: that's a lot. But what's important for his fiscal rule, 258 00:13:33,880 --> 00:13:35,880 Speaker 1: So the Chancellor wants debt to be falling as a 259 00:13:35,920 --> 00:13:38,800 Speaker 1: share of GDP in the final year of the forecast period, 260 00:13:38,840 --> 00:13:44,280 Speaker 1: which is twenty twenty seven twenty eight against that target. 261 00:13:44,480 --> 00:13:46,959 Speaker 1: In November he had nine billion pounds. We think he 262 00:13:47,040 --> 00:13:50,560 Speaker 1: might have about double that this time, so an extra 263 00:13:50,840 --> 00:13:54,640 Speaker 1: eight nine billion pounds. And I think what's really important. 264 00:13:54,840 --> 00:13:58,480 Speaker 1: So the point is that the good news this year 265 00:13:58,520 --> 00:14:01,400 Speaker 1: will dissipate over the course of the forecast period and 266 00:14:01,440 --> 00:14:02,920 Speaker 1: there will be there'll be a little pot of money 267 00:14:02,960 --> 00:14:05,720 Speaker 1: at the end. What I would say is that in 268 00:14:05,760 --> 00:14:09,200 Speaker 1: the contexts of a three trillion pound economy, which is 269 00:14:09,200 --> 00:14:13,400 Speaker 1: how big the UK will be, nine million pounds is peanuts, 270 00:14:13,440 --> 00:14:15,520 Speaker 1: So there isn't there is some months there might be 271 00:14:15,559 --> 00:14:17,920 Speaker 1: a bit of money there, but to really go ahead, 272 00:14:17,960 --> 00:14:21,400 Speaker 1: and we've been hearing about potential for tax cuts, but 273 00:14:21,440 --> 00:14:23,720 Speaker 1: to really go ahead and do something meaningful, he hasn't 274 00:14:23,720 --> 00:14:25,920 Speaker 1: really got the headroom to do that just yet. So 275 00:14:25,960 --> 00:14:29,000 Speaker 1: I think, I mean, we'll talk about the policy he 276 00:14:29,080 --> 00:14:31,480 Speaker 1: might focus on, but I think, you know, I think 277 00:14:31,480 --> 00:14:32,720 Speaker 1: it's going to be a lot of it's going to 278 00:14:32,760 --> 00:14:35,440 Speaker 1: be around near term temporary measures that he's going to use. 279 00:14:35,480 --> 00:14:37,920 Speaker 1: He's going to use that near term headroom and probably 280 00:14:37,960 --> 00:14:40,960 Speaker 1: bank that money just and use it closer to the election. 281 00:14:41,280 --> 00:14:44,800 Speaker 1: What's the broader economic backdrop here? We had been told 282 00:14:44,800 --> 00:14:46,880 Speaker 1: them in the Bank of England gave us dire forecast 283 00:14:46,960 --> 00:14:49,360 Speaker 1: for a session in the UK. Things are looking a 284 00:14:49,400 --> 00:14:51,880 Speaker 1: little bit better now, how are they looking for this year? 285 00:14:52,280 --> 00:14:54,400 Speaker 1: So I think they're looking they're looking a lot better. 286 00:14:54,400 --> 00:14:57,800 Speaker 1: I mean, I think we've spoken this year and the 287 00:14:57,880 --> 00:14:59,680 Speaker 1: key thing that's happened, well, there are two key things 288 00:14:59,720 --> 00:15:01,320 Speaker 1: that have and first is the data is just show 289 00:15:01,400 --> 00:15:04,320 Speaker 1: more momentum, more resilience. And the second thing, as we 290 00:15:04,320 --> 00:15:06,200 Speaker 1: all know, we've had this big fall in gas prices 291 00:15:06,400 --> 00:15:08,880 Speaker 1: and those two things combined I think will mean that 292 00:15:08,920 --> 00:15:12,560 Speaker 1: the OBR will predict it probably will still predict a recession, 293 00:15:12,640 --> 00:15:15,240 Speaker 1: but a very very shallow one and probably only lasting 294 00:15:15,240 --> 00:15:19,120 Speaker 1: in the first half of this year, with growth or 295 00:15:19,160 --> 00:15:22,000 Speaker 1: some very very minimal growth returning in the second half 296 00:15:22,040 --> 00:15:24,000 Speaker 1: of the year. And that's obviously a very different pictures 297 00:15:24,040 --> 00:15:26,520 Speaker 1: what they were talking about in November, which was a 298 00:15:26,600 --> 00:15:29,160 Speaker 1: peach trough fall in GDP of a little over two percent. 299 00:15:30,440 --> 00:15:32,360 Speaker 1: You know, if it wouldn't surprise me if the peach 300 00:15:32,360 --> 00:15:34,480 Speaker 1: troth fall in GDP was less than one percent now, 301 00:15:34,520 --> 00:15:36,480 Speaker 1: so cutting the side of the recession in half. So 302 00:15:36,840 --> 00:15:40,080 Speaker 1: the news has been good on the economy, particularly in 303 00:15:40,120 --> 00:15:42,520 Speaker 1: the near term I think the question for the public 304 00:15:42,560 --> 00:15:45,520 Speaker 1: finances though, isn't just about the near term picture. It's 305 00:15:45,560 --> 00:15:47,720 Speaker 1: about the medium term picture as well, and that feeds 306 00:15:47,720 --> 00:15:52,680 Speaker 1: into the questions around productivity growth, around labor force participation, 307 00:15:53,320 --> 00:15:56,200 Speaker 1: and actually there which goes back to why we don't 308 00:15:56,240 --> 00:15:59,160 Speaker 1: think good news on the public finances will last. We 309 00:15:59,200 --> 00:16:01,200 Speaker 1: think the OBI will probably take a slightly dimer view 310 00:16:01,240 --> 00:16:04,280 Speaker 1: of the UK's medium term prospects. And what that does, 311 00:16:04,320 --> 00:16:06,240 Speaker 1: how that interacts with the fiscal picture is that it 312 00:16:06,280 --> 00:16:09,040 Speaker 1: means that tax receipts don't grow as fast, and it 313 00:16:09,080 --> 00:16:12,000 Speaker 1: means the fiscal picture isn't quite as rosy looking when 314 00:16:12,000 --> 00:16:13,560 Speaker 1: you look at the medium term, which is where his 315 00:16:13,600 --> 00:16:15,840 Speaker 1: fiscal target sits. So that's something to watch out when 316 00:16:15,840 --> 00:16:20,480 Speaker 1: we get the Office for Budget Responsibilities report as well, 317 00:16:20,480 --> 00:16:24,080 Speaker 1: which is of course the government's fiscal watch dog. Is 318 00:16:24,080 --> 00:16:27,040 Speaker 1: there anything then, given that context, is there I think 319 00:16:27,040 --> 00:16:29,920 Speaker 1: the Chancellor can do to try and booth growth at 320 00:16:29,960 --> 00:16:32,120 Speaker 1: this stage or is it really just only the short 321 00:16:32,200 --> 00:16:34,840 Speaker 1: term prospects that he can look at. He goes to again, 322 00:16:34,880 --> 00:16:38,280 Speaker 1: I was split into two buckets. One is the near 323 00:16:38,400 --> 00:16:40,760 Speaker 1: term picture. We know he wants to haver inflation. We 324 00:16:40,800 --> 00:16:44,720 Speaker 1: know that's one of the government's goals, So that means 325 00:16:45,840 --> 00:16:48,080 Speaker 1: you want to you don't want to do anything that's 326 00:16:48,080 --> 00:16:51,200 Speaker 1: going to put that at risk. I think as things stand, 327 00:16:51,200 --> 00:16:54,040 Speaker 1: the inflation picture has probably improved a little bit as well. 328 00:16:54,080 --> 00:16:56,880 Speaker 1: In the UK, we've had data out that suggests it's 329 00:16:57,280 --> 00:16:59,120 Speaker 1: it's a little bit. The underlying picture is a little 330 00:16:59,120 --> 00:17:02,760 Speaker 1: bit weaker than most to commonistferre expecting. Obviously, the falling 331 00:17:02,760 --> 00:17:05,240 Speaker 1: gas prices has a big effect as well going through 332 00:17:05,280 --> 00:17:07,479 Speaker 1: the course of this year, and one thing I think 333 00:17:07,560 --> 00:17:10,920 Speaker 1: he'll do is keep the cap on the unit cost 334 00:17:10,960 --> 00:17:13,320 Speaker 1: of energy prices at two and a half thousand pounds 335 00:17:13,440 --> 00:17:16,600 Speaker 1: rather than really important for household exactly. So that's that's 336 00:17:16,640 --> 00:17:19,600 Speaker 1: one thing. That's that's But he's he's he's definitely going 337 00:17:19,640 --> 00:17:21,640 Speaker 1: to be focused, I think, at least at least at 338 00:17:21,680 --> 00:17:24,440 Speaker 1: this point. And taking into account the fact he doesn't 339 00:17:24,440 --> 00:17:27,119 Speaker 1: have a huge amount of headroom to play with for 340 00:17:27,280 --> 00:17:30,040 Speaker 1: sort of medium term tax cuts that affect the medium 341 00:17:30,119 --> 00:17:32,680 Speaker 1: term picture, I think he's just going to very much 342 00:17:32,720 --> 00:17:36,400 Speaker 1: be focused on shorter term if there are giveaways, ones 343 00:17:36,440 --> 00:17:38,679 Speaker 1: that affect the public finances in the near term but 344 00:17:38,760 --> 00:17:41,560 Speaker 1: don't affect the medium term picture. So as I say 345 00:17:41,680 --> 00:17:47,080 Speaker 1: that the price cap on household energy bills, we might 346 00:17:47,160 --> 00:17:51,119 Speaker 1: see something around capital allowances, but again I think that 347 00:17:51,119 --> 00:17:53,640 Speaker 1: will likely be a temporary thing rather than a permanent thing. 348 00:17:54,840 --> 00:17:56,800 Speaker 1: And the whole point here is, and the whole sort 349 00:17:56,800 --> 00:17:59,959 Speaker 1: of bigger political backdrop, is that you have an election 350 00:18:00,080 --> 00:18:03,760 Speaker 1: probably next year, and it's the point at which essentially 351 00:18:03,800 --> 00:18:07,080 Speaker 1: he uses up all his firepower to say to the electorate, look, 352 00:18:07,119 --> 00:18:09,280 Speaker 1: this is our offering. And I think probably now is 353 00:18:09,320 --> 00:18:11,520 Speaker 1: a little bit early, and the fiscal picture doesn't quite 354 00:18:11,560 --> 00:18:13,760 Speaker 1: allow for it as well, But I think now it's 355 00:18:13,800 --> 00:18:15,199 Speaker 1: just a bit early for him to go ahead and 356 00:18:15,240 --> 00:18:16,960 Speaker 1: do that. Yeah, I mean it's interesting that you talk 357 00:18:17,000 --> 00:18:20,000 Speaker 1: about some of those allowances because we have been reporting 358 00:18:20,000 --> 00:18:23,399 Speaker 1: that he's considering doing something around incentivizing investment. This is 359 00:18:23,560 --> 00:18:26,440 Speaker 1: sort of a long running problem within the UK economy, 360 00:18:26,440 --> 00:18:29,800 Speaker 1: particularly since Bragnics are trying to get businesses to invest more. 361 00:18:30,240 --> 00:18:32,479 Speaker 1: How how can you put that in context for us? 362 00:18:32,520 --> 00:18:34,480 Speaker 1: How big a problem is that? And so yeah, I 363 00:18:34,560 --> 00:18:36,320 Speaker 1: mean it's a huge it's a huge problem. I mean, 364 00:18:36,359 --> 00:18:39,440 Speaker 1: I think I think the level of business investment now 365 00:18:39,640 --> 00:18:43,000 Speaker 1: was only just about got back to its pretty pandemic level. 366 00:18:43,160 --> 00:18:46,639 Speaker 1: So it's it's it's really struggled to recover from the pandemic. 367 00:18:47,000 --> 00:18:48,560 Speaker 1: And if you look at it in the context of 368 00:18:48,560 --> 00:18:52,360 Speaker 1: what's happened, as you say, since the Brexit referendum, we're 369 00:18:52,400 --> 00:18:55,159 Speaker 1: well beneath the performance of other G seven economies the 370 00:18:55,240 --> 00:18:59,280 Speaker 1: UK economy, so I think there's something there is definitely 371 00:18:59,320 --> 00:19:01,960 Speaker 1: something to be done. The context again here though, is 372 00:19:02,000 --> 00:19:04,400 Speaker 1: that the government has put in place a massive rising 373 00:19:04,440 --> 00:19:09,760 Speaker 1: corporation tax that's going to take effects from April. Yeah, exactly. 374 00:19:09,840 --> 00:19:11,919 Speaker 1: So you've got a six percentage point rise in the 375 00:19:11,960 --> 00:19:15,320 Speaker 1: CT rate. That's obviously a massive disincentive for investment at 376 00:19:15,320 --> 00:19:17,160 Speaker 1: a time when interest rates are going through the roof. 377 00:19:18,000 --> 00:19:20,000 Speaker 1: So what the government is going to try and do 378 00:19:20,760 --> 00:19:27,240 Speaker 1: is sweeten that that hit, essentially by introducing tax allowances. 379 00:19:27,280 --> 00:19:29,239 Speaker 1: And this is something that Richie soon Act toyed with 380 00:19:29,320 --> 00:19:32,280 Speaker 1: when he was chancellor. He introduced this temporary superdeduction and 381 00:19:32,280 --> 00:19:36,199 Speaker 1: this is something that's actually expiring at the end of 382 00:19:36,440 --> 00:19:38,040 Speaker 1: at the end of March, and I think that the 383 00:19:38,080 --> 00:19:39,720 Speaker 1: government will want to or Hunt will want to put 384 00:19:39,760 --> 00:19:43,680 Speaker 1: something in place to at least temporarily replace that. Bloomberg 385 00:19:43,840 --> 00:19:46,240 Speaker 1: Senior UK economist Dan Hansen thank you very much for 386 00:19:46,280 --> 00:19:48,920 Speaker 1: your insights. I'm Stephen Carroll in London. You can catch 387 00:19:49,000 --> 00:19:51,879 Speaker 1: us every weekday morning here for Bloomberg Daybreak Europe, beginning 388 00:19:51,880 --> 00:19:55,760 Speaker 1: at six am in London and one am on Wall Street. Tom. 389 00:19:55,800 --> 00:19:58,720 Speaker 1: Thanks Stephen. Coming up on Bloomberg Daybreak weekend, we had 390 00:19:58,760 --> 00:20:00,639 Speaker 1: to DC and get a look at the week ahead 391 00:20:00,720 --> 00:20:04,040 Speaker 1: in the nation's capital. I'm Tom Busby, and this is 392 00:20:04,080 --> 00:20:19,040 Speaker 1: Bloomberg broadcasting live from the Bloomberg Interactive Broker Studio in 393 00:20:19,119 --> 00:20:23,160 Speaker 1: New York. Bloomberg Elomon Freo to Washington, DC, Bloomberg ninety 394 00:20:23,240 --> 00:20:26,200 Speaker 1: nine one to Boston, Bloomberg one oh sixty one to 395 00:20:26,320 --> 00:20:29,960 Speaker 1: San Francisco, Bloomberg nine sixty to the country, Sirius XM 396 00:20:30,040 --> 00:20:34,080 Speaker 1: Channel one nineteen to London, DAB Digital Radio, and around 397 00:20:34,080 --> 00:20:37,920 Speaker 1: the globe the Bloomberg Business app and Bloomberg Radio dot Com. 398 00:20:37,960 --> 00:20:47,560 Speaker 1: This is Bloomberg Daybreak Weekend. I'm Tom Busby in New 399 00:20:47,640 --> 00:20:49,720 Speaker 1: York with your global look ahead at the top stories 400 00:20:49,760 --> 00:20:52,160 Speaker 1: for investors in the coming week. We had to Washington, 401 00:20:52,240 --> 00:20:54,879 Speaker 1: DC now for a look ahead at the week in politics. 402 00:20:55,080 --> 00:20:59,160 Speaker 1: We're joined now by Bloomberg Sound On host Joe Matthew. Joe. 403 00:20:59,440 --> 00:21:01,639 Speaker 1: Thanks Tom, We're gonna look ahead now to the first 404 00:21:01,720 --> 00:21:05,360 Speaker 1: Republican primary on the calendar. That would be Iowa, the 405 00:21:05,400 --> 00:21:08,520 Speaker 1: fifth of February twenty twenty four. The fact of the 406 00:21:08,560 --> 00:21:11,760 Speaker 1: matter is the candidates are not waiting Ron de Santis 407 00:21:11,760 --> 00:21:14,600 Speaker 1: in Iowa today. We are gonna go on offense. I'm 408 00:21:14,600 --> 00:21:17,320 Speaker 1: gonna find issues. I'm not just gonna sit back and 409 00:21:17,359 --> 00:21:19,000 Speaker 1: waited for come to me. And I sat at my 410 00:21:19,080 --> 00:21:21,639 Speaker 1: desk the first day as governor, I looked around the 411 00:21:21,680 --> 00:21:23,840 Speaker 1: office and I said, you know, I don't know what 412 00:21:24,119 --> 00:21:26,359 Speaker 1: soob is going to succeed me in this office, but 413 00:21:26,400 --> 00:21:28,480 Speaker 1: I can tell I'll tell you this. They are not 414 00:21:28,560 --> 00:21:30,560 Speaker 1: going to have very much to do because I'm taking 415 00:21:30,600 --> 00:21:32,840 Speaker 1: all the meat off the bone there is and I'm 416 00:21:32,840 --> 00:21:35,680 Speaker 1: gonna get all this done. You wonder why he assumes 417 00:21:35,720 --> 00:21:38,880 Speaker 1: the next governor's an s ob like what if they're friends? 418 00:21:39,560 --> 00:21:42,679 Speaker 1: But I digress. On his way to Iowa for the 419 00:21:42,720 --> 00:21:45,840 Speaker 1: first time since announcing next week, Donald Trump, you know, 420 00:21:45,920 --> 00:21:50,439 Speaker 1: Ronda Sanctimonius head the crowd and Stadnila today, one hundred 421 00:21:50,440 --> 00:21:52,960 Speaker 1: and thirty nine people in Satnay. We got a lot 422 00:21:53,000 --> 00:21:55,000 Speaker 1: of people. We have one hundred and thirty nine times 423 00:21:55,040 --> 00:21:58,439 Speaker 1: about thirty. We got a lot of people here, but 424 00:21:59,160 --> 00:22:02,920 Speaker 1: I always say hit your enemy a little bit early. 425 00:22:03,000 --> 00:22:06,439 Speaker 1: Some people say don't, but I say do. Okay. That 426 00:22:06,600 --> 00:22:09,760 Speaker 1: was back in February, almost a year to the day 427 00:22:09,840 --> 00:22:14,040 Speaker 1: ahead of voting, and we're joined by Bloomberg Government Congress 428 00:22:14,080 --> 00:22:17,320 Speaker 1: reporter Emily Wilkins and Bloomberg Politics reporter Ryan Teak back 429 00:22:17,359 --> 00:22:20,200 Speaker 1: with as we take a peek into the landscape of 430 00:22:20,240 --> 00:22:21,879 Speaker 1: twenty twenty four and look a little bit into the 431 00:22:21,880 --> 00:22:24,520 Speaker 1: week ahead. Ryan, it's great to see you here. Thanks 432 00:22:24,520 --> 00:22:27,080 Speaker 1: for coming along Iowa. Of course, we do need to 433 00:22:27,160 --> 00:22:29,840 Speaker 1: establish this. It's a separate calendar for Republicans and Democrats 434 00:22:29,920 --> 00:22:33,720 Speaker 1: this time, but we're talking the Republican field. How important 435 00:22:33,760 --> 00:22:36,320 Speaker 1: is Iowa going to be for Donald Trump? You know, 436 00:22:37,080 --> 00:22:41,520 Speaker 1: he didn't win Iowa in twenty sixteen. I think that 437 00:22:41,600 --> 00:22:46,439 Speaker 1: he's doing better among Iowa voters now than he did then. 438 00:22:46,520 --> 00:22:49,960 Speaker 1: He sort of established that beachhead, So I don't think 439 00:22:50,040 --> 00:22:54,120 Speaker 1: losing there is killer for him. I think he could 440 00:22:54,240 --> 00:22:56,840 Speaker 1: he could withstand that if he's on the ropes against 441 00:22:56,840 --> 00:22:59,280 Speaker 1: a guy named DeSantis, though, Could it be more imperative 442 00:22:59,320 --> 00:23:02,160 Speaker 1: to start winning early? Yeah, I think that there, it's 443 00:23:02,200 --> 00:23:04,960 Speaker 1: definitely the field is going to narrow much faster than 444 00:23:05,000 --> 00:23:07,919 Speaker 1: in twenty sixteen when he last based a competitive one 445 00:23:07,960 --> 00:23:09,879 Speaker 1: and it was sort of dragging on about who was 446 00:23:09,920 --> 00:23:12,879 Speaker 1: going to be the mysterious candidate X to find to 447 00:23:12,920 --> 00:23:16,439 Speaker 1: be in the final two, and I think that ultimately 448 00:23:16,680 --> 00:23:19,560 Speaker 1: divided the competition. So I think that there's going to 449 00:23:19,640 --> 00:23:23,520 Speaker 1: be a push among everyone if someone shows themselves strong 450 00:23:23,560 --> 00:23:27,159 Speaker 1: in an early state like Iowa, to among Republicans to 451 00:23:27,200 --> 00:23:29,359 Speaker 1: sort of annoint that person as that's it, this is 452 00:23:29,359 --> 00:23:33,160 Speaker 1: the alternative to Trump and and get behind that person quickly. 453 00:23:33,200 --> 00:23:36,080 Speaker 1: Are we assuming Ronda Santis is running here? Ryan? Yeah? 454 00:23:36,080 --> 00:23:39,679 Speaker 1: I mean I this. You know, I almost corrected you 455 00:23:39,680 --> 00:23:41,679 Speaker 1: they there when you called him in Candida because technically 456 00:23:41,680 --> 00:23:44,000 Speaker 1: he is not yet running, But I mean, you know, 457 00:23:44,520 --> 00:23:48,960 Speaker 1: he's running. So that's where we're at. Emily Wilkins, what 458 00:23:49,040 --> 00:23:53,560 Speaker 1: do you think Donald Trump's acting like Ronda Santis is running? 459 00:23:53,680 --> 00:23:56,960 Speaker 1: Rhonda Santis is acting like Ronda Santis is running, but 460 00:23:57,000 --> 00:24:00,480 Speaker 1: he's in no hurry to win outs, right. I don't 461 00:24:00,520 --> 00:24:05,719 Speaker 1: think one just goes to Iowa casually and speech, especially 462 00:24:05,720 --> 00:24:08,080 Speaker 1: when one is the governor of the state of Florida. Yeah, 463 00:24:08,119 --> 00:24:11,240 Speaker 1: and to be to you know, to the to your question, 464 00:24:11,560 --> 00:24:13,800 Speaker 1: which is a great one of when he's actually going 465 00:24:13,840 --> 00:24:15,119 Speaker 1: to get in the race. I mean what he has 466 00:24:15,160 --> 00:24:17,920 Speaker 1: said and what sort of those near to him have 467 00:24:17,920 --> 00:24:20,480 Speaker 1: have implied that he's going to wait until the Florida 468 00:24:20,560 --> 00:24:24,200 Speaker 1: State Legislature session is over, which makes sense in a way. 469 00:24:24,240 --> 00:24:26,640 Speaker 1: I mean, he's he's already kind of a known quantity 470 00:24:26,760 --> 00:24:30,520 Speaker 1: out there. He's not someone who could kind of benefit 471 00:24:30,600 --> 00:24:33,000 Speaker 1: from getting into a race like this being one of 472 00:24:33,000 --> 00:24:35,080 Speaker 1: the first couple to really get in and get his 473 00:24:35,200 --> 00:24:37,720 Speaker 1: name out there. Um. At the same point, it kind 474 00:24:37,720 --> 00:24:39,440 Speaker 1: of makes sense for him to, you know, be able 475 00:24:39,440 --> 00:24:42,000 Speaker 1: to focus on finishing up what's what's going on in 476 00:24:42,000 --> 00:24:45,040 Speaker 1: the Florida State Legislature because certainly some of those things 477 00:24:45,080 --> 00:24:47,520 Speaker 1: will be things that he will run on when he 478 00:24:47,560 --> 00:24:50,040 Speaker 1: does launch his campaign. Yeah, that's right. And he's getting 479 00:24:50,040 --> 00:24:52,639 Speaker 1: a lot of publicity from stuff he's doing as governor. 480 00:24:52,920 --> 00:24:54,800 Speaker 1: I mean, I think if you're Nicki Haley, you have 481 00:24:54,920 --> 00:24:58,159 Speaker 1: to be you know, campaigning for anyone to pay attention 482 00:24:58,240 --> 00:25:00,400 Speaker 1: to you, because you don't have a day job, right, 483 00:25:00,520 --> 00:25:03,159 Speaker 1: But like he's Florida governor, and literally every bill he 484 00:25:03,200 --> 00:25:06,159 Speaker 1: does is something that's designed to get national media right, 485 00:25:06,280 --> 00:25:09,040 Speaker 1: tack all the national media, you know, and get Republican 486 00:25:09,119 --> 00:25:12,399 Speaker 1: voters excited. So he doesn't really need to be officially 487 00:25:12,480 --> 00:25:15,679 Speaker 1: running to get attention. He hasn't gone after Donald Trump's 488 00:25:15,680 --> 00:25:17,399 Speaker 1: certainly not in the way Trump has gone after him. 489 00:25:17,440 --> 00:25:19,600 Speaker 1: But he has been asked about that, and he's he's 490 00:25:19,640 --> 00:25:23,080 Speaker 1: been very careful in choosing his words to react. This 491 00:25:23,119 --> 00:25:25,800 Speaker 1: is Rhonda Santis the beginning of February. I spend my 492 00:25:25,960 --> 00:25:30,360 Speaker 1: time delivering results for the people of Florida and fighting 493 00:25:30,400 --> 00:25:35,160 Speaker 1: against Joe Biden. That's how I spend my time. Okay, 494 00:25:35,359 --> 00:25:38,399 Speaker 1: big rout of applause on that. You know, he's not 495 00:25:38,400 --> 00:25:41,560 Speaker 1: here to attack other cannabis as the other Republicans, the idea, 496 00:25:41,720 --> 00:25:45,280 Speaker 1: I don't spend my time trying to smear other Republicans. 497 00:25:45,320 --> 00:25:49,080 Speaker 1: There it is so emily though at a certain point 498 00:25:49,119 --> 00:25:51,720 Speaker 1: he's probably gonna have to write, you can't beat Donald 499 00:25:51,720 --> 00:25:54,639 Speaker 1: Trump without going up against Donald Trump without getting in 500 00:25:54,680 --> 00:25:57,280 Speaker 1: the ring. Right. Absolutely, But at the same point, I think, 501 00:25:57,320 --> 00:26:00,320 Speaker 1: to a certain extent, if you are a Republican for 502 00:26:00,320 --> 00:26:04,199 Speaker 1: the nomination right now, you are not trying to completely 503 00:26:04,400 --> 00:26:07,600 Speaker 1: isolate Trump supporters. At this point, You're trying to figure 504 00:26:07,600 --> 00:26:09,199 Speaker 1: out a way how you can appeal to those some 505 00:26:09,240 --> 00:26:11,879 Speaker 1: of those supporters get them over on their side. So 506 00:26:11,920 --> 00:26:13,760 Speaker 1: it's probably not a good idea of right out the 507 00:26:13,800 --> 00:26:17,000 Speaker 1: bat to slam the guy too hard. But certainly, you know, 508 00:26:17,240 --> 00:26:20,760 Speaker 1: as this continues, if DeSantis and Trump both wind up 509 00:26:20,840 --> 00:26:23,520 Speaker 1: continuing to be the strong nominees that they seem to 510 00:26:23,520 --> 00:26:26,360 Speaker 1: be at this point in the game, yeah, eventually you're 511 00:26:26,440 --> 00:26:29,439 Speaker 1: you're going to be seen a little more headbutting between 512 00:26:29,480 --> 00:26:31,840 Speaker 1: the two of them. You know, Ryan, we mentioned the 513 00:26:31,880 --> 00:26:34,280 Speaker 1: fact that the primaries and fib we've got debates way 514 00:26:34,320 --> 00:26:37,560 Speaker 1: before that. When does this field finally come together or 515 00:26:37,600 --> 00:26:39,560 Speaker 1: will we actually have some debates without a full field 516 00:26:39,560 --> 00:26:42,440 Speaker 1: this summer. I mean, you could have people filing as 517 00:26:42,520 --> 00:26:44,640 Speaker 1: late as to fall if they feel like there's a 518 00:26:44,680 --> 00:26:48,040 Speaker 1: weak point. You know, you've seen in the when we've 519 00:26:48,040 --> 00:26:50,239 Speaker 1: had bigger fields, and I have a story about this 520 00:26:50,480 --> 00:26:53,920 Speaker 1: right now. There's in some past years they were like seven, 521 00:26:54,000 --> 00:26:57,720 Speaker 1: eight nine people running by this point, but there also 522 00:26:57,760 --> 00:27:00,520 Speaker 1: have been years where they didn't really kick and intel 523 00:27:00,680 --> 00:27:04,240 Speaker 1: may or June. So we're not we're not anywhere near 524 00:27:04,280 --> 00:27:07,520 Speaker 1: the final field. We've only had one person who people 525 00:27:07,560 --> 00:27:12,160 Speaker 1: were watching, Larry Hogan, former Maryland governor bow out. So far, 526 00:27:12,359 --> 00:27:14,000 Speaker 1: there's a lot of other people who are at least 527 00:27:14,040 --> 00:27:17,560 Speaker 1: keeping their names alive as potential candidates, which is sometimes 528 00:27:17,600 --> 00:27:19,720 Speaker 1: just a ploy to get more attention for your book 529 00:27:19,760 --> 00:27:25,560 Speaker 1: or whatever whatever you're angling for. Yeah, so you know, 530 00:27:25,600 --> 00:27:27,639 Speaker 1: there's a chance that somebody might come in if they 531 00:27:27,720 --> 00:27:30,520 Speaker 1: if de Santis looks like he's not as strong against 532 00:27:30,560 --> 00:27:32,639 Speaker 1: Trump as some of the folks who don't want Trump 533 00:27:33,040 --> 00:27:36,600 Speaker 1: are hoping, then there might be some late joining person. 534 00:27:37,359 --> 00:27:39,359 Speaker 1: I mean, I think there's also a real question of 535 00:27:40,160 --> 00:27:42,919 Speaker 1: the debates, I mean, whether they can pull this together. 536 00:27:43,119 --> 00:27:47,119 Speaker 1: Like Trump has not said that he will support the 537 00:27:47,160 --> 00:27:50,359 Speaker 1: eventual nominee. Rona McDaniel, the RNC chair, has said that 538 00:27:50,400 --> 00:27:53,040 Speaker 1: she wants to require all the candidates to agree to 539 00:27:53,080 --> 00:27:55,439 Speaker 1: that before they get on stage. Of some of the 540 00:27:55,480 --> 00:27:59,240 Speaker 1: anti Trump candidates have said that they wouldn't do that 541 00:27:59,320 --> 00:28:03,240 Speaker 1: for if its Trump, So that's kind of messy, Um, 542 00:28:03,680 --> 00:28:06,239 Speaker 1: it's it's us. So just potential that you know, if 543 00:28:06,240 --> 00:28:08,000 Speaker 1: Trump decides not to show up at a debate like 544 00:28:08,160 --> 00:28:11,399 Speaker 1: theyone gonna watch, if it's the Santist debating, like Nicki Haley, 545 00:28:11,480 --> 00:28:14,480 Speaker 1: I mean, he could just sort of kill the whole format. 546 00:28:14,560 --> 00:28:19,480 Speaker 1: I know how how he would answer that, it's all 547 00:28:19,359 --> 00:28:22,200 Speaker 1: about the ratings. And now, as as Ronda Santist, Donald 548 00:28:22,200 --> 00:28:26,119 Speaker 1: Trump and others head for Iowa, Joe Biden is heading 549 00:28:26,160 --> 00:28:29,240 Speaker 1: to the West coast next week. Emily Wilkins, this is 550 00:28:29,280 --> 00:28:30,960 Speaker 1: all about the budget. This is the post state of 551 00:28:31,000 --> 00:28:35,520 Speaker 1: the Union, post budget road show that now begins once 552 00:28:35,560 --> 00:28:38,480 Speaker 1: all the bluster is out there. Though, when do actual 553 00:28:38,600 --> 00:28:42,680 Speaker 1: negotiations begin between these two parties. We know the Republican 554 00:28:42,760 --> 00:28:47,080 Speaker 1: budget won't be out for weeks, maybe a couple of months. Yeah, 555 00:28:47,160 --> 00:28:49,400 Speaker 1: at this point, they've got that going on. At the 556 00:28:49,440 --> 00:28:52,480 Speaker 1: same point, remember that the negotiations around the budget and 557 00:28:52,520 --> 00:28:56,080 Speaker 1: the debt limit are still somewhat similar from the negotiations 558 00:28:56,080 --> 00:28:59,200 Speaker 1: around actually funding the government for the next year, and 559 00:28:59,280 --> 00:29:02,160 Speaker 1: that's something that we expect lawmakers to really start digging 560 00:29:02,200 --> 00:29:04,800 Speaker 1: in the White House. Releasing their budget is kind of 561 00:29:04,840 --> 00:29:09,120 Speaker 1: the unofficial kickoff of that happening. And I think it's 562 00:29:09,120 --> 00:29:12,479 Speaker 1: going to be very interesting this year. With Republicans in 563 00:29:12,520 --> 00:29:15,760 Speaker 1: the House running the floor with only a five vote margin, 564 00:29:16,240 --> 00:29:18,720 Speaker 1: they have vowed to bring. You know, they've got a 565 00:29:18,800 --> 00:29:21,560 Speaker 1: huge government. They break it up into twelve spending bills. 566 00:29:22,240 --> 00:29:24,840 Speaker 1: It is really difficult for them to actually bring all 567 00:29:24,920 --> 00:29:27,200 Speaker 1: twelve spending bills to the floor, kind of go through 568 00:29:27,240 --> 00:29:31,080 Speaker 1: the regular process, if you will. But that is what 569 00:29:31,240 --> 00:29:34,200 Speaker 1: Republicans are really pushing for right now. Thanks to Ryan 570 00:29:34,280 --> 00:29:37,680 Speaker 1: Teague Beckwith and Emily Wilkins and Tom is a programming note, 571 00:29:37,680 --> 00:29:40,520 Speaker 1: an important one for you. Starting Monday, Balance of Power 572 00:29:41,200 --> 00:29:45,160 Speaker 1: moves to five pm on Bloomberg Television, now hosted by 573 00:29:45,160 --> 00:29:48,640 Speaker 1: Anne Marie Hordern and myself will be at the intersection 574 00:29:48,680 --> 00:29:51,880 Speaker 1: of Washington and Wall Street every weekday bringing you the 575 00:29:51,960 --> 00:29:54,600 Speaker 1: latest political news. Balance of Power at a new time, 576 00:29:54,680 --> 00:29:58,640 Speaker 1: five pm Eastern on Bloomberg Television. Tom, thanks Joe, and 577 00:29:58,720 --> 00:30:00,720 Speaker 1: good luck on the new show. Be sure to tune 578 00:30:00,720 --> 00:30:03,840 Speaker 1: into Bloomberg Sound on weekdays from one to three pm. 579 00:30:03,880 --> 00:30:07,080 Speaker 1: Wall Street Time here on Bloomberg Radio. Coming up on 580 00:30:07,080 --> 00:30:10,880 Speaker 1: Bloomberg Daybreak weekends and Apple Supplier focuses on India, will 581 00:30:10,920 --> 00:30:14,640 Speaker 1: bring you the details. I'm Tom Busby, and this is Bloomberg. 582 00:30:24,800 --> 00:30:27,520 Speaker 1: This is Bloomberg Daybreak Weekend, our global look ahead at 583 00:30:27,520 --> 00:30:30,080 Speaker 1: the top stories for investors in the coming week. I'm 584 00:30:30,120 --> 00:30:32,760 Speaker 1: Tom Busby in New York. We learned this week that 585 00:30:32,800 --> 00:30:36,640 Speaker 1: iPhone parts maker Fox Contechnology Group plans to invest about 586 00:30:36,640 --> 00:30:40,280 Speaker 1: seven hundred million dollars on a new plant in India 587 00:30:40,320 --> 00:30:43,400 Speaker 1: to ramp up local production for more Now, we're joined 588 00:30:43,400 --> 00:30:47,000 Speaker 1: by Bloomberg Daybreak Asia anchors Doug Chrisner and Brian Curtis 589 00:30:47,240 --> 00:30:51,040 Speaker 1: Tom With US China tension simmering as they are, Apple 590 00:30:51,120 --> 00:30:54,120 Speaker 1: supplier Houn High has confirmed that he will set up 591 00:30:54,120 --> 00:30:57,120 Speaker 1: a new plant in India. The confirmation caused quite a 592 00:30:57,240 --> 00:31:00,560 Speaker 1: stir in China as it raises the prospect of Apple 593 00:31:00,680 --> 00:31:05,000 Speaker 1: shifting its manufacturing supply chain out of China, and indeed, 594 00:31:05,000 --> 00:31:08,960 Speaker 1: Bloomberg reported this week that Apple itself is expected to 595 00:31:09,000 --> 00:31:12,640 Speaker 1: increase its focus on India. On High, or fox Khon 596 00:31:12,880 --> 00:31:16,080 Speaker 1: as it's often called, will invest seven hundred million dollars 597 00:31:16,080 --> 00:31:19,720 Speaker 1: on a new plant in India's Kannataka state. One of 598 00:31:19,720 --> 00:31:22,000 Speaker 1: the big issues for the company over the past year 599 00:31:22,120 --> 00:31:26,040 Speaker 1: has been the lockdowns in China. Yes, and even though 600 00:31:26,120 --> 00:31:29,320 Speaker 1: China has reopened, fox Kon said this week that sales 601 00:31:29,360 --> 00:31:33,360 Speaker 1: dropped eleven point seven percent in February from a year earlier, 602 00:31:33,800 --> 00:31:37,080 Speaker 1: even with the strong January, it raised a few eyebrows. 603 00:31:37,600 --> 00:31:40,120 Speaker 1: Dug and I thought we would explore all the questions 604 00:31:40,200 --> 00:31:44,520 Speaker 1: raised by Foxcon making this decision to do more in India. 605 00:31:44,640 --> 00:31:48,520 Speaker 1: Bloomberg Tech editor lad Sevof joins us, what do we 606 00:31:48,560 --> 00:31:51,960 Speaker 1: think is the prime reason, Flad that Foxcon is doing this. 607 00:31:52,320 --> 00:31:55,080 Speaker 1: It's one that Folkscon itself is not going to say, 608 00:31:55,160 --> 00:31:58,480 Speaker 1: but it really is a customer demand, and Folkscon's biggest 609 00:31:58,480 --> 00:32:02,800 Speaker 1: customer is Apple. We will, but it is a theme 610 00:32:02,880 --> 00:32:06,720 Speaker 1: and a trend that really transcends these two titans of 611 00:32:06,720 --> 00:32:10,680 Speaker 1: the industry, as we might put them. Fellow Taiwanese suppliers 612 00:32:10,680 --> 00:32:14,680 Speaker 1: such as Wistron are also looking to expand in India. 613 00:32:15,200 --> 00:32:18,760 Speaker 1: We heard from a Goetech executive, a Chinese supplier that's 614 00:32:18,800 --> 00:32:23,720 Speaker 1: expanding in Vietnam, and he spoke perhaps most candidly out 615 00:32:23,720 --> 00:32:26,920 Speaker 1: of any of these supply chain executives, really just saying 616 00:32:27,160 --> 00:32:29,960 Speaker 1: customers want this. They want us to have alternatives to 617 00:32:30,080 --> 00:32:33,640 Speaker 1: China now. But he's saying, take out manufacturing out of 618 00:32:33,720 --> 00:32:37,160 Speaker 1: China and put it elsewhere. But what customers are really 619 00:32:37,160 --> 00:32:41,040 Speaker 1: asking for is more geographic diversification. So that diversification, I 620 00:32:41,040 --> 00:32:44,840 Speaker 1: would imagine, is kind of like an insurance policy against 621 00:32:44,920 --> 00:32:48,400 Speaker 1: problems down the road with your supply chain. So in effect, 622 00:32:49,000 --> 00:32:52,320 Speaker 1: it's not as much as an increase in capacity. It's 623 00:32:52,360 --> 00:32:54,880 Speaker 1: more about redundancy. Am I right or wrong in that? 624 00:32:54,880 --> 00:32:58,240 Speaker 1: That's right? That's right. Now. That being said, it is interesting, 625 00:32:58,400 --> 00:33:01,680 Speaker 1: like one of the bits of off the cuff analysis 626 00:33:01,680 --> 00:33:03,600 Speaker 1: that you could put together is to just look at 627 00:33:03,840 --> 00:33:07,239 Speaker 1: iPhone production in India in recent times. Now, Fox going 628 00:33:07,240 --> 00:33:10,400 Speaker 1: again is one of the leading assemblers there that doubled 629 00:33:12,080 --> 00:33:14,880 Speaker 1: in the past year, and it is happening much faster 630 00:33:15,000 --> 00:33:18,560 Speaker 1: relative to production and assembly of iPhones in China. And 631 00:33:18,600 --> 00:33:21,120 Speaker 1: when you look at iPhone sales on an annual basis, 632 00:33:21,120 --> 00:33:23,720 Speaker 1: they kind of flat. So if iPhone sales overall flat 633 00:33:23,840 --> 00:33:26,720 Speaker 1: and India production is increasing, that kind of tends to 634 00:33:26,840 --> 00:33:29,160 Speaker 1: give you the suggestion that some production is moving out 635 00:33:29,200 --> 00:33:33,120 Speaker 1: of China. We've long thought that American manufacturing might move 636 00:33:33,160 --> 00:33:35,080 Speaker 1: to India, but one of the big problems in the 637 00:33:35,080 --> 00:33:38,120 Speaker 1: past has been infrastructure. They simply haven't had the same 638 00:33:38,160 --> 00:33:42,200 Speaker 1: sort of supply chains are developing there that we've seen 639 00:33:42,240 --> 00:33:44,840 Speaker 1: in China, and nor the physical attributes to get it 640 00:33:44,920 --> 00:33:48,120 Speaker 1: from a facility to pour it to customer. Has that 641 00:33:48,240 --> 00:33:51,760 Speaker 1: changed It should be changing over time, of course, nobody 642 00:33:51,800 --> 00:33:55,280 Speaker 1: has China's infrastructure system. The other thing we have to 643 00:33:55,360 --> 00:33:58,040 Speaker 1: bear in mind is that so many of the raw 644 00:33:58,120 --> 00:34:01,320 Speaker 1: materials and the basic supplies and basing components that go 645 00:34:01,440 --> 00:34:04,360 Speaker 1: into devices are they're made in China, So you're covering 646 00:34:04,400 --> 00:34:08,359 Speaker 1: smaller grounds, smaller distances, even if you don't have the 647 00:34:08,400 --> 00:34:11,080 Speaker 1: world class infrastructure that China has. Now, the other thing 648 00:34:11,080 --> 00:34:13,319 Speaker 1: to bear in mind is the seven hundred million dollar 649 00:34:13,440 --> 00:34:16,960 Speaker 1: plan that Foxscon is planning is to primarily start with 650 00:34:17,040 --> 00:34:20,720 Speaker 1: iPhone components. Down the line, it may actually assemble iPhones too, 651 00:34:21,000 --> 00:34:23,640 Speaker 1: but that's what we're seeing here as well. India itself, 652 00:34:23,760 --> 00:34:27,239 Speaker 1: it's subsidizing companies like Foxconn set enough factories, it is 653 00:34:27,280 --> 00:34:30,600 Speaker 1: providing its own investment in its own infrastructure, and then 654 00:34:30,640 --> 00:34:36,000 Speaker 1: companies like Foxcon are building let's say, the peripheral ecosystem 655 00:34:36,160 --> 00:34:39,040 Speaker 1: around an iPhone factory. Lad, thanks so much for joining 656 00:34:39,120 --> 00:34:41,720 Speaker 1: us and shedding some light on this story, which speaks 657 00:34:41,760 --> 00:34:44,759 Speaker 1: to a much bigger story down the road. Bloomberg Tech 658 00:34:44,880 --> 00:34:48,560 Speaker 1: editor Lad Savov and Brian Curtis, along with Doug Christener. 659 00:34:48,640 --> 00:34:52,160 Speaker 1: You can catch us every weekday here for Bloomberg Daybreak Asia, 660 00:34:52,520 --> 00:34:55,480 Speaker 1: beginning at six am in Hong Kong and six pm 661 00:34:55,680 --> 00:34:58,480 Speaker 1: on Wall Street. Tom, thank you Brian and Doug. And 662 00:34:58,520 --> 00:35:01,040 Speaker 1: that does it for this edition of blue Bird Daybreak Weekend. 663 00:35:01,200 --> 00:35:03,600 Speaker 1: Join us again Monday morning at five am Wall Street 664 00:35:03,600 --> 00:35:06,440 Speaker 1: Time for the latest on markets overseas and the news 665 00:35:06,600 --> 00:35:09,839 Speaker 1: you need to start your day. I'm Tom Husby. Stay 666 00:35:09,880 --> 00:35:12,399 Speaker 1: with us. Top stories and global business headlines are coming 667 00:35:12,480 --> 00:35:13,200 Speaker 1: up right now.